(Source: PRNewswire-FirstCall)
HOUSTON, Aug. 5 /PRNewswire-FirstCall/ -- Baker Hughes Incorporated today announced that net income for the second quarter 2009 was $87 million or $0.28 per diluted share compared to $379 million or $1.23 per diluted share for the second quarter 2008 and $195 million or $0.63 per diluted share for the first quarter 2009. Net income for the second quarter 2009 includes expenses of $54 million before tax ($0.13 per share) comprised of $16 million ($0.04 per share) associated with employee severance and reorganization costs and $38 million ($0.09 per share) associated with increasing our allowance for doubtful accounts.
As previously reported, net income for the first quarter 2009 included expenses of $83 million before tax ($0.19 per share) comprised of $54 million ($0.12 per share) associated with employee severance and $29 million ($0.07 per share) associated with increasing our allowance for doubtful accounts. Net income for the second quarter 2008 included a net charge of $62 million ($40 million after-tax or $0.13 per share), related to the settlement of litigation.
Revenue for the second quarter 2009 was $2.34 billion, down 22% compared to $3.00 billion for the second quarter 2008 and down 12% compared to $2.67 billion for the first quarter 2009.
Chad C. Deaton, Baker Hughes chairman, president and chief executive officer, said, "Our second quarter results reflect trends in the North America and International markets. For North America, the decline in activity has been severe; however, in recent weeks the market has been stabilizing. We believe the decline in the US rig count is now behind us and we expect a gradual increase in drilling activity beginning in 2010. Pricing deterioration has slowed and with our cost cutting efforts we expect the second quarter 2009 to have marked the bottom for North America profitability.
"Internationally, the decline in activity has been less severe and isolated to specific geographic areas. The recent strengthening of oil prices provides support for customer activity in the second half of 2009 and sets the stage for incremental growth in spending in 2010; however, price concessions negotiated in the first half of 2009 will drive international profitability lower in the second half of the year.
"Geographically, activity in the Russia and Caspian geomarkets has bottomed and is benefitting from the recent increase in oil prices. Activity in the Middle East Asia Pacific and Latin America regions will increase modestly. We were awarded new work or renewed international contracts in the second quarter for more than $1.5 billion including contracts for artificial lift in the Andean (Colombia / Ecuador / Peru) geomarket; intelligent completions in Brazil; directional drilling, drilling fluids, drill bits, wireline and oilfield chemicals offshore Nigeria; wireline in the North Africa and Caspian geomarkets, and wireline and completions in the Australasia and Southeast Asia geomarkets.
"Our new geographic organization is now in place. It has been well received by our customers and employees and is focused on new market opportunities. Our investments in infrastructure, organization and technology are positioning the company to grow share and profitability as the next cycle unfolds."
During the second quarter 2009, debt increased $16 million to $1.83 billion and cash and short-term investments increased $183 million to $1.36 billion as compared to the first quarter 2009. Capital expenditures were $291 million, depreciation and amortization expense was $182 million and dividend payments were $46 million in the second quarter 2009.
Financial Information Consolidated Statements of Operations UNAUDITED (In millions, except per share amounts) Three Months Ended ------------------------------- June 30, March 31, ---------------- --------- 2009 2008 2009 ---- ---- ---- Revenues: Sales $1,156 $1,466 $1,311 Services and rentals 1,180 1,532 1,357 ----- ----- ----- Total revenues 2,336 2,998 2,668 ----- ----- ----- Costs and Expenses: Cost of sales 926 1,055 1,027 Cost of services and rentals 871 942 933 Research and engineering 102 106 109 Marketing, general and administrative 284 270 281 Litigation settlement - 62 - ----- ----- ----- Total costs and expenses 2,183 2,435 2,350 ----- ----- ----- Operating income 153 563 318 Equity in income of affiliates - 1 - Interest expense (34) (17) (35) Interest and dividend income 3 4 1 ----- ----- ----- Income before income taxes 122 551 284 Income taxes (35) (172) (89) ----- ----- ----- Net income $87 $379 $195 ===== ===== ===== Basic earnings per share $0.28 $1.24 $0.63 Diluted earnings per share $0.28 $1.23 $0.63 Weighted average shares outstanding, basic 310 307 310 Weighted average shares outstanding, diluted 310 308 310 Depreciation and amortization expense $182 $155 $173 Capital expenditures $291 $312 $281 Financial Information Consolidated Statements of Operations (In millions, except per share amounts) Six Months Ended June 30, ------------------------- UNAUDITED 2009 2008 ---- ---- Revenues: Sales $2,467 $2,719 Services and rentals 2,537 2,949 ----- ----- Total revenues 5,004 5,668 ----- ----- Costs and Expenses: Cost of sales 1,953 1,920 Cost of services and rentals 1,804 1,846 Research and engineering 211 209 Marketing, general and administrative 565 520 Litigation settlement - 62 --- --- Total costs and expenses 4,533 4,557 ----- ----- Operating income 471 1,111 Equity in income of affiliates - 1 Gain on sale of product line - 28 Interest expense (69) (32) Interest and dividend income 4 12 --- --- Income before income taxes 406 1,120 Income taxes (124) (346) ---- ---- Net income $282 $774 ==== ==== Basic earnings per share $0.91 $2.51 Diluted earnings per share $0.91 $2.50 Weighted average shares outstanding, basic 310 308 Weighted average shares outstanding, diluted 310 310 Depreciation and amortization expense $355 $302 Capital expenditures $572 $539 Calculation of EBIT and EBITDA (non-GAAP measures)(1) UNAUDITED Three Months Ended --------------------------- June 30, March 31, -------- --------- 2009 2008 2009 ---- ---- ---- $122 $551 $284 Income before income taxes Litigation settlement(2) - 62 - Interest expense 34 17 35 --- --- --- Earnings before interest expense and taxes (EBIT) 156 630 319 Depreciation and amortization expense 182 155 173 --- --- --- Earnings before interest expense, taxes, depreciation and amortization (EBITDA) $338 $785 $492 ==== ==== ==== (1) EBIT and EBITDA (as defined in the calculations above) are non-GAAP measurements.
