RIG
$12.71
Transocean
$.35
2.83%
Earnings Details
2nd Quarter June 2018
Monday, July 30, 2018 4:17:00 PM
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Summary

Transocean Beats

Transocean (RIG) reported a 2nd Quarter June 2018 loss of $0.04 per share on revenue of $790.0 million. The consensus estimate was a loss of $0.17 per share on revenue of $754.9 million. The Earnings Whisper number was for a loss of $0.15 per share. Revenue grew 5.2% on a year-over-year basis.

Transocean Ltd is an international provider of offshore contract drilling services for oil and gas wells. The Company has two operating segments; contract drilling services and drilling management services.

Results
Reported Earnings
($0.04)
Earnings Whisper
($0.15)
Consensus Estimate
($0.17)
Reported Revenue
$790.0 Mil
Revenue Estimate
$754.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Transocean Ltd. Reports Second Quarter 2018 Results

  • Total contract drilling revenues were $790 million, compared with $664 million in the first quarter of 2018;
  • Revenue efficiency(1) was 97.4 percent, compared with 91.5 percent in the prior quarter;
  • Operating and maintenance expense was $431 million, compared with $424 million in the prior period;
  • Net loss attributable to controlling interest was $1.135 billion, $2.46 per diluted share, compared with net loss attributable to controlling interest of $210 million, $0.48 per diluted share, in the first quarter of 2018;
  • Adjusted net loss was $18 million, $0.04 per diluted share, excluding $1.117 billion of net unfavorable items. This compares with adjusted net loss of $210 million, $0.48 per diluted share, in the prior quarter;
  • During the second quarter, the company acquired a 33% interest in the newbuild, harsh environment semisubmersible Transocean Norge (formerly the West Rigel) through a joint venture with Hayfin Capital Management LLP (“Hayfin”); and
  • Contract backlog was $11.7 billion as of the July 2018 Fleet Status Report.

STEINHAUSEN, Switzerland, July 30, 2018 (GLOBE NEWSWIRE) -- Transocean Ltd. (NYSE: RIG) today reported net loss attributable to controlling interest of $1.135 billion, $2.46 per diluted share, for the three months ended June 30, 2018.

Second quarter 2018 results included net unfavorable items of $1.117 billion, or $2.42 per diluted share, as follows:

  • $548 million, $1.18 per diluted share, loss on impairment of three floaters previously announced for retirement;
  • $463 million, $1.00 per diluted share, associated with a goodwill impairment charge;
  • $91 million, $0.20 per diluted share, in discrete tax expense;
  • $11 million, $0.03 per diluted share, in restructuring charges;
  • $3 million, $0.01 per diluted share, loss on impairment of the deepwater floater asset group; and
  • $1 million loss related to the early retirement of debt, offset by gain on disposal of assets.

After consideration of these net unfavorable items, second quarter 2018 adjusted net loss was $18 million, or $0.04 per diluted share.

Contract drilling revenues for the three months ended June 30, 2018, sequentially increased $126 million to $790 million. The increase was primarily due to a full quarter’s contribution from the four, CAT-D harsh environment semisubmersibles acquired from Songa in January 2018 and the newbuild ultra-deepwater drillship, Deepwater Poseidon, that commenced operations in February 2018. The second quarter was also favorably impacted by higher revenue efficiency and utilization on the company’s ultra-deepwater fleet.

Contract drilling revenues included customer early termination fees of $37 million on the Discoverer Clear Leader, a decrease of $1 million from the prior quarter. The second quarter also included a non-cash revenue reduction of $30 million from contract intangible amortization associated with the Songa acquisition.

Operating and maintenance expense was $431 million, compared with $424 million in the prior quarter. The second quarter included a full quarter’s activity from both the Songa rigs and the newbuild drillship, Deepwater Poseidon.

General and administrative expense was $52 million, compared with $47 million in the first quarter of 2018. The second quarter was impacted by un-forecasted charges, including $7 million related to the early retirement of certain personnel.

Depreciation expense was $211 million, up from $202 million in the first quarter of 2018. The increase was primarily due to the acquisition of Songa.

Interest expense, net of amounts capitalized, was $148 million, compared with $147 million in the prior quarter. Capitalized interest sequentially decreased $6 million to $7 million primarily due to the commencement of operations of the Deepwater Poseidon. Interest income was $13 million, compared with $12 million in the prior quarter.

The Effective Tax Rate(2) was (8.0) percent, up from (42.2) percent in the prior quarter. The increase was primarily due to impairment losses in jurisdictions with no tax benefit. Also, the second quarter of 2018 included estimated transition taxes associated with the U.S. tax reform (“2017 Tax Act”). This estimate was partly offset by changes in the utilization of U.S. foreign tax credits. The Effective Tax Rate excluding discrete items(3) was 22.0 percent, compared with (42.8) percent in the previous quarter.

Cash flows from operating activities were $3 million, compared with $103 million in the prior quarter. The decrease was largely associated with increased interest payments, as well as income tax payments partly related to the aforementioned transition taxes.

Second quarter 2018 capital expenditures were $39 million, compared with $53 million in the previous quarter. Additionally, during the second quarter, the company acquired a 33% interest in the newbuild, harsh environment semisubmersible Transocean Norge through a joint venture with Hayfin, with an initial investment of $91 million.

“Operationally, we delivered another solid quarter, with an Adjusted Normalized EBITDA margin of 40% on Adjusted Normalized Revenue of $783 million, representing a 21% sequential increase,” said President and Chief Executive Officer, Jeremy Thigpen. “This performance was driven by strong revenue efficiency, exceeding 97 percent, and increased activity, as the second quarter marked the first full quarter of operations for all five of our newest ultra-deepwater drillships, as well as the four recently acquired CAT-D harsh environment semisubmersibles from Songa.”

“During the quarter, we continued to high-grade our fleet, acquiring a 33% interest in the newbuild, harsh environment semisubmersible Transocean Norge, while retiring four, less competitive floaters.”

“We also further strengthened our balance sheet and extended our liquidity runway by negotiating a new $1 billion revolving credit facility extending into 2023, refinancing debt associated with the Songa acquisition, and executing on a secured facility for the Deepwater Pontus.”

Thigpen concluded: “Our industry-leading floater fleet, consistently strong operating performance, solid liquidity position, and enviable backlog, which includes several new contracts approximating $400 million, positions us well at a time when our optimism about the market’s recovery is growing.”

Non-GAAP Financial Measures

We present our operating results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). We believe certain financial measures, such as Adjusted Net Income, EBITDA, Adjusted EBITDA and Adjusted Normalized EBITDA, which are non-GAAP measures, provide users of our financial statements with supplemental information that may be useful in evaluating our operating performance. We believe that such non-GAAP measures, when read in conjunction with our operating results presented under U.S. GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure. Such non-GAAP measures should be considered as a supplement to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.

All non-GAAP measure reconciliations to the most comparative U.S. GAAP measures are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

About Transocean

Transocean is a leading international provider of offshore contract drilling services for oil and gas wells. The company specializes in technically demanding sectors of the global offshore drilling business with a particular focus on ultra-deepwater and harsh environment drilling services, and believes that it operates one of the most versatile offshore drilling fleets in the world.

Transocean owns or has partial ownership interests in, and operates a fleet of 43 mobile offshore drilling units consisting of 24 ultra-deepwater floaters, 12 harsh environment floaters, two deepwater floaters and five midwater floaters. In addition, the company is constructing two ultra-deepwater drillships and one harsh environment semisubmersible that the company has one-third interest. We also continue to operate one high-specification jackup that was under a drilling contract when we sold the rig, and we will continue to operate this jackup until completion or novation of the drilling contract.

For more information about Transocean, please visit: www.deepwater.com.

Conference Call Information

Transocean will conduct a teleconference starting at 9 a.m. EDT, 3 p.m. CEST, on Tuesday, July 31, 2018, to discuss the results. To participate, dial +1 334-323-0522 and refer to conference code 3966625 approximately 10 minutes prior to the scheduled start time.

The teleconference will be simulcast in a listen-only mode at: www.deepwater.com, by selecting Investors, News, and Webcasts. Supplemental materials that may be referenced during the teleconference will be available at: www.deepwater.com, by selecting Investors, Financial Reports.

A replay of the conference call will be available after 12 p.m. EDT, 6 p.m. CEST, on July 31, 2018. The replay, which will be archived for approximately 30 days, can be accessed at +1 719-457-0820, passcode 3966625 and PIN 7706. The replay will also be available on the company’s website.

Forward-Looking Statements

The statements described in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements contain words such as "possible," "intend," "will," "if," "expect," or other similar expressions. Forward-looking statements are based on management’s current expectations and assumptions, and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, estimated duration of customer contracts, contract dayrate amounts, future contract commencement dates and locations, planned shipyard projects and other out-of-service time, sales of drilling units, timing of the company’s newbuild deliveries, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the future prices of oil and gas, the intention to scrap certain drilling rigs, the results of our final accounting for the periods presented in this press release, the success of our business following the acquisition of Songa Offshore SE (“Songa”), the ability to successfully integrate the Transocean and Songa businesses and other factors, including those and other risks discussed in the company's most recent Annual Report on Form 10-K for the year ended December 31, 2017, and in the company's other filings with the SEC, which are available free of charge on the SEC's website at: www.sec.gov. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur, or which we become aware of, after the date hereof, except as otherwise may be required by law. All non-GAAP financial measure reconciliations to the most comparative GAAP measure are displayed in quantitative schedules on the company’s website at: www.deepwater.com.

This press release, or referenced documents, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and do not constitute an offering prospectus within the meaning of article 652a or article 1156 of the Swiss Code of Obligations. Investors must rely on their own evaluation of Transocean and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of Transocean.

Notes

(1) Revenue efficiency is defined as actual contract drilling revenues for the measurement period divided by the maximum revenue calculated for the measurement period, expressed as a percentage. Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the measurement period, excluding amounts related to incentive provisions. See the accompanying schedule entitled “Revenue Efficiency.”

(2) Effective Tax Rate is defined as income tax expense for continuing operations divided by income from continuing operations before income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”

(3) Effective Tax Rate, excluding discrete items, is defined as income tax expense for continuing operations, excluding various discrete items (such as changes in estimates and tax on items excluded from income before income taxes), divided by income from continuing operations before income tax expense, excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”   

Analyst Contacts:
Bradley Alexander
+1 713-232-7515

Diane Vento
+1 713-232-8015

Media Contact:
Pam Easton
+1 713-232-7647

 
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share data)
(Unaudited)


              
  Three months ended  Six months ended  
  June 30 June 30 
  2018  2017  2018  2017  
              
Contract drilling revenues (1) $ 790  $ 705  $ 1,454  $ 1,443  
Other revenues   —    46    —    93  
    790    751    1,454    1,536  
Costs and expenses             
Operating and maintenance   431    331    855    678  
Depreciation   211    219    413    451  
General and administrative   52    35    99    74  
    694    585    1,367    1,203  
Loss on impairment   (1,014)   (113)   (1,014)   (113) 
Gain (loss) on disposal of assets, net   1    (1,595)   6    (1,593) 
Operating loss   (917)   (1,542)   (921)   (1,373) 
              
Other income (expense), net             
Interest income   13    7    25    13  
Interest expense, net of amounts capitalized   (148)   (129)   (295)   (256) 
Loss on retirement of debt   (2)   (48)   (2)   (48) 
Other, net   —    (4)   (10)   3  
    (137)   (174)   (282)   (288) 
Loss before income tax expense (benefit)   (1,054)   (1,716)   (1,203)   (1,661) 
Income tax expense (benefit)   85    (37)   148    (77) 
              
Net loss   (1,139)   (1,679)   (1,351)   (1,584) 
Net income (loss) attributable to noncontrolling interest   (4)   11    (6)   15  
Net loss attributable to controlling interest $ (1,135) $ (1,690) $ (1,345) $ (1,599) 
              
Loss per share             
Basic $ (2.46) $ (4.32) $ (2.99) $ (4.09) 
Diluted $ (2.46) $ (4.32) $ (2.99) $ (4.09) 
              
Weighted-average shares outstanding              
Basic   462    391    450    391  
Diluted   462    391    450    391  

___________________________________

(1) Contract drilling revenues, in the three and six months ended June 30, 2018, includes revenues of (a) $37 million and $75 million, respectively, resulting from contract early terminations and cancellations, (b) $25 million and $51 million, respectively, from customer reimbursements and (c) a reduction of $30 million and $49 million, respectively, resulting from the amortization of contract intangible assets.



 
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)


        
  June 30 December 31 
  2018  2017  
        
Assets       
Cash and cash equivalents $ 2,506  $ 2,519  
Short-term investments   —    450  
Accounts receivable, net of allowance for doubtful accounts
of less than $1 at June 30, 2018 and December 31, 2017
   619    596  
Materials and supplies, net of allowance for obsolescence
of $145 and $141 at June 30, 2018 and December 31, 2017, respectively
   414    418  
Restricted cash accounts and investments   490    466  
Other current assets   188    157  
Total current assets   4,217    4,606  
        
Property and equipment   24,236    22,693  
Less accumulated depreciation   (5,278)   (5,291) 
Property and equipment, net   18,958    17,402  
Contract intangible assets   583    —  
Deferred income taxes, net   44    47  
Other assets   444    355  
Total assets $ 24,246  $ 22,410  
        
Liabilities and equity       
Accounts payable $ 163  $ 201  
Accrued income taxes   76    79  
Debt due within one year   1,816    250  
Other current liabilities   771    839  
Total current liabilities   2,826    1,369  
        
Long-term debt   7,814    7,146  
Deferred income taxes, net   72    44  
Other long-term liabilities   1,172    1,082  
Total long-term liabilities   9,058    8,272  
        
Commitments and contingencies       
Redeemable noncontrolling interest   —    58  
        
Shares, CHF 0.10 par value, 490,568,452 authorized, 143,771,173 conditionally authorized, 462,864,563 issued and 461,862,248  outstanding at June 30, 2018, and 417,060,033 authorized, 143,783,041 conditionally authorized, 394,801,990 issued and 391,237,308 outstanding at December 31, 2017   44    37  
Additional paid-in capital   12,022    11,031  
Retained earnings   584    1,929  
Accumulated other comprehensive loss   (291)   (290) 
Total controlling interest shareholders’ equity   12,359    12,707  
Noncontrolling interest   3    4  
Total equity   12,362    12,711  
Total liabilities and equity $ 24,246  $ 22,410  




 
TRANSOCEAN LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)


        
  Six months ended  
  June 30 
  2018  2017  
Cash flows from operating activities       
Net loss $ (1,351) $ (1,584) 
Adjustments to reconcile to net cash provided by operating activities:       
Contract intangible asset amortization   49    —  
Depreciation   413    451  
Share-based compensation expense   28    21  
Loss on impairment   1,014    113  
(Gain) loss on disposal of assets, net   (6)   1,593  
Loss on retirement of debt   2    48  
Deferred income tax expense (benefit)   46    (39) 
Other, net   5    18  
Changes in deferred revenues, net   (72)   (104) 
Changes in deferred costs, net   7    28  
Changes in other operating assets and liabilities, net   (29)   (1) 
Net cash provided by operating activities   106    544  
        
Cash flows from investing activities       
Capital expenditures   (92)   (258) 
Proceeds from disposal of assets, net   23    329  
Unrestricted and restricted cash acquired in business combination   131    —  
Investment in unconsolidated affiliates   (106)   —  
Deposits into short-term investments   (50)   —  
Proceeds from maturities of short-term investments   500    —  
Other, net   —    (15) 
Net cash provided by investing activities   406    56  
        
Cash flows from financing activities       
Proceeds from issuance of debt, net of issue costs   —    403  
Repayments of debt   (388)   (1,533) 
Proceeds from investments restricted for financing activities   26    50  
Payments to terminate derivative instruments   (92)   —  
Other, net   (26)   (3) 
Net cash used in financing activities   (480)   (1,083) 
        
Net increase (decrease) in unrestricted and restricted cash and cash equivalents   32    (483) 
Unrestricted and restricted cash and cash equivalents at beginning of period   2,975    3,433  
Unrestricted and restricted cash and cash equivalents at end of period $ 3,007  $ 2,950  




                 
TRANSOCEAN LTD. AND SUBSIDIARIES 
FLEET OPERATING STATISTICS 
                 
                 
  Three months ended  Six months ended  
  June 30 March 31, June 30 June 30 June 30 
Contract Drilling Revenues (1) (in millions) 2018 2018 2017 2018 2017 
Contract drilling revenues                
Ultra-deepwater floaters $ 470 $ 378 $ 497 $ 848 $ 1,002 
Harsh environment floaters   252   204   104   456   226 
Deepwater floaters   35   35   36   70   71 
Midwater floaters   18   20   18   38   31 
High-specification jackups   15   27   50   42   113 
Total contract drilling revenues   790   664   705   1,454   1,443 
                 
Other revenues                
Customer early termination fees   —   —   40   —   77 
Customer reimbursement revenues and other   —   —   6   —   16 
Total other revenues   —   —   46   —   93 
Total revenues $ 790 $ 664 $ 751 $ 1,454 $ 1,536 


                 
                 
  Three months ended  Six months ended  
  June 30 March 31, June 30 June 30 June 30 
Average Daily Revenue (2) 2018 2018 2017 2018 2017 
Ultra-deepwater floaters $ 377,600 $ 381,600 $ 482,200 $ 379,300 $ 500,500 
Harsh environment floaters   304,600   279,100   262,200   292,700   269,900 
Deepwater floaters   189,800   193,400   199,000   191,600   195,500 
Midwater floaters   99,100   111,500   100,300   105,300   96,700 
High-specification jackups   150,600   150,000   142,800   150,200   141,900 
Total drilling fleet $ 308,300   287,600 $ 329,900 $ 298,600 $ 333,800 


                  
                  
   Three months ended  Six months ended  
   June 30 March 31, June 30 June 30 June 30 
Utilization (3)  2018 2018 2017 2018 2017 
Ultra-deepwater floaters   47  35  38  41  37% 
Harsh environment floaters   81  84  62  82  66% 
Deepwater floaters   100  100  67  100  67% 
Midwater floaters   35  38  33  36  30% 
High-specification jackups   95  97  54  96  52% 
Total drilling fleet   57  52  44  55  44% 


                 
                 
   Three months ended  Six months ended
   June 30 March 31, June 30 June 30 June 30
Revenue Efficiency (4)  2018 2018 2017 2018 2017
Ultra-deepwater floaters   99.7  88.3  97.1  94.4  97.5%
Harsh environment floaters   94.5  95.2  98.4  94.8  97.6%
Deepwater floaters   92.3  93.0  95.6  92.7  94.1%
Midwater floaters   99.1  96.6  98.8  97.8  95.4%
High-specification jackups   99.7  99.4  98.7  99.5  101.6%
Total drilling fleet   97.4  91.5  97.4  94.7  97.6%
                 
                 
(1) Contract drilling revenues, in the three and six months ended June 30, 2018, includes revenues of (a) $37 million and $75 million, respectively, resulting from
contract early terminations and cancellations, (b) $25 million and $51 million, respectively, from customer reimbursements and (c) a reduction of $30 million and
$49 million, respectively, resulting from the amortization of contract intangible assets.
        
(2) Average daily revenue is defined as contract drilling revenues earned per operating day. An operating day is defined as a calendar day during which a rig
is contracted to earn a dayrate during the firm contract period after commencement of operations.
                 
(3) Rig utilization is defined as the total number of operating days divided by the total number of available rig calendar days in the measurement period, expressed
as a percentage.
                 
(4) Revenue efficiency is defined as actual contract drilling revenues for the measurement period divided by the maximum revenue calculation for the measurement
period, expressed as a percentage.  Maximum revenue is defined as the greatest amount of contract drilling revenues the drilling unit could earn for the
measurement period, excluding amounts related to incentive provisions.
                 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

                       
TRANSOCEAN LTD. AND SUBSIDIARIES 
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS 
ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE 
(In millions, except per share data) 
                       
                       
          YTD QTD YTD 
          06/30/18 06/30/18 03/31/18 
Adjusted Net Loss                      
Net loss attributable to controlling interest, as reported             $ (1,345) $ (1,135) $ (210) 
Acquisition and restructuring costs               18    11    7  
Loss on impairment of goodwill and other assets               1,014    1,014    —  
Gain on disposal of assets, net               (7)   (1)   (6) 
Loss on retirement of debt               2    2    —  
Discrete tax items and other, net               90    91    (1) 
Net loss, as adjusted             $ (228) $ (18) $ (210) 
                       
Adjusted Diluted Loss Per Share:                      
Diluted loss per share, as reported             $ (2.99) $ (2.46) $ (0.48) 
Acquisition and restructuring costs               0.05    0.03    0.02  
Loss on impairment of goodwill and other assets               2.26    2.19    —  
Gain on disposal of assets, net               (0.02)   —    (0.02) 
Loss on retirement of debt               —    —    —  
Discrete tax items and other, net               0.20    0.20    —  
Diluted loss per share, as adjusted             $ (0.50) $ (0.04) $ (0.48) 


                       
  YTD QTD YTD QTD YTD QTD YTD 
  12/31/17 12/31/17 09/30/17 09/30/17 06/30/17 06/30/17 03/31/17 
Adjusted Net Income (Loss)                      
Net income (loss) attributable to controlling interest, as reported $ (3,127) $ (111) $ (3,016) $ (1,417) $ (1,599) $ (1,690) $ 91  
Litigation matters   (8)   (1)   (7)   —    (7)   1    (8) 
Acquisition and restructuring costs   6    1    5    3    2    2    —  
Loss on impairment of assets   1,497    (2)   1,499    1,386    113    113    —  
(Gain) loss on disposal of assets, net   1,590    (6)   1,596    1    1,595    1,597    (2) 
Loss on retirement of debt   55    6    49    1    48    48    —  
Discrete tax items and other, net   (37)   20    (57)   90    (147)   (70)   (77) 
Net income (loss), as adjusted $ (24) $ (93) $ 69  $ 64  $ 5  $ 1  $ 4  
                       
Adjusted Diluted Earnings (Loss) Per Share:                      
Diluted earnings (loss) per share, as reported $ (8.00) $ (0.28) $ (7.72) $ (3.62) $ (4.09) $ (4.32) $ 0.23  
Litigation matters   (0.02)   —    (0.02)   —    (0.02)   —    (0.02) 
Acquisition and restructuring costs   0.01    —    0.01    0.01    —    —    —  
Loss on impairment of assets   3.84    —    3.84    3.54    0.29    0.29    —  
(Gain) loss on disposal of assets, net   4.07    (0.01)   4.08    —    4.08    4.08    —  
Loss on retirement of debt   0.14    0.01    0.12    —    0.12    0.12    —  
Discrete tax items and other, net   (0.10)   0.04    (0.13)   0.23    (0.37)   (0.17)   (0.20) 
Diluted earnings (loss) per share, as adjusted $ (0.06) $ (0.24) $ 0.18  $ 0.16  $ 0.01  $ —  $ 0.01  




                      
TRANSOCEAN LTD. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
EARNINGS BEFORE INTEREST, TAXES AND DEPRECIATION AND RELATED MARGINS
(In millions, except percentages)
                      
                      
          YTD QTD YTD
          06/30/18 06/30/18 03/31/18
                      
Contract drilling revenues             $ 1,454  $ 790  $ 664 
Drilling contract termination fees               (75)   (37)   (38)
Contract intangible amortization               49    30    19 
Adjusted Normalized Revenues             $ 1,428  $ 783  $ 645 
                      
Net loss             $ (1,351) $ (1,139) $ (212)
Interest expense, net of interest income               270    135    135 
Income tax expense               148    85    63 
Depreciation expense               413    211    202 
Contract intangible amortization               49    30    19 
EBITDA               (471)   (678)   207 
                      
Acquisition and restructuring costs               18    11    7 
Loss on impairment of goodwill and other assets               1,014    1,014    — 
Gain loss on disposal of assets, net               (7)   (1)   (6)
Loss on retirement of debt               2    2    — 
Adjusted EBITDA               556    348    208 
                      
Drilling contract termination fees               (75)   (37)   (38)
Adjusted Normalized EBITDA             $ 481  $ 311  $ 170 
                      
EBITDA margin              (32)%  (86)%  31%
Adjusted EBITDA margin              38%  44%  31%
Adjusted Normalized EBITDA margin              34%  40%  26%


                      
  YTD QTD YTD QTD YTD QTD YTD
  12/31/17 12/31/17 09/30/17 09/30/17 06/30/17 06/30/17 03/31/17
                      
Operating  revenues $ 2,973  $ 629  $ 2,344  $ 808  $ 1,536  $ 751  $ 785 
Drilling contract termination fees   (201)   (25)   (176)   (99)   (77)   (40)   (37)
Adjusted Normalized Revenues $ 2,772  $ 604  $ 2,168  $ 709  $ 1,459  $ 711  $ 748 
                      
Net income (loss) $ (3,097) $ (102) $ (2,995) $ (1,411) $ (1,584) $ (1,679) $ 95 
Interest expense, net of interest income   448    114    334    91    243    122    121 
Income tax expense (benefit)   94    (9)   103    180    (77)   (37)   (40)
Depreciation expense   832    184    648    197    451    219    232 
EBITDA   (1,723)   187    (1,910)   (943)   (967)   (1,375)   408 
                      
Litigation matters   (8)   (2)   (6)   —    (6)   2    (8)
Acquisition and restructuring costs   7    1    6    4    2    2    — 
Loss on impairment of assets   1,498    —    1,498    1,385    113    113    — 
(Gain) loss on disposal of assets, net   1,590    (6)   1,596    1    1,595    1,597    (2)
Loss on retirement of debt   55    6    49    1    48    48    — 
Adjusted EBITDA   1,419    186    1,233    448    785    387    398 
                      
Drilling contract termination fees   (201)   (25)   (176)   (99)   (77)   (40)   (37)
Adjusted Normalized EBITDA $ 1,218  $ 161  $ 1,057  $ 349  $ 708  $ 347  $ 361 
                      
EBITDA margin   (58)%  30 %  (81)%  (117)%  (63)%  (183)% 52%
Adjusted EBITDA margin   48 %  30 %  53 %  55 %  51 %  52 % 51%
Adjusted Normalized EBITDA margin   44 %  27 %  49 %  49 %  49 %  49 % 48%


                 
                 
TRANSOCEAN LTD. AND SUBSIDIARIES 
SUPPLEMENTAL EFFECTIVE TAX RATE ANALYSIS 
(In millions, except tax rates) 
                 
                 
  Three months ended  Six months ended 
  June 30 March 31, June 30 June 30 June 30 
  2018  2018  2017  2018  2017  
Income (loss) before income taxes $ (1,054) $ (149) $ (1,716) $ (1,203) $ (1,661) 
Litigation matters   —    —    2    —    (6) 
Acquisition and restructuring costs   11    7    2    18    2  
Loss on impairment of goodwill and other assets   1,014    —    113    1,014    113  
(Gain) loss on disposal of assets, net   (1)   (6)   1,597    (7)   1,595  
Loss on retirement of debt   2    —    48    2    48  
Adjusted income (loss) before income taxes $ (28) $ (148) $ 46  $ (176) $ 91  
                 
Income tax expense (benefit) $ 85  $ 63  $ (37) $ 148  $ (77) 
Litigation matters   —    —    1    —    1  
Acquisition and restructuring costs   —    —    —    —    —  
Loss on impairment of goodwill and other assets   —    —    —    —    —  
(Gain) loss on disposal of assets, net   —    —    —    —    —  
Changes in estimates (1)   (91)   1    70    (90)   147  
Adjusted income tax expense (benefit) (2) $ (6) $ 64  $ 34  $ 58  $ 71  
                 
Effective Tax Rate (3)   (8.0)  (42.2)  2.2   (12.3)  4.7 %
                 
Effective Tax Rate, excluding discrete items (4)   22.0   (42.8)  74.0   (32.5)  78.0 %
                 
                 
(1) Our estimates change as we file tax returns, settle disputes with tax authorities or become aware of other events and include changes in 
(a) deferred taxes, (b) valuation allowances on deferred taxes and (c) other tax liabilities. 
                 
(2) The three months ended June 30, 2018 includes $18 million of additional tax benefit reflecting the catch-up effect of a decrease 
in the annual effective tax rate from the previous quarter estimate. 
                 
(3) Our effective tax rate is calculated as income tax expense divided by income before income taxes. 
                 
(4) Our effective tax rate, excluding discrete items, is calculated as income tax expense, excluding various discrete items (such as changes 
in estimates and tax on items excluded from income before income taxes), divided by income before income tax expense, excluding 
gains and losses on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate. 
                 

 

Source: Transocean Ltd.