UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 24, 2010 (February 24, 2010)

 

 

TRANSOCEAN LTD.

(Exact name of registrant as specified in its charter)

 

 

 

Switzerland		000-53533		98-0599916
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

Blandonnet International Business Center Building F, 7th Floor Chemin de Blandonnet 2 Vernier, Switzerland		CH-1214
(Address of principal executive offices)		(zip code)

Registrant’s telephone number, including area code: +41 (22) 930-9000

 

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

Our press release dated February 24, 2010, concerning financial results for the fourth quarter and fiscal year ended December 31, 2009, furnished as Exhibit 99.1 to this report, is incorporated by reference herein.

 

Item 7.01.

Regulation FD Disclosure.

Slide Presentation

On February 24, 2010, we are posting the slide presentation furnished as Exhibit 99.2 to this report on our website at www.deepwater.com. Exhibit 99.2 is incorporated in this Item 7.01 by reference.

Statements contained within the slide presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include but are not limited to projections relating to out-of-service forecasts, operating and maintenance costs trends, contract backlog, free cash flow backlog and debt maturities and other statements that are not historical facts. Such statements are subject to numerous risks, uncertainties and assumptions, including but not limited to, uncertainties relating to the level of activity in offshore oil and gas exploration and development, exploration success by producers, oil and gas prices, rig demand and capacity, drilling industry market conditions, possible delays or cancellation of drilling contracts, work stoppages, operational or other downtime, the Company’s ability to enter into and the terms of future contracts, the availability of qualified personnel, labor relations, future financial results, operating hazards, political and other uncertainties inherent in non-U.S. operations (including exchange and currency fluctuations), war, terrorism, natural disaster and cancellation or unavailability of insurance coverage, the impact of governmental laws and regulations, the adequacy of sources of liquidity, the effect of litigation and contingencies and other factors discussed in the Company’s most recently filed Form 10-K, and in the Company’s other filings with the Securities and Exchange Commission (“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 should underlying assumptions prove incorrect, actual results may vary materially from those indicated. We caution investors not to 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, except as required by law.

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Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

The exhibits to this report furnished pursuant to items 2.02, and 7.01 are as follows:

 

Exhibit No.		Description
99.1		Transocean Ltd.. Release Reporting Fourth Quarter and Full-Year 2009 Financial Results
99.2		Slide Presentation

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				TRANSOCEAN LTD.
Date: February 24, 2010				By		/s/    MARGARET C. FITZGERALD
						Margaret C. Fitzgerald
						Associate General Counsel

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Index to Exhibits

 

Exhibit Number		Description
99.1		Transocean Ltd.. Release Reporting Fourth Quarter and Full-Year 2009 Financial Results
99.2		Slide Presentation

Exhibit 99.1

 

Analyst Contact:		Gregory S. Panagos		News Release
		+1 713-232-7551
Media Contact:		Guy A. Cantwell
		+1 713-232-7647		FOR RELEASE: February 24, 2010

TRANSOCEAN LTD. REPORTS

FOURTH QUARTER AND FULL-YEAR 2009 RESULTS

ZUG, SWITZERLAND—Transocean Ltd. (NYSE: RIG) today reported net income attributable to controlling interest for the three months ended December 31, 2009 of $723 million, or $2.24 per diluted share, on revenues of $2.733 billion. The results compare to net income attributable to controlling interest of $754 million, or $2.35 per diluted share, on revenues of $3.270 billion, for the three months ended December 31, 2008.

Fourth quarter 2009 results were favorably impacted by certain net additions, after tax, totaling $10 million, or $0.03 per diluted share, as follows:

 

•

$34 million for the gain on sale of an interest in a joint venture,

 

•

$24 million of income related to the settlement of litigation matters,

 

•

Partially offset by $48 million of net charges primarily related to discrete tax items, the retirement of debt and adjustments associated with the GlobalSantaFe merger.

For the year ended December 31, 2009, net income attributable to controlling interest totaled $3.181 billion, or $9.84 per diluted share, on revenues of $11.556 billion. Net income for the year ended December 31, 2009 included after-tax charges of $498 million, or $1.55 per diluted share, resulting primarily from the fourth quarter items listed above, in addition to charges earlier this year of $334 million on impairments of intangible assets and two rigs held for sale, $132 million on litigation matters and $42 million of net charges primarily related to discrete tax items, the retirement of debt and adjustments associated with the GlobalSantaFe merger.

For 2008, net income attributable to controlling interest was $4.031 billion, or $12.53 per diluted share, on revenues of $12.674 billion. Net income for the year ended December 31, 2008 included after-tax charges of $401 million, or $1.24 per diluted share, primarily related to impairments of goodwill and other intangible assets, write-downs of two rigs held for sale and additional depreciation, depletion and amortization expense resulting from an adjustment to the useful lives of certain rigs acquired in the GlobalSantaFe merger.

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Operations Quarterly Review

Revenues for the three months ended December 31, 2009 decreased to $2.733 billion, compared to revenues of $2.823 billion during the three months ended September 30, 2009. The decrease was primarily due to a $219 million reduction in revenue resulting from the stacking of rigs and reduced revenue efficiency, partially offset by a $136 million increase in revenue due to the commencement of operations of three of our newbuild drillships and improvement in average dayrates for floaters.

Operating and maintenance expenses totaled $1.296 billion for the fourth quarter 2009, down seven percent compared to $1.396 billion for the prior quarter. The $100 million quarter-to-quarter reduction in operating and maintenance costs occurred as a result of $137 million in litigation settlement expenses in the third quarter 2009 and a $24 million favorable impact from litigation settlements in the fourth quarter 2009. These items were partially offset by shipyard extensions, increases in maintenance projects and commencement of operations of our newbuilds. In addition, the fourth quarter was favorably impacted by $43 million of reduced costs from stacked rigs and negatively impacted by unplanned costs of $28 million due to an operational incident affecting a jackup.

Depreciation, depletion and amortization expense was $382 million in the fourth quarter 2009, up four percent versus $367 million for the third quarter 2009. The increase was due to the impact on depreciation in the fourth quarter of 2009 from the commencement of operations of the newbuild units, compared to the prior quarter.

General and administrative expenses were $46 million for the fourth quarter 2009 compared to $54 million in the prior quarter. The $8 million decrease was due, in part, to reduced year-end accruals related to one-time personnel expenses.

Liquidity and Interest Expense

Interest expense, net of amounts capitalized for the fourth quarter 2009, increased to $119 million compared to $115 million in the third quarter 2009. The increase was due to the impact of two months of interest expense in the third quarter 2009 compared to the full quarter of interest expense in the fourth quarter 2009 for the Petrobras 10000 capital lease. As of December 31, 2009, total debt was $11.7 billion, compared to $11.9 billion as of September 30, 2009.

Cash flow from operating activities decreased to $1.175 billion for the fourth quarter 2009 compared to $1.406 billion for the third quarter 2009. For the full year 2009, cash flow from operating activities totaled $5.598 billion compared to $4.959 billion for the full year 2008.

Effective Tax Rate

Transocean’s Annual Effective Tax Rate⁽¹⁾, which excludes various discrete items, for the fourth quarter 2009 and the full year ended December 31, 2009 was 17.4 percent and 16.0 percent, respectively. The Effective Tax Rate⁽²⁾ for the fourth quarter 2009 and the full year ended December 31, 2009 was 20.1 percent and 19.2 percent, respectively. Transocean’s Effective Tax Rate reflects the impact of changes in estimates as well as the impact of impairments.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. EST, 4:00 p.m. Swiss time, on February 24, 2010. To participate, dial +1 913-312-1377 and refer to confirmation code 5179649 approximately five to 10 minutes prior to the scheduled start time of the call.

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In addition, the conference call will be simultaneously broadcast over the Internet in a listen-only mode and can be accessed by logging onto Transocean’s website at www.deepwater.com and selecting “Investor Relations.” A file containing five charts to be discussed during the conference call, titled “4Q09 Charts,” has been posted to Transocean’s website and can also be found by selecting “Investor Relations/Quarterly Toolkit.” The conference call may also be accessed via the Internet at www.CompanyBoardroom.com by typing in Transocean’s New York Stock Exchange trading symbol, “RIG.”

A telephonic replay of the conference call should be available after 1:00 p.m. EST, 7:00 p.m. Swiss time, on February 24, and can be accessed by dialing +1 719-457-0820 and referring to the passcode 5179649. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced Worldwide Web addresses.

Transocean is the world’s largest offshore drilling contractor and the leading provider of drilling management services worldwide. With a fleet of 138 mobile offshore drilling units plus five announced ultra-deepwater newbuild units, Transocean’s fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. Transocean owns or operates a contract drilling fleet of 44 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 26 Midwater Floaters, 10 High-Specification Jackups, 55 Standard Jackups and other assets utilized in the support of offshore drilling activities worldwide.

 

 

(1)

Annual Effective Tax Rate is defined as income tax expense excluding various discrete items (such as changes in estimates and tax on items excluded from income before income tax expense) divided by income before income tax expense excluding gains 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.”

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

 

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TRANSOCEAN LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

 

		Three months ended December 31,								Twelve months ended December 31,
		2009				2008				2009				2008
						(As adjusted)								(As adjusted)
Operating revenues
Contract drilling revenues		$	2,546			$	2,830			$	10,607			$	10,756
Contract drilling intangible revenues			44				133				281				690
Other revenues			143				307				668				1,228
			2,733				3,270				11,556				12,674
Costs and expenses
Operating and maintenance			1,296				1,408				5,140				5,355
Depreciation, depletion and amortization			382				396				1,464				1,436
General and administrative			46				59				209				199
			1,724				1,863				6,813				6,990
Loss on impairment			—				(320	)			(334	)			(320	)
Loss on disposal of assets, net			(6	)			(3	)			(9	)			(7	)
Operating income			1,003				1,084				4,400				5,357
Other income (expense), net
Interest income			3				2				5				32
Interest expense, net of amounts capitalized			(119	)			(167	)			(484	)			(640	)
Loss on retirement of debt			(12	)			(3	)			(29	)			(3	)
Other, net			23				49				32				26
			(105	)			(119	)			(476	)			(585	)
Income before income tax expense			898				965				3,924				4,772
Income tax expense			181				210				754				743
Net income			717				755				3,170				4,029
Net income (loss) attributable to noncontrolling interest			(6	)			1				(11	)			(2	)
Net income attributable to controlling interest		$	723			$	754			$	3,181			$	4,031
Earnings per share
Basic		$	2.24			$	2.36			$	9.87			$	12.63
Diluted		$	2.24			$	2.35			$	9.84			$	12.53
Weighted average shares outstanding
Basic			321				319				320				318
Diluted			322				320				321				321

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TRANSOCEAN LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

 

		December 31,
		2009				2008
						(As adjusted)
Assets
Cash and cash equivalents		$	1,130			$	963
Short-term investments			38				333
Accounts receivable, net
Trade			2,330				2,798
Other			55				66
Materials and supplies, net			462				432
Deferred income taxes, net			104				63
Assets held for sale			186				464
Other current assets			171				230
Total current assets			4,476				5,349
Property and equipment			29,351				25,836
Less accumulated depreciation			6,333				4,975
Property and equipment, net			23,018				20,861
Goodwill			8,134				8,128
Other assets			808				844
Total assets		$	36,436			$	35,182
Liabilities and equity
Accounts payable		$	780			$	914
Accrued income taxes			240				317
Debt due within one year			1,868				664
Other current liabilities			730				806
Total current liabilities			3,618				2,701
Long-term debt			9,849				12,893
Deferred income taxes, net			726				666
Other long-term liabilities			1,684				1,755
Total long-term liabilities			12,259				15,314
Commitments and contingencies
Shares, CHF 15.00 par value, 502,852,947 authorized, 167,617,649 conditionally authorized, 335,235,298 issued at December 31, 2009 and 2008; 321,223,882 and 319,262,113 outstanding at December 31, 2009 and 2008, respectively			4,472				4,444
Additional paid-in capital			7,407				7,313
Retained earnings			9,008				5,827
Accumulated other comprehensive loss			(335	)			(420	)
Total controlling interest shareholders’ equity			20,552				17,164
Noncontrolling interest			7				3
Total equity			20,559				17,167
Total liabilities and equity		$	36,436			$	35,182

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TRANSOCEAN LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

		Three months ended December 31,								Years ended December 31
		2009				2008				2009				2008
						(As adjusted)								(As adjusted)
Cash flows from operating activities
Net income		$	717			$	755			$	3,170			$	4,029
Adjustments to reconcile net income to net cash provided by operating activities
Amortization of drilling contract intangibles			(44	)			(133	)			(281	)			(690	)
Depreciation, depletion and amortization			382				396				1,464				1,436
Share-based compensation expense			15				15				81				64
Excess tax benefit from share-based compensation plans			8				1				(2	)			(10	)
Loss on impairment			—				320				334				320
Loss on disposal of assets, net			6				3				9				7
Loss on retirement of debt			12				—				29				3
Amortization of debt issue costs, discounts and premiums, net			49				47				209				176
Deferred income taxes			(37	)			4				13				8
Other, net			(23	)			26				7				41
Deferred revenue, net			97				(11	)			169				11
Deferred expenses, net			—				17				(38	)			(115	)
Changes in operating assets and liabilities			(7	)			(244	)			434				(321	)
Net cash provided by operating activities			1,175				1,196				5,598				4,959
Cash flows from investing activities
Capital expenditures			(857	)			(505	)			(3,052	)			(2,208	)
Proceeds from disposal of assets, net			8				(4	)			18				348
Proceeds from short-term investments			142				45				564				59
Purchases of short-term investments			(1	)			—				(269	)			(408	)
Joint ventures and other investments, net			40				16				45				13
Net cash used in investing activities			(668	)			(448	)			(2,694	)			(2,196	)
Cash flows from financing activities
Change in short-term borrowings, net			(136	)			(684	)			(382	)			(837	)
Proceeds from debt			169				307				514				2,661
Repayments of debt			(288	)			(220	)			(2,871	)			(4,893	)
Payments to shareholders for Reclassification			—				(1	)			—				(1	)
Payments for warrant exercises, net			—				(3	)			(13	)			(7	)
Proceeds from share-based compensation plans, net			1				2				17				51
Excess tax benefit from share-based compensation plans			(8	)			(1	)			2				10
Other, net			(1	)			(14	)			(4	)			(25	)
Net cash used in financing activities			(263	)			(614	)			(2,737	)			(3,041	)
Net increase (decrease) in cash and cash equivalents			244				134				167				(278	)
Cash and cash equivalents at beginning of period			886				829				963				1,241
Cash and cash equivalents at end of period		$	1,130			$	963			$	1,130			$	963

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TRANSOCEAN LTD.

FLEET OPERATING STATISTICS

 

		Operating Revenues ($ Millions) (1)
		Three months ended												Twelve months ended December 31,
		December 31, 2009				September 30, 2009				December 31, 2008				2009				2008
Contract Drilling Revenues
High-Specification Floaters:
Ultra Deepwater Floaters		$	890			$	732			$	673			$	2,997			$	2,456
Deepwater Floaters			449				463				331				1,731				1,355
Harsh Environment Floaters			155				141				164				613				646
Total High-Specification Floaters			1,494				1,336				1,168				5,341				4,457
Midwater Floaters			537				618				797				2,507				2,812
High-Specification Jackups			86				104				146				469				594
Standard Jackups			422				537				709				2,257				2,842
Other Rigs			7				6				10				33				51
Subtotal			2,546				2,602				2,830				10,607				10,756
Contract Intangible Revenue			44				58				133				281				690
Other Revenues
Client Reimbursable Revenues			46				49				51				194				203
Integrated Services and Other			48				53				49				206				186
Drilling Management Services			41				54				194				239				758
Oil and Gas Properties			8				7				13				29				81
Subtotal			143				163				307				668				1,228
Total Company		$	2,733			$	2,823			$	3,270			$	11,556			$	12,674
		Average Dayrates (1)
		Three months ended												Twelve months ended December 31,
		December 31, 2009				September 30, 2009				December 31, 2008				2009				2008
High-Specification Floaters:
Ultra Deepwater Floaters		$	486,200			$	458,500			$	423,600			$	462,700			$	399,200
Deepwater Floaters		$	346,600			$	355,600			$	299,000			$	344,900			$	305,400
Harsh Environment Floaters		$	405,800			$	386,000			$	358,900			$	378,000			$	361,500
Total High-Specification Floaters		$	425,900			$	409,300			$	370,500			$	407,200			$	360,100
Midwater Floaters		$	325,100			$	355,800			$	329,200			$	322,800			$	303,800
High-Specification Jackups		$	175,100			$	161,000			$	169,100			$	166,300			$	174,800
Standard Jackups		$	147,300			$	156,200			$	156,100			$	152,600			$	152,500
Other Rigs		$	72,300			$	73,300			$	37,800			$	54,700			$	46,200
Total Drilling Fleet		$	295,700			$	283,800			$	251,500			$	271,400			$	240,300
		Utilization (1)
		Three months ended												Twelve months ended December 31,
		December 31, 2009				September 30, 2009				December 31, 2008				2009				2008
High-Specification Floaters:
Ultra Deepwater Floaters			91	%			90	%			96	%			92	%			93	%
Deepwater Floaters			88	%			89	%			75	%			86	%			76	%
Harsh Environment Floaters			83	%			80	%			100	%			89	%			98	%
Total High-Specification Floaters			89	%			88	%			88	%			89	%			87	%
Midwater Floaters			69	%			72	%			92	%			79	%			87	%
High-Specification Jackups			53	%			70	%			94	%			77	%			93	%
Standard Jackups			57	%			68	%			90	%			74	%			91	%
Other Rigs			50	%			42	%			99	%			66	%			100	%
Total Drilling Fleet			69	%			75	%			90	%			80	%			90	%

 

(1)

Average daily revenue is defined as contract drilling revenue earned per revenue earning day in the period. A revenue earning day is defined as a day for which a rig earns dayrate after commencement of operations. Utilization is defined as the total actual number of revenue earning days in the period as a percentage of the total number of calendar days in the period for all drilling rigs in our fleet.

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Transocean Ltd. and Subsidiaries

Supplemental Effective Tax Rate Analysis

(In millions)

 

		Three months ended												Twelve months ended
		Dec 31, 2009				Sept 30, 2009				Dec 31, 2008				Dec 31, 2009				Dec 31, 2008
										(As adjusted)								(As adjusted)
Income before income taxes		$	898			$	844			$	965			$	3,924			$	4,772
Add back (subtract):
Litigation matters			(24	)			132				—				108				—
Loss on retirement of debt			12				7				—				29				3
GSF merger related costs			5				4				2				17				6
Income from TODCO tax sharing agreement			(1	)			(11	)			(4	)			(12	)			(18	)
Loss on impairment			—				46				326				334				326
Gain on sale of Sedco 135-D			—				(1	)			—				(2	)			—
Gain on sale of interests in joint ventures			(34	)			—				—				(30	)			—
Change to estimated useful lives of certain GSF rigs			—				—				46				—				46
Bad debt provision related to a customer bankruptcy			—				—				23				—				23
Loss on The Reserve Funds			—				—				—				—				16
Adjusted income before income taxes			856				1,021				1,358				4,368				5,174
Income tax expense			181				138				210				754				743
Add back (subtract):
Loss on impairment			18				—				17				18				17
GSF Merger related costs			—				1				—				2				1
Bad debt provision related to a customer bankruptcy			—				—				6				—				6
Loss on The Reserve Funds			—				—				—				—				2
Changes in estimates (1)			(50	)			28				(14	)			(74	)			(24	)
Adjusted income tax expense (2)		$	149			$	167			$	219			$	700			$	745
Effective Tax Rate (3)			20.1	%			16.4	%			21.8	%			19.2	%			15.6	%
Annual Effective Tax Rate (4)			17.4	%			16.4	%			16.1	%			16.0	%			14.4	%

 

(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 December 31, 2009 include $11 million of additional tax expense (benefit) reflecting the catch-up effect of an increase (decrease) in the annual effective tax rate from the previous quarter estimate.

(3)	Effective Tax Rate is income tax expense divided by income before income taxes.

(4)

Annual Effective Tax Rate is 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 taxes excluding gains and losses on sales and similar items pursuant to the accounting standards for income taxes and estimating the annual effective tax rate.

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