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):May 4, 2011

 

 

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.)

 

10 Chemin de Blandonnet 1214 Vernier, Geneva 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 May 4, 2011, concerning first quarter 2011 financial results, furnished as Exhibit 99.1 to this report, is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
99.1		Transocean Ltd. Release Reporting First Quarter 2011 Financial Results

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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: May 5, 2011		By		/s/ Eric J. Christ
				Eric J. Christ
				Authorized Person

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Index to Exhibits

 

Exhibit Number		Description
99.1		Transocean Ltd. Release Reporting First Quarter 2011 Financial Results

Exhibit 99.1

 

		Transocean Ltd. Investor Relations and Communications Dept.

 

Analyst Contact:		Gregory S. Panagos
+1 713-232-7551
Media Contact:		Guy A. Cantwell		FOR RELEASE: May 4, 2011
+1 713-232-7647

TRANSOCEAN LTD. REPORTS FIRST QUARTER 2011 RESULTS

ZUG, SWITZERLAND— Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported net income attributable to controlling interest of $310 million, or $0.96 per diluted share, for the three months ended March 31, 2011. The results compare to net income attributable to controlling interest of $677 million, or $2.09 per diluted share for the three months ended March 31, 2010.

First quarter 2011 results included the following items, after tax, that resulted in a net positive impact of approximately $139 million, or $0.43 per diluted share:

 

•

$176 million of income from discontinued operations, nearly all of which is from the gain on the sale of the Trident 20,

 

•

$9 million from the gain on the sale of the Transocean Mercury,

 

•

$8 million of net charges related to litigation matters not associated with the Macondo well incident, and

 

•

$38 million of net charges primarily related to discrete tax items.

First quarter 2011 results also included expenses associated with the Macondo well incident of $23 million, $19 million after tax, or $0.06 per diluted share. These expenses were primarily related to increased insurance premiums and legal costs.

Operations Quarterly Review

Revenues for the three months ended March 31, 2011 were $2.144 billion, compared to revenues of $2.127 billion during the three months ended December 31, 2010. First quarter contract drilling revenues were impacted by lower utilization and revenue efficiency. Our Deepwater and Midwater Floater fleets experienced lower utilization due to the stacking of rigs, as well as increased shipyard time related to contract preparation, special periodic surveys and major maintenance projects. Compliance with new well control equipment certification requirements, higher standards for equipment condition and capacity constraints on our vendors contributed to reduced revenue efficiency among our Ultra-Deepwater and Deepwater Floaters. Partially offsetting lower contract drilling revenue was additional revenue from two newbuild rigs commencing operations. Other revenues increased primarily from additional drilling management services activity.

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Operating and maintenance expenses totaled $1.359 billion for the first quarter 2011, up slightly from $1.339 billion for the prior quarter. The change was due to increased drilling management services activity, which was partially offset by reduced rig-related maintenance costs.

Depreciation and amortization expense was $354 million in the first quarter 2011 compared to $381 million in the prior quarter. The $27 million decrease was primarily due to the reduced carrying amounts of our Standard Jackups resulting from the approximately $1 billion asset impairment recognized on that asset group during the fourth quarter 2010.

Liquidity and Interest Expense

Interest expense, net of amounts capitalized for the first quarter 2011, was $145 million, compared to $152 million in the fourth quarter 2010.

Cash flow from operating activities decreased to $390 million for the first quarter 2011 compared to $796 million for the fourth quarter 2010. The decline in cash flow from operations resulted primarily from an increase in working capital.

Effective Tax Rate

Transocean’s Annual Effective Tax Rate⁽¹⁾ for the first quarter 2011, which excludes various discrete items, was 19.3 percent. The Effective Tax Rate⁽²⁾ for the first quarter was 33.1 percent, primarily reflecting the impact of discrete items resulting from changes in estimates.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. EDT, 4:00 p.m. CEST, on May 5, 2011. To participate, dial +1 719-325-2234 and refer to confirmation code 8570996 approximately five to 10 minutes prior to the scheduled start time of the call.

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 four charts to be discussed during the conference call, titled “1Q11 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. EDT, 7:00 p.m. CEST, on May 5, 2011, and can be accessed by dialing +1 719-457-0820 or +1 888-203-1112 and referring to the confirmation code 8570996. Also, a replay will be available through the Internet and can be accessed by visiting either of the above-referenced internet addresses. Both replay options will be available for approximately 30 days.

About Transocean

Transocean is the world’s largest offshore drilling contractor and the leading provider of drilling management services worldwide. With a fleet of 137 mobile offshore drilling units as well as one ultra-deepwater drillship and three high-specification jackups under construction, 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 47 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 25 Midwater Floaters, nine High-Specification Jackups, 53 Standard Jackups and other assets utilized in the support of offshore drilling activities worldwide.

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(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.”

For more information about Transocean, please visit our website at www.deepwater.com.

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TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

 

		Three months ended March 31,
		2011				2010
						(As adjusted)
Operating revenues
Contract drilling revenues		$	1,950			$	2,425
Contract drilling intangible revenues			10				33
Other revenues			184				121
			2,144				2,579
Costs and expenses
Operating and maintenance			1,359				1,186
Depreciation and amortization			354				374
General and administrative			67				63
			1,780				1,623
Gain (loss) on disposal of assets, net			8				(14	)
Operating income			372				942
Other income (expense), net
Interest income			15				5
Interest expense, net of amounts capitalized			(145	)			(132	)
Other, net			3				15
			(127	)			(112	)
Income from continuing operations before income tax expense			245				830
Income tax expense			81				147
Income from continuing operations			164				683
Income from discontinued operations, net of tax			176				2
Net income			340				685
Net income attributable to noncontrolling interest			30				8
Net income attributable to controlling interest		$	310			$	677
Earnings per share-basic
Earnings from continuing operations		$	0.42			$	2.09
Earnings from discontinued operations			0.54				0.01
Earnings per share			0.96				2.10
Earnings per share-diluted
Earnings from continuing operations		$	0.42			$	2.08
Earnings from discontinued operations			0.54				0.01
Earnings per share			0.96				2.09
Weighted-average shares outstanding
Basic			319				321
Diluted			320				322

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TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

 

		March 31, 2011				December 31, 2010
						(As adjusted)
Assets
Cash and cash equivalents		$	3,812			$	3,394
Accounts receivable, net of allowance for doubtful accounts of $33 and $38 at March 31, 2011 and December 31, 2010, respectively			2,161				1,978
Materials and supplies, net of allowance for obsolescence of $70 at March 31, 2011 and December 31, 2010			541				514
Deferred income taxes, net			116				115
Assets held for sale			77				—
Other current assets			197				194
Total current assets			6,904				6,195
Property and equipment			26,819				26,721
Property and equipment of consolidated variable interest entities			2,241				2,214
Less accumulated depreciation			7,887				7,616
Property and equipment, net			21,173				21,319
Goodwill			8,132				8,132
Other assets			1,001				1,165
Total assets		$	37,210			$	36,811
Liabilities and equity
Accounts payable		$	808			$	832
Accrued income taxes			67				109
Debt due within one year			1,965				1,917
Debt of consolidated variable interest entities due within one year			95				95
Other current liabilities			906				883
Total current liabilities			3,841				3,836
Long-term debt			8,361				8,354
Long-term debt of consolidated variable interest entities			820				855
Deferred income taxes, net			586				575
Other long-term liabilities			1,840				1,791
Total long-term liabilities			11,607				11,575
Commitments and contingencies
Redeemable noncontrolling interest			57				25
Shares, CHF 15.00 par value, 335,235,298 authorized, 167,617,649 conditionally authorized, 335,235,298 issued at March 31, 2011 and December 31, 2010; 319,538,901 and 319,080,678 outstanding at March 31, 2011 and December 31, 2010, respectively			4,488				4,482
Additional paid-in capital			7,518				7,504
Treasury shares, at cost, 2,863,267 held at March 31, 2011 and December 31, 2010			(240	)			(240	)
Retained earnings			10,279				9,969
Accumulated other comprehensive loss			(335	)			(332	)
Total controlling interest shareholders’ equity			21,710				21,383
Noncontrolling interest			(5	)			(8	)
Total equity			21,705				21,375
Total liabilities and equity		$	37,210			$	36,811

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TRANSOCEAN LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

		Three months ended March  31,
		2011				2010
						(As adjusted)
Cash flows from operating activities
Net income		$	340			$	685
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of drilling contract intangibles			(10	)			(33	)
Depreciation and amortization			354				374
Share-based compensation expense			27				35
Gain on disposal of discontinued operations			(173	)			—
(Gain) loss on disposal of assets, net			(8	)			14
Amortization of debt issue costs, discounts and premiums, net			26				49
Deferred income taxes			11				(22	)
Other, net			(3	)			31
Deferred revenue, net			46				151
Deferred expenses, net			(36	)			(14	)
Changes in operating assets and liabilities			(184	)			(98	)
Net cash provided by operating activities			390				1,172
Cash flows from investing activities
Capital expenditures			(240	)			(369	)
Proceeds from disposal of assets, net			13				41
Proceeds from disposal of discontinued operations			259				—
Other, net			(6	)			5
Net cash provided by (used in) investing activities			26				(323	)
Cash flows from financing activities
Change in short-term borrowings, net			51				(131	)
Proceeds from debt			5				54
Repayments of debt			(47	)			(253	)
Purchases of shares held in treasury			—				(60	)
Other, net			(7	)			(3	)
Net cash provided by (used in) financing activities			2				(393	)
Net increase in cash and cash equivalents			418				456
Cash and cash equivalents at beginning of period			3,394				1,130
Cash and cash equivalents at end of period		$	3,812			$	1,586

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TRANSOCEAN LTD.

FLEET OPERATING STATISTICS

 

		Operating Revenues ($ Millions) (1)
		Three months ended
		March 31, 2011				December 31, 2010				March 31, 2010
Contract Drilling Revenues
High-Specification Floaters:
Ultra Deepwater Floaters		$	844			$	740			$	901
Deepwater Floaters			290				339				390
Harsh Environment Floaters			150				155				176
Total High-Specification Floaters			1,284				1,234				1,467
Midwater Floaters			400				477				522
High-Specification Jackups			31				33				77
Standard Jackups			229				259				352
Other Rigs			6				6				7
Subtotal			1,950				2,009				2,425
Contract Intangible Revenue			10				13				33
Other Revenues
Client Reimbursable Revenues			37				34				40
Integrated Services and Other			15				15				30
Drilling Management Services			132				56				51
Subtotal			184				105				121
Total Company		$	2,144			$	2,127			$	2,579
		Average Daily Revenue (1)
		Three months ended
		March 31, 2011				December 31, 2010				March 31, 2010
High-Specification Floaters:
Ultra Deepwater Floaters		$	467,700			$	435,900			$	486,000
Deepwater Floaters		$	395,900			$	395,600			$	383,800
Harsh Environment Floaters		$	402,400			$	366,800			$	400,100
Total High-Specification Floaters		$	441,300			$	414,500			$	443,200
Midwater Floaters		$	313,000			$	298,500			$	331,600
High-Specification Jackups		$	106,200			$	129,400			$	162,600
Standard Jackups		$	109,200			$	110,600			$	133,100
Other Rigs		$	73,400			$	73,000			$	72,700
Total Drilling Fleet		$	292,600			$	276,900			$	299,600
		Utilization (1)
		Three months ended
		March 31, 2011				December 31, 2010				March 31, 2010
High-Specification Floaters:
Ultra Deepwater Floaters			77	%			76	%			88	%
Deepwater Floaters			51	%			58	%			71	%
Harsh Environment Floaters			83	%			92	%			98	%
Total High-Specification Floaters			69	%			71	%			83	%
Midwater Floaters			60	%			68	%			67	%
High-Specification Jackups			40	%			31	%			59	%
Standard Jackups			43	%			46	%			53	%
Other Rigs			49	%			48	%			50	%
Total Drilling Fleet			55	%			58	%			66	%

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Transocean Ltd. and Subsidiaries

Supplemental Effective Tax Rate Analysis

(In US$ millions)

 

		Three months ended
		Mar 31,				Dec 31,				Mar 31,
		2011				2010				2010
						(As adjusted)				(As adjusted)
Income from continuing operations before income taxes			245				(836	)			830
Add back (subtract):
Litigation matters			8				1				—
(Gain) loss on disposal of other assets, net			(9	)			—				14
Loss on impairment of other assets, net			—				1,010				—
(Gain) loss on retirement of debt			—				13				(2	)
Other, net			5				(8	)			5
Adjusted income from continuing operations before income taxes			249				180				847
Income tax expense from continuing operations			81				(32	)			147
Add back (subtract):
Changes in estimates (1)			(35	)			(8	)			(17	)
Other, net			2				—				(1	)
Adjusted income tax expense from continuing operations (2)			48				(40	)			129
Effective Tax Rate (3)			33.1	%			3.8	%			17.7	%
Annual Effective Tax Rate (4)			19.3	%			-22.1	%			15.2	%

 

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, 2010 includes ($65) 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.