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Earnings Release 8-K


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 26, 2015 (February 25, 2015)
 
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):
 
o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02 Results of Operations and Financial Condition
 
Our press release dated February 25, 2015, concerning financial results for the fourth quarter and full year 2014, furnished as Exhibit 99.1 to this report, is incorporated by reference herein.
 
Item 9.01.  Financial Statements and Exhibits
 
(d)  Exhibits.
 
The exhibit to this report furnished pursuant to item 9.01 is as follows:
 
Exhibit No.
 
Description
 
 
 
 
 
99.1
 
Press Release Reporting Fourth Quarter and Full Year 2014 Financial Results
 
 





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 25, 2015
By
/s/ Jill S. Greene
 
 
Jill S. Greene
 
 
Authorized Person






Index to Exhibits
 
Exhibit
 
 
Number
 
Description
 
 
 
99.1

 
Press Release Reporting Fourth Quarter and Full Year 2014 Financial Results



4Q and Full Year 2014 Earnings Press Release


 

Transocean Ltd.
Investor Relations and Corporate Communications
 
 
 
 
News Release
Analyst Contacts:
Thad Vayda
 
 
+1 713-232-7551
 
 
 
 
 
 
 
 
 
Diane Vento
 
 
 
 
+1 713-232-8015
 
 
 
 
 
 
 
 
Media Contact:
Pam Easton
 
FOR RELEASE:
February 25, 2015
 
+1 713-232-7647
 
 
 

TRANSOCEAN LTD. REPORTS FOURTH QUARTER AND
FULL YEAR 2014 RESULTS

•
Revenues were $2.237 billion, compared with $2.270 billion in the third quarter of 2014;

•
Operating and maintenance expenses were $1.310 billion, down from $1.318 billion in the prior period;

•
Adjusted net income was $344 million, $0.95 per diluted share, which excludes net unfavorable items;

•
Net loss attributable to controlling interest was $739 million, $2.04 per diluted share, including $1.083 billion of net unfavorable items, versus the comparable third quarter net loss of $2.217 billion, $6.12 per diluted share, including $2.569 billion of net unfavorable items;

•
The Annual Effective Tax Rate(1) was 26.5 percent, up from 24.8 percent in the prior quarter;

•
Cash flows from operating activities were $566 million, down sequentially from $882 million;

•
Fleet revenue efficiency(2) was 95.3 percent, up from 92.6 percent in the third quarter. Revenue efficiency on ultra-deepwater rigs was 95.4 percent, up from 91.6 percent in the prior quarter;

•
Fleet utilization(3) was 72 percent, versus 75 percent in the third quarter; and

•
Contract backlog was $21.2 billion as of the February 17, 2015, Fleet Update Summary.

ZUG, SWITZERLAND-February 25, 2015-Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a net loss attributable to controlling interest for the three months ended December 31, 2014 of $739 million, or $2.04 per diluted share. Fourth quarter 2014 results included net unfavorable items of $1.083 billion, $2.99 per diluted share, as follows:
•
$992 million, $2.75 per diluted share, resulting from a non-cash goodwill impairment. The impairment is due to the decline in the market valuation of the company’s contract drilling services business. As the result of this impairment, the company has no goodwill remaining on its balance sheet.

•
$148 million, $0.40 per diluted share, in impairments of assets classified as held for sale; and

•
$9 million, $0.02 per diluted share, primarily associated with a loss on retirement of debt and other items.




These net unfavorable items were partially offset by:
•
$66 million, $0.18 per diluted share, of favorable discrete tax benefits.
After consideration of these net unfavorable items, fourth quarter adjusted net income was $344 million, or $0.95 per diluted share.
For the three months ended December 31, 2013, the company reported net income attributable to controlling interest of $233 million, $0.64 per diluted share, which included net unfavorable items of $27 million, or $0.07 per diluted share. After consideration of these net unfavorable items, adjusted net income was $260 million, or $0.71 per diluted share.
Revenues for the three months ended December 31, 2014 decreased $33 million sequentially to $2.237 billion. The decrease was due primarily to increased idle time on several rigs partly offset by higher revenue efficiency, lower out-of-service days, and the commencement of operations in the third quarter of the company’s two newbuild ultra-deepwater drillships, Deepwater Asgard and Deepwater Invictus.
Operating and maintenance expenses decreased $8 million sequentially to $1.310 billion due primarily to lower shipyard and maintenance expenses.
General and administrative expenses increased $10 million from the prior quarter to $62 million. The increase was due primarily to costs associated with the company’s cost reduction initiatives and, to a lesser extent, personnel costs associated with Transocean Partners.
Transocean’s fourth quarter Effective Tax Rate(4) decreased to (1.3) percent from 0.7 percent in the third quarter of 2014. The decrease was primarily associated with the impairment of goodwill and other assets and favorable changes in estimates related to prior years’ tax liabilities partly offset by the impact of foreign currency losses on deferred tax assets mainly associated with the Norwegian Krone. Transocean’s Annual Effective Tax Rate for the fourth quarter of 2014 was 26.5 percent versus 24.8 percent for the prior quarter. Income tax expense included an unfavorable tax expense of $36 million, $0.10 per diluted share, to reflect the increase in the Annual Effective Tax Rate to 18.7 percent for 2014 from 16.7 percent for the nine months ended September 30, 2014.
Interest expense, net of amounts capitalized, was $123 million in the fourth quarter, generally unchanged from the prior quarter. Interest income was $8 million, compared with $6 million in the third quarter. Capitalized interest was $24 million, down sequentially from $33 million.
Cash flows from operating activities decreased $316 million from third quarter 2014 to $566 million due primarily to changes in working capital.
Capital expenditures decreased $47 million sequentially to $318 million.
Full Year 2014
For the year ended December 31, 2014, net loss attributable to controlling interest totaled $1.913 billion, or $5.29 per diluted share. Full year results included $3.716 billion, $10.23 per diluted share, of net unfavorable items as follows:
•
$3.826 billion, $10.53 per diluted share, resulting from a non-cash goodwill impairment, impairment of the Deepwater Floater asset group, and impairments of assets classified as held for sale; and

•
$28 million, $0.08 per diluted share, in net losses from discontinued operations and other miscellaneous unfavorable items.

These net unfavorable items were partially offset by:




•
$138 million, $0.38 per diluted share, in favorable discrete tax benefits.
After consideration of these net unfavorable items, adjusted net income for 2014 was $1.803 billion, or $4.94 per diluted share.
Interest expense, net of amounts capitalized, was $483 million for 2014, down from $584 million in 2013. In addition to scheduled maturities, the decrease reflects the completion of the company’s $1.0 billion accelerated debt retirement program. Capitalized interest for 2014 was $133 million, compared with $78 million in 2013. Interest income was $39 million for 2014, versus $52 million in 2013.
Cash flow from operating activities totaled $2.220 billion in 2014, compared with $1.918 billion in 2013, an increase of $302 million.
For the year ended December 31, 2013, net income attributable to controlling interest totaled $1.407 billion, $3.87 per diluted share, which included net unfavorable items of $81 million, or $0.22 per diluted share. After consideration of the net unfavorable items, adjusted net income for 2013 was $1.488 billion, or $4.09 per diluted share.
Full Year 2015 Guidance Summary
The following table is a summary of the company’s full year 2015 guidance for key income statement and balance sheet items. These estimates are based upon management’s current expectations and assumptions and are subject to change.

  Item
Range
Fleet Average Revenue Efficiency
95 percent
Other Revenues *
$115 million - $130 million
Operating and Maintenance Expenses
$4.5 billion - $4.7 billion
Depreciation
$1.0 billion - $1.2 billion
General and Administrative Expenses
$200 million - $215 million
Net Interest Expense **
$400 million - $450 million
Annual Effective Tax Rate
19 percent - 21 percent
Capital Expenditures
$1.8 billion
 
 
* Other Revenues primarily includes recharges and other miscellaneous revenues.
** Net Interest Expense is net of capitalized interest of approximately $130 million and interest income of approximately $20 million.

Non-GAAP Financial Measures

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.
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 and Section 21E of the Securities Exchange Act of 1934. 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, changes in tax estimates, impairment of goodwill, impairment of the Deepwater Floater asset group, 2015 guidance on key items, operating hazards and delays, risks associated with international operations, actions by customers and other third parties, the future prices of oil and gas 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, 2014, 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.
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 or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange. 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.
Conference Call Information

Transocean will conduct a teleconference starting at 9:30 a.m. EST, 3:30 p.m. CET, on Thursday, February 26, 2015, to discuss the results. To participate, dial +1 913-312-0375 and refer to confirmation code 5168358 approximately 10 minutes prior to the scheduled start time.
The teleconference will be simulcast in a listen-only mode over the Internet and can be accessed at Transocean’s website, www.deepwater.com, by selecting “Investor Relations/Overview.” Supplemental materials that may be referenced during the teleconference will be posted to Transocean’s website and can be found by selecting “Investor Relations/Financial Reports.”
A replay of the conference call will be available after 12:30 p.m. EST, 6:30 p.m. CET, on February 26, 2015. The replay, which will be archived for approximately 30 days, can be accessed by dialing +1 719-457-0820 and referring to the confirmation code 5168358. The replay will also be available by on the company’s website.
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 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 71 mobile offshore drilling units consisting of 44 high-specification floaters (ultra-deepwater, deepwater and harsh environment drilling rigs), 17 midwater floaters and 10 high-specification jackups. In addition, the company has seven ultra-deepwater drillships and five high-specification jackups under construction.
For more information about Transocean, please visit: www.deepwater.com.




Notes
(1) Annual Effective Tax Rate is defined as income tax expense from continuing operations excluding various discrete items (such as changes in estimates and tax on items excluded from income before income tax expense), divided by income from continuing operations before income tax expense excluding gains on sales and similar items pursuant to the accounting standards for income taxes. See the accompanying schedule entitled “Supplemental Effective Tax Rate Analysis.”
(2) 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.”
(3) Rig utilization is defined as the total number of operating days divided by the total number of rig calendar days in the measurement period, expressed as a percentage. See the accompanying schedule entitled “Utilization.”
(4) 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.”






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

 
 
Three months ended
December 31,
 
 
 
Years ended
December 31,
 
 
 
2014
 
 
2013
 
 
 
2014
 
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contract drilling revenues
 
$
2,167
 
 
$
2,202
 
 
 
$
8952
 
 
$
9,070
 
Other revenues
 
 
70
 
 
 
50
 
 
 
 
222
 
 
 
179
 
 
 
 
2,237
 
 
 
2,252
 
 
 
 
9174
 
 
 
9,249
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating and maintenance
 
 
1,310
 
 
 
1,461
 
 
 
 
5110
 
 
 
5,563
 
Depreciation
 
 
290
 
 
 
275
 
 
 
 
1139
 
 
 
1,109
 
General and administrative
 
 
62
 
 
 
75
 
 
 
 
234
 
 
 
286
 
 
 
 
1,662
 
 
 
1,811
 
 
 
 
6483
 
 
 
6,958
 
Loss on impairment
 
 
-1,210
 
 
 
-27
 
 
 
 
-4043
 
 
 
-81
 
Gain (loss) on disposal of assets, net
 
 
-12
 
 
 
-16
 
 
 
 
-26
 
 
 
7
 
Operating income (loss)
 
 
-647
 
 
 
398
 
 
 
 
-1378
 
 
 
2,217
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense), net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
 
8
 
 
 
13
 
 
 
 
39
 
 
 
52
 
Interest expense, net of amounts capitalized
 
 
-123
 
 
 
-139
 
 
 
 
-483
 
 
 
-584
 
Other, net
 
 
10
 
 
 
-8
 
 
 
 
22
 
 
 
-29
 
 
 
 
-105
 
 
 
-134
 
 
 
 
-422
 
 
 
-561
 
Income (loss) from continuing operations before income tax expense
 
 
-752
 
 
 
264
 
 
 
 
-1800
 
 
 
1,656
 
Income tax expense
 
 
10
 
 
 
44
 
 
 
 
146
 
 
 
258
 
Income (loss) from continuing operations
 
 
-762
 
 
 
220
 
 
 
 
-1946
 
 
 
1,398
 
Income (loss) from discontinued operations, net of tax
 
 
-4
 
 
 
15
 
 
 
 
-20
 
 
 
9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
 
-766
 
 
 
235
 
 
 
 
-1966
 
 
 
1,407
 
Net income (loss) attributable to noncontrolling interest
 
 
-27
 
 
 
2
 
 
 
 
-53
 
 
 
0
 
Net income (loss) attributable to controlling interest
 
$
-739
 
 
$
233
 
 
 
$
-1913
 
 
$
1,407
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share‑basic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from continuing operations
 
$
-2.03
 
 
$
0.60
 
 
 
$
-5.23
 
 
$
3.85
 
Earnings (loss) from discontinued operations
 
 
-0.01
 
 
 
0.04
 
 
 
 
-0.06
 
 
 
0.02
 
Earnings (loss) per share
 
$
-2.04
 
 
$
0.64
 
 
 
$
-5.29
 
 
$
3.87
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share‑diluted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from continuing operations
 
$
-2.03
 
 
$
0.60
 
 
 
$
-5.23
 
 
$
3.85
 
Earnings (loss) from discontinued operations
 
 
-0.01
 
 
 
0.04
 
 
 
 
-0.06
 
 
 
0.02
 
Earnings (loss) per share
 
$
-2.04
 
 
$
0.64
 
 
 
$
-5.29
 
 
$
3.87
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted‑average shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
362
 
 
 
361
 
 
 
 
362
 
 
 
360
 
Diluted
 
 
362
 
 
 
361
 
 
 
 
362
 
 
 
360
 




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

 
 
December 31,
 
 
2014
 
2013
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,635
 
 
$
3,243
 
Accounts receivable, net
 
 
 
 
 
 
 
 
Trade
 
 
2,084
 
 
 
2,112
 
Other
 
 
36
 
 
 
50
 
Materials and supplies, net
 
 
818
 
 
 
737
 
Assets held for sale
 
 
25
 
 
 
148
 
Deferred income taxes, net
 
 
161
 
 
 
151
 
Other current assets
 
 
242
 
 
 
331
 
Total current assets
 
 
6,001
 
 
 
6,772
 
 
 
 
 
 
 
 
 
 
Property and equipment
 
 
28,516
 
 
 
29,518
 
Less accumulated depreciation
 
 
-6,978
 
 
 
-7,811
 
Property and equipment, net
 
 
21,538
 
 
 
21,707
 
Goodwill
 
 
0
 
 
 
2,987
 
Other assets
 
 
874
 
 
 
1,080
 
Total assets
 
$
28,413
 
 
$
32,546
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
Accounts payable
 
$
784
 
 
$
1,106
 
Accrued income taxes
 
 
131
 
 
 
53
 
Debt due within one year
 
 
1,033
 
 
 
323
 
Other current liabilities
 
 
1,822
 
 
 
2,072
 
Total current liabilities
 
 
3,770
 
 
 
3,554
 
 
 
 
 
 
 
 
 
 
Long‑term debt
 
 
9,059
 
 
 
10,379
 
Deferred income taxes, net
 
 
237
 
 
 
374
 
Other long‑term liabilities
 
 
1,354
 
 
 
1,554
 
Total long‑term liabilities
 
 
10,650
 
 
 
12,307
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
 
11
 
 
 
0
 
 
 
 
 
 
 
 
 
 
Shares, CHF 15.00 par value, 396,260,487 authorized, 167,617,649 conditionally authorized, 373,830,649 issued and 362,279,530 outstanding at December 31, 2014 and 373,830,649 authorized, 167,617,649 conditionally authorized, 373,830,649 issued and 360,764,100 outstanding at December 31, 2013
 
 
5,169
 
 
 
5,147
 
Additional paid‑in capital
 
 
5,797
 
 
 
6,784
 
Treasury shares, at cost, 2,863,267 held at December 31, 2014 and 2013
 
 
-240
 
 
 
-240
 
Retained earnings
 
 
3,349
 
 
 
5,262
 
Accumulated other comprehensive loss
 
 
-404
 
 
 
-262
 
Total controlling interest shareholders’ equity
 
 
13,671
 
 
 
16,691
 
Noncontrolling interest
 
 
311
 
 
 
-6
 
Total equity
 
 
13,982
 
 
 
16,685
 
Total liabilities and equity
 
$
28,413
 
 
$
32,546
 





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

 
 
Three months ended
December 31,
 
 
 
Years ended
December 31,
 
 
 
2,014
 
 
2,013
 
 
 
2,014
 
 
2,013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(766
)
 
 
$
235

 
 
 
$
(1,966
)
 
 
$
1,407

 
Adjustments to reconcile to net cash provided by operating activities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of drilling contract intangibles
 
 
(3
)
 
 
 
6

 
 
 
 
(15
)
 
 
 
(15
)
 
Depreciation
 
 
290

 
 
 
275

 
 
 
 
1,139

 
 
 
1,109

 
Share-based compensation expense
 
 
23

 
 
 
28

 
 
 
 
98

 
 
 
113

 
Loss on impairment
 
 
1,210

 
 
 
27

 
 
 
 
4,043

 
 
 
81

 
Loss on impairment of assets in discontinued operations
 
 
—

 
 
 
—

 
 
 
 
—

 
 
 
14

 
(Gain) loss on disposal of assets, net
 
 
12

 
 
 
16

 
 
 
 
26

 
 
 
(7
)
 
(Gain) loss on disposal of assets in discontinued operations, net
 
 
—

 
 
 
(5
)
 
 
 
 
10

 
 
 
(54
)
 
Deferred income taxes
 
 
(8
)
 
 
 
55

 
 
 
 
(142
)
 
 
 
(9
)
 
Other, net
 
 
25

 
 
 
22

 
 
 
 
52

 
 
 
99

 
Changes in deferred revenue, net
 
 
26

 
 
 
(10
)
 
 
 
 
106

 
 
 
(78
)
 
Changes in deferred costs, net
 
 
(16
)
 
 
 
36

 
 
 
 
(48
)
 
 
 
74

 
Changes in operating assets and liabilities
 
 
(227
)
 
 
 
88

 
 
 
 
(1,083
)
 
 
 
(816
)
 
Net cash provided by operating activities
 
 
566

 
 
 
773

 
 
 
 
2,220

 
 
 
1,918

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
 
(318
)
 
 
 
(948
)
 
 
 
 
(2,165
)
 
 
 
(2,238
)
 
Proceeds from disposal of assets, net
 
 
12

 
 
 
—

 
 
 
 
215

 
 
 
174

 
Proceeds from disposal of assets in discontinued operations, net
 
 
—

 
 
 
73

 
 
 
 
35

 
 
 
204

 
Proceeds from sale of preference shares
 
 
—

 
 
 
—

 
 
 
 
—

 
 
 
185

 
Proceeds from repayment of notes receivable
 
 
—

 
 
 
3

 
 
 
 
101

 
 
 
17

 
Other, net
 
 
1

 
 
 
—

 
 
 
 
(14
)
 
 
 
—

 
Net cash used in investing activities
 
 
(305
)
 
 
 
(872
)
 
 
 
 
(1,828
)
 
 
 
(1,658
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of debt
 
 
(221
)
 
 
 
(19
)
 
 
 
 
(539
)
 
 
 
(1,692
)
 
Proceeds from restricted cash investments
 
 
—

 
 
 
15

 
 
 
 
176

 
 
 
298

 
Deposits to restricted cash investments
 
 
—

 
 
 
(7
)
 
 
 
 
(20
)
 
 
 
(119
)
 
Distribution of qualifying additional paid‑in capital
 
 
(272
)
 
 
 
(202
)
 
 
 
 
(1,018
)
 
 
 
(606
)
 
Proceeds from sale of noncontrolling interest
 
 
—

 
 
 
—

 
 
 
 
443

 
 
 
—

 
Other, net
 
 
(6
)
 
 
 
(4
)
 
 
 
 
(42
)
 
 
 
(32
)
 
Net cash provided by (used in) financing activities
 
 
(499
)
 
 
 
(217
)
 
 
 
 
(1,000
)
 
 
 
(2,151
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
 
(238
)
 
 
 
(316
)
 
 
 
 
(608
)
 
 
 
(1,891
)
 
Cash and cash equivalents at beginning of period
 
 
2,873

 
 
 
3,559

 
 
 
 
3,243

 
 
 
5,134

 
Cash and cash equivalents at end of period
 
$
2,635

 
 
$
3,243

 
 
 
$
2,635

 
 
$
3,243

 





TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS

 
Operating Revenues (in millions)
 
Three months ended
 
 
Twelve months ended
December 31,
 
December 31,
2014
 
 
September 30,
2014
 
 
December 31,
2013
 
 
2014
 
 
2013
Contract drilling revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
High-Specification Floaters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ultra-Deepwater Floaters:
$
997
 
 
$
1,135
 
$
 
1,098
 
 
$
4,495
 
 
$
4,523
Deepwater Floaters
 
277
 
 
 
233
 
 
 
255
 
 
 
1,021
 
 
 
1,142
Harsh Environment Floaters
 
312
 
 
 
247
 
 
 
283
 
 
 
1,099
 
 
 
1,150
Total High-Specification Floaters
 
1,586
 
 
 
1,615
 
 
 
1,636
 
 
 
6,615
 
 
 
6,815
Midwater Floaters
 
428
 
 
 
442
 
 
 
429
 
 
 
1,723
 
 
 
1,658
High-Specification Jackups
 
149
 
 
 
154
 
 
 
143
 
 
 
598
 
 
 
582
Contract intangible revenue
 
4
 
 
 
4
 
 
 
(6)
 
 
 
16
 
 
 
15
Total contract drilling revenues
 
2,167
 
 
 
2,215
 
 
 
2,202
 
 
 
8,952
 
 
 
9,070
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Client reimbursable revenues
 
40
 
 
 
46
 
 
 
42
 
 
 
172
 
 
 
167
Integrated services and other
 
30
 
 
 
9
 
 
 
8
 
 
 
50
 
 
 
12
Total other revenues
 
70
 
 
 
55
 
 
 
50
 
 
 
222
 
 
 
179
Total revenues
$
2,237
 
 
$
2,270
 
 
$
2,252
 
 
$
9,174
 
 
$
9,249
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Daily Revenue (1)
 
Three months ended
 
 
Twelve months ended
December 31,
 
December 31,
2014
 
 
September 30,
 2014
 
 
December 31,
2013
 
 
2014
 
 
2013
High-Specification Floaters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ultra-Deepwater Floaters
$
544,800
 
 
$
527,200
 
 
$
510,200
 
 
$
539,300
 
 
$
500,200
Deepwater Floaters
 
391,100
 
 
 
357,700
 
 
 
370,700
 
 
 
378,300
 
 
 
353,400
Harsh Environment Floaters
 
564,600
 
 
 
585,300
 
 
 
438,200
 
 
 
507,400
 
 
 
451,700
Total High-Specification Floaters
 
513,100
 
 
 
500,600
 
 
 
469,400
 
 
 
501,100
 
 
 
459,800
Midwater Floaters
 
338,500
 
 
 
353,000
11
 
 
 
338,400
 
 
 
347,200
 
 
 
311,100
High-Specification Jackups
 
170,200
 
 
 
167,800
 
 
 
165,600
 
 
 
168,500
 
 
 
164,400
Total
$
413,500
 
 
$
409,900
 
 
$
393,100
 
 
$
411,600
 
 
$
382,300
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.








TRANSOCEAN LTD. AND SUBSIDIARIES
FLEET OPERATING STATISTICS (continued)

 
Utilization (2)
 
Three months ended
 
 
Twelve months ended
December 31,
 
December 31,
2014
 
 
September 30,
2014
 
 
December 31,
2013
 
 
2014
 
 
2013
High-Specification Floaters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ultra-Deepwater Floaters
69%
 
 
83%
 
 
87%
 
 
82%
 
 
92%
Deepwater Floaters
64%
 
 
59%
 
 
62%
 
 
62%
 
 
68%
Harsh Environment Floaters
86%
 
 
65%
 
 
100%
 
 
85%
 
 
100%
Total High-Specification Floaters
70%
 
 
74%
 
 
82%
 
 
77%
 
 
86%
Midwater Floaters
65%
 
 
65%
 
 
60%
 
 
64%
 
 
61%
High-Specification Jackups
95%
 
 
99%
 
 
79%
 
 
93%
 
 
91%
Total Drilling Fleet
72%
 
 
75%
 
 
75%
 
 
76%
 
 
79%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) 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.

 
Revenue Efficiency(3)
 
Trailing Five Quarters and Historical Data
 
 
 
 
 
 
 
 
 
 
4Q 2014
3Q 2014
2Q 2014
1Q 2014
4Q 2013
FY 2014
FY 2013
FY 2012
Ultra-Deepwater
95.4%
91.6%
94.0%
96.4%
90.0%
94.3%
89.4%
93.2%
Deepwater
96.3%
93.3%
94.5%
100.5%
95.0%
96.2%
91.0%
91.4%
Harsh Environment Floaters
96.0%
94.7%
95.7%
96.3%
92.1%
95.7%
96.9%
97.1%
Midwater Floaters
93.0%
92.2%
97.0%
91.1%
92.3%
93.3%
93.5%
90.9%
High-Specification Jackups
99.0%
97.0%
97.3%
94.5%
97.2%
97.0%
97.8%
95.0%
Total
95.3%
92.6%
95.0%
95.7%
91.7%
94.7%
91.7%
93.0%
 
 
 
 
 
 
 
 
 
  
(3) 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
 
Supplemental Effective Tax Rate Analysis
 
(In US$ millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
 
Years ended
 
 
December 31,
 
 
September 30,
 
 
December 31,
 
 
December 31,
 
 
December 31,
 
 
2014
 
 
2014
 
 
2013
 
 
2014
 
 
2013
 
Income from continuing operations before income taxes
$
(752
)
 
 
$
(2,278
)
 
 
$
264

 
 
$
(1,800
)
 
 
$
1,656

 
     Add back (subtract):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
          Litigation matters
 
—

 
 
 
(21
)
 
 
 
17

 
 
 
(18
)
 
 
 
120

 
          One-time termination benefits
 
1

 
 
 
4

 
 
 
6

 
 
 
10

 
 
 
32

 
          Loss on early lease termination
 
—

 
 
 
—

 
 
 
3

 
 
 
—

 
 
 
3

 
          Loss on impairment of goodwill and other assets
 
1,210

 
 
 
2,768

 
 
 
27

 
 
 
4,043

 
 
 
64

 
          (Gain) loss on disposal of assets, net
 
(6
)
 
 
 
3

 
 
 
1

 
 
 
(4
)
 
 
 
(33
)
 
          Loss on financial instruments
 
—

 
 
 
—

 
 
 
—

 
 
 
—

 
 
 
19

 
          Loss on retirement of debt
 
8

 
 
 
—

 
 
 
—

 
 
 
13

 
 
 
2

 
Adjusted income from continuing operations before income taxes
 
461

 
 
 
476

 
 
 
318

 
 
 
2,244

 
 
 
1,863

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit) from continuing operations
 
10

 
 
 
(16
)
 
 
 
44

 
 
 
146

 
 
 
258

 
     Add back (subtract):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
          Litigation matters
 
—

 
 
 
(7
)
 
 
 
6

 
 
 
(6
)
 
 
 
42

 
          One-time termination benefits
 
—

 
 
 
1

 
 
 
1

 
 
 
1

 
 
 
5

 
          Loss on impairment of goodwill and other assets
 
48

 
 
 
95

 
 
 
—

 
 
 
143

 
 
 
—

 
          (Gain) loss on disposal of assets, net
 
(2
)
 
 
 
—

 
 
 
—

 
 
 
(2
)
 
 
 
(12
)
 
          Changes in estimates (1)
 
66

 
 
 
45

 
 
 
5

 
 
 
138

 
 
 
82

 
Adjusted income tax expense from continuing operations (2)
$
122

 
 
$
118

 
 
$
56

 
 
$
420

 
 
$
375

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate (3)
 
(1.3
)%
 
 
 
0.7
%
 
 
 
16.7
%
 
 
 
(8.1
)%
 
 
 
15.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Effective Tax Rate (4)
 
26.5
 %
 
 
 
24.8
%
 
 
 
17.6
%
 
 
 
18.7
 %
 
 
 
20.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 of allowances on deferred taxes and (c) other tax liabilities.
(2) The three months and year ended December 31, 2014 includes $36 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 for continuing operations, divided by income from continuing operations before income taxes.
(4) Annual Effective Tax Rate is 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.





Transocean Ltd. and subsidiaries
Non-GAAP Financial Measures and Reconciliations
Adjusted Net Income and Adjusted Diluted Earnings Per Share
(in US$ millions, except per share data)

 
YTD
QTD
YTD
QTD
YTD
QTD
QTD
 
12/31/14
12/31/14
09/30/14
09/30/14
06/30/14
06/30/14
03/31/14
Adjusted Net Income
 
 
 
 
 
 
 
Net income (loss) attributable to controlling interest, as reported
(1,913
)
(739
)
(1,174
)
(2,217
)
1,043
 
587
 
456

Add back (subtract):
 
 
 
 
 
 
 
Litigation matters
(12
)
—
 
(12
)
(14
)
2
 
—
 
2

One-time termination benefits
9
 
1
 
8
 
3
 
5
 
4
 
1

Loss on impairment of goodwill and other assets
3,826
 
1,140
 
2,686
 
2,621
 
65
 
—
 
65

(Gain) loss on disposal of assets, net
(2
)
(4
)
2
 
3
 
(1
)
(1
)
—

Loss on retirement of debt
13
 
8
 
5
 
—
 
5
 
4
 
1

Loss on disposal of assets in discontinued operations
10
 
—
 
10
 
—
 
10
 
—
 
10

Loss (income) from discontinued operations
10
 
4
 
6
 
1
 
5
 
7
 
(2
)
Discrete tax items and other, net
(138
)
(66
)
(72
)
(45
)
(27
)
(14
)
(13
)
Net income, as adjusted
1,803
 
344
 
1,459
 
352
 
1,107
 
587
 
520

 
 
 
 
 
 
 
 
Adjusted Diluted Earnings Per Share:
 
 
 
 
 
 
 
Diluted earnings (loss) per share, as reported
(5.29
)
(2.04
)
(3.24
)
(6.12
)
2.86
 
1.61
 
1.25

Add back (subtract):
 
 
 
 
 
 
 
Litigation matters
(0.03
)
—
 
(0.03
)
(0.04
)
0.01
 
—
 
0.01

One-time termination benefits
0.02
 
—
 
0.02
 
0.01
 
0.01
 
0.01
 
—

Loss on impairment of goodwill and other assets
10.53
 
3.15
 
7.39
 
7.22
 
0.19
 
—
 
0.19

(Gain) loss on disposal of assets, net
(0.01
)
(0.01
)
0.01
 
0.01
 
—
 
—
 
—

Loss on retirement of debt
0.04
 
0.02
 
0.01
 
—
 
0.01
 
0.01
 
—

Loss on disposal of assets in discontinued operations
0.03
 
—
 
0.03
 
—
 
0.03
 
—
 
0.03

Loss (income) from discontinued operations
0.03
 
0.01
 
0.02
 
—
 
0.01
 
0.02
 
(0.01
)
Discrete tax items and other, net
(0.38
)
(0.18
)
(0.21
)
(0.12
)
(0.08
)
(0.04
)
(0.04
)
Diluted earnings per share, as adjusted
4.94
 
0.95
 
4
 
0.96
 
3.04
 
1.61
 
1.43

 
 
 
 
 
 
 
 
YTD
QTD
YTD
QTD
YTD
QTD
QTD
12/31/2013
12/31/13
09/30/13
09/30/13
06/30/13
06/30/13
03/31/13
Adjusted Net Income
 
 
 
 
 
 
Net income attributable to controlling interest, as reported
233
 
1,174
 
546
 
628
 
307
 
321
 
Add back (subtract):
 
 
 
 
 
 
Litigation matters
11
 
67
 
19
 
48
 
—
 
48
 
One-time termination benefits
5
 
22
 
15
 
7
 
7
 
—
 
Loss on early lease termination
3
 
—
 
—
 
—
 
—
 
—
 
Loss on impairment of assets
27
 
37
 
—
 
37
 
37
 
—
 
Gain on disposal of assets, net
—
 
(22
)
(22
)
—
 
—
 
—
 
Loss on retirement of debt
—
 
2
 
—
 
2
 
1
 
1
 
Loss on financial instruments
—
 
19
 
—
 
19
 
19
 
—
 




Loss on impairment of assets in discontinued operations
—
 
14
 
14
 
—
 
—
 
—
 
Gain on disposal of assets in discontinued operations
(5
)
(49
)
(31
)
(18
)
(3
)
(15
)
Loss (income) from discontinued operations
(9
)
41
 
9
 
32
 
15
 
17
 
Discrete tax items and other, net
(5
)
(77
)
(55
)
(22
)
11
 
(33
)
Net income, as adjusted
260
 
1,228
 
495
 
733
 
394
 
339
 
 
 
 
 
 
 
 
Adjusted Diluted Earnings Per Share:
 
 
 
 
 
 
Diluted earnings per share, as reported
0.64
 
3.23
 
1.5
 
1.73
 
0.84
 
0.88
 
Add back (subtract):
 
 
 
 
 
 
Litigation matters
0.03
 
0.19
 
0.05
 
0.13
 
—
 
0.13
 
One-time termination benefits
0.01
 
0.06
 
0.04
 
0.02
 
0.02
 
—
 
Loss on early lease termination
0.01
 
—
 
—
 
—
 
—
 
—
 
Loss on impairment of assets
0.07
 
0.1
 
—
 
0.1
 
0.1
 
—
 
Gain on disposal of assets, net
—
 
(0.06
)
(0.06
)
—
 
—
 
—
 
Loss on retirement of debt
—
 
0.01
 
—
 
0.01
 
—
 
—
 
Loss on financial instruments
—
 
0.05
 
—
 
0.05
 
0.05
 
—
 
Loss on impairment of assets in discontinued operations
—
 
0.04
 
0.04
 
—
 
—
 
—
 
Gain on disposal of assets in discontinued operations
(0.01
)
(0.14
)
(0.09
)
(0.05
)
(0.01
)
(0.04
)
Loss (income) from discontinued operations
(0.03
)
0.11
 
0.02
 
0.09
 
0.04
 
0.05
 
Discrete tax items and other, net
(0.01
)
(0.21
)
(0.14
)
(0.06
)
0.04
 
(0.09
)
Diluted earnings per share, as adjusted
0.71
 
3.38
 
1.36
 
2.02
 
1.08
 
0.93