-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GcPtICFpGPSUvGsbq2rW2E8DoK8OpY5RPQS0m1cY8g7wJxXBXooOX0dBSnjwVPqx yZMWo1VXin+NsFQcIR+tuw== 0000950129-03-005207.txt : 20031029 0000950129-03-005207.hdr.sgml : 20031029 20031029103809 ACCESSION NUMBER: 0000950129-03-005207 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031029 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031029 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NABORS INDUSTRIES LTD CENTRAL INDEX KEY: 0001163739 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 980363970 STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-49887 FILM NUMBER: 03962457 BUSINESS ADDRESS: STREET 1: 2ND FLOOR INT'L TRADING CENTER STREET 2: WARRENS, P.O. BOX 905E CITY: ST. MICHAEL BARBADOS STATE: D0 ZIP: 0000 BUSINESS PHONE: 2464219471 MAIL ADDRESS: STREET 1: 2ND FLOOR INT'L TRADING CENTER STREET 2: WARRENS, P.O. BOX 905E CITY: ST. MICHAEL BARBADOS STATE: D0 ZIP: 0000 8-K 1 h09996e8vk.txt NABORS INDUSTRIES LTD.- OCTOBER 29, 2003 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): October 29, 2003 NABORS INDUSTRIES LTD. (Exact name of registrant as specified in its charter) Bermuda 000-49887 980363970 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 2nd Fl. International Trading Centre Warrens PO Box 905E St. Michael, Barbados N/A (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (246) 421-9471 N/A (Former name or former address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits
Exhibit No. Description ----------- ----------- 99.1 Press Release issued by Nabors Industries Ltd. on October 29, 2003.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION This Report on Form 8-K is being filed under the Securities Exchange Act of 1934, as amended. On October 29, 2003, the Company issued a press release announcing its results of operations for the three and nine months ended September 30, 2003. A copy of that release is attached as Exhibit 99.1 hereto and incorporated by reference herein. The press release filed as an exhibit to this report includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by the Company from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, the Company's actual results may differ materially from those indicated or implied by such forward-looking statements. The Company has presented its adjusted cash flows derived from operating activities for all periods presented in the release, which is a "non-GAAP" financial measure under Regulation G. The components of adjusted cash flows derived from operating activities are computed by using amounts which are determined in accordance with generally accepted accounting principles ("GAAP"). Adjusted cash flows derived from operating activities is computed by: subtracting direct costs and general and administrative expenses from Operating revenues and then adding Earnings from unconsolidated affiliates. As part of our press release information we have provided a reconciliation, for all periods presented in the release, of adjusted cash flows derived from operating activities to net cash provided by operating activities, which is its nearest comparable GAAP financial measure. The Company also presented its adjusted income derived from operating activities for all periods presented in the release, which is a "non-GAAP" financial measure under Regulation G. The components of adjusted income derived from operating activities are computed by using amounts which are determined in accordance with GAAP. Adjusted income derived from operating activities is computed by: subtracting direct costs, general and administrative expenses, and depreciation and amortization expense from Operating revenues and then adding Earnings from unconsolidated affiliates. As part of our press release information we have provided a reconciliation, for all periods presented in the release, of adjusted income derived from operating activities to consolidated income before income taxes, which is its nearest comparable GAAP financial measure. The Company included its adjusted cash flows derived from operating activities and adjusted income derived from operating activities in the release because management evaluates the performance of its business units and the consolidated Company based on several criteria, including adjusted cash flows derived from operating activities and adjusted income derived from operating activities, and because it believes these financial measures are an accurate reflection of the ongoing profitability of the Company. 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. NABORS INDUSTRIES LTD. Date: October 29, 2003 By: /s/ Daniel McLachlin -------------------------------- Daniel McLachlin Vice President-Administration & Secretary EXHIBIT INDEX
Exhibit No. Description - ----------- ----------- 99.1 Press Release issued by Nabors Industries Ltd. on October 29, 2003.
EX-99.1 3 h09996exv99w1.txt PRESS RELEASE ISSUED ON OCTOBER 29, 2003 EXHIBIT 99.1 (NABORS INDUSTRIES LOGO) NEWS RELEASE - -------------------------------------------------------------------------------- NABORS NETS $0.33 VS. $0.18 ON GENERALLY IMPROVING ACTIVITY ST. MICHAEL, BARBADOS, OCTOBER 29, 2003, NABORS INDUSTRIES LTD. (AMEX: NBR), today announced its results for the third quarter and nine months ended September 30, 2003. Adjusted income derived from operating activities(1) was $52.9 million for the current quarter compared to $32.1 million in the third quarter of last year and $38.0 million in the second quarter of this year. Net income was $50.3 million ($0.33 per diluted share) for the current quarter compared to $26.9 million ($0.18 per diluted share) in the prior year and $29.0 million ($0.19 per diluted share) in the second quarter of this year. Operating revenues and earnings from unconsolidated affiliates were $476.0 million in the current quarter compared to $355.1 million in the prior year quarter and $433.9 million in the second quarter of this year. For the nine months ended September 30, 2003, adjusted income derived from operating activities was $146.9 million compared to $130.7 million in 2002. Net income for the first nine months of 2003 was $127.4 million ($0.83 per diluted share) compared to $94.3 million ($0.63 per diluted share) in the first nine months of 2002. Revenues and earnings from unconsolidated affiliates for the first nine months were $1.37 billion compared to $1.10 billion for the first nine months of 2002. Gene Isenberg, Nabors' Chairman and Chief Executive Officer commented on the results, "Compared to the second quarter of 2003, the largest sequential improvement in results among our operating units came from Canada as it rebounded sharply from the second quarter seasonal trough. The next largest increment was in the U.S. Lower 48 land drilling business with 20 additional rigs working and a modest improvement in margins as projected. International operations achieved increased results during the quarter, as the contribution from recently deployed platform rigs improved. Our U.S. Offshore operation also showed modest improvement with increased jack-up and platform workover activity. U.S. Land Well-servicing posted steady results as expanded margins offset slightly lower rig hours. Alaska was down sequentially, but much less than expected with continued work for two rigs we had anticipated stacking." "Our outlook for the fourth quarter and therefore the full year 2003 continues to be in line with the consensus of analyst's estimates. Canada is likely to have the most significant impact on our near-term results with the anticipation of record levels of activity and firm pricing through the first quarter of 2004. We expect the number of rigs operating in our U.S. Lower 48 land drilling operation to continue increasing at a moderate pace along with our average daily margins. While we anticipate that our U.S. Offshore unit will realize a more significant sequential improvement in the fourth quarter from higher utilization of its workover jack-up and platform rigs, the sustainability of this trend is less certain in this market. The deployment, in the first half of 2004, of three newly constructed platform rigs for GOM deepwater SPAR platform contracts should - ---------- (1) Adjusted income derived from operating activities is computed by subtracting: direct costs, general and administrative expenses, and depreciation and amortization expense from Operating revenues and then adding Earnings from unconsolidated affiliates. Such amounts should not be used as a substitute to those amounts reported under accounting principles generally accepted in the United States of America (GAAP). A reconciliation of this non-GAAP measure to consolidated income before taxes, which is a GAAP measure, is provided herein. further benefit this unit. The 2004 outlook in Alaska is lower than 2003, but is much improved from our previous forecast. In addition to recent incremental contract awards the major operators in this area have recently agreed to commence the development of a heavier oil deposit which should employ more rigs in 2004. Our U.S. Land Well-servicing business expects the usual fourth quarter seasonality in its results with the holidays and shorter days generating fewer available work hours. Longer-term the outlook for this business remains quite positive." "Internationally, we expect flat sequential results over the next few quarters, as a result of the hopefully temporary cessation of a couple of long-running contracts, fewer successes in new contract awards than forecasted and lower expectations on the level of ongoing contribution from the platform rigs offshore Mexico. We do expect several of the idle rigs to return to work in the near future. Our manufacturing and logistics businesses are expected to improve modestly along with the expected improvements in our various U.S. businesses." "My conviction in the sustainability of growth in our North American gas-directed markets remains strong. In the U.S. Lower 48 drilling market I anticipate we will continue to see a steady increase in rig count that is likely to favor our rigs and geographic markets. Since the beginning of this year Nabors rig count has grown at roughly twice the rate of increase in the Baker Hughes land rig count. Further, our margins should begin to expand more meaningfully as we move into next year. I am particularly encouraged by the current and prospective performance of our Canadian unit which is virtually certain to significantly surpass its previous record results over the next few quarters and throughout 2004. While the timing of the progression of our international business is harder to predict, I am enthusiastic about the multitude of incremental prospects for continued growth in this unit and an improving contribution from our existing operations, as we continue to diligently focus on further enhancing our execution." The Nabors companies own and operate almost 600 land drilling and approximately 950 land workover and well-servicing rigs worldwide. Offshore, Nabors operates 42 platforms, 16 jack-ups, and three barge rigs in the domestic and international markets. Nabors markets 30 marine transportation and support vessels, primarily in the U.S. Gulf of Mexico. In addition, Nabors manufactures top drives and drilling instrumentation systems and provides comprehensive oilfield hauling, engineering, civil construction, logistics and facilities maintenance, and project management services. Nabors participates in most of the significant oil, gas and geothermal markets in the world. The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements. - -------------------------------------------------------------------------------- For further information, please contact Dennis A. Smith, Director of Corporate Development of Nabors Corporate Services, Inc. at (281) 775-8038. To request Investor Materials, call Angela Ridgell at (281) 775-8063 or our corporate headquarters in St. Michael, Barbados at (246) 421-9471 or via email at dan.mclachlin@nabors.com. Nabors will conduct a conference call to discuss the quarter's results and the near-term outlook, today at 12:00 p.m. Eastern Standard Time. The call can be accessed on our website at WWW.NABORS.COM, or through First Call at WWW.FIRSTCALLEVENTS.COM. NABORS INDUSTRIES LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED ---------------------------------------- ------------------------- JUNE 30, SEPTEMBER 30, SEPTEMBER 30, ---------- ------------------------- ------------------------- 2003 2003 2002 2003 2002 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues and other income: Operating revenues (1) $ 432,552 $ 473,494 $ 353,146 $1,355,883 $1,086,492 Earnings from unconsolidated affiliates (1) 1,359 2,485 1,932 9,747 11,941 Interest income 6,998 6,442 8,145 21,133 25,538 Other income (expense), net 23 2,279 (994) 2,326 2,152 ---------- ---------- ---------- ---------- ---------- Total revenues and other income 440,932 484,700 362,229 1,389,089 1,126,123 ---------- ---------- ---------- ---------- ---------- Costs and other deductions: Direct costs 298,791 323,296 233,890 926,647 721,513 General and administrative expenses 40,483 41,207 36,968 122,935 102,458 Depreciation and amortization 56,652 58,530 52,084 169,108 143,749 Interest expense 18,644 15,991 17,772 54,705 46,805 ---------- ---------- ---------- ---------- ---------- Total costs and other deductions 414,570 439,024 340,714 1,273,395 1,014,525 ---------- ---------- ---------- ---------- ---------- Income before income taxes 26,362 45,676 21,515 115,694 111,598 ---------- ---------- ---------- ---------- ---------- Income tax (benefit) expense: Current 3,226 644 1,774 7,930 8,731 Deferred (5,883) (5,249) (7,181) (19,593) 8,583 ---------- ---------- ---------- ---------- ---------- Total income tax (benefit) expense (2,657) (4,605) (5,407) (11,663) 17,314 ---------- ---------- ---------- ---------- ---------- Net income $ 29,019 $ 50,281 $ 26,922 $ 127,357 $ 94,284 ========== ========== ========== ========== ========== Earnings per share (2): Basic $ .20 $ .34 $ .19 $ .87 $ .66 Diluted $ .19 $ .33 $ .18 $ .83 $ .63 Weighted average number of common shares outstanding (2): Basic 146,382 146,905 145,078 146,332 143,079 ---------- ---------- ---------- ---------- ---------- Diluted 153,359 153,378 151,158 158,090 149,423 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Adjusted income derived from operating activities (3) $ 37,985 $ 52,946 $ 32,136 $ 146,940 $ 130,713 ========== ========== ========== ========== ==========
(1) During the fourth quarter of 2002, we revised the classification of revenues for certain rigs that we own that are leased to our joint venture in Saudi Arabia, in which we have a 50% ownership interest. We now report 100% of these revenues as Operating revenues. Previously, we had reported 50% of these lease revenues as Earnings from unconsolidated affiliates and 50% as Operating revenues. The effect of this change in classification resulted in an increase in Operating revenues and offsetting decrease in Earnings from unconsolidated affiliates of $6.2 million and $17.5 million for the three and nine months ended September 30, 2002, respectively. These reclassifications had no impact on total revenues and other income, or net income. (2) See "Computation of Per Share Earnings" included herein as a separate schedule. (3) Adjusted income derived from operating activities is computed by: subtracting direct costs, general and administrative expenses, and depreciation and amortization expense from Operating revenues and then adding Earnings from unconsolidated affiliates. Such amounts should not be used as a substitute to those amounts reported under accounting principles generally accepted in the United States of America (GAAP). However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income derived from operating activities, because it believes that this financial measure is an accurate reflection of the ongoing profitability of our company. A reconciliation of this non-GAAP measure to income before income taxes, which is a GAAP measure, is provided within the table set forth immediately following the heading "Segment Reporting". NABORS INDUSTRIES LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, JUNE 30, SEPTEMBER 30, 2002 2003 2003 ------------ ---------- ------------- (IN THOUSANDS, EXCEPT RATIOS) ASSETS Current assets: Cash and marketable securities $ 871,651 $1,050,450 $ 936,703 Accounts receivable, net 277,735 336,308 348,982 Other current assets 220,522 223,645 226,662 ---------- ---------- ---------- Total current assets 1,369,908 1,610,403 1,512,347 Marketable securities 459,148 432,873 580,473 Property, plant and equipment, net 2,781,050 2,880,104 2,881,531 Goodwill, net 306,762 328,033 331,509 Other long-term assets 147,004 185,599 181,459 ---------- ---------- ---------- Total assets $5,063,872 $5,437,012 $5,487,319 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 492,985 $ 298,007 $ 299,973 Other current liabilities 258,469 275,712 281,628 ---------- ---------- ---------- Total current liabilities 751,454 573,719 581,601 Long-term debt 1,614,656 1,990,138 1,984,749 Other long-term liabilities 539,307 523,658 522,159 ---------- ---------- ---------- Total liabilities 2,905,417 3,087,515 3,088,509 Shareholders' equity 2,158,455 2,349,497 2,398,810 ---------- ---------- ---------- Total liabilities and shareholders' equity $5,063,872 $5,437,012 $5,487,319 ========== ========== ========== Total cash and marketable securities $1,330,799 $1,483,323 $1,517,176 Working capital $ 618,454 $1,036,684 $ 930,746 Funded debt to capital ratio: - Gross 0.49 : 1 0.49 : 1 0.49 : 1 - Net of cash and marketable securities 0.26 : 1 0.26 : 1 0.24 : 1 Interest coverage ratio: 6.0 : 1 5.4 : 1 5.9 : 1
NABORS INDUSTRIES LTD. AND SUBSIDIARIES SEGMENT REPORTING (UNAUDITED) The following table sets forth certain information with respect to our segments and rig activity:
THREE MONTHS ENDED NINE MONTHS ENDED ---------------------------------------- ------------------------- JUNE 30, SEPTEMBER 30, SEPTEMBER 30, ---------- ------------------------- ------------------------- 2003 2003 2002 2003 2002 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS) Reportable segments: Operating revenues and Earnings from unconsolidated affiliates: Contract Drilling: (1) U.S. Lower 48 Land Drilling $ 116,605 $ 135,409 $ 92,298 $ 343,702 $ 298,479 U.S. Land Well-servicing 81,504 78,773 74,168 236,937 224,121 U.S. Offshore 24,680 25,928 24,446 72,322 75,876 Alaska 30,446 20,187 26,359 86,601 97,300 Canada 49,836 71,489 41,387 222,113 90,339 International 96,599 106,228 77,430 290,018 234,580 ---------- ---------- ---------- ---------- ---------- Subtotal Contract Drilling (2) 399,670 438,014 336,088 1,251,693 1,020,695 Manufacturing, Logistics and Other (3) (4) 46,572 48,635 33,692 150,396 115,288 Other (5) (12,331) (10,670) (14,702) (36,459) (37,550) ---------- ---------- ---------- ---------- ---------- Total $ 433,911 $ 475,979 $ 355,078 $1,365,630 $1,098,433 ========== ========== ========== ========== ========== Adjusted cash flow derived from operating activities: (6) Contract Drilling: U.S. Lower 48 Land Drilling $ 23,445 $ 28,867 $ 21,359 $ 66,363 $ 73,168 U.S. Land Well-servicing 18,811 18,644 14,320 52,600 45,046 U.S. Offshore 5,112 5,599 3,891 11,814 7,002 Alaska 13,414 8,659 11,371 40,235 35,232 Canada 5,453 18,054 9,067 56,760 24,210 International 33,350 36,046 27,206 97,538 84,798 ---------- ---------- ---------- ---------- ---------- Subtotal Contract Drilling 99,585 115,869 87,214 325,310 269,456 Manufacturing, Logistics and Other 4,883 4,624 8,282 20,374 34,991 Other (7) (9,831) (9,017) (11,276) (29,636) (29,985) ---------- ---------- ---------- ---------- ---------- Total 94,637 111,476 84,220 316,048 274,462 Depreciation and amortization (56,652) (58,530) (52,084) (169,108) (143,749) ---------- ---------- ---------- ---------- ---------- Adjusted income derived from operating activities (8) 37,985 52,946 32,136 146,940 130,713 Interest expense (18,644) (15,991) (17,772) (54,705) (46,805) Interest income 6,998 6,442 8,145 21,133 25,538 Other income (expense), net 23 2,279 (994) 2,326 2,152 ---------- ---------- ---------- ---------- ---------- Income before income taxes $ 26,362 $ 45,676 $ 21,515 $ 115,694 $ 111,598 ========== ========== ========== ========== ========== Net cash provided by operating activities from the consolidated statements of cash flows (6) $ 94,738 $ 112,063 $ 91,004 $ 232,834 $ 285,689 ========== ========== ========== ========== ========== Rig activity: Rig years: (9) U.S. Lower 48 Land Drilling 136.8 157.4 103.2 134.6 105.5 U.S. Offshore 15.0 14.1 14.5 14.2 14.6 Alaska 9.1 6.3 8.8 8.0 9.9 Canada 23.4 39.1 23.4 40.4 20.6 International (10) 59.8 63.3 54.6 60.1 53.5 ---------- ---------- ---------- ---------- ---------- Total rig years 244.1 280.2 204.5 257.3 204.1 ========== ========== ========== ========== ========== Rig hours: (11) U.S. Land Well-servicing 281,810 275,610 259,688 830,933 764,293 Canada Well-servicing (12) 46,458 90,233 62,553 229,393 93,081 ---------- ---------- ---------- ---------- ---------- Total rig hours 328,268 365,843 322,241 1,060,326 857,374 ========== ========== ========== ========== ==========
(1) This segment includes our drilling, workover and well-servicing operations, on land and offshore. (2) Includes Earnings from unconsolidated affiliates, accounted for by the equity method, of $.9 million, $1.0 million and $.9 million for the three months ended June 30, 2003, September 30, 2003 and 2002, respectively, and $2.7 million and $3.0 million for the nine months ended September 30, 2003 and 2002, respectively. (3) Includes our marine transportation and supply services, top drive manufacturing, directional drilling, rig instrumentation and software, and construction and logistics operations. (4) Includes Earnings from unconsolidated affiliates, accounted for by the equity method, of $.4 million, $1.5 million and $1.0 million for the three months ended June 30, 2003, September 30, 2003 and 2002, respectively, and $7.0 million and $8.9 million for the nine months ended September 30, 2003 and 2002, respectively. (5) Represents the elimination of inter-segment transactions. (6) Adjusted cash flow derived from operating activities is computed by subtracting direct costs and general and administrative expenses from Operating revenues and then adding Earnings from unconsolidated affiliates. Such amounts should not be used as a substitute to those amounts reported under GAAP. However, management evaluates the performance of our business units based on several criteria, including adjusted cash flows derived from operating activities, because it believes that this financial measure is an accurate reflection of the ongoing performance of our business units. The following is a reconciliation of net cash provided by operating activities from our consolidated statements of cash flows, which is a GAAP measure, to this non-GAAP measure:
(UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED ----------------------------------- ----------------------- JUNE 30, SEPTEMBER 30, SEPTEMBER 30, -------- ---------------------- ----------------------- 2003 2003 2002 2003 2002 -------- --------- -------- --------- --------- (IN THOUSANDS) Net cash provided by operating activities from the consolidated statements of cash flows $ 94,738 $ 112,063 $ 91,004 $ 232,834 $ 285,689 Interest expense 18,644 15,991 17,772 54,705 46,805 Interest income (6,998) (6,442) (8,145) (21,133) (25,538) Other (income) expense, net (23) (2,279) 994 (2,326) (2,152) Current income tax expense 3,226 644 1,774 7,930 8,731 Deferred financing cost amortization (1,323) (1,378) (1,598) (4,098) (3,794) Discount amortization on long-term debt (7,661) (4,961) (7,661) (20,530) (22,931) Amortization of loss on cash flow hedges (38) (42) -- (113) -- Gains (losses) on long-term assets, net 837 (95) (298) 3,182 (1,126) Gains (losses) on marketable securities, net 3,096 65 (564) 2,692 2,386 (Losses) gains on derivative instruments (2,617) 2,042 -- (1,659) -- Sales of marketable securities, trading (4,484) -- -- (4,484) -- Foreign currency transaction gains (losses) 532 36 (368) 387 1,939 Loss on early extinguishment of debt (908) -- -- (908) (202) Equity in (losses) earnings of unconsolidated affiliates, net of dividends (4,141) (1,015) 17,480 747 19,604 Decrease (increase), net of effects from acquisitions, from changes in balance sheet accounts 1,757 (3,153) (26,170) 68,822 (34,949) -------- --------- -------- --------- --------- Adjusted cash flow derived from operating activities $ 94,637 $ 111,476 $ 84,220 $ 316,048 $ 274,462 ======== ========= ======== ========= =========
(7) Represents the elimination of inter-segment transactions and unallocated corporate expenses. (8) Adjusted income derived from operating activities is computed by subtracting direct costs, general and administrative expenses, and depreciation and amortization expense from Operating revenues and then adding Earnings from unconsolidated affiliates. Such amounts should not be used as a substitute to those amounts reported under GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income derived from operating activities, because it believes that this financial measure is an accurate reflection of the ongoing profitability of our company. A reconciliation of this non-GAAP measure to income before income taxes, which is a GAAP measure, is provided within the table set forth immediately following the heading "Segment Reporting". (9) Excludes well-servicing rigs which are measured in rig hours. Includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates. Rig years represents a measure of the number of equivalent rigs operating during a given period. For example, one rig operating 182.5 days during a 365-day period represents 0.5 rig years. (10) International rig years include our equivalent percentage ownership of rigs owned by unconsolidated affiliates which totaled 4.0 years during the three months ended June 30, 2003 and 3.7 years and 3.9 years during the three and nine months ended September 30, 2003 and 2002, respectively. (11) Rig hours represents the aggregate number of hours that our well-servicing rig fleet operated during the period. (12) The Canada Well-servicing operation was acquired during April 2002 as part of our acquisition of Enserco Energy Service Company Inc. NABORS INDUSTRIES LTD. AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) A reconciliation of the numerators and denominators of the basic and diluted earnings per share computations is as follows:
THREE MONTHS ENDED NINE MONTHS ENDED ------------------------------------ ----------------------- JUNE 30, SEPTEMBER 30, SEPTEMBER 30, -------- ---------------------- ----------------------- 2003 2003 2002 2003 2002 -------- -------- -------- --------- -------- (In thousands, except per share amounts) Net income (numerator): Net income - basic $ 29,019 $ 50,281 $ 26,922 $ 127,357 $ 94,284 Add interest expense on assumed conversion of our zero coupon convertible senior debentures, net of tax: $825 million due 2020 (1) - - - 3,639 - $1.381 billion due 2021 (2) - - - - - -------- -------- -------- --------- -------- Adjusted net income - diluted $ 29,019 $ 50,281 $ 26,922 $ 130,996 $ 94,284 -------- -------- -------- --------- -------- Earnings per share: Basic $ .20 $ .34 $ .19 $ .87 $ .66 Diluted $ .19 $ .33 $ .18 $ .83 $ .63 Shares (denominator): Weighted average number of shares outstanding - basic (3) 146,382 146,905 145,078 146,332 143,079 Net effect of dilutive stock options and warrants based on the treasury stock method 6,977 6,473 6,080 6,680 6,344 Assumed conversion of our zero coupon convertible/exchangeable senior debentures/notes: $825 million due 2020 (1) - - - 5,078 - $1.381 billion due 2021 (2) - - - - - $700 million due 2023 (4) - - - - - -------- -------- -------- --------- -------- Weighted average number of shares outstanding - diluted 153,359 153,378 151,158 158,090 149,423 -------- -------- -------- --------- --------
(1) Diluted earnings per share for the nine months ended September 30, 2003 reflects the assumed conversion of our $825 million zero coupon convertible senior debentures due 2020, as the conversion in that period would have been dilutive. We redeemed for cash the remaining outstanding principal amount of our $825 million zero coupon convertible senior debentures due 2020 on June 20, 2003 and therefore these debentures did not impact the calculation of diluted earnings per share for the three months ended September 30, 2003. For the three months ended June 30, 2003 and the three and nine months ended September 30, 2002, the weighted average number of shares outstanding-diluted excludes 7.2 million, 8.1 million and 8.1 million, respectively, potentially dilutive shares issuable upon the conversion of our $825 million zero coupon convertible senior debentures due 2020 because the inclusion of such shares would have been anti-dilutive, given the level of net income for those periods. Net income for the three months ended June 30, 2003 and for the three and nine months ended September 30, 2002 also excludes the related add-back of interest expense, net of tax, of $1.7 million, $1.9 million and $5.7 million, respectively, for these debentures. These shares would have been dilutive and therefore included in the calculation of the weighted average number of shares outstanding-diluted had diluted earnings per share been at or above $.24 for the three months ended June 30, 2003, and $.23 and $.70 for the three and nine months ended September 30, 2002, respectively. (2) For the three and nine months ended September 30, 2003 and 2002, the weighted average number of shares outstanding-diluted excludes 8.5 million potentially dilutive shares issuable upon the conversion of our $1.381 billion zero coupon convertible senior debentures due 2021 because the inclusion of such shares would have been anti-dilutive, given the level of net income for those periods. Net income for the three months ended June 30, 2003, September 30, 2003 and 2002 excludes the related add-back of interest expense of $3.0 million and net income for the nine months ended September 30, 2003 and 2002 excludes the related add-back of interest expense of $9.2 million and $8.8 million, respectively, for these debentures. These shares would have been dilutive and therefore included in the calculation of the weighted average number of shares outstanding-diluted had diluted earnings per share been at or above $.36 for the three months ended June 30, 2003, at or above $.36 and $.35 for the three months ended September 30, 2003 and 2002, respectively, and at or above $1.07 and $1.04 for the nine months ended September 30, 2003 and 2002, respectively. (3) Includes the following weighted average number of common shares of Nabors and weighted average number of exchangeable shares of Nabors Exchangeco (Canada) Inc., respectively: 145.9 million and .5 million shares for the three months ended June 30, 2003; 146.5 million and .4 million shares for the three months ended September 30, 2003; 144.4 million and .7 million shares for the three months ended September 30, 2002; 145.8 million and .5 million shares for the nine months ended September 30, 2003; and 142.7 million and .4 million shares for the nine months ended September 30, 2002. The exchangeable shares of Nabors Exchangeco (Canada) Inc. are exchangeable for Nabors common shares on a one-for-one basis, and have essentially identical rights as Nabors Industries Ltd. common shares, including but not limited to voting rights and the right to receive dividends, if any. (4) Diluted earnings per share for the three months ended June 30, 2003 and for the three and nine months ended September 30, 2003 excludes approximately 10.0 million potentially dilutive shares initially issuable upon the exchange of our $700 million zero coupon exchangeable senior notes due 2023. Such shares are contingently exchangeable under certain circumstances and would only be included in the calculation of the weighted average number of shares outstanding-diluted if any of those criteria were met. Such criteria were not met during the three and nine months ended September 30, 2003. Based on the initial exchange price per share, these shares would be exchangeable if the closing sale price per share of Nabors' common shares for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the previous calendar quarter is greater than or equal to $84.12 for all calendar quarters ending on or before June 30, 2008, and $77.11 for all calendar quarters thereafter. These notes were issued in June 2003 and therefore did not impact the calculation of diluted earnings per share for the three and nine months ended September 30, 2002. -----END PRIVACY-ENHANCED MESSAGE-----