NABORS INDUSTRIES LTD - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - NABORS INDUSTRIES LTD	a14-23730_18k.htm

Exhibit 99.1

NEWS RELEASE

Nabors Announces Revised Third Quarter 2014 Results;

GAAP Earnings per Share of $0.34

HAMILTON, Bermuda, November 10, 2014 — Nabors Industries Ltd. (NYSE:NBR) today reported revised third-quarter 2014 diluted earnings per share from continuing operations of $0.34, versus the $0.19 previously announced in our earnings press release for the third quarter of 2014 that was issued on October 21, 2014. The revision is due to a change in the non-cash income tax provision for the third quarter. Upon review, it was determined that the previously reported $63.3 million non-cash tax charge related to the restructuring of the Company’s completion and production entities in preparation for the pending transaction with C&J Energy Services should be reduced by approximately $45.0 million to $18.3 million.

As a result of the revision, the total income tax provision for the third quarter of 2014 is $61.5 million, compared to the $106.5 million previously announced, and net income for the period is $106.4 million, compared to the $61.4 million previously announced.

Attached to this press release are revised financial information tables that give effect to these adjustments. These tables replace in their entirety the financial information accompanying our earnings press release for the third quarter of 2014, dated October 21, 2014.

###

About Nabors

The Nabors companies own and operate approximately 501 land drilling rigs throughout the world and approximately 542 land workover and well servicing rigs in North America. Nabors’ actively marketed offshore fleet consists of 37 platform rigs in the United States and multiple international markets. In addition, Nabors is one of the largest providers of hydraulic fracturing, cementing, nitrogen and acid pressure pumping services with approximately 800,000 hydraulic horsepower currently in service. Nabors also manufactures top drives and drilling instrumentation systems. Nabors participates in most of the significant oil and gas 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. The projections contained in this release reflect management’s estimates as of the date of the release. Nabors does not undertake to update these forward-looking statements.

MEDIA CONTACT:

Dennis A. Smith, Director of Corporate Development & Investor Relations, +1 281-775-8038. To request investor materials, contact Nabors’ corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail at mark.andrews@nabors.com

SOURCE: Nabors Industries Ltd.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) — REVISED

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30, 2014									September 30, 2014
(In thousands, except per share amounts)	As reported			Adjustments			Revised			As reported			Adjustments			Revised

Revenues and other income:
Operating revenues	$	1,813,762		$	—		$	1,813,762		$	5,020,361		$	—		$	5,020,361
Earnings (losses) from unconsolidated affiliates	(2,851		)	—			(2,851		)	(5,872		)	—			(5,872		)
Investment income (loss)	2,189			—			2,189			10,235			—			10,235
Total revenues and other income	1,813,100			—			1,813,100			5,024,724			—			5,024,724

Costs and other deductions:
Direct costs	1,181,986			—			1,181,986			3,310,220			—			3,310,220
General and administrative expenses	138,967			—			138,967			406,863			—			406,863
Depreciation and amortization	286,581			—			286,581			851,528			—			851,528
Interest expense	43,138			—			43,138			134,251			—			134,251
Losses (gains) on sales and disposals of long-lived assets and other expense (income), net	(1,513		)	—			(1,513		)	16,467			—			16,467
Impairments and other charges	—			—			—			—			—			—
Total costs and other deductions	1,649,159			—			1,649,159			4,719,329			—			4,719,329

Income (loss) from continuing operations before income taxes	163,941			—			163,941			305,395			—			305,395

Income tax expense (benefit)	106,515			(45,004		)	61,511			131,279			(45,004		)	86,275

Subsidiary preferred stock dividend	—			—			—			1,984			—			1,984

Income (loss) from continuing operations, net of tax	57,426			45,004			102,430			172,132			45,004			217,136
Income (loss) from discontinued operations, net of tax	4,005			—			4,005			4,488			—			4,488

Net income (loss)	61,431			45,004			106,435			176,620			45,004			221,624
Less: Net (income) loss attributable to noncontrolling interest	(387		)	—			(387		)	(1,213		)	—			(1,213		)
Net income (loss) attributable to Nabors	$	61,044		$	45,004		$	106,048		$	175,407		$	45,004		$	220,411

Earnings (losses) per share: (1)
Basic from continuing operations	$	.19		$	.15		$	.34		$	.57		$	.15		$	.72
Basic from discontinued operations	.02			—			.02			.01			.01			.02
Basic	$	.21		$	.15		$	.36		$	.58		$	.16		$	.74

Diluted from continuing operations	$	.19		$	.15		$	.34		$	.56		$	.15		$	.71
Diluted from discontinued operations	.01			—			.01			.02			—			.02
Diluted	$	.20		$	.15		$	.35		$	.58		$	.15		$	.73

Weighted-average number of common shares outstanding: (1)
Basic	292,621			—			292,621			292,613			—			292,613
Diluted	295,005			—			295,005			295,353			—			295,353

(1) See “Computation of Earnings (Losses) Per Share Revised” included herein as a separate schedule.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS — REVISED

	(Unaudited)
	September 30, 2014
(In thousands)	As reported		Adjustments			Revised

ASSETS
Current assets:
Cash and short-term investments	$	464,818	$	—		$	464,818
Accounts receivable, net	1,624,441		—			1,624,441
Assets held for sale	158,327		—			158,327
Other current assets	540,828		4,057			544,885
Total current assets	2,788,414		4,057			2,792,471
Long-term investments and other receivables	2,568		—			2,568
Property, plant and equipment, net	9,016,508		—			9,016,508
Goodwill	512,203		—			512,203
Investment in unconsolidated affiliates	60,451		—			60,451
Other long-term assets	235,139		—			235,139
Total assets	$	12,615,283	$	4,057		$	12,619,340

LIABILITIES AND EQUITY
Current liabilities:
Current debt	$	196	$	—		$	196
Other current liabilities	1,416,510		(1,125		)	1,415,385
Total current liabilities	1,416,706		(1,125		)	1,415,581
Long-term debt	4,255,136		—			4,255,136
Other long-term liabilities	1,115,211		(39,822		)	1,075,389
Total liabilities	6,787,053		(40,947		)	6,746,106

Equity:
Shareholders’ equity	5,817,869		45,004			5,862,873
Noncontrolling interest	10,361		—			10,361
Total equity	5,828,230		45,004			5,873,234
Total liabilities and equity	$	12,615,283	$	4,057		$	12,619,340

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

COMPUTATION OF EARNINGS (LOSSES) PER SHARE — REVISED

(Unaudited)

A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share computations is as follows:

	Three Months Ended									Nine Months Ended
	September 30, 2014									September 30, 2014
(In thousands, except per share amounts)	As reported			Adjustments			Revised			As reported			Adjustments			Revised

BASIC EPS:
Income (loss) from continuing operations, net of tax	$	57,426		$	45,004		$	102,430		$	172,132		$	45,004		$	217,136
Less: Net (income) loss attributable to noncontrolling interest	(387		)	—			(387		)	(1,213		)	—			(1,213		)
Less: Redemption of preferred shares	—			—			—			(1,688		)	—			(1,688		)
Less: Earnings allocated to unvested shareholders	(889		)	(690		)	(1,579		)	(2,596		)	(690		)	(3,286		)
Adjusted income (loss) from continuing operations - basic and diluted	$	56,150		$	44,314		$	100,464		$	166,635		$	44,314		$	210,949
Income (loss) from discontinued operations, net of tax	$	4,005		$	—		$	4,005		$	4,488		$	—		$	4,488

Weighted-average number of shares outstanding-basic	292,621			—			292,621			292,613			—			292,613

Earnings (losses) per share:
Basic from continuing operations	$	.19		$	.15		$	.34		$	.57		$	.15		$	.72
Basic from discontinued operations	.02			—			.02			.01			.01			.02
Total Basic	$	.21		$	.15		$	.36		$	.58		$	.16		$	.74

DILUTED EPS:
Income (loss) from continuing operations attributed to common shareholders	$	56,150		$	44,314		$	100,464		$	166,635		$	44,314		$	210,949
Add: Effect of reallocating undistributed earnings of unvested shareholders	5			6			11			19			6			25
Adjusted income (loss) from continuing operations attributed to common shareholders	$	56,155		$	44,320		$	100,475		$	166,654		$	44,320		$	210,974
Income (loss) from discontinued operations	$	4,005		$	—		$	4,005		$	4,488		$	—		$	4,488

Weighted-average number of shares outstanding-basic	292,621			—			292,621			292,613			—			292,613
Add: dilutive effect of potential common shares	2,384			—			2,384			2,740			—			2,740
Weighted-average number of diluted shares outstanding	295,005			—			295,005			295,353			—			295,353

Diluted from continuing operations	$	.19		$	.15		$	.34		$	.56		$	.15		$	.71
Diluted from discontinued operations	.01			—			.01			.02			—			.02
Total Diluted	$	.20		$	.15		$	.35		$	.58		$	.15		$	.73

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) ITEMS EXCLUDING CERTAIN NON-CASH CHARGES AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP) — REVISED

(Unaudited)

			Charges and Non-Operational			As adjusted
	Actuals		Items			(Non-GAAP)
	As reported
(In thousands, except per share amounts)	Three Months Ended September 30, 2014

Income (loss) from continuing operations, net of tax	$	57,426	$	(59,304	)	$	116,730
Diluted earnings (losses) per share from continuing operations	$	0.19	$	(0.20	)	$	0.39

			Charges and Non-Operational		As adjusted
	Actuals		Items		(Non-GAAP)
	Adjustments
(In thousands, except per share amounts)	Three Months Ended September 30, 2014

Income (loss) from continuing operations, net of tax	$	45,004	$	45,004	$	—
Diluted earnings (losses) per share from continuing operations	$	0.15	$	0.15	$	—

			Charges and Non-Operational			As adjusted
	Actuals		Items			(Non-GAAP)
	Revised
(In thousands, except per share amounts)	Three Months Ended September 30, 2014

Income (loss) from continuing operations, net of tax	$	102,430	$	(14,300	)	$	116,730
Diluted earnings (losses) per share from continuing operations	$	0.34	$	(0.05	)	$	0.39

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SCHEDULE OF NON-CASH CHARGES AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP) — REVISED

(Unaudited)

	Three Months Ended September 30, 2014
	As Reported						Adjustments						Revised
				Per Diluted						Per Diluted						Per Diluted
(In thousands, except per share amounts)	2014			Share			2014			Share			2014			Share

Transaction expenses (1)	$	13,062		$	.04		$	—		$	—		$	13,062		.04
Sale of Alaska E&P business (2)	(17,023		)	(.06		)	—			—			(17,023		)	(.06	)
Other non-operational items (3)	—			—			—			—			—			—
Restructuring tax charge (4)	63,265			.22			(45,004		)	(.15		)	18,261			.07

Total Adjustments, net of tax	$	59,304		$	.20		$	(45,004	)	(.15		)	$	14,300		.05

Weighted-average number of shares outstanding - diluted	295,005						295,005						295,005

(1) Represents expenses attributable to pending transaction with C&J Services, net of tax of $3.9 million.

(2) Represents the gain on the divestiture of our Alaska E&P business, net of tax of $5.1 million.

(3) Represents losses on the sale of non-core assets or in unconsolidated businesses in the process of being divested, net of tax of $1.3 million.

(4) Represents a tax charge associated with the restructuring of our completion and production services entities in preparation for the transaction with C&J Services.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
(In thousands, except per share amounts)	2014			2013			2014			2014			2013
	Revised									Revised
Revenues and other income:
Operating revenues	$	1,813,762		$	1,551,593		$	1,616,981		$	5,020,361		$	4,545,037
Earnings (losses) from unconsolidated affiliates	(2,851		)	(2,628		)	(576		)	(5,872		)	1,627
Investment income (loss)	2,189			1,229			7,066			10,235			95,471
Total revenues and other income	1,813,100			1,550,194			1,623,471			5,024,724			4,642,135

Costs and other deductions:
Direct costs	1,181,986			981,685			1,066,495			3,310,220			2,948,987
General and administrative expenses	138,967			127,943			133,630			406,863			390,023
Depreciation and amortization	286,581			273,444			282,820			851,528			809,019
Interest expense	43,138			56,059			46,303			134,251			176,343
Losses (gains) on sales and disposals of long-lived assets and other expense (income), net	(1,513		)	3,266			16,504			16,467			27,245
Impairments and other charges	—			242,241			—			—			287,241
Total costs and other deductions	1,649,159			1,684,638			1,545,752			4,719,329			4,638,858

Income (loss) from continuing operations before income taxes	163,941			(134,444		)	77,719			305,395			3,277

Income tax expense (benefit)	61,511			(44,684		)	10,756			86,275			(28,798		)

Subsidiary preferred stock dividend	—			750			1,234			1,984			2,250

Income (loss) from continuing operations, net of tax	102,430			(90,510		)	65,729			217,136			29,825
Income (loss) from discontinued operations, net of tax	4,005			(14,430		)	(1,032		)	4,488			(34,292		)

Net income (loss)	106,435			(104,940		)	64,697			221,624			(4,467		)
Less: Net (income) loss attributable to noncontrolling interest	(387		)	(441		)	(253		)	(1,213		)	(6,154		)
Net income (loss) attributable to Nabors	$	106,048		$	(105,381	)	$	64,444		$	220,411		$	(10,621	)

Earnings (losses) per share: (1)
Basic from continuing operations	$	.34		$	(.30	)	$	.21		$	.72		$	.08
Basic from discontinued operations	.02			(.05		)	—			.02			(.11		)
Basic	$	.36		$	(.35	)	$	.21		$	.74		$	(.03	)

Diluted from continuing operations	$	.34		$	(.30	)	$	.21		$	.71		$	.08
Diluted from discontinued operations	.01			(.05		)	—			.02			(.11		)
Diluted	$	.35		$	(.35	)	$	.21		$	.73		$	(.03	)

Weighted-average number of common shares outstanding: (1)
Basic	292,621			295,076			297,984			292,613			293,837
Diluted	295,005			295,076			300,981			295,353			296,208

Adjusted EBITDA (2)	$	489,958		$	439,337		$	416,280		$	1,297,406		$	1,207,654

Adjusted income (loss) derived from operating activities (3)	$	203,377		$	165,893		$	133,460		$	445,878		$	398,635

(1)	See “Computation of Earnings (Losses) Per Share” included herein as a separate schedule.

(2)	Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading “Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes”.

(3)	Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses and depreciation and amortization from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for those amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading “Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes”.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	September 30,		June 30,		December 31,
(In thousands, except ratios)	2014		2014		2013
	Revised
ASSETS
Current assets:
Cash and short-term investments	$	464,818	$	486,344	$	507,133
Accounts receivable, net	1,624,441		1,448,511		1,399,543
Assets held for sale	158,327		233,163		243,264
Other current assets	544,885		642,620		603,890
Total current assets	2,792,471		2,810,638		2,753,830
Long-term investments and other receivables	2,568		2,724		3,236
Property, plant and equipment, net	9,016,508		8,832,966		8,597,813
Goodwill	512,203		512,897		512,964
Investment in unconsolidated affiliates	60,451		60,509		64,260
Other long-term assets	235,139		216,265		227,708
Total assets	$	12,619,340	$	12,435,999	$	12,159,811

LIABILITIES AND EQUITY
Current liabilities:
Current debt	$	196	$	207	$	10,185
Other current liabilities	1,415,385		1,319,379		1,301,239
Total current liabilities	1,415,581		1,319,586		1,311,424
Long-term debt	4,255,136		3,956,290		3,904,117
Other long-term liabilities	1,075,389		1,078,201		893,905
Total liabilities	6,746,106		6,354,077		6,109,446

Subsidiary preferred stock (1)	—		—		69,188

Equity:
Shareholders’ equity	5,862,873		6,071,426		5,969,086
Noncontrolling interest	10,361		10,496		12,091
Total equity	5,873,234		6,081,922		5,981,177
Total liabilities and equity	$	12,619,340	$	12,435,999	$	12,159,811

(1) Represents subsidiary preferred stock from acquisition in September 2010. All 75,000 outstanding shares were redeemed in June 2014.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SEGMENT REPORTING

(Unaudited)

The following tables set forth certain information with respect to our reportable segments and rig activity:

	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
(In thousands, except rig activity)	2014			2013			2014			2014			2013

Reportable segments:
Operating revenues and Earnings (losses) from unconsolidated affiliates:
Drilling and Rig Services:
U.S.	$	571,736		$	491,857		$	532,894		$	1,615,106		$	1,443,759
Canada	80,491			81,397			54,861			246,973			273,053
International	424,698			383,712			391,251			1,191,018			1,056,649
Rig Services (1)	191,437			131,151			161,740			496,903			383,502
Subtotal Drilling and Rig Services (2)	1,268,362			1,088,117			1,140,746			3,550,000			3,156,963

Completion and Production Services:
Completion Services	352,027			266,520			276,639			856,565			782,674
Production Services	259,863			246,806			258,378			793,641			742,979
Subtotal Completion and Production Services (3)	611,890			513,326			535,017			1,650,206			1,525,653

Other reconciling items (4)	(69,341		)	(52,478		)	(59,358		)	(185,717		)	(135,952		)
Total operating revenues and earnings (losses) from unconsolidated affiliates	$	1,810,911		$	1,548,965		$	1,616,405		$	5,014,489		$	4,546,664

Adjusted EBITDA: (5)
Drilling and Rig Services:
U.S.	$	234,980		$	204,622		$	206,061		$	628,678		$	568,280
Canada	25,804			26,232			14,216			80,139			89,830
International	159,588			142,767			139,336			436,915			366,772
Rig Services (1)	30,153			10,567			17,176			63,820			22,174
Subtotal Drilling and Rig Services (2)	450,525			384,188			376,789			1,209,552			1,047,056

Completion and Production Services:
Completion Services	40,507			39,910			27,614			61,467			120,113
Production Services	49,312			50,904			58,267			167,635			150,058
Subtotal Completion and Production Services (3)	89,819			90,814			85,881			229,102			270,171

Other reconciling items (6)	(50,386		)	(35,665		)	(46,390		)	(141,248		)	(109,573		)
Total adjusted EBITDA	$	489,958		$	439,337		$	416,280		$	1,297,406		$	1,207,654

Adjusted income (loss) derived from operating activities: (7)
Drilling and Rig Services:
U.S.	$	117,212		$	92,710		$	89,977		$	279,683		$	240,118
Canada	11,517			12,244			225			37,902			46,657
International	68,452			54,271			50,583			167,154			108,221
Rig Services (1)	21,136			2,357			9,059			38,923			(1,739		)
Subtotal Drilling and Rig Services (2)	218,317			161,582			149,844			523,662			393,257

Completion and Production Services:
Completion Services	14,211			13,024			(581		)	(20,005		)	37,650
Production Services	21,182			25,909			29,889			81,662			75,394
Subtotal Completion and Production Services (3)	35,393			38,933			29,308			61,657			113,044

Other reconciling items (6)	(50,333		)	(34,622		)	(45,692		)	(139,441		)	(107,666		)
Total adjusted income (loss) derived from operating activities	$	203,377		$	165,893		$	133,460		$	445,878		$	398,635

Rig activity:
Rig years: (8)
U.S.	216.0			195.5			215.3			212.7			193.7
Canada	34.3			30.0			21.6			33.2			29.1
International (9)	130.1			124.2			127.3			129.1			124.0
Total rig years	380.4			349.7			364.2			375.0			346.8
Rig hours: (10)
U.S. Production Services	205,604			223,504			210,750			626,336			660,483
Canada Production Services	36,509			39,463			28,671			106,720			116,292
Total rig hours	242,113			262,967			239,421			733,056			776,775

(1) Includes our drilling technology and top drive manufacturing, directional drilling, rig instrumentation and software services. These services represent our other companies that are not aggregated into a reportable operating segment.

(2) Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of ($2.9) million, $(2.9) million and ($.8) million for the three months ended September 30, 2014 and 2013 and June 30, 2014, respectively and ($6.1) million and $1.0 million for the nine months ended September 30, 2014 and 2013, respectively.

(3) Includes earnings (losses), net from unconsolidated affiliates, accounted for using the equity method, of $0 million, $.3 million and $.2 million for the three months ended September 30, 2014 and 2013 and June 30, 2014, respectively and $.2 million and $.6 million for the nine months ended September 30, 2014 and 2013, respectively.

(4) Represents the elimination of inter-segment transactions.

(5) Adjusted EBITDA is computed by subtracting the sum of direct costs and general and administrative expenses from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. There are limitations inherent in using adjusted EBITDA as a measure of overall profitability because it excludes significant expense items. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted EBITDA and adjusted income (loss) derived from operating activities, because we believe that these financial measures accurately reflect our ongoing profitability. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. To compensate for the limitations in utilizing adjusted EBITDA as an operating measure, management also uses GAAP measures of performance, including income from continuing operations and net income, to evaluate performance, but only with respect to the Company as a whole and not on a segment basis. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading “Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes”.

(6) Represents the elimination of inter-segment transactions and unallocated corporate expenses.

(7) Adjusted income (loss) derived from operating activities is computed by subtracting the sum of direct costs, general and administrative expenses and depreciation and amortization from the sum of Operating revenues and Earnings (losses) from unconsolidated affiliates. These amounts should not be used as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our business units and the consolidated company based on several criteria, including adjusted income (loss) derived from operating activities, because it believes that these financial measures accurately reflect our ongoing profitability. A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure, is provided in the table set forth immediately following the heading “Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes”.

(8) Excludes well-servicing rigs, which are measured in rig hours. Includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates. Rig years represent 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.

(9) International rig years includes our equivalent percentage ownership of rigs owned by unconsolidated affiliates, which totaled 2.5 years during each of the three months ended September 30, 2014 and 2013 and June 30, 2014 and 2.5 years for each of the nine months ended September 30, 2014 and 2013.

(10) Rig hours represents the number of hours that our well-servicing rig fleet operated during the period.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
(In thousands)	2014			2013			2014			2014			2013

Adjusted EBITDA	$	489,958		$	439,337		$	416,280		$	1,297,406		$	1,207,654
Less: Depreciation and amortization	286,581			273,444			282,820			851,528			809,019
Adjusted income (loss) derived from operating activities	203,377			165,893			133,460			445,878			398,635

Interest expense	(43,138		)	(56,059		)	(46,303		)	(134,251		)	(176,343		)
Investment income (loss)	2,189			1,229			7,066			10,235			95,471
Gains (losses) on sales and disposals of
long-lived assets and other income (expense), net	1,513			(3,266		)	(16,504		)	(16,467		)	(27,245		)
Impairments and other charges	—			(242,241		)	—			—			(287,241		)
Income (loss) from continuing operations before income taxes	$	163,941		$	(134,444	)	$	77,719		$	305,395		$	3,277

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

COMPUTATION OF EARNINGS (LOSSES) PER SHARE

(Unaudited)

A reconciliation of the numerators and denominators of the basic and diluted earnings (losses) per share computations is as follows:

	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
(In thousands, except per share amounts)	2014			2013			2014			2014			2013
	Revised									Revised
BASIC EPS:
Income (loss) from continuing operations, net of tax	$	102,430		$	(90,510	)	$	65,729		$	217,136		$	29,825
Less: Net (income) loss attributable to noncontrolling interest	(387		)	(441		)	(253		)	(1,213		)	(6,154		)
Less: Redemption of preferred shares	—			—			(1,688		)	(1,688		)	—
Less: Earnings allocated to unvested shareholders	(1,579		)	1,411			(974		)	(3,286		)	671
Adjusted income (loss) from continuing operations - basic and diluted	$	100,464		$	(89,540	)	$	62,814		$	210,949		$	24,342
Income (loss) from discontinued operations, net of tax	$	4,005		$	(14,430	)	$	(1,032	)	$	4,488		$	(34,292	)

Weighted-average number of shares outstanding-basic	292,621			295,076			297,984			292,613			293,837

Earnings (losses) per share:
Basic from continuing operations	$	.34		$	(.30	)	$	.21		$	.72		$	.08
Basic from discontinued operations	.02			(.05		)	—			.02			(.11		)
Total Basic	$	.36		$	(.35	)	$	.21		$	.74		$	(.03	)

DILUTED EPS:
Income (loss) from continuing operations attributed to common shareholders	$	100,464		$	(89,540	)	$	62,814		$	210,949		$	24,342
Add: Effect of reallocating undistributed earnings of unvested shareholders	11			—			—			25			—
Adjusted income (loss) from continuing operations attributed to common shareholders	$	100,475		$	(89,540	)	$	62,814		$	210,974		$	24,342
Income (loss) from discontinued operations	$	4,005		$	(14,430	)	$	(1,032	)	$	4,488		$	(34,292	)

Weighted-average number of shares outstanding-basic	292,621			295,076			297,984			292,613			293,837
Add: dilutive effect of potential common shares	2,384			—			2,997			2,740			2,371
Weighted-average number of diluted shares outstanding	295,005			295,076			300,981			295,353			296,208

Diluted from continuing operations	$	.34		$	(.30	)	$	.21		$	.71		$	.08
Diluted from discontinued operations	.01			(.05		)	—			.02			(.11		)
Total Diluted	$	.35		$	(.35	)	$	.21		$	.73		$	(.03	)

Restricted stock grants that contain non-forfeitable rights to dividends are considered participating securities. As such, these grants are included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting. For all periods presented, the computation of diluted earnings (losses) per share excluded outstanding stock options with exercise prices greater than the average market price of Nabors’ common shares because their inclusion would have been anti-dilutive and because they were not considered participating securities. The average number of options that were excluded from diluted earnings (losses) per share that would have potentially diluted earnings (losses) per share were 5,389,090 and 18,786,837 shares during the three months ended September 30, 2014 and 2013, respectively; 5,782,273 shares during the three months ended June 30, 2014; and 6,341,624 and 11,887,169 shares during the nine months ended September 30, 2014 and 2013, respectively. In any period during which the average market price of Nabors’ common shares exceeds the exercise prices of these stock options, such stock options are included in our diluted earnings (losses) per share computation using the if-converted method of accounting.

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) ITEMS EXCLUDING CERTAIN NON-CASH CHARGES
AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)

(Unaudited)

			Charges and Non-Operational			As adjusted
	Actuals		Items			(Non-GAAP)
(In thousands, except per share amounts)	Three Months Ended September 30, 2014
			Revised
Income (loss) from continuing operations, net of tax	$	102,430	$	(14,300	)	$	116,730
Diluted earnings (losses) per share from continuing operations	$	0.34	$	(0.05	)	$	0.39

	Three Months Ended June 30, 2014

Income (loss) from continuing operations, net of tax	$	65,729	$	(8,284	)	$	74,013
Diluted earnings (losses) per share from continuing operations	$	0.21	$	(0.03	)	$	0.24

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SCHEDULE OF NON-CASH CHARGES AND OTHER NON-OPERATIONAL ITEMS (NON-GAAP)

(Unaudited)

	Three Months Ended
	September 30,						June 30,
	Revised
				Per Diluted					Per Diluted
(In thousands, except per share amounts)	2014			Share			2014		Share

Transaction expenses (1)	$	13,062		$	.04		$	—	$	—
Sale of Alaska E&P business (2)	(17,023		)	(.06		)	—		—
Other non-operational items (3)	—			—			8,284		.03
Restructuring tax charge (4)	18,261			.07			—		—

Total Adjustments, net of tax	$	14,300		$	.05		$	8,284	.03

Weighted-average number of shares outstanding - diluted	295,005						300,981

(1) Represents expenses attributable to pending transaction with C&J Services, net of tax of $3.9 million.

(2) Represents the gain on the divestiture of our Alaska E&P business, net of tax of $5.1 million.

(3) Represents losses on the sale of non-core assets or in unconsolidated businesses in the process of being divested, net of tax of $1.3 million.

(4) Represents a tax charge associated with the restructuring of our completion and production services entities in preparation for the transaction with C&J Services.

Attached files

Stock widget

Investing forum

NABORS INDUSTRIES LTD Reports