EXHIBIT 99.1
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(NABORS INDUSTRIES LOGO) NEWS RELEASE
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NABORS POST RECORD YEAR AND QUARTER AT $4.07 AND $1.35 PER DILUTED SHARE,
EXCLUDING LITIGATION AWARD
HAMILTON, BERMUDA, FEBRUARY 6, 2006, NABORS INDUSTRIES LTD. (NYSE: NBR), today
announced its results for the fourth quarter and full year ended December 31,
2005. Adjusted income derived from operating activities(1) increased 157% to
$292.2 million for the fourth quarter compared to $113.8 million in the fourth
quarter of 2004 and $241.9 million in the third quarter of this year. Net income
increased by 104% to $221.6 million ($1.35 per diluted share) for the fourth
quarter compared to $108.8 million ($0.68 per diluted share) in the fourth
quarter of 2004 and $178.9 million ($1.11 per diluted share) in the third
quarter of this year, excluding the effect of an interim litigation award
(discussed below) entered against the Company late this afternoon in the amount
of $25.6 million (plus attorneys fees and costs). After taking into account the
effect of the litigation award, net income for the fourth quarter was $210.6
($1.29 per diluted share). For the full year ended December 31, 2005, adjusted
income derived from operating activities rose by 167% to $879.8 million,
compared to $329.7 million in 2004. Net income for 2005 was $659.7 million
($4.07 per diluted share) compared to $302.5 million ($1.92 per diluted share)
in 2004, excluding the effect of the litigation award. After taking into account
the effect of the litigation award, net income for the full year was $648.7
($4.00 per diluted share).(2)
Gene Isenberg, Nabors' Chairman and CEO, commented on the Company's results.
"Our fourth quarter and full year results set records as the underlying strength
of our operations easily overcame several factors, such as downtime on offshore
rigs due to hurricane repairs and regulatory recertification, asset retirement
charges and a higher effective tax rate. Meaningful year-over-year improvements
were achieved in each of our operating units, led by our US Lower 48 Land
Drilling business which posted a fivefold increase. Our US Land Well-Servicing
and US Offshore businesses nearly doubled, while Canada and International both
gained over 50%. Our Other Operating Segments also made a significant
contribution following a loss in 2004. All of this resulted in new records in
return on average capital employed as the Company posted 24% in the quarter and
19% for the year. Nabors' ability to deploy growth capital and generate
substantially assured returns of greater than 20% is unmatched in our history
and probably the industry.
----------
(1) Adjusted income derived from operating activities is computed by:
subtracting direct costs, general and administrative expenses, depreciation
and amortization, and depletion 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."
(2) The Company also is presenting net income and earnings per share
numbers before and after the effect of an interim litigation judgment
against the Company late this afternoon in the amount of $25.6 million,
plus an undetermined amount of attorneys fees and costs. The Company is
including the adjusted net income number because management believes the
non-GAAP financial measure to be more indicative of the Company's ongoing
operating results and financial condition.
"Customer acceptance of our new rigs is proceeding at an extraordinary pace and
is best evidenced by the 21 new awards we have received in the seven weeks since
our December 14th analyst meeting. This brings the total number of term
contracts securing new built rigs to 82 in less than 13 months, making our
previous projection of 100 new rig contracts company wide by mid 2007 readily
achievable. In addition, 8 existing rigs are completing
reactivation/refurbishment before beginning term contracts, with another 10
expected to be completed and operating under term contracts by year's end.
"Meanwhile the pace of margin improvement continues to exceed our expectations
in virtually every area of our business, with our US Lower 48 operations
achieving a margin increase of $4,250 per rig day for the year and $1,031 per
rig day for the sequential quarter with the fourth quarter averaging $8,634 per
rig day and nearly $10,500 per rig day in our Canadian drilling business. Demand
for rigs continues unabated and customer commitments and forward plans lead us
to believe that a shortfall in rig supply will persist for several years. The
visibility of our future results has never been better with the magnitude of
current and prospective term contracts assuring an increasing proportion of our
income expectations throughout all of our rig units. However, we still retain a
high degree of discretion as to the proportion of our existing fleet that is
committed to term contracts or exposed to spot market pricing and new build
tie-in opportunities.
"Our US Lower 48 Land Drilling business realized the largest increase in
results, largely on the strength of increased pricing and refurbished rigs.
Demand for rigs remains strong against a constrained supply and this imbalance
continues to increase pricing faster than we previously anticipated. An
increasing proportion of this unit's future growth will be derived from new
built rigs, virtually all with three year contracts. This is evident by the 10
commitments we have received since our mid-December analyst meeting, bringing
the total number of new rig commitments in the last nine months to 57. The
certainty of future results is being enhanced by term contracts on existing
rigs, which increased by 15 to 112 out of the 255 currently working. Safety,
performance and efficiency are also at extraordinarily high levels, particularly
when you consider that in the last three years this unit increased its aggregate
man-hours worked by 132% to over 15 million in 2005 while reducing the number
and severity of lost time incidents by almost 60% to 0.17 per 0.2 million
man-hours.
"Canada set a new quarterly and full year record, surpassing the customarily
peak first quarter by over 30% and the previous year by 50% on the strength of a
substantial increase in margins and unseasonably high activity late in the year.
The performance in the fourth quarter, where results were nearly double the
prior year, portends a new record for the first quarter and full year 2006 with
an expectation of even higher utilization and margins. In recent weeks Canada
has also secured five commitments for new PACE rigs and expects to roll out
three of our new coiled tubing/stem drilling rigs in the first quarter. These
rigs have abundant opportunities in both Canada and the US Lower 48.
"Our US Land Well-Servicing business achieved an 87% increase in 2005, ending
the year with a record performance in what is traditionally the weakest quarter
of the year. This was fueled by significantly higher pricing and a less than
normal seasonal decline in rig hours worked. This is indicative of the strength
of demand in this market, which is leading to further price increases in the
first quarter. We also continue to see further opportunities for investment in
this area.
"Our US Offshore unit saw an 88% increase in its full year results, despite a
significantly weaker fourth quarter following the hurricanes. Not only did we
lose revenue from multiple rigs under repair, but we also saw a number of
projects postponed or cancelled by various customers. Our Barge Rig 300 returned
to service last week and our jackup rig 54 is nearly ready to return to work.
The outlook for this business is very strong with substantial increases in
jackup rates exerting the greatest impact. During the second half of the year we
expect to see even greater improvement with the deployment of Barge 301 and
SuperSundowners(R) XX and XXI, all new rigs currently under construction.
"Our International results increased by over 50% during 2005 and should see an
even larger increase in 2006, primarily in the second half as the effects of
multiple rig repricings and 18 incremental rig deployments are realized.
Commencement of 11 of these rig contracts will occur in the first half
including: Dolphin 111 jackup offshore Angola; the newly constructed MODS 175
rig for offshore New Zealand; the first two of four platform rigs (two MASE and
two SuperSundownwers) awarded by PEMEX for offshore Mexico; and seven land rigs,
six newly constructed and one refurbished. These land rigs will be deployed in
Saudi Arabia, Venezuela, Algeria, and Oman. Another two PACE rigs will commence
operations in Saudi Aramco in the third quarter of 2006. This unit also was the
recipient of seven new PACE rig awards in the last few weeks, all of which are
expected to commence in 2006. The awards are for term contracts in Saudi Arabia
(2), Oman (2), Libya (1), Tanzania (1) and Brunei (1). There remain a large
number of current and prospective opportunities for additional new PACE rigs.
International's fourth quarter 2005 results were dampened by downtime associated
with two jackups in dry-dock for much of the quarter due to regulatory
recertification, a situation that will also effect the first quarter.
"Our Other Operating Segments continue to improve at a rapid rate led by our
Marine Transportation unit. Ryan, Canrig and EPOCH also fueled the increase with
each showing sequential improvement of over 40%.
"During the quarter we continued to effect our stock buyback program with a
repurchase of 289,100 additional shares at an average price of $65.39. This
brings 2005's total purchases to 1,789,100 shares at an average price of $55.60
per share. We also expect to redeem for cash virtually all of our approximately
$827 million (accreted value) in zero coupon convertible Senior Debentures due
2021 given that today is the first of a series of opportunities that occur on
each fifth anniversary for holders to redeem the debentures. We will announce
the magnitude of the redemption as soon as the final amount is known.
"During the quarter we were the defendant in a class-action arbitration hearing
regarding compensation issues brought on behalf of field employees of our
well-servicing unit operations in California. Late this afternoon, we received
an interim judgment against the Company in the amount of $25.6 million (plus an
undetermined amount of attorneys fees and costs), which was in excess of
reserves established by the Company in the amount of $10.6 million as of
September 30, 2005. Given the timing of the award, we have not yet had an
opportunity to fully consider the arbitrator's decision.
"In summary, all of the developments we experienced throughout 2005 and
particularly during the fourth quarter served to further reinforce our
conviction in the strength and duration of this cycle. We are focused on
capturing a disproportionate share of the increasing global demand for new and
existing rigs. Our success to date in this effort is indicative of the inherent
advantages we enjoy and is resulting in a substantially larger and newer global
fleet underwritten with long-term contract commitments. This is providing us
with the highest degree of performance visibility in our history and I look
forward to continue reporting results that exceed even our optimistic
projections."
The Company will post a group of slides on its website coincident with this
release for interested investors to utilize in following the review of our
business results and outlook during a conference call it will conduct, tomorrow
Tuesday, February 7, 2006, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time).
The call can be accessed on our website at WWW.NABORS.COM, or through First Call
at WWW.FIRSTCALLEVENTS.COM. The slides will be available on the Nabors website
and can be viewed or downloaded by going to "Investor Information" and then to
"Events Calendar".
The Nabors companies own and operate almost 600 land drilling and approximately
780 land workover and well-servicing rigs worldwide. Offshore, Nabors operates
43 platform rigs, 19 jack-up units and three barge rigs in the United States and
multiple international markets. Nabors markets 28 marine transportation and
supply 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 OUR CORPORATE HEADQUARTERS IN HAMILTON, BERMUDA
AT (441) 292-1510 OR VIA EMAIL AT DAN.MCLACHLIN@NABORS.COM.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
EXCLUDING LITIGATION AWARD
(UNAUDITED)
THREE MONTHS ENDED YEAR ENDED
------------------------------------- -----------------------
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
--------------------- ------------- -----------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2005 (1) 2004 2005 2005 (1) 2004
---------- -------- ------------- ---------- ----------
Revenues and other income:
Operating revenues $1,017,589 $684,683 $893,254 $3,459,908 $2,394,031
Earnings (losses) from unconsolidated affiliates (1,627) (626) 91 5,671 4,057
Investment income 30,886 16,958 27,178 85,430 50,064
---------- -------- -------- ---------- ----------
Total revenues and other income 1,046,848 701,015 920,523 3,551,009 2,448,152
---------- -------- -------- ---------- ----------
Costs and other deductions:
Direct costs 567,505 435,584 500,552 1,997,267 1,572,649
General and administrative expenses 65,648 54,800 65,879 249,973 195,388
Depreciation and amortization 78,795 69,379 73,673 291,638 254,939
Depletion 11,849 10,465 11,349 46,894 45,460
Interest expense 11,582 10,728 11,195 44,847 48,507
Losses (gains) on sales of long-lived assets,
impairment charges and other expense (income), net 7,600 (1,290) 15,684 31,378 (4,629)
---------- -------- -------- ---------- ----------
Total costs and other deductions 742,979 579,666 678,332 2,661,997 2,112,314
---------- -------- -------- ---------- ----------
Income before income taxes 303,869 121,349 242,191 889,012 335,838
Income tax expense (benefit):
Current 6,246 5,295 10,153 30,517 20,867
Deferred 76,051 7,288 53,181 198,847 12,514
---------- -------- -------- ---------- ----------
Income tax expense 82,297 12,583 63,334 229,364 33,381
---------- -------- -------- ---------- ----------
Net income $ 221,572 $108,766 $178,857 $ 659,648 $ 302,457
========== ======== ======== ========== ==========
Earnings per share (2):
Basic $ 1.41 $ .73 $ 1.14 $ 4.23 $ 2.03
Diluted $ 1.35 $ .68 $ 1.11 $ 4.07 $ 1.92
Weighted-average number
of common shares outstanding (2):
Basic 157,452 149,805 157,209 156,067 148,936
---------- -------- -------- ---------- ----------
Diluted 163,768 165,368 161,850 162,189 164,030
---------- -------- -------- ---------- ----------
Adjusted income derived from operating activities (3) $ 292,165 $113,829 $241,892 $ 879,807 $ 329,652
========== ======== ======== ========== ==========
(1) Results presented for the three months and year ended December 31, 2005
exclude the incremental impact of $11 million, net of tax, related to an
interim litigation award entered against the Company on February 6, 2006.
The interim judgment totaled $25.6 million on a pretax basis (plus an
undetermined amount of attorney's fees and costs), which was in excess of
reserves established by the Company of $10.6 million (pretax) as of
September 30, 2005. We have provided a reconciliation below of net income,
as presented herein, to net income including the incremental impact of the
interim litigation award (its nearest comparable GAAP financial measure) and
diluted earnings per share, as presented herein, to diluted earnings per
share including the incremental impact of the interim litigation award (its
nearest comparable GAAP financial measure). The Company included these net
income and diluted earnings per share amounts in the release even though
these amounts exclude the incremental impact of the litigation award because
management believes these non-GAAP financial measures to be more indicative
of the Company's on-going operating results and financial condition.
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
(IN THOUSANDS) 2005 2005
------------------ ------------------
Reconciliation of net income:
As presented $ 221,572 $ 659,648
Impact of litigation award (10,953) (10,953)
------------------ ------------------
Net income, as adjusted $ 210,619 $ 648,695
================== ==================
Reconciliation of diluted earnings per share:
As presented $ 1.35 $ 4.07
Impact of litigation award (0.06) (0.07)
------------------ ------------------
Diluted earnings per share, as adjusted $ 1.29 $ 4.00
================== ==================
(2) See "Computation of Earnings Per Share" included herein as a separate
schedule.
(3) Adjusted income derived from operating activities is computed by:
subtracting direct costs, general and administrative expenses, depreciation
and amortization, and depletion 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".
1-1
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
EXCLUDING LITIGATION AWARD
(UNAUDITED)
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT RATIOS) 2005 2005 2004
------------ ------------- ------------
ASSETS
Current assets:
Cash and short-term investments $1,423,525 $1,431,589 $1,340,013
Accounts receivable, net 822,104 734,982 540,103
Other current assets 358,112 201,522 140,320
---------- ---------- ----------
Total current assets 2,603,741 2,368,093 2,020,436
Long-term investments 222,802 208,269 71,034
Property, plant and equipment, net 3,886,924 3,622,732 3,275,495
Goodwill, net 341,939 342,116 327,225
Other long-term assets 161,434 161,124 168,419
---------- ---------- ----------
Total assets $7,216,840 $6,702,334 $5,862,609
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 824,789 $ 819,682 $ 804,550
Other current liabilities 569,482 483,068 394,766
---------- ---------- ----------
Total current liabilities 1,394,271 1,302,750 1,199,316
Long-term debt 1,194,874 1,197,810 1,201,686
Other long-term liabilities 858,602 635,622 532,214
---------- ---------- ----------
Total liabilities 3,447,747 3,136,182 2,933,216
Shareholders' equity 3,769,093 3,566,152 2,929,393
---------- ---------- ----------
Total liabilities and shareholders' equity $7,216,840 $6,702,334 $5,862,609
========== ========== ==========
Cash, short-term and long-term investments $1,646,327 $1,639,858 $1,411,047
Funded debt to capital ratio:
- Gross 0.35 : 1 0.36 : 1 0.41 : 1
- Net of cash and investments 0.09 : 1 0.1 : 1 0.17 : 1
Interest coverage ratio: 28.4 24.5 14.1
1-2
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
SEGMENT REPORTING
EXCLUDING LITIGATION AWARD
(UNAUDITED)
The following tables set forth certain information with respect to our
reportable segments and rig activity:
THREE MONTHS ENDED YEAR ENDED
------------------------------------- -----------------------
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
--------------------- ------------- -----------------------
(IN THOUSANDS, EXCEPT RIG ACTIVITY) 2005 2004 2005 2005 2004
---------- -------- ------------- ---------- ----------
Reportable segments:
Operating revenues and Earnings from
unconsolidated affiliates:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $ 392,101 $221,299 $355,172 $1,306,963 $ 748,999
U.S. Land Well-servicing 136,550 96,992 130,265 491,704 360,010
U.S. Offshore 33,576 35,972 42,115 158,888 132,778
Alaska 20,886 17,815 18,159 85,768 83,835
Canada 196,157 136,711 131,348 577,627 426,675
International 150,103 122,499 143,355 552,656 444,289
---------- -------- -------- ---------- ----------
Subtotal Contract Drilling (2) 929,373 631,288 820,414 3,173,606 2,196,586
Oil and Gas (3) 16,042 15,788 16,354 62,913 65,303
Other Operating Segments (4) (5) 101,790 55,529 81,753 331,188 205,615
Other reconciling items (6) (31,243) (18,548) (25,176) (102,128) (69,416)
---------- -------- -------- ---------- ----------
Total $1,015,962 $684,057 $893,345 $3,465,579 $2,398,088
========== ======== ======== ========== ==========
Adjusted income (loss) derived from operating activities:
Contract Drilling: (1)
U.S. Lower 48 Land Drilling $ 154,003 $ 41,813 $135,295 $ 464,570 $ 93,573
U.S. Land Well-servicing 32,602 15,074 29,297 107,728 57,712
U.S. Offshore 6,391 6,491 12,883 38,783 20,611
Alaska 2,865 2,564 3,612 16,608 16,052
Canada 61,828 31,410 28,106 137,271 91,421
International 34,633 27,154 38,630 135,588 89,211
---------- -------- -------- ---------- ----------
Subtotal Contract Drilling (2) 292,322 124,506 247,823 900,548 368,580
Oil and Gas (3) 2,453 4,316 3,998 10,194 13,736
Other Operating Segments (4) (5) 15,066 298 7,465 34,063 (5,333)
Other reconciling items (7) (17,676) (15,291) (17,394) (64,998) (47,331)
---------- -------- -------- ---------- ----------
Total 292,165 113,829 241,892 879,807 329,652
Interest expense (11,582) (10,728) (11,195) (44,847) (48,507)
Investment income 30,886 16,958 27,178 85,430 50,064
Gains (losses) on sales of long-lived assets,
impairment charges and other income (expense), net (7,600) 1,290 (15,684) (31,378) 4,629
---------- -------- -------- ---------- ----------
Income before income taxes $ 303,869 $121,349 $242,191 $ 889,012 $ 335,838
========== ======== ======== ========== ==========
Rig activity:
Rig years: (8)
U.S. Lower 48 Land Drilling 247.5 217.2 244.2 235.9 199.0
U.S. Offshore 14.0 14.0 15.7 15.6 14.4
Alaska 8.3 6.7 6.5 7.1 6.9
Canada 64.8 54.4 54.7 53.0 46.5
International (9) 85.5 73.3 84.8 82.3 67.7
---------- -------- -------- ---------- ----------
Total rig years 420.1 365.6 405.9 393.9 334.5
========== ======== ======== ========== ==========
Rig hours: (10)
U.S. Land Well-servicing 297,447 286,104 313,677 1,216,453 1,137,914
Canada Well-servicing 103,452 105,025 89,329 367,414 377,170
---------- -------- -------- ---------- ----------
Total rig hours 400,899 391,129 403,006 1,583,867 1,515,084
========== ======== ======== ========== ==========
(1) These segments include our drilling, workover and well-servicing
operations, on land and offshore.
(2) Includes Earnings (losses) from unconsolidated affiliates, accounted for by
the equity method, of $(2.0) million, $(.37) million and $(1.1) million
for the three months ended December 31, 2005 and 2004 and September 30,
2005, respectively, and $(1.3) million and $1.6 million for the years ended
December 31, 2005 and 2004, respectively.
(3) Represents our oil and gas exploration, development and production
operations.
(4) Includes our marine transportation and supply services, drilling technology
and top drive manufacturing, directional drilling, rig instrumentation and
software, and construction and logistics operations.
(5) Includes Earnings (losses) from unconsolidated affiliates, accounted for by
the equity method, of $.37 million, $(.26) million and $1.2 million for the
three months ended December 31, 2005 and 2004 and September 30, 2005,
respectively, and $7.0 million and $2.5 million for the years ended
December 31, 2005 and 2004, respectively.
(6) Represents the elimination of inter-segment transactions.
1-3
(7) Represents the elimination of inter-segment transactions and unallocated
corporate expenses.
(8) 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.
(9) International rig years include our equivalent percentage ownership of rigs
owned by unconsolidated affiliates which totaled 3.9 years during the three
months ended December 31, 2005 and 4.0 years during the three months ended
December 31, 2004 and September 30, 2005, and 3.9 and 4.0 years for the
years ended December 31, 2005 and 2004, respectively.
(10) Rig hours represents the number of hours that our well-servicing rig fleet
operated during the period.
NABORS INDUSTRIES LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
EXCLUDING LITIGATION AWARD
(UNAUDITED)
A reconciliation of the numerators and denominators of the basic and diluted
earnings per share computations is as follows:
THREE MONTHS ENDED YEAR ENDED
------------------------------------- -----------------------
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
--------------------- ------------- -----------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2005 2004 2005 2005 2004
---------- -------- ------------- ---------- ----------
Net income (numerator):
Net income - basic $221,572 $108,766 $178,857 $659,648 $302,457
Add interest expense on assumed conversion of our
zero coupon convertible/exchangeable senior
debentures/notes, net of tax:
$1.381 billion due 2021 (1) -- 3,139 -- -- 12,438
$700 million due 2023 (2) -- -- -- -- --
-------- -------- -------- -------- --------
Adjusted net income - diluted $221,572 $111,905 $178,857 $659,648 $314,895
-------- -------- -------- -------- --------
Earnings per share:
Basic $ 1.41 $ .73 $ 1.14 $ 4.23 $ 2.03
Diluted $ 1.35 $ .68 $ 1.11 $ 4.07 $ 1.92
Shares (denominator):
Weighted-average number of shares outstanding - basic (3) 157,452 149,805 157,209 156,067 148,936
Net effect of dilutive stock options, warrants and restricted
stock awards based on the treasury stock method 5,267 7,072 4,641 5,073 6,603
Assumed conversion of our zero coupon
convertible/exchangeable senior debentures/notes:
$1.381 billion due 2021 (1) -- 8,491 -- -- 8,491
$700 million due 2023 (2) 1,049 -- -- 1,049 --
-------- -------- -------- -------- --------
Weighted-average number of shares outstanding - diluted 163,768 165,368 161,850 162,189 164,030
-------- -------- -------- -------- --------
(1) Diluted earnings per share for the three months ended December 31, 2005 and
September 30, 2005 and for the year ended December 31, 2005 excludes
approximately 8.5 million potentially dilutive shares initially issuable
upon the conversion of our $1.381 billion zero coupon convertible senior
debentures. Such shares did not impact our calculation of dilutive earnings
per share for those periods as we are required to pay cash up to the
principal amount of any debentures converted resulting from the issuance of
a supplemental indenture relating to the debentures in October 2004. We
would only issue an incremental number of shares upon conversion of these
debentures, and such shares would only be included in the calculation of
the weighted-average number of shares outstanding in our diluted earnings
per share calculation if the price of our shares exceeded approximately
$97. Diluted earnings per share for the three months and year ended
December 31, 2004 reflects the assumed conversion of our $1.381 billion
zero coupon convertible senior debentures, as the conversion in those
periods would have been dilutive.
(2) Diluted earnings per share for the three months and year ended December 31,
2005 reflects the assumed conversion of our $700 million zero coupon senior
exchangeable notes resulting in the inclusion of the incremental number of
shares that we would be required to issue upon exchange of these notes. The
number of shares that we would be required to issue upon exchange consists
of only the incremental shares that would be issued above the principal
amount of the notes, as we are required to pay cash up to the principal
amount of the notes exchanged. We would only issue an incremental number of
shares upon exchange of these notes, and such shares are only included in
the calculation of the weighted-average number of shares outstanding in our
diluted earnings per share calculation, when the price of our shares
exceeds $70.10, which was the case for the applicable measurement period
for the three months and year ended December 31, 2005. Diluted earnings per
share for the three months ended September 30, 2005 and December 31, 2004
and for the year ended December 31, 2004 does not include any incremental
shares issuable upon the exchange of our $700 million zero coupon senior
exchangeable notes as the price of our shares did not exceed $70.10 at the
end of those periods.
(3) Includes the following weighted-average number of common shares of Nabors
and weighted-average number of exchangeable shares of Nabors Exchangeco
(Canada) Inc., an indirect wholly-owned Canadian subsidiary of Nabors,
respectively: 157.3 million and .2 million shares for the three months
ended December 31, 2005; 149.6 million and .2 million shares for the three
months ended December 31, 2004; 157.0 million and .2 million shares for the
three months ended September 30, 2005; 155.9 million and .2 million shares
for the year ended December 31, 2005; and 148.7 million and .3 million
shares for the year ended December 31, 2004. The exchangeable shares of
Nabors Exchangeco 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.
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