Baker Hughes Announces Third Quarter Results

HOUSTON, Nov 04, 2009 /PRNewswire via COMTEX News Network/ -- Baker Hughes Incorporated (NYSE: BHI) today announced that net income for the third quarter 2009 was $55 million or $0.18 per diluted share compared to $429 million or $1.39 per diluted share for the third quarter 2008 and $87 million or $0.28 per diluted share for the second quarter 2009. Net income for the third quarter 2009 includes expenses of $38 million before tax ($0.08 per share) associated with reorganization, severance and acquisition costs, and an increase to our allowance for doubtful accounts.

As previously reported, net income for the second quarter 2009 included expenses of $54 million before tax ($0.13 per share) comprised of $16 million ($0.04 per share) associated with employee severance and reorganization costs and $38 million ($0.09 per share) associated with increasing our allowance for doubtful accounts.

Revenue for the third quarter 2009 was $2.23 billion, down 26% compared to $3.01 billion for the third quarter 2008 and down 4% compared to $2.34 billion for the second quarter 2009.

Chad C. Deaton, Baker Hughes chairman, president and chief executive officer, said, "Third quarter North America operating margins rebounded from the low set in the second quarter of 2009. Aggressive cost cutting in the first half of 2009 enabled us to absorb additional price decreases and improve profitability on modest activity increases.

"International results were disappointing with revenue less than expected and price discounting greater than expected. Our operating profit margin was also impacted by the extra costs we are carrying to assure a smooth organizational transition we announced in May 2009. Given the progress we are making on this company transformation these additional costs should largely be behind us as we enter 2010.

"Looking forward, gas-directed drilling in North America is gradually increasing and we believe this trend will likely continue through 2010. Internationally, we believe that customer spending reached its low point this quarter and that forecasts for increasing economic growth, particularly in China, India and the Middle East, combined with modest spare production capacity are supporting higher oil prices and laying the foundation for increased spending in 2010.

"We are continuing to make good progress on the pending BJ Services transaction. Regulatory filings have been made in the US and in some international jurisdictions, and our preliminary proxy statement has been filed and is being reviewed by the SEC. We have received a 'second request' from the Department of Justice which is limited in product and geographical scope. As a result of the second request, we now project that the transaction will close in the first quarter of 2010.

"With the pending addition of BJ Services, we expect to significantly advance our competitiveness as we improve our customer intimacy, operational effectiveness, and product portfolio."

During the third quarter 2009, debt decreased $23 million to $1.81 billion and cash and short-term investments increased $125 million to $1.49 billion as compared to the second quarter 2009. Capital expenditures were $222 million, depreciation and amortization expense was $177 million and dividend payments were $47 million in the third quarter 2009.

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