Transocean Ltd: Transocean Ltd. Reports Third Quarter 2013 Earnings Results

 Transocean Ltd: Transocean Ltd. Reports Third Quarter 2013 Earnings Results

ZUG SWITZERLAND - Transocean Ltd. (NYSE: RIG) (SIX: RIGN)

  *Third quarter 2013 revenues were $2.558 billion, compared with $2.397
    billion in the second quarter of 2013;
  *Operating and maintenance expenses for the third quarter were $1.491
    billion, compared with $1.393 billion in the second quarter of 2013;
  *Third quarter 2013 net income attributable to controlling interest was
    $546 million, which included $47 million of net favorable items. This
    compares with the second quarter 2013 net income attributable to
    controlling interest of $307 million, which included $85 million of net
    unfavorable items;
  *Third quarter Annual Effective Tax Rate(1) was 19.0 percent, compared with
    23.5 percent in the second quarter of 2013;
  *Third quarter 2013 net income attributable to controlling interest was
    $546 million, or $1.50 per diluted share. After adjusting for net
    favorable items, adjusted earnings from continuing operations were $499
    million, or $1.37 per diluted share;
  *Cash flows from operating activities were $623 million in the third
    quarter, compared with $416 million in the second quarter of 2013;
  *Revenue efficiency(2) was 94.0 percent in the third quarter, compared with
    93.1 percent in the second quarter of 2013. Ultra-deepwater revenue
    efficiency was 92.5 percent, compared with 91.1 percent in the prior
    quarter;
  *Total fleet rig utilization(3) was 83 percent in the third quarter,
    compared with 80 percent in the prior quarter; and
  *Contract backlog was $29.8 billion as of the October 16, 2013 Fleet Status
    Report. Since October 16, 2013, additional backlog totaling $166 million
    was secured.

ZUG, SWITZERLAND - Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported net
income attributable to controlling interest of $546 million, or $1.50 per
diluted share, for the three months ended September 30, 2013. Third quarter
2013 results included net favorable items, after tax, of $47 million, or $0.13
per diluted share, as follows:

  *$55 million, or $0.14 per diluted share, in favorable discrete tax
    benefits;
  *22 million, or $0.06 per diluted share, associated with gains on disposal
    of assets; and
  *$4 million, or $0.02 per diluted share, in income associated with
    discontinued operations.

These net favorable items were partially offset by:

  *$19 million, or $0.05 per diluted share, related to an unfavorable
    adjustment in contingencies associated with the Macondo well incident; and
  *$15 million, or $0.04 per diluted share, of costs associated with
    severance plans established for the company's previously announced
    shore-based organizational efficiency initiative.

After consideration of these net favorable items, third quarter 2013 adjusted
earnings from continuing operations were $499 million, or $1.37 per diluted
share. A reconciliation of the non-GAAP adjusted net income and diluted
earnings per share is included in the accompanying schedules.

In addition to the items above, third quarter 2013 results also included
approximately $11 million, or $0.03 per diluted share, in charges related to
accelerated recognition of existing compensation plans associated with the
implementation of the company's shore-based organizational efficiency
initiative.

The third quarter 2013 results compare with a net loss attributable to
controlling interest of $381 million, or $1.06 per diluted share, for the
three months ended September 30, 2012, which included net unfavorable items of
$887 million, or $2.46 per diluted share. The net unfavorable items were
mostly due to $881 million, or $2.45 per diluted share, associated with the
loss on impairment of assets included in discontinued operations primarily
related to exiting the standard jackup market. After consideration of these
net unfavorable items, third quarter 2012 adjusted earnings from continuing
operations were $506 million, or $1.40 per diluted share.

Operations Quarterly Review

Revenues for the three months ended September 30, 2013 were $2.558 billion,
compared with revenues of $2.397 billion during the quarter ended June 30,
2013. Contract drilling revenues increased $81 million primarily due to
higher utilization on the Discoverer Seven Seas and the GSF Explorer. Higher
fleet revenue efficiency, and higher dayrates, primarily in the North Sea,
also contributed to the sequential increase in contract drilling revenues.
Total fleet utilization was 83 percent in the third quarter of 2013, compared
with 80 percent in the prior quarter. Total fleet revenue efficiency was 94.0
percent in the third quarter, compared with 93.1 percent in the second quarter
of 2013. Other revenues increased $80 million to $156 million for the third
quarter of 2013, compared with $76 million in the prior quarter, primarily due
to increased drilling management services activity.

Operating and maintenance expenses increased $98 million to $1.491 billion for
the third quarter of 2013, compared with $1.393 billion for the prior quarter.
The sequential increase in operating and maintenance expenses was primarily
due to $64 million associated with drilling management services activity.
Contract drilling expenses were also higher mainly due to shipyard costs and
an unfavorable adjustment in contingencies associated with the Macondo well
incident.

General and administrative expenses were $67 million for the third quarter of
2013, compared with $77 million in the previous quarter. Second quarter 2013
general and administrative expenses included certain overhead costs that were
not repeated in the third quarter of 2013.

Third quarter 2013 results included approximately $27 million in costs
associated with severance and the accelerated recognition of existing
compensation plans due to the implementation of the shore-based organizational
efficiency initiative. Approximately $22 million of this cost was included in
operating and maintenance expenses and $5 million was included in general and
administrative expenses.

Annual Effective Tax Rate

Transocean's third quarter Effective Tax Rate^(4) was 10.4 percent, compared
with 28.8 percent in the second quarter of 2013. The decrease in the
Effective Tax Rate was due to changes in estimates, primarily related to
settlements of prior years' tax liabilities. Transocean's Annual Effective
Tax Ratefrom continuing operations for the third quarter of 2013 was 19.0
percent. This compares with 23.5 percent for the prior quarter. The decrease
was primarily due to changes in the annual provision estimate due to favorable
tax legislation and court rulings, the blend of income that is taxed based on
gross revenues versus pre-tax income and rig movements between taxing
jurisdictions, among other items. Third quarter 2013 income tax expense
included a favorable tax benefit of $9 million, or $0.03 per diluted share, to
reflect the decrease in the Annual Effective Tax Rate to 20.6 percent for the
nine months ended September 30, 2013, from 21.6 percent for the six months
ended June 30, 2013.

Other Items

Interest expense, net of amounts capitalized, was $142 million in the third
quarter of 2013, compared with $146 million in the prior quarter. Capitalized
interest for the third quarter was $19 million, compared with $16 million in
the second quarter of 2013. Interest income was $11 million in the third
quarter of 2013, unchanged from the prior quarter.

Cash flows from operating activities were $623 million for the third quarter,
compared with $416 million for the second quarter of 2013. Capital
expenditures increased $98 million to $450 million for the third quarter,
compared with $352 million in the second quarter of 2013. The increase in
capital expenditures was primarily associated with the company's newbuild
program.

Forward-Looking Statements

The statements described in this press release that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements which could be made include, but are not limited
to, changes in tax estimates, statements involving anticipated reduction in
costs, timing of costs savings or expectations of the onshore organizational
efficiency initiative and the offshore operations initiative, or the company's
competitiveness. These include but are not limited to operating hazards and
delays, risks associated with international operations, actions by customers
and other third parties, the future prices of oil and gas and other factors,
including those discussed in the company's most recent Annual Report on Form
10-K for the year ended December 31, 2012, Quarterly Report on Form10-Q for
the quarters ended March 31, 2013 and June 30, 2013, and in the company's
other filings with the SEC, which are available free of charge on the SEC's
website at www.sec.gov. Should one or more of these risks or uncertainties
materialize (or the other consequences of such a development worsen), or
should underlying assumptions prove incorrect, actual results may vary
materially from those indicated or expressed or implied by such
forward-looking statements. All subsequent written and oral forward-looking
statements attributable to the company or to persons acting on our behalf are
expressly qualified in their entirety by reference to these risks and
uncertainties. You should not place undue reliance on forward-looking
statements. Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly update or
revise any forward-looking statements. All non-GAAP financial measure
reconciliations to the most comparative GAAP measure are displayed in
quantitative schedules on the company's web site at www.deepwater.com.

This press release or referenced documents does not constitute an offer to
sell, or a solicitation of an offer to buy, any securities, and it does not
constitute an offering prospectus within the meaning of article 652a or
article 1156 of the Swiss Code of Obligations or a listing prospectus within
the meaning of the listing rules of the SIX Swiss Exchange. Investors must
rely on their own evaluation of Transocean Ltd. and its securities, including
the merits and risks involved. Nothing contained herein is, or shall be relied
on as, a promise or representation as to the future performance of Transocean
Ltd.

Conference Call Information

Transocean will conduct a teleconference call at 10:00 a.m. EST, 4:00 p.m.
CET, on Thursday, November 7, 2013. To participate, dial +1 913-643-4201 and
refer to confirmation code 7221105 approximately five to 10 minutes prior to
the scheduled start time of the call.

In addition, the conference call will be simultaneously broadcast over the
Internet in a listen-only mode and can be accessed by logging onto
Transocean's website at www.deepwater.com and selecting "Investor Relations."
The conference call may also be accessed via the Internet at
www.CompanyBoardroom.com by typing in Transocean's New York Stock Exchange
trading symbol, "RIG." Supplemental materials that may be referenced during
the conference call have been posted to Transocean's website and can be found
by selecting "Investor Relations/Quarterly Toolkit." 

A telephonic replay of the conference call should be available after 1:00 p.m.
EST, 7:00 p.m. CET, on November 7, 2013, and can be accessed by dialing +1
719-457-0820 and referring to the confirmation code 7221105. Also, a replay
will be available through the Internet and can be accessed by visiting either
of the above-referenced internet addresses. Both replay options will be
available for approximately 30 days.

About Transocean

Transocean is a leading international provider of offshore contract drilling
services for oil and gas wells. The company specializes in technically
demanding sectors of the global offshore drilling business with a particular
focus on deepwater and harsh environment drilling services, and believes that
it operates one of the most versatile offshore drilling fleets in the world.

Transocean owns or has partial ownership interests in, and operates a fleet
of, 80 mobile offshore drilling units consisting of 46 high-specification
floaters (ultra-deepwater, deepwater and harsh environment drilling rigs), 22
midwater floaters and 12 high-specification jackups. In addition, the company
has seven ultra-deepwater drillships and five high-specification jackups under
construction.

For more information about Transocean, please visit the website
www.deepwater.com.

Analyst Contacts:

Thad Vayda
+1 713-232-7551

Diane Vento
+1 713-232-8015

Media Contact:

Guy A. Cantwell
+ 1 713-232-7647

Notes

(1) Annual Effective Tax Rate is defined as income tax expense from continuing
operations excluding various discrete items (such as changes in estimates and
tax on items excluded from income before income tax expense) divided by income
from continuing operations before income tax expense excluding gains on sales
and similar items pursuant to the accounting standards for income taxes. See
the accompanying schedule entitled "Supplemental Effective Tax Rate Analysis."

(2) Revenue efficiency is defined as actual contract drilling revenues for the
measurement period divided by the maximum revenue calculated for the
measurement period, expressed as a percentage. Maximum revenue is defined as
the greatest amount of contract drilling revenues the drilling unit could earn
for the measurement period, excluding amounts related to incentive provisions.
 See the accompanying schedule entitled "Revenue Efficiency."

(3) Rig utilization is defined as the total number of operating days divided
by the total number of rig calendar days in the measurement period, expressed
as a percentage. See the accompanying schedule entitled "Utilization."

(4) Effective Tax Rate is defined as income tax expense from continuing
operations divided by income from continuing operations before income taxes.
See the accompanying schedule entitled "Supplemental Effective Tax Rate
Analysis."

                       TRANSOCEAN LTD. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (Inmillions, except per share data)
                                 (Unaudited)

                                  Threemonths ended      Ninemonths ended
                                    September30,           September30,
                                   2013       2012        2013        2012
Operating revenues
Contract drilling revenues        $ 2,402    $ 2,310     $ 6,868    $  6,498
Other revenues                        156        121         284         372
                                    2,558      2,431       7,152       6,870
Costs and expenses
Operating and maintenance           1,491      1,321       4,259       4,668
Depreciation                          273        280         834         845
General and administrative             67         69         211         217
                                    1,831      1,670       5,304       5,730
Loss on impairment                    (17 )        -         (54 )      (140 )
Gain on disposal of assets, net        32         50          23          40
Operating income                      742        811       1,817       1,040
Other income (expense), net
Interest income                        11         15          39          43
Interest expense, net of amounts
capitalized                          (142 )     (180 )      (445 )      (543 )
Other, net                             (4 )       (8 )       (21 )       (32 )
                                     (135 )     (173 )      (427 )      (532 )
Income from continuing
operations before income tax
expense                               607        638       1,390         508
Income tax expense                     63        105         212         124
Income      from      continuing 
operations                            544        533       1,178         384
Income (loss) from  discontinued 
operations, net of tax                  4       (916 )        (6 )    (1,052 )
Net income (loss)                     548       (383 )     1,172        (668 )
Net income  (loss)  attributable 
to noncontrolling interest              2         (2 )        (2 )         7
Net income  (loss)  attributable 
to controlling interest           $   546    $  (381 )   $ 1,174    $   (675 )
Earnings (loss) per share-basic
Earnings     from     continuing 
operations                        $  1.49    $  1.49     $  3.25    $   1.06
Earnings       (loss)       from 
discontinued operations              0.01      (2.55 )     (0.02 )     (2.96 )
Earnings (loss) per share         $  1.50    $ (1.06 )   $  3.23    $  (1.90 )
Earnings       (loss)        per 
share-diluted
Earnings     from     continuing 
operations                        $  1.49    $  1.49     $  3.25    $   1.06
Earnings       (loss)       from 
discontinued operations              0.01      (2.55 )     (0.02 )     (2.96 )
Earnings (loss) per share         $  1.50    $ (1.06 )   $  3.23    $  (1.90 )
Weighted-average          shares 
outstanding
Basic                                 360        359         360         354
Diluted                               361        359         360         354

                       TRANSOCEAN LTD. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS

                     (In millions, except per share data)

                                 (Unaudited)

                                                   September30,  December31,
                                                       2013           2012
Assets
Cash and cash equivalents                          $    3,559     $    5,134
Accounts receivable, net of allowance for
doubtful accounts
of $20 at September30, 2013 and December31,
2012                                                    2,367          2,200
Materials and supplies, net of allowance for
obsolescence
of $71 and $66 at September30, 2013 and
December31, 2012, respectively                           729            610
Assets held for sale                                      131            179
Deferred income taxes, net                                173            142
Other current assets                                      414            382
Total current assets                                    7,373          8,647
Property and equipment                                 27,707         26,967
Less accumulated depreciation                          (7,596 )       (7,118 )
Property and equipment  of consolidated  variable 
interest    entities,    net    of    accumulated 
depreciation                                              985          1,031
Property and equipment, net                            21,096         20,880
Goodwill                                                2,987          2,987
Other assets                                            1,145          1,741
Total assets                                       $   32,601     $   34,255
Liabilities and equity
Accounts payable                                   $      962     $    1,047
Accrued income taxes                                      176            116
Debt due within oneyear                                  162          1,339
Debt of consolidated  variable interest  entities 
due within oneyear                                        58             28
Other current liabilities                               2,418          2,933
Total current liabilities                               3,776          5,463
Long-term debt                                         10,388         10,929
Long-term debt of consolidated variable interest
entities                                                  120            163
Deferred income taxes, net                                341            366
Other long-term liabilities                             1,717          1,604
Total long-term liabilities                            12,566         13,062
Commitments and contingencies
Shares, CHF 15.00 par value, 373,830,649
authorized, 167,617,649 conditionally authorized,
373,830,649 issued and 360,559,090 outstanding at
September30, 2013 and 402,282,355 authorized,
167,617,649 conditionally authorized, 373,830,649
issued and 359,505,251 outstanding at
December31, 2012                                       5,145          5,130
Additional paid-in capital                              6,766          7,521
Treasury  shares,  at  cost,  2,863,267  held  at 
September30, 2013 and December31, 2012                (240)           (240 )
Retained earnings                                       5,029          3,855
Accumulated other comprehensive loss                    (426)           (521 )
Total controlling interest shareholders' equity        16,274         15,745
Noncontrolling interest                                  (15)            (15 )
Total equity                                           16,259         15,730
Total liabilities and equity                       $   32,601     $   34,255

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

                                  Threemonths ended      Ninemonths ended
                                    September30,           September30,
                                   2013       2012         2013       2012
Cash flows from operating
activities
Net income (loss)                 $   548    $  (383 )   $  1,172    $  (668 )
Adjustments to reconcile to net
cash provided by operating
activities
Amortization of drilling
contract intangibles                   (5 )       (9 )        (21 )      (32 )
Depreciation                          273        280          834        845
Depreciation and amortization of
assets in discontinued
operations                              -         48            -        183
Share-based compensation expense       36         24           85         72
Loss on impairment                     17          -           54        140
Loss on impairment of assets in
discontinued operations                14        878           14        983
Gain on disposal of assets, net       (32 )      (50 )        (23 )      (40 )
(Gain) loss on disposal of
assets in discontinued
operations, net                       (31 )        1          (49 )      (70 )
Amortization of debt issue
costs, discounts and premiums,
net                                     2         17            4         52
Deferred income taxes                 (28 )      (61 )        (64 )     (104 )
Other, net                             25         12           73         47
Changes in deferred revenue, net      (33 )      (64 )        (68 )      (69 )
Changes in deferred expenses,
net                                    30         51           38         30
Changes in operating assets and
liabilities                          (193 )       42         (904 )      416
Net cash provided by operating
activities                            623        786        1,145      1,785
Cash flows from investing
activities
Capital expenditures                 (450 )     (201 )     (1,290 )     (646 )
Capital expenditures for
discontinued operations                 -        (24 )          -        (75 )
Proceeds from disposal of
assets, net                           170        181          174        189
Proceeds from disposal of assets
in discontinued operations, net        68          2          131        196
Proceeds from sale of preference
shares                                  -          -          185          -
Other, net                              2          7           14         32
Net cash used in investing
activities                           (210 )      (35 )       (786 )     (304 )
Cash flows from financing
activities
Changes in short-term
borrowings, net                         -          -            -       (260 )
Proceeds from debt                      -      1,493            -      1,493
Repayments of debt                    (77 )     (264 )     (1,673 )     (584 )
Proceeds from restricted cash          77        106
investments                                                   283        298
Deposits to restricted cash            (8        (42
investments                               )          )       (112 )     (158 )
Distribution of qualifying           (202          -
additional paid-in capital                )                  (404 )     (278 )
Other, net                             (1 )       (7 )        (28 )       (8 )
Net cash provided by (used in)
financing activities                 (211 )    1,286       (1,934 )      503
Net increase (decrease) in cash
and cash equivalents                  202      2,037       (1,575 )    1,984
Cash and cash equivalents at
beginning of period                 3,357      3,964        5,134      4,017
Cash and cash equivalents at end
of period                         $ 3,559    $ 6,001     $  3,559    $ 6,001

                       TRANSOCEAN LTD. AND SUBSIDIARIES
                          FLEET OPERATING STATISTICS

                                 Operating Revenues (in millions)
                                                          Nine months ended
                           Three months ended               September 30,
                    September               September
                       30,      June 30,       30,
                      2013        2013        2012        2013         2012
Contract drilling
revenues
   
High-Specification
Floaters:
       
Ultra-Deepwater
Floaters:           $   1,177   $   1,201   $   1,213   $  3,425     $   3,446
  Deepwater
Floaters                  345         289         306        887           876
  Harsh
Environment
Floaters                  300         285         247        867           766
    Total
High-Specification
Floaters                1,822       1,775       1,766      5,179         5,088
 Midwater Floaters       419         381         424      1,229         1,108
   
High-Specification
Jackups                   157         158         110        439           270
Contract intangible
revenue                     4           7          10         21            32
Total contract
drilling revenues       2,402       2,321       2,310      6,868         6,498
Other revenues
    Client
reimbursable
revenues                   46          41          46        125           123
    Integrated
services and other          2           2           -          4             6
    Drilling
management services
- non US                  108          33          75        155           243
Total other
revenues                  156          76         121        284           372
Total revenues          2,558       2,397       2,431      7,152         6,870
                                    Average Daily Revenue ^(1)
                                                          Nine months ended
                           Three months ended               September 30,
                    September               September
                       30,      June 30,       30,
                      2013        2013       2012        2013         2012
   
High-Specification
Floaters:
       
Ultra-Deepwater       525,900     507,600     515,000     497,000      495,600
Floaters            $           $           $           $            $
  Deepwater         363,400     351,800     356,300     348,800      338,500
Floaters
  Harsh
Environment           466,800     447,500     421,000     456,300      436,100
Floaters
    Total
High-Specification    475,700     464,200     464,600     456,900      450,400
Floaters
 Midwater Floaters   316,400     301,100     264,500     302,700      255,200
   
High-Specification    164,300     165,800     154,600     164,500      134,300
Jackups
Total               $ 392,400   $ 382,900   $ 376,200   $ 379,000    $ 366,400
1.Average daily revenue is defined as contract drilling revenue earned per
    operating day. An operating day is defined as a calendar day during which
    a rig is contracted to earn a dayrate during the firm contract period
    after commencement of operations. 

                       TRANSOCEAN LTD. AND SUBSIDIARIES
                    FLEET OPERATING STATISTICS (continued)

                                           Utilization ^(2)
                                                                  Nine months
                                                                     ended
                                  Three months ended             September 30,
                         September       June
                            30,           30,       September,
                           2013          2013          2012       2013    2012
                    
High-Specification
Floaters:
                
Ultra-Deepwater
Floaters                    90%           96%          95%        94%     94%
  Deepwater Floaters      83%           64%          63%        69%     61%
   Harsh  Environment 
Floaters                   100%          100%          91%        100%    92%
              Total 
High-Specification
Floaters                    90%           88%          85%        88%     83%
 Midwater Floaters         63%           56%          70%        61%     63%
                    
High-Specification
Jackups                     95%          100%          86%        96%     86%
Total Drilling Fleet        83%           80%          80%        81%     78%
2.Rig utilization is defined as the total number of operating days divided
    by the total number of rig calendar days in the measurement period,
    expressed as a percentage.

                            Revenue Efficiency^(3)
                  Trailing Five Quarters and Historical Data
                    3Q 2013  2Q 2013  1Q 2013  4Q 2012 3Q 2012 FY 2012 FY 2011
Ultra-Deepwater      92.5%    91.1%    83.8%    95.5%   95.9%   93.2%   87.9%
Deepwater            91.1%    91.8%    86.4%    90.9%   96.1%   91.4%   90.7%
Harsh Environment
Floaters             99.9%    98.3%    97.6%    97.3%   95.4%   97.1%   97.4%
Midwater Floaters    95.3%    94.5%    92.1%    93.9%   90.4%   90.9%   93.4%
High-Specification
Jackups              98.9%    98.6%    96.4%    95.2%   97.2%   95.0%   94.8%
Total                94.0%    93.1%    88.0%    94.7%   94.9%   93.0%   90.5%
3.Revenue efficiency is defined as actual contract drilling revenues for the
    measurement period divided by the maximum revenue calculation for the
    measurement period, expressed as a percentage. Maximum revenue is defined
    as the greatest amount of contract drilling revenues the drilling unit
    could earn for the measurement period, excluding amounts related to
    incentive provisions.

                      Transocean Ltd. and Subsidiaries
                  Supplemental Effective Tax Rate Analysis
                             (In US$ millions)
                        Three months ended              Nine months ended
                 September      June     September    September    September
                    30,         30,         30,          30,          30,
                    2013        2013       2012         2013         2012
Income      from 
continuing
operations
before    income 
taxes            $      607    $  451      $   638     $  1,390      $   508
    Add  back 
(subtract):
            
Litigation
matters                  29         -            8          103          758
            
One-time
termination
benefits                 16        10            -           26            -
            
Acquisition
costs                     -         -            -            -            1
       Gain 
on  disposal  of 
assets, net             (34 )       -          (51 )        (34 )        (51 )
       Loss 
on     financial 
instruments               -        19            -           19            -
     (Gain)
loss          on 
retirement    of 
debt                      -         1           (2 )          2           (2 )
       Loss 
on impairment of
goodwill     and 
other assets              -        37            -           37          140
       Loss 
on      redeemed 
noncontrolling
interest                  -         -            -            -           25
Adjusted  income 
from  continuing 
operations
before    income 
taxes                   618       518          593        1,543        1,379
Income       tax 
expense     from 
continuing
operations               63       130          105          212          124
    Add  back 
(subtract):
            
Litigation
matters                  10         -            2           36            2
            
One-time
termination
benefits                  1         3            -            4            -
       Gain 
on  disposal  of 
assets, net             (12 )       -           (3 )        (12 )         (3 )
       Loss 
on impairment of
goodwill     and 
other assets              -         -            -            -            6
            
Changes       in 
estimates (1)            55       (11 )        (14 )         77          154
     Other,
net                       -         -            -            -            -
Adjusted  income 
tax expense from
continuing
operations (2)   $      117    $  122      $    90     $    317      $   283
Effective    Tax 
Rate (3)               10.4 %    28.8 %       16.5 %       15.3 %       24.4 %
Annual Effective
Tax Rate (4)           19.0 %    23.5 %       15.2 %       20.6 %       20.5 %
1.Our estimates change as we file tax returns, settle disputes with tax
    authorities or become aware of other events and include changes in (a)
    deferred taxes, (b) valuation of allowances on deferred taxes and (c)
    other tax liabilities.
2.The three months and nine months ended September 30, 2013 includes ($9)
    million of additional tax expense (benefit) reflecting the catch-up effect
    of an increase (decrease) in the annual effective tax rate from the
    previous quarter estimate.
3.Effective Tax Rate is income tax expense divided by income before income
    taxes.
4.Annual Effective Tax Rate is income tax expense excluding various discrete
    items (such as changes in estimates and tax on items excluded from income
    before income taxes) divided by income before income taxes excluding gains
    and losses on sales and similar items pursuant to the accounting standards
    for income taxes and estimating the annual effective tax rate.

                           Transocean Ltd. and Subsidiaries
                   Non-GAAP Financial Measures and Reconciliations
             Adjusted Net Income and Adjusted Diluted Earnings Per Share
                       (in US$ millions, except per share data)
                    YTD       QTD       YTD       QTD       QTD
                  09/30/13  09/30/13  06/30/13  06/30/13  03/31/13
 Adjusted Net
 Income
 Net income
 attributable to
 controlling
 interest, as
 reported           $1,174      $546      $628      $307      $321
 Add back
 (subtract):
                                              
  Litigation                              -       
  matters              67       19       48                48
  One-time                                    
  termination                                  -
  benefits             22       15        7        7         
  Loss on                                     
  impairment of             -                   -
  assets               37                37       37         
  Gain on                                     
  disposal of                        -     -     -
  assets, net        (22)     (22)                           
  Loss on                                     
  retirement of            -                  
  debt                  2                 2        1        1
  Loss on                                     
  financial                 -                   -
  instruments          19                19       19         
  Gain on
  disposal of
  assets in                                   
  discontinued                                         
  operations         (49)     (31)     (18)      (3)     (15)
  Loss from                                   
  discontinued                                     
  operations           55       27       28       13       15
  Discrete tax                                
  items and                                            
  other, net         (77)     (55)     (22)       11     (33)
 Net income, as
 adjusted           $1,228      $499      $729      $392      $337
 Adjusted
 Diluted
 Earnings Per
 Share:
 Diluted
 earnings per
 share, as
 reported            $3.23     $1.50     $1.73     $0.84     $0.88
 Add back
 (subtract):
                                                    
  Litigation                           -      
  matters           0.19    0.05    0.13             0.15
  One-time                                                    
  termination                                -
  benefits          0.06    0.04    0.02    0.02         
  Loss on                                                 
  impairment of            -                 -
  assets            0.10             0.10    0.10         
  Gain on
  disposal of               
  assets, net      (0.06)   (0.06)
  Loss on                                             
  retirement of            -           -     -
  debt              0.01             0.01                  
  Loss on                                                 
  financial                -                 -
  instruments       0.05             0.05    0.05         
  Gain on
  disposal of
  assets in
  discontinued                                
  operations       (0.14)   (0.09)   (0.05)   (0.01)   (0.05)
  Loss from
  discontinued                                
  operations        0.15    0.07    0.08    0.04    0.05
  Discrete tax
  items and                                   
  other, net       (0.21)   (0.14)   (0.06)    0.04   (0.10)
 Diluted
 earnings per
 share, as
 adjusted            $3.38     $1.37     $2.01     $1.08     $0.93
                    YTD       QTD       YTD       QTD       YTD       QTD       QTD
                  12/31/12  12/31/12  09/30/12  09/30/12  06/30/12  06/30/12  03/31/12
 Adjusted Net
 Income
 Net income
 (loss)
 attributable to
 controlling
 interest, as
 reported           ($219)      $456    ($675)    ($381)    ($294)    ($304)       $10
 Add back
 (subtract):
                                                                      
  Litigation               -                             -
  matters           756             756        6    750       750         
  Loss on
  impairment of                                                 
  goodwill and             -           -                  
  other assets      135             135             135      -     135
  Gain on                                                 
  disposal of                -                     -           -
  assets, net        (48)              (48)     (48)               -          
  Gain on                                                 
  retirement of             -                   -           -
  debt                (2)               (2)      (2)               -          
  Loss on
  redeemed                                                
  noncontrolling            -            -                    
  interest             25                25                25       14       11
  Loss on
  impairment of
  assets in                                                           
  discontinued                                              
  operations        961        2    959    881       78       12       66
  (Gain) loss on
  disposal of
  assets in                                               
  discontinued                                                   
  operations         (69)      (1)     (68)        2     (70)      (72)        2
  (Gain) loss
  from                                                                
  discontinued                                                
  operations        135     (26)    161       33    128       59       69
  Discrete tax                                                            
  items and                                                   
  other, net       (255)   (101)   (154)       15   (169)     (141)     (28)
 Net income, as
 adjusted           $1,419      $330    $1,089      $506      $583      $318      $265
 Adjusted
 Diluted
 Earnings Per
 Share:
 Diluted
 earnings (loss)
 per share, as
 reported          ($0.62)     $1.26   ($1.90)   ($1.06)   ($0.84)   ($0.86)     $0.03
 Add back
 (subtract):
                                                                          
  Litigation               -                              -
  matters           2.11             2.12    0.02    2.12  2.11            
  Loss on
  impairment of                                                
  goodwill and             -           -                  
  other assets      0.38             0.38             0.38   -        0.38
  Gain on                                                             
  disposal of              -                 -           -
  assets, net      (0.13)            (0.13)   (0.13)            -             
  Gain on                                                             
  retirement of            -                 -           -
  debt             (0.01)            (0.01)   (0.01)            -             
  Loss on
  redeemed                                                     
  noncontrolling           -           -                   
  interest          0.07             0.07             0.07  0.04       0.03
  Loss on
  impairment of
  assets in                                                        
  discontinued             -                               
  operations        2.70             2.70    2.45    0.23  0.03       0.19
  (Gain) loss on
  disposal of
  assets in                                                        
  discontinued             -                                
  operations       (0.19)            (0.19)    0.01   (0.20)  (0.20)     0.01
  (Gain) loss
  from                                                                 
  discontinued                                             
  operations        0.38   (0.07)    0.45    0.09    0.36  0.17       0.19
  Discrete tax                                                         
  items and                                                 
  other, net       (0.73)   (0.28)   (0.44)    0.03   (0.48)  (0.40)    (0.08)
 Diluted
 earnings per
 share, as
 adjusted            $3.96     $0.91     $3.05     $1.40     $1.64     $0.89     $0.75

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Source: Transocean Ltd via Thomson Reuters ONE
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