Excluding the gain on sale of common stock, second quarter income from continuing operations was $0.40 per diluted share, an increase over the prior quarter diluted earnings per share of $0.38.
Revenues for the second quarter were $742.2 million, 20 percent higher than the $616.2 million reported last year. Operating income was $92.0 million for the quarter, 33 percent higher than the second quarter 2003 operating income, excluding severance and the company's portion of Universal Compression's debt restructuring charge.
In the first six months of 2004, revenues were $1.5 billion, and income from continuing operations was $109.3 million, or $0.78 per diluted share, before the gain on sale of Universal common stock. In 2003, reported revenues for the first six months were $1.2 billion, and income from continuing operations before non-recurring expenses was $75.3 million, or $0.59 per diluted share.
The company's second quarter revenues improved $29.5 million, or 4 percent, sequentially. All regions contributed to the growth, with the most significant improvements occurring in the Eastern Hemisphere and Latin America, where revenues increased 7 percent and 8 percent, respectively. Despite a 15 percent North American rig count decline, sequential revenues increased slightly, with a 17 percent gain in the United States. This gain was largely offset by the seasonal decline in Canada.
Revenues for the quarter were $424.9 million, more than 5 percent above the prior quarter's record level revenues. The Eastern Hemisphere, in spite of weak activity in the North Sea, led international revenue improvements. In North America, strong sequential revenue gains in the United States more than offset the severe seasonal decline in Canada. On a product line basis, both drilling methods and intervention services improved over 10% sequentially.
Operating income of $87.0 million was 13 percent higher than the preceding quarter, reflecting strong revenue growth coupled with benefits from supply chain initiatives.
Second quarter revenues of $317.3 million were 3 percent higher than the prior quarter, led by a 19 percent increase in production optimization revenues. From a geographic perspective, Eastern Hemisphere and Latin America sequential revenue growth were 12 percent and 16 percent, respectively. The seasonal decline in Canada was offset in part by a 16 percent gain in the United States, causing a slight decrease in sequential North American revenues. The current quarter's operating income of $31.3 million decreased 14 percent compared to the first quarter of 2004, essentially due to the Canadian seasonal activity decline.
Gain on Sale of Universal Shares
The company sold three million shares of Universal Compression common stock for net proceeds of $90.0 million. There was no tax effect associated with the disposition. A gain of $25.3 million, or $0.17 cents per diluted share, was recognized.
The company is disposing of its non-core GSI compression fabrication business. The results of operations of this business for the current and prior periods are reflected as discontinued operations, net of taxes. For the three months ended June 30, 2004, the loss per diluted share from discontinued operations of $0.05 includes a loss from operations of $2.2 million, or $0.01 per diluted share, and a non-cash write down of $5.2 million, or $0.04 cents per diluted share.
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