Revenue for the third quarter of 2005 was $1,793.3 million, up 17% compared to $1,538.1 million for the third quarter of 2004 and up 1% compared to $1,775.5 million for the second quarter of 2005.
Chad C. Deaton, Baker Hughes chairman and chief executive officer, said, "Baker Hughes and the oil service industry faced significant challenges in the third quarter. Disruptions from the Gulf of Mexico hurricanes negatively impacted our third quarter results by approximately $0.05 per share. Despite the disruptions, we achieved a $0.01 per share sequential increase in net income per share as price increases, productivity improvements, and a lower effective tax rate offset higher raw material costs, labor inflation, and the impact of the Gulf of Mexico hurricanes."
Commenting on current market conditions, Mr. Deaton continued, "Activity increased in every region and challenged our ability to satisfy customer demand. We expect our customers will continue to increase their investment to develop oil and natural gas reserves to meet growing global demand. While the impact of high energy prices on the global economy is always a concern, and may result in brief periods of slower economic growth, we see a strong market continuing through 2006 and into 2007 and we expect to continue to grow revenue, profit, and profit margins."
Mr. Deaton continued, "To meet the demands of this environment we are planning to increase our research and development funding as well as increase capital spending next year as we deploy additional technologies and services that create value for our customers. We have accelerated investment in training for both our new and current employees to further our goal of flawless execution at the well site. To fund these programs and offset other rising costs we are continuing to push for fair pricing across all divisions."
Mr. Deaton concluded, "In closing I want to acknowledge once again the employees of Baker Hughes for their ongoing dedication and professionalism. I am particularly proud of the way they worked together to help their fellow employees who had their lives impacted by hurricanes Katrina and Rita. We once again demonstrated that it is our people that make the difference at Baker Hughes."
During the third quarter of 2005, debt increased $5.9 million to $1,098.6 million, and cash increased $264.8 million to $742.1 million. In the third quarter of 2005, the company's capital expenditures were $119.8 million, depreciation and amortization was $97.4 million and dividend payments were $39.1 million. On October 27, 2005 the company announced that the Board of Directors authorized a dividend in the amount of $0.13 per share to be paid in the fourth quarter of 2005, representing an increase from prior dividends of $0.115 per share.
In September 2002, the company's Board of Directors authorized the company to repurchase up to $275.0 million of its common stock. During the third quarter of 2005, the company did not repurchase any shares. In total, the company has repurchased approximately 8.1 million shares at a cost of $230.5 million. On October 27, 2005 the company also announced that the Board of Directors authorized the company to repurchase up to an additional $455.5 million of its common stock from time to time. The company now has authorization remaining to repurchase up to $500.0 million in stock.
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