The company's acquisition of TODCO closed on July 11, 2007, and the results from the acquired business are included from the date of the acquisition. Also included are a loss of $1.0 million related to the early retirement of debt, net of a $0.4 million gain on interest rate derivatives, and $2.6 million in severance costs and other costs related to the TODCO acquisition. On an after-tax basis, these items approximated $2.3 million, or $0.03 per diluted share. Excluding the effect of these items, net income for the third quarter 2007 was $50.7 million, or $0.61 per diluted share.
"Our third quarter financial results clearly reflect a difficult market environment for shallow water drilling in the U.S. Gulf of Mexico," said Randy Stilley. "Despite this slowdown, we generated substantial cash flow during the quarter due to the increased diversity of the company's asset base and our continued focus on maintaining a low-cost operating structure."
"Two-thirds of our operating income was generated by business segments other than our Domestic Offshore, which are currently experiencing stronger fundamentals," he continued. "Furthermore, again during this quarter, our operating cost performance was exceptional across the fleet. While it is difficult to predict a recovery in our domestic offshore drilling business, there are some early signs of a moderate increase in demand as we enter the fourth quarter."
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