form6-k.htm
FORM 6 - K
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
 
 
As of February 28, 2008
 
 
TENARIS, S.A.
(Translation of Registrant's name into English)
 
 
TENARIS, S.A.
46a, Avenue John F. Kennedy
L-1855 Luxembourg
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F.
 
Form 20-F Ö  Form 40-F__
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.
 
Yes ___ No  Ö _
 
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82___.
 
 
 
 

The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended.
This report contains Tenaris's press release announcing its 2007 Fourth Quarter and Annual Results.
 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Date: February 28, 2008
 
 
Tenaris, S.A.
 
 
By: /s/ Cecilia Bilesio
  
Cecilia Bilesio
  
Corporate Secretary
  
 
 
 
 
 
Nigel Worsnop
Tenaris
 1-888-300-5432
www.tenaris.com
 
 
Tenaris Announces 2007 Fourth Quarter and Annual Results
 
The financial and operational information contained in this press release is based on audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and presented in U.S. dollars.
 
Luxembourg, February 27, 2008. - Tenaris S.A. (NYSE, Buenos Aires and Mexico: TS and MTA Italy: TEN) (“Tenaris”) today announced its results for the fourth quarter and year ended December 31, 2007 with comparison to its results for the fourth quarter and year ended December 31, 2006.
 
 
Summary of 2007 Fourth Quarter Results
 
(Comparison with third quarter of 2007 and fourth quarter of 2006)
 
Q4 2007
Q3 2007
Q4 2006
Net sales (US$ million)
2,628.0
2,433.8
8%
2,460.9
7%
Operating income (US$ million)
756.7
671.7
13%
812.6
(7%)
Net income (US$ million)
595.8
436.4
37%
612.0
(3%)
Shareholders’ net income (US$ million)
546.5
401.0
36%
574.8
(5%)
Earnings per ADS (US$)
0.93
0.68
36%
0.97
(5%)
Earnings per share (US$)
0.46
0.34
36%
0.49
(5%)
EBITDA (US$ million)
890.9
804.5
11%
901.6
(1%)
EBITDA margin (% of net sales)
34%
33%
  
37%
  
 
Following the agreement to sell the Hydril pressure control business to GE, the pressure control segment was reclassified in our financial statements as a discontinued operation.
 
Our fourth quarter results show a partial recovery at the operating level compared to the third quarter, with operating income returning to the levels recorded in the first two quarters of the year but remaining below the strong level recorded in the fourth quarter of 2006. Our net income for the quarter further benefited from a reduced income tax charge and a gain recorded on the sale of our remaining 25% interest in Dalmine Energie. Free cash flow (net cash provided by operations less capital expenditures) totaled US$118.1 million, and net debt at December 31, 2007 was US$2,970.2 million following the payment of an interim dividend.

 
 
 

Summary of 2007 Annual Results
 
 
FY 2007
FY 2006
Increase/(Decrease)
Net sales (US$ million)
10,042.0
7,727.7
30%
Operating income (US$ million)
2,957.2
2,792.5
6%
Net income (US$ million)
2,076.1
2,059.4
1%
Shareholders’ net income (US$ million)
1,923.7
1,945.3
(1%)
Earnings per ADS (US$)
3.26
3.30
(1%)
Earnings per share (US$)
1.63
1.65
(1%)
EBITDA (US$ million)
3,449.3
3,045.6
13%
EBITDA margin (% of net sales)
34%
39%
  
 
Following several years of strong growth, earnings per share declined marginally in 2007 compared to 2006. Net sales, EBITDA and operating income, on the other hand continued to grow, up 30%, 13% and 6% respectively. These stable results reflect steady overall demand for our products and services from the global oil and gas industry. They were achieved in a context of rising costs and a severe decline in Canadian gas drilling activity.
 
We expect our sales to increase in 2008, led by higher sales of specialized, high-end OCTG products, and that the increase in sales should result in higher operating and net income. However, increased volatility in economic conditions and raw material and commodity prices could affect market conditions for our products and services and, consequently, our results for the second half of the year.
 
 
Annual Dividend Proposal
 
The board of directors proposes, for the approval of the annual general shareholders’ meeting to be held on June 4, 2008, the payment of an annual dividend of US$0.38 per share (US$0.76 per ADS), or approximately US$450 million, which includes the interim dividend of US$0.13 per share (US$0.26 per ADS) paid on November 22, 2007. This would represent an increase of 27% over the annual dividend paid for the 2006 fiscal year. If the annual dividend is approved by the shareholders, a dividend of US$0.25 per share (US$0.50 per ADS), or approximately US$295 million will be paid on June 26, 2008 with a record date of June 25, 2008 and an ex-dividend date of June 23, 2008.
 
 
Market Background and Outlook
 
In 2007, global demand for oil and gas continued to rise reflecting economic growth and the importance of oil and gas in the energy matrix. Encouraged by continuing high levels of oil prices, oil and gas companies in most regions of the world continued to increase their level of spending and drilling activity to offset declining rates of production from mature fields and to explore and develop new reserves. In Canada, however, subdued North American gas prices affected gas drilling activity.

 
 
 

The international count of active drilling rigs, as published by Baker Hughes, after rising steadily in the first three quarters of the year dipped marginally in the fourth quarter to average 1017, an increase of 7% compared to the same quarter of the previous year. The average increase for the full year, compared to 2006, was  9%.
 
The corresponding rig count in the USA, which is more sensitive to North American gas prices, also showed a positive, though decelerating, trend during the year. It showed an average annual increase of 7% in 2007 compared to 2006 and in the fourth quarter of 2007 was up 4% compared to the fourth quarter of 2006. The corresponding rig count in Canada, however, which began to decline in the second half of 2006, showed an average annual decline of 27% compared to 2006 and a decline of 19% in the fourth quarter compared to the same period of 2006.
 
We estimate that global apparent demand for OCTG in 2007 remained similar to that in 2006, following strong growth in the previous three years, as an increase in operative consumption was offset by inventory adjustments. We expect growth in apparent demand to resume in 2008 based on continued growth in oil and gas drilling activity outside North America and the maintenance of current levels of drilling activity in North America. However, the annual growth rate is expected to be lower than in the period 2004-2006 and may be affected by market volatility and inventory adjustments in some markets.
 
Demand for our large diameter pipes for pipeline projects in South America  was strong in 2007 as major gas pipeline infrastructure projects in Brazil and Argentina, which had previously been delayed, went forward. Orders for new projects in Brazil and Colombia have been received and we expect to maintain a strong level of sales in this segment in 2008.
 
Steelmaking raw material costs rose in 2007 and are expected to rise more steeply in 2008. Energy and labor costs also rose during 2007, and may rise further in 2008, with labor costs being affected primarily by currency-related factors. Steel costs for our welded pipe products also rose and are expected to increase further in 2008.
 
 
Analysis of 2007 Fourth Quarter Results
 
Sales volume (metric tons)
Q4 2007
Q4 2006
Increase/(Decrease)
Tubes - Seamless
714,000
730,000
(2%)
Tubes – Welded
259,000
264,000
(2%)
Tubes - Total
973,000
994,000
(2%)
Projects - Welded
157,000
98,000
60%
Total
1,130,000
1,092,000
3%
 
Tubes
Q4 2007
Q4 2006
Increase/(Decrease)
(Net sales - $ million)
      
North America
756.0
770.8
(2%)
South America
324.0
244.9
32%
Europe
460.8
363.8
27%
Middle East & Africa
458.7
613.4
(25%)
Far East & Oceania
153.5
139.5
10%
Total net sales ($ million)
2,153.0
2,132.5
1%
Cost of sales (% of sales)
53%
49%
  
Operating income ($ million)
656.9
760.9
(14%)
Operating income (% of sales)
31%
36%
  
 
 
 
 

Net sales of tubular products and services rose 1% to US$2,153.0 million in the fourth quarter of 2007, compared to US$2,132.5 million in the fourth quarter of 2006, as an increase in our average selling price for tubular products and services offset a 2% decline in sales volume. Sales rose strongly in South America, led by increased sales of OCTG products in Venezuela, and in Europe, where average selling prices increased due to a stronger product mix and the appreciation of the euro against the U.S. dollar. Sales declined in Middle East and Africa compared to the strong level of sales recorded in the fourth quarter of 2006 due primarily to lower sales in Saudi Arabia. In North America, an increase in sales in USA was offset by a decline in sales in Canada, where gas drilling activity continues to decline year on year, and in Mexico, where weather conditions affected drilling activity.
 
Projects
Q4 2007
Q4 2006
Increase/(Decrease)
Net sales ($ million)
315.4
172.4
83%
Cost of sales (% of sales)
71%
72%
  
Operating income ($ million)
78.1
27.3
186%
Operating income (% of sales)
25%
16%
  
 
Net sales of pipes for pipeline projects rose 83% to US$315.4 million in the fourth quarter of 2007, compared to US$172.4 million in the fourth quarter of 2006, reflecting a high level of deliveries to gas pipeline projects in Brazil and the partial resumption of deliveries to the loops expansion project in Argentina. Operating income in this segment in the fourth quarter of 2007 included other operating income of US$16.4 million in respect of the sale of surplus office space.
 
Others
Q4 2007
Q4 2006
Increase/(Decrease)
Net sales ($ million)
159.6
156.3
2%
Cost of sales (% of sales)
71%
77%
  
Operating income ($ million)
21.7
24.3
(11%)
Operating income (% of sales)
14%
16%
  
 
Net sales of other products and services rose 2% to US$159.6 million in the fourth quarter of 2007, compared to US$156.3 million in the fourth quarter of 2006, as higher sales of metallic equipment offset lower sales of hot briquetted iron from our plant in Venezuela.
 
Selling, general and administrative expenses, or SG&A, increased as a percentage of net sales to 15.7% in the quarter ended December 31, 2007 compared to 14.1% in the corresponding quarter of 2006 due primarily to an increase in amortization expenses following the incorporation of Hydril. Amortization of customer relationships and other intangibles acquired with Hydril amounted to US$19.8 million in the quarter, or 0.8% of net sales.
 
Other operating income included a gain of US$16.4 million in relation to the sale of surplus office space in Brazil (as mentioned above).
 
Net interest expense rose to US$41.8 million in the fourth quarter of 2007 compared to a net interest expense of US$33.5 million in the same period of 2006 reflecting an increased net debt position following the Hydril acquisition.

 
 
 

Other financial results contributed a loss of US$12.0 million during the fourth quarter of 2007, compared to a gain of US$18.2 million during the fourth quarter of 2006.
 
Equity in earnings of associated companies generated a gain of US$39.7 million in the fourth quarter of 2007, compared to a gain of US$17.9 million in the fourth quarter of 2006. The result in the fourth quarter of 2007 included a gain of US$18.4 million recorded on the sale of our remaining 25% participation in Dalmine Energie and the balance was derived mainly from our equity investment in Ternium.
 
Income tax charges totalled US$159.2 million in the fourth quarter of 2007. This result included reductions in deferred tax liabilities due to tax rate changes in Canada, Italy and Colombia and net non-recurring tax losses of US$47.3 million.
 
Income from discontinued operations amounted to US$12.4 million in the fourth quarter of 2007. This income corresponds to the Hydril pressure control business, which was classified as a discontinued operation following the conclusion of an agreement to sell this business on January 28, 2008.
 
Income attributable to minority interest rose to US$49.3 million in the fourth quarter of 2007, compared to US$37.2 million in the corresponding quarter of 2006 reflecting higher operating and financial results at our Confab subsidiary.
 
 
Cash Flow and Liquidity
 
Net cash provided by operations during the fourth quarter of 2007 was US$231.5 million (US$2,020.6 million for the year), compared to US$499.0 million in the fourth quarter of 2006 (US$1,810.9 million during the year). Working capital increased by US$205.1 million during the fourth quarter with the value of inventories rising by US$114.8 million and advance payables, mainly associated with our Project segment, declining by US$36.5 million.
 
Capital expenditures amounted to US$113.3 million for the fourth quarter of 2007 and US$447.9 million for the year, compared to US$139.4 million in the fourth quarter of 2006 and US$441.5 million for the year. During 2007 we completed a two-year investment program to increase capacity for specialized products and commissioned, among other facilities, new heat treatment facilities in Mexico and Argentina, a new premium threading facility in China, a new power generation plant in Italy and a new components center in Romania.
 
During 2007, total financial debt increased by US$369.0 million to US$4,020.2 million at December 31, 2007 from US$3,651.2 million at December 31, 2006, as additional debt was used to finance the acquisition of Hydril and liquidity (cash and cash equivalents and other current investments) was reduced. Net financial debt during 2007 increased by US$874.9 million to US$2,970.2 million at December 31, 2007.

 
 
 

Analysis of 2007 Annual Results
Sales volume (metric tons)
FY 2007
FY 2006
Increase/(Decrease)
Tubes - Seamless
2,870,000
2,919,000
(2%)
Tubes – Welded
965,000
297,000
225%
Tubes - Total
3,835,000
3,216,000
19%
Projects - Welded
474,000
281,000
69%
Total – Tubes + Projects
4,309,000
3,497,000
23%
 
Tubes
FY 2007
FY 2006
Increase/(Decrease)
Net sales ($ million)
      
- North America
2,921.7
1,993.0
47%
- South America
1,221.7
960.3
27%
- Europe
1,661.4
1,315.1
26%
- Middle East & Africa
2,057.6
1,895.7
9%
- Far East & Oceania
690.2
662.8
4%
Total net sales
8,552.6
6,826.9
25%
Cost of sales (% of sales)
52%
47%
  
Operating income ($ million)
2,713.9
2,670.5
2%
Operating income (% of sales)
32%
39%
  
 
Net sales of tubular products and services rose 25% to US$8,552.6 million in 2007, compared to US$6,826.9 million in 2006, due to a higher volume of welded pipe sales, resulting from the incorporation of the former Maverick operations acquired in October 2006, and a higher average selling price for our seamless pipes reflecting an enhanced product mix and increased demand for our specialized, high-end seamless pipe products used in the world’s more complex drilling operations and other demanding applications. In North America, sales increased principally due to the incorporation of sales from the former Maverick and Hydril premium connection operations but, excluding such effects, there was a substantial decline in sales in Canada reflecting the decline in drilling activity and consequent inventory adjustments. In South America, sales increased due primarily to higher sales of OCTG products in Venezuela as PDVSA began to replenish inventories and increased sales in Colombia. In Europe, sales increased, with higher average selling prices and volumes, reflecting higher sales to European-based process and power plant contractors, a more specialized mix of products sold to industrial and automotive customers, increased sales of OCTG products in continental Europe and the appreciation of the Euro with respect to the U.S. dollar. In the Middle East and Africa, higher average selling prices more than offset lower volumes which were affected by lower sales of API OCTG products and inventory adjustments. In the Far East and Oceania, sales remained stable with higher sales in South-East Asia and South Korea offsetting lower sales in China.
 
Operating income from tubular products and services rose 2% to US$2,713.9 million in 2007, from US$2,670.5 million in 2006, as the increase in sales was substantially offset by a reduction in the gross margin and higher expenses for the amortization of intangible assets.
 
Projects
FY 2007
FY 2006
Increase/(Decrease)
Net sales ($ million)
876.3
453.5
93%
Cost of sales (% of sales)
71%
72%
  
Operating income ($ million)
184.8
56.3
228%
Operating income (% of sales)
21%
12%
  

 
 
 

Net sales of pipes for pipeline projects rose 93% to US$876.3 million in 2007, compared to US$453.5 million in 2006, due to higher shipments and average selling prices. Regional demand for pipes for pipeline projects in South America improved substantially in 2007 as large gas pipeline projects in Brazil and Argentina that had been delayed in 2006 went ahead and orders were received for mineral slurry and additional gas pipeline projects in Brazil.
 
Operating income from pipes for pipeline projects rose 228% to US$184.8 million in 2007, from US$56.3 million in 2006, due to the increase in net sales and an increase in the operating margin reflecting a higher proportion of sales in Brazil where sales from our Brazilian mill have low logistics costs. Operating income in this segment in 2007 included other operating income of US$16.4 million in respect of the sale of surplus office space.
 
Others
FY 2007
FY 2006
Increase/(Decrease)
Net sales ($ million)
613.1
447.3
37%
Cost of sales (% of net sales)
76%
72%
  
Operating income ($ million)
58.5
65.6
(11%)
Operating income (% of sales)
10%
15%
  
 
Net sales of other products and services rose 37% to US$613.1 million in 2007, compared to US$447.3 million in 2006, as sales from electric conduit pipe operations acquired in October 2006 were included for a full year.  Sales of metallic structures also increased but sales of excess raw materials and sucker rods declined.
 
Selling, general and administrative expenses, or SG&A, increased as a percentage of net sales to 15.7% in 2007 compared to 13.6% in 2006 due mainly to increased charges for amortization of intangible assets relating principally to assets acquired in the Maverick and Hydril acquisitions. These amortization charges amounted to US$236.0 million in 2007, or 2.4% of net sales, compared to US$54.8 million, or 0.7% of net sales, in 2006.
 
Other operating income and expenses resulted in net income of US$4.9 million in 2007, compared to net income of US$3.8 million in 2006. The 2007 result included income of US$16.4 million in relation to the sale of surplus office space in Brazil and an expense of US$10.3 million relating to the settlement of redemptions on Maverick’s 2005 Notes.
 
Net interest expenses totalled US$182.3 million in 2007, compared to net interest expenses of US$31.8 million in 2006. The increase in net interest expenses reflects the increase in the average net debt position during 2007 compared to 2006, relating to debt contracted for the Maverick and Hydril acquisitions.
 
Other financial results contributed a loss of US$22.8 million in 2007, compared to a gain of US$26.8 million during 2006. These results largely reflect gains and losses on net foreign exchange transactions and the fair value of derivative instruments and are to a large extent offset by changes to our net equity position. They arise due to the fact that most of our subsidiaries prepare their financial statements in currencies other than the US dollar in accordance with IFRS.

 
 
 

Equity in earnings of associated companies generated a gain of US$113.3 million in 2007, compared to a gain of US$94.7 million in 2006. These gains were derived mainly from our equity investment in Ternium but, in 2007, also included a gain of US$18.4 million recorded on the sale of our remaining 25% participation in Dalmine Energie.
 
Income tax charges of US$823.9 million were recorded during 2007, equivalent to 30% of income before equity in earnings of associated companies and income tax, compared to income tax charges of US$870.0 million, equivalent to 31% of income before equity in earnings of associated companies and income tax, during 2006. The result in 2007 included net non-recurring tax losses of US$47.3 million.
 
Income from discontinued operations amounted to US$34.5 million, compared to US$47.2 million in 2006. The 2007 income corresponds to the Hydril pressure control business, which was classified as a discontinued operation following the conclusion of an agreement to sell this business on January 28, 2008. The 2006 income corresponds to our former Dalmine Energie energy supply subsidiary, in which we sold a majority participation in December 2006.
 
Net income rose marginally to US$2,076.1 million in 2007, compared to US$2,059.4 million in 2006, as an increase in operating income was largely offset by an increase in net interest expenses.
 
Income attributable to equity holders was US$1,923.7 million, or US$1.63 per share (US$3.26 per ADS), in 2007, compared to US$1,945.3 million, or US$1.65 per share (US$3.30 per ADS) in 2006.
 
Income attributable to minority interest was US$152.3 million in 2007, compared to US$114.1 million in 2006. The increase was due primarily to higher income attributable to minority interest at our Confab subsidiary.
 
 
Registered Major Holders
 
Pursuant to recent Luxembourg legislation implementing the EU Transparency Directive, San Faustín N.V. has notified the Company that it owns 713,605,187 shares in the Company (representing 60.4% of the Company’s capital and voting rights). San Faustín N.V. owns all of its shares in the Company through its wholly-owned subsidiary I.I.I. Industrial Investments Inc.  Rocca & Partners S.A. controls a significant portion of the voting power of San Faustín N.V. and has the ability to influence matters affecting, or submitted to a vote of the shareholders of, San Faustín N.V., such as the election of directors, the approval of certain corporate transactions and other matters concerning the company’s policies. There are no controlling shareholders for Rocca & Partners.
 
 
Some of the statements contained in this press release are “forward-looking statements”. Forward-looking statements are based on management’s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.

 
 
 

Consolidated Income Statement
 
(all amounts in thousands of U.S. dollars)
  
Three-month period ended December 31,
    
Year ended December 31,
  
   
2007
    
2006
    
2007
    
2006
  
Continuing operations
            
Net sales
     2,627,968       2,460,910       10,042,008       7,727,745  
Cost of sales
     (1,474,215 )     (1,298,328 )     (5,515,767 )     (3,884,226 )
Gross profit
     1,153,753       1,162,582       4,526,241       3,843,519  
Selling, general and administrative expenses
     (413,041 )     (347,871 )     (1,573,949 )     (1,054,806 )
Other operating income (expense), net
     16,012       (2,085 )     4,933       3,773  
Operating income
     756,724       812,626       2,957,225       2,792,486  
Interest income
     28,375       17,495       93,392       60,798  
Interest expense
     (70,211 )     (51,018 )     (275,648 )     (92,576 )
Other financial results
     (12,029 )     18,225       (22,754 )     26,826  
Income before equity in earnings of associated companies and income tax
     702,859       797,328       2,752,215       2,787,534  
Equity in earnings of associated companies
     39,691       17,942       113,276       94,667  
Income before income tax
     742,550       815,270       2,865,491       2,882,201  
Income tax
     (159,156 )     (243,679 )     (823,924 )     (869,977 )
Income for continuing operations
     583,394       571,591       2,041,567       2,012,224  
                                 
Discontinued operations
                                
Income for discontinued operations
     12,421       40,403       34,492       47,180  
                                 
Income for the period
     595,815       611,994       2,076,059       2,059,404  
                                 
Attributable to:
                                
Equity holders of the Company
     546,542       574,750       1,923,748       1,945,314  
Minority interest
     49,273       37,244       152,311       114,090  
      595,815       611,994       2,076,059       2,059,404  

 
 
 

Consolidated Balance Sheet
 
(all amounts in thousands of U.S. dollars)
  
At December 31, 2007
    
At December 31, 2006
  
             
ASSETS
                        
Non-current assets
                        
Property, plant and equipment, net
     3,269,007             2,939,241        
Intangible assets, net
     4,542,352             2,844,498        
Investments in associated companies
     509,354             422,958        
Other investments
     35,503             26,834        
Deferred tax assets
     310,590             291,641        
Receivables
     63,738       8,730,544       41,238       6,566,410  
                                 
Current assets
                                
Inventories
     2,598,856               2,372,308          
Receivables and prepayments
     222,410               272,632          
Current tax assets
     242,757               202,718          
Trade receivables
     1,748,833               1,625,241          
Other investments
     87,530               183,604          
Cash and cash equivalents
     962,497       5,862,883       1,372,329       6,028,832  
Current and non current assets held for sale
             651,160                  
                                 
                                 
Total assets
             15,244,587               12,595,242  
                                 
EQUITY
                                
Capital and reserves attributable to the Company’s equity holders
                                
Share capital
     1,180,537               1,180,537          
Legal reserves
     118,054               118,054          
Share premium
     609,733               609,733          
Currency translation adjustments
     266,049               3,954          
Other reserves
     18,203               28,757          
Retained earnings
     4,813,701       7,006,277       3,397,584       5,338,619  
Minority interest
             523,573               363,011  
Total equity
             7,529,850               5,701,630  
                                 
LIABILITIES
                                
Non-current liabilities
                                
Borrowings
     2,869,466               2,857,046          
Deferred tax liabilities
     1,233,836               991,945          
Other liabilities
     185,410               186,724          
Provisions
     97,912               92,027          
Trade payables
     47       4,386,671       366       4,128,108  
 
Current liabilities
                        
Borrowings
     1,150,779             794,197        
Current tax liabilities
     341,028             565,985        
Other liabilities
     252,204             187,701        
Provisions
     19,342             26,645        
Customer advances
     449,829             352,717        
Trade payables
     847,842       3,061,024       838,259       2,765,504  
Liabilities associated with current and non-current assets held for sale
             267,042                  
                                 
Total liabilities
             7,714,737               6,893,612  
                                 
Total equity and liabilities
             15,244,587               12,595,242  
 
 
 
 

Consolidated Cash Flow Statement
 
   
Three-month period ended December 31,
    
Year ended December 31,
  
(all amounts in thousands of U.S. dollars)
  
2007
    
2006
    
2007
    
2006
  
             
Cash flows from operating activities
                        
Income for the period
     595,815       611,994       2,076,059       2,059,404  
Adjustments for:
                                
Depreciation and amortization
     143,173       88,996       514,820       255,004  
Income tax accruals less payments
     (172,473 )     54,889       (393,055 )     56,836  
Equity in earnings of associated companies
     (21,303 )     (17,942 )     (94,888 )     (94,667 )
Interest accruals less payments, net
     (84,821 )     20,453       (21,302 )     21,909  
Income from disposal of investment and other
     (18,388 )     (39,548 )     (18,388 )     (46,481 )
Changes in provisions
     3,858       687       (421 )     8,894  
Changes in working capital
     (205,094 )     (218,863 )     (110,425 )     (469,517 )
Other, including currency translation adjustment
     (9,274 )     (1,622 )     68,224       19,474  
Net cash provided by operating activities
     231,493       499,044       2,020,624       1,810,856  
                                 
Cash flows from investing activities
                                
Capital expenditures
     (113,349 )     (139,395 )     (447,917 )     (441,472 )
Acquisitions of subsidiaries and minority interest
     (35 )     (2,347,772 )     (1,927,262 )     (2,387,249 )
Other disbursements relating to the acquisition of Hydril
     -       -       (71,580 )     -  
Decrease in subsidiaries / associated
     28,516       52,995       27,321       52,995  
Proceeds from disposal of property, plant and equipment and intangible assets
     17,118       (1,221 )     24,039       15,347  
Dividends and distributions received from associated companies
     674       -       12,170       -  
Changes in restricted bank deposits
     21       -       21       2,027  
Investments in short terms securities
     126,916       (48,953 )     96,074       (63,697 )
Net cash provided by (used in) investing activities
     59,861       (2,484,346 )     (2,287,132 )     (2,822,049 )
                                 
Cash flows from financing activities
                                
Dividends paid
     (153,470 )     -       (507,631 )     (204,233 )
Dividends paid to minority interest in subsidiaries
     (14,948 )     (3,573 )     (60,263 )     (23,194 )
Proceeds from borrowings
     266,301       2,739,385       2,718,264       3,033,230  
Repayments of borrowings
     (1,099,730 )     (661,770 )     (2,347,054 )     (1,105,098 )
Net cash (used in) provided by financing activities
     (1,001,847 )     2,074,042       (196,684 )     1,700,705  
(Decrease) Increase in cash and cash equivalents
     (710,493 )     88,740       (463,192 )     689,512  
                                 
Movement in cash and cash equivalents
                                
At the beginning of the period
     1,648,554       1,276,412       1,365,008       680,591  
Effect of exchange rate changes
     16,242       (144 )     52,487       (5,095 )
(Decrease) Increase in cash and cash equivalents
     (710,493 )     88,740       (463,192 )     689,512  
At December 31,
     954,303       1,365,008       954,303       1,365,008  

 
 
 
 
   
At December 31,
    
At December 31,
  
Cash and cash equivalents
  
2007
    
2006
    
2007
    
2006
  
Cash and bank deposits
     962,497       1,372,329       962,497       1,372,329  
Bank overdrafts
     (8,194 )     (7,300 )     (8,194 )     (7,300 )
                                 
Restricted bank deposits
     -       (21 )     -       (21 )
      954,303       1,365,008       954,303       1,365,008  
 
Non-cash financing activity
  
2007
    
2006
    
2007
    
2006
  
Conversion of debt to equity in subsidiaries
     -       -       35,140       -