Jason Vetter's blog

On 23-Jan-12, Schlumberger Limited (NYSE: SLB) reported that Philippe Camus (director since 2007) decided not to stand for re-election at the 2012 annual meeting scheduled to be held this coming April. Once consummated, this departure, along with the previously announced departure of Chairman Andrew Gould at the annual meeting, will bring the total number of director departures to 9 since 2007.

While the departures of Camus and Gould came with ample notification before the fact, the trend over the past five years shouldn’t be ignored. With the exception of 2011, the company has witnessed at least one director departure every year since 2007. So far, there are already 2 planned for 2012. It should also be noted that 3 of the 9 departures were individuals under the age of 60. Camus and Gould will depart from the board at the ages of 63 and 65, respectively, years below the company’s mandatory retirement age.

Last Friday, USEC Inc. (NYSE: USU) disclosed that it expects to expense approximately $137 million in previously capitalized items at its American Centrifuge Plant. Of that amount, $127 million relates to machines that were deemed no longer compatible with the commercial plant’s design and $10 million related to capitalized prepayments made to a plant supplier.

The larger of the two charges was the result of an evaluation of the utility provided by a number of centrifuge machines at the plant. The company determined that such machinery no longer carries future economic benefit and therefore must be expensed. The second and smaller charge relates to a prepayment balance for materials that the company will not purchase under a contract with a supplier that will not be extended.

Yesterday, Alcoa (NYSE:AA) announced that it expects to record restructuring-related charges during 4Q11 of approximately $155 million - $165 million after-tax. Considering the company’s pattern in recent years of repeatedly incurring such charges, this announcement is not that surprising.

From 2006 through 9M11, AA has recorded over $2.24 billion in pre-tax restructuring charges. Although the 9M11 charges combined with the yet to be known 4Q11 pre-tax charges will likely not be the largest taken by AA in a single calendar year, it represents a continuation of a pattern of "one-time" charges. The risk here is that these charges point toward a history of poor capital allocation decisions and that the company has not learned its lesson.

Historical Restructuring Charges (pre-tax, in millions)

In a press release today, Sears Holdings Corporation (NASDAQ: SHLD) reported that due to its performance during 2011, the company plans to close 100 to 200 Sears and K-mart stores and record a $1.6 billion to $1.8 billion charge during fiscal 4Q11. In addition, SHLD may recognize a goodwill impairment charge of up to $600 million.

While these charges are undoubtedly substantial, this isn’t the first time the company recorded such charges. SHLD has incurred $368 million in impairment charges in the past 5 years, $360 million of which were taken in fiscal 2008. The company has also recorded a total of $290 million in store closing, severance, and conversion charges.

On 20-Dec-11, Oceaneering International, Inc. (NYSE: OII) announced that it completed the acquisition of AGR Field Operations, a provider of inspection, maintenance, subsea engineering, and field operations services to the oil and gas industry, for approximately $230 million. After examining OII’s 5-year acquisition history, this comes as its fifth acquisition since 2007 and the largest one yet.