Note 17—Condensed Consolidating Financial Information

Transocean Inc., a wholly owned subsidiary of Transocean Ltd., is the issuer of certain notes and debentures, which have been guaranteed by Transocean Ltd. Transocean Ltd.’s guarantee of debt securities of Transocean Inc. is full and unconditional. Transocean Ltd. is not subject to any significant restrictions on its ability to obtain funds by dividends, loans or capital distributions from its consolidated subsidiaries.

The following tables present condensed consolidating financial information for (a) Transocean Ltd. (the “Parent Guarantor”), (b) Transocean Inc. (the “Subsidiary Issuer”), and (c) the other direct and indirect wholly owned and partially owned subsidiaries of the Parent Guarantor, none of which guarantee any indebtedness of the Subsidiary Issuer (the “Other Subsidiaries”). The tables include the consolidating adjustments necessary to present the condensed financial statements on a consolidated basis.

The condensed consolidating financial information may not necessarily be indicative of the results of operations, financial position or cash flows had the subsidiaries operated as independent entities (in millions):

	Three months ended June 30, 2013
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Operating revenues	$	—		$	—		$	2,403		$	(6	)	$	2,397
Cost and expenses		17			1			1,744			(6	)		1,756
Loss on impairment		—			—			(37	)		—			(37	)
Loss on disposal of assets, net		—			—			(2	)		—			(2	)
Operating income (loss)		(17	)		(1	)		620			—			602

Other income (expense), net
Interest expense, net		(3	)		(129	)		(3	)		—			(135	)
Equity in earnings		327			469			—			(796	)		—
Other, net		—			(5	)		(11	)		—			(16	)
		324			335			(14	)		(796	)		(151	)
Income from continuing operations before income tax expense		307			334			606			(796	)		451
Income tax expense		—			—			130			—			130
Income from continuing operations		307			334			476			(796	)		321
Gain (loss) from discontinued operations, net of tax		—			(25	)		15			—			(10	)

Net Income		307			309			491			(796	)		311
Net income attributable to noncontrolling interest		—			—			4			—			4
Net income attributable to controlling interest		307			309			487			(796	)		307

Other comprehensive income before income taxes		—			93			14			—			107
Income taxes related to other comprehensive loss		—			—			(1	)		—			(1	)
Other comprehensive income, net of income taxes		—			93			13			—			106

Total comprehensive income		307			402			504			(796	)		417
Total comprehensive income attributable to noncontrolling interest		—			—			4			—			4
Total comprehensive income attributable to controlling interest	$	307		$	402		$	500		$	(796	)	$	413

	Three months ended June 30, 2012
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments				Consolidated
Operating revenues	$	—		$	—		$	2,335		$	(6	)	$		2,329
Cost and expenses		21			1			2,448			(6	)			2,464
Loss on impairment		—			—			—			—				—
Loss on disposal of assets, net		—			—			(7	)		—				(7	)
Operating loss		(21	)		(1	)		(120	)		—				(142	)

Other income (expense), net
Interest expense, net		(4	)		(139	)		(27	)		—				(170	)
Equity in earnings		(279	)		(186	)		—			465				—
Other, net		—			18			(24	)		—				(6	)
		(283	)		(307	)		(51	)		465				(176	)
Loss from continuing operations before income tax expense		(304	)		(308	)		(171	)		465				(318	)
Income tax benefit		—			—			(15	)		—				(15	)
Loss from continuing operations		(304	)		(308	)		(156	)		465				(303	)
Loss from discontinued operations, net of tax		—			—			—			—				—

Net loss		(304	)		(308	)		(156	)		465				(303	)
Net income attributable to noncontrolling interest		—			—			1			—				1
Net loss attributable to controlling interest		(304	)		(308	)		(157	)		465				(304	)

Other comprehensive income before income taxes		1			7			6			—				14
Income taxes related to other comprehensive loss		—			—			1			—				1
Other comprehensive income, net of income taxes		1			7			7			—				15

Total comprehensive loss		(303	)		(301	)		(149	)		465				(288	)
Total comprehensive income attributable to noncontrolling interest		—			—			1			—				1
Total comprehensive loss attributable to controlling interest	$	(303	)	$	(301	)	$	(150	)	$	465			$	(289	)

	Six months ended June 30, 2013
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated
Operating revenues	$	—		$	—		$	4,605		$	(11	)	$	4,594
Cost and expenses		26			5			3,453			(11	)		3,473
Loss on impairment		—			—			(37	)		—			(37	)
Loss on disposal of assets, net		—			—			(9	)		—			(9	)
Operating income (loss)		(26	)		(5	)		1,106			—			1,075

Other income (expense), net
Interest expense, net		(6	)		(266	)		(3	)		—			(275	)
Equity in earnings		660			941			—			(1,601	)		—
Other, net		—			5			(22	)		—			(17	)
		654			680			(25	)		(1,601	)		(292	)
Income from continuing operations before income tax expense		628			675			1,081			(1,601	)		783
Income tax expense		—			—			149			—			149
Income from continuing operations		628			675			932			(1,601	)		634
Gain (loss) from discontinued operations, net of tax		—			(55	)		45			—			(10	)

Net Income		628			620			977			(1,601	)		624
Net loss attributable to noncontrolling interest		—			—			(4	)		—			(4	)
Net income attributable to controlling interest		628			620			981			(1,601	)		628

Other comprehensive income (loss) before income taxes		(6	)		72			22			—			88
Income taxes related to other comprehensive loss		—			—			—			—			—
Other comprehensive income (loss), net of income taxes		(6	)		72			22			—			88

Total comprehensive income		622			692			999			(1,601	)		712
Total comprehensive loss attributable to noncontrolling interest		—			—			(3	)		—			(3	)
Total comprehensive income attributable to controlling interest	$	622		$	692		$	1,002		$	(1,601	)	$	715

	Six months ended June 30, 2012
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments				Consolidated
Operating revenues	$	—		$	—		$	4,450		$	(11	)	$		4,439
Cost and expenses		32			2			4,037			(11	)			4,060
Loss on impairment		—			—			(140	)		—				(140	)
Loss on disposal of assets, net		—			—			(10	)		—				(10	)
Operating income (loss)		(32	)		(2	)		263			—				229

Other income (expense), net
Interest expense, net		(7	)		(273	)		(55	)		—				(335	)
Equity in earnings		(255	)		(16	)		—			271				—
Other, net		—			9			(33	)		—				(24	)
		(262	)		(280	)		(88	)		271				(359	)
Income (loss) from continuing operations before income tax expense		(294	)		(282	)		175			271				(130	)
Income tax expense		—			—			19			—				19
Income (loss) from continuing operations		(294	)		(282	)		156			271				(149	)
Loss from discontinued operations, net of tax		—			—			(136	)		—				(136	)

Net income (loss)		(294	)		(282	)		20			271				(285	)
Net income attributable to noncontrolling interest		—			—			9			—				9
Net income (loss) attributable to controlling interest		(294	)		(282	)		11			271				(294	)

Other comprehensive income (loss) before income taxes		(4	)		—			3			—				(1	)
Income taxes related to other comprehensive loss		—			—			(2	)		—				(2	)
Other comprehensive income (loss), net of income taxes		(4	)		—			1			—				(3	)

Total comprehensive income (loss)		(298	)		(282	)		21			271				(288	)
Total comprehensive income attributable to noncontrolling interest		—			—			9			—				9
Total comprehensive income (loss) attributable to controlling interest	$	(298	)	$	(282	)	$	12		$	271			$	(297	)

	June 30, 2013
	Parent Guarantor		Subsidiary Issuer		Other Subsidiaries		Consolidating adjustments			Consolidated
Assets
Cash and cash equivalents	$	1	$	1,692	$	1,664	$	—		$	3,357
Other current assets		8		2,298		3,514		(2,311	)		3,509
Total current assets		9		3,990		5,178		(2,311	)		6,866

Property and equipment, net		—		—		21,056		—			21,056
Goodwill		—		—		2,987		—			2,987
Investment in affiliates		17,142		28,684		—		(45,826	)		—
Other assets		—		1,993		18,586		(19,273	)		1,306
Total assets		17,151		34,667		47,807		(67,410	)		32,215

Liabilities and equity
Debt due within one year		—		—		191		—			191
Other current liabilities		629		473		4,813		(2,311	)		3,604
Total current liabilities		629		473		5,004		(2,311	)		3,795

Long-term debt		801		17,734		11,346		(19,273	)		10,608
Other long-term liabilities		39		365		1,744		—			2,148
Total long-term liabilities		840		18,099		13,090		(19,273	)		12,756

Commitments and contingencies

Total equity		15,682		16,095		29,713		(45,826	)		15,664
Total liabilities and equity	$	17,151	$	34,667	$	47,807	$	(67,410	)	$	32,215

	December 31, 2012
	Parent Guarantor		Subsidiary Issuer		Other Subsidiaries		Consolidating adjustments			Consolidated
Assets
Cash and cash equivalents	$	24	$	3,155	$	1,955	$	—		$	5,134
Other current assets		7		1,901		3,852		(2,247	)		3,513
Total current assets		31		5,056		5,807		(2,247	)		8,647

Property and equipment, net		—		—		20,880		—			20,880
Goodwill		—		—		2,987		—			2,987
Investment in affiliates		16,354		27,933		—		(44,287	)		—
Other assets		—		1,804		18,244		(18,307	)		1,741
Total assets		16,385		34,793		47,918		(64,841	)		34,255

Liabilities and equity
Debt due within one year		—		564		803		—			1,367
Other current liabilities		13		632		5,698		(2,247	)		4,096
Total current liabilities		13		1,196		6,501		(2,247	)		5,463

Long-term debt		594		17,772		11,033		(18,307	)		11,092
Other long-term liabilities		33		454		1,483		—			1,970
Total long-term liabilities		627		18,226		12,516		(18,307	)		13,062

Commitments and contingencies

Total equity		15,745		15,371		28,901		(44,287	)		15,730
Total liabilities and equity	$	16,385	$	34,793	$	47,918	$	(64,841	)	$	34,255

	Six months ended June 30, 2013
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated

Cash flows from operating activities	$	(26	)	$	(340	)	$	888		$	—		$	522

Cash flows from investing activities
Capital expenditures		—			—			(840	)		—			(840	)
Proceeds from disposal of assets, net		—			—			4			—			4
Proceeds from disposal of discontinued operations, net		—			—			63			—			63
Proceeds from sale of preference shares		—			185			—			—			185
Investing activities with affiliates, net		—			(700	)		(204	)		904			—
Other, net		—			—			12			—			12
Net cash used in investing activities		—			(515	)		(965	)		904			(576	)

Cash flows from financing activities
Repayments of debt		—			(562	)		(1,034	)		—			(1,596	)
Proceeds from restricted cash investments		—			—			206			—			206
Deposits to restricted cash investments		—			—			(104	)		—			(104	)
Distribution of qualifying additional paid-in capital		(204	)		—			—			—			(204	)
Financing activities with affiliates, net		207			(33	)		730			(904	)		—
Other, net		—			(13	)		(12	)		—			(25	)
Net cash provided by (used in) financing activities		3			(608	)		(214	)		(904	)		(1,723	)

Net decrease in cash and cash equivalents		(23	)		(1,463	)		(291	)		—			(1,777	)
Cash and cash equivalents at beginning of period		24			3,155			1,955			—			5,134
Cash and cash equivalents at end of period	$	1		$	1,692		$	1,664		$	—		$	3,357

	Six months ended June 30, 2012
	Parent Guarantor			Subsidiary Issuer			Other Subsidiaries			Consolidating adjustments			Consolidated

Cash flows from operating activities	$	(31	)	$	(570	)	$	1,600		$	—		$	999

Cash flows from investing activities
Capital expenditures		—			—			(445	)		—			(445	)
Capital expenditures for discontinued operations		—			—			(51	)		—			(51	)
Proceeds from disposal of assets, net		—			—			8			—			8
Proceeds from disposal of assets in discontinued operations, net		—			—			194			—			194
Investing activities with affiliates, net		—			(1,816	)		(2,269	)		4,085			—
Other, net		—			19			6			—			25
Net cash used in investing activities					(1,797	)		(2,557	)		4,085			(269	)

Cash flows from financing activities
Change in short-term borrowings, net		—			—			(260	)		—			(260	)
Repayments of debt		—			(30	)		(290	)		—			(320	)
Proceeds from restricted cash investments		—			—			192			—			192
Deposits to restricted cash investments		—			—			(116	)		—			(116	)
Distribution of qualifying additional paid-in capital		(278	)		—			—			—			(278	)
Financing activities with affiliates, net		325			1,819			1,941			(4,085	)		—
Other, net		—			(9	)		8			—			(1	)
Net cash provided by (used in) financing activities		47			1,780			1,475			(4,085	)		(783	)

Net increase (decrease) in cash and cash equivalents		16			(587	)		518			—			(53	)
Cash and cash equivalents at beginning of period		3			2,793			1,221			—			4,017
Cash and cash equivalents at end of period	$	19		$	2,206		$	1,739		$	—		$	3,964