Finally, in order to allow more callers to ask questions, I ask each caller in the Q&A to limit their questions to one initial question and one follow-up question.I will start my comments with some brief remarks on the operating results, but this will be much briefer than normal, as I will defer more to Bernard. I will then focus the majority of my comments on the restatement of our previously issued results due to additional adjustments to our income taxes. In the second quarter 2012, we generated -- before income taxes, we generated earnings before income taxes of $205 million or $276 million on a non-GAAP basis compared to non-GAAP earnings before income taxes for the first quarter of 2012 of $296 million, as detailed in the non-GAAP reconciliation table in our earnings release. Second quarter earnings before income taxes was unfavorably impacted by certain excluded items highlighted in our press release, totaling $71 million on a pre-tax basis. The excluded items for the second quarter were primarily composed of a $100 million accrual for the potential settlement of the sanctioned countries' investigation, $24 million for severance exit and other charges and $53 million gain associated with the sale of our subsea controls business. Second quarter revenues of $3.8 billion were 5% higher sequentially and 24% higher than the same period last year. North America revenue was up 25% versus the second quarter of 2011 and down 4% sequentially. International revenues were up 23% versus the same quarter of 2011 and up 14% sequentially. Segment operating income of $539 million improved 29% over second quarter 2011, while declining $15 million or 3% sequentially. Segment operating income margins of 14% were flat compared to second quarter 2011, while declining one point sequentially. North America operating margins for the quarter declined 430 basis points sequentially to 16%, primarily due to the impact of the extended Canadian spring breakup. International operating margins improved 210 basis points sequentially to 13%.
Corporate general and administrative expenses of $53 million declined $11 million compared to the prior quarter but continues to run at elevated levels due to additional professional service fees incurred in the quarter related to the income tax remediation.During the second quarter 2012, we generated EBITDA, defined as non-GAAP operating income plus depreciation and amortization, of $731 million, with depreciation and amortization of $310 million compared to EBITDA of $729 million and depreciation and amortization of $301 million in the prior quarter. Capital expenditures were $554 million for the quarter, net of $30 million of loss in whole revenue or approximately 15% of revenue. Full year 2012 CapEx is projected to be between 10% and 15% of revenue. Actual CapEx in the second half of the year will be driven primarily by how we see our incremental growth developing in 2013. Net debt for the quarter increased $641 million, primarily due to increases in capital expenditures and working capital metrics for accounts receivable, while inventory metrics improved. We continue to target 76 days and 75 days for receivables and inventory, respectively, by the end of 2012, as we continue our focus on working capital improvements and work to improve our CapEx returns. Subject to the risks and uncertainties regarding forward-looking statements highlighted in our press release and public filings, we expect North America should have significant revenue and margin improvement in Q3 compared to Q2, due in large part to Canadian seasonality but also to improving margins in the U.S. International should show modest top line growth and continued margin improvement. Q3 non-operating costs are protected at about $60 million for corporate general and administrative cost, depreciation and amortization at $310 million, interest at $127 million, and R&D at about $72 million a quarter. Increases in corporate general and administrative costs are for planned additional procedures related to the tax remediation. Read the rest of this transcript for free on seekingalpha.com