16. Supplemental Quarterly Financial Information (Unaudited)
Following is a summary of the unaudited interim results of operations for the years ended December 31, 2007 and 2006.
| 2007 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||
| (In millions, except per share amounts) | |||||||||||||||
| Revenues | $ | 2,473 | 2,929 | 2,763 | 3,197 | 11,362 | |||||||||
Earnings from continuing operations |
$ | 574 | 824 | 644 | 1,104 | 3,146 | |||||||||
| Earnings from discontinued operations | 77 | 80 | 91 | 212 | 460 | ||||||||||
| Net earnings | $ | 651 | 904 | 735 | 1,316 | 3,606 | |||||||||
Basic net earnings per common share: Earnings from continuing operations |
$ | 1.29 | 1.84 | 1.45 | 2.48 | 7.05 | |||||||||
| Earnings from discontinued operations | 0.17 | 0.18 | 0.20 | 0.48 | 1.03 | ||||||||||
| Net earnings | $ | 1.46 | 2.02 | 1.65 | 2.96 | 8.08 | |||||||||
Diluted net earnings per common share: Earnings from continuing operations |
$ | 1.27 | 1.82 | 1.43 | 2.45 | 6.97 | |||||||||
| Earnings from discontinued operations | 0.17 | 0.18 | 0.20 | 0.47 | 1.03 | ||||||||||
| Net earnings | $ | 1.44 | 2.00 | 1.63 | 2.92 | 8.00 | |||||||||
| 2006 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||
| (In millions, except per share amounts) | |||||||||||||||
| Revenues | $ | 2,500 | 2,350 | 2,499 | 2,418 | 9,767 | |||||||||
Earnings from continuing operations |
$ | 716 | 763 | 653 | 502 | 2,634 | |||||||||
| Earnings (loss) from discontinued operations | (16 | ) | 96 | 52 | 80 | 212 | |||||||||
| Net earnings | $ | 700 | 859 | 705 | 582 | 2,846 | |||||||||
Basic net earnings per common share: Earnings from continuing operations |
$ | 1.61 | 1.73 | 1.47 | 1.13 | 5.94 | |||||||||
| Earnings (loss) from discontinued operations | (0.03 | ) | 0.21 | 0.12 | 0.18 | 0.48 | |||||||||
| Net earnings | $ | 1.58 | 1.94 | 1.59 | 1.31 | 6.42 | |||||||||
Diluted net earnings per common share: Earnings from continuing operations |
$ | 1.59 | 1.71 | 1.45 | 1.11 | 5.87 | |||||||||
| Earnings (loss) from discontinued operations | (0.03 | ) | 0.21 | 0.12 | 0.18 | 0.47 | |||||||||
| Net earnings | $ | 1.56 | 1.92 | 1.57 | 1.29 | 6.34 | |||||||||
Earnings from Continuing Operations
The second quarter and fourth quarter of 2007 include a reduction to income tax expense from continuing operations of $30 million (or $0.07 per diluted share) and $231 million (or $0.52 per diluted share), respectively, due to statutory rate reductions in Canada.
The second quarter of 2006 included a reduction to income tax expense from continuing operations of $243 million (or $0.55 per diluted share) due to statutory rate reductions in Canada and additional income tax expense of $39 million (or $0.09 per diluted share) due to a new income-based tax enacted by the state of Texas.
The second and third quarters of 2006 include $16 million and $20 million, respectively, of reductions of carrying values of oil and gas properties. The after-tax effects of these amounts were $16 million (or $0.04 per share) and $10 million (or $0.02 per share), respectively.
Earnings from Discontinued Operations
The second quarter of 2007 earnings from discontinued operations includes a reduction of carrying value of oil and gas properties of $64 million ($13 million after-tax) or $0.03 per diluted share.
The fourth quarter of 2007 earnings from discontinued operations includes a $90 million gain ($90 million after-tax) or $0.20 per diluted share as a result of completing the sale of Devon's Egyptian operations in October 2007.
Revenues for the first, second, third and fourth quarters of 2007 in the table above exclude $175 million, $215 million, $206 million and $185 million, respectively, related to discontinued operations in West Africa and Egypt.
The first quarter of 2006 earnings from discontinued operations includes a reduction of carrying value of oil and gas properties of $85 million ($85 million after-tax) or $0.19 per share.
Revenues for the first, second, third and fourth quarters of 2006 in the table above exclude $218 million, $267 million, $223 million and $221 million, respectively, related to discontinued operations in West Africa and Egypt.
Management's Annual Report on Internal Control Over Financial Reporting
Devon's management is responsible for establishing and maintaining adequate internal control over financial reporting for Devon, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Under the supervision and with the participation of Devon's management, including our principal executive and principal financial officers, Devon conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO Framework"). Based on this evaluation under the COSO Framework, which was completed on February 5, 2008, management concluded that its internal control over financial reporting was effective as of December 31, 2007.
The effectiveness of Devon's internal control over financial reporting as of December 31, 2007 has been audited by KPMG LLP, an independent registered public accounting firm who audited Devon's consolidated financial statements as of and for the year ended December 31, 2007, as stated in their report, which is included on page 63.