- Industry leading sequential decrementals of 6%; 50%
incrementals (GAAP basis)
- Raised net proceeds of $2.7
billion through two successful offerings
- Repaid $1.9 billion of
senior notes
- Completed 92% of previously announced 8,000 headcount
reduction plan
BAAR, Switzerland,
July 27, 2016 /PRNewswire/ -- Weatherford International plc
(NYSE: WFT) reported GAAP net loss for the second quarter of
2016 of $565 million, or a net loss
of $0.63 per share, and adjusted net
loss before charges and credits of $253
million ($0.28 adjusted net
loss per share) on revenues of $1.40
billion for the second quarter of 2016.
Second Quarter 2016 Highlights
- Industry leading operating income decrementals of 6%
sequentially and 24% year-over-year; sequential incrementals of 50%
(GAAP basis);
- Ceased operations in three manufacturing and service
facilities, a year-to-date total of seven of the nine planned
closures for the year;
- Closed 28 additional operating and other facilities, now at 54
year-to-date, 11 more than originally projected;
- Completed 92% of the planned 8,000 reduction in force, with
expected annualized savings of $446
million;
- Entered into an agreement defining the terms and conditions of
the Zubair early production facility construction contract
settlement in the amount of $150
million;
- Raised net proceeds of $2.7
billion from newly issued debt: $1.265 billion in exchangeable (convertible)
notes maturing in 2021 and $1.5
billion in new senior notes, $750
million maturing in 2021 and $750 million maturing in 2023;
- Settled in cash, a tender offer of $1.9
billion face value of existing senior notes on June 30, 2016; and
- Gained inclusion in the Euronext Vigeo World 120 Index, which
recognizes companies achieving the most advanced Environmental,
Social and Governance (ESG) performance.
(In Millions, Except
Per Share Amounts)
|
|
Three Months
Ended
|
|
Change
|
|
|
6/30/2016
|
|
3/31/2016
|
|
6/30/2015
|
|
Sequential
|
|
Year-on-Year
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,402
|
|
|
$
|
1,585
|
|
|
$
|
2,390
|
|
|
(11)
|
%
|
|
(41)
|
%
|
Operating Income
(Loss)
|
|
$
|
(66)
|
|
|
$
|
(157)
|
|
|
$
|
36
|
|
|
58
|
%
|
|
(283)
|
%
|
Operating
Margin
|
|
(4.7)
|
%
|
|
(9.9)
|
%
|
|
1.5
|
%
|
|
520
|
bps
|
|
(621)
|
bps
|
Adjusted Operating
Income (Loss) *
|
|
$
|
(116)
|
|
|
$
|
(105)
|
|
|
$
|
117
|
|
|
(11)
|
%
|
|
(200)
|
%
|
Adjusted Operating
Margin
|
|
(8.3)
|
%
|
|
(6.6)
|
%
|
|
4.9
|
%
|
|
(168)
|
bps
|
|
(1,318)
|
bps
|
Adjusted Decrementals
**
|
|
|
|
|
|
|
|
|
|
|
(6)
|
%
|
|
(24)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(565)
|
|
|
$
|
(498)
|
|
|
$
|
(489)
|
|
|
(13)
|
%
|
|
(16)
|
%
|
Adjusted Net Loss
*
|
|
$
|
(253)
|
|
|
$
|
(239)
|
|
|
$
|
(77)
|
|
|
(6)
|
%
|
|
(225)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss per
Share
|
|
$
|
(0.63)
|
|
|
$
|
(0.61)
|
|
|
$
|
(0.63)
|
|
|
(3)
|
%
|
|
—
|
%
|
Adjusted Diluted Loss
per Share *
|
|
$
|
(0.28)
|
|
|
$
|
(0.29)
|
|
|
$
|
(0.10)
|
|
|
4
|
%
|
|
(181)
|
%
|
|
* Adjusted Operating
Income, Net Loss and Diluted Loss per Share are non-GAAP measures
and primarily exclude the charges and credits for the Zubair legacy
contract.
|
|
**
Incremental/decremental operating margin is calculated by taking
the change in adjusted operating income over the change in
revenue.
|
Bernard J. Duroc-Danner, Chairman
of the Board, President and Chief Executive Officer, stated,
"During the second quarter, we continued to drive progress both
operationally and financially.
On the operational front, our results show the impact of the
cost transformation of Weatherford, resulting in our adjusted
operating income declining by only $11
million on a sequential revenue decline of 11% or
$183 million, with an improvement in
our adjusted earnings per share. Underlying our operating results
are benefits from our continued cost reduction efforts, supporting
strong adjusted operating income decrementals of 6% sequentially
and 24% year-over-year.
North America revenue declined
26%, outperforming a 35% reduction in average rig count and
continued pricing headwinds. However, operating losses were reduced
substantially with the aggressive cost actions taken this year. We
believe North America activity
levels have hit a bottom.
Internationally, our revenue declined 3% on a sequential rig
count reduction of 7%. Latin
America bore the brunt of the decline with steep customer
spending cuts across the board. Eastern Hemisphere revenue
increased by 4% sequentially. In the Europe/Caspian/Russia/Sub-Sahara Africa region, sharp
activity reductions in offshore West
Africa were only partly mitigated by a seasonal recovery in
Russia. In the Middle East/North
Africa/Asia Pacific region,
the revenue increase reflected the final contract settlement of the
Zubair project and higher activity in Algeria more than offsetting declines across
several Asia Pacific operations.
Revenue for the Land Drilling Rigs business declined with lower
sequential utilization rates.
On the financial front, we successfully completed two upsized
capital markets transactions, materially de-risking our near-term
financial profile and meaningfully improving our liquidity
position. We reduced near term debt maturities over the next three
years from $2.1 billion down to
$639 million, ensuring that we can
meet our obligations under any business scenario. The settlement of
the Zubair early production facility contract located in
Iraq was an important milestone
during the quarter. We also substantially completed our full
year headcount reduction and continued to optimize our headcount
support ratio, all of which should positively impact our results
moving forward.
The industry has now hit a bottom on both the activity and
pricing fronts. Customers have begun to recognize that reliable,
high quality products and services have been discounted below
economic minimums and are at unsustainable levels. Our
conversations with several customers support expectations
that both activity and pricing levels will improve gradually over
the next several quarters.
With our legacy issues now behind us, and a fundamentally
transformed cost structure, Weatherford is positioned for the
market recovery. As we look forward to a gradual improving
macro environment, our core set of differentiated product lines and
technology, along with a very disciplined approach and a much
strengthened operational team, all support strong incremental
operating income margin improvement and future free cash flow
generation.
Our performance to come will reflect our transformation in all
metrics."
Second Quarter 2016 Results
Revenue for the second quarter of 2016 was $1.40 billion compared with $1.59 billion in the first quarter of 2016 and
$2.39 billion in the second quarter
of 2015. Second quarter revenues declined 11% sequentially and 41%
from the prior year. The sequential decline was 26% in North America and 3% for International
operations.
GAAP net loss for the second quarter of 2016 was $565 million (net loss of $0.63 per share), compared to a net loss of
$498 million in the first quarter of
2016 (net loss of $0.61 per share),
and a net loss of $489 million in the
second quarter of the prior year (net loss of $0.63 per share).
Adjusted net loss for the second quarter of 2016 was
$253 million (adjusted net loss of
$0.28 per share), compared to a net
loss of $239 million in the first
quarter of 2016 (adjusted net loss of $0.29 per share), and a net loss of $77 million in the second quarter of the prior
year (adjusted net loss of $0.10
per share).
After-tax charges, net of credits, of $312 million for the second quarter include:
- $146 million in charges primarily
from a fair market value adjustment of a note receivable from our
customer in Venezuela and
write-downs in inventory and other assets;
- $101 million in litigation
charges mainly related to advancement in negotiations with the
SEC/DOJ regarding our income tax restatements from previous
years;
- $69 million in charges from bond
tender premiums related to the repurchase of our senior notes;
and
- $41 million in severance and
restructuring charges.
The above charges were partly offset with $45 million of income from the settlement of our
Zubair legacy contract.
Operating margin of -4.7% for the second quarter improved
by 520 basis points sequentially, and deteriorated 621 basis
points from the second quarter of 2015. Adjusted operating margin
of -8.3%, for the second quarter decreased by 168 basis points
sequentially, and declined 1,318 basis points from the second
quarter of 2015. Sequentially, an overall 11% reduction in revenue
resulted in adjusted operating income decrementals of 6%.
Year-over-year revenue was down 41% with adjusted operating income
decrementals of 24%. The negative operating margins continue to
include about $50 million of costs
per quarter to preserve the operating infrastructure and structural
organization to enable the company to respond effectively to the
anticipated increase in activity levels.
Segment Highlights
North America
(In Millions, Except
Per Share Amounts)
|
|
Three Months
Ended
|
|
|
Change
|
|
|
|
6/30/2016
|
|
3/31/2016
|
|
|
6/30/2015
|
|
|
Sequential
|
|
|
Year-on-Year
|
North
America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
401
|
|
|
$
|
543
|
|
|
$
|
808
|
|
|
(26)
|
%
|
|
(50)
|
%
|
Operating
Loss
|
|
$
|
(101)
|
|
|
$
|
(128)
|
|
|
$
|
(92)
|
|
|
21
|
%
|
|
(9)
|
%
|
Operating
Margin
|
|
(25.2)
|
%
|
|
(23.6)
|
%
|
|
(11.5)
|
%
|
|
(153)
|
bps
|
|
(1,371)
|
bps
|
Second quarter revenues of $401
million were down $142
million, or 26% sequentially, and down $407 million, or 50%, over the same quarter in
the prior year. Second quarter operating losses decreased by
$27 million sequentially to
$101 million (-25.2% margin) and
increased $9 million from an
operating loss of $92 million in the
same quarter of the prior year. The 26% decrease in sequential
revenue in the region outperformed the 35% drop in the North
American rig count and reflected reduced customer activity and
spending as well as the Canadian seasonal spring break-up, coupled
with continued pricing headwinds. Operating losses decreased
sequentially, resulting in incrementals of 19%. Driving these
results were the benefits from aggressive cost saving actions taken
during the first half of 2016. Year-over-year decrementals were a
respectable 2%.
International Operations
(In Millions, Except
Per Share Amounts)
|
|
Three Months
Ended
|
|
|
Change
|
|
|
|
6/30/2016
|
|
|
3/31/2016
|
|
|
6/30/2015
|
|
|
Sequential
|
|
|
Year-on-Year
|
International
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
892
|
|
|
$
|
923
|
|
|
$
|
1,397
|
|
|
(3)
|
%
|
|
(36)
|
%
|
Operating Income
(Loss)
|
|
$
|
52
|
|
|
$
|
(3)
|
|
|
$
|
124
|
|
|
1,833
|
%
|
|
(58)
|
%
|
Adjusted Operating
Income
|
|
$
|
2
|
|
|
$
|
49
|
|
|
$
|
205
|
|
|
(97)
|
%
|
|
(99)
|
%
|
Adjusted Operating
Margin
|
|
0.2
|
%
|
|
5.4
|
%
|
|
14.7
|
%
|
|
(517)
|
bps
|
|
(1,451)
|
bps
|
Second quarter revenues of $892
million were down $31 million,
or 3% sequentially, and lower by $505
million, or 36% compared to the same quarter in the prior
year. Second quarter operating income of $52
million (5.8% margin) was $55
million higher sequentially and $72
million lower versus the same quarter in the prior year.
Second quarter adjusted operating income of $2 million (0.2% margin) was lower by
$47 million sequentially and
$203 million lower versus the same
quarter in the prior year. Adjusted operating income excludes both
charges and credits associated with our Zubair legacy contract. The
decline in international sequential revenue outperformed the rig
count decrease of 7%.
Second quarter revenues of $249
million were down $56 million,
or 18% sequentially, and down $214
million, or 46%, compared to the same quarter in the prior
year. Second quarter operating income of $1
million (0.6% margin) was down 97% sequentially and down 98%
compared to the same quarter in the prior year. Activity declines,
particularly in Mexico, Brazil and Colombia were the primary drivers of both the
revenue and operating income declines as customers continued to
reduce their spend. Cost reduction actions taken late in the second
quarter did not impact the results of the quarter.
- Europe/Sub-Sahara
Africa/Russia
Second quarter revenues of $243
million were down $14 million,
or 5% sequentially, and down $175
million, or 42%, over the same quarter in the prior year.
Second quarter operating income of $1
million (0.3% margin) increased $2
million or 156% sequentially, and down 99% when compared to
the same quarter in the prior year. The revenue and operating loss
decline was primarily due to customer activity reductions across
offshore West Africa, principally
in Angola, partly offset by the
seasonal recovery in Russia.
- Middle East/North Africa/Asia
Pacific
Second quarter revenues of $400
million were up $39 million,
or 11% sequentially, and down $116
million, or 23%, from the same quarter in the prior year.
Operating income of $50 million
(12.5% margin) was up 209% sequentially and up 394% from the same
quarter in the prior year. Adjusted operating income, which
excludes the impact of the Zubair contract, was essentially at
break-even levels. The sequential revenue increase was primarily
due to the settlement of the Zubair legacy contract in Iraq and was partially offset by activity
declines across many of the Asia
Pacific operations. Sequentially, the adjusted operating
income decreased due to the lower activity levels during the
quarter.
Land Drilling Rigs
Second quarter revenues of $109
million were down $10 million,
or 9% sequentially, and down $76
million, or 41%, compared to the same quarter in the prior
year. The termination fees earned in the first quarter of 2016 and
the completion of certain projects during the second quarter were
the main constituents of the sequential revenue decline. Second
quarter operating loss of $17 million
(-15.7% margin) was up $9 million
sequentially and down $21 million
from the same quarter in the prior year. The operating loss
improved sequentially due to increased activity in Saudi Arabia and continued structural cost
reductions.
Operational Highlights
- On July 26, 2016, Weatherford
announced that it has signed a Joint Initiative Agreement (JIA)
with IBM (NYSE: IBM) to collaborate on the development of new
products and services for oil and gas producers that leverage IBM
advanced analytics and Internet of Things capabilities on the IBM
Cloud and further strengthen Weatherford's industry-leading
production optimization technologies. Through the joint initiative
Weatherford and IBM will develop new analytics solutions, all
available via IBM Cloud, that are based on Weatherford's extensive
production optimization and engineering software platform, its
supervisory control and data acquisition (SCADA) tools, and its
sensors and controllers. The jointly-developed solutions will be
part of the Company's new Reservoir Solutions global business unit,
which was launched in early 2016 and is dedicated to providing
integrated offerings that help its clients lower their operating
costs and increase production.
- During the quarter, Weatherford was awarded a five-year
Drilling Services contract by a Middle Eastern National Oil Company
(NOC) client, effectively doubling our market share in the country.
The customer made this award on the basis of our advanced
Logging-while-Drilling (LWD) technology, our outstanding
performance record and superior service quality.
- Weatherford secured several multi-year contracts for Upper
Completions and Well Screens for a super major on Russia's Sakhalin Island. These contracts,
combined with our existing contracts for Annular Safety Systems and
Premium Open-Hole Cup Seal Packers, place our Company as the
primary Completion supplier for these wells. In addition,
Weatherford was awarded a contract for five wells in Australia for our new Open Hole Gravel pack
system and associated pumping services. The Gravel Pack system is a
clean sheet design that brings several improvements to the market
over existing technology. This contract gives Weatherford their
first foothold in the Asia Pacific Gravel Pack market. Both of
these contract wins follow market share gains achieved in the first
quarter in Norway when Weatherford
was awarded the Completion work on the Fram field.
- Another notable trend this quarter was the increasing
deployment of the Company's Jet Pump in the Permian Basin,
replacing previous electric submersible pumps (ESP) installations.
Clients benefit from such a substitution with lower overall cost
and reduced production downtime.
- Weatherford recently completed a rigless intervention project
in the Gulf of Mexico for which it
was the sole service provider. This marked the first time that a
complex intervention was completed by a single party with multiple
vessels in the region. The ability for one company to provide this
range of integrated services - including coiled tubing, well
testing, thru tubing, wireline, managed pressure drilling services,
and slickline - without a rig significantly simplified logistics
and resulted in time and cost savings. The intervention was a
success, increasing the production rate 70% beyond the operator's
expectations.
Free Cash Flow
Net cash used in operating activities was $139 million and free cash flow used in
operations was $160 million for the
second quarter of 2016. Working capital balances did not generate
as much cash as expected, primarily due to much slower receivable
collections from some of our key customers and to a certain extent,
lower than expected inventory reductions due to the decline in
product sales. Capital expenditures of $31
million were down $156
million, or 83% versus the same quarter in the prior year
and reduced by $12 million, or 28%,
from the first quarter of 2016. Also included in the quarter's free
cash flow were $97 million of debt
interest payments, including an accelerated $27 million payment due to the early retirement
of Weatherford's senior notes.
Additionally, $50 million of cash
severance and restructuring costs were paid, to further reduce
operating costs going forward.
The Company's second quarter capital market transactions provide
plenty of near-term financial flexibility and liquidity, and
successfully extend Weatherford's
near-term maturity obligations.
Reclassifications
Certain prior year amounts have been reclassified to conform to
the current year presentation related to the adoption of new
accounting standards.
About Weatherford
Weatherford is one of the largest
multinational oilfield service companies providing innovative
solutions, technology and services to the oil and gas
industry. The Company operates in over 100 countries and has a
network of approximately 1,000 locations, including manufacturing,
service, research and development, and training facilities and
employs approximately 32,000 people. For more information,
visit www.weatherford.com and connect with Weatherford on Facebook, LinkedIn, Twitter and
YouTube.
Conference Call
The Company will host a conference call with financial analysts
to discuss the quarterly results on July 28, 2016, at
7:00 a.m. eastern time (ET),
6:00 a.m. central time (CT).
Weatherford invites investors to listen
to the call live via the Company's website, www.weatherford.com, in
the Investor Relations section. A recording of the conference call
and transcript of the call will be available in that section of the
website shortly after the call ends.
Contacts:
|
|
Krishna
Shivram
|
+1.713.836.4610
|
|
|
Executive Vice
President and Chief Financial Officer
|
|
|
|
|
|
|
|
Karen
David-Green
|
+1.713.836.7430
|
|
|
Vice President –
Investor Relations, Corporate Marketing and
Communications
|
|
Forward-Looking Statements
This press release contains, and the conference call announced
in this release may include, forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, among other things, the
Company's quarterly non-GAAP earnings per share, effective tax
rate, free cash flow, net debt, forecasts or expectations regarding
business outlook, and capital expenditures, and are also generally
identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "outlook," "budget," "intend,"
"strategy," "plan," "guidance," "may," "should," "could," "will,"
"would," "will be," "will continue," "will likely result," and
similar expressions, although not all forward-looking statements
contain these identifying words. Such statements are based upon the
current beliefs of Weatherford's
management, and are subject to significant risks, assumptions and
uncertainties. Should one or more of these risks or uncertainties
materialize, or underlying assumptions prove incorrect, actual
results may vary materially from those indicated in our
forward-looking statements. Readers are also cautioned that
forward-looking statements are only predictions and may differ
materially from actual future events or results, including possible
changes in the size and components of the expected costs, expenses,
savings and charges associated with prior workforce reduction and
prior and ongoing facility closures; and risks associated with the
Company's ability to achieve the benefits and cost savings of such
activities. Forward-looking statements are also affected by the
risk factors described in the Company's Annual Report on Form 10-K
for the year ended December 31, 2015,
the Company's Quarterly Reports on Form 10-Q, and those set forth
from time-to-time in the Company's other filings with the
Securities and Exchange Commission ("SEC"). We undertake no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events, or
otherwise, except to the extent required under federal securities
laws.
Weatherford
International plc
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In Millions, Except
Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
6/30/2016
|
|
6/30/2015
|
|
6/30/2016
|
|
6/30/2015
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
401
|
|
|
$
|
808
|
|
|
$
|
944
|
|
|
$
|
1,971
|
|
Middle East/North
Africa/Asia Pacific
|
|
400
|
|
|
516
|
|
|
761
|
|
|
1,049
|
|
Europe/SSA/Russia
|
|
243
|
|
|
418
|
|
|
500
|
|
|
835
|
|
Latin
America
|
|
249
|
|
|
463
|
|
|
554
|
|
|
949
|
|
Land Drilling
Rigs
|
|
109
|
|
|
185
|
|
|
228
|
|
|
380
|
|
Total
Net Revenues
|
|
1,402
|
|
|
2,390
|
|
|
2,987
|
|
|
5,184
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
North
America
|
|
(101)
|
|
|
(92)
|
|
|
(229)
|
|
|
(102)
|
|
Middle East/North
Africa/Asia
|
|
—
|
|
|
55
|
|
|
6
|
|
|
124
|
|
Europe/SSA/Russia
|
|
1
|
|
|
65
|
|
|
—
|
|
|
136
|
|
Latin
America
|
|
1
|
|
|
85
|
|
|
45
|
|
|
183
|
|
Land Drilling
Rigs
|
|
(17)
|
|
|
4
|
|
|
(43)
|
|
|
14
|
|
Adjusted
Segment Operating Income (Loss)
|
|
(116)
|
|
|
117
|
|
|
(221)
|
|
|
355
|
|
Research and
Development
|
|
(41)
|
|
|
(59)
|
|
|
(86)
|
|
|
(123)
|
|
Corporate
Expenses
|
|
(34)
|
|
|
(46)
|
|
|
(77)
|
|
|
(102)
|
|
Loss on Sale of
Businesses, Net
|
|
—
|
|
|
(5)
|
|
|
(1)
|
|
|
(2)
|
|
Other
Charges
|
|
(269)
|
|
|
(471)
|
|
|
(522)
|
|
|
(542)
|
|
Total
Operating Loss
|
|
(460)
|
|
|
(464)
|
|
|
(907)
|
|
|
(414)
|
|
|
|
|
|
|
|
|
|
|
Other
Expense:
|
|
|
|
|
|
|
|
|
Interest Expense,
Net
|
|
(119)
|
|
|
(117)
|
|
|
(234)
|
|
|
(237)
|
|
Bond Tender Premium,
Net
|
|
(78)
|
|
|
—
|
|
|
(78)
|
|
|
—
|
|
Currency Devaluation
Charges
|
|
—
|
|
|
(16)
|
|
|
(31)
|
|
|
(42)
|
|
Other, Net
|
|
(7)
|
|
|
(18)
|
|
|
(6)
|
|
|
(29)
|
|
Net Loss Before
Income Taxes
|
|
(664)
|
|
|
(615)
|
|
|
(1,256)
|
|
|
(722)
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Benefit
|
|
102
|
|
|
132
|
|
|
203
|
|
|
132
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
(562)
|
|
|
(483)
|
|
|
(1,053)
|
|
|
(590)
|
|
Net Income
Attributable to Noncontrolling Interests
|
|
3
|
|
|
6
|
|
|
10
|
|
|
17
|
|
Net Loss Attributable
to Weatherford
|
|
$
|
(565)
|
|
|
$
|
(489)
|
|
|
$
|
(1,063)
|
|
|
$
|
(607)
|
|
|
|
|
|
|
|
|
|
|
Loss Per Share
Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
Basic &
Diluted
|
|
$
|
(0.63)
|
|
|
$
|
(0.63)
|
|
|
$
|
(1.24)
|
|
|
$
|
(0.78)
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic &
Diluted
|
|
899
|
|
|
778
|
|
|
856
|
|
|
778
|
|
Weatherford
International plc
|
Selected
Statements of Operations Information
|
(Unaudited)
|
(In
Millions)
|
|
Three Months
Ended
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
401
|
|
|
$
|
543
|
|
|
$
|
699
|
|
|
$
|
824
|
|
|
$
|
808
|
|
Middle East/North
Africa/Asia Pacific
|
400
|
|
|
361
|
|
|
453
|
|
|
445
|
|
|
516
|
|
Europe/SSA/Russia
|
243
|
|
|
257
|
|
|
337
|
|
|
361
|
|
|
418
|
|
Latin
America
|
249
|
|
|
305
|
|
|
376
|
|
|
421
|
|
|
463
|
|
Land Drilling
Rigs
|
109
|
|
|
119
|
|
|
147
|
|
|
186
|
|
|
185
|
|
Total Net
Revenues
|
$
|
1,402
|
|
|
$
|
1,585
|
|
|
$
|
2,012
|
|
|
$
|
2,237
|
|
|
$
|
2,390
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
(101)
|
|
|
$
|
(128)
|
|
|
$
|
(68)
|
|
|
$
|
(54)
|
|
|
$
|
(92)
|
|
Middle East/North
Africa/Asia Pacific
|
—
|
|
|
6
|
|
|
45
|
|
|
42
|
|
|
55
|
|
Europe/SSA/Russia
|
1
|
|
|
(1)
|
|
|
38
|
|
|
43
|
|
|
65
|
|
Latin
America
|
1
|
|
|
44
|
|
|
59
|
|
|
73
|
|
|
85
|
|
Land Drilling
Rigs
|
(17)
|
|
|
(26)
|
|
|
(17)
|
|
|
16
|
|
|
4
|
|
Adjusted
Segment Operating Income (Loss)
|
(116)
|
|
|
(105)
|
|
|
57
|
|
|
120
|
|
|
117
|
|
Research and
Development
|
(41)
|
|
|
(45)
|
|
|
(52)
|
|
|
(56)
|
|
|
(59)
|
|
Corporate
Expenses
|
(34)
|
|
|
(43)
|
|
|
(47)
|
|
|
(45)
|
|
|
(46)
|
|
Loss on Sale of
Businesses, Net
|
—
|
|
|
(1)
|
|
|
(4)
|
|
|
—
|
|
|
(5)
|
|
Other
Charges
|
(269)
|
|
|
(253)
|
|
|
(988)
|
|
|
(117)
|
|
|
(471)
|
|
Total Operating
Loss
|
$
|
(460)
|
|
|
$
|
(447)
|
|
|
$
|
(1,034)
|
|
|
$
|
(98)
|
|
|
$
|
(464)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
Product Service
Line Revenues:
|
|
|
|
|
|
|
|
|
|
Formation Evaluation
and Well Construction (a)
|
$
|
806
|
|
|
$
|
890
|
|
|
$
|
1,087
|
|
|
$
|
1,235
|
|
|
$
|
1,355
|
|
Completion and
Production (b)
|
487
|
|
|
576
|
|
|
778
|
|
|
816
|
|
|
850
|
|
Land Drilling
Rigs
|
109
|
|
|
119
|
|
|
147
|
|
|
186
|
|
|
185
|
|
Total Product Service
Line Revenues
|
$
|
1,402
|
|
|
$
|
1,585
|
|
|
$
|
2,012
|
|
|
$
|
2,237
|
|
|
$
|
2,390
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
Depreciation and
Amortization:
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
58
|
|
|
$
|
54
|
|
|
$
|
73
|
|
|
$
|
87
|
|
|
$
|
97
|
|
Middle East/North
Africa/Asia Pacific
|
60
|
|
|
61
|
|
|
61
|
|
|
62
|
|
|
66
|
|
Europe/SSA/Russia
|
48
|
|
|
48
|
|
|
46
|
|
|
52
|
|
|
53
|
|
Latin
America
|
56
|
|
|
61
|
|
|
63
|
|
|
63
|
|
|
62
|
|
Land Drilling
Rigs
|
23
|
|
|
22
|
|
|
26
|
|
|
28
|
|
|
27
|
|
Research and
Development and Corporate
|
4
|
|
|
4
|
|
|
6
|
|
|
6
|
|
|
6
|
|
Total Depreciation
and Amortization
|
$
|
249
|
|
|
$
|
250
|
|
|
$
|
275
|
|
|
$
|
298
|
|
|
$
|
311
|
|
|
|
(a)
|
Formation Evaluation
and Well Construction includes Managed-Pressure Drilling, Drilling
Services, Tubular Running Services, Drilling Tools, Wireline
Services, Testing and Production Services, Re-entry and Fishing
Services, Cementing, Liner Systems, Integrated Laboratory Services
and Surface Logging.
|
(b)
|
Completion and
Production includes Artificial Lift Systems, Stimulation and
Completion Systems.
|
|
|
|
We report our
financial results in accordance with U.S. generally accepted
accounting principles (GAAP). However, Weatherford's management
believes that certain non-GAAP financial measures and ratios (as
defined under the SEC's Regulation G) may provide users of this
financial information, additional meaningful comparisons between
current results and results of prior periods. The non-GAAP amounts
shown below should not be considered as substitutes for operating
income, provision for income taxes, net income or other data
prepared and reported in accordance with GAAP, but should be viewed
in addition to the Company's reported results prepared in
accordance with GAAP.
|
Weatherford
International plc
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
(Unaudited)
|
(In Millions, Except
Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
6/30/2016
|
|
3/31/2016
|
|
6/30/2015
|
|
6/30/2016
|
|
6/30/2015
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Loss
|
|
$
|
(460)
|
|
|
$
|
(447)
|
|
|
$
|
(464)
|
|
|
$
|
(907)
|
|
|
$
|
(414)
|
|
Severance,
Restructuring and Exited Businesses
|
|
51
|
|
|
77
|
|
|
72
|
|
|
128
|
|
|
113
|
|
Litigation
Charges, Net
|
|
114
|
|
|
67
|
|
|
112
|
|
|
181
|
|
|
112
|
|
Impairments,
Asset Write-Downs and Other (a)
|
|
154
|
|
|
57
|
|
|
218
|
|
|
211
|
|
|
239
|
|
Legacy
Contracts and Other
|
|
(50)
|
|
|
52
|
|
|
69
|
|
|
2
|
|
|
78
|
|
Loss on Sale of
Businesses, Net
|
|
—
|
|
|
1
|
|
|
5
|
|
|
1
|
|
|
2
|
|
Total Non-GAAP
Adjustments
|
|
269
|
|
|
254
|
|
|
476
|
|
|
523
|
|
|
544
|
|
Non-GAAP Adjusted
Operating Income (Loss)
|
|
$
|
(191)
|
|
|
$
|
(193)
|
|
|
$
|
12
|
|
|
$
|
(384)
|
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income
Taxes:
|
|
|
|
|
|
|
|
|
|
|
GAAP Loss Before
Income Taxes
|
|
$
|
(664)
|
|
|
$
|
(592)
|
|
|
$
|
(615)
|
|
|
$
|
(1,256)
|
|
|
$
|
(722)
|
|
Operating
Income Adjustments
|
|
269
|
|
|
254
|
|
|
476
|
|
|
523
|
|
|
544
|
|
Bond Tender
Premium, Net
|
|
78
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
—
|
|
Currency
Devaluation Charges
|
|
—
|
|
|
31
|
|
|
16
|
|
|
31
|
|
|
42
|
|
Non-GAAP Loss Before
Income Taxes
|
|
$
|
(317)
|
|
|
$
|
(307)
|
|
|
$
|
(123)
|
|
|
$
|
(624)
|
|
|
$
|
(136)
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit for Income
Taxes:
|
|
|
|
|
|
|
|
|
|
|
GAAP Benefit for
Income Taxes
|
|
$
|
102
|
|
|
$
|
101
|
|
|
$
|
132
|
|
|
$
|
203
|
|
|
$
|
132
|
|
Tax Effect on
Non-GAAP Adjustments
|
|
(35)
|
|
|
(26)
|
|
|
(80)
|
|
|
(61)
|
|
|
(89)
|
|
Non-GAAP Benefit for
Income Taxes
|
|
$
|
67
|
|
|
$
|
75
|
|
|
$
|
52
|
|
|
$
|
142
|
|
|
$
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Loss
|
|
$
|
(565)
|
|
|
$
|
(498)
|
|
|
$
|
(489)
|
|
|
$
|
(1,063)
|
|
|
$
|
(607)
|
|
Total Charges,
net of tax
|
|
312
|
|
|
259
|
|
|
412
|
|
|
571
|
|
|
497
|
|
Non-GAAP Net
Loss
|
|
$
|
(253)
|
|
|
$
|
(239)
|
|
|
$
|
(77)
|
|
|
$
|
(492)
|
|
|
$
|
(110)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss Per
Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Loss per
Share
|
|
$
|
(0.63)
|
|
|
$
|
(0.61)
|
|
|
$
|
(0.63)
|
|
|
$
|
(1.24)
|
|
|
$
|
(0.78)
|
|
Total Charges,
net of tax
|
|
0.35
|
|
|
0.32
|
|
|
0.53
|
|
|
0.67
|
|
|
0.64
|
|
Non-GAAP Diluted Loss
per Share
|
|
$
|
(0.28)
|
|
|
$
|
(0.29)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.57)
|
|
|
$
|
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Effective Tax
Rate (b)
|
|
15
|
%
|
|
17
|
%
|
|
21
|
%
|
|
16
|
%
|
|
18
|
%
|
Non-GAAP Effective
Tax Rate (c)
|
|
21
|
%
|
|
24
|
%
|
|
42
|
%
|
|
23
|
%
|
|
31
|
%
|
|
|
(a)
|
Impairments, Asset
Write-Downs and Other include primarily write-downs of inventory,
note receivable and other assets, long-lived and other asset
impairment charges, supply agreement charges, insurance losses and
professional fees and other charges.
|
(b)
|
GAAP Effective Tax
Rate is the GAAP provision for income taxes divided by GAAP income
before income taxes.
|
(c)
|
Non-GAAP Effective
Tax Rate is the Non-GAAP provision for income taxes divided by
Non-GAAP income before income taxes and calculated in
thousands.
|
Weatherford
International plc
|
Selected Balance
Sheet Data
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
452
|
|
|
$
|
464
|
|
|
$
|
467
|
|
|
$
|
519
|
|
|
$
|
611
|
|
Accounts Receivable,
Net
|
|
1,484
|
|
|
1,693
|
|
|
1,781
|
|
|
2,045
|
|
|
2,259
|
|
Inventories,
Net
|
|
2,195
|
|
|
2,302
|
|
|
2,344
|
|
|
2,767
|
|
|
2,921
|
|
Property, Plant and
Equipment, Net
|
|
5,247
|
|
|
5,471
|
|
|
5,679
|
|
|
6,394
|
|
|
6,694
|
|
Goodwill and
Intangibles, Net
|
|
3,182
|
|
|
3,216
|
|
|
3,159
|
|
|
3,224
|
|
|
3,335
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
790
|
|
|
934
|
|
|
948
|
|
|
1,015
|
|
|
1,104
|
|
Short-term Borrowings
and Current Portion of Long-term Debt
|
|
290
|
|
|
1,212
|
|
|
1,582
|
|
|
1,684
|
|
|
1,556
|
|
Long-term
Debt
|
|
6,943
|
|
|
5,846
|
|
|
5,852
|
|
|
5,990
|
|
|
6,235
|
|
Weatherford
International plc
|
Net
Debt
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
Change in Net Debt
for the Three Months Ended 6/30/2016:
|
|
|
|
|
|
|
Net Debt at
3/31/2016
|
|
|
|
|
|
$
|
(6,594)
|
|
Operating
Loss
|
|
|
|
|
|
(460)
|
|
Depreciation
and Amortization
|
|
|
|
|
|
249
|
|
Capital
Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
(31)
|
|
Decrease in
Working Capital
|
|
|
|
|
|
6
|
|
Equity
Issuance Fees
|
|
|
|
|
|
(7)
|
|
Bond Tender
Premium, Net
|
|
|
|
|
|
(78)
|
|
Litigation
Charges
|
|
|
|
|
|
114
|
|
Asset
Write-Downs and Other Charges
|
|
|
|
|
|
143
|
|
Income Taxes
Paid
|
|
|
|
|
|
(59)
|
|
Interest
Paid
|
|
|
|
|
|
(97)
|
|
Net Change in
Billings in Excess/Costs in Excess
|
|
|
|
|
|
34
|
|
Other
|
|
|
|
|
|
(1)
|
|
Net Debt at
6/30/2016
|
|
|
|
|
|
$
|
(6,781)
|
|
|
|
|
|
|
|
|
Change in Net Debt
for the Six Months Ended 6/30/2016:
|
|
|
|
|
|
|
Net Debt at
12/31/2015
|
|
|
|
|
|
$
|
(6,967)
|
|
Operating
Loss
|
|
|
|
|
|
(907)
|
|
Depreciation
and Amortization
|
|
|
|
|
|
499
|
|
Capital
Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
(74)
|
|
Decrease in
Working Capital
|
|
|
|
|
|
125
|
|
Equity Issuance
Proceeds, Net
|
|
|
|
|
|
623
|
|
Bond Tender
Premium, Net
|
|
|
|
|
|
(78)
|
|
Rig Loss
Proceeds
|
|
|
|
|
|
30
|
|
Litigation
Charges, Net
|
|
|
|
|
|
181
|
|
Asset
Write-Downs and Other Charges
|
|
|
|
|
|
178
|
|
Currency
Devaluation Charges
|
|
|
|
|
|
31
|
|
Income Taxes
Paid
|
|
|
|
|
|
(120)
|
|
Interest
Paid
|
|
|
|
|
|
(261)
|
|
Net Change in
Billings in Excess/Costs in Excess
|
|
|
|
|
|
45
|
|
Other
|
|
|
|
|
|
(86)
|
|
Net Debt at
6/30/2016
|
|
|
|
|
|
$
|
(6,781)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net
Debt
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
Cash
|
|
$
|
452
|
|
|
$
|
464
|
|
|
$
|
467
|
|
Short-term Borrowings
and Current Portion of Long-term Debt
|
|
(290)
|
|
|
(1,212)
|
|
|
(1,582)
|
|
Long-term
Debt
|
|
(6,943)
|
|
|
(5,846)
|
|
|
(5,852)
|
|
Net Debt
|
|
$
|
(6,781)
|
|
|
$
|
(6,594)
|
|
|
$
|
(6,967)
|
|
|
"Net Debt" is defined
as debt less cash. Management believes that it provides useful
information regarding our level of indebtedness by reflecting cash
that could be used to repay debt.
|
|
Working capital is
defined as accounts receivable plus inventory less accounts
payable.
|
|
|
|
We report our
financial results in accordance with U.S. generally accepted
accounting principles (GAAP). However, Weatherford's
management believes that certain non-GAAP financial measures and
ratios (as defined under the SEC's Regulation G) may provide users
of this financial information, additional meaningful comparisons
between current results and results of prior periods. The non-GAAP
amounts shown below should not be considered as substitutes for
cash flow information prepared and reported in accordance with
GAAP, but should be viewed in addition to the Company's reported
cash flow statements prepared in accordance with GAAP.
|
Weatherford
International plc
|
Selected Cash Flow
Data
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
6/30/2016
|
|
3/31/2016
|
|
6/30/2015
|
|
|
6/30/2016
|
|
6/30/2015
|
Net Cash Provided by
(Used In) Operating Activities
|
|
$
|
(139)
|
|
|
$
|
(205)
|
|
|
$
|
291
|
|
|
|
$
|
(344)
|
|
|
$
|
249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Capital
Expenditures for Property, Plant and Equipment
|
|
(31)
|
|
|
(43)
|
|
|
(187)
|
|
|
|
(74)
|
|
|
(411)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Proceeds from
Dispositions and Insurance Recoveries*
|
|
10
|
|
|
36
|
|
|
20
|
|
|
|
46
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
$
|
(160)
|
|
|
$
|
(212)
|
|
|
$
|
124
|
|
|
|
$
|
(372)
|
|
|
$
|
(139)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted for
Litigation Reimbursements**
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
|
(4)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Provided by (Used In) Operations
|
|
$
|
(160)
|
|
|
$
|
(216)
|
|
|
$
|
124
|
|
|
|
$
|
(376)
|
|
|
$
|
(139)
|
|
|
"Free Cash Flow" is
defined as net cash provided by or used in operating activities
less capital expenditures plus proceeds from dispositions and
insurance recoveries. "Free Cash Flow Provided by (Used In)
Operations" is defined as net cash provided by or used in operating
activities less capital expenditures plus proceeds from
dispositions and insurance recoveries and adjusted for litigation
reimbursements. Management uses the two free cash flow metrics to
measure progress on capital efficiency and cash flow
initiatives.
|
|
*Includes in the
first and second quarter 2016 $6 million and $10 million,
respectively, from the disposal of property, plant, and equipment
and $30 million of insurance reimbursements received during the
first quarter of 2016 on a land drilling rig loss.
|
|
**Includes in the
first quarter 2016 insurance proceeds received during the
applicable period reimbursing a portion of a shareholder derivative
litigation settlement payment of $120 million made in the third
quarter of 2015.
|
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