Negotiated new revolving and term loan
credit facilities to extend maturities
Raised net proceeds of $630
million through a successful public equity
offering
Completed 78% of the 2016 previously announced 6,000
headcount reduction plan
BAAR, Switzerland, May 4,
2016 /PRNewswire/ -- Weatherford International plc (NYSE: WFT)
reported a net loss before charges and credits of $239 million ($0.29
net loss per share before charges) on revenues of $1.59 billion for the first quarter of 2016. GAAP
net loss for the first quarter of 2016 was $498 million, or a net loss of $0.61 per share.
First Quarter 2016 Highlights
- The Company completed negotiations to refinance our existing
revolving credit facility into a consolidated $1.651 billion package, to be made up of a new
3-year $1.151 billion revolving
credit facility and a new 4-year $500
million term loan facility. Including the non-extending
banks, the total available facilities will stand at $1.88 billion through July of 2017;
- Raised net proceeds of $630
million through a successful public equity offering;
- Ceased operations in four of the nine planned manufacturing
facilities closures for the year;
- Closed 26 operating and other facilities, one more than
originally planned; and
- Completed 78% of the additional 6,000 reduction in force, with
annualized savings of $288
million.
(In Millions, Except Percentages and
bps)
|
|
Three Months Ended
|
|
Change
|
|
|
|
3/31/2016
|
|
12/31/2015
|
|
3/31/2015
|
|
Sequential
|
|
Year-on-Year
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,585
|
|
|
$
|
2,012
|
|
|
$
|
2,794
|
|
|
(21)
|
%
|
|
(43)
|
|
%
|
Operating Income (Loss)
|
|
$
|
(105)
|
|
|
$
|
57
|
|
|
$
|
238
|
|
|
(285)
|
%
|
|
(144)
|
|
%
|
Operating Margin
|
|
|
(6.6)
|
%
|
|
|
2.8
|
%
|
|
|
8.5
|
%
|
|
(943)
|
bps
|
|
(1,516)
|
|
bps
|
North America
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
543
|
|
|
$
|
699
|
|
|
$
|
1,163
|
|
|
(22)
|
%
|
|
(53)
|
|
%
|
Operating Loss
|
|
$
|
(128)
|
|
|
$
|
(68)
|
|
|
$
|
(10)
|
|
|
(90)
|
%
|
|
(1,210)
|
|
%
|
Operating Margin
|
|
(23.6)
|
%
|
|
|
(9.6)
|
%
|
|
|
(0.8)
|
%
|
|
(1,400)
|
bps
|
|
(2,279)
|
|
bps
|
International
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
923
|
|
|
$
|
1,166
|
|
|
$
|
1,436
|
|
|
(21)
|
%
|
|
(36)
|
|
%
|
Operating Income
|
|
$
|
49
|
|
|
$
|
142
|
|
|
$
|
238
|
|
|
(65)
|
%
|
|
(79)
|
|
%
|
Operating Margin
|
|
|
5.4
|
%
|
|
|
12.1
|
%
|
|
|
16.6
|
%
|
|
(673)
|
bps
|
|
(1,125)
|
|
bps
|
Land Drilling Rigs
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
119
|
|
|
$
|
147
|
|
|
$
|
195
|
|
|
(19)
|
%
|
|
(39)
|
|
%
|
Operating Income (Loss)
|
|
$
|
(26)
|
|
|
$
|
(17)
|
|
|
$
|
10
|
|
|
(55)
|
%
|
|
(355)
|
|
%
|
Operating Margin
|
|
|
(21.9)
|
%
|
|
|
(11.5)
|
%
|
|
|
5.2
|
%
|
|
(1,043)
|
bps
|
|
(2,712)
|
|
bps
|
(All Operating Income numbers are non-GAAP and
numbers in the table above reflect actual results and may not
compute from the table due to rounding)
|
Bernard J. Duroc-Danner, Chairman
of the Board, President and Chief Executive Officer, stated, "The
brutality and length of this down cycle has challenged the entire
industry, both our customer base and our peers. During the
first quarter, all of our regions and product lines suffered the
brunt of this harsh industry decline. North America was very challenged, with the
U.S. reaching its lowest rig count level in recorded history, and
several international markets experiencing severe seasonal
downturns. We managed what we could control, to the
fullest.
Historically our free cash flow has a seasonal low in the first
quarter and this year is no exception. While we recorded negative
free cash flow of $216 million this
quarter, this is $50 million better
year-over-year, despite experiencing much larger operating losses.
Furthermore, the first quarter's cash flow included severance and
restructuring cash payments of $71
million which were voluntary and accelerated coupled with
net cash outflows of $47 million from
the now largely completed Zubair project.
We are pleased to announce we have negotiated the renewal of our
revolving credit facility and a new term loan facility and are
grateful to our banking group for their continued commitment and
support. In addition, in order to safeguard our Company from a
protracted down cycle, during the first quarter, we successfully
raised $630 million of net proceeds
through an equity offering. Given our very aggressive cost actions
and our unyielding focus on quality and reliability, we are
confident in our ability to successfully navigate the current
challenging industry conditions.
Building on our fundamental operating progress and applying a
disciplined approach, we are prepared to address continued
near-term market strains, as well as to exploit activity turns when
the recovery comes. Our direction remains focused on core, cost and
cash. As we progress through the year, our performance to
come will reflect our transformation in all operating and financial
metrics."
First Quarter 2016 Results
Revenue for the first quarter of 2016 was $1.59 billion compared with $2.01 billion in the fourth quarter of 2015 and
$2.79 billion in the first quarter of
2015. First quarter revenues declined 21% sequentially and 43% from
the prior year. The sequential decline was 22% in North America and 21% for International
operations. Product sales declined 30% sequentially, while service
and rental revenue decreased by 16%. The product sales
decline was as much seasonal as cyclical and most impacted the
Eastern Hemisphere.
Net loss on a non-GAAP basis for the first quarter of 2016 was
$239 million (net loss of
$0.29 per share), compared to a net
loss of $102 million in the fourth
quarter of 2015 (net loss of $0.13
per share), and a net loss of $33
million in the first quarter of the prior year (net loss of
$0.04 per share).
GAAP net loss for the first quarter of 2016 was $498 million, or a net loss of $0.61 per share.
After-tax charges of $259 million
for the first quarter primarily include:
- $65 million of litigation charges
primarily related to the potential settlement of our previous
income tax restatements;
- $59 million of costs related to
severance and facility closures;
- $54 million of Zubair legacy
contract charges;
- $49 million primarily from supply
contract related charges and asset write-downs; and
- $31 million due to foreign
currency devaluation charges in Angola.
Operating margin of -6.6% for the first quarter decreased by 943
basis points sequentially, and declined 1,516 basis points from the
first quarter of 2015. Sequentially, there was an overall 21%
reduction in revenue resulting in decrementals of 38%.
Year-over-year revenue was down 43% with decrementals of 28%.
Segment Highlights
North America
First quarter revenues of $543
million were down $156
million, or 22% sequentially, and down $620 million, or 53%, over the same quarter in
the prior year. First quarter operating losses increased by
$60 million sequentially to
$128 million (-23.6% margin) and
increased $118 million from an
operating loss of $10 million in the
same quarter of the prior year. The sequential decrease in revenue
was less than the 27% decrease in average U.S. rig count that
resulted in further declines in customer activity and spending and
also impacted by the weakening Canadian dollar and the early
arrival of the Canadian spring break-up. Operating losses increased
sequentially resulting in decrementals of 39% as additional cost
reduction measures that began during the quarter were not enough to
offset the sharp drop in revenue. Year-over-year decrementals were
a respectable 19%.
International Operations
First quarter revenues of $923
million were down $243
million, or 21% sequentially, and lower by $513 million, or 36% compared to the same quarter
in the prior year. First quarter operating income of $49 million (5.4% margin) was $93 million lower sequentially and $189 million lower versus the same quarter in the
prior year. The international rig count in the first quarter
dropped 10% from last quarter. Decrementals were 38% sequentially
and 37% year-over-year.
• Latin
America
First quarter revenues of $305
million were down $71 million,
or 19% sequentially, and down $181
million, or 37%, compared to the same quarter in the prior
year. First quarter operating income of $44
million (14.5% margin) was down 22% sequentially and down
55% compared to the same quarter in the prior year. Continued
commodity price declines have caused further spending reductions
and activity declines, primarily in Colombia, Mexico, Brazil and Venezuela. Revenues were also negatively
impacted by lower sequential product sales. Operating income
declines from lower revenues were offset by continued strong cost
reduction measures that resulted in 18% sequential
decrementals.
• Europe/Sub-Sahara Africa/Russia
First quarter revenues of $257
million were down $80 million,
or 24% sequentially, and down $160
million, or 38%, over the same quarter in the prior year.
First quarter operating loss of $1
million (-0.4% margin) was down $39
million or 103% sequentially, and down 102% when compared to
the same quarter in the prior year. Revenue decreased primarily
from weak winter season activity in Russia and the North Sea, coupled with a
reduction from the strong year-end product sales in Europe and Sub-Sahara Africa, as well as from
project cancellations throughout the Sub-Sahara Africa region.
Operating income declines for the first quarter were impacted by
the revenue declines, an unfavorable product mix and in part lower
product sales. Decrementals were 49% sequentially and 45%
year-over-year.
• Middle
East/North
Africa/Asia
Pacific
First quarter revenues of $361
million were down $92 million,
or 20% sequentially, and down $172
million, or 32%, from the same quarter in the prior year.
First quarter operating income of $6
million (1.7% margin) was down 87% sequentially and down 91%
from the same quarter in the prior year. The sequential revenue
decline was primarily from lower seasonal product sales in
completion, artificial lift and well construction that impacted the
Gulf States, China, Australia and Indonesia, coupled with seasonal and budget
related activity reductions across the Asia Pacific region. The decline in operating
income was in line with the reduction in revenue.
Land Drilling Rigs
First quarter revenues of $119
million were down $28 million,
or 19% sequentially, and down $76
million, or 39%, compared to the same quarter in the prior
year. Lower activity from contracts ending in Bangladesh, activity declines in Colombia and project delays in both
Kuwait and Saudi Arabia were the primary drivers of the
sequential decline in revenue. First quarter operating loss
of $26 million (-21.9% margin) was
down $9 million sequentially and down
$36 million from the same quarter in
the prior year. Operating startup costs on new contracts were key
factors in the increase in operating loss.
Free Cash Flow and Net Debt
Free cash flow used in operations was $216 million for the first quarter of 2016.
During the quarter, working capital balances generated free cash
flow of $119 million. Capital
expenditures of $43 million were down
$181 million, or 81% versus the same
quarter in the prior year and were reduced by $97 million, or 69%, from the fourth quarter of
2015 demonstrating continued capital discipline. Included in the
quarter's free cash flow were $164
million of debt interest payments (these will be
approximately $100 million lower in
the second quarter), net cash expenditure of $47 million on the now largely completed Zubair
project in Iraq and $71 million of cash severance and restructuring
costs.
Net debt was reduced by $373
million to $6.6 billion as of
March 31, 2016.
We successfully negotiated an amended and restated
credit agreement and a term loan agreement in the aggregate amount
of $1.651 billion, including a
$500 million term loan and a
$1.151 billion revolving credit
facility. The term loan matures in July of 2020 and the revolving
credit facility matures in July of 2019. These newly negotiated
facilities offer financial flexibility over a reasonably long
period of time. More details will be provided during the earnings
call.
Outlook
In the first quarter of 2016, we completed 78% of our latest
6,000 headcount reduction target, ceased operations at four of the
nine planned manufacturing and service facilities for the year, and
shut down 26 operating and other facilities in North America.
As we continue to weather the reality of this downturn, we plan
to further reduce our cost structure by another 2,000 in headcount
and complete the closing of five additional manufacturing and
services facilities. In addition, we expect to close another 30
operating and other facilities by year-end, with a target of
completing half of these by the end of the second quarter. We have
reduced our full year forecast for capital expenditures to
$250 million, 63% lower than our 2015
spending level and 83% below the spend in 2014.
Bernard J. Duroc-Danner,
Chairman, President and Chief Executive Officer commented, "During
the first half of 2016, we are confronted with an unusually severe
market contraction characterized by extremely low levels of
customer activity and punitive pricing. We are managing our
operations with more cost rationalization, cash discipline and an
intensified sales drive, helping our customers improve efficiencies
and economics. We are also placing a strategic emphasis on quality
and reliability in everything we do. As we approach mid-year, we
have now gone beyond leveraging cost, efficiency and performance,
and we are strategically and actively safeguarding the critical
segments of our core businesses and technology offerings. We
believe these deliberate actions will best allow Weatherford to
balance the demands of the short-term market against the gains of
an eventual recovery. By preserving our deep technical
capabilities and managing our global geographical footprint, we are
ensuring our Company's future strength. In this way,
Weatherford can best respond to upcoming opportunities and further
exploit incremental gains, and we expect these to surpass those of
prior cycles.
Free cash flow generation remains an unyielding priority. This
commitment is well understood, planned for and embraced within the
organization. We remain confident that the full year free cash flow
will be strong and will be driven by reductions in working capital
balances, continued discipline in capital expenditure spending,
realized cost reductions, the conclusion and successful settlement
of claims relating to the Zubair project and improved net
income. We are in the business to make returns for our
shareholders and consider free cash flow a primary marker for our
success. Net debt will continue to decline. In addition
to the closing of our successful equity financing, we have
also completed negotiations to refinance our revolving
credit facility into multi-year revolving credit and term loan
facilities. This liquidity combination will help ensure Weatherford
has ample financial flexibility.
As we look forward, we believe the long-term fundamentals of our
industry remain intact. The steady increase in world energy demand
coupled with the acceleration of production decline rates are
forcing a balance between supply and demand. Oil prices are
beginning to respond to this gradual tightening of the
supply-demand balance. This shift is inevitable, given the extreme
cuts in both capital and operating spend by our customer base
around the world. The work we are doing now will prove the merits
of our direction. As a recovery unfolds, our performance will
reflect our transformation in all metrics. Our focus is making our
Company what it can be, and what it should be."
Reclassifications and Non-GAAP Financial Measures
Certain prior year amounts have been reclassified to conform to
the current year presentation related to the adoption of new
accounting standards. Unless explicitly stated to the
contrary, all financial measures used throughout this document are
non-GAAP. Corresponding reconciliations to GAAP financial measures
have been provided in the following pages to offer meaningful
comparisons between current results and results in prior
periods.
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 1,100 locations,
including manufacturing, service, research and development, and
training facilities and employs approximately 34,800 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 May 5, 2016, at
8:30 a.m. eastern daylight time
(EDT), 7:30 a.m. central daylight
time (CDT). 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 the Company's ability to execute and close on its new
revolving and term loan credit facilities, implement the planned
additional workforce reductions and additional facility closures;
possible changes in the size and components of the expected costs,
expenses, savings and charges associated with prior and ongoing
workforce reduction and 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
|
|
|
3/31/2016
|
|
3/31/2015
|
Net Revenues:
|
|
|
|
|
North America
|
|
$
|
543
|
|
|
$
|
1,163
|
|
Middle East/North Africa/Asia
Pacific
|
|
361
|
|
|
533
|
|
Europe/SSA/Russia
|
|
257
|
|
|
417
|
|
Latin America
|
|
305
|
|
|
486
|
|
Subtotal
|
|
1,466
|
|
|
2,599
|
|
Land Drilling Rigs
|
|
119
|
|
|
195
|
|
Total Net Revenues
|
|
1,585
|
|
|
2,794
|
|
|
|
|
|
|
Operating Income (Expense):
|
|
|
|
|
North America
|
|
(128)
|
|
|
(10)
|
|
Middle East/North Africa/Asia
|
|
6
|
|
|
69
|
|
Europe/SSA/Russia
|
|
(1)
|
|
|
71
|
|
Latin America
|
|
44
|
|
|
98
|
|
Subtotal
|
|
(79)
|
|
|
228
|
|
Land Drilling Rigs
|
|
(26)
|
|
|
10
|
|
Research and Development
|
|
(45)
|
|
|
(64)
|
|
Corporate Expenses
|
|
(43)
|
|
|
(56)
|
|
Gain (Loss) on Sale of Businesses and Investments,
Net
|
|
(1)
|
|
|
3
|
|
Other Charges
|
|
(253)
|
|
|
(71)
|
|
Total Operating Income (Loss)
|
|
(447)
|
|
|
50
|
|
|
|
|
|
|
Other (Expense):
|
|
|
|
|
Interest Expense, Net
|
|
(115)
|
|
|
(120)
|
|
Currency Devaluation Charges
|
|
(31)
|
|
|
(26)
|
|
Other, Net
|
|
1
|
|
|
(11)
|
|
Net Loss Before Income Taxes
|
|
(592)
|
|
|
(107)
|
|
|
|
|
|
|
Benefit (Provision) for Income
Taxes
|
|
101
|
|
|
—
|
|
|
|
|
|
|
Net Loss
|
|
(491)
|
|
|
(107)
|
|
Net Income Attributable to Noncontrolling
Interests
|
|
7
|
|
|
11
|
|
Net Loss Attributable to
Weatherford
|
|
$
|
(498)
|
|
|
$
|
(118)
|
|
|
|
|
|
|
Loss Per Share Attributable to
Weatherford:
|
|
|
|
|
Basic & Diluted
|
|
$
|
(0.61)
|
|
|
$
|
(0.15)
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding:
|
|
|
|
|
Basic & Diluted
|
|
813
|
|
|
778
|
|
Weatherford International
plc
|
Selected Statements of Operations
Information
|
(Unaudited)
|
(In Millions)
|
|
Three Months Ended
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
3/31/2015
|
Net Revenues:
|
|
|
|
|
|
|
|
|
|
North America
|
$
|
543
|
|
|
$
|
699
|
|
|
$
|
824
|
|
|
$
|
808
|
|
|
$
|
1,163
|
|
Middle East/North Africa/Asia
Pacific
|
361
|
|
|
453
|
|
|
445
|
|
|
516
|
|
|
533
|
|
Europe/SSA/Russia
|
257
|
|
|
337
|
|
|
361
|
|
|
418
|
|
|
417
|
|
Latin America
|
305
|
|
|
376
|
|
|
421
|
|
|
463
|
|
|
486
|
|
Subtotal
|
1,466
|
|
|
1,865
|
|
|
2,051
|
|
|
2,205
|
|
|
2,599
|
|
Land Drilling Rigs
|
119
|
|
|
147
|
|
|
186
|
|
|
185
|
|
|
195
|
|
Total Net Revenues
|
$
|
1,585
|
|
|
$
|
2,012
|
|
|
$
|
2,237
|
|
|
$
|
2,390
|
|
|
$
|
2,794
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
3/31/2015
|
Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
North America
|
$
|
(128)
|
|
|
$
|
(68)
|
|
|
$
|
(54)
|
|
|
$
|
(92)
|
|
|
$
|
(10)
|
|
Middle East/North Africa/Asia
Pacific
|
6
|
|
|
45
|
|
|
42
|
|
|
55
|
|
|
69
|
|
Europe/SSA/Russia
|
(1)
|
|
|
38
|
|
|
43
|
|
|
65
|
|
|
71
|
|
Latin America
|
44
|
|
|
59
|
|
|
73
|
|
|
85
|
|
|
98
|
|
Subtotal
|
(79)
|
|
|
74
|
|
|
104
|
|
|
113
|
|
|
228
|
|
Land Drilling Rigs
|
(26)
|
|
|
(17)
|
|
|
16
|
|
|
4
|
|
|
10
|
|
Research and Development
|
(45)
|
|
|
(52)
|
|
|
(56)
|
|
|
(59)
|
|
|
(64)
|
|
Corporate Expenses
|
(43)
|
|
|
(47)
|
|
|
(45)
|
|
|
(46)
|
|
|
(56)
|
|
Gain (Loss) on Sale of Businesses and Investments,
Net
|
(1)
|
|
|
(4)
|
|
|
—
|
|
|
(5)
|
|
|
3
|
|
Impairments and Other Charges
|
(253)
|
|
|
(988)
|
|
|
(117)
|
|
|
(471)
|
|
|
(71)
|
|
Total Operating Income
(Loss)
|
$
|
(447)
|
|
|
$
|
(1,034)
|
|
|
$
|
(98)
|
|
|
$
|
(464)
|
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
3/31/2015
|
Product Service Line
Revenues:
|
|
|
|
|
|
|
|
|
|
Formation Evaluation and Well Construction
(a)
|
$
|
890
|
|
|
$
|
1,087
|
|
|
$
|
1,235
|
|
|
$
|
1,355
|
|
|
$
|
1,582
|
|
Completion and Production
(b)
|
576
|
|
|
778
|
|
|
816
|
|
|
850
|
|
|
1,017
|
|
Land Drilling Rigs
|
119
|
|
|
147
|
|
|
186
|
|
|
185
|
|
|
195
|
|
Total Product Service Line
Revenues
|
$
|
1,585
|
|
|
$
|
2,012
|
|
|
$
|
2,237
|
|
|
$
|
2,390
|
|
|
$
|
2,794
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
3/31/2015
|
Depreciation and
Amortization:
|
|
|
|
|
|
|
|
|
|
North America
|
$
|
54
|
|
|
$
|
73
|
|
|
$
|
87
|
|
|
$
|
97
|
|
|
$
|
105
|
|
Middle East/North Africa/Asia
Pacific
|
61
|
|
|
61
|
|
|
62
|
|
|
66
|
|
|
65
|
|
Europe/SSA/Russia
|
48
|
|
|
46
|
|
|
52
|
|
|
53
|
|
|
50
|
|
Latin America
|
61
|
|
|
63
|
|
|
63
|
|
|
62
|
|
|
61
|
|
Land Drilling Rigs
|
22
|
|
|
26
|
|
|
28
|
|
|
27
|
|
|
29
|
|
Research and Development and
Corporate
|
4
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
Total Depreciation and
Amortization
|
$
|
250
|
|
|
$
|
275
|
|
|
$
|
298
|
|
|
$
|
311
|
|
|
$
|
316
|
|
(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, 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
|
|
|
3/31/2016
|
|
12/31/2015
|
|
3/31/2015
|
Operating Income (Loss):
|
|
|
|
|
|
|
GAAP Operating Income (Loss)
|
|
$
|
(447)
|
|
|
$
|
(1,034)
|
|
|
$
|
50
|
|
Severance, Restructuring and Exited
Businesses
|
|
77
|
|
|
68
|
|
|
41
|
|
Litigation Charges, Net
|
|
67
|
|
|
4
|
|
|
—
|
|
Impairments, Asset Write-Downs and Other
(a)(b)(c)
|
|
57
|
|
|
834
|
|
|
21
|
|
Legacy Contracts and Other
|
|
52
|
|
|
82
|
|
|
9
|
|
Loss (Gain) on Divestitures
|
|
1
|
|
|
4
|
|
|
(3)
|
|
Total Non-GAAP Adjustments
|
|
254
|
|
|
992
|
|
|
68
|
|
Non-GAAP Operating Income (Loss)
|
|
$
|
(193)
|
|
|
$
|
(42)
|
|
|
$
|
118
|
|
|
|
|
|
|
|
|
Loss Before Income Taxes:
|
|
|
|
|
|
|
GAAP Loss Before Income Taxes
|
|
$
|
(592)
|
|
|
$
|
(1,148)
|
|
|
$
|
(107)
|
|
Operating Income Adjustments
|
|
254
|
|
|
992
|
|
|
68
|
|
Currency Devaluation Charges
|
|
31
|
|
|
17
|
|
|
26
|
|
Non-GAAP Loss Before Income Taxes
|
|
$
|
(307)
|
|
|
$
|
(139)
|
|
|
$
|
(13)
|
|
|
|
|
|
|
|
|
Benefit (Provision) for Income
Taxes:
|
|
|
|
|
|
|
GAAP Benefit (Provision) for Income
Taxes
|
|
$
|
101
|
|
|
$
|
(52)
|
|
|
$
|
—
|
|
Tax Effect on Non-GAAP Adjustments
|
|
(26)
|
|
|
97
|
|
|
(9)
|
|
Non-GAAP Benefit (Provision) for Income
Taxes
|
|
$
|
75
|
|
|
$
|
45
|
|
|
$
|
(9)
|
|
|
|
|
|
|
|
|
Net Loss Attributable to
Weatherford:
|
|
|
|
|
|
|
GAAP Net Loss
|
|
$
|
(498)
|
|
|
$
|
(1,208)
|
|
|
$
|
(118)
|
|
Total Charges, net of tax
|
|
259
|
|
|
1,106
|
|
|
85
|
|
Non-GAAP Net Loss
|
|
$
|
(239)
|
|
|
$
|
(102)
|
|
|
$
|
(33)
|
|
|
|
|
|
|
|
|
Diluted Loss Per Share Attributable to
Weatherford:
|
|
|
|
|
|
|
GAAP Diluted Loss per Share
|
|
$
|
(0.61)
|
|
|
$
|
(1.54)
|
|
|
$
|
(0.15)
|
|
Total Charges, net of tax
|
|
0.32
|
|
|
1.41
|
|
|
0.11
|
|
Non-GAAP Diluted Loss per Share
|
|
$
|
(0.29)
|
|
|
$
|
(0.13)
|
|
|
$
|
(0.04)
|
|
|
|
|
|
|
|
|
GAAP Effective Tax Rate
(d)
|
|
17
|
%
|
|
(5)
|
%
|
|
—
|
%
|
Non-GAAP Effective Tax Rate
(e)
|
|
24
|
%
|
|
32
|
%
|
|
(73)
|
%
|
(a)
|
For the first quarter of 2016, impairments, asset
write-downs, and other of $57 million include $35 million of supply
contract related charges, $14 million of asset impairments, and $8
million of other charges.
|
(b)
|
For the fourth quarter of 2015, the $834 million
include $514 million long-lived asset impairments, $217 million of
inventory write-downs, $46 million of supply contract related
charges, $31 million of bad debt expense charges and $26 million of
other charges.
|
(c)
|
For the first quarter of 2015, the $21 million was
primarily comprised of divestiture program charges and
other.
|
(d)
|
GAAP Effective Tax Rate is the GAAP provision for
income taxes divided by GAAP income before income
taxes.
|
(e)
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
6/30/2015
|
|
3/31/2015
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
464
|
|
|
$
|
467
|
|
|
$
|
519
|
|
|
$
|
611
|
|
|
$
|
512
|
|
Accounts Receivable, Net
|
|
1,693
|
|
|
1,781
|
|
|
2,045
|
|
|
2,259
|
|
|
2,631
|
|
Inventories, Net
|
|
2,302
|
|
|
2,344
|
|
|
2,767
|
|
|
2,921
|
|
|
3,052
|
|
Property, Plant and Equipment, Net
|
|
5,471
|
|
|
5,679
|
|
|
6,394
|
|
|
6,694
|
|
|
6,932
|
|
Goodwill and Intangibles, Net
|
|
3,216
|
|
|
3,159
|
|
|
3,224
|
|
|
3,335
|
|
|
3,311
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
934
|
|
|
948
|
|
|
1,015
|
|
|
1,104
|
|
|
1,462
|
|
Short-term Borrowings and Current Portion of
Long-term Debt
|
|
1,212
|
|
|
1,582
|
|
|
1,684
|
|
|
1,556
|
|
|
1,554
|
|
Long-term Debt
|
|
5,846
|
|
|
5,852
|
|
|
5,990
|
|
|
6,235
|
|
|
6,244
|
|
Weatherford International
plc
|
Net Debt
|
(Unaudited)
|
(In Millions)
|
|
|
|
|
|
|
|
Change in Net Debt for the Three Months Ended
3/31/2016:
|
|
|
|
|
|
|
Net Debt at 12/31/2015
|
|
|
|
|
|
$
|
(6,967)
|
|
Operating Loss
|
|
|
|
|
|
(447)
|
|
Depreciation and Amortization
|
|
|
|
|
|
250
|
|
Capital Expenditures for Property, Plant and
Equipment
|
|
|
|
|
|
(43)
|
|
Decrease in Working Capital
|
|
|
|
|
|
119
|
|
Equity Issuance Proceeds, Net
|
|
|
|
|
|
630
|
|
Rig Loss Proceeds
|
|
|
|
|
|
30
|
|
Litigation Charges, Net
|
|
|
|
|
|
67
|
|
Asset Write-Downs and Other Related
Charges
|
|
|
|
|
|
49
|
|
Currency Devaluation Charges
|
|
|
|
|
|
31
|
|
Income Taxes Paid
|
|
|
|
|
|
(61)
|
|
Interest Paid
|
|
|
|
|
|
(164)
|
|
Net Change in Billing in Excess/Costs in
Excess
|
|
|
|
|
|
11
|
|
Other
|
|
|
|
|
|
(99)
|
|
Net Debt at 3/31/2016
|
|
|
|
|
|
$
|
(6,594)
|
|
|
|
|
|
|
|
|
Components of Net Debt
|
|
3/31/2016
|
|
12/31/2015
|
|
3/31/2015
|
Cash
|
|
$
|
464
|
|
|
$
|
467
|
|
|
$
|
512
|
|
Short-term Borrowings and Current Portion of
Long-term Debt
|
|
(1,212)
|
|
|
(1,582)
|
|
|
(1,554)
|
|
Long-term Debt
|
|
(5,846)
|
|
|
(5,852)
|
|
|
(6,244)
|
|
Net Debt
|
|
$
|
(6,594)
|
|
|
$
|
(6,967)
|
|
|
$
|
(7,286)
|
|
"Net Debt" is defined as debt less cash. Management
believes that Net Debt provides useful information regarding the
level of Weatherford 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
|
|
|
3/31/2016
|
|
12/31/2015
|
|
3/31/2015
|
Net Cash Provided by (Used In) Operating
Activities
|
|
$
|
(205)
|
|
|
$
|
323
|
|
|
$
|
(42)
|
|
|
|
|
|
|
|
|
Less: Capital Expenditures for Property, Plant and
Equipment
|
|
(43)
|
|
|
(140)
|
|
|
(224)
|
|
|
|
|
|
|
|
|
Add: Proceeds from Dispositions and Insurance
Recoveries*
|
|
36
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
(212)
|
|
|
$
|
183
|
|
|
$
|
(266)
|
|
|
|
|
|
|
|
|
Adjusted for Litigation
Reimbursements**
|
|
(4)
|
|
|
(15)
|
|
|
—
|
|
|
|
|
|
|
|
|
Free Cash Flow from Operations
|
|
$
|
(216)
|
|
|
$
|
168
|
|
|
$
|
(266)
|
|
"Free Cash Flow" is defined as net cash provided by
or used in operating activities less capital expenditures. Free
cash flow is an important indicator of how much cash is generated
or used by our normal business operations, including capital
expenditures. Management uses free cash flow as a measure of
progress on its capital efficiency and cash flow
initiatives.
|
*Represents $6 million 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.
|
**Represents 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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