UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
WASHINGTON, D.C. 20549 |
(Mark One) | Form 10-Q |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended June 30, 2017 | ||
or | ||
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from __________________________________to __________________________________ | ||
Commission file number 001-36504 |
Ireland | 98-0606750 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
Weststrasse 1, 6340 Baar, Switzerland | CH 6340 | |
(Address of Principal Executive Offices including Zip Code) | (Zip Code) |
N/A | ||||
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer (Do not check if a smaller reporting company) o | Smaller reporting company o | Emerging growth company o |
TABLE OF CONTENTS | PAGE | |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(Dollars and shares in millions, except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Revenues: | |||||||||||||||
Products | $ | 488 | $ | 479 | $ | 999 | $ | 1,039 | |||||||
Services | 875 | 923 | 1,750 | 1,948 | |||||||||||
Total Revenues | 1,363 | 1,402 | 2,749 | 2,987 | |||||||||||
Costs and Expenses: | |||||||||||||||
Cost of Products | 473 | 513 | 959 | 1,095 | |||||||||||
Cost of Services | 716 | 725 | 1,436 | 1,617 | |||||||||||
Research and Development | 36 | 41 | 75 | 86 | |||||||||||
Selling, General and Administrative Attributable to Segments | 214 | 230 | 446 | 499 | |||||||||||
Corporate General and Administrative | 32 | 34 | 65 | 76 | |||||||||||
Asset Write-Downs and Other | (12 | ) | 154 | (15 | ) | 212 | |||||||||
Restructuring Charges | 31 | 51 | 106 | 128 | |||||||||||
Litigation Charges, Net | — | 114 | — | 181 | |||||||||||
Total Costs and Expenses | 1,490 | 1,862 | 3,072 | 3,894 | |||||||||||
Operating Loss | (127 | ) | (460 | ) | (323 | ) | (907 | ) | |||||||
Other Income (Expense): | |||||||||||||||
Interest Expense, Net | (138 | ) | (119 | ) | (279 | ) | (234 | ) | |||||||
Bond Tender Premium, Net | — | (78 | ) | — | (78 | ) | |||||||||
Warrant Fair Value Adjustment | 127 | — | 65 | — | |||||||||||
Currency Devaluation Charges | — | — | — | (31 | ) | ||||||||||
Other Expense, Net | (10 | ) | (7 | ) | (21 | ) | (6 | ) | |||||||
Loss Before Income Taxes | (148 | ) | (664 | ) | (558 | ) | (1,256 | ) | |||||||
Income Tax (Provision) Benefit | (17 | ) | 102 | (50 | ) | 203 | |||||||||
Net Loss | (165 | ) | (562 | ) | (608 | ) | (1,053 | ) | |||||||
Net Income Attributable to Noncontrolling Interests | 6 | 3 | 11 | 10 | |||||||||||
Net Loss Attributable to Weatherford | $ | (171 | ) | $ | (565 | ) | $ | (619 | ) | $ | (1,063 | ) | |||
Loss Per Share Attributable to Weatherford: | |||||||||||||||
Basic & Diluted | $ | (0.17 | ) | $ | (0.63 | ) | $ | (0.63 | ) | $ | (1.24 | ) | |||
Weighted Average Shares Outstanding: | |||||||||||||||
Basic & Diluted | 990 | 899 | 989 | 856 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Loss | $ | (165 | ) | $ | (562 | ) | $ | (608 | ) | $ | (1,053 | ) | |||
Currency Translation Adjustments | 11 | (10 | ) | 74 | 132 | ||||||||||
Defined Benefit Pension Activity | (21 | ) | 1 | (41 | ) | 1 | |||||||||
Other | — | — | — | 1 | |||||||||||
Other Comprehensive Income (Loss) | (10 | ) | (9 | ) | 33 | 134 | |||||||||
Comprehensive Loss | (175 | ) | (571 | ) | (575 | ) | (919 | ) | |||||||
Comprehensive Income Attributable to Noncontrolling Interests | 6 | 3 | 11 | 10 | |||||||||||
Comprehensive Loss Attributable to Weatherford | $ | (181 | ) | $ | (574 | ) | $ | (586 | ) | $ | (929 | ) |
June 30, | December 31, | ||||||
(Dollars and shares in millions, except par value) | 2017 | 2016 | |||||
(Unaudited) | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 584 | $ | 1,037 | |||
Accounts Receivable, Net of Allowance for Uncollectible Accounts of $91 in 2017 and $129 in 2016 | 1,165 | 1,383 | |||||
Inventories, Net | 1,728 | 1,802 | |||||
Prepaid Expenses | 233 | 263 | |||||
Other Current Assets | 408 | 402 | |||||
Assets Held for Sale | 929 | 23 | |||||
Total Current Assets | 5,047 | 4,910 | |||||
Property, Plant and Equipment, Net of Accumulated Depreciation of $7,518 in 2017 and $7,362 in 2016 | 4,111 | 4,480 | |||||
Goodwill | 2,293 | 2,797 | |||||
Other Intangible Assets, Net of Accumulated Amortization of $836 in 2017 and $801 in 2016 | 234 | 248 | |||||
Equity Investments | 63 | 66 | |||||
Other Non-Current Assets | 304 | 163 | |||||
Total Assets | $ | 12,052 | $ | 12,664 | |||
Current Liabilities: | |||||||
Short-term Borrowings and Current Portion of Long-term Debt | $ | 152 | $ | 179 | |||
Accounts Payable | 837 | 845 | |||||
Accrued Salaries and Benefits | 295 | 291 | |||||
Income Taxes Payable | 223 | 255 | |||||
Other Current Liabilities | 783 | 858 | |||||
Liabilities Held for Sale | 90 | — | |||||
Total Current Liabilities | 2,380 | 2,428 | |||||
Long-term Debt | 7,538 | 7,403 | |||||
Other Non-Current Liabilities | 610 | 765 | |||||
Total Liabilities | 10,528 | 10,596 | |||||
Shareholders’ Equity: | |||||||
Shares - Par Value $0.001; Authorized 1,356 shares, Issued and Outstanding 986 shares at June 30, 2017 and 983 shares at December 31, 2016 | $ | 1 | $ | 1 | |||
Capital in Excess of Par Value | 6,612 | 6,571 | |||||
Retained Deficit | (3,569 | ) | (2,950 | ) | |||
Accumulated Other Comprehensive Loss | (1,577 | ) | (1,610 | ) | |||
Weatherford Shareholders’ Equity | 1,467 | 2,012 | |||||
Noncontrolling Interests | 57 | 56 | |||||
Total Shareholders’ Equity | 1,524 | 2,068 | |||||
Total Liabilities and Shareholders’ Equity | $ | 12,052 | $ | 12,664 |
Six Months Ended June 30, | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Cash Flows From Operating Activities: | |||||||
Net Loss | $ | (608 | ) | $ | (1,053 | ) | |
Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: | |||||||
Depreciation and Amortization | 412 | 499 | |||||
Employee Share-Based Compensation Expense | 41 | 38 | |||||
Asset Write-Downs and Other Charges | 34 | 164 | |||||
Inventory Charges | 35 | 26 | |||||
Defined Benefit Pension Plan Gains | (41 | ) | — | ||||
Litigation Charges | — | 185 | |||||
Bond Tender Premium | — | 78 | |||||
Deferred Income Tax Provision (Benefit) | 4 | (215 | ) | ||||
Currency Devaluation Charges | — | 31 | |||||
Warrant Fair Value Adjustment | (65 | ) | — | ||||
Other, Net | 72 | 75 | |||||
Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired: | |||||||
Accounts Receivable | (12 | ) | 170 | ||||
Inventories | (47 | ) | 122 | ||||
Other Current Assets | 69 | 67 | |||||
Accounts Payable | (16 | ) | (167 | ) | |||
Accrued Litigation and Settlements | (62 | ) | (10 | ) | |||
Other Current Liabilities | (16 | ) | (282 | ) | |||
Other, Net | (41 | ) | (67 | ) | |||
Net Cash Used in Operating Activities | (241 | ) | (339 | ) | |||
Cash Flows From Investing Activities: | |||||||
Capital Expenditures for Property, Plant and Equipment | (82 | ) | (74 | ) | |||
Acquisition of Assets Held for Sale | (243 | ) | — | ||||
Acquisition of Intellectual Property | (9 | ) | (8 | ) | |||
Insurance Proceeds Related to Asset Casualty Loss | — | 30 | |||||
Proceeds from Sale of Assets | 25 | 16 | |||||
Payment Related to Sale of Businesses, Net | (1 | ) | (20 | ) | |||
Other Investing Activities | (5 | ) | — | ||||
Net Cash Used in Investing Activities | (315 | ) | (56 | ) | |||
Cash Flows From Financing Activities: | |||||||
Borrowings of Long-term Debt | 251 | 3,156 | |||||
Repayments of Long-term Debt | (36 | ) | (1,880 | ) | |||
Repayments of Short-term Debt, Net | (96 | ) | (1,381 | ) | |||
Proceeds from Issuance of Ordinary Common Shares | — | 623 | |||||
Bond Tender Premium | — | (78 | ) | ||||
Other Financing Activities | (20 | ) | (25 | ) | |||
Net Cash Provided by Financing Activities | 99 | 415 | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 4 | (35 | ) | ||||
Net Decrease in Cash and Cash Equivalents | (453 | ) | (15 | ) | |||
Cash and Cash Equivalents at Beginning of Period | 1,037 | 467 | |||||
Cash and Cash Equivalents at End of Period | $ | 584 | $ | 452 | |||
Supplemental Cash Flow Information: | |||||||
Interest Paid | $ | 251 | $ | 261 | |||
Income Taxes Paid, Net of Refunds | $ | 47 | $ | 120 |
June 30, | ||||
(Dollars in millions) | 2017 | |||
Assets Held for Sale: | ||||
Other Current Assets | $ | 4 | ||
Inventory, Net | 83 | |||
Property, Plant and Equipment, Net | 260 | |||
Goodwill | 555 | |||
Total Assets | $ | 902 | ||
Liabilities Held for Sale: | ||||
Other Current Liabilities | $ | 8 | ||
Long-term Debt | 29 | |||
Other Non-Current Liabilities | 53 | |||
Total Liabilities | $ | 90 |
Three Months Ended June 30, 2017 | |||||||||
Total | |||||||||
(Dollars in millions) | Severance | Other | Severance and | ||||||
2016 Plan | Charges | Charges | Other Charges | ||||||
North America | $ | 2 | $ | 6 | $ | 8 | |||
MENA/Asia Pacific | 4 | 1 | 5 | ||||||
Europe/SSA/Russia | 6 | 2 | 8 | ||||||
Latin America | 8 | — | 8 | ||||||
Subtotal | 20 | 9 | 29 | ||||||
Land Drilling Rigs | 1 | — | 1 | ||||||
Corporate and Research and Development | 1 | — | 1 | ||||||
Total | $ | 22 | $ | 9 | $ | 31 |
Three Months Ended June 30, 2016 | |||||||||
Total | |||||||||
(Dollars in millions) | Severance | Other | Severance and | ||||||
2016 Plan | Charges | Charges | Other Charges | ||||||
North America | $ | 5 | $ | 10 | $ | 15 | |||
MENA/Asia Pacific | 9 | 2 | 11 | ||||||
Europe/SSA/Russia | 8 | 2 | 10 | ||||||
Latin America | 11 | 1 | 12 | ||||||
Subtotal | 33 | 15 | 48 | ||||||
Land Drilling Rigs | 1 | — | 1 | ||||||
Corporate and Research and Development | 2 | — | 2 | ||||||
Total | $ | 36 | $ | 15 | $ | 51 |
Six Months Ended June 30, 2017 | |||||||||
Total | |||||||||
(Dollars in millions) | Severance | Other | Severance and | ||||||
2016 Plan | Charges | Charges | Other Charges | ||||||
North America | $ | 2 | $ | 21 | $ | 23 | |||
MENA/Asia Pacific | 8 | 1 | 9 | ||||||
Europe/SSA/Russia | 8 | 21 | 29 | ||||||
Latin America | 13 | 3 | 16 | ||||||
Subtotal | 31 | 46 | 77 | ||||||
Land Drilling Rigs | 2 | — | 2 | ||||||
Corporate and Research and Development | 23 | 4 | 27 | ||||||
Total | $ | 56 | $ | 50 | $ | 106 |
Six Months Ended June 30, 2016 | |||||||||
Total | |||||||||
(Dollars in millions) | Severance | Other | Severance and | ||||||
2016 Plan | Charges | Charges | Other Charges | ||||||
North America | $ | 24 | $ | 15 | $ | 39 | |||
MENA/Asia Pacific | 18 | 2 | 20 | ||||||
Europe/SSA/Russia | 23 | 2 | 25 | ||||||
Latin America | 26 | 1 | 27 | ||||||
Subtotal | 91 | 20 | 111 | ||||||
Land Drilling Rigs | 5 | — | 5 | ||||||
Corporate and Research and Development | 12 | — | 12 | ||||||
Total | $ | 108 | $ | 20 | $ | 128 |
At June 30, 2017 | |||||||||||||||
2016 Plan | 2015 and 2014 Plans | Total | |||||||||||||
Severance | |||||||||||||||
Severance | Other | Severance | Other | and Other | |||||||||||
(Dollars in millions) | Liability | Liability | Liability | Liability | Liability | ||||||||||
North America | $ | 1 | $ | 20 | $ | — | $ | — | $ | 21 | |||||
MENA/Asia Pacific | 5 | 2 | — | — | 7 | ||||||||||
Europe/SSA/Russia | 3 | 10 | — | 7 | 20 | ||||||||||
Latin America | 1 | — | — | — | 1 | ||||||||||
Subtotal | 10 | 32 | — | 7 | 49 | ||||||||||
Land Drilling Rigs | — | — | — | — | — | ||||||||||
Corporate and Research and Development | 29 | — | — | — | 29 | ||||||||||
Total | $ | 39 | $ | 32 | $ | — | $ | 7 | $ | 78 |
Six Months Ended June 30, 2017 | |||||||||||||||||||
(Dollars in millions) | Accrued Balance at December 31, 2016 | Charges | Cash Payments | Other | Accrued Balance at June 30, 2017 | ||||||||||||||
2016 Plan: | |||||||||||||||||||
Severance liability | $ | 52 | $ | 56 | $ | (65 | ) | $ | (4 | ) | $ | 39 | |||||||
Other restructuring liability | 22 | 38 | (15 | ) | (13 | ) | 32 | ||||||||||||
2015 and 2014 Plan: | |||||||||||||||||||
Severance liability | 3 | — | (3 | ) | — | — | |||||||||||||
Other restructuring liability | 9 | — | — | (2 | ) | 7 | |||||||||||||
Total severance and other restructuring liability | $ | 86 | $ | 94 | $ | (83 | ) | $ | (19 | ) | $ | 78 |
(Dollars in millions) | June 30, 2017 | December 31, 2016 | |||||
Raw materials, components and supplies | $ | 160 | $ | 168 | |||
Work in process | 51 | 49 | |||||
Finished goods | 1,517 | 1,585 | |||||
$ | 1,728 | $ | 1,802 |
(Dollars in millions) | North America | MENA/ Asia Pacific | Europe/ SSA/ Russia | Latin America | Total | ||||||||||||||
Balance at December 31, 2016 | $ | 1,777 | $ | 189 | $ | 543 | $ | 288 | $ | 2,797 | |||||||||
Reclassification to assets held for sale | (555 | ) | — | — | — | (555 | ) | ||||||||||||
Foreign currency translation adjustments | 28 | 4 | 20 | (1 | ) | 51 | |||||||||||||
Balance at June 30, 2017 | $ | 1,250 | $ | 193 | $ | 563 | $ | 287 | $ | 2,293 |
(Dollars in millions) | June 30, 2017 | December 31, 2016 | |||||
Revolving credit facility | $ | — | $ | — | |||
Other short-term bank loans | 7 | 2 | |||||
Total short-term borrowings | 7 | 2 | |||||
Current portion of long-term debt and term loan agreement | 145 | 177 | |||||
Short-term borrowings and current portion of long-term debt | $ | 152 | $ | 179 |
(Dollars in millions) | June 30, 2017 | December 31, 2016 | |||||
Fair value | $ | 7,018 | $ | 6,739 | |||
Carrying value | 7,203 | 7,028 |
(Dollars in millions) | June 30, 2017 | December 31, 2016 | Classification | |||||||
Derivative assets not designated as hedges: | ||||||||||
Foreign currency forward contracts | $ | 8 | $ | 7 | Other Current Assets | |||||
Derivative liabilities not designated as hedges: | ||||||||||
Foreign currency forward contracts | (12 | ) | (14 | ) | Other Current Liabilities | |||||
Warrant on Weatherford Shares | (91 | ) | (156 | ) | Other Non-current Liabilities |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | Classification | |||||||||||||
Foreign currency forward contracts | $ | (15 | ) | $ | (16 | ) | $ | (22 | ) | $ | 10 | Other Expense, Net | ||||||
Warrant on Weatherford Shares | 127 | — | 65 | — | Warrant Fair Value Adjustment |
(Dollars in millions) | Par Value of Issued Shares | Capital in Excess of Par Value | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests | Total Shareholders’ Equity | |||||||||||||||||
Balance at December 31, 2015 | $ | 1 | $ | 5,502 | $ | 442 | $ | (1,641 | ) | $ | 61 | $ | 4,365 | ||||||||||
Net Income (Loss) | — | — | (1,063 | ) | — | 10 | (1,053 | ) | |||||||||||||||
Other Comprehensive Income | — | — | — | 134 | — | 134 | |||||||||||||||||
Dividends Paid to Noncontrolling Interests | — | — | — | — | (7 | ) | (7 | ) | |||||||||||||||
Issuance of Common Shares | — | 623 | — | — | — | 623 | |||||||||||||||||
Issuance of Exchangeable Notes | — | 97 | — | — | — | 97 | |||||||||||||||||
Equity Awards Granted, Vested and Exercised | — | 28 | — | — | — | 28 | |||||||||||||||||
Balance at June 30, 2016 | $ | 1 | $ | 6,250 | $ | (621 | ) | $ | (1,507 | ) | $ | 64 | $ | 4,187 | |||||||||
Balance at December 31, 2016 | $ | 1 | $ | 6,571 | $ | (2,950 | ) | $ | (1,610 | ) | $ | 56 | $ | 2,068 | |||||||||
Net Income (Loss) | — | — | (619 | ) | — | 11 | (608 | ) | |||||||||||||||
Other Comprehensive Income | — | — | — | 33 | — | 33 | |||||||||||||||||
Dividends Paid to Noncontrolling Interests | — | — | — | — | (10 | ) | (10 | ) | |||||||||||||||
Equity Awards Granted, Vested and Exercised | — | 41 | — | — | — | 41 | |||||||||||||||||
Balance at June 30, 2017 | $ | 1 | $ | 6,612 | $ | (3,569 | ) | $ | (1,577 | ) | $ | 57 | $ | 1,524 |
(Dollars in millions) | Currency Translation Adjustment | Defined Benefit Pension | Deferred Loss on Derivatives | Total | |||||||||||
Balance at December 31, 2015 | $ | (1,602 | ) | $ | (29 | ) | $ | (10 | ) | $ | (1,641 | ) | |||
Other Comprehensive Income before Reclassifications | 132 | 1 | — | 133 | |||||||||||
Reclassifications | — | — | 1 | 1 | |||||||||||
Net activity | 132 | 1 | 1 | 134 | |||||||||||
Balance at June 30, 2016 | $ | (1,470 | ) | $ | (28 | ) | $ | (9 | ) | $ | (1,507 | ) | |||
Balance at December 31, 2016 | $ | (1,614 | ) | $ | 13 | $ | (9 | ) | $ | (1,610 | ) | ||||
Other Comprehensive Income before Reclassifications | 74 | — | — | 74 | |||||||||||
Reclassifications | — | (41 | ) | — | (41 | ) | |||||||||
Net activity | 74 | (41 | ) | — | 33 | ||||||||||
Balance at June 30, 2017 | $ | (1,540 | ) | $ | (28 | ) | $ | (9 | ) | $ | (1,577 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
(Shares in millions) | 2017 | 2016 | 2017 | 2016 | |||||||
Basic and Diluted weighted average shares outstanding | 990 | 899 | 989 | 856 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
(Shares in millions) | 2017 | 2016 | 2017 | 2016 | |||||||
Anti-dilutive potential shares due to net loss | 250 | 43 | 250 | 24 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Share-based compensation | $ | 17 | $ | 17 | $ | 41 | $ | 38 | |||||||
Related tax benefit | — | 4 | — | 8 |
Three Months Ended June 30, 2017 | |||||||||||
(Dollars in millions) | Net Operating Revenues | Income (Loss) from Operations | Depreciation and Amortization | ||||||||
North America | $ | 475 | $ | 2 | $ | 40 | |||||
MENA/Asia Pacific | 340 | 9 | 51 | ||||||||
Europe/SSA/Russia | 244 | 5 | 39 | ||||||||
Latin America (a) | 203 | (35 | ) | 48 | |||||||
Subtotal | 1,262 | (19 | ) | 178 | |||||||
Land Drilling Rigs | 101 | (20 | ) | 23 | |||||||
1,363 | (39 | ) | 201 | ||||||||
Corporate and Research and Development | (69 | ) | 3 | ||||||||
Restructuring Charges (b) | (31 | ) | |||||||||
Asset Write-Downs and Other | 12 | ||||||||||
Total | $ | 1,363 | $ | (127 | ) | $ | 204 |
(a) | As discussed in “Note 1 – General”, in the second quarter of 2017, the Company changed its accounting for revenue related to an implied financing arrangement with our largest customer in Venezuela. The total impact of this change in the second quarter of 2017 related to prior periods is a reduction in revenues and income from operations of approximately $31 million: $8 million for the first quarter of 2017 and $23 million for the second half of 2016. |
(b) | Includes restructuring charges of $31 million: $8 million in Europe/SSA/Russia, $8 million in Latin America, $8 million in North America, $5 million in MENA/Asia Pacific, $1 million in Corporate and Research and Development, and $1 million in Land Drilling Rigs. |
Three Months Ended June 30, 2016 | |||||||||||
(Dollars in millions) | Net Operating Revenues | Income (Loss) from Operations | Depreciation and Amortization | ||||||||
North America | $ | 401 | $ | (101 | ) | $ | 58 | ||||
MENA/Asia Pacific | 400 | 50 | 60 | ||||||||
Europe/SSA/Russia | 243 | 1 | 48 | ||||||||
Latin America | 249 | 1 | 56 | ||||||||
Subtotal | 1,293 | (49 | ) | 222 | |||||||
Land Drilling Rigs | 109 | (17 | ) | 23 | |||||||
1,402 | (66 | ) | 245 | ||||||||
Corporate and Research and Development | (75 | ) | 4 | ||||||||
Asset Write-Downs and Other Charges (c) | (154 | ) | |||||||||
Restructuring Charges (d) | (51 | ) | |||||||||
Litigation Charges, Net | (114 | ) | |||||||||
Total | $ | 1,402 | $ | (460 | ) | $ | 249 |
(c) | Includes $84 million to adjust a note from our largest customer in Venezuela to fair value and other impairments and write-offs of $70 million. |
(d) | Includes restructuring charges of $51 million: $15 million in North America, $10 million in Europe/SSA/Russia, $12 million in Latin America, $11 million in MENA/Asia Pacific, $2 million in Corporate and Research and Development, and $1 million in Land Drilling Rigs. |
Six Months Ended June 30, 2017 | |||||||||||
(Dollars in millions) | Net Operating Revenues | Income (Loss) from Operations | Depreciation and Amortization | ||||||||
North America | $ | 965 | $ | (16 | ) | $ | 80 | ||||
MENA/Asia Pacific | 661 | 6 | 102 | ||||||||
Europe/SSA/Russia | 488 | (5 | ) | 78 | |||||||
Latin America (a) | 445 | (26 | ) | 99 | |||||||
Subtotal | 2,559 | (41 | ) | 359 | |||||||
Land Drilling Rigs | 190 | (50 | ) | 47 | |||||||
2,749 | (91 | ) | 406 | ||||||||
Corporate and Research and Development | (141 | ) | 6 | ||||||||
Restructuring Charges (b) | (106 | ) | |||||||||
Asset Write-Downs and Other | 15 | ||||||||||
Total | $ | 2,749 | $ | (323 | ) | $ | 412 |
(a) | As discussed in “Note 1 – General”, in the second quarter of 2017, the Company changed its accounting for revenue related to an implied financing arrangement with our largest customer in Venezuela. The total impact of this change for the first six months of 2017 related to prior periods is a reduction in revenues and income from operations of approximately $23 million for the second half of 2016. |
(b) | Includes restructuring charges of $106 million: $29 million in Europe/SSA/Russia, $27 million in Corporate and Research and Development, $23 million in North America, $16 million in Latin America, $9 million in MENA/Asia Pacific, and $2 million in Land Drilling Rigs. |
Six Months Ended June 30, 2016 | |||||||||||
(Dollars in millions) | Net Operating Revenues | Income (Loss) from Operations | Depreciation and Amortization | ||||||||
North America | $ | 944 | $ | (229 | ) | $ | 112 | ||||
MENA/Asia Pacific | 761 | 4 | 121 | ||||||||
Europe/SSA/Russia | 500 | — | 96 | ||||||||
Latin America | 554 | 45 | 117 | ||||||||
Subtotal | 2,759 | (180 | ) | 446 | |||||||
Land Drilling Rigs | 228 | (43 | ) | 45 | |||||||
2,987 | (223 | ) | 491 | ||||||||
Corporate and Research and Development | (163 | ) | 8 | ||||||||
Asset Write-Downs and Other Charges (c) | (212 | ) | |||||||||
Restructuring Charges (d) | (128 | ) | |||||||||
Litigation Charges, Net | (181 | ) | |||||||||
Total | $ | 2,987 | $ | (907 | ) | $ | 499 |
(c) | Includes $84 million to adjust a note from our largest customer in Venezuela to fair value, $92 million related to impairments, write-offs and other charges and $35 million of pressure pumping related charges. |
(d) | Includes restructuring charges of $128 million: $39 million in North America, $27 million in Latin America, $25 million in Europe/SSA/Russia, $20 million in MENA/Asia Pacific, $12 million in Corporate and Research and Development and $5 million in Land Drilling Rigs. |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | |||||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | 1,363 | $ | — | $ | 1,363 | |||||||||||
Costs and Expenses | (5 | ) | 19 | 1 | (1,505 | ) | — | (1,490 | ) | ||||||||||||||
Operating Income (Loss) | (5 | ) | 19 | 1 | (142 | ) | — | (127 | ) | ||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||
Interest Expense, Net | — | (144 | ) | 1 | 11 | (6 | ) | (138 | ) | ||||||||||||||
Intercompany Charges, Net | 3 | (82 | ) | (41 | ) | 120 | — | — | |||||||||||||||
Equity in Subsidiary Income (Loss) | (296 | ) | (304 | ) | (39 | ) | — | 639 | — | ||||||||||||||
Other, Net | 127 | 247 | 191 | (255 | ) | (193 | ) | 117 | |||||||||||||||
Income (Loss) Before Income Taxes | (171 | ) | (264 | ) | 113 | (266 | ) | 440 | (148 | ) | |||||||||||||
(Provision) Benefit for Income Taxes | — | — | — | (17 | ) | — | (17 | ) | |||||||||||||||
Net Income (Loss) | (171 | ) | (264 | ) | 113 | (283 | ) | 440 | (165 | ) | |||||||||||||
Noncontrolling Interests | — | — | — | 6 | — | 6 | |||||||||||||||||
Net Income (Loss) Attributable to Weatherford | $ | (171 | ) | $ | (264 | ) | $ | 113 | $ | (289 | ) | $ | 440 | $ | (171 | ) | |||||||
Comprehensive Income (Loss) Attributable to Weatherford | $ | (181 | ) | $ | (290 | ) | $ | 128 | $ | (298 | ) | $ | 460 | $ | (181 | ) |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | |||||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | 1,402 | $ | — | $ | 1,402 | |||||||||||
Costs and Expenses | (81 | ) | — | 5 | (1,786 | ) | — | (1,862 | ) | ||||||||||||||
Operating Income (Loss) | (81 | ) | — | 5 | (384 | ) | — | (460 | ) | ||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||
Interest Expense, Net | — | (106 | ) | (12 | ) | (4 | ) | 3 | (119 | ) | |||||||||||||
Intercompany Charges, Net | 13 | 5 | (45 | ) | 27 | — | — | ||||||||||||||||
Equity in Subsidiary Income | (497 | ) | 28 | 47 | — | 422 | — | ||||||||||||||||
Other, Net | — | (73 | ) | (27 | ) | 5 | 10 | (85 | ) | ||||||||||||||
Income (Loss) Before Income Taxes | (565 | ) | (146 | ) | (32 | ) | (356 | ) | 435 | (664 | ) | ||||||||||||
(Provision) Benefit for Income Taxes | — | — | 19 | 83 | — | 102 | |||||||||||||||||
Net Income (Loss) | (565 | ) | (146 | ) | (13 | ) | (273 | ) | 435 | (562 | ) | ||||||||||||
Noncontrolling Interests | — | — | — | 3 | — | 3 | |||||||||||||||||
Net Income (Loss) Attributable to Weatherford | $ | (565 | ) | $ | (146 | ) | $ | (13 | ) | $ | (276 | ) | $ | 435 | $ | (565 | ) | ||||||
Comprehensive Income (Loss) Attributable to Weatherford | $ | (574 | ) | $ | (188 | ) | $ | (40 | ) | $ | (285 | ) | $ | 513 | $ | (574 | ) |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | ||||||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | 2,749 | $ | — | $ | 2,749 | ||||||||||||
Costs and Expenses | (8 | ) | 39 | 1 | (3,104 | ) | — | (3,072 | ) | |||||||||||||||
Operating Income (Loss) | (8 | ) | 39 | 1 | (355 | ) | — | (323 | ) | |||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Expense, Net | — | (283 | ) | (20 | ) | 15 | 9 | (279 | ) | |||||||||||||||
Intercompany Charges, Net | 4 | (90 | ) | (43 | ) | 129 | — | — | ||||||||||||||||
Equity in Subsidiary Income (Loss) | (680 | ) | (132 | ) | 180 | — | 632 | — | ||||||||||||||||
Other, Net | 65 | 31 | 52 | (50 | ) | (54 | ) | 44 | ||||||||||||||||
Income (Loss) Before Income Taxes | (619 | ) | (435 | ) | 170 | (261 | ) | 587 | (558 | ) | ||||||||||||||
(Provision) Benefit for Income Taxes | — | — | — | (50 | ) | — | (50 | ) | ||||||||||||||||
Net Income (Loss) | (619 | ) | (435 | ) | 170 | (311 | ) | 587 | (608 | ) | ||||||||||||||
Noncontrolling Interests | — | — | 62 | — | 11 | — | 11 | |||||||||||||||||
Net Income (Loss) Attributable to Weatherford | $ | (619 | ) | $ | (435 | ) | $ | 170 | $ | (322 | ) | $ | 587 | $ | (619 | ) | ||||||||
Comprehensive Income (Loss) Attributable to Weatherford | $ | (586 | ) | $ | (466 | ) | $ | 102 | $ | (288 | ) | $ | 652 | $ | (586 | ) |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | |||||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | 2,987 | $ | — | $ | 2,987 | |||||||||||
Costs and Expenses | (147 | ) | — | 5 | (3,752 | ) | — | (3,894 | ) | ||||||||||||||
Operating Income (Loss) | (147 | ) | — | 5 | (765 | ) | — | (907 | ) | ||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||
Interest Expense, Net | — | (204 | ) | (26 | ) | (7 | ) | 3 | (234 | ) | |||||||||||||
Intercompany Charges, Net | 12 | (41 | ) | (46 | ) | (265 | ) | 340 | — | ||||||||||||||
Equity in Subsidiary Income | (928 | ) | (260 | ) | (188 | ) | — | 1,376 | — | ||||||||||||||
Other, Net | — | (86 | ) | (27 | ) | (12 | ) | 10 | (115 | ) | |||||||||||||
Income (Loss) Before Income Taxes | (1,063 | ) | (591 | ) | (282 | ) | (1,049 | ) | 1,729 | (1,256 | ) | ||||||||||||
(Provision) Benefit for Income Taxes | — | — | 24 | 179 | — | 203 | |||||||||||||||||
Net Income (Loss) | (1,063 | ) | (591 | ) | (258 | ) | (870 | ) | 1,729 | (1,053 | ) | ||||||||||||
Noncontrolling Interests | — | — | — | 10 | — | 10 | |||||||||||||||||
Net Income (Loss) Attributable to Weatherford | $ | (1,063 | ) | $ | (591 | ) | $ | (258 | ) | $ | (880 | ) | $ | 1,729 | $ | (1,063 | ) | ||||||
Comprehensive Income (Loss) Attributable to Weatherford | $ | (929 | ) | $ | (640 | ) | $ | (286 | ) | $ | (746 | ) | $ | 1,672 | $ | (929 | ) |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | |||||||||||||||||
Current Assets: | |||||||||||||||||||||||
Cash and Cash Equivalents | $ | 1 | $ | 154 | $ | — | $ | 429 | $ | — | $ | 584 | |||||||||||
Other Current Assets | 1 | — | 509 | 4,496 | (543 | ) | 4,463 | ||||||||||||||||
Total Current Assets | 2 | 154 | 509 | 4,925 | (543 | ) | 5,047 | ||||||||||||||||
Equity Investments in Affiliates | 1,806 | 8,496 | 8,526 | 1,040 | (19,868 | ) | — | ||||||||||||||||
Intercompany Receivables, Net | — | 133 | — | 3,578 | (3,711 | ) | — | ||||||||||||||||
Other Assets | — | 11 | 3 | 6,991 | — | 7,005 | |||||||||||||||||
Total Assets | $ | 1,808 | $ | 8,794 | $ | 9,038 | $ | 16,534 | $ | (24,122 | ) | $ | 12,052 | ||||||||||
Current Liabilities: | |||||||||||||||||||||||
Short-term Borrowings and Current Portion of Long-Term Debt | $ | — | $ | 119 | $ | 4 | $ | 29 | $ | — | $ | 152 | |||||||||||
Accounts Payable and Other Current Liabilities | 38 | 229 | — | 2,504 | (543 | ) | 2,228 | ||||||||||||||||
Total Current Liabilities | 38 | 348 | 4 | 2,533 | (543 | ) | 2,380 | ||||||||||||||||
Long-term Debt | — | 7,127 | 156 | 156 | 99 | 7,538 | |||||||||||||||||
Intercompany Payables, Net | 212 | — | 3,499 | — | (3,711 | ) | — | ||||||||||||||||
Other Long-term Liabilities | 91 | 98 | 91 | 421 | (91 | ) | 610 | ||||||||||||||||
Total Liabilities | 341 | 7,573 | 3,750 | 3,110 | (4,246 | ) | 10,528 | ||||||||||||||||
Weatherford Shareholders’ Equity | 1,467 | 1,221 | 5,288 | 13,367 | (19,876 | ) | 1,467 | ||||||||||||||||
Noncontrolling Interests | — | — | — | 57 | — | 57 | |||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 1,808 | $ | 8,794 | $ | 9,038 | $ | 16,534 | $ | (24,122 | ) | $ | 12,052 |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | |||||||||||||||||
Current Assets: | |||||||||||||||||||||||
Cash and Cash Equivalents | $ | — | $ | 586 | $ | 4 | $ | 447 | $ | — | $ | 1,037 | |||||||||||
Other Current Assets | 1 | — | 512 | 3,891 | (531 | ) | 3,873 | ||||||||||||||||
Total Current Assets | 1 | 586 | 516 | 4,338 | (531 | ) | 4,910 | ||||||||||||||||
Equity Investments in Affiliates | 2,415 | 8,669 | 8,301 | 1,037 | (20,422 | ) | — | ||||||||||||||||
Intercompany Receivables, Net | — | — | — | 3,762 | (3,762 | ) | — | ||||||||||||||||
Other Assets | 2 | 13 | — | 7,751 | (12 | ) | 7,754 | ||||||||||||||||
Total Assets | $ | 2,418 | $ | 9,268 | $ | 8,817 | $ | 16,888 | $ | (24,727 | ) | $ | 12,664 | ||||||||||
Current Liabilities: | |||||||||||||||||||||||
Short-term Borrowings and Current Portion of Long-Term Debt | $ | — | $ | 53 | $ | 94 | $ | 32 | $ | — | $ | 179 | |||||||||||
Accounts Payable and Other Current Liabilities | 105 | 198 | — | 2,488 | (542 | ) | 2,249 | ||||||||||||||||
Total Current Liabilities | 105 | 251 | 94 | 2,520 | (542 | ) | 2,428 | ||||||||||||||||
Long-term Debt | — | 6,944 | 148 | 204 | 107 | 7,403 | |||||||||||||||||
Intercompany Payables, Net | 145 | 224 | 3,393 | — | (3,762 | ) | — | ||||||||||||||||
Other Long-term Liabilities | 156 | 152 | 146 | 457 | (146 | ) | 765 | ||||||||||||||||
Total Liabilities | 406 | 7,571 | 3,781 | 3,181 | (4,343 | ) | 10,596 | ||||||||||||||||
Weatherford Shareholders’ Equity | 2,012 | 1,697 | 5,036 | 13,651 | (20,384 | ) | 2,012 | ||||||||||||||||
Noncontrolling Interests | — | — | — | 56 | — | 56 | |||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 2,418 | $ | 9,268 | $ | 8,817 | $ | 16,888 | $ | (24,727 | ) | $ | 12,664 |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | |||||||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||||||||||
Net Income (Loss) | $ | (619 | ) | $ | (435 | ) | $ | 170 | $ | (311 | ) | $ | 587 | $ | (608 | ) | |||||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities: | |||||||||||||||||||||||
Charges from Parent or Subsidiary | (4 | ) | 90 | 43 | (129 | ) | — | — | |||||||||||||||
Equity in (Earnings) Loss of Affiliates | 680 | 132 | (180 | ) | — | (632 | ) | — | |||||||||||||||
Deferred Income Tax Provision (Benefit) | — | — | — | 4 | 4 | ||||||||||||||||||
Other Adjustments | (134 | ) | 7 | (7 | ) | 452 | 45 | 363 | |||||||||||||||
Net Cash Provided (Used) by Operating Activities | (77 | ) | (206 | ) | 26 | 16 | — | (241 | ) | ||||||||||||||
Cash Flows from Investing Activities: | |||||||||||||||||||||||
Capital Expenditures for Property, Plant and Equipment | — | — | — | (82 | ) | — | (82 | ) | |||||||||||||||
Cash Paid for Assets Held for Sale | — | — | — | (243 | ) | — | (243 | ) | |||||||||||||||
Acquisition of Intellectual Property | — | — | — | (9 | ) | — | (9 | ) | |||||||||||||||
Proceeds from Sale of Assets | — | — | — | 25 | — | 25 | |||||||||||||||||
Payment Related to Sale of Businesses, Net | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
Other Investing Activities | — | — | — | (5 | ) | — | (5 | ) | |||||||||||||||
Net Cash Provided (Used) by Investing Activities | — | — | — | (315 | ) | — | (315 | ) | |||||||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||||||||
Borrowings (Repayments) Short-term Debt, Net | — | — | — | (96 | ) | — | (96 | ) | |||||||||||||||
Borrowings (Repayments) Long-term Debt, Net | — | 226 | (89 | ) | 78 | — | 215 | ||||||||||||||||
Borrowings (Repayments) Between Subsidiaries, Net | 78 | (452 | ) | 59 | 315 | — | — | ||||||||||||||||
Other, Net | — | — | — | (20 | ) | — | (20 | ) | |||||||||||||||
Net Cash Provided (Used) by Financing Activities | 78 | (226 | ) | (30 | ) | 277 | — | 99 | |||||||||||||||
Effect of Exchange Rate Changes On Cash and Cash Equivalents | — | — | — | 4 | — | 4 | |||||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 1 | (432 | ) | (4 | ) | (18 | ) | — | (453 | ) | |||||||||||||
Cash and Cash Equivalents at Beginning of Period | — | 586 | 4 | 447 | — | 1,037 | |||||||||||||||||
Cash and Cash Equivalents at End of Period | $ | 1 | $ | 154 | $ | — | $ | 429 | $ | — | $ | 584 |
(Dollars in millions) | Weatherford Ireland | Weatherford Bermuda | Weatherford Delaware | Other Subsidiaries | Eliminations | Consolidation | |||||||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||||||||||
Net Income (Loss) | $ | (1,063 | ) | $ | (591 | ) | $ | (258 | ) | $ | (870 | ) | $ | 1,729 | $ | (1,053 | ) | ||||||
Adjustments to Reconcile Net Income(Loss) to Net Cash Provided (Used) by Operating Activities: | |||||||||||||||||||||||
Charges from Parent or Subsidiary | (12 | ) | 41 | 46 | 265 | (340 | ) | — | |||||||||||||||
Equity in (Earnings) Loss of Affiliates | 928 | 260 | 188 | — | (1,376 | ) | — | ||||||||||||||||
Deferred Income Tax Provision (Benefit) | — | — | (24 | ) | (191 | ) | — | (215 | ) | ||||||||||||||
Other Adjustments | 883 | (1,078 | ) | (18 | ) | 1,155 | (13 | ) | 929 | ||||||||||||||
Net Cash Provided (Used) by Operating Activities | 736 | (1,368 | ) | (66 | ) | 359 | — | (339 | ) | ||||||||||||||
Cash Flows from Investing Activities: | |||||||||||||||||||||||
Capital Expenditures for Property, Plant and Equipment | — | — | — | (74 | ) | — | (74 | ) | |||||||||||||||
Acquisition of Intellectual Property | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||
Insurance Proceeds Related to Rig Loss | — | — | — | 30 | — | 30 | |||||||||||||||||
Proceeds from Sale of Assets and Businesses, Net | — | — | — | 16 | — | 16 | |||||||||||||||||
Other Investing Activities | — | — | — | (20 | ) | — | (20 | ) | |||||||||||||||
Net Cash Provided (Used) by Investing Activities | — | — | — | (56 | ) | — | (56 | ) | |||||||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||||||||
Borrowings (Repayments) Short-term Debt, Net | — | (1,450 | ) | — | 69 | — | (1,381 | ) | |||||||||||||||
Borrowings (Repayments) Long-term Debt, Net | — | 3,114 | (513 | ) | (1,325 | ) | — | 1,276 | |||||||||||||||
Borrowings (Repayments) Between Subsidiaries, Net | (736 | ) | (277 | ) | 557 | 456 | — | — | |||||||||||||||
Proceeds from Issuance of Ordinary Shares | — | — | — | 623 | — | 623 | |||||||||||||||||
Other, Net | — | — | — | (103 | ) | — | (103 | ) | |||||||||||||||
Net Cash Provided (Used) by Financing Activities | (736 | ) | 1,387 | 44 | (280 | ) | — | 415 | |||||||||||||||
Effect of Exchange Rate Changes On Cash and Cash Equivalents | — | — | — | (35 | ) | — | (35 | ) | |||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | — | 19 | (22 | ) | (12 | ) | — | (15 | ) | ||||||||||||||
Cash and Cash Equivalents at Beginning of Period | — | 2 | 22 | 443 | — | 467 | |||||||||||||||||
Cash and Cash Equivalents at End of Period | $ | — | $ | 21 | $ | — | $ | 431 | $ | — | $ | 452 |
• | Formation Evaluation and Well Construction includes Managed-Pressure Drilling, Drilling Services, Tubular Running Services, Drilling Tools and Rental Equipment, Wireline Services, Testing and Production Services, Re-entry and Fishing, Cementing Products, Liner Systems, Reservoir Solutions and Surface Logging Systems. |
• | Completion and Production includes Artificial Lift Systems, Stimulation and Completion Systems. |
• | Land Drilling Rigs encompasses our land drilling rigs business, including the products and services ancillary thereto. |
WTI Oil (a) | Henry Hub Gas (b) | North American Rig Count (c) | International Rig Count (c) | ||||||||||
June 30, 2017 | $ | 46.04 | $ | 3.04 | 1,012 | 958 | |||||||
December 31, 2016 | 53.72 | 3.68 | 770 | 925 | |||||||||
June 30, 2016 | 48.33 | 2.92 | 470 | 943 |
(a) | Price per barrel of West Texas Intermediate (“WTI”) crude oil as of the date indicated at Cushing, Oklahoma – Source: Thomson Reuters |
(b) | Price per MM/BTU as of the date indicated at Henry Hub Louisiana – Source: Thomson Reuters |
(c) | Quarterly average rig count – Source: Baker Hughes Rig Count |
Three Months Ended | ||||||||||||||
June 30, | ||||||||||||||
(Dollars and shares in millions, except per share data) | 2017 | 2016 | Favorable (Unfavorable) | Percentage Change | ||||||||||
Revenues: | ||||||||||||||
North America | $ | 475 | $ | 401 | $ | 74 | 18 | % | ||||||
MENA/Asia Pacific | 340 | 400 | (60 | ) | (15 | )% | ||||||||
Europe/SSA/Russia | 244 | 243 | 1 | — | % | |||||||||
Latin America | 203 | 249 | (46 | ) | (18 | )% | ||||||||
Subtotal | 1,262 | 1,293 | (31 | ) | (2 | )% | ||||||||
Land Drilling Rigs | 101 | 109 | (8 | ) | (7 | )% | ||||||||
Total Revenues | 1,363 | 1,402 | (39 | ) | (3 | )% | ||||||||
Operating Income (Loss): | ||||||||||||||
North America | 2 | (101 | ) | 103 | 102 | % | ||||||||
MENA/Asia Pacific | 9 | 50 | (41 | ) | (82 | )% | ||||||||
Europe/SSA/Russia | 5 | 1 | 4 | 400 | % | |||||||||
Latin America | (35 | ) | 1 | (36 | ) | (3,600 | )% | |||||||
Subtotal | (19 | ) | (49 | ) | 30 | 61 | % | |||||||
Land Drilling Rigs | (20 | ) | (17 | ) | (3 | ) | (18 | )% | ||||||
Total Segment Operating Loss | (39 | ) | (66 | ) | 27 | 41 | % | |||||||
Research and Development | (36 | ) | (41 | ) | 5 | 12 | % | |||||||
Corporate Expenses | (33 | ) | (34 | ) | 1 | 3 | % | |||||||
Asset Write-Downs and Other | 12 | (154 | ) | 166 | 108 | % | ||||||||
Restructuring Charges | (31 | ) | (51 | ) | 20 | 39 | % | |||||||
Litigation Charges, Net | — | (114 | ) | 114 | 100 | % | ||||||||
Total Operating Loss | (127 | ) | (460 | ) | 333 | 72 | % | |||||||
Interest Expense, Net | (138 | ) | (119 | ) | (19 | ) | (16 | )% | ||||||
Bond Tender Premium, Net | — | (78 | ) | 78 | 100 | % | ||||||||
Warrant Fair Value Adjustment | 127 | — | 127 | — | % | |||||||||
Other Expense, Net | (10 | ) | (7 | ) | (3 | ) | (43 | )% | ||||||
Income Tax (Provision) Benefit | (17 | ) | 102 | (119 | ) | (117 | )% | |||||||
Net Loss per Diluted Share | $ | (0.17 | ) | $ | (0.63 | ) | $ | 0.46 | 73 | % | ||||
Weighted Average Diluted Shares Outstanding | 990 | 899 | (91 | ) | (10 | )% | ||||||||
Depreciation and Amortization | $ | 204 | $ | 249 | $ | 45 | 18 | % |
Six Months Ended | ||||||||||||||
June 30, | ||||||||||||||
(Dollars and shares in millions, except per share data) | 2017 | 2016 | Favorable (Unfavorable) | Percentage Change | ||||||||||
Revenues: | ||||||||||||||
North America | $ | 965 | $ | 944 | $ | 21 | 2 | % | ||||||
MENA/Asia Pacific | 661 | 761 | (100 | ) | (13 | )% | ||||||||
Europe/SSA/Russia | 488 | 500 | (12 | ) | (2 | )% | ||||||||
Latin America | 445 | 554 | (109 | ) | (20 | )% | ||||||||
Subtotal | 2,559 | 2,759 | (200 | ) | (7 | )% | ||||||||
Land Drilling Rigs | 190 | 228 | (38 | ) | (17 | )% | ||||||||
Total Revenues | 2,749 | 2,987 | (238 | ) | (8 | )% | ||||||||
Operating Income (Expense): | ||||||||||||||
North America | (16 | ) | (229 | ) | 213 | 93 | % | |||||||
MENA/Asia Pacific | 6 | 4 | 2 | 50 | % | |||||||||
Europe/SSA/Russia | (5 | ) | — | (5 | ) | — | % | |||||||
Latin America | (26 | ) | 45 | (71 | ) | (158 | )% | |||||||
Subtotal | (41 | ) | (180 | ) | 139 | 77 | % | |||||||
Land Drilling Rigs | (50 | ) | (43 | ) | (7 | ) | (16 | )% | ||||||
Total Segment Operating Loss | (91 | ) | (223 | ) | 132 | 59 | % | |||||||
Research and Development | (75 | ) | (86 | ) | 11 | 13 | % | |||||||
Corporate Expenses | (66 | ) | (77 | ) | 11 | 14 | % | |||||||
Asset Write-Downs and Other | 15 | (212 | ) | 227 | 107 | % | ||||||||
Restructuring Charges | (106 | ) | (128 | ) | 22 | 17 | % | |||||||
Litigation Charges, Net | — | (181 | ) | 181 | 100 | % | ||||||||
Total Operating Loss | (323 | ) | (907 | ) | 584 | 64 | % | |||||||
Interest Expense, Net | (279 | ) | (234 | ) | (45 | ) | (19 | )% | ||||||
Bond Tender Premium, Net | — | (78 | ) | 78 | 100 | % | ||||||||
Warrant Fair Value Adjustment | 65 | — | 65 | — | % | |||||||||
Currency Devaluation Charges | — | (31 | ) | 31 | 100 | % | ||||||||
Other Expense, Net | (21 | ) | (6 | ) | (15 | ) | (250 | )% | ||||||
Income Tax (Provision) Benefit | (50 | ) | 203 | (253 | ) | (125 | )% | |||||||
Net Loss per Diluted Share | $ | (0.63 | ) | $ | (1.24 | ) | $ | 0.61 | 49 | % | ||||
Weighted Average Diluted Shares Outstanding | 989 | 856 | (133 | ) | (16 | )% | ||||||||
Depreciation and Amortization | $ | 412 | $ | 499 | $ | 87 | 17 | % |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Formation Evaluation and Well Construction | 60 | % | 57 | % | 59 | % | 56 | % | |||
Completion and Production | 33 | 35 | 34 | 36 | |||||||
Land Drilling Rigs | 7 | 8 | 7 | 8 | |||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
• | North America revenues increased $74 million, or 18%, in the second quarter of 2017 and $21 million, or 2%, during the first six months of 2017 compared to the second quarter and the first six months of 2016, respectively, in most product lines due to higher activity and sales. The increase was related to the 115% increase in North American rig count since the second quarter of 2016, which was partially offset by the shutdown of our U.S. pressure pumping operations in the fourth quarter of 2016. Revenues, excluding pressure pumping operations, improved $126 million, or 37%, in the second quarter of 2017 and improved $158 million, or 20%, during the first six months of 2017 compared to the second quarter and the first six months of 2016, respectively. |
• | International segment revenues declined $105 million, or 12%, in the second quarter of 2017 and $221 million, or 12%, during the first six months of 2017 compared to the second quarter and the first six months of 2016, respectively. The revenue decline was primarily in Latin America, Asia Pacific and the Middle East. |
◦ | In Latin America, the second quarter and year-to-date declines compared to the same periods of the prior year were primarily due to a change in the accounting for revenue related to an implied financing arrangement with our largest customer in Venezuela as discussed in “Note 1 – General” to our Condensed Consolidated Financial Statements. The total reduction in revenues from this change in accounting in the second quarter of 2017 includes a reduction of $31 million related to prior periods and $11 million related to the second quarter of 2017, for a total of $42 million. |
◦ | The MENA/Asia Pacific revenue decline in the second quarter of 2017 compared to the same period last year was primarily due to lower activity on the Zubair project. The MENA/Asia Pacific revenue decline in the first six months of 2017 compared to the same period last year was primarily due to an overall lower demand for services and continued pricing pressures, causing a broad decline in the Asia Pacific countries and in a concentration of countries in the Middle East. |
• | Land Drilling Rigs revenue declined $8 million, or 7%, in the second quarter of 2017 and $38 million, or 17%, during the first six months of 2017 primarily in Saudi Arabia and Oman, partially offset by an improved operational efficiency and fully operational contracts in Algeria and Kuwait. |
• | $31 million in 2017 compared to $51 million in 2016 of severance and other restructuring charges; |
• | $12 million in net credits in 2017 primarily related to the amortization of unrecognized net gains associated with our supplemental executive retirement plan net of asset write-downs and other charges compared to other charges of $154 million in 2016, which primarily includes a fair value adjustment to a note from our largest customer in Venezuela, asset write-offs, pressure pumping business related charges, rig casualty loss and other charges; and |
• | $114 million in 2016 of litigation charges, net. |
• | $106 million in 2017 compared to $128 million in 2016 of severance and other restructuring charges; |
• | $15 million in net credits in 2017 primarily related to the amortization of unrecognized net gains associated with our supplemental executive retirement plan net of asset write-downs and other charges compared to other charges of $212 million in 2016, which primarily includes a fair value adjustment to a note from our largest customer in Venezuela, asset write-offs, pressure pumping business related charges, rig casualty loss and other charges; and |
• | $181 million in 2016 of litigation charges, net. |
Six Months Ended June 30, | |||||||
(Dollars in millions) | 2017 | 2016 | |||||
Net Cash Used in Operating Activities | $ | (241 | ) | $ | (339 | ) | |
Net Cash Used in Investing Activities | (315 | ) | (56 | ) | |||
Net Cash Provided by Financing Activities | 99 | 415 |
Facility | $ | 1,599 | |
Less uses of facility: | |||
Revolving credit facility, secured term loan before debt issuance cost | 400 | ||
Letters of credit | 73 | ||
Borrowing Availability | $ | 1,126 |
• | the price and price volatility of oil, natural gas and natural gas liquids; |
• | global political, economic and market conditions, political disturbances, war, terrorist attacks, changes in global trade policies, weak local economic conditions and international currency fluctuations; |
• | nonrealization of expected benefits from our acquisitions or business dispositions and our ability to execute or close such acquisitions and dispositions; |
• | our ability to realize expected revenues and profitability levels from current and future contracts; |
• | our ability to manage our workforce, supply chain and business processes, information technology systems and technological innovation and commercialization, including the impact of our cost and support reduction plans; |
• | our high level of indebtedness; |
• | increases in the prices and availability of our raw materials; |
• | potential non-cash asset impairment charges for long-lived assets, goodwill, intangible assets or other assets; |
• | changes to our effective tax rate; |
• | nonrealization of potential earnouts associated with business dispositions; |
• | downturns in our industry which could affect the carrying value of our goodwill; |
• | member-country quota compliance within the Organization of Petroleum Exporting Countries; |
• | adverse weather conditions in certain regions of our operations; |
• | our ability to realize the expected benefits from our redomestication from Switzerland to Ireland and to maintain our Swiss tax residency; |
• | failure to ensure on-going compliance with current and future laws and government regulations, including but not limited to environmental and tax and accounting laws, rules and regulations; and |
• | limited access to capital, significantly higher cost of capital, or difficulty raising additional funds in the equity or debt capital markets. |
Exhibit Number | Description | |
3.1 | Memorandum and Articles of Association of Weatherford International public limited company (incorporated by reference as Exhibit 2.1 of the Weatherford’s Form 8-K filed April 2, 2014, File No. 1-36504). | |
4.1 | Registration Rights Agreement, dated June 29, 2017, by and among Weatherford International plc, Weatherford International Ltd., Weatherford International, LLC and Morgan Stanley & Co. LLC. (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, File No. 001-36504, filed with the SEC on June 29, 2017). | |
10.1 | Form of Change of Control Agreement, entered into by Mark M. McCollum on April 24, 2017 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed December 15, 2016). | |
10.2 | Form of Deed of Indemnity of Weatherford International plc entered into by Mark M. McCollum on April 24, 2017 (incorporated by reference to Exhibit 10.11 of the Company's Current Report on Form 8-K12B filed June 17, 2014). | |
10.3 | Form of Deed of Indemnity of Weatherford International Ltd. (Bermuda) entered into by Mark M. McCollum on April 24, 2017 (incorporated by reference to Exhibit 10.12 of the Company's Current Report on Form 8-K12B filed June 17, 2014). | |
†31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
†31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
††32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
††32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
**101 | The following materials from Weatherford International plc's Quarterly Report on Form 10-Q for the second quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (1) the unaudited Condensed Consolidated Balance Sheets, (2) the unaudited Condensed Consolidated Statements of Operations, (3) the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss), (4) the unaudited Condensed Consolidated Statements of Cash Flows, and (5) the related notes to the unaudited Condensed Consolidated Financial Statements. |
** | Submitted pursuant to Rule 405 and 406T of Regulation S-T. |
† | Filed herewith. |
†† | Furnished herewith. |
Weatherford International plc | ||
Date: August 1, 2017 | By: | /s/ Christoph Bausch |
Christoph Bausch | ||
Executive Vice President and | ||
Chief Financial Officer | ||
Date: August 1, 2017 | By: | /s/ Doug M. Mills |
Doug M. Mills | ||
Vice President and | ||
Chief Accounting Officer | ||
1. | I have reviewed this quarterly report on Form 10-Q of Weatherford International plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 1, 2017 | |
/s/ Mark A. McCollum | |
Mark A. McCollum | |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Weatherford International plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 1, 2017 | |
/s/ Christoph Bausch | |
Christoph Bausch | |
Executive Vice President and | |
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Mark A. McCollum | |||
Name: | Mark A. McCollum | ||
Title: | President and Chief Executive Officer | ||
Date: | August 1, 2017 | ||
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Christoph Bausch | |||
Name: | Christoph Bausch | ||
Title: | Executive Vice President and Chief Financial Officer | ||
Date: | August 1, 2017 | ||
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 18, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Weatherford International plc | |
Entity Central Index Key | 0001603923 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 989,035,049 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Revenues: | ||||
Products | $ 488,000,000 | $ 479,000,000 | $ 999,000,000 | $ 1,039,000,000 |
Services | 875,000,000 | 923,000,000 | 1,750,000,000 | 1,948,000,000 |
Total Revenues | 1,363,000,000 | 1,402,000,000 | 2,749,000,000 | 2,987,000,000 |
Costs and Expenses: | ||||
Cost of Products | 473,000,000 | 513,000,000 | 959,000,000 | 1,095,000,000 |
Cost of Services | 716,000,000 | 725,000,000 | 1,436,000,000 | 1,617,000,000 |
Research and Development | 36,000,000 | 41,000,000 | 75,000,000 | 86,000,000 |
Selling, General and Administrative Attributable to Segments | 214,000,000 | 230,000,000 | 446,000,000 | 499,000,000 |
Corporate General and Administrative | 32,000,000 | 34,000,000 | 65,000,000 | 76,000,000 |
Asset Write-Downs and Other | (12,000,000) | 154,000,000 | (15,000,000) | 212,000,000 |
Restructuring Charges | 31,000,000 | 51,000,000 | 106,000,000 | 128,000,000 |
Litigation Charges, Net | 0 | 114,000,000 | 0 | 181,000,000 |
Total Costs and Expenses | 1,490,000,000 | 1,862,000,000 | 3,072,000,000 | 3,894,000,000 |
Operating Income (Loss) | (127,000,000) | (460,000,000) | (323,000,000) | (907,000,000) |
Other Income (Expense): | ||||
Interest Expense, Net | (138,000,000) | (119,000,000) | (279,000,000) | (234,000,000) |
Bond Tender Premium, Net | 0 | (78,000,000) | 0 | (78,000,000) |
Warrant Fair Value Adjustment | 127,000,000 | 0 | 65,000,000 | 0 |
Currency Devaluation Charges | 0 | 0 | 0 | (31,000,000) |
Other Expense, Net | (10,000,000) | (7,000,000) | (21,000,000) | (6,000,000) |
Loss Before Income Taxes | (148,000,000) | (664,000,000) | (558,000,000) | (1,256,000,000) |
Income Tax (Provision) Benefit | (17,000,000) | 102,000,000 | (50,000,000) | 203,000,000 |
Net Loss | (165,000,000) | (562,000,000) | (608,000,000) | (1,053,000,000) |
Net Income Attributable to Noncontrolling Interests | 6,000,000 | 3,000,000 | 11,000,000 | 10,000,000 |
Net Income (Loss) Attributable to Weatherford | $ (171,000,000) | $ (565,000,000) | $ (619,000,000) | $ (1,063,000,000) |
Loss Per Share Attributable to Weatherford: | ||||
Basic | $ (0.17) | $ (0.63) | $ (0.63) | $ (1.24) |
Diluted | $ (0.17) | $ (0.63) | $ (0.63) | $ (1.24) |
Weighted Average Shares Outstanding: | ||||
Weighted average number of shares outstanding, basic | 990 | 899 | 989 | 856 |
Diluted | 990 | 899 | 989 | 856 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Loss | $ (165) | $ (562) | $ (608) | $ (1,053) |
Other Comprehensive Income (Loss), Net of Tax: | ||||
Currency Translation Adjustments | 11 | (10) | 74 | 132 |
Defined Benefit Pension Activity | (21) | 1 | (41) | 1 |
Other | 0 | 0 | 0 | 1 |
Other Comprehensive Income (Loss) | (10) | (9) | 33 | 134 |
Comprehensive Loss | (175) | (571) | (575) | (919) |
Comprehensive Income Attributable to Noncontrolling Interests | 6 | 3 | 11 | 10 |
Comprehensive Loss Attributable to Weatherford | $ (181) | $ (574) | $ (586) | $ (929) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Current Assets: | ||
Allowance for Uncollectible Accounts | $ 91 | $ 129 |
Noncurrent Assets: | ||
Accumulated Depreciation of Property, Plant and Equipment | 7,518 | 7,362 |
Accumulated Amortization of Other Intangible Assets | $ 836 | $ 801 |
Shareholders’ Equity: | ||
Common Shares, Par Value (in USD) | $ 0.001 | $ 0.001 |
Common Shares, Authorized (in shares) | 1,356,000,000 | 1,356,000,000 |
Common Shares, Conditionally Authorized (in shares) | 0 | 0 |
Common Shares, Issued (in shares) | 986,000,000 | 983,000,000 |
Common Stock, Outstanding (in shares) | 986,000,000 | 983,000,000 |
Treasury Shares, at cost (in shares) | 0 | 0 |
General |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The accompanying unaudited Condensed Consolidated Financial Statements of Weatherford International plc (the “Company”) are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include all adjustments which, in our opinion, are considered necessary to present fairly our Condensed Consolidated Balance Sheets at June 30, 2017 and December 31, 2016, and Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2017 and 2016 and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016. When referring to “Weatherford” and using phrases such as “we,” “us,” and “our,” the intent is to refer to Weatherford International plc, a public limited company organized under the law of Ireland, and its subsidiaries as a whole or on a regional basis, depending on the context in which the statements are made. Although we believe the disclosures in these financial statements are adequate, certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in this Form 10-Q pursuant to U.S. Securities and Exchange Commission (“SEC”) rules and regulations. These financial statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results expected for the year ending December 31, 2017. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to uncollectible accounts receivable, lower of cost or net realizable value for inventories, equity investments, derivative financial instruments, intangible assets and goodwill, property, plant and equipment (PP&E), income taxes, percentage-of-completion accounting for long-term contracts, self-insurance, foreign currency exchange rates, pension and post-retirement benefit plans, disputes, litigation, contingencies and share-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Principles of Consolidation We consolidate all wholly-owned subsidiaries, controlled joint ventures and variable interest entities where the Company has determined it is the primary beneficiary. Investments in affiliates in which we exercise significant influence over operating and financial policies are accounted for using the equity method. All material intercompany accounts and transactions have been eliminated in consolidation. Reclassifications Certain prior year cash flow amounts have been reclassified to conform to the current year presentation related to the adoption of new accounting standards. Net income and shareholders’ equity were not affected by these reclassifications. See “Note 17 – New Accounting Pronouncements” for additional details. Revenue Recognition In the second quarter of 2017, the Company changed its accounting for revenue related to an implied financing arrangement with our largest customer in Venezuela. We determined that beginning in the third quarter of 2016, the duration of time expected to collect revenue for goods and services provided to this customer significantly exceeded the contractual payment terms and represents an implied financing arrangement. Accordingly, we have modified our revenue recognition with this customer to record a discount reflecting the time value of money and accreting the discount as interest income over the expected collection period using the effective interest method. In connection with this development, the Company corrected this immaterial error for the three and six month periods ended June 30, 2017. The impact of the correction decreased revenue and increased interest income by approximately $31 million and $4 million, respectively, for the three month period ended June 30, 2017 and reduced accounts receivable by approximately $27 million as of June 30, 2017. As of June 30, 2017, to reflect the impact of payment delays and expectation that the time to collect may exceed one year, we have reclassified $150 million of our total $153 million “Accounts Receivable, Net of Allowance for Uncollectible Accounts” with this customer to “Other Non-Current Assets” on the accompanying Condensed Consolidated Balance Sheets. While we are continuing to experience delays with collections on our outstanding receivables with this customer, we believe the amounts are fully collectible. This change in accounting would not have affected our compliance with financial covenants under our senior revolving and term loan credit facilities if it had been recorded in the prior periods, and the adjustment has no impact to cash flow from operating activities or any other cash flow measures. Currency Devaluation Charges Currency devaluation charges are included in current earnings in “Currency Devaluation Charges” on the accompanying Condensed Consolidated Statements of Operations. In the first six months of 2016, currency devaluation charges of $31 million reflected the impact of the devaluation of the Angolan kwanza. In the second quarter and first six months of 2017, we had no currency devaluation charges. |
Business Combinations and Divestitures |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations and Dvestitures | Business Combinations and Divestitures Held for Sale On March 24, 2017, we entered a master formation agreement with affiliates of Schlumberger Limited (“Schlumberger”) to form a joint venture named “OneStimSM,” which will provide completion products and services for the development of unconventional land reservoirs in the United States and Canada. Under the terms of the master formation agreement, both parties will contribute their respective pressure pumping assets, multistage completions, and pump-down perforating businesses on land in the lower contiguous 48 states of the United States and the provinces of British Columbia, Saskatchewan, Manitoba and Alberta in Canada. In addition, we will contribute manufacturing facilities and supply chain resources to OneStim, and Schlumberger will provide the joint venture with access to its surface and downhole technologies and advanced geo-engineered workflows. At closing, we will own a 30% equity interest in the OneStim joint venture, and Schlumberger will own 70%, and we will also receive a one-time $535 million cash payment from Schlumberger. The transaction is expected to close in the second half of 2017 and is subject to regulatory approvals and other customary closing conditions. The carrying amounts of the major classes of assets and liabilities from our North America segment to be contributed to OneStim have been classified as held for sale in the table below.
As of June 30, 2017, we also had $27 million of PP&E held for sale unrelated to the OneStim joint venture. |
Percentage of Completion Contracts |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Contractors [Abstract] | |
Percentage of Completion Contracts | Percentage-of-Completion Contracts We account for our long-term early production facility construction contracts in Iraq under the percentage-of-completion method. In the second quarter and the first six months of 2017, there was no change to our cumulative estimated loss from the Iraq contracts, which was $532 million as of June 30, 2017 and December 31, 2016. As of June 30, 2017, we have no claims revenue and our percentage-of-completion project estimate includes zero back charges. Our net billings in excess of costs as of June 30, 2017 were $46 million and are shown in the “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets. On May 26, 2016, we entered into an agreement with our customer containing the terms and conditions of the settlement on the Zubair contract which included variation order requests, claims for extension of time, payments of remaining contract milestones and new project completion timelines that resulted in relief from the liquidated damages provisions. The settlement paid to us was a gross amount of $150 million, of which we received $62 million in the second quarter of 2016, $72 million in the third quarter of 2016 and $16 million in the first quarter of 2017. In the second quarter of 2016, we recognized an estimated project income of $52 million for our Zubair contract, and in the first six months of 2016 we were break-even. Cumulative estimated losses on these projects were $532 million, project estimates included no claims revenue, $25 million in newly approved change orders and $32 million of back charges at June 30, 2016. |
Restructuring Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | Restructuring Charges Due to the ongoing lower than anticipated levels of exploration and production spending, we continue to reduce our overall cost structure and workforce to better align with current activity levels. The ongoing cost reduction plans which began in 2016 (the “2016 Plan”) included a workforce reduction and other cost reduction measures initiated across our geographic regions. In connection with the 2016 Plan, we recognized restructuring charges of $31 million and $106 million in the second quarter and the first six months of 2017, respectively, which include termination (severance) charges of $22 million and $56 million, respectively, and other restructuring charges of $9 million and $38 million, respectively. The first six months of 2017 also includes restructuring related asset charges of $12 million. Other restructuring charges include contract termination costs, relocation and other associated costs. Also in connection with the 2016 Plan, we recognized restructuring charges of $51 million and $128 million in the second quarter and the first six months of 2016, respectively, which include termination (severance) charges of $36 million and $108 million, respectively, and other restructuring charges of $15 million and $20 million, respectively. Other restructuring charges also include contract termination costs, relocation and other associated costs. The following tables present the components of restructuring charges by segment for the second quarter and the first six months of 2017 and 2016.
The severance and other restructuring charges gave rise to certain liabilities, the components of which are summarized below, and largely relate to the severance accrued as part of earlier 2014 and 2015 Plans and the 2016 Plan and other executive severance matters that will be paid pursuant to the respective arrangements and statutory requirements.
The following table presents the restructuring liability activity for the first six months of 2017.
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Accounts Receivable Factoring and Other Receivables |
6 Months Ended |
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Jun. 30, 2017 | |
Receivables [Abstract] | |
Accounts Receivable Factoring and Other Receivables | Accounts Receivable Factoring and Other Receivables From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions. In the first six months of 2017, we sold accounts receivable of $78.1 million for $77.7 million, and received cash proceeds totaling $76.6 million. The loss recognized on these sales was $0.4 million. In the first six months of 2016, we sold approximately $77 million and recognized a loss of $0.3 million. Our factoring transactions in the first six months of 2017 and 2016 were recognized as sales, and the proceeds are included as operating cash flows in our Condensed Consolidated Statements of Cash Flows. In the first quarter of 2017, Weatherford converted trade receivables of $65 million into a note from the customer with a face value of $65 million. The note had a three year term at a 4.625% stated interest rate. We reported the note as a trading security within “Other Current Assets” at fair value on the Condensed Consolidated Balance Sheets at its fair value of $58 million on March 31, 2017. The note fair value was considered a Level 2 valuation and was estimated using secondary market data for similar bonds. During the second quarter of 2017, we sold the note for $59 million. |
Inventories, Net |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, Net | Inventories, Net Inventories, net of reserves, by category were as follows:
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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
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Short-term Borrowings and Other Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Borrowings and Other Debt Obligations | Short-term Borrowings and Other Debt Obligations
Revolving Credit Agreement and Secured Term Loan Agreement On April 17, 2017, we amended our revolving credit facility (the “Revolving Credit Agreement”) and our secured term loan agreement (the “Term Loan Agreement” and collectively with the Revolving Credit Agreement, the “Credit Agreements”). We modified the definition of consolidated adjusted earnings before interest, tax depreciation and amortization set forth in the Credit Agreements, as well as other definitional and covenant modifications, and reduced total commitments under the Revolving Credit Agreement from $1.38 billion to $1.199 billion. As of June 30, 2017, we had total commitments under the Revolving Credit Agreement of $1.199 billion and borrowings of $400 million under the Term Loan Agreement. At June 30, 2017, we had $1.1 billion available under the Credit Agreements, and there were $73 million in outstanding letters of credit. For lenders that previously extended their commitments (“extending lenders”), the Revolving Credit Agreement matures in July of 2019. For lenders that did not extend their commitments (such lenders, representing $199 million, the “non-extending lenders”), the Revolving Credit Agreement matured in July of 2017, which will further reduce total commitments under the Revolving Credit Agreement to $1.0 billion in the third quarter of 2017. The Term Loan Agreement matures in July of 2020. Loans under the Credit Agreements are subject to varying interest rates based on whether the loan is Eurodollar loan or an alternate base rate loan. We also incur a quarterly facility fee on the amount of the Revolving Credit Agreement. For the three months ended June 30, 2017, the interest rate for the Revolving Credit Agreement was LIBOR plus a margin rate of 2.80%. For the three months ended June 30, 2017, the interest rate for the Term Loan Agreement was LIBOR plus a margin rate of 2.30%. Our Credit Agreements contain customary events of default, including our failure to comply with our financial covenants. We must maintain a leverage ratio of no greater than 2.5 to 1, a leverage and letters of credit ratio of no greater than 3.5 to 1 and an asset coverage ratio of at least 4.0 to 1. As of June 30, 2017, we were in compliance with these financial covenants. Other Short-Term Borrowings and Other Debt Activity On June 26, 2017, we issued an additional $250 million aggregate principal amount of our 9.875% senior notes due 2024 (“Notes”) and received proceeds, net of underwriting fees, of $251 million. These Notes were issued as additional securities under an indenture pursuant to which we previously issued $540 million aggregate principal amount of our 9.875% senior notes due 2024. We have short-term borrowings with various domestic and international institutions pursuant to uncommitted credit facilities. At June 30, 2017, we had $7 million in short-term borrowings under these arrangements. In addition, we had $436 million of letters of credit under various uncommitted facilities, of which $69 million has been cash collateralized (included in “Cash and Cash Equivalents” in the accompanying Condensed Consolidated Balance Sheets), and $61 million of surety bonds, primarily performance bonds, issued by financial sureties against an indemnification from us at June 30, 2017. In June 2017, we repaid $88 million of our 6.35% Senior Notes on the maturity date. At June 30, 2017, the current portion of long-term debt was primarily related to $66 million of our 6.00% Senior Notes due March 2018, the $50 million current portion of our Term Loan Agreement and $29 million of current portion of capital leases and other debt. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial Instruments Measured and Recognized at Fair Value We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three level hierarchy, from highest to lowest level of observable inputs. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based upon our own judgment and assumptions used to measure assets and liabilities at fair value. Classification of a financial asset or liability within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. Other than the derivative instruments discussed in “Note 10 – Derivative Instruments”, we had no other material assets or liabilities measured and recognized at fair value on a recurring basis at June 30, 2017 and December 31, 2016. Fair Value of Other Financial Instruments Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings and long-term debt. The carrying value of our cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings approximates their fair value due to their short maturities. These short-term borrowings are classified as Level 2 in the fair value hierarchy. The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will generally exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will generally be less than the carrying value when the market rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. The fair value and carrying value of our senior notes were as follows:
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments From time to time, we may enter into derivative financial instrument transactions to manage or reduce our market risk. We manage our debt portfolio to achieve an overall desired position of fixed and floating rates, and we may employ interest rate swaps as a tool to achieve that goal. We enter into foreign currency forward contracts and cross-currency swap contracts to economically hedge our exposure to fluctuations in various foreign currencies. The major risks from interest rate derivatives include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates, changes in foreign exchange rates and the creditworthiness of the counterparties in such transactions. We monitor the creditworthiness of our counterparties, which are multinational commercial banks. The fair values of all our outstanding derivative instruments are determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates. Warrant During the fourth quarter of 2016, in conjunction with the issuance of 84.5 million ordinary shares, we also issued a warrant that gives the holder the option to acquire an additional 84.5 million ordinary shares. The exercise price on the warrant is $6.43 per share and is exercisable any time prior to May 21, 2019. The warrant is classified as a liability and carried at fair value with changes in its fair value reported through earnings. The warrant participates in dividends and other distributions as if the shares subject to the warrants were outstanding. In addition, the warrant permits early redemption due to a change in control. The warrant fair value is considered a Level 3 valuation and is estimated using a combination of the Black Scholes option valuation model and Monte-Carlo simulation. Inputs to these models include Weatherford’s share price, volatility and the risk free interest rate. The valuation also considers the probabilities of future share issuances and anticipated issuance discounts, which are considered Level 3 inputs. The fair value of the warrant was $156 million on December 31, 2016 and $91 million on June 30, 2017, generating an unrealized gain of $127 million for the second quarter of 2017 and $65 million for the first six months of 2017. The change in fair value of the warrant was principally due to a decrease in Weatherford’s stock price during the first six months of 2017. The warrant valuation would be negatively affected due to an increase in the likelihood of a future share issuance. Fair Value Hedges We may use interest rate swaps to help mitigate exposures related to changes in the fair values of fixed-rate debt. The interest rate swap is recorded at fair value with changes in fair value recorded in earnings. The carrying value of fixed-rate debt is also adjusted for changes in interest rates, with the changes in value recorded in earnings. After termination of the hedge, any discount or premium on the fixed-rate debt is amortized to interest expense over the remaining term of the debt. As of June 30, 2017, we did not have any fair value hedge designated. As of June 30, 2017, we had net unamortized premiums on fixed-rate debt of $5 million associated with fair value hedge terminations. These premiums are being amortized over the remaining term of the originally hedged debt as a reduction in interest expense included in “Interest Expense, Net” on the accompanying Condensed Consolidated Statements of Operations. Cash Flow Hedges In 2008, we entered into interest rate derivative instruments to hedge projected exposures to interest rates in anticipation of a debt offering. These hedges were terminated at the time of the issuance of the debt, and the associated loss is being amortized from “Accumulated Other Comprehensive Income (Loss)” to interest expense over the remaining term of the debt. As of June 30, 2017, we had net unamortized losses of $9 million associated with our cash flow hedge terminations. As of June 30, 2017, we did not have any cash flow hedges designated. Foreign Currency and Warrant Derivative Instruments At June 30, 2017 and December 31, 2016, we had outstanding foreign currency forward contracts with notional amounts aggregating to $1.2 billion and $1.6 billion, respectively. The notional amounts of our foreign currency forward contracts do not generally represent amounts exchanged by the parties and thus are not a measure of the cash requirements related to these contracts or of any possible loss exposure. The amounts actually exchanged at maturity are calculated by reference to the notional amounts and by other terms of the derivative contracts, such as exchange rates. Our foreign currency derivatives are not designated as hedges under ASC 815, and the changes in fair value of the contracts are recorded each period in “Other Expense, Net” on the accompanying Condensed Consolidated Statements of Operations. The total estimated fair values of our foreign currency forward contracts and warrant derivative were as follows:
The amount of derivative instruments’ gain or (loss) on the Condensed Consolidated Statements of Operations is in the table below.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We have historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to ordinary income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items and pre-tax losses for which no benefit has been recognized) for the reporting period. For the three month and six month periods ended June 30, 2017, we determined that since small changes in estimated ordinary annual income would result in significant changes in the estimated annual effective tax rate, the use of a discrete effective tax rate is appropriate for the current quarter. The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. We will use this method each quarter until the annual effective tax rate method is deemed appropriate. For the second quarter and the first six months of 2017, we had a tax expense of $17 million and $50 million, respectively, on a loss before income taxes of $148 million and $558 million, respectively. Results for the second quarter and the first six months of 2017 include losses with no significant tax benefit. The tax expense for the second quarter and the first six months of 2017 also includes withholding taxes and deemed profit taxes that do not directly correlate to ordinary income or loss. We are continuously under tax examination in various jurisdictions. We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements. We continue to anticipate a possible reduction in the balance of uncertain tax positions of approximately $10 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations. For both the second quarter and the first six months of 2016, we had a tax benefit of $102 million and $203 million, respectively, on a loss before income taxes of $664 million and $1.26 billion, respectively. Our results for the second quarter of 2016 include charges with no significant tax benefit principally related to $75 million of settlement charges, $78 million of bond tender premium, and $84 million of a note adjustment related to our largest customer in Venezuela, partially offset by $52 million of Zubair project gain with no significant tax expense. Our results for the first six months of 2016 include charges with no significant tax benefit principally related to $140 million of settlement charges, $31 million of currency devaluation related to the Angolan kwanza, $78 million of bond tender premium, and $84 million related to a note adjustment for our largest customer in Venezuela. |
Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity The following summarizes our shareholders’ equity activity for the first six months of 2017 and 2016:
In March 2016, we issued 115 million ordinary shares, and the amount in excess of par value of $623 million is reported in “Capital in Excess of Par Value” on the accompanying Condensed Consolidated Balance Sheets. On June 7, 2016, we issued exchangeable notes with a par value of $1.265 billion. The exchange feature carrying value of $97 million is included in the line captioned “Capital in Excess of Par Value” on the accompanying Condensed Consolidated Balance Sheets. The following table presents the changes in our accumulated other comprehensive loss by component for the second quarter of 2017 and 2016:
Defined benefit pension reclassifications relate to amortization of unrecognized net gains associated primarily with our supplemental executive retirement plan. |
Earnings per Share |
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Earnings per Share | Earnings per Share Basic earnings per share for all periods presented equals net income (loss) divided by the weighted average number of our shares outstanding during the period including participating securities. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of our shares outstanding during the period including participating securities, adjusted for the dilutive effect of our stock options, restricted shares and performance share units. The following table presents our basic and diluted weighted average shares outstanding for the second quarter and the first six months of 2017 and 2016:
Our basic and diluted weighted average shares outstanding for the periods presented are equivalent due to the net loss attributable to shareholders. Diluted weighted average shares outstanding for the second quarter and the first six months of 2017 and 2016 exclude potential shares for stock options, restricted shares, performance share units, exchangeable notes, warrant outstanding and the Employee Stock Purchase Plan as we have net losses for those periods, and their inclusion would be anti-dilutive. The following table presents the number of anti-dilutive shares excluded for the second quarter and the first six months of 2017 and 2016:
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Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation We recognized the following employee share-based compensation expense during the second quarter and the first six months of 2017 and 2016:
During the first six months of 2017, we granted to certain employees approximately 2.9 million performance share units that will vest with continued employment if the Company meets certain market-based performance goals. The performance share units have a weighted average grant date fair value of $6.26 per share based on the Monte Carlo simulation method. The assumptions used in the Monte Carlo simulation included a weighted average risk-free rate of 1.16%, volatility of 67% and a zero dividend yield. As of June 30, 2017, there was $16 million of unrecognized compensation expense related to our performance share units. This cost is expected to be recognized over a weighted average period of 2 years. During the first six months of 2017, we also granted 3.9 million restricted share units at a weighted average grant date fair value of $5.38 per share. As of June 30, 2017, there was $68 million of unrecognized compensation expense related to our unvested restricted share grants. This cost is expected to be recognized over a weighted average period of 2 years. |
Segment Information |
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Segment Information | Segment Information Financial information by segment is summarized below. Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as presented in our Form 10-K.
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Disputes, Litigation and Contingencies |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Disputes, Litigation and Contingencies | Disputes, Litigation and Contingencies Shareholder Litigation In 2010, three shareholder derivative actions were filed, purportedly on behalf of the Company, asserting breach of duty and other claims against certain current and former officers and directors of the Company related to the United Nations oil-for-food program governing sales of goods into Iraq, the Foreign Corrupt Practices Act of 1977 and trade sanctions related to the U.S. government investigations disclosed in our SEC filings since 2007. Those shareholder derivative cases were filed in Harris County, Texas state court and consolidated under the caption Neff v. Brady, et al., No. 2010040764 (collectively referred to as the “Neff Case”). Other shareholder demand letters covering the same subject matter were received by the Company in early 2014, and a fourth shareholder derivative action was filed, purportedly on behalf of the Company, also asserting breach of duty and other claims against certain current and former officers and directors of the Company related to the same subject matter as the Neff Case. That case, captioned Erste-Sparinvest KAG v. Duroc-Danner, et al., No. 201420933 (Harris County, Texas) was consolidated into the Neff Case in September 2014. A motion to dismiss was granted May 15, 2015, and an appeal was filed on June 15, 2015. Following briefing and oral argument, on June 29, 2017, the Texas Court of Appeals denied in part and granted in part the shareholders’ appeal. The Court ruled that the shareholders lacked standing to bring claims that arose prior to the Company’s redomestication to Switzerland in 2009, and upheld the dismissal of those claims. The Court reversed as premature the trial court’s dismissal of claims arising after the redomestication and remanded to the trial court for further proceedings. We cannot reliably predict the outcome of the remaining claims, including the amount of any possible loss. Securities Class Action Settlement On June 30, 2015, we signed a stipulation to settle a shareholder securities class action captioned Freedman v. Weatherford International Ltd., et al., No. 1:12-cv-02121-LAK (S.D.N.Y.) for $120 million subject to notice to the class and court approval. The Freedman lawsuit had been filed in the U.S. District Court for the Southern District of New York in March 2012, and alleged that we and certain current and former officers of Weatherford violated the federal securities laws in connection with the restatements of the Company’s historical financial statements announced on February 21, 2012 and July 24, 2012. On November 4, 2015, the U.S. District Court for the Southern District of New York entered a final judgment and an order approving the settlement. Pursuant to the settlement, we were required to pay $120 million, which was partially funded by insurance proceeds. There was no admission of liability or fault by a party in connection with the settlement. We are pursuing reimbursement from our insurance carriers and recovered $23 million of the settlement amount to date, of which $4 million was recovered in the second quarter of 2017. U.S. Government and Other Investigations The SEC and the U.S. Department of Justice (“DOJ”) investigated certain accounting issues associated with the material weakness in our internal control over financial reporting for income taxes that was disclosed in a notification of late filing on Form 12b-25 filed on March 1, 2011 and in current reports on Form 8-K filed on February 21, 2012 and on July 24, 2012 and the subsequent restatements of our historical financial statements. During the first quarter 2016, we recorded a loss contingency in the amount of $65 million and increased it to $140 million in the second quarter to reflect our best estimate of the potential settlement. As disclosed in the Form 8-K filed on September 27, 2016, the Company settled with the SEC without admitting or denying the findings of the SEC, by consenting to the entry of an administrative order that requires the Company to cease and desist from committing or causing any violations and any future violations of the anti-fraud provisions of the Securities Act of 1933 (as amended, the “Securities Act”), and the anti-fraud, reporting, books and records, and internal controls provisions of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), and the rules promulgated thereunder. As part of the terms of the SEC settlement, the Company agreed to pay a total civil monetary penalty of $140 million. In addition, certain reports and certifications regarding our tax internal controls must be delivered to the SEC during the two years following the settlement. A payment of $50 million was made during the fourth quarter of 2016, and a payment of $30 million was made in each of January and May 2017. A final payment of $30 million is due in September 2017. Spitzer Industries Litigation In August 2016, after a bench trial in Harris County, Texas, the court entered a judgment of $36 million against the Company in the case of Spitzer Industries, Inc. (“Spitzer”) vs. Weatherford U.S., L.P. in connection with Spitzer’s fabrication work on two mobile capture vessels used in the cleanup of marine oil spills. We continue to maintain a reserve in the amount of the judgment, and an appellate brief was filed on June 16, 2017 to the First Court of Appeals in Houston, Texas. Rapid Completions and Packers Plus Litigation Several subsidiaries of the Company are defendants in a patent infringement lawsuit filed by Rapid Completions LLC (“RC”) in U.S. District Court for the Eastern District of Texas on July 31, 2015. RC claims that we and other defendants are liable for infringement of six U.S. patents related to specific downhole completion equipment and the methods of using such equipment. These patents have been assigned to Packers Plus Energy Services, Inc., a Canadian corporation (“Packers Plus”), and purportedly exclusively licensed to RC. The litigation is currently stayed pending resolution of inter partes review of each of the patents-in-suit which is pending before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office. RC is seeking a permanent injunction against further alleged infringement, unspecified damages for infringement, supplemental and enhanced damages, and additional relief such as attorneys’ fees. On October 14, 2015, Packers Plus and RC filed suit in Federal Court in Toronto, Canada against the Company and certain subsidiaries alleging infringement of a related Canadian patent and seeking unspecified damages and an accounting of the Company’s profits. Trial on the validity of the Canadian patent was completed in March 2017. The parties are awaiting a decision from the Court, estimated to be on or before August 31, 2017. If the Federal Court upholds the validity of the patent, a trial on infringement will be held on March 12, 2018. The parties mediated both the U.S. and Canadian cases on July 5, 2017 but were unable to reach a settlement. During the second quarter of 2017, the negotiations related to this matter progressed to a point where we recognized a liability for a loss contingency that we believe to be probable and for which a reasonable estimate could be made. In both cases, we will continue to defend ourselves vigorously. If one or more negative outcomes were to occur in either case, the impact to our financial position, results of operations or cash flows could be material. Other Disputes and Litigation Additionally, we are aware of various disputes and potential claims and are a party in various litigation involving claims against us, including as a defendant in various employment claims alleging our failure to pay certain classes of workers overtime in compliance with the Fair Labor Standards Act for which an agreement was reached and settled during 2016. Some of these disputes and claims are covered by insurance. For claims, disputes and pending litigation in which we believe a negative outcome is probable and a loss can be reasonably estimated, we have recorded a liability for the expected loss. These liabilities are immaterial to our financial condition and results of operations. In addition we have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability. It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, that would result in liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material. If one or more negative outcomes were to occur relative to these matters, the aggregate impact to our financial condition could be material. Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 were $124 million and $181 million, respectively, and as of June 30, 2017 included the remaining SEC settlement obligation of $30 million. Other Contingencies The contractual residual value guarantee balance of $28 million in “Other Non-Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets at December 31, 2016 was extinguished after the underlying leased equipment in our North America pressure pumping operations was purchased during the first quarter of 2017. We have minimum purchase commitments related to supply contracts and maintain a liability at June 30, 2017 of $127 million for losses incurred on the contracts, of which $22 million is recorded in “Other Current Liabilities,” $47 million is recorded in “Other Non-Current Liabilities” and $58 million to be contributed to the OneStim joint venture is recorded in “Liabilities Held for Sale” on our Condensed Consolidated Balance Sheets. |
New Accounting Pronouncements |
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Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Changes In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies that modification accounting is required only if the fair value, the vesting conditions, or the classification of a share-based payment award changes as a result of changes in terms or conditions of the award. We have elected to early adopt ASU 2017-09 in the second quarter of 2017 and the adoption of this ASU had no impact on our Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 requires all income tax effects related to share-based payments at settlement (or expiration) be recorded through the income statement, including unrealized excess tax benefits. ASU 2016-09 also requires that all tax related cash flows resulting from share-based payments be presented as operating activities in the statement of cash flows. In addition, the guidance allows entities to increase the net-share settlement of an employee’s shares for tax withholding purposes without triggering liability accounting and to make a policy election to estimate forfeitures or recognize them as they occur. Finally, the new guidance requires all cash payments made to a taxing authority on an employee’s behalf for shares withheld be presented as financing activities in the statement of cash flows. We adopted ASU 2016-09 in the first quarter of 2017. We prospectively adopted the changes requiring all tax effects related to share-based payments to be recorded through the income statement and all tax related cash flows from share based payments to be presented as operating activities in the statement of cash flows. There is no cumulative effect as there is no impact from unrecognized excess tax benefits or minimum withholding requirements and prior periods have not been adjusted. We have also made an entity-wide accounting policy election to continue to estimate forfeitures and adjust the estimate when it is likely to change. We have retrospectively adopted the guidance to classify as a financing activity on the statement of cash flows all cash payments made to a taxing authority on an employee’s behalf for shares withheld for tax-withholding purposes. We have reclassified $5 million from other operating activities to other financing activities in the Statements of Cash Flows for the six months ended June 30, 2016. Accounting Standards Issued Not Yet Adopted In July 2017, the FASB issued ASU 2017-11, which amends the accounting for certain equity-linked financial instruments and states a down round feature no longer precludes equity classification when assessing wither the instrument is indexed to an entity’s own stock. For an equity-linked financial instrument no longer accounted for as a liability at fair value, the amendments require a down round to be treated as a dividend and a as a reduction of income available to common shareholders in basic earnings per share. The ASU is effective beginning with the first quarter of 2019, and early adoption is permitted. The ASU is required to be applied retrospectively to outstanding instruments. Weatherford is evaluating the impact that the ASU will have on our Consolidated Financial Statements and whether we will early adopt the ASU. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which amends the presentation of net periodic pension and postretirement benefit cost (“net benefit cost”). The service cost component of net benefit cost will be bifurcated and presented with other employee compensation costs, while other components of net benefit costs will be presented separately. The standard is required to be applied on a retrospective basis and will be effective beginning with the first quarter of 2018, although early adoption is permitted. We are evaluating the impact that this new standard will have on our Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to recognize a lease asset and lease liability for most leases, including those classified as operating leases under existing U.S. GAAP. The ASU also changes the definition of a lease and requires expanded quantitative and qualitative disclosures for both lessees and lessors. Under ASU 2016-02, we will revise our leasing policies to require most of the leases, where we are the lessee, to be recognized on the balance sheet as a lease asset and lease liability whereas currently we do not recognize operating leases on our balance sheet. Further, we will separate leases from other contracts where we are either the lessor or lessee when the rights conveyed under the contract indicate there is a lease, where we may not be required to do so under existing policies. While we cannot calculate the impact ASU 2016-02 will have on Weatherford’s financial statements, we anticipate that Weatherford’s assets and liabilities will increase by a significant amount. This standard will be effective for us beginning with the first quarter of 2019. We do not anticipate adopting ASU 2016-02 early, which is permitted under the standard. ASU 2016-02 requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective transition method but permits certain practical expedients to be applied, which may exclude certain leases that commenced before the effective date. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which will replace most existing revenue recognition guidance in U.S. GAAP. ASU 2014-09 will require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 requires a five-step approach to recognizing revenue: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. Subsequent to ASU 2014-09’s issuance, Topic 606 has been affected by other FASB updates that address certain aspects of Topic 606 or revised the effective date of the accounting changes. Under ASU 2014-09, we will revise our revenue recognition policy to require revenue recognition when control passes. This is a change from current policies, which generally require revenue recognition when delivery has occurred and risk and rewards of ownership have passed. The impact of these and other changes may be to delay the recognition of revenue in certain situations and to accelerate it in others. Our preliminary assessment is that the expected impact of ASU 2014-09 will have no impact for most of Weatherford’s activities, which are generally short-term in nature, although our assessment is still under evaluation. The changes are not expected to have any direct impact to our cash flows. We intend to adopt ASU 2014-09 as of its effective date in the first quarter of 2018. ASU 2014-09 permits two transition methods: the retrospective method or the modified retrospective method. Weatherford will be applying modified retrospective method which requires the recognition of a cumulative effect as an adjustment to opening retained earnings on the initial date of adoption. We have planned and commenced our implementation of ASU 2014-09. We are in the process of assessing differences between ASU 2014-09 and current accounting practices (gap analysis). Our approach involves comparing existing accounting requirements to the requirements under Topic 606 for each of our product lines and reviewing a sample of contracts within each product line and region. Remaining implementation matters include completing the gap analysis, implementing appropriate technology enhancements, establishing new policies, procedures, and controls, establishing appropriate presentation and disclosure changes and quantifying any adoption date adjustments. |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements Weatherford International plc (“Weatherford Ireland”), a public limited company organized under the laws of Ireland, a Swiss tax resident, and the ultimate parent of the Weatherford group, guarantees the obligations of its subsidiaries – Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”), including the notes and credit facilities listed below. The 6.80% senior notes of Weatherford Delaware were guaranteed by Weatherford Bermuda at June 30, 2017 and December 31, 2016. At December 31, 2016, Weatherford Bermuda also guaranteed the 6.35% senior notes of Weatherford Delaware. The following obligations of Weatherford Bermuda were guaranteed by Weatherford Delaware at June 30, 2017 and December 31, 2016: (1) Revolving Credit Agreement, (2) Term Loan Agreement, (3) 6.50% senior notes, (4) 6.00% senior notes, (5) 7.00% senior notes, (6) 9.625% senior notes, (7) 9.875% senior notes due 2039, (8) 5.125% senior notes, (9) 6.75% senior notes, (10) 4.50% senior notes, (11) 5.95% senior notes, (12) 5.875% exchangeable senior notes, (13) 7.75% senior notes, (14) 8.25% senior notes and (15) 9.875% senior notes due 2024. As a result of certain of these guarantee arrangements, we are required to present the following condensed consolidating financial information. The accompanying guarantor financial information is presented on the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions. Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended June 30, 2017 (Unaudited)
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended June 30, 2016 (Unaudited)
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Six Months Ended June 30, 2017 (Unaudited)
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Six Months Ended June 30, 2016 (Unaudited)
Condensed Consolidating Balance Sheet June 30, 2017 (Unaudited)
Condensed Consolidating Balance Sheet December 31, 2016
Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2017 (Unaudited)
Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2016 (Unaudited)
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General (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | The accompanying unaudited Condensed Consolidated Financial Statements of Weatherford International plc (the “Company”) are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include all adjustments which, in our opinion, are considered necessary to present fairly our Condensed Consolidated Balance Sheets at June 30, 2017 and December 31, 2016, and Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2017 and 2016 and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016. When referring to “Weatherford” and using phrases such as “we,” “us,” and “our,” the intent is to refer to Weatherford International plc, a public limited company organized under the law of Ireland, and its subsidiaries as a whole or on a regional basis, depending on the context in which the statements are made. Although we believe the disclosures in these financial statements are adequate, certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in this Form 10-Q pursuant to U.S. Securities and Exchange Commission (“SEC”) rules and regulations. These financial statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results expected for the year ending December 31, 2017. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to uncollectible accounts receivable, lower of cost or net realizable value for inventories, equity investments, derivative financial instruments, intangible assets and goodwill, property, plant and equipment (PP&E), income taxes, percentage-of-completion accounting for long-term contracts, self-insurance, foreign currency exchange rates, pension and post-retirement benefit plans, disputes, litigation, contingencies and share-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. |
Principles of Consolidation | Principles of Consolidation We consolidate all wholly-owned subsidiaries, controlled joint ventures and variable interest entities where the Company has determined it is the primary beneficiary. Investments in affiliates in which we exercise significant influence over operating and financial policies are accounted for using the equity method. All material intercompany accounts and transactions have been eliminated in consolidation. Reclassifications Certain prior year cash flow amounts have been reclassified to conform to the current year presentation related to the adoption of new accounting standards. Net income and shareholders’ equity were not affected by these reclassifications. See “Note 17 – New Accounting Pronouncements” for additional details. Revenue Recognition In the second quarter of 2017, the Company changed its accounting for revenue related to an implied financing arrangement with our largest customer in Venezuela. We determined that beginning in the third quarter of 2016, the duration of time expected to collect revenue for goods and services provided to this customer significantly exceeded the contractual payment terms and represents an implied financing arrangement. Accordingly, we have modified our revenue recognition with this customer to record a discount reflecting the time value of money and accreting the discount as interest income over the expected collection period using the effective interest method. In connection with this development, the Company corrected this immaterial error for the three and six month periods ended June 30, 2017. The impact of the correction decreased revenue and increased interest income by approximately $31 million and $4 million, respectively, for the three month period ended June 30, 2017 and reduced accounts receivable by approximately $27 million as of June 30, 2017. As of June 30, 2017, to reflect the impact of payment delays and expectation that the time to collect may exceed one year, we have reclassified $150 million of our total $153 million “Accounts Receivable, Net of Allowance for Uncollectible Accounts” with this customer to “Other Non-Current Assets” on the accompanying Condensed Consolidated Balance Sheets. While we are continuing to experience delays with collections on our outstanding receivables with this customer, we believe the amounts are fully collectible. This change in accounting would not have affected our compliance with financial covenants under our senior revolving and term loan credit facilities if it had been recorded in the prior periods, and the adjustment has no impact to cash flow from operating activities or any other cash flow measures. |
Reclassifications | Reclassifications Certain prior year cash flow amounts have been reclassified to conform to the current year presentation related to the adoption of new accounting standards. Net income and shareholders’ equity were not affected by these reclassifications. |
Revenue Recognition | Revenue Recognition In the second quarter of 2017, the Company changed its accounting for revenue related to an implied financing arrangement with our largest customer in Venezuela. We determined that beginning in the third quarter of 2016, the duration of time expected to collect revenue for goods and services provided to this customer significantly exceeded the contractual payment terms and represents an implied financing arrangement. Accordingly, we have modified our revenue recognition with this customer to record a discount reflecting the time value of money and accreting the discount as interest income over the expected collection period using the effective interest method. |
New Accounting Pronouncements New Accounting Pronouncements (Policies) |
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Accounting Policies [Abstract] | |
New Accounting Pronouncements | Accounting Changes In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies that modification accounting is required only if the fair value, the vesting conditions, or the classification of a share-based payment award changes as a result of changes in terms or conditions of the award. We have elected to early adopt ASU 2017-09 in the second quarter of 2017 and the adoption of this ASU had no impact on our Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 requires all income tax effects related to share-based payments at settlement (or expiration) be recorded through the income statement, including unrealized excess tax benefits. ASU 2016-09 also requires that all tax related cash flows resulting from share-based payments be presented as operating activities in the statement of cash flows. In addition, the guidance allows entities to increase the net-share settlement of an employee’s shares for tax withholding purposes without triggering liability accounting and to make a policy election to estimate forfeitures or recognize them as they occur. Finally, the new guidance requires all cash payments made to a taxing authority on an employee’s behalf for shares withheld be presented as financing activities in the statement of cash flows. We adopted ASU 2016-09 in the first quarter of 2017. We prospectively adopted the changes requiring all tax effects related to share-based payments to be recorded through the income statement and all tax related cash flows from share based payments to be presented as operating activities in the statement of cash flows. There is no cumulative effect as there is no impact from unrecognized excess tax benefits or minimum withholding requirements and prior periods have not been adjusted. We have also made an entity-wide accounting policy election to continue to estimate forfeitures and adjust the estimate when it is likely to change. We have retrospectively adopted the guidance to classify as a financing activity on the statement of cash flows all cash payments made to a taxing authority on an employee’s behalf for shares withheld for tax-withholding purposes. We have reclassified $5 million from other operating activities to other financing activities in the Statements of Cash Flows for the six months ended June 30, 2016. Accounting Standards Issued Not Yet Adopted In July 2017, the FASB issued ASU 2017-11, which amends the accounting for certain equity-linked financial instruments and states a down round feature no longer precludes equity classification when assessing wither the instrument is indexed to an entity’s own stock. For an equity-linked financial instrument no longer accounted for as a liability at fair value, the amendments require a down round to be treated as a dividend and a as a reduction of income available to common shareholders in basic earnings per share. The ASU is effective beginning with the first quarter of 2019, and early adoption is permitted. The ASU is required to be applied retrospectively to outstanding instruments. Weatherford is evaluating the impact that the ASU will have on our Consolidated Financial Statements and whether we will early adopt the ASU. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which amends the presentation of net periodic pension and postretirement benefit cost (“net benefit cost”). The service cost component of net benefit cost will be bifurcated and presented with other employee compensation costs, while other components of net benefit costs will be presented separately. The standard is required to be applied on a retrospective basis and will be effective beginning with the first quarter of 2018, although early adoption is permitted. We are evaluating the impact that this new standard will have on our Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to recognize a lease asset and lease liability for most leases, including those classified as operating leases under existing U.S. GAAP. The ASU also changes the definition of a lease and requires expanded quantitative and qualitative disclosures for both lessees and lessors. Under ASU 2016-02, we will revise our leasing policies to require most of the leases, where we are the lessee, to be recognized on the balance sheet as a lease asset and lease liability whereas currently we do not recognize operating leases on our balance sheet. Further, we will separate leases from other contracts where we are either the lessor or lessee when the rights conveyed under the contract indicate there is a lease, where we may not be required to do so under existing policies. While we cannot calculate the impact ASU 2016-02 will have on Weatherford’s financial statements, we anticipate that Weatherford’s assets and liabilities will increase by a significant amount. This standard will be effective for us beginning with the first quarter of 2019. We do not anticipate adopting ASU 2016-02 early, which is permitted under the standard. ASU 2016-02 requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective transition method but permits certain practical expedients to be applied, which may exclude certain leases that commenced before the effective date. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which will replace most existing revenue recognition guidance in U.S. GAAP. ASU 2014-09 will require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 requires a five-step approach to recognizing revenue: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. Subsequent to ASU 2014-09’s issuance, Topic 606 has been affected by other FASB updates that address certain aspects of Topic 606 or revised the effective date of the accounting changes. Under ASU 2014-09, we will revise our revenue recognition policy to require revenue recognition when control passes. This is a change from current policies, which generally require revenue recognition when delivery has occurred and risk and rewards of ownership have passed. The impact of these and other changes may be to delay the recognition of revenue in certain situations and to accelerate it in others. Our preliminary assessment is that the expected impact of ASU 2014-09 will have no impact for most of Weatherford’s activities, which are generally short-term in nature, although our assessment is still under evaluation. The changes are not expected to have any direct impact to our cash flows. We intend to adopt ASU 2014-09 as of its effective date in the first quarter of 2018. ASU 2014-09 permits two transition methods: the retrospective method or the modified retrospective method. Weatherford will be applying modified retrospective method which requires the recognition of a cumulative effect as an adjustment to opening retained earnings on the initial date of adoption. We have planned and commenced our implementation of ASU 2014-09. We are in the process of assessing differences between ASU 2014-09 and current accounting practices (gap analysis). Our approach involves comparing existing accounting requirements to the requirements under Topic 606 for each of our product lines and reviewing a sample of contracts within each product line and region. Remaining implementation matters include completing the gap analysis, implementing appropriate technology enhancements, establishing new policies, procedures, and controls, establishing appropriate presentation and disclosure changes and quantifying any adoption date adjustments. |
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Disposal Groups, Including Discontinued Operations [Table Text Block] |
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Restructuring Charges (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Charges | The following tables present the components of restructuring charges by segment for the second quarter and the first six months of 2017 and 2016.
The severance and other restructuring charges gave rise to certain liabilities, the components of which are summarized below, and largely relate to the severance accrued as part of earlier 2014 and 2015 Plans and the 2016 Plan and other executive severance matters that will be paid pursuant to the respective arrangements and statutory requirements.
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Schedule of Restructuring Reserve by Type of Cost | The severance and other restructuring charges gave rise to certain liabilities, the components of which are summarized below, and largely relate to the severance accrued as part of earlier 2014 and 2015 Plans and the 2016 Plan and other executive severance matters that will be paid pursuant to the respective arrangements and statutory requirements.
The following table presents the restructuring liability activity for the first six months of 2017.
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Inventories, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventory | Inventories, net of reserves, by category were as follows:
|
Goodwill (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill |
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Short-term Borrowings and Other Debt Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Short-Term Borrowings |
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Fair Value of Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | The fair value and carrying value of our senior notes were as follows:
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Derivative Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivatives Instruments in Statements of Financial Performance and Financial Position | The total estimated fair values of our foreign currency forward contracts and warrant derivative were as follows:
The amount of derivative instruments’ gain or (loss) on the Condensed Consolidated Statements of Operations is in the table below.
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Shareholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | The following summarizes our shareholders’ equity activity for the first six months of 2017 and 2016:
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents the changes in our accumulated other comprehensive loss by component for the second quarter of 2017 and 2016:
|
Earnings per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | The following table presents our basic and diluted weighted average shares outstanding for the second quarter and the first six months of 2017 and 2016:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents the number of anti-dilutive shares excluded for the second quarter and the first six months of 2017 and 2016:
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Share-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | We recognized the following employee share-based compensation expense during the second quarter and the first six months of 2017 and 2016:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial information by segment | Financial information by segment is summarized below. Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as presented in our Form 10-K.
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Condensed Consolidating Financial Statements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Operations | Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended June 30, 2017 (Unaudited)
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended June 30, 2016 (Unaudited)
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Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet June 30, 2017 (Unaudited)
Condensed Consolidating Balance Sheet December 31, 2016
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Condensed Consolidating Statement of Cash Flows | Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2017 (Unaudited)
Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2016 (Unaudited)
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General - Devaluation (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Foreign exchange related charges | $ 0 | $ 0 | $ 0 | $ (31,000,000) |
Business Combinations and Divestitures Joint Venture Formation (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Total Liabilities | $ 90 | $ 0 |
OneStim | ||
Other Current Assets | 4 | |
Inventory, Net | 83 | |
Property, Plant and Equipment, Net | 260 | |
Goodwill | 555 | |
Total Assets | 902 | |
Other Current Liabilities | 8 | |
Long-term Debt | 29 | |
Other Non-Current Liabilities | 53 | |
Total Liabilities | $ 90 |
Percentage of Completion Contracts (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
May 26, 2016 |
Mar. 31, 2017 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Jun. 30, 2017 |
|
Billed and Unbilled Contract Claims Subject to Uncertainty [Line Items] | |||||
Billings in excess of cost | $ (46,000,000) | ||||
Contract settlement amount | $ 150,000,000 | ||||
Proceeds from contract settlements | $ 16,000,000 | $ 72,000,000 | $ 62,000,000 | ||
Iraq | |||||
Billed and Unbilled Contract Claims Subject to Uncertainty [Line Items] | |||||
Total estimated loss on contracts | 532,000,000 | 532,000,000 | |||
Contract claims revenue | 0 | ||||
Deductions (back charges) | 32,000,000 | $ 0 | |||
Loss on contracts | 52,000,000 | ||||
Accounts receivable, unapproved contract claims | $ 25,000,000 |
Restructuring Charges (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Severance, asset impairment and other restructuring charges | $ 31 | $ 51 | $ 106 | $ 128 |
2016 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance, asset impairment and other restructuring charges | 31 | 51 | 106 | 128 |
2016 Plan | Other Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other restructuring costs | 9 | 15 | 50 | 20 |
Asset impairment charges | 12 | |||
2016 Plan | Employee Severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance costs | 22 | 36 | 56 | $ 108 |
2016 Plan | Other Restructuring Less Asset Write-Offs [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other restructuring costs | $ 9 | $ 38 | ||
2015 Plan | Other Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Other restructuring costs | $ 15 |
Accounts Receivable Factoring and Other Receivables (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Proceeds from Sale of Notes Receivable | $ 59.0 | |||
Sale of accounts receivable | $ 78.1 | $ 78.1 | ||
Quarterly amount transfer of accounts receivable, accounted for as sales, carrying value | 77.7 | |||
Proceeds from sale of accounts receivable | 76.6 | |||
Gain (loss) on sale of accounts receivable | $ (0.4) | $ (0.3) | ||
Accounts receivable sold, carrying value | $ 77.0 | |||
Trade receivables held-for-sale, reconciliation to cash flow, deductions from held-for-sale | $ 65.0 | |||
Receivable with imputed interest, face amount | $ 65.0 | |||
Receivable with imputed interest, term | 3 years | |||
Receivable with imputed interest, effective yield (interest rate) | 4.60% | |||
Notes receivable, fair value disclosure | $ 58.0 |
Inventories, Net (Schedule of Inventory) (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials, components and supplies | $ 160 | $ 168 |
Work in process | 51 | 49 |
Finished goods | 1,517 | 1,585 |
Inventories, Net | $ 1,728 | $ 1,802 |
Long-Lived Asset Impairments Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Asset Write-Downs and Other Charges | $ 34 | $ 164 |
Short-term Borrowings and Other Debt Obligations (Schedule of Short-term Debt) (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Short-term Debt [Line Items] | ||
Short-term debt | $ 7 | $ 2 |
Current portion of long-term debt and term loan agreement | 145 | 177 |
Short-term borrowings and current portion of long-term debt | 152 | 179 |
Revolving credit facility | ||
Short-term Debt [Line Items] | ||
Short-term debt | 0 | 0 |
Other short-term bank loans | ||
Short-term Debt [Line Items] | ||
Short-term debt | $ 7 | $ 2 |
Fair Value of Financial Instruments (Details) - Senior Notes - Level 2 - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long-term debt | $ 7,018 | $ 6,739 |
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long-term debt | $ 7,203 | $ 7,028 |
Derivative Instruments (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Derivative [Line Items] | ||||||
Number of securities called by each warrant or right | 84.5 | |||||
Exercise price of warrants or rights | $ 6.43 | |||||
Warrants and rights outstanding | $ 91 | $ 156 | $ 91 | |||
Fair Value Adjustment of Warrants | (127) | $ 0 | (65) | $ 0 | ||
Foreign currency forward contracts | ||||||
Derivative [Line Items] | ||||||
Notional amount | 1,200 | $ 1,600 | 1,200 | |||
Fair Value Hedging | Interest rate swap | ||||||
Derivative [Line Items] | ||||||
Debt instrument, unamortized premium | 5 | 5 | ||||
Deferred (gain) loss on discontinuation of fair value hedge | $ 9 | $ 9 | ||||
Capital in Excess of Par Value | ||||||
Derivative [Line Items] | ||||||
Stock issued during period, shares, new issues | 84.5 | 115.0 |
Derivative Instruments (Schedule of Derivatives - Balance Sheet) (Details) - Not Designated as Hedging Instrument - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Foreign currency forward contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross | $ 8 | $ 7 |
Foreign currency forward contracts | Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value, gross | (12) | (14) |
Warrant | Other Noncurrent Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value, gross | $ (91) | $ (156) |
Derivative Instruments (Schedule of Derivatives - Income Statement) (Details) - Other, Net - Not Designated as Hedging Instrument - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Foreign currency forward contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivative | $ (15) | $ (16) | $ (22) | $ 10 |
Warrant | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivative | $ 127 | $ 0 | $ 65 | $ 0 |
Income Taxes (Narrative) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2017 |
|
(Provision) Benefit for Income Taxes | $ (17,000,000) | $ 102,000,000 | $ (50,000,000) | $ 203,000,000 | |
Income (loss) before income taxes | (148,000,000) | (664,000,000) | (558,000,000) | (1,256,000,000) | |
Bond Tender Premium | 0 | (78,000,000) | 0 | (78,000,000) | |
Financing Receivable, Allowance for Credit Losses, Write-downs | 84,000,000 | 84,000,000 | |||
Foreign exchange related charges | $ 0 | 0 | $ 0 | 31,000,000 | |
Forecast | |||||
Uncertain tax positions, estimated for next twelve months | $ 10,000,000 | ||||
Iraq | |||||
Loss on contracts | 52,000,000 | ||||
SEC Settlement | |||||
Gain (loss) related to litigation settlement | $ (75,000,000) | $ (140,000,000) |
Earnings per Share (Weighted Average Shares Outstanding) (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Weighted average number of shares outstanding, basic | 990 | 899 | 989 | 856 |
Weighted average number of shares outstanding, diluted | 990 | 899 | 989 | 856 |
Earnings per Share (Antidilutive Shares) (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Anti-dilutive potential shares due to net loss | 250 | 43 | 250 | 24 |
Share-Based Compensation (Schedule of Share-based Compensation Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Share-based compensation | $ 17 | $ 17 | $ 38 | |
Related tax benefit | $ 0 | $ 4 | $ 0 | $ 8 |
Share-Based Compensation (Narrative) (Details) $ / shares in Units, shares in Millions, $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
$ / shares
shares
| |
Performance units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | shares | 2.9 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 6.26 |
Fair value, risk-free rate | 1.16% |
Fair value, volatility rate | 67.00% |
Fair value, dividend yield | 0.00% |
Unrecognized compensation expense | $ | $ 16 |
Unrecognized compensation expense, recognition period | 2 years |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | shares | 3.9 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 5.38 |
Unrecognized compensation expense | $ | $ 68 |
Unrecognized compensation expense, recognition period | 2 years |
Segment Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | $ (1,363) | $ (1,402) | $ (2,749) | $ (2,987) | |||||||||||||||||||||
Operating Income (Loss) | (127) | (460) | (323) | (907) | |||||||||||||||||||||
Depreciation and Amortization | 204 | 249 | 412 | 499 | |||||||||||||||||||||
Corporate and Research and Development | (36) | (41) | (75) | (86) | |||||||||||||||||||||
Restructuring Charges | (31) | (51) | (106) | (128) | |||||||||||||||||||||
Overstatement (reduction) of revenues | (1,363) | (1,402) | (2,749) | (2,987) | |||||||||||||||||||||
Litigation Charges, Net | 0 | (114) | 0 | (181) | |||||||||||||||||||||
Revenue recognition adjustment | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | 23 | ||||||||||||||||||||||||
Accounting change adjustment | 31 | $ 8 | 23 | ||||||||||||||||||||||
Overstatement (reduction) of revenues | 23 | ||||||||||||||||||||||||
Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | (1,363) | (1,402) | (2,749) | (2,987) | |||||||||||||||||||||
Operating Income (Loss) | (39) | (66) | (91) | (223) | |||||||||||||||||||||
Depreciation and Amortization | 201 | 245 | 406 | 491 | |||||||||||||||||||||
Overstatement (reduction) of revenues | (1,363) | (1,402) | (2,749) | (2,987) | |||||||||||||||||||||
Operating Segments | Core Regional Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | (1,262) | (1,293) | (2,559) | (2,759) | |||||||||||||||||||||
Operating Income (Loss) | (19) | (49) | (41) | (180) | |||||||||||||||||||||
Depreciation and Amortization | 178 | 222 | 359 | 446 | |||||||||||||||||||||
Overstatement (reduction) of revenues | (1,262) | (1,293) | (2,559) | (2,759) | |||||||||||||||||||||
Operating Segments | Drilling Rigs | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | (101) | (109) | (190) | (228) | |||||||||||||||||||||
Operating Income (Loss) | (20) | (17) | (50) | (43) | |||||||||||||||||||||
Depreciation and Amortization | 23 | 23 | 47 | 45 | |||||||||||||||||||||
Overstatement (reduction) of revenues | (101) | (109) | (190) | (228) | |||||||||||||||||||||
Corporate and Research and Development | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Depreciation and Amortization | 3 | 4 | 6 | 8 | |||||||||||||||||||||
Corporate and Research and Development | (69) | (75) | (141) | (163) | |||||||||||||||||||||
Segment Reconciling Items | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (31) | [1] | (51) | [2] | (106) | [3] | (128) | [4] | |||||||||||||||||
Impairment of Long-Lived Assets and Other Related Charges | 12 | (154) | [5] | 15 | (212) | [6] | |||||||||||||||||||
Litigation Charges, Net | (114) | (181) | |||||||||||||||||||||||
North America | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | (475) | (401) | (965) | (944) | |||||||||||||||||||||
Operating Income (Loss) | 2 | (101) | (16) | (229) | |||||||||||||||||||||
Depreciation and Amortization | 40 | 58 | 80 | 112 | |||||||||||||||||||||
Overstatement (reduction) of revenues | (475) | (401) | (965) | (944) | |||||||||||||||||||||
MENA/ Asia Pacific | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | (340) | (400) | (661) | (761) | |||||||||||||||||||||
Operating Income (Loss) | 9 | 50 | 6 | 4 | |||||||||||||||||||||
Depreciation and Amortization | 51 | 60 | 102 | 121 | |||||||||||||||||||||
Overstatement (reduction) of revenues | (340) | (400) | (661) | (761) | |||||||||||||||||||||
Europe/ SSA/ Russia | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | (244) | (243) | (488) | (500) | |||||||||||||||||||||
Operating Income (Loss) | 5 | 1 | (5) | 0 | |||||||||||||||||||||
Depreciation and Amortization | 39 | 48 | 78 | 96 | |||||||||||||||||||||
Overstatement (reduction) of revenues | (244) | (243) | (488) | (500) | |||||||||||||||||||||
Latin America | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Net Operating Revenues | (203) | [7] | (249) | (445) | [8] | (554) | |||||||||||||||||||
Operating Income (Loss) | (35) | 1 | (26) | 45 | |||||||||||||||||||||
Depreciation and Amortization | 48 | 56 | 99 | 117 | |||||||||||||||||||||
Overstatement (reduction) of revenues | (203) | [7] | (249) | (445) | [8] | (554) | |||||||||||||||||||
2016 Plan | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (31) | (51) | (106) | (128) | |||||||||||||||||||||
2016 Plan | Core Regional Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (29) | (48) | (77) | (111) | |||||||||||||||||||||
2016 Plan | Drilling Rigs | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (1) | (1) | (2) | (5) | |||||||||||||||||||||
2016 Plan | Corporate and Research and Development | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (1) | (2) | (27) | (12) | |||||||||||||||||||||
2016 Plan | North America | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (8) | (15) | (23) | (39) | |||||||||||||||||||||
2016 Plan | MENA/ Asia Pacific | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (5) | (11) | (9) | (20) | |||||||||||||||||||||
2016 Plan | Europe/ SSA/ Russia | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | (8) | (10) | (29) | (25) | |||||||||||||||||||||
2016 Plan | Latin America | Operating Segments | |||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||
Restructuring Charges | $ (8) | $ (12) | $ (16) | $ (27) | |||||||||||||||||||||
|
New Accounting Pronouncements Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash used in operating activities | $ 241 | $ 339 |
Net cash used in financing activities | $ 99 | 415 |
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09, Statutory Tax Withholding Component | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash used in operating activities | $ 5 |
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