WEATHERFORD INTERNATIONAL PLC BAAR, Switzerland, May 4, 2016 /PRNewswire/ -- Weatherford International plc (NYSE: WFT) reported a net loss before charges and credits of $239 million ($0.29 net loss per share before charges) on revenues of $1.59 billion for the first quarter of 2016. GAAP net loss for the first quarter of 2016 was $498 million, or a net loss of $0.61 per share.
First Quarter 2016 Highlights
-- The Company completed negotiations to refinance our existing revolving
credit facility into a consolidated $1.651 billion package, to be made
up of a new 3-year $1.151 billion revolving credit facility and a new
4-year $500 million term loan facility. Including the non-extending
banks, the total available facilities will stand at $1.88 billion
through July of 2017;
-- Raised net proceeds of $630 million through a successful public equity
offering;
-- Ceased operations in four of the nine planned manufacturing facilities
closures for the year;
-- Closed 26 operating and other facilities, one more than originally
planned; and
-- Completed 78% of the additional 6,000 reduction in force, with
annualized savings of $288 million.
(In Millions, Except
Percentages and
bps) Three Months Ended Change
------------------ ------
3/31/2016 12/31/2015 3/31/2015 Sequential Year-on-Year
--------- ---------- --------- ---------- ------------
Total
-----
Revenue $1,585 $2,012 $2,794 (21)% (43) %
Operating Income
(Loss) $(105) $57 $238 (285)% (144) %
Operating Margin (6.6)% 2.8% 8.5% (943) bps (1,516) bps
North America
-------------
Revenue $543 $699 $1,163 (22)% (53) %
Operating Loss $(128) $(68) $(10) (90)% (1,210) %
Operating Margin (23.6)% (9.6)% (0.8)% (1,400) bps (2,279) bps
International
-------------
Revenue $923 $1,166 $1,436 (21)% (36) %
Operating Income $49 $142 $238 (65)% (79) %
Operating Margin 5.4% 12.1% 16.6% (673) bps (1,125) bps
Land Drilling Rigs
------------------
Revenue $119 $147 $195 (19)% (39) %
Operating Income
(Loss) $(26) $(17) $10 (55)% (355) %
Operating Margin (21.9)% (11.5)% 5.2% (1,043) bps (2,712) bps
(All Operating Income
numbers are non-GAAP and
numbers in the table
above reflect actual
results and may not
compute from the table
due to rounding)
Bernard J. Duroc-Danner, Chairman of the Board, President and Chief Executive Officer, stated, "The brutality and length of this down cycle has challenged the entire industry, both our customer base and our peers. During the first quarter, all of our regions and product lines suffered the brunt of this harsh industry decline. North America was very challenged, with the U.S. reaching its lowest rig count level in recorded history, and several international markets experiencing severe seasonal downturns. We managed what we could control, to the fullest.
Historically our free cash flow has a seasonal low in the first quarter and this year is no exception. While we recorded negative free cash flow of $216 million this quarter, this is $50 million better year-over-year, despite experiencing much larger operating losses. Furthermore, the first quarter's cash flow included severance and restructuring cash payments of $71 million which were voluntary and accelerated coupled with net cash outflows of $47 million from the now largely completed Zubair project.
We are pleased to announce we have negotiated the renewal of our revolving credit facility and a new term loan facility and are grateful to our banking group for their continued commitment and support. In addition, in order to safeguard our Company from a protracted down cycle, during the first quarter, we successfully raised $630 million of net proceeds through an equity offering. Given our very aggressive cost actions and our unyielding focus on quality and reliability, we are confident in our ability to successfully navigate the current challenging industry conditions.
Building on our fundamental operating progress and applying a disciplined approach, we are prepared to address continued near-term market strains, as well as to exploit activity turns when the recovery comes. Our direction remains focused on core, cost and cash. As we progress through the year, our performance to come will reflect our transformation in all operating and financial metrics."
First Quarter 2016 Results
Revenue for the first quarter of 2016 was $1.59 billion compared with $2.01 billion in the fourth quarter of 2015 and $2.79 billion in the first quarter of 2015. First quarter revenues declined 21% sequentially and 43% from the prior year. The sequential decline was 22% in North America and 21% for International operations. Product sales declined 30% sequentially, while service and rental revenue decreased by 16%. The product sales decline was as much seasonal as cyclical and most impacted the Eastern Hemisphere.
Net loss on a non-GAAP basis for the first quarter of 2016 was $239 million (net loss of $0.29 per share), compared to a net loss of $102 million in the fourth quarter of 2015 (net loss of $0.13 per share), and a net loss of $33 million in the first quarter of the prior year (net loss of $0.04 per share).
GAAP net loss for the first quarter of 2016 was $498 million, or a net loss of $0.61 per share.
After-tax charges of $259 million for the first quarter primarily include:
-- $65 million of litigation charges primarily related to the potential
settlement of our previous income tax restatements;
-- $59 million of costs related to severance and facility closures;
-- $54 million of Zubair legacy contract charges;
-- $49 million primarily from supply contract related charges and asset
write-downs; and
-- $31 million due to foreign currency devaluation charges in Angola.
Operating margin of -6.6% for the first quarter decreased by 943 basis points sequentially, and declined 1,516 basis points from the first quarter of 2015. Sequentially, there was an overall 21% reduction in revenue resulting in decrementals of 38%. Year-over-year revenue was down 43% with decrementals of 28%.
Segment Highlights
North America
First quarter revenues of $543 million were down $156 million, or 22% sequentially, and down $620 million, or 53%, over the same quarter in the prior year. First quarter operating losses increased by $60 million sequentially to $128 million (-23.6% margin) and increased $118 million from an operating loss of $10 million in the same quarter of the prior year. The sequential decrease in revenue was less than the 27% decrease in average U.S. rig count that resulted in further declines in customer activity and spending and also impacted by the weakening Canadian dollar and the early arrival of the Canadian spring break-up. Operating losses increased sequentially resulting in decrementals of 39% as additional cost reduction measures that began during the quarter were not enough to offset the sharp drop in revenue. Year-over-year decrementals were a respectable 19%.
International Operations
First quarter revenues of $923 million were down $243 million, or 21% sequentially, and lower by $513 million, or 36% compared to the same quarter in the prior year. First quarter operating income of $49 million (5.4% margin) was $93 million lower sequentially and $189 million lower versus the same quarter in the prior year. The international rig count in the first quarter dropped 10% from last quarter. Decrementals were 38% sequentially and 37% year-over-year.
-- Latin America
First quarter revenues of $305 million were down $71 million, or 19% sequentially, and down $181 million, or 37%, compared to the same quarter in the prior year. First quarter operating income of $44 million (14.5% margin) was down 22% sequentially and down 55% compared to the same quarter in the prior year. Continued commodity price declines have caused further spending reductions and activity declines, primarily in Colombia, Mexico, Brazil and Venezuela. Revenues were also negatively impacted by lower sequential product sales. Operating income declines from lower revenues were offset by continued strong cost reduction measures that resulted in 18% sequential decrementals.
-- Europe/Sub-Sahara Africa/Russia
First quarter revenues of $257 million were down $80 million, or 24% sequentially, and down $160 million, or 38%, over the same quarter in the prior year. First quarter operating loss of $1 million (-0.4% margin) was down $39 million or 103% sequentially, and down 102% when compared to the same quarter in the prior year. Revenue decreased primarily from weak winter season activity in Russia and the North Sea, coupled with a reduction from the strong year-end product sales in Europe and Sub-Sahara Africa, as well as from project cancellations throughout the Sub-Sahara Africa region. Operating income declines for the first quarter were impacted by the revenue declines, an unfavorable product mix and in part lower product sales. Decrementals were 49% sequentially and 45% year-over-year.
-- Middle East/North Africa/Asia Pacific
First quarter revenues of $361 million were down $92 million, or 20% sequentially, and down $172 million, or 32%, from the same quarter in the prior year. First quarter operating income of $6 million (1.7% margin) was down 87% sequentially and down 91% from the same quarter in the prior year. The sequential revenue decline was primarily from lower seasonal product sales in completion, artificial lift and well construction that impacted the Gulf States, China, Australia and Indonesia, coupled with seasonal and budget related activity reductions across the Asia Pacific region. The decline in operating income was in line with the reduction in revenue.
Land Drilling Rigs
First quarter revenues of $119 million were down $28 million, or 19% sequentially, and down $76 million, or 39%, compared to the same quarter in the prior year. Lower activity from contracts ending in Bangladesh, activity declines in Colombia and project delays in both Kuwait and Saudi Arabia were the primary drivers of the sequential decline in revenue. First quarter operating loss of $26 million (-21.9% margin) was down $9 million sequentially and down $36 million from the same quarter in the prior year. Operating startup costs on new contracts were key factors in the increase in operating loss.
Free Cash Flow and Net Debt
Free cash flow used in operations was $216 million for the first quarter of 2016. During the quarter, working capital balances generated free cash flow of $119 million. Capital expenditures of $43 million were down $181 million, or 81% versus the same quarter in the prior year and were reduced by $97 million, or 69%, from the fourth quarter of 2015 demonstrating continued capital discipline. Included in the quarter's free cash flow were $164 million of debt interest payments (these will be approximately $100 million lower in the second quarter), net cash expenditure of $47 million on the now largely completed Zubair project in Iraq and $71 million of cash severance and restructuring costs.
Net debt was reduced by $373 million to $6.6 billion as of March 31, 2016.
We successfully negotiated an amended and restated credit agreement and a term loan agreement in the aggregate amount of $1.651 billion, including a $500 million term loan and a $1.151 billion revolving credit facility. The term loan matures in July of 2020 and the revolving credit facility matures in July of 2019. These newly negotiated facilities offer financial flexibility over a reasonably long period of time. More details will be provided during the earnings call.
Outlook
In the first quarter of 2016, we completed 78% of our latest 6,000 headcount reduction target, ceased operations at four of the nine planned manufacturing and service facilities for the year, and shut down 26 operating and other facilities in North America.
As we continue to weather the reality of this downturn, we plan to further reduce our cost structure by another 2,000 in headcount and complete the closing of five additional manufacturing and services facilities. In addition, we expect to close another 30 operating and other facilities by year-end, with a target of completing half of these by the end of the second quarter. We have reduced our full year forecast for capital expenditures to $250 million, 63% lower than our 2015 spending level and 83% below the spend in 2014.
Bernard J. Duroc-Danner, Chairman, President and Chief Executive Officer commented, "During the first half of 2016, we are confronted with an unusually severe market contraction characterized by extremely low levels of customer activity and punitive pricing. We are managing our operations with more cost rationalization, cash discipline and an intensified sales drive, helping our customers improve efficiencies and economics. We are also placing a strategic emphasis on quality and reliability in everything we do. As we approach mid-year, we have now gone beyond leveraging cost, efficiency and performance, and we are strategically and actively safeguarding the critical segments of our core businesses and technology offerings. We believe these deliberate actions will best allow Weatherford to balance the demands of the short-term market against the gains of an eventual recovery. By preserving our deep technical capabilities and managing our global geographical footprint, we are ensuring our Company's future strength. In this way, Weatherford can best respond to upcoming opportunities and further exploit incremental gains, and we expect these to surpass those of prior cycles.
Free cash flow generation remains an unyielding priority. This commitment is well understood, planned for and embraced within the organization. We remain confident that the full year free cash flow will be strong and will be driven by reductions in working capital balances, continued discipline in capital expenditure spending, realized cost reductions, the conclusion and successful settlement of claims relating to the Zubair project and improved net income. We are in the business to make returns for our shareholders and consider free cash flow a primary marker for our success. Net debt will continue to decline. In addition to the closing of our successful equity financing, we have also completed negotiations to refinance our revolving credit facility into multi-year revolving credit and term loan facilities. This liquidity combination will help ensure Weatherford has ample financial flexibility.
As we look forward, we believe the long-term fundamentals of our industry remain intact. The steady increase in world energy demand coupled with the acceleration of production decline rates are forcing a balance between supply and demand. Oil prices are beginning to respond to this gradual tightening of the supply-demand balance. This shift is inevitable, given the extreme cuts in both capital and operating spend by our customer base around the world. The work we are doing now will prove the merits of our direction. As a recovery unfolds, our performance will reflect our transformation in all metrics. Our focus is making our Company what it can be, and what it should be."
Reclassifications and Non-GAAP Financial Measures
Certain prior year amounts have been reclassified to conform to the current year presentation related to the adoption of new accounting standards. Unless explicitly stated to the contrary, all financial measures used throughout this document are non-GAAP. Corresponding reconciliations to GAAP financial measures have been provided in the following pages to offer meaningful comparisons between current results and results in prior periods.
About Weatherford
Weatherford is one of the largest multinational oilfield service companies providing innovative solutions, technology and services to the oil and gas industry. The Company operates in over 100 countries and has a network of approximately 1,100 locations, including manufacturing, service, research and development, and training facilities and employs approximately 34,800 people. For more information, visit www.weatherford.com and connect with Weatherford on Facebook, LinkedIn, Twitter and YouTube.
Conference Call
The Company will host a conference call with financial analysts to discuss the quarterly results on May 5, 2016, at 8:30 a.m. eastern daylight time (EDT), 7:30 a.m. central daylight time (CDT). Weatherford invites investors to listen to the call live via the Company's website, www.weatherford.com, in the Investor Relations section. A recording of the conference call and transcript of the call will be available in that section of the website shortly after the call ends.
Contacts: Krishna Shivram +1.713.836.4610
Executive Vice President and Chief
Financial Officer
Karen David-Green +1.713.836.7430
Vice President - Investor Relations,
Corporate Marketing and Communications
Forward-Looking Statements
This press release contains, and the conference call announced in this release may include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, the Company's quarterly non-GAAP earnings per share, effective tax rate, free cash flow, net debt, forecasts or expectations regarding business outlook, and capital expenditures, and are also generally identified by the words "believe," "project," "expect," "anticipate," "estimate," "outlook," "budget," "intend," "strategy," "plan," "guidance," "may," "should," "could," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. Such statements are based upon the current beliefs of Weatherford's management, and are subject to significant risks, assumptions and uncertainties. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those indicated in our forward-looking statements. Readers are also cautioned that forward-looking statements are only predictions and may differ materially from actual future events or results, including the Company's ability to execute and close on its new revolving and term loan credit facilities, implement the planned additional workforce reductions and additional facility closures; possible changes in the size and components of the expected costs, expenses, savings and charges associated with prior and ongoing workforce reduction and facility closures; and risks associated with the Company's ability to achieve the benefits and cost savings of such activities. Forward-looking statements are also affected by the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, the Company's Quarterly Reports on Form 10-Q, and those set forth from time-to-time in the Company's other filings with the Securities and Exchange Commission ("SEC"). We undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.
Weatherford International plc
Condensed Consolidated Statements of Operations
(Unaudited)
(In Millions, Except Per Share Amounts)
Three Months Ended
------------------
3/31/2016 3/31/2015
--------- ---------
Net Revenues:
North America $543 $1,163
Middle East/North Africa/Asia Pacific 361 533
Europe/SSA/Russia 257 417
Latin America 305 486
--- ---
Subtotal 1,466 2,599
Land Drilling Rigs 119 195
Total Net Revenues 1,585 2,794
----- -----
Operating Income (Expense):
North America (128) (10)
Middle East/North Africa/Asia 6 69
Europe/SSA/Russia (1) 71
Latin America 44 98
--- ---
Subtotal (79) 228
Land Drilling Rigs (26) 10
Research and Development (45) (64)
Corporate Expenses (43) (56)
Gain (Loss) on Sale of Businesses and
Investments, Net (1) 3
Other Charges (253) (71)
---- ---
Total Operating Income (Loss) (447) 50
Other (Expense):
Interest Expense, Net (115) (120)
Currency Devaluation Charges (31) (26)
Other, Net 1 (11)
--- ---
Net Loss Before Income Taxes (592) (107)
Benefit (Provision) for Income Taxes 101 -
Net Loss (491) (107)
Net Income Attributable to Noncontrolling
Interests 7 11
--- ---
Net Loss Attributable to Weatherford $(498) $(118)
===== =====
Loss Per Share Attributable to
Weatherford:
Basic & Diluted $(0.61) $(0.15)
Weighted Average Shares Outstanding:
Basic & Diluted 813 778
Weatherford International plc
Selected Statements of Operations Information
(Unaudited)
(In Millions)
Three Months Ended
------------------
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015
--------- ---------- --------- --------- ---------
Net Revenues:
North America $543 $699 $824 $808 $1,163
Middle East/North Africa/Asia
Pacific 361 453 445 516 533
Europe/SSA/Russia 257 337 361 418 417
Latin America 305 376 421 463 486
--- --- --- --- ---
Subtotal 1,466 1,865 2,051 2,205 2,599
Land Drilling Rigs 119 147 186 185 195
Total Net Revenues $1,585 $2,012 $2,237 $2,390 $2,794
====== ====== ====== ====== ======
Three Months Ended
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015
---------
Operating Income (Loss):
North America $(128) $(68) $(54) $(92) $(10)
Middle East/North Africa/Asia
Pacific 6 45 42 55 69
Europe/SSA/Russia (1) 38 43 65 71
Latin America 44 59 73 85 98
--- --- --- --- ---
Subtotal (79) 74 104 113 228
Land Drilling Rigs (26) (17) 16 4 10
Research and Development (45) (52) (56) (59) (64)
Corporate Expenses (43) (47) (45) (46) (56)
Gain (Loss) on Sale of
Businesses and Investments,
Net (1) (4) - (5) 3
Impairments and Other Charges (253) (988) (117) (471) (71)
Total Operating Income (Loss) $(447) $(1,034) $(98) $(464) $50
===== ======= ==== ===== ===
Three Months Ended
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015
---------
Product Service Line Revenues:
Formation Evaluation and Well
Construction (a) $890 $1,087 $1,235 $1,355 $1,582
Completion and Production (b) 576 778 816 850 1,017
Land Drilling Rigs 119 147 186 185 195
Total Product Service Line
Revenues $1,585 $2,012 $2,237 $2,390 $2,794
====== ====== ====== ====== ======
Three Months Ended
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015
---------
Depreciation and Amortization:
North America $54 $73 $87 $97 $105
Middle East/North Africa/Asia
Pacific 61 61 62 66 65
Europe/SSA/Russia 48 46 52 53 50
Latin America 61 63 63 62 61
Land Drilling Rigs 22 26 28 27 29
Research and Development and
Corporate 4 6 6 6 6
---
Total Depreciation and
Amortization $250 $275 $298 $311 $316
==== ==== ==== ==== ====
(a) Formation Evaluation and Well
Construction includes Managed-
Pressure Drilling, Drilling
Services, Tubular Running
Services, Drilling Tools,
Wireline Services, Testing and
Production Services, Re-entry
and Fishing, Cementing, Liner
Systems, Integrated Laboratory
Services and Surface Logging.
(b) Completion and Production
includes Artificial Lift
Systems, Stimulation and
Completion Systems.
We report our financial results in
accordance with U.S. generally
accepted accounting principles
(GAAP). However, Weatherford's
management believes that certain
non-GAAP financial measures and
ratios (as defined under the SEC's
Regulation G) may provide users of
this financial information,
additional meaningful comparisons
between current results and
results of prior periods. The non-
GAAP amounts shown below should
not be considered as substitutes
for operating income, provision
for income taxes, net income or
other data prepared and reported
in accordance with GAAP, but
should be viewed in addition to
the Company's reported results
prepared in accordance with GAAP.
Weatherford International plc
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
(In Millions, Except Per Share Amounts)
Three Months Ended
3/31/2016 12/31/2015 3/31/2015
--------- ---------- ---------
Operating Income (Loss):
GAAP Operating Income (Loss) $(447) $(1,034) $50
Severance, Restructuring and
Exited Businesses 77 68 41
Litigation Charges, Net 67 4 -
Impairments, Asset Write-Downs
and Other (a)(b)(c) 57 834 21
Legacy Contracts and Other 52 82 9
Loss (Gain) on Divestitures 1 4 (3)
--- --- ---
Total Non-GAAP Adjustments 254 992 68
--- --- ---
Non-GAAP Operating Income (Loss) $(193) $(42) $118
===== ==== ====
Loss Before Income Taxes:
GAAP Loss Before Income Taxes $(592) $(1,148) $(107)
Operating Income Adjustments 254 992 68
Currency Devaluation Charges 31 17 26
Non-GAAP Loss Before Income Taxes $(307) $(139) $(13)
===== ===== ====
Benefit (Provision) for Income
Taxes:
GAAP Benefit (Provision) for
Income Taxes $101 $(52) $ -
Tax Effect on Non-GAAP Adjustments (26) 97 (9)
Non-GAAP Benefit (Provision) for
Income Taxes $75 $45 $(9)
=== === ===
Net Loss Attributable to
Weatherford:
GAAP Net Loss $(498) $(1,208) $(118)
Total Charges, net of tax 259 1,106 85
----- ---
Non-GAAP Net Loss $(239) $(102) $(33)
===== ===== ====
Diluted Loss Per Share
Attributable to Weatherford:
GAAP Diluted Loss per Share $(0.61) $(1.54) $(0.15)
Total Charges, net of tax 0.32 1.41 0.11
---- ---- ----
Non-GAAP Diluted Loss per Share $(0.29) $(0.13) $(0.04)
====== ====== ======
GAAP Effective Tax Rate (d) 17% (5)% - %
Non-GAAP Effective Tax Rate (e) 24% 32% (73)%
(a) For the first quarter of 2016,
impairments, asset write-
downs, and other of $57
million include $35 million of
supply contract related
charges, $14 million of asset
impairments, and $8 million of
other charges.
(b) For the fourth quarter of 2015,
the $834 million include $514
million long-lived asset
impairments, $217 million of
inventory write-downs, $46
million of supply contract
related charges, $31 million
of bad debt expense charges
and $26 million of other
charges.
(c) For the first quarter of 2015,
the $21 million was primarily
comprised of divestiture
program charges and other.
(d) GAAP Effective Tax Rate is the
GAAP provision for income
taxes divided by GAAP income
before income taxes.
(e) Non-GAAP Effective Tax Rate is
the Non-GAAP provision for
income taxes divided by Non-
GAAP income before income
taxes and calculated in
thousands.
Weatherford International plc
Selected Balance Sheet Data
(Unaudited)
(In Millions)
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015
--------- ---------- --------- --------- ---------
Assets:
-------
Cash and Cash
Equivalents $464 $467 $519 $611 $512
Accounts Receivable,
Net 1,693 1,781 2,045 2,259 2,631
Inventories, Net 2,302 2,344 2,767 2,921 3,052
Property, Plant and
Equipment, Net 5,471 5,679 6,394 6,694 6,932
Goodwill and
Intangibles, Net 3,216 3,159 3,224 3,335 3,311
Liabilities:
------------
Accounts Payable 934 948 1,015 1,104 1,462
Short-term Borrowings
and Current Portion of
Long-term Debt 1,212 1,582 1,684 1,556 1,554
Long-term Debt 5,846 5,852 5,990 6,235 6,244
Weatherford International plc
Net Debt
(Unaudited)
(In Millions)
Change in Net Debt for the Three
Months Ended 3/31/2016:
Net Debt at 12/31/2015 $(6,967)
Operating Loss (447)
Depreciation and Amortization 250
Capital Expenditures for
Property, Plant and Equipment (43)
Decrease in Working Capital 119
Equity Issuance Proceeds, Net 630
Rig Loss Proceeds 30
Litigation Charges, Net 67
Asset Write-Downs and Other
Related Charges 49
Currency Devaluation Charges 31
Income Taxes Paid (61)
Interest Paid (164)
Net Change in Billing in Excess/
Costs in Excess 11
Other (99)
Net Debt at 3/31/2016 $(6,594)
=======
Components of Net Debt 3/31/2016 12/31/2015 3/31/2015
--------- ---------- ---------
Cash $464 $467 $512
Short-term Borrowings and
Current Portion of Long-term
Debt (1,212) (1,582) (1,554)
Long-term Debt (5,846) (5,852) (6,244)
------ ------
Net Debt $(6,594) $(6,967) $(7,286)
======= ======= =======
"Net Debt" is defined as debt less
cash. Management believes that Net
Debt provides useful information
regarding the level of Weatherford
indebtedness by reflecting cash
that could be used to repay debt.
Working capital is defined as
accounts receivable plus inventory
less accounts payable.
We report our financial results in
accordance with U.S. generally
accepted accounting principles
(GAAP). However, Weatherford's
management believes that certain
non-GAAP financial measures and
ratios (as defined under the SEC's
Regulation G) may provide users of
this financial information,
additional meaningful comparisons
between current results and
results of prior periods. The non-
GAAP amounts shown below should
not be considered as substitutes
for cash flow information prepared
and reported in accordance with
GAAP, but should be viewed in
addition to the Company's reported
cash flow statements prepared in
accordance with GAAP.
Weatherford International plc
Selected Cash Flow Data
(Unaudited)
(In Millions)
Three Months Ended
------------------
3/31/2016 12/31/2015 3/31/2015
--------- ---------- ---------
Net Cash Provided by (Used In)
Operating Activities $(205) $323 $(42)
Less: Capital Expenditures for
Property, Plant and Equipment (43) (140) (224)
Add: Proceeds from Dispositions and
Insurance Recoveries* 36 - -
--- --- ---
Free Cash Flow $(212) $183 $(266)
----- ---- -----
Adjusted for Litigation
Reimbursements** (4) (15) -
Free Cash Flow from Operations $(216) $168 $(266)
===== ==== =====
"Free Cash Flow" is defined as net
cash provided by or used in operating
activities less capital expenditures.
Free cash flow is an important
indicator of how much cash is
generated or used by our normal
business operations, including
capital expenditures. Management
uses free cash flow as a measure of
progress on its capital efficiency
and cash flow initiatives.
*Represents $6 million from the
disposal of property, plant, and
equipment and $30 million of
insurance reimbursements received
during the first quarter of 2016 on a
land drilling rig loss.
**Represents insurance proceeds
received during the applicable period
reimbursing a portion of a
shareholder derivative litigation
settlement payment of $120 million
made in the third quarter of 2015.
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SOURCE Weatherford International plc
