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EX-32.1 - EXHIBIT 32.1 CEO 906 CERTIFICATION - Weatherford International plcex321ceo906certwft33116.htm
EX-32.2 - EXHIBIT 32.2 CFO 906 CERTIFICATION - Weatherford International plcex322cfo906certwft33116.htm
EX-31.2 - EXHIBIT 31.2 CFO 302 CERTIFICATION - Weatherford International plcex312cfo302certwft33116.htm
EX-31.1 - EXHIBIT 31.1 CEO 302 CERTIFICATION - Weatherford International plcex311ceo302certwft33116.htm

            

 
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 March 31, 2016
 
 
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
 

Weatherford International public limited company
(Exact Name of Registrant as Specified in Its Charter)
Ireland
 
98-0606750
(State or Other Jurisdiction of Incorporation or Organization)
 
(IRS Employer Identification No.)
 
 
 
Bahnhofstrasse 1, 6340 Baar, Switzerland
 
CH 6340
(Address of Principal Executive Offices including Zip Code)
 
(Zip Code)

Registrant’s Telephone Number, Including Area Code: +41.22.816.1500
 
N/A
 
 
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
As of April 22, 2016, there were 895,690,433 shares of Weatherford ordinary shares, $0.001 par value per share, outstanding.




Weatherford International public limited company
Form 10-Q for the Three Months Ended March 31, 2016



1


PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
Three Months Ended March 31,
(Dollars and shares in millions, except per share amounts)
2016
 
2015
Revenues:
 
 
 
Products
$
560

 
$
1,040

Services
1,025

 
1,754

Total Revenues
1,585

 
2,794

 
 
 
 
Costs and Expenses:
 
 
 
Cost of Products
582

 
903

Cost of Services
892

 
1,299

Research and Development
45

 
64

Selling, General and Administrative Attributable to Segments
273

 
363

Corporate General and Administrative
46

 
77

Asset Write-Downs and Other Related Charges
49

 

Restructuring Charges
77

 
41

Litigation Charges, Net
67

 

(Gain) Loss on Sale of Businesses, Net
1

 
(3
)
Total Costs and Expenses
2,032

 
2,744

 
 
 
 
Operating Income (Loss)
(447
)
 
50

 
 
 
 
Other Income (Expense):
 
 
 
Interest Expense, Net
(115
)
 
(120
)
Currency Devaluation Charges
(31
)
 
(26
)
Other, Net
1

 
(11
)
 
 
 
 
Loss Before Income Taxes
(592
)
 
(107
)
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


The accompanying notes are an integral part of these condensed consolidated financial statements.
2


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

 
Three Months Ended March 31,
(Dollars in millions)
2016
 
2015
Net Loss
$
(491
)
 
$
(107
)
Other Comprehensive Income (Loss), Net of Tax:
 
 
 
Currency Translation Adjustments
142

 
(345
)
Defined Benefit Pension Activity

 
22

Other
1

 

Other Comprehensive Income (Loss)
143

 
(323
)
Comprehensive Loss
(348
)
 
(430
)
Comprehensive Income Attributable to Noncontrolling Interests
7

 
11

Comprehensive Loss Attributable to Weatherford
$
(355
)
 
$
(441
)

The accompanying notes are an integral part of these condensed consolidated financial statements.
3


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
March 31,
 
December 31,
(Dollars and shares in millions, except par value)
2016
 
2015
 
(Unaudited)
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
464

 
$
467

Accounts Receivable, Net of Allowance for Uncollectible Accounts of $108 in 2016 and $113 in 2015
1,693

 
1,781

Inventories, Net
2,302

 
2,344

Prepaid Expenses
308

 
343

Deferred Tax Assets
133

 
165

Other Current Assets
466

 
464

Total Current Assets
5,366

 
5,564

 
 
 
 
Property, Plant and Equipment, Net of Accumulated Depreciation of $7,437 in 2016 and $7,235 in 2015
5,471

 
5,679

Goodwill
2,864

 
2,803

Other Intangible Assets, Net of Accumulated Amortization of $802 in 2016 and $783 in 2015
352

 
356

Equity Investments
65

 
76

Other Non-Current Assets
398

 
282

Total Assets
$
14,516

 
$
14,760

 
 
 
 
Current Liabilities:
 
 
 
Short-term Borrowings and Current Portion of Long-term Debt
$
1,212

 
$
1,582

Accounts Payable
934

 
948

Accrued Salaries and Benefits
389

 
406

Income Taxes Payable
107

 
203

Other Current Liabilities
836

 
892

Total Current Liabilities
3,478

 
4,031

 
 
 
 
Long-term Debt
5,846

 
5,852

Other Non-Current Liabilities
533

 
512

Total Liabilities
9,857

 
10,395

 
 
 
 
Shareholders’ Equity:
 
 
 
Shares - Par Value $0.001; Authorized 1,356 shares, Issued and Outstanding 895 shares at March 31, 2016 and 779 shares at December 31, 2015
1

 
1

Capital in Excess of Par Value
6,144

 
5,502

Retained (Deficit) Earnings
(56
)
 
442

Accumulated Other Comprehensive Loss
(1,498
)
 
(1,641
)
Weatherford Shareholders’ Equity
4,591

 
4,304

Noncontrolling Interests
68

 
61

Total Shareholders’ Equity
4,659

 
4,365

Total Liabilities and Shareholders’ Equity
$
14,516

 
$
14,760

 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Three Months Ended March 31,
(Dollars in millions)
2016
 
2015
Cash Flows From Operating Activities:
 
 
 
Net Loss
$
(491
)
 
$
(107
)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
 
 
 
Depreciation and Amortization
250

 
316

Employee Share-Based Compensation Expense
21

 
15

Asset Write-Downs and Other Related Charges
49

 

Litigation Charges
71

 

Deferred Income Tax Benefit
(80
)
 
(36
)
Currency Devaluation Charges
31

 
26

Other, Net
5

 
78

Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired:
 
 
 
Accounts Receivable
88

 
320

Inventories
46

 
(32
)
Other Current Assets
49

 
(63
)
Accounts Payable
(15
)
 
(251
)
Other Current Liabilities
(211
)
 
(238
)
Other, Net
(18
)
 
(70
)
Net Cash Used in Operating Activities
(205
)
 
(42
)
 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Capital Expenditures for Property, Plant and Equipment
(43
)
 
(224
)
Acquisition of Intellectual Property
(7
)
 

Insurance Proceeds Related to Rig Loss
30

 

Proceeds from Sale of Assets and Businesses, Net
6

 
3

Net Cash Used in Investing Activities
(14
)
 
(221
)
 
 
 
 
Cash Flows From Financing Activities:
 
 
 
Repayments of Long-term Debt, Net
(9
)
 
(154
)
Borrowings (Repayments) of Short-term Debt, Net
(372
)
 
479

Proceeds from Issuance of Ordinary Common Shares
630

 

Other Financing Activities, Net
1

 
(18
)
Net Cash Provided by Financing Activities
250

 
307

Effect of Exchange Rate Changes on Cash and Cash Equivalents
(34
)
 
(6
)
 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
(3
)
 
38

Cash and Cash Equivalents at Beginning of Period
467

 
474

Cash and Cash Equivalents at End of Period
$
464

 
$
512

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest Paid
$
164

 
$
171

Income Taxes Paid, Net of Refunds
$
61

 
$
88

 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




1.  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 of a normal recurring nature which, in our opinion, are necessary to present fairly our Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015, and Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income (Loss), and Condensed Consolidated Statements of Cash Flows for the first quarter of 2016 and 2015. 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, 2015 included in our Annual Report on Form 10-K. The results of operations for the first quarter of 2016 are not necessarily indicative of the results expected for the year ending December 31, 2016.
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 market of inventories, equity investments, intangible assets and goodwill, property, plant and equipment, 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.

Certain prior year 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 15 – New Accounting Pronouncements” for additional details.

Currency Devaluation Charges

In the first quarter of 2016 and 2015, currency devaluation charges reflect the impact of the devaluation of the Angolan kwanza of $31 million and the Venezuelan bolivar of $26 million, respectively. The currency devaluation charges are included in current earnings in the line captioned “Currency Devaluation Charges” on the accompanying Condensed Consolidated Statements of Operations.


6


2. Restructuring Charges

In response to further decline in crude oil prices and our anticipation of a lower level of exploration and production spending in 2016, we initiated an additional plan to reduce our overall costs and workforce to better align with anticipated activity levels. This cost reduction plan (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 $77 million in the first quarter of 2016, which include termination (severance) benefits of $72 million and other restructuring charges of $5 million. Other restructuring charges include contract termination costs, relocation and other associated costs.

In the fourth quarter of 2014, we announced a cost reduction plan (the “2015 Plan”), which included a worldwide workforce reduction and other cost reduction measures. In the first quarter of 2015, we recognized restructuring charges of $41 million for the 2015 Plan, which include termination (severance) benefits of $40 million and other restructuring charges of $1 million.

The following tables present the components of the 2016 Plan and the 2015 Plan restructuring charges by segment for the first quarter of 2016 and 2015.
 
Three Months Ended March 31, 2016
 
 
 
Total
(Dollars in millions)
Severance
Other
Severance and
2016 Plan
Charges
Charges
Other Charges
North America
$
19

$
5

$
24

MENA/Asia Pacific
9


9

Europe/SSA/Russia
15


15

Latin America
15


15

  Subtotal
58

5

63

Land Drilling Rigs
4


4

Corporate and Research and Development
10


10

  Total
$
72

$
5

$
77


 
Three Months Ended March 31, 2015
 
 
 
Total
(Dollars in millions)
Severance
Other
Severance and
2015 Plan
Charges
Charges
Other Charges
North America
$
8

$

$
8

MENA/Asia Pacific
5

1

6

Europe/SSA/Russia
7


7

Latin America
12


12

  Subtotal
32

1

33

Land Drilling Rigs
5


5

Corporate and Research and Development
3


3

  Total
$
40

$
1

$
41



7


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 the plans mentioned previously as well as our 2014 cost reduction plan (the “2014 Plan”) that will be paid pursuant to the respective arrangements and statutory requirements.
 
At March 31, 2016
 
2016 Plan
2015 and 2014 Plans
Total
 
 
 
 
 
Severance
 
Severance
Other
Severance
Other
and Other
(Dollars in millions)
Liability
Liability
Liability
Liability
Liability
North America
$
6

$
5

$
5

$
1

$
17

MENA/Asia Pacific
2


3

4

9

Europe/SSA/Russia
9


5

8

22

Latin America





  Subtotal
17

5

13

13

48

Land Drilling Rigs
1




1

Corporate and Research and Development
4


1


5

  Total
$
22

$
5

$
14

$
13

$
54

The following table presents the restructuring liability activity for the first quarter of 2016.
 
 
 
Three Months Ended March 31, 2016
 
 
(Dollars in millions)
Accrued Balance at December 31, 2015
 
Charges
 
Cash Payments
 
Other 
 
Accrued Balance at March 31, 2016
2016 Plan:
 
 
 
 
 
 
 
 
 
Severance liability
$

 
$
72

 
$
(50
)
 
$

 
$
22

Other restructuring liability

 
5

 

 

 
5

2015 and 2014 Plan:
 
 
 
 
 
 
 
 
 
Severance liability
37

 

 
(20
)
 
(3
)
 
14

Other restructuring liability
14

 

 
(1
)
 

 
13

Total severance and other restructuring liability
$
51

 
$
77

 
$
(71
)
 
$
(3
)
 
$
54



8


3.  Percentage-of-Completion Contracts

In the first quarter of 2016, we recognized an estimated project loss of $52 million related to our Zubair long-term early production facility construction contract in Iraq accounted for under the percentage-of-completion method. Total estimated losses on these projects were $584 million at March 31, 2016.

As of March 31, 2016, our percentage-of-completion project estimates include $116 million of claims revenue and $32 million of back charges. During the first quarter of 2016, no additional claims revenue were included in our project estimates. Our costs in excess of billings as of March 31, 2016 were $2 million and are shown in the “Other Current Assets” line on the Consolidated Balance Sheet. We also have a variety of unapproved contract change orders or claims that are not included in our revenues as of March 31, 2016. The amounts associated with these contract change orders or claims are included in revenue only when they can be estimated reliably and their realization is reasonably assured.

In the first quarter of 2015, we recognized estimated project income of $42 million related to our long-term early production facility construction contracts in Iraq accounted for under the percentage-of-completion method. Total estimated losses on these projects were $337 million at March 31, 2015. As of March 31, 2015, our percentage-of-completion project estimates include $137 million of claims revenue. Claims revenue of $53 million was recognized during the first quarter of 2015.

4.  Inventories, Net

Inventories, net of reserves, by category were as follows:
(Dollars in millions)
March 31, 2016
 
December 31, 2015
Raw materials, components and supplies
$
178

 
$
172

Work in process
62

 
61

Finished goods
2,062

 
2,111

 
$
2,302

 
$
2,344


5.  Goodwill

The changes in the carrying amount of goodwill by reportable segment for the first quarter of 2016 were as follows:
(Dollars in millions)
North
America
 
MENA/
Asia Pacific
 
Europe/
SSA/
Russia
 
Latin
America
 
Land Drilling Rigs
 
Total
Balance at December 31, 2015
$
1,756

 
$
190

 
$
573

 
$
284

 
$

 
$
2,803

Foreign currency translation adjustments
52

 
2

 
6

 
1

 

 
61

Balance at March 31, 2016
$
1,808

 
$
192

 
$
579

 
$
285

 
$

 
$
2,864

 

9


6.  Short-term Borrowings and Current Portion of Long-term Debt
(Dollars in millions)
March 31, 2016
 
December 31, 2015
Revolving credit agreement
$
1,035

 
$
967

Other short-term bank loans
130

 
214

Total short-term borrowings
1,165

 
1,181

Current portion of long-term debt
47

 
401

Short-term borrowings and current portion of long-term debt
$
1,212

 
$
1,582


Revolving Credit Agreement
    
At March 31, 2016, we had a $2.0 billion unsecured revolving credit agreement (the “Credit Agreement”) that matures on July 13, 2017. The Credit Agreement can be used for a combination of borrowings, including support for our issuances of letters of credit.

The Credit Agreement was amended on February 1, 2016 to adjust its current amount to $2.0 billion from $2.25 billion as well as to adjust its requirement regarding our debt-to-capitalization ratio. The amended Credit Agreement requires that we maintain a debt-to-total capitalization ratio of less than 70% for the quarters ended March 31, 2016 and June 30, 2016 and less than 60% thereafter. We were in compliance with this covenant at March 31, 2016. At March 31, 2016, we had $949 million available under the Credit Agreement, and there were $16 million in outstanding letters of credit under the Credit Agreement. On May 4, 2016, we entered into an amended and restated credit agreement. See Note 17 – Subsequent Event for additional information.

Other Short-Term Borrowings and Other Debt Activity

We have short-term borrowings with various domestic and international institutions pursuant to uncommitted credit facilities. At March 31, 2016, we had $130 million in short-term borrowings under these arrangements, including overdraft facility borrowings and $30 million borrowed under a credit agreement that matures June 20, 2016. In the first quarter of 2016, we repaid $150 million borrowed under a credit agreement that matured on March 20, 2016. The borrowings under the credit agreement had a LIBOR-based weighted average interest rate of 2.22% as of March 31, 2016. In addition, we had $597 million of letters of credit under various uncommitted facilities and $151 million of surety bonds, primarily performance bonds, issued by financial sureties against an indemnification from us at March 31, 2016.

At March 31, 2016, the current portion of long-term debt was primarily related to our capital leases. Our 5.5% senior note, with a principal balance of $350 million was repaid in February 2016.


10


7.  Fair Value of Financial Instruments, Assets and Equity Investments
 
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 8 – Derivative Instruments,” we had no other material assets or liabilities measured and recognized at fair value on a recurring basis at March 31, 2016 and December 31, 2015.

Fair Value of Other Financial Instruments

Our other financial instruments include short-term borrowings and long-term debt. The carrying value of our short-term borrowings approximates their fair value due to the short-term duration of the associated interest rate periods. 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 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: 
(Dollars in millions)
March 31, 2016
 
December 31, 2015
Fair value
$
4,949

 
$
5,095

Carrying value
5,780

 
6,126


8.  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 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.

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.


11


As of March 31, 2016, we had net unamortized premiums on fixed-rate debt of $21 million associated with fair value swap terminations. These premiums are being amortized over the remaining term of the originally hedged debt as a reduction in interest expense included in the line captioned “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 March 31, 2016, we had net unamortized losses of $9 million associated with our cash flow hedge terminations.

Foreign Currency Derivative Instruments

At March 31, 2016 and December 31, 2015, we had outstanding foreign currency forward contracts with notional amounts aggregating to $1.5 billion and $1.7 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.

At March 31, 2016, we had no cross-currency swaps as we settled our cross-currency swap arrangements in the first quarter of 2015.

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 the line captioned “Other, Net” on the accompanying Condensed Consolidated Statements of Operations.

The total estimated fair values of our foreign currency forward contracts were as follows:
(Dollars in millions)
 
March 31, 2016
 
December 31, 2015
 
Classification
Derivative assets not designated as hedges:
 
 
 
 
 
 
Foreign currency forward contracts
 
$
40

 
$
5

 
Other Current Assets
 
 
 
 
 
 
 
Derivative liabilities not designated as hedges:
 
 
 
 
 
 
Foreign currency forward contracts
 
(10
)
 
(14
)
 
Other Current Liabilities

The amount of derivative instruments’ gain or (loss) on the Consolidated Statements of Operations is in the table below.
 
 
Three Months Ended March 31,
 
 
(Dollars in millions)
 
2016
 
2015
 
Classification
Foreign currency forward contracts
 
26

 
(66
)
 
Other, Net
Cross-currency swap contracts
 

 
13

 
Other, Net


12


9. Income Taxes

We estimate our annual effective tax rate based on year-to-date operating results and our forecast for the remainder of the year, by jurisdiction, and apply this rate to the year-to-date operating results. If our actual results, by jurisdiction, differ from the forecasted operating results, our effective tax rate can change, affecting the tax expense for both successive interim results as well as the annual tax results. For the first quarter of 2016, we had a tax benefit of $101 million, on a loss before income taxes of $592 million. Our results for the first quarter of 2016 include charges with no significant tax benefit principally related to a $65 million litigation accrual, $52 million of Zubair project losses and $31 million of currency devaluation related to the Angolan kwanza.

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 $16 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

For the first quarter of 2015, we had no tax provision on a loss before income taxes of $107 million. Our results for the first quarter of 2015 were impacted by discrete loss before tax items, including approximately $41 million of restructuring charges and a $26 million devaluation of the Venezuelan bolivar, with no significant tax benefit.

10.  Shareholders’ Equity

The following summarizes our shareholders’ equity activity for the first quarter of 2016 and 2015:
(Dollars in millions)
Par Value of Issued Shares
 
Capital In Excess of Par Value
 
Retained Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury Shares
 
Non-controlling Interests
 
Total Shareholders’ Equity
Balance at December 31, 2014
$
1

 
$
5,411

 
$
2,427

 
$
(881
)
 
$

 
$
75

 
$
7,033

Net Income (Loss)

 

 
(118
)
 

 

 
11

 
(107
)
Other Comprehensive Loss

 

 

 
(323
)
 

 

 
(323
)
Dividends Paid to Noncontrolling Interests

 

 

 

 

 
(18
)
 
(18
)
Equity Awards Granted, Vested and Exercised

 
12

 

 

 

 

 
12

Other

 

 

 

 

 
1

 
1

Balance at March 31, 2015
$
1

 
$
5,423

 
$
2,309

 
$
(1,204
)
 
$

 
$
69

 
$
6,598

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
$
1

 
$
5,502

 
$
442

 
$
(1,641
)
 
$

 
$
61

 
$
4,365

Net Income (Loss)

 

 
(498
)
 

 

 
7

 
(491
)
Other Comprehensive Income

 

 

 
143

 

 

 
143

Issuance of Common Shares

 
623

 

 

 

 

 
623

Equity Awards Granted, Vested and Exercised

 
19

 

 

 

 

 
19

Balance at March 31, 2016
$
1

 
$
6,144

 
$
(56
)
 
$
(1,498
)
 
$

 
$
68

 
$
4,659



13


The following table presents the changes in our accumulated other comprehensive income (loss) by component for the first quarter of 2016 and 2015:
(Dollars in millions)
Currency Translation Adjustment
 
Defined Benefit Pension
 
Deferred Loss on Derivatives
 
Total
Balance at December 31, 2014
$
(813
)
 
$
(57
)
 
$
(11
)
 
$
(881
)
 
 
 
 
 
 
 
 
Other Comprehensive Income (Loss)
(345
)
 
20

 

 
(325
)
Reclassifications

 
2

 

 
2

Net activity
(345
)
 
22

 

 
(323
)
 
 
 
 
 
 
 
 
Balance at March 31, 2015
$
(1,158
)
 
$
(35
)
 
$
(11
)
 
$
(1,204
)
 
 
 
 
 
 
 
 
Balance at December 31, 2015
$
(1,602
)
 
$
(29
)
 
$
(10
)
 
$
(1,641
)
 
 
 
 
 
 
 
 
Other Comprehensive Income before Reclassifications
142

 

 

 
142

Reclassifications

 

 
1

 
1

Net activity
142

 

 
1

 
143

 
 
 
 
 
 
 
 
Balance at March 31, 2016
$
(1,460
)
 
$
(29
)
 
$
(9
)
 
$
(1,498
)

The other comprehensive income before reclassifications from the defined benefit pension component for the first quarter of 2015 relates to the conversion of one of our international pension plans from a defined benefit plan to a defined contribution plan.

11.  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 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 units.

The following discloses basic and diluted weighted average shares outstanding:
 
Three Months Ended March 31,
(Shares in millions)
2016
 
2015
Basic and Diluted weighted average shares outstanding
813

 
778


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 first quarter of 2016 and 2015 exclude potential shares for stock options, restricted shares and performance units outstanding as we have net losses for those periods, and their inclusion would be anti-dilutive.

The following table discloses the number of anti-dilutive shares excluded:
 
Three Months Ended March 31,
(Shares in millions)
2016
 
2015
Anti-dilutive potential shares due to net loss
4

 
2



14


12. Share-Based Compensation

We recognized the following employee share-based compensation expense during the first quarter of 2016 and 2015:
 
Three Months Ended March 31,
(Dollars in millions)
2016
 
2015
Share-based compensation
$
21

 
$
15

Related tax benefit
4

 
3


During the first quarter of 2016, we granted approximately 2.1 million performance units to certain employees, which will vest with continued employment if the Company meets certain market-based performance goals. The performance units have a weighted average grant date fair value of $5.11 per share based on the Monte Carlo simulation method. The assumptions used in the Monte Carlo simulation included a risk-free rate of 0.80%, volatility of 68% and a zero dividend yield. As of March 31, 2016, there was $17 million of unrecognized compensation expense related to our performance units. This cost is expected to be recognized over a weighted average period of 2 years.

During the first quarter of 2016, we also granted 2.4 million restricted shares at a weighted average grant date fair value of $6.19 per share. As of March 31, 2016, there was $113 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.

13. 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.
 
Three Months Ended March 31, 2016
(Dollars in millions)
Net
Operating
Revenues
 
Income
from
Operations
 
Depreciation
and
Amortization
North America
$
543

 
$
(128
)
 
$
54

MENA/Asia Pacific
361

 
(46
)
 
61

Europe/SSA/Russia
257

 
(1
)
 
48

Latin America
305

 
44

 
61

Subtotal
1,466

 
(131
)
 
224

Land Drilling Rigs
119

 
(26
)
 
22

 
1,585

 
(157
)
 
246

Corporate and Research and Development
 
 
(88
)
 
4

Asset Write-Downs and Other Related Charges (a)
 
 
(49
)
 
 
Restructuring Charges (b)
 
 
(77
)
 
 
Litigation Charges, Net
 
 
(67
)
 
 
Loss on Sale of Businesses, Net
 
 
(1
)
 
 
Other Items (c)
 
 
(8
)
 
 
Total
$
1,585

 
$
(447
)
 
$
250

(a)
Includes pressure pumping business related charges of $20 million, supply agreement charges related to a non-core business divestiture of $15 million and $14 million primarily related to a rig casualty loss.
(b)
Includes restructuring charges of $77 million: $24 million in North America, $15 million in Europe/SSA/Russia, $15 million in Latin America, $10 million in Corporate and Research and Development, $9 million in MENA/Asia Pacific, and $4 million in Land Drilling Rigs.
(c)
Includes professional and other fees of $6 million and divestiture related charges of $2 million.

15


 
Three Months Ended March 31, 2015
(Dollars in millions)
Net
Operating
Revenues
 
Income
from
Operations
 
Depreciation
and
Amortization
North America
$
1,163

 
$
(10
)
 
$
105

MENA/Asia Pacific
533

 
60

 
65

Europe/SSA/Russia
417

 
71

 
50

Latin America
486

 
98

 
61

  Subtotal
2,599

 
219

 
281

Land Drilling Rigs
195

 
10

 
29

 
2,794

 
229

 
310

Corporate and Research and Development
 
 
(120
)
 
6

Restructuring Charges (d)
 
 
(41
)
 
 
Gain on Sale of Businesses, Net
 
 
3

 
 
Other Items (e)
 
 
(21
)
 
 
Total
$
2,794

 
$
50

 
$
316

(d)
Includes restructuring charges of $41 million: $8 million in North America, $6 million in MENA/Asia Pacific, $7 million in Europe/SSA/Russia, $12 million in Latin America, $5 million in Land Drilling Rigs and $3 million in Corporate and Research and Development.
(e)
Includes professional fees of $13 million related to the divestiture of our non-core businesses, restatement related litigation, post-settlement monitor and auditor expenses and other charges of $8 million.

14. 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 FCPA and trade sanctions related to the U.S. government investigations disclosed in our U.S. Securities and Exchange Commission (the “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, which remains pending, was filed on June 15, 2015.

We cannot reliably predict the outcome of the appeal including the amount of any possible loss. If one or more negative outcomes were to occur relative to the Neff Case, the aggregate impact to our financial condition could be material.

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 of the shareholder securities class action captioned Freedman v. Weatherford International Ltd., et al., No. 1:12-cv-02121-LAK (S.D.N.Y.). Pursuant to the settlement, we were required to pay $120 million in 2015, which was partially funded by insurance proceeds. There was no admission of liability or fault by any party in connection with the settlement. We are pursuing reimbursement from our insurance carriers and have recovered a total of $19 million of the settlement amount, of which $4 million was recovered in the first quarter of 2016.


16


U.S. Government and Other Investigations
 
As previously disclosed, the SEC and the U.S. Department of Justice (“DOJ”) are also investigating the circumstances surrounding 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. We are cooperating fully with these investigations and have been discussing a resolution with the SEC. During the first quarter 2016 we continued to discuss potential resolution with the SEC and, based on the progress of these discussions to date, we have booked an accrual in the amount of $65 million. However, we are unable to predict whether a settlement will be reached or, if so, the amount of any such settlement, and the actual loss incurred in connection with this matter could exceed the amount accrued. Further, we may not reach a settlement with the government which could result in litigation. The government, generally, has a broad range of civil and criminal penalties available for these types of matters under applicable law and regulation, including injunctive relief, fines, penalties and modifications to business practices, some of which, if imposed on us, could be material to our business, financial condition or results of operations.

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. 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 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.

Other Contingencies

We maintain a contractual residual value guarantee at March 31, 2016 of $68 million in “Other Current Liabilities” and $28 million in “Other Non-Current Liabilities” related to certain lease equipment in our North America pressure pumping business and our Land Drilling Rigs segment on our Consolidated Balance Sheets.

We have supply contract related minimum purchase commitments and maintain a liability at March 31, 2016 of $156 million, of which $63 million is recorded in current liabilities and $93 million is recorded in “Other Non-Current Liabilities” on our Consolidated Balance Sheets.


17


15. New Accounting Pronouncements

Accounting Changes

In April 2015, the FASB issued ASU 2015-03 Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. We adopted ASU 2015-03 in the first quarter of 2016 retrospectively, which reduced Long-term debt and Other non-current assets by $27 million and $26 million as of December 31, 2015 and March 31, 2016, respectively.

Accounting Standards Issued Not Yet Adopted

In March 2016, the FASB issued ASU 2016-09 Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which impacts certain aspects of the accounting for share-based payment transactions. This update provides various transition requirements that include both prospective, modified retrospective and retrospective application guidance. The new standard will be effective for us beginning with the first quarter of 2017. Early adoption is permitted, but it must include all amendments in the same period. We are evaluating the impact that this new standard will have on our Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires a lessee to recognize a lease asset and lease liability for most leases, including those classified as operating leases under existing GAAP. The ASU also changes the definition of a lease and requires expanded quantitative and qualitative disclosures for both lessees and lessors. The new standard will be effective for us beginning with the first quarter of 2019. Early application is permitted. The standard requires the use of a modified retrospective transition method and permits certain practical expedients to be applied. We are evaluating the effect that ASU 2016-02 will have on our Condensed Consolidated Financial Statements.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, all deferred tax assets and liabilities will be required to be classified as noncurrent. The new standard will be effective for us beginning with the first quarter of 2017. Early adoption is permitted. We are evaluating the impact that this new standard will have on our Condensed Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation.  The new standard will be effective for us beginning with the first quarter of 2017, and will be applied prospectively.  Early adoption is permitted. We do not expect the impact of our adoption to have a material effect on our Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09. Revenue from Contracts with Customers (Topic 606), which 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 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferred the effective date of ASU 2014-09 to annual and interim periods in fiscal years beginning after December 15, 2017. Earlier application is permitted only as of annual and interim reporting periods in fiscal years beginning after December 15, 2016. ASU 2014-09 permits either a retrospective application or a cumulative effect transition method. We have not yet selected the application date or a transition method, and we are currently evaluating the impact our adoption of this standard would have on our Condensed Consolidated Financial Statements.



18


16. 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 following obligations of Weatherford Delaware were guaranteed by Weatherford Bermuda at March 31, 2016 and December 31, 2015: (1) 6.35% senior notes and (2) 6.80% senior notes.
 
The following obligations of Weatherford Bermuda were guaranteed by Weatherford Delaware at March 31, 2016 and December 31, 2015: (1) revolving credit facility, (2) 6.50% senior notes, (3) 6.00% senior notes, (4) 7.00% senior notes, (5) 9.625% senior notes, (6) 9.875% senior notes, (7) 5.125% senior notes, (8) 6.75% senior notes, (9) 4.50% senior notes and (10) 5.95% senior notes. At December 31, 2015, Weatherford Delaware also guaranteed the 5.50% senior notes of Weatherford Bermuda.

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 March 31, 2016
(Unaudited)
(Dollars in millions)
Weatherford
Ireland
 
Weatherford Bermuda
 
Weatherford Delaware
 
Other
Subsidiaries
 
Eliminations
 
Consolidation
Revenues
$

 
$

 
$

 
$
1,585

 
$

 
$
1,585

Costs and Expenses
(66
)
 

 

 
(1,966
)
 

 
(2,032
)
Operating Income (Loss)
(66
)
 

 

 
(381
)
 

 
(447
)
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Expense, Net

 
(98
)
 
(14
)
 
(3
)
 

 
(115
)
Intercompany Charges, Net
(1
)
 
(46
)
 
(1
)
 
(292
)
 
340

 

Equity in Subsidiary Income
(431
)
 
(288
)
 
(235
)
 

 
954

 

Other, Net

 
(13
)
 

 
(17
)
 

 
(30
)
Income (Loss) Before Income Taxes
(498
)
 
(445
)
 
(250
)
 
(693
)
 
1,294

 
(592
)
(Provision) Benefit for Income Taxes

 

 
5

 
96

 

 
101

Net Income (Loss)
(498
)
 
(445
)
 
(245
)
 
(597
)
 
1,294

 
(491
)
Noncontrolling Interests

 

 

 
7

 

 
7

Net Income (Loss) Attributable to Weatherford
$
(498
)
 
$
(445
)
 
$
(245
)
 
$
(604
)
 
$
1,294

 
$
(498
)
Comprehensive Income (Loss) Attributable to Weatherford
$
(355
)
 
$
(452
)
 
$
(246
)
 
$
(461
)
 
$
1,159

 
$
(355
)
 

19


Condensed Consolidating Statement of Operations and
Comprehensive Income (Loss)
Three Months Ended March 31, 2015
(Unaudited) 
(Dollars in millions)
Weatherford
Ireland
 
Weatherford
Bermuda
 
Weatherford
Delaware
 
Other
Subsidiaries
 
Eliminations
 
Consolidation
Revenues
$

 
$

 
$

 
$
2,794

 
$

 
$
2,794

Costs and Expenses
(7
)
 

 

 
(2,737
)
 

 
(2,744
)
Operating Income (Loss)
(7
)
 

 

 
57

 

 
50

 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Expense, Net

 
(104
)
 
(13
)
 
(3
)
 

 
(120
)
Intercompany Charges, Net

 
(15
)
 

 
15

 

 

Equity in Subsidiary Income
(111
)
 
75

 
(25
)
 

 
61

 

Other, Net

 
(20
)
 

 
(17
)
 

 
(37
)
Income (Loss) Before Income Taxes
(118
)
 
(64
)
 
(38
)
 
52

 
61

 
(107
)
(Provision) Benefit for Income Taxes

 

 
5

 
(5
)
 

 

Net Income (Loss)
(118
)
 
(64
)
 
(33
)
 
47

 
61

 
(107
)
Noncontrolling Interests

 

 

 
11

 

 
11

Net Income (Loss) Attributable to Weatherford
$
(118
)
 
$
(64
)
 
$
(33
)
 
$
36

 
$
61

 
$
(118
)
Comprehensive Income (Loss) Attributable to Weatherford
$
(441
)
 
$
(156
)
 
$
(69
)
 
$
(286
)
 
$
511

 
$
(441
)
 





20


Condensed Consolidating Balance Sheet
March 31, 2016
(Unaudited)
(Dollars in millions)
Weatherford
Ireland
 
Weatherford
Bermuda
 
Weatherford
Delaware
 
Other
Subsidiaries
 
Eliminations
 
Consolidation
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$
1

 
$

 
$
21

 
$
442

 
$

 
$
464

Other Current Assets
2

 

 
634

 
4,913

 
(647
)
 
4,902

Total Current Assets
3

 

 
655

 
5,355

 
(647
)
 
5,366

 
 
 
 
 
 
 
 
 
 
 
 
Equity Investments in Affiliates
5,118

 
10,586

 
8,951

 
1,300

 
(25,955
)
 

Intercompany Receivables, Net

 

 

 
3,675

 
(3,675
)
 

Other Assets

 
3

 
21

 
9,126

 

 
9,150

Total Assets
$
5,121

 
$
10,589

 
$
9,627

 
$
19,456

 
$
(30,277
)
 
$
14,516

 
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Short-term Borrowings and Current Portion of Long-Term Debt
$

 
$
1,070

 
$
6

 
$
136

 
$

 
$
1,212

Accounts Payable and Other Current Liabilities
84

 
104

 

 
2,725

 
(647
)
 
2,266

Total Current Liabilities
84

 
1,174

 
6

 
2,861

 
(647
)
 
3,478

 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt

 
4,885

 
859

 
102

 

 
5,846

Intercompany Payables, Net
430

 
349

 
2,896

 

 
(3,675
)
 

Other Long-term Liabilities
16

 
77

 
8

 
432

 

 
533

Total Liabilities
530

 
6,485

 
3,769

 
3,395

 
(4,322
)
 
9,857

 
 
 
 
 
 
 
 
 
 
 
 
Weatherford Shareholders’ Equity
4,591

 
4,104

 
5,858

 
15,993

 
(25,955
)
 
4,591

Noncontrolling Interests

 

 

 
68

 

 
68

Total Liabilities and Shareholders’ Equity
$
5,121

 
$
10,589

 
$
9,627

 
$
19,456

 
$
(30,277
)
 
$
14,516


21


Condensed Consolidating Balance Sheet
December 31, 2015

(Dollars in millions)
Weatherford
Ireland
 
Weatherford
Bermuda
 
Weatherford
Delaware
 
Other
Subsidiaries
 
Eliminations
 
Consolidation
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$

 
$
2

 
$
22

 
$
443

 
$

 
$
467

Other Current Assets
4

 

 
651

 
5,146

 
(704
)
 
5,097

Total Current Assets
4

 
2

 
673

 
5,589

 
(704
)
 
5,564

 
 
 
 
 
 
 
 
 
 
 
 
Equity Investments in Affiliates
5,693

 
8,709

 
9,187

 
3,483

 
(27,072
)
 

Intercompany Receivables, Net

 

 

 
10,423

 
(10,423
)
 

Other Assets
3

 
2

 
16

 
9,175

 

 
9,196

Total Assets
$
5,700

 
$
8,713

 
$
9,876

 
$
28,670

 
$
(38,199
)
 
$
14,760

 
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Short-term Borrowings and Current Portion of Long-Term Debt
$

 
$
1,503

 
$
6

 
$
73

 
$

 
$
1,582

Accounts Payable and Other Current Liabilities
19

 
212

 

 
2,922

 
(704
)
 
2,449

Total Current Liabilities
19

 
1,715

 
6

 
2,995

 
(704
)
 
4,031

 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt

 
4,885

 
862

 
105

 

 
5,852

Intercompany Payables, Net
1,362

 
6,147

 
2,914

 

 
(10,423
)
 

Other Long-term Liabilities
15

 
77

 
10

 
410

 

 
512

Total Liabilities
1,396

 
12,824

 
3,792

 
3,510

 
(11,127
)
 
10,395

 
 
 
 
 
 
 
 
 
 
 
 
Weatherford Shareholders’ Equity
4,304

 
(4,111
)
 
6,084

 
25,099

 
(27,072
)
 
4,304

Noncontrolling Interests

 

 

 
61

 

 
61

Total Liabilities and Shareholders’ Equity
$
5,700

 
$
8,713

 
$
9,876

 
$
28,670

 
$
(38,199
)
 
$
14,760


22



Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2016
(Unaudited)
(Dollars in millions)
Weatherford
Ireland
 
Weatherford
Bermuda
 
Weatherford
Delaware
 
Other
Subsidiaries
 
Eliminations
 
Consolidation
Cash Flows from Operating Activities:
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
$
(498
)