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EX-32.1 - EXHIBIT 32.1 CEO 906 CERT WFT 063016 - Weatherford International plcex321ceo906certwft63016.htm
EX-32.2 - EXHIBIT 32.2 CFO 906 CERT WFT 063016 - Weatherford International plcex322cfo906certwft63016.htm
EX-31.2 - EXHIBIT 31.2 CFO 302 CERT WFT 063016 - Weatherford International plcex312cfo302certwft63016.htm
EX-31.1 - EXHIBIT 31.1 CEO 302 CERT 063016 - Weatherford International plcex311ceo302certwft63016.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 June 30, 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 July 19, 2016, there were 896,151,597 shares of Weatherford ordinary shares, $0.001 par value per share, outstanding.




Weatherford International public limited company
Form 10-Q for the Six Months Ended June 30, 2016



1


PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Dollars and shares in millions, except per share amounts)
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Products
$
479

 
$
891

 
$
1,039

 
$
1,931

Services
923

 
1,499

 
1,948

 
3,253

Total Revenues
1,402

 
2,390

 
2,987

 
5,184

 
 
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
 
 
Cost of Products
513

 
802

 
1,095

 
1,705

Cost of Services
725

 
1,214

 
1,617

 
2,513

Research and Development
41

 
59

 
86

 
123

Selling, General and Administrative Attributable to Segments
230

 
339

 
499

 
702

Corporate General and Administrative
34

 
53

 
76

 
120

Asset Write-Downs and Other Charges
154

 
181

 
211

 
191

Equity Investment Impairment

 
20

 

 
20

Restructuring Charges
51

 
69

 
128

 
110

Litigation Charges, Net
114

 
112

 
181

 
112

Loss on Sale of Businesses, Net

 
5

 
1

 
2

Total Costs and Expenses
1,862

 
2,854

 
3,894

 
5,598

 
 
 
 
 
 
 
 
Operating Loss
(460
)
 
(464
)
 
(907
)
 
(414
)
 
 
 
 
 
 
 
 
Other Income (Expense):
 
 
 
 
 
 
 
Interest Expense, Net
(119
)
 
(117
)
 
(234
)
 
(237
)
Bond Tender Premium, Net
(78
)
 


(78
)
 

Currency Devaluation Charges

 
(16
)
 
(31
)
 
(42
)
Other, Net
(7
)
 
(18
)
 
(6
)
 
(29
)
 
 
 
 
 
 
 
 
Loss Before Income Taxes
(664
)
 
(615
)
 
(1,256
)
 
(722
)
Income Tax Benefit
102

 
132

 
203

 
132

Net Loss
(562
)
 
(483
)
 
(1,053
)
 
(590
)
Net Income Attributable to Noncontrolling Interests
3

 
6

 
10

 
17

Net Loss Attributable to Weatherford
$
(565
)
 
$
(489
)
 
$
(1,063
)
 
$
(607
)
 
 
 
 
 
 
 
 
Loss Per Share Attributable to Weatherford:
 
 
 
 
 
 
 
Basic & Diluted
$
(0.63
)
 
$
(0.63
)
 
$
(1.24
)
 
$
(0.78
)
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
Basic & Diluted
899

 
778

 
856

 
778


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 June 30,
 
Six Months Ended June 30,
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Net Loss
$
(562
)
 
$
(483
)
 
$
(1,053
)
 
$
(590
)
Other Comprehensive Income (Loss), Net of Tax:
 
 
 
 
 
 
 
Currency Translation Adjustments
(10
)
 
115

 
132

 
(230
)
Defined Benefit Pension Activity
1

 
(1
)
 
1

 
21

Other

 

 
1

 

Other Comprehensive Income (Loss)
(9
)
 
114

 
134

 
(209
)
Comprehensive Loss
(571
)
 
(369
)
 
(919
)
 
(799
)
Comprehensive Income Attributable to Noncontrolling Interests
3

 
6

 
10

 
17

Comprehensive Loss Attributable to Weatherford
$
(574
)
 
$
(375
)
 
$
(929
)
 
$
(816
)

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


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
June 30,
 
December 31,
(Dollars and shares in millions, except par value)
2016
 
2015
 
(Unaudited)
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
452

 
$
467

Accounts Receivable, Net of Allowance for Uncollectible Accounts of $95 in 2016 and $113 in 2015
1,484

 
1,781

Inventories, Net
2,195

 
2,344

Prepaid Expenses
302

 
343

Deferred Tax Assets
136

 
165

Other Current Assets
480

 
464

Total Current Assets
5,049

 
5,564

 
 
 
 
Property, Plant and Equipment, Net of Accumulated Depreciation of $7,369 in 2016 and $7,235 in 2015
5,247

 
5,679

Goodwill
2,852

 
2,803

Other Intangible Assets, Net of Accumulated Amortization of $818 in 2016 and $783 in 2015
330

 
356

Equity Investments
65

 
76

Other Non-Current Assets
569

 
282

Total Assets
$
14,112

 
$
14,760

 
 
 
 
Current Liabilities:
 
 
 
Short-term Borrowings and Current Portion of Long-term Debt
$
290

 
$
1,582

Accounts Payable
790

 
948

Accrued Salaries and Benefits
338

 
406

Income Taxes Payable
111

 
203

Other Current Liabilities
999

 
892

Total Current Liabilities
2,528

 
4,031

 
 
 
 
Long-term Debt
6,943

 
5,852

Other Non-Current Liabilities
454

 
512

Total Liabilities
9,925

 
10,395

 
 
 
 
Shareholders’ Equity:
 
 
 
Shares - Par Value $0.001; Authorized 1,356 shares, Issued and Outstanding 896 shares at June 30, 2016 and 779 shares at December 31, 2015
1

 
1

Capital in Excess of Par Value
6,250

 
5,502

Retained (Deficit) Earnings
(621
)
 
442

Accumulated Other Comprehensive Loss
(1,507
)
 
(1,641
)
Weatherford Shareholders’ Equity
4,123

 
4,304

Noncontrolling Interests
64

 
61

Total Shareholders’ Equity
4,187

 
4,365

Total Liabilities and Shareholders’ Equity
$
14,112

 
$
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)
 
Six Months Ended June 30,
(Dollars in millions)
2016
 
2015
Cash Flows From Operating Activities:
 
 
 
Net Loss
$
(1,053
)
 
$
(590
)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
 
 
 
Depreciation and Amortization
499

 
627

Employee Share-Based Compensation Expense
38

 
34

Long-Lived Assets Impairment

 
124

Asset Write-Downs and Other Related Charges
164

 
122

Equity Investment Impairment

 
20

Litigation Charges
185

 
112

Bond Tender Premium
78

 

Deferred Income Tax Benefit
(215
)
 
(191
)
Currency Devaluation Charges
31

 
42

Other, Net
101

 
86

Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired:
 
 
 
Accounts Receivable
170

 
687

Inventories
122

 
76

Other Current Assets
67

 
27

Accounts Payable
(167
)
 
(616
)
Other Current Liabilities
(297
)
 
(173
)
Other, Net
(67
)
 
(138
)
Net Cash Provided by (Used in) Operating Activities
(344
)
 
249

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Capital Expenditures for Property, Plant and Equipment
(74
)
 
(411
)
Acquisition of Intellectual Property
(8
)
 
(3
)
Insurance Proceeds Related to Rig Loss
30

 

Proceeds from Sale of Assets and Businesses, Net
16

 
23

Payment Related to Sale of Business
(20
)
 

Net Cash Used in Investing Activities
(56
)
 
(391
)
 
 
 
 
Cash Flows From Financing Activities:
 
 
 
Borrowings of Long-term Debt
3,156

 

Repayments of Long-term Debt
(1,880
)
 
(161
)
Borrowings (Repayments) of Short-term Debt, Net
(1,381
)
 
478

Proceeds from Issuance of Ordinary Common Shares
623

 

Bond Tender Premium
(78
)
 

Other Financing Activities, Net
(20
)
 
(15
)
Net Cash Provided by Financing Activities
420

 
302

Effect of Exchange Rate Changes on Cash and Cash Equivalents
(35
)
 
(23
)
 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
(15
)
 
137

Cash and Cash Equivalents at Beginning of Period
467

 
474

Cash and Cash Equivalents at End of Period
$
452

 
$
611

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest Paid
$
261

 
$
239

Income Taxes Paid, Net of Refunds
$
120

 
$
180

 

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 June 30, 2016 and December 31, 2015, Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 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 three and six months ended June 30, 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 17 – 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. In the second quarter of 2015, the Angolan kwanza devalued approximately 11% and we recognized foreign exchange related charges of $16 million. 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 continuing crude oil prices fluctuation 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 $51 million and $128 million in the second quarter and the first six months of 2016, respectively, which include termination (severance) benefits of $36 million and $108 million, respectively, and other restructuring charges of $15 million and $20 million, respectively. 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 second quarter and the first six months of 2015, we recognized restructuring charges of $69 million and $110 million for the 2015 Plan, which include termination (severance) benefits of $19 million and $59 million, respectively, and other restructuring charges of $50 million and $51 million, respectively. Other restructuring charges include contract termination costs, relocation and other associated costs.

The following tables present the components of the 2016 Plan and the 2015 Plan restructuring charges by segment for the second quarter and the first six months of 2016 and 2015.

 
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


 
Three Months Ended June 30, 2015
 
 
 
Total
(Dollars in millions)
Severance
Other
Severance and
2015 Plan
Charges
Charges
Other Charges
North America
$
4

$
17

$
21

MENA/Asia Pacific
6

23

29

Europe/SSA/Russia
5

9

14

Latin America
3

1

4

  Subtotal
18

50

68

Land Drilling Rigs
1


1

Corporate and Research and Development



  Total
$
19

$
50

$
69


7


 
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


 
Six Months Ended June 30, 2015
 
 
 
Total
(Dollars in millions)
Severance
Other
Severance and
2015 Plan
Charges
Charges
Other Charges
North America
$
12

$
17

$
29

MENA/Asia Pacific
11

24

35

Europe/SSA/Russia
12

9

21

Latin America
15

1

16

  Subtotal
50

51

101

Land Drilling Rigs
6


6

Corporate and Research and Development
3


3

  Total
$
59

$
51

$
110


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 June 30, 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
$
1

$
8

$
4

$
1

$
14

MENA/Asia Pacific
3

1

2

4

10

Europe/SSA/Russia
9

1

2

8

20

Latin America





  Subtotal
13

10

8

13

44

Land Drilling Rigs
1




1

Corporate and Research and Development
3


1


4

  Total
$
17

$
10

$
9

$
13

$
49


8


The following table presents the restructuring liability activity for the first six months of 2016.
 
 
 
Six Months Ended June 30, 2016
 
 
(Dollars in millions)
Accrued Balance at December 31, 2015
 
Charges
 
Cash Payments
 
Other 
 
Accrued Balance at June 30, 2016
2016 Plan:
 
 
 
 
 
 
 
 
 
Severance liability
$

 
$
108

 
$
(92
)
 
$
1

 
$
17

Other restructuring liability

 
20

 
(5
)
 
(5
)
 
10

2015 and 2014 Plan:
 
 
 
 
 
 
 
 
 
Severance liability
37

 

 
(23
)
 
(5
)
 
9

Other restructuring liability
14

 

 
(1
)
 

 
13

Total severance and other restructuring liability
$
51

 
$
128

 
$
(121
)
 
$
(9
)
 
$
49


3.  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 of 2016, we recognized an estimated project income of $52 million for our Zubair contract, and in the first six months of 2016 we are break-even. Cumulative estimated loss from the Iraq contracts was $532 million as of June 30, 2016.

On May 26, 2016, we entered into an agreement with our customer containing the terms and conditions of the settlement on the Zubair contract. The settlement to be paid to us is a gross amount of $150 million, of which $62 million was received in the second quarter 2016, and includes 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. Of the remaining gross settlement, we expect to collect $72 million in the second half of 2016 and the last $16 million in the first quarter of 2017.

As of June 30, 2016, we have no claims revenue, and our percentage-of-completion project estimate includes $25 million in newly approved change orders and $32 million of back charges. Our net billings in excess of costs as of June 30, 2016 were $39 million and are shown in the “Other Current Liabilities” line on the Consolidated Balance Sheet.

In the second quarter and the first six months of 2015, we recognized estimated project losses of $69 million and $27 million, respectively, related to our long-term early production facility construction contracts in Iraq accounted for under the percentage-of-completion method. Cumulative estimated losses on these projects were $406 million at June 30, 2015. As of June 30, 2015, our percentage-of-completion project estimates include $137 million of claims revenue and $21 million of back charges.

4.  Accounts Receivable Factoring and Other Receivables

In the first six months of 2016, we sold approximately $77 million of accounts receivable. We received cash totaling $76 million and recognized a loss of $0.3 million. Our factoring transactions in the six months ended June 30, 2016 qualified for sale accounting under U.S. GAAP, and the proceeds are included in operating cash flows in our Condensed Consolidated Statements of Cash Flows. We did not sell any accounts receivable during the six months ended June 30, 2015.

During the second quarter of 2016, we accepted a note with a face value of $120 million from Petroleos de Venezuela, S.A. (“PDVSA”) in exchange for $120 million in trade receivables. The note has a three year term at a 6.5% stated interest rate. We may decide to sell this note in the future and have classified the note in “Other Non-Current Assets” on the accompanying Condensed Consolidated Balance Sheets. We carry the note at lower of cost or fair value and recognized a loss of $84 million to adjust the note to fair value.


9


5.  Inventories, Net

Inventories, net of reserves, by category were as follows:
(Dollars in millions)
June 30, 2016
 
December 31, 2015
Raw materials, components and supplies
$
176

 
$
172

Work in process
55

 
61

Finished goods
1,964

 
2,111

 
$
2,195

 
$
2,344


6.  Goodwill

The changes in the carrying amount of goodwill by reportable segment for the first six months ended June 30, 2016 were as follows:
(Dollars in millions)
North
America
 
MENA/
Asia Pacific
 
Europe/
SSA/
Russia
 
Latin
America
 
Total
Balance at December 31, 2015
$
1,756

 
$
190

 
$
573

 
$
284

 
$
2,803

Foreign currency translation adjustments
54

 

 
(9
)
 
4

 
49

Balance at June 30, 2016
$
1,810

 
$
190

 
$
564

 
$
288

 
$
2,852

 
7.  Short-term Borrowings and Other Debt Obligations
(Dollars in millions)
June 30, 2016
 
December 31, 2015
Revolving credit facility
$
47

 
$
967

Other short-term bank loans
73

 
214

Total short-term borrowings
120

 
1,181

Current portion of long-term debt and term loan agreement
170

 
401

Short-term borrowings and current portion of long-term debt
$
290

 
$
1,582


Revolving Credit Facility and Secured Term Loan Agreement

On May 4, 2016, we entered into an amended and restated revolving credit facility (the “A&R Credit Agreement”) in the amount of $1.38 billion and a $500 million secured term loan agreement (the “Term Loan Agreement” and collectively with the A&R Credit Agreement, the “Credit Agreements”). For lenders that have agreed to extend their commitments (“extending lenders”), the A&R Credit Agreement matures in July of 2019. For lenders that did not agree to extend their commitments (such lenders, representing $229 million, the “non-extending lenders”), the A&R Credit Agreement matures in July of 2017. The Term Loan Agreement matures on July of 2020, and beginning September 30, 2016, a principal repayment of $12.5 million is required on the last day of each quarter. At June 30, 2016, we had $1.31 billion available for borrowing under our A&R Credit Agreement and there were $26 million in outstanding letters of credit.

Loans under the Credit Agreements are subject to varying rates of interest based on whether the loan is a Eurodollar loan or an alternate base rate loan. We also incur a quarterly facility fee on the amount of the A&R Credit Agreement. See Note 8 – Long-term Debt, for information related to interest rate applicable for the Term Loan Agreement.

Eurodollar Loans. Eurodollar loans bear interest at the Eurodollar rate, which is LIBOR, plus the applicable margin. The applicable margin for Eurodollar loans under the A&R Credit Agreement depends on whether the lender is an extending lender or a non-extending lender. For non-extending lenders, the applicable margin under the A&R Credit Agreement ranges from 0.75% to 1.925% depending on our credit rating, and for extending lenders under the A&R Credit Agreement the applicable margin ranges from 1.925% to 3.7% depending on our leverage ratio.


10


Alternate Base Rate Loans. Alternate base rate loans bear interest at the alternate base rate plus the applicable margin. The applicable margin for alternate base rate loans under the A&R Credit Agreement depends on whether the lender is an extending lender or a non-extending lender. For non-extending lenders, the applicable margin under the A&R Credit Agreement ranges from 0.0% to 0.925% depending on our credit rating, and for extending lenders the applicable margin under the A&R Credit Agreement ranges from 0.925% to 2.7% depending on our leverage ratio.

Borrowings under our A&R Credit Agreement may be repaid from time to time without penalty. Obligations under the Term Loan Agreement are secured by substantially all of our assets. In addition, obligations under the Credit Agreements are guaranteed by a material portion of our subsidiaries.

Our Credit Agreements contain covenants including, among others, the following:
a prohibition against incurring debt, subject to permitted exceptions;
a restriction on creating liens on our assets and the assets of our operating subsidiaries, subject to permitted exceptions;
restrictions on mergers or asset dispositions;
restrictions on use of proceeds, investments, transactions with affiliates, or change of principal business; and
maintenance of the following financial covenants:
1)
leverage ratio of no greater than 3 to 1 through December 31, 2016 and 2.5 to 1 thereafter until maturity. This ratio measures our indebtedness guaranteed by subsidiaries under the Credit Agreements and other guaranteed facilities to the trailing four quarters consolidated adjusted earnings before interest, taxes, depreciation, amortization and other specified charges (“EBITDA”);
2)
leverage and letters of credit ratio of no greater than 4 to 1 on or before December 31, 2016 and 3.5 to 1 thereafter calculated as our indebtedness guaranteed by subsidiaries under the Credit Agreements and other guaranteed facilities and all letters of credit to the trailing four quarters consolidated adjusted EBITDA; and
3)
asset coverage ratio of at least 4 to 1, which is calculated as our asset value to indebtedness guaranteed by subsidiaries under the Credit Agreements and other guaranteed facilities.

Our Credit Agreements contain customary events of default, including our failure to comply with the financial covenants described above. As of June 30, 2016, we were in compliance with these financial covenants.

On July 19, 2016, we amended these facilities to make minor changes and amendments to certain collateral provisions, negative covenants and related definitions, and to add an accordion feature to permit new and existing lenders to add up to a maximum of $250 million in additional commitments.

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 June 30, 2016, we had $73 million in short-term borrowings under these arrangements, primarily from overdraft facility borrowings. In the first six months of 2016, we repaid $180 million borrowed under a credit agreement that matured on March 20, 2016 and June 20, 2016. In addition, we had $590 million of letters of credit under various uncommitted facilities and $149 million of surety bonds, primarily performance bonds, issued by financial sureties against an indemnification from us at June 30, 2016.

At June 30, 2016, the current portion of long-term debt was primarily related to our 6.35% Senior Notes due 2017 and the current portion of our secured term loan and capital leases. Our 5.50% senior notes with a principal balance of $350 million were repaid in February 2016.


11


8. Long-term Debt

Long-term Debt consisted of the following:
(Dollars in millions)
June 30, 2016
 
December 31, 2015
5.50% Senior Notes due 2016
$

 
$
350

6.35% Senior Notes due 2017
90

 
604

6.00% Senior Notes due 2018
66

 
498

9.625% Senior Notes due 2019
491

 
1,012

5.125% Senior Notes due 2020
364

 
768

5.875% Exchangeable Senior Notes due 2021
1,136

 

7.75% Senior Notes due 2021
738

 

4.50% Senior Notes due 2022
642

 
642

8.25% Senior Notes due 2023
738

 

6.50% Senior Notes due 2036
446

 
446

6.80% Senior Notes due 2037
255

 
255

7.00% Senior Notes due 2038
455

 
455

9.875% Senior Notes due 2039
245

 
245

6.75% Senior Notes due 2040
456

 
456

5.95% Senior Notes due 2042
368

 
368

Secured Term Loan due 2020
496

 

4.82% secured borrowing
7

 
9

Capital and other lease obligations
109

 
116

Other
11

 
29

Total Senior Notes and other debt
7,113

 
6,253

Less amounts due in one year
170

 
401

Long-term debt
$
6,943

 
$
5,852


Secured Term Loan Agreement

On May 4, 2016, we entered into an amended and restated revolving credit facility (the “A&R Credit Agreement”) and borrowed $500 million under the “Term Loan Agreement.” The interest rate under the Term Loan Agreement is variable and is determined by our leverage ratio as of the most recent fiscal quarter, as either (1) the one-month London Interbank Offered Rate (“LIBOR”) plus a variable margin rate ranging from 1.425% to 3.20% or (2) the alternate base rate plus the applicable margin ranging from 0.425% to 2.20%. For the quarter ended June 30, 2016, the interest rate for the Term Loan Agreement was LIBOR plus a margin rate of 2.30% and the interest rate for the A&R Credit Agreement was LIBOR plus a margin rate of 2.80%. Beginning September 30, 2016, the Term Loan Agreement requires a principal repayment of $12.5 million on the last day of each quarter.

Exchangeable Senior Notes, Senior Notes and Tender Offers

We have issued various senior notes, all of which rank equally with our existing and future senior unsecured indebtedness, which have semi-annual interest payments and no sinking fund requirements.

Exchangeable Senior Notes

On June 7, 2016, we issued exchangeable notes with a par value of $1.265 billion and an interest rate of 5.875%. The notes have a conversion price of $7.74 per share and are exchangeable into a total of 163.4 million shares of the Company upon the occurrence of certain events or on or after January 1, 2021. The notes mature on July 1, 2021. We have the choice to settle the exchange of the notes in any combination of cash or shares. As of June 30, 2016, the if-converted value did not exceed the principal amount of the notes.

12


 
The exchange feature is reported with a carrying amount of $97 million in the line captioned “Capital in Excess of Par Value” on the accompanying Condensed Consolidated Balance Sheets. The debt component of the exchangeable notes has been reported separately in the line captioned “Long-term Debt” on the accompanying Condensed Consolidated Balance Sheets with a carrying value of $1.136 billion at June 30, 2016 net of remaining unamortized discount and debt issue costs of $129 million. The discount on the debt component will be amortized over the remaining maturity of the exchangeable notes at an effective interest rate of 8.4%. For the quarter ended June 30, 2016, interest expense on the notes was $6 million, of which $5 million related to accrued interest and $1 million related to amortization of the discount.

Senior Notes

On June 17, 2016, we issued $750 million in aggregate principal amount of 7.75% senior notes due 2021 and $750 million in aggregate principal amount of 8.25% senior notes due 2023.

Tender Offer and Early Retirement of Senior Notes

We commenced a cash tender offer on June 1, 2016 (and amended the offer on June 8, 2016 and June 10, 2016), which included an early tender option with an early settlement date of June 17, 2016 and an expiration date of June 30, 2016 with a final settlement date of July 1, 2016 to repurchase a portion of our 6.35% senior notes due 2017, 6.00% senior notes due 2018, 9.625% senior notes due 2019, and 5.125% senior notes due 2020. On June 17, 2016, we settled the early tender offer in cash in the amount of $1.972 billion, retiring an aggregate face value of senior notes tendered of $1.867 billion and accrued interest of $27 million. We recognized a cumulative loss of $78 million on these transactions in the line captioned “Bond Tender Premium, Net” on the accompanying Consolidated Statements of Operations. On June 30, 2016, we accepted additional tenders of an additional $2 million of debt, which we settled in cash on July 1, 2016.

In the first six months of 2015, through a series of open market transactions, we repurchased certain of our 4.5% senior notes, 5.95% senior notes, 6.5% senior notes and 6.75% senior notes with a total book value of $160 million. We recognized a cumulative gain of approximately $12 million on these transactions in the line captioned “Other, Net” on the accompanying Consolidated Statements of Operations.

9.  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 10 – Derivative Instruments,” we had no other material assets or liabilities measured and recognized at fair value on a recurring basis at June 30, 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. 


13


The fair value and carrying value of our senior notes were as follows: 
(Dollars in millions)
June 30, 2016
 
December 31, 2015
Fair value
$
6,104

 
$
5,095

Carrying value
6,490

 
6,099


Non-recurring Fair Value Measurements

During the second quarter of 2015, long-lived pressure pumping assets and an equity investment were impaired and written down to their estimated fair values. The Level 3 fair value of the long-lived assets was determined using a combination of the cost approach and the market approach, which used inputs that included replacement costs (unobservable), physical deterioration estimates (unobservable), and market sales data for comparable assets. The equity investment Level 3 fair value was determined using an income based approach utilizing estimates of future cash flow, discount rate, long-term growth rate, and marketability discount, all of which were unobservable.

During the second quarter of 2016, we adjusted the note from PDVSA to its estimated fair value. The Level 3 fair value was estimated based on unobservable pricing indications.

10.  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. As of June 30, 2016, we did not have any fair value hedge designated.

As of June 30, 2016, we had net unamortized premiums on fixed-rate debt of $9 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 the line captioned “Interest Expense, Net” on the accompanying Condensed Consolidated Statements of Operations.

14



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, 2016, we had net unamortized losses of $9 million associated with our cash flow hedge terminations. As of June 30, 2016, we did not have any cash flow hedges designated.

Foreign Currency Derivative Instruments

At June 30, 2016 and December 31, 2015, we had outstanding foreign currency forward contracts with notional amounts aggregating to $1.6 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 June 30, 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)
 
June 30, 2016
 
December 31, 2015
 
Classification
Derivative assets not designated as hedges:
 
 
 
 
 
 
Foreign currency forward contracts
 
$
6

 
$
5

 
Other Current Assets
 
 
 
 
 
 
 
Derivative liabilities not designated as hedges:
 
 
 
 
 
 
Foreign currency forward contracts
 
(22
)
 
(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 June 30,
 
Six Months Ended June 30,
 
 
(Dollars in millions)
 
2016
 
2015
 
2016
 
2015
 
Classification
Foreign currency forward contracts
 
(16
)
 
10

 
10

 
(56
)
 
Other, Net
Cross-currency swap contracts
 

 

 

 
13

 
Other, Net

11. 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 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 PDVSA note adjustment, partially offset by $52 million of Zubair project gains 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 of PDVSA note adjustment.


15


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 $42 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 2015, we had a $132 million tax benefit on a loss before income taxes of $615 million and $722 million, respectively. Our results for the second quarter of 2015 includes $112 million of litigation settlements, $69 million of project losses, $16 million of devaluation of the Angolan kwanza currency, $20 million of equity investment impairment and $69 million of restructuring charges, with no significant tax benefit. Our results for the first six months of 2015 includes $112 million of litigation settlements, $27 million of project losses, $42 million of currency devaluation, $20 million of equity investment impairment and $110 million of restructuring charges, with no significant tax benefit.

12.  Shareholders’ Equity

The following summarizes our shareholders’ equity activity for the six months ended June 30, 2016 and 2015:
(Dollars in millions)
Par Value of Issued Shares
 
Capital in Excess of Par Value
 
Retained Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Non-controlling Interests
 
Total Shareholders’ Equity
Balance at December 31, 2014
$
1

 
$
5,411

 
$
2,427

 
$
(881
)
 
$
75

 
$
7,033

Net Income (Loss)

 

 
(607
)
 

 
17

 
(590
)
Other Comprehensive Loss

 

 

 
(209
)
 

 
(209
)
Dividends Paid to Noncontrolling Interests

 

 

 

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

 
30

 

 

 

 
30

Other

 

 

 

 
1

 
1

Balance at June 30, 2015
$
1

 
$
5,441

 
$
1,820

 
$
(1,090
)
 
$
75

 
$
6,247

 
 
 
 
 
 
 
 
 
 
 
 
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

Other

 

 

 

 

 

Balance at June 30, 2016
$
1

 
$
6,250

 
$
(621
)
 
$
(1,507
)
 
$
64

 
$
4,187


In 2016, we issued 115 million ordinary shares of the Company and the amount in excess of par value of $623 million is reported in the line captioned “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.




16


The following table presents the changes in our accumulated other comprehensive loss by component for the six months 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) before Reclassifications
(230
)
 
20

 

 
(210
)
Reclassifications

 
1

 

 
1

Net activity
(230
)
 
21

 

 
(209
)
 
 
 
 
 
 
 
 
Balance at June 30, 2015
$
(1,043
)
 
$
(36
)
 
$
(11
)
 
$
(1,090
)
 
 
 
 
 
 
 
 
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
)

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

13.  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 units.

The following discloses basic and diluted weighted average shares outstanding:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Shares in millions)
2016
 
2015
 
2016
 
2015
Basic and Diluted weighted average shares outstanding
899

 
778

 
856

 
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 second quarter and the first six months of 2016 and 2015 exclude potential shares for stock options, restricted shares, performance units and exchangeable notes 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 June 30,
 
Six Months Ended June 30,
(Shares in millions)
2016
 
2015
 
2016
 
2015
Anti-dilutive potential shares due to net loss
43

 
3

 
24

 
3



17


14. Share-Based Compensation

We recognized the following employee share-based compensation expense during the second quarter and the first six months of 2016 and 2015:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Share-based compensation
$
17

 
$
19

 
$
38

 
$
34

Related tax benefit
4

 
4

 
8

 
7


During the first six months 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 June 30, 2016, there was $15 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 six months of 2016, we also granted 2.9 million restricted shares at a weighted average grant date fair value of $6.31 per share. As of June 30, 2016, there was $96 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.

15. 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 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 (a)
 
 
(154
)
 
 
Restructuring Charges (b)
 
 
(51
)
 
 
Litigation Charges
 
 
(114
)
 
 
Total
$
1,402

 
$
(460
)
 
$
249

(a)
Includes $84 million to adjust a note from PDVSA to fair value and other impairments and write-offs of $70 million.
(b)
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.




18


 
Three Months Ended June 30, 2015
(Dollars in millions)
Net
Operating
Revenues
 
Income (Loss)
from
Operations
 
Depreciation
and
Amortization
North America
$
808

 
$
(92
)
 
$
97

MENA/Asia Pacific
516

 
(17
)
 
66

Europe/SSA/Russia
418

 
65

 
53

Latin America
463

 
76

 
62

  Subtotal
2,205

 
32

 
278

Land Drilling Rigs
185

 
4

 
27

 
2,390

 
36

 
305

Corporate and Research and Development
 
 
(105
)
 
6

Asset Write-Downs and Other Charges (c)
 
 
(181
)
 
 
Equity Investment Impairment
 
 
(20
)
 
 
Restructuring Charges (d)
 
 
(69
)
 
 
Litigation Charges
 
 
(112
)
 
 
Loss on Sale of Businesses, Net
 
 
(5
)
 
 
Other Items (e)
 
 
(8
)
 
 
Total
$
2,390

 
$
(464
)
 
$
311

(c)
Includes asset impairment charges of $124 million, pressure pumping business related charges of $37 million and supply agreement charges related to non-core business divestiture of $20 million.
(d)
Includes restructuring charges of $69 million: $21 million in North America, $29 million in MENA/Asia Pacific, $14 million in Europe/SSA/Russia, $4 million in Latin America, and $1 million in Land Drilling Rigs.
(e)
Includes professional fees of $3 million related to the divestiture of non-core businesses, facility closure fees of $3 million, restatement related litigation, post-settlement monitor and auditor expenses and other charges of $2 million.

 
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