Le Lézard
Classified in: Oil industry, Business
Subjects: ERN, CCA, FVT

Weatherford Reports Second Quarter 2017 Results


BAAR, Switzerland, July 28, 2017 /PRNewswire/ -- Weatherford International plc (NYSE: WFT) reported a net loss of $171 million, or a loss of $0.17 per share, and a non-GAAP net loss of $282 million before charges and credits ($0.28 non-GAAP loss per share) on revenues of $1.36 billion for the second quarter of 2017.

Second Quarter 2017 Highlights

Mark A. McCollum, President and Chief Executive Officer, commented, "I am pleased that our team has delivered a solid second quarter performance. We generated significantly higher incrementals, improved our cash flow compared to the previous quarter and provided our customers with nearly flawless service quality execution. Looking forward, I see a lot of opportunities for further performance improvements, and we have initiated several projects to unlock and accelerate these opportunities to drive stronger financial results and meaningfully reduce our debt and increase market share. We have great technology, a global presence, outstanding collaborative customer relationships and a high-caliber workforce, allowing us to be a partner of choice for our customers in many basins around the world."

McCollum continued, "The compelling strength of our fundamental qualities suggests an attractive upside and, by better aligning our strengths, we will soon have a more focused and effective organization, forging a solid path towards improving returns and renewing shareholder trust and value."



Three Months Ended


Change

(In Millions, Except Per Share Amounts)


6/30/2017


3/31/2017


6/30/2016


Sequential


Year-on-Year

Total Segment Results
















Revenues *


$

1,363




$

1,386




$

1,402




(2)


%


(3)


%

Segment Operating Loss *


$

(39)




$

(52)




$

(66)




26


%


41


%

Segment Operating Margin


(2.8)


%


(3.8)


%


(4.7)


%


 95 bps



185 bps


Adjusted Segment Operating Loss **


$

(39)




$

(52)




$

(116)




26


%


67


%

Adjusted Segment Operating Margin **


(2.8)


%


(3.8)


%


(8.3)


%


 95 bps



 548 bps


Adjusted Segment Incrementals ***











60


%


198


%

















Net Loss


$

(171)




$

(448)




$

(565)




62


%


70


%

Non-GAAP Net Loss


$

(282)




$

(318)




$

(253)




12


%


(11)


%

















Diluted Loss per Share


$

(0.17)




$

(0.45)




$

(0.63)




62


%


73


%

Non-GAAP Diluted Loss per Share


$

(0.28)




$

(0.32)




$

(0.28)




12


%


----

%


* Revenues and Segment Operating Loss in the second quarter of 2017 include a $42 million reduction in revenue and operating income for the change in revenue recognition in Venezuela. Excluding this adjustment, the second quarter 2017 total results would have been $1.405 billion in Revenues and $3 million in Segment Operating Income.

** Adjusted Segment Operating Loss and Margin here and elsewhere in this filing are non-GAAP measures and exclude the first quarter 2016 charges and second quarter 2016 income on the Zubair contract.

*** Adjusted Segment Incrementals here and elsewhere in this press release are calculated by taking the change in adjusted segment operating loss over the change in revenues.

"We believe our industry will remain range bound within this 'medium-for-longer' price level for some time, until production growth is moderated. In the interim, we expect continuous short-term cyclical fluctuations. Adapting to this likely new paradigm, our industry must transform itself. We will continue to push innovation, both from a technical and a business model perspective, and we will deliver operational excellence to bring the cost of production down to a point at which all participants can make a decent return.

To improve our position and drive better results, there are plenty of things well within our ability to execute. We will accelerate our mission to become a more focused and efficient company, and we are committed to a path of greater profitability, reliability and consistency within our organization. Ensuring flawless execution, discipline and accountability will be at the center of what we do. As we move forward toward reliable and sustainable performance, Weatherford will achieve new levels of success for our employees, customers and shareholders."

Second Quarter 2017 Results

Revenue for the second quarter of 2017 was $1.36 billion compared with $1.39 billion in the first quarter of 2017, or a 2% decrease, and was 3% lower than the $1.40 billion of revenue reported in the second quarter of 2016. Sequentially, North America revenue decreased 3% due to the seasonal slowdown in Canada, partially offset by an increase in the U.S. International revenue declined 2% sequentially, led by a previously disclosed change in accounting for revenue in Venezuela, which was almost entirely offset by improved results and activity in the Middle East and Russia. Land Drilling Rigs revenue improved 13% sequentially.

During the second quarter, Weatherford determined that the expected duration to collect revenue from its largest customer in Venezuela significantly exceeded the contractual payment terms and represents an implied financing arrangement. Accordingly, the Company modified its revenue recognition with this customer in the second quarter to record a discount reflecting the time value of money and accreting the discount as interest income over the expected collection period using the effective interest method. The impact of this change on the second quarter reduced revenue and increased operating loss by $42 million and reduced net income by $35 million  ($0.04 diluted net loss per share). Absent this adjustment, sequential revenue improved 1% and International revenue improved 3%.

Net loss for the second quarter of 2017 was $171 million (diluted net loss of $0.17 per share), compared to a $448 million loss in the first quarter of 2017 (diluted net loss of $0.45 per share), and a $565 million loss in the second quarter of the prior year (diluted net loss of $0.63 per share).

Non-GAAP adjusted net loss for the second quarter of 2017 was $282 million (non-GAAP diluted net loss of $0.28 per share), compared to a non-GAAP $318 million loss in the first quarter of 2017 (non-GAAP diluted net loss of $0.32 per share) and a non-GAAP $253 million loss in the second quarter of the prior year (non-GAAP diluted net loss of $0.28 per share). Excluding the impact of the Venezuela revenue recognition adjustment, non-GAAP adjusted net loss for the second quarter was $0.24 per share.

Non-GAAP adjustments, net of tax, of $111 million of income for the second quarter include:

Segment operating margins improved 95 basis points sequentially and 400 basis points excluding the impact of the change in Venezuela revenue recognition due to activity increases in the U.S., Middle East and Russia. On a product line basis, Artificial Lift, Reservoir Solutions, Land Drilling Rigs and Drilling Services drove the margin improvements. Year-on-year segment operating margin improved 185 basis points due to reduced operating expenses from the shutdown of Pressure Pumping operations in North America, realization of savings from cost reduction measures, and increased activity in the U.S. and Russia. Excluding the second quarter 2016 income on the Zubair contract, adjusted segment operating margin improved 548 basis points.

Cash Flow and Financial Covenants

Net cash used in operating activities was $62 million for the second quarter of 2017, including $107 million of debt interest payments, $40 million of cash severance and restructuring costs, and $30 million of SEC legal settlement costs, partially offset by $93 million of positive cash inflows from collection of other receivables, insurance proceeds and favorable legal settlements. Capital expenditures of $42 million increased slightly by $2 million or 5% sequentially, and increased $11 million or 35% from the same quarter in the prior year. We remain in compliance with our financial covenants as defined in our revolving and secured term loan credit facilities as of June 30, 2017. Based on our current financial projections, we believe we will continue to remain in compliance with these covenants for the remainder of 2017.

Technology Highlights

Weatherford announced the commercial release of the following technologies during the quarter:

Region and Segment Highlights

North America



Three Months Ended



Change


(In Millions)


6/30/2017



3/31/2017



6/30/2016



Sequential



Year-on-Year


North America
















Revenues


$

475




$

490




$

401




(3)


%


18


%

Segment Operating Income (Loss)


$

2




$

(18)




$

(101)




114


%


103


%

Segment Operating Margin


0.5


%


(3.7)


%


(25.2)


%


 428 bps



 2,570 bps


Second quarter revenues of $475 million were down $15 million or 3% sequentially, and up $74 million, or 18%, over the same period last year. Sequential revenues decreased primarily due to the seasonal spring break-up in Canada offset by an increase in revenue across all product lines in the U.S. as a result of the increased drilling and completion activity. Excluding the impact of the U.S. Pressure Pumping operations that shut down during the fourth quarter 2016, year-on-year revenues improved 37%.

Second quarter segment operating income of $2 million (0.5% margin) improved by $20 million sequentially from a loss of $18 million (-3.7% margin). Sequential margin improvement was driven by a lower cost structure in the U.S. associated with a favorable product mix and partially offset by the seasonal slowdown in Canada. Compared to the same period last year, second quarter segment operating income improved by $103 million or 103% due to increased activity levels, a significantly lower loss in Pressure Pumping following the shut-down of operations in the fourth quarter of 2016 and the realization of significant savings from cost cutting measures taken over the past quarters.

Operational highlights in North America during the second quarter include:

International Operations



Three Months Ended


Change

(In Millions)


6/30/2017


3/31/2017


6/30/2016


Sequential


Year-on-Year

International Operations
















Revenues *


$

787




$

807




$

892




(2)


%


(12)


%

Segment Operating Income (Loss) *


$

(21)




$

(4)




$

52




(372)


%


(140)


%

Adjusted Segment Operating Income (Loss) **


$

(21)




$

(4)




$

2




(372)


%


(1,340)


%

Adjusted Segment Operating Margin **


(2.6)


%


(0.5)


%


0.2


%


(203 bps)



(274 bps)



* Revenues and Segment Operating Loss in the second quarter of 2017 include a $42 million reduction in revenue and operating income for the change in revenue recognition in Venezuela. Excluding this adjustment, the second quarter 2017 International results would have been $829 million in Revenues and $21 million in Segment Operating Income.

** Adjusted Segment Operating Income (Loss) and Margin here and elsewhere in this filing are non-GAAP measures and exclude the first quarter 2016 charges and second quarter 2016 income on the Zubair contract.

Second quarter revenues of $787 million were down 2% sequentially and down 12% year-on-year. Second quarter segment operating loss of $21 million (-2.6% margin) deteriorated $17 million from an operating loss of $4 million (-0.5% margin) in the prior quarter. Second quarter operating loss deteriorated $73 million year-on-year, and second quarter adjusted segment operating loss, which excluded the effect from the Zubair contract in 2016, deteriorated by $23 million year-on-year.

Second quarter revenues of $203 million were down $39 million, or 16% sequentially, and down $46 million, or 18% compared to the same quarter last year. Second quarter operating loss of $35 million (-16.9% margin) was down $44 million sequentially from operating income of $9 million (3.8% margin) and down  $36 million from operating income of $1 million (0.6% margin) compared to the same period last year.

The sequential and year-on-year declines in second quarter revenues and operating income were almost entirely due to the $42 million change in our accounting for revenue in Venezuela. Excluding this negative impact, second quarter revenues of $245 million were up $3 million, or 1% sequentially, and down $4 million, or 2% compared to the same quarter last year, and second quarter operating income of $7 million (2.9% margin) was down $2 million sequentially, and up $6 million compared to the same period last year. Sequentially, the improvements in revenue were primarily driven by activity increases in Argentina.

Operational highlights in Latin America during the second quarter include:

 

Second quarter revenues of $244 million were flat sequentially and compared to the same quarter last year. Second quarter operating income of $5 million (2.0% margin) increased from operating loss of $10 million (-4.1% margin) sequentially, and increased from operating income of $1 million (0.3% margin) year-on-year. Sequential revenues remained steady due to recovery from the seasonal decline in Russia, partially offset by a decrease in Secure Drilling product sales in Europe while activity in Sub-Sahara Africa remained flat in a challenged market. Operating income improved primarily on the higher activity in Russia and further cost reduction measures in Sub-Sahara Africa.

Operational highlights in Europe/Sub-Sahara Africa/Russia during the second quarter include:

 

Second quarter revenues of $340 million were up 6% sequentially and down 15% from the same quarter in the prior year. Excluding the revenue related to the Zubair contract, second quarter revenue of $331 million was up 4% sequentially and flat compared to the same period last year. Second quarter segment operating income of $9 million (2.8% margin) improved from an operating loss of $3 million (-1.1% margin) in the prior quarter and deteriorated from an operating income of $50 million (12.5% margin) year-on-year. Excluding the income on the Zubair contract, second quarter 2016 adjusted segment operating income was nil (-0.1% margin), resulting in a year-on-year increase of $9 million compared to the current quarter adjusted segment operating income of $9 million (2.8% margin). The increase in sequential revenue and operating results was primarily due to higher activity in the United Arab Emirates, Kuwait and Thailand.

Operational highlights in the Middle East/North Africa/Asia Pacific during the second quarter include:

 Land Drilling Rigs

Second quarter revenues of $101 million were up $12 million, or 13% sequentially and down $8 million, or 7% compared to the same quarter in the prior year. Second quarter operating loss of $20 million (-20.7% margin) improved sequentially by $10 million from an operating loss of $30 million (-33.3% margin) and deteriorated year-on-year by $3 million from an operating loss of $17 million (-15.7%). The sequential improvement in revenues and operating results was due to improved operational efficiency, and from Algeria and Kuwait being fully operational during the quarter. During the second quarter of 2017, the Land Drilling Rigs segment returned to positive EBITDA (segment operating income before interest, taxes, depreciation and amortization) with improved rig utilization and lower cost structure. The structural changes to operational processes and efficiencies implemented in the first half of this year, as well as potential opportunities to restart operations in multiple geographies should allow for continued improvement and sustained returns throughout the second half of 2017 and beyond.

Operational highlights in the Land Drilling Rigs business during the second quarter include:

About Weatherford

Weatherford is one of the largest multinational oilfield service companies providing innovative solutions, technology and services to the oil and gas industry. The Company operates in over 90 countries and has a network of approximately 860 locations, including manufacturing, service, research and development, and training facilities and employs approximately 29,500 people. For more information, visit www.weatherford.com and connect with Weatherford on LinkedIn, Facebook, Twitter and YouTube.

Conference Call

The Company will host a conference call with financial analysts to discuss the quarterly results on July 28, 2017, at 8:30 a.m. eastern time (ET), 7:30 a.m. central time (CT). Weatherford invites investors to listen to the call live via the Company's website, at http://ir.weatherford.com/conference-call-details. A recording of the conference call and transcript of the call will be available in that section of the website shortly after the call ends.

Contacts:


Christoph Bausch

+1.713.836.4615



Executive Vice President and Chief Financial Officer








Karen David-Green

+1.713.836.7430



Vice President ? Investor Relations, Marketing and Communications


Forward-Looking Statements

This news release contains, and the conference call announced in this release may include, forward-looking statements. These forward-looking statements include, among other things, the Company's quarterly non-GAAP earnings per share, effective tax rate, net debt, forecasts or expectations regarding business outlook, and capital expenditures, and are also generally identified by the words "believe," "project," "expect," "anticipate," "estimate," "outlook," "budget," "intend," "strategy," "plan," "guidance," "may," "should," "could," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. Such statements are based upon the current beliefs of Weatherford's management, and are subject to significant risks, assumptions and uncertainties. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those indicated in our forward-looking statements. Readers are also cautioned that forward-looking statements are only predictions and may differ materially from actual future events or results, including possible changes in the expected savings associated with our cost cutting measures, including the closing of our pressure pumping operations; the success and closing of our joint ventures and strategic partnerships; and the changes in spending by our clients and customers. Forward-looking statements are also affected by the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, the Company's Quarterly Reports on Form 10-Q, and those set forth from time-to-time in the Company's other filings with the Securities and Exchange Commission. We undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.

Weatherford International plc

Condensed Consolidated Statements of Operations

(Unaudited)

(In Millions, Except Per Share Amounts)













Three Months Ended


Six Months Ended




6/30/2017


6/30/2016


6/30/2017


6/30/2016


Net Revenues:










North America


$

475



$

401



$

965



$

944



Middle East/North Africa/Asia Pacific


340



400



661



761



Europe/SSA/Russia


244



243



488



500



Latin America


203



249



445



554



Land Drilling Rigs


101



109



190



228



   Total Net Revenues


1,363



1,402



2,749



2,987













Operating Income (Loss):










North America


2



(101)



(16)



(229)



Middle East/North Africa/Asia


9



?



6



6



Europe/SSA/Russia


5



1



(5)



?



Latin America


(35)



1



(26)



45



Land Drilling Rigs


(20)



(17)



(50)



(43)



  Adjusted Segment Operating Loss


(39)



(116)



(91)



(221)



Research and Development


(36)



(41)



(75)



(86)



Corporate Expenses


(33)



(34)



(66)



(77)



Other Charges, Net


(19)



(269)



(91)



(523)



   Total Operating Loss


(127)



(460)



(323)



(907)













Other Income (Expense):










Interest Expense, Net


(138)



(119)



(279)



(234)



Bond Tender Premium, Net


?



(78)



?



(78)



Warrant Fair Value Adjustment


127



?



65



?



Currency Devaluation Charges


?



?



?



(31)



Other Expense, Net


(10)



(7)



(21)



(6)



Net Loss Before Income Taxes


(148)



(664)



(558)



(1,256)













Income Tax (Provision) Benefit


(17)



102



(50)



203













Net Loss


(165)



(562)



(608)



(1,053)



Net Income Attributable to Noncontrolling Interests


6



3



11



10



Net Loss Attributable to Weatherford


$

(171)



$

(565)



$

(619)



$

(1,063)













Loss Per Share Attributable to Weatherford:










Basic & Diluted


$

(0.17)



$

(0.63)



$

(0.63)



$

(1.24)













Weighted Average Shares Outstanding:










Basic & Diluted


990



899



989



856



 

Weatherford International plc

Selected Statements of Operations Information

(Unaudited)

(In Millions)


Three Months Ended


6/30/2017


3/31/2017


12/31/2016


9/30/2016


6/30/2016

Net Revenues:










North America

$

475



$

490



$

485



$

449



$

401


Middle East/North Africa/Asia Pacific

340



321



363



329



400


Europe/SSA/Russia

244



244



214



225



243


Latin America

203



242



250



255



249


Land Drilling Rigs

101



89



94



98



109


Total Net Revenues

$

1,363



$

1,386



$

1,406



$

1,356



$

1,402













Three Months Ended


6/30/2017


3/31/2017


12/31/2016


9/30/2016


6/30/2016

Operating Income (Loss):










North America

$

2



$

(18)



$

(58)



$

(95)



$

(101)


Middle East/North Africa/Asia Pacific

9



(3)



9



(8)



?


Europe/SSA/Russia

5



(10)



(8)



(3)



1


Latin America

(35)



9



6



14



1


Land Drilling Rigs

(20)



(30)



(25)



(19)



(17)


  Adjusted Segment Operating Loss

(39)



(52)



(76)



(111)



(116)


Research and Development

(36)



(39)



(40)



(33)



(41)


Corporate Expenses

(33)



(33)



(32)



(30)



(34)


Other Charges, Net

(19)



(72)



(251)



(771)



(269)


Total Operating Loss

$

(127)



$

(196)



$

(399)



$

(945)



$

(460)













Three Months Ended


6/30/2017


3/31/2017


12/31/2016


9/30/2016


6/30/2016

Product and Service Line Revenues (a):










Formation Evaluation and Well Construction

$

811



$

824



$

773



$

765



$

806


Completion and Production

451



473



539



493



487


Land Drilling Rigs

101



89



94



98



109


Total Product Service Line Revenues

$

1,363



$

1,386



$

1,406



$

1,356



$

1,402













Three Months Ended


6/30/2017


3/31/2017


12/31/2016


9/30/2016


6/30/2016

Depreciation and Amortization:










North America

$

40



$

40



$

41



$

55



$

58


Middle East/North Africa/Asia Pacific

51



51



52



60



60


Europe/SSA/Russia

39



39



41



45



48


Latin America

48



51



55



56



56


Land Drilling Rigs

23



24



22



22



23


Research and Development and Corporate

3



3



4



4



4


Total Depreciation and Amortization

$

204



$

208



$

215



$

242



$

249




(a)

Formation Evaluation and Well Construction includes Managed-Pressure Drilling, Drilling Services, Tubular Running Services, Drilling Tools and Rental Equipment, Wireline Services, Testing and Production Services, Re-entry and Fishing Services, Cementing Products, Liner Systems, Reservoir Solutions and Surface Logging. Completion and Production includes Artificial Lift Systems, Stimulation and Completion Systems.

We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, Weatherford's management believes that certain non-GAAP financial measures and ratios (as defined under the SEC's Regulation G) may provide users of this financial information, additional meaningful comparisons between current results and results of prior periods. The non-GAAP amounts shown below should not be considered as substitutes for operating income, provision for income taxes, net income or other data prepared and reported in accordance with GAAP, but should be viewed in addition to the Company's reported results prepared in accordance with GAAP.

 

Weatherford International plc

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

(In Millions, Except Per Share Amounts)















Three Months Ended


Six Months Ended




6/30/2017


3/31/2017


6/30/2016


6/30/2017


6/30/2016


Operating Loss:












GAAP Operating Loss


$

(127)



$

(196)



$

(460)



$

(323)



$

(907)



Severance, Restructuring and Exited Businesses


31



75



51



106



128



Litigation Charges, Net


?



?



114



?



181



Impairments, Asset Write-Downs and Other (a)


(12)



(3)



154



(15)



212



Legacy Contract


?



?



(50)



?



2



Total Non-GAAP Adjustments


19



72



269



91



523



Non-GAAP Adjusted Operating Loss


$

(108)



$

(124)



$

(191)



$

(232)



$

(384)















Loss Before Income Taxes:












GAAP Loss Before Income Taxes


$

(148)



$

(410)



$

(664)



$

(558)



$

(1,256)



Operating Income Adjustments


19



72



269



91



523



Bond Tender Premium, Net


?



?



78



?



78



Warrant Fair Value Adjustment


(127)



62



?



(65)



?



Currency Devaluation Charges


?



?



?



?



31



Non-GAAP Loss Before Income Taxes


$

(256)



$

(276)



$

(317)



$

(532)



$

(624)















(Provision) Benefit for Income Taxes:












GAAP (Provision) Benefit for Income Taxes


$

(17)



$

(33)



$

102



$

(50)



$

203



Tax Effect on Non-GAAP Adjustments


(3)



(4)



(35)



(7)



(61)



Non-GAAP (Provision) Benefit for Income Taxes


$

(20)



$

(37)



$

67



$

(57)



$

142















Net Loss Attributable to Weatherford:












GAAP Net Loss


$

(171)



$

(448)



$

(565)



$

(619)



$

(1,063)



Non-GAAP Adjustments, net of tax


(111)



130



312



19



571



Non-GAAP Net Loss


$

(282)



$

(318)



$

(253)



$

(600)



$

(492)















Diluted Loss Per Share Attributable to Weatherford:












GAAP Diluted Loss per Share


$

(0.17)



$

(0.45)



$

(0.63)



$

(0.63)



$

(1.24)



Non-GAAP Adjustments, net of tax


(0.11)



0.13



0.35



0.02



0.67



Non-GAAP Diluted Loss per Share


$

(0.28)



$

(0.32)



$

(0.28)



$

(0.61)



$

(0.57)















GAAP Effective Tax Rate (b)


(12)%



(8)%



15

%


(9)%



16

%


Non-GAAP Effective Tax Rate (c)


(8)%



(14)%



21

%


(11)%



23

%




(a)

Impairments, asset write-downs and other of $154 million in the second quarter of 2016 include $84 million to adjust a note from our largest customer in Venezuela to fair value and other impairments and write-offs of $70 million.



(b)

GAAP Effective Tax Rate is the GAAP provision for income taxes divided by GAAP income before income taxes.



(c)

Non-GAAP Effective Tax Rate is the Non-GAAP provision for income taxes divided by Non-GAAP income before income taxes and calculated in thousands.

 

Weatherford International plc

Selected Balance Sheet Data

(Unaudited)

(In Millions)














6/30/2017


3/31/2017


12/31/2016


9/30/2016


6/30/2016

Assets:











Cash and Cash Equivalents


$

584



$

546



$

1,037



$

440



$

452


Accounts Receivable, Net


1,165



1,292



1,383



1,414



1,484


Inventories, Net


1,728



1,700



1,802



1,917



2,195


Assets Held for Sale


929



860



23



11



14


Property, Plant and Equipment, Net


4,111



4,265



4,480



4,708



5,247


Goodwill and Intangibles, Net


2,527



2,602



3,045



3,104



3,182













Liabilities:











Accounts Payable


837



803



845



666



790


Liabilities Held for Sale


90



96



?



?



?


Short-term Borrowings and Current Portion of Long-term Debt


152



240



179



555



290


Long-term Debt


7,538



7,299



7,403



6,937



6,943


 

Weatherford International plc

Net Debt

(Unaudited)

(In Millions)








Change in Net Debt for the Three Months Ended 6/30/2017:







Net Debt at 3/31/2017






$

(6,993)


Operating Loss






(127)


Depreciation and Amortization






204


Capital Expenditures for Property, Plant and Equipment






(42)


Acquisition of Assets Held for Sale






(3)


Proceeds from Sale of Assets






21


Increase in Working Capital






(78)


Proceeds from Note Receivable






59


Asset Write-Downs and Other Charges






9


Accrued Litigation and Settlements






(32)


Income Taxes Paid






(4)


Interest Paid






(107)


Other






(13)


Net Debt at 6/30/2017






$

(7,106)









Change in Net Debt for the Six Months Ended 6/30/2017:







Net Debt at 12/31/2016






$

(6,545)


Operating Loss






(323)


Depreciation and Amortization






412


Capital Expenditures for Property, Plant and Equipment






(82)


Acquisition of Assets Held for Sale






(243)


Proceeds from Sale of Assets






25


Increase in Working Capital






(75)


Proceeds from Note Receivable






59


Asset Write-Downs and Other Charges






28


Inventory Charges






6


Accrued Litigation and Settlements






(62)


Income Taxes Paid






(47)


Interest Paid






(251)


Other






(8)


Net Debt at 6/30/2017






$

(7,106)









Components of Net Debt


6/30/2017


3/31/2017


12/31/2016

Cash


$

584



$

546



$

1,037


Short-term Borrowings and Current Portion of Long-term Debt


(152)



(240)



(179)


Long-term Debt


(7,538)



(7,299)



(7,403)


Net Debt


$

(7,106)



$

(6,993)



$

(6,545)



"Net Debt" is defined as debt less cash. Management believes that it provides useful information regarding our level of indebtedness by reflecting cash that could be used to repay debt.



Working capital is defined as accounts receivable plus inventory less accounts payable.

 

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