Weatherford International plc - FORM 8-K - EX-99.1 - EX 99.1 PRO FORMA STATEMENTS OF OPERATIONS AND BALANCE SHEET - December 31, 2014

Attached files

file filename
8-K - 8-K ANNOUNCING CLOSE OF SALE OF ENG CHEM AND INT. DRILLING FLUIDS - Weatherford International plca8-kcompleteddispositionso.htm
EX-10.1 - EX 10.1 PURCHASE AGREEMENT BETWEEN WFT AND LUBRIZOL - Weatherford International plcex101purchaseagreementexec.htm
EX-99.2 - EX 99.2 PRESS RELEASE ANNOUNCING CLOSE OF SALE ENG CHEM INT. DRILLING FLUIDS - Weatherford International plcex992pr-completeddispositi.htm


Exhibit 99.1


WEATHERFORD INTERNATIONAL PLC
UNAUDTED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On December 31, 2014, Weatherford International plc (“Weatherford”) closed the previously announced sale of its engineered chemistry and Integrity drilling fluids businesses to an affiliate of The Lubrizol Corporation, a Berkshire Hathaway company (“Lubrizol”), for a purchase price of $750 million, subject to a customary post-closing working capital adjustment. In connection with the closing, the United States and Canadian portions of the businesses have been transferred to Lubrizol, while the remaining foreign portions of the businesses will be transferred throughout 2015. Weatherford may also receive a potential increase of $75 million from an earnout tied to the post-closing performance of the disposed businesses during the twelve month period after the closing date. The sale includes manufacturing, storage, research and development facilities, additives and chemicals inventories, and patented technologies and processes for application in engineered chemistry treatments for stimulation and drilling operations.

The unaudited pro forma condensed consolidated balance sheet of Weatherford International plc as of September 30, 2014 and the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2013 and for the nine months ended September 30, 2014 were derived from our historical condensed consolidated balance sheet and statements of operations. The unaudited pro forma condensed consolidated statement of operations gives effect to the disposition of the engineered chemistry and Integrity drilling fluids businesses as if the disposition occurred on January 1, 2013. The unaudited pro forma condensed consolidated balance sheet assumes the disposition of the engineered chemistry and Integrity drilling fluids businesses occurred on September 30, 2014. The following unaudited pro forma condensed consolidated financial information should be read in conjunction with our historical financial statements and accompanying notes.
    
The pro forma adjustments are based on the best information available and assumptions that management believes are factually supportable and reasonable; however, such adjustments are estimates and subject to change. The unaudited pro forma condensed consolidated information is for illustrative and informational purposes only and is not intended to reflect what our condensed consolidated financial position and results of operations would have been had the disposition occurred on the dates indicated and is not necessarily indicative of our future condensed consolidated financial position and results of operations.

The pro forma adjustments remove the engineered chemistry and Integrity drilling fluids assets, liabilities and results of operations, and give effect to the following items:

•
An adjustment to reflect the net cash proceeds used to repay debt and the gain on the sale of the engineered chemistry and Integrity drilling fluids businesses;
•
An adjustment to interest expense associated with the repayment of company debt;
•
An adjustment to reflect the tax impact on the gain from the sale of engineered chemistry and Integrity drilling fluids businesses; and
•
An adjustment to reflect accrued liabilities for estimated professional fees and closing costs related to the sale of the engineered chemistry and Integrity drilling fluids businesses.

Our unaudited pro forma condensed consolidated statements of operations do not include adjustments for all of the costs of operating after the disposition of the engineered chemistry and Integrity drilling fluids businesses, since they are not factually supportable and recurring.


1


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD ENDED DECEMBER 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Weatherford
 
Disposed
 
Pro Forma
 
 
(Dollars in millions, except per share amounts)
 
Historical
 
Businesses
 
Adjustments
 
Pro Forma
Total Revenues
 
15,263

 
(457
)
 
—

 
14,806

 
 
 
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
 
 
 
Cost of Products and Services
 
12,302

 
(350
)
 
—

 
11,952

Research and Development
 
265

 
(4
)
 
—


261

Selling, General and Administrative Attributable to Segments
 
1,728

 
(55
)
 
—


1,673

Corporate General and Administrative
 
316

 
—

 
—


316

U.S. Government Investigation Loss
 
153

 
—

 
—

 
153

Gain on Sale of Businesses
 
(24
)
 
—

 
—


(24
)
Total Costs and Expenses
 
$
14,740

 
$
(409
)
 
$
—

 
$
14,331

 
 
 
 
 
 
 
 
 
Operating Income
 
$
523

 
$
(48
)
 
$
—

 
$
475

 
 
 
 
 
 
 
 
 
Net Interest and Other Expense
 
(693
)
 
—

 
10

(a)
(683
)
Loss Before Income Taxes
 
(170
)
 
(48
)
 
10

 
(208
)
Provision for Income Taxes
 
(144
)
 
16

 
(3
)
(b)
(131
)
Net Loss
 
(314
)
 
(32
)
 
7

 
(339
)
Net Income Attributable to Noncontrolling Interests
 
(31
)
 
—

 
—

 
(31
)
Net Loss Attributable to Weatherford
 
$
(345
)
 
$
(32
)
 
$
7

 
$
(370
)
 
 
 
 
 
 
 
 
 
Loss Per Share Attributable to Weatherford:
 
 
 
 
 
 
 
 
Basic
 
$
(0.45
)
 
 
 
 
 
$
(0.48
)
Diluted
 
$
(0.45
)
 
 
 
 
 
$
(0.48
)
 
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
 
Basic
 
772

 
 
 
 
 
772

Diluted
 
772

 
 
 
 
 
772



See accompanying notes to the unaudited pro forma condensed consolidated financial statements.



2


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD ENDED SEPTEMBER 30, 2014
 
 
 
 
 
 
 
 
 
 
 
Weatherford
 
Disposed
 
Pro Forma
 
 
(Dollars in millions, except per share amounts)
 
Historical
 
Businesses
 
Adjustments
 
Pro Forma
Total Revenues
 
11,184

 
(341
)
 
—

 
10,843

 
 
 
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
 
 
 
Cost of Products and Services
 
8,553

 
(260
)
 
—

 
8,293

Research and Development
 
216

 
(2
)
 
—


214

Selling, General and Administrative Attributable to Segments
 
1,228

 
(41
)
 
—


1,187

Corporate General and Administrative
 
205

 
—

 
—


205

Long-Lived Assets Impairment
 
143

 
—

 
—

 
143

Goodwill Impairment
 
121

 
—

 
—

 
121

Restructuring Charges
 
283

 
—

 
—

 
283

Gain on Sale of Businesses, Net
 
(38
)
 
—

 
—

 
(38
)
Total Costs and Expenses
 
$
10,711

 
$
(303
)
 
$
—

 
$
10,408

 
 
 
 
 
 
 
 
 
Operating Income
 
$
473

 
$
(38
)
 
$
—

 
$
435

 
 
 
 
 
 
 
 
 
Net Interest and Other Expense
 
(413
)
 
—

 
9

(a)
(404
)
Income Before Income Taxes
 
60

 
(38
)
 
9

 
31

Provision for Income Taxes
 
(136
)
 
12

 
(3
)
(b)
(127
)
Net Loss
 
(76
)
 
(26
)
 
6

 
(96
)
Net Income Attributable to Noncontrolling Interests
 
(33
)
 
—

 
—

 
(33
)
Net Loss Attributable to Weatherford
 
$
(109
)
 
$
(26
)
 
$
6

 
$
(129
)
 
 
 
 
 
 
 
 
 
Loss Per Share Attributable to Weatherford:
 
 
 
 
 
 
 
 
Basic
 
$
(0.14
)
 
 
 
 
 
$
(0.17
)
Diluted
 
$
(0.14
)
 
 
 
 
 
$
(0.17
)
 
 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding:
 
 
 
 
 
 
 
 
Basic
 
776

 
 
 
 
 
776

Diluted
 
776

 
 
 
 
 
776



See accompanying notes to the unaudited pro forma condensed consolidated financial statements.


3


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF SEPTEMBER 30, 2014
 
 
 
 
 
 
 
 
 
Weatherford
 
Disposed
 
 
(Dollars in millions, except per share amounts)
 
Historical
 
Businesses
 
Pro Forma
Current Assets:
 
 
 
 
 
 
Cash and Cash Equivalents
 
$
582

 
$
—


$
582

Accounts Receivable, Net
 
3,315

 
(56
)
(c)
3,259

Inventories, Net
 
3,317

 
(109
)
(c)
3,208

Deferred Tax Assets
 
291

 
(85
)
(c) (d)
206

Other Current Assets
 
1,182

 
—


1,182

Current Assets Held for Sale
 
240

 
—

 
240

Total Current Assets
 
8,927

 
(250
)
 
8,677

 
 
 
 
 
 
 
Property, Plant and Equipment, Net
 
7,460

 
(50
)
(c)
7,410

Goodwill
 
3,375

 
(270
)
(c)
3,105

Other Intangible Assets, Net
 
530

 
(44
)
(c)
486

Equity Investments
 
266

 
—

 
266

Other Non-Current Assets
 
169

 
—

 
169

Total Assets
 
$
20,727

 
$
(614
)
 
$
20,113

 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
Short-term Borrowings and Current Portion of Long-term Debt
 
$
1,715

 
$
(750
)
(e)
$
965

Accounts Payable
 
1,784

 
(35
)
(c)
1,749

Accrued Salaries and Benefits
 
442

 
—

 
442

Income Taxes Payable
 
130

 
40

(d)
170

Other Current Liabilities
 
807

 
8

(c) (f)
815

Total Current Liabilities
 
4,878

 
(737
)
 
4,141

 
 
 
 
 
 
 
Long-term Debt
 
7,004

 
—

 
7,004

Other Non-Current Liabilities
 
903

 
(19
)
(c) (d)
884

Total Liabilities
 
12,785

 
(756
)
 
12,029

 
 
 
 
 
 
 
Shareholders’ Equity:
 
 
 
 
 
 
Shares - Par Value $0.001; Authorized 1,356 shares, Issued and Outstanding 774 shares
 
1

 
—

 
1

Capital in Excess of Par Value
 
5,390

 
—

 
5,390

Retained Earnings
 
2,902

 
142

(g)
3,044

Accumulated Other Comprehensive Loss
 
(430
)
 
—

 
(430
)
Weatherford Shareholders’ Equity
 
7,863

 
142

 
8,005

Noncontrolling Interests
 
79

 
—

 
79

Total Shareholders’ Equity
 
7,942

 
142

 
8,084

Total Liabilities and Shareholders’ Equity
 
$
20,727

 
$
(614
)
 
$
20,113


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.


4


WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(a)
Represents the adjustment to interest expense resulting from the assumed repayment of company debt.
(b)
Represents the tax effect on the pro forma adjustment to income using a statutory rate of 32% for all periods.
(c)
Represents the removal of the assets and liabilities from the balance sheet due to the sale of the engineered chemistry and Integrity drilling fluids businesses.
(d)
Represents the utilization of net operating loss carryforwards and recognition of an income taxes payable on the gain from the sale of engineered chemistry and Integrity drilling fluids businesses.
(e)
Represents the cash proceeds of $750 million from the sale of the engineered chemistry and Integrity drilling fluids businesses, before closing costs and customary post-closing working capital adjustment, used to repay debt.
(f)
Represents accrued liabilities for estimated professional fees and closing costs related to the sale of the engineered chemistry and Integrity drilling fluids businesses.
(g)
Represents the estimated gain on sale, net of tax, that would have been recorded as of September 30, 2014. We will utilize net operating loss carryforwards and anticipate paying cash taxes of $40 million.





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