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SEC Filings

10-Q
KEY ENERGY SERVICES INC filed this Form 10-Q on 08/10/2017
Entire Document
 

The company has issued potentially dilutive instruments such as RSUs, stock options, SARs and warrants. However, the company did not include these instruments in its calculation of diluted loss per share during the periods presented, because to include them would be anti-dilutive. The following table shows potentially dilutive instruments (in thousands):
 
Successor
 
 
Predecessor
 
Successor
 
 
Predecessor
 
Three Months Ended June 30, 2017
 
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2017
 
 
Six Months Ended June 30, 2016
RSUs
667

 
 
62

 
667

 
 
62

Stock options
667

 
 
587

 
667

 
 
812

SARs

 
 
240

 

 
 
240

Warrants
1,838

 
 

 
1,838

 
 

Total
3,172

 
 
889

 
3,172

 
 
1,114

No events occurred after June 30, 2017 that would materially affect the number of weighted average shares outstanding.
NOTE 12. SHARE-BASED COMPENSATION
We recognized employee share-based compensation expense of $3.0 million and $0.5 million during the three months ended June 30, 2017 and 2016, respectively. We recognized employee share-based compensation expense of $7.6 million and $2.9 million during the six months ended June 30, 2017 and 2016, respectively. Our employee share-based awards vest in equal installments over a four-year period. Additionally, we recognized share-based compensation expense related to our outside directors of $0.2 million and zero during the three months ended June 30, 2017 and 2016, respectively. We recognized share-based compensation expense related to our outside directors of $0.5 million and zero during the six months ended June 30, 2017 and 2016, respectively. The unrecognized compensation cost related to our unvested share-based awards as of June 30, 2017 is estimated to be $15.8 million and is expected to be recognized over a weighted-average period of 2.0 years.
We recognized compensation expense related to our stock options of $1.0 million and zero during the three months ended June 30, 2017 and 2016, respectively. We recognized compensation expense related to our stock options of $1.8 million and zero during the six months ended June 30, 2017 and 2016, respectively. Our employee stock options vest in equal installments over a four-year period. The unrecognized compensation cost related to our unvested stock options as of June 30, 2017 is estimated to be $5.3 million and is expected to be recognized over a weighted-average period of 2.0 years.
NOTE 13. TRANSACTIONS WITH RELATED PARTIES
The Company has purchased equipment and services from a few affiliates of certain directors. The dollar amounts related to these related party activities are not material to the Company’s condensed consolidated financial statements.
NOTE 14. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, cash equivalents, accounts receivable, accounts payable and accrued liabilities. These carrying amounts approximate fair value because of the short maturity of the instruments or because the carrying value is equal to the fair value of those instruments on the balance sheet date.
Term Loan Facility due 2021. Because the variable interest rates of these loans approximate current market rates, the fair values of the loans borrowed under this facility approximate their carrying values.
NOTE 15. SEGMENT INFORMATION
Our reportable business segments are U.S. Rig Services, Fluid Management Services, Coiled Tubing Services, Fishing and Rental Services and International. We also have a “Functional Support” segment associated with overhead and other costs in support of our reportable segments. Our U.S. Rig Services, Fluid Management Services, Coiled Tubing Services, Fishing and Rental Services operate geographically within the United States. The International reportable segment includes our current and former operations in Canada, Mexico and Russia. During the second quarter of 2017 and the fourth quarter of 2016, we completed the sale of our businesses in Canada and Mexico, respectively, and we are currently in discussions to sell our business in Russia. We evaluate the performance of our segments based on gross margin measures. All inter-segment sales pricing is based on current market conditions.

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