Print Page  Close Window

SEC Filings

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

Direct Operating Expenses
Our direct operating expenses decreased $29.2 million, to $150.9 million (72.1% of revenues), for the six months ended June 30, 2017, compared to $180.0 million (87.3% of revenues) for the six months ended June 30, 2016. The decrease is primarily related to a $21.0 million gain on the sale of certain assets and a decrease in employee compensation costs, fuel expense and repair and maintenance expense as we sought to reduce our cost structure.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased $29.4 million, or 41.1%, to $42.2 million during the six months ended June 30, 2017, compared to $71.6 million for the six months ended June 30, 2016. The decrease is primarily attributable to the reduction of property, plant and equipment due to the implementation of fresh start accounting in the fourth quarter of 2016.
General and Administrative Expenses
General and administrative expenses decreased $25.8 million, to $61.3 million (29.3% of revenues), for the six months ended June 30, 2017, compared to $87.1 million (42.3% of revenues) for the six months ended June 30, 2016. The decrease is primarily due to the decrease in professional fees related to our 2016 corporate restructuring, lower employee compensation costs due to reduced staffing levels and reduction in wages and decrease in the accruals of legal settlements.
Impairment Expense
During the six months ended June 30, 2017, we recorded a $0.2 million impairment to reduce the carrying value of the assets and related liabilities of our Russian business unit, which is being held for sale, to fair market value. We recorded no impairment expense during the six months ended June 30, 2016.
Interest Expense, Net of Amounts Capitalized
Interest expense decreased $27.4 million, or 63.7%, to $15.6 million for the six months ended June 30, 2017, compared to $42.9 million for the same period in 2016. The decrease is primarily related to the elimination of the Predecessor Company’s senior secured notes in connection with our emergence from voluntary reorganization.
Other Income, Net
During the six months ended June 30, 2017, we recognized other income, net, of $1.2 million, compared to other income, net, of $0.8 million for the six months ended June 30, 2016. Our foreign exchange loss relates to U.S. dollar-denominated transactions in our foreign locations and fluctuations in exchange rates between local currencies and the U.S. dollar.
The following table summarizes the components of other income, net for the periods indicated (in thousands):
 
Successor
 
 
Predecessor
 
Six Months Ended June 30, 2017
 
 
Six Months Ended June 30, 2016
Interest income
$
(352
)
 
 
$
(266
)
Foreign exchange (gain) loss
(14
)
 
 
761

Other, net
(835
)
 
 
(1,314
)
Total
$
(1,201
)
 
 
$
(819
)
Reorganization Items, Net
Reorganization item expenses were $1.4 million for the three months ended June 30, 2017, and there were no reorganization item expenses for the same period in 2016. Reorganization items consist of professional fees incurred in connection with our emergence from voluntary reorganization.
Income Tax Benefit
We recorded an income tax benefit of $1.1 million on a pre-tax loss of $61.2 million for the six months ended June 30, 2017, compared to an income tax benefit of $0.4 million on a pre-tax loss of $174.8 million for the same period in 2016. Our effective tax rate was 1.9% for the six months ended June 30, 2017, compared to 0.2% for the six months ended June 30, 2016. Our effective tax rates for such periods differ from the U.S. statutory rate of 35% due to a number of factors, including the mix of profit and loss between domestic and international taxing jurisdictions and the impact of permanent items, including expenses subject to statutorily imposed limitations such as meals and entertainment expenses, that affect book income but do not affect taxable income and discrete tax adjustments, such as valuation allowances against deferred tax assets and tax expense or benefit recognized for uncertain tax positions.

27