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SEC Filings

10-Q
KEY ENERGY SERVICES INC filed this Form 10-Q on 08/10/2017
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Operating expenses for our Fishing and Rental Services segment were $18.0 million for the six months ended June 30, 2017, which represented a decrease of $24.5 million, or 57.6%, compared to $42.5 million for the same period in 2016. These expenses decreased primarily due to a $21.0 million gain on the sale of certain assets, as a result of reduced depreciation expense and a decrease in employee compensation on a per hour basis as we sought to reduce our cost structure.
International
Revenues for our International segment decreased $2.3 million, or 34.8%, to $4.2 million for the six months ended June 30, 2017, compared to $6.5 million for the six months ended June 30, 2016. The decrease was primarily attributable the exit of operations in Mexico.
Operating expenses for our International segment decreased $8.6 million, or 52.1%, to $7.9 million for the six months ended June 30, 2017, compared to $16.5 million for the six months ended June 30, 2016. These expenses decreased primarily as a result of a decrease in employee compensation costs and equipment expense, primarily due the exit of operations in Mexico.
Functional Support
Operating expenses for Functional Support, which represent expenses associated with managing our U.S. and International reporting segments, decreased $22.9 million, or 35.9%, to $40.9 million (19.6% of consolidated revenues) for the six months ended June 30, 2017 compared to $63.9 million (31.0% of consolidated revenues) for the same period in 2016. The decrease is primarily due to lower employee compensation costs due to reduced staffing levels and reduction in wages and the $5.0 million FCPA settlement accrual and $3.0 million decrease in expenses related to the FCPA investigation, which was completed in 2016, and decrease of $7.7 million in professional fees related to the 2016 corporate restructuring.
LIQUIDITY AND CAPITAL RESOURCES
Current Financial Condition and Liquidity
As of June 30, 2017, we had total liquidity of $120.4 million which consists of $94.7 million cash and cash equivalents and $25.7 million borrowing capacity available under our ABL Facility. This compares to total liquidity of $118.2 million which consists of $90.5 million cash and cash equivalents and $27.7 million borrowing capacity available under our ABL Facility as of December 31, 2016. Our working capital was $114.4 million as of June 30, 2017, compared to $120.3 million as of December 31, 2016. Our working capital decreased from the prior year end primarily as a result of a decrease in restricted cash, accounts receivable and other current assets partially offset by a decrease in other current liabilities. As of June 30, 2017, we had no borrowings outstanding and $33.7 million in committed letters of credit outstanding under our ABL Facility.
The following table summarizes our cash flows for the six months ended June 30, 2017 and 2016 (in thousands):
 
 
Successor
 
 
Predecessor
 
 
Six Months Ended June 30, 2017
 
 
Six Months Ended June 30, 2016
Net cash used in operating activities
 
$
(27,188
)
 
 
$
(67,390
)
Cash paid for capital expenditures
 
(7,236
)
 
 
(5,067
)
Proceeds received from sale of fixed assets
 
24,106

 
 
8,506

Repayments of long-term debt
 
(1,250
)
 
 
(13,901
)
Restricted cash
 
16,007

 
 
(18,605
)
Payment of deferred financing costs
 
(350
)
 
 

Other financing activities, net
 
(54
)
 
 
(2,782
)
Effect of exchange rates on cash
 
144

 
 
(1,593
)
Net increase (decrease) in cash and cash equivalents
 
$
4,179

 
 
$
(100,832
)
Cash used in operating activities was $27.2 million for the six months ended June 30, 2017 compared to cash used in operating activities of $67.4 million for the six months ended June 30, 2016. Cash used in operating activities for the six months ended June 30, 2017 was primarily related to net loss adjusted for noncash items and decrease in accounts payable partially offset by a cash inflow related to a decrease in accounts receivable and other current assets. Cash used in operating activities for the six months ended June 30, 2016 was primarily related to net loss adjusted for noncash items.
Cash used in investing activities was $16.9 million for the six months ended June 30, 2017 compared to cash provided by investing activities of $3.4 million for the six months ended June 30, 2016. Cash inflows during these periods consisted primarily of proceeds from sales of fixed assets. Cash outflows during these periods consisted primarily of capital expenditures. Our capital expenditures primarily relate to maintenance of our equipment.

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