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SEC Filings

10-Q
KEY ENERGY SERVICES INC filed this Form 10-Q on 11/09/2017
Entire Document
 

Impairment Expense
During the nine months ended September 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 was sold in the third quarter of 2017, to fair market value. During the nine months ended September 30, 2016, we recorded a $40.0 million impairment to reduce the carrying value of the assets and related liabilities of our Mexican business unit, which was sold in 2016, to fair market value.
Interest Expense, Net of Amounts Capitalized
Interest expense decreased $40.4 million, or 63.0%, to $23.7 million for the nine months ended September 30, 2017, compared to $64.1 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 nine months ended September 30, 2017, we recognized other income, net, of $5.8 million, compared to other income, net, of $0.7 million for the nine months ended September 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
 
Nine Months Ended September 30, 2017
 
 
Nine Months Ended September 30, 2016
Interest income
$
(534
)
 
 
$
(371
)
Foreign exchange (gain) loss
(29
)
 
 
1,112

Other, net
(5,216
)
 
 
(1,406
)
Total
$
(5,779
)
 
 
$
(665
)
Reorganization Items, Net
Reorganization item expenses were $1.5 million for the nine months ended September 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 $1.2 million on a pre-tax loss of $99.5 million for the nine months ended September 30, 2017, compared to an income tax benefit of $0.5 million on a pre-tax loss of $305.7 million for the same period in 2016. Our effective tax rate was 1.2% for the nine months ended September 30, 2017, compared to 0.2% for the nine months ended September 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.
Segment Operating Results — Nine Months Ended September 30, 2017 and 2016
The following table shows operating results for each of our segments for the nine months ended September 30, 2017 and 2016 (in thousands):
Successor company as of and for the nine months ended September 30, 2017
 
 
U.S. Rig Services
 
Fluid Management Services
 
Coiled Tubing Services
 
Fishing and Rental Services
 
International
 
Functional
Support
 
Total
Revenues from external customers
 
$
184,026

 
$
57,475

 
$
27,005

 
$
45,808

 
$
5,571

 
$

 
$
319,885

Operating expenses
 
186,792

 
74,901

 
27,111

 
34,557

 
10,351

 
66,279

 
399,991

Operating loss
 
(2,766
)
 
(17,426
)
 
(106
)
 
11,251

 
(4,780
)
 
(66,279
)
 
(80,106
)

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