UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2018
OR
¨ Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the transition period from ______ to ______
Commission file number: 001-36053

Frank’s International N.V.
(Exact name of registrant as specified in its charter)
 
The Netherlands
 
98-1107145
 
 
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification number)
 
 
 
 
 
 
 
Mastenmakersweg 1
 
 
 
 
1786 PB Den Helder, The Netherlands
 
Not Applicable
 
 
(Address of principal executive offices)
 
(Zip Code)
 

Registrant’s telephone number, including area code: +31 (0)22 367 0000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
þ
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company
¨
 
 
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No þ
As of May 3, 2018 , there were 224,032,321 shares of common stock, €0.01 par value per share, outstanding.


TABLE OF CONTENTS
 
 
Page
PART I. FINANCIAL INFORMATION
 
 
 
Item 1.
Financial Statements
 
 
Condensed Consolidated Balance Sheets (Unaudited) at March 31, 2018 and December 31, 2017
 
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2018 and 2017
 
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2018 and 2017
 
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 2018 and 2017
 
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2018 and 2017
 
Notes to the Unaudited Condensed Consolidated Financial Statements
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and
 
 
Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
PART II. OTHER INFORMATION
 
 
 
Item 1.
Legal Proceedings
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 5.
Other Information
 
 
 
Item 6.
Exhibits
 
 
 
Signatures
 



2

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FRANK'S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 
 
 
 
 
March 31,
 
December 31,
 
2018
 
2017
Assets
(Unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
188,779

 
$
213,015

Short-term investments
76,149

 
81,021

Accounts receivables, net
132,263

 
127,210

Inventories, net
72,507

 
76,420

Assets held for sale
2,943

 
3,792

Other current assets
10,353

 
10,437

Total current assets
482,994

 
511,895

 
 
 
 
Property, plant and equipment, net
449,153

 
469,646

Goodwill
211,040

 
211,040

Intangible assets, net
32,133

 
33,895

Other assets
33,986

 
35,293

Total assets
$
1,209,306

 
$
1,261,769

 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities:
 
 
 
Short-term debt
$
3,266

 
$
4,721

Accounts payable and accrued liabilities
101,011

 
108,885

Deferred revenue
64

 
4,703

Total current liabilities
104,341

 
118,309

 
 
 
 
Deferred tax liabilities
233

 
229

Other non-current liabilities
28,426

 
27,330

Total liabilities
133,000

 
145,868

 
 
 
 
Commitments and contingencies (Note 14)


 


 
 
 
 
Stockholders' equity:
 
 
 
Common stock, €0.01 par value, 798,096,000 shares authorized, 224,928,953 and 224,228,071 shares issued and 223,822,476 and 223,289,389 shares outstanding
2,823

 
2,814

Additional paid-in capital
1,053,705

 
1,050,873

Retained earnings
65,520

 
106,923

Accumulated other comprehensive loss
(30,970
)
 
(30,972
)
Treasury stock (at cost), 1,106,477 and 938,682 shares
(14,772
)
 
(13,737
)
Total stockholders' equity
1,076,306

 
1,115,901

Total liabilities and equity
$
1,209,306

 
$
1,261,769


The accompanying notes are an integral part of these condensed consolidated financial statements.
3


FRANK'S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2018
 
2017
Revenues:
 
 
 
Services
$
91,348

 
$
86,322

Products
24,221

 
24,409

Total revenue
115,569

 
110,731

 
 
 
 
Operating expenses:
 
 
 
Cost of revenues, exclusive of depreciation and amortization
 
 
 
Services
63,210

 
51,683

Products
18,747

 
22,269

General and administrative expenses
38,730

 
42,725

Depreciation and amortization
28,300

 
31,099

Severance and other charges
1,254

 
1,037

(Gain) loss on disposal of assets
235

 
(1,472
)
Operating loss
(34,907
)
 
(36,610
)
 
 
 
 
Other income (expense):
 
 
 
Tax receivable agreement ("TRA") related adjustments
(2,941
)
 
—

Other income (expense), net
(440
)
 
134

Interest income, net
944

 
398

Mergers and acquisition expense
(58
)
 
(449
)
Foreign currency gain
1,704

 
746

Total other income (expense)
(791
)
 
829

 
 
 
 
Loss before income taxes
(35,698
)
 
(35,781
)
Income tax expense (benefit)
6,375

 
(9,118
)
Net loss
$
(42,073
)
 
$
(26,663
)
 
 
 
 
Dividends per common share
$
—

 
$
0.075

 
 
 
 
Loss per common share:
 
 
 
Basic and diluted
$
(0.19
)
 
$
(0.12
)
 
 
 
 
Weighted average common shares outstanding:
 
 
 
Basic and diluted
223,567

 
222,564



The accompanying notes are an integral part of these condensed consolidated financial statements.
4


FRANK'S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2018
 
2017
 
 
 
 
Net loss
$
(42,073
)
 
$
(26,663
)
Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
87

 
483

Marketable securities:
 
 
 
Unrealized loss on marketable securities
(85
)
 
(81
)
Reclassification to net income
—

 
(395
)
Deferred tax asset / liability change
—

 
158

Unrealized loss on marketable securities, net of tax
(85
)
 
(318
)
Total other comprehensive income
2

 
165

Comprehensive loss
$
(42,071
)
 
$
(26,498
)


The accompanying notes are an integral part of these condensed consolidated financial statements.
5


FRANK'S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
Total
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
Treasury
 
Stockholders'
 
Shares
 
Value
 
Capital
 
Earnings
 
Income (Loss)
 
Stock
 
Equity
Balances at December 31, 2016
222,401

 
$
2,802

 
$
1,036,786

 
$
317,270

 
$
(32,977
)
 
$
(12,562
)
 
$
1,311,319

Net loss
—

 
—

 
—

 
(26,663
)
 
—

 
—

 
(26,663
)
Foreign currency translation adjustments
—

 
—

 
—

 
—

 
483

 
—

 
483

Change in marketable securities
—

 
—

 
—

 
—

 
(318
)
 
—

 
(318
)
Equity-based compensation expense
—

 
—

 
5,701

 
—

 
—

 
—

 
5,701

Common stock dividends ($0.075 per share)
—

 
—

 
—

 
(16,703
)
 
—

 
—

 
(16,703
)
Common shares issued upon vesting of share-based awards
471

 
5

 
(5
)
 
—

 
—

 
—

 
—

Common shares issued for employee stock purchase plan ("ESPP")
50

 
1

 
525

 
—

 
—

 
—

 
526

Treasury shares issued upon vesting of share-based awards
1

 
—

 
(31
)
 
—

 
—

 
23

 
(8
)
Treasury shares withheld
(147
)
 
—

 
—

 
—

 
—

 
(1,794
)
 
(1,794
)
Balances at March 31, 2017
222,776

 
$
2,808

 
$
1,042,976

 
$
273,904

 
$
(32,812
)
 
$
(14,333
)
 
$
1,272,543

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
Total
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
Treasury
 
Stockholders'
 
Shares
 
Value
 
Capital
 
Earnings
 
Income (Loss)
 
Stock
 
Equity
Balances at December 31, 2017
223,289

 
$
2,814

 
$
1,050,873

 
$
106,923

 
$
(30,972
)
 
$
(13,737
)
 
$
1,115,901

Cumulative effect of accounting change
—

 
—

 
—

 
670

 
—

 
—

 
670

Net loss
—

 
—

 
—

 
(42,073
)
 
—

 
—

 
(42,073
)
Foreign currency translation adjustments
—

 
—

 
—

 
—

 
87

 
—

 
87

Change in marketable securities
—

 
—

 
—

 
—

 
(85
)
 
—

 
(85
)
Equity-based compensation expense
—

 
—

 
2,280

 
—

 
—

 
—

 
2,280

Common shares issued upon vesting of share-based awards
601

 
8

 
(8
)
 
—

 
—

 
—

 
—

Common shares issued for ESPP
99

 
1

 
560

 
—

 
—

 
—

 
561

Treasury shares withheld
(167
)
 
—

 
—

 
—

 
—

 
(1,035
)
 
(1,035
)
Balances at March 31, 2018
223,822

 
$
2,823

 
$
1,053,705

 
$
65,520

 
$
(30,970
)
 
$
(14,772
)
 
$
1,076,306


The accompanying notes are an integral part of these condensed consolidated financial statements.
6


FRANK'S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended
 
March 31,
 
2018
 
2017
Cash flows from operating activities
 
 
 
Net loss
$
(42,073
)
 
$
(26,663
)
Adjustments to reconcile net loss to cash used in operating activities
 
 
 
Depreciation and amortization
28,300

 
31,099

Equity-based compensation expense
2,280

 
5,701

Amortization of deferred financing costs
—

 
205

Deferred tax benefit
—

 
(11,060
)
Provision (recovery) for bad debts
103

 
(91
)
(Gain) loss on disposal of assets
235

 
(1,472
)
Changes in fair value of investments
191

 
(1,013
)
Realized loss on sale of investment
—

 
478

Unrealized (gain) loss on derivatives
(561
)
 
456

Other
—

 
(1,876
)
Changes in operating assets and liabilities
 
 
 
Accounts receivable
(4,426
)
 
(10,030
)
Inventories
(2,469
)
 
4,732

Other current assets
1,042

 
1,045

Other assets
270

 
547

Accounts payable and accrued liabilities
(3,295
)
 
4,486

Deferred revenue
(410
)
 
(3,716
)
Other non-current liabilities
(96
)
 
(2,263
)
Net cash used in operating activities
(20,909
)
 
(9,435
)

 
 
 
Cash flows from investing activities
 
 
 
Purchases of property, plant and equipment and intangibles
(6,323
)
 
(11,720
)
Proceeds from sale of assets
1,639

 
1,636

Proceeds from sale of investments
30,969

 
2,899

Purchase of investments
(26,428
)
 
(59
)
Net cash used in investing activities
(143
)
 
(7,244
)
 
 
 
 
Cash flows from financing activities
 
 
 
Repayments of borrowings
(1,455
)
 
(72
)
Proceeds from borrowings
—

 
4

Dividends paid on common stock
—

 
(16,703
)
Net treasury shares withheld for taxes
(1,035
)
 
(1,802
)
Proceeds from the issuance of ESPP shares
561

 
526

Net cash used in financing activities
(1,929
)
 
(18,047
)
Effect of exchange rate changes on cash
(1,255
)
 
(860
)
Net decrease in cash and cash equivalents
(24,236
)
 
(35,586
)
Cash and cash equivalents at beginning of period
213,015

 
319,526

Cash and cash equivalents at end of period
$
188,779

 
$
283,940

 
 
 
 
Non-cash transactions:
 
 
 
Change in accounts payable and accrued liabilities related to capital expenditures
$
(2,538
)
 
$
2,430

Net transfers from inventory to property, plant and equipment
(720
)
 
—


The accompanying notes are an integral part of these condensed consolidated financial statements.
7

FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1—Basis of Presentation

Nature of Business

Frank’s International N.V. ("FINV"), a limited liability company organized under the laws of The Netherlands, is a global provider of highly engineered tubular services, tubular fabrication and specialty well construction and well intervention solutions to the oil and gas industry. FINV provides services and products to leading exploration and production companies in both offshore and onshore environments with a focus on complex and technically demanding wells.

Basis of Presentation

The condensed consolidated financial statements of FINV for the three months ended March 31, 2018 and 2017 include the activities of Frank's International C.V. ("FICV"), Blackhawk Group Holdings, LLC ("Blackhawk") and their wholly owned subsidiaries (collectively, the "Company," "we," "us" or "our"). All intercompany accounts and transactions have been eliminated for purposes of preparing these condensed consolidated financial statements.

Our accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. The consolidated balance sheet at December 31, 2017 is derived from audited financial statements. However, certain information and footnote disclosures required by generally accepted accounting principles in the United States of America ("GAAP") for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2017 , which are included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 27, 2018 ("Annual Report"). In the opinion of management, these condensed consolidated financial statements, which have been prepared pursuant to the rules of the SEC and GAAP for interim financial reporting, reflect all adjustments, which consisted only of normal recurring adjustments that were necessary for a fair statement of the interim periods presented. The results of operations for interim periods are not necessarily indicative of those for a full year.

The condensed consolidated financial statements have been prepared on a historical cost basis using the United States dollar as the reporting currency. Our functional currency is primarily the United States dollar.

Reclassifications

Certain prior-period amounts have been reclassified to conform to the current period's presentation. These reclassifications had no impact on our net income (loss), working capital, cash flows or total equity previously reported.
Our financial statements for the three months ended March 31, 2017 have been revised to decrease "cost of revenues, services" and increase "cost of revenues, products" by the following immaterial amounts in order to correct a misclassification associated with Blackhawk product costs. While the revisions do impact two financial statement line items, the revisions had no impact on our net income (loss), working capital, cash flows or total equity previously reported (in thousands):
 
Three Months Ended
 
March 31, 2017
Cost of revenues, exclusive of depreciation and amortization
 
Services, as previously reported
$
57,107

Blackhawk adjustment
(5,424
)
Services, as revised
$
51,683

 
 
Products, as previously reported
$
16,845

Blackhawk adjustment
5,424

Products, as revised
$
22,269



8
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standards updates ("ASUs") to the FASB’s Accounting Standards Codification.

We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and were either determined to be not applicable or are expected to have immaterial impact on our consolidated financial position, results of operations and cash flows.

In May 2017, the FASB issued guidance to clarify and reduce both (i) diversity in practice and (ii) cost and complexity when accounting for a change to the terms and conditions of a share-based payment award. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this guidance should be applied prospectively to an award modified on or after the adoption date. We adopted the guidance on January 1, 2018 and the adoption did not have an impact on our consolidated financial statements.

In January 2017, the FASB issued new accounting guidance for business combinations clarifying the definition of a business. The objective of the guidance is to help companies and other organizations which have acquired or sold a business to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities, the guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. We adopted the guidance on January 1, 2018 and the adoption did not have an impact on our consolidated financial statements.

In June 2016, the FASB issued new accounting guidance for credit losses on financial instruments. The guidance includes the replacement of the “incurred loss” approach for recognizing credit losses on financial assets, including trade receivables, with a methodology that reflects expected credit losses, which considers historical and current information as well as reasonable and supportable forecasts. For public entities, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the provisions of this new accounting guidance, including which period to adopt, and has not determined what impact the adoption will have on our consolidated financial statements.

In February 2016, the FASB issued accounting guidance for leases. The main objective of the accounting guidance is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and the new guidance is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The new guidance requires lessees to recognize assets and liabilities arising from leases on the balance sheet and further defines a lease as a contract that conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Control over the use of the identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefit from the use of the asset and (2) the right to direct the use of the asset. The accounting guidance requires disclosures by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. For public entities, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; early application is permitted. We are currently evaluating the impact of this accounting standard update on our consolidated financial statements and plan to adopt the new standard effective January 1, 2019.

In May 2014, the FASB issued amendments to guidance on the recognition of revenue based upon the entity’s contracts with customers to transfer goods or services. Under the new revenue standard, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five step model


9
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

that requires companies to exercise judgment when considering the terms of a contract and all relevant facts and circumstances. The standard allows for two transition methods: (a) a full retrospective adoption in which the standard is applied to all periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements, including additional disclosures of the standard’s application impact to individual financial statement line items. In July 2015, the FASB deferred the effective date to December 15, 2017 for annual periods, and interim reporting periods within those fiscal years, beginning after that date.

We adopted the new revenue standard effective January 1, 2018 using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. Our adjustment related solely to revenues from certain product sales with bill-and-hold arrangements in our Tubular Sales segment. The comparative information has not been restated and continues to be reported under the accounting standards which were in effect for those periods. The impact to revenue of applying the new revenue recognition standard for the three months ended March 31, 2018 was immaterial. We expect the impact of the adoption of the new standard to be immaterial to our financial results on an ongoing basis.
The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of the new revenue standard was as follows (in thousands):
 
Balance at
 
Impact of
 
Balance at
 
December 31, 2017
 
Adjustments
 
January 1, 2018
Balance Sheet
 
 
 
 
 
Assets
 
 
 
 
 
Inventories, net
$
76,420

 
$
(3,560
)
 
$
72,860

Liabilities
 
 
 
 
 
Deferred revenue
4,703

 
(4,230
)
 
473

Stockholders' Equity
 
 
 
 
 
Retained earnings
106,923

 
670

 
107,593


Note 2—Revenues

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Payment terms on services and products generally range from  30 days to  120 days. Given the short-term nature of our service and product offerings, our contracts do not have a significant financing component and the consideration we receive is generally fixed.    
Service revenues are recognized over time as services are performed or rendered. We generally perform services either under direct service purchase orders or master service agreements which are supplemented by individual call-out provisions. For customers contracted under such arrangements, an accrual is recorded in unbilled revenue for revenue earned but not yet invoiced.
Revenues on product sales are generally recognized at a point in time when the product has shipped and significant risks of ownership have passed to the customer. The sales arrangements typically do not include a right of return or other similar provisions, nor do they contain any other post-delivery obligations.
Some of our Tubular Sales and Blackhawk segment customers have requested that we store pipe, connectors and other products purchased from us in our facilities. We recognize revenues for these “bill and hold” sales once the following criteria have been met: (1) there is a substantive reason for the arrangement, (2) the product is identified as the customer's asset, (3) the product is ready for delivery to the customer, and (4) we cannot use the product or direct it to another customer.



10
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Practical Expedients

We elected to apply certain practical expedients available under the new revenue standard. We elected to expense cost of obtaining contracts, such as sales commissions, when incurred because the amortization period would have been one year or less due to the length of our contracts. We have also elected not to assess immaterial promises in the context of our contracts as performance obligations and to exclude taxes from the assessment of transaction price in arrangements where taxes are collected by the entity from a customer.
We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Because our contracts with customers are short-term in nature and fall within this exemption, we do not have significant unsatisfied performance obligations as defined by the new revenue standard.
Note 3—Accounts Receivable, net

Accounts receivable at March 31, 2018 and December 31, 2017 were as follows (in thousands):
 
March 31,
 
December 31,
 
2018
 
2017
Trade accounts receivable, net of allowance of $4,972 and $4,777, respectively
$
88,993

 
$
83,482

Unbilled revenue
25,470

 
25,670

Taxes receivable
11,008

 
11,305

Affiliated (1)
549

 
716

Other receivables
6,243

 
6,037

Total accounts receivable, net
$
132,263

 
$
127,210

 
 
 

(1)  
Amounts represent expenditures on behalf of non-consolidated affiliates.

Note 4—Inventories, net

Inventories at March 31, 2018 and December 31, 2017 were as follows (in thousands):
 
March 31,
 
December 31,
 
2018
 
2017
Pipe and connectors, net of allowance of $19,868 and $20,064, respectively
$
27,930

 
$
33,620

Finished goods, net of allowance of $1,517 and $1,520, respectively
15,016

 
14,541

Work in progress
9,179

 
9,206

Raw materials, components and supplies
20,382

 
19,053

Total inventories, net
$
72,507

 
$
76,420




11
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5—Property, Plant and Equipment

The following is a summary of property, plant and equipment at March 31, 2018 and December 31, 2017 (in thousands):
 
Estimated
Useful Lives
in Years
 
March 31,
2018
 
December 31,
2017
Land
—
 
$
15,365

 
$
15,314

Land improvements (1)
8-15
 
15,080

 
14,594

Buildings and improvements (1)
39
 
117,003

 
119,380

Rental machinery and equipment
7
 
900,702

 
898,146

Machinery and equipment - other
7
 
55,351

 
55,049

Furniture, fixtures and computers
5
 
27,697

 
27,259

Automobiles and other vehicles
5
 
30,001

 
29,971

Leasehold improvements (1)
7-15, or lease term if shorter
 
11,915

 
10,030

Construction in progress - machinery
     and equipment and land improvements (1)
—
 
61,644

 
61,836

 
 
 
1,234,758

 
1,231,579

Less: Accumulated depreciation
 
 
(785,605
)
 
(761,933
)
Total property, plant and equipment, net
 
 
$
449,153

 
$
469,646

 
 
 

(1)  
See Note 11 - Related Party Transactions for additional information.

During the third quarter of 2017, we committed to sell certain of our buildings in the Middle East region and determined those assets met the criteria to be classified as held for sale in our condensed consolidated balance sheet. As a result, we reclassified the buildings, with a net book value of $4.1 million , from property, plant and equipment to assets held for sale. During the first quarter of 2018, we sold one of the buildings classified as held for sale for $0.8 million and recorded an immaterial loss.

The following table presents the depreciation and amortization expense associated with each line item for the three months ended March 31, 2018 and 2017 (in thousands):
 
 
Three Months Ended
 
March 31,
 
2018
 
2017
Services
 
$
23,579

 
$
26,643

Products
 
1,137

 
1,309

General and administrative expenses
 
3,584

 
3,147

Total
 
$
28,300

 
$
31,099




12
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6—Other Assets

Other assets at March 31, 2018 and December 31, 2017 consisted of the following (in thousands):
 
March 31,
 
December 31,
 
2018
 
2017
Cash surrender value of life insurance policies (1)
$
30,491

 
$
30,351

Deposits
2,422

 
2,564

Other
1,073

 
2,378

Total other assets
$
33,986

 
$
35,293

 
 
 

        
(1)  
See Note 9 – Fair Value Measurements

Note 7—Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at March 31, 2018 and December 31, 2017 consisted of the following (in thousands):
 
March 31,
 
December 31,
 
2018
 
2017
Accounts payable
$
31,899

 
$
33,912

Accrued compensation
21,221

 
25,510

Accrued property and other taxes
12,485

 
16,908

Accrued severance and other charges
1,072

 
1,444

Income taxes
13,143

 
8,091

Accrued purchase orders and other
21,191

 
23,020

Total accounts payable and accrued liabilities
$
101,011

 
$
108,885


Note 8—Debt

Credit Facility

We have a $100.0 million revolving credit facility with certain financial institutions, including up to $20.0 million in letters of credit and up to $10.0 million in swingline loans, which matures in August 2018 (the “Credit Facility”). Subject to the terms of the Credit Facility, we have the ability to increase the commitments to $150.0 million . At March 31, 2018 and December 31, 2017 , we had $2.5 million and $2.8 million , respectively, in letters of credit outstanding and no outstanding borrowings under this facility. Our borrowing capacity is equal to  2.5 x our trailing twelve month Adjusted EBITDA less letters of credit outstanding under the Credit Facility. Our borrowing capacity under the Credit Facility could be reduced or eliminated depending on our future Adjusted EBITDA.

Borrowings under the Credit Facility bear interest, at our option, at either a base rate or an adjusted Eurodollar rate. Base rate loans under the Credit Facility bear interest at a rate equal to the higher of (i) the prime rate as published in the Wall Street Journal, (ii) the Federal Funds Effective Rate plus 0.50% or (iii) the adjusted Eurodollar rate plus 1.00% , plus an applicable margin ranging from 0.50% to 1.50% , subject to adjustment based on a leverage ratio. Interest is in each case payable quarterly for base-rate loans. Eurodollar loans under the Credit Facility bear interest at an adjusted Eurodollar rate equal to the Eurodollar rate for such interest period multiplied by the statutory reserves, plus an applicable margin ranging from 1.50% to 2.50% . Interest is payable at the end of applicable interest periods for Eurodollar loans, except that if the interest period for a Eurodollar loan is longer than three months , interest is paid at the end of each three -month period. The unused portion of the Credit Facility is subject to a commitment fee ranging from 0.250% to 0.375% based on certain leverage ratios.


13
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The Credit Facility contains various covenants that, among other things, limit our ability to grant certain liens, make certain loans and investments, enter into mergers or acquisitions, enter into hedging transactions, change our lines of business, prepay certain indebtedness, enter into certain affiliate transactions, incur additional indebtedness or engage in certain asset dispositions.

The Credit Facility also contains financial covenants, which, among other things, require us, on a consolidated basis, to maintain: (i) a ratio of total consolidated funded debt to adjusted EBITDA (as defined in our Credit Agreement) of not more than 2.5 to 1.0 and (ii) a ratio of EBITDA to interest expense of not less than 3.0 to 1.0. As of March 31, 2018 , we were in compliance with the covenants included in the Credit Agreement.

In addition, the Credit Facility contains customary events of default, including, among others, the failure to make required payments, the failure to comply with certain covenants or other agreements, breach of the representations and covenants contained in the agreements, default of certain other indebtedness, certain events of bankruptcy or insolvency and the occurrence of a change in control.

Citibank Credit Facility

In 2016, we entered into a three -year credit facility with Citibank N.A., UAE Branch in the amount of $6.0 million for the issuance of standby letters of credit and guarantees. The credit facility also allows for open ended guarantees. Outstanding amounts under the credit facility bear interest of 1.25% per annum for amounts outstanding up to one year. Amounts outstanding more than one year bear interest at 1.5% per annum. As of both March 31, 2018 and December 31, 2017 , we had $2.6 million in letters of credit outstanding.

Insurance Notes Payable

In 2017, we entered into three notes to finance our annual insurance premiums totaling $5.1 million . The notes bear interest at an annual rate of 2.9% with a final maturity date in October 2018 . At March 31, 2018 and December 31, 2017 , the total outstanding balance was $3.2 million and $4.7 million , respectively.

Note 9—Fair Value Measurements

We follow fair value measurement authoritative accounting guidance for measuring fair values of assets and liabilities in financial statements. We have consistently used the same valuation techniques for all periods presented. Please see Note 10 - Fair Value Measurements in our Annual Report for further discussion.


14
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of March 31, 2018 and December 31, 2017 , were as follows (in thousands):
 
Quoted Prices
in Active
Markets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
 
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
March 31, 2018
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Derivative financial instruments
$
—

 
$
73

 
$
—

 
$
73

Investments:
 
 
 
 
 
 
 
Cash surrender value of life insurance policies - deferred compensation plan
—

 
30,491

 
—

 
30,491

Marketable securities - other
54

 
—

 
—

 
54

Liabilities:
 
 
 
 
 
 
 
Deferred compensation plan
—

 
26,191

 
—

 
26,191

 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
Cash surrender value of life insurance policies - deferred compensation plan
$
—

 
$
30,351

 
$
—

 
$
30,351

Marketable securities - other
113

 
—

 
—

 
113

Liabilities:
 
 
 
 
 
 
 
Derivative financial instruments
—

 
487

 
—

 
487

Deferred compensation plan
—

 
26,797

 
—

 
26,797


Our derivative financial instruments consist of short-duration foreign currency forward contracts. The fair value of our derivative financial instruments is based on quoted market values including foreign exchange forward rates and interest rates. The fair value is computed by discounting the projected future cash flow amounts to present value. Derivative financial instruments are included in our condensed consolidated balance sheets in accounts receivable, net at March 31, 2018 and in accounts payable and accrued liabilities at December 31, 2017 .

Our investments associated with our deferred compensation plan consist primarily of the cash surrender value of life insurance policies and are included in other assets on the condensed consolidated balance sheets. Our investments change as a result of contributions, payments, and fluctuations in the market. Our liabilities associated with our deferred compensation plan are included in o ther non-current liabilities on the condensed consolidated balance sheets. Assets and liabilities, measured using significant observable inputs, are reported at fair value based on third-party broker statements, which are derived from the fair value of the funds' underlying investments. We also have marketable securities in publicly traded equity securities as an indirect result of strategic investments. They are reported at fair value based on the price of the stock and are included in other assets on the condensed consolidated balance sheets.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

We apply the provisions of the fair value measurement standard to our non-recurring, non-financial measurements including business combinations as well as impairment related to goodwill and other long-lived assets.



15
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Fair Value Considerations

The carrying values on our condensed consolidated balance sheet of our cash and cash equivalents, short-term investments, trade accounts receivable, other current assets, accounts payable, accrued and other current liabilities and lines of credit approximate fair values due to their short maturities.

Note 10— Derivatives

We enter into short-duration foreign currency forward derivative contracts to reduce the risk of foreign currency fluctuations. We use these instruments to mitigate our exposure to non-local currency operating working capital. We record these contracts at fair value on our condensed consolidated balance sheets. Although the derivative contracts will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts for hedge accounting treatment. Accordingly, any changes in the fair value of the derivative instruments during a period will be included in our condensed consolidated statements of operations.

As of March 31, 2018 and December 31, 2017 , we had the following foreign currency derivative contracts outstanding in U.S. dollars (in thousands):
 
 
March 31, 2018
Derivative Contracts
 
Notional Amount
 
Contractual Exchange Rate
 
Settlement Date
Canadian dollar
 
$
5,025

 
1.2935
 
6/15/2018
Euro
 
9,080

 
1.2438
 
6/15/2018
Norwegian krone
 
5,575

 
7.7127
 
6/15/2018
Pound sterling
 
6,105

 
1.4035
 
6/15/2018
 
 
December 31, 2017
Derivative Contracts
 
Notional Amount
 
Contractual Exchange Rate
 
Settlement Date
Canadian dollar
 
$
6,226

 
1.2850
 
3/15/2018
Euro
 
5,326

 
1.1836
 
3/15/2018
Norwegian krone
 
6,212

 
8.3704
 
3/15/2018
Pound sterling
 
6,039

 
1.3419
 
3/15/2018

The following table summarizes the location and fair value amounts of all derivative contracts in the condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017 (in thousands):
Derivatives not Designated as Hedging Instruments
 
Consolidated Balance Sheet Location
 
March 31, 2018
 
December 31, 2017
Foreign currency contracts
 
Accounts receivable, net
 
$
73

 
$
—

Foreign currency contracts
 
Accounts payable and accrued liabilities
 
—

 
(487
)



16
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the location and amounts of the realized and unrealized gains and losses on derivative contracts in the condensed consolidated statements of operations (in thousands):
 
 
 
 
Three Months Ended
 
 
 
 
March 31,
Derivatives not Designated as Hedging Instruments
 
Location of Gain (Loss) Recognized in Income on Derivative Contracts
 
2018
 
2017
Unrealized gain (loss) on foreign currency contracts
 
Other income (expense), net
 
$
561

 
$
(456
)
Realized gain (loss) on foreign currency contracts
 
Other income (expense), net
 
(940
)
 
255

Total net loss on foreign currency contracts
 
 
 
$
(379
)
 
$
(201
)

Our derivative transactions are governed through International Swaps and Derivatives Association master agreements. These agreements include stipulations regarding the right of offset in the event that we or our counterparty default on our performance obligations. If a default were to occur, both parties have the right to net amounts payable and receivable into a single net settlement between parties. Our accounting policy is to offset derivative assets and liabilities executed with the same counterparty when a master netting arrangement exists.

The following table presents the gross and net fair values of our derivatives at March 31, 2018 and December 31, 2017 (in thousands):
 
 
Derivative Asset Positions
 
Derivative Liability Positions
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 2018
 
December 31, 2017
Gross position - asset / (liability)
 
$
115

 
$
—

 
$
(42
)
 
$
(487
)
Netting adjustment
 
(42
)
 
—

 
42

 
—

Net position - asset / (liability)
 
$
73

 
$
—

 
$
—

 
$
(487
)

Note 11—Related Party Transactions

We have engaged in certain transactions with other companies related to us by common ownership. We have entered into various operating leases to lease facilities from these affiliated companies. The majority of these lease obligations expire in 2018 and, at our discretion, may be extended for an additional 36 months subject to agreement on pricing of the extension. These leases may be extended or allowed to expire by us depending on operational needs, market prices and the ability for us to negotiate and secure, at our discretion, alternative leases or replacement locations. Rent expense associated with our related party leases was $2.2 million and $1.8 million for the three months ended March 31, 2018 and 2017 , respectively.

In certain cases, we have made improvements to properties subject to related party leases referenced above, including the construction of buildings. As of March 31, 2018 , the net book value associated with buildings we constructed on properties subject to related party leases was $58.8 million . We are depreciating the costs associated with these buildings over their estimated remaining useful lives of approximately 38 years, which exceeds the remaining lease terms that primarily expire in 2018. Upon expiration of the leases, the buildings, land improvements and leasehold improvements could be construed as becoming the property of the related party lessors. As of March 31, 2018 , the net book value associated with leasehold and land improvements we constructed on properties subject to related party leases was $18.0 million , a portion of which is in construction in progress. We are depreciating the costs associated with these leasehold and land improvements over their estimated remaining lives of approximately 10 years, which exceeds the remaining lease terms that primarily expire in 2018. It is our intent to extend, renew, or replace the related party property leases such that we have unrestricted use of the buildings and improvements throughout their estimated useful lives. Extension, renewal or replacement of the related party property leases is dependent on negotiations with related parties, the failure of which could result in material disputes with the related parties. In the event we do not


17
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

extend, renew, or replace these related party property leases, we will revise the remaining estimated useful lives of the buildings and other improvements accordingly.

We were a party to certain agreements relating to the rental of aircraft to Western Airways ("WA"), an entity owned by the Mosing family. The WA agreements reflected both dry lease and wet lease rental, whereby we were charged a flat monthly fee primarily for crew, hangar, maintenance and administration costs in addition to other variable costs for fuel and maintenance. We also earned charter income from third party usage through a revenue sharing agreement. We recorded a minimal amount of net charter expense for the three months ended March 31, 2018 and 2017. In March 2017, we sold a fully depreciated aircraft for a total sales price of $1.3 million and recorded a gain on sale of $1.3 million . The rental agreements were terminated with WA effective December 29, 2017, upon the sale of our last aircraft.

Tax Receivable Agreement

Mosing Holdings and its permitted transferees converted all their Preferred Stock into shares of our common stock on a one -for-one basis on August 26, 2016, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications and other similar transactions, by delivery of an equivalent portion of their interests in FICV to us (the “Conversion”). FICV made an election under Section 754 of the Internal Revenue Code. Pursuant to the Section 754 election, the Conversion resulted in an adjustment to the tax basis of the tangible and intangible assets of FICV with respect to the portion of FICV now held by FINV. These adjustments will be allocated to FINV. The adjustments to the tax basis of the tangible and intangible assets of FICV described above would not have been available absent this Conversion. These basis adjustments may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

The TRA that we entered into with FICV and Mosing Holdings in connection with our initial public offering ("IPO") generally provides for the payment by FINV of 85% of the amount of the actual reductions, if any, in payments of U.S. federal, state and local income tax or franchise tax (which reductions we refer to as “cash savings”) in periods after our IPO as a result of (i) the tax basis increases resulting from the Conversion and (ii) imputed interest deemed to be paid by us as a result of, and additional tax basis arising from, payments under the TRA. In addition, the TRA provides for payment by us of interest earned from the due date (without extensions) of the corresponding tax return to the date of payment specified by the TRA. The payments under the TRA will not be conditioned upon a holder of rights under the TRA having a continued ownership interest in either FICV or FINV. We will retain the remaining 15% of cash savings, if any.

The estimation of the liability under the TRA is by its nature imprecise and subject to significant assumptions regarding the amount and timing of future taxable income. As of March 31, 2018 , FINV has a cumulative loss over the prior 36 -month period. Based on this history of losses, as well as uncertainty regarding the timing and amount of future taxable income, we are unable to conclude that there will be future cash savings that will lead to additional payouts under the TRA beyond the estimated $5.1 million as of March 31, 2018 . Additional TRA liability may be recognized in the future based on changes in expectations regarding the timing and likelihood of future cash savings.

The payment obligations under the TRA are our obligations and are not obligations of FICV. The term of the TRA will continue until all such tax benefits have been utilized or expired, unless FINV elects to exercise its sole right to terminate the TRA early. If FINV elects to terminate the TRA early, which it may do so in its sole discretion, it would be required to make an immediate payment equal to the present value of the anticipated future tax benefits subject to the TRA (based upon certain assumptions and deemed events set forth in the TRA, including the assumption that it has sufficient taxable income to fully utilize such benefits and that any FICV interests that Mosing Holdings or its transferees own on the termination date are deemed to be exchanged on the termination date). Any early termination payment may be made significantly in advance of the actual realization, if any, of such future benefits. In addition, payments due under the TRA will be similarly accelerated following certain mergers or other changes of control. In these situations, FINV’s obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. For example, if the TRA were terminated on March 31, 2018 , the estimated termination payment would be


18
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

approximately $54.6 million (calculated using a discount rate of 5.85% ). The foregoing number is merely an estimate and the actual payment could differ materially.

Because FINV is a holding company with no operations of its own, its ability to make payments under the TRA is dependent on the ability of FICV to make distributions to it in an amount sufficient to cover FINV’s obligations under such agreements; this ability, in turn, may depend on the ability of FICV’s subsidiaries to provide payments to it. The ability of FICV and its subsidiaries to make such distributions will be subject to, among other things, the applicable provisions of Dutch law that may limit the amount of funds available for distribution and restrictions in our debt instruments. To the extent that FINV is unable to make payments under the TRA for any reason, except in the case of an acceleration of payments thereunder occurring in connection with an early termination of the TRA or certain mergers or change of control, such payments will be deferred and will accrue interest until paid, and FINV will be prohibited from paying dividends on its common stock.

Note 12 - Loss Per Common Share

Basic loss per common share is determined by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is determined by dividing net loss by the weighted average number of common shares outstanding, assuming all potentially dilutive shares were issued. We apply the treasury stock method to determine the dilutive weighted average common shares represented by the unvested restricted stock units and ESPP shares.

The following table summarizes the basic and diluted loss per share calculations (in thousands, except per share amounts):
 
Three Months Ended
 
March 31,
 
2018
 
2017
Numerator
 
 
 
Net loss
$
(42,073
)
 
$
(26,663
)
Denominator
 
 
 
Basic and diluted weighted average common shares  (1)
223,567

 
222,564

Loss per common share:
 
 
 
Basic and diluted
$
(0.19
)
 
$
(0.12
)
 
 
 
 
 
(1)  
Approximate number of unvested restricted stock units and stock to be issued pursuant to the ESPP that have been excluded from the computation of diluted loss per share as the effect would be anti-dilutive when results from operations are at a net loss position.
702

 
799


Note 13—Income Taxes

For interim financial reporting, we estimate the annual tax rate based on projected pre-tax income (loss) for the full year and record a quarterly income tax provision (benefit) in accordance with accounting guidance for income taxes. As the year progresses, we refine the estimate of the year's pre-tax income (loss) as new information becomes available. The continual estimation process often results in a change to the expected effective tax rate for the year. When this occurs, we adjust the income tax provision (benefit) during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the most current expected annual tax rate.

Our effective tax rate was (17.9)% and 25.5% for the three months ended March 31, 2018 and 2017 , respectively. In the current period we have a negative tax rate primarily due to recording tax expense in various foreign jurisdictions even though we had a net consolidated loss for the current period. We also recorded additional tax expense due to establishing valuation allowances against deferred tax assets generated in the U.S. and certain foreign jurisdictions


19
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

during the first quarter of 2018. In the first quarter of 2017, we did not record valuation allowances against our U.S. deferred tax assets or the corresponding tax expense.

In determining that a valuation allowance must be recorded in the current period, we assessed the available positive and negative evidence and concluded that it is not more likely than not that sufficient future taxable income would be generated to permit the use of our deferred tax assets. This conclusion is primarily the result of cumulative losses incurred in the most recent three-year period, and uncertainty regarding when we will return to profitability. The amount of deferred tax asset considered realizable and the related need for a valuation allowance may be adjusted in future periods as the available evidence changes.

We are under audit by the U.S. and certain foreign jurisdictions for the years 2014 - 2016. We do not expect the results of these audits to have any material effect on our financial statements.

As of March 31, 2018 , there were no significant changes to our unrecognized tax benefits as reported in our audited financial statements for the year ended December 31, 2017 .

Note 14—Commitments and Contingencies

We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of March 31, 2018 and December 31, 2017 . We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows.

We are conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act ("FCPA"), our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our extensive internal review to the SEC, the U.S. Department of Justice ("DOJ") and other governmental entities. It is our intent to continue to fully cooperate with these agencies and any other applicable authorities in connection with any further investigation that may be conducted in connection with this matter. While our review has not indicated that there has been any material impact on our previously filed financial statements, we have continued to collect information and cooperate with the authorities, but at this time are unable to predict the ultimate resolution of these matters with these agencies.

In addition, during the course of the investigation, we discovered historical business transactions (and bids to enter into business transactions) in certain countries that may have been subject to U.S. and other international sanctions. We disclosed this information to the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement (“OEE”) and to the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) (as well as to the agencies involved in our ongoing investigation discussed above). We received a No Action Letter dated April 20, 2018 from OEE, stating that OEE had closed its investigation without taking further action. In addition, we received a No Action Letter dated April 23, 2018 from OFAC, stating that OFAC had closed its investigation without taking further action.

As disclosed above, our investigation into possible violations of the FCPA remains ongoing, and we will continue to cooperate with the SEC, DOJ and other relevant governmental entities in connection therewith. At this time, we are unable to predict the ultimate resolution of these matters with these agencies, including any financial impact to us. Our board and management are committed to continuously enhancing our internal controls that support improved compliance and transparency throughout our global operations.



20
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 15—Segment Information

Reporting Segments

Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company's chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. We are comprised of four reportable segments: International Services, U.S. Services, Tubular Sales and Blackhawk.

The International Services segment provides tubular services in international offshore markets and in several onshore international regions. Our customers in these international markets are primarily large exploration and production companies, including integrated oil and gas companies and national oil and gas companies , and other oilfield services companies .

The U.S. Services segment provides tubular services in the active onshore oil and gas drilling regions in the U.S., including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus/Utica Shale, Niobrara Shale, Woodford Shale, Green River Basin and Uintah Basin , as well as in the U.S. Gulf of Mexico.

The Tubular Sales segment designs, manufactures and distributes large outside diameter ("OD") pipe, connectors and casing attachments and sells large OD pipe originally manufactured by various pipe mills. We also provide specialized fabrication and welding services in support of offshore projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long length tubulars (up to 300 feet in length) for use as caissons or pilings. This segment also designs and manufactures proprietary equipment for use in our International and U.S. Services segments.

The Blackhawk segment provides well construction and well intervention services and products, in addition to cementing tool expertise, in the U.S. and Mexican Gulf of Mexico, onshore U.S. and other select international locations. Blackhawk’s customer base consists primarily of major and independent oil and gas companies as well as other oilfield services companies.

Revenues

We disaggregate our revenue from contracts with customers by geography for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following table presents our revenues disaggregated by geography based on the location where our services were provided and products sold (in thousands):
 
Three Months Ended March 31, 2018
 
International Services
 
U.S. Services
 
Tubular Sales
 
Blackhawk
 
Consolidated
United States
$
—

 
$
32,607

 
$
15,105

 
$
17,054

 
$
64,766

International
48,733

 
—

 
115

 
1,955

 
50,803

Total Revenues
$
48,733

 
$
32,607

 
$
15,220

 
$
19,009

 
$
115,569

 
Three Months Ended March 31, 2017
 
International Services
 
U.S. Services
 
Tubular Sales
 
Blackhawk
 
Consolidated
United States
$
—

 
$
30,966

 
$
16,559

 
$
16,152

 
$
63,677

International
46,610

 
—

 
386

 
58

 
47,054

Total Revenues
$
46,610

 
$
30,966

 
$
16,945

 
$
16,210

 
$
110,731




21
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue by geographic area was as follows (in thousands):
 
Three Months Ended
 
March 31,
 
2018
 
2017
United States
$
64,766

 
$
63,677

Europe/Middle East/Africa
30,246

 
28,486

Latin America
7,473

 
9,931

Asia Pacific
5,994

 
4,563

Other countries
7,090

 
4,074

Total Revenues
$
115,569

 
$
110,731


Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before interest income, net, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on disposal of assets, foreign currency gain or loss, equity-based compensation, unrealized and realized gain or loss, the effects of the TRA, other non-cash adjustments and other charges. We review Adjusted EBITDA on both a consolidated basis and on a segment basis. We use Adjusted EBITDA to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), income tax, foreign currency exchange rates and other charges and credits. Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP.

Our CODM uses Adjusted EBITDA as the primary measure of segment reporting performance.



22
FRANK’S INTERNATIONAL N.V.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a reconciliation of Segment Adjusted EBITDA to net loss (in thousands):
 
Three Months Ended
 
March 31,
 
2018
 
2017
Segment Adjusted EBITDA:
 
 
 
International Services
$
2,588

 
$
5,286

U.S. Services (1)
(9,301
)
 
(7,215
)
Tubular Sales
2,188

 
2,254

Blackhawk
2,366

 
1,211

 
(2,159
)
 
1,536

Interest income, net
944

 
398

Depreciation and amortization
(28,300
)
 
(31,099
)
Income tax (expense) benefit
(6,375
)
 
9,118

Gain (loss) on disposal of assets
(235
)
 
1,472

Foreign currency gain
1,704

 
746

TRA related adjustments
(2,941
)
 
—

Charges and credits (2)
(4,711
)
 
(8,834
)
Net loss
$
(42,073
)
 
$
(26,663
)
 
 
(1)  
Includes all corporate general and administrative expenses.
(2)  
Comprised of Equity-based compensation expense (for the three months ended March 31, 2018 and 2017 : $2,280 and $5,701 , respectively), Mergers and acquisition expense (for the three months ended March 31, 2018 and 2017 : $58 and $449 , respectively), Severance and other charges (for the three months ended March 31, 2018 and 2017 : $1,254 and $1,037 , respectively), Unrealized and realized losses (for the three months ended March 31, 2018 and 2017 : $400 and $608 , respectively) and Investigation-related matters (for the three months ended March 31, 2018 and 2017 : $719 and $1,039 , respectively).

The following tables set forth certain financial information with respect to our reportable segments (in thousands):
 
International
Services
 
U.S.
Services
 
Tubular Sales
 
Blackhawk
 
Eliminations
 
Total
Three Months Ended March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
$
48,733

 
$
32,607

 
$
15,220

 
$
19,009

 
$
—

 
$
115,569

Inter-segment revenue
(23
)
 
4,216

 
97

 
210

 
(4,500
)
 
—

Operating income (loss)
(11,721
)
 
(21,980
)
 
1,265

 
(2,471
)
 
—

 
(34,907
)
Adjusted EBITDA
2,588

 
(9,301
)
 
2,188

 
2,366

 
—

 
*
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
$
46,610

 
$
30,966

 
$
16,945

 
$
16,210

 
$
—

 
$
110,731

Inter-segment revenue
3

 
4,285

 
3,675

 
—

 
(7,963
)
 
—

Operating income (loss)
(9,513
)
 
(23,347
)
 
2,380

 
(6,130
)
 
—

 
(36,610
)
Adjusted EBITDA
5,286

 
(7,215
)
 
2,254

 
1,211

 
—

 
*
 
 
* Non-GAAP financial measure not disclosed.



23

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things:

•
our business strategy and prospects for growth;
•
our cash flows and liquidity;
•
our financial strategy, budget, projections and operating results;
•
the amount, nature and timing of capital expenditures;
•
the availability and terms of capital;
•
competition and government regulations; and
•
general economic conditions.

Our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “plan,” “goal” or other terms that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. The forward-looking statements in this Form 10-Q speak only as of the date of this report; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following:

•
the level of activity in the oil and gas industry;
•
further or sustained declines in oil and gas prices, including those resulting from weak global demand;
•
the timing, magnitude, probability and/or sustainability of any oil and gas price recovery;
•
unique risks associated with our offshore operations;
•
political, economic and regulatory uncertainties in our international operations;
•
our ability to develop new technologies and products;
•
our ability to protect our intellectual property rights;
•
our ability to employ and retain skilled and qualified workers;
•
the level of competition in our industry;
•
operational safety laws and regulations; and
•
weather conditions and natural disasters.

These and other important factors that could affect our operating results and performance are described in (1) “Risk Factors” in Part II, Item IA of this Form 10-Q, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Form 10-Q, and elsewhere within this Form 10-Q, (2) our Annual Report on Form 10-K for the year ended December 31, 2017 , filed with the SEC on February 27, 2018 (our "Annual Report"), (3) our other reports and filings we make with the SEC from time to time and (4) other announcements we make from time to time. Should one or more of the risks or uncertainties described in the documents above or in this Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statements. All such forward-looking statements in this Form 10-Q are expressly qualified in their entirety by the cautionary statements in this section.



24

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Form 10-Q and the audited consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.

This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statement because of various factors, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” of this Form 10-Q.

Overview of Business

We are a global provider of highly engineered tubular services, tubular fabrication and specialty well construction and well intervention solutions to the oil and gas industry and have been in business for over 75 years. We provide our services and products to leading exploration and production companies in both offshore and onshore environments, with a focus on complex and technically demanding wells.

We conduct our business through four operating segments:

•
International Services. The International Services segment currently provides tubular services in approximately 50 countries on six continents. Our customers in these international markets are primarily large exploration and production companies, including integrated oil and gas companies and national oil and gas companies , and other oilfield services companies .

•
U.S. Services. The U.S. Services segment services customers in the offshore areas of the U.S. Gulf of Mexico. In addition, we have a presence in the active onshore oil and gas drilling regions in the U.S., including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus/Utica Shale, Niobrara Shale, Woodford Shale, Green River Basin and Uintah Basin .

•
Tubular Sales. The Tubular Sales segment designs, manufactures and distributes large OD pipe, connectors and casing attachments and sells large OD pipe originally manufactured by various pipe mills. We also provide specialized fabrication and welding services in support of offshore projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long-length tubulars (up to 300 feet in length) for use as caissons or pilings. This segment also designs and manufactures proprietary equipment for use in our International and U.S. Services segments.

•
Blackhawk. The Blackhawk segment provides well construction and well intervention services and products, in addition to cementing tool expertise, in the U.S. and Mexican Gulf of Mexico, onshore U.S. and other select international locations. Blackhawk’s customer base consists primarily of major and independent oil and gas companies as well as other oilfield services companies.

Market Outlook

In 2018, we expect to see increased customer spending globally on oil and natural gas exploration and production in response to the improvement in commodity prices in recent months. However, much of the anticipated increase in spending will likely continue to be associated with onshore projects that contribute lower revenue and margins to the Company than offshore projects. Activity in the deep and ultra-deep offshore markets is not projected to see significant improvement in 2018 and pricing of newly sanctioned projects is estimated to be approximately in-line with recent trends. In response, we are expanding products and services historically weighted to the U.S. market to international markets, reducing costs through operational efficiency gains and prioritizing projects that improve market share and profitability.



25

How We Evaluate Our Operations

We use a number of financial and operational measures to routinely analyze and evaluate the performance of our business, including revenue, Adjusted EBITDA, Adjusted EBITDA margin and safety performance.

Revenue

We analyze our revenue growth by comparing actual monthly revenue to our internal projections for each month to assess our performance. We also assess incremental changes in our monthly revenue across our operating segments to identify potential areas for improvement.

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA as net income (loss) before interest income, net, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on disposal of assets, foreign currency gain or loss, equity-based compensation, unrealized gain or loss, the effects of the tax receivable agreement ("TRA"), other non-cash adjustments and other charges or credits. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of our revenues. We review Adjusted EBITDA and Adjusted EBITDA margin on both a consolidated basis and on a segment basis. We use Adjusted EBITDA and Adjusted EBITDA margin to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), items outside the control of our management team (such as income tax and foreign currency exchange rates) and other charges outside the normal course of business. Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with generally accepted accounting principles in the U.S. ("GAAP").

The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to net loss for each of the periods presented (in thousands):
 
Three Months Ended
 
March 31,
 
2018
 
2017
 
 
 
 
Net loss
$
(42,073
)
 
$
(26,663
)
Interest income, net
(944
)
 
(398
)
Depreciation and amortization
28,300

 
31,099

Income tax expense (benefit)
6,375

 
(9,118
)
(Gain) loss on disposal of assets
235

 
(1,472
)
Foreign currency gain
(1,704
)
 
(746
)
TRA related adjustments
2,941

 
—

Charges and credits  (1)
4,711

 
8,834

Adjusted EBITDA
$
(2,159
)
 
$
1,536

Adjusted EBITDA margin
(1.9
)%
 
1.4
%
 
 
(1)  
Comprised of Equity-based compensation expense (for the three months ended March 31, 2018 and 2017 : $2,280 and $5,701 , respectively), Mergers and acquisition expense (for the three months ended March 31, 2018 and 2017 : $58 and $449 , respectively), Severance and other charges (for the three months ended March 31, 2018 and 2017 : $1,254 and $1,037 , respectively), Unrealized and realized losses (for the three months ended March 31, 2018 and 2017 : $400 and $608 , respectively) and Investigation-related matters (for the three months ended March 31, 2018 and 2017 : $719 and $1,039 , respectively).

For a reconciliation of our Adjusted EBITDA on a segment basis to the most comparable measure calculated in accordance with GAAP, see “Operating Segment Results.”


26


Safety and Quality Performance

Safety is one of our primary core values. Maintaining a strong safety record is a critical component of our operational success. Many of our customers have safety standards we must satisfy before we can perform services. As a result, we continually monitor and improve our safety performance through the evaluation of safety observations, job and customer surveys, and safety data. The primary measure for our safety performance is the tracking of the Total Recordable Incident Rate which is reviewed on both a monthly and rolling twelve-month basis.

Consolidated Results of Operations

The following table presents our consolidated results for the periods presented (in thousands):
 
 
Three Months Ended
 
 
March 31,
 
 
2018
 
2017
 
(Unaudited)
Revenues:
 
 
 
 
Services
 
$
91,348

 
$
86,322

Products  
 
24,221

 
24,409

Total revenue
 
115,569

 
110,731

 
 
 
 
 
Operating expenses:
 
 
 
 
Cost of revenues, exclusive of depreciation and amortization
 
 
 
 
Services (1)
 
63,210

 
51,683

Products (1)
 
18,747

 
22,269

General and administrative expenses
 
38,730

 
42,725

Depreciation and amortization
 
28,300

 
31,099

Severance and other charges
 
1,254

 
1,037

(Gain) loss on disposal of assets
 
235

 
(1,472
)
Operating loss
 
(34,907
)
 
(36,610
)
 
Other income (expense):
 
 
 
 
TRA related adjustments
 
(2,941
)
 
—

Other income (expense), net
 
(440
)
 
134

Interest income, net
 
944

 
398

Mergers and acquisition expense
 
(58
)
 
(449
)
Foreign currency gain
 
1,704

 
746

Total other income (expense)
 
(791
)
 
829

 
 
 
 
 
Loss before income taxes
 
(35,698
)
 
(35,781
)
Income tax expense (benefit)
 
6,375

 
(9,118
)
Net loss
 
$
(42,073
)
 
$
(26,663
)
 
 
 
(1)  
Our financial statements for the three months ended March 31, 2017 , have been revised to decrease cost of revenues, services and increase cost of revenues, products by $5,424 . See Note 1 - Basis of Presentation in the Notes to Unaudited Condensed Consolidated Financial Statements.

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Revenues. Revenues from external customers, excluding intersegment sales, for the three months ended March 31, 2018 increased by $4.8 million , or 4.4% , to $115.6 million from $110.7 million for the three months ended March 31, 2017 . The revenue increase was primarily attributable to our Blackhawk and International Services segment, partially


27

offset by a decrease in our Tubular Sales segments. Revenues for our segments are discussed separately below under the heading "Operating Segment Results."

Cost of revenues, exclusive of depreciation and amortization. Cost of revenues for the three months ended March 31, 2018 increased by $8.0 million or 10.8% , to $82.0 million from $74.0 million for the three months ended March 31, 2017 primarily due to higher operating costs and mix of work in the U.S. Services segment.

General and administrative expenses. General and administrative expenses for the three months ended March 31, 2018 decreased by $4.0 million or 9.4% , to $38.7 million from $42.7 million for the three months ended March 31, 2017 primarily due to lower equity-based compensation expense.

Depreciation and amortization. Depreciation and amortization for the three months ended March 31, 2018 decreased by $2.8 million , or 9.0% , to $28.3 million from $31.1 million for the three months ended March 31, 2017 , as a result of a lower depreciable base due to decreased capital expenditures during current year and prior years.

Foreign currency gain . Foreign currency gain for the three months ended March 31, 2018 was $1.7 million as compared to a foreign currency gain for the three months ended March 31, 2017 of $0.7 million . The change in foreign currency gain year-over-year was primarily driven by the weakening of the U.S. dollar against other currencies.

Income tax expense (benefit). Income tax expense of $6.4 million for the three months ended March 31, 2018 increased by $15.5 million from an income tax benefit of $9.1 million for the three months ended March 31, 2017 . In the current period we recorded tax expense in various foreign jurisdictions even though we had a net consolidated loss for the current period. We also recorded additional tax expense due to establishing valuation allowances against deferred tax assets generated in the U.S. and certain foreign jurisdictions during the first quarter of 2018. In the first quarter of 2017, we recorded a tax benefit for U.S. and foreign losses which fully offset the tax expense in profitable jurisdictions, resulting in an overall tax benefit for the first quarter of 2017.

Operating Segment Results

The following table presents revenues and Adjusted EBITDA by segment (in thousands):
 
Three Months Ended
 
March 31,
 
2018
 
2017
Revenue:
 
 
 
International Services
$
48,733

 
$
46,610

U.S. Services
32,607

 
30,966

Tubular Sales
15,220

 
16,945

Blackhawk
19,009

 
16,210

Total
$
115,569

 
$
110,731

 
 
 
 
Segment Adjusted EBITDA (1) :
 
 
 
International Services
$
2,588

 
$
5,286

U.S. Services
(9,301
)
 
(7,215
)
Tubular Sales
2,188

 
2,254

Blackhawk
2,366

 
1,211

 
$
(2,159
)
 
$
1,536

 
 
 
(1)  
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. (For a reconciliation of our Adjusted EBITDA, see "Adjusted EBITDA and Adjusted EBITDA Margin").



28

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

International Services

Revenue for the International Services segment was $48.7 million for the three months ended March 31, 2018 , an increase of $2.1 million , or 4.6% , compared to the same period in 2017 , primarily due to activity improvements in offshore Western Hemisphere, Asia Pacific and the Middle East, which was partially offset by lower activity levels in Latin America and decreased work scope in the North Sea.

Adjusted EBITDA for the International Services segment was $2.6 million for the three months ended March 31, 2018 , a decrease of $2.7 million , or 51.0% , compared to the same period in 2017 , primarily due to decreased work scope in the North Sea and start-up costs on new projects in onshore Latin America, partially offset by higher realized prices in offshore Western Hemisphere.

U.S. Services

Revenue for the U.S. Services segment was $32.6 million for the three months ended March 31, 2018 , an increase of $1.6 million , or 5.3% , compared to the same period in 2017 . Onshore services revenue increased by $4.6 million as a result of improved activity from increased rig counts. The offshore business saw a decrease in revenue of $3.0 million as a result of decreased activity levels in the Gulf of Mexico.

Adjusted EBITDA for the U.S. Services segment was a loss of $9.3 million for the three months ended March 31, 2018 , an unfavorable change of $2.1 million , or 28.9% , compared to the same period in 2017 , primarily due to lower demand for our offshore services, partially offset by an increase in onshore services activity.

Tubular Sales

Revenue for the Tubular Sales segment was $15.2 million for the three months ended March 31, 2018 , a decrease of $1.7 million , or 10.2% , compared to the same period in 2017 , primarily as a result of lower deepwater activity in the Gulf of Mexico.

Adjusted EBITDA for the Tubular Sales segment was $2.2 million for the three months ended March 31, 2018 , a decrease of $0.1 million , or 2.9% , compared to the same period in 2017 , primarily due to lower sales activity offset by improved margin.

Blackhawk

Revenue for the Blackhawk Segment was $19.0 million for the three months ended March 31, 2018 , an increase of $2.8 million , or 17.3% , compared to the same period in 2017 , driven by strong activity in the U.S. onshore market and increased demand for well construction services in the Gulf of Mexico.

Adjusted EBITDA for the Blackhawk segment was $2.4 million for the three months ended March 31, 2018 , an increase of $1.2 million , or 95.4% , compared to the same period in 2017 , primarily due to increased activity levels.

Liquidity and Capital Resources

Liquidity

At March 31, 2018 , we had cash and cash equivalents and short-term investments of $264.9 million and debt of $3.3 million . Our primary sources of liquidity to date have been cash flows from operations. Our primary uses of capital have been for organic growth capital expenditures. We continually monitor potential capital sources, including equity and debt financing, in order to meet our investment and target liquidity requirements.



29

Our total capital expenditures are estimated at $48.0 million for 2018 . We expect to spend approximately $38.0 million for the purchase and manufacture of equipment and $10.0 million for other property, plant and equipment, inclusive of the purchase or construction of facilities. The actual amount of capital expenditures for the manufacture of equipment may fluctuate based on market conditions. During the three months ended March 31, 2018 and 2017 , expenditures related to property, plant and equipment and intangibles were $6.3 million and $11.7 million , respectively, all of which were funded from internally generated funds. We believe our cash on hand should be sufficient to fund our capital expenditure and liquidity requirements for the remainder of 2018 .

Credit Facility

We have a $100.0 million revolving credit facility with certain financial institutions, including up to $20.0 million in letters of credit and up to $10.0 million in swingline loans, which matures in August 2018 (the “Credit Facility”). Subject to the terms of the Credit Facility, we have the ability to increase the commitments to $150.0 million . At March 31, 2018 and December 31, 2017 , we had $2.5 million and $2.8 million , respectively, in letters of credit outstanding and no outstanding borrowings under this facility. As of March 31, 2018 , our ability to borrow under the Credit Facility has been reduced to approximately $5.0 million as a result of our decreased Adjusted EBITDA. Our borrowing capacity under the Credit Facility could be further reduced or eliminated depending on our future Adjusted EBITDA. As a result of this, our overall liquidity would be diminished.

Borrowings under the Credit Facility bear interest, at our option, at either a base rate or an adjusted Eurodollar rate. Base rate loans under the Credit Facility bear interest at a rate equal to the higher of (i) the prime rate as published in the Wall Street Journal, (ii) the Federal Funds Effective Rate plus 0.50% or (iii) the adjusted Eurodollar rate plus 1.00%, plus an applicable margin ranging from 0.50% to 1.50%, subject to adjustment based on a leverage ratio. Interest is in each case payable quarterly for base-rate loans. Eurodollar loans under the Credit Facility bear interest at an adjusted Eurodollar rate equal to the Eurodollar rate for such interest period multiplied by the statutory reserves, plus an applicable margin ranging from 1.50% to 2.50%. Interest is payable at the end of applicable interest periods for Eurodollar loans, except that if the interest period for a Eurodollar loan is longer than three months, interest is paid at the end of each three-month period. The unused portion of the Credit Facility is subject to a commitment fee ranging from 0.250% to 0.375% based on certain leverage ratios.

The Credit Facility contains various covenants that, among other things, limit our ability to grant certain liens, make certain loans and investments, enter into mergers or acquisitions, enter into hedging transactions, change our lines of business, prepay certain indebtedness, enter into certain affiliate transactions, incur additional indebtedness or engage in certain asset dispositions.

The Credit Facility also contains financial covenants, which, among other things, require us, on a consolidated basis, to maintain: (i) a ratio of total consolidated funded debt to adjusted EBITDA (as defined in the Credit Agreement) of not more than 2.5 to 1.0 and (ii) a ratio of EBITDA to interest expense of not less than 3.0 to 1.0. As of March 31, 2018 , we were in compliance with the covenants included in the Credit Agreement.

In addition, the Credit Facility contains customary events of default, including, among others, the failure to make required payments, failure to comply with certain covenants or other agreements, breach of the representations and covenants contained in the agreements, default of certain other indebtedness, certain events of bankruptcy or insolvency and the occurrence of a change in control.

Citibank Credit Facility

In 2016, we entered into a three -year credit facility with Citibank N.A., UAE Branch in the amount of $6.0 million for issuance of standby letters of credit and guarantees. The credit facility also allows for open ended guarantees. Outstanding amounts under the credit facility bear interest of 1.25% per annum for amounts outstanding up to one year. Amounts outstanding more than one year bear interest at 1.5% per annum. As of both March 31, 2018 and December 31, 2017 , we had $2.6 million in letters of credit outstanding.



30

Insurance Notes Payable

In 2017, we entered into three notes to finance our annual insurance premiums totaling $5.1 million . The notes bear interest at an annual rate of 2.9% with a final maturity date in October 2018 . At March 31, 2018 and December 31, 2017 , the total outstanding balance was $3.2 million and $4.7 million , respectively.

Tax Receivable Agreement

We entered into a tax receivable agreement with Frank's International C.V. ("FICV") and Mosing Holdings, LLC ("Mosing Holdings") in connection with our initial public offering ("IPO"). The TRA generally provides for the payment by us to Mosing Holdings of 85% of the amount of the actual reductions, if any, in payments of U.S. federal, state and local income tax or franchise tax in periods after our IPO (which reductions we refer to as "cash savings") as a result of (i) the tax basis increases resulting from the transfer of FICV interests to us in connection with the conversion of shares of Preferred Stock into shares of our common stock on August 26, 2016 and (ii) imputed interest deemed to be paid by us as a result of, and additional tax basis arising from, payments under the TRA. In addition, the TRA provides for interest earned from the due date (without extensions) of the corresponding tax return to the date of payment specified by the TRA. We will retain the remaining 15% of cash savings, if any. The payment obligations under the TRA are our obligations and not obligations of FICV. The term of the TRA continues until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the TRA.

If we elect to execute our sole right to terminate the TRA early, we would be required to make an immediate payment equal to the present value of the anticipated future tax benefits subject to the TRA (based upon certain assumptions and deemed events set forth in the TRA, including the assumption that it has sufficient taxable income to fully utilize such benefits and that any FICV interests that Mosing Holdings or its transferees own on the termination date are deemed to be exchanged on the termination date). In addition, payments due under the TRA will be similarly accelerated following certain mergers or other changes of control.

In certain circumstances, we may be required to make payments under the TRA that we have entered into with Mosing Holdings. In most circumstances, these payments will be associated with the actual cash savings that we recognize in connection with the conversion of Preferred Stock, which would reduce the actual tax benefit to us. If we were to elect to exercise our sole right to terminate the TRA early or enter into certain change of control transactions, we may incur payment obligations prior to the time we actually incur any tax benefit. In those circumstances, we would need to pay the amounts out of cash on hand, finance the payments or refrain from triggering the obligation. Though we do not have any present intention of triggering an advance payment under the TRA, based on our current liquidity and our expected ability to access debt and equity financing, we believe we would be able to make such a payment if necessary. Any such payment could reduce our cash on hand and our borrowing availability, however, which would also reduce the amount of cash available to operate our business, to fund capital expenditures and to be paid as dividends to our stockholders, among other things. Please see Note 11 - Related Party Transactions in the Notes to Unaudited Condensed Consolidated Financial Statements .

Cash Flows from Operating, Investing and Financing Activities

Cash flows used in our operations, investing and financing activities are summarized below (in thousands):
 
Three Months Ended
 
March 31,
 
2018
 
2017
Operating activities
$
(20,909
)
 
$
(9,435
)
Investing activities
(143
)
 
(7,244
)
Financing activities
(1,929
)
 
(18,047
)
 
(22,981
)
 
(34,726
)
Effect of exchange rate changes on cash
(1,255
)
 
(860
)
Net decrease in cash and cash equivalents
$
(24,236
)
 
$
(35,586
)


31


Statements of cash flows for entities with international operations that use the local currency as the functional currency exclude the effects of the changes in foreign currency exchange rates that occur during any given year, as these are noncash changes. As a result, changes reflected in certain accounts on the condensed consolidated statements of cash flows may not reflect the changes in corresponding accounts on the condensed consolidated balance sheets.

Operating Activities

Cash flow used in operating activities was $20.9 million for the three months ended March 31, 2018 compared to cash flow used in operating activities of $9.4 million for the same period in 2017 . The increase in cash flow used by operating activities of $11.5 million was primarily due to unfavorable working capital changes.

Investing Activities

Cash flow used in investing activities was $0.1 million for the three months ended March 31, 2018 compared to $7.2 million in the same period in 2017 . The decrease of $7.1 million was primarily related to lower purchases of property, plant and equipment and intangibles of $5.4 million .

Financing Activities

Cash flow used in financing activities was $1.9 million for the three months ended March 31, 2018 compared to $18.0 million in the same period in 2017 . The decrease in cash flow used in financing activities of $16.1 million was primarily due to lower dividend payments on common stock of $16.7 million .

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements with the exception of operating leases.

Critical Accounting Policies

There were no changes to our significant accounting policies from those disclosed in our Annual Report with the exception of revenue recognition. Please see Note 2 - Revenues in the Notes to Unaudited Condensed Consolidated Financial Statements.

Impact of Recent Accounting Pronouncements

Refer to Note 1 - Basis of Presentation in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of accounting standards we recently adopted or will be required to adopt.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our 2017 Annual Report on Form 10-K. Our exposure to market risk has not changed materially since December 31, 2017.



32

Item 4. Controls and Procedures

(a)
Evaluation of Disclosure Controls and Procedures.

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, and such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2018 at the reasonable assurance level.

(b)
Change in Internal Control Over Financial Reporting.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2018 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


33

PART II. OTHER INFORMATION
Item 1.     Legal Proceedings

We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of March 31, 2018 and December 31, 2017 . We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows. Please see Note 14 - Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements .

We are conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act ("FCPA"), our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our extensive internal review to the U.S. Securities and Exchange Commission ("SEC"), the U.S. Department of Justice ("DOJ") and other governmental entities. It is our intent to continue to fully cooperate with these agencies and any other applicable authorities in connection with any further investigation that may be conducted in connection with this matter. While our review has not indicated that there has been any material impact on our previously filed financial statements, we have continued to collect information and cooperate with the authorities, but at this time are unable to predict the ultimate resolution of these matters with these agencies.

In addition, during the course of the investigation, we discovered historical business transactions (and bids to enter into business transactions) in certain countries that may have been subject to U.S. and other international sanctions. We disclosed this information to the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement (“OEE”) and to the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) (as well as to the agencies involved in our ongoing investigation discussed above). We received a No Action Letter dated April 20, 2018 from OEE, stating that OEE had closed its investigation without taking further action. In addition, we received a No Action Letter dated April 23, 2018 from OFAC, stating that OFAC had closed its investigation without taking further action.

As disclosed above, our investigation into possible violations of the FCPA remains ongoing, and we will continue to cooperate with the SEC, DOJ and other relevant governmental entities in connection therewith. At this time, we are unable to predict the ultimate resolution of these matters with these agencies, including any financial impact to us. Our board and management are committed to continuously enhancing our internal controls that support improved compliance and transparency throughout our global operations.

Item 1A.      Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks under the heading “Risk Factors” in our Annual Report, which risks could materially affect our business, financial condition or future results. These risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.

Item 5. Other Information

On May 8, 2018, the board of managing directors and the board of supervisory directors of Frank’s International N.V. (the “Company”) appointed Darren C. Miles, age 42, as Chief Accounting Officer of the Company, to serve as the Company’s principal accounting officer, a role currently held by Ozong E. Etta, effective May 8, 2018.

Prior to serving in his current position, Mr. Miles served as the Company’s Vice President, Tax, a position he had held since April 2015 with responsibilities including the oversight of all global tax matters, including financial reporting for income taxes, of the Company’s operations encompassing over 50 countries. Prior to his role at the Company, Mr. Miles served as Senior Director - International Tax Strategy for Eaton Corporation, an electrical, hydraulic, and mechanical power management company, from December 2012 to April 2015. Mr. Miles was previously employed by Cooper Industries, an electrical products manufacturer, where he served in roles of increasing responsibility beginning


34

September 2006 until its acquisition by Eaton Corporation in December 2012, concluding his career at Cooper Industries in the role of Director - International Tax. Mr. Miles began his career in public accounting with Ernst & Young and has over 20 years of accounting, tax, and finance experience. Mr. Miles holds Bachelor of Business Administration and Master of Professional Accounting degrees from the University of Texas at Austin. Mr. Miles is a CPA licensed in the State of Texas and is an officer of the Tax Executives Institute (Houston Chapter).     

Mr. Etta is replaced as the Company’s principal accounting officer, effective May 8, 2018. This is not due to any disagreement with the Company or any matter relating to the Company’s operations, policies or practices. Mr. Etta will continue to serve in a senior financial role as the Vice President of Finance for the International Services and U.S. Services segments of the Company.

There are no understandings or arrangements between Mr. Miles and any other person pursuant to which Mr. Miles was selected to serve as principal accounting officer, other than his employment relationship set forth above. Mr. Miles does not have any relationships requiring disclosure under Item 401(d) of Regulation S-K or any interests requiring disclosure under Item 404(a) of Regulation S-K. Mr. Miles is eligible to receive grants under the Company’s 2013 Long Term Incentive Plan, which was filed as Exhibit 4.3 to the Registration Statement on Form S-8 on August 13, 2013, and is incorporated herein by reference.

In connection with Mr. Miles’ appointment, he entered into an indemnification agreement with the Company. The agreement provides, to the fullest extent permitted by the Company’s Deed of Amendment to Articles of Association dated May 19, 2017 and the law of The Netherlands, that the Company will indemnify him against any and all liabilities, claims, judgments, fines, penalties, interest and expenses, including attorney’s fees, incurred in connection with any expected, threatened, pending or completed action, investigation or other proceeding, whether civil, criminal or administrative, involving him by reason of his position as an officer.

The foregoing description is qualified in its entirety by reference to the full text of the indemnification agreement, which is filed as an exhibit to this report.

Item 6. Exhibits

The Exhibit Index, which follows the signature page to this report and is incorporated by reference herein, sets forth a list of exhibits to this report.


35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 
 
 
FRANK'S INTERNATIONAL N.V.
 
 
 
 
Date: May 8, 2018
 
By:
/s/ Kyle McClure
 
 
 
Kyle McClure
 
 
 
Senior Vice President and Chief Financial Officer
 
 
 
(Principal Financial Officer)




























36

EXHIBIT INDEX

Exhibit
Number
Description
3.1
Deed of Amendment to Articles of Association of Frank's International N.V., dated May 19, 2017 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-36053), filed on May 25, 2017).
*† 10.1
Frank's International N.V. 2013 Long-Term Incentive Plan Employee Restricted Stock Unit Agreement (Performance Based Form).
*† 10.2
Indemnification Agreement dated May 8, 2018, by and between Frank's International N.V. and Darren C. Miles.
Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the Securities Exchange Act of 1934.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
*101.INS
XBRL Instance Document.
*101.SCH
XBRL Taxonomy Extension Schema Document.
*101.CAL
XBRL Taxonomy Calculation Linkbase Document.
*101.DEF
XBRL Taxonomy Definition Linkbase Document.
*101.LAB
XBRL Taxonomy Extension Label Linkbase Document.
*101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 
 
†
Represents management contract or compensatory plan or arrangement.
*
Filed herewith.
**
Furnished herewith.



37
        

EXHIBIT 10.1
FRANK’S INTERNATIONAL N.V.
EMPLOYEE RESTRICTED STOCK UNIT (RSU) AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT including Exhibits A and B (this “ Agreement ”) evidences an award made as of the ____ day of ______________ (the “ Date of Grant ”), between FRANK’S INTERNATIONAL N.V. , a limited liability company organized in the Netherlands (the “ Company ”), and __________________________ (the “ Employee ”). The Company and Employee may be referred to individually as “Party,” and/or collectively as the “Parties.”
1. The Grant .
(a)      Pursuant to the FRANK’S INTERNATIONAL N.V. 2013 LONG-TERM INCENTIVE PLAN , as the same may be amended from time to time (the “ Plan ”), and subject to the conditions set forth below, the Company hereby awards to Employee, effective as of the Date of Grant, an award consisting of an aggregate number of ___________ restricted stock units (the “ Restricted Stock Units ” or “ RSUs ”), whereby each Restricted Stock Unit represents the right to receive one share of the Company’s common stock, par value €0.01 per share (“ Common Stock ”), in accordance with the terms and conditions set forth herein and in the Plan (the “Award”). The Restricted Stock Units subject to this Agreement are hereby designated as Performance Awards for purposes of Section 8 of the Plan. The number of Restricted Stock Units subject to this Award, as described in this Section 1(a), is the “target” number of shares that may become vested and shall be adjusted based on the attainment of the Performance Criteria described in Section 1(b) below and on Exhibit A.
(b)      The Award’s performance period (“ Performance Period ”) and Performance Criteria (the “ Performance Criteria ”) are set forth in Exhibit A to this Agreement. The Performance Criteria has been established by the Compensation Committee of the Supervisory Board, which shall determine and certify whether such criteria have been satisfied.
(c)      To the extent any provision of this Agreement conflicts with the expressly applicable terms of the Plan, those terms of the Plan shall control, and if necessary, the applicable terms of this Agreement shall be deemed amended so as to carry out the purpose and intent of the Plan.
2.      Definitions . Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:
(a)      “ Cause ” shall have the meaning set forth in any written employment or consulting agreement between the Company (or one of its affiliates) and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Cause” shall mean a determination by the Company or its employing affiliate (the “ Employer ”) that Employee (i) has engaged in gross negligence, gross incompetence, or misconduct in the performance of Employee’s duties with respect to the Employer or any of their affiliates; (ii) has failed without proper legal reason to perform Employee’s duties and responsibilities to the Employer or any of its affiliates; (iii) has breached any material provision of this Agreement or any written agreement or corporate policy or code of conduct established by the Employer





or any of its affiliates; (iv) has engaged in conduct that is, or could reasonably expected to be, materially injurious to the Employer or any of its affiliates; (v) has committed an act of theft, fraud, embezzlement, misappropriation, or breach of a fiduciary duty to the Employer or any of its affiliates; or (vi) has been convicted of, pleaded no contest to, or received adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty, or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction).
(b)      “ Disability ” shall have the meaning set forth in any written employment or consulting agreement between the Company (or one of its affiliates) and Employee. If Employee is not party to such an agreement that defines these terms, then for purposes of this Agreement, “Disability” shall mean Employee being unable to perform Employee’s duties or fulfill Employee’s obligations under the terms of his/her employment by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months as determined by the Employer and certified in writing by a competent medical physician selected by the Employer.
(c)      “ Forfeiture Restrictions ” shall have the meaning specified in Section 3(a) hereof.
(d)      “ Involuntary Termination ” shall mean a termination of Employee’s employment by the Company or an affiliate for a reason other than for Cause.
(e)      “Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended.
(f)      “Executive Severance Plan” shall mean the Company’s Executive Change-In-Control Severance Plan.
(g)      “Special Vesting Agreement” means an agreement which permits Employee’s RSUs to continue vesting following Employee’s employment with the Company or with an affiliate, as applicable, in exchange for Employee’s strict compliance with designated post-termination conditions, as determined by the Committee pursuant to a written agreement executed at the time the Participant’s termination of employment occurs. The Compensation Committee may, in is sole discretion, elect to limit coverage of a Special Vesting Agreement to only a portion of the Employee’s RSUs.
3.      Restricted Stock Units . By acceptance of this Restricted Stock Unit award, Employee agrees with respect thereto as follows:
(a)      Forfeiture Restrictions . The Restricted Stock Units are restricted in that they may not be sold, assigned, pledged, exchanged, hypothecated, or otherwise alienated or transferred, encumbered, or disposed of, and in the event of termination of Employee’s employment or service with the Company for any reason other than death or Disability, or, to the extent provided in Section 3(c)(4) below, on account of an Involuntary Termination, Employee shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock Units to the Company upon termination of employment or services as provided in this Section 3(a) are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock Units.

2




(b)      Lapse of Forfeiture Restrictions (Vesting) . Provided that: (i) Employee has been continuously employed by the Company from the Date of Grant through _________________________ (the scheduled “Lapse (Vesting) Date”), (ii) the Company attains the Performance Criteria as described on Exhibit A, and (iii) Employee is in compliance with Exhibit B and all other agreements or obligations to the Company, the Forfeiture Restrictions shall lapse, and the number of Restricted Stock Units as determined on Exhibit A shall become vested. Except as provided in Subsection (c) below, the Company will issue one share of Common Stock to Employee on the Lapse (Vesting) Date. Except as provided in Subsection (c) below, any Restricted Stock Units with respect to which the Forfeiture Restrictions do not lapse in accordance with this Section 3(b) (and any associated unvested dividend equivalents) shall be forfeited to the Company for no consideration as of the date of the termination of Employee’s employment with the Company.
(c)      Accelerated Vesting .
(1)     Death . If Employee’s employment with the Company is terminated by reason of death, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target” level effective on the date such death occurs and Employee’s RSUs shall be settled in the manner provided under Section 3(d) below.
(2)     Disability . If Employee’s employment with the Company is terminated by reason of Disability, then the Forfeiture Restrictions shall lapse with respect to 100% of the Restricted Stock Units at the “target level” effective as of the date of Employee’s “separation from service” (as defined under the Section 409A) and Employee’s RSU’s shall be settled in the manner provided under Section 3(d) below on the date such awards were scheduled to become vested under Section 3(b) above.
(3)     Change in Control . If a Change in Control occurs and Employee is a participant in the Executive Severance Plan, then the terms of Section 3 of such plan are hereby incorporated by reference into this Agreement.
(4)      Involuntary Termination . If Employee’s employment with the Company is terminated due to an Involuntary Termination then, unless otherwise determined by the Compensation Committee in its sole discretion, which shall be treated as an exercise of negative discretion for purposes of Code Section 162(m), the Company shall enter into a Special Vesting Agreement with Employee pursuant to which the Forfeiture Restrictions shall not lapse upon such termination of employment and that this Award shall continue to remain outstanding and Employee will be treated, solely for purposes of satisfying the requirements for a lapse of Forfeiture Restrictions under Section 3(b), as continuing in the employment of the Company throughout the period during which he/she continuously satisfies the obligations set forth in Exhibit B attached hereto and incorporated herein by reference as part of this Agreement. If the provisions of this Section 3(c)(4) apply with respect to Employee, the number of shares of Common Stock received under this Agreement shall be determined based on the Company’s attainment of the Performance Criteria described on Exhibit A. As further condition to receiving any Special Vesting Agreement, Employee shall provide a release of all claims against the Company in a form acceptable to the Company, upon entering the Special Vesting Agreement, as well as upon the last date on which the Forfeiture Restrictions lapse, and also Employee must continuously comply with any other obligations to, or agreements with, the Company.
(d)      Payments . Subject to compliance with all terms of this Agreement and Exhibit B as soon as reasonably practicable after (i) the scheduled Lapse (Vesting) Date with respect to the number of Restricted Stock Units as determined pursuant to Exhibit A (but in no event later than the end of the calendar year in which the Forfeiture Restrictions so lapse), or (ii) the date of Employee’s death. The Company shall deliver the shares of Common Stock in book-entry form, with such legends or restrictions thereon as the

3




Committee may determine to be necessary or advisable in order to comply with applicable securities laws. Employee shall complete and sign any documents and take any additional action that the Company may request to enable it to deliver shares of Common Stock on Employee’s behalf. In the event that all or part of the Restricted Stock Units granted pursuant to this Agreement provides for a deferral of compensation within the meaning of the Section 409A, it is the general intention, but not the obligation, of the Company to design this Award to comply with the Section 409A and such Award should be interpreted accordingly. Notwithstanding anything to the contrary contained herein, in the event that Employee is a “specified employee” (as defined under the Section 409A) when Employee becomes entitled to a payment or settlement under the Award which is subject to the Section 409A on account of a “separation from service” (as defined under the Section 409A), to the extent required by the Code, such payment shall not occur until the date that is six months plus one day from the date of such separation from service. Any amount that is otherwise payable within the six-month period described herein will be aggregated and paid in a lump sum without interest. Further, for purposes of the Section 409A, each payment or settlement of any portion of the Restricted Stock Units under this Agreement shall be treated as a separate payment of compensation.
(e)      Restrictive Covenants . Employee acknowledges and recognizes the highly competitive nature of the businesses of the Company and accordingly agrees, in his/her capacity as an employee and equity holder in the Company, to the provisions of Exhibit B to this Agreement. Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Exhibit B or any other similar obligations Employee has towards the Company under applicable law or other agreements (which includes any attempt to have any provision in Exhibit B or other similar obligations of Employee declared overbroad or unenforceable) (a “Restrictive Covenant Violation”) would be available but inadequate and the Company would suffer irreparable damages as a result of such a Restrictive Covenant Violation. In recognition of this fact, Employee agrees that, in the event of a Restrictive Covenant Violation, in addition to any remedies available to the Company under law, including damages and attorneys’ fees, remedies available the Company, without posting any bond, shall be to (i) cease making any dividend or other payments or providing any benefit otherwise required by this Agreement; (ii) terminate future vesting and cause forfeiture of all vested and unvested RSUs and common stock issued or issuable under this Agreement without consideration, (iii) cause forfeiture of the gross value of the common stock issued to Employee in the one year period prior to the Restrictive Covenant Violation (determined as of the date such stock was issued to Employee and using the Fair Market Value (as defined in the Plan) of the Company’s common stock on that date), (iv) receive repayment of any cash payments made to Employee with respect to the RSUs during the prior twelve month period, (v) obtain a temporary restraining order, temporary or permanent injunction or (vi) specific performance or any other equitable remedy which may then be available.
(f)      Corporate Acts . The existence of the Restricted Stock Units shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange, or other disposition of all or any part of its assets or business, or any other corporate act or proceeding.

4




4.      Withholding of Tax . To the extent that the receipt of the Restricted Stock Units (or any Common Stock or dividend equivalents related thereto) or the lapse of any Forfeiture Restrictions results in compensation, income or wages to Employee for federal, state, or local tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if Employee fails to do so (or if Employee instructs the Company to withhold cash or stock to meet such obligation), the Company shall withhold from any cash or stock remuneration (including withholding any shares of the Common Stock distributable to Employee under this Agreement) then or thereafter payable to Employee, any tax required to be withheld by reason of such resulting compensation income or wages. The Company is making no representation or warranty as to the tax consequences to Employee as a result of the receipt of the Restricted Stock Units, the treatment of dividend equivalents, the lapse of any Forfeiture Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Forfeiture Restrictions.
5.      No Shareholder Rights . The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle Employee to any rights of a holder of Common Stock prior to the date that shares of Common Stock are issued to Employee in settlement of the Award. Employee’s rights with respect to the Restricted Stock Units shall remain forfeitable as stated in this Agreement.
6.      Clawback . Notwithstanding any provisions in the Agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of the Common Stock delivered hereunder), whether in the form of cash or otherwise, shall be subject to a clawback to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, section 304 of the Sarbanes Oxley Act of 2002, or any regulations promulgated thereunder, as well as pursuant to the terms of this Agreement in the event of a Restrictive Covenant Violation.
7.      Employment Relationship . For purposes of this Agreement (except as otherwise provided in Section 3(c)(4) hereof), Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company or a Subsidiary. Without limiting the scope of the preceding sentence, it is specifically provided that Employee shall be considered to have terminated employment or service with the Company at the time of the termination of the “Subsidiary” status of the entity or other organization that employs or engages Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock Units thereunder pursuant to this Agreement, shall confer upon Employee the right to continued employment by or service with the Company or affect in any way the right of the Company to terminate such employment or service at any time. Unless otherwise provided in a written employment or consulting agreement or by applicable law, Employee’s employment by or service with the Company shall be on an at-will basis, and the employment or service relationship may be terminated at any time by either Employee or the Company for any reason whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment or service, and the cause of such termination, shall be determined by the Committee or its delegate, in its sole discretion, and its determination shall be final.
8.      Notices . Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered if hand delivered to Employee at Employee’s principal place of employment or if sent by registered or certified mail

5




or other mail delivery method that provides a receipt, to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail or other mail delivery service that provides a receipt, to the General Counsel of Company at its principal executive offices.
9.      Entire Agreement; Amendment . This Agreement (including Exhibit B) and the documents incorporated by reference herein replace and merge all previous agreements and discussions relating to the same or similar subject matters between Employee and the Company and constitute the entire agreement between Employee and the Company with respect to the subject matter of this Agreement, except as otherwise provided herein. This Agreement including Exhibit B may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. The foregoing notwithstanding, this Agreement does not modify or replace in any way any obligations Employee has to the Company or its related entities, under any agreement or applicable law, for non-disclosure, non-competition, non-solicitation, or non-interference.
10.      Severability . If any part of this Agreement including Exhibit B is found to be unenforceable by a court of competent jurisdiction, then such unenforceable portion will be modified to be enforceable, or severed from this Agreement if it cannot be modified, and such modification or severance shall have no effect upon the remaining portions of this Agreement and Exhibit B which shall remain in full force and effect.
11.      No Waiver . No failure by either Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall (i) be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time or (ii) preclude insistence upon strict compliance in the future.
12.      Binding Effect; Survival . The provisions of Sections 3(e) and 6 and Exhibit B shall survive the lapse of the Forfeiture Restrictions without forfeiture. This Agreement and Exhibit B shall be binding upon and shall inure to the benefit of the Company, and automatically to any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s obligations under this Agreement and Exhibit B are personal and such obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred by Employee without the prior written consent of the Company.
13.      Governing Law/Forum/Jury Waiver . The Parties agree and acknowledge that Exhibit B shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws principles. With respect to any claim or dispute arising out of or related to this Agreement or Exhibit B, the Parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas, unless another forum or venue is required by law. Both the Company and Employee agree to waive a trial by jury of any or all issues arising under or connected with this Agreement or Exhibit B, and consent to trial by the judge .

6





IN WITNESS WHEREOF , this Agreement has been executed by the parties as of the date first above written.
FRANK’S INTERNATIONAL N.V.

By :    ___________________________________
Name:     
Title:     
Date: _________________________________
    
EMPLOYEE

Signature: __________________________________
Name:         
Date: ________________________________


7




Exhibit A
Performance Period and Criteria
Performance Period : January 1, 2018 to December 31, 2020
First Achievement Period : January 1, 2018 to December 31, 2018
Second Achievement Period : January 1, 2019 to December 31, 2019
Third Achievement Period : January 1, 2020 to December 31, 2020
Performance Criteria :
Payment under this Award is determined based on relative performance using Total Stockholder Return (“TSR”). No portion of this Award will be earned if the Company’s performance during the Performance Period is below the threshold level of the Performance Criteria as described below. Any determination of performance under this Agreement shall be determined by the Committee in accordance with the Plan’s terms.
The Company’s TSR shall be as measured against the TSR of the companies listed on the SPDR® S&P® Oil & Gas Equipment and Services ETF (XES) (the “Comparator Group”). Such comparison will be based on a percentile approach as detailed below, with any payment based on linear interpolation if performance is between threshold and maximum levels. TSR for the Company and the Comparator Group to be calculated separately for the First Achievement Period, Second Achievement Period and Third Achievement Period resulting in a weighted average payout at the end of the Performance Period (using a 30-day averaging period for the first 30 calendar days and the last 30 calendar days of each annual achievement period to mitigate the effect of stock price volatility). TSR calculation to assume reinvestment of dividends.
Level
Percentile Rank vs. Comparator Group
Payout Percentage *
Maximum
90th Percentile and above
200% of Target Level
Target
75th percentile
150% of Target Level
Target
50th percentile
100% of Target Level
Threshold
25th percentile
50% of Target Level
 
Below 25th percentile
0%
* Based on the Target Level for the TSR Based Award set forth on the first page of this Agreement.



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EXHIBIT B TO RSU AGREEMENT

NON-DISCLOSURE, NON-COMPETITION, AND NON-SOLICITATION OBLIGATIONS DURING AND FOLLOWING EMPLOYMENT
1.      Defined Terms; Employment Relationship; Application of Exhibit B . Capitalized terms used in this Exhibit B that are not defined in this Exhibit B shall have the meanings assigned to such terms in the Restricted Stock Unit Agreement to which this Exhibit B is attached (the “ RSU Agreement ”). This Exhibit B shall apply during the period of Employee’s ongoing employment with the Company and, as provided below, during the designated period after such employment ends. This Exhibit B does not modify or relieve Employee from any other restrictive covenants contained in any other agreement between Employee and the Company and any of its affiliates.
As used in this Exhibit B, the following terms shall have the following meanings:
(a)      “ Company Business ” includes, but not limited to, the land operations, offshore operations, tubular sales, casing installation, completion installation, and specialty products divisions of the Company’s business as well as Company’s current and planned (future) bids, projects, contracts, and relationships with its customers and potential customers; provided, however, that if Employee’s termination of employment occurs within 60 days following the occurrence of a Change in Control, “Company Business” shall mean the business described in this Section (a) as in existence immediately prior to the Change in Control.
(b)      “Competing Business” means any business, individual, partnership, firm, corporation, or other entity which is similar to, or competitive with, the Company Business in the Restricted Area. In no event will the Company or any of its affiliates be deemed a Competing Business. For further clarity, Competing Business shall include the design, sales, marketing, fabrication, installation, provision, repair, or manufacturing of products or services similar to or functionally equivalent to those designed, sold, installed, repaired, fabricated, manufactured, produced, provided, marketed or licensed by the Company. Competing Business shall not include any services or products of the Company in which Employee had no responsibility, no involvement and about which he/she had no access to Confidential Information.
(c)      “ Confidential Information ” includes any information about the Company that has not been intentionally publicly disclosed by the Company; knowledge, data, trade secrets, proprietary information, or information provided to the Company by its customers, suppliers, contractors, subcontractors, business partners, agents or representatives (regardless of whether the Company is contractually obligated to keep such information confidential). Confidential Information includes, without limitation, information relating to the services, products, policies, practices, pricing, costs, suppliers, vendors, methods, processes, techniques, finances, administration, employees, devices, trade secrets and operations of the Company, any inventions, modifications, discoveries, designs, developments, improvements, processes, software programs, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right by any Company employee, Company customers or potential customers, marketing, sales activities, development programs, promotions, manufacturing, machining, drawings, future and current plans regarding business and customers, e-mails, notes, manufacturing documents, engineering documents, formulas, financial statements, bids, projects reports, handling documentation, machinery and compositions, all

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financial data relating to the Company, business methods, accounting and tracking methods, books, inventory handling procedure, credit, credit procedures, indebtedness, financing procedures, investments, trading, shipping, production, processing, welding, fabricating, assembling, domestic and foreign operations, customer and vendor and supplier lists, data storage in any medium (electronically, hard copy) contact information, lab reports, lab work, and any data or materials used in and created during the development of any of the aforementioned materials or processes. Confidential Information may include but is not limited to the areas of piping and fabrication, connectors, hammers, casing equipment, cementing equipment, laydown equipment, completion equipment, manipulating and handling tubulars, drilling of subterranean and offshore wells, energy exploration, energy drilling, energy production, and the processing of hydrocarbons.
(d)      “ Governmental Authority ” means any governmental, quasi-governmental, state, county, city, or other political subdivision of the United States or any other country, or any agency, court or instrumentality, foreign or domestic, or statutory or regulatory body thereof.
(e)      “ Legal Requirement ” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization, or other directional requirement (including, without limitation, any of the foregoing that relates to environmental standards or controls, energy regulations, and occupational, safety, and health standards or controls, including those arising under environmental laws) of any Governmental Authority.
(f)      “ Restricted Period ” means during Employee’s employment with the Company, and for those Employees with a Special Vesting Agreement, through the last lapse date specified in the Special Vesting Agreement. The duration of the Restricted Period shall be tolled and suspended for any period that Employee is in violation of these covenants up to a period of two (2) years, unless such tolling is disallowed under applicable law.
(g)      “ Restricted Area ” means the Louisiana parishes of Lafayette, Iberia, and Terrebonne and the Texas counties of Harris, Fort Bend, Montgomery, Brazoria, and Galveston, as well as any county/parish in which Employee engaged in the Company Business during the last twelve months of Employee’s employment with the Company. Restricted Area shall not include any geographic areas in which Employee had no responsibility or involvement or about which he/she had access to Confidential Information.
2.      Non-Competition; Non-Solicitation; Non-Interference . Employee and the Company agree that the highly competitive nature of the Company’s business, Employee’s position with the Company, and the Confidential Information, training, and goodwill provided to Employee during his/her employment with the Company, as well as incentive to the Company to provide the restricted stock units under this Agreement, support Employee’s promises not to compete with the Company, and not to solicit or interfere with the Company’s relationships with its customers and employees as stated below in the rest of this Section 2 during the Restricted Period, regardless of the reason for the separation, within the Restricted Area.
(a)      Subject to the exceptions set forth in Section 2(b) below, Employee expressly covenants and agrees that during the Restricted Period and in the Restricted Area, Employee will not engage in or carry on, directly or indirectly, a Competing Business, as defined herein. Accordingly, Employee will not, directly or indirectly, own, manage, operate, join, become employed or engaged by, partner in, control,

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participate in, be connected with, loan money or sell or lease equipment or property to, or otherwise be affiliated with any Competing Business.
(b)      Notwithstanding the restrictions contained in Section 2(a), Employee may own less than 2% of the outstanding stock of any class for a Competing Business which sells its stock on a national securities exchange if Employee is not involved in the management of such Competing Business.
(c)      Employee further expressly covenants and agrees that during the Restricted Period and in the Restricted Area, Employee will not interfere with the Company’s relationship with, solicit or hire or otherwise encourage to change or leave their employment or contractor position with the Company any person currently employed by or engaged as a contractor to the Company, or who was employed by or engaged by the Company during Employee’s employment with the Company. This restriction shall not include any current or potential employee or contractor of the Company for which employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her employment with the Company.
(d)      During the Restricted Period and in the Restricted Area, Employee further agrees that he/she will not solicit business from, nor encourage or otherwise cause any current or potential customer, vendor or supplier of the Company, including its current or planned (future) projects, bids, or contracts, to cease or materially change their current or potential business relationship with the Company or otherwise attempt to interfere with these Company relationships. For purposes of this Section, “potential customer, vendor or supplier” shall mean any entity or person with whom the Company has been pursuing a business relationship during Employee’s employment with the Company, and any “potential business relationship” shall mean any relationship pursued by the Company during Employee’s employment with the Company, including any current or planned (future) bids, projects or contracts. This restriction shall not include any current or potential customer, vendor or supplier of the Company for which Employee had no responsibility, no involvement, and about which he/she had no access to Confidential Information during his/her employment with the Company.
3.      Non-Disclosure . Employee acknowledges that the Confidential Information provided to Employee during his/her employment with the Company is confidential, proprietary, not known outside of the Company’s business, valuable, special and/or a unique asset of Company which belongs to the Company and gives the Company a competitive advantage. If this Confidential Information were disclosed to third parties or used by third parties and/or Employee, such disclosure or use would seriously and irreparably damage the Company and cause the loss of certain competitive advantages. Employee promises he/she has not and will not disclose in any way, or use for Employee’s own benefit or for the benefit of anyone besides the Company, the Confidential Information described above. Employee acknowledges that this promise of non-disclosure and non-use continues indefinitely and specifically does not expire at the end of Employee’s employment with the Company.
4.      Intellectual Property . Employee ratifies any previous assignment for any Intellectual Property under other agreements or obligations, including any fiduciary duty to the Company, and otherwise hereby assigns to the Company all right, title and interest Employee has or may acquire in and to any Intellectual Property that results from Employee’s efforts, either alone or jointly with others, during the period of Employee’s employment with the Company. “Intellectual Property” means any and all inventions,

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discoveries, developments, innovations, processes, designs, methods, technologies, formulae, models, research and development, patents, patent applications, trade secrets and other Confidential Information and works of authorship (including copyrightable works, copyrights and copyright applications), and improvements to any of the foregoing that, either alone or jointly with others: (a) result from any work performed on behalf of the Company, or from a research project suggested by the Company; (b) relate in any way to the existing or contemplated Business of the Company; or (c) result from the use of the Company’s time, material, employees or facilities. Employee acknowledges and agrees that any work Employee performs for the Company during employment that constitutes copyrightable subject matter shall be considered a “work made for hire” as that term is defined in the United States Copyright Act (17 U.S.C. Section 101). Employee hereby ratifies and otherwise transfers and assigns to the Company, and waives and agrees never to assert, any and all rights to claim authorship, rights to object to any modification or other moral rights that Employee may have in or with respect to any Intellectual Property and/or works made for hire, even after termination of Employee’s employment. Employee further agrees that if, in the course of providing services to the Company, Employee incorporates any intellectual property owned by Employee, the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide right and license to make, have made, copy, modify, use, distribute and sell such intellectual property or products incorporating such intellectual property of Employee. During and after Employee’s employment, Employee will assist and cooperate with the Company for no additional compensation but at the Company’s out of pocket expense and execute documents requested by the Company to acquire, transfer, maintain, perfect and enforce the Company’s rights to the Intellectual Property, including patent, copyright, trade secret and other protections for the Company’s Intellectual Property.
5.      Employee Acknowledgement of Need For Protections and Restrictions Promised . Employee acknowledges and understands that his/her promises in this Exhibit B restrict some of his/her actions during and after employment with the Company. However, Employee acknowledges and agrees that he/she has or will receive sufficient consideration from the Company to justify such restrictions. Further, Employee acknowledges that Employee’s skills are such that Employee can be gainfully employed in non-competitive employment and that these restrictions will not prevent Employee from earning a living.
6.      Notification to Subsequent Employers/Business Relationships . Employee further acknowledges that in order to enforce his/her obligations under this Agreement and Exhibit B that the Company will need to notify any subsequent actual or potential employers or other business relationships of Employee’s obligations under this Agreement and Exhibit B. Employee agrees to notify the Company of the identity of his/her potential employers or other business relationships which may be a Competing Business, during the Restricted Period and in the Restricted Area, and Employee consents to the Company providing notification to these employers/business relationships of Employee’s ongoing obligations to the Company under this Exhibit B or under other applicable law or agreement with the Company.
7.      Return of Confidential Information and Company Property . All written or electronic or other data, materials, records and other documents made by, or coming into the possession or control of, Employee which contain or disclose Confidential Information shall be and remain the property of the Company. Upon request, and in any event, without request upon termination of Employee’s employment with the Company for any reason, Employee shall promptly return, without deletion, copying or alteration, all written or electronic materials, data, information, records and any other property in Employee’s possession or control,

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whether located on or off Company premises, which may concern the Company, its current or potential customers, vendors or suppliers, whether or not designated as confidential or proprietary in nature.
8.      No Interference with Rights . Employee acknowledges and agrees that nothing in this Exhibit B is intended to, nor does it, interfere with or restrain Employee’s right to share or discuss information regarding his/her wages, hours, or other terms and conditions of employment in the exercise of any rights provided by the National Labor Relations Act. Further, Employee acknowledges and agrees that this Exhibit B is not intended to, nor does it, interfere with or restrain Employee’s right to report unlawful actions to any law enforcement or administrative agency, or to participate in any such agency’s investigation.
9.      Reasonableness; Enforcement; Reformation . Employee hereby represents that Employee has read and understands, and agrees to be bound by, the terms of this Exhibit B. Employee acknowledges that the geographic scope and duration of the covenants contained in this Exhibit B are the result of arm’s-length bargaining and are fair and reasonable in light of (a) the nature and wide geographic scope of the Company’s Business, (b) Employee’s contact with the Company’s business in all jurisdictions in which it is conducted, which includes the entire Restricted Area, and (c) the amount of Confidential Information that Employee is receiving in connection with the performance of Employee’s duties on behalf of the Company and/or its affiliates and the amount of goodwill with which Employee is and/or will be connected and will help build on behalf of the Company and its affiliates. It is the desire and intent of the Parties that the provisions of this Exhibit B be enforced to the fullest extent permitted under applicable Legal Requirements, whether now or hereafter in effect; therefore, to the extent permitted by applicable Legal Requirements, Employee and the Company hereby waive any provision of applicable Legal Requirements that would render any provision of this Exhibit B invalid or unenforceable. Nevertheless, if any of the aforesaid restrictions are found by a court of competent jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise unenforceable, the Parties intend for the restrictions herein set forth to be modified by the court making such determination so as to be reasonable and enforceable and, as so modified, to be fully enforced. By agreeing to this contractual modification prospectively at this time, the Company and Employee intend to make this Exhibit B enforceable under the law or laws of all applicable states and other jurisdictions so that the terms of this Exhibit B as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal. Such modifications to Exhibit B shall not affect the other terms of the Agreement.

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EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “ Agreement ”) dated the 8th day of May, 2018, by and between Frank’s International N.V., a public limited liability company organized and existing under the laws of The Netherlands (the “ Company ”), and Darren C. Miles, an individual (“ Indemnitee ”).
RECITALS
A. Competent and experienced persons may be reluctant to serve or to continue to serve as directors, officers or in other capacities unless they are provided with adequate protection through insurance or indemnification (or both) against claims against them arising out of their service and activities on behalf of the corporation.
B.      The current uncertainties relating to the availability of adequate insurance have increased the difficulty of attracting and retaining competent and experienced persons to serve in such capacity.
C.      The supervisory board of the Company (the “ Supervisory Board ”) has determined that the continuation of present trends in litigation will make it more difficult to attract and retain competent and experienced persons to serve as directors of the Company, that this situation is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of adequate protection in the future.
D.      As a supplement to and in the furtherance of the Company’s Articles of Association, as amended (the “ Articles ”), it is reasonable, prudent, desirable and necessary for the Company contractually to obligate itself to indemnify, and to pay in advance expenses on behalf of, directors and officers to the fullest extent permitted by Applicable Law, consistent with the Company’s Liability Insurance, so that they will serve or continue to serve the Company free from concern that they will not be so indemnified and that their expenses will not be so paid in advance;
E.      This Agreement is not a substitute for, nor is it intended to diminish or abrogate any rights of Indemnitee under, Liability Insurance, the Articles, any resolutions adopted pursuant thereto (including any contractual rights of Indemnitee that may exist) or otherwise;
F.      Indemnitee is a director or officer of the Company and his or her willingness to continue to serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him or her to the fullest extent permitted by Applicable Law, consistent with the Company’s Liability Insurance, and upon the other undertakings set forth in this Agreement.
AGREEMENT
NOW, THEREFORE , in consideration of the premises and covenants contained herein, the Company and Indemnitee hereby agree as follows:





ARTICLE 1
CERTAIN DEFINITIONS
Capitalized terms used but not otherwise defined in this Agreement have the meanings set forth below:
“ Applicable Law ” means the laws of The Netherlands.
“ Claims ” means any and all liabilities, claims, judgments, fines (including excise taxes and penalties assessed with respect to employee benefit plans), penalties and all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing.
“ Corporate Status ” means the status of a person who is or was a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of the Company or of any other Enterprise which such person is or was serving at the request of the Company. In addition to any service at the actual request of the Company, Indemnitee will be deemed, for purposes of this Agreement, to be serving or to have served at the request of the Company as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another Enterprise if Indemnitee is or was serving as a director, officer, employee, partner, member, manager, fiduciary, trustee or agent of such Enterprise and (i) such Enterprise is or at the time of such service was a Controlled Affiliate, (ii) such Enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or a Controlled Affiliate or (iii) the Company or a Controlled Affiliate caused Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity on its behalf.
“ Controlled Affiliate ” means any corporation, limited liability company, partnership, joint venture, trust or other Enterprise, whether or not for profit, that is directly or indirectly controlled by the Company. For purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of an Enterprise, whether through the ownership of voting securities, through other voting rights, by contract or otherwise; provided , however , that direct or indirect beneficial ownership of capital stock or other interests in an Enterprise entitling the holder to cast 10% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such Enterprise will be deemed to constitute “control” for purposes of this definition.
“ Disinterested Director ” means a director of the Company who is not and was not a party to the Legal Action, decision or Enterprise action in respect of which indemnification is sought by Indemnitee.
“ Enterprise ” means the Company and any other corporation, partnership, limited liability company, joint venture, employee benefit plan, trust or other entity or other enterprise of which Indemnitee is or was serving at the request of the Company in a Corporate Status.

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“ Expenses ” means all reasonable expenses, including attorney’s fees and litigation costs, paid or incurred in connection with a Legal Action, or in connection with seeking indemnification under this Agreement. Expenses will also include Expenses reasonably paid or incurred in connection with any appeal resulting from any Legal Action. Notwithstanding the foregoing, the Company’s obligation to pay “Expenses” is limited to Expenses incurred after written notice is given to the Company of a Legal Action. When a Legal Action subject to the indemnity obligation in this Agreement presents both matters that are covered by the indemnity obligation and matters that are not, Expenses shall refer solely to Expenses incurred for the defense of those parts of the Legal Action that are covered by the indemnity obligation in this Agreement
“ Independent Counsel ” means an attorney or firm of attorneys that is experienced in matters of corporation law in the appropriate jurisdictions and neither currently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement and/or the indemnification provisions of the Articles, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Legal Action giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
“ Legal Action ” means any expected, threatened, pending or completed action, investigation, or other proceeding, whether civil, criminal or administrative, and in each case commenced after the date of this Agreement, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of or relating to Indemnitee’s Corporate Status and by reason of or relating to either (i) any action or alleged action taken by Indemnitee (or failure or alleged failure to act) or of any action or alleged action (or failure or alleged failure to act) on Indemnitee’s part, while acting in his or her Corporate Status or (ii) the fact that Indemnitee is or was serving at the request of the Company as director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another Enterprise, in each case whether or not serving in such capacity at the time any Loss or Expense is paid or incurred for which indemnification or advancement of Expenses can be provided under this Agreement, except one initiated by Indemnitee to enforce his or her rights under this Agreement.
“ Liability Insurance ” means such director and officer liability insurance (or the equivalent), which the Company purchases for the benefit of its directors and officers.
“ Management Board ” means the management board of the Company.
“ Person ” shall be construed broadly and shall include, without limitation, an individual, a partnership, stichting , commanditaire vennootschap , besloten vennootschap , a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
References to “serving at the request of the Company” include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such

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director, officer, employee or agent with respect to any employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan will be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to under applicable law or in this Agreement.
ARTICLE 2     
SERVICES TO THE COMPANY
2.1      Services to the Company . Indemnitee agrees to serve as an officer or as a director on the Company’s Supervisory Board. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company will have no obligation under this Agreement to continue Indemnitee in such position. This Agreement will not be construed as giving Indemnitee any right to be retained as an officer, as a director on the Company’s Supervisory Board or in any other position with the Company (or any other Enterprise).
ARTICLE 3     
INDEMNIFICATION
3.1      Company Indemnification . Except as otherwise provided in this Article 3, if Indemnitee was, is or becomes a party to, or was or is threatened to be made a party to, or was or is otherwise involved in, any Legal Action, the Company will indemnify and hold harmless Indemnitee to the fullest extent permitted by the Articles and Applicable Law, as the same exists or may hereafter be amended, interpreted or replaced, against any and all Expenses, Claims or amounts paid in settlement, and any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement, that are paid or incurred by Indemnitee in connection with such Legal Action.
3.2      Mandatory Indemnification if Indemnitee is Wholly or Partly Successful . Notwithstanding any other provision of this Agreement (other than Section 6.9), to the extent that Indemnitee has been successful, on the merits or otherwise, in defense of any Legal Action or any part thereof, the Company will indemnify Indemnitee against all Expenses that are paid or incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Legal Action, but is successful, on the merits or otherwise, as to one or more but fewer than all Claims, issues or matters in such Legal Action, the Company will indemnify and hold harmless Indemnitee against all Expenses paid or incurred by Indemnitee in connection with each successfully resolved Claim, issue or matter on which Indemnitee was successful. For purposes of this Section 3.2, the termination of any Legal Action, or any Claim, issue or matter in such Legal Action, by dismissal with or without prejudice will be deemed to be a successful result as to such Legal Action, Claim, issue or matter.
3.3      Indemnification for Expenses of a Witness . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Legal Action to which Indemnitee is not a party, the Company will advance all reasonable expenses and indemnify Indemnitee against all Expenses paid or incurred by Indemnitee on his or her behalf in connection therewith.

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3.4      Exclusions . Notwithstanding any other provision of this Agreement, the Company will not be obligated under this Agreement to provide indemnification in connection with the following:
(a)      Any Legal Action (or part of any Legal Action) initiated or brought voluntarily by Indemnitee against the Company or its directors, officers, employees or other indemnities, unless the Management Board has authorized or consented to the initiation of the Legal Action (or such part of any Legal Action) with approval of the Supervisory Board.
(b)      An accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute or for any Claims to the extent that they represent the gain in fact of any profit or advantage to which the Indemnitee is not legally entitled.
(c)      If a court of competent jurisdiction has made a final and binding judgment that the act or omission of the Indemnitee can be characterized as a result of willful misconduct ( opzet ), willful recklessness ( bewuste roekeloosheid ) or serious culpability ( ernstig verwijt ) under Applicable Law.
(d)      For any Legal Action arising out of, based upon or attributable to the committing in fact by the Indemnitee of any deliberate criminal or deliberate fraudulent act.
ARTICLE 4     
ADVANCEMENT OF EXPENSES
4.1      Expense Advances . Except as set forth in Section 4.2, the Company will, if requested by Indemnitee, advance, to the fullest extent permitted by Applicable Law, to Indemnitee (hereinafter an “ Expense Advance ”) any and all Expenses paid or incurred by Indemnitee in connection with any Legal Action (whether prior to or after its final disposition). Indemnitee’s right to each Expense Advance will be subject to the requirements of the next sentence but not otherwise subject to the satisfaction of any standard of conduct and will be made without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement, or under provisions of the Articles or otherwise. Each Expense Advance will be unsecured and interest free and will be made by the Company upon a resolution of the Supervisory Board; provided , however , that an Expense Advance will be made only upon delivery to the Company of an undertaking (hereinafter an “ Undertaking ”), in a form satisfactory to the Company, by or on behalf of Indemnitee, to immediately repay such Expense Advance if it is ultimately determined, by final and binding judgment by a court or arbitrator, as applicable, from which there is no further right to appeal, that Indemnitee is not entitled to be indemnified for such Expenses under the Articles or Applicable Law. An Expense eligible for an Expense Advance will include any and all reasonable Expenses incurred pursuing an action to enforce the right of advancement provided for in this Article 4.
4.2      Exclusions . Indemnitee will not be entitled to any Expense Advance in connection with any of the matters for which indemnity is excluded pursuant to Section 3.4.

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4.3      Timing . An Expense Advance pursuant to Section 4.1 will be made within fifteen business days after the resolution of the Management Board is approved by the Supervisory Board with respect to such Expense Advance; provided , however , that no such Expense Advance will be made by the Company prior to receipt by the Company of the Undertaking.
ARTICLE 5     
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
5.1      Contribution by Company . To the fullest extent permitted by Applicable Law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount of Expenses and Claims incurred or paid by Indemnitee in connection with any Legal Action in proportion to the relative benefits received by the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee, on the one hand, and Indemnitee, on the other hand, from the transaction from which such Legal Action arose; provided , however , that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee, on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses and Claims, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors and employees of the Company other than Indemnitee who are jointly liable with Indemnitee, on the one hand, and Indemnitee, on the other hand, will be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct was active or passive.
5.2      Indemnification for Contribution Claims by Others . To the fullest extent permitted by Applicable Law, the indemnification herein will include claims of contribution which may be brought by other officers, directors or employees of the Company who may be jointly liable with Indemnitee for any Loss or Expense arising from a Legal Action.
ARTICLE 6     
PROCEDURES AND PRESUMPTIONS FOR THE
DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION
6.1      Notification of Claims; Request for Indemnification . Indemnitee agrees to notify promptly the Company in writing of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement; provided , however , that a delay in giving such notice will not deprive Indemnitee of any right to be indemnified under this Agreement unless, and then only to the extent that, the Company did not otherwise learn of the Legal Action and such delay is materially prejudicial to the Company’s ability to defend or to obtain coverage under the Company’s Liability Insurance for such Legal Action; and, provided , further , that notice will be deemed to have been given without any action on the part of Indemnitee in the event the Company is a party to the same Legal Action. The omission to notify the Company will not relieve the Company from any liability for indemnification which it may have to Indemnitee otherwise than under this Agreement.

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Indemnitee may deliver to the Company a written request to have the Company indemnify and hold harmless Indemnitee in accordance with this Agreement. Subject to Section 6.9, such request may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole discretion. Following such a written request for indemnification, Indemnitee’s entitlement to indemnification shall be determined according to Section 6.2. The Secretary of the Company will, promptly upon receipt of such a request for indemnification, advise the Management Board in writing that Indemnitee has requested indemnification. The Company will be entitled to participate in any Legal Action at its own expense.
6.2      Determination of Right to Indemnification . Upon written request by Indemnitee for indemnification pursuant to Section 6.1 hereof with respect to any Legal Action, a determination with respect to Indemnitee’s entitlement thereto will be made by one of the following, at the election of the Company: (1) so long as there are Disinterested Directors with respect to such Legal Action, a majority vote of the Disinterested Directors, even though less than a quorum of the Supervisory Board, (2) so long as there are Disinterested Directors with respect to such Legal Action, a committee of such Disinterested Directors designated by a majority vote of such Disinterested Directors, even though less than a quorum of the Supervisory Board or (3) Independent Counsel in a written opinion delivered to the Supervisory Board, a copy of which will also be delivered to Indemnitee. The election by the Company to use a particular person, persons or entity to make such determination is to be included in a written notification to Indemnitee. The person, persons or entity chosen to make a determination under this Agreement of the Indemnitee’s entitlement to indemnification shall act reasonably and in good faith in making such determination.
6.3      Selection of Independent Counsel . If the determination of entitlement to indemnification pursuant to Section 6.2 will be made by an Independent Counsel, the Independent Counsel will be selected as provided in this Section 6.3. The Independent Counsel will be selected by the Company (unless the Company requests that such selection be made by the Indemnitee, in which event the immediately following sentence will apply), and the Company will give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. If the Independent Counsel is selected by the Indemnitee, Indemnitee will give written notice to the Company advising of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten days after such written notice of selection is given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 30 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6.1, no Independent Counsel is selected, or an Independent Counsel for which an objection thereto has been properly made remains unresolved, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which has been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person

7



selected by the court or by such other person as the court may designate, and the person with respect to whom all objections are so resolved or the person so appointed will act as Independent Counsel under Section 6.2. The Company will pay any and all reasonable and necessary fees and expenses incurred by such Independent Counsel in connection with acting pursuant to Section 6.2 hereof, and the Company will pay all fees and expenses incident to the procedures of this Section 6.3, regardless of the manner in which such Independent Counsel was selected or appointed.
6.4      Burden of Proof . In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination will presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption will have the burden of proof. Indemnitee will be deemed to have acted in good faith if Indemnitee’s action with respect to a particular Enterprise is based on the records or books of account of such Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of such Enterprise in the course of their duties, or on the advice of legal counsel for such Enterprise or on information or records given or reports made to such Enterprise by an independent certified public accountant or by an appraiser or other expert selected by such Enterprise; provided , however this sentence will not be deemed to limit in any way the other circumstances in which Indemnitee may be deemed to have met the appropriate standard of conduct and provided further that this sentence shall not excuse fraudulent or other knowing improper actions taken by Indemnitee. In addition, the knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of such Enterprise will not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
6.5      No Presumption in Absence of a Determination or As Result of an Adverse Determination; Presumption Regarding Success . Neither the failure of any person, persons or entity chosen to make a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief to make such determination, nor an actual determination by such person, persons or entity that Indemnitee has not met such standard of conduct or did not have such belief, prior to or after the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under this Agreement under Applicable Law, will be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In addition, the termination of any Legal Action by settlement approved by the Management Board and Supervisory Board (whether with or without court approval) or upon a plea of nolo contendere, or its equivalent, will not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by this Agreement or Applicable Law.
6.6      Timing of Determination . The Company will use its reasonable best efforts to cause any determination required to be made pursuant to Section 6.2 to be made as promptly as practicable after Indemnitee has submitted a written request for indemnification pursuant to Section 6.1.
6.7      Timing of Payments . All payments of Expenses, including any Expense Advance, and other amounts by the Company to the Indemnitee pursuant to this Agreement will be made as soon as practicable after a written request or demand therefor by Indemnitee is presented to the

8



Company, but in no event later than 30 days after (i) such demand is presented or (ii) such later date as a determination of entitlement to indemnification is made in accordance with Section 6.6, if applicable; provided , however , that an Expense Advance will be made within the time provided in Section 4.3 hereof.
6.8      Cooperation . Indemnitee will cooperate with the person, persons or entity making a determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity, upon reasonable advance request, any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination will be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification).
6.9      Time for Submission of Request . Indemnitee will be required to submit any request for Indemnification pursuant to this Article 6 within a reasonable time, not to exceed two years, after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere (or its equivalent) or other full or partial final determination or disposition of the Legal Action (with the latest date of the occurrence of any such event to be considered the commencement of the two year period).
ARTICLE 7     
LIABILITY INSURANCE
7.1      Liability Insurance . The Company will use its reasonable endeavors to obtain and maintain a policy or policies of Liability Insurance with one or more reputable insurance companies providing Indemnitee with coverage in such amount as will be determined by the Supervisory Board for Claims and Expenses paid or incurred by Indemnitee as a result of acts or omissions of Indemnitee in his or her Corporate Status, and to ensure the Company’s performance of its indemnification obligations under this Agreement, to the extent that a policy covering the indemnification obligations under this Agreement is reasonably attainable; provided , however , in all policies of director and officer liability insurance obtained by the Company, Indemnitee will be named as an Insured in such manner as to provide Indemnitee with the same rights and benefits as are afforded to the other directors or officers, as applicable, of the Company under such policies. Any reductions to the amount of director and officer liability insurance coverage maintained by the Company as of the date hereof will be subject to the approval of the Supervisory Board.
7.2      Notice to Insurers . If, at the time of receipt by the Company of a notice from any source of a Legal Action as to which Indemnitee is a party or participant, the Company will give prompt notice of such Legal Action to the insurers in accordance with the procedures set forth in the respective policies, the Company will provide Indemnitee with a copy of such notice. The Company will thereafter take all necessary or desirable actions to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Legal Action in accordance with the terms of such policies.

9



7.3      Cooperation with Company . The Indemnitee will cooperate in all ways with the Company and its counsel and, if required by the Company, with the insurers issuing the Company’s Liability Insurance, to the extent the Company deems such cooperation reasonably necessary in connection with the tender, evaluation, investigation, and pursuant of insurance coverage for any Legal Action.
ARTICLE 8     
REMEDIES OF INDEMNITEE
8.1      Action by Indemnitee . In the event that (i) a determination is made pursuant to Article 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) an Expense Advance is not timely made pursuant to Section 4.3 of this Agreement, (iii) no determination of entitlement to indemnification is made within the applicable time periods specified in Section 6.6 or (iv) payment of indemnified amounts is not made within the applicable time periods specified in Section 6.7, Indemnitee will be entitled to seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association; such award to be made within 60 days following the filing of the demand for arbitration. The provisions of the laws of the State of Texas (without regard to its conflict of laws rules that would cause the application of the laws of another jurisdiction) will apply to any such arbitration. The Company will not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
8.2      Company Bound by Favorable Determination by Reviewing Party . If a determination is made that Indemnitee is entitled to indemnification pursuant to Article 6, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Article 8, absent (i) a misstatement by Indemnitee of a material fact or an omission of a material fact necessary to make Indemnitee’s statements in connection with the request for indemnification not materially misleading or (ii) a prohibition of such indemnification under Applicable Law.
8.3      Company Bound by Provisions of this Agreement . The Company and Indemnitee will each be precluded from asserting in any judicial or arbitration proceeding commenced pursuant to this Article 8 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such judicial or arbitration proceeding that the Company is bound by all the provisions of this Agreement.
ARTICLE 9     
NON-EXCLUSIVITY, SUBROGATION; NO DUPLICATIVE PAYMENTS
9.1      Non-Exclusivity . The rights of indemnification and to receive Expense Advances as provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under Applicable Law, the Articles, any agreement, a vote of stockholders, a resolution of the directors or otherwise. To the extent Indemnitee otherwise would have any greater right to indemnification or payment of any advancement of Expenses under any other provisions under Applicable Law, the Articles, any agreement, vote of stockholders, a resolution of directors or otherwise, Indemnitee will be entitled under this Agreement to such greater right. No amendment, alteration or repeal of this Agreement or of any provision hereof limits or restricts any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee prior

10



to such amendment, alteration or repeal. To the extent that a change in Applicable Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Articles and this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy will be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.
9.2      Subrogation . In the event of any payment by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect thereto, including rights under any policy of insurance or other indemnity agreement or obligation, and Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights (it being understood that all of Indemnitee’s reasonable Expenses related thereto will be borne by the Company).
9.3      No Duplicative Payments . The Company will not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or any Expense for which advancement is provided) hereunder if and to the extent that Indemnitee is otherwise entitled to receive such payment under any insurance policy, contract, agreement or otherwise. The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee in respect of Legal Actions relating to Indemnitee’s service at the request of the Company as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of any other Enterprise will be reduced by any amount Indemnitee is actually entitled to receive as indemnification or advancement of Expenses from such other Enterprise. Subject to Section 4.1, the indemnity obligations of this Agreement shall apply in excess of the Company’s Liability Insurance and to any other insurance or indemnities available to the Indemnitee.
ARTICLE 10     
DEFENSE OF PROCEEDINGS
10.1      Company Assuming the Defense . In the event the Company is obligated to pay in advance the Expenses of any Legal Action pursuant to Article 4, the Company will be entitled, by written notice to Indemnitee, to assume the defense of such Legal Action, with counsel approved by Indemnitee, which approval will not be unreasonably withheld or delayed. The Company will identify the counsel it proposes to employ in connection with such defense as part of the written notice sent to Indemnitee notifying Indemnitee of the Company’s election to assume such defense, and Indemnitee will be required, within ten days following Indemnitee’s receipt of such notice, to inform the Company of its approval of such counsel or, if it has objections, the reasons therefor. If such objections cannot be resolved by the parties, the Company will identify alternative counsel, which counsel will also be subject to approval by Indemnitee in accordance with the procedure described in the prior sentence. In the absence of an actual conflict of interest that would prevent defense counsel from representing both the Indemnitee and other defendants in the Legal Action,

11



the Indemnitee agrees that the Company may assign defense counsel to represent Indemnitee and other defendants in that Legal Action.
10.2      Right of Indemnitee to Employ Counsel . Following approval of counsel by Indemnitee pursuant to Section 10.1 and retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees and expenses of counsel subsequently incurred by Indemnitee with respect to the same Legal Action; provided , however , that (a) Indemnitee has the right to employ counsel in any such Legal Action at Indemnitee’s expense and (b) the Company will be required to pay the fees and expenses of Indemnitee’s counsel if (i) the employment of counsel by Indemnitee is authorized by the Company, (ii) an actual conflict of interest arises between the Company (or any other person or persons included in a joint defense) and Indemnitee in the conduct of such defense or representation by such counsel retained by the Company and the Company has not appointed new counsel without such conflict of interest to represent the Indemnitee or (iii) the Company does not continue to retain such counsel approved by the Indemnitee and the Company has not appointed new counsel to represent the Indemnitee in accordance with Section 10.1.
ARTICLE 11     
SETTLEMENT
11.1      Company Bound by Provisions of this Agreement . Notwithstanding anything in this Agreement to the contrary, the Company will have no obligation to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Legal Action effected without the Company’s prior written consent, which consent shall not be unreasonably withheld.
11.2      When Indemnitee’s Prior Consent Required . The Company will not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) contains any non-monetary remedy imposed on Indemnitee or a Loss for which Indemnitee is not wholly indemnified hereunder or (ii) with respect to any Legal Action with respect to which Indemnitee is made a party or a participant or is otherwise entitled to seek indemnification hereunder, does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Legal Action. Neither the Company nor Indemnitee will unreasonably withhold its consent to any proposed settlement; provided , however , Indemnitee may withhold consent to any settlement that does not provide a full and unconditional release of Indemnitee from all liability in respect of such Legal Action.
ARTICLE 12     
DURATION OF AGREEMENT; PERIOD OF LIMITATIONS
12.1      Duration of Agreement . This Agreement will continue until and terminate upon the latest of (a) the statute of limitations applicable to any claim that could be asserted against an Indemnitee with respect to which Indemnitee may be entitled to indemnification and/or an Expense Advance under this Agreement, (b) ten years after the date that Indemnitee has ceased to serve as a director or officer of the Company or as a director, officer, employee, partner, member, manager, fiduciary or agent of any other Enterprise which Indemnitee served at the request of the Company, or (c) if, at the later of the dates referred to in (a) and (b) above, there is pending a Legal Action in

12



respect of which Indemnitee is granted rights of indemnification or the right to an Expense Advance under this Agreement or a Legal Action commenced by Indemnitee pursuant to Article 8 of this Agreement, one year after the final termination of such Legal Action, including any and all appeals.
ARTICLE 13     
MISCELLANEOUS
13.1      Entire Agreement . This Agreement constitutes the entire agreement and understanding of the parties in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties, written or oral, to the extent they relate in any way to the subject matter hereof; provided , however , it is agreed that the provisions contained in this Agreement are a supplement to, and not a substitute for, any provisions regarding the same subject matter contained in the Articles and any employment or similar agreement between the parties.
13.2      Assignment; Binding Effect; Third Party Beneficiaries . No party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other party and any such assignment by a party without prior written approval of the other parties will be deemed invalid and not binding on such other parties. All of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective successors, permitted assigns, heirs, executors and personal and legal representatives. There are no third party beneficiaries having rights under or with respect to this Agreement.
13.3      Notices . All notices, requests and other communications provided for or permitted to be given under this Agreement must be in writing and be given by personal delivery, by certified or registered mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, or by facsimile transmission, as follows (or to such other address as any party may give in a notice given in accordance with the provisions hereof):
If to the Company:
Frank’s International N.V.
Mastenmakersweg 1
1786 PB Den Helder, The Netherlands
Attention: Alejandro Cestero
Facsimile: (281) 558-2980

with a copy to:
Frank’s International N.V.
10260 Westheimer Rd.
Houston, Texas 77042
Attention: Alejandro Cestero
Facsimile: (281) 558-2980

13



If to Indemnitee:

Darren C. Miles
10260 Westheimer, Suite 700
Houston, TX 77042
Facsimile: (281) 558-2980
All notices, requests or other communications will be effective and deemed given only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or registered mail, on the fifth business day after being deposited in the United States mail, (iii) if sent for next day delivery by overnight delivery service, on the date of delivery as confirmed by written confirmation of delivery, (iv) if sent by facsimile, upon the transmitter’s confirmation of receipt of such facsimile transmission, except that if such confirmation is received after 5:00 p.m. (in the recipient’s time zone) on a business day, or is received on a day that is not a business day, then such notice, request or communication will not be deemed effective or given until the next succeeding business day. Notices, requests and other communications sent in any other manner, including by electronic mail, will not be effective.
13.4      Specific Performance; Remedies . Each party acknowledges and agrees that the other party would be damaged irreparably if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. Accordingly, the parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its provisions in any action or proceeding instituted in any court having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided for herein, the rights, obligations and remedies created by this Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Except as expressly provided herein, nothing herein will be considered an election of remedies.
13.5      Submission to Jurisdiction . Any Legal Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement may only be brought in any courts in the State of Texas, which will be the exclusive and only proper forums for adjudicating such Legal Action, and each party consents to the exclusive jurisdiction and venue of such courts (and of the appropriate appellate courts therefrom) in any such Legal Action and irrevocably waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of the venue of any such Legal Action in any such court or that any such Legal Action brought in any such court has been brought in an inconvenient forum. Process in any such action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.
13.6      Headings . The article and section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.
13.7      Governing Law . This Agreement will be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any choice of law principles.

14



13.8      Amendment . This Agreement may not be amended or modified except by a writing signed by all of the parties.
13.9      Extensions; Waivers . Any party may, for itself only, (i) extend the time for the performance of any of the obligations of any other party under this Agreement, (ii) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any such extension or waiver will be valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. Neither the failure nor any delay on the part of any party to exercise any right or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy.
13.10      Severability . The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Agreement, as applied to any party or to any circumstance, is judicially determined not to be enforceable in accordance with its terms, the parties agree that the court judicially making such determination may modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its modified form, such provision will then be enforceable and will be enforced.
13.11      Counterparts; Effectiveness . This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This Agreement will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, which delivery may be made by exchange of copies of the signature page by facsimile or other electronic transmission.
13.12      Construction . This Agreement has been freely and fairly negotiated among the parties. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any law will be deemed also to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant

15



relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached will not detract from or mitigate the fact that the party is in breach of the first representation, warranty, or covenant. Time is of the essence in the performance of this Agreement.
[Signature page follows]


16



IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
FRANK’S INTERNATIONAL N.V.

By:     /s/ Alejandro Cestero .
Name: Alejandro Cestero
Title: Senior Vice President, General Counsel and Secretary


Indemnitee

/s/ Darren C. Miles         
Signature

 
Name: Darren C. Miles







EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Michael C. Kearney, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Frank’s International N.V. (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 8, 2018


/s/ Michael C. Kearney
Michael C. Kearney
Chairman, President and Chief Executive Officer





EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Kyle McClure, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Frank’s International N.V. (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 8, 2018


/s/ Kyle McClure        
Kyle McClure
Senior Vice President and Chief Financial Officer






EXHIBIT 32.1

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350

In connection with the Quarterly Report of Frank’s International N.V. (the “Company”) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael C. Kearney, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:

1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 8, 2018
 
/s/ Michael C. Kearney
 
 
 
Michael C. Kearney
 
 
 
Chairman, President and Chief Executive Officer
 

    




EXHIBIT 32.2

CERTIFICATION OF
CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350

In connection with the Quarterly Report of Frank’s International N.V. (the “Company”) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kyle McClure, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:

1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 8, 2018
 
/s/ Kyle McClure
 
 
 
Kyle McClure
 
 
 
Senior Vice President and Chief Financial Officer