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Item 1. Financial Statements

2021-05-06 compared with 2020-11-04 · 152 added, 294 removed, 215 unchanged (67% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Successor Predecessor Successor Predecessor

(Dollars and shares in millions, Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended

except per share amounts) 9/30/2020 9/30/2019 9/30/2020 9/30/2019

Three Months Ended March 31,

(Dollars and shares in millions, except per share amounts) 2021 2020

Products $ 309 $ 450

6 unchanged sentences

Selling, General and Administrative 188 248

Long-lived Asset Impairments — — 818 20

Goodwill Impairment — 399 239 730

Inventory Charges — — 134 —

Restructuring, Facility and Severance 31 53 114 93

Other Operating Charges 16 42 48 100

Prepetition Charges — — — 86

Gain on Operational Assets Sale ( 12 ) ( 15 ) ( 12 ) ( 15 )

(Gain) Loss on Sale of Businesses, Net — 8 — ( 104 )

Impairments and Other Charges — 817

Restructuring Charges — 26

Total Costs and Expenses 845 2,037

Operating Loss ( 13 ) ( 822 )

Interest Expense, Net (Unrecognized Contractual Interest Expense was $ 133 million for three and nine months ended September 30, 2019)

Interest Expense, Net

( 70 ) ( 58 )

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Successor Predecessor Successor Predecessor

Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended

Three Months Ended March 31,

(Dollars in millions) 2021 2020

1 unchanged sentence

Foreign Currency Translation Adjustments ( 4 ) ( 95 )

Interest Rate Derivative Loss — 8 — 8

Other Comprehensive Income (Loss) ( 6 ) ( 20 ) ( 72 ) 43

Comprehensive Loss ( 114 ) ( 1,053 )

7 unchanged sentences

Restricted Cash 166 167

Accounts Receivable, Net of Allowance for Credit Losses of $ 31 at September 30, 2020 and $ 0 at December 31, 2019

Accounts Receivable, Net of Allowance for Credit Losses of $ 32 at March 31, 2021 and $ 32 at December 31, 2020

Inventories, Net 676 717

1 unchanged sentence

Total Current Assets 3,158 3,177

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 284 at September 30, 2020 and $ 25 at December 31, 2019

Goodwill — 239

Intangible Assets, Net of Accumulated Amortization of $ 133 at September 30, 2020 and $ 9 at December 31, 2019

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 430 at March 31, 2021 and $ 367 at December 31, 2020

Intangible Assets, Net of Accumulated Amortization of $ 212 at March 31, 2021 and $ 173 at December 31, 2020

Operating Lease Right-of-Use Assets 128 138

14 unchanged sentences

Ordinary Shares - Par Value $ 0.001 ;

Authorized 1,356 shares, Issued and Outstanding 70 shares at September 30, 2020 and December 31, 2019

Authorized 1,356 shares, Issued and Outstanding 70 shares at March 31, 2021 and December 31, 2020

Capital in Excess of Par Value 2,897 2,897

Retained Deficit ( 2,063 ) ( 1,947 )

Accumulated Other Comprehensive Income (Loss) ( 63 ) 9

Accumulated Other Comprehensive Loss ( 47 ) ( 43 )

Weatherford Shareholders’ Equity 787 907

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Successor Predecessor

Nine Months Ended

Three Months Ended March 31,

(Dollars in millions) 2021 2020

4 unchanged sentences

Goodwill Impairment — 167

Impairments and Other Charges 1,114 213

Reorganization Items (Non-Cash) — 134

Reorganization Items (Debtor in Possession Financing and Backstop Agreement) — 110

Gain on Sale Businesses, Net — ( 104 )

Change in Assets and Liabilities:

Long-lived Asset Impairments — 640

Inventory Charges 17 2

Asset Write-Downs and Other Charges — 6

Deferred Income Tax Provision 2 23

Share-Based Compensation 4 —

Changes in Operating Assets and Liabilities, Net:

Accounts Receivable

( 4 ) ( 152 )

Accounts Payable

( 248 ) ( 105 )

Other Operating Activities 46 ( 111 )

Net Cash Provided by (Used in) Operating Activities 188 ( 679 )

Other Assets and Liabilities, Net ( 10 ) 76

Net Cash Provided by Operating Activities 74 30

Cash Flows From Investing Activities:

1 unchanged sentence

Proceeds from Disposition of Assets 11 6

Payments of Deferred Consideration on the Acquisition of Equity Investment ( 24 ) —

Acquisition of Intangible Assets ( 4 ) ( 12 )

Proceeds from Disposition of Businesses, Net 1 319

Proceeds from Bond Maturities 25 —

Net Cash Provided by (Used in) Investing Activities ( 89 ) 210

Other Investing Activities 1 ( 3 )

Net Used in Investing Activities ( 3 ) ( 35 )

Cash Flows From Financing Activities:

Borrowings of Long-term Debt 457 —

Repayments of Long-term Debt ( 3 ) ( 2 )

Repayments of Short-term Debt, Net ( 4 ) ( 3 )

Borrowings (Repayments) of Debtor in Possession Credit Agreement, Net — 1,386

Debtor in Possession Financing Fees and Payments on Backstop Agreement — ( 110 )

Deferred Consideration Payment — ( 12 )

Other Financing Activities ( 2 ) ( 3 )

Net Cash Provided by Financing Activities 400 917

Net Cash Used in Financing Activities ( 9 ) ( 20 )

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 4 ) ( 11 )

Net Increase in Cash, Cash Equivalents and Restricted Cash 493 448

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash 58 ( 36 )

Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,285 800

7 unchanged sentences

The accompanying unaudited Condensed Consolidated Financial Statements of Weatherford International plc (the “Company,” or “Weatherford”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

GAAP”) and pursuant to the rules and regulations of the SEC for interim financial information.

GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.

Accordingly, certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted.

9 unchanged sentences

Please refer to “Note 1 – Summary of Significant Accounting Policies” of our Consolidated Financial Statements from our 2020 Annual Report for the discussion on our significant accounting policies.

Certain reclassifications of the financial statements and accompanying footnotes for the three and nine months ended September 30, 2019 have been made to conform to the presentation for the three and nine months ended September 30, 2020.

As described in “Note 1 – Summary of Significant Accounting Policies”, “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings”, and “Note 3 – Fresh Start Accounting” of our Consolidated Financial Statements from our 2019 Annual Report, we filed voluntary petitions for bankruptcy on July 1, 2019, then emerged from bankruptcy on December 13, 2019 and adopted fresh-start accounting upon emergence.

References to “Predecessor” herein relate to the Condensed Consolidated Statements of Operations of the Company prior to the emergence from bankruptcy on December 13, 2019.

References to “Successor” herein relate to the Condensed Consolidated Balance Sheets of the reorganized Company as of September 30, 2020 and December 31, 2019 and the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 (“Successor Period”) and are not comparable to the Condensed Consolidated Financial Statements of the Predecessor Periods for the three and nine months ended September 30, 2019 (“Predecessor Period”), as indicated by the “black line” division in the financials and footnote tables, which emphasizes the lack of comparability between amounts presented.

Our financial results for future periods will be different from historical trends and the differences may be material.

Accounts Receivable Factoring

From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions.

Our factoring transactions in the Successor Periods and Predecessor Periods were recognized as sales, and the proceeds are included as operating cash flows in our Condensed Consolidated Statements of Cash Flows.

The loss on sale of accounts receivable sold was immaterial for all Successor Periods and Predecessor Periods.

The following table presents accounts receivable sold and cash proceeds from the sale of accounts receivable.

Successor Predecessor Successor Predecessor

Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended

Certain reclassifications of the financial statements and accompanying footnotes for the three months ended March 31, 2020 have been made to conform to the presentation for the three months ended March 31, 2021.

Impairments and Other Charges

We recorded the following in “Impairments and Other Charges” on the accompanying Condensed Consolidated Statements of Operations:

Three Months Ended

(Dollars in millions) 2021 2020

Accounts Receivable Sold $ 11 $ 37 $ 34 $ 199

Cash Proceeds from Sale of Accounts Receivable $ 10 $ 34 $ 30 $ 186

Long-lived Asset Impairments $ — $ 640

Goodwill Impairment — 167

Other Charges, Net — 10

Total Impairment and Other Charges $ — $ 817

We recognized long-lived asset and goodwill impairments as further described in “Note 4 – Long-Lived Asset Impairments” and “Note 5 – Goodwill and Intangible Assets”.

Inventories, Net

Inventories, net of reserves of $ 106 million and $ 0 as of September 30, 2020 and December 31, 2019, respectively by category were as follows:

Inventories, net of reserves of $ 137 million and $ 119 million as of March 31, 2021 and December 31, 2020, respectively by category in the table below.

During the three months ended March 31, 2021 and 2020, we recognized excess and obsolete inventory charges of $ 17 million and $ 2 million, respectively, recorded in “Cost of Products” on our Condensed Consolidated Statements of Operations.

(Dollars in millions) 3/31/2021 12/31/2020

1 unchanged sentence

Work in Process and Raw Materials, Components and Supplies 72 62

During the second quarter of 2020, we recognized inventory charges and write-downs of $ 134 million primarily for excess and obsolete inventory as a result of the decline in oil and gas commodity demand, the downturn in the oil and gas industry and the impact of COVID-19 pandemic.

These inventory charges are included in “Inventory Charges” on the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2020.

Acquisitions and Divestitures

We did not have any acquisitions of businesses in the three and nine months ended September 30, 2020 or 2019.

We paid $ 12 million in March 2020 and an additional $ 12 million in April 2020 as final settlement of the deferred consideration associated with our acquisition of the remaining 50% equity interest in our Qatari joint venture, which took place in the first quarter of 2018.

We did not have any significant dispositions of businesses in the three and nine months ended September 30, 2020.

In the second quarter of 2019 we completed the sale of our reservoir solutions and our surface data logging businesses for an aggregate sale price of $ 256 million and recognized a net gain of approximately $ 117 million and divested a carrying amount of $ 95 million in net assets.

In the first quarter of 2019, we received the remaining gross proceeds of $ 72 million to complete the final closings pursuant to the purchase and sale agreements entered into with ADES International Holding Ltd.

in July of 2018 to sell our land drilling rig operations in Algeria, Kuwait and Saudi Arabia for an aggregate purchase price of $ 288 million.

The loss on the sale of land drilling rigs operations recognized in the first quarter of 2019 was $ 6 million and the divested carrying amount of net assets was $ 66 million.

Inventories, Net $ 676 $ 717

Long-lived Asset Impairments

We did not recognize any long-lived asset impairments in the third quarter ended September 30, 2020.

The unprecedented global economic and industry conditions resulting from the decline in demand and impact from the COVID-19 pandemic were identified as impairment indicators.

As a result, we performed interim impairment assessments as of March 31, 2020, and as of June 30, 2020, of our property, plant and equipment, definite-lived intangible assets, goodwill and right of use assets with the assistance of third-party valuation advisors.

Based on our impairment test, we determined the carrying amount of certain long-lived assets exceeded their respective fair values and recognized $ 818 million of long-lived asset impairments in “Long-lived Asset Impairments” on the accompanying Condensed Consolidated Statements of Operations during the nine months ended September 30, 2020.

The fair values of our long-lived assets were determined using discounted cash flow or Level 3 fair value analyses.

The unobservable inputs to the income approach included the estimated discounted future cash flows by asset group, specifically the forecasted revenue, forecasted operating margins, and discount rate assumptions used to determine the fair value of certain asset groups.

The table below details the Successor long-lived asset impairments by asset and segment recognized for the nine months ended September 30, 2020.

Nine Months Ended September 30, 2020

We did not recognize any long-lived asset impairments in the three months ended March 31, 2021.

During the three months ended March 31, 2020, the global economic and industry conditions resulting from the decline in demand and impact from the COVID-19 pandemic were identified as impairment indicators.

As a result, we performed interim impairment assessments as of March 31, 2020, of our property, plant and equipment, definite-lived intangible assets, goodwill and right of use assets with the assistance of third-party valuation advisors.

Based on our impairment test, we determined the carrying amount of certain long-lived assets exceeded their respective fair values and recognized $ 640 million of long-lived asset impairments in “Long-lived Asset Impairments” on the accompanying Condensed Consolidated Statements of Operations during the three months ended March 31, 2020.

See the impairment to goodwill and intangible assets at “Note 5 – Goodwill and Intangible Assets.”

The fair values of our long-lived assets were determined using discounted cash flow under the income approach or Level 3 fair value analyses.

The income approach required significant assumptions to determine the fair value of an asset or asset group including the estimated discounted future cash flows, specifically the forecasted revenue, forecasted operating margins and the discount rate.

The table below details the long-lived asset impairments by asset and segment recognized.

Three Months Ended March 31, 2020

(Dollars in millions) Western Hemisphere Eastern Hemisphere Total

3 unchanged sentences

Total Impairment Charges $ 302 $ 338 $ 640

We recognized no Predecessor long-lived asset impairments in the third quarter of 2019 and $ 20 million of Predecessor long-lived asset impairments for the nine months ended September 30, 2019.

The impairments in 2019 were related to our Western Hemisphere segment totaling $ 13 million and Eastern Hemisphere totaling $ 7 million.

Goodwill and Intangible Assets

The impairment indicators discussed in “Note 5 - Long-Lived Asset Impairments” triggered interim quantitative goodwill assessments as of March 31, 2020 and June 30, 2020.

Our quantitative goodwill impairment assessments were based on a discounted cash flow analysis and a multiples-based market approach for comparable companies in our industry, a Level 3 fair value analysis.

The analysis included significant judgments, including estimated future cash flows by reporting unit, specifically forecasted revenue, forecasted operating margins, discount rates and forecasted capital expenditures used to determine the fair value of the reporting units.

As a result, we fully impaired our goodwill in the Russia and Middle East & North Africa (“MENA”) reporting units as of the second quarter ended June 30, 2020.

The changes in the carrying amount of goodwill by reporting segment for the nine months ended September 30, 2020, are presented in the following table.

(Dollars in millions) Western Hemisphere Eastern Hemisphere Total

Balance at December 31, 2019 $ — $ 239 $ 239

Impairment — ( 239 ) ( 239 )

Balance at September 30, 2020 $ — $ — $ —

For the three and nine months ended September 30, 2019, the Predecessor goodwill impairment tests indicated that goodwill was impaired and as a result the Predecessor incurred a charge of $ 399 million and $ 730 million, respectively.

The Predecessor impairment indicators were a result of lower activity levels and lower exploration and production capital spending that resulted in a decline in drilling activity and forecasted growth in the North America, Asia and MENA reporting units.

We have no goodwill as of December 31, 2020 and March 31, 2021.

The cumulative impairment loss for goodwill was $ 239 million.

For the three months ended March 31, 2020, based on our goodwill impairment assessment that determined the fair value of our reporting units were less than their carrying values, we recognized goodwill impairment of $ 167 million in our Eastern Hemisphere segment, included in “Impairments and Other Charges” on the accompanying Condensed Consolidated Statements of Operations.

We identified the impairment indicators as discussed in “Note 4 – Long-Lived Asset Impairments” that triggered interim quantitative goodwill assessments as of March 31, 2020.

The fair values of our reporting units were determined using a combination of the income approach and the market approach for comparable companies in our industry, a Level 3 fair value analysis.

Determining the fair value of the reporting units requires management to develop significant judgments, including estimating and discounting future cash flows by reporting unit, specifically forecasted revenue, forecasted operating margins and discount rates.

Intangible Assets

4 unchanged sentences

Totals $ 771 $ 810

We did not recognize any impairment of intangible assets in the Successor three months ended September 30, 2020.

For the Successor nine months ended September 30, 2020, based on our impairment tests in the first and second quarters of 2020, we recognized impairments of $ 159 million of our developed and acquired technology.

Amortization expense was $ 38 million and $ 124 million for the Successor three and nine months ended September 30, 2020, respectively, and $ 17 million and $ 49 million for the Predecessor three and nine months ended September 30, 2019 and is reported in Selling, General and Administrative on our Condensed Consolidated Statements of Operations.

As of September 30, 2020, accumulated amortization was $ 101 million for Developed and Acquired Technology and $ 32 million for Trade Names.

Restructuring, Facility Consolidation and Severance Charges

During the Successor three and nine months ended September 30, 2020, in response to the impact on our business from the COVID-19 pandemic and the significant decline in demand, we initiated additional immediate actions and developed plans to reduce our future cost structure.

As a result, during the Successor three and nine months ended September 30, 2020, we incurred restructuring and severance charges of $ 31 million and $ 114 million, respectively in “Restructuring, Facility and Severance” on the accompanying Condensed Consolidated Statements of Operations.

Additional charges with respect to our ongoing cost reduction actions are expected to be recorded through the remainder of 2020 and could result in additional charges in future periods as we execute and revise our plans.

The following table presents restructuring and severance charges for the Successor Period and Predecessor Period.

Successor Predecessor Successor Predecessor

Three Months Ended Three Months Ended Nine Months Ended

Nine Months Ended

We did not recognize any impairment of intangible assets in the three months ended March 31, 2021.

For the three months ended March 31, 2020, based on our impairment test, we recognized intangible asset impairments of $ 137 million of our developed and acquired technology.

Amortization expense was $ 39 million and $ 46 million for the three months ended March 31, 2021 and 2020, respectively, and is reported in Selling, General and Administrative on our Condensed Consolidated Statements of Operations.

Accumulated amortization as of March 31, 2021 and December 31, 2020, was $ 161 million and $ 132 million, respectively, for Developed and Acquired Technology and $ 51 million and $ 41 million, respectively, for Trade Names.

Restructuring Charges

During the three months ended March 31, 2021 and 2020, we incurred restructuring charges of zero and $ 26 million, respectively, in “Restructuring Charges” on the accompanying Condensed Consolidated Statements of Operations.

Additional charges with respect to our ongoing cost reduction actions may be recognized in subsequent periods.

The following table presents restructuring charges for the first quarter of 2021 and 2020.

Three Months Ended March 31,

(Dollars in millions) 2021 2020

Severance Charges $ — $ 23

Facility Consolidation and Other Charges — 40 5 69

Asset Related Charges (non-cash) — 6 — 14

Total Restructuring and Severance Charges $ 31 $ 53 $ 114 $ 93

The following table presents total restructuring and severance charges by reporting segment and Corporate for the Successor Period and Predecessor Period.

Successor Predecessor Successor Predecessor

Three Months Ended Three Months Ended Nine Months Ended

Nine Months Ended

Facility Exit Charges — 3

Total Restructuring Charges $ — $ 26

The following table presents total restructuring charges by reporting segment and Corporate for the first quarter of 2021 and 2020.

Three Months Ended March 31,

(Dollars in millions) 2021 2020

2 unchanged sentences

Corporate — 5

$ 31 $ 53 $ 114 $ 93

The following table presents total restructuring and severance accrual activity charges, payments and other changes for the Successor Period ended September 30, 2020.

Total Restructuring Charges $ — $ 26

The following table presents total restructuring accrual activity for the three months ended March 31, 2021.

(Dollars in millions) Accrued Balance at December 31, 2020 Charges Cash Payments Other

Accrued Balance at September 30, 2020

Restructuring and Severance Reserve $ 66 $ 114 $ ( 109 ) $ ( 15 ) $ 56

Accrued Balance at March 31, 2021

Restructuring Reserve $ 53 $ — $ ( 12 ) $ ( 1 ) $ 40

Borrowings and Other Obligations

8 unchanged sentences

Long-term Debt $ 2,602 $ 2,601

Credit Agreements

ABL Credit Agreement

On December 13, 2019, we entered into a senior secured asset-based lending agreement in an aggregate amount of $ 450 million (the “ABL Credit Agreement”) with the lenders party thereto and Wells Fargo Bank, N.A.

as administrative agent.

On August 28, 2020, we issued $ 500 million of 8.75 % Senior Secured Notes due 2024 (“Senior Secured Notes”) and terminated the ABL Credit Agreement, resulting in the alleviation of our substantial doubt to continue as a going concern that was previously reported as of June 30, 2020.

At the time of termination, there were no loan amounts outstanding under the ABL Credit Agreement, and all outstanding letters of credit thereunder were either cash collateralized or transferred to issuing banks under the senior secured letter of credit agreement (“LC Credit Agreement”), described below.

Upon termination of the ABL Credit Agreement, we recorded $ 15 million of unamortized deferred debt issuance costs in “Interest Expense, Net” on our Condensed Consolidated Financial Statements.

Upon our emergence from bankruptcy on December 13, 2019, we entered into an indenture with Deutsche Bank Trust Company Americas, as trustee and issued unsecured 11.00 % Exit Notes in an aggregate principal amount of $ 2.1 billion maturing on December 1, 2024 (the “Exit Notes”).

Interest on the Exit Notes accrues at the rate of 11.00 % per annum and is payable semiannually in arrears on June 1 and December 1, which commenced on June 1, 2020.

Senior Secured Notes

On August 28, 2020, we entered into an indenture with Wilmington Trust, National Association, as trustee and collateral agent, and issued the 8.75 % Senior Secured Notes in an aggregate principal amount of $ 500 million maturing September 1, 2024 (the “Senior Secured Notes”).

Interest on the Senior Secured Notes accrues at the rate of 8.75 % per annum and is payable semiannually in arrears on March 1 and September 1, commencing on March 1, 2021.

LC Credit Agreement

On December 13, 2019, we entered into the LC Credit Agreement in an aggregate amount of $ 195 million maturing on June 13, 2024 with the lenders party thereto and Deutsche Bank Trust Company Americas as administrative agent.

On August 28, 2020, we amended the LC Credit Agreement to, among other things, increase the aggregate commitments to $ 215 million, modify the maturity date to May 29, 2024 and reduce the minimum liquidity covenant from $ 200 million to $ 175 million.

On December 13, 2019, we entered into the senior secured letter of credit agreement in an aggregate amount of $ 195 million maturing on June 13, 2024 with the lenders party thereto and Deutsche Bank Trust Company Americas as administrative agent (the “LC Credit Agreement”).

The LC Credit Agreement is used for the issuance of bid and performance letters of credit of the Company and certain of its subsidiaries.

At September 30, 2020, we had approximately $ 168 million in outstanding letters of credit under the LC Credit Agreement and availability of $ 47 million.

We incurred $ 6 million of issuance costs in obtaining the amendment, increasing our unamortized costs to $ 12 million.

These issuance costs will be recognized over the term of the agreement in “Other Expense, Net” on our Condensed Consolidated Financial Statements.

As of September 30, 2020, we had $ 346 million of letters of credit outstanding, consisting of the $ 168 million mentioned above under the LC Credit Agreement and another $ 178 million under various uncommitted facilities (of which there was $ 170 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

The applicable terms, interest rates and fees for borrowings under the LC Credit Agreement are the same as those presented in “Note 13 – Short-Term Borrowings and other Debt Obligations” in our 2019 Annual Report.

Long-term Debt

On December 13, 2019, we issued unsecured 11 % senior notes maturing December 1, 2024 (“Exit Notes”) for an aggregate principal amount of $ 2.1 billion.

Interest on the Exit Notes accrues at the rate of 11 % per annum and is payable semiannually in arrears on June 1 and December 1.

The first interest payment was made on June 1, 2020.

On August 28, 2020, Weatherford International Ltd., as issuer, Weatherford International plc and Weatherford International, LLC, as guarantors, and the other subsidiary guarantors party thereto, entered into an indenture with Wilmington Trust, National Association, as trustee and collateral agent, and issued the Senior Secured Notes in an aggregate principal amount of $ 500 million.

Interest on the Senior Secured Notes accrues at the rate of 8.75 % per annum and is payable semiannually in arrears on March 1 and September 1, commencing on March 1, 2021.

Proceeds from the issuance were reduced by a purchase commitment discount of $ 25 million and a commitment fee of $ 15 million.

These debt issuance costs along with legal and other direct costs are presented as a contra-liability of the carrying amount of the debt liability and will be recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net” on our Condensed Consolidated Financial Statements.

The Senior Secured Notes are fully and unconditionally guaranteed on a senior secured basis by the Company’s material domestic subsidiaries, certain material foreign subsidiaries, and in the future by other subsidiaries that guarantee its obligations under the LC Credit Agreement or other material indebtedness.

The Senior Secured Notes are secured by substantially all of the assets of the Company and the guarantors (on an effectively first-priority basis with respect to the priority collateral for the Senior Secured Notes, and on an effectively second-priority basis with respect to the priority collateral for the LC Credit Agreement, in each case, subject to permitted liens).

The indentures governing the Exit Notes and Senior Secured Notes contain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to:

incur, assume or guarantee additional indebtedness;

pay dividends or distributions on capital stock or redeem or repurchase capital stock;

make investments;

sell stock of our subsidiaries;

transfer or sell assets;

create liens;

enter into transactions with affiliates;

and enter into mergers or consolidations.

In addition, the Senior Secured Notes require maintaining at least $ 175 million of minimum liquidity as defined in the Senior Secured Notes indenture agreement.

As of September 30, 2020, we were in compliance with the covenants of the aforementioned indentures and the LC Credit Agreement.

At March 31, 2021, we had approximately $ 160 million in outstanding letters of credit under the LC Credit Agreement and availability of $ 55 million.

As of March 31, 2021, we had $ 328 million of letters of credit outstanding, consisting of the $ 160 million mentioned above under the LC Credit Agreement and another $ 168 million under various uncommitted facilities (of which there was $ 163 million in cash collateral held and recorded in “Restricted Cash” on our Condensed Consolidated Balance Sheets).

Accrued Interest

As of March 31, 2021 and December 31, 2020, we had approximately $ 80 million and $ 34 million, respectively in “Other Current Liabilities” primarily related to the Exit Notes and Senior Secured Notes.

Fair Value of Short and Long-term Borrowings

2 unchanged sentences

The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors.

Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the market rate is greater than the interest rate at which the debt was originally issued.

Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued

and will be less than the carrying value when the market rate is greater than the interest rate at which the debt was originally issued.

The fair value of our long-term debt is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets.

The table below presents the fair value and carrying value of the Exit and Senior Secured Notes.

(Dollars in millions) 9/30/2020 12/31/2019

The table below presents the fair value and carrying value of the Exit Notes and Senior Secured Notes.

3/31/2021 12/31/2020

(Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value

11.00% Exit Notes due 2024

1 unchanged sentence

8.75% Senior Secured Notes due 2024

Fair Value $ 1,780 $ 2,252

Carrying Value $ 2,554 $ 2,097

The total fair value of our debt decreased significantly primarily due to the negative impact the COVID-19 pandemic had on our business and industry, which increased the credit spreads of our debt.

Fair Value of Financial Instruments

Our assets and liabilities measured at fair value on a recurring basis consist solely of our derivative instruments.

We monitor the creditworthiness of our counterparties, which are multinational commercial banks.

The fair values of all our outstanding derivative instruments are determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates.

Our derivative activity is not material to our financial statements.

Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable and held-to-maturity investments.

The estimated fair value of these financial instruments approximates their carrying values as reflected in our Condensed Consolidated Financial Statements.

The fair value of our short-term and long-term borrowings are discussed in “Note 8 – Borrowings and Other Obligations.”

As of September 30, 2020 and December 31, 2019, we had $ 25 million and $ 50 million, respectively, of held-to-maturity Angolan government bonds.

During the nine months ended September 30, 2020, we received proceeds of $ 25 million from the maturity of a portion of our Angolan government bonds.

The carrying value of these bonds approximated their fair value as of September 30, 2020 and December 31, 2019, respectively.

457 524 455 507

Total $ 2,555 $ 2,542 $ 2,553 $ 2,135

Disputes, Litigation and Legal Contingencies

3 unchanged sentences

If one or more negative outcomes were to occur relative to these cases, the aggregate impact to our financial condition could be material.

Due to the COVID-19 pandemic, courts in many jurisdictions around the world have been temporarily closed for trials and hearings, which has resulted in delays in many of our litigation matters.

Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 were $ 43 million and $ 44 million, respectively.

Shareholder Litigation

Due to the COVID-19 pandemic, many of the Company’s litigation matters and other disputes have been delayed due to court closures or other mandated accommodations.

Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 were $ 44 million and $ 43 million, respectively.

GAMCO Shareholder Litigation

9 unchanged sentences

The defendants filed their motion to dismiss on May 18, 2020, and plaintiffs filed their response on July 3, 2020.

The defendants filed a reply brief on August 3, 2020, and now the Court will rule on the motion to dismiss.

The defendants filed a reply brief on August 3, 2020.

Their motion to dismiss is pending before the Court.

We cannot reliably predict the outcome of the claims, including the amount of any possible loss.

Prior Shareholder Litigation

In 2010, three shareholder derivative actions were filed, and in 2014 a fourth shareholder derivative action was filed, purportedly on behalf of the Company, asserting breach of duty and other claims against certain then-current and former officers and directors of the Company related to the United Nations oil-for-food program governing sales of goods into Iraq, the Foreign Corrupt Practices Act of 1977 and trade sanctions related to the U.S.

government investigations disclosed in our SEC filings since 2007.

Those shareholder derivative cases were filed in Harris County, Texas state court and consolidated under the caption Neff v.

Brady, et al.

2010040764 (collectively referred to as the “ Neff Case ”).

A motion to dismiss was granted May 15, 2015, and an appeal was filed on June 15, 2015.

Following briefing and oral argument, on June 29, 2017, the Texas Court of Appeals denied in part and granted in part the shareholders’ appeal.

The Court ruled that the shareholders lacked standing to bring claims that arose prior to the Company’s redomestication to Switzerland in 2009 and upheld the dismissal of those claims.

The Court reversed as premature the trial court’s dismissal of claims arising after the redomestication and remanded to the trial court for further proceedings.

On February 1, 2018, the individual defendants and nominal defendant Weatherford filed a motion for summary judgment on the remaining claims in the case.

On February 13, 2018, the trial court dismissed with prejudice certain directors for lack of jurisdiction.

Although the plaintiffs appealed the jurisdictional ruling, on June 19, 2020, the plaintiffs filed a motion to dismiss the appeal with prejudice.

This litigation has concluded.

Environmental Contingencies

We have obligations and expect to incur capital, operating and maintenance, and remediation expenditures, as a result of compliance with environmental laws and regulations.

Among those obligations, are the current requirements imposed by the Texas Commission on Environmental Quality (“TCEQ”) at the former Universal Compression facility in Midland, Texas.

At this location we are performing a TCEQ-approved Remedial Action Plan (“RAP”) to address contaminated ground water.

The performance of the RAP and related expenses are scheduled to be performed over a ten to twenty-year period and may cost as much as $ 6 million.

We continuously monitor and strive to maintain compliance with changes in laws and regulations that impact our business.

Shareholders’ Equity (Deficiency)

The following summarizes our shareholders’ equity (deficiency) activity for the three and nine months ended September 30, 2020 and 2019.

(Dollars in Millions) Par Value of Issued Shares Capital in Excess of Par Value Retained

Shareholders’ Equity

The following summarizes our shareholders’ equity activity for the three months ended March 31, 2021 and 2020.

(Dollars in Millions) Capital in Excess of Par Value Retained

Deficit Accumulated

Comprehensive

Income (Loss) Non-controlling Interests Total Shareholders’ Equity (Deficiency)

Balance at December 31, 2019 (Successor) $ — $ 2,897 $ ( 26 ) $ 9 $ 36 $ 2,916

Income (Loss) Non-controlling Interests Total Shareholders’ Equity

Balance at December 31, 2020 $ 2,897 $ ( 1,947 ) $ ( 43 ) $ 30 $ 937

Net Income (Loss) — ( 116 ) — 6 ( 110 )

Other — — — ( 2 ) ( 2 )

Other Comprehensive Loss — — ( 4 ) — ( 4 )

Balance at March 31, 2020 (Successor) $ — $ 2,897 $ ( 992 ) $ ( 86 ) $ 44 $ 1,863

Balance at March 31, 2021 $ 2,897 $ ( 2,063 ) $ ( 47 ) $ 34 $ 821

Balance at December 31, 2019 $ 2,897 $ ( 26 ) $ 9 $ 36 $ 2,916

Net Income (Loss) — ( 966 ) — 8 ( 958 )

Other Comprehensive Loss — — ( 95 ) — ( 95 )

Dividends to Noncontrolling Interests — — — — ( 8 ) ( 8 )

Balance at June 30, 2020 (Successor) $ — $ 2,897 $ ( 1,573 ) $ ( 57 ) $ 38 $ 1,305

Net Income (Loss) — — ( 174 ) — 7 ( 167 )

Balance at March 31, 2020 $ 2,897 $ ( 992 ) $ ( 86 ) $ 44 $ 1,863

The following table presents the changes in our accumulated other comprehensive income (loss) by component for the three months ended March 31, 2021 and 2020:

(Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Total

Balance at December 31, 2020 $ ( 31 ) $ ( 12 ) $ ( 43 )

Other Comprehensive Loss $ ( 4 ) $ — $ ( 4 )

Dividends to Noncontrolling Interests — — — — ( 9 ) ( 9 )

Balance at September 30, 2020 (Successor) $ — $ 2,897 $ ( 1,747 ) $ ( 63 ) $ 36 $ 1,123

Balance at December 31, 2018 (Predecessor) $ 1 $ 6,711 $ ( 8,671 ) $ ( 1,746 ) $ 39 $ ( 3,666 )

Net Income (Loss) — — ( 481 ) — 4 ( 477 )

Other Comprehensive Income — — — 33 — 33

Dividends to Noncontrolling Interests — — — — ( 5 ) ( 5 )

Awards Granted, Vested and Exercised — 8 — — — 8

Other — — — — 1 1

Balance at March 31, 2019 (Predecessor) 1 6,719 ( 9,152 ) ( 1,713 ) 39 ( 4,106 )

Net Income (Loss) — — ( 316 ) — 4 ( 312 )

Other Comprehensive Income — — — 30 — 30

Dividends to Noncontrolling Interests — — — — ( 6 ) ( 6 )

Awards Granted, Vested and Exercised — 5 — — — 5

Balance at June 30, 2019 (Predecessor) $ 1 $ 6,724 $ ( 9,468 ) $ ( 1,683 ) $ 37 $ ( 4,389 )

Net Income (Loss) — — ( 821 ) — 6 ( 815 )

Other Comprehensive Income — — — ( 20 ) — ( 20 )

Dividends to Noncontrolling Interests — — — — ( 5 ) ( 5 )

Awards Granted, Vested and Exercised — 5 — — — 5

Balance at September 30, 2019 (Predecessor) $ 1 $ 6,729 $ ( 10,289 ) $ ( 1,703 ) $ 38 $ ( 5,224 )

The following table presents the changes in our accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2020 for the Successor and nine months ended September 30, 2019 for the Predecessor:

(Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Deferred Loss on Derivatives Total

Balance at December 31, 2019 (Successor) $ 7 $ 2 $ — $ 9

Balance at March 31, 2021 $ ( 35 ) $ ( 12 ) $ ( 47 )

Balance at December 31, 2019 $ 7 $ 2 $ 9

Other Comprehensive Loss ( 95 ) — ( 95 )

Balance at September 30, 2020 (Successor)

$ ( 65 ) $ 2 $ — $ ( 63 )

Balance at December 31, 2018 (Predecessor) $ ( 1,724 ) $ ( 14 ) $ ( 8 ) $ ( 1,746 )

Other Comprehensive Income 35 — — 35

Reclassifications — — 8 8

Net activity 35 — 8 43

Balance at September 30, 2019 (Predecessor)

$ ( 1,689 ) $ ( 14 ) $ — $ ( 1,703 )

Balance at March 31, 2020 $ ( 88 ) $ 2 $ ( 86 )

Loss per Share

1 unchanged sentence

Diluted earnings (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including potential dilutive ordinary shares.

The following table presents our basic and diluted weighted average shares outstanding and loss per share for the three and nine months ended September 30, 2020 and 2019:

Successor Predecessor Successor Predecessor

(Dollars and shares in millions, Three Months Ended Three Months Ended Nine Months Ended

Nine Months Ended

except per share amounts) 9/30/2020

The following table presents our basic and diluted weighted average shares outstanding and loss per share for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

(Dollars and shares in millions, except per share amounts) 2021 2020

Net Loss Attributable to Weatherford $ ( 116 ) $ ( 966 )

1 unchanged sentence

Basic and Diluted Loss Per Share Attributable to Weatherford $ ( 1.66 ) ( 13.80 )

Our basic and diluted weighted average shares outstanding for the Successor Period and Predecessor Period are equivalent due to the net loss attributable to shareholders.

Diluted weighted average shares outstanding for both the three and nine months ended September 30, 2020 exclude 8 million potential ordinary shares, and the three and nine months ended September 30, 2019 exclude 163 million and 208 million potential ordinary shares, respectively, for restricted share units, performance units, exchangeable senior notes and warrants outstanding as we had net losses for those periods and their inclusion would be anti-dilutive.

Our basic and diluted weighted average shares outstanding for the periods presented are equivalent due to the net loss attributable to shareholders.

Diluted weighted average shares outstanding for the three months ended March 31, 2021 and 2020 exclude 9 million and 8 million, respectively, potential ordinary shares for restricted share units, performance share units,

phantom restricted share units, and warrants outstanding as we had net losses for those periods and their inclusion would be anti-dilutive.

Revenue by Product Line and Geographic Region

Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services.

During the second quarter of 2020, in order to support the streamlining and realignment of the business, we combined our prior reported four product lines into two product lines, and all prior periods have been retrospectively recast to conform to this new presentation.

Our two primary product lines are as follows:

(1) Production and Completions and (2) Drilling, Evaluation and Intervention.

Our new combined Production and Completion product line was previously reported as two separate product lines.

Our new Drilling, Evaluation and Intervention product line was previously reported as two separate product lines of Drilling and Evaluation and Well Construction.

The unmanned equipment that we lease to customers as operating leases consists primarily of drilling rental tools (in the Drilling, Evaluation and Intervention product line) and artificial lift pumping equipment (in the Production and Completions product line).

Our two product lines are as follows:

(1) Completion and Production and (2) Drilling, Evaluation and Intervention.

These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts.

Equipment rental revenues recognized under Accounting Standards Update No.

2016-02, Leases (Topic 842) were $ 30 million and $ 119 million for the three and nine months Successor Periods ended September 30, 2020, respectively, and $ 64 million and $ 226 million for the three and nine months Predecessor Periods ended September 30, 2019, respectively.

The following tables disaggregate our product and service revenues by major product line and geographic region for the three and nine months ended September 30, 2020 and 2019.

Successor Predecessor Successor Predecessor

Three Months Ended Three Months Ended Nine Months Ended

Nine Months Ended

The following tables disaggregate our product and service revenues by major product line and geographic region for the three months ended March 31, 2021 and 2020 and includes equipment revenues recognized under lease accounting standards of $ 28 million for the three months ended March 31, 2021, and $ 57 million for the three months ended March 31, 2020.

Three Months Ended March 31,

(Dollars in millions) 2021 2020

Product Line Revenue by Hemisphere:

Production and Completions $ 170 $ 348 $ 632 $ 1,098

Product Line Revenue for Western Hemisphere

Completion and Production $ 225 $ 297

Drilling, Evaluation and Intervention 165 291

Western Hemisphere $ 316 $ 675 $ 1,214 $ 2,120

Production and Completions $ 241 $ 265 $ 783 $ 792

Total Western Hemisphere Revenue 390 588

Product Line Revenue for Eastern Hemisphere

Completion and Production 198 302

Drilling, Evaluation and Intervention 244 325

Eastern Hemisphere $ 491 $ 639 $ 1,629 $ 1,849

Total Revenue $ 807 $ 1,314 $ 2,843 $ 3,969

Successor Predecessor Successor Predecessor

Three Months Ended Three Months Ended Nine Months Ended

Nine Months Ended

Total Eastern Hemisphere Revenue 442 627

Total Revenues $ 832 $ 1,215

Three Months Ended March 31,

(Dollars in millions) 2021 2020

7 unchanged sentences

Total Revenues $ 832 $ 1,215

The following table provides information about receivables for product and services included in “Accounts Receivable, Net,” “Contrast Assets” and “Contract Liabilities” at September 30, 2020 and December 31, 2019.

(Dollars in millions) 9/30/2020

Receivables for Product and Services in Accounts Receivable, Net $ 793 $ 1,156

Receivables for Equipment Rentals in Account Receivable, Net $ 42 $ 85

Contract Assets $ 1 $ 3

Contract Liabilities $ 29 $ 12

Revenue recognized for the nine months ended September 30, 2020 that were included in the contract liabilities balance at the beginning of 2020 was $ 8 million.

In the following table, estimated revenue expected to be recognized in the future related to performance obligations that are either unsatisfied or partially unsatisfied as of September 30, 2020 primarily relate to subsea services and an artificial lift contract.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets (including unbilled receivables), and customer advances and deposits (contract liabilities classified as deferred revenues).

Our receivables are primarily derived from contract sales of products and services, which are included in “Accounts Receivable, Net” on the Condensed Consolidated Balance Sheets, and was $ 758 million and $ 792 million at March 31, 2021 and December 31, 2021, respectively.

Total accounts receivable, net was $ 793 million and $ 826 million at March 31, 2021 and December 31, 2020, respectively.

Contract assets were immaterial in both periods ending March 31, 2021 and December 31, 2020.

Contract liabilities totaled $ 43 million and $ 37 million at March 31, 2021 and December 31, 2020.

Revenue recognized for the three months ended March 31, 2021 that were included in the contract liabilities balance at the beginning of 2021 was $ 18 million.

Performance Obligations

In the following table, estimated revenue for contracts with original performance obligations greater than twelve months are expected to be recognized in the future related to performance obligations that are either unsatisfied or partially unsatisfied as of March 31, 2021.

(Dollars in millions) 2021 2022 2023 2024 Thereafter Total

3 unchanged sentences

The accounting policies of the segments are the same as those described in the summary of significant accounting policies as presented in our 2020 Annual Report.

Successor Predecessor Successor Predecessor

Three Months Ended Three Months Ended Nine Months Ended

Nine Months Ended

Three Months Ended March 31,

(Dollars in millions) 2021 2020

6 unchanged sentences

Total Segment Operating Income 5 47

Corporate ( 28 ) ( 31 ) ( 80 ) ( 95 )

Impairments and Other Charges (a) (b)

( 47 ) ( 494 ) ( 1,353 ) ( 1,029 )

Gain on Operational Assets Sale 12 15 12 15

Gain (Loss) on Sale of Businesses, Net (c)

Corporate (a)

( 18 ) ( 26 )

Total Operating Income (Loss) Before Impairments, Restructuring and Other Charges ( 13 ) 21

Impairments and Other Charges (b)

Restructuring Charges — ( 26 )

Total Operating Loss ( 13 ) ( 822 )

3 unchanged sentences

Loss Before Income Taxes $ ( 87 ) $ ( 914 )

(a) In the Successor three months ended September 30, 2020, primarily includes restructuring and other charges.

In the Successor nine months ended September 30, 2020, primarily includes the impairment of goodwill, property, plant and equipment, intangibles and right of use assets, inventory excess and obsolete charges, and restructuring and other charges.

See “Note 3 – Inventories, Net”, “Note 5 - Long-Lived Asset Impairments”, “Note 6 – Goodwill and Intangible Assets”, and “Note 7 – Restructuring, Facility Consolidation and Severance Charges” for additional information.

(b) In the Predecessor three months ended September 30, 2019, primarily includes goodwill impairment, and restructuring and other charges.

In the Predecessor nine months ended September 30, 2019, primarily includes goodwill impairment, restructuring and other charges, and prepetition charges for professional and other fees related to the Predecessor bankruptcy cases.

See “Note 5 - Long-Lived Asset Impairments”, “Note 6 – Goodwill and Intangible Assets”, and “Note 7 – Restructuring, Facility Consolidation and Severance Charges” for additional information.

The following table presents total assets by segment at for each period presented:

(Dollars in millions) 9/30/2020

Western Hemisphere $ 1,694 $ 2,514

Eastern Hemisphere 3,264 4,392

Corporate 706 387

Total $ 5,664 $ 7,293

We use the discrete method to determine our quarterly tax provision because small changes in estimated ordinary annual income result in significant changes in our estimated annual effective tax rate.

The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis.

For the Successor three and nine months ended September 30, 2020, we recognized tax expense of $ 8 million and $ 64 million, respectively, on a loss before income taxes of $ 159 million and $ 1.6 billion, respectively, as compared to the Predecessor three and nine months ended September 30, 2019 where we recognized tax expense of $ 31 million and $ 76 million, respectively, on a loss before income taxes of $ 784 million and $ 1.5 billion, respectively.

Tax expense for the three and nine months ended September 30, 2020 and 2019 includes withholding taxes, minimum taxes and deemed profit taxes that do not directly correlate to ordinary income or loss.

Impairments and other charges did not result in significant tax benefit in either period.

Tax expense for the Successor nine months ended September 30, 2020 includes $ 20 million recorded in the first quarter of 2020 to recognize valuation allowance in jurisdictions where we are no longer able to forecast taxable income and a subsequent $ 11 million release to derecognize such valuation allowance in the current quarter where this was no longer applicable.

(a) Corporate also includes eliminations of intercompany margins associated with transfers of assets and inventory that were nil in the three months ended March 31, 2021 and $ 8 million in the three months ended March 31, 2020.

(b) In the three months ended March 31, 2020, primarily includes the impairment of goodwill, property, plant and equipment, intangibles and right of use assets and other charges.

See “Note 4 – Long-Lived Asset Impairments” and “Note 5 – Goodwill and Intangible Assets” for additional information.

We determined our quarterly tax provision using the year-to-date effective tax rate because small changes in estimated ordinary annual income result in significant changes in our estimated annual effective tax rate.

The year-to-date effective tax rate treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis.

For the three months ended March 31, 2021, we recognized tax expense of $ 23 million on a loss before income taxes of $ 87 million compared to tax expense of $ 44 million on a loss before income taxes of $ 914 million for the three months ended March 31, 2020.

Our income tax provisions generally do not correlate to our consolidated income (loss) before tax.

Our income taxes provisions are primarily driven by profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss.

Impairments and other charges recognized do not result in significant tax benefit as a result of our inability to forecast realization of the tax benefit of such losses.

Tax expense for the three months ended March 31, 2020 included $ 20 million to recognize valuation allowance in jurisdictions where we are no longer able to forecast taxable income as a result of our liquidity position as of March 31, 2020.

We routinely undergo tax examination in various jurisdictions.

We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements.

As of September 30, 2020, we anticipate that it is reasonably possible that our uncertain tax positions of $ 214 million may decrease by up to $ 2 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

As of March 31, 2021, we anticipate that it is reasonably possible that our uncertain tax positions of $ 233 million may decrease by up to $ 3 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

In response to the COVID-19 pandemic, many countries have enacted tax relief measures to provide aid and economic stimulus to companies impacted by the COVID-19 pandemic.

For the Successor third quarter and nine months ended September 30, 2020, there were no material tax impacts to our financial statements as it relates to COVID-19 tax relief measures.

For the three months ended March 31, 2021, there were no material tax impacts to our Condensed Consolidated Financial Statements related to COVID-19 tax relief measures.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements