Weatherford International plc 10-Q

Item 1. Financial Statements. WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, (Dollars and shares in millions, except per share amounts) 2021 2020 Revenues: Products $ 309 $ 450 Services 523 765 Total Revenues 832 1,215 Costs and Expenses: Cost of Products 280 392 Cost of Services 356 521 Research and Development 21 33 Selling, General and Administrative 188 248 Impairments and Other Charges — 817 Restructuring Charges — 26 Total Costs and Expenses 845 2,037 Operating Loss ( 13 ) ( 822 ) Interest Expense, Net ( 70 ) ( 58 ) Reorganization Items — ( 9 ) Other Expense, Net ( 4 ) ( 25 ) Loss Before Income Taxes ( 87 ) ( 914 ) Income Tax Provision ( 23 ) ( 44 ) Net Loss ( 110 ) ( 958 ) Net Income Attributable to Noncontrolling Interests 6 8 Net Loss Attributable to Weatherford $ ( 116 ) $ ( 966 ) Basic & Diluted Loss per Share $ ( 1.66 ) $ ( 13.80 ) Basic & Diluted Weighted Average Shares Outstanding 70 70 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 2 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) Three Months Ended March 31, (Dollars in millions) 2021 2020 Net Loss $ ( 110 ) $ ( 958 ) Foreign Currency Translation Adjustments ( 4 ) ( 95 ) Comprehensive Loss ( 114 ) ( 1,053 ) Comprehensive Income Attributable to Noncontrolling Interests 6 8 Comprehensive Loss Attributable to Weatherford $ ( 120 ) $ ( 1,061 ) The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars and shares in millions, except par value) 3/31/2021 12/31/2020 (Unaudited) Assets: Cash and Cash Equivalents $ 1,177 $ 1,118 Restricted Cash 166 167 Accounts Receivable, Net of Allowance for Credit Losses of $ 32 at March 31, 2021 and $ 32 at December 31, 2020 793 826 Inventories, Net 676 717 Other Current Assets 346 349 Total Current Assets 3,158 3,177 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 430 at March 31, 2021 and $ 367 at December 31, 2020 1,170 1,236 Intangible Assets, Net of Accumulated Amortization of $ 212 at March 31, 2021 and $ 173 at December 31, 2020 771 810 Operating Lease Right-of-Use Assets 128 138 Other Non-Current Assets 68 73 Total Assets $ 5,295 $ 5,434 Liabilities: Short-term Borrowings and Current Portion of Long-term Debt 11 13 Accounts Payable 330 325 Accrued Salaries and Benefits 253 297 Income Taxes Payable 194 185 Current Portion of Operating Lease Liabilities 67 71 Other Current Liabilities 509 471 Total Current Liabilities 1,364 1,362 Long-term Debt 2,602 2,601 Operating Lease Liabilities 159 177 Other Non-Current Liabilities 349 357 Total Liabilities $ 4,474 $ 4,497 Shareholders’ Equity: Ordinary Shares - Par Value $ 0.001 ; 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 Loss ( 47 ) ( 43 ) Weatherford Shareholders’ Equity 787 907 Noncontrolling Interests 34 30 Total Shareholders’ Equity 821 937 Total Liabilities and Shareholders’ Equity $ 5,295 $ 5,434 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (Dollars in millions) 2021 2020 Cash Flows From Operating Activities: Net Loss $ ( 110 ) $ ( 958 ) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 111 157 Goodwill Impairment — 167 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 33 ( 3 ) Inventories 20 ( 48 ) Accounts Payable 7 ( 32 ) Other Assets and Liabilities, Net ( 10 ) 76 Net Cash Provided by Operating Activities 74 30 Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment ( 15 ) ( 38 ) Proceeds from Disposition of Assets 11 6 Other Investing Activities 1 ( 3 ) Net Used in Investing Activities ( 3 ) ( 35 ) Cash Flows From Financing Activities: Repayments of Long-term Debt ( 3 ) ( 2 ) Repayments of Short-term Debt, Net ( 4 ) ( 3 ) Deferred Consideration Payment — ( 12 ) Other Financing Activities ( 2 ) ( 3 ) Net Cash Used in Financing Activities ( 9 ) ( 20 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 4 ) ( 11 ) 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 Cash, Cash Equivalents and Restricted Cash at End of Period $ 1,343 $ 764 Supplemental Cash Flow Information: Interest Paid $ 24 $ 2 Income Taxes Paid, Net of Refunds $ 15 $ 21 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. General 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 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. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report”). The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from our estimates. In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state the results of operations, financial position and cash flows of Weatherford and its subsidiaries for the periods presented and are not necessarily indicative of the results that may be expected for a full year. Our financial statements have been prepared on a consolidated basis. Under this basis, our financial statements consolidate all wholly owned subsidiaries and controlled joint ventures. All intercompany accounts and transactions have been eliminated. Summary of Significant Accounting Policies 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 months ended March 31, 2020 have been made to conform to the presentation for the three months ended March 31, 2021. 2. Impairments and Other Charges We recorded the following in “Impairments and Other Charges” on the accompanying Condensed Consolidated Statements of Operations: Three Months Ended March 31, (Dollars in millions) 2021 2020 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”. 6 Table of Contents 3. Inventories, Net 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 Finished Goods $ 604 $ 655 Work in Process and Raw Materials, Components and Supplies 72 62 Inventories, Net $ 676 $ 717 4. Long-lived Asset Impairments 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 Property, Plant and Equipment $ 222 $ 208 $ 430 Intangible Assets 31 106 137 Right of Use Assets 49 24 73 Total Impairment Charges $ 302 $ 338 $ 640 7 Table of Contents 5. Goodwill and Intangible Assets Goodwill 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 The components of definite-lived intangible assets, net of accumulated amortization, were as follows: (Dollars in millions) 3/31/2021 12/31/2020 Developed and Acquired Technology $ 427 $ 456 Trade Names 344 354 Totals $ 771 $ 810 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. 8 Table of Contents 6. 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 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 Western Hemisphere $ — $ 15 Eastern Hemisphere — 6 Corporate — 5 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 March 31, 2021 Restructuring Reserve $ 53 $ — $ ( 12 ) $ ( 1 ) $ 40 9 Table of Contents 7. Borrowings and Other Obligations (Dollars in millions) 3/31/2021 12/31/2020 Finance Lease Current Portion $ 11 $ 9 Other Short-term Financing Arrangements — 4 Short-term Borrowings $ 11 $ 13 11.00% Exit Notes due 2024 $ 2,098 $ 2,098 8.75% Senior Secured Notes due 2024 457 455 Finance Lease Long-term Portion 47 48 Long-term Debt $ 2,602 $ 2,601 Exit Notes 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 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. 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 to $ 175 million. 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 The carrying value of our short-term borrowings approximates their fair value due to their short maturities. These short-term borrowings are classified as Level 2 in the fair value hierarchy. 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 10 Table of Contents 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 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 $ 2,098 $ 2,018 $ 2,098 $ 1,628 8.75% Senior Secured Notes due 2024 457 524 455 507 Total $ 2,555 $ 2,542 $ 2,553 $ 2,135 8. Disputes, Litigation and Legal Contingencies We are subject to lawsuits and claims arising out of the nature of our business. We have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability. It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, that would result in a liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material. 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, 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 On September 6, 2019, GAMCO Asset Management, Inc. (“GAMCO”), purportedly on behalf of itself and other similarly situated shareholders, filed a lawsuit asserting violations of the federal securities laws against certain then-current and former officers and directors of the Company. GAMCO alleges violations of Sections 10(b) and 20(b) of the Securities Exchange Act of 1934, and violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) based on allegations that the Company and certain of its officers made false and/or misleading statements, and alleged non-disclosure of material facts, regarding our business, operations, prospects and performance. GAMCO seeks damages on behalf of purchasers of the Company’s ordinary shares from October 26, 2016 through May 10, 2019. GAMCO’s lawsuit was filed in the United States District Court for the Southern District of Texas, Houston Division, and it is captioned GAMCO Asset Management, Inc. v. McCollum, et al., Case No. 4:19-cv-03363. The District Court Judge appointed Utah Retirement Systems (“URS”) as Lead Plaintiff, and on March 16, 2020, URS filed its Amended Complaint. URS added the Company as a defendant but dropped the claims against non-officer board members and all the claims under the Securities Act. 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. 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. 11 Table of Contents 9. 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 Other Comprehensive 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, 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 ) 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 ) Balance at March 31, 2021 $ ( 35 ) $ ( 12 ) $ ( 47 ) Balance at December 31, 2019 $ 7 $ 2 $ 9 Other Comprehensive Loss ( 95 ) — ( 95 ) Balance at March 31, 2020 $ ( 88 ) $ 2 $ ( 86 ) 10. Loss per Share Basic earnings (loss) per share for all periods presented equals net income (loss) divided by our weighted average shares outstanding during the period. 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 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 ) Basic and Diluted Weighted Average Shares Outstanding 70 70 Basic and Diluted Loss Per Share Attributable to Weatherford $ ( 1.66 ) ( 13.80 ) 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, 12 Table of Contents phantom restricted share units, and warrants outstanding as we had net losses for those periods and their inclusion would be anti-dilutive. 11. Revenues 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. Our two product lines are as follows: (1) Completion and Production and (2) Drilling, Evaluation and Intervention. 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 Completion and Production product line). 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. 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 for Western Hemisphere Completion and Production $ 225 $ 297 Drilling, Evaluation and Intervention 165 291 Total Western Hemisphere Revenue 390 588 Product Line Revenue for Eastern Hemisphere Completion and Production 198 302 Drilling, Evaluation and Intervention 244 325 Total Eastern Hemisphere Revenue 442 627 Total Revenues $ 832 $ 1,215 Three Months Ended March 31, (Dollars in millions) 2021 2020 Revenue by Geographic Areas: North America $ 214 $ 341 Latin America 176 247 Western Hemisphere 390 588 Middle East & North Africa and Asia 267 403 Europe/Sub-Sahara Africa/Russia 175 224 Eastern Hemisphere 442 627 Total Revenues $ 832 $ 1,215 13 Table of Contents 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 Service Revenue $ 38 $ 41 $ 39 $ 40 $ 54 $ 212 12. Segment Information Financial information by segment is summarized below. 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. Three Months Ended March 31, (Dollars in millions) 2021 2020 Revenue: Western Hemisphere $ 390 $ 588 Eastern Hemisphere 442 627 Total Revenue 832 1,215 Operating Income (Loss): Western Hemisphere 24 29 Eastern Hemisphere ( 19 ) 18 Total Segment Operating Income 5 47 Corporate (a) ( 18 ) ( 26 ) Total Operating Income (Loss) Before Impairments, Restructuring and Other Charges ( 13 ) 21 Impairments and Other Charges (b) — ( 817 ) Restructuring Charges — ( 26 ) Total Operating Loss ( 13 ) ( 822 ) Interest Expense, Net ( 70 ) ( 58 ) Reorganization Items — ( 9 ) Other Expense, Net ( 4 ) ( 25 ) Loss Before Income Taxes $ ( 87 ) $ ( 914 ) (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. 14 Table of Contents (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. 13. Income Taxes 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 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 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. 15 Table of Contents