What changed in this filing

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Item 1. Financial Statements

2021-11-02 compared with 2021-07-29 · 136 added, 110 removed, 282 unchanged (47% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

7 unchanged sentences

Selling, General and Administrative 175 180 551 651

Impairments and Other Charges (Credits), Net ( 8 ) 406 ( 8 ) 1,223

Goodwill and Long-Lived Asset Impairments — — — 1,057

Restructuring Charges — 31 — 114

Other Charges (Credits), Net ( 8 ) 4 ( 16 ) 170

Total Costs and Expenses 874 867 2,597 4,222

1 unchanged sentence

Interest Expense Net ( 69 ) ( 64 ) ( 211 ) ( 181 )

( 72 ) ( 59 ) ( 142 ) ( 117 )

Reorganization Items — — — ( 9 )

Loss on Extinguishment of Debt and Bond Redemption Premium ( 59 ) — ( 59 ) —

Loss on Termination of ABL Credit Agreement — ( 15 ) — ( 15 )

Other Expense, Net ( 4 ) ( 20 ) ( 19 ) ( 65 )

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(Dollars in millions) 2021 2020 2021 2020

10 unchanged sentences

Restricted Cash 155 167

Accounts Receivable, Net of Allowance for Credit Losses of $ 38 at June 30, 2021 and $ 32 at December 31, 2020

Accounts Receivable, Net of Allowance for Credit Losses of $ 32 at September 30, 2021 and $ 32 at December 31, 2020

Inventories, Net 681 717

1 unchanged sentence

Total Current Assets 3,244 3,177

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 505 at June 30, 2021 and $ 367 at December 31, 2020

Intangible Assets, Net of Accumulated Amortization of $ 251 at June 30, 2021 and $ 173 at December 31, 2020

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 570 at September 30, 2021 and $ 367 at December 31, 2020

Intangible Assets, Net of Accumulated Amortization of $ 289 at September 30, 2021 and $ 173 at December 31, 2020

Operating Lease Right-of-Use Assets 117 138

14 unchanged sentences

Ordinary Shares - Par Value $ 0.001 ;

Authorized 1,356 shares, Issued and Outstanding 70 shares at June 30, 2021 and December 31, 2020

Authorized 1,356 shares, Issued and Outstanding 70 shares at September 30, 2021 and December 31, 2020

Capital in Excess of Par Value 2,900 2,897

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in millions) 2021 2020

1 unchanged sentence

Net Loss $ ( 272 ) $ ( 1,704 )

Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities:

Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:

Depreciation and Amortization 337 387

Goodwill Impairment — 239

Long-lived Asset Impairments — 818

Loss on Extinguishment of Debt 37 —

Bond Redemption Premium 22 —

Loss on Termination of ABL Credit Agreement — 15

Goodwill and Long-lived Asset Impairments — 1,057

Inventory Charges 50 166

(Gain) Loss on Disposition of Assets ( 13 ) 4

Loss (Gain) on Disposition of Assets ( 22 ) 8

Deferred Income Tax Provision 15 10

11 unchanged sentences

Cash Flows From Financing Activities:

Borrowings of Long-term Debt, Net 491 457

Repayments of Long-term Debt ( 510 ) ( 7 )

Repayments of Short-term Debt, Net ( 4 ) ( 22 )

Bond Redemption Premium ( 22 ) —

Deferred Consideration Payment — ( 24 )

Other Financing Activities ( 20 ) ( 28 )

Net Cash Used in Financing Activities ( 15 ) ( 36 )

Net Cash Provided by (Used in) Financing Activities ( 65 ) 376

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 6 ) ( 6 )

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash 102 ( 44 )

Net Increase in Cash, Cash Equivalents and Restricted Cash 161 493

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

19 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 six months ended June 30, 2020 have been made to conform to the presentation for the three and six months ended June 30, 2021.

Impairments and Other Charges (Credits), Net

We recorded the following in “Impairments and Other Charges (Credits), Net” on the accompanying Condensed Consolidated Statements of Operations:

Three Months Ended Six Months Ended

June 30, June 30,

Certain reclassifications of the financial statements and accompanying footnotes for the three and nine months ended September 30, 2020 have been made to conform to the presentation for the three and nine months ended September 30, 2021.

Impairments and Other Charges (Credits)

We recorded the following in “Goodwill and Long-Lived Asset Impairments” and “Other Charges (Credits), Net” on the accompanying Condensed Consolidated Statements of Operations:

Three Months Ended Nine Months Ended

September 30, September 30,

(Dollars in millions) 2021 2020 2021 2020

1 unchanged sentence

Goodwill Impairment — — — 239

Total Goodwill and Long-lived Asset Impairments $ — $ — $ — $ 1,057

Inventory Charges $ — $ 4 $ 7 $ 138

Other Charges (Credits) ( 8 ) — ( 23 ) 32

Total Impairments and Other Charges (Credits), Net $ ( 8 ) $ 406 $ ( 8 ) $ 1,223

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 three and six months ended June 30, 2021 and 2020 were recognized as sales of accounts receivable, 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 the three and six months of 2021 and 2020.

The following table presents accounts receivable sold and cash proceeds from the sale of accounts receivable, net of discount and hold-back amounts:

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2021 2020 2021 2020

Accounts Receivable Sold $ 34 $ 17 $ 40 $ 23

Cash Proceeds from Sale of Accounts Receivable $ 29 $ 15 $ 34 $ 21

Total Other Charges (Credits) $ ( 8 ) $ 4 $ ( 16 ) $ 170

Inventories, Net

Inventories, net of reserves of $ 147 million and $ 119 million as of June 30, 2021 and December 31, 2020, respectively, are presented by category in the table below:

Inventories, net of reserves of $ 157 million and $ 119 million as of September 30, 2021 and December 31, 2020, respectively, are presented by category in the table below:

(Dollars in millions) 9/30/2021 12/31/2020

2 unchanged sentences

Inventories, Net $ 681 $ 717

In the three and six months ended June 30, 2021 and 2020, we recognized inventory charges, including excess and obsolete inventory charges, in the following captions on our Condensed Consolidated Statements of Operations:

Three Months Ended Six Months Ended

June 30, June 30,

In the three and nine months ended September 30, 2021 and 2020, we recognized inventory charges, including excess and obsolete inventory charges, in the following captions on our Condensed Consolidated Statements of Operations:

Three Months Ended Nine Months Ended

September 30, September 30,

(Dollars in millions) 2021 2020 2021 2020

Inventory Charges in “Impairments and Other Charges” $ 6 $ 134 $ 7 $ 134

Inventory Charges in “Other Charges (Credits), Net” $ — $ 4 $ 7 $ 138

Inventory Charges in “Cost of Products” 11 24 43 28

1 unchanged sentence

Long-lived Asset Impairments

We did not recognize any long-lived asset impairments in the three and six months ended June 30, 2021.

We did not recognize any long-lived asset impairments in the three and nine months ended September 30, 2021.

During the first half of 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 of our property, plant and equipment, definite-lived intangible assets, and right of use assets with the assistance of third-party valuation advisors.

The fair values of our long-lived assets were determined using discounted cash flows under the income approach, a Level 3 fair value analysis.

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 class and segment recognized for the three and six months ended June 30, 2020:

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020

(Dollars in millions) Western Hemisphere Eastern Hemisphere Total Western Hemisphere Eastern Hemisphere Total

Based on our impairment tests, we determined the carrying amount of certain long-lived assets exceeded their respective fair values and recognized long-lived asset impairments as summarized in “Note 2 – Impairments and Other Charges (Credits), Net.” and further presented by asset class and segment in the table below.

We did not recognize any long-lived asset impairments in the third quarter of 2020.

Nine Months Ended September 30, 2020

(Dollars in millions) Western Hemisphere Eastern Hemisphere Total

Property, Plant and Equipment $ 316 $ 255 $ 571

3 unchanged sentences

Goodwill and Intangible Assets

As of June 30, 2021 and December 31, 2020, we had no goodwill.

As of September 30, 2021 and December 31, 2020, we had no goodwill.

The cumulative impairment loss for goodwill was $ 239 million, all of which was fully impaired in the first half of 2020.

2 unchanged sentences

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.

See goodwill impairment charges presented in “Note 2 – Impairments and Other Charges (Credits), Net.”

Intangible Assets

1 unchanged sentence

(Dollars in millions) 9/30/2021

Developed and Acquired Technology, Net of Accumulated Amortization of $ 190 at June 30, 2021 and $ 132 at December 31, 2020

Trade Names, Net of Accumulated Amortization of $ 61 at June 30, 2021 and $ 41 at December 31, 2020

Intangible Assets, Net of Accumulated Amortization of $ 251 at June 30, 2021 and $ 173 at December 31, 2020

Amortization expense was $ 39 million and $ 78 million in the three and six months ended June 30, 2021, respectively, and $ 40 million and $ 86 million in the three and six months ended June 30, 2020, respectively, and is reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations.

Developed and Acquired Technology, Net of Accumulated Amortization of $ 218 at September 30, 2021 and $ 132 at December 31, 2020

Trade Names, Net of Accumulated Amortization of $ 71 at September 30, 2021 and $ 41 at December 31, 2020

Intangible Assets, Net of Accumulated Amortization of $ 289 at September 30, 2021 and $ 173 at December 31, 2020

Amortization expense was $ 39 million and $ 117 million in the three and nine months ended September 30, 2021, respectively, and $ 38 million and $ 124 million in the three and nine months ended September 30, 2020, respectively, and is reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations.

Restructuring Charges

The following table presents restructuring charges in the three and six months ended June 30, 2021 and 2020 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.

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2021 2020 2021 2020

Severance Charges $ — $ 55 $ — $ 78

Facility Exit Charges — 2 — 5

Total Restructuring Charges $ — $ 57 $ — $ 83

The following table presents total restructuring charges by reporting segment and Corporate in the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

We had no restructuring charges in the three and nine months ended September 30, 2021, compared to $ 31 million and $ 114 million in the three and nine months ended September 30, 2020, respectively, which are presented in “Restructuring Charges” on the accompanying Condensed Consolidated Statements of Operations.

The following table presents total restructuring charges by reporting segment and Corporate in the three and nine months ended September 30, 2021 and 2020:

Three Months Ended

September 30, Nine Months Ended September 30,

(Dollars in millions) 2021 2020 2021 2020

3 unchanged sentences

Total Restructuring Charges $ — $ 31 $ — $ 114

The following table presents total restructuring accrual activity in the six months ended June 30, 2021:

The following table presents total restructuring accrual activity in the nine months ended September 30, 2021:

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

Accrued Balance at June 30, 2021

Accrued Balance at September 30, 2021

Restructuring Reserve $ 53 $ — $ ( 26 ) $ ( 5 ) $ 22

1 unchanged sentence

(Dollars in millions) 9/30/2021 12/31/2020

Finance Lease Current Portion $ 10 $ 9

Current Portion of Exit Notes and Finance Lease $ 211 $ 9

Other Short-term Financing Arrangements — 4

Short-term Borrowings $ 211 $ 13

11.00% Exit Notes due 2024

$ 1,898 $ 2,098

8.75% Senior Secured Notes due 2024

2028 Senior Secured Notes 488 —

2024 Senior Secured Notes

Finance Lease Long-term Portion 45 48

2 unchanged sentences

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.

As of September 30, 2021, $ 200 million of the Exit Notes were classified as a current obligation.

On October 20, 2021 we redeemed $ 200 million of our Exit Notes and paid related accrued interest of $ 8 million along with a bond redemption premium of $ 6 million.

See “Note 14 – Subsequent Events” for additional details.

2024 Senior Secured Notes

On August 28, 2020, we entered into an indenture and issued the 8.75 % Senior Secured Notes in an aggregate principal amount of $ 500 million maturing September 1, 2024 (the “2024 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, which commenced on March 1, 2021.

Interest accrued at the rate of 8.75 % per annum and was payable semiannually in arrears on March 1 and September 1, which commenced on March 1, 2021.

On September 30, 2021, we repaid our 2024 Senior Secured Notes and accrued interest with proceeds from the issuance of the 2028 Senior Secured Notes described below and cash on hand.

In addition, we paid and recognized a $ 22 million bond redemption premium and recognized a $ 37 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs and discount, which is presented as “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Condensed Consolidated Statements of Operations.

2028 Senior Secured Notes

On September 30, 2021, we entered into an indenture and issued the 6.5 % Senior Secured Notes in aggregate principal amount of $ 500 million maturing September 15, 2028 (the “2028 Senior Secured Notes”).

Interest accrues at the rate of 6.5 % per annum and is payable semiannually on September 15 and March 15 of each year, commencing on March 15, 2022.

The 2028 Senior Secured Notes are guaranteed by the Company and the same subsidiaries of the Company that guaranteed the 2024 Senior Secured Notes.

On September 30, 2021 we received $ 491 million of proceeds net of debt issuance costs paid and the net book value after including accrued debt issuance costs was $ 488 million.

Debt issuance costs will be amortized to “Interest Expense, Net” on the Condensed Consolidated Financial Statements using the effective interest rate method over the term of the debt.

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 (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 June 30, 2021, we had approximately $ 160 million in outstanding letters of credit under the LC Credit Agreement and availability of $ 55 million.

As of June 30, 2021, we had $ 331 million of letters of credit outstanding, consisting of the $ 160 million mentioned above under the LC Credit Agreement and another $ 171 million under various uncommitted facilities (of which there was $ 165 million in cash collateral held and recorded in “Restricted Cash” on our Condensed Consolidated Balance Sheets).

We have a senior secured letter of credit agreement in an aggregate amount of $ 215 million maturing on May 29, 2024 (the “LC Credit Agreement”), which is used by the Company and certain of its subsidiaries for the issuance of bid and performance letters of credit.

On September 20, 2021, certain provisions and covenants of the LC Credit Agreement were amended as follows:

• Permit the borrowing of up to an additional $ 400 million of secured indebtedness under an asset-based lending facility or a revolving credit facility upon compliance with certain conditions;

• Removed the minimum secured liquidity requirement;

• Increased the minimum aggregate liquidity requirement from $ 175 million to $ 300 million;

• Decreased the minimum aggregate book value of certain pledged assets requirement from $ 1.25 billion to $ 1 billion;

• Increased the ability to repay or redeem debt to $ 500 million subject to minimum aggregate liquidity of $ 400 million at the time of repayment or redemption.

At September 30, 2021, we had approximately $ 173 million in outstanding letters of credit under the LC Credit Agreement and availability of $ 42 million.

As of September 30, 2021, we had $ 329 million of letters of credit outstanding, consisting of the $ 173 million mentioned above under the LC Credit Agreement and another $ 156 million under various uncommitted bi-lateral facilities (for which there was $ 152 million in cash collateral held and recorded in “Restricted Cash” on our Condensed Consolidated Balance Sheets).

Accrued Interest

As of June 30, 2021 and December 31, 2020, we had accrued interest primarily related to the Exit Notes and Senior Secured Notes of $ 34 million in both periods, respectively, in “Other Current Liabilities” on our Condensed Consolidated Balance Sheets.

As of September 30, 2021 and December 31, 2020, we had accrued interest of $ 77 million and $ 34 million, respectively, in “Other Current Liabilities” on our Condensed Consolidated Balance Sheets.

Fair Value of Short and Long-term Borrowings

7 unchanged sentences

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

11.00% Exit Notes due 2024

$ 2,098 $ 2,215 $ 2,098 $ 1,628

8.75% Senior Secured Notes due 2024

2028 Senior Secured Notes $ 488 $ 516 $ — $ —

2024 Senior Secured Notes

$ — $ — $ 455 $ 507

15 unchanged sentences

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.

On May 14, 2021, the District Court dismissed the case with prejudice for failure to state a claim.

On June 11, 2021, the plaintiffs filed their Notice of Appeal with the District Court.

The Appellate Court clerk will receive the District Court’s docket and issue a briefing schedule.

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

On August 9, 2021, the plaintiffs filed their Notice of Appeal with the District Court.

The case is still pending appeal and we cannot reliably predict the outcome of the claims, including the amount of any possible loss.

Shareholders’ Equity

The following summarizes our shareholders’ equity activity in the three and six months ended June 30, 2021 and 2020:

The following summarizes our shareholders’ equity activity in the three and nine months ended September 30, 2021 and 2020:

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

13 unchanged sentences

Balance at June 30, 2021 $ 2,899 $ ( 2,141 ) $ ( 32 ) $ 33 $ 759

Net Income (Loss) — ( 95 ) — $ 6 ( 89 )

Other Comprehensive Loss — — ( 11 ) — ( 11 )

Dividends to Noncontrolling Interests — — — ( 11 ) ( 11 )

Equity Awards Granted, Vested and Exercised 1 — — — 1

Other — — — ( 2 ) ( 2 )

Balance at September 30, 2021 $ 2,900 $ ( 2,236 ) $ ( 43 ) $ 26 $ 647

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

6 unchanged sentences

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

The following table presents the changes in our accumulated other comprehensive income (loss) by component in the six months ended June 30, 2021 and 2020:

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

Other Comprehensive Loss — — ( 6 ) — ( 6 )

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

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

The following table presents the changes in our accumulated other comprehensive loss by component in the nine months ended September 30, 2021 and 2020:

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

1 unchanged sentence

Other Comprehensive Loss $ — $ — $ —

Balance at June 30, 2021 $ ( 20 ) $ ( 12 ) $ ( 32 )

Balance at September 30, 2021 $ ( 31 ) $ ( 12 ) $ ( 43 )

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

Other Comprehensive Loss ( 72 ) — ( 72 )

Balance at June 30, 2020 $ ( 59 ) $ 2 $ ( 57 )

Balance at September 30, 2020 $ ( 65 ) $ 2 $ ( 63 )

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 in the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

The following table presents our basic and diluted weighted average shares outstanding and loss per share in the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,

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

3 unchanged sentences

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 in the three and six months ended June 30, 2021 and 2020 exclude 10 million and 8 million potential ordinary shares, respectively, 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.

Diluted weighted average shares outstanding in the three and nine months ended September 30, 2021 and 2020 exclude 10 million and 8 million potential ordinary shares, respectively, for restricted share units, performance share units, phantom restricted share units, and outstanding warrants as we had net losses for those periods and their inclusion would be anti-dilutive.

Revenue by Product Line and Geographic Region

2 unchanged sentences

(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).

The unmanned equipment that we lease to customers under 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 and six months ended June 30, 2021 and 2020 and includes equipment revenues recognized under lease accounting standards of $ 35 million and $ 63 million in the three and six months ended June 30, 2021, respectively, and $ 32 million and $ 89 million for the three and six months ended June 30, 2020, respectively.

Three Months Ended June 30, Six Months Ended June 30,

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, 2021 and 2020 and includes equipment revenues recognized under lease accounting standards of $ 34 million and $ 97 million in the three and nine months ended September 30, 2021, respectively, and $ 30 million and $ 119 million for the three and nine months ended September 30, 2020, respectively.

Three Months Ended

September 30, Nine Months Ended

September 30,

(Dollars in millions) 2021 2020 2021 2020

8 unchanged sentences

Total Revenues $ 945 $ 807 $ 2,680 $ 2,843

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

(Dollars in millions) 2021 2020 2021 2020

10 unchanged sentences

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.

Contract assets were immaterial as of June 30, 2021 and December 31, 2020.

Revenue recognized during the six months ended June 30, 2021 that was included in the contract liabilities balance at the beginning of 2021 was $ 25 million.

The following table summarizes these balances as of June 30, 2021 and December 31, 2020:

Contract assets were immaterial as of September 30, 2021 and December 31, 2020.

Revenue recognized during the nine months ended September 30, 2021 that was included in the contract liabilities balance at the beginning of 2021 was $ 28 million.

The following table summarizes these balances as of September 30, 2021 and December 31, 2020:

(Dollars in millions) 9/30/2021

3 unchanged sentences

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 June 30, 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.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

(Dollars in millions) 2021 2020 2021 2020

1 unchanged sentence

Eastern Hemisphere 504 491 1,424 $ 1,629

Total Revenue 903 821 $ 1,735 $ 2,036

Total Revenues 945 807 $ 2,680 $ 2,843

Operating Income (Loss):

1 unchanged sentence

Eastern Hemisphere 34 5 21 38

Total Segment Operating Income (Loss) 34 ( 8 ) 39 39

Total Segment Operating Income 79 3 118 42

Corporate (a)

( 16 ) ( 28 ) ( 51 ) ( 80 )

Total Operating Income (Loss) Before Impairments, Restructuring and Other (Charges) Credits 17 ( 34 ) 4 ( 13 )

Impairments and Other (Charges) Credits, Net (b)

8 ( 406 ) 8 ( 1,223 )

Total Operating Income (Loss) Before Other Operating Expenses 63 ( 25 ) 67 ( 38 )

Goodwill and Long-Lived Asset Impairments — — — ( 1,057 )

Restructuring Charges — ( 31 ) — ( 114 )

Other (Charges) Credits, Net 8 ( 4 ) 16 ( 170 )

Total Operating Income (Loss) 71 ( 60 ) 83 ( 1,379 )

Interest Expense, Net ( 72 ) ( 59 ) ( 142 ) ( 117 )

Reorganization Items — — — ( 9 )

Interest Expense, Net (b)

( 69 ) ( 64 ) ( 211 ) ( 181 )

Loss on Extinguishment of Debt and Bond Redemption Premium ( 59 ) — ( 59 ) —

Loss on Termination of ABL Credit Agreement (b)

— ( 15 ) — ( 15 )

Other Expense, Net ( 4 ) ( 20 ) ( 19 ) ( 65 )

Loss Before Income Taxes $ ( 61 ) $ ( 159 ) $ ( 206 ) $ ( 1,640 )

(a) Corporate also includes eliminations of intercompany margins associated with transfers of assets and inventory that were $ 1 million and $ 10 million in the three months ended June 30, 2021 and 2020, respectively.

The six months ended June 30, 2021 and 2020, included elimination of intercompany margins of $ 1 million and $ 18 million, respectively.

(b) The three and six months ended June 30, 2021 primarily included gains on the disposition of assets, lease terminations and litigation matters, partially offset by the write-down of inventory.

The three and six months ended June 30, 2020, primarily includes the impairment of goodwill, property, plant and equipment, intangibles and right of use assets and other charges.

See “Note 5 – Long-lived Asset Impairments” and “Note 6 – Goodwill and Intangible Assets” for additional information.

(a) Corporate also includes eliminations of intercompany margins associated with transfers of assets and inventory that was a benefit of $ 1 million and expense of $ 9 million in the three months ended September 30, 2021 and 2020, respectively.

The nine months ended September 30, 2021 and 2020, included elimination of intercompany margins of zero and an expense $ 27 million, respectively.

(b) Loss on Termination of ABL Credit Agreement was included in “Interest Expense Net” in 2020, which has been reclassified to be presented on a consistent basis with 2021.

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.

In the three and six months ended June 30, 2021, we recognized tax expense of $ 15 million and $ 38 million, respectively, on a loss before income taxes of $ 58 million and $ 145 million, respectively, compared to the three and six months ended June 30, 2020 where we recognized tax expense of $ 12 million and $ 56 million, respectively, on a loss before income taxes of $ 567 million and $ 1.5 billion, respectively.

Our income tax provisions are primarily driven by income 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.

In the three and nine months ended September 30, 2021, we recognized tax expense of $ 28 million and $ 66 million, respectively, on a loss before income taxes of $ 61 million and $ 206 million, respectively, compared to the three and nine months ended September 30, 2020 where 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.

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 in the three and the six months ended June 30, 2021 includes a $ 13 million tax benefit attributed to the reversal of a tax accrual in connection with an internal restructuring transaction completed in the second quarter of 2021.

Tax expense for the six months ended June 30, 2020 included $ 20 million recorded in the first quarter of 2020 to recognize valuation allowance in jurisdictions where we were no longer able to forecast taxable income.

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 June 30, 2021, we anticipate that it is reasonably possible that our uncertain tax positions of $ 241 million may decrease by up to $ 13 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

As of September 30, 2021, we anticipate that it is reasonably possible that our uncertain tax positions of $ 241 million may decrease by up to $ 13 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

Subsequent Events

Exit Notes Redemption

On October 20, 2021 we redeemed $ 200 million of our Exit Notes and paid related accrued interest of $ 8 million and an early bond redemption premium of $ 6 million.

2030 Senior Notes and Exit Notes Redemption

On October 27, 2021, we issued $ 1.6 billion of 8.625 % senior notes due April 30, 2030 (the “2030 Senior Notes”).

The net proceeds and cash on hand were used to redeem $ 1.6 billion in principal of our Exit Notes at applicable prices, plus accrued and unpaid interest.

Interest on the 2030 Senior Notes is payable semi-annually on June 1 and December 1 of each year, beginning on June 1, 2022 at a rate of 8.625 % per year and will mature on April 30, 2030.

The 2030 Senior Notes are guaranteed by the Company and the same subsidiaries that guaranteed the 2028 Senior Secured Notes.

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