Item 1. Financial Statements
Item 1. Financial Statements.
WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars and shares in millions, except per share amounts) 2021 2020 2021 2020
Revenues:
Services $ 623 $ 485 $ 1,734 $ 1,762
Products 322 322 946 1,081
Total Revenues 945 807 2,680 2,843
Costs and Expenses:
Cost of Services 407 341 1,155 1,218
Cost of Products 279 290 844 935
Research and Development 21 21 63 77
Selling, General and Administrative 175 180 551 651
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
Operating Income (Loss) 71 ( 60 ) 83 ( 1,379 )
Interest Expense Net ( 69 ) ( 64 ) ( 211 ) ( 181 )
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 )
Loss Before Income Taxes ( 61 ) ( 159 ) ( 206 ) ( 1,640 )
Income Tax Provision ( 28 ) ( 8 ) ( 66 ) ( 64 )
Net Loss ( 89 ) ( 167 ) ( 272 ) ( 1,704 )
Net Income Attributable to Noncontrolling Interests 6 7 17 17
Net Loss Attributable to Weatherford $ ( 95 ) $ ( 174 ) $ ( 289 ) $ ( 1,721 )
Basic & Diluted Loss per Share $ ( 1.36 ) $ ( 2.48 ) $ ( 4.13 ) $ ( 24.58 )
Basic & Diluted Weighted Average Shares Outstanding 70 70 70 70
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in millions) 2021 2020 2021 2020
Net Loss $ ( 89 ) $ ( 167 ) $ ( 272 ) $ ( 1,704 )
Foreign Currency Translation Adjustments ( 11 ) ( 6 ) — ( 72 )
Comprehensive Loss ( 100 ) ( 173 ) ( 272 ) ( 1,776 )
Comprehensive Income Attributable to Noncontrolling Interests 6 7 17 17
Comprehensive Loss Attributable to Weatherford $ ( 106 ) $ ( 180 ) $ ( 289 ) $ ( 1,793 )
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars and shares in millions, except par value) 9/30/2021 12/31/2020
(Unaudited)
Assets:
Cash and Cash Equivalents $ 1,291 $ 1,118
Restricted Cash 155 167
Accounts Receivable, Net of Allowance for Credit Losses of $ 32 at September 30, 2021 and $ 32 at December 31, 2020
816 826
Inventories, Net 681 717
Other Current Assets 301 349
Total Current Assets 3,244 3,177
Property, Plant and Equipment, Net of Accumulated Depreciation of $ 570 at September 30, 2021 and $ 367 at December 31, 2020
1,022 1,236
Intangible Assets, Net of Accumulated Amortization of $ 289 at September 30, 2021 and $ 173 at December 31, 2020
695 810
Operating Lease Right-of-Use Assets 117 138
Other Non-Current Assets 70 73
Total Assets $ 5,148 $ 5,434
Liabilities:
Short-term Borrowings and Current Portion of Finance Leases 211 13
Accounts Payable 350 325
Accrued Salaries and Benefits 317 297
Income Taxes Payable 139 185
Current Portion of Operating Lease Liabilities 63 71
Other Current Liabilities 444 471
Total Current Liabilities 1,524 1,362
Long-term Debt 2,431 2,601
Operating Lease Liabilities 135 177
Other Non-Current Liabilities 411 357
Total Liabilities $ 4,501 $ 4,497
Shareholders’ Equity:
Ordinary Shares - Par Value $ 0.001 ; 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
Retained Deficit ( 2,236 ) ( 1,947 )
Accumulated Other Comprehensive Loss ( 43 ) ( 43 )
Weatherford Shareholders’ Equity 621 907
Noncontrolling Interests 26 30
Total Shareholders’ Equity 647 937
Total Liabilities and Shareholders’ Equity $ 5,148 $ 5,434
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30,
(Dollars in millions) 2021 2020
Cash Flows From Operating Activities:
Net Loss $ ( 272 ) $ ( 1,704 )
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Depreciation and Amortization 337 387
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
Loss (Gain) on Disposition of Assets ( 22 ) 8
Deferred Income Tax Provision 15 10
Share-Based Compensation 13 —
Changes in Operating Assets and Liabilities, Net:
Accounts Receivable
5 358
Inventories
( 14 ) ( 4 )
Accounts Payable
27 ( 248 )
Other Assets and Liabilities, Net 36 143
Net Cash Provided by Operating Activities 234 188
Cash Flows From Investing Activities:
Capital Expenditures for Property, Plant and Equipment ( 44 ) ( 100 )
Proceeds from Disposition of Assets 39 13
Other Investing Activities 3 22
Net Cash Used in Investing Activities ( 2 ) ( 65 )
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 Provided by (Used in) Financing Activities ( 65 ) 376
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 6 ) ( 6 )
Net Increase in Cash, Cash Equivalents and Restricted Cash 161 493
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,285 800
Cash, Cash Equivalents and Restricted Cash at End of Period $ 1,446 $ 1,293
Supplemental Cash Flow Information:
Interest Paid $ 171 $ 114
Income Taxes Paid, Net of Refunds $ 44 $ 60
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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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 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.
2. 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
Long-lived Asset Impairments $ — $ — $ — $ 818
Goodwill Impairment — — — 239
Total Goodwill and Long-lived Asset Impairments $ — $ — $ — $ 1,057
Inventory Charges $ — $ 4 $ 7 $ 138
Other Charges (Credits) ( 8 ) — ( 23 ) 32
Total Other Charges (Credits) $ ( 8 ) $ 4 $ ( 16 ) $ 170
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3. Inventories, Net
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
Finished Goods $ 611 $ 655
Work in Process and Raw Materials, Components and Supplies 70 62
Inventories, Net $ 681 $ 717
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 “Other Charges (Credits), Net” $ — $ 4 $ 7 $ 138
Inventory Charges in “Cost of Products” 11 24 43 28
Total Inventory Charges $ 11 $ 28 $ 50 $ 166
4. Long-lived Asset Impairments
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.
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
Intangible Assets 44 115 159
Right of Use Assets 56 32 88
Total Long-Lived Asset Impairments $ 416 $ 402 $ 818
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5. Goodwill and Intangible Assets
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.
During 2020, based on our interim goodwill impairment assessments that determined the fair value of our reporting units were less than their carrying values, we recognized goodwill impairment charges presented in “Note 2 – Impairments and Other Charges (Credits), Net.” We identified impairment indicators as discussed in “Note 4 – Long-lived Asset Impairments” that triggered these interim quantitative goodwill assessments. 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) 9/30/2021
12/31/2020
Developed and Acquired Technology, Net of Accumulated Amortization of $ 218 at September 30, 2021 and $ 132 at December 31, 2020
$ 371 $ 456
Trade Names, Net of Accumulated Amortization of $ 71 at September 30, 2021 and $ 41 at December 31, 2020
324 354
Intangible Assets, Net of Accumulated Amortization of $ 289 at September 30, 2021 and $ 173 at December 31, 2020
$ 695 $ 810
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.
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6. Restructuring Charges
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
Western Hemisphere $ — $ 17 $ — $ 58
Eastern Hemisphere — 12 — 29
Corporate — 2 — 27
Total Restructuring Charges $ — $ 31 $ — $ 114
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 September 30, 2021
Restructuring Reserve $ 53 $ — $ ( 26 ) $ ( 5 ) $ 22
7. Borrowings and Other Obligations
(Dollars in millions) 9/30/2021 12/31/2020
Current Portion of Exit Notes and Finance Lease $ 211 $ 9
Other Short-term Financing Arrangements — 4
Short-term Borrowings $ 211 $ 13
Exit Notes
$ 1,898 $ 2,098
2028 Senior Secured Notes 488 —
2024 Senior Secured Notes
— 455
Finance Lease Long-term Portion 45 48
Long-term Debt $ 2,431 $ 2,601
Exit Notes
Upon our emergence from bankruptcy on December 13, 2019, we entered into an indenture 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. 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.
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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 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
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; and
• 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 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
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.
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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. 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.
9/30/2021 12/31/2020
(Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value
Exit Notes
$ 2,098 $ 2,215 $ 2,098 $ 1,628
2028 Senior Secured Notes $ 488 $ 516 $ — $ —
2024 Senior Secured Notes
$ — $ — $ 455 $ 507
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.
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 (as amended, the “Exchange Act”), 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. On May 14, 2021, the District Court dismissed the case with prejudice for failure to state a claim. 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.
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9. Shareholders’ Equity
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
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
Net Income (Loss) — ( 78 ) — 5 ( 73 )
Other Comprehensive Loss — — 15 — 15
Dividends to Noncontrolling Interests — — — ( 4 ) ( 4 )
Equity Awards Granted, Vested and Exercised 2 — — — 2
Other — — — ( 2 ) ( 2 )
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
Net Income (Loss) — ( 966 ) — 8 ( 958 )
Other Comprehensive Loss — — ( 95 ) — ( 95 )
Balance at March 31, 2020 $ 2,897 $ ( 992 ) $ ( 86 ) $ 44 $ 1,863
Net Income (Loss) — ( 581 ) — 2 ( 579 )
Other Comprehensive Loss — — 29 — 29
Dividends to Noncontrolling Interests — — — ( 8 ) ( 8 )
Balance at June 30, 2020 $ 2,897 $ ( 1,573 ) $ ( 57 ) $ 38 $ 1,305
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
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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
Balance at December 31, 2020 $ ( 31 ) $ ( 12 ) $ ( 43 )
Other Comprehensive Loss $ — $ — $ —
Balance at September 30, 2021 $ ( 31 ) $ ( 12 ) $ ( 43 )
Balance at December 31, 2019 $ 7 $ 2 $ 9
Other Comprehensive Loss ( 72 ) — ( 72 )
Balance at September 30, 2020 $ ( 65 ) $ 2 $ ( 63 )
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 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
Net Loss Attributable to Weatherford $ ( 95 ) $ ( 174 ) $ ( 289 ) $ ( 1,721 )
Basic and Diluted Weighted Average Shares Outstanding 70 70 70 70
Basic and Diluted Loss Per Share Attributable to Weatherford $ ( 1.36 ) $ ( 2.48 ) $ ( 4.13 ) $ ( 24.58 )
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 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.
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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 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 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
Product Line Revenue for Western Hemisphere
Completion and Production $ 239 $ 170 $ 695 $ 632
Drilling, Evaluation and Intervention 202 146 561 582
Total Western Hemisphere Revenue 441 316 $ 1,256 $ 1,214
Product Line Revenue for Eastern Hemisphere
Completion and Production 221 241 $ 633 $ 783
Drilling, Evaluation and Intervention 283 250 791 846
Total Eastern Hemisphere Revenue 504 491 $ 1,424 $ 1,629
Total Revenues $ 945 $ 807 $ 2,680 $ 2,843
Three Months Ended
September 30, Nine Months Ended
September 30,
(Dollars in millions) 2021 2020 2021 2020
Revenue by Geographic Areas:
North America $ 224 $ 175 $ 658 $ 688
Latin America 217 141 598 526
Western Hemisphere 441 316 $ 1,256 $ 1,214
Middle East & North Africa and Asia 312 319 $ 868 $ 1,063
Europe/Sub-Sahara Africa/Russia 192 172 556 566
Eastern Hemisphere 504 491 $ 1,424 $ 1,629
Total Revenues $ 945 $ 807 $ 2,680 $ 2,843
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Contract Balances
The timing of our revenue recognition, billings and cash collections results in the recording of billed accounts receivable, contract assets (including unbilled receivables), 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. 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
12/31/2020
Receivables for Product and Services in Accounts Receivable, Net $ 782 $ 792
Total Accounts Receivables $ 816 $ 826
Contract Liabilities $ 31 $ 37
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 September 30, 2021.
(Dollars in millions) 2021 2022 2023 2024 Thereafter Total
Service Revenue $ 17 $ 66 $ 55 $ 57 $ 65 $ 260
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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
September 30, Nine Months Ended
September 30,
(Dollars in millions) 2021 2020 2021 2020
Revenues:
Western Hemisphere $ 441 $ 316 $ 1,256 $ 1,214
Eastern Hemisphere 504 491 1,424 $ 1,629
Total Revenues 945 807 $ 2,680 $ 2,843
Operating Income (Loss):
Western Hemisphere 45 ( 2 ) $ 97 $ 4
Eastern Hemisphere 34 5 21 38
Total Segment Operating Income 79 3 118 42
Corporate (a)
( 16 ) ( 28 ) ( 51 ) ( 80 )
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 (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 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.
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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.
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. 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 and other adjustments. 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.
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, 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.
14. 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.
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