Weatherford International plc 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE PAGE Reports of Independent Registered Public Accounting Firm ( KPMG LLP , Houston, TX Firm ID 185 ) 42 Consolidated Statements of Operations for the years ended December 31, 2021 and 2020, and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 (Predecessor period) 45 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020, and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 (Predecessor period) 46 Consolidated Balance Sheets as of December 31, 2021 and 2020 47 Consolidated Statements of Shareholders’ Equity (Deficiency) for the years ended December 31, 2021 and 2020, and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 (Predecessor period) 48 Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020, and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 (Predecessor period) 49 Notes to Consolidated Financial Statements 50 Financial Statement Schedule II: Valuation and Qualifying Accounts and Allowances 95 Weatherford International plc – 2021 Form 10-K | 41 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Weatherford International plc: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Weatherford International plc and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity (deficiency), and cash flows for each of the years in the two-year period ended December 31, 2021 and for the period from December 14, 2019 to December 31, 2019 (Successor periods) and for the period from January 1, 2019 to December 13, 2019 (Predecessor period), and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the Successor and Predecessor periods, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 17, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. New Basis of Accounting As discussed in Notes 2 and 3 to the consolidated financial statements, on September 11, 2019, the United States Bankruptcy Court for the Southern District of Texas entered an order confirming the Company’s plan for reorganization under Chapter 11, which became effective on December 13, 2019. Accordingly, the accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification Subtopic 852-10, Reorganizations , for the Successor as a new entity with assets, liabilities, and a capital structure having carrying amounts not comparable with prior periods. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of impairment triggering events related to certain long-lived assets As discussed in Notes 1 and 7 to the consolidated financial statements, the Company evaluates long-lived assets, consisting of property, plant and equipment, definite-lived intangible assets, and operating lease right-of-use assets, for impairment whenever events or changes in circumstances, known as triggering events, indicate that the carrying amount of an asset or asset group may not be recoverable. The triggering events evaluated by the Company include reduced or expected sustained decreases in cash flows generated by an asset or asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived asset’s use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The carrying value of long-lived assets as of December 31, 2021 was $1.8 billion. Weatherford International plc – 2021 Form 10-K | 42 Table of Contents We identified the assessment of impairment triggering events related to certain long-lived asset groups as a critical audit matter. The assessment of whether (i) reduced or expected sustained decreases in cash flows generated by an asset group and (ii) negative changes in industry conditions represented a triggering event required a higher degree of subjective auditor judgment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s triggering events assessment. This included a control related to the Company’s process to identify and evaluate triggering events that indicate the carrying value of an asset or asset group may not be recoverable. We evaluated the Company’s identification of triggering events related to the evaluation of cash flow trends for certain asset groups by comparing historical cash flow trends to the asset groups’ carrying values. Further, we evaluated the Company’s assessment of changes in industry conditions by comparing them to changes in global rig count, commodity prices, and economic outlook using data obtained from publicly available industry and market information. /s/ KPMG LLP We have served as the Company’s auditor since 2013. Houston, Texas February 17, 2022 Weatherford International plc – 2021 Form 10-K | 43 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Weatherford International plc: Opinion on Internal Control Over Financial Reporting We have audited Weatherford International plc and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity (deficiency), and cash flows for each of the years in the two-year period ended December 31, 2021 and for the period from December 14, 2019 to December 31, 2019 (Successor periods) and for the period from January 1, 2019 to December 13, 2019 (Predecessor period), and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated February 17, 2022 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Houston, Texas February 17, 2022 Weatherford International plc – 2021 Form 10-K | 44 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Years Ended through through (Dollars and shares in millions, except per share amounts) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Revenues: Services $ 2,353 $ 2,250 $ 150 $ 3,135 Products 1,292 1,435 111 1,819 Total Revenues 3,645 3,685 261 4,954 Costs and Expenses: Cost of Services 1,547 1,550 108 2,168 Cost of Products 1,169 1,257 100 1,685 Research and Development 85 97 7 136 Selling, General and Administrative 738 837 45 895 Goodwill and Long-Lived Assets Impairment — 1,053 — 750 Restructuring Charges — 206 — 189 Other Charges (Credits), Net ( 10 ) 171 — 339 Prepetition Charges — — — 86 Gain on Sale of Businesses, Net — — — ( 112 ) Total Costs and Expenses 3,529 5,171 260 6,136 Operating Income (Loss) 116 ( 1,486 ) 1 ( 1,182 ) Other Income (Expense): Interest Expense, Net ( 260 ) ( 251 ) ( 12 ) ( 362 ) Loss on Extinguishment of Debt and Bond Redemption Premium ( 170 ) — — — Loss on Termination of ABL Credit Agreement — ( 15 ) — — Reorganization Items — ( 9 ) ( 4 ) 5,389 Other Expense, Net ( 29 ) ( 53 ) — ( 26 ) Income (Loss) Before Income Taxes ( 343 ) ( 1,814 ) ( 15 ) 3,819 Income Tax Provision ( 86 ) ( 85 ) ( 9 ) ( 135 ) Net Income (Loss) ( 429 ) ( 1,899 ) ( 24 ) 3,684 Net Income Attributable to Noncontrolling Interests 21 22 2 23 Net Income (Loss) Attributable to Weatherford $ ( 450 ) $ ( 1,921 ) $ ( 26 ) $ 3,661 Basic and Diluted Loss Per Share Attributable to Weatherford $ ( 6.43 ) $ ( 27.44 ) $ ( 0.37 ) $ 3.65 Basic and Diluted Weighted Average Shares Outstanding 70 70 70 1,004 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2021 Form 10-K | 45 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Years Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Net Income (Loss) $ ( 429 ) $ ( 1,899 ) $ ( 24 ) $ 3,684 Foreign Currency Translation ( 5 ) ( 38 ) 7 52 Defined Benefit Pension Activity 13 ( 14 ) 2 ( 11 ) Interest Rate Derivative Loss — — — 8 Other Comprehensive Income (Loss) 8 ( 52 ) 9 49 Comprehensive Income (Loss) ( 421 ) ( 1,951 ) ( 15 ) 3,733 Comprehensive Income Attributable to Noncontrolling Interests 21 22 2 23 Comprehensive Income (Loss) Attributable to Weatherford $ ( 442 ) $ ( 1,973 ) $ ( 17 ) $ 3,710 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2021 Form 10-K | 46 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (Dollars and shares in millions, except par value) 2021 2020 Assets: Cash and Cash Equivalents $ 951 $ 1,118 Restricted Cash 162 167 Accounts Receivable, Net of Allowance for Credit Losses of $ 31 at December 31, 2021 and $ 32 at December 31, 2020 825 826 Inventories, Net 670 717 Other Current Assets 303 349 Total Current Assets 2,911 3,177 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 623 at December 31, 2021 and $ 367 at December 31, 2020 996 1,236 Intangible Assets, Net of Accumulated Amortization of $ 328 at December 31, 2021 and $ 173 at December 31, 2020 657 810 Operating Lease Right-of-Use Assets 113 138 Other Non-current Assets 97 73 Total Assets $ 4,774 $ 5,434 Liabilities: Short-term Borrowings and Current Portion of Long-term Debt $ 12 $ 13 Accounts Payable 380 325 Accrued Salaries and Benefits 343 297 Income Taxes Payable 140 185 Current Portion of Operating Lease Liabilities 59 71 Other Current Liabilities 398 471 Total Current Liabilities 1,332 1,362 Long-term Debt 2,416 2,601 Operating Lease Liabilities 128 177 Other Non-current Liabilities 402 357 Total Liabilities 4,278 4,497 Shareholders’ Equity: Ordinary Shares - Par value $ 0.001 ; Authorized 1,356 , Issued and Outstanding 70 at December 31, 2021 and 2020 — — Capital in Excess of Par Value 2,904 2,897 Retained Deficit ( 2,397 ) ( 1,947 ) Accumulated Other Comprehensive Loss ( 35 ) ( 43 ) Weatherford Shareholders’ Equity 472 907 Noncontrolling Interests 24 30 Total Shareholders’ Equity 496 937 Total Liabilities and Shareholders’ Equity $ 4,774 $ 5,434 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2021 Form 10-K | 47 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIENCY) (Dollars in millions) Par Value of Issued Shares Capital In Excess of Par Value Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Non-controlling Interests Total Shareholders’ Equity (Deficiency) Balance at December 31, 2018 (Predecessor) $ 1 $ 6,711 $ ( 8,671 ) $ ( 1,746 ) $ 39 $ ( 3,666 ) Net Income (Loss) — — 3,661 — 23 3,684 Other Comprehensive Income — — — 49 — 49 Dividends to NCI — — — — ( 22 ) ( 22 ) Equity Awards Granted, Vested and Exercised — 22 — — — 22 Equity Awards Vested and Cancelled in Connection With the Plan — 24 — — — 24 Other Activity — — — — 2 2 Elimination of Predecessor Equity Balances ( 1 ) ( 6,757 ) 5,010 1,697 — ( 51 ) Issuance of New Ordinary Shares to Creditors in Connection with the Plan — 2,837 — — — 2,837 Issuance of New Ordinary Shares to Prior Shareholders — 29 — — — 29 Equity Value of Warrants — 31 — — — 31 Fresh Start Adjustment to NCI — — — — ( 8 ) ( 8 ) Balance at December 13, 2019 (Successor) $ — $ 2,897 $ — $ — $ 34 $ 2,931 Net Income (Loss) — — ( 26 ) — 2 ( 24 ) Other Comprehensive Income — — — 9 — 9 Balance at December 31, 2019 (Successor) $ — $ 2,897 $ ( 26 ) $ 9 $ 36 $ 2,916 Net Income (Loss) — — ( 1,921 ) — 22 ( 1,899 ) Other Comprehensive Income — — — $ ( 52 ) — ( 52 ) Dividends to NCI — — — — ( 28 ) ( 28 ) Balance at December 31, 2020 (Successor) $ — $ 2,897 $ ( 1,947 ) $ (43) $ 30 $ 937 Net Income (Loss) — — ( 450 ) — 21 ( 429 ) Equity Awards, Granted, Vested and Exercised — 7 — — — 7 Other Comprehensive Income — — — 8 — 8 Dividends to NCI — — — — ( 27 ) ( 27 ) Balance at December 31, 2021 (Successor) $ — $ 2,904 $ ( 2,397 ) $ ( 35 ) $ 24 $ 496 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2021 Form 10-K | 48 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Years Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Cash Flows From Operating Activities: Net Income (Loss) $ ( 429 ) $ ( 1,899 ) $ ( 24 ) $ 3,684 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 440 503 34 447 Bond Redemption Premium and Loss on Extinguishment of Debt and Termination of ABL Credit Agreement 170 15 — — Gain on Settlement of Liabilities Subject to Compromise — — — ( 4,297 ) Reorganization Items — — — ( 1,161 ) Goodwill and Long-Lived Assets Impairment — 1,053 — 750 Inventory Charges 62 210 — 159 Asset Write-Downs and Other Charges — 60 — 145 Employee Share-Based Compensation Expense 25 — — 46 Loss (Gain) on Disposition of Assets ( 22 ) 2 — — Gain on Sale Businesses, Net — — — ( 112 ) Deferred Income Tax Provision (Benefit) ( 10 ) ( 5 ) — 25 Change in Operating Assets and Liabilities, Net: Accounts Receivable ( 6 ) 378 36 ( 135 ) Inventories ( 18 ) 64 18 ( 215 ) Accounts Payable 56 ( 250 ) ( 79 ) ( 72 ) Other Assets and Liabilities, Net 54 79 76 ( 11 ) Net Cash Provided by (Used in) Operating Activities $ 322 $ 210 $ 61 $ ( 747 ) Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment $ ( 85 ) $ ( 154 ) $ ( 20 ) $ ( 250 ) Proceeds from Divestiture of Businesses and Investments — 11 7 328 Proceeds from Disposition of Assets 41 22 — 84 Proceeds from Bond Maturities — 50 — — Other Investing Activities ( 39 ) ( 4 ) ( 1 ) ( 13 ) Net Cash Provided by (Used in) Investing Activities $ ( 83 ) $ ( 75 ) $ ( 14 ) $ 149 Cash Flows From Financing Activities: Borrowings of Long-term Debt $ 2,073 $ 453 $ — $ 1,600 Repayments of Long-term Debt ( 2,313 ) ( 9 ) ( 1 ) ( 318 ) Bond Redemption Premium ( 131 ) — — — Repayments of Short-term Debt, Net ( 4 ) ( 27 ) ( 1 ) ( 347 ) Borrowings on Debtor in Possession (“DIP”) Credit Agreement — — — 1,529 Repayment on DIP Credit Agreement upon Emergence — — — ( 1,529 ) DIP Financing Fees and Payments on Backstop Agreement — — — ( 137 ) Deferred Consideration Payment — ( 24 ) — — Other Financing Activities, Net ( 28 ) ( 45 ) — ( 49 ) Net Cash Provided by (Used in) Financing Activities $ ( 403 ) $ 348 $ ( 2 ) $ 749 Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 8 ) 2 1 1 Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 172 ) 485 46 152 Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,285 800 754 602 Cash, Cash Equivalents and Restricted Cash at End of Period $ 1,113 $ 1,285 $ 800 $ 754 Supplemental Cash Flow Information Interest Paid $ 269 $ 232 $ — $ 272 Income Taxes Paid, Net of Refunds $ 62 $ 79 $ 2 $ 89 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2021 Form 10-K | 49 Table of Contents Item 8 | Notes to the Consolidated Financial Statements WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 – Summary of Significant Accounting Policies Organization and Nature of Operations Weatherford International plc (“Weatherford Ireland”), an Irish public limited company, together with its subsidiaries (“Weatherford,” the “Company,” “we,” “us” and “our”), is a multinational energy services company. Weatherford is one of the world’s leading providers of equipment and services used in the drilling, evaluation, completion, production and intervention of oil, geothermal and natural gas wells. We operate in approximately 75 countries and have service and sales locations in oil and natural gas producing regions globally. Many of our businesses, including those of our predecessor companies, have been operating for more than 50 years. The authorized share capital of Weatherford includes 1.356 billion ordinary shares with a par value of $ 0.001 per share. On June 1, 2021, The Nasdaq Stock Market LLC stock exchange (“NASDAQ”) approved our application for the listing of our ordinary shares. In connection with the listing, we became subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). Our ordinary shares began trading on The Nasdaq Global Select Market on June 2, 2021 under the ticker symbol “WFRD”. Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC for annual financial information. We consolidate all wholly owned subsidiaries and controlled joint ventures. All material intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation, including “Note 4 – Segment Information”. Prior year net income (loss) and shareholders’ equity (deficiency) were not affected by these reclassifications. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions, including those related to allowance for credit losses, inventory valuation reserves, recoverability of long-lived assets, useful lives used in depreciation and amortization, income taxes and related valuation allowance, accruals for contingencies, actuarial assumptions to determine costs and liabilities related to employee benefit plans, and share-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe the most significant estimates and assumptions are associated with the recoverability of long-lived assets impairment assessment, inventory valuation reserves and estimating our income tax provision, including uncertain tax positions and the valuation of deferred taxes. Actual results could differ from those estimates. Bankruptcy and Fresh Start Accounting On July 1, 2019 (the “Petition Date”), Weatherford Ireland, Weatherford International Ltd. (“Weatherford Bermuda”), and Weatherford International, LLC (“Weatherford Delaware”) (collectively, “Weatherford Parties”), filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (“Bankruptcy Court”). On December 13, 2019 (“Effective Date” or “Fresh Start Reporting Date”) after all conditions to effectiveness were satisfied, we emerged from bankruptcy after successfully completing the reorganization pursuant to the Plan. During bankruptcy in 2019, we classified all income, expenses, gains or losses that were incurred or realized as a result of the Chapter 11 proceedings as “Reorganization Items” in our 2019 Consolidated Statements of Operations through the Effective Date. Weatherford International plc – 2021 Form 10-K | 50 Table of Contents Item 8 | Notes to the Consolidated Financial Statements In accordance with Accounting Standards Codification “ASC” 852 - Reorganizations, we qualified for and adopted fresh start accounting (“Fresh Start Accounting”) on the Fresh Start Reporting Date, at which point we became a new entity for financial reporting because (i) the holders of the then existing ordinary shares of the Predecessor company received less than 50% of the new ordinary shares of the Successor company outstanding upon emergence and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims. Upon adoption of Fresh Start Accounting, the reorganization value derived from the enterprise value associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their estimated fair values (except for deferred income taxes), with the remaining excess value allocated to Goodwill in accordance with ASC 805 – Business Combinations. Deferred income tax amounts were determined in accordance with ASC 740 – Income Taxes. For more information, see “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” and “Note 3 – Fresh Start Accounting.” The Company’s financial results for periods following the application of Fresh Start Accounting are and will be different from the Predecessor historical trends and the differences may be material. References to “Predecessor” relate to the Consolidated Statements of Operations for the period from January 1, 2019 through and including the adjustments from the application of Fresh Start Accounting on December 13, 2019 (“Predecessor Period”). References to “Successor” relate to the Consolidated Balance Sheets of the reorganized Company as of December 31, 2021 and 2020 and Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 and for the period from December 14, 2019 through December 31, 2019 (“Successor Periods”) and are not comparable to the Consolidated Financial Statements of the Predecessor as indicated by the “black line” division in the financials and footnote tables, which emphasizes the lack of comparability between amounts presented. Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Restricted Cash Our restricted cash balance of $ 162 million at December 31, 2021 and $ 167 million at December 31, 2020 primarily includes cash collateral for certain of our letters of credit facilities. Allowance for Credit Losses on Accounts Receivables We establish an allowance for credit losses based on various factors to including historical experience, current conditions and environments in which our customers operate, the aging status and reasonable and supportable forecasts. The determination of the collectability requires us to use estimates and make judgments regarding future events and trends, including monitoring our customers’ payment history and current creditworthiness, as well as consideration of the overall business and political climate in which our customers operate. Our customer base has generally similar collectability risk characteristics, although risk profiles can vary between larger independent customers and state-owned customers, which may have a lower risk than smaller independent customers. Provisions for credit losses are recorded based on estimated losses on customer accounts that may become uncollectible. Major Customers and Credit Risk Substantially all of our customers are engaged in the energy industry. This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform periodic credit evaluations of our customers and do not generally require collateral in support of our trade receivables. We maintain allowances for credit losses. International sales also present various risks, including risks of war, civil disturbances and governmental activities that may limit or disrupt markets, restrict the movement of funds, or result in the deprivation of contract rights or the taking of property without fair consideration. Most of our international sales are to large international or national oil companies and these sales may result in a concentration of receivables from such companies. As of December 31, 2021, accounts receivable in Mexico and the U.S. accounted for 22 % and 15 %, respectively, of our total net outstanding account receivables. Although we have experienced delay of payments in Mexico, the balances due are not Weatherford International plc – 2021 Form 10-K | 51 Table of Contents Item 8 | Notes to the Consolidated Financial Statements in dispute and we do not expect to have any material write-offs of receivables in the country. No other country accounted for more than 10% of our net outstanding accounts receivables balance. For the years ended December 31, 2021, 2020 and 2019, no individual customer accounted for more than 10 % of our consolidated revenues. Inventories We state our inventories at the lower of cost or net realizable value using either the first-in, first-out (“FIFO”) or average cost method. Cost represents third-party invoice or production cost. Production cost includes material, labor and manufacturing overhead. To maintain a carrying value that is the lower of cost or net realizable value, we regularly review inventory quantities on hand and compare to estimates of future product demand, market conditions, our production requirements, and technological developments. We maintain reserves for excess, slow moving and obsolete inventory and we may periodically recognize additional charges for inventory in which we determine there is no forecasted demand. Property, Plant and Equipment (“PP&E”) PP&E is both owned and under finance leases, and is initially stated at cost and depreciated over its estimated life. Subsequently, PP&E is measured at cost less accumulated depreciation and impairment losses. The carrying values are based on our estimates and judgments relative to capitalized costs, useful lives and salvage value, where applicable. We expense maintenance and repairs as incurred. We capitalize expenditures for improvements as well as renewals and replacements that extend the useful life of the asset. We depreciate our fixed assets on a straight-line basis over their estimated useful lives, allowing for salvage value where applicable. The estimated useful lives of our major classes of PP&E are as follows: Major Classes of Property, Plant and Equipment PP&E Estimated Useful Lives Buildings and leasehold improvements 10 – 40 years or lease term Rental and service equipment 3 – 10 years Machinery and other 2 – 12 years Goodwill As of December 31, 2021 and 2020, we no longer carried goodwill on our Consolidated Balance Sheets. See Note 11 – Goodwill and Intangibles, Net for further discussion. Goodwill represented the excess of consideration paid (or with respect to our 2019 Fresh Start Accounting, the excess of reorganization value) over the fair value of net tangible and identifiable intangible assets acquired. Goodwill was not amortized but was evaluated for impairment. When we carried goodwill on our Consolidated Balance Sheets, we performed an impairment test for goodwill annually as of October 1 or more frequently whenever events and changes in the circumstances indicate that the carrying value of a reporting unit might exceed its fair value. The quantitative step of the goodwill impairment test involves a comparison of the fair value of each of our reporting units that have goodwill assigned with their carrying values. If the carrying value of a reporting unit’s goodwill were to exceed its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Other Intangible Assets With respect to the Successor and as a result of Fresh Start Accounting, our newly established identifiable intangible assets included developed technologies and our trade name. Successor identifiable intangible assets are being amortized on a straight-line basis over their estimated economic lives generally ranging from five to 10 years. We amortize developed technology over 5 years and our trade names over 10 years. As many areas of our business rely on patents and proprietary technology, we seek patent protection both inside and outside the U.S. for products and methods that appear to have commercial significance. We capitalize patent defense costs when we determine that a successful defense is probable. Weatherford International plc – 2021 Form 10-K | 52 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Long-Lived Assets Long-lived assets to be held and used are reviewed to determine whether any events or changes in circumstances, known as triggering events, indicate that we may not be able to recover the carrying amount of the asset or asset group. Triggering events include, but are not limited to, reduced or expected sustained decreases in cash flows generated by an asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived asset’s use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The Company groups individual assets at the lowest level of identifiable cash flows and, if impairment triggers are present, performs an undiscounted cash flow analysis to identify assets or asset groups that may not be recoverable. Long-lived assets held as of our 2019 emergence date were remeasured to fair value. Refer to Note 3 – Fresh Start Accounting for further details. Research and Development Expenditures Research and development expenditures are expensed as incurred. Derivative Financial Instruments We record derivative instruments on the balance sheet at their fair value as either assets or liabilities. Changes in the fair value of derivatives are recorded each period in current earnings. Foreign Currency Results of operations for our foreign subsidiaries with functional currencies other than the U.S. dollar are translated using average exchange rates during the period. Assets and liabilities of these foreign subsidiaries are translated using the exchange rates in effect at the balance sheet dates, and the resulting translation adjustments are included in “Accumulated Other Comprehensive Loss”, a component of Shareholders’ Equity (Deficiency). For our subsidiaries that have a functional currency that differs from the currency of their balances and transactions, inventories, PP&E and other non-monetary assets and liabilities, together with their related elements of expense or income, are remeasured into the functional currency using historical exchange rates. All monetary assets and liabilities are remeasured into the functional currency at current exchange rates. All revenues and expenses are translated into the functional currency at average exchange rates. Remeasurement gains and losses for these subsidiaries are recognized in our results of operations during the period incurred. We record net foreign currency gains and losses on foreign currency derivatives (see “Note 15 – Derivative Instruments”) and currency devaluation charges, when incurred, in “Other Income (Expense), Net” on the accompanying Consolidated Statements of Operations. Share-Based Compensation We account for equity-classified share-based payment awards, including awards issued under employee stock purchase plans, stock options, restricted shares, restricted share units and performance units by measuring these awards at the date of grant and recognizing the grant date fair value as an expense, net of forfeitures, over the service period, which is usually the vesting period. Liability-classified awards, such as phantom restricted share units, are remeasured at their current market value at the end of each reporting period over the service period. Income Taxes We account for taxes under the asset and liability method. Income taxes have been provided based upon the tax laws and rates in the countries in which our operations are conducted and income is earned. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. Weatherford International plc – 2021 Form 10-K | 53 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Leases We lease certain facilities, land, vehicles, and equipment. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. We determine if an arrangement is classified as a lease at inception of the arrangement. As most of our leases do not provide an implicit rate of return, on a quarterly basis, we use our incremental borrowing rate, together with the lease term information available at commencement date of the lease, in determining the present value of lease payments. For certain equipment leases, such as copiers and vehicles, we account for the leases under a portfolio method. Operating lease payments include related options to extend or terminate lease terms that are reasonably certain of being exercised. Upon emergence from bankruptcy on December 13, 2019, our lease liabilities were remeasured to fair value using the present value of the remaining lease payments as if we acquired new leases. The remeasurement was based on our incremental borrowing rate as of December 13, 2019. Additionally, the ROU assets were revalued based upon the present value of market-based rent. The remeasurement of our ROU assets was based on the market discount rate as of December 13, 2019. Disputes, Litigation and Contingencies We accrue an estimate of costs to resolve certain disputes, legal matters and contingencies when a loss on these matters is deemed probable and reasonably estimable. For matters not deemed probable or not reasonably estimable, we have not accrued any amounts. Our contingent loss estimates are based upon an analysis of potential results, assuming a combination of possible litigation and settlement strategies. The accuracy of these estimates is impacted by the complexity of the associated issues. Revenue Recognition We account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , and all of the related amendments, collectively referred to as “Topic 606”. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenue is derived from short term contracts. Our services and products are generally sold based upon purchase orders, contracts or other legally enforceable arrangements with our customers that included fixed or determinable prices but do not generally include right of return provisions or other significant post-delivery obligations. The unmanned equipment that we lease to customers under operating leases consist primarily of drilling rental tools and artificial lift pumping equipment. 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. We include revenue from these leases within “Services Revenue” on our Consolidated Statement of Operations. Contract Balances The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable, contract assets, and customer advances and deposits (contract liabilities classified as deferred revenues). Receivables are included in “Accounts Receivable, Net,” contract assets are included in “Other Current Assets” and contract liabilities are included in “Other Current Liabilities” on our Consolidated Balance Sheets. Consideration under certain contracts such as turnkey or lump sum contracts may be classified as contract assets as the invoicing occurs once the performance obligations have been satisfied while the customer simultaneously receives and consumes the benefits provided. We also have receivables for work completed on service contracts but not billed in which the rights to consideration are conditional and would be classified as contract assets. We may also have contract liabilities and defer revenues for certain product sales that are not distinct from their installation. Weatherford International plc – 2021 Form 10-K | 54 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Generally, our revenue is recognized for services over time as the services are rendered and we primarily utilize an output method such as time elapsed or footage drilled which coincides with how customers receive the benefit. Both contract drilling and pipeline service revenue is contractual by nature and generally governed by day-rate based contracts. Revenue is recognized on product sales at a point in time when control passes and is generally upon delivery but is dependent on the terms of the contract. Our services and products are generally sold based upon purchase orders, contracts or call-out work orders that include fixed per unit prices or variable consideration but do not generally include right of return provisions or other significant post-delivery obligations. We generally bill our sales of services and products upon completion of the performance obligation. Product sales are billed and recognized when control passes to the customer. Our products are produced in a standard manufacturing operation, even if produced to our customer’s specifications. Revenues are recognized at the amount to which we have the right to invoice for services performed. Our payment terms vary by the type and location of our customer and the products or services offered. For certain products or services and customer types, we require payment before the products or services are delivered to the customer and record as a contract liability. We defer revenue recognition on such payments until the products or services are delivered to the customer. From time to time, we may enter into bill and hold arrangements. When we enter into these arrangements, we determine if the customer has obtained control of the product by determining (a) the reason for the bill-and-hold arrangement; (b) whether the product is identified separately as belonging to the customer; (c) whether the product is ready for physical transfer to the customer; and (d) whether we are unable to utilize the product or direct it to another customer. We account for individual products and services separately if they are distinct and the product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration, including any discounts, is allocated between separate products and services based on their standalone selling prices. The standalone selling prices are determined based on the prices at which we separately sell our products and services. For items not sold separately (e.g. term software licenses in our Completion and Production product line), we estimate standalone selling prices using the adjusted market assessment approach. Costs of relocating equipment without contracts are expensed as incurred. The nature of our contracts gives rise to several types of variable consideration, including claims and lost-in-hole charges. Our claims are not significant and lost-in-hole charges are constrained variable consideration. We do not estimate revenue associated with these types of variable consideration. Under certain contracts, we may incur rebillable expenses including shipping and handling, third-party inspection and repairs, and customs costs and duties. If reimbursable by customers we recognize the revenue associated with these rebillable expenses as “Product Revenues” and all related costs as “Cost of Products” in the accompanying Consolidated Statements of Operations. We provide certain assurance warranties on product sales which range from one to five years but do not offer extended warranties on any of our products or services. These assurance warranties are not separate performance obligations thus no portion of the transaction price is allocated to our obligations under these warranties. Earnings (Loss) per Share Basic earnings (loss) per share for all periods presented equals net income (loss) divided by the weighted average shares outstanding during the period including participating securities. Diluted earnings (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including participating securities and any potential dilutive shares, when applicable. Weatherford International plc – 2021 Form 10-K | 55 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Unvested share-based payment awards and other instruments issued by the Company that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and are included in the computation of earnings per share following the two-class method. Accounting Standards Issued Not Yet Adopted Evaluations of all other new accounting pronouncements that have been issued, but not yet effective are on-going, and at this time are not expected to have a material impact on our Consolidated Financial Statements. 2 – Emergence from Chapter 11 Bankruptcy Proceedings Restructuring Support Agreement; Voluntary Reorganization Under Chapter 11 of the U.S. Bankruptcy Code On May 10, 2019, the Weatherford Parties entered into the Restructuring Support Agreement (“RSA”) with certain holders of our unsecured notes (“Consenting Creditors”), setting forth, subject to certain conditions, the terms of the proposed capital financial restructuring of the Company (“Transaction”). The RSA included certain milestones for the progress of the upcoming court proceedings, which included the dates by which the Weatherford Parties were required to, among other things, obtain certain court orders and complete the Transaction. On July 1, 2019, Weatherford Ireland, Weatherford Bermuda, and Weatherford Delaware, filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas (the “Cases”). Emergence The Company emerged from Chapter 11 with an Effective Date of December 13, 2019, except as noted below: (1) the Company amended and restated its memorandum and articles of association on December 10, 2019; (2) the Company appointed new members to the Successor’s board of directors to replace the directors of the Predecessor; (3) all outstanding obligations under our unsecured senior and exchangeable notes were cancelled and the applicable agreements governing such obligations were terminated; (4) the senior secured superpriority debtor-in-possession credit agreement (the “DIP Credit Agreement”) the Company previously entered into was paid in full and terminated; (5) the Company issued a $ 2.1 billion aggregate principal amount of unsecured 11.00 % Exit Notes due 2024; for additional details see “Note 13 – Borrowings and Other Debt Obligations”; (6) the Company entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $ 450 million (the “ABL Credit Agreement ” ) with the lenders party thereto and Wells Fargo Bank, N.A. as administrative agent; for additional details see Note 13 – Borrowings and Other Debt Obligations; (7) the Company entered into a senior secured letter of credit agreement in an aggregate amount of $ 195 million (the “LC Credit Agreement”) for issuance of bid and performance letters of credit; for additional details see Note 13 – Borrowings and Other Debt Obligations; (8) the Company issued 69,999,954 shares of Successor new ordinary shares (“New Ordinary Shares”) to the holders of the Company’s existing senior notes and holders of the existing ordinary shares (“Old Ordinary Shares”); for additional details see “Note 19 – Shareholders’ Equity (Deficiency)”; (9) the Company issued warrants (the “New Warrants”), to holders of the Company’s existing Old Ordinary Shares, to purchase up to an aggregate of 7,777,779 New Ordinary Shares in the Company at an exercise price of $ 99.96 per ordinary share. The New Warrants are exercisable until the earlier of December 13, 2023 and the date of consummation of any liquidity event as defined in the Warrant Agreement; for additional details see “Note 19 – Shareholders’ Equity (Deficiency)”. Weatherford International plc – 2021 Form 10-K | 56 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Prepetition Charges Expenses, gains and losses were realized or incurred before July 1, 2019 and in relation to the Cases are recorded under the caption “Prepetition Charges” on our 2019 Predecessor Consolidated Statements of Operations. The $ 86 million of prepetition charges primarily consisted of professional and other fees related to the Cases. Reorganization Items Any expenses, gains and losses that are realized or incurred as of or subsequent to the Petition Date and as a direct result of the Cases are recorded under “Reorganization Items” on our Consolidated Statements of Operations for the Predecessor and Successor Periods and consisted of the following: Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Year Ended through through Reorganization Gain (Expense) (Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 Gain on Settlement of Liabilities Subject to Compromise $ — $ — $ 4,297 Fresh Start Valuation Adjustments — — 1,434 Reorganization Items for Plan Effects (Non-Cash) — — 5,731 Unamortized Debt Issuance and Discount $ — $ — $ ( 128 ) Unamortized Interest Rate Derivative Loss — — ( 8 ) Reorganization Items (Non-Cash) — — ( 136 ) Backstop Commitment Fees $ — $ — $ ( 81 ) DIP Financing Fees — — ( 56 ) Professional Fees ( 9 ) ( 4 ) ( 69 ) Reorganization Fees ( 9 ) ( 4 ) ( 206 ) Total Reorganization Items $ ( 9 ) $ ( 4 ) $ 5,389 Reorganization Items (Fees) Unpaid $ — $ 30 $ 30 Reorganization Items (Fees) Paid $ 39 $ 4 $ 176 Weatherford International plc – 2021 Form 10-K | 57 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 3 – Fresh Start Accounting Fresh Start Accounting Upon emergence from bankruptcy, we qualified for and adopted Fresh Start Accounting in accordance with ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes because (1) the holders of the then existing common shares of the Predecessor received less than 50 percent of the new common shares of the Successor outstanding upon emergence and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims. The reorganization value derived from the range of enterprise values associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their estimated fair values (except for deferred income taxes) with the remaining excess value allocated to goodwill in accordance with ASC 805 – Business Combinations. The amount of deferred income taxes recorded was determined in accordance with ASC 740 – Income Taxes. Reorganization Value Under ASC 852, the Successor determined a value to be assigned to the equity of the emerging entity as of the date of adoption of Fresh Start Accounting. The Company engaged valuation experts to assist management in the allocation of such enterprise value to the assets and liabilities for financial reporting purposes based on management’s latest outlook as of the effective date. Based on this reassessment, the Company deemed it appropriate to use an enterprise value of $ 4.5 billion for financial reporting purposes. The following table reconciles the enterprise value to the estimated fair value of our Successor common shares as of the Fresh Start Reporting Date: (Dollars in millions) Fresh Start Reporting Date Enterprise Value $ 4,516 Plus: Cash and Cash Equivalents (includes $ 25 million cash collateral released from restricted cash on 12/17/19) 518 Less: Fair Value of Debt ( 2,103 ) Fair Value of Successor Equity as of December 13, 2019 $ 2,931 The following table reconciles the enterprise value to the reorganization value of the Successor’s assets to be allocated to the Company’s individual assets as of the Fresh Start Reporting Date: (Dollars in millions) Fresh Start Reporting Date Enterprise Value $ 4,516 Plus: Cash and Cash Equivalents (includes $ 25 million cash collateral released from restricted cash on 12/17/19) 518 Plus: Current Liabilities Excluding Short-term Borrowings and Current Portion of Long-term Debt 1,707 Plus: Non-current Liabilities Excluding Long-term Debt 627 Reorganization Value of Successor’s Assets to be Allocated $ 7,368 With the assistance of third-party valuation advisors, we determined the enterprise and corresponding equity value of the Successor using various valuation methods, including: (i) a calculation of the present value of future cash flows based on our financial projections, and (ii) a peer group trading analysis. The enterprise value and corresponding equity value were dependent upon achieving the future financial results set forth in our valuations, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, upon emergence we could not assure that the estimates, assumptions, valuations or financial projections would be realized, and actual results could vary materially. Weatherford International plc – 2021 Form 10-K | 58 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 4 – Segment Information The Company's chief operating decision maker (“CODM”), our chief executive officer, regularly reviews information to make operating decisions, allocate resources and assess performance of the business. During the fourth quarter of 2021, the CODM changed the information regularly reviewed to be aligned with how we offer our services and technologies in relation to the well life cycle and we have realigned our reportable segments to reflect the change. All of our segments are enabled by a full suite of digital, monitoring, optimization and artificial intelligence solutions providing services throughout the well life cycle, including responsible responsible abandonment. We now have three reportable segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention. Previously we had two geographic based reportable segments, Western Hemisphere and Eastern Hemisphere. Drilling and Evaluation (“DRE”) offers a suite of services including managed pressure drilling, drilling services, wireline and drilling fluids. DRE offerings range from early well planning to reservoir management through innovative tools and expert engineering to optimize reservoir access and productivity. Well Construction and Completions (“WCC”) offers products and services for well integrity assurance across the full life cycle of the well. The primary offerings are tubular running services, cementation products, completions, liner hangers and well services. WCC deploys conventional to advanced technologies, providing safe and efficient services in any environment during the well construction phase. Production and Intervention (“PRI”) offers a suite of reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in conventional and unconventional wells, deep water, and aging reservoirs. The primary offerings are intervention services & drilling tools, artificial lift, production automation & software, sub-sea intervention and pressure pumping services in select markets. Total revenues are from external customers and segment revenues are specific to our three reportable segments and all other revenues are specific to our non-operating segment revenues. Revenues are further described in “Note 5 – Revenues.” Additionally, we have changed our primary measure of segment profitability to segment adjusted EBITDA, which is based on segment earnings before interest, taxes, depreciation, amortization, share-based compensation expense and other adjustments. Research and development expenses are included in segment adjusted EBITDA. Corporate and other includes business activities related to all other segments (profit and loss), corporate and other expenses (overhead support and centrally managed or shared facilities costs) that do not individually meet the criteria for segment reporting. We have revised our segment reporting to reflect our current management approach and recast prior periods to conform to the current segment presentation. Weatherford International plc – 2021 Form 10-K | 59 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Year Ended Year Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Revenues: Drilling and Evaluation $ 1,066 $ 1,044 $ 67 $ 1,407 Well Construction and Completions 1,353 1,414 90 1,583 Production and Intervention 1,127 1,106 86 1,673 Segment Revenues 3,546 3,564 243 4,663 All Other 99 121 18 291 Total Revenues $ 3,645 $ 3,685 $ 261 $ 4,954 Segment Adjusted EBITDA: Drilling and Evaluation $ 186 $ 132 $ ( 3 ) $ 219 Well Construction and Completions 256 273 19 225 Production and Intervention 191 154 20 216 Segment Adjusted EBITDA $ 633 $ 559 $ 36 $ 660 Corporate and Other ( 62 ) ( 100 ) ( 1 ) ( 104 ) Depreciation and Amortization ( 440 ) ( 503 ) ( 34 ) ( 447 ) Share-based Compensation Expense (a) ( 25 ) — — ( 24 ) Other Adjustments (b) 10 ( 1,442 ) — ( 1,267 ) Operating Income (Loss) $ 116 $ ( 1,486 ) $ 1 $ ( 1,182 ) (a) See “Note 18 – Share-Based Compensation” for additional information. (b) Other adjustments include goodwill and long-lived asset impairments, restructuring charges, prepetition charges, gain on sale of businesses and other charges and credits, net as applicable to the periods presented. See “Note 7 – Long-Lived Assets Impairment”, “Note 11 – Goodwill and Intangibles, Net”, “ Note 8 – Restructuring Charges”, “ Note 6 – Impairments and Other Charges, Net”, and “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” for additional information. In the 2020 Successor and 2019 Predecessor Periods, the segment adjusted EBITDA of Well Construction and Completions includes $ 12 million and $ 15 million, respectively, of gains on sales of operational assets. Weatherford International plc – 2021 Form 10-K | 60 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Depreciation and amortization and capital expenditures by segment are summarized in the table below: Successor Predecessor Period From Period From Year Year 12/14/2019 1/1/2019 Ended Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Depreciation and Amortization: Drilling and Evaluation $ 164 $ 183 $ 11 $ 168 Well Construction and Completions 123 151 9 115 Production and Intervention 102 112 9 121 Corporate and Other 51 57 5 43 Total Depreciation and Amortization $ 440 $ 503 $ 34 $ 447 Capital Expenditures: Drilling and Evaluation $ 18 $ 27 $ 10 $ 88 Well Construction and Completions 18 23 6 59 Production and Intervention 36 73 2 60 Corporate and Other 13 31 2 43 Total Capital Expenditures $ 85 $ 154 $ 20 $ 250 Corporate and other depreciation and amortization and capital expenditures were for business activities related to all other segments (profit and loss), corporate and other expenses (overhead support and centrally managed or shared facilities costs) that do not individually meet the criteria for segment reporting. Total assets by segment are summarized in the table below: December 31, (Dollars in millions) 2021 2020 Total Assets: Drilling and Evaluation $ 783 $ 950 Well Construction and Completions 974 1,100 Production and Intervention 686 768 Total Reportable Segment Assets 2,443 2,818 Corporate and Other 2,331 2,616 Total $ 4,774 $ 5,434 Corporate and other assets primarily include cash and cash equivalents, certain intangibles, and centrally managed or shared facilities. Weatherford International plc – 2021 Form 10-K | 61 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Long-lived Assets by Geographic Areas Long-lived assets by geographic area are summarized below and includes PP&E, intangibles and ROU assets at December 31, 2021 and December 31, 2020. Long-lived assets were zero in Ireland, our country of domicile in both years and in the U.S. were $ 238 million and $ 306 million as of December 31, 2021 and December 31, 2020, respectively. North America in the table below consists of the U.S. and Canada. December 31, (Dollars in millions) 2021 2020 Long-Lived Assets: North America $ 324 $ 403 Latin America 265 289 Europe/Sub-Sahara Africa/Russia 337 463 Middle East/North Africa/Asia 840 1,029 Total Long-Lived Assets $ 1,766 $ 2,184 5 – Revenues Disaggregated Revenue Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenue is derived from short term contracts. Our services and products are generally sold based upon purchase orders, contracts or other legally enforceable arrangements with our customers that include fixed or determinable prices but do not generally include right of return provisions or other significant post-delivery obligations. For additional details on our revenue recognition policies see “Note 1 – Summary of Significant Accounting Policies”. The unmanned equipment that we lease to customers as operating leases consists primarily of drilling rental tools and artificial lift pumping equipment (in the Production and Intervention reportable segment). These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts. Equipment revenues recognized under Topic 842 was $ 131 million, $ 150 million and $ 12 million in 2021, 2020 and 2019 Successor Periods, respectively, and $ 284 million in the 2019 Predecessor Period. The following tables disaggregate our revenues from contracts with customers by geographic region and includes equipment rental revenues. Revenues in the U.S. were $ 678 million, $ 720 million and $ 59 million in the 2021, 2020 and 2019 Successor Periods, respectively, and $ 1.3 billion in the 2019 Predecessor Period. We had no revenue in our country of domicile (Ireland) in the 2021, 2020 and 2019 Successor Periods, and the 2019 Predecessor Period. North America in the table below consists of the U.S. and Canada. Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Year Ended Year Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Revenues by Geographic Areas: North America $ 896 $ 889 $ 68 1,548 Latin America 814 697 53 1,072 Europe/Sub-Sahara Africa/Russia 737 747 52 $ 907 Middle East/North Africa/Asia 1,198 1,352 88 1,427 Total Revenues $ 3,645 $ 3,685 $ 261 $ 4,954 Weatherford International plc – 2021 Form 10-K | 62 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Contract Balances The timing of our revenue recognition, billings and cash collections results in the recording of billed and unbilled accounts receivable, contract assets, customer advances and deposits (contract liabilities classified as deferred revenues). Receivables with customers are included in “Accounts Receivable, Net,” contract assets are included in “Other Current Assets” and contract liabilities are included in “Other Current Liabilities” on our Consolidated Balance Sheets. Contract assets are immaterial in all periods presented on our Consolidated Balance Sheets. Revenues recognized in the 2021 and 2020 Successor Periods were $ 32 million and $ 10 million, respectively and included in the contract liabilities balance at the beginning of each year. The following table summarizes these balances at December 31, 2021 and December 31, 2020: (Dollars in millions) 12/31/2021 12/31/2020 Total Accounts Receivables, Net $ 825 $ 826 Receivables for Product and Services in Accounts Receivable, Net $ 795 $ 792 Receivables for Equipment Rentals in Account Receivable, Net $ 30 $ 34 Contract Liabilities included in Other Current Liabilities $ 26 $ 37 Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. 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 December 31, 2021. (Dollars in millions) 2022 2023 2024 2025 Thereafter Total Service revenue $ 67 $ 59 $ 59 $ 44 $ 20 $ 249 Weatherford International plc – 2021 Form 10-K | 63 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 6 – Impairments and Other Charges, Net We recorded the following in “Goodwill and Long-Lived Assets Impairment” and “Other Charges (Credits), Net” on the accompanying Consolidated Statements of Operations: Successor Predecessor Period From Period From Year Year 12/14/2019 1/1/2019 Ended Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Long-lived Assets Impairment $ — $ 814 $ — $ 20 Goodwill Impairment — 239 — 730 Total Goodwill and Long-lived Assets Impairment $ — $ 1,053 $ — $ 750 Inventory Charges $ 7 $ 138 $ — $ 117 Asset Write-downs and Rigs Related Charges — 11 — 132 Other Charges, Net ( 17 ) 22 — 90 Total Other Charges (Credits), Net $ ( 10 ) $ 171 $ — $ 339 Gain on Sale of Businesses, Net $ — $ — $ — $ ( 112 ) See “Note 7 – Long-Lived Assets Impairment”, “Note 11 – Goodwill and Intangibles, Net” and “Note 9 – Inventories, Net” for further details. We did not have any significant divestitures of businesses in our Successor Periods. In the 2019 Predecessor Period, we disposed of net assets of $ 161 million of our laboratory, surface data logging and a portion of our rigs businesses for proceeds of $ 328 million and recognized $ 112 million in “Gain on Sale of Businesses, Net” on the Consolidated Statements of Operations. Weatherford International plc – 2021 Form 10-K | 64 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 7 – Long-Lived Assets Impairment We did not recognize long-lived assets impairments in the 2021 Successor Period. During the 2020 Successor Period, 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 a third-party valuation advisor. As of March 31, 2020, and as of June 30, 2020, we determined the carrying amount of certain long-lived assets exceeded their respective fair values and recognized $ 814 million of long-lived asset impairments as summarized by asset class and segment in the table below, which was included in “Goodwill and Long-Lived Assets Impairment” on the Consolidated Statements of Operations. 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, forecasted revenues and operating margins and the discount rate. Long-Lived Assets Impairment by Asset Class and Segment (Dollars in millions) Drilling and Evaluation Well Construction and Completions Production and Intervention All Other Total Property, Plant and Equipment $ 195 $ 126 $ 232 $ 18 $ 571 Intangible Assets 76 39 40 — 155 Right of Use Assets 14 20 54 — 88 Long-lived Assets Impairment $ 285 $ 185 $ 326 $ 18 $ 814 We recognized long-lived assets impairment of $ 20 million for the 2019 Predecessor Period to write-down our land drilling rigs included in All Other due to the sustained downturn in the energy services industry. Weatherford International plc – 2021 Form 10-K | 65 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 8 – Restructuring Charges We had no restructuring charges for the 2021 Successor Period. Our prior restructuring plans include workforce reductions, organization restructurings, facility consolidations and other cost reduction measures and efficiency initiatives targeted to better align with activity levels at the time. The following table presents restructuring charges for the Successor Periods and the 2019 Predecessor Period. Successor Predecessor Period From Period From Year Year 12/14/2019 01/01/2019 Ended Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Severance Charges $ — $ 132 $ — $ 53 Facility Exit Charges — 10 — 99 Inventory Charges — 15 — 24 Property, Plant and Equipment — 40 — 13 Right of Use and Other Assets — 9 — — Total Restructuring Charges $ — $ 206 $ — $ 189 The following table presents total restructuring charges by reportable segment and corporate and other for the Successor and Predecessor Periods. Successor Predecessor Period From Period From Year Year 12/14/2019 01/01/2019 Ended Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Drilling and Evaluation $ — $ 35 $ — $ 29 Well Construction and Completions — 60 — 47 Production and Intervention — 52 — 54 Corporate and Other — 59 — 59 Total Restructuring Charges $ — $ 206 $ — $ 189 The following table presents total restructuring accrual activity for the periods presented. Restructuring charges in the table below exclude restructuring related asset charges. (Dollars in millions) Accrued Balance at Beginning of Period Charges Cash Payments Other Accrued Balance at End of Period 2021 Successor Period $ 53 $ — $ ( 30 ) $ ( 6 ) $ 17 2020 Successor Period $ 66 $ 142 $ ( 137 ) $ ( 18 ) $ 53 2019 Successor Period $ 66 $ — $ — $ — $ 66 2019 Predecessor Period $ 59 $ 152 $ ( 120 ) $ ( 25 ) $ 66 Weatherford International plc – 2021 Form 10-K | 66 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 9 – Inventories, Net Inventories, net of reserves of $ 159 million and $ 119 million as of December 31, 2021 and December 31, 2020, respectively, by category were as follows: December 31, (Dollars in millions) 2021 2020 Finished Goods $ 595 $ 655 Raw Materials, Components and Supplies 75 62 Total Inventory $ 670 $ 717 We recognized inventory charges, including excess and obsolete inventory charges considered commercially unviable or technologically obsolete considering current and future demand and volatility in industry demand. In 2020, these charges were additionally driven by the impact of the COVID-19 pandemic. These inventory charges were recognized in the following captions on our Consolidated Statements of Operations: Successor Predecessor Period From Period From Year Year 12/14/2019 1/1/2019 Ended Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Inventory Charges in “Cost of Products” $ 55 $ 57 $ — $ 18 Inventory Charges in “Restructuring Charges” — 15 — 24 Inventory Charges in “Other Charges (Credits), Net” 7 138 — 117 Total Inventory Charges $ 62 $ 210 $ — $ 159 10 – Property, Plant and Equipment, Net Property, plant and equipment, net was composed of the following: December 31, (Dollars in millions) 2021 2020 Land, Buildings and Leasehold Improvements $ 484 $ 515 Rental and Service Equipment 902 869 Machinery and Other 233 219 1,619 1,603 Less: Accumulated Depreciation 623 367 Property, Plant and Equipment, Net $ 996 $ 1,236 Depreciation expense was $ 284 million, $ 340 million and $ 25 million in the 2021, 2020 and 2019 Successor Periods, respectively, and $ 386 million in the 2019 Predecessor Periods. See “Note 7 – Long-Lived Assets Impairment” for additional information on impairments. Weatherford International plc – 2021 Form 10-K | 67 Table of Contents 11 – Goodwill and Intangibles, Net Goodwill Impairment We based our goodwill impairment assessments previously on the fair value of our reporting units, which were at a regional geographic level. We fully impaired our Successor and Predecessor goodwill during 2020 and 2019. The cumulative impairment loss for goodwill was $ 239 million for the Successor and $ 3.4 billion for Predecessor periods. Successor Goodwill Recognition and Impairment As a result of Fresh Start Accounting, we recognized $ 239 million of goodwill. 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 and fully impaired our goodwill as presented in “Note 4 – Impairments and Other Charges.” We identified impairment indicators as discussed in “Note 7 – Long-Lived Assets Impairment” 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 required management to develop significant judgments, including estimating and discounting future cash flows by reporting unit, specifically forecasted revenue, forecasted operating margins and discount rates. Predecessor Period Goodwill Impairments and Assessment Factors The 2019 Predecessor impairment indicators were a result of lower activity levels and lower exploration and production capital spending that resulted in a decline in drilling activity and forecasted growth in all our reporting units. Our lower than expected and forecasted financial results were due to the continued weakness within the energy market and consequently our inability to quickly and significantly reduce our cost structure under our restructuring plans savings and as a result we incurred a goodwill impairment charge of $ 730 million. Intangible Assets The components of intangible assets were as follows: December 31, 2021 Gross Net Carrying Accumulated Intangible (Dollars in millions) Amount Amortization Assets Developed and Acquired Technology $ 590 $ ( 247 ) $ 343 Trade Names 395 ( 81 ) 314 Totals $ 985 $ ( 328 ) $ 657 December 31, 2020 Gross Net Carrying Accumulated Intangible (Dollars in millions) Amount Amortization Assets Developed and Acquired Technology $ 588 $ ( 132 ) $ 456 Trade Names 395 ( 41 ) 354 Totals $ 983 $ ( 173 ) $ 810 Weatherford International plc – 2021 Form 10-K | 68 Table of Contents See “Note 7 – Long-Lived Assets Impairment” for additional information on impairments. Amortization expense was $ 156 million, $ 163 million and $ 9 million in the 2021, 2020, and 2019 Successor Periods and $ 61 million in the 2019 Predecessor Period. Based on the carrying value of intangible assets at December 31, 2021, amortization expense for the subsequent five years is estimated as follows (dollars in millions): Period Amount 2022 $ 157 2023 157 2024 145 2025 41 2026 41 12 – Leases We lease certain facilities, land, vehicles, and equipment. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet (including short-term sale leaseback transactions); we recognize lease expense for these leases on a straight-line basis over the lease term. We have data center lease agreements with lease and non-lease components which are accounted for separately, while for the remainder of our agreements we have elected the practical expedient to account for lease and non-lease components as a single lease component. For certain equipment leases, such as copiers and vehicles, we account for the leases under a portfolio method. Operating lease payments include related options to extend or terminate lease terms that are reasonably certain of being exercised. The unmanned equipment that we lease to customers under operating leases consists primarily of drilling rental tools and artificial lift pumping equipment. 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. See “Note 1 – Summary of Significant Accounting Policies” and “Note 5 – Revenues” for additional details on our equipment rental revenues. Successor Predecessor Period From Period From Years Ended 12/14/2019 1/1/2019 December 31, through through (Dollars in millions) 2021 2020 12/31/2019 12/13/2019 Lease Expense Components: Operating Lease Expense $ 61 $ 76 $ 5 $ 109 Short-term and Variable Lease Expense 65 63 5 91 Subtotal of Operating Lease Expense $ 126 $ 139 $ 10 $ 200 Finance Lease Expense: Amortization of ROU Assets and Interest on Lease Liabilities 16 15 1 11 Sublease Income ( 4 ) ( 6 ) ( 1 ) ( 6 ) Total Lease Expense $ 138 $ 148 $ 10 $ 205 Weatherford International plc – 2021 Form 10-K | 69 Table of Contents We are committed under various operating lease agreements primarily related to office space and equipment. Generally, these leases include renewal provisions and rental payments, which may be adjusted for taxes, insurance and maintenance related to the property. Future minimum commitments under operating and finance leases are as follows: Operating Finance (Dollars in millions) Leases Leases Maturity of Lease Liabilities as of December 31, 2021: 2022 $ 74 $ 16 2023 42 14 2024 29 12 2025 23 12 2026 18 11 After 2026 113 4 Total Lease Payments 299 69 Less: Interest 112 13 Present Value of Lease Liabilities $ 187 $ 56 Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Years Ended through through (Dollars in millions except years and percentages) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Other Supplemental Information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 89 $ 101 $ 5 $ 131 Operating cash outflows from finance leases $ 5 $ 5 $ — $ 4 Financing cash outflows from finance leases $ 13 $ 9 $ 1 $ 8 ROU assets obtained in exchange of new operating lease liabilities $ 23 $ 37 $ 2 $ 59 Loss on sale leaseback transactions (short-term) (a) $ — $ — $ — $ 34 December 31, 2021 December 31, 2020 December 31, 2019 Weighted-average remaining lease term (years) Operating leases 8.9 8.1 7.8 Finance leases 4.8 5.9 6.7 Weighted-average discount rate (percentages) Operating leases 9.6 % 9.6 % 9.2 % Finance leases 8.9 % 9.1 % 9.1 % (a) Included in “Goodwill and Long-Lived Assets Impairment” in our Consolidated Statements of Operations and “Other Assets and Liabilities, Net” in our Consolidated Statements of Cash Flows. Weatherford International plc – 2021 Form 10-K | 70 Table of Contents 13 – Borrowings and Other Debt Obligations Total debt carrying values consisted of the following: December 31, (Dollars in millions) 2021 2020 Finance Lease Current Portion $ 12 $ 9 Other Short-term Financing Arrangements — 4 Short-term Borrowings $ 12 $ 13 11.00 % Exit Notes due 2024 300 2,098 8.75 % Senior Secured Notes due 2024 — 455 6.5 % Senior Secured Notes due 2028 488 — 8.625 % Senior Notes due 2030 $ 1,584 $ — Finance Lease Long-term Portion 44 48 Long-term Debt $ 2,416 $ 2,601 Our Exit Notes, 2024 Senior Secured Notes (before repayment in 2021), 2028 Senior Secured Notes and 2030 Senior Notes were issued by Weatherford Bermuda and guaranteed by Weatherford International plc and Weatherford Delaware and other subsidiary guarantors party thereto. The bond redemption premiums and noncash loss on extinguishment of debt related to the unamortized debt issuance costs are presented as “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Consolidated Statements of Operations. Exit Notes On December 13, 2019, we issued unsecured 11.00 % Exit Notes due in 2024 for an aggregate principal amount of $ 2.1 billion (of which $ 500 million was in the form of Exit Takeback Notes to existing creditors on the senior notes being cancelled). Interest on the Exit Notes accrues at the rate of 11.00 % per annum and is payable semiannually on June 1 and December 1 and commenced June 1, 2020. Proceeds from the issuance were reduced by debt issuance costs which reduced the carrying amount of the debt liability and are recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net” on our Consolidated Financial Statements. 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. On October 27, 2021, we issued $ 1.6 billion of 2030 Senior Notes (defined below) and 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 of $ 71 million. We paid and recognized a $ 103 million bond redemption premium and recognized a $ 2 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs. At December 31, 2021, the carrying value of $ 300 million represents the remaining unpaid principal. 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 on March 1 and September 1, which commenced on March 1, 2021. Proceeds from the issuance were reduced by a purchase commitment discount of $ 25 million and a commitment fee of $ 15 million which reduced the carrying amount of the debt liability and were recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net” on our Consolidated Financial Statements. On September 30, 2021, we repaid the principal outstanding on 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. Weatherford International plc – 2021 Form 10-K | 71 Table of Contents 2028 Senior Secured Notes On September 30, 2021, we issued 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. Proceeds from the issuance were reduced by debt issuance costs which reduced the carrying amount of the debt liability and are being recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net” on our Consolidated Financial Statements. The 2028 Senior Secured Notes and the related guarantees are secured by substantially all of the assets and properties of the Company and the other guarantors (on an effectively first-priority basis with respect to the priority collateral for the 2028 Senior Secured Notes, and on an effectively second-priority basis with respect to the priority collateral for the senior secured letter of credit agreement (the “LC Credit Agreement”), in each case, subject to permitted liens). 2030 Senior Notes On October 27, 2021, we issued 8.625 % Senior Notes in aggregate principal amount of $ 1.6 billion maturing April 30, 2030 (the “2030 Senior Notes”). Interest accrues at the rate of 8.625 % per annum and is payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2022. Proceeds from the issuance were reduced by debt issuance costs which reduced the carrying amount of the debt liability and are being recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net” on our Consolidated Financial Statements. LC Credit Agreement We have a senior secured letter of credit agreement (the “LC Credit Agreement”) in an aggregate amount of $ 215 million maturing on May 29, 2024, 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 to: • 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; • Remove the minimum secured liquidity requirement; • Increase the minimum aggregate liquidity requirement from $ 175 million to $ 300 million; • Decrease the minimum aggregate book value of certain pledged assets requirement from $ 1.25 billion to $ 1 billion; and • Increase the ability to redeem debt up to $ 500 million subject to minimum aggregate liquidity of $ 400 million at the time of repayment or redemption. At December 31, 2021, we had approximately $ 181 million in outstanding letters of credit under the LC Credit Agreement and availability of $ 34 million. The outstanding amount of each letter of credit under the LC Credit Agreement bears interest at London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 350 basis points per annum. We expect LIBOR to continue to be published until June 2023, and expect to transition to an alternative to LIBOR prior to that termination date. The LC Credit Agreement currently contains provisions allowing the Administrative Agent to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein) that has been broadly accepted by the syndicated loan market in the United States in lieu of LIBOR. The LC Credit Agreement includes (i) a 12.5 basis point per annum fronting fee on the outstanding amount of each such letter of credit and (ii) an unused commitment fee in respect of the unutilized commitments at a rate of 50 basis point per annum on the average daily unused commitments under the LC Credit Agreement. The LC Credit Agreement is secured by substantially all the personal assets and properties of certain subsidiaries of the Company and (including a first lien on the priority collateral for the LC Credit Agreement and a second lien on the priority collateral for Senior Secured Notes, in each case, subject to permitted liens). The LC Credit Agreement is also guaranteed on an unsecured basis by certain other subsidiaries of the Company. As of December 31, 2021, we had $ 342 million of letters of credit outstanding, consisting of the $ 181 million mentioned above under the LC Credit Agreement and another $ 161 million under various uncommitted bi-lateral facilities (of which there was $ 158 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets). Weatherford International plc – 2021 Form 10-K | 72 Table of Contents ABL Credit Agreement On the Effective Date pursuant to the terms of the Plan, the Company entered into a senior secured asset-based lending agreement (the “ABL Credit Agreement”) in an aggregate amount of $ 450 million with the lenders party thereto and Wells Fargo Bank, N.A. as administrative agent. On August 28, 2020, we terminated the ABL Credit Agreement. At the time of termination, there were no loan amounts outstanding under the ABL Credit Agreement, and all outstanding letters of credit thereunder were either cash collateralized or transferred to issuing banks under the LC Credit Agreement, described above. Upon termination, we recorded $ 15 million of unamortized deferred debt issuance costs in “Loss on Termination of ABL Credit Agreement” on our Consolidated Statements of Operations. Covenants for the Exit Notes, 2028 Senior Secured Notes and LC Credit Agreement The indentures governing the Exit Notes and 2028 Senior Secured Notes contain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to: incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; sell stock of our subsidiaries; transfer or sell assets; create liens; enter into transactions with affiliates; and enter into mergers or consolidations. The Company is subject to a $ 300 million minimum aggregate liquidity requirement covenant under our amended LC Credit Agreement as defined in the applicable documents. In the event (1) the Exit Notes have an investment grade rating from both of Moody’s Investors Service (“Moody’s”), and Standard and Poor’s (“S&P’) and (2) no default has occurred and is continuing under the indenture, certain of these and other covenants will be suspended and cease to be in effect so long as the rating assigned by either Moody’s or S&P has not subsequently declined to below Baa3 or BBB- (or equivalent). The indentures also provide for certain customary events of default, including, among others, nonpayment of principal or interest, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding Exit Notes and 2028 Senior Secured Notes to be declared due and payable immediately. As of December 31, 2021, we were in compliance with the covenants of the indentures governing the Exit Notes and 2028 Senior Secured Notes and the LC Credit Agreement. The following is a summary of scheduled debt maturities by year: (Dollars in millions) 2022 $ 12 2023 11 2024 310 2025 10 2026 10 Thereafter 2,103 Total Debt Maturities $ 2,456 Unamortized Debt Issuance and Discount $ ( 28 ) Total Debt Carrying Value $ 2,428 Weatherford International plc – 2021 Form 10-K | 73 Table of Contents 14 – Fair Value of Financial Instruments, Assets and Other Assets Financial Instruments and Other Assets Measured and Recognized at Fair Value We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based upon our own judgment and assumptions used to measure assets and liabilities at fair value. Classification of a financial asset or liability within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. Other than the derivative instruments discussed in “Note 15 – Derivative Instruments” we had no other material assets or liabilities measured and recognized at fair value on a recurring basis at December 31, 2021 and December 31, 2020. Fair Value of Other Financial Instruments Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings and long-term debt. The carrying value of our cash and cash equivalents, accounts receivable, accounts payable, and 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 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 in the following table is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. December 31, 2021 December 31, 2020 (Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value 11.00 % Exit Notes due 2024 $ 300 $ 311 $ 2,098 $ 1,628 8.75 % Senior Secured Notes due 2024 — — 455 507 6.5 % Senior Secured Notes due 2028 488 528 — — 8.625 % Senior Notes due 2030 1,584 1,660 — — Total Long-Term Debt $ 2,372 $ 2,499 $ 2,553 $ 2,135 Non-recurring Fair Value Measurements In the 2019 Successor Period, our Fresh Start Accounting to determine the reorganization value derived from the enterprise value associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values (except for deferred income taxes), with the remaining excess value allocated to goodwill. They were determined to be Level 3 fair values. See further discussion at “Note 3 – Fresh Start Accounting”. In the 2020 Successor Period and the 2019 Predecessor Period, our goodwill impairment tests indicated that our goodwill was impaired and as a result was written down to estimated fair value. The Level 3 fair values of our reporting units were determined using a combination of the income approach and the market approach. The unobservable inputs to the income approach requiring significant assumptions include each reporting unit’s estimated discounted future cash flows, specifically the forecasted revenue, forecasted operating margins, and the discount rate. The market approach considered market multiples of comparable publicly traded companies to estimate fair value as a multiple of each reporting unit’s actual and forecasted earnings. During the 2020 Successor Period, we recognized long-lived asset impairments to write-down our assets or asset groups to the lower of carrying amount or fair value less cost to sell, triggered by the current and forecasted impacts of the COVID-19 pandemic on our operations. The Level 3 fair values of the long-lived assets or asset groups were determined using a combination of the income approach and the market approach. The unobservable inputs to the income approach requiring significant assumptions include each asset groups estimated discounted future cash flows, specifically the forecasted revenue, Weatherford International plc – 2021 Form 10-K | 74 Table of Contents forecasted operating margins, and the discount rate. During the 2019 Predecessor Period, we recognized long-lived asset impairments to write-down our assets to the lower of carrying amount or fair value less cost to sell. The change in our expectations of the market’s recovery, in addition to successive negative operating cash flows in certain disposal asset groups represented an indicator that those assets will no longer be recoverable over their remaining useful lives. The Level 3 fair values of the long-lived assets were determined using a combination of the income approach and the market approach. See further discussion at “Note 6 – Impairments and Other Charges, Net,” “Note 7 – Long-Lived Assets Impairment”, and “Note 11 – Goodwill and Intangibles, Net.” 15 – Derivative Instruments From time to time, we may enter into derivative financial instrument transactions to manage or reduce our market risk. We manage our debt portfolio to achieve an overall desired position of fixed and floating rates. We enter into foreign currency forward contracts and cross-currency swap contracts to economically hedge our exposure to fluctuations in various foreign currencies. The major risks from interest rate derivatives include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates, changes in foreign exchange rates and the creditworthiness of the counterparties in such transactions. We monitor the creditworthiness of our counterparties, which are multinational commercial banks. The fair values of all our outstanding derivative instruments are determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates. We enter into contracts to hedge our exposure to currency fluctuations in various foreign currencies. At December 31, 2021 and December 31, 2020, we had outstanding foreign currency forward contracts with notional amounts aggregating to $ 349 million and $ 337 million, respectively. These foreign currency forward contracts are not designated as hedges under ASU 2014-03 , Derivatives and Hedging (Topic 815) or “Topic 815”. The notional amounts of our foreign currency forward contracts do not generally represent amounts exchanged by the parties and thus are not a measure of the cash requirements related to these contracts or of any possible loss exposure. The amounts actually exchanged at maturity are calculated by reference to the notional amounts and by other terms of the derivative contracts, such as exchange rates. Our foreign currency derivatives are not designated as hedges under Topic 815, and the changes in fair value of the contracts were not material to our consolidated results and are recorded in each period in “Other Expense, Net” on the accompanying Consolidated Statements of Operations. Weatherford International plc – 2021 Form 10-K | 75 Table of Contents 16 – Retirement and Employee Benefit Plans We have defined contribution plans covering certain employees. Contribution expenses related to these plans totaled $ 16 million, $ 13 million and $ 31 million for the 2021 and 2020 Successor Periods and the 2019 Predecessor Period, respectively. Contribution expense for the 2019 Successor Period was not material. The decrease in 2020 relates primarily to the suspension of employer matching contributions to our U.S. 401(k) savings plan and other contribution plans sponsored by the Company. We have defined benefit pension and other post-retirement benefit plans covering certain U.S. and international employees. Plan benefits are generally based on factors such as age, compensation levels and years of service. Net periodic benefit cost related to these plans totaled $ 4 million, $ 2 million, and $ 5 million for the 2021 and 2020 Successor Periods and the 2019 Predecessor Period, respectively. Net periodic benefit cost for the 2019 Successor Period was not material. The projected benefit obligations on a consolidated basis were $ 207 million and $ 231 million as of December 31, 2021 and December 31, 2020, respectively. The decrease year over year is due primarily to actuarial gains as a result of increased discount rates. The fair values of plan assets on a consolidated basis (determined primarily using Level 2 inputs) were $ 160 million and $ 164 million as of December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021, the net underfunded obligation consisted of $ 16 million of funded obligations recorded to “Other Non-current Assets” and $ 63 million of underfunded obligations substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. As of December 31, 2020, the net underfunded obligation was substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. Additionally, the consolidated pre-tax amount in accumulated other comprehensive income (loss) as of December 31, 2021 and 2020, that has not yet been recognized as a component of net periodic benefit cost was a net gain of $ 1 million and net loss of $ 12 million, respectively. As mentioned above, increased discount rates were the primary driver of the overall gain in 2021. The weighted average assumption rates used for benefit obligations were as follows: Years Ended December 31, 2021 2020 Discount rate: United States Plans 2.00 % - 2.75 % 1.50 % - 2.50 % International Plans 0.85 % - 8.47 % 0.40 % - 5.85 % Rate of Compensation Increase: United States Plans — — International Plans 2.00 % - 4.77 % 2.00 % - 3.48 % During the years ended December 31, 2021 and 2020, we made contributions and paid direct benefits of $ 5 million and $ 5 million, respectively, in connection with our defined benefit pension and other post-retirement benefit plans. Contributions in the 2019 Successor Period were not material. In 2022, we expect to fund approximately $ 5 million related to those plans. Weatherford International plc – 2021 Form 10-K | 76 Table of Contents 17 – 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, courts in many jurisdictions around the world were temporarily closed for trials and hearings and have been slow to reopen, which has resulted in delays in many of our litigation matters. Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020 were $ 40 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 the Court granted the motion on May 14, 2021. URS appealed the Court’s Opinion on Dismissal to the Court of Appeals for the Fifth Circuit, and the parties are awaiting a decision. We cannot reliably predict the outcome of the claims, including the amount of any possible loss. Weatherford International plc – 2021 Form 10-K | 77 Table of Contents 18 – Share-Based Compensation As part of the emergence from bankruptcy in 2019, all outstanding awards under our previous share-based compensation plans were cancelled, and the 2019 Equity Incentive Plan was approved. The 2019 Plan was amended and restated in 2020. The share-based compensation plan permits the grant of options, share appreciation rights, restricted share awards, restricted share units, and other share-based and performance-based awards to any employee, consultant or non-employee director. The provisions of each award vary based on the type of award granted and are determined by the Compensation and Human Resources Committee of our Board of Directors. Those awards that are based on a specific contractual term will be granted with a term not to exceed 10 years. When the Company settles awards with shares, new shares are issued. Recipients of restricted share units (“RSUs”) and performance-based restricted share units (“PSUs”) do not have the rights of a shareholder until such date as the shares are issued or transferred to the recipient under the Plan. During the 2021 Successor Period, we granted 5 million RSUs, Phantom RSUs and PSUs, and the number of units vested and forfeited was immaterial. As of December 31, 2021, 8 million shares authorized under our 2019 Plan were remaining, of which 3 million were available for future grants. For RSUs, compensation expense is recognized on a straight-line basis over the requisite service period for the separately vesting portion of each award. For Phantom RSUs, which may be settled in either cash or shares, compensation expense is recognized over the requisite service period and remeasured based on current fair value. For PSUs, compensation expense is recognized over the requisite service period for the entire award, with adjustments for estimated payout. We record shared-based compensation in “Selling, General and Administrative” on the accompanying Consolidated Statements of Operations. We recognized $ 25 million, an immaterial amount and zero in the 2021, 2020 and 2019 Successor Periods, respectively. During the 2019 Predecessor Period, we recognized $ 46 million, of which $ 24 million was recorded in “Selling, General and Administrative” and the remainder in “Other Charges (Credits), Net” to include $ 24 million related to the acceleration of share-based compensation at Fresh Start offset by $ 2 million in terminated executive forfeitures. Weatherford International plc – 2021 Form 10-K | 78 Table of Contents 19 – Shareholders’ Equity (Deficiency) There were no material changes in our ordinary shares issued as of December 31, 2021 and 2020. Upon the effectiveness of the Plan, all previously issued and outstanding equity interests in the Predecessor were cancelled and the Company issued 69,999,954 “New Ordinary Shares” to the holders of the Company’s existing senior notes and holders of “Old Ordinary Shares”. The amount in excess of par value of $ 2.9 billion is reported in “Capital in Excess of Par Value ” on the accompanying Consolidated Balance Sheets. On the Effective Date, the Company issued New Warrants to holders of the Company’s Old Ordinary Shares, to purchase up to an aggregate of 7,777,779 New Ordinary Shares in the Company, par value $ 0.001 , at an exercise price of $ 99.96 per ordinary share. The New Warrants are equity classified and, upon issuance, have a value of $ 31 million, which was recorded in “Capital in Excess of Par Value.” The warrant fair value was a Level 2 valuation and is estimated using the Black Scholes valuation model. Inputs to the model include Weatherford’s share price, volatility of our share price, and the risk-free interest rate. The New Warrants are exercisable until “Expiration Date” of which is the earlier of (i) December 13, 2023 and (ii) the date of consummation of any liquidity event resulting in the sale or exchange of all or substantially all of the equity interests of the Company to one or more third parties (whether by merger, sale, recapitalization, consolidation, combination or otherwise) or the sale, directly or indirectly, by the Company of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole; or a liquidation, dissolution or winding up of the Company. All unexercised New Warrants will expire, and the rights of the warrant holders to purchase New Ordinary Shares will terminate, on the Expiration Date. During 2021 and 2020, an immaterial number of warrants were exercised. Accumulated Other Comprehensive Loss The following table presents the changes in our accumulated other comprehensive loss by component: (Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Total Balance at December 31, 2019 $ 7 $ 2 $ 9 Other Comprehensive Income ( 38 ) ( 14 ) ( 52 ) Balance at December 31, 2020 $ ( 31 ) $ ( 12 ) $ (43) Other Comprehensive Income ( 5 ) $ 13 $ 8 Balance at December 31, 2021 $ ( 36 ) $ 1 $ ( 35 ) Weatherford International plc – 2021 Form 10-K | 79 Table of Contents 20 – Earnings 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 : Successor Predecessor Period From Period From 12/14/19 1/1/2019 Year Ended through through (Shares in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Net Income (Loss) Attributable to Weatherford $ ( 450 ) $ ( 1,921 ) $ ( 26 ) $ 3,661 Basic and Diluted Weighted Average Shares Outstanding 70 70 70 1,004 Basic and Diluted Income (Loss) Per Share Attributable to Weatherford $ ( 6.43 ) $ ( 27.44 ) $ ( 0.37 ) $ 3.65 Our basic and diluted weighted average shares outstanding for the 2021, 2020 and 2019 Successor Periods are equivalent due to the net loss attributable to shareholders. Diluted weighted average shares outstanding for 2021 exclude 10 million potential ordinary shares for restricted share units, performance units, phantom restricted share units, and outstanding warrants. Diluted weighted average shares for the 2020 and 2019 Successor Periods exclude 8 million potential ordinary shares. Our basic and diluted weighted average shares outstanding for the 2019 Predecessor Period are equivalent as we believe including the dilutive impact of our Predecessor potential shares would not be meaningful as the potential shares were cancelled pursuant to the terms of the Plan. Diluted weighted average shares outstanding for the 2019 Predecessor Period exclude 197 million potential ordinary shares for restricted share units, performance units, exchangeable senior notes and warrants outstanding. Weatherford International plc – 2021 Form 10-K | 80 Table of Contents 21 – Income Taxes We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period as a result of various factors which include changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions and in our operating structure. On September 26, 2019, our parent company ceased to be a Swiss tax resident and became an Irish tax resident subject to tax under the Irish tax regime. Our income tax provision from continuing operations consisted of the following: Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Year Ended Year Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Total Current Provision $ ( 96 ) $ ( 90 ) $ ( 9 ) $ ( 110 ) Total Deferred (Provision) Benefit 10 5 — ( 25 ) Provision for Income Taxes $ ( 86 ) $ ( 85 ) $ ( 9 ) $ ( 135 ) The difference between the income tax provision at the Irish and/or Swiss income tax rate and the income tax (provision) benefit attributable to “Loss Before Income Taxes” for the 2021 and 2020 Successor years and the 2019 Successor and Predecessor Periods are analyzed below: Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Year Ended Year Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Irish or Swiss Income Tax at a rate of 25.0 % and 7.83 %, respectively $ 86 $ 454 $ 2 $ ( 299 ) Tax on Operating Earnings/Losses Subject to Rates Different than the Irish or Swiss Federal Income Tax Rate ( 166 ) ( 182 ) ( 65 ) 197 Change in Valuation Allowance 29 ( 330 ) 56 17 Change in Uncertain Tax Positions ( 35 ) ( 27 ) ( 2 ) ( 18 ) Estimated Tax on Settlement of Liabilities Subject to Compromise and Fresh Start Accounting — — — ( 495 ) Change in Valuation Allowance Attributed to Estimated Tax on Settlement of Liabilities Subject to Compromise and Fresh Start Accounting — — — 463 Provision for Income Taxes $ ( 86 ) $ ( 85 ) $ ( 9 ) $ ( 135 ) 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. Our results for the 2019 Predecessor period include $ 32 million of tax expense related to the Fresh Start Accounting impacts and $ 14 million of tax benefit primarily related to goodwill and other asset impairments and write downs. We also recognized $ 4.3 billion gain on Settlement of Liabilities Subject to Compromise as a result of the bankruptcy (See “Note 2 – Weatherford International plc – 2021 Form 10-K | 81 Table of Contents Emergence from Chapter 11 Bankruptcy Proceedings”) with no tax impact due to it being attributed to Bermuda, which has no income tax regime, and the U.S., which resulted in the reduction of our U.S. unbenefited net operating losses carryforward under the operative tax statute and applicable regulations offset by the release of the valuation allowance. Prepetition charges (charges prior to Petition Date) and reorganization items (charges after Petition Date) had no significant tax impact. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Financial Statements. The measurement of deferred tax assets and liabilities is based on enacted tax laws and rates currently in effect in each of the jurisdictions in which we have operations. The components of the net deferred tax asset (liability) were as follows: December 31, December 31, (Dollars in millions) 2021 2020 Deferred Tax Assets: Net Operating Losses Carryforwards $ 828 $ 881 Unused Recognized Built in Losses 50 39 Accrued Liabilities and Reserves 186 175 Tax Credit Carryforwards 9 11 Employee Benefits 30 30 Property, Plant and Equipment 118 129 Inventory 52 52 U.S. Interest Deferral 13 55 State Deferred 50 84 Other Differences between Financial and Tax Basis 139 92 Valuation Allowance ( 1,426 ) ( 1,499 ) Total Deferred Tax Assets 49 49 Deferred Tax Liabilities: Intangible Assets ( 35 ) ( 45 ) Other Differences between Financial and Tax Basis ( 3 ) ( 4 ) Total Deferred Tax Liabilities ( 38 ) ( 49 ) Net Deferred Tax Asset (Liability) $ 11 $ — We record deferred tax assets for net operating losses and temporary differences between the book and tax basis of assets and liabilities that are expected to produce tax deductions in future periods. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those deferred tax assets would be deductible. The Company assesses the realizability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required, with emphasis on our past operating results, the existence of cumulative losses in the most recent years and our forecast of near- term taxable income. The Company evaluates possible sources of taxable income that may be available to realize the benefit of deferred tax assets, including projected future taxable income, the reversal of existing temporary differences, taxable income in carryback years and available tax planning strategies, and the impact of fresh start accounting in making this assessment. The realizability of the deferred tax assets is dependent upon judgments and assumptions inherent in the determination of future taxable income, including factors such as future operation conditions (particularly as related to prevailing oil prices and market demand for our products and services). The decrease in the valuation allowance in 2021 is primarily attributable to the utilization of net operating losses previously not expected to be realized. Weatherford International plc – 2021 Form 10-K | 82 Table of Contents Deferred income taxes generally have not been recognized on the cumulative undistributed earnings of our non-Irish subsidiaries because they are considered to be indefinitely reinvested. Distribution of these earnings in the form of dividends or otherwise may result in a combination of income and withholding taxes payable in various countries. As of December 31, 2021, the pool of positive undistributed earnings of our non-Irish subsidiaries that are considered indefinitely reinvested and may be subject to tax if distributed amounts to approximately $ 1.4 billion. Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes and the related dividend withholding taxes associated with these undistributed earnings. At December 31, 2021, we had approximately $ 5.4 billion of net operating losses (“NOLs”) in various jurisdictions, $ 2.0 billion of which were generated by certain U.S. subsidiaries. We estimate that the maximum U.S. NOLs available for utilization in the future is $ 713 million as a result of the tax consequences of our emergence from bankruptcy as described below. As a result of our emergence on December 13, 2019, in the U.S. approximately $ 480 million of cancellation of indebtedness (COD) income was realized for tax purposes. Under exceptions applying to COD income resulting from a bankruptcy reorganization, the U.S. subsidiaries were not required to recognize this COD income currently as taxable income. Instead, the company’s US net operating losses were reduced under the operative tax statute and applicable regulations, affecting the balance of deferred taxes. The Company also realized COD income attributable to Bermuda, which does not have an income tax regime. As a result, there was no impact from the COD income. Additionally, upon emergence our U.S. subsidiaries experienced an ownership change as the Company’s emergence was considered an “ownership change” for purposes of Internal Revenue Code section 382. The Internal Revenue Code sections 382 and 383 impose limitations on the ability of a company to utilize tax attributes after experiencing an “ownership change.” As a result, we have estimated our annual limitation is approximately $ 23 million against the utilization of our U.S. loss carryforwards and other tax attributes, including unused recognized built-in losses and U.S. interest deferral. The annual limitation will result in approximately $ 1.2 billion of our U.S. loss carryforwards expiring unused. Upon emergence, we decreased our NOL deferred tax asset and also decreased our valuation allowance each by $ 273 million to remove these lost NOLs. Our non-indefinite loss carryforwards, if not utilized, will mostly expire for U.S. subsidiaries from 2030 through 2037 and at various dates from 2021 through 2040 for non-U.S. subsidiaries. At December 31, 2021, we had $ 9 million of tax credit carryovers, all of which are related to our non-U.S. subsidiaries. A tabular reconciliation of the total amounts of uncertain tax positions at the beginning and end of the period is as follows: Successor Predecessor Period From Period From 12/14/2019 1/1/2019 Year Ended Year Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Balance at Beginning of Year $ 222 $ 214 $ 213 $ 195 Additions as a Result of Tax Positions Taken During a Prior Period 23 9 — 34 Reductions as a Result of Tax Positions Taken During a Prior Period ( 8 ) ( 4 ) — ( 1 ) Additions as a Result of Tax Positions Taken During the Current Period 12 21 2 17 Reductions Relating to Settlements with Taxing Authorities ( 5 ) ( 2 ) ( 1 ) ( 20 ) Reductions as a Result of a Lapse of the Applicable Statute of Limitations ( 2 ) ( 7 ) — ( 5 ) Foreign Exchange Effects ( 7 ) ( 9 ) — ( 7 ) Balance at End of Year $ 235 $ 222 $ 214 $ 213 Substantially all of the uncertain tax positions, if released in future periods, would impact our effective tax rate. Within the total balance is $ 76 million and $ 77 million as of December 31, 2021 and 2020, respectively, that would be offset by net Weatherford International plc – 2021 Form 10-K | 83 Table of Contents operating losses and other tax attributes if settled. Our income tax provision includes penalties and interest on uncertain tax positions of $ 17 million, $ 11 million, $ 1 million, and $ 15 million for Successor years ended December 31, 2021 and 2020, and the 2019 Successor and Predecessor Periods, respectively. The amounts in the table above exclude cumulative accrued interest and penalties of $ 104 million and $ 89 million at December 31, 2021 and 2020 respectively, which are included in other non-current liabilities. We are subject to income tax in many of the approximately 75 countries where we operate. As of December 31, 2021, the following table summarizes the tax years that remain subject to examination for the major jurisdictions in which we operate: Tax Jurisdiction Tax Years under Examination Canada 2013 - 2021 Mexico 2010 - 2021 Russia 2018 - 2021 Switzerland 2013 - 2021 United States (Federal) 2018 - 2021 We are continuously under 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 December 31, 2021, we anticipate that it is reasonably possible that the amount of uncertain tax positions may decrease by up to $ 1 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations. 22 – Accounts Receivable Factoring From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions. Our factoring transactions are recognized as sales, and the proceeds are included as operating cash flows in our Consolidated Statements of Cash Flows. The loss on sale of accounts receivable was immaterial for all periods. The following table presents accounts receivable sold and the cash proceeds, net of discount and hold-back. Successor Predecessor Period From Period From Year Year 12/14/2019 1/1/2019 Ended Ended through through (Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019 Accounts Receivable Sold $ 100 $ 90 $ 7 $ 199 Cash Proceeds from Sale of Accounts Receivable $ 85 $ 79 $ 7 $ 186 Weatherford International plc – 2021 Form 10-K | 84 Table of Contents Item 9 | Changes in and Disagreement with Accountants on Accounting and Financial Disclosure Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure None.