Weatherford International plc 10-Q

Item 1. Financial Statements. WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, (Dollars and shares in millions, except per share amounts) 2022 2021 2022 2021 Revenues: Services $ 656 $ 588 $ 1,249 $ 1,111 Products 408 315 753 624 Total Revenues 1,064 903 2,002 1,735 Costs and Expenses: Cost of Services 418 392 803 748 Cost of Products 338 285 635 565 Research and Development 22 21 43 42 Selling, General and Administrative 196 188 374 376 Restructuring Charges — — 20 — Other Charges (Credits) ( 14 ) ( 8 ) 5 ( 8 ) Total Costs and Expenses 960 878 1,880 1,723 Operating Income 104 25 122 12 Interest Expense, Net ( 48 ) ( 72 ) ( 96 ) ( 142 ) Other Expense, Net ( 32 ) ( 11 ) ( 48 ) ( 15 ) Income (Loss) Before Income Taxes 24 ( 58 ) ( 22 ) ( 145 ) Income Tax Provision ( 12 ) ( 15 ) ( 40 ) ( 38 ) Net Income (Loss) 12 ( 73 ) ( 62 ) ( 183 ) Net Income Attributable to Noncontrolling Interests 6 5 12 11 Net Income (Loss) Attributable to Weatherford $ 6 $ ( 78 ) $ ( 74 ) $ ( 194 ) Basic and Diluted Income (Loss) per Share $ 0.08 $ ( 1.11 ) $ ( 1.04 ) $ ( 2.77 ) Basic Weighted Average Shares Outstanding 71 70 71 70 Diluted Weighted Average Shares Outstanding 73 70 71 70 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 2 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, (Dollars in millions) 2022 2021 2022 2021 Net Income (Loss) $ 12 $ ( 73 ) $ ( 62 ) $ ( 183 ) Foreign Currency Translation Adjustments 59 15 59 11 Comprehensive Income (Loss) 71 ( 58 ) ( 3 ) ( 172 ) Comprehensive Income Attributable to Noncontrolling Interests 6 5 12 11 Comprehensive Income (Loss) Attributable to Weatherford $ 65 $ ( 63 ) $ ( 15 ) $ ( 183 ) The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars and shares in millions, except par value) June 30, 2022 December 31, 2021 (Unaudited) Assets: Cash and Cash Equivalents $ 879 $ 951 Restricted Cash 211 162 Accounts Receivable, Net of Allowance for Credit Losses of $ 30 at June 30, 2022 and $ 31 at December 31, 2021 930 825 Inventories, Net 716 670 Other Current Assets 274 303 Total Current Assets 3,010 2,911 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 718 at June 30, 2022 and $ 623 at December 31, 2021 939 996 Intangible Assets, Net of Accumulated Amortization of $ 403 at June 30, 2022 and $ 328 at December 31, 2021 579 657 Operating Lease Right-of-Use Assets 115 113 Other Non-Current Assets 92 97 Total Assets $ 4,735 $ 4,774 Liabilities: Current Portion of Long-term Debt $ 64 $ 12 Accounts Payable 448 380 Accrued Salaries and Benefits 291 343 Income Taxes Payable 142 140 Current Portion of Operating Lease Liabilities 53 59 Other Current Liabilities 385 398 Total Current Liabilities 1,383 1,332 Long-term Debt 2,366 2,416 Operating Lease Liabilities 121 128 Non-current Taxes Payable 239 264 Other Non-Current Liabilities 135 138 Total Liabilities $ 4,244 $ 4,278 Shareholders’ Equity: Ordinary Shares - Par Value $ 0.001 ; Authorized 1,356 shares, Issued and Outstanding 70 shares at June 30, 2022 and December 31, 2021 $ — $ — Capital in Excess of Par Value 2,913 2,904 Retained Deficit ( 2,471 ) ( 2,397 ) Accumulated Other Comprehensive Income (Loss) 24 ( 35 ) Weatherford Shareholders’ Equity 466 472 Noncontrolling Interests 25 24 Total Shareholders’ Equity 491 496 Total Liabilities and Shareholders’ Equity $ 4,735 $ 4,774 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, (Dollars in millions) 2022 2021 Cash Flows From Operating Activities: Net Loss $ ( 62 ) $ ( 183 ) Adjustments to Reconcile Net Loss to Net Cash (Used in) Provided by Operating Activities: Depreciation and Amortization 177 225 Asset Write-downs and Other Charges 6 — Inventory Charges 24 39 Gain on Disposition of Assets ( 14 ) ( 13 ) Deferred Income Tax Provision 6 6 Share-Based Compensation 13 9 Changes in Operating Assets and Liabilities, Net: Accounts Receivable ( 86 ) 41 Inventories ( 71 ) 15 Accounts Payable 62 16 Other Assets and Liabilities, Net ( 59 ) ( 35 ) Net Cash (Used in) Provided by Operating Activities ( 4 ) 120 Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment ( 44 ) ( 24 ) Proceeds from Disposition of Assets 43 22 Other Investing Activities 8 — Net Cash Provided by (Used in) Investing Activities 7 ( 2 ) Cash Flows From Financing Activities: Repayments of Long-term Debt ( 7 ) ( 5 ) Repayments of Short-term Debt, Net — ( 4 ) Other Financing Activities ( 18 ) ( 6 ) Net Cash Used in Financing Activities ( 25 ) ( 15 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 1 ) ( 1 ) Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash ( 23 ) 102 Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,113 1,285 Cash, Cash Equivalents and Restricted Cash at End of Period $ 1,090 $ 1,387 Supplemental Cash Flow Information: Interest Paid $ 117 $ 141 Income Taxes Paid, Net of Refunds $ 42 $ 32 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 – Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of Weatherford International plc (the “Company,” “Weatherford,” “we,” “us,” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Annual Report”). The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from our estimates. In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state the results of operations, financial position and cash flows of Weatherford and its subsidiaries for the periods presented and are not necessarily indicative of the results that may be expected for a full year. Our financial statements have been prepared on a consolidated basis. Under this basis, our financial statements consolidate all wholly owned subsidiaries and controlled joint ventures. All intercompany accounts and transactions have been eliminated. Summary of Significant Accounting Policies Please refer to “Note 1 – Summary of Significant Accounting Policies” of our Consolidated Financial Statements from our 2021 Annual Report for the discussion on our significant accounting policies. Certain reclassifications have been made to the financial statements and accompanying footnotes for the three and six months ended June 30, 2021 to conform to the presentation for the three and six months ended June 30, 2022, including the change in reportable segments made during the fourth quarter of 2021. New Accounting Standards All new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations. 2 – Segment Information Financial information by segment is summarized below. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as presented in our 2021 Annual Report. During the fourth quarter of 2021, our chief operating decision maker changed the information regularly reviewed to be aligned with how we offer our services and technologies in relation to the life cycle of a well 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 abandonment. We 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. Our primary measure of segment profitability is 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. 6 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenues: Drilling and Evaluation $ 317 $ 265 $ 609 $ 501 Well Construction and Completions 383 337 727 660 Production and Intervention 345 278 631 537 Segment Revenues 1,045 880 1,967 1,698 All Other 19 23 35 37 Total Revenues $ 1,064 $ 903 $ 2,002 $ 1,735 Segment Adjusted EBITDA: Drilling and Evaluation $ 69 $ 46 $ 128 $ 75 Well Construction and Completions 67 55 134 105 Production and Intervention 68 46 107 87 Segment Adjusted EBITDA $ 204 $ 147 $ 369 $ 267 Corporate and Other ( 18 ) ( 11 ) ( 32 ) ( 29 ) Depreciation and Amortization ( 90 ) ( 114 ) ( 177 ) ( 225 ) Share-based Compensation Expense ( 6 ) ( 5 ) ( 13 ) ( 9 ) Other Adjustments (a) 14 8 ( 25 ) 8 Operating Income $ 104 $ 25 $ 122 $ 12 (a) Other adjustments in six months ended June 30, 2022 primarily include a net credit from the gain on asset sales related to our fulfillment initiatives and collections of previously impaired receivables in the three months ended June 30, 2022 offset by net charges in the three months ended March 31, 2022 that include a $ 20 million restructuring charge and a $ 17 million charge related to Ukraine. See “Note 4 – Restructuring Charges” for additional information on restructuring around our fulfillment initiatives. 7 Table of Contents 3 – 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 receive, in exchange for those goods or services. The majority of our revenue is derived from short term contracts. Our products and services 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. We lease drilling tools, artificial lift pumping equipment and other unmanned equipment to customers as operating leases. 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 ASU No. 2016-02, Leases (Topic 842) were $ 35 million and $ 66 million in the three and six months ended June 30, 2022, respectively, and $ 35 million and $ 63 million for the three and six months ended June 30, 2021, respectively. The following table disaggregates our revenues from contracts with customers by geographic region and includes equipment rental revenues. North America in the table below consists of the U.S. and Canada. Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenues by Geographic Areas: Middle East/North Africa/Asia $ 350 $ 289 $ 660 $ 556 North America 268 220 506 434 Latin America 265 205 492 381 Europe/Sub-Sahara Africa/Russia 181 189 344 364 Total Revenues $ 1,064 $ 903 $ 2,002 $ 1,735 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,” short-term contract assets are included in “Other Current Assets,” long-term contract assets are included in “Other Non-Current Assets” and contract liabilities are included in “Other Current Liabilities” on our Condensed Consolidated Balance Sheets. The following table summarizes these balances as of June 30, 2022 and December 31, 2021: (Dollars in millions) June 30, 2022 December 31, 2021 Total Accounts Receivables $ 930 $ 825 Receivables for Product and Services in Accounts Receivable, Net $ 900 $ 795 Receivables for Equipment Rentals in Account Receivable, Net $ 30 $ 30 Short-Term Contract Assets in Other Current Assets $ 41 $ 47 Long-term Contract Assets in Other Non-Current Assets $ 18 $ 14 Contract Liabilities in Other Current Liabilities (a) $ 22 $ 26 (a) Revenues recognized during the six months ended June 30, 2022 and 2021 that were included in the contract liabilities balance at the beginning of each year were $ 18 million and $ 25 million, respectively. 8 Table of Contents 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 ASU 2014-09, Revenues from Contracts with Customers (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 June 30, 2022. (Dollars in millions) 2022 2023 2024 2025 Thereafter Total Service Revenue $ 35 $ 63 $ 65 $ 52 $ 22 $ 237 4 – Restructuring Charges We had nil and $ 20 million in restructuring charges for the three and six months ended June 30, 2022, respectively, presented as “Restructuring Charges” on the accompanying Condensed Consolidated Statements of Operations. The charges were primarily related to the launch of a multi-year footprint consolidation and workforce efficiency initiative aimed at improving fulfillment operations and included $ 14 million in severance and $ 6 million in asset retirement obligations. No restructuring charges were recognized in the three and six months ended June 30, 2021. The following table presents total restructuring charges by segment and All Other in the three and six months ended June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Drilling and Evaluation $ — $ — $ 5 $ — Well Construction and Completions — — 7 — Production and Intervention — — 5 — All Other — — 3 — Total Restructuring Charges $ — $ — $ 20 $ — The following table presents total restructuring reserve activity in the six months ended June 30, 2022: (Dollars in millions) December 31, 2021 Charges Cash Payments (Credits)/Other June 30, 2022 Restructuring Reserve $ 17 $ 20 $ ( 10 ) $ — $ 27 9 Table of Contents 5 – Inventories, Net Inventories, net of reserves of $ 139 million and $ 159 million as of June 30, 2022 and December 31, 2021, respectively, are presented by category in the table below: (Dollars in millions) June 30, 2022 December 31, 2021 Finished Goods $ 634 $ 595 Work in Process and Raw Materials, Components and Supplies 82 75 Inventories, Net $ 716 $ 670 In the three and six months ended June 30, 2022 and 2021, we recognized inventory charges, including excess and obsolete inventory charges, in the following captions on our Condensed Consolidated Statements of Operations: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Inventory Charges in “Cost of Products” $ 9 $ 16 $ 20 $ 32 Inventory Charges in “Other Charges (Credits)” — 6 4 7 Total Inventory Charges $ 9 $ 22 $ 24 $ 39 10 Table of Contents 6 – Intangibles, Net The components of intangible assets, net were as follows: (Dollars in millions) June 30, 2022 December 31, 2021 Developed and Acquired Technology, Net of Accumulated Amortization of $ 302 at June 30, 2022 and $ 247 at December 31, 2021 $ 285 $ 343 Trade Names, Net of Accumulated Amortization of $ 101 at June 30, 2022 and $ 81 at December 31, 2021 294 314 Intangible Assets, Net of Accumulated Amortization of $ 403 at June 30, 2022 and $ 328 at December 31, 2021 $ 579 $ 657 Amortization expense was $ 39 million and $ 78 million for both the three and six months ended June 30, 2022 and June 30, 2021, respectively, and is reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations. 7 – Borrowings and Other Debt Obligations (Dollars in millions) June 30, 2022 December 31, 2021 Current Portion of Finance Leases $ 14 $ 12 Current Portion of Exit Notes 50 — Current Portion of Long-term Debt $ 64 $ 12 11.00 % Exit Notes due 2024 $ 250 $ 300 6.50 % Senior Secured Notes due 2028 489 488 8.625 % Senior Notes due 2030 1,585 1,584 Long-term Portion Finance Leases 42 44 Long-term Debt $ 2,366 $ 2,416 Our Exit Notes, 2028 Senior Secured Notes and 2030 Senior Notes (described below) were issued by Weatherford Bermuda and guaranteed by Weatherford International plc and Weatherford Delaware and other subsidiary guarantors party thereto. Exit Notes We have an outstanding aggregate principal amount of $ 300 million due in 2024 on our 11.00 % senior unsecured notes (“Exit Notes”) with interest payable semiannually on June 1 and December 1. At June 30, 2022, the carrying value of $ 300 million represents the remaining unpaid principal. On July 11, 2022, we issued a notice of election to redeem $50 million in principal plus related unpaid interest by August 10, 2022 of our Exit Notes. 2028 Senior Secured Notes On September 30, 2021, we issued 6.50 % 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 6.50 % per annum and is payable semiannually on September 15 and March 15 of each year, commencing on March 15, 2022. Proceeds from this debt issuance were used to fully repay a senior secured note with an aggregate principal amount of $ 500 million with a stated interest rate of 8.75 % per annum due 2024. 11 Table of Contents 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. The proceeds from this debt issuance were used to redeem $ 1.6 billion of the above Exit Notes. LC Agreement We have a senior secured letter of credit agreement (the “LC 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. At June 30, 2022, we had approximately $ 173 million in outstanding letters of credit under the LC Agreement and availability of $ 42 million. As of June 30, 2022, we had $ 378 million of letters of credit outstanding, consisting of the $ 173 million under the LC Agreement and another $ 205 million under various uncommitted bi-lateral facilities (of which there was $ 205 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets). Our letters of credit under various uncommitted bi-lateral facilities increased “Restricted Cash” since December 31, 2021 due to a requirement from a new multi-year contract. Accrued Interest As of June 30, 2022 and December 31, 2021, we had accrued interest of approximately $ 24 million and $ 35 million, respectively in “Other Current Liabilities” primarily related to the Exit Notes, 2028 Senior Secured Notes and 2030 Senior Notes. Fair Value of Short and Long-term Borrowings The carrying value of our short-term borrowings approximates their fair value due to their short maturities. These short-term borrowings are classified as Level 2 in the fair value hierarchy. The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the market rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. The table below presents the fair value and carrying value of our long-term debt (including the current portion of long-term debt and excluding finance leases). June 30, 2022 December 31, 2021 (Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value 11.00 % Exit Notes due 2024 $ 300 $ 302 $ 300 $ 311 6.50 % Senior Secured Notes due 2028 489 450 488 528 8.625 % Senior Notes due 2030 1,585 1,338 1,584 1,660 Current and Long-Term Debt (excluding Finance Leases) $ 2,374 $ 2,090 $ 2,372 $ 2,499 12 Table of Contents 8 – Disputes, Litigation and Legal Contingencies We are subject to lawsuits and claims arising out of the nature of our business. We have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability. It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, that would result in a liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material. If one or more negative outcomes were to occur relative to these cases, the aggregate impact to our financial condition could be material. Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 were $ 41 million and $ 40 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 continuing to await a decision. We cannot reliably predict the outcome of the claims, including the amount of any possible loss. 13 Table of Contents 9 – Shareholders’ Equity The following summarizes our shareholders’ equity activity for the three and six months ended June 30, 2022 and 2021: (Dollars in millions) Capital in Excess of Par Value Retained Deficit Accumulated Other Comprehensive Income (Loss) Non-controlling Interests “NCI” Total Shareholders’ Equity Balance at December 31, 2021 $ 2,904 $ ( 2,397 ) $ ( 35 ) $ 24 $ 496 Net Income (Loss) — ( 80 ) — 6 ( 74 ) Equity Awards, Granted, Vested and Exercised 4 — — — 4 Balance at March 31, 2022 $ 2,908 $ ( 2,477 ) $ ( 35 ) $ 30 $ 426 Net Income — 6 — 6 12 Other Comprehensive Income — — 59 — 59 Dividends to NCI — — — ( 11 ) ( 11 ) Equity Awards Granted, Vested and Exercised 5 — — — 5 Balance at June 30, 2022 $ 2,913 $ ( 2,471 ) $ 24 $ 25 $ 491 Balance at December 31, 2020 $ 2,897 $ ( 1,947 ) $ ( 43 ) $ 30 $ 937 Net Income (Loss) — ( 116 ) — 6 ( 110 ) Dividends to NCI — — — ( 2 ) ( 2 ) Other Comprehensive Loss — — ( 4 ) — ( 4 ) Balance at March 31, 2021 $ 2,897 $ ( 2,063 ) $ ( 47 ) $ 34 $ 821 Net Income (Loss) — ( 78 ) — 5 ( 73 ) Other Comprehensive Income — — 15 — 15 Dividends to NCI — — — ( 4 ) ( 4 ) Equity Awards Granted, Vested and Exercised 2 — — — 2 Other — — — ( 2 ) ( 2 ) Balance at June 30, 2021 $ 2,899 $ ( 2,141 ) $ ( 32 ) $ 33 $ 759 The following table presents the changes in our accumulated other comprehensive income (loss) by component for the six months ended June 30, 2022 and 2021: (Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Total Balance at December 31, 2021 $ ( 36 ) $ 1 $ ( 35 ) Other Comprehensive Income 59 — 59 Balance at June 30, 2022 $ 23 $ 1 $ 24 Balance at December 31, 2020 $ ( 31 ) $ ( 12 ) $ ( 43 ) Other Comprehensive Income 11 — 11 Balance at June 30, 2021 $ ( 20 ) $ ( 12 ) $ ( 32 ) 14 Table of Contents 10 – Income (Loss) per Share Basic income (loss) per share for all periods presented equals net income (loss) divided by our weighted average shares outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including potential dilutive ordinary shares. Antidilutive shares represent potentially dilutive securities which are excluded from the computation of diluted income or loss per share as their impact was antidilutive. These include potential ordinary shares for restricted share units, performance share units, phantom restricted share units, and outstanding warrants. Our basic and diluted weighted average shares outstanding for periods presented with net loss are equivalent as the impact of the inclusion of potential dilutive securities are antidilutive. A reconciliation of the number of shares used for the basic and diluted income (loss) per share calculation was as follows: Three Months Ended June 30, Six Months Ended June 30, (Dollars and shares in millions, except per share amounts) 2022 2021 2022 2021 Net Income (Loss) Attributable to Weatherford $ 6 $ ( 78 ) $ ( 74 ) $ ( 194 ) Basic Weighted Average Shares Outstanding 71 70 71 70 Dilutive Effect of Awards Granted in Stock Incentive Plans 2 — — — Diluted Weighted Average Shares Outstanding 73 70 71 70 Antidilutive Shares 8 10 11 10 Basic and Diluted Income (Loss) Per Share Attributable to Weatherford $ 0.08 $ ( 1.11 ) $ ( 1.04 ) $ ( 2.77 ) 11 – Income Taxes We determine our quarterly tax provision using the year-to-date effective tax rate because the estimated annual approach is not reliable given that small changes in estimated ordinary annual income result in significant changes in our estimated annual effective tax rate. The year-to-date effective tax rate treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. 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 residents 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 due to 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. In the three and six months ended June 30, 2022, we recognized tax expense of $ 12 million and $ 40 million, respectively, on an income before income taxes of $ 24 million and loss before taxes of $ 22 million, respectively, compared to the three and six months ended June 30, 2021 where we recognized tax expense of $ 15 million and $ 38 million, respectively, on a loss before income taxes of $ 58 million and $ 145 million, respectively. The expense in the three and six months ended June 30, 2022 included a $ 27 million recognition of a benefit from previously uncertain tax positions. Our income tax provisions are primarily driven by income in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss and other adjustments. Impairments and other charges recognized may not result in significant tax benefit due to our inability to forecast realization of the tax benefit of such losses. We routinely undergo tax examination in various jurisdictions. We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements. As of June 30, 2022, we anticipate that it is reasonably possible that our uncertain tax positions of $ 239 million may decrease by up to $ 13 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations. 15 Table of Contents