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Item 1. Financial Statements

2023-10-25 compared with 2023-07-26 · 130 added, 80 removed, 294 unchanged (42% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(Dollars and shares in millions, except per share amounts) 2023 2022 2023 2022

1 unchanged sentence

Products 508 422 1,433 1,175

Total Revenues 1,274 1,064 2,460 2,002

Total Revenue

1,313 1,120 3,773 3,122

Costs and Expenses:

10 unchanged sentences

Other Expense, Net ( 24 ) ( 14 ) ( 98 ) ( 62 )

Income (Loss) Before Income Taxes 74 24 193 ( 22 )

Income Tax Benefit (Provision) 16 ( 12 ) ( 22 ) ( 40 )

Income Before Income Taxes 164 63 357 41

Income Tax Provision ( 33 ) ( 26 ) ( 55 ) ( 66 )

Net Income (Loss) 131 37 302 ( 25 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(Dollars in millions) 2023

7 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars and shares in millions, except par value) June 30, 2023 December 31, 2022

(Dollars and shares in millions, except par value) September 30, 2023 December 31, 2022

Cash and Cash Equivalents $ 839 $ 910

Restricted Cash 107 202

Accounts Receivable, Net of Allowance for Credit Losses of $ 19 at June 30, 2023 and $ 26 at December 31, 2022

Accounts Receivable, Net of Allowance for Credit Losses of $ 15 at September 30, 2023 and $ 26 at December 31, 2022

Inventories, Net 776 689

1 unchanged sentence

Total Current Assets 3,220 3,043

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 825 at June 30, 2023 and $ 773 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 560 at June 30, 2023 and $ 480 at December 31, 2022

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 843 at September 30, 2023 and $ 773 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 597 at September 30, 2023 and $ 480 at December 31, 2022

Operating Lease Assets 132 115

15 unchanged sentences

Ordinary Shares - Par Value $ 0.001 ;

Authorized 1,356 shares, Issued and Outstanding 72 shares at June 30, 2023 and 71 at December 31, 2022

Authorized 1,356 shares, Issued and Outstanding 72 shares at September 30, 2023 and 71 at December 31, 2022

Capital in Excess of Par Value 2,900 2,928

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in millions) 2023 2022

1 unchanged sentence

Net Income (Loss) $ 302 $ ( 25 )

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

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

Depreciation and Amortization 244 265

2 unchanged sentences

Inventory Charges 11 30

Gain on Disposition of Assets ( 7 ) ( 14 )

Gain on Disposition of Assets and Businesses

( 11 ) ( 22 )

Deferred Income Tax Provision (Benefit) ( 67 ) 24

6 unchanged sentences

Other Assets and Liabilities, Net 105 13

Net Cash Provided by (Used in) Operating Activities 285 ( 4 )

Net Cash Provided by Operating Activities 457 156

Cash Flows From Investing Activities:

4 unchanged sentences

Other Investing Activities 20 6

Net Cash Provided by (Used in) Investing Activities ( 122 ) 7

Net Cash Used in Investing Activities ( 158 ) ( 22 )

Cash Flows From Financing Activities:

4 unchanged sentences

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 77 ) ( 15 )

Net Decrease in Cash, Cash Equivalents and Restricted Cash ( 190 ) ( 23 )

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 166 ) 30

Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,112 1,113

15 unchanged sentences

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.

In the opinion of management, the Condensed Consolidated Financial Statements reflect all 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.

3 unchanged sentences

Please refer to “Note 1 – Summary of Significant Accounting Policies” of our Consolidated Financial Statements from our 2022 Form 10-K for the discussion on our significant accounting policies.

Certain reclassifications have been made to these Condensed Consolidated Financial Statements and accompanying footnotes for the three and six months ended June 30, 2022 to conform to the presentation for the three and six months ended June 30, 2023.

Certain reclassifications have been made to these Condensed Consolidated Financial Statements and accompanying footnotes for the three and nine months ended September 30, 2022 to conform to the presentation for the three and nine months ended September 30, 2023.

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.

Table of Con t e n t s

2 – Segment Information

7 unchanged sentences

All other and corporate do not individually meet the criteria for segment reporting.

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

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

(Dollars in millions) 2023 2022 2023 2022

12 unchanged sentences

Share-Based Compensation ( 9 ) ( 5 ) ( 26 ) ( 18 )

Other (Charges) Credits ( 1 ) 14 4 ( 25 )

Other Credits (Charges)

Operating Income $ 218 $ 121 $ 604 $ 243

Table of Con t e n t s

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.

Revenue is 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.

1 unchanged sentence

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 rental revenues were $ 39 million and $ 72 million in the three and six months ended June 30, 2023, respectively, and $ 35 million and $ 66 million for the three and six months ended June 30, 2022, respectively.

The following table disaggregates our revenues from contracts with customers by geographic region and includes equipment rental revenues.

Equipment rental revenue is generally provided based on call-out work orders that include fixed per unit prices and derived from short-term contracts.

Equipment rental revenue was $ 37 million and $ 109 million in the three and nine months ended September 30, 2023, respectively, and $ 43 million and $ 109 million for the three and nine months ended September 30, 2022, respectively.

The following table disaggregates our revenue from contracts with customers by geographic area and includes equipment rental revenue.

North America in the table below consists of the U.S.

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

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

(Dollars in millions) 2023 2022 2023 2022

Revenues by Geographic Areas:

Revenue by Geographic Areas:

Middle East/North Africa/Asia $ 471 $ 354 $ 1,268 $ 1,014

2 unchanged sentences

Europe/Sub-Sahara Africa/Russia 216 189 640 533

Total Revenues $ 1,274 $ 1,064 $ 2,460 $ 2,002

Total Revenue

$ 1,313 $ 1,120 $ 3,773 $ 3,122

Contract Balances

The timing of our revenue recognition, billings and cash collections results in the recording of accounts receivable, contract assets, and contract liabilities.

The following table summarizes these balances as of June 30, 2023 and December 31, 2022:

(Dollars in millions) June 30, 2023 December 31, 2022

The following table summarizes these balances as of September 30, 2023 and December 31, 2022:

(Dollars in millions) September 30, 2023 December 31, 2022

Receivables for Product and Services in Accounts Receivable, Net $ 1,227 $ 954

5 unchanged sentences

Contract Liabilities in Other Non-Current Liabilities $ 3 $ —

Table of Con t e n t s

4 – Inventories, Net

Inventories, net of reserves of $ 126 million and $ 129 million as of June 30, 2023 and December 31, 2022, respectively, are presented by category in the table below:

(Dollars in millions) June 30, 2023 December 31, 2022

Inventories, net of reserves of $ 119 million and $ 129 million as of September 30, 2023 and December 31, 2022, respectively, are presented by category in the table below:

(Dollars in millions) September 30, 2023 December 31, 2022

Finished Goods $ 663 $ 601

3 unchanged sentences

Inventory charges were recognized in the following captions on our Condensed Consolidated Statements of Operations:

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

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

(Dollars in millions) 2023 2022 2023 2022

2 unchanged sentences

Total Inventory Charges $ — $ 6 $ 11 $ 30

Table of Con t e n t s

5 – Intangibles, Net

The components of intangible assets, net were as follows:

(Dollars in millions) June 30, 2023 December 31, 2022

Developed and Acquired Technology, Net of Accumulated Amortization of $ 419 at June 30, 2023 and $ 359 at December 31, 2022

Trade Names, Net of Accumulated Amortization of $ 141 at June 30, 2023 and $ 121 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 560 at June 30, 2023 and $ 480 at December 31, 2022

Amortization expense was $ 40 million and $ 80 million in the three and six months ended June 30, 2023, respectively, and $ 39 million and $ 78 million in the three and six months ended June 30, 2022, respectively, and was reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations.

(Dollars in millions) September 30, 2023 December 31, 2022

Developed and Acquired Technology, Net of Accumulated Amortization of $ 446 at September 30, 2023 and $ 359 at December 31, 2022

Trade Names, Net of Accumulated Amortization of $ 151 at September 30, 2023 and $ 121 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 597 at September 30, 2023 and $ 480 at December 31, 2022

Amortization expense was $ 37 million and $ 117 million in the three and nine months ended September 30, 2023, respectively, and $ 39 million and $ 117 million in the three and nine months ended September 30, 2022, respectively, and was reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations.

6 – Borrowings and Other Debt Obligations

(Dollars in millions) June 30, 2023 December 31, 2022

Current Portion of Finance Leases $ 16 $ 14

(Dollars in millions) September 30, 2023 December 31, 2022

Current Portion of 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes”

Current Portion of Finance Leases 16 14

Current Portion of 11.00 % Exit Notes due 2024 “Exit Notes”

Current Portion of Long-term Debt $ 91 $ 45

11.00 % Exit Notes due 2024 “Exit Notes”

6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes”

8.625 % Senior Notes due 2030 “2030 Senior Notes”

Long-term Portion Finance Leases 37 41

$ 1,587 $ 1,586

6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes”

Finance Leases

11.00 % Exit Notes due 2024 “Exit Notes”

Long-term Debt $ 1,864 $ 2,203

3 unchanged sentences

During 2023, we redeemed $ 20 million in principal of our Exit Notes in the first quarter and redeemed the remaining principal of $ 105 million in the second quarter.

Table of Con t e n t s

2028 Senior Secured Notes

2 unchanged sentences

On April 19, 2023, Weatherford Bermuda, the Company and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”), entered into a Second Supplemental Indenture relating to the 2028 Senior Secured Notes which amended the “Limitation on Restricted Payments” covenant to permit the purchase, repurchase, redemption, defeasance or other acquisition or retirement of the Exit Notes.

In the second quarter of 2023 and for the six months ended June 30, 2023, we repurchased $ 54 million and $ 96 million in principal, respectively, of our 2028 Senior Secured Notes.

At June 30, 2023, the carrying value represents the remaining unpaid principal of $ 396 million offset by unamortized deferred issuance cost of $ 9 million.

In the third quarter of 2023 and for the nine months ended September 30, 2023, we repurchased $ 72 million and $ 168 million in principal, respectively, of our 2028 Senior Secured Notes.

At September 30, 2023, the carrying value represents the remaining unpaid principal of $ 324 million offset by unamortized deferred issuance cost of $ 7 million.

At December 31, 2022, the carrying value represented unpaid principal of $ 492 million offset by unamortized deferred issuance cost of $ 10 million.

On October 23, 2023, we redeemed $ 50 million in aggregate principal of our 2028 Senior Secured Notes for a redemption price of 103.00 % plus accrued and unpaid interest.

Since the third quarter of 2023, we also repurchased an additional $ 25 million in principal through the date of this report.

2030 Senior Notes

2 unchanged sentences

On December 1, 2022, the indenture related to our 2030 Senior Notes was amended and supplemented to add Weatherford Delaware as co-issuer and co-obligor, and concurrently releases the guarantee of Weatherford Delaware.

At June 30, 2023 and December 31, 2022, the carrying value represents the remaining unpaid principal of $ 1.6 billion offset by unamortized deferred issuance cost of $ 14 million in each period, respectively.

At September 30, 2023, the carrying value represents the remaining unpaid principal of $ 1.6 billion offset by unamortized deferred issuance of $ 13 million.

At December 31, 2022, the carrying value represented the remaining unpaid principal of $ 1.6 billion offset by unamortized deferred issuance cost of $ 14 million.

Credit Agreement

5 unchanged sentences

The obligations under the Credit Agreement are guaranteed by the Company and certain of our subsidiaries and secured by substantially all of the personal property of the Company and those subsidiaries.

As of June 30, 2023, we had $ 385 million of letters of credit outstanding, consisting of the $ 250 million under the Credit Agreement and another $ 135 million under various uncommitted bi-lateral facilities (of which there was $ 128 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

On October 24, 2023, we further amended our Credit Agreement, the details of which are discussed in “Note 12 - Subsequent Events”.

As of September 30, 2023, we had $ 379 million of letters of credit outstanding, consisting of the $ 272 million under the Credit Agreement and another $ 107 million under various uncommitted bi-lateral facilities (of which there was $ 101 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

As of December 31, 2022, we had $ 395 million of letters of credit outstanding, consisting of the $ 195 million under the Credit Agreement and another $ 200 million under various uncommitted bi-lateral facilities (of which there was $ 199 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

As of June 30, 2023 and December 31, 2022, our revolving loan capacity available was $ 45 million, respectively.

As of September 30, 2023 and December 31, 2022, our revolving loan capacity available was $ 45 million, respectively.

As mentioned above, on October 24, 2023, we further amended our Credit Agreement, the details of which are discussed in “Note 12 - Subsequent Events”.

Accrued Interest

As of June 30, 2023 and December 31, 2022, we had accrued interest of approximately $ 19 million and $ 22 million, respectively, in “Other Current Liabilities” primarily related to our outstanding debt as of the respective dates.

As of September 30, 2023 and December 31, 2022, we had accrued interest of approximately $ 46 million and $ 22 million, respectively, in “Other Current Liabilities” primarily related to our outstanding debt as of the respective dates.

Table of Con t e n t s

The carrying value of our short-term borrowings approximates their fair value due to their short maturities.

1 unchanged sentence

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 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 (excluding finance leases).

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

11 unchanged sentences

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, 2023 and December 31, 2022 were $ 46 million and $ 41 million, respectively.

Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 were $ 36 million and $ 41 million, respectively.

GAMCO Shareholder Litigation

11 unchanged sentences

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

Table of Con t e n t s

8 – Shareholders’ Equity

The change in shares issued and outstanding on our Condensed Consolidated Balance Sheets from 71 million as of December 31, 2022 to 72 million as of June 30, 2023, was due to equity awards granted, vested, and exercised, net of shares withheld for taxes.

The following summarizes our shareholders’ equity activity for the three and six months ended June 30, 2023 and 2022:

The change in shares issued and outstanding on our Condensed Consolidated Balance Sheets from 71 million as of December 31, 2022 to 72 million as of September 30, 2023, was due to equity awards granted, vested, and exercised, net of shares withheld for taxes.

The following summarizes our shareholders’ equity activity for the three and nine months ended September 30, 2023 and 2022:

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

4 unchanged sentences

Net Income — 72 — 9 81

Dividends to Noncontrolling Interests — — — ( 6 ) ( 6 )

Distributions to Noncontrolling Interests

— — — ( 6 ) ( 6 )

Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes ( 43 ) — — — ( 43 )

3 unchanged sentences

Net Income — 82 — 8 90

Distributions to Noncontrolling Interests

Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes 6 — — — 6

2 unchanged sentences

2,891 ( 2,217 ) ( 29 ) 27 672

Net Income — 123 — 8 131

Distributions to Noncontrolling Interests

— — — ( 15 ) ( 15 )

Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes

Other Comprehensive Loss — — ( 35 ) — ( 35 )

Other — — — 1 1

Balance at September 30, 2023

2,900 ( 2,094 ) ( 64 ) 21 763

Table of Con t e n t s

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

Deficit Accumulated

Comprehensive Income (Loss) Noncontrolling Interests Total Shareholders’ Equity

Balance at December 31, 2021

5 unchanged sentences

Net Income — 6 — 6 12

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

Distributions to Noncontrolling Interests

— — — ( 11 ) ( 11 )

Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes 5 — — — 5

2 unchanged sentences

2,913 ( 2,471 ) 24 25 491

The following table presents the changes in our accumulated other comprehensive income (loss) by component for the six months ended June 30, 2023 and 2022:

Other Comprehensive Loss — — ( 51 ) — ( 51 )

Distributions to Noncontrolling Interests

— — — ( 9 ) ( 9 )

Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes

Other 6 — — ( 6 ) —

Balance at September 30, 2022

2,923 ( 2,443 ) ( 27 ) 19 472

The following table presents the changes in our accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2023 and 2022:

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

2 unchanged sentences

Other Comprehensive Loss ( 42 ) — ( 42 )

Balance at June 30, 2023

Balance at September 30, 2023

$ ( 83 ) $ 19 $ ( 64 )

2 unchanged sentences

Other Comprehensive Income 8 — 8

Balance at June 30, 2022

Balance at September 30, 2022

$ ( 28 ) $ 1 $ ( 27 )

Table of Con t e n t s

9 – 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 securities that could potentially dilute income (loss) per share in the future, which are excluded from the computation as their impact was antidilutive.

These include potential ordinary shares issuable for restricted share units, performance share units, phantom restricted share units, and outstanding warrants.

Our basic and dilutive weighted average shares outstanding for periods presented with a net loss are equivalent as the inclusion of potential dilutive securities is 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,

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

(Dollars and shares in millions, except per share amounts) 2023 2022 2023 2022

1 unchanged sentence

Basic Weighted Average Shares Outstanding 72 71 72 71

Dilutive Effect of Awards Granted in Stock Incentive Plans 1 2 1 —

Dilutive Effect of Awards Granted in Stock Incentive Plan

Diluted Weighted Average Shares Outstanding 74 72 74 71

Basic Income (Loss) per Share $ 1.70 $ 0.39 $ 3.85 $ ( 0.65 )

Diluted Income (Loss) per Share $ 1.66 $ 0.39 $ 3.76 $ ( 0.65 )

Antidilutive Shares:

Basic Income (Loss) Per Share Attributable to Weatherford $ 1.14 $ 0.08 $ 2.14 $ ( 1.04 )

Diluted Income (Loss) Per Share Attributable to Weatherford $ 1.12 $ 0.08 $ 2.11 $ ( 1.04 )

Equity Awards

Total Antidilutive Shares 8 8 9 9

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 securities that could potentially dilute income (loss) per share in the future, which are excluded from the computation as their impact was antidilutive.

Our basic and dilutive weighted average shares outstanding for the period presented with a net loss are equivalent as the inclusion of potential dilutive securities is antidilutive.

Warrants to purchase 7.8 million ordinary shares at $ 99.96 per share were issued on December 13, 2019.

As of September 30, 2023, substantially all of the warrants remain outstanding and will expire on December 13, 2023.

These were excluded from the diluted weighted average shares outstanding as the exercise price of the warrants was greater than the average market price of the Company’s ordinary shares or excluded in the period in which the company incurred a net loss.

Table of Con t e n t s

10 – Income Taxes

1 unchanged sentence

We believed the change was appropriate as we are more reliably able to calculate the estimated annual effective tax rate due to sustained profitability and confidence in future earnings.

This method is applied for the three and six months ended June 30, 2023.

For the three and six months ended June 30, 2022, we determined our quarterly tax provision using the year-to-date effective tax rate method because the estimated annual approach was not reliable given that small changes in estimated ordinary annual income resulted in significant changes in our estimated annual effective tax rate.

In the three months ended June 30, 2023, we recognized a tax benefit of $ 16 million and for the six months ended June 30, 2023, we recognized a tax expense of $ 22 million, compared to the three and six months ended June 30, 2022 where we recognized tax expense of $ 12 million and $ 40 million, respectively.

This method is applied for the three and nine months ended September 30, 2023.

For the three and nine months ended September 30, 2022, we determined our quarterly tax provision using the year-to-date effective tax rate method because the estimated annual approach was not reliable given that small changes in estimated ordinary annual income resulted in significant changes in our estimated annual effective tax rate.

We recognized a tax expense of $ 33 million and $ 55 million for the three and nine months ended September 30, 2023, respectively, compared to the three and nine months ended September 30, 2022 where we recognized tax expense of $ 26 million and $ 66 million, respectively.

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.

3 unchanged sentences

This is partially offset by the utilization of previously unbenefited deferred tax assets, such as net operating loss carryforwards.

During the three and six months ended June 30, 2023, income tax expense was lower by $ 67 million, respectively, due to the release of valuation allowances and the recognition of a benefit from previously uncertain tax positions in the second quarter.

Those benefits were offset by the establishment of valuation allowance of approximately $ 20 million related to the $ 57 million loss on the sale of Blue Chip Swap securities in Argentina, further described in the following footnote.

During the three and six months ended June 30, 2022, income tax expense was lower by $ 27 million, respectively, due the recognition of a benefit from previously uncertain tax positions.

During the nine months ended September 30, 2023, income tax expense was lower by $ 67 million due to the release of valuation allowances and the recognition of a benefit from previously uncertain tax positions in the second quarter.

Those benefits were offset by the establishment of a valuation allowance of approximately $ 20 million related to the $ 57 million loss on the sale of Blue Chip Swap securities in Argentina, further described in the following footnote.

During the nine months ended September 30, 2022, income tax expense was lower by $ 27 million, due the recognition of a benefit from previously uncertain tax positions.

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, 2023, we anticipate that it is reasonably possible that our uncertain tax positions of $ 257 million, including interest and penalties, may decrease by up to $ 5 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

As of September 30, 2023, we anticipate that it is reasonably possible that our uncertain tax positions of $ 262 million, including interest and penalties, may decrease by up to $ 12 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

11 – Blue Chip Swap Securities - Argentina

4 unchanged sentences

dollars in Argentina and to remit cash from our Argentine operations.

During the second quarter of 2023 we utilized an indirect foreign exchange mechanism known as a Blue Chip Swap (“BCS”) to remit U.S.

An indirect foreign exchange mechanism known as a Blue Chip Swap (“BCS”) allows entities to remit U.S.

dollars from Argentina through the purchase and sale of BCS securities.

The transactions were completed at implied exchange rates (“BCS rates”) that were approximately 106 % higher than the official exchange rate resulting in a loss of $ 57 million during the second quarter of 2023.

No BCS transactions were executed during the third quarter of 2023.

During the second quarter of 2023, we completed a series of BCS transactions at implied exchange rates (“BCS rates”) that were approximately 106 % higher than the official exchange rate resulting in a loss of $ 57 million during the second quarter of 2023.

We continue to use the official exchange rate for remeasurement of our Argentine peso-denominated net monetary assets under U.S.

GAAP as the BCS rate does not meet the criteria for remeasurement under U.S.

GAAP as the BCS rates do not meet the criteria for remeasurement under U.S.

Table of Con t e n t s

12 – Subsequent Events

On October 23, 2023, we redeemed $ 50 million in aggregate principal of our 2028 Senior Secured Notes for a redemption price of 103.00 %, plus accrued and unpaid interest.

On October 24, 2023, we amended the Credit Agreement to (i) allow for an increase in total commitment amount from $ 400 million to $ 550 million ($ 250 million for performance letters of credit and $ 300 million for either borrowings or additional performance or financial letters of credit), (ii) extend maturity to October 24, 2028, subject to certain conditions, (iii) allow for dividends, share buybacks, and acquisitions which combined with other permitted transactions, are not to exceed a total net leverage ratio of 2.00 to 1.00 and an aggregate liquidity not less than $ 400 million, and (iv) remove the minimum book value of assets requirement.

Table of Con t e n t s

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements