Segment Information

Reporting Segments

At the end of the third quarter of 2017, changes to the Company’s organization structure were internally announced by the Company’s management. During the fourth quarter of 2017, the Company's chief operating decision maker (its chief executive officer) changed the information he regularly reviews to allocate resources and assess performance. Implementation of these changes commenced in the beginning of the fourth quarter of 2017, and, as a result, we realigned our reporting segments into two reportable segments which are the Western Hemisphere segment and Eastern Hemisphere segment. Our Western Hemisphere segment represents the prior North America and Latin America segments as well as land drilling rigs operations in Colombia and Mexico. Our Eastern Hemisphere segment represents the prior MENA/Asia Pacific segment and Europe/SSA/Russia segment as well as land drilling rigs operations in the Eastern Hemisphere. Research and Development expenses are now included in the results of our Western and Eastern Hemisphere segments. We have revised our segment reporting to reflect our current management approach and recast prior periods to conform to the current segment presentation.

These reportable segments are based on management’s organization and view of Weatherford’s business when making operating decisions and assessing performance. The purpose of the change is to flatten the organization structure, reduce our costs and accelerate decision-making processes. Our corporate and other expenses that do not individually meet the criteria for segment reporting continue to be reported separately as Corporate expenses.

Financial information by segment is summarized below. Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services. The accounting policies of the segments are the same as those described in “Note 1 – Summary of Significant Accounting Policies.” Included in the 2016 and 2015 income (loss) from operations in the Eastern Hemisphere are losses related to our Zubair project in Iraq accounted for under the percentage-of-completion method as described in “Note 5 – Percentage of Completion Contracts.”



	Year Ended December 31, 2017
(Dollars in millions)	Net Operating Revenues		Income (Loss) from Operations			Depreciation and Amortization		Capital Expenditures
Western Hemisphere	$	2,937	$	(115	)	$	352	$	70
Eastern Hemisphere	2,762		(143		)	443		130
	5,699		(258		)	795		200
Corporate General and Administrative			(130		)	6		25
Long-Lived Asset Impairments, Write-Downs and Other Charges ^(a)			(1,664		)
Restructuring Charges ^(b)			(183		)
Litigation Charges, Net			10
Gain from Disposition of U.S. Pressure Pumping Assets ^(c)			96
Total	$	5,699	$	(2,129	)	$	801	$	225


(a)	During 2017, impairments, asset write-downs and other include $928 million in long-lived asset impairments (of which $740 million relates to the write-down to the lower of carrying amount or fair value less cost to sell of our land drilling rigs assets classified as held for sale), $506 million of asset write-downs, charges and credits and $230 million in the write-down of Venezuelan receivables.


(b)	Includes restructuring charges of $183 million: $70 million in Western Hemisphere, $77 million in Eastern Hemisphere and $36 million in Corporate.


(c)	In the fourth quarter of 2017, we recognized a gain on the disposition of our U.S. pressure pumping and pump-down perforating assets.



	Year Ended December 31, 2016
(Dollars in millions)	Net Operating Revenues		Loss from Operations			Depreciation and Amortization		Capital Expenditures
Western Hemisphere	$	2,942	$	(409	)	$	446	$	55
Eastern Hemisphere	2,807		(160		)	501		134
	5,749		(569		)	947		189
Corporate General and Administrative			(139		)	9		15
Long-Lived Asset Impairment and Other Related Charges ^(d)			(1,043		)
Restructuring Charges ^(e)			(280		)
Litigation Charges			(220		)
Total	$	5,749	$	(2,251	)	$	956	$	204


(d)	Includes $710 million related to long-lived asset impairments, asset write-downs, receivable write-offs and other charges and credits, $219 million in inventory write-downs and $114 million of pressure pumping related charges.


(e)	Includes restructuring charges of $280 million: $153 million in the Western Hemisphere, $75 million in the Eastern Hemisphere and $52 million in Corporate.



	Year Ended December 31, 2015
(Dollars in millions)	Net Operating Revenues		Income (Loss) from Operations^(f)			Depreciation and Amortization		Capital Expenditures
Western Hemisphere	$	5,276	$	(180	)	$	621	$	390
Eastern Hemisphere	4,157		27			563		273
	9,433		(153		)	1,184		663
Corporate General and Administrative			(194		)	16		19
Long-Lived Asset Impairments ^(g)			(768		)
Goodwill Impairment			(25		)
Restructuring Charges ^(h)			(232		)
Litigation Charges			(116		)
Loss on Sale of Businesses, Net			(6		)
Other Items ⁽ⁱ⁾			(52		)
Total	$	9,433	$	(1,546	)	$	1,200	$	682

(f)

Includes inventory write-downs of $223 million attributable to the reporting segments as follows: $127 million in the Western Hemisphere and $96 million in the Eastern Hemisphere. Also includes bad debt expense of $48 million of which $31 million was taken in the fourth quarter attributable to our reporting segments as follows: $29 million in the Western Hemisphere and $19 million in the Eastern Hemisphere.


(g)	Includes $638 million of long-lived asset impairment charges, supply agreement charges related to a non-core business divestiture of $67 million, and pressure pumping related charges of $63 million.


(h)	Includes restructuring charges of $232 million: $94 million in the Western Hemisphere, $123 million in the Eastern Hemisphere and $15 million in Corporate.


(i)	Includes $17 million in professional and other fees, $11 million in divestiture related charges and facility closures and $24 million in other charges.

The following table presents total assets by segment at December 31:



	Total Assets at December 31,
(Dollars in millions)	2017		2016
Western Hemisphere	$	4,933	$	6,167
Eastern Hemisphere	4,311		5,491
Corporate	503		1,006
Total	$	9,747	$	12,664

Total assets in the United States, part of our Western Hemisphere segment, were $2.9 billion and $3.3 billion as of December 31, 2017 and 2016, respectively.

Products and Services

We are one of the world’s leading providers of equipment and services used in the production, completion, drilling and evaluation, and well construction of oil and natural gas wells. The composition of our consolidated revenues by product service line group is as follows:



	Year Ended December 31,
	2017		2016		2015
Production	26	%	29	%	29	%
Completions	22		20		20
Drilling and Evaluation	24		22		22
Well Construction	28		29		29
Total	100	%	100	%	100	%

Geographic Areas

Financial information by geographic area within the hemispheres is summarized below. Revenues from customers and long-lived assets in Ireland were nil in each of the years presented. Long-lived assets exclude goodwill and intangible assets as well as deferred tax assets of $36 million and $81 million at December 31, 2017 and 2016, respectively.



	Revenues						Long-lived Assets
(Dollars in millions)	2017		2016		2015		2017		2016
United States	$	1,555	$	1,523	$	2,864	$	870	$	1,008
Latin America	890		1,064		1,782		575		903
Canada	492		355		630		118		140
Western Hemisphere	$	2,937	$	2,942	$	5,276	$	1,563	$	2,051

Middle East & North Africa	$	1,464	$	1,513	$	1,843	$	528	$	1,595
Europe/Sub-Sahara Africa/Russia	999		939		1,613		532		629
Asia	299		355		701		270		354
Eastern Hemisphere	$	2,762	$	2,807	$	4,157	$	1,330	$	2,578

Total	$	5,699	$	5,749	$	9,433	$	2,893	$	4,629