e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the
fiscal year ended December 31,
2010
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number 1-34258
WEATHERFORD INTERNATIONAL
LTD.
(Exact name of registrant as
specified in its charter)
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Switzerland
(State or other jurisdiction
of
incorporation or organization)
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98-0606750
(IRS Employer Identification
No.)
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4-6 Rue Jean-Francois Bartholoni,
1204 Geneva, Switzerland
(Address of principal
executive offices)
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Not Applicable
(Zip Code)
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Registrants telephone number, including area code:
41.22.816.1500
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Name of each exchange on which registered
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Registered Shares, par value 1.16 Swiss francs per share
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act.
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
The aggregate market value of the voting stock held by
nonaffiliates of the registrant as of June 30, 2010 was
approximately $9 billion based upon the closing price on
the New York Stock Exchange as of such date.
As of March 2, 2011, there were 742,121,086 shares of
Weatherford registered shares, 1.16 Swiss francs par value per
share, outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Certain information called for by Items 10, 11, 12, 13 and
14 of Part III of this Annual Report on
Form 10-K
will be included in an amendment to this
Form 10-K
or incorporated by reference from the registrants
definitive proxy statement for the annual shareholder meeting to
be held on May 25, 2011.
Weatherford
International Ltd.
Form 10-K
for the Year Ended December 31, 2010
Table of
Contents
Explanatory
Note
This Form 10-K includes restated financial information for the
years ended December 31, 2009, 2008 and 2007, and the
quarterly periods ended March 31, June 30 and
September 30, 2010, and all four quarters of 2009 due to
errors in the Companys accounting for income taxes. The
Companys management identified a related material weakness
with respect to its internal control over financial reporting
for income taxes. Disclosures related to these matters are
included in Part I, Item 9A, under Controls and
Procedures, which describes the material weakness and
managements conclusion that our internal control over
financial reporting was not effective as of December 31,
2010. Corresponding changes were also made in Part I,
Item 1A, under Risk Factors; Part II,
Item 6, under Selected Financial Data;
Part II, Item 7, under Managements
Discussion and Analysis of Results of Operations and Financial
Condition; and Part II, Item 8, under
Financial Statements and Supplementary Data (see
Notes 2, 17, 20, 21 and 23).
PART I
Weatherford International Ltd. (the Company) is one
of the worlds leading providers of equipment and services
used in the drilling, evaluation, completion, production and
intervention of oil and natural gas wells. Many of our
businesses, including those of our predecessor companies, have
been operating for more than 50 years.
We were originally incorporated in Delaware in 1972 and moved
our incorporation to Bermuda in 2002. In February 2009, we
completed a share exchange transaction in which Weatherford
International Ltd., a Bermuda exempted company
(Weatherford Bermuda), became a wholly-owned
subsidiary of Weatherford International Ltd., a Swiss
joint-stock corporation (Weatherford Switzerland),
for purposes of changing the Companys place of
incorporation from Bermuda to Switzerland (collectively, the
Transaction). Pursuant to the Transaction, each
common share, par value U.S. $1.00 per share, of
Weatherford Bermuda was exchanged for one registered share, par
value 1.16 Swiss francs (CHF) per share, of
Weatherford Switzerland.
When referring to Weatherford and using phrases such as
we and us, our intent is to refer to
Weatherford International Ltd. and its subsidiaries as a whole
or on a regional basis, depending on the context in which the
statements are made.
We operate in over 100 countries, which are located in nearly
all of the oil and natural gas producing regions in the world.
Our operational performance is reviewed and managed on a
geographic basis, and we report the following regions as
reporting segments: (1) North America, (2) Latin
America, (3) Europe/West Africa/the former Soviet Union
(FSU) and (4) Middle East/North Africa/Asia.
Our headquarters are located at 4-6 Rue Jean-Francois
Bartholoni, 1204 Geneva, Switzerland and our telephone number at
that location is 41.22.816.1500. Our internet address is
www.weatherford.com. General information about us, including our
corporate governance policies and charters for the committees of
our board of directors, can be found on our web site. On our web
site we make available, free of charge, our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after we electronically file or furnish
them to the Securities and Exchange Commission
(SEC). The public may read and copy any materials we
have filed with the SEC at the SECs Public Reference Room
at 100 F Street, NE, Room 1580, Washington, DC
20549. Information on the operation of the Public Reference Room
may be obtained by calling the SEC at
1-800-SEC-0330.
The SEC maintains an internet site that contains our reports,
proxy and information statements, and our other SEC filings. The
address of that site is www.sec.gov.
The following is a summary of our business strategies and the
markets we serve. We have also included a description of our
products and services offered and our competitors. Segment
financial information appears in Item 8. Financial
Statements and Supplementary Data Notes to
Consolidated Financial Statements Note 20.
Strategy
Our primary objective is to provide our shareholders with
above-average returns on their investment through income growth.
Principal components of our strategy include:
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Continuously improving the efficiency, productivity and quality
of our products and services and their respective delivery in
order to grow revenues and operating margins in all of our
geographic markets at a rate exceeding underlying market
activity;
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Through a commitment to innovation and invention, developing and
commercializing new products and services capable of meeting
evolving needs of our customers; and
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Further extending our global infrastructure in scope and scale
at a level consistent with meeting customer demand for our
products and services in an efficient manner.
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Markets
We are a leading provider of equipment and services to the oil
and natural gas exploration and production industry. Demand for
our industrys services and products depends upon the
number of oil and natural gas wells being drilled, the depth and
drilling conditions of wells, the number of well completions and
the level of workover activity worldwide.
As a result of the maturity of the worlds oil and natural
gas reservoirs, accelerating production decline rates and the
focus on complex deepwater prospects, technology has become
increasingly critical to the marketplace. Clients continue to
seek, test and prove production-enabling technologies at an
increasing rate. Technology is an important aspect of our
products and services as it helps us provide our clients with
more efficient tools to find and produce oil and natural gas. We
have invested a substantial amount of our time and resources in
building our technology offerings. We believe our products and
services enable our clients to reduce their costs of drilling
and production
and/or
increase production rates. Furthermore, these offerings afford
us additional opportunities to sell our traditional core
products and services to our clients.
Product
Offerings
Within each of our geographic reporting segments, we group our
product offerings into ten service lines: 1) artificial
lift systems; 2) drilling services; 3) well
construction; 4) drilling tools; 5) completion
systems; 6) wireline and evaluation services;
7) re-entry and fishing; 8) stimulation and chemicals;
9) integrated drilling; and 10) pipeline and specialty
services. The following discussion provides an overview of our
various product offerings. With the exception of integrated
drilling, our service line offerings are provided in all of our
geographic segments. Our integrated drilling service line is
offered only outside of North America.
Artificial
Lift Systems
Artificial lift systems are installed in oil wells and, to a
lesser extent, natural gas wells that do not have sufficient
reservoir pressure to raise the produced hydrocarbon to the
surface. These systems supplement the natural reservoir
pressures to produce oil or natural gas from the well. There are
six principal types of artificial lift technologies used in the
industry. We are able to provide all forms of lift, including
progressing cavity pumps, reciprocating rod lift systems, gas
lift systems, hydraulic lift systems, plunger lift systems,
hybrid lift systems, and electric submersible systems, which are
sold through our equity investment partner. We also offer
wellhead systems and production optimization.
Progressing Cavity Pumps A progressing cavity
pump (PCP) is a downhole pump driven by an above-ground electric
motor system connected to it by a coupled rod or continuous rod
string. PCPs are particularly useful in heavy-oil-producing
basins around the world.
Reciprocating Rod Lift Systems A
reciprocating rod lift system is an artificial lift pumping
system that uses an above-ground mechanical unit connected to a
sucker rod and a downhole pump. It uses an
up-and-down
suction pump to lift the oil from the reservoir.
Gas Lift Systems Gas lift is a form of
artificial lift that uses natural gas to lift oil in a producing
reservoir to the surface. The process of gas lift involves the
injection of natural gas into the well through an above-ground
injection system and a series of downhole mandrels and gas lift
valves in the production tubing string. The injected gas
lightens the pressure of the fluid in the well bore, allowing
the reservoirs natural pressure to push the fluid to the
surface in wells that have stopped producing and allowing
greater volume in already producing wells. Gas lift systems are
used primarily for offshore wells (including deepwater and
ultra-deepwater) and for wells that have a high component of gas
in the produced fluid or have a gas supply near the well.
Hydraulic Lift Systems A hydraulic lift oil
pumping system uses an above-ground surface power unit to
operate a downhole hydraulic pump (jet or piston) to lift oil
from the reservoir. Hydraulic pumps are well suited for wells
with high volumes and low solids.
Plunger Lift Systems Plunger lift is the only
artificial lift method that requires no assistance from outside
energy sources. The typical system consists of a plunger (or
piston), top and bottom bumper springs, a lubricator and
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a surface controller. By using the energy from the compressed
gas in the well, the plunger travels to the surface, creating a
solid interface between the lifted gas below and produced fluid
above to maximize lift energy. Plunger lift is a low-cost,
easily maintained method of lift. It is particularly useful for
dewatering gas wells and increasing production from wells with
emulsion problems.
Hybrid Lift Systems We offer a variety of
hybrid artificial lift systems which are engineered for special
applications and may incorporate two or more of the artificial
lift methods described above.
Wellhead Systems We offer a line of
conventional wellhead equipment and valves manufactured to the
latest API industry specifications and client requirements,
including conventional surface wellheads through 20,000 psi;
gate valves from 2,000 to 20,000 psi; complete wellhead systems
(drill-through, multi-bowl, unitized and mud-line); and all the
accessories and aftermarket services to go with them. Wellhead
tools are used by drilling and workover crews to reduce time in
changing wellhead sizes while fundamentally increasing safety
procedures.
Production Optimization Production
optimization is the process of monitoring oil and natural gas
fields, and interpreting the resulting data to inform production
and reservoir management decisions. The ultimate goal is to
assist operators in making better decisions that maximize
profits through improved optimized well production and maximized
reservoir recovery. The major benefits of production
optimization are increased production with lower operating costs
resulting in improved bottom-line profits for producers.
Weatherford offers products for optimizing at the well,
reservoir and field level. Downhole and surface electronics,
communication systems, analysis software and consulting services
are combined into solutions that fit the customers
specific needs for optimizing production.
Well Optimization For wellsite intelligence,
we offer specific controllers for each type of artificial lift.
These controllers contain computers with specific logic to
control the well in response to changes in the reservoir,
artificial-lift equipment or well characteristics. The desktop
software provides advanced analytical tools that allow the
operator to make changes by controlling the well directly or by
changing the parameters that the controller is using to operate
the well. Our clients have the option of hosting the software
system at their location or using an on-line version that
provides status reports
and/or
analysis reports from our consultants.
Flow Measurement We provide multiphase
metering systems that measure how much fluid is flowing in a
well. These systems also measure the percentages of oil and
water in the fluid. Expanded development of our water-cut meter
technology helps us provide clients with accurate measurement
for wells that span wide levels of gas, salt and solids that
normally would interfere with the water cut measurement.
Field Optimization - We provide tools for optimizing
workflow. These software tools assist the operator in tracking
the operations needed for optimal field management. Tasks such
as chemical injection, well workovers and allocation of
injection gas can easily generate unnecessary expenses by
inefficient prioritization of tasks, poor recordkeeping and lack
of analysis of the effectiveness of the total field operations.
The combination of our experienced consultants and advanced
software tools help the operator optimize operations for entire
fields.
Deepwater Our subsea production control
system simplifies subsea operations by providing open systems
for control, communications, and data management that can work
with all existing and new subsea wells. Traditionally, wells are
single sourced with a proprietarily communication system. This
method can slow down production and increase costs if
technologies other than the single-sourced providers are
added or merged. By making our systems open, operators can
benefit by a reduction in downtime, an increase in production
and explanation of subsea fields, and an ability to retrofit
designs into existing operations. Our open-system approach also
creates pull through opportunities for our control systems,
reservoir monitoring, flow measurement, and software systems.
Drilling
Services
These capabilities include directional drilling, Secure
Drillingsmservices,
Well Testing, drilling-with-casing
(DwCtm)
and drilling-with-liner
(DwLtm)
systems and surface logging systems.
Directional drilling involves the personnel, equipment and
engineering required to actively control the direction of a
wellbore and its eventual optimal position in the target
reservoir. Directional drilling allows drilling of
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multiple wells from a single offshore platform or a land-based
pad site. It also allows drilling of horizontal wells and
penetration of multiple reservoir pay zones from a single
wellbore. We supply a range of specialized, patented equipment
for directional drilling, and real-time wellbore logging,
including:
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Measurement while drilling (MWD) and logging while drilling
(LWD) MWD and LWD measure, respectively,
wellbore trajectory and formation properties, in real time,
while the well is being drilled, to enable it to be steered into
its optimum position.
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Rotary steerable systems (RSS) These systems
allow control of wellbore trajectory while maintaining
continuous rotation of the drillstring at the surface. RSS
technology is crucial for enabling long, step-out, directional
wells and for reducing completion-running complications
resulting from abrupt small-scale hole-angle changes caused by
conventional drilling methods.
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Directional drilling services These services
include surveying, design and operational support for
directional and horizontal drilling and performance drilling in
vertical wells; products include drilling motors and other
associated equipment, software and expertise required to deliver
the well on target as efficiently as possible.
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Our directional drilling capabilities are supported by our
engineering facilities in Houston and other locations globally,
which house and support qualified engineers, scientists and
technicians, all focused on developing technologies for the
MWD/LWD and directional drilling markets, both land based and
offshore.
Secure
DrillingSMservices
Our Secure Drilling services minimize the risk of
drilling hazards related to a wellbores pressure profile,
and optimize
life-of-well
performance. Weatherfords Secure Drilling offerings
are provided through three techniques: 1) Managed Pressure
Drilling, 2) Underbalanced Drilling and 3) Air
Drilling.
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Managed Pressure Drilling (MPD) This
technique provides an advanced method of controlling the well
using a closed, pressurized fluid system that more precisely
controls the wellbore pressure profile than mud weight
adjustments alone. The main objective of MPD is to optimize
drilling processes by decreasing non-productive time and
mitigating drilling hazards.
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Underbalanced Drilling (UBD) This technique
is used in development, exploration and mature field
applications to minimize formation damage and maximize
productivity. UBD is drilling with bottomhole pressure that is
maintained below reservoir pressure to intentionally invite
fluid influx. This technique permits the reservoir to flow while
drilling takes place, thereby improving well productivity by
protecting the formation from damage by the drilling fluids.
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Air Drilling This technique applies reduced
density fluid systems to drill
sub-hydrostatically.
Air drilling is used primarily in hard rock applications to
reduce drilling costs by increasing the rate of penetration.
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A full range of downhole equipment, such as high temperature
motors, wireline steering tools, drillpipe, air rotary hammer
drills, casing exit systems, downhole deployment valves and
downhole data acquisition equipment, make our product offerings
unique.
Well Testing Well testing uses specialized
equipment and procedures to obtain essential information about
oil and gas wells after the drilling process has been completed.
Typical information derived may include reservoir boundaries,
reservoir pressure, formation permeability, formation porosity
and formation fluid composition.
A related application is our separation business, which supplies
personnel and equipment on a wellsite to recover a mixture of
solids, liquids and gases from oil and gas wells. These services
are used during drilling, after stimulation or after
re-completion to clean up wells. The operator requires that a
well be properly cleaned before undertaking a well test to
ensure that the true deliverability of the well is attained and
that debris and spent stimulation chemicals do not ultimately
flow to the process plant.
Drilling-with-casing and drilling-with-liner
systems These systems allow operators to
simultaneously drill and case oil and natural gas wells. Our
DwC and DwL techniques eliminate downhole
complexity, reducing expensive rig modifications and the number
of trips downhole. Consequently, drilling hazards are mitigated,
well construction is simplified, and productivity can be
improved when drilling through the reservoir.
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Surface Logging Systems Often referred to as
mud logging, this is a well-site service that uses fluid and gas
samples along with drilling cuttings to evaluate the geology and
geo chemistry of the formation as it is being drilled. The
derived data and interpretation is used to help geologists and
drillers ensure that the well is placed in the most productive
formation to maximize ultimate well productivity.
Well
Construction
This grouping includes the primary services and products
required to construct a well and spans tubular running services,
cementation tools, liner systems, solid tubular expandable
technologies and aluminum alloy tubular products.
Tubular Running Services These services
consist of a wide variety of tubular connection and installation
services for the drilling, completion and workover of an oil or
natural gas well. We provide tubular handling, preparation,
inspection and wellsite installation services from a single
source. We offer a suite of products and services for improving
rig floor operations by reducing personnel exposure, increasing
operational efficiency and improving safety. We also specialize
in critical-service installations where operating conditions,
such as downhole environments
and/or
metallurgical characteristics, call for specific handling
technology.
Cementing Products Cementing operations
comprise one of the most expensive phases of well completion. We
produce specialized equipment that allows operators to
centralize the casing throughout the wellbore and control the
displacement of cement and other fluids. Our cementing engineers
also analyze complex wells and provide recommendations to help
optimize cementing results.
Liner Systems Liner hangers allow suspension
of strings of casing within a wellbore without the need to
extend the casing to the surface. Most directional wells include
one or more liners to optimize casing programs. We offer both
drilling and production liner hangers. Drilling liners are used
to isolate areas within the well during drilling operations.
Production liners are used in the producing area of the well to
support the wellbore and to isolate various sections of the well.
Swellable Products Weatherford has combined
swellable elastomer technologies with our packers and
centralization technology to address well construction
challenges. Our
Micro-Sealtm
isolation system combines swellable technology with mechanical
cementing products to isolate microannular voids or discrete
reservoir intervals in oil, gas and injection wells. We have
introduced four main swellable packers offering
Genisis®,
Nemisis®,
Morphisis®,
and Genisis FT for zonal isolation. All of these products
incorporate oil swell, water swell or the industrys only
customizable, dual-fluid activated swellable hybrid elastomers.
Solid Tubular Expandable Technologies
Proprietary expandable tools are being developed for
downhole solid tubular applications in well remediation, well
completion and well construction. Our solid tubular expandable
products include the
MetalSkin®
line and the
HydraSkintm
System, MetalSkin systems are used for well cladding to
shut off zones, retro-fit corroded sections of casing and
strengthen existing casing. MetalSkin open-hole clad
systems are used for controlling drilling hazards such as
unwanted fluid loss or influx and as slim-bore drilling liners.
Slim-bore and, ultimately, monobore liner systems are designed
to allow significant cost reductions by reducing consumables for
drilling and completion of wells, allowing use of smaller rigs
and reducing cuttings removal needs. The benefits are derived
because of the potential of expandable technologies to
significantly reduce or eliminate the reverse-telescoping
architecture inherent in traditional well construction. The
HydraSkin system is a hydraulic
bottom-up
expansion system that can be used for increased diameter
efficiency in either planned or contingency operations.
Aluminum Alloy Tubular Products We design and
manufacture aluminum alloy tubular goods for drilling,
production and completion. Unique physical and mechanical
properties of aluminum alloys provide a number of benefits,
especially superior corrosion resistance in various aggressive
environments and enhanced
strength-to-weight
ratio, resulting in better drilling performance. Products range
from Aluminum Alloy Drill Pipe, which is used in most
drilling applications, but especially recommended for ultra deep
and extended reach wells and rigs with limited load capacity, to
drillpipe risers designed for drilling, production and
completion operations. These large diameter products possess
high strength and significant corrosion resistance properties
essential in aggressive environments, such as deepwater wells.
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Drilling
Tools
We design and manufacture patented tools, including our drilling
jars, rotating control devices and other pressure-control
equipment used in drilling oil and natural gas wells. We also
offer a broad selection of in-house or third-party manufactured
equipment for the drilling, completion and workover of oil and
natural gas wells. We offer these proprietary and nonproprietary
drilling tools to our clients primarily operators
and drilling contractors on a rental basis, allowing
the clients to use unique equipment to improve drilling
efficiency without the cost of holding that equipment in
inventory.
Our drilling tools include the following:
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Drillpipe and related drillstem tools, drill collars,
heavyweight pipe and drilling jars;
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Downhole tools;
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Pressure-control equipment such as blowout preventers,
high-pressure valves, accumulators, adapters and
choke-and-kill
manifolds; and
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Tubular handling equipment such as elevators, spiders, slips,
tongs and kelly spinners.
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Completion
Systems
We offer our clients a comprehensive line of completion tools
and sand screens. These products and services include the
following:
Completion Tools These tools are incorporated
into the tubing string used to transport hydrocarbons from the
reservoir to the surface. We offer a wide range of devices for
enhancing the safety and functionality of the production string,
including permanent and retrievable packer systems, subsurface
safety systems, flow control systems and tool strings,
specialized downhole isolation valves and associated servicing
equipment. Over the past decade, we have evolved our portfolio
from one of basic cased-hole commodity products to one that
focuses more heavily on premium offerings for deepwater and
high-pressure/high-temperature environments.
Sand Screens Sand production often results in
premature failure of artificial-lift and other downhole and
surface equipment and can obstruct the flow of oil and natural
gas. To remedy this issue, we provide two different sand screen
approaches: conventional and expandable.
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Conventional Sand Screens These products are
used in the fluid-solid separation processes and have a variety
of product applications. Our primary application of well screens
is for the control of sand in unconsolidated formations. We
offer premium, pre-pack and wire-wrap sand screens. We also
offer a
FloRegtm
line of inflow control devices that balance horizontal wellbore
production, ultimately maximizing reservoir drainage. We also
operate the water well and industrial screen business of Johnson
Screens. Served markets include water well, petrochemical,
wastewater treatment and surface water intake, mining and
general industrial applications.
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Expandable Sand Screens (ESS) Our ESS systems
are proprietary step-change sand-control devices that reduce
cost and improve production. An ESS system consists of three
layers, including slotted base pipe, filtration screens and an
outer protective shroud. The system can be expanded using a
fixed cone
and/or
compliantly using our proprietary axial and rotary expansion
system. This system aids productivity because it stabilizes the
wellbore, prevents sand migration and has a larger inner
diameter. ESS technology can replace complex gravel-packing
techniques in many sand-control situations.
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Reservoir Optimization Our intelligent
completion technology (ICT) uses downhole optical and electronic
sensing to allow operators to remotely monitor the downhole
pressure, temperature, flow rate, phase fraction and seismic
activity of each well and the surrounding reservoir. This
advanced monitoring capability allows the operator to monitor
the reaction of the reservoir to the production of the well.
Combining this monitoring with multiple-zone downhole flow
control allows field pressure management and shutoff of unwanted
flows of water or gas.
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Wireline
and Evaluation Services
Wireline and evaluation services, in concert with surface
logging systems and LWD, form a data acquisition and
interpretation capability that enables clients with an
integrated approach to formation evaluation and reservoir
characterization. Open-hole wireline services and logging while
drilling compliment laboratory-derived analysis of core and
reservoir fluid samples. When combined with geosciences
consulting, this integrated capability provides the data and
interpretation to reduce reservoir uncertainty and ultimately
optimize production and maximize recovery.
Wireline Services Wireline services measure
the physical properties of underground formations to help
determine the location and potential deliverability of oil and
gas from a reservoir. Wireline services are provided from
surface logging units, which lower tools and sensors into the
wellbore mainly on a single or multiple conductor wireline.
The provision of wireline and associated interpretation services
is divided into four categories: open hole wireline, geoscience
services, cased hole wireline and slickline services:
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Open Hole Wireline This service helps locate
oil and gas by measuring certain characteristics of geological
formations and providing permanent records called
logs. Open hole logging can be performed at
different intervals during the well drilling process or
immediately after a well is drilled. The logging data provides a
valuable benchmark to which future well management decisions may
be referenced. The open hole sensors are used to determine well
lithology and the presence of hydrocarbons. Formation
characteristics such as resistivity, density and porosity are
measured using electrical, nuclear, acoustic, magnetic and
mechanical technologies.
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The formation characteristics are then used to characterize the
reservoir and describe it in terms of porosity, permeability,
oil, gas or water content and an estimation of productivity.
Wireline services can relay this information from the wellsite
on a real-time basis via a secure satellite transmission network
and secure internet connection to the clients office for
faster evaluation and decision making.
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Geoscience Services This capability,
consisting of geologists, geophysicists, and drilling,
completion, production and reservoir engineers, serves as the
interpretive bridge across diverse data sources to support
client efforts to maximize their oil and gas assets for the life
of the well from well planning through drilling,
evaluation, completion, production, intervention and, finally,
abandonment.
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Major computing centers in Calgary and Houston, along with
branches in Europe, the Middle East, Latin America and Asia
Pacific, use the latest technology to deliver data to our
clients from real-time (LWD) geosteering
for critical well placement decisions to ongoing reservoir
monitoring with permanent intelligent completion
sensors. We provide advanced reservoir solutions by
incorporating open hole, cased hole and production data.
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Cased Hole Wireline This service is performed
at various times throughout the life of the well and includes
perforating, completion logging, production logging and casing
integrity services. Perforating creates the flow path between
the reservoir and the wellbore. Production logging can be
performed throughout the life of the well to measure
temperature, fluid type, flow rate, pressure and other reservoir
characteristics. In addition, cased hole services may involve
wellbore diagnostics and remediation, which could include the
positioning and installation of various plugs and packers to
maintain production or repair well problems, and casing
inspection for internal or external abnormalities in the casing
string.
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Slickline Services This service uses a solid
steel or braided nonconductor line, in place of a single or
multiple conductor braided line used in electric logging, to run
downhole memory tools, manipulate downhole production devices
and provide fishing services primarily in producing wells.
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Integrated Evaluation Services These services
help clients plan the development of new and existing oil and
gas production fields. Specifically, a global network of
laboratories provide support in terms of fluid and reservoir
characterization, specialized core and fluid testing, enhanced
oil recovery, rock strength and characterization, sour richness
and maturity, sorption properties assessment and reservoir flow
studies.
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Production and Produced Water Systems
These systems help clients manage water
handling during fracturing, production, disposal and enhanced
oil recovery operations. Weatherford provides complete
production solutions for field development
and/or
production optimization projects. Our engineering consultancy
services and project management extend through construction to
commissioning and operations for: early production facilities
(the rapid design, construction and operation of complex, often
remote installations), engineered resources, extended well
testing, field development studies, FPSO topsides, permanent
production facilities, project management, and supply chain
management.
Re-entry
and Fishing
Our re-entry, fishing and thru-tubing services help clients
repair wells that have mechanical problems or that need work to
prolong production of oil and natural gas reserves.
Re-entry Services Our re-entry services
include casing exit services and advanced multilateral systems.
Conventional and advanced casing exit systems allow sidetrack
and lateral drilling solutions for clients who either cannot
proceed down the original well track or want to drill lateral
wells from the main or parent wellbore.
Fishing Services Fishing services are
provided through teams of experienced fishing tool supervisors
and a comprehensive line of fishing and milling tools. Our teams
provide conventional fishing services, such as removing wellbore
obstructions, including stuck or dropped equipment, tools,
drillstring components and other debris, that have been lost
downhole unintentionally during the drilling, completion or
workover of new and old wells. Specialty fishing tools required
in these activities include fishing jars, milling tools, casing
cutters, overshots and spears. Our Fishing Services business
unit also provides well patches and extensive
plug-and-abandonment
products.
Thru-tubing Services Thru-tubing services are
used in well re-entry activity to allow operators to perform
complex drilling, completion and cementing activities from
existing wellbores without removing existing production systems.
We provide a full range of thru-tubing services and products,
including drilling motors, casing exits, fishing and milling,
zonal isolation packers and other well remediation services.
Well Abandonment Services Oil or gas wells
ultimately reach their economic limit or can be irreparably
damaged. In these situations, the well must be abandoned
according to federal requirements that ensure it will pose no
safety or environmental hazards. Weatherford combines
proprietary well abandonment technology, complementary
intervention equipment, and a global team of dedicated
specialists to ensure that this critical phase in the
wells life cycle goes smoothly and safely.
Wellbore Cleaning Remnants of drilling fluid
and other debris can damage equipment, jeopardize well
completion or even shorten a wells lifespan. A
cost-effective alternative to workovers, Weatherfords
CLEARMAXtm
wellbore cleaning services incorporate specialized chemical,
hydraulic and mechanical technologies to remove lingering
debris, safely and efficiently.
Stimulation
and Chemicals
We offer our clients advanced chemical technology and services
for safer and more effective production enhancement. These
products and services include the following:
Fracturing Technologies Hydraulic reservoir
fracturing is a stimulation method routinely performed on oil
and natural gas wells in low-permeability reservoirs to increase
productivity and oil and gas recovery. Our offerings include the
latest in equipment design and technology.
Coiled Tubing Technologies Our services
include a line of equipment designed with the latest technology
to ensure effective results during operations that require
coiled tubing intervention. Offerings include coiled tubing
units, appropriate crane trucks and nitrogen tanks and pumpers
(trailer or skid formats).
Cement Services Includes CHEMVIEW and CHEMPRO
software to analyze each job to ensure the best application for
each situation. Our new fleet of cement pumping equipment
includes high-horsepower pump trailers, batch mixers, two-pod
blended cement trailers and a four-pod sand storage trailer, all
with the latest in technology and design features for improved
operation and performance.
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Chemical Systems Our Engineered
Chemistry®
business combines proprietary chemical solutions with internally
developed oilfield equipment technologies. Our high-performance
chemistry solutions include: customized chemical solutions for
drilling, completion, production, intervention, refining, water
treatment as well as many industrial processes; a total service
package (product selection, application and optimization); and
precise formulations and multi-functional chemical formulations
that include the only formulas certified for capillary injection.
Drilling Fluids Our drilling fluids service
line is engaged in the provision of drilling fluids, completion
fluids and other related services. The main functions of
drilling fluids include providing hydrostatic pressure to
prevent formation fluids from entering into the well bore,
keeping the drill bit cool and clean during drilling, carrying
out drill cuttings and suspending the drill cuttings while
drilling is paused and the drilling assembly is brought in and
out of the hole. We also provide waste management services which
separate and manage drill cuttings produced by the drilling
process. Drill cuttings are usually contaminated with petroleum
or drilling fluids, and must be disposed of in an
environmentally safe manner.
Integrated
Drilling
We have the ability to offer project management services to our
clients, in which we provide a number of products and services
needed to drill and complete a well, including the rig. All of
our land drilling rigs are located outside of North America.
Pipeline
and Specialty Services
We provide a range of services used throughout the life cycle of
pipelines and process facilities, onshore and offshore. Our
pipeline group can meet all the requirements of the pipeline,
process, industrial and energy markets worldwide. We also can
provide any service (or package of services) carried out on
permanently installed client equipment that involves inspecting,
cleaning, drying, testing, improving production, running or
establishing integrity from the wellhead out, including
integrated management services.
Other
Business Data
Competition
We provide our products and services worldwide, and compete in a
variety of distinct segments with a number of competitors. Our
principal competitors include Baker Hughes, Halliburton, and
Schlumberger. We also compete with various other regional
suppliers that provide a limited range of equipment and services
tailored for local markets. Competition is based on a number of
factors, including performance, safety, quality, reliability,
service, price, response time and, in some cases, breadth of
products.
Raw
Materials
We purchase a wide variety of raw materials as well as parts and
components made by other manufacturers and suppliers for use in
our manufacturing. Many of the products sold by us are
manufactured by other parties. We are not dependent on any
single source of supply for any of our raw materials or
purchased components.
Customers
Our principal customers consist of major and independent oil and
natural gas producing companies. During 2010 and 2008, there was
no individual customer who accounted for more than 10% of our
consolidated revenues. Revenue from Petroleos Mexicanos
(Pemex) accounted for approximately 13% of our
revenues during 2009. No other individual customer accounted for
more than 10% of our consolidated revenues during 2009.
Research
and Development and Patents
We maintain world-class technology and training centers
throughout the world. Our 34 research, development and
engineering facilities are focused on improving existing
products and services and developing new technologies
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to meet customer demands for improved drilling performance and
enhanced reservoir productivity. Our expenditures for research
and development totaled $214 million in 2010,
$195 million in 2009 and $193 million in 2008.
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. In the U.S., we currently have 1,362
patents issued and over 420 pending. We have 2,662 patents
issued in international jurisdictions and over 1,270 pending. We
amortize patents over the years expected to be benefited,
ranging from three to 20 years.
Although in the aggregate our patents are important to the
manufacturing and marketing of many of our products and
services, we do not believe that the loss of any one of our
patents would have a material adverse effect on our business.
Seasonality
Weather and natural phenomena can temporarily affect the level
of demand for our products and services. Spring months in Canada
and winter months in the North Sea and Russia tend to affect
operations negatively. In 2010, heavy rains in parts of
Australia and an exceedingly cold winter in the U.S. had an
impact on our reported results. Furthermore, in the summers of
2005 and 2008, the Gulf of Mexico suffered an unusually high
number of hurricanes that adversely impacted our operations. The
widespread geographical locations of our operations serve to
mitigate the impact of the seasonal nature of our business.
Federal
Regulation and Environmental Matters
Our operations are subject to federal, state and local laws and
regulations relating to the energy industry in general and the
environment in particular.
Our 2010 expenditures to comply with environmental laws and
regulations were not material, and we currently do not expect
the cost of compliance with environmental laws and regulations
for 2011 to be material.
Employees
At December 31, 2010, we employed approximately
55,000 employees. Certain of our operations are subject to
union contracts. These contracts cover approximately two percent
of our employees. We believe that our relationship with our
employees is generally satisfactory.
Forward-Looking
Statements
This report, as well as other filings made by us with the SEC
and our releases issued to the public contain various statements
relating to future results, including certain projections and
business trends. We believe these statements constitute
Forward-Looking Statements as defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements generally are identified by the words
believe, project, expect,
anticipate, estimate,
intend, strategy, plan,
may, should, will,
would, will be, will
continue, will likely result, and similar
expressions, although not all forward-looking statements contain
these identifying words.
From time to time, we update the various factors we consider in
making our forward-looking statements and the assumptions we use
in those statements. However, we undertake no obligation to
publicly update or revise any forward-looking events or
circumstances that may arise after the date of this report. The
following sets forth the various assumptions we use in our
forward-looking statements, as well as risks and uncertainties
relating to those statements. Certain of the risks and
uncertainties may cause actual results to be materially
different from projected results contained in forward-looking
statements in this report and in our other disclosures. These
risks and uncertainties include, but are not limited to, the
following:
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Global political, economic and market conditions could affect
projected results. Our operating results and the
forward-looking information we provide are based on our current
assumptions about oil and natural gas supply and demand, oil and
natural gas prices, rig count and other market trends. Our
assumptions on these
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matters are in turn based on currently available information,
which is subject to change. The oil and natural gas industry is
extremely volatile and subject to change based on political and
economic factors outside our control. Worldwide drilling
activity, as measured by average worldwide rig counts, increased
in each year from 2002 to 2008. However, activity began
declining in the fourth quarter of 2008, particularly in North
America. The weakened global economic climate resulted in lower
demand and lower prices for oil and natural gas, which reduced
drilling and production activity, which in turn resulted in
lower than expected revenues and income in 2009 and 2010 and may
affect our future revenues and income. Worldwide drilling
activity and global demand for oil and natural gas may also be
affected by changes in governmental policies and debt loads,
laws and regulations related to environmental or energy security
matters, including those addressing alternative energy sources
and the risks of global climate change. For 2011, worldwide
demand may be significantly weaker than we have assumed.
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We may be unable to recognize our expected revenues from
current and future contracts. Our customers, many of whom
are national oil companies, often have significant bargaining
leverage over us and may elect to cancel or revoke contracts,
not renew contracts, modify the scope of contracts or delay
contracts, in some cases preventing us from realizing expected
revenues
and/or
profits. Our projections assume that our customers will honor
the contracts we have been awarded and that those contracts and
the business that we believe is otherwise substantially firm
will result in anticipated revenues in the periods for which
they are scheduled.
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Currency fluctuations could have a material adverse financial
impact on our business. A material change in
currency rates in our markets, such as the devaluation of the
Venezuelan Bolivar experienced during the first quarter of 2010,
could affect our future results as well as affect the carrying
values of our assets. World currencies have been subject to much
volatility. In addition, due to the volatility we may be unable
to enter into foreign currency contracts at a reasonable cost.
As we are not able to predict changes in currency valuations,
our forward-looking statements assume no material impact from
future changes in currency exchange rates.
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Our ability to manage our workforce could affect our
projected results. In a climate of decreasing
demand, we are faced with managing our workforce levels to
control costs without impairing our ability to provide service
to our customers. Conversely, in a climate of increasing demand,
we are faced with the challenge of hiring and maintaining a
skilled workforce at a reasonable cost. Our forward-looking
statements assume we will be able to do so.
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Increases in the prices and availability of our raw materials
could affect our results of operations. We use
large amounts of raw materials for manufacturing our products
and some of our fixed assets. The price of these raw materials
has a significant impact on our cost of producing products for
sale or producing fixed assets used in our business. We have
assumed that the prices of our raw materials will remain within
a manageable range and will be readily available. If we are
unable to obtain necessary raw materials or if we are unable to
minimize the impact of increased raw material costs or to
realize the benefit of cost decreases in a timely fashion
through our supply chain initiatives or pricing, our margins and
results of operations could be adversely affected.
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Our ability to manage our supply chain and business processes
could affect our projected results. We have
undertaken efforts to improve our supply chain, invoicing and
collection processes and procedures. These undertakings include
costs, which we expect will result in long-term benefits of our
business processes. Our forward-looking statements assume we
will realize the benefits of these efforts.
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Our long-term growth depends upon technological innovation
and commercialization. Our ability to deliver our
long-term growth strategy depends in part on the
commercialization of new technology. A central aspect of our
growth strategy is to improve our products and services through
innovation, to obtain technologically advanced products through
internal research and development
and/or
acquisitions, to protect proprietary technology from
unauthorized use and to expand the markets for new technology by
leveraging our worldwide infrastructure. The key to our success
will be our ability to commercialize the technology that we have
acquired and demonstrate the enhanced value our technology
brings to our customers operations. Our major
technological advances include, but are not limited to, those
related to controlled pressure drilling
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and testing systems, expandable solid tubulars, expandable sand
screens and intelligent well completion. Our forward-looking
statements have assumed successful commercialization of, and
above-average growth from, these new products and services, as
well as legal protection of our intellectual property rights.
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Nonrealization of expected benefits from our redomestication
could affect our projected results. We operate
through our various subsidiaries in numerous countries
throughout the world including the United States. During
the first quarter of 2009, we completed a transaction in which
our former parent Bermuda company became a wholly-owned
subsidiary of Weatherford International Ltd., a Swiss
joint-stock corporation, and holders of common shares of the
Bermuda company received one registered share of the Swiss
company in exchange for each common share that they held.
Consequently, we are or may become subject to changes in tax
laws, treaties or regulations or the interpretation or
enforcement thereof in the U.S., Bermuda, Switzerland or any
other jurisdictions in which we or any of our subsidiaries
operates or is resident. Our income tax expense is based upon
our interpretation of the tax laws in effect in various
countries at the time that the expense was incurred. If the
U.S. Internal Revenue Service or other taxing authorities
do not agree with our assessment of the effects of such laws,
treaties and regulations, this could have a material adverse
effect on us including the imposition of a higher effective tax
rate on our worldwide earnings or a reclassification of the tax
impact of our significant corporate restructuring transactions.
In addition, our realization of expected tax benefits is based
upon the assumption that we take successful planning steps and
that we maintain and execute adequate processes to support our
planning activities. If we fail to do so, we may not achieve the
expected benefits.
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Nonrealization of expected benefits from our acquisitions or
business dispositions could affect our projected
results. We expect to gain certain business,
financial and strategic advantages as a result of business
acquisitions we undertake, including synergies and operating
efficiencies. Our forward-looking statements assume that we will
successfully integrate our business acquisitions and realize the
benefits of those acquisitions. Further, we may from time to
time undertake to dispose of businesses or capital assets that
are no longer core to our long-term growth strategy and the
disposition of which may improve our capital structure. Our
forward-looking statements assume that if we decide to dispose
of a business or asset we will find a buyer willing to pay a
price we deem favorable to Weatherford and that we will
successfully dispose of the business or asset. Our inability to
complete dispositions timely and at attractive prices may impair
our ability to improve our capital structure as rapidly as our
forward-looking statements may indicate.
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The downturn in our industry could affect the carrying value
of our goodwill. As of December 31, 2010, we
had approximately $4.2 billion of goodwill. Our estimates
of the value of our goodwill could be reduced in the future as a
result of various factors, including market factors, some of
which are beyond our control. Our forward-looking statements do
not assume any future goodwill impairment. Any reduction in the
fair value of our businesses may result in an impairment charge
and therefore adversely affect our results.
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Adverse weather conditions in certain regions could adversely
affect our operations. In the summers of 2005 and
2008, the Gulf of Mexico suffered several significant
hurricanes. These hurricanes and associated hurricane threats
reduced the number of days on which we and our customers could
operate, which resulted in lower revenues than we otherwise
would have achieved. In parts of 2006, and particularly in the
second quarters of 2007 and 2008, climatic conditions in Canada
were not as favorable to drilling as we anticipated, which
limited our potential results in that region. Similarly,
unfavorable weather in Russia, China, Mexico, Australia and in
the North Sea, as well as exceedingly cold winters in other
areas of the world, could reduce our operations and revenues
from this area during the relevant period. Our forward-looking
statements assume weather patterns in our primary areas of
operations will be conducive to our operations.
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U.S. Government and internal investigations could affect
our results of operations. We are currently
involved in government and internal investigations involving
various of our operations. We have begun negotiations with the
government agencies to resolve these matters, but we cannot yet
anticipate the timing, outcome or possible impact of the
ultimate resolution of these investigations, financial or
otherwise. The governmental agencies involved in these
investigations have a broad range of civil and criminal
penalties they may seek to impose against corporations and
individuals for violations of trade sanction laws, the Foreign
Corrupt Practices Act and other federal statutes including, but
not limited to, injunctive relief,
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disgorgement, fines, penalties and modifications to business
practices and compliance programs. In recent years, these
agencies and authorities have entered into agreements with, and
obtained a range of penalties against, several public
corporations and individuals in similar investigations, under
which civil and criminal penalties were imposed, including in
some cases fines and other penalties and sanctions in the tens
and hundreds of millions of dollars. These agencies likely will
seek to impose penalties of some amount against us for past
conduct, but the ultimate amount of any penalties we may pay
currently cannot be reasonably estimated. Under trade sanction
laws, the U.S. Department of Justice may also seek to
impose modifications to business practices, including immediate
cessation of all business activities in specific countries or
other limitations that decrease our business, and modifications
to compliance programs, which may increase compliance costs. Any
injunctive relief, disgorgement, fines, penalties, sanctions or
imposed modifications to business practices resulting from these
investigations could adversely affect our results of operations.
To date, we have incurred $49 million for costs in
connection with our exit from certain sanctioned countries and
incurred $113 million for legal and professional fees in
connection with complying with and conducting these on-going
investigations. This amount excludes the costs we have incurred
to augment and improve our compliance function. We may have
additional charges related to these matters in future periods,
which costs may include labor claims, contractual claims,
penalties assessed by customers, and costs, fines, taxes and
penalties assessed by the local governments, but we cannot
quantify those charges or be certain of the timing of them.
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Failure in the future to ensure ongoing compliance with
certain laws could affect our results of
operations. In 2009, we substantially augmented
our compliance infrastructure with increased staff and more
rigorous policies, procedures and training of our employees
regarding compliance with applicable anti-corruption laws, trade
sanctions laws and import/export laws. As part of this effort,
we now undertake audits of our compliance performance in various
countries. Our forward-looking statements assume that our
compliance efforts will be successful and that we will comply
with our internal policies and applicable laws regarding these
issues. Our failure to do so could result in additional
enforcement action in the future, the results of which could be
material and adverse to us.
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Political disturbances, war, or terrorist attacks and changes
in global trade policies could adversely impact our
operations. We operate in over 100 countries, and
as such are at risk of various types of political activities,
including acts of insurrections, war, terrorism, nationalization
of assets and changes in trade policies. We have assumed there
will be no material political disturbances or terrorist attacks
and there will be no material changes in global trade policies
that affect our business. In early 2011, our operations in
Tunisia, Egypt, and Libya were disrupted by political
revolutions and uprisings in these countries. Political
disturbances in these countries and elsewhere in the Middle East
and North Africa regions, including to a lesser extent Yemen and
Bahrain, are ongoing as of the end of February, 2011, and our
operations in Libya have not resumed. During 2010, these five
countries accounted for approximately 3% of our global revenue.
We have taken steps to secure our personnel and assets in
affected areas and to resume or continue operations where it is
safe for us to do so, and our forward-looking statements assume
we will do so successfully. In Libya, we have evacuated all of
our non-Libyan employees and their families. At
December 31, 2010, we had in Libya inventory, property,
plant and equipment (net) with a carrying value of approximately
$141 million, as well as cash, accounts receivable and
prepaid expenses of approximately $76 million. In cases
where we must evacuate personnel, it may be difficult, if not
impossible, for us to safeguard and recover our operating
assets, and our ability to do so will depend on the local turn
of events. In these areas we also may not be able to perform the
work we are contracted to perform, which could lead to
forfeiture of performance bonds. We currently have outstanding
approximately $19 million of performance bonds related to
contracts in Libya. Our forward-looking statements assume that
we will not incur a substantial loss with respect to our assets
or under performance bonds located in or related to affected
areas. We have assumed that cessation of business activities in
parts of the Middle East and North Africa regions due to
political turmoil will be short-lived, that the negative impact
on our business will not be material, and that the region will
not experience further disruptive political revolution in the
near term. However, if political violence were to curtail our
activities in other countries in the region from which we derive
greater business, such as Saudi Arabia, Iraq and Algeria, and
particularly if political activities were to result in prolonged
violence or civil war, we may fail to achieve the results
reflected in our forward-looking statements.
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The material weakness in accounting for income taxes could
have a further adverse effect on our share
price. If we are unable to effectively remediate
this material weakness in a timely manner, we could lose
investor confidence in the accuracy and completeness of our
financial reports, which could have a further adverse effect on
our share price and could subject us to additional potentially
costly shareholder litigation or government inquiries. Our
forward-looking statements assume we will be able to remediate
the material weakness in a timely manner and will maintain an
effective internal control environment in the future.
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Recent turmoil in the credit markets may reduce our access to
capital or reduce the availability of financial risk-mitigation
tools. The worldwide credit markets experienced
turmoil and uncertainty from mid-2008 through most of 2009, and
certain markets remained challenging in parts of 2010. Our
forward-looking statements assume that the financial
institutions that have committed to extend us credit will honor
their commitments under our credit facilities. If one or more of
those institutions becomes unwilling or unable to honor its
commitments, our access to liquidity could be impaired and our
cost of capital to fund growth could increase. We use
interest-rate and foreign-exchange swap transactions with
financial institutions to mitigate certain interest-rate and
foreign-exchange risks associated with our capital structure and
our business. Our forward-looking statements assume that those
tools will continue to be available to us at prices we deem
reasonable. However, the failure of any counter party to honor a
swap agreement could reduce the availability of these financial
risk-mitigation tools or could result in the loss of expected
financial benefits.
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Finally, our future results will depend upon various other risks
and uncertainties, including, but not limited to, those detailed
in our other filings with the SEC under the Securities Exchange
Act of 1934, as amended, and the Securities Act of 1933, as
amended. For additional information regarding risks and
uncertainties, see our other filings with the SEC. Our annual
reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act of 1934 are made
available free of charge on our internet web site
www.weatherford.com as soon as reasonably practicable
after we have electronically filed the material with, or
furnished it to, the SEC.
An investment in our common shares involves various risks. When
considering an investment in our company, you should consider
carefully all of the risk factors described below, the matters
discussed on the foregoing pages under
Business-Forward-Looking Statements, as well as
other information included and incorporated by reference in this
report.
Physical dangers are inherent in our operations and may expose
us to significant potential losses. Personnel and property may
be harmed during the process of drilling for oil and natural gas.
Drilling for and producing hydrocarbons, and the associated
products and services that we provide, include inherent dangers
that may lead to property damage, personal injury, death or the
discharge of hazardous materials into the environment. Many of
these events are outside our control. Typically, we provide
products and services at a well site where our personnel and
equipment are located together with personnel and equipment of
our customer and third parties, such as other service providers.
At many sites, we depend on other companies and personnel to
conduct drilling operations in accordance with appropriate
safety standards. From time to time, personnel are injured or
equipment or property is damaged or destroyed as a result of
industrial accidents, failed equipment, faulty products or
services, failure of safety measures, uncontained formation
pressures, or other dangers inherent in drilling for oil and
natural gas. Any of these events can be the result of human
error. With increasing frequency, our products and services are
deployed on more challenging prospects both onshore and
offshore, where the occurrence of the types of events mentioned
above can have an even more catastrophic impact on people,
equipment and the environment. Such events may expose us to
significant potential losses.
We may
not be fully indemnified against financial losses in all
circumstances where damage to or loss of property, personal
injury, death or environmental harm occur.
As is customary in our industry, our contracts typically provide
that our customers indemnify us for claims arising from the
injury or death of their employees, the loss or damage of their
equipment, damage to the reservoir and pollution emanating from
the customers equipment or from the reservoir (including
uncontained oil flow from
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a reservoir). Conversely, we typically indemnify our customers
for claims arising from the injury or death of our employees,
the loss or damage of our equipment, or pollution emanating from
our equipment. Our contracts typically provide that our customer
will indemnify us for claims arising from catastrophic events,
such as a well blowout, fire or explosion.
Our indemnification arrangements may not protect us in every
case. For example, from time to time we may enter into contracts
with less favorable indemnities or perform work without a
contract that protects us; our indemnity arrangements may be
held unenforceable in some courts and jurisdictions; or we may
be subject to other claims brought by third parties or
government agencies. Furthermore, the parties from which we seek
indemnity may not be solvent, may become bankrupt, may lack
resources or insurance to honor their indemnities, or may not
otherwise be able to satisfy their indemnity obligations to us.
The lack of enforceable indemnification could expose us to
significant potential losses.
Further, our assets are not insured against loss from political
violence such as war, terrorism or civil commotion. If any of
our assets are damaged or destroyed as a result of an uninsured
cause, we would recognize a loss of those assets.
Our
business may be exposed to uninsured claims, and litigation
might result in significant potential losses.
In the ordinary course of business, we become the subject of
various claims and litigation. For example, we have been named
in a number of lawsuits because, along with other oilfield
service companies, we provided products and services on the
Deepwater Horizon in the Gulf of Mexico. We maintain liability
insurance, which includes insurance against damage to people,
equipment and the environment, up to maximum limits of
$600 million, and subject to
self-insured
retentions and deductibles of $2 million, per occurrence.
Our insurance policies are subject to exclusions, limitations,
and other conditions and may not apply in all cases, for example
where willful wrongdoing on our part is alleged. It is possible
an unexpected judgment could be rendered against us in cases in
which we could be uninsured and beyond the amounts we currently
have reserved or anticipate incurring, and in some cases those
potential losses could be material.
Our insurance may not be sufficient to cover any particular
loss, or our insurance may not cover all losses. For example,
although we maintain product liability insurance, this type of
insurance is limited in coverage and it is possible an adverse
claim could arise in excess of our coverage. Finally, insurance
rates have in the past been subject to wide fluctuation. In
response to the recent catastrophic accident in the Gulf of
Mexico, insurance rates are volatile and increasing, and some
forms of insurance may become entirely unavailable in the future
or unavailable on terms that we or our customers believe are
economically acceptable. Reductions in coverage, changes in the
insurance markets and accidents affecting our industry may
result in further increases in our cost and higher deductibles
and retentions in future years and may also result in reduced
activity levels in certain markets. Any of these events would
have an adverse impact on our financial performance.
Our
operations are subject to environmental and other laws and
regulations that may expose us to significant liabilities and
could reduce our business opportunities and revenues.
We are subject to various federal, state and local laws and
regulations relating to the energy industry in general and the
environment in particular. An environmental claim could arise
with respect to one or more of our current businesses, products
or services, or a business or property that one of our
predecessors owned or used, and such claims could involve
material expenditures. Generally, environmental laws have in
recent years become more stringent and have sought to impose
greater liability on a larger number of potentially responsible
parties. The scope of regulation of our industry and our
products and services may increase further following recent
events in the Gulf of Mexico, including possible increases in
liabilities or funding requirements imposed by governmental
agencies. In early 2010, a moratorium was issued on new
deepwater projects in the Gulf of Mexico. Although that
moratorium was recently lifted, we cannot anticipate when and to
what extent drilling activity in the deepwater Gulf will resume.
We also cannot ensure that our future business in the deepwater
Gulf, if any, will be profitable in light of new regulations
that may be promulgated and in light of the current risk
environment and insurance markets. Further, additional
regulations on deepwater drilling elsewhere in the world could
be imposed as a result of the Deepwater
15
Horizon incident, and those regulations could limit our business
where they are imposed. In addition, members of the
U.S. Congress and the U.S. Environmental Protection
Agency are reviewing more stringent regulation of hydraulic
fracturing, a technology which is used in one of our business
segments, and regulators are investigating whether any chemicals
used in the fracturing process might adversely affect
groundwater. A significant portion of North American service
activity today is directed at prospects that require hydraulic
fracturing in order to produce hydrocarbons. Additional
regulation could increase the costs of conducting our business
and could materially reduce our business opportunities and
revenues if our customers decrease their levels of activity in
response to such regulation.
We have
significant operations that would be adversely impacted in the
event of war, political disruption, civil disturbance, economic
and legal sanctions or changes in global trade
policies.
Like most multinational oilfield service companies, we have
operations in certain international areas, including parts of
the Middle East, Africa, Latin America, the Asia Pacific region
and the FSU, that are subject to risks of war, political
disruption, civil disturbance, economic and legal sanctions
(such as restrictions against countries that the
U.S. government may deem to sponsor terrorism) and changes
in global trade policies. Our operations may be restricted or
prohibited in any country in which the foregoing risks occur.
In particular, the occurrence of any of these risks could result
in the following events, which in turn, could materially and
adversely impact our results of operations:
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disruption of oil and natural gas exploration and production
activities;
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restriction of the movement and exchange of funds;
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our inability to collect receivables;
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loss of assets in affected jurisdictions
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enactment of additional or stricter U.S. government or
international sanctions; and
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limitation of our access to markets for periods of time.
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In early 2011, our operations in Tunisia, Egypt and Libya have
been disrupted by the political revolutions and uprisings in
these countries. Political disturbances in these countries and
elsewhere in the Middle East and North Africa regions,
including to a lesser extent Yemen and Bahrain, are ongoing as
of the end of February, 2011, and our operations in Libya have
not resumed. During 2010, these five countries accounted for
approximately 3% of our global revenue. In Libya, we have
evacuated all of our non-Libyan employees and their families.
At December 31, 2010, we had in Libya inventory, property,
plant and equipment (net) with a carrying value of approximately
$141 million, as well as cash, accounts receivable and
prepaid expenses of approximately $76 million. In cases
where we must evacuate personnel, it may be difficult, if not
impossible, for us to safeguard and recover our operating
assets, and our ability to do so will depend on the local turn
of events. In these areas we also may not be able to perform the
work we are contracted to perform, which could lead to
forfeiture of performance bonds. We currently have outstanding
approximately $19 million of performance bonds related to
contracts in Libya. We could suffer material losses with respect
to these assets.
If political violence were to curtail our activities in other
countries in the region from which we derive greater business,
such as Saudi Arabia, Iraq and Algeria, and particularly if
political activities were to result in prolonged violence or
civil war, these political activities could have a material
adverse effect on our business in the region.
We are
involved in several governmental and internal investigations,
which are costly to conduct, have resulted in a loss of revenue
and may result in substantial financial penalties.
We are currently involved in government and internal
investigations involving various areas of our operations.
Until 2003, we participated in the United Nations
oil-for-food
program governing sales of goods and services into Iraq. The
U.S. Department of Justice (DOJ) and the SEC
have undertaken investigations of our participation in the
oil-for-food
program and have subpoenaed certain documents in connection with
these investigations. We
16
have cooperated fully with these investigations. We have
retained legal counsel, reporting to our audit committee, to
investigate this matter. We have begun negotiations with the
government agencies to resolve these matters, but we cannot yet
anticipate the timing, outcome or possible impact of the
ultimate resolution of the investigations, financial or
otherwise.
The U.S. Department of Commerce, Bureau of
Industry & Security, Office of Foreign Assets Control
(OFAC), DOJ and SEC have undertaken investigations
of allegations of improper sales of products and services by the
Company and its subsidiaries in certain sanctioned countries. We
have cooperated fully with this investigation. We have retained
legal counsel, reporting to our audit committee, to investigate
these matters and to cooperate fully with these agencies. We
have begun negotiations with the government agencies to resolve
these matters, but we cannot yet anticipate the timing, outcome
or possible impact of the ultimate resolution of the
investigation, financial or otherwise.
In light of this investigation and of U.S. and foreign
policy environment and the inherent uncertainties surrounding
these countries, we decided in September 2007 to direct our
foreign subsidiaries to discontinue doing business in countries
that are subject to comprehensive U.S. economic and trade
sanctions, specifically Cuba, Iran, and Sudan, as well as Syria.
Effective September 2007, we ceased entering into any new
contracts in these countries and began an orderly
discontinuation and winding down of our existing business in
these sanctioned countries. Effective March 31, 2008, we
substantially completed our winding down of business in these
countries. We can complete the withdrawal process only pursuant
to licenses issued by OFAC. Our remaining activities in Iran,
Sudan and Syria include ongoing withdrawal activities such as
attempts to collect accounts receivable, attempts to settle tax
liabilities or legal claims and attempts to recover or liquidate
assets, including equipment and funds. Certain of our
subsidiaries continue to conduct business in countries such as
Myanmar that are subject to more limited U.S. trading
sanctions.
The DOJ and SEC are investigating our compliance with the
Foreign Corrupt Practices Act (FCPA) and other laws
worldwide. We have retained legal counsel, reporting to our
audit committee, to investigate these matters and to cooperate
fully with the DOJ and SEC. As part of our investigations, we
have uncovered potential violations of U.S. law in
connection with activities in West Africa. We have begun
negotiations with the government agencies to resolve these
matters, but we cannot yet anticipate the timing, outcome or
possible impact of the ultimate resolution of the
investigations, financial or otherwise.
The DOJ, SEC and other agencies and authorities have a broad
range of civil and criminal penalties they may seek to impose
against corporations and individuals for violations of trade
sanctions laws, the FCPA and other federal statutes including,
but not limited to, injunctive relief, disgorgement, fines,
penalties and modifications to business practices and compliance
programs. In recent years, these agencies and authorities have
entered into agreements with, and obtained a range of penalties
against, several public corporations and individuals in similar
investigations, under which civil and criminal penalties were
imposed, including in some cases fines and other penalties and
sanctions in the tens and hundreds of millions of dollars. These
agencies are seeking to impose penalties against us for past
conduct, but the ultimate amount of any penalties we may pay
currently cannot be reasonably estimated. Under trade sanctions
laws, the DOJ may also seek to impose modifications to business
practices, including immediate cessation of all business
activities in specific countries or other limitations that
decrease our business, and modifications to compliance programs,
which may increase compliance costs. Any injunctive relief,
disgorgement, fines, penalties, sanctions or imposed
modifications to business practices resulting from these
investigations could adversely affect our results of operations.
In addition, our historical activities in sanctioned countries,
such as Sudan and Iran, could result in certain investors, such
as government sponsored pension funds, divesting or not
investing in our registered shares. Based on available
information, we cannot predict what, if any, actions the DOJ,
SEC or other authorities will take in our situation or the
effect any such actions will have on our consolidated financial
position or results of operations. To the extent we violated
trade sanctions laws, the FCPA, or other laws or regulations,
fines and other penalties may be imposed. Because these matters
are now pending before the indicated agencies, there can be no
assurance that actual fines or penalties, if any, will not have
a material adverse effect on our business, financial condition,
liquidity or results of operations.
17
To date, we have incurred $49 million for costs in
connection with our exit from sanctioned countries and incurred
$113 million for legal and professional fees in connection
with complying with and conducting these on-going investigations.
Our
significant operations in foreign countries expose us to
currency fluctuation risks or devaluation.
A portion of our net assets are located outside the
U.S. and are carried on our books in local currencies.
Changes in those currencies in relation to the U.S. dollar
result in translation adjustments, which are reflected as
accumulated other comprehensive income in the shareholders
equity section in our Consolidated Balance Sheets. We recognize
remeasurement and transactional gains and losses on currencies
in our Consolidated Statements of Income, which may adversely
impact our results of operations. We enter into foreign currency
forward contracts and other derivative instruments as an effort
to reduce our exposure to currency fluctuations; however, there
can be no assurance that these hedging activities will be
effective in reducing or eliminating foreign currency risks.
In certain foreign countries, a component of our cost structure
is denominated in a different currency than our revenues. In
those cases, currency fluctuations could adversely impact our
operating margins.
In January 2010, the Venezuelan government announced its
intention to devalue its currency and move to a two tier
exchange structure. The official exchange moved from 2.15 to
2.60 for essential goods and 4.30 for non-essential goods and
services. In connection with this devaluation, we incurred a
charge of $64 million for the remeasurement of our net
monetary assets denominated in Venezuelan bolivars at the date
of the devaluation, which was not tax deductible. We also
recorded a $24 million tax benefit for local Venezuelan
income tax purposes related to our net
U.S. dollar-denominated monetary liability position in the
country. We currently utilize the 4.30 Venezuelan bolivar
to U.S. dollar exchange rate. At December 31, 2010, we
had a net monetary asset position denominated in Venezuelan
bolivars of approximately $56 million comprised primarily
of cash and accounts receivable. We are continuing to explore
opportunities to reduce this exposure but should another
devaluation occur in the future, we may be required to take
further charges related to the remeasurement of our net monetary
asset position. For example, if the Venezuela bolivar devalued
by an additional 10% in the future, we would record a
devaluation charge of approximately $6 million. Effective
January 1, 2011, the Venezuelan government again modified
the fixed rate of exchange, eliminating the two tier structure
and establishing 4.30 as the official exchange rate for all
goods and services. This modification will not have a material
impact to our financial position or results of operations.
As a result of discussions with a customer and the economic
environment in Venezuela, we reviewed how the dual exchange rate
might affect amounts we receive for our
U.S. dollar-denominated receivables in Venezuela. We
believe our contracts are legally enforceable and our customers
continue to accept our invoices. However, based on the current
political and economic environment in Venezuela, we believe a
loss is probable. Accordingly, we recorded a reserve of
$32 million against this exposure in the fourth quarter of
2010.
Customer
credit risks could result in losses.
The concentration of our customers in the energy industry may
impact our overall exposure to credit risk as customers may be
similarly affected by prolonged changes in economic and industry
conditions. Those countries that rely heavily upon income from
hydrocarbon exports will be hit particularly hard given the drop
in oil prices. Further, laws in some jurisdictions in which we
operate could make collection difficult or time consuming. We
perform ongoing credit evaluations of our customers and do not
generally require collateral in support of our trade
receivables. While we maintain reserves for potential credit
losses, we cannot assure such reserves will be sufficient to
meet write-offs of uncollectible receivables or that our losses
from such receivables will be consistent with our expectations.
Any
capital financing that may be necessary to fund growth may not
be available to us at economic rates.
Turmoil in the credit markets and the potential impact on
liquidity of major financial institutions may have an adverse
effect on our ability to fund growth opportunities through
borrowings, under either existing or newly created instruments
in the public or private markets on terms we believe to be
reasonable.
18
A
terrorist attack could have a material and adverse effect on our
business.
We operate in many dangerous countries, such as Iraq, in which
acts of terrorism or political violence are a substantial and
frequent risk. Such acts could result in kidnappings or the loss
of life of our employees or contractors, a loss of equipment,
which may or may not be insurable in all cases, or a cessation
of business in an affected area. We cannot be certain that our
security efforts will in all cases be sufficient to deter or
prevent acts of political violence or terrorist strikes against
us or our customers operations.
We have
identified a material weakness in accounting for income taxes in
our internal control over financial reporting, which, if not
remedied effectively, could have a further adverse effect on our
share price.
Management, through documentation, testing and assessment of our
internal control over financial reporting pursuant to the rules
promulgated by the SEC under Section 404 of the
Sarbanes-Oxley Act of 2002 and Item 308 of
Regulation S-K,
has concluded that our internal control over financial reporting
had a material weakness in accounting for income taxes as of
December 31, 2010. See Item 9A Controls
and Procedures. If we are unable to effectively remediate this
material weakness in a timely manner, we could lose investor
confidence in the accuracy and completeness of our financial
reports, which could have a further adverse effect on our share
price.
In future periods, if the process required by Section 404
of the Sarbanes-Oxley Act reveals further material weaknesses or
significant deficiencies, the correction of any such material
weakness or significant deficiency could require additional
remedial measures including additional personnel which could be
costly and time-consuming. If a material weakness exists as of a
future period year-end (including a material weakness identified
prior to year-end for which there is an insufficient period of
time to evaluate and confirm the effectiveness of the
corrections or related new procedures), our management will be
unable to report favorably as of such future period year-end to
the effectiveness of our control over financial reporting. If we
are unable to assert that our internal control over financial
reporting is effective in any future period, or if we continue
to experience material weaknesses in our internal control over
financial reporting for accounting for income taxes, we could
lose investor confidence in the accuracy and completeness of our
financial reports, which could have a further adverse effect on
our share price and potentially subject us to additional and
potentially costly litigation and governmental
inquiries/investigations. In March 2011, shareholders filed suit
relating to the matters described above.
With respect to the restatement of our historical financial
statements as a result of errors in our tax accounts, the SEC
has sent us questions regarding our Current Report on Form
8-K, filed
March 1, 2011.
Changes
in tax laws could adversely impact our results.
On June 26, 2002, the shareholders and Board of Directors
of Weatherford International, Inc. (Weatherford
Delaware) approved our corporate reorganization, and
Weatherford International Ltd. (Weatherford
Bermuda), a newly formed Bermuda company, became the
parent holding company of Weatherford International, Inc. During
the first quarter of 2009, we completed a transaction in which
Weatherford Bermuda became a wholly-owned subsidiary of
Weatherford International Ltd., a Swiss joint-stock company
(Weatherford Switzerland), and holders of our common
shares received one registered share of Weatherford Switzerland
for each common share of Weatherford Bermuda that they held. We
refer to this transaction as the redomestication.
The realization of the tax benefit of this reorganization could
be impacted by changes in tax laws, tax treaties or tax
regulations or the interpretation or enforcement thereof or
differing interpretation or enforcement of applicable law by the
U.S. Internal Revenue Service or other taxing
jurisdictions. The inability to realize this benefit could have
a material impact on our financial statements.
The
anticipated benefits of moving our principal executive offices
to Switzerland may not be realized, and difficulties in
connection with moving our principal executive offices could
have an adverse effect on us.
In connection with the redomestication, we relocated our
principal executive offices from Houston, Texas to Geneva,
Switzerland. Most of our executive officers, including our Chief
Executive Officer, and other key decision makers have relocated
or will relocate to Switzerland. We may face significant
challenges in relocating our
19
executive offices to a different country, including difficulties
in retaining and attracting officers, key personnel and other
employees and challenges in maintaining our executive offices in
a country different from the country where other employees,
including corporate support staff, are located. Employees may be
uncertain about their future roles within our organization as a
result of the redomestication. Management may also be required
to devote substantial time to the redomestication and related
matters, which could otherwise be devoted to focusing on ongoing
business operations and other initiatives and opportunities. In
addition, we may not realize the benefits we anticipate from the
redomestication, including the benefit of moving to a location
that is more centrally located within our area of worldwide
operations. Any such difficulties could have an adverse effect
on our business, results of operations or financial condition.
The
rights of our shareholders are governed by Swiss law and
documents following the redomestication.
Following the redomestication, the rights of our shareholders
are governed by Swiss law and Weatherford Switzerlands
articles of association and organizational regulations. The
rights of shareholders under Swiss law differ from the rights of
shareholders of companies incorporated in other jurisdictions.
For example, directors of Weatherford Switzerland may be removed
by shareholders with or without cause, but such removal requires
the vote of shareholders holding at least
662/3%
of the voting rights and the absolute majority of the par value
of the registered shares represented at the meeting as well as a
quorum of at least two-thirds of the registered shares recorded
in the share register.
We hold
shareholder meetings in Switzerland, and our required quorum for
those meetings is lower.
We hold shareholders meetings in Switzerland, which may make
attendance in person more difficult for some investors. For
shareholders meetings for Weatherford-Switzerland for the
transaction of any business other than removal of a director or
certain other specified resolutions, a quorum comprises at least
one-third of the registered shares recorded in the share
register and entitled to vote (and at least two-thirds of the
registered shares recorded in the share register and entitled to
vote for the removal of directors and certain other specified
resolutions).
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Item 1B.
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Unresolved
Staff Comments
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None.
20
Our operations are conducted in approximately 100 countries and
we have manufacturing facilities and sales, service and
distribution locations throughout the world. The following table
describes our material facilities as of December 31, 2010:
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Owned/
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Principal Services and Products
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Location
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Leased
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Offered or Manufactured
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North America:
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Houma, Louisiana
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Owned
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Cementing products
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Houston, Texas
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Owned
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Sand screens
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Huntsville, Texas
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Owned
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Liner systems and solid expandables
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New Brighton, Minnesota
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Owned
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Water well and industrial screens
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Nisku, Alberta, Canada
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Owned
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Reciprocating rod lift
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Nisku, Alberta, Canada
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Owned
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Drilling equipment, fishing, wireline, controlled pressure
drilling and testing services
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Schriever, Louisiana
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Owned
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Cementation manufacturing. plant and well construction services
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Latin America:
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Ciudad Del Carmen, Campeche, Mexico
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Leased
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Wireline
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Europe/West Africa/FSU:
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Aberdeen, Scotland
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Leased
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Expandable slotted tubulars
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Langenhagen, Germany
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Leased
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Manufacturing
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Lukhovitsy, Russia
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Owned
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Pipeline and specialty services
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Nizhnevartovsk, Russia
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Owned
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Drilling, sidetracking, wireline, fishing, well workover and
tool rental
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Stavanger, Norway
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Leased
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Casing exit, cementation equipment & systems, directional
drilling and fishing
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Middle East/North Africa/Asia:
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Abu Dhabi, UAE
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Leased
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Manufacturing
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Awjila, Libya
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Leased
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Warehouse and service
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Dongyin, China
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Leased
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Progressing cavity pumping
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Hassi Messaoud, Algeria
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Leased
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Fishing, liner hangers, controlled pressure drilling and testing
services
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Shifang, China
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Owned
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Pump jacks and wellhead
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Corporate:
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Geneva, Switzerland
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Leased
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Headquarters
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Houston, Texas
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Leased
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Corporate offices
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Item 3.
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Legal
Proceedings
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In the ordinary course of business, we become the subject of
various claims and litigation. We maintain insurance to cover
many of our potential losses, and we are subject to various
self-retention limits and deductibles with respect to our
insurance.
Please see the following:
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Item 1. Business Other Business
Data Federal Regulation and Environmental
Matters, which is incorporated by reference into this item.
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Item 1A. Risk Factors We are involved in
several governmental and internal investigations, which are
costly to conduct, have resulted in a loss of revenue and may
result in substantial financial penalties, which is
incorporated by reference into this item.
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21
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Item 8. Financial Statements and Supplementary
Data Notes to Consolidated Financial
Statements Note 18. Disputes, Litigation
and Contingencies.
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Although we are subject to various ongoing items of litigation,
we do not believe it is probable that any of the items of
litigation to which we are currently subject will result in any
material uninsured losses to us. It is possible, however, an
unexpected judgment could be rendered against us in the cases in
which we are involved that could be uninsured and beyond the
amounts we currently have reserved and in some cases those
losses could be material.
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Item 4.
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(Removed
and Reserved)
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PART II
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Item 5.
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Market
for Registrants Common Equity, Related Shareholder Matters
and Issuer Purchases of Equity Securities
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Our shares are traded under the symbol WFT on the
New York Stock Exchange (NYSE), the Euronext-Paris
exchange and as of November 17, 2010, the SIX Swiss Stock
Exchange. As of March 2, 2011, there were
2,803 shareholders of record. Additionally, there were 55
stockholders of Weatherford International, Inc. as of the same
date who had not yet exchanged their shares. The following table
sets forth, for the periods indicated, the range of high and low
sales prices per share for our stock as reported on the NYSE.
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Price
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High
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Low
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Year ending December 31, 2010
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First Quarter
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$
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20.88
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$
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14.63
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Second Quarter
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18.80
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12.34
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Third Quarter
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17.60
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|
|
12.68
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Fourth Quarter
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22.98
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16.70
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Year ending December 31, 2009
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First Quarter
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$
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14.47
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$
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9.08
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Second Quarter
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23.75
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10.50
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Third Quarter
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23.00
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17.22
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Fourth Quarter
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20.92
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15.43
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On March 2, 2011, the closing sales price of our shares as
reported by the New York Stock Exchange was $21.14 per share. We
have not declared or paid cash dividends on our shares since
1984.
Under our restricted share plan, employees may elect to have us
withhold shares to satisfy minimum statutory federal, state and
local tax withholding obligations arising on the vesting of
restricted stock awards and exercise of options. When we
withhold these shares, we are required to remit to the
appropriate taxing authorities the market price of the shares
withheld, which could be deemed a purchase of shares by us on
the date of withholding. During the quarter ended
December 31, 2010, we withheld shares to satisfy these tax
withholding obligations as follows:
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No. of
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Average
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Period
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Shares
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Price
|
|
|
October 1-October 31, 2010
|
|
|
39,763
|
|
|
$
|
17.38
|
|
November 1-November 30, 2010
|
|
|
8,951
|
|
|
|
19.01
|
|
December 1-December 31, 2010
|
|
|
170,573
|
|
|
|
20.94
|
|
Information concerning securities authorized for issuance under
equity compensation plans is set forth in Part III of this
report under Item 12(d). Security Authorized for
Issuance Under Equity Compensation Plans, which is
incorporated by reference into this Item.
22
Performance
Graph
This graph compares the yearly cumulative return on our shares
with the cumulative return on the Dow Jones U.S. Oil
Equipment & Services Index and the Dow Jones
U.S. Index for the last five years. The graph assumes the
value of the investment in our shares and each index was $100 on
December 31, 2005. The stockholder return set forth below
is not necessarily indicative of future performance. The
following graph and related information shall not be deemed
soliciting material or to be filed with
the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that
Weatherford specifically incorporates it by reference into such
filing.
23
|
|
Item 6.
|
Selected
Financial Data
|
The following table sets forth certain selected historical
consolidated financial data and should be read in conjunction
with Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations
and Item 8. Financial Statements and Supplementary
Data, both contained in this report. The following
information may not be indicative of our future operating
results. Results for 2009, 2008 and 2007 have been restated in
the following table. See Item 8. Financial Statements
and Supplementary Data Notes to Consolidated
Financial Statements Note 2. Restatement of
Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
|
|
|
(In thousands, except per share amount)
|
|
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
10,220,797
|
|
|
$
|
8,833,005
|
|
|
$
|
9,600,564
|
|
|
$
|
7,832,062
|
|
|
$
|
6,578,928
|
|
Operating Income
|
|
|
781,453
|
|
|
|
687,864
|
|
|
|
1,955,168
|
|
|
|
1,643,912
|
|
|
|
1,354,687
|
|
Income (Loss) From Continuing Operations Attributable to
Weatherford
|
|
|
(107,925
|
)
|
|
|
170,141
|
|
|
|
1,259,424
|
|
|
|
961,926
|
|
|
|
906,106
|
|
Basic Earnings (Loss) Per Share From Continuing Operations
Attributable To Weatherford
|
|
|
(0.15
|
)
|
|
|
0.24
|
|
|
|
1.84
|
|
|
|
1.42
|
|
|
|
1.31
|
|
Diluted Earnings (Loss) Per Share From Continuing Operations
Attributable To Weatherford
|
|
|
(0.15
|
)
|
|
|
0.24
|
|
|
|
1.80
|
|
|
|
1.38
|
|
|
|
1.28
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
19,131,654
|
|
|
$
|
18,696,690
|
|
|
$
|
16,470,187
|
|
|
$
|
13,208,909
|
|
|
$
|
10,139,248
|
|
Long-term Debt
|
|
|
6,529,998
|
|
|
|
5,847,258
|
|
|
|
4,564,255
|
|
|
|
3,066,335
|
|
|
|
1,564,600
|
|
Shareholders Equity
|
|
|
9,464,847
|
|
|
|
9,438,373
|
|
|
|
8,128,593
|
|
|
|
7,309,997
|
|
|
|
6,197,837
|
|
Cash Dividends Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
Our Managements Discussion and Analysis of Financial
Condition and Results of Operations (MD&A)
begins with an executive overview which provides a general
description of our company today, a synopsis of industry market
trends, insight into managements perspective of the
opportunities and challenges we face and our outlook for 2011.
Next, we analyze the results of our operations for the last
three years, including the trends in our business. Then we
review our cash flows and liquidity, capital resources and
contractual commitments. We conclude with an overview of our
critical accounting judgments and estimates and a summary of
recently issued accounting pronouncements.
The Company, we, us and
our refer to Weatherford International Ltd., a Swiss
joint-stock corporation, or, prior to February 26, 2009, to
Weatherford International Ltd., a Bermuda exempted company,
which, as of that date, became a direct, wholly owned subsidiary
of Weatherford International Ltd., a Swiss joint-stock
corporation, in either case on a consolidated basis.
The following discussion should be read in conjunction with our
Consolidated Financial Statements and Notes thereto included in
Item 8. Financial Statements and Supplementary
Data. Our discussion includes various forward-looking
statements about our markets, the demand for our products and
services and our future results. These statements are based on
certain assumptions we consider reasonable. For information
about these assumptions, you should refer to the section
entitled Item 1. Business Forward-Looking
Statements.
Overview
General
We provide equipment and services used for drilling, completion
and production of oil and natural gas wells throughout the
world. We conduct operations in approximately 100 countries and
have service and sales locations in nearly all of the oil and
natural gas producing regions in the world. Our product
offerings can be grouped into ten service lines:
1) drilling services; 2) artificial lift systems;
3) well construction; 4) completion systems;
5) integrated drilling; 6) drilling tools;
7) re-entry and fishing; 8) stimulation and chemicals
services; 9) wireline and evaluation services; and
10) pipeline and specialty services.
Our operational performance is segmented and reviewed on a
geographic basis and we report the following regions as
separate, distinct reporting segments (1) North America,
(2) Latin America, (3) Europe/West Africa/FSU and
(4) Middle East/North Africa/Asia.
In July 2009, we acquired the Oilfield Services Division
(OFS) of
TNK-BP for
24.3 million shares valued at approximately
$450 million plus contingent and other consideration.
During 2010, we settled the working capital and contingent
consideration payment provisions for $44 million and
$47 million, respectively. Through this transaction, we
acquired drilling, well workover and cementing services
operations in West Siberia, East Siberia and the Volga-Urals
region.
25
Industry
Trends
Changes in the current price and expected future prices of oil
and natural gas influence the level of energy industry spending.
Changes in expenditures result in an increased or decreased
demand for our products and services. Rig count is an indicator
of the level of spending for the exploration for and production
of oil and natural gas reserves. The following chart sets forth
certain statistics that reflect historical market conditions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
|
|
|
|
|
|
|
Henry Hub
|
|
American Rig
|
|
International
|
|
|
WTI Oil(1)
|
|
Gas(2)
|
|
Count(3)
|
|
Rig Count(3)
|
|
2010
|
|
$
|
91.38
|
|
|
$
|
4.41
|
|
|
|
2,108
|
|
|
|
1,118
|
|
2009
|
|
|
79.36
|
|
|
|
5.57
|
|
|
|
1,485
|
|
|
|
1,113
|
|
2008
|
|
|
44.60
|
|
|
|
5.62
|
|
|
|
2,143
|
|
|
|
1,175
|
|
|
|
|
(1) |
|
Price per barrel as of December 31 Source:
Thomson Reuters |
|
(2) |
|
Price per MM/BTU as of December 31 Source:
Thomson Reuters |
|
(3) |
|
Average rig count for December Source: Baker
Hughes Rig Count and other third-party data |
Oil prices increased during 2010, ranging from a low of $68.01
per barrel in May to a high of $91.51 per barrel late in
December. Natural gas prices decreased during 2010, ranging from
a high of $6.01 MM/BTU in early January to a low of
$3.65 MM/BTU late in August. Factors influencing oil and
natural gas prices during the period include hydrocarbon
inventory levels, realized and expected economic growth,
realized and expected levels of hydrocarbon demand, levels of
spare production capacity within the Organization of Petroleum
Exporting Countries (OPEC), weather and geopolitical
uncertainty.
Opportunities
and Challenges
The nature of our industry offers many opportunities and
challenges. The cyclicality of the energy industry impacts the
demand for our products and services. Certain of our products
and services, such as our drilling and evaluation services, well
installation services and well completion services, depend on
the level of exploration and development activity and the
completion phase of the well life cycle. Other products and
services, such as our production optimization and artificial
lift systems, are dependent on production activity. We have
created a long-term strategy aimed at growing our businesses,
servicing our customers, and most importantly, creating value
for our shareholders. The success of our long-term strategy will
be determined by our ability to manage effectively any industry
cyclicality, respond to industry demands and successfully
maximize the benefits from our acquisitions.
Outlook
We believe the long-term outlook for our businesses is
favorable. As decline rates accelerate and reservoir
productivity complexities increase, our clients will face
growing challenges securing desired rates of production growth.
These challenges increase our customers requirements for
technologies that improve productivity and efficiency and
increase demand for our products and services. These phenomena
provide us with a positive outlook over the longer term.
We noted a substantial increase in activity in North America
during 2010 as compared to 2009. For 2011, we expect land
activity in the U.S. will flatten out and we do not expect
the market to provide significant volume gains. We anticipate
that further strengthening in oil and shale activity in North
America will offset a reduction in conventional gas segments.
Our assessment of the international market for 2011 is positive.
The Eastern Hemisphere is beginning its recovery process which
has been led by Russia, both in volume and price. We also have
contractual commitments in hand and have initiated
start-ups in
Algeria, Bangladesh, Iraq, Kuwait, Libya, Oman and Turkmenistan.
Our expectation is that the current political upheaval in the
Middle East and North Africa will be resolved quickly, that the
interruption of our business will be brief and that we will not
incur a substantial loss with respect to our assets located in,
or related to, these countries. However, we expect operating
results will be negatively impacted in the
near-term.
Overall our prognosis for Latin America for 2011 is positive.
Brazil, Colombia, Argentina and Peru should have robust growth
in 2011, with Brazil and Colombia experiencing the strongest
growth. In Mexico, we expect activity to gradually improve from
the trough levels witnessed during 2010.
26
The level of improvement in our businesses in 2011 will continue
to depend heavily on volume increases and our ability to further
penetrate existing markets with our younger technologies as well
as to successfully introduce these technologies to new markets.
In addition, our ability to grow our business aggressively will
rely on our continued demonstration of a high level of
operational efficacy for our clients including the efficiency of
mobilization related to planned startups. The recruitment,
training and retention of personnel will also be a critical
factor in growing our businesses. The continued strength of the
industry will be highly dependent on many external factors, such
as world economic and political conditions, member country quota
compliance within OPEC and weather conditions, including the
factors described under Forward-Looking
Statements.
Results
of Operations
The following charts contain selected financial data comparing
our consolidated and segment results from operations for 2010,
2009 and 2008. Results for 2009 and 2008 have been restated in
the following table. See Item 8. Financial Statements
and Supplementary Data Notes to Consolidated
Financial Statements Note 2. Restatement of
Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands, except percentages and per share data)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
4,166,881
|
|
|
$
|
2,762,264
|
|
|
$
|
4,460,147
|
|
Middle East/North Africa/Asia
|
|
|
2,450,503
|
|
|
|
2,372,798
|
|
|
|
2,391,520
|
|
Europe/West Africa/FSU
|
|
|
1,984,429
|
|
|
|
1,618,664
|
|
|
|
1,539,190
|
|
Latin America
|
|
|
1,618,984
|
|
|
|
2,079,279
|
|
|
|
1,209,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,220,797
|
|
|
|
8,833,005
|
|
|
|
9,600,564
|
|
Operating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
695,607
|
|
|
|
190,877
|
|
|
|
1,105,924
|
|
Middle East/North Africa/Asia
|
|
|
264,647
|
|
|
|
440,371
|
|
|
|
563,438
|
|
Europe/West Africa/FSU
|
|
|
241,298
|
|
|
|
224,666
|
|
|
|
374,888
|
|
Latin America
|
|
|
53,843
|
|
|
|
279,888
|
|
|
|
279,646
|
|
Research and Development
|
|
|
(214,481
|
)
|
|
|
(194,650
|
)
|
|
|
(192,659
|
)
|
Corporate
|
|
|
(172,918
|
)
|
|
|
(176,995
|
)
|
|
|
(136,212
|
)
|
Revaluation of Contingent Consideration
|
|
|
12,597
|
|
|
|
24,273
|
|
|
|
|
|
Exit and Restructuring
|
|
|
(99,140
|
)
|
|
|
(100,566
|
)
|
|
|
(39,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
781,453
|
|
|
|
687,864
|
|
|
|
1,955,168
|
|
Interest Expense, Net
|
|
|
(405,785
|
)
|
|
|
(366,748
|
)
|
|
|
(243,679
|
)
|
Bond Tender Premium
|
|
|
(53,973
|
)
|
|
|
|
|
|
|
|
|
Devaluation of Venezuelan Bolivar
|
|
|
(63,859
|
)
|
|
|
|
|
|
|
|
|
Other, Net
|
|
|
(53,247
|
)
|
|
|
(37,633
|
)
|
|
|
(44,956
|
)
|
Effective Tax Rate
|
|
|
145.5
|
%
|
|
|
30.8
|
%
|
|
|
22.4
|
%
|
Net Income per Diluted Share
|
|
$
|
(0.15
|
)
|
|
$
|
0.24
|
|
|
$
|
1.80
|
|
Depreciation and Amortization
|
|
|
1,047,334
|
|
|
|
908,897
|
|
|
|
731,808
|
|
27
Revenues
The following chart contains consolidated revenues by product
line for 2010, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Drilling Services
|
|
|
17
|
%
|
|
|
16
|
%
|
|
|
16
|
%
|
Artificial Lift Systems
|
|
|
15
|
|
|
|
14
|
|
|
|
17
|
|
Well Construction
|
|
|
14
|
|
|
|
15
|
|
|
|
15
|
|
Integrated Drilling
|
|
|
12
|
|
|
|
14
|
|
|
|
6
|
|
Stimulation & Chemicals
|
|
|
12
|
|
|
|
8
|
|
|
|
7
|
|
Completion Systems
|
|
|
8
|
|
|
|
11
|
|
|
|
10
|
|
Drilling Tools
|
|
|
8
|
|
|
|
8
|
|
|
|
11
|
|
Wireline
|
|
|
6
|
|
|
|
6
|
|
|
|
8
|
|
Re-entry & Fishing
|
|
|
6
|
|
|
|
6
|
|
|
|
7
|
|
Pipeline & Specialty Services
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenues increased $1,388 million, or 16%, in
2010 as compared to 2009. North American revenue increased
$1,405 million, or 51%, in 2010 when compared to the prior
year, on a 45% increase in rig count. International revenues
were essentially flat compared to 2009. An 11% increase in
Eastern Hemisphere revenues was offset by a decline in Latin
America. Our stimulation and chemicals, artificial lift and
drilling services product lines were strong contributors to the
year-over-year
increase.
Consolidated revenues decreased $768 million, or 8%, in
2009 as compared to 2008 against a 31% decrease in rig count
activity. This decrease in revenue was mainly attributable to
the significant declines experienced in North America.
International revenues increased $930 million, or 18%, in
2009 as compared to 2008. Our Latin American region was the
largest contributor to our
year-over-year
international revenue growth. This international growth occurred
despite an 8% decline in international rig count. From a service
line perspective, our integrated drilling service line
experienced the strongest growth in 2009.
Operating
Income
Consolidated operating income increased $94 million, or
14%, in 2010 as compared to 2009. Our operating segments
contributed $120 million of incremental operating income
during 2010 as compared to the prior year. This incremental
income was partially offset by an increase in research and
development expenditures of $20 million over 2009. Research
and development expenditures represented a consistent 2% of
revenues in both years. The revaluation of contingent
consideration associated with the OFS acquisition offset
$11 million of the incremental operating income contributed
by our operating segments, as we recognized a gain of
$13 million in 2010 compared to a gain of $24 million
in 2009.
Consolidated operating income decreased $1,267 million, or
65%, in 2009 as compared to 2008. Our operating segments
accounted for $1,188 million of this decrease. In addition,
exit and restructuring charges during 2009 increased
$61 million and corporate expenditures increased
$41 million compared to 2008. The increase in corporate
expenses was primarily attributable to higher employee
compensation costs, professional fees and costs related to
acquisitions (which were capitalized in 2008 and expensed in
2009 due to the adoption of new accounting guidance related to
business combinations) and settlement of certain legal disputes.
In addition, 2009 includes costs associated with business
process optimization initiatives. We also augmented our
compliance infrastructure with increased staff and more rigorous
policies and training of our employees regarding compliance with
applicable anti-corruption laws, trade sanction laws and
import/export laws. Also, 2009 results include $24 million
related to a gain recorded in connection with the revaluation of
contingent consideration included as part of the acquisition of
OFS.
28
The $99 million of exit and restructuring costs incurred
during 2010 include (i) a $38 million charge related
to our Supplemental Executive Retirement Plan (SERP)
which was frozen on March 31, 2010,
(ii) $61 million for severance and facility closure
costs and (iii) $7 million for legal and professional
fees incurred in connection with our on-going investigations.
These charges were offset by a $7 million benefit related
to the reversal of prior cost accruals for our exit from
sanctioned countries.
We incurred exit and restructuring charges during 2009 of
$101 million, which was comprised of
(i) $45 million for legal and professional fees
incurred in connection with our on-going investigations,
(ii) $52 million for severance and facility closure
costs and (iii) $4 million for unusable assets and
cost accruals in certain sanctioned countries.
Exit and restructuring charges during 2008 included
(i) $47 million for legal and professional fees
incurred in connection with our on-going investigations,
(ii) $18 million for severance costs incurred
associated with restructuring activities and
(iii) $56 million for costs incurred in connection
with our withdrawal from sanctioned countries. These charges
were partially offset by an $81 million gain recognized in
the second quarter of 2008 as a result of selling our 50%
interest in a subsidiary we control to Qatar Petroleum for cash
consideration of $113 million.
Devaluation
of Venezuelan Bolivar
In January 2010, the Venezuelan government announced its
intention to devalue its currency and move to a two tier
exchange structure. The official exchange moved from 2.15 to
2.60 for essential goods and to 4.30 for non-essential goods and
services. In connection with this devaluation, we incurred a
charge of $64 million in the first quarter of 2010 for the
remeasurement of our net monetary assets denominated in the
Venezuelan bolivar at the date of the devaluation. Effective
January 1, 2011, the Venezuelan government again modified
the fixed rate of exchange, eliminating the two tier structure
and establishing 4.30 as the official exchange rate for all
goods and services. This modification will not have a material
impact to our financial position or results of operations.
Interest
Expense, Net
Interest expense, net increased $39 million, or 11% in 2010
compared to 2009. The increase in interest expense was primarily
attributable to an overall increase in our long-term debt
balance when compared to 2009, as we refinanced lower-rate
short-term debt with higher interest bearing long-term debt. In
addition, in September 2010 we completed a $1.4 billion
long-term debt offering, and in October 2010, we completed a
tender offer, repurchasing $700 million of our senior notes
due 2012 and 2013. This activity temporarily increased the
balance of our borrowings and contributed to the increase in
interest expense.
Interest expense, net increased $123 million, or 51% in
2009 compared to 2008. The increase in interest expense was
primarily attributable to an overall increase in our long-term
debt balance during the period. We issued $1.5 billion in
senior notes in March 2008 and an additional $1.25 billion
of senior notes in January 2009. This increase was partially
offset by lower short-term borrowing rates and balances during
the comparable period. The incremental borrowings added were
primarily used to fund capital expenditures and to fund
acquisitions.
Bond
Tender Premium
In September 2010, we commenced a cash tender offer for up to
$700 million aggregate principal amount of specified series
of our outstanding debt. Pursuant to the tender-offer terms, in
September 2010 we repurchased $167 million of our
6.625% senior notes due 2011 and incurred an expense of
$11 million for the premium we paid on the repurchase. In
October 2010 we completed the tender offer by repurchasing
$327 million and $206 million of our 5.95% senior
notes due 2012 and 5.15% senior notes due 2013,
respectively. We paid a $44 million premium on these bonds
tendered and incurred a charge of $43 million in the fourth
quarter of 2010.
Other
Expense, Net
Other expense, net increased $16 million, or 42% in 2010
compared to 2009. The increase was mostly due to an increase in
foreign currency exchange losses incurred as the result of the
weakening of foreign currencies against
29
the U.S. dollar. Other expense, net decreased
$7 million, or 16% in 2009 compared to 2008. The decrease
was primarily due to a decline in foreign currency exchange
losses.
Income
Taxes
Our effective tax rates were 145.5% in 2010, 30.8% in 2009 and
22.4% in 2008. The increase in our effective tax rate during
2010 was primarily due to tax expense related to the
reorganization of our operations in Latin America, minimum
tax in Mexico, curtailment expense on our SERP for which no
related tax benefit was recorded and changes in our geographic
earnings mix, all of which are partially offset by a tax benefit
related to the devaluation of the Venezuelan bolivar. The
increase in our effective tax rate during 2009 was primarily due
to minimum tax in Mexico and changes in our geographic earnings
mix.
Segment
Results
North
America
North American revenues increased $1,405 million, or 51%,
in the current year as compared to the prior year and outpaced a
45% increase in average North American rig count over the
comparable period. The strong performance in the U.S. land
market, an overall increase in North American drilling activity,
and price improvements more than offset a weak Gulf of Mexico
environment. Revenues from our stimulation and chemicals,
artificial lift and drilling services product lines were the
strongest contributors to our
year-over-year
increase in revenue.
Revenues in our North American segment decreased
$1,698 million, or 38%, in 2009 as compared to 2008 on a
42% decline in the average rig count in North America over the
comparable period. The decrease in revenues was the result of
the steep decline in drilling activity both in Canada and the
United States and the significant declines in pricing
experienced in the first half of 2009.
Operating income increased $505 million, or 264% in 2010 as
compared to the prior year. Operating margins were 17% in 2010
compared to 7% in 2009. The increase in operating income and
margins is attributable to increased onshore activity in the
U.S., the realization of prior cost reduction efforts, a more
favorable sales mix and improved pricing.
Operating income decreased $915 million, or 83%, in 2009
compared to 2008. Operating margins were 7% and 25% in 2009 and
2008, respectively. The significant reduction in drilling
activity in the region and pricing declines were the primary
reasons for the deterioration in margins and operating income.
Middle
East/North Africa/Asia
Middle East/North Africa/Asia revenues increased
$78 million, or 3%, in 2010 as compared to 2009 with a 7%
increase in rig count over the comparable period. Within the
region our integrated drilling product line continued as the
strongest performer from a service line perspective.
Middle East/North Africa/Asia revenues decreased
$19 million, or 1%, in 2009 as compared to 2008 on a 7%
decline in rig count over the comparable period. Integrated
drilling and drilling services product lines were the strongest
performers from a service line perspective.
Operating income decreased $176 million, or 40%, during
2010 compared to the prior year. Operating margins decreased
from 19% in 2009 to 11% in 2010. The decline in operating income
and margins was primarily the result of higher mobilization
costs and operating delays related to operations in certain
countries, a full years impact of lower pricing and a less
favorable sales mix.
Operating income decreased $123 million, or 22%, during
2009 compared to the prior year. Operating margins were 19% and
24% in 2009 and 2008, respectively. The deterioration in
operating income and margins during 2009 was primarily the
result of delays in startups and deliveries as well as pricing
declines experienced in the region.
30
Europe/West
Africa/FSU
Revenues in our Europe/West Africa/FSU segment increased
$366 million, or 23%, in 2010 compared to the prior year
with a 34% rig count increase over the comparable period. The
increase in revenue was largely attributable to our acquisition
of OFS in July 2009.
Revenues in our Europe/West Africa/FSU segment increased
$79 million, or 5%, in 2009 compared to 2008 against a 16%
rig count decrease over the comparable period. Our acquisition
of OFS in July 2009 was the primary driver of the increase.
Operating income increased $17 million, or 7%, during the
current year compared to the prior year. Operating margins were
12% in 2010 and 14% in 2009. The decline in operating margins
was primarily due to a $6 million one-time depreciation
charge as a result of finalizing third-party asset valuations in
connection with the OFS acquisition, higher than usual year-end
inventory write-offs, pricing declines and changes in sales mix
over the comparable period.
Operating income decreased $150 million, or 40%, during
2009 compared to 2008. Operating margins were 14% in 2009 and
24% in 2008. The decline in operating income and operating
margins was primarily due to activity and pricing declines
experienced in the region in 2009.
Latin
America
Revenues in our Latin American segment decreased
$460 million, or 22%, in 2010 as compared to 2009 against
an average rig count increase of 8% over the comparable period.
The decline in revenue was due to reduced project activity in
Mexico, while Brazil and Colombia posted strong operational
results partially offsetting the decline in Mexico.
Revenues in our Latin American segment increased
$870 million, or 72%, in 2009 as compared to the prior year
against an average rig count decrease of 7% over the comparable
period. Mexico was the strongest contributor to revenue growth.
From a service line perspective, our integrated drilling and
stimulation and chemicals service lines experienced the
strongest growth in 2009.
Operating income decreased $226 million, or 81% in 2010
over 2009. Operating margins decreased from 14% in the prior
year to 3% in the current year. The decline in operating income
and operating margins is attributable to the reduced scale of
project work in Mexico and the revisions to our profitability
estimates on project management contracts in the country. During
the quarter ended September 30, 2010, we incurred a $76
million charge for revisions to our profitability estimates on
our project management contracts in Mexico, as the client
requested a slowdown in drilling activity to near zero while
they re-evaluated the pace of drilling and capital expenditures
in the current year. As a result, the contracts will take longer
to complete than originally estimated. In addition, a
$32 million reserve was taken against accounts receivable
balances in Venezuela in light of the countrys economic
prognosis.
Operating income was relatively flat in 2009 as compared to 2008
and operating margins decreased from 23% in 2008 to 14% in 2009.
A significant change in product mix, together with unforeseen
delays, shifts in customer focus and market declines in
Venezuela, Argentina and Colombia negatively impacted margins.
In addition, weather issues and a reduction in gas activity in
Mexico contributed to the decline in margins.
Discontinued
Operation
We finalized the divestiture of our discontinued operation
consisting of our oil and gas development and production company
during the second quarter of 2008. We recorded a gain of
$11 million, net of taxes, in connection with the
finalization of the divestiture. For the full year of 2008, we
had a loss from our discontinued operation, net of taxes, of
$13 million, which included approximately $21 million
incurred in connection with the settlement of a legal dispute
regarding the business. This loss was partially offset by the
gain recognized in the second quarter of 2008.
31
Equity
Investment Acquisition
We acquired a 33% ownership interest in Premier Business
Solutions (PBS) in June 2007 for approximately
$330 million. PBS conducts business in Russia and is an
electric submersible pump manufacturer. In January 2008, we sold
our electrical submersible pumps product line to PBS and
received a combination of cash and an additional equity
investment in PBS in consideration of the sale. This transaction
increased our ownership percentage to 38.5%. In September 2009,
we converted a $38 million note plus accrued interest due
from PBS for an additional equity investment. Our ownership
percentage was unchanged as the other joint venture partner also
converted its notes receivable for an additional equity
investment.
Liquidity
and Capital Resources
Sources
of Liquidity
Our sources of available liquidity include cash and cash
equivalent balances, cash generated from operations, and
committed availabilities under bank lines of credit. We also
historically have accessed banks for short-term loans from
uncommitted borrowing arrangements and the capital markets with
debt, equity and convertible bond offerings and may from time to
time dispose of businesses or capital assets that are no longer
core to our long-term growth strategy.
Committed
Borrowing Facility
Effective October 15, 2010, we entered into a new,
unsecured revolving credit agreement (the Credit
Agreement) which replaced our previous agreements
scheduled to mature in May 2011. The Credit Agreement can be
used for a combination of borrowings, support for our commercial
paper program and issuances of letters of credit. At
December 31, 2010, the Credit Agreement allowed for
aggregate availability of $1.75 billion with an October
2013 maturity date, subject to extension. There were no
outstanding borrowings on this facility at December 31,
2010.
Consistent with our prior facilities, the Credit Agreement
requires us to maintain a
debt-to-capitalization
ratio of less than 60% and contains other covenants and
representations customary for an investment-grade commercial
credit. Our
debt-to-capitalization
ratio was approximately 42% at December 31, 2010, which is
in compliance with these covenants.
The following is a recap of our availability under the Credit
Agreement at December 31, 2010 (in millions):
|
|
|
|
|
Facility
|
|
$
|
1,750
|
|
Less uses of facility:
|
|
|
|
|
Amount drawn
|
|
|
|
|
Commercial paper
|
|
|
|
|
Letters of credit
|
|
|
64
|
|
|
|
|
|
|
Availability
|
|
$
|
1,686
|
|
|
|
|
|
|
Commercial
Paper
We have a $1.5 billion commercial paper program under which
we may from time to time issue short-term, unsecured notes. Our
commercial paper issuances are supported by the Credit Agreement.
Accounts
Receivable Factoring
We have entered into an accounts receivable factoring program to
sell accounts receivable related to Latin America to third party
financial institutions. We sold approximately $395 million
under this program during 2010. We received cash totaling
$363 million and recognized a loss of $10 million on
these sales. These transactions qualified for sale accounting
under the accounting standards. The remaining amounts due to us
will be paid as the third party financial institution collects
on the receivables. These deferred amounts are recorded as Other
Current Assets in the Condensed Consolidated Balance Sheet. The
proceeds received on the initial sale and $16 million for
32
the collection of deferred amounts through December 31,
2010, are included in operating cash flows in our Consolidated
Statement of Cash Flows.
Secured
Loan Agreement
In June 2010, we entered into a secured loan agreement with a
third-party financial institution and received proceeds of
$180 million. The note bears interest at a rate of 4.8% and
will be repaid in monthly installments over seven years. The
loan is secured by assets located in the United States, and is
included in long-term debt on our Condensed Consolidated Balance
Sheet.
Cash
Requirements
During 2011, we anticipate our cash requirements will include
interest payments on our outstanding debt, the payment of
$183 million of senior notes due in the fourth quarter of
2011, working capital needs and capital expenditures and may
include opportunistic business acquisitions. We anticipate
funding these requirements with cash generated from operations
and, if necessary, with availability under the Credit Agreement
or with an issuance of commercial paper.
Capital expenditures during the year ended December 31,
2010 were $977 million. We estimate our capital
expenditures for 2011 will be approximately $1.4 billion.
We are projecting higher capital expenditures during 2011 to
support anticipated near-term growth.
From time to time we acquire businesses or technologies or enter
into joint ventures to increase our range of products and
services, expand our geographic scope or otherwise enhance our
businesses. During the year ended December 31, 2010, we
used $146 million in cash for business and technology
acquisitions, which includes our payment of $47 million to
settle contingent consideration terms and $44 million paid
in accordance with the working capital adjustment provisions
associated with our 2009 OFS acquisition. Consideration for the
2010 acquisitions also included the issuance of approximately
two million shares valued at approximately $28 million.
From time to time we also divest of businesses or capital assets
when we believe they are no longer core to our long-term growth
strategy or when combining those businesses with a joint venture
partner presents us with a strategic opportunity. In 2010, we
received $197 million in cash from sales of assets and
businesses.
Contractual
Obligations
The following summarizes our contractual obligations and
contingent commitments by period. The obligations we pay in
future periods may vary due to certain assumptions including the
duration of our obligations and anticipated actions by third
parties.
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
2012 and
|
|
|
2014 and
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2013
|
|
|
2015
|
|
|
Thereafter
|
|
|
Total
|
|
|
|
(In millions)
|
|
|
Short-term debt
|
|
$
|
18
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
18
|
|
Long-term debt(a)
|
|
|
207
|
|
|
|
862
|
|
|
|
45
|
|
|
|
5,578
|
|
|
|
6,692
|
|
Interest on long-term debt
|
|
|
448
|
|
|
|
837
|
|
|
|
777
|
|
|
|
4,326
|
|
|
|
6,388
|
|
Noncancellable operating leases
|
|
|
116
|
|
|
|
149
|
|
|
|
79
|
|
|
|
188
|
|
|
|
532
|
|
Purchase obligations
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,049
|
|
|
$
|
1,848
|
|
|
$
|
901
|
|
|
$
|
10,092
|
|
|
$
|
13,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Amounts represent the expected cash payments for our total debt
and do not include any unamortized discounts or deferred gains
on terminated interest rate swap agreements. |
Due to the uncertainty with respect to the timing of future cash
flows associated with our unrecognized tax benefits at
December 31, 2010, we are unable to make reasonably
reliable estimates of the period of cash settlement with the
respective taxing authorities. Therefore, $84 million in
unrecognized tax benefits, including interest and penalties,
have been excluded from the contractual obligations table above.
33
We have defined benefit pension plans covering certain of our
U.S. and international employees that provide various
pension benefits. During 2010, we contributed approximately
$8 million towards those plans and paid out benefits
directly of approximately $33 million. For 2011, we
anticipate funding $8 million through cash flows from
operating activities.
Senior
Notes and Bond Tender
In September 2010, we completed a $1.4 billion long-term
debt offering comprised of (i) $800 million of
5.125% Senior Notes due in 2020 (5.125% Senior
Notes) and (ii) $600 million of
6.75% Senior Notes due in 2040 (6.75% Senior
Notes). Net proceeds of $1.386 billion were used to
fund our bond tender offer that commenced in September 2010 and
repay short-term borrowings on our revolving credit facilities.
In September 2010, we commenced a cash tender offer for up to
$700 million aggregate principal amount of specified series
of our outstanding debt. Pursuant to the tender-offer terms, in
September 2010 we repurchased $167 million of our
6.625% senior notes due 2011 and incurred an expense of
$11 million for the premium we paid on the repurchase.
In October 2010, we completed the tender offer by repurchasing
$327 million and $206 million of our 5.95% senior
notes due 2012 and 5.15% senior notes due 2013,
respectively. We paid a $44 million premium on these bonds
tendered and incurred a charge of $43 million in the fourth
quarter of 2010.
In January 2009, we completed a $1.25 billion long-term
debt offering comprised of (i) $1 billion of
9.625% Senior Notes due in 2019 (9.625% Senior
Notes) and (ii) $250 million of
9.875% Senior Notes due in 2039 (9.875% Senior
Notes). Net proceeds of $1.23 billion were used to
repay short-term borrowings and for general corporate purposes.
In March 2008, we completed a $1.5 billion long-term debt
offering comprised of (i) $500 million of
5.15% Senior Notes due in 2013 (5.15% Senior
Notes), (ii) $500 million of 6.00% Senior
Notes due 2018 (6.00% Senior Notes) and
(iii) $500 million of 7.00% Senior Notes due 2038
(7.00% Senior Notes). Net proceeds of
$1.47 billion were used to repay short-term borrowings and
for general corporate purposes, including capital expenditures
and business acquisitions.
Interest
Rate Swaps
We use interest rate swaps to help mitigate exposures related to
interest rate movements. Amounts paid or received upon
termination of the interest rate swaps accounted for as fair
value hedges represent the fair value of the agreements at the
time of termination and are recorded as an adjustment to the
carrying value of the related debt. These amounts are being
amortized as a reduction (in the case of gains) or as an
increase (in the case of losses) to interest expense over the
remaining term of the debt. As of December 31, 2010 and
2009 we had net unamortized gains of $55 million and
$68 million, respectively, associated with interest rate
swap terminations.
Cash Flow
Hedges
In 2008, we entered into interest rate derivative instruments to
hedge projected exposures to interest rates in anticipation of a
debt offering. Those hedges were terminated at the time of the
issuance of the debt and the loss on these hedges is being
amortized from Accumulated Other Comprehensive Income to
interest expense over the remaining term of the debt. As of
December 31, 2010 and 2009, we had net unamortized losses
of $13 million associated with our cash flow hedge
terminations.
Other
Derivative Instruments
As of December 31, 2010 and 2009, we had foreign currency
forward and option contracts with notional amounts aggregating
$925 million and $1,062 million, respectively, which
were entered into to hedge exposure to currency fluctuations in
various foreign currencies, including, but not limited to, the
British pound sterling, the Canadian dollar, the euro and the
Norwegian krone. The total estimated fair value of these
contracts and amounts owed associated with closed contracts
resulted in a net liability of approximately $14 million
and $9 million at
34
December 31, 2010 and 2009, respectively. These derivative
instruments were not designated as hedges, and the changes in
fair value of the contracts are recorded each period in current
earnings.
We have cross-currency swaps between the U.S. dollar and
Canadian dollar to hedge certain exposures to the Canadian
dollar. At December 31, 2010 and 2009, we had notional
amounts outstanding of $215 million and $263 million,
respectively. The total estimated fair value of these contracts
at December 31, 2010 and 2009 resulted in a liability of
$35 million and $26 million, respectively. These
derivative instruments were not designated as hedges, and the
changes in fair value of the contracts are recorded each period
in current earnings.
Warrants
At December 31, 2010, we had outstanding warrants to
purchase up to 12.9 million of our shares at a price of
$15.00 per share. The warrants remain exercisable until
February 28, 2012 and are subject to adjustment for changes
in our capital structure or the issuance of dividends in cash,
securities or property. Upon exercise by the holders, settlement
may occur through physical delivery, net share settlement, net
cash settlement or a combination of those methods. The net cash
settlement option upon exercise is at our sole discretion.
Off
Balance Sheet Arrangements
Guarantees
During the first quarter of 2009, we completed a transaction
that changed our place of incorporation from Bermuda to
Switzerland. A new Swiss corporation named Weatherford
International Ltd. was formed and is now the ultimate parent
(Weatherford Switzerland) of the Weatherford group
and guarantees the obligations of Weatherford International Ltd.
incorporated in Bermuda (Weatherford Bermuda) and
Weatherford International, Inc. incorporated in Delaware
(Weatherford Delaware) noted below.
The following obligations of Weatherford Delaware were
guaranteed by Weatherford Bermuda at December 31, 2010 and
2009: (i) the 6.625% Senior Notes, (ii) the
5.95% Senior Notes, (iii) the 6.35% Senior Notes
and (iv) the 6.80% Senior Notes.
The following obligations of Weatherford Bermuda were guaranteed
by Weatherford Delaware at December 31, 2009: (i) the
revolving credit facilities, (ii) the 4.95% Senior
Notes, (iii) the 5.50% Senior Notes, (iv) the
6.50% Senior Notes, (v) the 5.15% Senior Notes,
(vi) the 6.00% Senior Notes, (vii) the
7.00% Senior Notes, (viii) the 9.625% Senior
Notes, (ix) the 9.875% Senior Notes and
(x) issuances of notes under the commercial paper program.
In September 2010, Weatherford Bermuda issued $800 million
of 5.125% Senior Notes due 2020 and $600 million of
6.75% Senior Notes due 2040, both of which are guaranteed
by Weatherford Delaware. As a result of these transactions, the
following obligations of Weatherford Bermuda were guaranteed by
Weatherford Delaware at December 31, 2010: (i) the
revolving credit facility, (ii) the 4.95% Senior
Notes, (iii) the 5.50% Senior Notes, (iv) the
6.50% Senior Notes, (v) the 5.15% Senior Notes,
(vi) the 6.00% Senior Notes, (vii) the
7.00% Senior Notes, (viii) the 9.625% Senior
Notes, (ix) the 9.875% Senior Notes, (x) the
5.125% Senior Notes, (xi) the 6.75% Senior Notes
and (xii) issuances of notes under the commercial paper
program.
Letters
of Credit
We execute letters of credit in the normal course of business.
While these obligations are not normally called, these
obligations could be called by the beneficiaries at any time
before the expiration date should we breach certain contractual
or payment obligations. As of December 31, 2010, we had
$425 million of letters of credit and bid and performance
bonds outstanding, consisting of $361 million outstanding
under various uncommitted credit facilities and $64 million
letters of credit outstanding under our committed facility. If
the beneficiaries called these letters of credit, the called
amount would become an on-balance sheet liability, and our
available liquidity would be reduced by the amount called. To
the extent we are successful in being awarded large contracts in
the future, our requirements for posting letters of credit and
bid and performance bonds could increase.
35
Critical
Accounting Policies and Estimates
Our discussion and analysis of our financial condition and
results of operation is based upon our consolidated financial
statements. We prepare these financial statements in conformity
with U.S. generally accepted accounting principles. As
such, we are required to make certain estimates, judgments and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the periods
presented. We base our estimates on historical experience,
available information and various other assumptions we believe
to be reasonable under the circumstances. On an on-going basis,
we evaluate our estimates; however, actual results may differ
from these estimates under different assumptions or conditions.
The accounting policies we believe require managements
most difficult, subjective or complex judgments and are the most
critical to our reporting of results of operations and financial
position are as follows:
Business
Combinations and Goodwill and Indefinite-Lived Intangible
Assets
Goodwill and intangible assets acquired in connection with
business combinations represent the excess of consideration over
the fair value of tangible net assets acquired. Certain
assumptions and estimates are employed in determining the fair
value of assets acquired, the fair value of liabilities assumed,
as well as in determining the allocation of goodwill to the
appropriate reporting unit.
We perform an impairment test for goodwill and indefinite-lived
intangible assets annually as of October 1, or earlier if
indicators of potential impairment exist.
We have indefinite-lived intangible assets totaling
$19 million and $20 million as of December 31,
2010 and 2009, respectively. Our impairment test for
indefinite-lived intangible assets involves the comparison of
the fair value of the intangible asset and its carrying value.
We have determined that no impairment exists related to these
assets.
We have goodwill totaling $4.2 billion at both
December 31, 2010 and 2009. Goodwill impairment is
evaluated using a two-step process. The first step of the
goodwill impairment test involves a comparison of the fair value
of each of our reporting units with their carrying values. Our
reporting units are based on our regional structure and consist
of the United States, Canada, Latin America, Europe, West
Africa, FSU, Middle East/North Africa and Asia Pacific. If the
carrying amount of a reporting unit exceeds its fair value, the
second step of the goodwill impairment test shall be performed.
The second step compares the implied fair value of the reporting
units goodwill to the carrying amount of its goodwill to
measure the amount of impairment loss.
The fair value of our reporting units are determined using
discounted cash flows using a discount rate adjusted for the
credit risk of the regional reporting unit tested. Certain
estimates and judgments are required in the application of these
fair value models. The discounted cash flow analysis consists of
estimating the future revenue, operating margins, capital
expenditures, working capital and cash flows that are directly
associated with each of our reporting units.
Many of the assumptions used in our discounted cash flow
analysis are based upon our annual financial forecast. This
annual planning process takes into consideration many factors
including historical results and operating performance, related
industry trends, pricing strategies, customer analysis,
operational issues, competitor analysis, and marketplace data,
among others. Assumptions are also made for growth rates for
periods beyond the financial forecast period. Our estimates of
fair value are sensitive to changes in all of these variables,
certain of which relate to conditions outside our control. If
any one of the above assumptions changes or fails to
materialize, the resulting decline in our estimated fair value
could result in an impairment charge to goodwill associated with
the applicable reporting unit.
None of our reporting units failed the first step of our
impairment test during 2010. In addition, all reporting
units fair values were substantially in excess of their
carrying value with the exception of the FSU and West Africa
reporting units. These reporting units had an excess of fair
value over carrying value of approximately 20%. Our FSU and West
Africa reporting units have approximately $300 million and
$75 million of goodwill, respectively.
36
Long-Lived
Assets
Long-lived assets, which includes property, plant and equipment
and definite-lived intangibles, comprise a significant amount of
our assets. In accounting for long-lived assets, we must make
estimates about the expected useful lives of the assets and the
potential for impairment based on the fair value of the assets
and the cash flows they are expected to generate. The value of
the long-lived assets is then amortized over its expected useful
life. A change in the estimated useful lives of our long-lived
assets would have an impact on our results of operations. We
estimate the useful lives of our long-lived asset groups as
follows:
|
|
|
|
|
Useful Lives
|
|
Buildings and leasehold improvements
|
|
10-40 years or lease term
|
Rental and service equipment
|
|
2-20 years
|
Machinery and other
|
|
2-12 years
|
Intangible assets
|
|
2-20 years
|
In estimating the useful lives of our property, plant and
equipment, we rely primarily on our actual experience with the
same or similar assets. The useful lives of our intangible
assets are determined by the years over which we expect the
assets to generate a benefit based on legal, contractual or
regulatory terms.
Long-lived assets to be held and used by us are reviewed to
determine whether any events or changes in circumstances
indicate that we may not be able to recover the carrying amount
of the asset. Factors that might indicate a potential impairment
may include, but are not limited to, significant decreases in
the market value of the long-lived asset, a significant change
in the long-lived assets physical condition, the
introduction of competing technologies, legal challenges, a
change in industry conditions or a reduction in cash flows
associated with the use of the long-lived asset. If these or
other factors exist that indicate the carrying amount of the
asset may not be recoverable, we determine whether an impairment
has occurred through the use of an undiscounted cash flow
analysis. The undiscounted cash flow analysis consists of
estimating the future cash flows that are directly associated
with and expected to arise from the use and eventual disposition
of the asset over its remaining useful life. These cash flows
are inherently subjective and require significant estimates
based upon historical experience and future expectations such as
budgets and internal projections. If the undiscounted cash flows
do not exceed the carrying value of the long-lived asset, an
impairment has occurred, and we recognize a loss for the
difference between the carrying amount and the estimated fair
value of the asset. The fair value of the asset is measured
using market prices, or in the absence of market prices, is
based on an estimate of discounted cash flows. Cash flows are
generally discounted at an interest rate commensurate with our
weighted average cost of capital for a similar asset.
Pension
and Other Postretirement Benefits
We recognize the overfunded or underfunded status of a defined
benefit pension or other postretirement benefit plan as an asset
or liability in the financial statements, measure plan assets
and obligations as of the end of our fiscal year, and recognize
gains/losses, prior service credits/costs, and transition
assets/obligations in accumulated other comprehensive income
until they are recognized as components of net periodic benefit
cost.
Amounts recognized in the financial statements are determined on
an actuarial basis. Two of the more critical assumptions in the
actuarial calculations are the discount rate for determining the
current value of plan benefits and the expected rate of return
on plan assets. Discount rates are based on the yields of
government bonds or high quality corporate bonds in the
respective country or economic market. The expected long-term
rates of return on plan assets are based on a combination of
historical experience and anticipated future returns in each of
the asset categories. As we have both domestic and international
plans, the assumptions, though the same in nature, are based on
varying factors specific to each particular country or economic
environment. Changes in any of the assumptions used could impact
our projected benefit obligations and benefit costs as well as
other pension and postretirement benefit calculations.
37
Due to the significance of the discount rates and expected
long-term rates of return, the following sensitivity analysis
demonstrates the effect that a 50 basis point change in
those assumptions will have on annual pension expense:
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) of Annual
|
|
|
Pension Expense
|
|
|
50 Basis Point
|
|
50 Basis Point
|
|
|
Increase
|
|
Decrease
|
|
|
(In millions)
|
|
Discount rate
|
|
$
|
(1.1
|
)
|
|
$
|
1.5
|
|
Expected long-term rate of return
|
|
|
(0.5
|
)
|
|
|
0.5
|
|
Percentage
of Completion
Revenue from long-term contracts, primarily for our integrated
project management services, is reported on the
percentage-of-completion
method of accounting. This method of accounting requires us to
calculate contract profit to be recognized in each reporting
period for each contract based upon our projections of future
outcomes, which include:
|
|
|
|
|
estimates of the total cost to complete the project;
|
|
|
|
estimates of project schedule and completion date;
|
|
|
|
estimates of the extent of progress toward completion; and
|
|
|
|
amounts of any change orders or claims included in revenue.
|
Measurements of progress are generally output based related to
physical progress. At the outset of each contract, we prepare a
detailed analysis of our estimated cost to complete the project.
Risks related to service delivery, usage, productivity, and
other factors are considered in the estimation process. Our
personnel periodically evaluate the estimated costs, claims,
change orders, and percentage of completion at the contract
level. The recording of profits and losses on long-term
contracts requires an estimate of the total profit or loss over
the life of each contract. This estimate requires consideration
of total contract value, change orders, and claims, less costs
incurred and estimated costs to complete. There are many factors
that impact future costs, including but not limited to weather,
inflation, labor and community disruptions, timely availability
of materials, productivity, and other factors as outlined in our
Risk Factors. During the quarter ended
September 30, 2010, we incurred a $76 million charge
for revisions to our profitability estimates on our project
management contracts in Mexico, as the client requested a
slowdown in drilling activity to near zero while they
re-evaluated the pace of drilling and capital expenditures in
the current year. As a result, the contracts will take longer to
complete than originally estimated. For example, during the
quarter ended September 30, 2010, we incurred a
$76 million charge for revisions to our profitability
estimates on our project management contracts in Mexico, where
the clients budget constraints triggered an activity
decline to near zero and an expected modification to future
drilling plans. The change in our profitability estimates was
due to what we view as a change in public policy in Mexico with
respect to expenditures. Anticipated losses on contracts are
recorded in full in the period in which they become evident.
Profits are recorded based upon the total estimated contract
profit times the current percentage complete for the contract.
Income
Taxes
We take into account the differences between the financial
statement treatment and tax treatment of certain transactions.
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. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
of a change in tax rates is recognized as income or expense in
the period that includes the enactment date. Our effective tax
rates for 2010, 2009 and 2008 were 145.5%, 30.8% and 22.4%,
respectively.
38
We recognize the impact of an uncertain tax position taken or
expected to be taken on an income tax return in the financial
statements at the largest amount that is more likely than not to
be sustained upon examination by the relevant taxing authority.
We operate in approximately 100 countries through various legal
entities. As a result, we are subject to numerous domestic and
foreign tax jurisdictions and tax agreements and treaties among
the various taxing authorities. Our operations in these
jurisdictions are taxed on various bases: income before taxes,
deemed profits (which is generally determined using a percentage
of revenues rather than profits), withholding taxes based on
revenue, and other alternative minimum taxes. The calculation of
our tax liabilities involves consideration of uncertainties in
the application and interpretation of complex tax regulations in
a multitude of jurisdictions across our global operations. We
recognize potential liabilities and record tax liabilities for
anticipated tax audit issues in the U.S. and other tax
jurisdictions based on our estimate of whether, and the extent
to which, additional taxes will be due. The tax liabilities are
reflected net of realized tax loss carryforwards. We adjust
these reserves upon specific events; however, due to the
complexity of some of these uncertainties, the ultimate
resolution may result in a payment that is different from our
current estimate of the tax liabilities. If our estimate of tax
liabilities proves to be less than the ultimate assessment, an
additional charge to expense would result. If payment of these
amounts ultimately proves to be less than the recorded amounts,
the reversal of the liabilities would result in tax benefits
being recognized in the period when the contingency has been
resolved and the liabilities are no longer necessary. Changes in
tax laws, regulations, agreements and treaties, foreign currency
exchange restrictions or our level of operations or
profitability in each taxing jurisdiction could have an impact
upon the amount of income taxes that we provide during any given
year.
Valuation
Allowance for Deferred Tax Assets
We record a valuation allowance to reduce the carrying value of
our deferred tax assets when it is more likely than not that a
portion or all of the deferred tax assets will expire before
realization of the benefit or that future deductibility is not
probable. The ultimate realization of the deferred tax assets
depends on the ability to generate sufficient taxable income of
the appropriate character and in the related jurisdiction in the
future. In evaluating our ability to recover our deferred tax
assets, we consider reasonably available positive and negative
evidence, including our past operating results, the existence of
cumulative losses in the most recent years and our forecast of
future taxable income. In estimating future taxable income, we
develop assumptions, including the amount of future state,
federal and international pretax operating income, the reversal
of temporary differences and the implementation of feasible and
prudent tax planning strategies. These assumptions require
significant judgment.
We have identified various domestic and international tax
planning strategies that we would implement, if necessary, to
enable the realization of our deferred tax assets; however, when
the likelihood of the realization of existing deferred tax
assets changes, adjustments to the valuation allowance are
charged to our income tax provision in the period in which the
determination is made.
As of December 31, 2010, our net deferred tax assets were
$266 million before a related valuation allowance of
$103 million. As of December 31, 2009, our net
deferred tax assets were $314 million before a related
valuation allowance of $70 million.
For a more comprehensive list of our accounting policies, see
Item 8. Financial Statements and Supplementary
Data Notes to Consolidated Financial
Statements Note 1.
New
Accounting Pronouncements
In October 2009, the Financial Accounting Standards Board issued
an update to existing guidance on revenue recognition for
arrangements with multiple deliverables. This update will allow
companies to allocate consideration received for qualified
separate deliverables using estimated selling price for both
delivered and undelivered items when vendor-specific objective
evidence or third-party evidence is unavailable. Additional
disclosures discussing the nature of multiple element
arrangements, the types of deliverables under the arrangements,
the general timing of their delivery, and significant factors
and estimates used to determine estimated selling prices are
required. We will adopt this update for new revenue arrangements
entered into or materially modified beginning January 1,
2011. We
39
do not expect the provisions of this update to have a material
impact on our condensed consolidated financial statements.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
We are currently exposed to market risk from changes in foreign
currency and changes in interest rates. From time to time, we
may enter into derivative financial instrument transactions to
manage or reduce our market risk. A discussion of our market
risk exposure in these financial instruments follows.
Foreign
Currency Exchange Rates
We operate in virtually every oil and natural gas exploration
and production region in the world. In some parts of the world,
such as the Middle East and Southeast Asia, the currency of our
primary economic environment is the U.S. dollar. We use
this as our functional currency. In other parts of the world, we
conduct our business in currencies other than the
U.S. dollar and the functional currency is the applicable
local currency. In those countries in which we operate in the
local currency, the effects of foreign currency fluctuations are
largely mitigated because local expenses of such foreign
operations are also generally denominated in the same currency.
In January 2010, the Venezuelan government announced its
intention to devalue its currency and move to a two tier
exchange structure. The official exchange rate moved from 2.15
to 2.60 for essential goods and from 2.15 to 4.30 for
non-essential goods and services. Our Venezuelan entities
maintain the U.S. dollar as their functional currency. In
connection with this devaluation, we incurred a charge of
$64 million for the remeasurement of our net monetary
assets denominated in Venezuelan bolivars at the date of the
devaluation, which was not tax deductible in Venezuela. We also
recorded a $24 million tax benefit for local Venezuelan
income tax purposes related to our net
U.S. dollar-denominated monetary liability position in the
country. As of December 31, 2010, we had a net monetary
asset position denominated in Venezuelan bolivars of
approximately $56 million comprised primarily of cash and
accounts receivable. We are continuing to explore opportunities
to reduce this exposure but should another devaluation occur in
the future, we may be required to take further charges related
to the remeasurement of our net monetary asset position. For
example, if the Venezuela bolivar devalued by an additional 10%
in the future, we would record a devaluation charge of
approximately $6 million.
Assets and liabilities of entities for which the functional
currency is the local currency are translated into
U.S. dollars using the exchange rates in effect at the
balance sheet date, resulting in translation adjustments that
are reflected in Accumulated Other Comprehensive Income in the
shareholders equity section on our Consolidated Balance
Sheets. A portion of our net assets are impacted by changes in
foreign currencies in relation to the U.S. dollar. We
recorded a $5 million adjustment to increase our equity
account for 2010 to reflect the net impact of the weakening of
the U.S. dollar against various foreign currencies.
Effective January 1, 2011, the Venezuelan government again
modified the fixed rate of exchange, eliminating the two tier
structure and establishing 4.30 as the official exchange rate
for all goods and services. This modification will not have a
material impact to our financial position or results of
operations.
As of December 31, 2010 and 2009, we had foreign currency
forward and option contracts with notional amounts aggregating
$925 million and $1,062 million, respectively, which
were entered into to hedge exposure to currency fluctuations in
various foreign currencies, including, but not limited to, the
British pound sterling, the Canadian dollar, the euro and the
Norwegian krone. The total estimated fair value of these
contracts and amounts owed associated with closed contracts
resulted in a net liability of approximately $14 million
and $9 million at December 31, 2010 and 2009,
respectively. These derivative instruments were not designated
as hedges, and the changes in fair value of the contracts are
recorded each period in current earnings.
We have cross-currency swaps between the U.S. dollar and
Canadian dollar to hedge certain exposures to the Canadian
dollar. At December 31, 2010 and 2009, we had notional
amounts outstanding of $215 million and $263 million,
respectively. The estimated fair value of these contracts at
December 31, 2010 and 2009 resulted in a liability of
$35 million and $26 million, respectively. These
derivative instruments were not designated as hedges, and the
changes in fair value of the contracts are recorded each period
in current earnings.
40
Interest
Rates
We are subject to interest rate risk on our long-term
fixed-interest rate debt and variable-interest rate borrowings.
Variable rate debt, where the interest rate fluctuates
periodically, exposes us to short-term changes in market
interest rates. Fixed rate debt, where the interest rate is
fixed over the life of the instrument, exposes us to changes in
market interest rates reflected in the fair value of the debt
and to the risk that we may need to refinance maturing debt with
new debt at a higher rate. All other things being equal, the
fair value of our fixed rate debt will increase or decrease as
interest rates change.
Our long-term borrowings that were outstanding at
December 31, 2010 and 2009 subject to interest rate risk
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2010
|
|
2009
|
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
|
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
|
|
(In millions)
|
|
6.625% Senior Notes due 2011
|
|
$
|
184
|
|
|
$
|
191
|
|
|
$
|
353
|
|
|
$
|
380
|
|
5.95% Senior Notes due 2012
|
|
|
273
|
|
|
|
290
|
|
|
|
599
|
|
|
|
648
|
|
5.15% Senior Notes due 2013
|
|
|
299
|
|
|
|
310
|
|
|
|
511
|
|
|
|
526
|
|
4.95% Senior Notes due 2013
|
|
|
252
|
|
|
|
266
|
|
|
|
253
|
|
|
|
263
|
|
5.50% Senior Notes due 2016
|
|
|
358
|
|
|
|
374
|
|
|
|
360
|
|
|
|
351
|
|
6.35% Senior Notes due 2017
|
|
|
600
|
|
|
|
651
|
|
|
|
600
|
|
|
|
647
|
|
6.00% Senior Notes due 2018
|
|
|
498
|
|
|
|
551
|
|
|
|
498
|
|
|
|
514
|
|
9.625% Senior Notes due 2019
|
|
|
1,033
|
|
|
|
1,287
|
|
|
|
1,034
|
|
|
|
1,236
|
|
5.125% Senior Notes due 2020
|
|
|
799
|
|
|
|
794
|
|
|
|
|
|
|
|
|
|
6.50% Senior Notes due 2036
|
|
|
596
|
|
|
|
595
|
|
|
|
596
|
|
|
|
574
|
|
6.80% Senior Notes due 2037
|
|
|
298
|
|
|
|
312
|
|
|
|
298
|
|
|
|
303
|
|
7.00% Senior Notes due 2038
|
|
|
498
|
|
|
|
535
|
|
|
|
498
|
|
|
|
517
|
|
9.875% Senior Notes due 2039
|
|
|
247
|
|
|
|
335
|
|
|
|
247
|
|
|
|
326
|
|
6.75% Senior Notes due 2040
|
|
|
598
|
|
|
|
624
|
|
|
|
|
|
|
|
|
|
We have various other long-term debt instruments of
$215 million at December 31, 2010, but believe the
impact of changes in interest rates in the near term will not be
material to these instruments. The carrying value of our
short-term borrowings of $18 million at December 31,
2010 approximates fair value.
As it relates to our variable rate debt, if market interest
rates average 1% more in 2011 than the rates as of
December 31, 2010, interest expense for 2011 would increase
by less than $1 million. This amount was determined by
calculating the effect of the hypothetical interest rate on our
variable rate debt. This sensitivity analysis assumes there are
no changes in our financial structure.
Interest
Rate Swaps and Derivatives
We manage our debt portfolio to limit our exposure to interest
rate volatility and may employ interest rate swaps as a tool to
achieve that goal. 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 and
the creditworthiness of the counterparties in such transactions.
The counterparties to our interest rate swaps are multinational
commercial banks. In light of events in the global credit
markets and the potential impact of these events on the
liquidity of the banking industry, we continue to monitor the
creditworthiness of our counterparties.
Amounts paid or received upon termination of the interest rate
swaps represent the fair value of the agreements at the time of
termination and are recorded as an adjustment to the carrying
value of the related debt. These amounts are amortized as a
reduction (in the case of gains) or an increase (in the case of
losses) to interest expense over the remaining term of the debt.
41
In August 2009, we entered into interest rate swap agreements to
pay a variable interest rate and receive a fixed interest rate
with an aggregate notional amount of $1.2 billion against
our 5.15%, 5.50% and 9.625% Senior Notes. These swaps were
designed as fair value hedges and were terminated in December
2009. As a result of these terminations, we received a cash
settlement of $53 million. In addition, we received
$11 million in interest payments while the interest rate
swaps were open. The gains associated with these interest rate
swap terminations have been deferred and will be amortized over
the remaining term of our 5.15%, 5.50% and 9.625% Senior
Notes.
In December 2008, we entered into an interest rate swap
agreement on an aggregate notional amount of $150 million
against one of our revolving credit facilities. This agreement
matured in June 2009.
Upon completion of the long-term debt offering in March 2008, we
entered into interest rate swap agreements on an aggregate
notional amount of $500 million against our
5.15% Senior Notes. These swaps were designed as fair value
hedges and were terminated in December 2008. As a result of
these terminations, we received cash proceeds, net of accrued
interest, of $12 million. The gain associated with this
interest rate swap termination has been deferred and is being
amortized over the remaining term of the 5.15% Senior Notes.
As of December 31, 2010 and 2009, we had net unamortized
gains of $55 million and $68 million, respectively,
associated with interest rate swap terminations. We have no
interest rate swaps outstanding at December 31, 2010.
42
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
INDEX TO
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
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Page
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44
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45
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46
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47
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48
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49
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50
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|
Financial Statement Schedule II:
|
|
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|
|
|
|
|
113
|
|
43
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Weatherford International Ltd. and subsidiaries
We have audited Weatherford International Ltd. and
subsidiaries internal control over financial reporting as
of December 31, 2010, based on criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Weatherford International Ltd. and
subsidiaries 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
Managements Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the
companys internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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 included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys 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 companys
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
companys 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.
A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material
misstatement of the companys annual or interim financial
statements will not be prevented or detected on a timely basis.
The following material weakness has been identified and included
in managements assessment. Management has identified a
material weakness in controls related to the companys
accounting for income taxes at December 31, 2010. We also
have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the
consolidated financial statements of Weatherford International
Ltd. and subsidiaries as of December 31, 2010 and 2009 and
the related consolidated statements of income,
shareholders equity and cash flows for each of the three
years in the period ended December 31, 2010. This material
weakness was considered in determining the nature, timing and
extent of audit tests applied in our audit of the 2010 financial
statements and this report does not affect our report dated
March 8, 2011, which expressed an unqualified opinion on
those financial statements.
In our opinion, because of the effect of the material weakness
described above on the achievement of the objectives of the
control criteria, Weatherford International Ltd. and
subsidiaries has not maintained effective internal control over
financial reporting as of December 31, 2010, based on the
COSO criteria.
/s/ Ernst &
Young LLP
Houston, Texas
March 8, 2011
44
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Weatherford International Ltd. and subsidiaries
We have audited the accompanying consolidated balance sheets of
Weatherford International Ltd. and subsidiaries as of
December 31, 2010 and 2009, and the related consolidated
statements of income, shareholders equity, and cash flows
for each of the three years in the period ended
December 31, 2010. Our audits also included the financial
statement schedule listed in the Index at Item 15. These
financial statements and schedule are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Weatherford International Ltd. and
subsidiaries at December 31, 2010 and 2009, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended
December 31, 2010, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Weatherford International Ltd.s internal control over
financial reporting as of December 31, 2010, based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated March 8, 2011
expressed an adverse opinion thereon.
As discussed in Note 2 to the consolidated financial
statements, the December 31, 2009 and 2008 consolidated
financial statements have been restated to correct certain
errors in the income tax accounts.
/s/ Ernst &
Young LLP
Houston, Texas
March 8, 2011
45
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|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
(Restated)
|
|
|
|
(In thousands, except par value)
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
415,772
|
|
|
$
|
252,519
|
|
Accounts Receivable, Net of Allowance for Uncollectible Accounts
of $58,756 in 2010 and $20,466 in 2009
|
|
|
2,629,403
|
|
|
|
2,510,948
|
|
Inventories
|
|
|
2,590,008
|
|
|
|
2,238,294
|
|
Current Deferred Tax Assets
|
|
|
255,476
|
|
|
|
259,077
|
|
Other Current Assets
|
|
|
601,408
|
|
|
|
721,115
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
6,492,067
|
|
|
|
5,981,953
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
Land, Buildings and Leasehold Improvements
|
|
|
1,159,442
|
|
|
|
976,274
|
|
Rental and Service Equipment
|
|
|
7,977,336
|
|
|
|
7,534,467
|
|
Machinery and Other
|
|
|
2,024,856
|
|
|
|
1,919,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,161,634
|
|
|
|
10,429,827
|
|
Less: Accumulated Depreciation
|
|
|
4,221,880
|
|
|
|
3,440,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,939,754
|
|
|
|
6,989,379
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
4,185,477
|
|
|
|
4,156,105
|
|
Other Intangible Assets
|
|
|
730,429
|
|
|
|
772,786
|
|
Equity Investments
|
|
|
539,580
|
|
|
|
533,138
|
|
Other Assets
|
|
|
244,347
|
|
|
|
263,329
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
19,131,654
|
|
|
$
|
18,696,690
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-term Debt
|
|
$
|
235,392
|
|
|
$
|
869,581
|
|
Accounts Payable
|
|
|
1,335,020
|
|
|
|
1,002,359
|
|
Accrued Salaries and Benefits
|
|
|
328,967
|
|
|
|
274,199
|
|
Income Taxes Payable
|
|
|
43,167
|
|
|
|
201,647
|
|
Other Current Liabilities
|
|
|
640,433
|
|
|
|
652,914
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
2,582,979
|
|
|
|
3,000,700
|
|
Long-term Debt
|
|
|
6,529,998
|
|
|
|
5,847,258
|
|
Other Liabilities
|
|
|
553,830
|
|
|
|
410,359
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
9,666,807
|
|
|
|
9,258,317
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity:
|
|
|
|
|
|
|
|
|
Shares, CHF 1.16 Par Value: Authorized
1,137,670 Shares Conditionally Authorized
379,223 Shares, Issued 758,447 Shares at
December 31, 2010; Authorized 1,093,303 Shares,
Conditionally Authorized 364,434 Shares, Issued
758,447 Shares at December 31, 2009
|
|
|
761,077
|
|
|
|
761,077
|
|
Capital in Excess of Par Value
|
|
|
4,701,797
|
|
|
|
4,642,800
|
|
Treasury Shares, at Cost
|
|
|
(562,906
|
)
|
|
|
(616,048
|
)
|
Retained Earnings
|
|
|
4,348,845
|
|
|
|
4,456,770
|
|
Accumulated Other Comprehensive Income
|
|
|
152,118
|
|
|
|
114,742
|
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
9,400,931
|
|
|
|
9,359,341
|
|
Noncontrolling Interests
|
|
|
63,916
|
|
|
|
79,032
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
9,464,847
|
|
|
|
9,438,373
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
19,131,654
|
|
|
$
|
18,696,690
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
3,579,681
|
|
|
$
|
2,921,174
|
|
|
$
|
3,564,636
|
|
Services
|
|
|
6,641,116
|
|
|
|
5,911,831
|
|
|
|
6,035,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,220,797
|
|
|
|
8,833,005
|
|
|
|
9,600,564
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Products
|
|
|
2,634,666
|
|
|
|
2,307,731
|
|
|
|
2,577,254
|
|
Cost of Services
|
|
|
4,948,615
|
|
|
|
4,154,911
|
|
|
|
3,687,520
|
|
Research and Development
|
|
|
214,481
|
|
|
|
194,650
|
|
|
|
192,659
|
|
Selling, General and Administrative Attributable to Segments
|
|
|
1,404,421
|
|
|
|
1,261,377
|
|
|
|
1,081,032
|
|
Corporate General and Administrative
|
|
|
237,161
|
|
|
|
226,472
|
|
|
|
188,275
|
|
Gain on Sale of Subsidiary
|
|
|
|
|
|
|
|
|
|
|
(81,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,439,344
|
|
|
|
8,145,141
|
|
|
|
7,645,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
781,453
|
|
|
|
687,864
|
|
|
|
1,955,168
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
(405,785
|
)
|
|
|
(366,748
|
)
|
|
|
(243,679
|
)
|
Bond Tender Premium
|
|
|
(53,973
|
)
|
|
|
|
|
|
|
|
|
Devaluation of Venezuelan Bolivar
|
|
|
(63,859
|
)
|
|
|
|
|
|
|
|
|
Other, Net
|
|
|
(53,247
|
)
|
|
|
(37,633
|
)
|
|
|
(44,956
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations Before Income Taxes
|
|
|
204,589
|
|
|
|
283,483
|
|
|
|
1,666,533
|
|
Provision for Income Taxes
|
|
|
(297,721
|
)
|
|
|
(87,183
|
)
|
|
|
(372,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations, Net of Taxes
|
|
|
(93,132
|
)
|
|
|
196,300
|
|
|
|
1,293,696
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
|
|
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
(93,132
|
)
|
|
|
196,300
|
|
|
|
1,280,768
|
|
Net Income Attributable to Noncontrolling Interests
|
|
|
(14,793
|
)
|
|
|
(26,159
|
)
|
|
|
(34,272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Weatherford
|
|
$
|
(107,925
|
)
|
|
$
|
170,141
|
|
|
$
|
1,246,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
|
|
$
|
(0.15
|
)
|
|
$
|
0.24
|
|
|
$
|
1.84
|
|
Loss from Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(0.15
|
)
|
|
$
|
0.24
|
|
|
$
|
1.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
|
|
$
|
(0.15
|
)
|
|
$
|
0.24
|
|
|
$
|
1.80
|
|
Loss from Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(0.15
|
)
|
|
$
|
0.24
|
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations, Net of Taxes
|
|
$
|
(107,925
|
)
|
|
$
|
170,141
|
|
|
$
|
1,259,424
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
|
|
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(107,925
|
)
|
|
$
|
170,141
|
|
|
$
|
1,246,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
743,125
|
|
|
|
714,981
|
|
|
|
682,704
|
|
Diluted
|
|
|
743,125
|
|
|
|
723,449
|
|
|
|
698,178
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital In
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Issued
|
|
|
Excess of Par
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Noncontrolling
|
|
|
Shareholders
|
|
|
|
Shares
|
|
|
Value
|
|
|
Earnings
|
|
|
Income (Loss)
|
|
|
Shares
|
|
|
Interests
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
As Reported December 31, 2007
|
|
$
|
727,204
|
|
|
$
|
3,995,747
|
|
|
$
|
3,170,182
|
|
|
$
|
437,788
|
|
|
$
|
(924,202
|
)
|
|
$
|
33,327
|
|
|
$
|
7,440,046
|
|
Restatement Adjustment
|
|
|
|
|
|
|
|
|
|
|
(130,049
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(130,049
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
727,204
|
|
|
|
3,995,747
|
|
|
|
3,040,133
|
|
|
|
437,788
|
|
|
|
(924,202
|
)
|
|
|
33,327
|
|
|
|
7,309,997
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
1,246,496
|
|
|
|
|
|
|
|
|
|
|
|
34,272
|
|
|
|
1,280,768
|
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(682,669
|
)
|
|
|
|
|
|
|
|
|
|
|
(682,669
|
)
|
Deferred Loss on Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,576
|
)
|
|
|
|
|
|
|
|
|
|
|
(12,576
|
)
|
Defined Benefit Pension Plans, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,788
|
)
|
|
|
|
|
|
|
|
|
|
|
(9,788
|
)
|
Other, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
1,246,496
|
|
|
|
(704,549
|
)
|
|
|
|
|
|
|
34,272
|
|
|
|
576,219
|
|
Sale of Subsidiary Shares to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,156
|
|
|
|
27,156
|
|
Dividends Paid to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,903
|
)
|
|
|
(18,903
|
)
|
Shares Issued for Acquisitions
|
|
|
|
|
|
|
(38,683
|
)
|
|
|
|
|
|
|
|
|
|
|
168,817
|
|
|
|
|
|
|
|
130,134
|
|
Equity Awards Granted, Vested and Exercised
|
|
|
1,433
|
|
|
|
102,019
|
|
|
|
|
|
|
|
|
|
|
|
(2,331
|
)
|
|
|
|
|
|
|
101,121
|
|
Excess Tax Benefit of Share-Based Compensation Plans
|
|
|
|
|
|
|
10,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,032
|
|
Other
|
|
|
52
|
|
|
|
(10,003
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,761
|
)
|
|
|
4,549
|
|
|
|
(7,163
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
728,689
|
|
|
|
4,059,112
|
|
|
|
4,286,629
|
|
|
|
(266,761
|
)
|
|
|
(759,477
|
)
|
|
|
80,401
|
|
|
|
8,128,593
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
170,141
|
|
|
|
|
|
|
|
|
|
|
|
26,159
|
|
|
|
196,300
|
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377,313
|
|
|
|
|
|
|
|
|
|
|
|
377,313
|
|
Defined Benefit Pension Plans, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,580
|
|
|
|
|
|
|
|
|
|
|
|
3,580
|
|
Other, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
170,141
|
|
|
|
381,503
|
|
|
|
|
|
|
|
26,159
|
|
|
|
577,803
|
|
Dividends Paid to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,464
|
)
|
|
|
(30,464
|
)
|
Shares Issued for Acquisitions
|
|
|
32,208
|
|
|
|
522,657
|
|
|
|
|
|
|
|
|
|
|
|
118,181
|
|
|
|
|
|
|
|
673,046
|
|
Equity Awards Granted, Vested and Exercised
|
|
|
|
|
|
|
66,786
|
|
|
|
|
|
|
|
|
|
|
|
24,817
|
|
|
|
|
|
|
|
91,603
|
|
Excess Tax Benefit of Share-Based Compensation Plans
|
|
|
|
|
|
|
4,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,197
|
|
Other
|
|
|
180
|
|
|
|
(9,952
|
)
|
|
|
|
|
|
|
|
|
|
|
431
|
|
|
|
2,936
|
|
|
|
(6,405
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
761,077
|
|
|
|
4,642,800
|
|
|
|
4,456,770
|
|
|
|
114,742
|
|
|
|
(616,048
|
)
|
|
|
79,032
|
|
|
|
9,438,373
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
(107,925
|
)
|
|
|
|
|
|
|
|
|
|
|
14,793
|
|
|
|
(93,132
|
)
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,572
|
|
|
|
|
|
|
|
|
|
|
|
4,572
|
|
Defined Benefit Pension Plans, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,178
|
|
|
|
|
|
|
|
|
|
|
|
32,178
|
|
Other, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
626
|
|
|
|
|
|
|
|
|
|
|
|
626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
(107,925
|
)
|
|
|
37,376
|
|
|
|
|
|
|
|
14,793
|
|
|
|
(55,756
|
)
|
Dividends Paid to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,683
|
)
|
|
|
(28,683
|
)
|
Shares Issued for Acquisitions
|
|
|
|
|
|
|
(10,649
|
)
|
|
|
|
|
|
|
|
|
|
|
38,979
|
|
|
|
|
|
|
|
28,330
|
|
Equity Awards Granted, Vested and Exercised
|
|
|
|
|
|
|
70,127
|
|
|
|
|
|
|
|
|
|
|
|
15,509
|
|
|
|
|
|
|
|
85,636
|
|
Excess Tax Benefit of Share-Based Compensation Plans
|
|
|
|
|
|
|
(318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(318
|
)
|
Other
|
|
|
|
|
|
|
(163
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,346
|
)
|
|
|
(1,226
|
)
|
|
|
(2,735
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
$
|
761,077
|
|
|
$
|
4,701,797
|
|
|
$
|
4,348,845
|
|
|
$
|
152,118
|
|
|
$
|
(562,906
|
)
|
|
$
|
63,916
|
|
|
$
|
9,464,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(93,132
|
)
|
|
$
|
196,300
|
|
|
$
|
1,280,768
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
1,047,334
|
|
|
|
908,897
|
|
|
|
731,808
|
|
Employee Share-Based Compensation Expense
|
|
|
98,725
|
|
|
|
110,359
|
|
|
|
101,416
|
|
Bad Debt Expense
|
|
|
56,803
|
|
|
|
11,328
|
|
|
|
5,970
|
|
(Gain) Loss on Sale of Assets and Businesses, Net
|
|
|
30,410
|
|
|
|
(13,841
|
)
|
|
|
(110,326
|
)
|
Deferred Income Tax Provision (Benefit)
|
|
|
55,033
|
|
|
|
(130,770
|
)
|
|
|
(84,310
|
)
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
(318
|
)
|
|
|
(4,197
|
)
|
|
|
(10,032
|
)
|
Devaluation of Venezuelan Bolivar
|
|
|
63,859
|
|
|
|
|
|
|
|
|
|
Bond Tender Premium
|
|
|
53,973
|
|
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
38,021
|
|
|
|
|
|
|
|
|
|
Revaluation of Contingent Consideration
|
|
|
(12,597
|
)
|
|
|
(24,273
|
)
|
|
|
|
|
Loss from Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
12,928
|
|
Other, Net
|
|
|
(13,328
|
)
|
|
|
(25,550
|
)
|
|
|
(12,312
|
)
|
Change in Operating Assets and Liabilities, Net of Effect of
Businesses Acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
(190,304
|
)
|
|
|
94,133
|
|
|
|
(461,239
|
)
|
Inventories
|
|
|
(360,062
|
)
|
|
|
(48,744
|
)
|
|
|
(559,847
|
)
|
Other Current Assets
|
|
|
80,895
|
|
|
|
(150,393
|
)
|
|
|
(167,440
|
)
|
Accounts Payable
|
|
|
298,493
|
|
|
|
41,277
|
|
|
|
230,596
|
|
Other Current Liabilities
|
|
|
(7,227
|
)
|
|
|
(236,736
|
)
|
|
|
183,911
|
|
Other, Net
|
|
|
(18,565
|
)
|
|
|
(119,468
|
)
|
|
|
(31,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities-Continuing Operations
|
|
|
1,128,013
|
|
|
|
608,322
|
|
|
|
1,110,787
|
|
Net Cash Used by Operating Activities-Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
1,128,013
|
|
|
|
608,322
|
|
|
|
1,104,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures for Property, Plant and Equipment for
Continuing Operations
|
|
|
(976,544
|
)
|
|
|
(1,569,477
|
)
|
|
|
(2,484,163
|
)
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
(143,556
|
)
|
|
|
(9,695
|
)
|
|
|
(798,530
|
)
|
Acquisition of Intellectual Property
|
|
|
(23,977
|
)
|
|
|
(28,210
|
)
|
|
|
(24,079
|
)
|
Acquisition of Equity Investments in Unconsolidated Affiliates
|
|
|
(2,405
|
)
|
|
|
(26,999
|
)
|
|
|
(11,568
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
196,927
|
|
|
|
123,445
|
|
|
|
297,285
|
|
Other Investing Activities
|
|
|
41,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities-Continuing Operations
|
|
|
(907,715
|
)
|
|
|
(1,510,936
|
)
|
|
|
(3,021,055
|
)
|
Net Cash Provided by Investing Activities-Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities
|
|
|
(907,715
|
)
|
|
|
(1,510,936
|
)
|
|
|
(3,010,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of Long-term Debt
|
|
|
1,580,548
|
|
|
|
1,240,300
|
|
|
|
1,498,874
|
|
Borrowings (Repayments) of Short-term Debt, Net
|
|
|
(834,310
|
)
|
|
|
(392,920
|
)
|
|
|
477,821
|
|
Repayments of Long-term Debt
|
|
|
(721,005
|
)
|
|
|
(13,714
|
)
|
|
|
(20,541
|
)
|
Bond Tender Premium
|
|
|
(53,973
|
)
|
|
|
|
|
|
|
|
|
Proceeds from Interest Rate Derivatives
|
|
|
|
|
|
|
63,544
|
|
|
|
(638
|
)
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
318
|
|
|
|
4,197
|
|
|
|
10,032
|
|
Other Financing Activities, Net
|
|
|
(9,426
|
)
|
|
|
4,748
|
|
|
|
11,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used) Provided by Financing Activities-Continuing
Operations
|
|
|
(37,848
|
)
|
|
|
906,155
|
|
|
|
1,977,531
|
|
Net Cash Provided by Financing Activities-Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used) Provided by Financing Activities
|
|
|
(37,848
|
)
|
|
|
906,155
|
|
|
|
1,977,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
(19,197
|
)
|
|
|
10,580
|
|
|
|
(4,360
|
)
|
Net Increase in Cash and Cash Equivalents
|
|
|
163,253
|
|
|
|
14,121
|
|
|
|
67,684
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
252,519
|
|
|
|
238,398
|
|
|
|
170,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
415,772
|
|
|
$
|
252,519
|
|
|
$
|
238,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements
49
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
1.
|
Summary
of Significant Accounting Policies
|
Basis
of Presentation
In February 2009, Weatherford International Ltd., a Bermuda
exempted company (Weatherford Bermuda) became a
wholly-owned subsidiary of Weatherford International Ltd., a
Swiss joint-stock corporation (Weatherford
Switzerland) for purposes of changing the Companys
place of incorporation from Bermuda to Switzerland
(collectively, the Transaction). Pursuant to the
Transaction, each common share, par value U.S. $1.00 per
share, of Weatherford Bermuda was exchanged for one registered
share, par value 1.16 Swiss francs (CHF) per share,
of Weatherford Switzerland.
Principles
of Consolidation
The consolidated financial statements include the accounts of
Weatherford International Ltd., all majority-owned subsidiaries,
all controlled joint ventures and variable interest entities
where the Company has determined it is the primary beneficiary
(collectively, the Company). When referring to
Weatherford and using phrases such as we,
us and our, the intent is to refer to
Weatherford International Ltd. and its subsidiaries as a whole
or on a regional basis, depending on the context in which the
statements are made.
Investments in affiliates in which we exercise significant
influence over operating and financial policies are accounted
for using the equity method. All material intercompany accounts
and transactions have been eliminated in consolidation.
Nature
of Operations
We are one of the largest global providers of innovative
mechanical solutions, technology and services for the drilling
and production sectors of the oil and natural gas industry.
Reclassifications
Certain reclassifications have been made to conform prior year
financial information to the current period presentation.
Use of
Estimates
The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period and disclosure of
contingent liabilities. On an ongoing basis, we evaluate our
estimates, including those related to uncollectible accounts
receivable, lower of cost or market value of inventories, equity
investments, intangible assets and goodwill, property, plant and
equipment, income taxes,
percentage-of-completion
accounting for long-term contracts, self-insurance, pension and
postretirement benefit plans and contingent liabilities. 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
not readily apparent from other sources. Actual results could
differ from those estimates.
Cash
and Cash Equivalents
We consider all highly liquid investments with original
maturities of three months or less to be cash equivalents.
50
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Accounts
Receivable and Allowance for Uncollectible
Accounts
Accounts receivable are stated at the historical carrying amount
net of allowances for uncollectible accounts. We establish an
allowance for uncollectible accounts based on specific customer
collection issues we have identified. Uncollectible accounts
receivable are written off when a settlement is reached for an
amount less than the outstanding historical balance or when we
determine that it is probable the balance will not be collected.
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 ongoing credit evaluations
of our customers and do not generally require collateral in
support of our trade receivables. We maintain reserves for
potential credit losses, and actual losses have historically
been within our expectations. 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, result in the deprivation of
contract rights or the taking of property without fair
consideration. Most of our international sales, however, are to
large international or national companies. During 2010 and 2008,
no individual customer accounted for more than 10% of our
consolidated revenues. Revenue from Petroleos Mexicanos
(Pemex) accounted for approximately 13% of our
consolidated revenues during 2009 and is included in our Latin
America segment (see Note 20).
Inventories
We value our inventories at lower of cost or market using either
the
first-in,
first-out (FIFO) or average cost methods. Cost
represents third-party invoice or production cost. Production
cost includes material, labor and manufacturing overhead.
Property,
Plant and Equipment
We carry our property, plant and equipment, both owned and under
capital lease, at cost less accumulated depreciation. 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 renewals, replacements
and improvements. We depreciate our fixed assets on a
straight-line basis over their estimated useful lives, allowing
for salvage value where applicable. Our depreciation expense for
the years ended December 31, 2010, 2009 and 2008 was
$955 million, $828 million and $669 million,
respectively. We classify our rig assets as Rental and Service
Equipment on the Consolidated Balance Sheets. The estimated
useful lives of our major classes of property, plant and
equipment are as follows:
|
|
|
|
|
Estimated
|
|
|
Useful Lives
|
|
Buildings and leasehold improvements
|
|
10-40 years or lease term
|
Rental and service equipment
|
|
2-20 years
|
Machinery and other
|
|
2-12 years
|
Goodwill
and Indefinite-Lived Intangible Assets
We test for the impairment of goodwill and other intangible
assets with indefinite lives on at least an annual basis. Our
goodwill impairment test involves a comparison of the fair value
of each of our reporting units with its carrying amount. Our
indefinite-lived asset impairment test involves a comparison of
the fair value of the intangible asset and its carrying value.
Fair value is estimated using discounted cash flows using a
discount rate adjusted for the credit risk of the regional
reporting unit tested. If the fair value is less than the
carrying value, the asset is considered
51
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
impaired. The amount of the impairment, if any, is then
determined based on an allocation of the reporting unit fair
values to individual assets and liabilities.
Intangible
Assets
Our intangible assets, excluding goodwill, are acquired
technology, licenses, patents, customer relationships and other
identifiable intangible assets. Intangible assets are amortized
on a straight-line basis over their estimated economic lives
generally ranging from two to 20 years, except for
intangible assets with indefinite lives, which are not
amortized. 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.
Long-Lived
Assets
We review our long-lived assets to determine whether any events
or changes in circumstances indicate the carrying amount of the
assets may not be recoverable. Factors that might indicate a
potential impairment may include, but are not limited to,
significant decreases in the market value of the long-lived
asset, a significant change in the long-lived assets
physical condition, a change in industry conditions or a
reduction in cash flows associated with the use of the
long-lived asset. If these or other factors indicate the
carrying amount of the asset may not be recoverable, we
determine whether an impairment has occurred through analysis of
undiscounted cash flow of the asset at the lowest level that has
an identifiable cash flow. If an impairment has occurred, we
recognize a loss for the difference between the carrying amount
and the fair value of the asset. We measure the fair value of
the asset using market prices or, in the absence of market
prices, based on an estimate of discounted cash flows. Cash
flows are generally discounted using an interest rate
commensurate with a weighted average cost of capital for a
similar asset.
Pension
and Postretirement Benefit Plans
We have defined benefit pension and other postretirement benefit
plans covering certain of our employees. Costs of the plan are
charged to income and consist of several components, known
collectively as net periodic pension cost, which are based on
various actuarial assumptions regarding future experience of the
plans. Amounts recorded for these defined benefit plans reflect
estimates related to future interest rates, investment rates of
return, employee turnover and wage increases. We review all
assumptions and estimates on an ongoing basis. As of
December 31, 2010 and 2009, we have recognized the
overfunded or underfunded status of our plans as an asset or
liability in the Consolidated Balance Sheets.
Research
and Development Expenditures
Research and development expenditures are expensed as incurred.
Environmental
Expenditures
Environmental expenditures that relate to the remediation of an
existing condition caused by past operations and that do not
contribute to future revenues are expensed. Liabilities for
these expenditures are recorded when it is probable that
obligations have been incurred and costs can be reasonably
estimated. Estimates are based on available facts and
technology, enacted laws and regulations and our prior
experience in remediation of contaminated sites.
Insurance
We are self-insured up to certain retention limits for general
liability, vehicle liability, group medical and for
workers compensation claims for certain of our employees.
The amounts in excess of the self-insured levels are
52
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
fully insured, up to a limit. Self-insurance accruals are based
on claims filed and an estimate for significant claims incurred
but not reported.
Derivative
Financial Instruments
We record derivative instruments at fair value in the balance
sheet as either an asset or a liability. Changes in the fair
value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether the
derivative is designated as part of a hedge relationship, and if
so, the type of hedge transaction. Any gain or loss associated
with the termination of an interest rate swap that was accounted
for as a hedge instrument is deferred and amortized as an
adjustment to interest expense over the remaining debt term.
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 as Accumulated Other Comprehensive Income, a component
of shareholders equity.
For our
non-U.S. subsidiaries
where the functional currency is the U.S. dollar,
inventories, property, plant and equipment and other
non-monetary assets and liabilities, together with their related
elements of expense or income, are remeasured using historical
exchange rates. All other assets and liabilities are remeasured
at current exchange rates. All other revenues and expenses are
translated at average exchange rates. Translation gains and
losses for these subsidiaries are recognized in our results of
operations during the period incurred. We had net currency
losses of $34 million, $29 million and
$39 million in 2010, 2009 and 2008, respectively. The gain
or loss related to individual foreign currency transactions are
included in results of operations when incurred. Currency gains
and losses are included in Other, Net in our Consolidated
Statements of Income.
Share-Based
Compensation
We account for all share-based payment awards, including shares
issued under employee stock purchase plans, stock options,
restricted stock and performance units by measuring these awards
at the date of grant and recognizing the grant date fair value
as an expense over the service period, which is usually the
vesting period.
Income
Taxes
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 are 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.
Revenue
Recognition
Revenue is recognized when all of the following criteria have
been met: a) evidence of an arrangement exists,
b) delivery to and acceptance by the customer has occurred,
c) the price to the customer is fixed or determinable and
d) collectability is reasonably assured.
Both contract drilling and pipeline service revenue is
contractual by nature and both are day-rate based contracts. We
recognize revenue for these contracts based on the criteria
outlined above, which is consistent with our other product
offerings.
53
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
From time to time, we may receive revenues for preparation and
mobilization of equipment and personnel. In connection with new
drilling contracts, revenues earned and incremental costs
incurred directly related to preparation and mobilization are
deferred and recognized over the primary contract term of the
project using the straight-line method. Costs of relocating
equipment without contracts to more promising market areas are
expensed as incurred. Demobilization fees received are
recognized, along with any related expenses, upon completion of
contracts.
We incur rebillable expenses including shipping and handling,
third-party inspection and repairs, and custom and duties. We
recognize the revenue associated with these rebillable expenses
as Products Revenues and all related costs as Cost of Products
in the accompanying Consolidated Statements of Income.
Percentage-
of- Completion
Revenue from certain long-term contracts, primarily for our
integrated project management services, is reported on the
percentage-of-completion
method of accounting. This method of accounting requires us to
calculate contract profit to be recognized in each reporting
period for each contract based upon our projections of future
outcomes, which include:
|
|
|
|
|
estimates of the total cost to complete the project;
|
|
|
|
estimates of project schedule and completion date;
|
|
|
|
estimates of the extent of progress toward completion; and
|
|
|
|
amounts of any change orders or claims included in revenue.
|
Measurements of progress are generally output based related to
physical progress. At the outset of each contract, we prepare a
detailed analysis of our estimated cost to complete the project.
Risks related to service delivery, usage, productivity, and
other factors are considered in the estimation process. We
periodically evaluate the estimated costs, claims, change
orders, and
percentage-of-completion
at the contract level. The recording of profits and losses on
long-term contracts requires an estimate of the total profit or
loss over the life of each contract. This estimate requires
consideration of total contract value, change orders, and
claims, less costs incurred and estimated costs to complete.
Anticipated losses on contracts are recorded in full in the
period in which they become evident. Profits are recorded based
upon the total estimated contract profit times the current
percentage complete for the contract.
Earnings
per Share
Basic earnings per share for all periods presented equals net
income divided by the weighted average number of our shares
outstanding during the period. Diluted earnings per share is
computed by dividing net income by the weighted average number
of our shares outstanding during the period, adjusted for the
dilutive effect of our stock options, restricted shares,
performance units and our outstanding warrants. The diluted
earnings per share calculation excludes three million potential
shares for the year ended December 31, 2010, seven million
potential shares for the year ended December 31, 2009 and
six million potential shares for the year ended
December 31, 2008, due to their antidilutive effect. Our
diluted earnings per share calculation for the year ended
December 31, 2010 also excludes seven million potential
shares that would have been included if we had net income for
that year, but are excluded as we had a net loss and their
inclusion would have been anti-dilutive.
Unvested share-based payment awards that contain nonforfeitable
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. Accordingly, we now include our restricted share awards,
which contain the right to vote and receive dividends, in the
computation of both basic and diluted earnings per share.
54
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In 2008, our Board of Directors approved a
two-for-one
split of our shares effected through a share dividend. The share
and option amounts included in the accompanying consolidated
financial statements and related notes reflect the effect of the
share split.
The following reconciles basic and diluted weighted average of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Basic weighted average shares outstanding
|
|
|
743,125
|
|
|
|
714,981
|
|
|
|
682,704
|
|
Dilutive effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
|
|
|
|
1,858
|
|
|
|
5,720
|
|
Stock options and restricted shares
|
|
|
|
|
|
|
6,610
|
|
|
|
9,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
743,125
|
|
|
|
723,449
|
|
|
|
698,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
Accounting Pronouncements
In October 2009, the Financial Accounting Standards Board issued
an update to existing guidance on revenue recognition for
arrangements with multiple deliverables. This update will allow
companies to allocate consideration received for qualified
separate deliverables using estimated selling price for both
delivered and undelivered items when vendor-specific objective
evidence or third-party evidence is unavailable. Additional
disclosures discussing the nature of multiple element
arrangements, the types of deliverables under the arrangements,
the general timing of their delivery, and significant factors
and estimates used to determine estimated selling prices are
required. We will adopt this update for new revenue arrangements
entered into or materially modified beginning January 1,
2011. We do not expect the provisions of this update to have a
material impact on our condensed consolidated financial
statements.
|
|
2.
|
Restatement
of the Consolidated Financial Statements
|
We identified a material weakness in our internal controls over
the accounting for income taxes in 2010 that resulted in the
identification of certain errors in our income tax accounts. The
correction of these errors resulted in restatements of our
previously reported financial statements as of and for the years
ended December 31, 2009 and 2008, including beginning
retained earnings in 2008, and our condensed consolidated
financial statements for each of the quarters within 2009 and
2010.
The most significant adjustment for the errors identified
relates to the correction of our accounting for the income tax
consequences of certain intercompany transactions that were
inappropriately tax-effected over multiple years. This error
resulted in the understatement of income tax expense by
$100 million and $106 million in 2009 and 2008,
respectively. A similar error was identified in 2007 that
understated income tax expense by $154 million. The impact
of the 2007 error is included as an adjustment to the 2008
beginning retained earnings. We also recorded other adjustments
to our tax provision to correct for certain errors and items
recorded in the improper period. These adjustments were not
recorded previously as we concluded that they were not material
to the respective periods. These other adjustments resulted in a
decrease to our total tax provision in 2009 of $32 million,
which is primarily comprised of an adjustment to the cumulative
difference between book and tax basis of fixed assets and
intangibles and an adjustment related to differences between
accrued tax expense and tax expense per the filed tax returns.
Our total 2008 tax provision was increased by $17 million, which
is primarily comprised of an adjustment related to differences
between accrued tax expense and tax expense per the filed tax
returns.
In addition, we recorded other adjustments to correct for
previously identified immaterial errors affecting operating
income that were recorded in improper periods. These adjustments
were not recorded previously as we concluded that these
adjustments were not material to the respective periods. In
2008, operating income was reduced by $23 million,
primarily related to an inventory reserve adjustment in North
America. In 2009, operating
55
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
income was reduced by $16 million primarily as a result of
recognizing foreign payroll tax expense in the Middle East/North
Africa and operating costs associated with an equity method
joint venture in the Former Soviet Union (FSU). We
have adjusted income tax expense for the tax effect of these
adjustments. These adjustments had no impact to operating cash
flows during 2008. During 2009, these adjustments resulted in a
decrease to operating cash flows of $6 million and a
corresponding increase to investing cash flows of the same
amount.
The following tables summarize the impact of these adjustments
on our previously reported annual results filed on our Annual
Reports on
Form 10-K.
The effect of these adjustments on our 2010 quarterly results is
shown in Note 21.
The effects of the restatements on our consolidated income
statement for the year ended December 31, 2009 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
2,921,174
|
|
|
$
|
|
|
|
$
|
2,921,174
|
|
Services
|
|
|
5,905,759
|
|
|
|
6,072
|
|
|
|
5,911,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,826,933
|
|
|
|
6,072
|
|
|
|
8,833,005
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Products
|
|
|
2,311,068
|
|
|
|
(3,337
|
)
|
|
|
2,307,731
|
|
Cost of Services
|
|
|
4,152,268
|
|
|
|
2,643
|
|
|
|
4,154,911
|
|
Research and Development
|
|
|
194,650
|
|
|
|
|
|
|
|
194,650
|
|
Selling, General and Administrative Attributable to Segments
|
|
|
1,241,920
|
|
|
|
19,457
|
|
|
|
1,261,377
|
|
Corporate General and Administrative
|
|
|
223,172
|
|
|
|
3,300
|
|
|
|
226,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,123,078
|
|
|
|
22,063
|
|
|
|
8,145,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
703,855
|
|
|
|
(15,991
|
)
|
|
|
687,864
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
(366,748
|
)
|
|
|
|
|
|
|
(366,748
|
)
|
Other, Net
|
|
|
(37,633
|
)
|
|
|
|
|
|
|
(37,633
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations Before Income Taxes
|
|
|
299,474
|
|
|
|
(15,991
|
)
|
|
|
283,483
|
|
Provision for Income Taxes
|
|
|
(19,549
|
)
|
|
|
(67,634
|
)
|
|
|
(87,183
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
279,925
|
|
|
|
(83,625
|
)
|
|
|
196,300
|
|
Net Income Attributable to Noncontrolling Interests
|
|
|
(26,159
|
)
|
|
|
|
|
|
|
(26,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
253,766
|
|
|
$
|
(83,625
|
)
|
|
$
|
170,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.35
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.24
|
|
Diluted
|
|
$
|
0.35
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.24
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
714,981
|
|
|
|
|
|
|
|
714,981
|
|
Diluted
|
|
|
723,449
|
|
|
|
|
|
|
|
723,449
|
|
56
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The effects of the restatements on our consolidated income
statement for the year ended December 31, 2008 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
3,564,636
|
|
|
$
|
|
|
|
$
|
3,564,636
|
|
Services
|
|
|
6,035,928
|
|
|
|
|
|
|
|
6,035,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,600,564
|
|
|
|
|
|
|
|
9,600,564
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Products
|
|
|
2,555,965
|
|
|
|
21,289
|
|
|
|
2,577,254
|
|
Cost of Services
|
|
|
3,686,495
|
|
|
|
1,025
|
|
|
|
3,687,520
|
|
Research and Development
|
|
|
192,659
|
|
|
|
|
|
|
|
192,659
|
|
Selling, General and Administrative Attributable to Segments
|
|
|
1,081,165
|
|
|
|
(133
|
)
|
|
|
1,081,032
|
|
Corporate General and Administrative
|
|
|
187,075
|
|
|
|
1,200
|
|
|
|
188,275
|
|
Gain on Sale of Subsidiary
|
|
|
(81,344
|
)
|
|
|
|
|
|
|
(81,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,622,015
|
|
|
|
23,381
|
|
|
|
7,645,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
1,978,549
|
|
|
|
(23,381
|
)
|
|
|
1,955,168
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
(243,679
|
)
|
|
|
|
|
|
|
(243,679
|
)
|
Other, Net
|
|
|
(44,956
|
)
|
|
|
|
|
|
|
(44,956
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations Before Income Taxes
|
|
|
1,689,914
|
|
|
|
(23,381
|
)
|
|
|
1,666,533
|
|
Provision for Income Taxes
|
|
|
(249,561
|
)
|
|
|
(123,276
|
)
|
|
|
(372,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations, Net of Taxes
|
|
|
1,440,353
|
|
|
|
(146,657
|
)
|
|
|
1,293,696
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
1,427,425
|
|
|
|
(146,657
|
)
|
|
|
1,280,768
|
|
Net Income Attributable to Noncontrolling Interests
|
|
|
(34,272
|
)
|
|
|
|
|
|
|
(34,272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
1,393,153
|
|
|
$
|
(146,657
|
)
|
|
$
|
1,246,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
2.06
|
|
|
$
|
(0.22
|
)
|
|
$
|
1.84
|
|
Loss from Discontinued Operation
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
2.04
|
|
|
$
|
(0.22
|
)
|
|
$
|
1.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
2.01
|
|
|
$
|
(0.21
|
)
|
|
$
|
1.80
|
|
Loss from Discontinued Operation
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
1.99
|
|
|
$
|
(0.21
|
)
|
|
$
|
1.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations, Net of Taxes
|
|
$
|
1,406,081
|
|
|
$
|
(146,657
|
)
|
|
$
|
1,259,424
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
1,393,153
|
|
|
$
|
(146,657
|
)
|
|
$
|
1,246,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
682,704
|
|
|
|
|
|
|
|
682,704
|
|
Diluted
|
|
|
698,178
|
|
|
|
|
|
|
|
698,178
|
|
57
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The effects of the restatements on our consolidated balance
sheet for the year ended December 31, 2009 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
(In thousands, except par value)
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
252,519
|
|
|
$
|
|
|
|
$
|
252,519
|
|
Accounts Receivable
|
|
|
2,504,876
|
|
|
|
6,072
|
|
|
|
2,510,948
|
|
Inventories
|
|
|
2,239,762
|
|
|
|
(1,468
|
)
|
|
|
2,238,294
|
|
Current Deferred Tax Assets
|
|
|
259,077
|
|
|
|
|
|
|
|
259,077
|
|
Other Current Assets
|
|
|
884,372
|
|
|
|
(163,257
|
)
|
|
|
721,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
6,140,606
|
|
|
|
(158,653
|
)
|
|
|
5,981,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
Land, Buildings and Leasehold Improvements
|
|
|
976,274
|
|
|
|
|
|
|
|
976,274
|
|
Rental and Service Equipment
|
|
|
7,534,467
|
|
|
|
|
|
|
|
7,534,467
|
|
Machinery and Other
|
|
|
1,919,086
|
|
|
|
|
|
|
|
1,919,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,429,827
|
|
|
|
|
|
|
|
10,429,827
|
|
Less: Accumulated Depreciation
|
|
|
3,438,248
|
|
|
|
2,200
|
|
|
|
3,440,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,991,579
|
|
|
|
(2,200
|
)
|
|
|
6,989,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
4,156,105
|
|
|
|
|
|
|
|
4,156,105
|
|
Other Intangible Assets
|
|
|
778,786
|
|
|
|
(6,000
|
)
|
|
|
772,786
|
|
Equity Investments
|
|
|
542,667
|
|
|
|
(9,529
|
)
|
|
|
533,138
|
|
Other Assets
|
|
|
256,440
|
|
|
|
6,889
|
|
|
|
263,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
18,866,183
|
|
|
$
|
(169,493
|
)
|
|
$
|
18,696,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-term Debt
|
|
$
|
869,581
|
|
|
$
|
|
|
|
$
|
869,581
|
|
Accounts Payable
|
|
|
1,002,359
|
|
|
|
|
|
|
|
1,002,359
|
|
Accrued Salaries and Benefits
|
|
|
274,199
|
|
|
|
|
|
|
|
274,199
|
|
Income Taxes Payable
|
|
|
|
|
|
|
201,647
|
|
|
|
201,647
|
|
Other Current Liabilities
|
|
|
650,749
|
|
|
|
2,165
|
|
|
|
652,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
2,796,888
|
|
|
|
203,812
|
|
|
|
3,000,700
|
|
Long-term Debt
|
|
|
5,847,258
|
|
|
|
|
|
|
|
5,847,258
|
|
Other Liabilities
|
|
|
423,333
|
|
|
|
(12,974
|
)
|
|
|
410,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
9,067,479
|
|
|
|
190,838
|
|
|
|
9,258,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
761,077
|
|
|
|
|
|
|
|
761,077
|
|
Capital in Excess of Par Value
|
|
|
4,642,800
|
|
|
|
|
|
|
|
4,642,800
|
|
Treasury Shares, at Cost
|
|
|
(616,048
|
)
|
|
|
|
|
|
|
(616,048
|
)
|
Retained Earnings
|
|
|
4,817,101
|
|
|
|
(360,331
|
)
|
|
|
4,456,770
|
|
Accumulated Other Comprehensive Income
|
|
|
114,742
|
|
|
|
|
|
|
|
114,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
9,719,672
|
|
|
|
(360,331
|
)
|
|
|
9,359,341
|
|
Noncontrolling Interests
|
|
|
79,032
|
|
|
|
|
|
|
|
79,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
9,798,704
|
|
|
|
(360,331
|
)
|
|
|
9,438,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
18,866,183
|
|
|
$
|
(169,493
|
)
|
|
$
|
18,696,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The effects of the restatements on our consolidated balance
sheet for the year ended December 31, 2008 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
(In thousands, except par value)
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
238,398
|
|
|
$
|
|
|
|
$
|
238,398
|
|
Accounts Receivable
|
|
|
2,442,848
|
|
|
|
|
|
|
|
2,442,848
|
|
Inventories
|
|
|
2,088,342
|
|
|
|
(4,182
|
)
|
|
|
2,084,160
|
|
Current Deferred Tax Assets
|
|
|
270,252
|
|
|
|
|
|
|
|
270,252
|
|
Other Current Assets
|
|
|
530,442
|
|
|
|
(700
|
)
|
|
|
529,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
5,570,282
|
|
|
|
(4,882
|
)
|
|
|
5,565,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
Land, Buildings and Leasehold Improvements
|
|
|
756,416
|
|
|
|
|
|
|
|
756,416
|
|
Rental and Service Equipment
|
|
|
6,246,278
|
|
|
|
|
|
|
|
6,246,278
|
|
Machinery and Other
|
|
|
1,610,474
|
|
|
|
|
|
|
|
1,610,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,613,168
|
|
|
|
|
|
|
|
8,613,168
|
|
Less: Accumulated Depreciation
|
|
|
2,690,996
|
|
|
|
|
|
|
|
2,690,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,922,172
|
|
|
|
|
|
|
|
5,922,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
3,530,915
|
|
|
|
|
|
|
|
3,530,915
|
|
Other Intangible Assets
|
|
|
701,483
|
|
|
|
|
|
|
|
701,483
|
|
Equity Investments
|
|
|
515,770
|
|
|
|
(6,245
|
)
|
|
|
509,525
|
|
Other Assets
|
|
|
235,891
|
|
|
|
4,801
|
|
|
|
240,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
16,476,513
|
|
|
$
|
(6,326
|
)
|
|
$
|
16,470,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-term Debt
|
|
$
|
1,255,947
|
|
|
$
|
|
|
|
$
|
1,255,947
|
|
Accounts Payable
|
|
|
886,104
|
|
|
|
|
|
|
|
886,104
|
|
Accrued Salaries and Benefits
|
|
|
257,016
|
|
|
|
|
|
|
|
257,016
|
|
Income Taxes Payable
|
|
|
74,052
|
|
|
|
272,319
|
|
|
|
346,371
|
|
Other Current Liabilities
|
|
|
548,974
|
|
|
|
(7,322
|
)
|
|
|
541,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
3,022,093
|
|
|
|
264,997
|
|
|
|
3,287,090
|
|
Long-term Debt
|
|
|
4,564,255
|
|
|
|
|
|
|
|
4,564,255
|
|
Other Liabilities
|
|
|
484,866
|
|
|
|
5,383
|
|
|
|
490,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
8,071,214
|
|
|
|
270,380
|
|
|
|
8,341,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
728,689
|
|
|
|
|
|
|
|
728,689
|
|
Capital in Excess of Par Value
|
|
|
4,059,112
|
|
|
|
|
|
|
|
4,059,112
|
|
Treasury Shares, at Cost
|
|
|
(759,477
|
)
|
|
|
|
|
|
|
(759,477
|
)
|
Retained Earnings
|
|
|
4,563,335
|
|
|
|
(276,706
|
)
|
|
|
4,286,629
|
|
Accumulated Other Comprehensive Income
|
|
|
(266,761
|
)
|
|
|
|
|
|
|
(266,761
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
8,324,898
|
|
|
|
(276,706
|
)
|
|
|
8,048,192
|
|
Noncontrolling Interests
|
|
|
80,401
|
|
|
|
|
|
|
|
80,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
8,405,299
|
|
|
|
(276,706
|
)
|
|
|
8,128,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
16,476,513
|
|
|
$
|
(6,326
|
)
|
|
$
|
16,470,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The effects of the restatements on our consolidated cash flow
for the year ended December 31, 2009 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
(In thousands)
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
279,925
|
|
|
$
|
(83,625
|
)
|
|
$
|
196,300
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
906,697
|
|
|
|
2,200
|
|
|
|
908,897
|
|
Employee Share-Based Compensation Expense
|
|
|
110,359
|
|
|
|
|
|
|
|
110,359
|
|
Bad Debt Expense
|
|
|
11,328
|
|
|
|
|
|
|
|
11,328
|
|
(Gain) Loss on Sale of Assets and Businesses, Net
|
|
|
(13,841
|
)
|
|
|
|
|
|
|
(13,841
|
)
|
Deferred Income Tax Provision (Benefit)
|
|
|
(110,324
|
)
|
|
|
(20,446
|
)
|
|
|
(130,770
|
)
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
(4,197
|
)
|
|
|
|
|
|
|
(4,197
|
)
|
Revaluation of Contingent Consideration
|
|
|
(21,073
|
)
|
|
|
(3,200
|
)
|
|
|
(24,273
|
)
|
Other, Net
|
|
|
(28,835
|
)
|
|
|
3,285
|
|
|
|
(25,550
|
)
|
Change in Operating Assets and Liabilities, Net of Effect of
Businesses Acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
100,205
|
|
|
|
(6,072
|
)
|
|
|
94,133
|
|
Inventories
|
|
|
(46,030
|
)
|
|
|
(2,714
|
)
|
|
|
(48,744
|
)
|
Other Current Assets
|
|
|
(312,950
|
)
|
|
|
162,557
|
|
|
|
(150,393
|
)
|
Accounts Payable
|
|
|
41,277
|
|
|
|
|
|
|
|
41,277
|
|
Other Current Liabilities
|
|
|
(178,751
|
)
|
|
|
(57,985
|
)
|
|
|
(236,736
|
)
|
Other, Net
|
|
|
(119,468
|
)
|
|
|
|
|
|
|
(119,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
614,322
|
|
|
|
(6,000
|
)
|
|
|
608,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures for Property, Plant and Equipment for
Continuing Operations
|
|
|
(1,569,477
|
)
|
|
|
|
|
|
|
(1,569,477
|
)
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
(9,695
|
)
|
|
|
|
|
|
|
(9,695
|
)
|
Acquisition of Intellectual Property
|
|
|
(34,210
|
)
|
|
|
6,000
|
|
|
|
(28,210
|
)
|
Acquisition of Equity Investments in Unconsolidated Affiliates
|
|
|
(26,999
|
)
|
|
|
|
|
|
|
(26,999
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
123,445
|
|
|
|
|
|
|
|
123,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities
|
|
|
(1,516,936
|
)
|
|
|
6,000
|
|
|
|
(1,510,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of Long-term Debt
|
|
|
1,240,300
|
|
|
|
|
|
|
|
1,240,300
|
|
Borrowings (Repayments) of Short-term Debt, Net
|
|
|
(392,920
|
)
|
|
|
|
|
|
|
(392,920
|
)
|
Repayments of Long-term Debt
|
|
|
(13,714
|
)
|
|
|
|
|
|
|
(13,714
|
)
|
Proceeds from Interest Rate Derivatives
|
|
|
63,544
|
|
|
|
|
|
|
|
63,544
|
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
4,197
|
|
|
|
|
|
|
|
4,197
|
|
Other Financing Activities, Net
|
|
|
4,748
|
|
|
|
|
|
|
|
4,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used) Provided by Financing Activities
|
|
|
906,155
|
|
|
|
|
|
|
|
906,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
10,580
|
|
|
|
|
|
|
|
10,580
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
14,121
|
|
|
|
|
|
|
|
14,121
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
238,398
|
|
|
|
|
|
|
|
238,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
252,519
|
|
|
$
|
|
|
|
$
|
252,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The effects of the restatements on our consolidated cash flow
for the year ended December 31, 2008 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
(In thousands)
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
1,427,425
|
|
|
$
|
(146,657
|
)
|
|
$
|
1,280,768
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
731,808
|
|
|
|
|
|
|
|
731,808
|
|
Employee Share-Based Compensation Expense
|
|
|
101,416
|
|
|
|
|
|
|
|
101,416
|
|
Bad Debt Expense
|
|
|
5,970
|
|
|
|
|
|
|
|
5,970
|
|
(Gain) Loss on Sale of Assets and Businesses, Net
|
|
|
(110,326
|
)
|
|
|
|
|
|
|
(110,326
|
)
|
Deferred Income Tax Provision (Benefit)
|
|
|
(80,692
|
)
|
|
|
(3,618
|
)
|
|
|
(84,310
|
)
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
(10,032
|
)
|
|
|
|
|
|
|
(10,032
|
)
|
Loss from Discontinued Operation
|
|
|
12,928
|
|
|
|
|
|
|
|
12,928
|
|
Other, Net
|
|
|
(18,557
|
)
|
|
|
6,245
|
|
|
|
(12,312
|
)
|
Change in Operating Assets and Liabilities, Net of Effect of
Businesses Acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
(461,239
|
)
|
|
|
|
|
|
|
(461,239
|
)
|
Inventories
|
|
|
(581,981
|
)
|
|
|
22,134
|
|
|
|
(559,847
|
)
|
Other Current Assets
|
|
|
(168,140
|
)
|
|
|
700
|
|
|
|
(167,440
|
)
|
Accounts Payable
|
|
|
230,596
|
|
|
|
|
|
|
|
230,596
|
|
Other Current Liabilities
|
|
|
62,715
|
|
|
|
121,196
|
|
|
|
183,911
|
|
Other, Net
|
|
|
(31,104
|
)
|
|
|
|
|
|
|
(31,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities-Continuing Operations
|
|
|
1,110,787
|
|
|
|
|
|
|
|
1,110,787
|
|
Net Cash Used by Operating Activities-Discontinued Operation
|
|
|
(6,219
|
)
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
1,104,568
|
|
|
|
|
|
|
|
1,104,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures for Property, Plant and Equipment for
Continuing Operations
|
|
|
(2,484,163
|
)
|
|
|
|
|
|
|
(2,484,163
|
)
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
(798,530
|
)
|
|
|
|
|
|
|
(798,530
|
)
|
Acquisition of Intellectual Property
|
|
|
(24,079
|
)
|
|
|
|
|
|
|
(24,079
|
)
|
Acquisition of Equity Investments in Unconsolidated Affiliates
|
|
|
(11,568
|
)
|
|
|
|
|
|
|
(11,568
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
297,285
|
|
|
|
|
|
|
|
297,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities-Continuing Operations
|
|
|
(3,021,055
|
)
|
|
|
|
|
|
|
(3,021,055
|
)
|
Net Cash Provided by Investing Activities-Discontinued Operation
|
|
|
11,000
|
|
|
|
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities
|
|
|
(3,010,055
|
)
|
|
|
|
|
|
|
(3,010,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of Long-term Debt
|
|
|
1,498,874
|
|
|
|
|
|
|
|
1,498,874
|
|
Borrowings (Repayments) of Short-term Debt, Net
|
|
|
477,821
|
|
|
|
|
|
|
|
477,821
|
|
Repayments of Long-term Debt
|
|
|
(20,541
|
)
|
|
|
|
|
|
|
(20,541
|
)
|
Proceeds from Interest Rate Derivatives
|
|
|
(638
|
)
|
|
|
|
|
|
|
(638
|
)
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
10,032
|
|
|
|
|
|
|
|
10,032
|
|
Other Financing Activities, Net
|
|
|
11,983
|
|
|
|
|
|
|
|
11,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used) Provided by Financing Activities-Continuing
Operations
|
|
|
1,977,531
|
|
|
|
|
|
|
|
1,977,531
|
|
Net Cash Provided by Financing Activities-Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used) Provided by Financing Activities
|
|
|
1,977,531
|
|
|
|
|
|
|
|
1,977,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
(4,360
|
)
|
|
|
|
|
|
|
(4,360
|
)
|
Net Increase in Cash and Cash Equivalents
|
|
|
67,684
|
|
|
|
|
|
|
|
67,684
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
170,714
|
|
|
|
|
|
|
|
170,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
238,398
|
|
|
$
|
|
|
|
$
|
238,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Effective January 1, 2009, we adopted a new accounting
standard for business combinations. This standard
established principles and requirements for how a company
recognizes assets acquired, liabilities assumed, contingencies
and contingent consideration measured at fair value at the
acquisition date. The statement also established disclosure
requirements that enable users to evaluate the nature and
financial effect of business combinations.
We have acquired businesses we feel are important to our
long-term growth strategy. Results of operations for
acquisitions are included in the accompanying Consolidated
Statements of Income from the date of acquisition. The balances
included in the Consolidated Balance Sheets related to recent
acquisitions are based on preliminary information and are
subject to change when final asset valuations are obtained and
the potential for liabilities has been evaluated. The purchase
price is allocated to the net assets acquired based upon their
estimated fair values at the date of acquisition.
In July 2009, we acquired the Oilfield Services Division
(OFS) of
TNK-BP. In
this transaction, we acquired drilling, well workover and
cementing services operations in West Siberia, East Siberia and
the Volga-Urals region. We issued 24.3 million shares
valued at approximately $450 million. Under our sale and
purchase agreement dated May 29, 2009, if
TNK-BP sold
the shares it received in consideration for the transaction for
a price less than $18.50 per share prior to June 29, 2010,
we were obligated to pay
TNK-BP
additional consideration in an amount equal to the difference
between the price at which the shares were sold and $18.50. On
June 24, 2010, we entered into an amendment that modified
the provisions relating to the value guarantee mechanism to
allow the parties additional time to settle the amount of
consideration received by
TNK-BP under
the agreement. The settlement date was extended from
June 29, 2010 to the earlier of (a) December 1,
2010, or (b) 30 days after the third business day
following our public announcement of our quarterly earnings for
the third quarter of 2010. In addition, the base dollar amount
used to calculate potential guarantee payments was increased
from $18.50 to $19.50.
The accounting guidance for business combinations requires
contingent consideration to be recognized at its acquisition
date fair value. Based on the terms of the arrangement, we
classified the contingent consideration for the OFS acquisition
as a liability. Such liabilities are required to be remeasured
to fair value at each reporting date until the contingency is
resolved, with any changes in fair value recognized in earnings.
We estimated the fair value of the contingent consideration for
the OFS acquisition to be a liability of $84 million at the
date of acquisition and $60 million at December 31,
2009. The valuation of the contingent consideration was
determined using a lattice-based model incorporating the term of
the contingency, the price of our shares over the relevant
periods and the volatility of our stock price. In November 2010,
TNK-BP
informed us that 23.1 million shares issued to them had
been sold below the guaranteed share price at a weighted average
price of $17.47. In accordance with the contingent consideration
arrangement we paid
TNK-BP
approximately $47 million and recognized a gain of
approximately $13 million on settlement. All remeasurement
gains and losses have been recorded in the Selling, General and
Administrative Attributable to Segments line in the Condensed
Consolidated Statements of Income. In 2010, we also paid
TNK-BP
$44 million in accordance with the working capital
adjustment provisions of the OFS acquisition agreement and, in
the third quarter of 2010, finalized the valuation of the assets
and liabilities acquired in the OFS acquisition.
In November 2008, we acquired a group of affiliated companies in
Latin America. Consideration for the transaction totaled
approximately $160 million, which was comprised of
approximately six million shares valued at approximately
$65 million, non-cash consideration of approximately
$75 million and cash of approximately $20 million.
Additional consideration of up to $65 million was
contingent on the occurrence of future events and circumstances.
In December 2010, we paid $5 million under the contingent
consideration provisions and recorded it as an addition to
goodwill in our Latin America segment in accordance with the
accounting guidance in effect on the date of acquisition.
62
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In August 2008, we acquired International Logging, Inc.
(ILI), a provider of surface logging and formation
and evaluation and drilling related services for approximately
$400 million. We allocated approximately $140 million
of the purchase price to intangible assets (See Note 9).
We also acquired various other businesses during the years ended
December 31, 2010, 2009 and 2008 for cash consideration of
approximately $52 million, $54 million and
$380 million, respectively. In addition, other 2010
acquisitions included the issuance of approximately two million
shares valued at $28 million, other 2009 acquisitions
included the issuance of approximately 11 million shares
valued at $222 million and other 2008 acquisitions included
the issuance of approximately two million shares valued at
approximately $65 million.
|
|
4.
|
Equity
Investment Acquisition
|
We acquired a 33% ownership interest in Premier Business
Solutions (PBS) in June 2007 for approximately
$330 million. PBS conducts business in Russia and is an
electric submersible pump manufacturer. In January 2008, we sold
our electrical submersible pumps (ESP) product line
to PBS and received a combination of cash and an additional
equity investment in PBS in consideration of the sale. This
transaction increased our ownership percentage to 38.5%. In
September 2009, we converted a $38 million note plus
accrued interest due from PBS for an additional equity
investment. Our ownership percentage was unchanged as the other
joint venture partner also converted its notes receivable for an
additional equity investment.
|
|
5.
|
Discontinued
Operation
|
In June 2007, our management approved a plan to sell our oil and
gas development and production business. We finalized the
divestiture of the business in 2008. The results of operations
and cash flows of the business have been characterized in the
consolidated financial statements as a discontinued operation
for the year ended December 31, 2008.
Operating results of the oil and gas development and production
business for the year ended December 31, 2008 were as
follows (in thousands):
|
|
|
|
|
Revenues
|
|
$
|
556
|
|
|
|
|
|
|
Loss Before Income Taxes
|
|
$
|
25,811
|
|
Benefit for Income Taxes
|
|
|
12,883
|
|
|
|
|
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
$
|
12,928
|
|
|
|
|
|
|
The 2008 loss includes charges of approximately $21 million
associated with a settlement of a legal dispute regarding the
business. These charges were partially offset by an
$11 million gain, net of taxes, recognized upon the
finalization of the divestiture.
Gain
on Sales of Assets and Businesses, Net
Gain on sales of assets and businesses, net for the year ended
December 31, 2008 of $110 million includes a
$19 million write-off of fixed assets resulting from our
exit from sanctioned countries, an $81 million gain
recognized in connection with the sale of a 50% interest in a
subsidiary we control to Qatar Petroleum and $48 million in
gains related to our divestiture of other assets and businesses.
Non-cash
Activities
We issued approximately two million shares valued at
$28 million in connection with acquisitions during the year
ended December 31, 2010, 35 million shares valued at
approximately $673 million in connection with
63
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
acquisitions during the year ended December 31, 2009 and
eight million shares valued at approximately $130 million
in connection with acquisitions during the year ended
December 31, 2008.
During the year ended December 31, 2009, there were
non-cash investing activities of approximately $18 million
related to investment securities received in exchange for our
sale of a business, which we liquidated in 2010. During the year
ended December 31, 2008, there was a non-cash investing
activity of $75 million related to our consideration for an
acquisition.
Supplemental
Cash Flow Information
Cash paid for interest and income taxes, net of refunds, was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
(In thousands)
|
|
Interest paid, net of capitalized interest
|
|
$
|
403,055
|
|
|
$
|
331,862
|
|
|
$
|
233,468
|
|
Income taxes paid, net of refunds
|
|
|
350,603
|
|
|
|
389,652
|
|
|
|
271,418
|
|
Inventories by category were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Raw materials, components and supplies
|
|
$
|
383,639
|
|
|
$
|
328,253
|
|
Work in process
|
|
|
114,266
|
|
|
|
115,564
|
|
Finished goods
|
|
|
2,092,103
|
|
|
|
1,794,477
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,590,008
|
|
|
$
|
2,238,294
|
|
|
|
|
|
|
|
|
|
|
Work in process and finished goods inventories include the cost
of materials, labor and manufacturing overhead.
Goodwill is evaluated for impairment on at least an annual
basis. Our goodwill impairment test involves a comparison of the
fair value of each of our reporting units with its carrying
amount. Our reporting units are based on our regional structure
and consist of the United States, Canada, Latin America, Europe,
West Africa, FSU, Middle East/North Africa and Asia Pacific. We
perform our annual goodwill impairment test as of
October 1. Our 2010 impairment test indicated goodwill was
not impaired. We will continue to test our goodwill annually as
of October 1 unless events occur or circumstances change between
annual tests that would more likely than not reduce the fair
value of a reporting unit below its carrying amount.
64
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The changes in the carrying amount of goodwill for the two years
ended December 31, 2010 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Middle East/
|
|
|
Europe/
|
|
|
|
|
|
|
|
|
|
North
|
|
|
North Africa/
|
|
|
West Africa/
|
|
|
Latin
|
|
|
|
|
|
|
America
|
|
|
Asia
|
|
|
FSU
|
|
|
America
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Balance at December 31, 2008
|
|
$
|
1,813,710
|
|
|
$
|
675,558
|
|
|
$
|
734,930
|
|
|
$
|
306,717
|
|
|
$
|
3,530,915
|
|
Acquisitions
|
|
|
146,504
|
|
|
|
|
|
|
|
245,571
|
|
|
|
|
|
|
|
392,075
|
|
Disposals
|
|
|
(6,648
|
)
|
|
|
(2,659
|
)
|
|
|
|
|
|
|
(534
|
)
|
|
|
(9,841
|
)
|
Purchase price and other adjustments
|
|
|
14,000
|
|
|
|
10,672
|
|
|
|
8,554
|
|
|
|
(16
|
)
|
|
|
33,210
|
|
Foreign currency translation
|
|
|
129,983
|
|
|
|
15,325
|
|
|
|
56,522
|
|
|
|
7,916
|
|
|
|
209,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
2,097,549
|
|
|
|
698,896
|
|
|
|
1,045,577
|
|
|
|
314,083
|
|
|
|
4,156,105
|
|
Acquisitions
|
|
|
4,169
|
|
|
|
24,114
|
|
|
|
1,246
|
|
|
|
|
|
|
|
29,529
|
|
Disposals
|
|
|
|
|
|
|
(862
|
)
|
|
|
|
|
|
|
|
|
|
|
(862
|
)
|
Purchase price and other adjustments
|
|
|
(361
|
)
|
|
|
(635
|
)
|
|
|
(19,374
|
)
|
|
|
(1,364
|
)
|
|
|
(21,734
|
)
|
Foreign currency translation
|
|
|
31,663
|
|
|
|
10,315
|
|
|
|
(19,844
|
)
|
|
|
305
|
|
|
|
22,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
$
|
2,133,020
|
|
|
$
|
731,828
|
|
|
$
|
1,007,605
|
|
|
$
|
313,024
|
|
|
$
|
4,185,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
Other
Intangible Assets
|
The components of intangible assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Acquired technology
|
|
$
|
412,744
|
|
|
$
|
(144,752
|
)
|
|
$
|
267,992
|
|
|
$
|
410,115
|
|
|
$
|
(109,134
|
)
|
|
$
|
300,981
|
|
Licenses
|
|
|
269,802
|
|
|
|
(119,971
|
)
|
|
|
149,831
|
|
|
|
259,930
|
|
|
|
(101,884
|
)
|
|
|
158,046
|
|
Patents
|
|
|
215,293
|
|
|
|
(80,461
|
)
|
|
|
134,832
|
|
|
|
204,702
|
|
|
|
(68,086
|
)
|
|
|
136,616
|
|
Customer relationships and contracts
|
|
|
165,701
|
|
|
|
(54,885
|
)
|
|
|
110,816
|
|
|
|
160,556
|
|
|
|
(35,818
|
)
|
|
|
124,738
|
|
Other
|
|
|
119,812
|
|
|
|
(52,854
|
)
|
|
|
66,958
|
|
|
|
96,535
|
|
|
|
(44,130
|
)
|
|
|
52,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,183,352
|
|
|
$
|
(452,923
|
)
|
|
$
|
730,429
|
|
|
$
|
1,131,838
|
|
|
$
|
(359,052
|
)
|
|
$
|
772,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangibles obtained through acquisitions are initially recorded
at estimated fair value based on preliminary information. Final
valuations are obtained within one year from the date of
acquisition. The acquired technology and customer relationships
are being amortized over estimated useful lives ranging from
three to 15 years.
We have trademarks that are considered to have indefinite lives
as we have the ability and intent to renew them indefinitely.
These trademarks had a carrying value of $19 million and
$20 million as of December 31, 2010 and
December 31, 2009, respectively, and are included in the
Other caption in the table above.
65
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Amortization expense was $92 million, $81 million and
$63 million for the years ended December 31, 2010,
2009 and 2008, respectively. Future estimated amortization
expense for the carrying amount of intangible assets as of
December 31, 2010 is expected to be as follows (in
thousands):
|
|
|
|
|
2011
|
|
$
|
89,206
|
|
2012
|
|
|
86,315
|
|
2013
|
|
|
84,045
|
|
2014
|
|
|
80,005
|
|
2015
|
|
|
67,658
|
|
|
|
10.
|
Short-term
Borrowings and Current Portion of Long-term Debt
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Revolving credit facility
|
|
$
|
|
|
|
$
|
798,500
|
|
Commercial paper program
|
|
|
|
|
|
|
|
|
Other short-term bank loans
|
|
|
18,001
|
|
|
|
53,007
|
|
|
|
|
|
|
|
|
|
|
Total short-term borrowings
|
|
|
18,001
|
|
|
|
851,507
|
|
Current portion of long-term debt
|
|
|
217,391
|
|
|
|
18,074
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$
|
235,392
|
|
|
$
|
869,581
|
|
|
|
|
|
|
|
|
|
|
Weighted average interest rate on short-term borrowings
outstanding at end of year
|
|
|
8.96
|
%
|
|
|
1.39
|
%
|
Prior to October 2010, we maintained two revolving credit
facilities with syndicates of banks available for a combination
of borrowings, support for our commercial paper program and
issuances of letters of credit. These facilities allowed for an
aggregate availability of $1.75 billion and were scheduled
to mature in May 2011. In October 2010, we entered into a
$1.75 billion unsecured, revolving credit agreement (the
Credit Agreement) with JPMorgan Chase Bank, N.A., as
administrative agent. The Credit Agreement replaced our existing
revolving credit facilities. The Credit Agreement has a
scheduled maturity date of October 15, 2013, subject to
extension, and can be used for a combination of borrowings,
support for our commercial paper program and issuances of
letters of credit. Consistent with our prior facilities, the
Credit Agreement requires us to maintain a
debt-to-capitalization
ratio of less than 60%. We are in compliance with these
covenants at December 31, 2010. There were $64 million
in outstanding letters of credit under these facilities at
December 31, 2010.
We have a $1.5 billion commercial paper program under which
we may from time to time issue short-term unsecured notes. The
commercial paper program is supported by our revolving credit
facilities.
We have short-term borrowings with various domestic and
international institutions pursuant to uncommitted facilities.
At December 31, 2010, we had $18 million in short-term
borrowings under these arrangements with a weighted average
interest rate of 9%. In addition, we had $361 million of
letters of credit and bid and performance bonds under these
uncommitted facilities. The carrying value of our short-term
borrowings approximates their fair value as of December 31,
2010.
66
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
We have issued various senior notes, all of which rank equally
with our existing and future senior unsecured indebtedness, have
semi-annual interest payments and no sinking fund requirements.
Our long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
6.625% Senior Notes due 2011
|
|
$
|
183,647
|
|
|
$
|
352,872
|
|
5.95% Senior Notes due 2012
|
|
|
272,897
|
|
|
|
599,380
|
|
5.15% Senior Notes due 2013
|
|
|
298,586
|
|
|
|
511,273
|
|
4.95% Senior Notes due 2013
|
|
|
252,412
|
|
|
|
253,203
|
|
5.50% Senior Notes due 2016
|
|
|
358,208
|
|
|
|
359,585
|
|
6.35% Senior Notes due 2017
|
|
|
599,656
|
|
|
|
599,615
|
|
6.00% Senior Notes due 2018
|
|
|
498,050
|
|
|
|
497,782
|
|
9.625% Senior Notes due 2019
|
|
|
1,032,959
|
|
|
|
1,033,818
|
|
5.125% Senior Notes due 2020
|
|
|
798,917
|
|
|
|
|
|
6.50% Senior Notes due 2036
|
|
|
595,940
|
|
|
|
595,880
|
|
6.80% Senior Notes due 2037
|
|
|
298,215
|
|
|
|
298,192
|
|
7.00% Senior Notes due 2038
|
|
|
498,433
|
|
|
|
498,376
|
|
9.875% Senior Notes due 2039
|
|
|
247,136
|
|
|
|
247,118
|
|
6.75% Senior Notes due 2040
|
|
|
597,570
|
|
|
|
|
|
4.80% Secured Borrowing
|
|
|
172,004
|
|
|
|
|
|
Foreign bank and other debt denominated in foreign currencies
|
|
|
15,299
|
|
|
|
12,933
|
|
Capital and Other Lease Obligations
|
|
|
23,660
|
|
|
|
2,548
|
|
Other
|
|
|
3,800
|
|
|
|
2,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,747,389
|
|
|
|
5,865,332
|
|
Less amounts due in one year
|
|
|
217,391
|
|
|
|
18,074
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
6,529,998
|
|
|
$
|
5,847,258
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of scheduled long-term debt
maturities by year (in thousands):
|
|
|
|
|
2011
|
|
$
|
217,391
|
|
2012
|
|
|
324,386
|
|
2013
|
|
|
572,687
|
|
2014
|
|
|
28,187
|
|
2015
|
|
|
29,634
|
|
Thereafter
|
|
|
5,575,104
|
|
|
|
|
|
|
|
|
$
|
6,747,389
|
|
|
|
|
|
|
In September 2010, we completed a $1.4 billion long-term
debt offering comprised of (i) $800 million of
5.125% Senior Notes due in 2020 (5.125% Senior
Notes) and (ii) $600 million of
6.75% Senior Notes due in 2040 (6.75% Senior
Notes). Net proceeds of $1.386 billion were used to
fund our bond tender offer that commenced in September 2010 and
repay short-term borrowings on our revolving credit facilities.
67
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In September 2010, we commenced a cash tender offer for up to
$700 million aggregate principal amount of specified series
of our outstanding debt. Pursuant to the tender-offer terms, we
repurchased $167 million of our 6.625% senior notes
due 2011 and incurred an expense of $11 million for the
premium we paid on the repurchase. In October 2010, we completed
the tender offer by repurchasing $327 million and
$206 million of our 5.95% senior notes due 2012 and
5.15% senior notes due 2013, respectively. We paid a
$44 million premium on these bonds tendered and incurred a
charge of $43 million in the fourth quarter of 2010.
In January 2009, we completed a $1.25 billion long-term
debt offering comprised of (i) $1 billion of
9.625% Senior Notes due in 2019 (9.625% Senior
Notes) and (ii) $250 million of
9.875% Senior Notes due in 2039 (9.875% Senior
Notes).
In March 2008, we completed a $1.5 billion long-term debt
offering comprised of (i) $500 million of
5.15% Senior Notes due in 2013 (5.15% Senior
Notes), (ii) $500 million of 6.00% Senior
Notes due 2018 (6.00% Senior Notes) and
(iii) $500 million of 7.00% Senior Notes due 2038
(7.00% Senior Notes).
The weighted average effective interest rates on our Senior
Notes for 2010 was 6.67%. The effective rate was determined
after giving consideration to the effect of interest rate
derivatives accounted for as hedges and the amortization of any
discounts (See Note 13).
In June 2010, we entered into a secured loan agreement with a
third-party financial institution and received proceeds of
$180 million. The note bears interest at a rate of 4.8% and
will be repaid in monthly installments over seven years. The
loan is secured by equipment located in the United States, and
is included in long-term debt on our Consolidated Balance Sheet.
|
|
12.
|
Fair
Value of Financial Instruments
|
Accounts
Receivable Factoring
We have entered into an accounts receivable sales program to
sell accounts receivable related to Latin America to third party
financial institutions. We sold approximately $395 million
under this program during 2010. We received cash totaling
$363 million and recognized a loss of $10 million on
these sales. These transactions qualified for sale accounting
under the accounting standards. The remaining amounts due to us
will be paid as the third party financial institution collects
on the receivables. These deferred amounts are recorded as Other
Current Assets in the Condensed Consolidated Balance Sheet. The
proceeds received on the initial sale and $16 million for
collection on the deferred amounts through December 31,
2010 are included in operating cash flows in our Consolidated
Statement of Cash Flows.
Financial
Instruments Measured and Recognized at Fair Value
There is a hierarchy that classifies valuation inputs into three
broad levels. Level 1 inputs are quoted prices (unadjusted)
in active markets for identical assets or liabilities.
Level 2 inputs are quoted prices 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 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.
68
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 31, 2010, we did not have non-derivative assets
or liabilities measured and recognized at fair value on a
recurring basis. The following table presents our non-derivative
assets and liabilities that are measured and recognized at fair
value on a recurring basis as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments
|
|
$
|
|
|
|
$
|
40,822
|
|
|
$
|
|
|
|
$
|
40,822
|
|
Other Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration on acquisition (See Note 3)
|
|
|
|
|
|
|
|
|
|
|
59,563
|
|
|
|
59,563
|
|
During the first quarter of 2010, we received proceeds of
approximately $42 million from the redemption of our other
investments recorded at fair value at December 31, 2009.
The proceeds are included in investing activities in the
Condensed Consolidated Statement of Cash Flows for the period
ended March 31, 2010.
The following table provides a summary of changes in fair value
of our Level 3 financial liability as of December 31,
2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Balance at beginning of period
|
|
$
|
59,563
|
|
|
$
|
|
|
Contingent consideration on acquisition (See Note 3)
|
|
|
|
|
|
|
83,836
|
|
Payment of contingent consideration on acquisition
|
|
|
(46,966
|
)
|
|
|
|
|
Gain on contingent consideration on acquisition included in
earnings
|
|
|
(12,597
|
)
|
|
|
(24,273
|
)
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
|
|
|
$
|
59,563
|
|
|
|
|
|
|
|
|
|
|
The gains recorded during 2010 and 2009 are included in the
Selling, General and Administrative Attributable to Segments
line in the Consolidated Statements of Income.
Fair
Value of Other Financial Instruments
Our other financial instruments include cash and cash
equivalents, foreign currency exchange contracts, interest rate
swaps, accounts receivable, notes receivable, accounts payable
and short and long-term debt. With the exception of long-term
debt, the carrying value of these financial instruments
approximates their fair value.
The fair value of outstanding debt fluctuates with changes in
applicable interest rates. 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. The fair value of
a companys debt is a measure of its current value under
present market conditions. It does not impact the financial
statements under current accounting rules. The fair value of our
long-term debt was established based on quoted market prices.
69
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The fair value and carrying value of the our long-term debt and
current portion of long-term debt is provided as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2010
|
|
2009
|
|
|
(In thousands)
|
|
Fair value
|
|
$
|
7,329,299
|
|
|
$
|
6,303,203
|
|
Carrying value
|
|
|
6,747,389
|
|
|
|
5,865,332
|
|
|
|
13.
|
Derivative
Instruments
|
We are exposed to market risk from changes in foreign currency
and changes in interest rates. 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 and we
may employ interest rate swaps as a tool to achieve that goal.
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 and the
creditworthiness of the counterparties in such transactions. In
light of events in the global credit markets and the potential
impact of these events on the liquidity of the banking industry,
we continue to 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.
Interest
Rate Swaps
We use interest rate swaps to help mitigate exposures related to
interest rate movements. Amounts paid or received upon
termination of the interest rate swaps accounted for as fair
value hedges represent the fair value of the agreements at the
time of termination and are recorded as an adjustment to the
carrying value of the related debt. These amounts are amortized
as a reduction (in the case of gains) or as an increase (in the
case of losses) to interest expense over the remaining term of
the debt. As of December 31, 2010 and 2009, we had net
unamortized gains of $55 million and $68 million,
respectively, associated with interest rate swap terminations.
Cash
Flow Hedges
In 2008, we entered into interest rate derivative instruments to
hedge projected exposures to interest rates in anticipation of a
debt offering. Those hedges were terminated at the time of the
issuance of the debt and the loss on these hedges is being
amortized from Accumulated Other Comprehensive Income to
interest expense over the remaining term of the debt. As of
December 31, 2010 and 2009, we had net unamortized losses
of $13 million associated with our cash flow hedge
terminations.
Other
Derivative Instruments
As of December 31, 2010 and 2009, we had foreign currency
forward contracts with notional amounts aggregating to
$925 million and $1,062 million, respectively, which
were entered into to hedge exposure to currency fluctuations in
various foreign currencies, including, but not limited to, the
British pound sterling, the Canadian dollar, the euro and the
Norwegian krone. The total estimated fair value of these
contracts and amounts owed associated with closed contracts
resulted in a net liability of approximately $14 million
and $9 million at December 31, 2010 and 2009,
respectively. These derivative instruments were not designated
as hedges, and the changes in fair value of the contracts are
recorded each period in Other, Net in the accompanying
Consolidated Statements of Income.
We have cross-currency swaps between the U.S. dollar and
Canadian dollar to hedge certain exposures to the Canadian
dollar. At December 31, 2010 and 2009, we had notional
amounts outstanding of $215 million and
70
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
$263 million, respectively. The total estimated fair value
of these contracts at December 31, 2010 and 2009 resulted
in a liability of $35 million and $26 million,
respectively. These derivative instruments were not designated
as hedges, and the changes in fair value of the contracts are
recorded each period in Other, Net in the accompanying
Consolidated Statements of Income.
The fair values of outstanding derivative instruments are
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2010
|
|
2009
|
|
Classifications
|
|
|
(In thousands)
|
|
|
|
Derivative assets not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
$
|
8,155
|
|
|
$
|
9,831
|
|
|
Other Current Assets
|
Derivative liabilities not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
21,664
|
|
|
|
18,939
|
|
|
Other Current Liabilities
|
Cross-currency swap contracts
|
|
|
34,783
|
|
|
|
26,170
|
|
|
Other Liabilities
|
Accumulated other comprehensive income is comprised of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Cumulative translation adjustment
|
|
$
|
193,077
|
|
|
$
|
188,768
|
|
|
$
|
(190,317
|
)
|
Cumulative defined benefit plan adjustments
|
|
|
(28,195
|
)
|
|
|
(60,636
|
)
|
|
|
(62,444
|
)
|
Deferred loss on derivative instruments, net of amortization
|
|
|
(12,764
|
)
|
|
|
(13,390
|
)
|
|
|
(14,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
152,118
|
|
|
$
|
114,742
|
|
|
$
|
(266,761
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in our Issued and Treasury shares during the years ended
December 31, 2010, 2009 and 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
Treasury
|
|
|
|
(In thousands)
|
|
|
Balance at December 31, 2007
|
|
|
727,204
|
|
|
|
(49,018
|
)
|
Shares issued for acquisitions
|
|
|
|
|
|
|
7,709
|
|
Equity awards granted, vested and exercised
|
|
|
1,433
|
|
|
|
924
|
|
Other
|
|
|
52
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
728,689
|
|
|
|
(40,367
|
)
|
Shares issued for acquisitions
|
|
|
29,578
|
|
|
|
5,398
|
|
Equity awards granted, vested and exercised
|
|
|
|
|
|
|
6,030
|
|
Other
|
|
|
180
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
758,447
|
|
|
|
(28,801
|
)
|
Shares issued for acquisitions
|
|
|
|
|
|
|
1,780
|
|
Equity awards granted, vested and exercised
|
|
|
|
|
|
|
4,181
|
|
Other
|
|
|
|
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
|
758,447
|
|
|
|
(22,638
|
)
|
|
|
|
|
|
|
|
|
|
71
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Authorized
Shares
At December 31, 2010, we were authorized to issue
1,137,669,955 registered shares and conditionally authorized to
issue 379,223,318 registered shares.
Warrants
At December 31, 2010, we had outstanding warrants to
purchase up to 12.9 million of our shares at a price of
$15.00 per share. The warrants remain exercisable until
February 28, 2012 and are subject to adjustment for changes
in our capital structure or the issuance of dividends in cash,
securities or property. Upon exercise by the holders, settlement
may occur through physical delivery, net share settlement, net
cash settlement or a combination of those choices. The net cash
settlement option upon exercise is at our sole discretion.
|
|
15.
|
Share-Based
Compensation
|
Incentive
Plans
The Weatherford International Ltd. 2006 Omnibus Incentive Plan
(Omnibus Plan) provides for awards of options, stock
appreciation rights, restricted share awards (RSA),
restricted share units (RSU), performance share
awards, performance unit awards, other share-based awards and
cash-based awards to any employee or our non-employee directors.
In June 2010, the Weatherford International Ltd. 2010 Omnibus
Incentive Plan (2010 Omnibus Plan) was approved by
our shareholders. This plan permits the grant of options, stock
appreciation rights, restricted share awards, restricted share
units, performance share awards, performance unit awards, other
share-based awards and cash-based awards to any employee,
non-employee director and other individual service providers or
any affiliate. The 2010 Omnibus Plan is similar to our 2006
Omnibus Plan.
The provisions of each award vary based on the type of award
granted and are specified by the Compensation Committee of our
Board of Directors. Those awards, such as stock options that are
based on a specific contractual term, will be granted with a
term not to exceed ten years. Upon grant of an RSA, the
participant has the rights of a shareholder, including but not
limited to the right to vote such shares and the right to
receive any dividends paid on such shares. Recipients of RSU
awards do not have the rights of a shareholder until such date
as the shares are issued or transferred to the recipient. As of
December 31, 2010, approximately 8.4 million shares
were available for grant under the 2010 Omnibus Plan and
approximately 1.8 million shares were available for grant
under the 2006 Omnibus Plan.
Share-Based
Compensation Expense
We recognized the following employee share-based compensation
expense during the years ended December 31, 2010, 2009 and
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
(In thousands)
|
|
Share-based compensation
|
|
$
|
98,725
|
|
|
$
|
110,359
|
|
|
$
|
101,416
|
|
Related tax benefit
|
|
|
34,554
|
|
|
|
38,626
|
|
|
|
35,496
|
|
72
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Options
A summary of option activity for the year ended
December 31, 2010, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
(In years)
|
|
|
(In thousands)
|
|
|
Outstanding at December 31, 2009
|
|
|
12,848,036
|
|
|
$
|
8.42
|
|
|
|
5.08
|
|
|
$
|
124,787
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1,008,492
|
)
|
|
|
4.78
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(20,000
|
)
|
|
|
23.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2010
|
|
|
11,819,544
|
|
|
|
8.70
|
|
|
|
4.20
|
|
|
|
166,624
|
|
Vested or Expected to Vest at December 31, 2010
|
|
|
11,819,544
|
|
|
|
8.70
|
|
|
|
4.20
|
|
|
|
166,624
|
|
Exercisable at December 31, 2010
|
|
|
11,482,894
|
|
|
|
8.37
|
|
|
|
4.18
|
|
|
|
165,698
|
|
Stock options are granted with an exercise price equal to or
greater than the fair market value of our shares as of the date
of grant. We use the Black-Scholes option pricing model to
determine the fair value of stock options awarded. The estimated
fair value of our stock options is expensed over their vesting
period, which is generally one to four years. There were no
stock options granted during 2010, 2009 or 2008. The intrinsic
value of stock options exercised during 2010, 2009 and 2008 was
$12 million, $18 million and $46 million,
respectively. As of December 31, 2010, there was less than
$1 million of unrecognized compensation expense related to
our unvested stock options, which is expected to be recognized
over a weighted average period of less than one year.
Restricted
Share Awards and Restricted Share Units
A summary of RSAs and RSUs activity for the year ended
December 31, 2010 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
Grant Date
|
|
|
|
RSA
|
|
|
Fair Value
|
|
|
RSU
|
|
|
Fair Value
|
|
|
Non-Vested at December 31, 2009
|
|
|
6,541,985
|
|
|
$
|
22.84
|
|
|
|
6,292,484
|
|
|
$
|
23.20
|
|
Granted
|
|
|
523,800
|
|
|
|
15.99
|
|
|
|
852,311
|
|
|
|
16.74
|
|
Vested
|
|
|
(2,367,280
|
)
|
|
|
21.56
|
|
|
|
(2,014,697
|
)
|
|
|
22.58
|
|
Forfeited
|
|
|
(430,412
|
)
|
|
|
24.73
|
|
|
|
(914,670
|
)
|
|
|
20.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Vested at December 31, 2010
|
|
|
4,268,093
|
|
|
|
22.59
|
|
|
|
4,215,428
|
|
|
|
22.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSAs and RSUs vest based on continued employment, generally over
a two to five-year period. The fair value of RSAs and RSUs is
determined based on the closing price of our shares on the date
of grant. The total fair value, less assumed forfeitures, is
expensed over the vesting period. The weighted-average grant
date fair value of RSAs and RSUs granted during the years ended
2010, 2009 and 2008 was $16.45, $13.67 and $32.55, respectively.
The total fair value of RSAs and RSUs vested during the years
ended 2010, 2009 and 2008 was $96 million, $99 million
and $40 million, respectively. As of December 31,
2010, there was $144 million of unrecognized compensation
expense related to unvested RSAs and RSUs, which is expected to
be recognized over a weighted average period of two years.
Performance
Units
During 2010, we issued performance units, which will vest
ratably over a three-year period assuming continued employment
and if the Company meets certain market-based performance goals.
The weighted average
73
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
grant date fair value of our performance units was determined
through use of the Monte Carlo simulation method. As of
December 31, 2010, there was $8 million of
unrecognized compensation expense related to performance units.
A summary of performance unit activity for the year ended
December 31, 2010 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
Performance
|
|
|
Grant Date
|
|
|
|
Units
|
|
|
Fair Value
|
|
|
Granted
|
|
|
1,089,517
|
|
|
$
|
12.41
|
|
Forfeited
|
|
|
(103,062
|
)
|
|
|
13.19
|
|
|
|
|
|
|
|
|
|
|
Non-Vested at December 31, 2010
|
|
|
986,455
|
|
|
|
12.32
|
|
|
|
|
|
|
|
|
|
|
Executive
Deferred Compensation Plan
Under our Executive Deferred Compensation Stock Ownership Plan
(the EDC Plan), a portion of the compensation for
certain key employees, including officers and employee
directors, can be deferred for payment after retirement or
termination of employment. We established a grantor trust to
fund the benefits under the EDC Plan. The funds provided to such
trust are invested by an independent trustee in shares of our
stock, which are purchased by the trustee on the open market.
The assets of the trust are available to satisfy the claims of
all our general creditors in the event of bankruptcy or
insolvency. Accordingly, the shares held by the trust and our
liability under the EDC Plan are included in the accompanying
Consolidated Balance Sheets as Treasury Shares. Effective
December 31, 2008, we suspended the EDC Plan. While the
plan is suspended, no new participants may join the plan and no
further deferrals of compensation or matching contributions will
be made under the plan unless and until our Board of Directors
determines otherwise.
|
|
16.
|
Retirement
and Employee Benefit Plans
|
We have defined contribution plans covering certain employees.
Contribution expenses related to these plans totaled
$43 million, $36 million and $32 million in 2010,
2009 and 2008, respectively.
Effective for the year ended December 31, 2009, we adopted
an update to existing accounting standards that amends the
requirements for employers disclosures about plan assets
for defined benefit pension and other postretirement plans. The
objectives of this update are to provide users of financial
statements with an understanding of how investment allocation
decisions are made, the major categories of assets held by the
plans, the inputs and valuation techniques used to measure the
fair value of plan assets, significant concentration of risk
within the companys plan assets, and, for fair value
measurements determined using significant unobservable inputs, a
reconciliation of changes between the beginning and ending
balances.
We have defined benefit pension and other postretirement 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.
74
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The changes in benefit obligations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Benefit obligation at beginning of year
|
|
$
|
143,399
|
|
|
$
|
130,686
|
|
|
$
|
121,922
|
|
|
$
|
143,408
|
|
Adjustment to beginning of year benefit obligation(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,139
|
)
|
Service cost
|
|
|
1,032
|
|
|
|
5,205
|
|
|
|
3,085
|
|
|
|
6,964
|
|
Interest cost
|
|
|
4,634
|
|
|
|
6,858
|
|
|
|
7,805
|
|
|
|
7,195
|
|
Plan participants contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
227
|
|
Amendments
|
|
|
|
|
|
|
150
|
|
|
|
30,244
|
|
|
|
|
|
Curtailments
|
|
|
(34,143
|
)
|
|
|
(1,608
|
)
|
|
|
(1,341
|
)
|
|
|
(176
|
)
|
Settlements
|
|
|
(32,779
|
)
|
|
|
(3,044
|
)
|
|
|
(12,881
|
)
|
|
|
|
|
Divestitures
|
|
|
|
|
|
|
(902
|
)
|
|
|
|
|
|
|
|
|
Actuarial (gain)/loss
|
|
|
7,905
|
|
|
|
17,637
|
|
|
|
(4,312
|
)
|
|
|
(7,273
|
)
|
Currency fluctuations
|
|
|
|
|
|
|
(4,007
|
)
|
|
|
|
|
|
|
16,871
|
|
Benefits paid
|
|
|
(836
|
)
|
|
|
(3,524
|
)
|
|
|
(1,123
|
)
|
|
|
(2,391
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
89,212
|
|
|
$
|
147,451
|
|
|
$
|
143,399
|
|
|
$
|
130,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
See note following change in plan assets. |
We have a supplemental executive retirement plan
(SERP), which provides pension benefits to certain
executives upon retirement. This plan is a nonqualified,
unfunded retirement plan and was amended effective
March 31, 2010, to freeze the benefits under the plan. This
resulted in the curtailment shown above for the U.S. The
SERP was further amended effective April 8, 2010, to allow
participants a one-time option to convert their vested,
fixed-amount,
dollar-denominated benefits under the SERP into
equity-denominated benefits. The amendment permitted
participants in the SERP to make a one-time irrevocable election
before June 7, 2010 to convert between 50% and 100% of
their cash balance under the plan into units representing the
right to receive registered shares in the Company. During May
2010, the remaining participants elected to convert
approximately $76 million of their cash entitlement into
approximately 4.7 million shares, which was based on the
closing share price on the date of the election. In addition,
during 2010, four executives in the plan left the Company
resulting in the settlement shown above for the U.S. At
December 31, 2010, the projected benefit obligation of the
SERP was $77 million.
75
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The changes in plan assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
8,176
|
|
|
$
|
89,553
|
|
|
$
|
7,096
|
|
|
$
|
96,593
|
|
Adjustment to beginning of year fair value of plan assets(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,139
|
)
|
Actual return on plan assets
|
|
|
1,073
|
|
|
|
6,564
|
|
|
|
1,715
|
|
|
|
8,212
|
|
Employer contributions
|
|
|
526
|
|
|
|
7,273
|
|
|
|
341
|
|
|
|
8,383
|
|
Plan participants contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
227
|
|
Settlements
|
|
|
|
|
|
|
(3,044
|
)
|
|
|
|
|
|
|
|
|
Divestitures
|
|
|
|
|
|
|
(430
|
)
|
|
|
|
|
|
|
|
|
Currency fluctuations
|
|
|
|
|
|
|
(3,275
|
)
|
|
|
|
|
|
|
12,140
|
|
Benefits paid
|
|
|
(836
|
)
|
|
|
(2,737
|
)
|
|
|
(976
|
)
|
|
|
(1,863
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
8,939
|
|
|
|
93,904
|
|
|
|
8,176
|
|
|
|
89,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(80,273
|
)
|
|
$
|
(53,547
|
)
|
|
$
|
(135,223
|
)
|
|
$
|
(41,133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Effective January 1, 2009, our disclosures for one of our
international plans reflect the defined benefit related amounts
only. In previous years, the plan calculations included both the
defined benefit obligations and assets and the defined
contribution obligations and assets as the plan is not formally
divided. In an effort to provide clarity to the defined benefit
obligation specifically, we requested that the actuary begin to
capture the data separately starting in 2009. As a result, the
defined contribution obligation and assets were carved out of
the disclosure as shown above and only the true defined benefit
obligations and assets remain. In addition, the expense shown in
the defined benefit disclosure for the year ended
December 31, 2009, is only the defined benefit related
expense for this plan and the defined contribution related
expense for this plan is disclosed with our other sponsored
defined contribution plans at the beginning of this footnote. |
The amounts recognized in the Consolidated Balance Sheets were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2010
|
|
2009
|
|
|
United
|
|
|
|
United
|
|
|
|
|
States
|
|
International
|
|
States
|
|
International
|
|
|
(In thousands)
|
|
Noncurrent assets
|
|
$
|
|
|
|
$
|
2,642
|
|
|
$
|
|
|
|
$
|
4,526
|
|
Current liabilities
|
|
|
(66
|
)
|
|
|
(826
|
)
|
|
|
(10,886
|
)
|
|
|
(542
|
)
|
Noncurrent liabilities
|
|
|
(80,207
|
)
|
|
|
(55,363
|
)
|
|
|
(124,337
|
)
|
|
|
(45,117
|
)
|
76
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Amounts in accumulated other comprehensive income that have not
yet been recognized as components of net periodic benefit cost
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Net loss
|
|
$
|
14,506
|
|
|
$
|
25,988
|
|
|
$
|
41,113
|
|
|
$
|
10,903
|
|
Net prior service costs (credit)
|
|
|
498
|
|
|
|
(601
|
)
|
|
|
40,631
|
|
|
|
(811
|
)
|
Net transition asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accumulated other comprehensive income
|
|
$
|
15,004
|
|
|
$
|
25,387
|
|
|
$
|
81,744
|
|
|
$
|
10,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accumulated benefit obligation for defined benefit pension
plans was $84 million and $104 million at
December 31, 2010 and 2009, respectively, for the
U.S. plans and $129 million and $116 million at
December 31, 2010 and 2009, respectively, for the
international plans.
The projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans
with projected benefit obligations in excess of plan assets or
accumulated benefit obligations in excess of plan assets as of
December 31, 2010 and 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
United
|
|
|
|
United
|
|
|
|
|
States
|
|
International
|
|
States
|
|
International
|
|
|
(In thousands)
|
|
Plans with projected benefit obligation in excess of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
|
|
$
|
89,212
|
|
|
$
|
116,617
|
|
|
$
|
143,399
|
|
|
$
|
100,953
|
|
Fair value of plan assets
|
|
|
8,939
|
|
|
|
60,428
|
|
|
|
8,176
|
|
|
|
55,295
|
|
Plans with accumulated benefit obligation in excess of plan
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation
|
|
|
83,877
|
|
|
|
73,728
|
|
|
|
103,752
|
|
|
|
69,750
|
|
Fair value of plan assets
|
|
|
8,939
|
|
|
|
32,665
|
|
|
|
8,176
|
|
|
|
32,362
|
|
The components of net periodic benefit cost during the years
ended December 31, 2010, 2009 and 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
1,032
|
|
|
$
|
5,205
|
|
|
$
|
3,085
|
|
|
$
|
6,964
|
|
|
$
|
2,879
|
|
|
$
|
13,557
|
|
Interest cost
|
|
|
4,634
|
|
|
|
6,858
|
|
|
|
7,805
|
|
|
|
7,195
|
|
|
|
6,017
|
|
|
|
9,905
|
|
Expected return on plan assets
|
|
|
(595
|
)
|
|
|
(4,712
|
)
|
|
|
(630
|
)
|
|
|
(4,031
|
)
|
|
|
(687
|
)
|
|
|
(8,700
|
)
|
Amortization of transition asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
Amortization of prior service cost (credit)
|
|
|
1,578
|
|
|
|
(42
|
)
|
|
|
3,908
|
|
|
|
(48
|
)
|
|
|
1,833
|
|
|
|
(47
|
)
|
Settlements/curtailments
|
|
|
37,126
|
|
|
|
(1,188
|
)
|
|
|
4,760
|
|
|
|
|
|
|
|
5,621
|
|
|
|
(126
|
)
|
Amortization of net loss
|
|
|
1,320
|
|
|
|
(76
|
)
|
|
|
6,340
|
|
|
|
993
|
|
|
|
3,862
|
|
|
|
319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
45,095
|
|
|
$
|
6,045
|
|
|
$
|
25,268
|
|
|
$
|
11,069
|
|
|
$
|
19,525
|
|
|
$
|
14,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other changes in plan assets and benefit obligations recognized
in other comprehensive income during the years ended
December 31, 2010 and 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
New Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (gain) loss for the year
|
|
$
|
(26,716
|
)
|
|
$
|
14,177
|
|
|
$
|
(6,738
|
)
|
|
$
|
(11,550
|
)
|
Net prior service cost for the year
|
|
|
|
|
|
|
150
|
|
|
|
30,244
|
|
|
|
|
|
Reclassification Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
109
|
|
|
|
1,250
|
|
|
|
(10,037
|
)
|
|
|
(993
|
)
|
Prior service credit (cost)
|
|
|
(40,133
|
)
|
|
|
42
|
|
|
|
(4,971
|
)
|
|
|
48
|
|
Transition asset
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income
|
|
$
|
(66,740
|
)
|
|
$
|
15,633
|
|
|
$
|
8,498
|
|
|
$
|
(12,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in accumulated other comprehensive income expected to be
recognized as components of net periodic benefit cost in 2011
are as follows:
|
|
|
|
|
|
|
|
|
|
|
United
|
|
|
|
|
States
|
|
International
|
|
|
(In thousands)
|
|
Net loss
|
|
$
|
734
|
|
|
$
|
821
|
|
Prior service costs (credit)
|
|
|
88
|
|
|
|
(63
|
)
|
Prior service costs are amortized using an alternative
straight-line method over the average remaining service period
of employees expected to receive plan benefits. Assumed
long-term rates of return on plan assets, discount rates and
rates of compensation increases vary for the different plans
according to the local economic conditions.
The weighted average assumption rates used for benefit
obligations were as follows:
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
Discount rate:
|
|
|
|
|
United States plans
|
|
3.25 - 4.50%
|
|
5.25%
|
International plans
|
|
1.59 - 7.50
|
|
1.68 - 8.00
|
Rate of compensation increase:
|
|
|
|
|
United States plans
|
|
|
|
6.00
|
International plans
|
|
2.00 - 4.50
|
|
2.00 - 4.70
|
78
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The weighted average assumption rates used for net periodic
benefit costs were as follows:
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
2008
|
|
Discount rate:
|
|
|
|
|
|
|
United States plans
|
|
5.25%
|
|
5.75 - 6.25%
|
|
5.75 - 6.00%
|
International plans
|
|
1.68 - 8.00
|
|
1.68 - 6.00
|
|
1.94 - 5.60
|
Expected return on plan assets:
|
|
|
|
|
|
|
United States plans
|
|
7.00
|
|
7.00
|
|
7.00
|
International plans
|
|
4.60 - 6.46
|
|
4.20 - 7.05
|
|
4.20 - 7.34
|
Rate of compensation increase:
|
|
|
|
|
|
|
United States plans
|
|
|
|
8.00
|
|
8.00
|
International plans
|
|
2.00 - 4.70
|
|
2.00 - 5.15
|
|
2.00 - 4.77
|
In determining the overall expected long-term rate of return for
plan assets, we take into consideration the historical
experience as well as future expectations of the asset mix
involved. As different investments yield different returns, each
asset category must be reviewed individually and then weighted
for significance in relation to the total portfolio.
The following table presents the fair values of the
Companys pension plan assets as of December 31, 2010.
United States and International plans are combined below as
there is only one United States plan with assets. For an
explanation of the various levels, see Note 12.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Investment funds(1)
|
|
$
|
|
|
|
$
|
93,904
|
|
|
$
|
93,904
|
|
Common/collective trust funds(2)
|
|
|
|
|
|
|
8,939
|
|
|
|
8,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
|
|
|
$
|
102,843
|
|
|
$
|
102,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These international funds invest in the following: 5% cash, 9%
U.S. equities, 39%
non-U.S.
equities, 37%
non-U.S.
fixed income securities, 6% property and 4% other. |
|
(2) |
|
These U.S. funds invest in 63% equities and 37% fixed income
securities. |
The following table presents the fair values of the
Companys pension plan assets as of December 31, 2009.
United States and International plans are combined below as
there is only one United States plan with assets. For an
explanation of the various levels, see Note 12.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Investment funds(1)
|
|
$
|
|
|
|
$
|
86,765
|
|
|
$
|
86,765
|
|
Common/collective trust funds(2)
|
|
|
|
|
|
|
8,176
|
|
|
|
8,176
|
|
Cash
|
|
|
2,788
|
|
|
|
|
|
|
|
2,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
2,788
|
|
|
$
|
94,941
|
|
|
$
|
97,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These international funds invest in the following: 4% cash, 6%
U.S. equities, 39%
non-U.S.
equities, 41%
non-U.S.
fixed income securities, 7% property and 3% other. |
|
(2) |
|
These U.S. funds invest in 62% equities and 38% fixed income
securities. |
79
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Common/collective trust funds are valued at the net asset value
of shares in the fund as determined by the issuer which are
based on the fair value of the underlying assets. Investment
funds are valued by the issuer based on the fair value of the
underlying assets.
In the U.S., our investment strategy includes a balanced
approach with target allocation percentages of 60% equity
investments and 40% fixed income investments. For the
international plans, the assets are invested primarily in equity
investments as they are expected to provide a higher long-term
rate of return. Our pension investment strategy worldwide
prohibits a direct investment in our own stock.
In 2011, we expect to contribute less than $1 million in
the U.S. and $8 million internationally to our pension
and other postretirement benefit plans. In addition, the
following benefit payments, which reflect expected future
service and anticipated settlements, as appropriate, are
expected to be paid:
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
2011
|
|
$
|
10,546
|
|
|
$
|
2,941
|
|
2012
|
|
|
8,411
|
|
|
|
2,035
|
|
2013
|
|
|
7,806
|
|
|
|
3,709
|
|
2014
|
|
|
7,051
|
|
|
|
3,088
|
|
2015
|
|
|
6,554
|
|
|
|
4,045
|
|
2016-2020
|
|
|
53,876
|
|
|
|
25,397
|
|
As discussed in Note 2, we have restated our provision for
income taxes and related balance sheet accounts for 2009 and
2008 in the following tables below. The components of Income
from Continuing Operations Before Income Taxes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Domestic
|
|
$
|
18,104
|
|
|
$
|
(470,793
|
)
|
|
$
|
519,074
|
|
Foreign
|
|
|
186,485
|
|
|
|
754,276
|
|
|
|
1,147,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
204,589
|
|
|
$
|
283,483
|
|
|
$
|
1,666,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Our income tax benefit (provision) from continuing operations
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Current;
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal and state income taxes
|
|
$
|
(34,898
|
)
|
|
$
|
75,532
|
|
|
$
|
(118,446
|
)
|
Foreign
|
|
|
(207,790
|
)
|
|
|
(293,485
|
)
|
|
|
(338,701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
(242,688
|
)
|
|
|
(217,953
|
)
|
|
|
(457,147
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
|
(72,370
|
)
|
|
|
69,221
|
|
|
|
73,837
|
|
Foreign
|
|
|
17,337
|
|
|
|
61,549
|
|
|
|
10,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
(55,033
|
)
|
|
|
130,770
|
|
|
|
84,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(297,721
|
)
|
|
$
|
(87,183
|
)
|
|
$
|
(372,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The restatement increased our provision for income taxes by
$68 million in 2009 and $123 million in 2008,
primarily due to the income tax consequences of certain
intercompany transactions inappropriately tax-effected. The
correction of the tax-effect of these intercompany transactions
resulted in an increase to our current tax expense of
$100 million in 2009 and an increase of $106 million
in 2008. In addition, we recorded other adjustments to our tax
provision to correct for certain errors and items recorded in
the improper period. These other adjustments resulted in a
decrease to our total tax provision in 2009 of $32 million,
which is primarily comprised of an adjustment to the cumulative
differences between book and tax basis of fixed assets and
intangibles and an adjustment related to differences between
accrued tax expense and tax expense per the filed tax returns.
Our total 2008 tax provision was increased by $17 million,
which is primarily comprised of an adjustment related to
differences between accrued tax expense and tax expense per the
filed tax returns.
The difference between the tax (provision) benefit at the
statutory federal income tax rate and the tax (provision)
benefit attributable to Income from Continuing Operations Before
Income Taxes for the three years ended December 31, 2010 is
analyzed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Statutory federal income tax rate
|
|
$
|
(71,606
|
)
|
|
$
|
(99,219
|
)
|
|
$
|
(583,287
|
)
|
Effect of state income tax, net and alternative minimum tax
|
|
|
(6,693
|
)
|
|
|
(8,268
|
)
|
|
|
(11,177
|
)
|
Effect of domestic non-deductible expenses
|
|
|
(8,873
|
)
|
|
|
(11,005
|
)
|
|
|
(20,610
|
)
|
Change in valuation allowance
|
|
|
(31,641
|
)
|
|
|
(636
|
)
|
|
|
(4,574
|
)
|
Effect of foreign income tax, net
|
|
|
(153,754
|
)
|
|
|
37,159
|
|
|
|
258,222
|
|
Change in income tax reserve
|
|
|
(20,615
|
)
|
|
|
(7,101
|
)
|
|
|
(9,302
|
)
|
Effect of change in statutory rates
|
|
|
(1,428
|
)
|
|
|
6,365
|
|
|
|
(1,782
|
)
|
Other
|
|
|
(3,111
|
)
|
|
|
(4,478
|
)
|
|
|
(327
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(297,721
|
)
|
|
$
|
(87,183
|
)
|
|
$
|
(372,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effect of foreign income taxes for 2009 and 2008 above
includes the effect of the restatement for the intercompany
transactions inappropriately tax-effected.
During 2010, we recorded expense of approximately
$124 million related to the restructuring of our
Latin America operations. During 2008, we recorded a
benefit of approximately $100 million related to foreign
81
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
taxes paid that will be used to reduce our future United States
tax liability. Both of these adjustments are presented in effect
of foreign income tax, net for 2010 and 2008.
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 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. Deferred tax assets and liabilities are
classified as current or non-current according to the
classification of the related asset or liability for financial
reporting.
The components of the net deferred tax asset (liability)
attributable to continuing operations were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Domestic and foreign operating losses
|
|
$
|
525,163
|
|
|
$
|
447,521
|
|
Accrued liabilities and reserves
|
|
|
136,809
|
|
|
|
157,429
|
|
Tax credits
|
|
|
52,348
|
|
|
|
102,289
|
|
Other differences between financial and tax basis
|
|
|
49,028
|
|
|
|
98,247
|
|
Differences between financial and tax basis inventory
|
|
|
62,057
|
|
|
|
47,258
|
|
Valuation allowance
|
|
|
(102,794
|
)
|
|
|
(70,349
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
722,611
|
|
|
|
782,395
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(316,682
|
)
|
|
|
(275,475
|
)
|
Goodwill and other intangibles
|
|
|
(192,906
|
)
|
|
|
(179,413
|
)
|
Unremitted foreign earnings
|
|
|
|
|
|
|
(22,585
|
)
|
Other differences between financial and tax basis
|
|
|
(50,231
|
)
|
|
|
(60,940
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(559,819
|
)
|
|
|
(538,413
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
162,792
|
|
|
$
|
243,982
|
|
|
|
|
|
|
|
|
|
|
The overall increase in the valuation allowance in 2010 is
primarily attributable to the establishment of a valuation
allowance against net operating losses (NOLs) and
tax credits in various jurisdictions. Managements
assessment is that the character and nature of future taxable
income may not allow us to realize the tax benefits of the NOLs
and tax credits within the allowable carryforward period.
Therefore, an appropriate valuation allowance has been made.
In 2010, we did not provide additional taxes for the anticipated
repatriation of earnings of our foreign subsidiaries because
their earnings are deemed to be indefinitely reinvested, which
represents a change from the prior year. As a result of this
change, we recognized a tax benefit in 2010 of $23 million.
If the earnings in our foreign subsidiaries were not
indefinitely reinvested as of December 31, 2010, the
estimated tax expense would be approximately $144 million,
net.
At December 31, 2010, we had approximately
$1.7 billion of NOLs, $85 million of which were
generated by certain domestic subsidiaries prior to their
acquisition by us. The use of these acquired domestic NOLs is
subject to limitations imposed by the Internal Revenue Code and
is also restricted to the taxable income of the subsidiaries
generating these losses. Loss carryforwards, if not utilized,
will expire at various dates from 2011 through 2030.
82
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A tabular reconciliation of the total amounts of unrecognized
tax benefits at the beginning and end of the period is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
Balance at beginning of year
|
|
$
|
63,466
|
|
|
$
|
55,979
|
|
|
$
|
44,577
|
|
Additions as a result of tax positions taken during a prior
period
|
|
|
20,059
|
|
|
|
13,007
|
|
|
|
11,263
|
|
Reductions as a result of tax positions taken during a prior
period
|
|
|
(15,526
|
)
|
|
|
(2,259
|
)
|
|
|
(71
|
)
|
Additions as a result of tax positions taken during the current
period
|
|
|
4,106
|
|
|
|
1,991
|
|
|
|
2,977
|
|
Reductions relating to settlements with taxing authorities
|
|
|
(9,397
|
)
|
|
|
(3,933
|
)
|
|
|
(2,767
|
)
|
Reductions as a result of a lapse of the applicable statute of
limitations
|
|
|
(1,986
|
)
|
|
|
(1,319
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
60,722
|
|
|
$
|
63,466
|
|
|
$
|
55,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our tabular reconciliation of unrecognized tax benefits above
has been restated primarily to correct for unrecognized tax
benefits that had been inappropriately included in current
income taxes payable. This resulted in an increase to the
beginning balance of unrecognized tax benefits of
$11 million in 2009 and $7 million in 2008.
All of the unrecognized tax benefits, if recognized in future
periods, would impact our effective tax rate.
To the extent penalties and interest would be assessed on any
underpayment of income tax, such amounts have been accrued and
classified as a component of income tax expense in the financial
statements. This is an accounting policy election made by us
that is a continuation of our historical policy and will
continue to be consistently applied in the future. We recognized
a benefit of approximately $4 million relating to interest
for the period ended December 31, 2010. We recognized
$8 million and $2 million of expense relating to
interest for the periods ended December 31, 2009 and 2008,
respectively. We recognized approximately $1 million and
$5 million of penalties for the years ended
December 31, 2010 and 2009 respectively. Penalties during
the year ended December 31, 2008 were immaterial. The
amounts in the table above exclude accrued interest and
penalties of $23 million, $28 million and
$14 million at December 31, 2010, 2009 and 2008,
respectively.
We are subject to income tax in many of the approximately 100
countries where we operate including major operations in the
United States, the United Kingdom, and Canada. Many of our
subsidiaries are open to examination in the United Kingdom and
Canada dating from 2003 through December 31, 2010. We are
open to examination in the United States for tax years ended
December 31, 2005 through December 31, 2009.
We do not anticipate a significant change in the balance of
unrecognized tax benefits within the next 12 months.
|
|
18.
|
Disputes,
Litigation and Contingencies
|
U.S.
Government and Internal Investigations
We are currently involved in government and internal
investigations involving various areas of our operations.
Until 2003, we participated in the United Nations
oil-for-food
program governing sales of goods and services into Iraq. The
U.S. Department of Justice (DOJ) and the SEC
have undertaken investigations of our participation in the
oil-for-food
program and have subpoenaed certain documents in connection with
these investigations. We have cooperated fully with these
investigations. We have retained legal counsel, reporting to our
audit committee, to
83
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
investigate this matter. We have begun negotiations with the
government agencies to resolve these matters, but we cannot yet
anticipate the timing, outcome or possible impact of the
ultimate resolution of the investigations, financial or
otherwise.
The U.S. Department of Commerce, Bureau of
Industry & Security, Office of Foreign Assets Control
(OFAC), DOJ and SEC have undertaken investigations
of allegations of improper sales of products and services by the
Company and its subsidiaries in certain sanctioned countries. We
have cooperated fully with this investigation. We have retained
legal counsel, reporting to our audit committee, to investigate
these matters and to cooperate fully with these agencies. We
have begun negotiations with the government agencies to resolve
these matters, but we cannot yet anticipate the timing, outcome
or possible impact of the ultimate resolution of the
investigation, financial or otherwise.
In light of this investigation and of U.S. and foreign
policy environment and the inherent uncertainties surrounding
these countries, we decided in September 2007 to direct our
foreign subsidiaries to discontinue doing business in countries
that are subject to comprehensive U.S. economic and trade
sanctions, specifically Cuba, Iran, and Sudan, as well as Syria.
Effective September 2007, we ceased entering into any new
contracts in these countries and began an orderly
discontinuation and winding down of our existing business in
these sanctioned countries. Effective March 31, 2008, we
substantially completed our winding down of business in these
countries. We can complete the withdrawal process only pursuant
to licenses issued by OFAC. Our remaining activities in Iran,
Sudan and Syria include ongoing withdrawal activities such as
attempts to collect accounts receivable, attempts to settle tax
liabilities or legal claims and attempts to recover or liquidate
assets, including equipment and funds. Certain of our
subsidiaries continue to conduct business in countries such as
Myanmar that are subject to more limited U.S. trading
sanctions.
The DOJ and SEC are investigating our compliance with the
Foreign Corrupt Practices Act (FCPA) and other laws
worldwide. We have retained legal counsel, reporting to our
audit committee, to investigate these matters and to cooperate
fully with the DOJ and SEC. As part of our investigations, we
have uncovered potential violations of U.S. law in
connection with activities in West Africa. We have begun
negotiations with the government agencies to resolve these
matters, but we cannot yet anticipate the timing, outcome or
possible impact of the ultimate resolution of the
investigations, financial or otherwise.
The DOJ, SEC and other agencies and authorities have a broad
range of civil and criminal penalties they may seek to impose
against corporations and individuals for violations of trade
sanctions laws, the FCPA and other federal statutes including,
but not limited to, injunctive relief, disgorgement, fines,
penalties and modifications to business practices and compliance
programs. In recent years, these agencies and authorities have
entered into agreements with, and obtained a range of penalties
against, several public corporations and individuals in similar
investigations, under which civil and criminal penalties were
imposed, including in some cases fines and other penalties and
sanctions in the tens and hundreds of millions of dollars. These
agencies are seeking to impose penalties against us for past
conduct, but the ultimate amount of any penalties we may pay
currently cannot be reasonably estimated. Under trade sanctions
laws, the DOJ may also seek to impose modifications to business
practices, including immediate cessation of all business
activities in specific countries or other limitations that
decrease our business, and modifications to compliance programs,
which may increase compliance costs. Any injunctive relief,
disgorgement, fines, penalties, sanctions or imposed
modifications to business practices resulting from these
investigations could adversely affect our results of operations.
In addition, our historical activities in sanctioned countries,
such as Sudan and Iran, could result in certain investors, such
as government sponsored pension funds, divesting or not
investing in our registered shares. Based on available
information, we cannot predict what, if any, actions the DOJ,
SEC or other authorities will take in our situation or the
effect any such actions will have on our consolidated financial
position or results of operations. To the extent we violated
trade sanctions laws, the FCPA, or other laws or regulations,
fines and other penalties may be imposed. Because these matters
are now pending before the indicated agencies, there can be no
assurance that actual fines or penalties, if any, will not have
a material adverse effect on our business, financial condition,
liquidity or results of operations.
84
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
To date, we have incurred $49 million for costs in
connection with our exit from sanctioned countries and incurred
$113 million for legal and professional fees in connection
with complying with and conducting these on-going investigations.
Macondo
Litigation
On April 20, 2010, the Deepwater Horizon rig operating
under contract with BP at the Macondo well in the Gulf of Mexico
exploded and sank, resulting in 11 deaths, several injuries and
significant damages to property and the environment.
Weatherford provided the following services and products to BP
on the Macondo well: (1) connected and tightened four
intermediate casing strings and one tapered production string
(long string); (2) furnished a liner hanger on
one casing string; (3) furnished centralizers, most of
which were not used in the well, and (4) provided float
equipment on the long string. The float equipment consisted of a
reamer shoe, a float collar and wiper plugs. The float collar is
designed to control backflow or ingress of the cement through
the shoe track while the cement hardens. At the time of the
explosion, Weatherford had two employees on the Deepwater
Horizon; they sustained minor injuries.
As a result of the explosion, approximately 400 lawsuits were
filed, mainly for personal injuries, wrongful death and
pollution damage. Weatherford is currently named, along with BP
and other defendants, in several dozen of these lawsuits. The
United States Judicial Panel on Multidistrict Litigation issued
an order centralizing most of these cases in the Federal
District Court for the Eastern District of Louisiana. The
pollution damage complaints generally refer to the Oil Pollution
Act of 1990 (OPA) and allege, among other things,
negligence and gross negligence by Weatherford and other
defendants. They allege that Weatherford and the other
defendants are responsible for property damage, trespass,
nuisance and economic loss as a result of environmental
pollution and generally seek awards of unspecified economic,
compensatory, and punitive damages, as well as injunctive
relief. Additional lawsuits may be filed in the future relating
to the Macondo incident.
Weatherford was not designated as a Responsible
Party, as that term is defined by OPA. Therefore,
Weatherford was not charged with responsibility for cleaning up
the oil or handling any claims. The Responsible Party may make a
claim for contribution against any other party it alleges
contributed to the oil spill. Since Weatherford has not been
named a Responsible Party, we intend to seek to be dismissed
from any and all
OPA-related
claims and to seek indemnity from any and all liability under
OPA.
In the master service contract between BP and Weatherford, under
which Weatherford provided products and services to BP related
to the Macondo well, BP agreed to save, indemnify,
release, defend and hold harmless [Weatherford, its
subcontractors and their affiliates, directors, officers and
employees] from and against any claim of whatsoever nature
arising from pollution
and/or
contamination including without limitation such pollution or
contamination from the reservoir. BP further agreed to
save, indemnify, release, defend and hold harmless
[Weatherford, its subcontractors and their affiliates,
directors, officers and employees] from and against any claims,
losses, damages, costs (including legal costs) expenses and
liabilities resulting from...blowout, fire, explosion, cratering
or any uncontrolled well condition (including the costs to
control a wild well and the removal of debris). These
indemnity provisions include direct claims asserted against
Weatherford by third parties and any claim by BP for
contribution under OPA. These indemnities apply regardless of
the cause of the condition giving rise to the claim. The
indemnities exclude claims for injury to Weatherfords
employees and subcontractors. However, as injuries to our two
employees were minor, we do not anticipate any significant
liabilities with respect to our employees.
We believe that the indemnification obligations of BP are valid
and enforceable. However, BP may seek to avoid its
indemnification obligations. Should a court determine that the
wrongful death and personal injury indemnity provisions are
unenforceable, Weatherford might be liable for injuries to, or
the death of, BP personnel
85
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
and personnel of third party contractors if a case is adversely
determined. The cause of the Macondo incident remains under
investigation and has yet to be determined.
If BP were to avoid its indemnities regarding personal injury
and a case is adversely determined against Weatherford with
respect to the Macondo incident, Weatherford believes its
exposure to personal injury/death claims is within the limits of
its insurance coverage. Weatherford has a self-insured retention
of $2 million. Above that amount, Weatherford has aggregate
liability insurance coverage with limits of $303 million.
Weatherford believes all claims for personal injury made against
Weatherford, even if they are not covered by indemnity from BP,
are covered under its various liability insurance policies, up
to the $303 million in limits. Weatherford has met
individually with its insurers to discuss this matter. While
some of our insurers have sent notices stating that they lack
sufficient information to adequately assess coverage issues at
this time, we do not currently anticipate there will be a
substantive coverage dispute amongst Weatherford and its
insurers.
We do not expect that we will have liability for these claims,
but the litigation surrounding these matters is complex and
likely to continue for some time, and the damages claimed are
significant. We cannot predict the ultimate outcome of these
claims.
Weatherford is cooperating fully with the investigations of the
accident initiated by various agencies of the
U.S. Government and, to the extent requested, has responded
to several subpoenas, information and document requests, and
requests for testimony of employees.
Shareholder
Litigation
In June and July 2010, shareholders filed suit in
Weatherfords name against those directors in place before
June 2010 and certain current and former members of management
relating to the U.S. government and internal investigations
disclosed above and in our SEC filings since 2007. In March
2011, shareholders filed suit relating to the matters described
in Note 2 above and Item 9A of our
Form 10-K
below. We will investigate these claims appropriately. We cannot
predict the ultimate outcome of these claims.
Other
Disputes
As a result of discussions with a customer, we reviewed how the
dual exchange rate might affect amounts we receive for our
U.S. dollar-denominated receivables in Venezuela. We
believe our contracts are legally enforceable and our customers
continue to accept our invoices. However, based on the current
political and economic environment in Venezuela, we believe a
loss is probable. Accordingly, we recorded a reserve of
$32 million against this exposure in the fourth quarter of
2010.
Our former Senior Vice President and General Counsel (the
Executive) left the Company in June 2009. The
Executive had employment agreements with us that terminated on
his departure. There is currently a dispute between the
Executive and us as to the amount of compensation we are
obligated to pay under these employment agreements based on the
Executives separation. This dispute has not resulted in a
lawsuit being filed. It is our belief that an unfavorable
outcome regarding this dispute is not probable, and as such, we
have not accrued for $9 million of the Executives
claimed severance and other benefits.
Additionally, we are aware of various disputes and potential
claims and are a party in various litigation involving claims
against us, some of which are covered by insurance. For claims,
disputes and pending litigation in which we believe a negative
outcome is probable and a loss can be reasonably estimated, we
have recorded a liability for the expected loss. These
liabilities are immaterial to our financial condition and
results of operations. In addition we have certain claims,
disputes and pending litigation in which we do not believe a
negative outcome is probable. If one or more negative outcomes
were to occur, the impact to our financial condition could be as
high as $180 million.
86
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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 rental commitments under
noncancellable operating leases are as follows (in thousands):
|
|
|
|
|
2011
|
|
$
|
115,679
|
|
2012
|
|
|
88,466
|
|
2013
|
|
|
60,152
|
|
2014
|
|
|
45,099
|
|
2015
|
|
|
34,368
|
|
Thereafter
|
|
|
188,164
|
|
|
|
|
|
|
|
|
$
|
531,928
|
|
|
|
|
|
|
Total rent expense incurred under operating leases was
approximately $321 million, $367 million and
$188 million for the years ended December 31, 2010,
2009 and 2008, respectively.
Reporting
Segments
We report the following regions as separate, distinct reporting
segments: (1) North America, (2) Middle East/North
Africa/Asia, (3) Europe/West Africa/FSU and (4) Latin
America. 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 total assets and capital expenditures for the years ended
December 31, 2010, 2009 and 2008, do not include the assets
or activity of our discontinued operation. The accounting
policies of the segments are the same as those described in the
summary of significant accounting policies. Results for 2009 and
2008 have been restated to correct for previously identified
immaterial errors affecting operating income that were recorded
in improper periods (See Note 2).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2010
|
|
|
|
|
|
|
Net
|
|
|
Income
|
|
|
Depreciation
|
|
|
|
|
|
Total Assets at
|
|
|
|
Operating
|
|
|
from
|
|
|
and
|
|
|
Capital
|
|
|
December 31,
|
|
|
|
Revenues
|
|
|
Operations
|
|
|
Amortization
|
|
|
Expenditures
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
North America
|
|
$
|
4,166,881
|
|
|
$
|
695,607
|
|
|
$
|
327,539
|
|
|
$
|
242,235
|
|
|
$
|
6,569,694
|
|
Middle East/North Africa/Asia
|
|
|
2,450,503
|
|
|
|
264,647
|
|
|
|
304,993
|
|
|
|
380,581
|
|
|
|
4,921,588
|
|
Europe/West Africa/FSU
|
|
|
1,984,429
|
|
|
|
241,298
|
|
|
|
212,010
|
|
|
|
106,050
|
|
|
|
3,626,904
|
|
Latin America(a)
|
|
|
1,618,984
|
|
|
|
53,843
|
|
|
|
181,136
|
|
|
|
219,661
|
|
|
|
2,728,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,220,797
|
|
|
|
1,255,395
|
|
|
|
1,025,678
|
|
|
|
948,527
|
|
|
|
17,846,247
|
|
Corporate and Research and Development
|
|
|
|
|
|
|
(387,399
|
)
|
|
|
21,656
|
|
|
|
28,017
|
|
|
|
1,285,407
|
|
Revaluation of Contingent Consideration
|
|
|
|
|
|
|
12,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(b)
|
|
|
|
|
|
|
(99,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
10,220,797
|
|
|
$
|
781,453
|
|
|
$
|
1,047,334
|
|
|
$
|
976,544
|
|
|
$
|
19,131,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
Net
|
|
|
Income
|
|
|
Depreciation
|
|
|
|
|
|
Total Assets at
|
|
|
|
Operating
|
|
|
from
|
|
|
and
|
|
|
Capital
|
|
|
December 31,
|
|
|
|
Revenues
|
|
|
Operations
|
|
|
Amortization
|
|
|
Expenditures
|
|
|
2009
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
North America
|
|
$
|
2,762,264
|
|
|
$
|
190,877
|
|
|
$
|
315,746
|
|
|
$
|
276,457
|
|
|
$
|
6,347,978
|
|
Middle East/North Africa/Asia
|
|
|
2,372,798
|
|
|
|
440,371
|
|
|
|
257,065
|
|
|
|
817,635
|
|
|
|
4,572,498
|
|
Europe/West Africa/FSU
|
|
|
1,618,664
|
|
|
|
224,666
|
|
|
|
167,308
|
|
|
|
206,559
|
|
|
|
3,586,895
|
|
Latin America
|
|
|
2,079,279
|
|
|
|
279,888
|
|
|
|
152,567
|
|
|
|
228,180
|
|
|
|
3,125,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,833,005
|
|
|
|
1,135,802
|
|
|
|
892,686
|
|
|
|
1,528,831
|
|
|
|
17,632,747
|
|
Corporate and Research and Development
|
|
|
|
|
|
|
(371,645
|
)
|
|
|
16,211
|
|
|
|
40,646
|
|
|
|
1,063,943
|
|
Revaluation of Contingent Consideration
|
|
|
|
|
|
|
24,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(c)
|
|
|
|
|
|
|
(100,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,833,005
|
|
|
$
|
687,864
|
|
|
$
|
908,897
|
|
|
$
|
1,569,477
|
|
|
$
|
18,696,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
Net
|
|
|
Income
|
|
|
Depreciation
|
|
|
|
|
|
Total Assets at
|
|
|
|
Operating
|
|
|
from
|
|
|
and
|
|
|
Capital
|
|
|
December 31,
|
|
|
|
Revenues
|
|
|
Operations
|
|
|
Amortization
|
|
|
Expenditures
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
North America
|
|
$
|
4,460,147
|
|
|
$
|
1,105,924
|
|
|
$
|
310,054
|
|
|
$
|
602,876
|
|
|
$
|
6,536,410
|
|
Middle East/North Africa/Asia
|
|
|
2,391,520
|
|
|
|
563,438
|
|
|
|
196,443
|
|
|
|
1,123,751
|
|
|
|
4,322,475
|
|
Europe/West Africa/FSU
|
|
|
1,539,190
|
|
|
|
374,888
|
|
|
|
119,957
|
|
|
|
393,532
|
|
|
|
2,631,648
|
|
Latin America
|
|
|
1,209,707
|
|
|
|
279,646
|
|
|
|
93,942
|
|
|
|
312,382
|
|
|
|
2,010,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,600,564
|
|
|
|
2,323,896
|
|
|
|
720,396
|
|
|
|
2,432,541
|
|
|
|
15,500,846
|
|
Corporate and Research and Development
|
|
|
|
|
|
|
(328,871
|
)
|
|
|
11,412
|
|
|
|
51,622
|
|
|
|
969,341
|
|
Other(d)
|
|
|
|
|
|
|
(39,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9,600,564
|
|
|
$
|
1,955,168
|
|
|
$
|
731,808
|
|
|
$
|
2,484,163
|
|
|
$
|
16,470,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Latin America for the year ended December 31, 2010 includes
a $76 million charge for revisions to our profitability
estimates on our project management contracts in Mexico and a
$32 million reserve taken against accounts receivable
balances in Venezuela in light of the countrys economic
prognosis. |
|
(b) |
|
Other for the year ended December 31, 2010 includes a
$38 million charge related to our SERP which was frozen on
March 31, 2010, $61 million for severance and facility
closure costs and $7 million for legal and professional
fees incurred in connection with our on-going investigations.
These charges were offset by a $7 million benefit related
to the reversal of prior cost accruals for our exit from certain
sanctioned countries. |
|
(c) |
|
Other for the year ended December 31, 2009 includes
$45 million for legal and professional fees incurred in
connection with on-going investigations by the U.S. government,
$52 million for severance and facility closure costs
associated with reorganization activities and $4 million in
costs related to the Companys withdrawal from certain
sanctioned countries. |
|
(d) |
|
Other for the year ended December 31, 2008 includes
$56 million for costs incurred in connection with the
Companys withdrawal from sanctioned countries,
$47 million in legal and professional fees incurred in
connection with the Companys on-going investigations by
the U.S. government and $18 million for severance costs
incurred for restructuring activities. These charges were
partially offset by an $81 million gain |
88
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
recognized as a result of the Company selling its 50% interest
in a subsidiary it controlled to Qatar Petroleum for cash
consideration of $113 million. |
Products
and Services
We are a diversified international energy service and
manufacturing company that provides a variety of services and
equipment to the exploration, production and transmission
sectors of the oil and natural gas industry. The composition of
our consolidated revenues by product line is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Drilling Services
|
|
|
17
|
%
|
|
|
16
|
%
|
|
|
16
|
%
|
Artificial Lift Systems
|
|
|
15
|
|
|
|
14
|
|
|
|
17
|
|
Well Construction
|
|
|
14
|
|
|
|
15
|
|
|
|
15
|
|
Integrated Drilling
|
|
|
12
|
|
|
|
14
|
|
|
|
6
|
|
Stimulation & Chemicals
|
|
|
12
|
|
|
|
8
|
|
|
|
7
|
|
Completion Systems
|
|
|
8
|
|
|
|
11
|
|
|
|
10
|
|
Drilling Tools
|
|
|
8
|
|
|
|
8
|
|
|
|
11
|
|
Wireline
|
|
|
6
|
|
|
|
6
|
|
|
|
8
|
|
Re-entry & Fishing
|
|
|
6
|
|
|
|
6
|
|
|
|
7
|
|
Pipeline & Specialty Services
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic
Areas
Financial information by geographic area for each of the three
years ended December 31, 2010, is summarized below.
Long-lived assets are long-term assets excluding deferred tax
assets of $107 million, $74 million and
$40 million at December 31, 2010, 2009 and 2008,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from Unaffiliated Customers
|
|
|
Long-lived Assets
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
(In thousands)
|
|
|
United States
|
|
$
|
3,197,064
|
|
|
$
|
2,118,922
|
|
|
$
|
3,392,945
|
|
|
$
|
4,209,399
|
|
|
$
|
4,317,191
|
|
|
$
|
4,156,196
|
|
Mexico
|
|
|
617,350
|
|
|
|
1,230,605
|
|
|
|
293,224
|
|
|
|
372,238
|
|
|
|
407,603
|
|
|
|
356,210
|
|
Canada
|
|
|
969,818
|
|
|
|
643,342
|
|
|
|
1,067,202
|
|
|
|
1,187,136
|
|
|
|
1,197,723
|
|
|
|
1,039,899
|
|
Other Countries
|
|
|
5,436,565
|
|
|
|
4,840,136
|
|
|
|
4,847,193
|
|
|
|
6,763,399
|
|
|
|
6,717,822
|
|
|
|
5,312,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,220,797
|
|
|
$
|
8,833,005
|
|
|
$
|
9,600,564
|
|
|
$
|
12,532,172
|
|
|
$
|
12,640,339
|
|
|
$
|
10,864,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.
|
Quarterly
Financial Data (Unaudited)
|
Restated results for 2010 include a reduction to net income of
approximately $44 million, $31 million and
$46 million for the first, second and third quarters,
respectively, primarily attributable to the error in determining
the tax consequences of intercompany amounts over multiple years
(See Note 2).
89
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Restated results for 2009 include a reduction to net income of
approximately $20 million, $20 million,
$18 million, and $26 million for the first, second,
third and fourth quarters, respectively, primarily attributable
to the error in determining the tax consequences of intercompany
amounts over multiple years (See Note 2).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
|
|
|
|
|
(In thousands, except per share amounts)
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,331,067
|
|
|
$
|
2,437,163
|
|
|
$
|
2,529,752
|
|
|
$
|
2,922,815
|
|
|
$
|
10,220,797
|
|
Gross Profit
|
|
|
578,607
|
|
|
|
630,412
|
|
|
|
633,896
|
|
|
|
794,601
|
|
|
|
2,637,516
|
|
Net Income (Loss) Attributable to Weatherford
|
|
|
(83,607
|
)
|
|
|
(57,556
|
)
|
|
|
99,324
|
|
|
|
(66,086
|
)
|
|
|
(107,925
|
)
|
Basic Earnings (Loss) Per Share
|
|
$
|
(0.11
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.15
|
)
|
Diluted Earnings (Loss) Per Share
|
|
$
|
(0.11
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
|
|
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share amounts)
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,254,631
|
|
|
$
|
1,998,427
|
|
|
$
|
2,144,947
|
|
|
$
|
2,435,000
|
|
|
$
|
8,833,005
|
|
Gross Profit
|
|
|
716,019
|
|
|
|
549,623
|
|
|
|
546,048
|
|
|
|
558,673
|
|
|
|
2,370,363
|
|
Net Income (Loss) Attributable to Weatherford
|
|
|
144,355
|
|
|
|
22,249
|
|
|
|
59,729
|
|
|
|
(56,192
|
)
|
|
|
170,141
|
|
Basic Earnings (Loss) Per Share
|
|
$
|
0.21
|
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.24
|
|
Diluted Earnings (Loss) Per Share
|
|
$
|
0.21
|
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.24
|
|
|
|
22.
|
Other
Disclosures Required by Swiss Law
|
Balance
Sheet Item
Information regarding insurance coverage on our property, plant
and equipment is presented in Note 15 (Insurance) in the
Weatherford International Ltd. stand-alone statutory financial
statements.
Statement
of Income Item
Information regarding our personnel expenses is presented in
Note 16 (Personnel Expenses) in the Weatherford
International Ltd. stand-alone statutory financial statements.
Compensation
and Security Ownership of Board Members and Executive
Officers
The compensation and security ownership of members of the Board
of Directors of Weatherford International Ltd. and of
Weatherford executive officers is presented in Note 8
(Board of Directors Compensation), Note 9 (Executive
Management Compensation) and Note 10 (Share
Ownership Board of Directors and Executive
Management) in the Weatherford International Ltd. stand-alone
statutory financial statements.
Risk
Assessment
Weatherford International Ltd.s risk assessment is
presented in Note 11 (Risk Assessment Disclosure) of the
Weatherford International Ltd. stand-alone statutory financial
statements.
90
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
23.
|
Consolidating
Financial Statements
|
As discussed in Note 2, we have restated financial information
for 2009 and 2008.
During the first quarter of 2009, we completed a transaction
that changed our place of incorporation from Bermuda to
Switzerland. A new Swiss corporation named Weatherford
International Ltd. was formed and is now the ultimate parent of
the Weatherford group (Parent). The Parent
guarantees the obligations of Weatherford International Ltd.
incorporated in Bermuda (Weatherford Bermuda) and
Weatherford International, Inc. incorporated in Delaware
(Weatherford Delaware) noted below.
The following obligations of Weatherford Delaware were
guaranteed by Weatherford Bermuda as of December 31, 2010
and 2009: (i) the 6.625% Senior Notes, (ii) the
5.95% Senior Notes, (iii) the 6.35% Senior Notes
and (iv) the 6.80% Senior Notes.
The following obligations of Weatherford Bermuda were guaranteed
by Weatherford Delaware at December 31, 2009: (i) the
revolving credit facilities, (ii) the 4.95% Senior
Notes, (iii) the 5.50% Senior Notes, (iv) the
6.50% Senior Notes, (v) the 5.15% Senior Notes,
(vi) the 6.00% Senior Notes, (vii) the
7.00% Senior Notes, (viii) the 9.625% Senior
Notes, (ix) the 9.875% Senior Notes and
(x) issuances of notes under the commercial paper program.
In September 2010, Weatherford Bermuda issued $800 million
of 5.125% Senior Notes due 2020 and $600 million of
6.75% Senior Notes due 2040, both of which are guaranteed
by Weatherford Delaware. As a result of these transactions, the
following obligations of Weatherford Bermuda were guaranteed by
Weatherford Delaware at December 31, 2010: (i) the
revolving credit facility, (ii) the 4.95% Senior
Notes, (iii) the 5.50% Senior Notes, (iv) the
6.50% Senior Notes, (v) the 5.15% Senior Notes,
(vi) the 6.00% Senior Notes, (vii) the
7.00% Senior Notes, (viii) the 9.625% Senior
Notes, (ix) the 9.875% Senior Notes, (x) the
5.125% Senior Notes, (xi) the 6.75% Senior Notes
and (xii) issuances of notes under the commercial paper
program.
As a result of these guarantee arrangements, we are required to
present the following condensed consolidating financial
information. The accompanying guarantor financial information is
presented on the equity method of accounting for all periods
presented. Under this method, investments in subsidiaries are
recorded at cost and adjusted for our share in the
subsidiaries cumulative results of operations, capital
contributions and distributions and other changes in equity.
Elimination entries relate primarily to the elimination of
investments in subsidiaries and associated intercompany balances
and transactions. Certain prior year amounts have been
reclassified to conform to the current year presentation.
91
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Balance Sheet
December 31, 2010
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
124
|
|
|
$
|
113,443
|
|
|
$
|
11,433
|
|
|
$
|
290,772
|
|
|
$
|
|
|
|
$
|
415,772
|
|
Other Current Assets
|
|
|
10,018
|
|
|
|
9,107
|
|
|
|
85,342
|
|
|
|
5,971,828
|
|
|
|
|
|
|
|
6,076,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
10,142
|
|
|
|
122,550
|
|
|
|
96,775
|
|
|
|
6,262,600
|
|
|
|
|
|
|
|
6,492,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Investments in Affiliates
|
|
|
9,143,623
|
|
|
|
15,304,005
|
|
|
|
7,401,552
|
|
|
|
11,308,896
|
|
|
|
(43,158,076
|
)
|
|
|
|
|
Shares Held in Parent
|
|
|
|
|
|
|
|
|
|
|
94,105
|
|
|
|
468,801
|
|
|
|
(562,906
|
)
|
|
|
|
|
Intercompany Receivables, Net
|
|
|
|
|
|
|
2,233,910
|
|
|
|
420,066
|
|
|
|
|
|
|
|
(2,653,976
|
)
|
|
|
|
|
Other Assets
|
|
|
8,124
|
|
|
|
39,318
|
|
|
|
294,821
|
|
|
|
12,297,324
|
|
|
|
|
|
|
|
12,639,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
9,161,889
|
|
|
$
|
17,699,783
|
|
|
$
|
8,307,319
|
|
|
$
|
30,337,621
|
|
|
$
|
(46,374,958
|
)
|
|
$
|
19,131,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-Term Debt
|
|
$
|
|
|
|
$
|
7,887
|
|
|
$
|
201,676
|
|
|
$
|
25,829
|
|
|
$
|
|
|
|
$
|
235,392
|
|
Accounts Payable and Other Current Liabilities
|
|
|
21,657
|
|
|
|
133,850
|
|
|
|
114,023
|
|
|
|
2,078,057
|
|
|
|
|
|
|
|
2,347,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
21,657
|
|
|
|
141,737
|
|
|
|
315,699
|
|
|
|
2,103,886
|
|
|
|
|
|
|
|
2,582,979
|
|
Long-term Debt
|
|
|
|
|
|
|
5,170,323
|
|
|
|
1,324,743
|
|
|
|
34,932
|
|
|
|
|
|
|
|
6,529,998
|
|
Intercompany Payables, Net
|
|
|
226,167
|
|
|
|
|
|
|
|
|
|
|
|
2,427,809
|
|
|
|
(2,653,976
|
)
|
|
|
|
|
Other Long-term Liabilities
|
|
|
5,924
|
|
|
|
77,049
|
|
|
|
2,115
|
|
|
|
468,742
|
|
|
|
|
|
|
|
553,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
253,748
|
|
|
|
5,389,109
|
|
|
|
1,642,557
|
|
|
|
5,035,369
|
|
|
|
(2,653,976
|
)
|
|
|
9,666,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
8,908,141
|
|
|
|
12,310,674
|
|
|
|
6,664,762
|
|
|
|
25,238,336
|
|
|
|
(43,720,982
|
)
|
|
|
9,400,931
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,916
|
|
|
|
|
|
|
|
63,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
9,161,889
|
|
|
$
|
17,699,783
|
|
|
$
|
8,307,319
|
|
|
$
|
30,337,621
|
|
|
$
|
(46,374,958
|
)
|
|
$
|
19,131,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Balance Sheet
December 31, 2009
(Restated)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
ASSETS
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
102
|
|
|
$
|
47
|
|
|
$
|
421
|
|
|
$
|
251,949
|
|
|
$
|
|
|
|
$
|
252,519
|
|
Other Current Assets
|
|
|
496
|
|
|
|
11,163
|
|
|
|
98,033
|
|
|
|
5,619,742
|
|
|
|
|
|
|
|
5,729,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
598
|
|
|
|
11,210
|
|
|
|
98,454
|
|
|
|
5,871,691
|
|
|
|
|
|
|
|
5,981,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Investments in Affiliates
|
|
|
9,183,803
|
|
|
|
14,952,128
|
|
|
|
6,527,676
|
|
|
|
11,441,274
|
|
|
|
(42,104,881
|
)
|
|
|
|
|
Shares Held in Parent
|
|
|
|
|
|
|
|
|
|
|
108,268
|
|
|
|
507,780
|
|
|
|
(616,048
|
)
|
|
|
|
|
Intercompany Receivables, Net
|
|
|
|
|
|
|
1,671,487
|
|
|
|
1,017,215
|
|
|
|
|
|
|
|
(2,688,702
|
)
|
|
|
|
|
Other Assets
|
|
|
9,376
|
|
|
|
68,960
|
|
|
|
190,174
|
|
|
|
12,446,227
|
|
|
|
|
|
|
|
12,714,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
9,193,777
|
|
|
$
|
16,703,785
|
|
|
$
|
7,941,787
|
|
|
$
|
30,266,972
|
|
|
$
|
(45,409,631
|
)
|
|
$
|
18,696,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-Term Debt
|
|
$
|
|
|
|
$
|
352,373
|
|
|
$
|
1,868
|
|
|
$
|
515,340
|
|
|
$
|
|
|
|
$
|
869,581
|
|
Accounts Payable and Other Current Liabilities
|
|
|
46,160
|
|
|
|
107,984
|
|
|
|
116,404
|
|
|
|
1,860,571
|
|
|
|
|
|
|
|
2,131,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
46,160
|
|
|
|
460,357
|
|
|
|
118,272
|
|
|
|
2,375,911
|
|
|
|
|
|
|
|
3,000,700
|
|
Long-term Debt
|
|
|
|
|
|
|
3,988,162
|
|
|
|
1,848,191
|
|
|
|
10,905
|
|
|
|
|
|
|
|
5,847,258
|
|
Intercompany Payables, Net
|
|
|
36,611
|
|
|
|
|
|
|
|
|
|
|
|
2,652,091
|
|
|
|
(2,688,702
|
)
|
|
|
|
|
Other Long-term Liabilities
|
|
|
8,132
|
|
|
|
132,155
|
|
|
|
2,309
|
|
|
|
267,763
|
|
|
|
|
|
|
|
410,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
90,903
|
|
|
|
4,580,674
|
|
|
|
1,968,772
|
|
|
|
5,306,670
|
|
|
|
(2,688,702
|
)
|
|
|
9,258,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
9,102,874
|
|
|
|
12,123,111
|
|
|
|
5,973,015
|
|
|
|
24,881,270
|
|
|
|
(42,720,929
|
)
|
|
|
9,359,341
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,032
|
|
|
|
|
|
|
|
79,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
9,193,777
|
|
|
$
|
16,703,785
|
|
|
$
|
7,941,787
|
|
|
$
|
30,266,972
|
|
|
$
|
(45,409,631
|
)
|
|
$
|
18,696,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Income
Year Ended December 31, 2010
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
10,220,797
|
|
|
$
|
|
|
|
$
|
10,220,797
|
|
Costs and Expenses
|
|
|
(39,534
|
)
|
|
|
(45,767
|
)
|
|
|
(2,993
|
)
|
|
|
(9,351,050
|
)
|
|
|
|
|
|
|
(9,439,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
(39,534
|
)
|
|
|
(45,767
|
)
|
|
|
(2,993
|
)
|
|
|
869,747
|
|
|
|
|
|
|
|
781,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
(982
|
)
|
|
|
(285,705
|
)
|
|
|
(113,343
|
)
|
|
|
(5,755
|
)
|
|
|
|
|
|
|
(405,785
|
)
|
Bond Tender Premium
|
|
|
|
|
|
|
(15,447
|
)
|
|
|
(38,526
|
)
|
|
|
|
|
|
|
|
|
|
|
(53,973
|
)
|
Devaluation of Venezuelan Bolivar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(63,859
|
)
|
|
|
|
|
|
|
(63,859
|
)
|
Intercompany Charges, Net
|
|
|
(27,143
|
)
|
|
|
2,858
|
|
|
|
(187,546
|
)
|
|
|
211,831
|
|
|
|
|
|
|
|
|
|
Equity in Subsidiary Income
|
|
|
(40,180
|
)
|
|
|
22,424
|
|
|
|
1,070,951
|
|
|
|
|
|
|
|
(1,053,195
|
)
|
|
|
|
|
Other, Net
|
|
|
(86
|
)
|
|
|
239,347
|
|
|
|
(884
|
)
|
|
|
(291,624
|
)
|
|
|
|
|
|
|
(53,247
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes
|
|
|
(107,925
|
)
|
|
|
(82,290
|
)
|
|
|
727,659
|
|
|
|
720,340
|
|
|
|
(1,053,195
|
)
|
|
|
204,589
|
|
Provision for Income Taxes
|
|
|
|
|
|
|
(5
|
)
|
|
|
119,545
|
|
|
|
(417,261
|
)
|
|
|
|
|
|
|
(297,721
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
(107,925
|
)
|
|
|
(82,295
|
)
|
|
|
847,204
|
|
|
|
303,079
|
|
|
|
(1,053,195
|
)
|
|
|
(93,132
|
)
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,793
|
)
|
|
|
|
|
|
|
(14,793
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
(107,925
|
)
|
|
$
|
(82,295
|
)
|
|
$
|
847,204
|
|
|
$
|
288,286
|
|
|
$
|
(1,053,195
|
)
|
|
$
|
(107,925
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Income
Year Ended December 31, 2009
(Restated)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,833,005
|
|
|
$
|
|
|
|
$
|
8,833,005
|
|
Costs and Expenses
|
|
|
(10,609
|
)
|
|
|
(25,914
|
)
|
|
|
(3,011
|
)
|
|
|
(8,105,607
|
)
|
|
|
|
|
|
|
(8,145,141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
(10,609
|
)
|
|
|
(25,914
|
)
|
|
|
(3,011
|
)
|
|
|
727,398
|
|
|
|
|
|
|
|
687,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
(86
|
)
|
|
|
(253,403
|
)
|
|
|
(114,874
|
)
|
|
|
1,615
|
|
|
|
|
|
|
|
(366,748
|
)
|
Intercompany Charges, Net
|
|
|
(20,776
|
)
|
|
|
5,430
|
|
|
|
(143,689
|
)
|
|
|
159,035
|
|
|
|
|
|
|
|
|
|
Equity in Subsidiary Income
|
|
|
201,603
|
|
|
|
249,409
|
|
|
|
404,287
|
|
|
|
|
|
|
|
(855,299
|
)
|
|
|
|
|
Other, Net
|
|
|
9
|
|
|
|
208,493
|
|
|
|
(591
|
)
|
|
|
(245,544
|
)
|
|
|
|
|
|
|
(37,633
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes
|
|
|
170,141
|
|
|
|
184,015
|
|
|
|
142,122
|
|
|
|
642,504
|
|
|
|
(855,299
|
)
|
|
|
283,483
|
|
Provision for Income Taxes
|
|
|
|
|
|
|
|
|
|
|
89,404
|
|
|
|
(176,587
|
)
|
|
|
|
|
|
|
(87,183
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
170,141
|
|
|
|
184,015
|
|
|
|
231,526
|
|
|
|
465,917
|
|
|
|
(855,299
|
)
|
|
|
196,300
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,159
|
)
|
|
|
|
|
|
|
(26,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
170,141
|
|
|
$
|
184,015
|
|
|
$
|
231,526
|
|
|
$
|
439,758
|
|
|
$
|
(855,299
|
)
|
|
$
|
170,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Income
Year Ended December 31, 2008
(Restated)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,600,564
|
|
|
$
|
|
|
|
$
|
9,600,564
|
|
Costs and Expenses
|
|
|
(35,899
|
)
|
|
|
(1,684
|
)
|
|
|
(7,607,813
|
)
|
|
|
|
|
|
|
(7,645,396
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
(35,899
|
)
|
|
|
(1,684
|
)
|
|
|
1,992,751
|
|
|
|
|
|
|
|
1,955,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
(127,684
|
)
|
|
|
(115,721
|
)
|
|
|
(274
|
)
|
|
|
|
|
|
|
(243,679
|
)
|
Intercompany Charges, Net
|
|
|
128,198
|
|
|
|
|
|
|
|
(128,198
|
)
|
|
|
|
|
|
|
|
|
Equity in Subsidiary Income
|
|
|
1,286,557
|
|
|
|
1,371,167
|
|
|
|
|
|
|
|
(2,657,724
|
)
|
|
|
|
|
Other, Net
|
|
|
(6,676
|
)
|
|
|
(1,783
|
)
|
|
|
(36,497
|
)
|
|
|
|
|
|
|
(44,956
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations Before Income Taxes
|
|
|
1,244,496
|
|
|
|
1,251,979
|
|
|
|
1,827,782
|
|
|
|
(2,657,724
|
)
|
|
|
1,666,533
|
|
Provision for Income Taxes
|
|
|
|
|
|
|
34,578
|
|
|
|
(407,415
|
)
|
|
|
|
|
|
|
(372,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
|
|
|
1,244,496
|
|
|
|
1,286,557
|
|
|
|
1,420,367
|
|
|
|
(2,657,724
|
)
|
|
|
1,293,696
|
|
Income (Loss) from Discontinued Operation, Net of Taxes
|
|
|
2,000
|
|
|
|
|
|
|
|
(14,928
|
)
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
1,246,496
|
|
|
|
1,286,557
|
|
|
|
1,405,439
|
|
|
|
(2,657,724
|
)
|
|
|
1,280,768
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
(34,272
|
)
|
|
|
|
|
|
|
(34,272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
1,246,496
|
|
|
$
|
1,286,557
|
|
|
$
|
1,371,167
|
|
|
$
|
(2,657,724
|
)
|
|
$
|
1,246,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Cash Flows
Year Ended December 31, 2010
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(107,925
|
)
|
|
$
|
(82,295
|
)
|
|
$
|
847,204
|
|
|
$
|
303,079
|
|
|
$
|
(1,053,195
|
)
|
|
$
|
(93,132
|
)
|
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
(Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges from Parent or Subsidiary
|
|
|
27,143
|
|
|
|
(2,858
|
)
|
|
|
187,546
|
|
|
|
(211,831
|
)
|
|
|
|
|
|
|
|
|
Equity in (Earnings) Loss of Affiliates
|
|
|
40,180
|
|
|
|
(22,424
|
)
|
|
|
(1,070,951
|
)
|
|
|
|
|
|
|
1,053,195
|
|
|
|
|
|
Deferred Income Tax Benefit
|
|
|
|
|
|
|
|
|
|
|
(119,558
|
)
|
|
|
174,591
|
|
|
|
|
|
|
|
55,033
|
|
Other Adjustments
|
|
|
11,149
|
|
|
|
(127,298
|
)
|
|
|
(274
|
)
|
|
|
1,282,535
|
|
|
|
|
|
|
|
1,166,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
|
|
|
(29,453
|
)
|
|
|
(234,875
|
)
|
|
|
(156,033
|
)
|
|
|
1,548,374
|
|
|
|
|
|
|
|
1,128,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
(91,455
|
)
|
|
|
|
|
|
|
|
|
|
|
(52,101
|
)
|
|
|
|
|
|
|
(143,556
|
)
|
Capital Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(976,544
|
)
|
|
|
|
|
|
|
(976,544
|
)
|
Acquisition of Intellectual Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23,977
|
)
|
|
|
|
|
|
|
(23,977
|
)
|
Purchase of Equity Investment in Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,405
|
)
|
|
|
|
|
|
|
(2,405
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,927
|
|
|
|
|
|
|
|
196,927
|
|
Capital Contribution to Subsidiary
|
|
|
|
|
|
|
(12,671
|
)
|
|
|
(25
|
)
|
|
|
|
|
|
|
12,696
|
|
|
|
|
|
Other Investing Activities
|
|
|
|
|
|
|
41,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing Activities
|
|
|
(91,455
|
)
|
|
|
29,169
|
|
|
|
(25
|
)
|
|
|
(858,100
|
)
|
|
|
12,696
|
|
|
|
(907,715
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings (Repayments) Short-term Debt, Net
|
|
|
|
|
|
|
(344,485
|
)
|
|
|
(835
|
)
|
|
|
(488,990
|
)
|
|
|
|
|
|
|
(834,310
|
)
|
Borrowings (Repayments) Long-term Debt, Net
|
|
|
|
|
|
|
1,180,007
|
|
|
|
(501,269
|
)
|
|
|
180,805
|
|
|
|
|
|
|
|
859,543
|
|
Borrowings (Repayments) Between Subsidiaries, Net
|
|
|
120,930
|
|
|
|
(497,066
|
)
|
|
|
706,249
|
|
|
|
(330,113
|
)
|
|
|
|
|
|
|
|
|
Proceeds from Capital Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,696
|
|
|
|
(12,696
|
)
|
|
|
|
|
Other, Net
|
|
|
|
|
|
|
(19,354
|
)
|
|
|
(37,075
|
)
|
|
|
(6,652
|
)
|
|
|
|
|
|
|
(63,081
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
|
|
|
120,930
|
|
|
|
319,102
|
|
|
|
167,070
|
|
|
|
(632,254
|
)
|
|
|
(12,696
|
)
|
|
|
(37,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,197
|
)
|
|
|
|
|
|
|
(19,197
|
)
|
Net Increase in Cash and Cash Equivalents
|
|
|
22
|
|
|
|
113,396
|
|
|
|
11,012
|
|
|
|
38,823
|
|
|
|
|
|
|
|
163,253
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
102
|
|
|
|
47
|
|
|
|
421
|
|
|
|
251,949
|
|
|
|
|
|
|
|
252,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
124
|
|
|
$
|
113,443
|
|
|
$
|
11,433
|
|
|
$
|
290,772
|
|
|
$
|
|
|
|
$
|
415,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Cash Flows
Year Ended December 31, 2009
(Restated)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
170,141
|
|
|
$
|
184,015
|
|
|
$
|
231,526
|
|
|
$
|
465,917
|
|
|
$
|
(855,299
|
)
|
|
$
|
196,300
|
|
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
(Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges from Parent or Subsidiary
|
|
|
20,776
|
|
|
|
(5,430
|
)
|
|
|
143,689
|
|
|
|
(159,035
|
)
|
|
|
|
|
|
|
|
|
Equity in (Earnings) Loss of Affiliates
|
|
|
(201,603
|
)
|
|
|
(249,409
|
)
|
|
|
(404,287
|
)
|
|
|
|
|
|
|
855,299
|
|
|
|
|
|
Deferred Income Tax Benefit
|
|
|
|
|
|
|
|
|
|
|
(10,008
|
)
|
|
|
(120,762
|
)
|
|
|
|
|
|
|
(130,770
|
)
|
Other Adjustments
|
|
|
7,718
|
|
|
|
(166,010
|
)
|
|
|
161,307
|
|
|
|
539,777
|
|
|
|
|
|
|
|
542,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
|
|
|
(2,968
|
)
|
|
|
(236,834
|
)
|
|
|
122,227
|
|
|
|
725,897
|
|
|
|
|
|
|
|
608,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,695
|
)
|
|
|
|
|
|
|
(9,695
|
)
|
Capital Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,569,477
|
)
|
|
|
|
|
|
|
(1,569,477
|
)
|
Acquisition of Intellectual Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,210
|
)
|
|
|
|
|
|
|
(28,210
|
)
|
Purchase of Equity Investment in Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,999
|
)
|
|
|
|
|
|
|
(26,999
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,445
|
|
|
|
|
|
|
|
123,445
|
|
Capital Contribution to Subsidiary
|
|
|
|
|
|
|
(474,465
|
)
|
|
|
(39
|
)
|
|
|
|
|
|
|
474,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing Activities
|
|
|
|
|
|
|
(474,465
|
)
|
|
|
(39
|
)
|
|
|
(1,510,936
|
)
|
|
|
474,504
|
|
|
|
(1,510,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings (Repayments) Short-term Debt, Net
|
|
|
|
|
|
|
(429,070
|
)
|
|
|
110
|
|
|
|
36,040
|
|
|
|
|
|
|
|
(392,920
|
)
|
Borrowings (Repayments) Long-term Debt, Net
|
|
|
|
|
|
|
1,233,365
|
|
|
|
|
|
|
|
(6,779
|
)
|
|
|
|
|
|
|
1,226,586
|
|
Borrowings (Repayments) Between Subsidiaries, Net
|
|
|
2,968
|
|
|
|
(92,973
|
)
|
|
|
(194,416
|
)
|
|
|
284,421
|
|
|
|
|
|
|
|
|
|
Proceeds from Capital Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
474,504
|
|
|
|
(474,504
|
)
|
|
|
|
|
Other, Net
|
|
|
|
|
|
|
|
|
|
|
72,489
|
|
|
|
|
|
|
|
|
|
|
|
72,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
|
|
|
2,968
|
|
|
|
711,322
|
|
|
|
(121,817
|
)
|
|
|
788,186
|
|
|
|
(474,504
|
)
|
|
|
906,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,580
|
|
|
|
|
|
|
|
10,580
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
|
|
|
|
23
|
|
|
|
371
|
|
|
|
13,727
|
|
|
|
|
|
|
|
14,121
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
102
|
|
|
|
24
|
|
|
|
50
|
|
|
|
238,222
|
|
|
|
|
|
|
|
238,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
102
|
|
|
$
|
47
|
|
|
$
|
421
|
|
|
$
|
251,949
|
|
|
$
|
|
|
|
$
|
252,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Cash Flows
Year Ended December 31, 2008
(Restated)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
1,246,496
|
|
|
$
|
1,286,557
|
|
|
$
|
1,405,439
|
|
|
$
|
(2,657,724
|
)
|
|
$
|
1,280,768
|
|
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
(Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges from Parent or Subsidiary
|
|
|
(128,198
|
)
|
|
|
|
|
|
|
128,198
|
|
|
|
|
|
|
|
|
|
(Gain) Loss from Discontinued Operation
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
14,928
|
|
|
|
|
|
|
|
12,928
|
|
Equity in (Earnings) Loss of Affiliates
|
|
|
(1,286,557
|
)
|
|
|
(1,371,167
|
)
|
|
|
|
|
|
|
2,657,724
|
|
|
|
|
|
Deferred Income Tax Benefit
|
|
|
|
|
|
|
(15,687
|
)
|
|
|
(68,623
|
)
|
|
|
|
|
|
|
(84,310
|
)
|
Other Adjustments
|
|
|
(21,284
|
)
|
|
|
(120,321
|
)
|
|
|
43,006
|
|
|
|
|
|
|
|
(98,599
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
Continuing Operations
|
|
|
(191,543
|
)
|
|
|
(220,618
|
)
|
|
|
1,522,948
|
|
|
|
|
|
|
|
1,110,787
|
|
Net Cash Used by Operating Activities Discontinued
Operation
|
|
|
|
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
|
|
|
(191,543
|
)
|
|
|
(220,618
|
)
|
|
|
1,516,729
|
|
|
|
|
|
|
|
1,104,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
|
|
|
|
|
|
|
|
(798,530
|
)
|
|
|
|
|
|
|
(798,530
|
)
|
Capital Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
(2,484,163
|
)
|
|
|
|
|
|
|
(2,484,163
|
)
|
Acquisition of Intellectual Property
|
|
|
|
|
|
|
|
|
|
|
(24,079
|
)
|
|
|
|
|
|
|
(24,079
|
)
|
Purchase of Equity Investment in Unconsolidated Affiliate
|
|
|
|
|
|
|
|
|
|
|
(11,568
|
)
|
|
|
|
|
|
|
(11,568
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
|
|
|
|
|
|
|
|
297,285
|
|
|
|
|
|
|
|
297,285
|
|
Capital Contribution to Subsidiary
|
|
|
(350,966
|
)
|
|
|
(5,050
|
)
|
|
|
|
|
|
|
356,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing Activities
Continuing Operation
|
|
|
(350,966
|
)
|
|
|
(5,050
|
)
|
|
|
(3,021,055
|
)
|
|
|
356,016
|
|
|
|
(3,021,055
|
)
|
Net Cash Provided by Investing Activities
Discontinued Operation
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing Activities
|
|
|
(339,966
|
)
|
|
|
(5,050
|
)
|
|
|
(3,021,055
|
)
|
|
|
356,016
|
|
|
|
(3,010,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings (Repayments) Short-term Debt, Net
|
|
|
199,054
|
|
|
|
(23,096
|
)
|
|
|
301,863
|
|
|
|
|
|
|
|
477,821
|
|
Borrowings (Repayments) Long-term Debt, Net
|
|
|
1,483,931
|
|
|
|
(1,166
|
)
|
|
|
(4,432
|
)
|
|
|
|
|
|
|
1,478,333
|
|
Borrowings (Repayments) Between Subsidiaries, Net
|
|
|
(1,151,147
|
)
|
|
|
226,581
|
|
|
|
924,566
|
|
|
|
|
|
|
|
|
|
Proceeds from Capital Contribution
|
|
|
|
|
|
|
|
|
|
|
356,016
|
|
|
|
(356,016
|
)
|
|
|
|
|
Other, Net
|
|
|
(533
|
)
|
|
|
21,910
|
|
|
|
|
|
|
|
|
|
|
|
21,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
Continuing Operations
|
|
|
531,305
|
|
|
|
224,229
|
|
|
|
1,578,013
|
|
|
|
(356,016
|
)
|
|
|
1,977,531
|
|
Net Cash Provided (Used) by Financing Activities
Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
|
|
|
531,305
|
|
|
|
224,229
|
|
|
|
1,578,013
|
|
|
|
(356,016
|
)
|
|
|
1,977,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
(4,360
|
)
|
|
|
|
|
|
|
(4,360
|
)
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
(204
|
)
|
|
|
(1,439
|
)
|
|
|
69,327
|
|
|
|
|
|
|
|
67,684
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
228
|
|
|
|
1,489
|
|
|
|
168,997
|
|
|
|
|
|
|
|
170,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
24
|
|
|
$
|
50
|
|
|
$
|
238,324
|
|
|
$
|
|
|
|
$
|
238,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99
|
|
Item 9.
|
Changes
in and Disagreement with Accountants on Accounting and Financial
Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
MANAGEMENTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting
as such term is defined in the Securities Exchange Act of 1934
Rule 13a-15(f).
The Companys internal controls are designed to provide
reasonable assurance as to the reliability of its financial
reporting and the preparation of financial statements for
external purposes in accordance with U.S. generally
accepted accounting principles (GAAP).
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.
Management assessed the effectiveness of the Companys
internal control over financial reporting as of
December 31, 2010. In connection with this assessment,
management identified a material weakness in the Companys
internal controls over financial reporting for income taxes. The
Companys processes, procedures and controls related to
financial reporting were not effective to ensure that amounts
related to current taxes payable, certain deferred tax assets
and liabilities, reserves for uncertain tax positions, the
current and deferred income tax expense and related footnote
disclosures were accurate. Specifically, our processes and
procedures were not designed to provide for adequate and timely
identification and review of various income tax calculations,
reconciliations and related supporting documentation required to
apply our accounting policies for income taxes in accordance
with U.S. GAAP. This material weakness resulted in the
restatement for material errors in the income tax accounts in
the 2008 and 2009 consolidated financial statements and our
condensed consolidated financial statements for each of the
quarters within 2009 and 2010.
The principal factors contributing to the material weakness
were: 1) inadequate staffing and technical expertise within
the company related to taxes, 2) ineffective review and
approval practices relating to taxes, 3) inadequate
processes to effectively reconcile income tax accounts and
4) inadequate controls over the preparation of the
quarterly tax provision.
A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material
misstatement of the annual or interim financial statements will
not be prevented or detected on a timely basis. In making this
assessment, our management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission
in Internal Control An Integrated Framework
(September 1992). Because of the material weaknesses described
below, management concluded that, as of December 31, 2010,
our internal control over financial reporting was not effective.
The effectiveness of the Companys internal control over
financial reporting as of December 31, 2010, has been
audited by Ernst & Young LLP, an independent
registered public accounting firm, as stated in their report
which appears in Item 8.
Remediation
Plan
In an effort to remediate the material weakness, the company
plans to undertake the following:
|
|
|
|
|
Redesign the tax accounting processes to improve the flow of
information to provide for more timely generation of account
reconciliations and supporting documentation that will
facilitate supervision and review of the resulting account
analyses;
|
100
|
|
|
|
|
Hire experienced personnel within the tax and financial
reporting process to ensure effective preparation and review of
account reconciliations and analyses and enhance training
programs for local finance and corporate personnel;
|
|
|
|
Increase the frequency of the preparation of a formal tax basis
balance sheet and reconciliations of the all tax accounts to
enable more timely detection of potential errors; and
|
|
|
|
Implement a quarterly process to highlight significant matters
requiring the attention of both local finance and corporate
personnel.
|
Evaluation
of disclosure controls and procedures
At the end of the period covered by this Annual Report on
Form 10-K,
we carried out an evaluation, under the supervision and with the
participation of management, including the Chief Executive
Officer (CEO) and the Chief Financial Officer
(CFO), of the effectiveness of our disclosure
controls and procedures (as defined in
Rules 13a-15(e) and
15d-15(e) under
the Exchange Act). Based upon that evaluation, the
identification of a material weakness in our internal control
over financial reporting, as discussed in
Managements Report on Internal Control over
Financial Reporting, and our resulting inability to file
this Annual Report on
Form 10-K
by March 1, 2011, our CEO and CFO have concluded our
disclosure controls and procedures (as defined in
Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) were not effective to provide
reasonable assurance that information required to be disclosed
in the reports we file and submit under the Exchange Act is
recorded, processed, summarized and reported within the time
period specified in the SECs rules and forms.
Changes
in internal controls
Our management, including the CEO and CFO, identified no change
in our internal control over financial reporting that occurred
during our fiscal quarter ended December 31, 2010, that has
materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
|
|
Item 9B.
|
Other
Information
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
Pursuant to General Instructions G(3), information on
directors and executive officers of the Registrant and corporate
governance matters will be filed in an amendment to this Annual
Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual shareholder meeting to be held on May 25,
2011.
The Company has adopted a code of ethics entitled Code of
Business Conduct, which applies to all our employees,
officers and directors and our board of directors has also
adopted a separate Supplemental Code of Business
Conduct for our senior officers. Copies of these codes can
also be found at www.weatherford.com.
We intend to satisfy the requirement under Item 5.05 of
Form 8-K
to disclose any amendments to our Code of Business Conduct and
any waiver from any provision of our Code of Business Conduct by
posting such information on our website at
www.weatherford.com.
|
|
Item 11.
|
Executive
Compensation
|
Pursuant to General Instructions G(3), information on
executive compensation will be filed in an amendment to this
Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual shareholder meeting to be held on May 25,
2011.
101
|
|
Item 12(a).
|
Security
Ownership of Certain Beneficial Owners
|
Pursuant to General Instructions G(3), information on
security ownership of certain beneficial owners will be filed in
an amendment to this Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual shareholder meeting to be held on May 25,
2011.
|
|
Item 12(b).
|
Security
Ownership of Management
|
Pursuant to General Instructions G(3), information on
security ownership of management will be filed in an amendment
to this Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual shareholder meeting to be held on May 25,
2011.
|
|
Item 12(d).
|
Securities
Authorized for Issuance under Equity Compensation
Plans
|
The following table provides information as of December 31,
2010, about the number of shares to be issued upon vesting or
exercise of equity awards including options, restricted shares,
warrants and deferred stock units as well as the number of
shares remaining available for issuance under our equity
compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Shares
|
|
|
|
|
|
for Future Issuance
|
|
|
|
to be Issued Upon
|
|
|
Weighted Average
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
(Excluding Shares
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Reflected in the
|
|
|
|
and Rights
|
|
|
and Rights
|
|
|
First Column)
|
|
|
|
(In thousands, except share prices)
|
|
|
Plan Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by shareholders(a)
|
|
|
10,629
|
|
|
$
|
21.41
|
|
|
|
10,231
|
|
Equity compensation plans not approved by shareholders(b)
|
|
|
23,920
|
|
|
|
11.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,549
|
|
|
|
14.62
|
|
|
|
10,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes our Omnibus Plan, which was approved by our
shareholders in May 2006, and our 2010 Omnibus Plan, which was
approved by our shareholders in June 2010. |
|
(b) |
|
Includes the following compensation plans that were not approved
by our shareholders: our 1998 Employee Stock Option Plan, our
Non-Employee Director Deferred Compensation Plan, our Foreign
Executive Deferred Compensation Stock Ownership Plan and our
2003 Restricted Share Plan. Those plans and other individual
compensation arrangements that were not approved by our
shareholders are described below: |
|
|
|
Our 1998 Employee Stock Option Plan (1998 Plan)
provides for the grant of nonqualified options to purchase our
shares to employees or employees of our affiliates, as
determined by the Compensation Committee of our Board of
Directors. The price at which shares may be purchased is based
on the market price of the shares and cannot be less than the
aggregate par value of the shares on the date the option was
granted. Unless otherwise provided in an option agreement, no
option may be exercised after one day less than 10 years
from the date of vesting. Options generally become fully
exercisable after three to four years from the date of grant,
subject to earlier vesting in the event of the death, disability
or retirement of the employee or in the event of a change of
control of the Company. The 1998 Plan provides for the grant of
options to purchase up to 88,000,000 shares. As of
December 31, 2010, there were options to purchase an
aggregate of 8,886,316 of our shares outstanding under the 1998
Plan, all of which are vested. Subsequent to the shareholder
approval of our Omnibus Plan in May 2006, awards are no longer
granted under the 1998 Plan. |
|
|
|
A total of 3,898,112 options to purchase shares of our stock
were granted under individual compensation arrangements with the
following directors: Mr. David J. Butters, Mr. William
E. Macaulay, Mr. Robert B. Millard, Mr. Robert K.
Moses, Jr. and Mr. Robert A. Rayne. At
December 31, 2010, there were 1,876,928 of these options
outstanding under these agreements, all of which are fully
vested. |
102
|
|
|
|
|
Under our Non-Employee Director Deferred Compensation Plan
(DDC Plan), each non-employee director may elect to
defer up to 7.5% of any fees paid by the Company. The deferred
fees were converted into non-monetary units representing shares
that could have been purchased with the deferred fees based on
the market price of our shares on the last day of the month in
which fees were deferred. If a non-employee director elected to
defer at least 5% of his fees, we made an additional
contribution to the directors account equal to the sum of
(1) 7.5% of the directors fees plus (2) the
amount of fees deferred by the director. The non-employee
directors are fully vested at all times. Our directors may
generally determine when distributions will be made from the
plan, but in any event all benefits under the DDC Plan will be
distributed no later than January 1, 2017. The amount of
the distribution will be a number of our shares equal to the
number of units at the time of distribution. As of
December 31, 2010, there were 121,226 deferred units
outstanding under this plan. Effective December 31, 2008,
we suspended the DDC Plan. While the plan is suspended, no new
participants may join the plan and no further deferrals of fees
or matching contributions will be made under the plan unless and
until our Board of Directors determines otherwise. |
|
|
|
We established our Foreign Executive Deferred Compensation Stock
Ownership Plan for key foreign employees (FEDC Plan)
and under this plan we contribute 15% of each participants
total salary, bonus and commission compensation each year. Our
contributions vest over a five-year period on the basis of 20%
per year for each year of service. Under the FEDC Plan, our
contributions are converted into non-monetary units equal to the
number of our shares that could have been purchased with the
amounts contributed based on the average closing price of our
shares for each day of the month in which contributions are
made. Distributions are made under the FEDC Plan after a
participant retires, becomes disabled or dies or after his
employment is terminated, but in any event all benefits under
the FEDC Plan will be distributed no later than January 1,
2017. Distributions under the FEDC Plan are made in a number of
our shares equal to the number of units allocated to the
participants account at the time of distribution. As of
December 31, 2010, there were 106,632 deferred units
outstanding under this plan. |
|
|
|
In 2002, we issued warrants to purchase up to 12,928,856 of our
shares at a price of $15.00 per share, which are exercisable
until February 28, 2012. These warrants were issued in
connection with the acquisition of intellectual property rights
and not as compensation to any employee. The warrant holders may
exercise the warrants and settlement may occur through physical
delivery, net share settlement, net cash settlement or a
combination thereof. The net cash settlement option upon
exercise is at our sole discretion. |
|
|
|
In 2003, our Board of Directors approved a restricted share plan
that allows for the grant of up to 15,340,000 of our shares to
our key employees and directors (2003 Restricted Share
Plan). Restricted shares are subject to forfeiture
restrictions that generally lapse after a specified period from
the date of grant and are subject to earlier vesting in the
event of death, retirement or a change in control. As of
December 31, 2010, there were 12,534,835 shares
granted net of forfeitures under the 2003 Restricted Share Plan,
all of which are vested. Subsequent to the shareholder approval
of our Omnibus Plan in May 2006, awards are no longer made under
this plan. |
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Pursuant to General Instruction G(3), information on
certain relationships and related transactions and director
independence will be filed in an amendment to this Annual Report
on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual shareholder meeting to be held on May 25,
2011.
|
|
Item 14.
|
Principal
Accounting Fees and Services
|
Pursuant to General Instruction G(3), information on
principal accounting fees and services will be filed in an
amendment to this Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual shareholder meeting to be held on May 25,
2011.
103
PART IV
|
|
Item 15.
|
Exhibits,
Financial Statement Schedules
|
(a) The following documents are filed as part of this
report or incorporated by reference:
1. The consolidated financial statements of the Company
listed on page 43 of this report.
2. The financial statement schedule on page 113 of
this report.
3. The exhibits of the Company listed below under
Item 15(b).
(b) Exhibits:
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
1
|
.1
|
|
Underwriting Agreement, dated September 16, 2010, among
Weatherford International Ltd., a Bermuda exempted company,
Weatherford International Ltd., a Swiss joint-stock corporation,
Weatherford International, Inc., a Delaware corporation, and
Deutsche Bank Securities Inc., Morgan Stanley & Co.
Incorporated, UBS Securities LLC and JP Morgan Securities LLC,
as representatives of the several underwriters named therein
(incorporated by reference to Exhibit 1.1 to the
Registrants Current report on
Form 8-K
(File
No. 1-34258)
filed September 22. 2010).
|
|
2
|
.1
|
|
Stock Purchase Agreement dated June 6, 2005 by and between
Precision Drilling Corporation and Weatherford International
Ltd. (incorporated by reference to Exhibit 2.1 to Amendment
No. 1 to the Registrants Current Report on
Form 8-K
dated June 6, 2005 on
Form 8-K/A
(File
No. 1-31339)
filed June 9, 2005).
|
|
2
|
.2
|
|
Agreement and Plan of Merger dated May 8, 2002, among
Weatherford International, Inc., Weatherford Merger, Inc.,
Weatherford International Ltd. and Weatherford U.S. Holdings LLC
(incorporated by reference to Exhibit 2.1 to Amendment
No. 1 to the Registration Statement on
Form S-4
(Reg. No. 333-85644)
filed on May 22, 2002).
|
|
2
|
.3
|
|
Share Exchange Agreement dated as of December 10, 2008,
among Weatherford International, Ltd., a Bermuda exempted
company, and Weatherford International Ltd., a Swiss joint-stock
corporation (incorporated by reference to Exhibit 2.1 to
the Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed December 10, 2008).
|
|
2
|
.4
|
|
Sale and Purchase Agreement, dated as of May 29, 2009
between Weatherford International Ltd. and Novy Investments
Limited (incorporated by reference to Exhibit 99.1 to the
Registrants Current Report on
Form 8-K/A
(File
No. 1-34258)
filed June 3, 2009).
|
|
3
|
.1
|
|
Second Amendment dated June 24, 2010 to Sale and Purchase
Agreement between Weatherford International Ltd. And Novy
Investments Limited dated May 29, 2009 (incorporated by
reference to Exhibit 99.1 to the Registrants Current
Report on
Form 8-K
(File
No. 1-34258)
filed June 28, 2010).
|
|
3
|
.2
|
|
Organizational Regulations of Weatherford International Ltd.
(incorporated by reference to Exhibit 3.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
3
|
.3
|
|
Articles of Association of Weatherford International Ltd.
(incorporated by reference to Exhibit 3.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed June 23, 2010)
|
|
4
|
.1
|
|
Guarantee, dated as of October 25, 2005, of Weatherford
International, Inc. for the benefit of holders of any notes
issued by Weatherford International Ltd., from time to time
pursuant to the Issuing and Paying Agent Agreement, dated as of
October 25, 2005, between Weatherford International Ltd.,
Weatherford International, Inc. and JPMorgan Chase Bank,
National Association (incorporated by reference to
Exhibit 4.1 to the Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed October 31, 2005).
|
|
4
|
.2
|
|
Second Amended and Restated Credit Agreement dated as of
May 2, 2006, among Weatherford International Ltd.,
Weatherford International, Inc., Weatherford Liquidity
Management Hungary Limited Liability Company, JPMorgan Chase
Bank, as administrative agent, and the other Lenders party
thereto (incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed May 5, 2006).
|
104
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.3
|
|
Notice of Commitment Increase dated as of November 14,
2006, among Weatherford International Ltd., Weatherford
International, Inc., Weatherford Liquidity Management Hungary
Limited Liability Company, JPMorgan Chase Bank, as
administrative agent, and the other Lenders party thereto
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed November 16, 2006.
|
|
4
|
.4
|
|
Omnibus Consent and Amendment to Second Amended and Restated
Credit Agreement dated January 9, 2009 (incorporated by
reference to Exhibit 4.1 to the Registrants Current
Report on
Form 8-K
(File
No. 1-31339)
filed January 15, 2009).
|
|
4
|
.5
|
|
Credit Agreement, dated March 19, 2008, among Weatherford
International Ltd., as borrower, Weatherford International, Inc.
as guarantor, and Deutsche Bank AG Cayman Islands Branch as
administrative agent, and the other lenders party thereto
(incorporated by reference to Exhibit 4.6 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed March 25, 2008).
|
|
4
|
.6
|
|
Omnibus Consent and Amendment to Credit Agreement dated
January 9, 2009 (incorporated by reference to
Exhibit 4.2 to the Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed January 15, 2009).
|
|
4
|
.7
|
|
Indenture dated May 17, 1996, between Weatherford Enterra,
Inc. and Bank of Montreal Trust Company, as Trustee
(incorporated by reference to Exhibit 4.1 to Weatherford
Enterra, Inc.s Current Report on
Form 8-K
(File
No. 1-7867)
filed May 31, 1996).
|
|
4
|
.8
|
|
Third Supplemental Indenture dated November 16, 2001,
between Weatherford International, Inc. and The Bank of New
York, as Trustee (incorporated by reference to Exhibit 4.11
to the Registration Statement on
Form S-3
(Reg.
No. 333-73770)
filed November 20, 2001).
|
|
4
|
.9
|
|
Fourth Supplemental Indenture dated June 26, 2002, among
Weatherford International, Inc., Weatherford International Ltd.
and The Bank of New York (as successor in interest to Bank of
Montreal Trust Company) (incorporated by reference to
Exhibit 4.7 to the Registrants Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002 (File
No. 1-13086)
filed August 14, 2002).
|
|
4
|
.10
|
|
Indenture, dated October 1, 2003, among Weatherford
International Ltd., Weatherford International, Inc., and
Deutsche Bank Trust Company Americas (incorporated by
reference to Exhibit 4.1 to the Registrants Current
Report on
Form 8-K
(File
No. 1-31339)
filed October 2, 2003).
|
|
4
|
.11
|
|
Officers Certificate dated as of February 17, 2006,
establishing the series of 5.50% Senior Notes due 2016
(incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed February 17, 2006).
|
|
4
|
.12
|
|
Officers Certificate, dated August 7, 2006,
establishing the series of 6.50% Senior Notes due 2036
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed August 7, 2006).
|
|
4
|
.13
|
|
First Supplemental Indenture, dated March 25, 2008 among
Weatherford International Ltd., Weatherford International, Inc.,
and Deutsche Bank Trust Company Americas (incorporated by
reference to Exhibit 4.1 to the Registrants Current
Report on
Form 8-K
(File
No. 1-31339)
filed March 25, 2008).
|
|
4
|
.14
|
|
Indenture, dated June 18, 2007, among Weatherford
International, Inc., as issuer, Weatherford International Ltd.,
as guarantor, and Deutsche Bank Trust Company Americas, as
trustee, (incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed on June 18, 2007).
|
|
4
|
.15
|
|
First Supplemental Indenture, dated June 18, 2007, among
Weatherford International, Inc., as issuer, Weatherford
International Ltd., as guarantor, and Deutsche Bank
Trust Company Americas, as trustee (including forms of
notes) (incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed on June 18, 2007).
|
|
4
|
.16
|
|
Second Supplemental Indenture, dated as of January 8, 2009,
among Weatherford International Ltd., Weatherford International,
Inc., and Deutsche Bank Trust Company Americas
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed January 8, 2009).
|
105
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.17
|
|
Form of global note for 5.95% Senior Notes due 2012
(incorporated by reference to Exhibit 4.15 to the
Registrants Registration Statement on
Form S-4
(Registration
No. 333-146695)
filed November 8, 2007).
|
|
4
|
.18
|
|
Form of global note for 5.15% Senior Notes due 2013
(incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed March 25, 2008).
|
|
4
|
.19
|
|
Form of global note for 4.95% Senior Notes due 2013
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed October 7, 2003).
|
|
4
|
.20
|
|
Form of global note for 5.50% Senior Notes due 2016
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed February 17, 2006).
|
|
4
|
.21
|
|
Form of global note for 6.00% Senior Notes due 2018
(incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed March 25, 2008).
|
|
4
|
.22
|
|
Form of global note for 9.625% Senior Notes due 2019
(incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed January 8, 2009).
|
|
4
|
.23
|
|
Form of $500,000 global note for 6.50% Senior Notes due
2036 (incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed August 7, 2006).
|
|
4
|
.24
|
|
Form of $100,000 global note for 6.50% Senior Notes due
2036 (incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed August 7, 2006).
|
|
4
|
.25
|
|
Form of global note for 6.80% Senior Notes due 2037
(incorporated by reference to Exhibit 4.17 to the
Registrants Registration Statement on
Form S-4
(Registration
No. 333-146695)
filed November 8, 2007).
|
|
4
|
.26
|
|
Form of global note for 7.00% Senior Notes due 2038
(incorporated by reference to Exhibit 4.4 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed March 25, 2008).
|
|
4
|
.27
|
|
Form of global note for 9.875% Senior Notes due 2039
(incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed January 8, 2009).
|
|
4
|
.28
|
|
Amended and Restated Warrant Agreement, dated effective as of
July 12, 2006, by and among Weatherford International Ltd.,
Weatherford International, Inc. and Shell Technology Ventures,
Inc. (incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed July 14, 2006).
|
|
4
|
.29
|
|
Fifth Supplemental Indenture, dated as of February 26,
2009, among Weatherford International, Inc., a Delaware
corporation, Weatherford International Ltd., a Bermuda exempted
company, Weatherford International Ltd., a Swiss joint-stock
corporation, and The Bank of New York, as successor trustee, to
the Indenture dated as of May 17, 1996 (the 1996
Indenture) (incorporated by reference to Exhibit 4.1
to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
4
|
.30
|
|
Third Supplemental Indenture, dated as of February 26,
2009, among Weatherford International Ltd., a Bermuda exempted
company, Weatherford International, Inc., Weatherford
International Ltd., a Swiss joint-stock corporation, and
Deutsche Bank Trust Company Americas, as trustee, to the
Indenture dated as of October 1, 2003 (the 2003
Indenture) (incorporated by reference to Exhibit 4.2
to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
4
|
.31
|
|
Second Supplemental Indenture, dated as of February 26,
2009, among Weatherford International, Inc., Weatherford
International Ltd., a Bermuda exempted company, Weatherford
International Ltd., a Swiss joint-stock corporation, and
Deutsche Bank Trust Company Americas, as trustee, to the
Indenture dated as of June 18, 2007 (the 2007
Indenture) (incorporated by reference to Exhibit 4.3
to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
4
|
.32
|
|
Registration Rights Agreement, dated as of July 27, 2009
between Weatherford International Ltd. and Novy Investments
Limited (incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed July 27, 2009).
|
|
4
|
.33
|
|
Registration Rights Agreement, dated as of September 16,
2009 between Weatherford International Ltd. and Integrity Energy
International, LLC. (incorporated by reference to
Exhibit 4.1 to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed September 17, 2009).
|
106
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.34
|
|
Fourth Supplemental Indenture, dated September 23, 2010,
among Weatherford International Ltd., a Bermuda exempted
company, Weatherford International Ltd., a Swiss joint-stock
corporation, Weatherford International, Inc. and Deutsche Bank
Trust Company Americas (incorporated by reference to
Exhibit 4.1 to the Registrants Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2010 (File
No. 1-34258)
filed November 2, 2010).
|
|
4
|
.35
|
|
Form of global note for 5.125% Senior Notes due 2020
(incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed September 22, 2010).
|
|
4
|
.36
|
|
Form of global note for 6.750% Senior Notes due 2040
(incorporated by reference to Exhibit 4.4 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed September 22, 2010).
|
|
4
|
.37
|
|
Form of guarantee notation (incorporated by reference to
Exhibit 4.5 to the Registrants Current Report on
Form 8-K
(File No. 1034258) filed September 22, 2010).
|
|
10
|
.1
|
|
Issuing and Paying Agent Agreement, dated as of October 25,
2005, among Weatherford International Ltd., Weatherford
International, Inc. and JPMorgan Chase Bank, National
Association (incorporated by reference to Exhibit 10.1 to
the Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed October 31, 2005).
|
|
10
|
.2
|
|
Commercial Paper Dealer Agreement, dated as of October 25,
2005, among Weatherford International Ltd., Weatherford
International, Inc. and JPMorgan Securities Inc. (incorporated
by reference to Exhibit 10.2 to the Registrants
Current Report on
Form 8-K
(File
No. 1-31339)
filed October 31, 2005).
|
|
10
|
.3
|
|
Commercial Paper Dealer Agreement, dated as of October 25,
2005, among Weatherford International Ltd., Weatherford
International, Inc. and Goldman, Sachs & Co.
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed October 31, 2005).
|
|
10
|
.4
|
|
Commercial Paper Dealer Agreement, dated as of October 25,
2005, among Weatherford International Ltd., Weatherford
International, Inc. and Merrill Lynch Money Markets Inc. (for
notes with maturities up to 270 days) and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, (for notes with
maturities over 270 days up to 397 days) (incorporated
by reference to Exhibit 10.4 to the Registrants
Current Report on
Form 8-K
(File
No. 1-31339)
filed October 31, 2005).
|
|
*10
|
.5
|
|
Weatherford International Ltd. Restricted Share Plan, including
form of agreement for officers and non-officers (incorporated by
reference to Exhibit 10.2 to Amendment No. 1 to the
Registrants Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2004 on
Form 10-Q/A
(File
No. 1-31339)
filed September 15, 2004).
|
|
*10
|
.6
|
|
Trust under Weatherford International Ltd. Nonqualified
Executive Retirement Plan dated March 23, 2004
(incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2004 (File
No. 1-31339)
filed May 6, 2004).
|
|
*10
|
.7
|
|
Amended and Restated Non-Employee Director Stock Option Plan
(incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1995 (File
No. 1-13086)
filed August 12, 1995).
|
|
*10
|
.8
|
|
General Amendment of Employee Stock Option Programs of
Weatherford International, Inc. dated May 9, 2003
(incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2003 (File
No. 1-31339)
filed August 14, 2003).
|
|
*10
|
.9
|
|
General Amendment of Directors Stock Option Plans and
Agreements dated May 9, 2003 (incorporated by reference to
Exhibit 10.2 to the Registrants Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2003 (File
No. 1-31339)
filed August 14, 2003).
|
|
*10
|
.10
|
|
Weatherford International, Inc. 1998 Employee Stock Option Plan,
as amended, including form of agreement for officers
(incorporated by reference to Exhibit 10.18 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2003 (File
No. 1-13086)
filed March 24, 2004).
|
|
*10
|
.11
|
|
Amendment to Stock Option Programs (incorporated by reference to
Exhibit 4.19 to the Registrants Registration
Statement on
Form S-8
(Reg.
No. 333-36598)
filed May 19, 2000).
|
|
*10
|
.12
|
|
Indemnification Agreement, dated as of September 29, 2005,
between Weatherford International Ltd. and Andrew P. Becnel
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed October 5, 2005).
|
107
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.13
|
|
Indemnification Agreements with Robert K. Moses, Jr.
(incorporated by reference to Exhibit 10.10 to Weatherford
Enterra, Inc.s Annual Report on
Form 10-K
for the year ended December 31, 1987
(File No. 1-7867));
and William E. Macaulay (incorporated by reference to
Exhibit 10.2 to Weatherford Enterra, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended September 30, 1995
(File No. 1-7867)).
|
|
*10
|
.14
|
|
Indemnification Agreements with each of Bernard J. Duroc-Danner,
Burt M. Martin, Stuart E. Ferguson, David J. Butters,
Robert A. Rayne, Robert K. Moses, Jr., Robert B. Millard, and
William E. Macaulay (incorporated by reference to
Exhibit 10.1 to the Registrants Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2002 (File
No. 1-13086)
filed November 13, 2002).
|
|
*10
|
.15
|
|
Form of Stock Option Agreement for Non-Employee Directors dated
September 8, 1998 (incorporated by reference to
Exhibit 10.23 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 1998 (File
No. 1-13086)
filed March 31, 1999).
|
|
*10
|
.16
|
|
Form of Amendment to Stock Option Agreements dated
September 8, 1998 for Non-Employee Directors (incorporated
by reference to Exhibit 4.17 to the Registration Statement
on
Form S-8
(Reg.
No. 333-36598)
filed May 9, 2000).
|
|
*10
|
.17
|
|
Form of Stock Option Agreement for Non-employee Directors dated
July 5, 2000 (incorporated by reference to
Exhibit 4.16 to the Registration Statement on
Form S-8
(Reg.
No. 333-48322)
filed October 20, 2000).
|
|
*10
|
.18
|
|
Form of Stock Option Agreement for Non-employee Directors dated
September 26, 2001 (incorporated by reference to
Exhibit 4.19 to the Registration Statement on
Form S-8
(Reg.
No. 333-81678)
filed January 30, 2002).
|
|
*10
|
.19
|
|
Assumption and General Amendment of Directors Stock Option
and Benefit Programs and General Amendment of Employee Stock
Option and Benefit Programs of Weatherford International, Inc.
dated June 26, 2002 (incorporated by reference to
Exhibit 10.1 to the Registrants Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002 (File
No. 1-13086)
filed August 14, 2002).
|
|
*10
|
.20
|
|
Indemnification Agreement dated October 27, 2006, between
Weatherford International Ltd. and Jessica Abarca (incorporated
by reference to Exhibit 10.3 to the Registrants
Current Report on
Form 8-K
(File
No. 1-31339)
filed October 27, 2006).
|
|
*10
|
.21
|
|
Form of Restricted Share Unit Award Agreement for Officers
pursuant to Weatherford International Ltd. 2006 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.45
to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 (File
No. 1-31339)
filed February 23, 2007).
|
|
*10
|
.22
|
|
Form of Stock Option Award Agreement for Officers pursuant to
Weatherford International Ltd. 2006 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.46 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 (File
No. 1-31339)
filed February 23, 2007).
|
|
*10
|
.23
|
|
Form of Restricted Share Award Agreement for Non-employee
Directors pursuant to Weatherford International Ltd. 2006
Omnibus Incentive Plan (incorporated by reference to
Exhibit 10.47 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 (File
No. 1-31339)
filed February 23, 2007).
|
|
*10
|
.24
|
|
Form of Restricted Share Award Agreement for Officers pursuant
to Weatherford International Ltd. 2006 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.48 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006 (File
No. 1-31339)
filed February 23, 2007).
|
|
*10
|
.25
|
|
Form of Stock Option Award Agreement for Non-Employee Directors
pursuant to Weatherford International Ltd. 2006 Omnibus Plan
(incorporated by reference to Exhibit 10.49 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2006
(File No. 1-31339)
filed February 23, 2007).
|
|
*10
|
.26
|
|
Indemnification Agreement, dated as of June 11, 2007,
between Weatherford International Ltd. and Keith R. Morley
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed June 11, 2007).
|
108
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.27
|
|
Amended and Restated Employment Agreements dated
December 31, 2008, between Weatherford International Ltd.
and each of Jessica Abarca, Andrew P. Becnel, M. David Colley,
Bernard J.
Duroc-Danner,
Stuart E. Ferguson, Burt M. Martin and Keith R. Morley
(incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.28
|
|
Employment Agreements effective as of January 1, 2009,
between Weatherford International, Inc. and each of Jessica
Abarca, Andrew P. Becnel, M. David Colley, Bernard J.
Duroc-Danner, Stuart E. Ferguson, Burt M. Martin and Keith
R. Morley (incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.29
|
|
Weatherford International, Inc. Executive Deferred Compensation
Stock Ownership Plan, as amended and restated as of
December 31, 2008 (incorporated by reference to
Exhibit 10.3 to the Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.30
|
|
Weatherford International, Inc. Foreign Executive Deferred
Compensation Stock Plan, as amended and restated as of
December 31, 2008 (incorporated by reference to
Exhibit 10.4 to the Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.31
|
|
Weatherford International Ltd. Non-Employee Director Deferred
Compensation, as amended and restated as of December 31,
2008 (incorporated by reference to Exhibit 10.5 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.32
|
|
Weatherford International Ltd. Non-Employee Director Retirement
Plan, as amended and restated as of December 31, 2008
(incorporated by reference to Exhibit 10.6 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.33
|
|
Weatherford Management Incentive Plan, including Form of Award
Letter, as amended and restated as of December 31, 2008
(incorporated by reference to Exhibit 10.7 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.34
|
|
Amended and Restated Weatherford International Ltd. Nonqualified
Executive Retirement Plan (incorporated by reference to
Exhibit 10.8 to the Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.35
|
|
Weatherford International, Inc. Supplemental Retirement Plan
(incorporated by reference to Exhibit 10.9 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.36
|
|
Weatherford International Ltd. 2006 Omnibus Incentive Plan, as
amended (incorporated by reference to Exhibit 10.10 to the
Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.37
|
|
Amendment to Weatherford International, Inc. 1998 Employee Stock
Option Plan (incorporated by reference to Exhibit 10.11 to
the Registrants Current Report on
Form 8-K
(File
No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.38
|
|
Amendment to Weatherford International Ltd. Non-Employee
Director Stock Option Agreements (incorporated by reference to
Exhibit 10.12 to the Registrants Current Report on
Form 8-K
(File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.39
|
|
Amended and Restated Employment Agreement, dated
December 31, 2008, between Weatherford International Ltd.
and Carel W. Hoyer (incorporated by reference to
Exhibit 10.39 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
|
*10
|
.40
|
|
Employment Agreement, dated February 2, 2009, between
Weatherford International, Inc. and Carel W. Hoyer
(incorporated by reference to Exhibit 10.40 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
|
*10
|
.41
|
|
Indemnification Agreement, dated as of February 9, 2009,
between Weatherford International Ltd. and Carel W. Hoyer
(incorporated by reference to Exhibit 10.41 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
109
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.42
|
|
Indemnification Agreement, dated as of February 9, 2009,
between Weatherford International, Inc. and Carel W. Hoyer
(incorporated by reference to Exhibit 10.42 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
|
*10
|
.43
|
|
Amended and Restated Employment Agreement, dated
December 31, 2008, between Weatherford International Ltd.
and James M. Hudgins (incorporated by reference to
Exhibit 10.43 to the Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
|
*10
|
.44
|
|
Employment Agreement, dated February 9, 2009, between
Weatherford International, Inc. and James M. Hudgins
(incorporated by reference to Exhibit 10.44 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
|
*10
|
.45
|
|
Indemnification Agreement, dated as of September 4, 2002,
between Weatherford International Ltd. and James M. Hudgins
(incorporated by reference to Exhibit 10.45 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
|
*10
|
.46
|
|
Indemnification Agreement, dated as of September 4, 2002,
between Weatherford International, Inc. and James M. Hudgins
(incorporated by reference to Exhibit 10.46 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File
No. 1-31339)
filed February 24, 2009).
|
|
10
|
.47
|
|
Warrant Assignment and Assumption Agreement, dated
February 26, 2009, between Weatherford International Ltd.,
a Bermuda exempted company, and Weatherford International Ltd.,
a Swiss joint-stock corporation (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
10
|
.48
|
|
Guaranty Agreement, dated as of February 26, 2009, by
Weatherford International Ltd., a Swiss joint-stock corporation,
in favor of the lenders and certain other parties under the
Second Amended and Restated Credit Agreement dated as of
May 2, 2006, among Weatherford International Ltd., a
Bermuda exempted company, Weatherford International, Inc.,
Weatherford Liquidity Management Hungary Limited Liability
Company, JPMorgan Chase Bank, as administrative agent, and the
other Lenders party thereto (incorporated by reference to
Exhibit 10.2 to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
10
|
.49
|
|
Guaranty Agreement, dated as of February 26, 2009, by
Weatherford International Ltd., a Swiss joint-stock corporation,
in favor of the lenders and certain other parties under the
Credit Agreement dated as of March 19, 2008, among
Weatherford International Ltd., a Bermuda exempted company,
Weatherford International, Inc., Deutsche Bank AG Cayman Islands
Branch, as administrative agent, and the other Lenders party
thereto (incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
10
|
.50
|
|
Guaranty Agreement, dated as of February 26, 2009, by
Weatherford International Ltd., a Swiss joint-stock corporation,
in favor of the lenders and certain other parties under the
Credit Agreement dated as of October 20, 2008, among
Weatherford International Ltd., a Bermuda exempted company,
Weatherford International, Inc., UBS AG, Stamford Branc, as
administrative agent, and the other Lenders party thereto
(incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
10
|
.51
|
|
Assumption and General Amendment Agreement, dated
February 25, 2009, between Weatherford International Ltd.,
a Bermuda exempted company, and Weatherford International Ltd.,
a Swiss joint-stock corporation (incorporated by reference to
Exhibit 10.5 to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
10
|
.52
|
|
Form of Indemnification Agreement of Weatherford International
Ltd., a Swiss joint-stock corporation, for use with directors
and executive officers (incorporated by reference to
Exhibit 10.6 to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 26, 2009).
|
|
*10
|
.53
|
|
Employment Agreement, dated as of June 8, 2009, between
Weatherford International Ltd. and Joseph C. Henry
(incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.54
|
|
Employment Agreement, dated as of June 8, 2009, between
Weatherford International, Inc. and Joseph C. Henry
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed June 9, 2009).
|
110
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.55
|
|
Indemnification Agreement, dated as of February 26, 2009,
between Weatherford International Ltd. and Joseph C. Henry
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.56
|
|
Employment Agreement, dated as of March 30, 2009, between
Weatherford International Ltd. and William B. Jacobson
(incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.57
|
|
Employment Agreement, dated as of March 30, 2009, between
Weatherford International, Inc. and William B. Jacobson
(incorporated by reference to Exhibit 10.5 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.58
|
|
Indemnification Agreement, dated as of March 30, 2009
between Weatherford International Ltd. and William B. Jacobson
(incorporated by reference to Exhibit 10.6 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.59
|
|
Employment Agreement, dated as of July 21, 2009, between
Weatherford International Ltd. and Peter T. Fontana
(incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed July 22, 2009).
|
|
*10
|
.60
|
|
Employment Agreement, dated as of July 21, 2009, between
Weatherford International, Inc. and Peter T. Fontana
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed July 22, 2009).
|
|
*10
|
.61
|
|
Indemnification Agreement, dated as of July 21, 2009,
between Weatherford International Ltd. and Peter T. Fontana
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed July 22, 2009).
|
|
*10
|
.62
|
|
Form of Employment Agreement, between Weatherford International
Ltd. and each of Jessica Abarca, Andrew P. Becnel, M. David
Colley, Stuart E. Ferguson, and Keith R. Morley (incorporated by
reference to Exhibit 10.1 to the Registrants Current
Report on
Form 8-K
(File
No. 1-34258)
filed December 31, 2009).
|
|
*10
|
.63
|
|
Supplemental Executive Retirement Plan effective as of
January 1, 2010, between Weatherford International Ltd. and
each of Jessica Abarca, Andrew P. Becnel, M. David Colley,
Bernard J. Duroc-Danner, Stuart E. Ferguson and Keith R. Morley
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed December 31, 2009).
|
|
*10
|
.64
|
|
First amendment to the Weatherford International Ltd.,
Supplemental Executive Retirement Plan, effective March 31,
2010 (incorporated by reference to Exhibit 10.1 to the
Registrants Current report on
Form 8-K
(File
No. 1-34258)
filed March 23, 2010).
|
|
*10
|
.65
|
|
Weatherford International Ltd. Performance Unit Award Agreement,
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed March 23, 2010).
|
|
*10
|
.66
|
|
Second amendment to the Weatherford International Ltd.
Supplemental Executive Retirement Plan, effective April 8,
2010 (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed April 9, 2010).
|
|
*10
|
.67
|
|
Form of amended and restated Employment Agreement, between
Weatherford International Ltd. and each of Bernard J.
Duroc-Danner, Peter T. Fontana, Nicholas W. Gee, Joseph C.
Henry, Carel W. J. Hoyer, James M. Hudgins and William B.
Jacobson (incorporated by reference to the Registrants
Current Report on
Form 8-K
(File
No. 1-34258)
filed April 13, 2010).
|
|
*10
|
.68
|
|
Form of Performance Unit Award Agreement pursuant to Weatherford
International Ltd. 2010 Omnibus Incentive Plan (incorporated by
references to Exhibit 10.2 to the Registrants
Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010 (File
No. 1-34258)
filed August 3, 2010).
|
|
*10
|
.69
|
|
Employment Agreement, dated September 14, 2010, between
Andrew P. Becnel and Weatherford International Ltd.
(incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed September 15, 2010).
|
111
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
10
|
.70
|
|
Credit Agreement, dated as of October 15, 2010, among
Weatherford International Ltd., a Bermuda exempted company,
Weatherford International Ltd., a Swiss joint-stock corporation,
and other Borrowers party thereto, and Wells Fargo Bank,
National Association, as a Swingline Lender, JP Morgan
Chase Bank, N.A., as Administrative Agent and a Swingline Lender
and the other parties thereto (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on
Form 8-K
(File No. 1-34258)
filed October 19, 2010).
|
|
10
|
.71
|
|
Guarantee Agreement, dated October 15, 2010 among
Weatherford International Ltd., Weatherford International, Inc.
and JP Morgan Chase Bank, N.A. as administrative agent
(incorporated by reference to Exhibit 10.3 to the
Registrants Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2010 (File
No. 1-34258)
filed November 2, 2010).
|
|
*10
|
.72
|
|
Weatherford International Ltd. 2010 Omnibus incentive Plan
(incorporated by reference to Annex C of the
Registrants Proxy Statement (File
No. 1-34258)
filed May 13, 2010).
|
|
*10
|
.73
|
|
Form of Performance Unit Award Agreement for use under the
Weatherford International Ltd. 2010 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 22, 2011).
|
|
*10
|
.74
|
|
Form of Restricted Share Unit Award Agreement for use under the
Weatherford International Ltd. 2010 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.2 to the
Registrants Current report on
Form 8-K
(File
No. 1-34258)
filed February 22, 2011).
|
|
*10
|
.75
|
|
Form of Restricted Share Unit Award Agreement (U.K. version) for
use under the Weatherford International Ltd. 2010 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.3
to the Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 22, 2011).
|
|
*10
|
.76
|
|
Form of Restricted Share Award Agreement for use under the
Weatherford International Ltd. 2006 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 22, 2011).
|
|
*10
|
.77
|
|
Weatherford International Ltd. Non-Equity Incentive Compensation
Plan (incorporated by reference to Exhibit 10.5 to the
Registrants Current Report on
Form 8-K
(File
No. 1-34258)
filed February 22, 2011).
|
|
21
|
.1
|
|
Subsidiaries of Weatherford International, Ltd.
|
|
23
|
.1
|
|
Consent of Ernst & Young LLP.
|
|
31
|
.1
|
|
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31
|
.2
|
|
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
**32
|
.1
|
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
**32
|
.2
|
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
* |
|
Management contract or compensatory plan or arrangement. |
|
** |
|
Furnished with this
Form 10-K |
|
|
|
Filed herewith. |
112
As permitted by Item 601(b)(4)(iii)(A) of
Regulation S-K,
the Company has not filed with this Annual Report on
Form 10-K
certain instruments defining the rights of holders of long-term
debt of the Company and its subsidiaries because the total
amount of securities authorized under any of such instruments
does not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. We will furnish a copy of
any of such instruments to the Securities and Exchange
Commission upon request.
We will furnish to any requesting shareholder a copy of any of
the above named exhibits upon the payment of our reasonable
expenses of obtaining, duplicating and mailing the requested
exhibits. All requests for copies of exhibits should be made in
writing to our U.S. Investor Relations Department at 515
Post Oak Blvd., Houston, TX 77027.
(c) Financial Statement Schedules
1. Valuation and qualifying accounts and allowances.
SCHEDULE II
WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND ALLOWANCES
FOR THE THREE YEARS ENDED DECEMBER 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
Balance at
|
|
Charged to
|
|
|
|
|
|
Balance at
|
|
|
Beginning
|
|
Costs and
|
|
|
|
|
|
End of
|
Description
|
|
of Period
|
|
Expenses
|
|
Collections
|
|
Deductions
|
|
Period
|
|
|
(In thousands)
|
|
Year Ended December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for uncollectible accounts receivable
|
|
$
|
20,466
|
|
|
$
|
56,803
|
|
|
$
|
213
|
|
|
$
|
(18,726
|
)
|
|
$
|
58,756
|
|
Year Ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for uncollectible accounts receivable
|
|
|
16,425
|
|
|
|
11,328
|
|
|
|
28
|
|
|
|
(7,315
|
)
|
|
|
20,466
|
|
Year Ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for uncollectible accounts receivable
|
|
|
13,760
|
|
|
|
5,970
|
|
|
|
4,975
|
|
|
|
(8,280
|
)
|
|
|
16,425
|
|
All other schedules are omitted because they are not required or
because the information is included in the financial statements
or the related notes.
113
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of
Texas, on March 8, 2011.
WEATHERFORD INTERNATIONAL LTD.
|
|
|
|
By:
|
/s/ Bernard
J. Duroc-Danner
|
Bernard J. Duroc-Danner
President, Chief Executive Officer,
Chairman of the Board and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
|
|
|
|
|
|
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Bernard
J. Duroc-Danner
Bernard
J. Duroc-Danner
|
|
President, Chief Executive Officer, Chairman
of the Board and Director
(Principal Executive Officer)
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Andrew
P. Becnel
Andrew
P. Becnel
|
|
Senior Vice President and Chief Financial
Officer
(Principal Financial Officer)
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Charles
E. Geer, Jr.
Charles
E. Geer, Jr.
|
|
Vice President Financial Reporting
(Principal Accounting Officer)
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Samuel
Bodman
Samuel
Bodman
|
|
Director
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Nicholas
F. Brady
Nicholas
F. Brady
|
|
Director
|
|
March 8, 2011
|
|
|
|
|
|
/s/ David
J. Butters
David
J. Butters
|
|
Director
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Emyr
Jones Parry
Emyr
Jones Parry
|
|
Director
|
|
March 8, 2011
|
|
|
|
|
|
/s/ William
E. Macaulay
William
E. Macaulay
|
|
Director
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Robert
B. Millard
Robert
B. Millard
|
|
Director
|
|
March 8, 2011
|
114
|
|
|
|
|
|
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Robert
K. Moses, Jr.
Robert
K. Moses, Jr.
|
|
Director
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Guillermo
Ortiz
Guillermo
Ortiz
|
|
Director
|
|
March 8, 2011
|
|
|
|
|
|
/s/ Robert
A. Rayne
Robert
A. Rayne
|
|
Director
|
|
March 8, 2011
|
115