UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Commission file number)

WEATHERFORD INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)

Switzerland (State or other jurisdiction of incorporation or organization)		98-0606750 (I.R.S. Employer Identification No.)
4-6 Rue Jean-Francois Bartholoni, 1204 Geneva, Switzerland (Address of principal executive offices)		Not Applicable (Zip Code)

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 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.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

     Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of May 2, 2011 there were 745,173,406 shares of Weatherford registered shares, 1.16 Swiss francs par value per share, outstanding.

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

		March 31,				December 31,
		2011				2010
		(unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents		$	249,317			$	415,772
Accounts Receivable, Net of Allowance for Uncollectible Accounts of $57,880 and $58,756, Respectively			2,923,062				2,629,403
Inventories			2,759,569				2,590,008
Current Deferred Tax Assets			268,814				255,476
Other Current Assets			695,105				601,408
Total Current Assets			6,895,867				6,492,067
Property, Plant and Equipment, Net of Accumulated Depreciation of $4,466,414 and $4,221,880, Respectively			7,117,261				6,939,754
Goodwill			4,260,025				4,185,477
Other Intangible Assets, Net of Accumulated Amortization of $484,596 and $452,923, Respectively			735,494				730,429
Equity Investments			551,686				539,580
Other Assets			261,588				244,347
Total Assets		$	19,821,921			$	19,131,654
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term Borrowings and Current Portion of Long-term Debt		$	619,490			$	235,392
Accounts Payable			1,433,259				1,335,020
Other Current Liabilities			939,560				1,012,567
Total Current Liabilities			2,992,309				2,582,979
Long-term Debt			6,526,464				6,529,998
Other Liabilities			590,765				553,830
Total Liabilities			10,109,538				9,666,807
Shareholders’ Equity:
Shares, CHF 1.16 Par Value: Authorized 1,137,670 Shares, Conditionally Authorized 377,550 Shares, Issued 760,120 Shares at March 31, 2011; Authorized 1,137,670 Shares, Conditionally Authorized 379,223 Shares, Issued 758,447 Shares at December 31, 2010			763,163				761,077
Capital in Excess of Par Value			4,710,429				4,701,797
Treasury Shares, Net			(561,292	)			(562,906	)
Retained Earnings			4,408,046				4,348,845
Accumulated Other Comprehensive Income			330,638				152,118
Weatherford Shareholders’ Equity			9,650,984				9,400,931
Noncontrolling Interests			61,399				63,916
Total Shareholders’ Equity			9,712,383				9,464,847
Total Liabilities and Shareholders’ Equity		$	19,821,921			$	19,131,654

The accompanying notes are an integral part of these condensed consolidated financial statements.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)

		Three Months
		Ended March 31,
		2011				2010
Revenues:
Products		$	1,063,798			$	781,056
Services			1,792,388				1,550,011
			2,856,186				2,331,067
Costs and Expenses:
Cost of Products			786,179				573,797
Cost of Services			1,339,490				1,178,663
Research and Development			64,547				48,857
Selling, General and Administrative Attributable to Segments			388,791				337,936
Corporate, General and Administrative			65,291				84,253
			2,644,298				2,223,506
Operating Income			211,888				107,561
Other Expense:
Interest Expense, Net			(112,506	)			(95,339	)
Devaluation of Venezuelan Bolivar			—				(63,859	)
Other, Net			(18,566	)			(9,218	)
Income (Loss) Before Income Taxes			80,816				(60,855	)
Provision for Income Taxes			(19,277	)			(3,467	)
Net Income (Loss)			61,539				(64,322	)
Net Income Attributable to Noncontrolling Interests			(2,338	)			(4,035	)
Net Income (Loss) Attributable to Weatherford		$	59,201			$	(68,357	)
Earnings (Loss) Per Share Attributable to Weatherford:
Basic		$	0.08			$	(0.09	)
Diluted		$	0.08			$	(0.09	)
Weighted Average Shares Outstanding:
Basic			747,468				737,865
Diluted			757,617				737,865

The accompanying notes are an integral part of these condensed consolidated financial statements.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

		Three Months
		Ended March 31,
		2011				2010
Cash Flows from Operating Activities:
Net Income (Loss)		$	61,539			$	(64,322	)
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization			277,055				249,705
Employee Share-Based Compensation Expense			22,456				22,974
Deferred Income Tax Benefit			(3,961	)			(91,651	)
Devaluation of Venezuelan Bolivar			—				63,859
Supplemental Executive Retirement Plan			—				38,021
Revaluation of Contingent Consideration			—				11,010
Other, Net			10,894				7,646
Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired
Accounts Receivable			(235,669	)			(211,917	)
Inventories			(143,327	)			(99,094	)
Other Current Assets			(107,066	)			32,465
Accounts Payable			79,273				128,522
Other Current Liabilities			(95,447	)			(59,611	)
Other			(38,734	)			(22,651	)
Net Cash Provided by Operating Activities			(172,987	)			4,956
Cash Flows from Investing Activities:
Capital Expenditures for Property, Plant and Equipment			(355,650	)			(231,087	)
Acquisitions of Businesses, Net of Cash Acquired			(15,143	)			(46,579	)
Acquisition of Intellectual Property			(3,462	)			(6,072	)
Acquisition of Equity Investments in Unconsolidated Affiliates			(6,752	)			—
Proceeds from Sale of Assets and Businesses, Net			2,506				87,790
Other Investing Activities			—				41,840
Net Cash Used by Investing Activities			(378,501	)			(154,108	)
Cash Flows from Financing Activities:
Borrowings of Short-term Debt, Net			384,532				122,746
Repayments of Long-term Debt, Net			(4,736	)			(2,113	)
Other Financing Activities, Net			343				3,227
Net Cash Provided by Financing Activities			380,139				123,860
Effect of Exchange Rate Changes on Cash and Cash Equivalents			4,894				(20,128	)
Net Decrease in Cash and Cash Equivalents			(166,455	)			(45,420	)
Cash and Cash Equivalents at Beginning of Period			415,772				252,519
Cash and Cash Equivalents at End of Period		$	249,317			$	207,099
Supplemental Cash Flow Information:
Interest Paid		$	175,925			$	139,597
Income Taxes Paid, Net of Refunds			65,532				90,735

The accompanying notes are an integral part of these condensed consolidated financial statements.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands)

		Three Months
		Ended March 31,
		2011				2010
Net Income (Loss)		$	61,539			$	(64,322	)
Other Comprehensive Income:
Curtailment and Remeasurement of Supplemental Executive Retirement Plan			—				45,237
Amortization of Pension Components			989				1,513
Foreign Currency Translation Adjustment			177,371				(67,387	)
Other			160				155
Comprehensive Income (Loss)			240,059				(84,804	)
Comprehensive Income Attributable to Noncontrolling Interests			(2,338	)			(4,035	)
Comprehensive Income (Loss) Attributable to Weatherford		$	237,721			$	(88,839	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. General

     The accompanying unaudited condensed consolidated financial statements of Weatherford International Ltd. and all majority-owned subsidiaries (the “Company”) are prepared in accordance with U.S. generally accepted accounting principles and include all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly our Condensed Consolidated Balance Sheet at March 31, 2011, Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010. Although we believe the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to U.S. Securities and Exchange Commission (“SEC”) rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2010 and the related notes included in our Annual Report on Form 10-K, as amended. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results expected for the full year.

     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 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 post retirement 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 that are not readily apparent from other sources. Actual results could differ from those estimates.

     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. 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.

2. 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 Condensed Consolidated Statements of Income from the date of acquisition. The balances included in the Condensed 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.

     During the three months ended March 31, 2011, we paid cash consideration of $16 million for acquisitions.

     Our results for the three months ended March 31, 2010 include a loss of $11 million related to the revaluation of contingent consideration issued in connection with the acquisition of the Oilfield Services Division of TNK-BP. This loss was recorded in the Selling, General and Administrative Attributable to Segments line in the Condensed Consolidated Statements of Income.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

3. Inventories

     The components of inventory were as follows:

		March 31,				December 31,
		2011				2010
		(In thousands)
Raw materials, components and supplies		$	410,810			$	383,639
Work in process			141,828				114,266
Finished goods			2,206,931				2,092,103
		$	2,759,569			$	2,590,008

     Work in process and finished goods inventories include the cost of materials, labor and manufacturing overhead.

4. Goodwill

     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. 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.

     The changes in the carrying amount of goodwill for the three months ended March 31, 2011, were as follows:

						Middle East/ North				Europe/				Latin
		North America				Africa/ Asia				West Africa/ FSU				America				Total
										(In thousands)
As of December 31, 2010		$	2,133,020			$	731,828			$	1,007,605			$	313,024			$	4,185,477
Acquisitions			—				—				1,363				5,442				6,805
Disposals			—				—				—				—				—
Purchase price and other adjustments			(740	)			(4,697	)			30				(375	)			(5,782	)
Foreign currency translation			24,536				1,992				46,701				296				73,525
As of March 31, 2011		$	2,156,816			$	729,123			$	1,055,699			$	318,387			$	4,260,025

5. Short-term Borrowings and Current Portion of Long-term Debt

The components of short-term borrowings were as follows:

		March 31,				December 31,
		2011				2010
		(In thousands)
Revolving credit facilities		$	—			$	—
Commercial paper			385,321				—
Other short-term bank loans			17,421				18,001
Total short-term borrowings			402,742				18,001
Current portion of long-term debt			216,748				217,391
Short-term borrowings and current portion of long-term debt		$	619,490			$	235,392

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

     We maintain a $1.75 billion unsecured, revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. 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. The Credit Agreement requires us to maintain a debt-to-capitalization ratio of less than 60%. We are in compliance with these covenants at March 31, 2011. There were $48 million in outstanding letters of credit under this facility at March 31, 2011.

     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. The weighted average interest rate related to outstanding commercial paper issuances at March 31, 2011 was 1% per annum.

     We have short-term borrowings with various domestic and international institutions pursuant to uncommitted facilities. At March 31, 2011, we had $17 million in short-term borrowings under these arrangements with a weighted average interest rate of 9% per annum. In addition, we had $384 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 March 31, 2011.

6. Financial Instruments

     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. Other than disclosed below under derivative instruments, we had no assets or liabilities measured and recognized at fair value on a recurring basis at March 31, 2011 and December 31, 2010.

     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, short-term borrowings 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 company’s 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.

     The fair value and carrying value of our long-term debt and current portion of long-term debt is as follows:

		March 31, 2011				December 31, 2010
		(In thousands)
Fair value		$	7,317,780			$	7,329,299
Carrying value			6,743,212				6,747,389

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

7. 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 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 March 31, 2011, we had net unamortized gains of $53 million 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 March 31, 2011, we had net unamortized losses of $13 million associated with our cash flow hedge terminations.

     Other Derivative Instruments

     As of March 31, 2011, we had foreign currency forward contracts with notional amounts aggregating to $837 million, which were entered into to hedge exposure to currency fluctuations in various foreign currencies. The total estimated fair value of these contracts at March 31, 2011, resulted in a net liability of approximately $9 million. 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 Condensed 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 March 31, 2011, we had notional amounts outstanding of $215 million. The total estimated fair value of these contracts at March 31, 2011, resulted in a liability of $42 million. 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 Condensed Consolidated Statements of Income.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

     The fair values of outstanding derivative instruments are summarized as follows:

		March 31, 2011				December 31, 2010				Classifications
		(In thousands)
Derivative assets not designated as hedges:
Foreign exchange contracts		$	953			$	8,155			Other Current Assets
Derivative liabilities not designated as hedges:
Foreign exchange contracts			9,742				21,664			Other Current Liabilities
Cross-currency swap contracts			41,566				34,783			Other Liabilities

     During the three months ended March 31, 2011 and 2010, we recognized foreign currency losses of $17 million and $7 million, respectively.

8. Income Taxes

     For the three months ended March 31, 2011, we had a tax provision of $19 million on income before taxes of $81 million. Our tax provision for the three months ended March 31, 2011 includes tax benefits of $8 million related to certain prior period expenses for which a benefit could not be recorded in the prior periods as well as other discrete items in the period primarily related to the settlement of uncertain tax positions which lowered our provision by an additional $6 million. For the three months ended March 31, 2010, we had a tax provision of $3 million on a pretax loss of $61 million that includes curtailment expense for our SERP for which no related tax benefit was recorded. Our tax provision for the three months ended March 31, 2010 includes minimum tax in Mexico, and the tax impact of changes in our geographic earnings mix, both of which are partially offset by a tax benefit related to the devaluation of the Venezuelan bolivar.

9. Shareholders’ Equity

     The following summarizes our shareholders’ equity activity for the three months ended March 31, 2011 and 2010:

										Noncontrolling
						Company				Interests in
		Total Shareholders’				Shareholders’				Consolidated
		Equity				Equity				Subsidiaries
						(In thousands)
Balance at December 31, 2010		$	9,464,847			$	9,400,931			$	63,916
Comprehensive Income:
Net Income			61,539				59,201				2,338
Amortization of Pension Components			989				989				—
Foreign Currency Translation Adjustments			177,371				177,371				—
Other			160				160				—
Comprehensive Income			240,059				237,721				2,338
Transactions with Shareholders			12,332				12,332				—
Dividends Paid to Noncontrolling Interests			(5,495	)			—				(5,495	)
Other			640				—				640
Balance at March 31, 2011		$	9,712,383			$	9,650,984			$	61,399

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

										Noncontrolling
						Company				Interests in
		Total Shareholders’				Shareholders’				Consolidated
		Equity				Equity				Subsidiaries
						(In thousands)
Balance at December 31, 2009		$	9,438,373			$	9,359,341			$	79,032
Comprehensive Income:
Net Income (Loss)			(64,322	)			(68,357	)			4,035
Curtailment of Executive Supplemental Executive Retirement Plan			45,237				45,237				—
Amortization of Pension Components			1,513				1,513				—
Foreign Currency Translation Adjustments			(67,387	)			(67,387	)			—
Other			155				155				—
Comprehensive Income (Loss)			(84,804	)			(88,839	)			4,035
Transactions with Shareholders			39,980				39,980				—
Dividends Paid to Noncontrolling Interests			(6,442	)			—				(6,442	)
Other			338				—				338
Balance at March 31, 2010		$	9,387,445			$	9,310,482			$	76,963

     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. On March 4, 2011, 4.3 million of these warrants were exercised through net share settlement and the issuance of 1.7 million shares of our stock. At March 31, 2011, 8.6 million of our warrants remain outstanding and are exercisable until February 28, 2012. These warrants are subject to adjustment for changes in our capital structure or the issuance of dividends. Future settlements may occur through physical delivery, net share settlement, net cash settlement or a combination of those methods. The net cash settlement option is available at our sole discretion.

10. 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. Our diluted earnings per share calculation excludes one million potential shares for the three months ended March 31, 2011 and three million potential shares for the three months ended March 31, 2010, due to their anti-dilutive effect. Our diluted earnings per share calculation for the three months ended March 31, 2010 also excludes ten million potential shares that would have been included if we had net income for that period, but are excluded as we had a net loss and their inclusion would have been anti-dilutive.

     The following reconciles basic and diluted weighted average of shares outstanding:

		Three Months
		Ended March 31,
		2011				2010
		(In thousands)
Basic weighted average shares outstanding			747,468				737,865
Dilutive effect of:
Warrants			3,934				—
Stock options and restricted shares			6,215				—
Diluted weighted average shares outstanding			757,617				737,865

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

11. Share-Based Compensation

     We recognized the following employee share-based compensation expense during the three months ended March 31, 2011 and 2010:

		Three Months
		Ended March 31,
		2011				2010
		(In thousands)
Share-based compensation		$	22,456			$	22,974
Related tax benefit			7,860				8,041

     During the three months ended March 31, 2011, we issued approximately one million performance units, which will vest assuming continued employment and assuming the Company meets certain market-based performance goals. The performance units have a weighted-average grant date fair value of $30.49 per share based on the Monte Carlo simulation method. As of March 31, 2011, there was $25 million of unrecognized compensation related to our performance units. This cost is expected to be recognized over a weighted average period of two years.

     During the three months ended March 31, 2011, we also granted three million restricted share awards at a weighted average grant date fair value of $24.24 per share. As of March 31, 2011, there was $177 million of unrecognized compensation cost related to all of our unvested restricted share grants. This cost is expected to be recognized over a weighted average period of two years.

12. Retirement and Employee Benefit Plans

     We have defined benefit pension and other postretirement benefit plans covering certain employees. The components of net periodic benefit cost for the three months ended March 31, 2011 and 2010 were as follows:

		Three Months Ended March 31,
		2011								2010
		United States				International				United States				International
						(In thousands)
Service cost		$	8			$	1,652			$	951			$	1,528
Interest cost			755				2,096				1,937				1,830
Expected return on plan assets			(147	)			(1,244	)			(149	)			(1,201	)
Amortization of prior service cost (credit)			22				(15	)			1,512				(13	)
Amortization of loss			184				228				772				42
Curtailment/settlement loss			—				—				34,958				—
Net periodic benefit cost		$	822			$	2,717			$	39,981			$	2,186

     Our Supplemental Executive Retirement Plan (“SERP”) was amended effective March 31, 2010 to freeze the benefits under the plan. This resulted in the net curtailment loss shown above.

     We previously disclosed in our financial statements for the year ended December 31, 2010, that we expected to contribute less than $1 million in the U.S. and approximately $8 million internationally to our pension and other postretirement benefit plans during 2011. As of March 31, 2011, we have contributed approximately $2 million to these plans and currently anticipate total annual contributions to approximate $10 million.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

13. Segment Information

     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.

		Three Months Ended March 31, 2011
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
						(In thousands)
North America		$	1,360,472			$	283,697			$	87,793
Middle East/North Africa/Asia			575,526				10,804				81,380
Europe/West Africa/FSU			510,423				37,504				56,594
Latin America (a)			409,765				21,091				46,388
			2,856,186				353,096				272,155
Corporate and Research and Development			—				(120,376	)			4,900
Other (b)			—				(20,832	)			—
Total		$	2,856,186			$	211,888			$	277,055

		Three Months Ended March 31, 2010
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
						(In thousands)
North America		$	888,579			$	108,432			$	80,660
Middle East/North Africa/Asia			562,056				75,714				72,290
Europe/West Africa/FSU			453,759				46,298				49,271
Latin America			426,673				26,074				42,479
			2,331,067				256,518				244,700
Corporate and Research and Development			—				(93,915	)			5,005
Revaluation of Contingent Consideration			—				(11,010	)			—
Other (c)			—				(44,032	)			—
Total		$	2,331,067			$	107,561			$	249,705

     In early 2011, our operations in Tunisia, Egypt, and Libya were disrupted by political revolutions and uprisings in these countries. Political disturbances in Libya and elsewhere in the Middle East and North Africa,

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

including to a lesser extent Yemen and Bahrain, are ongoing, and our operations in Libya have not resumed. At March 31, 2011, we had in Libya inventory, property, plant and equipment (net) with a carrying value of approximately $144 million, as well as cash, accounts receivable, prepaid expenses and other assets totaling approximately $83 million, including approximately $52 million of accounts receivable that currently are subject to sanctions recently imposed by western governments. 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. Based on information available to us and our current assessment of the situation in Libya, we believe that we will recover our assets there, and we have not impaired these assets.

14. 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 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, the 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

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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.

     Through March 31, 2011, we have incurred $49 million for costs in connection with our exit from sanctioned countries and incurred $114 million for legal and professional fees in connection with complying with and conducting these on-going investigations.

     In addition, the SEC is investigating the circumstances surrounding the material weakness in the Company’s internal controls over financial reporting for income taxes that was disclosed on Forms 12b-25 and 8-K on March 1, 2011 and the related restatement of historical financial statements. We are cooperating with the investigation.

     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.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

     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 Weatherford’s 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 indemnity provisions are unenforceable, Weatherford might be held liable in one or more of the civil actions brought as a result of the aforementioned deaths, personal injuries, property and/or environmental damage. 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 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 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, however given the complexity of the litigation surrounding these matters, it is possible that Weatherford could be adjudged to be liable in an amount in excess of its policy 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 Weatherford’s 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. Separately, shareholders have also filed suit relating to the material weakness in the Company’s internal controls over financial reporting for income taxes that was disclosed on Forms 12b-25 and 8-K on March 1, 2011 and the related restatement of historical financial statements. These suits name the Company as well as current and former members of management as well as our directors. 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

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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 Executive’s 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 Executive’s 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.

15. New Accounting Pronouncements

     On January 1, 2011, we adopted an update to existing guidance on revenue recognition for arrangements with multiple deliverables. This update allows companies to allocate consideration 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. It also requires additional disclosures on 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. The adoption of this update did not have a material impact on our condensed consolidated financial statements or existing revenue recognition policies.

16. Condensed Consolidating Financial Statements

     A Swiss corporation named Weatherford International Ltd. is 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 at March 31, 2011 and December 31, 2010: (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 March 31, 2011 and 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 the 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.

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Condensed Consolidating Balance Sheet
March 31, 2011
(unaudited)
(In thousands)

														Other
		Parent				Bermuda				Delaware				Subsidiaries				Eliminations				Consolidation
ASSETS
Current Assets:
Cash and Cash Equivalents		$	419			$	112			$	4,636			$	244,150			$	—			$	249,317
Other Current Assets			931				1,854				72,628				6,571,137				—				6,646,550
Total Current Assets			1,350				1,966				77,264				6,815,287				—				6,895,867
Equity Investments in Affiliates			9,224,138				15,515,349				7,600,723				11,308,885				(43,649,095	)			—
Shares Held in Parent			—				—				92,492				468,800				(561,292	)			—
Intercompany Receivables, Net			—				2,492,223				457,873				—				(2,950,096	)			—
Other Assets			23,648				38,547				309,699				12,554,160				—				12,926,054
Total Assets		$	9,249,136			$	18,048,085			$	8,538,051			$	31,147,132			$	(47,160,483	)		$	19,821,921
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term Borrowings and Current Portion of Long-term Debt		$	—			$	393,311			$	201,640			$	24,539			$	—			$	619,490
Accounts Payable and Other Current Liabilities			24,796				41,416				128,670				2,177,937				—				2,372,819
Total Current Liabilities			24,796				434,727				330,310				2,202,476				—				2,992,309
Long-term Debt			—				5,168,584				1,320,206				37,674				—				6,526,464
Intercompany Payables, Net			235,833				—				—				2,714,263				(2,950,096	)			—
Other Long-term Liabilities			2,355				78,683				2,066				507,661				—				590,765
Total Liabilities			262,984				5,681,994				1,652,582				5,462,074				(2,950,096	)			10,109,538
Weatherford Shareholders’ Equity			8,986,152				12,366,091				6,885,469				25,623,659				(44,210,387	)			9,650,984
Noncontrolling Interests			—				—				—				61,399				—				61,399
Total Liabilities and Shareholders’ Equity		$	9,249,136			$	18,048,085			$	8,538,051			$	31,147,132			$	(47,160,483	)		$	19,821,921

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Condensed Consolidating Statements of Income
Three Months Ended March 31, 2011
(unaudited)
(In thousands)

														Other
		Parent				Bermuda				Delaware				Subsidiaries				Eliminations				Consolidation
Revenues		$	—			$	—			$	—			$	2,856,186			$	—			$	2,856,186
Costs and Expenses			(21,068	)			(738	)			(928	)			(2,621,564	)			—				(2,644,298	)
Operating Income (Loss)			(21,068	)			(738	)			(928	)			234,622				—				211,888
Other Income (Expense):
Interest Income (Expense), Net			—				(86,660	)			(23,688	)			(2,158	)			—				(112,506	)
Intercompany Charges, Net			—				(388	)			33,153				(32,765	)			—				—
Equity in Subsidiary Income (Loss)			80,515				211,344				199,160				—				(491,019	)			—
Other, Net			13				(49,436	)			(79	)			30,936				—				(18,566	)
Income (Loss) Before Income Taxes			59,460				74,122				207,618				230,635				(491,019	)			80,816
Provision for Income Taxes			(259	)			—				2,909				(21,927	)			—				(19,277	)
Net Income (Loss)			59,201				74,122				210,527				208,708				(491,019	)			61,539
Noncontrolling Interests			—				—				—				(2,338	)			—				(2,338	)
Net Income (Loss) Attributable to Weatherford		$	59,201			$	74,122			$	210,527			$	206,370			$	(491,019	)		$	59,201

Condensed Consolidating Statements of Income
Three Months Ended March 31, 2010
(unaudited)
(In thousands)

														Other
		Parent				Bermuda				Delaware				Subsidiaries				Eliminations				Consolidation
Revenues		$	—			$	—			$	—			$	2,331,067			$	—			$	2,331,067
Costs and Expenses			(15,249	)			(39,358	)			(607	)			(2,168,292	)			—				(2,223,506	)
Operating Income (Loss)			(15,249	)			(39,358	)			(607	)			162,775				—				107,561
Other Income (Expense):
Interest Income (Expense), Net			(947	)			(64,200	)			(28,848	)			(1,344	)			—				(95,339	)
Devaluation of Venezuelan Bolivar			—				—				—				(63,859	)			—				(63,859	)
Intercompany Charges, Net			(300	)			717				(43,553	)			43,136				—				—
Equity in Subsidiary Income (Loss)			(51,818	)			(10,391	)			133,258				—				(71,049	)			—
Other, Net			(43	)			61,412				(191	)			(70,396	)			—				(9,218	)
Income (Loss) from Before Income Taxes			(68,357	)			(51,820	)			60,059				70,312				(71,049	)			(60,855	)
Provision for Income Taxes			—				—				25,147				(28,614	)			—				(3,467	)
Net Income (Loss)			(68,357	)			(51,820	)			85,206				41,698				(71,049	)			(64,322	)
Noncontrolling Interests			—				—				—				(4,035	)			—				(4,035	)
Net Income Attributable to Weatherford		$	(68,357	)		$	(51,820	)		$	85,206			$	37,663			$	(71,049	)		$	(68,357	)

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2011
(unaudited)
(In thousands)

														Other
		Parent				Bermuda				Delaware				Subsidiaries				Eliminations				Consolidation
Cash Flows from Operating Activities:
Net Income (Loss)		$	59,201			$	74,122			$	210,527			$	208,708			$	(491,019	)		$	61,539
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities:
Charges from Parent or Subsidiary			—				388				(33,153	)			32,765				—				—
Equity in (Earnings) Loss of Affiliates			(80,515	)			(211,344	)			(199,160	)			—				491,019				—
Deferred Income Tax Benefit			—				—				(2,929	)			(1,032	)			—				(3,961	)
Other Adjustments			8,271				(99,424	)			26,062				(165,474	)			—				(230,565	)
Net Cash Provided (Used) by Operating Activities			(13,043	)			(236,258	)			1,347				74,967				—				(172,987	)
Cash Flows from Investing Activities:
Capital Expenditures for Property, Plant and Equipment			—				—				—				(355,650	)			—				(355,650	)
Acquisitions of Businesses, Net of Cash Acquired			—				—				—				(15,143	)			—				(15,143	)
Acquisition of Intellectual Property			—				—				—				(3,462	)			—				(3,462	)
Acquisition of Equity Investments in Unconsolidated Affiliates			—				—				—				(6,752	)			—				(6,752	)
Proceeds from Sale of Assets and Businesses, Net			—				—				—				2,506				—				2,506
Capital Contribution to Subsidiary			—				—				—				—				—				—
Other Investing Activities			—				—				—				—				—				—
Net Cash Provided (Used) by Investing Activities			—				—				—				(378,501	)			—				(378,501	)
Cash Flows from Financing Activities:
Borrowings (Repayments) Short-term Debt, Net			—				385,320				(204	)			(584	)			—				384,532
Borrowings (Repayments) Long-term Debt, Net			—				—				(4,445	)			(291	)			—				(4,736	)
Borrowings (Repayments) Between Subsidiaries, Net			13,338				(262,393	)			(3,838	)			252,893				—				—
Proceeds from Capital Contribution			—				—				—				—				—				—
Other, Net			—				—				343				—				—				343
Net Cash Provided (Used) by Financing Activities			13,338				122,927				(8,144	)			252,018				—				380,139
Effect of Exchange Rate Changes on Cash and Cash Equivalents			—				—				—				4,894				—				4,894
Net Increase (Decrease) in Cash and Cash Equivalents			295				(113,331	)			(6,797	)			(46,622	)			—				(166,455	)
Cash and Cash Equivalents at Beginning of Year			124				113,443				11,433				290,772				—				415,772
Cash and Cash Equivalents at End of Year		$	419			$	112			$	4,636			$	244,150			$	—			$	249,317