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

001-34258
(Commission file number)

WEATHERFORD INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)

Switzerland		98-0606750
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
4-6 Rue Jean-Francois Bartholoni, 1204 Geneva, Switzerland		Not Applicable
(Address of principal executive offices)		(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		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 October 21, 2011 there were 754,068,167 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)

		September 30,				December 31,
		2011				2010
		(unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents		$	273,562			$	415,772
Accounts Receivable, Net of Allowance for Uncollectible Accounts of $56,557 and $58,756, Respectively			3,180,861				2,629,403
Inventories			3,071,830				2,590,008
Current Deferred Tax Assets			261,500				255,476
Other Current Assets			806,795				601,408
Total Current Assets			7,594,548				6,492,067
Property, Plant and Equipment, Net of Accumulated Depreciation of $4,800,326 and $4,221,880, Respectively			7,140,692				6,939,754
Goodwill			4,351,160				4,185,477
Other Intangible Assets, Net of Accumulated Amortization of $519,278 and $452,923, Respectively			722,315				730,429
Equity Investments			599,730				539,580
Other Assets			258,831				244,347
Total Assets		$	20,667,276			$	19,131,654
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term Borrowings and Current Portion of Long-term Debt		$	1,349,624			$	235,392
Accounts Payable			1,565,728				1,335,020
Other Current Liabilities			1,122,803				1,012,567
Total Current Liabilities			4,038,155				2,582,979
Long-term Debt			6,266,190				6,529,998
Other Liabilities			466,358				553,830
Total Liabilities			10,770,703				9,666,807
Shareholders’ Equity:
Shares, CHF 1.16 Par Value: Authorized 1,137,670 Shares, Conditionally Authorized 379,223 Shares, Issued 764,774 Shares at September 30, 2011; Authorized 1,137,670 Shares, Conditionally Authorized 379,223 Shares, Issued 758,447 Shares at December 31, 2010			769,254				761,077
Capital in Excess of Par Value			4,807,181				4,701,797
Treasury Shares, Net			(485,246	)			(562,906	)
Retained Earnings			4,700,272				4,348,845
Accumulated Other Comprehensive Income			80,860				152,118
Weatherford Shareholders’ Equity			9,872,321				9,400,931
Noncontrolling Interests			24,252				63,916
Total Shareholders’ Equity			9,896,573				9,464,847
Total Liabilities and Shareholders’ Equity		$	20,667,276			$	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								Nine Months
		Ended September 30,								Ended September 30,
		2011				2010				2011				2010
Revenues:
Products		$	1,254,809			$	910,653			$	3,470,878			$	2,522,867
Services			2,117,841				1,619,099				5,809,772				4,775,115
			3,372,650				2,529,752				9,280,650				7,297,982
Costs and Expenses:
Cost of Products			949,509				640,752				2,607,630				1,817,693
Cost of Services			1,527,586				1,255,104				4,260,347				3,637,374
Research and Development			58,888				54,457				185,666				156,844
Selling, General and Administrative Attributable to Segments			377,654				257,063				1,145,725				1,012,853
Corporate, General and Administrative			43,307				46,952				156,473				185,144
			2,956,944				2,254,328				8,355,841				6,809,908
Operating Income			415,706				275,424				924,809				488,074
Other Expense:
Interest Expense, Net			(114,448	)			(99,318	)			(340,638	)			(290,376	)
Bond Tender Premium			—				(10,731	)			—				(10,731	)
Devaluation of Venezuelan Bolivar			—				—				—				(63,859	)
Other, Net			(26,261	)			(12,277	)			(67,194	)			(35,681	)
Income Before Income Taxes			274,997				153,098				516,977				87,427
Provision for Income Taxes			(81,856	)			(54,159	)			(147,261	)			(97,384	)
Net Income (Loss)			193,141				98,939				369,716				(9,957	)
Net Income Attributable to Noncontrolling Interests			(2,781	)			(4,286	)			(10,057	)			(11,637	)
Net Income (Loss) Attributable to Weatherford		$	190,360			$	94,653			$	359,659			$	(21,594	)
Earnings (Loss) Per Share Attributable to Weatherford:
Basic		$	0.25			$	0.13			$	0.48			$	(0.03	)
Diluted		$	0.25			$	0.13			$	0.47			$	(0.03	)
Weighted Average Shares Outstanding:
Basic			753,896				745,502				750,634				742,192
Diluted			759,946				751,394				758,491				742,192

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)

		Nine Months
		Ended September 30,
		2011				2010
Cash Flows from Operating Activities:
Net Income (Loss)		$	369,716			$	(9,957	)
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization			847,673				775,484
Employee Share-Based Compensation Expense			65,848				75,167
Loss on Sales of Assets and Businesses, Net			16,418				20,843
Deferred Income Tax Benefit			(79,346	)			(102,102	)
Devaluation of Venezuelan Bolivar			—				63,859
Supplemental Executive Retirement Plan			—				38,021
Revaluation of Contingent Consideration			—				2,752
Other, Net			18,756				11,930
Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired:
Accounts Receivable			(541,822	)			(59,226	)
Inventories			(515,831	)			(273,887	)
Other Current Assets			(192,551	)			317,023
Accounts Payable			236,291				176,284
Other Current Liabilities			83,820				(262,650	)
Other			(70,733	)			(37,690	)
Net Cash Provided by Operating Activities			238,239				735,851
Cash Flows from Investing Activities:
Capital Expenditures for Property, Plant and Equipment			(1,120,325	)			(717,556	)
Acquisitions of Businesses, Net of Cash Acquired			(83,270	)			(58,417	)
Acquisition of Intellectual Property			(7,605	)			(20,784	)
Acquisition of Equity Investments in Unconsolidated Affiliates			(7,273	)			(1,750	)
Proceeds from Sale of Assets and Businesses, Net			24,659				191,115
Other Investing Activities			(15,242	)			41,840
Net Cash Used by Investing Activities			(1,209,056	)			(565,552	)
Cash Flows from Financing Activities:
Borrowings (Repayments) of Short-term Debt, Net			836,217				(841,058	)
Borrowings (Repayments) of Long-term Debt, Net			(4,898	)			1,396,553
Other Financing Activities, Net			(2,429	)			(7,403	)
Net Cash Provided by Financing Activities			828,890				548,092
Effect of Exchange Rate Changes on Cash and Cash Equivalents			(283	)			(19,528	)
Net Increase (Decrease) in Cash and Cash Equivalents			(142,210	)			698,863
Cash and Cash Equivalents at Beginning of Period			415,772				252,519
Cash and Cash Equivalents at End of Period		$	273,562			$	951,382
Supplemental Cash Flow Information:
Interest Paid		$	413,677			$	354,677
Income Taxes Paid, Net of Refunds			194,730				257,605

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								Nine Months
		Ended September 30,								Ended September 30,
		2011				2010				2011				2010
Net Income (Loss)		$	193,141			$	98,939			$	369,716			$	(9,957	)
Other Comprehensive Income:
Curtailment and Remeasurement of Supplemental Executive Retirement Plan			—				—				—				35,111
Amortization of Pension Components			292				173				1,515				1,819
Foreign Currency Translation Adjustment			(255,300	)			143,587				(59,619	)			(9,017	)
Other			(13,475	)			157				(13,154	)			468
Comprehensive Income (Loss)			(75,342	)			242,856				298,458				18,424
Comprehensive Income Attributable to Noncontrolling Interests			(2,781	)			(4,286	)			(10,057	)			(11,637	)
Comprehensive Income (Loss) Attributable to Weatherford		$	(78,123	)		$	238,570			$	288,401			$	6,787

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. (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 September 30, 2011, Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2011 and 2010 and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010. When referring to the Company 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. Although we believe the disclosures in these financial statements are adequate to make the interim financial 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 and notes thereto as of December 31, 2010 and 2009 and for each of the three years in the period ended December 31, 2010 included in our Annual Report on Form 10-K, as amended. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the results expected for the year ending December 31, 2011.

     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 disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, 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, contingencies and share-based compensation. 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

     We consolidate wholly-owned subsidiaries, controlled joint ventures and variable interest entities where the Company has determined it is the primary beneficiary for accounting purposes.

     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 nine months ended September 30, 2011, we paid cash consideration of $83 million, net of cash acquired, and issued total share consideration of approximately 7.7 million shares valued at $134 million for acquisitions.

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

     Our results for the nine months ended September 30, 2010 include a loss of $3 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. The contingent consideration arrangement was settled in the fourth quarter of 2010.

3. Inventories

     The components of inventory were as follows:

		September 30,				December 31,
		2011				2010
		(In thousands)
Raw materials, components and supplies		$	428,874			$	383,639
Work in process			159,318				114,266
Finished goods			2,483,638				2,092,103
		$	3,071,830			$	2,590,008

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

4. Goodwill

     We perform an impairment test for goodwill and indefinite-lived intangible assets annually as of October 1, or more frequently if indicators of potential impairment exist. During September 2011, the market price of our common stock declined significantly. As a result, we considered whether it was more likely than not that an impairment of our goodwill had occurred. We concluded that this decline did not constitute an indicator of potential impairment. In reaching this conclusion, we considered that there has not been a significant change in the estimated future cash flows of our reporting units and that, by mid-October 2011, the market price of our common stock had recovered to prices reflective of the market in early September 2011. Our annual impairment test for goodwill is underway and will be completed in the fourth quarter of 2011. At this time, no impairment has been identified. However, the decline in our market capitalization does suggest that the margin by which the fair value of our Middle East/North Africa, FSU and West Africa reporting units executed their book value may have decreased since our last annual test and may be at risk of impairment. As of September 30, 2011, goodwill attributable to our Middle East/North Africa, FSU and West Africa reporting units totaled $501 million, $273 million and $74 million, respectively.

     The changes in the carrying amount of goodwill for the nine months ended September 30, 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			63,609				—				5,964				65,482				135,055
Purchase price and other adjustments			723				(4,195	)			1,687				(375	)			(2,160	)
Foreign currency translation			48,400				(1,770	)			(8,412	)			(5,430	)			32,788
As of September 30, 2011		$	2,245,752			$	725,863			$	1,006,844			$	372,701			$	4,351,160

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

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

     The components of short-term borrowings were as follows:

		September 30,				December 31,
		2011				2010
		(In thousands)
Revolving credit facilities		$	210,000			$	—
Commercial paper			632,919				—
Other short-term bank loans			12,188				18,001
Total short-term borrowings			855,107				18,001
Current portion of long-term debt			494,517				217,391
Short-term borrowings and current portion of long-term debt		$	1,349,624			$	235,392

     Prior to July 2011, we maintained a $1.75 billion unsecured, revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement had a scheduled maturity date of October 15, 2013, and could be used for a combination of borrowings, support for our commercial paper program and issuances of letters of credit. The Credit Agreement required that we maintain a debt-to-capitalization ratio of less than 60%.

     On July 13, 2011, we amended the Credit Agreement to increase the facility size from $1.75 billion to $2.25 billion and extend the scheduled maturity date to July 13, 2016. The amendment also decreased interest rate margins under the facility. The Credit Agreement, as amended, remains available to support our commercial paper program and issuances of letters of credit. At September 30, 2011, we had $210 million in revolver borrowings outstanding with a weighted average interest rate of 1% per annum. The amended Credit Agreement did not change the required debt-to-capitalization ratio. We were in compliance with these covenants at September 30, 2011. There were $63 million in outstanding letters of credit under this facility at September 30, 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 facility. The weighted average interest rate related to outstanding commercial paper issuances at September 30, 2011 was 1% per annum.

     We have short-term borrowings with various domestic and international institutions pursuant to uncommitted facilities. At September 30, 2011, we had $12 million in short-term borrowings under these arrangements with a weighted average interest rate of 5% per annum.

     The current portion of long-term debt at September 30, 2011 includes $183 million for our senior notes due November 2011, $273 million for our senior notes due June 2012 and other long-term debt totaling $39 million.

6. Financial Instruments

     Financial Instruments Measured and Recognized at Fair Value

     We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three level hierarchy, from highest to lowest level of observable inputs. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data 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 judgment and assumptions used to measure assets and liabilities at fair value. Classification of a financial asset or liability within the hierarchy is

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

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 September 30, 2011 and December 31, 2010.

     Fair Value of Other Financial Instruments

     Our other financial instruments include cash and cash equivalents, 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 due primarily to their short-term nature.

     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 were as follows:

		September 30,				December 31,
		2011				2010
		(In thousands)
Fair value		$	7,392,647			$	7,329,299
Carrying value			6,760,708				6,747,389

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 in active markets for contracts with similar terms and maturity dates.

     Fair Value Hedges

     We may use interest rate swaps to help mitigate exposures related to changes in the fair values of the hedged debt. 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, of interest expense over the remaining term of the debt. As of September 30, 2011, we had net unamortized gains of $48 million associated with interest rate swap terminations.

     In July 2011, 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 $300 million. These swaps were designated as fair value hedges of our 6.35% Senior Notes. These agreements are determined to be highly effective and the effects of any ineffectiveness were not material to the Condensed Consolidated Statements of Income as the changes in the fair values of the interest rate swaps offset changes in the fair value of the underlying debt. The aggregate fair value of the interest rate swaps at

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

September 30, 2011 resulted in an asset of $13 million with a corresponding increase to Long-term Debt on the accompanying Condensed Consolidated Balance Sheets.

     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 amortized from Accumulated Other Comprehensive Income to interest expense over the remaining term of the debt. As of September 30, 2011, we had net unamortized losses of $12 million associated with our cash flow hedge terminations.

     In August 2011, we entered into interest rate derivative instruments for a notional amount of $294 million to hedge projected exposures to interest rates in anticipation of a refinancing transaction. The aggregate fair value of these interest rate derivatives at September 30, 2011 resulted in the recognition of a current liability of $14 million, with a corresponding unrealized loss recognized in Accumulated Other Comprehensive Income. Ineffectiveness related to these cash flow hedges during the three month period ended September 30, 2011 was not material.

     Other Derivative Instruments

     As of September 30, 2011, we had foreign currency forward contracts with notional amounts aggregating to $551 million, which were entered into to hedge exposure to currency fluctuations in various foreign currencies. The total estimated fair value of these contracts at September 30, 2011, resulted in a net asset of approximately $58 million. These derivative instruments were not designated as hedges and the changes in fair value of the contracts are recorded 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 September 30, 2011, we had notional amounts outstanding of $168 million. The total estimated fair value of these contracts at September 30, 2011, resulted in a liability of $30 million. These derivative instruments were not designated as hedges and the changes in fair value of the contracts are recorded in Other, Net in the accompanying Condensed Consolidated Statements of Income.

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

		September 30,				December 31,
		2011				2010				Classifications
		(In thousands)
Derivative assets not designated as hedges:
Foreign exchange contracts		$	72,388			$	8,155			Other Current Assets
Derivative liabilities not designated as hedges:
Foreign exchange contracts			14,007				21,664			Other Current Liabilities
Cross-currency swap contracts			29,748				34,783			Other Liabilities
Derivative assets designated as hedges:
Interest rate swaps			12,555				—			Other Assets
Derivative liabilities designated as hedges:
Interest rate locks			13,637				—			Other Current Liabilities

     During the nine months ended September 30, 2011 and 2010, we recognized foreign currency losses of $54 million and $25 million, respectively.

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

8. Income Taxes

     For the three and nine months ended September 30, 2011, we had a tax provision of $82 million and $147 million on income before taxes of $275 million and $517 million, respectively. Our tax provision for the three months ended September 30, 2011 includes discrete tax benefits of $29 million which lowered our effective tax rate for the period to 29.8%. Our tax provision for the nine months ended September 30, 2011 includes discrete tax benefits of $58 million which lowered our year-to-date effective tax rate to 28.5%. Included in the discrete tax benefits for the three and nine-months ended September 30, 2011 are $16 million and $11 million, respectively, of income tax benefits related to prior periods. The impact of these amounts is not material to any individual prior period.

     For the nine months ended September 30, 2011, the balance of unrecognized tax benefits decreased by $6 million and the balance of accrued interest and penalties decreased by $7 million.

     For the three months ended September 30, 2010, we had a tax provision of $54 million on income before taxes of $153 million. Our income before taxes for the three months ended September 30, 2010, includes a $90 million gain on the fair value adjustment to the put option issued in connection with the OFS acquisition for which no tax expense was recorded. For the nine months ended September 30, 2010, we had a provision of $97 million on income before taxes of $87 million that includes curtailment expense on our SERP for which no related tax benefit was recorded. Our tax provision for the nine months ended September 30, 2010, includes minimum tax in Mexico and the tax impact of changes in our geographic earnings mix, both of which were 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 nine months ended September 30, 2011 and 2010:

										Noncontrolling
		Total				Company				Interests in
		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			369,716				359,659				10,057
Amortization of Pension Components			1,515				1,515				—
Foreign Currency Translation Adjustments			(59,619	)			(59,619	)			—
Other			(13,154	)			(13,154	)			—
Comprehensive Income			298,458				288,401				10,057
Transactions with Shareholders			191,221				191,221				—
Dividends Paid to Noncontrolling Interests			(21,631	)			—				(21,631	)
Other			(36,322	)			(8,232	)			(28,090	)
Balance September 30, 2011		$	9,896,573			$	9,872,321			$	24,252

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

										Noncontrolling
		Total				Company				Interests in
		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)			(9,957	)			(21,594	)			11,637
Curtailment of Supplemental Executive Retirement Plan			35,111				35,111				—
Amortization of Pension Components			1,819				1,819				—
Foreign Currency Translation Adjustments			(9,017	)			(9,017	)			—
Other			468				468				—
Comprehensive Income (Loss)			18,424				6,787				11,637
Transactions with Shareholders			90,611				90,611				—
Dividends Paid to Noncontrolling Interests			(21,378	)			—				(21,378	)
Other			297				—				297
Balance at September 30, 2010		$	9,526,327			$	9,456,739			$	69,588

     At December 31, 2010, warrants were outstanding 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 resulting in the issuance of 1.7 million shares. At September 30, 2011, 8.6 million 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.

     During the three month period ended September 30, 2011, we deconsolidated three joint ventures that should have been deconsolidated as of January 1, 2010 in accordance with the variable interest entity accounting guidance that became effective in 2010. We recognized equity investments totaling $43 million and derecognized the associated noncontrolling interests totaling $29 million. The consolidation of these joint ventures in prior periods and deconsolidation in the current period did not have a material impact on our statement of financial position or our results of operations for the current or prior periods.

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 three million and two million potential shares for the three and nine months ended September 30, 2011, respectively, and three million potential shares for the three and nine months ended September 30, 2010, due to their anti-dilutive effect. Our diluted earnings per share calculation for the nine months ended September 30, 2010 also excludes six 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.

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

     The following reconciles basic and diluted weighted average shares outstanding:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2011				2010				2011				2010
						(In thousands)
Basic weighted average shares outstanding			753,896				745,502				750,634				742,192
Dilutive effect of:
Warrants			1,107				553				2,368				—
Stock options and restricted shares			4,943				5,339				5,489				—
Diluted weighted average shares outstanding			759,946				751,394				758,491				742,192

11. Share-Based Compensation

     We recognized the following employee share-based compensation expense during the three and nine months ended September 30, 2011 and 2010:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2011				2010				2011				2010
						(In thousands)
Share-based compensation		$	17,915			$	25,298			$	65,848			$	75,167
Related tax benefit			6,270				8,854				23,047				26,308

     During the nine months ended September 30, 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 $28.75 per share based on the Monte Carlo simulation method. As of September 30, 2011, there was $21 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 nine months ended September 30, 2011, we also granted three million restricted share awards at a weighted average grant date fair value of $23.14 per share. As of September 30, 2011, there was $111 million of unrecognized compensation cost related to our unvested restricted share grants. This cost is expected to be recognized over a weighted average period of less than two years.

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

12. Retirement and Employee Benefit Plans

     We have defined benefit pension and other post retirement benefit plans covering certain employees. The components of net periodic benefit cost for the three and nine months ended September 30, 2011 and 2010 were as follows:

		Three Months Ended September 30,
		2011								2010
		United States				Non-U.S.				United States				Non-U.S.
						(In thousands)
Service cost		$	8			$	1,719			$	—			$	1,450
Interest cost			755				2,155				765				1,797
Expected return on plan assets			(147	)			(1,267	)			(149	)			(1,172	)
Amortization of prior service cost (credit)			22				(15	)			—				(14	)
Amortization of loss			184				234				225				41
Curtailment/settlement loss			—				—				—				—
Net periodic benefit cost		$	822			$	2,826			$	841			$	2,102

		Nine Months Ended September 30,
		2011								2010
		United States				Non-U.S.				United States				Non-U.S.
						(In thousands)
Service cost		$	24			$	5,103			$	978			$	4,415
Interest cost			2,265				6,423				3,921				5,373
Expected return on plan assets			(441	)			(3,792	)			(447	)			(3,514	)
Amortization of prior service cost (credit)			66				(45	)			1,534				(40	)
Amortization of loss			552				698				1,139				122
Curtailment/settlement loss (a)			—				—				35,453				—
Net periodic benefit cost		$	2,466			$	8,387			$	42,578			$	6,356

As of September 30, 2011, we have contributed approximately $8 million to our pension and other post retirement benefit plans and currently anticipate total contributions for 2011 to approximate $11 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 September 30, 2011
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
						(In thousands)
North America		$	1,619,601			$	352,163			$	90,994
Middle East/North Africa/Asia			572,707				15,341				83,441
Europe/West Africa/FSU			588,572				86,595				58,782
Latin America			591,770				70,878				50,577
			3,372,650				524,977				283,794
Corporate and Research and Development			—				(100,869	)			4,656
Other (a)			—				(8,402	)			—
Total		$	3,372,650			$	415,706			$	288,450

		Three Months Ended September 30, 2010
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
						(In thousands)
North America		$	1,096,963			$	199,029			$	81,843
Middle East/North Africa/Asia			601,215				65,718				75,968
Europe/West Africa/FSU			496,113				63,236				56,960
Latin America (b)			335,461				(35,182	)			46,527
			2,529,752				292,801				261,298
Corporate and Research and Development			—				(96,364	)			5,911
Revaluation of Contingent Consideration			—				90,011				—
Other (c)			—				(11,024	)			—
Total		$	2,529,752			$	275,424			$	267,209

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

		Nine Months Ended September 30, 2011
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
						(In thousands)
North America		$	4,324,318			$	879,473			$	266,793
Middle East/North Africa/Asia			1,765,609				60,109				247,369
Europe/West Africa/FSU			1,691,453				216,610				173,072
Latin America (d)			1,499,270				143,050				145,687
			9,280,650				1,299,242				832,921
Corporate and Research and Development			—				(326,506	)			14,752
Other (e)			—				(47,927	)			—
Total		$	9,280,650			$	924,809			$	847,673

		Nine Months Ended September 30, 2010
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
						(In thousands)
North America		$	2,903,238			$	434,462			$	243,543
Middle East/North Africa/Asia			1,765,873				215,425				223,397
Europe/West Africa/FSU			1,456,049				176,900				158,602
Latin America (f)			1,172,822				32,883				133,759
			7,297,982				859,670				759,301
Corporate and Research and Development			—				(286,479	)			16,183
Revaluation of Contingent Consideration			—				(2,752	)			—
Other (g)			—				(82,365	)			—
Total		$	7,297,982			$	488,074			$	775,484

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

     Total assets at September 30, 2011 and December 31, 2010 by reporting segments were as follows:

		September 30,				December 31,
		2011				2010
		(In thousands)
North America		$	7,542,233			$	6,569,694
Middle East/North Africa/Asia			5,131,820				4,921,588
Europe/West Africa/FSU			3,799,154				3,626,904
Latin America			3,370,814				2,728,061
			19,844,021				17,846,247
Corporate			823,255				1,285,407
Total		$	20,667,276			$	19,131,654

     In early 2011, our operations in Tunisia, Egypt, and Libya and to a lesser extent Yemen and Bahrain were disrupted by political revolutions and uprisings in these countries. Civil war in Libya and lesser political disturbances elsewhere in the Middle East and North Africa are ongoing. We do not expect our operations in Libya to resume in 2011. At September 30, 2011, we had in Libya inventory, property, plant and equipment with a carrying value of approximately $134 million, as well as cash, accounts receivable, prepaid expenses and other assets totaling approximately $79 million, including approximately $57 million of accounts receivable that currently are subject to sanctions recently imposed by western governments. In Libya, we determined the safest course of action was to evacuate most of our personnel. In cases where we must evacuate personnel, it may be difficult, if not impossible, for us to safeguard and recover all of 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 $18 million of performance bonds related to contracts in Libya. Our personnel in Libya have been able to verify the existence of our significant tangible assets and as a result we are aware of no material losses. However, subject to security and logistical concerns, we expect to complete a full examination of our Libya assets before the end of 2011.

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 are in 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 directly to our audit committee, to investigate these matters. We are in 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.

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

     In light of these investigations, 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 several jurisdictions. We are in 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 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 and the cost of our investigations have been significant. 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 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, and we currently cannot reasonably estimate the ultimate amount of any penalties we may pay, 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 September 30, 2011, we have incurred $49 million for costs in connection with our exit from sanctioned countries and incurred $118 million for legal, professional and related 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 INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

     We 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, we 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. We currently are 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 us and other defendants. They allege that we 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.

     We were not designated as a “Responsible Party,” as that term is defined by OPA. Therefore, we were not charged with responsibility for cleaning up the oil released from the Macondo well 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 we have not been named a Responsible Party, we have sought to be dismissed from any and all OPA-related claims.

     In June 2011, we reached an agreement with BP wherein BP agreed to indemnify us for the vast majority of our potential exposure related to the Macondo incident, including OPA claims. Pursuant to this agreement, we agreed to pay BP $75 million, an amount covered by our insurance policies.

     We 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. We believe our exposure, to the extent it is not covered by the agreement with BP, is within the limits of our remaining insurance coverage. We have a self-insured retention of $2 million. Above that amount, we have aggregate liability insurance coverage with limits of $303 million for the time period covered by the Macondo incident. With regard to the Macondo incident, $228 million of that coverage remains extant following the agreement with BP. However, given the complexity of the litigation surrounding these matters, it is reasonably possible that we could be adjudged to be liable in an amount in excess of our policy limits.

     The litigation surrounding these matters is complex and likely to continue for some time, and the potential damages claimed are significant. We cannot predict the ultimate outcome of these claims.

     We are cooperating fully with the investigations of the accident initiated by various agencies of the U.S. government and, to the extent requested, have 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.

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

     Other Disputes

     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 or range of 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 $80 million.

15. New Accounting Pronouncements

     In January 2011, we adopted an update to existing guidance on revenue recognition for arrangements with multiple deliverables. This update requires 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.

     In April 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance to achieve common fair value measurement and disclosure requirements between U.S. generally accepted accounting principles and International Financial Reporting Standards. This new guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. We do not believe our adoption of the new guidance will have an impact on our consolidated financial position, results of operations or cash flows.

     In June 2011, the FASB issued new guidance on the presentation of comprehensive income. The new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes of shareholders’ equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011.

     In September 2011, the FASB issued an accounting update that gives companies the option to make a qualitative evaluation about the likelihood of goodwill impairment. Companies will be required to perform the two-step impairment test only if it concludes that the fair value of a reporting unit is more likely than not less than its carrying value. The accounting update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. We do not intend to early adopt this guidance and do not believe our adoption of the new guidance will have a material impact on our consolidated financial position, results of operations or cash flows.

     In September 2011, the FASB issued an accounting update that requires additional qualitative and quantitative disclosures by employers that participate in multi-employer pension plans. The amendments are effective for annual

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

periods for the fiscal years ending after December 15, 2011. We do not believe our adoption of the new guidance will have a material impact on our consolidated financial position, results of operations or cash flows.

16. Condensed Consolidating Financial Statements

     A Swiss corporation named Weatherford International Ltd. (“Weatherford Switzerland”) is the ultimate parent of the Weatherford group. Weatherford Switzerland 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 September 30, 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 September 30, 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 and (xi) the 6.75% Senior Notes.

     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
September 30, 2011
(unaudited)
(In thousands)

		Weatherford				Weatherford				Weatherford				Other
		Switzerland				Bermuda				Delaware				Subsidiaries				Eliminations				Consolidation
ASSETS
Current Assets:
Cash and Cash Equivalents		$	217			$	167			$	139			$	273,039			$	—			$	273,562
Other Current Assets			2,817				73,102				111,322				7,133,745				—				7,320,986
Total Current Assets			3,034				73,269				111,461				7,406,784				—				7,594,548
Equity Investments in Affiliates			9,659,950				16,229,434				6,723,519				10,399,429				(43,012,332	)			—
Shares Held in Weatherford Switzerland			—				—				84,107				401,139				(485,246	)			—
Intercompany Receivables, Net			—				1,396,542				399,026				—				(1,795,568	)			—
Other Assets			21,063				38,055				167,534				12,846,076				—				13,072,728
Total Assets		$	9,684,047			$	17,737,300			$	7,485,647			$	31,053,428			$	(45,293,146	)		$	20,667,276
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term Borrowings and Current Portion of Long-term Debt		$	—			$	851,123			$	476,112			$	22,389			$	—			$	1,349,624
Accounts Payable and Other Current Liabilities			12,602				59,411				128,895				2,487,623				—				2,688,531
Total Current Liabilities			12,602				910,534				605,007				2,510,012				—				4,038,155
Long-term Debt			—				5,165,036				1,050,437				50,717				—				6,266,190
Intercompany Payables, Net			310,051				—				—				1,485,517				(1,795,568	)			—
Other Long-term Liabilities			—				79,965				8,365				378,028				—				466,358
Total Liabilities			322,653				6,155,535				1,663,809				4,424,274				(1,795,568	)			10,770,703
Weatherford Shareholders’ Equity			9,361,394				11,581,765				5,821,838				26,604,902				(43,497,578	)			9,872,321
Noncontrolling Interests			—				—				—				24,252				—				24,252
Total Liabilities and Shareholders’ Equity		$	9,684,047			$	17,737,300			$	7,485,647			$	31,053,428			$	(45,293,146	)		$	20,667,276

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

Condensed Consolidating Balance Sheet
December 31, 2010
(In thousands)

		Weatherford				Weatherford				Weatherford				Other
		Switzerland				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				15,901,543				5,656,040				11,941,645				(42,642,851	)			—
Shares Held in Weatherford Switzerland			—				—				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			$	18,297,321			$	6,561,807			$	30,970,370			$	(45,859,733	)		$	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				12,908,212				4,919,250				25,871,085				(43,205,757	)			9,400,931
Noncontrolling Interests			—				—				—				63,916				—				63,916
Total Liabilities and Shareholders’ Equity		$	9,161,889			$	18,297,321			$	6,561,807			$	30,970,370			$	(45,859,733	)		$	19,131,654