e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the
fiscal year ended December 31, 2009
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number 1-34258
WEATHERFORD INTERNATIONAL
LTD.
(Exact name of registrant as
specified in its charter)
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Switzerland
(State or other jurisdiction
of
incorporation or organization)
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98-0606750
(IRS Employer Identification
No.)
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4-6 Rue Jean-Francois Bartholoni,
1204 Geneva, Switzerland
(Address of principal
executive offices)
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Not Applicable
(Zip Code)
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Registrants telephone number, including area code:
41.22.816.1500
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Name of each exchange on which registered
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Registered Shares, par value 1.16 Swiss francs per share
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if and,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act (Check one):
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
The aggregate market value of the voting stock held by
nonaffiliates of the registrant as of June 30, 2009, was
approximately $11 billion based upon the closing price on
the New York Stock Exchange as of such date.
As of February 24, 2010, there were 738,353,813 shares
of Weatherford registered shares, 1.16 Swiss francs par value
per share, outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Certain information called for by Items 10, 11, 12, 13 and
14 of Part III of this Annual Report on
Form 10-K
will be included in an amendment to this
Form 10-K
or incorporated by reference from the registrants
definitive proxy statement for the annual meeting to be held on
June 23, 2010.
Weatherford
International Ltd.
Form 10-K
for the Year Ended December 31, 2009
Table of
Contents
PART I
Weatherford International Ltd. (NYSE:WFT) is one of the
worlds leading providers of equipment and services used in
the drilling, evaluation, completion, production and
intervention of oil and natural gas wells. Many of our
businesses, including those of our predecessor companies, have
been operating for more than 50 years.
We were originally incorporated in Delaware in 1972 and moved
our incorporation to Bermuda in 2002. In February 2009, we
completed a share exchange transaction in which Weatherford
International Ltd., a Bermuda exempted company
(Weatherford Bermuda) became a wholly-owned
subsidiary of Weatherford International Ltd., a Swiss joint
stock corporation (Weatherford Switzerland) for
purposes of changing the Companys place of incorporation
from Bermuda to Switzerland (collectively, the
Transaction). Pursuant to the Transaction, each
common share, par value U.S. $1.00 per share, of
Weatherford Bermuda was exchanged for one registered share, par
value 1.16 Swiss francs (CHF) per share, of
Weatherford Switzerland.
When referring to Weatherford and using phrases such as
we and us, our intent is to refer to
Weatherford International Ltd. and its subsidiaries as a whole
or on a regional basis, depending on the context in which the
statements are made.
We operate in over 100 countries, which are located in nearly
all of the oil and natural gas producing regions in the world.
Our operational performance is segmented and reviewed on a
geographic basis, and we report the following regions as
reporting segments: (1) North America, (2) Latin
America, (3) Europe/West Africa/the Former Soviet Union
(FSU) and (4) Middle East/North Africa/Asia.
Our headquarters are located at 4-6 Rue Jean-Francois
Bartholoni, 1204 Geneva, Switzerland and our telephone number at
that location is 44.22.816.1500. Our Internet address is
www.weatherford.com. General information about us, including our
Corporate Governance Policies and charters for the committees of
our board of directors, can be found on our Web site. On our Web
site we make available, free of charge, our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after we electronically file or furnish
them to the SEC. The public may read and copy any materials we
have filed with the SEC at the SECs Public Reference Room
at 100 F Street, NE, Room 1580, Washington, DC
20549. Information on the operation of the Public Reference Room
may be obtained by calling the SEC at
1-800-SEC-0330.
The SEC maintains an Internet site that contains our reports,
proxy and information statements, and our other SEC filings. The
address of that site is www.sec.gov.
The following is a summary of our business strategies and the
markets we serve. We have also included a description of our
products and services offered and our competitors. Segment
financial information appears in Item 8. Financial
Statements and Supplementary Data Notes to
Consolidated Financial
Statements Note 19.
Strategy
Our primary objective is to provide our shareholders with
above-average returns on their investment through income growth.
Principal components of our strategy include:
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Continuously improving the efficiency, productivity and quality
of our products and services and their respective delivery in
order to grow revenues and operating margins in all of our
geographic markets at a rate exceeding underlying market
activity;
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Through a commitment to innovation and invention, developing and
commercializing new products and services capable of meeting
evolving needs of our customers; and
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Further extending our global infrastructure in scope and scale
at a level consistent with meeting customer demand for our
products and services in an efficient manner.
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Markets
We are a leading provider of equipment and services to the oil
and natural gas exploration and production industry. Demand for
our industrys services and products depends upon the
number of oil and natural gas wells being drilled, the depth and
drilling conditions of wells, the number of well completions and
the level of workover activity worldwide.
As a result of the maturity of the worlds oil and natural
gas reservoirs, accelerating production decline rates and the
focus on complex deepwater prospects, technology has become
increasingly critical to the marketplace. Clients continue to
seek, test and prove production-enabling technologies at an
increasing rate. Technology is an important aspect of our
products and services as it helps us provide our clients with
more efficient tools to find and produce oil and natural gas. We
have invested a substantial amount of our time and resources in
building our technology offerings. We believe our products and
services enable our clients to reduce their costs of drilling
and production
and/or
increase production rates. Furthermore, these offerings afford
us additional opportunities to sell our traditional core
products and services to our clients.
Product
Offerings
Our product offerings can be grouped into ten service lines:
1) artificial lift systems; 2) drilling services;
3) well construction; 4) drilling tools;
5) completion systems; 6) wireline and evaluation
services; 7) re-entry and fishing; 8) stimulation and
chemicals; 9) integrated drilling; and 10) pipeline
and specialty services. The following discussion provides an
overview of our various product offerings. With the exception of
integrated drilling, our service line offerings are provided in
all of our regional segments. Our integrated drilling service
line is offered only outside of North America.
Artificial
Lift Systems
Artificial lift systems are installed in oil wells and, to a
lesser extent, natural gas wells that do not have sufficient
reservoir pressure to raise the produced hydrocarbon to the
surface. These systems supplement the natural reservoir
pressures to produce oil or natural gas from the well. There are
six principal types of artificial lift technologies used in the
industry. With the exception of our electrical submersible pumps
business, which we sold to an equity investment partner in
January 2008, we are able to provide all forms of lift,
including progressing cavity pumps, reciprocating rod lift
systems, gas lift systems, hydraulic lift systems, plunger lift
systems and hybrid lift systems. We also offer wellhead systems
and production optimization.
Progressing Cavity Pumps A progressing cavity
pump (PCP) is a downhole pump driven by an above-ground electric
motor system connected to it by a coupled rod or continuous rod
string. PCPs are particularly useful in heavy-oil-producing
basins around the world.
Reciprocating Rod Lift Systems A
reciprocating rod lift system is an artificial lift pumping
system that uses an above-ground mechanical unit connected to a
sucker rod and a downhole pump. It uses an
up-and-down
suction process to lift the oil from the reservoir.
Gas Lift Systems Gas lift is a form of
artificial lift that uses natural gas to lift oil in a producing
reservoir to the surface. The process of gas lift involves the
injection of natural gas into the well through an above-ground
injection system and a series of downhole mandrels and gas lift
valves in the production tubing string. The injected gas acts as
the lifting agent for the oil. Gas lift systems are used
primarily for offshore wells (including deepwater and
ultra-deepwater) and for wells that have a high component of gas
in the produced fluid or have a gas supply near the well.
Hydraulic Lift Systems A hydraulic lift oil
pumping system uses an above-ground surface power unit to
operate a downhole hydraulic pump (jet or piston) to lift oil
from the reservoir. Hydraulic pumps are well suited for wells
with high volumes and low solids.
Plunger Lift Systems Plunger lift is the only
artificial lift method that requires no assistance from outside
energy sources. The typical system consists of a plunger (or
piston), top and bottom bumper springs, a lubricator and a
surface controller. As the plunger travels to the surface, it
creates a solid interface between the lifted gas below and
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produced fluid above to maximize lift energy. Plunger lift is a
low-cost, easily maintained method of lift. It is particularly
useful for dewatering gas wells and increasing production from
wells with emulsion problems.
Hybrid Lift Systems We offer a variety of
hybrid artificial lift systems which are engineered for special
applications and may incorporate two or more of the artificial
lift methods described above.
Wellhead Systems We offer a line of
conventional wellhead equipment and valves manufactured to the
latest API industry specifications and client requirements,
including conventional surface wellheads through 20,000 psi;
gate valves from 2,000 to 20,000 psi; complete wellhead systems
(drill-through, multi-bowl, unitized and mud-line); and all the
accessories and aftermarket services to go with them.
Production Optimization Production
optimization is the process of monitoring oil and natural gas
fields, and interpreting the resulting data to inform production
and reservoir management decisions. The ultimate goal is to
assist operators in making better decisions that maximize
profits through improved optimized well production and maximized
reservoir recovery. The major benefits of production
optimization are increased production with decreased operating
costs resulting in increased bottom-line profits for producers.
Weatherford offers products for optimizing at the well,
reservoir and field level. Both hardware and software are
combined into solutions that fit the customers specific
needs for optimizing production.
Well Optimization For wellsite intelligence,
we offer specific controllers for each type of artificial lift.
These controllers contain computers with specific logic to
control the well in response to changes in the reservoir,
artificial-lift equipment or well completion. The desktop
software provides advanced analytical tools that allow the
operator to make changes by controlling the well directly or by
changing the parameters that the controller is using to operate
the well. In 2007, we enhanced our plunger lift controller and
added a new variable speed drive for progressing cavity pumps
(PCP), rod pumping, and electric submersible pumps (ESP).
Flow Measurement Our Production Optimization
group develops metering and software solutions to supply
real-time production information to the operator, allowing
accurate production measurements as a part of individual well
and field optimization.
Field Optimization We provide tools for
optimizing workflow. These software tools assist the operator in
tracking the operations needed for optimal field management.
Tasks such as chemical injection, well workovers and allocation
of injection gas can easily generate unnecessary expenses by
inefficient prioritization of tasks, poor recordkeeping and lack
of analysis of the effectiveness of the total field operations.
The combination of our experienced consultants and advanced
software tools help the operator optimize operations for entire
fields.
Heavy-oil Production Optimization Equipment
We provide mechanical production treators and sand management
systems to improve heavy-oil flow to and separation in
sit-storage tanks. Sands removed from the storage tanks can be
used as environmentally friendly, field-road base material
without any special treatment or processing.
Drilling
Services
These capabilities include directional drilling, Controlled
Pressure
Drilling®
(CPD®)
& Well Testing, drilling-with-casing
(DwCtm)
and drilling-with-liner
(DwLtm)
systems and surface logging systems.
Directional drilling involves the personnel, equipment and
engineering required to actively control the direction of a
wellbore and its eventual optimal position in the target
reservoir. Directional drilling allows drilling of multiple
wells from a single offshore platform or a land-based pad site.
It also allows drilling of horizontal wells and penetration of
multiple reservoir pay zones from a single wellbore. We supply a
range of specialized, patented equipment for directional
drilling, and real-time wellbore logging, including:
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Measurement while drilling (MWD) and logging while drilling
(LWD) MWD and LWD measure, respectively,
wellbore trajectory and formation properties, in real time,
while the well is being drilled, to enable it to be steered into
its optimum position.
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Rotary steerable systems (RSS) These systems
allow control of wellbore trajectory while drilling at the
surface with continuous rotation of the drillstring at the
surface. RSS technology is crucial for enabling long,
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step-out, directional wells and for reducing completion-running
complications resulting from abrupt small-scale hole-angle
changes caused by conventional drilling methods.
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Directional drilling services These services
include surveying, design and operational support for
directional and horizontal drilling and performance drilling in
vertical wells; products include drilling motors and other
associated equipment, software and expertise required to deliver
the well on target as efficiently as possible.
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Our directional drilling capabilities are supported by our
engineering facilities in Houston and other locations globally,
which house and support qualified engineers, scientists and
technicians, all focused on developing technologies for the
MWD/LWD and directional drilling markets, both land based and
offshore.
Controlled Pressure
Drilling®
(CPD®)
Weatherfords CPD offerings are provided through three
techniques: 1) Managed Pressure Drilling,
2) Underbalanced Drilling and 3) Air Drilling.
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Managed Pressure Drilling (MPD) This
technique provides an advanced form of primary well control,
using a closed, pressurized fluid system that more precisely
controls the wellbore pressure profile than mud weight
adjustments alone. The main objective of MPD is to optimize
drilling processes by decreasing non-productive time and
mitigating drilling hazards.
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Underbalanced Drilling (UBD) This technique
is used in development, exploration and mature field
applications to minimize formation damage and maximize
productivity. UBD is drilling with bottomhole pressure that is
maintained below reservoir pressure to intentionally invite
fluid influx. This technique permits the reservoir to flow while
drilling takes place, thereby improving well productivity by
protecting the formation from damage by the drilling fluids.
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Air Drilling This technique applies reduced
density fluid systems to drill
sub-hydrostatically.
Air drilling is used primarily in hard rock applications to
reduce drilling costs by increasing the rate of penetration.
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A full range of downhole equipment, such as high temperature
motors, wireline steering tools, drillpipe, air rotary hammer
drills, casing exit systems, downhole deployment valves and
downhole data acquisition equipment, make our product offerings
unique.
Well Testing Well testing uses specialized
equipment and procedures to obtain essential information about
oil and gas wells after the drilling process has been completed.
Typical information derived may include reservoir performance,
reservoir pressure, formation permeability, formation porosity
and formation fluid composition.
A related application is our separation business, which supplies
personnel and equipment on a wellsite to recover a mixture of
solids, liquids and gases from oil and gas wells. These services
are used during drilling, after stimulation or after
re-completion to clean up wells. The operator requires that a
well be properly cleaned before undertaking a well test to
ensure that the true deliverability of the well is attained and
that debris and spent stimulation chemicals do not ultimately
flow to the process plant.
Drilling-with-casing and drilling-with-liner systems -
These systems allow operators to simultaneously drill and case
oil and natural gas wells. Our DwC and DwL
techniques eliminate downhole complexity, reducing expensive
rig modifications and the number of trips downhole.
Consequently, drilling hazards are mitigated, well construction
is simplified, and productivity can be improved when drilling
through the reservoir.
Surface Logging Systems Often referred to as
mud logging, this is a well-site service that uses fluid and gas
samples along with drilling cuttings to evaluate the geology and
geo chemistry of the formation as it is being drilled. The
derived data and interpretation is used to help geologists and
drillers ensure that the well is placed in the most productive
formation to maximize ultimate well productivity.
Well
Construction
This grouping includes the primary services and products
required to construct a well and spans tubular running services,
cementation tools, liner systems, solid tubular expandable
technologies and aluminum alloy tubular products.
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Tubular Running Services These services
consist of a wide variety of tubular connection and installation
services for the drilling, completion and workover of an oil or
natural gas well. We provide tubular handling, preparation,
inspection and wellsite installation services from a single
source. We offer a suite of products and services for improving
rig floor operations by reducing personnel exposure, increasing
operational efficiency and improving safety. We also specialize
in critical-service installations where operating conditions,
such as downhole environments
and/or
metallurgical characteristics, call for specific handling
technology.
Cementation Tools Cementing operations
comprise one of the most expensive phases of well completion. We
produce specialized equipment that allows operators to
centralize the casing throughout the wellbore and control the
displacement of cement and other fluids. Our cementing engineers
also analyze complex wells and provide recommendations to help
optimize cementing results.
Liner Systems Liner hangers allow suspension
of strings of casing within a wellbore without the need to
extend the casing to the surface. Most directional wells include
one or more liners to optimize casing programs. We offer both
drilling and production liner hangers. Drilling liners are used
to isolate areas within the well during drilling operations.
Production liners are used in the producing area of the well to
support the wellbore and to isolate various sections of the well.
Solid Tubular Expandable Technologies
Proprietary expandable tools are being developed for
downhole solid tubular applications in well remediation, well
completion and well construction. Our solid tubular expandable
products include the
MetalSkin®
line and the
HydraSkintm
System, MetalSkin systems are used for well cladding to
shut off zones, retro-fit corroded sections of casing and
strengthen existing casing. MetalSkin open-hole clad
systems are used for controlling drilling hazards such as
unwanted fluid loss or influx and as slim-bore drilling liners.
Slim-bore and, ultimately, monobore liner systems are designed
to allow significant cost reductions by reducing consumables for
drilling and completion of wells, allowing use of smaller rigs
and reducing cuttings removal needs. The benefits are derived
because of the potential of expandable technologies to
significantly reduce or eliminate the reverse-telescoping
architecture inherent in traditional well construction. The
HydraSkin system is a hydraulic
bottom-up
expansion system that can be used for increased diameter
efficiency in either planned or contingency operations.
Aluminum Alloy Tubular Products We design and
manufacture aluminum alloy (AA) tubular goods for drilling,
production and completion. Unique physical and mechanical
properties of aluminum alloys provide a number of benefits,
especially superior corrosion resistance in various aggressive
environments and enhanced
strength-to-weight
ratio, resulting in better drilling performance. Products range
from Aluminum Alloy Drill Pipe, which is used in most
drilling applications, but especially recommended for ultra deep
and extended reach wells and rigs with limited load capacity, to
drillpipe risers designed for drilling, production and
completion operations. These large diameter products possess
high strength and significant corrosion resistance properties
essential in aggressive environments, such as deepwater wells.
Drilling
Tools
We design and manufacture patented tools, including our drilling
jars, rotating control devices and other pressure-control
equipment used in drilling oil and natural gas wells. We also
offer a broad selection of in-house or third-party manufactured
equipment for the drilling, completion and workover of oil and
natural gas wells. We offer these proprietary and nonproprietary
drilling tools to our clients primarily operators
and drilling contractors on a rental basis, allowing
the clients to use unique equipment to improve drilling
efficiency without the cost of holding that equipment in
inventory.
Our drilling tools include the following:
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Drillpipe and related drillstem tools, drill collars,
heavyweight pipe and drilling jars;
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Downhole tools;
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Pressure-control equipment such as blowout preventers,
high-pressure valves, accumulators, adapters and
choke-and-kill
manifolds; and
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Tubular handling equipment such as elevators, spiders, slips,
tongs and kelly spinners.
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Completion
Systems
We offer our clients a comprehensive line of completion tools
and sand screens. These products and services include the
following:
Completion Tools These tools are incorporated
into the tubing string used to transport hydrocarbons from the
reservoir to the surface. We offer a wide range of devices for
enhancing the safety and functionality of the production string,
including permanent and retrievable packer systems, subsurface
safety systems, flow control systems and tool strings,
specialized downhole isolation valves and associated servicing
equipment. Over the past decade, we have evolved our portfolio
from one of basic cased-hole commodity products to one that
focuses more heavily on premium offerings for deepwater and
high-pressure/high-temperature environments.
Sand Screens Sand production often results in
premature failure of artificial-lift and other downhole and
surface equipment and can obstruct the flow of oil and natural
gas. To remedy this issue, we provide two different sand screen
approaches: conventional and expandable.
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Conventional sand screens These products are
used in the fluid-solid separation processes and have a variety
of product applications. Our primary application of well screens
is for the control of sand in unconsolidated formations. We
offer premium, pre-pack and wire-wrap sand screens. We also
offer a
FloRegtm
line of inflow control devices that balance horizontal wellbore
production, ultimately maximizing reservoir drainage. We also
operate the water well and industrial screen business of Johnson
Screens. Served markets include water well, petrochemical,
wastewater treatment and surface water intake, mining and
general industrial applications.
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Expandable Sand Screens (ESS) Our
ESS®
systems are proprietary step-change sand-control devices that
reduce cost and improve production. An ESS system consists of
three layers, including slotted base pipe, filtration screens
and an outer protective shroud. The system can be expanded using
a fixed cone
and/or
compliantly using our proprietary axial and rotary expansion
system. This system aids productivity because it stabilizes the
wellbore, prevents sand migration and has a larger inner
diameter. ESS technology can replace complex gravel-packing
techniques in many sand-control situations.
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Reservoir Optimization Our intelligent
completion technology (ICT) uses downhole optical and electronic
sensing to allow operators to remotely monitor the downhole
pressure, temperature, flow rate, phase fraction and seismic
activity of each well and the surrounding reservoir. This
advanced monitoring capability allows the operator to monitor
the reaction of the reservoir to the production of the well.
Combining this monitoring with multiple-zone downhole flow
control allows field pressure management and shutoff of unwanted
flows of water or gas.
Wireline
and Evaluation Services
Wireline and evaluation services, in concert with surface
logging systems and LWD, form a data acquisition and
interpretation capability that enables clients with an
integrated approach to formation evaluation and reservoir
characterization. Open-hole wireline services and logging while
drilling compliment laboratory-derived analysis of core and
reservoir fluid samples. When combined with geosciences
consulting, this integrated capability provides the data and
interpretation to reduce reservoir uncertainty and ultimately
optimize production and maximize recovery.
Wireline services Wireline services measure
the physical properties of underground formations to help
determine the location and potential deliverability of oil and
gas from a reservoir. Wireline services are provided from
surface logging units, which lower tools and sensors into the
wellbore mainly on a single or multiple conductor wireline.
The provision of wireline and associated interpretation services
is divided into four categories: open hole wireline, geoscience
services, cased hole wireline and slickline services:
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Open Hole Wireline This service helps locate
oil and gas by measuring certain characteristics of geological
formations and providing permanent records called
logs. Open hole logging can be performed at
different intervals during the well drilling process or
immediately after a well is drilled. The logging data provides a
valuable benchmark to which future well management decisions may
be referenced. The open
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hole sensors are used to determine well lithology and the
presence of hydrocarbons. Formation characteristics such as
resistivity, density and porosity are measured using electrical,
nuclear, acoustic, magnetic and mechanical technologies.
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The formation characteristics are then used to characterize the
reservoir and describe it in terms of porosity, permeability,
oil, gas or water content and an estimation of productivity.
Wireline services can relay this information from the wellsite
on a real-time basis via a secure satellite transmission network
and secure Internet connection to the clients office for
faster evaluation and decision making.
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Geoscience Services This capability,
consisting of geologists, geophysicists, and drilling,
completion, production and reservoir engineers, serves as the
interpretive bridge across diverse data sources to support
client efforts to maximize their oil and gas assets for the life
of the well from well planning through drilling,
evaluation, completion, production, intervention and, finally,
abandonment.
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Major computing centers in Calgary and Houston, along with
branches in Europe, the Middle East, Latin America and Asia
Pacific, use the latest technology to deliver data to our
clients from real-time (LWD) geosteering
for critical well placement decisions to ongoing reservoir
monitoring with permanent intelligent completion
sensors. We provide advanced reservoir solutions by
incorporating open hole, cased hole and production data.
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Cased Hole Wireline This service is performed
at various times throughout the life of the well and includes
perforating, completion logging, production logging and casing
integrity services. Perforating creates the flow path between
the reservoir and the wellbore. Production logging can be
performed throughout the life of the well to measure
temperature, fluid type, flow rate, pressure and other reservoir
characteristics. In addition, cased hole services may involve
wellbore diagnostics and remediation, which could include the
positioning and installation of various plugs and packers to
maintain production or repair well problems, and casing
inspection for internal or external abnormalities in the casing
string.
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Slickline Services This service uses a solid
steel or braided nonconductor line, in place of a single or
multiple conductor braided line used in electric logging, to run
downhole memory tools, manipulate downhole production devices
and provide fishing services primarily in producing wells.
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Integrated Evaluation Services These
services help clients plan the development of new and existing
oil and gas production fields. Specifically, a global network of
laboratories provide support in terms of fluid and reservoir
characterization, specialized core and fluid testing, enhanced
oil recovery, rock strength and characterization, sour richness
and maturity, sorption properties assessment and reservoir flow
studies.
Re-entry
and Fishing
Our re-entry, fishing and thru-tubing services help clients
repair wells that have mechanical problems or that need work to
prolong production of oil and natural gas reserves.
Re-entry Services Our re-entry services
include casing exit services and advanced multilateral systems.
Conventional and advanced casing exit systems allow sidetrack
and lateral drilling solutions for clients who either cannot
proceed down the original well track or want to drill lateral
wells from the main or parent wellbore.
Fishing Services Fishing services are
provided through teams of experienced fishing tool supervisors
and a comprehensive line of fishing and milling tools. Our teams
provide conventional fishing services, such as removing wellbore
obstructions, including stuck or dropped equipment, tools,
drillstring components and other debris, that have been lost
downhole unintentionally during the drilling, completion or
workover of new and old wells. Specialty fishing tools required
in these activities include fishing jars, milling tools, casing
cutters, overshots and spears. Our Fishing Services business
unit also provides well patches and extensive
plug-and-abandonment
products.
Thru-tubing Services Thru-tubing services are
used in well re-entry activity to allow operators to perform
complex drilling, completion and cementing activities from
existing wellbores without removing existing production systems.
We provide a full range of thru-tubing services and products,
including drilling motors, casing exits, fishing and milling,
zonal isolation packers and other well remediation services.
7
Stimulation
and Chemicals
We offer our clients advanced chemical technology and services
for safer and more effective production enhancement. These
products and services include the following:
Fracturing Technologies Hydraulic
reservoir fracturing is a stimulation method routinely performed
on oil and natural gas wells in low-permeability reservoirs to
increase productivity and oil and gas recovery. Our offerings
include the latest in equipment design and technology.
Coiled Tubing Technologies Our services
include a line of equipment designed with the latest technology
to ensure effective results during operations that require
coiled tubing intervention. Offerings include coiled tubing
units, appropriate crane trucks and nitrogen tanks and pumpers
(trailer or skid formats).
Cement Services Includes CHEMVIEW and CHEMPRO
software to analyze each job to ensure the best application for
each situation. Our new fleet of cement pumping equipment
includes high-horsepower pump trailers, batch mixers, two-pod
blended cement trailers and a four-pod sand storage trailer; all
with the latest in technology and design features for improved
operation and performance.
Chemical Systems Our Engineered
Chemistry®
business combines proprietary chemical solutions with internally
developed oilfield equipment technologies. Our high-performance
chemistry solutions include: customized chemical solutions for
drilling, completion, production, intervention, refining, water
treatment as well as many industrial processes; a total service
package (product selection, application and optimization); and
precise formulations and multi-functional chemical formulations
that include the only formulas certified for capillary injection.
Drilling Fluids Our drilling fluids service
line is engaged in the provision of drilling fluids, completion
fluids and other related services. The main functions of
drilling fluids include providing hydrostatic pressure to
prevent formation fluids from entering into the well bore,
keeping the drill bit cool and clean during drilling, carrying
out drill cuttings and suspending the drill cuttings while
drilling is paused and the drilling assembly is brought in and
out of the hole. We also provide waste management services which
separate and manage drill cuttings produced by the drilling
process. Drill cuttings are usually contaminated with petroleum
or drilling fluids, and must be disposed of in an
environmentally safe manner.
Integrated
Drilling
We have the ability to offer project management services to our
clients, in which we provide a number of products and services
needed to drill and complete a well, including the rig. All of
our land drilling rigs are located outside of North America.
Pipeline
and Specialty Services
We provide a range of services used throughout the life cycle of
pipelines and process facilities, onshore and offshore. Our
pipeline group can meet all the requirements of the pipeline,
process, industrial and energy markets worldwide. We also can
provide any service (or package of services) carried out on
permanently installed client equipment that involves inspecting,
cleaning, drying, testing, improving production, running or
establishing integrity from the wellhead out.
Other
Business Data
Competition
We provide our products and services worldwide, and compete in a
variety of distinct segments with a number of competitors. Our
principal competitors include Baker Hughes, BJ Services,
Halliburton, Schlumberger and Smith International. We also
compete with various other regional suppliers that provide a
limited range of equipment and services tailored for local
markets. Competition is based on a number of factors, including
performance, safety, quality, reliability, service, price,
response time and, in some cases, breadth of products.
8
Raw
Materials
We purchase a wide variety of raw materials as well as parts and
components made by other manufacturers and suppliers for use in
our manufacturing. Many of the products sold by us are
manufactured by other parties. We are not dependent on any
single source of supply for any of our raw materials or
purchased components.
Customers
Our principal customers consist of major and independent oil and
natural gas producing companies. Revenue from Petroleos
Mexicanos (Pemex) accounted for approximately 13% of
our revenues during 2009 and no other individual customer
accounted for more than 10% of our consolidated revenues. During
2008 and 2007, there was no individual customer who accounted
for more than 10% of our consolidated revenues.
Research
and Development and Patents
We maintain world-class technology and training centers
throughout the world. Our 34 research, development and
engineering facilities are focused on improving existing
products and services and developing new technologies to meet
customer demands for improved drilling performance and enhanced
reservoir productivity. Our expenditures for research and
development totaled $195 million in 2009, $193 million
in 2008 and $169 million in 2007.
As many areas of our business rely on patents and proprietary
technology, we seek patent protection both inside and outside
the U.S. for products and methods that appear to have
commercial significance. In the U.S., we currently have 1,229
patents issued and over 463 pending. We have 2,470 patents
issued in international jurisdictions and over 1,255 pending. We
amortize patents over the years expected to be benefited,
ranging from three to 20 years.
Although in the aggregate our patents are important to the
manufacturing and marketing of many of our products and
services, we do not believe that the loss of any one of our
patents would have a material adverse effect on our business.
Seasonality
Weather and natural phenomena can temporarily affect level of
demand for our products and services. Spring months in Canada
and winter months in the North Sea and Russia tend to affect
operations negatively. In the summers of 2005 and 2008, the Gulf
of Mexico suffered an unusually high number of hurricanes that
adversely impacted our operations. In addition, unfavorable
weather conditions in Mexico could reduce our operations and
revenues from that area. The widespread geographical locations
of our operations serve to mitigate the impact of the seasonal
nature of our business.
Federal
Regulation and Environmental Matters
Our operations are subject to federal, state and local laws and
regulations relating to the energy industry in general and the
environment in particular.
Our 2009 expenditures to comply with environmental laws and
regulations were not material, and we currently do not expect
the cost of compliance with environmental laws and regulations
for 2010 to be material.
Employees
At December 31, 2009, we employed approximately
52,000 employees. Certain of our operations are subject to
union contracts. These contracts cover approximately two percent
of our employees. We believe that our relationship with our
employees is generally satisfactory.
Forward-Looking
Statements
This report, as well as other filings made by us with the
Securities and Exchange Commission (SEC), and our
releases issued to the public contain various statements
relating to future results, including certain projections and
business trends. We believe these statements constitute
Forward-Looking Statements as defined in the Private
9
Securities Litigation Reform Act of 1995. These forward-looking
statements generally are identified by the words
believe, project, expect,
anticipate, estimate,
intend, strategy, plan,
may, should, will,
would, will be, will
continue, will likely result, and similar
expressions, although not all forward-looking statements contain
these identifying words.
From time to time, we update the various factors we consider in
making our forward-looking statements and the assumptions we use
in those statements. However, we undertake no obligation to
publicly update or revise any forward-looking events or
circumstances that may arise after the date of this report. The
following sets forth the various assumptions we use in our
forward-looking statements, as well as risks and uncertainties
relating to those statements. Certain of the risks and
uncertainties may cause actual results to be materially
different from projected results contained in forward-looking
statements in this report and in our other disclosures. These
risks and uncertainties include, but are not limited to, the
following:
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Global political, economic and market conditions could affect
projected results. Our operating results and the
forward-looking information we provide are based on our current
assumptions about oil and natural gas supply and demand, oil and
natural gas prices, rig count and other market trends. Our
assumptions on these matters are in turn based on currently
available information, which is subject to change. The oil and
natural gas industry is extremely volatile and subject to change
based on political and economic factors outside our control.
Worldwide drilling activity, as measured by average worldwide
rig counts, increased in each year from 2002 to 2008. However,
activity began declining in the fourth quarter of 2008,
particularly in North America. The weakened global economic
climate has resulted in lower demand and lower prices for oil
and natural gas, which has reduced drilling and production
activity, which has in turn resulted in lower than expected
revenues and income in 2009 and may affect our future revenues
and income. Our projections assume that the decline in North
America rig activity reached its trough during 2009. However, we
are not certain as to the timing of the recovery in activity. We
cannot accurately predict how much lower commodity prices and
drilling activity may go, or when they may recover. Worldwide
drilling activity and global demand for oil and natural gas may
also be affected by changes in governmental policies and debt
loads, laws and regulations related to environmental or energy
security matters, including those addressing alternative energy
sources and the risks of global climate change. We have assumed
global demand will continue to be down in 2010 compared to 2008
and only slightly up compared to 2009. In 2010, worldwide demand
may be significantly weaker than we have assumed.
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We may be unable to recognize our expected revenues from
current and future contracts. Our customers, many
of whom are national oil companies, often have significant
bargaining leverage over us and may elect to cancel or revoke
contracts, not renew contracts, modify the scope of contracts or
delay contracts, in some cases preventing us from realizing
expected revenues
and/or
profits. Our projections assume that our customers will honor
the contracts we have been awarded and that those contracts and
the business that we believe is otherwise substantially firm
will result in anticipated revenues in the periods for which
they are scheduled.
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Currency fluctuations could have a material adverse financial
impact on our business. A material change in
currency rates in our markets, including the devaluation of the
Venezuelan Bolivar (See Item 7A. Quantitative and
Qualitative Disclosure About Market Risk) could affect our
future results as well as affect the carrying values of our
assets. World currencies have been subject to much volatility.
As we are not able to predict changes in currency valuations,
our forward-looking statements assume no material impact from
future changes in currency exchange rates.
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Our ability to manage our workforce could affect our
projected results. In a climate of decreasing
demand, we are faced with managing our workforce levels to
control costs without impairing our ability to provide service
to our customers. Our forward-looking statements assume we will
be able to do so.
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Increases in the prices and availability of our raw materials
could affect our results of operations. We use
large amounts of raw materials for manufacturing our products.
The price of these raw materials has a significant impact on our
cost of producing products for sale or producing fixed assets
used in our business. We have assumed that the prices of our raw
materials will remain within a manageable range and will be
readily available. If we are unable to obtain necessary raw
materials or if we are unable to minimize the
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impact of increased raw material costs or to realize the benefit
of cost decreases in a timely fashion through our supply chain
initiatives or pricing, our margins and results of operations
could be adversely affected.
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Our ability to manage our supply chain could affect our
projected results. We have undertaken efforts to
improve our supply chain, invoicing and collection processes and
procedures. These undertakings include costs, which we expect
will result in long-term benefits of our business processes. Our
forward-looking statements assume we will realize the benefits
of these efforts.
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Our long-term growth depends upon technological innovation
and commercialization. Our ability to deliver our
long-term growth strategy depends in part on the
commercialization of new technology. A central aspect of our
growth strategy is to improve our products and services through
innovation, to obtain technologically advanced products through
internal research and development
and/or
acquisitions, to protect proprietary technology from
unauthorized use and to expand the markets for new technology by
leveraging our worldwide infrastructure. The key to our success
will be our ability to commercialize the technology that we have
acquired and demonstrate the enhanced value our technology
brings to our customers operations. Our major
technological advances include, but are not limited to, those
related to controlled pressure drilling and testing systems,
expandable solid tubulars, expandable sand screens and
intelligent well completion. Our forward-looking statements have
assumed successful commercialization of, and above-average
growth from, these new products and services, as well as legal
protection of our intellectual property rights.
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Nonrealization of expected benefits from our redomestication
could affect our projected results. We operate
through our various subsidiaries in numerous countries
throughout the world including the United States. During the
first quarter of 2009, we completed a transaction in which our
former parent Bermuda company became a wholly-owned subsidiary
of Weatherford International Ltd., a Swiss joint-stock
corporation, and holders of common shares of the Bermuda company
received one registered share of the Swiss company in exchange
for each common share that they held. Consequently, we are or
may become subject to changes in tax laws, treaties or
regulations or the interpretation or enforcement thereof in the
U.S., Bermuda, Switzerland or any other jurisdictions in which
we or any of our subsidiaries operates or is resident. Our
income tax expense is based upon our interpretation of the tax
laws in effect in various countries at the time that the expense
was incurred. If the U.S. Internal Revenue Service or other
taxing authorities do not agree with our assessment of the
effects of such laws, treaties and regulations, this could have
a material adverse effect on us including the imposition of a
higher effective tax rate on our worldwide earnings or a
reclassification of the tax impact of our significant corporate
restructuring transactions.
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Nonrealization of expected benefits from our acquisitions
could affect our projected results. We expect to
gain certain business, financial and strategic advantages as a
result of business acquisitions we undertake, including
synergies and operating efficiencies. Our forward-looking
statements assume that we will successfully integrate our
business acquisitions and realize the benefits of those
acquisitions.
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The downturn in our industry could affect the carrying value
of our goodwill. As of December 31, 2009, we
had approximately $4.2 billion of goodwill. Our estimates
of the value of our goodwill could be reduced in the future as a
result of various factors, including market factors, some of
which are beyond our control. Our forward-looking statements do
not assume any future goodwill impairment. Any reduction in the
fair value of our businesses may result in an impairment charge
and therefore adversely affect our results.
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Adverse weather conditions in certain regions could adversely
affect our operations. In the summers of 2005 and
2008, the Gulf of Mexico suffered several significant
hurricanes. These hurricanes and associated hurricane threats
reduced the number of days on which we and our customers could
operate, which resulted in lower revenues than we otherwise
would have achieved. In parts of 2006, and particularly in the
second quarters of 2007 and 2008, climatic conditions in Canada
were not as favorable to drilling as we anticipated, which
limited our potential results in that region. Similarly,
unfavorable weather in Russia, Mexico and in the North Sea could
reduce our operations and revenues from that area during the
relevant period. Our forward-looking statements assume weather
patterns in our primary areas of operations will be conducive to
our operations.
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U.S. Government and internal investigations could affect
our results of operations. We are currently
involved in government and internal investigations involving
various of our operations. These investigations
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are not yet resolved, and we cannot anticipate the timing,
outcome or possible impact of the ultimate resolution of these
investigations, financial or otherwise. The governmental
agencies involved in these investigations have a broad range of
civil and criminal penalties they may seek to impose against
corporations and individuals for violations of trading sanctions
laws, the Foreign Corrupt Practices Act and other federal
statutes including, but not limited to, injunctive relief,
disgorgement, fines, penalties and modifications to business
practices and compliance programs. In recent years, these
agencies and authorities have entered into agreements with, and
obtained a range of penalties against, several public
corporations and individuals in similar investigations, under
which civil and criminal penalties were imposed, including in
some cases fines and other penalties and sanctions in the tens
and hundreds of millions of dollars. These agencies likely will
seek to impose penalties of some amount against us for past
conduct, but the ultimate amount of any penalties we may pay
currently cannot be reasonably estimated. Under trade sanctions
laws, the U.S. Department of Justice may also seek to
impose modifications to business practices, including immediate
cessation of all business activities in specific countries or
other limitations that decrease our business, and modifications
to compliance programs, which may increase compliance costs. Any
injunctive relief, disgorgement, fines, penalties, sanctions or
imposed modifications to business practices resulting from these
investigations could adversely affect our results of operations.
Additionally, during 2008, we incurred $56 million for
costs in connection with our exit from certain sanctioned
countries and, to date, we have incurred $106 million for
legal and professional fees in connection with complying with
and conducting these on-going investigations. This amount
excludes the costs we have incurred to augment and improve our
compliance function in 2008 and 2009. We may have additional
charges related to these matters in future periods, which costs
may include labor claims, contractual claims, penalties assessed
by customers, and costs, fines, taxes and penalties assessed by
the local governments, but we cannot quantify those charges or
be certain of the timing of them.
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Failure in the future to ensure ongoing compliance with
certain laws could affect our results of
operations. In 2009, we substantially augmented
our compliance infrastructure with increased staff and more
rigorous policies, procedures and training of our employees
regarding compliance with applicable anti-corruption laws, trade
sanctions laws and import/export laws. As part of this effort,
we now undertake audits of our compliance performance in various
countries. Our forward-looking statements assume that our
compliance efforts will be successful and that we will comply
with our internal policies and applicable laws regarding these
issues. Our failure to do so could result in additional
enforcement action in the future.
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Political disturbances, war, or terrorist attacks and changes
in global trade policies could adversely impact our
operations. We operate in over 100 countries, and
as such are at risk of various types of political activities,
including acts of insurrections, war, terrorism, nationalization
of assets and changes in trade policies. We have assumed there
will be no material political disturbances or terrorist attacks
and there will be no material changes in global trade policies
that affect our business. Any further military action undertaken
by the U.S. or other countries or political disturbances in
the countries in which we conduct business could adversely
affect our results of operations.
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Current turmoil in the credit markets may reduce our access
to capital or reduce the availability of financial
risk-mitigation tools. The worldwide credit
markets have experienced turmoil and uncertainty since mid-2008.
Our forward-looking statements assume that the financial
institutions that have committed to extend us credit will honor
their commitments under our credit facilities. If one or more of
those institutions becomes unwilling or unable to honor its
commitments, our access to liquidity could be impaired and our
cost of capital to fund growth could further increase. We use
interest-rate and foreign-exchange swap transactions with
financial institutions to mitigate certain interest-rate and
foreign-exchange risks associated with our capital structure and
our business. Our forward-looking statements assume that those
tools will continue to be available to us. However, the failure
of any counter party to honor a swap agreement could reduce the
availability of these financial risk-mitigation tools or could
result in the loss of expected financial benefits. In response
to credit market conditions and the global economic and business
environment, we have undertaken measures to reduce our use of
capital going forward. Our forward-looking statements assume
that we will operate with lower capital expenditures in 2010
than in 2009. However, as the business climate
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changes and if attractive opportunities for organic or
acquisitive growth become available, we may spend capital
selectively above the amounts we have budgeted.
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Finally, our future results will depend upon various other risks
and uncertainties, including, but not limited to, those detailed
in our other filings with the SEC. For additional information
regarding risks and uncertainties, see our other filings with
the SEC under the Securities Exchange Act of 1934, as amended,
and the Securities Act of 1933, as amended, available free of
charge at the SECs website at www.sec.gov.
An investment in our common shares involves various risks. When
considering an investment in our company, you should consider
carefully all of the risk factors described below, the matters
discussed on the foregoing pages under
Business-Forward-Looking Statements, as well as
other information included and incorporated by reference in this
report.
We have
significant operations that would be adversely impacted in the
event of war, political disruption, civil disturbance, economic
and legal sanctions or changes in global trade
policies.
Like most multinational oilfield service companies, we have
operations in certain international areas, including parts of
the Middle East, Africa, Latin America, the Asia Pacific region
and the FSU, that are subject to risks of war, political
disruption, civil disturbance, economic and legal sanctions
(such as restrictions against countries that the
U.S. government may deem to sponsor terrorism) and changes
in global trade policies. Our operations may be restricted or
prohibited in any country in which the foregoing risks occur.
In particular, the occurrence of any of these risks could result
in the following events, which in turn, could materially and
adversely impact our results of operations:
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disruption of oil and natural gas exploration and production
activities;
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restriction of the movement and exchange of funds;
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our inability to collect receivables;
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enactment of additional or stricter U.S. government or
international sanctions; and
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limitation of our access to markets for periods of time.
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We are
involved in several governmental and internal investigations,
which are costly to conduct, have resulted in a loss of revenue
and may result in substantial financial penalties.
We are currently involved in government and internal
investigations involving various areas of our operations.
Until 2003, we participated in the United Nations
oil-for-food
program governing sales of goods and services into Iraq. The
U.S. Department of Justice (DOJ) and the SEC
have undertaken investigations of our participation in the
oil-for-food
program and have subpoenaed certain documents in connection with
these investigations. We have cooperated fully with these
investigations. We have retained legal counsel, reporting to our
audit committee, to investigate this matter. These
investigations are not yet resolved, and we cannot 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. This
investigation is not yet resolved, and we cannot anticipate the
timing, outcome or possible impact of the ultimate resolution of
the investigation, financial or otherwise.
In light of this investigation and of the current 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,
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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 the embezzlement of
approximately $175,000 at a European subsidiary and the possible
improper use of these funds, including possible payments to
government officials in Europe, during the period from 2000 to
2004, and 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. These investigations are not yet resolved, and we
cannot anticipate the timing, outcome or possible impact of the
ultimate resolution of the investigations, financial or
otherwise.
The DOJ, SEC and other agencies and authorities have a broad
range of civil and criminal penalties they may seek to impose
against corporations and individuals for violations of trade
sanctions laws, the FCPA and other federal statutes including,
but not limited to, injunctive relief, disgorgement, fines,
penalties and modifications to business practices and compliance
programs. In recent years, these agencies and authorities have
entered into agreements with, and obtained a range of penalties
against, several public corporations and individuals in similar
investigations, under which civil and criminal penalties were
imposed, including in some cases fines and other penalties and
sanctions in the tens and hundreds of millions of dollars. These
agencies are seeking to impose penalties against us for past
conduct, but the ultimate amount of any penalties we may pay
currently cannot be reasonably estimated. Under trade sanctions
laws, the DOJ may also seek to impose modifications to business
practices, including immediate cessation of all business
activities in specific countries or other limitations that
decrease our business, and modifications to compliance programs,
which may increase compliance costs. Any injunctive relief,
disgorgement, fines, penalties, sanctions or imposed
modifications to business practices resulting from these
investigations could adversely affect our results of operations.
In addition, our 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 have 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 affect on our business, financial condition,
liquidity or results of operations.
During 2009 and 2008, we incurred $45 million and
$47 million, respectively, in connection with these
on-going investigations. In addition, we incurred
$56 million for costs incurred in connection with our exit
from certain sanctioned countries during 2008.
Our
significant operations in foreign countries expose us to
currency fluctuation risks or devaluation.
A portion of our net assets are located outside the
U.S. and are carried on our books in local currencies.
Changes in those currencies in relation to the U.S. dollar
result in translation adjustments, which are reflected as
accumulated other comprehensive income in the shareholders
equity section in our Consolidated Balance Sheets. We recognize
remeasurement and transactional gains and losses on currencies
in our Consolidated Statements of Income, which may adversely
impact our results of operations. We enter into foreign currency
forward contracts and other derivative instruments as an effort
to reduce our exposure to currency fluctuations; however, there
can be no assurance that these hedging activities will be
effective in reducing or eliminating foreign currency risks.
In certain foreign countries, a component of our cost structure
is denominated in a different currency than our revenues. In
those cases, currency fluctuations could adversely impact our
operating margins.
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Uninsured
claims and litigation could adversely impact our
results.
In the ordinary course of business, we become the subject of
various claims and litigation. We maintain insurance to cover
many of our potential losses and we are subject to various
self-retentions and deductibles with respect to our insurance.
Although we are subject to various ongoing items of litigation,
we do not believe any of our current items of litigation are
likely to result in any material uninsured losses to us.
However, it is possible an unexpected judgment could be rendered
against us in cases in which we could be uninsured and beyond
the amounts we currently have reserved or anticipate incurring,
and in some cases those losses could be material.
We currently carry a variety of insurance for our operations. We
are partially self-insured for certain claims in amounts we
believe to be customary and reasonable. Although we believe we
maintain insurance coverage adequate for the risks of our
business, our insurance may not be sufficient to cover any
particular loss, or our insurance may not cover all losses. For
example, while we maintain product liability insurance, this
type of insurance is limited in coverage and it is possible an
adverse claim could arise in excess of our coverage. Finally,
insurance rates have in the past been subject to wide
fluctuation, and in the current global economic environment
could increase significantly in the near future. Changes in
coverage, insurance markets and our industry may result in
further increases in our cost and higher deductibles and
retentions.
We are also subject to various federal, state and local laws and
regulations relating to the energy industry in general and the
environment in particular. Environmental laws have in recent
years become more stringent and have generally sought to impose
greater liability on a larger number of potentially responsible
parties. While we are not currently aware of any situation
involving an environmental claim that would be likely to have a
material adverse effect on our business, it is always possible
that an environmental claim with respect to one or more of our
current businesses or a business or property that one of our
predecessors owned or used could arise and could involve
material expenditures.
Customer
credit risks could result in losses.
The concentration of our customers in the energy industry may
impact our overall exposure to credit risk as customers may be
similarly affected by prolonged changes in economic and industry
conditions. Those countries that rely heavily upon income from
hydrocarbon exports will be hit particularly hard given the drop
in oil prices. Further, laws in some jurisdictions in which we
operate could make collection difficult or time consuming. We
perform ongoing credit evaluations of our customers and do not
generally require collateral in support of our trade
receivables. While we maintain reserves for potential credit
losses, we cannot assure such reserves will be sufficient to
meet write-offs of uncollectible receivables or that our losses
from such receivables will be consistent with our expectations.
Any
capital financing that may be necessary to fund growth may not
be available to us at economic rates.
Turmoil in the credit markets and the potential impact on
liquidity of major financial institutions may have an adverse
effect on our ability to fund growth opportunities through
borrowings, under either existing or newly created instruments
in the public or private markets on terms we believe to be
reasonable.
A
terrorist attack could have a material and adverse effect on our
business.
We operate in many dangerous countries, such as Iraq, in which
acts of terrorism or political violence are a substantial and
frequent risk. Such acts could result in kidnappings or the loss
of life of our employees or contractors, a loss of equipment,
which may or may not be insurable in all cases, or a cessation
of business in an affected area. We cannot be certain that our
security efforts will in all cases be sufficient to deter or
prevent acts of political violence or terrorist strikes against
us or our customers operations.
Changes
in tax laws could adversely impact our results
On June 26, 2002, the stockholders and Board of Directors
of Weatherford International, Inc.
(Weatherford-Delaware) approved our corporate
reorganization, and Weatherford International Ltd.
(Weatherford-Bermuda),
15
a newly formed Bermuda company, became the parent holding
company of Weatherford International, Inc. During the first
quarter of 2009, we completed a transaction in which Weatherford
Bermuda company became a wholly-owned subsidiary of Weatherford
International Ltd., a Swiss joint-stock company
(Weatherford-Switzerland), and holders of our common
shares received one registered share of Weatherford Switzerland
for each common share of Weatherford Bermuda that they held. We
refer to this transaction as the redomestication.
The realization of the tax benefit of this reorganization could
be impacted by changes in tax laws, tax treaties or tax
regulations or the interpretation or enforcement thereof or
differing interpretation or enforcement of applicable law by the
U.S. Internal Revenue Service or other taxing
jurisdictions. The inability to realize this benefit could have
a material impact on our financial statements.
The
anticipated benefits of moving our principal executive offices
to Switzerland may not be realized, and difficulties in
connection with moving our principal executive offices could
have an adverse effect on us.
In connection with the redomestication, we relocated our
principal executive offices from Houston, Texas to Geneva,
Switzerland. Most of our executive officers, including our Chief
Executive Officer, and other key decision makers have relocated
or will relocate to Switzerland. We may face significant
challenges in relocating our executive offices to a different
country, including difficulties in retaining and attracting
officers, key personnel and other employees and challenges in
maintaining our executive offices in a country different from
the country where other employees, including corporate support
staff, are located. Employees may be uncertain about their
future roles within our organization as a result of the
redomestication. Management may also be required to devote
substantial time to the redomestication and related matters,
which could otherwise be devoted to focusing on ongoing business
operations and other initiatives and opportunities. In addition,
we may not realize the benefits we anticipate from the
redomestication, including the benefit of moving to a location
that is more centrally located within our area of worldwide
operations. Any such difficulties could have an adverse effect
on our business, results of operations or financial condition.
The
rights of our shareholders are governed by Swiss law and
documents following the redomestication.
Following the redomestication, the rights of our shareholders
are governed by Swiss law and Weatherford-Switzerlands
articles of association and organizational regulations. The
rights of shareholders under Swiss law differ from the rights of
shareholders of companies incorporated in other jurisdictions.
For example, directors of Weatherford-Switzerland may be removed
by shareholders with or without cause, but such removal requires
the vote of shareholders holding at least
662/3%
of the voting rights and the absolute majority of the par value
of the registered shares represented at the meeting as well as a
quorum of at least two-thirds of the registered shares recorded
in the share register.
We intend
to hold future shareholder meetings in Switzerland, and our
required quorum for those meetings is lower.
We intend to hold future shareholders meetings in Switzerland,
which may make attendance in person more difficult for some
investors. For shareholders meetings for Weatherford-Switzerland
for the transaction of any business other than removal of a
director or certain other specified resolutions, a quorum
comprises at least one-third of the registered shares recorded
in the share register and entitled to vote (and at least
two-thirds of the registered shares recorded in the share
register and entitled to vote for the removal of directors and
certain other specified resolutions).
|
|
Item 1B.
|
Unresolved
Staff Comments
|
None.
16
Our operations are conducted in approximately 100 countries and
we have manufacturing facilities and sales, service and
distribution locations throughout the world. The following table
describes our material facilities as of December 31, 2009:
|
|
|
|
|
|
|
Owned/
|
|
Principal Services and Products
|
Location
|
|
Leased
|
|
Offered or Manufactured
|
|
North America:
|
|
|
|
|
Houston, Texas
|
|
Owned
|
|
Research and development
|
Houston, Texas
|
|
Owned
|
|
Sand screens
|
Houma, Louisiana
|
|
Owned
|
|
Cementing products
|
New Brighton, Minnesota
|
|
Owned
|
|
Water well and industrial screens
|
Nisku, Alberta, Canada
|
|
Owned
|
|
Reciprocating rod lift
|
Nisku, Alberta, Canada
|
|
Owned
|
|
Drilling equipment, fishing, wireline, controlled pressure
drilling and testing services
|
Pearland, Texas
|
|
Owned
|
|
Fishing, drilling equipment
|
Schriever, Louisiana
|
|
Owned
|
|
Cementation mfg. plant, well construction services
|
Latin America:
|
|
|
|
|
Ciudad Del Carmen, Campeche, Mexico
|
|
Leased
|
|
Wireline
|
Reynosa,Tamaulipas, Mexico
|
|
Leased
|
|
Casing exit, cementation equipment & systems, directional
drilling, fishing , managed pressure drilling
|
Reynosa,Tamaulipas, Mexico
|
|
Leased
|
|
Service center
|
Europe/West Africa/FSU:
|
|
|
|
|
Aberdeen, Scotland
|
|
Leased
|
|
Expandable slotted tubulars
|
Langenhagen, Germany
|
|
Leased
|
|
Manufacturing
|
Nizhnevartovsk, Russia(2)
|
|
Owned
|
|
Drilling, sidetracking, wireline, fishing, well workover and
tool rental
|
Nyagan, Russia
|
|
Owned
|
|
Drilling, sidetracking, wireline, fishing, well workover and
tool rental
|
Middle East/North Africa/Asia:
|
|
|
|
|
Awjila, Libya
|
|
Leased
|
|
Warehouse and service
|
Deyang, China
|
|
Owned
|
|
Pump jacks and wellhead
|
Dongyin, Shangdong, China
|
|
Leased
|
|
Progressing cavity pumping
|
Hassi Messaoud, Algeria
|
|
Owned
|
|
Fishing, liner hangers, controlled pressure drilling and testing
services
|
Corporate:
|
|
|
|
|
Geneva, Switzerland
|
|
Leased
|
|
Headquarters
|
Houston, Texas
|
|
Leased
|
|
Corporate offices
|
|
|
Item 3.
|
Legal
Proceedings
|
In the ordinary course of business, we become the subject of
various claims and litigation. We maintain insurance to cover
many of our potential losses, and we are subject to various
self-retention limits and deductibles with respect to our
insurance.
See Item 1. Business Other Business
Data Federal Regulation and Environmental
Matters, which is incorporated by reference into this item.
17
See Item 1A. Risk Factors We are involved
in several governmental and internal investigations, which are
costly to conduct, have resulted in a loss of revenue and may
result in substantial financial penalties, which is
incorporated by reference into this item.
Although we are subject to various ongoing items of litigation,
we do not believe any of the items of litigation to which we are
currently subject is likely to result in any material uninsured
losses to us. It is possible, however, an unexpected judgment
could be rendered against us in the cases in which we are
involved that could be uninsured and beyond the amounts we
currently have reserved and in some cases those losses could be
material.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
No matters were submitted to a vote of our shareholders during
the fourth quarter of the year ended December 31, 2009.
PART II
|
|
Item 5.
|
Market
for Registrants Common Equity, Related Shareholder Matters
and Issuer Purchases of Equity Securities
|
Our shares are traded on the New York Stock and the Euronext
Exchanges under the symbol WFT. As of
February 24, 2010, there were 2,865 shareholders of
record. Additionally, there were 55 stockholders of Weatherford
International, Inc. as of the same date who had not yet
exchanged their shares. The following table sets forth, for the
periods indicated, the range of high and low sales prices per
share for our stock as reported on the New York Stock Exchange.
|
|
|
|
|
|
|
|
|
|
|
Price
|
|
|
High
|
|
Low
|
|
Year ending December 31, 2009
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
14.47
|
|
|
$
|
9.08
|
|
Second Quarter
|
|
|
23.75
|
|
|
|
10.50
|
|
Third Quarter
|
|
|
23.00
|
|
|
|
17.22
|
|
Fourth Quarter
|
|
|
20.92
|
|
|
|
15.43
|
|
Year ending December 31, 2008
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
36.82
|
|
|
$
|
25.91
|
|
Second Quarter
|
|
|
49.98
|
|
|
|
34.96
|
|
Third Quarter
|
|
|
49.76
|
|
|
|
22.26
|
|
Fourth Quarter
|
|
|
24.69
|
|
|
|
7.75
|
|
On February 24, 2010, the closing sales price of our shares
as reported by the New York Stock Exchange was $16.56 per share.
We have not declared or paid cash dividends on our shares since
1984.
We have an approved share repurchase program under which we can
spend up to $1 billion to repurchase our outstanding
shares. As of December 31, 2009, we have $205 million
available under this authorization to repurchase shares. During
the year ended December 31, 2009, no shares were
repurchased.
In addition, under our restricted share plan, employees may
elect to have us withhold shares to satisfy minimum statutory
federal, state and local tax withholding obligations arising on
the vesting of restricted stock awards and exercise of options.
When we withhold these shares, we are required to remit to the
appropriate taxing authorities the market price of the shares
withheld, which could be deemed a purchase of shares by us on
the date of
18
withholding. During the quarter ended December 31, 2009, we
withheld shares to satisfy these tax withholding obligations as
follows:
|
|
|
|
|
|
|
|
|
|
|
No. of
|
|
Average
|
Period
|
|
Shares
|
|
Price
|
|
October 1-October 31, 2009
|
|
|
11,934
|
|
|
$
|
20.33
|
|
November 1-November 30, 2009
|
|
|
3,298
|
|
|
|
16.84
|
|
December 1-December 31, 2009
|
|
|
877,714
|
|
|
|
15.91
|
|
Information concerning securities authorized for issuance under
equity compensation plans is set forth in Part III of this
report under Item 12(d). Security Authorized for
Issuance Under Equity Compensation Plans, which is
incorporated by reference into this Item.
Performance
Graph
This graph compares the yearly cumulative return on our shares
with the cumulative return on the Dow Jones U.S. Oil
Equipment & Services Index and the Dow Jones
U.S. Index for the last five years. The graph assumes the
value of the investment in our shares and each index was $100 on
December 31, 2004. The stockholder return set forth below
is not necessarily indicative of future performance. The
following graph and related information shall not be deemed
soliciting material or to be filed with
the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that
Weatherford specifically incorporates it by reference into such
filing.
Comparison
of Five Year Total Return
19
|
|
Item 6.
|
Selected
Financial Data
|
The following table sets forth certain selected historical
consolidated financial data and should be read in conjunction
with Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations
and Item 8. Financial Statements and Supplementary
Data, both contained in this report. The following
information may not be indicative of our future operating
results. Results for 2008 have been corrected in the following
table to reflect a change in our income tax provision during
that year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005(a)
|
|
|
|
|
(In thousands, except per share amount)
|
|
|
|
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
8,826,933
|
|
|
$
|
9,600,564
|
|
|
$
|
7,832,062
|
|
|
$
|
6,578,928
|
|
|
$
|
4,333,227
|
|
Operating Income
|
|
|
703,855
|
|
|
|
1,978,549
|
|
|
|
1,624,336
|
|
|
|
1,354,687
|
|
|
|
570,598
|
|
Income From Continuing Operations Attributable to Weatherford
|
|
|
253,766
|
|
|
|
1,406,081
|
|
|
|
1,091,975
|
|
|
|
906,106
|
|
|
|
470,095
|
|
Basic Earnings Per Share From Continuing Operations Attributable
To Weatherford
|
|
|
0.35
|
|
|
|
2.06
|
|
|
|
1.61
|
|
|
|
1.31
|
|
|
|
0.78
|
|
Diluted Earnings Per Share From Continuing Operations
Attributable To Weatherford
|
|
|
0.35
|
|
|
|
2.01
|
|
|
|
1.57
|
|
|
|
1.28
|
|
|
|
0.74
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
18,866,183
|
|
|
$
|
16,476,513
|
|
|
$
|
13,190,957
|
|
|
$
|
10,139,248
|
|
|
$
|
8,580,304
|
|
Long-term Debt
|
|
|
5,847,258
|
|
|
|
4,564,255
|
|
|
|
3,066,335
|
|
|
|
1,564,600
|
|
|
|
632,071
|
|
Shareholders Equity
|
|
|
9,798,704
|
|
|
|
8,405,299
|
|
|
|
7,440,046
|
|
|
|
6,197,837
|
|
|
|
5,676,303
|
|
Cash Dividends Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
In 2005, we acquired Precision Energy Services and Precision
Drilling International for $943 million in cash and
104 million Weatherford shares. In connection with the
acquisition we recorded exit and restructuring charges of
$114 million or $79 million, net of tax. Also in 2005,
we recorded a $115 million gain on the sale of our
remaining shares of Universal stock with no income tax impact. |
20
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
Our Managements Discussion and Analysis of Financial
Condition and Results of Operations (MD&A)
begins with an executive overview which provides a general
description of our company today, a synopsis of industry market
trends, insight into managements perspective of the
opportunities and challenges we face and our outlook for 2010.
Next, we analyze the results of our operations for the last
three years, including the trends in our business. Then we
review our cash flows and liquidity, capital resources and
contractual commitments. We conclude with an overview of our
critical accounting judgments and estimates and a summary of
recently issued accounting pronouncements.
The Company, we, us and
our refer to Weatherford International Ltd., a Swiss
joint stock corporation, or, prior to February 26, 2009, to
Weatherford International Ltd., a Bermuda exempted company,
which, as of that date, became a direct, wholly owned subsidiary
of Weatherford International Ltd., a Swiss joint stock
corporation, in either case on a consolidated basis.
The following discussion should be read in conjunction with our
Consolidated Financial Statements and Notes thereto included in
Item 8. Financial Statements and Supplementary
Data. Our discussion includes various forward-looking
statements about our markets, the demand for our products and
services and our future results. These statements are based on
certain assumptions we consider reasonable. For information
about these assumptions, you should refer to the section
entitled Item 1. Business Forward-Looking
Statements.
Overview
General
We provide equipment and services used for drilling, completion
and production of oil and natural gas wells throughout the
world. We conduct operations in approximately 100 countries and
have service and sales locations in nearly all of the oil and
natural gas producing regions in the world. Our product
offerings can be grouped into ten service lines:
1) drilling services; 2) artificial lift systems;
3) well construction; 4) completion systems;
5) integrated drilling; 6) drilling tools:
7) re-entry and fishing; 8) stimulation and chemicals
services; 9) wireline and evaluation services; and
10) pipeline and specialty services.
Our operational performance is segmented and reviewed on a
geographic basis and we report the following regions as
separate, distinct reporting segments (1) North America,
(2) Latin America, (3) Europe/West Africa/FSU and
(4) Middle East/North Africa/Asia.
In July 2009, we acquired the Oilfield Services Division
(OFS) of
TNK-BP for
24.3 million shares valued at approximately
$450 million plus contingent and other consideration. In
this transaction, we acquired drilling, well workover and
cementing services operations in West Siberia, East Siberia
and the Volga-Urals region.
21
Industry
Trends
Changes in the current price and expected future prices of oil
and natural gas influence the level of energy industry spending.
Changes in expenditures result in an increased or decreased
demand for our products and services. Rig count is an indicator
of the level of spending for the exploration for and production
of oil and natural gas reserves. The following chart sets forth
certain statistics that reflect historical market conditions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
|
|
|
|
|
|
|
Henry Hub
|
|
American Rig
|
|
International
|
|
|
WTI Oil(1)
|
|
Gas(2)
|
|
Count(3)
|
|
Rig Count(3)
|
|
2009
|
|
$
|
79.36
|
|
|
$
|
5.57
|
|
|
|
1,485
|
|
|
|
1,113
|
|
2008
|
|
|
44.60
|
|
|
|
5.62
|
|
|
|
2,143
|
|
|
|
1,175
|
|
2007
|
|
|
95.98
|
|
|
|
7.48
|
|
|
|
2,171
|
|
|
|
1,122
|
|
|
|
|
(1) |
|
Price per barrel as of December 31 Source:
Thomson Reuters |
|
(2) |
|
Price per MM/BTU as of December 31 Source:
Thomson Reuters |
|
(3) |
|
Average rig count for December Source: Baker
Hughes Rig Count and other third-party data |
Oil prices increased during 2009, ranging from a low of $33.98
per barrel in February to a high of $81.37 per barrel late in
October. Natural gas prices decreased for most of the first
three quarters of 2009, but started to rally late in September,
ranging from a high of $6.07 MM/BTU in early January to a
low of $2.51 MM/BTU early in September. Factors influencing
oil and natural gas prices during the period include hydrocarbon
inventory levels, realized and expected economic growth,
realized and expected levels of hydrocarbon demand, levels of
spare production capacity within the Organization of Petroleum
Exporting Countries (OPEC), weather and geopolitical
uncertainty.
Opportunities
and Challenges
The nature of our industry offers many opportunities and
challenges. The cyclicality of the energy industry impacts the
demand for our products and services. Certain of our products
and services, such as our drilling and evaluation services, well
installation services and well completion services, depend on
the level of exploration and development activity and the
completion phase of the well life cycle. Other products and
services, such as our production optimization and artificial
lift systems, are dependent on production activity. We have
created a long-term strategy aimed at growing our businesses,
servicing our customers, and most importantly, creating value
for our shareholders. The success of our long-term strategy will
be determined by our ability to manage effectively any industry
cyclicality, respond to industry demands and successfully
maximize the benefits from our acquisitions.
Outlook
We believe the long-term outlook for our businesses is
favorable. As decline rates accelerate and reservoir
productivity complexities increase, our clients will face
growing challenges securing desired rates of production growth.
The acceleration of decline rates and the increasing complexity
of the reservoirs increase our customers requirements for
technologies that improve productivity and efficiency and for
our products and services. These phenomena provide us with a
positive outlook over the longer term.
The near-term outlook is more difficult to assess. Climate,
natural gas storage levels and commodity prices, as well as
expectations for the U.S. economy, will dictate the level
of oilfield service activity in North America. The prognosis for
North America in 2010 is favorable, but limited in scope and
scale by the relative elasticity of the gas supply curve. We are
currently anticipating that North America will experience an
increase in volume during 2010.
While it is difficult to predict exact growth rates given the
current fluid economic conditions and volatility, we expect our
total international businesses to grow 20% in 2010 as compared
to 2009. The Eastern Hemisphere is anticipated to contribute
essentially all of the
year-over-year
increase in revenues, with our Latin America business
essentially flat year-over-year. Given the activity declines
experienced during the first half of 2009 in North America,
pricing in the U.S. and Canada had seen significant
weakness, with rigs, tubulars and stimulation showing the
strongest pressures. In the international markets, pricing
softened during the first half of 2009 where and when
contractual terms had come to renewal time. Requests by clients
to renegotiate existing contracts yielded more
22
modest price erosion with significant differences between
international regions. On a global basis, we believe that these
pricing moves are now behind us.
Overall, the level of improvements for our businesses for 2010
will continue to depend heavily on volume increases and our
ability to further penetrate existing markets with our younger
technologies as well as to successfully introduce these
technologies to new markets. In addition, our ability to
continue to grow our business aggressively will rely on our
continued demonstration of a high level of operational efficacy
for our clients on project management opportunities. The
recruitment, training and retention of personnel will also be a
critical factor in growing our businesses. The continued
strength of the industry will be highly dependent on many
external factors, such as world economic and political
conditions, member country quota compliance within OPEC and
weather conditions, including the factors described above under
Forward-Looking Statements.
Results
of Operations
The following charts contain selected financial data comparing
our consolidated and segment results from operations for 2009,
2008 and 2007. Results for 2008 have been corrected in the
following chart to reflect a change in our income tax provision
during that year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except percentages and
|
|
|
|
per share data)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
2,765,707
|
|
|
$
|
4,460,147
|
|
|
$
|
3,937,456
|
|
Middle East/North Africa/Asia
|
|
|
2,368,118
|
|
|
|
2,391,520
|
|
|
|
1,823,769
|
|
Europe/West Africa/FSU
|
|
|
1,616,460
|
|
|
|
1,539,190
|
|
|
|
1,188,519
|
|
Latin America
|
|
|
2,076,648
|
|
|
|
1,209,707
|
|
|
|
882,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,826,933
|
|
|
|
9,600,564
|
|
|
|
7,832,062
|
|
Operating Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
197,211
|
|
|
|
1,125,199
|
|
|
|
1,013,088
|
|
Middle East/North Africa/Asia
|
|
|
441,974
|
|
|
|
561,012
|
|
|
|
416,263
|
|
Europe/West Africa/FSU
|
|
|
251,991
|
|
|
|
382,772
|
|
|
|
293,846
|
|
Latin America
|
|
|
281,590
|
|
|
|
277,094
|
|
|
|
203,211
|
|
Research and Development
|
|
|
(194,650
|
)
|
|
|
(192,659
|
)
|
|
|
(169,317
|
)
|
Corporate
|
|
|
(173,695
|
)
|
|
|
(135,012
|
)
|
|
|
(101,968
|
)
|
Exit and Restructuring
|
|
|
(100,566
|
)
|
|
|
(39,857
|
)
|
|
|
(30,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
703,855
|
|
|
|
1,978,549
|
|
|
|
1,624,336
|
|
Interest Expense, Net
|
|
|
(366,748
|
)
|
|
|
(243,679
|
)
|
|
|
(171,281
|
)
|
Other, Net
|
|
|
(37,633
|
)
|
|
|
(44,956
|
)
|
|
|
(8,569
|
)
|
Effective Tax Rate
|
|
|
6.5
|
%
|
|
|
14.8
|
%
|
|
|
23.0
|
%
|
Net Income from Continuing Operations Per Diluted Share
|
|
$
|
0.35
|
|
|
$
|
2.01
|
|
|
$
|
1.57
|
|
Loss from Discontinued Operation per Diluted Share
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
Net Income per Diluted Share
|
|
$
|
0.35
|
|
|
$
|
1.99
|
|
|
$
|
1.54
|
|
Depreciation and Amortization
|
|
|
906,697
|
|
|
|
731,808
|
|
|
|
606,226
|
|
23
Revenues
The following chart contains consolidated revenues by product
line for 2009, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Well Construction
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
16
|
%
|
Artificial Lift Systems
|
|
|
16
|
|
|
|
17
|
|
|
|
18
|
|
Drilling Services
|
|
|
16
|
|
|
|
16
|
|
|
|
15
|
|
Integrated Drilling
|
|
|
13
|
|
|
|
6
|
|
|
|
5
|
|
Completion Systems.
|
|
|
8
|
|
|
|
10
|
|
|
|
10
|
|
Drilling Tools
|
|
|
8
|
|
|
|
11
|
|
|
|
12
|
|
Stimulation & Chemicals
|
|
|
8
|
|
|
|
7
|
|
|
|
6
|
|
Wireline
|
|
|
6
|
|
|
|
8
|
|
|
|
8
|
|
Re-entry & Fishing
|
|
|
6
|
|
|
|
7
|
|
|
|
8
|
|
Pipeline & Specialty Services
|
|
|
2
|
|
|
|
3
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenues decreased $774 million, or 8%, in
2009 as compared to 2008 against a 30% decrease in rig count
activity. This decrease in revenue is mainly attributable to the
significant declines experienced in North America.
International revenues increased $921 million, or 18%, in
the current year as compared to the prior year. Our Latin
American region was the largest contributor to our
year-over-year
international revenue growth. This international growth was
against an 8% decline in international rig count. From a service
line perspective, our integrated drilling service line
experienced the strongest growth in 2009.
Consolidated revenues increased $1,769 million, or 23%, in
2008 as compared to 2007. Approximately 70% of our revenue
growth was derived from outside of North America. International
revenues increased $1,246 million, or 32%, in 2008 as
compared to 2007, which outpaced the 8% increase in average
international rig count over the comparable period and is
consistent with international growth trends we experienced in
the prior year. Revenues from our drilling services, well
construction, artificial lift systems and integrated drilling
product lines were strong contributors to the
year-over-year
increase.
Operating
Income
Consolidated operating income decreased $1,275 million, or
64%, in 2009 as compared to 2008. Our operating segments
accounted for $1,173 million of this decrease. In addition,
exit and restructuring charges during 2009 increased
$61 million and corporate expenditure increased
$39 million compared to 2008. The increase in corporate
expenses was primarily attributable to higher employee
compensation costs, professional fees and costs related to
acquisitions (which were capitalized in 2008 and expensed in
2009 due to the adoption of new accounting guidance related to
business combinations) and settlement of certain legal disputes.
In addition, 2009 includes costs associated with business
process optimization initiatives that should be ongoing over the
next two years. We also augmented our compliance infrastructure
with increased staff and more rigorous policies and training of
our employees regarding compliance with applicable
anti-corruption laws, trade sanction laws and import/export laws.
Consolidated operating income increased $354 million, or
22%, in 2008 as compared to 2007. Our operating segments
contributed $420 million of incremental operating income
during 2008 as compared to 2007. This incremental gain was
partially offset by an increase in corporate and research and
development expenditures of $57 million over 2007 and an
increase in exit and restructuring costs of $9 million. The
increase in corporate and research and development expenses was
primarily attributable to higher employee compensation costs.
We incurred exit and restructuring charges during 2009 of
$101 million, which was comprised of
(i) $45 million for legal and professional fees
incurred in connection with our on-going investigations,
(ii) $52 million for severance and facility closure
costs and (iii) $4 million for unusable assets and
cost accruals in certain sanctioned countries.
24
Exit and restructuring charges during 2008 include
(i) $47 million for legal and professional fees
incurred in connection with our on-going investigations,
(ii) $18 million for severance costs incurred
associated with restructuring activities and
(iii) $56 million for costs incurred in connection
with our withdrawal from sanctioned countries. These charges
were partially offset by an $81 million gain recognized in
the second quarter of 2008 as a result of selling our 50%
interest in a subsidiary we control to Qatar Petroleum for cash
consideration of $113 million.
During 2007, we incurred exit and restructuring charges of
$31 million which was comprised of $17 million in
severance charges associated with restructuring activities and
$14 million for legal and professional fees incurred in
connection with our on-going investigations by the
U.S. government.
Interest
Expense, Net
Interest expense, net increased $123 million, or 51% in
2009 compared to 2008. The increase in interest expense was
primarily attributable to an overall increase in our long-term
debt balance during the period. We issued $1.5 billion in
senior notes in March 2008 and an additional $1.25 billion
of senior notes in January 2009. This increase was partially
offset by lower short-term borrowing rates and balances during
the comparable period. The incremental borrowings added were
primarily used to fund capital expenditures and to fund
acquisitions.
Interest expense increased $72 million, or 42%, in 2008
compared to 2007. The increase in interest expense was primarily
attributable to an overall increase in our long-term debt
balance during the periods. We issued $1.5 billion in
senior notes in June 2007 and an additional $1.5 billion of
senior notes in March 2008. This increase was partially offset
by lower weighted average short-term borrowing rates during 2008
as compared to 2007. The incremental borrowings added were used
to fund capital expenditures and to fund our current year
acquisitions.
Other
Expense, Net
Other expense, net decreased $7 million, or 16% in 2009
compared to 2008. The decrease was primarily due to a decline in
foreign currency exchange losses. During 2008, other expense,
net increased $36 million, from $9 million in 2007 to
$45 million in 2008. The increase was almost entirely
attributable to foreign currency exchange losses incurred as the
result of the weakening of foreign currencies against the
U.S. dollar, particularly in the latter half of 2008.
Income
Taxes
Our effective tax rates were 6.5% in 2009, 14.8% in 2008 and
23.0% in 2007. The decrease in our effective tax rate during
2009 is primarily due to a large decrease in earnings in certain
jurisdictions, largely North America, with no corresponding
decrease in certain tax deductions. The decrease in our
effective tax rate during 2008 was due to benefits realized from
the refinement of our international tax structure and changes in
our geographic earnings mix.
During 2008, we recorded a benefit of approximately
$100 million related to foreign taxes paid that will be
used to reduce our future United States tax liability.
Segment
Results
North
America
Revenues in our North America segment decreased
$1,694 million, or 38%, in 2009 as compared to 2008 on a
42% decline in average North America rig count over the
comparable period. The decrease in revenues is the result of the
steep decline in drilling activity both in Canada and the United
States and the significant declines in pricing experienced in
the first half of 2009.
Operating income decreased $928 million, or 82%, in 2009
compared to 2008. Operating margins were 7% and 25% in 2009 and
2008, respectively. The combination of the significant reduction
in drilling activity in the region and pricing declines was the
primary reason for the deterioration in margins and operating
income.
25
Revenues in our North America segment increased
$523 million, or 13%, in 2008 as compared to 2007 and
outpaced a 7% increase in rig count over the comparable period.
Revenues grew across all product lines, with artificial lift
systems, drilling services and stimulation & chemicals
product lines being the strongest contributors to the
year-over-year
increase.
Operating income increased $112 million, or 11%, from
$1,013 million in 2007 to $1,125 million in 2008.
Operating margins declined slightly to 25% in 2008 compared to
26% in 2007.
Middle
East/North Africa/Asia
Middle East/North Africa/Asia revenues decreased
$23 million, or 1%, in 2009 as compared to 2008 on a 6%
decline in rig count over the comparable period. Integrated
drilling was the strongest performer from a service line
perspective.
Operating income decreased $119 million, or 21%, during
2009 compared to the prior year. Operating margins were 19% and
23% in 2009 and 2008, respectively. The deterioration in
operating income and margins during 2009 was primarily the
result of delays in startups and deliveries as well as pricing
declines experienced in the region.
Revenues in our Middle East/North Africa/Asia segment increased
$568 million, or 31%, in 2008 as compared to 2007. This
region contributed approximately 32% of our total revenue growth
for 2008 and exceeded the average rig count increase of 6% for
this region over the comparable period. Revenues from our
drilling services and integrated drilling product lines were
among the strongest contributors to the
year-over-year
increase.
Operating income increased $145 million, or 35%, from
$416 million in 2007 to $561 million in 2008.
Operating margins were 23% in both 2008 and 2007.
Europe/West
Africa/FSU
Revenues in our Europe/West Africa/FSU segment increased
$77 million, or 5%, in 2009 compared to 2008 against a 16%
rig count decrease over the comparable period. Our acquisition
of OFS in July 2009 contributed approximately $180 million
in revenues during the year. This increase was partially offset
by activity declines experienced in the region. Integrated
drilling and stimulation and chemicals were the strongest
performers from a service line perspective.
Operating income decreased $131 million, or 34%, during the
current year compared to the prior year. Operating margins were
16% in 2009 and 25% in 2008. The current years operating
income includes $21 million related to a gain recorded in
connection with the revaluation of contingent consideration
included as part of the acquisition of OFS. This gain was offset
by activity and pricing declines experienced in the region.
Revenues in our Europe/West Africa/FSU segment increased
$351 million, or 30%, in 2008 as compared to 2007. The
region contributed approximately 20% of our total revenue growth
for 2008 and exceeded the 20% increase in average rig count in
the region over the comparable period. Revenues from our well
construction and drilling services product lines were the
strongest contributors to the
year-over-year
increase.
Operating income increased $89 million, or 30%, from
$294 million in 2007 to $383 million in 2008.
Operating margins were 25% in both 2008 and 2007.
Latin
America
Revenues in our Latin America segment increased
$867 million, or 71%, in 2009 as compared to the prior year
against an average rig count decrease of 7% over the comparable
period. Mexico was the strongest contributor to revenue growth.
From a service line perspective, our integrated drilling and
stimulation and chemicals service lines experienced the
strongest growth in 2009.
Operating income increased $5 million, or 2%, during 2009
as compared to 2008 and operating margins decreased from 23% in
2008 to 14% in 2009. A significant change in product mix,
together with unforeseen delays, shifts in customer focus and
market declines in Venezuela, Argentina and Colombia negatively
impacted margins. In addition, weather issues and a reduction in
gas activity in Mexico contributed to the decline in margins.
26
Revenues in our Latin America segment increased
$327 million, or 37%, in 2008 as compared to 2007. The
region contributed approximately 19% of our total revenue growth
for 2008 and outpaced the 8% increase in Latin American rig
count over the comparable period. Revenues from our drilling
services, completion systems, artificial lift systems and
integrated drilling service lines were the strongest
contributors to the
year-over-year
increase.
Operating income increased $74 million, or 36%, from
$203 million in 2007 to $277 million in 2008.
Operating margins were 23% in both 2008 and 2007.
Discontinued
Operation
We finalized the divestiture of our discontinued operation
consisting of our oil and gas development and production company
during the second quarter of 2008. We recorded a gain of
$11 million, net of taxes, in connection with the
finalization of the divestiture. On a
year-to-date
basis, we had a loss from our discontinued operation, net of
taxes, of $13 million, which included approximately
$21 million incurred in connection with the settlement of a
legal dispute regarding the business. This loss was partially
offset by the gain recognized in the second quarter of 2008.
Equity
Investment Acquisition
We acquired a 33% ownership interest in Premier Business
Solutions (PBS) in June 2007 for approximately
$330 million. PBS conducts business in Russia and is an
electric submersible pump manufacturer. In January 2008, we sold
our electrical submersible pumps product line to PBS and
received a combination of cash and an additional equity
investment in PBS in consideration of the sale. This transaction
increased our ownership percentage to approximately 40%. In
September 2009, we converted a $38 million note plus
accrued interest due from PBS for an additional equity
investment. Our ownership percentage was unchanged as the other
joint venture partner also converted its notes receivable for an
additional equity investment.
Liquidity
and Capital Resources
Sources
of Liquidity
Our sources of liquidity include current cash and cash
equivalent balances, cash generated from operations, and
committed availabilities under bank lines of credit. We also
historically have accessed banks for short-term loans from
uncommitted borrowing arrangements and the capital markets with
debt, equity and convertible offerings.
Committed
Borrowing Facilities
We maintain various revolving credit facilities with syndicates
of banks that can be used for a combination of borrowings,
support for our commercial paper program and issuances of
letters of credit. At December 31, 2009, these facilities
allow for an aggregate availability of $1.8 billion and
mature in May 2011. The weighted average interest rate on
outstanding borrowings of these facilities at December 31,
2009, was 1.3%.
Our committed borrowing facilities require us to maintain a
debt-to-capitalization
ratio of less than 60% and contains other covenants and
representations customary for an investment-grade commercial
credit. Our
debt-to-capitalization
ratio was 41% at December 31, 2009, which is in compliance
with these covenants. The following is a recap of our
availability under our committed borrowing facilities at
December 31, 2009 (in millions):
|
|
|
|
|
Facilities
|
|
$
|
1,750
|
|
Less uses of facility:
|
|
|
|
|
Amount drawn
|
|
|
799
|
|
Commercial paper
|
|
|
|
|
Letters of credit
|
|
|
72
|
|
|
|
|
|
|
Availability
|
|
$
|
879
|
|
|
|
|
|
|
27
Commercial
Paper
We have a $1.5 billion commercial paper program under which
we may from time to time issue short-term, unsecured notes. Our
commercial paper issuances are supported by our committed
borrowing facilities. There was no commercial paper outstanding
at December 31, 2009.
Cash
Requirements
During 2010, we anticipate our cash requirements will include
interest payments on our outstanding debt, working capital needs
and capital expenditures and may include opportunistic business
acquisitions. We anticipate funding these requirements from cash
generated from operations and, if necessary, from availability
under our committed borrowing facilities.
Capital expenditures during the year ended December 31,
2009 were approximately $1.5 billion, net of proceeds from
tools lost down hole. We project our capital expenditures for
2010 will be approximately $1.1 billion. We are projecting
lower capital expenditures for the coming year largely because
our existing equipment, people and infrastructure capacity is
sufficient to meet our near-term growth objective.
From time to time we acquire businesses or technologies or enter
into joint ventures to increase our range of products and
services, expand our geographic scope or otherwise enhance our
businesses. During the year ended December 31, 2009, we
used approximately $54 million in cash for business and
technology acquisitions. Consideration for 2009 acquisitions
also included the issuance of approximately 35 million
shares valued at approximately $673 million. From time to
time we also divest of businesses when we believe they are no
longer core to our long-term growth strategy or when combining
those businesses with a joint venture partner presents us with a
strategic opportunity. In 2009, we received $123 million in
cash from sales of businesses.
We have an approved share repurchase program under which we can
spend up to $1.0 billion to repurchase our outstanding
shares. As of December 31, 2009, we have $205 million
remaining availability under this share repurchase program.
During the year ended December 31, 2009, no shares were
repurchased.
Contractual
Obligations
The following summarizes our contractual obligations and
contingent commitments by period. The obligations we pay in
future periods may vary due to certain assumptions including the
duration of our obligations and anticipated actions by third
parties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
2011 and
|
|
|
2013 and
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2012
|
|
|
2014
|
|
|
Thereafter
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
852
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
852
|
|
Long-term debt(a)
|
|
|
6
|
|
|
|
959
|
|
|
|
751
|
|
|
|
4,101
|
|
|
|
5,817
|
|
Interest on long-term debt
|
|
|
400
|
|
|
|
754
|
|
|
|
621
|
|
|
|
3,319
|
|
|
|
5,094
|
|
Noncancellable operating leases
|
|
|
88
|
|
|
|
115
|
|
|
|
52
|
|
|
|
108
|
|
|
|
363
|
|
Purchase obligations
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,474
|
|
|
$
|
1,828
|
|
|
$
|
1,424
|
|
|
$
|
7,528
|
|
|
$
|
12,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Amounts represent the expected cash payments for our total debt
and do not include any unamortized discounts or deferred gains
on terminated interest rate swap agreements. |
Due to the uncertainty with respect to the timing of future cash
flows associated with our unrecognized tax benefits at
December 31, 2009, we are unable to make reasonably
reliable estimates of the period of cash settlement with the
respective taxing authorities. Therefore, $82 million in
unrecognized tax benefits, including interest and penalties,
have been excluded from the contractual obligations table above.
28
We have defined benefit pension plans covering certain of our
U.S. and international employees that provide various
pension benefits. During 2009, we contributed approximately
$9 million towards those plans, and for 2010, we anticipate
funding approximately $7 million through cash flows from
operating activities.
Senior
Notes
In January 2009, we completed a $1.25 billion long-term
debt offering comprised of (i) $1 billion of
9.625% Senior Notes due in 2019 (9.625% Senior
Notes) and (ii) $250 million of
9.875% Senior Notes due in 2039 (9.875% Senior
Notes). Net proceeds of $1.23 billion were used to
repay short-term borrowings and for general corporate purposes
In March 2008, we completed a $1.5 billion long-term debt
offering comprised of (i) $500 million of
5.15% Senior Notes due in 2013 (5.15% Senior
Notes), (ii) $500 million of 6.00% Senior
Notes due 2018 (6.00% Senior Notes) and
(iii) $500 million of 7.00% Senior Notes due 2038
(7.00% Senior Notes). Net proceeds of
$1.47 billion were used to repay short-term borrowings and
for general corporate purposes, including capital expenditures
and business acquisitions.
In June 2007, we completed a $1.5 billion long-term debt
offering comprised of (i) $600 million of
5.95% senior notes due 2012 (5.95% Senior
Notes), (ii) $600 million of 6.35% senior
notes due 2017 (6.35% Senior Notes) and
(iii) $300 million of 6.80% senior notes due 2037
(6.80% Senior Notes). Net proceeds of
approximately $1.49 billion were used to repay outstanding
borrowings on our commercial paper program and for general
corporate purposes.
Interest
Rate Swaps
In August 2009, we entered into interest rate swap agreements to
pay a variable interest rate and receive a fixed interest rate
with an aggregate notional amount of $1.2 billion against
our 5.15%, 5.50% and 9.625% Senior Notes. These swaps were
designed as fair value hedges and were terminated in December
2009. As a result of these terminations, we received a cash
settlement of $53 million. In addition, we received
$11 million in interest payments while the interest rate
swaps were open. The gains associated with these interest rate
swap terminations have been deferred and will be amortized over
the remaining term of our 5.15%, 5.50% and 9.625% Senior
Notes.
In December 2008, we entered into an interest rate swap
agreement on an aggregate notional amount of $150 million
against one of our revolving credit facilities. This agreement
matured in June 2009.
Upon completion of the long-term debt offering in March 2008, we
entered into interest rate swap agreements with an aggregate
notional amount of $500 million against our
5.15% Senior Notes. These swaps were designed as fair value
hedges and were terminated in December 2008. As a result of
these terminations, we received cash proceeds, net of accrued
interest, of $12 million. The gain associated with this
interest rate swap termination has been deferred and is being
amortized over the remaining term of the 5.15% Senior Notes.
We have no interest rate swaps outstanding at December 31,
2009. As of December 31, 2009, we had net unamortized gains
of $68 million associated with our interest rate swap
terminations.
Cash Flow
Hedges
In March 2008, we entered into interest rate derivative
instruments with a notional amount of $500 million to hedge
projected exposures to interest rates in anticipation of the
issuance of our 7.00% senior notes due 2038
(7.00% Senior Notes). Those hedges were
terminated in March 2008 at the time of the issuance. We paid a
cash settlement of $13 million at termination, and the loss
on these hedges is being amortized to interest expense over the
life of the 7.00% Senior Notes.
We have no interest rate derivative instruments designated as
cash flow hedges outstanding at December 31, 2009. As of
December 31, 2009, we had net unamortized losses of
$13 million associated with our cash flow hedge
terminations.
29
Other
Derivative Instruments
As of December 31, 2009 and 2008, we had several foreign
currency forward and option contracts with notional amounts
aggregating $1,062 million and $503 million,
respectively, which were entered into to hedge exposure to
currency fluctuations in various foreign currencies, including,
but not limited to, the British pound sterling, the Canadian
dollar, the euro and the Norwegian krone. The total estimated
fair value of these contracts at December 31, 2009 resulted
in a net liability of approximately $9 million and at
December 31, 2008 resulted in a liability of approximately
$2 million. These derivative instruments were not
designated as hedges and the changes in fair value of the
contracts are recorded each period in current earnings.
We have cross-currency swaps between the U.S. dollar and
Canadian dollar to hedge certain exposures to the Canadian
dollar. At December 31, 2009 and 2008, we had notional
amounts outstanding of $263 million and $280 million,
respectively. The total estimated fair value of these contracts
at December 31, 2009 and 2008 resulted in a liability of
$26 million and an asset of $1 million, respectively.
These derivative instruments were not designated as hedges and
the changes in fair value of the contracts are recorded each
period in current earnings.
Warrants
We have outstanding warrants to purchase up to 12.9 million
of our shares at a price of $15.00 per share. The warrants
remain exercisable until February 28, 2012 and are subject
to adjustment for changes in our capital structure or the
issuance of dividends in cash, securities or property. Upon
exercise by the holders, settlement may occur through physical
delivery, net share settlement, net cash settlement or a
combination of those methods. The net cash settlement option
upon exercise is at our sole discretion.
Off
Balance Sheet Arrangements
Guarantees
During the first quarter of 2009, we completed a transaction
that changed our place of incorporation from Bermuda to
Switzerland. A new Swiss corporation named Weatherford
International Ltd. was formed and is now the ultimate parent
(Weatherford Switzerland) of the Weatherford group
and guarantees the obligations of Weatherford International Ltd.
incorporated in Bermuda (Weatherford Bermuda) and
Weatherford International, Inc. incorporated in Delaware
(Weatherford Delaware) noted below.
The following obligations of Weatherford Delaware were
guaranteed by Weatherford Bermuda at December 31, 2009:
(i) the 6.625% Senior Notes, (ii) the
5.95% Senior Notes, (iii) the 6.35% Senior Notes
and (iv) the 6.80% Senior Notes.
The following obligations of Weatherford Bermuda were guaranteed
by Weatherford Delaware at December 31, 2009: (i) the
revolving credit facilities, (ii) the 4.95% Senior
Notes, (iii) the 5.50% Senior Notes, (iv) the
6.50% Senior Notes, (v) the 5.15% Senior Notes,
(vi) the 6.00% Senior Notes, (vii) the
7.00% Senior Notes, (viii) the 9.625% Senior
Notes, (ix) the 9.875% Senior Notes and
(x) issuances of notes under the commercial paper program.
Letters
of Credit
We execute letters of credit in the normal course of business.
While these obligations are not normally called, these
obligations could be called by the beneficiaries at any time
before the expiration date should we breach certain contractual
or payment obligations. As of December 31, 2009, we had
$282 million of letters of credit and bid and performance
bonds outstanding, consisting of $210 million outstanding
under various uncommitted credit facilities and $72 million
letters of credit outstanding under our committed facilities. If
the beneficiaries called these letters of credit, the called
amount would become an on-balance sheet liability, and our
available liquidity would be reduced by the amount called. To
the extent we are successful in being awarded large contracts in
the future, our requirements for posting letters of credit and
bid and performance bonds could increase.
30
Critical
Accounting Policies and Estimates
Our discussion and analysis of our financial condition and
results of operation is based upon our consolidated financial
statements. We prepare these financial statements in conformity
with U.S. generally accepted accounting principles. As
such, we are required to make certain estimates, judgments and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the periods
presented. We base our estimates on historical experience,
available information and various other assumptions we believe
to be reasonable under the circumstances. On an on-going basis,
we evaluate our estimates; however, actual results may differ
from these estimates under different assumptions or conditions.
The accounting policies we believe require managements
most difficult, subjective or complex judgments and are the most
critical to our reporting of results of operations and financial
position are as follows:
Business
Combinations and Goodwill and Indefinite-Lived Intangible
Assets
Goodwill and intangible assets acquired in connection with
business combinations represent the excess of consideration over
the fair value of tangible net assets acquired. Certain
assumptions and estimates are employed in determining the fair
value of assets acquired, the fair value of liabilities assumed,
as well as in determining the allocation of goodwill to the
appropriate reporting unit.
We perform an impairment test for goodwill and indefinite-lived
intangible assets annually as of October 1, or earlier if
indicators of potential impairment exist.
We have indefinite-lived intangible assets totaling
$20 million and $16 million as of December 31,
2009 and 2008, respectively. Our impairment test for
indefinite-lived intangible assets involves the comparison of
the fair value of the intangible asset and its carrying value.
We have determined that no impairment exists related to these
assets.
We have goodwill totaling $4.2 billion and
$3.5 billion as of December 31, 2009 and 2008,
respectively. Goodwill impairment is evaluated using a two-step
process. The first step of the goodwill impairment test involves
a comparison of the fair value of each of our reporting units
with their carrying values. Our reporting units are based on our
regional structure and consist of the United States, Canada,
Latin America, Europe, West Africa, FSU, Middle East/North
Africa and Asia Pacific. If the carrying amount of a reporting
unit exceeds its fair value, the second step of the goodwill
impairment test shall be performed. The second step compares the
implied fair value of the reporting units goodwill to the
carrying amount of its goodwill to measure the amount of
impairment loss.
The fair value of our reporting units are determined using
discounted cash flows using a discount rate adjusted for the
credit risk of the regional reporting unit tested. Certain
estimates and judgments are required in the application of these
fair value models. The discounted cash flow analysis consists of
estimating the future revenue, operating margins, capital
expenditures, working capital and cash flows that are directly
associated with each of our reporting units.
Many of the assumptions used in our discounted cash flow
analysis are based upon our annual financial forecast. This
annual planning process takes into consideration many factors
including historical results and operating performance, related
industry trends, pricing strategies, customer analysis,
operational issues, competitor analysis, and marketplace data,
among others. Assumptions are also made for growth rates for
periods beyond the financial forecast period. Our estimates of
fair value are sensitive to changes in all of these variables,
certain of which relate to conditions outside our control.
None of our reporting units failed the first step of our
impairment test during 2009. In addition, all reporting
units fair values were substantially in excess of their
carrying value with the exception of the FSU reporting unit.
This reporting unit had an excess of fair value over carrying
value of 12% and has approximately $249 million of goodwill.
Long-Lived
Assets
Long-lived assets, which includes property, plant and equipment
and definite-lived intangibles, comprise a significant amount of
our assets. In accounting for long-lived assets, we must make
estimates about the expected
31
useful lives of the assets and the potential for impairment
based on the fair value of the assets and the cash flows they
are expected to generate. The value of the long-lived assets is
then amortized over its expected useful life. A change in the
estimated useful lives of our long-lived assets would have an
impact on our results of operations. We estimate the useful
lives of our long-lived asset groups as follows:
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Useful Lives
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Buildings and leasehold improvements
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|
10-40 years or lease term
|
Rental and service equipment
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|
2-20 years
|
Machinery and other
|
|
2-12 years
|
Intangible assets
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|
2-20 years
|
In estimating the useful lives of our property, plant and
equipment, we rely primarily on our actual experience with the
same or similar assets. The useful lives of our intangible
assets are determined by the years over which we expect the
assets to generate a benefit based on legal, contractual or
regulatory terms.
Long-lived assets to be held and used by us are reviewed to
determine whether any events or changes in circumstances
indicate that we may not be able to recover the carrying amount
of the asset. Factors that might indicate a potential impairment
may include, but are not limited to, significant decreases in
the market value of the long-lived asset, a significant change
in the long-lived assets physical condition, the
introduction of competing technologies, legal challenges, a
change in industry conditions or a reduction in cash flows
associated with the use of the long-lived asset. If these or
other factors exist that indicate the carrying amount of the
asset may not be recoverable, we determine whether an impairment
has occurred through the use of an undiscounted cash flow
analysis. The undiscounted cash flow analysis consists of
estimating the future cash flows that are directly associated
with and expected to arise from the use and eventual disposition
of the asset over its remaining useful life. These cash flows
are inherently subjective and require significant estimates
based upon historical experience and future expectations such as
budgets and internal projections. If the undiscounted cash flows
do not exceed the carrying value of the long-lived asset, an
impairment has occurred, and we recognize a loss for the
difference between the carrying amount and the estimated fair
value of the asset. The fair value of the asset is measured
using market prices, or in the absence of market prices, is
based on an estimate of discounted cash flows. Cash flows are
generally discounted at an interest rate commensurate with our
weighted average cost of capital for a similar asset.
Pension
and Other Postretirement Benefits
We recognize the overfunded or underfunded status of a defined
benefit pension or other postretirement benefit plan as an asset
or liability in the financial statements, measure plan assets
and obligations as of the end of our fiscal year, and recognize
gains/losses, prior service credits/costs, and transition
assets/obligations in accumulated other comprehensive income
until they are recognized as components of net periodic benefit
cost.
Amounts recognized in the financial statements are determined on
an actuarial basis. Two of the more critical assumptions in the
actuarial calculations are the discount rate for determining the
current value of plan benefits and the expected rate of return
on plan assets. Discount rates are based on the yields of
government bonds or high quality corporate bonds in the
respective country or economic market. The expected long-term
rates of return on plan assets are based on a combination of
historical experience and anticipated future returns in each of
the asset categories. As we have both domestic and international
plans, the assumptions, though the same in nature, are based on
varying factors specific to each particular country or economic
environment. Changes in any of the assumptions used could impact
our projected benefit obligations and benefit costs as well as
other pension and postretirement benefit calculations.
Due to the significance of the discount rates and expected
long-term rates of return, the following sensitivity analysis
demonstrates the effect that a 50 basis point change in
those assumptions will have on annual pension expense:
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Increase (Decrease) of Annual
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|
Pension Expense
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|
50 Basis Point
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|
50 Basis Point
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|
|
Increase
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|
Decrease
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(In millions)
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|
Discount rate
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|
$
|
(0.8
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)
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|
$
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1.5
|
|
Expected long-term rate of return
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|
|
(0.5
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)
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|
0.5
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|
32
Percentage
of Completion
Revenue from long-term contracts, primarily for our integrated
project management services, is reported on the
percentage-of-completion
method of accounting. This method of accounting requires us to
calculate contract profit to be recognized in each reporting
period for each contract based upon our projections of future
outcomes, which include:
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estimates of the total cost to complete the project;
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|
estimates of project schedule and completion date;
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|
estimates of the extent of progress toward completion; and
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|
amounts of any change orders or claims included in revenue.
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Measurements of progress are generally output based related to
physical progress. At the outset of each contract, we prepare a
detailed analysis of our estimated cost to complete the project.
Risks related to service delivery, usage, productivity, and
other factors are considered in the estimation process. Our
personnel periodically evaluate the estimated costs, claims,
change orders, and percentage of completion at the contract
level. The recording of profits and losses on long-term
contracts requires an estimate of the total profit or loss over
the life of each contract. This estimate requires consideration
of total contract value, change orders, and claims, less costs
incurred and estimated costs to complete. There are many factors
that impact future costs, including but not limited to weather,
inflation, labor and community disruptions, timely availability
of materials, productivity, and other factors as outlined in our
Risk Factors. Anticipated losses on contracts are
recorded in full in the period in which they become evident.
Profits are recorded based upon the total estimated contract
profit times the current percentage complete for the contract.
Income
Taxes
We take into account the differences between the financial
statement treatment and tax treatment of certain transactions.
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
of a change in tax rates is recognized as income or expense in
the period that includes the enactment date. Our effective tax
rates for 2009, 2008 and 2007 were 6.5%, 14.8% and 23.0%,
respectively.
We recognize the impact of an uncertain tax position taken or
expected to be taken on an income tax return in the financial
statements at the largest amount that is more likely than not to
be sustained upon examination by the relevant taxing authority.
We operate in approximately 100 countries through various legal
entities. As a result, we are subject to numerous domestic and
foreign tax jurisdictions and tax agreements and treaties among
the various taxing authorities. Our operations in these
jurisdictions are taxed on various bases: income before taxes,
deemed profits (which is generally determined using a percentage
of revenues rather than profits) and withholding taxes based on
revenue. The calculation of our tax liabilities involves
consideration of uncertainties in the application and
interpretation of complex tax regulations in a multitude of
jurisdictions across our global operations. We recognize
potential liabilities and record tax liabilities for anticipated
tax audit issues in the U.S. and other tax jurisdictions
based on our estimate of whether, and the extent to which,
additional taxes will be due. The tax liabilities are reflected
net of realized tax loss carryforwards. We adjust these reserves
upon specific events; however, due to the complexity of some of
these uncertainties, the ultimate resolution may result in a
payment that is different from our current estimate of the tax
liabilities. If our estimate of tax liabilities proves to be
less than the ultimate assessment, an additional charge to
expense would result. If payment of these amounts ultimately
proves to be less than the recorded amounts, the reversal of the
liabilities would result in tax benefits being recognized in the
period when the contingency has been resolved and the
liabilities are no longer necessary. Changes in tax laws,
regulations, agreements and treaties, foreign currency exchange
restrictions or our level of operations or profitability in each
taxing jurisdiction could have an impact upon the amount of
income taxes that we provide during any given year.
33
Valuation
Allowance for Deferred Tax Assets
We record a valuation allowance to reduce the carrying value of
our deferred tax assets when it is more likely than not that a
portion or all of the deferred tax assets will expire before
realization of the benefit or that future deductibility is not
probable. The ultimate realization of the deferred tax assets
depends on the ability to generate sufficient taxable income of
the appropriate character and in the related jurisdiction in the
future. In evaluating our ability to recover our deferred tax
assets, we consider reasonably available positive and negative
evidence, including our past operating results, the existence of
cumulative losses in the most recent years and our forecast of
future taxable income. In estimating future taxable income, we
develop assumptions, including the amount of future state,
federal and international pretax operating income, the reversal
of temporary differences and the implementation of feasible and
prudent tax planning strategies. These assumptions require
significant judgment.
We have identified various domestic and international tax
planning strategies that we would implement, if necessary, to
enable the realization of our deferred tax assets; however, when
the likelihood of the realization of existing deferred tax
assets changes, adjustments to the valuation allowance are
charged to our income tax provision in the period in which the
determination is made.
As of December 31, 2009, our net deferred tax assets were
$297 million before a related valuation allowance of
$70 million. As of December 31, 2008, our net deferred
tax assets were $173 million before a related valuation
allowance of $69 million.
For a more comprehensive list of our accounting policies, see
Item 8. Financial Statements and Supplementary
Data Notes to Consolidated Financial
Statements Note 1.
New
Accounting Pronouncements
Effective July 1, 2009, the Financial Accounting Standards
Boards (FASB) Accounting Standards
Codification (ASC) became the single official source
of authoritative, nongovernmental generally accepted accounting
principles (GAAP) in the U.S. The historical
GAAP hierarchy was eliminated and the ASC became the only level
of authoritative GAAP, other than guidance issued by the SEC.
Our accounting policies were not affected by the conversion to
the ASC. However, any references to specific accounting
standards have been changed to refer to the appropriate section
of the ASC.
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|
Item 7A.
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Quantitative
and Qualitative Disclosures about Market Risk
|
We are currently exposed to market risk from changes in foreign
currency and changes in interest rates. From time to time, we
may enter into derivative financial instrument transactions to
manage or reduce our market risk, but we do not enter into
derivative transactions for speculative purposes. A discussion
of our market risk exposure in these financial instruments
follows.
Foreign
Currency Exchange Rates
We operate in virtually every oil and natural gas exploration
and production region in the world. In some parts of the world,
such as the Middle East and Southeast Asia, the currency of our
primary economic environment is the U.S. dollar. We use
this as our functional currency. In other parts of the world, we
conduct our business in currencies other than the
U.S. dollar and the functional currency is the applicable
local currency. In those countries in which we operate in the
local currency, the effects of foreign currency fluctuations are
largely mitigated because local expenses of such foreign
operations are also generally denominated in the same currency.
In January 2010, the Venezuelan government announced its
intention to devalue its currency (Bolivar) and move
to a two tier exchange structure. The official exchange rate is
expected to move from 2.15 to 2.60 for essential
34
goods and 4.30 for non-essential goods and services. While we
are still evaluating the impact of these actions, our
preliminary assessment of the impact of the devaluation is that
we will incur a one-time loss of approximately $50 million
in the first quarter of 2010 for the remeasurement of the local
balance sheet at the date of the devaluation.
Assets and liabilities of which the functional currency is the
local currency are translated into U.S. dollars using the
exchange rates in effect at the balance sheet date, resulting in
translation adjustments that are reflected as Accumulated Other
Comprehensive Income in the shareholders equity section on
our Consolidated Balance Sheets. A portion of our net assets are
impacted by changes in foreign currencies in relation to the
U.S. dollar. We recorded a $377 million adjustment to
increase our equity account for the year ended December 31,
2009 to reflect the net impact of the weakening of the
U.S. dollar against various foreign currencies.
As of December 31, 2009 and 2008, we had several foreign
currency forward and option contracts with notional amounts
aggregating $1,062 million and $503 million,
respectively, which were entered into to hedge exposure to
currency fluctuations in various foreign currencies, including,
but not limited to, the British pound sterling, the Canadian
dollar, the euro and the Norwegian krone. The total estimated
fair value of these contracts at December 31, 2009 resulted
in a net liability of approximately $9 million and at
December 31, 2008, resulted in a liability of approximately
$2 million. These derivative instruments were not
designated as hedges and the changes in fair value of the
contracts are recorded each period in current earnings.
We have cross-currency swaps between the U.S. dollar and
Canadian dollar to hedge certain exposures to the Canadian
dollar. At December 31, 2009 and 2008, we had notional
amounts outstanding of $263 million and $280 million,
respectively. The estimated fair value of these contracts at
December 31, 2009 and 2008 resulted in a liability of
$26 million and an asset of $1 million, respectively.
These derivative instruments were not designated as hedges and
the changes in fair value of the contracts are recorded each
period in current earnings.
Interest
Rates
We are subject to interest rate risk on our long-term
fixed-interest rate debt and variable-interest rate borrowings.
Variable rate debt, where the interest rate fluctuates
periodically, exposes us to short-term changes in market
interest rates. Fixed rate debt, where the interest rate is
fixed over the life of the instrument, exposes us to changes in
market interest rates reflected in the fair value of the debt
and to the risk that we may need to refinance maturing debt with
new debt at a higher rate. All other things being equal, the
fair value of our fixed rate debt will increase or decrease as
interest rates change.
Our long-term borrowings that were outstanding at
December 31, 2009 and 2008 subject to interest rate risk
consist of the following:
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|
December 31,
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|
|
2009
|
|
2008
|
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
|
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
|
|
|
|
(In millions)
|
|
|
|
6.625% Senior Notes due 2011
|
|
$
|
353
|
|
|
$
|
380
|
|
|
$
|
354
|
|
|
$
|
330
|
|
5.95% Senior Notes due 2012
|
|
|
599
|
|
|
|
648
|
|
|
|
599
|
|
|
|
585
|
|
5.15% Senior Notes due 2013
|
|
|
511
|
|
|
|
526
|
|
|
|
511
|
|
|
|
463
|
|
4.95% Senior Notes due 2013
|
|
|
253
|
|
|
|
263
|
|
|
|
254
|
|
|
|
213
|
|
5.50% Senior Notes due 2016
|
|
|
360
|
|
|
|
351
|
|
|
|
349
|
|
|
|
306
|
|
6.35% Senior Notes due 2017
|
|
|
600
|
|
|
|
647
|
|
|
|
600
|
|
|
|
513
|
|
6.00% Senior Notes due 2018
|
|
|
498
|
|
|
|
514
|
|
|
|
498
|
|
|
|
456
|
|
9.625% Senior Notes due 2019
|
|
|
1,034
|
|
|
|
1,236
|
|
|
|
|
|
|
|
|
|
6.50% Senior Notes due 2036
|
|
|
596
|
|
|
|
574
|
|
|
|
596
|
|
|
|
495
|
|
6.80% Senior Notes due 2037
|
|
|
298
|
|
|
|
303
|
|
|
|
298
|
|
|
|
227
|
|
7.00% Senior Notes due 2038
|
|
|
498
|
|
|
|
517
|
|
|
|
498
|
|
|
|
394
|
|
9.875% Senior Notes due 2039
|
|
|
247
|
|
|
|
326
|
|
|
|
|
|
|
|
|
|
35
We have various other long-term debt instruments of
$18 million at December 31, 2009, but believe the
impact of changes in interest rates in the near term will not be
material to these instruments. The carrying value of our
short-term borrowings of $852 million at December 31,
2009 approximates their fair value.
As it relates to our variable rate debt, if market interest
rates average 1% more in 2010 than the rates as of
December 31, 2009, interest expense for 2010 would increase
by $9 million. This amount was determined by calculating
the effect of the hypothetical interest rate on our variable
rate debt. This sensitivity analysis assumes there are no
changes in our financial structure.
Interest
Rate Swaps and Derivatives
We manage our debt portfolio to achieve an overall desired
position of fixed and floating rates and may employ interest
rate swaps as a tool to achieve that goal. The major risks from
interest rate derivatives include changes in the interest rates
affecting the fair value of such instruments, potential
increases in interest expense due to market increases in
floating interest rates and the creditworthiness of the
counterparties in such transactions. The counterparties to our
interest rate swaps are multinational commercial banks. In light
of events in the global credit markets and the potential impact
of these events on the liquidity of the banking industry, we
continue to monitor the creditworthiness of our counterparties.
We use interest rate swaps to take advantage of available
short-term interest rates. Amounts received upon termination of
the swaps represent the fair value of the agreements at the time
of termination and are recorded as an adjustment to the carrying
value of the related debt. These amounts are being amortized as
a reduction to interest expense over the remaining term of the
debt.
In August 2009, we entered into interest rate swap agreements to
pay a variable interest rate and receive a fixed interest rate
with an aggregate notional amount of $1.2 billion against
our 5.15%, 5.50% and 9.625% Senior Notes. These swaps were
designed as fair value hedges and were terminated in December
2009. As a result of these terminations, we received a cash
settlement of $53 million. In addition, we received
$11 million in interest payments while the interest rate
swaps were open. The gains associated with these interest rate
swap terminations have been deferred and will be amortized over
the remaining term of our 5.15%, 5.50% and 9.625% Senior
Notes.
In December 2008, we entered into an interest rate swap
agreement on an aggregate notional amount of $150 million
against one of our revolving credit facilities. This agreement
matured in June 2009.
Upon completion of the long-term debt offering in March 2008, we
entered into interest rate swap agreements on an aggregate
notional amount of $500 million against our
5.15% Senior Notes. These swaps were designed as fair value
hedges and were terminated in December 2008. As a result of
these terminations, we received cash proceeds, net of accrued
interest, of $12 million. The gain associated with this
interest rate swap termination has been deferred and is being
amortized over the remaining term of the 5.15% Senior Notes.
We have no interest rate swaps outstanding at December 31,
2009. As of December 31, 2009 and 2008, we had net
unamortized gains of $68 million and $21 million,
respectively, associated with interest rate swap terminations.
36
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
INDEX TO
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
|
|
|
|
|
|
|
Page
|
|
|
|
|
38
|
|
|
|
|
39
|
|
|
|
|
40
|
|
|
|
|
41
|
|
|
|
|
42
|
|
|
|
|
43
|
|
|
|
|
44
|
|
|
|
|
45
|
|
Financial Statement Schedule II:
|
|
|
|
|
|
|
|
98
|
|
37
MANAGEMENTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting
as such term is defined in the Securities Exchange Act of 1934
Rule 13a-15(f).
The Companys internal controls were designed to provide
reasonable assurance as to the reliability of its financial
reporting and the preparation of financial statements for
external purposes in accordance with U.S. generally
accepted accounting principles.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Companys
internal control over financial reporting as of
December 31, 2009. In making its assessment, management has
utilized the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal
Control-Integrated Framework. Based on this assessment,
management concluded that as of December 31, 2009 the
Companys internal control over financial reporting is
effective.
The effectiveness of the Companys internal control over
financial reporting as of December 31, 2009, has been
audited by Ernst & Young LLP, an independent
registered public accounting firm, as stated in their report
which appears herein.
38
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Weatherford International Ltd. and subsidiaries
We have audited Weatherford International Ltd.s internal
control over financial reporting as of December 31, 2009,
based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria).
Weatherford International Ltd.s management is responsible
for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of
internal control over financial reporting included in the
accompanying Managements Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion
on the companys internal control over financial reporting
based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Weatherford International Ltd. and subsidiaries
maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2009 based on
the COSO criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Weatherford International Ltd.
and subsidiaries as of December 31, 2009 and 2008, and the
related consolidated statements of income, shareholders
equity, and cash flows for each of the three years in the period
ended December 31, 2009 of Weatherford International Ltd.
and subsidiaries and our report dated March 1, 2010
expressed an unqualified opinion thereon.
Houston, Texas
March 1, 2010
39
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Weatherford International Ltd. and subsidiaries
We have audited the accompanying consolidated balance sheets of
Weatherford International Ltd. and subsidiaries as of
December 31, 2009 and 2008, and the related consolidated
statements of income, shareholders equity, and cash flows
for each of the three years in the period ended
December 31, 2009. Our audits also included the financial
statement schedule listed in the Index at Item 15. These
financial statements and schedule are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Weatherford International Ltd. and
subsidiaries at December 31, 2009 and 2008, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended
December 31, 2009, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
As discussed in Note 1 to the consolidated financial
statements, the Company changed its method of accounting for
noncontrolling interests.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Weatherford International Ltd.s internal control over
financial reporting as of December 31, 2009, based on
criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated March 1, 2010
expressed an unqualified opinion thereon.
Houston, Texas
March 1, 2010
40
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands, except par value)
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
252,519
|
|
|
$
|
238,398
|
|
Accounts Receivable, Net of Allowance for Uncollectible Accounts
of $20,466 in 2009 and $16,425 in 2008
|
|
|
2,504,876
|
|
|
|
2,442,848
|
|
Inventories
|
|
|
2,239,762
|
|
|
|
2,088,342
|
|
Current Deferred Tax Assets
|
|
|
259,077
|
|
|
|
270,252
|
|
Other Current Assets
|
|
|
884,372
|
|
|
|
530,442
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
6,140,606
|
|
|
|
5,570,282
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
Land, Buildings and Leasehold Improvements
|
|
|
976,274
|
|
|
|
756,416
|
|
Rental and Service Equipment
|
|
|
7,534,467
|
|
|
|
6,246,278
|
|
Machinery and Other
|
|
|
1,919,086
|
|
|
|
1,610,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,429,827
|
|
|
|
8,613,168
|
|
Less: Accumulated Depreciation
|
|
|
3,438,248
|
|
|
|
2,690,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,991,579
|
|
|
|
5,922,172
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
4,156,105
|
|
|
|
3,530,915
|
|
Other Intangible Assets
|
|
|
778,786
|
|
|
|
701,483
|
|
Equity Investments
|
|
|
542,667
|
|
|
|
515,770
|
|
Other Assets
|
|
|
256,440
|
|
|
|
235,891
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
18,866,183
|
|
|
$
|
16,476,513
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-term Debt
|
|
$
|
869,581
|
|
|
$
|
1,255,947
|
|
Accounts Payable
|
|
|
1,002,359
|
|
|
|
886,104
|
|
Accrued Salaries and Benefits
|
|
|
274,199
|
|
|
|
257,016
|
|
Other Current Liabilities
|
|
|
650,749
|
|
|
|
623,026
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
2,796,888
|
|
|
|
3,022,093
|
|
Long-term Debt
|
|
|
5,847,258
|
|
|
|
4,564,255
|
|
Other Liabilities
|
|
|
423,333
|
|
|
|
484,866
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
9,067,479
|
|
|
|
8,071,214
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity:
|
|
|
|
|
|
|
|
|
Shares, CHF 1.16 Par Value, Authorized
1,093,303 Shares, Conditionally Authorized
364,434 Shares, Issued 758,447 Shares at
December 31, 2009, Common Shares, $1 Par Value,
Authorized 1,000,000 Shares, Issued 728,689 Shares at
December 31, 2008
|
|
|
761,077
|
|
|
|
728,689
|
|
Capital in Excess of Par Value
|
|
|
4,642,800
|
|
|
|
4,059,112
|
|
Treasury Shares, at Cost
|
|
|
(616,048
|
)
|
|
|
(759,477
|
)
|
Retained Earnings
|
|
|
4,817,101
|
|
|
|
4,563,335
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
114,742
|
|
|
|
(266,761
|
)
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
9,719,672
|
|
|
|
8,324,898
|
|
Noncontrolling Interests
|
|
|
79,032
|
|
|
|
80,401
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
9,798,704
|
|
|
|
8,405,299
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
18,866,183
|
|
|
$
|
16,476,513
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
2,921,174
|
|
|
$
|
3,564,636
|
|
|
$
|
2,983,427
|
|
Services
|
|
|
5,905,759
|
|
|
|
6,035,928
|
|
|
|
4,848,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,826,933
|
|
|
|
9,600,564
|
|
|
|
7,832,062
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Products
|
|
|
2,311,068
|
|
|
|
2,555,965
|
|
|
|
2,087,296
|
|
Cost of Services
|
|
|
4,152,268
|
|
|
|
3,686,495
|
|
|
|
2,970,314
|
|
Research and Development
|
|
|
194,650
|
|
|
|
192,659
|
|
|
|
169,317
|
|
Selling, General and Administrative Attributable to Segments
|
|
|
1,241,920
|
|
|
|
1,081,165
|
|
|
|
850,359
|
|
Corporate General and Administrative
|
|
|
223,172
|
|
|
|
187,075
|
|
|
|
130,440
|
|
Gain on Sale of Subsidiary
|
|
|
|
|
|
|
(81,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,123,078
|
|
|
|
7,622,015
|
|
|
|
6,207,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
703,855
|
|
|
|
1,978,549
|
|
|
|
1,624,336
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
(366,748
|
)
|
|
|
(243,679
|
)
|
|
|
(171,281
|
)
|
Other, Net
|
|
|
(37,633
|
)
|
|
|
(44,956
|
)
|
|
|
(8,569
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations Before Income Taxes
|
|
|
299,474
|
|
|
|
1,689,914
|
|
|
|
1,444,486
|
|
Provision for Income Taxes
|
|
|
(19,549
|
)
|
|
|
(249,561
|
)
|
|
|
(332,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations, Net of Taxes
|
|
|
279,925
|
|
|
|
1,440,353
|
|
|
|
1,111,726
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
(21,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
279,925
|
|
|
|
1,427,425
|
|
|
|
1,090,357
|
|
Net Income Attributable to Noncontrolling Interests
|
|
|
(26,159
|
)
|
|
|
(34,272
|
)
|
|
|
(19,751
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
253,766
|
|
|
$
|
1,393,153
|
|
|
$
|
1,070,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
0.35
|
|
|
$
|
2.06
|
|
|
$
|
1.61
|
|
Loss from Discontinued Operation
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
0.35
|
|
|
$
|
2.04
|
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
0.35
|
|
|
$
|
2.01
|
|
|
$
|
1.57
|
|
Loss from Discontinued Operation
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
0.35
|
|
|
$
|
1.99
|
|
|
$
|
1.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations, Net of Taxes
|
|
$
|
253,766
|
|
|
$
|
1,406,081
|
|
|
$
|
1,091,975
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
(21,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
253,766
|
|
|
$
|
1,393,153
|
|
|
$
|
1,070,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
714,981
|
|
|
|
682,704
|
|
|
|
677,032
|
|
Diluted
|
|
|
723,449
|
|
|
|
698,178
|
|
|
|
695,516
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital In
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Issued
|
|
|
Excess of Par
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Noncontrolling
|
|
|
Shareholders
|
|
|
|
Shares
|
|
|
Value
|
|
|
Earnings
|
|
|
Income (Loss)
|
|
|
Shares
|
|
|
Interests
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
$
|
723,842
|
|
|
$
|
3,913,613
|
|
|
$
|
2,099,307
|
|
|
$
|
119,153
|
|
|
$
|
(681,116
|
)
|
|
$
|
23,038
|
|
|
$
|
6,197,837
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
1,070,606
|
|
|
|
|
|
|
|
|
|
|
|
19,751
|
|
|
|
1,090,357
|
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
334,217
|
|
|
|
|
|
|
|
|
|
|
|
334,217
|
|
Defined Benefit Pension Plans, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,736
|
)
|
|
|
|
|
|
|
|
|
|
|
(15,736
|
)
|
Other, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
1,070,606
|
|
|
|
318,635
|
|
|
|
|
|
|
|
19,751
|
|
|
|
1,408,992
|
|
Dividends Paid to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,350
|
)
|
|
|
(14,350
|
)
|
Purchase of Treasury Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(246,190
|
)
|
|
|
|
|
|
|
(246,190
|
)
|
Equity Awards Granted, Vested and Exercised
|
|
|
3,362
|
|
|
|
52,031
|
|
|
|
|
|
|
|
|
|
|
|
2,733
|
|
|
|
|
|
|
|
58,126
|
|
Excess Tax Benefit of Share-Based Compensation Plans
|
|
|
|
|
|
|
28,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,895
|
|
Other
|
|
|
|
|
|
|
1,208
|
|
|
|
269
|
|
|
|
|
|
|
|
371
|
|
|
|
4,888
|
|
|
|
6,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
727,204
|
|
|
|
3,995,747
|
|
|
|
3,170,182
|
|
|
|
437,788
|
|
|
|
(924,202
|
)
|
|
|
33,327
|
|
|
|
7,440,046
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
1,393,153
|
|
|
|
|
|
|
|
|
|
|
|
34,272
|
|
|
|
1,427,425
|
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(682,669
|
)
|
|
|
|
|
|
|
|
|
|
|
(682,669
|
)
|
Deferred Loss on Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,576
|
)
|
|
|
|
|
|
|
|
|
|
|
(12,576
|
)
|
Defined Benefit Pension Plans, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,788
|
)
|
|
|
|
|
|
|
|
|
|
|
(9,788
|
)
|
Other, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
1,393,153
|
|
|
|
(704,549
|
)
|
|
|
|
|
|
|
34,272
|
|
|
|
722,876
|
|
Sale of Subsidiary Shares to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,156
|
|
|
|
27,156
|
|
Dividends Paid to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,903
|
)
|
|
|
(18,903
|
)
|
Shares Issued for Acquisitions
|
|
|
|
|
|
|
(38,683
|
)
|
|
|
|
|
|
|
|
|
|
|
168,817
|
|
|
|
|
|
|
|
130,134
|
|
Equity Awards Granted, Vested and Exercised
|
|
|
1,433
|
|
|
|
102,019
|
|
|
|
|
|
|
|
|
|
|
|
(2,331
|
)
|
|
|
|
|
|
|
101,121
|
|
Excess Tax Benefit of Share-Based Compensation Plans
|
|
|
|
|
|
|
10,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,032
|
|
Other
|
|
|
52
|
|
|
|
(10,003
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,761
|
)
|
|
|
4,549
|
|
|
|
(7,163
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
728,689
|
|
|
|
4,059,112
|
|
|
|
4,563,335
|
|
|
|
(266,761
|
)
|
|
|
(759,477
|
)
|
|
|
80,401
|
|
|
|
8,405,299
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
253,766
|
|
|
|
|
|
|
|
|
|
|
|
26,159
|
|
|
|
279,925
|
|
Foreign Currency Translation Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377,313
|
|
|
|
|
|
|
|
|
|
|
|
377,313
|
|
Defined Benefit Pension Plans, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,580
|
|
|
|
|
|
|
|
|
|
|
|
3,580
|
|
Other, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
253,766
|
|
|
|
381,503
|
|
|
|
|
|
|
|
26,159
|
|
|
|
661,428
|
|
Dividends Paid to Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,464
|
)
|
|
|
(30,464
|
)
|
Shares Issued for Acquisitions
|
|
|
32,208
|
|
|
|
522,657
|
|
|
|
|
|
|
|
|
|
|
|
118,181
|
|
|
|
|
|
|
|
673,046
|
|
Equity Awards Granted, Vested and Exercised
|
|
|
|
|
|
|
66,786
|
|
|
|
|
|
|
|
|
|
|
|
24,817
|
|
|
|
|
|
|
|
91,603
|
|
Excess Tax Benefit of Share-Based Compensation Plans
|
|
|
|
|
|
|
4,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,197
|
|
Other
|
|
|
180
|
|
|
|
(9,952
|
)
|
|
|
|
|
|
|
|
|
|
|
431
|
|
|
|
2,936
|
|
|
|
(6,405
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
761,077
|
|
|
$
|
4,642,800
|
|
|
$
|
4,817,101
|
|
|
$
|
114,742
|
|
|
$
|
(616,048
|
)
|
|
$
|
79,032
|
|
|
$
|
9,798,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
279,925
|
|
|
$
|
1,427,425
|
|
|
$
|
1,090,357
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
906,697
|
|
|
|
731,808
|
|
|
|
606,226
|
|
Gain on Sale of Assets and Businesses, Net
|
|
|
(13,841
|
)
|
|
|
(110,326
|
)
|
|
|
(41,185
|
)
|
Fair Value Adjustments on Contingent Consideration
|
|
|
(21,073
|
)
|
|
|
|
|
|
|
|
|
Loss from Discontinued Operation
|
|
|
|
|
|
|
12,928
|
|
|
|
21,369
|
|
Employee Share-Based Compensation Expense
|
|
|
110,359
|
|
|
|
101,416
|
|
|
|
64,901
|
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
(4,197
|
)
|
|
|
(10,032
|
)
|
|
|
(28,895
|
)
|
Deferred Income Tax Provision (Benefit)
|
|
|
(110,326
|
)
|
|
|
(80,692
|
)
|
|
|
28,873
|
|
Other, Net
|
|
|
(17,507
|
)
|
|
|
(12,587
|
)
|
|
|
4,608
|
|
Change in Operating Assets and Liabilities, Net of Effect of
Businesses Acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
100,205
|
|
|
|
(461,239
|
)
|
|
|
(296,120
|
)
|
Inventories
|
|
|
(46,030
|
)
|
|
|
(581,981
|
)
|
|
|
(417,305
|
)
|
Other Current Assets
|
|
|
(312,950
|
)
|
|
|
(168,140
|
)
|
|
|
(45,794
|
)
|
Accounts Payable
|
|
|
41,277
|
|
|
|
230,596
|
|
|
|
74,815
|
|
Other Current Liabilities
|
|
|
(178,751
|
)
|
|
|
62,715
|
|
|
|
(108,362
|
)
|
Other, Net
|
|
|
(119,466
|
)
|
|
|
(31,104
|
)
|
|
|
(70,833
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities-Continuing Operations
|
|
|
614,322
|
|
|
|
1,110,787
|
|
|
|
882,655
|
|
Net Cash Used by Operating Activities-Discontinued Operation
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
(10,149
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
614,322
|
|
|
|
1,104,568
|
|
|
|
872,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
(9,695
|
)
|
|
|
(798,530
|
)
|
|
|
(275,149
|
)
|
Capital Expenditures for Property, Plant and Equipment for
Continuing Operations
|
|
|
(1,569,477
|
)
|
|
|
(2,484,163
|
)
|
|
|
(1,635,041
|
)
|
Acquisition of Intellectual Property
|
|
|
(34,210
|
)
|
|
|
(24,079
|
)
|
|
|
(23,035
|
)
|
Acquisition of Equity Investments in Unconsolidated Affiliates
|
|
|
(26,999
|
)
|
|
|
(11,568
|
)
|
|
|
(335,220
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
123,445
|
|
|
|
297,285
|
|
|
|
84,476
|
|
Other Investing Activities
|
|
|
|
|
|
|
|
|
|
|
(38,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities-Continuing Operations
|
|
|
(1,516,936
|
)
|
|
|
(3,021,055
|
)
|
|
|
(2,222,469
|
)
|
Net Cash Provided (Used) by Investing Activities-Discontinued
Operation
|
|
|
|
|
|
|
11,000
|
|
|
|
(10,579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities
|
|
|
(1,516,936
|
)
|
|
|
(3,010,055
|
)
|
|
|
(2,233,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of (Repayments on) Short-term Debt, Net
|
|
|
(392,920
|
)
|
|
|
477,821
|
|
|
|
117,865
|
|
Borrowings of Long-term Debt
|
|
|
1,240,300
|
|
|
|
1,498,874
|
|
|
|
1,488,934
|
|
Repayments on Long-term Debt
|
|
|
(13,714
|
)
|
|
|
(20,541
|
)
|
|
|
(18,171
|
)
|
Purchase of Treasury Shares
|
|
|
|
|
|
|
|
|
|
|
(246,190
|
)
|
Proceeds from Exercise of Stock Options
|
|
|
5,721
|
|
|
|
9,942
|
|
|
|
34,192
|
|
Excess Tax Benefits from Share-Based Compensation
|
|
|
4,197
|
|
|
|
10,032
|
|
|
|
28,895
|
|
Proceeds from Interest Rate Derivatives
|
|
|
63,544
|
|
|
|
(638
|
)
|
|
|
|
|
Other Financing Activities, Net
|
|
|
(973
|
)
|
|
|
2,041
|
|
|
|
(3,896
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities-Continuing Operations
|
|
|
906,155
|
|
|
|
1,977,531
|
|
|
|
1,401,629
|
|
Net Cash Provided by Financing Activities-Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
906,155
|
|
|
|
1,977,531
|
|
|
|
1,401,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
10,580
|
|
|
|
(4,360
|
)
|
|
|
3,340
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
14,121
|
|
|
|
67,684
|
|
|
|
44,427
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
238,398
|
|
|
|
170,714
|
|
|
|
126,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
252,519
|
|
|
$
|
238,398
|
|
|
$
|
170,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
44
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
|
|
1.
|
Summary
of Significant Accounting Policies
|
Basis
of Presentation
In February 2009, Weatherford International Ltd., a Bermuda
exempted company (Weatherford Bermuda) became a
wholly-owned subsidiary of Weatherford International Ltd., a
Swiss joint stock corporation (Weatherford
Switzerland) for purposes of changing the Companys
place of incorporation from Bermuda to Switzerland
(collectively, the Transaction). Pursuant to the
transaction, each common share, par value U.S. $1.00 per
share, of Weatherford Bermuda was exchanged for one registered
share, par value 1.16 Swiss francs (CHF) per share,
of Weatherford Switzerland.
Principles
of Consolidation
The consolidated financial statements include the accounts of
Weatherford International Ltd., all majority-owned subsidiaries,
all controlled joint ventures and variable interest entities
where the Company has determined it is the primary beneficiary
(collectively, the Company). When referring to
Weatherford and using phrases such as we
,us, and our, the intent is to refer to
Weatherford International Ltd. and its subsidiaries as a whole
or on a regional basis, depending on the context in which the
statements are made.
Investments in affiliates in which we exercise significant
influence over operating and financial policies are accounted
for using the equity method. All material intercompany accounts
and transactions have been eliminated in consolidation.
Nature of
Operations
We are one of the largest global providers of innovative
mechanical solutions, technology and services for the drilling
and production sectors of the oil and natural gas industry.
Reclassifications
Certain reclassifications have been made to conform prior year
financial information to the current period presentation.
Correction
of an Immaterial Error in the Financial Statements
We have corrected our historical consolidated financial
statements for the year ended December 31, 2008 for the
impact of an error in accounting for deferred taxes totaling
$39 million. The result of this correction was an increase
of net income by the same amount. This error was identified in
2009 through the operation of our internal controls over
financial reporting as it relates to our tax provision system.
Using the guidance of Staff Accounting Bulletin No. 99,
Materiality and Staff Accounting Bulletin
No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year
Financial Statements, the determination to correct these
consolidated financial statements was made as a result of our
assessment that these items, although immaterial to the
consolidated financial statements for the year ended
December 31, 2008, would be considered material to the
consolidated financial statements for the year ended
December 31, 2009.
The information included in this
Form 10-K
sets forth the effects of this correction on the previously
reported financial statements of operations for the year ended
December 31, 2008.
45
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following tables represent the effect of this correction on
the Consolidated Statements of Operations for the year ended
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously
|
|
|
|
|
|
|
Reported
|
|
Adjustment
|
|
As Adjusted
|
|
|
(In thousands, except per share amounts)
|
|
Provision for taxes
|
|
$
|
(288,811
|
)
|
|
$
|
39,250
|
|
|
$
|
(249,561
|
)
|
Net Income Attributable to Weatherford
|
|
|
1,366,831
|
|
|
|
39,250
|
|
|
|
1,406,081
|
|
Net Income
|
|
|
1,388,175
|
|
|
|
39,250
|
|
|
|
1,427,425
|
|
Net Income Attributable to Weatherford
|
|
|
1,353,903
|
|
|
|
39,250
|
|
|
|
1,393,153
|
|
Basic Earnings per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
2.00
|
|
|
$
|
0.06
|
|
|
$
|
2.06
|
|
Net Income
|
|
|
1.98
|
|
|
|
0.06
|
|
|
|
2.04
|
|
Diluted Earnings per Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$
|
1.96
|
|
|
$
|
0.05
|
|
|
$
|
2.01
|
|
Net Income
|
|
|
1.94
|
|
|
|
0.05
|
|
|
|
1.99
|
|
The following table presents the effect of this correction on
the Consolidated Balance Sheet at December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously
|
|
|
|
|
|
|
Reported
|
|
Adjustments
|
|
As Adjusted
|
|
|
(In thousands)
|
|
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities
|
|
$
|
228,576
|
|
|
$
|
(39,250
|
)
|
|
$
|
189,326
|
|
Total Liabilities
|
|
|
8,110,464
|
|
|
|
(39,250
|
)
|
|
|
8,071,214
|
|
Retained Earnings
|
|
|
4,524,085
|
|
|
|
39,250
|
|
|
|
4,563,335
|
|
Weatherfords Shareholders Equity
|
|
|
8,285,648
|
|
|
|
39,250
|
|
|
|
8,324,898
|
|
The correction had no net effect on operating cash flows for the
year ended December 31, 2008. The following table presents
the effect to the individual line items within operating cash
flows on the Consolidated Statements of Cash Flows for the year
ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously
|
|
|
|
|
|
|
Reported
|
|
Adjustment
|
|
As Adjusted
|
|
|
(In thousands)
|
|
Selected Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
1,388,175
|
|
|
$
|
39,250
|
|
|
$
|
1,427,425
|
|
Deferred Income Tax Benefit
|
|
|
(41,442
|
)
|
|
|
(39,250
|
)
|
|
|
(80,692
|
)
|
Discontinued
Operation
In June 2007, our management approved a plan to sell our oil and
gas development and production business. The business was
historically included in our North America and Europe/West
Africa/FSU segments. The results of operations, financial
position and cash flows of the business have been reflected in
the consolidated financial statements and notes as a
discontinued operation for the years ended December 31,
2008 and 2007. We finalized the divestiture of the business in
2008.
Use of
Estimates
The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at
46
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period and disclosure
of contingent liabilities. On an ongoing basis, we evaluate our
estimates, including those related to uncollectible accounts
receivable, lower of cost or market value of inventories, equity
investments, intangible assets and goodwill, property, plant and
equipment, income taxes,
percentage-of-completion
accounting for long-term contracts, self-insurance, pension and
postretirement benefit plans and contingent liabilities. We base
our estimates on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities
not readily apparent from other sources. Actual results could
differ from those estimates.
Cash
and Cash Equivalents
We consider all highly liquid investments with original
maturities of three months or less to be cash equivalents.
Accounts
Receivable and Allowance for Uncollectible
Accounts
Accounts receivable are stated at the historical carrying amount
net of allowances for uncollectible accounts. We establish an
allowance for uncollectible accounts based on specific customer
collection issues we have identified. Uncollectible accounts
receivable are written off when a settlement is reached for an
amount less than the outstanding historical balance or when we
determine the balance will not be collected.
Major
Customers and Credit Risk
Substantially all of our customers are engaged in the energy
industry. This concentration of customers may impact our overall
exposure to credit risk, either positively or negatively, in
that customers may be similarly affected by changes in economic
and industry conditions. We perform ongoing credit evaluations
of our customers and do not generally require collateral in
support of our trade receivables. We maintain reserves for
potential credit losses, and actual losses have historically
been within our expectations. International sales also present
various risks, including risks of war, civil disturbances and
governmental activities that may limit or disrupt markets,
restrict the movement of funds, result in the deprivation of
contract rights or the taking of property without fair
consideration. Most of our international sales, however, are to
large international or national companies. Revenue from
Petroleos Mexicanos (Pemex) accounted for
approximately 13% of our revenues during 2009 and is included in
our Latin America segment (see Note 19). No other
individual customer accounted for more than 10% of our
consolidated revenues. During 2008 and 2007, no individual
customer accounted for more than 10% of our consolidated
revenues.
Inventories
We value our inventories at lower of cost or market using either
the
first-in,
first-out (FIFO) or average cost methods. Cost
represents third-party invoice or production cost. Production
cost includes material, labor and manufacturing overhead.
Property,
Plant and Equipment
We carry our property, plant and equipment, both owned and under
capital lease, at cost less accumulated depreciation. The
carrying values are based on our estimates and judgments
relative to capitalized costs, useful lives and salvage value,
where applicable. We expense maintenance and repairs as
incurred. We capitalize expenditures for renewals, replacements
and improvements. We depreciate our fixed assets on a
straight-line basis over their estimated useful lives, allowing
for salvage value where applicable. Our depreciation expense for
the years ended
47
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
December 31, 2009, 2008 and 2007 was $826 million,
$669 million and $553 million, respectively. The
estimated useful lives of our major classes of property, plant
and equipment are as follows:
|
|
|
|
|
Estimated
|
|
|
Useful Lives
|
|
Buildings and leasehold improvements
|
|
10-40 years or lease term
|
Rental and service equipment
|
|
2-20 years
|
Machinery and other
|
|
2-12 years
|
We classify our rig assets as Rental and Service Equipment on
the Consolidated Balance Sheets.
Goodwill
and Indefinite-Lived Intangible Assets
We test for the impairment of goodwill and other intangible
assets with indefinite lives on at least an annual basis. Our
goodwill impairment test involves a comparison of the fair value
of each of our reporting units with its carrying amount. Our
indefinite-lived asset impairment test involves a comparison of
the fair value of the intangible asset and its carrying value.
Fair value is estimated using discounted cash flows using a
discount rate adjusted for the credit risk of the regional
reporting unit tested. If the fair value is less than the
carrying value, the asset is considered impaired. The amount of
the impairment, if any, is then determined based on an
allocation of the reporting unit fair values to individual
assets and liabilities.
Intangible
Assets
Our intangible assets, excluding goodwill, are acquired
technology, licenses, patents, customer relationships and other
identifiable intangible assets. Intangible assets are amortized
on a straight-line basis over their estimated economic lives
generally ranging from two to 20 years, except for
intangible assets with indefinite lives, which are not
amortized. As many areas of our business rely on patents and
proprietary technology, we seek patent protection both inside
and outside the U.S. for products and methods that appear
to have commercial significance. We capitalize patent defense
costs when we determine that a successful defense is probable.
Long-Lived
Assets
We review our long-lived assets to determine whether any events
or changes in circumstances indicate the carrying amount of the
assets may not be recoverable. Factors that might indicate a
potential impairment may include, but are not limited to,
significant decreases in the market value of the long-lived
asset, a significant change in the long-lived assets
physical condition, a change in industry conditions or a
reduction in cash flows associated with the use of the
long-lived asset. If these or other factors indicate the
carrying amount of the asset may not be recoverable, we
determine whether an impairment has occurred through analysis of
undiscounted cash flow of the asset at the lowest level that has
an identifiable cash flow. If an impairment has occurred, we
recognize a loss for the difference between the carrying amount
and the fair value of the asset. We measure the fair value of
the asset using market prices or, in the absence of market
prices, based on an estimate of discounted cash flows. Cash
flows are generally discounted using an interest rate
commensurate with a weighted average cost of capital for a
similar asset.
Pension
and Postretirement Benefit Plans
We have defined benefit pension and other postretirement benefit
plans covering certain of our employees. Costs of the plan are
charged to income and consist of several components, known
collectively as net periodic pension cost, which are based on
various actuarial assumptions regarding future experience of the
plans. Amounts recorded for these defined benefit plans reflect
estimates related to future interest rates, investment rates of
return, employee turnover and wage increases. We review all
assumptions and estimates on an ongoing basis. As of
December 31, 2009 and 2008, we have recognized the
overfunded or underfunded status of our plans as an asset or
liability in the Consolidated Balance Sheets.
48
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Research
and Development Expenditures
Research and development expenditures are expensed as incurred.
Environmental
Expenditures
Environmental expenditures that relate to the remediation of an
existing condition caused by past operation and that do not
contribute to future revenues are expensed. Liabilities for
these expenditures are recorded when it is probable that
obligations have been incurred and costs can be reasonably
estimated. Estimates are based on available facts and
technology, enacted laws and regulations and our prior
experience in remediation of contaminated sites.
Insurance
We are self-insured up to certain retention limits for general
liability, vehicle liability, group medical and for
workers compensation claims for certain of our employees.
The amounts in excess of the self-insured levels are fully
insured, up to a limit. Self-insurance accruals are based on
claims filed and an estimate for significant claims incurred but
not reported.
Derivative
Financial Instruments
We record derivative instruments at fair value in the balance
sheet as either an asset or a liability. Changes in the fair
value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether the
derivative is designated as part of a hedge relationship, and if
so, the type of hedge transaction. Any gain or loss associated
with the termination of an interest rate swap that was accounted
for as a hedge instrument is deferred and amortized as an
adjustment to interest expense over the remaining debt term.
Foreign
Currency
Results of operations for our foreign subsidiaries with
functional currencies other than the U.S. dollar are
translated using average exchange rates during the period.
Assets and liabilities of these foreign subsidiaries are
translated using the exchange rates in effect at the balance
sheet dates, and the resulting translation adjustments are
included as Accumulated Other Comprehensive Income, a component
of shareholders equity.
For our
non-U.S. subsidiaries
where the functional currency is the U.S. dollar,
inventories, property, plant and equipment and other
non-monetary assets and liabilities, together with their related
elements of expense or income, are translated at historical
exchange rates. All other assets and liabilities are translated
at current exchange rates. All other revenues and expenses are
translated at average exchange rates. Translation gains and
losses for these subsidiaries are recognized in our results of
operations during the period incurred. The gain or loss related
to individual foreign currency transactions are included in
results of operations when incurred. These currency gains and
losses are included in Other, Net in our Consolidated Statements
of Income.
Employee
Share-Based Compensation
We account for all share-based payment awards, including shares
issued under employee stock purchase plans, stock options,
restricted stock and stock appreciation rights by measuring the
fair value of employee stock-based awards granted at the grant
date and recognizing it as an expense over the service period,
which is usually the vesting period.
Income
Taxes
Income taxes have been provided based upon the tax laws and
rates in the countries in which our operations are conducted and
income is earned. Deferred tax assets and liabilities are
recognized for the future tax consequences
49
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. A valuation allowance for deferred tax
assets is recorded when it is more likely than not that some or
all of the benefit from the deferred tax asset will not be
realized. The impact of an uncertain tax position taken or
expected to be taken on an income tax return are recognized in
the financial statements at the largest amount that is more
likely than not to be sustained upon examination by the relevant
taxing authority.
Revenue
Recognition
Revenue is recognized when all of the following criteria have
been met: a) evidence of an arrangement exists,
b) delivery to and acceptance by the customer has occurred,
c) the price to the customer is fixed or determinable and
d) collectability is reasonably assured.
Both contract drilling and pipeline service revenue is
contractual by nature and both are day-rate based contracts. We
recognize revenue for these contracts based on the criteria
outlined above, which is consistent with our other product
offerings.
From time to time, we may receive revenues for preparation and
mobilization of equipment and personnel. In connection with new
drilling contracts, revenues earned and incremental costs
incurred directly related to preparation and mobilization are
deferred and recognized over the primary contract term of the
project using the straight-line method. Costs of relocating
equipment without contracts to more promising market areas are
expensed as incurred. Demobilization fees received are
recognized, along with any related expenses, upon completion of
contracts.
We incur rebillable expenses including shipping and handling,
third-party inspection and repairs, and custom and duties. We
recognize the revenue associated with these rebillable expenses
as Products Revenues and all related costs as Cost of Products
in the accompanying Consolidated Statements of Income.
Percentage
of Completion
Revenue from long-term contracts, primarily for our integrated
project management services, is reported on the
percentage-of-completion
method of accounting. This method of accounting requires us to
calculate contract profit to be recognized in each reporting
period for each contract based upon our projections of future
outcomes, which include:
|
|
|
|
|
estimates of the total cost to complete the project;
|
|
|
|
estimates of project schedule and completion date;
|
|
|
|
estimates of the extent of progress toward completion; and
|
|
|
|
amounts of any change orders or claims included in revenue.
|
Measurements of progress are generally output based related to
physical progress. At the outset of each contract, we prepare a
detailed analysis of our estimated cost to complete the project.
Risks related to service delivery, usage, productivity, and
other factors are considered in the estimation process. We
periodically evaluate the estimated costs, claims, change
orders, and percentage of completion at the contract level. The
recording of profits and losses on long-term contracts requires
an estimate of the total profit or loss over the life of each
contract. This estimate requires consideration of total contract
value, change orders, and claims, less costs incurred and
estimated costs to complete. Anticipated losses on contracts are
recorded in full in the period in which they become evident.
Profits are recorded based upon the total estimated contract
profit times the current percentage complete for the contract.
50
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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 option and restricted share plans
and our outstanding warrants. The diluted earnings per share
calculation excludes seven million potential shares for the year
ended December 31, 2009 and six million potential shares
for the year ended December 31, 2008, due to their
antidilutive effect. Antidilutive potential shares were not
significant for the year ended December 31, 2007.
We adopted new accounting guidance related to determining
whether instruments granted in share-based payment transactions
are participating securities, effective January 1, 2009.
Under this guidance, unvested share-based payment awards that
contain nonforfeitable rights to dividends or dividend
equivalents, whether paid or unpaid, are participating
securities and are included in the computation of earnings per
share following the two-class method. Accordingly, we now
include our restricted share awards that contain the right to
vote and receive dividends in the computation of both basic and
diluted earnings per share. This guidance has not been applied
to prior periods as the impact is immaterial.
In 2008, our Board of Directors approved a
two-for-one
share split of our shares effected through a share dividend.
Shareholders of record on May 9, 2008 were entitled to the
dividend, which was distributed on May 23, 2008. All share
and option amounts included in the accompanying consolidated
financial statements and related notes reflect the effect of the
share split.
The following reconciles basic and diluted weighted average of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Basic weighted average shares outstanding
|
|
|
714,981
|
|
|
|
682,704
|
|
|
|
677,032
|
|
Dilutive effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
1,858
|
|
|
|
5,720
|
|
|
|
5,570
|
|
Stock option and restricted share plans
|
|
|
6,610
|
|
|
|
9,754
|
|
|
|
12,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
723,449
|
|
|
|
698,178
|
|
|
|
695,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
Accounting Pronouncements
Effective July 1, 2009, the Financial Accounting Standards
Boards (FASB) Accounting Standards
Codification (ASC) became the single official source
of authoritative, nongovernmental generally accepted accounting
principles (GAAP) in the U.S. The historical
GAAP hierarchy was eliminated and the ASC became the only level
of authoritative GAAP, other than guidance issued by the SEC.
Our accounting policies were not affected by the conversion to
the ASC. However, any references to specific accounting
standards in the footnotes to our consolidated financial
statements have been changed to refer to the appropriate section
of the ASC, when necessary.
Effective January 1, 2009, we adopted a new standard for
the accounting and reporting of ownership interests in
subsidiaries held by parties other than the parent, the amount
of consolidated net income attributable to the parent and to the
noncontrolling interest, changes in a parents ownership
interest and the valuation of retained noncontrolling equity
investments when a subsidiary is deconsolidated. The statement
also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the
interest of the parent and the interest of the noncontrolling
owners. This standard changed the accounting for and reporting
of minority interest (now called noncontrolling interest) in the
consolidated financial statements. Upon adoption, certain prior
period amounts were reclassified to conform to the current
period financial statement presentation.
51
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Effective January 1, 2009, we adopted a new standard on
accounting for business combinations. This standard
established principles and requirements for how a company
recognizes assets acquired, liabilities assumed, contingencies
and contingent consideration measured at fair value at the
acquisition date. The statement also establishes disclosure
requirements which will enable users to evaluate the nature and
financial effect of the business combination.
We have acquired businesses we feel are important to our
long-term growth strategy. Results of operations for
acquisitions are included in the accompanying Consolidated
Statements of Income from the date of acquisition. The balances
included in the Consolidated Balance Sheets related to recent
acquisitions are based on preliminary information and are
subject to change when final asset valuations are obtained and
the potential for liabilities has been evaluated. Purchase price
is allocated to the net assets acquired based upon their
estimated fair values at the date of acquisition.
In July 2009, we acquired the Oilfield Services Division
(OFS) of
TNK-BP. In
this transaction, we acquired drilling, well workover and
cementing services operations in West Siberia, East Siberia and
the Volga-Urals region. We issued 24.3 million shares
valued at approximately $450 million and expect to pay
$45 million in additional cash consideration related to
working capital adjustments during the first quarter of 2010. In
addition, if
TNK-BP sells
the shares it received in consideration for the transaction for
a price less than $18.50 per share prior to June 29, 2010,
we are obligated to pay
TNK-BP
additional consideration in an amount equal to the difference
between the price at which the shares were sold and $18.50. We
will pay any additional consideration in cash or, at our option
in certain instances, in additional shares following such date.
We made a preliminary allocation of the purchase price as of the
date of the acquisition. We will continue to adjust the
allocations until final valuation of the assets and liabilities
are completed.
The new accounting guidance adopted on business combinations
requires contingent consideration to be recognized at its
acquisition date fair value. Based on the terms of the
arrangement, we classified the contingent consideration as a
liability. This new guidance requires such liabilities to be
remeasured to fair value at each reporting date until the
contingency is resolved, with changes in fair value being
recognized in earnings. We estimated the fair value of the
contingent consideration for the OFS acquisition at the date of
acquisition to be a liability of $84 million. This
liability was estimated to have a fair value of $63 million
at December 31, 2009, resulting in the recognition of a
$21 million gain during 2009. This gain was recorded in the
Selling, General and Administrative Attributable to Segments
line in the Consolidated Statements of Income. The valuation of
the contingent consideration was determined using a
lattice-based model incorporating the term of the contingency,
the price of our shares over the relevant periods and the
volatility of our stock price.
In November 2008, we acquired a group of affiliated companies in
Latin America, which provide project management services,
drilling fluids, contract drilling and environmental services in
that region. Consideration for the transaction totaled
approximately $160 million, which was comprised of
approximately six million shares valued at approximately
$65 million, non-cash consideration of approximately
$75 million and cash of approximately $20 million. An
additional $65 million in cash consideration for this
acquisition is contingent on the occurrence of future events and
circumstances and will be recorded by us when and if these
events occur.
52
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In August 2008, we acquired International Logging, Inc.
(ILI), a provider of surface logging and formation
and evaluation and drilling related services for approximately
$400 million. We allocated approximately $140 million
of the purchase price to intangible assets (See Note 8).
We also acquired various other businesses during the years ended
December 31, 2009, 2008 and 2007 for cash consideration of
approximately $54 million, $380 million and
$253 million, respectively. In addition, other 2009
acquisitions included the issuance of approximately
11 million shares valued at $222 million and other
2008 acquisitions included the issuance of approximately two
million shares valued at approximately $65 million.
|
|
3.
|
Equity
Investment Acquisition
|
We acquired a 33% ownership interest in Premier Business
Solutions (PBS) in June 2007 for approximately
$330 million. PBS conducts business in Russia and is an
electric submersible pump manufacturer. In January 2008, we sold
our electrical submersible pumps (ESP) product line
to PBS and received a combination of cash and an additional
equity investment in PBS in consideration of the sale. This
transaction increased our ownership percentage to approximately
40%. In September 2009, we converted a $38 million note
plus accrued interest due from PBS for an additional equity
investment. Our ownership percentage was unchanged as the other
joint venture partner also converted its notes receivable for an
additional equity investment.
|
|
4.
|
Discontinued
Operation
|
In June 2007, our management approved a plan to sell our oil and
gas development and production business. We finalized the
divestiture of the business in 2008. The results of operations,
financial position and cash flows of the business have been
reflected in the consolidated financial statements as a
discontinued operation for the years ended December 31,
2008 and 2007.
Operating results of the oil and gas development and production
business were as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Revenues
|
|
$
|
556
|
|
|
$
|
2,299
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income Taxes
|
|
$
|
25,811
|
|
|
$
|
30,303
|
|
Benefit for Income Taxes
|
|
|
12,883
|
|
|
|
8,934
|
|
|
|
|
|
|
|
|
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
$
|
12,928
|
|
|
$
|
21,369
|
|
|
|
|
|
|
|
|
|
|
The 2008 loss includes charges of approximately $21 million
associated with a settlement of a legal dispute regarding the
business. These charges were partially offset by an
$11 million gain, net of taxes, recognized upon the
finalization of the divestiture. The 2007 loss includes
approximately $17 million, net of tax, for asset impairment
charges related to write-downs of the operations
U.S. properties. In addition, we completed the sale of the
operations international properties in November 2007 and
recorded a gain of approximately $5 million, net of tax, in
connection with the sale.
Gain
on Sales of Assets and Businesses, Net
Gain on sales of assets and businesses, net for the year ended
December 31, 2008 of $110 million includes a
$19 million write-off of fixed assets resulting from our
exit from sanctioned countries, an $81 million gain
recognized in connection with the sale of a 50% interest in a
subsidiary we control to Qatar Petroleum and $48 million in
gains related to our divestiture of other assets and businesses.
53
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Non-cash
Activities
We issued approximately 35 million shares valued at
$673 million in connection with acquisitions during the
year ended December 31, 2009 and eight million shares
valued at approximately $130 million in connection with
acquisitions during the year ended December 31, 2008. There
were no shares issued in connection with acquisitions during
2007.
During the year ended December 31, 2009, there was non-cash
investing activities of approximately $18 million related
to stock received in exchange for our sale of a business. During
the year ended December 31, 2008, there were non-cash
investing activities of approximately $75 million related
to our consideration for an acquisition. During the year ended
December 31, 2007, there was a non-cash investing activity
of $20 million related to a note received in exchange for
our sale of a business.
Supplemental
Cash Flow Information
Cash paid for interest and income taxes, net of refunds, was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
(In thousands)
|
|
Interest paid, net of capitalized interest
|
|
$
|
331,862
|
|
|
$
|
233,468
|
|
|
$
|
184,093
|
|
Income taxes paid, net of refunds
|
|
|
389,652
|
|
|
|
271,418
|
|
|
|
372,025
|
|
Inventories by category were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Raw materials, components and supplies
|
|
$
|
328,253
|
|
|
$
|
346,258
|
|
Work in process
|
|
|
115,564
|
|
|
|
152,864
|
|
Finished goods
|
|
|
1,795,945
|
|
|
|
1,589,220
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,239,762
|
|
|
$
|
2,088,342
|
|
|
|
|
|
|
|
|
|
|
Work in process and finished goods inventories include the cost
of materials, labor and plant overhead.
Goodwill is evaluated for impairment on at least an annual
basis. We perform our annual goodwill impairment test as of
October 1. Our 2009 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.
Our operating segments consist of the following reporting units:
|
|
|
|
|
North America (i) United States and
(ii) Canada
|
|
|
|
Middle East/North Africa/Asia (i) Middle
East/North Africa and (ii) Asia Pacific
|
|
|
|
Europe/West Africa/FSU (i) Europe,
(ii) West Africa and (iii) FSU
|
|
|
|
Latin America
|
54
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The changes in the carrying amount of goodwill for the two years
ended December 31, 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Middle East/
|
|
|
Europe/
|
|
|
|
|
|
|
|
|
|
North
|
|
|
North Africa/
|
|
|
West Africa/
|
|
|
Latin
|
|
|
|
|
|
|
America
|
|
|
Asia
|
|
|
FSU
|
|
|
America
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
1,918,411
|
|
|
$
|
604,821
|
|
|
$
|
678,433
|
|
|
$
|
156,825
|
|
|
$
|
3,358,490
|
|
Acquisitions
|
|
|
86,037
|
|
|
|
99,456
|
|
|
|
169,941
|
|
|
|
155,098
|
|
|
|
510,532
|
|
Disposals
|
|
|
(4,380
|
)
|
|
|
|
|
|
|
(1,435
|
)
|
|
|
(27
|
)
|
|
|
(5,842
|
)
|
Purchase price and other adjustments
|
|
|
5,299
|
|
|
|
(15,847
|
)
|
|
|
5,950
|
|
|
|
7,766
|
|
|
|
3,168
|
|
Foreign currency translation
|
|
|
(191,657
|
)
|
|
|
(12,872
|
)
|
|
|
(117,959
|
)
|
|
|
(12,945
|
)
|
|
|
(335,433
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
1,813,710
|
|
|
|
675,558
|
|
|
|
734,930
|
|
|
|
306,717
|
|
|
|
3,530,915
|
|
Acquisitions
|
|
|
146,504
|
|
|
|
|
|
|
|
245,571
|
|
|
|
|
|
|
|
392,075
|
|
Disposals
|
|
|
(6,648
|
)
|
|
|
(2,659
|
)
|
|
|
|
|
|
|
(534
|
)
|
|
|
(9,841
|
)
|
Purchase price and other adjustments
|
|
|
14,000
|
|
|
|
10,672
|
|
|
|
8,554
|
|
|
|
(16
|
)
|
|
|
33,210
|
|
Foreign currency translation
|
|
|
129,983
|
|
|
|
15,325
|
|
|
|
56,522
|
|
|
|
7,916
|
|
|
|
209,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
2,097,549
|
|
|
$
|
698,896
|
|
|
$
|
1,045,577
|
|
|
$
|
314,083
|
|
|
$
|
4,156,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.
|
Other
Intangible Assets, Net
|
The components of intangible assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
December 31, 2008
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net
|
|
|
|
(In thousands)
|
|
|
Acquired technology
|
|
$
|
410,115
|
|
|
$
|
(109,134
|
)
|
|
$
|
300,981
|
|
|
$
|
377,393
|
|
|
$
|
(67,281
|
)
|
|
$
|
310,112
|
|
Licenses
|
|
|
259,930
|
|
|
|
(101,884
|
)
|
|
|
158,046
|
|
|
|
243,741
|
|
|
|
(87,624
|
)
|
|
|
156,117
|
|
Patents
|
|
|
210,702
|
|
|
|
(68,086
|
)
|
|
|
142,616
|
|
|
|
172,754
|
|
|
|
(58,410
|
)
|
|
|
114,344
|
|
Customer relationships and contracts
|
|
|
160,556
|
|
|
|
(35,818
|
)
|
|
|
124,738
|
|
|
|
98,428
|
|
|
|
(19,614
|
)
|
|
|
78,814
|
|
Other
|
|
|
96,535
|
|
|
|
(44,130
|
)
|
|
|
52,405
|
|
|
|
78,024
|
|
|
|
(35,928
|
)
|
|
|
42,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,137,838
|
|
|
$
|
(359,052
|
)
|
|
$
|
778,786
|
|
|
$
|
970,340
|
|
|
$
|
(268,857
|
)
|
|
$
|
701,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangibles obtained through acquisitions are initially recorded
at estimated fair value based on preliminary information. Final
valuations are obtained within one year from the date of
acquisition. During 2008, we allocated value to the intangible
assets acquired in the acquisition of ILI based on a valuation
performed by a third party. We allocated approximately
$100 million to acquired technology and approximately
$40 million to customer relationships. The acquired
technology and customer relationships are being amortized over
estimated useful lives ranging from three to 15 years.
We have trademarks that are considered to have indefinite lives
as we have the ability and intent to renew them indefinitely.
These trademarks had a carrying value of $20 million and
$16 million as of December 31, 2009 and
December 31, 2008, respectively, and are included in the
Other caption in the table above.
55
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Amortization expense was $81 million, $63 million and
$54 million for the years ended December 31, 2009,
2008 and 2007, respectively. Future estimated amortization
expense for the carrying amount of intangible assets as of
December 31, 2009 is expected to be as follows (in
thousands):
|
|
|
|
|
2010
|
|
$
|
87,033
|
|
2011
|
|
|
84,470
|
|
2012
|
|
|
81,496
|
|
2013
|
|
|
78,585
|
|
2014
|
|
|
72,294
|
|
|
|
9.
|
Short-term
Borrowings and Current Portion of Long-term Debt
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Revolving credit facility
|
|
$
|
798,500
|
|
|
$
|
1,068,000
|
|
Commercial paper program
|
|
|
|
|
|
|
127,884
|
|
Other short-term bank loans
|
|
|
53,007
|
|
|
|
44,205
|
|
|
|
|
|
|
|
|
|
|
Total short-term borrowings
|
|
|
851,507
|
|
|
|
1,240,089
|
|
Current portion of long-term debt
|
|
|
18,074
|
|
|
|
15,858
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings and current portion of long-term debt
|
|
$
|
869,581
|
|
|
$
|
1,255,947
|
|
|
|
|
|
|
|
|
|
|
Weighted average interest rate on short-term borrowings
outstanding at end of year
|
|
|
1.39
|
%
|
|
|
1.07
|
%
|
We maintain various revolving credit facilities with syndicates
of banks that can be used for a combination of borrowings,
support for our commercial paper program and issuances of
letters of credit. At December 31, 2009, these facilities
allow for an aggregate availability of $1.8 billion and
mature in May 2011. The weighted average interest rate on
outstanding borrowings of these facilities at December 31,
2009 was 1.3%. There were $72 million in outstanding
letters of credit under these facilities at December 31,
2009.
These borrowing facilities require us to maintain a
debt-to-capitalization
ratio of less than 60% and contain other covenants and
representations customary for an investment-grade commercial
credit. We are in compliance with these covenants at
December 31, 2009.
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. There was no commercial paper outstanding at
December 31, 2009.
We have short-term borrowings with various domestic and
international institutions pursuant to uncommitted facilities.
At December 31, 2009, we had $53 million in short-term
borrowings under these arrangements with a weighted average
interest rate of 2.7%. In addition, we had $210 million of
letters of credit and bid and performance bonds under these
uncommitted facilities.
The carrying value of our short-term borrowings approximates
their fair value as of December 31, 2009.
56
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
We have issued various senior notes, all of which rank equally
with our existing and future senior unsecured indebtedness, have
semi-annual interest payments and no sinking fund requirements.
Our long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
6.625% Senior Notes due 2011
|
|
$
|
352,872
|
|
|
$
|
354,286
|
|
5.95% Senior Notes due 2012
|
|
|
599,380
|
|
|
|
599,153
|
|
5.15% Senior Notes due 2013
|
|
|
511,273
|
|
|
|
510,833
|
|
4.95% Senior Notes due 2013
|
|
|
253,203
|
|
|
|
253,959
|
|
5.50% Senior Notes due 2016
|
|
|
359,585
|
|
|
|
348,859
|
|
6.35% Senior Notes due 2017
|
|
|
599,615
|
|
|
|
599,576
|
|
6.00% Senior Notes due 2018
|
|
|
497,782
|
|
|
|
497,512
|
|
9.625% Senior Notes due 2019
|
|
|
1,033,818
|
|
|
|
|
|
6.50% Senior Notes due 2036
|
|
|
595,880
|
|
|
|
595,824
|
|
6.80% Senior Notes due 2037
|
|
|
298,192
|
|
|
|
298,171
|
|
7.00% Senior Notes due 2038
|
|
|
498,376
|
|
|
|
498,318
|
|
9.875% Senior Notes due 2039
|
|
|
247,118
|
|
|
|
|
|
Foreign bank and other debt denominated in foreign currencies
|
|
|
12,933
|
|
|
|
16,046
|
|
Other
|
|
|
5,305
|
|
|
|
7,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,865,332
|
|
|
|
4,580,113
|
|
Less amounts due in one year
|
|
|
18,074
|
|
|
|
15,858
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
5,847,258
|
|
|
$
|
4,564,255
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of scheduled long-term debt
maturities by year (In thousands):
|
|
|
|
|
2010
|
|
$
|
18,074
|
|
2011
|
|
|
366,669
|
|
2012
|
|
|
612,138
|
|
2013
|
|
|
756,804
|
|
2014
|
|
|
6,139
|
|
Thereafter
|
|
|
4,105,508
|
|
|
|
|
|
|
|
|
$
|
5,865,332
|
|
|
|
|
|
|
In January 2009, we completed a $1.25 billion long-term
debt offering comprised of (i) $1 billion of
9.625% Senior Notes due in 2019 (9.625% Senior
Notes)and (ii) $250 million of
9.875% Senior Notes due in 2039 (9.875% Senior
Notes).
In March 2008, we completed a $1.5 billion long-term debt
offering comprised of (i) $500 million of
5.15% Senior Notes due in 2013 (5.15% Senior
Notes), (ii) $500 million of 6.00% Senior
Notes due 2018 (6.00% Senior Notes) and
(iii) $500 million of 7.00% Senior Notes due 2038
(7.00% Senior Notes).
In June 2007, we completed a $1.5 billion long-term debt
offering comprised of (i) $600 million of
5.95% Senior Notes due 2012 (5.95% Senior
Notes), (ii) $600 million of 6.35% Senior
Notes due 2017 (6.35% Senior Notes) and
(iii) $300 million of 6.80% Senior Notes due 2037
(6.80% Senior Notes).
57
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The weighted average effective interest rates on our Senior
Notes for 2009 was 6.64%. The effective rate was determined
after giving consideration to the effect of interest rate
derivatives accounted for as hedges and the amortization of any
discounts (See Note 12).
|
|
11.
|
Fair
Value of Financial Instruments
|
Financial
Instruments Measured and Recognized at Fair Value
On January 1, 2008, we adopted new accounting guidance on
fair value measurements. The new guidance defines fair value,
establishes a framework for measuring fair value under
U.S. generally accepted accounting principles, and expands
disclosures about fair value measurements. The new guidance was
effective for us beginning January 1, 2008, for certain
assets and liabilities measured at fair value on a recurring
basis. The new guidance was effective for non-financial assets
and liabilities recognized or disclosed at fair value on a
nonrecurring basis beginning January 1, 2009.
The accounting guidance establishes a valuation hierarchy for
disclosure of the inputs to the valuations used to measure fair
value. This hierarchy prioritizes the inputs into three broad
levels as follows. 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. A financial asset
or liabilitys classification within the hierarchy is
determined based on the lowest level of input that is
significant to the fair value measurement.
The following table presents our non-derivative assets and
liabilities that are measured and recognized at fair value on a
recurring basis classified under the appropriate level of the
fair value hierarchy as of December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
(In thousands)
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments
|
|
$
|
|
|
|
$
|
40,822
|
|
|
$
|
|
|
|
$
|
40,822
|
|
Other Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration on acquisition (See Note 2)
|
|
|
|
|
|
|
|
|
|
|
62,763
|
|
|
|
62,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
(In thousands)
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments
|
|
$
|
|
|
|
$
|
30,611
|
|
|
$
|
|
|
|
$
|
30,611
|
|
58
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table provides a summary of changes in fair value
of our Level 3 financial liability as of December 31,
2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Balance at beginning of period
|
|
$
|
|
|
|
$
|
|
|
Contingent consideration on acquisition (See Note 2)
|
|
|
83,836
|
|
|
|
|
|
Unrealized gain on contingent consideration on acquisition
included in earnings
|
|
|
(21,073
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
62,763
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
The $21 million gain recorded during 2009 is included in
the Selling, General and Administrative Attributable to Segments
line in the Consolidated Statements of Income.
Fair
Value of Other Financial Instruments
Our other financial instruments include cash and cash
equivalents, foreign currency exchange contracts, interest rate
swaps, accounts receivable, notes receivable, accounts payable
and short and long-term debt. With the exception of long-term
debt, the carrying value of these financial instruments
approximates their fair value.
The fair value of outstanding debt fluctuates with changes in
applicable interest rates. Fair value will exceed carrying value
when the current market interest rate is lower than the interest
rate at which the debt was originally issued. The fair value of
a companys debt is a measure of its current value under
present market conditions. It does not impact the financial
statements under current accounting rules. The fair value of our
long-term debt was established based on quoted market prices.
The fair value and carrying value of the our long-term debt is
as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2009
|
|
2008
|
|
|
(In thousands)
|
|
Fair value
|
|
$
|
6,285,129
|
|
|
$
|
3,991,879
|
|
Carrying value
|
|
|
5,847,258
|
|
|
|
4,564,255
|
|
|
|
12.
|
Derivative
Instruments
|
On January 1, 2009, we adopted new accounting guidance
regarding the disclosure of derivative and hedging activities.
Entities are now required to provide enhanced disclosures about
how and why they use derivative instruments, how derivative
instruments and related hedged items are accounted for, and how
derivative instruments and related hedged items affect an
entitys financial position, financial performance and cash
flows.
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, but we do not enter into derivative
transactions for speculative purposes. 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.
59
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Interest
Rate Swaps
We use interest rate swaps to help mitigate exposures related to
interest rate movements. Amounts received upon termination of
the swaps accounted for as fair value hedges represent the fair
value of the agreements at the time of termination and are
recorded as an adjustment to the carrying value of the related
debt. These amounts are being amortized as a reduction to
interest expense over the remaining term of the debt.
In August 2009, we entered into interest rate swap agreements to
pay a variable interest rate and receive a fixed interest rate
with an aggregate notional amount of $1.2 billion against
our 5.15%, 5.50% and 9.625% Senior Notes. These swaps were
designed as fair value hedges and were terminated in December
2009. As a result of these terminations, we received a cash
settlement of $53 million. In addition, we received
$11 million in interest payments while the interest rate
swaps were open. The gains associated with these interest rate
swap terminations have been deferred and will be amortized over
the remaining term of our 5.15%, 5.50% and 9.625% Senior
Notes.
In December 2008, we entered into an interest rate swap
agreement on an aggregate notional amount of $150 million
against one of our revolving credit facilities. This agreement
matured in June 2009.
Upon completion of the long-term debt offering in March 2008, we
entered into interest rate swap agreements with an aggregate
notional amount of $500 million against our
5.15% Senior Notes. These swaps were designed as fair value
hedges and were terminated in December 2008. As a result of
these terminations, we received cash proceeds, net of accrued
interest, of $12 million. The gain associated with these
interest rate swap terminations has been deferred and will be
amortized over the remaining term of the 5.15% Senior Notes.
We have no interest rate swaps outstanding at December 31,
2009. As of December 31, 2009 and 2008, we had net
unamortized gains of $68 million and $21 million,
respectively, associated with interest rate swap terminations.
Cash
Flow Hedges
In March 2008, we entered into interest rate derivative
instruments with a notional amount of $500 million to hedge
projected exposures to interest rates in anticipation of the
7.00% Senior Notes issued in March 2008. Those hedges were
terminated at the time of the issuance. We paid a cash
settlement of $13 million at termination, and the loss on
these hedges is being amortized from Accumulated Other
Comprehensive Income to interest expense over the life of the
7.00% Senior Notes.
As of December 31, 2009, we had net unamortized losses of
$13 million associated with our cash flow hedge
terminations.
Other
Derivative Instruments
As of December 31, 2009 and 2008, we had several foreign
currency forward and option contracts with notional amounts
aggregating to $1,062 million and $503 million,
respectively, which were entered into to hedge exposure to
currency fluctuations in various foreign currencies, including,
but not limited to, the British pound sterling, the Canadian
dollar, the euro and the Norwegian krone. The total estimated
fair value of these contracts at December 31, 2009 resulted
in a net liability of approximately $9 million and at
December 31, 2008, resulted in a liability of approximately
$2 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 Consolidated Statements of Income.
We have cross-currency swaps between the U.S. dollar and
Canadian dollar to hedge certain exposures to the Canadian
dollar. At December 31, 2009 and 2008, we had notional
amounts outstanding of $263 million and $280 million,
respectively. The total estimated fair value of these contracts
at December 31, 2009 and 2008 resulted in a liability of
$26 million and an asset of $1 million, respectively.
These derivative instruments were not designated as hedges and
the changes in fair value of the contracts are recorded each
period in Other, Net in the accompanying Consolidated Statements
of Income.
60
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The fair values of outstanding derivative instruments are
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2009
|
|
2008
|
|
Classifications
|
|
|
(In thousands)
|
|
|
|
Derivative assets not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
$
|
9,831
|
|
|
$
|
|
|
|
Other Current Assets
|
Cross-currency swap contracts
|
|
|
|
|
|
|
1,455
|
|
|
Other Assets
|
Derivative liabilities not designated as hedges:
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
18,939
|
|
|
|
2,233
|
|
|
Other Current Liabilities
|
Cross-currency swap contracts
|
|
|
26,170
|
|
|
|
|
|
|
Other Liabilities
|
Accumulated other comprehensive income is comprised of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Cumulative translation adjustment
|
|
$
|
188,768
|
|
|
$
|
(190,317
|
)
|
|
$
|
495,935
|
|
Cumulative defined benefit plan adjustments
|
|
|
(60,636
|
)
|
|
|
(62,444
|
)
|
|
|
(56,239
|
)
|
Deferred loss on derivative instruments, net of amortization
|
|
|
(13,390
|
)
|
|
|
(14,000
|
)
|
|
|
(1,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
114,742
|
|
|
$
|
(266,761
|
)
|
|
$
|
437,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in our Issued and Treasury shares during the years ended
December 31, 2009, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
Treasury
|
|
|
|
(In thousands)
|
|
|
Balance at December 31, 2006
|
|
|
723,842
|
|
|
|
(44,264
|
)
|
Purchase of treasury shares
|
|
|
|
|
|
|
(10,224
|
)
|
Equity awards granted, vested and exercised
|
|
|
3,362
|
|
|
|
5,502
|
|
Other
|
|
|
|
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
727,204
|
|
|
|
(49,018
|
)
|
Shares issued for acquisitions
|
|
|
|
|
|
|
7,709
|
|
Equity awards granted, vested and exercised
|
|
|
1,433
|
|
|
|
924
|
|
Other
|
|
|
52
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
728,689
|
|
|
|
(40,367
|
)
|
Shares issued for acquisitions
|
|
|
29,578
|
|
|
|
5,398
|
|
Equity awards granted, vested and exercised
|
|
|
|
|
|
|
6,030
|
|
Other
|
|
|
180
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
758,447
|
|
|
|
(28,801
|
)
|
|
|
|
|
|
|
|
|
|
Authorized
Shares
At December 31, 2009, we are authorized to issue 1,093,303
registered shares and conditionally authorized to issue 364,434
registered shares.
61
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Share
Repurchase Program
We have an approved share repurchase program under which we can
spend up to $1 billion to repurchase our outstanding
shares. We purchased approximately 10 million shares during
the year ended December 31, 2007 at an average price per
share of $24.08 under this program. No shares were repurchased
during the years ended December 31, 2009 and 2008. As of
December 31, 2009, we had $205 million available under
this authorization to repurchase shares.
Warrants
We have outstanding warrants to purchase up to 12.9 million
of our shares at a price of $15.00 per share. The warrants
remains exercisable until February 28, 2012 and are subject
to adjustment for changes in our capital structure or the
issuance of dividends in cash, securities or property. Upon
exercise by the holders, settlement may occur through physical
delivery, net share settlement, net cash settlement or a
combination of those choices. The net cash settlement option
upon exercise is at our sole discretion.
|
|
14.
|
Share-Based
Compensation Plans
|
Incentive
Plan
The Weatherford International Ltd. 2006 Omnibus Incentive Plan
(Omnibus Plan) provides for awards of options, stock
appreciation rights, restricted share awards (RSA),
restricted share units (RSU), performance share
awards, performance unit awards, other share-based awards and
cash-based awards to any employee or our non-employee directors.
To date, we have granted stock options, RSAs and RSUs under the
Omnibus Plan. The provisions of each award vary based on the
type of award granted and are specified by the Compensation
Committee of our Board of Directors. Those awards, such as stock
options that are based on a specific contractual term, will be
granted with a term not to exceed ten years. Upon grant of an
RSA, the participant has the rights of a shareholder, including
but not limited to the right to vote such shares and the right
to receive any dividends paid on such shares. Recipients of RSU
awards will not have the rights of a shareholder until such date
as the shares are issued or transferred to the recipient. As of
December 31, 2009, approximately two million shares were
available for grant under the Omnibus Plan. All stock options,
RSA and RSU awards have been made from the Omnibus Plan since
its approval in 2006. The terms of the awards granted under the
prior plans are consistent with the awards issued under the
Omnibus plan.
Share-Based
Compensation Expense and Activity
We recognized the following employee share-based compensation
expense during the years ended December 31, 2009, 2008 and
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
(In thousands)
|
|
Share-based compensation
|
|
$
|
110,359
|
|
|
$
|
101,416
|
|
|
$
|
64,901
|
|
Related tax benefit
|
|
|
38,626
|
|
|
|
35,496
|
|
|
|
22,715
|
|
The estimated fair value of our stock options is expensed over
their vesting period. Our stock options generally vest after one
to four years following the date of grant. We use the
Black-Scholes option pricing model to determine the fair value
of stock options awarded as of the date of grant. There were no
stock options granted in 2009 or 2008. The expected volatility
of stock options granted in 2007 was determined using a blended
rate based upon implied volatility calculated on actively traded
options on our shares and upon the historical volatility of our
shares. The risk-free interest rate is determined based upon the
interest rate on a U.S. Treasury Bill with a term equal to
the expected life of the stock option at the time of grant. In
estimating the expected lives of the stock options, we have
62
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
relied primarily on actual experience with previous stock option
grants. The expected life is less than the term of the stock
option as holders, in our experience, exercise or forfeit the
stock options during the term of the stock option.
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31, 2007
|
|
Expected volatility
|
|
|
31.0
|
%
|
Expected dividends
|
|
|
|
|
Expected term (in years)
|
|
|
5.0
|
|
Risk-free rate
|
|
|
4.5
|
%
|
A summary of option activity for the year ended
December 31, 2009, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
(In years)
|
|
|
(In thousands)
|
|
|
Outstanding at December 31, 2008
|
|
|
13,995,269
|
|
|
$
|
8.14
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1,147,233
|
)
|
|
|
4.99
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
12,848,036
|
|
|
|
8.42
|
|
|
|
5.08
|
|
|
$
|
124,787
|
|
Vested or Expected to Vest at December 31, 2009
|
|
|
12,848,036
|
|
|
|
8.42
|
|
|
|
5.08
|
|
|
|
124,787
|
|
Exercisable at December 31, 2009
|
|
|
12,308,386
|
|
|
|
7.89
|
|
|
|
5.02
|
|
|
|
124,787
|
|
Stock options are granted with an exercise price equal to or
greater than the fair market value of our shares at the time of
grant. The weighted-average grant date fair value of stock
options granted during 2007 was $7.16. There were no stock
options granted during 2009 or 2008. The intrinsic value of
stock options exercised during 2009, 2008 and 2007 was
$18 million, $46 million and $110 million,
respectively. As of December 31, 2009, there was
$2 million of unrecognized compensation expense related to
our unvested stock options, which is expected to be recognized
over a weighted-average period of one year.
RSAs and RSUs vest based on continued employment, generally over
a two to five-year period. The fair value of RSAs and RSUs is
determined based on the closing price of our shares on the date
of grant. The total fair value, less assumed forfeitures, is
expensed over the vesting period. A summary of RSAs and RSUs
activity for the year ended December 31, 2009 is presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
Grant Date
|
|
|
|
RSA
|
|
|
Fair Value
|
|
|
RSU
|
|
|
Fair Value
|
|
|
Non-Vested at December 31, 2008
|
|
|
7,378,848
|
|
|
$
|
26.16
|
|
|
|
6,112,874
|
|
|
$
|
27.40
|
|
Granted
|
|
|
3,430,302
|
|
|
|
12.74
|
|
|
|
3,435,614
|
|
|
|
14.60
|
|
Vested
|
|
|
(3,970,188
|
)
|
|
|
20.31
|
|
|
|
(2,623,354
|
)
|
|
|
21.94
|
|
Forfeited
|
|
|
(296,977
|
)
|
|
|
25.86
|
|
|
|
(632,650
|
)
|
|
|
23.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Vested at December 31, 2009
|
|
|
6,541,985
|
|
|
|
22.84
|
|
|
|
6,292,484
|
|
|
|
23.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average grant date fair value of RSAs and RSUs
granted during the years ended 2009, 2008 and 2007 was $13.67,
$32.55 and $25.42, respectively. The total fair value of RSAs
and RSUs vested during the years ended 2009, 2008 and 2007 was
$99 million, $40 million and $156 million,
respectively. As of December 31, 2009, there was
$217 million of unrecognized compensation expense related
to unvested RSAs and RSUs, which is expected to be recognized
over a weighted-average period of two years.
63
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Executive
Deferred Compensation Plan
Under our Executive Deferred Compensation Stock Ownership Plan
(the EDC Plan), a portion of the compensation for
certain key employees, including officers and employee
directors, can be deferred for payment after retirement or
termination of employment. We established a grantor trust to
fund the benefits under the EDC Plan. The funds provided to such
trust are invested by an independent trustee in shares of our
stock, which are purchased by the trustee on the open market.
The assets of the trust are available to satisfy the claims of
all our general creditors in the event of bankruptcy or
insolvency. Accordingly, the shares held by the trust and our
liability under the EDC Plan are included in the accompanying
Consolidated Balance Sheets as Treasury Shares. Effective
December 31, 2008, we suspended the EDC Plan. While the
plan is suspended, no new participants may join the plan and no
further deferrals of compensation or matching contributions will
be made under the plan unless and until our Board of Directors
determines otherwise.
|
|
15.
|
Retirement
and Employee Benefit Plans
|
We have defined contribution plans covering certain employees.
Contribution expenses related to these plans totaled
$36 million, $32 million and $29 million in 2009,
2008 and 2007, respectively.
Effective for the year ended December 31, 2009, we adopted
an update to existing accounting standards that amends the
requirements for employers disclosures about plan assets
for defined benefit pension and other postretirement plans. The
objectives of this update are to provide users of financial
statements with an understanding of how investment allocation
decisions are made, the major categories of assets held by the
plans, the inputs and valuation techniques used to measure the
fair value of plan assets, significant concentration of risk
within the companys plan assets, and, for fair value
measurements determined using significant unobservable inputs, a
reconciliation of changes between the beginning and ending
balances.
We have defined benefit pension and other postretirement benefit
plans covering certain U.S. and international employees.
Plan benefits are generally based on factors such as age,
compensation levels and years of service. We have a supplemental
executive retirement plan (SERP), which provides
pension benefits to certain executives upon retirement. This
plan is a nonqualified, unfunded retirement plan and in order to
meet our future benefit obligations under the SERP, we maintain
life insurance policies on the lives of the participants. These
policies are not included as plan assets nor in the funded
status amounts in the table below. We are the sole owner and
beneficiary of such policies.
The changes in benefit obligations were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Benefit obligation at beginning of year
|
|
$
|
121,922
|
|
|
$
|
143,408
|
|
|
$
|
115,585
|
|
|
$
|
189,193
|
|
Adjustment to beginning of year benefit obligation(1)
|
|
|
|
|
|
|
(34,139
|
)
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
3,085
|
|
|
|
6,964
|
|
|
|
2,879
|
|
|
|
13,557
|
|
Interest cost
|
|
|
7,805
|
|
|
|
7,195
|
|
|
|
6,017
|
|
|
|
9,905
|
|
Plan participants contributions
|
|
|
|
|
|
|
227
|
|
|
|
|
|
|
|
3,547
|
|
Amendments
|
|
|
30,244
|
|
|
|
|
|
|
|
|
|
|
|
(553
|
)
|
Curtailments
|
|
|
(1,341
|
)
|
|
|
(176
|
)
|
|
|
|
|
|
|
|
|
Settlements
|
|
|
(12,881
|
)
|
|
|
|
|
|
|
(12,001
|
)
|
|
|
(2,116
|
)
|
Actuarial (gain)/loss
|
|
|
(4,312
|
)
|
|
|
(7,273
|
)
|
|
|
10,691
|
|
|
|
(22,099
|
)
|
Currency fluctuations
|
|
|
|
|
|
|
16,871
|
|
|
|
|
|
|
|
(43,060
|
)
|
Benefits paid
|
|
|
(1,123
|
)
|
|
|
(2,391
|
)
|
|
|
(1,249
|
)
|
|
|
(4,966
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
143,399
|
|
|
$
|
130,686
|
|
|
$
|
121,922
|
|
|
$
|
143,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
See note following change in plan assets. |
64
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The changes in plan assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
7,096
|
|
|
$
|
96,593
|
|
|
$
|
10,518
|
|
|
$
|
142,919
|
|
Adjustment to beginning of year fair value of plan assets(1)
|
|
|
|
|
|
|
(34,139
|
)
|
|
|
|
|
|
|
|
|
Actual return on plan assets
|
|
|
1,715
|
|
|
|
8,212
|
|
|
|
(2,816
|
)
|
|
|
(23,760
|
)
|
Employer contribution
|
|
|
341
|
|
|
|
8,383
|
|
|
|
535
|
|
|
|
14,408
|
|
Plan participants contributions
|
|
|
|
|
|
|
227
|
|
|
|
|
|
|
|
3,547
|
|
Settlements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,984
|
)
|
Currency fluctuations
|
|
|
|
|
|
|
12,140
|
|
|
|
|
|
|
|
(34,123
|
)
|
Benefits paid
|
|
|
(976
|
)
|
|
|
(1,863
|
)
|
|
|
(1,141
|
)
|
|
|
(4,414
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
8,176
|
|
|
|
89,553
|
|
|
|
7,096
|
|
|
|
96,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(135,223
|
)
|
|
$
|
(41,133
|
)
|
|
$
|
(114,826
|
)
|
|
$
|
(46,815
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Effective January 1, 2009, our disclosures for one of our
international plans reflect the defined benefit related amounts
only. In previous years, the plan calculations included both the
defined benefit obligations and assets and the defined
contribution obligations and assets as the plan is not formally
divided. In an effort to provide clarity to the defined benefit
obligation specifically, we requested that the actuary begin to
capture the data separately starting in 2009. As a result, the
defined contribution obligation and assets were carved out of
the disclosure as shown above and only the true defined benefit
obligations and assets remain. In addition, the expense shown in
the defined benefit disclosure for the year ended
December 31, 2009, is only the defined benefit related
expense for this plan and the defined contribution related
expense for this plan is disclosed with our other sponsored
defined contribution plans at the beginning of this footnote. |
The amounts recognized in the Consolidated Balance Sheets were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
|
United
|
|
|
|
United
|
|
|
|
|
States
|
|
International
|
|
States
|
|
International
|
|
|
(In thousands)
|
|
Noncurrent assets
|
|
$
|
|
|
|
$
|
4,526
|
|
|
$
|
|
|
|
$
|
|
|
Current liabilities
|
|
|
(10,886
|
)
|
|
|
(542
|
)
|
|
|
(8,671
|
)
|
|
|
(494
|
)
|
Noncurrent liabilities
|
|
|
(124,337
|
)
|
|
|
(45,117
|
)
|
|
|
(106,155
|
)
|
|
|
(46,321
|
)
|
65
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Amounts in accumulated other comprehensive income that have not
yet been recognized as components of net periodic benefit cost
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Net loss
|
|
$
|
41,113
|
|
|
$
|
10,903
|
|
|
$
|
57,888
|
|
|
$
|
20,796
|
|
Net prior service costs (credit)
|
|
|
40,631
|
|
|
|
(811
|
)
|
|
|
15,358
|
|
|
|
(755
|
)
|
Net transition asset
|
|
|
|
|
|
|
(16
|
)
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accumulated other comprehensive income
|
|
$
|
81,744
|
|
|
$
|
10,076
|
|
|
$
|
73,246
|
|
|
$
|
20,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accumulated benefit obligation for defined benefit pension
plans was $104 million and $79 million at
December 31, 2009 and 2008, respectively, for the
U.S. plans and $116 million and $129 million at
December 31, 2009 and 2008, respectively, for the
international plans.
The projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans
with projected benefit obligations in excess of plan assets or
accumulated benefit obligations in excess of plan assets as of
December 31, 2009 and 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
|
United
|
|
|
|
United
|
|
|
|
|
States
|
|
International
|
|
States
|
|
International
|
|
|
(In thousands)
|
|
Plans with projected benefit obligation in excess of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
|
|
$
|
143,399
|
|
|
$
|
100,953
|
|
|
$
|
121,922
|
|
|
$
|
143,156
|
|
Fair value of plan assets
|
|
|
8,176
|
|
|
|
55,295
|
|
|
|
7,096
|
|
|
|
96,162
|
|
Plans with accumulated benefit obligation in excess of plan
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation
|
|
|
103,752
|
|
|
|
69,750
|
|
|
|
78,727
|
|
|
|
128,474
|
|
Fair value of plan assets
|
|
|
8,176
|
|
|
|
32,362
|
|
|
|
7,096
|
|
|
|
96,162
|
|
The components of net periodic benefit cost during the years
ended December 31, 2009, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
Service cost
|
|
$
|
3,085
|
|
|
$
|
6,964
|
|
|
$
|
2,879
|
|
|
$
|
13,557
|
|
|
$
|
2,642
|
|
|
$
|
11,308
|
|
Interest cost
|
|
|
7,805
|
|
|
|
7,195
|
|
|
|
6,017
|
|
|
|
9,905
|
|
|
|
5,391
|
|
|
|
8,189
|
|
Expected return on plan assets
|
|
|
(630
|
)
|
|
|
(4,031
|
)
|
|
|
(687
|
)
|
|
|
(8,700
|
)
|
|
|
(744
|
)
|
|
|
(8,003
|
)
|
Amortization of transition asset
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
Amortization of prior service cost (credit)
|
|
|
3,908
|
|
|
|
(48
|
)
|
|
|
1,833
|
|
|
|
(47
|
)
|
|
|
2,108
|
|
|
|
(87
|
)
|
Settlements/curtailments
|
|
|
4,760
|
|
|
|
|
|
|
|
5,621
|
|
|
|
(126
|
)
|
|
|
1,548
|
|
|
|
4
|
|
Amortization of net loss
|
|
|
6,340
|
|
|
|
993
|
|
|
|
3,862
|
|
|
|
319
|
|
|
|
4,224
|
|
|
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
25,268
|
|
|
$
|
11,069
|
|
|
$
|
19,525
|
|
|
$
|
14,904
|
|
|
$
|
15,169
|
|
|
$
|
11,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Other changes in plan assets and benefit obligations recognized
in other comprehensive income during the years ended
December 31, 2009 and 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
United
|
|
|
|
|
|
United
|
|
|
|
|
|
|
States
|
|
|
International
|
|
|
States
|
|
|
International
|
|
|
|
(In thousands)
|
|
|
New Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (gain) loss for the year
|
|
$
|
(6,738
|
)
|
|
$
|
(11,550
|
)
|
|
$
|
14,194
|
|
|
$
|
10,747
|
|
Net prior service cost for the year
|
|
|
30,244
|
|
|
|
|
|
|
|
|
|
|
|
90
|
|
Reclassification Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(10,037
|
)
|
|
|
(993
|
)
|
|
|
(9,483
|
)
|
|
|
(193
|
)
|
Prior service credit (cost)
|
|
|
(4,971
|
)
|
|
|
48
|
|
|
|
(1,833
|
)
|
|
|
47
|
|
Transition asset
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income:
|
|
$
|
8,498
|
|
|
$
|
(12,491
|
)
|
|
$
|
2,878
|
|
|
$
|
10,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in accumulated other comprehensive income expected to be
recognized as components of net periodic benefit cost in 2010
are as follows:
|
|
|
|
|
|
|
|
|
|
|
United
|
|
|
|
|
States
|
|
International
|
|
|
(In thousands)
|
|
Net loss
|
|
$
|
3,086
|
|
|
$
|
186
|
|
Prior service costs (credit)
|
|
|
6,049
|
|
|
|
(54
|
)
|
Transition asset
|
|
|
|
|
|
|
(4
|
)
|
Prior service costs are amortized using an alternative
straight-line method over the average remaining service period
of employees expected to receive plan benefits. Assumed
long-term rates of return on plan assets, discount rates and
rates of compensation increases vary for the different plans
according to the local economic conditions.
The weighted average assumption rates used for benefit
obligations were as follows:
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
Discount rate:
|
|
|
|
|
United States plans
|
|
5.25%
|
|
5.75 - 6.25%
|
International plans
|
|
1.68 - 8.00
|
|
2.10 - 6.00
|
Rate of compensation increase:
|
|
|
|
|
United States plans
|
|
6.00
|
|
8.00
|
International plans
|
|
2.00 - 4.70
|
|
2.00 - 5.15
|
67
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The weighted average assumption rates used for net periodic
benefit costs were as follows:
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
Discount rate:
|
|
|
|
|
|
|
United States plans
|
|
5.75 - 6.25%
|
|
5.75 - 6.00%
|
|
5.00 - 5.50%
|
International plans
|
|
1.68 - 6.00
|
|
1.94 - 5.60
|
|
1.90 - 6.60
|
Expected return on plan assets:
|
|
|
|
|
|
|
United States plans
|
|
7.00
|
|
7.00
|
|
5.00 - 7.00
|
International plans
|
|
4.20 - 7.05
|
|
4.20 - 7.34
|
|
4.00 - 6.82
|
Rate of compensation increase:
|
|
|
|
|
|
|
United States plans
|
|
8.00
|
|
8.00
|
|
8.00
|
International plans
|
|
2.00 - 5.15
|
|
2.00 - 4.77
|
|
2.00 - 6.50
|
In determining the overall expected long-term rate of return for
plan assets, we take into consideration the historical
experience as well as future expectations of the asset mix
involved. As different investments yield different returns, each
asset category must be reviewed individually and then weighted
for significance in relation to the total portfolio.
The following table presents the fair values of the
Companys pension plan assets as of December 31, 2009.
United States and International plans are combined below as
there is only one United States plan with assets. For an
explanation of the various levels, see Note 11.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Investment funds(1)
|
|
$
|
|
|
|
$
|
86,765
|
|
|
$
|
86,765
|
|
Common/collective trust funds(2)
|
|
|
|
|
|
|
8,176
|
|
|
|
8,176
|
|
Cash
|
|
|
2,788
|
|
|
|
|
|
|
|
2,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
2,788
|
|
|
$
|
94,941
|
|
|
$
|
97,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These international funds invest in the following: 4% cash, 6%
U.S. equities, 39%
non-U.S.
equities, 41%
non-U.S.
fixed income securities, 7% property and 3% other. |
|
(2) |
|
These U.S. funds invest in 62% equities and 38% fixed income
securities. |
Common/collective trust funds are valued at the net assets value
of shares in the fund as determined by the issuer which are
based on the fair value of the underlying assets. Investment
funds are valued by the issuer based on the fair value of the
underlying assets.
At December 31, 2008, 58% of our U.S. pension plan
assets were invested in equity-based securities and 42% were
invested in debt-based securities. Internationally at
December 31, 2008, 62% of our pension plan assets were
invested in equity-based securities, 23% in debt-based
securities and 15% in other investments.
In the U.S., our investment strategy includes a balanced
approach with target allocation percentages of 60% equity
investments and 40% fixed income investments. For the
international plans, the assets are invested primarily in equity
investments as they are expected to provide a higher long-term
rate of return. Our pension investment strategy worldwide
prohibits a direct investment in our own stock.
68
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In 2010, we expect to contribute less than $1 million in
the U.S. and $6 million internationally to our pension
and other postretirement benefit plans. In addition, the
following benefit payments, which reflect expected future
service and anticipated settlements, as appropriate, are
expected to be paid:
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
International
|
|
|
(In thousands)
|
|
2010
|
|
$
|
12,914
|
|
|
$
|
4,283
|
|
2011
|
|
|
11,737
|
|
|
|
2,494
|
|
2012
|
|
|
11,305
|
|
|
|
1,611
|
|
2013
|
|
|
15,856
|
|
|
|
2,304
|
|
2014
|
|
|
13,239
|
|
|
|
3,216
|
|
2015 - 2019
|
|
|
97,252
|
|
|
|
18,365
|
|
The components of Income from Continuing Operations Before
Income Taxes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Domestic
|
|
$
|
(464,694
|
)
|
|
$
|
533,942
|
|
|
$
|
512,275
|
|
Foreign
|
|
|
764,168
|
|
|
|
1,155,972
|
|
|
|
932,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
299,474
|
|
|
$
|
1,689,914
|
|
|
$
|
1,444,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our income tax benefit (provision) from continuing operations
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal and state income taxes
|
|
$
|
63,635
|
|
|
$
|
(96,549
|
)
|
|
$
|
(132,182
|
)
|
Foreign
|
|
|
(193,508
|
)
|
|
|
(233,704
|
)
|
|
|
(171,705
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
(129,873
|
)
|
|
|
(330,253
|
)
|
|
|
(303,887
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal
|
|
|
43,489
|
|
|
|
76,295
|
|
|
|
(47,990
|
)
|
Foreign
|
|
|
66,835
|
|
|
|
4,397
|
|
|
|
19,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
110,324
|
|
|
|
80,692
|
|
|
|
(28,873
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(19,549
|
)
|
|
$
|
(249,561
|
)
|
|
$
|
(332,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The difference between the tax (provision) benefit at the
statutory federal income tax rate and the tax (provision)
benefit attributable to Income from Continuing Operations Before
Income Taxes for the three years ended December 31, 2009 is
analyzed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Statutory federal income tax rate
|
|
$
|
(104,816
|
)
|
|
$
|
(591,470
|
)
|
|
$
|
(505,571
|
)
|
Effect of state income tax, net and alternative minimum tax
|
|
|
(8,268
|
)
|
|
|
(11,177
|
)
|
|
|
(8,957
|
)
|
Effect of domestic non-deductible expenses
|
|
|
(38,622
|
)
|
|
|
(2,510
|
)
|
|
|
(5,295
|
)
|
Change in valuation allowance
|
|
|
(636
|
)
|
|
|
(4,574
|
)
|
|
|
(6,662
|
)
|
Effect of foreign income tax, net
|
|
|
140,322
|
|
|
|
371,582
|
|
|
|
197,540
|
|
Change in income tax reserve
|
|
|
(9,401
|
)
|
|
|
(9,302
|
)
|
|
|
(5,425
|
)
|
Effect of change in statutory rates
|
|
|
6,365
|
|
|
|
(1,782
|
)
|
|
|
6,930
|
|
Other
|
|
|
(4,493
|
)
|
|
|
(328
|
)
|
|
|
(5,320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(19,549
|
)
|
|
$
|
(249,561
|
)
|
|
$
|
(332,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2008, we recorded a benefit of approximately
$100 million related to foreign taxes paid that will be
used to reduce our future United States tax liability. This
adjustment is presented in effect of foreign income tax, net.
Deferred tax assets and liabilities are recognized for the
estimated future tax effects of temporary differences between
the tax basis of an asset or liability and its reported amount
in the financial statements. The measurement of deferred tax
assets and liabilities is based on enacted tax laws and rates
currently in effect in each of the jurisdictions in which we
have operations. Deferred tax assets and liabilities are
classified as current or non-current according to the
classification of the related asset or liability for financial
reporting.
The components of the net deferred tax asset (liability)
attributable to continuing operations were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Domestic and foreign operating losses
|
|
$
|
440,878
|
|
|
$
|
118,519
|
|
Accrued liabilities and reserves
|
|
|
157,429
|
|
|
|
180,476
|
|
Tax credits
|
|
|
102,288
|
|
|
|
127,332
|
|
Other differences between financial and tax basis
|
|
|
97,893
|
|
|
|
91,484
|
|
Differences between financial and tax basis inventory
|
|
|
47,258
|
|
|
|
32,596
|
|
Valuation allowance
|
|
|
(70,349
|
)
|
|
|
(68,853
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
775,397
|
|
|
|
481,554
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(284,441
|
)
|
|
|
(180,852
|
)
|
Goodwill and other intangibles
|
|
|
(184,365
|
)
|
|
|
(188,883
|
)
|
Unremitted foreign earnings
|
|
|
(18,987
|
)
|
|
|
(1,046
|
)
|
Other differences between financial and tax basis
|
|
|
(61,185
|
)
|
|
|
(6,916
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(548,978
|
)
|
|
|
(377,697
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
226,419
|
|
|
$
|
103,857
|
|
|
|
|
|
|
|
|
|
|
70
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The overall increase in the valuation allowance in 2009 is
primarily attributable to the establishment of a valuation
allowance against net operating losses (NOLs) in
various jurisdictions. Managements assessment is that the
character and nature of future taxable income may not allow us
to realize the tax benefits of the NOLs and tax credits within
the allowable carryforward period. Therefore, an appropriate
valuation allowance has been made.
We have provided additional taxes for the anticipated
repatriation of earnings of our foreign subsidiaries where our
management has determined that the foreign subsidiaries earnings
are not indefinitely reinvested. For foreign subsidiaries whose
earnings are indefinitely reinvested, no provision for
U.S. federal and state income taxes has been provided. If
the earnings were not indefinitely reinvested, the estimated tax
benefit would be approximately $15 million after
application of available foreign tax credits.
At December 31, 2009, we had approximately
$1.4 billion of NOLs, $70 million of which were
generated by certain domestic subsidiaries prior to their
acquisition by us. The use of these acquired domestic NOLs is
subject to limitations imposed by the Internal Revenue Code and
is also restricted to the taxable income of the subsidiaries
generating these losses. Loss carryforwards, if not utilized,
will expire at various dates from 2010 through 2029.
At December 31, 2009, we had approximately $86 million
of foreign tax credits available to offset future payments of
federal income taxes. The foreign tax credits expire in varying
amounts through 2019.
A tabular reconciliation of the total amounts of unrecognized
tax benefits at the beginning and end of the period is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Balance at beginning of year
|
|
$
|
45,262
|
|
|
$
|
37,805
|
|
|
$
|
33,891
|
|
Additions as a result of tax positions taken during a prior
period
|
|
|
13,007
|
|
|
|
8,904
|
|
|
|
9,451
|
|
Reductions as a result of tax positions taken during a prior
period
|
|
|
(2,259
|
)
|
|
|
(71
|
)
|
|
|
(3,076
|
)
|
Additions as a result of tax positions taken during the current
period
|
|
|
1,298
|
|
|
|
1,391
|
|
|
|
|
|
Reductions relating to settlements with taxing authorities
|
|
|
(1,633
|
)
|
|
|
(2,767
|
)
|
|
|
(2,080
|
)
|
Reductions as a result of a lapse of the applicable statute of
limitations
|
|
|
(1,319
|
)
|
|
|
|
|
|
|
(381
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
54,356
|
|
|
$
|
45,262
|
|
|
$
|
37,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All of the unrecognized benefits, if recognized in future
periods, would impact our effective tax rate.
To the extent penalties and interest would be assessed on any
underpayment of income tax, such amounts have been accrued and
classified as a component of income tax expense in the financial
statements. This is an accounting policy election made by us
that is a continuation of our historical policy and will
continue to be consistently applied in the future. We recognized
$8 million, $2 million and $3 million of expense relating
to interest for the periods ended December 31, 2009, 2008
and 2007, respectively. We recognized $5 million of penalties
for the year ended December 31, 2009. Penalties during the
years ended December 31, 2008 and 2007 were immaterial. The
amounts in the table above exclude accrued interest and
penalties of $28 million, $14 million and
$13 million at December 31, 2009, 2008 and 2007,
respectively.
We are subject to income tax in many of the approximately 100
countries where we operate including major operations in the
United States, the United Kingdom, and Canada. Many of our
subsidiaries are open to examination in the United Kingdom and
Canada dating from 2003 and 2001, respectively through
December 31, 2009. We are open to examination in the United
States for tax years ended December 31, 2004 through
December 31, 2008.
We do not anticipate a significant change in the balance of
unrecognized tax benefits within the next 12 months.
71
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
17.
|
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. These
investigations are not yet resolved, and we cannot 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. This
investigation is not yet resolved, and we cannot anticipate the
timing, outcome or possible impact of the ultimate resolution of
the investigation, financial or otherwise.
In light of this investigation and of the current 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 the embezzlement of
approximately $175,000 at a European subsidiary and the possible
improper use of these funds, including possible payments to
government officials in Europe, during the period from 2000 to
2004, and 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. These investigations are not yet resolved, and we
cannot anticipate the timing, outcome or possible impact of the
ultimate resolution, of the investigations, financial or
otherwise.
The DOJ, SEC and other agencies and authorities have a broad
range of civil and criminal penalties they may seek to impose
against corporations and individuals for violations of trade
sanctions laws, the FCPA and other federal statutes including,
but not limited to, injunctive relief, disgorgement, fines,
penalties and modifications to business practices and compliance
programs. In recent years, these agencies and authorities have
entered into agreements with, and obtained a range of penalties
against, several public corporations and individuals in similar
investigations, under which civil and criminal penalties were
imposed, including in some cases fines and other penalties and
sanctions in the tens and hundreds of millions of dollars. These
agencies are seeking to impose penalties against us for past
conduct, but the ultimate amount of any penalties we may pay
currently cannot be reasonably estimated. Under trade sanctions
laws, the DOJ may also seek to impose modifications to business
practices, including immediate cessation of all business
activities in specific countries or other limitations that
decrease our business, and modifications to compliance programs,
which may increase compliance costs. Any injunctive relief,
disgorgement, fines, penalties, sanctions or imposed
modifications to business practices resulting
72
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
from these investigations could adversely affect our results of
operations. In addition, our 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 affect on our business, financial condition,
liquidity or results of operations.
During 2009 and 2008, we incurred $45 million and
$47 million, respectively, in connection with these
on-going investigations. In addition, we incurred
$56 million for costs incurred in connection with our exit
from certain sanctioned countries during 2008.
Other
Litigation and Disputes
We are aware of various disputes and potential claims and we 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.
Our former Senior Vice President and General Counsel (the
Executive) left the Company in June 2009. The
Executive had employment agreements with us that terminated on
his departure. There is currently a dispute between the
Executive and us as to the amount of compensation we are
obligated to pay under these employment agreements based on the
Executives separation. It is our belief that an
unfavorable outcome regarding this dispute is not probable, and
as such, we have not accrued for $9 million of the
Executives claimed severance and other benefits.
In association with a prior acquisition, we identified
pre-acquisition contingencies related to duties and taxes
associated with the importation of certain assets to foreign
jurisdictions. At December 31, 2009, we have a liability in
the amount of $5 million for this matter. If we use the
high end of the range, the aggregate potential liability would
be approximately $6 million higher.
We are committed under various operating lease agreements
primarily related to office space and equipment. Generally,
these leases include renewal provisions and rental payments,
which may be adjusted for taxes, insurance and maintenance
related to the property. Future minimum rental commitments under
noncancellable operating leases are as follows (in thousands):
|
|
|
|
|
2010
|
|
$
|
88,274
|
|
2011
|
|
|
68,392
|
|
2012
|
|
|
46,706
|
|
2013
|
|
|
30,304
|
|
2014
|
|
|
22,047
|
|
Thereafter
|
|
|
107,403
|
|
|
|
|
|
|
|
|
$
|
363,126
|
|
|
|
|
|
|
Total rent expense incurred under operating leases was
approximately $367 million, $188 million and
$130 million for the years ended December 31, 2009,
2008 and 2007, respectively.
73
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Reporting
Segments
We report the following regions as separate, distinct reporting
segments: (1) North America, (2) Middle East/North
Africa/Asia, (3) Europe/West Africa/FSU and (4) Latin
America. Financial information by segment is summarized below.
Revenues are attributable to countries based on the ultimate
destination of the sale of products or performance of services.
The total assets and capital expenditures for the years ended
December 31, 2009, 2008 and 2007 do not include the assets
or activity of our discontinued operation. The accounting
policies of the segments are the same as those described in the
summary of significant accounting policies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
Net
|
|
|
Income
|
|
|
Depreciation
|
|
|
|
|
|
Total Assets at
|
|
|
|
Operating
|
|
|
from
|
|
|
and
|
|
|
Capital
|
|
|
December 31,
|
|
|
|
Revenues
|
|
|
Operations
|
|
|
Amortization
|
|
|
Expenditures
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
North America
|
|
$
|
2,765,707
|
|
|
$
|
197,211
|
|
|
$
|
315,746
|
|
|
$
|
276,457
|
|
|
$
|
6,357,021
|
|
Middle East/North Africa/Asia
|
|
|
2,368,118
|
|
|
|
441,974
|
|
|
|
257,065
|
|
|
|
817,635
|
|
|
|
4,568,310
|
|
Europe/West Africa/FSU(a)
|
|
|
1,616,460
|
|
|
|
251,991
|
|
|
|
165,108
|
|
|
|
206,559
|
|
|
|
3,601,031
|
|
Latin America
|
|
|
2,076,648
|
|
|
|
281,590
|
|
|
|
152,567
|
|
|
|
228,180
|
|
|
|
3,122,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,826,933
|
|
|
|
1,172,766
|
|
|
|
890,486
|
|
|
|
1,528,831
|
|
|
|
17,649,264
|
|
Corporate and Research and Development
|
|
|
|
|
|
|
(368,345
|
)
|
|
|
16,211
|
|
|
|
40,646
|
|
|
|
1,216,919
|
|
Other(b)
|
|
|
|
|
|
|
(100,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,826,933
|
|
|
$
|
703,855
|
|
|
$
|
906,697
|
|
|
$
|
1,569,477
|
|
|
$
|
18,866,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
Net
|
|
|
Income
|
|
|
Depreciation
|
|
|
|
|
|
Total Assets at
|
|
|
|
Operating
|
|
|
from
|
|
|
and
|
|
|
Capital
|
|
|
December 31,
|
|
|
|
Revenues
|
|
|
Operations
|
|
|
Amortization
|
|
|
Expenditures
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
North America
|
|
$
|
4,460,147
|
|
|
$
|
1,125,199
|
|
|
$
|
310,054
|
|
|
$
|
602,876
|
|
|
$
|
6,541,697
|
|
Middle East/North Africa/Asia
|
|
|
2,391,520
|
|
|
|
561,012
|
|
|
|
196,443
|
|
|
|
1,123,751
|
|
|
|
4,320,875
|
|
Europe/West Africa/FSU
|
|
|
1,539,190
|
|
|
|
382,772
|
|
|
|
119,957
|
|
|
|
393,532
|
|
|
|
2,641,687
|
|
Latin America
|
|
|
1,209,707
|
|
|
|
277,094
|
|
|
|
93,942
|
|
|
|
312,382
|
|
|
|
2,010,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,600,564
|
|
|
|
2,346,077
|
|
|
|
720,396
|
|
|
|
2,432,541
|
|
|
|
15,514,572
|
|
Corporate and Research and Development
|
|
|
|
|
|
|
(327,671
|
)
|
|
|
11,412
|
|
|
|
51,622
|
|
|
|
961,941
|
|
Other(c)
|
|
|
|
|
|
|
(39,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9,600,564
|
|
|
$
|
1,978,549
|
|
|
$
|
731,808
|
|
|
$
|
2,484,163
|
|
|
$
|
16,476,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2007
|
|
|
|
|
|
|
Net
|
|
|
Income
|
|
|
Depreciation
|
|
|
|
|
|
Total Assets at
|
|
|
|
Operating
|
|
|
from
|
|
|
and
|
|
|
Capital
|
|
|
December 31,
|
|
|
|
Revenues
|
|
|
Operations
|
|
|
Amortization
|
|
|
Expenditures
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
North America
|
|
$
|
3,937,456
|
|
|
$
|
1,013,088
|
|
|
$
|
277,222
|
|
|
$
|
722,277
|
|
|
$
|
6,265,186
|
|
Middle East/North Africa/Asia
|
|
|
1,823,769
|
|
|
|
416,263
|
|
|
|
158,321
|
|
|
|
446,215
|
|
|
|
3,027,456
|
|
Europe/West Africa/FSU
|
|
|
1,188,519
|
|
|
|
293,846
|
|
|
|
86,768
|
|
|
|
230,990
|
|
|
|
2,005,391
|
|
Latin America
|
|
|
882,318
|
|
|
|
203,211
|
|
|
|
74,089
|
|
|
|
198,321
|
|
|
|
1,209,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,832,062
|
|
|
|
1,926,408
|
|
|
|
596,400
|
|
|
|
1,597,803
|
|
|
|
12,507,879
|
|
Corporate and Research and Development
|
|
|
|
|
|
|
(271,285
|
)
|
|
|
9,826
|
|
|
|
37,238
|
|
|
|
656,876
|
|
Other(d)
|
|
|
|
|
|
|
(30,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,832,062
|
|
|
$
|
1,624,336
|
|
|
$
|
606,226
|
|
|
$
|
1,635,041
|
|
|
$
|
13,164,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Income from operations includes a $21 million gain related
to the acquisition of OFS. |
|
(b) |
|
Other for the year ended December 31, 2009 is comprised of
$4 million for costs incurred in connection with our
withdrawal from sanctioned countries, $45 million in legal
and professional fees incurred in connection with our on-going
investigations by the U.S. government and $52 million for
severance costs incurred for restructuring activities. |
|
(c) |
|
Other for the year ended December 31, 2008 is comprised of
$56 million for costs incurred in connection with our
withdrawal from sanctioned countries, $47 million in legal
and professional fees incurred in connection with our on-going
investigations by the U.S. government and $18 million for
severance costs incurred for restructuring activities. These
charges were partially offset by an $81 million gain
recognized as a result of our selling our 50% interest in a
subsidiary we controlled to Qatar Petroleum for cash
consideration of $113 million. |
|
(d) |
|
Other for the year ended December 31, 2007 is comprised of
$17 million in severance charges associated with
restructuring activities and $14 million in legal and
professional fees incurred in connection with our on-going
investigations by the U.S. government. |
Products
and Services
We are a diversified international energy service and
manufacturing company that provides a variety of services and
equipment to the exploration, production and transmission
sectors of the oil and natural gas industry. We operate in
virtually every oil and natural gas exploration and production
region in the world. The composition of our consolidated
revenues by product line is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Well Construction
|
|
|
17
|
%
|
|
|
15
|
%
|
|
|
16
|
%
|
Artificial Lift Systems
|
|
|
16
|
|
|
|
17
|
|
|
|
18
|
|
Drilling Services
|
|
|
16
|
|
|
|
16
|
|
|
|
15
|
|
Integrated Drilling
|
|
|
13
|
|
|
|
6
|
|
|
|
5
|
|
Completion Systems.
|
|
|
8
|
|
|
|
10
|
|
|
|
10
|
|
Drilling Tools
|
|
|
8
|
|
|
|
11
|
|
|
|
12
|
|
Stimulation & Chemicals
|
|
|
8
|
|
|
|
7
|
|
|
|
6
|
|
Wireline
|
|
|
6
|
|
|
|
8
|
|
|
|
8
|
|
Re-entry & Fishing
|
|
|
6
|
|
|
|
7
|
|
|
|
8
|
|
Pipeline & Specialty Services
|
|
|
2
|
|
|
|
3
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Geographic
Areas
Financial information by geographic area for each of the three
years ended December 31, 2009, is summarized below.
Long-lived assets are long-term assets excluding deferred tax
assets of $67 million, $36 million and
$46 million at December 31, 2009, 2008 and 2007,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from Unaffiliated Customers
|
|
|
Long-Lived Assets
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
United States
|
|
$
|
2,122,389
|
|
|
$
|
3,392,945
|
|
|
$
|
2,955,108
|
|
|
$
|
4,317,191
|
|
|
$
|
4,156,196
|
|
|
$
|
3,612,886
|
|
Mexico
|
|
|
1,230,200
|
|
|
|
293,224
|
|
|
|
218,423
|
|
|
|
407,603
|
|
|
|
356,210
|
|
|
|
84,863
|
|
Canada
|
|
|
643,318
|
|
|
|
1,067,202
|
|
|
|
982,348
|
|
|
|
1,198,923
|
|
|
|
1,039,899
|
|
|
|
1,259,620
|
|
Other Countries
|
|
|
4,831,026
|
|
|
|
4,847,193
|
|
|
|
3,676,183
|
|
|
|
6,734,351
|
|
|
|
5,318,283
|
|
|
|
3,715,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,826,933
|
|
|
$
|
9,600,564
|
|
|
$
|
7,832,062
|
|
|
$
|
12,658,068
|
|
|
$
|
10,870,588
|
|
|
$
|
8,673,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.
|
Quarterly
Financial Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
Total
|
|
|
|
(In thousands, except per share amounts)
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,256,141
|
|
|
$
|
1,994,832
|
|
|
$
|
2,149,879
|
|
|
$
|
2,426,081
|
|
|
$
|
8,826,933
|
|
Gross Profit
|
|
|
721,621
|
|
|
|
551,990
|
|
|
|
540,638
|
|
|
|
549,348
|
|
|
|
2,363,597
|
|
Income (Loss) from Continuing Operations Attributable to
Weatherford
|
|
|
164,802
|
|
|
|
41,981
|
|
|
|
77,374
|
|
|
|
(30,391
|
)
|
|
|
253,766
|
|
Gain (Loss) from Discontinued Operation, Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
|
164,802
|
|
|
|
41,981
|
|
|
|
77,374
|
|
|
|
(30,391
|
)
|
|
|
253,766
|
|
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
$
|
0.24
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.35
|
|
Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
0.24
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
$
|
0.23
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.35
|
|
Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
0.23
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
Total
|
|
|
|
(In thousands, except per share amounts)
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,195,892
|
|
|
$
|
2,229,250
|
|
|
$
|
2,540,796
|
|
|
$
|
2,634,626
|
|
|
$
|
9,600,564
|
|
Gross Profit
|
|
|
746,214
|
|
|
|
775,096
|
|
|
|
899,873
|
|
|
|
936,923
|
|
|
|
3,358,106
|
|
Income from Continuing Operations Attributable to Weatherford
|
|
|
284,069
|
|
|
|
364,044
|
|
|
|
370,600
|
|
|
|
387,368
|
|
|
|
1,406,081
|
|
Gain (Loss) from Discontinued Operation, Net of Tax
|
|
|
(19,868
|
)
|
|
|
6,940
|
|
|
|
|
|
|
|
|
|
|
|
(12,928
|
)
|
Net Income Attributable to Weatherford
|
|
|
264,201
|
|
|
|
370,984
|
|
|
|
370,600
|
|
|
|
387,368
|
|
|
|
1,393,153
|
|
Basic Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
$
|
0.42
|
|
|
$
|
0.53
|
|
|
$
|
0.54
|
|
|
$
|
0.56
|
|
|
$
|
2.06
|
|
Discontinued Operation
|
|
|
(0.03
|
)
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
0.39
|
|
|
$
|
0.54
|
|
|
$
|
0.54
|
|
|
$
|
0.56
|
|
|
$
|
2.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
$
|
0.41
|
|
|
$
|
0.52
|
|
|
$
|
0.53
|
|
|
$
|
0.56
|
|
|
$
|
2.01
|
|
Discontinued Operation
|
|
|
(0.03
|
)
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
0.38
|
|
|
$
|
0.53
|
|
|
$
|
0.53
|
|
|
$
|
0.56
|
|
|
$
|
1.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter 2008 results have been corrected in the table
above to reflect a change in our income tax provision (See
Note 1).
In January 2010, the Venezuelan government announced its
intention to devalue its currency (Bolivar) and move
to a two tier exchange structure. The official exchange rate is
expected to move from 2.15 to 2.60 for essential goods and 4.30
for non-essential goods and services. While we are still
evaluating the impact of these actions, our preliminary
assessment of the impact of the devaluation is that we will
incur a one-time loss in the first quarter of 2010 of
approximately $50 million for the remeasurement of the
local balance sheet at the date of the devaluation.
Our compensation committee is in the process of evaluating the
components of our executive officers compensation for 2010.
Changes to our Supplemental Executive Retirement Plan may occur
as a result of this review, including the possible
discontinuation of the plan. If this were to occur we would be
required to record a non-cash charge of up to $30 million,
while any payments vested under the plan would not be paid until
the executives separation.
|
|
22.
|
Other
Disclosures Required by Swiss Law
|
Balance
Sheet Item
Information regarding insurance coverage on our property, plant
and equipment is presented in Note 15 (Insurance) in the
Weatherford International Ltd. stand-alone statutory financial
statements.
Statement
of Income Item
Information regarding our personnel expenses is presented in
Note 16 (Personnel Expenses) in the Weatherford
International Ltd. stand-alone statutory financial statements.
77
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Compensation
and Security Ownership of Board Members and Executive
Officers
The compensation and security ownership of members of the Board
of Directors of Weatherford International Ltd. and of
Weatherford executive officers is presented in Note 8
(Board of Directors Compensation), Note 9 (Executive
Management Compensation) and Note 10 (Share
Ownership Board of Directors and Executive
Management) in the Weatherford International Ltd. stand-alone
statutory financial statements.
Risk
Assessment
Weatherford International Ltd.s risk assessment is
presented in Note 11 (Risk Assessment Disclosure) of the
Weatherford International Ltd. stand-alone statutory financial
statements.
|
|
23.
|
Consolidating
Financial Statements
|
During the first quarter of 2009, we completed a transaction
that changed our place of incorporation from Bermuda to
Switzerland. A new Swiss corporation named Weatherford
International Ltd. was formed and is now the ultimate parent of
the Weatherford group (Parent). The Parent
guarantees the obligations of Weatherford International Ltd.
incorporated in Bermuda (Weatherford Bermuda) and
Weatherford International, Inc. incorporated in Delaware
(Weatherford Delaware) noted below.
The following obligations of Weatherford Delaware were
guaranteed by Weatherford Bermuda as of December 31, 2009
and 2008: (i) the 6.625% Senior Notes, (ii) the
5.95% Senior Notes, (iii) the 6.35% Senior Notes
and (iv) the 6.80% Senior Notes.
The following obligations of Weatherford Bermuda were guaranteed
by Weatherford Delaware at December 31, 2009: (i) the
revolving credit facilities, (ii) the 4.95% Senior
Notes, (iii) the 5.50% Senior Notes, (iv) the
6.50% Senior Notes, (v) the 5.15% Senior Notes,
(vi) the 6.00% Senior Notes, (vii) the
7.00% Senior Notes, (viii) the 9.625% Senior
Notes, (ix) the 9.875% Senior Notes and
(x) issuances of notes under the commercial paper program.
The following obligations of the Weatherford Bermuda were
guaranteed by the Weatherford Delaware at December 31,
2008: (i) the revolving credit facilities, (ii) the
4.95% Senior Notes, (iii) the 5.50% Senior Notes,
(iv) the 6.50% Senior Notes, (v) the
5.15% Senior Notes, (vi) the 6.00% Senior Notes,
(vii) the 7.00% Senior Notes and (viii) issuances
of notes under the commercial paper program.
As a result of these guarantee arrangements, we are required to
present the following condensed consolidating financial
information. The accompanying guarantor financial information is
presented on the equity method of accounting for all periods
presented. Under this method, investments in subsidiaries are
recorded at cost and adjusted for our share in the
subsidiaries cumulative results of operations, capital
contributions and distributions and other changes in equity.
Elimination entries relate primarily to the elimination of
investments in subsidiaries and associated intercompany balances
and transactions. Certain prior year amounts have been
reclassified to conform to the current year presentation.
78
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Balance Sheet
December 31, 2009
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
ASSETS
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
102
|
|
|
$
|
47
|
|
|
$
|
421
|
|
|
$
|
251,949
|
|
|
$
|
|
|
|
$
|
252,519
|
|
Other Current Assets
|
|
|
510
|
|
|
|
11,163
|
|
|
|
98,033
|
|
|
|
5,778,381
|
|
|
|
|
|
|
|
5,888,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
612
|
|
|
|
11,210
|
|
|
|
98,454
|
|
|
|
6,030,330
|
|
|
|
|
|
|
|
6,140,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Investments in Affiliates
|
|
|
8,615,365
|
|
|
|
15,160,748
|
|
|
|
6,754,566
|
|
|
|
12,092,950
|
|
|
|
(42,623,629
|
)
|
|
|
|
|
Shares Held in Parent
|
|
|
|
|
|
|
|
|
|
|
108,268
|
|
|
|
507,780
|
|
|
|
(616,048
|
)
|
|
|
|
|
Intercompany Receivables, Net
|
|
|
|
|
|
|
1,671,487
|
|
|
|
1,017,215
|
|
|
|
|
|
|
|
(2,688,702
|
)
|
|
|
|
|
Other Assets
|
|
|
9,376
|
|
|
|
68,960
|
|
|
|
190,175
|
|
|
|
12,457,066
|
|
|
|
|
|
|
|
12,725,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
8,625,353
|
|
|
$
|
16,912,405
|
|
|
$
|
8,168,678
|
|
|
$
|
31,088,126
|
|
|
$
|
(45,928,379
|
)
|
|
$
|
18,866,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-Term Debt
|
|
$
|
|
|
|
$
|
352,373
|
|
|
$
|
1,868
|
|
|
$
|
515,340
|
|
|
$
|
|
|
|
$
|
869,581
|
|
Accounts Payable and Other Current Liabilities
|
|
|
46,160
|
|
|
|
107,984
|
|
|
|
116,404
|
|
|
|
1,656,759
|
|
|
|
|
|
|
|
1,927,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
46,160
|
|
|
|
460,357
|
|
|
|
118,272
|
|
|
|
2,172,099
|
|
|
|
|
|
|
|
2,796,888
|
|
Long-term Debt
|
|
|
|
|
|
|
3,988,162
|
|
|
|
1,848,191
|
|
|
|
10,905
|
|
|
|
|
|
|
|
5,847,258
|
|
Intercompany Payables, Net
|
|
|
36,606
|
|
|
|
|
|
|
|
|
|
|
|
2,652,096
|
|
|
|
(2,688,702
|
)
|
|
|
|
|
Other Long-term Liabilities
|
|
|
8,132
|
|
|
|
132,155
|
|
|
|
2,309
|
|
|
|
280,737
|
|
|
|
|
|
|
|
423,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
90,898
|
|
|
|
4,580,674
|
|
|
|
1,968,772
|
|
|
|
5,115,837
|
|
|
|
(2,688,702
|
)
|
|
|
9,067,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
8,534,455
|
|
|
|
12,331,731
|
|
|
|
6,199,906
|
|
|
|
25,893,257
|
|
|
|
(43,239,677
|
)
|
|
|
9,719,672
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,032
|
|
|
|
|
|
|
|
79,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
8,625,353
|
|
|
$
|
16,912,405
|
|
|
$
|
8,168,678
|
|
|
$
|
31,088,126
|
|
|
$
|
(45,928,379
|
)
|
|
$
|
18,866,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Balance Sheet
December 31, 2008
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
ASSETS
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
24
|
|
|
$
|
50
|
|
|
$
|
238,324
|
|
|
$
|
|
|
|
$
|
238,398
|
|
Other Current Assets
|
|
|
11,547
|
|
|
|
90,626
|
|
|
|
5,229,711
|
|
|
|
|
|
|
|
5,331,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
11,571
|
|
|
|
90,676
|
|
|
|
5,468,035
|
|
|
|
|
|
|
|
5,570,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Investments in Affiliates
|
|
|
14,335,661
|
|
|
|
6,231,144
|
|
|
|
12,611,943
|
|
|
|
(33,178,748
|
)
|
|
|
|
|
Shares Held in Parent
|
|
|
|
|
|
|
133,519
|
|
|
|
625,958
|
|
|
|
(759,477
|
)
|
|
|
|
|
Intercompany Receivables, Net
|
|
|
1,289,507
|
|
|
|
906,534
|
|
|
|
|
|
|
|
(2,196,041
|
)
|
|
|
|
|
Other Assets
|
|
|
59,325
|
|
|
|
184,869
|
|
|
|
10,662,037
|
|
|
|
|
|
|
|
10,906,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
15,696,064
|
|
|
$
|
7,546,742
|
|
|
$
|
29,367,973
|
|
|
$
|
(36,134,266
|
)
|
|
$
|
16,476,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Borrowings and Current Portion of Long-term Debt
|
|
$
|
781,443
|
|
|
$
|
1,758
|
|
|
$
|
472,746
|
|
|
$
|
|
|
|
$
|
1,255,947
|
|
Accounts Payable and Other Current Liabilities
|
|
|
59,534
|
|
|
|
39,764
|
|
|
|
1,666,848
|
|
|
|
|
|
|
|
1,766,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
840,977
|
|
|
|
41,522
|
|
|
|
2,139,594
|
|
|
|
|
|
|
|
3,022,093
|
|
Long-term Debt
|
|
|
2,701,747
|
|
|
|
1,849,428
|
|
|
|
13,080
|
|
|
|
|
|
|
|
4,564,255
|
|
Intercompany Payables, Net
|
|
|
|
|
|
|
|
|
|
|
2,196,041
|
|
|
|
(2,196,041
|
)
|
|
|
|
|
Other Long-term Liabilities
|
|
|
110,627
|
|
|
|
2,502
|
|
|
|
371,737
|
|
|
|
|
|
|
|
484,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
3,653,351
|
|
|
|
1,893,452
|
|
|
|
4,720,452
|
|
|
|
(2,196,041
|
)
|
|
|
8,071,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherford Shareholders Equity
|
|
|
12,042,713
|
|
|
|
5,653,290
|
|
|
|
24,567,120
|
|
|
|
(33,938,225
|
)
|
|
|
8,324,898
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
80,401
|
|
|
|
|
|
|
|
80,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
15,696,064
|
|
|
$
|
7,546,742
|
|
|
$
|
29,367,973
|
|
|
$
|
(36,134,266
|
)
|
|
$
|
16,476,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Income
Year Ended December 31, 2009
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,826,933
|
|
|
$
|
|
|
|
$
|
8,826,933
|
|
Costs and Expenses
|
|
|
(10,609
|
)
|
|
|
(25,914
|
)
|
|
|
(3,011
|
)
|
|
|
(8,083,544
|
)
|
|
|
|
|
|
|
(8,123,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
(10,609
|
)
|
|
|
(25,914
|
)
|
|
|
(3,011
|
)
|
|
|
743,389
|
|
|
|
|
|
|
|
703,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income (Expense), Net
|
|
|
(86
|
)
|
|
|
(253,403
|
)
|
|
|
(114,874
|
)
|
|
|
1,615
|
|
|
|
|
|
|
|
(366,748
|
)
|
Intercompany Charges, Net
|
|
|
(20,776
|
)
|
|
|
5,430
|
|
|
|
(143,689
|
)
|
|
|
159,035
|
|
|
|
|
|
|
|
|
|
Equity in Subsidiary Income
|
|
|
285,228
|
|
|
|
350,622
|
|
|
|
523,383
|
|
|
|
|
|
|
|
(1,159,233
|
)
|
|
|
|
|
Other, Net
|
|
|
9
|
|
|
|
208,493
|
|
|
|
(591
|
)
|
|
|
(245,544
|
)
|
|
|
|
|
|
|
(37,633
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations Before Income Taxes
|
|
|
253,766
|
|
|
|
285,228
|
|
|
|
261,218
|
|
|
|
658,495
|
|
|
|
(1,159,233
|
)
|
|
|
299,474
|
|
Provision for Income Taxes
|
|
|
|
|
|
|
|
|
|
|
89,404
|
|
|
|
(108,953
|
)
|
|
|
|
|
|
|
(19,549
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
|
|
|
253,766
|
|
|
|
285,228
|
|
|
|
350,622
|
|
|
|
549,542
|
|
|
|
(1,159,233
|
)
|
|
|
279,925
|
|
Loss from Discontinued Operation, Net of Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
253,766
|
|
|
|
285,228
|
|
|
|
350,622
|
|
|
|
549,542
|
|
|
|
(1,159,233
|
)
|
|
|
279,925
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,159
|
)
|
|
|
|
|
|
|
(26,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
253,766
|
|
|
$
|
285,228
|
|
|
$
|
350,622
|
|
|
$
|
523,383
|
|
|
$
|
(1,159,233
|
)
|
|
$
|
253,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Income
Year Ended December 31, 2008
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,600,564
|
|
|
$
|
|
|
|
$
|
9,600,564
|
|
Costs and Expenses
|
|
|
(35,899
|
)
|
|
|
(1,684
|
)
|
|
|
(7,584,432
|
)
|
|
|
|
|
|
|
(7,622,015
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
(35,899
|
)
|
|
|
(1,684
|
)
|
|
|
2,016,132
|
|
|
|
|
|
|
|
1,978,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income (Expense), Net
|
|
|
(127,684
|
)
|
|
|
(115,721
|
)
|
|
|
(274
|
)
|
|
|
|
|
|
|
(243,679
|
)
|
Intercompany Charges, Net
|
|
|
128,198
|
|
|
|
|
|
|
|
(128,198
|
)
|
|
|
|
|
|
|
|
|
Equity in Subsidiary Income
|
|
|
1,393,964
|
|
|
|
1,478,574
|
|
|
|
|
|
|
|
(2,872,538
|
)
|
|
|
|
|
Other, Net
|
|
|
(6,676
|
)
|
|
|
(1,783
|
)
|
|
|
(36,497
|
)
|
|
|
|
|
|
|
(44,956
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations Before Income Taxes
|
|
|
1,351,903
|
|
|
|
1,359,386
|
|
|
|
1,851,163
|
|
|
|
(2,872,538
|
)
|
|
|
1,689,914
|
|
Provision for Income Taxes
|
|
|
|
|
|
|
34,578
|
|
|
|
(284,139
|
)
|
|
|
|
|
|
|
(249,561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
|
|
|
1,351,903
|
|
|
|
1,393,964
|
|
|
|
1,567,024
|
|
|
|
(2,872,538
|
)
|
|
|
1,440,353
|
|
Income (Loss) from Discontinued Operation, Net of Taxes
|
|
|
2,000
|
|
|
|
|
|
|
|
(14,928
|
)
|
|
|
|
|
|
|
(12,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
1,353,903
|
|
|
|
1,393,964
|
|
|
|
1,552,096
|
|
|
|
(2,872,538
|
)
|
|
|
1,427,425
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
(34,272
|
)
|
|
|
|
|
|
|
(34,272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
1,353,903
|
|
|
$
|
1,393,964
|
|
|
$
|
1,517,824
|
|
|
$
|
(2,872,538
|
)
|
|
$
|
1,393,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Income
Year Ended December 31, 2007
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
|
|
|
$
|
7,832,062
|
|
|
$
|
|
|
|
$
|
7,832,062
|
|
Costs and Expenses
|
|
|
(15,400
|
)
|
|
|
(3,641
|
)
|
|
|
(6,188,685
|
)
|
|
|
|
|
|
|
(6,207,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
(15,400
|
)
|
|
|
(3,641
|
)
|
|
|
1,643,377
|
|
|
|
|
|
|
|
1,624,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income (Expense), Net
|
|
|
(95,568
|
)
|
|
|
(73,428
|
)
|
|
|
(2,285
|
)
|
|
|
|
|
|
|
(171,281
|
)
|
Intercompany Charges, Net
|
|
|
(100,538
|
)
|
|
|
206,371
|
|
|
|
(105,833
|
)
|
|
|
|
|
|
|
|
|
Equity in Subsidiary Income
|
|
|
1,262,288
|
|
|
|
1,177,140
|
|
|
|
|
|
|
|
(2,439,428
|
)
|
|
|
|
|
Other, Net
|
|
|
7,709
|
|
|
|
1,101
|
|
|
|
(17,379
|
)
|
|
|
|
|
|
|
(8,569
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations Before Income Taxes
|
|
|
1,058,491
|
|
|
|
1,307,543
|
|
|
|
1,517,880
|
|
|
|
(2,439,428
|
)
|
|
|
1,444,486
|
|
Provision for Income Taxes
|
|
|
|
|
|
|
(45,255
|
)
|
|
|
(287,505
|
)
|
|
|
|
|
|
|
(332,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
|
|
|
1,058,491
|
|
|
|
1,262,288
|
|
|
|
1,230,375
|
|
|
|
(2,439,428
|
)
|
|
|
1,111,726
|
|
Income (Loss) from Discontinued Operation, Net of Taxes
|
|
|
12,115
|
|
|
|
|
|
|
|
(33,484
|
)
|
|
|
|
|
|
|
(21,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
1,070,606
|
|
|
|
1,262,288
|
|
|
|
1,196,891
|
|
|
|
(2,439,428
|
)
|
|
|
1,090,357
|
|
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
(19,751
|
)
|
|
|
|
|
|
|
(19,751
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Weatherford
|
|
$
|
1,070,606
|
|
|
$
|
1,262,288
|
|
|
$
|
1,177,140
|
|
|
$
|
(2,439,428
|
)
|
|
$
|
1,070,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Cash Flows
Year Ended December 31, 2009
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
253,766
|
|
|
$
|
285,228
|
|
|
$
|
350,622
|
|
|
$
|
549,542
|
|
|
$
|
(1,159,233
|
)
|
|
$
|
279,925
|
|
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
(Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges from Parent or Subsidiary
|
|
|
20,776
|
|
|
|
(5,430
|
)
|
|
|
143,689
|
|
|
|
(159,035
|
)
|
|
|
|
|
|
|
|
|
(Gain) Loss from Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in (Earnings) Loss of Affiliates
|
|
|
(285,228
|
)
|
|
|
(350,622
|
)
|
|
|
(523,383
|
)
|
|
|
|
|
|
|
1,159,233
|
|
|
|
|
|
Deferred Income Tax Provision (Benefit)
|
|
|
|
|
|
|
|
|
|
|
(10,008
|
)
|
|
|
(100,318
|
)
|
|
|
|
|
|
|
(110,326
|
)
|
Other Adjustments
|
|
|
7,718
|
|
|
|
(166,010
|
)
|
|
|
161,307
|
|
|
|
441,708
|
|
|
|
|
|
|
|
444,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating
Activities Continuing Operations
|
|
|
(2,968
|
)
|
|
|
(236,834
|
)
|
|
|
122,227
|
|
|
|
731,897
|
|
|
|
|
|
|
|
614,322
|
|
Net Cash Used by Operating
Activities Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
|
|
|
(2,968
|
)
|
|
|
(236,834
|
)
|
|
|
122,227
|
|
|
|
731,897
|
|
|
|
|
|
|
|
614,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,695
|
)
|
|
|
|
|
|
|
(9,695
|
)
|
Capital Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,569,477
|
)
|
|
|
|
|
|
|
(1,569,477
|
)
|
Acquisition of Intellectual Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,210
|
)
|
|
|
|
|
|
|
(34,210
|
)
|
Purchase of Equity Investment in Unconsolidated Affiliate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,999
|
)
|
|
|
|
|
|
|
(26,999
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,445
|
|
|
|
|
|
|
|
123,445
|
|
Capital Contribution to Subsidiary
|
|
|
|
|
|
|
(474,465
|
)
|
|
|
(39
|
)
|
|
|
|
|
|
|
474,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing
Activities Continuing Operations
|
|
|
|
|
|
|
(474,465
|
)
|
|
|
(39
|
)
|
|
|
(1,516,936
|
)
|
|
|
474,504
|
|
|
|
(1,516,936
|
)
|
Net Cash Provided by Investing
Activities Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing Activities
|
|
|
|
|
|
|
(474,465
|
)
|
|
|
(39
|
)
|
|
|
(1,516,936
|
)
|
|
|
474,504
|
|
|
|
(1,516,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of (Repayments on) Short-term Debt, Net
|
|
|
|
|
|
|
(429,070
|
)
|
|
|
110
|
|
|
|
36,040
|
|
|
|
|
|
|
|
(392,920
|
)
|
Borrowings of (Repayments on) Long-term Debt, Net
|
|
|
|
|
|
|
1,233,365
|
|
|
|
|
|
|
|
(6,779
|
)
|
|
|
|
|
|
|
1,226,586
|
|
Borrowings (Repayments) Between Subsidiaries, Net
|
|
|
2,968
|
|
|
|
(92,973
|
)
|
|
|
(194,416
|
)
|
|
|
284,421
|
|
|
|
|
|
|
|
|
|
Proceeds from Capital Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
474,504
|
|
|
|
(474,504
|
)
|
|
|
|
|
Other, Net
|
|
|
|
|
|
|
|
|
|
|
72,489
|
|
|
|
|
|
|
|
|
|
|
|
72,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
Continuing Operations
|
|
|
2,968
|
|
|
|
711,322
|
|
|
|
(121,817
|
)
|
|
|
788,186
|
|
|
|
(474,504
|
)
|
|
|
906,155
|
|
Net Cash Provided (Used) by Financing Activities
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
|
|
|
2,968
|
|
|
|
711,322
|
|
|
|
(121,817
|
)
|
|
|
788,186
|
|
|
|
(474,504
|
)
|
|
|
906,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,580
|
|
|
|
|
|
|
|
10,580
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
|
|
|
|
23
|
|
|
|
371
|
|
|
|
13,727
|
|
|
|
|
|
|
|
14,121
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
102
|
|
|
|
24
|
|
|
|
50
|
|
|
|
238,222
|
|
|
|
|
|
|
|
238,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
102
|
|
|
$
|
47
|
|
|
$
|
421
|
|
|
$
|
251,949
|
|
|
$
|
|
|
|
$
|
252,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Cash Flows
Year Ended December 31, 2008
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
1,353,903
|
|
|
$
|
1,393,964
|
|
|
$
|
1,552,096
|
|
|
$
|
(2,872,538
|
)
|
|
$
|
1,427,425
|
|
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
(Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges from Parent or Subsidiary
|
|
|
(128,198
|
)
|
|
|
|
|
|
|
128,198
|
|
|
|
|
|
|
|
|
|
(Gain) Loss from Discontinued Operations
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
14,928
|
|
|
|
|
|
|
|
12,928
|
|
Equity in (Earnings) Loss of Affiliates
|
|
|
(1,393,964
|
)
|
|
|
(1,478,574
|
)
|
|
|
|
|
|
|
2,872,538
|
|
|
|
|
|
Deferred Income Tax Provision (Benefit)
|
|
|
|
|
|
|
(15,687
|
)
|
|
|
(65,005
|
)
|
|
|
|
|
|
|
(80,692
|
)
|
Other Adjustments
|
|
|
(21,284
|
)
|
|
|
(120,321
|
)
|
|
|
(107,269
|
)
|
|
|
|
|
|
|
(248,874
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating
Activities Continuing Operations
|
|
|
(191,543
|
)
|
|
|
(220,618
|
)
|
|
|
1,522,948
|
|
|
|
|
|
|
|
1,110,787
|
|
Net Cash Used by Operating
Activities Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
|
|
|
|
(6,219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
|
|
|
(191,543
|
)
|
|
|
(220,618
|
)
|
|
|
1,516,729
|
|
|
|
|
|
|
|
1,104,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
|
|
|
|
|
|
|
|
(798,530
|
)
|
|
|
|
|
|
|
(798,530
|
)
|
Capital Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
(2,484,163
|
)
|
|
|
|
|
|
|
(2,484,163
|
)
|
Acquisition of Intellectual Property
|
|
|
|
|
|
|
|
|
|
|
(24,079
|
)
|
|
|
|
|
|
|
(24,079
|
)
|
Purchase of Equity Investment in Unconsolidated Affiliate
|
|
|
|
|
|
|
|
|
|
|
(11,568
|
)
|
|
|
|
|
|
|
(11,568
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
|
|
|
|
|
|
|
|
297,285
|
|
|
|
|
|
|
|
297,285
|
|
Capital Contribution to Subsidiary
|
|
|
(350,966
|
)
|
|
|
(5,050
|
)
|
|
|
|
|
|
|
356,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing
Activities Continuing Operations
|
|
|
(350,966
|
)
|
|
|
(5,050
|
)
|
|
|
(3,021,055
|
)
|
|
|
356,016
|
|
|
|
(3,021,055
|
)
|
Net Cash Provided by Investing
Activities Discontinued Operations
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing Activities
|
|
|
(339,966
|
)
|
|
|
(5,050
|
)
|
|
|
(3,021,055
|
)
|
|
|
356,016
|
|
|
|
(3,010,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of (Repayments on) Short-term Debt, Net
|
|
|
199,054
|
|
|
|
(23,096
|
)
|
|
|
301,863
|
|
|
|
|
|
|
|
477,821
|
|
Borrowings of (Repayments on) Long-term Debt, Net
|
|
|
1,483,931
|
|
|
|
(1,166
|
)
|
|
|
(4,432
|
)
|
|
|
|
|
|
|
1,478,333
|
|
Proceeds from Exercise of Stock Options
|
|
|
|
|
|
|
9,942
|
|
|
|
|
|
|
|
|
|
|
|
9,942
|
|
Borrowings (Repayments) Between Subsidiaries, Net
|
|
|
(1,151,147
|
)
|
|
|
226,581
|
|
|
|
924,566
|
|
|
|
|
|
|
|
|
|
Proceeds from Capital Contribution
|
|
|
|
|
|
|
|
|
|
|
356,016
|
|
|
|
(356,016
|
)
|
|
|
|
|
Other, Net
|
|
|
(533
|
)
|
|
|
11,968
|
|
|
|
|
|
|
|
|
|
|
|
11,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
Continuing Operations
|
|
|
531,305
|
|
|
|
224,229
|
|
|
|
1,578,013
|
|
|
|
(356,016
|
)
|
|
|
1,977,531
|
|
Net Cash Provided (Used) by Financing Activities
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
|
|
|
531,305
|
|
|
|
224,229
|
|
|
|
1,578,013
|
|
|
|
(356,016
|
)
|
|
|
1,977,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
(4,360
|
)
|
|
|
|
|
|
|
(4,360
|
)
|
Net Decrease in Cash and Cash Equivalents
|
|
|
(204
|
)
|
|
|
(1,439
|
)
|
|
|
69,327
|
|
|
|
|
|
|
|
67,684
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
228
|
|
|
|
1,489
|
|
|
|
168,997
|
|
|
|
|
|
|
|
170,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
24
|
|
|
$
|
50
|
|
|
$
|
238,324
|
|
|
$
|
|
|
|
$
|
238,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85
WEATHERFORD
INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Condensed
Consolidating Statement of Cash Flows
Year Ended December 31, 2007
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Bermuda
|
|
|
Delaware
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidation
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
1,070,606
|
|
|
$
|
1,262,288
|
|
|
$
|
1,196,891
|
|
|
$
|
(2,439,428
|
)
|
|
$
|
1,090,357
|
|
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
(Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges from Parent or Subsidiary
|
|
|
100,538
|
|
|
|
(206,371
|
)
|
|
|
105,833
|
|
|
|
|
|
|
|
|
|
(Income) Loss from Discontinued Operation
|
|
|
(12,115
|
)
|
|
|
|
|
|
|
33,484
|
|
|
|
|
|
|
|
21,369
|
|
Equity in (Earnings) Loss of Affiliates
|
|
|
(1,262,288
|
)
|
|
|
(1,177,140
|
)
|
|
|
|
|
|
|
2,439,428
|
|
|
|
|
|
Deferred Income Tax Provision (Benefit)
|
|
|
|
|
|
|
(16,788
|
)
|
|
|
45,661
|
|
|
|
|
|
|
|
28,873
|
|
Other Adjustments
|
|
|
413,899
|
|
|
|
(115,003
|
)
|
|
|
(556,840
|
)
|
|
|
|
|
|
|
(257,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
Continuing Operations
|
|
|
310,640
|
|
|
|
(253,014
|
)
|
|
|
825,029
|
|
|
|
|
|
|
|
882,655
|
|
Net Cash Used by Operating Activities Discontinued
Operation
|
|
|
|
|
|
|
|
|
|
|
(10,149
|
)
|
|
|
|
|
|
|
(10,149
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Operating Activities
|
|
|
310,640
|
|
|
|
(253,014
|
)
|
|
|
814,880
|
|
|
|
|
|
|
|
872,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of Businesses, Net of Cash Acquired
|
|
|
|
|
|
|
|
|
|
|
(275,149
|
)
|
|
|
|
|
|
|
(275,149
|
)
|
Purchase of Equity Investments in Unconsolidated Affiliates
|
|
|
|
|
|
|
|
|
|
|
(335,220
|
)
|
|
|
|
|
|
|
(335,220
|
)
|
Capital Expenditures for Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
(1,635,041
|
)
|
|
|
|
|
|
|
(1,635,041
|
)
|
Acquisition of Intellectual Property
|
|
|
|
|
|
|
|
|
|
|
(23,035
|
)
|
|
|
|
|
|
|
(23,035
|
)
|
Proceeds from Sale of Assets and Businesses, Net
|
|
|
|
|
|
|
|
|
|
|
84,476
|
|
|
|
|
|
|
|
84,476
|
|
Capital Contribution to Subsidiary
|
|
|
(736,748
|
)
|
|
|
(36,147
|
)
|
|
|
|
|
|
|
772,895
|
|
|
|
|
|
Distribution of Earnings from Subsidiary
|
|
|
|
|
|
|
(1,486,365
|
)
|
|
|
1,486,365
|
|
|
|
|
|
|
|
|
|
Other Investing Activities
|
|
|
|
|
|
|
|
|
|
|
(38,500
|
)
|
|
|
|
|
|
|
(38,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing
Activities
Continuing Operations
|
|
|
(736,748
|
)
|
|
|
(1,522,512
|
)
|
|
|
(736,104
|
)
|
|
|
772,895
|
|
|
|
(2,222,469
|
)
|
Net Cash Used by Investing Activities Discontinued
Operation
|
|
|
|
|
|
|
|
|
|
|
(10,579
|
)
|
|
|
|
|
|
|
(10,579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Investing Activities
|
|
|
(736,748
|
)
|
|
|
(1,522,512
|
)
|
|
|
(746,683
|
)
|
|
|
772,895
|
|
|
|
(2,233,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of (Repayments on) Short-term Debt, Net
|
|
|
(299,187
|
)
|
|
|
16,361
|
|
|
|
400,691
|
|
|
|
|
|
|
|
117,865
|
|
Borrowings of (Repayments on) Long-term Debt, Net
|
|
|
|
|
|
|
1,485,497
|
|
|
|
(14,734
|
)
|
|
|
|
|
|
|
1,470,763
|
|
Borrowings (Repayments) Between Subsidiaries, Net
|
|
|
725,488
|
|
|
|
213,695
|
|
|
|
(939,183
|
)
|
|
|
|
|
|
|
|
|
Purchase of Treasury Shares
|
|
|
|
|
|
|
|
|
|
|
(246,190
|
)
|
|
|
|
|
|
|
(246,190
|
)
|
Proceeds from Exercise of Stock Options
|
|
|
|
|
|
|
34,192
|
|
|
|
|
|
|
|
|
|
|
|
34,192
|
|
Proceeds from Capital Contribution
|
|
|
|
|
|
|
|
|
|
|
772,895
|
|
|
|
(772,895
|
)
|
|
|
|
|
Other, Net
|
|
|
|
|
|
|
24,999
|
|
|
|
|
|
|
|
|
|
|
|
24,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing
Activities Continuing Operations
|
|
|
426,301
|
|
|
|
1,774,744
|
|
|
|
(26,521
|
)
|
|
|
(772,895
|
)
|
|
|
1,401,629
|
|
Net Cash Provided by Financing Activities
Discontinued Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided (Used) by Financing Activities
|
|
|
426,301
|
|
|
|
1,774,744
|
|
|
|
(26,521
|
)
|
|
|
(772,895
|
)
|
|
|
1,401,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
3,340
|
|
|
|
|
|
|
|
3,340
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
193
|
|
|
|
(782
|
)
|
|
|
45,016
|
|
|
|
|
|
|
|
44,427
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
|
35
|
|
|
|
2,271
|
|
|
|
123,981
|
|
|
|
|
|
|
|
126,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$
|
228
|
|
|
$
|
1,489
|
|
|
$
|
168,997
|
|
|
$
|
|
|
|
$
|
170,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86
|
|
Item 9.
|
Changes
in and Disagreement with Accountants on Accounting and Financial
Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
Evaluation
of disclosure controls and procedures.
At the end of the period covered by this Annual Report on
Form 10-K,
we carried out an evaluation, under the supervision and with the
participation of management, including the Chief Executive
Officer (CEO) and the Chief Financial Officer
(CFO), of the effectiveness of our disclosure
controls and procedures (as defined in
Rules 13a-15
(e) and
15d-15
(e) under the Exchange Act). Based upon that evaluation,
our CEO and CFO have concluded our disclosure controls and
procedures are effective as of the end of the period covered by
this report to ensure that information required to be disclosed
by us in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange
Commissions rules and forms and that information relating
to us (including our consolidated subsidiaries) required to be
disclosed is accumulated and communicated to management,
including the CEO and CFO, to allow timely decisions regarding
required disclosure.
Changes
in internal controls.
Our management, including the CEO and CFO, identified no change
in our internal control over financial reporting that occurred
during our fiscal quarter ended December 31, 2009 that has
materially affected, or is reasonably likely to materially
affect, our internal controls over financial reporting.
Internal
controls over financial reporting.
Managements report on our internal controls over financial
reporting can be found in Item 8 of this report.
|
|
Item 9B.
|
Other
Information
|
None
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
Pursuant to General Instructions G(3), information on
directors and executive officers of the Registrant will be filed
in an amendment to this Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual meeting to be held on June 23, 2010.
The Company has adopted a code of ethics entitled Code of
Business Conduct, which applies to all our employees,
officers and directors and our board of directors has also
adopted a separate Supplemental Code of Business
Conduct for our senior officers. Copies of these codes can
also be found at www.weatherford.com.
|
|
Item 11.
|
Executive
Compensation
|
Pursuant to General Instructions G(3), information on
executive compensation will be filed in an amendment to this
Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual meeting to be held on June 23, 2010.
|
|
Item 12(a).
|
Security
Ownership of Certain Beneficial Owners.
|
Pursuant to General Instructions G(3), information on
security ownership of certain beneficial owners will be filed in
an amendment to this Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual meeting to be held on June 23, 2010.
87
|
|
Item 12(b).
|
Security
Ownership of Management.
|
Pursuant to General Instructions G(3), information on
security ownership of management will be filed in an amendment
to this Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual meeting to be held on June 23, 2010.
|
|
Item 12(d).
|
Securities
Authorized for Issuance under Equity Compensation
Plans.
|
The following table provides information as of December 31,
2009 about the number of shares to be issued upon vesting or
exercise of equity awards including options, restricted shares,
warrants and deferred stock units as well as the number of
shares remaining available for issuance under our equity
compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Shares
|
|
|
|
|
|
for Future Issuance
|
|
|
|
to be Issued Upon
|
|
|
Weighted Average
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
(Excluding Shares
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Reflected in the
|
|
|
|
and Rights
|
|
|
and Rights
|
|
|
First Column)
|
|
|
|
(In thousands, except share prices)
|
|
|
Plan Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by shareholders(a)
|
|
|
13,825
|
|
|
$
|
22.86
|
|
|
|
2,297
|
|
Equity compensation plans not approved by shareholders(b)
|
|
|
25,061
|
|
|
|
11.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
38,886
|
|
|
|
15.46
|
|
|
|
2,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes our Omnibus Plan, which was approved by our
shareholders in May 2006. |
|
(b) |
|
Includes the following compensation plans that were not approved
by our shareholders: our 1998 Employee Stock Option Plan, our
Non-Employee Director Deferred Compensation Plan, our Foreign
Executive Deferred Compensation Stock Ownership Plan and our
2003 Restricted Share Plan. Those plans and other individual
compensation arrangements that were not approved by our
shareholders are described below. |
|
|
|
Our 1998 Employee Stock Option Plan, (1998 Plan),
provides for the grant of nonqualified options to purchase our
shares to employees or employees of our affiliates, as
determined by the Compensation Committee of our Board of
Directors. The price at which shares may be purchased is based
on the market price of the shares and cannot be less than the
aggregate par value of the shares on the date the option was
granted. Unless otherwise provided in an option agreement, no
option may be exercised after one day less than 10 years
from the date of vesting. Options generally become fully
exercisable after three to four years from the date of grant,
subject to earlier vesting in the event of the death, disability
or retirement of the employee or in the event of a change of
control of the Company. The 1998 Plan provides for the grant of
options to purchase up to 88,000,000 shares. As of
December 31, 2009, there were options to purchase an
aggregate of 9,280,280 our shares outstanding under the 1998
Plan, all of which are vested. Subsequent to the shareholder
approval of our Omnibus Plan in May 2006, awards are no longer
granted under the 1998 Plan. |
|
|
|
A total of 3,898,112 options to purchase shares of our stock
were granted under individual compensation arrangements with the
following directors: Mr. David J. Butters, Mr. William E.
Macaulay, Mr. Robert B. Millard, Mr. Robert K.
Moses, Jr. and Mr. Robert A. Rayne. At December 31,
2009, there were an aggregate of 2,491,456 of these options
outstanding under these agreements, all of which are fully
vested. |
88
|
|
|
|
|
Under our Non-Employee Director Deferred Compensation Plan
(DDC Plan), each non-employee director may elect to
defer up to 7.5% of any fees paid by the us. The deferred fees
were converted into non-monetary units representing shares that
could have been purchased with the deferred fees based on the
market price of our shares on the last day of the month in which
fees were deferred. If a non-employee director elected to defer
at least 5% of his fees, we made an additional contribution to
the directors account equal to the sum of (1) 7.5% of
the directors fees plus (2) the amount of fees
deferred by the director. The non-employee directors are fully
vested at all times. Our directors may generally determine when
distributions will be made from the plan, but in any event all
benefits under the DDC Plan will be distributed no later than
January 1, 2017. The amount of the distribution will be a
number of our shares equal to the number of units at the time of
distribution. As of December 31, 2009, there were 121,226
deferred units outstanding under this plan. Effective
December 31, 2008, we suspended the DDC Plan. While the
plan is suspended, no new participants may join the plan and no
further deferrals of fees or matching contributions will be made
under the plan unless and until our Board of Directors
determines otherwise. |
|
|
|
We established our Foreign Executive Deferred Compensation Stock
Ownership Plan for key foreign employees (FEDC Plan)
and under this plan we contribute 15% of each participants
total salary, bonus and commission compensation each year. Our
contributions vest over a five-year period on the basis of 20%
per year for each year of service. Under the FEDC Plan, our
contributions are converted into non-monetary units equal to the
number of our shares that could have been purchased with the
amounts contributed based on the average closing price of our
shares for each day of the month in which contributions are
made. Distributions are made under the FEDC Plan after a
participant retires, becomes disabled or dies or after his
employment is terminated, but in any event all benefits under
the FEDC Plan will be distributed no later than January 1,
2017. Distributions under the FEDC Plan are made in a number of
our shares equal to the number of units allocated to the
participants account at the time of distribution. As of
December 31, 2009, there were 153,490 deferred units
outstanding under this plan. |
|
|
|
We issued warrants to purchase up to 12,928,856 of our shares at
a price of $15.00 per share, which are exercisable until
February 28, 2012. The warrant holders may exercise the
warrants and settlement may occur through physical delivery, net
share settlement, net cash settlement or a combination thereof.
The net cash settlement option upon exercise is at our sole
discretion. |
|
|
|
In 2003, our Board of Directors approved a restricted share plan
that allows for the grant of up to 15,340,000 of our shares to
our key employees and directors (2003 Restricted Share
Plan). Restricted shares are subject to forfeiture
restrictions that generally lapse after a specified period from
the date of grant and are subject to earlier vesting in the
event of death, retirement or a change in control. As of
December 31, 2009, there were 12,534,835 shares
granted net of forfeitures under the 2003 Restricted Share Plan
and 86,000 shares are unvested. Subsequent to the
shareholder approval of our Omnibus Plan in May 2006, awards are
no longer made under this plan. |
|
|
Item 13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
Pursuant to General Instruction G(3), information on
certain relationships and related transactions and director
independence will be filed in an amendment to this Annual Report
on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual meeting to be held on June 23, 2010.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
Pursuant to General Instruction G(3), information on
principal accountant fees and services will be filed in an
amendment to this Annual Report on
Form 10-K
or incorporated by reference from our definitive proxy statement
for the annual meeting to be held on June 23, 2010.
89
PART IV
|
|
Item 15.
|
Exhibits,
Financial Statement Schedules
|
(a) The following documents are filed as part of this
report or incorporated by reference:
1. The consolidated financial statements of the Company
listed on page 37 of this report.
2. The financial statement schedule on page 98 of this
report.
3. The exhibits of the Company listed below under
Item 15(b).
(b) Exhibits:
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
2
|
.1
|
|
Stock Purchase Agreement dated June 6, 2005 by and between
Precision Drilling Corporation and Weatherford International
Ltd. (incorporated by reference to Exhibit 2.1 to Amendment No.
1 to the Registrants Current Report on Form 8-K dated June
6, 2005 on Form 8-K/A (File No. 1-31339) filed June 9, 2005).
|
|
2
|
.2
|
|
Agreement and Plan of Merger dated May 8, 2002, among
Weatherford International, Inc., Weatherford Merger, Inc.,
Weatherford International Ltd. and Weatherford U.S. Holdings LLC
(incorporated by reference to Exhibit 2.1 to Amendment No. 1 to
the Registration Statement on Form S-4
(Reg. No. 333-85644)
filed on May 22, 2002).
|
|
2
|
.3
|
|
Share Exchange Agreement dated as of December 10, 2008, among
Weatherford International, Ltd., a Bermuda exempted company, and
Weatherford International Ltd., a Swiss company (incorporated by
reference to Exhibit 2.1 to the Registrants Current Report
on Form 8-K (File No. 1-31339) filed December 10, 2008).
|
|
2
|
.5
|
|
Sale and Purchase Agreement, dated as of May 29, 2009 between
Weatherford International Ltd. and Novy Investments Limited
(incorporated by reference to Exhibit 99.1 to the
Registrants Current Report on Form 8-K/A (File No.
1-34258) filed June 3, 2009).
|
|
3
|
.1
|
|
Memorandum of Association of Weatherford International Ltd.
(incorporated by reference to Annex II to the proxy
statement/prospectus included in Amendment No. 1 to the
Registration Statement on Form S-4 (Reg. No. 333-85644) filed on
May 22, 2002).
|
|
3
|
.2
|
|
Memorandum of Increase of Share Capital of Weatherford
International Ltd. (incorporated by reference to Annex II
to the proxy statement/prospectus included in Amendment No. 1 to
the Registration Statement on Form S-4 (Reg. No. 333-85644)
filed on May 22, 2002).
|
|
3
|
.3
|
|
Bye-laws of Weatherford International Ltd. (incorporated by
reference to Annex III to the proxy statement/prospectus
included in Amendment No. 1 to the Registration Statement on
Form S-4 (Reg. No. 333-85644) filed on May 22, 2002).
|
|
3
|
.4
|
|
Articles of Association of Weatherford International Ltd., a
Swiss joint stock corporation (incorporated by reference to
Exhibit 3.1 to the Registrants Current Report on Form 8-K
(File No. 1-34258) filed February 26, 2009).
|
|
3
|
.5
|
|
Organizational Regulations of Weatherford International Ltd., a
Swiss joint stock corporation (incorporated by reference to
Exhibit 3.2 to the Registrants Current Report on Form 8-K
(File No. 1-34258) filed February 26, 2009).
|
|
3
|
.6
|
|
Articles of Association of Weatherford International Ltd.
(incorporated by reference to Exhibit 3.1 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed July 27, 2009).
|
|
3
|
.7
|
|
Articles of Association of Weatherford International Ltd.
(incorporated by reference to Exhibit 3.1 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed September 17, 2009).
|
|
4
|
.1
|
|
See Exhibits 3.1, 3.2 and 3.3 for provisions of the Memorandum
of Association and Bye-laws of Weatherford International Ltd.
defining the rights of holders of common shares.
|
|
4
|
.2
|
|
Certificate of Assistant Secretary as to the adoption of a
resolution increasing authorized share capital (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K
(File No. 1-31339)
filed May 15, 2006).
|
90
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.3
|
|
Guarantee, dated as of October 25, 2005, of Weatherford
International, Inc. for the benefit of holders of any notes
issued by Weatherford International Ltd., from time to time
pursuant to the Issuing and Paying Agent Agreement, dated as of
October 25, 2005, between Weatherford International Ltd.,
Weatherford International, Inc. and JPMorgan Chase Bank,
National Association (incorporated by reference to Exhibit 4.1
to the Registrants Current Report on Form 8-K (File No.
1-31339) filed October 31, 2005).
|
|
4
|
.4
|
|
Second Amended and Restated Credit Agreement dated as of May 2,
2006, among Weatherford International Ltd., Weatherford
International, Inc., Weatherford Liquidity Management Hungary
Limited Liability Company, JPMorgan Chase Bank as Administrative
Agent, and the other Lenders party thereto (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K (File No. 1-31339) filed May 5, 2006).
|
|
4
|
.5
|
|
Notice of Commitment Increase dated as of November 14, 2006,
among Weatherford International Ltd., Weatherford International,
Inc., Weatherford Liquidity Management Hungary Limited Liability
Company, JPMorgan Chase Bank as Administrative Agent, and the
other Lenders party thereto (incorporated by reference to
Exhibit 4.1 to the Registrants Current Report on Form 8-K
(File No. 1-31339) filed November 16, 2006.
|
|
4
|
.6
|
|
Omnibus Consent and Amendment to Second Amended and Restated
Credit Agreement dated January 9, 2009 (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K (File No. 1-31339) filed January 15, 2009).
|
|
4
|
.7
|
|
Credit Agreement, dated March 19, 2008, among Weatherford
International Ltd, as borrower, Weatherford International, Inc.
as guarantor, and Deutsche Bank AG Cayman Islands Branch as
administrative agent, and the other lenders party thereto
(incorporated by reference to Exhibit 4.6 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed March 25, 2008).
|
|
4
|
.8
|
|
Omnibus Consent and Amendment to Credit Agreement dated January
9, 2009 (incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed January 15, 2009).
|
|
4
|
.9
|
|
Indenture dated May 17, 1996, between Weatherford Enterra, Inc.
and Bank of Montreal Trust Company, as Trustee (incorporated by
reference to Exhibit 4.1 to Weatherford Enterra, Inc.s
Current Report on Form 8-K (File No. 1-7867) filed May 31, 1996).
|
|
4
|
.10
|
|
Third Supplemental Indenture dated November 16, 2001, between
Weatherford International, Inc. and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 4.11 to the
Registration Statement on Form S-3 (Reg. No. 333-73770) filed
November 20, 2001).
|
|
4
|
.11
|
|
Fourth Supplemental Indenture dated June 26, 2002, among
Weatherford International, Inc., Weatherford International Ltd.
and The Bank of New York (as successor in interest to Bank of
Montreal Trust Company) (incorporated by reference to Exhibit
4.7 to the Registrants Quarterly Report on Form 10-Q for
the quarter ended June 30, 2002 (File No. 1-13086) filed August
14, 2002).
|
|
4
|
.12
|
|
Indenture, dated October 1, 2003, among Weatherford
International Ltd., Weatherford International, Inc., and
Deutsche Bank Trust Company Americas (incorporated by reference
to Exhibit 4.1 to the Registrants Current Report on Form
8-K (File No. 1-31339) filed October 2, 2003).
|
|
4
|
.13
|
|
Officers Certificate dated as of February 17, 2006,
establishing the series of 5.50% Senior Notes due 2016
(incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K (File No.
001-31339) filed February 17, 2006).
|
|
4
|
.14
|
|
Officers Certificate, dated August 7, 2006, establishing
the series of 6.50% Senior Notes due 2036 (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K
(File No. 1-31339)
filed August 7, 2006).
|
|
4
|
.15
|
|
First Supplemental Indenture, dated March 25, 2008 among
Weatherford International Ltd., Weatherford International, Inc.,
and Deutsche Bank Trust Company Americas (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K (File No. 1-31339) filed March 25, 2008).
|
|
4
|
.16
|
|
Indenture, dated June 18, 2007, among the Weatherford Delaware,
as issuer, Weatherford Bermuda, as guarantor, and Deutsche Bank
Trust Company Americas, as trustee, (incorporated by reference
to Exhibit 4.1 to the Registrants Current Report on Form
8-K (File No. 1-31339) filed on June 18, 2007).
|
91
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.17
|
|
First Supplemental Indenture, dated June 18, 2007, among the
Weatherford Delaware, as issuer, Weatherford Bermuda, as
guarantor, and Deutsche Bank Trust Company Americas, as trustee
(including forms of notes) (incorporated by reference to Exhibit
4.2 to the Registrants Current Report on Form 8-K (File
No. 1-31339) filed on June 18, 2007).
|
|
4
|
.18
|
|
Second Supplemental Indenture, dated as of January 8, 2009,
among Weatherford International Ltd., Weatherford International,
Inc., and Deutsche Bank Trust Company Americas (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K (File No. 1-31339) filed January 8, 2009).
|
|
4
|
.19
|
|
Form of global note for 5.95% Senior Notes due 2012
(incorporated by reference to Exhibit 4.15 to the
Registrants Registration Statement on Form S-4
(Registration No. 333-146695) filed November 8, 2007).
|
|
4
|
.20
|
|
Form of global note for 5.15% Senior Notes due 2013
(incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed March 25, 2008).
|
|
4
|
.21
|
|
Form of global note for 4.95% Senior Notes due 2013
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed October 7, 2003).
|
|
4
|
.22
|
|
Form of global note for 5.50% Senior Notes due 2016
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K (File No.
001-31339) filed February 17, 2006).
|
|
4
|
.23
|
|
Form of global note for 6.00% Senior Notes due 2018
(incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed March 25, 2008).
|
|
4
|
.24
|
|
Form of global note for 9.625% Senior Notes due 2019
(incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed January 8, 2009).
|
|
4
|
.25
|
|
Form of $500,000 Global note for 6.50% Senior Notes due
2036 (incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed August 7, 2006).
|
|
4
|
.26
|
|
Form of $100,000 Global note for 6.50% Senior Notes due
2036 (incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed August 7, 2006).
|
|
4
|
.27
|
|
Form of global note for 6.80% Senior Notes due 2037
(incorporated by reference to Exhibit 4.17 to the
Registrants Registration Statement on Form S-4
(Registration No. 333-146695) filed November 8, 2007).
|
|
4
|
.28
|
|
Form of global note for 7.00% Senior Notes due 2038
(incorporated by reference to Exhibit 4.4 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed March 25, 2008).
|
|
4
|
.29
|
|
Form of global note for 9.875% Senior Notes due 2039
(incorporated by reference to Exhibit 4.3 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed January 8, 2009).
|
|
4
|
.30
|
|
Amended and Restated Warrant Agreement, dated effective as of
July 12, 2006, by and among Weatherford International, Ltd.,
Weatherford International, Inc. and Shell Technology Ventures,
Inc. (incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K
(File No. 1-31339)
filed July 14, 2006).
|
|
4
|
.31
|
|
Fifth Supplemental Indenture, dated as of February 26, 2009,
among Weatherford International, Inc., a Delaware corporation,
Weatherford International Ltd., a Bermuda exempted company,
Weatherford International Ltd., a Swiss joint stock corporation,
and The Bank of New York, as successor trustee, to the Indenture
dated as of May 17, 1996 (the 1996 Indenture)
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed February 26, 2009).
|
|
4
|
.32
|
|
Third Supplemental Indenture, dated as of February 26, 2009,
among Weatherford International Ltd., a Bermuda exempted
company, Weatherford International, Inc., a Delaware
corporation, Weatherford International Ltd., a Swiss joint stock
corporation, and Deutsche Bank Trust Company Americas, as
trustee, to the Indenture dated as of October 1, 2003 (the
2003 Indenture) (incorporated by reference to
Exhibit 4.2 to the Registrants Current Report on Form
8-K (File No. 1-34258) filed February 26, 2009).
|
92
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
4
|
.33
|
|
Second Supplemental Indenture, dated as of February 26, 2009,
among Weatherford International, Inc., a Delaware corporation,
Weatherford International Ltd., a Bermuda exempted company,
Weatherford International Ltd., a Swiss joint stock corporation,
and Deutsche Bank Trust Company Americas, as trustee, to the
Indenture dated as of June 18, 2007 (the 2007
Indenture) (incorporated by reference to Exhibit 4.3
to the Registrants Current Report on Form 8-K (File No.
1-34258) filed February 26, 2009).
|
|
4
|
.34
|
|
Opinion of Baker & McKenzie Geneva relating to the
guarantees of Weatherford International Ltd., a Swiss joint
stock corporation, with respect to the 9.625% Senior Notes
due 2019 and 9.875% Senior Notes due 2039, issued by
Weatherford International Ltd., a Bermuda exempted company,
under the 2003 Indenture (incorporated by reference to Exhibit
5.1 to the Registrants Current Report on Form 8-K (File
No. 1-34258) filed February 26, 2009).
|
|
4
|
.35
|
|
Opinion of Andrews Kurth relating to the guarantees of
Weatherford International Ltd., a Swiss joint stock corporation,
with respect to the 9.625% Senior Notes due 2019 and
9.875% Senior Notes due 2039, issued by Weatherford
International Ltd., a Bermuda exempted company, under the 2003
Indenture (incorporated by reference to Exhibit 5.2 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed February 26, 2009).
|
|
4
|
.36
|
|
Registration Rights Agreement, dated as of July 27, 2009 between
Weatherford International Ltd. and Novy Investments Limited
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed July 27, 2009).
|
|
4
|
.37
|
|
Registration Rights Agreement, dated as of September 16, 2009
between Weatherford International Ltd. and Integrity Energy
International, LLC. (incorporated by reference to Exhibit 4.1 to
the Registrants Current Report on Form 8-K (File No.
1-34258) filed September 17, 2009).
|
|
10
|
.1
|
|
Issuing and Paying Agent Agreement, dated as of October 25,
2005, among Weatherford International Ltd., Weatherford
International, Inc. and JPMorgan Chase Bank, National
Association (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed October 31, 2005).
|
|
10
|
.2
|
|
Commercial Paper Dealer Agreement, dated as of October 25, 2005,
among Weatherford International Ltd., Weatherford International,
Inc. and J.P. Morgan Securities Inc. (incorporated by
reference to Exhibit 10.2 to the Registrants Current
Report on Form 8-K (File No. 1-31339) filed October 31, 2005).
|
|
10
|
.3
|
|
Commercial Paper Dealer Agreement, dated as of October 25, 2005,
among Weatherford International Ltd., Weatherford International,
Inc. and Goldman, Sachs & Co. (incorporated by reference to
Exhibit 10.3 to the Registrants Current Report on Form 8-K
(File No. 1-31339) filed October 31, 2005).
|
|
10
|
.4
|
|
Commercial Paper Dealer Agreement, dated as of October 25, 2005,
among Weatherford International Ltd., Weatherford International,
Inc. and Merrill Lynch Money Markets Inc. (for notes with
maturities up to 270 days) and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, (for notes with maturities
over 270 days up to 397 days) (incorporated by
reference to Exhibit 10.4 to the Registrants Current
Report on Form 8-K (File No. 1-31339) filed October 31, 2005).
|
|
*10
|
.5
|
|
Weatherford International Ltd. Restricted Share Plan, including
form of agreement for officers and non-officers (incorporated by
reference to Exhibit 10.2 to Amendment No. 1 to the
Registrants Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004 on Form 10-Q/A (File No. 1-31339) filed
September 15, 2004).
|
|
*10
|
.6
|
|
Trust under Weatherford International Ltd. Nonqualified
Executive Retirement Plan dated March 23, 2004 (incorporated by
reference to Exhibit 10.1 to the Registrants Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004 (File
No. 1-31339) filed May 6, 2004).
|
|
*10
|
.7
|
|
Amended and Restated Non-Employee Director Stock Option Plan
(incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 (File No. 1-13086) filed August 12, 1995).
|
|
*10
|
.8
|
|
General Amendment of Employee Stock Option Programs of
Weatherford International, Inc. dated May 9, 2003 (incorporated
by reference to Exhibit 10.1 to the Registrants Quarterly
Report on Form 10-Q for the quarter ended June 30, 2003 (File
No. 1-31339) filed August 14, 2003).
|
|
*10
|
.9
|
|
General Amendment of Directors Stock Option Plans and
Agreements dated May 9, 2003 (incorporated by reference to
Exhibit 10.2 to the Registrants Quarterly Report on Form
10-Q for the quarter ended June 30, 2003 (File No. 1-31339)
filed August 14, 2003).
|
93
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.10
|
|
Weatherford International, Inc. 1998 Employee Stock Option Plan,
as amended, including form of agreement for officers
(incorporated by reference to Exhibit 10.18 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2003 (File No. 1-13086) filed March 24, 2004).
|
|
*10
|
.11
|
|
Amendment to Stock Option Programs (incorporated by reference to
Exhibit 4.19 to the Registrants Registration Statement on
Form S-8 (Reg. No. 333-36598) filed May 19, 2000).
|
|
*10
|
.12
|
|
Indemnification Agreement, dated as of September 29, 2005,
between Weatherford International Ltd. and Andrew P. Becnel
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed October 5, 2005).
|
|
*10
|
.13
|
|
Indemnification Agreements with Robert K. Moses, Jr.
(incorporated by reference to Exhibit 10.10 to Weatherford
Enterra, Inc.s Annual Report on Form 10-K for the year
ended December 31, 1987 (File No. 1-7867)); and William E.
Macaulay (incorporated by reference to Exhibit 10.2 to
Weatherford Enterra, Inc.s Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995
(File No. 1-7867)).
|
|
*10
|
.14
|
|
Indemnification Agreements with each of Bernard J. Duroc-Danner,
Burt M. Martin, Stuart E. Ferguson, David J. Butters, Robert A.
Rayne, Robert K. Moses, Jr., Robert B. Millard, and William E.
Macaulay (incorporated by reference to Exhibit 10.1 to the
Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002 (File No. 1-13086) filed November 13,
2002).
|
|
*10
|
.15
|
|
Form of Stock Option Agreement for Non-Employee Directors dated
September 8, 1998 (incorporated by reference to Exhibit 10.23 to
the Registrants Annual Report on Form 10-K for the year
ended December 31, 1998 (File No. 1-13086) filed March 31, 1999).
|
|
*10
|
.16
|
|
Form of Amendment to Stock Option Agreements dated September
8, 1998 for Non-Employee Directors (incorporated by
reference to Exhibit 4.17 to the Registration Statement on Form
S-8 (Reg. No. 333-36598) filed May 9, 2000).
|
|
*10
|
.17
|
|
Form of Stock Option Agreement for Non-employee Directors dated
July 5, 2000 (incorporated by reference to Exhibit 4.16 to the
Registration Statement on Form S-8 (Reg. No. 333-48322) filed
October 20, 2000).
|
|
*10
|
.18
|
|
Form of Stock Option Agreement for Non-employee Directors dated
September 26, 2001 (incorporated by reference to Exhibit 4.19 to
the Registration Statement on Form S-8 (Reg. No. 333-81678)
filed January 30, 2002).
|
|
*10
|
.19
|
|
Assumption and General Amendment of Directors Stock Option
and Benefit Programs and General Amendment of Employee Stock
Option and Benefit Programs of Weatherford International, Inc.
dated June 26, 2002 (incorporated by reference to Exhibit 10.1
to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002 (File No. 1-13086) filed August 14,
2002).
|
|
*10
|
.20
|
|
Indemnification Agreement dated October 27, 2006, between
Weatherford International Ltd. and Jessica Abarca (incorporated
by reference to Exhibit 10.3 to the Registrants Current
Report on
Form 8-K
(File No. 1-31339) filed October 27, 2006).
|
|
*10
|
.21
|
|
Form of Restricted Share Unit Award Agreement for Officers
pursuant to Weatherford International Ltd. 2006 Omnibus
Incentive Plan (incorporated by reference to Exhibit 10.45 to
the Registrants Annual Report on Form 10-K for the year
ended December 31,2006 (File No. 1-31339) filed February 23,
2007).
|
|
*10
|
.22
|
|
Form of Stock Option Award Agreement for Officers pursuant to
Weatherford International Ltd. 2006 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.46 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2006 (File No. 1-31339) filed February 23, 2007).
|
|
*10
|
.23
|
|
Form of Restricted Share Award Agreement for Non-employee
Directors pursuant to Weatherford International Ltd. 2006
Omnibus Incentive Plan (incorporated by reference to Exhibit
10.47 to the Registrants Annual Report on Form 10-K for
the year ended December 31, 2006 (File No. 1-31339 filed
February 23, 2007).
|
|
*10
|
.24
|
|
Form of Restricted Share Award Agreement for Officers pursuant
to Weatherford International Ltd. 2006 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.48 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2006 (File No. 1-31339) filed February 23, 2007).
|
94
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.25
|
|
Form of Stock Option Award Agreement for Non-Employee Directors
pursuant to Weatherford International Ltd. 2006 Omnibus Plan
(incorporated by reference to Exhibit 10.49 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2006
(File No. 1-31339)
filed February 23, 2007).
|
|
*10
|
.26
|
|
Indemnification Agreement, dated as of June 11, 2007, between
Weatherford International Ltd. and Keith R. Morley (incorporated
by reference to Exhibit 10.2 to the Registrants Current
Report on Form 8-K (File No. 1-31339) filed June 11, 2007).
|
|
*10
|
.27
|
|
Amended and Restated Employment Agreements dated December 31,
2008, between Weatherford International Ltd. and each of Jessica
Abarca, Andrew P. Becnel, M. David Colley,
Bernard J. Duroc-Danner,
Stuart E. Ferguson, Burt M. Martin and Keith R. Morley
(incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.28
|
|
Employment Agreements effective as of January 1, 2009, between
Weatherford International, Inc. and each of Jessica Abarca,
Andrew P. Becnel, M. David Colley, Bernard J. Duroc-Danner,
Stuart E. Ferguson, Burt M. Martin and Keith R. Morley
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.29
|
|
Weatherford International, Inc. Executive Deferred Compensation
Stock Ownership Plan, as amended and restated as of December 31,
2008 (incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.30
|
|
Weatherford International, Inc. Foreign Executive Deferred
Compensation Stock Plan, as amended and restated as of December
31, 2008 (incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.31
|
|
Weatherford International Ltd. Non-Employee Director Deferred
Compensation, as amended and restated as of December 31, 2008
(incorporated by reference to Exhibit 10.5 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.32
|
|
Weatherford International Ltd. Non-Employee Director Retirement
Plan, as amended and restated as of December 31, 2008
(incorporated by reference to Exhibit 10.6 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.33
|
|
Weatherford Management Incentive Plan, including Form of Award
Letter, as amended and restated as of December 31, 2008
(incorporated by reference to Exhibit 10.7 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.34
|
|
Amended and Restated Weatherford International Ltd. Nonqualified
Executive Retirement Plan (incorporated by reference to Exhibit
10.8 to the Registrants Current Report on Form 8-K (File
No. 1-31339) filed December 31, 2008).
|
|
*10
|
.35
|
|
Weatherford International, Inc. Supplemental Retirement Plan
(incorporated by reference to Exhibit 10.9 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.36
|
|
Weatherford International Ltd. 2006 Omnibus Incentive Plan, as
amended (incorporated by reference to Exhibit 10.10 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.37
|
|
Amendment to Weatherford International, Inc. 1998 Employee Stock
Option Plan (incorporated by reference to Exhibit 10.11 to the
Registrants Current Report on Form 8-K (File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.38
|
|
Amendment to Weatherford International Ltd. Non-Employee
Director Stock Option Agreements (incorporated by reference to
Exhibit 10.12 to the Registrants Current Report on Form
8-K
(File No. 1-31339)
filed December 31, 2008).
|
|
*10
|
.39
|
|
Amended and Restated Employment Agreement, dated December 31,
2008, between Weatherford International Ltd. and Carel W. Hoyer
(incorporated by reference to Exhibit 10.39 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2008 (File No. 1-31339) filed February 24, 2009).
|
|
*10
|
.40
|
|
Employment Agreement, dated February 2, 2009, between
Weatherford International, Inc. and Carel W. Hoyer (incorporated
by reference to Exhibit 10.40 to the Registrants Annual
Report on Form 10-K for the year ended December 31, 2008 (File
No. 1-31339) filed February 24, 2009).
|
95
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.41
|
|
Indemnification Agreement, dated as of February 9, 2009, between
Weatherford International Ltd. and Carel W. Hoyer (incorporated
by reference to Exhibit 10.41 to the Registrants Annual
Report on Form 10-K for the year ended December 31, 2008 (File
No. 1-31339) filed February 24, 2009).
|
|
*10
|
.42
|
|
Indemnification Agreement, dated as of February 9, 2009, between
Weatherford International, Inc. and Carel W. Hoyer
(incorporated by reference to Exhibit 10.42 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2008 (File No. 1-31339) filed February 24, 2009).
|
|
*10
|
.43
|
|
Amended and Restated Employment Agreement, dated December 31,
2008, between Weatherford International Ltd. and James M.
Hudgins (incorporated by reference to Exhibit 10.43 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2008 (File No. 1-31339) filed February 24, 2009).
|
|
*10
|
.44
|
|
Employment Agreement, dated February 9, 2009, between
Weatherford International, Inc. and James M. Hudgins
(incorporated by reference to Exhibit 10.44 to the
Registrants Annual Report on
Form 10-K
for the year ended December 31, 2008 (File No. 1-31339) filed
February 24, 2009).
|
|
*10
|
.45
|
|
Indemnification Agreement, dated as of September 4, 2002,
between Weatherford International Ltd. and James M. Hudgins
(incorporated by reference to Exhibit 10.45 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2008 (File No. 1-31339) filed February 24, 2009).
|
|
*10
|
.46
|
|
Indemnification Agreement, dated as of September 4, 2002,
between Weatherford International, Inc. and James M. Hudgins
(incorporated by reference to Exhibit 10.46 to the
Registrants Annual Report on Form 10-K for the year ended
December 31, 2008 (File No. 1-31339) filed February 24, 2009).
|
|
10
|
.47
|
|
Warrant Assignment and Assumption Agreement, dated February 26,
2009, between Weatherford International Ltd., a Bermuda exempted
company, and Weatherford International Ltd., a Swiss joint stock
corporation (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed February 26, 2009).
|
|
10
|
.48
|
|
Guaranty Agreement, dated as of February 26, 2009, by
Weatherford International Ltd., a Swiss joint stock corporation,
in favor of the lenders and certain other parties under the
Second Amended and Restated Credit Agreement dated as of May 2,
2006, among Weatherford International Ltd., a Bermuda exempted
company, Weatherford International, Inc., Weatherford Liquidity
Management Hungary Limited Liability Company, JPMorgan Chase
Bank as Administrative Agent, and the other Lenders party
thereto (incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed February 26, 2009).
|
|
10
|
.49
|
|
Guaranty Agreement, dated as of February 26, 2009, by
Weatherford International Ltd., a Swiss joint stock corporation,
in favor of the lenders and certain other parties under the
Credit Agreement dated as of March 19, 2008, among Weatherford
International Ltd., a Bermuda exempted company, Weatherford
International, Inc., Deutsche Bank AG Cayman Islands Branch as
Administrative Agent, and the other Lenders party thereto
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed February 26, 2009).
|
|
10
|
.50
|
|
Guaranty Agreement, dated as of February 26, 2009, by
Weatherford International Ltd., a Swiss joint stock corporation,
in favor of the lenders and certain other parties under the
Credit Agreement dated as of October 20, 2008, among Weatherford
International Ltd., a Bermuda exempted company, Weatherford
International, Inc., UBS AG, Stamford Branch as Administrative
Agent, and the other Lenders party thereto (incorporated by
reference to Exhibit 10.4 to the Registrants Current
Report on Form 8-K (File No. 1-34258) filed February 26, 2009).
|
|
10
|
.51
|
|
Assumption and General Amendment Agreement, dated February 25,
2009, between Weatherford International Ltd., a Bermuda exempted
company, and Weatherford International Ltd., a Swiss joint stock
corporation (incorporated by reference to Exhibit 10.5 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed February 26, 2009).
|
|
10
|
.52
|
|
Form of Indemnification Agreement of Weatherford International
Ltd., a Swiss joint stock corporation, for use with directors
and executive officers (incorporated by reference to Exhibit
10.6 to the Registrants Current Report on Form 8-K (File
No. 1-34258) filed February 26, 2009).
|
|
*10
|
.53
|
|
Employment Agreement, dated as of June 8, 2009, between
Weatherford International Ltd. and Joseph C. Henry (incorporated
by reference to Exhibit 10.1 to the Registrants Current
Report on Form 8-K (File No. 1-34258) filed June 9, 2009).
|
96
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*10
|
.54
|
|
Employment Agreement, dated as of June 8, 2009, between
Weatherford International, Inc. and Joseph C. Henry
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.55
|
|
Indemnification Agreement, dated as of February 26, 2009,
between Weatherford International Ltd. and Joseph C. Henry
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.56
|
|
Employment Agreement, dated as of March 30, 2009, between
Weatherford International Ltd. and William B. Jacobson
(incorporated by reference to Exhibit 10.4 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.57
|
|
Employment Agreement, dated as of March 30, 2009, between
Weatherford International, Inc. and William B. Jacobson
(incorporated by reference to Exhibit 10.5 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.58
|
|
Indemnification Agreement, dated as of March 30, 2009 between
Weatherford International Ltd. and William B. Jacobson
(incorporated by reference to Exhibit 10.6 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed June 9, 2009).
|
|
*10
|
.59
|
|
Employment Agreement, dated as of July 21, 2009, between
Weatherford International Ltd. and Peter T. Fontana
(incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed July 22, 2009).
|
|
*10
|
.60
|
|
Employment Agreement, dated as of July 21, 2009, between
Weatherford International, Inc. and Peter T. Fontana
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed July 22, 2009).
|
|
*10
|
.61
|
|
Indemnification Agreement, dated as of July 21, 2009, between
Weatherford International Ltd. and Peter T. Fontana
(incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed July 22, 2009).
|
|
*10
|
.62
|
|
Form of Employment Agreement, between Weatherford International
Ltd. and each of Jessica Abarca, Andrew P. Becnel, M. David
Colley, Bernard J. Duroc-Danner, Stuart E. Ferguson, William B.
Jacobson and Keith R. Morley (incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on Form 8-K
(File No. 1-34258) filed December 31, 2009).
|
|
*10
|
.63
|
|
Supplemental Executive Retirement Plan effective as of January
1, 2010, between Weatherford International Ltd. and each of
Jessica Abarca, Andrew P. Becnel, M. David Colley, Bernard J.
Duroc-Danner, Stuart E. Ferguson and Keith R. Morley
(incorporated by reference to Exhibit 10.2 to the
Registrants Current Report on Form 8-K (File No. 1-34258)
filed December 31, 2009).
|
|
21
|
.1
|
|
Subsidiaries of Weatherford International, Ltd.
|
|
23
|
.1
|
|
Consent of Ernst & Young LLP.
|
|
31
|
.1
|
|
Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
|
|
31
|
.2
|
|
Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
|
|
**32
|
.1
|
|
Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|
|
**32
|
.2
|
|
Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
|
|
**101
|
|
|
The following materials from Weatherford International
Ltd.s Annual Report on Form 10-K for the year ended
December 31, 2009, formatted in XBRL (Extensible Business
reporting Language): (i) the Consolidated Balance Sheets, (ii)
the Consolidated Statements of Income, (iii) the
Consolidated Statement of Cash Flows, (iv) the Consolidated
Statement of Comprehensive Income and (v) the notes to the
consolidated financial statements, tagged as blocks of text.
|
|
|
|
* |
|
Management contract or compensatory plan or arrangement. |
|
** |
|
Furnished with this
Form 10-K |
|
|
|
Filed herewith. |
97
As permitted by Item 601(b)(4)(iii)(A) of
Regulation S-K,
the Company has not filed with this Annual Report on
Form 10-K
certain instruments defining the rights of holders of long-term
debt of the Company and its subsidiaries because the total
amount of securities authorized under any of such instruments
does not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. We will furnish a copy of
any of such instruments to the Securities and Exchange
Commission upon request.
We will furnish to any requesting stockholder a copy of any of
the above named exhibits upon the payment of our reasonable
expenses of obtaining, duplicating and mailing the requested
exhibits. All requests for copies of exhibits should be made in
writing to our U.S. Investor Relations Department at 515
Post Oak Blvd., Houston, TX 77027.
(c) Financial Statement Schedules
1. Valuation and qualifying accounts and allowances.
SCHEDULE II
WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND ALLOWANCES
FOR THE THREE YEARS ENDED DECEMBER 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
Balance at
|
|
Charged to
|
|
|
|
|
|
Balance at
|
|
|
Beginning
|
|
Costs and
|
|
|
|
|
|
End of
|
Description
|
|
of Period
|
|
Expenses
|
|
Collections
|
|
Deductions
|
|
Period
|
|
|
(In thousands)
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for uncollectible accounts receivable
|
|
$
|
16,425
|
|
|
$
|
11,328
|
|
|
$
|
28
|
|
|
$
|
(7,315
|
)
|
|
$
|
20,466
|
|
Year Ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for uncollectible accounts receivable
|
|
|
13,760
|
|
|
|
5,970
|
|
|
|
4,975
|
|
|
|
(8,280
|
)
|
|
|
16,425
|
|
Year Ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for uncollectible accounts receivable
|
|
|
13,452
|
|
|
|
6,984
|
|
|
|
523
|
|
|
|
(7,199
|
)
|
|
|
13,760
|
|
All other schedules are omitted because they are not required or
because the information is included in the financial statements
or the related notes.
98
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of
Texas, on March 1, 2010.
WEATHERFORD INTERNATIONAL LTD.
|
|
|
|
By
|
/s/ Bernard
J. Duroc-Danner
|
Bernard J. Duroc-Danner
President, Chief Executive Officer,
Chairman of the Board and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
|
|
|
|
|
|
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Bernard
J. Duroc-Danner
Bernard
J. Duroc-Danner
|
|
President, Chief Executive Officer, Chairman of the Board and
Director
(Principal Executive Officer)
|
|
March 1, 2010
|
|
|
|
|
|
/s/ Andrew
P. Becnel
Andrew
P. Becnel
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
March 1, 2010
|
|
|
|
|
|
/s/ Jessica
Abarca
Jessica
Abarca
|
|
Vice President Accounting and Chief Accounting
Officer
(Principal Accounting Officer)
|
|
March 1, 2010
|
|
|
|
|
|
/s/ Nicholas
F. Brady
Nicholas
F. Brady
|
|
Director
|
|
March 1, 2010
|
|
|
|
|
|
/s/ David
J. Butters
David
J. Butters
|
|
Director
|
|
March 1, 2010
|
|
|
|
|
|
/s/ William
E. Macaulay
William
E. Macaulay
|
|
Director
|
|
March 1, 2010
|
|
|
|
|
|
/s/ Robert
B. Millard
Robert
B. Millard
|
|
Director
|
|
March 1, 2010
|
|
|
|
|
|
/s/ Robert
K. Moses, Jr.
Robert
K. Moses, Jr.
|
|
Director
|
|
March 1, 2010
|
|
|
|
|
|
/s/ Robert
A. Rayne
Robert
A. Rayne
|
|
Director
|
|
March 1, 2010
|
99