Weatherford International Ltd./Switzerland (WFT) Inactive
Company Profile
| Condensed Consolidated Balance Sheets (USD $) | ||
| In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
| Current Assets | ||
| Cash and Cash Equivalents | $205,272 | $238,398 |
| Accounts Receivable, Net of Allowance for Uncollectible Accounts | 2,189,769 | 2,442,848 |
| Inventories | 2,259,904 | 2,088,342 |
| Current Deferred Tax Asset | 250,579 | 270,252 |
| Other Current Assets | 728,704 | 530,442 |
| Total Current Assets | 5,634,228 | 5,570,282 |
| Property, Plant and Equipment, Net of Accumulated Depreciation | 6,533,003 | 5,922,172 |
| Goodwill | 3,643,511 | 3,530,915 |
| Other Intangible Assets, Net of Accumulated Amortization | 697,489 | 701,483 |
| Equity Investments | 488,820 | 515,770 |
| Other Assets | 368,608 | 235,891 |
| Total Assets | 17,365,659 | 16,476,513 |
| Current Liabilities: | ||
| Short-term Borrowings and Current Portion of Long-term Debt | 692,535 | 1,255,947 |
| Accounts Payable | 844,953 | 886,104 |
| Other Current Liabilities | 702,983 | 880,042 |
| Total Current Liabilities | 2,240,471 | 3,022,093 |
| Liabilities, Noncurrent: | ||
| Long-term Debt | 5,805,036 | 4,564,255 |
| Other Liabilities | 487,535 | 524,116 |
| Total Liabilities | 8,533,042 | 8,110,464 |
| Shareholders' Equity | ||
| Common Stock, Value, Issued | 728,889 | 728,689 |
| Capital in Excess of Par Value | 4,082,261 | 4,059,112 |
| Treasury Stock, Net | (690,981) | (759,477) |
| Retained Earnings | 4,730,868 | 4,524,085 |
| Accumulated Other Comprehensive Loss | (101,587) | (266,761) |
| Weatherford Shareholders' Equity | 8,749,450 | 8,285,648 |
| Noncontrolling Interests | 83,167 | 80,401 |
| Total Shareholders' Equity | 8,832,617 | 8,366,049 |
| Total Liabilities and Shareholders' Equity | $17,365,659 | $16,476,513 |
| Condensed Consolidated Balance Sheet (Parenthetical) (USD $) | ||
| In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
| Parenthetical Disclosures | ||
| Allowance for Doubtful Accounts Receivable, Current | $21,373 | $16,425 |
| Accumulated Depreciation | 3,030,799 | 2,690,996 |
| Finite-Lived Intangible Assets, Accumulated Amortization | $311,144 | $268,857 |
| Stockholders' Equity, Number of Shares, Par Value and Other Disclosures | ||
| Common Share, Par Value | CHF 1.16 | USD $1 |
| Common Share, Shares Authorized | 1,093,303 | 1,000,000 |
| Common Share, Shares Conditionally Authorized | 364,434 | 0 |
| Common Share, Shares, Issued | 728,889 | 728,689 |
| Condensed Consolidated Statements of Income (Unaudited) (USD $) | ||||
| In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Revenues: | ||||
| Products | $650,553 | $834,443 | $1,393,453 | $1,663,626 |
| Services | 1,344,279 | 1,394,807 | 2,857,520 | 2,761,516 |
| Total Revenues | 1,994,832 | 2,229,250 | 4,250,973 | 4,425,142 |
| Costs and Expenses: | ||||
| Cost of Products | 525,180 | 621,836 | 1,094,236 | 1,220,626 |
| Cost of Services | 917,662 | 832,318 | 1,883,126 | 1,683,206 |
| Research and Development | 46,113 | 44,430 | 95,134 | 87,069 |
| Selling, General and Administrative Attributable to Segments | 296,625 | 268,798 | 605,369 | 509,665 |
| Corporate General and Administrative | 55,887 | 46,288 | 109,018 | 93,462 |
| Gain on Sale of Subsidiary | 0 | (81,344) | 0 | (81,344) |
| Operating Income | 153,365 | 496,924 | 464,090 | 912,458 |
| Other Expense: | ||||
| Interest Expense, Net | (93,498) | (62,399) | (184,561) | (115,202) |
| Other, Net | (3,871) | (5,282) | (17,410) | (4,783) |
| Income From Continuing Operations Before Income Taxes | 55,996 | 429,243 | 262,119 | 792,473 |
| Provision for Income Taxes | (5,441) | (57,875) | (37,904) | (131,500) |
| Income From Continuing Operations, Net of Taxes | 50,555 | 371,368 | 224,215 | 660,973 |
| Gain (Loss) from Discontinued Operation, Net of Taxes | 0 | 6,940 | 0 | (12,928) |
| Net Income | 50,555 | 378,308 | 224,215 | 648,045 |
| Net Income Attributable to Noncontrolling Interests | (8,574) | (7,324) | (17,432) | (12,860) |
| Net Income Attributable to Weatherford | 41,981 | 370,984 | 206,783 | 635,185 |
| Basic Earnings Per Share Attributable to Weatherford: | ||||
| Income from Continuing Operations | 0.06 | 0.53 | 0.3 | 0.95 |
| Gain (Loss) from Discontinued Operation | $0 | 0.01 | $0 | -0.02 |
| Net Income | 0.06 | 0.54 | 0.3 | 0.93 |
| Diluted Earnings Per Share Attributable to Weatherford: | ||||
| Income from Continuing Operations | 0.06 | 0.52 | 0.29 | 0.93 |
| Gain (Loss) from Discontinued Operation | $0 | 0.01 | $0 | -0.02 |
| Net Income, Per Diluted Share | 0.06 | 0.53 | 0.29 | 0.91 |
| Amounts Attributable to Weatherford Registered Shareholders: | ||||
| Income from Continuing Operations, Net of Taxes | 41,981 | 364,044 | 206,783 | 648,113 |
| Gain (Loss) from Discontinued Operation, Net of Taxes | 0 | 6,940 | 0 | (12,928) |
| Net Income Attributable to Weatherford | $41,981 | $370,984 | $206,783 | $635,185 |
| Weighted Average Shares Outstanding: | ||||
| Basic | 700,424 | 681,870 | 699,375 | 681,030 |
| Diluted | 709,412 | 701,927 | 706,024 | 699,507 |
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) | ||||
| In Thousands | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Net Income | $50,555 | $378,308 | $224,215 | $648,045 |
| Other Comprehensive Income: | ||||
| Deferred Loss on Derivative Instruments | 0 | 0 | 0 | (12,576) |
| Amortization of Pension Components | 3,348 | 980 | 4,528 | 5,616 |
| Foreign Currency Translation Adjustment | 210,282 | 32,449 | 160,222 | 37,326 |
| Other | 152 | 147 | 303 | 187 |
| Comprehensive Income | 264,337 | 411,884 | 389,268 | 678,598 |
| Comprehensive Income Attributable to Noncontrolling Interests | (8,574) | (7,324) | (17,311) | (12,860) |
| Comprehensive Income Attributable to Weatherford | $255,763 | $404,560 | $371,957 | $665,738 |
| Condensed Consolidated Statement of Cash Flows (Unaudited) (USD $) | ||
| In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Cash Flows from Operating Activities: | ||
| Net Income | $224,215 | $648,045 |
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||
| Depreciation and Amortization | 415,087 | 340,998 |
| Loss (Gain) on Sales of Assets and Businesses, Net | 3,964 | (85,815) |
| Loss from Discontinued Operation | 0 | 12,928 |
| Employee Share-Based Compensation Expense | 55,046 | 48,134 |
| Excess Tax (Benefits) Deficits from Share-Based Compensation | 4,897 | (15,194) |
| Deferred Income Tax Benefit | (61,770) | (12,248) |
| Other, Net | (3,673) | (12,478) |
| Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired | ||
| Accounts Receivable | 285,915 | (115,277) |
| Inventories | (132,380) | (288,328) |
| Accounts Payable | (57,303) | 45,041 |
| Other | (434,085) | (178,370) |
| Net Cash Provided by Operating Activities - Continuing Operations | 299,913 | 387,436 |
| Net Cash Used by Operating Activities - Discontinued Operation | 0 | (6,219) |
| Net Cash Provided by Operating Activities | 299,913 | 381,217 |
| Cash Flows from Investing Activities: | ||
| Acquisitions of Businesses, Net of Cash Acquired | (22,049) | (160,351) |
| Capital Expenditures for Property, Plant and Equipment | (970,384) | (1,144,530) |
| Acquisition of Intellectual Property | (16,456) | (6,436) |
| Acquisition of Equity Investments in Unconsolidated Affiliates | (26,509) | 0 |
| Proceeds from Sale of Assets and Businesses, Net | 40,873 | 255,121 |
| Net Cash Used by Investing Activities - Continuing Operations | (994,525) | (1,056,196) |
| Net Cash Provided by Investing Activities - Discontinued Operation | 0 | 2,000 |
| Net Cash Used by Investing Activities | (994,525) | (1,054,196) |
| Cash Flows from Financing Activities: | ||
| Repayments of Short-term Debt, Net | (564,808) | (728,801) |
| Borrowings of Long-term Debt, Net | 1,230,214 | 1,486,207 |
| Excess Tax Benefit from Share-based Compensation, Financing Activities | (4,897) | 15,194 |
| Other Financing Activities, Net | 977 | (2,357) |
| Net Cash Provided by Financing Activities - Continuing Operations | 661,486 | 770,243 |
| Net Cash Provided by Financing Activities - Discontinued Operation | 0 | 0 |
| Net Cash Provided by Financing Activities | 661,486 | 770,243 |
| Cash and Cash Equivalents, Period Increase (Decrease) | (33,126) | 97,264 |
| Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 238,398 | 170,714 |
| Cash and Cash Equivalents, at Carrying Value, Ending Balance | 205,272 | 267,978 |
| Supplemental Cash Flow Information: | ||
| Interest Paid | 167,332 | 110,515 |
| Income Taxes Paid, Net of Refunds | $258,482 | $148,123 |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Condensed Consolidated Financial Statements | |
| 1. General | 1. General The accompanying unaudited condensed consolidated financial statements of Weatherford International Ltd. and all majority-owned subsidiaries (the Company) include all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the Companys Condensed Consolidated Balance Sheet at June 30, 2009, Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2009 and 2008. Although the Company believes the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to the Companys organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to U.S. Securities and Exchange Commission (SEC) rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2008 and the related notes included in the Companys Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2009 are not necessarily indicative of the results expected for the full year. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to uncollectible accounts receivable, lower of cost or market of inventories, equity investments, intangible assets and goodwill, property, plant and equipment, income taxes, percentage-of-completion accounting for long-term contracts, self-insurance, pension and post retirement benefit plans and contingent liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. In February 2009, Weatherford International Ltd., a Bermuda exempted company (Weatherford Bermuda), and Weatherford International Ltd., a Swiss joint stock corporation (Weatherford Switzerland), completed a share exchange transaction under the terms of a share exchange agreement, dated as of December10, 2008, effected by way of a scheme of arrangement under Bermuda law, 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 register |
| 2. Business Combinations | 2. Business Combinations Effective January1, 2009, the Company adopted SFAS No. 141(R), Business Combination, (SFAS No. 141(R)). SFAS No. 141(R) establishes principles and requirements for how a company recognizes assets acquired, liabilities assumed, contractual 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. Due to the fact that SFAS No. 141(R) is applicable to acquisitions completed after January1, 2009 and the Company did not have any material business combinations during the first six months of 2009, the adoption of SFAS No. 141(R) did not have a material impact on the Companys condensed consolidated financial statements. The Company has acquired businesses critical to its long-term growth strategy. Results of operations for acquisitions are included in the accompanying Condensed Consolidated Statements of Income from the date of acquisition. The balances included in the Condensed Consolidated Balance Sheets related to recent acquisitions are based on preliminary information and are subject to change when final asset valuations are obtained and the potential for liabilities has been evaluated. Acquisitions are accounted for using the purchase method of accounting and the purchase price is allocated to the net assets acquired based upon their estimated fair values at the date of acquisition. During the six months ended June 30, 2009, the Company acquired businesses for cash consideration of $22 million and approximately three million common shares valued at $54 million. |
| 3. Equity Investment Acquisition | 3. Equity Investment Acquisition The Company acquired a 33% ownership interest in Premier Business Solutions (PBS) in June 2007 for approximately $330 million. PBS conducts business in Russia and is the worlds largest electric submersible pump manufacturer by volume. In January 2008, the Company sold its 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 the Companys ownership percentage to approximately 40%. The Companys investment in PBS is included in Equity Investments in the accompanying Condensed Consolidated Balance Sheets at June 30, 2009 and December 31, 2008. |
| 4. Discontinued Operations | 4. Discontinued Operations In 2007, the Companys management approved a plan to sell its oil and gas development and production business. The Company finalized the divestiture of the business in June 2008 and recorded an $11 million gain, net of taxes, during the three months ended June 30, 2008. This gain was partially offset by operating and legal expenses incurred during the period. Included in the loss for the six months ended June 30, 2008, is approximately $21 million, net of taxes, incurred in connection with the settlement of a legal dispute regarding the business. |
| 5. Inventory | 5. Inventories The components of inventory were as follows: June 30, 2009 December 31, 2008 (In thousands) Raw materials, components and supplies............................................ $ 358,045 $ 430,352 Work in process....................................................................................... 134,433 152,864 Finished goods........................................................................................ 1,767,426 1,505,126 $ 2,259,904 $ 2,088,342 Work in process and finished goods inventories include the cost of materials, labor and plant overhead. |
| 6. Goodwill | 6. Goodwill Goodwill is evaluated for impairment on at least an annual basis. The Company performs its annual goodwill impairment test as of October 1. In addition, the Company updated its goodwill impairment test in December 2008 as a result of the decline in its common share price during the fourth quarter of 2008. The Companys 2008 impairment tests indicated goodwill was not impaired. The Company will continue to test its goodwill annually as of October 1 unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The changes in the carrying amount of goodwill for the six months ended June 30, 2009 were as follows: North America Middle East/ North Africa/ Asia Europe/ West Africa/ FSU Latin America Total (In thousands) As of December 31, 2008......... $ 1,813,710 $ 675,558 $ 734,930 $ 306,717 $ 3,530,915 Acquisitions............................. 1,857 5,571 3,302 1,857 12,587 Disposals................................... (5,097) (5,097) Purchase price and other adjustments........................... 5,711 9,232 6,234 (762) 20,415 Foreign currency translation.. 45,019 8,624 27,424 3,624 84,691 As of June 30, 2009.................. $ 1,861,200 $ 698,985 $ 771,890 $ 311,436 $ 3,643,511 |
| 7. Short-term Borrowings and Current Portion of Long-term Debt | 7. Short-term Borrowings and Current Portion of Long-term Debt The components of short-term borrowings were as follows: June 30, 2009 December 31, 2008 (In thousands) Revolving credit facilities................................................................... $ 542,500 $ 1,068,000 Commercial paper program................................................................. 75,618 127,884 Other short-term bank loans............................................................... 61,897 44,205 Total short-term borrowings.............................................................. 680,015 1,240,089 Current portion of long-term debt..................................................... 12,520 15,858 Short-term borrowings and current portion of long-term debt..... $ 692,535 $ 1,255,947 In January 2009, the Company 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. Interest on these notes is due semi-annually on March 1 and September 1 of each year. The Company maintains various revolving credit facilities with syndicates of banks. These facilities allow for an aggregate availability of $2.3 billion, and can be used for a combination of borrowings, support of the Companys commercial paper program and issuances of letters of credit. Facilities with $550 million in availability will mature in October 2009 and the remaining facilities mature in May 2011. There were $74 million in outstanding letters of credit under these facilities at June 30, 2009. These borrowing facilities require the Company to maintain a debt-to-capitalization ratio of less than 60% and contain other covenants and representations customary for an investment-grade commercial credit. The Company was in compliance with these covenants at June 30, 2009. The Company has a $1.5 billion commercial paper program under which it may from time to time issue short-term unsecured notes. The commercial paper program is supported by the Companys revolving credit facilities. The weighted average interest rate related to outstanding commercial paper issuances at June 30, 2009 was 0.5%. The Company has short-term borrowings with various domestic and international institutions pursuant to uncommitted facilities. At June 30, 2009, the Company had $62 million in short-term borrowings outstanding under these arrangements with a weighted average interest rate of 4.9%. In addition, the Company had $192 million of letters of credit and bid and performance bonds outstanding under these uncommitted facilities. The Companys short-term borrowings approximate their fair value at June 30, 2009 and December 31, 2008. |
| 8. Financial Instruments and Fair Value Measures | 8. Financial Instruments and Fair Value Measures Effective January 1, 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS No. 161). SFAS No. 161 requires enhanced disclosures about an entitys derivative and hedging activity. Entities are required to provide enhanced disclosures about how and why they use derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and how derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. The Company is exposed to market risk from changes in foreign currency and changes in interest rates. From time to time, the Company may enter into derivative financial instrument transactions to manage or reduce its market risk, but does not enter into derivative transactions for speculative purposes. The Company manages its 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 the Companys interest rate swaps are multinational commercial banks. Interest Rate Swaps In December 2008, the Company entered into an interest rate swap agreement on an aggregate notional amount of $150 million against one of its revolving credit facilities. This agreement matured in June 2009. Upon completion of the long-term debt offering in March 2008, the Company entered into interest rate swap agreements on an aggregate notional amount of $500million against its 5.15% senior notes due in 2013 (5.15% Senior Notes). These agreements were terminated in December 2008. As a result of these terminations, the Company received cash proceeds, net of accrued interest, of $12 million. The gain associated with this interest rate swap termination has been deferred and will be amortized to interest expense over the remaining term of the 5.15% Senior Notes. Cash Flow Hedges In March 2008, the Company entered into interest rate derivative instruments for a notional amount of $500 million to hedge projected exposures to interest rates in anticipation of the issuance of the 7.00% senior notes due in 2038 (7.00% Senior Notes). Those hedges were terminated in March 2008 at the time of the issuance. The Company 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. Other Derivative Instruments As of June 30, 2009, the Company had several foreign currency forward and option contracts with notional amounts aggregating $843 million, 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 kroner. |
| 9. Income Taxes | 9. Income Taxes The Companys effective tax rates were 9.7% and 14.5% for the three and six months ended June 30, 2009, respectively, and were 13.5% and 16.6% for the three and six months ended June 30, 2008, respectively. The decrease in the effective tax rate is due to the decrease in earnings in certain jurisdictions, largely in North America, and benefits realized from the refinement of the Companys international tax structure. |
| 10. Stockholders' Equity | 10. Shareholders Equity The following summarizes the Companys shareholders equity activity for the period presented: Total Shareholders Equity Company Shareholders Equity Noncontrolling Interests in Consolidated Subsidiaries (In thousands) Balance at December 31, 2008............................. $ 8,366,049 $ 8,285,648 $ 80,401 Comprehensive Income: Net Income......................................................... 224,215 206,783 17,432 Amortization of Pension Components........... 4,528 4,528 Foreign Currency Translation Adjustments. 160,222 160,343 (121) Other................................................................... 303 303 Comprehensive Income............................... 389,268 371,957 17,311 Transactions with Shareholders......................... 91,845 91,845 Dividends paid to Noncontrolling Interests..... (16,047) (16,047) Other....................................................................... 1,502 1,502 Balance at June 30, 2009....................................... $ 8,832,617 $ 8,749,450 $ 83,167 |
| 11. Earnings Per Share | 11. Earnings Per Share Basic earnings per share for all periods presented equals net income divided by the weighted average number of the Companys registered shares, par value CHF 1.16 (Registered Shares) outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of Registered Shares outstanding during the period, as adjusted for the dilutive effect of the Companys stock option and restricted share plans and warrant. Effective January1, 2009, the Company implemented FASB Staff Position (FSP) EITF03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (FSP EITF03-6-1). FSP EITF03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities. Under the guidance of FSP EITF03-6-1, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class method. Accordingly, the Company now includes its restricted share awards that contain the right to vote and receive dividends in the computation of both basic and diluted earnings per share. FSP EITF 03-6-1 has not been applied to prior periods as the impact is immaterial. The Companys Board of Directors approved a two-for-one share split of its common 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 shares outstanding: Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 (In thousands) Basic weighted average shares outstanding 700,424 681,870 699,375 681,030 Dilutive effect of: Warrant........................................... 2,105 8,380 1,053 7,663 Stock option and restricted share plans..................................................... 6,883 11,677 5,596 10,814 Diluted weighted average shares outstanding.................................... 709,412 701,927 706,024 699,507 The diluted earning per share calculation excludes four million potential shares for the three months ended June 30, 2009 and 11 million potential shares for the six months ended June 30, 2009, due to their antidilutive effect. Antidilutive potential shares were not significant for the three and six months ended June 30, 2008. |
| 12. Share-Based Compensation | 12. Share-Based Compensation The Company recognized the following employee share-based compensation expense during the three and six months ended June 30, 2009 and 2008: Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 (In thousands) Share-based compensation.......................... $ 28,617 $ 24,660 $ 55,046 $ 48,134 Related tax benefit......................................... 10,016 8,631 19,266 16,847 During the six months ended June 30, 2009, the Company granted six million restricted share awards and units at a weighted average grant date fair value of $13.17 per share. As of June 30, 2009, there was $268 million of total unrecognized compensation cost related to the Companys unvested stock options and restricted share grants. This cost is expected to be recognized over a weighted-average period of two years. |
| 13. Retirement and Employee Benefit Plans | 13. Retirement and Employee Benefit Plans The Company has defined benefit pension and other post-retirement benefit plans covering certain employees. The components of net periodic benefit cost for the three and six months ended June 30, 2009 and 2008 were as follows: Three Months Ended June 30, 2009 2008 United States International United States International (In thousands) Service cost...................................................... $ 906 $ 1,681 $ 720 $ 3,555 Interest cost...................................................... 2,079 1,654 1,511 2,659 Expected return on plan assets...................... (166) (979) (179) (2,320) Amortization of transition obligation........... (1) Amortization of prior service cost (credit)... 1,535 (12) 458 (20) Amortization of loss........................................ 2,209 235 964 107 Curtailment/settlement loss............................ 1,063 Net periodic benefit cost................................ $ 7,626 $ 2,579 $ 3,474 $ 3,980 Six Months Ended June 30, 2009 2008 United States International United States International (In thousands) Service cost..................................................... $ 1,781 $ 3,285 $ 1,440 $ 7,043 Interest cost.................................................... 3,785 3,250 3,022 5,269 Expected return on plan assets.................... (331) (1,933) (358) (4,626) Amortization of transition obligation.......... (1) (2) Amortization of prior service cost (credit).. 1,993 (23) 916 (40) Amortization of loss....................................... 3,234 463 1,928 208 Curtailment/settlement loss.......................... 1,063 5,621 Net periodic benefit cost............................... $ 11,525 $ 5,041 $ 12,569 $ 7,852 The Company previously disclosed in its financial statements for the year ended December 31, 2008, that it expected to contribute approximately $10 million to its pension and other postretirement benefit plans during 2009. Due to the amendment of one of our foreign plans, the Company currently anticipates total 2009 contributions for the defined benefit plans to approximate $7 million. As of June 30, 2009, the Company has contributed approximately $4 million to these plans. |
| 14. Segment Information | 14. Segment Information Financial information by segment is summarized below. Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Three Months Ended June 30, 2009 Net Operating Revenues Income (Loss) from Operations Depreciation and Amortization (In thousands) North America........................................ $ 571,415 $ (709) $ 77,253 Middle East/North Africa/Asia........... 592,908 123,553 60,921 Europe/West Africa/FSU..................... 364,968 62,614 35,190 Latin America......................................... 465,541 85,759 35,971 1,994,832 271,217 209,335 Corporate and Research and Development...................................... (86,947) 4,358 Other (a).................................................. (30,905) Total......................................................... $ 1,994,832 $ 153,365 $ 213,693 Three Months Ended June 30, 2008 Net Operating Revenues Income from Operations Depreciation and Amortization (In thousands) North America........................................ $ 1,012,244 $ 224,252 $ 75,093 Middle East/North Africa/Asia........... 556,251 130,650 45,982 Europe/West Africa/FSU..................... 389,563 99,016 27,600 Latin America......................................... 271,192 58,355 20,368 2,229,250 512,273 169,043 Corporate and Research and Development...................................... (79,705) 2,667 Other (b).................................................. 64,356 Total......................................................... $ 2,229,250 $ 496,924 $ 171,710 (a) The three months ended June 30, 2009 includes $14 million for costs incurred in connection with on-going investigations by the U.S. government, $13 million for severance and facility closure costs associated with reorganization activities and $4 million in costs related to the Companys withdrawal from certain sanctioned countries. (b) During the three months ended June 30, 2008, the Company sold a 50% interest in a subsidiary it controls to Qatar Petroleum for cash consideration of $113 million. The subsidiary contains substantially all of the Companys Qatar operations. The sale resulted in a gain of $81 million, after deducting direct costs of the transaction. The gain was partially offset by $11 million in costs incurred in connection with the Companys on-going investigations and $6 million in costs related to the Companys withdrawal from certain sanctioned countries. |
| 15. Disputes, Litigation and Contingencies | 15. Disputes and Litigation U.S. Government and Internal Investigations The Company is currently involved in government and internal investigations involving various areas of its operations. The Company 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 are conducting investigations of the Companys participation in the oil-for-food program and have subpoenaed certain documents in connection with these investigations. The Company is cooperating fully with these investigations. The Company has retained legal counsel, reporting to its audit committee, to investigate this matter. These investigations are ongoing, and the Company cannot anticipate the timing, outcome or possible impact of these investigations, financial or otherwise. The U.S. Department of Commerce, Bureau of Industry Security, Office of Foreign Assets Control, DOJ and SEC are investigating allegations of improper sales of products and services by the Company and its subsidiaries in certain sanctioned countries. The Company is cooperating fully with this investigation. The Company has retained legal counsel, reporting to its audit committee, to investigate these matters and to cooperate fully with these agencies. This investigation is ongoing, and the Company cannot anticipate the timing, outcome or possible impact 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, the Company decided in September2007 to direct its 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 September2007, the Company ceased entering into any new contracts relating to these countries and began an orderly discontinuation and winding down of its existing business in these sanctioned countries. Effective March 31, 2008, the Company substantially completed its withdrawal from these countries. The Companys remaining activities in these countries consist primarily of attempts to collect accounts receivable and recover or liquidate assets, including funds. Certain of the Companys 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 the Companys compliance with the Foreign Corrupt Practices Act (FCPA) and other laws worldwide. The Company has retained legal counsel, reporting to its audit committee, to investigate these matters and to cooperate fully with the DOJ and SEC. As part of its investigations, the Company has uncovered potential violations of U.S. law in connection with activities in West Africa. These investigations are ongoing, and the Company cannot anticipate the t |
| 16. New Accounting Pronouncements | 16. New Accounting Pronouncements In December 2008, the FASB issued FSP SFAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets (FSP SFAS No. 132(R)-1). This FSP amends the disclosure requirements for employers disclosure of plan assets for defined benefit pensions and other postretirement plans. The objective of this FSP is to provide users of financial statements with an understanding of how investment allocation decisions are made, the major categories of plan 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. FSP SFAS No. 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company will adopt the new disclosure requirements in the 2009 annual reporting period. In June 2009, the FASB issued SFAS 167, Amendments to FASB Interpretation No. 46(R) (SFAS No. 167). SFAS No. 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities, and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The objective of this SFAS is to improve financial reporting by enterprises involved with variable interest entities. SFAS No. 167 is effective for fiscal years beginning after November 15, 2009. The Company will adopt the new disclosure requirements beginning January 1, 2010. |
| 17. Commitments and Contingencies | 17. Commitments and Contingencies In association with a prior acquisition, the Company identified pre-acquisition contingencies related to duties and taxes associated with the importation of certain equipment assets to foreign jurisdictions. At June 30, 2009, the Company has a liability in the amount of $9 million for this matter. If the Company used the high end of the range, the aggregate potential liability would be approximately $10 million higher. The Companys former Senior Vice President and General Counsel (the Executive) left the Company in June 2009. The Executive had employment agreements with the Company that terminated on his departure. There is currently a dispute between the Executive and the Company as to the amount of compensation the Company is obligated to pay under these employment agreements based on the Executives separation. It is the Companys belief that an unfavorable outcome regarding this dispute is not probable, and as such, the Company has not accrued for $9 million of the Executives claimed severance and other benefits. |
| 18. Subsequent Event | 18. Subsequent Event On July 27, 2009, the Company completed its acquisition of the Oilfield Services Division of TNK-BP (TNK-BP) for 24.3 million shares valued at approximately $450 million. In addition, if TNK-BP sells its shares in the Company for a price less than $18.50 per share prior to June29, 2010, the Company is 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. The Company will pay any additional consideration in cash or, at the Companys option in certain instances, in additional shares following such date. |
| 19. Condensed Consolidating Financil Statements | 19. Condensed Consolidating Financial Statements During the first quarter of 2009, the Company completed a transaction that changed its 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. It 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 June 30, 2009 and December 31, 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 June 30, 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 and (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 Weatherford Bermuda were guaranteed by 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,(viii) issuances of notes under the commercial paper program. As a result of these guarantee arrangements, the Company is 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 the Companys 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. Condensed Consolidating Balance Sheet June 30, 2009 (unaudited) (In thousands) Parent Bermuda Delaware Other Subsidiaries Eliminations Consolidation ASSETS Current Assets: Cash and Cash Equivalents............ $ 132 $ 26 $ 21 $ 205,093 $ $ 205,272 Other Current Assets.................... 1,209 19,422 78,967 5,329,358 5,428,956 Total Current Assets 1,341 19,448 78,988 5,534,451 5,634,228 Equity Investments in Affiliates........ 8,493,192 14,920,933 6,563,691 12,275,120 (42,252,936) Shares Held in Parent......................... |
| Document Information | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Document Information | |
| Document Type | 10-Q |
| Amendment Flag | true |
| Amendment Description | XBRL Filing |
| Document Period End Date | 2009-06-30 |
| Entity Information (USD $) | |||
| 6 Months Ended
Jun. 30, 2009 | Jul. 30, 2009
| Jun. 30, 2008
| |
| Entity Information | |||
| Entity Registrant Name | WEATHERFORD INTERNATIONAL LTD. | ||
| Entity Central Index Key | 0001453090 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Public Float | $28,142,429,139 | ||
| Entity Listings | |||
| Entity Common Shares, Shares Outstanding | 727,702,595 |