Our Management's 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 management's perspective of the opportunities and challenges we face and our outlook for 2012. 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.
As discussed in "Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Restatement of the Consolidated Financial Statements," we have restated our previously issued audited consolidated financial statements for fiscal years ended December 31, 2011, 2010 and 2009 and our unaudited condensed consolidated financial statements for each of the quarters within 2011 and 2010. Accordingly, Management's Discussion and Analysis of Financial Condition and Results of Operations have been revised for the effects of the restatement.
The following discussion should be read in conjunction with our restated 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" and the section "Item 1A. - Risk Factors". Overview
General
Our principal business is to provide equipment and services to the oil and natural gas exploration and production industry both on land and offshore, through our ten product and service lines: (1) artificial lift systems, (2) stimulation and chemicals services, (3) drilling services, (4) well construction, (5) integrated drilling, (6) completion systems, (7) drilling tools, (8) wireline and evaluation services, (9) re-entry and fishing and (10) pipeline and specialty services. We may sell our products and services separately or may bundle them together to provide integrated solutions, up to and including integrated well construction where we are responsible for the entire process of drilling, constructing and completing a well. Our customers include both exploration and production companies and other oilfield service companies. Depending on the service line, customer and location, our contracts vary in their terms, provisions and indemnities. We earn revenues under our contracts when products and services are delivered. Typically, we provide products and services at a well site where our personnel and equipment may be located together with personnel and equipment of our customer and third parties, such as other service providers.
We conduct operations in over 100 countries and have service and sales locations 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 separate, distinct reporting segments: (1) North America; (2) Latin America; (3) Europe/SSA/Russia; and (4) MENA/Asia Pacific.

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 American       International Rig
                           WTI Oil (a)        Henry Hub Gas (b)        Rig Count (c)           Count (c)
2011                      $        98.83     $              2.99                 2,432                 1,180
2010                               91.38                    4.41                 2,108                 1,118
2009                               79.36                    5.57                 1,485                 1,113

(a) Price per barrel as of the last business day of the year indicated - Source:
Thomson Reuters

(b) Price per MM/BTU as of the last business day of the year indicated - Source:
Thomson Reuters

(c) Average rig count for December - Source: Baker Hughes Rig Count and other third-party data

Oil prices fluctuated during 2011, ranging from a high of $113.93 per barrel at the end of April to a low of $75.67 per barrel in early October. Natural gas ranged from a high of $4.87 MM/BTU in early June to a low of $2.99 MM/BTU at the end of December. Factors influencing oil and natural gas prices during the period include hydrocarbon inventory levels, realized and expected global 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
Our industry offers many opportunities and challenges. The cyclicality of the energy industry impacts the demand for our products and services. Certain of our products and services, such as our drilling and evaluation services, well installation services and well completion services, depend on the level of exploration and development activity and the completion phase of the well life cycle. Other products and services, such as our production optimization and artificial lift systems, are dependent on production activity. We have created a long-term strategy aimed at growing our businesses, servicing our customers, and most importantly, creating value for our shareholders. The success of our long-term strategy will be determined by our ability to manage effectively any industry cyclicality, respond to industry demands and successfully maximize the benefits from our acquisitions.
Outlook
We believe the long-term outlook for our businesses is favorable. As decline rates accelerate and reservoir productivity complexities increase, our clients will face growing challenges securing desired rates of production growth. These challenges increase our customers' requirements for technologies that improve productivity and efficiency and increase demand for our products and services.
These phenomena provide us with a positive outlook over the longer term.

The level of improvement in our businesses in 2012 will continue to depend heavily on pricing and volume increases, our control of costs and our ability to further penetrate existing markets with our younger technologies, as well as to successfully introduce these technologies to new markets.
For 2012, we maintain a positive outlook with respect to increases in North American revenue and profitability. Assuming a flat rig count, we expect our fourth quarter 2012 revenue to increase modestly compared to 2011 exit rates and also expect operating profit to increase, comparing the same periods. We believe the predominance of oil activity in Canada and the strength of oil-based activity in the United States will more than offset likely declines in natural gas related activity in the North American market. As a result, our artificial lift, production optimization, formation evaluation, open hole completion and wireline product lines should show meaningful growth compared to 2011. However, in our stimulation and chemicals product lines, we anticipate comparative weakness and a correction due to low barriers to entry, rapid expansion of capacity, a migration from natural gas activity to oil activity and improvements in stimulation efficiency.

Similar to 2011, Latin America should continue to grow revenue and profitability in 2012 with activity improvements expected in Argentina, Brazil, Colombia, Mexico and Venezuela. In the Eastern Hemisphere, we expect 2012 to be a better year than 2011 with revenue growth in Europe and Russia and stronger activity levels in Iraq, Kuwait and Saudi Arabia, as well as Australia and China. In addition, our ability to grow our business aggressively will rely on our demonstration of a high level of operational efficacy for our clients including the efficiency of mobilization related to planned startups. The recruitment, training and retention of personnel will also be a critical factor in growing our businesses. The continued and increasing strength of the industry, including client spending, will be highly dependent on many external factors, such as world economic and political conditions, member-country quota compliance within OPEC and weather conditions, including the factors described under "-Forward-Looking Statements."
Results of Operations

The following charts contain selected financial data comparing our consolidated and segment results from operations for 2011, 2010 and 2009. See "Notes to Consolidated Financial Statements - Note 18 - Segment Information" for additional information regarding variances in operating income.

                                                      Year Ended December 31,
                                               2011             2010             2009
                                            (Restated)       (Restated)       (Restated)
                                                (In millions, except per share data)
 Revenues:
 North America                             $      6,023     $      4,167     $      2,762
 MENA/Asia Pacific                                2,441            2,451            2,373
 Europe/SSA/Russia                                2,298            1,984            1,619
 Latin America                                    2,226            1,619            2,079
                                                 12,988           10,221            8,833
 Operating Income (Expense):
 North America                                    1,259              693              191
 MENA/Asia Pacific                                   25              264              445
 Europe/SSA/Russia                                  287              240              223
 Latin America                                      254               51              277
 Research and Development                          (245 )           (216 )           (196 )
 Corporate                                         (177 )           (172 )           (177 )
 Revaluation of Contingent Consideration              -               13               24
 Other Items                                        (96 )            (99 )           (100 )
                                                  1,307              774              687

 Interest Expense, Net                             (453 )           (406 )           (367 )
 Bond Tender Premium                                  -              (54 )              -
 Devaluation of Venezuelan Bolivar                    -              (64 )              -
 Other, Net                                        (107 )            (53 )            (44 )

 Provision for Income Tax                          (542 )           (396 )           (163 )

 Net Income per Diluted Share                      0.25            (0.29 )           0.12

 Depreciation and Amortization                    1,136            1,048              909

Revenues
The following chart contains the percentage distribution of our consolidated
revenues by product line for 2011, 2010 and 2009:
                                                    Year Ended December 31,
                                                 2011           2010       2009

          Artificial Lift Systems                    17 %           15 %      14 %
          Stimulation and Chemicals Services         17             12         8
          Drilling Services                          17             17        16
          Well Construction                          12             14        15
          Integrated Drilling                        11             12        14
          Completion Systems.                         8              8        11
          Drilling Tools                              6              8         8
          Wireline and Evaluation Services            6              6         6
          Re-entry and Fishing                        5              6         6
          Pipeline and  Specialty Services            1              2         2
          Total                                     100 %          100 %     100 %

Consolidated revenues increased $2.8 billion, or 27%, in 2011 compared to 2010.
North American revenues increased $1.9 billion, or 45%, compared to the prior year, on a 15% increase in rig count. International revenues increased $911 million, or 15%, on a 6% rig count increase. Latin America was the strongest contributor to our year-over-year international revenue growth. From a product line perspective, our artificial lift, drilling services and stimulation and chemicals product lines experienced the strongest growth in 2011. Consolidated revenues increased $1.4 billion, or 16%, in 2010 as compared to 2009. North American revenue increased $1.4 billion, or 51%, in 2010 when compared to the prior year, on a 42% increase in rig count. International revenues were essentially flat compared to 2009. An 11% increase in Eastern Hemisphere revenues was offset by a decline in Latin America. Our artificial lift, drilling services and stimulation and chemicals product lines were strong contributors to the year-over-year increase. Operating Income
Consolidated operating income increased $533 million, or 69%, in 2011 compared to 2010. Our operating segments contributed $577 million of the increase. This incremental operating income was partially offset by a $29 million increase in research and development expenditures, a $5 million increase in corporate general and administrative expenses and a $13 million decrease in the gain recognized on the revaluation of contingent consideration associated with the OFS acquisition. Research and development expenditures represented a consistent 2% of revenues in both 2010 and 2011. The increase in our corporate general and administrative expenses is primarily attributable to increased professional services fees. The revaluation of contingent consideration associated with the 2009 OFS acquisition resulted in the recognition of a $13 million gain in 2010 prior to our settlement of the contingent consideration terms in November 2010.

Consolidated operating income increased $87 million, or 13%, in 2010 as compared to 2009. Our operating segments contributed $112 million of incremental operating income during 2010 as compared to the prior year. This incremental income was partially offset a $20 million increase in research and development expenditures of over 2009. Research and development expenditures represented a consistent 2% of revenues in both years. The revaluation of contingent consideration associated with the OFS acquisition offset $11 million of the incremental operating income contributed by our operating segments, as we recognized a gain of $13 million in 2010 compared to a gain of $24 million in 2009.

We incurred $96 million of other items during 2011, which included income tax restatement and material weakness remediation expenses of $21 million, $10 million of costs incurred in connection with on-going investigations by the U.S. government, $9 million associated with the termination of a corporate consulting contract and severance, exit and other charges totaling $56 million.

We incurred $99 million of other items during 2010, which include a $38 million charge related to our Supplemental Executive Retirement Plan ("SERP") which was frozen on March 31, 2010, $61 million in severance and facility closure costs and $7 million in legal and professional fees incurred in connection with our on-going investigations. These charges were offset by a $7 million benefit related to the reversal of prior cost accruals for our exit from sanctioned countries.

We incurred $100 million of other items during 2009, comprised of $45 million in legal and professional fees incurred in connection with our on-going investigations, $51 million in severance and facility closure costs and $4 million for unusable assets and cost accruals in certain sanctioned countries. Devaluation of Venezuelan Bolivar
In January 2010, the Venezuelan government announced its intention to devalue its currency and move to a two tier exchange structure. The official exchange moved from 2.15 to 2.60 for essential goods and 4.30 for non-essential goods and services. In connection with this devaluation, we incurred a charge of $64 million in the first quarter of 2010 for the remeasurement of our net monetary assets denominated in Venezuelan bolivars at the date of the devaluation.

Interest Expense, Net
Interest expense, net increased $47 million, or 12% in 2011 compared to 2010.
This increase was primarily the result of replacing our short-term debt with higher-rate senior notes through the debt offering and bond tender completed in the second half of 2010, as well as due to increased levels of debt. Interest expense, net increased $39 million, or 11% in 2010 compared to 2009. The increase in interest expense was primarily attributable to an overall increase in our long-term debt balance when compared to 2009, as we refinanced lower-rate short-term debt with higher interest bearing long-term debt. In addition, in September 2010 we completed a $1.4 billion long-term debt offering, and in October 2010, we completed a tender offer, repurchasing $700 million of our senior notes due 2012 and 2013. This activity temporarily increased the balance of our borrowings and contributed to the increase in interest expense. Bond Tender Premium
In September 2010, we commenced a cash tender offer for up to $700 million aggregate principal amount of specified series of our outstanding debt.
Pursuant to the tender-offer terms, in September 2010, we repurchased $167 million of our 6.625% senior notes due 2011 and incurred an expense of $11 million for the premium we paid on the repurchase. In October 2010, we completed the tender offer by repurchasing $327 million and $206 million of our 5.95% senior notes due 2012 and 5.15% senior notes due 2013, respectively. We paid a $44 million premium on these bonds tendered and incurred a charge of $43 million in the fourth quarter of 2010.
Other Expense, Net
Other expense, net increased $54 million in 2011 compared to 2010, mostly due to an increase in foreign currency exchange losses incurred as the result of the strengthening U.S. dollar. Other expense, net increased $9 million, or 20% in 2010 compared to 2009. This increase was also due to the weakening of foreign currencies to the U. S. dollar.
Income Taxes
We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes. We are exempt from Swiss cantonal and communal tax on income derived outside Switzerland, and are also granted participation relief from Swiss federal tax for qualifying dividend income and capital gains related to the sale of qualifying investments in subsidiaries. We expect that the participation relief will result in a full exemption of participation income from Swiss federal income tax.
Our provision for income taxes was $542 million in 2011, $396 million in 2010 and $163 million in 2009, which resulted in an effective tax rate of 73%, 201% and 59%, respectively. Our provision for income taxes was significantly impacted by discrete tax expense items in each of these years. In 2011, we recognized $20 million of withholding tax on the redemption of equity in one of our U.S. subsidiaries; in 2010, we recognized $124 million of tax expense related to the reorganization of our operations in Latin America; and, in 2009, we recognized a benefit of $34 million related to the reorganization of our international operations. Our provision for income taxes was impacted by increases in our reserves for uncertain tax positions of $77 million in 2011, $79 million in 2010 and $62 million in 2009 and valuation allowances of $29 million recognized in 2011, $55 million recognized in 2010 and $38 million recognized in 2009. Excluding these items, our effective tax rate was 56% in 2011, 70% in 2010 and 35% in 2009.
The relationship between our pre-tax income or loss from continuing operations and our income tax benefit or provision varies from period to period as a result of various factors which include, in addition to the discrete items discussed above, changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions and in our operating structure. Our income derived in Switzerland is taxed at a rate of 7.83%; however, our effective rate, even after excluding the transactional and discrete items discussed above, is substantially above the Swiss statutory tax rate as the majority of our operations are taxed in jurisdictions with much higher tax rates.
Our effective tax rate for these periods was further negatively impacted by the taxing regimes in certain countries and our operating structure. Several of the countries in which we operate, primarily in our MENA/Asia Pacific segment, tax us based on "deemed", rather than actual, profits. We are not currently profitable in certain of those countries, which results in us accruing and paying taxes based on a "deemed profit" instead of recognizing no tax expense or potentially recognizing a tax benefit. Our operating structure results in us paying withholding taxes on intercompany charges for items such as rentals, management fees, royalties, and interest as well as on applicable third party transactions. Such withholding taxes were $94 million in 2011, $76 million in 2010 and $70 million in 2009. We also incur pre-tax losses in certain jurisdictions that do not have a corporate income tax and thus we are not able to recognize an income tax benefit on those losses.
In addition to the transaction and structural causes discussed above, our effective tax rate decreased from 2010 to 2011 due to higher pre-tax income and changes in our geographic earnings mix. Our effective tax rate will generally be lower in periods of higher pre-tax earnings as the rate impact of certain of the items discussed above is mitigated by the higher earnings. Our effective tax rate increased from 2009 to 2010 due primarily to lower pre-tax income and changes in our geographic earnings mix.

Restatement of Interim Financial Statements We have restated all interim quarterly periods of 2011 and 2010 to correct errors noted in the Company's accounting for income taxes. In addition to the adjustments recorded to address our income tax errors, we recorded other adjustments to correct previously identified immaterial errors affecting operating income. The following paragraphs update our Management's Discussion and Analysis for the interim periods ended March 31, June 30, September 30 and annual periods ended December 31, 2011 and 2010. The tables below present the adjustments to the quarterly provision for income taxes presented in our Form 10-K filed March 15, 2012.

                                                         2011 Quarters
                                           First      Second      Third       Fourth      Total
                                                               (In millions)

 Provision for Income Taxes, as Reported   $   46     $    76     $  143     $    221     $  486
 Adjustment                                     -          24          2           30         56
 Restated                                  $   46     $   100     $  145     $    251     $  542




                                                         2010 Quarters
                                    First          Second            Third            Fourth         Total
                                                                 (In millions)

Provision for Income Taxes, as
Reported                          $        5     $       46     $            59     $      229     $     339
Adjustment                                11             17                  17             12            57
Restated                          $       16     $       63     $            76     $      241     $     396

Restated results for 2011 include a decrease in net income attributable to Weatherford of approximately $7 million, $25 million, $9 million and $32 million for the first, second, third and fourth quarters, respectively. The $56 million correction of income tax expense in 2011 resulted from an additional $59 million of reserves for uncertain tax positions and a net benefit of $3 million resulting from adjustments to our current and deferred tax accounts.

The $57 million correction of income tax expense in 2010 resulted from an additional $55 million of reserves for uncertain tax positions and a benefit of $2 million from other net adjustments to our current and deferred tax accounts.
The correction of these tax errors and the immaterial errors impacting operating income resulted in a reduction to net income of approximately $13 million, $18 million, $19 million and $15 million for the first, second, third and fourth quarters, respectively.

The following quarterly MD&A reflects the impact of the restatement adjustments.

For the three months ended March 31, 2011, we had a tax provision of $46 million on income before taxes of $78 million. Our tax provision for the three months ended March 31, 2011 includes discrete tax benefits of $6 million. For the three months ended March 31, 2010, we had a tax provision of $16 million on a pretax loss of $62 million that includes curtailment expense for our SERP for which no related tax benefit was recorded. Our tax provision for the three months ended March 31, 2010 includes the tax impact of changes in our geographic earnings mix, which is partially offset by a tax benefit related to the devaluation of the Venezuelan bolivar.

For the three and six months ended June 30, 2011, we had a tax provision of $100 million and $146 million on income before taxes of $156 million and $234 million, respectively. Our tax provision for the three and six months ended June 30, 2011 includes discrete tax benefits of $12 million and $18 million, respectively.

For the three months ended June 30, 2010, we had a tax provision of $63 million on a pretax loss of $6 million that includes an $82 million loss on the fair value adjustment to the put option issued in connection with the OFS acquisition . . .