<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-Q



[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the transition period from ________ to ________


                         Commission file number 1-13086


                        WEATHERFORD INTERNATIONAL, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)


          Delaware                                          04-2515019
-------------------------------                        -------------------
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                        Identification No.)


515 Post Oak Blvd., Suite 600, Houston, Texas               77027-3415
------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)

                                 (713) 693-4000
               --------------------------------------------------
               (Registrant's telephone number, include area code)


              (Former name, former address and former fiscal year,
                         if changed since last report)


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 [X]   No [ ]

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


      Title of Class                               Outstanding at August 9, 2000
      --------------                               ----------------------------
Common Stock, par value $1.00                              108,554,674

<PAGE>   2


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT PAR VALUE)

<TABLE>
<CAPTION>
                                                                                 JUNE 30,             DECEMBER 31,
                                                                                   2000                   1999
                                                                               -------------          -------------
                                                                                (UNAUDITED)
<S>                                                                             <C>                   <C>
                          ASSETS

CURRENT ASSETS:
   Cash and Cash Equivalents............................................        $    281,717           $     44,361
   Accounts Receivable, Net of Allowance for Uncollectible
     Accounts of $21,396 and $19,882, Respectively......................             423,735                352,139
   Inventories..........................................................             419,724                364,607
   Other Current Assets.................................................             124,790                108,042
                                                                                ------------           ------------
                                                                                   1,249,966                869,149
                                                                                ------------           ------------
PROPERTY, PLANT AND EQUIPMENT, AT COST,
   NET OF ACCUMULATED DEPRECIATION......................................             874,274                898,996

GOODWILL, NET...........................................................           1,027,584                991,679
NET ASSETS OF DISCONTINUED OPERATIONS...................................                  --                553,861
DEFERRED TAX ASSET......................................................              63,027                 66,077
OTHER ASSETS............................................................             241,176                134,027
                                                                                ------------           ------------
                                                                                $  3,456,027           $  3,513,789
                                                                                ============           ============

         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Short-Term Borrowings and Current Portion of Long-Term Debt..........        $    216,434           $    322,767
   Accounts Payable.....................................................             139,312                117,530
   Other Current Liabilities............................................             198,151                225,783
                                                                                ------------           ------------
                                                                                     553,897                666,080
                                                                                ------------           ------------

LONG-TERM DEBT..........................................................             223,403                226,603
ZERO COUPON CONVERTIBLE SENIOR DEBENTURES...............................             501,647                     --
MINORITY INTEREST.......................................................             199,076                198,597
DEFERRED INCOME TAXES AND OTHER.........................................             212,572                186,611
5% CONVERTIBLE SUBORDINATED PREFERRED
   EQUIVALENT DEBENTURES................................................             402,500                402,500

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Common Stock, $1 Par Value, Authorized 250,000 Shares,
     Issued 120,570 and 120,200 Shares, Respectively....................             120,570                120,200
   Capital in Excess of Par Value.......................................           1,536,443              1,526,648
   Treasury Stock, at Cost..............................................            (311,059)              (309,963)
   Retained Earnings....................................................             114,727                586,310
   Accumulated Other Comprehensive Loss.................................             (97,749)               (89,797)
                                                                                ------------           ------------
                                                                                   1,362,932             1,833,398
                                                                                ------------           ------------
                                                                                $  3,456,027           $  3,513,789
                                                                                ============           ============
</TABLE>



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



                                       1
<PAGE>   3

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                  (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS                    SIX MONTHS
                                                                  ENDED JUNE 30,                 ENDED JUNE 30,
                                                             --------------------------    ---------------------------
                                                                2000           1999           2000            1999
                                                             -----------    -----------    ------------    -----------
<S>                                                         <C>            <C>             <C>             <C>

REVENUES:
     Products...........................................     $  182,955     $  107,991     $  361,744      $  224,882
     Services and Rentals...............................        238,893        170,597        455,486         319,047
                                                             ----------     ----------     ----------      ----------
                                                                421,848        278,588        817,230         543,929

COSTS AND EXPENSES:
     Cost of Products...................................        123,512         70,720        249,705         151,842
     Cost of Services and Rentals.......................        170,958        131,034        325,757         232,866
     Selling, General and Administrative Attributable
       to Segments......................................         84,211         60,191        163,184         121,830
     Corporate General and Administrative...............          9,231          6,993         17,809          12,565
     Equity in Earnings of Unconsolidated Affiliates....           (949)          (436)        (1,783)           (890)
                                                             ----------     ----------     ----------      ----------

OPERATING INCOME........................................         34,885         10,086         62,558          25,716
                                                             ----------     ----------     ----------      ----------

OTHER INCOME (EXPENSE):
     Interest Income....................................          2,895            596          3,512           2,101
     Interest Expense...................................        (16,520)       (10,898)       (29,542)        (20,898)
     Other, Net.........................................           (409)         3,093            561           2,157
                                                             ----------     ----------     ----------      ----------
INCOME BEFORE INCOME TAXES
     AND MINORITY INTEREST..............................         20,851          2,877         37,089           9,076
PROVISION FOR INCOME TAXES .............................         (7,502)          (356)       (13,184)         (2,055)
                                                             ----------     ----------     ----------      ----------
INCOME BEFORE MINORITY INTEREST.........................         13,349          2,521         23,905           7,021
MINORITY INTEREST EXPENSE, NET OF TAX...................           (145)          (588)          (708)         (1,326)
                                                             ----------     ----------     ----------      ----------
INCOME FROM CONTINUING
     OPERATIONS.........................................         13,204          1,933         23,197           5,695
LOSS FROM DISCONTINUED
     OPERATIONS, NET OF TAX.............................             --         (3,953)        (3,458)         (5,177)
                                                             ----------     ----------     ----------      ----------
NET INCOME (LOSS).......................................     $   13,204     $   (2,020)    $   19,739      $      518
                                                             ==========     ==========     ==========      ==========
BASIC EARNINGS (LOSS) PER SHARE:
     Income From Continuing Operations..................     $     0.12     $     0.02     $     0.21      $     0.06
     Loss From Discontinued Operations..................             --          (0.04)         (0.03)          (0.05)
                                                             ----------     ----------     ----------      ----------
NET INCOME (LOSS) PER SHARE.............................     $     0.12     $    (0.02)    $     0.18      $     0.01
                                                             ==========     ==========     ==========      ==========

DILUTED EARNINGS (LOSS) PER SHARE:
     Income From Continuing Operations..................     $     0.12     $     0.02     $     0.21      $     0.06
     Loss From Discontinued Operations..................             --          (0.04)         (0.03)          (0.05)
                                                             ----------     ----------     ----------      ----------
NET INCOME (LOSS) PER SHARE.............................     $     0.12     $    (0.02)    $     0.18      $     0.01
                                                             ==========     ==========     ==========      ==========
WEIGHTED AVERAGE SHARES OUTSTANDING:
     Basic..............................................        108,896         97,586        108,824          97,451
                                                             ==========     ==========     ==========      ==========
     Diluted............................................        112,905         99,430        112,111          98,718
                                                             ==========     ==========     ==========      ==========
</TABLE>


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


                                       2

<PAGE>   4

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                            SIX MONTHS
                                                                                           ENDED JUNE 30,
                                                                                ------------------------------------
                                                                                    2000                   1999
                                                                                -------------          -------------
<S>                                                                             <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income............................................................        $    19,739            $        518
  Adjustments to Reconcile Net Income to Net Cash
     Provided (Used) by Operating Activities:
     Depreciation and Amortization......................................             96,057                  79,351
     Loss from Discontinued Operations..................................              3,458                   5,177
     Minority Interest Expense, Net of Tax..............................                708                   1,326
     Deferred Income Tax Provision......................................             19,304                     685
     Provision for Uncollectible Accounts Receivable....................              1,907                   1,126
     Gain on Sales of Property, Plant and Equipment.....................             (5,534)                 (5,364)
     Change in Operating Assets and Liabilities, Net of Effects
       of Businesses Acquired...........................................           (175,580)                (68,939)
                                                                                -----------            ------------
       Net Cash Provided (Used) by Continuing Operations................            (39,941)                 13,880
       Net Cash Used by Discontinued Operations.........................            (13,332)                 (3,150)
                                                                                -----------            ------------
       Net Cash Provided (Used) by Operating Activities.................            (53,273)                 10,730
                                                                                -----------            ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of Businesses, Net of Cash Acquired.......................            (67,698)                (54,853)
  Capital Expenditures for Property, Plant and Equipment................            (86,684)                (77,065)
  Acquisitions and Capital Expenditures of
     Discontinued Operations............................................             (5,056)                (13,865)
  Proceeds from Sales of Property, Plant and Equipment..................             17,845                  13,727
  Proceeds from Sale and Leaseback of Equipment.........................             46,113                  83,503
                                                                                -----------            ------------
       Net Cash Used by Investing Activities............................            (95,480)                (48,553)
                                                                                -----------            ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings (Repayments) of Short-Term Debt, Net.......................           (103,060)                 99,069
  Repayments of Long-Term Debt, Net.....................................             (5,871)                 (1,042)
  Issuance of Zero Coupon Convertible Senior Debentures, Net............            491,868                      --
  Distribution to Minority Interest Holder..............................                 --                 (65,350)
  Proceeds from Exercise of Stock Options...............................              5,001                   1,329
  Acquisition of Treasury Stock.........................................             (2,045)                 (1,971)
  Other, Net............................................................                216                     408
                                                                                -----------            ------------
       Net Cash Provided by Financing Activities........................            386,109                  32,443
                                                                                -----------            ------------
NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS......................................................            237,356                  (5,380)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........................             44,361                  34,131
                                                                                -----------            ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..............................        $   281,717            $     28,751
                                                                                ===========            ============
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest Paid.........................................................        $    31,649            $     22,839
  Income Taxes Paid, Net of Refunds.....................................             10,220                   7,097
</TABLE>


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


                                       3

<PAGE>   5

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS                     SIX MONTHS
                                                                   ENDED JUNE 30,                  ENDED JUNE 30,
                                                             ---------------------------    -----------------------------
                                                                2000            1999            2000             1999
                                                             ------------    -----------    -------------    ------------
<S>                                                         <C>             <C>            <C>              <C>
Net Income (Loss)......................................      $   13,204      $   (2,020)    $   19,739       $      518
Other Comprehensive Income (Loss):
     Foreign Currency Translation Adjustment...........         (12,156)          8,963        (22,417)          (5,311)
                                                             ----------      ----------     ----------       ----------
Comprehensive Income (Loss)............................      $    1,048      $    6,943     $   (2,678)      $   (4,793)
                                                             ==========      ==========     ==========       ==========
</TABLE>

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


                                       4

<PAGE>   6

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.   GENERAL

     The consolidated condensed financial statements included herein are
unaudited; however, they include all adjustments of a normal recurring nature
which, in the opinion of management, are necessary to present fairly the
Consolidated Condensed Balance Sheet of Weatherford International, Inc. (the
"Company") at June 30, 2000, the Consolidated Condensed Statement of Income for
the three and six months ended June 30, 2000 and 1999, the Consolidated
Condensed Cash Flows for the six months ended June 30, 2000 and 1999 and the
Consolidated Statements of Comprehensive Income (Loss) for the three and six
months ended June 30, 2000 and 1999. Although the Company believes that the
disclosures in these financial statements are adequate to make the interim
information presented not misleading, certain information relating to the
Company's organization and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted in this Form 10-Q pursuant to such rules and
regulations. These financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 1999
and notes thereto included in the Company's Annual Report on Form 10-K. The
results of operations for the three and six month periods ended June 30, 2000
are not necessarily indicative of the results expected for the full year.

     In October 1999, the Board of Directors of the Company approved a plan to
distribute all of the outstanding shares of common stock of its wholly owned
subsidiary, Grant Prideco, Inc. (the "Spin-off"), to holders of the Company's
common stock, $1.00 par value ("Common Stock"). These shares were distributed
at the close of business on April 14, 2000 to stockholders of record as of
March 23, 2000. In connection with and prior to the Spin-off, the Company
transferred its drilling products businesses to Grant Prideco, Inc. ("Grant
Prideco"). As a result, the accompanying financial statements reflect the
operations of Grant Prideco as discontinued operations (See Note 5).

     Certain reclassifications of prior year balances have been made to conform
such amounts to corresponding 2000 classifications.

2.   ZERO COUPON CONVERTIBLE SENIOR DEBENTURES

     On June 30, 2000 the Company completed a private placement of $910.0
million face amount of its Zero Coupon Convertible Senior Debentures, due 2020
(the "Zero Coupon Debentures"). The Zero Coupon Debentures were issued at a
discount with an imputed 3% per annum interest rate. The Company received
proceeds of $491.9 million, net of debt issuance costs of $9.7 million. The
proceeds were used to pay down current debt of $228.7 million. Subsequent to
June 30, 2000, $85.3 million has been paid, with an additional $120.0 million
anticipated to be paid by October 30, 2000.

     Holders may convert the Zero Coupon Debentures into shares of Common Stock
at any time before maturity at a conversion rate of 9.9970 shares per $1,000
principal amount at maturity or initially at a price of $55.1425 per share of
Common Stock. The effective conversion price will increase as the accreted
value of the Zero Coupon Debentures increases. The Company may redeem any of
the Zero Coupon Debentures on or after June 30, 2005 at the accreted discounted
amount at the time of redemption. Holders may require the Company to repurchase
the Zero Coupon Debentures on June 30, 2005, June 30, 2010, and June 30, 2015
at the accreted discounted amount at the time of redemption.

                                       5

<PAGE>   7

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

3.   INVENTORIES

     Inventories by category are as follows:

<TABLE>
<CAPTION>
                                                                               JUNE 30,       DECEMBER 31,
                                                                                2000              1999
                                                                            -------------     -------------
                                                                                    (in thousands)
<S>                                                                        <C>                  <C>
     Raw materials, components and supplies............................     $   149,148         $  159,380
     Work in process...................................................          56,967             34,089
     Finished goods....................................................         213,609            171,138
                                                                            -----------         ----------
                                                                            $   419,724         $  364,607
                                                                            ===========         ==========
</TABLE>

     Work in process and finished goods inventories include the cost of
material, labor and plant overhead.

4.   BUSINESS COMBINATIONS

      On June 30, 2000, the Company acquired the underbalanced drilling product
line of Oiltools International Limited ("Oiltools") for approximately $20.0
million cash. The acquired business provides underbalanced drilling service in
the international markets, in particular, Asia Pacific and the Middle East. The
assets add to the capabilities of the Company's underbalanced drilling
operations and are being integrated into its Drilling and Intervention Services
Division. On April 20, 2000, the Company also acquired the sand screen product
lines of Oiltools for approximately $18.5 million. The principal sand screen
product lines include Stratapac(R), a highly engineered, patented screen used
in offshore, deviated and horizontal wells; Stratacoil(TM), a small diameter
premium screen used for thru tubing completions; and AccuWrap(TM), a premium
wire wrap screen. These product lines were acquired to enhance and complement
the Company's Completion Systems Division's existing Houston Well Screen(TM)
and Expandable Sand Screen(TM) product lines.

     On January 12, 2000, the Company's Compression Services Division acquired
Singapore-based Gas Services International Limited ("GSI") for a total of
approximately $20.2 million. The acquisition is intended to expand this
division's platform of full service capabilities in the Asia-Pacific and Middle
Eastern markets. GSI's main business units include compressor package rental,
maintenance and service, and floating production storage and offloading
platforms. In addition to Singapore, GSI has service locations in Indonesia and
the United Arab Emirates.

     The Company also effected various other smaller acquisitions during the
six months ended June 30, 2000 for total consideration of approximately $20.9
million, of which $16.1 million was paid in cash and assumed debt and $4.8
million was paid in the form of shares of Common Stock.

     On August 31, 1999, the Company completed the acquisition of Dailey
International Inc. ("Dailey") pursuant to a pre-negotiated plan of
reorganization in bankruptcy. Under the terms of the acquisition, the Company
issued a total of approximately 4.3 million shares of Common Stock to the
Dailey noteholders and stockholders. Because the Company held Senior Notes of
Dailey, which the Company acquired prior to the bankruptcy at a discount, the
total purchase price for Dailey, excluding assumed liabilities of Dailey that
were not impaired in the bankruptcy, was approximately $185.0 million.

     The acquisitions discussed above were accounted for using the purchase
method of accounting. Results of operations for acquisitions accounted for as
purchases are included in the accompanying consolidated condensed financial
statements since the date of acquisition. The purchase price was allocated to
the net assets acquired based upon their estimated fair market values at the
date of acquisition. The balances included in the Consolidated Condensed
Balance Sheets related to the acquisitions are based upon preliminary
information and are subject to change when final asset and liability valuations
are obtained. Material changes in the preliminary allocations are not
anticipated by management.


                                       6

<PAGE>   8

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


     The following presents the consolidated financial information for the
Company on a pro forma basis assuming the Dailey acquisition had occurred on
January 1, 1999. All other 1999 and 2000 acquisitions are not material
individually nor in the aggregate with same year acquisitions, therefore, pro
forma information is not presented. The pro forma information set forth below
is not necessarily indicative of the results that actually would have been
achieved had such transactions been consummated as of January 1, 1999, or that
may be achieved in the future.

<TABLE>
<CAPTION>
                                                                   THREE MONTHS                 SIX MONTHS
                                                                ENDED JUNE 30, 1999         ENDED JUNE 30, 1999
                                                              ------------------------    ------------------------
                                                                    (in thousands, except per share amounts)
<S>                                                                  <C>                        <C>
    Revenues.............................................             $  301,450                 $  594,605
    Loss from continuing operations......................                 (8,609)                   (13,688)
    Net loss.............................................                (12,562)                   (18,865)
    Basic loss per common share:
         Loss from continuing operations.................                  (0.08)                    (0.13)
         Net loss........................................                  (0.12)                    (0.19)
    Diluted loss per common share:
         Loss from continuing operations.................                  (0.08)                    (0.13)
         Net loss........................................                  (0.12)                    (0.19)
</TABLE>


5.   DISCONTINUED OPERATIONS

     In October 1999, the Board of Directors of the Company approved a plan to
spinoff Grant Prideco through a distribution by the Company to its stockholders
of one share of stock of Grant Prideco for each share of Common Stock held by
the Company's stockholders. The distribution was completed as of the close of
business on April 14, 2000 (the "Spin-off Date"). The distribution of the net
assets of discontinued operations and the related accumulated other
comprehensive loss is reflected in the accompanying Consolidated Condensed
Balance Sheets as an adjustment to Retained Earnings.
     The results of operations for Grant Prideco are reflected in the
accompanying Consolidated Condensed Statements of Income as Loss from
Discontinued Operations, Net of Taxes. Condensed results of Grant Prideco were
as follows:

<TABLE>
<CAPTION>
                                                              THREE MONTHS                   SIX MONTHS
                                                             ENDED JUNE 30,                ENDED JUNE 30,
                                                      ---------------------------    --------------------------
                                                           2000          1999             2000         1999
                                                      ------------  -------------    ------------  ------------
                                                                            (in thousands)
<S>                                                    <C>           <C>              <C>            <C>
    Revenues......................................     $  17,668     $   64,507       $  124,813     $  153,000
                                                      ----------     ----------       ----------     ----------

    Income (loss) before interest
         allocation and income taxes..............    $      184     $   (3,464)      $     (831)    $   (2,811)
    Interest allocation...........................            --         (1,813)          (2,500)        (3,625)
    (Provision) benefit for income taxes..........           (49)         1,324              888          1,259
                                                      ----------     ----------       ----------     ----------
    Net income (loss) before accrued costs........           135         (3,953)          (2,443)        (5,177)
    Accrued net income through distribution.......          (135)            --               --             --
    Spin-off related costs, net of taxes..........            --             --           (1,015)            --
                                                      ----------     ----------       ----------     ----------
    Net loss from discontinued operations,
         as reported..............................     $      --     $   (3,953)      $   (3,458)    $   (5,177)
                                                      ==========     ==========       ==========     ==========
</TABLE>


                                       7

<PAGE>   9

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


     In connection with the Spin-off, Grant Prideco issued an unsecured
subordinated note to the Company in the amount of $100.0 million. The $100.0
million obligation, which is classified as Other Assets on the accompanying
Consolidated Condensed Balance Sheets, bears interest at an annual rate equal
to 10.0%. Interest payments are due quarterly, and principal and all unpaid
interest is due no later than March 31, 2002. Under the terms of the note,
Grant Prideco is required to repay this note with the proceeds of any debt or
equity financing, excluding financing under a credit facility or any equity
issued in connection with a business combination. The indebtedness of Grant
Prideco to the Company is subordinated to the working capital obligations of
Grant Prideco to its banks.

     The Drilling and Intervention Services Division and Artificial Lift
Systems Division of the Company purchase drill pipe and other related products
from Grant Prideco. The purchases made prior to the Spin-off Date have been
eliminated in the accompanying consolidated condensed financial statements. The
purchases eliminated during the six months ended June 30, 2000 were $6.8
million, and for the three and six months ended June 30, 1999 were $1.5 million
and $7.5 million, respectively. There were no purchases for the period between
April 1, 2000 and April 14, 2000. These purchases represent Grant Prideco's
cost.

     The results from discontinued operations include a management fee charged
to Grant Prideco of $0.5 million for the six months ended June 30, 2000, and
$0.2 million and $0.5 million for the three and six months ended June 30, 1999,
respectively. There was no management fee for the period between April 1, 2000
and April 14, 2000. The fee is based on the time devoted to Grant Prideco for
accounting, tax, treasury and risk management services.

     Grant Prideco was charged $1.5 million and $2.9 million of costs related
to the Company's information systems function in the three and six months ended
June 30, 1999, respectively. There were no charges for the comparable periods
of 2000. Information systems charges were based on direct support provided,
equipment usage and number of system users.

     Agreements Between the Company and Grant Prideco

     In connection with the Spin-off, Grant Prideco and the Company entered
into a tax allocation agreement (the "Tax Allocation Agreement"). Under the
terms of the Tax Allocation Agreement, Grant Prideco is responsible for all
taxes and associated liabilities relating to the historical businesses of Grant
Prideco. The Tax Allocation Agreement also requires that any tax liabilities
associated with the Spin-off will be paid by Grant Prideco subject to certain
exceptions relating to changes in control of the Company. The Tax Allocation
Agreement further provides that in the event there is a tax liability
associated with the historical operations of Grant Prideco that is offset by a
tax benefit of the Company, the Company will apply the tax benefit against such
tax liability and will be reimbursed for the value of the tax benefit when and
as the Company would have been able to otherwise utilize that tax benefit for
its own businesses.

     The Company entered into a transition services agreement with Grant
Prideco for a period of one year from the Spin-off Date. Under the agreement,
the Company has agreed to provide certain services requested by Grant Prideco.
The fee for these services is based on a cost-plus 10% basis. Under this
agreement, transition services include accounting services, tax services,
finance services, employee benefit services, information systems services, risk
management services and may include any other similar services. Since the
Spin-off Date, the Company has charged Grant Prideco $0.1 million related to
such services.

     The Company has also entered into a preferred customer agreement with
Grant Prideco pursuant to which the Company agreed, for a three-year period, to
purchase at least 70% of its requirements of drill stem products from Grant
Prideco. The price for those products will be at a price not greater than that
which Grant Prideco sells to its best similarly situated customers.


                                       8

<PAGE>   10

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


6.   SHORT-TERM DEBT

     The Company's unsecured credit agreement provides for borrowings of up to
an aggregate of $250.0 million, consisting of a $200.0 million U.S. credit
facility and a $50.0 million Canadian credit facility. As of June 30, 2000, the
Company had $221.5 million available under this agreement. Amounts outstanding
under the facility accrue interest at the U.S. prime rate or a variable rate
based on LIBOR. A commitment fee ranging from 0.09% to 0.20% per annum,
depending on the senior unsecured credit ratings assigned by Standard and
Poor's and Moody's Investor Service to the Company, is payable quarterly on the
unused portion of the facility. The facility contains customary affirmative and
negative covenants, including a maximum debt to capitalization ratio, a minimum
interest coverage ratio, a limitation on liens and a limitation on asset
dispositions.

     The Company also engages in unsecured short-term borrowings with various
institutions pursuant to uncommitted facilities and bid note arrangements. At
June 30, 2000, the Company had $181.3 million in unsecured short-term
borrowings outstanding under these arrangements. The Company intends to repay
these borrowings on their maturity with the proceeds from the placement of the
Zero Coupon Debentures.

7.   SALE AND LEASEBACK OF EQUIPMENT

     The Compression Services Division has entered into various sale and
leaseback arrangements under which it has sold $285.9 million of compression
units and has a right to sell up to another $64.1 million of compression units.
Under these arrangements, legal title to the compression units are sold to
third parties and leased back to the division under a five-year operating lease
with a market-based purchase option.

     As of December 31, 1999, the Compression Services Division had sold
compressors under these arrangements having appraised values equal to the cash
received of $239.8 million. These sales resulted in a pretax deferred gain of
$77.3 million, classified as Deferred Income Taxes and Other on the accompanying
Consolidated Condensed Balance Sheets, which may be deferred until the end of
the lease. During the six months ended June 30, 2000, the Compression Services
Division sold additional compressors having an appraised value equal to the cash
received of $46.1 million. The sales resulted in an additional pretax deferred
gain of approximately $11.5 million.

     The Company has guaranteed certain of the obligations of the joint venture
with respect to the sale of $200.0 million of the compression units. The
remaining sales by the joint venture were done on a non-recourse basis to the
Company and recourse is limited solely to the assets of the joint venture.

     The following table provides future minimum lease payments (in thousands)
under the aforementioned lease as of June 30, 2000:

       Remainder of 2000................................ $    11,644
       2001.............................................      23,289
       2002.............................................      23,289
       2003.............................................      22,489
       2004.............................................       8,812
       2005.............................................       1,101
                                                         -----------
                                                         $    90,624
                                                         ===========


                                       9

<PAGE>   11

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


8.   EARNINGS PER SHARE

     Basic earnings per share is computed by dividing net income by the
weighted average number of shares of Common Stock outstanding during the
period. Diluted earnings per common share is computed by dividing net income by
the weighted average number of shares of Common Stock outstanding during the
period adjusted for the dilutive effect of the incremental shares that would
have been outstanding under the Company's stock option and restricted stock
plans. The effect of the Company's 5% Convertible Subordinated Preferred
Equivalent Debentures due 2027 (the "Debentures") and the Zero Coupon
Debentures on diluted earnings per share is anti-dilutive and thus is not
included in the calculation.


     The following reconciles basic and diluted weighted average shares
outstanding:

<TABLE>
<CAPTION>
                                                                     THREE MONTHS              SIX MONTHS
                                                                    ENDED JUNE 30,           ENDED JUNE 30,
                                                                -----------------------  -----------------------
                                                                   2000        1999        2000         1999
                                                                ----------- -----------  ----------  -----------
                                                                                (in thousands)
<S>                                                             <C>         <C>          <C>         <C>
     Basic weighted average shares outstanding................     108,896      97,586     108,824       97,451
     Dilutive effect of stock option and restricted
     stock plans..............................................       4,009       1,844       3,287        1,267
                                                                ---------   ----------  ----------    ---------
     Dilutive weighted average shares outstanding.............     112,905      99,430     112,111       98,718
                                                                ==========  ==========  ==========    =========
</TABLE>

     The number of shares under all option plans, as well as their exercise
prices, were adjusted so that the options immediately after the Spin-off had
equivalent economic terms to the options immediately before the Spin-off.

9.   SUPPLEMENTAL CASH FLOW INFORMATION

     The following summarizes investing activities relating to acquisitions
integrated into the Company's continuing operations for the periods shown:

<TABLE>
<CAPTION>
                                                                                          SIX MONTHS
                                                                                         ENDED JUNE 30,
                                                                                 -------------------------------
                                                                                     2000             1999
                                                                                 --------------   --------------
                                                                                         (in thousands)
<S>                                                                              <C>              <C>
      Fair value of assets, net of cash acquired...........................      $      34,294    $     289,931
      Goodwill.............................................................             64,443           59,348
      Total liabilities, including minority interest.......................            (26,200)        (280,334)
      Common stock issued..................................................             (4,839)         (14,092)
                                                                                 -------------    -------------
      Cash consideration, net of cash acquired.............................      $      67,698    $      54,853
                                                                                 =============    =============
</TABLE>

10.  SEGMENT INFORMATION

     Business Segments

     The Company is 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 gas industry.
The Company operates in virtually every oil and gas exploration and production
region in the world. The Company currently divides its business into four
separate segments: drilling and intervention services, completion systems,
artificial lift systems and compression services.

     The Company's drilling and intervention services segment provides a wide
range of oilfield products and services, including fishing and rental services,
well installation services, cementing products and underbalanced drilling and
specialty pipeline services.


                                      10

<PAGE>   12
                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


     The Company's completion systems segment provides completion products and
systems including packers, sand control, flow control, liner hangers,
inflatable packers and intelligent well technology.

     The Company's artificial lift systems segment designs, manufactures, sells
and services a complete line of artificial lift equipment, including
progressing cavity pumps, reciprocating rod lift, gas lift, electrical
submersible pumps and hydraulic lift. This segment also offers well
optimization and remote monitoring and control services.

     The Company's compression services segment packages, rents and sells parts
and services for gas compressor units over a broad horsepower range.

     Financial information by industry segment for each of the three and six
months ended June 30, 2000 and June 30, 1999 is summarized below. The
accounting policies of the segments are the same as those of the Company.

<TABLE>
<CAPTION>
                                                           THREE MONTHS                        SIX MONTHS
                                                           ENDED JUNE 30,                     ENDED JUNE 30,
                                                     ----------------------------    ---------------------------
                                                        2000            1999            2000            1999
                                                     ------------   -------------    ------------   ------------
                                                                           (in thousands)
<S>                                                  <C>            <C>             <C>              <C>
    Revenues from unaffiliated customers
         Drilling and Intervention Services......    $    206,748   $    136,730    $    394,277     $    279,364
         Completion Systems......................          46,544         23,681          94,165           46,334
         Artificial Lift Systems.................         104,235         62,227         204,452          119,698
         Compression Services....................          64,321         55,950         124,336           98,533
                                                     ------------   ------------    ------------     ------------
                                                     $    421,848   $    278,588    $    817,230     $    543,929
                                                     ============   ============    ============     ============

    EBITDA (a)
         Drilling and Intervention Services......    $     63,793   $     39,019    $    120,646     $     85,047
         Completion Systems......................           1,751         (3,475)          3,087           (6,190)
         Artificial Lift Systems.................          15,115          7,506          29,287           11,497
         Compression Services....................          10,130         13,822          21,683           26,406
         Corporate...............................          (8,261)        (6,484)        (16,088)         (11,693)
                                                     ------------   ------------    ------------     ------------
                                                     $     82,528   $     50,388    $    158,615     $    105,067
                                                     ============   ============    ============     ============

    Depreciation and amortization
         Drilling and Intervention Services......    $     24,983   $     23,509    $     50,992     $     47,365
         Completion Systems......................           6,146          2,283          12,597            4,710
         Artificial Lift Systems.................           6,166          4,835          12,040            9,670
         Compression Services....................           9,521          9,166          18,850           16,734
         Corporate...............................             827            509           1,578              872
                                                     ------------   ------------    ------------     ------------
                                                     $     47,643   $     40,302    $     96,057     $     79,351
                                                     ============   ============    ============     ============
    Operating income (loss)
         Drilling and Intervention Services......    $     38,810   $     15,510    $     69,654     $     37,682
         Completion Systems......................          (4,395)        (5,758)         (9,510)         (10,900)
         Artificial Lift Systems.................           8,949          2,671          17,247            1,827
         Compression Services....................             609          4,656           2,833            9,672
         Corporate...............................          (9,088)        (6,993)        (17,666)         (12,565)
                                                     ------------   ------------    ------------     ------------
                                                     $     34,885   $     10,086    $     62,558     $     25,716
                                                     ============   ============    ============     ============
</TABLE>

(a)  The Company evaluates performance and allocates resources based on EBITDA,
     which is calculated as operating income adding back depreciation and
     amortization. Calculations of EBITDA should not be viewed as a substitute
     to calculations under GAAP, in particular cash flows from operations,
     operating income, income from continuing operations and net income. In
     addition, EBITDA calculations by one company may not be comparable to
     another company.


                                      11

<PAGE>   13

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


     As of June 30, 2000, total assets were $1,147.9 million for Drilling and
Intervention Services, $461.7 million for Completion Systems, $660.7 million
for Artificial Lift Systems, $689.9 million for Compression Services and $495.8
million for Corporate.

     As of December 31, 1999, total assets, excluding net assets of
discontinued operations, were $1,117.9 million for Drilling and Intervention
Services, $424.5 million for Completion Systems, $615.9 million for Artificial
Lift Systems, $662.7 million for Compression Services and $138.9 million for
Corporate.

11.  RECENT ACCOUNTING PRONOUNCEMENTS

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB No. 101"), Revenue Recognition in
Financial Statements, to provide guidance on the recognition, presentation and
disclosure of revenue in financial statements. In March 2000, the SEC issued
SAB 101A, which delayed the implementation date of SAB 101 until no later than
the fourth quarter of fiscal years beginning after December 15, 1999, with an
effective date of January 1, 2000. The Company is currently evaluating the
impact of SAB No. 101, but does not anticipate that application of this bulletin
will have a material impact on its financial position or results of operations.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999 the FASB issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of SFAS No. 133, amending the effective date of SFAS No. 133 to
years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No.
138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, amending accounting and reporting standards of SFAS No. 133 for
certain derivative instruments and certain hedging activities. The Company is
currently evaluating the impact of SFAS No. 133 on its consolidated condensed
financial statements.

12.  SUBSEQUENT EVENTS

     In June 2000, the Company entered into an agreement to acquire Alpine Oil
Services Corporation, headquartered in Calgary, Alberta, Canada for
approximately $55.0 million of our Common Stock. This acquisition closed on
August 10, 2000 and extends the Company's underbalanced drilling capabilities
worldwide, adds new completion technology capabilities to its Completion
Systems division and further expands the Company's offering of products and
services in Canada.


                                      12


<PAGE>   14

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

GENERAL

     Our business is conducted through four business segments: (1) Drilling and
Intervention Services, (2) Completion Systems, (3) Artificial Lift Systems and
(4) Compression Services. We also have historically operated a Drilling Products
segment that manufactured and sold drill pipe and other drill stem products and
premium tubulars and connections. The operations of this segment were conducted
through our Grant Prideco Division.

     On April 14, 2000, we distributed to our stockholders all of the
outstanding shares of Grant Prideco, Inc., which at the time of the distribution
held substantially all of the operating assets used in our Drilling Products
segment. As a result of this distribution, our Grant Prideco Division is
presented as a discontinued operation in the accompanying financial statements.

     The following is a discussion of our results of operations for the three
and six months ended June 30, 2000 and 1999. This discussion should be read in
conjunction with our financial statements that are included with this report and
our financial statements and related Management's Discussion and Analysis of
Financial Condition and Results of Operations for the year ended December 31,
1999 included in our Annual Report on Form 10-K.

     Our discussion of our results and financial condition 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 that we consider reasonable. For information about these
assumptions, you should refer to our section entitled "Forward-Looking
Statements."

MARKET TRENDS AND OUTLOOK

     Our businesses serve the oil and gas industry. All of our businesses are
affected by changes in the worldwide demand and the price of oil and natural
gas. Certain of our products and services, such as our fishing and rental
services, our well installation services and our well completion services, are
dependent on the level of exploration and development activity and particularly
the completion phase of a well. Other products and services, such as our
artificial lift systems and compression services, are dependent on oil and gas
production activity. We currently estimate that around 50% of our continuing
operations are primarily reliant on drilling activity, with the remainder
focused on production and reservoir enhancement activity.

     In 1999, the price of oil hit a low of $11.07 per barrel and the North
American and international rig counts reached historical lows of 534 and 556,
respectively. During the second half of 1999, the price of oil increased due to
demand and supply imbalances and members of the Organization of Petroleum
Exporting Countries reducing production in compliance with production quotas.
These conditions have resulted in world oil prices increasing and trading in the
$25 to $35 a barrel range.

     The following chart sets forth certain historical statistics that are
reflective of the market conditions in which we operate:

<TABLE>
<CAPTION>
                                                     HENRY HUB     NORTH AMERICAN     INTERNATIONAL
                                   WTI OIL (1)        GAS (2)       RIG COUNT (3)      RIG COUNT(3)
                                   -----------       ---------     ---------------    --------------

<S>                                <C>               <C>                 <C>                <C>
     June 30, 2000.............    $  32.50          $  4.476            1,154              642
     December 31, 1999.........       25.60             2.329            1,177              575
     June 30, 1999.............       17.89             2.394              724              597
</TABLE>

(1) Price per barrel of West Texas Intermediate crude oil as of June 30 and
    December 31 - Source: Applied Reasoning, Inc.

(2) Price per MM/BTU as of June 30 and December 31 - Source:  Oil World

(3) Average rig count for the applicable month - Source:  Baker Hughes Rig Count



                                       13
<PAGE>   15

     Our Artificial Lift Systems Division, which tracks very closely the United
States and Canadian rig counts, was the first to benefit from the price
improvements as many production projects were reinstated in light of the higher
prices of oil, in particular heavy oil in Canada. Natural gas activity in Canada
also increased significantly due to new pipelines and higher demand. Our
Drilling and Intervention Services Division was the next to benefit from the
improved activity in North America, in particular in its fishing and rental and
cementation businesses. Our international activity, which generally lags North
American activity by around six months, has started to improve in the second
quarter of 2000.

     Throughout 2000, we have experienced steady improvements in the demand for
our products and services. As we enter the second half of the year, we expect
these improvements to be even stronger due to the beginning of a market recovery
in the markets outside North America. In general, we expect the recovery to
affect our businesses as follows:

     DRILLING AND INTERVENTION SERVICES. This division is expected to see
quarter on quarter improvements throughout the remainder of the year in both
revenue and profitability. This division should continue to see a strong
contribution from the North American market throughout the second half of the
year as the rig count and drilling activity increases. During the second quarter
we saw the beginning of improvements in our international businesses and expect
these improvements to slowly increase throughout the remainder of 2000. Results
for the full year will be heavily dependent on the continued recovery in the
North American markets and the timing and strength of the recovery outside North
America.

     COMPLETION SYSTEMS. Our Completion Systems Division is expected to continue
to experience revenue growth throughout the year as it increases its sales and
service infrastructure and manufacturing capability. The profitability of this
division will be dependent on increased drilling activity, particularly in the
international markets, and the division's ability to successfully market its new
products. In addition, we expect that results will be impacted during the
remainder of the year from relatively high selling, general and administrative
expenses as a percentage of revenues while the division seeks to increase its
revenue base and positions itself for growth in 2001 by expanding its sales,
service and engineering operations worldwide. Based on our assumption that the
market positions and revenues for the division will continue to improve, we
currently expect that this division will begin realizing an operating profit
sometime in the second half of the year.

     ARTIFICIAL LIFT SYSTEMS. We expect that our Artificial Lift Systems
Division will continue to see improvements on a year on year basis in North
American revenues, as well as improvements in margins as a result of cost
containment, pricing and higher throughput in our plants. Results for the
remainder of the year will be heavily dependent on the United States and
Canadian rig counts, oil workover activity and heavy oil production in Canada.

     COMPRESSION SERVICES. Our Compression Services Division, which is less
affected by day-to-day market factors, experienced a decline in operating profit
and profitability in the first half of 2000 as we implemented a reorganization
of its operations. This division was also affected by some start-up and
administrative costs associated with the expansion of its operations outside of
North America, in particular Asia and the Middle East. With this division's
reorganization substantially complete, we believe it is now positioned for
renewed growth. We expect the benefits from this reorganization and the
division's international operations to begin to be realized in the second half
of this year. Ultimate growth will be dependent on new contracts added to the
operations and the division's ability to increase its market share and margins.

     Overall, the level of market improvements for our businesses in the
remainder of 2000 will be heavily dependent on the North American and
international rig counts and whether recent commodity price increases will
result in higher customer spending. Recent improvements in North America may be
partially offset by a slower recovery in the international markets. Although we
believe that the activity levels in our industry are in the early stages of
recovery, the extent of the recovery is difficult to predict in light of the
volatile nature of our business. In particular, the recovery to date has not
been linear and has varied from region to region and month to month as new
projects are added and rigs deployed. We expect this trend to continue through
the remainder of the year. In addition, the strength of the recovery will be
dependent on many external factors such as compliance with OPEC quotas, world
economic conditions and weather conditions. The extreme volatility of our
markets makes predictions regarding future results difficult.



                                       14
<PAGE>   16

RESULTS OF CONTINUING OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1999

     The following charts contain selected financial data comparing our results
for the three months ended June 30, 2000 and June 30, 1999:

      COMPARATIVE FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                         JUNE 30,
                                                                 --------------------------
                                                                   2000              1999
                                                                 --------          --------
                                                                   (in thousands, except
                                                                    percentages and per
                                                                        share data)
<S>                                                              <C>               <C>
      Revenues ................................................  $421,848          $278,588
      Gross Profit ............................................   127,378            76,834
      Gross Profit % ..........................................      30.2%             27.6%
      Selling, General and Administrative
        Attributable to Segments ..............................  $ 84,211          $ 60,191
      Corporate General and Administrative ....................     9,231             6,993
      Operating Income ........................................    34,885            10,086
      Income from Continuing Operations .......................    13,204             1,933
      Income from Continuing Operations Excluding
        Goodwill Amortization, Net of Taxes ...................    21,615             6,222
      EBITDA (a) ..............................................    82,528            50,388
      EBITDAR (b) .............................................    87,659            52,509
      Income per Diluted Share from Continuing Operations .....      0.12              0.02
      Income per Diluted Share from Continuing Operations
        Excluding Goodwill Amortization, Net of Taxes .........      0.19              0.06
</TABLE>

(a)   EBITDA is calculated by taking operating income and adding back
      depreciation and amortization. We have included an EBITDA calculation
      here because when we look at the performance of our businesses, we give
      consideration to their EBITDA. Calculations of EBITDA should not be
      viewed as a substitute to calculations under GAAP, in particular cash
      flows from operations, operating income, income from continuing
      operations and net income. In addition, EBITDA calculations by one
      company may not be comparable to another company.

(b)   EBITDAR is calculated by adding our Compression Services Division's lease
      expenses from the compressor leases, that are subject to its sale
      leaseback arrangements to our EBITDA. We have included the EBITDAR for
      the informational purposes because this is a financial measure under
      which other public compression companies are analyzed by the investment
      community. In addition, EBITDAR calculations by one company may not be
      comparable to another company.


      SALES BY GEOGRAPHIC REGION

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                         JUNE 30,
                                                                 --------------------------
                                                                   2000              1999
                                                                 --------          --------
<S>                                                                <C>               <C>
     REGION: (a)

     U.S..........................................................  47%              47%
     Canada.......................................................  19%              16%
     Europe.......................................................   9%              12%
     Latin America................................................   9%               9%
     Africa.......................................................   5%               7%
     Middle East..................................................   3%               4%
     Asia  .......................................................   8%               5%
                                                                   ----             ----
         Total.................................................... 100%             100%
                                                                   ====             ====
</TABLE>

                                       15
<PAGE>   17

(a)  Sales are based on the region of origination and do not reflect sales by
     ultimate destination.

     Our results for the three months ended June 30, 2000 reflected the improved
market conditions in which we were operating. These conditions had the following
effects on our results:

  o  Second quarter 2000 consolidated revenues improved 51.4% over the second
     quarter 1999 as a result of improved North American revenues, especially in
     the United States, and the impact of our late 1999 acquisitions. Our second
     quarter 2000 revenues in North America were $98.4 million higher than they
     were in the second quarter of 1999. We also saw the start of the
     international market recovery, with revenues outside North America
     increasing 44.0% from the extremely low levels experienced in the second
     quarter of 1999.

  o  Our gross profit percentage increased 9.4% from the second quarter of 1999
     to the second quarter of 2000. Improved margins reflect the higher revenue
     base and improved efficiencies.

  o  Selling, general and administrative expenses decreased as a percentage of
     revenues from 24.1% in the second quarter of 1999 to 22.2% in the second
     quarter of 2000. The decrease primarily reflects a higher revenue base,
     offset by a $5.8 million increase in goodwill and intangible amortization
     primarily associated with acquisitions in late 1999.

  o  Operating income increased 245.9% from the second quarter of 1999 due to
     improved market conditions and our efforts to reduce costs and improve
     efficiencies during the industry downturn. The acquisitions made by us late
     in the third quarter 1999 also contributed to the increase in operating
     income.

  o  Our effective tax rate for the second quarter of 2000 was 36.0%, as
     compared to 12.4% for the second quarter 1999, due to the mix between
     foreign and U.S. tax attributes for 2000 and the low levels of income last
     year.

  o  Our operating income as a percentage of revenues was 8.3% compared to 3.6%
     in the second quarter of 1999.

  o  Our EBITDA as a percentage of revenues was 19.6% in the second quarter of
     2000 compared to 18.1% in the second quarter of 1999.

  o  We saw a 6.7% increase in revenues, a 26.1% increase in operating income
     and a 8.5% increase in EBITDA compared to the first quarter of 2000 due
     primarily to increased activity. These gains were realized notwithstanding
     declines in three of our divisions' Canadian revenues, operating income and
     EBITDA associated with the seasonal decline in activity in Canada in the
     second quarter.

  SEGMENT RESULTS

     DRILLING AND INTERVENTION SERVICES

     Our Drilling and Intervention Services Division experienced improvements in
revenue and operating income as the increase in the North American rig count
positively impacted the demand for its products and services, particularly in
the United States. The initial signs of recovery for the international markets
also contributed to the growth in the second quarter for this division. Our
Drilling and Intervention Services Division's revenue and operating income were
positively impacted by its 1999 acquisitions, including Dailey International and
Williams Tool.

     Within our Drilling and Intervention Services Division, all of the product
lines reported gains in revenues. Our fishing and rental and cementation lines
showed the greatest improvements, due to stronger demand in North America.


                                       16
<PAGE>   18

     The following chart sets forth data regarding the results of our Drilling
and Intervention Services Division for the second quarters of 2000 and 1999:

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                    JUNE 30,
                                                           ---------------------------
                                                              2000             1999
                                                           ---------         ---------
                                                                 (in thousands,
                                                               except percentages)

<S>                                                        <C>               <C>
     Revenues...........................................   $ 206,748         $ 136,730
     Gross Profit.......................................      69,272            37,323
     Gross Profit %.....................................        33.5%             27.3%
     Selling, General and Administrative................    $ 31,268         $  22,249
     Operating Income...................................      38,810            15,510
     EBITDA.............................................      63,793            39,019
 </TABLE>

     Other material items affecting the results of our Drilling and Intervention
Services Division for the second quarter of 2000 compared to the second quarter
of 1999 were:

  o  Our North American revenues for the second quarter of 2000 improved by
     106.5% over the comparable period of 1999. Acquisitions completed in the
     latter half of 1999 and an increase in the North American rig count
     contributed to these improvements. Our international revenues, excluding
     Canada, increased by 11.4% from the second quarter of 1999 reflecting the
     international rig count improvement. The most significant revenue increase
     occurred in Europe where revenues increased 10.9% from prior year levels.

  o  Selling, general and administrative expenses decreased as a percentage of
     revenues from 16.3% in the second quarter of 1999 to 15.1% in the second
     quarter of 2000. The decrease primarily reflects a higher revenue base
     partially offset by higher employee costs and an increase of $2.2 million
     in goodwill and intangible amortization expense.

  o  Operating income increased $23.3 million in the second quarter of 2000 as
     compared to the second quarter of 1999 primarily due to improved market
     conditions in North America and the impact of 1999 acquisitions.

  o  United States activity was the biggest contributor to the earnings of our
     Drilling and Intervention Services Division for the quarter, with the
     United States having contributed around 49.5% of the division's revenues
     and 45.6% of its operating profits. Europe also contributed around 12.5% of
     the division's revenues and 13.4% of its operating profits.

  o  Our Drilling and Intervention Services Division reported the following
     gains in revenues, operating income and EBITDA in the second quarter 2000
     as compared to the first quarter 2000 (in thousands, except percentages):

<TABLE>
<CAPTION>
<S>                                                        <C>                  <C>
     Revenues............................................  $  19,219            10.3%
     Operating Income.....................................     7,966            25.8
     EBITDA...............................................     6,940            12.2
</TABLE>

     COMPLETION SYSTEMS

     Our Completion Systems Division has shown steady improvements since the
first quarter of 1999. We significantly changed the composition of this division
in 1999 through our acquisitions of Petroline Wellsystems Limited and Cardium
Tool Services. These acquisitions, together with a major expansion of our Nodeco
liner hanger product line into the United States in 1999 and our acquisition of
the Stratapac(R) and Stratacoil(TM) screen lines earlier this year, have
expanded our businesses into higher margin premium completion markets worldwide
and have added sand control and flow control to our completion product and
service offerings.

     Our Completion Systems Division's revenues were slightly down from the
first quarter of 2000. This decline was mostly attributable to the impact of the
'spring breakup' in Canada and disruptions in manufacturing due to a relocation
of two of our manufacturing facilities in Europe. The transfer of manufacturing
operations between locations in this Division is continuing and is expected to
have some impact on costs and production in the third quarter. The manufacturing
change is designed to reduce costs, improve efficiencies and expand production
from our European liner hanger and flow control operations by more than 50%. We
have also recently completed the first phase of a manufacturing expansion of our
expandable sand control operations that is expected to increase capacity by more
than five times.



                                       17
<PAGE>   19

     The Completion Systems Division continues to show signs of improvement,
most notably in the United States where revenues were up 49.8% from the first
quarter of 1999 and Asia where revenues were up 29.9% from the first quarter of
2000 and 417.7% from the second quarter of 1999. Sales in Europe are also
beginning to improve.

     The following chart sets forth data regarding the results of our Completion
Systems Division for the second quarters of 2000 and 1999:

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                    JUNE 30,
                                                            -------------------------
                                                               2000           1999
                                                            ---------      ----------
                                                              (in thousands, except
                                                                  percentages)
<S>                                                         <C>            <C>
     Revenues............................................   $  46,544      $   23,681
     Gross Profit........................................       9,288           2,460
     Gross Profit %......................................        20.0%          10.4%
     Selling, General and Administrative.................   $  13,683      $    8,218
     Operating Loss......................................      (4,395)         (5,758)
     EBITDA..............................................       1,751          (3,475)
 </TABLE>

     Other material items affecting the results of our Completion Systems
Division for the second quarter of 2000 compared to second quarter of 1999 were:

  o  Revenues nearly doubled in the second quarter of 2000 as compared to the
     second quarter of 1999. This improvement was mostly seen in the packer and
     liner hangers product lines as well as from sales of expandable completion
     products and flow control products added through our acquisition of
     Petroline Well Services in September 1999.

  o  Gross profit as a percentage of revenues increased 92.3% primarily due to
     higher gross margin percentages from our 1999 acquisitions and improved
     manufacturing efficiencies.

  o  Selling, general and administrative expenses as a percentage of revenues
     decreased from 34.7% in the second quarter of 1999 to 29.4% in the same
     period in 2000. The decrease is primarily due to the higher revenue base,
     partially offset by an increase of $2.7 million in goodwill and intangible
     amortization.

  o  Sales of our sand screen product line nearly doubled in the second quarter
     of 2000 compared to the first quarter of 2000 due to improved market
     conditions and our recent addition of the Stratapac(R) and Stratacoil(TM)
     lines to our offering of sand control products.

  o  Our research and development expenses for our Completion Services Division
     were approximately $2.4 million, or 5.2% of sales during the three months
     ended June 30, 2000. Goodwill and intangible amortization for the quarter
     was $3.4 million or 7.3% of revenues. These two items of expense are
     expected to be relatively flat for the remainder of the year and decline
     as a percentage of revenues as revenues increase.

     ARTIFICIAL LIFT SYSTEMS

     Our Artificial Lift Division continued to show strong growth in the second
quarter of 2000. Despite the 'spring breakup' in Canada, our revenues in this
division remained relatively flat in North America compared to the first quarter
of 2000. We had expected revenues to be down in the second quarter due to the
significance the Canadian market has on this division, approximately 50% of its
revenues, but this division was able to benefit from Canadian workover-related
drilling and the increased activity in the United States. International
revenues, excluding Canada, increased $3.6 million to $14.6 million from the
first quarter of 2000 due to a 40.5% improvement in Latin America, primarily
Mexico and Argentina.

     Looking forward to the third quarter we expect that revenues in our
Artificial Lift Systems Division will continue to benefit from the recovery in
North America and the impact of price increases initiated earlier this year.
Growth for the division will be heavily dependent on the extent and timing of
increases in oil drilling and workover activity in North America, as well as the
growth in South America.


                                       18
<PAGE>   20

     The following chart sets forth data regarding the results of our Artificial
Lift Systems Division for the second quarters of 2000 and 1999:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED
                                                                  JUNE 30,
                                                          -------------------------
                                                             2000           1999
                                                          ----------      ---------
                                                            (in thousands, except
                                                                 percentages)
<S>                                                       <C>              <C>
    Revenues............................................  $  104,235      $  62,227
    Gross Profit........................................      36,502         23,757
    Gross Profit %......................................        35.0%          38.2%
    Selling, General and Administrative.................  $   27,553      $  21,086
    Operating Income ...................................       8,949          2,671
    EBITDA..............................................      15,115          7,506
</TABLE>

     Other material items affecting the results of our Artificial Lift Systems
Division as reflected above for the second quarter of 2000 compared to the
second quarter of 1999 were:

  o  The second quarter of 2000 experienced an increase in revenues of 67.5%
     compared to the second quarter of 1999 primarily as a result of recent
     improvements in North American markets. The most significant improvement
     was in Canada where revenues were up 94.6% from second quarter 1999 levels.

  o  Gross profit as a percentage of revenues decreased from the comparable
     period in 1999 primarily due to product mix differences.

  o  Selling, general and administrative expenses decreased as a percentage of
     revenues from 33.9% in the second quarter of 1999 to 26.4% in the second
     quarter of 2000 due to cost reductions previously implemented and a higher
     revenue base.

  o  Operating income as a percentage of revenues improved to 8.6% for the
     second quarter of 2000 as compared to 4.3% for the second quarter of 1999
     due to cost reductions and the higher revenue base.

  o  EBITDA as a percentage of revenues increased to 14.5% in the second quarter
     of 2000 from 14.1% in the first quarter of 2000 and 12.1% in the second
     quarter of 1999. The improvement reflected the impact of higher revenues
     and lower overhead costs.

     COMPRESSION SERVICES

     The Compression Services Division reported revenues of $64.3 million for
the quarter compared to $56.0 million for the second quarter of 1999. Operating
income, however, declined to $0.6 million in the second quarter of 2000 from
$4.7 million in the second quarter of 1999 due to lower margin sales, higher
compressor lease and other costs and the impact of a reorganization within the
division. During the second quarter, this division substantially completed that
reorganization that we initiated in the first quarter of this year. The
reorganization included the termination of employment of approximately 75
employees, a change in pricing of fabricated compressors and a restructuring of
packaging operations that has reallocated functions among the division's three
fabrication facilities to reduce costs and increase efficiencies. Cost reduction
activities will be ongoing throughout the third and fourth quarters.



                                       19
<PAGE>   21

     The following chart sets forth data regarding the results of our
Compression Services Division for the second quarters of 2000 and 1999:

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                    JUNE 30,
                                                           ---------------------------
                                                              2000              1999
                                                           ---------         ---------
                                                              (in thousands, except
                                                                   percentages)
<S>                                                        <C>               <C>
    Revenues.............................................. $  64,321         $  55,950
    Gross Profit..........................................    12,316            13,294
    Gross Profit %........................................      19.1%             23.8%
    Selling, General and Administrative................... $  11,707         $   8,638
    Operating Income......................................       609             4,656
    EBITDA................................................    10,130            13,822
    Lease Expense.........................................     5,131             2,121
    EBITDAR ..............................................    15,261            15,943
    Minority Interest, Net of Taxes.......................      (152)             (915)
</TABLE>

     Other material items affecting the results of our Compression Services
Division for the second quarter of 2000 as compared to the comparable period in
1999 were:

  o  Revenues increased 15.0% from the second quarter of 1999. This increase is
     attributable to increased revenues in Latin America, due to our YPF
     compression contract, and in Asia, due to our January 2000 acquisition of
     GSI.

  o  Gross profit as a percentage of revenues decreased 19.7%. A contributing
     factor to the decrease was the impact of contracts bid at lower margins
     prior to our changes in manufacturing and pricing requirements. Another
     contributing factor to lower gross margins was higher lease expenses due to
     an increased number of compressors having been sold and subject to the
     sales leaseback arrangements described below. At June 30, 2000, the
     Compression Services Division had $285.9 million in compressors subject to
     these arrangements compared to $184.9 million at June 30, 1999. Quarterly
     lease payments for the compressors was $5.1 million for the second quarter
     of 2000 compared to $2.1 million for the second quarter of 1999.

  o  The increase in selling, general and administrative expenses reflects costs
     associated with increased market activity and costs related to the
     reorganization of this division that was essentially complete by the end of
     the second quarter. International expansion, including Latin America and
     Asia, and higher goodwill amortization of $0.4 million also contributed to
     the increase in selling, general and administrative expense.

  o  This division recently closed the purchase of Cooper Cameron's parts and
     services business in Canada. This acquisition expands our parts and
     services business and compliments our existing packaging operations in
     Canada.

  o  During the first quarter, we acquired GSI and began start-up operations for
     the Middle East. The selling, general and administrative costs associated
     with GSI for the three months ended June 30, 2000 were approximately $1.3
     million, with little profit attributable to that unit due to the start-up
     nature of its operations. GSI, however, commenced operations in Oman in the
     second quarter and has a large construction contract slated to begin later
     in the third quarter.




                                       20
<PAGE>   22



SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1999

      The following charts contain selected financial data comparing our results
for the six months ended June 30, 2000 and June 30, 1999:

      COMPARATIVE FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                      SIX MONTHS ENDED
                                                                          JUNE 30,
                                                                ------------------------------
                                                                  2000                 1999
                                                                ---------           ----------
                                                                   (in thousands, except
                                                               percentages and per share data)
<S>                                                             <C>                 <C>
      Revenues ...............................................  $ 817,230           $  543,929
      Gross Profit ...........................................    241,768              159,221
      Gross Profit % .........................................       29.6%                29.3%
      Selling, General and Administrative
         Attributable to Segments ............................  $ 163,184           $  121,830
      Corporate General and Administrative ...................     17,809               12,565
      Operating Income .......................................     62,558               25,716
      Income from Continuing Operations ......................     23,197                5,695
      Income from Continuing Operations Excluding
         Goodwill Amortization, Net of Taxes .................     39,650               14,258
      EBITDA .................................................    158,615              105,067
      EBITDAR ................................................    168,243              108,783
      Income per Diluted Share from Continuing Operations ....       0.21                 0.06
      Income per Diluted Share from Continuing Operations
         Excluding Goodwill Amortization, Net of Taxes .......       0.35                 0.14
</TABLE>

      SALES BY GEOGRAPHIC REGION


<TABLE>
<CAPTION>
                                                                      SIX MONTHS ENDED
                                                                          JUNE 30,
                                                                ------------------------------
                                                                  2000                 1999
                                                                ---------           ----------
<S>                                                             <C>                 <C>
      REGION: (a)

      U.S....................................................      46%                  45%
      Canada.................................................      21%                  16%
      Europe.................................................       9%                  13%
      Latin America..........................................       9%                   9%
      Africa.................................................       5%                   8%
      Middle East............................................       3%                   4%
      Asia  .................................................       7%                   5%
                                                                  ----                 ----
          Total..............................................     100%                 100%
                                                                  ====                 ====
</TABLE>

(a)  Sales are based on the region of origination and do not reflect sales by
     ultimate destination.

     Our results for the six months ended June 30, 2000 reflected the improved
market conditions in which we were operating. These conditions had the following
effects on our results:

  o  Consolidated revenues for the first six months of 2000 improved 50.2% over
     the same period of 1999 as a result of improved North American revenues and
     the impact of our 1999 acquisitions. For this period of 2000, revenues in
     North America were $212.8 million higher than they were in the comparable
     period of 1999. International revenues increased 28.8% from 1999 levels for
     these periods.


                                       21
<PAGE>   23

  o  Selling, general and administrative expenses decreased as a percentage of
     revenues from 24.7% in the first six months of 1999 to 22.1% for the same
     period of 2000. The decrease primarily reflects a higher revenue base,
     offset by the initial costs relating to new product lines and businesses,
     and a $11.0 million increase in goodwill and intangible amortization.

  o  Operating income increased 143.3% from the first half of 1999 due to
     improved market conditions and our efforts to reduce costs and improve
     efficiencies during the recent industry downturn. The acquisitions made by
     us late in the third quarter 1999 also contributed to the increase in
     operating income.

  o  Our effective tax rate for the six months ended June 30, 2000 was 35.5%, as
     compared to 22.6% for the same period of 1999, due to the change in the mix
     between foreign and U.S. tax attributes and lower income levels in 1999.

  SEGMENT RESULTS

     DRILLING AND INTERVENTION SERVICES

     Our Drilling and Intervention Services Division experienced improvements in
revenue and operating income as the increase in the North American rig count
positively impacted the demand for its products and services. Demand in
international markets was at historical lows during 1999. The decline in demand
carried into the first quarter of 2000, resulting in pricing pressures and
reduced volumes. This decline in demand in our international markets has started
to show the initial signs of recovery. Our Drilling and Intervention Services
Division's revenue and operating income were positively impacted by its 1999
acquisitions, including Dailey and Williams Tool.

     The following chart sets forth data regarding the results of our Drilling
and Intervention Services Division for the six months ended June 30, 2000 and
1999:

<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED
                                                                        JUNE 30,
                                                               ---------------------------
                                                                  2000             1999
                                                               ----------       ----------
                                                                  (in thousands, except
                                                                   percentages)
<S>                                                            <C>              <C>
     Revenues..............................................    $  394,277       $  279,364
     Gross Profit..........................................       128,258           82,755
     Gross Profit %........................................          32.5%            29.6%
     Selling, General and Administrative...................    $   60,244       $   45,963
     Operating Income......................................        69,654           37,682
     EBITDA................................................       120,646           85,047
 </TABLE>

     Other material items affecting the results of our Drilling and Intervention
Services Division for the six months ended June 30, 2000 compared to the six
months ended June 30, 1999 were:

  o  Our North American revenues for the first six months of 2000 improved by
     98.3% over the comparable period of 1999. Acquisitions completed in the
     latter half of 1999 and a 56.8% increase in the North American rig count
     contributed to these improvements. Our international revenues, excluding
     Canada, remained relatively flat year over year, but were up 14.7% compared
     to the second half of 1999.

  o  Selling, general and administrative expenses decreased as a percentage of
     revenues from 16.5% in the first half of 1999 to 15.3% in the first half
     of 2000. The decrease primarily reflects a higher revenue base, partially
     offset by an increase of $4.5 million in goodwill and intangible
     amortization expense.

  o  Operating income increased $32.0 million in the six months ended June 30,
     of 2000 as compared to the same period of 1999 primarily due to improved
     market conditions in North America and the impact of the late 1999
     acquisitions.

  o  The improvement in the North American markets was most strongly felt by
     this division as 58.4% of its revenues and 57.7% of its operating profits
     are attributable to this region.



                                       22
<PAGE>   24

     COMPLETION SYSTEMS

     Our Completion Systems Division has shown steady improvements since the
first quarter of 1999. The following chart sets forth data regarding the results
of our Completion Systems Division for the six months ended June 30, 2000 and
1999:

<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED
                                                                      JUNE 30,
                                                            --------------------------
                                                               2000            1999
                                                            ----------      ----------
                                                              (in thousands, except
                                                                  percentages)
<S>                                                          <C>             <C>
     Revenues............................................    $  94,165      $   46,334
     Gross Profit........................................       17,949           5,270
     Gross Profit %......................................         19.1%           11.4%
     Selling, General and Administrative.................    $  27,459      $   16,170
     Operating Loss......................................       (9,510)        (10,900)
     EBITDA..............................................        3,087          (6,190)
 </TABLE>

     Other material items affecting the results of our Completion Systems
Division for the six months ended June 30, 2000 compared to six months ended
June 30, 1999 were:

  o  Revenues more than doubled in the first half of 2000 as compared to the
     first half of 1999. The increase is due to the expansion of the
     distribution of our core products and the new product offerings generated
     by our late 1999 acquisitions.

  o  Gross profit as a percentage of revenues increased 67.5% primarily due to
     higher gross margin percentages from our late 1999 acquisitions and higher
     throughput in our manufacturing facilities.

  o  Selling, general and administrative expenses as a percentage of revenues
     decreased from 34.9% in the first half of 1999 to 29.2% in the same period
     in 2000. The decrease is primarily due to the higher revenue base,
     partially offset by an increase of $5.4 million in goodwill and intangible
     amortization associated with acquisitions.

     ARTIFICIAL LIFT SYSTEMS

     Operating results from our Artificial Lift Systems Division are heavily
dependent on oil production activity. Revenues for this division increased
approximately 70.8% for the six months ended June 30, 2000, from 1999 levels,
primarily in response to improved activity levels in North American markets, in
particular Canada. This division has also seen increased sales in the Latin
American markets from 1999 levels as its artificial lift products have begun
to penetrate those markets utilizing our worldwide infrastructure.

     The following chart sets forth data regarding the results of our Artificial
Lift Systems Division for the six months ended June 30, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED
                                                                      JUNE 30,
                                                            --------------------------
                                                               2000            1999
                                                            ----------      ----------
                                                              (in thousands, except
                                                                  percentages)
<S>                                                         <C>             <C>
    Revenues..............................................  $  204,452      $  119,698
    Gross Profit..........................................      70,857          45,152
    Gross Profit %........................................        34.7%           37.7%
    Selling, General and Administrative...................  $   53,610      $   43,325
    Operating Income .....................................      17,247           1,827
    EBITDA................................................      29,287          11,497
</TABLE>


                                       23
<PAGE>   25



     Other material items affecting the results of our Artificial Lift Systems
Division as reflected above for the six months ended June 30, 2000 compared to
the six months ended June 30, 1999 were:

  o  The first half of 2000 experienced an increase in revenues of 70.8%
     compared to the first half of 1999 primarily as a result of recent
     improvements in North American markets. The most significant improvement
     was in Canada where revenues more than doubled 1999 levels as compared to
     the Canadian rig count increase of 76.8% period over period.

  o  Gross profit as a percentage of revenues decreased 8.0% from the comparable
     period 1999 primarily due to increased sales of lower margin ancillary
     products associated with progressing cavity pumps in Canada.

  o  Selling, general and administrative expenses decreased as a percentage of
     revenues from 36.2% in the six months ended June 30, 1999 to 26.2% in the
     same period of 2000 due to cost reductions previously implemented and a
     higher revenue base.

  o  Operating income increased by $15.4 million compared to the first half of
     1999. This improvement is primarily due to increased demand, both
     domestically and internationally, as well as the impact of cost reduction
     programs implemented during 1999.

     COMPRESSION SERVICES

     The Compression Services Division reported revenues of $124.3 million for
the first six months of 2000 compared to $98.5 million for the same period of
1999. Operating income declined to $2.8 million in the first six months of 2000
from $9.7 million in the same period of 1999. The decline in operating income
for the period was primarily attributable to lower margins on sales and rentals,
higher costs related to the reorganization of the division during the first half
of 2000, higher selling, general and administrative expenses and start-up costs
associated with international expansion, including GSI.

     The following chart sets forth data regarding the results of our
Compression Services Division for the six months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                                    JUNE 30,
                                                            --------------------------
                                                              2000              1999
                                                            ---------        ---------
                                                               (in thousands, except
                                                                   percentages)

<S>                                                         <C>              <C>
    Revenues.............................................   $ 124,336        $  98,533
    Gross Profit.........................................      24,704           26,044
    Gross Profit %.......................................        19.9%            26.4%
    Selling, General and Administrative..................   $  21,871        $  16,372
    Operating Income.....................................       2,833            9,672
    EBITDA...............................................      21,683           26,406
    Lease Expense........................................       9,628            3,716
    EBITDAR..............................................      31,311           30,122
    Minority Interest, Net of Taxes......................        (694)          (1,886)
</TABLE>

     Other material items affecting the results of our Compression Services
Division for the six months ended June 30, 2000 as compared to the six months
ended June 30, 1999 were:

  o  The increase in revenues primarily reflects the inclusion of the joint
     venture for the entire six months of 2000, $6.8 million in revenues from
     the YPF contract and $15.8 million of incremental revenues from the
     January 2000 acquisition of GSI.

  o  Gross profit as a percentage of revenues decreased 24.6% due to lower
     margins on equipment sales worldwide and lower margins on rental contracts
     due to pricing pressures primarily in the United States and higher lease
     expenses due to an increased number of compressors having been sold and
     subject to the sales leaseback arrangements described below. Quarterly
     lease payments for the compressors was $9.6 million for the first
     six months of 2000 compared to $3.7 million for the first six months of
     1999. Another contributing factor to the decrease in gross profit
     percentage is the change in product mix from the higher margin rental
     services to the lower margin equipment sales.



                                       24
<PAGE>   26

  o  The increase in selling, general and administrative expenses reflects costs
     associated with increased market activity, costs related to the
     reorganization of this division that commenced in the first quarter of 2000
     and costs associated with new foreign operations, including Latin America
     and Asia.

  o  During the first quarter of 2000, we acquired GSI and began start-up
     operations for the Middle East. The selling, general and administrative
     costs associated with GSI for the first six months 0f 2000 were
     approximately $2.2 million, with little profit attributable to that unit
     due to the start-up nature of operations. GSI, however, commenced
     operations in Oman in the second quarter and has a large construction
     contract slated to begin later in the year.

  o  During 1999, our Compression Services Division financed a substantial
     portion of its growth through the use of sale and leaseback arrangements.
     The payments under these leases are charged as a direct operating expense
     and reduce the operating income and margins of the division. However,
     EBITDAR, which excludes the effect of these leases, was up in the six
     months ended June 30, 2000 from the first half of 1999.

DISCONTINUED OPERATIONS

     Our discontinued operations consist of our Grant Prideco drilling products
division that was distributed to our shareholders on April 14, 2000. Results
from discontinued operations were as follows:

  o  We had a loss from discontinued operations, net of taxes, for the six
     months ended June 30, 2000, of $3.5 million and a loss from discontinued
     operations, net of taxes, for the three and six months ended June 30, 1999
     of $4.0 million and $5.2, respectively.

  o  Included in the loss from discontinued operations for the three months
     ended March 31, 2000 are $1.0 million, net of taxes, of estimated
     transaction costs and the net income of $0.1 million from discontinued
     operations for the period April 1, 2000 through the distribution date.

LIQUIDITY AND CAPITAL RESOURCES

     Our current sources of capital are reserves of cash, cash generated from
operations and borrowings under bank lines of credit. We recently completed
the private placement of $910 million face amount of our Zero Coupon Convertible
Senior Debentures due 2020 (the "Zero Coupon Debentures"). The net proceeds of
approximately $491.9 million from the placement were used or will be used to
repay our short-term indebtedness.

     As of June 30, 2000, we had repaid approximately $228.7 million in short
term and other debt with the proceeds of the placement and we expect to repay
approximately $195.3 million in short-term debt with the net proceeds during the
third quarter of 2000 and $10.0 million in the fourth quarter of 2000. Once this
debt has been repaid, our total funded debt will be around $1.1 billion. Pending
the repayment of our short-term debt, we are investing the net proceeds in
short-term government and investment grade securities. We elected to issue the
Zero Coupon Debentures because of the attractiveness of the rate compared to the
prevailing rate on our short-term debt, our desire to convert our short-term
borrowings into longer term debt and the significant premium to market provided
to us on the conversion rate. We believe the placement of the Zero Coupon
Debentures substantially strengthens our financial position to take advantage of
future opportunities as they may arise. On a pro forma basis, the annual after
tax cash cost of our outstanding debt is around $22.5 million.

     We believe that the current reserves of cash and short-term investments,
access to our existing credit lines and internally generated cash from
operations are sufficient to finance the projected cash requirements of our
current and future operations. We are continually reviewing acquisitions in our
markets. Depending upon the size, nature and timing of an acquisition, we may
require additional capital in the form of either debt, equity or a combination
of both.



                                       25
<PAGE>   27



     The following chart contains information regarding our capital resources
and borrowings and exposures as of June 30, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
                                                                                JUNE 30,      DECEMBER 31,
                                                                                  2000           1999
                                                                              -----------     ------------
                                                                                    (in thousands)

<S>                                                                           <C>              <C>
     Cash and Cash Equivalents..........................................      $   281,717      $   44,361
     Short-Term Borrowings and Current Portion of
       Long-Term Debt...................................................          216,434         322,767
     Long-Term Debt.....................................................          223,403         226,603
     Zero Coupon Convertible Senior Debentures..........................          501,647              --
     5% Convertible Subordinated Preferred Equivalent Debenture.........          402,500         402,500
     Letters of Credit Outstanding......................................           32,434          27,791
     Cumulative Foreign Currency Translation
       Adjustment.......................................................          (97,749)        (89,797)
     International Assets (Liabilities) Hedged (U.S. Dollar
       Equivalent)......................................................                -          14,745
</TABLE>

     The net increase in our cash and cash equivalents since June 30, 2000, was
primarily attributable to the following:

  o  Proceeds from issuance of Zero Coupon Debentures of $491.9 million, net of
     expenses.

  o  Repayments, net, on long-term debt and short-term facilities of $108.9
     million.

  o  Proceeds from the sale and leaseback of compression units of $46.1 million.

  o  Capital expenditures of property, plant and equipment from continuing
     operations of $86.7 million, including $29.8 million for Compression
     Services Division funded by sale and leaseback arrangements.

  o  Acquisition of new businesses for continuing operations of approximately
     $67.7 million in cash, net of cash acquired, including acquisitions for our
     Compression Services Division of $18.7 million that were partially funded
     with the proceeds of the sale and leaseback arrangements noted above.

  o  Cash outflows from operating activities associated with our continuing
     operations of $39.9 million.

  o  Capital expenditures of property, plant and equipment from discontinued
     operations of $5.1 million and cash outflow from operating activities of
     discontinued operations of $13.3 million.

     BANKING FACILITIES

     In May 1998, we put in place a five-year unsecured revolving credit
facility that allows us to borrow up to $250.0 million at any time. The facility
consists of a $200.0 million U.S. credit facility and a $50.0 million Canadian
credit facility. As of June 30, 2000, $221.5 million was available under the
credit facility. Borrowings under this facility bear interest at the U.S. prime
rate or a variable rate based on the LIBOR. Our credit facility contains
customary affirmative and negative covenants, including a maximum debt to
capitalization ratio, a minimum interest coverage ratio, a limitation on liens
and a limitation on asset dispositions.

     We have unsecured short-term borrowings with various institutions pursuant
to uncommitted lines of credit facilities and bid note arrangements. At June 30,
2000, we had $181.3 million in unsecured short-term borrowings outstanding under
these arrangements. We intend to repay these borrowings on their maturity over
the next months using proceeds from the placement of the Zero Coupon Debentures.

     ZERO COUPON CONVERTIBLE SENIOR DEBENTURES

     As noted above, on June 30, 2000 we completed the private placement of $910
million face amount of our Zero Coupon Debentures. These Debentures were issued
at $501.6 million providing the holders with an annual 3% yield to maturity. We
received proceeds of $491.9 million, net of debt issuance costs of $9.7 million.

     Holders may convert the Zero Coupon Debentures into shares of our Common
Stock at any time before maturity at a conversion rate of 9.9970 shares per
$1,000 principal amount at maturity or an initial conversion price of $55.1425
per share of Common Stock. The effective conversion price will increase as the
accreted value of the Zero Coupon Debentures increases. We may redeem the Zero
Coupon Debentures on or after June 30, 2005 at the accreted discounted amount
at the time of redemption as provided for in the indenture agreement. The
holders also may require us to repurchase the Zero Coupon Debentures on June 30,
2005, June 30, 2010, and June 30, 2015 at the accreted discounted amount at the
time of redemption.


                                       26
<PAGE>   28

     CONVERTIBLE SUBORDINATED DEBENTURES

     In November 1997, we sold $402.5 million principal amount of our 5%
Convertible Subordinated Preferred Equivalent Debentures (the "Debentures") due
2027. The Debentures bear interest at an annual rate of 5% and are convertible
into Common Stock. The original conversion was at a price of $80 per share;
however, under the terms of the Debentures, the conversion rate for the
Debentures was adjusted to $53.34 per share following our spin-off of Grant
Prideco. The adjustment factor for the conversion rate was based on the average
market price of our common stock on a pre-spin basis and the fair market value
of the Grant Prideco common stock distributed.

     We have the right to redeem the Debentures at any time on or after November
4, 2000, at redemption prices provided for in the indenture agreement. The
Debentures are subordinated in right of payment of principal and interest to the
prior payment in full of certain existing and future senior indebtedness. We
also have the right to defer payments of interest on the Debentures by extending
the quarterly interest payment period on the Debentures for up to 20 consecutive
quarters at any time when we are not in default in the payment of interest.

     7 1/4% SENIOR NOTES DUE 2006

     We have outstanding $200.0 million of publicly traded 7 1/4% Senior Notes
due May 15, 2006. Interest on the 7 1/4% Senior Notes is payable semi-annually
on May 15 and November 15. These Senior Notes may not be redeemed prior to
maturity.

     COMPRESSION FINANCING

     Our Compression Services Division has entered into various sale and
leaseback arrangements where it has sold $285.9 million of compression units at
June 30, 2000, and has a right to sell up to another $64.1 million of
compression units. Under these arrangements, legal title to the compression
units are sold to third parties and leased back to the division under a
five-year operating lease with a market-based purchase option.

     As of December 31, 1999, our Compression Services Division had sold
compressors under these arrangements having appraised values and received cash
of $239.8 million. These sales resulted in a pretax deferred gain of $77.3
million, which may be deferred until the end of the lease. During the six months
ended June 30, 2000, our Compression Services Division sold additional
compressors for which it received cash equal to the appraised value of $46.1
million. The sales resulted in an additional pretax deferred gain of
approximately $11.5 million.

     Our Compression Services Division continues to review potential projects
for expansion of its operations both domestically and internationally. Depending
on the size of these projects, we expect that the financing of the projects will
be funded with the joint venture's cash flow from operations, proceeds from its
sale and leaseback arrangements, or new project or similar type financings.

     GRANT PRIDECO NOTE

     In connection with our spin-off of Grant Prideco, we received from Grant
Prideco an unsecured subordinated note to us in the amount of $100.0 million.
The $100.0 million obligation to us bears interest at an annual rate equal to
10.0%. Interest payments are payable to us quarterly, and principal and all
unpaid interest is due no later than March 31, 2002. Under the terms of the
note, Grant Prideco is required to repay this note with the proceeds of any debt
or equity financing, excluding financing under a credit facility or any equity
issued in connection with a business combination. The indebtedness of Grant
Prideco to us is subordinated to the working capital obligations of Grant
Prideco to its banks. Grant Prideco's ability to repay this indebtedness and the
timing thereof is subject to its discretion and will be dependent upon market
conditions.

     CAPITAL EXPENDITURES

     Our capital expenditures for property, plant and equipment for our
continuing operations during the six months ended June 30, 2000 were $86.7
million and primarily related to rental equipment, fishing tools and tubular
service equipment and compressors and related assets. Included within these
capital expenditures for the six months ended June 30, 2000 was $29.8 million
for our Compression Services Division that primarily related to our U.S.




                                       27
<PAGE>   29

operations. Capital expenditures for 2000 are expected to be approximately
$135.0 million, excluding capital expenditures for our compression operations
that are financed by sale and leaseback arrangements. Our depreciation expense
during the first half of 2000 was $74.2 million. We currently expect
depreciation for the year to be approximately $200 to $210 million.

     Our compression operations are, by their nature, capital intensive and
require substantial investments in compressor units. Capital expenditures will
be based on contract needs and the timing of new projects entered into by our
compression joint venture. We expect that future capital investments will be
financed by our compression joint venture through debt, sale and leaseback
arrangements and other similar financing structures that are repaid from the
cash flows generated from the compressor units over the projected term of rental
of the equipment.

     ACQUISITIONS

     On June 30, 2000, we acquired the underbalanced drilling product line of
Oiltools International Limited for approximately $20.0 million. The acquired
business provides underbalanced drilling services in the international markets,
in particular Asia Pacific and the Middle East. The assets add to the
capabilities of our underbalanced drilling operations. On April 20, 2000, we
acquired the sand screen product lines of Oiltools for approximately $18.5
million. The principal product lines include Stratapac(R), a highly engineered,
patented screen used in offshore, deviated and horizontal wells; Stratacoil(TM),
a small diameter premium screen used for thru tubing completions; and
AccuWrap(TM), a premium wire wrap screen. These product lines were acquired to
enhance and complement our existing Houston Well Screen(TM) and Expandable Sand
Screen(TM) product lines.

     On January 12, 2000, we acquired Singapore-based GSI for a total of
approximately $20.2 million. The acquisition expands our Compression Services
Division's platform of full service capabilities in the Asia-Pacific and Middle
Eastern markets. GSI's main business units include compressor packaging, rental,
maintenance and service, and floating production storage and offloading
platforms. In addition to Singapore, GSI has service locations in Indonesia and
the United Arab Emirates.

     During the six months ended June 30, 2000 we also completed two
acquisitions for our Artificial Lift Systems Division and four additional
acquisitions for our Compression Services Division for total consideration of
$12.1 million. We also acquired a minority-held interest in one of our
subsidiaries of our Completion Systems Division for shares of our common stock
valued at $4.8 million, and completed two acquisitions for our Drilling and
Intervention Services division for total consideration of $4.0 million.

     Some of our acquisitions have resulted in substantial goodwill associated
with their operations, including the addition of approximately $64.4 million of
goodwill during the six months ended June 30, 2000. The amortization expense for
goodwill and other intangibles during the six months ended June 30, 2000 was
$21.8 million.

     Our acquisitions are accounted for using the purchase method of accounting.
Results of operations for acquisitions accounted for as purchases are included
in our consolidated condensed financial statements since the date of
acquisition. The purchase price is allocated to the net assets acquired based
upon their estimated fair market values at the date of acquisition. The
balances included in our Consolidated Condensed Balance Sheets related to our
acquisitions are based upon preliminary information and are subject to change
when final asset and liability valuations are obtained.

NEW ACCOUNTING PRONOUNCEMENTS

      In December 1999 the Securities and Exchange Commission ("SEC") released
Staff Accounting Bulletin No. 101 ("SAB No. 101"), Revenue Recognition in
Financial Statements, to provide guidance on the recognition, presentation and
disclosure of revenue in financial statements. In March 2000, the SEC issued SAB
101A, which delayed the implementation date of SAB 101 until no later than the
fourth quarter of fiscal years beginning after December 15, 1999, with an
effective date of January 1, 2000. We are currently evaluating the impact of SAB
No. 101, but do not anticipate that application of this bulletin will have a
material impact on our financial position or results of operations.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999, the FASB issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of SFAS No. 133, amending the effective date of SFAS No. 133 to
years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities,
amending accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and certain hedging activities. We are currently
evaluating the impact of SFAS No. 133 on our consolidated financial statements.



                                       28
<PAGE>   30

EXPOSURES

     INDUSTRY EXPOSURE

     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
generally, actual losses have historically been within our expectations.

     LITIGATION AND ENVIRONMENTAL EXPOSURE

     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 that any of the items of litigation that we are currently subject to
will result in any material uninsured losses to us. It is, however, possible
that an unexpected judgment could be rendered against us in cases in which we
could be uninsured and beyond the amounts that we currently have reserved or
anticipate incurring for that matter.

     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 which 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 that
could involve the expenditure of a material amount of funds.


     INTERNATIONAL EXPOSURE

     Like most multinational oilfield service companies, we have operations in
certain international areas, including parts of the Middle East, North and West
Africa, Latin America, the Asia-Pacific region and the Commonwealth of
Independent States, that are inherently subject to risks of war, political
disruption, civil disturbance and policies that may:

     o  disrupt oil and gas exploration and production activities;

     o  restrict the movement of funds;

     o  lead to U.S. government or international sanctions; and

     o  limit access to markets for periods of time.

     Historically, the economic impact of such disruptions has been temporary
and oil and gas exploration and production activities have resumed eventually in
relation to market forces. Certain areas, including the CIS, Algeria, Nigeria,
parts of the Middle East, the Asia-Pacific region and Latin America, have been
subjected to political disruption that has negatively impacted results of
operations following such events.

     CURRENCY EXPOSURE

     A single European currency ("the Euro") was introduced on January 1, 1999,
at which time the conversion rates between legacy currencies and the Euro were
set for 11 participating member countries. However, the legacy currencies in
those countries will continue to be used as legal tender through January 1,
2002. Thereafter, the legacy currencies will be canceled, and the Euro bills and
coins will be used in the 11 participating countries. We are currently
evaluating the effect of the Euro on our consolidated financial statements and
our business operations; however, we do not foresee that the transition to the
Euro will have a significant impact.

     Approximately 42.7% of our net assets from continuing operations are
located outside the United States 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
loss in the stockholders' equity section on our balance sheet. We recorded a
$22.4 million adjustment to our equity account for the six months ended June 30,
2000 primarily to reflect the net impact of the decline in European currencies
against the U.S. dollar. We recognize remeasurement and transactional gains and
losses on currencies in our Consolidated Condensed Statements of Income.






                                       29
<PAGE>   31

FORWARD-LOOKING STATEMENTS

     This report and our other filings with the Securities and Exchange
Commission and public releases contain statements relating to our future
results, including certain projections and business trends. We believe these
statements constitute "Forward-Looking Statements" as defined in the Private
Securities Litigation Reform Act of 1995.

     Certain 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:

         A Downturn in Market Conditions Could Affect Projected Results. Any
     unexpected material changes in drilling activity or oil and gas prices or
     other market trends would likely affect the forward-looking information
     provided by us. Any unexpected material changes in oil and gas prices or
     other market trends that would impact drilling activity would likely affect
     the forward-looking information contained in this report. The oil and gas
     industry is extremely volatile and subject to change based on political and
     economic factors outside our control.

         Our estimates as to future results and industry trends are based on
     assumptions regarding the future prices of oil and gas, the North American
     and international rig counts and their effect on the demand and pricing of
     our products and services. In analyzing the market and its impact on us for
     the remainder of 2000, we have made the following assumptions:

         o  The increases in the price of oil that have occurred will result in
            continuing improvements to our businesses this year, with the
            strongest improvements expected to occur in the fourth quarter.

         o  Activity levels and volume and pricing improvements in our industry
            will gradually improve as the year progresses, with the strongest
            markets being in North America.

         o  International activity outside North America will lag North America
            with volume improvements being gradual and varied across regions. We
            do not expect substantial international improvement this year, but
            do expect the international markets to substantially improve next
            year.

         o  Oil prices will average over $25 per barrel for West Texas
            Intermediate crude.

         o  Average natural gas prices for the remainder of 2000 will exceed
            $3.00 per mcf.

         o  World demand for oil will be up only slightly.

         o  North American and international rig counts will continue to
            improve, with increases in the international rig count following the
            North American rig count increase by around six months.

         o  Pricing will continue to be subject to market conditions and
            competitive pricing pressures in selected markets and product lines.
            We have also assumed that we will be able to improve our margins
            through price increases and that price increases will more than
            offset wage and other cost increases.

         o  Demand for compression services will remain relatively flat for the
            remainder of the year with improvements to be based on new
            contracts.

         o  Canadian activity will recover in the third quarter but below first
            quarter levels and be at or above our first quarter levels by the
            fourth quarter.

         o  Demand for our products and services will vary based on regions as
            products are added.

         o  Demand for many of our products and services will track completion
            activity and lag drilling.

         o  Future growth in the industry will be dependent on technological
            advances that can reduce the costs of exploration and production,
            and technological improvements in tools used for re-entry,
            thru-tubing and extended reach drilling as well as artificial lift
            technologies will be important to our future.

         These assumptions are based on various macroeconomic factors, and
     actual market conditions could vary materially from those assumed.

         A Future Reduction in the Rig Count Could Adversely Affect the Demand
     for Our Products and Services. Our operations were materially affected by
     the decline in the rig count during 1998 and 1999. Although the North
     American rig count has recently improved significantly from the low levels
     in 1999, another decline in the North American and international rig counts
     would adversely affect our results. Our forward-looking statements
     regarding our drilling products assume the rig count in 2000 will continue
     to improve domestically and that the international rig count will slowly


                                       30
<PAGE>   32
     improve with the greatest improvements this year being in the fourth
     quarter. We have also assumed that there will not be any material declines
     in the worldwide rig count, in particular the domestic rig count.

         Projected Cost Savings Could Be Insufficient. During 1998 and 1999, we
     implemented a number of programs intended to reduce costs and align our
     cost structure with the current market environment. We also have recently
     implemented costs saving measures at our Compression Services Division. Our
     forward-looking statements regarding cost savings and their impact on our
     business assume these measures will generate the savings expected.

         Manufacturing Improvements. We have recently taken steps to increase
     our manufacturing capacity and reduce manufacturing costs in our European
     completion operations through the consolidation of facilities and additions
     of equipment. These activities are still ongoing. We were affected by the
     relocation of manufacturing operations in this division in the second
     quarter of 2000. Our forward-looking statements assume that the
     manufacturing expansion and consolidation are completed without any further
     material disruptions. If there are any additional disruptions or excess
     costs associated with the manufacturing changes, the results of our
     Completion Systems division could be adversely affected.

         Capacity Constraints. Our forward-looking information assumes that we
     will have sufficient manufacturing capacity and personnel to address demand
     increases. To the extent there are limitations on capacity or personnel in
     areas in which the markets are improving, our growth could be limited or
     our costs increased due to the need to meet demand through outside sources.

         Weatherford's Success is Dependent upon the Integration of
     Acquisitions. During 1999 and 2000, we consummated, or agreed to
     consummate, various acquisitions of product lines and businesses. The
     success of these acquisitions will be dependent on our ability to integrate
     these product lines and businesses with our existing businesses and
     eliminate duplicative costs. We have, or will have, incurred various
     duplicative costs with respect to the operations of companies and
     businesses acquired by us during 1999 and 2000 pending the integration of
     the acquired businesses with our businesses. Our forward-looking statements
     assume the successful integration of the acquired businesses and their
     contribution to our income during 2000. Integration of acquisitions is
     something that cannot occur overnight and is something that requires
     constant effort at the local level to be successful. Accordingly, there can
     be no assurance as to the ultimate success of our integration efforts.

         Weatherford's Success is Dependent upon Technological Advances. Our
     ability to succeed with our long-term growth strategy is dependent in part
     on the technological competitiveness of our product and service offerings.
     A central aspect of our growth strategy is to enhance the technology of our
     products and services, to expand the markets for many of our products
     through the leverage of our worldwide infrastructure and to enter new
     markets and expand in existing markets with technologically advanced
     value-added products. These technological advances include our
     underbalanced drilling technology and our expandable sand screen
     technology. Our forward-looking statements have assumed gradual growth from
     these new products and services through 2000.

         Economic Downturn Could Adversely Affect Demand for Products and
     Services. The economic downturn that began in Asia in 1997 affected the
     economies in other regions of the world, including South America and the
     former Soviet Union, and contributed to the decline in the price of oil and
     the level of drilling activity. Although the economy in the United States
     also has experienced one of its longest periods of growth in recent
     history, the continued strength of the United States economy cannot be
     assured. If the United States or European economies were to begin to
     decline or if the economies of South America or Asia were to experience
     further material problems, the demand and price for oil and gas and our
     products and services could again adversely affect our revenues and income.
     We have assumed that a worldwide recession or a material downturn in the
     United States economy will not occur.

         Currency Fluctuations Could Have a Material Adverse Financial Impact. A
     material decline in currency rates in our markets could affect our future
     results as well as affect the carrying values of our assets. World
     currencies have been subject to much volatility. The United States dollar
     has been strong against most currencies over the past year. In particular,
     while the Euro has declined significantly against the United States dollar
     since the beginning of the year. Our forward-looking statements assume no
     material impact from future changes in currencies.



                                       31
<PAGE>   33

         Changes in Global Trade Policies Could Adversely Impact Operations.
     Changes in global trade policies in our markets could impact our operations
     in these markets. We have assumed that there will be no material changes in
     global trading policies.

         Unexpected Litigation and Legal Disputes Could Have a Material Adverse
      Financial Impact. If we experience unexpected litigation or unexpected
      results in our existing litigation having a material effect on results,
      the accuracy of the forward-looking statements would be affected. Our
      forward-looking statements assume that there will be no such unexpected
      litigation or results.

     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 Securities and Exchange Commission. For additional information
regarding risks and uncertainties, see our other current year filings with the
Commission under the Securities Exchange Act of 1934, as amended, and the
Securities Act of 1933, as amended. We will generally update our assumptions in
our filings as circumstances require.

PART II.  OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

     On June 30, 2000, we sold $910.0 million face amount of our Zero Coupon
Senior Convertible Debentures due 2020 in a private placement, resulting in
proceeds to us of approximately $491.9 million, net of issuance costs. The
debentures were issued to Morgan Stanley Dean Witter, the initial purchaser, at
an original issue discount of $551.26 per debenture. The debentures have a yield
to maturity of 3% per annum. The proceeds of the private placement have been
used to pay down current debt of $314.0 million and an additional $120.0 million
is anticipated to be paid by October 30, 2000.

     Holders may convert the debentures into shares of our common stock at a
rate of 9.9970 shares for each $1,000 principal amount at maturity (effectively
an initial conversion price of $55.1425 per share of common stock) at any time
before maturity. The conversion price will not be adjusted for the accrued
original issue discount. We may redeem any of the debentures on or after June
30, 2005. Holders may require us to repurchase the debentures on June 30, 2005,
June 30, 2010, and June 30, 2015.

     The debentures were issued in a private placement in reliance on the
exemption from registration contained in Section 4(2) of the Securities Act.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the Company's Annual Meeting of Stockholders held on June 9, 2000, the
stockholders of the Company approved: the election of eight directors to serve
until the next annual meeting of stockholders. There were no broker non-votes.
The following sets forth the results of the voting with respect to each such
matter.

<TABLE>
<CAPTION>
             Election of Directors                            For          Withheld/Against      Abstained
--------------------------------------------------------   ----------      ----------------      ---------
<S>                                                        <C>                 <C>
Philip Burguieres........................................  96,645,573          1,251,002                --
David J. Butters.........................................  96,646,181          1,250,394                --
Bernard J. Duroc-Danner..................................  96,646,226          1,250,349                --
Sheldon B. Lubar.........................................  96,645,170          1,251,405                --
William E. Macaulay......................................  96,645,737          1,250,838                --
Robert B. Millard........................................  96,645,728          1,250,847                --
Robert K. Moses, Jr......................................  96,646,112          1,250,463                --
Robert A. Rayne..........................................  96,646,069          1,250,506                --
</TABLE>


                                       32
<PAGE>   34

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)   Exhibits:

           3.1    Certificate of Designation of the Registrant's Series A
                  Preferred Stock, par value $1.00 per share (incorporated by
                  reference to Exhibit 3.3 to Registration Statement on Form
                  S-3, as amended (Reg. No. 333-41344)).

           4.1    Second Supplemental Indenture dated June 30, 2000, between
                  Weatherford International, Inc. and The Bank of New York, as
                  successor trustee to Bank of Montreal Trust (including form of
                  Debenture) (incorporated by reference to Exhibit 4.1 to
                  Current Report on Form 8-K (File No. 1-13086) filed July 10,
                  2000).

           4.2    Registration Rights Agreement dated June 30, 2000, between
                  Weatherford International, Inc. and Morgan Stanley & Co.
                  Incorporated (incorporated by referencce to Exhibit 4.2 to
                  Current Report on Form 8-K (File No. 1-13086) filed July 10,
                  2000).

          10.1    Purchase Agreement, dated June 26, 2000, between Weatherford
                  International, Inc. and Morgan Stanley & Co. Incorporated
                  (incorporated by reference to Exhibit 10.1 to Current Report
                  on Form 8-K (File No. 1-13086) filed July 10, 2000).

         *10.2    Change of Control Agreement dated as of June 10, 1998, between
                  Weatherford International, Inc. and Burt M. Martin.

          10.3    Combination Agreement dated as of June 16, 2000, by and among
                  Weatherford International, Inc., Weatherford Oil Services,
                  Inc., Weatherford Canada Ltd. And Alpine Oil Services
                  Corporation (including as exhibits, forms of Plan of
                  Arrangement, Support Agreement and Voting and Exchange Trust
                  Agreement) (incorporated by reference to Exhibit 10.2 to
                  Current Report on Form 8-K (File No. 1-13086) filed July 10,
                  2000).

         *27.1    Financial Data Schedule

         * Filed herewith

     (b)   Reports on Form 8-K:

           1)     Current Report on Form 8-K dated April 17, 2000, announcing
                  (i) the completion of the spin-off to our stockholders of
                  Grant Prideco drilling products division, (ii) the adjustment
                  to the conversion price of the 5% Convertible Subordinated
                  Preferred Equivalent Debentures due 2027 as a result of the
                  spin-off of Grant Prideco, and (iii) the earnings for the
                  quarter ended March 31, 2000.





                                       33
<PAGE>   35

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    Weatherford International, Inc.



                                    By: /s/ Curtis W. Huff
                                        ---------------------------------------
                                        Curtis W. Huff
                                        Executive Vice President and
                                        Chief Financial Officer
                                        (Principal Financial Officer)


                                        /s/ Lisa W. Rodriguez
                                        ---------------------------------------
                                        Lisa W. Rodriguez
                                        Vice President Accounting and Controller
                                        (Principal Accounting Officer)




Date:  August 14, 2000


                                       34
<PAGE>   36


                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
   EXHIBIT NO.                        DESCRIPTION
   -----------                        -----------
<S>               <C>
       3.1        Certificate of Designation of the Registrant's Series A
                  Preferred Stock, par value $1.00 per share (incorporated by
                  reference to Exhibit 3.3 to Registration Statement on Form
                  S-3, as amended (Reg. No. 333-41344)).

       4.1        Second Supplemental Indenture dated June 30, 2000, between
                  Weatherford International, Inc. and The Bank of New York, as
                  successor trustee to Bank of Montreal Trust (including form of
                  Debenture) (incorporated by reference to Exhibit 4.1 to
                  Current Report on Form 8-K (File No. 1-13086) filed July 10,
                  2000).

       4.2        Registration Rights Agreement dated June 30, 2000, between
                  Weatherford International, Inc. and Morgan Stanley & Co.
                  Incorporated (incorporated by referencce to Exhibit 4.2 to
                  Current Report on Form 8-K (File No. 1-13086) filed July 10,
                  2000).

      10.1        Purchase Agreement, dated June 26, 2000, between Weatherford
                  International, Inc. and Morgan Stanley & Co. Incorporated
                  (incorporated by reference to Exhibit 10.1 to Current Report
                  on Form 8-K (File No. 1-13086) filed July 10, 2000).

     *10.2        Change of Control Agreement dated as of June 10, 1998, between
                  Weatherford International, Inc. and Burt M. Martin.

      10.3        Combination Agreement dated as of June 16, 2000, by and among
                  Weatherford International, Inc., Weatherford Oil Services,
                  Inc., Weatherford Canada Ltd. And Alpine Oil Services
                  Corporation (including as exhibits, forms of Plan of
                  Arrangement, Support Agreement and Voting and Exchange Trust
                  Agreement) (incorporated by reference to Exhibit 10.2 to
                  Current Report on Form 8-K (File No. 1-13086) filed July 10,
                  2000).

     *27.1        Financial Data Schedule
</TABLE>


     * Filed herewith