<PAGE>

                                  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 September 30, 2001

                                       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 October 26, 2001
      --------------                             -------------------------------
Common Stock, par value $1.00                              114,766,950



<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

<Table>
<Caption>
                                                                          SEPTEMBER 30,     DECEMBER 31,
                                                                              2001              2000
                                                                         --------------    --------------
                                                                          (UNAUDITED)
<S>                                                                      <C>               <C>
                          ASSETS

Current Assets:
   Cash and Cash Equivalents .........................................   $       44,732    $      153,808
   Accounts Receivable, Net of Allowance for Uncollectible
     Accounts of $22,775 and $23,281, Respectively ...................          456,757           498,663
   Inventories .......................................................          483,946           443,588
   Other Current Assets ..............................................          164,639           145,528
                                                                         --------------    --------------
                                                                              1,150,074         1,241,587
                                                                         --------------    --------------

Property, Plant and Equipment, Net ...................................          938,782           973,025
Goodwill, Net ........................................................        1,148,716         1,051,562
Equity Investments in Unconsolidated Affiliates ......................          482,348             9,229
Other Assets .........................................................          157,645           186,176
                                                                         --------------    --------------
                                                                         $    3,877,565    $    3,461,579
                                                                         ==============    ==============

         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Short-Term Borrowings and Current Portion of Long-Term Debt .......   $      308,955    $       31,134
   Accounts Payable ..................................................          200,574           196,200
   Other Current Liabilities .........................................          313,658           235,382
                                                                         --------------    --------------
                                                                                823,187           462,716
                                                                         --------------    --------------

Long-Term Debt .......................................................          232,441           221,004
Zero Coupon Convertible Senior Debentures ............................          520,685           509,172
Minority Interests ...................................................            3,444           198,523
Deferred Tax Liability ...............................................          115,157           164,451
Other Liabilities ....................................................           81,866           164,755
5% Convertible Subordinated Preferred
   Equivalent Debentures .............................................          402,500           402,500

Commitments and Contingencies

Stockholders' Equity:
   Series A Preferred Stock, $1 Par Value, Authorized Zero Shares
     and One Share, Issued Zero Shares and One Share, Respectively ...               --                --
   Common Stock, $1 Par Value, Authorized 250,000,000 Shares,
     Issued 126,576,790 and 121,955,723 Shares, Respectively .........          126,577           121,956
   Capital in Excess of Par Value ....................................        1,810,847         1,594,060
   Treasury Stock, Net ...............................................         (300,686)         (304,315)
   Retained Earnings .................................................          213,526            53,399
   Accumulated Other Comprehensive Loss ..............................         (151,979)         (126,642)
                                                                         --------------    --------------
                                                                              1,698,285         1,338,458
                                                                         --------------    --------------
                                                                         $    3,877,565    $    3,461,579
                                                                         ==============    ==============
</Table>

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



                                       1
<PAGE>

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

<Table>
<Caption>
                                                                       THREE MONTHS                     NINE MONTHS
                                                                    ENDED SEPTEMBER 30,             ENDED SEPTEMBER 30,
                                                               ----------------------------    ----------------------------
                                                                   2001            2000            2001            2000
                                                               ------------    ------------    ------------    ------------
<S>                                                            <C>             <C>             <C>             <C>
Revenues:
     Products ..............................................   $    259,083    $    207,983    $    734,821    $    569,727
     Services and Rentals ..................................        349,538         254,187         972,958         709,673
                                                               ------------    ------------    ------------    ------------
                                                                    608,621         462,170       1,707,779       1,279,400

Costs and Expenses:
     Cost of Products ......................................        161,512         133,556         474,064         383,261
     Cost of Services and Rentals ..........................        232,997         188,839         640,644         514,596
     Selling, General and Administrative Attributable
       to Segments .........................................         94,915          85,869         271,861         249,053
     Corporate General and Administrative ..................          9,984           9,574          29,650          27,383
     Equity in Earnings of Unconsolidated Affiliates .......         (6,947)           (677)        (14,708)         (2,460)
                                                               ------------    ------------    ------------    ------------

Operating Income ...........................................        116,160          45,009         306,268         107,567
                                                               ------------    ------------    ------------    ------------

Other Income (Expense):
     Interest Income .......................................            156           5,269           1,695           8,781
     Interest Expense ......................................        (19,958)        (15,818)        (53,602)        (45,360)
     Other, Net ............................................         (1,047)           (368)           (744)            193
                                                               ------------    ------------    ------------    ------------
Income Before Income Taxes and Minority Interests ..........         95,311          34,092         253,617          71,181
Provision for Income Taxes .................................        (34,789)        (12,442)        (92,683)        (25,626)
                                                               ------------    ------------    ------------    ------------
Income Before Minority Interests ...........................         60,522          21,650         160,934          45,555
Minority Interest Expense, Net of Taxes ....................           (341)           (127)           (807)           (835)
                                                               ------------    ------------    ------------    ------------
Income from Continuing Operations ..........................         60,181          21,523         160,127          44,720
Loss from Discontinued Operations, Net of Taxes ............             --              --              --          (3,458)
                                                               ------------    ------------    ------------    ------------
Net Income .................................................   $     60,181    $     21,523    $    160,127    $     41,262
                                                               ============    ============    ============    ============

Basic Earnings (Loss) Per Share:
     Income from Continuing Operations .....................   $       0.52    $       0.20    $       1.42    $       0.41
     Loss from Discontinued Operations .....................             --              --              --           (0.03)
                                                               ------------    ------------    ------------    ------------
Net Income Per Basic Share .................................   $       0.52    $       0.20    $       1.42    $       0.38
                                                               ============    ============    ============    ============

Diluted Earnings (Loss) Per Share:
     Income from Continuing Operations .....................   $       0.49    $       0.19    $       1.32    $       0.40
     Loss from Discontinued Operations .....................             --              --              --           (0.03)
                                                               ------------    ------------    ------------    ------------
Net Income Per Diluted Share ...............................   $       0.49    $       0.19    $       1.32    $       0.37
                                                               ============    ============    ============    ============

Weighted Average Shares Outstanding:
     Basic .................................................        115,068         109,792         113,093         109,147
                                                               ============    ============    ============    ============
     Diluted ...............................................        135,081         114,500         131,826         112,908
                                                               ============    ============    ============    ============
</Table>



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



                                       2
<PAGE>

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


<Table>
<Caption>
                                                                                NINE MONTHS
                                                                            ENDED SEPTEMBER 30,
                                                                         ------------------------
                                                                            2001          2000
                                                                         ----------    ----------
<S>                                                                      <C>           <C>
Cash Flows from Operating Activities:
  Net Income .........................................................   $  160,127    $   41,262
  Adjustments to Reconcile Net Income to Net Cash
     Provided by Operating Activities:
     Depreciation and Amortization ...................................      152,845       146,339
     Amortization of Original Issue Discount .........................       11,513         3,762
     Equity in Earnings of Unconsolidated Affiliates .................      (14,708)       (2,460)
     Loss from Discontinued Operations, Net of Taxes .................           --         3,458
     Deferred Income Tax Provision (Benefit) .........................           62       (13,647)
     Gain on Sales of Property, Plant and Equipment ..................      (11,202)       (8,483)
     Change in Operating Assets and Liabilities, Net of Effect
       of Businesses Acquired ........................................     (196,138)     (148,364)
                                                                         ----------    ----------
       Net Cash Provided by Continuing Operations ....................      102,499        21,867
       Net Cash Used by Discontinued Operations ......................           --       (12,225)
                                                                         ----------    ----------
       Net Cash Provided by Operating Activities .....................      102,499         9,642
                                                                         ----------    ----------

Cash Flows from Investing Activities:
  Acquisition of Businesses, Net of Cash Acquired ....................     (214,417)      (86,366)
  Capital Expenditures for Property, Plant and Equipment .............     (237,200)     (164,062)
  Acquisitions and Capital Expenditures of
      Discontinued Operations ........................................           --        (5,056)
  Acquisition of Minority Interest ...................................     (206,500)           --
  Proceeds from Sale of Businesses ...................................           --        14,084
  Proceeds from Sales of Property, Plant and Equipment ...............       21,408        25,666
  Proceeds from Sale and Leaseback of Equipment ......................           --        55,068
                                                                         ----------    ----------
       Net Cash Used by Investing Activities .........................     (636,709)     (160,666)
                                                                         ----------    ----------

Cash Flows from Financing Activities:
  Borrowings (Repayments) on Short-Term Debt, Net ....................      286,383      (280,095)
  Repayments of Long-Term Debt, Net ..................................       (8,612)       (9,468)
  Issuance of Zero Coupon Convertible Senior Debentures, Net .........           --       491,868
  Proceeds from Asset Securitization .................................      136,784            --
  Proceeds from Exercise of Stock Options ............................       10,170         6,226
  Acquisition of Treasury Stock ......................................       (2,815)       (2,607)
  Other, Net .........................................................           --           324
                                                                         ----------    ----------
       Net Cash Provided by Financing Activities .....................      421,910       206,248
                                                                         ----------    ----------

Effect of Exchange Rates on Cash .....................................        3,224        (1,846)
Net Increase (Decrease) in Cash and Cash Equivalents .................     (109,076)       53,378
Cash and Cash Equivalents at Beginning of Period .....................      153,808        44,361
                                                                         ----------    ----------
Cash and Cash Equivalents at End of Period ...........................   $   44,732    $   97,739
                                                                         ==========    ==========

Supplemental Cash Flow Information:
  Interest Paid ......................................................   $   35,110    $   40,204
  Income Taxes Paid, Net of Refunds ..................................       44,951        12,916
</Table>

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



                                       3
<PAGE>

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


<Table>
<Caption>
                                                          THREE MONTHS                NINE MONTHS
                                                       ENDED SEPTEMBER 30,        ENDED SEPTEMBER 30,
                                                     -----------------------    ------------------------
                                                        2001         2000          2001          2000
                                                     ----------   ----------    ----------    ----------
<S>                                                  <C>          <C>           <C>           <C>
Net Income .......................................   $   60,181   $   21,523    $  160,127    $   41,262
Other Comprehensive Income (Loss):
     Foreign Currency Translation Adjustment .....        1,156      (31,176)      (28,962)      (53,593)
                                                     ----------   ----------    ----------    ----------
Comprehensive Income (Loss) ......................   $   61,337   $   (9,653)   $  131,165    $  (12,331)
                                                     ==========   ==========    ==========    ==========
</Table>



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



                                       4
<PAGE>

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

1.   GENERAL

     The consolidated condensed financial statements of Weatherford
International, Inc. (the "Company") 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 Company's Consolidated Condensed
Balance Sheet at September 30, 2001, Consolidated Condensed Statements of Income
and Consolidated Condensed Statements of Comprehensive Income (Loss) for the
three and nine months ended September 30, 2001 and 2000, and Consolidated
Condensed Statements of Cash Flows for the nine months ended September 30, 2001
and 2000. 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 accounting principles generally accepted in the U.S. has been
condensed or omitted in this Form 10-Q pursuant to Securities and Exchange
Commission rules and regulations. These financial statements should be read in
conjunction with the audited consolidated financial statements for the year
ended December 31, 2000 and notes thereto included in the Company's Annual
Report on Form 10-K, as amended on Forms 10-K/A. The results of operations for
the three and nine month periods ended September 30, 2001 are not necessarily
indicative of the results expected for the full year.

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

2.   UNIVERSAL TRANSACTION

     On February 9, 2001, the Company completed the merger of essentially all of
its Compression Services Division with and into a subsidiary of Universal
Compression Holdings, Inc. ("Universal") in exchange for 13.75 million shares of
Universal common stock. The Company retained part of the Compression Services
Division, including Singapore-based Gas Services International operations, which
is now consolidated within the Company's Artificial Lift Systems Division. The
Universal common stock received represented approximately 48% of Universal's
total common stock outstanding as of the date of the merger. Subsequent to the
merger, Universal issued additional shares of common stock, and the Company's
ownership declined to 45%.

     In connection with the merger, the Company de-consolidated the businesses
that merged with Universal and recorded its investment in Universal as Equity
Investments in Unconsolidated Affiliates on the accompanying Consolidated
Condensed Balance Sheets. Accordingly, the Company began recording its equity
interest in Universal's results of operations, based on estimates provided by
Universal, as Equity in Earnings of Unconsolidated Affiliates on the
accompanying Consolidated Condensed Statements of Income. The difference between
the cost basis of the Company's investment in Universal and the Company's fair
value in the net assets of Universal was $152.5 million and is being amortized
straight-line over 40 years through Equity in Earnings of Unconsolidated
Affiliates.

     Prior to the merger, the Company operated this division in a joint venture
with GE Capital. The Company paid GE Capital $206.5 million for its 36%
ownership in the joint venture concurrent with the merger.



                                       5
<PAGE>

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

     As of December 31, 2000, the net assets of the Compression Services
Division, excluding the assets which the Company retained, were as follows, in
thousands:

<Table>
<S>                                                                      <C>
Assets:
     Cash ............................................................   $  3,118
     Accounts Receivable, Net ........................................     62,650
     Inventory .......................................................     77,059
     Other Current Assets ............................................     10,113
                                                                         --------
        Total Current Assets .........................................    152,940

     Property, Plant and Equipment, Net ..............................    281,622
     Goodwill, Net ...................................................    166,720
     Other Assets ....................................................     12,849
                                                                         --------
        Total Assets .................................................   $614,131
                                                                         ========


Liabilities:
     Accounts Payable ................................................   $ 26,125
     Short-Term Borrowings and Current Portion of Long-Term Debt .....     13,136
     Other Current Liabilities .......................................     21,048
                                                                         --------
        Total Current Liabilities ....................................     60,309

     Long-Term Debt ..................................................      1,727
     Minority Interest Liability .....................................    197,513
     Deferred Income Taxes ...........................................     26,917
     Other Liabilities ...............................................     95,538
                                                                         --------
         Total Liabilities ...........................................    382,004
                                                                         --------
         Net Assets ..................................................   $232,127
                                                                         ========
</Table>

3.   INVENTORIES

     Inventories by category are as follows:

<Table>
<Caption>
                                                 SEPTEMBER 30,    DECEMBER 31,
                                                     2001             2000
                                                --------------   --------------
                                                        (in thousands)
<S>                                             <C>              <C>
Raw materials, components and supplies ......   $      128,896   $      152,569
Work in process .............................           47,443           46,500
Finished goods ..............................          307,607          244,519
                                                --------------   --------------
                                                $      483,946   $      443,588
                                                ==============   ==============
</Table>

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



                                       6
<PAGE>

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

4.   BUSINESS COMBINATIONS

     On April 19, 2001, the Company acquired Orwell Group plc ("Orwell") for
total consideration of approximately $258.5 million, consisting of 3.4 million
shares of the Company's common stock, $1.00 par value ("Common Stock") and $81.4
million of assumed debt which was paid in full following the closing of the
transaction. Orwell is an international provider of oilfield services for
drilling, fishing, remediation and marine applications. This acquisition
increases the Company's presence in the international markets and increases
capacity. Orwell's operations are being integrated into the Company's Drilling
and Intervention Services Division.

     The Company also completed various other smaller acquisitions during the
nine months ended September 30, 2001 for total consideration of approximately
$166.9 million, of which $136.9 million was paid in cash and assumed debt and
$30.0 million was paid in the form of Common Stock.

     The acquisitions discussed above were accounted for using the purchase
method of accounting; accordingly, the results of operations 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.

5.   ASSET SECURITIZATION

     In July 2001, the Company entered into an agreement with a financial
institution to securitize, on a continuous basis, an undivided interest in a
specific pool of the Company's domestic accounts receivables. Pursuant to this
agreement, the Company periodically sells certain trade accounts receivables to
a wholly-owned bankruptcy-remote subsidiary of the Company, W1 Receivables, L.P.
("W1"). W1 was formed to purchase accounts receivables and, in turn, sell
participating interests in such accounts receivables to a financial institution.
The financial institution then purchases and receives ownership and security
interests in those receivables. In this transaction, the Company retained
servicing responsibilities and a subordinated interest in the receivables sold.
The Company's retained interest in the receivables pool is valued based on the
recoverable value which approximates book value. There is no recourse against
the Company for failure of debtors to pay when due, and the Company's retained
interest in the receivables pool is subordinate to the investors' interests. The
Company is permitted to securitize up to $150.0 million under this agreement.
The Company pays a program fee on participating interests at a variable rate
based on the financial institution's commercial paper rate plus other fees.
Program fees totaled $1.3 million for the three and nine months ended September
30, 2001. As of September 30, 2001, the Company had received $136.8 million for
purchased interests which was used to pay down short-term debt.

6.   SHORT-TERM DEBT

     In April 2001, the Company entered into a $250.0 million, three-year
multi-currency revolving credit facility, with commitment capacity of up to
$400.0 million. As of September 30, 2001, the Company had $158.0 million
available under this agreement. Amounts outstanding under this facility accrue
interest at a variable rate based on the borrower's applicable Eurocurrency rate
and credit ratings assigned to the Company by Standard and Poor's and Moody's
Investor Service. A commitment fee of 0.125% is payable quarterly on the unused
portion of the facility. The facility contains customary affirmative and
negative covenants and reflects the same covenant structure as the Company's
existing $250.0 million revolving credit agreement, dated May 1998, which
remains in effect.

     The Company entered into a five-year unsecured credit agreement in May 1998
which 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 September 30, 2001, the Company had $43.0 million
available under this facility due to amounts outstanding and $40.2 million being
used to secure outstanding letters of credit. 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 to the Company by Standard and Poor's
and Moody's Investor Service, 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.



                                       7
<PAGE>

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

     The Company also engages in unsecured short-term borrowings with various
institutions pursuant to uncommitted facilities and bid note arrangements. At
September 30, 2001, the Company had $43.5 million in unsecured short-term
borrowings outstanding under these arrangements with interest rates ranging from
3.80% to 5.77%.

7.   INTEREST RATE SWAP

     In July 2001, the Company entered into an interest rate swap to hedge the
exposure on $100.0 million of its 7 1/4% Senior Notes due May 2006. The
objective of this transaction is to protect the debt against changes in fair
value and take advantage of the interest rates available in the current economic
environment. Under the agreement, on May 15 and November 15 of each year until
maturity on May 15, 2006, the Company will receive interest at the fixed rate of
7 1/4% and will pay a floating rate based on six month LIBOR in arrears plus a
spread of 1.405%. The hedge qualifies under Statement of Financial Accounting
Standards ("SFAS") No. 133 for the shortcut method of accounting. The fair value
of the swap is offset by the effect of changes in the underlying basis of the
hedged transaction, and the interest rate differential to be received or paid on
the swap is recognized over the life of the swap as an adjustment to interest
expense. As of September 30, 2001, the fair market value of this swap agreement
was a $5.0 million asset, which is recorded in Other Assets on the Consolidated
Condensed Balance Sheets.

8.   DISCONTINUED OPERATIONS

     At the close of business on April 14, 2000 (the "Spin-off Date"), the
Company distributed shares of its wholly owned subsidiary Grant Prideco, Inc.
("Grant Prideco") to the holders of record of Common Stock as of March 23, 2000.
As a result, the accompanying Consolidated Condensed Statements of Income
reflect the results of operations for Grant Prideco through the Spin-off Date as
Loss from Discontinued Operations, Net of Taxes. 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.

     Condensed results of Grant Prideco were as follows:

<Table>
<Caption>
                                                               NINE MONTHS
                                                          ENDED SEPTEMBER 30,
                                                                  2000
                                                          -------------------
                                                             (in thousands)
<S>                                                       <C>
Revenues ..............................................   $           124,813
                                                          -------------------

Loss before interest allocation and income taxes ......   $              (831)
Interest allocation ...................................                (2,500)
Income tax benefit ....................................                   888
                                                          -------------------
Net loss before Spin-off related costs ................                (2,443)
Spin-off related costs, net of taxes ..................                (1,015)
                                                          -------------------
Net loss ..............................................   $            (3,458)
                                                          ===================
</Table>

     The Company purchases 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 for the nine months ended September 30, 2000 were $7.0 million. These
purchases represent Grant Prideco's cost.

     The results from discontinued operations for the nine months ended
September 30, 2000 include a management fee charged to Grant Prideco of $0.5
million. The fee is based on the time devoted to Grant Prideco for accounting,
tax, treasury and risk management services.



                                       8
<PAGE>

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

     The Company 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. The Company is entitled
to apply against its purchases a drill stem credit in the amount of $30.0
million, subject to a limitation of the application of the credit to no more
than 20% of any purchase. As of September 30, 2001, the Company had $22.9
million remaining of the drill stem credit.

9.   EARNINGS PER SHARE

     Basic earnings per share for all periods presented equals net income
divided by the weighted average number of shares of Common Stock outstanding
during the period. Diluted earnings per share is computed by dividing net
income, as adjusted for the assumed conversion of dilutive debentures, by the
weighted average number of shares of Common Stock outstanding during the period
adjusted for the dilutive effect of the Company's stock option and restricted
stock plans and the incremental shares for the assumed conversion of dilutive
debentures.

     Diluted earnings per share for the three and nine months ended September
30, 2001 reflects the assumed conversion of the Company's Zero Coupon
Convertible Senior Debentures (the "Zero Coupon Debentures") and the Company's
5% Convertible Subordinated Preferred Equivalent Debentures (the "Convertible
Preferred Debentures"), as the conversion of each in those periods would have
been dilutive. Net income for the dilutive earnings per share calculation is
adjusted to add back the amortization of original issue discount, net of taxes,
relating to the Zero Coupon Debentures totaling $2.5 million and $7.6 million
for the three and nine months ended September 30, 2001, respectively, and
interest, net of taxes, on the Convertible Preferred Debentures totaling $3.3
million and $6.5 million for the three and nine months ended September 30, 2001,
respectively.

     The following reconciles basic and diluted weighted average shares
outstanding:

<Table>
<Caption>
                                                                        THREE MONTHS           NINE MONTHS
                                                                     ENDED SEPTEMBER 30,   ENDED SEPTEMBER 30,
                                                                     -------------------   -------------------
                                                                       2001       2000       2001       2000
                                                                     --------   --------   --------   --------
                                                                               (in thousands)
<S>                                                                 <C>        <C>        <C>        <C>
Basic weighted average shares outstanding ........................    115,068    109,792    113,093    109,147
Dilutive  effect of stock  option  and  restricted  stock plans ..      3,370      4,708      4,605      3,761
Dilutive effect of Zero Coupon Debentures ........................      9,097         --      9,097         --
Dilutive effect of Convertible Preferred Debentures ..............      7,546         --      5,031         --
                                                                     --------   --------   --------   --------
Diluted weighted average shares outstanding ......................    135,081    114,500    131,826    112,908
                                                                     ========   ========   ========   ========
</Table>

10.  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>
                                                           NINE MONTHS
                                                       ENDED SEPTEMBER 30,
                                                     ------------------------
                                                        2001          2000
                                                     ----------    ----------
                                                         (in thousands)
<S>                                                  <C>           <C>
Fair value of assets, net of cash acquired .......   $  213,950    $   87,173
Goodwill .........................................      312,697       129,256
Total liabilities, including minority interest ...     (105,168)      (70,812)
Common Stock issued ..............................     (207,062)      (59,251)
                                                     ----------    ----------
Cash consideration, net of cash acquired .........   $  214,417    $   86,366
                                                     ==========    ==========
</Table>



                                       9
<PAGE>

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

11.  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 divides its business segments into three separate groups as
defined by the chief operating decision maker: drilling and intervention
services, completion systems, and artificial lift systems. The Company also
historically operated a compression services segment. The amounts reported for
this segment include results up through February 9, 2001 (Note 2).

     The Company's Drilling and Intervention Services segment provides a wide
range of oilfield products and services, including fishing services, third-party
and proprietary drilling products, well installation services, cementing
products and underbalanced drilling and specialty pipeline services.

     The Company's Completion Systems segment provides completion products and
systems including packers, sand control, flow control, expandable products,
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 historically packaged, rented
and sold parts and provided services for gas compressor units over a broad
horsepower range.



                                       10
<PAGE>

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

     Financial information by industry segment for each of the three and nine
months ended September 30, 2001 and 2000 is summarized below. The accounting
policies of the segments are the same as those of the Company.

<Table>
<Caption>
                                                        THREE MONTHS                    NINE MONTHS
                                                     ENDED SEPTEMBER 30,             ENDED SEPTEMBER 30,
                                                ----------------------------    ----------------------------
                                                    2001            2000            2001            2000
                                                ------------    ------------    ------------    ------------
                                                                       (in thousands)
<S>                                             <C>             <C>             <C>             <C>
Revenues from unaffiliated customers
     Drilling and Intervention Services .....   $    363,293    $    225,720    $    986,197    $    619,997
     Completion Systems .....................         86,838          56,656         247,807         150,821
     Artificial Lift Systems ................        158,490         119,910         446,836         340,181
     Compression Services ...................             --          59,884          26,939         168,401
                                                ------------    ------------    ------------    ------------
                                                $    608,621    $    462,170    $  1,707,779    $  1,279,400
                                                ============    ============    ============    ============

EBITDA(a)
     Drilling and Intervention Services .....   $    127,824    $     67,334    $    345,294    $    186,340
     Completion Systems .....................         15,588           7,391          40,875          10,478
     Artificial Lift Systems ................         29,480          17,429          79,504          46,793
     Compression Services ...................             --          11,195           3,587          32,801
     Corporate(b) ...........................         (1,274)         (8,058)        (10,147)        (22,506)
                                                ------------    ------------    ------------    ------------
                                                $    171,618    $     95,291    $    459,113    $    253,906
                                                ============    ============    ============    ============

Depreciation and amortization
     Drilling and Intervention Services .....   $     38,064    $     26,288    $    100,491    $     77,280
     Completion Systems .....................          8,368           6,660          22,314          19,257
     Artificial Lift Systems ................          7,263           6,859          21,061          19,373
     Compression Services ...................             --           9,636           4,184          28,012
     Corporate(b) ...........................          1,763             839           4,795           2,417
                                                ------------    ------------    ------------    ------------
                                                $     55,458    $     50,282    $    152,845    $    146,339
                                                ============    ============    ============    ============

Operating income (loss)
     Drilling and Intervention Services .....   $     89,760    $     41,046    $    244,803    $    109,060
     Completion Systems .....................          7,220             731          18,561          (8,779)
     Artificial Lift Systems ................         22,217          10,570          58,443          27,420
     Compression Services ...................             --           1,559            (597)          4,789
     Corporate(b) ...........................         (3,037)         (8,897)        (14,942)        (24,923)
                                                ------------    ------------    ------------    ------------
                                                $    116,160    $     45,009    $    306,268    $    107,567
                                                ============    ============    ============    ============
</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 those
     of another company.

(b)  Includes Equity in Earnings of Unconsolidated Affiliates.



                                       11
<PAGE>

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

     As of September 30, 2001, total assets were $1,873.0 million for Drilling
and Intervention Services, $646.6 million for Completion Systems, $844.6 million
for Artificial Lift Systems and $513.4 million for Corporate.

     As of December 31, 2000, total assets were $1,284.4 million for Drilling
and Intervention Services, $538.9 million for Completion Systems, $724.6 million
for Artificial Lift Systems, $614.1 million for Compression Services and $299.6
million for Corporate.

12.  RECENT ACCOUNTING PRONOUNCEMENTS

     In August 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets".
This statement supercedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", and the
accounting and reporting provisions of Accounting Principles Board Opinion
("APB") No. 30. This statement retains the fundamental provisions of SFAS No.
121 and the basic requirements of APB No. 30; however, it establishes a single
accounting model to be used for long-lived assets to be disposed of by sale and
it expands the presentation of discontinued operations to include more disposal
transactions. The provisions of this statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001. The
Company does not anticipate that the statement will have a material impact on
its financial position or results of operations.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Intangible
Assets." This statement establishes new accounting standards for goodwill,
recognition of intangibles and certain intangibles determined to have an
indefinite life. It continues to require the recognition of goodwill and certain
intangibles determined to have an indefinite life as assets but does not permit
their amortization as previously required. The statement also establishes a new
method of testing goodwill and intangibles determined to have an indefinite life
for impairment. It requires them to be tested for impairment at least annually
at a reporting unit level and written down against results of operations in the
periods in which the recorded value is greater than the market value. This
statement is effective for fiscal years beginning after December 15, 2001 except
for goodwill and certain intangibles determined to have an indefinite life
acquired after June 30, 2001 which will be subject to the non-amortization
provisions of this statement immediately. The Company will apply the new rules
on accounting for goodwill and other intangible assets beginning in the first
quarter of 2002. Application of the goodwill non-amortization provision of this
statement is expected to result in an increase in net income per diluted share
of approximately $0.28, on an annual basis. The Company has not yet determined
whether the potential non-amortization of identifiable intangible assets will
have a material impact on its financial position and results of operations.
During 2002, the Company will perform the first of the required impairment
tests; therefore, has not yet determined what the impact of these tests will be
on its financial position and results of operations.

     In July 2001, the FASB issued SFAS No. 141, "Business Combinations." This
statement establishes accounting and reporting standards requiring that all
business combinations be accounted for using the purchase method of accounting.
This statement is effective for all business combinations initiated after June
30, 2001 and has no current impact on the Company's financial statements.

     In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities - a
replacement of FASB Statement No. 125." This statement revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of SFAS
No. 125's provisions without reconsideration. SFAS No. 140 is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001. It is effective for recognition and
reclassification of collateral and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000. The
Company adopted this standard in connection with its agreement to sell accounts
receivable (see Note 5). The adoption of this standard did not have a material
effect on the Company's financial position or results of operations.



                                       12
<PAGE>

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

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes new accounting
and reporting standards requiring that all derivative instruments, including
derivative instruments embedded in other contracts, be recorded in the balance
sheet as either an asset or liability, depending on the rights or obligations
under the contracts, at its fair value. The statement requires that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. For a qualifying cash flow hedge, the changes
in fair value of the derivative instrument are initially recognized in other
comprehensive income and then are reclassified into earnings in the period that
the hedged transaction affects earnings. For a qualifying fair value hedge, the
changes in fair value of the derivative instrument are offset against the
corresponding changes for the hedged item through earnings. Such accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results of the hedged item in the income statement and requires that a company
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting treatment. SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities", was issued in June 2000
and amends certain provisions of SFAS No. 133. The Company adopted SFAS No. 133
and SFAS No. 138 as of January 1, 2001 with no financial statement impact.

13.  SUBSEQUENT EVENTS

     On October 24, 2001 the Company signed an agreement to acquire CiDRA
Corporation's Optical Sensing Systems ("CiDRA OSS") unit for $130.0 million.
Consideration will be in the form of Common Stock or up to 90% cash, at the
option of the Company. If the Company elects to convert any percentage of the
purchase price to cash, the cash consideration to be paid will be based on an
overall purchase price of $125.0 million. CiDRA OSS is a provider of a suite of
permanent in-well fiber optic sensor systems which include pressure temperature
gauges, a flow and phase fraction system, and an all-fiber in-well seismic
system. This acquisition is expected to provide the Company's Completion Systems
Division with proprietary technology in the growing field of advanced
intelligent completions and field automation systems. CiDRA OSS also complements
this division's growing mechanical capabilities for "smart" completion
technologies by providing a means of monitoring downhole well and reservoir
activity. The acquisition is subject to customary closing conditions, the
receipt of all required regulatory approvals and the expiration or termination
of all waiting periods (and extensions thereof) under the Hart-Scott-Rodino Act.
Although there can be no assurance that this acquisition will close, the Company
currently expects this acquisition to be consummated sometime in the fourth
quarter of this year.

     The Company signed an agreement to purchase the Johnson Screens division
("Johnson Screens") of Vivendi Environnement on October 22, 2001 for $110.0
million. Johnson Screens is a global provider of screens for fluid-solid
separation processes, including the recently-introduced Excelflo(TM) premium
screen line and the Superflo(TM), Super Weld(R) and Thin Pack(TM) screens for
oil and gas production. The integration of Johnson Screens within the Company's
Completion Systems Division is expected to provide significant manufacturing
consolidation benefits, economies of scale and access to innovative new
technologies. The acquisition is subject to customary closing conditions, the
receipt of all required foreign regulatory approvals and the expiration or
termination of all waiting periods (and extensions thereof) under the
Hart-Scott-Rodino Act. Although there can be no assurance that this acquisition
will close, the Company currently expects this acquisition to be consummated
sometime in the fourth quarter of this year.



                                       13
<PAGE>

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

GENERAL

     Our business is conducted through three principal operating divisions: (1)
Drilling and Intervention Services, (2) Completion Systems and (3) Artificial
Lift Systems. In addition to these operations, we historically operated a
Compression Services Division and a Drilling Products Division. In February
2001, we completed the merger of essentially all of our Compression Services
Division into a subsidiary of Universal Compression Holdings, Inc. in exchange
for 13.75 million shares of Universal common stock, or an approximate 48%
interest in Universal. On April 14, 2000, we distributed to our stockholders all
of the outstanding shares of Grant Prideco, which held the operating assets used
in our Drilling Products Division. As a result of this distribution, our
Drilling Products Division is presented as discontinued operations in the
accompanying financial statements.

     The following is a discussion of our results of operations for the three
and nine months ended September 30, 2001 and 2000. 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, 2000 included in our Annual Report on Form 10-K, as amended by
Forms 10-K/A.

     This 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 the 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 price of oil and natural gas.
Certain products and services, such as our fishing services, drilling products,
well installation services and well completion products and services, are
dependent on the level of exploration and development activity and particularly
on the completion phase of a well. Other products and services, such as our
artificial lift systems, are dependent on oil and/or gas production activity. We
currently estimate that around two-thirds of our continuing operations are
primarily reliant on drilling activity, with the remainder focused on production
and reservoir enhancement activity.

     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>
September 30, 2001 ......   $        23.43   $        2.244            1,539              761
December 31, 2000 .......            26.80            9.775            1,497              703
September 30, 2000 ......            30.84            5.186            1,327              710
</Table>

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

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

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

     The oil and gas industry has been subject to extreme volatility in the last
few years. During 2000, the price of oil increased as a result of supply and
demand imbalances created by reduced customer investment in oil and gas
development in 1998 and 1999 when oil and gas prices decreased and North
American and international rig count hit historical lows. Due to the supply and
demand imbalances that caused the increase in the price of oil and gas in 2000,
we experienced steady improvements in the demand for our products and services,
which continued through the first nine months of 2001.



                                       14
<PAGE>

     In the U.S., the level of rig activity began to slow-down in the third
quarter 2001. The U.S. rig count peaked at 1,293 rigs in July 2001 and by the
end of October, the count decreased to 1,063 rigs. Natural gas prices had
declined from a high of $9.82 per mcf earlier in the year to a recent price of
approximately $3.00 per mcf. We expect a continued decline in the North American
markets in response to the slowing growth in the worldwide economy. Although the
initial decline in U.S. activity did not significantly impact the demand for our
products and services in the third quarter 2001, a continued decline in 2002
will adversely impact our U.S. markets. However, for the remainder of 2001 and
for 2002, we currently expect improvements in the markets outside North and
Latin America. In general, we expect the markets to affect our businesses as
follows:

     DRILLING AND INTERVENTION SERVICES. This division is expected to see slight
improvements in the fourth quarter as compared to the third quarter in both
revenues and profitability. We currently expect that the markets in Europe and
West Africa, Middle East and North Africa and Asia Pacific will experience sales
improvements in the fourth quarter and into 2002. Due to the recent decline in
the natural gas prices we expect a decline in the North and Latin American
market segments through year-end and into 2002.

     COMPLETION SYSTEMS. In 2001, we completed our plan to increase our
manufacturing capacity by approximately 50% over our available capacity as of
mid-2000 and have continued to expand this division's sales and service
infrastructure worldwide. We expect to see top-line growth in the fourth quarter
of 2001 and in 2002 as we continue to realize the benefits of these initiatives.
This growth will be offset in part by a decline in North American drilling.
However, in addition to reliance upon drilling activity, the level of this
division's contribution will be dependent on its ability to meet market demand
through increased manufacturing output and its ability to successfully market
its products, including its expandable products, liner hangers and packer
systems.

     ARTIFICIAL LIFT SYSTEMS. We expect that our Artificial Lift Systems
Division will continue to see revenue improvements due to new product offerings
and international market penetration in spite of current market trends. This
division will benefit from any shift in priority that our customers place on oil
projects rather than natural gas projects in light of the recent decline in
natural gas. We believe we will experience moderate improvements in margins as a
result of higher throughput in our plants and the impact of price increases
initiated throughout 2000.

     Overall, the level of results of operations for our businesses in the
fourth quarter 2001 and into 2002 will be heavily dependent on the worldwide
industrial production and our ability to react to the changes in the industry.
In addition, the strength of the industry will be highly dependent on many other
external factors, such as world economic conditions, world response to the
September 11, 2001 terrorism acts, member country compliance with Organization
of Petroleum Exporting Countries quotas and weather conditions. The extreme
volatility of our markets makes predictions regarding future results difficult.



                                       15
<PAGE>

RESULTS OF CONTINUING OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2000

     The following charts contain selected financial data comparing our results
for the three months ended September 30, 2001 and September 30, 2000:

     COMPARATIVE FINANCIAL DATA

<Table>
<Caption>
                                                                       THREE MONTHS ENDED
                                                                          SEPTEMBER 30,
                                                                    ------------------------
                                                                       2001          2000
                                                                    ----------    ----------
                                                                     (in thousands, except
                                                                   percentages and per share
                                                                              data)
<S>                                                                <C>            <C>
Revenues ........................................................   $  608,621    $  462,170
Gross Profit ....................................................      214,112       139,775
Gross Profit % ..................................................         35.2%         30.2%
Selling, General and Administrative Attributable to Segments ....   $   94,915    $   85,869
Corporate General and Administrative ............................        9,984         9,574
Operating Income ................................................      116,160        45,009
Net Income ......................................................       60,181        21,523
Net Income Excluding Goodwill Amortization, Net of Taxes ........       70,343        29,658
EBITDA (a) ......................................................      171,618        95,291
Net Income per Diluted Share ....................................         0.49          0.19
Net Income per Diluted Share Excluding Goodwill Amortization,
   Net of Taxes .................................................         0.56          0.26
</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, and net income. In addition, EBITDA
     calculations by one company may not be comparable to those of another
     company.

     SALES BY GEOGRAPHIC REGION

<Table>
<Caption>
                                       THREE MONTHS ENDED
                                          SEPTEMBER 30,
                                      --------------------
                                        2001        2000
                                      --------    --------
<S>                                   <C>         <C>
REGION:(a)
U.S. ..............................         44%         46%
Canada ............................         14          20
Europe and West Africa ............         17          11
Latin America .....................         10          10
Middle East and North Africa ......          8           6
Asia Pacific ......................          7           7
                                      --------    --------
    Total .........................        100%        100%
                                      ========    ========
</Table>

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

     A discussion of our results for the three months ended September 30, 2001
as compared to the three months ended September 30, 2000 follows:

o    Third quarter 2001 consolidated revenues improved 51.3% over the third
     quarter 2000, excluding the results of our Compression Services Division
     that was merged into Universal Compression. This incremental revenue is the
     result of improved market conditions, pricing initiatives, acquisitions and
     new product offerings. Our third quarter 2001 revenues in North America
     were $88.4 million higher than they were in the third quarter of 2000. Our
     international revenues increased 76.2% compared to a quarterly
     international rig count increase of 10.7%. Our recent acquisitions
     contributed more than $33.0 million of international revenues in the third
     quarter of



                                       16
<PAGE>

     2001. Excluding the impact of these acquisitions, our most significant
     international improvements were in Latin America and Asia Pacific.

o    Our gross profit as a percentage of revenues increased 16.6% from the third
     quarter of 2000 to the third quarter of 2001. Improved margins reflect
     pricing initiatives and improved manufacturing efficiencies due to higher
     throughput.

o    Selling, general and administrative expenses decreased as a percentage of
     revenues from 20.7% in the third quarter of 2000 to 17.2% in the third
     quarter of 2001. The decrease primarily reflects a higher revenue base,
     partially offset by higher selling costs associated with the additional
     revenues and incremental costs attributable to our acquisitions not yet
     fully integrated. Goodwill amortization was $10.8 million for the three
     months ended September 30, 2001 and $9.2 million for the same period last
     year.

o    Our effective tax rate for the third quarters of 2001 and 2000 was 36.5%.

  SEGMENT RESULTS

     DRILLING AND INTERVENTION SERVICES

     Our Drilling and Intervention Services Division continued to see
improvements in both revenues and operating income as this division benefited
from pricing initiatives, acquisitions and the higher North American and
international rig count. In April 2001, we acquired Orwell Group plc which is an
international provider of oilfield services for drilling, fishing, remediation
and marine applications.

     All product lines and geographic regions experienced increased revenue when
compared to the third quarter of 2000. The product line reflecting the most
significant improvement in revenues was underbalanced services where revenues
nearly doubled to $41.7 million. Excluding the results of Orwell, this
division's strongest international improvements were in Latin America and Asia
Pacific.

     The following chart sets forth data regarding the results of our Drilling
and Intervention Services Division for the third quarters of 2001 and 2000:

<Table>
<Caption>
                                              THREE MONTHS ENDED
                                                 SEPTEMBER 30,
                                           ------------------------
                                              2001          2000
                                           ----------    ----------
                                             (in thousands, except
                                                 percentages)
<S>                                        <C>           <C>
Revenues ...............................   $  363,293    $  225,720
Gross Profit ...........................      132,557        73,322
Gross Profit % .........................         36.5%         32.5%
Selling, General and Administrative ....   $   42,797    $   32,276
Operating Income .......................       89,760        41,046
EBITDA .................................      127,824        67,334
</Table>

     A discussion of the results of our Drilling and Intervention Services
Division for the third quarter of 2001 compared to the third quarter of 2000
follows:

o    Our North American revenues for the third quarter of 2001 improved by 37.8%
     over the comparable period of 2000. Acquisitions, pricing initiatives and
     an increase in the North American rig count contributed to this
     improvement.

o    Our international revenues, excluding Canada, increased 95.0% from the
     third quarter of 2000 primarily due to an increase of $19.2 million in
     underbalanced services international revenues and our acquisition of
     Orwell. An international rig count increase of 10.7% also contributed to
     our international improvement.

o    Selling, general and administrative expenses decreased as a percentage of
     revenues from 14.3% in the third quarter of 2000 to 11.8% in the third
     quarter of 2001. The decrease primarily reflects a higher revenue base
     partially offset by increased selling costs attributable to higher sales
     and an increase of $1.9 million in goodwill and intangible amortization
     expense. We are in the process of fully integrating current year
     acquisitions, which is also diluting the positive impact of the higher
     revenue base.

o    Incremental EBITDA on incremental revenues was 44.0%.



                                       17
<PAGE>

     COMPLETION SYSTEMS

     Our Completion Systems Division has shown strong quarterly improvements in
its operating results since its formation in 1999. Revenues increased 53.3% from
the third quarter of 2000. Geographically, the most improved regions were North
America and Asia Pacific. On a product line basis, the strongest growth from the
third quarter of 2000 was in expandable products and liner hangers.

     The following chart sets forth data regarding the results of our Completion
Systems Division for the third quarters of 2001 and 2000:

<Table>
<Caption>
                                              THREE MONTHS ENDED
                                                 SEPTEMBER 30,
                                           ------------------------
                                              2001          2000
                                           ----------    ----------
                                             (in thousands, except
                                                 percentages)
<S>                                        <C>           <C>
Revenues ...............................   $   86,838    $   56,656
Gross Profit ...........................       24,312        14,526
Gross Profit % .........................         28.0%         25.6%
Selling, General and Administrative ....   $   17,092    $   13,795
Operating Income .......................        7,220           731
EBITDA .................................       15,588         7,391
</Table>

     A discussion of the results of our Completion Systems Division for the
third quarter of 2001 compared to third quarter of 2000 follows:

o    Revenues significantly improved primarily due to industry conditions,
     market expansion and new product offerings. The use of our worldwide
     infrastructure to expand into new markets contributed to a 46.0% increase
     in international revenues. We have also benefited from the market
     acceptance of our new technologies, particularly our expandable products,
     and our recently added manufacturing capacity.

o    Gross profit as a percentage of revenues increased 9.4% primarily due to
     pricing initiatives and improved product mix.

o    Research and development expenses of this division were $4.5 million for
     the third quarter of 2001 and $2.9 million for the same period last year.

o    Selling, general and administrative expenses as a percentage of revenues
     decreased from 24.3% in the third quarter of 2000 to 19.7% in the same
     period in 2001. The decrease is primarily due to the higher revenue base.

o    Incremental EBITDA on incremental revenues was 27.2%.

     ARTIFICIAL LIFT SYSTEMS

     Operating results from our Artificial Lift Systems Division are heavily
dependent on oil production activity. Revenues for this division increased 32.2%
from third quarter 2000 levels in a market that was dominated by natural gas.
Geographically, our U.S. and Latin American markets both experienced strong
growth. On a product line basis, our reciprocating rod lift and gas lift showed
the greatest improvement over third quarter 2000.



                                       18
<PAGE>

     The following chart sets forth data regarding the results of our Artificial
Lift Systems Division for the third quarters of 2001 and 2000:

<Table>
<Caption>
                                              THREE MONTHS ENDED
                                                 SEPTEMBER 30,
                                           ------------------------
                                              2001          2000
                                           ----------    ----------
                                             (in thousands, except
                                                 percentages)
<S>                                        <C>           <C>
Revenues ...............................   $  158,490    $  119,910
Gross Profit ...........................       57,243        40,650
Gross Profit % .........................         36.1%         33.9%
Selling, General and Administrative ....   $   35,026    $   30,080
Operating Income .......................       22,217        10,570
EBITDA .................................       29,480        17,429
</Table>

     A discussion of the results of our Artificial Lift Systems Division as
reflected above for the third quarter of 2001 compared to the third quarter of
2000 follows:

o    The third quarter of 2001 experienced an increase in revenues of $38.6
     million compared to the third quarter of 2000. Revenues in the U.S.
     increased 69.4% due to pricing initiatives, increased volume and
     acquisitions. Our current year acquisitions contributed approximately $20.0
     million in revenues in the third quarter of 2001.

o    Gross profit as a percentage of revenues increased by 6.5% from the
     comparable period in 2000 primarily due to pricing and improved
     manufacturing productivity and utilization.

o    Selling, general and administrative expenses decreased as a percentage of
     revenue from 25.1% in the third quarter of 2000 to 22.1% in the comparable
     quarter this year. The decrease is primarily attributable to the higher
     revenue base and cost reduction initiatives, partially offset by increased
     selling costs associated with the incremental revenue.

o    Incremental EBITDA on incremental revenues was 31.2%.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2000

     The following charts contain selected financial data comparing our results
for the nine months ended September 30, 2001 and September 30, 2000:

     COMPARATIVE FINANCIAL DATA

<Table>
<Caption>
                                                                                 NINE MONTHS ENDED
                                                                                    SEPTEMBER 30,
                                                                              ------------------------
                                                                                 2001          2000
                                                                              ----------    ----------
                                                                                (in thousands, except
                                                                              percentages and per share
                                                                                        data)
<S>                                                                           <C>           <C>
       Revenues ...........................................................   $1,707,779    $1,279,400
       Gross Profit .......................................................      593,071       381,543
       Gross Profit % .....................................................         34.7%         29.8%
       Selling, General and Administrative Attributable to Segments .......   $  271,861    $  249,053
       Corporate General and Administrative ...............................       29,650        27,383
       Operating Income ...................................................      306,268       107,567
       Income from Continuing Operations ..................................      160,127        44,720
       Income from Continuing Operations Excluding
         Goodwill Amortization, Net of Taxes ..............................      187,366        69,308
       EBITDA .............................................................      459,113       253,906
       Income per Diluted Share from Continuing Operations ................         1.32          0.40
       Income per Diluted Share from Continuing Operations
         Excluding Goodwill Amortization, Net of Taxes ....................         1.53          0.61
</Table>



                                       19
<PAGE>

      SALES BY GEOGRAPHIC REGION

<Table>
<Caption>
                                        NINE MONTHS ENDED
                                          SEPTEMBER 30,
                                      --------------------
                                        2001        2000
                                      --------    --------
<S>                                   <C>         <C>
REGION:(a)
U.S. ..............................         45%         46%
Canada ............................         15          21
Europe and West Africa ............         14          11
Latin America .....................         11           9
Middle East and North Africa ......          8           6
Asia Pacific ......................          7           7
                                      --------    --------
    Total .........................        100%        100%
                                      ========    ========
</Table>

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

     A discussion of our results for the nine months ended September 30, 2001
compared to the nine months ended September 30, 2000 follows:

o    Consolidated revenues for the first nine months of 2001, excluding our
     historical compression results, improved 51.3% over the same period of
     2000. Revenues in North America increased $272.6 million, while
     international revenues increased $297.2 million. Our 2001 acquisitions
     contributed more than $90.0 million in revenue and the market acceptance of
     our underbalanced drilling services and expandable products contributed
     incremental revenue of more than $80.0 million in 2001.

o    Gross profit as a percentage of revenues increased 16.4%, primarily due to
     pricing, product mix and manufacturing improvements.

o    Selling, general and administrative expenses decreased as a percentage of
     revenues from 21.6% in the first nine months of 2000 to 17.7% for the same
     period of 2001 primarily due to a higher revenue base. Goodwill
     amortization was $29.0 million for the nine months ended September 30, 2001
     and $27.2 million for the same period of 2000.

o    Incremental EBITDA as a percentage of incremental revenues was 47.9%.

o    Our effective tax rate for the nine months ended September 30, 2001 was
     36.5%, compared to 36.0% for the same period of 2000, due to the mix of
     foreign and domestic income.

  SEGMENT RESULTS

     DRILLING AND INTERVENTION SERVICES

     The following chart sets forth data regarding the results of our Drilling
and Intervention Services Division for the nine months ended September 30, 2001
and 2000:

<Table>
<Caption>
                                              NINE MONTHS ENDED
                                                SEPTEMBER 30,
                                           ------------------------
                                              2001          2000
                                           ----------    ----------
                                             (in thousands, except
                                                  percentages)
<S>                                        <C>           <C>
Revenues ...............................   $  986,197    $  619,997
Gross Profit ...........................      359,192       201,580
Gross Profit % .........................         36.4%         32.5%
Selling, General and Administrative ....   $  114,389    $   92,520
Operating Income .......................      244,803       109,060
EBITDA .................................      345,294       186,340
</Table>



                                       20
<PAGE>

     A discussion of the results of our Drilling and Intervention Services
Division for the nine months ended September 30, 2001 compared to the nine
months ended September 30, 2000 follows:

o    Our North American revenues for the first nine months of 2001 improved by
     48.6% over the comparable period of 2000. Pricing initiatives and a 30.8%
     increase in the North American rig count contributed to these improvements.
     Our international revenues were up 73.5%. Current year acquisitions
     contributing over $50.0 million in revenue, increased underbalanced
     drilling services revenue of $55.4 million, and strengthened international
     markets attributed to this improvement.

o    Gross profit as a percentage of revenues increased 12.0% primarily due to
     pricing initiatives, improved market conditions and product mix.

o    Selling, general and administrative expenses decreased as a percentage of
     revenues from 14.9% in 2000 to 11.6% in 2001 due to higher revenue base
     partially offset by higher selling costs and a $3.5 million increase in
     amortization expense.

o    Operating income increased $135.7 million in the nine months ended
     September 30, 2001 as compared to the same period of 2000 primarily due to
     improved market conditions and acquisitions.

     COMPLETION SYSTEMS

     The following chart sets forth data regarding the results of our Completion
Systems Division for the nine months ended September 30, 2001 and 2000:

<Table>
<Caption>
                                               NINE MONTHS ENDED
                                                 SEPTEMBER 30,
                                           ------------------------
                                              2001          2000
                                           ----------    ----------
                                             (in thousands, except
                                                  percentages)
<S>                                        <C>           <C>
Revenues ...............................   $  247,807    $  150,821
Gross Profit ...........................       68,773        32,475
Gross Profit % .........................         27.8%         21.5%
Selling, General and Administrative ....   $   50,212    $   41,254
Operating Income (Loss) ................       18,561        (8,779)
EBITDA .................................       40,875        10,478
</Table>

     A discussion of the results of our Completion Systems Division for the nine
months ended September 30, 2001 compared to nine months ended September 30, 2000
follows:

o    Revenues increased by 64.3% compared to the first nine months of 2000, with
     North American revenues increasing $47.8 million and international revenues
     increasing $49.2 million.

o    Gross profit as a percentage of revenues increased 29.3% primarily due to
     pricing initiatives and higher throughput in our manufacturing facilities.

o    Selling, general and administrative expenses as a percentage of revenues
     decreased from 27.4% in 2000 to 20.3% in 2001 primarily due to increased
     revenues partially offset by costs associated with our efforts to expand
     our sales presence.

o    Operating income increased $27.3 million from a loss position last year of
     $8.8 million. Incremental operating income on incremental revenues was
     28.2%.



                                       21
<PAGE>

     ARTIFICIAL LIFT SYSTEMS

     The following chart sets forth data regarding the results of our Artificial
Lift Systems Division for the nine months ended September 30, 2001 and 2000:

<Table>
<Caption>
                                              NINE MONTHS ENDED
                                                 SEPTEMBER 30,
                                           ------------------------
                                              2001          2000
                                           ----------    ----------
                                             (in thousands, except
                                                  percentages)
<S>                                        <C>           <C>
Revenues ...............................   $  446,836    $  340,181
Gross Profit ...........................      161,152       113,359
Gross Profit % .........................         36.1%         33.3%
Selling, General and Administrative ....   $  102,709    $   85,939
Operating Income .......................       58,443        27,420
EBITDA .................................       79,504        46,793
</Table>

     A discussion of the results of our Artificial Lift Systems Division as
reflected above for the nine months ended September 30, 2001 compared to the
nine months ended September 30, 2000 follows:

o    The first nine months of 2001 experienced an increase in revenues of 31.4%
     compared to the same period in 2000. Acquisitions contributed more than
     $35.0 million to the improved revenue. Revenues in North America increased
     $50.6 million and international revenues increased $56.0 million.

o    Selling, general and administrative expenses decreased as a percentage of
     revenues from 25.3% in the nine months ended September 30, 2000 to 23.0% in
     the same period of 2001 due to higher revenue base partially offset by
     higher selling costs incurred to support increased revenues.

o    Operating income increased by $31.0 million compared to 2000. Incremental
     operating income on incremental revenues was 29.1%.

     COMPRESSION SERVICES

     On February 9, 2001, we completed the merger of essentially all of our
Compression Services Division into a subsidiary of Universal in exchange for
13.75 million shares of Universal common stock, which approximated 48% of
Universal's outstanding shares. Subsequent to the merger Universal issued
additional shares of common stock and our ownership declined to 45%. During the
current year, up to the merger date, the Compression Services Division
contributed $26.9 million of revenues, $3.6 million of EBITDA and an operating
loss of $0.6 million to our consolidated results. During the three months ended
September 30, 2000, this division contributed $59.9 million of revenues, $11.2
million of EBITDA and operating income of $1.6 million. During the nine months
ended September 30, 2000, the Compression Services Division contributed $168.4
million of revenue, $32.8 million of EBITDA and operating income of $4.8
million.

     Subsequent to the merger date we began recording equity in earnings of
unconsolidated affiliates based on our portion of Universal's net income. The
compression businesses that were not included in the merger have been combined
with our Artificial Lift Systems Division.

DISCONTINUED OPERATIONS

     Our discontinued operations consist of our Grant Prideco drilling products
division which was spun-off to our stockholders in April 2000. We had a loss
from discontinued operations, net of taxes, for the nine months ended September
30, 2000 of $3.5 million. Included in the loss is $1.0 million of transaction
costs, net of taxes.

LIQUIDITY AND CAPITAL RESOURCES

     Our current sources of capital are current reserves of cash, cash generated
from operations, proceeds from our asset securitization and borrowings under
bank lines of credit. We believe that the current reserves of cash, access to
our existing credit lines and internally generated cash from operations are
sufficient to finance the projected cash requirements of our current operations.
We have recently announced and are continually reviewing potential



                                       22
<PAGE>

acquisitions in our industry. Due to the size of our current pending
acquisitions, we will require additional capital in the form of either debt,
equity or a combination of both.

     As of September 30, 2001, our cash and cash equivalents were $44.7 million,
a net decrease of $109.1 million from December 31, 2000, which was primarily
attributable to the following:

o    Payment to GE Capital for the acquisition of its minority interest in our
     Compression Services Division of $206.5 million.

o    Capital expenditures for property, plant and equipment of $237.2 million,
     including $5.7 million for our Compression Services Division.

o    Acquisition of new businesses of approximately $214.4 million in cash, net
     of cash acquired.

o    Cash inflows from operating activities of $102.5 million.

o    Proceeds from our asset securitization of $136.8 million.

o    Borrowings, net of repayments, on long-term debt and short-term facilities
     of $277.8 million.

     BANKING FACILITIES

     In April 2001, we entered into a $250.0 million, three-year multi-currency
revolving credit facility, with commitment capacity of up to $400.0 million. As
of September 30, 2001, $158.0 million was available under this credit facility.
Amounts outstanding under the facility accrue interest at a variable rate based
on the borrower's applicable Eurocurrency rate and credit ratings assigned to us
by Standard and Poor's and Moody's Investor Service. A commitment fee of 0.125%
is payable quarterly on the unused portion of the facility. The facility
contains customary affirmative and negative covenants, and it reflects the same
covenant structure as our existing $250.0 million revolving credit agreement,
dated May 1998, which remains in effect.

     We have a five-year unsecured revolving credit facility, dated May 1998,
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 September 30, 2001, $43.0 million was available under this
facility due to amounts outstanding and $40.2 million was used to secure
outstanding letters of credit. Borrowings under this 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 to us by Standard and Poor's and Moody's Investor Service, is payable
quarterly on the unused portion of the facility. 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 also have unsecured short-term borrowings with various institutions
pursuant to uncommitted facilities and bid note arrangements. At September 30,
2001, we had $43.5 million in unsecured short-term borrowings outstanding under
these arrangements with interest rates ranging from 3.80% to 5.77%.

     ASSET SECURITIZATION

     In July 2001, we entered into an agreement with a financial institution to
securitize, on a continuous basis, an undivided interest in a specific pool of
our domestic accounts receivables. Pursuant to this agreement, we periodically
sell certain trade accounts receivables to a wholly-owned bankruptcy-remote
subsidiary, W1 Receivables. W1 was formed to purchase accounts receivables and,
in turn, sell participating interests in such accounts receivables to a
financial institution. That financial institution then purchases and receives
ownership and security interest in those receivables. In this transaction, we
retained servicing responsibilities and a subordinated interest in the
receivables sold. Our retained interest in the receivables pool is valued based
on the recoverable value which approximates book value. There is no recourse
against us for failure of debtors to pay when due, and our retained interest in
the receivables pool is subordinate to the investors' interests. We are
permitted to securitize up to $150.0 million under this agreement. We pay a
program fee on participating interests at a variable rate based on the financial
institution's commercial paper rate plus other fees. Program fees totaled $1.3
million for the three and nine months ended September 30, 2001. As of September
30, 2001, we had received $136.8 million for purchased interests which was used
to pay down short-term debt.

     ZERO COUPON CONVERTIBLE SENIOR DEBENTURES

     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



                                       23
<PAGE>
maturity. As of September 30, 2001, the amount recorded on our balance sheet
was $520.7 million, net of original issue discount.

     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.

     CONVERTIBLE PREFERRED DEBENTURES

     In November 1997, we completed a private placement of $402.5 million
principal amount of our 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027. The Convertible Preferred 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 Convertible
Preferred Debentures, the conversion rate was adjusted to $53.34 per share
following our spin-off of Grant Prideco.

     We have the right to redeem the Convertible Preferred Debentures at
redemption prices provided for in the indenture agreement. The Convertible
Preferred 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
Convertible Preferred Debentures by extending the quarterly interest payment
period 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.

     In July 2001, we entered into an interest rate swap to hedge the exposure
on $100.0 million of our 7 1/4% Senior Notes due May 2006. The objective of this
transaction was to protect the debt against changes in fair value and to take
advantage of the interest rates available in the current economic environment.
Under the agreement, on May 15 and November 15 of each year until maturity on
May 15, 2006, we will receive interest at the fixed rate of 7 1/4% and will pay
a floating rate based on six month LIBOR in arrears plus a spread of 1.405%. The
hedge qualifies under Statement of Financial Accounting Standards ("SFAS") No.
133 for the shortcut method of accounting. The fair value of the swap is offset
by the effect of changes in the underlying basis of the hedged transaction, and
the interest rate differential to be received or paid on the swap is recognized
over the life of the swap as an adjustment to interest expense. As of September
30, 2001, the fair market value of this swap agreement was a $5.0 million asset.

     CAPITAL EXPENDITURES

     Our capital expenditures for property, plant and equipment, excluding $5.7
million for our Compression Services Division, during the nine months ended
September 30, 2001 were $231.5 million and primarily related to our new
technologies, drilling equipment, fishing tools and tubular service equipment.
Capital expenditures for 2001 are expected to be approximately $260.0 million,
with fourth quarter expenditures for international and technology. Our
depreciation expense during the nine months ended September 30, 2001 was $117.8
million.

     PENDING ACQUISITIONS

     On October 24, 2001 we signed an agreement to acquire CiDRA Corporation's
Optical Sensing Systems unit for $130.0 million. Consideration will be in the
form of common stock or up to 90% cash, at our option. If we elect to convert
any percentage of the purchase price to cash, the cash consideration to be paid
will be based on an overall purchase price of $125.0 million. CiDRA OSS is a
provider of a suite of permanent in-well fiber optic sensor systems which
include pressure temperature gauges, a provider of flow and phase fraction
systems, and an all-fiber in-well seismic system. This acquisition is expected
to provide our Completion Systems Division with proprietary technology in the
growing field of advanced intelligent completions and field automation systems.
CiDRA complements this division's growing mechanical capabilities for "smart"
completion technologies by providing a means of monitoring downhole well and
reservoir activity.



                                       24
<PAGE>
     We signed an agreement to purchase the Johnson Screens division of Vivendi
Environnement on October 22, 2001 for $110.0 million. Johnson Screens is a
global provider of screens for fluid-solid separation processes, including the
recently-introduced Excelflo(TM) premium screen line and the Superflo(TM), Super
Weld(R) and Thin Pack(TM) screens for oil and gas production. The integration of
Johnson Screens within our Completion Systems Division is expected to provide
significant manufacturing consolidation benefits, economies of scale and access
to innovative new technologies.

     These acquisitions are subject to customary closing conditions, the receipt
of all required foreign regulatory approvals and the expiration or termination
of all waiting periods (and extensions thereof) under the Hart-Scott-Rodino Act.
Although there can be no assurance that these acquisitions will close, we
currently expect these acquisitions to be consummated sometime during the fourth
quarter of this year.

     ACQUISITIONS

     On April 19, 2001, we acquired Orwell for total consideration of
approximately $258.5 million, consisting of 3.4 million shares of our common
stock and $81.4 million of assumed debt which was paid in full immediately
following the closing of the transaction. Orwell is based in Aberdeen, Scotland
and is an international provider of oilfield services for drilling, fishing,
remediation and marine applications. This acquisition increases our share of the
international markets and increases capacity. These operations are being
integrated into our Drilling and Intervention Services Division.

     During the nine months ended September 30, 2001, we also completed various
other acquisitions for total consideration of $166.9 million.

     Some of our acquisitions have resulted in substantial goodwill associated
with their operations, including the addition of goodwill of approximately
$312.7 million during the nine months ended September 30, 2001. Amortization
expense for goodwill and other intangibles during the three and nine months
ended September 30, 2001 was $13.0 million and $35.0 million, respectively.

NEW ACCOUNTING PRONOUNCEMENTS

     In August 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets".
This statement supercedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and the
accounting and reporting provisions of Accounting Principles Board Opinion
("APB") No. 30. This statement retains the fundamental provisions of SFAS No.
121 and retains the basic requirements of APB No. 30; however, it establishes a
single accounting model to be used for long-lived assets to be disposed of by
sale and it expands the presentation of discontinued operations to include more
disposal transactions. The provisions of this statement are effective for
financial statements issued for fiscal years beginning after December 15, 2001.
We do not anticipate that this statement will have a material impact on its
financial position or results of operations.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Intangible
Assets." This statement establishes new accounting standards for goodwill,
recognition of intangibles and certain intangibles determined to have an
indefinite life. It continues to require the recognition of goodwill and certain
intangibles determined to have an indefinite life as assets but does not permit
their amortization as previously required. The statement also establishes a new
method of testing goodwill and intangibles determined to have an indefinite life
for impairment. It requires them to be tested for impairment at least annually
at a reporting unit level and written down against results of operations in the
periods in which the recorded value is more than the market value. This
statement is effective for fiscal years beginning after December 15, 2001,
except for goodwill and certain intangibles determined to have an indefinite
life acquired after June 30, 2001 which will be subject to the non-amortization
provisions of this statement immediately. We will apply the new rules on
accounting for goodwill and other intangible assets beginning in the first
quarter of 2002. Application of the goodwill non-amortization provision of this
statement is expected to result in an increase in net income per diluted share
of approximately $0.28, on an annual basis. We have not yet determined whether
the potential non-amortization of identifiable intangible assets will have a
material impact on our financial position and results of operations. During
2002, we will perform the first of the required impairment tests; therefore,
have not yet determined what the impact of these tests will be on our financial
position and results of operations.



                                       25
<PAGE>

     In July 2001, the FASB issued SFAS No. 141, "Business Combinations." This
statement establishes accounting and reporting standards requiring that all
business combinations be accounted for using the purchase method of accounting.
This statement is effective for all business combinations initiated after June
30, 2001 and have no current impact on our financial statements.

     In September 2000, the FASB issued No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a replacement
of FASB Statement No. 125." This Statement revises the standards for accounting
for securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS No. 125's
provisions without reconsideration. SFAS No. 140 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. It is effective for recognition and reclassification of
collateral and for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. We adopted this
standard in connection with our agreement to sell accounts receivable. The
adoption of this standard did not have a material effect on our financial
position or results of operations.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". This statement
establishes new accounting and reporting standards requiring that all derivative
instruments, including derivative instruments embedded in other contracts, be
recorded in the balance sheet as either an asset or liability, depending on the
rights or obligations under the contracts, at its fair value. The statement
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. For a qualifying
cash flow hedge, the changes in fair value of the derivative instrument are
initially recognized in other comprehensive income and then are reclassified
into earnings in the period the hedge transaction affects earnings. For a
qualifying fair value hedge, the changes in fair value of the derivative
instrument are offset against the corresponding changes for the hedged item
through earnings. Such accounting for qualifying hedges allows a derivative's
gain and losses to offset related results of the hedged item in the income
statement and requires that a company formally document, designate and assess
the effectiveness of transactions that receive hedge accounting treatment. SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities," was issued in June 2000 and amends certain provisions of SFAS No.
133. We adopted SFAS No. 133 and SFAS No. 138 as of January 1, 2001, with no
financial statement impact.

EXPOSURES

     INDUSTRY EXPOSURE

     Almost all of our customers operate 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,
historically, actual losses have been consistent with 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.

     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.



                                       26
<PAGE>

     TERRORISM EXPOSURE

     The terrorist attacks that took place in the U.S. on September 11, 2001
were unprecedented events that have created many economic and political
uncertainties, some of which may materially impact our businesses. The long-term
effects of the September 11, 2001 attacks on our businesses are unknown. The
potential for future terrorist attacks, the national and international responses
to terrorist attacks, and other acts of war or hostility have created many
economic and political uncertainties, which could adversely affect our
businesses for the short or long-term in ways that cannot presently be
predicted.

     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 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 28.0% of our net assets from continuing operations are
located outside the U.S. and are carried on our books in local currencies.
Changes in those currencies in relation to the U.S. dollar result in translation
adjustments which are reflected as accumulated other comprehensive loss in the
stockholders' equity section on our balance sheet. We recorded a $29.0 million
adjustment to our equity account for the nine months ended September 30, 2001
primarily to reflect the net impact of the Canadian dollar and Brazilian real
against the U.S. dollar. We recognize remeasurement and transactional gains and
losses on currencies in our Consolidated Condensed Statements of Income.

FORWARD-LOOKING STATEMENTS

     This report and our other filings with the Securities and Exchange
Commission and our releases issued to the public contain various 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
     material changes in oil and gas supply and demand balance, oil and gas
     prices or other market trends would affect our results and would likely
     affect the forward-looking information provided by us. The oil and gas
     industry is extremely volatile and subject to change based on political and
     economic factors outside our control.



                                       27
<PAGE>

          A Future Reduction in the Rig Count Could Adversely Affect the Demand
     for Our Products and Services. A material decline in the North American and
     international rig counts would adversely affect our results. Our
     forward-looking statements regarding our drilling products and services
     assume an improvement in the international rig count in 2001 and 2002 and
     that no extended material declines in the worldwide rig count, in
     particular the domestic rig count, will occur. Our statements also assume
     continued increase in the international markets during 2001 and 2002.

          A Material Disruption in our Manufacturing Improvements Could
     Adversely Affect Some Divisions of Our Business. We have recently taken
     steps to increase our manufacturing capacity and reduce manufacturing costs
     in our European completion operations through the addition of equipment and
     the consolidation of facilities. We were adversely affected by the
     relocation of manufacturing operations in our Completion Systems Division
     in 2000. Our forward-looking statements assume that the manufacturing
     expansion and consolidation will be 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.

          Any Limitations on Our Capacity or Personnel Could Increase Our Costs.
     Our forward-looking information assumes that we will have sufficient
     manufacturing capacity and personnel to address demand increases that we
     expect, as noted above. 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 could increase due to the need to meet demand through
     outside sources or due to higher wages.

          Our Success is Dependent Upon the Integration of Acquisitions. During
     2000 and 2001, we consummated, or agreed to consummate, various
     acquisitions of product lines and businesses, including the pending
     acquisitions of CiDRA OSS and Johnson Screens. 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 incur various duplicative costs during the integration of the
     operations of acquired businesses into our businesses. Our forward-looking
     statements assume the successful integration of the operations of the
     acquired businesses and their contribution to our income during 2001 and
     2002. We have also assumed that we will successfully consummate our pending
     acquisitions of CiDRA OSS and Johnson Screens. However, there can be no
     assurance that these acquisitions will close or that the expected benefits
     of these acquisitions will materialize. Integration of acquisitions is
     something that cannot occur in the short term and that requires constant
     effort at the local level to be successful. Accordingly, there can be no
     assurance as to the ultimate success of these integration efforts.

          Our Long-Term Growth Strategy 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 products and
     services. 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, our expandable sand screen
     technology, our rotary expansion systems and our recently added
     multilateral technology. Our forward-looking statements have assumed above
     average growth from these new products and services through 2001 and 2002.

          Economic Downturn Could Adversely Affect Demand for Our Products and
     Services. The U.S. and many foreign economies are currently weakening.
     Several quarters of shrinking GDP would indicate economic recession. An
     extended regional and/or worldwide recession would result in lower demand
     and lower prices for oil and gas, which would adversely affect our revenues
     and income. At this time, we have assumed that material declines will be
     limited to North and Latin America and that such declines will not last for
     an extended period of time.

          Currency Fluctuations Could Have a Material Adverse Financial Impact
     on Our Business. 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. Our
     forward-looking statements assume no material impact from future changes in
     currencies.

          Changes in Global Trade Policies Could Adversely Impact Our
     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.



                                       28
<PAGE>

          Unexpected Litigation and Legal Disputes Could Have a Material Adverse
     Financial Impact. If we experience unexpected litigation or unexpected
     results in our existing litigation that have a material effect on our
     financial 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     We are currently exposed to market risk from changes in foreign currency
changes in interest rates and changes in equity prices. A discussion of our
market risk exposure in financial instruments follows.

FOREIGN CURRENCY EXCHANGE RATES

     Because we operate in virtually every oil and gas exploration and
production region in the world, we conduct a portion of our business in
currencies other than the U.S. dollar. The functional currency for most of our
international operations is the applicable local currency. Although most of our
international revenues are denominated in the local currency, the effects of
foreign currency fluctuations are largely mitigated because local expenses of
such foreign operations are also generally denominated in the same currency. The
impact of exchange rate fluctuations during the three and nine months ended
September 30, 2001 did not have a material effect on reported amounts of
revenues or net income.

     Assets and liabilities of those foreign subsidiaries are translated using
the exchange rates in effect at the balance sheet date, resulting in translation
adjustments that are reflected as accumulated other comprehensive loss in the
stockholders' equity section on our balance sheet. Approximately 28.0% of our
net assets are impacted by changes in foreign currencies in relation to the U.S.
dollar. We recorded a $29.0 million adjustment to our equity account for the
nine months ended September 30, 2001 to reflect the net impact of the decline in
various foreign currencies against the U.S. dollar.

INTEREST RATES

     We are subject to interest rate risk on our long-term fixed interest rate
debt and, to a lesser extent, variable-interest rate borrowings. Our long-term
borrowings subject to interest rate risk primarily consist of the $200.0 million
principal of the 7 1/4% Senior Notes due 2006, the $402.5 million principal of
the 5% Convertible Subordinated Preferred Equivalent Debentures due 2027 and the
$910.0 million Zero Coupon Senior Convertible Debentures due 2020. Changes in
interest rates would, assuming all other things being equal, cause the fair
market value of debt with a fixed interest rate to increase or decrease, and
thus increase or decrease the amount required to refinance the debt. As of
September 30, 2001, the fair value of the Senior Notes was $202.8 million. The
fair value of the Senior Notes is principally dependent on changes in prevailing
interest rates. In July 2001, we entered into an interest rate swap to hedge the
exposure on $100.0 million of the Senior Notes. Under the agreement, on May 15
and November 15 of each year until maturity on May 15, 2006, we will receive
interest at the fixed rate of 7 1/4% and will pay a floating based on six month
LIBOR in arrears plus a spread of 1.405%. As of September 30, 2001, the fair
market value of the swap agreement was a $5.0 million asset. The fair market
value of the Convertible Preferred Debentures was $316.0 million and the fair
market value of the Zero Coupon Debentures at September 30, 2001 was $485.7
million. The fair value of the Convertible Preferred Debentures and the Zero
Coupon Debentures are principally dependent on both prevailing interest rates
and our current stock price as it relates to the conversion price of $53.34 per
share and $55.1425 per share of our common stock, respectively.

     We have various other debt instruments but believe that the impact of
changes in interest rates in the near term will not be material to these
instruments.



                                       29
<PAGE>
PART II. OTHER INFORMATION

ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS

     During the quarter ended September 30, 2001, we issued an aggregate of
358,999 shares of Common Stock as follows:

     On July 5, 2001, we issued 358,999 shares of Common Stock to the
shareholders of Brit Bit Limited in consideration for the purchase of all the
issued capital stock of Brit Bit Limited. The shares were issued in transactions
not involving a public offering and were exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits:

EXHIBIT
NUMBER                             DESCRIPTION

10.1     Sale and Purchase Agreement dated July 3, 2001, among Binnert Ruerd
         Haites and Others, Scottish Enterprise, Russell Eric Furner,
         Weatherford Australia Pty. Limited and Weatherford International, Inc.
         (incorporated by reference to Exhibit 4.13 to the Registrant's
         Registration Statement on Form S-3 (Reg. No. 333-65136) filed on July
         13, 2001).

10.2     Registration Rights Agreement dated July 3, 2001, among Weatherford
         Australia Pty. Limited, Weatherford International, Inc. and the
         stockholders listed therein (incorporated by reference to Exhibit 4.14
         to the Registrant's Registration Statement on Form S-3 (Reg. No.
         333-65136) filed on July 13, 2001).

+*10.3   Employment Agreements dated August 1, 2001 with Gary L. Warren, Mark E.
         Hopmann, Burt M. Martin, Lisa W. Rodriguez, and James N. Parmigiano.


----------

* Management contract or compensatory plan or arrangement

+ Filed herewith


     (b) Reports on Form 8-K:

          1)   Current Report on Form 8-K dated August 13, 2001, announcing the
               dismissal of Arthur Andersen LLP as the Company's independent
               accountants and the engagement of Ernst & Young LLP as the
               Company's new independent accountants.

          2)   Current Report on Form 8-K dated July 16, 2001, announcing the
               Company's earnings for the quarter ended June 30, 2001.



                                       30
<PAGE>

                                   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/ Bernard J. Duroc-Danner
                                    -----------------------------------------
                                    Bernard J. Duroc-Danner
                                    Chief Executive Officer, Chairman of the
                                    Board and Director
                                    (Principal Executive Officer)


                                    /s/ Lisa W. Rodriguez
                                    --------------------------------------------
                                    Lisa W. Rodriguez
                                    Vice President, Finance and Accounting
                                    (Principal Financial and Accounting Officer)







Date: November 1, 2001



                                       31
<PAGE>

                                  EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<S>      <C>
10.1     Sale and Purchase Agreement dated July 3, 2001, among Binnert Ruerd
         Haites and Others, Scottish Enterprise, Russell Eric Furner,
         Weatherford Australia Pty. Limited and Weatherford International, Inc.
         (incorporated by reference to Exhibit 4.13 to the Registrant's
         Registration Statement on Form S-3 (Reg. No. 333-65136) filed on July
         13, 2001).

10.2     Registration Rights Agreement dated July 3, 2001, among Weatherford
         Australia Pty. Limited, Weatherford International, Inc. and the
         stockholders listed therein (incorporated by reference to Exhibit 4.14
         to the Registrant's Registration Statement on Form S-3 (Reg. No.
         333-65136) filed on July 13, 2001).

+*10.3   Employment Agreements dated August 1, 2001 with Gary L. Warren, Mark E.
         Hopmann, Burt M. Martin, Lisa W. Rodriguez, and James N. Parmigiano.
</Table>


----------

* Management contract or compensatory plan or arrangement

+ Filed herewith