##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    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 1-31339
 WEATHERFORD INTERNATIONAL LTD.
  Bermuda
    
    98-0371344(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 515 Post Oak BoulevardSuite 600Houston, Texas
    
    77027-3415(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, include area code)
 
   þ o
  þ o o
  o þ
  Title of Class
    
    Outstanding at October 26, 2007Common Shares, par value $1.00
    
    337,283,227




---



TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDSITEM 6. EXHIBITSSIGNATURESExhibit IndexCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906    Table of Contents  
 
 PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
 WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
 September 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    125,998
    
    
    $
    126,287Accounts Receivable, Net of Allowance for Uncollectible
Accounts of $14,985 and $13,452, Respectively
    
    
    1,868,458
    
    
    
    1,560,849Inventories
    
    
    1,639,095
    
    
    
    1,239,034Other Current Assets
    
    
    538,656
    
    
    
    465,6054,172,207
    
    
    
    3,391,775Property, Plant and Equipment, Net of Accumulated
Depreciation of $2,256,751 and $1,925,177, Respectively
    
    
    3,807,593
    
    
    
    2,979,271Goodwill
    
    
    3,325,182
    
    
    
    3,000,589Other Intangible Assets, Net
    
    
    609,468
    
    
    
    599,828Equity Investments in Unconsolidated Affiliates
    
    
    356,212
    
    
    
    31,175Other Assets
    
    
    168,740
    
    
    
    136,610$
    12,439,402
    
    
    $
    10,139,248LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term Borrowings and Current Portion of Long-term Debt
    
    $
    431,051
    
    
    $
    648,736Accounts Payable
    
    
    556,202
    
    
    
    509,942Other Current Liabilities
    
    
    745,620
    
    
    
    884,4671,732,873
    
    
    
    2,043,145Long-term Debt
    
    
    3,064,508
    
    
    
    1,564,600Deferred Tax Liabilities
    
    
    230,470
    
    
    
    136,208Other Liabilities
    
    
    329,787
    
    
    
    220,496Commitments and ContingenciesShareholders Equity:Common Shares, $1 Par Value, Authorized 1,000,000 Shares,
Issued 363,344 and 361,921 Shares, Respectively
    
    
    363,344
    
    
    
    361,921Capital in Excess of Par Value
    
    
    4,363,424
    
    
    
    4,275,534Treasury Shares, Net
    
    
    (849,368
    )
    
    
    (681,116
    )Retained Earnings
    
    
    2,839,171
    
    
    
    2,099,307Accumulated Other Comprehensive Income
    
    
    365,193
    
    
    
    119,1537,081,764
    
    
    
    6,174,799$
    12,439,402
    
    
    $
    10,139,248
  1




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Products
    
    $
    777,243
    
    
    $
    634,415
    
    
    $
    2,136,346
    
    
    $
    1,805,029Services
    
    
    1,194,748
    
    
    
    1,062,338
    
    
    
    3,503,875
    
    
    
    2,966,3111,971,991
    
    
    
    1,696,753
    
    
    
    5,640,221
    
    
    
    4,771,340Costs and ExpensesCost of Products
    
    
    544,295
    
    
    
    439,132
    
    
    
    1,647,318
    
    
    
    1,242,189Cost of Services
    
    
    728,952
    
    
    
    638,714
    
    
    
    1,982,753
    
    
    
    1,818,291Research and Development
    
    
    43,199
    
    
    
    38,241
    
    
    
    124,413
    
    
    
    112,045Selling, General and Administrative
Attributable to Segments
    
    
    211,532
    
    
    
    192,363
    
    
    
    634,727
    
    
    
    557,417Corporate General and Administrative
    
    
    28,573
    
    
    
    24,718
    
    
    
    94,194
    
    
    
    71,251Equity in (Earnings) Losses of Unconsolidated
Affiliates
    
    
    (4,149
    )
    
    
    190
    
    
    
    (5,928
    )
    
    
    (5,737
    )Operating Income
    
    
    419,589
    
    
    
    363,395
    
    
    
    1,162,744
    
    
    
    975,884Other Expense:Interest Expense, Net
    
    
    (50,194
    )
    
    
    (27,487
    )
    
    
    (119,258
    )
    
    
    (70,066
    )Other, Net
    
    
    1,282
    
    
    
    332
    
    
    
    (7,024
    )
    
    
    (10,417
    )Income from Continuing Operations Before
Income Taxes and Minority Interest
    
    
    370,677
    
    
    
    336,240
    
    
    
    1,036,462
    
    
    
    895,401Provision for Income Taxes
    
    
    (70,429
    )
    
    
    (94,022
    )
    
    
    (267,078
    )
    
    
    (256,428
    )Income from Continuing Operations Before
Minority Interest
    
    
    300,248
    
    
    
    242,218
    
    
    
    769,384
    
    
    
    638,973Minority Interest, Net of Taxes
    
    
    (5,324
    )
    
    
    (6,076
    )
    
    
    (14,161
    )
    
    
    (7,812
    )Income from Continuing Operations
    
    
    294,924
    
    
    
    236,142
    
    
    
    755,223
    
    
    
    631,161Loss from Discontinued Operation, Net of Taxes
    
    
    (2,211
    )
    
    
    (1,939
    )
    
    
    (15,628
    )
    
    
    (6,794
    )Net Income
    
    $
    292,713
    
    
    $
    234,203
    
    
    $
    739,595
    
    
    $
    624,367Basic Earnings Per Share:Income from Continuing Operations
    
    $
    0.87
    
    
    $
    0.68
    
    
    $
    2.23
    
    
    $
    1.81Loss from Discontinued Operation
    
    
    
    
    
    
    
    
    
    
    (0.05
    )
    
    
    (0.02
    )Net Income
    
    $
    0.87
    
    
    $
    0.68
    
    
    $
    2.18
    
    
    $
    1.79Diluted Earnings Per Share:Income from Continuing Operations
    
    $
    0.85
    
    
    $
    0.67
    
    
    $
    2.17
    
    
    $
    1.77Loss from Discontinued Operation
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    (0.02
    )Net Income
    
    $
    0.84
    
    
    $
    0.66
    
    
    $
    2.13
    
    
    $
    1.75Weighted Average Shares Outstanding:Basic
    
    
    338,176
    
    
    
    345,733
    
    
    
    338,506
    
    
    
    347,915Diluted
    
    
    348,248
    
    
    
    354,471
    
    
    
    347,458
    
    
    
    356,905
  2




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
 Nine MonthsEnded September 30,2007
    
    
    2006Cash Flows from Operating Activities:Net Income
    
    $
    739,595
    
    
    $
    624,367Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:Depreciation and Amortization
    
    
    439,034
    
    
    
    353,963Gain on Sales of Assets, Net
    
    
    (35,188
    )
    
    
    (23,040
    )Loss from Discontinued Operation
    
    
    15,628
    
    
    
    6,794Equity in Earnings of Unconsolidated Affiliates
    
    
    (5,928
    )
    
    
    (5,737
    )Employee Share-Based Compensation Expense
    
    
    57,109
    
    
    
    43,017Excess Tax Benefits from Share-Based Compensation
    
    
    (20,396
    )
    
    
    (194
    )Minority Interest
    
    
    14,161
    
    
    
    7,812Deferred Income Tax Provision (Benefit)
    
    
    140,884
    
    
    
    (19,283
    )Other, Net
    
    
    15,022
    
    
    
    8,520Change in Operating Assets and Liabilities, Net of Effect
of Businesses Acquired
    
    
    (829,469
    )
    
    
    (277,701
    )Net Cash Provided by Operating Activities- Continuing Operations
    
    
    530,452
    
    
    
    718,518Net Cash Used by Operating Activities- Discontinued Operation
    
    
    (9,014
    )
    
    
    (4,433
    )Net Cash Provided by Operating Activities
    
    
    521,438
    
    
    
    714,085Cash Flows from Investing Activities:Acquisitions of Businesses, Net of Cash Acquired
    
    
    (224,878
    )
    
    
    (162,192
    )Capital Expenditures for Property, Plant and Equipment
    
    
    (1,097,470
    )
    
    
    (707,103
    )Acquisition of Intellectual Property
    
    
    (17,683
    )
    
    
    (28,469
    )Purchase of Equity Investment in Unconsolidated Affiliates
    
    
    (334,520
    )
    
    
    Proceeds from Sale of Assets and Business, Net
    
    
    59,927
    
    
    
    22,132Net Cash Used by Investing Activities- Continuing Operations
    
    
    (1,614,624
    )
    
    
    (875,632
    )Net Cash Used by Investing Activities- Discontinued Operation
    
    
    (22,361
    )
    
    
    (13,547
    )Net Cash Used by Investing Activities
    
    
    (1,636,985
    )
    
    
    (889,179
    )Cash Flows from Financing Activities:Repayments on Short-term Debt, Net
    
    
    (228,256
    )
    
    
    (121,716
    )Borrowings of Long-term Debt, Net
    
    
    1,474,773
    
    
    
    735,920Purchase of Treasury Shares
    
    
    (179,262
    )
    
    
    (507,646
    )Proceeds from Exercise of Stock Options
    
    
    30,753
    
    
    
    54,003Excess Tax Benefits from Share-Based Compensation
    
    
    20,396
    
    
    
    194Other Financing Activities, Net
    
    
    (3,146
    )
    
    
    386Net Cash Provided by Financing Activities-Continuing Operations
    
    
    1,115,258
    
    
    
    161,141Net Cash Provided by Financing Activities-Discontinued Operation
    
    
    
    
    
    
    Net Cash Provided by Financing Activities
    
    
    1,115,258
    
    
    
    166,141Net Decrease in Cash and Cash Equivalents
    
    
    (289
    )
    
    
    (13,953
    )Cash and Cash Equivalents at Beginning of Period
    
    
    126,287
    
    
    
    134,245Cash and Cash Equivalents at End of Period
    
    $
    125,998
    
    
    $
    120,292Supplemental Cash Flow Information:Interest Paid
    
    $
    110,766
    
    
    $
    64,453Income Taxes Paid, Net of Refunds
    
    
    241,887
    
    
    
    111,888
  3




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands)
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Income
    
    $
    292,713
    
    
    $
    234,203
    
    
    $
    739,595
    
    
    $
    624,367Other Comprehensive Income:Reclassification Adjustment for Deferred
Gain (Loss), Net on Derivative Instruments
    
    
    39
    
    
    
    (1,499
    )
    
    
    114
    
    
    
    4,790Pension Adjustments
    
    
    1,026
    
    
    
    
    
    
    
    5,608
    
    
    
    Pension Remeasurement Loss
    
    
    
    
    
    
    
    
    
    
    (15,427
    )
    
    
    Foreign Currency Translation
Adjustment
    
    
    127,370
    
    
    
    19,381
    
    
    
    255,745
    
    
    
    81,248Comprehensive Income
    
    $
    421,148
    
    
    $
    252,085
    
    
    $
    985,635
    
    
    $
    710,405
  4




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 1. General
     2. Critical Accounting Policies
  3. Business Combinations
  5




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
   Accounting for Contingencies
 4. Inventories
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Raw materials, components and supplies
    
    $
    350,739
    
    
    $
    330,006Work in process
    
    
    123,767
    
    
    
    98,920Finished goods
    
    
    1,164,589
    
    
    
    810,108$
    1,639,095
    
    
    $
    1,239,034
  5. Discontinued Operation
 Accounting for the Impairment or Disposal of
Long-Lived Assets
  Allocation of Interest to Discontinued Operations
 6




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Revenues
    
    $
    856
    
    
    $
    3⁄4
    
    
    $
    2,062
    
    
    $
    3⁄4Loss Before Income Taxes
    
    $
    3,272
    
    
    $
    2,517
    
    
    $
    19,971
    
    
    $
    9,333Benefit for Income Taxes
    
    
    1,061
    
    
    
    578
    
    
    
    4,343
    
    
    
    2,539Loss from Discontinued Operation,
Net of Taxes
    
    $
    2,211
    
    
    $
    1,939
    
    
    $
    15,628
    
    
    $
    6,794
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Other Current Assets
    
    $
    3,938
    
    
    $
    1,715Property, Plant and Equipment, Net
    
    
    37,272
    
    
    
    24,377Other Assets
    
    
    3,012
    
    
    
    7,401Current Assets Held for Sale
    
    $
    44,222
    
    
    $
    33,493Accounts Payable
    
    $
    732
    
    
    $
    2,553Other Current Liabilities
    
    
    1,373
    
    
    
    4,826Other Liabilities
    
    
    262
    
    
    
    3⁄4Current Liabilities Held for Sale
    
    $
    2,367
    
    
    $
    7,379
 6. Goodwill
 Goodwill and Other
Intangible Assets
   Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 7




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  Europe/
    
    
    Middle East/North
    
    
    Latin
    
    
    West Africa/
    
    
    North Africa/America
    
    
    America
    
    
    CIS
    
    
    Asia
    
    
    Total(In thousands)As of December 31, 2006
    
    $
    1,759,086
    
    
    $
    146,507
    
    
    $
    499,686
    
    
    $
    595,310
    
    
    $
    3,000,589Goodwill acquired during period
    
    
    33,676
    
    
    
    
    
    
    
    132,463
    
    
    
    3,200
    
    
    
    169,339Purchase price and other
adjustments
    
    
    (167
    )
    
    
    4,854
    
    
    
    (2,539
    )
    
    
    194
    
    
    
    2,342Impact of foreign currency
translation
    
    
    124,920
    
    
    
    3,319
    
    
    
    19,421
    
    
    
    5,252
    
    
    
    152,912As of September 30, 2007
    
    $
    1,917,515
    
    
    $
    154,680
    
    
    $
    649,031
    
    
    $
    603,956
    
    
    $
    3,325,182
 7. Other Intangible Assets, Net
  September 30, 2007
    
    
    December 31, 2006Gross Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    Net(In thousands)Acquired technology
    
    $
    342,267
    
    
    $
    (46,699
    )
    
    $
    295,568
    
    
    $
    311,939
    
    
    $
    (26,620
    )
    
    $
    285,319Licenses
    
    
    237,531
    
    
    
    (71,663
    )
    
    
    165,868
    
    
    
    226,444
    
    
    
    (60,316
    )
    
    
    166,128Patents
    
    
    135,426
    
    
    
    (48,366
    )
    
    
    87,060
    
    
    
    127,799
    
    
    
    (42,184
    )
    
    
    85,615Customer relationships
    
    
    29,532
    
    
    
    (5,669
    )
    
    
    23,863
    
    
    
    27,043
    
    
    
    (3,133
    )
    
    
    23,910Customer contracts
    
    
    21,890
    
    
    
    (5,993
    )
    
    
    15,897
    
    
    
    21,890
    
    
    
    (4,027
    )
    
    
    17,863Covenants not to compete
    
    
    28,077
    
    
    
    (25,195
    )
    
    
    2,882
    
    
    
    24,831
    
    
    
    (23,257
    )
    
    
    1,574Other
    
    
    16,212
    
    
    
    (9,283
    )
    
    
    6,929
    
    
    
    15,761
    
    
    
    (7,743
    )
    
    
    8,018Total finite-lived intangible
assets
    
    
    810,935
    
    
    
    (212,868
    )
    
    
    598,067
    
    
    
    755,707
    
    
    
    (167,280
    )
    
    
    588,427Intangible assets with an
indefinite useful life
    
    
    11,401
    
    
    
    
    
    
    
    11,401
    
    
    
    11,401
    
    
    
    
    
    
    
    11,401$
    822,336
    
    
    $
    (212,868
    )
    
    $
    609,468
    
    
    $
    767,108
    
    
    $
    (167,280
    )
    
    $
    599,828
    Remainder of 2007
    
    $
    13,5062008
    
    
    53,2542009
    
    
    51,9112010
    
    
    50,9682011
    
    
    50,157
 8




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 8. Short-term Borrowings and Current Portion of Long-term Debt
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Revolving credit facility
    
    $
    224,000
    
    
    $
    75,321Commercial paper program
    
    
    69,865
    
    
    
    490,808Other short-term bank borrowings
    
    
    122,158
    
    
    
    66,864Total Short-term Borrowings
    
    
    416,023
    
    
    
    632,993Current Portion of Long-term Debt
    
    
    15,028
    
    
    
    15,743Short-term Borrowings and Current Portion of Long-term Debt
    
    $
    431,051
    
    
    $
    648,736
      9. Derivative Instruments
 Interest Rate Swaps
   9




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  Cash Flow Hedges
  Other Derivative Instruments
   10. Income Taxes
      10




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
   11. Earnings Per Share
    Three Months
    
    
    Nine MonthsEnded September30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Basic weighted average shares outstanding
    
    
    338,176
    
    
    
    345,733
    
    
    
    338,506
    
    
    
    347,915Dilutive effect of:Warrant
    
    
    3,125
    
    
    
    2,251
    
    
    
    2,557
    
    
    
    2,307Stock option and restricted share plans
    
    
    6,947
    
    
    
    6,487
    
    
    
    6,395
    
    
    
    6,683Diluted weighted average shares
outstanding
    
    
    348,248
    
    
    
    354,471
    
    
    
    347,458
    
    
    
    356,905
 11




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 12. Supplemental Cash Flow Information
  Nine MonthsEnded September 30,2007
    
    
    2006(In thousands)Fair value of assets, net of cash acquired
    
    $
    109,907
    
    
    $
    87,178Goodwill
    
    
    169,339
    
    
    
    119,770Consideration paid related to prior year acquisitions
    
    
    20,797
    
    
    
    6,539Total liabilities
    
    
    (75,165
    )
    
    
    (51,295
    )Cash consideration, net of cash acquired
    
    $
    224,878
    
    
    $
    162,192
 Non-cash Activities
  13. Share-Based Compensation
   12




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 14. Retirement and Employee Benefit Plans
  Three Months Ended September 30,2007
    
    
    2006UnitedUnited States
    
    
    International
    
    
    States
    
    
    International(In thousands)Service cost
    
    $
    660
    
    
    $
    2,798
    
    
    $
    610
    
    
    $
    2,408Interest cost
    
    
    1,326
    
    
    
    2,060
    
    
    
    1,002
    
    
    
    1,659Expected return on plan assets
    
    
    (165
    )
    
    
    (2,001
    )
    
    
    (144
    )
    
    
    (1,551
    )Amortization of transition obligation
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Amortization of prior service cost
    
    
    527
    
    
    
    (27
    )
    
    
    572
    
    
    
    (27
    )Amortization of loss
    
    
    1,043
    
    
    
    39
    
    
    
    474
    
    
    
    127Curtailment loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlement loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    3,391
    
    
    $
    2,868
    
    
    $
    2,514
    
    
    $
    2,615
 Nine Months Ended September 30,2007
    
    
    2006UnitedUnited States
    
    
    International
    
    
    States
    
    
    International(In thousands)Service cost
    
    $
    1,981
    
    
    $
    8,216
    
    
    $
    1,828
    
    
    $
    6,992Interest cost
    
    
    3,979
    
    
    
    6,053
    
    
    
    3,034
    
    
    
    4,868Expected return on plan assets
    
    
    (495
    )
    
    
    (5,887
    )
    
    
    (474
    )
    
    
    (4,578
    )Amortization of transition obligation
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Amortization of prior service cost
    
    
    1,581
    
    
    
    (79
    )
    
    
    1,717
    
    
    
    (78
    )Amortization of loss
    
    
    3,127
    
    
    
    113
    
    
    
    1,417
    
    
    
    367Curtailment loss
    
    
    1,881
    
    
    
    
    
    
    
    
    
    
    
    Settlement loss
    
    
    
    
    
    
    
    
    
    
    2,770
    
    
    
    Net periodic benefit cost
    
    $
    12,054
    
    
    $
    8,413
    
    
    $
    10,292
    
    
    $
    7,568
  15. Variable Interest Entities
 Consolidation of Variable Interest Entities
 13




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  16. Segment Information
 Products and Services
  Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2007
    
    2006
    
    2007
    
    2006Artificial Lift Systems
    
    
    18
    %
    
    
    18
    %
    
    
    17
    %
    
    
    18
    %Well Construction
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    15Drilling Services
    
    
    16
    
    
    
    14
    
    
    
    15
    
    
    
    15Drilling Tools
    
    
    11
    
    
    
    12
    
    
    
    12
    
    
    
    11Completion Systems
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10Wireline
    
    
    8
    
    
    
    10
    
    
    
    8
    
    
    
    10Re-entry & Fishing
    
    
    7
    
    
    
    8
    
    
    
    8
    
    
    
    8Stimulation & Chemicals
    
    
    6
    
    
    
    6
    
    
    
    7
    
    
    
    6Integrated Drilling
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5Pipeline & Specialty Services
    
    
    3
    
    
    
    1
    
    
    
    2
    
    
    
    2Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Reporting Segments
   Three Months Ended September 30, 2007Net
    
    
    
    
    
    
    Depreciation
    
    
    Total Assets atOperating
    
    
    Income from
    
    
    and
    
    
    September 30,Revenues (b)
    
    
    Operations
    
    
    Amortization
    
    
    2007(In thousands)North America
    
    $
    993,828
    
    
    $
    264,183
    
    
    $
    74,047
    
    
    $
    6,070,091Latin America
    
    
    213,644
    
    
    
    45,453
    
    
    
    18,880
    
    
    
    1,125,582Europe/West Africa/CIS
    
    
    308,587
    
    
    
    73,884
    
    
    
    22,926
    
    
    
    1,809,351Middle East/North Africa/Asia
    
    
    455,932
    
    
    
    103,692
    
    
    
    40,983
    
    
    
    2,747,2331,971,991
    
    
    
    487,212
    
    
    
    156,836
    
    
    
    11,752,257Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (67,623
    )
    
    
    2,141
    
    
    
    642,923Total
    
    $
    1,971,991
    
    
    $
    419,589
    
    
    $
    158,977
    
    
    $
    12,395,180
 14




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Nine Months Ended September 30, 2007Net
    
    
    
    
    
    
    DepreciationOperating
    
    
    Income from
    
    
    andRevenues (b)
    
    
    Operations
    
    
    Amortization(In thousands)North America
    
    $
    2,883,825
    
    
    $
    755,663
    
    
    $
    202,770Latin America
    
    
    626,190
    
    
    
    138,383
    
    
    
    52,737Europe/West Africa/CIS
    
    
    844,184
    
    
    
    197,419
    
    
    
    62,097Middle East/North Africa/Asia
    
    
    1,286,022
    
    
    
    283,958
    
    
    
    114,1015,640,221
    
    
    
    1,375,423
    
    
    
    431,705Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (212,679
    )
    
    
    7,329Total
    
    $
    5,640,221
    
    
    $
    1,162,744
    
    
    $
    439,034
 Three Months Ended September 30, 2006Net
    
    
    
    
    
    
    Depreciation
    
    
    Total Assets atOperating
    
    
    Income from
    
    
    and
    
    
    December 31,Revenues (b)
    
    
    Operations
    
    
    Amortization
    
    
    2006(In thousands)North America
    
    $
    954,007
    
    
    $
    281,484
    
    
    $
    58,102
    
    
    $
    5,290,389Latin America
    
    
    173,953
    
    
    
    27,877
    
    
    
    16,856
    
    
    
    959,141Europe/West Africa/CIS
    
    
    215,270
    
    
    
    46,049
    
    
    
    16,460
    
    
    
    1,272,906Middle East/North
Africa/Asia
    
    
    353,523
    
    
    
    71,134
    
    
    
    29,653
    
    
    
    2,330,9111,696,753
    
    
    
    426,544
    
    
    
    121,071
    
    
    
    9,853,347Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (63,149
    )
    
    
    2,409
    
    
    
    252,408Total
    
    $
    1,696,753
    
    
    $
    363,395
    
    
    $
    123,480
    
    
    $
    10,105,755
 Nine Months Ended September 30, 2006Net
    
    
    
    
    
    
    DepreciationOperating
    
    
    Income from
    
    
    andRevenues (b)
    
    
    Operations
    
    
    Amortization(In thousands)North America
    
    $
    2,716,194
    
    
    $
    766,173
    
    
    $
    165,420Latin America
    
    
    514,685
    
    
    
    86,614
    
    
    
    47,557Europe/West Africa/CIS
    
    
    597,586
    
    
    
    125,402
    
    
    
    48,281Middle East/North Africa/Asia
    
    
    942,875
    
    
    
    175,254
    
    
    
    85,0504,771,340
    
    
    
    1,153,443
    
    
    
    346,308Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (177,559
    )
    
    
    7,655Total
    
    $
    4,771,340
    
    
    $
    975,884
    
    
    $
    353,963
 
 (a)
    
    Includes equity in earnings of unconsolidated affiliates that are integral to the Companys
operations and research and development expenses which are not allocated geographically.(b)
    
    Net operating revenues are comprised of sales to the Companys external customers. For the
three months ended September 30, 2007, the Company had intersegment revenues of approximately
$156 million, $37 million, $97 million and $115 million for North America, Latin America,
Europe/West Africa/CIS and Middle East/North Africa/Asia, respectively. For the nine months
ended September 30, 2007, the Company had intersegment revenues of approximately $423 million,
$91 million, $273 million and $303 million for North America, Latin America, Europe/West
Africa/CIS and Middle East/North Africa/Asia, respectively. For the three months ended
September 30, 2006, the Company had intersegment revenues of approximately $96 million, $26
million, $59 million and $63 million for North America, Latin America, Europe/West Africa/CIS
and Middle East/North Africa/Asia, respectively. For the nine months ended September 30, 2006,
the Company 15




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  17. New Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities
 18. Condensed Consolidating Financial Statements
    16




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Balance Sheet
September 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    25
    
    
    $
    23,478
    
    
    $
    102,495
    
    
    $
    3⁄4
    
    
    $
    125,998Other Current Assets
    
    
    12,502
    
    
    
    1,167
    
    
    
    4,032,540
    
    
    
    3⁄4
    
    
    
    4,046,20912,527
    
    
    
    24,645
    
    
    
    4,135,035
    
    
    
    3⁄4
    
    
    
    4,172,207Equity Investments in Affiliates
    
    
    11,392,440
    
    
    
    4,268,347
    
    
    
    13,750,508
    
    
    
    (29,411,295
    )
    
    
    3⁄4Shares Held in Parent
    
    
    3⁄4
    
    
    
    121,523
    
    
    
    727,845
    
    
    
    (849,368
    )
    
    
    3⁄4Intercompany Receivables, Net
    
    
    (468,049
    )
    
    
    1,307,810
    
    
    
    3⁄4
    
    
    
    (839,761
    )
    
    
    3⁄4Other Assets
    
    
    52,866
    
    
    
    19,929
    
    
    
    8,194,400
    
    
    
    3⁄4
    
    
    
    8,267,195$
    10,989,784
    
    
    $
    5,742,254
    
    
    $
    26,807,788
    
    
    $
    (31,100,424
    )
    
    $
    12,439,402LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term Borrowings and Current
Portion of Long-term Debt
    
    $
    130,624
    
    
    $
    92,540
    
    
    $
    207,887
    
    
    $
    3⁄4
    
    
    $
    431,051Accounts Payable and Other Current
Liabilities
    
    
    18,492
    
    
    
    36,547
    
    
    
    1,246,783
    
    
    
    3⁄4
    
    
    
    1,301,822149,116
    
    
    
    129,087
    
    
    
    1,454,670
    
    
    
    3⁄4
    
    
    
    1,732,873Long-term Debt
    
    
    1,198,559
    
    
    
    1,850,874
    
    
    
    15,075
    
    
    
    3⁄4
    
    
    
    3,064,508Intercompany Payables, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    839,761
    
    
    
    (839,761
    )
    
    
    3⁄4Other Long-term Liabilities
    
    
    99,900
    
    
    
    23,023
    
    
    
    437,334
    
    
    
    3⁄4
    
    
    
    560,257Shareholders Equity
    
    
    9,542,209
    
    
    
    3,739,270
    
    
    
    24,060,948
    
    
    
    (30,260,663
    )
    
    
    7,081,764$
    10,989,784
    
    
    $
    5,742,254
    
    
    $
    26,807,788
    
    
    $
    (31,100,424
    )
    
    $
    12,439,402
 17




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Balance Sheet
December 31, 2006
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    35
    
    
    $
    2,271
    
    
    $
    123,981
    
    
    $
    3⁄4
    
    
    $
    126,287Other Current Assets
    
    
    131
    
    
    
    3,739
    
    
    
    3,261,618
    
    
    
    3⁄4
    
    
    
    3,265,488166
    
    
    
    6,010
    
    
    
    3,385,599
    
    
    
    3⁄4
    
    
    
    3,391,775Equity Investments in Affiliates
    
    
    10,009,855
    
    
    
    3,502,589
    
    
    
    12,935,625
    
    
    
    (26,448,069
    )
    
    
    3⁄4Shares Held in Parent
    
    
    3⁄4
    
    
    
    132,541
    
    
    
    548,575
    
    
    
    (681,116
    )
    
    
    3⁄4Intercompany Receivables, Net
    
    
    329,237
    
    
    
    1,333,181
    
    
    
    3⁄4
    
    
    
    (1,662,418
    )
    
    
    3⁄4Other Assets
    
    
    40,897
    
    
    
    8,517
    
    
    
    6,698,059
    
    
    
    3⁄4
    
    
    
    6,747,473$
    10,380,155
    
    
    $
    4,982,838
    
    
    $
    23,567,858
    
    
    $
    (28,791,603
    )
    
    $
    10,139,248LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term Borrowings and Current
Portion of Long-term Debt
    
    $
    491,542
    
    
    $
    9,272
    
    
    $
    147,922
    
    
    $
    3⁄4
    
    
    $
    648,736Accounts Payable and Other Current
Liabilities
    
    
    33,788
    
    
    
    3,887
    
    
    
    1,356,734
    
    
    
    3⁄4
    
    
    
    1,394,409525,330
    
    
    
    13,159
    
    
    
    1,504,656
    
    
    
    3⁄4
    
    
    
    2,043,145Long-term Debt
    
    
    1,198,973
    
    
    
    355,318
    
    
    
    10,309
    
    
    
    3⁄4
    
    
    
    1,564,600Intercompany Payables, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    1,662,418
    
    
    
    (1,662,418
    )
    
    
    3⁄4Other Long-term Liabilities
    
    
    72,789
    
    
    
    57,119
    
    
    
    226,796
    
    
    
    3⁄4
    
    
    
    356,704Shareholders Equity
    
    
    8,583,063
    
    
    
    4,557,242
    
    
    
    20,163,679
    
    
    
    (27,129,185
    )
    
    
    6,174,799$
    10,380,155
    
    
    $
    4,982,838
    
    
    $
    23,567,858
    
    
    $
    (28,791,603
    )
    
    $
    10,139,248
 18




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Income
Three Months Ended September 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    1,971,991
    
    
    $
    3⁄4
    
    
    $
    1,971,991Costs and Expenses
    
    
    (3,027
    )
    
    
    (272
    )
    
    
    (1,553,252
    )
    
    
    3⁄4
    
    
    
    (1,556,551
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    4,149
    
    
    
    3⁄4
    
    
    
    4,149Operating Income (Loss)
    
    
    (3,027
    )
    
    
    (272
    )
    
    
    422,888
    
    
    
    3⁄4
    
    
    
    419,589Other Income (Expense):Interest Expense, Net
    
    
    (19,087
    )
    
    
    (30,131
    )
    
    
    (976
    )
    
    
    3⁄4
    
    
    
    (50,194
    )Intercompany Charges, Net
    
    
    36,021
    
    
    
    26,700
    
    
    
    (62,721
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    269,206
    
    
    
    271,357
    
    
    
    3⁄4
    
    
    
    (540,563
    )
    
    
    3⁄4Other, Net
    
    
    9,600
    
    
    
    114
    
    
    
    (8,432
    )
    
    
    3⁄4
    
    
    
    1,282Income (Loss) from Continuing Operations
Before Income Taxes and Minority Interest
    
    
    292,713
    
    
    
    267,768
    
    
    
    350,759
    
    
    
    (540,563
    )
    
    
    370,677(Provision) Benefit for Income Taxes
    
    
    
    
    
    
    1,438
    
    
    
    (71,867
    )
    
    
    3⁄4
    
    
    
    (70,429
    )Income (Loss) from Continuing Operations
Before Minority Interest
    
    
    292,713
    
    
    
    269,206
    
    
    
    278,892
    
    
    
    (540,563
    )
    
    
    300,248Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (5,324
    )
    
    
    3⁄4
    
    
    
    (5,324
    )Income (Loss) from Continuing Operations
    
    
    292,713
    
    
    
    269,206
    
    
    
    273,568
    
    
    
    (540,563
    )
    
    
    294,924Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (2,211
    )
    
    
    3⁄4
    
    
    
    (2,211
    )Net Income (Loss)
    
    $
    292,713
    
    
    $
    269,206
    
    
    $
    271,357
    
    
    $
    (540,563
    )
    
    $
    292,713
 Condensed Consolidating Statements of Income
Three Months Ended September 30, 2006
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    1,696,753
    
    
    $
    3⁄4
    
    
    $
    1,696,753Costs and Expenses
    
    
    (2,525
    )
    
    
    (243
    )
    
    
    (1,330,400
    )
    
    
    3⁄4
    
    
    
    (1,333,168
    )Equity in
Losses of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (190
    )
    
    
    3⁄4
    
    
    
    (190
    )Operating Income (Loss)
    
    
    (2,525
    )
    
    
    (243
    )
    
    
    366,163
    
    
    
    3⁄4
    
    
    
    363,395Other Income (Expense):Interest Expense, Net
    
    
    (21,770
    )
    
    
    (5,665
    )
    
    
    (52
    )
    
    
    3⁄4
    
    
    
    (27,487
    )Intercompany Charges, Net
    
    
    (10,419
    )
    
    
    108,275
    
    
    
    (97,856
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    273,678
    
    
    
    208,552
    
    
    
    3⁄4
    
    
    
    (482,230
    )
    
    
    3⁄4Other, Net
    
    
    (4,761
    )
    
    
    (209
    )
    
    
    5,302
    
    
    
    3⁄4
    
    
    
    332Income (Loss) from Continuing Operations
Before Income Taxes and Minority Interest
    
    
    234,203
    
    
    
    310,710
    
    
    
    273,557
    
    
    
    (482,230
    )
    
    
    336,240Provision for Income Taxes
    
    
    3⁄4
    
    
    
    (37,032
    )
    
    
    (56,990
    )
    
    
    3⁄4
    
    
    
    (94,022
    )Income (Loss) from Continuing Operations
Before Minority Interest
    
    
    234,203
    
    
    
    273,678
    
    
    
    216,567
    
    
    
    (482,230
    )
    
    
    242,218Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (6,076
    )
    
    
    3⁄4
    
    
    
    (6,076
    )Income (Loss) from Continuing Operations
    
    
    234,203
    
    
    
    273,678
    
    
    
    210,491
    
    
    
    (482,230
    )
    
    
    236,142Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,939
    )
    
    
    3⁄4
    
    
    
    (1,939
    )Net Income (Loss)
    
    $
    234,203
    
    
    $
    273,678
    
    
    $
    208,552
    
    
    $
    (482,230
    )
    
    $
    234,203
 19




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Income
Nine Months Ended September 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    5,640,221
    
    
    $
    3⁄4
    
    
    $
    5,640,221Costs and Expenses
    
    
    (10,313
    )
    
    
    (2,783
    )
    
    
    (4,470,309
    )
    
    
    3⁄4
    
    
    
    (4,483,405
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    5,928
    
    
    
    3⁄4
    
    
    
    5,928Operating Income (Loss)
    
    
    (10,313
    )
    
    
    (2,783
    )
    
    
    1,175,840
    
    
    
    3⁄4
    
    
    
    1,162,744Other Income (Expense):Interest Expense, Net
    
    
    (73,906
    )
    
    
    (44,387
    )
    
    
    (965
    )
    
    
    3⁄4
    
    
    
    (119,258
    )Intercompany Charges, Net
    
    
    27,411
    
    
    
    120,302
    
    
    
    (147,713
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    786,917
    
    
    
    738,658
    
    
    
    3⁄4
    
    
    
    (1,525,575
    )
    
    
    3⁄4Other, Net
    
    
    9,486
    
    
    
    1,346
    
    
    
    (17,856
    )
    
    
    3⁄4
    
    
    
    (7,024
    )Income (Loss) from Continuing Operations
Before Income Taxes and Minority Interest
    
    
    739,595
    
    
    
    813,136
    
    
    
    1,009,306
    
    
    
    (1,525,575
    )
    
    
    1,036,462Provision for Income Taxes
    
    
    
    
    
    
    (26,219
    )
    
    
    (240,859
    )
    
    
    3⁄4
    
    
    
    (267,078
    )Income (Loss) from Continuing Operations
Before Minority Interest
    
    
    739,595
    
    
    
    786,917
    
    
    
    768,447
    
    
    
    (1,525,575
    )
    
    
    769,384Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (14,161
    )
    
    
    3⁄4
    
    
    
    (14,161
    )Income (Loss) from Continuing Operations
    
    
    739,595
    
    
    
    786,917
    
    
    
    754,286
    
    
    
    (1,525,575
    )
    
    
    755,223Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (15,628
    )
    
    
    3⁄4
    
    
    
    (15,628
    )Net Income (Loss)
    
    $
    739,595
    
    
    $
    786,917
    
    
    $
    738,658
    
    
    $
    (1,525,575
    )
    
    $
    739,595
 Condensed Consolidating Statements of Income
Nine Months Ended September 30, 2006
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    4,771,340
    
    
    $
    3⁄4
    
    
    $
    4,771,340Costs and Expenses
    
    
    (11,302
    )
    
    
    (819
    )
    
    
    (3,789,072
    )
    
    
    3⁄4
    
    
    
    (3,801,193
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    5,737
    
    
    
    3⁄4
    
    
    
    5,737Operating Income (Loss)
    
    
    (11,302
    )
    
    
    (819
    )
    
    
    988,005
    
    
    
    3⁄4
    
    
    
    975,884Other Income (Expense):Interest Income (Expense), Net
    
    
    (50,485
    )
    
    
    (20,297
    )
    
    
    716
    
    
    
    3⁄4
    
    
    
    (70,066
    )Intercompany Charges, Net
    
    
    (17,324
    )
    
    
    74,128
    
    
    
    (56,804
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    704,052
    
    
    
    671,167
    
    
    
    3⁄4
    
    
    
    (1,375,219
    )
    
    
    3⁄4Other, Net
    
    
    (574
    )
    
    
    (463
    )
    
    
    (9,380
    )
    
    
    3⁄4
    
    
    
    (10,417
    )Income (Loss) from Continuing Operations
Before Income Taxes and Minority Interest
    
    
    624,367
    
    
    
    723,716
    
    
    
    922,537
    
    
    
    (1,375,219
    )
    
    
    895,401Provision for Income Taxes
    
    
    3⁄4
    
    
    
    (19,664
    )
    
    
    (236,764
    )
    
    
    3⁄4
    
    
    
    (256,428
    )Income (Loss) from Continuing Operations
Before Minority Interest
    
    
    624,367
    
    
    
    704,052
    
    
    
    685,773
    
    
    
    (1,375,219
    )
    
    
    638,973Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (7,812
    )
    
    
    3⁄4
    
    
    
    (7,812
    )Income (Loss) from Continuing Operations
    
    
    624,367
    
    
    
    704,052
    
    
    
    677,961
    
    
    
    (1,375,219
    )
    
    
    631,161Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (6,794
    )
    
    
    3⁄4
    
    
    
    (6,794
    )Net Income (Loss)
    
    $
    624,367
    
    
    $
    704,052
    
    
    $
    671,167
    
    
    $
    (1,375,219
    )
    
    $
    624,367
 20




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Cash Flows
Nine Months Ended September 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    Issuer
    
    Subsidiaries
    
    Eliminations
    
    ConsolidationCash Flows from Operating Activities:Net Income (Loss)
    
    $
    739,595
    
    
    $
    786,917
    
    
    $
    738,658
    
    
    $
    (1,525,575
    )
    
    $
    739,595Adjustments
to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating
Activities:Equity in Earnings of Unconsolidated
Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (5,928
    )
    
    
    3⁄4
    
    
    
    (5,928
    )Equity in (Earnings) Loss of Affiliates
    
    
    (786,917
    )
    
    
    (738,658
    )
    
    
    3⁄4
    
    
    
    1,525,575
    
    
    
    3⁄4Loss from Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    15,628
    
    
    
    3⁄4
    
    
    
    15,628Charges from Parent or Subsidiary
    
    
    (27,411
    )
    
    
    (120,302
    )
    
    
    147,713
    
    
    
    3⁄4
    
    
    
    3⁄4Deferred Income Tax Provision (Benefit)
    
    
    3⁄4
    
    
    
    (16,222
    )
    
    
    157,106
    
    
    
    3⁄4
    
    
    
    140,884Other Adjustments
    
    
    65,154
    
    
    
    (59,825
    )
    
    
    (365,056
    )
    
    
    3⁄4
    
    
    
    (359,727
    )Net Cash Provided (Used) by Operating
Activities- Continuing Operations
    
    
    (9,579
    )
    
    
    (148,090
    )
    
    
    688,121
    
    
    
    3⁄4
    
    
    
    530,452Net Cash Used by Operating Activities-
Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (9,014
    )
    
    
    3⁄4
    
    
    
    (9,014
    )Net Cash Provided (Used) by Operating
Activities
    
    
    (9,579
    )
    
    
    (148,090
    )
    
    
    679,107
    
    
    
    3⁄4
    
    
    
    521,438Cash Flows from Investing Activities:Purchase of Equity Investment in
Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (334,520
    )
    
    
    3⁄4
    
    
    
    (334,520
    )Acquisition of Businesses, Net of Cash
Acquired
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (224,878
    )
    
    
    3⁄4
    
    
    
    (224,878
    )Capital Expenditures for Property, Plant and
Equipment
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,097,470
    )
    
    
    3⁄4
    
    
    
    (1,097,470
    )Acquisition of Intellectual Property
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (17,683
    )
    
    
    3⁄4
    
    
    
    (17,683
    )Proceeds from Sale of Assets
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    59,927
    
    
    
    3⁄4
    
    
    
    59,927Capital Contribution to Subsidiary
    
    
    (595,651
    )
    
    
    (27,100
    )
    
    
    3⁄4
    
    
    
    622,751
    
    
    
    3⁄4Distribution of Earnings from Subsidiary
    
    
    3⁄4
    
    
    
    (1,486,365
    )
    
    
    1,486,365
    
    
    
    3⁄4
    
    
    
    3⁄4Net Cash Provided (Used) by Investing
Activities- Continuing Operations
    
    
    (595,651
    )
    
    
    (1,513,465
    )
    
    
    (128,259
    )
    
    
    622,751
    
    
    
    (1,614,624
    )Net Cash Used by Investing Activities-
Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (22,361
    )
    
    
    3⁄4
    
    
    
    (22,361
    )Net Cash Provided (Used) by Investing
Activities
    
    
    (595,651
    )
    
    
    (1,513,465
    )
    
    
    (150,620
    )
    
    
    622,751
    
    
    
    (1,636,985
    )Cash Flows from Financing Activities:Borrowings of (Repayments on) Short-term
Debt,
Net
    
    
    (420,944
    )
    
    
    84,072
    
    
    
    108,616
    
    
    
    3⁄4
    
    
    
    (228,256
    )Borrowings of (Repayments on) Long-term Debt,
Net
    
    
    3⁄4
    
    
    
    1,485,497
    
    
    
    (10,724
    )
    
    
    3⁄4
    
    
    
    1,474,773Borrowings (Repayments) Between
Subsidiaries, Net
    
    
    1,026,164
    
    
    
    65,190
    
    
    
    (1,091,354
    )
    
    
    3⁄4
    
    
    
    3⁄4Shares Repurchased
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (179,262
    )
    
    
    3⁄4
    
    
    
    (179,262
    )Proceeds from Exercise of Stock Options
    
    
    3⁄4
    
    
    
    30,753
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    30,753Proceeds from Capital Contribution
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    622,751
    
    
    
    (622,751
    )
    
    
    3⁄4Other, Net
    
    
    3⁄4
    
    
    
    17,250
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    17,250Net Cash Provided (Used) by Financing
Activities- Continuing Operations
    
    
    605,220
    
    
    
    1,682,762
    
    
    
    (549,973
    )
    
    
    (622,751
    )
    
    
    1,115,258Net Cash Provided by Financing Activities-
Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net Cash Provided (Used) by Financing
Activities
    
    
    605,220
    
    
    
    1,682,762
    
    
    
    (549,973
    )
    
    
    (622,751
    )
    
    
    1,115,258Net Increase (Decrease) in Cash and Cash
Equivalents
    
    
    (10
    )
    
    
    21,207
    
    
    
    (21,486
    )
    
    
    3⁄4
    
    
    
    (289
    )Cash and Cash Equivalents at Beginning of
Period
    
    
    35
    
    
    
    2,271
    
    
    
    123,981
    
    
    
    3⁄4
    
    
    
    126,287Cash and Cash Equivalents at End of Period
    
    $
    25
    
    
    $
    23,478
    
    
    $
    102,495
    
    
    $
    3⁄4
    
    
    $
    125,998
 21




---



##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Cash Flows
Nine Months Ended September 30, 2006
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationCash Flows from Operating Activities:Net Income (Loss)
    
    $
    624,367
    
    
    $
    704,052
    
    
    $
    671,167
    
    
    $
    (1,375,219
    )
    
    $
    624,367Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) by Operating Activities:Equity in Earnings of Unconsolidated
Affiliates
    
    
    
    
    
    
    
    
    
    
    (5,737
    )
    
    
    
    
    
    
    (5,737
    )Equity in (Earnings) Loss of Affiliates
    
    
    (704,052
    )
    
    
    (671,167
    )
    
    
    
    
    
    
    1,375,219
    
    
    
    Loss from Discontinued Operation
    
    
    
    
    
    
    
    
    
    
    6,794
    
    
    
    
    
    
    
    6,794Charges from Parent or Subsidiary
    
    
    17,324
    
    
    
    (74,128
    )
    
    
    56,804
    
    
    
    
    
    
    
    Deferred Income Tax Provision (Benefit)
    
    
    
    
    
    
    19,630
    
    
    
    (38,913
    )
    
    
    
    
    
    
    (19,283
    )Other, Net
    
    
    141,055
    
    
    
    (188,305
    )
    
    
    159,627
    
    
    
    
    
    
    
    112,377Net Cash Provided (Used) by Operating
Activities-Continuing Operations
    
    
    78,694
    
    
    
    (209,918
    )
    
    
    849,742
    
    
    
    
    
    
    
    718,518Net Cash Used by Operating Activities-
Discontinued Operation
    
    
    
    
    
    
    
    
    
    
    (4,433
    )
    
    
    
    
    
    
    (4,433
    )Net Cash Provided (Used) by Operating Activities
    
    
    78,694
    
    
    
    (209,918
    )
    
    
    845,309
    
    
    
    
    
    
    
    714,085Cash Flows from Investing Activities:Acquisition of Businesses, Net of Cash
Acquired
    
    
    
    
    
    
    
    
    
    
    (162,192
    )
    
    
    
    
    
    
    (162,192
    )Capital Expenditures for Property, Plant and
Equipment
    
    
    
    
    
    
    
    
    
    
    (707,103
    )
    
    
    
    
    
    
    (707,103
    )Acquisition of Intellectual Property
    
    
    
    
    
    
    
    
    
    
    (28,469
    )
    
    
    
    
    
    
    (28,469
    )Capital Contribution to Subsidiary
    
    
    (651,748
    )
    
    
    
    
    
    
    
    
    
    
    651,748
    
    
    
    Proceeds from Sale of Assets and Business, Net
    
    
    
    
    
    
    
    
    
    
    22,132
    
    
    
    
    
    
    
    22,132Net Cash Provided (Used) by Investing
Activities-Continuing Operations
    
    
    (651,748
    )
    
    
    
    
    
    
    (875,632
    )
    
    
    651,748
    
    
    
    (875,632
    )Net Cash Used by Investing Activities-
Discontinued Operation
    
    
    
    
    
    
    
    
    
    
    (13,547
    )
    
    
    
    
    
    
    (13,547
    )Net Cash Provided (Used) by Investing Activities
    
    
    (651,748
    )
    
    
    
    
    
    
    (889,179
    )
    
    
    651,748
    
    
    
    (889,179
    )Cash Flows from Financing Activities:Borrowings of (Repayments on) Short-term Debt, Net
    
    
    (267,407
    )
    
    
    51,136
    
    
    
    94,555
    
    
    
    
    
    
    
    (121,716
    )Borrowings of (Repayments on) Long-term Debt, Net
    
    
    944,216
    
    
    
    (200,865
    )
    
    
    (7,431
    )
    
    
    
    
    
    
    735,920Borrowings (Repayments) Between
Subsidiaries, Net
    
    
    (103,717
    )
    
    
    301,888
    
    
    
    (198,171
    )
    
    
    
    
    
    
    Proceeds from Exercise of Stock Options
    
    
    
    
    
    
    54,003
    
    
    
    
    
    
    
    
    
    
    
    54,003Purchase of Treasury Shares
    
    
    
    
    
    
    
    
    
    
    (507,646
    )
    
    
    
    
    
    
    (507,646
    )Proceeds from Capital Contribution
    
    
    
    
    
    
    
    
    
    
    651,748
    
    
    
    (651,748
    )
    
    
    Other, Net
    
    
    (51
    )
    
    
    631
    
    
    
    
    
    
    
    
    
    
    
    580Net Cash Provided (Used) by Financing
Activities-Continuing Operations
    
    
    573,041
    
    
    
    206,793
    
    
    
    33,055
    
    
    
    (651,748
    )
    
    
    161,141Net Cash Provided by Financing Activities-
Discontinued Operation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Cash Provided (Used) by Financing Activities
    
    
    573,041
    
    
    
    206,793
    
    
    
    33,055
    
    
    
    (651,748
    )
    
    
    161,141Net Decrease in Cash and Cash Equivalents
    
    
    (13
    )
    
    
    (3,125
    )
    
    
    (10,815
    )
    
    
    
    
    
    
    (13,953
    )Cash and Cash Equivalents at Beginning of
Period
    
    
    124
    
    
    
    3,172
    
    
    
    130,949
    
    
    
    
    
    
    
    134,245Cash and Cash Equivalents at End of Period
    
    $
    111
    
    
    $
    47
    
    
    $
    120,134
    
    
    $
    
    
    
    $
    120,292
 22




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
 General
   Industry Trends
   Henry Hub
    
    North American
    
    InternationalWTI Oil (1)
    
    Gas (2)
    
    Rig Count (3)
    
    Rig Count (3)September 30, 2007
    
    $
    81.66
    
    
    $
    6.87
    
    
    
    2,128
    
    
    
    1,114December 31, 2006
    
    
    61.05
    
    
    
    6.30
    
    
    
    2,178
    
    
    
    1,029September 30, 2006
    
    
    62.91
    
    
    
    5.62
    
    
    
    2,185
    
    
    
    949
 
 (1)
    
    Price per barrel 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 and other
third-party data   23




---



##### Table of Contents



Opportunities and Challenges
   2007 and 2008 Outlook
   Geographic Markets.
 Pricing.
  24




---



##### Table of Contents



Results of Operations
  25




---



##### Table of Contents



Comparative Financial Data
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except percentages and per share data)Revenues:North America
    
    $
    993,828
    
    
    $
    954,007
    
    
    $
    2,883,825
    
    
    $
    2,716,194Latin America
    
    
    213,644
    
    
    
    173,953
    
    
    
    626,190
    
    
    
    514,685Europe/West Africa/CIS
    
    
    308,587
    
    
    
    215,270
    
    
    
    844,184
    
    
    
    597,586Middle East/North Africa/Asia
    
    
    455,932
    
    
    
    353,523
    
    
    
    1,286,022
    
    
    
    942,8751,971,991
    
    
    
    1,696,753
    
    
    
    5,640,221
    
    
    
    4,771,340Gross Profit %
    
    
    35.4
    %
    
    
    36.5
    %
    
    
    35.6
    %
    
    
    35.9
    %Research and Development
    
    
    43,199
    
    
    
    38,241
    
    
    
    124,413
    
    
    
    112,045Selling, General and Administrative
Attributable to Segments
    
    
    211,532
    
    
    
    192,363
    
    
    
    634,727
    
    
    
    557,417Corporate General and Administrative
    
    
    28,573
    
    
    
    24,718
    
    
    
    94,194
    
    
    
    71,251Equity in Earnings (Losses) of
Unconsolidated Affiliates
    
    
    4,149
    
    
    
    (190
    )
    
    
    5,928
    
    
    
    5,737Operating Income:North America
    
    
    264,183
    
    
    
    281,484
    
    
    
    755,663
    
    
    
    766,173Latin America
    
    
    45,453
    
    
    
    27,877
    
    
    
    138,383
    
    
    
    86,614Europe/West Africa/CIS
    
    
    73,884
    
    
    
    46,049
    
    
    
    197,419
    
    
    
    125,402Middle East/North Africa/Asia
    
    
    103,692
    
    
    
    71,134
    
    
    
    283,958
    
    
    
    175,254Corporate and Other (a)
    
    
    (67,623
    )
    
    
    (63,149
    )
    
    
    (212,679
    )
    
    
    (177,559
    )419,589
    
    
    
    363,395
    
    
    
    1,162,744
    
    
    
    975,884Interest Expense, Net
    
    
    (50,194
    )
    
    
    (27,487
    )
    
    
    (119,258
    )
    
    
    (70,066
    )Other, Net
    
    
    1,282
    
    
    
    332
    
    
    
    (7,024
    )
    
    
    (10,417
    )Effective Tax Rate
    
    
    19.0
    %
    
    
    28.0
    %
    
    
    25.8
    %
    
    
    28.6
    %Net Income per Diluted Share from Continuing
Operations
    
    $
    0.85
    
    
    $
    0.67
    
    
    $
    2.17
    
    
    $
    1.77Loss from Discontinued Operation, Net of Taxes
    
    
    2,211
    
    
    
    1,939
    
    
    
    15,628
    
    
    
    6,794Net Income per Diluted Share
    
    $
    0.84
    
    
    $
    0.66
    
    
    $
    2.13
    
    
    $
    1.75Depreciation and Amortization
    
    
    158,977
    
    
    
    123,480
    
    
    
    439,034
    
    
    
    353,963
 
 (a)
    
    Includes equity in earnings of unconsolidated affiliates which are integral to our
operations and research and development expenses, which are not allocated geographically. 26




---



##### Table of Contents



Consolidated Revenues by Product Line
 Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,2007
    
    2006
    
    2007
    
    2006Artificial Lift Systems
    
    
    18
    %
    
    
    18
    %
    
    
    17
    %
    
    
    18
    %Well Construction
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    15Drilling Services
    
    
    16
    
    
    
    14
    
    
    
    15
    
    
    
    15Drilling Tools
    
    
    11
    
    
    
    12
    
    
    
    12
    
    
    
    11Completion Systems
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10Wireline
    
    
    8
    
    
    
    10
    
    
    
    8
    
    
    
    10Re-entry & Fishing
    
    
    7
    
    
    
    8
    
    
    
    8
    
    
    
    8Stimulation & Chemicals
    
    
    6
    
    
    
    6
    
    
    
    7
    
    
    
    6Integrated Drilling
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5Pipeline & Specialty Services
    
    
    3
    
    
    
    1
    
    
    
    2
    
    
    
    2Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Company Results
 Revenues
   Gross Profit
  Selling, General and Administrative Attributable to Segments
   27




---



##### Table of Contents



Corporate General and Administrative
  Interest Expense, Net
  Income Taxes
  Discontinued Operation
  Segment Results
 North America
     28




---



##### Table of Contents



Middle East/North Africa/Asia
    Europe/West Africa/CIS
    Latin America
    29




---



##### Table of Contents



Equity Investment Acquisition
 Consolidation of Variable Interest Entities
 Liquidity and Capital Resources
 Historical Cash Flows
  
    
    cash inflows from operating activities of $521.4 million;
    
    capital expenditures from continuing operations for property, plant and equipment of
$1,097.5 million;
    
    acquisition of businesses of approximately $224.9 million, net of cash acquired;
    
    acquisition of equity investments of $334.5 million;
    
    acquisition of intellectual property of $17.7 million;
    
    borrowings, net of repayments, on long-term debt and short-term facilities of $1,246.5
million;
    
    proceeds from the sale of assets and business, net of $59.9 million;
    
    proceeds from stock option activity of $30.8 million; and
    
    treasury share purchases of $179.3 million.
 Sources of Liquidity and Borrowings
  Committed Borrowing Facility
  Facility amount
    
    $
    1,500.0Less uses of facility:Amount drawn
    
    
    224.0Commercial paper support
    
    
    69.9Letters of credit
    
    
    74.6Availability
    
    $
    1,131.5
 30




---



##### Table of Contents



Uncommitted Borrowing Arrangements
  Commercial Paper
  Debt Offering
  Cash Requirements
    Derivative Instruments
   Interest Rate Swaps
   31




---



##### Table of Contents



Cash Flow Hedges
  Other Derivative Instruments
   Off Balance Sheet Arrangements
 Guarantees
   Letters of Credit
  Operating Leases
  32




---



##### Table of Contents



New Accounting Pronouncements
  Critical Accounting Policies and Estimates
  Goodwill Impairment Test
  Exposures
 Risk Factors
 U.S. Government Investigations
     33




---



##### Table of Contents



Currency Exposure
   Acquisition Exposure
 Accounting for Contingencies
 Forward-Looking Statements
   
    
    A downturn in market conditions could affect projected results.Any material changes in
oil and natural gas supply and demand, oil and natural gas prices, rig count or other
market trends would affect our results and would likely affect the forward-looking
information we provide. The oil and natural gas industry is extremely volatile and subject
to change based on political and economic factors outside our control. During 2004, 2005
and 2006, worldwide drilling activity increased; however, if an extended regional and/or
worldwide recession were to occur, it would result in lower demand and lower prices for oil
and natural gas, which would adversely affect drilling and production activity and
therefore would affect our revenues and income. We have assumed increases in worldwide
demand will continue throughout 2007.
    
    Availability of a skilled workforce could affect our projected results.Due to the high
activity in the exploration and production and oilfield service industries there is an
increasing shortage of available skilled
 34




---



##### Table of Contents



labor. Our forward-looking statements assume we will be able to recruit and maintain a
sufficient skilled workforce for activity levels.
    
    Increases in the prices and availability of our raw materials could affect our results
of operations.We use large amounts of raw materials for manufacturing our products. The
price of these raw materials has a significant impact on our cost of producing products for
sale or producing fixed assets used in our business. We have assumed that the prices of
our raw materials will remain within a manageable range and will be readily available. If
we are unable to attain necessary raw materials or if we are unable to minimize the impact
of increased raw materials costs through our supply chain initiatives or by passing through
these increases to our customers, our margins and results of operations could be adversely
affected.
    
    Our long-term growth depends upon technological innovation and commercialization.Our
ability to deliver our long-term growth strategy depends in part on the commercialization
of new technology. A central aspect of our growth strategy is to innovate our products and
services, to obtain technologically advanced products through internal research and
development and/or acquisitions, to protect proprietary technology from unauthorized use
and to expand the markets for new technology through leverage of our worldwide
infrastructure. The key to our success will be our ability to commercialize the technology
that we have acquired and demonstrate the enhanced value our technology brings to our
customers operations. Our major technological advances include, but are not limited to,
those related to controlled pressure drilling and testing systems, expandable solid
tubulars, expandable sand screens and intelligent well completion. Our forward-looking
statements have assumed successful commercialization of, and above-average growth from,
these new products and services.
    
    Nonrealization of expected benefits from our 2002 corporate reincorporation could affect
our projected results.We are incorporated in Bermuda and we operate through our various
subsidiaries in numerous countries throughout the world including the United States.
Consequently, we are subject to changes in tax laws, treaties or regulations or the
interpretation or enforcement thereof in the U.S., Bermuda or jurisdictions in which we or
any of our subsidiaries operates or is resident. Our income tax expense is based upon our
interpretation of the tax laws in effect in various countries at the time that the expense
was incurred. If the U.S. Internal Revenue Service or other taxing authorities do not agree
with our assessment of the effects of such laws, treaties and regulations, this could have
a material adverse effect on us including the imposition of a higher effective tax rate on
our worldwide earnings or a reclassification of the tax impact of our significant corporate
restructuring transactions.
    
    Nonrealization of expected benefits from our acquisitions could affect our projected
results.We expect to gain certain business, financial and strategic advantages as a
result of business acquisitions we undertake, including synergies and operating
efficiencies. Our forward-looking statements assume that we will successfully integrate
our business acquisitions and realize the benefits of that. An inability to realize
expected strategic advantages as a result of the acquisition would negatively affect the
anticipated benefits of the acquisition.
    
    The cyclical nature of or a prolonged downturn in our industry could affect the carrying
value of our goodwill.As of September 30, 2007, we had approximately $3.3 billion of
goodwill. Our estimates of the value of our goodwill could be reduced in the future as a
result of various factors, some of which are beyond our control. Any reduction in the
value of our goodwill may result in an impairment charge and therefore adversely affect our
results.
    
    Currency fluctuations could have a material adverse financial impact on our business.A
material change 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 currency exchange rates.
    
    Adverse weather conditions in certain regions could aversely affect our operations.In
the summer of 2005, the Gulf of Mexico suffered several significant hurricanes. These
hurricanes and associated hurricane threats reduced the number of days on which we and our
customers could operate, which resulted in lower revenues than we otherwise would have
achieved. In parts of 2006, and particularly in the second quarter of 2007, climatic
conditions in Canada were not as favorable to drilling as we anticipated, which limited our
results in that region. Similarly, unusually rough weather in the North Sea could reduce
our operations and revenues from that area during the relevant period. Our forward-looking
statements assume weather patterns in our primary areas of operations will not deviate
significantly from historical patterns.
    
    Political disturbances, war, or terrorist attacks and changes in global trade policies
could adversely impact our operations.We have assumed there will be no material political
disturbances or terrorist attacks
 35




---



##### Table of Contents



and there will be no material changes in global trade policies. Any further military action
undertaken by the U.S. or other countries could adversely affect our results of operations.
 www.sec.gov
 Available Information
 www.weatherford.com
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Foreign Currency Exposures
     Interest Rates
  36




---



##### Table of Contents



September 30, 2007
    
    December 31, 2006Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In millions)6 5/8% Senior Notes
    
    $
    355.9
    
    
    $
    365.2
    
    
    $
    356.9
    
    
    $
    368.85.95% Senior Notes
    
    
    598.9
    
    
    
    604.7
    
    
    
    
    
    
    
    4.95% Senior Notes
    
    
    254.9
    
    
    
    238.1
    
    
    
    255.4
    
    
    
    245.25.50% Senior Notes
    
    
    348.7
    
    
    
    336.1
    
    
    
    348.6
    
    
    
    339.96.35% Senior Notes
    
    
    599.5
    
    
    
    602.2
    
    
    
    
    
    
    
    6.50% Senior Notes
    
    
    595.8
    
    
    
    586.1
    
    
    
    595.7
    
    
    
    619.56.80% Senior Notes
    
    
    298.1
    
    
    
    305.7
    
    
    
    
    
    
    
    
   Interest Rate Swaps and Derivatives
    37




---



##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
     
 ITEM 1A. RISK FACTORS
  
    
    We have updated the percentage of our net assets located outside the U.S. and carried on
our books in local currencies on page 34 of this report from 38.9% as of December 31, 2006
to 36.6% as of September 30, 2007.
    
    We have replaced the risk factor titled Trading Sanctions Exposure with the following
risk factor titled U.S. Government Investigations:
     38




---



##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS
   Period
    
    No. of Shares
    
    Average PriceJuly 1  July 31, 2007
    
    
    45,049
    
    
    $
    56.51August 1  August 31, 2007
    
    
    
    
    
    
    September 1  September 30, 2007
    
    
    32,120
    
    
    
    61.95
 39




---



##### Table of Contents



ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 
    
    Filed herewith 40




---



##### Table of Contents



SIGNATURES
  Weatherford International Ltd.By:
    /s/ Bernard J. Duroc-DannerBernard J. Duroc-DannerChief Executive Officer
(Principal Executive Officer)/s/ Andrew P. BecnelAndrew P. BecnelSenior Vice President and Chief
Financial Officer
(Principal Financial Officer)/s/ Jessica AbarcaJessica AbarcaVice President  Accounting and Chief
Accounting Officer
(Principal Accounting Officer)Date: November 1, 2007 41




---



##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 
    
    Filed herewith