##### 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 June 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)
  
  
   þ o
  þ o o
  o þ
  Title of Class
    
    Outstanding at July 31, 2007Common Shares, par value $1.00
    
    336,993,477




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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 1A. RISK FACTORSITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURESIndex to ExhibitCertification 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)
 June 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    115,504
    
    
    $
    126,287Accounts Receivable, Net of Allowance for Uncollectible
Accounts of $14,603 and $13,452, Respectively
    
    
    1,740,277
    
    
    
    1,560,849Inventories
    
    
    1,515,812
    
    
    
    1,239,034Other Current Assets
    
    
    504,696
    
    
    
    465,6053,876,289
    
    
    
    3,391,775Property, Plant and Equipment, Net of Accumulated
Depreciation of $2,151,174 and $1,925,177, Respectively
    
    
    3,491,395
    
    
    
    2,979,271Goodwill
    
    
    3,239,487
    
    
    
    3,000,589Other Intangible Assets, Net
    
    
    606,365
    
    
    
    599,828Equity Investments in Unconsolidated Affiliates
    
    
    358,172
    
    
    
    31,175Other Assets
    
    
    157,691
    
    
    
    136,610$
    11,729,399
    
    
    $
    10,139,248LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term Borrowings and Current Portion of Long-term Debt
    
    $
    268,440
    
    
    $
    648,736Accounts Payable
    
    
    527,976
    
    
    
    509,942Other Current Liabilities
    
    
    716,875
    
    
    
    884,4671,513,291
    
    
    
    2,043,145Long-term Debt
    
    
    3,072,430
    
    
    
    1,564,600Deferred Tax Liabilities
    
    
    227,837
    
    
    
    136,208Other Liabilities
    
    
    300,416
    
    
    
    220,496Commitments and ContingenciesShareholders Equity:Common Shares, $1 Par Value, Authorized 1,000,000 Shares,
Issued 362,715 and 361,921 Shares, Respectively
    
    
    362,715
    
    
    
    361,921Capital in Excess of Par Value
    
    
    4,324,540
    
    
    
    4,275,534Treasury Shares, Net
    
    
    (855,046
    )
    
    
    (681,116
    )Retained Earnings
    
    
    2,546,458
    
    
    
    2,099,307Accumulated Other Comprehensive Income
    
    
    236,758
    
    
    
    119,1536,615,425
    
    
    
    6,174,799$
    11,729,399
    
    
    $
    10,139,248
  1




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Products
    
    $
    676,851
    
    
    $
    601,931
    
    
    $
    1,359,103
    
    
    $
    1,170,614Services
    
    
    1,139,094
    
    
    
    936,645
    
    
    
    2,309,127
    
    
    
    1,903,9731,815,945
    
    
    
    1,538,576
    
    
    
    3,668,230
    
    
    
    3,074,587Costs and ExpensesCost of Products
    
    
    614,154
    
    
    
    412,510
    
    
    
    1,103,023
    
    
    
    803,057Cost of Services
    
    
    578,314
    
    
    
    585,762
    
    
    
    1,253,801
    
    
    
    1,179,577Research and Development
    
    
    40,700
    
    
    
    37,361
    
    
    
    81,214
    
    
    
    73,804Selling, General and Administrative
Attributable to Segments
    
    
    220,764
    
    
    
    181,469
    
    
    
    423,195
    
    
    
    365,054Corporate General and Administrative
    
    
    35,561
    
    
    
    24,277
    
    
    
    65,621
    
    
    
    46,533Equity in Earnings of Unconsolidated
Affiliates
    
    
    (989
    )
    
    
    (3,293
    )
    
    
    (1,779
    )
    
    
    (5,927
    )Operating Income
    
    
    327,441
    
    
    
    300,490
    
    
    
    743,155
    
    
    
    612,489Other Expense:Interest Expense, Net
    
    
    (35,293
    )
    
    
    (23,637
    )
    
    
    (69,064
    )
    
    
    (42,579
    )Other, Net
    
    
    (5,934
    )
    
    
    (9,926
    )
    
    
    (8,306
    )
    
    
    (10,749
    )Income from Continuing Operations Before
Income Taxes and Minority Interest
    
    
    286,214
    
    
    
    266,927
    
    
    
    665,785
    
    
    
    559,161Provision for Income Taxes
    
    
    (105,271
    )
    
    
    (77,533
    )
    
    
    (196,649
    )
    
    
    (162,406
    )Income from Continuing Operations
Before Minority Interest
    
    
    180,943
    
    
    
    189,394
    
    
    
    469,136
    
    
    
    396,755Minority Interest, Net of Taxes
    
    
    (4,463
    )
    
    
    (899
    )
    
    
    (8,837
    )
    
    
    (1,736
    )Income from Continuing Operations
    
    
    176,480
    
    
    
    188,495
    
    
    
    460,299
    
    
    
    395,019Loss from Discontinued Operation, Net
of Taxes
    
    
    (11,170
    )
    
    
    (1,648
    )
    
    
    (13,417
    )
    
    
    (4,855
    )Net Income
    
    $
    165,310
    
    
    $
    186,847
    
    
    $
    446,882
    
    
    $
    390,164Basic Earnings Per Share:Income from Continuing Operations
    
    $
    0.52
    
    
    $
    0.54
    
    
    $
    1.36
    
    
    $
    1.13Loss from Discontinued Operation
    
    
    (0.03
    )
    
    
    (0.00
    )
    
    
    (0.04
    )
    
    
    (0.01
    )Net Income
    
    $
    0.49
    
    
    $
    0.54
    
    
    $
    1.32
    
    
    $
    1.12Diluted Earnings Per Share:Income from Continuing Operations
    
    $
    0.51
    
    
    $
    0.53
    
    
    $
    1.33
    
    
    $
    1.10Loss from Discontinued Operation
    
    
    (0.03
    )
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    (0.01
    )Net Income
    
    $
    0.48
    
    
    $
    0.52
    
    
    $
    1.29
    
    
    $
    1.09Weighted Average Shares Outstanding:Basic
    
    
    338,331
    
    
    
    348,853
    
    
    
    338,670
    
    
    
    349,006Diluted
    
    
    347,817
    
    
    
    358,433
    
    
    
    347,062
    
    
    
    358,164
  2




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
 Six MonthsEnded June 30,2007
    
    
    2006Cash Flows from Operating Activities:Net Income
    
    $
    446,882
    
    
    $
    390,164Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:Depreciation and Amortization
    
    
    280,057
    
    
    
    230,483Gain on Sales of Assets, Net
    
    
    (19,680
    )
    
    
    (10,544
    )Loss from Discontinued Operation
    
    
    13,417
    
    
    
    4,855Equity in Earnings of Unconsolidated Affiliates
    
    
    (1,779
    )
    
    
    (5,927
    )Employee Share-Based Compensation Expense
    
    
    37,213
    
    
    
    28,467Excess Tax Benefits from Share-Based Compensation
    
    
    (8,154
    )
    
    
    (690
    )Minority Interest
    
    
    8,837
    
    
    
    1,736Deferred Income Tax Provision (Benefit)
    
    
    95,071
    
    
    
    (1,536
    )Other, Net
    
    
    11,431
    
    
    
    3,517Change in Operating Assets and Liabilities, Net of Effect
of Businesses Acquired
    
    
    (583,071
    )
    
    
    (126,227
    )Net Cash
Provided by Operating Activities  Continuing Operations
    
    
    280,224
    
    
    
    514,298Net Cash Used by Operating Activities  Discontinued Operation
    
    
    (14,038
    )
    
    
    (4,574
    )Net Cash Provided by Operating Activities
    
    
    266,186
    
    
    
    509,724Cash Flows from Investing Activities:Acquisitions of Businesses, Net of Cash Acquired
    
    
    (211,044
    )
    
    
    (106,077
    )Capital Expenditures for Property, Plant and Equipment
    
    
    (672,528
    )
    
    
    (446,306
    )Acquisition of Intellectual Property
    
    
    (14,057
    )
    
    
    (4,945
    )Purchase of Equity Investment in Unconsolidated Affiliates
    
    
    (331,771
    )
    
    
    3⁄4Proceeds from Sale of Assets and Business, Net
    
    
    30,390
    
    
    
    1,352Net Cash
Used by Investing Activities  Continuing Operations
    
    
    (1,199,010
    )
    
    
    (555,976
    )Net Cash Used by Investing Activities  Discontinued Operation
    
    
    (12,265
    )
    
    
    (4,833
    )Net Cash Used by Investing Activities
    
    
    (1,211,275
    )
    
    
    (560,809
    )Cash Flows from Financing Activities:Borrowings of (Repayments on) Short-term Debt, Net
    
    
    (389,517
    )
    
    
    86,524Borrowings of Long-term Debt, Net
    
    
    1,483,443
    
    
    
    143,215Purchase of Treasury Shares
    
    
    (179,262
    )
    
    
    (238,652
    )Proceeds from Exercise of Stock Options
    
    
    13,010
    
    
    
    52,062Excess Tax Benefits from Share-Based Compensation
    
    
    8,154
    
    
    
    690Other Financing Activities, Net
    
    
    (1,522
    )
    
    
    376Net Cash
Provided by Financing Activities  Continuing Operations
    
    
    934,306
    
    
    
    44,215Net Cash
Provided by Financing Activities  Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4Net Cash Provided by Financing Activities
    
    
    934,306
    
    
    
    44,215Net Decrease in Cash and Cash Equivalents
    
    
    (10,783
    )
    
    
    (6,870
    )Cash and Cash Equivalents at Beginning of Period
    
    
    126,287
    
    
    
    134,245Cash and Cash Equivalents at End of Period
    
    $
    115,504
    
    
    $
    127,375Supplemental Cash Flow Information:Interest Paid
    
    $
    73,460
    
    
    $
    45,226Income Taxes Paid, Net of Refunds
    
    
    207,855
    
    
    
    76,452
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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Income
    
    $
    165,310
    
    
    $
    186,847
    
    
    $
    446,882
    
    
    $
    390,164Other Comprehensive Income:Reclassification Adjustment for
Deferred Gain, net on Derivative
Instruments
    
    
    39
    
    
    
    21
    
    
    
    75
    
    
    
    6,289Pension Adjustments
    
    
    3,530
    
    
    
    3⁄4
    
    
    
    4,582
    
    
    
    3⁄4Pension Remeasurement Loss
    
    
    (15,427
    )
    
    
    3⁄4
    
    
    
    (15,427
    )
    
    
    3⁄4Foreign Currency Translation
Adjustment
    
    
    124,453
    
    
    
    52,175
    
    
    
    128,375
    
    
    
    61,867Comprehensive Income
    
    $
    277,905
    
    
    $
    239,043
    
    
    $
    564,487
    
    
    $
    458,320
  4




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##### 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




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
   Accounting for Contingencies
 4. Inventories
  June 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Raw materials, components and supplies
    
    $
    344,336
    
    
    $
    330,006Work in process
    
    
    121,509
    
    
    
    98,920Finished goods
    
    
    1,049,967
    
    
    
    810,108$
    1,515,812
    
    
    $
    1,239,034
  5. Discontinued Operation
 Accounting for the Impairment or Disposal of
Long-Lived Assets
  Allocation of Interest to Discontinued Operations
 6




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Revenues
    
    $
    1,206
    
    
    $
    3⁄4
    
    
    $
    1,206
    
    
    $
    3⁄4Loss Before Income Taxes
    
    $
    13,373
    
    
    $
    2,122
    
    
    $
    16,699
    
    
    $
    6,816Benefit for Income Taxes
    
    
    2,203
    
    
    
    474
    
    
    
    3,282
    
    
    
    1,961Loss from Discontinued Operation,
Net of Taxes
    
    $
    11,170
    
    
    $
    1,648
    
    
    $
    13,417
    
    
    $
    4,855
  June 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Other Current Assets
    
    $
    3,458
    
    
    $
    1,715Property, Plant and Equipment, Net
    
    
    34,038
    
    
    
    24,377Other Assets
    
    
    2,992
    
    
    
    7,401Current Assets Held for Sale
    
    $
    40,488
    
    
    $
    33,493Accounts Payable
    
    $
    388
    
    
    $
    2,553Other Current Liabilities
    
    
    709
    
    
    
    4,826Other Liabilities
    
    
    391
    
    
    
    3⁄4Current Liabilities Held for Sale
    
    $
    1,488
    
    
    $
    7,379
 6. Goodwill
 Goodwill and Other
Intangible Assets
   Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 7




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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
    
    
    24,642
    
    
    
    (620
    )
    
    
    123,147
    
    
    
    3,087
    
    
    
    150,256Purchase price and other
adjustments
    
    
    (363
    )
    
    
    3,937
    
    
    
    361
    
    
    
    475
    
    
    
    4,410Impact of foreign currency
translation
    
    
    68,289
    
    
    
    3,011
    
    
    
    10,006
    
    
    
    2,926
    
    
    
    84,232As of June 30, 2007
    
    $
    1,851,654
    
    
    $
    152,835
    
    
    $
    633,200
    
    
    $
    601,798
    
    
    $
    3,239,487
 7. Other Intangible Assets, Net
  June 30, 2007
    
    
    December 31, 2006Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    Net(In thousands)Acquired technology
    
    $
    329,115
    
    
    $
    (39,203
    )
    
    $
    289,912
    
    
    $
    311,939
    
    
    $
    (26,620
    )
    
    $
    285,319Licenses
    
    
    236,223
    
    
    
    (67,880
    )
    
    
    168,343
    
    
    
    226,444
    
    
    
    (60,316
    )
    
    
    166,128Patents
    
    
    132,982
    
    
    
    (46,197
    )
    
    
    86,785
    
    
    
    127,799
    
    
    
    (42,184
    )
    
    
    85,615Customer relationships
    
    
    28,396
    
    
    
    (4,724
    )
    
    
    23,672
    
    
    
    27,043
    
    
    
    (3,133
    )
    
    
    23,910Customer contracts
    
    
    21,890
    
    
    
    (5,370
    )
    
    
    16,520
    
    
    
    21,890
    
    
    
    (4,027
    )
    
    
    17,863Covenants not to compete
    
    
    27,404
    
    
    
    (24,576
    )
    
    
    2,828
    
    
    
    24,831
    
    
    
    (23,257
    )
    
    
    1,574Other
    
    
    15,636
    
    
    
    (8,732
    )
    
    
    6,904
    
    
    
    15,761
    
    
    
    (7,743
    )
    
    
    8,018Total finite-lived intangible
assets
    
    
    791,646
    
    
    
    (196,682
    )
    
    
    594,964
    
    
    
    755,707
    
    
    
    (167,280
    )
    
    
    588,427Intangible assets with an
indefinite useful life
    
    
    11,401
    
    
    
    3⁄4
    
    
    
    11,401
    
    
    
    11,401
    
    
    
    3⁄4
    
    
    
    11,401$
    803,047
    
    
    $
    (196,682
    )
    
    $
    606,365
    
    
    $
    767,108
    
    
    $
    (167,280
    )
    
    $
    599,828
    Remainder of 2007
    
    $
    26,5892008
    
    
    51,7552009
    
    
    50,4872010
    
    
    49,5962011
    
    
    48,811
 8




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 8. Short-term Borrowings and Current Portion of Long-term Debt
  June 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Revolving credit facility
    
    $
    76,739
    
    
    $
    75,321Canadian credit facility
    
    
    9,297
    
    
    
    6,854Commercial paper program
    
    
    68,061
    
    
    
    490,808Other short-term bank borrowings
    
    
    99,746
    
    
    
    60,010Total Short-term Borrowings
    
    
    253,843
    
    
    
    632,993Current Portion of Long-term Debt
    
    
    14,597
    
    
    
    15,743Short-term Borrowings and Current Portion of Long-term Debt
    
    $
    268,440
    
    
    $
    648,736
      9. Derivative Instruments
 Interest Rate Swaps
  9




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




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
    11. Earnings Per Share
    Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2007
    
    2006
    
    2007
    
    2006Basic weighted average shares outstanding
    
    
    338,331
    
    
    
    348,853
    
    
    
    338,670
    
    
    
    349,006Dilutive effect of:Warrant
    
    
    2,805
    
    
    
    2,809
    
    
    
    2,274
    
    
    
    2,377Stock option and restricted share plans
    
    
    6,681
    
    
    
    6,771
    
    
    
    6,118
    
    
    
    6,781Diluted weighted average shares
outstanding
    
    
    347,817
    
    
    
    358,433
    
    
    
    347,062
    
    
    
    358,164
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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 12. Supplemental Cash Flow Information
  Six MonthsEnded June 30,2007
    
    
    2006(In thousands)Fair value of assets, net of cash acquired
    
    $
    108,591
    
    
    $
    42,944Goodwill
    
    
    150,256
    
    
    
    68,355Consideration paid related to prior year acquisitions
    
    
    19,421
    
    
    
    6,216Total liabilities
    
    
    (67,224
    )
    
    
    (11,438
    )Cash consideration, net of cash acquired
    
    $
    211,044
    
    
    $
    106,077
 Non-cash Activities
  13. Share-Based Compensation
   12




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 14. Retirement and Employee Benefit Plans
  Three Months Ended June 30,2007
    
    
    2006United
    
    
    
    
    
    
    UnitedStates
    
    
    International
    
    
    States
    
    
    International(In thousands)Service cost
    
    $
    671
    
    
    $
    2,736
    
    
    $
    609
    
    
    $
    2,344Interest cost
    
    
    1,430
    
    
    
    2,022
    
    
    
    1,016
    
    
    
    1,631Expected return on plan assets
    
    
    (165
    )
    
    
    (1,960
    )
    
    
    (165
    )
    
    
    (1,546
    )Amortization of transition obligation
    
    
    3⁄4
    
    
    
    (1
    )
    
    
    3⁄4
    
    
    
    (1
    )Amortization of prior service cost
    
    
    494
    
    
    
    (26
    )
    
    
    573
    
    
    
    (26
    )Amortization of loss
    
    
    1,433
    
    
    
    37
    
    
    
    471
    
    
    
    122Curtailment loss
    
    
    1,484
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Settlement loss
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    2,770
    
    
    
    3⁄4Net periodic benefit cost
    
    $
    5,347
    
    
    $
    2,808
    
    
    $
    5,274
    
    
    $
    2,524
 Six Months Ended June 30,2007
    
    
    2006United
    
    
    
    
    
    
    UnitedStates
    
    
    International
    
    
    States
    
    
    International(In thousands)Service cost
    
    $
    1,321
    
    
    $
    5,418
    
    
    $
    1,218
    
    
    $
    4,584Interest cost
    
    
    2,653
    
    
    
    3,993
    
    
    
    2,032
    
    
    
    3,209Expected return on plan assets
    
    
    (330
    )
    
    
    (3,886
    )
    
    
    (330
    )
    
    
    (3,027
    )Amortization of transition obligation
    
    
    3⁄4
    
    
    
    (2
    )
    
    
    3⁄4
    
    
    
    (2
    )Amortization of prior service cost
    
    
    1,054
    
    
    
    (52
    )
    
    
    1,145
    
    
    
    (51
    )Amortization of loss
    
    
    2,084
    
    
    
    74
    
    
    
    943
    
    
    
    240Curtailment loss
    
    
    1,881
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Settlement loss
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    2,770
    
    
    
    3⁄4Net periodic benefit cost
    
    $
    8,663
    
    
    $
    5,545
    
    
    $
    7,778
    
    
    $
    4,953
  15. Variable Interest Entities
 Consolidation of Variable Interest Entities
 13




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  16. Segment Information
 Reporting Segments
    Three Months Ended June 30, 2007Net
    
    
    
    
    
    
    DepreciationOperating
    
    
    Income from
    
    
    and
    
    
    Total Assets atRevenues (b)
    
    
    Operations
    
    
    Amortization
    
    
    June 30, 2007(In thousands)North America
    
    $
    883,364
    
    
    $
    191,956
    
    
    $
    66,959
    
    
    $
    5,756,259Latin America
    
    
    206,604
    
    
    
    44,981
    
    
    
    17,118
    
    
    
    1,037,120Europe/West Africa/CIS
    
    
    290,639
    
    
    
    68,778
    
    
    
    20,936
    
    
    
    1,696,114Middle East/North
Africa/Asia
    
    
    435,338
    
    
    
    96,998
    
    
    
    36,951
    
    
    
    2,600,2391,815,945
    
    
    
    402,713
    
    
    
    141,964
    
    
    
    11,089,732Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (75,272
    )
    
    
    2,578
    
    
    
    599,179Total
    
    $
    1,815,945
    
    
    $
    327,441
    
    
    $
    144,542
    
    
    $
    11,688,911
 Six Months Ended June 30, 2007Net
    
    
    
    
    
    
    DepreciationOperating
    
    
    Income from
    
    
    andRevenues (b)
    
    
    Operations
    
    
    Amortization(In thousands)North America
    
    $
    1,889,997
    
    
    $
    491,480
    
    
    $
    128,723Latin America
    
    
    412,546
    
    
    
    92,930
    
    
    
    33,857Europe/West Africa/CIS
    
    
    535,597
    
    
    
    123,535
    
    
    
    39,171Middle East/North
Africa/Asia
    
    
    830,090
    
    
    
    180,266
    
    
    
    73,1183,668,230
    
    
    
    888,211
    
    
    
    274,869Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (145,056
    )
    
    
    5,188Total
    
    $
    3,668,230
    
    
    $
    743,155
    
    
    $
    280,057
 14




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Three Months Ended June 30, 2006Net
    
    
    
    
    
    
    Depreciation
    
    
    Total Assets atOperating
    
    
    Income from
    
    
    and
    
    
    December 31,Revenues (b)
    
    
    Operations
    
    
    Amortization
    
    
    2006(In thousands)North America
    
    $
    839,753
    
    
    $
    222,276
    
    
    $
    53,829
    
    
    $
    5,290,389Latin America
    
    
    178,637
    
    
    
    33,575
    
    
    
    15,251
    
    
    
    959,141Europe/West Africa/CIS
    
    
    205,092
    
    
    
    45,178
    
    
    
    16,084
    
    
    
    1,272,906Middle East/North
Africa/Asia
    
    
    315,094
    
    
    
    57,806
    
    
    
    27,263
    
    
    
    2,330,9111,538,576
    
    
    
    358,835
    
    
    
    112,427
    
    
    
    9,853,347Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (58,345
    )
    
    
    2,567
    
    
    
    252,408Total
    
    $
    1,538,576
    
    
    $
    300,490
    
    
    $
    114,994
    
    
    $
    10,105,755
 Six Months Ended June 30, 2006Net
    
    
    
    
    
    
    DepreciationOperating
    
    
    Income from
    
    
    andRevenues (b)
    
    
    Operations
    
    
    Amortization(In thousands)North America
    
    $
    1,762,187
    
    
    $
    484,689
    
    
    $
    107,318Latin America
    
    
    340,732
    
    
    
    58,737
    
    
    
    30,701Europe/West Africa/CIS
    
    
    382,316
    
    
    
    79,353
    
    
    
    31,821Middle East/North Africa/Asia
    
    
    589,352
    
    
    
    104,120
    
    
    
    55,3973,074,587
    
    
    
    726,899
    
    
    
    225,237Corporate and Other (a)
    
    
    3⁄4
    
    
    
    (114,410
    )
    
    
    5,246Total
    
    $
    3,074,587
    
    
    $
    612,489
    
    
    $
    230,483
 
 (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 June 30, 2007, the Company had intersegment revenues of approximately $144
million, $27 million, $99 million and $104 million for North America, Latin America, Europe/West
Africa/CIS and Middle East/North Africa/Asia, respectively. For the six months ended June 30,
2007, the Company had intersegment revenues of approximately $267 million, $54 million, $176
million and $189 million for North America, Latin America, Europe/West Africa/CIS and Middle
East/North Africa/Asia, respectively. For the three months ended June 30, 2006, the Company
had intersegment revenues of approximately $94 million, $24 million, $59 million and $45 million
for North America, Latin America, Europe/West Africa/CIS and Middle East/North Africa/Asia,
respectively. For the six months ended June 30, 2006, the Company had intersegment revenues of
approximately $177 million, $46 million, $109 million and $90 million for North America, Latin
America, Europe/West Africa/CIS and Middle East/North Africa/Asia, respectively. 17. Condensed Consolidating Financial Statements
  15




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
   16




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Balance Sheet
June 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    24
    
    
    $
    747
    
    
    $
    114,733
    
    
    $
    3⁄4
    
    
    $
    115,504Other Current Assets
    
    
    4,941
    
    
    
    1,167
    
    
    
    3,754,677
    
    
    
    3⁄4
    
    
    
    3,760,7854,965
    
    
    
    1,914
    
    
    
    3,869,410
    
    
    
    3⁄4
    
    
    
    3,876,289Equity Investments in Affiliates
    
    
    11,119,716
    
    
    
    3,992,990
    
    
    
    13,758,026
    
    
    
    (28,870,732
    )
    
    
    3⁄4Shares Held in Parent
    
    
    3⁄4
    
    
    
    127,208
    
    
    
    727,838
    
    
    
    (855,046
    )
    
    
    3⁄4Intercompany Receivables, Net
    
    
    (606,685
    )
    
    
    1,356,551
    
    
    
    3⁄4
    
    
    
    (749,866
    )
    
    
    3⁄4Other Assets
    
    
    42,063
    
    
    
    18,269
    
    
    
    7,792,778
    
    
    
    3⁄4
    
    
    
    7,853,110$
    10,560,059
    
    
    $
    5,496,932
    
    
    $
    26,148,052
    
    
    $
    (30,475,644
    )
    
    $
    11,729,399LIABILITIES AND SHAREHOLDERS
EQUITYCurrent Liabilities:Short-term Borrowings and Current
Portion of Long-term Debt
    
    $
    68,812
    
    
    $
    65,658
    
    
    $
    133,970
    
    
    $
    3⁄4
    
    
    $
    268,440Accounts Payable and Other Current
Liabilities
    
    
    31,439
    
    
    
    7,217
    
    
    
    1,206,195
    
    
    
    3⁄4
    
    
    
    1,244,851100,251
    
    
    
    72,875
    
    
    
    1,340,165
    
    
    
    3⁄4
    
    
    
    1,513,291Long-term Debt
    
    
    1,198,698
    
    
    
    1,851,151
    
    
    
    22,581
    
    
    
    3⁄4
    
    
    
    3,072,430Intercompany Payables, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    749,866
    
    
    
    (749,866
    )
    
    
    3⁄4Other Long-term Liabilities
    
    
    98,124
    
    
    
    34,097
    
    
    
    396,032
    
    
    
    3⁄4
    
    
    
    528,253Shareholders Equity
    
    
    9,162,986
    
    
    
    3,538,809
    
    
    
    23,639,408
    
    
    
    (29,725,778
    )
    
    
    6,615,425$
    10,560,059
    
    
    $
    5,496,932
    
    
    $
    26,148,052
    
    
    $
    (30,475,644
    )
    
    $
    11,729,399
 17




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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




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Income
Three Months Ended June 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    1,815,945
    
    
    $
    3⁄4
    
    
    $
    1,815,945Costs and Expenses
    
    
    (4,185
    )
    
    
    (2,243
    )
    
    
    (1,483,065
    )
    
    
    3⁄4
    
    
    
    (1,489,493
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    989
    
    
    
    3⁄4
    
    
    
    989Operating Income (Loss)
    
    
    (4,185
    )
    
    
    (2,243
    )
    
    
    333,869
    
    
    
    3⁄4
    
    
    
    327,441Other Income (Expense):Interest
Income (Expense), Net
    
    
    (27,638
    )
    
    
    (8,663
    )
    
    
    1,008
    
    
    
    3⁄4
    
    
    
    (35,293
    )Intercompany Charges, Net
    
    
    (8,726
    )
    
    
    103,766
    
    
    
    (95,040
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    207,926
    
    
    
    146,768
    
    
    
    3⁄4
    
    
    
    (354,694
    )
    
    
    3⁄4Other, Net
    
    
    (2,067
    )
    
    
    1,461
    
    
    
    (5,328
    )
    
    
    3⁄4
    
    
    
    (5,934
    )Income
(Loss) from Continuing Operations Before Income Taxes and Minority
Interest
    
    
    165,310
    
    
    
    241,089
    
    
    
    234,509
    
    
    
    (354,694
    )
    
    
    286,214Provision for Income Taxes
    
    
    3⁄4
    
    
    
    (33,163
    )
    
    
    (72,108
    )
    
    
    3⁄4
    
    
    
    (105,271
    )Income (Loss) from Continuing Operations Before Minority Interest
    
    
    165,310
    
    
    
    207,926
    
    
    
    162,401
    
    
    
    (354,694
    )
    
    
    180,943Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (4,463
    )
    
    
    3⁄4
    
    
    
    (4,463
    )Income
(Loss) from Continuing Operations
    
    
    165,310
    
    
    
    207,926
    
    
    
    157,938
    
    
    
    (354,694
    )
    
    
    176,480Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (11,170
    )
    
    
    3⁄4
    
    
    
    (11,170
    )Net Income (Loss)
    
    $
    165,310
    
    
    $
    207,926
    
    
    $
    146,768
    
    
    $
    (354,694
    )
    
    $
    165,310
 Condensed Consolidating Statements of Income
Three Months Ended June 30, 2006
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    1,538,576
    
    
    $
    3⁄4
    
    
    $
    1,538,576Costs and Expenses
    
    
    (5,957
    )
    
    
    (300
    )
    
    
    (1,235,122
    )
    
    
    3⁄4
    
    
    
    (1,241,379
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3,293
    
    
    
    3⁄4
    
    
    
    3,293Operating Income (Loss)
    
    
    (5,957
    )
    
    
    (300
    )
    
    
    306,747
    
    
    
    3⁄4
    
    
    
    300,490Other Income (Expense):Interest Expense, Net
    
    
    (16,484
    )
    
    
    (6,697
    )
    
    
    (456
    )
    
    
    3⁄4
    
    
    
    (23,637
    )Intercompany Charges, Net
    
    
    (7,132
    )
    
    
    (20,537
    )
    
    
    27,669
    
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    214,122
    
    
    
    231,916
    
    
    
    3⁄4
    
    
    
    (446,038
    )
    
    
    3⁄4Other, Net
    
    
    2,298
    
    
    
    (59
    )
    
    
    (12,165
    )
    
    
    3⁄4
    
    
    
    (9,926
    )Income (Loss) from Continuing Operations Before Income Taxes and Minority
Interest
    
    
    186,847
    
    
    
    204,323
    
    
    
    321,795
    
    
    
    (446,038
    )
    
    
    266,927(Provision) Benefit for Income Taxes
    
    
    3⁄4
    
    
    
    9,799
    
    
    
    (87,332
    )
    
    
    3⁄4
    
    
    
    (77,533
    )Income (Loss) from Continuing Operations Before Minority Interest
    
    
    186,847
    
    
    
    214,122
    
    
    
    234,463
    
    
    
    (446,038
    )
    
    
    189,394Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (899
    )
    
    
    3⁄4
    
    
    
    (899
    )Income
(Loss) from Continuing Operations
    
    
    186,847
    
    
    
    214,122
    
    
    
    233,564
    
    
    
    (446,038
    )
    
    
    188,495Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,648
    )
    
    
    3⁄4
    
    
    
    (1,648
    )Net Income (Loss)
    
    $
    186,847
    
    
    $
    214,122
    
    
    $
    231,916
    
    
    $
    (446,038
    )
    
    $
    186,847
 19




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Income
Six Months Ended June 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    3,668,230
    
    
    $
    3⁄4
    
    
    $
    3,668,230Costs and Expenses
    
    
    (7,286
    )
    
    
    (2,511
    )
    
    
    (2,917,057
    )
    
    
    3⁄4
    
    
    
    (2,926,854
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    1,779
    
    
    
    3⁄4
    
    
    
    1,779Operating Income (Loss)
    
    
    (7,286
    )
    
    
    (2,511
    )
    
    
    752,952
    
    
    
    3⁄4
    
    
    
    743,155Other Income (Expense):Interest
Income (Expense), Net
    
    
    (54,819
    )
    
    
    (14,256
    )
    
    
    11
    
    
    
    3⁄4
    
    
    
    (69,064
    )Intercompany Charges, Net
    
    
    (8,610
    )
    
    
    93,602
    
    
    
    (84,992
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    517,711
    
    
    
    467,301
    
    
    
    3⁄4
    
    
    
    (985,012
    )
    
    
    3⁄4Other, Net
    
    
    (114
    )
    
    
    1,232
    
    
    
    (9,424
    )
    
    
    3⁄4
    
    
    
    (8,306
    )Income (Loss) from Continuing Operations Before Income Taxes and Minority
Interest
    
    
    446,882
    
    
    
    545,368
    
    
    
    658,547
    
    
    
    (985,012
    )
    
    
    665,785Provision for Income Taxes
    
    
    3⁄4
    
    
    
    (27,657
    )
    
    
    (168,992
    )
    
    
    3⁄4
    
    
    
    (196,649
    )Income (Loss) from Continuing Operations Before Minority Interest
    
    
    446,882
    
    
    
    517,711
    
    
    
    489,555
    
    
    
    (985,012
    )
    
    
    469,136Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (8,837
    )
    
    
    3⁄4
    
    
    
    (8,837
    )Income
(Loss) from Continuing Operations
    
    
    446,882
    
    
    
    517,711
    
    
    
    480,718
    
    
    
    (985,012
    )
    
    
    460,299Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (13,417
    )
    
    
    3⁄4
    
    
    
    (13,417
    )Net Income (Loss)
    
    $
    446,882
    
    
    $
    517,711
    
    
    $
    467,301
    
    
    $
    (985,012
    )
    
    $
    446,882
 Condensed Consolidating Statements of Income
Six Months Ended June 30, 2006
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    3,074,587
    
    
    $
    3⁄4
    
    
    $
    3,074,587Costs and Expenses
    
    
    (8,777
    )
    
    
    (576
    )
    
    
    (2,458,672
    )
    
    
    3⁄4
    
    
    
    (2,468,025
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    5,927
    
    
    
    3⁄4
    
    
    
    5,927Operating Income (Loss)
    
    
    (8,777
    )
    
    
    (576
    )
    
    
    621,842
    
    
    
    3⁄4
    
    
    
    612,489Other Income (Expense):Interest Income (Expense), Net
    
    
    (28,715
    )
    
    
    (14,632
    )
    
    
    768
    
    
    
    3⁄4
    
    
    
    (42,579
    )Intercompany Charges, Net
    
    
    (6,905
    )
    
    
    (34,147
    )
    
    
    41,052
    
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    430,374
    
    
    
    462,615
    
    
    
    3⁄4
    
    
    
    (892,989
    )
    
    
    3⁄4Other, Net
    
    
    4,187
    
    
    
    (254
    )
    
    
    (14,682
    )
    
    
    3⁄4
    
    
    
    (10,749
    )Income (Loss) from Continuing Operations Before Income Taxes and Minority
Interest
    
    
    390,164
    
    
    
    413,006
    
    
    
    648,980
    
    
    
    (892,989
    )
    
    
    559,161(Provision) Benefit for Income Taxes
    
    
    3⁄4
    
    
    
    17,368
    
    
    
    (179,774
    )
    
    
    3⁄4
    
    
    
    (162,406
    )Income (Loss) from Continuing Operations Before Minority Interest
    
    
    390,164
    
    
    
    430,374
    
    
    
    469,206
    
    
    
    (892,989
    )
    
    
    396,755Minority Interest, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,736
    )
    
    
    3⁄4
    
    
    
    (1,736
    )Income
(Loss) from Continuing Operations
    
    
    390,164
    
    
    
    430,374
    
    
    
    467,470
    
    
    
    (892,989
    )
    
    
    395,019Loss from Discontinued Operation, Net of Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (4,855
    )
    
    
    3⁄4
    
    
    
    (4,855
    )Net Income (Loss)
    
    $
    390,164
    
    
    $
    430,374
    
    
    $
    462,615
    
    
    $
    (892,989
    )
    
    $
    390,164
 20




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2007
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationCash Flows from Operating Activities:Net Income (Loss)
    
    $
    446,882
    
    
    $
    517,711
    
    
    $
    467,301
    
    
    $
    (985,012
    )
    
    $
    446,882Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) by Operating
Activities:Equity in Earnings of Unconsolidated
Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,779
    )
    
    
    3⁄4
    
    
    
    (1,779
    )Equity in (Earnings) Loss of Affiliates
    
    
    (517,711
    )
    
    
    (467,301
    )
    
    
    3⁄4
    
    
    
    985,012
    
    
    
    3⁄4Loss from Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    13,417
    
    
    
    3⁄4
    
    
    
    13,417Charges from Parent or Subsidiary
    
    
    8,610
    
    
    
    (93,602
    )
    
    
    84,992
    
    
    
    3⁄4
    
    
    
    3⁄4Deferred Income Tax Provision (Benefit)
    
    
    3⁄4
    
    
    
    (5,217
    )
    
    
    100,288
    
    
    
    3⁄4
    
    
    
    95,071Other Adjustments
    
    
    (13,429
    )
    
    
    (42,062
    )
    
    
    (217,876
    )
    
    
    3⁄4
    
    
    
    (273,367
    )Net Cash
Provided (Used) by Operating Activities  Continuing
Operations
    
    
    (75,648
    )
    
    
    (90,471
    )
    
    
    446,343
    
    
    
    3⁄4
    
    
    
    280,224Net Cash Used by Operating Activities  Discontinued
Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (14,038
    )
    
    
    3⁄4
    
    
    
    (14,038
    )Net Cash Provided (Used) by Operating
Activities
    
    
    (75,648
    )
    
    
    (90,471
    )
    
    
    432,305
    
    
    
    3⁄4
    
    
    
    266,186Cash Flows from Investing Activities:Purchase of Equity Investment in
Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (331,771
    )
    
    
    3⁄4
    
    
    
    (331,771
    )Acquisition of Businesses, Net of Cash
Acquired
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (211,044
    )
    
    
    3⁄4
    
    
    
    (211,044
    )Capital Expenditures for Property, Plant and
Equipment
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (672,528
    )
    
    
    3⁄4
    
    
    
    (672,528
    )Acquisition of Intellectual Property
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (14,057
    )
    
    
    3⁄4
    
    
    
    (14,057
    )Proceeds from Sale of Assets
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    30,390
    
    
    
    3⁄4
    
    
    
    30,390Capital Contribution to Subsidiary
    
    
    (592,134
    )
    
    
    (23,100
    )
    
    
    3⁄4
    
    
    
    615,234
    
    
    
    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
    
    
    (592,134
    )
    
    
    (1,509,465
    )
    
    
    287,355
    
    
    
    615,234
    
    
    
    (1,199,010
    )Net Cash Used by
Investing Activities Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (12,265
    )
    
    
    3⁄4
    
    
    
    (12,265
    )Net Cash Provided (Used) by
Investing Activities
    
    
    (592,134
    )
    
    
    (1,509,465
    )
    
    
    275,090
    
    
    
    615,234
    
    
    
    (1,211,275
    )Cash Flows from Financing Activities:Borrowings of (Repayments on) Short-term
Debt, Net
    
    
    (422,747
    )
    
    
    57,216
    
    
    
    (23,986
    )
    
    
    3⁄4
    
    
    
    (389,517
    )Borrowings of (Repayments on) Long-term
Debt, Net
    
    
    3⁄4
    
    
    
    1,485,497
    
    
    
    (2,054
    )
    
    
    3⁄4
    
    
    
    1,483,443Borrowings (Repayments) Between
Subsidiaries, Net
    
    
    1,090,518
    
    
    
    36,057
    
    
    
    (1,126,575
    )
    
    
    3⁄4
    
    
    
    3⁄4Purchase of Treasury Shares
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (179,262
    )
    
    
    3⁄4
    
    
    
    (179,262
    )Proceeds from Exercise of Stock Options
    
    
    3⁄4
    
    
    
    13,010
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    13,010Proceeds from Capital Contribution
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    615,234
    
    
    
    (615,234
    )
    
    
    3⁄4Other, Net
    
    
    3⁄4
    
    
    
    6,632
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    6,632Net Cash
Provided (Used) by Financing Activities  Continuing
Operations
    
    
    667,771
    
    
    
    1,598,412
    
    
    
    (716,643
    )
    
    
    (615,234
    )
    
    
    934,306Net Cash Provided by
Financing Activities  Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net Cash Provided (Used) by
Financing Activities
    
    
    667,771
    
    
    
    1,598,412
    
    
    
    (716,643
    )
    
    
    (615,234
    )
    
    
    934,306Net Decrease in Cash and Cash
Equivalents
    
    
    (11
    )
    
    
    (1,524
    )
    
    
    (9,248
    )
    
    
    3⁄4
    
    
    
    (10,783
    )Cash and Cash Equivalents at Beginning of
Period
    
    
    35
    
    
    
    2,271
    
    
    
    123,981
    
    
    
    3⁄4
    
    
    
    126,287Cash and Cash Equivalents at End of Period
    
    $
    24
    
    
    $
    747
    
    
    $
    114,733
    
    
    $
    3⁄4
    
    
    $
    115,504
 21




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2006
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationCash Flows from Operating Activities:Net Income (Loss)
    
    $
    390,164
    
    
    $
    430,374
    
    
    $
    462,615
    
    
    $
    (892,989
    )
    
    $
    390,164Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) by Operating Activities:Equity in Earnings of Unconsolidated
Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (5,927
    )
    
    
    3⁄4
    
    
    
    (5,927
    )Equity in (Earnings) Loss of Affiliates
    
    
    (430,374
    )
    
    
    (462,615
    )
    
    
    3⁄4
    
    
    
    892,989
    
    
    
    3⁄4Loss from Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    4,855
    
    
    
    3⁄4
    
    
    
    4,855Charges from Parent or Subsidiary
    
    
    6,905
    
    
    
    34,147
    
    
    
    (41,052
    )
    
    
    3⁄4
    
    
    
    3⁄4Deferred Income Tax Provision (Benefit)
    
    
    3⁄4
    
    
    
    (17,370
    )
    
    
    15,834
    
    
    
    3⁄4
    
    
    
    (1,536
    )Other, Net
    
    
    245,791
    
    
    
    (199,759
    )
    
    
    80,710
    
    
    
    3⁄4
    
    
    
    126,742Net Cash
Provided (Used) by Operating Activities  Continuing
Operations
    
    
    212,486
    
    
    
    (215,223
    )
    
    
    517,035
    
    
    
    3⁄4
    
    
    
    514,298Net Cash Used by Operating Activities  Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (4,574
    )
    
    
    3⁄4
    
    
    
    (4,574
    )Net Cash Provided (Used) by Operating Activities
    
    
    212,486
    
    
    
    (215,223
    )
    
    
    512,461
    
    
    
    3⁄4
    
    
    
    509,724Cash Flows from Investing Activities:Acquisition of Businesses, Net of Cash
Acquired
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (106,077
    )
    
    
    3⁄4
    
    
    
    (106,077
    )Capital Expenditures for Property, Plant and
Equipment
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (446,306
    )
    
    
    3⁄4
    
    
    
    (446,306
    )Acquisition of Intellectual Property
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (4,945
    )
    
    
    3⁄4
    
    
    
    (4,945
    )Capital Contribution to Subsidiary
    
    
    (651,748
    )
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    651,748
    
    
    
    3⁄4Proceeds from Sale of Assets and Business, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    1,352
    
    
    
    3⁄4
    
    
    
    1,352Net Cash Provided (Used) by
Investing Activities  Continuing Operations
    
    
    (651,748
    )
    
    
    3⁄4
    
    
    
    (555,976
    )
    
    
    651,748
    
    
    
    (555,976
    )Net Cash Used by
Investing Activities  Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (4,833
    )
    
    
    3⁄4
    
    
    
    (4,833
    )Net Cash Provided (Used) by Investing Activities
    
    
    (651,748
    )
    
    
    3⁄4
    
    
    
    (560,809
    )
    
    
    651,748
    
    
    
    (560,809
    )Cash Flows from Financing Activities:Borrowings of Short-term Debt, Net
    
    
    36,135
    
    
    
    31,245
    
    
    
    19,144
    
    
    
    3⁄4
    
    
    
    86,524Borrowings of (Repayments on) Long-term Debt, Net
    
    
    348,513
    
    
    
    (200,870
    )
    
    
    (4,428
    )
    
    
    3⁄4
    
    
    
    143,215Borrowings (Repayments) Between
Subsidiaries, Net
    
    
    54,566
    
    
    
    328,951
    
    
    
    (383,517
    )
    
    
    3⁄4
    
    
    
    3⁄4Proceeds from Exercise of Stock Options
    
    
    3⁄4
    
    
    
    52,062
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    52,062Purchase of Treasury Shares
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (238,652
    )
    
    
    3⁄4
    
    
    
    (238,652
    )Proceeds from Capital Contribution
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    651,748
    
    
    
    (651,748
    )
    
    
    3⁄4Other, Net
    
    
    (51
    )
    
    
    1,117
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    1,066Net Cash Provided (Used) by
Financing Activities  Continuing Operations
    
    
    439,163
    
    
    
    212,505
    
    
    
    44,295
    
    
    
    (651,748
    )
    
    
    44,215Net Cash Provided by
Financing Activities  Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net Cash Provided (Used) by Financing Activities
    
    
    439,163
    
    
    
    212,505
    
    
    
    44,295
    
    
    
    (651,748
    )
    
    
    44,215Net Decrease in Cash and Cash
Equivalents
    
    
    (99
    )
    
    
    (2,718
    )
    
    
    (4,053
    )
    
    
    3⁄4
    
    
    
    (6,870
    )Cash and Cash Equivalents at Beginning of
Period
    
    
    124
    
    
    
    3,172
    
    
    
    130,949
    
    
    
    3⁄4
    
    
    
    134,245Cash and Cash Equivalents at End of Period
    
    $
    25
    
    
    $
    454
    
    
    $
    126,896
    
    
    $
    3⁄4
    
    
    $
    127,375
 22




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 18. New Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities
 23




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
 General
    
    
    North America  (i) United States of America and (ii) Canada
    
    Latin America  (i) North Latin America and (ii) South Latin America
    
    Europe/West Africa/CIS  (i) West Europe, (ii) Eastern Europe, (iii) Sub-Sahara
Africa, and (iv) Russia/Caspian/FSU
    
    Middle East/North Africa/Asia  (i) Eastern Middle East (ii) Western Middle
East/North Africa and (iii) Asia Pacific
 Industry Trends
   Henry Hub
    
    North American
    
    InternationalWTI Oil (1)
    
    Gas (2)
    
    Rig Count (3)
    
    Rig Count (3)June 30, 2007
    
    $
    70.68
    
    
    $
    6.77
    
    
    
    1,981
    
    
    
    1,097December 31, 2006
    
    
    61.05
    
    
    
    6.30
    
    
    
    2,178
    
    
    
    1,029June 30, 2006
    
    
    73.91
    
    
    
    6.10
    
    
    
    2,073
    
    
    
    914
 
 (1)
    
    Price per barrel as of June 30 and December 31  Source:Applied Reasoning, Inc.(2)
    
    Price per MM/BTU as of June 30 and December 31  Source:Oil World 24




---



##### Table of Contents



(3)
    
    Average rig count for the applicable month  Source:Baker Hughes Rig Count and other
third-party data    Opportunities and Challenges
   2007 and 2008 Outlook
    25




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##### Table of Contents



Geographic Markets.
 Pricing.
  Results of Operations
  26




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##### Table of Contents



Comparative Financial Data
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except percentages and per share data)Revenues:North America
    
    $
    883,364
    
    
    $
    839,753
    
    
    $
    1,889,997
    
    
    $
    1,762,187Latin America
    
    
    206,604
    
    
    
    178,637
    
    
    
    412,546
    
    
    
    340,732Europe/West Africa/CIS
    
    
    290,639
    
    
    
    205,092
    
    
    
    535,597
    
    
    
    382,316Middle East/North Africa/Asia
    
    
    435,338
    
    
    
    315,094
    
    
    
    830,090
    
    
    
    589,3521,815,945
    
    
    
    1,538,576
    
    
    
    3,668,230
    
    
    
    3,074,587Gross Profit %
    
    
    34.3
    %
    
    
    35.1
    %
    
    
    35.8
    %
    
    
    35.5
    %Research and Development
    
    
    40,700
    
    
    
    37,361
    
    
    
    81,214
    
    
    
    73,804Selling,
General and Administrative Attributable to Segments
    
    
    220,764
    
    
    
    181,469
    
    
    
    423,195
    
    
    
    365,054Corporate General and Administrative
    
    
    35,561
    
    
    
    24,277
    
    
    
    65,621
    
    
    
    46,533Equity in Earnings of Unconsolidated Affiliates
    
    
    989
    
    
    
    3,293
    
    
    
    1,779
    
    
    
    5,927Operating Income:North America
    
    
    191,956
    
    
    
    222,276
    
    
    
    491,480
    
    
    
    484,689Latin America
    
    
    44,981
    
    
    
    33,575
    
    
    
    92,930
    
    
    
    58,737Europe/West Africa/CIS
    
    
    68,778
    
    
    
    45,178
    
    
    
    123,535
    
    
    
    79,353Middle East/North Africa/Asia
    
    
    96,998
    
    
    
    57,806
    
    
    
    180,266
    
    
    
    104,120Corporate and Other (a)
    
    
    (75,272
    )
    
    
    (58,345
    )
    
    
    (145,056
    )
    
    
    (114,410
    )327,441
    
    
    
    300,490
    
    
    
    743,155
    
    
    
    612,489Interest Expense, Net
    
    
    (35,293
    )
    
    
    (23,637
    )
    
    
    (69,064
    )
    
    
    (42,579
    )Other, Net
    
    
    (5,934
    )
    
    
    (9,926
    )
    
    
    (8,306
    )
    
    
    (10,749
    )Effective Tax Rate
    
    
    36.8
    %
    
    
    29.0
    %
    
    
    29.5
    %
    
    
    29.0
    %Net Income per Diluted Share from Continuing
Operations
    
    $
    0.51
    
    
    $
    0.53
    
    
    $
    1.33
    
    
    $
    1.10Loss from Discontinued Operation, Net of Taxes
    
    
    11,170
    
    
    
    1,648
    
    
    
    13,417
    
    
    
    4,855Net Income per Diluted Share
    
    $
    0.48
    
    
    $
    0.52
    
    
    $
    1.29
    
    
    $
    1.09Depreciation and Amortization
    
    
    144,542
    
    
    
    114,994
    
    
    
    280,057
    
    
    
    230,483
 
 (a)
    
    Includes equity in earnings of unconsolidated affiliates which are integral to our
operations and research and development expenses, which are not allocated geographically. 27




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##### Table of Contents



Consolidated Revenues by Product Line
 Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2007
    
    2006
    
    2007
    
    2006Artificial Lift Systems
    
    
    17
    %
    
    
    19
    %
    
    
    17
    %
    
    
    19
    %Well Construction
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    15Drilling Services
    
    
    15
    
    
    
    14
    
    
    
    15
    
    
    
    15Drilling Tools
    
    
    12
    
    
    
    11
    
    
    
    12
    
    
    
    11Completion Systems
    
    
    11
    
    
    
    11
    
    
    
    10
    
    
    
    10Wireline
    
    
    7
    
    
    
    8
    
    
    
    9
    
    
    
    10Re-entry & Fishing
    
    
    8
    
    
    
    8
    
    
    
    8
    
    
    
    7Stimulation & Chemicals Services
    
    
    7
    
    
    
    6
    
    
    
    6
    
    
    
    6Integrated Drilling
    
    
    5
    
    
    
    6
    
    
    
    5
    
    
    
    6Pipeline & Specialty Services
    
    
    2
    
    
    
    1
    
    
    
    2
    
    
    
    1Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Company Results
 Revenues
   Gross Profit
  Selling, General and Administrative Attributable to Segments
  Corporate General and Administrative
  28




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##### Table of Contents



Interest Expense, Net
  Income Taxes
  Discontinued Operation
  Segment Results
 North America
     Middle East/North Africa/Asia
  29




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##### Table of Contents



Europe/West Africa/CIS
    Latin America
    30




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##### Table of Contents



Recent Equity Investment Acquisition
 Consolidation of Variable Interest Entities
 Liquidity and Capital Resources
 Historical Cash Flows
  
    
    cash inflows from operating activities of $266.2 million;
    
    capital expenditures from continuing operations for property, plant and equipment of $672.5 million;
    
    acquisition of businesses of approximately $211.0 million, net of cash acquired;
    
    acquisition of equity investments of $331.8 million;
    
    acquisition of intellectual property of $14.1 million;
    
    borrowings, net of repayments, on long-term debt and
short-term facilities of $1,093.9 million;
    
    proceeds from the sale of assets and business, net of $30.4 million;
    
    proceeds from stock option activity of $13.0 million; and
    
    treasury share purchases of $179.3 million.
 Sources of Liquidity and Borrowings
  Committed Borrowing Facilities
  Uses of AvailabilityCommercialShort-term Committed
    
    Facility
    
    Expiration
    
    Paper
    
    
    
    
    
    Letters of
    
    CommittedFinancing Facilities
    
    Amount
    
    Date
    
    Support
    
    Drawn
    
    Credit
    
    AvailabilityRevolving Credit Facility
    
    $
    1,500.0
    
    
    May 2011
    
    $
    68.1
    
    
    $
    76.7
    
    
    $
    62.2
    
    
    $
    1,293.0Canadian Credit Facility
    
    
    23.4
    
    
    July 2007
    
    
    3⁄4
    
    
    
    9.3
    
    
    
    0.4
    
    
    
    13.7
   31




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##### Table of Contents



Uncommitted Borrowing Arrangements
  Commercial Paper
  Debt Offering
  Cash Requirements
    Derivative Instruments
   Interest Rate Swaps
   32




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##### Table of Contents



Cash Flow Hedges
  Other Derivative Instruments
   Off Balance Sheet Arrangements
 Guarantees
   Letters of Credit
  Operating Leases
  New Accounting Pronouncements
  Critical Accounting Policies and Estimates
  33




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##### Table of Contents



Goodwill Impairment Test
  Exposures
 Risk Factors
 Trading Sanctions Exposure
    Currency Exposure
   34




---



##### Table of Contents



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 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.
 35




---



##### Table of Contents




    
    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 June 30, 2007, we had approximately $3.2 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 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
 36




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Foreign Currency Exposures
     Interest Rates
  37




---



##### Table of Contents



June 30, 2007
    
    December 31, 2006Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In millions)6 5/8% Senior Notes due 2011
    
    $
    356.3
    
    
    $
    359.1
    
    
    $
    356.9
    
    
    $
    368.85.95% Senior Notes due 2012
    
    
    598.8
    
    
    
    605.2
    
    
    
    3⁄4
    
    
    
    3⁄44.95% Senior Notes due 2013
    
    
    255.0
    
    
    
    234.9
    
    
    
    255.4
    
    
    
    245.25.50% Senior Notes due 2016
    
    
    348.7
    
    
    
    336.1
    
    
    
    348.6
    
    
    
    339.96.35% Senior Notes due 2017
    
    
    599.5
    
    
    
    608.6
    
    
    
    3⁄4
    
    
    
    3⁄46.50% Senior Notes due 2036
    
    
    595.7
    
    
    
    583.2
    
    
    
    595.7
    
    
    
    619.56.80% Senior Notes due 2037
    
    
    298.1
    
    
    
    306.2
    
    
    
    3⁄4
    
    
    
    3⁄4
   Interest Rate Swaps and Derivatives
    
 ITEM 4. CONTROLS AND PROCEDURES
  38




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##### Table of Contents



PART II. OTHER INFORMATION
 
 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 36.4% as of June 30, 2007.
    
    We have added the following risk factor titled Trading Sanctions Exposure:
    
 ITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS
  Total Number
    
    Maximumof Shares
    
    Number (orPurchased as
    
    ApproximatePart of
    
    Dollar Value) ofPublicly
    
    Shares that MayTotal Number
    
    Average
    
    Announced
    
    Yet Be Purchasedof Shares
    
    Price Paid
    
    Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    per Share
    
    Programs
    
    ProgramsApril 1  April 30, 2007
    
    
    3⁄4
    
    
       $
    3⁄4
    
    
    
    3⁄4
    
    
    $
    327,615,968May 1  May 31, 2007
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4June 1  June 30, 2007
    
    
    1,000,000
    
    
    
    55.45
    
    
    
    1,000,000
    
    
    
    272,161,9421,000,000
    
    
    
    55.45
    
    
    
    1,000,000
    
    
    
    272,161,942
 39




---



##### Table of Contents



Period
    
    No. of Shares
    
    Average PriceApril 1  April 30, 2007
    
    
    1,175
    
    
    $
    47.75May 1  May 31, 2007
    
    
    10,797
    
    
    
    42.15June 1  June 30, 2007
    
    
    183
    
    
    
    55.24
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  BrokerElection of Directors
    
    For
    
    Against
    
    Withheld
    
    Non-VotesNicholas F. Brady
    
    
    260,276,181
    
    
    
    23,099,586
    
    
    
    6,934,181
    
    
    
    1,242,008David J. Butters
    
    
    259,221,057
    
    
    
    25,346,387
    
    
    
    6,984,510
    
    
    
    3⁄4Bernard J. Duroc-Danner
    
    
    260,317,642
    
    
    
    24,282,581
    
    
    
    6,951,725
    
    
    
    3⁄4Sheldon B. Lubar
    
    
    257,983,599
    
    
    
    26,587,065
    
    
    
    6,981,282
    
    
    
    3⁄4William E. Macaulay
    
    
    260,032,250
    
    
    
    24,580,684
    
    
    
    6,939,016
    
    
    
    3⁄4Robert B. Millard
    
    
    261,625,494
    
    
    
    23,006,441
    
    
    
    6,920,013
    
    
    
    3⁄4Robert K. Moses, Jr.
    
    
    260,288,423
    
    
    
    24,277,602
    
    
    
    6,985,927
    
    
    
    3⁄4Robert A. Rayne
    
    
    236,158,876
    
    
    
    48,329,411
    
    
    
    7,063,660
    
    
    
    3⁄4
  (a)
    
    The appointment of Ernst & Young LLP as our Independent Registered Public Accounting
Firm for the year ending December 31, 2007, and the authorization of the Audit Committee of
the Board of Directors to set Ernst & Young LLPs remuneration. The results of the voting
with respect to such matter were 284,436,208 shares voted for, 259,783 shares voted against
and 6,855,964 shares abstained. There were no broker non-votes.
 40




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##### Table of Contents



ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description4.1
    
    Indenture, dated June 18, 2007, among the Weatherford Delaware, as
issuer, Weatherford Bermuda, as guarantor, and Deutsche Bank Trust
Company Americas, as trustee (incorporated by reference to Exhibit
4.1 to the Registrants Current Report on Form 8-K (File No.
1-31339) filed June 18, 2007).4.2
    
    First Supplement Indenture, dated June 18, 2007, among the
Weatherford Delaware, as issuer, Weatherford Bermuda, as
guarantor, and Deutsche Bank Trust Company Americas, as trustee
(including forms of notes) (incorporated by reference to Exhibit
4.2 to the Registrants Current Report on Form 8-K (File No.
1-31339) filed June 18, 2007).4.3
    
    Registration Rights Agreement, dated June 18, 2007, among
Weatherford International Ltd., Weatherford International, Inc.,
and Morgan Stanley & Co. Incorporated, Deutsche Bank Securities
Inc. and UBS Securities LLC (incorporated by reference to Exhibit
4.3 to the Registrants Current Report on Form 8-K (File No.
1-31339) filed June 18, 2007).10.1
    
    Employment Agreement, dated as of June 11, 2007, between
Weatherford International Ltd. and Keith R. Morley (incorporated
by reference to Exhibit 10.1 to the Registrants Current Report on
Form 8-K (File No. 1-31339) filed June 11, 2007).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 41




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##### 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 ChiefFinancial Officer
(Principal Financial Officer)/s/ Jessica AbarcaJessica AbarcaVice President  Accounting and Chief Accounting Officer(Principal Accounting Officer)Date: August 3, 2007
 42




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##### Table of Contents



Index
to Exhibit
 ExhibitNumber
    
    Description4.1
    
    Indenture, dated June 18, 2007, among the Weatherford Delaware, as
issuer, Weatherford Bermuda, as guarantor, and Deutsche Bank Trust
Company Americas, as trustee (incorporated by reference to Exhibit
4.1 to the Registrants Current Report on Form 8-K (File No.
1-31339) filed June 18, 2007).4.2
    
    First Supplement Indenture, dated June 18, 2007, among the
Weatherford Delaware, as issuer, Weatherford Bermuda, as
guarantor, and Deutsche Bank Trust Company Americas, as trustee
(including forms of notes) (incorporated by reference to Exhibit
4.2 to the Registrants Current Report on Form 8-K (File No.
1-31339) filed June 18, 2007).4.3
    
    Registration Rights Agreement, dated June 18, 2007, among
Weatherford International Ltd., Weatherford International, Inc.,
and Morgan Stanley & Co. Incorporated, Deutsche Bank Securities
Inc. and UBS Securities LLC (incorporated by reference to Exhibit
4.3 to the Registrants Current Report on Form 8-K (File No.
1-31339) filed June 18, 2007).10.1
    
    Employment Agreement, dated as of June 11, 2007, between
Weatherford International Ltd. and Keith R. Morley (incorporated
by reference to Exhibit 10.1 to the Registrants Current Report on
Form 8-K (File No. 1-31339) filed June 11, 2007).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