##### 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, 2006
 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)
 (Former name, former address and former fiscal year, if changed since last report)
  þ o
  þ o o
  o þ
  Title of Class
    
    Outstanding at August 3, 2006Common Shares, par value $1.00
    
    346,006,661




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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 ExhibitsCertification 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 31,2006
    
    
    2005(unaudited)ASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    127,375
    
    
    $
    134,245Accounts Receivable, Net of Allowance for Uncollectible
Accounts of $12,311 and $12,210, Respectively
    
    
    1,340,307
    
    
    
    1,259,990Inventories
    
    
    1,069,754
    
    
    
    890,121Other Current Assets
    
    
    377,204
    
    
    
    354,5172,914,640
    
    
    
    2,638,873Property, Plant and Equipment, Net
    
    
    2,642,594
    
    
    
    2,367,237Goodwill
    
    
    2,936,881
    
    
    
    2,808,217Other Intangible Assets, Net
    
    
    608,558
    
    
    
    621,365Other Assets
    
    
    123,588
    
    
    
    144,612$
    9,226,261
    
    
    $
    8,580,304LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term Borrowings and Current Portion of Long-term Debt
    
    $
    842,903
    
    
    $
    954,766Accounts Payable
    
    
    455,702
    
    
    
    476,363Other Current Liabilities
    
    
    699,951
    
    
    
    567,0121,998,556
    
    
    
    1,998,141Long-term Debt
    
    
    977,292
    
    
    
    632,071Deferred Tax Liabilities
    
    
    55,467
    
    
    
    88,476Other Liabilities
    
    
    231,662
    
    
    
    194,799Commitments and ContingenciesShareholders Equity:Common Shares, $1 Par Value, Authorized 1,000,000 Shares,
Issued 361,662 and 358,973 Shares, Respectively
    
    
    361,662
    
    
    
    358,973Capital in Excess of Par Value
    
    
    4,217,537
    
    
    
    4,164,365Treasury Shares, Net
    
    
    (369,825
    )
    
    
    (152,111
    )Retained Earnings
    
    
    1,593,102
    
    
    
    1,202,938Accumulated Other Comprehensive Income
    
    
    160,808
    
    
    
    92,6525,963,284
    
    
    
    5,666,817$
    9,226,261
    
    
    $
    8,580,304
  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 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Products
    
    $
    601,931
    
    
    $
    427,228
    
    
    $
    1,170,614
    
    
    $
    855,996Services
    
    
    936,645
    
    
    
    510,067
    
    
    
    1,903,973
    
    
    
    939,0051,538,576
    
    
    
    937,295
    
    
    
    3,074,587
    
    
    
    1,795,001Costs and Expenses:Cost of Products
    
    
    412,510
    
    
    
    297,581
    
    
    
    803,057
    
    
    
    594,131Cost of Services
    
    
    585,762
    
    
    
    335,527
    
    
    
    1,182,856
    
    
    
    621,713Research and Development
    
    
    37,361
    
    
    
    23,903
    
    
    
    73,804
    
    
    
    44,922Selling, General and Administrative Attributable
to Segments
    
    
    183,451
    
    
    
    125,367
    
    
    
    368,397
    
    
    
    236,328Corporate General and Administrative
    
    
    24,277
    
    
    
    17,330
    
    
    
    46,533
    
    
    
    36,956Equity in Earnings of Unconsolidated Affiliates
    
    
    (3,293
    )
    
    
    (2,822
    )
    
    
    (5,927
    )
    
    
    (4,123
    )Operating Income
    
    
    298,508
    
    
    
    140,409
    
    
    
    605,867
    
    
    
    265,074Other Income (Expense):Interest Expense, Net
    
    
    (23,715
    )
    
    
    (14,979
    )
    
    
    (42,703
    )
    
    
    (28,637
    )Other, Net
    
    
    (11,371
    )
    
    
    3,432
    
    
    
    (13,490
    )
    
    
    1,206Income from Continuing Operations Before Income
Taxes
    
    
    263,422
    
    
    
    128,862
    
    
    
    549,674
    
    
    
    237,643Provision for Income Taxes
    
    
    (76,575
    )
    
    
    (34,137
    )
    
    
    (159,510
    )
    
    
    (62,483
    )Income from Continuing Operations
    
    
    186,847
    
    
    
    94,725
    
    
    
    390,164
    
    
    
    175,160Income from Discontinued Operation,
Net of Taxes
    
    
    3⁄4
    
    
    
    463
    
    
    
    3⁄4
    
    
    
    624Net Income
    
    $
    186,847
    
    
    $
    95,188
    
    
    $
    390,164
    
    
    $
    175,784Basic Earnings Per Share:Income from Continuing Operations
    
    $
    0.54
    
    
    $
    0.34
    
    
    $
    1.12
    
    
    $
    0.63Income from Discontinued Operation
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.01Net Income
    
    $
    0.54
    
    
    $
    0.34
    
    
    $
    1.12
    
    
    $
    0.64Diluted Earnings Per Share:Income from Continuing Operations
    
    $
    0.52
    
    
    $
    0.32
    
    
    $
    1.09
    
    
    $
    0.59Income from Discontinued Operation
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00Net Income
    
    $
    0.52
    
    
    $
    0.32
    
    
    $
    1.09
    
    
    $
    0.59Weighted Average Shares Outstanding:Basic
    
    
    348,853
    
    
    
    277,872
    
    
    
    349,006
    
    
    
    276,750Diluted
    
    
    358,433
    
    
    
    307,026
    
    
    
    358,164
    
    
    
    305,584
  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 30,2006
    
    
    2005Cash Flows from Operating Activities:Net Income
    
    $
    390,164
    
    
    $
    175,784Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:Depreciation and Amortization
    
    
    230,522
    
    
    
    140,439Gain on Sales of Assets, Net
    
    
    (10,544
    )
    
    
    (2,504
    )Income from Discontinued Operation
    
    
    3⁄4
    
    
    
    (624
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    (5,927
    )
    
    
    (6,754
    )Employee Stock-Based Compensation Expense
    
    
    28,467
    
    
    
    13,448Amortization of Original Issue Discount
    
    
    3⁄4
    
    
    
    8,604Deferred Income Tax Provision (Benefit)
    
    
    (1,536
    )
    
    
    5,583Other, Net
    
    
    4,563
    
    
    
    4,320Change in Operating Assets and Liabilities, Net of Effect
of Businesses Acquired
    
    
    (125,985
    )
    
    
    (201,200
    )Net Cash Provided by Continuing Operations
    
    
    509,724
    
    
    
    137,096Net Cash Provided by Discontinued Operation
    
    
    3⁄4
    
    
    
    3,051Net Cash Provided by Operating Activities
    
    
    509,724
    
    
    
    140,147Cash Flows from Investing Activities:Acquisitions of Businesses, Net of Cash Acquired
    
    
    (106,077
    )
    
    
    (26,237
    )Capital Expenditures for Property, Plant and Equipment
    
    
    (451,139
    )
    
    
    (191,094
    )Acquisition of Intellectual Property
    
    
    (4,945
    )
    
    
    (6,830
    )Purchase of Equity Investment in Unconsolidated Affiliate
    
    
    3⁄4
    
    
    
    (1,351
    )Proceeds from Sale of Assets and Businesses, Net
    
    
    1,352
    
    
    
    7,044Net Cash Used by Investing Activities
    
    
    (560,809
    )
    
    
    (218,468
    )Cash Flows from Financing Activities:Borrowings of Short-term Debt, Net
    
    
    86,524
    
    
    
    7,928Borrowings (Repayments) of Long-term Debt, Net
    
    
    143,215
    
    
    
    (1,195
    )Purchase of Treasury Shares
    
    
    (238,652
    )
    
    
    3⁄4Proceeds from Exercise of Stock Options
    
    
    52,062
    
    
    
    62,320Tax Benefit on Stock Option Exercises
    
    
    690
    
    
    
    3⁄4Other Financing Activities, Net
    
    
    376
    
    
    
    (2,500
    )Net Cash Provided by Financing Activities
    
    
    44,215
    
    
    
    66,553Net Decrease in Cash and Cash Equivalents
    
    
    (6,870
    )
    
    
    (11,768
    )Cash and Cash Equivalents at Beginning of Period
    
    
    134,245
    
    
    
    317,439Cash and Cash Equivalents at End of Period
    
    $
    127,375
    
    
    $
    305,671Supplemental Cash Flow Information:Interest Paid
    
    $
    30,889
    
    
    $
    27,891Income Taxes Paid, Net of Refunds
    
    
    76,452
    
    
    
    54,563
  3




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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 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net Income
    
    $
    186,847
    
    
    $
    95,188
    
    
    $
    390,164
    
    
    $
    175,784Other Comprehensive Income (Loss):Reclassification Adjustment for Deferred
Gain, Net on Derivative Instruments
    
    
    21
    
    
    
    69
    
    
    
    6,289
    
    
    
    137Foreign Currency Translation Adjustment
    
    
    52,175
    
    
    
    (37,448
    )
    
    
    61,867
    
    
    
    (44,512
    )Comprehensive Income
    
    $
    239,043
    
    
    $
    57,809
    
    
    $
    458,320
    
    
    $
    131,409
  4




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)
 1. General
       5




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 2. Critical Accounting Policies
  Revenue Recognition
     3. Business Combinations
    6




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
   4. Exit Costs, Severance, Restructuring and Asset Impairment Charges
 2005 Exit Cost and Restructuring Charges
      7




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  Evaluation,Drilling &
    
    
    CompletionIntervention
    
    
    & ProductionServices
    
    
    Systems
    
    
    Corporate
    
    
    Total(In thousands)Cost of Products
    
    $
    20,654
    
    
    $
    3,842
    
    
    $
    3⁄4
    
    
    $
    24,496Cost of Services
    
    
    25,766
    
    
    
    1,083
    
    
    
    3⁄4
    
    
    
    26,849Research and Development
    
    
    9,000
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    9,000Selling General & Administrative
    
    
    17,349
    
    
    
    3,803
    
    
    
    3⁄4
    
    
    
    21,152Corporate General & Administrative
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    32,738
    
    
    
    32,738Total
    
    
    72,769
    
    
    
    8,728
    
    
    
    32,738
    
    
    
    114,235Cash Payments
    
    
    (20,131
    )
    
    
    (6,080
    )
    
    
    (8,126
    )
    
    
    (34,337
    )Non-cash Utilization
    
    
    (52,389
    )
    
    
    3⁄4
    
    
    
    (12,911
    )
    
    
    (65,300
    )Balance at June 30, 2006
    
    $
    249
    
    
    $
    2,648
    
    
    $
    11,701
    
    
    $
    14,598
  5. Dispositions
    Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2005(In thousands)Revenues
    
    $
    12,478
    
    
    $
    20,794Income Before Income Taxes
    
    $
    29
    
    
    $
    190Benefit for Income Taxes
    
    
    434
    
    
    
    434Income from Discontinued Operation,
Net of Taxes
    
    $
    463
    
    
    $
    624
  8




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Accounting for the Impairment or Disposal of Long-Lived Assets,
 6. Universal Compression
  7. Goodwill
 Goodwill and Other
Intangible Assets
  Evaluation,Drilling &
    
    
    CompletionIntervention
    
    
    & ProductionServices
    
    
    Systems
    
    
    Total(In thousands)As of December 31, 2005
    
    $
    1,960,013
    
    
    $
    848,204
    
    
    $
    2,808,217Goodwill acquired during period
    
    
    52,270
    
    
    
    16,085
    
    
    
    68,355Disposal
    
    
    (1,216
    )
    
    
    3⁄4
    
    
    
    (1,216
    )Purchase price and other adjustments
    
    
    17,348
    
    
    
    9,741
    
    
    
    27,089Impact of foreign currency translation
    
    
    13,823
    
    
    
    20,613
    
    
    
    34,436As of June 30, 2006
    
    $
    2,042,238
    
    
    $
    894,643
    
    
    $
    2,936,881
 8. Other Intangible Assets, Net
  June 30, 2006
    
    
    December 31, 2005Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    Net(In thousands)Acquired technology
    
    $
    291,482
    
    
    $
    (17,013
    )
    
    $
    274,469
    
    
    $
    281,350
    
    
    $
    (6,501
    )
    
    $
    274,849Licenses
    
    
    206,283
    
    
    
    (54,021
    )
    
    
    152,262
    
    
    
    205,232
    
    
    
    (48,164
    )
    
    
    157,068Patents
    
    
    121,512
    
    
    
    (37,660
    )
    
    
    83,852
    
    
    
    116,590
    
    
    
    (33,028
    )
    
    
    83,562Customer relationships
    
    
    39,000
    
    
    
    (1,830
    )
    
    
    37,170
    
    
    
    43,000
    
    
    
    (717
    )
    
    
    42,283Customer contracts
    
    
    21,890
    
    
    
    (2,392
    )
    
    
    19,498
    
    
    
    22,450
    
    
    
    (961
    )
    
    
    21,489Covenants not to compete
    
    
    23,681
    
    
    
    (21,633
    )
    
    
    2,048
    
    
    
    22,333
    
    
    
    (19,942
    )
    
    
    2,391Other
    
    
    13,483
    
    
    
    (6,878
    )
    
    
    6,605
    
    
    
    13,277
    
    
    
    (6,175
    )
    
    
    7,102Total finite-lived intangible
assets
    
    
    717,331
    
    
    
    (141,427
    )
    
    
    575,904
    
    
    
    704,232
    
    
    
    (115,488
    )
    
    
    588,744Intangible assets with an
indefinite useful life
    
    
    32,654
    
    
    
    3⁄4
    
    
    
    32,654
    
    
    
    32,621
    
    
    
    3⁄4
    
    
    
    32,621$
    749,985
    
    
    $
    (141,427
    )
    
    $
    608,558
    
    
    $
    736,853
    
    
    $
    (115,488
    )
    
    $
    621,365
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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
     Remainder of 2006
    
    $
    23,4992007
    
    
    45,0362008
    
    
    42,9962009
    
    
    42,0672010
    
    
    41,781
 9. Inventories
  June 30,
    
    
    December 31,2006
    
    
    2005(In thousands)Raw materials, components and supplies
    
    $
    285,523
    
    
    $
    259,047Work in process
    
    
    83,269
    
    
    
    63,491Finished goods
    
    
    700,962
    
    
    
    567,583$
    1,069,754
    
    
    $
    890,121
  10. Short-term Debt
 June 30,
    
    
    December 31,2006
    
    
    2005(In thousands)364-Day revolving credit facility
    
    $
    3⁄4
    
    
    $
    3⁄4Revolving credit facility
    
    
    3⁄4
    
    
    
    3⁄4Canadian credit facility
    
    
    14,848
    
    
    
    3⁄4Commercial paper program
    
    
    753,062
    
    
    
    716,927Short-term bank loans
    
    
    62,877
    
    
    
    24,596Total Short-term Borrowings
    
    
    830,787
    
    
    
    741,523Current Portion of Long-term Debt
    
    
    12,116
    
    
    
    213,243Short-term Borrowings and Current Portion of Long-term Debt
    
    $
    842,903
    
    
    $
    954,766
 10




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
     1 4
   11




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
    11. Shareholders Equity
 Authorized Shares
  Share Repurchase Program
  Warrant
  12. Derivative Instruments
 Interest Rate Swaps
   Cash Flow Hedges
  12




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  Other Derivative Instruments
  13. Earnings Per Share
    Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Basic weighted average shares outstanding
    
    
    348,853
    
    
    
    277,872
    
    
    
    349,006
    
    
    
    276,750Dilutive effect of:Warrant
    
    
    2,809
    
    
    
    2,086
    
    
    
    2,377
    
    
    
    1,498Stock option and restricted share plans
    
    
    6,771
    
    
    
    8,874
    
    
    
    6,781
    
    
    
    9,142Convertible debentures
    
    
    3⁄4
    
    
    
    18,194
    
    
    
    3⁄4
    
    
    
    18,194Diluted weighted average shares outstanding
    
    
    358,433
    
    
    
    307,026
    
    
    
    358,164
    
    
    
    305,584
 13




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 14. Supplemental Cash Flow Information
  Six MonthsEnded June 30,2006
    
    
    2005(In thousands)Fair value of assets, net of cash acquired
    
    $
    42,944
    
    
    $
    4,490Goodwill
    
    
    68,355
    
    
    
    24,219Consideration paid related to prior year acquisitions
    
    
    6,216
    
    
    
    1,946Total liabilities
    
    
    (11,438
    )
    
    
    (4,418
    )Cash consideration, net of cash acquired
    
    $
    106,077
    
    
    $
    26,237
 15. Stock-Based Compensation
     Incentive Plan
  14




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
   Stock Option Plans
   Restricted Share Plan
    15




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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 30,2005
    
    
    2005(In thousands, except per shareamounts)Net Income:As reported
    
    $
    95,188
    
    
    $
    175,784Employee stock-based compensation expense included in
reported net income, net of income tax benefit
    
    
    4,300
    
    
    
    8,742Pro forma compensation expense, determined
under fair value methods for all awards,
net of income tax benefit
    
    
    (8,221
    )
    
    
    (16,242
    )Pro forma
    
    $
    91,267
    
    
    $
    168,284Basic earnings per share:As reported
    
    $
    0.34
    
    
    $
    0.64Pro forma
    
    
    0.33
    
    
    
    0.61Diluted earnings per share:As reported
    
    $
    0.32
    
    
    $
    0.59Pro forma
    
    
    0.31
    
    
    
    0.57
    Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2006
    
    2006Expected volatility
    
    
    37.7
    %
    
    
    37.7
    %Expected dividends
    
    
    0.00
    %
    
    
    0.00
    %Expected term (in years)
    
    
    5.0
    
    
    
    5.0Risk-free rate
    
    
    4.93
    %
    
    
    4.93
    %
 16




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
  Weighted-Weighted-
    
    Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicExercise
    
    Contractual
    
    ValueOptions
    
    Shares
    
    Price
    
    Term
    
    (in thousands)Outstanding at January 1, 2006
    
    
    13,940,334
    
    
    $
    13.72Granted
    
    
    39,000
    
    
    
    50.67Exercised
    
    
    (3,986,937
    )
    
    
    12.98Forfeited
    
    
    (18,000
    )
    
    
    19.87Outstanding at June 30, 2006
    
    
    9,974,397
    
    
    
    14.16
    
    
    
    8.40
    
    
    $
    353,755Vested or Expected to Vest at
June 30, 2006
    
    
    9,974,397
    
    
    
    14.16
    
    
    
    8.40
    
    
    
    353,755Exercisable at June 30, 2006
    
    
    8,692,531
    
    
    
    13.35
    
    
    
    8.09
    
    
    
    315,298
   Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageGrant Date
    
    
    
    
    
    
    Grant DateRSA
    
    
    Fair Value
    
    
    RSU
    
    

Fair ValueNon-Vested at January 1, 2006
    
    
    4,206,900
    
    
    $
    30.47
    
    
    
    2,680,240
    
    
    $
    33.99Granted
    
    
    63,000
    
    
    
    44.55
    
    
    
    60,000
    
    
    
    47.78Vested
    
    
    (518,424
    )
    
    
    23.48
    
    
    
    (261,217
    )
    
    
    25.96Forfeited
    
    
    (89,155
    )
    
    
    31.46
    
    
    
    (121,363
    )
    
    
    33.52Non-Vested at June 30, 2006
    
    
    3,662,321
    
    
    $
    32.29
    
    
    
    2,357,660
    
    
    $
    34.26
  17




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 16. Retirement and Employee Benefit Plans
  Three Months Ended June 30,2006
    
    
    2005United
    
    
    
    
    
    
    UnitedStates
    
    
    International
    
    
    States
    
    
    International(In thousands)Service cost
    
    $
    609
    
    
    $
    2,344
    
    
    $
    633
    
    
    $
    1,993Interest cost
    
    
    1,016
    
    
    
    1,631
    
    
    
    881
    
    
    
    1,148Expected return on plan assets
    
    
    (165
    )
    
    
    (1,546
    )
    
    
    (208
    )
    
    
    (882
    )Amortization of transition obligation
    
    
    3⁄4
    
    
    
    (1
    )
    
    
    3⁄4
    
    
    
    (1
    )Amortization of prior service cost
    
    
    573
    
    
    
    (26
    )
    
    
    657
    
    
    
    82Amortization of loss
    
    
    471
    
    
    
    122
    
    
    
    309
    
    
    
    11Settlements
    
    
    2,770
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net periodic benefit cost
    
    $
    5,274
    
    
    $
    2,524
    
    
    $
    2,272
    
    
    $
    2,351
 Six Months Ended June 30,2006
    
    
    2005United
    
    
    
    
    
    
    UnitedStates
    
    
    International
    
    
    States
    
    
    International(In thousands)Service cost
    
    $
    1,218
    
    
    $
    4,584
    
    
    $
    1,266
    
    
    $
    4,010Interest cost
    
    
    2,032
    
    
    
    3,209
    
    
    
    1,761
    
    
    
    2,311Expected return on plan assets
    
    
    (330
    )
    
    
    (3,027
    )
    
    
    (415
    )
    
    
    (1,777
    )Amortization of transition obligation
    
    
    3⁄4
    
    
    
    (2
    )
    
    
    3⁄4
    
    
    
    (2
    )Amortization of prior service cost
    
    
    1,145
    
    
    
    (51
    )
    
    
    1,314
    
    
    
    166Amortization of loss
    
    
    943
    
    
    
    240
    
    
    
    618
    
    
    
    21Settlements
    
    
    2,770
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net periodic benefit cost
    
    $
    7,778
    
    
    $
    4,953
    
    
    $
    4,544
    
    
    $
    4,729
  17. Segment Information
 Reporting Segments
   18




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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 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Revenues from unaffiliated customers:Evaluation, Drilling & Intervention Services
    
    $
    965,504
    
    
    $
    514,022
    
    
    $
    1,971,770
    
    
    $
    981,003Completion & Production Systems
    
    
    573,072
    
    
    
    423,273
    
    
    
    1,102,817
    
    
    
    813,998$
    1,538,576
    
    
    $
    937,295
    
    
    $
    3,074,587
    
    
    $
    1,795,001Depreciation and amortization:Evaluation, Drilling & Intervention Services
    
    $
    90,838
    
    
    $
    48,615
    
    
    $
    182,162
    
    
    $
    96,958Completion & Production Systems
    
    
    23,481
    
    
    
    21,139
    
    
    
    46,877
    
    
    
    42,350Corporate
    
    
    700
    
    
    
    563
    
    
    
    1,483
    
    
    
    1,131$
    115,019
    
    
    $
    70,317
    
    
    $
    230,522
    
    
    $
    140,439Operating income:Evaluation, Drilling & Intervention Services
    
    $
    217,895
    
    
    $
    110,868
    
    
    $
    467,145
    
    
    $
    210,703Completion & Production Systems
    
    
    101,597
    
    
    
    44,049
    
    
    
    179,328
    
    
    
    87,204Corporate (a)
    
    
    (20,984
    )
    
    
    (14,508
    )
    
    
    (40,606
    )
    
    
    (32,833
    )$
    298,508
    
    
    $
    140,409
    
    
    $
    605,867
    
    
    $
    265,074
 
 (a)
    
    Includes equity in earnings of unconsolidated affiliates that are integral to the Companys
operations.  18. Condensed Consolidating Financial Statements
  19




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
   20




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Balance Sheet
June 30, 2006
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    25
    
    
    $
    454
    
    
    $
    126,896
    
    
    $
    3⁄4
    
    
    $
    127,375Other Current Assets
    
    
    1,874
    
    
    
    4,471
    
    
    
    2,780,920
    
    
    
    3⁄4
    
    
    
    2,787,2651,899
    
    
    
    4,925
    
    
    
    2,907,816
    
    
    
    3⁄4
    
    
    
    2,914,640Equity Investments in Affiliates
    
    
    9,112,060
    
    
    
    3,069,766
    
    
    
    12,800,894
    
    
    
    (24,982,720
    )
    
    
    3⁄4Shares Held in Parent
    
    
    3⁄4
    
    
    
    131,173
    
    
    
    238,652
    
    
    
    (369,825
    )
    
    
    3⁄4Intercompany Receivables, Net
    
    
    126,394
    
    
    
    1,412,063
    
    
    
    3⁄4
    
    
    
    (1,538,457
    )
    
    
    3⁄4Other Assets
    
    
    46,410
    
    
    
    10,099
    
    
    
    6,255,112
    
    
    
    3⁄4
    
    
    
    6,311,621$
    9,286,763
    
    
    $
    4,628,026
    
    
    $
    22,202,474
    
    
    $
    (26,891,002
    )
    
    $
    9,226,261LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term Borrowings and Current Portion
of Long-term Debt
    
    $
    753,779
    
    
    $
    35,505
    
    
    $
    53,619
    
    
    $
    3⁄4
    
    
    $
    842,903Accounts Payable and Other Current
Liabilities
    
    
    13,183
    
    
    
    4,186
    
    
    
    1,138,284
    
    
    
    3⁄4
    
    
    
    1,155,653766,962
    
    
    
    39,691
    
    
    
    1,191,903
    
    
    
    3⁄4
    
    
    
    1,998,556Long-term Debt
    
    
    603,542
    
    
    
    355,965
    
    
    
    17,785
    
    
    
    3⁄4
    
    
    
    977,292Intercompany Payables, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    1,538,457
    
    
    
    (1,538,457
    )
    
    
    3⁄4Other Long-term Liabilities
    
    
    47,583
    
    
    
    64,027
    
    
    
    175,519
    
    
    
    3⁄4
    
    
    
    287,129Shareholders Equity
    
    
    7,868,676
    
    
    
    4,168,343
    
    
    
    19,278,810
    
    
    
    (25,352,545
    )
    
    
    5,963,284$
    9,286,763
    
    
    $
    4,628,026
    
    
    $
    22,202,474
    
    
    $
    (26,891,002
    )
    
    $
    9,226,261
 21




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WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 Condensed Consolidating Balance Sheet
December 31, 2005
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationASSETSCurrent Assets:Cash and Cash Equivalents
    
    $
    124
    
    
    $
    3,172
    
    
    $
    130,949
    
    
    $
    3⁄4
    
    
    $
    134,245Other Current Assets
    
    
    952
    
    
    
    1,179
    
    
    
    2,502,497
    
    
    
    3⁄4
    
    
    
    2,504,6281,076
    
    
    
    4,351
    
    
    
    2,633,446
    
    
    
    3⁄4
    
    
    
    2,638,873Equity Investments in Affiliates
    
    
    8,029,938
    
    
    
    2,602,236
    
    
    
    12,368,520
    
    
    
    (23,000,694
    )
    
    
    3⁄4Shares Held in Parent
    
    
    3⁄4
    
    
    
    152,111
    
    
    
    3⁄4
    
    
    
    (152,111
    )
    
    
    3⁄4Intercompany Receivables, Net
    
    
    180,959
    
    
    
    1,741,011
    
    
    
    3⁄4
    
    
    
    (1,921,970
    )
    
    
    3⁄4Other Assets
    
    
    43,493
    
    
    
    10,366
    
    
    
    5,887,572
    
    
    
    3⁄4
    
    
    
    5,941,431$
    8,255,466
    
    
    $
    4,510,075
    
    
    $
    20,889,538
    
    
    $
    (25,074,775
    )
    
    $
    8,580,304LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Short-term Borrowings and Current Portion
of Long-term Debt
    
    $
    717,628
    
    
    $
    206,118
    
    
    $
    31,020
    
    
    $
    3⁄4
    
    
    $
    954,766Accounts Payable and Other Current
Liabilities
    
    
    4,002
    
    
    
    7,770
    
    
    
    1,031,603
    
    
    
    3⁄4
    
    
    
    1,043,375721,630
    
    
    
    213,888
    
    
    
    1,062,623
    
    
    
    3⁄4
    
    
    
    1,998,141Long-term Debt
    
    
    255,329
    
    
    
    357,449
    
    
    
    19,293
    
    
    
    3⁄4
    
    
    
    632,071Intercompany Payables, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    1,921,970
    
    
    
    (1,921,970
    )
    
    
    3⁄4Other Long-term Liabilities
    
    
    46,792
    
    
    
    80,231
    
    
    
    156,252
    
    
    
    3⁄4
    
    
    
    283,275Shareholders Equity
    
    
    7,231,715
    
    
    
    3,858,507
    
    
    
    17,729,400
    
    
    
    (23,152,805
    )
    
    
    5,666,817$
    8,255,466
    
    
    $
    4,510,075
    
    
    $
    20,889,538
    
    
    $
    (25,074,775
    )
    
    $
    8,580,304
 22




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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, 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
    )
    
    
    (1,237,104
    )
    
    
    3⁄4
    
    
    
    (1,243,361
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3,293
    
    
    
    3⁄4
    
    
    
    3,293Operating Income (Loss)
    
    
    (5,957
    )
    
    
    (300
    )
    
    
    304,765
    
    
    
    3⁄4
    
    
    
    298,508Other Income (Expense):Interest Expense, Net
    
    
    (16,484
    )
    
    
    (6,697
    )
    
    
    (534
    )
    
    
    3⁄4
    
    
    
    (23,715
    )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
    )
    
    
    (13,610
    )
    
    
    3⁄4
    
    
    
    (11,371
    )Income (Loss) from Continuing Operations
Before Income Taxes
    
    
    186,847
    
    
    
    204,323
    
    
    
    318,290
    
    
    
    (446,038
    )
    
    
    263,422(Provision) Benefit for Income Taxes
    
    
    3⁄4
    
    
    
    9,799
    
    
    
    (86,374
    )
    
    
    3⁄4
    
    
    
    (76,575
    )Income (Loss) from Continuing Operations
    
    
    186,847
    
    
    
    214,122
    
    
    
    231,916
    
    
    
    (446,038
    )
    
    
    186,847Income from Discontinued Operation, Net of
Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net Income (Loss)
    
    $
    186,847
    
    
    $
    214,122
    
    
    $
    231,916
    
    
    $
    (446,038
    )
    
    $
    186,847
 Condensed Consolidating Statements of Income
Three Months Ended June 30, 2005
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    937,295
    
    
    $
    3⁄4
    
    
    $
    937,295Costs and Expenses
    
    
    (2,240
    )
    
    
    (294
    )
    
    
    (797,174
    )
    
    
    3⁄4
    
    
    
    (799,708
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    2,822
    
    
    
    3⁄4
    
    
    
    2,822Operating Income (Loss)
    
    
    (2,240
    )
    
    
    (294
    )
    
    
    142,943
    
    
    
    3⁄4
    
    
    
    140,409Other Income (Expense):Interest Expense, Net
    
    
    (351
    )
    
    
    (13,676
    )
    
    
    (952
    )
    
    
    3⁄4
    
    
    
    (14,979
    )Intercompany Charges, Net
    
    
    (2,677
    )
    
    
    28,743
    
    
    
    (26,066
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    98,565
    
    
    
    88,840
    
    
    
    3⁄4
    
    
    
    (187,405
    )
    
    
    3⁄4Other, Net
    
    
    1,891
    
    
    
    (227
    )
    
    
    1,768
    
    
    
    3⁄4
    
    
    
    3,432Income (Loss) from Continuing Operations
Before Income Taxes
    
    
    95,188
    
    
    
    103,386
    
    
    
    117,693
    
    
    
    (187,405
    )
    
    
    128,862(Provision) Benefit for Income Taxes
    
    
    3⁄4
    
    
    
    (4,821
    )
    
    
    (29,316
    )
    
    
    3⁄4
    
    
    
    (34,137
    )Income (Loss) from Continuing Operations
    
    
    95,188
    
    
    
    98,565
    
    
    
    88,377
    
    
    
    (187,405
    )
    
    
    94,725Income from Discontinued Operation, Net of
Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    463
    
    
    
    3⁄4
    
    
    
    463Net Income (Loss)
    
    $
    95,188
    
    
    $
    98,565
    
    
    $
    88,840
    
    
    $
    (187,405
    )
    
    $
    95,188
 23




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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, 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
    )
    
    
    (2,465,294
    )
    
    
    3⁄4
    
    
    
    (2,474,647
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    5,927
    
    
    
    3⁄4
    
    
    
    5,927Operating Income (Loss)
    
    
    (8,777
    )
    
    
    (576
    )
    
    
    615,220
    
    
    
    3⁄4
    
    
    
    605,867Other Income (Expense):Interest Income (Expense), Net
    
    
    (28,715
    )
    
    
    (14,632
    )
    
    
    644
    
    
    
    3⁄4
    
    
    
    (42,703
    )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
    )
    
    
    (17,423
    )
    
    
    3⁄4
    
    
    
    (13,490
    )Income (Loss) from Continuing Operations
Before Income Taxes
    
    
    390,164
    
    
    
    413,006
    
    
    
    639,493
    
    
    
    (892,989
    )
    
    
    549,674(Provision) Benefit for Income Taxes
    
    
    3⁄4
    
    
    
    17,368
    
    
    
    (176,878
    )
    
    
    3⁄4
    
    
    
    (159,510
    )Income (Loss) from Continuing Operations
    
    
    390,164
    
    
    
    430,374
    
    
    
    462,615
    
    
    
    (892,989
    )
    
    
    390,164Income from Discontinued Operation, Net of
Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net Income (Loss)
    
    $
    390,164
    
    
    $
    430,374
    
    
    $
    462,615
    
    
    $
    (892,989
    )
    
    $
    390,164
 Condensed Consolidating Statements of Income
Six Months Ended June 30, 2005
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationRevenues
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    1,795,001
    
    
    $
    3⁄4
    
    
    $
    1,795,001Costs and Expenses
    
    
    (5,144
    )
    
    
    (341
    )
    
    
    (1,528,565
    )
    
    
    3⁄4
    
    
    
    (1,534,050
    )Equity in Earnings of Unconsolidated Affiliates
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    4,123
    
    
    
    3⁄4
    
    
    
    4,123Operating Income (Loss)
    
    
    (5,144
    )
    
    
    (341
    )
    
    
    270,559
    
    
    
    3⁄4
    
    
    
    265,074Other Income (Expense):Interest Expense, Net
    
    
    (2,887
    )
    
    
    (25,426
    )
    
    
    (324
    )
    
    
    3⁄4
    
    
    
    (28,637
    )Intercompany Charges, Net
    
    
    (10,844
    )
    
    
    52,116
    
    
    
    (41,272
    )
    
    
    3⁄4
    
    
    
    3⁄4Equity in Subsidiary Income
    
    
    194,023
    
    
    
    177,004
    
    
    
    3⁄4
    
    
    
    (371,027
    )
    
    
    3⁄4Other, Net
    
    
    44
    
    
    
    (172
    )
    
    
    1,334
    
    
    
    3⁄4
    
    
    
    1,206Income (Loss) from Continuing Operations
Before Income Taxes
    
    
    175,192
    
    
    
    203,181
    
    
    
    230,297
    
    
    
    (371,027
    )
    
    
    237,643(Provision) Benefit for Income Taxes
    
    
    592
    
    
    
    (9,158
    )
    
    
    (53,917
    )
    
    
    3⁄4
    
    
    
    (62,483
    )Income (Loss) from Continuing Operations
    
    
    175,784
    
    
    
    194,023
    
    
    
    176,380
    
    
    
    (371,027
    )
    
    
    175,160Income from Discontinued Operation, Net of
Taxes
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    624
    
    
    
    3⁄4
    
    
    
    624Net Income (Loss)
    
    $
    175,784
    
    
    $
    194,023
    
    
    $
    177,004
    
    
    $
    (371,027
    )
    
    $
    175,784
 24




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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 of Affiliates
    
    
    (430,374
    )
    
    
    (462,615
    )
    
    
    3⁄4
    
    
    
    892,989
    
    
    
    3⁄4Charges 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
    )
    
    
    80,991
    
    
    
    3⁄4
    
    
    
    127,023Net Cash Provided (Used) by Continuing
Operations
    
    
    212,486
    
    
    
    (215,223
    )
    
    
    512,461
    
    
    
    3⁄4
    
    
    
    509,724Net Cash Used by Discontinued Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Net 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
    
    
    
    (451,139
    )
    
    
    3⁄4
    
    
    
    (451,139
    )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 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 (Repayments ) of 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
    
    
    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
 25




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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, 2005
(unaudited)
(In thousands)
 OtherParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidationCash Flows from Operating Activities:Net Income (Loss)
    
    $
    175,784
    
    
    $
    194,023
    
    
    $
    177,004
    
    
    $
    (371,027
    )
    
    $
    175,784Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) by Operating
Activities:Equity in Earnings of Unconsolidated
Affiliates
    
    
    (2,631
    )
    
    
    3⁄4
    
    
    
    (4,123
    )
    
    
    3⁄4
    
    
    
    (6,754
    )Equity in Earnings of Affiliates
    
    
    (194,023
    )
    
    
    (177,004
    )
    
    
    3⁄4
    
    
    
    371,027
    
    
    
    3⁄4Charges from Parent or Subsidiary
    
    
    10,844
    
    
    
    (52,116
    )
    
    
    41,272
    
    
    
    3⁄4
    
    
    
    3⁄4Deferred Income Tax Provision (Benefit)
    
    
    3⁄4
    
    
    
    9,103
    
    
    
    (3,520
    )
    
    
    3⁄4
    
    
    
    5,583Other, Net
    
    
    (35,538
    )
    
    
    (13,198
    )
    
    
    11,219
    
    
    
    3⁄4
    
    
    
    (37,517
    )Net Cash Provided (Used) by Continuing
Operations
    
    
    (45,564
    )
    
    
    (39,192
    )
    
    
    221,852
    
    
    
    3⁄4
    
    
    
    137,096Net Cash Provided by Discontinued
Operation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3,051
    
    
    
    3⁄4
    
    
    
    3,051Net Cash Provided (Used) by Operating
Activities
    
    
    (45,564
    )
    
    
    (39,192
    )
    
    
    224,903
    
    
    
    3⁄4
    
    
    
    140,147Cash Flows from Investing Activities:Acquisition of Businesses, Net of Cash
Acquired
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (26,237
    )
    
    
    3⁄4
    
    
    
    (26,237
    )Capital Expenditures for Property, Plant and
Equipment
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (191,094
    )
    
    
    3⁄4
    
    
    
    (191,094
    )Acquisition of Intellectual Property
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (6,830
    )
    
    
    3⁄4
    
    
    
    (6,830
    )Proceeds
from Sale of Assets and Businesses, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    7,044
    
    
    
    3⁄4
    
    
    
    7,044Other, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,351
    )
    
    
    3⁄4
    
    
    
    (1,351
    )Net Cash Used by Investing Activities
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (218,468
    )
    
    
    3⁄4
    
    
    
    (218,468
    )Cash Flows from Financing Activities:Borrowings of Short-term Debt, Net
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    7,928
    
    
    
    3⁄4
    
    
    
    7,928Borrowings (Repayments) of Long-term Debt
Net
    
    
    3⁄4
    
    
    
    (1,761
    )
    
    
    566
    
    
    
    3⁄4
    
    
    
    (1,195
    )Borrowings (Repayments) Between
Subsidiaries, Net
    
    
    (88,530
    )
    
    
    (52,324
    )
    
    
    140,854
    
    
    
    3⁄4
    
    
    
    3⁄4Proceeds from Exercise of Stock Options
    
    
    3⁄4
    
    
    
    62,320
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    62,320Other, Net
    
    
    3⁄4
    
    
    
    (2,463
    )
    
    
    (37
    )
    
    
    3⁄4
    
    
    
    (2,500
    )Net Cash Provided (Used) by Financing
Activities
    
    
    (88,530
    )
    
    
    5,772
    
    
    
    149,311
    
    
    
    3⁄4
    
    
    
    66,553Net Increase (Decrease) in Cash and Cash
Equivalents
    
    
    (134,094
    )
    
    
    (33,420
    )
    
    
    155,746
    
    
    
    3⁄4
    
    
    
    (11,768
    )Cash and Cash Equivalents at Beginning of
Period
    
    
    138,979
    
    
    
    74,053
    
    
    
    104,407
    
    
    
    3⁄4
    
    
    
    317,439Cash and Cash Equivalents at End of Period
    
    $
    4,885
    
    
    $
    40,633
    
    
    $
    260,153
    
    
    $
    3⁄4
    
    
    $
    305,671
 26




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##### Table of Contents



WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(UNAUDITED)
 19. New Accounting Pronouncement
 Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement No. 109
 20. Subsequent Events
   27




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
  Overview
 General
   Industry Trends
   North American Rig
    
    International RigWTI Oil (1)
    
    Henry Hub Gas (2)
    
    Count (3)
    
    Count (3)June 30, 2006
    
    $
    73.91
    
    
    $
    6.099
    
    
    
    2,073
    
    
    
    914December 31, 2005
    
    
    61.04
    
    
    
    11.225
    
    
    
    2,046
    
    
    
    948June 30, 2005
    
    
    56.50
    
    
    
    6.981
    
    
    
    1,662
    
    
    
    932
 
 (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(3)
    
    Average rig count for the applicable month  Source:Baker Hughes Rig Count
  28




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##### Table of Contents



Opportunities and Challenges
    Industry Outlook
     29




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##### Table of Contents



Weatherford Outlook
 Geographic Markets.
 Pricing.
 Business Segments.
  Results of Operations
   30




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##### Table of Contents



Comparative Financial Data
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands, except percentages and per share data)Revenues:Evaluation, Drilling & Intervention Services
    
    $
    965,504
    
    
    $
    514,022
    
    
    $
    1,971,770
    
    
    $
    981,003Completion & Production Systems
    
    
    573,072
    
    
    
    423,273
    
    
    
    1,102,817
    
    
    
    813,9981,538,576
    
    
    
    937,295
    
    
    
    3,074,587
    
    
    
    1,795,001Gross Profit %:Evaluation, Drilling & Intervention Services
    
    
    36.4
    %
    
    
    36.8
    %
    
    
    37.2
    %
    
    
    36.0
    %Completion & Production Systems
    
    
    32.9
    
    
    
    27.2
    
    
    
    32.2
    
    
    
    27.735.1
    
    
    
    32.5
    
    
    
    35.4
    
    
    
    32.3Research and Development:Evaluation, Drilling & Intervention Services
    
    $
    23,064
    
    
    $
    11,312
    
    
    $
    45,027
    
    
    $
    20,673Completion & Production Systems
    
    
    14,297
    
    
    
    12,591
    
    
    
    28,777
    
    
    
    24,24937,361
    
    
    
    23,903
    
    
    
    73,804
    
    
    
    44,922Selling, General and Administrative Attributable
to Segments:Evaluation, Drilling & Intervention Services
    
    
    110,739
    
    
    
    66,745
    
    
    
    221,534
    
    
    
    122,091Completion & Production Systems
    
    
    72,712
    
    
    
    58,622
    
    
    
    146,863
    
    
    
    114,237183,451
    
    
    
    125,367
    
    
    
    368,397
    
    
    
    236,328Corporate General and Administrative
    
    
    24,277
    
    
    
    17,330
    
    
    
    46,533
    
    
    
    36,956Equity in Earnings of Unconsolidated Affiliates
    
    
    3,293
    
    
    
    2,822
    
    
    
    5,927
    
    
    
    4,123Operating Income:Evaluation, Drilling & Intervention Services
    
    
    217,895
    
    
    
    110,868
    
    
    
    467,145
    
    
    
    210,703Completion & Production Systems
    
    
    101,597
    
    
    
    44,049
    
    
    
    179,328
    
    
    
    87,204Corporate (a)
    
    
    (20,984
    )
    
    
    (14,508
    )
    
    
    (40,606
    )
    
    
    (32,833
    )298,508
    
    
    
    140,409
    
    
    
    605,867
    
    
    
    265,074Interest Expense, Net
    
    
    (23,715
    )
    
    
    (14,979
    )
    
    
    (42,703
    )
    
    
    (28,637
    )Other, Net
    
    
    (11,371
    )
    
    
    3,432
    
    
    
    (13,490
    )
    
    
    1,206Effective Tax Rate
    
    
    29.1
    %
    
    
    26.5
    %
    
    
    29.0
    %
    
    
    26.3
    %Income from Continuing Operations per Diluted Share
    
    $
    0.52
    
    
    $
    0.32
    
    
    $
    1.09
    
    
    $
    0.59Net Income per Diluted Share
    
    
    0.52
    
    
    
    0.32
    
    
    
    1.09
    
    
    
    0.59Depreciation and Amortization
    
    
    115,019
    
    
    
    70,317
    
    
    
    230,522
    
    
    
    140,439
 
 (a)
    
    Includes equity in earnings of unconsolidated affiliates which are integral to our
operations.
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##### Table of Contents



Consolidated Revenues by Geographic Region
 Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2006
    
    2005
    
    2006
    
    2005U.S.
    
    
    41
    %
    
    
    40
    %
    
    
    38
    %
    
    
    38
    %Canada
    
    
    14
    
    
    
    13
    
    
    
    20
    
    
    
    16Latin America
    
    
    12
    
    
    
    9
    
    
    
    11
    
    
    
    9Europe, CIS and West Africa
    
    
    13
    
    
    
    18
    
    
    
    12
    
    
    
    17Middle East and North Africa
    
    
    14
    
    
    
    12
    
    
    
    13
    
    
    
    12Asia Pacific
    
    
    6
    
    
    
    8
    
    
    
    6
    
    
    
    8Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Company Results
 Revenues
   Gross Profit
  Research and Development
  32




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Corporate General and Administrative
  Interest Expense, Net
  Other, Net
  Income Taxes
  Segment Results
 Evaluation, Drilling & Intervention Services
   33




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Completion & Production Systems
     34




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Liquidity and Capital Resources
 Historical Cash Flows
  
    
    cash inflows from operating activities of $509.7 million;
    
    capital expenditures for property, plant and equipment of $451.1 million;
    
    acquisition of new businesses of approximately $106.1 million in cash, net of cash acquired;
    
    acquisition of intellectual property of $4.9 million;
    
    borrowings, net of repayments, on long-term debt and short-term facilities of $229.7 million;
    
    proceeds from stock option activity of $52.1 million; and
    
    treasury share purchases of $238.7 million.
 Sources of Liquidity
   Uses of AvailabilityCommercialFacility
    
    Expiration
    
    Paper
    
    
    
    
    
    Letters ofShort-term Financing Facilities
    
    Amount
    
    Date
    
    Support
    
    Drawn
    
    Credit
    
    Availability364-Day Revolving
Credit Facility
    
    $
    600.0
    
    
    August 2006
    
    $
    600.0
    
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    3⁄4Revolving Credit
Facility
    
    
    750.0
    
    
    May 2011
    
    
    153.1
    
    
    
    3⁄4
    
    
    
    16.6
    
    
    
    580.3Canadian Facility
    
    
    17.9
    
    
    July 2006
    
    
    3⁄4
    
    
    
    14.8
    
    
    
    0.5
    
    
    
    2.6
 Revolving Credit Facilities
    35




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Commercial Paper
  Debt Offering
  Cash Requirements
     36




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Derivative Instruments
      Off Balance Sheet Arrangements
 Guarantees
  Letters of Credit
  37




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##### Table of Contents



Operating Leases
  New Accounting Pronouncement
  Critical Accounting Policies and Estimates
  Revenue Recognition
     Exposures
 Risk Factors
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Currency Exposure
   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 provided. The oil and natural gas industry is extremely volatile and
subject to change based on political and economic factors outside our control. During 2004
and 2005, 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 2006.
    
    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 underbalanced systems,
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##### Table of Contents



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 have gained certain business, financial and strategic advantages
as a result of our reincorporation, including improvements to our global tax position and
cash flow. An inability to continue to realize expected benefits of the reincorporation in
the anticipated time frame, or at all, would negatively affect the benefit of our corporate
reincorporation.
    
    Nonrealization of expected benefits from our 2005 acquisition of Precision Energy
Services and Precision Drilling International could affect our projected results.We
expect to gain certain business, financial and strategic advantages as a result of this
acquisition, including synergies and operating efficiencies. 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, 2006, we had approximately $2.9 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 currencies.
    
    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. Similarly, an unusually warm Canadian winter or unusually rough weather in the
North Sea could reduce our operations and revenues from those areas 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
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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Foreign Currency Exchange Rates
    Interest Rates
   June 30, 2006
    
    December 31, 2005Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In millions)6 5/8% Senior Notes due 2011
    
    $
    357.5
    
    
    $
    362.1
    
    
    $
    358.1
    
    
    $
    374.04.95% Senior Notes due 2013
    
    
    255.7
    
    
    
    231.3
    
    
    
    256.0
    
    
    
    244.55.50% Senior Notes due 2016
    
    
    348.6
    
    
    
    331.8
    
    
    
    3⁄4
    
    
    
    3⁄4
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##### Table of Contents



Interest Rate Swaps
    
 ITEM 4. CONTROLS AND PROCEDURES
   42




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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 39 of this report from 40.7% as of December 31, 2005
to 43.7% as of June 30, 2006.
 
 ITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS
  MaximumTotal
    
    
    Number (orNumber of
    
    
    ApproximateShares
    
    
    Dollar Value)Purchased as
    
    
    of Shares thatPart of
    
    
    May Yet BeTotal
    
    
    
    
    
    
    Publicly
    
    
    PurchasedNumber of
    
    
    Average Price
    
    
    Announced
    
    
    Under theShares
    
    
    Paid per
    
    
    Plans or
    
    
    Plans orPeriod
    
    Purchased
    
    
    Share
    
    
    Programs
    
    
    ProgramsApril 1 - April 30, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    908,520,947May 1 - May 31, 2006
    
    
    998,800
    
    
    
    50.53
    
    
    
    998,800
    
    
    
    858,049,474June 1 - June 30, 2006
    
    
    1,994,610
    
    
    
    48.48
    
    
    
    1,994,610
    
    
    
    761,347,9412,993,410
    
    
    
    49.17
    
    
    
    2,993,410
    
    
    
    761,347,941
  Period
    
    No. of Shares
    
    Average PriceApril 1 -
April 30, 2006
    
    
    520
    
    
    $
    50.06May 1 - May
31, 2006
    
    
    3⁄4
    
    
    
    3⁄4June 1 -
June 30, 2006
    
    
    164
    
    
    $
    49.40
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Election of Directors
    
    For
    
    WithheldNicholas F. Brady
    
    
    283,702,083
    
    
    
    1,547,282David J. Butters
    
    
    282,110,300
    
    
    
    3,139,065Bernard J. Duroc-Danner
    
    
    282,454,928
    
    
    
    2,794,437Sheldon B. Lubar
    
    
    282,591,340
    
    
    
    2,658,025William E. Macaulay
    
    
    282,404,019
    
    
    
    2,845,346Robert B. Millard
    
    
    282,882,596
    
    
    
    2,366,769Robert K. Moses, Jr.
    
    
    282,747,661
    
    
    
    2,501,704Robert A. Rayne
    
    
    273,319,650
    
    
    
    11,929,715
  (a)
    
    The appointment of Ernst & Young LLP as our Independent Registered Public Accounting
Firm for the year ending December 31, 2006, 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 284,867,487 shares voted for, 162,766 shares voted against
and 219,112 shares abstained. There were no broker non-votes;
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##### Table of Contents



(b)
    
    The approval of the Weatherford International Ltd. 2006 Omnibus Incentive Plan. The
results of the voting with respect to such matter were 172,953,816 shares voted for,
81,230,438 shares voted against, 805,898 shares abstained, and 30,259,213 shares broker
non-votes;(c)
    
    The approval of an increase in our authorized share capital from $510,000,000, consisting
of 500,000,000 common shares and 10,000,000 preference shares, to $1,010,000,000 by the
creation of an additional 500,000,000 common shares. The results of the voting with
respect to such matter were 279,822,169 shares voted for, 4,780,017 shares voted against,
646,034 shares abstained, and 1,145 shares broker non-votes.
 
 ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description4.1
    
    Second Amended and Restated Credit Agreement dated as of May 2,
2006, among Weatherford International Ltd., Weatherford
International, Inc., Weatherford Liquidity Management Hungary
Limited Liability Company, JPMorgan Chase Bank as Administrative
Agent, and the other Lenders party thereto (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report on
Form 8-K (File No. 1-31339) filed May 5, 2006).4.2
    
    Certificate of Assistant Secretary as to the adoption of a
resolution increasing authorized share capital (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report on
Form 8-K (File No. 1-31339) filed May 15, 2006).4.3
    
    Amended and Restated Warrant Agreement, dated effective as of July
12, 2006, by and among Weatherford International, Ltd.,
Weatherford International, Inc. and Shell Technology Ventures,
Inc. (incorporated by reference to Exhibit 4.1 to the Registrants
Current Report on Form 8-K (File No. 1-31339) filed July 14,
2006).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 with this report 44




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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/ Lisa W. RodriguezLisa W. RodriguezSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)Date: August 8, 2006
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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description4.1
    
    Second Amended and Restated Credit Agreement dated as of May 2,
2006, among Weatherford International Ltd., Weatherford
International, Inc., Weatherford Liquidity Management Hungary
Limited Liability Company, JPMorgan Chase Bank as Administrative
Agent, and the other Lenders party thereto (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report on
Form 8-K (File No. 1-31339) filed May 5, 2006).4.2
    
    Certificate of Assistant Secretary as to the adoption of a
resolution increasing authorized share capital (incorporated by
reference to Exhibit 4.1 to the Registrants Current Report on
Form 8-K (File No. 1-31339) filed May 15, 2006).4.3
    
    Amended and Restated Warrant Agreement, dated effective as of July
12, 2006, by and among Weatherford International, Ltd.,
Weatherford International, Inc. and Shell Technology Ventures,
Inc. (incorporated by reference to Exhibit 4.1 to the Registrants
Current Report on Form 8-K (File No. 1-31339) filed July 14,
2006).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 with this report 46