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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-31339
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WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
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Weatherford International Ltd.
515 Post Oak Boulevard
Suite 600
Houston, TX 77027
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
Page
----
Independent Auditors' Report 2
Report of Independent Public Accountants 3
Financial Statements-
Statements of Net Assets Available for Plan Benefits as of
December 31, 2002 and 2001 4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2002 5
Notes to Financial Statements 6
Supplemental Schedule-
Schedule H, Line 4i, Schedule of Assets (Held at End of Year)
as of December 31, 2002 11
1
INDEPENDENT AUDITORS' REPORT
The Administrative Committee of the
Weatherford International, Inc. 401(k) Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Weatherford International, Inc. 401(k) Savings Plan (the Plan),
as of December 31, 2002, and the related statement of changes in net assets
available for plan benefits for the year then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2002 and the changes in net assets available for plan benefits
for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule H, line 4i,
schedule of assets (held at end of year) as of December 31, 2002, is presented
for purposes of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements, and in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
KPMG LLP
Houston, Texas
June 27, 2003
2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
Weatherford International, Inc. 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Weatherford International, Inc. 401(k) Savings Plan (the Plan)
as of December 31, 2001 and 2000, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 2001. These
financial statements and supplemental schedule referred to below are the
responsibility of the Administrative Committee. Our responsibility is to express
an opinion on these financial statements and supplemental schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2001 and 2000, and the changes in net assets available for plan
benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, Line 4i,
schedule of assets (held at end of year) as of December 31, 2001, is presented
for purposes of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
May 14, 2002
NOTE: The report of Arthur Andersen LLP presented above is a copy of a
previously issued Arthur Andersen LLP report and said report has not been
reissued by Arthur Andersen LLP nor has Arthur Andersen LLP provided a consent
to the inclusion of its report in this Form 11-K.
3
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
2002 2001
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ASSETS:
Investments, at fair value $ 166,384,832 $ 154,548,126
Receivables-
Participants' contributions 1,046,291 923,169
Company contributions 358,657 303,343
Loan repayment receivable 257,119 --
Pending settlement 13,279 97,630
Accrued income receivable 29,230 32,751
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Total receivables 1,704,576 1,356,893
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 168,089,408 $ 155,905,019
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The accompanying notes are an integral part of these financial statements.
4
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
ADDITIONS:
Net appreciation in fair value of common stock $ 3,362,866
Interest income 694,958
Dividend income 3,905,619
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7,963,443
Contributions-
Participants 17,230,950
Company 5,524,922
Rollover 2,751,717
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25,507,589
Transfers from other plans 11,913,197
Total additions 45,384,229
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DEDUCTIONS:
Net depreciation in fair value of collective trusts $ 4,058,542
Net depreciation in fair value of mutual funds 13,245,896
Benefits paid to participants and beneficiaries 15,839,773
Administrative fees 55,629
Total deductions 33,199,840
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NET INCREASE 12,184,389
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 155,905,019
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NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $ 168,089,408
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The accompanying notes are an integral part of these financial statements.
5
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
1. DESCRIPTION OF THE PLAN:
The following description of the Weatherford International, Inc. 401(k) Savings
Plan (the Plan) provides only general information. Participants should refer to
the Plan document for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan established by the board of directors
(the Board of Directors) of Weatherford International, Inc.
The Board of Directors appointed a committee (the Administrative Committee) to
administer the Plan. Merrill Lynch Trust Company (Merrill Lynch) serves as asset
custodian and trustee of the Plan. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended (ERISA).
Effective June 26, 2002, Weatherford International Ltd. (the Company) became the
parent holding company of Weatherford International, Inc. following a corporate
reorganization. Weatherford International, Inc. continues to exist as an
indirect, wholly owned subsidiary of the Company. The Company and its
subsidiaries continue to conduct the business previously conducted by
Weatherford International, Inc. and its subsidiaries. The reorganization did not
result in any changes to the Plan. Upon consummation of the merger, the shares
of Weatherford International, Inc.'s common stock automatically converted into
the right to receive Weatherford International Ltd. common shares (Common
Shares). In the merger, Common Shares were issued to holders of Weatherford
International, Inc. common stock. In the financial statements for all periods
presented, Weatherford International, Inc.'s common stock and Weatherford
International Ltd.'s common shares will be referred to as Common Shares.
Effective January 1, 2001, the Plan document was amended and restated.
Eligibility
All employees, other than employees who are subject to collective bargaining
agreements and have not bargained to participate, employees who are nonresident
aliens and receive no U.S.-source income from the Company and employees who are
members of other retirement plans sponsored by the Company or one of its
subsidiaries outside the United States, are eligible to participate in the Plan
on their dates of hire but are not eligible to participate for purposes of the
Company's matching or discretionary contributions until the employee has
completed one year of continuous service.
Contributions
An eligible employee may elect to contribute by payroll deductions to the Plan
on a pre-tax and/or after-tax basis subject to certain limitations, up to 16
percent of his or her considered compensation, as defined by the Plan. The
combination of employee contributions cannot exceed 16 percent of considered
compensation, as defined by the Plan. In addition, participants may contribute
amounts representing rollovers from other qualified plans.
Effective January 1, 2002, under the terms of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA), employees who are eligible to make elective
deferrals under the Plan and who have attained the age of 50 before the close of
the Plan year are permitted to make catch-up contributions subject to certain
limitations. No matching contributions shall be made with respect to the
catch-up contributions.
6
The Company shall make matching contributions equal to 50 percent of the
participant's pre-tax contributions up to 6 percent of considered compensation,
as defined by the Plan. Effective July 1, 2001, the Company changed the
definition of considered compensation used to calculate the Company match from
eligible base earnings to eligible gross earnings which includes overtime,
bonuses and commissions but does not include relocation or severance pay. The
Company, solely at the discretion of the Board of Directors, may make additional
discretionary contributions. There were no discretionary contributions made for
the year ended December 31, 2002.
Participant Accounts
Each participant's account is credited with the participant's contributions, the
Company's matching contributions, an allocation of the Company's discretionary
contribution, if any, and Plan earnings or losses thereon. Earnings or losses
are allocated by investment based on the ratio of the participant's account
invested in a particular investment to all participants' accounts in that
investment.
Investment Options
Participants may invest in any of ten mutual funds, two collective trusts, a
money market account and Common Shares. Shares of Grant Prideco, Inc. common
stock received as a result of a prior transaction may be sold and reinvested in
other investment options, but no additional shares may be purchased.
Each participant who has invested in Common Shares has the right to vote the
shares in his or her account with respect to any matter that comes before the
shareholders for a vote.
Vesting
Participants are immediately vested in their elective deferral account,
rollovers from other qualified plans, the participant's Company match and
discretionary contribution accounts.
Expenses of the Plan
During 2002, administrative fees incurred by the Plan were paid by the Company,
except for participant loan fees, which were paid from the account of the
participant requesting the loan.
Participant Loans
Participants may borrow from their vested account balances a minimum of $1,000
up to a maximum equal to the lesser of $50,000 reduced by the highest
outstanding loan balance in the preceding one year period or one half of the
fair market value of the participant's vested account balance. Loan maturity
dates range from one year to five years except when the loan is used to purchase
a participant's principal residence. In the case of home loans, all such loans
are required to be repaid within ten years. The loans are fully secured by a
pledge of the participant's vested account balance and bear interest at the
prime rate as reported in The Wall Street Journal or at a rate determined by the
Administrative Committee.
Withdrawals and Terminations
A participant may withdraw the value of his or her after-tax contributions or
rollover contributions to the Plan at any time and for any reason during the
year, with a minimum withdrawal of $500. The participant's pre-tax contributions
and Company contributions will be available to a participant who has attained
age 59-1/2 or in the event of severe and immediate financial hardship.
Withdrawals based on financial hardship result in a suspension of employee
contributions for 6 months.
In the event of normal retirement, total and permanent disability or death while
actively employed, the full value of the participant's account balance will be
distributed to the participant or his or her beneficiary as a lump sum. Upon
termination of employment, the participant's entire account balance will be
available for withdrawal. If the participant's account balance is less than
$5,000, the participant is paid a lump-sum payment as soon as practicable after
his or her termination date. Certain benefits related to other forms of payment
are protected by the Plan.
7
Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The accompanying financial statements are prepared and presented in accordance
with the accrual method of accounting. Benefits are recorded when paid.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Administrative
Committee to use estimates and assumptions that affect the reported amounts of
assets and liabilities and changes therein and disclosure of contingent assets
and liabilities. Actual results could differ from those estimates.
Valuation of Investments and Income Recognition
The fair value of investments in collective trusts is based on the market value
of their underlying assets as determined by the investment issuer. Investments
in mutual funds and common stocks are reported at fair market value based on
quoted market prices. Participant loans receivable are stated at cost, which
approximates fair value.
Investment income (loss) is recorded when earned. Purchases and sales of
securities are recorded on a trade-date basis. Realized gains (losses) on the
sale of investments and unrealized appreciation (depreciation) in the fair value
of investments are shown as net depreciation in fair value of collective trusts
and mutual funds on the statement of changes in net assets available for plan
benefits. Realized gains (losses) on the sale of common stock and unrealized
appreciation (depreciation) in the fair value of common stock are shown as net
appreciation in fair value of common stock on the statement of changes in net
assets available for plan benefits. No dividends were paid on the Company's
Common Shares during 2002.
For the years ended December 31, 2002 and 2001, certain of the mutual funds may
have utilized foreign currency exchange contracts and/or invested in futures
contracts.
Guaranteed Investment Accounts
The Merrill Lynch Retirement Preservation Trust is a collective trust fund
investing primarily in guaranteed investment contracts (GICs), synthetic GICs
and U.S. Government securities. The GICs are fully benefit-responsive and are
recorded at contract value, which approximates fair value. Contract value is
determined based on contributions made under the contract plus interest earned
at the contract's rate less funds used to pay investment fees and withdrawals.
The interest rate was 5.68 percent and 6.26 percent at December 31, 2002 and
2001, respectively. The effective yield of the collective trust fund was 5.89
percent for the year ended December 31, 2002.
3. INVESTMENTS:
The following presents investments that represent 5 percent or more of the
Plan's net assets available for plan benefits at December 31,:
2002
------------
Merrill Lynch Retirement Preservation Trust $ 51,632,185
Common Shares of Weatherford International Ltd. 18,822,558
Davis New York Venture Fund, Inc. (Class A) 17,983,429
Merrill Lynch Equity Index Trust 13,675,657
Merrill Lynch Balanced Capital Fund, Inc. (Class A) 13,090,922
Merrill Lynch Corporate Bond Intermediate Term Portfolio - (Class A) 11,988,401
Participant Loans 8,735,331
8
2001
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Merrill Lynch Retirement Preservation Trust $ 36,156,938
Common Shares of Weatherford International Ltd. 23,589,927
Davis New York Venture Fund, Inc. (Class A) 21,186,571
Merrill Lynch Equity Index Trust 17,176,853
Merrill Lynch Balanced Capital Fund, Inc. (Class A) 15,289,130
Phoenix-Engemann Small and Mid Cap Growth Fund (Class A) 8,809,044
4. ASSETS TRANSFERRED FROM OTHER PLANS:
During 2002, account balances of participants totaling $59,819 were transferred
to the Plan from the Robison Services, Inc. 401(k) Plan & Trust.
In conjunction with the November 30, 2001, acquisition of Johnson Screens, the
Plan accepted transfers in the amounts of $10,689,699, $519,835, $583,131 and
$60,713 on January 18, 2002, January 24, 2002, March 19, 2002 and March 27,
2002, respectively.
Also related to the Johnson Screens acquisition, the Plan was amended effective
January 1, 2002, to permit participation of certain collectively bargained
employees who were previously employed by United States Filter Corporation. The
amendment generally provides for those employees to defer into the Plan up to 18
percent of their eligible compensation and to receive a matching contribution
equal to 50 percent of their deferrals, up to 7 percent of eligible
compensation. The amendment also provides for vesting of matching contributions
in increments of 33 1/3 at the end of the first and second years of service and
full vesting after three years of service. There are currently no employees
eligible to defer compensation or receive matching contributions under the
provisions of this amendment.
5. RISKS AND UNCERTAINTIES:
The Plan provides for various investments in collective trusts, mutual funds, a
money market fund and Common Shares. Investment securities, in general, are
exposed to various risks, such as interest rate, credit and overall market
volatility risk. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the values of investment
securities will occur in the near term.
6. TAX STATUS:
The Plan obtained its latest determination letter on September 11, 2002, in
which the Internal Revenue Service (IRS) stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue Code
of 1986, as amended (the Code). The Plan has been amended since receiving the
determination letter. The Administrative Committee believes that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Code. Therefore, the Administrative Committee believes that
the Plan was qualified and the related trust was tax-exempt as of December 31,
2002 and 2001. The Administrative Committee filed for a new determination letter
from the IRS on April 7, 2003.
7. RELATED-PARTY TRANSACTIONS:
Certain Plan investments are Common Shares of Weatherford International Ltd. and
mutual funds and collective trusts managed by Merrill Lynch. Merrill Lynch is
the trustee and asset custodian of the Plan and Weatherford International, Inc.
is the Plan sponsor; therefore, these transactions qualify as party-in-interest
transactions.
8. CHANGES TO FUND NAMES
Effective March 19, 2002, the Pilgrim International Small Cap Growth Fund was
renamed the ING International Small Cap Growth Fund. Effective May 31, 2002, the
Mercury Hotchkis and Wiley International Value Fund Class I was renamed the
Mercury International Value Fund Class I.
9
9. SUBSEQUENT EVENT
In conjunction with the October 23, 2002 acquisition of Clearwater
International, the Plan accepted transfers in the amounts of $779,477 and
$27,946 on April 1, 2003 and April 11, 2003, respectively.
10
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
SCHEDULE H, LINE 4i, SCHEDULE OF ASSETS (HELD AT END OF YEAR) (a)
AS OF DECEMBER 31, 2002
Principal
Number
of Units/ Current
Identity of Issue Description of Investment Shares Value
-------------------------------------- -------------------------------------------------------- ------------- -------------
COLLECTIVE TRUSTS:
*Merrill Lynch Trust Company Merrill Lynch Equity Index Trust 218,287 $ 13,675,657
*Merrill Lynch Trust Company Merrill Lynch Retirement Preservation Trust 51,632,185 51,632,185
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Total collective trusts 65,307,842
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MUTUAL FUNDS:
AIM Funds AIM Balanced Fund (Class A) 49,244 1,024,761
Davis Venture Group Davis New York Venture Fund, Inc. (Class A) 858,808 17,983,429
Mercury International Value Fund of Mercury International Value Fund (Class I) 248,452 4,121,823
Mercury Funds II
Massachusetts Investors Massachusetts Investors Growth Stock Fund (Class A) 146,236 1,349,759
*Merrill Lynch Trust Company Merrill Lynch Balanced Capital Fund, Inc. (Class A) 588,092 13,090,922
*Merrill Lynch Trust Company Merrill Lynch Corporate Bond Intermediate Term Portfolio
(Class A) 1,036,163 11,988,401
*Merrill Lynch Trust Company Merrill Lynch Global Allocation Fund, Inc. (Class A) 475,482 5,434,755
Phoenix Investment Partners Phoenix-Engemann Small and Mid Cap Growth Fund (Class A) 426,663 7,880,462
ING International ING International Small Cap Growth Fund (Class A) 52,295 980,017
State Street Research State Street Research Aurora Fund (Class A) 211,840 5,465,463
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Total mutual funds 69,319,792
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COMMON STOCKS:
*Weatherford International Ltd. Common Shares of Weatherford International Ltd. 471,389 18,822,558
Grant Prideco, Inc. Common stock of Grant Prideco, Inc. 243,461 2,833,894
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Total common stocks 21,656,452
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MONEY MARKET ACCOUNT:
*Merrill Lynch Trust Company Merrill Lynch U.S.A. Government Reserves 1,322,055 1,322,055
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Total money market account 1,322,055
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OTHER:
*Merrill Lynch Trust Company Cash, interest-bearing $ 43,360 43,360
*Participant loans Interest rates from 5.25% to 10.5% per annum $ 8,735,331 8,735,331
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Total assets $ 166,384,832
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*Identified party in interest.
(a)See accompanying Independent Auditors' Report
11
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee, which administers the Plan, has duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
WEATHERFORD INTERNATIONAL, INC.
401(k) SAVINGS PLAN
Date: June 27, 2003 /s/ Jon R. Nicholson
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Jon R. Nicholson
Senior Vice President, Human Resources
For Weatherford International, Inc. and
Weatherford International Ltd., and
Administrative Committee Member
12
INDEX TO EXHIBIT
EXHIBIT
NUMBER DESCRIPTION
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23.1 Independent Auditors' Consent
99.1 Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
13