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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, 2003
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
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Report of Independent Registered Public Accounting Firm 2
Report of Independent Registered Public Accounting Firm 3
Financial Statements-
Statements of Net Assets Available for Plan Benefits as of
December 31, 2003 and 2002 4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2003 5
Notes to Financial Statements 6
Supplemental Schedule-
Schedule H, Line 4(i), Schedule of Assets (Held at End of Year) 10
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Administrative Committee of the
Weatherford International, Inc. 401(k) Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of Weatherford International, Inc. 401(k) Savings Plan as of December 31, 2003,
and the related statement of changes in net assets available for 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 the standards of the Public Company
Accounting Oversight Board (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 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 benefits of the Plan at
December 31, 2003, and the changes in its net assets available for benefits for
the year then ended, in conformity with U.S. generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2003 is presented for purposes of
additional analysis and is not a required part of the 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 our audit of the financial statements and, in our opinion,
is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Houston, Texas
June 24, 2004
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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. This financial statement is the responsibility of the
Plan's management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2002, in conformity with U.S. generally accepted accounting
principles.
/s/ KPMG LLP
Houston, Texas
June 27, 2003
3
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2003 AND 2002
2003 2002
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ASSETS:
Investments, at fair value $ 206,845,803 $ 166,384,832
Receivables-
Participants' contributions 1,268,626 1,046,291
Company contributions 415,342 358,657
Loan repayment receivable 302,838 257,119
Pending settlement 3,714 13,279
Accrued income receivable 31,440 29,230
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Total receivables 2,021,960 1,704,576
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 208,867,763 $ 168,089,408
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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, 2003
ADDITIONS:
Net appreciation in fair value of collective trusts $ 4,011,075
Net appreciation in fair value of mutual funds 20,203,458
Interest income 574,105
Dividend income 3,721,961
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28,510,599
Contributions-
Participants 17,935,414
Company 5,611,874
Rollovers 3,103,826
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26,651,114
Transfers from other plans 123,201
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Total additions $ 55,284,914
DEDUCTIONS:
Net depreciation in fair value of common stock $ 1,290,541
Benefits paid to participants and beneficiaries 13,188,058
Administrative fees 27,960
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Total deductions 14,506,559
NET INCREASE 40,778,355
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 168,089,408
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NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $ 208,867,763
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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, 2003
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.
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.
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.
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. Considered compensation used to calculate the Company
match includes overtime, bonuses and commissions but does not include relocation
or severance pay. The Company, solely at the discretion of the Board of
6
Directors, may make additional discretionary contributions. There were no
discretionary contributions made for the year ended December 31, 2003.
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 Weatherford International Ltd. common shares (Common
Shares). 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. 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.
Effective May 5, 2003, the Mercury International Value Fund was renamed the
Merrill Lynch International Value Fund.
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 2003, 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.
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.
7
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 U.S. generally
accepted accounting principles requires the Administrative Committee to make
estimates that affect the amounts reported in the financial statements and
accompanying notes and schedule. 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.
Interest and dividend income 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 appreciation 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
depreciation 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 2003.
3. INVESTMENTS:
Individual investments that represent 5 percent or more of the Plan's net assets
available for plan benefits at December 31, 2003 and 2002 are as follows:
2003 2002
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Merrill Lynch Retirement Preservation Trust $ 51,838,818 $ 51,632,185
Davis New York Venture Fund, Inc. 25,472,992 17,983,429
Common Shares of Weatherford International Ltd. 24,075,196 18,822,558
Merrill Lynch Equity Index Trust 18,366,306 13,675,657
Merrill Lynch Balanced Capital Fund, Inc. 15,524,720 13,090,922
Merrill Lynch Corporate Bond Intermediate Term Portfolio 14,229,392 11,988,401
State Street Research Aurora Fund 11,721,971 5,465,463*
Phoenix-Engemann Small and Mid Cap Growth Fund 11,608,839 7,880,462*
Participant Loans -- 8,735,331
*Not a reportable investment, included for comparative purposes only.
4. ASSETS TRANSFERRED/ROLLED FROM OTHER PLANS:
During March 2003, account balances of participants totaling $123,201 were
transferred to the Plan from the Weatherford Enterra Compression Company, L.P.
Savings and Retirement Plan and Trust and are included in Transfers from Other
Plans in the accompanying Statement of Changes in Net Assets Available for Plan
Benefits.
In conjunction with the October 23, 2002 acquisition of Clearwater
International, employees were given the option to roll their 401(k) balances
into the Plan. As a result, voluntary rollovers of $779,477 and $27,946 were
accepted into the Plan on April 1, 2003 and April 11, 2003, respectively, and
are included in Rollovers on the accompanying Statement of Changes in Net Assets
Available for Plan Benefits.
In addition, in conjunction with the July 7, 2003 acquisition of Kvaerner
Oilfield Products, Inc., employees were given the option to roll their 401(k)
balances into the Plan. As a result, voluntary rollovers of
8
$61,594 and $365,457 were accepted into the Plan on September 26, 2003 and
September 30, 2003, respectively, and are included in Rollovers on the
accompanying Statement of Changes in Net Assets Available for Plan Benefits.
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 and that such changes could materially
affect the amounts reported in the statements of net assets available for
benefits and participant account balances.
6. TAX STATUS:
The Plan obtained its latest determination letter on June 9, 2003, 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. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. 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 is qualified and the related
trust is tax-exempt.
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for benefits per the
financial statements at December 31, 2003 to Form 5500:
Net assets available for benefits per the financial statements $208,867,763
Amounts allocated to withdrawing participants (69,658)
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Net assets available for benefits per the Form 5500 $208,798,105
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The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2003, to Form 5500:
Benefits paid to participants and beneficiaries per the financial statements $ 13,188,058
Add: Amounts allocated to withdrawing participants at December 31, 2003 69,658
------------
Benefits paid to participants and beneficiaries per Form 5500 $ 13,257,716
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Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, 2003, but not yet paid as of that date.
8. SUBSEQUENT EVENT:
Effective January 1, 2004, an eligible employee may elect to contribute on a
pre-tax basis subject to certain limitations, up to 50 percent of his or her
considered compensation as defined by the Plan and on an after tax basis, up to
16 percent of his or her considered compensation, as defined by the Plan. The
combination of employee contributions cannot exceed 50 percent of considered
compensation, as defined by the Plan.
9
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
SCHEDULE H, LINE 4(i), SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 04-2515019 PN:002
DECEMBER 31, 2003
Principal
Number
of Units/ Current
Identity of Issue Description of Investment Shares Value
--------------------------------- ------------------------------------------------------------------ ----------- -------------
COLLECTIVE TRUSTS:
*Merrill Lynch Trust Company Merrill Lynch Equity Index Trust 228,493 $ 18,366,306
*Merrill Lynch Trust Company Merrill Lynch Retirement Preservation Trust 51,838,818 51,838,818
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Total collective trusts 70,205,124
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MUTUAL FUNDS:
AIM Funds AIM Balanced Fund 51,565 1,233,946
Davis Venture Group Davis New York Venture Fund, Inc. 925,617 25,472,992
ING International ING International Small Cap Growth Fund 75,041 2,035,103
Massachusetts Investors Massachusetts Investors Growth Stock Fund 177,203 2,005,936
*Merrill Lynch Trust Company Merrill Lynch International Value Fund 302,401 6,767,739
*Merrill Lynch Trust Company Merrill Lynch Balanced Capital Fund, Inc. 587,612 15,524,720
*Merrill Lynch Trust Company Merrill Lynch Corporate Bond Intermediate Term Portfolio 1,214,112 14,229,392
*Merrill Lynch Trust Company Merrill Lynch Global Allocation Fund, Inc. 527,453 7,917,063
Phoenix Investment Partners Phoenix-Engemann Small and Mid Cap Growth Fund 423,835 11,608,839
State Street Research State Street Research Aurora Fund 303,599 11,721,971
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Total mutual funds 98,517,701
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COMMON STOCKS:
*Weatherford International Ltd. Common Shares of Weatherford International Ltd. 668,755 24,075,196
Grant Prideco, Inc. Common stock of Grant Prideco, Inc. 228,324 2,972,783
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Total common stocks 27,047,979
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MONEY MARKET ACCOUNT:
*Merrill Lynch Trust Company Merrill Lynch U.S.A. Government Reserves 1,138,103 1,138,103
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Total money market account 1,138,103
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OTHER:
*Merrill Lynch Trust Company Cash, interest-bearing 107,297
*Participant loans Interest rates ranging from 5% to 11.5% with varying maturity dates 9,829,599
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Total assets $ 206,845,803
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*Party in interest.
10
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 28, 2004 /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
11
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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23.1 Consent of Independent Registered Public Accounting Firm
23.2 Consent of Independent Registered Public Accounting Firm
12