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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, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-13086
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WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
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Weatherford International, Inc.
515 Post Oak Boulevard
Suite 600
Houston, TX 77027
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
Page
----
Report of Independent Public Accountants 2
Financial Statements-
Statements of Net Assets Available for Plan Benefits as of
December 31, 2001 and 2000 3
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2001 4
Notes to Financial Statements 5
Supplemental Schedule-
Schedule H, Line 4i, Schedule of Assets (Held at End of Year)
as of December 31, 2001 9
1
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
2
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
2001 2000
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ASSETS:
Investments, at fair value $154,548,126 $162,323,420
Receivables-
Participants' contributions 923,169 1,185,647
Company contributions 303,343 295,609
Pending settlement 97,630 983,389
Accrued income receivable 32,751 50,615
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Total receivables 1,356,893 2,515,260
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $155,905,019 $164,838,680
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The accompanying notes are an integral part of these financial statements.
3
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
ADDITIONS:
Investment loss-
Net investment loss from collective trusts $ (367,133)
Net investment loss from mutual funds (7,411,735)
Net depreciation in fair value of common stock (6,980,795)
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(14,759,663)
Interest income 679,548
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(14,080,115)
Contributions-
Participants 14,231,857
Company 3,694,002
Rollover 4,052,111
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21,977,970
Transfer from other plans 523,965
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Total additions 8,421,820
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DEDUCTIONS:
Benefits paid to participants and beneficiaries 17,283,748
Administrative fees 71,733
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Total deductions 17,355,481
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NET DECREASE (8,933,661)
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 164,838,680
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NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $ 155,905,019
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The accompanying notes are an integral part of this financial statement.
4
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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. (Weatherford or the
Company).
The Company's 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 January 1, 2001, the Plan document was amended and restated.
Eligibility
All employees, other than employees who are subject to collective bargaining
agreements, 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.
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, 2001.
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 thereon. Earnings 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.
5
Investment Options
Participants may invest in any of ten mutual funds, two collective trusts, a
money market account and Company common stock. Shares of Grant Prideco, Inc.
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 Company common stock has the right to vote
the shares of stock in his or her account with respect to any matter that comes
before the stockholders 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 and actual earnings thereon.
Expenses of the Plan
During 2001, 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 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 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 12
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.
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.
6
Changes in Presentation
Certain reclassifications have been made to amounts reported in the prior year
to conform to the current year's presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 is recorded when earned. Realized gains (losses) on the sale
of investments, unrealized appreciation (depreciation) in the fair value of
investments and dividends are shown as net investment loss from 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
Company common stock during 2001.
For the years ended December 31, 2001 and 2000, 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 6.26 percent and 6.75 percent at December 31, 2001 and
2000, respectively. The effective yield of the collective trust fund was 6.5
percent for the year ended December 31, 2001.
3. INVESTMENTS:
The following presents investments that represent 5 percent or more of the
Plan's net assets available for plan benefits:
December 31,
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2001 2000
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Common stock of Weatherford International, Inc. $ 23,589,927 $ 22,996,980
Davis New York Venture Fund, Inc. (Class A) 21,186,571 26,217,585
Merrill Lynch Balanced Capital Fund, Inc. (Class A) 15,289,130 17,045,264
Merrill Lynch Equity Index Trust 17,176,853 20,311,979
Merrill Lynch Retirement Preservation Trust 36,156,938 32,646,941
Phoenix-Engemann Small and Mid Cap Growth Fund (Class A) 8,809,044 10,955,984
7
4. ASSETS TRANSFERRED FROM OTHER PLANS:
During 2001, account balances of participants totaling $475,897 were transferred
to the Plan from the Oil Country Manufacturing, Inc. Profit Sharing 401(k) Plan
and account balances of participants totaling $48,068 were transferred to the
Plan from the Weatherford Enterra, Inc. Money Purchase Pension Plan.
5. RISKS AND UNCERTAINTIES:
The Plan provides for various investments in collective trusts, mutual funds, a
money market fund and common stock. 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 April 19, 2000, 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 and restated 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, 2001 and 2000. The Administrative Committee filed for a new
determination letter from the IRS on February 14, 2002.
7. RELATED-PARTY TRANSACTIONS:
Certain Plan investments are shares of Weatherford International, Inc. common
stock 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. SUBSEQUENT EVENTS (Unaudited):
In conjunction with the November 30, 2001, acquisition of Johnson Screens, the
Plan accepted rollovers in the amounts of approximately $10,648,000 and
$583,000 on January 18, 2002, and March 19, 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.
8
WEATHERFORD INTERNATIONAL, INC. 401(k) SAVINGS PLAN
SCHEDULE H, LINE 4i, SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2001
Principal
Number
of Units/ Current
Identity of Issue Description of Investment Shares Cost Value
----------------- ------------------------- ------------ ---- ------------
COLLECTIVE TRUSTS:
Merrill Lynch Trust Company* Merrill Lynch Equity Index Trust 213,112 (a) $ 17,176,853
Merrill Lynch Trust Company* Merrill Lynch Retirement Preservation Trust 36,156,938 (a) 36,156,938
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Total collective trusts 53,333,791
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MUTUAL FUNDS:
AIM Funds AIM Balanced Fund (Class A) 14,670 (a) 380,538
Davis Venture Group Davis New York Venture Fund, Inc. (Class A) 833,133 (a) 21,186,571
Mercury Hotchkis Wiley Funds Hotchkis and Wiley International Fund (Class I) 182,393 (a) 3,551,190
Massachusetts Investors Massachusetts Investors Growth Stock Fund (Class A) 99,367 (a) 1,280,838
Merrill Lynch Trust Company* Merrill Lynch Balanced Capital Fund, Inc. (Class A) 571,984 (a) 15,289,130
Merrill Lynch Trust Company* Merrill Lynch Corporate Bond Intermediate Term
Portfolio (Class A) 589,414 (a) 6,518,914
Merrill Lynch Trust Company* Merrill Lynch Global Allocation Fund, Inc. (Class A) 410,743 (a) 5,278,045
Phoenix Investment Partners Phoenix-Engemann Small and Mid Cap Growth Fund (Class A) 331,416 (a) 8,809,044
Pilgrim International Pilgrim International Small Cap Growth Fund (Class A) 19,594 (a) 443,210
State Street Research State Street Research Aurora Fund (Class A) 96,064 (a) 3,107,669
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Total mutual funds 65,845,149
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COMMON STOCKS:
Weatherford International, Inc.* Common stock of Weatherford International, Inc. 633,105 (a) 23,589,927
Grant Prideco, Inc. Common stock of Grant Prideco, Inc. 313,521 (a) 3,605,492
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Total common stocks 27,195,419
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MONEY MARKET ACCOUNT:
Merrill Lynch Trust Company* Merrill Lynch U.S.A. Government Reserves 550,650 (a) 550,650
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Total money market account 550,650
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OTHER:
Merrill Lynch Trust Company* Cash, interest-bearing $ 4,693 (a) 4,693
Participant loans* Interest rates from 6% to 10.5% per annum $ 7,618,424 (a) 7,618,424
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Total assets $154,548,126
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*Identified party in interest.
(a)Cost omitted for participant-directed investments.
9
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the Plan) have 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: May 14, 2002 /s/ Jon R. Nicholson
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Jon R. Nicholson
Senior Vice President, Human Resources
and Information Technology,
For Weatherford International, Inc., and
Administrative Committee Member
INDEX TO EXHIBIT
EXHIBIT
NUMBER DESCRIPTION
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23.1 Consent of Independent Public Accountants
99.1 Temporary Note 3T to Article 3 of Regulation S-X