-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EHqv2Co+ubayK7qVNpY63zgk/NKRYv4U+gnC8FvJocyws2AgWQ8WjzSFAxPSueBf Ru1Dyl74jslELtvFd2m0mw== 0000950129-99-003249.txt : 19990723 0000950129-99-003249.hdr.sgml : 19990723 ACCESSION NUMBER: 0000950129-99-003249 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990721 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEATHERFORD INTERNATIONAL INC /NEW/ CENTRAL INDEX KEY: 0000032908 STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533] IRS NUMBER: 042515019 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13086 FILM NUMBER: 99668413 BUSINESS ADDRESS: STREET 1: 515 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77027-3415 BUSINESS PHONE: 7132978400 MAIL ADDRESS: STREET 1: 5 POST OAK PARK STREET 2: STE 1760 CITY: HOUSTON STATE: TX ZIP: 77027-3415 FORMER COMPANY: FORMER CONFORMED NAME: EVI WEATHERFORD INC DATE OF NAME CHANGE: 19980528 FORMER COMPANY: FORMER CONFORMED NAME: EVI INC DATE OF NAME CHANGE: 19980226 FORMER COMPANY: FORMER CONFORMED NAME: ENERGY VENTURES INC /DE/ DATE OF NAME CHANGE: 19920703 8-K 1 WEATHERFORD INTERNATIONAL, INC. - 7/21/99 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): JULY 21, 1999 WEATHERFORD INTERNATIONAL, INC. (Exact name of registrant as specified in charter)
DELAWARE 1-13086 04-2515019 (State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
515 POST OAK BLVD., SUITE 600 HOUSTON, TEXAS 77027 (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 693-4000 ================================================================================ PAGE 1 EXHIBIT INDEX APPEARS ON PAGE 5 2 ITEM 5. OTHER EVENTS RESULTS RELEASE On July 21, 1999, we announced our results for the quarter ended June 30, 1999. A copy of the press release announcing our results for the quarter ended June 30, 1999, is filed as Exhibit 99.1 and is hereby incorporated herein by reference. POSSIBLE SPIN-OFF On July 21, 1999, we announced a proposed spin-off of our Grant Prideco drilling products business to our shareholders. A copy of the press release announcing the proposed spin-off is attached as Exhibit 99.2. Although a spin-off of our Grant Prideco drilling products business is contingent upon a number of events, including the receipt of a favorable private letter ruling from the Internal Revenue Service regarding the tax free nature of the spin-off, we currently expect that the spin-off would occur around year end. We are proposing the spin-off of Grant Prideco to allow Grant Prideco and our non-Grant Prideco businesses to each focus on their own operations and growth in their core markets. As previously disclosed by us in our filings with the Securities and Exchange Commission, we have in recent periods concentrated our growth on the acquisition and development of new technologies directed at reservoir recovery. Grant Prideco's growth has focused on the manufacture of value added products in the tubular segment of the industry. The proposed spin-off is expected to allow all of our businesses to continue to expand and grow on a more focused basis and to permit our remaining businesses and those of Grant Prideco to pursue opportunities that might not otherwise be available on a combined basis. The spin-off of Grant Prideco will also allow Grant Prideco to fund future acquisitions and expansions using its own capital. We expect that following the spin-off, Grant Prideco will continue to actively pursue growth opportunities in the tubular segment of the industry. We are currently reviewing the final structure of the spin-off and there can be no assurance as to the final terms of the spin-off or as to its timing. In particular, we will not pursue the spin-off unless we receive a favorable private letter ruling from the Internal Revenue Service. We currently expect that if we effect the spin-off, one share of Grant Prideco common stock would be distributed for every two shares of Weatherford common stock held by our shareholders. We would also expect that Grant Prideco would raise approximately $200 million in indebtedness at the time of the spin-off, of which approximately $100 million would be used to repay indebtedness owed to us by Grant Prideco. Assuming our receipt of a favorable private letter ruling, the spin-off of Grant Prideco should be tax free to our shareholders. In addition, under the terms of our 5% Convertible Subordinated Preferred Equivalent Debentures due 2027, the conversion price of those debentures will be adjusted to reflect the spin-off. The specific terms for the adjustment are set forth in Section 6.3(c) of the First Supplemental Indenture between us and The Chase Manhattan Bank dated as of October 28, 1997, previously filed with the Securities and Exchange Commission. In general, under that section, the conversion price for our convertible debentures will be determined utilizing the following formula: Conversion Price X A - B ($80 per share) ----- A A = The current market price per share of Weatherford common stock on the payment date for the distribution. The current market price of the Weatherford common stock for purposes of the adjustment is defined in Section 6.3(g) of the First Supplemental Indenture and is generally defined as the average of the daily closing price of the Weatherford common stock for the ten trading days ending on the day of the distribution of the Grant Prideco common stock to shareholders. B = Fair market value of the Grant Prideco common stock to be distributed as determined by the Board of Directors of Weatherford. PAGE 2 3 Options and warrants previously granted to the employees, officers and directors of Weatherford will be adjusted pursuant to the terms of those options and warrants. Additional information with respect to the business of Grant Prideco is set forth in our Annual Report on Form 10-K for the year ended December 31, 1998. That annual report also contains information with respect to the financial segment data results and performance of the Grant Prideco drilling products division. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Press release dated July 21, 1999, announcing Weatherford's results for the quarter ended June 30, 1999. 99.2 Press release dated July 21, 1999, announcing Weatherford's possible spin-off of its Grant Prideco Drilling Products business. PAGE 3 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WEATHERFORD INTERNATIONAL, INC. Dated: July 21, 1999 /s/ Bruce F. Longaker, Jr. -------------------------------------- Bruce F. Longaker, Jr. Senior Vice President and Chief Financial Officer PAGE 4 5 INDEX TO EXHIBITS
Number Exhibit ------ ------- 99.1 Press release dated July 21, 1999, announcing Weatherford's results for the quarter ended June 30, 1999. 99.2 Press release dated July 21, 1999, announcing Weatherford's possible spin-off of its Grant Prideco Drilling Products business.
PAGE 5 EX-99.1 2 PRESS RELEASE DATED 7/21/99 - RESULTS OF QUARTER 1 EXHIBIT 99.1 [WEATHERFORD LOGO] NEWS RELEASE WEATHERFORD REPORTS SECOND QUARTER 1999 RESULTS HOUSTON, July 21, 1999 - Weatherford International, Inc. (NYSE:WFT) today reported results for the second quarter of 1999. Revenues for the quarter were $343.1 million, a decrease of 35 percent compared to the prior year second quarter. This decline in revenue reflected the substantial decline in industry activity and resulted in the Company recording a net loss of $2 million, or $0.02 per share, compared to net income of $0.65 per share in last year's second quarter, after excluding the $0.80 per share charge related to the merger of EVI, Inc. and Weatherford Enterra, Inc. in that quarter. Although oil prices increased significantly during the second quarter, this recent improvement has not equated to any meaningful increase in customer E&P spending to date. The worldwide drilling rig count averaged just over 1,200 rigs in the second quarter, a decrease of 33 percent compared to last year's second quarter. Canada, a significant market for Weatherford, averaged only 100 working rigs in the second quarter as customary spring break up lasted longer than usual. International activity also declined during the second quarter as the average rig count outside North America fell from 800 to 600. Although Weatherford expects an increase in activity from very low second quarter levels, a gradual increase in customer spending over the remainder of the year is likely. For the six months ended June 30, 1999, revenues were $696.9 million, a 37 percent decline from last year. Net income from continuing operations was $500 thousand compared to $124.3 million last year, which excluded one time charges of $120 million ($78 million after tax) related to the merger of EVI and Weatherford Enterra. COMPLETION AND OILFIELD SERVICES Revenues declined 27 percent from last year's second quarter to $160.4 million, but were only slightly down from the first quarter 1999. North American revenues remained depressed, with the Canadian market continuing to be the most adversely impacted. International revenues, in particular the North Sea, continued to decline during the second quarter as international projects -More- 2 1999 Second Quarter Earnings Page 2 have been delayed due to market conditions and industry consolidations. Completion activity and revenues are expected to improve next quarter. During the quarter, Weatherford entered into an agreement to acquire Dailey International Inc., a leading supplier of drilling jars and other downhole tools. This transaction, which is highly complementary and provides substantial synergies to Weatherford is anticipated to close in the third quarter. In addition, the acquisition of ECD Northwest Inc., one of the leading providers of underbalanced drilling systems and fluids, closed during the quarter. ARTIFICIAL LIFT SYSTEMS Revenues were down 31 percent to $62.2 million in the quarter but were up slightly from the first quarter, primarily due to an increase in North American activity late in the quarter. An increase in customer spending related to heavy oil production is expected to continue in Canada, as well as in South America in future periods. COMPRESSION SERVICES Weatherford Global Compression Services (WGCS), the joint venture between GE Capital and Weatherford formed in February, had revenues of $56 million, which were significantly higher than the prior year quarter. Equipment sales were substantially higher and contract services revenues remained strong. The division continued to grow its longer term, higher value added compression services business, as evidenced by the successful award by YPF of a seven year contract to WGCS to provide total compression services in Argentina. The revenue value of this contract will be approximately $95 million over the seven years and gives WGCS an important presence in Argentina. DRILLING PRODUCTS Grant Prideco, the Company's drilling products division, continued to be negatively impacted by the worldwide decline in drilling activity. Grant Prideco revenues were down 63 percent from the 1998 second quarter to $64.5 million. Drilling activity dropped to its lowest level in 60 years during the quarter and excess drill pipe is still being consumed from idle rigs. Drill stem revenues are not expected to recover during the third quarter of 1999. As announced earlier today, Weatherford is currently proposing the spin-off of Grant Prideco to the Weatherford shareholders subject to the receipt of a favorable private letter ruling by the 3 1999 Second Quarter Earnings Page 3 Internal Revenue Service regarding the tax-free nature of the spin-off. The spin-off is intended to allow Weatherford and Grant Prideco to continue to expand and grow their respective businesses on a more focused basis and to permit them to seek opportunities that might not otherwise be available on a combined basis. Weatherford expects that following the spin-off Grant Prideco will continue to actively pursue growth opportunities in the tubular segment of the industry. Houston-based Weatherford International, Inc. is one of the world's largest providers of engineered products and services to the drilling and production segments of the oil and gas industry. # # # Contacts: Don Galletly (713) 693-4148 Bruce F. Longaker (713) 693-4161 This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, Weatherford's prospects for its operations and the integration of recent acquisitions, all of which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Weatherford International, Inc.'s Annual, Quarterly and Current Reports filed with the Securities and Exchange Commission, include the impact of oil and natural gas prices and worldwide economic conditions on drilling activity, the demand and pricing of Weatherford's products, as well as the ability to achieve the anticipated synergies and savings from the recent merger between EVI, Inc. and Weatherford Enterra, Inc. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. 4 WEATHERFORD INTERNATIONAL, INC. Consolidated Condensed Statements of Operations (In 000's, Except Per Share Amounts)
Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Net Revenues: Completion and Oilfield Services $ 160,411 $ 218,544 $ 325,698 $ 448,306 Artificial Lift Systems 62,227 90,427 119,698 197,556 Compression Services 55,950 47,164 98,533 90,165 Drilling Products 64,507 174,698 153,000 365,326 ----------- ----------- ----------- ----------- 343,095 530,833 696,929 1,101,353 ----------- ----------- ----------- ----------- Operating Income (Loss): Completion and Oilfield Services 9,752 54,806 26,782 111,757 Artificial Lift Systems 2,671 9,506 1,827 21,462 Compression Services 4,656 4,755 9,672 9,428 Drilling Products (2,483) 46,717 (838) 91,396 Corporate Expenses (7,243) (7,157) (13,065) (15,385) Merger-Related Costs -- (120,000) -- (120,000) ----------- ----------- ----------- ----------- 7,353 (11,373) 24,378 98,658 Other Income (Expense): Other, Net 3,882 2,310 4,549 2,262 Interest Expense (13,635) (13,748) (26,287) (25,759) ----------- ----------- ----------- ----------- Income (Loss) Before Income Taxes (2,400) (22,811) 2,640 75,161 (Provision) Benefit For Income Taxes 968 8,019 (796) (28,800) ----------- ----------- ----------- ----------- Income (Loss) Before Minority Interest (1,432) (14,792) 1,844 46,361 Minority Interest Expense, Net of Tax (588) (99) (1,326) (109) ----------- ----------- ----------- ----------- Net Income (Loss) $ (2,020) $ (14,891) $ 518 $ 46,252 =========== =========== =========== =========== Earnings (Loss) Per Share: Basic (0.02) (0.15) 0.01 0.48 =========== =========== =========== =========== Diluted (0.02) (0.15) 0.01 0.47 =========== =========== =========== =========== Weighted Average Shares Outstanding: Basic 97,586 96,771 97,451 96,766 =========== =========== =========== =========== Diluted 97,586 96,771 98,718 97,618 =========== =========== =========== =========== Depreciation and Amortization: Completion and Oilfield Services $ 25,792 $ 22,422 $ 52,075 $ 45,044 Artificial Lift Systems 4,835 4,758 9,670 9,688 Compression Services 9,166 5,883 16,734 11,975 Drilling Products 7,280 7,861 14,487 15,493 Corporate 509 663 872 1,327 ----------- ----------- ----------- ----------- $ 47,582 $ 41,587 $ 93,838 $ 83,527 =========== =========== =========== ===========
EX-99.2 3 PRESS RELEASE DATED 7/21/99 - POSSIBLE SPIN-OFF 1 [WEATHERFORD LOGO] EXHIBIT 99.2 NEWS RELEASE WEATHERFORD PROPOSES SPIN-OFF OF GRANT PRIDECO DRILLING PRODUCTS BUSINESS TO SHAREHOLDERS Houston, July 21, 1999 -- Weatherford International, Inc. (NYSE:WFT) today announced that it is proposing to spin-off its Grant Prideco Drilling Products business to the Weatherford shareholders. Weatherford currently expects that a spin-off of Grant Prideco to the Weatherford shareholders will be effected by year-end, subject to the receipt of a favorable private letter ruling by the Internal Revenue Service regarding the tax-free nature of the spin-off. A request for a ruling was recently filed with the IRS. The spin-off of Grant Prideco is being proposed to allow Weatherford and Grant Prideco to focus their operations and growth in their respective core markets. Weatherford has in recent periods concentrated its growth on the acquisition and development of new technologies directed at reservoir recovery. Grant Prideco has focused its growth on the manufacture of value added products in the tubular segment of the industry. The proposed spin-off is expected to allow Weatherford and Grant Prideco to continue to expand and grow on a more focused basis and to permit them to seek opportunities that might not otherwise be available on a combined basis. The spin-off will also allow Grant Prideco to fund future acquisitions and expansions using its own capital. Weatherford expects that following the spin-off Grant Prideco will continue to actively pursue growth opportunities in the tubular segment of the industry. The final structure of the spin-off has not been determined and will be announced at the time of the final approval of the spin-off. Weatherford, however, currently expects that one share of Grant Prideco will be distributed for every two shares of Weatherford Common Stock held by its shareholders. Weatherford also contemplates that Grant will raise approximately $200 million in indebtedness at the time of the spin-off, of which approximately $100 million will be used to repay intercompany indebtedness. John C. Coble, President of Grant Prideco, will be named as President and Chief Executive Officer of Grant Prideco after the spin-off and Bernard J. Duroc-Danner, Chairman of the Board, President and Chief Executive Officer of Weatherford, will, in addition to his duties at Weatherford, continue with Grant Prideco as its Chairman of the Board. - More - 2 Grant Prideco Spin-off Page 2 Houston based Weatherford International, Inc. is one of the largest providers of engineered products and services for the oil and gas industry. Grant Prideco is the world's largest provider of drill stem products and a leading provider of engineered connections. # # # Contact: Don Galletly (713) 693-4148 Bruce Longaker (713) 693-4161 This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, Weatherford's prospects for its operations and the integration of recent acquisitions, all of which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Weatherford International, Inc.'s Annual, Quarterly and Current Reports filed with the Securities and Exchange Commission, include the impact of oil and natural gas prices and worldwide economic conditions on drilling activity, the demand and pricing of Weatherford's products, as well as the ability to achieve the anticipated synergies and savings from the recent merger between EVI, Inc. and Weatherford Enterra, Inc. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. -----END PRIVACY-ENHANCED MESSAGE-----