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Rule 424(b)(1)
Registration No. 333-72509
PROSPECTUS
3,000,000 SHARES
NATIONAL-OILWELL, INC.
COMMON STOCK
Westburne Inc. is offering for sale all 3,000,000 shares of our common
stock under this prospectus. We will receive no proceeds from the sale of these
shares.
Westburne may sell the shares through public or private transactions,
on or off the New York Stock Exchange, at prevailing market prices or at
privately negotiated prices. See "Plan of Distribution" on page 8.
The Common Stock is listed on the New York Stock Exchange under the
symbol "NOI." On March 1, 1999, the last reported sale price of the Common
Stock on the New York Stock Exchange was $8.875 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF SOME
ISSUES TO CONSIDER BEFORE PURCHASING OUR COMMON STOCK.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus is March 2, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
The Company.................................................................................................. 2
Disclosure Regarding Forward-Looking Statements.............................................................. 2
Risk Factors................................................................................................. 3
Recent Developments.......................................................................................... 7
Use of Proceeds.............................................................................................. 7
Selling Stockholder.......................................................................................... 7
Plan of Distribution......................................................................................... 8
Legal Matters................................................................................................ 9
Experts...................................................................................................... 9
Where You Can Find More Information.......................................................................... 9
Incorporation of Certain Documents by Reference.............................................................. 10
</TABLE>
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WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT
FROM WHAT IS CONTAINED IN THIS PROSPECTUS. WE ARE NOT OFFERING SHARES OF OUR
COMMON STOCK IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. THE
INFORMATION IN THIS PROSPECTUS MAY NOT BE CORRECT AT ANY TIME AFTER ITS DATE.
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THE COMPANY
Our principal executive offices are located at 5555 San Felipe,
Houston, Texas 77056 and our telephone number is (718) 960-5100.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains, or has
incorporated by reference, forward-looking statements within the meaning of the
federal securities laws. Forward-looking statements typically are identified by
use of terms such as "may," "will," "expect," "anticipate," "estimate" and
similar words, although some forward-looking statements are expressed
differently. You should be aware that our actual results could differ materially
from those contained in the forward-looking statements due to a number of
factors, including changes in worldwide economic activity, oil and gas prices
and customer demand for our products. You should also consider carefully the
statements under "Risk Factors" which address additional factors that could
cause our actual results to differ from those set forth in the forward-looking
statements. Given these uncertainties, current or prospective investors are
cautioned not to place undue reliance on any such forward-looking statements. We
disclaim any obligation or intent to update any such factors or forward-looking
statement to reflect future events or developments.
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RISK FACTORS
Before purchasing any shares of our common stock, you should consider
carefully the following factors, in addition to the other information contained
or incorporated by reference in this prospectus.
WE DEPEND ON THE OIL AND GAS INDUSTRY
We are very dependent upon the oil and gas industry and its willingness
to explore for and produce oil and gas. The industry's willingness to explore
and produce depends upon the prevailing view of future product prices. Many
factors affect the supply and demand for oil and gas and therefore influence
product prices, including:
o level of production from known reserves;
o cost of producing oil and gas;
o level of drilling activity;
o worldwide economic activity;
o national government political requirements;
o interest rates and the costs of capital;
o development of alternate energy sources;
o environmental regulation; and
o tax policies.
If there is a significant reduction in demand for drilling services, in cash
flows of drilling contractors or in rig utilization rates, then demand for our
products will drop.
OIL AND GAS PRICES ARE VOLATILE
Oil and gas prices have been volatile over the last ten years, ranging
from less than $11 per barrel to over $40 per barrel. Oil prices have been low
in 1998 and to date in 1999, and have generally ranged from $11 to $16 per
barrel.
Spot gas prices have also been volatile, ranging from less than $1.00
per mcf of gas to above $3.00. Gas prices have been moderate in 1998 and
to date in 1999, and have generally ranged from $1.75 to $2.20 per mcf.
These price changes have caused many shifts in the strategies and
expenditure levels of oil and gas companies and drilling contractors,
particularly with respect to decisions to purchase major capital equipment of
the type that we manufacture. Recent expectations of lower oil prices are
slowing production and new drilling, particularly in areas where the per barrel
cost of production is high. This
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slowdown quickly affected our distribution and downhole products businesses and
is now negatively impacting the products and technology segment as lower prices
are expected to continue for an extended period. We cannot predict future oil
and gas prices or whether such future prices will be sufficient to support
current exploration and production levels.
OUR INDUSTRY IS HIGHLY COMPETITIVE
The oilfield products and services industry is highly competitive. The
following competitive actions can each affect our revenues and earnings:
o price changes;
o new product and technology introductions; and
o improvements in availability and delivery.
We compete with many companies. Some of these companies may possess
greater financial resources than we do or offer certain products that we do not
have.
WE FACE POTENTIAL PRODUCT LIABILITY AND WARRANTY CLAIMS
Customers use some of our products in potentially hazardous drilling,
completion and production applications that can cause:
o injury or loss of life;
o damage to property, equipment or the environment; and
o suspension of operations.
We have what we believe to be the amounts and types of insurance
coverage which are consistent with normal industry practice. However, our
insurance does not protect us against all liabilities (including liabilities for
events involving pollution). We cannot guarantee that our insurance will be
adequate to cover all liabilities we may incur. We also cannot assure that we
will be able to maintain our insurance in the future at levels we think are
necessary and at rates we consider reasonable. Particular types of insurance
coverage may not be available in the future.
We may be named as a defendant in product liability or other lawsuits
asserting potentially large claims if an accident occurs at a location where our
equipment and services have been used. We are currently party to legal and
administrative proceedings. We cannot predict the outcome of these proceedings,
nor the effects any negative outcomes may have on us.
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FOREIGN AND DOMESTIC POLITICAL DEVELOPMENTS AND GOVERNMENTAL REGULATIONS CAN
AFFECT US
Many aspects of our operations are affected by political developments,
including restrictions on the ability to do business in various foreign
jurisdictions. We are also subject to foreign and domestic government
regulations, such as regulations relating to oilfield operations, worker safety
and environmental protection.
In addition, we depend on demand for our products and services from the
oil and gas industry, and are therefore affected by any changes in taxation,
price controls or other laws and regulations that affect the oil and gas
industry. If laws or regulations are adopted which hinder exploration for or
production of oil and gas, our operations could suffer. We cannot predict the
extent to which our future operations may be affected by political developments,
new legislation or new regulations.
ENVIRONMENTAL REGULATIONS CAN AFFECT US
Many foreign, federal, state, provincial and local environmental laws
and regulations affect our operations, as well as the operations of our
customers. The technical requirements of these laws and regulations are becoming
increasingly expensive, complex and stringent. These laws and regulations may
sanction us for damages to natural resources or threats to public health and
safety. These laws can also make us liable for the actions of others, or for our
acts (or acts of our predecessors) that were, at the time, perfectly legal.
Violations of laws or regulations may result in any one or more of the
following:
o revocation of permits;
o corrective action orders;
o administrative or civil penalties; or
o criminal prosecution.
Certain environmental laws may subject us to joint and several
liability for spills or releases of hazardous substances. This means that we
could be forced to pay an entire judgment even in a case in which we were only
partially responsible for the damage. We could also be sued for personal
injuries or property damage as a result of alleged exposure to hazardous
substances, as well as damage to natural resources.
INSTABILITY OF FOREIGN MARKETS COULD HAVE A NEGATIVE IMPACT ON OUR REVENUES
Some of our revenues depend upon customers in the Middle East, Africa,
Southeast Asia and other international markets. These revenues are subject to
risks of instability of foreign economies and governments. Furthermore, our
sales can be affected by laws and regulations limiting exports to particular
countries. Sometimes export laws and regulations of one jurisdiction may
contradict those of another.
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We are exposed to the risks of changes in exchange rates between the
U.S. dollar and foreign currencies. We do not currently engage in or plan to
engage in any significant hedging or currency trading transactions designed to
compensate for adverse currency fluctuations.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH
We acquired three companies in 1997 and five more in 1998. We also
intend to acquire additional companies in the future, where feasible. We cannot
predict whether suitable acquisition candidates will be available on reasonable
terms. Further, we may not have access to adequate funds to complete any desired
acquisitions. Once acquired, we cannot guarantee that we will successfully
integrate the operations of the acquired companies.
Combining organizations could interrupt the activities of some or all
of our businesses, and have a negative impact on operations. Our recent
acquisitions and recent growth in revenues and backlog have placed significant
demands on us to do the following:
o improve the combined entity's operational, financial
and management information systems;
o develop further the management skills of our
managers and supervisors; and
o continue to train, motivate and effectively manage
our employees.
If we fail to effectively manage our growth, our results could suffer.
WE ARE LEVERAGED
We recently issued 6 7/8% senior notes due July 1, 2005. As a result of
this issuance we have become more leveraged. As of September 30, 1998, we had a
total of $224.7 million of debt, and a total of $353.5 million of stockholders'
equity. Our increased leverage will require us to use more of our cash flow from
operations for payment of interest on our debt. Our increased leverage may also
make it more difficult for us to obtain additional financing in the future.
Further, the increased leverage could make us more vulnerable to economic
downturns and competitive pressures.
POTENTIAL FUTURE SALE OF OUR SHARES COULD AFFECT OUR MARKET PRICE
Future sales of our shares by stockholders or option holders could have
a negative effect on the market price of our stock. At December 31, 1998, we had
outstanding options to purchase a total of 904,511 of our shares at prices
ranging from $5.63 to $28.81 per share. In addition, we have a contractual
obligation to issue 316,264 shares of our common stock under our Value
Appreciation Plans in January, 1999. Some of our stockholders have certain
rights to cause us to file a registration statement with the SEC to allow the
sale of their shares, and some also have the right to be included in any
registration statements we do file. The following is a list of the amount of
shares subject to registration rights:
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<TABLE>
<CAPTION>
Stockholder Number of Shares
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<S> <C>
Inverness/Phoenix LLC 9,300,562
First Reserve Corporation 8,370,494
Other stockholders 4,484,510
</TABLE>
RECENT DEVELOPMENTS
On February 4, 1999, we announced 1998 net income of $68.9 million, or
$1.30 per share. These 1998 results include the following:
<TABLE>
<CAPTION>
Total After Taxes Per Share
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<S> <C> <C> <C>
Fourth Quarter Charge for Personnel
Reductions and Facility Closures
Due To Current Industry Conditions: $16.4 million $10.3 million $.19
</TABLE>
<TABLE>
<CAPTION>
Total After Taxes Per Share
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<S> <C> <C> <C>
Inventory Write-Down to
The Lower of Cost or Market: $ 5.6 million $ 3.5 million $.07
</TABLE>
During 1997, we reported net income of $50.7 million, or $.98 per share. These
1997 results include the following:
<TABLE>
<CAPTION>
Total After Taxes Per Share
------------- ------------- ------------
<S> <C> <C> <C>
Third Quarter Special Charge Related to
Combination with Dreco Energy Services: $10.7 million $ 8.1 million $.15
</TABLE>
<TABLE>
<CAPTION>
Total After Taxes Per Share
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<S> <C> <C> <C>
Extraordinary Write-Off
Of Deferred Debt Costs: $ .9 million $ .6 million $.01
</TABLE>
Revenues in 1998 increased to $1.2 billion compared to $1.0 billion in the prior
year.
We announced a backlog of capital equipment orders of $77 million at
the end of 1998, down from $270 million at the end of 1997. The lower backlog
is a result of a significant decline in the price of oil and the expectation
that oil prices will remain low throughout 1999, which in turn lowered demand
for products manufactured and sold by us. We expect revenues and earnings to
decline in 1999 due to the continued impact of current market conditions.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by
Westburne. The offering is made to fulfill our contractual obligations to
Westburne to register their shares.
SELLING STOCKHOLDER
The shares offered under this prospectus are being sold for the account
of the selling stockholder listed below. We also provide information regarding
the selling stockholder's beneficial ownership of our common stock as of
December 31, 1998 and as adjusted to give effect to the sale.
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<TABLE>
<CAPTION>
Shares Beneficially Shares Shares Beneficially
Owned Prior to Being Owned Subsequent
Offering(1) Offered to Offering(1)
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<S> <C> <C> <C> <C>
Name of Selling Stockholder Number Percent Number Percent
- --------------------------- -------- ------- ------ -------
Westburne Inc.(2) 3,000,000 5.36% 3,000,000 0 0
</TABLE>
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(1) Based on 55,996,785 shares outstanding at December 31, 1998.
(2) Westburne's address is 505 Locke Street, Suite 200, St. Laurent, Quebec,
Canada H42 1X7.
PLAN OF DISTRIBUTION
We are registering the shares of common stock to fulfill our
obligations under a registration rights agreement, but the registration of the
shares of common stock does not necessarily mean that any of the shares will be
offered or sold by Westburne under this prospectus.
Westburne may offer its shares at various times in one or more of the
following transactions:
o a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
o purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this
prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
o face-to-face transactions between Westburne and purchasers
without a broker-dealer.
In effecting sales, brokers or dealers engaged by Westburne may arrange
for other brokers or dealers to participate. Such brokers or dealers may receive
commissions or discounts from Westburne in amounts to be negotiated immediately
prior to the sale. Such brokers or dealers and any other participating brokers
or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended in connection with such sales. In addition,
securities covered by this prospectus may qualify in the future to be sold under
Rule 144 of the Securities Act.
Upon the Company's being notified by Westburne that any material
arrangement has been entered into with a broker or dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplemented prospectus will
be filed, if required, pursuant to Rule 424(c) under the Securities Act,
disclosing
o the name of each such broker or dealer;
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o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to
such broker(s) or dealer(s), where applicable;
o that such broker(s) or dealer(s) did not conduct any
investigation to verify the information set out or
incorporated by reference in this prospectus, as supplemented;
and
o other facts material to the transaction.
We are bearing all costs relating to the registration of the shares
(other than fees and expenses, if any, of counsel or other advisers to
Westburne). Any commissions, discounts or other fees payable to broker-dealers
in connection with any sale of the shares will be borne by Westburne.
LEGAL MATTERS
Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania, will issue an
opinion as to the legality of the common stock offered under this prospectus.
EXPERTS
Our consolidated financial statements appearing in our Annual Report on
Form 10-K for the years ended December 31, 1997 and 1996 have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon.
For the year ended December 31, 1996, the Ernst & Young report is based in part
on the report of Coopers & Lybrand, independent auditors. Our consolidated
financial statements are incorporated by reference in reliance on their report,
given on their authority as experts in accounting and auditing.
Our consolidated financial statements appearing in our Annual Report on
Form 10-K for the year ended August 31, 1995 have been audited by Coopers &
Lybrand, independent auditors, as set forth in their report thereon. Our
consolidated financial statements are incorporated by reference in reliance on
their report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the Securities and Exchange
Commission (the "SEC"). These reports, proxy statements and other information
can be read and copied at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549; Midwest Regional office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Northeast Regional Office, 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can be obtained at the prescribed
rates from the Public Reference Section of the SEC at its principal office in
Washington, D.C. In addition, we file this material electronically with the SEC,
and the SEC maintains a Web site (http://www.sec.gov) that contains reports,
proxy statements and other information regarding companies (including us) that
file electronically with the SEC. Our common stock is listed on the New York
Stock Exchange and our reports, proxy statements and other information can
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also be inspected at the office of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
We have filed with the SEC a registration statement on Form S-3, with
respect to our common stock. For further information with respect to us and the
shares, we refer you to that registration statement and its exhibits. Statements
made in this prospectus regarding the contents of any contract or other
documents are not necessarily complete. You should read the actual documents
which are exhibits to the registration statement in their entirety.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We refer you to the following documents which we have filed with the
SEC and incorporate by reference into this prospectus:
1. Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
2. Our Quarterly Report on Form 10-Q for the period ended
March 31, 1998.
3. Our Current Report on Form 8-K filed on June 17, 1998, as
amended by Form 8-K/A filed on August 17, 1998.
4. Our Quarterly Report on Form 10-Q for the period ended June
30, 1998.
5. Our Quarterly Report on Form 10-Q for the period ended
September 30, 1998.
6. The description of our common stock contained in the
registration statement on Form 8-A filed on October 15,
1996, as updated by our Current Report on Form 8-K filed on
November 7, 1997.
We also incorporate by reference all reports and documents filed by us
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
while this registration statement is effective. Any statement contained or
incorporated is superseded by any subsequently filed document that constitutes a
part of this prospectus.
Upon request, we will provide to you a copy of any or all of such
documents which are incorporated into this prospectus by reference. You should
direct written or oral requests for copies to Gay Mather, Manager, Investor
Relations, National-Oilwell, Inc., 5555 San Felipe, Houston, Texas 77056
(telephone number (713) 960-5422).
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3,000,000 SHARES
NATIONAL-OILWELL, INC.
COMMON STOCK
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PROSPECTUS
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MARCH 2, 1999
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