<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K
ON
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 15, 1995
(Date of earliest event reported)
WEATHERFORD ENTERRA, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7867 74-1681642
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 439-9400
(not applicable)
-------------------------------------------------------------
(Former name or former address, if changed since last report)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
EXPLANATION
As discussed in its Current Report on Form 8-K dated December 15,
1995 (the "Current Report"), as filed with the Securities and Exchange
Commission (the "Commission") on December 29, 1995, Weatherford Enterra,
Inc. completed the acquisition of substantially all of the assets of the
natural gas compression business of Energy Industries, Inc., a Delaware
corporation ("EI"), and Zapata Energy Industries, L.P., a Delaware
limited partnership ("ZEI"), for a purchase price of $130 million and
the assumption of certain current liabilities, pursuant to an Agreement
dated as of September 20, 1995, among Zapata Corporation, a Delaware
corporation, EI, ZEI, Enterra Corporation, formerly a Delaware
corporation, and Enterra Compression Company, a Delaware corporation.
Item 7 of the Current Report is hereby amended and restated in its
entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The following Zapata Energy Industries Combined Financial
Statements as of September 30, 1995 are attached hereto as Exhibit 99.2
and are incorporated herein by reference.
- - Report of Independent Public Accountants
- - Zapata Energy Industries Combined Balance Sheet as of September 30, 1995
- - Zapata Energy Industries Combined Statement of Income and Changes in
Reinvested Earnings for the year ended September 30, 1995
- - Zapata Energy Industries Statement of Cash Flows for the year ended
September 30, 1995
- - Zapata Energy Industries Notes to Combined Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION.
The unaudited pro forma consolidated statement of operations for the
year ended December 31, 1994 for Weatherford Enterra, Inc. is included in the
Registration Statement on Form S-4 (File No. 33-62195) of Weatherford
International Incorporated (the predecessor of Weatherford Enterra, Inc.) and
is incorporated herein by reference. The following Weatherford Enterra, Inc.
and Subsidiaries Unaudited Pro Forma Consolidated Financial Statements as of
September 30, 1995 are attached hereto as Exhibit 99.3 and are incorporated
herein by reference.
- - Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma
Consolidated Balance Sheet as of September 30, 1995
- - Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma Consolidated
Statement of Income for the Nine Months Ended September 30, 1995
- - Weatherford Enterra, Inc. and Subsidiaries Notes to Unaudited Pro Forma
Consolidated Financial Statements
<PAGE>
(c) EXHIBITS.
2.1 Agreement dated as of September 20, 1995, among Zapata Corporation,
Energy Industries, Inc., Zapata Energy Industries, L.P., Enterra
Corporation and Enterra Compression Company (incorporated by reference
to Exhibit 2 to the Enterra Corporation Current Report on Form 8-K
dated October 2, 1995 (Commission File No. 1-8153)).
* 27.1 Article 5 Financial Data Schedule.
** 99.1 Joint Press Release of Weatherford Enterra, Inc. and Zapata
Corporation dated December 15, 1995.
* 99.2 Zapata Energy Industries Combined Financial Statements as of September
30, 1995.
* 99.3 Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma
Consolidated Financial Statements as of September 30, 1995.
_______________
* Filed herein.
** Previously filed.
<PAGE>
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 ENTERRA, INC.
Dated: February 27, 1996 /s/ NORMAN W. NOLEN
--------------------------------------
Norman W. Nolen
Senior Vice President, Chief Financial
Officer and Treasurer
<PAGE>
EXHIBIT INDEX
2.1 Agreement dated as of September 20, 1995, among Zapata Corporation,
Energy Industries, Inc., Zapata Energy Industries, L.P., Enterra
Corporation and Enterra Compression Company (incorporated by reference
to Exhibit 2 to Enterra Corporation's Current Report on Form 8-K dated
October 2, 1995 (Commission File No. 1-8153)).
* 27.1 Article 5 Financial Data Schedule.
**99.1 Joint Press Release of Weatherford Enterra, Inc. and Zapata
Corporation dated December 15, 1995.
* 99.2 Zapata Energy Industries Combined Financial Statements as of September
30, 1995.
* 99.3 Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma
Consolidated Financial Statements as of September 30, 1995.
_______________
* Filed herein.
** Previously filed.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ZAPATA
ENERGY INDUSTRIES COMBINED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 2763
<SECURITIES> 0
<RECEIVABLES> 7696
<ALLOWANCES> (10)
<INVENTORY> 21588
<CURRENT-ASSETS> 32061
<PP&E> 70,663
<DEPRECIATION> (9101)
<TOTAL-ASSETS> 113911
<CURRENT-LIABILITIES> 6309
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 25533
<TOTAL-LIABILITY-AND-EQUITY> 113911
<SALES> 66635
<TOTAL-REVENUES> 66635
<CGS> 50275
<TOTAL-COSTS> 60682
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3420
<INCOME-PRETAX> 3349
<INCOME-TAX> 1400
<INCOME-CONTINUING> 1949
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1949
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
ZAPATA ENERGY INDUSTRIES
COMBINED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1995
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Weatherford Enterra, Inc.:
We have audited the accompanying combined balance sheet of Zapata Energy
Industries as of September 30, 1995, and the related combined statements of
income and changes in reinvested earnings and cash flows for the year then
ended. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
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 combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Zapata
Energy Industries as of September 30, 1995, and the combined results of their
operations and their combined cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
- ------------------------------------
Houston, Texas
February 23, 1996
<PAGE>
ZAPATA ENERGY INDUSTRIES
COMBINED BALANCE SHEET
SEPTEMBER 30, 1995
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . . . . . . $ 2,763
Receivables:
Trade, net of allowance of $10 . . . . . . . . . . 6,532
Sales-type lease . . . . . . . . . . . . . . . . . 1,154
Inventories, net of allowance of $310. . . . . . . . 21,588
Prepayments and other. . . . . . . . . . . . . . . . 24
--------
Total current assets . . . . . . . . . . . . . . . 32,061
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land . . . . . . . . . . . . . . . . . . . . . . . . 1,024
Buildings and improvements . . . . . . . . . . . . . 3,279
Rental and service equipment . . . . . . . . . . . . 63,679
Machinery and other equipment. . . . . . . . . . . . 2,681
--------
70,663
Less--Accumulated depreciation . . . . . . . . . . . 9,101
--------
61,562
--------
SALES-TYPE LEASE RECEIVABLES, NET OF CURRENT . . . . . 1,721
GOODWILL, NET. . . . . . . . . . . . . . . . . . . . . 18,402
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . 165
--------
Total assets . . . . . . . . . . . . . . . . . . . . $113,911
--------
--------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt. . . . . . . . . . $ 743
Accounts payable . . . . . . . . . . . . . . . . . . 2,376
Accrued liabilities. . . . . . . . . . . . . . . . . 3,190
--------
Total current liabilities. . . . . . . . . . . . . 6,309
LONG-TERM DEBT, NET OF CURRENT . . . . . . . . . . . . 27,116
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 6,054
DUE TO ZAPATA CORPORATION. . . . . . . . . . . . . . . 48,896
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDER'S EQUITY:
Common stock, $1.00 par; 3,000 shares authorized,
issued and outstanding. . . . . . . . . . . . . . . 3
Capital in excess of par value . . . . . . . . . . . 20,787
Reinvested earnings. . . . . . . . . . . . . . . . . 4,746
--------
25,536
--------
Total liabilities and stockholder's equity . . . . $113,911
--------
--------
</TABLE>
The accompanying notes are an integral part of
this combined financial statement.
2
<PAGE>
ZAPATA ENERGY INDUSTRIES
COMBINED STATEMENT OF INCOME AND CHANGES IN REINVESTED EARNINGS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
REVENUES . . . . . . . . . . . . . . . . . . . . . . $ 66,635
--------
EXPENSES:
Operating . . . . . . . . . . . . . . . . . . . . 50,275
Depreciation and amortization . . . . . . . . . . 5,741
Selling, general and administrative . . . . . . . 4,666
--------
Total operating costs and expenses. . . . . . . 60,682
--------
OPERATING INCOME . . . . . . . . . . . . . . . . . . 5,953
Interest expense. . . . . . . . . . . . . . . . . (3,420)
Interest income . . . . . . . . . . . . . . . . . 306
Other income. . . . . . . . . . . . . . . . . . . 510
--------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . 3,349
Provision for income taxes . . . . . . . . . . . . . (1,400)
--------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 1,949
--------
--------
REINVESTED EARNINGS, September 30, 1994. . . . . . . 2,797
--------
REINVESTED EARNINGS, September 30, 1995. . . . . . . $ 4,746
--------
--------
</TABLE>
The accompanying notes are an integral part of
this combined financial statement.
3
<PAGE>
ZAPATA ENERGY INDUSTRIES
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $ 1,949
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and amortization. . . . . . . . . . . . . . 5,741
Deferred income tax. . . . . . . . . . . . . . . . . . . 4,632
Gain on sale of heat exchanger division. . . . . . . . . (510)
Changes in assets and liabilities:
Decrease in trade receivables, net . . . . . . . . . . 770
Decrease in sales-type lease receivables . . . . . . . 1,212
Increase in inventories. . . . . . . . . . . . . . . . (4,474)
Decrease in prepayments and other. . . . . . . . . . . 360
Decrease in accounts payable and accrued liabilities . (1,294)
--------
CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . . . . . . 8,386
--------
CASH USED IN INVESTING ACTIVITIES:
Purchases of property, plant and equipment . . . . . . . . (12,697)
Acquisitions of equipment. . . . . . . . . . . . . . . . . (3,425)
Proceeds from sale of equipment. . . . . . . . . . . . . . 1,473
Proceeds from sale of heat exchanger division. . . . . . . 1,470
--------
CASH USED IN INVESTING ACTIVITIES. . . . . . . . . . . . . (13,179)
--------
CASH PROVIDED BY FINANCING ACTIVITIES:
Payments to Zapata Corporation, net. . . . . . . . . . . . (6,782)
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . 13,898
Repayment of borrowings. . . . . . . . . . . . . . . . . . (1,238)
--------
CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . . 5,878
--------
INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . 1,085
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . . . 1,678
--------
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . $ 2,763
--------
--------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 1,634
Income taxes . . . . . . . . . . . . . . . . . . . . . . 304
</TABLE>
The accompanying notes are an integral part of
this combined financial statement.
4
<PAGE>
ZAPATA ENERGY INDUSTRIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(1) BUSINESS AND ORGANIZATION---
The accompanying combined financial statements of Zapata Energy Industries
(Energy Industries or the Company) include the accounts of Zapata Rentals, Inc.,
Zapata Compression Investments, Inc. and Energy Industries, Inc., three wholly-
owned subsidiaries of Zapata Corporation (Zapata).
The Company is engaged in the business of renting, fabricating, selling,
and servicing natural gas compressor packages used in the oil and gas
industry. Rental service, equipment sales and service revenues accounted for
27%, 62% and 11%, respectively, of total revenues for the year ended
September 30, 1995. The Company is headquarted in Corpus Christi, Texas and
maintains a network of fifteen sales and service offices in the surrounding
four state area. Compression equipment is utilized in the production and
transportation of natural gas. Factors influencing compressor rental
operations include the number and age of producing gas wells, the ownership
of these properties and natural gas prices.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ---
PRINCIPLES OF COMBINATION. The financial statements are presented on a
combined basis because their business activities are performed as one entity.
All significant intercompany accounts and transactions have been eliminated in
combination.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.
INVENTORIES. Inventories are valued at the lower of cost or market. Cost
is determined using the moving average method for parts inventories. The cost
of major component inventories is determined by using specific identification.
Inventories at September 30, 1995 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Compressor equipment and components . . . . . . $ 7,768
Parts and materials . . . . . . . . . . . . . . 8,135
Work in process . . . . . . . . . . . . . . . . 5,995
Allowance . . . . . . . . . . . . . . . . . . . (310)
--------
$ 21,588
--------
--------
</TABLE>
Work in process includes the costs of materials, labor and overhead.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is
depreciated on a straight-line basis over the estimated useful lives of the
assets. Estimated useful lives of assets are as follows:
5
<PAGE>
ZAPATA ENERGY INDUSTRIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
USEFUL LIVES
(YEARS)
------------
<S> <C>
Rental and service equipment. . . . . . . . . . . . . 15
Building and improvements . . . . . . . . . . . . . . 20
Machinery and other equipment . . . . . . . . . . . . 5 - 7
</TABLE>
Depreciation expense for the year ended September 30, 1995 was $5,136,000.
Expenditures for major additions and improvements are capitalized while
minor replacements, maintenance and repairs are charged to expense as incurred.
When property is retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the related accounts, and any resulting gain or
loss is included in the combined statement of income.
GOODWILL. Goodwill represents the excess of the aggregate price paid by
the Company in acquisitions accounted for as purchases over the fair market
value of the net assets acquired. Goodwill is being amortized on a straight-
line basis over 40 years. Management continually evaluates whether events or
circumstances have occurred that indicate the remaining estimated useful life of
goodwill may warrant revision or that the remaining balance of goodwill may not
be recoverable. Goodwill amortization expense totaled $483,000 during 1995.
Accumulated amortization at September 30, 1995 was $926,000.
INCOME TAXES. The Company is included in Zapata's consolidated U.S.
federal income tax return; however, its income tax effects are reflected on a
separate company basis for financial reporting purposes. The Company applies the
liability method of accounting for income taxes. Accordingly, deferred tax
assets and liabilities are determined based on the estimated future tax effects
of differences between the financial statement and tax bases of assets and
liabilities given the provisions of enacted tax laws.
EQUIPMENT UNDER OPERATING LEASES AND HELD FOR LEASE. The Company leases
certain equipment to customers under agreements that contain an option to
purchase the equipment at any time. The option amount is computed based on the
original purchase price, less payments received, plus interest and insurance
covering the period from the inception of the lease to the date the option is
exercised. The lease payments are generally computed to pay-out the original
purchase price plus interest over approximately 36 months. Leases with
noncancelable lease terms greater than 18 months are considered sales-type
leases because by the end of the original lease term, the option price is
expected to be lower than the equipment's fair market value. Equipment leased
under agreements with noncancelable lease terms of less than 18 months and those
which do not include a purchase option are accounted for as operating leases and
included in the rental fleet in property, plant and equipment. Rental inventory
is depreciated over the estimated life based on a proportionate amount of rental
income receipts. Rental inventory depreciation expense totalled $122,000 in
1995.
CONCENTRATION OF CREDIT RISK. The Company sells, leases, and rents gas
compressors to customers in the oil and gas industry. The Company generally
does not require collateral. However, cash prepayments and security deposits
are required for accounts with indicated credit risks. The Company also bills
for progress payments from time to time on large dollar, long-term construction
projects. The Company maintains reserves for potential losses, and credit
losses have been within management's expectations.
At September 30, 1995, the Company had cash deposits concentrated primarily
in one bank.
6
<PAGE>
ZAPATA ENERGY INDUSTRIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
REVENUES. Revenues are recognized as rental equipment is provided, as
services are performed, or as parts or equipment deliveries are made. In
some cases, revenue is recognized on large compressor equipment construction
when the project is completed, but before the equipment is actually shipped.
This practice is common when a customer agrees to take delivery and pay an
invoice for the equipment, but is not yet ready to take possession of the
equipment. Most rental contracts have an initial contract term of six to
twelve months and then continue on a month-to-month basis. Lease charges are
billed at the end of each month for the following month. Energy Industries
provides a limited warranty on certain equipment and services. The warranty
period varies depending on the equipment sold or service performed. A
liability for performance under warranty obligations is accrued based upon
the nature of the warranty and historical experience.
(3) ACQUISITIONS AND DISPOSITIONS ---
In January 1995, Energy Industries sold its heat exchanger division,
located in Garland, Texas, resulting in a net gain of $510,000 which is included
in the combined statement of income as other income. The Company received
$1,470,000 in cash, and entered into an alliance agreement structured to provide
Energy Industries with the heat exchangers necessary to perform its fabrication
operations. As part of the consideration of the sale, Energy Industries
received a $725,000 credit to be used against future purchases over the next
five years at a rate of 10% off of normal invoice price. The Company did not
record a gain associated with the $725,000 credit because management believed
that ultimate realization of the benefit was uncertain.
During February 1995, the company acquired the rental fleet of J-Brex
Company, located in Amarillo, Texas, for $725,000. Fourteen active rental units
were acquired in this transaction, and the Company entered into a three-year
rental alliance agreement which affords the Company the right of first refusal
on these and any future compressors J-Brex may need.
In April 1995, Energy Industries acquired the forty-four unit rental fleet
of Mountain Front Pipeline Company, Inc. located in Oklahoma and Arkansas.
Energy Industries purchased these units for $2,700,000, and entered into a
rental alliance agreement with Mountain Front, which affords the Company
exclusive rights for these and any future compressors for a period of up to
30 months.
(4) ACCRUED LIABILITIES ---
Accrued liabilities as of September 30, 1995 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
State income taxes. . . . . . . . . . . . . . . . $ 367
Sales taxes . . . . . . . . . . . . . . . . . . . 359
Insurance . . . . . . . . . . . . . . . . . . . . 280
Maintenance . . . . . . . . . . . . . . . . . . . 280
Ad valorem taxes. . . . . . . . . . . . . . . . . 374
Accrued warranty. . . . . . . . . . . . . . . . . 302
Other accrued liabilities . . . . . . . . . . . . 1,228
-------
$ 3,190
-------
-------
</TABLE>
7
<PAGE>
ZAPATA ENERGY INDUSTRIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(5) LONG-TERM DEBT ---
Long-term debt at September 30, 1995 consists of the following (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Texas Commerce Bank revolving-term credit facility,
interest at prime or Eurodollar rates, 7.375% at
September 30, 1995, due in quarterly installments
beginning in 1997 through 1999, collateralized by
certain compression assets. . . . . . . . . . . . . . . $25,800
Other debt, interest ranging from 8.9% - 9.6% . . . . . 2,059
-------
Total debt . . . . . . . . . . . . . . . . . . . . . 27,859
Less current maturities . . . . . . . . . . . . . . . . 743
-------
Long-term debt . . . . . . . . . . . . . . . . . . . $27,116
-------
-------
</TABLE>
Interest expense on long-term debt totalled $1,720,000 in 1995.
At September 30, 1994, a line of credit was opened with Texas Commerce
Bank. This credit agreement provides the Company with a $30,000,000
revolving credit facility that converts after two years to a three-year
amortizing term loan. The debt bears interest at a variable rate, adjusted
periodically based on prime or Eurodollar interest rate.
The estimated fair value of total long term debt at September 30, 1995
approximates book value.
Maturities of the Company's long-term debt at September 30, 1995 are as
follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1996. . . . . . . . . . . . . . . . . . . . . . .$ 743
1997. . . . . . . . . . . . . . . . . . . . . . . 8,990
1998. . . . . . . . . . . . . . . . . . . . . . . 9,153
1999. . . . . . . . . . . . . . . . . . . . . . . 8,928
2000. . . . . . . . . . . . . . . . . . . . . . . 45
-------
$27,859
-------
-------
</TABLE>
(6) INCOME TAXES ---
The components of the combined income tax provision are as follows (in
thousands):
8
<PAGE>
ZAPATA ENERGY INDUSTRIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
Income tax provision:
Current:
State. . . . . . . . . . . . . . . . . . . . $ 250
U.S. . . . . . . . . . . . . . . . . . . . . (3,482)
Deferred:
U.S. . . . . . . . . . . . . . . . . . . . . 4,632
-------
$ 1,400
-------
-------
</TABLE>
The combined provision for income taxes differs from the provision
computed at the statutory U.S. federal income tax rate of 34% in 1995 for
the following reasons (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Tax provision at U.S. statutory rate. . . . . . . $ 1,139
State income taxes. . . . . . . . . . . . . . . . 250
Other . . . . . . . . . . . . . . . . . . . . . . 11
-------
$ 1,400
-------
-------
</TABLE>
The tax effects of significant temporary differences giving rise to
deferred tax assets (liabilities) are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Financial reserves and accruals not yet
deductible . . . . . . . . . . . . . . . . . . $ 514
-------
Deferred tax liabilities:
Property, plant and equipment . . . . . . . . . $(5,358)
Other . . . . . . . . . . . . . . . . . . . . . (1,138)
-------
(6,496)
-------
Net deferred tax liability. . . . . . . . . . . $(5,982)
-------
-------
</TABLE>
(7) PROFIT SHARING PLAN ---
All qualified employees of the Company are covered under the Energy
Industries, Inc. Profit Sharing Plan. The Company matches an employee's
voluntary contribution on a dollar-for-dollar basis, up to 2% of the
employee's gross payroll. The Company can also elect to make an annual
contribution to the plan based on profits. These contributions are allocated
to the participants based on gross payroll. Contributions of $131,000 were
made under this discretionary profit sharing feature of the plan for the year
ended September 30, 1995.
(8) COMMITMENTS AND CONTINGENCIES ---
SALES-TYPE LEASE RECEIVABLES. Energy Industries provides a capital
lease financing option to its customers. Future minimum lease payments
receivable resulting from the sale of compression packages under sales-type
leases are due as follows (in thousands):
9
<PAGE>
ZAPATA ENERGY INDUSTRIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
1996 . . . . . . . . . . . . . . . . . . $ 1,154
1997 . . . . . . . . . . . . . . . . . . 699
1998 . . . . . . . . . . . . . . . . . . 647
1999 . . . . . . . . . . . . . . . . . . 358
2000 . . . . . . . . . . . . . . . . . . 17
--------
$ 2,875
--------
--------
</TABLE>
Energy Industries periodically sells a portion of its lease receivables
to third party factoring companies. Certain of these receivables are sold
with partial recourse to the Company. At September 30, 1995, the total
amount of recourse to the Company on the unpaid balance of all previously
sold receivables was $1,685,000. During fiscal 1995, the Company sold a
total of $92,000 of these receivables. To date, the Company has not
experienced any significant recourse losses.
OPERATING LEASES RECEIVABLE. The Company maintains a fleet of natural gas
compressor packages for rental under operating leases. At September 30, 1995,
the net book value of such property was $55,826,000. Future minimum lease
payments receivable under remaining noncancelable operating leases as of
September 30, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1996 . . . . . . . . . . . . . . . . . . $ 5,554
1997 . . . . . . . . . . . . . . . . . . 2,514
1998 . . . . . . . . . . . . . . . . . . 806
--------
$ 8,874
--------
--------
</TABLE>
OPERATING LEASES PAYABLE. The Company leases certain buildings and
service equipment under noncancelable operating leases. Aggregate minimum
rental commitments under noncancelable operating leases with lease terms in
excess of one year as of September 30, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1996 . . . . . . . . . . . . . . . . . $ 240
1997 . . . . . . . . . . . . . . . . . 273
1998 . . . . . . . . . . . . . . . . . 215
1999 . . . . . . . . . . . . . . . . . 78
------
$ 806
------
------
</TABLE>
Rental expenses for operating leases were $755,000 for the year ended
September 30, 1995.
CLAIMS AND LITIGATION. The Company is defending various claims and
litigation arising in the normal course of business. In the opinion of
management, uninsured losses, if any, resulting from these matters will not have
a material adverse effect on the Company's results of operations or financial
position.
LONG-TERM SUPPLY AND DISTRIBUTION AGREEMENTS. The Company has commitments
under two long-term supply and distribution agreements as follows:
Energy Industries and Atlas Copco Airpower N.V. (Atlas Copco), a Belgian
corporation, entered into the following three agreements: Know-How license
agreement, Screw Compressor Development and Distribution agreement, and OEM
agreement (a supply agreement). Under such agreements, Atlas Copco
10
<PAGE>
ZAPATA ENERGY INDUSTRIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
represents Energy Industries in countries and markets where the Company does
not have sales contracts or convenient access. Atlas Copco receives a
commission on sales that Energy Industries makes internationally, whether
they made the initial sales contact or not. The contract specifically
excludes sales to Canada and Mexico. The initial term of the contract was in
effect until July 15, 1995 and renews automatically for successive one year
terms unless terminated by one of the parties in advance. International
sales, excluding Canada and Mexico, were $992,345 and the Company paid Atlas
Copco $177,607 under such agreements for the year ended September 30, 1995.
Energy Industries is under contract with Energy Industries LTD (EIL), a
Canadian corporation, pursuant to which Energy Industries is required to
supply EIL with proprietary compressor components used in the fabrication of
gas compressor packages. Also, according to this agreement, EIL cannot buy
similar components from other manufacturers. The companies also are bound
by non-compete agreements in each other's respective country. This agreement
remains in effect through November 1996, after which time Energy Industries
will be obligated to sell compressor components to EIL until 2002, but not on
an exclusive basis in Canada. In addition, after 1996 either company may
compete in the other's country for sales of new compressor packages or any
other product or services. Sales to EIL pursuant to the agreement were
$4,685,333 for the year ended September 30, 1995.
(9) RELATED PARTY TRANSACTIONS ---
Energy Industries purchases Caterpillar engines and parts from Holt
Company of Texas (Holt), a corporation owned by the CEO of Energy Industries,
a major stockholder and director of Zapata. During 1995, Energy
Industries purchased $10,415,000 of parts and engines from Holt. At
September 30, 1995, Energy Industries owed Holt $326,000 related to these
purchases.
The Company's interest expense includes an allocation of interest
expense from Zapata totaling $1,700,000 for the year ended September 30,
1995. Interest expense of Zapata that was not directly attributable to or
related to other operations of Zapata was allocated to the Company based on a
ratio of the Company's net assets to the sum of total net assets of Zapata
plus general debt of Zapata. Additionally, Zapata performs certain
administrative functions for Energy Industries including insurance policy
placement, and income tax and legal support. These costs are charged to Energy
Industries based upon costs incurred in support of these activities.
(10) SUBSEQUENT EVENTS---
On December 15, 1995, substantially all of the assets of Energy
Industries were purchased by Weatherford Enterra, Inc. for a purchase price
of approximately $130,000,000, subject to adjustment, and the assumption of
certain current liabilities. Zapata used a portion of the proceeds from the
sale to repay all amounts outstanding under the Company's $30,000,000
revolving credit facility.
11
<PAGE>
EXHIBIT 99.3
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements are
based upon (i) the unaudited supplemental condensed consolidated financial
statements of Weatherford Enterra, Inc. and subsidiaries and (ii) the
unaudited historical combined financial statements of Zapata Energy
Industries as of and for the nine month period ended September 30, 1995. The
Unaudited Pro Forma Consolidated Balance Sheet was prepared assuming that the
Zapata Energy Industries acquisition was consummated as of September 30,
1995. The Unaudited Pro Forma Consolidated Statement of Income was prepared
assuming that the Zapata Energy Industries acquisition was consummated as of
January 1, 1995. The Unaudited Pro Forma Consolidated Financial Statements
have been prepared based upon assumptions deemed appropriate by Weatherford
Enterra, Inc. and may not be indicative of actual results.
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ZAPATA
WEATHERFORD ENERGY
ENTERRA, INC. INDUSTRIES ADJUSTMENTS(1) PRO FORMA
------------- ---------- -------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,453 $ 2,763 $(15,000) $ 19,216
Receivables, net 239,082 7,686 - 246,768
Inventories, net 150,591 21,588 - 172,179
Other current assets 33,993 24 - 34,017
---------- -------- ------- ---------
Total current assets 455,119 32,061 (15,000) 472,180
Property, plant and equipment, net 456,100 61,562 - 517,662
Goodwill, net 212,627 18,402 26,655 257,684
Other assets 23,161 1,886 - 25,047
---------- -------- ------- ----------
Total assets $1,147,007 $113,911 $11,655 $1,272,573
---------- -------- ------- ----------
---------- -------- ------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion
of long-term debt $ 26,058 $ 743 $ (743) $ 26,058
Accounts payable 47,597 2,376 - 49,973
Accrued liabilities 106,889 3,190 - 110,079
---------- -------- ------- ----------
Total current liabilities 180,544 6,309 (743) 186,110
Long-term debt 171,195 27,116 120,000 291,195
(27,116)
Deferred tax and other long-term
liabilities 29,021 54,950 (54,950) 29,021
Stockholders' equity 766,247 25,536 (25,536) 766,247
---------- -------- ------- ----------
Total liabilities and stockholders' equity $1,147,007 $113,911 $11,655 $1,272,573
---------- -------- ------- ----------
---------- -------- ------- ----------
</TABLE>
The accompanying notes are an integral part of
the unaudited pro forma financial statements.
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ZAPATA
WEATHERFORD ENERGY
ENTERRA, INC. INDUSTRIES ADJUSTMENTS PRO FORMA
------------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $644,199 $48,472 - $692,671
-------- ------- ------- --------
Costs and expenses:
Cost of sales and services 400,156 36,859 (3,561)(2) 433,454
Selling, general and administrative
expenses 114,977 3,248 (2,940)(2) 115,285
Depreciation and amortization 68,717 4,335 950 (3) 74,002
Other (income) expense, net (8,336) (510) - (8,846)
Unusual charges 28,297 - - 28,297
-------- ------- ------- --------
Total costs and expenses 603,811 43,932 (5,551) 642,192
-------- ------- ------- --------
Operating income 40,388 4,540 5,551 50,479
Interest, net 11,358 2,426 3,644 (4) 17,428
-------- ------- ------- --------
Income before income taxes and
minority interests 29,030 2,114 1,907 33,051
Income taxes 4,373 824 583 (5) 5,780
-------- ------- ------- --------
Income before minority interests 24,657 1,290 1,324 27,271
Minority interests (215) - - (215)
-------- ------- ------- --------
Net income $ 24,442 $1,290 $1,324 $27,056
-------- ------- ------- --------
-------- ------- ------- --------
Weighted average common and
common equivalent shares outstanding 50,804 50,804
-------- --------
-------- --------
Income per common and
common equivalent share $0.48 $0.53
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma financial statements.
<PAGE>
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. To record the expenditure of cash and borrowings used to finance the
Zapata Energy Industries acquisition, to reflect the allocation of the
related purchase price and to eliminate all liabilities and equity of Zapata
Energy Industries not acquired by Weatherford Enterra, Inc.
2. To record certain estimated consolidated cost savings and operational
efficiencies associated with the Zapata Energy Industries acquisition,
primarily resulting from the combination of certain locations and the
elimination of duplicate corporate functions.
3. To record additional depreciation expense and amortization of goodwill
resulting from the allocation of the purchase price of Zapata Energy
Industries.
4. To record additional interest expense on debt incurred in connection with
the Zapata Energy Industries acquisition.
5. To record additional income tax expense on the effect of the adjustments
discussed in Notes 2, 3 and 4 above.
