<PAGE> 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): MAY 27, 1998
EVI WEATHERFORD, 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.)
5 POST OAK PARK, SUITE 1760,
HOUSTON, TEXAS 77027-3415
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 297-8400
EVI, INC.
(Former name or former address, if changed since last report)
================================================================================
Page 1
Exhibit Index Appears on Page 5
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 27, 1998, EVI Weatherford, Inc., a Delaware corporation and
formerly known as EVI, Inc. (the "Company"), completed the merger (the "Merger")
of Weatherford Enterra, Inc., a Delaware corporation ("Weatherford"), with and
into the Company pursuant to an Agreement and Plan of Merger dated as of March
4, 1998, as amended, by and between the Company and Weatherford. Approximately
49.9 million shares of the Company's common stock, $1.00 par value (the "Common
Stock"), will be issued to the prior stockholders of Weatherford as
consideration for the Merger and an additional 1.4 million shares of Common
Stock will be reserved for issuance for the holders of outstanding Weatherford
stock-based awards. The principle followed in fixing the exchange ratio in the
Merger was based on negotiations between the parties.
Information relating to any material relationships existing between
the Company and Weatherford and any of their respective officers, directors or
affiliates is incorporated herein by reference from pages 32-33, 45, 49-50,
52-57 and 73-82 of the Company's Joint Proxy Statement/Prospectus contained
within the Company's Registration Statement on Form S-4, as amended (Reg. No.
333- 49527), and are filed herewith as Exhibit 99.1 and incorporated herein by
reference.
A copy of the press release announcing the closing of the Merger is
filed as Exhibit 99.2 and is hereby incorporated herein by reference.
ITEM 5. OTHER EVENTS.
On May 27, 1997, and in connection with the Merger, the name of the
Company was changed from EVI, Inc. to EVI Weatherford, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The financial statements of Weatherford for the periods specified in
Rule 3-05(b) of Regulation S-X are filed herewith as Exhibits 99.3 and 99.4 and
are incorporated herein by reference.
(b) Pro Forma Financial Information.
The pro forma financial information required pursuant to Article 11 of
Regulation S-X are filed herewith as Exhibits 99.5 and 99.6 are incorporated
herein by reference.
-2-
<PAGE> 3
(c) Exhibits.
2.1 - Agreement and Plan of Merger dated as of March 4, 1998, by
and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.1 to Amendment
No. 1 to Form 8-K on Form 8-K/A, File 1-13086, filed March
9, 1998).
2.2 - Amendment No. 1 dated as of April 17, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998, by
and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form 8-K,
File 1-13086, filed April 21, 1998).
2.3 - Amendment No. 2 dated as of April 22, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998, as
amended, by and between EVI, Inc. and Weatherford Enterra,
Inc. (incorporated by reference to Exhibit No. 2.3 to Form
8-K, File 1-13086, filed April 23, 1998).
3.1 - Amended and Restated Certificate of Incorporation of the
Company.
3.2 - Amended and Restated By-Laws of the Company.
4.1 - First Supplemental Indenture dated and effective as of
May 27, 1998, by and among EVI Weatherford, Inc., the
successor by merger to Weatherford Enterra, Inc., and Bank
of Montreal Trust Company, as Trustee.
23.1 - Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford Enterra, Inc.
23.2 - Consent of Arthur Andersen LLP, with respect to the
financial statements of EVI Weatherford, Inc.
99.1 - Information from pages 32-33, 45, 49-50, 52-57 and 73-82 of
the Company's Registration Statement on Form S-4, as
amended (Reg. No. 333-49527).
99.2 - Press Release of the Company dated May 27, 1997, announcing
the closing of the Merger.
99.3 - Consolidated Financial Statements of Weatherford Enterra,
Inc. as of December 31, 1997 and 1996 and for each of the
three years in the period ended December 31, 1997.
99.4 - Consolidated Financial Statements of Weatherford Enterra,
Inc. for the quarterly period ended March 31, 1998.
99.5 - Pro forma information of the Company for the year ended
December 31, 1997.
99.6 - Pro forma information of the Company for the quarterly
period ended March 31, 1998.
-3-
<PAGE> 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.
EVI WEATHERFORD, INC.
(formerly known as EVI, Inc.)
Dated: June 2, 1998 /s/ Curtis W. Huff
--------------------------------------
Curtis W. Huff
Senior Vice President,
General Counsel and Secretary
-4-
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Exhibit
- ------ -------
<S> <C>
2.1 - Agreement and Plan of Merger dated as of March 4, 1998, by
and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.1 to Amendment
No. 1 to Form 8-K on Form 8-K/A, File 1-13086, filed March
9, 1998).
2.2 - Amendment No. 1 dated as of April 17, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998, by
and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form 8-K,
File 1-13086, filed April 21, 1998).
2.3 - Amendment No. 2 dated as of April 22, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998, as
amended, by and between EVI, Inc. and Weatherford Enterra,
Inc. (incorporated by reference to Exhibit No. 2.3 to Form
8-K, File 1-13086, filed April 23, 1998).
3.1 - Amended and Restated Certificate of Incorporation of the
Company.
3.2 - Amended and Restated By-Laws of the Company.
4.1 - First Supplemental Indenture dated and effective as of
May 27, 1998, by and among EVI Weatherford, Inc., the
successor by merger to Weatherford Enterra, Inc., and Bank
of Montreal Trust Company, as Trustee.
23.1 - Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford Enterra, Inc.
23.2 - Consent of Arthur Andersen LLP, with respect to the
financial statements of EVI Weatherford, Inc.
99.1 - Information from pages 32-33, 45, 49-50, 52-57 and
73-82 of the Company's Registration Statement on
Form S-4, as amended (Reg. No. 333-49527).
99.2 - Press Release of the Company dated May 27, 1997, announcing
the closing of the Merger.
99.3 - Consolidated Financial Statements of Weatherford Enterra,
Inc. as of December 31, 1997 and 1996 and for each of the
three years in the period ended December 31, 1997.
99.4 - Consolidated Financial Statements of Weatherford Enterra,
Inc. for the quarterly period ended March 31, 1998.
99.5 - Pro forma information of the Company for the year ended
December 31, 1997.
99.6 - Pro forma information of the Company for the quarterly
period ended March 31, 1998.
</TABLE>
-5-
<PAGE> 1
EXHIBIT 3.1
EVI WEATHERFORD, INC.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
1. The name of the Corporation is EVI Weatherford, Inc.
2. The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street in the City
of Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
4. The total number of shares of stock of all classes which the
Corporation has authority to issue is Two Hundred and Fifty-Three Million
(253,000,000) shares, of which Two Hundred and Fifty Million (250,000,000)
shares shall be Common Stock, with a par value of one dollar ($1.00) per share
("Common Stock"), and Three Million (3,000,000) shares shall be Preferred
Stock, with a par value of one dollar ($1.00) per share ("Preferred Stock").
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of each class of
stock are as follows:
PREFERRED STOCK
Preferred Stock may be issued from time to time by the Board
of Directors as shares of one or more series. Subject to the
provisions hereof and the limitations prescribed by law, the Board of
Directors is hereby vested with the authority and is expressly
authorized, prior to issuance, by adopting resolutions providing for
the issuance of, or providing for a change in the number of, shares of
any particular series and, if and to the extent from time to time
required by law, by filing a certificate pursuant to the General
Corporation Law (or other law hereafter in effect relating to the same
or substantially similar subject matter), to establish or change the
number of shares to be included in each such series and to fix the
designation and relative powers, preferences and rights and the
qualifications and limitations or restrictions thereof relating to the
shares of each such series. The vested authority of the Board of
Directors with respect to each series shall include, but not be
limited to, the determination of the following:
(a) the distinctive serial designation of such
series and the number of shares constituting such series
(provided that the aggregate number of shares constituting all
series of Preferred Stock shall not exceed Three Million
(3,000,000));
<PAGE> 2
(b) the annual dividend rate, if any, on shares
of such series and the preferences, if any, over any other
series (or of any other series over such series) with respect
to dividends, and whether dividends shall be cumulative and,
if so, from which date or dates;
(c) whether the shares of such series shall be
redeemable and, if so, the terms and conditions of such
redemption, including the date or dates upon and after which
such shares shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(d) the obligation, if any, of the Corporation to
purchase or redeem shares of such series pursuant to a sinking
fund or purchase fund and, if so, the terms of such
obligation;
(e) whether shares of such series shall be
convertible into, or exchangeable for, shares of stock of any
other class or classes or any stock of any series of the same
class or any other class or classes or any evidences of
indebtedness and, if so, the terms and conditions of such
conversion or exchange, including the price or prices or the
rate or rates of conversion or exchange and the terms of
adjustment, if any;
(f) whether the shares of such series shall have
voting rights, in addition to the voting rights provided by
law, and if so, the terms of such voting rights, including,
without limitation, whether such shares shall have the right
to vote with the Common Stock on issues on an equal, greater
or lesser basis;
(g) the rights of the shares of such series in
the event of a voluntary or involuntary liquidation,
dissolution, winding up or distribution of assets of the
Corporation;
(h) whether the shares of such series shall be
entitled to the benefit of conditions and restrictions upon
(i) the creation of indebtedness of the Corporation or any
subsidiary, (ii) the issuance of any additional stock
(including additional shares of such series or of any other
series) or (iii) the payment of dividends or the making of
other distributions on the purchase, redemption or other
acquisition by the Corporation or any subsidiary of any
outstanding stock of the Corporation; and
-2-
<PAGE> 3
(i) any other relative rights, powers,
preferences, qualifications, limitations or restrictions
thereof relating to any such series.
Except where otherwise set forth in the resolution or
resolutions adopted by the Board of Directors providing for the
issuance of any series of Preferred Stock, the number of shares
comprising such series may be increased or decreased (but not below
the number of shares then outstanding) from time to time by like
action of the Board of Directors. The shares of Preferred Stock of
any one series shall be identical with the other shares in such series
in all respects except as to the dates from and after which dividends
thereon shall cumulate, if cumulative.
Shares of any series of Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or
otherwise) or purchased by the Corporation, or which, if convertible
or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes shall have the status of
authorized and unissued shares of Preferred Stock and may be reissued
as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors
or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in the resolution or
resolutions adopted by the Board of Directors providing for the
issuance of any series of Preferred Stock and to any filing required
by law.
Subject to the rights of any outstanding shares of any series
of Preferred Stock, this Restated Certificate of Incorporation may be
amended from time to time in a manner that would solely modify or
change the relative powers, preferences and rights and the
qualifications and limitations or restrictions of any issued shares of
any series of Preferred Stock then outstanding with the only required
vote or consent for approval of such amendment being the affirmative
vote or consent of the holders of a majority of the outstanding shares
of the series of Preferred Stock so affected provided that the powers,
preferences and rights and the qualification and limitations or
restrictions of such series after giving effect to such amendment are
no greater than the powers, preferences and rights and the
qualifications and limitations or restrictions permitted to be fixed
and determined by the Board of Directors with respect to the
establishment of any new series of shares of Preferred Stock pursuant
to the authority vested in the Board of Directors by this Article 4.
Approval of any such amendment by the holders of the Common Stock
shall not be required and any such amendment shall be deemed not to
have affected the holders of the Common Stock adversely.
The number of authorized shares of Preferred Stock may be
increased or decreased by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote without the
separate vote of holders of Preferred Stock as a class.
-3-
<PAGE> 4
COMMON STOCK
Subject to all of the rights of the Preferred Stock, and
except as may be expressly provided with respect to the Preferred
Stock herein, by law or by the Board of Directors pursuant to this
Article 4:
(a) dividends may be declared and paid or set
apart for payment upon Common Stock out of any assets or funds
of the Corporation legally available for the payment of
dividends and may be payable in cash, stock or otherwise;
(b) the holders of Common Stock shall have the
exclusive right to vote for the election of directors and on
all other matters requiring stockholder action, each share
being entitled to one vote; and
(c) upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
net assets of the Corporation shall be distributed pro rata to
the holders of Common Stock in accordance with their
respective rights and interests to the exclusion of the
holders of the Preferred Stock.
5. The Corporation is to have perpetual existence.
6. In furtherance and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized:
To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose
and to abolish any such reserve in the manner in which it was created.
By a majority vote of the whole board, to designate one or
more committees. Any such committee, to the extent provided in the
resolution of the board of directors, or in the by-laws of the
Corporation, shall have and may exercise all the powers and authority
of the board of directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to
amending the certificate of incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of
directors as provided in Section 151(a) of the Delaware General
Corporation Law, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of
such shares for, shares of any other class or classes, or any other
series of the same or any other class or classes of stock of the
Corporation), adopting an
-4-
<PAGE> 5
agreement of merger or consolidation under Section 251 or 252 of the
Delaware General Corporation Law, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or
amending the bylaws of the Corporation; and, unless the resolution,
bylaws or certificate of incorporation expressly so provides, no such
committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership
and merger pursuant to Section 253 of the Delaware General Corporation
Law.
When and as authorized by the stockholders in accordance with
statute, to sell, lease or exchange all or substantially all of the
property and assets of the Corporation, including its good will and
its corporate franchises, upon such terms and conditions and for such
consideration, which may consist in whole or in part of money or
property including shares of stock in, and/or other securities of, any
other corporation or corporations, as its board of directors shall
deem expedient and for the best interest of the Corporation.
7. Elections of directors need not be by written ballot unless
the by-laws of the Corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the Corporation.
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
-5-
<PAGE> 6
8. All of the powers of the Corporation, insofar as the same may
be lawfully vested by this Restated Certificate of Incorporation in the Board
of Directors of the Corporation, are hereby conferred upon the Board of
Directors of the Corporation.
In furtherance and not in limitation of the foregoing provisions of
this Article 8, and for the purpose of the orderly management of the business
and the conduct of the affairs of the Corporation, the Board of Directors of
the Corporation shall have the power to adopt, amend or repeal from time to
time any provision of the by-laws of the Corporation (including, without
limitation, by-laws governing the conduct of, and the matters which may
properly be brought before, meetings of the stockholders and by-laws specifying
the manner and extent to which prior notice shall be given of the submission of
proposals to be submitted at any meeting of stockholders or of nominations of
elections of directors to be held at any such meeting) by the vote of a
majority of the entire Board of Directors, subject to the right of the
stockholders of the Corporation entitled to vote thereon to adopt, amend or
repeal by-laws of the Corporation. In addition to any requirements of law and
any other provision of this Restated Certificate of Incorporation or any
resolution or resolutions of the Board of Directors adopted pursuant to Article
4 of this Restated Certificate of Incorporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Restated Certificate of
Incorporation or any such resolution or resolutions), the affirmative vote of
the holders of 80% or more of the combined voting power of the then outstanding
shares of stock of all classes and series of stock the holders of which are
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to adopt, amend, alter or repeal any provision
of the by-laws.
9. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
10. To the fullest extent that the General Corporation Law of the
State of Delaware as it exists on the date hereof and as it may hereafter be
amended permits the limitation or elimination of the liability of directors, no
director of the Corporation shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
-6-
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
EVI WEATHERFORD, INC.
AMENDED AND RESTATED ON MAY 27, 1998
ARTICLE I
STOCKHOLDERS
1. Annual Meeting. The annual meeting of stockholders shall be
held on the second Friday in May in each year (or if that be a legal holiday in
the place where the meeting is to be held, on the next succeeding full business
day), at the principal office of the corporation at 11:00 o'clock A.M. unless a
different date, hour or place within or without the State of Delaware is fixed
by the Board of Directors or the President. The purposes for which the annual
meeting is to be held, in addition to those prescribed by law, by the
Certificate of Incorporation or by these By-Laws, may be specified by the Board
of Directors or the President.
2. Notice of Meetings. A written notice stating the place, date
and hour of all meetings of stockholders, and in the case of special meetings,
the purposes of the meeting shall be given by the Secretary (or other person
authorized by these By-Laws or by law) not less than ten nor more than sixty
days before the meeting to each stockholder entitled to vote thereat and to
each stockholder who, under the Certificate of Incorporation or under these
By-Laws is entitled to such notice, by delivering such notice to him or by
mailing it, postage prepaid, and addressed to such stockholder at his address
as it appears in the records of the corporation. Notice need not be given to a
stockholder if a written waiver of notice is executed before or after the
meeting by such stockholder, if communication with such stockholder is
unlawful, or if such stockholder attends the meeting in question, unless such
attendance was for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting was not
lawfully called or convened. If a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and place
are announced at the meeting at which the adjournment is taken, except that if
the adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
3. Quorum. The holders of a majority in interest of all stock
issued, outstanding and entitled to vote at a meeting shall constitute a
quorum. Any meeting may be adjourned from time to time by a majority of the
votes properly cast upon the question, whether or not a quorum is present.
4. Voting and Proxies. Stockholders shall have one vote for each
share of stock entitled to vote owned by them of record according to the books
of the corporation unless otherwise provided by law or by the Certificate of
Incorporation.
<PAGE> 2
Stockholders may vote either in person or by written proxy, but no proxy shall
be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. Proxies shall be filed with the Secretary of the
meeting, or of any adjournment thereof. Except as otherwise limited therein,
proxies shall entitle the persons authorized thereby to vote at any adjournment
of such meeting. A proxy purporting to be executed by or on behalf of a
stockholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
5. Action at Meeting. When a quorum is present, any matter
before the meeting shall be decided by vote of the holders of a majority of the
shares of stock voting on such matters except where a larger vote is required
by law, by the Certificate of Incorporation or by these By-Laws. Any election
by stockholders shall be determined by plurality of the votes cast, except
where a larger vote is required by law, by the Certificate of Incorporation or
by these By-Laws. No ballot shall be required for any election unless
requested by a stockholder entitled to vote in the election. The corporation
shall not directly or indirectly vote any share of its own stock; provided,
however, that the corporation may vote shares which it holds in a fiduciary
capacity to the extent permitted by law.
6. Action Without a Meeting. Any action required or permitted by
law to be taken at any annual or special meeting of stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
7. Stockholder Lists. The Secretary (or other person authorized
by these By-Laws or by law) shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
ARTICLE II
DIRECTORS
1. Powers. The business of the corporation shall be managed by a
Board of Directors consisting of ten members, which number may be increased or
decreased from time to time by the Board of Directors, who may exercise all the
powers of the corporation except as otherwise provided by law.
-2-
<PAGE> 3
2. Tenure. Except as otherwise provided by law, by the
Certificate of Incorporation or by these By-Laws, Directors shall hold office
until their successors are elected and qualified or until their earlier
resignation or removal. Any Director may resign by delivering his written
resignation to the corporation. Such resignation shall be effective upon
receipt unless it is specified to be effective at some other time or upon the
happening of some other event.
3. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by any vote or other concurrence of the remaining directors or by
vote of the stockholders.
4. Removal. A Director may be removed from office (a) with or
without cause by vote of the holders of the majority of the shares of stock
entitled to vote in the election of Directors or (b) to the extent permitted by
law, for cause by vote of the majority of the Directors then in office. A
Director may be removed for cause only after reasonable notice and opportunity
to be heard before the body proposing to remove him.
5. Meetings. Regular meetings of the Board of Directors may be
held without notice at such time, date and place as the Board of Directors may
from time to time determine. Special meetings of the Board of Directors may be
called, orally or in writing, by three or more Directors, designating the time,
date and place thereof. Directors may participate in meetings of the Board of
Directors by means of conference telephone or similar communications equipment
by means of which all Directors participating in the meeting can hear each
other, and participation in a meeting in accordance herewith shall constitute
presence in person at such meeting.
6. Notice of Meetings. Notice of the time, date and place of all
special meetings of the Board of Directors shall be given to each Director by
the Secretary, or Assistant Secretary, or in the case of the death, absence,
incapacity or refusal of such persons, by one of the Directors calling the
meeting. Notice shall be given to each Director in person or by telephone or
by telegram sent to his business or home address at least twenty-four hours in
advance of the meeting, or by written notice mailed to his business or home at
least forty-eight hours in advance of the meeting. Notice need not be given to
any Director if a written waiver of notice is executed by him before or after
the meeting, or if communication with such Director is unlawful. A notice or
waiver of notice of a meeting of the Board of Directors need not specify the
purposes of the meeting.
7. Quorum. At any meeting of the Board of Directors, a majority
of the Directors then in office shall constitute a quorum. Less than a quorum
may adjourn any meeting from time to time and the meeting may be held as
adjourned without further notice.
8. Action at Meeting. At any meeting of the Board of Directors
at which a quorum is present, a majority of the Directors present may take any
action on behalf of the Board of Directors, unless a larger number is required
by law, by the Certificate of Incorporation or by these By-Laws.
-3-
<PAGE> 4
9. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting
if all members of the Board of Directors may be taken without a meeting if all
members of the Board of Directors consent thereto in writing, and the writing
or writings are filed with the minutes of the Board of Directors. Such consent
shall be treated as a vote of the Board of Directors for all purposes.
10. Committees. The Board of Directors, by a majority vote of the
Directors then in office, may establish one or more committees, and may
delegate thereto some or all of its powers except those which by law, by the
Certificate of Incorporation, or by these By-Laws may not be delegated. Except
as the Board of Directors may otherwise determine, any such committee may make
rules for the conduct of its business, but in the absence of such rules its
business shall be conducted so far as possible in the same manner as is
provided in these By-Laws for the Board of Directors. All members of such
committees shall hold their committee offices at the pleasure of the Board of
Directors, and the Board may abolish any committee at any time. Each such
committee shall report its action to the Board of Directors who shall have
power to rescind any action of any committee without retroactive effect.
ARTICLE III
OFFICERS
1. Officers. The officers of the corporation shall be a Chairman
of the Board and Chief Executive Officer, a President, one or more Vice
Presidents, any one or more of which may be designated Executive Vice President
or Senior Vice President, a Secretary and a Treasurer. The Board of Directors
may appoint such other officers and agents, including Chief Financial Officer,
Controller, Assistant Vice Presidents, Assistant Secretaries, and Assistant
Treasurers, in each case as the Board of Directors shall deem necessary, who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined by the Board. Any two or more
offices may be held by the same person. No officer shall execute, acknowledge,
verify or countersign any instrument on behalf of the corporation in more than
one capacity, if such instrument is required by law, by these By-Laws or by any
act of the corporation to be executed, acknowledged, verified, or countersigned
by two or more officers. The Chairman of the Board shall be elected from among
the directors. With the foregoing exceptions, none of the other officers need
be a director, and none of the officers need be a stockholder of the
corporation.
2. Election and Term of Office. The officers of the corporation
shall be elected annually by the Board of Directors at its first regular
meeting held after the annual meeting of stockholders or as soon thereafter as
conveniently possible. Each officer shall hold office until his successor
shall have been chosen and shall have qualified or until his death or the
effective date of his resignation or removal, or until he shall cease to be a
director in the case of the Chairman.
3. Removal and Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed without cause by the
affirmative vote of a majority of the Board of Directors whenever, in its
judgment, the best interests of the corporation shall be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed. Any officer may resign at any time by giving written
notice to the corporation. Any such resignation shall take effect at the
-4-
<PAGE> 5
date of the receipt of such notice or at any later time specified therein, and
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
4. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors.
5. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors or pursuant to its
direction; and no officer shall be prevented from receiving such salary by
reason of his also being a director.
6. Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the corporation and, subject to the control of the
Board of Directors, shall in general supervise and control the business and
affairs of the corporation The Chairman shall preside at all meetings of the
Board of Directors or of the stockholders of the corporation. The Chairman
shall formulate and submit to the Board of Directors matters of general policy
for the corporation and shall perform such other duties as usually appertain to
the office or as may be prescribed by the Board of Directors. He shall have
the power to appoint and remove subordinate officers, agents and employees,
except those elected or appointed by the Board of Directors. The Chairman of
the Board shall keep the Board of Directors informed and shall consult with
them concerning the business of the corporation. He may sign with the
Secretary or any other officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of the corporation and any deeds,
bonds, mortgages, contracts, checks, notes, drafts, or other instruments that
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof has been expressly delegated by these By-Laws or
by the Board of Directors to some other officer or agent of the corporation, or
shall be required by law to be otherwise executed. He shall vote, or give a
proxy to any other officer of the corporation to vote, all shares of stock of
any other corporation standing in the name of the corporation and in general he
shall perform all other duties normally incident to the office of Chairman and
Chief Executive Officer and such other duties as may be prescribed by the
stockholders or the Board of Directors from time to time.
7. President. The President shall be the chief operating officer
of the corporation and, subject to the powers of the Chairman and Chief
Executive Officer and the control of the Board of Directors, shall in general
supervise and control the operations of the corporation. In the absence of the
Chairman of the Board, the President shall preside at all meetings of the Board
of Directors and of the stockholders. He may also preside at any such meeting
attended by the Chairman if he is so designated by the Chairman. He shall have
the power to appoint and remove subordinate officers, agents and employees,
except those elected or appointed by the Board of Directors or by the Chairman
and Chief Executive Officer. The President shall keep the Chairman and the
Board of Directors informed and shall consult with them concerning the
operations of the corporation. He may sign with the Secretary or any other
officer of the corporation thereunto authorized by the Board of Directors,
certificates for shares of the corporation and any deeds, bonds, mortgages,
contracts, checks, notes, drafts, or other instruments that the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof has been expressly delegated by these By-Laws or by the Board
of Directors to some other officer or agent of the corporation, or shall be
required by law to be otherwise executed. He
-5-
<PAGE> 6
shall vote, or give a proxy to any other officer of the corporation to vote,
all shares of stock of any other corporation standing in the name of the
corporation and in general he shall perform all other duties normally incident
to his office and such other duties as may be prescribed by the stockholders or
the Board of Directors from time to time.
8. Vice Presidents. In the absence of the Chairman and the
President, or in the event of their inability or refusal to act, the Executive
Vice President (or in the event there shall be no Vice President designated
Executive Vice President, any Vice President designated by the Board) shall
perform the duties and exercise the powers of the President. Any Vice
President may sign, with the Secretary or Assistant Secretary, certificates for
shares of the corporation. The Vice Presidents shall perform such other duties
as from time to time may be assigned to them by the Chairman, the President or
the Board of Directors.
9. Secretary. The Secretary shall (a) keep the minutes of the
meetings of the stockholders, the Board of Directors and committees of
directors; (b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law; (c) be custodian of the
corporate records and of the seal of the corporation, and see that the seal of
the corporation or a facsimile thereof is affixed to all certificates for
shares prior to the issue thereof and to all documents, the execution of which
on behalf of the corporation under its seal is duly authorized in accordance
with the provisions of these By-Laws; (d) keep or cause to be kept a register
of the post office address of each stockholder which shall be furnished by such
stockholder; (e) sign with the President, or an Executive Vice President or
Vice President, certificates for shares of the corporation, the issue of which
shall have been authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the corporation; and (g) in
general, perform all duties normally incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the Chairman,
the President or the Board of Directors.
10. Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall (a) have charge and custody of and be responsible for all funds and
securities of the corporation; (b) receive and give receipts for moneys due and
payable to the corporation from any source whatsoever and deposit all such
moneys in the name of the corporation in such banks, trust companies, or other
depositories as shall be selected in accordance with these By-Laws; (c)
prepare, or cause to be prepared, for submission at each regular meeting of the
Board of Directors, at each annual meeting of the stockholders, and at such
other times as may be required by the Board of Directors, the Chairman or the
President, a statement of financial condition of the corporation in such detail
as may be required; and (d) in general, perform all the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the Chairman, the President or the Board of Directors.
11. Assistant Secretary or Treasurer. The Assistant Secretaries
and Assistant Treasurers shall, in general, perform such duties as shall be
assigned to them by the Secretary or the Treasurer, respectively, or by the
Chairman, the President or the Board of Directors. The Assistant Secretaries
and Assistant Treasurers shall, in the absence of the Secretary or Treasurer,
respectively, perform all functions and duties which such absent officers may
delegate, but such delegation shall not relieve the
-6-
<PAGE> 7
absent officer from the responsibilities and liabilities of his office. The
Assistant Secretaries may sign, with the President or a Vice President,
certificates for shares of the corporation, the issue of which shall have been
authorized by a resolution of the Board of Directors. The Assistant Treasurers
shall respectively, if required by the Board of Directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board of Directors shall determine.
12. Other Powers and Duties. Subject to these By-Laws, each
officer of the corporation shall have in addition to the duties and powers
specifically set forth in these By-Laws, such duties and powers as are
customarily incident to his office, and such duties and powers as may be
designated from time to time by the Board of Directors.
ARTICLE IV
CAPITAL STOCK
1. Certificates of Stock. Each stockholder shall be entitled to
a certificate of the capital stock of the corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall
be signed by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary. Such
signatures may be facsimile if the certificate is signed by a transfer agent or
registrar, other than the corporation or its employee. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed on such certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the time of its issue. Every certificate for shares of stock
which are subject to any restriction on transfer and every certificate issued
when the corporation is authorized to issue more than one class or series of
stock shall contain such legend with respect thereto as is required by law.
2. Transfers. Subject to any restrictions on transfer, shares of
stock may be transferred on the books of the corporation by the surrender to
the corporation of its transfer agent of the certificate therefor properly
endorsed or accompanied by a written assignment or power of attorney properly
executed, with transfer stamps (if necessary) affixed, and with such proof of
the authenticity of signature as the corporation or its transfer agent may
reasonably require.
3. Record Holders. Except as may otherwise be required by law,
by the Certificate of Incorporation or by these By-Laws, the corporation shall
be entitled to treat the record holder of stock as shown on its books as the
owner of such stock for all purposes, including the payment of dividends and
the right to vote with respect thereto, regardless of any transfer, pledge or
other disposition of such stock, until the shares have been transferred on the
books of the corporation in accordance with the requirements of these By-Laws.
It shall be the duty of each stockholder to notify the corporation of
his post office address.
-7-
<PAGE> 8
4. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days prior to any other action.
In order that the corporation may determine the stockholders entitled to
receive the payment of any dividend or other distribution or any allotment of
any rights, the Board of Directors may fix in advance a record date and a
payment date therefor. In such case only stockholders of record on such record
date shall be so entitled notwithstanding any transfer of stock on the books of
the corporation after the record date.
5. Replacement of Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, a duplicate certificate
may be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
ARTICLE V
Indemnification
This corporation shall indemnify, to the fullest extent that the
General Corporation Law of the State of Delaware as it exists on the date
hereof and as it may hereafter be amended, (a) each of its present and former
officers and Directors, and (b) each of its present or former officers,
Directors, agents or employees who are serving or have served at the request of
this corporation as an officer, Director or partner (or in any similar
position) of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
any threatened, pending or completed action, suit or proceeding, whether by or
in the right of this corporation, by a third party or otherwise, to which such
person is made a party or threatened to be made a party by reason of such
office in this corporation or in another corporation, partnership, joint
venture, trust or other enterprise.
To the fullest extent that the General Corporation Law of the State of
Delaware as it exists on the date hereof and as it may hereafter be amended,
under general or specific authority granted by the Board of Directors, (a) this
corporation may furnish such indemnification to its agents and employees with
respect to their activities on behalf of this corporation; (b) this corporation
may furnish such indemnification to each present or former officer, Director,
employee or agent of a constituent corporation absorbed in a consolidation or
merger with this corporation and to each officer, Director, agent or employee
who is or was serving at the request of such constituent corporation as an
officer, Director, agent or employee of another corporation, partnership, joint
venture, trust or other enterprise; and (c) this corporation may purchase and
maintain indemnification insurance on behalf of any of the officers, Directors,
agents or employees whom it is required or permitted to indemnify as provided
in this Article.
-8-
<PAGE> 9
ARTICLE VI
MISCELLANEOUS PROVISIONS
1. Fiscal Year. Except as otherwise determined by the Board of
Directors, the fiscal year of the corporation shall end on December 31 of each
year.
2. Seal. The Board of Directors shall have power to adopt and
alter the seal of the corporation.
3. Execution of Instruments. All deeds, leases, transfers,
contracts, bonds, notes and other obligations to be entered into by the
corporation in the ordinary course of its business without Director action, may
be executed on behalf of the corporation by the President or the Treasurer.
4. Voting of Securities. Unless otherwise provided by the Board
of Directors, the President or Treasurer may waive notice of and act on behalf
of this corporation, or appoint another person or persons to act as proxy or
attorney in fact for this corporation with or without discretionary power
and/or power of substitution, at any meeting of stockholders or shareholders of
any other corporation or organization, any of whose securities are held by this
corporation.
5. Resident Agent. The Board of Directors may appoint a resident
agent upon whom legal process may be served in any action or proceeding against
the corporation.
6. Corporate Records. The original or attested copies of the
Certificate of Incorporation, By-Laws and records of all meetings of the
incorporators, stockholders and the Board of Directors and the stock and
transfer records, which shall contain the names of all stockholders, their
record addresses and the amount of stock held by each, shall be kept at the
principal office of the corporation, at the office of its counsel, or at an
office of its transfer agent.
7. Certification of Incorporation. All references in these
By-Laws to the Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the corporation, as amended and in effect from
time to time.
8. Amendments. These By-Laws may be amended or repealed or
additional By-Laws adopted by the stockholders or by the Board of Directors;
provided, that (a) the Board of Directors may not amend or repeal this Section
or any provision of these By-Laws which by law, by the Certificate of
Incorporation or by these By-Laws requires action by the stockholders, and (b)
any amendment or repeal of these By-Laws by the Board of Directors and any
By-Law adopted by the Board of Directors may be amended or repealed by the
stockholders.
-9-
<PAGE> 1
EXHIBIT 4.1
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this "Supplement"), dated and effective
as of May 27, 1998, is entered into by and among EVI Weatherford, Inc.,
(formerly known as EVI, Inc.) a Delaware corporation ("EVI Weatherford") and the
successor by merger to Weatherford Enterra, Inc., a Delaware corporation (the
"Company"), and Bank of Montreal Trust Company, as Trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Company and the Trustee have executed and delivered an
Indenture dated as of May 17, 1996, between the Company and the Trustee (the
"Indenture"), providing for the issuance by the Company from time to time of its
unsecured debentures, notes or other evidences of indebtedness (the
"Securities") to be issued in one or more series as provided in the Indenture;
WHEREAS, on May 27, 1998, the Company merged with and into EVI
Weatherford, and EVI Weatherford, as successor to the Company, is required under
Article Eight of the Indenture to assume the observance and performance by the
Company of every covenant contained in the Indenture to be observed and
performed by the Company;
WHEREAS, pursuant to Section 901(1) of the Indenture, EVI Weatherford
and the Trustee may enter into this Supplement without the consent of any
Holder; and
WHEREAS, the execution and delivery of this Supplement have been duly
authorized by a Board Resolution of the Board of Directors of EVI Weatherford;
NOW, THEREFORE, in consideration of the above premises, each of the
parties hereto agrees, for the benefit of the others and for the equal and
proportionate benefit of the Holders of the Securities, as follows:
ARTICLE ONE
ASSUMPTION
Section 101. For value received, EVI Weatherford hereby assumes the due
and punctual payment of the principal of and any premium and interest (including
all additional amounts, if any, payable pursuant to Section 1004 of the
Indenture) on all the Securities and the performance or observance of every
other covenant of the Indenture on the part of the Company to be performed or
observed.
Section 102. Effective as of the date hereof, EVI Weatherford shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture with the same effect as if EVI Weatherford had
been named as the Company therein, and the Company shall be relieved of all
obligations and covenants under the Indenture and the Securities and coupons.
ARTICLE TWO
MISCELLANEOUS
Section 201. Except as otherwise expressly provided or unless the
context otherwise requires, all terms used herein which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. Except as
supplemented hereby, the Indenture and the
<PAGE> 2
Securities are in all respects ratified and confirmed and all the terms and
provisions thereof shall remain in full force and effect.
Section 202. This Supplement shall be effective as of the date above
written.
Section 203. This Supplement shall be governed by and construed in
accordance with the laws of the jurisdiction which govern the Indenture and its
construction.
Section 204. This Supplement may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed as of the day and year first above written.
EVI WEATHERFORD, INC.
By: /s/ James G. Kiley
----------------------------
James G. Kiley
Chief Financial Officer,
Senior Vice President and
Treasurer
BANK OF MONTREAL TRUST COMPANY
By: /s/ Therese Gaballah
----------------------------
Name: Therese Gaballah
--------------------------
Title: Vice President
-------------------------
-3-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Current Report on Form 8-K of our report dated March 11, 1998
included in Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997 and into EVI Weatherford, Inc.'s (formerly
known as EVI, Inc.) previously filed Registration Statement File Nos. 33-31662,
33-56384, 33-56386, 33-65790, 33-64349, 333-13531, 333-24133, 333-39587, 333-
44345, 333-45207, 333-49527 and 333-53633.
ARTHUR ANDERSEN LLP
Houston, Texas
May 28, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Current Report on Form 8-K of our report dated January 29,
1998 included in EVI Weatherford, Inc.'s (formerly known as EVI, Inc.) Annual
Report on Form 10-K for the year ended December 31, 1997, as amended, and
into EVI Weatherford, Inc.'s previously filed Registration Statement File Nos.
33-31662, 33-56384, 33-56386, 33-65790, 33-64349, 333-13531, 333-24133,
333-39587, 333-44345, 333-45207, 333-49527 and 333-53633.
ARTHUR ANDERSEN LLP
Houston, Texas
May 28, 1998
<PAGE> 1
EXHIBIT 99.1
Certain Information from the Company's Registration Statement on
Form S-4, as amended (Reg. No. 333-49527)
In addition to the fees paid to Morgan Stanley, EVI also has agreed to pay
certain fees to Credit Suisse First Boston Corporation ("First Boston"),
Jefferies & Company, Inc. ("Jefferies") and Lehman Brothers for the assistance
rendered by such firms in connection with the Merger. Pursuant to agreements
with such firms, upon consummation of the Merger, EVI has agreed to pay $3
million, $3 million and $1 million to Lehman Brothers, Jefferies and First
Boston, respectively. Lehman Holdings, an affiliate of Lehman Brothers, owns
3,598,832 shares of Common Stock (approximately 7.5% of the shares of Common
Stock outstanding as of
32
<PAGE> 2
April 22, 1998). Additionally, Energy International, N.V., an investment fund
that is co-managed by an affiliate of Lehman Brothers, is the beneficial owner
of 104,352 shares of Weatherford Common Stock and, upon consummation of Merger,
will be entitled to receive 99,135 shares of EVI Common Stock. David J. Butters
and Robert B. Millard, who are employees of Lehman Brothers, constitute two of
the seven members of EVI's current Board of Directors, and Mr. Butters is the
current Chairman of the EVI Board. Sheldon B. Lubar, a member of EVI's current
Board of Directors and Chairman and Chief Executive Officer of Christiana, is a
member of the board of directors of Jefferies. Additionally, each of Messrs.
Butters, Lubar and Millard has been selected to be members of the EVI Board
following the Merger. See "Management -- Directors of EVI Following the Merger".
33
<PAGE> 3
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
At the Effective Time, the number of directors of EVI will be eight, of
which five members have been named by EVI and three have been named by
Weatherford. The five members named by EVI are Bernard J. Duroc-Danner, who will
serve as Chairman, David J. Butters, Sheldon B. Lubar, Robert B. Millard and
Robert A. Rayne. The three members named by Weatherford are Philip Burguieres,
William E. Macaulay and Robert K. Moses, Jr. See "Management -- Directors of EVI
Following the Merger". Additionally, following the Effective Time, Mr.
Duroc-Danner will serve as the Chairman, Chief Executive Officer and President
of EVI and Mr. Burguieres will serve as Chairman Emeritus. The other persons
expected to serve as executive officers of EVI after the Effective Time are set
forth under "Management -- Officers of EVI Following the Merger".
45
<PAGE> 4
VOTING AGREEMENTS
As a condition to EVI's agreement to enter into the Merger Agreement, the
First Reserve Entities and Messrs. Hill and Macaulay executed a voting agreement
(the "First Reserve Voting Agreement") with respect to the approval of the
Merger and the Merger Agreement. No consideration was received by the First
Reserve Entities or Messrs. Hill or Macaulay for their execution of the First
Reserve Voting Agreement other than as an inducement to EVI to enter into the
Merger Agreement. Pursuant to the First Reserve Voting Agreement, the First
Reserve Entities and Messrs. Hill and Macaulay have agreed to vote an aggregate
of 6,585,968 shares (approximately 12.8%) of Weatherford Common Stock held by
them in favor of the Merger and the Merger Agreement at the Weatherford Special
Meeting, unless the Weatherford Board is recommending, at the time of such
meeting, that the stockholders of Weatherford vote against such adoption in view
of the pendency of a superior proposal as provided in the Merger Agreement. Mr.
Hill is the Chairman of First Reserve Corporation and is a current director of
Weatherford and Mr. Macaulay is the President and Chief Executive Officer of
First Reserve Corporation and is a current director of Weatherford, and a
proposed director of EVI following the Merger. See "-- Interests of Certain
Persons in the Merger -- Directors of EVI Following the Merger" and
"Management -- Directors of EVI Following the Merger".
Pursuant to the First Reserve Voting Agreement, the First Reserve Entities
and Messrs. Hill and Macaulay additionally each agreed that they will not: (i)
directly or indirectly (a) solicit, initiate or encourage the submission of any
takeover proposal with respect to Weatherford, (b) enter into any agreement with
respect to a takeover proposal with respect to Weatherford or (c) participate in
any discussion or negotiation regarding, or furnish to any person any
information with respect to, the making of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal with respect to
Weatherford; provided that the foregoing clause (c) will not prohibit any of
their affiliates who serve as a director of Weatherford from acting, subject to
the Merger Agreement, solely in his capacity as a director of Weatherford; or
(ii) sell, contract to sell or otherwise transfer or dispose of any voting
securities of Weatherford over which they have dispositive power; provided,
however, First Reserve Secured Energy Assets Fund, Limited Partnership, was
permitted to dispose of its 650,000 shares of Weatherford Common Stock pursuant
to a preexisting obligation to liquidate that partnership prior to June 30,
1998, subject to approval by EVI. As of April 23, 1998, First Reserve Secured
Energy Assets Fund, Limited Partnership had disposed of 484,000 of such shares.
Additionally, each of the parties agreed that, upon consummation of the Merger,
all stockholder agreements with Weatherford, including the Agreement dated as of
June 23, 1995, as amended (the "First Reserve Agreement"), among Weatherford
International Incorporated and American Gas & Oil Investors, L.P., AMGO II,
L.P., AMGO III, L.P., First Reserve Secured Energy Assets Fund, Limited
Partnership, First Reserve Fund V, L.P., First Reserve Fund V-2, L.P., First
Reserve Fund VI, L.P., First Reserve Corporation, William E. Macaulay and John
A. Hill, would be terminated and that the First Reserve Entities and Messrs.
Hill and Macaulay would have no further rights thereunder.
As a result of the First Reserve Voting Agreement, approval of the Merger
will only require the approval of the holders of approximately an additional
37.2% of the outstanding shares of Weatherford Common Stock as of the Record
Date.
49
<PAGE> 5
As a condition to Weatherford's agreement to enter into the Merger
Agreement, Weatherford required each of Christiana and Lehman Holdings to
execute a voting agreement with respect to the approval of the Merger and the
Merger Agreement. No consideration was received by either of Christiana or
Lehman Holdings for their execution of the voting agreements other than as an
inducement to Weatherford to enter into the Merger Agreement. As a result,
Christiana and Lehman Holdings have agreed to vote 3,897,462 and 3,598,832
shares, respectively, or an aggregate of 7,496,294 shares (approximately 15.7%),
of EVI Common Stock in favor of the Merger at the EVI Special Meeting, unless
the EVI Board is recommending, at the time of such meeting, that the
stockholders of EVI vote against such adoption in view of the pendency of a
superior proposal as provided in the Merger Agreement. Additionally, pursuant to
such voting agreements, each of Christiana and Lehman agreed not to directly or
indirectly (i) solicit, initiate or encourage the submission of any Preclusive
Transaction, (ii) enter into any agreement with respect to a Preclusive
Transaction or (iii) participate in any discussion or negotiation regarding, or
furnish to any person any information with respect to, the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Preclusive Transaction; provided that the foregoing clause (iii) shall not
prohibit any affiliate of Christiana or Lehman Holdings who serves as a director
of EVI from acting, subject to the Merger Agreement, solely in his capacity as a
director of EVI. The Voting Agreement with Christiana does not prohibit
Christiana from being acquired by EVI pursuant to a merger in which a number of
shares of EVI Common Stock approximating the number of shares of EVI Common
Stock currently held by Christiana would be issued to the Christiana
stockholders as partial consideration for EVI's acquisition of Christiana.
As a result of such voting agreements, approval of the Merger will only
require the approval of the holders of approximately an additional 34.3% of the
outstanding shares of EVI Common Stock as of the Record Date.
50
<PAGE> 6
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Weatherford Board with respect to
the Merger, Weatherford's stockholders should be aware that certain members of
the Weatherford Board and certain officers of Weatherford have certain interests
respecting the Merger separate from their interests as holders of Weatherford
Common Stock, including those referred to below. In addition, Merrill Lynch and
Simmons, Weatherford's financial advisors, will receive additional compensation
if the Merger is effected. See "Opinions of Financial Advisors".
Weatherford Stock Options and Awards. There are currently outstanding
options to purchase an aggregate of 1,437,259 shares of Weatherford Common Stock
(equivalent to 1,365,396 shares of EVI Common Stock). The Merger will constitute
a "change of control" under Weatherford's stock option plans and all Weatherford
Options, except for those stock options granted on or after March 4, 1998 and an
option granted to a former employee, will become fully vested and immediately
exercisable as of the Effective Time. As of April 15, 1998, Messrs. Bates,
Burke, Nicholson, Nolen and Stilley and Ms. Thomas held unvested options to
purchase 150,000, 10,667, 5,167, 7,334, 20,000 and 7,334 shares of Weatherford
Common Stock, respectively, that will become fully vested and exercisable as a
result of the Merger. The value of these unvested options, based on the
difference between the exercise price and the closing sale price per share of
Weatherford Common Stock on April 15, 1998, is $1,743,750, $122,836, $59,618,
$84,299, $11,240 and $84,299 for Messrs. Bates, Burke, Nicholson, Nolen and
Stilley and Ms. Thomas, respectively. Also, unvested options to purchase 55,000,
12,000, 6,000, 8,000, 12,000 and 8,000 shares of Weatherford Common Stock
granted on March 16, 1998 to Messrs. Bates, Burke, Nicholson, Nolen and Stilley
and Ms. Thomas,
52
<PAGE> 7
respectively, will become vested if the employment of any of such persons is
terminated by EVI without cause or by any of such persons for good reason within
three years following the Merger. The value of these unvested options, based on
the difference between the exercise price and the closing sale price of the
Weatherford Common Stock on April 15, 1998, is $201,080, $43,872, $21,936,
$29,248, $43,872 and $29,248, respectively.
The Merger also will constitute a "change of control" under Weatherford's
Restricted Stock Incentive Plan (the "Weatherford Restricted Stock Plan") and
ownership restrictions on all shares of Weatherford Common Stock granted
pursuant to such plan, except for those shares granted on or after March 4,
1998, will terminate as of the Effective Time. As of April 15, 1998, Messrs.
Bates, Burke, Nicholson and Nolen and Ms. Thomas held 65,041, 3,125, 1,125,
2,625 and 2,625 shares of Weatherford Common Stock subject to ownership
restrictions that will terminate as of the Effective Time. The value of these
shares, based on the closing sale price per share of Weatherford Common Stock on
April 15, 1998 is $2,756,113, $132,422, $47,672, $111,235 and $111,235,
respectively. Additionally, ownership restrictions on 20,000, 5,000, 3,000,
5,000 and 4,000 shares of Weatherford Common Stock granted to Messrs. Bates,
Burke, Nicholson and Stilley and Ms. Thomas, respectively, pursuant to such plan
on March 16, 1998 will terminate if the employment of such person is terminated
by EVI without cause or by any of such persons for good reason within three
years following the Merger. The value of these shares, based on the closing sale
price per share of Weatherford Common Stock on April 15, 1998, is $847,500,
$211,875, $127,125, $211,875 and $169,500, respectively. As of April 15, 1998,
each of Messrs. Edelman, Greehey, Hill, Johnson, Macaulay, Moses and Widmann
held 909 shares, and Mr. Amonett held 1,290 shares, of Weatherford Common Stock
subject to ownership restrictions that will terminate as of the Effective Time.
The value of these shares, based on the closing sales price per share of
Weatherford Common Stock on April 15, 1998 is $38,519 and $54,664, respectively.
It is currently expected that Messrs. Bates, Burke and Nolen and Ms. Thomas
will not continue to be employed in their current capacities with EVI following
the Merger and will therefore be entitled to the vesting of the options and
restricted stock described above following the Merger.
EVI Employee Stock Options and Awards. There are currently outstanding
unvested options to purchase an aggregate of 536,900 shares of EVI Common Stock.
The Merger will constitute a "change of control" under EVI's employee stock
option plans and all EVI employee stock options will become fully vested and
immediately exercisable as of the Effective Time. As of April 15, 1998, Messrs.
Duroc-Danner, Kiley, Coble and Stiles and Ms. Powell held unvested options to
purchase 280,000, 117,500, 70,400, 45,000 and 24,000 shares of EVI Common Stock,
respectively, that will become fully vested and exercisable as a result of the
Merger. The value of these unvested options, based on the difference between the
exercise price and the EVI Common Stock on April 15, 1998, is $8,608,125,
$3,450,313, $2,067,525, $815,625 and $435,000 for Messrs. Duroc-Danner, Kiley,
Coble and Stiles and Ms. Powell, respectively.
Indemnification. Pursuant to the Merger Agreement, EVI agreed that all
rights to indemnification for acts or omissions occurring prior to the Effective
Time in favor of the current or former directors or officers of Weatherford and
its subsidiaries as provided in their respective certificates of incorporation
or by-laws and indemnity agreements will survive the Merger, and EVI, as the
surviving corporation, shall continue such indemnification rights in full force
and effect in accordance with their terms as an obligation of EVI. Under the
terms of the Merger Agreement, EVI also agreed to use its reasonable best
efforts to purchase directors and officers insurance for the benefit of
Weatherford directors and officers for period of six years at a cost not to
exceed $1 million in aggregate. See "Terms of the Merger -- Indemnification".
Change of Control Agreements. Weatherford has entered into change of
control agreements with 10 of its executives ("Executive Change of Control
Agreements") and 36 of its key employees ("Key Employee Change of Control
Agreements"). These agreements give the executives and key employees certain
benefits in the event of a change of control (as defined therein) of Weatherford
(a "Weatherford Change of Control") and certain additional benefits if that
person is subsequently terminated other than for "cause" (as defined therein),
or elects to terminate his or her employment for "good reason" (as defined
therein), within a certain amount of time after a Weatherford Change of Control.
The Merger will constitute a Weatherford Change of Control.
53
<PAGE> 8
Executive Change of Control Agreements. The Executive Change of Control
Agreements provide that, in the event of a Weatherford Change of Control, the
following provisions will apply: (i) the executive's base salary will not
decrease unless there is a company-wide salary reduction; (ii) the executive's
annual bonus may not be less than the highest bonus paid to him or her in the
three years immediately preceding the Weatherford Change of Control; (iii) the
executive will be entitled to the most favorable incentive, savings, retirement
and welfare plans, expense reimbursement, fringe benefits and vacation policies
in effect 120 days prior to the Weatherford Change of Control and at anytime
thereafter; (iv) if Weatherford is not the surviving corporation in a
Weatherford Change of Control, the surviving corporation must issue
substantially similar options and stock appreciation rights in replacement of
any Weatherford options or stock appreciation rights held by the executive; (v)
the executive's job title and responsibilities may not be materially reduced and
(vi) the executive cannot be forced to move more than 35 miles.
If the executive is terminated other than for cause ("Executive Cause") or
if the executive terminates his or her employment for good reason ("Executive
Good Reason"), in either case within two or three years after the Weatherford
Change of Control, depending on the terms of each executive's contract, the
executive will be entitled to the following: (i) salary plus pro rata bonus owed
through date of termination; (ii) two or three times annual salary and bonus,
depending on the term of the contract; (iii) all amounts that would otherwise
have been owed to that executive under all retirement and savings plans during
the next two or three years, depending on the term of the contract; (iv) welfare
plan coverage for two or three years, depending on the contract term (if the
executive pays the required premium); (v) outplacement services; (vi) at the
executive's option, to be exercised within 60 days after termination, payment of
the unrecognized appreciation on all outstanding options and stock appreciation
rights within 30 days after the date of the executive's election (regardless of
whether vested at termination), unless to do so would cause a transaction
otherwise eligible for pooling of interests accounting treatment under
Accounting Principles Board Opinion No. 16 to be ineligible for such treatment,
in which case the executive would receive shares of EVI Common Stock equal in
value to the cash he or she would have received, or all outstanding options and
stock appreciation rights vest upon, and survive and will be exercisable for,
seven months after termination; (vii) ownership restrictions remaining on any
shares granted under the Weatherford Restricted Stock Plan will terminate;
(viii) all club memberships will be transferred to the executive; (ix) the
executive's company car will be transferred to him or her, if applicable, or the
executive will be paid two or three times his or her annual car allowance,
depending on the term of the contract; (x) all benefits under all retirement and
savings plans will vest; and (xi) in the event any such payments trigger excise
taxes, the amounts paid will be grossed up to pay this obligation of the
executive.
"Executive Cause" is defined as willful and continued failure of the
executive to perform his or her job, after written demand is made by the Chief
Executive Officer or the Board of Directors, or the executive's willful
engagement in illegal conduct or gross misconduct.
"Executive Good Reason" is defined as (i) a material reduction in title
and/or responsibilities of executive, (ii) a required move of more than 35 miles
or (iii) any material reductions in benefits.
The following executives of Weatherford are parties to Executive Change of
Control Agreements: Thomas R. Bates, Jr., James R. Burke, Jon Nicholson, Norman
W. Nolen, Randall P. Stilley, H. Suzanne Thomas, James D. Green, Weldon D.
Walker, Philip D. Gardner and F. Thomas Tilton. If the employment arrangements
with Messrs. Bates, Burke, Nicholson, Nolen, Stilley, Green, Walker, Gardner and
Tilton and Ms. Thomas were to be terminated by EVI for reason other than for
Executive Cause or by the executive for Executive Good Reason, such persons
would be entitled to receive cash and other benefits in an amount of
approximately $3,800,056, $1,826,984, $1,018,818, $1,391,478, $1,064,063,
$568,638, $500,040, $527,503, $535,857 and $1,404,171, respectively. These
payments include the estimated fair value of various benefits to which the
executives would be entitled to receive and do not include any gross-up payments
for excise taxes that might be payable by the executive. It is currently
contemplated that Messrs. Bates, Burke and Nolen and Ms. Thomas will not
continue to be employed in their current capacities with EVI following the
Merger and will therefore receive the foregoing payments. Although EVI and
Weatherford do not believe that any of the payments under the Executive Change
of Control Agreements will be subject to excise taxes under the Code because the
Weatherford stockholders will own more than 50% of the outstanding shares of EVI
Common
54
<PAGE> 9
Stock after the Merger, if any excise taxes were to be triggered as a result of
the Merger, EVI could be required to make gross-up payments to the above named
individuals aggregating approximately $5.1 million.
Key Employee Change of Control Agreements. The Key Employee Change of
Control Agreements provide that, in the event of a Weatherford Change of
Control, the following provisions will apply: (i) the key employee's base salary
will not decrease unless there is a company-wide salary reduction; (ii) the key
employee will be eligible for an annual bonus under the incentive plan
applicable to other peer key employees; (iii) if the key employee is located in
the U.S., he or she will be eligible for incentive, savings, retirement and
welfare plans and expense reimbursement; (iv) a company car or car allowance
applicable to other peer key employees; (v) if Weatherford is not the surviving
entity in a Weatherford Change of Control, the surviving corporation must issue
substantially similar options in replacement of any Weatherford options held by
the key employee; and (vi) the key employee's responsibilities may not be
materially reduced.
If the key employee is terminated for other than cause ("Key Employee
Cause") or if the key employee terminates his or her employment for good reason
("Key Employee Good Reason") within one or two years after the Weatherford
Change of Control, depending on the terms of the contract, the key employee will
be entitled to the following benefits: (i) salary plus pro rata bonus through
date of termination; (ii) one or two times annual salary and bonus, depending on
the term of the contract; (iii) if the key employee is located in the U.S., all
amounts that would otherwise have been owed under retirement and savings plans
during the next one or two years, depending on the term of the contract; (iv)
welfare plan coverage for the next one or two years, depending on the term of
the contract (if the key employee pays the required premium); (v) all
outstanding options vest upon, and survive and will be exercisable for, seven
months after termination; (vi) if the key employee is located in the U.S. and
has a company car or receives a car allowance, the car will be transferred to
the key employee or he or she will be paid one or two times the annual car
allowance, depending on the term of the contract; and (vii) if the key employee
is located in the U.S., all benefits under retirement and savings plans will
become vested; provided, however, that if the aggregate of all such payments
would result in the occurrence of excise taxes, then the payments shall be
reduced to an amount that will not give rise to such excise taxes.
"Key Employee Cause" is defined as continued failure of the key employee to
perform his or her job after written notice from the employer, engaging in
illegal conduct or misconduct, conviction of a crime involving moral turpitude,
misappropriation of funds, disparagement of Weatherford and its management or
other cause determined by the Weatherford Board.
"Key Employee Good Reason" is defined as a material reduction in
responsibilities or benefits.
Weatherford Employment Agreements. Weatherford has entered into an
employment agreement with Mr. Bates, which will expire on May 31, 2002, unless
earlier terminated in accordance therewith. If Mr. Bates is terminated during
the term of his employment agreement by Weatherford for any reason other than
cause or by Mr. Bates for good reason (including any material change in his
responsibilities), he is entitled under the terms of his employment agreement to
a lump sum severance payment of approximately $2,586,000, assuming termination
during 1998. If Mr. Bates' employment is terminated after a change of control
under his employment agreement, then Mr. Bates may elect to receive benefits
either under the employment agreement or under his Executive Change of Control
Agreement, but not both. Because Mr. Bates is not expected to continue
employment with EVI following the Merger, he will be entitled to such severance
payment. However, because the severance payments under his employment agreement
would be less than the payments under his Executive Change of Control Agreement,
it is expected that Mr. Bates will elect to receive the higher payment.
Weatherford also has entered into an employment agreement with Mr.
Burguieres, which will expire on October 16, 2001. If this employment agreement
is terminated by Weatherford or by Mr. Burguieres, at his option, following a
change of control under this agreement, Mr. Burguieres will receive a lump sum
of $1,012,500 (assuming termination on approximately May 27, 1998) and all
ownership restrictions on 5,250 shares previously granted to Mr. Burguieres
under the Weatherford Restricted Stock Plan will terminate. The value of the
shares, based on the closing sale price per share of Weatherford Common Stock on
April 15, 1998, is $222,469.
55
<PAGE> 10
EVI Employment Agreements. EVI has entered into employment agreements (each
an "Employment Agreement") with each of Bernard J. Duroc-Danner, James G. Kiley,
John C. Coble, Robert Stiles, Curtis W. Huff and Frances R. Powell. Each of the
Employment Agreements provides for a term of three years and is renewable
annually. Under the terms of the Employment Agreements, if the executive's
employment is terminated by the Company for any reason other than "cause" or
"disability" or by the executive for "good reason", in each case as such terms
are defined in the Employment Agreements, the executive will be entitled to
receive (i) an amount equal to three times the executive's current base
compensation plus the highest bonus paid to the executive during the three years
preceding the year of termination, (ii) any accrued salary or bonus (pro rated
to the date of termination), (iii) an amount equal to the amount that would be
payable if all retirement plans were vested, (iv) an amount equal to the amount
that would have been contributed as EVI's match under its 401(k) savings plan
and its Executive Deferred Compensation Stock Ownership Plan for three years and
(v) an amount equal to the amount the executive would have received as a car
allowance for three years. Under the EVI employment agreements, "cause" is
defined as the willful and continued failure to perform the executive's job,
after written demand is made by the Chief Executive Officer or the EVI Board, or
the willful engagement in illegal conduct or gross misconduct. Termination by
the executive for "good reason" is generally defined as (i) a material reduction
in title and/or responsibilities of the executive, (ii) certain relocations of
the executive or (iii) any material reduction in the executive's benefits. In
addition, under such circumstances, all stock options and restricted stock
granted to the executive will automatically vest. Further, with respect to
options, the executive would have the right to either exercise such options for
one year after his or her date of termination or to surrender for such cash all
such options unless to do so would cause a transaction otherwise eligible for
pooling of interests accounting treatment under Accounting Principles Board
Opinion No. 16 to be ineligible for such treatment, in which case the executive
would receive shares of EVI Common Stock equal in value to the cash he or she
would have received. All health and medical benefits would also be maintained
after termination for a period of three years provided the executive makes his
or her required contribution. Under the Deficit Reduction Act of 1984, certain
severance payments that exceed a certain amount could subject both EVI and the
executive to adverse U.S. federal income tax consequences. Each of the
Employment Agreements provides that EVI would be required to pay the executive a
"gross up payment" to insure that the executive receives the total benefit
intended by the Employment Agreement. In addition, in connection with the
retention of Mr. Huff as Senior Vice President, General Counsel and Secretary of
EVI, EVI has agreed to grant to Mr. Huff a sign-on incentive bonus of 75,000
shares of restricted EVI Common Stock subject to four year vesting on the basis
of 25% per year and options to purchase an aggregate of 100,000 shares of EVI
Common Stock at the per share market price of the EVI Common Stock on the date
of his employment, which is expected to be in June 1998, subject to vesting over
a three year period on the basis of one-third per year. The base compensation
payable to Messrs. Duroc-Danner, Kiley, Coble, Stiles and Huff and Ms. Powell
under the Employment Agreements are $550,000, $275,000, $300,000, $270,000,
$350,000 and $200,000, respectively.
Directors of EVI Following the Merger. At the Effective Time, the number of
directors of EVI will be eight, of which five members have been named by EVI and
three have been named by Weatherford. The five members named by EVI are Bernard
J. Duroc-Danner, who will serve as Chairman, David Butters, Sheldon Lubar,
Robert Millard and Robert Rayne. The three members named by Weatherford are
Philip Burguieres, who will serve as Chairman Emeritus of EVI, William E.
Macaulay and Robert K. Moses, Jr. See "Management -- Directors of EVI Following
the Merger". Upon their appointment, each of Messrs. Burguieres, Macaulay and
Moses will be eligible to participate in EVI's Non-Employee Director Stock
Option Plan and will receive an option to acquire 10,000 shares of EVI Common
Stock at an option price equal to the closing sale price on such date, which
option will be subject to vesting in one year. Additionally, subject to the
fiduciary duties of the EVI Board, and the willingness of such persons to serve
as directors of EVI, the EVI Board shall submit each of Messrs. Burguieres,
Macaulay and Moses as nominees for election to the EVI Board at the Annual
Meetings of Stockholders of EVI to be held through the year 2000. Mr. Macaulay,
a Director of Weatherford and proposed Director of EVI following the Merger, is
the President and Chief Executive Officer of First Reserve Corporation, which,
together with the other First Reserve Entities and Mr. Macaulay, owned as of
April 23, 1998, an aggregate of 6,093,637 shares of Weatherford Common Stock.
Based upon the Exchange Ratio, the First Reserve Entities will own an
56
<PAGE> 11
aggregate of 5,788,955 shares, or approximately 6.0 % outstanding, of EVI Common
Stock following the Merger.
57
<PAGE> 12
MANAGEMENT
DIRECTORS OF EVI FOLLOWING THE MERGER
At the Effective Time, the number of directors of EVI will be eight, of
which five members have been named by EVI and three have been named by
Weatherford. The five members named by EVI are Bernard J. Duroc-Danner, who
shall serve as Chairman, David J. Butters, Sheldon B. Lubar, Robert B. Millard
and Robert A. Rayne. The three members named by Weatherford are Philip
Burguieres, who will serve as Chairman Emeritus of EVI, William E. Macaulay and
Robert K. Moses, Jr.
Set forth below is the name and age of the persons named to serve as
directors of EVI following the Merger and the term during which each of such
persons has served as a director of EVI or Weatherford, as appropriate:
<TABLE>
<CAPTION>
NAME OF DIRECTOR AGE DIRECTOR SINCE
---------------- --- --------------
<S> <C> <C>
Bernard J. Duroc-Danner..................................... 44 1988
Philip Burguieres........................................... 54 1991
David J. Butters............................................ 57 1984
Sheldon B. Lubar............................................ 68 1995
William E. Macaulay......................................... 52 1995
Robert B. Millard........................................... 47 1989
Robert K. Moses, Jr......................................... 57 1978
Robert A. Rayne............................................. 49 1987
</TABLE>
Bernard J. Duroc-Danner joined EVI in May 1987 to initiate the start-up of
EVI's oilfield service and equipment business. He was elected President of EVI
in January 1990 and Chief Executive Officer in May 1990. Following the Merger,
Mr. Duroc-Danner shall serve as Chairman of the Board, President and Chief
Executive Officer of EVI. Mr. Duroc-Danner holds a Ph.D. in economics from
Wharton (University of Pennsylvania). Mr. Duroc-Danner is a director of Parker
Drilling Company and Dailey International, Inc.
Philip Burguieres has been a director of Weatherford since April 1991 and
has served as Chairman of the Board of Weatherford since December 1992. From
April 1991 to October 1996, he also served as President and Chief Executive
Officer of Weatherford. Mr. Burguieres serves as a director of Denali
Incorporated, a Houston, Texas-based provider of products and services for
handling critical fluids; McDermott International, Inc., a New Orleans,
Louisiana-based company engaged in the fabrication of oilfield equipment; Chase
Bank of Texas, N.A., a national banking organization; and TransAmerican Waste
Industries, Inc., a Houston, Texas-based company engaged in the processing and
disposal of nonhazardous industrial and municipal waste ("TransAmerican Waste").
Mr. Burguieres will serve as Chairman Emeritus following the Effective Time.
David J. Butters is a Managing Director of Lehman Brothers, where he has
been employed for more than the past five years. Mr. Butters is currently
Chairman of the Board of Directors of GulfMark Offshore, Inc., a director of
Anangel-American Shipholdings, Ltd. and a member of the Board of Advisors of
Energy International, N.V.
Sheldon B. Lubar has been Chairman and Chief Executive Officer of
Christiana, a diversified holding company with interests in refrigerated and dry
warehousing, transportation and logistic services, and Chairman of Lubar & Co.
Incorporated for more than the past five years. Mr. Lubar is a director of
Ameritech Corporation, Massachusetts Mutual Life Insurance Company, Firstar
Corporation, MGIC Investment Corporation and Jefferies. Under the terms of the
agreements relating to EVI's acquisition of Prideco, Inc. in June 1995, EVI
agreed to nominate Mr. Lubar or another acceptable nominee of Christiana for
election to the EVI Board as long as Christiana beneficially owns 8% or more of
the outstanding shares of EVI Common Stock.
William E. Macaulay is and has been for more than the past five years
President and Chief Executive Officer of First Reserve Corporation, a
Connecticut-based corporation that manages various funds. He is a director of
Maverick Tube Corporation, a Missouri corporation engaged in the manufacture of
oilfield
73
<PAGE> 13
tubulars, line pipe and structural steel; TransMontaigne Oil Company, a
Colorado-based company engaged in natural gas and oil products pipelines,
distribution and marketing; Patina Oil & Gas Corporation, a Colorado-based
company engaged in oil and gas exploration and production; National-Oilwell,
Inc., a Houston, Texas-based company engaged in the design, manufacture and sale
of machinery and equipment and the distribution of products used in oil and gas
drilling production; Cal-Dive International, a Houston, Texas-based corporation
engaged in subsea services in the Gulf of Mexico; and Hugoton Energy
Corporation, a Kansas corporation engaged in oil and gas exploration and
production.
Robert B. Millard is a Managing Director of Lehman Brothers, where he has
been employed for more than the past five years. Mr. Millard is also a director
of GulfMark Offshore, Inc.
Robert K. Moses, Jr. is and has been for more than the past five years a
private investor, principally in the oil and gas exploration and oilfield
services business in Houston, Texas. He served as Chairman of the Weatherford
Board from May 1989 to December 1992. Mr. Moses serves as a director of
TransAmerican Waste.
Robert A. Rayne has been an Executive Director of London Merchant
Securities plc (property investment and development with major investments in
leisure enterprises), a United Kingdom-listed public limited company, for more
than the past five years.
Additionally, subject to the fiduciary duties of the EVI Board and the
willingness of such persons to serve as directors of EVI, following the
Effective Time, the EVI Board will be required to submit each of the above
persons as nominees for re-election to the EVI Board at the Annual Meetings of
Stockholders of EVI to be held through the year 2000.
EXECUTIVE OFFICERS OF EVI FOLLOWING THE MERGER
Set forth below is certain information with respect to the executive
officers of EVI following the Merger.
<TABLE>
<CAPTION>
NAME OF OFFICER AGE POSITION
--------------- --- --------
<S> <C> <C>
Bernard J. Duroc-Danner........... 44 Chairman of the Board, President and Chief Executive
Officer
James G. Kiley.................... 41 Chief Financial Officer, Senior Vice President and
Treasurer
John C. Coble..................... 55 Senior Vice President and President -- Drilling
Products Group
Robert F. Stiles.................. 40 Senior Vice President and President -- Artificial
Lift Group
Randall D. Stilley................ 44 Senior Vice President and President -- Completion &
Oilfield Services Group
Curtis W. Huff.................... 40 Senior Vice President, General Counsel and Secretary
Jon R. Nicholson.................. 55 Vice President, Human Resources
Frances R. Powell................. 43 Vice President, Accounting and Controller
</TABLE>
James G. Kiley was elected Vice President and Chief Financial Officer of
EVI in May 1996 and Vice President, Finance, Treasurer and Secretary in May 1994
when he joined EVI. From April 1991 to April 1994, Mr. Kiley served as Treasurer
of Baroid Corporation, a provider of oilfield services. Prior to his position at
Baroid, Mr. Kiley held various positions, including Assistant Treasurer, at NL
Industries, Inc., a manufacturer of titanium dioxide pigments and specialty
chemicals. Following the Merger, Mr. Kiley will serve as Chief Financial
Officer, Senior Vice President and Treasurer of EVI.
John C. Coble joined EVI in July 1981 and was elected Executive Vice
President of EVI in March 1997. Mr. Coble has served as President of EVI's Grant
Prideco drilling products segment ("Grant Prideco") since
74
<PAGE> 14
October 1995. From December 1991 to October 1995, he served as Chief Operating
Officer of EVI. Following the Merger, Mr. Coble will serve as Senior Vice
President of EVI and as President -- Drilling Products Group.
Robert F. Stiles joined EVI in October 1992 and was elected a Vice
President of EVI in March 1997. Mr. Stiles has been President of EVI's EVI Oil
Tools production equipment segment since January 1996. Prior to that time, Mr.
Stiles served as President of Production Oil Tools, Inc., a wholly owned
subsidiary of EVI included in the EVI Oil Tools division, from November 1993 to
December 1995 and as Vice President, Manufacturing of Grant Prideco from October
1992 to November 1993. Following the Merger, Mr. Stiles will serve as Senior
Vice President of EVI and President -- Artificial Lift Group.
Randall D. Stilley is currently and has served as Senior Vice President and
President-Services of Weatherford since January 5, 1998. Prior to joining
Weatherford, Mr. Stilley held various management positions with Halliburton
Energy Services from 1976 until 1998, serving as Vice President-Asia
Pacific/China from 1995 until December 31, 1997. Following the Merger, Mr.
Stilley will serve as Senior Vice President of EVI and President -- Completion &
Oilfield Services Group.
Curtis W. Huff was elected Senior Vice President, General Counsel and
Secretary of EVI, effective on or prior to June 15, 1998. Mr. Huff is currently
a partner at the law firm of Fulbright & Jaworski, counsel to EVI, and has held
that position for more than the past five years.
Jon R. Nicholson is currently and has served as Vice President -- Human
Resources of Weatherford since October 5, 1995. Mr. Nicholson joined Weatherford
as Director of Human Resources in February 1993. From March 1992 until January
1993, he was a human resources consultant. From July 1990 until March 1992, Mr.
Nicholson served as President of Atlas Bradford Corporation, an oilfield
services company. Following the Merger, Mr. Nicholson will serve as Vice
President, Human Resources of EVI.
Frances R. Powell was elected Vice President, Accounting of EVI in May
1994, Controller in November 1991 and has been employed by EVI since 1990.
Following the Merger, Ms. Powell will continue to serve as Vice President,
Accounting and Controller of EVI.
75
<PAGE> 15
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF EVI
Principal Stockholders. The following table sets forth, as of the Record
Date, the beneficial ownership of each person who is known by EVI to be the
beneficial owner of more than five percent of the outstanding EVI Common Stock.
Such information is based solely upon data provided to EVI by such persons.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
------------------------ ------------------------
NUMBER OF NUMBER OF
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME AND ADDRESS OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Christiana Companies, Inc.(2).................... 3,897,462 8.2 3,897,462 4.0
700 North Water Street, #1200
Milwaukee, Wisconsin 53202
Lehman Brothers Holdings Inc..................... 3,598,832 7.5 3,598,832 3.7
3 World Financial Center
New York, New York 10285
FMR Corp.(3)..................................... 2,401,050 5.0 6,181,292(4) 6.4
82 Devonshire Street
Boston, Massachusetts 02109
AMVESCAP PLC(5).................................. 3,090,152 6.5 3,090,152 3.2
11 Devonshire Square
London EC2M 4YR
England
</TABLE>
- ---------------
(1) Unless otherwise indicated below, the persons or groups listed have sole
voting and dispositive power with respect to their shares of EVI Common
Stock, and none of such shares are deemed to be owned because the holder has
the right to acquire the shares within 60 days.
(2) Sheldon Lubar, a Director of EVI, is the Chairman and Chief Executive
Officer of Christiana and is the beneficial owner of 18.8% of the common
stock of Christiana.
(3) Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp. ("FMR") and a registered investment adviser, is the
beneficial owner of 2,005,750 shares as a result of acting as investment
adviser to various registered investment companies (the "Funds"). Fidelity
Management Trust Company ("FMTC"), a wholly owned subsidiary of FMR, is the
beneficial owner of 395,300 shares as a result of serving as investment
manager of various institutional accounts. Edward C. Johnson 3d, FMR's
Chairman and principal stockholder, FMR, through its control of Fidelity,
and the Funds each has sole power to dispose of the 2,005,750 shares owned
by the Funds and Mr. Johnson and FMR, through its control of FMTC, each has
sole power to vote and dispose of 352,500 shares owned by the institutional
accounts; however, sole power to vote 42,800 shares owned by the Funds
resides with the Funds' Boards of Trustees. Fidelity carries out the voting
of the Funds' shares under written guidelines established by the Funds'
Board of Trustees. Additionally, Mr. Johnson, FMR and the Funds may be
deemed to be the beneficial owner of an additional 18,750 shares resulting
from the assumed conversion of 30,000 of EVI's Debentures. Members of Mr.
Johnson's family and trusts for their benefit are the predominant owners of
Class B shares of common stock of FMR. Mr. Johnson owns 12.0% and Abigail P.
Johnson, Mr. Johnson's wife and a Director of FMR, owns 24.5% of the voting
stock of FMR. The Johnson family and all other Class B shareholders have
entered into a shareholders' voting agreement under which all Class B shares
will be voted in accordance with the majority vote of Class B shares.
Accordingly, through their ownership of voting common stock and the
execution of the shareholders' voting agreement, members of the Johnson
family may be deemed, under the Investment Company Act of 1940, to form a
controlling group with respect to FMR.
76
<PAGE> 16
(4) Includes 3,780,242 shares of EVI Common Stock issuable upon the consummation
of the Merger as a result of FMR's ownership of 3,979,202 shares of
Weatherford Common Stock. See "-- Principal Stockholders and Management of
Weatherford".
(5) AMVESCAP PLC has beneficial ownership of the 3,090,152 shares of EVI Common
Stock with the following subsidiaries: AVZ, Inc., AIM Management Group Inc.,
AMVESCAP Group Services, Inc., INVESCO, Inc., INVESCO North American
Holdings, Inc. and INVESCO Funds Group, Inc.
Management. The following table sets forth as of the Record Date the
beneficial ownership of the outstanding EVI Common Stock by each current
director and each current executive officer of EVI and all directors and
executive officers of EVI as a group.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
------------------------ ------------------------
NUMBER OF NUMBER OF
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Bernard J. Duroc-Danner.......................... 572,500 1.2% 830,000 *
James G. Kiley................................... 47,500 * 155,000 *
Frances R. Powell................................ 17,668 * 41,668 *
Ghazi J. Hashem.................................. -- * -- *
John C. Coble.................................... 36,800 * 80,400 *
Robert F. Stiles................................. 15,200 * 60,200 *
David J. Butters................................. 56,612 * 56,612 *
Uriel E. Dutton.................................. 70,000 * 70,000 *
Sheldon S. Gordon................................ 40,000 * 40,000 *
Sheldon B. Lubar(2).............................. 30,000 * 30,000 *
Robert B. Millard................................ 118,960 * 118,960 *
Robert A. Rayne(3)............................... 20,000 * 20,000 *
All Directors and Executive Officers as a Group
(12 persons)................................... 1,025,240 2.1% 1,502,840 1.5%
</TABLE>
- ---------------
* Less than 1%.
(1) Beneficial ownership by a person includes both outstanding shares of EVI
Common Stock owned and shares of EVI Common Stock which such person has a
right to acquire within 60 days upon the exercise of outstanding options.
Directors and executive officers have sole voting and investment power with
respect to the shares they own. Includes 22,500, 10,000, 26,800 and 119,300
shares of EVI Common Stock beneficially owned by Messrs. Duroc-Danner, Kiley
and Coble and all directors and executive officers of EVI as a group,
respectively, pursuant to outstanding options that are exercisable within 60
days. The beneficial ownership after the Merger includes 280,000, 117,500,
70,400, 45,000 and 24,000 shares of EVI Common Stock held by Messrs.
Duroc-Danner, Kiley, Coble and Stiles and Ms. Powell, respectively, that are
currently subject to unvested options that will become vested upon the
Merger.
(2) Does not include 3,897,462 shares of EVI Common Stock owned directly by
Christiana. Mr. Lubar currently beneficially owns approximately 18.8% of the
outstanding shares of common stock of Christiana. Pursuant to the Christiana
Acquisition, Mr. Lubar will be entitled to receive 725,618 shares of EVI
Common Stock or approximately 1.5% and 0.8% of the outstanding shares of EVI
Common Stock before and after the Merger, respectively.
(3) Excludes 400,000 shares beneficially owned by London Merchant Securities
plc, of which Mr. Rayne serves as Executive Director. Mr. Rayne disclaims
beneficial ownership of all of such shares.
77
<PAGE> 17
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF WEATHERFORD
Principal Stockholders. The following table sets forth certain information
with respect to (i) the Weatherford Common Stock beneficially owned by persons
who are known to Weatherford to be the beneficial owners of more than five
percent of the Weatherford Common Stock as of the Record Date and (ii) the
approximate number of shares of EVI Common Stock each of such persons will be
entitled to receive upon the consummation of the Merger. For purposes of this
Report, beneficial ownership is defined in accordance with the rules of the
Commission to mean generally the power to vote or dispose of shares, regardless
of any economic interest therein. The persons listed have sole voting power and
sole dispositive power over all shares set forth in the table, unless otherwise
specified in the footnotes to the table.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
------------------------ ------------------------
SHARES OF SHARES OF
WEATHERFORD EVI
COMMON COMMON
STOCK PERCENT STOCK PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME AND ADDRESS OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
First Reserve Corporation(2)............ 6,569,306 12.8 6,240,840 6.8
475 Steamboat Road
Greenwich, CT 06830
Princeton Services, Inc.(3)............. 4,601,900 9.0 4,371,805 4.5
800 Scudders Mill Road
Plainsboro, NJ 08536
FMR Corp.(4)............................ 3,979,202 7.7 6,181,292(5) 6.4
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
(1) Information with respect to beneficial ownership is based upon information
furnished by each stockholder or contained in filings made with the
Commission. To Weatherford's knowledge, none of such shares are deemed to be
beneficially owned because the holder has the right to acquire such shares
within 60 days.
(2) Based upon information contained in Amendment No. 4 to Schedule 13D/A dated
March 4, 1998, filed with the Commission by First Reserve Corporation
("First Reserve"). Represents shares owned by the following funds (the
"First Reserve Funds"), for each of which First Reserve is the general
partner: American Gas & Oil Investors, Limited Partnership -- 1,360,000
shares; AmGO II, Limited Partnership -- 850,000 shares; First Reserve
Secured Energy Assets Fund, Limited Partnership -- 650,000 shares; First
Reserve Fund V, Limited Partnership -- 2,300,000 shares; First Reserve Fund
V-2, Limited Partnership -- 640,000 shares; and First Reserve Fund VI,
Limited Partnership -- 735,371 shares. First Reserve, in its role as
managing general partner of the First Reserve Funds and acting on behalf of
the First Reserve Funds, has the power to cause each First Reserve Fund to
dispose of or vote shares of Common Stock held by such First Reserve Fund.
Also includes 33,935 shares owned directly by First Reserve. The principal
beneficial owners of the common stock of First Reserve are its executive
officers, including Mr. Hill, Chairman of the Board of First Reserve, and
Mr. Macaulay, President and Chief Executive Officer of First Reserve, each
of whom is also a director of Weatherford. First Reserve, the First Reserve
Funds and Messrs. Macaulay and Hill are parties to the First Reserve
Agreement under which First Reserve and the First Reserve Funds are entitled
to collectively elect up to two directors depending on their percentage of
ownership of the Weatherford Common Stock. Upon the consummation of the
Merger, the First Reserve Agreement will terminate and the parties thereto
will have no further rights under such agreement. Subsequent to the Record
Date, pursuant to an existing obligation to liquidate First Reserve Secured
Energy Asset Fund, Limited Partnership prior to June 30, 1998, such
partnership disposed of 484,000 shares of Weatherford Common Stock and may
dispose of up to an additional 166,000 shares subject to approval by EVI.
See "The Merger -- Voting Agreements". Does not include shares of
Weatherford Common Stock owned directly by each of Messrs. Hill and
Macaulay.
78
<PAGE> 18
(3) Based upon information contained in a Schedule 13G dated April 2, 1998,
filed with the Commission by Princeton Services, Inc. ("PSI"), Merrill Lynch
Asset Management, L.P. ("MLAM") and Merrill Lynch Growth Fund ("MLGF"). PSI
and MLAM each has shared voting and dispositive power over 4,601,900 shares
of Weatherford Common Stock and MLGF has shared voting and dispositive power
over 4,600,000 shares of Weatherford Common Stock. PSI is a corporate
managing general partner of MLAM and MLGF. PSI disclaims beneficial
ownership of all the shares of Weatherford Common Stock described above
pursuant to Section 13d-4 promulgated under the Exchange Act.
(4) Based upon information contained in a joint Schedule 13G/A dated February
14, 1998, filed with the Commission by Edward C. Johnson 3d, Abigail P.
Johnson and by FMR Corp., on behalf of itself and its subsidiaries, Fidelity
Management & Research Company (beneficial owner of 3,523,447 shares of
Weatherford Common Stock), Fidelity Management Trust Company (beneficial
owner of 403,665 shares of Weatherford Common Stock) and Fidelity
International Limited ("FIL") (beneficial owner of 52,100 shares of
Weatherford Common Stock). FMR Corp. and Mr. Johnson each has sole
dispositive power over 3,523,447 shares of Weatherford Common Stock and no
voting power over these shares. FMR Corp. and Mr. Johnson each has sole
dispositive power over 403,655 shares of Weatherford Common Stock, of which
each has sole voting power over 375,855 shares and no voting power over
27,800 shares. FIL has the sole power to vote and dispose of 52,100 shares.
FMR Corp. and FIL are of the view that they are not acting as a "group" for
purposes of Section 13(d) of the Exchange Act and that they are not
otherwise required to attribute to each other the "beneficial ownership" of
securities "beneficially owned" by the other corporation within the meaning
of Rule 13d-3 promulgated under the Exchange Act.
(5) Includes 2,401,050 shares of EVI Common Stock held by FMR Corp. prior to the
Merger.
Management. The following table sets forth certain information with respect
to (i) the Weatherford Common Stock beneficially owned by each of Weatherford's
directors and each of its executive officers and by all of its directors and
executive officers as a group, as of the Record Date and (ii) the approximate
number of shares of EVI Common Stock each of such persons will be entitled to
receive upon the consummation of the Merger. Such persons have sole voting power
and sole dispositive power over all shares set forth in the table unless
otherwise specified in the footnotes to the table.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
----------------------- -----------------------
SHARES OF SHARES OF
WEATHERFORD EVI
COMMON COMMON
STOCK PERCENT STOCK PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Directors:
Thomas N. Amonett(2)(3)(4)............... 27,297 * 25,932 *
Thomas R. Bates, Jr.(5).................. 117,041 * 277,438 *
Philip Burguieres(6)..................... 236,024 * 233,722 *
Thomas J. Edelman(2)(4).................. 7,864 * 7,470 *
William E. Greehey(2)(4)................. 17,452 * 16,579 *
John A. Hill(2)(4)(7).................... 6,579,637 12.8 6,250,655 6.5
John W. Johnson(2)(4)(8)................. 61,984 * 58,884 *
William E. Macaulay(2)(4)(7)(9).......... 6,579,637 12.8 6,250,655 6.5
Robert K. Moses, Jr.(2)(4)(10)........... 447,609 * 425,228 *
Roger A. Widmann(2)(4)................... 6,364 * 6,045 *
</TABLE>
79
<PAGE> 19
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
----------------------- -----------------------
SHARES OF SHARES OF
WEATHERFORD EVI
COMMON COMMON
STOCK PERCENT STOCK PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Executive Officers:
James R. Burke(11)....................... 51,216 * 70,188 *
Jon Nicholson (12)....................... 18,292 * 22,286 *
Norman W. Nolen(13)...................... 48,702 * 60,834 *
Randall D. Stilley(14)................... 5,000 * 23,750 *
H. Suzanne Thomas(15).................... 74,136 * 84,996 *
All Directors and Executive Officers as a
Group (15 persons)(16)................ 7,708,949 15.0 7,573,821 7.8
</TABLE>
- ---------------
* Denotes ownership of less than one percent.
(1) Information with respect to beneficial ownership is based upon information
furnished by each director or executive officer of Weatherford or contained
in filings made with the Commission.
(2) Includes 3,500 shares of Weatherford Common Stock subject to acquisition
within 60 days pursuant to a Weatherford stock option plan for Mr. Amonett;
5,500 shares of Weatherford Common Stock for each of Messrs. Greehey,
Johnson and Moses; 4,500 shares of Weatherford Common Stock for Mr.
Edelman; 2,000 shares of Weatherford Common Stock for each of Messrs. Hill
and Macaulay; and 5,000 shares of Weatherford Common Stock for Mr. Widmann.
(3) Includes 12,000 shares of Weatherford Common Stock subject to acquisition
within 60 days pursuant to a Weatherford stock option plan.
(4) Includes 1,290 shares of Weatherford Common Stock granted to Mr. Amonett
and 1,364 shares of Weatherford Common Stock granted to each of the other
named individuals pursuant to the Weatherford Restricted Stock Plan, with
respect to which he has sole voting and no dispositive power.
(5) Includes 85,041 shares of Weatherford Common Stock granted to Mr. Bates
pursuant to the Weatherford Restricted Stock Plan, with respect to which he
has sole voting power and no dispositive power. Also includes 30,000 shares
of Weatherford Common Stock subject to acquisition by Mr. Bates within 60
days pursuant to a Weatherford option plan. After the Merger also includes
166,250 shares of EVI Common Stock subject to acquisition pursuant to stock
options which vest and become exercisable as a result of the Merger or the
termination of Mr. Bates' employment.
(6) Includes (a) 1,000 shares of Weatherford Common Stock held by Mr.
Burguieres' wife, with respect to which he has no voting or dispositive
power, and (b) 500 shares of Weatherford Common Stock held by Mr.
Burguieres' adult son supported by him, with respect to which he has sole
voting and dispositive power; Mr. Burguieres disclaims beneficial ownership
of all such shares. Also includes (a) 8,750 shares of Weatherford Common
Stock granted to Mr. Burguieres pursuant to the Weatherford Restricted
Stock Plan, with respect to which he has sole voting and no dispositive
power, and (b) 102,500 shares of Weatherford Common Stock subject to
acquisition by Mr. Burguieres within 60 days pursuant to a Weatherford
stock option plan. Also includes 431 shares of Weatherford Common Stock
held under Weatherford's Employee Stock Purchase Plan (the "ESPP") in the
account of Mr. Burguieres, as to which he has sole voting and no
dispositive power prior to withdrawal of such shares from the ESPP. Shares
may be withdrawn from the ESPP by a participant on March 31 of each year
upon written notice by such participant. Also includes 184 shares of
Weatherford Common Stock held under Weatherford's 401(k) Savings Plan (the
"401(k) Plan") in Mr. Burguieres' account, as to which shares Mr.
Burguieres has sole voting and no dispositive power. After the Merger also
includes 9,500 shares of EVI Common Stock subject to acquisition pursuant
to stock options which vest and become exercisable as a result of the
Merger.
(7) Includes 6,569,306 shares of Weatherford Common Stock owned beneficially by
First Reserve and the First Reserve Funds; Messrs. Hill and Macaulay
disclaim beneficial ownership of such shares.
80
<PAGE> 20
Subsequent to the Record Date, the First Reserve Funds disposed of 484,000
shares of Weatherford Common Stock included herein.
(8) Does not include 1,050,000 shares of Weatherford Common Stock owned by
Permian Mud Service, Inc. ("Permian"). Mr. Johnson is a director, officer
and substantial beneficial shareholder of Permian and therefore may be
deemed to be a beneficial owner of the shares of the Weatherford Common
Stock held by Permian; Mr. Johnson disclaims beneficial ownership of all
such shares. Includes (a) 6,000 shares of Weatherford Common Stock held by
Mr. Johnson as a trustee of various trusts for his children, with respect
to which he has sole voting and dispositive power, and (b) 120 shares of
Weatherford Common Stock held as custodian for Mr. Johnson's children, with
respect to which he has sole voting and dispositive power; Mr. Johnson
disclaims beneficial ownership of all such shares.
(9) Includes 6,967 shares of Weatherford Common Stock held by Mr. Macaulay's
wife, with respect to which he has no voting or dispositive power; Mr.
Macaulay disclaims beneficial ownership of such shares.
(10) Includes an aggregate of 45,000 shares of Weatherford Common Stock held in
various trusts for Mr. Moses' children, his brother and his sister, of
which Mr. Moses is the trustee, with respect to which Mr. Moses has sole
voting and dispositive power; Mr. Moses disclaims beneficial ownership of
all such shares. Does not include (a) an aggregate of 52,500 shares of
Weatherford Common Stock held in various trusts for Mr. Moses' children,
with respect to which Mr. Moses has no voting or dispositive power, (b)
1,851 shares of Weatherford Common Stock held in a trust for Mr. Moses'
son, with respect to which he has no voting or dispositive power; since Mr.
Moses is not a trustee of such trusts and has no voting or dispositive
power, he disclaims beneficial ownership of all such shares or (a) 625
shares of Weatherford Common Stock held by Mr. Moses' adult son supported
by him, with respect to which Mr. Moses has no voting or dispositive
power,.
(11) Includes (a) 8,125 shares of Weatherford Common Stock granted to Mr. Burke
pursuant to the Weatherford Restricted Stock Plan, with respect to which he
has sole voting and no dispositive power, and (b) 31,166 shares of
Weatherford Common Stock subject to acquisition by Mr. Burke within 60 days
pursuant to options held by him. Also includes 2,076 shares of Weatherford
Common Stock held under the 401(k) Plan in Mr. Burke's account, with
respect to which shares Mr. Burke has sole voting and no dispositive power.
After the Merger also includes 21,533 shares of EVI Common Stock subject to
acquisition pursuant to stock options which vest and become exercisable as
a result of the Merger or the termination of Mr. Burke's employment.
(12) Includes (a) 4,125 shares of Weatherford Common Stock granted to Mr.
Nicholson pursuant to the Weatherford Restricted Stock Plan, with respect
to which he has sole voting and no dispositive power, and (b) 11,833 shares
of Weatherford Common Stock subject to acquisition by Mr. Nicholson within
60 days pursuant to the options held by him. Also includes 771 shares of
Weatherford Common Stock held under the Weatherford 401(k) plan in Mr.
Nicholson's account, with respect to which shares Mr. Nicholson has sole
voting and no dispositive power. After the Merger also includes 4,908
shares of EVI Common Stock subject to acquisition pursuant to stock options
which vest and become exercisable as a result of the Merger.
(13) Includes (a) 2,625 shares of Weatherford Common Stock granted to Mr. Nolen
pursuant to the Weatherford Restricted Stock Plan, with respect to which he
has sole voting and no dispositive power, and (b) 26,916 shares of
Weatherford Common Stock subject to acquisition by Mr. Nolen within 60 days
pursuant to options held by him. Also includes 259 shares of Weatherford
Common Stock held under the 401(k) Plan in Mr. Nolen's account, with
respect to which shares Mr. Nolen has sole voting and no dispositive power.
After the Merger also includes 14,567 shares of EVI Common Stock subject to
acquisition pursuant to stock options which vest and become exercisable as
a result of the Merger or the termination of Mr. Nolen's employment.
(14) All of the shares of Weatherford Common Stock were granted to Mr. Stilley
pursuant to the Weatherford Restricted Stock Plan, and he has sole voting
and no dispositive power with respect to such shares. After the Merger also
includes 19,000 shares of EVI Common Stock subject to acquisition pursuant
to stock options which vest and become exercisable as a result of the
Merger.
81
<PAGE> 21
(15) Includes (a) 6,625 shares of Weatherford Common Stock granted to Ms. Thomas
pursuant to the Weatherford Restricted Stock Plan, with respect to which
she has sole voting and no dispositive power, and (b) 34,666 shares of
Weatherford Common Stock subject to acquisition by Ms. Thomas within 60
days pursuant to the options held by her. Also includes 890 shares of
Weatherford Common Stock held under the Weatherford 401(k) Plan in Ms.
Thomas' account, with respect to which shares Ms. Thomas has sole voting
and no dispositive power. After the Merger also includes 12,667 shares of
EVI Common Stock subject to acquisition pursuant to stock options which
vest and become exercisable as a result of the Merger or the termination of
Ms. Thomas' employment.
(16) See footnotes (2) through (15).
LEGAL MATTERS
The validity of the shares of EVI Common Stock to be issued in connection
with the Merger will be passed upon by Fulbright & Jaworski L.L.P., 1301
McKinney, Suite 5100, Houston, Texas 77010. Certain tax consequences of the
Merger will be passed upon for EVI by Fulbright & Jaworski L.L.P. and for
Weatherford by Baker & Botts, L.L.P., 910 Louisiana, Houston, Texas 77002. Uriel
E. Dutton, a director of EVI, is a partner at Fulbright & Jaworski L.L.P. and
currently holds options to purchase 70,000 shares of EVI Common Stock, which
options were granted to him pursuant to EVI's Non-Employee Director Stock Option
Plan. In addition, Curtis W. Huff, a partner at Fulbright & Jaworski L.L.P., has
agreed to be retained as Senior Vice President, General Counsel and Secretary of
EVI, effective June 15, 1998, and pursuant to an agreement with EVI would
receive 75,000 restricted shares of EVI Common Stock and options to purchase
100,000 shares of EVI Common Stock.
82
<PAGE> 1
EXHIBIT 99.2
EVI COMPLETES WEATHERFORD MERGER
May 27, 1998, Houston, Texas - EVI, Inc. (NYSE-EVI) today announced the
completion of its previously announced merger with Weatherford Enterra, Inc. The
combined company has changed its name to EVI Weatherford, Inc. and will continue
to trade on the New York Stock Exchange under the symbol "EVI".
Under the terms of the merger agreement, Weatherford stockholders will received
0.95 of a newly issued share of EVI common stock for each Weatherford common
share. The transaction, which is being accounted for as a pooling of interests,
will result in an estimated one time after-tax charge of approximately $60
million, or $0.60 per diluted share, in the second quarter for the merger
related expenses.
EVI Weatherford is an international provider of engineered products and
specialized services to the drilling, completion and production sectors of the
oil and gas industry.
Contact:
James G. Kiley
Senior Vice President and
Chief Financial Officer
(713) 297-8400
<PAGE> 1
EXHIBIT 99.3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Weatherford Enterra, Inc.:
We have audited the accompanying consolidated balance sheets of Weatherford
Enterra, Inc. (a Delaware corporation) and subsidiaries (the "Company") as of
December 31, 1997 and 1996, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Weatherford Enterra, Inc. and subsidiaries as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
March 11, 1998
<PAGE> 2
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ..................................... $ 42,348 $ 33,029
Receivables, net of allowance of
$22,467 and $16,241 ....................................... 261,449 272,816
Inventories, net of allowance of
$16,671 and $21,261 ....................................... 169,048 163,302
Deferred tax assets ........................................... 11,266 20,090
Prepayments and other ......................................... 20,767 16,197
----------- -----------
Total current assets .............................. 504,878 505,434
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land .......................................................... 16,166 20,041
Buildings and improvements .................................... 93,033 101,114
Rental and service equipment .................................. 1,010,065 1,017,866
Machinery and other equipment ................................. 131,230 115,665
----------- -----------
1,250,494 1,254,686
Less -- Accumulated depreciation .............................. 682,048 693,496
----------- -----------
568,446 561,190
----------- -----------
GOODWILL, net ..................................................... 266,121 290,474
----------- -----------
OTHER ASSETS ...................................................... 38,550 40,625
----------- -----------
$ 1,377,995 $ 1,397,723
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion of
long-term debt ............................................ $ 2,823 $ 24,508
Accounts payable .............................................. 63,808 65,713
Accrued compensation and employee
benefits .................................................. 29,752 29,885
Accrued income taxes .......................................... 30,404 17,427
Accrued taxes other than income
taxes ..................................................... 11,602 10,078
Accrued insurance ............................................. 10,329 11,283
Other accrued liabilities ..................................... 43,627 52,465
----------- -----------
Total current liabilities ......................... 192,345 211,359
----------- -----------
LONG-TERM DEBT .................................................... 209,124 291,266
----------- -----------
DEFERRED TAX LIABILITIES .......................................... 27,401 34,728
----------- -----------
OTHER LONG-TERM LIABILITIES ....................................... 14,999 18,762
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par; shares authorized 1,000,000; none
issued .................................................... -- --
Common stock, $.10 par; shares authorized 80,000,000;
issued 52,701,964 and 52,172,796 .......................... 5,270 5,217
Paid-in capital ............................................... 652,378 639,679
Retained earnings ............................................. 313,216 200,316
Cumulative translation adjustment ............................. (23,795) (2,768)
Treasury stock, 322,667 and 28,269
common shares, at cost .................................... (12,943) (836)
----------- -----------
Total stockholders' equity ........................ 934,126 841,608
----------- -----------
$ 1,377,995 $ 1,397,723
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 3
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR EACH OF THE THREE YEARS IN THE
PERIOD ENDED DECEMBER 31, 1997
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Services and rentals ................ $ 821,397 $ 746,180 $ 612,597
Products ............................ 262,568 248,288 246,310
----------- ----------- -----------
Total revenues .......... 1,083,965 994,468 858,907
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of services and rentals ........ 551,375 537,313 442,902
Cost of products .................... 175,165 177,033 182,444
Selling, general and administrative
expenses ........................ 140,229 140,614 137,959
Research and development ............ 7,782 7,154 4,954
Equity in earnings of
unconsolidated affiliates ....... (2,582) (2,078) (1,477)
Foreign currency loss (gain),
net ............................. 1,782 (49) (74)
Other expense, net .................. 17,132 8,725 3,835
Acquisition-related costs and other
unusual charges ................. -- -- 88,182
----------- ----------- -----------
Total operating costs and
expenses ............ 890,883 868,712 858,725
----------- ----------- -----------
OPERATING INCOME ........................ 193,082 125,756 182
Interest expense ........................ 20,139 22,914 17,217
Interest income ......................... (2,630) (2,005) (2,081)
----------- ----------- -----------
Income (loss) before income taxes ....... 175,573 104,847 (14,954)
Income tax provision (benefit) .......... 62,673 34,774 (4,396)
----------- ----------- -----------
NET INCOME (LOSS) ....................... $ 112,900 $ 70,073 $ (10,558)
=========== =========== ===========
Basic earnings (loss) per common
share ............................... $ 2.15 $ 1.35 $ (0.21)
=========== =========== ===========
Diluted earnings (loss) per common
share ............................... $ 2.14 $ 1.35 $ (0.21)
=========== =========== ===========
Weighted average shares
outstanding ......................... 52,430 51,722 50,681
Diluted average shares outstanding ...... 52,837 52,097 50,681
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 4
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Cumulative
Common Paid-in Retained Translation Treasury
Stock Capital Earnings Adjustment Stock Total
--------- --------- -------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994 .............. $ 5,058 $ 593,744 $ 140,801 $ (4,168) $ (801) $ 734,634
Shares issued under employee benefit
plans ................................ 1 187 -- -- -- 188
Stock grants and options exercised ...... 40 8,300 -- -- (60) 8,280
Currency translation adjustment ......... -- -- -- (1,701) -- (1,701)
Net loss ................................ -- -- (10,558) -- -- (10,558)
--------- --------- --------- --------- --------- ---------
BALANCE, December 31, 1995 .............. 5,099 602,231 130,243 (5,869) (861) 730,843
Shares issued under employee benefit
plans ................................ 3 1,367 -- -- 419 1,789
Stock grants and options exercised ...... 40 9,636 -- -- (394) 9,282
Issuance of Common Stock in
acquisition .......................... 75 26,445 -- -- -- 26,520
Currency translation adjustment ......... -- -- -- 3,101 -- 3,101
Net income .............................. -- -- 70,073 -- -- 70,073
--------- --------- --------- --------- --------- ---------
BALANCE, December 31, 1996 .............. 5,217 639,679 200,316 (2,768) (836) 841,608
Shares issued under employee benefit
plans ................................ 1 474 -- -- -- 475
Stock grants and options exercised ...... 52 12,225 -- -- (247) 12,030
Purchase of treasury stock .............. -- -- -- -- (11,860) (11,860)
Currency translation adjustment ......... -- -- -- (21,027) -- (21,027)
Net income .............................. -- -- 112,900 -- -- 112,900
--------- --------- --------- --------- --------- ---------
BALANCE, December 31, 1997 .............. $ 5,270 $ 652,378 $ 313,216 $ (23,795) $ (12,943) $ 934,126
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 5
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
NET INCOME (LOSS) .............................. $ 112,900 $ 70,073 $ (10,558)
Income items not requiring
(providing) cash:
Depreciation and amortization .............. 110,810 105,857 95,957
Non-cash portion of
acquisition-related costs and
other unusual charges .................. -- -- 66,196
Deferred income tax provision
(benefit) .............................. 11,548 12,103 (20,781)
Gain on sales of assets, net ............... (16,704) (14,058) (12,503)
Other non-cash items, net .................. (3,079) (1,428) 409
Increase (decrease) in operating
cash flow resulting from:
Receivables, net .................... (37,229) (38,587) 16,277
Inventories, net .................... (39,681) (8,384) (12,603)
Payment of deferred loan costs ...... -- (4,820) (892)
Prepayments and other ............... 4,562 (922) (5,799)
Accounts payable and accrued
liabilities .................... 25,800 15,868 (46,307)
Other long-term liabilities ......... (2,194) (7,024) 9,477
--------- --------- ---------
CASH PROVIDED BY OPERATING
ACTIVITIES ................................. 166,733 128,678 78,873
--------- --------- ---------
Purchases of property, plant and equipment ..... (153,412) (148,656) (110,625)
Proceeds from sales of property,
plant and equipment ........................ 30,431 20,215 31,137
Proceeds from sales of businesses .............. 68,798 40,481 9,493
Acquisitions, net of notes issued and
cash acquired .............................. -- (16,278) (139,226)
Other net cash flows from investing activities . (6,384) (15,388) (9,245)
--------- --------- ---------
CASH USED IN INVESTING ACTIVITIES .............. (60,567) (119,626) (218,466)
--------- --------- ---------
Borrowings under credit facilities ............. 13,190 250,783 411,737
Repayment of borrowings ........................ (115,374) (271,565) (283,346)
Net cash flows from currency hedging
transactions ............................... 5,229 1,133 (2,719)
Purchase of treasury stock ..................... (11,860) -- --
Proceeds from stock option exercises,
sales of stock to employee benefit
plans and other ............................ 12,752 11,046 6,268
--------- --------- ---------
CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES ....................... (96,063) (8,603) 131,940
--------- --------- ---------
Effect of exchange rate changes on cash ........ (784) (220) 4,347
--------- --------- ---------
Increase (decrease) in cash and cash equivalents 9,319 229 (3,306)
Cash and cash equivalents at
beginning of year .......................... 33,029 32,800 36,106
--------- --------- ---------
Cash and cash equivalents at end of year ....... $ 42,348 $ 33,029 $ 32,800
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest ................................... $ 19,588 $ 12,826 $ 14,396
Income taxes ............................... 38,016 14,652 17,741
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 6
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation. The accompanying consolidated financial statements
include the accounts of Weatherford Enterra, Inc. and its subsidiaries (the
"Company" or "Weatherford") after elimination of all significant intercompany
accounts and transactions. The Company accounts for its 50% or less-owned
affiliates using the equity method. Weatherford is a diversified international
energy service and manufacturing company that provides a variety of services and
equipment to the exploration, production and transmission sectors of the oil and
gas industry.
Accounting 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
the disclosure of contingent assets and liabilities at the balance sheet date
and the reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management believes that
the estimates are reasonable.
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. The reported value of all financial instruments approximates market
value. Prepayments and other current assets at December 31, 1997 and 1996
included cash of approximately $3,436,000 and $1,656,000, respectively, which
was restricted as a result of exchange controls in certain foreign countries or
cash collateral requirements for performance bonds, letters of credit and
customs bonds.
Inventories. Inventories, net of allowances, are valued at the lower of cost
(first-in, first-out or average) or market and are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Spare parts and components .... $ 56,686 $ 41,068
Raw materials ................. 29,920 28,734
Work in process ............... 19,904 26,902
Finished goods ................ 62,538 66,598
-------- --------
$169,048 $163,302
======== ========
</TABLE>
Work in process and finished goods inventories include the costs of materials,
labor and plant 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:
Buildings and improvements............................... 5-45 years
Rental and service equipment............................. 3-15 years
Machinery and other equipment............................ 3-15 years
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 consolidated statements of income. The Company evaluates
potential impairment of property, plant and equipment and other long-lived
assets on an ongoing basis as necessary whenever events or changes in
circumstances indicate that the carrying amounts may not be recoverable.
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 amortized on a straight-line basis
generally over a period of 40 years. The Company evaluates potential impairment
of goodwill on an ongoing basis as necessary whenever events or changes in
circumstances indicate that the carrying amounts may not be recoverable.
Goodwill amortization expense totaled $7,713,000, $7,044,000 and $5,852,000
during 1997, 1996 and 1995, respectively. Accumulated amortization at December
31, 1997 and 1996 was $22,536,000 and $14,199,000, respectively.
Income taxes. 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.
<PAGE> 7
The Company does not provide federal income taxes on the undistributed earnings
of certain of its foreign subsidiaries because it believes these amounts are
permanently invested outside the United States. The cumulative amount of such
undistributed earnings on which federal taxes have not been provided was
$173,502,000 at December 31, 1997. If these foreign earnings were to be
ultimately remitted, certain foreign withholding taxes would be payable and U.S.
federal income taxes payable at that time would be reduced by foreign tax
credits generated by the repatriation.
Environmental expenditures. Environmental expenditures that relate to ongoing
business activities are expensed or capitalized, in accordance with the
Company's capitalization policy. Expenditures that relate to the remediation of
an existing condition caused by past operations, and which do not contribute to
current or future revenues, are expensed. Liabilities for these expenditures are
recorded when it is probable that obligations have been incurred and the costs
can be reasonably estimated. Estimates are based on currently available facts
and technology, presently enacted laws and regulations and the Company's prior
experience in remediation of contaminated sites. Liabilities included $5,203,000
and $10,263,000 of accrued environmental expenditures at December 31, 1997 and
1996, respectively.
Foreign currency translation. The functional currency for most of the Company's
international operations is the applicable local currency. The translation of
the foreign currencies into U.S. dollars is performed for balance sheet accounts
using exchange rates in effect at the balance sheet date and for income
statement accounts using a weighted average exchange rate for the period. The
gains or losses resulting from such translation are included as a separate
component of stockholders' equity. Gains or losses resulting from foreign
currency transactions are included in the consolidated statements of income.
Foreign exchange enters into foreign exchange contracts only as a hedge against
certain existing economic exposures, and not for speculative or trading
purposes. These contracts reduce exposure to currency movements affecting
existing assets and liabilities denominated in foreign currencies, such
exposure resulting primarily from trade receivables and payables and
intercompany loans. The future value of these contracts and the related
currency positions are subject to offsetting market risk resulting from foreign
currency exchange rate volatility. The counterparties to the Company's foreign
exchange contracts are creditworthy multinational commercial banks. Management
believes that the risk of counterparty nonperformance is immaterial. At
December 31, 1997 and 1996, the Company had contracts maturing within the next
60 days to sell $36,802,000 and $50,942,000, respectively, in Norwegian kroner,
U.K. pounds sterling, Canadian dollars and Dutch guilders. Had such respective
contracts matured on December 31, 1997 and 1996, the Company's required cash
outlay would have been minimal.
Revenue recognition. Revenues are generally recognized when services and rentals
are provided and when products and equipment are shipped. Proceeds from
customers for the cost of oilfield rental equipment that is damaged or lost
downhole are reflected as revenues.
Earnings (loss) per common share. In the fourth quarter of 1997, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share." Accordingly, the Company's reported per share results for prior
periods have been restated. Basic earnings (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of Common
Stock outstanding during the period. Diluted earnings per common share for 1997
and 1996 also assume the exercise of employee stock options under the treasury
stock method. Stock options are not included in the 1995 computation because to
do so would have been anti-dilutive.
A reconciliation of the numerators and denominators of the basic and diluted
earnings per common share computations follows (in thousands except per share
amounts):
<TABLE>
<CAPTION>
Per Share
Net Income Shares Amount
---------- ------ ----------
<S> <C> <C> <C>
1997:
Basic earnings per common
share .......................... $ 112,900 52,430 $ 2.15
=========
Employee stock options ......... -- 407
--------- ------
Diluted earnings per common
share .......................... $ 112,900 52,837 $ 2.14
========= ====== =========
1996:
Basic earnings per common
share .......................... $ 70,073 51,722 $ 1.35
=========
Employee stock options ......... -- 375
--------- ------
Diluted earnings per common
share .......................... $ 70,073 52,097 $ 1.35
========= ====== =========
1995:
Basic and diluted loss per
common share ................... $ (10,558) 50,681 $ (0.21)
========= ====== =========
</TABLE>
<PAGE> 8
Concentration of credit risk. The Company grants credit to its customers, which
are primarily in the oil and gas industry. Credit risk with respect to trade
accounts receivable is generally diversified due to the large number of entities
comprising the Company's customer base and their dispersion across many
different countries. The Company performs periodic credit evaluations of its
customers and generally does not require collateral. The Company monitors its
exposure for credit losses and maintains an allowance for anticipated losses
(see Note 10).
Stock-based compensation. SFAS No. 123, "Accounting for Stock-Based
Compensation," encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value. The
Company has elected to continue to account for stock-based compensation using
the intrinsic value method prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees". Accordingly, compensation cost
for stock options is measured as the excess, if any, of the quoted market price
of the Company's Common Stock at the date of grant over the option exercise
price (see Note 5).
New accounting pronouncements. In June 1997, the Financial Accounting Standards
Board (the "FASB") issued SFAS No. 130, "Reporting Comprehensive Income", which
establishes standards for reporting and financial statement display of
comprehensive income. SFAS No. 130 is effective January 1, 1998. Had SFAS No.
130 been adopted in 1997, the year-to-date change in cumulative translation
adjustment would have been added to net income to calculate comprehensive
income.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", which requires segment information to be
reported on a basis consistent with that used internally for evaluating resource
allocation and segment performance. The Company will adopt SFAS No. 131 in 1998
and is currently evaluating its method of reporting segment information.
In 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits", which standardizes disclosure requirements
for pensions and other postretirement benefits. The Company is required to adopt
SFAS No. 132 in 1998. Had the Company adopted SFAS No. 132 at December 31, 1997,
it would have had no impact on the consolidated financial statements.
Reclassifications. Certain reclassifications were made to previously reported
amounts in the consolidated financial statements and notes to make them
consistent with the current presentation.
(2) ACQUISITIONS, MERGERS AND DIVESTITURES
Results of operations for business combinations accounted for as purchases are
included in the accompanying consolidated financial statements since the date of
acquisition. With respect to business combinations accounted for as poolings of
interests, the consolidated financial statements have been restated for all
periods presented as if the companies had been combined since inception.
Nodeco. On May 23, 1996, the Company acquired the business and assets of Nodeco
AS, a Norwegian company, and its wholly-owned subsidiary, Aarbakke AS
(collectively, "Nodeco"), in a transaction accounted for as a purchase. Nodeco
designs, manufactures, sells and rents oil and gas well completion products
primarily consisting of liner hanger equipment and related services, as well as
pump packers. The Company paid cash of $14,393,000 net of cash acquired, issued
750,000 shares of its Common Stock and assumed all liabilities of Nodeco,
totaling $12,109,000.
Energy Industries. On December 15, 1995, the Company acquired substantially all
of the assets of the natural gas compression business of Energy Industries, Inc.
and Zapata Energy Industries, L.P. (collectively, "Energy Industries") in a
transaction accounted for as a purchase. Energy Industries was engaged in the
business of fabricating, selling, installing, renting and servicing natural gas
compressor units used in the oil and gas industry. The Company paid
approximately $130,000,000 in cash and assumed certain liabilities totaling
approximately $12,485,000.
Enterra. On October 5, 1995, the Company completed a merger with Enterra
Corporation ("Enterra"), a worldwide provider of specialized services and
products to the oil and gas industry through its oilfield, pipeline and gas
compression services businesses. The Company issued approximately 23,668,000
shares of Common Stock in exchange for all the outstanding shares of Enterra
common stock. The merger was accounted for as a pooling of interests. In
connection with the Enterra merger, the Company recorded acquisition-related
costs totaling $59,900,000 (see Note 8).
Other acquisitions. During 1996 and 1995, the Company acquired several
businesses in addition to those mentioned above in transactions accounted for as
purchases. The impact of these acquisitions on reported results of operations,
on a pro forma basis, was not material to the Company's consolidated results of
operations.
<PAGE> 9
Divestitures. During 1997, 1996 and 1995, the Company sold certain non-core
businesses which did not fit into the long-term strategy of the Company. Such
businesses included CRC-Evans Pipeline International, Inc., Arrow Completion
Systems, Inc., Total Engineering Services Team, Inc. and several others (see
Note 9). Cash proceeds from these transactions totaled $68,798,000, $40,481,000
and $9,493,000 in 1997, 1996 and 1995, respectively, and were primarily used to
repay bank debt.
(3) DEBT
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
7 1/4% Notes ......................... $200,000 $200,000
Bank term loan ....................... -- 95,950
Foreign bank debt, denominated in
foreign currencies ............... 8,152 11,231
Other indebtedness ................... 3,795 8,593
-------- --------
211,947 315,774
Less -- Amounts due within one
year ............................. 2,823 24,508
-------- --------
$209,124 $291,266
======== ========
</TABLE>
The Company has outstanding $200,000,000 of 7 1/4% notes due May 15, 2006 (the
"7 1/4% Notes"). Interest on the 7 1/4% Notes is payable semi-annually on May 15
and November 15 of each year.
On October 24, 1997, the Company amended its primary bank credit facility,
extending its $200,000,000 revolving credit facility (the "Revolving Credit
Facility") through October 24, 2002, reducing interest rates and fees and
improving other terms and conditions. The balance outstanding under the bank
term loan was repaid earlier in 1997. Amounts outstanding under the Revolving
Credit Facility accrue interest at a variable rate, ranging from 0.25% to 0.625%
above a specified Eurodollar rate, depending on the credit ratings assigned to
the 7 1/4% Notes. A commitment fee ranging from 0.09% to 0.20% per annum,
depending on the credit ratings assigned to the 7 1/4% Notes, is payable
quarterly on the unused portion of the Revolving Credit Facility. The Company is
required under the Revolving Credit Facility to maintain certain financial
ratios, including a maximum debt-to-capitalization ratio of 50%.
Maturities of the Company's debt at December 31, 1997 were as follows (in
thousands):
<TABLE>
<S> <C>
1998.......................................................... $2,823
1999.......................................................... 6,525
2000.......................................................... 579
2001.......................................................... 647
2002.......................................................... 682
Thereafter.................................................... 200,691
--------
$211,947
========
</TABLE>
At December 31, 1997, the Company had $200,000,000 available to borrow under the
Revolving Credit Facility. The Company also has various credit facilities
available only for stand-by letters of credit and bid and performance bonds,
pursuant to which funds are available to the Company to secure performance
obligations and certain retrospective premium adjustments under insurance
policies. The Company had a total of $13,019,000 of letters of credit and bid
and performance bonds outstanding at December 31, 1997.
(4) INCOME TAXES
The components of income (loss) before income taxes were as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Foreign .......... $ 60,722 $ 52,529 $ 23,853
United States .... 114,851 52,318 (38,807)
--------- --------- ---------
$ 175,573 $ 104,847 $ (14,954)
========= ========= =========
</TABLE>
<PAGE> 10
The income tax provision (benefit) was comprised of the following (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Current:
Foreign .......................... $ 26,812 $ 18,729 $ 15,439
U.S. federal and state income
taxes ......................... 24,313 3,942 946
-------- -------- --------
Total current ............ 51,125 22,671 16,385
-------- -------- --------
Deferred:
Foreign .......................... 2,562 478 3,038
U.S. federal ..................... 8,986 11,625 (23,819)
-------- -------- --------
Total deferred ........... 11,548 12,103 (20,781)
-------- -------- --------
$ 62,673 $ 34,774 $ (4,396)
======== ======== ========
</TABLE>
The consolidated provision (benefit) for income taxes differs from the provision
(benefit) computed at the statutory U.S. federal income tax rate of 35% for the
following reasons (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Tax provision (benefit) at U.S. ..........
statutory rate ....................... $ 61,451 $ 36,696 $ (5,234)
Foreign income, taxed at more than
U.S. statutory rate .................. 8,120 715 7,687
Intercompany dividends ................... 1,001 -- 557
Benefit of U.S. NOL carryforwards and
other credits ........................ (7,719) (9,550) (15,299)
Nondeductible goodwill ................... 3,051 1,601 1,601
Nondeductible expenses related to
acquisitions ......................... -- -- 3,307
U.S. alternative minimum taxes and
state income taxes ................... 868 3,942 946
Other .................................... (4,099) 1,370 2,039
-------- -------- --------
$ 62,673 $ 34,774 $ (4,396)
======== ======== ========
</TABLE>
On the accompanying consolidated balance sheets, current deferred tax assets and
liabilities are netted within each tax jurisdiction. The components of the net
deferred tax assets (liabilities) shown on the consolidated balance sheets are
as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Current deferred tax assets .......... $ 11,470 $ 22,450
Valuation allowance, current ......... (204) (2,360)
Non-current deferred tax assets ...... 15,063 26,806
Valuation allowance, non-current ..... (2,300) (7,864)
-------- --------
Total deferred tax assets .... 24,029 39,032
-------- --------
Current deferred tax liabilities ..... (1,043) (2,867)
Non-current deferred tax
liabilities ...................... (27,401) (34,728)
-------- --------
Total deferred tax
liabilities ............... (28,444) (37,595)
-------- --------
Net deferred tax assets
(liabilities) .................... $ (4,415) $ 1,437
======== ========
</TABLE>
<PAGE> 11
The change in the valuation allowance in 1997 and 1996 primarily relates to
utilization of U.S. net operating loss ("NOL") and tax credit carryforwards and
management's assessment that future taxable income will be sufficient to enable
the Company to utilize remaining NOL and tax credit carryforwards. The tax
effects of significant temporary differences giving rise to deferred tax assets
(liabilities) are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
NOL and tax credit carryforwards ............... $ 12,347 $ 24,990
Depreciation and amortization .................. (24,896) (18,939)
Financial reserves and accruals not
yet deductible ............................. 9,127 19,426
Other differences between financial
and tax bases of assets and liabilities .... 1,511 (13,816)
Valuation allowances ........................... (2,504) (10,224)
-------- --------
$ (4,415) $ 1,437
======== ========
</TABLE>
The Company has U.S. NOL carryforwards available to reduce future U.S. taxable
income of $6,973,000 expiring between 1999 and 2009, of which $2,558,000 is
limited pursuant to Section 382 of the U.S. Internal Revenue Code.
(5) COMMON STOCK AND STOCK-BASED COMPENSATION PLANS
Common Stock. In December 1997, the Board of Directors instituted a stock
repurchase program under which the Company is authorized to purchase up to
$100,000,000 of Common Stock from time to time in open market transactions or in
privately negotiated transactions. Pursuant to this program, the Company
purchased 289,200 shares of Common Stock in December 1997 at an average cost of
$41.01 per share. During the two-month period ended February 28, 1998, the
Company purchased 1,040,300 shares of Common Stock at an average cost of $35.98
per share.
Stock option plans. The Company has a number of stock option plans pursuant to
which officers and other key employees may be granted options to purchase shares
of Common Stock at fair market value. Options generally become exercisable in
three annual installments, commencing one year after the date of grant.
Unexercised options expire ten years after the date of grant. In addition, the
Company has a Non-Employee Director Stock Option Plan (the "Director Option
Plan") pursuant to which each non-employee director receives upon initial
election as a director an option to purchase 2,500 shares and, at each annual
meeting thereafter, an additional option to purchase 2,000 shares of Common
Stock, in each case at fair market value. Options granted under the Director
Option Plan become exercisable six months after the date of grant, and
unexercised options expire ten years after the date of grant. Enterra had a
similar plan, pursuant to which directors of Enterra received immediately
exercisable options to purchase shares of Enterra common stock at fair market
value. All outstanding options under the Enterra director plan were exercised
prior to the Enterra merger.
The following table summarizes activity related to stock option plans of the
Company:
<TABLE>
<CAPTION>
Number of Shares
--------------------------
Non-Employee Weighted Average
Employees Directors Exercise Price
--------- ------------ ----------------
<S> <C> <C> <C>
Outstanding, December 31, 1994 ........... 978,935 59,150 $16.06
Granted .................................. 953,985 58,075 20.89
Exercised ................................ (220,284) (88,725) 16.02
Terminated ............................... (424,404) -- 17.03
--------- ---------
Outstanding, December 31, 1995 ........... 1,288,232 28,500 18.72
Granted .................................. 325,650 3,000 31.59
Exercised ................................ (238,665) (11,500) 19.09
Terminated ............................... (376,977) -- 21.93
--------- ---------
Outstanding, December 31, 1996 ........... 998,240 20,000 21.79
Granted .................................. 446,250 16,500 30.74
Exercised ................................ (375,697) (3,000) 19.52
Terminated ............................... (50,429) -- 26.02
--------- ---------
Outstanding, December 31, 1997 ........... 1,018,364 33,500 $26.41
========= =========
Shares available for future issuance,
December 31, 1997 ..................... 1,702,782 45,500
========= =========
Exercisable, December 31, 1995 ........... 432,494 21,000 $15.49
Exercisable, December 31, 1996 ........... 398,569 20,000 15.92
Exercisable, December 31, 1997 ........... 322,822 33,500 20.40
</TABLE>
<PAGE> 12
The following table summarizes information about stock options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Prices Outstanding Life Price Exercisable Price
--------------- ----------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$6.75 to $15.75 110,185 4.4 years $13.14 108,767 $13.16
17.50 to 19.75 190,924 6.8 years 18.97 148,461 19.10
21.30 to 30.63 353,893 8.0 years 28.99 20,266 23.04
30.75 to 31.56 396,862 8.6 years 31.37 78,828 32.15
--------- -------
$6.75 to $31.56 1,051,864 7.6 years $26.41 356,322 $20.40
========= =======
</TABLE>
The weighted average fair values of options granted during 1997, 1996 and 1995
were $12.96, $14.46 and $8.53 per share, respectively. The fair values were
estimated using the Black-Scholes option-pricing model with the following
weighted average assumptions for 1997, 1996 and 1995, respectively: expected
volatility of 42%, 50% and 52% (38% for options issued by Enterra prior to the
merger), risk free interest rates of 6.07%, 5.13% and 6.85% (7% for options
issued by Enterra prior to the merger), expected lives of four years and zero
dividend yield. If the fair value-based method of accounting under SFAS No. 123
had been applied, the Company's pro forma net income (loss) and diluted earnings
(loss) per share would have been, respectively, $110,765,000 and $2.10 in 1997,
$68,412,000 and $1.31 in 1996 and $(11,926,000) and $(0.23) in 1995. As the
disclosure requirements of SFAS No. 123 are not applicable to options granted
prior to 1995, the pro forma effects for 1997, 1996 and 1995 are not indicative
of the pro forma effects in future years.
In addition to the options in the above table, the Company granted options to
purchase 84,500, 45,337 and 34,200 shares of Common Stock in 1995, 1994 and
1991, respectively, to former directors and former employees of acquired
companies and to a former officer of the Company. These options were granted
pursuant to separate agreements and are not covered by an option plan. Exercises
of such options totaled 22,816, 16,483 and 40,334 shares in 1997, 1996 and 1995,
respectively, and 67,600 of such options were outstanding and exercisable at
December 31, 1997 at a weighted average exercise price of $25.75 per share.
Stock appreciation rights plan. The Company has a stock appreciation rights plan
(the "SAR Plan") pursuant to which certain officers and other key employees were
granted stock appreciation units ("SARs"). The SAR Plan was amended in 1992 to
provide that no additional grants would be made. SARs were awarded in connection
with stock options granted under one of the Company's stock option plans and can
be exercised only if the related stock option is exercised. Compensation expense
is recorded based on the increase in the market price of the Company's Common
Stock since the date of grant. At December 31, 1997, there were 15,543 SARs
outstanding, all of which were vested, at an average price of $10.41 per SAR.
During 1997, 1996 and 1995, the Company recognized compensation expense of
$700,000, $225,000 and $121,000, respectively, in connection with SARs.
Stock bonus plan. The Company has a stock bonus, pursuant to which officers and
certain other key employees of the Company may be granted shares of Common
Stock. The market value of shares granted under the Bonus Plan is recorded as
compensation expense on the date of grant. With respect to the Bonus Plan, the
Company granted 2,485 and 21,391 shares in 1997 and 1996, respectively, and
recognized compensation expense of $110,000 and $675,000 during 1997 and 1996,
respectively. The Company granted no shares under the Bonus Plan in 1995. There
were 1,303 shares available for future grants under the Bonus Plan at December
31, 1997.
Restricted stock plans. The Company has a restricted stock plan for certain
officers of the Company (the "Restricted Plan") and a restricted stock plan for
non-employee directors (the "Director Restricted Plan"; collectively, the
"Restricted Stock Plans"), pursuant to which shares of Common Stock may be
granted. Shares granted under the Restricted Stock Plans are subject to certain
restrictions on ownership and transferability when granted. Restrictions
applicable to shares granted under the Restricted Plan lapse in part based on
continued employment and in part based on Company performance. Restrictions
applicable to shares granted under the Director Restricted Plan lapse in three
equal annual installments, commencing one year after the date of grant. The
compensation related to the restricted stock grants is deferred and amortized to
expense on a straight-line basis over the period of time the restrictions are in
place, and the unamortized portion is classified as a reduction of paid-in
capital in the accompanying consolidated balance sheets. The following table
provides a summary of activity related to the Restricted Stock Plans:
<PAGE> 13
<TABLE>
<CAPTION>
Number of Shares
---------------------------
Non-Employee
Employees Directors
----------- ------------
<S> <C> <C>
Outstanding, December 31, 1994 ........... 53,832 --
Granted (market price: $18.50 per
share) ............................... 29,500 --
Restrictions terminated .................. (47,193) --
----------- -----------
Outstanding, December 31, 1995 ........... 36,139 --
Granted (market price: $31.56 per
share) ............................... 31,000 --
Restrictions terminated .................. (37,735) --
----------- -----------
Outstanding, December 31, 1996 ........... 29,404 --
Granted (average market price: $32.08
per share) ........................... 91,041 10,838
Restrictions terminated .................. (27,030) --
----------- -----------
Outstanding, December 31, 1997 ........... 93,415 10,838
=========== ===========
Shares available for future grants at
December 31, 1997 .................... 38,396 239,162
=========== ===========
Compensation expense:
1997 ............................ $ 1,146,000 $ 120,000
1996 ............................ 418,000 --
1995 ............................ 392,000 --
Deferred compensation at December 31:
1997 ............................ $ 3,095,000 $ 352,000
1996 ............................ 1,445,000 --
</TABLE>
Stock purchase plan. The Company has an employee stock purchase plan (the
"ESPP"), pursuant to which eligible employees can purchase shares of Common
Stock through payroll deductions. The Company matches a specified percentage of
the employee contributions made to the ESPP. Company matching contributions to
the ESPP totaled $162,000, $88,000 and $48,000 during 1997, 1996 and 1995,
respectively. There were 51,015 shares available for future purchases under the
ESPP at December 31, 1997.
(6) RETIREMENT AND EMPLOYEE BENEFIT PLANS
The Company has defined benefit and defined contribution pension plans covering
substantially all U.S. employees and certain international employees. Plan
benefits are generally based on years of service and average compensation
levels. The Company's funding policy is to contribute, at a minimum, the annual
amount required under applicable governmental regulations. With respect to
certain international plans, the Company has purchased irrevocable annuity
contracts to settle certain benefit obligations. Plan assets are invested
primarily in equity and fixed income mutual funds.
Pension expense related to the Company's defined contribution pension plans
totaled $2,806,000, $3,200,000 and $4,489,000 in 1997, 1996 and 1995,
respectively. Pension expense related to the Company's defined benefit pension
plans included the following components (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned
during the period .................... $ 961 $ 1,248 $ 692
Interest cost on projected benefit
obligation ........................... 386 427 365
Actual return on plan assets ........... (391) (466) (354)
Net amortization and deferral .......... 48 213 115
------- ------- -------
$ 1,004 $ 1,422 $ 818
======= ======= =======
</TABLE>
<PAGE> 14
The following table sets forth the funded status of the Company's defined
benefit pension plans and the assumptions used in computing such information (in
thousands, except percentages):
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
--------------------- ---------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation .......................... $ 1,356 $ 1,257 $ 3,053 $ 2,933
======= ======= ======= =======
Accumulated benefit obligation ..................... $ 1,599 $ 1,902 $ 3,531 $ 3,388
======= ======= ======= =======
Projected benefit obligation ....................... $ 1,599 $ 2,026 $ 4,261 $ 4,192
Plan assets at fair value .......................... 1,487 1,383 2,553 2,194
------- ------- ------- -------
Projected benefit obligation in
excess of plan assets ........................... (112) (643) (1,708) (1,998)
Unrecognized prior service cost .................... (620) (637) 124 158
Unrecognized net (gain) loss ....................... 457 592 (758) (775)
Unrecognized transition obligation ................. -- -- 81 125
------- ------- ------- -------
Unfunded accrued pension cost ...................... (275) (688) (2,261) (2,490)
Adjustment for minimum liability ................... -- (9) -- --
------- ------- ------- -------
Pension liability .................................. $ (275) $ (697) $(2,261) $(2,490)
======= ======= ======= =======
Assumed discount rates ............................. 7.25% 7.25% 6.0-8.0% 6.5-8.0%
Assumed rates of increase in
compensation levels ............................. 4.0% 4.0% 3.7-5.0% 3.7-5.0%
Assumed expected long-term rate of return
on plan assets .................................. 8.0% 8.0% 8.0% 8.0%
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
Aggregate minimum rental commitments under noncancelable operating leases with
lease terms in excess of one year as of December 31, 1997 were as follows (in
thousands):
<TABLE>
<S> <C>
1998..................................................... $10,535
1999..................................................... 11,449
2000..................................................... 6,596
2001..................................................... 5,235
2002 4,709
Thereafter............................................... 32,311
-------
$70,835
=======
</TABLE>
The Company incurred total rental expense under operating leases of $20,902,000,
$21,197,000 and $18,499,000 in 1997, 1996 and 1995, respectively.
The Company is involved in certain claims and lawsuits arising in the normal
course of business. In the opinion of management, the likelihood that uninsured
losses, if any, resulting from the ultimate resolution of these matters will
have a material adverse effect on the financial position, results of operations
or liquidity of the Company is remote.
(8) Acquisition-related costs and other unusual charges
During the second quarter of 1995, management of Enterra made certain strategic
decisions which resulted in $28,282,000 of unusual charges. Such charges
included a $10,041,000 writedown to fair value, based on management's estimation
of net sales price, related to three businesses to be sold. The remaining second
quarter unusual charges of $18,241,000 consisted primarily of asset writedowns
related to certain excess facilities, equipment and inventories, as well as
estimated costs in connection with the closure of certain pipeline businesses
and the consolidation of certain oilfield service administrative and operating
facilities. This restructuring resulted in reductions of approximately 120
employees.
During the fourth quarter of 1995, the Company recorded expenses of $59,900,000
related to the merger with Enterra and the financial impact of management
decisions related to the future operations of the combined company. The
acquisition-related costs primarily consisted of transaction costs, severance
and termination agreements with former officers and employees, facility closure
costs primarily
<PAGE> 15
to consolidate the oilfield service operations and administrative functions
(reducing approximately 600 employees), and the reduction in recorded value of
certain assets that had diminished future value in the operations of the
combined company.
A summary of the 1995 acquisition-related costs and other unusual charges
follows (in thousands):
<TABLE>
<S> <C>
Enterra merger transaction-related
costs.................................................. $18,800
Severance and termination costs.......................... 12,488
Facility closure and consolidation
costs.................................................. 20,943
Writedowns of assets to be sold.......................... 12,281
Other asset writedowns................................... 21,972
Other.................................................... 1,698
-------
$88,182
=======
</TABLE>
(9) SEGMENT INFORMATION
The Company is a diversified international energy service and manufacturing
company that provides a variety of services and equipment to the exploration,
production and transmission sectors of the oil and gas industry. The Company
operates in three industry segments -- oilfield services, oilfield products and
gas compression. During 1996 and 1995, management of the Company made strategic
decisions to dispose of certain non-core businesses, which are presented
separately and described as "Other Businesses" (see Note 2).
Revenues by industry segment and geographic area include both revenues from
unaffiliated customers and intersegment revenues from related companies. The
price at which intercompany sales are made is generally based on the selling
price to unaffiliated customers less a discount or the direct product cost plus
a mark-up. Indirect expenses have been allocated to industry segments in
proportion to outside revenues.
Export sales from the United States to unaffiliated customers in other
geographic areas were as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Europe/Commonwealth of Independent
States ................................ $15,839 $27,523 $10,904
Canada ................................ 10,754 11,334 14,729
Africa ................................ 9,162 26,079 17,792
Middle East ........................... 10,106 7,494 3,843
Asia-Pacific .......................... 9,535 12,364 11,242
Latin America ......................... 9,293 7,247 5,552
Other ................................. 11 2,714 1,403
------- ------- -------
$64,700 $94,755 $65,465
======= ======= =======
</TABLE>
<PAGE> 16
Information with respect to industry and geographic segments follows (in
thousands):
<TABLE>
<CAPTION>
Corporate
Oilfield Oilfield Gas Other and
Services Products Compression Businesses Eliminations Consolidated
-------- -------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1997:
Outside revenues .................. $ 645,906 $ 182,311 $ 178,896 $ 76,852 $ -- $1,083,965
Intersegment revenues ............. -- 27,895 -- -- (27,895) --
Operating income (loss) ........... 152,668 39,129 13,723 440 (12,878) 193,082
Identifiable assets ............... 664,655 203,342 441,758 -- 68,240 1,377,995
Depreciation and amortization ..... 75,582 8,265 21,666 1,541 3,756 110,810
Capital expenditures .............. 104,518 10,603 35,705 940 1,646 153,412
1996:
Outside revenues .................. $ 520,195 $ 149,713 $ 154,503 $ 170,057 $ -- $ 994,468
Intersegment revenues ............. -- 31,020 -- -- (31,020) --
Operating income (loss) ........... 93,644 23,388 7,833 8,849 (7,958) 125,756
Identifiable assets ............... 646,915 187,002 414,969 97,646 51,191 1,397,723
Depreciation and amortization ..... 70,552 6,264 23,554 4,787 700 105,857
Capital expenditures .............. 99,570 10,569 30,392 8,125 -- 148,656
1995:
Outside revenues .................. $ 470,085 $ 115,399 $ 94,386 $ 179,037 $ -- $ 858,907
Intersegment revenues ............. -- 20,537 -- 49 (20,586) --
Acquisition-related costs and other
unusual charges ............... 31,715 15,745 -- 11,711 29,011 88,182
Operating income (loss) ........... 41,849 (13,253) 7,788 2,010 (38,212) 182
Identifiable assets ............... 556,125 120,777 396,465 121,177 64,316 1,258,860
Depreciation and amortization ..... 65,217 5,519 14,421 9,070 1,730 95,957
Capital expenditures .............. 83,849 2,731 16,246 7,657 142 110,625
</TABLE>
<PAGE> 17
<TABLE>
<CAPTION>
United Other and
States Canada Europe Africa International Eliminations
------ ------ ------ ------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1997:
Outside revenues ................ $601,522 $104,983 $147,809 $ 70,037 $159,614 $ --
Intersegment revenues ........... 26,827 -- 19,917 5,601 1,901 (54,246)
Operating income (loss) ......... 132,958 17,346 32,424 14,658 8,574 (12,878)
Identifiable assets ............. 762,592 82,120 187,202 63,677 214,164 68,240
Capital expenditures ............ 84,829 12,381 17,286 10,919 26,351 1,646
1996:
Outside revenues ................ $579,024 $ 78,497 $145,126 $ 72,457 $119,364 $ --
Intersegment revenues ........... 27,966 566 9,848 5,452 1,860 (45,692)
Operating income (loss) ......... 72,042 12,557 19,470 15,028 14,617 (7,958)
Identifiable assets ............. 828,930 69,391 201,137 67,856 179,218 51,191
Capital expenditures ............ 85,729 12,105 15,955 9,437 25,430 --
1995:
Outside revenues ................ $471,672 $106,491 $110,065 $ 57,450 $113,229 $ --
Intersegment revenues ........... 10,091 167 6,049 -- 1,638 (17,945)
Acquisition-related costs
and other unusual charges .... 43,276 2,850 4,302 624 8,119 29,011
Operating income (loss) ......... 5,745 11,382 3,088 13,912 4,267 (38,212)
Identifiable assets ............. 790,625 73,368 141,673 40,299 148,579 64,316
Capital expenditures ............ 59,474 9,953 9,605 5,655 25,796 142
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
Consolidated
------------
<S> <C>
1997:
Outside revenues ................. $1,083,965
Intersegment revenues ............ --
Operating income (loss) .......... 193,082
Identifiable assets .............. 1,377,995
Capital expenditures ............. 153,412
1996:
Outside revenues ................. $ 994,468
Intersegment revenues ............ --
Operating income (loss) .......... 125,756
Identifiable assets .............. 1,397,723
Capital expenditures ............. 148,656
1995:
Outside revenues ................. $ 858,907
Intersegment revenues ............ --
Acquisition-related costs
and other unusual charges .... 88,182
Operating income (loss) .......... 182
Identifiable assets .............. 1,258,860
Capital expenditures ............. 110,625
</TABLE>
(10) VALUATION ALLOWANCES
Activity in the Company's allowance for doubtful accounts, deducted from
receivables in the consolidated balance sheets, was as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year ................ $ 16,241 $ 15,942 $ 11,240
Additions charged to costs and
expenses ................................ 12,858 4,122 6,499
Deductions for uncollectible receivables
written off ............................. (6,441) (4,842) (1,878)
Translation and other, net .................. (191) 1,019 81
-------- -------- --------
Balance at end of year ...................... $ 22,467 $ 16,241 $ 15,942
======== ======== ========
</TABLE>
Activity in the Company's allowance for obsolete or slow-moving inventories,
deducted from inventories in the consolidated balance sheets, was as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year .......... $ 21,261 $ 23,760 $ 16,470
Additions charged to costs and
expenses .......................... 2,987 897 10,683
Deductions for inventories written
off ............................... (7,041) (3,632) (3,520)
Translation and other, net ............ (536) 236 127
-------- -------- --------
Balance at end of year ................ $ 16,671 $ 21,261 $ 23,760
======== ======== ========
</TABLE>
<PAGE> 19
(11) Unaudited quarterly financial data (in thousands except per share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
<S> <C> <C> <C> <C> <C>
1997:
Revenues ...................... $ 267,113 $ 266,835 $ 274,382 $ 275,635 $1,083,965
Gross profit .................. 85,542 87,821 91,094 92,968 357,425
Operating income .............. 40,882 46,020 50,954 55,226 193,082
Income before income taxes .... 35,449 41,185 46,929 52,010 175,573
Net income .................... 22,952 26,795 30,434 32,719 112,900
Basic earnings per share ...... $ 0.44 $ 0.51 $ 0.57 $ 0.63 $ 2.15
Diluted earnings per share .... 0.44 0.51 0.57 0.62 2.14
1996:
Revenues ...................... $ 218,841 $ 233,782 $ 259,070 $ 282,775 $ 994,468
Gross profit .................. 60,319 62,727 76,545 80,531 280,122
Operating income .............. 23,784 26,936 35,864 39,172 125,756
Income before income taxes .... 19,281 21,892 30,153 33,521 104,847
Net income .................... 13,477 14,898 19,828 21,870 70,073
Basic earnings per share ...... $ 0.26 $ 0.29 $ 0.38 $ 0.42 $ 1.35
Diluted earnings per share .... 0.26 0.29 0.38 0.42 1.35
</TABLE>
(12) SUBSEQUENT EVENT (UNAUDITED)
On March 4, 1998, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") providing for the merger of the Company into EVI, Inc.
("EVI"). Pursuant to the terms of the Merger Agreement, Weatherford stockholders
will receive 0.95 of a share of EVI common stock for each share of Weatherford
Common Stock. The transaction, which is expected to be accounted for as a
pooling of interests and to result in no immediate federal income tax
recognition for the Company's stockholders, is subject to the approval of the
stockholders of each of EVI and Weatherford as well as customary regulatory
approvals and other conditions to closing. The transaction is currently expected
to close in late spring or early summer of 1998. There can be no assurance that
this merger will be consummated.
<PAGE> 1
EXHIBIT 99.4
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................................................. $ 17,318 $ 42,348
Receivables, net of allowance of $24,251 and $22,467 ...................................... 267,991 261,449
Inventories, net of allowance of $20,904 and $16,671 ...................................... 183,583 169,048
Deferred tax and other current assets ...................................................... 37,746 32,033
------------ ------------
Total current assets ................................................................... 506,638 504,878
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, AT COST ........................................................ 1,263,446 1,250,494
Less -- Accumulated depreciation ........................................................... 701,006 682,048
------------ ------------
562,440 568,446
------------ ------------
GOODWILL, NET ................................................................................. 263,466 266,121
------------ ------------
OTHER ASSETS .................................................................................. 33,215 38,550
------------ ------------
$ 1,365,759 $ 1,377,995
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion of long-term debt ...................................... $ 4,547 $ 2,823
Accounts payable ........................................................................... 54,942 63,808
Accrued income taxes ....................................................................... 34,294 30,404
Other accrued liabilities .................................................................. 92,339 95,310
------------ ------------
Total current liabilities .............................................................. 186,122 192,345
------------ ------------
LONG-TERM DEBT ................................................................................ 210,452 209,124
------------ ------------
DEFERRED TAX LIABILITIES ...................................................................... 27,308 27,401
------------ ------------
OTHER LONG-TERM LIABILITIES ................................................................... 15,103 14,999
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par; shares authorized 1,000,000; none issued .......................... -- --
Common stock, $.10 par; shares authorized 80,000,000;
issued 52,770,441 and 52,701,964 ....................................................... 5,277 5,270
Paid-in capital ............................................................................ 653,898 652,378
Retained earnings .......................................................................... 343,703 313,216
Cumulative translation adjustment .......................................................... (25,576) (23,795)
Treasury stock, 1,367,478 and 322,667 common shares, at cost ............................... (50,528) (12,943)
------------ ------------
Total stockholders' equity ............................................................. 926,774 934,126
------------ ------------
$ 1,365,759 $ 1,377,995
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE> 2
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
REVENUES:
Services and rentals ............................... $ 196,453 $ 201,317
Products ........................................... 63,276 65,796
------------ ------------
Total revenues ................................. 259,729 267,113
------------ ------------
COSTS AND EXPENSES:
Cost of services and rentals ....................... 126,459 136,754
Cost of products ................................... 41,249 44,817
Selling, general and administrative expenses ....... 31,899 36,190
Research and development ........................... 2,038 2,774
Equity in earnings of unconsolidated affiliates .... (780) (509)
Foreign currency (gain) loss, net .................. (407) 393
Other expense, net ................................. 4,935 5,812
------------ ------------
Total costs and expenses ....................... 205,393 226,231
------------ ------------
OPERATING INCOME ...................................... 54,336 40,882
Interest expense ...................................... 4,018 6,134
Interest income ....................................... (480) (701)
------------ ------------
INCOME BEFORE INCOME TAXES ............................ 50,798 35,449
Income tax provision .................................. 20,311 12,497
------------ ------------
NET INCOME ............................................ $ 30,487 $ 22,952
============ ============
Basic earnings per common share ....................... $ 0.59 $ 0.44
============ ============
Diluted earnings per common share ..................... $ 0.59 $ 0.44
============ ============
Weighted average shares outstanding, basic ............ 51,610 52,242
============ ============
Weighted average shares outstanding, diluted .......... 51,886 52,567
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE> 3
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION TREASURY
STOCK CAPITAL EARNINGS ADJUSTMENT STOCK TOTAL
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 .............. $ 5,270 $ 652,378 $ 313,216 $ (23,795) $ (12,943) $ 934,126
Shares issued under employee
benefit plans ...................... -- 47 -- -- -- 47
Stock grants and options exercised ... 7 1,473 -- -- (157) 1,323
Purchases of treasury stock .......... -- -- -- -- (37,428) (37,428)
Currency translation adjustment ...... -- -- -- (1,781) -- (1,781)
Net income ........................... -- -- 30,487 -- -- 30,487
--------- --------- --------- --------- --------- ---------
BALANCE, MARCH 31, 1998 ................. $ 5,277 $ 653,898 $ 343,703 $ (25,576) $ (50,528) $ 926,774
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE> 4
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED-IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
NET INCOME .................................................................................... $ 30,487 $ 22,952
Income items not requiring (providing) cash:
Depreciation and amortization .............................................................. 29,207 27,378
Gain on sales of assets .................................................................... (3,473) (2,836)
Deferred income tax provision (benefit) .................................................... 87 453
Other non-cash charges ..................................................................... (136) 409
Increase (decrease) in cash from changes in operating accounts:
Receivables, net ....................................................................... (3,505) (20,150)
Inventories, net ....................................................................... (15,049) (11,476)
Prepayments and other .................................................................. 199 6,987
Accounts payable and accrued liabilities ............................................... (9,784) (3,560)
Other long-term liabilities ............................................................ 164 (748)
------------ ------------
CASH PROVIDED BY OPERATING ACTIVITIES ......................................................... 28,197 19,409
------------ ------------
Purchases of property, plant and equipment .................................................... (31,125) (23,018)
Proceeds from sales of property, plant and equipment .......................................... 6,297 7,503
Other net cash flows from investing activities ................................................ 3,928 305
------------ ------------
CASH USED IN INVESTING ACTIVITIES ............................................................. (20,900) (15,210)
------------ ------------
Borrowings under credit facilities ............................................................ 4,356 7,069
Repayment of borrowings ....................................................................... (762) (18,657)
Net cash flows from currency hedging transactions ............................................. 822 2,409
Purchases of treasury stock ................................................................... (37,428) --
Proceeds from sale of stock to employee benefit plans and stock
option exercises ........................................................................... 1,370 2,900
------------ ------------
CASH USED IN FINANCING ACTIVITIES ............................................................. (31,642) (6,279)
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH ....................................................... (685) (1,200)
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS ......................................................... (25,030) (3,280)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................................................ 42,348 33,029
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...................................................... $ 17,318 $ 29,749
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ................................................................................... $ 157 $ 1,659
Income taxes, net of refunds received ...................................................... 7,323 3,970
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 5
WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The consolidated financial statements of Weatherford Enterra, Inc. and its
subsidiaries (the "Company" or "Weatherford") included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished reflects all adjustments, consisting only of normal
recurring adjustments, which are necessary for a fair presentation of the
results of the interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading.
Certain reclassifications were made to previously reported amounts in the
consolidated financial statements and notes to make them consistent with the
current presentation format.
It is suggested that these financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997. No significant
accounting changes have occurred during the three months ended March 31, 1998.
See Note 5.
(2) EVI MERGER. On March 4, 1998, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the merger of the Company into
EVI, Inc. ("EVI"). Pursuant to the terms of the Merger Agreement, Weatherford
stockholders will receive 0.95 of a share of EVI common stock for each share of
Weatherford Common Stock. The transaction, which is expected to be accounted for
as a pooling of interests and to result in no immediate federal income tax
recognition for the Company's stockholders, is subject to the approval of the
stockholders of each of EVI and Weatherford as well as other conditions to
closing. The transaction is expected to close on May 27, 1998. There can be no
assurance that this merger will be consummated.
(3) EARNINGS PER COMMON SHARE. In the fourth quarter of 1997, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share." Basic earnings per common share is computed by dividing net income
by the weighted average number of shares of Common Stock outstanding during the
period. Diluted earnings per common share also assume the exercise of employee
stock options under the treasury stock method.
A reconciliation of the numerators and the denominators of the basic and
diluted earnings per common share computation follows (in thousands except per
share amounts):
<TABLE>
<CAPTION>
PER SHARE
NET INCOME SHARES AMOUNT
---------- ------ ---------
<S> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1998:
Basic earnings per common share . . . . . . . . . . . . . . . . $ 30,487 51,610 $ 0.59
Employee stock options . . . . . . . . . . . . . . . . . . . . . -- 276 =========
----------- ----------
Diluted earnings per common share . . . . . . . . . . . . . . . $ 30,487 51,886 $ 0.59
=========== ========== =========
THREE MONTHS ENDED MARCH 31, 1997:
Basic earnings per common share . . . . . . . . . . . . . . . . $ 22,952 52,242 $ 0.44
Employee stock options . . . . . . . . . . . . . . . . . . . . . -- 325 =========
----------- ----------
Diluted earnings per common share . . . . . . . . . . . . . . . $ 22,952 52,567 $ 0.44
=========== ========== =========
</TABLE>
5
<PAGE> 6
(4) INVENTORIES. Consolidated net inventories consist of the following (in
thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Spare parts and components ................................................... $ 44,572 $ 56,686
Raw materials ................................................................ 44,722 29,920
Work in process .............................................................. 22,390 19,904
Finished goods ............................................................... 71,899 62,538
------------ ------------
$ 183,583 $ 169,048
============ ============
</TABLE>
(5) COMPREHENSIVE INCOME. In January 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income", which establishes standards for reporting and
financial statement display of comprehensive income. A reconciliation of net
income and comprehensive income of the Company follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net income ................................................................... $ 30,487 $ 22,952
Change in cumulative translation adjustment .................................. (1,781) (9,185)
------------ ------------
Comprehensive income ......................................................... $ 28,706 $ 13,767
============ ============
</TABLE>
6
<PAGE> 1
EXHIBIT 99.5
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth certain summary unaudited pro forma
condensed consolidated financial data of EVI and is based on the historical
financial data of EVI, Weatherford Enterra, Inc. ("Weatherford"), Christiana
Companies, Inc. ("Christiana"), Trico Industries, Inc. ("Trico"), BMW Monarch
(Lloydminster) Ltd. ("BMW Monarch") and BMW Pump Inc. (together, "BMW") and the
assets of GulfMark International, Inc. acquired by EVI on May 1, 1997 ("the
GulfMark Retained Assets"). The Unaudited Pro Forma Condensed Consolidated
Financial Statements of EVI have been prepared assuming the proposed merger of
Weatherford with and into EVI (the "Merger"), pursuant to an Agreement and Plan
of Merger dated as of March 4, 1998, as amended, between EVI and Weatherford, is
accounted for as a pooling of interests and give effect to the proposed Merger
by combining EVI's and Weatherford's results of operations for each of the three
years ended December 31, 1997 on a pooling-of-interests basis as if EVI and
Weatherford had been combined since inception. The Unaudited Adjusted Pro Forma
Condensed Consolidated Statement of Income further gives effect to (i) the
acquisition by EVI on May 1, 1997, of the GulfMark Retained Assets, (ii) the
issuance and sale of EVI's 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027 (the "Debentures") on November 10, 1997, (iii) the
acquisition by EVI on December 15, 1997, of $119,980,000 principal amount of
EVI's outstanding 10 1/4% Senior Notes due 2004 and 10 1/4% Senior Notes due
2004, Series B (collectively, the "Notes") from the holders of the Notes
pursuant to a cash tender offer and consent solicitation of the Company (the
"Tender Offer"), (iv) EVI's acquisition of Trico on December 2, 1997, (v) EVI's
acquisition of BMW on December 3, 1997 and (vi) EVI's proposed acquisition of
Christiana through a merger of a subsidiary of EVI with and into Christiana
("Christiana Acquisition") pursuant to an Agreement and Plan of Merger dated
December 12, 1996 (the "Christiana Merger Agreement"), by and among EVI,
Christiana and C2, Inc., a Wisconsin corporation ("C2"), and the sale by
Christiana, prior to the Christiana Acquisition, of two-thirds of its interest
in Total Logistic Control, LLC ("Logistic"), a wholly owned subsidiary of
Christiana, to C2 for approximately $10.7 million, as if these transactions had
occurred on January 1, 1997. The Unaudited Adjusted Pro Forma Condensed
Consolidated Balance Sheet presents the combined financial position of EVI and
Weatherford and gives effect to EVI's proposed merger with Christiana as if
these transactions had occurred on December 31, 1997. The pro forma amounts
presented do not include transaction costs related to the Merger which are
estimated to be approximately $25 million and other costs directly attributable
to the Merger which, in the aggregate, are expected to be between $90 million
and $110 million.
The pro forma information set forth below is not necessarily indicative
of the results that actually would have been achieved had such transactions been
consummated as of the aforementioned dates, or that may be achieved in the
future. All other 1997 and 1998 acquisitions by EVI are not material
individually or in the aggregate with same-year acquisitions; therefore, pro
forma information is not reflected. This information should be read in
conjunction with EVI's Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in its Annual Report on Form 10-K,
as amended, for the year ended December 31, 1997, and EVI's, GulfMark Retained
Assets', Trico's, BMW's, Christiana's and Weatherford's financial statements and
related notes thereto, all of which have been previously filed.
Page 1
<PAGE> 2
UNAUDITED ADJUSTED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
EVI AND PRO FORMA EVI AND
WEATHERFORD ADJUSTMENTS WEATHERFORD
COMBINED -------------------------- COMBINED
PRO CHRISTIANA SALE OF PRO FORMA
FORMA(a) HISTORICAL LOGISTIC(b) CHRISTIANA ADJUSTED
----------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 74,211 $ 6,855 $ 33,280 (c) $(20,858)(d)(e) $ 93,488
Accounts receivable, net.......................... 526,756 9,258 (9,258) -- 526,756
Inventories....................................... 455,811 -- -- -- 455,811
Prepaid expenses and other........................ 79,125 1,459 (1,459) -- 79,125
---------- -------- -------- -------- ----------
Total current assets........................ 1,135,903 17,572 22,563 (20,858) 1,155,180
---------- -------- -------- -------- ----------
Property, plant and equipment, net................ 870,163 73,881 (73,881) -- 870,163
Goodwill, net..................................... 669,449 5,514 (5,514) -- 669,449
Investment in EVI................................. -- 44,703 -- (44,703)(f) --
Investment in Logistic............................ -- -- 7,620 (g) (3,919)(h) 3,701
Other assets...................................... 68,546 1,891 (1,891) -- 68,546
---------- -------- -------- -------- ----------
$2,744,061 $143,561 $(51,103) $(69,480) $2,767,039
========== ======== ======== ======== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of
long-term debt.................................. $ 37,421 $ 1,245 $ (1,245) $ -- $ 37,421
Accounts payable.................................. 220,637 4,729 (4,729) -- 220,637
Other accrued liabilities......................... 248,452 5,579 2,173 (i) 1,288 (e)(j) 257,492
---------- -------- -------- -------- ----------
Total current liabilities................... 506,510 11,553 (3,801) 1,288 515,550
---------- -------- -------- -------- ----------
Long-term debt.................................... 252,322 33,617 (33,617) -- 252,322
Deferred income taxes and other................... 121,370 23,626 (10,731)(i) 1,043 (f)(k) 135,308
5% Convertible Subordinated Preferred Equivalent
Debentures...................................... 402,500 -- -- -- 402,500
Stockholders' equity:
Common stock...................................... 101,651 (l) 5,209 -- (1,312)(e)(m)(n) 105,548
Capital in excess of par.......................... 1,005,387 (l) 12,346 -- 144,527 (e)(m)(n) 1,162,260
Retained earnings................................. 545,159 58,446 (2,954) (55,492)(e)(n) 545,159
Foreign currency translation adjustment........... (38,494) -- -- -- (38,494)
Treasury stock, at cost........................... (152,344)(l) (1,236) -- (159,534)(m)(n) (313,114)
---------- -------- -------- -------- ----------
Total stockholders' equity.................. 1,461,359 74,765 (2,954) (71,811) 1,461,359
---------- -------- -------- -------- ----------
$2,744,061 $143,561 $(51,103) $(69,480) $2,767,039
========== ======== ======== ======== ==========
</TABLE>
2
<PAGE> 3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997(o) 1996(o) 1995(o)
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Products............................................ $1,147,692 $ 721,090 $ 513,206
Services and rentals................................ 821,397 746,180 612,597
---------- ---------- ----------
1,969,089 1,467,270 1,125,803
---------- ---------- ----------
Costs and expenses:
Cost of sales
Products......................................... 817,013 553,501 388,329
Services and rentals............................. 551,375 537,313 442,902
Selling, general and administrative................. 264,553 209,433 195,747
Acquisition-related costs and other unusual
charges.......................................... -- -- 88,182
---------- ---------- ----------
1,632,941 1,300,247 1,115,160
---------- ---------- ----------
Operating income...................................... 336,148 167,023 10,643
---------- ---------- ----------
Other income (expense):
Interest expense.................................... (43,273) (39,368) (33,504)
Interest income..................................... 8,329 4,168 2,249
Equity in earnings of unconsolidated affiliates..... 2,582 2,078 1,477
Other income (expense), net......................... 1,175 (1,227) 6,160
---------- ---------- ----------
(31,187) (34,349) (23,618)
---------- ---------- ----------
Income (loss) before income taxes..................... 304,961 132,674 (12,975)
Provision (benefit) for income taxes.................. 108,188 40,513 (4,707)
---------- ---------- ----------
Income (loss) from continuing operations.............. $ 196,773 $ 92,161 $ (8,268)
========== ========== ==========
Earnings (loss) per share from continuing operations:
Basic(p)............................................ $ 2.05 $ 1.03 $ (0.11)
Diluted(p).......................................... 2.02 1.01 (0.11)
Weighted average shares outstanding:
Basic............................................... 96,052 89,842 77,595
Diluted............................................. 97,562 90,981 77,595
</TABLE>
3
<PAGE> 4
UNAUDITED ADJUSTED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
EVI AND
WEATHERFORD BMW PUMP/
COMBINED GULFMARK BMW MONARCH
PRO RETAINED ASSETS TRICO COMBINED CHRISTIANA
FORMA(o) HISTORICAL(q) HISTORICAL(r) HISTORICAL(r) HISTORICAL
----------- --------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Products...................... $1,147,692 $ 818 $51,459 $103,847 $90,101
Services and rentals.......... 821,397 -- -- -- --
---------- ----- ------- -------- -------
1,969,089 818 51,459 103,847 90,101
---------- ----- ------- -------- -------
Costs and expenses:
Cost of sales
Products.................. 817,013 678 34,323 73,591 76,377
Services and rentals...... 551,375 -- -- -- --
Selling, general and
administrative.............. 264,553 688 15,346 15,450 9,103
---------- ----- ------- -------- -------
1,632,941 1,366 49,669 89,041 85,480
---------- ----- ------- -------- -------
Operating income................. 336,148 (548) 1,790 14,806 4,621
---------- ----- ------- -------- -------
Other income (expense):
Interest expense.............. (43,273) -- (493) (337) (2,991)
Interest income............... 8,329 -- -- -- 507
Equity in earnings of BMW
Monarch..................... -- -- 832 -- --
Equity in earnings of EVI..... -- -- -- -- 6,290
Equity in earnings of
Logistic.................... -- -- -- -- --
Equity in earnings of
unconsolidated affiliates... 2,582 -- -- -- --
Other income (expense), net... 1,175 -- (595) 65 (1,470)
---------- ----- ------- -------- -------
(31,187) -- (256) (272) 2,336
---------- ----- ------- -------- -------
Income (loss) before income
taxes........................... 304,961 (548) 1,534 14,534 6,957
Provision (benefit) for income
taxes........................... 108,188 100 797 5,748 2,763
---------- ----- ------- -------- -------
Income (loss) from continuing
operations...................... $ 196,773 $(648) $ 737 $ 8,786 $ 4,194
========== ===== ======= ======== =======
Earnings per share from
continuing operations:
Basic......................... $ 2.05(p)
Diluted....................... 2.02(p)
Weighted average shares
outstanding:
Basic......................... 96,052(dd)
Diluted....................... 97,562(dd)
<CAPTION>
PRO FORMA ADJUSTMENTS EVI AND
-------------------------------------------------------------------- WEATHERFORD
BMW PUMP/ COMBINED
DEBENTURE SENIOR NOTES BMW MONARCH PRO FORMA
OFFERING TENDER TRICO COMBINED CHRISTIANA(s) ADJUSTED
--------- ------------ ------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Products...................... $ -- $ -- $ -- $ -- $(90,101) $1,303,816
Services and rentals.......... -- -- -- -- -- 821,397
-------- ------- ------- ------- -------- ----------
-- -- -- -- (90,101) 2,125,213
-------- ------- ------- ------- -------- ----------
Costs and expenses:
Cost of sales
Products.................. -- -- 2,100(t) -- (76,377) 927,705
Services and rentals...... -- -- -- -- 551,375
Selling, general and
administrative.............. -- -- 1,364(u) (3,616)(u)(v) (9,103) 293,785
-------- ------- ------- ------- -------- ----------
-- -- 3,464 (3,616) (85,480) 1,772,865
-------- ------- ------- ------- -------- ----------
Operating income................. -- -- (3,464) 3,616 (4,621) 352,348
-------- ------- ------- ------- -------- ----------
Other income (expense):
Interest expense.............. (17,325)(w) 12,216(x) -- 373(y) 2,991 (48,839)
Interest income............... -- -- -- -- (507) 8,329
Equity in earnings of BMW
Monarch..................... -- -- (832)(z) -- -- --
Equity in earnings of EVI..... -- -- -- -- (6,290)(aa) --
Equity in earnings of
Logistic.................... -- -- -- -- 130 130
Equity in earnings of
unconsolidated affiliates... -- -- -- -- -- 2,582
Other income (expense), net... -- -- 538(bb) -- 1,470 1,183
-------- ------- ------- ------- -------- ----------
(17,325) 12,216 (294) 373 (2,206) (36,615)
-------- ------- ------- ------- -------- ----------
Income (loss) before income
taxes........................... (17,325) 12,216 (3,758) 3,989 (6,827) 315,733
Provision (benefit) for income
taxes........................... (6,064)(cc) 4,276(cc) (1,315)(cc) 1,396(cc) (2,676)(cc) 113,213
-------- ------- ------- ------- -------- ----------
Income (loss) from continuing
operations...................... $(11,261) $ 7,940 $(2,443) $ 2,593 $ (4,151) $ 202,520
======== ======= ======= ======= ======== ==========
Earnings per share from
continuing operations:
Basic......................... $ 2.11(p)
Diluted....................... 2.08(p)
Weighted average shares
outstanding:
Basic......................... 96,052(dd)
Diluted....................... 97,562(dd)
</TABLE>
4
<PAGE> 5
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma financial statements. The pro forma adjustments are based on
estimates made by EVI's management using information currently available.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying Unaudited Adjusted Pro Forma Condensed
Consolidated Balance Sheets are described below:
(a) The EVI and Weatherford Combined Pro Forma Balance Sheet has been
prepared assuming the Merger is accounted for as a pooling of interests.
The EVI and Weatherford Combined Pro Forma Balance Sheet is based on the
consolidated financial statements of EVI and Weatherford.
(b) To reflect the sale of a two-thirds interest in Logistic by
Christiana to C2 for cash of $10.67 million and to reflect a $3.0 million
loss, net of taxes, due to the purchase price being less than the $15.5
million carrying value of the interest in Logistic. Such sale is in
accordance with the Christiana Merger Agreement as (i) Logistic is required
to distribute $23.0 million to Christiana, funded from borrowings of
Logistic to permit Christiana to have sufficient cash to allow EVI to pay
the cash consideration contemplated by the Christiana Acquisition, (ii)
Christiana is to sell its two-thirds interest in Logistic to C2 for $10.67
million and (iii) EVI is required to pay to the Christiana shareholders an
amount of cash equal to the cash of Christiana at the closing of the
Christiana Acquisition less $10.0 million and the amount of certain
liabilities and tax benefits to be maintained by Christiana for the benefit
of EVI.
(c) To reflect an increase in Christiana's cash of $23.0 million from
a dividend from Logistic funded through Logistic's borrowings to meet the
required minimum cash levels per the Christiana Merger Agreement, and to
reflect the cash to Christiana of $10.67 million from its sale of the
two-thirds interest in Logistic less $0.4 million of cash held by Logistic.
(d) To reflect the cash payment by EVI of $19.8 million or $3.81 per
share to the holders of common stock of Christiana pursuant to the
Christiana Merger Agreement. The pro forma cash payment by EVI of $3.81 per
share is based on pro forma data presented herein; however, Christiana
currently expects such payment will be approximately $3.60 per share. The
difference of $0.21 per share relates to timing differences for cash
expenditures, including taxes, for the period from January 1, 1998 to
closing, not reflected in the historical financial information of
Christiana.
(e) To reflect the exercise of Christiana employee stock options
relating to 53,334 shares of common stock of Christiana for $1.4 million in
cash and the cancellation of Christiana employee stock options for $2.5
million in cash. The exercise and cancellation of Christiana employee stock
options generates a tax benefit of $1.2 million. Cash in this amount is
required to be retained by Christiana for the benefit of EVI.
(f) To eliminate Christiana's investment in EVI and related deferred
taxes.
(g) To reflect the remaining one-third interest in Logistic held by
Christiana. The investment represents a one-third interest of the net book
value of Logistic.
(h) Prior to Christiana's sale of its two-thirds interest in Logistic,
the pro forma net book value of Logistic was $23.1 million. After the sale
of Christiana's two-thirds interest in Logistic, the remaining net book
value of Logistic is $7.6 million. EVI reflects a reduction of $3.9 million
in the carrying value of Christiana's remaining one-third interest in
Logistic reflecting the excess fair value of the net tangible post merger
assets of Christiana over the cash and stock consideration being paid to
the Christiana shareholders.
5
<PAGE> 6
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(i) To reclassify certain deferred tax liabilities of $8.8 million to
current federal taxes payable as a result of the sale by Christiana of its
two-thirds interest in Logistic.
(j) To record a $2.5 million liability for transaction costs related
to the Christiana Acquisition.
(k) To record a $10.0 million EVI liability to the Christiana
shareholders payable in five years pursuant to the Christiana Merger
Agreement.
(l) Reflects the issuance of 49,760,332 shares of EVI Common Stock in
exchange for all 52,379,297 shares of Weatherford Common Stock outstanding
at December 31, 1997, based upon the conversion rate of .95 of a share of
EVI Common Stock for each share of common stock of Weatherford
("Weatherford Common Stock"). The difference between the par value of
Weatherford Common Stock exchanged and the par value of the EVI Common
Stock issued upon consummation of the Merger is reflected as a decrease in
paid-in capital. Weatherford treasury stock as of December 31, 1997 is
reflected as a decrease in paid-in capital.
(m) To reflect the issuance of 3,897,462 shares of EVI Common Stock in
the Christiana Acquisition at a price of $41.25 per share, the market price
of the EVI Common Stock on December 15, 1997, and the acquisition of
3,897,462 shares of EVI Common Stock held by Christiana as a result of the
Christiana Acquisition. The shares of EVI Common Stock held by Christiana
have been classified as treasury shares.
(n) To eliminate the remaining common stock of Christiana of $5.3
million, capital in excess of par of $15.0 million, retained earnings of
$53.0 million and treasury stock of $1.2 million.
The adjustments to the accompanying Unaudited Adjusted Pro Forma Condensed
Consolidated Statements of Income are described below:
(o) The Unaudited Pro Forma Condensed Consolidated Statements of
Income of EVI and Weatherford Combined are based on the consolidated
financial statements of EVI and Weatherford. Pro forma adjustments include
the elimination of intercompany revenues of $7.1 million, $5.2 million and
$4.8 million, respectively, and cost of sales of $5.7 million, $4.2 million
and $4.3 million, respectively, for the years ended December 31, 1997,
1996, and 1995. Pro forma adjustments for the years ended December 31, 1997
and 1996 also include the elimination of expenses of $1.7 million and a
gain of $2.7 million, respectively, recorded by Weatherford on the sale of
Arrow Completion Systems, Inc. to EVI in December 1996. Certain amounts
have been reclassified to conform presentation.
(p) The pro forma earnings per share from continuing operations is
computed on the basis of the combined weighted average number of common
shares of EVI and Weatherford for each period presented based upon the
conversion rate of .95 of a share of EVI Common Stock for each share of
Weatherford Common Stock.
(q) Reflects the results of the GulfMark Retained Assets, which were
acquired by EVI on May 1, 1997, from January 1, 1997, through March 31,
1997. Actual results of the GulfMark Retained Assets are included in EVI's
historical results from May 1, 1997.
(r) Reflects the results of Trico and BMW, which were acquired by EVI
on December 2, 1997 and December 3, 1997, respectively, from January 1,
1997 through September 30, 1997. Actual results of Trico and BMW are
included in EVI's historical results from their respective dates of
acquisitions.
(s) To eliminate Logistic's historical operating results, to reflect a
one-third equity interest in Logistic and to record the income tax
provision related to the one-third equity interest at the statutory rate.
6
<PAGE> 7
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(t) To eliminate the provision for environmental remediation, the
liability related to property retained by the prior shareholder of Trico.
(u) To record amortization expense relating to the estimated excess of
cost over fair value of tangible assets acquired in connection with the
Trico and BMW acquisitions. Such excess of cost over fair value of net
tangible assets acquired is being amortized over 40 years.
(v) To eliminate bonuses paid to the shareholders of BMW and
management fees paid to Trico by BMW Monarch that would not have been paid
by EVI.
(w) To adjust interest expense for the Debentures at the rate of 5%
per annum and to record amortization expense of related debt issuance costs
over the life of the Debentures.
(x) To reduce interest expense and amortization of debt issuance costs
to reflect the repayment of the Notes. EVI funded such repayment with a
portion of the proceeds from the Debentures.
(y) To reduce interest expense to reflect EVI's retirement of BMW's
indebtedness. EVI funded such retirement with a portion of the proceeds
from the Debentures.
(z) To eliminate Trico's equity in earnings of BMW Monarch.
(aa) To eliminate Christiana's equity in earnings of EVI.
(bb) To eliminate Trico's provision for estimated losses on property
held for sale as the property was retained by the prior shareholder of
Trico.
(cc) To record the income tax provision (benefit) related to the
effect of the pro forma adjustments at the statutory rate.
(dd) EVI's historical shares outstanding, pro forma post-merger shares
outstanding and basic weighted average pro forma post-merger shares
outstanding as of December 31, 1997, were 47,100,290, 96,860,622 and
96,050,625, respectively. Weatherford's historical shares outstanding at
December 31, 1997 was 52,379,297.
7
<PAGE> 1
EXHIBIT 99.6
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth certain summary unaudited pro forma
condensed consolidated financial data of EVI, Inc., a Delaware corporation
("EVI" or the "Company"), and is based on the historical financial data of EVI,
Weatherford Enterra, Inc. ("Weatherford"), Christiana Companies, Inc.
("Christiana"), Trico Industries, Inc. ("Trico"), BMW Monarch (Lloydminster)
Ltd. ("BMW Monarch") and BMW Pump Inc. (together, "BMW") and the assets of
GulfMark International, Inc. acquired by EVI on May 1, 1997 (the "GulfMark
Retained Assets"). The Unaudited Pro Forma Condensed Consolidated Financial
Statements of EVI have been prepared assuming the proposed merger of Weatherford
with and into EVI (the "Merger"), pursuant to an Agreement and Plan of Merger
dated as of March 4, 1998, as amended, between EVI and Weatherford, is accounted
for as a pooling of interests and give effect to the proposed Merger by
combining EVI's and Weatherford's results of operations for the quarterly
periods ended March 31, 1997 and 1998 on a pooling-of-interests basis as if EVI
and Weatherford had been combined since inception. The Unaudited Adjusted Pro
Forma Condensed Consolidated Statement of Income for the quarterly period ended
March 31, 1998, further gives effect to EVI's proposed acquisition of Christiana
through a merger of a subsidiary of EVI with and into Christiana ("Christiana
Acquisition") pursuant to an Agreement and Plan of Merger dated December 12,
1996 (the "Christiana Merger Agreement"), by and among EVI, Christiana and C2,
Inc., a Wisconsin corporation ("C2"), and the sale by Christiana, prior to the
Christiana Acquisition, of two-thirds of its interest in Total Logistic Control,
LLC ("Logistic"), a wholly owned subsidiary of Christiana, to C2 for
approximately $10.7 million, and also reflects (i) the acquisition by EVI on May
1, 1997, of the GulfMark Retained Assets, (ii) the issuance and sale of EVI's 5%
Convertible Subordinated Preferred Equivalent Debentures due 2027 (the
"Debentures") on November 10, 1997, (iii) the acquisition by EVI on December 15,
1997, of $119,980,000 principal amount of EVI's outstanding 10 1/4% Senior Notes
due 2004 and 10 1/4% Senior Notes due 2004, Series B (collectively, the "Notes")
from the holders of the Notes pursuant to a cash tender offer and consent
solicitation of the Company (the "Tender Offer"), (iv) EVI's acquisition of
Trico on December 2, 1997, and (v) EVI's acquisition of BMW on December 3, 1997,
as if these transactions had occurred on January 1, 1997. The Unaudited Adjusted
Pro Forma Condensed Consolidated Balance Sheet presents the combined financial
position of EVI and Weatherford and gives effect to EVI's proposed acquisition
of Christiana as if these transactions had occurred on March 31, 1998. The pro
forma amounts presented do not include transaction costs related to the Merger
which are estimated to be approximately $25 million and other costs directly
attributable to the Merger which, in the aggregate, are expected to be between
$90 million and $110 million.
The pro forma information set forth below is not necessarily indicative
of the results that actually would have been achieved had such transactions been
consummated as of the aforementioned dates, or that may be achieved in the
future. All other 1997 and 1998 acquisitions by EVI are not material
individually or in the aggregate with same-year acquisitions; therefore, pro
forma information is not reflected. This information should be read in
conjunction with EVI's Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in its Annual Report on Form 10-K,
as amended, for the year ended December 31, 1997, and in its Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1998, and EVI's, GulfMark
Retained Assets', Trico's, BMW's, Christiana's and Weatherford's financial
statements and related notes thereto, all of which have been previously filed.
1
<PAGE> 2
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------------------- EVI
EVI Christiana Sale of Merger Pro Forma
Historical Historical Logistic(a) Entries Pre Merger
------------- -------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................... $ 25,182 $ 5,290 $ 33,303 (b) $(20,357)(c)(d) $ 43,418
Accounts receivable, net ....................... 270,320 8,169 (8,169) -- 270,320
Inventories .................................... 316,202 -- -- -- 316,202
Prepaid expenses and other ..................... 63,453 1,734 (1,734) -- 63,453
---------- -------- -------- -------- ----------
Total current assets ....................... 675,157 15,193 23,400 (20,357) 693,393
---------- -------- -------- -------- ----------
Property, plant and equipment, net ............. 327,816 72,301 (72,301) -- 327,816
Goodwill, net .................................. 493,470 5,475 (5,475) -- 493,470
Investment in EVI .............................. -- 47,268 -- (47,268)(e) --
Investment in Logistic ......................... -- -- 7,976 (f) (4,163)(g) 3,813
Other assets ................................... 54,015 2,527 (2,527) -- 54,015
---------- -------- -------- -------- ----------
$1,550,458 $142,764 $(48,927) $(71,788) $1,572,507
========== ======== ======== ======== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt ..................... 143,496 1,404 (1,404) -- 143,496
Accounts payable ............................... 148,501 4,081 (4,081) -- 148,501
Other accrued liabilities ...................... 129,262 4,815 1,921 (h) 1,373 (d)(i) 137,371
---------- -------- -------- -------- ----------
Total current liabilities .................. 421,259 10,300 (3,564) 1,373 429,368
---------- -------- -------- -------- ----------
Long-term debt ................................. 42,075 31,167 (31,167) -- 42,075
Deferred income taxes and other ............... 95,624 24,699 (10,797)(h) 38 (e)(j) 109,564
5% Convertible Subordinated
Preferred Equivalent Debentures ............... 402,500 -- -- -- 402,500
Shareholders' equity
Common stock ................................... 52,674 5,209 -- (1,312)(d)(k)(l) 56,571
Capital in excess of par ....................... 441,767 12,346 -- 144,527 (d)(k)(l) 598,640
Retained earnings .............................. 263,220 60,279 (3,399) (56,880)(d)(l) 263,220
Cumulative foreign currency
translation adjustment ........................ (16,059) -- -- -- (16,059)
Treasury stock, at cost ........................ (152,602) (1,236) -- (159,534)(k)(l) (313,372)
---------- -------- -------- -------- ----------
Total stockholders' equity ................. 589,000 76,598 (3,399) (73,199) 589,000
---------- -------- -------- -------- ----------
$1,550,458 $142,764 $(48,927) $(71,788) $1,572,507
========== ======== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Adjustments
--------------
Weatherford Weatherford Pro Forma
Historical Merger Post Merger
-------------- ------------- --------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ...................................... $ 17,318 $ -- $ 60,736
Accounts receivable, net ...................................... 267,991 -- 538,311
Inventories ................................................... 183,583 -- 499,785
Prepaid expenses and other .................................... 37,746 -- 101,199
----------- ----------- -----------
Total current assets ...................................... 506,638 -- 1,200,031
----------- ----------- -----------
Property, plant and equipment, net ............................ 562,440 -- 890,256
Goodwill, net ................................................. 263,466 -- 756,936
Investment in EVI ............................................. -- -- --
Investment in Logistic ........................................ -- -- 3,813
Other assets .................................................. 33,215 -- 87,230
----------- ----------- -----------
$ 1,365,759 $ -- $ 2,938,266
=========== =========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt .................................... $ 4,547 $ -- $ 148,043
Accounts payable .............................................. 54,942 -- 203,443
Other accrued liabilities ..................................... 126,633 -- 264,004
----------- ----------- -----------
Total current liabilities ................................. 186,122 -- 615,490
----------- ----------- -----------
Long-term debt ................................................ 210,452 -- 252,527
Deferred income taxes and other ............................... 42,411 -- 151,975
5% Convertible Subordinated
Preferred Equivalent Debentures .............................. -- -- 402,500
Shareholders' equity
Common stock .................................................. 5,277 43,556 (m) 105,404
Capital in excess of par ...................................... 653,898 (94,084)(m) 1,158,454
Retained earnings ............................................. 343,703 -- 606,923
Cumulative foreign currency
translation adjustment ....................................... (25,576) -- (41,635)
Treasury stock, at cost ....................................... (50,528) 50,528 (m) (313,372)
----------- ----------- -----------
Total stockholders' equity ................................ 926,774 -- 1,515,774
----------- ----------- -----------
$ 1,365,759 $ -- $ 2,938,266
=========== =========== ===========
</TABLE>
2
<PAGE> 3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998(n) 1997(n)
------------ ------------
<S> <C> <C>
Revenues:
Products.................................................. $ 377,007 $ 229,936
Services and rentals...................................... 196,453 201,317
------------ ------------
573,460 431,253
------------ ------------
Costs and expenses:
Cost of sales
Products............................................... 255,713 169,337
Services and rentals................................... 126,459 136,754
Selling, general and administrative....................... 81,468 57,783
------------ ------------
463,640 363,874
------------ ------------
Operating income.............................................. 109,820 67,379
------------ ------------
Other income (expense):
Interest expense.......................................... (12,011) (10,545)
Interest income........................................... 648 3,280
Equity in earnings of unconsolidated
affiliates............................................. 780 509
Other income (expense), net............................... (1,275) (2,002)
------------ ------------
(11,858) (8,758)
------------ ------------
Income before income taxes.................................... 97,962 58,621
Provision for income taxes.................................... 36,819 20,718
------------ ------------
Income from continuing operations............................. $ 61,143 $ 37,903
============ ============
Earnings per share from continuing operations:
Basic(o).................................................. $ 0.63 $ 0.40
============ ============
Diluted(o)................................................ $ 0.63 $ 0.39
============ ============
Basic weighted average shares outstanding
Basic..................................................... 96,761 95,302
============ ============
Diluted................................................... 97,625 96,704
============ ============
</TABLE>
3
<PAGE> 4
UNAUDITED ADJUSTED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENT
----------
EVI
EVI CHRISTIANA PRO FORMA
HISTORICAL HISTORICAL CHRISTIANA(p) PRE MERGER
---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Revenues:
Products ................................................... $ 316,840 $ 21,865 $ (21,865) 316,840
Service and rentals ........................................ -- -- -- --
--------- -------- --------- ---------
316,840 21,865 $ (21,865) 316,840
--------- -------- --------- ---------
Costs and expenses:
Cost of sales
Products .............................................. 214,581 18,526 (18,526) 214,581
Services and rentals .................................. -- -- -- --
Selling, general and administrative ........................ 46,937 2,273 (2,273) 46,937
--------- -------- --------- ---------
261,518 20,799 (20,799) 261,518
--------- -------- --------- ---------
Operating income ................................................ 55,322 1,066 (1,066) 55,322
Other income (expense):
Interest expense ........................................... (7,993) (658) 658 (7,993)
Interest income ............................................ 168 101 (101) 168
Equity in earnings of EVI .................................. -- 2,564 (2,564)(s) --
Equity in earnings of Logistic ............................. -- -- 94 94
Equity in earnings of unconsolidated affiliates ............ -- -- -- --
Other income (expense), net ................................ 621 (72) 72 621
--------- -------- --------- ---------
(7,204) 1,935 (1,841) (7,110)
--------- -------- --------- ---------
Income (loss) before income taxes ............................... 48,118 3,001 (2,907) 48,212
Provision (benefit) for income taxes ............................ 16,841 1,168 (1,164)(t) 16,845
--------- -------- --------- ---------
Income (loss) from continuing operations ........................ $ 31,277 $ 1,833 $ (1,743) $ 31,367
========= ======== ========= =========
Earnings per share from continuing operations:
Basic ...................................................... $ 0.66 $ 0.66
========= =========
Diluted .................................................... $ 0.65 $ 0.65
========= =========
Weighted average share outstanding
Basic ...................................................... 47,732 47,732
========= =========
Diluted .................................................... 48,333 48,333
========= =========
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENT
----------
EVI
WEATHERFORD WEATHERFORD PRO FORMA
HISTORICAL MERGER POST MERGER
---------- --------- -----------
<S> <C> <C> <C>
Revenues:
Products ................................................... $ 63,276 $ (3,109)(q) $ 377,007
Service and rentals ........................................ 196,453 -- 196,453
--------- --------- ---------
259,729 $ (3,109) 573,460
--------- --------- ---------
Costs and expenses:
Cost of sales
Products .............................................. 43,287 (2,155)(q) 255,713
Services and rentals .................................. 126,459 -- 126,459
Selling, general and administrative ........................ 31,899 2,632 (r) 81,468
--------- --------- ---------
201,645 477 463,640
--------- --------- ---------
Operating income ................................................ 58,084 (3,586) 109,820
Other income (expense):
Interest expense ........................................... (4,018) -- (12,011)
Interest income ............................................ 480 -- 648
Equity in earnings of EVI .................................. -- -- --
Equity in earnings of Logistic ............................. -- -- 94
Equity in earnings of unconsolidated affiliates ............ 780 -- 780
Other income (expense), net ................................ (4,528) 2,632 (r) (1,275)
--------- --------- ---------
(7,286) 2,632 (11,764)
--------- --------- ---------
Income (loss) before income taxes ............................... 50,798 (954) 98,056
Provision (benefit) for income taxes ............................ 20,311 (333)(t) 36,823
--------- --------- ---------
Income (loss) from continuing operations ........................ $ 30,487 $ (621) $ 61,233
========= ========= =========
Earnings per share from continuing operations:
Basic ...................................................... $ 0.63 (o)
=========
Diluted .................................................... $ 0.63 (o)
=========
Weighted average share outstanding
Basic ...................................................... 96,761 (u)
=========
Diluted .................................................... 97,625 (u)
=========
</TABLE>
4
<PAGE> 5
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma financial statements. The pro forma adjustments are based on
estimates made by EVI's management using information currently available.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying Unaudited Pro Forma Condensed
Consolidated Balance Sheet are described below:
(a) To reflect the sale of a two-thirds interest in Logistic by
Christiana to C2 for cash of $10.67 million and to reflect a $3.4 million
loss, net of taxes, due to the purchase price being less than the $16.2
million carrying value of the interest in Logistic. Such sale is in
accordance with the Christiana Merger Agreement as (i) Logistic is required
to distribute $23.4 million to Christiana, funded from borrowings of
Logistic to permit Christiana to have sufficient cash to allow EVI to pay
the cash consideration contemplated by the Christiana Acquisition, (ii)
Christiana is to sell its two-thirds interest in Logistic to C2 for $10.67
million and (iii) EVI is required to pay to the Christiana shareholders an
amount of cash equal to the cash of Christiana at the closing of the
Christiana Acquisition less $10.0 million and the amount of certain
liabilities and tax benefits to be maintained by Christiana for the benefit
of EVI.
(b) To reflect an increase in Christiana's cash of $23.0 million from
a dividend from Logistic funded through Logistic's borrowings to meet the
required minimum cash levels per the Christiana Merger Agreement, and to
reflect the cash to Christiana of $10.67 million from its sale of the
two-thirds interest in Logistic less $0.4 million of cash held by Logistic.
(c) To reflect the cash payment by EVI of $19.3 million or $3.71 per
share to the holders of common stock of Christiana pursuant to the
Christiana Merger Agreement. The pro forma cash payment by EVI of $3.71 per
share is based on pro forma data for the period presented herein; however,
Christiana currently expects that such payment will be approximately $3.60
per share. The difference of $0.11 per share relates to timing differences
for cash expenditures, including taxes, for the period from April 1, 1998,
to closing, not reflected in the historical financial information of
Christiana presented herein.
(d) To reflect the exercise of Christiana employee stock options
relating to 53,334 shares of Christiana Common Stock for $1.4 million in
cash and the cancellation of Christiana employee stock options for $2.5
million in cash. The exercise and cancellation of Christiana employee stock
options generates a tax benefit of $1.1 million. Cash in this amount is
required to be retained by Christiana for the benefit of EVI.
(e) To eliminate Christiana's investment in EVI and related deferred
taxes.
(f) To reflect the remaining one-third interest in Logistic held by
Christiana. The investment represents a one-third interest of the net book
value of Logistic.
(g) Prior to Christiana's sale of its two-thirds interest in Logistic,
the pro forma net book value of Logistic was $24.2 million. After the sale
of Christiana's two-thirds interest in Logistic, the remaining net book
value of Logistic is $8.0 million. EVI reflects a reduction of $2.8 million
in the carrying value of Christiana's remaining one-third interest in
Logistic reflecting the excess fair value of the net tangible post merger
assets of Christiana over the cash and stock consideration being paid to
the Christiana shareholders.
(h) To reclassify certain deferred tax liabilities of $8.9 million to
current federal taxes payable as a result of the sale by Christiana of its
two-thirds interest in Logistic.
(i) To record a $2.5 million liability for transaction costs related
to the Christiana Acquisition.
5
<PAGE> 6
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(j) To record a $10.0 million EVI liability to the Christiana
shareholders payable in five years pursuant to the Christiana Merger
Agreement.
(k) To reflect the issuance of 3,897,462 shares of EVI Common Stock in
the Christiana Acquisition at a price of $41.25 per share, the market price
of the EVI Common Stock on December 15, 1997, and the acquisition of
3,897,462 shares of EVI Common Stock held by Christiana as a result of the
Christiana Acquisition. The shares of EVI Common Stock held by Christiana
have been classified as treasury shares.
(l) To eliminate the remaining Christiana Common Stock of $5.3
million, capital in excess of par of $14.9 million, retained earnings of
$52.9 million and treasury stock of $1.2 million.
(m) Reflects the issuance of 48,832,815 shares of EVI Common Stock in
exchange for all 51,402,963 shares of Weatherford Common Stock outstanding
at March 31, 1998, based upon the conversion rate of .95 of a share of EVI
Common Stock for each share of Weatherford Common Stock. The difference
between the par value of Weatherford Common Stock exchanged and the par
value of the EVI Common Stock issued upon consummation of the Weatherford
Merger is reflected as a decrease in paid-in capital. Weatherford treasury
stock as of March 31, 1998 is reflected as a decrease in paid-in capital.
The adjustments to the accompanying Unaudited Pro Forma Condensed
Consolidated Statement of Income are described below:
(n) The Unaudited Pro Forma Condensed Consolidated Statements of
Income of EVI and Weatherford Combined are based on the consolidated
financial statements of EVI and Weatherford. Pro forma adjustments include
the elimination of intercompany revenues of $3.1 million and $0.5 million,
respectively, and cost of sales of $2.2 million and $0.5 million,
respectively, for the three months ended March 31, 1998 and 1997. Pro forma
adjustments for the three months ended March 31, 1997 also include the
elimination of expenses of $0.9 million recorded by Weatherford on the sale
of Arrow Completion Systems, Inc. to EVI in December 1996. Certain amounts
have been reclassified to conform presentation.
(o) The pro forma earnings per share from continuing operations is
computed on the basis of the combined weighted average number of common
shares of EVI and Weatherford for each period presented based upon the
conversion rate of .95 of a share of EVI Common Stock for each share of
Weatherford Common Stock as provided in the Weatherford Merger.
(p) To eliminate Logistic's historical operating results, to reflect a
one-third equity interest in Logistic and to record the income tax
provision related to the one-third equity interest at the statutory rate.
(q) Reflects the elimination of intercompany revenues of $3.1 million
and cost of sales of $2.2 million.
6
<PAGE> 7
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(r) Reflects the reclassification of certain Weatherford historical
amounts to conform to EVI's presentation.
(s) To eliminate Christiana's equity in earnings of EVI.
(t) To record the income tax provision (benefit) related to the
effect of the pro forma adjustments at the statutory rate.
(u) EVI's historical shares outstanding, pro forma post-merger shares
outstanding and basic weighted average pro forma post-merger shares
outstanding as of March 31, 1998, were 47,877,546, 96,710,361 and
96,761,171, respectively. Weatherford's historical shares outstanding at
March 31, 1998, was 51,402,963.
7
