<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-13086
EVI WEATHERFORD, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
Delaware 04-2515019
- ------------------------------------ ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Post Oak Park, Houston, Texas 77027-3415
- -------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(713) 297-8400
--------------------------------------------------
(Registrant's telephone number, include area code)
EVI, INC.
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Title of Class Outstanding at August 6, 1998
-------------- ------------------------------
Common Stock, par value $1.00 97,279,228
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EVI WEATHERFORD, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . $ 66,527 $ 74,211
Accounts Receivable, Net of Allowance for Uncollectible
Accounts of $20,882 and $23,473, Respectively . . . . . 507,731 524,929
Inventories . . . . . . . . . . . . . . . . . . . . . . . . 529,069 455,811
Other Current Assets . . . . . . . . . . . . . . . . . . . 94,226 79,125
---------- -----------
1,197,553 1,134,076
PROPERTY, PLANT AND EQUIPMENT, AT COST,
NET OF ACCUMULATED DEPRECIATION . . . . . . . . . . . . . . 872,045 866,813
GOODWILL, NET . . . . . . . . . . . . . . . . . . . . . . . . . . 758,993 668,475
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 93,715 68,546
---------- ----------
$2,922,306 $2,737,910
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-Term Borrowings, Primarily Under Revolving
Lines of Credit . . . . . . . . . . . . . . . . . . . . $ 200,517 $ 24,243
Current Maturities of Long-Term Debt . . . . . . . . . . . 20,278 13,178
Accounts Payable . . . . . . . . . . . . . . . . . . . . . 192,183 218,810
Accrued Salaries and Benefits . . . . . . . . . . . . . . . 62,735 63,656
Current Tax Liabilities . . . . . . . . . . . . . . . . . . 35,659 44,317
Other Accrued Liabilities . . . . . . . . . . . . . . . . . 137,824 138,965
---------- ----------
649,196 503,169
----------- ----------
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . 246,963 252,322
DEFERRED INCOME TAXES AND OTHER . . . . . . . . . . . . . . . . . 128,186 121,370
5% CONVERTIBLE SUBORDINATED PREFERRED
EQUIVALENT DEBENTURES . . . . . . . . . . . . . . . . . . . 402,500 402,500
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $1 Par Value, Authorized 250,000 Shares,
Issued 103,021 and 101,958, Respectively . . . . . . . . 103,021 101,958
Capital in Excess of Par Value . . . . . . . . . . . . . . 1,040,091 1,018,024
Treasury Stock, at Cost . . . . . . . . . . . . . . . . . . (183,435) (165,287)
Retained Earnings . . . . . . . . . . . . . . . . . . . . . 588,600 542,348
Cumulative Foreign Currency Translation Adjustment . . . . (52,816) (38,494)
---------- ----------
1,495,461 1,458,549
---------- ----------
$2,922,306 $2,737,910
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
2
<PAGE> 3
EVI WEATHERFORD, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES . . . . . . . . . . . . . . . . . . . . . . . . $ 530,833 $ 476,999 $1,104,293 $ 908,252
--------- --------- ---------- ---------
COSTS AND EXPENSES:
Cost of Sales . . . . . . . . . . . . . . . . . . . 358,165 337,186 740,337 644,177
Selling, General and Administrative Attributable
to Segments . . . . . . . . . . . . . . . . . . . 59,419 56,450 132,659 105,669
Corporate General and Administrative . . . . . . . . 7,157 8,201 15,385 16,765
Merger Costs and Other Charges . . . . . . . . . . . 120,000 -- 120,000 --
Equity in Earnings of Unconsolidated Affiliates . . . (785) (543) (1,565) (1,052)
--------- --------- --------- ---------
OPERATING INCOME (LOSS) . . . . . . . . . . . . . . . . . (13,123) 75,705 97,477 142,693
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest Income . . . . . . . . . . . . . . . . . . 421 1,390 1,069 4,670
Interest Expense . . . . . . . . . . . . . . . . . . (13,748) (10,603) (25,759) (21,148)
Gain on Sale of Marketable Securities . . . . . . . -- 3,352 -- 3,352
Other, Net . . . . . . . . . . . . . . . . . . . . . 3,540 518 2,265 (584)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . . . . (22,910) 70,362 75,052 128,983
PROVISION (BENEFIT) FOR INCOME TAXES . . . . . . . . . . (8,019) 24,621 28,800 45,339
--------- --------- --------- ---------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . $ (14,891) $ 45,741 $ 46,252 $ 83,644
========= ========= ========= =========
EARNINGS (LOSS) PER SHARE:
Basic . . . . . . . . . . . . . . . . . . . . . . . $ (0.15) $ 0.48 $ 0.48 $ 0.88
========= ========= ========= =========
Diluted . . . . . . . . . . . . . . . . . . . . . . $ (0.15) $ 0.47 $ 0.47 $ 0.86
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic . . . . . . . . . . . . . . . . . . . . . . . . 96,771 95,462 96,766 95,382
========= ========= ========= =========
Diluted . . . . . . . . . . . . . . . . . . . . . . 96,771 96,941 97,618 96,823
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
3
<PAGE> 4
EVI WEATHERFORD, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
---------------------------------
1998 1997
----------- -----------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,252 $ 83,644
Adjustments to Reconcile Net Income to Net Cash
Used by Operating Activities:
Depreciation and Amortization . . . . . . . . . . . . . . . . . 83,527 69,767
Non-Cash Portion of Merger Costs and Other Charges . . . . . . 51,389 --
Deferred Income Tax Provision . . . . . . . . . . . . . . . . 7,550 6,075
Gain on Sale of Marketable Securities . . . . . . . . . . . . . -- (3,352)
Gain on Sales of Property, Plant and Equipment . . . . . . . . (10,244) (7,236)
Change in Operating Assets and Liabilities, Net of Effects
of Businesses Acquired . . . . . . . . . . . . . . . . . . . (169,602) (118,738)
----------- -----------
Net Cash Provided by Operating Activities . . . . . . . . . . 8,872 30,160
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Income Taxes Paid on Gain on Disposal of Discontinued
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . -- (62,808)
Acquisition of Businesses, Net of Cash Acquired . . . . . . . . . (80,598) (73,309)
Capital Expenditures for Property, Plant and
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . (95,899) (81,447)
Proceeds from Sales of Businesses . . . . . . . . . . . . . . . . -- 57,716
Proceeds from Sales of Property, Plant and Equipment . . . . . . 31,400 14,643
Proceeds from Sale of Marketable Securities . . . . . . . . . . . -- 23,352
Other, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (2,618)
----------- -----------
Net Cash Used by Investing Activities . . . . . . . . . . . . . (145,097) (124,471)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings Under Revolving Lines of Credit, Net . . . . . . . . . 176,274 4,476
Repayments on Term Debt, Net . . . . . . . . . . . . . . . . . . (13,111) (86,813)
Proceeds from Exercise of Stock Options . . . . . . . . . . . . . 3,681 6,292
Acquisition of Treasury Stock . . . . . . . . . . . . . . . . . . (39,536) (2,112)
Other, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,233 3,678
----------- -----------
Net Cash Provided (Used) by Financing Activities . . . . . . . 128,541 (74,479)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . (7,684) (168,790)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . 74,211 256,995
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . $ 66,527 $ 88,205
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest Paid . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,235 $ 19,051
Income Taxes Paid, Net of Refund . . . . . . . . . . . . . . . . 46,898 84,095
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
4
<PAGE> 5
EVI WEATHERFORD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1998 1997 1998 1997
-------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Net Income (Loss) . . . . . . . . . . . . . . . . . $(14,891) $ 45,741 $ 46,252 $ 83,644
Other Comprehensive Loss:
Foreign Currency Translation Adjustment . . . (11,181) (2,330) (14,322) (11,515)
-------- --------- --------- ---------
Comprehensive Income (Loss) . . . . . . . . . . . . $(26,072) $ 43,411 $ 31,930 $ 72,129
======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
5
<PAGE> 6
EVI WEATHERFORD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) General
The unaudited consolidated condensed financial statements included herein
have been prepared by EVI Weatherford, Inc. (the "Company") pursuant to the
rules and regulations of the Securities and Exchange Commission. These
financial statements reflect all adjustments which the Company considers
necessary for the fair presentation of such financial statements for the
interim periods presented. Although the Company believes that the disclosures
in these financial statements are adequate to make the interim information
presented not misleading, certain information relating to the Company's
organization and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles has been
condensed or omitted in this Form 10-Q pursuant to such rules and regulations.
These financial statements should be read in conjunction with the audited
supplemental consolidated financial statements for the year ended December 31,
1997 and notes thereto included in the Company's Current Report on Form 8-K, as
amended. The results of operations for the six month period ended June 30,
1998 are not necessarily indicative of the results expected for the full year.
On May 27, 1998, the Company (formerly known as EVI, Inc.) completed a
merger (the "Merger") with Weatherford Enterra, Inc. ("Weatherford") and
changed its name to EVI Weatherford, Inc. (See Note 4). The Merger was
accounted for as a pooling of interests; accordingly, the accompanying
financial statements have been restated to include the results of Weatherford
for all periods presented. Certain classifications of prior year balances have
been made to conform such amounts to corresponding 1998 classifications.
(2) Comprehensive Income
Comprehensive income as defined by Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income, is net income plus direct
adjustments to stockholders' equity. The cumulative translation adjustment of
certain foreign entities is the only such direct adjustment applicable to the
Company.
(3) Inventories
Inventories by category are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -----------
(in thousands)
<S> <C> <C>
Raw materials and components . . . . . . . . . $ 291,969 $ 238,349
Work in process . . . . . . . . . . . . . . . 67,829 66,402
Finished goods . . . . . . . . . . . . . . . . 169,271 151,060
----------- -----------
$ 529,069 $ 455,811
=========== ===========
</TABLE>
Work in process and finished goods inventories include the cost of
material, labor and plant overhead.
(4) Business Combinations and Acquisitions
On May 27, 1998, the Company completed the Merger with Weatherford, merging
Weatherford with and into the Company pursuant to a tax free merger in which the
stockholders of Weatherford received 0.95 of a share of the Company's common
stock, $1.00 par value ("Common Stock"), in exchange for each outstanding share
of Weatherford common stock. Based on the number of shares of Weatherford
common stock outstanding as of May 27, 1998, approximately 48.9 million shares
were issued in the Merger. In addition, as of May 27, 1998, approximately 1.4
million shares of Common Stock were reserved for issuance by the Company for
outstanding options under Weatherford's compensation and benefit plans. The
Merger was accounted for as a pooling of interests; accordingly, prior year
amounts have been restated to include the results of Weatherford for all periods
presented.
6
<PAGE> 7
EVI WEATHERFORD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The separate results of EVI and Weatherford and the combined company were
as follows:
<TABLE>
<CAPTION>
APRIL 1 TO THREE MONTHS JANUARY 1 TO SIX MONTHS
MAY 27 ENDED JUNE 30, MAY 27 ENDED JUNE 30,
----------- -------------- ------------ --------------
1998 1997 1998 1997
----------- -------------- ------------ --------------
(in thousands)
<S> <C> <C> <C> <C>
Operating Revenues:
EVI . . . . . . . . . . . . . . $188,709 $211,468 $505,549 $376,108
Weatherford . . . . . . . . . . 166,693 266,835 426,422 533,948
Merger adjustments . . . . . . . (1,854) (1,304) (4,963) (1,804)
-------- -------- -------- --------
Combined . . . . . . . . . . . . . $353,548 $476,999 $927,008 $908,252
======== ======== ======== ========
Net Income:
EVI . . . . . . . . . . . . . . $ 22,768 $ 19,062 $ 54,045 $ 33,407
Weatherford . . . . . . . . . . 17,994 26,795 48,481 49,747
Merger adjustments . . . . . . . (412) (116) (1,033) 490
-------- -------- -------- --------
Combined . . . . . . . . . . . . . $ 40,350 $ 45,741 $101,493 $ 83,644
======== ======== ======== ========
</TABLE>
Merger adjustments include the elimination of intercompany revenues of $1.9
million and $5.0 million, respectively, and cost of sales of $0.7 million and
$2.9 million, respectively, for the two and five months ended May 27, 1998.
Merger adjustments include the elimination of intercompany revenues of $1.3
million and $1.8 million, respectively, and cost of sales of $0.5 million and
$1.5 million, respectively, for the three months ended June 30, 1998 and 1997.
Merger adjustments for the three and six months ended June 30, 1997 also
include the elimination of expenses of $0.2 million and $1.1 million,
respectively, recorded by Weatherford on the sale of Arrow Completion Systems,
Inc. to EVI in December 1996.
The Company recorded merger and other charges (the "Merger and Other
Charges") during the second quarter of 1998 aggregating approximately $120.0
million before taxes for merger expenses and other matters associated with the
consolidation and reorganization of the Company's operations and businesses in
light of the Merger and recent market conditions. The Merger and Other Charges
consist of $29.9 million in transaction costs, $32.6 million in severance and
termination costs related to former officers, directors and employees and other
employee benefits related to stock grants pursuant to Weatherford employment
agreements and option plans, $5.2 million in corporate related expenses
directly associated with the Merger, $6.3 million related to facility closure
costs, costs associated with the closure of excess and duplicated
manufacturing, distribution and service locations primarily due to integrating
the Company's businesses with Weatherford's businesses under a Company-wide
consolidation plan and $46.0 million associated with the impairment of various
assets as a result of the combination of worldwide operations and the
rationalization of product lines and the elimination of certain products,
services and locations, as a result of the changes in the operations of the
Company following the Merger in accordance with the Company-wide consolidation
plan.
On February 19, 1998, the Company acquired Ampscot Equipment Ltd., an
Alberta corporation ("Ampscot") for approximately $57.1 million in cash.
Ampscot is a Canadian-based manufacturer of pumping units.
On January 15, 1998, the Company completed the acquisition of Taro
Industries Limited ("Taro"), an Alberta corporation, in which approximately 0.8
million shares of Common Stock have been issued or are reserved for issuance to
the shareholders of Taro in exchange for their shares of Taro stock. Taro is a
Canadian provider of well automation, gas compression, and drilling equipment
distribution.
On January 12, 1998, the Company completed the acquisition of the
Houston Well Screen group of companies ("HWS") from Van der Horst Limited, a
Singapore company, for a net purchase price of approximately $27.6 million in
cash. The HWS acquisition includes the purchase of Van der Horst USA Inc.,
which is the holding company of Houston Well Screen Company and of Houston Well
Screen Asia Pte Ltd. which has operations in
7
<PAGE> 8
EVI WEATHERFORD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Singapore and Indonesia. HWS makes wedge-wire screen products for use in oil
and gas production and other applications.
The acquisitions discussed above, with the exception of Weatherford, were
accounted for using the purchase method of accounting. Results of operations
for acquisitions accounted for as purchases are included in the accompanying
consolidated financial statements since the date of acquisition. With respect
to the business combination accounted for as a pooling of interests, the
consolidated financial statements have been restated for all periods presented
as if the companies had been combined since inception. Acquisitions accounted
for as purchases are not material individually or in the aggregate with same
year acquisitions; therefore, pro forma information is not provided.
(5) Long-Term Debt
On May 27, 1998, the Company amended its credit facility to consolidate
EVI's and Weatherford's then existing credit facilities into a single facility.
The new credit facility provides for borrowings of up to an aggregate of $250.0
million, consisting of a $200.0 million U.S. credit facility and a $50.0
million Canadian credit facility and terminated both of EVI's and Weatherford's
working capital facilities. Borrowings under the new credit facility bear
interest at a variable rate based on prime or LIBOR and are unsecured. In
addition, the Company's credit facility contains customary affirmative and
negative covenants, including debt incurrence tests, interest coverage ratio,
negative pledges and certain dispositions of assets.
(6) Treasury Stock
In December 1997, the Weatherford Board of Directors instituted a stock
repurchase program under which up to $100.0 million of Weatherford common stock
could be purchased in open market transactions or in privately negotiated
transactions. Pursuant to this program, Weatherford purchased approximately
0.3 million shares of its common stock in December 1997. During 1998,
Weatherford purchased approximately 1.0 million shares of its common stock. In
connection with the Merger, the stock repurchase program has been discontinued
and all treasury shares were canceled.
(7) Revenues and Cost of Sales
The following presents the Company's revenues and costs by product and
services and rentals:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- ---------
(in thousands)
<S> <C> <C> <C> <C>
REVENUES:
Products . . . . . . . . . . . . . . . . . $ 314,461 $ 260,198 $ 677,857 $ 480,177
Services and Rentals . . . . . . . . . . . 216,372 216,801 426,436 428,075
---------- ---------- ---------- ----------
Total Revenues . . . . . . . . . . . . . $ 530,833 $ 476,999 $1,104,293 $ 908,252
========== ========== ========== ==========
COSTS AND EXPENSES:
Cost of Products . . . . . . . . . . . . . $ 210,657 $ 190,860 $ 459,723 $ 353,653
Cost of Services and Rentals . . . . . . . 147,508 146,326 280,614 290,524
---------- ---------- ---------- ----------
Total Costs and Expenses . . . . . . . . $ 358,165 $ 337,186 $ 740,337 $ 644,177
========== ========== ========== ==========
</TABLE>
8
<PAGE> 9
EVI WEATHERFORD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(8) Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the year. Diluted
earnings per common share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the year adjusted
for the dilutive effect of the incremental shares that would have been
outstanding under the Company's stock option plans. In the case of a net loss,
the effect of the incremental shares that would have been outstanding under the
Company's stock option plans is anti-dilutive and, thus, is not included in the
calculation. The effect of the Company's 5% Convertible Subordinated Preferred
Equivalent Debentures due 2027 (the "Debentures") on diluted earnings per share
is anti-dilutive and, thus is not included in the calculation.
The following reconciles basic and diluted weighted average shares:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------- -------------------------
1998 1997 1998 1997
----------- ----------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C>
Basic weighted average number of
shares outstanding . . . . . . . . . . 96,771 95,462 96,766 95,382
Dilutive effect of stock option plans . . -- 1,479 852 1,441
------ ------ ------ ------
Dilutive weighted average number of
shares outstanding . . . . . . . . . . 96,771 96,941 97,618 96,823
====== ====== ====== ======
</TABLE>
(9) Supplemental Cash Flow Information
The following summarizes investing activities relating to acquisitions:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1998 1997
-------- ---------
(in thousands)
<S> <C> <C>
Fair value of assets, net of cash
acquired . . . . . . . . . . . . . . . . . . $ 69,383 $106,935
Goodwill . . . . . . . . . . . . . . . . . . . 98,977 53,623
Total liabilities . . . . . . . . . . . . . . . (56,867) (87,249)
Common Stock issued . . . . . . . . . . . . . . (30,895) --
-------- --------
Cash consideration, net of cash acquired . . . $ 80,598 $ 73,309
======== ========
</TABLE>
During the six months ended June 30, 1998 and 1997, there were noncash
financing activities of $3.1 million and $1.6 million, respectively, relating
to tax benefits received from the exercise of nonqualified stock options.
These benefits were recorded as a reduction of income taxes payable and an
increase to additional paid-in capital.
(10) Recent Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 131
("SFAS No. 131"), Disclosures About Segments of an Enterprise and Related
Information, in the first quarter of 1998. SFAS No. 131 requires segment
information to be reported on a basis consistent with that used internally for
evaluating segment performance and deciding how to allocate resources to
segment. Quarterly disclosures are not required in the first year of adoption.
The adoption of SFAS No. 131 has not resulted in a change in the manner the
Company reports segment information and related disclosures.
In 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Accounting Standards No. 132 ("SFAS No. 132"), Employers' Disclosures About
Pensions and Other Postretirement Benefits. SFAS No. 132 standardizes annual
disclosure
9
<PAGE> 10
EVI WEATHERFORD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
requirements for pensions and other postretirement benefits. SFAS No. 132 is
effective for years beginning after December 15, 1997. SFAS No. 132 has no
impact on the consolidated condensed financial statements of the Company.
In June 1998, the FASB issued Statement of Accounting Standards No. 133
("SFAS No. 133"), Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 provides a comprehensive and consistent standard for the
recognition and measurement of derivatives and hedging activities. SFAS No.
133 is effective for years beginning after June 15, 1999. The Company is
currently evaluating the impact of SFAS No. 133 on its consolidated condensed
financial statements.
(11) Subsequent Events
In December 1997, the Company entered into a merger agreement (the "Merger
Agreement") with Christiana Companies, Inc. ("Christiana") and C2, Inc.,
Wisconsin corporations, pursuant to which approximately 3.9 million shares of
Common Stock will be issued to the stockholders of Christiana in a merger of a
subsidiary of the Company with and into Christiana ("Christiana Merger"). Prior
to the Christiana Merger, Christiana is required to sell two-thirds of its
interest in Total Logistic Control ("Logistic"), a wholly owned subsidiary of
Christiana, to C2, Inc. for approximately $10.7 million. Following the Logistic
sale, the remaining assets of Christiana will consist of (i) approximately 3.9
million shares of Common Stock, (ii) a one-third interest in Logistic and (iii)
cash and other assets with a book value of approximately $10.0 million and (iv)
subject to early payment under certain circumstances, a contingent cash payment
of up to $10.0 million payable five years after the effective date of the merger
to the extent such funds are not required to satisfy contingent claims against
Christiana. It is anticipated that Christiana will have no material debt as of
the consummation of the Christiana Merger, but will have various tax liabilities
which will be paid with the remaining cash balance in Christiana after the
Christiana Merger. Because the number of shares of Common Stock issuable in the
proposed Christiana Merger approximates the number of shares of Common Stock
currently held by Christiana, the Christiana Merger, if consummated, would be
expected to have no material effect on the outstanding number of shares of
Common Stock or equity of the Company.
The Christiana Merger is subject to various conditions, including approval
by the stockholders of the Company and Christiana and the receipt of an opinion
by its tax advisors to the effect that the shareholders of Christiana will
not recognize gain or loss for federal income tax purposes on their receipt of
shares of Common Stock in exchange for their shares of Christiana common stock.
The Company has scheduled a special meeting of stockholders to consider and vote
on the Christiana Merger for August 17, 1998.
Under the applicable provisions of the United States Income Tax Code of
1986, as amended, the Christiana shareholders may not receive their shares of
Common Stock in the Christiana Merger on a tax free basis unless the market
price of the Common Stock on the date of the closing is equal to at least
approximately $30.00, such that the value of the shares of Common Stock issuable
to the Christiana stockholders in the Christiana Merger is equal to at least 80%
of total consideration to be received by them. The market price of the Common
Stock is currently less than $30.00. Accordingly, the Christiana Merger will
not close unless and until the Common Stock is at least approximately $30.00 and
all other conditions to the Christiana Merger have been satisfied. The Company
currently intends to hold its Special Meeting of Stockholders to vote on the
Christiana Merger on August 17, 1998, and if the stockholders approve the
Christiana Merger, to delay the closing of the Christiana Merger until such time
that the Common Stock is equal to at least approximately $30.00 per share or the
Merger Agreement is terminated. Under the terms of the Merger Agreement, the
Company and Christiana may not terminate the Merger Agreement until at least
October 31, 1998. As a result, there can be no assurance that the Christiana
Merger will close or if it does close, and the timing thereof.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BUSINESS COMBINATION
On May 27, 1998, the Company and Weatherford Enterra, Inc. ("Weatherford")
merged pursuant to an Agreement and Plan of Merger dated March 4, 1998, as
amended, between the Company and Weatherford, with the Company being the
surviving corporation (the "Weatherford Merger"). Under the terms of the
Merger, the stockholders of Weatherford received 0.95 of a share of the
Company's common stock, $1.00 par value ("Common Stock"), in exchange for each
outstanding share of Weatherford common stock outstanding immediately prior to
the Weatherford Merger. The Weatherford Merger has been accounted for as a
pooling of interests and the consolidated financial statements of the Company
have been restated to include the accounts of the Company and Weatherford.
As a result of the Weatherford Merger, the Company is realigning and
reorganizing its geographic distribution and marketing of the Company's
products and services worldwide. The Company is also rationalizing and
consolidating its product lines and manufacturing, distribution and
administrative operations in light of the Weatherford Merger and current market
conditions in order to achieve cost savings and greater name identification and
market penetration. The Company has reduced its combined workforce by more than
5% for the year and is in the process of reorganizing and restructuring its
operations domestically and worldwide to facilitate the current and proposed
business operations of the combined company following the Weatherford Merger.
The Company currently expects that the consolidation of the Company's and
Weatherford's operations will be substantially completed by year end.
In connection with the above activities and the consummation of the
Weatherford Merger, the Company recorded merger and other charges (the "Merger
and Other Charges") during the second quarter of 1998 aggregating approximately
$120.0 million before taxes for merger expenses and other matters associated
with the consolidation and reorganization of the Company's operations and
businesses in light of the Weatherford Merger and recent market conditions. The
Merger and Other Charges consist of $29.9 million in transaction costs, $32.6
million in severance and termination costs related to former officers, directors
and employees and other employee benefits related to stock grants pursuant to
Weatherford employment agreements and option plans, $5.2 million in corporate
related expenses directly associated with the Merger, $6.3 million related to
facility closure costs, costs associated with the closure of excess and
duplicated manufacturing, distribution and service locations primarily due to
integrating the Company's businesses with Weatherford's businesses under a
Company-wide consolidation plan and $46.0 million associated with the impairment
of various assets as a result of the combination of worldwide operations and the
rationalization of product lines and the elimination of certain products,
services and locations, as a result of the changes in the operations of the
Company following the Weatherford Merger in accordance with the Company-wide
consolidation plan.
MARKET TRENDS
The demand for the Company's products and services is affected by the price
and demand of natural gas, the level of oil and gas exploration, production and
consumption, the number of oil and gas wells being drilled, the depth and
drilling conditions of such wells, the volume of production, the number of well
completions, the level of workover activity, the construction of gathering and
storage systems and the age and operating pressures of natural gas wells.
Exploration and production activities are affected by worldwide economic
conditions, supply and demand for oil and natural gas, seasonal trends and the
political stability of oil producing countries. Drilling and workover activity
can fluctuate significantly in a short period of time, particularly in the
United States and Canada.
The willingness of oil and gas operators to make capital expenditures for
the exploration and production of oil and natural gas is influenced by numerous
factors over which the Company has no control, including the prevailing and
expected market prices for oil and natural gas. Such prices are impacted by,
among other factors, worldwide demand for oil and gas, costs of exploration and
production, general economic and political conditions, availability of new
leases and concessions, the ability of the members of the Organization of
Petroleum Exporting Countries ("OPEC") to maintain price stability through
voluntary production limits, the level of production by non-OPEC countries, and
governmental regulations regarding, among other things, environmental
protection, taxation, price controls and product allocations.
11
<PAGE> 12
The oil and gas industry has been substantially volatile over the years, due
in large part to volatility in the prevailing prices of oil and natural gas.
In 1996 and much of 1997, the oil and gas service industry experienced a
general improvement in product demand and pricing as relatively stable and
improved oil and or natural gas prices combined with a strong world economy to
increase exploration and development activity worldwide. This trend, together
with a decline in the worldwide inventory of used drill pipe, benefited the
Company and its results in 1997 and 1996.
The worldwide price of oil has declined significantly since late 1997, with
prices having dropped as much as 40% to under $13 per barrel for spot
deliveries, and prices for natural gas have weakened slightly on a year to year
basis. These declines have been attributed to, among other things, an excess
supply of oil in the world markets, reduced domestic demand associated with an
unseasonably warm winter, high inventory levels of oil and gas and the impact
of the economic downturn in Southeast Asia. The depressed economic conditions
in Southeast Asia also have had a negative effect on the economies in other
regions around the world and the associated demand for oil in those regions.
These conditions have resulted in substantially lower rig utilization rates in
the United States and Canadian land markets as well as less dramatic declines
in the United States offshore markets as the Company's customers have begun to
reevaluate their exploration and development plans for 1998 in light of current
lower oil prices. Within the international markets, which are characterized by
larger projects and longer lead times, demand has remained relatively stable.
The demand within these markets for 1999, however, is subject to uncertainty if
oil prices remain at their present levels for a prolonged period of time.
Although members of OPEC have recently taken action to reduce the world supply
of oil, the ultimate reduction in supply and its impact on prices is uncertain
and ultimately dependent on worldwide demand.
The current market conditions have had varying impacts on the Company's
businesses. Within the United States and Canada, the Company's completion and
services segment and artificial lift segment have experienced declines in
revenue as demand and pricing have fallen with the lower rig count and oil
production activity. The artificial lift segment has been particularly affected
by large declines in demand for its equipment used for the production of heavy
oil and other wells that are highly dependent on oil prices. These declines
have been somewhat offset by the continued relative strength in the
international markets, in particular the markets served by the Company's
completion and services segment. The Company has also seen an increase in
demand for its natural gas compression products and services due to more stable
natural gas prices and a general trend in the industry for companies to
out-source their compression needs. Within the Company's drilling products
segment, the Company has begun seeing a decline in new orders for drill pipe and
premium connections associated with lower rig utilization rates and higher
customer inventory levels. Sales of couplings and premium casing has also
declined as the Company's customers for these products have begun to reduce
their inventory levels in light of current market conditions.
The Company currently anticipates that under current market conditions the
demand for its current products and services will decline during the remainder
of 1998 on a consecutive and comparative quarter to quarter basis. The Company
also expects that sales and backlog of drilling products will decline from this
year's previously historical high levels to a more moderate level starting in
the fourth quarter and international service revenues and compression sales
should remain relatively flat for the remainder of 1998, with some downward
pressure on prices and margins. The Company, however, currently expects that
net income, excluding the Merger and Other Charges, should exceed 1997 net
income of $2.01 per diluted share. The impact of the current market conditions
on 1999 sales and income, however, will be dependent upon a number of factors
outside the control of the Company, including whether recent announced
production cuts by members of OPEC will have a material impact on oil prices,
whether the economic conditions in Asia, in particular, Japan and China, will
stabilize or further decline and further impact the economies in the United
States and Europe.
The Company intends to actively monitor market conditions and to react
through reductions in its manufacturing, distribution and sales operations in
order to manage its businesses in a manner consistent with existing market
conditions and activity levels, including reductions in workforce and
production levels. The Company, however, believes that the benefits from the
Weatherford Merger and associated consolidation of operations and
diversification of product and geographic exposure should partially offset the
impact of the current industry downturn.
ACQUISITIONS
The Company has grown substantially over the years through acquisitions
within the Company's core operations. During 1997, the Company completed
approximately 18 acquisitions for a total consideration in excess of $321.5
million in cash, $197.9 million in debt and assumed liabilities and the
issuance of approximately 900,000 shares of
12
<PAGE> 13
Common Stock for one acquisition that was accounted for as an immaterial
pooling of interests. In addition to the Weatherford Merger, during the first
half of 1998, the Company completed approximately seven acquisitions for a
total consideration of approximately $80.6 million in cash, $56.9 million in
debt and assumed liabilities and 730,208 shares of Common Stock. The Company
also disposed of various non-core businesses in 1997 for a total of $68.8
million.
Various of the Company's acquisitions have involved companies with substantial
goodwill associated with their operations, including goodwill relating to
acquisitions effected during the first six months of 1998 of approximately $94.5
million. The amortization of the Company's goodwill and other intangibles
during the three and six months ended June 30, 1998, was $5.1 million and $10.1
million, respectively, and is expected to be approximately $10.2 million for the
second half of 1998 before giving effect to any future acquisitions.
RESULTS OF OPERATIONS
A summary of operating results by industry segment is shown below (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
------------------------- --------------------------
1998 1997 1998 1997
--------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues
Completion and Oilfield
Services . . . . . . . . $218,544 $234,064 $ 448,306 $ 460,309
Artificial Lift and
Compression . . . . . . . 137,591 92,156 290,444 179,861
Drilling Products . . . . 174,698 150,779 365,543 268,082
-------- -------- ---------- ---------
$530,833 $476,999 $1,104,293 $ 908,252
======== ======== ========== =========
Merger Costs and Other Charges
Completion and Oilfield
Services . . . . . . . . $ 26,805 $ -- $ 26,805 $ --
Artificial Lift and
Compression . . . . . . . 18,570 -- 18,570 --
Drilling Products . . . . 6,950 -- 6,950 --
Corporate . . . . . . . . 67,675 -- 67,675 --
-------- -------- ---------- ---------
$120,000 $ -- $ 120,000 $ --
======== ======== ========== =========
Operating Income (Loss):
Completion and Oilfield
Services . . . . . . . . $ 28,001 $ 48,448 $ 84,538 $ 94,089
Artificial Lift and
Compression . . . . . . . (4,309) 8,787 12,280 17,407
Drilling Products . . . . 38,017 26,671 83,719 47,962
Corporate . . . . . . . . (74,832) (8,201) (83,060) (16,765)
-------- -------- ---------- ---------
$(13,123) $ 75,705 $ 97,477 $ 142,693
======== ======== ========== =========
</TABLE>
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
GENERAL
For the second quarter of 1998, the Company reported a net loss of $14.9
million, or $0.15 per diluted share, which included pretax Merger and Other
Charges of $120.0 million, or $78.0 million net of taxes, or $0.80 per diluted
share, compared to $45.7 million in net income, or $0.47 per diluted share, for
the second quarter of 1997. Excluding the Merger and Other Charges, the Company
would have recorded net income of $63.1 million, or $0.65 per diluted share, for
the quarter ended June 30, 1998, an improvement of approximately 38.0% over the
second quarter of 1997. This improvement was primarily attributable to the
revenue and margin improvements in the Company's drilling products segment and
completion and oilfield services segment, as well as the beneficial effect of
the Company's 1997 and 1998 acquisitions. The net effect of acquisitions
effected after June 30, 1997, and dispositions effected in 1997 was an increase
in net income of $11.4 million.
Revenues for the quarter ended June 30, 1998, were up 11.3% over the quarter
ended June 30, 1997, primarily due to the effect of acquisitions. The net
effect of acquisitions effected after June 30, 1997, and dispositions effected
in 1997 was an increase in revenues of $51.0 million. While revenues were up on
a comparative year basis, revenues declined by $42.6 million during the second
quarter of 1998 from the first quarter of 1998 due to declining market
13
<PAGE> 14
conditions, in particular in the United States and Canada. Excluding the
Merger and Other Charges of $120.0 million, operating income for the second
quarter of 1998 was $106.9 million, as compared to $110.6 million for the first
quarter of 1998, with operating margins of 20.1% and 19.3%, respectively.
Of the Company's second quarter 1998 sales, 48.8%, 8.4%, 5.2%, 12.3% and
7.8%, respectively, were attributable to sales in the U.S., Europe, Africa,
Canada and Latin America, respectively, compared to 52.2%, 7.4%, 4.8%, 11.4%
and 7.4%, respectively, for the second quarter of 1997. U.S. sales for the
second quarter of 1998 included sales to U.S. distributors and other U.S.
companies for ultimate use outside the U.S.
COMPLETION AND OILFIELD SERVICES SEGMENT
The Company's completion and oilfield services segment reported revenues of
$218.5 million for the second quarter of 1998, down from $234.1 million for the
second quarter of 1997. Excluding the Merger and Other Charges of $26.8
million, operating income for the second quarter of 1998 was $54.8 million, as
compared to $48.4 million for the second quarter of 1997. The comparative
improvement in operating income reflects reduced costs in North American
operations and the loss of low margin non-core businesses disposed of during
1997.
International revenues increased $15.1 million in the second quarter of 1998
compared to the same period in 1997, with the most significant revenue increases
occurring in the Middle East and Asia Pacific. North American revenues declined
by $30.0 million in the second quarter of 1998, as compared to the second
quarter of 1997. Revenues in Canada increased 23.5% for the second quarter of
1998 over the second quarter of 1997. The decline in North American revenues
reflects the loss of $31.3 million of revenues from the non-core businesses
disposed of during 1997. The 1997 acquisitions for this segment generated
revenues of $8.5 million and operating income of $1.0 million in the second
quarter of 1998. Comparing the same periods, the average North American
drilling rig count decreased 7.3% and the average workover rig count declined
24.1%. The average international rig count declined slightly in the second
quarter of 1998, as compared to the second quarter of 1997.
Cost of goods sold and services and rentals declined as a percentage of
revenues from 67.6% in the second quarter of 1997 to 64.5% in the second
quarter of 1998, as a result of improved pricing in certain areas and increased
volume. Selling, general and administrative expenses for the second quarter of
1998 as a percentage of revenues was 10.8% compared to 11.9% for the second
quarter of 1997.
ARTIFICIAL LIFT AND COMPRESSION SEGMENT
The Company's artificial lift and compression segment reported revenues of
$137.6 million for the second quarter of 1998, up from $92.2 million for the
second quarter of 1997. Excluding the Merger and Other Charges of $18.6
million, operating income for the second quarter of 1998 was $14.3 million,
compared to $8.8 million for the second quarter of 1997. These improvements in
revenue and operating income were due to the Company's 1997 and 1998
acquisitions and the revenue growth in gas compression. The 1997 and 1998
acquisitions generated revenues and operating income for this segment of $58.9
million and $9.1 million in the second quarter of 1998, respectively. The
improvements attributable to the businesses acquired in these acquisitions were
partially offset by the decline in the United States oil markets and the
substantial decline in demand for the Company's progressing cavity pump line of
artificial lift products due to lower oil prices and an associated drop in
heavy oil drilling activity primarily in Canada and other marginal oil
production activity. Revenues and operating income were also adversely affected
by a decline in the manufacturing and packaging of compressors in Canada. The
Company has been reducing costs in the North American operations, in light of
industry conditions.
Cost of goods sold increased as a percentage of revenues from 70.1% in the
first quarter of 1997 to 71.7% in the first quarter of 1998, as a result of a
shift in the sales mix from higher margin product sales to lower margin product
sales. Such increase in cost of goods sold was partially offset by the
consolidation savings from the December 1997 acquisitions of Trico Industries,
Inc., a manufacturer and distributor of subsurface pumps, sucker rods,
accessories and hydraulic lift systems ("Trico"), BMW Pump, Inc., a manufacturer
of progressing cavity pumps ("BMW Pump"), and BMW Monarch (Lloydminster) Ltd.,
a distributor of progressing cavity pumps ("BMW Monarch"), in December 1997, and
the acquisition of Taro Industries Ltd., a provider of well monitoring, gas
compression and drilling equipment ("Taro"), and Ampscot Equipment Ltd., a
manufacturer of conventional pumping units ("Ampscot"), in the first quarter of
1998. This segment also benefited from an expansion and increased utilization
of the Company's U.S. compressor rental fleet. Selling, general and
administrative expenses for the second quarter of 1998 as a percentage of
revenues was 17.9% compared to 20.3% for the second quarter of 1997. The
decrease in selling, general and
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<PAGE> 15
administrative expenses for this segment reflects the benefit from cost
reductions implemented partially offset by higher costs associated with
increased amortization of goodwill and other intangibles relating to the
Company's 1997 and 1998 acquisitions in this segment.
DRILLING PRODUCTS SEGMENT
The Company's drilling products segment reported revenues of $174.7 million
for the second quarter 1998, up from $150.8 million for the second quarter 1997.
Excluding the Merger and Other Charges of $6.9 million, operating income for the
second quarter of 1998 was $45.0 million, as compared to $26.7 million for the
second quarter of 1997. These improvements in revenue and operating income were
primarily due to improved pricing for drill pipe and other drilling tools
implemented in prior quarters for products sold during the quarter, increased
sales of premium tubular products and the effects of the Company's acquisitions
of TA Industries, Inc., a manufacturer of premium couplings and casing ("TA"),
and XLS Holding, Inc., a manufacturer of high performance connectors for marine
applications ("XL"). Premium tubular revenues decreased to approximately $56.0
million in the second quarter of 1998 down from approximately $81.4 million for
1997. The comparative decrease in revenues was primarily due to special
one-time sales of premium products in 1997. The net effect of the acquisitions
of TA and XL on revenues and operating income in this segment for the quarter
ended June 30, 1998, compared to the second quarter of 1997 was an increase in
revenues of $3.6 million and an increase in operating income of $0.1 million.
Cost of goods sold declined as a percentage of revenues from 75.8% in the
second quarter of 1997 to 67.8% in the second quarter of 1998, due to increased
pricing on the Company's products and reduced costs resulting from the expansion
of the Company's Mexico tool joint facility, which provided comparative savings
of approximately $1.0 million in the second quarter of 1998. Selling, general
and administrative expenses as a percentage of revenues represented 6.4% for the
second quarter of 1998 and 6.5% in the second quarter of 1997.
Customer backlog for tubular products at June 30, 1998, was approximately
$300 million. The Company currently expects that over $196 million of this
backlog will be shipped by December 31, 1998, with the remainder to be shipped
within the first six months of 1999. The Company currently expects that under
current market conditions sales of drill pipe will decline during the second
half of 1998 and in 1999 as result of reduced drilling activity and rig
utilization rates and increases in customer inventories.
OTHER
Corporate expenses as a percentage of revenues for the second quarter of
1998 were 1.3% as compared to 1.7% for the second quarter of 1997. The
reduction in corporate expenses reflects consolidation savings from the
Weatherford Merger.
The Company incurred research and development costs of $3.9 million in the
second quarter of 1998 compared to $2.9 million in the second quarter of 1997.
This increase primarily reflects the expansion of the Company's operations and
the development of new service equipment designs to support the oilfield
products and services and new products for drilling products to support high
performance applications businesses.
Interest expense for the second quarter of 1998 was $13.7 million compared
to $10.6 million for the second quarter of 1997. The increase in interest
expense in the second quarter of 1998, as compared to the second quarter of
1997, reflects the issuance by the Company of $402.5 million principal amount
of its 5% Convertible Subordinated Preferred Equivalent Debentures due 2027
(the "Debentures") issued in November 1997, a portion of which was utilized to
purchase substantially all of the $120.0 million principal amount of the 10
1/4% Senior Notes due 2004 (the "Senior Notes").
The Company's effective tax rate on net income in the second quarter of
1998 was 35% as comparable to the second quarter of 1997.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
GENERAL
Net income for the six months ended June 30, 1998 was $46.3 million, or
$0.47 per diluted share, on revenues of $1,104.3 million, as compared to net
income for the six months ended June 30, 1997 of $83.6 million, or $0.86 per
diluted share, on revenues of $908.3 million. Included in net income is a
pretax charge of $120.0 million, or
15
<PAGE> 16
$78.0 million net of taxes, or $0.80 per diluted share, for Merger and Other
Charges. Excluding the Merger and Other Charges, the Company would have
recorded net income of $124.3 million, or $1.27 per diluted share, for the six
months ended June 30, 1998, an improvement of approximately 48.5% over the six
months ended June 30, 1997. This improvement was primarily attributable to
improvements in the Completion and Oilfield Services segment, revenue and
margin improvement in the Company's drilling products segment and the
beneficial effect of the Company's 1997 and 1998 acquisitions. The net effect
of acquisitions effected after June 30, 1997, and dispositions effected in 1997
was an increase in net income of $17.7 million.
Revenues for the six months ended June 30, 1998, were up 21.6% over the six
months ended June 30, 1997, primarily due to relatively stronger market
conditions, in particular in comparison to the first quarter of 1997, and the
effect of acquisitions. The net effect of acquisitions effected after June 30,
1997, and dispositions effected in 1997 was an increase in revenues of $104.8
million. Excluding Merger and Other Charges, operating income for the six
months ended June 30, 1998, was $217.5 million as compared to $142.7 million
for the six months ended June 30, 1997, with operating margins of 19.7% and
15.7%, respectively.
Of the Company's first six months of 1998 sales, 49.0%, 7.5%, 4.4%, 14.6%
and 7.4%, respectively, were attributable to sales in the U.S., Europe, Africa,
Canada and Latin America, respectively, compared to 51.0%, 7.9%, 4.8%, 11.9%
and 7.1%, respectively, for the first six months of 1997. U.S. sales for this
period included sales to U.S. distributors and other U.S. companies for
ultimate use outside the U.S.
COMPLETION AND OILFIELD SERVICES SEGMENT
The Company's completion and oilfield services segment reported revenues of
$448.3 million for the six months ended June 30, 1998, down from $460.3 million
for the first six months of 1997. Excluding the Merger and Other Charges of
$26.8 million, operating income for the first six months of 1998 was $111.3
million, as compared to $94.1 million for the first six months of 1997. The
improvement in operating income before the Merger and Other Charges reflects
the reduced costs in North American operations and the loss of low margin
non-core businesses disposed of during 1997.
International revenues increased $29.9 million for the period ended June 30,
1998 compared to the same period in 1997, with the most significant revenue
increases occurring in the Middle East and Asia Pacific. North American
revenues declined by $40.6 million for the first six months of 1998, as compared
to the first six months of 1997. Revenues in Canada increased 36.6% for the
first six months of 1998 over the first six months of 1997. The decline in
North American revenues reflects the loss of $66.4 million of revenues from the
non-core businesses disposed of during 1997. The 1997 acquisitions for this
segment generated revenues of $17.7 million and operating income of $2.3 million
in the second half of 1998. Comparing the same periods, the average North
American drilling rig count increased 3.0% and the average workover rig count
declined 18.9%. The average international rig count declined slightly during
the first six months of 1998, as compared to the same period for 1997.
Cost of goods sold and services and rentals declined as a percentage of
revenues from 67.8% for the period ended June 30, 1997 to 64.4% for the period
ended June 30, 1998, as a result of North American cost reductions and improved
pricing in certain areas. Selling, general and administrative expenses for the
first six months of 1998 as a percentage of revenues were 11.1% compared to
12.0% for the first six months of 1997.
ARTIFICIAL LIFT AND COMPRESSION SEGMENT
The Company's artificial lift and compression segment reported revenues and
operating income of $290.4 million and $30.9 million for the six months ended
June 30, 1998, respectively, up from $179.9 million and $17.4 million for the
six months ended June 30, 1997, respectively. Excluding the Merger and Other
Charges of $18.6 million, operating income for this segment for the six months
ended June 30, 1998, was $30.9 million, as compared to $17.4 million for the six
months ended June 30, 1997. These improvements were due to the Company's 1997
and 1998 acquisitions and growth in the Latin American markets. The 1997 and
1998 acquisitions generated revenues and operating income for this segment of
$135.6 million and $19.7 million in the first half of 1998, respectively. The
improvements attributable to the businesses acquired in these acquisitions were
partially offset by a substantial decline in the United States oil markets and
the substantial decline in demand for the Company's progressing cavity pump line
of artificial lift products due to lower oil prices and an associated drop in
heavy oil drilling activity primarily in Canada and other marginal oil
production activity. Revenues and operating income were also adversely affected
by a decline in the manufacturing and packaging of compressors in Canada.
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<PAGE> 17
Cost of goods sold declined as a percentage of revenues from 71.5% in the
six months ended June 30, 1997 to 68.5% in the six months ended June 30, 1998,
as a result of an improvement in the segment's North American cost structure
from the December 1997 acquisitions of Trico, BMW Pump and BMW Monarch and the
1998 acquisitions of Taro and Ampscot. This segment also benefited from the
expansion and increased utilization of the Company's United States compressor
rental fleet. Selling, general and administrative expenses for the first half
of 1998 as a percentage of revenues was 20.9% compared to 18.8% for the first
half of 1997. The increase in selling, general and administrative expenses for
this segment reflects higher costs associated with overlapping operations at
various acquired companies pending the consolidation of those operations and
increased amortization of goodwill and other intangibles relating to the
Company's 1997 and second quarter 1998 acquisitions in this segment.
DRILLING PRODUCTS SEGMENT
The Company's drilling products segment reported revenues of $365.5 million
for the first six months of 1998, up from $268.1 million for the first six
months 1997. Excluding the Merger and Other Charges of $6.9 million, operating
income for the first half of 1998 was $90.7 million, as compared to $48.0
million for the first half of 1997. These improvements in revenue and
operating income, before the Merger and Other Charges, were primarily due to
improved pricing for drill pipe and other drilling tools, increased sales of
premium tubular products and the effects of the Company's acquisition of TA and
XL. Premium tubular revenues were flat in the first six months of 1998 compared
to the first six months of 1997. The net effect of the acquisitions of TA and
XL on revenues and operating income in this segment for the period ended June
30, 1998, compared to the same period for 1997 was an increase in revenues of
$34.0 million and an increase in operating income of $4.9 million.
Cost of goods sold declined as a percentage of revenues from 75.9% for the
six months ended June 30, 1997 to 69.1% for the six months ended June 30, 1998,
due to increased pricing on the Company's products and reduced costs resulting
from the expansion of the Company's Mexico tool joint facility, which provided
savings of approximately $2.2 million in the first half of 1998. Selling,
general and administrative expenses as a percentage of revenues represented 6.1%
for the first six months of 1998 and 6.2% for the first six months of 1997.
OTHER
Corporate expenses as a percentage of revenues for the first half of 1998
were 1.4% as compared to 1.8% for the first half of 1997.
The Company incurred research and development costs of $7.3 million in the
first half of 1998 compared to $6.5 million in the first half of 1997. This
increase primarily reflects the expansion of the Company's operations and the
development of new service equipment designs to support the oilfield products
and services businesses and new products for drilling products to support high
performance applications.
Interest expense for the six months ended June 30, 1998 was $25.8 million
compared to $21.1 million for the same period in 1997. The increase in
interest expense in the first half of 1998, as compared to first half 1997,
reflects the issuance by the Company of $402.5 million principal amount of the
Debentures in November 1997.
The Company's effective tax rate on net income for the six months ended
June 30, 1998 was 38.4% as compared to 35.2% for the six months ended June 30,
1997. The lower effective tax rate in 1997 reflects the utilization of
substantially all of the Company's U.S. net operating loss and tax credit
carryforwards in 1997 and differences in the components and tax rates
applicable to foreign taxable income.
17
<PAGE> 18
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130 ("SFAS No. 130"), Reporting Comprehensive Income. SFAS No. 130 establishes
standards for the reporting of comprehensive income and its components in a
full set of general-purpose financial statements and is effective for years
beginning after December 15, 1997. The Company adopted SFAS No. 130 in the
first quarter of 1998.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131 ("SFAS No. 131"), Disclosures About Segments of an Enterprise and Related
Information. SFAS No. 131, effective for years beginning after December 15,
1997, requires segment information to be reported on a basis consistent with
that used internally for evaluating segment performance and deciding how to
allocate resources to segments. The Company will adopt SFAS No. 131 in 1998
and is reviewing its segments in light of SFAS No. 131.
In 1998, the FASB issued Statement of Accounting Standards No. 132 ("SFAS No.
132"), Employers' Disclosures About Pensions and Other Postretirement Benefits.
SFAS No. 132 standardizes disclosure requirements for pensions and other
postretirement benefits. SFAS No. 132 will be effective for years beginning
after December 15, 1997. Had the Company adopted SFAS No. 132 as of December
31, 1997, it would have had no material impact on the consolidated financial
statements of the Company.
In June 1998 the FASB issued Statement of Accounting Standards No. 133 ("SFAS
No. 133"), Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133 provides a comprehensive and consistent standard for the recognition
and measurement of derivatives and hedging activities. SFAS No. 133 is
effective for years beginning after June 15, 1999. The Company is currently
evaluating the impact of SFAS No. 133 on its consolidated condensed financial
statements.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had cash and cash equivalents of $66.5 million
compared to $74.2 million at December 31, 1997. The reduction in cash and cash
equivalents since December 31, 1997, was primarily attributable to the
acquisition of new businesses for approximately $80.6 million in cash and
capital expenditures for property plant and equipment of $95.9 million, offset
by borrowings under revolving credit facilities of $176.3 million.
At June 30, 1998, the Company had outstanding $200.5 million in borrowings
under its revolving credit facilities compared to $24.2 million at December 31,
1997. In addition, the Company had outstanding approximately $26.2 million and
$22.7 million in letters of credit at June 30, 1998 and June 30, 1997,
respectively.
In November 1997, the Company completed a private placement of $402.5 million
principal amount of Debentures. The net proceeds from the Debentures were
$390.9 million. The Debentures bear interest at an annual rate of 5% and are
convertible into Common Stock at a price of $80 per share. The Debentures are
redeemable by the Company at any time on or after November 4, 2000, at
redemption prices provided for in the indenture related to the Debentures, and
are subordinated in right of payment of principal and interest to the prior
payment in full of certain existing and future senior indebtedness of the
Company. The Company also has the right to defer payments of interest on the
Debentures by extending the quarterly interest payment period on the Debentures
for up to 20 consecutive quarters at anytime when the Company is not in default
in the payment of interest.
On May 27, 1998, the Company amended its credit facility to consolidate EVI's
and Weatherford's then existing credit facilities into a single facility. The
new credit facility provides for borrowings of up to an aggregate of $250.0
million, consisting of a $200.0 million U.S. credit facility and a $50.0
million Canadian credit facility and terminated both of the Company's and
Weatherford's revolving credit facilities. Borrowings under the new credit
facility bear interest at a variable rate based on prime or LIBOR and are
unsecured. In addition, the Company's credit facility contains customary
affirmative and negative covenants, including debt incurrence tests, interest
coverage ratio, negative pledges and certain dispositions of assets.
The Company conducts a portion of its business in currencies other than the
U.S. dollar, including the Canadian dollar, major European currencies and
certain Latin American currencies. Although most of the revenues of the
Company's international operations are denominated in the local currency, the
effects of foreign currency
18
<PAGE> 19
fluctuations are largely mitigated because local expenses of such foreign
operations also generally are denominated in the same currency. Changes in the
value of the U.S. dollar relative to these foreign currencies affect the
weighted average currency exchange rates used to translate the statements of
income of the Company's international subsidiaries into U.S. dollars. The
impact of exchange rate fluctuations during the first six months of 1998, the
year ended 1997, 1996 and 1995 did not have a material effect on reported
amounts of revenues or net income. The increase in the value of the U.S. dollar
against most major currencies during 1997 and the six months ended June 30, 1998
caused the cumulative translation adjustment, a reduction in stockholders'
equity, to increase by $27.0 million and $13.7 million, respectively.
The Company enters into forward 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. Settlement of forward exchange contracts
resulted in net cash inflows totaling $1.2 million and $3.8 million during the
first six months of 1998 and 1997, respectively.
Like most multinational oilfield service companies, the Company has
operations in certain international areas, including parts of the Middle East,
North and West Africa, Latin America, the Asia-Pacific region and the
Commonwealth of Independent States (the "CIS"), that are inherently subject to
risks of war, political disruption, civil disturbance and policies that may
disrupt oil and gas exploration and production activities, restrict the
movement of funds, lead to U.S. government or international sanctions or limit
access to markets for periods of time. Historically, the economic impact of
such disruptions has been temporary and oil and gas exploration and production
activities have resumed eventually in relation to market forces. Certain
areas, including the CIS, Algeria, Nigeria, and parts of the Middle East, the
Asia Pacific region and Latin America, have been subjected to political
disruption or social unrest in the past twelve months. Generally, business
interruptions resulting from civil or political disruptions negatively impact
near-term results of operations; however, management believes that it is
unlikely that any specific business disruption caused by existing or foreseen
civil or political instability will have a materially adverse impact on the
financial condition or liquidity of the Company.
The Company's current sources of capital are its current cash, cash generated
from operations and borrowings under its revolving credit lines of credit. The
Company believes that the current reserves of cash and short-term investments,
access to its existing credit line and internally generated cash from
operations are sufficient to finance the projected cash requirements of its
current and future operations. The Company is continually reviewing
acquisitions in its markets. Depending upon the size, nature and timing of an
acquisition, the Company could require additional capital in the form of either
debt, equity or a combination of both.
Substantially all of the Company's customers are engaged in the energy
industry. This concentration of customers may impact the Company's overall
exposure to credit risk, either positively or negatively, in that customers may
be similarly affected by changes in economic and industry conditions. The
Company performs ongoing credit evaluations of its customers and does not
generally require collateral in support of its trade receivables. The Company
maintains reserves for potential credit losses, and actual losses have
historically been within the Company's expectations.
CAPITAL EXPENDITURES
Capital expenditures for property, plant and equipment by the Company during
the six months ended June 30, 1998, totaled approximately $95.9 million and
primarily related to drill pipe and tubing, fishing tools, tubular service
equipment, compression rental equipment and plant expansions in Canada.
Ongoing routine capital expenditures for the remainder of 1998 are estimated to
be approximately $75.0 million. In addition, the Company recently entered into
an agreement to acquire the Company's leased facility in Veracruz, Mexico for
$48.0 million. This acquisition is subject to various conditions, including
Mexican regulatory approval and is not expected to close until the fourth
quarter of 1998. Capital expenditures are expected to be funded with available
cash, cash flow from operations and, if desirable, borrowings under its
existing line of credit and other facilities.
In 1997, the Company began modifying its computer system programming to
process transactions in the year 2000. Anticipated spending for this
modification will be expensed as incurred and is not expected to be material.
19
<PAGE> 20
CHRISTIANA MERGER
In December 1997, the Company entered into a merger agreement (the "Merger
Agreement") with Christiana Companies, Inc. ("Christiana") and C2, Inc.,
Wisconsin corporations, pursuant to which approximately 3.9 million shares of
Common Stock will be issued to the stockholders of Christiana in a merger of a
subsidiary of the Company with and into Christiana ("Christiana Merger").
Prior to the Christiana Merger, Christiana is required to sell two-thirds of
its interest in Total Logistic Control ("Logistic"), a wholly owned subsidiary
of Christiana, to C2, Inc. for approximately $10.7 million. Following the
Logistic sale, the remaining assets of Christiana will consist of (i)
approximately 3.9 million shares of Common Stock, (ii) a one-third interest in
Logistic and (iii) cash and other assets with a book value of approximately
$10.0 million and (iv) subject to early payment under certain circumstances, a
contingent cash payment of up to $10.0 million payable five years after the
effective date of the merger to the extent such funds are not required to
satisfy contingent claims against Christiana. It is anticipated that
Christiana will have no material debt as of the consummation of the Christiana
Merger, but will have various tax liabilities which will be paid with the
remaining cash balance in Christiana after the Christiana Merger. Because the
number of shares of Common Stock issuable in the proposed Christiana Merger
approximates the number of shares of Common Stock currently held by Christiana,
the Christiana Merger, if consummated, would be expected to have no material
effect on the outstanding number of shares of Common Stock or equity of the
Company.
The Christiana Merger is subject to various conditions, including approval by
the stockholders of the Company and Christiana and the receipt of an opinion by
its tax advisors to the effect that the shareholders of Christiana will not
recognize gain or loss for federal income tax purposes on their receipt of
shares of Common Stock in exchange for their shares of Christiana common stock.
The Company has scheduled a special meeting of stockholders to consider and
vote on the Christiana Merger for August 17, 1998.
Under the applicable provisions of the United States Income Tax Code of 1986,
as amended, the Christiana shareholders may not receive their shares of Common
Stock in the Christiana Merger on a tax free basis unless the market price of
the Common Stock on the date of the closing is equal to at least approximately
$30.00, such that the value of the shares of Common Stock issuable to the
Christiana stockholders in the Christiana Merger is equal to at least 80% of
total consideration to be received by them. The market price of the Common
Stock is currently less than $30.00. Accordingly, the Christiana Merger will
not close unless and until the Common Stock is at least approximately $30.00 and
all other conditions to the Christiana Merger have been satisfied. The Company
currently intends to hold its Special Meeting of Stockholders to vote on the
Christiana Merger on August 17, 1998, and if the stockholders approve the
Christiana Merger, to delay the closing of the Christiana Merger until such time
that the Common Stock is equal to at least approximately $30.00 per share or the
Merger Agreement is terminated. Under the terms of the Merger Agreement, the
Company and Christiana may not terminate the Merger Agreement until at least
October 31, 1998. As a result, there can be no assurance that the Christiana
Merger will close or if it does close, and the timing thereof.
FORWARD-LOOKING STATEMENTS
Certain statements made herein and in other public filings and releases by
the Company contain "forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995) that involve risk and uncertainty.
These forward-looking statements may include, but are not limited to, future
sales, earnings, margins, production levels and costs, expected savings from
acquisitions and plant expansions, demand for products, product deliveries,
market trends in the oil and gas industry and the oilfield service sector
thereof, research and development, environmental and other expenditures,
currency fluctuations and various business trends. Forward-looking statements
may be made by management orally or in writing including, but not limited to,
this Management's Discussion and Analysis of Financial Condition and Results of
Operations section and other sections of the Company's filings with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
and the Securities Act of 1933.
Actual results and trends in the future may differ materially depending on a
variety of factors including, but not limited to, whether and for how long the
current pricing trend for oil will continue and the effect thereof on the
demand and price of the Company's products, changes in the price of oil and
gas, changes in the domestic and international rig count, global trade
policies, domestic and international drilling activities, the impact of the
economic downturn in Southeast Asia on the worldwide economies and associated
demand for oil, world-wide political stability and economic growth, including
currency fluctuations, government export and import policies, technological
advances involving the Company's products, the Company's successful execution
of internal operating plans and manufacturing consolidations and
restructurings, performance issues with key suppliers and subcontractors, the
ability of the Company to maintain price increases and market shares, raw
material costs changes, collective bargaining labor disputes, regulatory
20
<PAGE> 21
uncertainties and legal proceedings. Future results will also be dependent
upon the ability of the Company to successfully integrate the operations of
Weatherford with the Company, as well as its ability to continue to identify
and complete successful acquisitions at acceptable prices, integrate those
acquisitions with the Company's other operations and penetrate existing and new
markets.
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<PAGE> 22
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On June 15, 1998, the Company issued 75,000 shares of restricted Common Stock
(the "Restricted Shares") to Curtis W. Huff pursuant to the terms of an
Employment Agreement between the Company and Mr. Huff. The Restricted Shares
are subject to four year vesting on the basis of 25% per year and were granted
to Mr. Huff as a sign-on incentive bonus under the Employment Agreement in
connection with the retention of Mr. Huff as Senior Vice President, General
Counsel and Secretary of the Company. The issuance of the Restricted Shares
was exempt from registration under the Securities Act of 1933 (the "Act") in
reliance upon Section 4(2) of the Act as a transaction not involving any public
offering.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's special meeting of stockholders held on May 27, 1998, the
stockholders of the Company approved and adopted the Agreement and Plan of
Merger dated as of March 4, 1998, as amended, by and between the Company and
Weatherford Enterra, Inc. ("Weatherford"), providing for the merger of
Weatherford with and into the Company (the "Merger") pursuant to which each
outstanding share of Weatherford common stock was converted into the right to
receive 0.95 of a share of the Company's Common Stock. There were no broker
non-votes.
The following sets forth the results of the voting:
<TABLE>
<CAPTION>
Withheld/
For Against Abstained
---------- --------- ---------
<S> <C> <C> <C>
Merger with Weatherford Enterra, Inc. 35,523,507 83,136 127,877
</TABLE>
22
<PAGE> 23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<S> <C>
2.1 Amendment No. 1 dated as of May 26, 1998, to the Agreement and Plan of Merger dated as of December 12, 1997 and
to the Agreement dated as of December 12, 1997, by and among EVI, Inc., Christiana Acquisition, Inc.,
Christiana Companies, Inc., C2, Inc. and Total Logistic Control, LLC.
3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit No. 3.1
to Form 8-K, File 1-13086, filed June 2, 1998).
3.2 Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit No. 3.2 to Form 8-K, File 1-
13086, filed June 2, 1998).
4.1 See Exhibit Nos. 3.1 and 3.2 for provisions of the Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws of the Registrant defining the rights of the holders of Common Stock.
4.2 Amended and Restated Credit Agreement dated as of May 27, 1998, among EVI Weatherford, Inc., EVI Oil Tools
Canada Ltd., Chase Bank of Texas, National Association, as U.S. Administrative Agent, The Bank of Nova Scotia,
as Documentation Agent and Canadian Agent, ABN AMRO Bank, N.V., as Syndication Agent, and the other Lenders
defined therein, including the forms of Notes (incorporated by reference to Exhibit No. 4.1 to the Form 8-K,
File 1-13086, filed June 16, 1998).
4.3 Indenture dated May 17, 1996, between Weatherford Enterra, Inc. and Bank of Montreal Trust Company, as Trustee
(incorporated by reference to Exhibit 4.1 to Weatherford Enterra, Inc.'s Current Report on Form 8-K, File No.
1-7867, dated May 28, 1996).
4.4 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 (incorporated
by reference to Exhibit No. 4.1 to Form 8-K, File 1-13086, filed June 2, 1998).
4.5 Form of Weatherford Enterra, Inc.'s 7 1/4% Notes Due May 15, 2006 (incorporated by reference to Exhibit 4.2 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K, File No. 1-7867, dated May 28, 1996).
10.1 Weatherford Enterra, Inc. 401(k) Savings Plan (incorporated by reference to Exhibit 4.15 to the Company's
Registration Statement on Form S-8 (File No. 333-53633)).
10.2 Weatherford International Incorporated 1987 Stock Option Plan, as amended and restated (incorporated by
reference to Exhibit 10.3 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 1-7867)).
10.3 Weatherford Enterra, Inc. 1991 Stock Option Plan, as amended and restated (incorporated by reference to Exhibit
10.4 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 (File No.
1-7867)).
10.4 Weatherford Enterra, Inc. Amended and Restated Employee Stock Purchase Plan (incorporated by reference to
Exhibit 4.19 to the Company's Registration Statement on Form S-8 (File No. 333-53633)).
10.5 Weatherford Enterra, Inc. Restricted Stock Incentive Plan, as amended and restated (incorporated by reference
to Exhibit 10.6 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996
(File No. 1-7867)).
10.6 Amended and Restated Change of Control Agreements with Jon Nicholson (incorporated by reference to Exhibit 10.1
to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 (File No.
1-7867)).
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C>
10.7 Change of Control Agreement with Randall D. Stilley (incorporated by reference to Exhibit 10.1 to Weatherford
Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-17867)).
10.8 Indemnification Agreements with Robert K. Moses, Jr. (incorporated by reference to Exhibit 10.10 to Weatherford
Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1987 (File No. 1-7867)); Philip
Burguieres (incorporated by reference to Exhibit 10.4 to Weatherford Enterra, Inc.'s Quarterly Report on Form
10-Q for the quarter ended June 30, 1991 (File No. 1-7867)); William E. Macaulay (incorporated by reference to
Exhibit 10.2 to Weatherford Enterra, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30,
1995 (File No. 1-7867)); Jon Nicholson (incorporated by reference to Exhibit 10.2 to Weatherford Enterra,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 1-7867)); and Randall D.
Stilley (incorporated by reference to Exhibit 10.1 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1997 (File No. 1-17867)).
10.9 Employment Agreement dated as of June 15, 1998, between EVI Weatherford, Inc. and Philip Burguieres.
27.1 Financial Data Schedule
</TABLE>
Reports on Form 8-K:
1. Current Report on Form 8-K dated April 20, 1998, reporting (i) the
Company's earnings for the quarter ended March 31, 1998, and (ii) the
execution of 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.
2. Amendment No. 1 to Current Report on Form 8-K/A filed on April 21,
1998, amending Current Report on Form 8-K dated February 19, 1998, to
report the acquisition of Ampscot Equipment Ltd. under Item 5 and
delete the previous reporting under Item 2 because such acquisition
not constitute an acquisition of a significant amount of assets.
3. Current Report on Form 8-K dated April 22, 1998, as amended by
Amendment No. 1 to Current Report on Form 8-K/A filed April 24, 1998,
reporting (i) the execution of Amendment No. 2 dated as of April 22,
1998, to the Agreement and Plan of Merger dated as of March 4, 1998,
by and between EVI, Inc. and Weatherford Enterra, Inc. and (ii)
certain pro forma financial information of the Company.
4. Current Report on Form 8-K dated May 15, 1998, as amended by Current
Report on Form 8-K/A filed May 22, 1998, containing certain pro forma
financial information of the Company.
5. Current Report on Form 8-K dated May 27, 1998, reporting (i) the
completion of the Company's merger with Weatherford Enterra, Inc.,
(ii) the change of the Company's name to AEVI Weatherford, Inc.@ and
(iii) the financial statements and pro forma financial information of
Weatherford Enterra, Inc. pursuant to Rule 3-05(b) and Article 11 of
Regulation S-X.
6. Current Report on Form 8-K dated June 15, 1998, reporting the
Company's (i) Management's Discussion and Analysis of Financial
Condition and Results of Operations on a restated basis and (ii) the
Company's supplemental restated financial statements as of December
31, 1996 and 1997 and for the three years ended December 31, 1997.
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EVI Weatherford, Inc.
By: /s/ James G. Kiley
-----------------------------------
James G. Kiley
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
By: /s/ Frances R. Powell
-----------------------------------
Frances R. Powell
Vice President, Accounting and
Controller
(Principal Accounting Officer)
Date: August 14, 1998
25
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.1 Amendment No. 1 dated as of May 26, 1998, to the Agreement and Plan of Merger dated as of December 12, 1997 and
to the Agreement dated as of December 12, 1997, by and among EVI, Inc., Christiana Acquisition, Inc.,
Christiana Companies, Inc., C2, Inc. and Total Logistic Control, LLC. (incorporated by reference).
3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit No. 3.1
to Form 8-K, File 1-13086, filed June 2, 1998).
3.2 Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit No. 3.2 to Form 8-K, File 1-
13086, filed June 2, 1998).
4.1 See Exhibit Nos. 3.1 and 3.2 for provisions of the Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws of the Registrant defining the rights of the holders of Common Stock.
4.2 Amended and Restated Credit Agreement dated as of May 27, 1998, among EVI Weatherford, Inc., EVI Oil Tools
Canada Ltd., Chase Bank of Texas, National Association, as U.S. Administrative Agent, The Bank of Nova Scotia,
as Documentation Agent and Canadian Agent, ABN AMRO Bank, N.V., as Syndication Agent, and the other Lenders
defined therein, including the forms of Notes (incorporated by reference to Exhibit No. 4.1 to the Form 8-K,
File 1-13086, filed June 16, 1998).
4.3 Indenture dated May 17, 1996, between Weatherford Enterra, Inc. and Bank of Montreal Trust Company, as Trustee
(incorporated by reference to Exhibit 4.1 to Weatherford Enterra, Inc.'s Current Report on Form 8-K, File No.
1-7867, dated May 28, 1996).
4.4 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 (incorporated
by reference to Exhibit No. 4.1 to Form 8-K, File 1-13086, filed June 2, 1998).
4.5 Form of Weatherford Enterra, Inc.'s 7 1/4% Notes Due May 15, 2006 (incorporated by reference to Exhibit 4.2 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K, File No. 1-7867, dated May 28, 1996).
10.1 Weatherford Enterra, Inc. 401(k) Savings Plan (incorporated by reference to Exhibit 4.15 to the Company's
Registration Statement on Form S-8 (File No. 333-53633)).
10.2 Weatherford International Incorporated 1987 Stock Option Plan, as amended and restated (incorporated by
reference to Exhibit 10.3 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 1-7867)).
10.3 Weatherford Enterra, Inc. 1991 Stock Option Plan, as amended and restated (incorporated by reference to Exhibit
10.4 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 (File No.
1-7867)).
10.4 Weatherford Enterra, Inc. Amended and Restated Employee Stock Purchase Plan (incorporated by reference to
Exhibit 4.19 to the Company's Registration Statement on Form S-8 (File No. 333-53633)).
10.5 Weatherford Enterra, Inc. Restricted Stock Incentive Plan, as amended and restated (incorporated by reference
to Exhibit 10.6 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996
(File No. 1-7867)).
10.6 Amended and Restated Change of Control Agreements with Jon Nicholson (incorporated by reference to Exhibit 10.1
to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 (File No.
1-7867)).
10.7 Change of Control Agreement with Randall D. Stilley (incorporated by reference to Exhibit 10.1 to Weatherford
Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-17867)).
10.8 Indemnification Agreements with Robert K. Moses, Jr. (incorporated by reference to Exhibit 10.10 to Weatherford
Enterra, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1987 (File No. 1-7867)); Philip
Burguieres (incorporated by reference to Exhibit 10.4 to Weatherford Enterra, Inc.'s Quarterly Report on Form
10-Q for the quarter ended June 30, 1991 (File No. 1-7867)); William E. Macaulay (incorporated by reference to
Exhibit 10.2 to Weatherford Enterra, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30,
1995 (File No. 1-7867)); Jon Nicholson (incorporated by reference to Exhibit 10.2 to Weatherford Enterra,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 1-7867)); and Randall D.
Stilley (incorporated by reference to Exhibit 10.1 to Weatherford Enterra, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1997 (File No. 1-17867)).
10.9 Employment Agreement dated as of June 15, 1998, between EVI Weatherford, Inc. and Philip Burguieres.
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 10.9
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of June 15, 1998 by and between EVI Weatherford, Inc., a Delaware
corporation ("EVI" or the "Company"), and Philip Burguieres, an individual
currently residing in Houston, Texas ("Burguieres").
RECITALS:
WHEREAS, prior to the date of this Agreement, Burguieres has been
employed by the Company pursuant to an Employment Agreement dated October 17,
1996, between Burguieres and Weatherford Enterra, Inc., a predecessor to EVI
(the "Prior Agreement"); and
WHEREAS, the Prior Agreement has been terminated by Burguieres in
accordance with its terms and the Company and Burguieres wish to enter into a
new employment contract on the terms and conditions set forth;
NOW, THEREFORE, for and in consideration of the premises and the
respective covenants and agreements of the parties herein contained, the
Company and Burguieres hereby agree as follows:
ARTICLE 1
EMPLOYMENT
The Company hereby agrees to employ Burguieres, and Burguieres hereby
agrees to serve the Company, on the terms and conditions set forth herein.
ARTICLE 2
TERM
The term of this Agreement shall commence as of June 15, 1998 (the
"Effective Date"), and shall continue through September 30, 2008, unless sooner
terminated as hereinafter provided (the "Scheduled Term").
ARTICLE 3
POSITION AND DUTIES
3.1 Burguieres shall initially be employed as Chairman Emeritus of
the Board of Directors of the Company (the "Board") and shall have such
responsibilities, duties and authority reasonably accorded to and expected of a
Chairman Emeritus and as may from time to time be prescribed by the Chief
Executive Officer of the Company pursuant to the Company's bylaws. The parties
expressly agree that the Company is under no obligation to reelect Burguieres
as Chairman
1
<PAGE> 2
Emeritus at any time in the future, nor is the Board required to nominate
Burguieres for reelection as a director upon the expiration of his current
term. Should Burguieres cease to be Chairman Emeritus, the Board or the Chief
Executive Officer of the Company may assign to him such other responsibilities,
duties and authority as are deemed appropriate by the Board or the Chief
Executive Officer consistent with those responsibilities currently assigned to
Burguieres as an executive officer of the Company.
3.2 During the term of his employment, and excluding any periods
of vacation and sick leave to which Burguieres is entitled, Burguieres shall
devote such time and efforts to the business and affairs of the Company as
shall be necessary to discharge his responsibilities and duties; provided,
however, that Burguieres shall be permitted to engage from time to time in and
to receive compensation for outside business activities, including the
management of businesses and investments that are not related to the business
and affairs of the Company to the extent such activities do not significantly
interfere with the performance of Burguieres' responsibilities to the Company
in accordance with this Agreement and do not cause Burguieres to be in
violation of Article 6 of this Agreement.
ARTICLE 4
COMPENSATION AND RELATED MATTERS
4.1 Salary. During the term of employment set forth in Article 2,
the Company shall pay to Burguieres an annual base salary of $120,000, or such
higher rate as may from time to time be determined by the Company, the base
salary to be paid in substantially equal semi-monthly installments.
4.2 Benefits. During the term of this Agreement, Burguieres shall
be eligible for the benefit plans and programs enumerated below:
(a) Burguieres shall be entitled to continue his participation in
the Company's 401(k) Savings Plan as, and to the extent, such
plan is in effect from time to time during the term of this
Agreement.
(b) Burguieres and Burguieres' eligible dependents shall be
entitled to continue to participate and shall receive all
benefits under the Company's welfare benefit plans, including,
without limitation, medical, prescription, dental, disability,
salary continuance, group life, accidental death and travel
accident insurance plans and programs, as, and to the extent
such plans and programs are, in effect from time to time
during the term of this Agreement; provided, however, that
Burguieres shall pay any premiums or other amounts required to
be paid for such benefits. Upon termination of Burguieres'
employment, he shall be entitled to health benefits pursuant
to the Consolidated Omnibus Budget Reconciliation Act
("COBRA"), provided that he shall pay any premiums owed in
connection with such health
2
<PAGE> 3
benefits. After expiration of the COBRA benefits, Burguieres
shall be entitled to convert the Company's health plan, as it
relates to Burguieres and any eligible dependents, to an
individual policy, upon payment of the applicable conversion
fee.
(c) Burguieres shall be entitled to a Company telephone calling
card, a Company corporate American Express card, but only to
the extent this perquisite is afforded to other key employees
of the Company and reimbursement for his expenses related to
one mobile telephone.
(d) Burguieres shall be eligible to receive annual bonuses and to
participate in the Company's stock option plans that are
available to the Company's key employees.
4.3 Vacation. Burguieres shall be entitled to paid vacation
during each year of the Agreement, determined in accordance with the Company's
then current vacation policy. Burguieres shall also be entitled to all paid
holidays given by the Company to its employees.
4.4 Business Expenses. During the term of this Agreement, the
Company will reimburse Burguieres for authorized business expenses incurred by
Burguieres for Company-related business purposes, including expenses for
entertainment and business development, travel and similar items, provided such
expenses are made in accordance with the Company's policies and procedures and
are approved by the Company. The Company will reimburse Burguieres on a
monthly basis upon presentment by Burguieres of an itemized accounting of such
expenditures, including receipts setting forth (in appropriate detail the date
place, amount, names, etc.) the individual items for which reimbursement is
sought. Major expense items, such as travel, must be authorized by the Company
prior to Burguieres' incurring the expense.
4.5 Office and Support Staff. The Company contemplates that
Burguieres in performing under this Agreement may require office space,
secretarial assistance, telephone usage, facsimile, computer and other office
equipment usage and other assistance. During the term of this Agreement, the
Company shall, if requested by Burguieres, furnish Burguieres with office
space, either in one of the Company's locations or elsewhere, and supply
Burguieres' reasonable requirements pursuant to the terms of this Agreement, at
no expense to Burguieres.
ARTICLE 5
TERMINATION
5.1 Termination by the Company.
(a) Termination Due to Disability. Burguieres' employment
hereunder shall terminate upon his "Disability". In the event
of such termination, the Company shall (i) continue to pay to
Burguieres the compensation pursuant to Section 4.1 to which
he would otherwise be entitled had his employment continued
through the date indicated
3
<PAGE> 4
in Article 2 hereof, in the same manner as paid while
Burguieres was employed, (ii) extend to Burguieres the
benefits pursuant to Section 4.2(b) in accordance with the
Company's policy with respect to Disability and the Company
shall be entitled to credit against any such benefits payable
by it any amount paid to Burguieres under the Company's
disability benefit programs provided for the benefit of
Burguieres. For purposes of this Agreement, "Disability" is
defined to mean that, as a result of Burguieres' incapacity
due to physical or mental illness, Burguieres shall have been
absent from his duties with the Company on a full-time basis
for a period of one year and a physician acceptable to the
Company is of the opinion that (i) Burguieres is suffering
from "total disability" as defined in the Company's long-term
disability plan, or any successor plan or program or (ii)
Burguieres will qualify for a social security disability
payment, and (iii) within thirty (30) days after written
notice of termination is given, Burguieres shall not have
returned to the full-time performance of Burguieres' duties.
(b) Termination Due to Death. Burguieres' employment hereunder
shall terminate upon his death. In the event of such
termination, the Company shall (i) continue to pay to
Burguieres' estate the compensation pursuant to Section 4.1 to
which he would otherwise be entitled had his employment
continued through the date indicated in Article 2 hereof, in
the same manner as paid while Burguieres was employed, and
(ii) extend to Burguieres' eligible dependents or estate, as
appropriate, the benefits pursuant to Section 4.2(b) in
accordance with the Company's policy with respect to death.
(c) Termination Without Cause. The Company, without cause, may
terminate this Agreement at any time by written notice to
Burguieres. In the event of such termination, the Company
shall continue to pay Burguieres the compensation pursuant to
Section 4.1 and extend to Burguieres the benefits pursuant to
Section 4.2(b) except for long-term disability to which he
would otherwise be entitled had his employment continued
through the date indicated in Article 2 hereof in the same
manner as paid or extended while Burguieres was employed.
(d) Termination for Cause. The Company may terminate Burguieres'
employment for "Cause". In the event of such termination, the
Company shall cease paying Burguieres compensation pursuant to
Section 4.1 and shall terminate benefits pursuant to Sections
4.2, 4.3. 4.4 and 4.5, except as required by law. For
purposes of this Agreement, the Company shall have "Cause" to
terminate Burguieres' employment hereunder only (i) if
termination shall have been the result of an act or acts of
dishonesty on Burguieres' part constituting a felony and
resulting, or intending to result, directly or indirectly, in
gain or personal enrichment at the expense of the Company, or
(ii) upon the willful and continued failure by Burguieres to
substantially perform his duties with the Company (other than
any such failure resulting from his incapacity due to mental
or physical illness) after demand in
4
<PAGE> 5
writing for substantial performance is delivered to Burguieres
by the Board, which demand specifically identifies the manner
in which the Board believes that Burguieres has not
substantially performed his duties, and such failure to
perform his duties results in demonstrably material injury to
the Company, or (iii) upon the breach by Burguieres of Article
6, which breach remains uncorrected for 30 days following
written notice to Burguieres by the Company of such breach.
Burguieres' employment shall in no event be considered to have
been terminated by the Company for cause if such termination
took place as a result of (i) bad judgment or negligence on
his part, or (ii) any act or omission without intent of
gaining therefrom, directly or indirectly, a profit to which
Burguieres was not legally entitled, or (iii) any act or
omission believed by Burguieres in good faith to have been in
or not opposed to the interests of the Company, or (iv) any
act or omission in respect of which a determination is made
that Burguieres met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of
expenses under the bylaws of the Company or the laws of the
State of Texas or the directors and officers liability
insurance of the Company, in each case as in effect at the
time of such act or omission. Burguieres shall not be deemed
to have been terminated for cause unless and until there shall
have been delivered to Burguieres a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths
(3/4) of the entire membership of the Board at a meeting of
the Board called and held for the purpose (after reasonable
notice to Burguieres and an opportunity for Burguieres,
together with his counsel, to be heard before the Board)
finding that in the good faith of the Board he was guilty of
conduct set forth above in clauses (i) through (iii) of the
first sentence of this paragraph and specifying the
particulars thereof in detail.
5.2 Termination by Burguieres. Burguieres may terminate his
employment hereunder without any breach of this Agreement under any of the
following circumstances:
(a) the assignment to Burguieres of duties inconsistent with the
position, duties, responsibilities and status of an executive
of the Company; or
(b) the Company's breach of any provision of this Agreement which,
if correctable, remains uncorrected for 30 days following
written notice to the Company by Burguieres of such breach..
5.3 Date and Effect of Termination. "Date of Termination" shall
mean (i) if Burguieres' employment is terminated by his death, the date of his
death, (ii) if Burguieres' employment is involuntarily terminated pursuant to
Section 5.1(c) (other than by reason of death) or Section 5.1(d) herein, the
date specified in the notice of termination, (iii) if Burguieres' employment is
terminated upon his Disability, the date 30 days after the Company's notice to
Burguieres as contemplated in Section 5.1(a) hereof, and (iv) if Burguieres
voluntarily terminates his employment, the date set forth in any notice to
terminate under Section 5.2. This Agreement shall terminate on the Date of
Termination relating to a termination pursuant to Sections 5.1(a), 5.1(b),
5.1(c) or 5.2 and thereafter
5
<PAGE> 6
neither party will have any liability or obligation to the other under this
Agreement, except for the covenants in Sections 5.1(a), 5.1(b), 5.1(c) and 6.
ARTICLE 6
NON-COMPETE
In consideration of his employment and payments hereunder and in view
of the key position in which he has previously served and is expected to serve
the Company, Burguieres agrees that from the date hereof through the Scheduled
Term, he will not, without the prior written consent of the Board of Directors
of the Company, directly or indirectly, own, manage, operate, control, be
employed by, participate in or be connected in any manner with the ownership,
management, operation or control of any business which competes, in the
Company's reasonable judgment, with any business conducted by the Company or
any of its subsidiaries or affiliates at the time of such termination in any
area where such business is being conducted at the time of such termination.
In addition, Burguieres agrees that from the date hereof through the Scheduled
Term, he will not solicit for employment any individuals currently or then
employed by the Company or any of its subsidiaries or affiliates. Breach by
Burguieres of this covenant while he is employed by the Company shall be deemed
to be "Cause", as defined in Section 5.1(d).
ARTICLE 7
MISCELLANEOUS
7.1 No Mitigation Required; Other Employment.
(a) If Burguieres' employment is terminated prior to the date
indicated in Article 2 and he is receiving compensation and
benefits hereunder, he shall not be required to mitigate the
amount of any payment or benefit provided for in Sections 4.1
or 4.2 by seeking other employment or otherwise.
(b) If Burguieres' employment is terminated for any reason other
than Cause and Burguieres obtains other employment that would
not be a breach of the non-compete covenant included in
Article 6 if he were still employed, the Company shall
continue paying the compensation owed pursuant to Section 4.1
without reduction by any compensation earned by Burguieres as
a result of employment by another employer after the date of
termination, or otherwise. The benefits provided for in
Section 4.2 shall terminate immediately, except as required by
law.
7.2 Existing Agreement. The parties agree that the Existing
Agreement has been terminated pursuant to the terms thereof and that neither
Burguieres nor the Company has any further obligation or liability thereunder.
6
<PAGE> 7
7.3 Successors; Binding Agreement. The Company will require any
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably satisfactory to
Burguieres, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any succession shall be a breach of
this Agreement and shall entitle Burguieres to compensation from the Company in
the same amount and on the same terms as if he had terminated his employment
pursuant to Section 5.2, except that for purposes of implementing the
foregoing, the date on which each such succession become effective shall be the
Date of Termination. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 7.3 or which otherwise becomes bound by all of the terms and provisions
of this Agreement by operation of law. This Agreement and all rights of
Burguieres hereunder shall inure to the benefit of and be enforceable by
Burguieres' personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Burguieres should
die while any amounts would still be payable to him hereunder if he continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Burguieres' designated
beneficiaries set forth in a written beneficiary designation filed with the
Company or, if there be no such designated beneficiary, to Burguieres' estate.
7.4 Notices. For purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company to: 5 Post Oak Blvd., Suite 1760
Houston, Texas 77027
Attn: General Counsel
If to Burguieres to: 3229 Del Monte
Houston, Texas 77019
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
7.5 Applicable Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Texas without regard to the conflict of law principles thereof.
7.6 Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by Burguieres and such officer of the Company as may be
specifically designated by the Board. No waiver by either party
7
<PAGE> 8
hereto at any time of any breach by the other party hereto of or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or any prior or subsequent time.
7.7 Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
7.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
7.9 Entire Agreement. This Agreement, together with any exhibits
hereto, constitutes, the entire agreement of the parties with regard to the
subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
the employment of Burguieres by the Company. Each party to this Agreement
acknowledges that no representation, inducement, promise or agreement, oral or
written, has been made by either party or by anyone acting on behalf of either
party which is not embodied herein, and that no agreement, statement or promise
relating to the employment of Burguieres by the Company, which is not contained
in this Agreement shall be valid or binding. Any modification or amendment of
this Agreement will be effective only if it is in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
<TABLE>
<S> <C>
EVI WEATHERFORD, INC.
By: /s/ Curtis W. Huff
----------------------------------------------------------
/s/ Philip Burguieres
-------------------------------------------------------------
Philip Burguieres
</TABLE>
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed balance sheets and consolidated condensed statements of
income and is qualified in its entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 66,527
<SECURITIES> 0
<RECEIVABLES> 528,613
<ALLOWANCES> 20,882
<INVENTORY> 529,069
<CURRENT-ASSETS> 1,197,553
<PP&E> 872,045
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 2,922,306
<CURRENT-LIABILITIES> 649,196
<BONDS> 649,463
0
0
<COMMON> 103,021
<OTHER-SE> 1,392,440
<TOTAL-LIABILITY-AND-EQUITY> 2,922,306
<SALES> 677,857
<TOTAL-REVENUES> 1,104,293
<CGS> 459,723
<TOTAL-COSTS> 740,337
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,759
<INCOME-PRETAX> 75,052
<INCOME-TAX> 28,800
<INCOME-CONTINUING> 46,252
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,252
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.47
<FN>
<F1>This amount is not disclosed in the financial statements and thus a value of
zero has been shown for purposes of this financial data schedule.
</FN>
</TABLE>
