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