<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
COMMISSION FILE NUMBER 1-10718
---------------
REED HOURLY THRIFT PLAN
(FULL TITLE OF THE PLAN)
---------------
CAMCO INTERNATIONAL INC.
(NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN)
7030 ARDMORE STREET
HOUSTON, TEXAS 77054
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICE)
(713) 747-4000
(TELEPHONE NUMBER, INCLUDING AREA CODE)
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REED HOURLY THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
--------------------
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
PAGE
----
<S> <C>
Independent Auditors' Report........................................................... 2
Statements of Net Assets Available for Benefits,
December 31, 1997 and 1996.................................................... 3
Statement of Changes in Net Assets Available for Benefits with
Fund Information, Year Ended December 31, 1997................................ 4
Notes to Financial Statements.......................................................... 5
--------------------
SUPPLEMENTAL SCHEDULES
Schedule of Assets Held for Investment Purposes, December 31, 1997..................... 9
Schedule of Reportable Transactions, Year Ended December 31, 1997...................... 10
All other schedules are omitted because they are not applicable, not required or the
information is included in the Notes to Financial Statements.
</TABLE>
<PAGE> 3
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the trustees
(or other persons who administer the employee benefit plan) have caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
REED HOURLY THRIFT PLAN
BY J. CHRISTOPHER HOLLAND
---------------------------------
J. Christopher Holland
Secretary, Retirement Plan Committee
Date: June 22, 1998
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<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Retirement Plan Committee of the
Reed Hourly Thrift Plan:
We have audited the accompanying statements of net assets available for benefits
of the Reed Hourly Thrift Plan as of December 31, 1997 and 1996, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 1997. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Reed Hourly
Thrift Plan as of December 31, 1997 and 1996, and the changes in net assets
available for benefits for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the changes in net assets
available for plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ LARKIN, ERVIN & SHIRLEY, L.L.P.
Houston, Texas
June 22, 1998
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REED HOURLY THRIFT PLAN
Statements of Net Assets Available for Benefits
December 31
<TABLE>
<CAPTION>
1997 1996
---------- ----------
Assets
<S> <C> <C>
Investments:
At fair value--
Registered investment company shares:
IDS International Fund $ 23,012 $ 21,695
IDS New Dimensions Fund 805,582 463,628
IDS Stock Fund 311,063 157,743
IDS Mutual Fund 131,895 90,021
IDS Federal Income Fund 1,426,026 1,198,845
Camco Stock Fund 13,758 --
Participant notes receivable 372,997 314,792
---------- ----------
3,084,333 2,246,724
At contract value--
American Express Trust Income Fund II 1,551,701 1,329,401
---------- ----------
Total investments 4,636,034 3,576,125
Other assets -- --
---------- ----------
Total assets 4,636,034 3,576,125
Liabilities
Total liabilities -- --
---------- ----------
Net assets available for benefits $4,636,034 $3,576,125
========== ==========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
3
<PAGE> 6
REED HOURLY THRIFT PLAN
Statement of Changes in Net Assets Available for
Benefits With Fund Information
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
IDS IDS New IDS IDS
Camco Stock International Dimensions Stock Mutual
Fund Fund Fund Fund Fund
----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Additions
Additions to net assets attributed to:
Investment income
Net appreciation/(depreciation)
in fair value of investments $ 1,748 $ (783) $ 74,262 $ 5,293 $ (461)
Interest
Dividends -- 964 59,901 42,413 18,447
----------- ----------- ----------- ----------- -----------
1,748 181 134,163 47,706 17,986
----------- ----------- ----------- ----------- -----------
Contributions
Participants' 6,063 8,328 120,665 43,412 22,990
Employer's 1,591 3,174 33,982 12,085 8,206
----------- ----------- ----------- ----------- -----------
7,654 11,502 154,647 55,497 31,196
----------- ----------- ----------- ----------- -----------
Total additions 9,402 11,683 288,810 103,203 49,182
----------- ----------- ----------- ----------- -----------
Deductions
Deductions from net assets attributable to:
Benefits paid to participants -- -- 22,222 -- 5,975
Administrative expenses 4 20 226 85 75
----------- ----------- ----------- ----------- -----------
Total deductions 4 20 22,448 85 6,050
----------- ----------- ----------- ----------- -----------
Net increase prior to interfund transfers 9,398 11,663 266,362 103,118 43,132
Interfund transfers 4,360 (10,346) 75,592 50,202 (1,258)
----------- ----------- ----------- ----------- -----------
Net increase 13,758 1,317 341,954 153,320 41,874
Net assets available for benefits:
Beginning of year -- 21,695 463,628 157,743 90,021
----------- ----------- ----------- ----------- -----------
End of year $ 13,758 $ 23,012 $ 805,582 $ 311,063 $ 131,895
=========== =========== =========== =========== ===========
<CAPTION>
American
IDS Express
Federal Trust Income Participant
Income Fund Fund II Notes Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Additions
Additions to net assets attributed to:
Investment income
Net appreciation/(depreciation)
in fair value of investments $ 22,365 $ 85,310 $ $ 187,734
Interest 24,795 24,795
Dividends 80,082 201,807
----------- ----------- ----------- -----------
102,447 85,310 24,795 414,336
----------- ----------- ----------- -----------
Contributions
Participants' 172,173 196,476 570,107
Employer's 61,154 71,146 191,338
----------- ----------- ----------- -----------
233,327 267,622 -- 761,445
----------- ----------- ----------- -----------
Total additions 335,774 352,932 24,795 1,175,781
----------- ----------- ----------- -----------
Deductions
Deductions from net assets attributable to:
Benefits paid to participants 37,080 36,471 12,141 113,889
Administrative expenses 754 819 1,983
----------- ----------- ----------- -----------
Total deductions 37,834 37,290 12,141 115,872
----------- ----------- ----------- -----------
Net increase prior to interfund transfers 297,940 315,642 12,654 1,059,909
Interfund transfers (70,759) (93,342) 45,551 --
----------- ----------- ----------- -----------
Net increase 227,181 222,300 58,205 1,059,909
Net assets available for benefits:
Beginning of year 1,198,845 1,329,401 314,792 3,576,125
----------- ----------- ----------- -----------
End of year $ 1,426,026 $ 1,551,701 $ 372,997 $ 4,636,034
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
4
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REED HOURLY THRIFT PLAN
Notes to Financial Statements
December 31, 1997
NOTE 1 - DESCRIPTION OF THE PLAN
The Reed Hourly Thrift Plan (the "Plan"), a defined contribution plan, was
established on January 1, 1991. It covers substantially all bargaining unit
employees of the Reed Tool Company Division of Camco International Inc. (the
"Company"). The following description of the Plan and Plan Amendments is
provided for general purposes only. Participants should refer to the Plan
Document, as amended, for more complete information.
General
Administration of the Plan is conducted by a committee consisting of five
members appointed by the board of directors of the Company. The board of
directors has appointed two officers of the Company as Trustees for the Plan.
American Express Trust Company is asset custodian and record keeper for the
Plan.
Eligibility and Vesting
Employees are eligible to participate in the Plan after completing one hour of
service. Participants are fully vested in their contributions and the related
earnings/losses. Participants vest in Company matching contributions and related
earnings/losses at 20% per year, becoming fully vested after five years of
service. In the event the Plan is partially or completely terminated, all
participants will become 100% vested in their account balances.
Contributions
Participants may elect to defer from 1% to 15% of their compensation on a
pre-tax basis, subject to maximum annual contributions of $9,500, and have the
Company contribute to the Plan on their behalf the amount so deferred. After-tax
contributions of up to 10% of compensation are also permitted. The Company makes
matching contributions of 50% of participants' pre-tax contributions up to a
maximum contribution amount of $1,500 per year.
Expenses
The accounts of participants are charged fees of $2.50 per quarter, which are
applied to the cost of administering the Plan. Transaction fees are also charged
for participant loans, withdrawals and distributions. For the years ending
December 31, 1997 and 1996, the Company elected to pay all administrative
expenses in excess of these fees.
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Withdrawals
All after-tax contributions may be withdrawn by participants by making written
application to the Plan's record keeper. Company matching contributions, pre-tax
contributions and rollover contributions may be withdrawn after the participant
has attained age 59-1/2 or if the participant suffers an immediate and heavy
financial hardship that cannot be satisfied from other reasonably available
resources. Additionally, Company matching contributions may be withdrawn only if
they have been credited to a participant's account for more than two years. No
more than one withdrawal may be made during any calendar quarter.
Loans
Participants may borrow a portion of their account balance to relieve a
financial hardship or for any other suitable purpose. Loan amounts are limited
in accordance with a formula based on 50% of the present value of a
participant's vested account balance, not to exceed $50,000. Loans must be
repaid within five years and are secured by the participant's account balance.
Forfeitures
Participants who terminate employment forfeit the non-vested portion of their
account. Forfeited amounts will be restored for former participants who resume
employment if they repay, within five years, the full amount of termination
distribution they received. Amounts forfeited are used first to restore
accounts, as above, and then to reduce Company contributions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan are presented on the accrual basis of
accounting in compliance with generally accepted accounting principles. Certain
reclassifications have been made to prior year balances to conform to current
year financial statement presentation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan administrator to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results may differ from those estimates.
Investments in registered investment companies (mutual funds) are valued at
quoted market prices. American Express Trust Income Fund II is a collective
trust stated at contract value. Units of the Camco Stock Fund, invested
primarily in common stock of the Company but also in cash or cash equivalents to
provide liquidity, are valued using the quoted market price for Company stock.
The average cost method is used to calculate gains and losses on the sale of
investments.
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NOTE 3 - INVESTMENT PROGRAMS
Participants may invest their account balances and all contributions made to
their accounts in the investment choices described below. Investments may be
made in one or more of the funds in 1% increments and choices may be changed any
business day. The number of participants investing in each fund at December 31,
1997, is shown parenthetically.
IDS International Fund (14 participants)
A specialty growth fund for aggressive investors whose
objective is long-term growth of capital that invests in
common stocks of foreign companies.
IDS New Dimensions Fund (58 participants)
A growth fund for aggressive investors whose objective is
long-term growth of capital that invests in a portfolio of
company stocks in which powerful economic and/or technical
changes may take place.
IDS Stock Fund (37 participants)
A growth and income fund for investors with moderate tolerance
for risk whose objective is current income and growth of
capital that invests in a portfolio of medium to large,
well-established U. S. company common stocks.
IDS Mutual Fund (30 participants)
A growth and income fund for investors with moderate tolerance
for risk whose objective is balance of growth of capital and
current income that invests in a portfolio of common and
preferred stocks and bonds.
IDS Federal Income Fund (157 participants)
An income fund for conservative investors whose objective is
current income and preservation of capital that invests in a
portfolio of U. S. government and government agency
securities.
American Express Trust Income Fund II (159 participants)
A stable capital fund for conservative investors whose
objective is to preserve principal and income while maximizing
current income that invests in investment contracts and stable
value contracts.
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<PAGE> 10
Camco Stock Fund (8 participants)
A Company stock fund for aggressive investors whose objective
is growth of capital and dividend income that invests in
Company common stock. Participants may invest no more than 25%
of their account balances and/or contributions in this fund.
NOTE 4 - REGULATORY STATUS OF THE PLAN
In a determination letter dated June 28, 1995, the Internal Revenue Service (the
"IRS") stated that the Plan met the requirements of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that the trust
established thereunder was entitled to exemption from federal income tax under
the provisions of Section 501(a) of the Code. Company matching contributions
will not be required to be included in participants' taxable income until they
are distributed to the participants.
Although the Plan has been amended since receiving the determination letter, the
Plan administrator and the Plan's counsel believe that the Plan currently is
designed and being operated in compliance with the applicable requirements of
the Code. They believe, therefore, that the Plan was qualified and the related
trust was tax-exempt as of the financial statement date. The Plan is also in
compliance with the provisions of the ERISA.
On February 26, 1996, and November 20, 1996, the Plan was amended (1) to
clarify the Plan Sponsor's desires regarding the distribution of earnings on
excess annual additions, (2) to increase the maximum amount of Company matching
contributions per participant to $1,500 per year effective January 1, 1997, and
(3) to establish an investment fund comprised of Company common stock effective
January 1, 1997. None of the amendments had a material effect on the December
31, 1997, Financial Statements.
NOTE 5 - SUBSEQUENT EVENTS
The Plan was amended and restated on April 21, 1998, to incorporate changes to
the Internal Revenue Code and ERISA as a result of the Uniformed Services
Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996 and the Taxpayer Relief Act of 1997. The amended Plan was
filed with the IRS prior to its adoption and, on February 12, 1998, the IRS
issued a favorable determination letter. None of the changes will have a
material financial effect on Plan operations.
On June 19, 1998, the Company announced the signing of a definitive merger
agreement with Schlumberger Technology Corporation, a wholly owned subsidiary of
Schlumberger Limited. The agreement is subject to regulatory approvals and the
approval of the shareholders of both companies. Closing is expected to take
place by the end of 1998. Although Schlumberger sponsors defined contribution
plans similar to the Plan, the effect of the merger agreement on the
continuation of the Plan is not determinable at this time. The Company has
reserved the right to terminate the Plan at any time by resolution of the board
of directors.
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<PAGE> 11
Line 27a - Schedule of Assets Held for Investment Purposes
Reed Hourly Thrift Plan
EIN: 13-3517570; P/N 006
December 31, 1997
<TABLE>
<CAPTION>
(c)
Description of investment
(b) including maturity date,
Identify of issue, rate of interest, (e)
borrower, lessor, or collateral, par or (d) Current
(a) similar party maturity value Cost value
--- -------------------------- --------------------------- ----------- ------------
<S> <C> <C> <C> <C>
Participant loans 7% - 12% interest $ -- $ 372,997
Camco Stock Fund Employer common stock
758 units 12,215 13,758
American Express Trust Common/collective trust
Income Fund II 89,209 shares 1,383,782 1,551,701
Registered investment
companies:
IDS International Fund 2,258 shares 23,983 23,012
IDS New Dimensions Fund 33,760 shares 713,922 805,582
IDS Stock Fund 12,756 shares 310,025 311,063
IDS Mutual Fund 9,608 shares 128,985 131,895
IDS Federal Income Fund 282,047 shares 1,430,415 1,426,026
----------- -----------
$ 4,003,327 $ 4,636,034
=========== ===========
</TABLE>
9
<PAGE> 12
Line 27d - Schedule of Reportable Transactions
Reed Hourly Thrift Plan
EIN: 13-3517570; P/N 006
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
(a) (c) (d) (i)
Identify of (b) Purchase Selling Net gain
party involved Description of asset price price of (loss)
- ---------------------------- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Camco Stock Fund Employer common stock $ 14,609 $ 2,514 $ 120
58 purchases, 10 sales
American Express Trust Common/collective trust
Income Fund II 68 purchases, 52 sales 506,976 364,449 37,062
Registered investment
companies:
IDS International Fund 56 purchases, 12 sales 14,340 12,092 187
IDS New Dimensions Fund 76 purchases, 31 sales 495,705 226,280 34,478
IDS Stock Fund 78 purchases, 23 sales 258,255 109,554 13,782
IDS Mutual Fund 63 purchases, 11 sales 62,503 19,877 1,058
IDS Federal Income Fund 96 purchases, 45 sales 449,993 240,553 (4,155)
---------- ---------- ----------
$1,802,381 $ 975,319 $ 82,532
========== ========== ==========
</TABLE>
10
