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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 2000
REGISTRATION NUMBER 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WEATHERFORD INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2515019
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 POST OAK BOULEVARD, SUITE 600
HOUSTON, TEXAS 77027
(713) 693-4000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
BERNARD J. DUROC-DANNER
WEATHERFORD INTERNATIONAL, INC.
515 POST OAK BOULEVARD, SUITE 600
HOUSTON, TEXAS 77027
(713) 693-4000
(Name, address, including zip code, and telephone number including area
code, of agent for service)
Copies to:
CURTIS W. HUFF CHARLES H. STILL
WEATHERFORD INTERNATIONAL, INC. FULBRIGHT & JAWORSKI L.L.P.
515 POST OAK BOULEVARD, SUITE 600 1301 MCKINNEY, SUITE 5100
HOUSTON, TEXAS 77027 HOUSTON, TEXAS 77010-3095
(713) 693-4000 (713) 651-5151
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective, subject to market
conditions and other factors.
If the any of securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE MAXIMUM AMOUNT OF
REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
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Zero Coupon Convertible Senior Debentures due
2020............................................. $910,000,000 55.126% $501,646,600 $132,435
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Common Stock, par value $1.00 per share(1)......... 9,097,270(2) n/a n/a n/a
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(1) The debentures are convertible into an aggregate of 9,097,270 shares of
common stock. The Registrant will receive no consideration upon conversion.
Therefore, pursuant to Rule 457(i), no filing fee is required with respect
to the shares of common stock registered hereby.
(2) Includes an additional indeterminate number of shares of common stock that
may become issuable upon conversion of the debentures being registered
hereunder by means of adjustment of the conversion price pursuant to the
terms of the debentures.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 22, 2000
PROSPECTUS
WEATHERFORD INTERNATIONAL, INC.
$910,000,000
ZERO COUPON CONVERTIBLE SENIOR DEBENTURES DUE 2020
9,097,270 SHARES OF COMMON STOCK
The securities to be offered and sold using this prospectus will be offered
and sold by the selling security holders named in this prospectus or in any
supplement to this prospectus. See "Selling Security Holders" beginning on page
10. The shares of our common stock offered by this prospectus are issuable upon
conversion or repurchase of the debentures offered by this prospectus.
Holders may convert the debentures into shares of our common stock at any
time before maturity at a conversion rate of 9.997 shares per $1,000 principal
amount at maturity. The conversion rate will not be adjusted for original issue
discount, but will be subject to adjustment in certain events. Our common stock
is listed and traded on the New York Stock Exchange under the symbol "WFT". On
August 21, 2000, the last reported sales price for our common stock on the New
York Stock Exchange was $47 15/16 per share.
On or after June 30, 2005, we may redeem any of the debentures at the
redemption prices described in this prospectus. Holders may require us to
repurchase the debentures at the repurchase prices described in this prospectus
on June 30, 2005, June 30, 2010 and June 30, 2015. For a more detailed
description of the debentures, see "Description of Debentures" beginning on page
13.
Our principal executive offices are located at 515 Post Oak Boulevard,
Suite 600, Houston, Texas 77027. Our telephone number is (713) 693-4000.
The selling security holders may sell the securities offered by this
prospectus from time to time on any exchange on which the securities are listed
on terms to be negotiated with buyers. The selling security holders may also
sell the securities in private sales or through dealers or agents. The prices at
which the securities may be sold will be at fixed offering prices, which may be
changed, at varying prices to be determined at the time of sale or at negotiated
prices. The selling security holders will be responsible for any commissions or
discounts due to brokers, dealers or agents. We will pay all of the other
offering expenses. We will not receive any proceeds from the sales of securities
by selling security holders.
INVESTING IN THESE SECURITIES INVOLVES RISKS. SEE "FORWARD-LOOKING
STATEMENTS" BEGINNING ON PAGE 4 AND "RISK FACTORS" BEGINNING ON PAGE 7.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT A SOLICITATION OF AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS PROHIBITED.
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The date of this prospectus is August , 2000.
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TABLE OF CONTENTS
PAGE
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About this Prospectus....................................... 1
About The Debentures........................................ 2
Ratio of Earnings to Fixed Charges.......................... 3
Forward-Looking Statements.................................. 4
Risk Factors................................................ 7
No Proceeds................................................. 9
Selling Security Holders.................................... 10
Description of Debentures................................... 12
Description of Capital Stock................................ 26
Plan of Distribution........................................ 29
Material U.S. Federal Income Tax Considerations............. 30
Legal Matters............................................... 36
Experts..................................................... 36
Where You Can Find More Information......................... 36
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. This
means the debentures and the shares of common stock may be offered and sold
using this prospectus from time to time as described in "Plan of Distribution".
UNDER NO CIRCUMSTANCES SHOULD THE DELIVERY TO YOU OF THIS PROSPECTUS OR ANY
OFFERING OR SALES MADE PURSUANT TO THIS PROSPECTUS CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE
DATE OF THIS PROSPECTUS. IN THIS PROSPECTUS, WHEN WE REFER TO WEATHERFORD AND
USE PHRASES SUCH AS "WE" AND "US", WE ARE GENERALLY REFERRING TO WEATHERFORD
INTERNATIONAL, INC. AND ITS SUBSIDIARIES AS A WHOLE OR ON A DIVISION BASIS
DEPENDING ON THE CONTEXT IN WHICH THE STATEMENTS ARE MADE.
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ABOUT THE DEBENTURES
Securities Offered......... $910,000,000 aggregate principal amount at maturity
of zero coupon convertible senior debentures due
June 30, 2020, including 9,097,270 shares of common
stock into which the debentures are convertible. We
will not pay periodic interest on the debentures,
except as described under "Description of
Debentures -- Optional Conversion to Semiannual
Coupon Debentures Upon a Tax Event." See
"Description of Debentures -- General."
Selling Security Holders... The securities to be offered and sold using this
prospectus will be offered and sold by the selling
security holders named in this prospectus or in any
supplement to this prospectus. See "Selling
Security Holders."
Conversion................. You have the option to convert the debentures into
our common stock at any time prior to maturity or
their earlier redemption. You can convert the
debentures into common stock at a fixed conversion
rate of 9.9970 shares per $1,000 principal amount
at maturity. The conversion rate will be subject to
adjustment if certain events occur. See
"Description of Debentures -- Conversion of
Debentures by Holders."
You may exercise the option to convert only before
the debentures reach maturity and before we redeem
or repurchase them.
Original Issue Discount.... We originally issued the debentures at an original
issue discount for United States federal income tax
purposes equal to the excess of their principal
amount at maturity over the amount of their issue
price (which was $551.26 per $1,000 principal
amount at maturity). We will not make periodic cash
payments of interest on the debentures, except as
described under "Description of
Debentures -- Optional Conversion to Semiannual
Coupon Debentures Upon a Tax Event." Nonetheless,
you should be aware that accrued original issue
discount will be included periodically in your
gross income for United States federal income tax
purposes. See "Material U.S. Federal Income Tax
Considerations."
You should be aware that you will be responsible
for the payment of taxes that may be due even
though you may not receive any cash payment at the
time original issue discount is included in your
gross income.
Sinking Fund............... None.
Redemption at Our Option... We cannot redeem the debentures before June 30,
2005. At any time on or after June 30, 2005, we can
redeem all or part of the debentures for cash. You
can convert the debentures after they are called
for redemption at any time up to the redemption
date.
Redemption prices are equal to the issue price plus
accrued original issue discount to the date of
redemption. See "Description of Debentures --
Redemption of Debentures at Our Option."
Fundamental Change......... You may require us to repurchase the debentures if
we experience a Fundamental Change. The Fundamental
Change purchase price is equal to the issue price
plus accrued original issue discount to the date of
repurchase, subject to adjustment in certain
circumstances. See
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"Description of Debentures -- Repurchase at the
Option of the Holder Upon a Fundamental Change."
Repurchase at the Option of
the Holder................. You may require us to repurchase the debentures on
June 30, 2005, June 30, 2010 and June 30, 2015 for
a purchase price equal to the issue price plus
accrued original issue discount to the date of
repurchase. We may elect to pay all or a portion of
the purchase price in common stock instead of cash.
See "Description of Debentures -- Repurchase of
Debentures at the Option of the Holder."
Conversion to Semiannual
Coupon Debenture......... If a tax event prevents us from deducting original
issue discount payable on the debentures, we can
elect to pay you interest in cash and terminate the
further accrual of original issue discount. See
"Description of Debentures -- Optional Conversion
to Semiannual Coupon Debentures Upon a Tax Event."
No Proceeds................ We will not receive any proceeds on the sale of the
securities or the conversion of the debentures.
New York Stock Exchange
Symbol................... Our common stock is listed on the New York Stock
Exchange under the symbol WFT.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
See "Forward-Looking Statements" and "Risk Factors," immediately following
this summary, for a discussion of certain factors relating to us, our business
and an investment in our securities.
RATIO OF EARNINGS TO FIXED CHARGES
We have computed the ratio of earnings to fixed charges for each of the
following periods on a consolidated basis. The unaudited pro forma ratio of
earnings to fixed charges gives effect to (i) our August 31, 1999, acquisition
of Dailey International Inc. (ii) our issuance and sale of the Zero Coupon
Convertible Senior Debentures due 2020 and (iii) our use of proceeds to pay down
current debt as if these transactions had occurred on January 1, 1999. The pro
forma information set forth below is not necessarily indicative of the results
that actually would have been achieved had such transactions been consummated as
of January 1, 1999 or that may be achieved in the future. You should read the
ratio of earnings to fixed charges in conjunction with our consolidated
financial statements (including the notes thereto) incorporated by reference
into this prospectus.
HISTORICAL PRO FORMA
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TWELVE
SIX MONTHS SIX MONTHS MONTHS SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED ENDED ENDED
-------------------------------------- JUNE 30, JUNE 30, DEC. 31, JUNE 30,
1995 1996 1997 1998 1999 1999 2000 1999 2000
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Ratio of earnings to
fixed charges...... 0.42x(a) 3.46x 6.00x 0.87x(a) 1.52x 1.42x 2.04x 1.13x 2.40x
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(a) For the year ended December 31, 1995, earnings before fixed charges were
inadequate to cover fixed charges by $19.3 million. For the year ended
December 31, 1998, earnings before fixed charges were inadequate to cover
fixed charges by $6.8 million.
For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of earnings (loss) before income taxes, minority interest,
extraordinary charges and discontinued operations plus fixed charges. "Fixed
charges" represent interest incurred (whether expensed or capitalized),
amortization of debt expense, and that portion of rental expense on operating
leases deemed to be the equivalent of interest.
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FORWARD-LOOKING STATEMENTS
This prospectus and our other filings with the SEC and our public releases
contain statements relating to our future results, including certain projections
and business trends. We believe these statements constitute "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995.
Certain risks and uncertainties may cause actual results to be materially
different from projected results contained in forward-looking statements in this
prospectus and in our other disclosures. These risks and uncertainties include,
but are not limited to, the following factors as well as the factors discussed
in the documents incorporated by reference in this prospectus.
A DOWNTURN IN MARKET CONDITIONS COULD AFFECT PROJECTED RESULTS.
Any unexpected material changes in drilling activity or oil and gas prices
or other market trends would likely affect the forward-looking information
provided by us. Any unexpected material changes in oil and gas prices or other
market trends that would impact drilling activity would likely affect the
forward-looking information contained in this prospectus. The oil and gas
industry is extremely volatile and subject to change based on political and
economic factors outside our control.
Our estimates as to future results and industry trends are based on
assumptions regarding the future prices of oil and gas, the North American and
international rig counts and their effect on the demand and pricing of our
products and services. In analyzing the market and its impact on us for the
remainder of 2000, we have made the following assumptions:
- The increases in the price of oil that have occurred will result in
continuing improvements to our businesses this year, with the strongest
improvements expected to occur in the fourth quarter.
- Activity levels and volume and pricing improvements in our industry will
gradually improve as the year progresses, with the strongest markets
being in North America.
- International activity outside North America will lag North America with
volume improvements being gradual and varied across regions. We do not
expect substantial international improvement this year, but do expect the
international markets to substantially improve next year.
- Oil prices will average over $25 per barrel for West Texas Intermediate
crude.
- Average natural gas prices for the remainder of 2000 will exceed $3.00
per mcf.
- World demand for oil will be up only slightly.
- North American and international rig counts will continue to improve,
with increases in the international rig count following the North
American rig count increase by around six months.
- Pricing will continue to be subject to market conditions and competitive
pricing pressures in selected markets and product lines. We have also
assumed that we will be able to improve our margins through price
increases and that price increases will more than offset wage and other
cost increases.
- Demand for compression services will remain relatively flat for the
remainder of the year with improvements to be based on new contracts.
- Canadian activity will recover in the third quarter but below first
quarter levels and be at or above our first quarter levels by the fourth
quarter.
- Demand for our products and services will vary based on regions as
products are added.
- Demand for many of our products and services will track completion
activity and lag drilling.
- Future growth in the industry will be dependent on technological advances
that can reduce the costs of exploration and production, and
technological improvements in tools used for re-entry, thru-tubing and
extended reach drilling as well as artificial lift technologies will be
important to our future.
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These assumptions are based on various macroeconomic factors, and actual
market conditions could vary materially from those assumed.
A FUTURE REDUCTION IN THE RIG COUNT COULD ADVERSELY AFFECT THE DEMAND FOR OUR
PRODUCTS AND SERVICES.
Our operations were materially affected by the decline in the rig count
during 1998 and 1999. Although the North American rig count has recently
improved significantly from the low levels in 1999, another decline in the North
American and international rig counts would adversely affect our results. Our
forward-looking statements regarding our drilling products assume the rig count
in 2000 will continue to improve domestically and that the international rig
count will slowly improve with the greatest improvements this year being in the
fourth quarter. We have also assumed that there will not be any material
declines in the worldwide rig count, in particular the domestic rig count.
PROJECTED COST SAVINGS COULD BE INSUFFICIENT.
During 1998 and 1999, we implemented a number of programs intended to
reduce costs and align our cost structure with the current market environment.
We also have recently implemented costs saving measures at our Compression
Services Division. Our forward-looking statements regarding cost savings and
their impact on our business assume these measures will generate the savings
expected.
MANUFACTURING IMPROVEMENTS.
We have recently taken steps to increase our manufacturing capacity and
reduce manufacturing costs in our European Completion Systems operations through
the consolidation of facilities and additions of equipment. These activities are
still ongoing. We were affected by the relocation of manufacturing operations in
this division in the second quarter of 2000. Our forward-looking statements
assume that the manufacturing expansion and consolidation are completed without
any further material disruptions. If there are any additional disruptions or
excess costs associated with the manufacturing changes, the results of our
Completion Systems Division could be adversely affected.
CAPACITY CONSTRAINTS.
Our forward-looking information assumes that we will have sufficient
manufacturing capacity and personnel to address demand increases. To the extent
there are limitations on capacity or personnel in areas in which the markets are
improving, our growth could be limited or our costs increased due to the need to
meet demand through outside sources.
OUR SUCCESS IS DEPENDENT UPON THE INTEGRATION OF ACQUISITIONS.
During 1999 and 2000, we consummated, or agreed to consummate, various
acquisitions of product lines and businesses. The success of these acquisitions
will be dependent on our ability to integrate these product lines and businesses
with our existing businesses and eliminate duplicative costs. We have, or will
have, incurred various duplicative costs with respect to the operations of
companies and businesses acquired by us during 1999 and 2000 pending the
integration of the acquired businesses with our businesses. Our forward-looking
statements assume the successful integration of the acquired businesses and
their contribution to our income during 2000. Integration of acquisitions is
something that cannot occur overnight and is something that requires constant
effort at the local level to be successful. Accordingly, there can be no
assurance as to the ultimate success of our integration efforts.
OUR SUCCESS IS DEPENDENT UPON TECHNOLOGICAL ADVANCES.
Our ability to succeed with our long-term growth strategy is dependent in
part on the technological competitiveness of our product and service offerings.
A central aspect of our growth strategy is to enhance the technology of our
products and services, to expand the markets for many of our products through
the leverage of our worldwide infrastructure and to enter new markets and expand
in existing markets with technologically advanced value-added products. These
technological advances include our underbalanced
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drilling technology and our expandable sand screen technology. Our
forward-looking statements have assumed gradual growth from these new products
and services through 2000.
ECONOMIC DOWNTURN COULD ADVERSELY AFFECT DEMAND FOR PRODUCTS AND SERVICES.
The economic downturn that began in Asia in 1997 affected the economies in
other regions of the world, including South America and the former Soviet Union,
and contributed to the decline in the price of oil and the level of drilling
activity. Although the economy in the United States also has experienced one of
its longest periods of growth in recent history, the continued strength of the
United States economy cannot be assured. If the United States or European
economies were to begin to decline or if the economies of South America or Asia
were to experience further material problems, the demand and price for oil and
gas and our products and services could again adversely affect our revenues and
income. We have assumed that a worldwide recession or a material downturn in the
United States economy will not occur.
CURRENCY FLUCTUATIONS COULD HAVE A MATERIAL ADVERSE FINANCIAL IMPACT.
A material decline in currency rates in our markets could affect our future
results as well as affect the carrying values of our assets. World currencies
have been subject to much volatility. The United States dollar has been strong
against most currencies over the past year. In particular, while the Euro has
declined significantly against the United States dollar since the beginning of
the year. Our forward-looking statements assume no material impact from future
changes in currencies.
CHANGES IN GLOBAL TRADE POLICIES COULD ADVERSELY IMPACT OPERATIONS.
Changes in global trade policies in our markets could impact our operations
in these markets. We have assumed that there will be no material changes in
global trading policies.
UNEXPECTED LITIGATION AND LEGAL DISPUTES COULD HAVE A MATERIAL ADVERSE FINANCIAL
IMPACT.
If we experience unexpected litigation or unexpected results in our
existing litigation having a material effect on results, the accuracy of the
forward-looking statements would be affected. Our forward-looking statements
assume that there will be no such unexpected litigation or results.
Finally, our future results will depend upon various other risks and
uncertainties, including, but not limited to, those detailed in our other
filings with the SEC. For additional information regarding risks and
uncertainties, see our other current year filings with the SEC under the
Securities Exchange Act of 1934 and the Securities Act of 1933. We will
generally update our assumptions in our filings as circumstances require.
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RISK FACTORS
A potential investor should consider carefully all of the risk factors
described below, as well as the other information included and incorporated by
reference in this prospectus, before making an investment decision.
RISKS RELATING TO WEATHERFORD
CUSTOMER CREDIT RISKS
Substantially all of our customers are engaged in the energy industry. This
concentration of customers may impact our overall exposure to credit risk,
either positively or negatively, in that customers may be similarly affected by
changes in economic and industry conditions. We perform ongoing credit
evaluations of our customers and do not generally require collateral in support
of our trade receivables. We maintain reserves for potential credit losses, and
generally, actual losses have historically been within our expectations.
DISRUPTIONS IN FOREIGN OPERATIONS COULD ADVERSELY AFFECT OUR INCOME.
Like most multinational oilfield service companies, we have 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, 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; and
- 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,
parts of the Middle East, the Asia-Pacific region and Latin America, have been
subjected to political disruption that has negatively impacted results of
operations following such events.
OUR PRODUCTS AND SERVICES ARE SUBJECT TO OPERATIONAL, LITIGATION AND
ENVIRONMENTAL RISKS.
Our products are used for the exploration and production of oil and natural
gas. These operations are subject to hazards inherent in the oil and gas
industry that can cause personal injury or loss of life, damage to or
destruction of property, equipment, the environment and marine life, and
suspension of operations. These hazards include fires, explosions, craterings,
blowouts and oil spills. Litigation arising from an accident at a location where
our products or services are used or provided may result in our being named as a
defendant in lawsuits asserting potentially large claims.
In the ordinary course of business, we become the subject of various claims
and litigation. We maintain insurance to cover many of our potential losses and
we are subject to various self-retentions and deductibles with respect to our
insurance. Although we are subject to various ongoing items of litigation, we do
not believe that any of the items of litigation that we are currently subject to
will result in any material uninsured losses to us. It is, however, possible
that an unexpected judgment could be rendered against us in cases in which we
could be uninsured and beyond the amounts that we currently have reserved or
anticipate incurring for that matter.
We are also subject to various federal, state and local laws and
regulations relating to the energy industry in general and the environment in
particular. Environmental laws have in recent years become more stringent and
have generally sought to impose greater liability on a larger number of
potentially responsible parties. While we are not currently aware of any
situation involving an environmental claim
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which would be likely to have a material adverse effect on our business, it is
always possible that an environmental claim with respect to one or more of our
current businesses or a business or property that one of our predecessors owned
or used could arise that could involve the expenditure of a material amount of
funds.
CURRENCY DEVALUATION AND FLUCTUATION RISKS.
A single European currency ("the Euro") was introduced on January 1, 1999,
at which time the conversion rates between legacy currencies and the Euro were
set for 11 participating member countries. However, the legacy currencies in
those countries will continue to be used as legal tender through January 1,
2002. Thereafter, the legacy currencies will be canceled, and the Euro bills and
coins will be used in the 11 participating countries. We are currently
evaluating the effect of the Euro on our consolidated financial statements and
our business operations, however, we do not foresee that the transition to the
Euro will have a significant impact.
Approximately 43% of our net assets from continuing operations are located
outside the United States and are carried on our books in local currencies.
Changes in those currencies in relation to the U.S. dollar result in translation
adjustments which are reflected as accumulated other comprehensive loss in the
stockholders' equity section on our balance sheet. We recorded a $22.4 million
adjustment to our equity account for the six months ended June 30, 2000
primarily to reflect the net impact of the decline in European currencies
against the U.S. dollar. We recognize remeasurement and transactional gains and
losses on currencies in our consolidated statements of income.
LOW PRICES FOR OIL ADVERSELY AFFECT THE DEMAND FOR OUR PRODUCTS AND SERVICES.
Low oil prices adversely affect demand throughout the oil and natural gas
industry, including the demand for our products and services. As prices decline,
we are affected in two significant ways. First, the funds available to our
customers for the purchase of goods and services declines. Second, exploration
and drilling activity declines as marginally profitable projects become
uneconomic and either are delayed or eliminated. Accordingly, when oil prices
are relatively low, our revenues and income will be adversely affected. Despite
the increases in the price of oil during 1999 and 2000, the market conditions
existing in 1998 and 1999 affected our business in various ways. Our drilling
and intervention services business experienced declines in line with the general
reduction in industry activity. Our completion systems business experienced
declines corresponding to the lower activity levels, with the greatest declines
outside the United States markets. Our artificial lift business, which is
heavily dependent on North American production, experienced continuous declines
in revenue throughout 1998 and the first quarter of 1999. Our compression
services business has only been marginally affected by the declines in market
conditions because its business is based on levels of natural gas development
and production, which has been more stable than oil production. Our compression
business is subject to price competition in North America.
OUR COMMON STOCK HAS FLUCTUATED HISTORICALLY.
Historically, and in the past year in particular, the market price of
common stock of companies engaged in the oil and gas industry has been highly
volatile. Likewise, the market price of our common stock has varied
significantly in the past. News announcements and changes in oil and natural gas
prices, changes in the demand for oil and natural gas exploration and changes in
the supply and demand for oil and natural gas have all been factors that have
affected the price of our common stock.
RISKS RELATING TO THE DEBENTURES
DECLINES IN THE MARKET PRICE OF OUR COMMON STOCK COULD ADVERSELY IMPACT MARKET
PRICES FOR THE DEBENTURES.
Because the debentures are convertible into common stock, declines in the
market price of our common stock could adversely impact market prices for the
debentures.
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ALTHOUGH THE DEBENTURES ARE REFERRED TO AS "SENIOR DEBENTURES," THEY WILL BE
EFFECTIVELY SUBORDINATED TO ANY FUTURE SECURED DEBT AND DEBT OF OUR
SUBSIDIARIES.
The debentures are unsecured and therefore will be effectively subordinated
to any indebtedness of our subsidiaries and future secured indebtedness to the
extent of the value of the assets securing such indebtedness. If we default on
the debentures, become bankrupt, liquidate or reorganize, any secured creditors
could use their collateral to satisfy their secured indebtedness before you
would receive any payment on the debentures. If the value of such collateral is
not sufficient to pay any secured indebtedness in full, our secured creditors
would share the value of our other assets, if any, with you and the holders of
other claims against us which rank equally with the debentures.
YOU CANNOT BE SURE THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE
DEBENTURES.
There is no established trading market for the debentures. We have no plans
to list the debentures on a securities exchange. The liquidity of any market for
the debentures will depend upon the number of holders of the debentures, our
results of operations and financial condition, the market for similar
securities, the interest of securities dealers in making a market in the
debentures and other factors. An active or liquid trading market may not develop
for the debentures.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO REPURCHASE YOUR
DEBENTURES UPON A FUNDAMENTAL CHANGE.
Upon the occurrence of a Fundamental Change, you will have the right to
require us to repurchase your debentures. However, it is possible that we will
not have sufficient funds at such time to make the required repurchase of
debentures or that restrictions in our credit agreements or other indebtedness
will not allow such repurchases. In addition, certain important corporate
events, such as leveraged recapitalizations that would increase the level of our
indebtedness would not constitute a Fundamental Change under the indenture. See
"Description of the Debentures -- Repurchase at the Option of the Holder Upon a
Fundamental Change."
NO PROCEEDS
The securities to be offered and sold using this prospectus will be offered
and sold by the selling security holders named in this prospectus or in any
supplement to this prospectus. We will not receive any proceeds on the sale of
the securities or conversion of the debentures. The shares of our common stock
offered by this prospectus are issuable on conversion of the debentures.
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SELLING SECURITY HOLDERS
We originally sold the debentures to Morgan Stanley & Co. Incorporated on
June 30, 2000 in a private placement. Morgan Stanley has advised us that it
resold the debentures in transactions exempt from the registration requirements
of the Securities Act of 1933 to "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act) in compliance with Rule 144A. These
subsequent purchasers (and their respective donees and transferees for no
consideration) may from time to time offer and sell any or all of the debentures
or the common stock issuable on conversion of the debentures pursuant to this
prospectus.
The debentures and the common stock to be offered and sold using this
prospectus are being registered pursuant to a registration rights agreement
between us and Morgan Stanley. In that agreement, we undertook to file a
registration statement with regard to the debentures and common stock and,
subject to certain exceptions, to keep that registration statement effective for
up to two years. The registration statement to which this prospectus relates is
intended to satisfy our obligations under that agreement.
The selling security holders named below have advised us that they
currently intend to sell the debentures and common stock set forth below
pursuant to this prospectus. Additional selling security holders may choose to
sell debentures and common stock from time to time upon notice to us. See "Plan
of Distribution".
Before a security holder may use this prospectus in connection with an
offering of securities, this prospectus will be supplemented to include the name
and amount of debentures and common stock beneficially owned by the selling
security holder and the amount of debentures and common stock to be offered. Any
prospectus supplement will also disclose whether any selling security holder
selling in connection with that prospectus supplement has held any position,
office or other material relationship with us or any of our predecessors or
affiliates during the three years prior to the date of the prospectus
supplement.
The following table is based solely on information provided by the selling
security holders.
NUMBER OF
SHARES OF NUMBER OF
AMOUNT OF PERCENTAGE OF COMMON SHARES OF
DEBENTURES DEBENTURES AMOUNT OF STOCK COMMON
BENEFICIALLY BENEFICIALLY DEBENTURES TO BENEFICIALLY STOCK TO BE
SELLING SECURITY HOLDER OWNED OWNED BE SOLD (1) OWNED (2) SOLD(1)
- ----------------------- ------------ ------------- ------------- ------------ -------------
Allstate Life Insurance Company.... $ 8,500,000 * $ 8,500,000 385,974 84,974
Arbitex Master Fund, L.P........... 5,000,000 * 5,000,000 49,985 49,985
Aristeia International, Ltd........ 11,160,000 1.2% 11,160,000 111,566 111,566
Aristeia Trading L.P............... 6,840,000 * 6,840,000 68,379 68,379
Bear, Stearns & Co., Inc. ......... 24,500,000 2.7 24,500,000 244,926 244,926
Black Diamond Offshore, Ltd........ 5,600,000 * 5,600,000 55,983 55,983
Clinton Riverside Convertible
Portfolio Limited................ 5,000,000 * 5,000,000 49,985 49,985
Conseco Annuity Assurance Company
Multi-Bucket Annuity Convertible
Bond Fund........................ 5,000,000 * 5,000,000 49,985 49,985
Conseco Fund Group Convertible
Securities Fund.................. 2,000,000 * 2,000,000 19,994 19,994
Conseco Health Insurance Company
Convertible...................... 500,000 * 500,000 4,998 4,998
Conseco Senior Health Insurance
Company Convertible.............. 500,000 * 500,000 4,998 4,998
Deephaven Domestic Convertible
Trading Ltd...................... 2,900,000 * 2,900,000 28,991 28,991
Deeprock & Co...................... 5,000,000 * 5,000,000 49,985 49,985
Double Black Diamond Offshore,
LDC.............................. 23,324,000 2.6 23,324,000 233,170 233,170
First Union Securities Inc. ....... 2,000,000 * 2,000,000 19,994 19,994
Forest Fulcrum Fund LP............. 500,000 * 500,000 4,998 4,998
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NUMBER OF
SHARES OF NUMBER OF
AMOUNT OF PERCENTAGE OF COMMON SHARES OF
DEBENTURES DEBENTURES AMOUNT OF STOCK COMMON
BENEFICIALLY BENEFICIALLY DEBENTURES TO BENEFICIALLY STOCK TO BE
SELLING SECURITY HOLDER OWNED OWNED BE SOLD (1) OWNED (2) SOLD(1)
- ----------------------- ------------ ------------- ------------- ------------ -------------
Forest Global Convertible
Fund(3).......................... 51,650,000 5.7 51,650,000 516,345 516,345
Goldman Sachs and Company.......... 10,000,000 1.1 10,000,000 99,970 99,970
Highbridge International LLC(4).... 57,000,000 6.3 57,000,000 569,829 569,829
Jersey (IMA) Ltd................... 1,800,000 * 1,800,000 17,994 17,994
KBC Financial Products............. 7,000,000 * 7,000,000 69,979 69,979
Kentfield Trading, Ltd............. 7,125,000 * 7,125,000 71,228 71,228
Libertyview Funds L.P.............. 8,000,000 * 8,000,000 79,976 79,976
LLT Limited........................ 5,000,000 * 5,000,000 49,985 49,985
Lutheran Brotherhood............... 3,000,000 * 3,000,000 62,831 29,991
Lyxer Master Fund.................. 35,000,000 3.8 35,000,000 349,895 349,895
Morgan Stanley & Co.
Incorporated(5).................. 145,000,000 16.0 145,000,000 1,473,549 1,449,565
Peoples Benefit Life Insurance
Company.......................... 5,000,000 * 5,000,000 49,985 49,985
Peoples Benefit Life Insurance
Company (Teamsters Separate
Account)......................... 20,000,000 2.2 20,000,000 199,940 199,940
RBC Capital Services Inc. ......... 600,000 * 600,000 5,998 5,998
Retail Clerks Pension Trust........ 5,000,000 * 5,000,000 49,985 49,985
Sagamore Hill Hubb Fund LTD........ 15,000,000 1.6 15,000,000 149,955 149,955
SG Cowan Securities Corp........... 5,000,000 * 5,000,000 49,985 49,985
Spear, Leeds & Kellogg............. 4,000,000 * 4,000,000 39,988 39,988
St. Albans Partners Ltd............ 10,000,000 1.1 10,000,000 99,970 99,970
St. Thomas Trading, Ltd............ 375,000 * 375,000 3,748 3,748
Sylvan IMA Ltd..................... 15,000,000 1.6 15,000,000 149,955 149,955
Teachers Insurance and Annuity
Association...................... 11,000,000 1.2 11,000,000 109,967 109,967
UBS O'Connor LLC F/b/o UBS Global
Equity Arbitrage Master
Limited(6)....................... 86,500,000 9.5 86,500,000 864,740 864,740
UBS Warburg LLC(7)................. 62,500,000 6.9 62,500,000 624,812 624,812
White River Securities L.L.C....... 24,500,000 2.7 24,500,000 244,926 244,926
Wilmington Trust Company, as Owner
and Trustee for the Forrestal
Funding Master Trust............. 15,000,000 1.6 15,000,000 149,955 149,955
Worldwide Transactions, Ltd........ 1,076,000 * 1,076,000 10,756 10,756
Zurich HRF Master Hedge Fund....... 250,000 * 250,000 2,499 2,499
- ---------------
* Less than 1%
(1) Because a selling security holder may sell all or a portion of the
debentures and common stock pursuant to this prospectus, no estimate can be
given as to the number or percentage of debentures and common stock that the
selling security holder will hold upon termination of any sales.
(2) Includes shares of common stock issuable upon conversion of the debentures.
None of the selling security holders beneficially owns one percent or more
of the common stock, except that Morgan Stanley & Co. beneficially owns 1.3%
of the common stock.
(3) The address of Forest Global Convertible Fund is 53 Forest Avenue, Old
Greenwich, CT 06870.
(4) The address of Highbridge International LLC is 767 5(th) Ave, 23(rd) Floor,
New York, New York 10153.
(5) The address of Morgan Stanley & Co. Incorporated is 1585 Broadway, New York,
New York 10036. Morgan Stanley & Co. was the initial purchaser of all of the
debentures.
(6) The address of UBS O'Connor LLC F/b/o UBS Global Equity Arbitrage Master
Limited is 141 Jackson Blvd, Chicago, Illinois 60604.
(7) The address of UBS Warburg LLC is 677 Washington Blvd., 9-N, Stamford, CT
06901.
None of the selling security holders named above has, within the past three
years, held any position, office or other material relationship with us or any
of our predecessors or affiliates, except as noted above.
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DESCRIPTION OF DEBENTURES
The debentures were issued under an indenture dated as of May 17, 1996, as
supplemented by the first supplemental indenture thereto dated as of May 27,
1998 and the second supplemental indenture dated as of June 30, 2000, between
Weatherford and The Bank of New York, successor to Bank of Montreal Trust
Company, as trustee. We have summarized the material terms and provisions of the
indenture in this section. You should read the indenture for additional
information before you buy any of these debentures. References in this section
to Weatherford are solely to Weatherford International, Inc. and not to its
subsidiaries.
GENERAL
The debentures are unsecured obligations of Weatherford, ranking equal in
right of payment with all other senior unsecured indebtedness of Weatherford.
The debentures are limited to $910,000,000 aggregate principal amount at
maturity. The debentures are scheduled to mature on June 30, 2020. The
debentures were originally issued at a substantial discount from their principal
amount at maturity and therefore have original issue discount for U.S. federal
income tax purposes. See "Material U.S. Federal Income Tax Considerations."
There will be no periodic cash payments of interest on the debentures,
except as described under "--Optional Conversion to Semiannual Coupon Debentures
Upon a Tax Event." The calculation of the accrual of original issue discount,
the difference between the issue price of a debenture and the principal amount
at maturity of a debenture, in the period during which a debenture remains
outstanding will be compounded semi-annually using a year composed of twelve
30-day months. The accrual of original issue discount commenced on the issue
date of the debentures. Original issue discount or, if the debentures are
converted to semiannual coupon debentures following the occurrence of a tax
event, interest on the debentures, will cease to accrue on the debentures upon
conversion, repurchase or redemption under the terms and subject to the
conditions of the indenture.
The principal amount at maturity of each debenture is payable at the office
or agency of the paying agent, currently the trustee, in the Borough of
Manhattan, The City of New York, or any other office of the paying agent
maintained for this purpose. You may present debentures for conversion into
common stock at the office of the conversion agent. Debentures in definitive
form may be presented for exchange for other debentures or registration of
transfer at the office of the registrar. Currently, the trustee is the paying
agent, the conversion agent and the registrar. Weatherford will not charge a
service charge for any registration, transfer or exchange of debentures.
However, Weatherford may require the holder to pay for any tax, assessment or
other governmental charge to be paid in connection with any registration,
transfer or exchange of debentures.
RANKING
The debentures constitute senior debt and rank equally with all of our
unsecured and unsubordinated debt and will rank senior to any future
subordinated indebtedness. As of June 30, 2000, excluding the debentures, we had
outstanding approximately $439.8 million aggregate principal amount of senior
indebtedness.
We currently conduct a substantial portion of our operations through our
subsidiaries, and our subsidiaries generate a substantial portion of our
operating income and cash flow. As a result, distributions or advances from our
subsidiaries are one of the principal source of funds necessary to meet our debt
service obligations. Contractual provisions or laws, as well as our
subsidiaries' financial conditions and operating requirements, may limit our
ability to obtain cash from our subsidiaries that we require to pay our debt
service obligations, including payments on the debentures. In addition, holders
of the debentures have a junior position to the claims of creditors of our
subsidiaries on their assets and earnings.
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CONVERSION OF DEBENTURES BY HOLDERS
You have the option to convert your debentures into Weatherford common
stock at any time prior to maturity. However, if we elect to redeem a debenture,
you may convert it only until the close of business on the last trading day
prior to a redemption date, unless we default in the payment of the redemption
price. If you have delivered a repurchase notice exercising your option to
require us to repurchase your debenture, you may not convert the debenture
unless you withdraw the notice in accordance with the terms of the indenture.
Similarly, if you exercise your option to require us to repurchase your
debenture upon a Fundamental Change, that debenture may be converted only if you
withdraw your election to exercise your option in accordance with the terms of
the indenture. You may convert your debentures in part so long as you convert
debentures of an integral multiple of $1,000 principal amount at maturity. On
any conversion, we will deliver the common shares issuable upon such conversion
to the trustee no later than the close of business on the seventh business day
following the conversion date.
The conversion rate is 9.9970 shares of common stock per $1,000 principal
amount at maturity of debentures, subject to adjustment upon the occurrence of
the events described below. If, on conversion, you would be entitled to a
fractional share of common stock, you will instead receive cash in an amount
equal to the closing price of shares of common stock on the trading day
immediately prior to the conversion date multiplied by such fraction.
On conversion of a debenture, you will not receive any cash payment
representing accrued original issue discount. Instead, accrued original issue
discount will be deemed paid in full rather than canceled, extinguished or
forfeited. Consequently, our delivery to you of the fixed number of shares of
common stock into which the debenture is convertible, together with the cash
payment, if any, in lieu of a fractional share of common stock, will be deemed
to satisfy our obligation to pay the principal amount at maturity of the
debenture, including the accrued original issue discount attributable to the
period from the issue date to the conversion date. We will not adjust the
conversion ratio to account for the accrued original issue discount.
The date on which all of the requirements for delivery of the debenture for
conversion have been satisfied is the conversion date.
The conversion rate is subject to adjustment under formulae as set forth in
the indenture in certain events, including:
- the issuance of Weatherford common stock as a dividend or distribution
on the common stock;
- certain subdivisions, combinations and reclassifications of the
outstanding common stock;
- the issuance to all holders of common stock of certain rights or
warrants to purchase common stock at less than the current market price;
- the distribution to all holders of common stock of capital stock (other
than our common stock), debt, or other assets, but excluding
distributions of rights and warrants described above and all-cash
distributions;
- distributions consisting of cash, excluding any quarterly cash dividend
on the common stock to the extent that the aggregate cash dividend per
share of common stock in any quarter does not exceed the greater of:
(i) the amount per share of common stock of the next preceding
quarterly cash dividend on the common stock to the extent that the
preceding quarterly dividend did not require an adjustment of the
conversion rate pursuant to this fifth bullet point (as adjusted to
reflect subdivisions or combinations of the common stock); or
(ii) 3.75% of the average of the last reported sales price of the common
stock during the 10 trading days immediately prior to the date of
declaration of the dividend, and excluding any dividend or
distribution in connection with the liquidation, dissolution or
winding up of Weatherford; or
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- payment in respect of a tender offer or exchange offer by us or any of
our subsidiaries for the common stock to the extent that the per share
consideration exceeds the current market price per share of common stock
on the trading day next succeeding the last date on which tenders or
exchanges may be made; and
- payment in respect of a tender offer or exchange offer by a person other
than Weatherford or any of its subsidiaries in which, as of the closing
or expiration date of such offer, our Board of Directors is not
recommending rejection of the offer.
If an adjustment is required to be made as set forth in the fifth bullet
point above as a result of a distribution that is a quarterly dividend, the
adjustment would be based upon the amount by which the distribution exceeds the
amount of the quarterly cash dividend permitted to be excluded pursuant to such
fifth bullet point. If an adjustment is required to be made as set forth in the
fifth bullet point above as a result of a distribution that is not a quarterly
dividend, the adjustment would be based upon the full amount of the
distribution. The adjustment referred to in the seventh bullet point above will
be made only (i) if the tender offer or exchange offer is for an amount that
increases that person's ownership of the common stock to more than 25% of the
total shares of the common stock outstanding and (ii) if the cash and value of
any other consideration included in such payment per share of the common stock
exceeds the current market price per share of the common stock on the trading
day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer. The adjustment referred to in the
seventh bullet point above will not be made, however, if, as of the closing of
the offer, the offering documents with respect to such offer disclose a plan or
an intention to cause Weatherford to engage in a consolidation or merger of
Weatherford or a sale of all or substantially all of Weatherford's assets.
We may from time to time increase the conversion rate by any amount for any
period if the period is at least 20 days or such longer period as may be
required by law, so long as the increase is irrevocable during the period.
Subsequent to such increase, we may from time to time lower the conversion rate
to any rate that is not lower than the conversion rate that would have been
applicable had such increase not been made, if we determine that the decrease
would be in our best interests. For purposes of this paragraph, a determination
by our board of directors will be conclusive. If we increase the conversion
rate, we will give at least seven days' notice of the increase. We may, at our
option, make increases in the conversion rate, in addition to those described
above, as we deem advisable to avoid or diminish any income tax to holders of
common stock resulting from any dividend or distribution of stock, or rights to
acquire stock, or from any event treated as a dividend distribution or a right
to acquire stock for income tax purposes. See "Material U.S. Federal Income Tax
Considerations."
No adjustment in the conversion rate will be required unless the adjustment
would require a change of at least 1% in the rate then in effect; provided that
any adjustment that would otherwise be required to be made will be carried
forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion rate will not be adjusted for the
issuance of common stock or any securities convertible into or exchangeable for
common stock or carrying the right to purchase any of the foregoing.
If we exercise our option to have interest in lieu of original issue
discount accrue on a debenture following a tax event, the holder will be
entitled on conversion to receive the same number of shares of common stock that
the holder would have received if we had not exercised our option. If we
exercise our option, debentures surrendered for conversion during the period
from the close of business on the record date next preceding the next interest
payment date to the opening of business on the next interest payment date
(except debentures to be redeemed on the next interest payment date) must also
be accompanied by an amount equal to the accrued and unpaid interest on the
debenture that the registered holder is to receive. Except where debentures
surrendered for conversion must be accompanied by the payment described in this
paragraph, no interest on converted debentures will be payable by us on any
interest payment date subsequent to the date of conversion. See "--Optional
Conversion to Semiannual Coupon Debentures Upon a Tax Event."
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In the case of either: (1) any reclassification of the common stock, or (2)
a consolidation or merger involving Weatherford or a conveyance, transfer or
lease to another entity of the property and assets of Weatherford substantially
as an entirety, if holders of common stock would be entitled to receive any form
of consideration with respect to or in exchange for common stock, the holders of
the debentures then outstanding would be entitled to convert their debentures
into the kind and amount of consideration which they would have owned or been
entitled to receive had their debentures been converted immediately prior to the
applicable transaction. This assumes that a holder of debentures would not have
exercised any rights of election as to the consideration receivable in
connection with the transaction.
In the event of a taxable distribution to holders of common stock or in
certain other circumstances requiring an adjustment to the conversion rate, the
holders of debentures may, in certain circumstances, be deemed to have received
a distribution subject to United States income tax as a dividend. In certain
other circumstances, the absence of an adjustment may result in a taxable
dividend to the holders of common stock. See "Material U.S. Federal Income Tax
Considerations."
REDEMPTION OF DEBENTURES AT OUR OPTION
We may not redeem the debentures before June 30, 2005. Beginning on June
30, 2005, we may redeem the debentures for cash in whole or in part at any time,
by giving by mail to holders of debentures not less than 30 days' nor more than
60 days' notice of redemption prior to the redemption date for an amount in cash
equal to 100% of the sum of (1) the $551.26 original debenture issue price per
$1,000 principal amount and (2) accrued original issue discount through the date
of redemption. We can also convert the debentures to interest-bearing debentures
upon the occurrence of certain tax events. The debentures will be redeemable in
multiples of $1,000 principal amount at maturity. No sinking fund is provided
for the debentures.
The table below shows redemption prices of debentures per $1,000 principal
amount at maturity, at June 30, 2005, and at each June 30 thereafter prior to
maturity and at maturity on June 30, 2020, which prices reflect the accrued
original issue discount calculated to each date. The redemption price of a
debenture redeemed between any two dates below would include an additional
amount reflecting the additional original issue discount accrued since the date
in the table preceding the actual redemption date.
(2)
(1) ACCRUED ORIGINAL (3)
DEBENTURE ISSUE DISCOUNT REDEMPTION
ISSUE PRICE AT 3.0% PRICE (1) + (2)
----------- ---------------- ---------------
June 30, 2005......................... $551.26 $ 88.50 $ 639.76
June 30, 2006......................... 551.26 107.84 659.10
June 30, 2007......................... 551.26 127.76 679.02
June 30, 2008......................... 551.26 148.28 699.54
June 30, 2009......................... 551.26 169.43 720.69
June 30, 2010......................... 551.26 191.21 742.47
June 30, 2011......................... 551.26 213.65 764.91
June 30, 2012......................... 551.26 236.77 788.03
June 30, 2013......................... 551.26 260.59 811.85
June 30, 2014......................... 551.26 285.13 836.39
June 30, 2015......................... 551.26 310.41 861.67
June 30, 2016......................... 551.26 336.45 887.71
June 30, 2017......................... 551.26 363.28 914.54
June 30, 2018......................... 551.26 390.92 942.18
June 30, 2019......................... 551.26 419.40 970.66
At Stated Maturity (June 30, 2020).... 551.26 448.74 1,000.00
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If we elect to convert the debentures to semiannual coupon debentures
following a tax event, the debentures will be redeemable at the Restated
Principal Amount (as described below) plus accrued and unpaid interest, if any,
to the applicable redemption date.
If less than all of the outstanding debentures held in certificated form
are to be redeemed, the trustee will select the debentures held in certificated
form to be redeemed in principal amounts at maturity of $1,000 or integral
multiples thereof by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of your certificated debentures is selected
for partial redemption and you convert a portion of your debentures, the
converted portion will be deemed to be the portion selected for redemption.
Debentures registered in the name of DTC or its nominee will be redeemed as
described under the caption entitled "Book-Entry System."
REPURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER
You have the right to require us to repurchase the debentures on June 30,
2005, June 30, 2010 and June 30, 2015. We will be required to repurchase any
outstanding debenture for which you deliver a written repurchase notice to the
paying agent. This notice must be delivered during the period beginning at any
time from the opening of business on the date that is 20 business days prior to
the repurchase date until the close of business on the repurchase date. If the
repurchase notice is given and withdrawn during the period, we will not be
obligated to repurchase the related debentures. Our repurchase obligation will
be subject to certain additional conditions. Also, our ability to satisfy our
repurchase obligations may be affected by the factors described in "Risk
Factors" under the caption "We may not have the ability to raise the funds
necessary to repurchase your debentures upon a Fundamental Change."
The purchase price payable in respect of a debenture will be equal to the
issue price plus accrued original issue discount to the repurchase date. If,
prior to the repurchase date, we have elected to convert the debentures to
semiannual coupon debentures following a tax event, the purchase price will be
equal to the Restated Principal Amount plus accrued and unpaid interest to the
repurchase date. See the discussion under the caption entitled "--Optional
Conversion to Semiannual Coupon Debentures Upon a Tax Event." The table below
shows the purchase prices of a debenture as of the specified repurchase dates.
REPURCHASE DATE PRICE
- --------------- -------
June 30, 2005.............................................. $639.76
June 30, 2010.............................................. $742.47
June 30, 2015.............................................. $861.67
We may, at our option, elect to pay the purchase price payable, as of any
repurchase date, in cash or common stock or any combination of cash or common
stock. For a discussion of the tax treatment of a holder receiving cash, shares
of common stock or any combination thereof, see "Material U.S. Federal Income
Tax Considerations--U.S. Holders--Sale, Exchange or Retirement of the
Debentures."
If we elect to pay the purchase price, in whole or in part, in common
stock, the number of shares to be delivered in respect of the portion of the
purchase price to be paid in common stock will be equal to the portion of the
purchase price divided by the "market price" of the common stock. However, we
will not deliver fractional shares of common stock upon any repurchase by us of
debentures through the delivery of common stock in payment, in whole or in part,
of the purchase price. If, on a repurchase of common stock, you would be
entitled to a fractional share of common stock, you will instead receive cash in
an amount equal to the market price of a share of common stock (as defined
below) multiplied by such fraction.
Your right to require us to repurchase debentures is exercisable by
delivery during the 20-business day repurchase period referenced above of a
written repurchase notice by the holder to the office of the paying agent. The
paying agent is the trustee.
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The repurchase notice will state:
- if certificated debentures have been issued, the debenture certificate
numbers, or, if not certificated, your notice must comply with
appropriate DTC procedures;
- the portion of the principal amount at maturity of debentures to be
repurchased, which must be $1,000 or in multiples of $1,000;
- that the debentures are to be repurchased by us pursuant to the
applicable provisions of the debentures and the indenture; and
- if we elect, pursuant to the election notice that we are required to
give, to pay the purchase price, in whole or in part, in common stock
but do not end up satisfying the conditions to payment and ultimately
have to pay the holder in cash, whether you would choose:
(i) to withdraw the repurchase notice as to some or all of the
debentures to which it relates; or
(ii) to receive cash in respect of the entire purchase price for all
debentures subject to the repurchase notice.
If you fail to indicate your choice with respect to the election described
in the fourth bullet point in the paragraph above, you will be deemed to have
elected to receive cash for the entire purchase price for all debentures subject
to the repurchase notice. For a discussion of the tax treatment of a holder
receiving cash or common stock pursuant to its election to tender its debentures
to us on a repurchase date, see the discussion under "Material U.S. Federal
Income Tax Considerations."
You may withdraw any repurchase notice by a written notice of withdrawal
delivered to the paying agent prior to the close of business on the repurchase
date. The notice of withdrawal must state:
- the principal amount at maturity of the withdrawn debentures;
- if certificated debentures have been issued, the certificate numbers of
the withdrawn debentures, or if not certificated, your notice must
comply with appropriate DTC procedures; and
- the principal amount at maturity, if any, which remains subject to the
repurchase notice.
We must give notice of an upcoming repurchase date not less than 20
business days prior to the repurchase date to all holders at their addresses
shown in the register of the registrar. We will also give notice to beneficial
owners as required by applicable law. This notice will state, among other
things:
- whether we will pay the purchase price of the debentures in cash or
shares of common stock, or any combination of cash or common stock. The
notice will specify the percentage of each;
- if we elect to pay in common stock, in whole or in part, the method of
calculating the market price of the common stock; and
- the procedures that holders must follow to require us to repurchase
their debentures.
The "market price" means the average of the sale prices of the common stock
for the five-trading-day period ending on the third business day prior to the
applicable repurchase date (if the third business day prior to the applicable
repurchase date is a trading day, or if not, then on the last trading day prior
to the third business day), appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such trading days
during such five-trading-day period and ending on such repurchase date, of
certain events that would result in an adjustment of the conversion rate with
respect to the common stock.
The "sale price" of the common stock on any date means the closing sale
price per share of common stock (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on such date as reported
in composite transactions for the principal United States securities exchange on
which the common stock is
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traded or, if the common stock is not listed on a United States national or
regional securities exchange, as reported on the Nasdaq Market.
Because the market price of the common stock is determined prior to the
applicable repurchase date, holders of debentures bear the market risk with
respect to the value of the common stock to be received from the date such
market price is determined to such repurchase date. We may pay the repurchase
price or any portion of the repurchase price in shares of common stock only if
the common stock is listed on a United States national securities exchange or
quoted in an inter-dealer quotation system of any registered United States
national securities association.
Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, we will notify the securities
exchange(s) on which our common stock is then listed and disseminate such
determination on our website on the world wide web or through such other public
medium as we may use at that time.
Our right to repurchase debentures, in whole or in part, with common stock
is subject to the satisfaction of various conditions, including:
- the registration of the common stock under the Securities Act and
Securities Exchange Act of 1934 (the "Exchange Act"), if required, and
- any necessary qualification or registration under applicable state
securities laws, if any, or the availability of an exemption therefrom.
If the conditions are not satisfied by a repurchase date, we will pay the
purchase price of the debentures to be purchased on the repurchase date entirely
in cash. We may not change the form or components or percentages of components
of consideration to be paid for the debentures once we have given the notice
that we are required to give to holders of debentures, except as described in
the first sentence of this paragraph.
Payment of the repurchase price for a debenture for which a repurchase
notice has been delivered and not withdrawn is conditioned upon book-entry
transfer or delivery of the debenture, together with necessary endorsements, to
the paying agent at its office in the Borough of Manhattan, The City of New
York, or any other office of the paying agent, at any time after delivery of the
repurchase notice. Payment of the purchase price for the debenture will be made
promptly following the later of the repurchase date and the time of book-entry
transfer or delivery of the debenture. If the paying agent holds money or
securities sufficient to pay the purchase price of the debenture on the business
day following the repurchase date, then, on and after the date:
- the debenture will cease to be outstanding;
- original issue discount (or, if the debentures have been converted to
interest-bearing debentures following a tax event, interest) will cease
to accrue; and
- all other rights of the holder will terminate.
This will be the case whether or not book-entry transfer of the debenture
is made or the debenture is delivered to the paying agent, and all other rights
of the holder will terminate, other than the right to receive the purchase price
upon delivery of the debenture.
Our ability to repurchase debentures with cash may be limited by the terms
of our then-existing borrowing agreements. The indenture prohibits us from
repurchasing debentures for cash in connection with holders' repurchase right if
any event of default under the indenture has occurred and is continuing, except
a default in the payment of the repurchase price with respect to the debentures.
Even though we become obligated to repurchase any outstanding debenture on
a repurchase date, we may not have sufficient funds to pay the purchase price on
that repurchase date. If this were to occur, we
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could be required to issue shares of common stock to pay the purchase price at
valuations based on then prevailing market prices for all the debentures
tendered by the holders.
We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Exchange Act which may be applicable at the time. We will file
Schedule TO or any other schedule required in connection with any offer by us to
repurchase the debentures.
REPURCHASE AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE
If we undergo a Fundamental Change (as defined below), you will have the
option to require us to purchase for cash any or all of your debentures 35
business days after such Fundamental Change. We will pay a purchase price equal
to the issue price plus accrued original issue discount through the purchase
date or, if applicable, the Restated Principal Amount plus accrued and unpaid
interest to the date of purchase. You may require us to purchase all or any part
of the debentures so long as the principal amount at maturity of the debentures
being purchased is an integral multiple of $1,000.
A Fundamental Change means the occurrence of any transaction or event in
connection with which all or substantially all common stock (excluding shares
held by stockholders exercising dissenters' rights) will be exchanged for,
converted into, acquired for or constitute solely the right to receive any form
of consideration which is not all or substantially all common stock listed, or,
upon consummation of or immediately following such transaction or event, which
will be listed, on a United States national securities exchange or approved for
quotation on The Nasdaq National Market or any similar United States system of
automated dissemination of quotations of securities prices or, where applicable,
cash in lieu of fractional shares of such stock.
You must deliver a written notice to the paying agent prior to the close of
business on the business day prior to the date on which the debentures are to be
purchased to exercise the repurchase right upon a Fundamental Change. This
notice must specify the debentures submitted for repurchase. You may withdraw
the notice by delivering a written notice of withdrawal to the paying agent
before the same date.
Within 15 business days after a Fundamental Change, we will publish and
mail to the trustee and to each holder of the debentures a written notice of the
Fundamental Change which specifies the terms and conditions and the procedures
required for exercise of a holder's right to require us to purchase your
debentures.
If we had previously exercised our option to pay interest instead of
accruing original issue discount on the debentures following a tax event, we
will purchase the debentures at a cash price equal to the Restated Principal
Amount plus accrued and unpaid interest which had accrued from the date we
exercised our option. See "-- Optional Conversion to Semiannual Coupon
Debentures Upon a Tax Event."
We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Exchange Act which will be applicable at the time in connection
with the repurchase of the debentures in the event of a Fundamental Change. We
will file Schedule TO or any other schedule required in connection with any
offer by us to so repurchase the debentures.
The repurchase rights of the holders of debentures could discourage a
potential acquirer of Weatherford. The Fundamental Change repurchase feature,
however, is not the result of management's knowledge of any specific effort to
obtain control of Weatherford by any means or part of a plan by management to
adopt a series of anti-takeover provisions.
The term Fundamental Change is limited to specified transactions and may
not include other events that might adversely affect Weatherford's financial
condition. In addition, you may not be protected by the requirement that we
offer to repurchase the debentures upon a Fundamental Change in the event of a
highly leveraged transaction, reorganization, merger or similar transaction
involving Weatherford.
No debentures may be repurchased at the option of holders upon a
Fundamental Change if there has occurred and is continuing an event of default
described under "--Events of Default; Notice and Waiver"
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below. However, debentures may be repurchased if the event of default is in the
payment of the Fundamental Change purchase price with respect to the debentures.
MERGERS AND SALES OF ASSETS
Weatherford may not consolidate with or merge into any other person or
convey, transfer or lease our properties and assets substantially as an entirety
to another person, unless:
- the successor person assumes all of Weatherford's obligations under the
debentures and the indenture; and
- Weatherford or the successor person will not immediately thereafter be in
default under the indenture.
Upon the assumption of our obligations by a successor as described above,
subject to certain exceptions, we will be discharged from all obligations under
the debentures and the indenture. Certain of these transactions which would
constitute a Fundamental Change would permit each holder to require us to
repurchase their debentures as described under "--Repurchase at Option of the
Holder Upon a Fundamental Change."
OPTIONAL CONVERSION TO SEMIANNUAL COUPON DEBENTURES UPON A TAX EVENT
We have the option to convert the debentures to interest-bearing debentures
following a tax event. From and after the date a tax event occurs, we may elect
to pay interest at 3.0% per year on the debentures instead of accruing original
issue discount. The principal amount, which will be restated, will be calculated
by adding the issue price and the original issue discount which had accrued up
and until the date on which we exercise the option. This Restated Principal
Amount will be the amount due at maturity. If we elect this option, interest
will be based on a 360-day year comprised of twelve 30-day months. Interest will
accrue from the option exercise date and will be payable semiannually on June 30
to holders of record on the immediately preceding June 15 and on December 31 to
holders of record on the immediately preceding December 15.
A tax event occurs when we receive an opinion from tax counsel stating
that, as a result of either:
- any amendment, change or announced prospective change in the laws or
regulations of the United States or any of its political subdivisions or
taxing authorities of the United States or
- any amendment, change, interpretation or application of the laws or
regulations by any legislative body, court, government agency or
regulatory authority,
there is more than an insubstantial risk that interest, including original issue
discount, payable on the debentures either
- would not be deductible on a current accrual basis; or
- would not be deductible under any other method,
in whole or in part, by us for United States federal income tax purposes.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The indenture provides that, if an event of default specified in the
indenture has occurred and is continuing, either the trustee or the holders of
not less than 25% in aggregate principal amount at maturity of the debentures
then outstanding may declare due and payable:
- the issue price of the debentures or, if the debentures are converted to
semiannual coupon debentures following the occurrence of a tax event, the
Restated Principal Amount; plus
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- the original issue discount on the debentures or, if the debentures are
converted to semiannual coupon debentures following the occurrence of a
tax event, interest on the debentures, in each case accrued and unpaid to
the date of the declaration; plus
- any liquidated damages owing.
In the case of certain events of bankruptcy or insolvency, the issue price
plus the original issue discount on the debentures or, if the debentures are
converted to semiannual coupon debentures following the occurrence of a tax
event, the Restated Principal Amount plus interest on the debentures, accrued
and unpaid to the occurrence of the event will automatically become and be
immediately due and payable in each case.
Under certain circumstances, the holders of a majority in aggregate
principal amount at maturity of the outstanding debentures may rescind any
acceleration with respect to the debentures and its consequences.
Interest will accrue at the rate of 3.0% per annum and be payable on demand
upon a default in the payment of any redemption price or purchase price and,
after acceleration, of the issue price and accrued original issue discount or,
if the debentures are converted to semiannual coupon debentures following the
occurrence of a tax event, interest, to the extent that payment of the interest
is legally enforceable. Original issue discount or, if the debentures are
converted to semiannual coupon debentures following the occurrence of a tax
event, interest on the debentures (except as provided in the first sentence of
this paragraph), will cease to accrue after declaration of acceleration.
The following constitute events of default with respect to the debentures:
(1) our failure for 30 days to pay any interest (after any conversion of
the debentures to interest-bearing debentures following a tax event)
or liquidated damages due on the debentures;
(2) our failure to pay principal of the debentures (or, if the debentures
have been converted to interest-bearing debentures following a tax
event, the Restated Principal Amount) at maturity, issue price,
accrued original discount, redemption price, repurchase price or
Fundamental Change purchase price, when the same becomes due and
payable;
(3) our failure for 10 days to deliver shares of our common stock
(including cash in lieu of fractional shares) when common stock is
required to be delivered following the conversion of a debenture;
(4) our failure to comply with any of our covenants or agreements in the
debentures or the indenture (other than an agreement or covenant that
we have included in the indenture solely for the benefit of other
series of debt securities or that is made inapplicable to the
debentures) for 90 days after written notice by the trustee or by the
holders of at least 25% in principal amount of all outstanding debt
securities affected by that failure; and
(5) certain events involving bankruptcy, insolvency or reorganization of
Weatherford.
A default under one series of debt securities issued under the base
indenture will not necessarily be a default under another series. The trustee
may withhold notice to the holders of the debentures of any default or event of
default (except in any payment on the debentures) if the trustee considers it in
the interest of the holders of the debentures to do so.
The trustee will give notice to holders of the debentures of any continuing
default known to the trustee within 90 days after the trustee becomes aware of
such default provided that, except in the case of a default as described in
clause (1) above, the trustee may withhold notice if it determines in good faith
that withholding the notice is in the interests of the holders.
The holders of a majority in aggregate principal amount at maturity of the
outstanding debentures may direct the time, method and place of conducting any
proceeding for any remedy available to the
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trustee or exercising any trust or power conferred on the trustee; provided that
the direction may not conflict with any law or the indenture and will be subject
to certain other limitations. Before proceeding to exercise any right or power
under the indenture at the direction of the holders, the trustee will be
entitled to receive from the holders reasonable security or indemnity
satisfactory to it against the costs, expenses and liabilities incurred by it in
complying with the direction. No holder of any debenture will have any right to
pursue any remedy with respect to the indenture or the debentures unless:
(1) the holder has previously given us and the trustee written notice
of a continuing event of default;
(2) the holders of at least 25% in aggregate principal amount at
maturity of the outstanding debentures have made a written request to the
trustee to pursue the remedy;
(3) the holder or holders have offered to the trustee reasonable
indemnity satisfactory to the trustee;
(4) the holders of a majority in aggregate principal amount at
maturity of the outstanding debentures have not given the trustee a
direction inconsistent with the request within 60 days after receipt of the
request; and
(5) the trustee has failed to comply with the request within the
60-day period.
However, the right of any holder:
(1) to receive payments of principal, including the issue price and
accrued original issue discount, liquidated damages owing or interest, and
any interest in respect of a default in the payment of any amounts due in
respect of a debenture, on or after the due date of the debenture;
(2) to institute suit for the enforcement of any payments or
conversion; or
(3) to convert debentures
will not be impaired or adversely affected without the holder's consent.
The holders of at least a majority in aggregate principal amount at
maturity of the outstanding debentures may waive an existing default and its
consequences, other than:
- any default in any payment on the debentures;
- any default with respect to the conversion rights of the debentures; or
- any default in respect of certain covenants or provisions in the
indenture which may not be modified without the consent of the holder of
each debenture as described under the caption entitled "--Modification
and Waiver" below.
We are required to furnish to the trustee annually a statement as to any
default by us in the performance and observance of our obligations under the
indenture.
MODIFICATION AND WAIVER
We may amend, modify or supplement the indenture with the consent of the
holders of not less than a majority in aggregate principal amount at maturity of
all series affected (acting as one class). Notwithstanding the foregoing, no
amendment may, without the consent of each holder affected:
(1) change the stated maturity of the principal of, or any installment
of principal or interest in any security, or reduce the principal amount
thereof or rate of interest thereon or any premium payable upon the
redemption thereof, or change the redemption date, or any obligation to pay
additional amounts pursuant to the indenture, or reduce the principal
amount of any original issue discount security payable upon a declaration
of acceleration, change the coin or currency in which any
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security or any premium or interest is payable or change of the right of
redemption, purchase or repayment by Weatherford at the option of the
holder or change the holder's right to institute suit;
(2) reduce the percentage in principal amount of the outstanding
securities of any series, the consent of whose holders is required for any
such amendment, modification or supplement, or the consent of whose holders
is required for any waiver provided for in the indenture, or reduce the
requirements of the indenture for quorum or voting, or
(3) change any obligation of the Company to maintain an office or
agency in the places and for the purposes specified in the indenture, or
(4) make any change that adversely affects the right to convert any
debenture or the right to require us to repurchase a debenture or the right
to require us to repurchase a debenture upon a Fundamental Change; or
(5) subject to specified exceptions, modify certain of the provisions
of the indenture relating to modification or waiver of provisions of the
indenture.
The indenture also provides for certain modifications of its terms without
the consent of the holders.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
We issued the debentures in registered form, without interest coupons. We
will not charge a service charge for any registration of transfer or exchange of
the debentures. We may, however, require the payment of any tax or other
governmental charge payable for that registration.
Debentures are exchangeable for other debentures, for the same total
principal amount and for the same terms but in different authorized
denominations in accordance with the indenture. Holders may present debentures
for registration of transfer at the office of the security registrar or any
transfer agent we designate. The security registrar or transfer agent will
effect the transfer or exchange when it is satisfied with the documents of title
and identity of the person making the request.
We have appointed the trustee as security registrar for the debentures. We
may at any time rescind that designation or approve a change in the location
through which any registrar acts. We are required to maintain an office or
agency for transfers and exchanges in each place of payment. We may at any time
designate additional registrars for the debentures.
In the case of any redemption, the security registrar will not be required
to register the transfer or exchange of any debenture either:
- during a period beginning 15 business days prior to the expected mailing
of the relevant notice of redemption and ending on the close of business
on the day of mailing of such notice; or
- if the debentures have been called for redemption, in whole or in part,
except the unredeemed portion of any debenture being redeemed in part.
PAYMENT AND PAYING AGENTS
Payments on the debentures not made in common stock will be made in U.S.
dollars at the office of the trustee. At our option, however, we may make
payments by check mailed to the holder's registered address or, with respect to
global debentures, by wire transfer. We will make interest payments to the
person in whose name the debenture is registered at the close of business on the
record date for the interest payment.
The trustee will be designated as our paying agent for payments on
debentures. We may at any time designate additional paying agents or rescind the
designation of any paying agent or approve a change in the office through which
any paying agent acts.
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Subject to the requirements of any applicable abandoned property laws, the
trustee and paying agent shall pay to us upon written request any money held by
them for payments on the debentures that remain unclaimed for two years after
the date upon which that payment has become due. After payment to us, holders
entitled to the money must look to us for payment. In that case, all liability
of the trustee or paying agent with respect to that money will cease.
BOOK-ENTRY SYSTEM
The debentures are represented by several Global Securities (each a "Global
Security"). Each Global Security has been deposited with, or on behalf of, The
Depository Trust Company ("DTC") and is registered in the name of a nominee of
DTC. Except under circumstances described below, the debentures will not be
issued in definitive form.
DTC will credit on its book-entry registration and transfer system the
accounts of persons holding beneficial interests in the Global Security with the
respective principal amounts of the debentures represented by the Global
Security. Ownership of beneficial interests in a Global Security will be limited
to persons that have accounts with DTC or its nominee ("participants") or
persons that may hold interests through participants. Ownership of beneficial
interests in a Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of persons other than participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the debentures represented by that Global Security for all purposes
under the indenture. Except as provided below, owners of beneficial interests in
a Global Security are not entitled to have debentures represented by that Global
Security registered in their names, are not entitled to receive physical
delivery of debentures in definitive form and are not considered the owners or
holders thereof under the indenture. Principal and interest payments, if any, or
payments of the redemption price or the purchase price on debentures registered
in the name of DTC or its nominee will be made to DTC or its nominee, as the
case may be, as the registered owner of the relevant Global Security. Neither
we, the trustee, any paying agent nor the registrar for the debentures have any
responsibility or liability for any aspect of the records relating to nor
payments made on account of beneficial interests in a Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, if any, or payments of the redemption price or the purchase price
will credit immediately participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the relevant Global Security as shown on the records of DTC or its nominee.
We also expect that payments by participants to owners of beneficial interests
in a Global Security held through such participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants.
If DTC is at any time unwilling or unable to continue as a depositary and a
successor depositary is not appointed by us within 90 days, we will issue
debentures in definitive form in exchange for the entire Global Security for the
debentures. In addition, we may at any time and in our sole discretion determine
not to have debentures represented by a Global Security and, in such event, will
issue debentures in definitive form in exchange for the entire Global Security
relating to such debentures. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery in
definitive form of debentures represented by such Global Security equal in
principal amount to such beneficial interest and to have such debentures
registered in its name. Debentures so issued in definitive form will be issued
as registered debentures in denominations of $1,000 and integral multiples
thereof, unless otherwise specified by us.
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DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a clearing corporation within the meaning of the Uniform
Commercial Code and a clearing agency registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants. This practice eliminates the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations and may include certain other
organizations. Some of the participants, or their representatives, together with
other entities, own DTC. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through,
or maintain a custodial relationship with, a participant, either directly or
indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Security among participants, it is under no
obligation to perform or continue to perform these procedures, and these
procedures may be discontinued at any time.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and indirect participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices will be sent to Cede & Co., as nominee of DTC. If less than all of the
debentures are being redeemed, DTC will reduce the amount of interest of each
participant in the debentures in accordance with its procedures.
Holders of debentures may not request certificated debentures and
certificated debentures will not be issued, except at our option or in exchange
for debentures represented by the global debenture if no successor depositary is
appointed by us as set forth above in the fifth paragraph under this caption.
TAXATION OF DEBENTURES
See the description under "Material U.S. Federal Income Tax Considerations"
for a discussion of certain tax considerations relevant to a holder of
debentures.
INFORMATION CONCERNING THE TRUSTEE
We have appointed The Bank of New York as trustee under the indenture, and
as paying agent, conversion agent, registrar and custodian with regard to the
debentures.
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DESCRIPTION OF CAPITAL STOCK
As of the date of this prospectus, we are authorized to issue up to
250,000,000 shares of common stock, par value $1.00 per share, and up to
3,000,000 shares of preferred stock, par value $1.00 per share. As of June 30,
2000, we had 109,079,361 shares of common stock and no shares of preferred stock
outstanding. As of that date, we also had approximately 28.2 million shares of
common stock reserved for issuance in connection with options or other awards
outstanding under various employee or director incentive, compensation and
option plans, and for issuance pursuant to conversions of the debentures and our
5% Convertible Subordinated Preferred Equivalent Debentures due 2027.
In connection with the acquisition of Alpine Oil Services Corporation on
August 10, 2000, in a transaction structured to provide certain Canadian tax
results for Alpine's former stockholders, we issued one share of our Series A
Preferred Stock, par value $1.00 per share, a new series of Preferred Stock. The
one share of Series A Preferred Stock is held by a trustee for the benefit of
the former Alpine shareholders. The former Alpine shareholders were issued an
exchangeable security in one of our Canadian subsidiaries that is exchangeable
for common stock on a one-for-one basis. The one share of Series A Preferred
Stock, pursuant to its terms and subject to certain other contractual provisions
with respect to the acquisition, effectively provides the former Alpine
shareholders, who have not exchanged their exchangeable securities for shares of
our common stock, with the right to vote as a holder of our common stock.
The following is a summary of the key terms and provisions of our equity
securities. You should refer to the applicable provisions of our certificate of
incorporation, as amended, our bylaws, the Delaware General Corporation Law and
the documents we have incorporated by reference for a complete statement of the
terms and rights of our capital stock.
COMMON STOCK
Subject to the rights of the holders of any outstanding shares of our
preferred stock that may be outstanding from time to time and to those rights
provided by law:
- dividends may be declared and paid or set apart for payment upon our
common stock out of any of our assets or funds legally available for the
payment of dividends and may be payable in cash, stock or otherwise;
- the holders of our common stock have the exclusive right to vote for the
election of directors and, except as provided below, on all other matters
requiring stockholder action generally, with each share being entitled to
one vote; and
- upon our voluntary or involuntary liquidation, dissolution or winding up,
our net assets will be distributed pro rata to the holders of our common
stock in accordance with their respective rights and interests to the
exclusion of the holders of any outstanding shares of our preferred
stock.
Although the holders of our common stock are generally entitled to vote for
the approval of amendments to our certificate of incorporation, an amendment to
our certificate of incorporation that would solely modify or change the relative
powers, preferences and rights and the qualifications or restrictions of any
issued shares of any series of our preferred stock then outstanding generally
would not require a vote by our common stockholders.
Holders of our common stock do not have any cumulative voting, redemption
or conversion rights and have no preemptive rights to subscribe for, purchase or
receive any class of our shares or our other securities. Holders of our common
stock have no fixed dividend rights. Dividends may be declared by our board of
directors at its discretion depending on various factors, although no dividends
are anticipated for the foreseeable future.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except
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under certain circumstances, including a breach of the director's duty of
loyalty, acts or omissions of the director not in good faith or which involve
intentional misconduct or a knowing violation of law, the approval of an
improper payment of a dividend or an improper purchase by us of stock or any
transaction from which the director derived an improper personal benefit. Our
certificate of incorporation, as amended, provides that our directors are not
liable to the Company or its stockholders for monetary damages for breach of
their fiduciary duty, subject to the above described exceptions specified by
Delaware law.
As a Delaware corporation, we are subject to Section 203 of the Delaware
General Corporation Law (the "DGCL"). In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with the Company for three years following the time
such person became an interested stockholder unless:
- before such person became an interested stockholder, our board of
directors approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination;
- upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of our voting stock outstanding at the time the transaction
commenced (excluding stock held by our directors who are also officers
and by our employee stock plans, if any, that do not provide employees
with the rights to determine confidentiality whether shares held subject
to the plan will be tendered in a tender or exchange offer); or
- following the transaction in which such person became an interested
stockholder, the business combination is approved by our board of
directors and authorized at a meeting of our stockholders by the
affirmative vote of the holders of two-thirds of our outstanding voting
stock not owned by the interested stockholder. Under Section 203, the
restrictions described above also do not apply to certain business
combinations proposed by an interested stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the Company and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of our directors, if such
extraordinary transaction is approved or not opposed by a majority of our
directors who were directors prior to any person becoming an interested
stockholder during the previous three years or were recommended for
election or elected to succeed such directors by a majority of such
directors.
The Registrar and Transfer Agent for our common stock is American Stock
Transfer and Trust Company, New York, New York.
PREFERRED STOCK
As described above, we issued one share of Series A Preferred Stock to a
trustee on August 10, 2000. The one share entitles that trustee to vote,
essentially as a proxy for the former Alpine shareholders who have not yet
exchanged their exchangeable securities into shares of common stock, the same
number of votes as could be voted if the former Alpine shareholders had
exchanged the exchangeable securities for common stock. As the exchangeable
securities are exchanged for common stock, the number of votes to which the
Series A Preferred Stock is entitled decreases and the voting rights of the
Series A Preferred Stock will be eliminated entirely when there are no more
outstanding exchangeable securities. The Series A Prefered Stock has a $1.00
liquidation preference. The Series A Prefered Stock has no class voting rights
and votes together with the common stock. Except for the specific voting rights
and the $1.00 liquidation preference, the Series A Preferred Stock has no other
rights or preferences.
Our board of directors can, without approval of our stockholders, issue one
or more additional series of preferred stock and determine the number of shares
of each series and the rights, preferences and limitations of each series by
appropriate board resolutions. The following description of the terms of the
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preferred stock sets forth some of the general terms and provisions of our
authorized preferred stock. If we offer additional preferred stock, the terms
may include the following:
- the series, the number of shares offered and the liquidation value of the
preferred stock;
- the price at which the preferred stock will be issued;
- the dividend rate, if any, the dates on which the dividends will be
payable and other terms relating to the payment of dividends on the
preferred stock;
- the liquidation preference of the preferred stock;
- the voting rights of the preferred stock;
- whether the preferred stock is redeemable, optionally or mandatorily, or
subject to a sinking fund, and the terms of any redemption or sinking
fund;
- whether the preferred stock is convertible into, or exchangeable for, any
other securities, and the terms of any conversion; and
- any additional rights, preferences, qualifications, limitations and
restrictions of the preferred stock.
This description of the terms of the preferred stock is not complete and
will be subject to and qualified by the certificate of designation relating to
any applicable series of preferred stock.
Undesignated preferred stock may enable our board of directors to render
more difficult or to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise, and to thereby protect the
continuity of our management. As a result, the issuance of shares of a series of
preferred stock may discourage bids for our common stock or may otherwise
adversely affect the market price of our common stock or any other of our
preferred stock. The issuance of shares of preferred stock may also adversely
affect the rights of the holders of our common stock. For example, any preferred
stock issued may rank prior to our common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
be convertible into shares of common stock or other securities.
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PLAN OF DISTRIBUTION
The debentures and common stock are being registered to permit public
secondary trading of these securities by the selling security holders from time
to time after the date of this prospectus. We have agreed to bear all expenses
in connection with the registration of the debentures and common stock, other
than discounts and commissions. We will not receive any of the proceeds from the
offering of debentures and common stock by the selling security holders or the
issuance of common stock on conversion of the debentures.
The selling security holders (and their respective donees and transferees
for no consideration) may sell all or a portion of the debentures and common
stock beneficially owned by them and offered by this prospectus from time to
time on any exchange on which the securities are listed on terms to be
determined at the time of sale. The selling security holders may also make
private sales directly or through a broker. Alternatively, any of the selling
security holders may from time to time offer the debentures and common stock
beneficially owned by them through dealers or agents, who may receive
compensation in the form of commissions or concessions from the selling security
holders and the purchasers for whom they may act as agent. The aggregate
proceeds to the selling security holders from the sale of the debentures and
common stock offered by them will be the purchase price less discounts and
commissions, if any.
The debentures and common stock may be sold from time to time in one or
more transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Prices will be
determined by the holders of the securities or by agreement between the holders
and dealers who may receive fees or commissions in connection with the sale.
The shares of our common stock offered by this prospectus are issuable on
conversion of the debentures. Holders may convert the debentures into shares of
our common stock at any time before maturity at a conversion rate of 9.997
shares per $1,000 principal amount at maturity. See "Description of Debentures".
We will not receive any cash proceeds on conversion of the debentures.
Our common stock is traded on the New York Stock Exchange under the symbol
"WFT".
Morgan Stanley is making a market in the debentures; however, it is not
obligated to do so and any such market-making may be discontinued at any time
without notice, in the sole discretion of Morgan Stanley. We do not intend to
apply for listing of the debentures on any securities exchange. Accordingly, no
assurance can be given as to the development or liquidity of any trading market
that may develop for the debentures.
The selling security holders and any broker-dealers or agents that
participate with the selling security holders in the distribution of the
securities offered pursuant to this prospectus may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions received by the broker-dealers or agents and any profits realized by
the selling security holders on the resales of the debentures and common stock
purchased by them may be deemed to be underwriting commissions or discount under
the Securities Act.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144, Rule 144A or any other available exemption from
registration under the Securities Act may be sold under Rule 144, Rule 144A or
such other available exemption rather than pursuant to this prospectus. There is
no assurance that any selling security holder will sell any or all of the
debentures and common stock described in this prospectus, and any selling
security holder may transfer, devise or gift such securities by other means not
described in this prospectus.
We originally sold the debentures to Morgan Stanley on June 30, 2000 in a
private placement. We agreed to indemnify and hold Morgan Stanley harmless
against certain liabilities under the Securities Act that could arise in
connection with the sale of the debentures by Morgan Stanley. The registration
rights agreement pursuant to which we filed the registration statement to which
this prospectus relates provides
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for us and the selling security holders to indemnify each other against certain
liabilities arising under the Securities Act.
In the ordinary course of business, Morgan Stanley and certain of its
affiliates have in the past and may in the future engage in investment banking
or other transactions of a financial nature with us and our affiliates,
including providing advisory services to us, for which they have received
customary compensation.
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of material U.S. federal income tax
considerations relating to the purchase, ownership and disposition of the
debentures and common stock by U.S. holders, and certain material U.S. federal
income, withholding and estate tax considerations relating to the purchase,
ownership and disposition of the debentures and common stock by non-U.S.
holders. The discussion is a summary only and does not purport to be a complete
analysis of all the potential tax considerations relating to the purchase,
ownership and disposition of the debentures and common stock. We have based this
summary on the U.S. federal income tax laws, regulations, rulings and judicial
decisions as of the date of this prospectus. These laws may change, possibly
retroactively. There can be no assurance that the IRS will not challenge one or
more of the tax consequences described herein, and we have not obtained, nor do
we intend to obtain, a ruling from the IRS or an opinion of counsel with respect
to the U.S. federal tax consequences of purchasing, owning or disposing of
debentures and common stock.
The discussion does not address all tax consequences that may be important
to you in light of your specific circumstances. For instance, this discussion
does not address the alternative minimum tax provisions of the tax code, or
special rules applicable to certain categories of investors, such as certain
financial institutions, partnerships or other flow-through entities, insurance
companies, tax-exempt organizations, dealers in securities, or persons who hold
debentures or common stock as part of a hedge, conversion or constructive sale
transaction, straddle or other risk reduction transaction, that may be subject
to special rules. This discussion will not apply if you hold the debentures and
any common stock into which the debentures are converted other than as capital
assets. This discussion also does not address the tax consequences arising under
the laws of any foreign, state or local jurisdiction or U.S. estate and gift tax
law as applicable to U.S. holders.
Persons considering the purchase of a debenture should consult their own
tax advisors as to the particular tax consequences to them of acquiring,
holding, converting or otherwise disposing of the debentures and common stock,
including the effect and applicability of state, local or foreign tax laws and
the potential for a tax event to occur.
U.S. HOLDERS
As used in this discussion, the term U.S. holder means a holder of a
debenture or common stock that is:
(1) for United States federal income tax purposes, a citizen or
resident of the United States;
(2) a corporation created or organized in or under the laws of the
United States or of any state or the District of Columbia;
(3) an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
(4) a trust, the administration of which is subject to the primary
supervision of a court within the United States and which has one or more
United States persons with authority to control all substantial decisions,
or if the trust was in existence on August 20, 1996, and has elected to
continue to be treated as a United States trust.
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A non-U.S. holder is any holder of debentures or common stock other than a
U.S. holder.
Original Issue Discount or Interest on the Debentures. The debentures were
originally issued at a substantial discount from their stated redemption price
at maturity. For U.S. federal income tax purposes, the excess of the stated
redemption price at maturity of each debenture over its issue price constitutes
original issue discount. The issue price of the debentures was $551.26 per
$1,000 principal amount.
A U.S. holder of a debenture will be required to include original issue
discount in income as ordinary interest income as it accrues before receipt of
the cash attributable to such income, regardless of such U.S. holder's regular
method of accounting for U.S. federal income tax purposes. A U.S. holder of a
debenture must include in gross income for federal income tax purposes the sum
of the daily portions of original issue discount with respect to the debenture
for each day during the taxable year or portion of a taxable year on which such
U.S. holder holds the debenture. The daily portion is determined by allocating
to each day of each accrual period a pro rata portion of an amount equal to the
adjusted issue price of the debenture at the beginning of the accrual period
multiplied by the yield to maturity of the debenture, determined by compounding
at the close of each accrual period and adjusted for the length of the accrual
period. The adjusted issue price of a debenture at the start of any accrual
period will be the issue price of the debenture increased by the accrued
original issue discount included in the U.S. holder's income for all prior
accrual periods. Under these rules, U.S. holders will have to include in gross
income increasingly greater amounts of original issue discount in each accrual
period. A U.S. holder's original tax basis for determining gain or loss on the
sale or other disposition of a debenture will be increased by any accrued
original issue discount includable in such U.S. holder's gross income.
There are circumstances under which we could make a payment on a debenture
which would affect the yield to maturity of a debenture, including, as described
under "Description of Debentures," in the event of certain defaults. According
to Treasury Regulations, the possibility of a change in the yield will not be
treated as affecting the amount of original issue discount required to be
recognized by a holder, or the timing of such recognition, if the likelihood of
the change, as of the date the debt obligations are issued, is remote. We intend
to take the position that the likelihood of any change in the yield on the
debentures is remote. We also intend to take the position that there is no
alternative payment schedule that would minimize the yield on the debentures to
Weatherford.
The modification of the terms of the debentures by us upon a tax event as
described in "Description of Debentures--Optional Conversion to Semiannual
Coupon Debenture upon a Tax Event," could possibly alter the timing of income
recognition by the holders with respect to the semiannual payments of interest
due after the option exercise date.
We or our paying agent will be required to furnish annually to the IRS and
each U.S. holder information regarding the amount of original issue discount
attributable to that year.
Market Discount. Any principal payment or gain realized by a U.S. holder on
disposition or retirement of a debenture generally will be treated as ordinary
income to the extent that there is accrued market discount on the debenture. The
amount of market discount on a debenture with respect to a U.S. holder will
equal the excess of the "revised issue price" (generally, the sum of the issue
price of a debenture and the aggregate amount of accrued original issue discount
on a debenture) of such debenture over the initial tax basis of such debenture
in the hands of such holder. To the extent a U.S. holder exchanges or converts a
debenture into common stock in a transaction that is otherwise tax free, any
accrued market discount will carry over and generally be recognized upon a
disposition of the common stock. Unless a U.S. holder irrevocably elects to
accrue market discount under a constant-interest method, accrued market discount
is the total market discount multiplied by a fraction, the numerator of which is
the number of days the U.S. holder has held the obligation and the denominator
of which is the number of days from the date the holder acquired the obligation
until its maturity. A U.S. holder may be required to defer a portion of its
interest deductions for the taxable year attributable to any indebtedness
incurred or continued to purchase or carry a debenture purchased with market
discount. Any such deferred interest expense would not exceed the market
discount that accrues during such taxable year and is, in general, allowed as a
deduction not later than the year in which such market discount is includable in
income. If a
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U.S. holder elects to include market discount in income currently as it accrues
on all market discount instruments acquired by the U.S. holder in that taxable
year or thereafter, (i) the interest deferral described above will not apply and
(ii) market discount will not carry over into common stock as described above.
Any such election is terminable only with the consent of the IRS and applies to
all market discount bonds acquired during or after the year for which it is
made.
Acquisition Premium. A U.S. holder will be considered to have "acquisition
premium" to the extent the U.S. holder's initial tax basis in a debenture is
greater than the adjusted issue price of such debenture but less than the stated
redemption price at maturity of such debenture. Acquisition premium will reduce
the amount of original issue discount received on such debenture that the U.S.
holder is required to include in income.
Sale, Exchange or Retirement of the Debentures. Upon the sale, exchange or
retirement of a debenture, including as a result of a tender upon the occurrence
of a Fundamental Change, and, except as discussed in the next paragraph, on a
purchase date a U.S. holder will generally recognize gain or loss equal to the
difference between the sale or redemption proceeds and the U.S. holder's
adjusted tax basis in the debenture.
A U.S. holder's adjusted tax basis in a debenture will generally equal the
holder's cost of the debenture increased by any original issue discount and
market discount previously included in income by such holder with respect to
such debenture and decreased by any payments received thereon. Except to the
extent of any accrued market discount not previously included in income, gain or
loss recognized on the sale, exchange or retirement of a debenture will
generally be capital gain or loss and will be long-term capital gain or loss if
the debenture has been held for more than one year. Prospective investors should
consult their tax advisers regarding the treatment of capital gains (which may
be taxed at lower rates than ordinary income for certain taxpayers who are
individuals) and losses (the deductibility of which is subject to limitations).
If a U.S. holder elects to exercise its option to tender the debentures to
us on a purchase date and we issue common stock in satisfaction of all or part
of the purchase price, the exchange of the debentures for common stock should
qualify as a reorganization for federal income tax purposes. If the purchase
price is paid solely in common stock, except in the case of a fractional share
described below and except to the extent the common stock is considered
attributable to original issue discount not previously included in income (which
is taxed as ordinary income), a U.S. holder should not recognize any gain or
loss realized. If the purchase price is paid in a combination of common stock
and cash, other than cash received in lieu of a fractional share, gain, but not
loss, realized by the U.S. holder should be recognized, but only to the extent
of the cash received. A U.S. holder's initial tax basis in the common stock
received should be equal to such U.S. holder's adjusted tax basis in the
debenture tendered (except for any portion allocable to a fractional share of
common stock), increased by the amount of gain recognized, other than with
respect to a fractional share, and decreased by the amount of any cash received,
except cash received in lieu of a fractional share. The holding period for
common stock received in the exchange should include the holding period of the
debenture tendered to us in exchange for common stock except that the holding
period of shares attributable to original issue discount may commence on the day
following the date of exchange. The receipt of cash in lieu of a fractional
share of common stock should generally result in capital gain or loss (except to
the extent of any accrued market discount not previously included in income that
is allocable to such fractional share), measured by the difference between the
amount of cash received for the fractional share and the U.S. holder's tax basis
in the fractional share interest.
Conversion of Debentures. A U.S. holder's conversion of a debenture into
common stock will generally not be a taxable event, except with respect to cash
received in lieu of a fractional share and except to the extent the common stock
is considered attributable to original issue discount not previously included in
income (which is taxed as ordinary income). A U.S. holder's basis in the common
stock received on conversion of a debenture will be the same as the U.S.
holder's basis in the debenture at the time of conversion, exclusive of any tax
basis allocable to a fractional share, and the holding period for the common
stock received on conversion will include the holding period of the debenture
converted except
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that the holding period of shares attributable to original issue discount may
commence on the day following the date of exchange. The receipt of cash in lieu
of a fractional share of common stock should generally result in capital gain or
loss, measured by the difference between the cash received in lieu of the
fractional share interest and the portion of the U.S. holder's tax basis in the
debenture that is allocable to the fractional share interest, except to the
extent allocable to accrued market discount not previously taken into income
that is allocable to such fractional share.
Dividends; Adjustment of Conversion Price. Dividends, if any, paid on the
common stock generally will be includable in the income of a U.S. holder of
common stock as ordinary income to the extent of our current and accumulated
earnings and profits as determined for U.S. federal income tax purposes. If at
any time we make a distribution of property to shareholders that would be
taxable to such shareholders as a dividend for federal income tax purposes and,
pursuant to the anti-dilution provisions of the indenture, the conversion rate
of the debentures is increased, such increase may be deemed to be the payment of
a taxable dividend to U.S. holders of debentures. If the conversion rate is
increased at our discretion or in certain other circumstances, or if we
implement a shareholder rights plan, such increase or implementation also may be
deemed to be the payment of a taxable dividend to U.S. holders of debentures.
The absence of such an adjustment to the conversion rate also may, in certain
circumstances, be treated as a taxable dividend to U.S. holders of common stock.
Certain Modifications or Assumptions. The terms of the debentures may be
modified upon the consent of a specified percentage of holders and, in some
instances, without consent of the holders. In addition, the debentures may be
assumed upon certain transactions in which we are involved. The modification or
assumption of a debenture could, in certain instances, give rise to a deemed
exchange of a debenture for a new debenture for U.S. federal income tax
purposes. If an exchange is deemed to occur by reason of a modification or
assumption, the amount and timing of taxable income required to be recognized by
a U.S. holder with respect to a debenture could be affected.
Sale of Common Stock. Upon the sale, exchange or other disposition of
common stock, a U.S. holder generally will recognize capital gain or capital
loss (except to the extent of ordinary income in respect of any accrued market
discount not previously included in income that has been carried over to the
common stock, as described in "-- Market Discount" above) equal to the
difference between the amount realized on such sale or exchange and the holder's
adjusted tax basis in such common stock. Such capital gain or loss will be
long-term capital gain or loss if the cumulative holding period of the common
stock, including the holding period of a debenture converted to such common
stock as described above, is more than one year. Prospective investors should
consult their tax advisers regarding the treatment of capital gains (which may
be taxed at lower rates than ordinary income for certain taxpayers who are
individuals) and losses (the deductibility of which is subject to limitations).
See "--Sale, Exchange or Retirement of the Debentures."
NON-U.S. HOLDERS
The following discussion is a summary of the principal U.S. federal income
and estate tax consequences resulting from the ownership of the debentures or
common stock by non-U.S. holders.
Withholding Tax on Payments of Principal and Original Issue Discount on
Debentures. Except as described below with respect to effectively connected
original issue discount, the payment of principal, including any original issue
discount included therein, of a debenture by us or any of our paying agents to
any non-U.S. holder will not be subject to U.S. federal income tax or
withholding tax, provided that in the case of payment of cash in respect of
original issue discount (i) the non-U.S. holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of our stock, (ii) the non-U.S. holder is not a controlled foreign corporation
that is related to us within the meaning of the U.S. federal income tax code,
and (iii) either (A) the beneficial owner of the debenture certifies to the
applicable payor or its agent, under penalties of perjury, that it is not a U.S.
holder and provides its name and address on United States Treasury Form W-8BEN
or a suitable substitute or successor form, or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the
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ordinary course of its trade or business, and holds the debenture certifies
under penalties of perjury that such a Form W-8BEN, or suitable substitute form,
has been received from the beneficial owner by it or by a financial institution
between it and the beneficial owner and furnishes the payor with a copy thereof.
Except to the extent otherwise provided under an applicable tax treaty, a
non-U.S. holder generally will be subject to U.S. federal income tax in the same
manner as a U.S. holder with respect to original issue discount on a debenture
if such original issue discount is effectively connected with a U.S. trade or
business conducted by the non-U.S. holder. Effectively connected original issue
discount received by a corporate non-U.S. holder may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate,
or, if applicable, a lower treaty rate. Such effectively connected original
issue discount will not be subject to withholding tax if the holder delivers an
IRS Form W-8ECI to the payor.
Dividends. Dividends, if any, paid on the common stock to a non-U.S.
holder, and, after December 31, 2000, any deemed dividends resulting from an
adjustment to the conversion rate, see "U.S. Holders--Dividends; Adjustment of
Conversion Price" above, generally will be subject to a 30% U.S. federal
withholding tax unless such non-U.S. holders is eligible for a lower rate under
an applicable income tax treaty. Currently, for purposes of determining whether
tax is to be withheld at the 30% rate or at a reduced treaty rate, we will
ordinarily presume that dividends paid to an address in a foreign country are
paid to a resident of such country absent knowledge that such presumption is not
warranted. A non-U.S. holder is required to satisfy certain certification
requirements to claim treaty benefits. Except as otherwise provided under an
applicable tax treaty, a non-U.S. holder will be taxed in the same manner as a
U.S. holder on dividends paid, or deemed paid, that: (1) are effectively
connected with the conduct of a U.S. trade or business by such non-U.S. holder
or (2) if a tax treaty applies, are attributable to a U.S. permanent
establishment of the non-U.S. holder. Such dividends generally are not subject
to the 30% withholding rate, provided that the non-U.S. holder timely files the
appropriate form with the paying agent. If such dividends are received by a
non-U.S. holder that is a foreign corporation, the non-U.S. holder may also be
required to pay U.S. branch profits tax on such effectively connected income at
a 30% rate or such lower rate as may be specified by an applicable income tax
treaty.
Gain on Disposition of the Debentures and Common Stock. A non-U.S. holder
generally will not be required to pay U.S. federal income tax on gain realized
on the sale, exchange or redemption of a debenture, including the exchange of a
debenture for common stock, or the sale or exchange of common stock unless:
(1) in the case of an individual non-U.S. holder, such holder is
present in the United States for 183 days or more in the year of such sale,
exchange or redemption and either (A) has a tax home in the United States
and certain other requirements are met, or (B) the gain from the
disposition is attributable to an office or other fixed place of business
in the United States;
(2) the non-U.S. holder is required to pay tax pursuant to the
provisions of U.S. tax law applicable to certain U.S. expatriates;
(3) the gain is effectively connected with the conduct of a U.S. trade
or business of or, if a tax treaty applies, is attributable to a U.S.
permanent establishment of, the non-U.S. holder; or
(4) we are or have been during certain periods a "U.S. real property
holding corporation" for U.S. federal income tax purposes.
However, in some instances you may be required to establish an exemption from
United States federal income and withholding tax.
If we are or have been a U.S. real property holding corporation, a non-U.S.
holder will generally not be subject to U.S. federal income tax on gain
recognized on a sale or other disposition of our common stock provided that:
(1) the non-U.S. holder does not hold, and has not held during certain
periods, directly or indirectly, more than 5% of our outstanding common
stock, and
34
37
(2) our common stock is and continues to be traded on an established
securities market for U.S. federal income tax purposes.
We believe that our common stock will be traded on an established
securities market for this purpose in any quarter during which it is listed on
the New York Stock Exchange.
If we are or have been during certain periods a U.S. real property holding
corporation and the above exception does not apply, a non-U.S. holder will be
subject to U.S. federal income tax with respect to gain realized on any sale or
other disposition of our common stock as well as to a withholding tax, generally
at a rate of 10% of the proceeds. Any amount withheld pursuant to a withholding
tax will be creditable against a non-U.S. holder's U.S. federal income tax
liability.
U.S. Federal Estate Tax. A debenture held by an individual who at the time
of death is not a citizen or resident of the United States, as specifically
defined for U.S. federal estate tax purposes, will not be included in such
holder's gross estate for U.S. federal estate tax purposes if the individual did
not actually or constructively own 10% or more of the total combined voting
power of all classes of our stock and, at the time of the individual's death,
payments with respect to such debenture would not have been effectively
connected with the conduct by such individual of a trade or business in the
United States. Common stock held by an individual who at the time of death is
not a citizen or resident of the United States, as specifically defined for U.S.
federal estate tax purposes, will be included in such individual's gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
otherwise applies.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders. Information reporting will apply to original issue discount
and any payments of interest or dividends on or the proceeds of the sale or
other disposition of the debentures or shares of common stock with respect to
certain noncorporate U.S. holders, and backup withholding at a rate of 31% may
apply to such payments unless the recipient of such payment supplies a taxpayer
identification number, certified under penalties of perjury, as well as certain
other information or otherwise establishes an exemption from backup withholding.
Any amount withheld under the backup withholding rules is allowable as a credit
against the U.S. holder's federal income tax, provided that the required
information is provided to the IRS on a timely basis.
Non-U.S. Holders. We must report annually to the IRS and to each non-U.S.
holder the amount of any dividends paid to, and the tax withheld with respect
to, such non-U.S. holder, regardless of whether any tax was actually withheld.
Copies of these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax authorities of the
country in which the non-U.S. holder resides.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of principal, including cash payments in
respect of original issue discount, on the debentures by us or our agent to a
non-U.S. holder if the non-U.S. holder certifies as to its non-U.S. holder
status under penalties of perjury or otherwise establishes an exemption,
provided that neither we nor our agents have actual knowledge that the holder is
a U.S. person or that the conditions of any other exemptions are not in fact
satisfied. The payment of the proceeds on the disposition of debentures or
shares of common stock to or through the United States office of a United States
or foreign broker will be subject to information reporting and backup
withholding unless the owner provides the certification described above or
otherwise establishes an exemption. The proceeds of the disposition by a
non-U.S. holder of debentures or shares of common stock to or through a foreign
office of a broker will not be subject to backup withholding or information
reporting. However, if such broker is a U.S. person, a controlled foreign
corporation for U.S. tax purposes, or a foreign person, 50% or more of whose
gross income from all sources for certain periods is from activities that are
effectively connected with a U.S. trade or business, or, in the case of payments
made after December 31, 2000, a foreign partnership with certain connections to
the United States, information reporting requirements will apply unless such
broker has documentary evidence in its
35
38
files of the holder's non-U.S. status and has no actual knowledge to the
contrary or unless the holder otherwise establishes an exemption.
The Treasury Department recently promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general,
these regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. In addition, these
regulations impose more stringent conditions on the ability of financial
intermediaries acting for a non-U.S. holder to provide certifications on behalf
of the holder, which may include entering into an agreement with the IRS to
audit certain documentation with respect to such certifications. These
regulations are generally effective for payments made after December 31, 2000,
subject to certain transition rules. You should consult your own tax advisor to
determine the effects of the application of these regulations to your particular
circumstances.
LEGAL MATTERS
Certain legal matters with respect to the validity of the debentures and
the common stock have been passed upon for us by Fulbright & Jaworski L.L.P.,
Houston, Texas.
EXPERTS
The consolidated financial statements and schedule of Weatherford
International, Inc. and subsidiaries as of December 31, 1999 and 1998 and for
each of the three years in the period ended December 31, 1999 included in
Weatherford International, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1999, incorporated by reference in this prospectus and elsewhere in
the registration statement, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein by reference in reliance upon the authority
of said firm as experts in accounting and auditing in giving said report.
Ernst & Young LLP, independent auditors, have audited Dailey International
Inc.'s consolidated balance sheet as of December 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year ended December 31, 1998, the eight month period ended
December 31, 1997 and for the year ended April 30, 1997, as set forth in their
report, which is incorporated by reference in this prospectus and elsewhere in
the registration statement. These financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC pursuant to the Securities Exchange Act of 1934. You
may inspect and copy those reports, proxy statements and other information at
the Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and the Regional Offices of the SEC at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, New York, New York 10048. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
The SEC maintains a site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding us. You can also inspect and copy those reports, proxy and information
statements and other information at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, on which our common stock is
listed.
We have filed with the SEC a registration statement on Form S-3 covering
the securities offered by this prospectus. This prospectus is only a part of the
registration statement and does not contain all of the information in the
registration statement. For further information on us and the securities being
offered, please review the registration statement and the exhibits that are
filed with it, as the same may be
36
39
amended or supplemented from time to time. Statements made in this prospectus
that describe documents may not necessarily be complete. We recommend that you
review the documents that we have filed with the registration statement to
obtain a more complete understanding of those documents.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information in this prospectus. This prospectus
incorporates by reference the documents set forth below that we previously filed
with the SEC. These documents contain important information about us.
The following documents that we have filed with the SEC (File No.1-13086)
are incorporated by reference into this prospectus:
- Our Annual Report on Form 10-K for the year ended December 31, 1999;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
- Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000;
- Our Current Report on Form 8-K dated January 31, 2000;
- Our Current Report on Form 8-K dated February 11, 2000;
- Our Current Report on Form 8-K dated March 6, 2000;
- Our Current Report on Form 8-K dated April 17, 2000;
- Our Current Report on Form 8-K dated June 19, 2000;
- Our Current Report on Form 8-K dated July 27, 2000; and
- The description of our common stock contained in our Registration
Statement on Form 8-A (filed May 19, 1994) and as amended by our
Registration Statement on Form S-3 that includes this prospectus,
including any amendment or report filed for the purpose of updating such
description.
All documents that we file pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of this prospectus and
prior to the termination of the offering will be deemed to be incorporated in
this prospectus by reference and will be a part of this prospectus from the date
of the filing of the document. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this prospectus will
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference in this prospectus modifies or supersedes that statement. Any
statement that is modified or superseded will not constitute a part of this
prospectus, except as modified or superseded.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus has been delivered, upon written or
oral request, a copy of any or all of the documents incorporated by reference in
this prospectus, other than the exhibits to those documents, unless the exhibits
are specifically incorporated by reference into the information that this
prospectus incorporates. You should direct a request for copies to us at 515
Post Oak Boulevard, Suite 600, Houston, Texas 77027, Attention: Secretary
(telephone number: (713) 693-4000). If you have any other questions regarding
us, please contact our Investor Relations Department in writing (515 Post Oak
Blvd., Suite 600, Houston, Texas 77027) or by telephone ((713) 693-4000) or
visit our website at www.weatherford.com.
37
40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the distribution of the securities covered by this Registration Statement. We
will bear all of these expenses.
Registration fee under the Securities Act................... $132,435
Exchange Listing Fees *..................................... $ 1,500
Printing and engraving expenses *........................... $ 10,000
Legal fees and expenses *................................... $ 20,000
Accounting fees and expenses *.............................. $ 10,000
Miscellaneous *............................................. $ 6,065
--------
Total................................................ $180,000
========
- ---------------
* Estimated solely for the purpose of this Item.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment of
a dividend or an improper purchase by the corporation of stock or any
transaction from which the director derived an improper personal benefit. The
Registrant's Amended and Restated Certificate of Incorporation, as amended,
provides that the Registrant's directors are not liable to the Registrant or its
stockholders for monetary damages for breach of their fiduciary duty, subject to
the described exceptions specified by Delaware law.
Section 145 of the Delaware General Corporation Law grants to the
Registrant the power to indemnify each officer and director of the Registrant
against liabilities and expenses incurred by reason of the fact that he is or
was an officer or director of the Registrant if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Registrant and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Amended and Restated
By-laws of the Registrant provide for indemnification of each officer and
director of the Registrant to the fullest extent permitted by Delaware law.
David J. Butters and Robert B. Millard, employees of Lehman Brothers Inc.
("Lehman Brothers"), constitute two of the eight members of the Board of
Directors of the Registrant. Under the restated certificates of incorporation,
as amended to date, of Lehman Brothers and its parent, Lehman Brothers Holdings
Inc. ("Holdings"), both Delaware corporations, Messrs. Butters and Millard, in
their capacity as directors of the Registrant, are to be indemnified by Lehman
Brothers and Holdings to the fullest extent permitted by Delaware law. Messrs.
Butters and Millard are serving as directors of the Registrant at the request of
Lehman Brothers and Holdings.
Section 145 of the Delaware General Corporation Law also empowers the
Registrant to purchase and maintain insurance on behalf of any person who is or
was an officer or director of the Registrant against liability asserted against
or incurred by him in any such capacity, whether or not the Registrant would
have the power to indemnify such officer or director against such liability
under the provisions of Section 145. The Registrant has purchased and maintains
a directors' and officers' liability policy for such purposes. Messrs. Butters
and Millard are insured against certain liabilities which they may incur in
their capacity as directors pursuant to insurance maintained by Holdings.
II-1
41
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant, as amended (incorporated by reference to
Exhibit No. 3.1 to Form 10-K (File 1-13086) filed March
30, 1999)
3.2 -- By-laws of the Registrant, as amended (incorporated by
reference to Exhibit No. 3.2 to Form 8-K (File 1-3086)
filed June 2, 1998)
3.3 -- Certificate of Designation of the Registrant's Series A
Preferred Stock, par value $1.00 per share (incorporated
by reference to Exhibit 3.3 to Registration Statement on
Form S-3 (Reg. No. 333-41344))
4.1 -- See Exhibits numbered 3.1 and 3.2 for provisions of the
Amended and Restated Certificate of Incorporation and
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, 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 Form 8-K (File 1-13086)
filed June 16, 1998)
4.3 -- Indenture dated March 15, 1994, among Energy Ventures,
Inc., as Issuer, the Subsidiary Guarantors party thereto,
as Guarantors, and Chemical Bank, as Trustee
(incorporated by reference to Form 8-K (File 1-13086)
filed April 5, 1994)
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
Inc. (incorporated by reference to Form 8-K (File
1-13086) filed April 5, 1994)
4.5 -- First Supplemental Indenture by and among Energy
Ventures, Inc., Prideco and Chemical Bank, as trustee,
dated June 30, 1995 (incorporated by reference to Exhibit
No. 4.4 to Registration Statement on Form S-3 (Reg. No.
33-61933))
4.6 -- Second Supplemental Indenture by and among Energy
Ventures, Inc., EVI Arrow, Inc., EVI Watson, Inc. and The
Chase Manhattan Bank, as trustee, dated effective as of
December 6, 1996 (incorporated by reference to Exhibit
4.6 to Form 10-K (File 1-13086) filed March 20, 1997)
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K (File 1-13086)
filed October 27, 1997)
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K
(File 1-13086) filed October 27, 1997)
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K
(File 1-13086) filed December 31, 1997)
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to Registration Statement
on Form S-3 (Reg. No 333-45207))
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including Form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K (File 1-13086) filed
November 5, 1997)
II-2
42
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Current Report on Form 8-K (File 1-13086) filed November
5, 1997)
4.13 -- 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)
4.14 -- First Supplemental Indenture dated and effective as of
May 27, 1998, between EVI Weatherford, Inc., the
successor by merger to 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) filed
June 2, 1996)
4.15 -- 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)
4.16 -- Participation Agreement dated December 8, 1998, by and
among Weatherford Enterra Compression Company, L.P., ABN
AMRO Bank N.V., as Administrative Agent, Arranger and
Syndication Agent, Chase Bank of Texas, National
Association, and the Lessors listed on Schedule I thereto
(incorporated by reference to Exhibit 4.16 to Amendment
No. 2 to Registration Statement on Form S-4 (Reg. No.
333-65663))
4.17 -- Master Lease Intended as Security dated as of December 8,
1998, between Weatherford Enterra Compression Company,
L.P., as Lessee, and ABN AMRO Bank N.V., as
Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.17 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No 333-65663))
4.18 -- Guaranty Agreement dated as of December 8, 1998, between
Weatherford International, Inc. and ABN AMRO Bank N.V.,
as Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.18 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No 333-65663))
4.19 -- Second Supplemental Indenture dated as of June 30, 2000
between Weatherford International, Inc. and The Bank of
New York, as successor trustee to Bank of Montreal Trust
Company (including form of Debenture) (incorporated by
reference to Exhibit 4.1 to Current Report on Form 8-K
(File No. 1-13086) filed July 10, 2000)
4.20 -- Registration Rights Agreement dated June 30, 2000 between
Weatherford International, Inc. and Morgan Stanley & Co.
Incorporated (incorporated by reference to Exhibit 4.2 to
Current Report on Form 8-K (File No. 1-13086) filed July
10, 2000)
*5.1 -- Opinion of Fulbright & Jaworski L.L.P. regarding legality
*12.1 -- Statement of Computation of Ratios
*23.1 -- Consent of Arthur Andersen LLP, with respect to
Weatherford International, Inc.
*23.2 -- Consent of Ernst & Young LLP, with respect to Dailey
International Inc.
*23.3 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1)
*24.1 -- Powers of Attorney from certain members of the Board of
Directors of the Registrant (contained on pages II-6 to
II-7)
*25.1 -- Statement of Eligibility of Trustee
- ---------------
* Filed herewith.
II-3
43
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant
has not filed with this Registration Statement certain instruments defining the
rights of holders of long-term debt of the Registrant and its subsidiaries
because the total amount of securities authorized under any of such instruments
does not exceed 10% of the total assets of the Registrant and its subsidiaries
on a consolidated basis. The Registrant agrees to furnish a copy of any such
agreement to the Commission upon request.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement.
Provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Securities Act or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful
II-4
44
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-5
45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Houston, State of Texas, on August 18, 2000.
WEATHERFORD INTERNATIONAL, INC.
By: /s/ BERNARD J. DUROC-DANNER
-------------------------------------
Bernard J. Duroc-Danner
President, Chief Executive Officer,
Chairman of the Board and Director
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Bernard J. Duroc-Danner and Curtis W. Huff, or
any of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same and all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent, and any of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ BERNARD J. DUROC-DANNER President, Chief Executive August 18, 2000
- ----------------------------------------------------- Officer, Chairman of the
Bernard J. Duroc-Danner Board and Director
(principal executive officer)
/s/ CURTIS W. HUFF Executive Vice President and August 18, 2000
- ----------------------------------------------------- Chief Financial Officer
Curtis W. Huff (principal financial officer)
/s/ LISA W. RODRIGUEZ Vice President-Accounting August 18, 2000
- ----------------------------------------------------- and Controller
Lisa W. Rodriguez (principal accounting officer)
/s/ DAVID J. BUTTERS Director August 18, 2000
- -----------------------------------------------------
David J. Butters
/s/ PHILIP BURGUIERES Director August 18, 2000
- -----------------------------------------------------
Philip Burguieres
II-6
46
SIGNATURE TITLE DATE
--------- ----- ----
Director
- -----------------------------------------------------
Sheldon B. Lubar
/s/ WILLIAM E. MACAULAY Director August 18, 2000
- -----------------------------------------------------
William E. Macaulay
/s/ ROBERT B. MILLARD Director August 18, 2000
- -----------------------------------------------------
Robert B. Millard
/s/ ROBERT K. MOSES, JR. Director August 18, 2000
- -----------------------------------------------------
Robert K. Moses, Jr.
/s/ ROBERT A. RAYNE Director August 18, 2000
- -----------------------------------------------------
Robert A. Rayne
II-7
47
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant, as amended (incorporated by reference to
Exhibit No. 3.1 to Form 10-K (File 1-13086) filed March
30, 1999)
3.2 -- By-laws of the Registrant, as amended (incorporated by
reference to Exhibit No. 3.2 to Form 8-K (File 1-3086)
filed June 2, 1998)
3.3 -- Certificate of Designation of the Registrant's Series A
Preferred Stock, par value $1.00 per share (incorporated
by reference to Exhibit 3.3 to Registration Statement on
Form S-3 (Reg. No. 333-41344))
4.1 -- See Exhibits numbered 3.1 and 3.2 for provisions of the
Amended and Restated Certificate of Incorporation and
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, 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 Form 8-K (File 1-13086)
filed June 16, 1998)
4.3 -- Indenture dated March 15, 1994, among Energy Ventures,
Inc., as Issuer, the Subsidiary Guarantors party thereto,
as Guarantors, and Chemical Bank, as Trustee
(incorporated by reference to Form 8-K (File 1-13086)
filed April 5, 1994)
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
Inc. (incorporated by reference to Form 8-K (File
1-13086) filed April 5, 1994)
4.5 -- First Supplemental Indenture by and among Energy
Ventures, Inc., Prideco and Chemical Bank, as trustee,
dated June 30, 1995 (incorporated by reference to Exhibit
No. 4.4 to Registration Statement on Form S-3 (Reg. No.
33-61933))
4.6 -- Second Supplemental Indenture by and among Energy
Ventures, Inc., EVI Arrow, Inc., EVI Watson, Inc. and The
Chase Manhattan Bank, as trustee, dated effective as of
December 6, 1996 (incorporated by reference to Exhibit
4.6 to Form 10-K (File 1-13086) filed March 20, 1997)
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K (File 1-13086)
filed October 27, 1997)
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K
(File 1-13086) filed October 27, 1997)
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K
(File 1-13086) filed December 31, 1997)
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to Registration Statement
on Form S-3 (Reg. No 333-45207))
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including Form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K (File 1-13086) filed
November 5, 1997)
48
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Current Report on Form 8-K (File 1-13086) filed November
5, 1997)
4.13 -- 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)
4.14 -- First Supplemental Indenture dated and effective as of
May 27, 1998, between EVI Weatherford, Inc., the
successor by merger to 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) filed
June 2, 1996)
4.15 -- 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)
4.16 -- Participation Agreement dated December 8, 1998, by and
among Weatherford Enterra Compression Company, L.P., ABN
AMRO Bank N.V., as Administrative Agent, Arranger and
Syndication Agent, Chase Bank of Texas, National
Association, and the Lessors listed on Schedule I thereto
(incorporated by reference to Exhibit 4.16 to Amendment
No. 2 to Registration Statement on Form S-4 (Reg. No.
333-65663))
4.17 -- Master Lease Intended as Security dated as of December 8,
1998, between Weatherford Enterra Compression Company,
L.P., as Lessee, and ABN AMRO Bank N.V., as
Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.17 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No 333-65663))
4.18 -- Guaranty Agreement dated as of December 8, 1998, between
Weatherford International, Inc. and ABN AMRO Bank N.V.,
as Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.18 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No 333-65663))
4.19 -- Second Supplemental Indenture dated as of June 30, 2000
between Weatherford International, Inc. and The Bank of
New York, as successor trustee to Bank of Montreal Trust
Company (including form of Debenture) (incorporated by
reference to Exhibit 4.1 to Current Report on Form 8-K
(File No. 1-13086) filed July 10, 2000)
4.20 -- Registration Rights Agreement dated June 30, 2000 between
Weatherford International, Inc. and Morgan Stanley & Co.
Incorporated (incorporated by reference to Exhibit 4.2 to
Current Report on Form 8-K (File No. 1-13086) filed July
10, 2000)
*5.1 -- Opinion of Fulbright & Jaworski L.L.P. regarding legality
*12.1 -- Statement of Computation of Ratios
*23.1 -- Consent of Arthur Andersen LLP, with respect to
Weatherford International, Inc.
*23.2 -- Consent of Ernst & Young LLP, with respect to Dailey
International Inc.
*23.3 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1)
*24.1 -- Powers of Attorney from certain members of the Board of
Directors of the Registrant (contained on pages II-6 to
II-7)
*25.1 -- Statement of Eligibility of Trustee
- ---------------
* Filed herewith.