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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): August 16, 1999
WEATHERFORD INTERNATIONAL, INC.
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(Exact name of registrant as specified in charter)
Delaware 1-13086 04-2515019
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(State of Incorporation) (Commission (I.R.S. Employer
File No.) Identification No.)
515 Post Oak Blvd., Suite 600, Houston, Texas 77027
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(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 693-4000
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Exhibit Index Appears on Page 8
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ITEM 5. OTHER EVENTS.
DAILEY ACQUISITION
We previously announced that on May 21, 1999, we entered into an agreement
to acquire Dailey International Inc. for total consideration of approximately
$195.0 million. This current report on Form 8-K contains pro forma financial
information for us and Dailey. For additional pro forma financial information
for us and Dailey, you should read our current report on Form 8-K filed on May
26, 1999.
DAILEY FINANCIAL STATEMENTS
The financial statements of Dailey for the periods specified in Rule
3-05(b) of Regulation S-X are filed as Exhibit 99.1 and are incorporated herein
by reference.
PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following summary unaudited pro forma condensed consolidated financial
data of Weatherford is based on the historical financial data of Weatherford and
the historical financial data of Dailey. The Unaudited Pro Forma Condensed
Consolidated Statement of Operations for the six months ended June 30, 1999,
gives effect to Weatherford's proposed acquisition of Dailey as if the
transaction had occurred on January 1, 1999. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet gives effect to the proposed acquisition as if this
transaction had occurred on June 30, 1999.
The pro forma information set forth below is not necessarily indicative of
the results that actually would have been achieved had such transaction been
consummated as of the aforementioned dates, or that may be achieved in the
future. In particular, the pro forma financial statements do not give effect to
any cost savings or additional synergies that may be realized by us as a result
of the proposed acquisition. We currently expect to realize around $20 million
in annual cost savings and $8 million in additional annual margins from the
acquisition. These benefits are not reflected in the pro forma adjustments and
are subject to various uncertainties described below under "Forward Looking
Statements". As a result, while we currently expect to realize these benefits
from the acquisition, there can be no assurance that these benefits will be
fully realized.
All other acquisitions by Weatherford are not material individually or in
the aggregate; therefore, pro forma information is not reflected. Because this
pro forma information is a summary, it does not contain all information that may
be important to you. You should also read the following:
o Weatherford's Management's Discussion and Analysis of Financial
Condition and Results of Operations and its financial statements and
related notes thereto contained in its Annual Report on Form 10-K for
the year ended December 31, 1998.
o Weatherford's Quarterly Report on Form 10-Q for the period ended March
31, 1999.
o Weatherford's Quarterly Report on Form 10-Q for the period ended June
30, 1999.
o Weatherford's Current Report on Form 8-K dated May 21, 1999.
o Dailey's Management's Discussion and Analysis of Financial Condition
and Results of Operations and its financial statements and related
notes thereto contained in its Annual Report on Form 10-K for the year
ended December 31, 1998.
o Dailey's Quarterly Report on Form 10-Q for the period ended March 31,
1999.
o Dailey's Quarterly Report on Form 10-Q for the period ended June 30,
1999.
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WEATHERFORD INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(IN THOUSANDS)
WEATHERFORD DAILEY PRO FORMA WEATHERFORD
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
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ASSETS
Current assets:
Cash and cash equivalents .................... $ 29,952 $ 12,599 $ (11,042)(a) $ 31,509
Accounts receivable, net ..................... 368,157 27,718 -- 395,875
Inventories .................................. 499,951 -- -- 499,951
Other current assets ......................... 148,215 7,369 (37,652)(b) 117,932
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Total current assets ....................... 1,046,275 47,686 (48,694) 1,045,267
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Property, plant and equipment, net .............. 1,016,032 144,719 (11,376)(c) 1,149,375
Goodwill, net ................................... 867,710 21,693 11,174 (d) 900,577
Other assets .................................... 111,082 23,481 (7,425)(e) 127,138
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$ 3,041,099 $ 237,579 $ (56,321) $ 3,222,357
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt .................. $ 256,043 $ 443 $ -- $ 256,486
Accounts payable ............................. 110,894 10,442 -- 121,336
Other accrued liabilities .................... 181,232 4,081 7,893 (f)(g) 193,206
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Total current liabilities .................. 548,169 14,966 7,893 571,028
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Long-term debt .................................. 228,457 275,068 (275,000)(e) 228,525
Minority interests .............................. 194,042 -- -- 194,042
Deferred income taxes and other ................. 165,368 14,265 (7,409)(f) 172,224
5% Convertible Subordinated Preferred
Equivalent Debentures ........................ 402,500 -- -- 402,500
Stockholders' equity:
Common stock ................................. 108,484 106 4,245 (h)(i) 112,835
Capital in excess of par ..................... 1,137,333 53,117 94,007 (h)(i) 1,284,457
Treasury stock, at cost ...................... (269,257) (4,061) 4,061 (i) (269,257)
Retained earnings (deficit) .................. 607,703 (114,000) 114,000 (i) 607,703
Accumulated other comprehensive loss ......... (81,700) (1,882) 1,882 (i) (81,700)
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Total stockholders' equity ................. 1,502,563 (66,720) 218,195 1,654,038
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$ 3,041,099 $ 237,579 $ (56,321) $ 3,222,357
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WEATHERFORD INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
WEATHERFORD DAILEY PRO FORMA WEATHERFORD
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
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Revenues .................................... $ 696,929 $ 51,380 $ (704)(j) $ 747,605
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Cost and Expenses:
Cost of sales ............................ 518,441 47,189 (1,314)(j)(k) 564,316
Selling, general and administrative ...... 155,000 16,726 140 (l) 171,866
Reorganization costs ..................... -- 2,891 -- 2,891
Equity in earnings of unconsolidated
affiliates ............................. (890) (634) -- (1,524)
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672,551 66,172 (1,174) 737,549
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Operating income (loss) ..................... 24,378 (14,792) 470 10,056
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Other income (expense):
Interest expense ......................... (26,287) (11,388) 11,105 (m) (26,570)
Interest income .......................... 2,127 902 (1,122)(n) 1,907
Other income, net ........................ 2,422 (195) -- 2,227
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(21,738) (10,681) 9,983 (22,436)
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Income (loss) before income taxes and
minority interest.......................... 2,640 (25,473) 10,453 (12,380)
Provision for income taxes .................. 796 873 3,659 (o) 5,328
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Income (loss) before minority interest ...... 1,844 (26,346) 6,794 (17,708)
Minority interest expense, net of taxes ..... 1,326 -- -- 1,326
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Net income (loss) ........................... $ 518 $ (26,346) $ 6,794 $ (19,034)
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Net income (loss) per share:
Basic .................................... $ 0.01 $ (0.19)
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Diluted .................................. $ 0.01 $ (0.19)
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Weighted average shares outstanding:
Basic .................................... 97,451 101,802(p)
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Diluted .................................. 98,718 101,802
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma financial statements. The pro forma adjustments are based on
estimates made by Weatherford's management using information currently
available.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying Unaudited Pro Forma Condensed
Consolidated Balance Sheet are described below:
(a) To record the cash payment of $11.0 million for transaction and
severance costs.
(b) To reverse Weatherford's $33.7 million net investment (face value
$64.7 million) in Dailey's 9 1/2% Senior Notes due 2008 (the "Senior
Notes") and to write-off approximately $4.0 million of Dailey's
prepaid transaction costs.
(c) To reflect the initial estimate of the write-down of Dailey's
property, plant, and equipment to fair market value.
(d) To record the excess purchase price over the fair value of the net
assets acquired.
(e) To reflect the retirement of the Senior Notes and the write-off of
related debt issuance costs.
(f) To reverse $7.4 million in accrued interest and the $2.6 million
income tax receivable related to the Senior Notes.
(g) To accrue $5.3 million for litigation and other contingencies relating
to Dailey.
(h) To reflect the issuance of $195.0 million in shares of Weatherford
common stock less $43.5 million in Weatherford common stock to be
received by Weatherford in respect of the Senior Notes held by
Weatherford. The net shares to be issued are approximately 4.4 million
shares, valued at $34 13/16 per share, which was the closing market
price on May 21, 1999. Of this amount, the Dailey shareholders will
receive shares valued at $10.0 million and the balance of the shares
will be issued to the holders of the Senior Notes other than
Weatherford.
(i) To eliminate Dailey's equity, which consists of $0.1 million common
stock, $53.1 million capital in excess of par, $4.1 million of
treasury stock, $114.0 million of retained deficit, and $1.9 million
of accumulated other comprehensive loss.
The adjustments to the accompanying Unaudited Pro Forma Condensed
Consolidated Statements of Operations are described below:
(j) To eliminate revenues of $0.7 million and related costs of $0.2
million associated with transactions between Dailey and Weatherford.
(k) To reverse depreciation expense of $1.1 million to reflect the
write-down of property, plant, and equipment to fair market value.
Such property, plant and equipment is being depreciated over five
years.
(l) To record amortization of $0.1 million for goodwill related to
acquisition of Dailey. Such goodwill is being amortized over 40 years.
(m) To eliminate interest expense to reflect the retirement of the Senior
Notes.
(n) To eliminate Weatherford's interest income related to its investment
in the Senior Notes.
(o) To record the income tax provision related to the effect of the pro
forma adjustments at the statutory rate.
(p) Weatherford's historical shares outstanding and basic weighted average
pro forma shares outstanding as of June 30, 1999, were 97,796,122 and
101,801,882, respectively.
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FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements relating to our proposed
acquisition of Dailey. 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
report. In addition to the general market risks described in our Annual and
Quarterly Reports, which we encourage you to read, there exist risks and
uncertainties relating to the Dailey acquisition, including, but not limited to,
the following:
o BANKRUPTCY UNCERTAINTIES. Our acquisition of Dailey is subject to
bankruptcy court approval. Although we have received agreements from
the holders of more than two-thirds of the claims of Dailey's impaired
creditors, there can be no assurance that the acquisition will be
completed in a timely manner. Our pro forma financial statements
assume that the acquisition of Dailey will be completed between 60 and
120 days without any unexpected administrative costs and expenses or
unknown claims against Dailey. To the extent the bankruptcy process
takes longer than anticipated or claims, including severance, exceed
those currently projected the costs of the acquisition could be
greater than that set forth in the pro forma financial statements.
o COST SAVINGS. We currently expect that our acquisition of Dailey will
allow us to realize around $20 million in annual cost savings through
the elimination and reduction of overlapping costs. Our ability to
achieve these savings will be dependent on our ability to integrate
the operations of the acquired business, including personnel, systems
and facilities.
o SYNERGIES. We currently expect to realize around $8 million annually
in additional margins from the manufacture of our own drilling and
fishing jars. These savings will be dependent on the ultimate amount
of jar business conducted by us, which in turn will be dependent on
market conditions. Our ability to realize these benefits will also be
dependent on the timing of the conversion of our current jar lines to
the Dailey jar line.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Consolidated Financial Statements of Dailey International Inc.
for the quarterly period ended June 30, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WEATHERFORD INTERNATIONAL, INC.
Dated: August 16, 1999 /s/ Frances R. Powell
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Frances R. Powell
Vice President and Controller
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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99.1 Consolidated Financial Statement of Dailey
International Inc. for the quarterly period ended June
30, 1999.