-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P7dYeW/Sar0M9uCr4L0qyDTGZ0rrxkS2BpfIXr+djkKsdSD1O8GLwuvnrJmvQtOM hldckSweeCLszAEejoucSw== 0000912057-96-003153.txt : 19960228 0000912057-96-003153.hdr.sgml : 19960228 ACCESSION NUMBER: 0000912057-96-003153 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951215 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960227 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEATHERFORD ENTERRA INC CENTRAL INDEX KEY: 0000029302 STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533] IRS NUMBER: 741681642 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07867 FILM NUMBER: 96526326 BUSINESS ADDRESS: STREET 1: 1360 POST OAK BLVD STE 1000 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7134399400 MAIL ADDRESS: STREET 1: 1360 POST OAK BLVD STE 1000 CITY: HOUSTON STATE: TX ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: WEATHERFORD INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DIXEL INDUSTRIES INC DATE OF NAME CHANGE: 19750618 8-K/A 1 FOR 8-K/A - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 AMENDMENT NO. 1 TO FORM 8-K ON FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: December 15, 1995 (Date of earliest event reported) WEATHERFORD ENTERRA, INC. (Exact name of registrant as specified in its charter) Delaware 1-7867 74-1681642 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 1360 Post Oak Boulevard, Suite 1000 Houston, Texas 77056-3098 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 439-9400 (not applicable) ------------------------------------------------------------- (Former name or former address, if changed since last report) - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- EXPLANATION As discussed in its Current Report on Form 8-K dated December 15, 1995 (the "Current Report"), as filed with the Securities and Exchange Commission (the "Commission") on December 29, 1995, Weatherford Enterra, Inc. completed the acquisition of substantially all of the assets of the natural gas compression business of Energy Industries, Inc., a Delaware corporation ("EI"), and Zapata Energy Industries, L.P., a Delaware limited partnership ("ZEI"), for a purchase price of $130 million and the assumption of certain current liabilities, pursuant to an Agreement dated as of September 20, 1995, among Zapata Corporation, a Delaware corporation, EI, ZEI, Enterra Corporation, formerly a Delaware corporation, and Enterra Compression Company, a Delaware corporation. Item 7 of the Current Report is hereby amended and restated in its entirety as follows: ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The following Zapata Energy Industries Combined Financial Statements as of September 30, 1995 are attached hereto as Exhibit 99.2 and are incorporated herein by reference. - - Report of Independent Public Accountants - - Zapata Energy Industries Combined Balance Sheet as of September 30, 1995 - - Zapata Energy Industries Combined Statement of Income and Changes in Reinvested Earnings for the year ended September 30, 1995 - - Zapata Energy Industries Statement of Cash Flows for the year ended September 30, 1995 - - Zapata Energy Industries Notes to Combined Financial Statements (b) PRO FORMA FINANCIAL INFORMATION. The unaudited pro forma consolidated statement of operations for the year ended December 31, 1994 for Weatherford Enterra, Inc. is included in the Registration Statement on Form S-4 (File No. 33-62195) of Weatherford International Incorporated (the predecessor of Weatherford Enterra, Inc.) and is incorporated herein by reference. The following Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma Consolidated Financial Statements as of September 30, 1995 are attached hereto as Exhibit 99.3 and are incorporated herein by reference. - - Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1995 - - Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma Consolidated Statement of Income for the Nine Months Ended September 30, 1995 - - Weatherford Enterra, Inc. and Subsidiaries Notes to Unaudited Pro Forma Consolidated Financial Statements (c) EXHIBITS. 2.1 Agreement dated as of September 20, 1995, among Zapata Corporation, Energy Industries, Inc., Zapata Energy Industries, L.P., Enterra Corporation and Enterra Compression Company (incorporated by reference to Exhibit 2 to the Enterra Corporation Current Report on Form 8-K dated October 2, 1995 (Commission File No. 1-8153)). * 27.1 Article 5 Financial Data Schedule. ** 99.1 Joint Press Release of Weatherford Enterra, Inc. and Zapata Corporation dated December 15, 1995. * 99.2 Zapata Energy Industries Combined Financial Statements as of September 30, 1995. * 99.3 Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma Consolidated Financial Statements as of September 30, 1995. _______________ * Filed herein. ** Previously filed. 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 ENTERRA, INC. Dated: February 27, 1996 /s/ NORMAN W. NOLEN -------------------------------------- Norman W. Nolen Senior Vice President, Chief Financial Officer and Treasurer EXHIBIT INDEX 2.1 Agreement dated as of September 20, 1995, among Zapata Corporation, Energy Industries, Inc., Zapata Energy Industries, L.P., Enterra Corporation and Enterra Compression Company (incorporated by reference to Exhibit 2 to Enterra Corporation's Current Report on Form 8-K dated October 2, 1995 (Commission File No. 1-8153)). * 27.1 Article 5 Financial Data Schedule. **99.1 Joint Press Release of Weatherford Enterra, Inc. and Zapata Corporation dated December 15, 1995. * 99.2 Zapata Energy Industries Combined Financial Statements as of September 30, 1995. * 99.3 Weatherford Enterra, Inc. and Subsidiaries Unaudited Pro Forma Consolidated Financial Statements as of September 30, 1995. _______________ * Filed herein. ** Previously filed. EX-27.1 2 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ZAPATA ENERGY INDUSTRIES COMBINED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR SEP-30-1995 OCT-01-1994 SEP-30-1995 2763 0 7696 (10) 21588 32061 70,663 (9101) 113911 6309 0 0 0 3 25533 113911 66635 66635 50275 60682 0 0 3420 3349 1400 1949 0 0 0 1949 0 0
EX-99.2 3 EXHIBIT 99.2 ZAPATA ENERGY INDUSTRIES COMBINED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1995 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Weatherford Enterra, Inc.: We have audited the accompanying combined balance sheet of Zapata Energy Industries as of September 30, 1995, and the related combined statements of income and changes in reinvested earnings and cash flows for the year then ended. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Zapata Energy Industries as of September 30, 1995, and the combined results of their operations and their combined cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN LLP - ------------------------------------ Houston, Texas February 23, 1996 ZAPATA ENERGY INDUSTRIES COMBINED BALANCE SHEET SEPTEMBER 30, 1995 (IN THOUSANDS EXCEPT SHARE AMOUNTS)
ASSETS CURRENT ASSETS: Cash and cash equivalents. . . . . . . . . . . . . . $ 2,763 Receivables: Trade, net of allowance of $10 . . . . . . . . . . 6,532 Sales-type lease . . . . . . . . . . . . . . . . . 1,154 Inventories, net of allowance of $310. . . . . . . . 21,588 Prepayments and other. . . . . . . . . . . . . . . . 24 -------- Total current assets . . . . . . . . . . . . . . . 32,061 PROPERTY, PLANT AND EQUIPMENT, AT COST: Land . . . . . . . . . . . . . . . . . . . . . . . . 1,024 Buildings and improvements . . . . . . . . . . . . . 3,279 Rental and service equipment . . . . . . . . . . . . 63,679 Machinery and other equipment. . . . . . . . . . . . 2,681 -------- 70,663 Less--Accumulated depreciation . . . . . . . . . . . 9,101 -------- 61,562 -------- SALES-TYPE LEASE RECEIVABLES, NET OF CURRENT . . . . . 1,721 GOODWILL, NET. . . . . . . . . . . . . . . . . . . . . 18,402 OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . 165 -------- Total assets . . . . . . . . . . . . . . . . . . . . $113,911 -------- -------- LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Current portion of long-term debt. . . . . . . . . . $ 743 Accounts payable . . . . . . . . . . . . . . . . . . 2,376 Accrued liabilities. . . . . . . . . . . . . . . . . 3,190 -------- Total current liabilities. . . . . . . . . . . . . 6,309 LONG-TERM DEBT, NET OF CURRENT . . . . . . . . . . . . 27,116 DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . 6,054 DUE TO ZAPATA CORPORATION. . . . . . . . . . . . . . . 48,896 COMMITMENTS AND CONTINGENCIES (NOTE 8) STOCKHOLDER'S EQUITY: Common stock, $1.00 par; 3,000 shares authorized, issued and outstanding. . . . . . . . . . . . . . . 3 Capital in excess of par value . . . . . . . . . . . 20,787 Reinvested earnings. . . . . . . . . . . . . . . . . 4,746 -------- 25,536 -------- Total liabilities and stockholder's equity . . . . $113,911 -------- --------
The accompanying notes are an integral part of this combined financial statement. 2 ZAPATA ENERGY INDUSTRIES COMBINED STATEMENT OF INCOME AND CHANGES IN REINVESTED EARNINGS FOR THE YEAR ENDED SEPTEMBER 30, 1995 (IN THOUSANDS) REVENUES . . . . . . . . . . . . . . . . . . . . . . $ 66,635 -------- EXPENSES: Operating . . . . . . . . . . . . . . . . . . . . 50,275 Depreciation and amortization . . . . . . . . . . 5,741 Selling, general and administrative . . . . . . . 4,666 -------- Total operating costs and expenses. . . . . . . 60,682 -------- OPERATING INCOME . . . . . . . . . . . . . . . . . . 5,953 Interest expense. . . . . . . . . . . . . . . . . (3,420) Interest income . . . . . . . . . . . . . . . . . 306 Other income. . . . . . . . . . . . . . . . . . . 510 -------- INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . 3,349 Provision for income taxes . . . . . . . . . . . . . (1,400) -------- NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 1,949 -------- -------- REINVESTED EARNINGS, September 30, 1994. . . . . . . 2,797 -------- REINVESTED EARNINGS, September 30, 1995. . . . . . . $ 4,746 -------- --------
The accompanying notes are an integral part of this combined financial statement. 3 ZAPATA ENERGY INDUSTRIES COMBINED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 1995 (IN THOUSANDS) CASH PROVIDED BY OPERATING ACTIVITIES: NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $ 1,949 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization. . . . . . . . . . . . . . 5,741 Deferred income tax. . . . . . . . . . . . . . . . . . . 4,632 Gain on sale of heat exchanger division. . . . . . . . . (510) Changes in assets and liabilities: Decrease in trade receivables, net . . . . . . . . . . 770 Decrease in sales-type lease receivables . . . . . . . 1,212 Increase in inventories. . . . . . . . . . . . . . . . (4,474) Decrease in prepayments and other. . . . . . . . . . . 360 Decrease in accounts payable and accrued liabilities . (1,294) -------- CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . . . . . . 8,386 -------- CASH USED IN INVESTING ACTIVITIES: Purchases of property, plant and equipment . . . . . . . . (12,697) Acquisitions of equipment. . . . . . . . . . . . . . . . . (3,425) Proceeds from sale of equipment. . . . . . . . . . . . . . 1,473 Proceeds from sale of heat exchanger division. . . . . . . 1,470 -------- CASH USED IN INVESTING ACTIVITIES. . . . . . . . . . . . . (13,179) -------- CASH PROVIDED BY FINANCING ACTIVITIES: Payments to Zapata Corporation, net. . . . . . . . . . . . (6,782) Borrowings . . . . . . . . . . . . . . . . . . . . . . . . 13,898 Repayment of borrowings. . . . . . . . . . . . . . . . . . (1,238) -------- CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . . 5,878 -------- INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . 1,085 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . . . 1,678 -------- CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . $ 2,763 -------- -------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 1,634 Income taxes . . . . . . . . . . . . . . . . . . . . . . 304
The accompanying notes are an integral part of this combined financial statement. 4 ZAPATA ENERGY INDUSTRIES NOTES TO COMBINED FINANCIAL STATEMENTS (1) BUSINESS AND ORGANIZATION--- The accompanying combined financial statements of Zapata Energy Industries (Energy Industries or the Company) include the accounts of Zapata Rentals, Inc., Zapata Compression Investments, Inc. and Energy Industries, Inc., three wholly- owned subsidiaries of Zapata Corporation (Zapata). The Company is engaged in the business of renting, fabricating, selling, and servicing natural gas compressor packages used in the oil and gas industry. Rental service, equipment sales and service revenues accounted for 27%, 62% and 11%, respectively, of total revenues for the year ended September 30, 1995. The Company is headquarted in Corpus Christi, Texas and maintains a network of fifteen sales and service offices in the surrounding four state area. Compression equipment is utilized in the production and transportation of natural gas. Factors influencing compressor rental operations include the number and age of producing gas wells, the ownership of these properties and natural gas prices. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --- PRINCIPLES OF COMBINATION. The financial statements are presented on a combined basis because their business activities are performed as one entity. All significant intercompany accounts and transactions have been eliminated in combination. USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. INVENTORIES. Inventories are valued at the lower of cost or market. Cost is determined using the moving average method for parts inventories. The cost of major component inventories is determined by using specific identification. Inventories at September 30, 1995 are summarized as follows (in thousands):
Compressor equipment and components . . . . . . $ 7,768 Parts and materials . . . . . . . . . . . . . . 8,135 Work in process . . . . . . . . . . . . . . . . 5,995 Allowance . . . . . . . . . . . . . . . . . . . (310) -------- $ 21,588 -------- --------
Work in process includes the costs of materials, labor and overhead. PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is depreciated on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives of assets are as follows: 5 ZAPATA ENERGY INDUSTRIES NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
USEFUL LIVES (YEARS) ------------ Rental and service equipment. . . . . . . . . . . . . 15 Building and improvements . . . . . . . . . . . . . . 20 Machinery and other equipment . . . . . . . . . . . . 5 - 7
Depreciation expense for the year ended September 30, 1995 was $5,136,000. Expenditures for major additions and improvements are capitalized while minor replacements, maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the related accounts, and any resulting gain or loss is included in the combined statement of income. GOODWILL. Goodwill represents the excess of the aggregate price paid by the Company in acquisitions accounted for as purchases over the fair market value of the net assets acquired. Goodwill is being amortized on a straight- line basis over 40 years. Management continually evaluates whether events or circumstances have occurred that indicate the remaining estimated useful life of goodwill may warrant revision or that the remaining balance of goodwill may not be recoverable. Goodwill amortization expense totaled $483,000 during 1995. Accumulated amortization at September 30, 1995 was $926,000. INCOME TAXES. The Company is included in Zapata's consolidated U.S. federal income tax return; however, its income tax effects are reflected on a separate company basis for financial reporting purposes. The Company applies the liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. EQUIPMENT UNDER OPERATING LEASES AND HELD FOR LEASE. The Company leases certain equipment to customers under agreements that contain an option to purchase the equipment at any time. The option amount is computed based on the original purchase price, less payments received, plus interest and insurance covering the period from the inception of the lease to the date the option is exercised. The lease payments are generally computed to pay-out the original purchase price plus interest over approximately 36 months. Leases with noncancelable lease terms greater than 18 months are considered sales-type leases because by the end of the original lease term, the option price is expected to be lower than the equipment's fair market value. Equipment leased under agreements with noncancelable lease terms of less than 18 months and those which do not include a purchase option are accounted for as operating leases and included in the rental fleet in property, plant and equipment. Rental inventory is depreciated over the estimated life based on a proportionate amount of rental income receipts. Rental inventory depreciation expense totalled $122,000 in 1995. CONCENTRATION OF CREDIT RISK. The Company sells, leases, and rents gas compressors to customers in the oil and gas industry. The Company generally does not require collateral. However, cash prepayments and security deposits are required for accounts with indicated credit risks. The Company also bills for progress payments from time to time on large dollar, long-term construction projects. The Company maintains reserves for potential losses, and credit losses have been within management's expectations. At September 30, 1995, the Company had cash deposits concentrated primarily in one bank. 6 ZAPATA ENERGY INDUSTRIES NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) REVENUES. Revenues are recognized as rental equipment is provided, as services are performed, or as parts or equipment deliveries are made. In some cases, revenue is recognized on large compressor equipment construction when the project is completed, but before the equipment is actually shipped. This practice is common when a customer agrees to take delivery and pay an invoice for the equipment, but is not yet ready to take possession of the equipment. Most rental contracts have an initial contract term of six to twelve months and then continue on a month-to-month basis. Lease charges are billed at the end of each month for the following month. Energy Industries provides a limited warranty on certain equipment and services. The warranty period varies depending on the equipment sold or service performed. A liability for performance under warranty obligations is accrued based upon the nature of the warranty and historical experience. (3) ACQUISITIONS AND DISPOSITIONS --- In January 1995, Energy Industries sold its heat exchanger division, located in Garland, Texas, resulting in a net gain of $510,000 which is included in the combined statement of income as other income. The Company received $1,470,000 in cash, and entered into an alliance agreement structured to provide Energy Industries with the heat exchangers necessary to perform its fabrication operations. As part of the consideration of the sale, Energy Industries received a $725,000 credit to be used against future purchases over the next five years at a rate of 10% off of normal invoice price. The Company did not record a gain associated with the $725,000 credit because management believed that ultimate realization of the benefit was uncertain. During February 1995, the company acquired the rental fleet of J-Brex Company, located in Amarillo, Texas, for $725,000. Fourteen active rental units were acquired in this transaction, and the Company entered into a three-year rental alliance agreement which affords the Company the right of first refusal on these and any future compressors J-Brex may need. In April 1995, Energy Industries acquired the forty-four unit rental fleet of Mountain Front Pipeline Company, Inc. located in Oklahoma and Arkansas. Energy Industries purchased these units for $2,700,000, and entered into a rental alliance agreement with Mountain Front, which affords the Company exclusive rights for these and any future compressors for a period of up to 30 months. (4) ACCRUED LIABILITIES --- Accrued liabilities as of September 30, 1995 are summarized as follows (in thousands):
State income taxes. . . . . . . . . . . . . . . . $ 367 Sales taxes . . . . . . . . . . . . . . . . . . . 359 Insurance . . . . . . . . . . . . . . . . . . . . 280 Maintenance . . . . . . . . . . . . . . . . . . . 280 Ad valorem taxes. . . . . . . . . . . . . . . . . 374 Accrued warranty. . . . . . . . . . . . . . . . . 302 Other accrued liabilities . . . . . . . . . . . . 1,228 ------- $ 3,190 ------- -------
7 ZAPATA ENERGY INDUSTRIES NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) (5) LONG-TERM DEBT --- Long-term debt at September 30, 1995 consists of the following (in thousands):
Texas Commerce Bank revolving-term credit facility, interest at prime or Eurodollar rates, 7.375% at September 30, 1995, due in quarterly installments beginning in 1997 through 1999, collateralized by certain compression assets. . . . . . . . . . . . . . . $25,800 Other debt, interest ranging from 8.9% - 9.6% . . . . . 2,059 ------- Total debt . . . . . . . . . . . . . . . . . . . . . 27,859 Less current maturities . . . . . . . . . . . . . . . . 743 ------- Long-term debt . . . . . . . . . . . . . . . . . . . $27,116 ------- -------
Interest expense on long-term debt totalled $1,720,000 in 1995. At September 30, 1994, a line of credit was opened with Texas Commerce Bank. This credit agreement provides the Company with a $30,000,000 revolving credit facility that converts after two years to a three-year amortizing term loan. The debt bears interest at a variable rate, adjusted periodically based on prime or Eurodollar interest rate. The estimated fair value of total long term debt at September 30, 1995 approximates book value. Maturities of the Company's long-term debt at September 30, 1995 are as follows (in thousands):
1996. . . . . . . . . . . . . . . . . . . . . . .$ 743 1997. . . . . . . . . . . . . . . . . . . . . . . 8,990 1998. . . . . . . . . . . . . . . . . . . . . . . 9,153 1999. . . . . . . . . . . . . . . . . . . . . . . 8,928 2000. . . . . . . . . . . . . . . . . . . . . . . 45 ------- $27,859 ------- -------
(6) INCOME TAXES --- The components of the combined income tax provision are as follows (in thousands): 8 ZAPATA ENERGY INDUSTRIES NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Income tax provision: Current: State. . . . . . . . . . . . . . . . . . . . $ 250 U.S. . . . . . . . . . . . . . . . . . . . . (3,482) Deferred: U.S. . . . . . . . . . . . . . . . . . . . . 4,632 ------- $ 1,400 ------- -------
The combined provision for income taxes differs from the provision computed at the statutory U.S. federal income tax rate of 34% in 1995 for the following reasons (in thousands):
Tax provision at U.S. statutory rate. . . . . . . $ 1,139 State income taxes. . . . . . . . . . . . . . . . 250 Other . . . . . . . . . . . . . . . . . . . . . . 11 ------- $ 1,400 ------- -------
The tax effects of significant temporary differences giving rise to deferred tax assets (liabilities) are as follows (in thousands):
Deferred tax assets: Financial reserves and accruals not yet deductible . . . . . . . . . . . . . . . . . . $ 514 ------- Deferred tax liabilities: Property, plant and equipment . . . . . . . . . $(5,358) Other . . . . . . . . . . . . . . . . . . . . . (1,138) ------- (6,496) ------- Net deferred tax liability. . . . . . . . . . . $(5,982) ------- -------
(7) PROFIT SHARING PLAN --- All qualified employees of the Company are covered under the Energy Industries, Inc. Profit Sharing Plan. The Company matches an employee's voluntary contribution on a dollar-for-dollar basis, up to 2% of the employee's gross payroll. The Company can also elect to make an annual contribution to the plan based on profits. These contributions are allocated to the participants based on gross payroll. Contributions of $131,000 were made under this discretionary profit sharing feature of the plan for the year ended September 30, 1995. (8) COMMITMENTS AND CONTINGENCIES --- SALES-TYPE LEASE RECEIVABLES. Energy Industries provides a capital lease financing option to its customers. Future minimum lease payments receivable resulting from the sale of compression packages under sales-type leases are due as follows (in thousands): 9 ZAPATA ENERGY INDUSTRIES NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
1996 . . . . . . . . . . . . . . . . . . $ 1,154 1997 . . . . . . . . . . . . . . . . . . 699 1998 . . . . . . . . . . . . . . . . . . 647 1999 . . . . . . . . . . . . . . . . . . 358 2000 . . . . . . . . . . . . . . . . . . 17 -------- $ 2,875 -------- --------
Energy Industries periodically sells a portion of its lease receivables to third party factoring companies. Certain of these receivables are sold with partial recourse to the Company. At September 30, 1995, the total amount of recourse to the Company on the unpaid balance of all previously sold receivables was $1,685,000. During fiscal 1995, the Company sold a total of $92,000 of these receivables. To date, the Company has not experienced any significant recourse losses. OPERATING LEASES RECEIVABLE. The Company maintains a fleet of natural gas compressor packages for rental under operating leases. At September 30, 1995, the net book value of such property was $55,826,000. Future minimum lease payments receivable under remaining noncancelable operating leases as of September 30, 1995 are as follows (in thousands):
1996 . . . . . . . . . . . . . . . . . . $ 5,554 1997 . . . . . . . . . . . . . . . . . . 2,514 1998 . . . . . . . . . . . . . . . . . . 806 -------- $ 8,874 -------- --------
OPERATING LEASES PAYABLE. The Company leases certain buildings and service equipment under noncancelable operating leases. Aggregate minimum rental commitments under noncancelable operating leases with lease terms in excess of one year as of September 30, 1995 are as follows (in thousands):
1996 . . . . . . . . . . . . . . . . . $ 240 1997 . . . . . . . . . . . . . . . . . 273 1998 . . . . . . . . . . . . . . . . . 215 1999 . . . . . . . . . . . . . . . . . 78 ------ $ 806 ------ ------
Rental expenses for operating leases were $755,000 for the year ended September 30, 1995. CLAIMS AND LITIGATION. The Company is defending various claims and litigation arising in the normal course of business. In the opinion of management, uninsured losses, if any, resulting from these matters will not have a material adverse effect on the Company's results of operations or financial position. LONG-TERM SUPPLY AND DISTRIBUTION AGREEMENTS. The Company has commitments under two long-term supply and distribution agreements as follows: Energy Industries and Atlas Copco Airpower N.V. (Atlas Copco), a Belgian corporation, entered into the following three agreements: Know-How license agreement, Screw Compressor Development and Distribution agreement, and OEM agreement (a supply agreement). Under such agreements, Atlas Copco 10 ZAPATA ENERGY INDUSTRIES NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) represents Energy Industries in countries and markets where the Company does not have sales contracts or convenient access. Atlas Copco receives a commission on sales that Energy Industries makes internationally, whether they made the initial sales contact or not. The contract specifically excludes sales to Canada and Mexico. The initial term of the contract was in effect until July 15, 1995 and renews automatically for successive one year terms unless terminated by one of the parties in advance. International sales, excluding Canada and Mexico, were $992,345 and the Company paid Atlas Copco $177,607 under such agreements for the year ended September 30, 1995. Energy Industries is under contract with Energy Industries LTD (EIL), a Canadian corporation, pursuant to which Energy Industries is required to supply EIL with proprietary compressor components used in the fabrication of gas compressor packages. Also, according to this agreement, EIL cannot buy similar components from other manufacturers. The companies also are bound by non-compete agreements in each other's respective country. This agreement remains in effect through November 1996, after which time Energy Industries will be obligated to sell compressor components to EIL until 2002, but not on an exclusive basis in Canada. In addition, after 1996 either company may compete in the other's country for sales of new compressor packages or any other product or services. Sales to EIL pursuant to the agreement were $4,685,333 for the year ended September 30, 1995. (9) RELATED PARTY TRANSACTIONS --- Energy Industries purchases Caterpillar engines and parts from Holt Company of Texas (Holt), a corporation owned by the CEO of Energy Industries, a major stockholder and director of Zapata. During 1995, Energy Industries purchased $10,415,000 of parts and engines from Holt. At September 30, 1995, Energy Industries owed Holt $326,000 related to these purchases. The Company's interest expense includes an allocation of interest expense from Zapata totaling $1,700,000 for the year ended September 30, 1995. Interest expense of Zapata that was not directly attributable to or related to other operations of Zapata was allocated to the Company based on a ratio of the Company's net assets to the sum of total net assets of Zapata plus general debt of Zapata. Additionally, Zapata performs certain administrative functions for Energy Industries including insurance policy placement, and income tax and legal support. These costs are charged to Energy Industries based upon costs incurred in support of these activities. (10) SUBSEQUENT EVENTS--- On December 15, 1995, substantially all of the assets of Energy Industries were purchased by Weatherford Enterra, Inc. for a purchase price of approximately $130,000,000, subject to adjustment, and the assumption of certain current liabilities. Zapata used a portion of the proceeds from the sale to repay all amounts outstanding under the Company's $30,000,000 revolving credit facility. 11 EX-99.3 4 EXHIBIT 99.3 EXHIBIT 99.3 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma consolidated financial statements are based upon (i) the unaudited supplemental condensed consolidated financial statements of Weatherford Enterra, Inc. and subsidiaries and (ii) the unaudited historical combined financial statements of Zapata Energy Industries as of and for the nine month period ended September 30, 1995. The Unaudited Pro Forma Consolidated Balance Sheet was prepared assuming that the Zapata Energy Industries acquisition was consummated as of September 30, 1995. The Unaudited Pro Forma Consolidated Statement of Income was prepared assuming that the Zapata Energy Industries acquisition was consummated as of January 1, 1995. The Unaudited Pro Forma Consolidated Financial Statements have been prepared based upon assumptions deemed appropriate by Weatherford Enterra, Inc. and may not be indicative of actual results. WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1995 (IN THOUSANDS)
ZAPATA WEATHERFORD ENERGY ENTERRA, INC. INDUSTRIES ADJUSTMENTS(1) PRO FORMA ------------- ---------- -------------- --------- ASSETS Current assets: Cash and cash equivalents $ 31,453 $ 2,763 $(15,000) $ 19,216 Receivables, net 239,082 7,686 - 246,768 Inventories, net 150,591 21,588 - 172,179 Other current assets 33,993 24 - 34,017 ---------- -------- ------- --------- Total current assets 455,119 32,061 (15,000) 472,180 Property, plant and equipment, net 456,100 61,562 - 517,662 Goodwill, net 212,627 18,402 26,655 257,684 Other assets 23,161 1,886 - 25,047 ---------- -------- ------- ---------- Total assets $1,147,007 $113,911 $11,655 $1,272,573 ---------- -------- ------- ---------- ---------- -------- ------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt and current portion of long-term debt $ 26,058 $ 743 $ (743) $ 26,058 Accounts payable 47,597 2,376 - 49,973 Accrued liabilities 106,889 3,190 - 110,079 ---------- -------- ------- ---------- Total current liabilities 180,544 6,309 (743) 186,110 Long-term debt 171,195 27,116 120,000 291,195 (27,116) Deferred tax and other long-term liabilities 29,021 54,950 (54,950) 29,021 Stockholders' equity 766,247 25,536 (25,536) 766,247 ---------- -------- ------- ---------- Total liabilities and stockholders' equity $1,147,007 $113,911 $11,655 $1,272,573 ---------- -------- ------- ---------- ---------- -------- ------- ----------
The accompanying notes are an integral part of the unaudited pro forma financial statements. WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
ZAPATA WEATHERFORD ENERGY ENTERRA, INC. INDUSTRIES ADJUSTMENTS PRO FORMA ------------- ---------- ----------- --------- Revenues $644,199 $48,472 - $692,671 -------- ------- ------- -------- Costs and expenses: Cost of sales and services 400,156 36,859 (3,561)(2) 433,454 Selling, general and administrative expenses 114,977 3,248 (2,940)(2) 115,285 Depreciation and amortization 68,717 4,335 950 (3) 74,002 Other (income) expense, net (8,336) (510) - (8,846) Unusual charges 28,297 - - 28,297 -------- ------- ------- -------- Total costs and expenses 603,811 43,932 (5,551) 642,192 -------- ------- ------- -------- Operating income 40,388 4,540 5,551 50,479 Interest, net 11,358 2,426 3,644 (4) 17,428 -------- ------- ------- -------- Income before income taxes and minority interests 29,030 2,114 1,907 33,051 Income taxes 4,373 824 583 (5) 5,780 -------- ------- ------- -------- Income before minority interests 24,657 1,290 1,324 27,271 Minority interests (215) - - (215) -------- ------- ------- -------- Net income $ 24,442 $1,290 $1,324 $27,056 -------- ------- ------- -------- -------- ------- ------- -------- Weighted average common and common equivalent shares outstanding 50,804 50,804 -------- -------- -------- -------- Income per common and common equivalent share $0.48 $0.53 -------- -------- -------- --------
The accompanying notes are an integral part of the unaudited pro forma financial statements. WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS 1. To record the expenditure of cash and borrowings used to finance the Zapata Energy Industries acquisition, to reflect the allocation of the related purchase price and to eliminate all liabilities and equity of Zapata Energy Industries not acquired by Weatherford Enterra, Inc. 2. To record certain estimated consolidated cost savings and operational efficiencies associated with the Zapata Energy Industries acquisition, primarily resulting from the combination of certain locations and the elimination of duplicate corporate functions. 3. To record additional depreciation expense and amortization of goodwill resulting from the allocation of the purchase price of Zapata Energy Industries. 4. To record additional interest expense on debt incurred in connection with the Zapata Energy Industries acquisition. 5. To record additional income tax expense on the effect of the adjustments discussed in Notes 2, 3 and 4 above. -----END PRIVACY-ENHANCED MESSAGE-----