<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
For the quarterly period ended September 30, 1999

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
For the transition period from ________ to ________

                         Commission file number 1-13086


                         WEATHERFORD INTERNATIONAL, INC.
             (Exact name of Registrant as specified in its Charter)

               Delaware                                         04-2515019
-------------------------------------                        -------------------
   (State or other jurisdiction of                           (I.R.S. Employer
   incorporation or organization)                            Identification No.)

     515 Post Oak Blvd., Suite 600, Houston, Texas              77027-3415
--------------------------------------------------------------------------------
(Address of principal executive offices)                        (Zip Code)

                                 (713) 693-4000
               --------------------------------------------------
               (Registrant's telephone number, include area code)

--------------------------------------------------------------------------------
     (Former name, former address and former fiscal year, if changed since
                                  last report)


         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes |X| No  [ ]

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:


        Title of Class                           Outstanding at November 9, 1999
-----------------------------                    -------------------------------
Common Stock, par value $1.00                             108,088,398






<PAGE>   2


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                              SEPTEMBER 30,           DECEMBER 31,
                                                                                  1999                    1998
                                                                              -------------           -------------
<S>                                                                           <C>                     <C>
                                                                               (UNAUDITED)
                          ASSETS

CURRENT ASSETS:
   Cash and Cash Equivalents...........................................       $     21,169            $     34,131
   Accounts Receivable, Net of Allowance for Uncollectible
     Accounts of $20,340 and $19,398, Respectively.....................            345,434                 271,867
   Inventories.........................................................            359,446                 298,555
   Other Current Assets................................................            126,427                 127,543
                                                                              -------------           -------------
                                                                                   852,476                 732,096
                                                                              -------------           -------------
PROPERTY, PLANT AND EQUIPMENT, AT COST,
   NET OF ACCUMULATED DEPRECIATION.....................................            901,502                 629,276

GOODWILL, NET..........................................................            969,046                 648,570
NET ASSETS OF DISCONTINUED OPERATIONS..................................            571,625                 545,211
OTHER ASSETS...........................................................            148,820                  83,459
                                                                              =============           =============
                                                                              $  3,443,469            $  2,638,612
                                                                              =============           =============

         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Short-Term Borrowings...............................................       $    282,618            $    137,279
   Current Portion of Long-Term Debt...................................             11,392                  14,915
   Accounts Payable....................................................             96,719                  92,274
   Other Accrued Liabilities...........................................            217,246                 168,105
                                                                              -------------           -------------
                                                                                   607,975                 412,573
                                                                              -------------           -------------

LONG-TERM DEBT.........................................................            225,044                 220,398
MINORITY INTERESTS.....................................................            195,209                   2,888
DEFERRED INCOME TAXES AND OTHER........................................            160,549                 106,373
5% CONVERTIBLE SUBORDINATED PREFERRED
   EQUIVALENT DEBENTURES...............................................            402,500                 402,500

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Common Stock, $1 Par Value, Authorized 250,000 Shares,
     Issued 119,999 and 103,513 Shares, Respectively...................            119,999                 103,513
   Capital in Excess of Par Value......................................          1,525,946               1,052,899
   Treasury Stock, at Cost.............................................           (303,560)               (193,328)
   Retained Earnings...................................................            596,610                 607,185
   Accumulated Other Comprehensive Loss................................            (86,803)                (76,389)
                                                                              -------------           -------------
                                                                                 1,852,192               1,493,880
                                                                              =============           =============
                                                                               $ 3,443,469            $  2,638,612
                                                                              =============           =============
</TABLE>

         The accompanying notes are an integral part of these consolidated
                        condensed financial statements.


                                       1
<PAGE>   3


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                      THREE MONTHS                       NINE MONTHS
                                                                   ENDED SEPTEMBER 30,               ENDED SEPTEMBER 30,
                                                               ----------------------------      ----------------------------
                                                                  1999             1998             1999             1998
                                                               -----------      -----------      -----------      -----------
<S>                                                            <C>              <C>              <C>              <C>

REVENUES:
  Products..............................................       $  162,564       $  140,874       $  387,446       $  454,076
  Services and Rentals..................................          161,068          181,384          480,115          607,820
                                                               -----------      -----------      -----------      -----------
                                                                  323,632          322,258          867,561        1,061,896

COSTS AND EXPENSES:
  Cost of Products......................................          122,711           99,323          274,553          314,818
  Cost of Services and Rentals..........................          115,270          122,648          350,251          403,262
  Selling, General and Administrative Attributable
     to Segments........................................           63,125           52,021          182,840          163,325
  Corporate General and Administrative..................            5,585            5,197           18,150           20,102
  Merger Costs and Other Charges........................               --               --               --          103,197
  Equity in Earnings of Unconsolidated Affiliates.......             (688)            (676)          (1,578)          (2,241)
                                                               -----------      -----------      -----------      -----------

OPERATING INCOME........................................           17,629           43,745           43,345           59,433
                                                               -----------      -----------      -----------      -----------

OTHER INCOME (EXPENSE):
  Interest Income.......................................              427              624            2,528            1,713
  Interest Expense......................................          (11,019)         (11,752)         (31,917)         (31,361)
  Other, Net............................................             (672)              (5)           1,485           (2,533)
                                                               -----------      -----------      -----------      -----------
INCOME  BEFORE INCOME TAXES AND
  MINORITY INTEREST.....................................            6,365           32,612           15,441           27,252
PROVISION FOR INCOME TAXES .............................           (1,848)         (10,383)          (3,903)          (7,990)
                                                               -----------      -----------      -----------      -----------
INCOME BEFORE MINORITY INTEREST.........................            4,517           22,229           11,538           19,262
MINORITY INTEREST (EXPENSE) INCOME,
  NET OF TAX............................................           (1,495)              10           (2,821)             (99)
                                                               -----------      -----------      -----------      -----------
INCOME FROM CONTINUING OPERATIONS.......................            3,022           22,239            8,717           19,163
INCOME (LOSS) FROM DISCONTINUED
  OPERATIONS, NET OF TAX................................          (14,115)          20,515          (19,292)          69,843
                                                               -----------      -----------      -----------      -----------
NET INCOME (LOSS).......................................       $  (11,093)      $   42,754       $  (10,575)      $   89,006
                                                               ===========      ===========      ===========      ===========

BASIC EARNINGS (LOSS) PER SHARE:
  Income From Continuing Operations.....................       $     0.03       $     0.23       $     0.09       $     0.20
  Income (Loss) From Discontinued Operations............            (0.14)            0.21            (0.20)            0.72
                                                               -----------      -----------      -----------      -----------
NET INCOME (LOSS) PER SHARE.............................       $    (0.11)      $     0.44       $    (0.11)      $     0.92
                                                               ===========      ===========      ===========      ===========

DILUTED EARNINGS (LOSS) PER SHARE:
  Income From Continuing Operations.....................       $     0.03       $     0.23       $     0.09       $     0.20
  Income (Loss) From Discontinued Operations............            (0.14)            0.21            (0.19)            0.71
                                                               -----------      -----------      -----------      -----------
NET INCOME (LOSS) PER SHARE.............................       $    (0.11)      $     0.44       $    (0.10)      $     0.91
                                                               ===========      ===========      ===========      ===========

WEIGHTED AVERAGE SHARES OUTSTANDING:
  Basic.................................................          101,408           97,386           98,770           96,973
                                                               ===========      ===========      ===========      ===========
  Diluted...............................................          103,481           97,819          100,306           97,684
                                                               ===========      ===========      ===========      ===========
</TABLE>



         The accompanying notes are an integral part of these consolidated
                        condensed financial statements.


                                       2
<PAGE>   4


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                           NINE MONTHS
                                                                                       ENDED SEPTEMBER 30,
                                                                               ------------------------------------
                                                                                   1999                   1998
                                                                               ------------           -------------
<S>                                                                            <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income (Loss).....................................................       $   (10,575)           $     89,006
  Adjustments to Reconcile Net Income (Loss) to Net Cash
     Provided by Operating Activities:
     Depreciation and Amortization......................................           119,968                 103,324
     (Income) Loss from Discontinued Operations.........................            19,292                 (69,843)
     Non-Cash Portion of Merger Costs and Other Charges.................                --                  48,039
     Minority Interest Expense, Net of Tax..............................             2,821                      99
     Deferred Income Tax Provision .....................................             3,903                   9,881
     Gain on Sales of Property, Plant and Equipment.....................            (7,157)                 (8,324)
     Change in Operating Assets and Liabilities, Net of Effects
       of Businesses Acquired...........................................          (103,766)                (96,297)
                                                                               ------------           -------------
       Net Cash Provided by Continuing Operations.......................            24,486                  75,885
       Net Cash Provided (Used) by Discontinued Operations..............            55,176                 (18,361)
                                                                               ------------           -------------
       Net Cash Provided by Operating Activities........................            79,662                  57,524
                                                                               ------------           -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of Businesses, Net of Cash Acquired.......................           (78,286)                (99,461)
  Capital Expenditures for Property, Plant and Equipment................          (134,719)               (126,216)
  Acquisitions and Capital Expenditures of
     Discontinued Operations............................................           (50,340)                (35,357)
  Proceeds from Sales of Property, Plant and Equipment..................            21,763                  18,999
  Proceeds from Sale and Leaseback of Equipment.........................           139,815                      --
                                                                               ------------           -------------
       Net Cash Used by Investing Activities............................          (101,767)               (242,035)
                                                                               ------------           -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on Short-Term Debt, Net....................................           145,339                 192,652
  Borrowings (Repayments) of Long-Term Debt, Net........................           (17,598)                 11,615
  Repayments of Debt for Discontinued Operations........................           (52,316)                 (5,662)
  Distribution to Minority Interest Holder..............................           (65,350)                     --
  Proceeds from Exercise of Stock Options...............................             1,329                   3,595
  Acquisition of Treasury Stock.........................................            (2,762)                (40,062)
  Other, Net............................................................               501                      --
                                                                               ------------           -------------
       Net Cash Provided by Financing Activities........................             9,143                 162,138
                                                                               ------------           -------------


NET DECREASE IN CASH AND CASH EQUIVALENTS...............................           (12,962)                (22,373)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........................            34,131                  66,008
                                                                               ------------           -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..............................       $    21,169            $     43,635
                                                                               ============           =============

SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest Paid.........................................................       $    32,802            $     30,741
  Income Taxes Paid, Net of Refunds.....................................            14,322                  60,075
</TABLE>


         The accompanying notes are an integral part of these consolidated
                        condensed financial statements.


                                       3
<PAGE>   5


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                      THREE MONTHS                       NINE MONTHS
                                                                   ENDED SEPTEMBER 30,               ENDED SEPTEMBER 30,
                                                               ----------------------------      ----------------------------
                                                                   1999             1998             1999             1998
                                                               -----------      -----------      -----------      -----------
<S>                                                            <C>              <C>              <C>              <C>
Net Income (Loss)......................................        $  (11,093)      $   42,754       $  (10,575)      $   89,006
Other Comprehensive Loss:
  Foreign Currency Translation Adjustment..............            (5,103)         (18,948)         (10,414)         (33,270)
                                                               -----------      -----------      -----------      -----------
Comprehensive Income (Loss)............................        $  (16,196)      $   23,806       $  (20,989)      $   55,736
                                                               ===========      ===========      ===========      ===========
</TABLE>


         The accompanying notes are an integral part of these consolidated
                        condensed financial statements.


                                       4
<PAGE>   6


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.   GENERAL

     The unaudited consolidated condensed financial statements included herein
have been prepared by Weatherford International, Inc. (the "Company") pursuant
to the rules and regulations of the Securities and Exchange Commission. These
financial statements reflect all adjustments which the Company considers
necessary for the fair presentation of such financial statements for the interim
periods presented. Although the Company believes that the disclosures in these
financial statements are adequate to make the interim information presented not
misleading, certain information relating to the Company's organization and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted in this Form 10-Q pursuant to such rules and regulations. These
financial statements should be read in conjunction with the restated audited
consolidated financial statements for the year ended December 31, 1998 and notes
thereto included in the Company's Current Report on Form 8-K filed October 25,
1999. The results of operations for the nine month period ended September 30,
1999 are not necessarily indicative of the results expected for the full year.

     In October 1999, the Board of Directors of the Company approved a plan to
distribute all of the outstanding shares of common stock of its wholly owned
subsidiary, Grant Prideco, Inc. (the "Spinoff"), to holders of the Company's
common stock, $1.00 par value ("Common Stock"). In connection with and prior to
the Spinoff, the Company will transfer its drilling products businesses to Grant
Prideco, Inc. ("Grant Prideco"). As a result, the accompanying financial
statements reflect the operations of Grant Prideco as discontinued operations
(See Note 4).

     Certain reclassifications of prior year balances have been made to conform
such amounts to corresponding 1999 classifications.

2.   INVENTORIES

     Inventories by category are as follows:
<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,    DECEMBER 31,
                                                                  1999             1998
                                                              -------------    -------------
                                                                      (in thousands)
<S>                                                           <C>              <C>
     Raw materials, components and supplies............       $   158,727      $    86,304
     Work in process...................................            50,517           25,590
     Finished goods....................................           150,202          186,661
                                                              -------------    -------------
                                                              $   359,446       $  298,555
                                                              =============    =============
</TABLE>


     Work in process and finished goods inventories include the cost of
material, labor and plant overhead.

3.   BUSINESS COMBINATIONS

     On September 2, 1999, the Company acquired Petroline Wellsystems Limited
("Petroline") for a total consideration of approximately $165.0 million,
consisting of $32.2 million in cash and 3.8 million shares of Common Stock. The
Company also agreed to pay to the sellers additional funds in the event they
resell the shares of Common Stock received by them in the acquisition in certain
market transactions at a price less than $35.175 per share. This obligation
continues until October 2000. Petroline, based in Aberdeen, Scotland, is a
provider of premium completion products and services to the international oil
and gas industry. Petroline is the leading provider of flow control equipment in
the North Sea and was the first company to successfully introduce completion
products using new expandable tube technology.

     On September 15, 1999, the Company acquired Williams Tool Co. ("Williams")
for 1.8 million shares of Common Stock. Williams, based in Fort Smith, Arkansas,
offers a full range of rotating control heads for horizontal, underbalanced and
low hydrostatic drilling operations. Williams products are used to control flow
from the wellbore to reduce the risk of blowouts when oil, gas, geothermal and
coal gas methane wells are being drilled with light fluids.


                                       5
<PAGE>   7

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

     On August 31, 1999, the Company completed the acquisition of Dailey
International Inc. ("Dailey") pursuant to a pre-negotiated plan of
reorganization in bankruptcy. Under the terms of the acquisition, the Company
issued a total of approximately 4.3 million shares of Common Stock to the Dailey
noteholders and stockholders. Of the total number shares issued, the Company
issued approximately 4.0 million shares to the Dailey noteholders and
approximately 0.3 million shares to the Dailey common stockholders. At the time
of the acquisition of Dailey, the Company held approximately 24% of Dailey's
Senior Notes. In the reorganization, the Company contributed those notes to
Dailey and received approximately 1.2 million shares of Common Stock which the
Company holds as treasury shares. Because the Company held Senior Notes of
Dailey, which the Company acquired prior to the bankruptcy at a discount, the
total purchase price for Dailey, excluding assumed liabilities of Dailey that
were not impaired in the bankruptcy, was approximately $185.0 million.

     Dailey is a leading provider of specialty drilling equipment and services
to the oil and gas industry and designs, manufactures and rents proprietary
downhole tools for oil and gas drilling and workover applications worldwide.

     On February 2, 1999, the Company completed a joint venture with GE Capital
Corporation ("GE Capital") in which the Company's compression services
operations were combined with GE Capital's Global Compression Services
operations. The joint venture is known as Weatherford Global Compression
Services. The Company owns 64% of the joint venture and GE Capital owns 36%. The
Company has the right to acquire GE Capital's interest at anytime at a price
equal to a third party market-determined value that is not less than book value.
GE Capital also has the right to require the Company to purchase its interest at
anytime after February 2001 at a market-determined third party valuation as well
as request a public offering of its interest after that date, if the Company has
not purchased its interest by that time.

     On February 8, 1999, the Company completed the acquisition of Christiana
Companies, Inc. ("Christiana") for approximately 4.4 million shares of Common
Stock and $20.6 million cash. In the acquisition, the Company acquired through
Christiana (1) 4.4 million shares of the Company's Common Stock, (2) cash, after
distribution to the Christiana shareholders, equal to the amount of Christiana's
outstanding tax and other liabilities and (3) a one-third interest in Total
Logistic Control, a refrigerated warehouse, trucking and logistics company. The
4.4 million shares of Common Stock acquired are classified as Treasury Stock, at
cost on the accompanying Consolidated Condensed Balance Sheet. Because the
number of shares of Common Stock issued in the Christiana acquisition
approximated the number of shares of Common Stock held by Christiana prior to
the acquisition, the Christiana acquisition had no material effect on the
outstanding number of shares of Common Stock or net equity of the Company.

     The Company also effected various other acquisitions during the nine months
ended September 30, 1999 for total consideration of approximately $56.0 million,
of which $43.6 million was paid in cash and $12.4 million was paid in the form
of shares of Common Stock.

     Through these acquisitions and the acquisitions of technology, the Company
increased its intangible assets by $57.0 million in the nine months ended
September 30, 1999.

     The acquisitions discussed above, were accounted for using the purchase
method of accounting. Results of operations for acquisitions accounted for as
purchases are included in the accompanying consolidated condensed financial
statements since the date of acquisition. The following presents the
consolidated financial information for the Company on a pro forma basis assuming
the Dailey acquisition had occurred on January 1, 1998. All other 1998 and 1999
acquisitions are not material individually nor in the aggregate with same year
acquisitions, therefore, pro forma information is not presented. 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, 1998, or that may be achieved in the future.


                                       6
<PAGE>   8


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


<TABLE>
<CAPTION>
                                                                THREE MONTHS                    NINE MONTHS
                                                            ENDED SEPTEMBER 30,             ENDED SEPTEMBER 30,
                                                         ---------------------------    ----------------------------
                                                            1999            1998           1999             1998
                                                         -----------     -----------    ------------    ------------
                                                                  (in thousands, except per share amounts)
<S>                                                      <C>             <C>            <C>             <C>
Revenues............................................     $  340,199      $  353,258     $  934,804      $1,163,981
Income (loss) from continuing operations............           (714)         11,566        (14,665)          6,606
Net income (loss)...................................        (14,829)         32,081        (33,957)         58,870
Basic earnings (loss) per common share from
     continuing operations..........................          (0.01)           0.11          (0.14)           0.07
Diluted earnings (loss) per common share from
     continuing operations..........................          (0.01)           0.11          (0.14)           0.06
</TABLE>

     Included in net income for the nine months ended September 30, 1998 is an
extraordinary loss, net of taxes recorded by Dailey of $17.6 million. This
extraordinary loss is the result of Dailey's repurchase of their 9 3/4% Senior
Notes in the first quarter of 1998, and represents the excess of the purchase
price for the notes over the carrying value on the date of repurchase.

4.   DISCONTINUED OPERATIONS

     In October 1999, the Board of Directors of the Company approved a plan to
spinoff Grant Prideco. The Spinoff is proposed to be effected through a
distribution by the Company to its stockholders of one share of stock of Grant
Prideco for each two shares of Common Stock held by the Company's stockholders.
The Spinoff is subject to the receipt of a favorable private letter ruling from
the Internal Revenue Service to the effect that receipt of shares of Grant
Prideco common stock should be tax free for federal income tax purposes to the
Company's stockholders and that the Company should not recognize a gain or loss
as a result of the Spinoff. A request for the private letter ruling was filed
with the Internal Revenue Service in July 1999 and that request is in the
process of being reviewed by the Internal Revenue Service. The Company currently
expects that the Spinoff will occur during the first quarter of 2000.

     Summary Financial Results

     The results of operations for Grant Prideco are reflected in the
accompanying Consolidated Condensed Statements of Operations as discontinued
operations, net of taxes. Condensed results of Grant Prideco were as follows:


<TABLE>
<CAPTION>
                                                                   THREE MONTHS                 NINE MONTHS
                                                               ENDED SEPTEMBER 30,          ENDED SEPTEMBER 30,
                                                            ---------------------------  ---------------------------
                                                                1999           1998          1999           1998
                                                            ------------  -------------  ------------  -------------
                                                                                 (in thousands)
<S>                                                         <C>           <C>            <C>           <C>
          Revenues.......................................    $  57,987     $ 160,196      $ 210,987     $  521,911
                                                            ------------  -------------  ------------  -------------

          Income (loss) before interest
            allocation and income taxes..................      (12,862)       34,967        (15,673)       119,113
          Interest allocation............................       (1,813)       (1,812)        (5,438)        (5,437)
          (Provision) benefit for income taxes...........        4,130       (12,640)         5,389        (43,833)
                                                            ------------  -------------  ------------  -------------
          Net income (loss) before Spinoff-related
            costs........................................      (10,545)       20,515        (15,722)        69,843
          Spinoff-related costs, net of taxes............       (3,570)           --         (3,570)            --
                                                            ------------  -------------  ------------  -------------
          Net income (loss)..............................    $ (14,115)    $  20,515      $ (19,292)    $   69,843
                                                            ============  =============  ============  =============
</TABLE>


                                       7
<PAGE>   9


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

     In connection with the Spinoff, Grant Prideco will issue an unsecured
subordinated note to the Company in the amount of $100.0 million. The $100.0
million obligation will bear interest at an annual rate equal to 10.0%. Interest
payments will be due quarterly, and principal and all unpaid interest will be
due no later than December 31, 2001. Under the terms of the note, Grant Prideco
is required to repay this note with the proceeds of any debt or equity
financing, excluding financing under a credit facility or any equity issued in
connection with a business combination. The indebtedness of Grant Prideco to the
Company will be subordinated to the working capital obligations of Grant Prideco
to its banks. Grant Prideco currently intends to repay the obligation within 12
months from the completion of the Spinoff, pursuant to an anticipated public or
private debt financing. Grant Prideco's ability to repay this indebtedness,
however, will be dependent upon market conditions.

     The Company's historical practice has been to incur indebtedness for its
consolidated group at the parent company level or at a limited number of
subsidiaries, rather than at the operating levels, and to centrally manage
various cash functions. Consequently, a portion of the Company's historical
interest expense has been allocated to discontinued operations. The amount
allocated reflects interest expense associated with the Grant Prideco note
calculated using the Company's average long-term debt interest rates for the
applicable periods. The amount allocated using this methodology results in
amounts consistent with the allocation of interest expense based on a ratio of
the net assets of discontinued operations to the Company's consolidated net
assets plus debt.

     The Completion and Oilfield Services Division and Artificial Lift Division
of the Company purchase drill pipe and other related products from Grant
Prideco. These purchases have been eliminated in the accompanying consolidated
condensed financial statements. The amounts purchased for the three and nine
months ended September 30, 1999 were $15.1 million and $22.7 million,
respectively, and for the three and nine months ended September 30, 1998 were
$1.5 million and $6.1 million, respectively. Such purchases represent Grant
Prideco's cost.

     The results from discontinued operations include a management fee charged
to Grant Prideco of $0.5 million and $1.0 million for the three and nine months
ended September 30, 1999, respectively, and $0.2 million and $0.7 million for
the three and nine months ended September 30, 1998, respectively. The fee is
based on the time devoted to Grant Prideco for accounting, tax, treasury and
risk management services.

     Grant Prideco was charged $1.4 million and $4.3 million of costs related to
the Company's information systems function in the three and nine months ended
September 30, 1999, respectively and $1.4 million and $4.2 million in the three
and nine months ended September 30, 1998, respectively. Information systems
charges were based on direct support provided, equipment usage and number of
system users.

     Proposed Agreements Between The Company and Grant Prideco

     In connection with the Spinoff, Grant Prideco and the Company will enter
into a tax allocation agreement (the "Tax Allocation Agreement"). Under the
terms of the Tax Allocation Agreement, Grant Prideco, is responsible for all
taxes and associated liabilities relating to the historical businesses of Grant
Prideco. The Tax Allocation Agreement also provides that any tax liabilities
associated with the Spinoff shall be assumed and paid by Grant Prideco subject
to certain exceptions relating to changes in control of the Company. The Tax
Allocation Agreement further provides that in the event there is a tax liability
associated with the historical operations of Grant Prideco that is offset by a
tax benefit of the Company, the Company will apply the tax benefit against such
tax liability and will be reimbursed for the value of such tax benefit when and
as the Company would have been able to otherwise utilize that tax benefit for
its own businesses.

     The Company intends to enter into a transition services agreement with
Grant Prideco for a period of one year from the Spinoff date. Under the
agreement, the Company will provide certain services requested by Grant Prideco.
The fee for these services will be based on a cost-plus 10% basis. The
transition services to be provided under this agreement may include accounting,
tax, finance services, employee benefit services, information services,
management information systems and may include any other similar services.


                                       8
<PAGE>   10


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

     The Company also intends to enter into a preferred customer agreement with
Grant Prideco pursuant to which the Company will agree for at least a three year
period to purchase at least 70% of its requirements of drill stem product from
Grant Prideco. The price for those products will be at a price not greater than
that which Grant Prideco sells to its best similarly situated customers. The
Company will be entitled to apply against its purchases a drill stem credit
granted to it in the amount of $15 million, subject to a limitation of the
application of the credit to no more than 20% of any purchase.

5.   SHORT-TERM DEBT

     The Company's unsecured credit agreement provides for borrowings of up to
an aggregate of $250.0 million, consisting of a $200.0 million U.S. credit
facility and a $50.0 million Canadian credit facility. Amounts outstanding under
the facility accrue interest at the U.S. prime rate or a variable rate based on
LIBOR. A commitment fee ranging from 0.09% to 0.20% per annum, depending on the
senior unsecured credit ratings assigned by Standard and Poor's and Moody's
Investor Service to the Company, is payable quarterly on the unused portion of
the facility. The facility contains customary affirmative and negative
covenants, including a maximum debt to capitalization ratio, a minimum interest
coverage ratio, a limitation on liens, and a limitation on asset dispositions.

6.   SALE AND LEASEBACK OF EQUIPMENT

     The Compression Services Division has entered into various sale and
leaseback arrangements where it has sold $239.8 million of compression units and
has a right to sell up to another $110.2 million of compression units. Under
these arrangements, legal title to the compression units are sold to third
parties and leased back to the division under a five year operating lease with a
market-based purchase option.

     As of December 31, 1998, the Compression Services Division had sold
compressors under these arrangements having appraised values of $119.6 million
and had received cash in the amount of $100.0 million and a receivable of $19.6
million. During the nine months ended September 30, 1999, the Compression
Services Division sold additional compressors having an appraised value of
$120.2 million and received cash of $139.8 million. The sales resulted in an
additional pretax deferred gain of approximately $37.3 million, classified as
Deferred Income Taxes and Other on the accompanying Consolidated Condensed
Balance Sheets, which may be deferred until the end of the lease.

     Of the proceeds received by the Compression Services Division from the sale
and leaseback of the compressor units, $100.0 million was distributed to the
Company by the division and $65.4 million was distributed to GE Capital as part
of the joint venture. The remaining proceeds of these sales were utilized by the
joint venture for internal corporate purposes and growth. The Company has
guaranteed certain of the obligations of the joint venture with respect to the
sale of $200.0 million of the compression units. The remaining sales by the
joint venture were done on a non-recourse basis to the Company and are limited
solely to the assets of the joint venture.

     The following table provides future minimum lease payments (in thousands)
under the aforementioned lease as of September 30, 1999:

       Remainder of 1999....................................... $       4,064
       2000 ...................................................        16,256
       2001 ...................................................        16,256
       2002 ...................................................        16,256
       2003 ...................................................        15,582
       2004 ...................................................         4,047
                                                                --------------
                                                                $      72,461
                                                                ==============


                                       9
<PAGE>   11


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

7.  CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENT

   The functional currency for certain of the Company's international
operations is the applicable local currency. Results of operations for foreign
subsidiaries with functional currencies other than the U.S. dollar are
translated using average exchange rates during the period. Assets and
liabilities of these foreign subsidiaries are translated using the exchange
rates in effect at the balance sheet date and the resulting translation
adjustments are included as accumulated other comprehensive loss, a separate
component of stockholders' equity. Currency transaction gains and losses are
reflected in income for the period.

   The net decline in the cumulative foreign currency translation adjustment
from December 31, 1998 to September 30, 1999 was $10.4 million. This decline
primarily reflects the financial impact of the devaluation of Latin American and
European currencies, partially offset by the strengthening Canadian dollar, as
compared to the U.S. dollar.

8.  1998 SPECIAL CHARGES

   In the second quarter of 1998, the Company incurred $113.0 million in
merger and other charges relating to the merger between EVI, Inc. and
Weatherford Enterra, Inc. and a reorganization and rationalization of the
Company's businesses in light of the initial downturn in the industry. These
charges had been fully realized as of December 31, 1998.

   The Company incurred a $47.0 million charge in the fourth quarter of 1998
related to the decline in our markets. As of December 31, 1998, $23.5 million of
these charges had been utilized. The remaining $23.5 million of these charges
were fully utilized in the first half of 1999 as follows:

   o  The severance and related costs included in the fourth quarter charges
      were $7.6 million for the termination of approximately 940 employees
      during the first half of 1999, in accordance with the announced plan.
      These employees had all been terminated by June 30, 1999.

   o  The facility and plant closures of $12.8 million were accrued in the
      fourth quarter of 1998 for the consolidation and closure of approximately
      100 service, manufacturing and administrative facilities in response to
      declining market conditions in the fourth quarter. These facilities had
      all been closed as of June 30, 1999.

   o  The corporate related expenses of $3.1 million recorded in the fourth
      quarter were primarily for the consolidation of technology centers, the
      relocation of corporate offices and the related lease obligations to align
      the corporate cost structure in light of current conditions.

   o  In the first half of 1999, $7.7 million of the 1998 fourth quarter charge
      was utilized by the Completion and Oilfield Services Division, $12.1
      million by the Artificial Lift Systems Division and $3.7 million by
      Corporate.

9.  EARNINGS PER SHARE

   Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the year. Diluted
earnings per common share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the year adjusted
for the dilutive effect of the incremental shares that would have been
outstanding under the Company's stock option and restricted stock plans. The
effect of stock options and restricted stock are not included in the diluted
computation for periods in which a loss from continuing operations occurs
because to do so would have been anti-dilutive. The effect of the Company's 5%
Convertible Subordinated Preferred Equivalent Debentures due 2027 (the
"Debentures") on diluted earnings per share is anti-dilutive and thus is not
included in the calculation.


                                       10
<PAGE>   12


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

     The following reconciles basic and diluted weighted average shares
outstanding:

<TABLE>
<CAPTION>
                                                                      THREE MONTHS               NINE MONTHS
                                                                   ENDED SEPTEMBER 30,       ENDED SEPTEMBER 30,
                                                                -------------------------- -------------------------
                                                                    1999          1998         1999         1998
                                                                ------------  ------------ ------------ ------------
                                                                                  (in thousands)
<S>                                                             <C>           <C>          <C>          <C>
      Basic weighted average shares outstanding...............      101,408        97,386       98,770      96,973
      Dilutive effect of stock option and restricted stock
        plans.................................................        2,073           433        1,536         711
                                                                ------------  ------------ ------------ ------------
      Dilutive weighted average shares outstanding............      103,481        97,819      100,306      97,684
                                                                ============  ============ ============ ============
</TABLE>

10.  SUPPLEMENTAL CASH FLOW INFORMATION

     The following summarizes investing activities relating to acquisitions
integrated into the Company's continuing operations and the GE joint venture for
the periods shown:

<TABLE>
<CAPTION>
                                                                         NINE MONTHS
                                                                      ENDED SEPTEMBER 30,
                                                                 ---------------------------
                                                                    1999             1998
                                                                 ----------       ----------
                                                                         (in thousands)
<S>                                                              <C>             <C>
       Fair value of assets, net of cash acquired................  $  494,331    $   73,862
       Goodwill..................................................     327,813        95,810
       Total liabilities, including minority interest............    (380,280)      (39,316)
       Common stock issued.......................................    (363,578)      (30,895)
                                                                   ----------    ----------
       Cash consideration, net of cash acquired................... $   78,286    $   99,461
                                                                   ==========    ==========
</TABLE>

11.  SEGMENT INFORMATION

     Business Segments

     The Company is a diversified international energy service and manufacturing
company that provides a variety of services and equipment to the exploration,
production and transmission sectors of the oil and gas industry. The Company
operates in virtually every oil and gas exploration and production region in the
world. The Company currently divides its business segments into three separate
groups: completion and oilfield services, artificial lift systems, and
compression services.

     The Company's completion and oilfield services segment provides downhole
services, well installation services, well completion systems, equipment rental
and underbalanced drilling products and services.

     The Company's artificial lift systems segment designs, manufactures, sells
and services a complete line of artificial lift equipment, including progressing
cavity pumps, reciprocating rod lift equipment, gas lift equipment and hydraulic
lift equipment. The Company has a long-term alliance with Electric Submersible
Pumps, Inc. to supply a line of electrical submersible pumps and to distribute
the line in selected markets.

     The Company's compression services segment manufactures, packages, rents
and sells parts and services for gas compressor units over a broad horsepower
range.


                                       11
<PAGE>   13


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

     Financial information by industry segment for each of the three and nine
months ended September 30, 1999 and 1998, is summarized below.

<TABLE>
<CAPTION>
                                                                   THREE MONTHS                  NINE MONTHS
                                                               ENDED SEPTEMBER 30,           ENDED SEPTEMBER 30,
                                                            ---------------------------  ----------------------------
                                                                1999          1998           1999            1998
                                                            ------------  ------------   ------------   -------------
<S>                                                         <C>           <C>            <C>            <C>
                                                                                 (in thousands)
     Revenues from unaffiliated customers
          Completion and Oilfield Services...............   $   176,961   $   209,607    $   502,659    $    661,524
          Artificial Lift Systems........................        78,740        70,010        198,438         267,566
          Compression Services...........................        67,931        42,641        166,464         132,806
                                                            ------------  ------------   ------------   -------------
                                                            $   323,632   $   322,258    $   867,561    $  1,061,896
                                                            ============  ============   ============   =============


     EBITDA, before merger costs and other charges (a)
          Completion and Oilfield Services...............   $    36,632   $    66,754    $   115,489    $    224,840
          Artificial Lift Systems........................        10,979         6,678         22,476          37,828
          Compression Services...........................        15,581        10,291         41,987          31,694
          Corporate......................................        (4,946)       (4,977)       (16,639)        (18,555)
                                                            ------------  ------------   ------------   -------------
                                                            $    58,246   $    78,746    $   163,313    $    275,807
                                                            ============  ============   ============   =============

     Merger costs and other charges (b)
          Completion and Oilfield Services...............   $        --   $        --    $        --    $     26,805
          Artificial Lift Systems........................            --            --             --          18,570
          Corporate......................................            --            --             --          67,675
                                                            ------------  ------------   ------------   -------------
                                                            $        --   $        --    $        --    $    113,050
                                                            ============  ============   ============   =============

     Depreciation and amortization
          Completion and Oilfield Services...............   $    26,495   $    24,041    $    78,570    $     69,374
          Artificial Lift Systems........................         5,024         4,623         14,694          14,311
          Compression Services...........................         8,459         6,117         25,193          18,092
          Corporate......................................           639           220          1,511           1,547
                                                            ------------  ------------   ------------   -------------
                                                            $    40,617   $    35,001    $   119,968    $    103,324
                                                            ============  ============   ============   =============

     Operating income (loss)
          Completion and Oilfield Services...............   $    10,137   $    42,713    $    36,919    $    128,661
          Artificial Lift Systems........................         5,955         2,055          7,782           4,947
          Compression Services...........................         7,122         4,174         16,794          13,602
          Corporate......................................        (5,585)       (5,197)       (18,150)        (87,777)
                                                            ------------  ------------   ------------   -------------
                                                            $    17,629   $    43,745    $    43,345    $     59,433
                                                            ============  ============   ============   =============
</TABLE>

     (a) The Company evaluates performance and allocates resources based on
     EBITDA, which is calculated as operating income adding back depreciation
     and amortization, excluding the impact of merger costs and other charges.
     Calculations of EBITDA should not be viewed as a substitute to calculations
     under GAAP, in particular operating income, income from continuing
     operations and net income. In addition, EBITDA calculations by one company
     may not be comparable to another company.

     (b) Includes inventory write-downs of $9.9 million which have been
     classified as Cost of Products on the accompanying Consolidated Condensed
     Statements of Operations.


                                       12
<PAGE>   14


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

     As of September 30, 1999, total assets, excluding net assets of
discontinued operations, were $1,524.7 million for Completion and Oilfield
Services, $604.4 million for Artificial Lift Systems, $661.3 million for
Compression Services, and $81.4 million for Corporate.

     As of December 31, 1998, total assets, excluding net assets of discontinued
operations, were $1,022.1 million for Completion and Oilfield Services, $592.4
million for Artificial Lift Systems, $388.2 million for Compression Services,
and $90.7 million for Corporate.

12.  RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999 the FASB issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of SFAS No. 133, amending the effective date of SFAS No. 133 to
years beginning after June 15, 2000. The Company is currently evaluating the
impact of SFAS No. 133 on its consolidated condensed financial statements.


                                       13
<PAGE>   15


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

GENERAL

     Our business is conducted through three business segments: (1) Completion
and Oilfield Services, (2) Artificial Lift Systems and (3) Compression Services.
We also historically operated a Drilling Products segment that manufactures and
sells drill pipe and other drill stem products and premium tubulars and
connections. In October 1999, our Board of Directors approved the spinoff by us
of our Drilling Products segment. We have reclassified the operations of this
segment as a discontinued operation in light of the anticipated spinoff of the
segment.

     The spinoff of our Drilling Products segment is proposed to be effected
through a distribution by us to our stockholders of one share of stock of our
Grant Prideco, Inc. subsidiary for each two shares of our common stock held by
our stockholders. The spinoff is subject to our receipt of a favorable private
letter ruling from the Internal Revenue Service on certain aspects of the
spinoff. A request for the private letter ruling was filed with the Internal
Revenue Service in July 1999 and that request is in the process of being
reviewed by the Internal Revenue Service. A registration statement on Form 10
and related preliminary information statement describing the business, assets
and stock of Grant Prideco has been filed with the Securities and Exchange
Commission. We currently expect that the spinoff of our Grant Prideco drilling
products division will occur during the first quarter of 2000.

     The following is a discussion of our results of operations for the three
and nine months ended September 30, 1999 and 1998. This discussion should be
read in conjunction with our financial statements that are included with this
report and our restated financial statements and related Management's Discussion
and Analysis of Financial Condition and Results of Operations for the year ended
December 31, 1998 included in our Current Report on Form 8-K filed October 25,
1999.

     Our discussion of our results and financial condition includes various
forward-looking statements about our markets, the demand for our products and
services and our future results. These statements are based on certain
assumptions that we consider reasonable. For information about these
assumptions, you should refer to our section entitled "Forward-Looking
Statements."



                                       14
<PAGE>   16

MARKET TRENDS AND OUTLOOK

     Our businesses serve the oil and gas industry. Certain of our products and
services, such as well installation services and our well completion services,
are dependent on the North American and worldwide level of exploration and
development activity. Other products and services, such as our artificial lift
systems and compression services, are dependent on oil and gas production
activity. We currently estimate that between 35% and 45% of our continuing
operations are primarily reliant on drilling activity, with the remainder
primarily related to production activity. All of our businesses, however, are
affected by changes in the worldwide demand and the price of oil and natural
gas.

     During 1998, the price of oil ranged from a high of $17.62 per barrel of
West Texas Intermediate crude to a low of $10.44 per barrel of West Texas
Intermediate crude. The North American rig count also fell from a high of 1,508
rigs to a low in 1998 of 854. The international rig count, which typically
trails the domestic rig count by a number of months, fell in 1998 from a high of
819 to a low of 671. In 1999, the price of oil hit a low of $11.07 per barrel
and the North American and international rig counts reached historical lows of
534 and 556, respectively.

     The downturn in the industry that began in 1998 led our customers to
substantially curtail their exploration and drilling activity during the second
half of 1998 and most of 1999. This reduction in activity resulted in
substantially lower purchases and rentals of equipment manufactured and sold by
us for the exploration and completion of wells. Our field services, such as
fishing and rental, and our sales of artificial lift and other production
equipment and services were also materially impacted by the fall in demand. We
were also impacted by an unprecedented wave of mergers and consolidations among
our customers due to the market conditions. Our customers also canceled, delayed
and rebid many projects to reduce their costs in light of market conditions. In
certain markets in the United States and Canada we believe activity fell by more
than 70%.

     Although market conditions have adversely affected our businesses and their
results in 1999, we made the strategic decision to add to our core competencies
during this downturn and take advantage of desirable acquisitions in our
markets. This decision was based on our belief that the downturn would create
unique opportunities for us to acquire on desirable terms businesses and
capabilities that could serve as the platform for growth in the future. We also
believe that because of the consolidating nature of our industry, many of these
opportunities would not be available again. The principal acquisitions completed
by us in late 1998 and 1999 include:

     (1) Our acquisitions of Cardium Oil Tools and Petroline Wellsystems in the
         second and third quarters of 1999. These two acquisitions significantly
         increased the capabilities of our completion division in the areas of
         flow control, liner hangers and packers and added state of the art sand
         control technology to our completion product offering. We also acquired
         a 50% interest in SubTech, a company that provides products for
         intelligent completions and production automation.
     (2) Our acquisitions of Dailey International Inc. and Williams Tool Co. in
         the third quarter of 1999 and ECD in the second quarter of 1999. These
         three acquisitions have provided us with a complete integrated package
         for the provision of underbalanced drilling services. We now have the
         largest compression fleet in the industry used for underbalanced and
         air drilling, our own proprietary line of pressure control equipment,
         state of the art foam and chemical technology used for underbalanced
         drilling and the largest fleet of nitrogen membrane units. The Dailey
         acquisition also provided us with our own manufactured line of drilling
         and fishing jars for use in our rental and fishing operations.
     (3) Our joint venture with GE Capital which combined our Weatherford
         Compression business with GE's Global Compression business to create
         the second largest natural gas compression fleet in the industry. This
         joint venture has allowed us to expand our compression operations into
         the higher margin higher horsepower business as well as the growing
         international markets.
     (4) Our acquisition of various licenses, technologies and businesses in the
         multi-lateral and re-entry market. These transactions have provided us
         with key technologies and a platform for growth in the growing re-entry
         and multi-lateral markets.

     While we believe the steps we have taken over the last year to position us
for growth in the future should benefit our results as our industry improves,
the recent downturn in our industry has materially and adversely impacted our
results over the last year and a half through substantially lower sales and
margins. Our results have also been affected by higher average fixed and
variable costs associated with the maintenance of our extensive worldwide
manufacturing, sales and service infrastructure during a period of low activity.



                                       15
<PAGE>   17
     Although we have sought over the past year to reduce our costs through
reductions in headcount and locations in light of this most recent industry
downturn, we believe that in order for us to effectively compete in our industry
against much larger competitors we must continue to maintain our market shares
and a strong presence in many of our markets, in particular the higher margin,
long-term growth international markets, notwithstanding the recent downturn. In
addition, we have incurred higher costs associated with our integration and
assimilation of acquisitions and new businesses and products into our
organization during the downturn. All of these circumstances, combined with
record low levels of activity, have materially reduced our margins and operating
profits since mid-1998.

     Recently, the price of oil has increased due to members of the Organization
of Petroleum Exporting Countries reducing production in compliance with
production quotas. Although oil prices have been higher for a number of months,
the increased prices have not yet translated to materially higher overall
activity in our business, in particular in the higher margin international and
offshore markets and the market for higher cost deep and difficult wells.
International activity outside North America is in fact still declining due to
the larger and longer nature of international projects.

     The third quarter of 1999 also represented the first sequential quarterly
improvement that we have seen in our businesses in over a year. This improvement
was primarily due to higher oil prices and increased North American activity.
Activity in the United States and Canada gradually improved during the quarter
and is expected to continue to improve during the fourth quarter of 1999.
Notwithstanding this improvement in North America, we do not expect to see any
major improvements in business activity until 2000, in particular in the
international markets outside North America. Further, the timing of improvements
in our operations will be dependent upon the segment of the industry involved.
Our artificial lift group was the first to benefit from the recent improvements
as production projects were reinstated in light of the higher prices of oil, in
particular heavy oil in Canada. Natural gas activity in Canada is also
increasing. Our completion and downhole services group has recently begun to
benefit from the improved activity in North America. The pickup in this group,
however, is expected to be gradual and we expect that results in this group will
be affected by pricing pressures through at least the remainder of the year, in
particular in the international markets. Our compression business, which is less
affected by day-to-day market factors, is expected to improve slightly as a
result of recent improvements in domestic pricing.

   The following chart sets forth certain historical statistics that are
reflective of the market conditions in which we operate:

<TABLE>
<CAPTION>
                                                        HENRY HUB      NORTH AMERICAN    INTERNATIONAL
                                      WTI OIL (1)        GAS (2)       RIG COUNT (3)     RIG COUNT (3)
                                     --------------  --------------  ---------------  ----------------
<S>                                  <C>             <C>             <C>              <C>

    September 30, 1999.............. $      24.51    $    2.560              966              557
    December 31, 1998...............        11.28         1.945              895              671
    September 30, 1998..............        14.95         2.433              964              727
</TABLE>

   (1) Price per barrel of West Texas Intermediate crude oil as of September 30
       and December 31 - Source: Applied Reasoning, Inc.
   (2) Price per MM/BTU as of September 30 and December 31 - Source: Oil World
   (3) Average rig count for the applicable month - Source: Baker Hughes Rig
       Count

     Looking forward into the fourth quarter of 1999 and next year, we are
currently expecting improvements in most of our businesses as exploration and
production activity increase. This improvement will likely be gradual and felt
most strongly in North America. The level of market improvements for our
businesses will be heavily dependent on whether oil and natural gas prices can
remain at or about their present levels and the impact recent market
improvements may have on customer spending. Improvements in North America may
also be partially offset by a slower recovery in the international markets.
Although we believe that the activity levels in our industry are at or near
their bottom, the timing and extent of a recovery is difficult to predict and
will be dependent on many external factors such as compliance with OPEC quotas,
world economic conditions and weather conditions. The extreme volatility of our
markets makes predictions regarding future results difficult.



                                       16
<PAGE>   18


RESULTS OF CONTINUING OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998

   The following charts contain selected financial data comparing our results
for 1999 and 1998:

<TABLE>
<CAPTION>

 COMPARATIVE FINANCIAL DATA                                    THREE MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                         -------------------------------
                                                              1999              1998
                                                         -------------     -------------
<S>                                                      <C>               <C>
                                                             (in thousands, except
                                                                  percentages)

  Revenues...........................................     $  323,632        $  322,258
  Gross Profit.......................................         85,651           100,287
  Gross Profit %.....................................          26.5%             31.1%
  Selling, General and Administrative
    Attributable to Segments.........................     $   63,125        $   52,021
  Corporate General and Administrative...............          5,585             5,197
  Operating Income...................................         17,629            43,745
  Income from Continuing Operations..................          3,022            22,239
  EBITDA (a).........................................         58,246            78,746
</TABLE>

   (a) EBITDA is calculated by taking operating income and adding back
       depreciation and amortization. We have included an EBITDA calculation
       here because when we look at the performance of our businesses, we give
       consideration to their EBITDA. Calculations of EBITDA should not be
       viewed as a substitute to calculations under GAAP, in particular cash
       flows from operations, operating income, income from continuing
       operations and net income. In addition, EBITDA calculations by one
       company may not be comparable to another company.


 SALES BY GEOGRAPHIC REGION
                                              THREE MONTHS ENDED
                                                SEPTEMBER 30,
                                          ------------ - ------------
                                             1999           1998
                                          ------------   ------------
 REGION: (a)

 U.S.  ..............................             48%            47%
 Canada  ............................             19%            14%
 Europe  ............................             11%            13%
 Latin America.......................              9%            10%
 Africa  ............................              6%             7%
 Middle East.........................              3%             4%
 Other ..............................              4%             5%
                                          ============   ============
     Total...........................            100%           100%
                                          ============   ============

   (a) Sales are based on the region of origination and do not reflect sales by
ultimate destination.

   Our results for the three months ended September 30, 1999 reflected the
adverse market conditions described above in which we were operating. These
conditions had the following effects on our results:

   o   Third quarter 1999 consolidated revenues remained virtually unchanged
       from third quarter 1998 as improvements in North American revenues were
       offset by deterioration in international revenues. Our third quarter 1999
       revenues in North America were $22.7 million higher than they were in the
       third quarter of 1998 due to recent improvements in the North American
       rig count, particularly Canada. International revenues decreased 16.8%
       from third quarter 1998 levels as activity has continued to decline due
       to the consolidations and internal restructurings at the major oil
       companies.



                                       17
<PAGE>   19

   o   The gross profit percentage decreased 4.6% from the third quarter of 1998
       to the third quarter of 1999. This decline reflects the general effects
       of the downturn in the industry, in particular lower activity in the
       higher margin international markets and pricing pressures throughout.
   o   Our selling, general and administrative expenses increased in 1999 due to
       the addition of various new businesses and costs associated with the
       introduction of new products and services.
   o   Operating income declined 59.7% from the third quarter of 1998 due to
       lower pricing, higher operating and administrative costs and
       manufacturing and operational inefficiencies associated with the decline
       in activity. Although we have sought over the past year to reduce our
       costs through reductions in headcount and locations in light of the
       industry downturn, we have elected to maintain our market position and
       international infrastructure in order to capitalize on the market
       recovery when it occurs.
   o   Our corporate expenses as a percentage of revenues increased slightly
       from 1.6% in the third quarter of 1998 to 1.7% in the third quarter of
       1999.
   o   Our effective tax rate for the third quarter of 1999 was 29.0%, as
       compared to 31.8% for the third quarter 1998, due to the mix between
       foreign and U.S. tax attributes for 1999.

   SEGMENT RESULTS

     COMPLETION AND OILFIELD SERVICES

     Our Completion and Oilfield Services Division experienced reductions in
revenue, operating income and margins as the international rig count declined
and the demand for its products and services dropped. In addition, although the
North American rig count has recently improved, a large part of the improvement
has been in the lower margin markets. Pricing pressures were also prevalent in
most of our markets in the quarter. Our Completion and Oilfield Services
Division was also materially affected by higher average fixed and variable costs
associated with the maintenance of its extensive worldwide manufacturing, sales
and service infrastructure during a period of low activity. In addition, costs
associated with the integration and assimilation of recent acquisitions and new
businesses and products into this division during the downturn for growth in the
future have reduced its profitability.

     This division's North American completion and downhole services operations
were the most adversely affected by the downturn and continued to experience
pricing pressures throughout the quarter. In most of our international markets,
we are seeing significantly reduced volumes and are experiencing continued
pricing pressures due to soft demand. Although our completion and downhole
services group has begun to benefit from the improved activity in North America,
any improvements in operating results are expected to be gradual. Further, we
expect that results in this division will be affected by lower international
activity for the remainder of 1999 and pricing pressures through at least the
remainder of the year, in particular in the international markets.

     The following chart sets forth additional data regarding the results of our
Completion and Oilfield Services Division for the third quarters of 1999 and
1998:

                                                       THREE MONTHS ENDED
                                                         SEPTEMBER 30,
                                                 -------------------------------
                                                     1999              1998
                                                 -------------     -------------
                                                    (in thousands, except
                                                        percentages)

      Revenues...................................  $  176,961      $   209,607
      Gross Profit...............................      43,117           64,341
      Gross Profit %.............................       24.4%            30.7%
      Selling, General and Administrative........  $   33,528      $    22,304
      Operating Income...........................      10,137           42,713
      EBITDA.....................................      36,632           66,754

     Other material items affecting the results of our Completion and Oilfield
Services Division for the third quarter of 1999 compared to 1998 were:

     o Our domestic revenues for the third quarter of 1999 declined by 16.9% as
       compared to the third quarter of 1998 due to an average rig count
       reduction of 20.8%. Our international revenues, excluding Canada,
       decreased by 18.3% from the third quarter of 1998 due to a rig count
       reduction of 22.9%. The most


                                       18
<PAGE>   20

       significant revenue decreases occurred in Europe, Africa, and the
       Middle East where revenues declined 14.4%, 21.5%, and 28.6%, respectively
       from prior year levels.
     o Gross profit percentage declined in the third quarter of 1999 by 6.3% as
       compared to the third quarter of 1998, due to revenue and pricing
       declines and factory underutilization. The gross profit was further
       reduced by the decline in higher margin international revenues.
     o Selling, general and administrative expenses increased as a percentage
       of revenues from 10.6% in the third quarter of 1998 to 18.9% in the third
       quarter of 1999. The increase primarily reflects a lower revenue base,
       start up costs for new product lines and businesses, costs associated
       with the integration and introduction of newly acquired businesses and
       goodwill amortization associated with 1999 acquisitions. Selling, general
       and administrative costs were negatively impacted by certain acquisitions
       completed in 1999, in particular Dailey International Inc. and Williams
       Tool Co., which had historically high selling, general and administrative
       costs as a percentage of revenues. Because most of these businesses have
       just recently been acquired, we have not yet been able to eliminate
       redundant costs and expenses.
     o Operating income declined $32.6 million in the third quarter of 1999
       from the third quarter of 1998 primarily due to reduced revenues
       associated with industry conditions and higher average costs due to
       manufacturing and operational inefficiencies attributable to lower
       operating levels.

     ARTIFICIAL LIFT SYSTEMS

     Operating results from our Artificial Lift Systems Division are heavily
dependent on oil production activity. Revenues for this division increased
approximately 12% from third quarter 1998 levels, primarily in response to
improved activity levels in North American markets, in particular Canada. This
division has also seen increased sales in the Latin American markets from second
quarter 1999 levels as its artificial lift products have begun to penetrate
those markets utilizing our worldwide infrastructure. We expect the results from
this division to continue to improve during the year. The level of improvement
in this division will depend on our customer's reaction to higher oil prices and
the strength of the recovery.

     The following chart sets forth additional data regarding the results of our
Artificial Lift Systems Division for the third quarters of 1999 and 1998:

                                                      THREE MONTHS ENDED
                                                        SEPTEMBER 30,
                                                -------------------------------
                                                     1999              1998
                                                -------------     -------------
                                                   (in thousands, except
                                                       percentages)

    Revenues..................................  $     78,740      $     70,010
    Gross Profit..............................        26,660            26,341
    Gross Profit %............................         33.9%             37.6%
    Selling, General and Administrative.......  $     20,845      $     24,286
    Operating Income..........................         5,955             2,055
    EBITDA....................................        10,979             6,678

     Other material items affecting the results of our Artificial Lift Systems
Division as reflected above for the third quarter of 1999 compared to the third
quarter of 1998 were:

     o The third quarter of 1999 experienced an increase in revenues of 12.5%
       compared to the third quarter of 1998 primarily as a result of recent
       improvements in North American markets. The most significant improvement
       was in Canada where revenues were up 53.5% from third quarter 1998 levels
       as the Canadian rig count increased 19.8% period over period.
     o Gross profit as a percentage of revenues decreased from 37.6% in the
       third quarter of 1998 to 33.9% in the third quarter of 1999 due to
       pricing pressures associated with depressed market conditions that
       occurred during the earlier part of the year. We have recently begun to
       see improvements in pricing as the market for artificial lift products
       has begun its recovery.
     o Selling, general and administrative expenses decreased as a percentage
       of revenues from 34.7% in the third quarter of 1998 to 26.5% in the third
       quarter of 1999 due to cost reductions previously implemented.
     o Operating income as a percentage of revenues improved to 7.6% for the
       third quarter of 1999 as compared to 2.9% for the third quarter of 1998
       due to cost reductions.


                                       19
<PAGE>   21

COMPRESSION SERVICES

     Our Compression Services Division's results for the third quarter of 1999
reflected increased revenues compared to the third quarter of 1998 as well as
sequential improvement over the second quarter of 1999. Contributing to the
increase in revenues was the February 1999 joint venture with GE Capital and
continued expansion into high value added, long-term contracts.

     Our Compression Services Division recently expanded its international
presence through the award of a seven year contract with YPF S.A. in Argentina
to provide full compression rental, maintenance and service for approximately
$95.0 million over the term of the contract. This project became fully
operational in the third quarter of 1999 and contributed $3.0 million in
revenues.

     The following chart sets forth additional data regarding the results of our
Compression Services Division for the third quarters of 1999 and 1998:

                                                     THREE MONTHS ENDED
                                                        SEPTEMBER 30,
                                                ------------------------------
                                                    1999             1998
                                                -------------    -------------
                                                    (in thousands, except
                                                        percentages)

    Revenues................................... $     67,931     $     42,641
    Gross Profit...............................       15,874            9,605
    Gross Profit %.............................        23.4%            22.5%
    Selling, General and Administrative........ $      8,752     $      5,431
    Operating Income...........................        7,122            4,174
    EBITDA.....................................       15,581           10,291
    Minority Interest Expense, Net of Taxes....        1,671               --

    Other material items affecting the results of our Compression Services
Division for 1999 compared to 1998 were:

       o The increase in revenues primarily reflects the impact of the joint
         venture, higher equipment sales, and the YPF contract.
       o Gross profit as a percentage of revenues increased slightly due to a
         better product sales mix. Compressor rental revenues, which generally
         have higher margins than equipment sales, increased as a percentage of
         total revenues from the three months ended September 30, 1998 to the
         three months ended September 30, 1999 due to the joint venture and the
         YPF contract. This improvement was offset, in part, by the increase in
         lower margin equipment sales.
       o The increase in selling, general and administrative expenses reflects
         costs associated with the additional operations acquired in the joint
         venture with GE.


                                       20
<PAGE>   22


   NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
   SEPTEMBER 30, 1998

     The following charts contain selected financial data comparing our results
for 1999 and 1998:

 COMPARATIVE FINANCIAL DATA                         NINE MONTHS ENDED
                                                      SEPTEMBER 30,
                                              ------------------------------
                                                   1999             1998
                                              -------------    -------------
                                                  (in thousands, except
                                                      percentages)

   Revenues................................. $   867,561      $ 1,061,896
   Gross Profit.............................     242,757          343,816   (a)
   Gross Profit %...........................       28.0%            32.4%
   Selling, General and Administrative
     Attributable to Segments............... $   182,840      $   163,325
   Corporate General and Administrative.....      18,150           20,102
   Operating Income.........................      43,345           59,433   (a)
   Income from Continuing Operations........       8,717           19,163   (a)
   EBITDA (b)...............................     163,313          162,757   (a)

   (a) Includes $113.0 million, $73.5 million net of tax, of merger and other
       charges relating to the merger between EVI and Weatherford Enterra and a
       reorganization and rationalization of our business in light of industry
       conditions. Of these charges, $9.9 million related to the write-off of
       inventory has been classified as cost of products.

   (b) EBITDA is calculated by taking operating income and adding back
       depreciation and amortization. We have included an EBITDA calculation
       here because when we look at the performance of our businesses, we give
       consideration to their EBITDA. Calculations of EBITDA should not be
       viewed as a substitute to calculations under GAAP, in particular cash
       flows from operations, operating income, income from continuing
       operations and net income. In addition, EBITDA calculations by one
       company may not be comparable to another company.

 SALES BY GEOGRAPHIC REGION
                                         NINE MONTHS ENDED
                                           SEPTEMBER 30,
                                     ---------------------------
                                        1999           1998
                                     ------------   ------------
 Region: (a)

 U.S.  ............................          46%            47%
 Canada  ..........................          17%            18%
 Europe  ..........................          12%            12%
 Latin America.....................           9%             9%
 Africa  ..........................           7%             6%
 Middle East.......................           4%             3%
 Other ............................           5%             5%
                                     ------------   ------------
     Total.........................         100%           100%
                                     ============   ============

   (a) Sales are based on the region of origination and do not reflect sales by
ultimate destination.

   Our results for the nine months ended September 30, 1999 reflected the
depressed market conditions discussed above. These conditions had the following
effects on our results:

   o   Revenues for the nine months ended September 30, 1999 declined 18.3%
       compared to the same period in 1998. Of the $194.3 million decline in
       revenues from 1998 to 1999, $136.7 million, or 70.4%, was attributable to
       sales in North America.
   o   Selling, general and administrative expenses attributable to the
       segments increased as a percent of revenue due primarily to a lower
       revenue base and startup costs for new product lines and businesses,
       costs associated with



                                       21
<PAGE>   23

       the integration and introduction of newly acquired businesses and
       goodwill amortization associated with 1999 acquisitions. Selling, general
       and administrative costs were negatively impacted by certain acquisitions
       completed in 1999, in particular Dailey International Inc. and Williams
       Tool Co., which had historically high selling, general and administrative
       costs as a percentage of revenues. Because most of these businesses have
       just recently been completed, we have not yet been able to eliminate
       redundant costs and expenses.
   o   Operating income declined $129.1 million to $43.3 million for the nine
       months ended September 30, 1999 as compared to $172.4 million, excluding
       the effect of merger and other charges, for the same period in 1998. This
       resulted from lower revenues, lower margins, and increased selling,
       general and administrative expenses attributable to segments. The
       reduction in margins reflected pricing pressures throughout our markets
       and higher average fixed and variable costs associated with the
       maintenance of our extensive worldwide manufacturing, sales and service
       infrastructure during a period of low activity.
   o   The decrease in corporate expenses from 1998 was primarily attributable
       to consolidation savings.

   SEGMENT RESULTS

     COMPLETION AND OILFIELD SERVICES

     Our Completion and Oilfield Services Division experienced reductions in
revenue, operating income and margins as the rig count declined and demand for
this division's products and services dropped. This division's North American
operations were the most adversely affected by the downturn during the first
half of 1999. International activity outside of North America has also declined
significantly during the year. All our markets in this division experienced
pricing pressures associated with the drop in activity and demand. The on-going
cost of maintaining this division's international infrastructure, which is
necessary for long-term success, and the cost of the integration and
assimilation of acquisitions completed in 1999 and new businesses and products
during the downtown have further eroded its profitability.

     The following chart sets forth additional data regarding the results of our
Completion and Oilfield Services Division:

                                                    Nine Months Ended
                                                      September 30,
                                              -------------------------------
                                                   1999              1998
                                              -------------     -------------
                                                 (in thousands, except
                                                     percentages)
      Revenues..............................   $   502,659      $   661,524
      Gross Profit..........................       131,142          225,200  (a)
      Gross Profit %........................         26.1%            34.0%
      Selling, General and Administrative...   $    95,661      $    72,505
      Operating Income......................        36,919          128,661  (a)
      EBITDA................................       115,489          198,035  (a)

     (a) Includes merger and other charges of $26.8 million, which consists of
         $3.2 million for facility closures, $23.1 million for write-down of
         assets and $0.5 million for write-off of inventory. The write-off of
         inventory has been classified as cost of products.

     Other material items affecting the results of our Completion and Oilfield
Services Division were:

     o Our North American  revenues for the nine months ended  September 30,
       1999 declined by 33.6% as compared to 1998 due to an average rig count
       reduction of 32.7%.
     o Our international revenues, excluding Canada, decreased by 14.1% in the
       nine months ended September 30, 1999 to $279.5 million, as compared to
       the nine months ended September 30, 1998. The most significant revenue
       decrease occurred in Europe, Africa, and the Middle East where revenues
       decreased 12.6%, 10.9%, and 15.7%, respectively.
     o Our gross profit percentage, excluding the effect of the merger and
       other charges, declined in the nine months ended September 30, 1999 by
       7.9%, from the same period in 1998 due to revenue and pricing declines
       and plant under absorption. The gross profit percentage was further
       reduced by the loss of international sales which tend to have higher
       profit margins.


                                       22
<PAGE>   24

     o Selling, general and administrative expenses increased as a percentage
       of revenues from 11.0% in nine months ended September 30, 1998 to 19.0%
       in 1999. The increase primarily reflects a lower revenue base and start
       up costs relating to new product lines and businesses, costs associated
       with the integration and introduction of newly acquired businesses and
       goodwill amortization associated with 1999 acquisitions. Selling, general
       and administrative costs were negatively impacted by certain acquisitions
       completed in 1999, in particular Dailey International Inc. and Williams
       Tool Co., which had historically high selling, general and administrative
       costs as a percentage of revenues.
     o Operating income, excluding the effect of merger and other charges,
       declined in the nine months ended September 30, 1999 to $36.9 million
       from $155.5 million in 1998 primarily due to reduced revenues associated
       with industry conditions, higher costs and resulting operational
       inefficiencies attributable to lower operating levels.

     ARTIFICIAL LIFT SYSTEMS

     Our Artificial Lift Systems Division's results for the nine months ended
September 30, 1999 compared to the same period in 1998, were down significantly
due to a substantial reduction in demand during the first half of 1999 for our
artificial lift products following the downturn in the industry. This decline
was most pronounced in North America where our sales for the nine months ended
September 30, 1998, represented approximately 82.7% of the division's total
revenue.

     The following chart sets forth additional data regarding the results of our
Artificial Lift Systems Division:

                                                   NINE MONTHS ENDED
                                                     SEPTEMBER 30,
                                             -------------------------------
                                                  1999              1998
                                             -------------     -------------
                                                (in thousands, except
                                                    percentages)

    Revenues................................ $    198,438      $    267,566
    Gross Profit............................       71,812            89,225  (a)
    Gross Profit %..........................        36.2%             33.3%
    Selling, General and Administrative..... $     64,170      $     75,031
    Operating Income........................        7,782             4,947  (a)
    EBITDA..................................       22,476            19,258  (a)

     (a) Includes merger and other charges of $18.6 million, which consists of
         $7.7 million for facility closures, $9.3 million for the write-off of
         inventory and $1.6 million related to the write-down of assets. The
         write-off of inventory has been classified as cost of products.

     Other material items affecting the results of our Artificial Lift Systems
Division as reflected above were:

     o   The nine months ended September 30, 1999 experienced a decline in
         revenues of 25.8% compared to the same period in 1998 due to the
         industry downturn which began to impact this division in the second
         quarter of 1998. Revenues in North America decreased $49.3 million or
         22.3%, from the nine months ended September 30, 1998 to the same period
         in the current year.
     o   Gross profit, excluding the effect of merger and other charges,
         declined to $71.8 million in the nine months ended September 30, 1999
         from $107.8 million in the nine months ended September 30, 1998 due
         primarily to a lower revenue base and pricing declines. Gross profit,
         excluding the effect of the merger and other charges, as a percent of
         revenue remained constant period over period at approximately 36.0%.
     o   Selling, general and administrative expenses declined due to the cost
         reductions implemented in response to the depressed industry
         conditions. Selling, general and administrative expenses increased 4.3%
         as a percent of revenue due to lower revenue levels.
     o   The decline in operating income, excluding the effect of the merger
         and other charges, of $15.8 million for the first nine months of 1999,
         as compared to the same period in 1998 is a result of the sharp decline
         in revenues and pricing pressures.


                                       23
<PAGE>   25


     COMPRESSION SERVICES

     Our Compression Services Division's results for the nine months ended
September 30, 1999 reflected improved revenues, margins, and operating income as
compared to the same period in 1998. The improvements were primarily
attributable to a better revenue mix and the impact of the joint venture entered
into with GE Capital in February 1999.

     The following chart sets forth additional data regarding the results of our
Compression Services Division:

                                                      NINE MONTHS ENDED
                                                        SEPTEMBER 30,
                                                ------------------------------
                                                    1999             1998
                                                -------------    -------------
                                                    (in thousands, except
                                                        percentages)

    Revenues................................... $    166,464     $    132,806
    Gross Profit...............................       39,803           29,391
    Gross Profit %.............................        23.9%            22.1%
    Selling, General and Administrative........ $     23,009     $     15,789
    Operating Income...........................       16,794           13,602
    EBITDA.....................................       41,987           31,694
    Minority Interest Expense, Net of Taxes....        3,557               --

     Other material items affecting the results of our Compression Services
Division as reflected above were:

     o   Revenues increased 25.3% from the nine months ended September 30, 1998
         to the nine months ended September 30, 1999 due to the joint venture
         with GE and an increase in equipment sales.
     o   Gross profit as a percentage of revenues increased due to improved
         product and sales mix, offset by pricing pressures in the United States
         rental market.
     o   The increase in selling, general and administrative expenses reflects
         costs associated with the additional operations acquired in the joint
         venture with GE.

1998 SPECIAL CHARGES

     In the second quarter of 1998, we incurred $113.0 million in merger and
other charges relating to the merger between EVI and Weatherford Enterra and a
reorganization and rationalization of our businesses in light of the initial
downturn in the industry. These charges had been fully realized as of December
31, 1998.

     We incurred a $47.0 million charge in the fourth quarter of 1998 related to
the significant decline that occurred in our markets at the end of 1998. As of
December 31, 1998, $23.5 million of these charges had been utilized. The
remaining $23.5 million of these charges were fully realized in the first half
of 1999 as follows:

     o    The severance and related costs included in the fourth quarter
          charges were $7.6 million for the termination of approximately 940
          employees during the first half of 1999, in accordance with the
          announced plan. These employees had all been terminated by June 30,
          1999.

     o    The facility and plant closures of $12.8 million were accrued in the
          fourth quarter of 1998 for the consolidation and closure of
          approximately 100 service, manufacturing and administrative facilities
          in response to declining market conditions in the fourth quarter.
          These facilities had all been closed as of June 30, 1999.

     o    The corporate related expenses of $3.1 million recorded in the fourth
          quarter were primarily for the consolidation of technology centers,
          the relocation of corporate offices and the related lease obligations
          to align the corporate cost structure in light of current conditions.

     o    In the first half of 1999, $7.7 million of the 1998 fourth quarter
          charge was utilized by the Completion and Oilfield Services Division,
          $12.1 million by the Artificial Lift Systems Division and $3.7 million
          by Corporate.


                                       24
<PAGE>   26

DISCONTINUED OPERATIONS

     Our discontinued operations consist of our Grant Prideco drilling products
division. Results from discontinued operations were as follows:

     o    We had a loss from discontinued operations, net of taxes, for the
          three months ended September 30, 1999, of $14.1 million and income
          from discontinued operations, net of taxes, for the three months ended
          September 30, 1998 of $20.5 million.

     o    We had a loss from discontinued operations, net of taxes, for the
          nine months ended September 30, 1999 of $19.3 million and income from
          discontinued operations, net of taxes, for the nine months ended
          September 30, 1998, of $69.8 million.

     o    Included in the loss from discontinued operations for the three and
          nine months ended September 30, 1999 are $3.5 million, net of taxes,
          of estimated transaction costs which were accrued in the third
          quarter.

     Our discontinued operations results reflect the extreme adverse market
conditions that have existed in the oilfield equipment market since 1998. These
conditions have resulted in substantially lower purchases of drill pipe and
other drill stem products as well as sharply lower purchases of premium tubulars
and connections. Although oil prices have been higher for a number of months,
the increased prices have not yet translated to materially higher drilling
activity. However, orders for drill stem products and other premium tubular
products are increasing, and we expect that demand will continue to improve
absent another material decline in oil prices. We currently expect that demand
for Grant Prideco's drill pipe and other drill stem products will slowly improve
during 2000, with most of the improvement occurring in the second half of 2000.
We expect that results will be significantly better in 2000 than they were in
1999. Nevertheless, demand for these products continues to be highly dependent
upon drilling activity and the price of oil and natural gas and any material
decline in the price of oil and natural gas or drilling activity could result in
further delay in the recovery.

LIQUIDITY AND CAPITAL RESOURCES

     Our current sources of capital are current cash, cash generated from
operations and borrowings under bank lines of credit. We believe that the
current reserves of cash and short-term investments, access to our existing
credit lines and internally generated cash from operations are sufficient to
finance the projected cash requirements of our current and future operations. We
are continually reviewing acquisitions in our markets. Depending upon the size,
nature and timing of an acquisition, we may require additional capital in the
form of either debt, equity or a combination of both.

     The following chart contains information regarding our capital resources
and borrowings and exposures as of September 30, 1999 and December 31, 1998:

                                                  SEPTEMBER 30,     DECEMBER 31,
                                                      1999              1998
                                                 ----------------  -------------
                                                         (in thousands)

     Cash and Cash Equivalents.................  $    21,169        $   34,131
     Short-Term Borrowings.....................      282,618           137,279
     Letters of Credit Outstanding.............       26,837            23,222
     Cumulative Foreign Currency Translation
       Adjustment..............................      (86,803)          (76,389)
     International Assets Hedged (U.S. Dollar
       Equivalent).............................       41,638            33,365


     The reduction in our cash and cash equivalents since December 31, 1998, was
primarily attributable to the following:

     o    Borrowings, net of repayments, on term debt and other short-term
          facilities of $127.7 million.


                                       25
<PAGE>   27

     o    Proceeds from the sale and leaseback of compression units of $139.8
          million. Of these proceeds, $65.4 million were subsequently paid to
          GE Capital under terms of the joint venture agreement.
     o    Capital expenditures of property, plant and equipment from continuing
          operations of $134.7  million, including $79.7 million for the
          purchase of compression equipment and related assets for our
          Compression Services Division for use in North America and Argentina.
     o    Capital expenditures of property, plant and equipment from
          discontinued operations of $14.8 million.
     o    Acquisition of new businesses for continuing operations of
          approximately $78.3 million in cash, net of cash acquired.
     o    Acquisition of new businesses for discontinued operations of
          approximately $35.5 million in cash, net of cash acquired, and the
          repayment of approximately $48.0 million in indebtedness incurred for
          Grant Prideco's acquisition of substantially all the outstanding
          shares of the company that owns its Veracruz, Mexico manufacturing
          facility.
     o    Cash inflow from operating activities associated with our continuing
          operations of $24.5 million.
     o    Cash inflow from operating activities of discontinued operations of
          $55.2 million.

     BANKING FACILITIES

     In May 1998, we put in place a five-year unsecured revolving credit
facility that allows us to borrow up to $250.0 million at any time. The facility
consists of a $200.0 million U.S. credit facility and a $50.0 million Canadian
credit facility. As of September 30, 1999, $66.6 million was available under the
credit facility. Borrowings under this facility bear interest at the U.S. prime
rate or a variable rate based on the LIBOR. Our credit facility contains
customary affirmative and negative covenants, including a maximum debt to
capitalization ratio, a minimum interest coverage ratio, a limitation on liens
and a limitation on asset dispositions.

     CONVERTIBLE SUBORDINATED DEBENTURES

     In November 1997, we completed a private placement of $402.5 million
principal amount of our 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027. The Debentures bear interest at an annual rate of 5% and
are convertible into Common Stock at a price of $80 per share. We have the right
to redeem the Debentures at any time on or after November 4, 2000, at redemption
prices provided for in the indenture agreement, and are subordinated in right of
payment of principal and interest to the prior payment in full of certain
existing and future senior indebtedness. We also have the right to defer
payments of interest on the Debentures by extending the quarterly interest
payment period on the Debentures for up to 20 consecutive quarters at any time
when we are not in default in the payment of interest. Under the terms of the
Debentures, the conversion rate for the Debentures will be adjusted following
our spinoff of Grant Prideco. The following sets forth the formula for the
adjustment to the conversion rights of the Debentures for the proposed spinoff.

                                    Conversion Price          x     A - B
                                    ($80 per share)                 -----
                                                                      A

A        =        The current market price per share of our common stock on
                  the payment date for the distribution. The current market
                  price of our common stock for purposes of the adjustment is
                  defined in Section 6.3(g) of the First Supplemental Indenture
                  and is generally defined as the average of the daily closing
                  price of our common stock for the ten trading days ending on
                  the day of the distribution of the Grant Prideco common stock
                  to our stockholders.

B        =        Fair market value of the Grant Prideco common stock to be
                  distributed as determined by our Board of Directors.


     7 1/4% SENIOR NOTES DUE 2006

     We have outstanding $200.0 million of publicly-traded 7 1/4% Senior Notes
due May 15, 2006. Interest on the 7 1/4% Senior Notes is payable semi-annually
on May 15 and November 15 of each year.



                                       26
<PAGE>   28


     COMPRESSION FINANCING

     Our Compression Services Division has entered into various sale and
leaseback arrangements where it has sold $239.8 million of compression units and
has a right to sell up to another $110.2 million of compression units. Under
these arrangements, legal title to the compression units are sold to third
parties and leased back to the division under a five year operating lease with a
market based purchase option.

     As of December 31, 1998, our Compression Services Division had sold
compressors under these arrangements having appraised values of $119.6 million
and had received cash in the amount of $100.0 million and a receivable of $19.6
million. During the nine months ended September 30, 1999, our Compression
Services Division sold additional compressors having an appraised value of
$120.2 million and received cash of $139.8 million.

     Of the proceeds received by our Compression Services Division from the sale
and leaseback of the compressor units, $100.0 million was distributed to us by
the division and $65.4 million was distributed to GE Capital as part of the
joint venture. The remaining proceeds of these sales were utilized by the joint
venture for internal corporate purposes and growth. We have guaranteed certain
of the obligations of the joint venture with respect to the sale of $200.0
million of the compression units. The remaining sales by the joint venture were
done on a non-recourse basis to us and are limited solely to the assets of the
joint venture.

     Our Compression Services Division continues to review potential projects
for expansion of its operations both domestically and internationally. Depending
on the size of these projects, we expect that the financing of the projects will
be funded with the joint venture's cash flow from operations, proceeds from its
sale and leaseback arrangements or new project or similar type financings.

     GRANT PRIDECO NOTE

     In connection with our proposed spinoff of Grant Prideco, we expect to
receive from Grant Prideco an unsecured subordinated note to us in the amount of
$100.0 million. The $100.0 million obligation to us will bear interest at an
annual rate equal to 10.0%. Interest payments will be due quarterly, and
principal and all unpaid interest will be due no later than December 31, 2001.
Under the terms of the note, Grant Prideco will be required to repay this note
with the proceeds of any debt or equity financing, excluding financing under a
credit facility or any equity issued in connection with a business combination.
The indebtedness of Grant Prideco to us will be subordinated to the working
capital obligations of Grant Prideco to its banks. Grant Prideco currently
intends to repay the obligations within 12 months from the completion of the
spinoff, pursuant to an anticipated public or private debt financing. Grant
Prideco's ability to repay this indebtedness, however, will be dependent upon
market conditions.

     CAPITAL EXPENDITURES

     Our capital expenditures for property, plant and equipment for our
continuing operations during the nine months ended September 30, 1999 were
$134.7 million and primarily related to compression and other rental equipment,
fishing tools and tubular service equipment. Included within our capital
expenditures for the nine months ended September 30, 1999 was $79.7 million for
our Compression Services Division which primarily related to U.S. assets and our
long term contract with YPF. A portion of the 1999 capital expenditures related
to projects initiated at the end of 1998. Capital expenditures for the fourth
quarter of 1999 are expected to be approximately $15.0 million to $20.0 million
and will be primarily maintenance related, excluding our compression operations.
Capital expenditures for our compression operations will be based on contract
needs and the timing of new projects entered into by our compression joint
venture.



                                       27
<PAGE>   29


     Our compression operations are, by their nature, capital intensive and
require substantial investments in compressor units. These capital investments
have historically been financed through existing cash and internally generated
cash flow. We expect that future capital investments by our compression division
will be financed by our compression joint venture through debt, sale and
leaseback arrangements and other similar financing structures that are repaid
from the cash flows generated from the compressor units over the projected term
of rental of the equipment.

     ACQUISITIONS AND JOINT VENTURES

     In February 1999, we completed a joint venture with GE Capital Corporation
in which we combined our compression services operations with GE Capital's
Global Compression's services operations. The joint venture, which is known as
Weatherford Global Compression Services, is the world's second largest provider
of natural gas contract compression services and owns or manages over 4,500
compression units worldwide having approximately 1.1 million horsepower. We own
64% of the joint venture and GE Capital owns 36%. We have the right to acquire
GE Capital's interest at anytime at a price equal to a third party market
determined value that is not less than book value. GE Capital also has the right
to require us to purchase its interest at any time after February 2001 at a
third party market determined value as well as request a public offering of its
interest after that date if we have not purchased its interest by that time.

     In February 1999, we acquired Christiana Companies, Inc. for approximately
4.4 million shares of our common stock and $20.6 million cash. In the
acquisition we acquired through Christiana (i) 4.4 million shares of our common
stock, (ii) cash, after distribution to the Christiana shareholders, equal to
the amount of Christiana's outstanding tax and other liabilities and (iii) a
one-third interest in Total Logistic Control, a refrigerated warehouse, trucking
and logistics company. We acquired Christiana because it gave us a unique
opportunity to own an interest in Total Logistic Control for essentially no
consideration other than our agreement to pursue the acquisition.

     On August 31, 1999, we completed our acquisition of Dailey International
Inc. pursuant to a pre-negotiated plan of reorganization in bankruptcy. Under
the terms of the acquisition, we issued a total of approximately 4.3 million
shares of our common stock to the Dailey noteholders and stockholders. Of the
total number shares issued, we issued approximately 4.0 million shares to the
Dailey noteholders and approximately 0.3 million shares to the Dailey common
stockholders. At the time of our acquisition of Dailey, we held approximately
24% of Dailey's Senior Notes. In the reorganization, we contributed those notes
to Dailey and received approximately 1.2 million shares of our own common stock
which we hold as treasury shares. Because we held Senior Notes of Dailey, which
we acquired prior to the bankruptcy at a discount, the total purchase price for
Dailey, excluding assumed liabilities of Dailey that were not impaired in the
bankruptcy, was approximately $185.0 million.

     Dailey International is a leading provider of specialty drilling equipment
and services to the oil and gas industry and designs, manufactures and rents
proprietary downhole tools for oil and gas drilling and workover applications
worldwide.

     In September 1999, we acquired Petroline Wellsystems Limited for a total
consideration of approximately $165.0 million, consisting of $32.2 million in
cash and 3.8 million shares of our common stock. We also agreed to pay to the
sellers additional funds in the event they resell the shares of our stock
received by them in the acquisition in certain market transactions at a price
less than $35.175 per share. This obligation continues until October 2000.
Petroline, based in Aberdeen, Scotland, is a provider of premium completion
products and services to the international oil and gas industry. Petroline is
the leading provider of flow control equipment in the North Sea and was the
first company to successfully introduce completion products using new expandable
tube technology.

     On September 15, 1999, we acquired Williams Tool Co. for 1.8 million shares
of our common stock. Williams, based in Fort Smith, Arkansas, offers a full
range of rotating control heads for horizontal, underbalanced and low
hydrostatic drilling operations. Williams products are used to control flow from
the wellbore to reduce the risk of blowouts when oil, gas, geothermal and coal
gas methane wells are being drilled with light fluids.

     In the nine months ended September 30, 1999, we also completed eight
acquisitions for our Completion and Oilfield Services Division for consideration
of cash plus assumed debt of $42.6 million and shares of our common stock having
a value of $12.4 million.


                                       28

<PAGE>   30
     We also completed acquisitions during the nine months ended September 30,
1999 that will be integrated into Grant Prideco for total consideration of $36.6
million in cash and assumed debt and shares of our common stock having a value
of $17.3 million.

     Some of our acquisitions have resulted in substantial goodwill associated
with their operations, including goodwill of approximately $327.8 million
relating to our 1999 acquisitions. Through these acquisitions and acquisitions
of technology, we have increased our intangible assets by $57.0 million in 1999.
The amortization expense for goodwill and other intangibles during the nine
months ended September 30, 1999 was $17.0 million.

NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999, the FASB issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of SFAS No. 133, amending the effective date of SFAS No. 133 to
years beginning after June 15, 2000. We are currently evaluating the impact of
SFAS No. 133 on our consolidated financial statements.

YEAR 2000 MATTERS

     The Year 2000 issue is the risk that information systems, computers,
equipment and products using date-sensitive software or containing computer
chips with two-digit date fields will be unable to correctly process the Year
2000 date change. If not identified and corrected prior to the Year 2000,
failures could occur in our software, hardware, equipment and products and those
of our suppliers, vendors and customers that could result in interruptions in
our business. Any failure could have a material impact on us.

     In response to the Year 2000 issue, we have prepared and implemented a plan
("Year 2000 Plan") to assess and remediate significant Year 2000 issues in our:

     o    Information technology systems ("IT"), including computer software and
          hardware.
     o    Non-information technology systems utilizing date-sensitive software
          or computer chips ("Non-IT"), including products, facilities,
          equipment and other infrastructures.

     Our management information systems department ("MIS Department"), together
with our technical and engineering employees and outside consultants, are
responsible for the implementation and execution of the Year 2000 Plan. Our Year
2000 Plan is a comprehensive, multi-step process covering our IT and Non-IT
systems. The primary phases of the Year 2000 Plan are:

     (1)  Assessing and analyzing our systems to identify those that are not
          Year 2000 ready.
     (2)  Preparing cost and resource estimates to repair, remediate or replace
          all systems that are not Year 2000 ready.
     (3)  Developing a Company-wide, detailed strategy to coordinate the repair
          or replacement of all systems that are not Year 2000 ready.
     (4)  Implementing the strategy to make all systems Year 2000 ready.
     (5)  Verifying, testing and auditing the Year 2000 readiness of all
          systems.

     As of September 30, 1999, the first, second, third and fourth phases of the
Year 2000 Plan had been completed. The fifth phase will be completed by the end
of the fourth quarter of 1999. Any unexpected delays or problems that prevent us
from completing the final phase of the Year 2000 Plan in a timely manner could
have a material adverse impact on us.

     In addition to our assessment and review of our own systems, we are
communicating with our third-party contractors, such as vendors, service
providers and customers, for the purpose of evaluating their readiness for the
Year 2000 and determining the extent to which we may be affected by the
remediation of their systems, software, applications and products. We continue
to review and evaluate the Year 2000 programs of our significant third-party
contractors. However, there can be no guarantee that our IT and Non-IT systems
of third-party contractors


                                       29
<PAGE>   31

will be Year 2000 ready or that the failure of any such party to have Year 2000
ready systems would not result in interruptions in our business which could have
a material adverse impact on us.

     In connection with the implementation and completion of the Year 2000 Plan,
we currently expect to incur pretax expenditures of approximately $9.5 million.
We have incurred approximately $9.2 million of such expenditures from January
1998 through September 30, 1999, of which, approximately $7.6 million has been
incurred in connection with the replacement of our business application software
and approximately $1.6 million has been incurred in connection with the
replacement of certain IT hardware systems. We intend to continue to fund the
Year 2000 Plan expenditures with working capital and third-party lease
financing. Based upon information currently available, we believe that
expenditures associated with achieving Year 2000 compliance will not have a
material impact on operating results. However, any unanticipated problems
relating to the Year 2000 issue that result in materially increased expenditures
could have a material adverse impact on us.

     The 1999 expenditures associated with the Year 2000 Plan represent
approximately 15% of our 1999 MIS Department's budget. Various other IT projects
that are not related to the Year 2000 issue have been deferred due to the Year
2000 efforts. The effects of these delays are not expected to have a material
impact on us.

     We are unable to predict the most likely worst case Year 2000 scenario. We
are preparing a contingency plan in response to Year 2000 worst case scenario
and we estimate no lost revenues due to Year 2000 issues. However, there can be
no assurance that any contingency plan developed by us will be sufficient to
alleviate or remediate any significant Year 2000 problems that we may
experience.

     The above discussion of our efforts and expectations relating to the risks
and uncertainties associated with the Year 2000 issues and our Year 2000 Plan
contain forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. These statements involve predictions and
expectations concerning our ability to achieve Year 2000 compliance, the amount
of costs and expenses related to the Year 2000 issue and the effect the Year
2000 issue may have on business and results of operations. Certain risks and
uncertainties may cause actual results to be materially different from the
projected or expected results, the overall effect of which may have a materially
adverse impact on us. These risks and uncertainties include, but are not limited
to, unanticipated problems and costs identified in all phases of the Year 2000
Plan, our ability to successfully implement the Year 2000 Plan in a timely
manner and the ability of our suppliers, vendors and customers to make their
systems and products Year 2000 compliant.

EXPOSURES

     INDUSTRY EXPOSURE

     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. Many of our customers have slowed
the payment of their accounts in light of current industry conditions and others
have experienced greater financial difficulties in meeting their payment terms.
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.

     LITIGATION AND ENVIRONMENTAL EXPOSURE

     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.



                                       30
<PAGE>   32


     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 that would likely 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.

     INTERNATIONAL EXPOSURE

     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:

     o    disrupt oil and gas exploration and production activities;
     o    restrict the movement of funds;
     o    lead to U.S. government or international sanctions; and
     o    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 which has negatively impacted results of
operations following such events.

     CURRENCY EXPOSURE

     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 69.3% 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 on our balance sheet. We recorded a $10.4
million adjustment to our equity account for the nine months ended September 30,
1999 to reflect the net impact of the decline in Latin American and European
currencies, partially offset by the strengthening Canadian dollar, against the
U.S. dollar.


FORWARD-LOOKING STATEMENTS

     This report and our other filings with the Securities and Exchange
Commission and 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
report and in our other disclosures. These risks and uncertainties include, but
are not limited to, the following:

       A Further Downturn in Market Conditions Could Affect Projected Results.
     Any unexpected material changes in oil and gas prices or other market
     trends would likely affect the forward-looking information contained in
     this report. Our estimates as to future results and industry trends make
     assumptions regarding the future prices of oil and gas 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 1999 and into 2000, we
     have made the following assumptions:



                                       31
<PAGE>   33

     o   The recent increase in the price of oil will result in modest
         improvements on our businesses in the fourth quarter of 1999 and
         continue to improve through 2000, with the strongest improvements
         expected to incur in the second half of 2000.
     o   Oil prices will average around $20 per barrel for 2000.
     o   Average natural gas prices for 2000 will remain at or near their
         current levels.
     o   World demand for oil will be up only marginally or flat.
     o   Drilling activity will increase slightly beyond normal demand as oil
         companies seek to replace and produce reserves that were not replaced
         or produced in 1999.
     o   North American and international rig counts will improve, with
         increases in the international rig count following the North American
         rig count increase by around six months. In 2000, we expect the average
         rig count for North America to be around 1,040 and the international
         rig count to average around 629.
     o   Pricing for many of our products and services will continue to be
         subject to pricing pressures due to industry consolidations and
         competition as the industry recovers.
     o   Our completion and downhole services business will begin to experience
         slight improvements in the fourth quarter.
     o   Demand for compression services will remain relatively flat for the
         remainder of the year with some pricing pressure.
     o   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.

       These assumptions are based on various macroeconomic factors, and actual
     market conditions could vary materially from those assumed.

       A Continuation of the Low 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 to date. Although the North
     American rig count has improved slightly from its historical low earlier
     this year, a further decline in the North American and international rig
     counts would adversely affect our results. Our forward-looking statements
     regarding our drilling products assume an improvement in the rig count in
     2000 and that there will not be any further material declines in the
     worldwide rig count, in particular the domestic rig count.

       Projected Cost Savings Could Be Insufficient. During 1998 and 1999 to
     date, we implemented a number of programs intended to reduce costs and
     align our cost structure with the current market environment. Our
     forward-looking statements regarding cost savings and their impact on our
     business assume these measures will generate the savings expected. However,
     if the markets continue to decline, additional actions may be necessary to
     achieve the desired savings.

       Grant Spinoff. We are currently proposing a spinoff of our Grant Prideco
     drilling products business. The spinoff of this business is subject to the
     receipt of a favorable private letter ruling from the Internal Revenue
     Service confirming that the spinoff will be generally tax free to us and
     our shareholders. There can be no assurance that a spinoff of the business
     will occur or the specific timing thereof.

       Integration of Acquisitions. During the last year, we have consummated
     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 incurred various duplicative costs with respect to the
     operations of companies and businesses acquired by us during 1999 pending
     the integration of the acquired businesses with our businesses. Revenue and
     income benefits from the acquisitions have also been delayed due to the
     current adverse market conditions. 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.

       Weatherford's Success is Dependent upon Technological Advances. Our
     ability to succeed with our long-term growth strategy is dependent 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


                                       32
<PAGE>   34

     markets and expand in existing markets with technologically advanced
     value-added products. Our forward-looking statements have assumed gradual
     growth from these new products and services during 2000.

       Unexpected Year 2000 Problems Could Have an Adverse Financial Impact. We
     have not fully determined the impact of Year 2000 on our systems and
     products. It is possible that unexpected problems associated with the Year
     2000 could arise during the implementation of our Year 2000 program that
     could have a material adverse effect on our business, financial condition
     and results of operations. We are currently in the testing phase of our
     Year 2000 program and expect it to be completed by the end of November
     1999.

       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. Our forward-looking
     statements assume no material impact from changes in currencies because our
     financial position is generally dollar based or hedged. For those revenues
     denominated in local currency the effect of foreign currency fluctuations
     is largely mitigated because local expenses are denominated in the same
     currency.

       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 Securities and Exchange Commission. For additional information
regarding risks and uncertainties, see our other current year filings with the
Commission under the Securities Exchange Act of 1934, as amended, and the
Securities Act of 1933, as amended. We will generally update our assumptions in
our filings as circumstances require.



                                       33
<PAGE>   35
PART II. OTHER INFORMATION

ITEM 2.  CHANGE IN SECURITIES AND USE OF PROCEEDS

   During the quarter ended September 30, 1999, we issued an aggregate of
11,540,002 shares of our common stock as follows:

      o  On July 7, 1999, we issued 105,000 shares of our common stock to Texas
         Pup, Inc. in consideration for the purchase of certain of Texas Pup's
         assets by our Drilling Products Division.
      o  On August 25, 1999, we issued 328,767 shares of our common stock to the
         shareholders of Petro-Drive, Inc. in consideration for the purchase of
         all of the issued capital stock of Petro-Drive, Inc. by our Drilling
         Products Division.
      o  On August 31, 1999, we issued 3,985,900 shares of our common stock to
         the noteholders of Dailey International Inc. and 281,692 shares of
         common stock to the shareholders of Dailey International Inc. We also
         retained 1,226,285 shares of our common stock that would have otherwise
         been issued to Dailey's noteholders as treasury shares (in respect of
         our holdings of Dailey International notes) in consideration for the
         purchase of all of the issued capital stock of Dailey International
         Inc. In addition, we issued 28,726 shares of our common stock to a
         creditor of Dailey International Inc. for modifications of certain
         leases. These issuances of stock were effected pursuant to a plan of
         reorganization of Dailey that was confirmed by the United States
         Bankruptcy Court in Delaware.
      o  On September 2, 1999, we issued 3,830,209 shares of our common stock to
         the shareholders of Petroline Wellsystems Limited in consideration for
         the purchase of all of the issued capital stock of Petroline
         Wellsystems Limited.
      o  On September 15, 1999, we issued 1,753,423 shares of our common stock
         to the shareholders of Williams Tool Co. and Williams Tool Co. (Canada)
         Inc. in consideration for the purchase of all of the issued capital
         stock of Williams Tool Co. and Williams Tool Co. (Canada) Inc.

   With the exception of the shares that were issued to persons other than us
in connection with our acquisition of Dailey International, all of the shares
issued by us in the above transactions were issued in transactions not involving
a public offering and were exempt from registration pursuant to Section 4(2) of
the Securities Act of 1933. The issuance by us of our shares in the Dailey
International bankruptcy was exempt from registration under the Securities Act
of 1933 pursuant to Section 1145 of the United States Bankruptcy Code.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

  (a)   Exhibits:

    *10.1   Stock Purchase Agreement dated August 25, 1999, among the
            shareholders of Petro-Drive, Inc., Grant Prideco, Inc. and
            Weatherford International, Inc.

     10.2   Share Sale Agreement dated September 2, 1999, between the
            shareholders of Petroline Wellsystems Limited and Weatherford
            Eurasia Limited and Weatherford International, Inc. (including
            Registration Rights Undertaking attached as Annex A)
            (incorporated by reference to Exhibit 10.1 to Form 8-K (File
            1-13086) filed September 7, 1999).

     10.3   Agreement and Plan of Reorganization dated September 14, 1999,
            among Williams Tool Co., the shareholders of Williams Tool
            Co., the shareholders of Williams Tool Co. (Canada) Inc.
            (formerly 598148 Alberta Ltd.), Weatherford International,
            Inc. and Weatherford Acquisition, Inc. (incorporated by
            reference to Exhibit 10.1 to Form 8-K (File 1-13086) filed
            September 24, 1999).

    *27.1   Financial Data Schedule

  * Filed herewith


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<PAGE>   36


    (b) Reports on Form 8-K:

          1)      Current Report on Form 8-K dated July 21, 1999, announcing the
                  Company's earnings for the quarter ended June 30, 1999 and a
                  possible spin-off of the Company's Grant Prideco drilling
                  products business to its shareholders.

          2)      Current Report on Form 8-K dated August 16, 1999, containing
                  pro forma financial information of the Company and Dailey
                  International Inc.

          3)      Current Report on Form 8-K dated August 31, 1999, announcing
                  the completion of the acquisitions of Dailey International
                  Inc. and Petroline Wellsystems Limited and containing certain
                  financial statements of Dailey International Inc.

          4)      Current Report on Form 8-K dated September 15, 1999,
                  announcing the completion of the acquisition of Williams Tool
                  Co.



                                       35
<PAGE>   37


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   Weatherford International, Inc.



                                   By: /s/ Bruce F. Longaker, Jr.
                                       -----------------------------------------
                                       Bruce F. Longaker, Jr.
                                       Senior Vice President and Chief Financial
                                       Officer
                                       (Principal Financial Officer)




Date:  November 12, 1999

                                       36
<PAGE>   38
                                 EXHIBIT INDEX

EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------

 *10.1            Stock Purchase Agreement dated August 25, 1999, among the
                  shareholders of Petro-Drive, Inc., Grant Prideco, Inc. and
                  Weatherford International, Inc.

  10.2            Share Sale Agreement dated September 2, 1999, between the
                  shareholders of Petroline Wellsystems Limited and Weatherford
                  Eurasia Limited and Weatherford International, Inc. (including
                  Registration Rights Undertaking attached as Annex A)
                  (incorporated by reference to Exhibit 10.1 to Form 8-K (File
                  1-13086) filed September 7, 1999).

  10.3            Agreement and Plan of Reorganization dated September 14, 1999,
                  among Williams Tool Co., the shareholders of Williams Tool
                  Co., the  shareholders of Williams Tool Co. (Canada) Inc.
                  (formerly 598148 Alberta Ltd.), Weatherford International,
                  Inc. and Weatherford Acquisition, Inc. (incorporated by
                  reference to Exhibit 10.1 to Form 8-K (File 1-13086) filed
                  September 24, 1999).

 *27.1            Financial Data Schedule

* Filed herewith