<PAGE>   1



                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                             ---------------------

                                   FORM 10-K

      For Annual and Transition Report Pursuant to Sections 13 or 15(d) of
                        Securities Exchange Act of 1933

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998
                                       OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934

                         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                  (IRS Employer
       incorporation or organization)                 Identification No.)

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

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

Securities registered pursuant to Section 12(b) of the Act:

   Title of each class              Name of each exchange in which registered
   --------------------             -----------------------------------------
Common Stock, $1.00 Par Value                  New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

         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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         The aggregate market value of the voting stock held by nonaffiliates
of the registrant as of March 24, 1999, was $2,407,577,415, based upon the
closing price on the New York Stock Exchange as of such date.

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

        Title of Class                    Outstanding at March 24, 1999
        --------------                    -----------------------------
Common Stock, $1.00 Par Value                     97,311,874

                      DOCUMENTS INCORPORATED BY REFERENCE

         The information called for by Items 10, 11, 12 and 13 of Part III 
will be included in the registrant's definitive proxy statement to be filed
pursuant to Regulation 14A and is incorporated herein by reference.
<PAGE>   2

                                     PART I

ITEM 1.  BUSINESS

         Weatherford International, Inc. is one of the world's largest
providers of equipment and services used for the exploration and production of
oil and natural gas. Our operations are conducted in over 50 countries and we
have more than 300 service locations, which are located in substantially all of
the oil and natural gas producing regions in the world. We are among the
leaders in each of our primary markets and our distribution and service network
is one of the most extensive in the industry.

         Our products and services are divided into four principal operating
business divisions:

         o    Completion and Oilfield Services

         o    Artificial Lift Systems

         o    Compression Services

         o    Drilling Products

         A discussion follows of our products and services offered, our
strategy for growth and the markets in which we compete. There is also included
a discussion of our recent financial results, the trends affecting our results
and our financial condition. We believe you will find these discussions
informative and helpful to a better understanding of the new Weatherford.

                                    STRATEGY

         In May 1998, EVI, Inc. and Weatherford Enterra, Inc. merged to form
the new Weatherford. A principal objective of the merger was to create a larger
integrated oilfield service company that could take advantage of Weatherford's
historical worldwide service infrastructure by adding new products, services
and technology to compete in changing markets. Since the merger, we have
combined various components of the operations of the two companies, added new
technologies to the products and services offered by our Completion and Oilfield
Services Division and Artificial Lift Systems Division and have substantially
expanded our Compression Services Division through a strategic joint venture
with GE Capital Corporation.

         Although current market conditions in our industry are depressed and
will likely continue to be depressed through 1999, we see many opportunities
for positioning our company for growth as the industry recovers. In looking to
the future, our strategic focus for growth is as follows:

<TABLE>

<S>                                                 <C>
         o    Invest in technology to provide       o    Take advantage of secular       
              customers value-added products             growth trends, such as natural  
              and services that can reduce               gas compression, thru-tubing    
              the cost of exploration and                re-entry drilling and           
              production of oil and gas                  underbalanced drilling          
                                                         
         o    Pursue strategic acquisitions          o   Leverage our worldwide             
              and combinations for long-term             infrastructure to introduce new    
              growth                                     products and services              
                                                             

         o    Continually review our asset           o   Continue our expansion 
              holdings for ways to maximize              internationally        
              value                                  

         o    Provide integrated product and
              services offerings
</TABLE>

         Our long-term objective is to create stockholder value in the form of
asset and income growth through the implementation of this strategy.
Positioning our company for growth in these times is a difficult task,
especially when there is uncertainty as to when the bottom of the cycle will be
reached and a recovery will begin.


                                       1

<PAGE>   3


Nevertheless, we believe that to achieve stockholder value, we cannot remain
static and we must pursue new opportunities to enhance new Weatherford's
position in our industry.

                          SEGMENT AND GEOGRAPHIC DATA

FINANCIAL SEGMENT DATA

         When we review the operations of our business divisions we look at
their revenues, operating income, EBITDA (operating income adding back
depreciation and amortization), total assets and capital expenditures. We gauge
how these divisions are performing by comparing their year on year results,
their average gross margins and their returns on total assets.

         The following charts set forth those items for each of our operating
business segments for 1998, 1997 and 1996:

<TABLE>
<CAPTION>


                                      COMPLETION                                           
                                     AND OILFIELD     ARTIFICIAL  COMPRESSION    DRILLING  
                                       SERVICES      LIFT SYSTEMS   SERVICES     PRODUCTS  
                                      ----------     ----------    ----------   ---------- 
                                                          (IN THOUSANDS)            
<S>                                   <C>            <C>           <C>          <C>        
               1998                                                                        
Revenues ............................ $  848,219     $  329,196    $  177,481   $  655,758 
Operating Income (Loss)(1)...........    135,521        (19,223)       17,092      115,433 
EBITDA (1) ..........................    230,239            (40)       40,171      147,384 
Total Assets ........................  1,007,399        592,370       388,220      764,807 
Capital Expenditures ................    107,661         20,946        32,465       42,052 
                                                                                           
               1997                                                                        
                                                                                           
Revenues ............................ $  929,001     $  249,476   $  178,897   $  611,715  
Operating Income ....................    215,412         22,792       14,774      120,830  
EBITDA ..............................    301,550         31,736       36,440      144,440  
Total Assets ........................    919,198        622,853      441,759      674,388  
Capital Expenditures ................    121,422         20,213       35,705       32,682  
                                                                                           
               1996                                                                        
                                                                                           
Revenues ............................ $  824,639     $  150,816   $  154,503   $  337,312  
Operating Income ....................    146,332         11,667        7,833       42,573  
EBITDA ..............................    226,914         17,532       31,387       53,619  
Total Assets ........................    952,445        199,615      414,969      386,245  
Capital Expenditures ................    119,201          8,732       30,392       14,332  
</TABLE>                                            
-----------------------------
(1) In 1998 we incurred $195.0 million in merger and other charges relating to
    the merger of EVI and Weatherford Enterra on May 27, 1998 and a
    reorganization and rationalization of our business to match industry
    conditions. Of this charge, $44.9 million, $40.8 million, $1.5 million,
    $35.0 million, and $72.8 million relate to Completion and Oilfield
    Services, Artificial Lift Systems, Compression Services, Drilling Products
    and Corporate.

                                       2
<PAGE>   4
GEOGRAPHIC DATA

         At the time of the combination of EVI and Weatherford Enterra, a large
portion of our business was concentrated in the United States and Canada. We
also had a strong international presence in all of the oil producing regions of
the world through our Completion and Oilfield Services Division. As the world's
oil reserves have matured and prices declined, international exploration,
development and production has become more dominant.

         Following our merger last year, we began a concentrated program to
expand our operations and shift our product sales to the international side by
utilizing the strength of our international service infrastructure to introduce
new and existing products and services in these markets. Among the activities
being pursued by us are:

         o    The offering of our completion, artificial lift systems and 
              compression services through our international service locations. 
              Sales of these products and services had historically been 
              concentrated in North America.

         o    The introduction of new technologies and products in the
              multi-lateral, thru-tubing, re-entry and underbalanced markets.

         We are also reorganizing our operations by reducing our staff and
locations primarily in North America and focusing on growth in those areas which
serve the international markets. We expect that our international revenue and
income will increase over time and our dependence on North American activity
will decline as this strategy is implemented.

         The following charts set forth for 1998, 1997 and 1996:

         o    Our revenues from third party customers in the United States,
              Canada, Europe, the Middle East and Africa and all other foreign
              locations. Sales in the United States include export sales. Sales
              are based on the location of our entity that is selling or
              providing the products or services.

         o    Our long-lived assets located in the United States, Canada,
              Europe, the Middle East and Africa and all other foreign
              locations.


                         [REVENUE BY COUNTRY PIE CHART]


<TABLE>
<CAPTION>
                                                                                AFRICA
                            UNITED                   LATIN                       AND
                            STATES     CANADA       AMERICA       EUROPE     MIDDLE EAST    OTHER         TOTAL
                          ---------  -----------  ------------  -----------  -----------  -----------   -----------
                                                               (in millions)
<S>                       <C>           <C>           <C>          <C>           <C>         <C>          <C>
Revenues
  1998 .................  $1,181.9      $265.2        $138.8       $167.3        $143.2      $114.3       $2,010.7
  1997 .................   1,205.6       257.5         118.8        149.2         109.1       128.9        1,969.1
  1996 .................     929.0       143.6          74.1        148.1          98.9        73.6        1,467.3
</TABLE>

                                       3
<PAGE>   5
<TABLE>
<CAPTION>
                    [LONG LIVED ASSETS BY COUNTRY PIE CHART]


            UNITED             LATIN             AFRICA AND
            STATES   CANADA   AMERICA   EUROPE   MIDDLE EAST   OTHER     TOTAL
            ------   ------   -------   ------   -----------   -----   ---------
                                       (in millions)
<S>         <C>      <C>      <C>       <C>      <C>           <C>     <C>
1998       $  950.6  $306.5   $204.7    $151.4      $59.1      $60.3   $1,732.6
1997        1,060.9   133.3    174.8     143.8       36.7       41.6    1,591.1
1996          784.4    66.3    100.9     145.8       33.4       32.1    1,162.9
</TABLE>

                           

                                       4

<PAGE>   6



         Looking forward, we expect that Asia, Middle East, North Africa and
Eastern Europe will be the growth markets for our products and services, with
North America and Western Europe declining as a percentage of our total sales
as the oil and gas reserves in those regions mature.

                        COMPLETION AND OILFIELD SERVICES

         Our Completion and Oilfield Services Division provides a wide range of
products and services for the exploration and production of oil and natural
gas. The principal products and services provided by this segment are:


         o    Fishing and Downhole Services       o Well Completion Systems

         o    Well Installation Services          o Equipment Rental

MARKET TRENDS AND OUTLOOK

         Our Completion and Oilfield Services Division provides products and
services used by oil and gas companies, drilling contractors and other service
companies to explore for and produce oil and natural gas. We estimate that
around 50% of the products and services offered by this division are used in
the initial drilling and 


                                       5

<PAGE>   7


completion of oil and gas wells. The remainder of the products and services are
used in connection with the production phases of wells, primarily maintenance
and recompletion.

         Historically, our Completion and Oilfield Services Division has
generated much of its revenues from activity in North America, in particular
the United States. With the recent declines in oil prices, activity in North
America has fallen substantially to nearly a 50-year low. As a result of the
decline in this revenue base, we are focusing our future growth in the
international markets using our broad international infrastructure. We are also
pursuing selective consolidation opportunities in the United States as a means
to reduce costs and offer a broader range of services to our customers and to
assist our customers in reducing the costs of exploration and production.

         Technology is becoming a more important aspect of our products and
services so that we may provide our customers with more efficient and
cost-effective tools to find and produce oil and gas. During 1998 and 1999
to-date, we invested a substantial amount of our time and resources in building
our technology offerings. We believe that many of the new technological
products and services being offered by us are among the best in the industry
and provide our customers with a means to reduce their costs of exploration and
production through more efficient and accurate tools.

         Integrated product offerings are also becoming more important in the
market as customers seek to reduce the number of vendors to perform a single
task on a well. We continue to expand the scope and breadth of our extensive
products and services offerings through selective acquisitions and alliances.

GROWTH STRATEGY

         The growth strategy for our Completion and Oilfield Services Division
is to:

         o    Improve the technology of our products and services to allow our
              customers to reduce the costs of exploration and production

         o    Leverage our worldwide sales and service infrastructure to push
              through new products and services

         o    Focus on secular growth trends such as thru-tubing, re-entry
              drilling, underbalanced drilling and intelligent completion and
              monitoring

         o    Take advantage of selective consolidation and acquisition
              opportunities to reduce costs and increase market share

         o    Provide our customers with integrated products and services

         o    Reduce costs and increase profit margins through the addition of
              manufacturing capabilities for our higher margin products

PRODUCTS AND SERVICES OFFERED BY OUR COMPLETION AND OILFIELD SERVICES DIVISION

         FISHING AND DOWNHOLE SERVICES

         Our Fishing and Downhole Services group provides a wide variety of 
downhole services used during the drilling, completion, workover and plugging of
oil and gas wells. These include:

         o    Fishing Services

         o    Re-Entry and Thru-Tubing Services

         o    Downhole Remediation and Other Services

         Our downhole services are provided worldwide at more than 300
locations in 50 countries. We believe that our downhole services group is the
largest provider of these services in the world.


                                       6

<PAGE>   8


         Fishing Services. Our "fishing" services consist of cleaning and
removing obstructions (such as a piece of equipment, a tool, a part of a drill
string or other debris) in a well bore that may become caught during the
drilling, completion and workover of a well or during the well's production
phase. The process of "fishing" requires the use of a wide variety of specialty
and proprietary tools, including fishing jars, milling tools, casing cutters,
overshots, spears and other tools used for retrieving or eliminating the items
within the well. These operations also utilize our proprietary "whipstocks",
which are downhole tools that act as vertical ramps to "sidetrack" an existing
wellbore. We believe we have one of the most comprehensive lines of proprietary
fishing tools in the industry and one of the largest and most experienced teams
of fishing services employees in the industry.

         Our fishing services are provided at our various service and
distribution locations throughout the world.

         We believe we are one of the largest providers of fishing services in
the United States and the second largest provider in the world. Our principal
competitors are Baker Hughes Incorporated and Smith International, Inc. There
are also a large number of smaller regional competitors.

         Re-Entry and Thru-Tubing Services. Our re-entry and thru-tubing group
provides specialized products and services that allow the operator to perform
drilling, completion and remediation functions from existing wellbores.
Re-entry drilling may involve multilateral drilling of newly drilled open holes
or the opening of new sections within an existing wellbore. Re-entry wells are
typically drilled from a directional or horizontal well. Thru-tubing services
consist of the drilling, completion and remediation of a well directly through
an existing wellbore's production tubing. Our re-entry and thru-tubing
operations also utilize our proprietary "whipstocks". Our thru-tubing and
re-entry group grew out of our fishing and downhole services group, which was
among the first to use thru-tubing technology for downhole fishing operations.
This group has expanded on that expertise and technology to provide
state-of-the-art technology for re-entry drilling and multilateral completions.

         The use of re-entry and thru-tubing technology substantially reduces
the cost of drilling a well by eliminating the need for the drilling and
completion of a new well bore. Although the rig count declined substantially
during 1998 and is currently at historical lows, re-entry drilling rose by
approximately 10% in 1998 from the previous year. We believe that the
thru-tubing re-entry and multi-lateral re-entry markets will continue to
increase in the coming years as operators seek ways to contain costs by
reducing risks and construction downhole.

         Our thru-tubing operations require highly engineered and technically
advanced products that can operate within the confined space of an existing
well bore. Our operations utilize proprietary whipstock mills, high performance
drilling motors and completion tools, including the high performance long
running MacDrill(TM) metal motor, the Radius(TM) short radius motor, the Radius
downhole guidance instrumentation and the thru-tubing inflatable packer
systems.

         Our primary competition in the area of re-entry and thru-tubing is
Baker Hughes Incorporated.

         Downhole Remediation and Other Services. Our other downhole services
operations include a variety of well maintenance and control services. Among
the services and equipment provided by us are well control equipment used in
critical well situations such as a blow out or high pressure sour gas wells. We
also provide internal casing patch installation, plugging and abandonment
services, pipe recovery wireline services and foam services for underbalanced 
wells.

         Our primary competitor in the area of downhole remediation is Baker
Hughes Incorporated.

         EQUIPMENT RENTAL

         Our equipment rental group provides specialized equipment and tools
for the drilling, completion and workover of oil and gas wells. Our rental
equipment allows our customers (primarily operators and drilling contractors)
the ability to have access to inventories of tools and other equipment without
the cost of maintaining that equipment in their own inventory. The rental of
this equipment permits the equipment to be more efficiently used and allows us
to receive value-added returns on the rental of the equipment.

                                       7


<PAGE>   9
         Among the equipment and tools rented by us are: 

         o    Pressure control equipment such as preventers, high pressure
              valves, accumulators, adapters and choke and kill manifolds

         o    Drill string equipment such as drill pipe, drill collars, tubing
              and drilling jars

         o    Tubular handling equipment such as elevators, spiders, slits,
              tongs and kelly spinners

         o    Fishing and downhole tools such as milling tools, casing cutters,
              fishing jars, spears and overshots, stabilizers, power swivels
              and bottom hole assemblies

         We manufacture many of our rental tools, such as drill pipe, pressure
control equipment and fishing tools.

         We conduct our rental operations worldwide. The breadth of our
operations and locations allow us to manage and redeploy our equipment
throughout our worldwide system to locations where the equipment is most
needed.

         We believe we are the world's largest provider of oilfield rental tool
equipment. Our primary competitors are Baker Hughes Incorporated, Superior
Energy Services and Offshore Rentals. There are also a number of regional
competitors.

         WELL COMPLETION

         Our well completion group provides a variety of products and services
used to construct and complete oil and gas wells. The principal products and
services provided by this group are:

         o    PACKERS - Packers are mechanical or hydraulically actuated devices
              that lock into the casing string and provide a seal between the
              casing and tubing in the well through an expanding element system.
              Packers permit producing formations to be isolated from other
              sections of the well bore as well as allow downhole operations,
              such as cementing and acidizing, to take place without damaging
              the reservoir. We also offer an extensive line of inflatable
              casing packers that are used in openhole sections of a wellbore to
              isolate a zone with or without the use of cement as well as in
              thru-tubing applications.

         o    LINER HANGERS - Liner hangers allow strings of casing to be
              suspended within a wellbore without having to extend the string
              to the surface. We offer both production and service liner
              hangers. Drilling liners are used to isolate areas within the
              well during drilling operations. Production liners are used in
              the producing area of the well to support the wellbore and to
              isolate various sections of the well. Most directional wells
              include one or more liners because of the difficulty of designing
              casing programs compatible with high tensile tubulars.

         o    SAND SCREENS - Sand screens are devices run in the producing
              section of a well to prevent sand from reaching the surface or
              causing problems with production equipment and pumps.

         o    INTELLIGENT WELL TECHNOLOGY - Intelligent completion products
              allow operators to remotely monitor and control various downhole
              components, such as chokes and pumps. These products, when
              combined with production packers, permit various sections of a
              well to be optimized to improve production. These devices can
              also eliminate the need for wireline and coiled tubing because
              they can be operated electrically from the surface.

         o    CEMENTING AND ELASTOMER PRODUCTS -Cementing operations are one of
              the most important and expensive phases in the completion of a
              well. Our cementing products allow operators to centralize the
              casing in the well and control the displacement of cement and
              other fluids. We also offer specialty elastomer products that are
              designed to remove excess cement from the inside of the casing. 

                                       8


<PAGE>   10


         The market for our well completion products is dependent on the level
of worldwide completion and workover activity. Our completion products are
currently sold primarily in North America and the North Sea. We are actively
pursuing the distribution of our completion products in other regions of the
world through our worldwide infrastructure.

         Our competition in the completion market is generally based on price
and product quality. Our principal competitors in the well completion market
are Baker Hughes Incorporated and Halliburton Company. We also compete with
various smaller providers of completion equipment. We believe that we are the
number one provider of oilfield cementation products in the world, the third
largest provider of completion equipment in the United States and the leading
provider of liner hanger equipment in the North Sea market.

         WELL INSTALLATION SERVICES

         Our well installation services group provides a wide variety of tubular
and completion equipment installation services for the drilling, completion and
workover of an oil and gas well. This group offers an integrated package of
installation services that allows our customers to receive all of their tubular
handling, preparation, inspection, cleaning and wellsite installation needs from
a single source. This group is a leader in rig mechanization technology used for
the installation of tubing and casing and offers various products and services
to improve rig floor operations by reducing staffing requirements and increasing
operational effectiveness and safety standards. They also specialize in high
alloy installation services where metallurgical characteristics call for
specific handling technology. Finally, this group also works with our well
completion group to provide high grade completion equipment installation
services as well as cementation engineering services (consisting of
computer-generated recommendations as to the number and placement of
centralizers during cementation).

         We believe that we are one of the largest providers of installation
services in the world. Competition in the market for tubular and completion well
installation services is based on price, experience and quality. We believe that
our ability to provide an integrated package of rig mechanization and high grade
installation services, together with our worldwide infrastructure, provides us
with a competitive advantage. Our primary competitors are Franks International
and BJ Services, Inc. We also compete with a large number of smaller regional
competitors.

         The market for well installation services is dependent on the level of
worldwide drilling and well completion activity.

RAW MATERIALS

         Our Completion and Oilfield Services Division purchases a wide variety
of materials from a number of sources. Many of the products sold by our
Completion and Oilfield Services Division also are manufactured and provided by
other parties. We do not believe that the loss of any one supplier would have a
material adverse effect on this division.


                                       9

<PAGE>   11

                            ARTIFICIAL LIFT SYSTEMS

         Our Artificial Lift Systems Division is a leading provider of
artificial lift systems worldwide. Artificial lift systems are installed in oil
wells that do not have sufficient reservoir pressure to raise the oil to the
surface or that need to supplement the natural reservoir drive in producing oil
from the well. We estimate that 80% of all producing oil wells in the world
require some form of artificial lift. Regionally, we estimate that 90% of the
producing wells in North America are on some form of lift and approximately 70%
of the rest of the world's wells require artificial lift. In addition, as oil
wells mature, artificial lift is generally necessary to supplement or enhance
the flowing pressure of oil from the well. The worldwide market for artificial
lift is estimated to be in excess of $1.2 billion per year, of which 50% has
historically been in North America due to the maturity of the North American
oil fields.

         There are five principal types of artificial lift technologies used in
the industry. These forms of lift are:

         o    Progressing Cavity Pumps       o Electrical Submersible Pumps

         o    Reciprocating Rod Lift         o Hydraulic Lift

         o    Gas Lift


         We are the only company in the industry that has the ability to offer
all forms of artificial lift as well as the ability to design optimization
solutions.

MARKET TRENDS AND OUTLOOK

         Our Artificial Lift Systems Division was severely affected by the
recent declines in oil prices. These declines were particularly felt in our
North American operations where historically our businesses were located. Since
the merger of EVI and Weatherford Enterra, we have undertaken an aggressive
worldwide marketing program of our artificial lift systems. This program
involves the provision of artificial lift products and services worldwide
utilizing the assistance of the Weatherford international distribution and
service locations. We have recently been awarded a number of international
contracts to manage fields using our artificial lift systems and expect to
continue to pursue additional contracts in the future.

         Although we expect that oil production and demand for our products in
North America will not likely return to prior levels as a result of the recent
declines in oil prices and associated reduction in drilling for and production
of oil in North America, we do expect that international demand for our
artificial lift products will continue to increase as the rest of the world's
oil fields mature. As the only fully integrated provider of these systems, we
expect to greatly benefit from the breadth of our product line and expertise.

         We also are extending our product offerings in the growing areas of
wellsite optimization. This product offering is driven by our clients' needs
for greater planning of their production. We are currently implementing a
package for production in Venezuela that will transmit real time data from the
well to the operator's office for continuous monitoring. This division is
working with our well completion division on the use of its intelligent
completion and monitoring technology to optimize the production process and
reduce the cost of production.

GROWTH STRATEGY

         The growth strategy for our Artificial Lift Systems Division is as
follows:

<TABLE>

<S>                                                                   <C>
         o    Invest in and provide technological                     o    Expand our electrical submersible pump    
              solutions for artificial lift needs                          business with Electrical Submersible  
                                                                           Pumps, Inc.                               
                                                                                                                    
         o    Provide our customers with the right                    o    Reposition and consolidate our            
              technologies that increase run times,                        manufacturing and distribution            
              decrease costs and effectively deliver                       organization to address the changing      
              oil production at a given depth,                             marketplace, in particular, in North      
              temperature and level of corrosion                           America                                   
                                                                                                                     
         o    Provide integrated solution packages to                 o    Position our business for the return      
              our customers to address all of their                        cycle in oil production and take          
              artificial lift needs                                        advantage of the continued maturation of  
                                                                           the world's oilfields                     

         o    Expand internationally by leveraging our
              international infrastructure
</TABLE>


                                       10
<PAGE>   12


PRODUCTS OFFERED BY OUR ARTIFICIAL LIFT SYSTEMS DIVISION

         The following is a brief description of each of the forms of
artificial lift offered by us:

         PROGRESSING CAVITY PUMPS

         A progressing cavity pump is a downhole pump that is controlled by an
above-ground electric system connected to a sucker rod that operates the
downhole pump for the production of oil. These pumps are among the most
efficient to operate and are designed to work in wells of depths up to 6,000
feet and production between 10 to 4,500 barrels of oil per day. We believe that
we are the world's largest provider of progressing cavity pumps and the only
fully integrated provider of these systems. Our principal competitors for
progressing cavity pumps are Robbins & Myers and KUDU.

         RECIPROCATING ROD LIFT SYSTEMS

         A reciprocating rod lift system is an artificial lift pumping system
that uses an above-ground pumping unit that is connected to a sucker rod and a
downhole pump and uses an up and down suction process to lift the oil from the
reservoir. Reciprocating lift is used primarily for the production of oil from
wells of depths up to 14,000 feet and production rates from 20 to 8,000 barrels
per day. Reciprocating lift systems are generally more expensive to install
than other systems but less costly to operate. We offer a complete package of
products for rod lift applications ranging from traditional pump jacks to the
state-of-the-art RotaFlex(R) long stroke pumping unit, as well as all downhole
components, including the Corod(R) continuous sucker rod, traditional sucker
rods and tubing anchors. We believe we are the world's largest provider of
reciprocating rod lift pump systems and the only fully integrated provider of
these systems. Our principal competitors for rod lift systems are Lufkin
Industries, Dover Industries and Harbinson Fischer.

         GAS LIFT SYSTEMS

         Gas lift is a form of artificial lift that uses natural gas to lift
oil in a producing reservoir to the surface. The process of gas lift involves
the injection of natural gas into the well through an above-ground injection
system and a series of downhole mandrels and gas lift valves. The gas that is
injected into the system is either produced from and reinjected into the well,
or is injected from nearby gas produced from nearby wells. The injected gas
acts as the lifting agent for the heavier oil. Gas lift systems are used
primarily for offshore wells and those wells that have a high component of gas
in the well or have a gas supply near the well. Gas lift systems are designed
to operate at a depth of up to 15,000 feet with volume up to 20,000 barrels of
oil per day. We believe that we are one of the two largest providers of gas
lift systems in the world, with our principal competitor being Schlumberger
Limited.

         ELECTRICAL SUBMERSIBLE PUMPS

         An electrical submersible pump is an electric pump and motor that is
placed downhole near the producing reservoir and is driven by an electric motor
controller and supply system above ground. Electrical submersible pumps are
designed to operate at depths of 9,000 to 12,000 feet with volumes from 800 to
20,000 barrels per day. We have historically not been a provider of electrical
submersible pumps to the industry. We recently entered into a long-term
alliance with Electrical Submersible Pumps, Inc., the world's third largest
supplier of electrical submersible pumps, to supply us with our own line of
electrical submersible pumps and to take over distribution of electrical
submersible pumps from Electrical Submersible Pumps, Inc. in selected markets.
We believe that this alliance will be highly beneficial to both our customers
and the customers of Electrical Submersible Pumps, Inc. This alliance also
provides our customers with a complete suite of artificial lift systems. Our
principal competitors for electrical submersible pumps are Baker Hughes
Incorporated and Schlumberger Limited.

                                      11

<PAGE>   13


         HYDRAULIC LIFT SYSTEMS

         Hydraulic lift is a form of oil pumping system that uses an
above-ground surface power unit to operate a downhole hydraulic pump (jet or
piston) to lift oil from the reservoir. These systems are designed for wells at
depths up to 20,000 feet with volumes of up to 15,000 barrels per day.
Hydraulic pumps are well-suited for wells with high volumes and low solids. We
believe that we are the world's largest provider of hydraulic lift systems. Our
principal competitor for hydraulic lift systems is Baker Hughes Incorporated.

RAW MATERIALS

         Our Artificial Lift Systems Division purchases a variety of raw
materials for its manufacturing operations. A number of its products are
manufactured utilizing parts and components made by other manufacturers and
suppliers. This division is not dependent upon any single source of supply for
its raw materials and components. The loss of one or more of our suppliers
could, however, disrupt production for some time.

                              COMPRESSION SERVICES

         Our Compression Services Division is one of the world's largest
providers of natural gas compression products and services. The products and
services offered by this division include:

<TABLE>

<S>                                                         <C>
         o    Sales and rental of natural gas               o    Maintenance and reconditioning        
              compressors                                        services and select services such as  
                                                                 repair services                       
                                                                                                       
         o    Custom-designed compression systems           o    Offshore platform installation and    
                                                                 management of compression equipment   
                                                            
         o    Full service turnkey compression
              management
</TABLE>

         As of February 1999, our compression business is operated through a 
joint venture with GE Capital's Global Compression Services. We own 64% of this
venture and GE Capital owns 36%. We have the right to acquire GE Capital's
interest at any time at a price equal to the greater of a market determined
third party valuation or book value. GE Capital also has the right to require us
to purchase its interest at any time after February 2001 at a market determined
third party valuation and to request a public offering of its interest after
that date, if we have not purchased its interest by that time.

MARKET TRENDS AND OUTLOOK

         We believe our compression services operate in a growth market with
significant opportunities. We estimate that over 75% of the operating natural
gas compressors are owned by the exploration and production companies and more
than 75% of the world's natural gas compression services are sold in North
America. We expect international demand to grow significantly in the coming
years as producers of natural gas worldwide continue to grow. We also believe
that demand in North America should increase as natural gas production
continues to grow and our customers seek ways to reduce costs by out-sourcing
their compression needs.

         Our compression services are provided primarily to producers of
natural gas and pipeline companies. These services are used by the customer to
compensate for diminished wellhead pressure. Our compressors are either sold or
rented to the client on a term basis ranging from a number of months to years.
Once a compressor has been placed in service, that compressor will generally
remain in place for the life of the reservoir. We also offer field management
services. Our compression services are charged on both a fixed and turnkey
basis.

         The compressors marketed by us are generally manufactured by us at our
manufacturing facility located in Corpus Christi, Texas or purchased from third
parties.

                                      12

<PAGE>   14


GROWTH STRATEGY

         The growth strategy for our compression business is as follows:

<TABLE>

<S>                                                         <C>
         o    Expand our operations                         o    Place into service the newly         
              internationally using our worldwide                manufactured inventory of high power 
              infrastructure                                     compressors previously owned by      
                                                                 Global Compression                   
                                                            
         o    Leverage our businesses in locations          o    Increase our revenues, income and                  
              where we are currently located to                  market share by offering to our     
              obtain economies of scale                          customers the ability to out-source 
                                                                 all of their compression needs      
                                                            
         o    Pursue higher horsepower projects
              that provide for longer term
              contracts and higher margins
</TABLE>

     COMPRESSOR FLEET
     
         Our Compression Services Division currently has a fleet of over 4,100
compression units with horsepowers ranging from 26 to 3,335 horsepower. The
average horsepower of our compression fleet is approximately 220 horsepower.

         The following table sets forth a summary of our compression fleet.

<TABLE>
<CAPTION>


         HORSEPOWER SIZE            NUMBER OF UNITS     TOTAL HORSEPOWER
<S>                                 <C>                 <C>
            0 - 100                       2,117              127,592 
          101 - 200                         894              139,362 
          201 - 500                         633              191,409 
          501 - 800                         211              139,198 
          801 - 1,100                       157              157,395 
        1,101 and over                      130              182,429 
                                      ---------            --------- 
                TOTALS                    4,142              937,385 
                                      =========            ========= 
</TABLE>
                                                             
         In addition, we manage over 530 compression units owned by our clients
having an aggregate horsepower of approximately 122,000.

CAPITAL EXPENDITURES

         Our compression services operations are by their nature capital
intensive as they require substantial investments in additional compressor
units as our business grows. These capital investments have historically been
financed through existing cash and internally generated cash flow. We expect
that future capital investments by our Compression Services Division will be
financed by the joint venture through debt, sale-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. We recently entered into a lease arrangement under which a number of
our compressors were sold to a third party and were then rented back to us over
a five year period. Structures such as this lease should allow us to expand our
compressor fleet and maximize the return on the equity invested in this joint
venture. Compression services does not require a high level of maintenance
capital expenditures.

         Because of the high leverage aspect of our compression business, we
gauge the performance of this division primarily by the cash flow it generates
and its operating income and EBITDA. We do this because in the initial years of
financing the acquisition of compressors, there will be high levels of interest
expense or lease expense. Although the net income return on capital from this
business is generally less than other less capital intensive businesses, we
believe the benefits of the steady cash flow from the operations and the less
cyclical nature 


                                      13

<PAGE>   15
of the business make this business an important component in our growth. Where
possible, we will attempt to secure our financing on a non-recourse basis.

COMPETITION

         Our principal competitors in the compression service business are
Hanover Compression Company and Production Operators Corp., a subsidiary of
Schlumberger Limited. We believe that we are the second largest provider of
natural gas compression services in the world.

                               DRILLING PRODUCTS

         Our Drilling Products Division is the world's leading provider of
drill stem products, including drill pipe, drill collars and heavyweight
tubular products used for the drilling of oil and gas wells. This division is
also a leading provider in North America for engineered connections used for
casing, production tubing and marine conductors and subsea structures. Our
drilling products are designed and engineered for high performance and include
all components of a drill stem from the rig to the drill bit.

         The principal products offered by our Drilling Products Division are
as follows:

         o    Drill pipe                          o Engineered connections
  
         o    Drill collars                       o High Grade Premium
                                                    Tubing and Casing
  
         o    Heavyweight drill pipe              o Accessories
  
         o    Connections for Marine Conductors
              and Subsea Structures
  

MARKET TRENDS AND OUTLOOK

         The market conditions for our Drilling Products Division have been
depressed since mid-1998 due to low oil prices and reduced drilling activity.
This decline has affected our Drilling Product Division's operations in two
significant ways:

         o    The lower rig count has reduced demand for drill stem products.
              The reduction in demand is attributable to both the lower number
              of drilling rigs requiring drill stem products and an increased
              level of stock on hand with our customers as drill stem products
              from idle rigs are made available to other rigs.

         o    The decline in drilling activity has reduced the number of wells
              being completed offshore. This reduction in the number of
              completed offshore wells also reduces the demand for our premium
              casing, liner and production tubing and connections for these
              products. The reduced demand for premium tubular products also
              affects our accessory products.

         We currently expect that the demand for our drill stem products for
1999 could be down as much as 60% from 1998. The utilization of the excess drill
stem products provided by idle rigs may also suppress levels of demand
substantially below requirements for current drilling activity. We expect,
however, that excess stock should, absent any further changes in the drilling
markets, be substantially diminished by the middle of the year 2000. Because the
market conditions for our drilling products is heavily dependent on drilling
activity, which in turn is dependent on the price of oil and gas, the effect of
the current market conditions on our business is extremely difficult to project
and is subject to much uncertainty.

GROWTH STRATEGY


         The growth strategy for our Drilling Products Division is as follows:
<TABLE>

 
<S>                                                  <C> 
         o    Lower drill stem cost structure        o    Introduce new technologies, such as
                                                          vacuum insulated tubing and short
                                                          radius drill pipe

         o    Maintain capacity capabilities for     o    Expand product line and marketing of
              recovery                                    subsea conductors and risers

         o    Add complementary products to          o    Continue improvements in connector
              existing lines                              technology
                                                  
                                                         
</TABLE>

                                      14


<PAGE>   16


PRODUCTS OFFERED BY OUR DRILLING PRODUCTS DIVISION

         A description of the principal products offered by our Drilling
Products Division is as follows:

         DRILL PIPE

         Drill pipe is the principal mechanical tool used to drill for oil and
gas. Our drill pipe is sold primarily to rig contractors and rental companies.
Unlike a drilling rig, drill pipe is a consumable product with a limited
lifespan based on usage. Our drill pipe is designed and manufactured for
extreme environments and incorporates a number of proprietary designs. Our
principal competitors in drill pipe are Omsco, IDPA and various local
manufacturers in foreign countries.

         DRILL COLLARS

         Drill collars are used to provide weight on a drill bit to assist in
the drilling process. A drill collar is generally located directly above the
drill bit and is machined from a solid steel bar to provide the necessary
weight for a vertical well.

         HEAVYWEIGHT DRILL PIPE AND OTHER DRILL STEM PRODUCTS

         Our heavyweight drill pipe is a seamless tubular product that is less
rigid than a drill collar. Heavyweight drill collars provide the transition
zone between a drill collar and the drill pipe. Heavyweight drill pipe also
serves to apply weight to a drill bit in a directional well. We also provide
kellys, subs and pupjoints. The principal competitors for heavyweight drill
pipe and other drill stem products are Smith International, Inc., SMFI and
Omsco.

         ENGINEERED CONNECTIONS AND PREMIUM TUBULARS

         Our premium tubular products consist of premium production tubing,
liners and casing. The term "premium" refers to seamless tubulars with high
alloy chemistry, specific molecular structure and highly engineered
connections. Our premium tubulars are sold both with and without our
proprietary Atlas Bradford(R) connections. Our premium tubulars are used in
particularly harsh environments, such as offshore and deep natural gas wells
where pressure, temperature and corrosive elements are extreme. The principal
competitors for our premium engineered connections are Hydril, Hunting
Interlock and VAM. During 1999, we licensed TAMSA the international rights 
to our Atlas Bradford connections.

         CONNECTORS FOR CONDUCTORS AND SUBSEA STRUCTURES

         Our connections for marine conductors and subsea structures consist of
our XL System proprietary line of connection technology for conductors and
subsea structures. Conductors are the initial support for new wells from which
both downhole and wellhead sections attach. Conductors are typically hammered
in place at the beginning of the drilling process. We use a proprietary wedge
thread technology to connect the conductors. Our primary competition for
conductors and subsea constructors are ABB, DrillQuip and various smaller
companies.

RAW MATERIALS

         The following list sets forth the principal raw materials used by our
Drilling Products Division.

<TABLE>
<CAPTION>
                                        
         Product                             Raw Material
         -------                             ------------ 
<S>                                          <C>
         Drill pipe                          Steel billets and seamless green tubing
         Drill collars                       Solid steel bars
         Heavyweight drill pipe              Heavy walled tubes
         Premium tubing and casing           Seamless green tubing
</TABLE>


                                      15


<PAGE>   17


         Our suppliers for the above raw materials are the major domestic and
international steel mills. We have established relationships with several
domestic and foreign mill sources to provide us with these products. Currently
raw materials for our Mexican and Indian operations are provided by TAMSA in
Mexico. We have a 30 year supply contract with TAMSA in which we have given it
the right to supply these operations as long as the prices are on a competitive
basis and we are not providing those supplies internally. We are also reviewing
other cost-effective long-term supply arrangements for this division.

                                   PROPERTIES

         Our operations are conducted in over 50 countries. We currently have
more than 60 manufacturing and over 300 sales, service and distribution
locations throughout the world. We are in the process of consolidating many of
these operations in light of current market conditions.

         The following table describes the material manufacturing and other
facilities and principal offices currently owned or leased by us.

<TABLE>
<CAPTION>

                                   FACILITY       PROPERTY                                       
                                     SIZE          SIZE                                          
           LOCATION                (SQ. FT)       (ACRES)    TENURE            UTILIZATION       
           --------                -------        --------   ------            -----------     
COMPLETION AND OILFIELD SERVICES:                                                                
<S>                                <C>              <C>       <C>            <C>                 
Houston, Texas                     117,500          16.36     Owned          Manufacture of power tongs, power units and      
                                                                             accessories                                      
Pearland, Texas                    127,500          57.45     Owned          Manufacture of fishing tools, milling tools,     
                                                                             cutters, overshots and whipstocks      
Houma, Louisiana                   109,800         12.908     Owned          Manufacture of mechanical cementing products,    
                                                                             float equipment, stage tools, rubber products    
                                                                             and industrial valves                            
Hannover, Germany                   65,950           3.41    Leased          Manufacture of mechanical cementing products,    
                                                                             power tongs, power units and accessories, and    
                                                                             specialized bucking machines                     
Bryne, Norway                       60,000          13.59    Leased          Manufacture of liner hanger equipment            
Huntsville, Texas                   81,700          20.00     Owned          Manufacture of downhole packers and              
                                                                             completion systems                               
Liberal, Kansas                     40,000           9.93     Owned          Provider of fishing and rental, coiled tubing, and foam
Casper, Wyoming                     41,553           9.50     Owned          Provider of rental and fishing tools and services 
                                                                                                                              
COMPRESSION SERVICES:                                                                                                         
Cochrane, Alberta, Canada           41,200           1.90     Owned          Package of natural gas compression systems   
Corpus Christi, Texas               90,000           61.5     Owned          Manufacture of and package of natural gas compression 
                                                                             systems  
Yukon, Oklahoma                     77,500          15.00     Owned          Repair of natural gas compressors                     

ARTIFICIAL LIFT SYSTEMS:                                                                                                      
Woodward, Oklahoma                 138,800          53.00    Leased          Manufacture of sucker rod pumps                  
Greenville, Texas                  100,000          26.00     Owned          Manufacture of sucker rods, couplings,           
                                                                             stabilizer bars and pump parts                   
Odessa, Texas                       99,200           7.20     Owned          Manufacture of RotaFlex(R) pumping units          
Sao Leopoldo, Brazil                86,100          17.00     Owned          Manufacture of progressing cavity pumps          
Houston, Texas                      81,000           6.50     Owned          Manufacture of steel filter screens              
Nisku, Alberta, Canada              74,000           8.00    Leased          Manufacture of pumpjacks                         
</TABLE>

 
                                       16
<PAGE>   18


<TABLE>


<S>                                  <C>              <C>          <C>        <C>
Caxias do Sul, Brazil                62,400           6.00         Leased     Manufacture of downhole packers and      
                                                                              completion systems                       

Longview, Texas                      47,000          22.10          Owned     Manufacture of pump barrels and plungers 
Lloydminster, Alberta, Canada        47,000           2.70          Owne      Manufacture of progressing cavity pumps      
Edmonton, Alberta, Canada            42,000          11.00          Owned     Manufacture of progressing cavity pumps and  
                                                                              continuous sucker rods                       
DRILLING PRODUCTS:                                                                                                         
Navasota, Texas                     347,000          83.00          Owned     Manufacture of drill pipe, premium threaded  
                                                                              casing, liners and tubing                    
Veracruz, Mexico                    303,400          42.00          Owned     Manufacture of tool joints                   
Muskogee, Oklahoma                  195,900         108.40          Owned     Manufacture of TCA premium casing            
Houston, Texas                      148,500          20.00         Leased     Manufacture of AB connectors                 
                                    114,200          21.90          Owned     Manufacture of API and premium threaded      
                                                                              couplings                                    
                                     82,750          13.50          Owned     Manufacture of drill pipe, drill collars,    
                                                                              heavyweights and kellys                      
                                     54,500           7.00          Owned     Premium threading services and manufacture   
                                                                              tubular accessories                          
Bryan, Texas                        160,000          55.30          Owned     Manufacture of premium tubing                
Edmonton, Alberta, Canada           109,600          10.20          Owned     Manufacture of drill pipe, premium threaded  
                                                                              casing, liners and tubing                    
Houma, Louisiana                     85,000           9.40          Owned     Manufacture of downhole accessories          
Jurong, Singapore                    64,000           1.48         Leased     Manufacture of drill collars and accessories

CORPORATE:                                                                                                                 
Houston, Texas                       82,000           --           Leased     Company's principal offices                  
</TABLE>

         In addition to the above facilities, our Drilling Products Division
has an agreement with Oil Country Tubular Limited pursuant to which OCTL's
manufacturing facility in Narketpally, India is dedicated by OCTL to the
production of drill pipe and other tubular products exclusively for us. This
facility is owned by OCTL and consists of 262,000 square feet located on 60
acres.

         The facilities owned by our Compression Services Division are held in
a joint venture that is 64% owned by us.

                              OTHER BUSINESS DATA

PATENTS

         Many areas of our business rely on patents and proprietary technology.
We currently have more than 500 patents. Many of our patents provide us with
competitive advantages in our markets. Although we consider our patents and our
patent protection to be an important part of our business, we do not believe
that the loss of one or more of our patents would have a material adverse
effect on our business.

BACKLOG

         With the exception of drill pipe for our Drilling Products Division,
backlog is not material. Our Drilling Products Division had a backlog of drill
pipe as of December 31, 1998, 1997 and 1996, of $89.9 million, $360.0 million
and $170.0 million, respectively. This backlog represented approximately 4.5%,
18.3% and 11.6% of our total company sales for those years. The total backlog
for drill pipe and other drilling products at December 31, 1998, was down to

                                      17


<PAGE>   19
approximately $89.9 million, most of which is expected to be shipped by the
second quarter of 1999. The decline in drill pipe backlog is reflective of
current market conditions. We do not expect that there will be a substantial
backlog for this division during 1999. We also believe that sales for this
division will be materially dependent upon timing and recovery of drilling 
activity.

INSURANCE

         We currently carry a variety of insurance for our operations. We are
partially self-insured for certain claims in amounts that we believe to be
customary and reasonable. We also maintain political risk insurance to insure
against certain risks while doing business with foreign countries.

         Although we believe that we currently maintain insurance coverage that
is adequate for the risks involved, there is always a risk that our insurance
may not be sufficient to cover any particular loss or that our insurance may
not cover all losses. For example, while we maintain product liability
insurance, this type of insurance is limited in coverage and it is possible
that an adverse claim could arise that is in excess of our coverage. Finally,
insurance rates have in the past been subject to wide fluctuation and changes
in coverage could result in increases in our cost or higher deductibles and
retentions.

FEDERAL REGULATION AND ENVIRONMENTAL MATTERS

         Our operations are subject to 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 have
a material adverse effect.

     We have been recently named by the Environmental Protection Agency
("EPA") as a party to the Casmalia, California landfill Superfund site. We
legally transported certain waste materials to this site between 1980 and 1985.
In 1985, after we had ended transporting materials to the landfill, the EPA
declared the landfill as a Superfund site. We have been requested to participate
in a settlement for the matter by paying approximately $440,000. However, we
dispute the findings of EPA regarding our level of involvement in this matter
and are currently reviewing the proposed settlement and other options we may
have.

         Our expenditures during 1998 to comply with environmental laws and
regulations were not material and we currently expect that the cost of
compliance with environmental laws and regulations for 1999 also will not be
material. We also believe that our costs for compliance with environmental laws
and regulations are generally within the same range with those of our
competitors.

EMPLOYEES

         As of December 31, 1998, we employed approximately 11,400 employees.
This number of employees was down from approximately 13,800 at the beginning of
1998. The reduction in the number of employees was attributable to the downturn
in the industry and our attempts to control costs. In the first quarter of 1999,
we further reduced headcount an additional 10% from December 31, 1998 levels.

         Certain of our operations are subject to union contracts. These
contracts, however, cover only a small number of our employees. We believe that
our relationship with our employees is generally satisfactory.

              

CORPORATE HISTORY

         We are a Delaware corporation that was organized in 1972. Many of our
businesses, including those of Weatherford Enterra, Inc., have been conducted
for more than 50 years.

PRINCIPAL EXECUTIVE OFFICES

         Our principal executive offices are located at 515 Post Oak Blvd.,
Suite 600, Houston, Texas 77027. Our telephone number is (713) 693-4000.


                            


                                      18

<PAGE>   20
                           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 1999, we have made the following assumptions:

         o    Average prices for oil for most of 1999 will not increase
              significantly and will be within the same range of prices as they
              were in the fourth quarter of 1998 and the first quarter of 1999.

         o    Average natural gas prices for 1999 will remain at or near their
              current levels.

         o    World demand for oil will be up only marginally or flat.

         o    North American and international rig counts will remain at 
              their current low levels.

         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 macro economic 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 and international rig counts are at
         historical or near historical lows, a continuation of the rig count at
         its current level for a prolonged period of time would adversely
         affect our results as demand for oil related products and services
         would continue to fall because of the uncertainty relating to the
         future prices. In addition, any further material declines in the
         current worldwide rig count or drilling activity would likely further
         reduce the demand for our drilling products and services. Our
         forward-looking statements regarding our drilling products assume
         there will not be any further material declines in the worldwide rig
         count, in particular the foreign 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 


                                      19

<PAGE>   21
         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.

              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 markets and expand in existing markets
         with technologically advanced value-added products. Our
         forward-looking statements have assumed only a small amount of
         near-term growth from these new products and services.

              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 assessment and initial implementation phases of our
         Year 2000 program and expect it to be completed by the fourth quarter
         of 1999.

              Economic Downturn in Asia and South America Could Adversely
         Affect Demand for Products and Services. The economic downturn in Asia
         has begun to affect the economies in other regions of the world,
         including South America and the Former Soviet Union. To date, the
         economies in the United States and Europe have not been materially
         affected. 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 fall further and adversely
         affect our revenues and income. We have assumed that a worldwide
         recession will not occur as a result of the economic downturn in Asia
         and South America. A material decline in the Chinese economy or
         devaluation of its currency could cause further deterioration to the
         Asian and world economies.

              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.


                                      20

<PAGE>   22
                                  RISK FACTORS

         An investment in our stock and securities involves various risks. When
considering your investment in our company you should carefully consider the
following factors, together with the information described elsewhere in this
report.

         Continued Low Prices for Oil Will Adversely Affect the Demand for Our
Products and Services

         Low oil prices adversely affect demand throughout the oil and natural
gas industry, including the demand for our products and services. As prices
decline, we are affected in two significant ways. First, the funds available to
our customers for the purchase of goods and services declines. Second,
exploration and drilling activity declines as marginally profitable projects
become uneconomic and either are delayed or eliminated. Accordingly, as long as
oil prices remain low, our revenues and income will be adversely affected.

         The current market conditions have affected our business in various
ways. Our artificial lift business which is heavily dependent on North American
production experienced continuous declines in revenue throughout 1998. Our
Drilling Products Division has experienced a significant decline in new orders
of drill pipe and other drill stem products and tubular sales have fallen as
completion activity slowed and tubular distributors reduced inventories. Sales
in 1999 for our drill stem products could be down by more than 50% from 1998.
The level of decline will be dependent on the timing of any increase of drilling
activity and the amount of time it takes for our customers' drill pipe and other
tubular inventories to be reduced. Our completion and oilfield services business
has experienced declines in line with the general reduction in industry
activity, with the greatest declines occurring in the United States markets. Our
compression business has only been marginally affected by the recent declines in
market conditions due to the fact that its business is based on levels of
natural gas development and production, which has been more stable than oil
production.

         Our businesses will continue to be affected by industry conditions,
including those conditions and factors described under "Forward-Looking
Statements".

         Disruptions in Foreign Operations Could Adversely Affect Our Income

         Our operations in certain locations in Latin America, Africa and Far
East are subject to various political and economic conditions existing in such
countries that could disrupt operations. Disruptions may occur in our foreign
operations and losses may occur that will not be covered by insurance.

         Drill pipe and other products are manufactured for us by Oil Country
Tubular Limited in India under a long-term exclusive manufacturing arrangement.
Although we have sought to minimize the risks of this operation through a
manufacturing versus ownership arrangement, we are providing OCTL with a
substantial amount of raw materials, inventory and working capital for the
products it manufactures for us. Our Indian operations have been adversely
affected by the downturn of the economies in the eastern hemisphere. Operations
in India are subject to various political and economic risks as well as
financial risks with respect to OCTL. We have recently substantially curtailed
our operations in India and they are expected to continue to be curtailed
through the end of 1999. A termination or complete shutdown of this operation in
light of current market conditions or political factors could have an adverse
effect on our income and results.

         Our Products and Services are Subject to Operational Hazards

         Our products are used for the exploration and production of oil and
natural gas. These operations are subject to hazards inherent in the oil and
gas industry that can cause personal injury or loss of life, damage to or
destruction of property, equipment, the environment and marine life, and
suspension of operations. These hazards include fires, explosions, craterings,
blowouts and oil spills. Litigation arising from an accident at a location
where our products or services are used or provided may result in our being
named as a defendant in lawsuits asserting potentially large claims.

         Our Common Stock has Fluctuated Historically

         Historically, and in recent months in particular, the market price of
common stock of companies engaged in the oil and gas industry has been highly
volatile. Likewise, the market price of our common stock has varied
significantly in the past. News announcements and changes in oil and natural
gas prices, changes in the demand for oil and natural gas exploration and
changes in the supply and demand for oil and natural gas have all been factors
that have affected the price of our common stock.


                                      21

<PAGE>   23
                           REFERENCES TO WEATHERFORD

         When we refer to Weatherford and make use of phrases such as "we" and
"us", we are generally referring to Weatherford International, Inc. and its
subsidiaries as a whole or on a division basis depending on the context in
which the statements are made.

ITEM 2.  PROPERTIES

         See Item 1. Business - Properties on page 16 of this report, which is 
incorporated by reference into this item.


ITEM 3.  LEGAL PROCEEDINGS

     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.

     See Item 1, Business -- Other Business Data -- Federal Regulation and
Environmental Matters on page 18 of this report, which is incorporated by
reference into this item.

     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 the cases in which
we are involved that could be uninsured and beyond the amounts that we
currently have reserved or anticipate incurring for that matter.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted during the fourth quarter of the year ended
December 31, 1998, to a vote of stockholders of the Company.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our Common Stock is traded on the New York Stock Exchange under the symbol
"WFT". As of March 24, 1999, there were 3,209 stockholders of record. The
following table sets forth, for the periods indicated, the range of high and
low sale prices per share for the Common Stock as reported on the New York
Stock Exchange. These prices have been adjusted for a two-for-one stock split
that occurred in May 1997.

<TABLE>
<CAPTION>
                                                                               PRICE
                                                                     ---------------------------
                                                                        HIGH            LOW
                                                                     -----------    ------------
     <S>                                                             <C>            <C> 
     Year ending December 31, 1998
       First Quarter..............................................   $   53 7/8       $  37 1/2
       Second Quarter.............................................       58 7/16         34 3/4
       Third Quarter..............................................       39 15/16        15
       Fourth Quarter.............................................       28 3/4          16
     Year ending December 31, 1997
       First Quarter..............................................     $ 31 7/8        $ 23 7/8
       Second Quarter.............................................       45 1/2          28
       Third Quarter..............................................       64              42 1/16
       Fourth Quarter.............................................       73              40 1/4
</TABLE>

     On March 24, 1999, the closing sales price of our Common Stock as reported
by the New York Stock Exchange was $26 3/4 per share. We have not declared or
paid dividends on our Common Stock since 1984 and we do not anticipate paying
dividends on our Common Stock at any time in the foreseeable future.

     In addition to our Common Stock, we currently have outstanding $402.5
million principal amount in 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027. These debentures have the following material terms:

    o Mature on November 1, 2027

    o Interest rate of 5% per annum, payable February 1, May 1, August 1 and 
      November 1 of each year 

    o Are convertible in Common Stock at a conversion price of $80 per share

    o May be redeemed at any time on or after November 4, 2000 at redemption
      prices set forth in an indenture relating to the debentures


                                      22
<PAGE>   24

    o Are subordinated in right of payment of principal and interest on certain
      existing and future senior indebtedness

ITEM 6.  SELECTED FINANCIAL DATA

     The following table sets forth certain restated selected historical
consolidated financial data and should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and
the Consolidated Financial Statements and Notes thereto included elsewhere
herein. The following information may not be deemed indicative of our future
operating results.


<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                 ---------------------------------------------------------------------
                                                    1998          1997           1996          1995          1994
                                                 ------------  ------------  -------------  ------------  ------------
                                                               (in thousands, except per share amounts)
<S>                                              <C>           <C>           <C>            <C>            <C>
 Revenues..................................      $ 2,010,654   $ 1,969,089   $ 1,467,270    $ 1,125,803    $  858,993
 Operating Income..........................          149,048(a)    335,992       169,101         12,120        70,952
 Income (Loss) From Continuing
     Operations............................           64,837(a)    196,773        92,161         (8,268)       36,046
 Basic Earnings (Loss) Per Share From 
     Continuing Operations.................             0.67          2.04          1.03         (0.10)          0.53
 Diluted Earnings (Loss) Per Share
     From Continuing Operations............             0.66          2.01          1.01         (0.10)          0.53

 Total Assets..............................        2,831,715     2,737,910     2,243,633      1,710,568     1,464,804
 Long-Term Debt............................          229,663       252,322       417,976        416,473       303,854
 5% Convertible Subordinated Preferred 
     Equivalent Debentures.................          402,500       402,500            --             --            --
 Stockholders' Equity......................        1,493,880     1,458,549     1,292,704        958,337       845,287
 Cash Dividends Per Share..................               --            --            --             --            --
</TABLE>

(a) Includes $195.0 million, $126.8 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.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

   In May 1998, the new Weatherford was created through the merger of EVI, Inc.
and Weatherford Enterra, Inc. This merger was accounted for as a pooling of
interests and our financial statements have been restated to reflect our
businesses on a combined basis. We have also redefined our business segments
into four separate divisions: Completion and Oilfield Services, Artificial Lift
Systems, Compression Services and Drilling Products. Our segment data has been
restated to reflect these four divisions.

   The following is a discussion of our results of operations for the last
three years and our current financial position. This discussion should be read
in conjunction with our financial statements that are included with this
report.

   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 to be reasonable. For information about these
assumptions, you should refer to our Section entitled "Forward-Looking
Statements."

MARKET TRENDS AND OUTLOOK

   Our businesses serve the oil and gas industry. Certain of our products and
services, such as our drill pipe, tubular installation services and 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 50% and 60% of our
business is reliant on drilling activity, with the remainder related to
production activity.

   The oil and gas industry has been subject to extreme volatility in recent
years due to significant changes in the demand, supply and pricing of oil and
natural gas. In 1997 through early 1998, we experienced a strong increase in
the demand for our products and services due to a worldwide increase in the
demand for oil and shortages of 


                                       23
<PAGE>   25

equipment and people to service this demand. During this period, we and our
industry operated at levels that had not been experienced since the early
1980's and many of our businesses operated at full capacity.

   Beginning in late 1997, the price of oil began to fall. The reasons for the
decline included the spreading impact of the financial crisis in Asia on the
worldwide demand for oil and an increase in the supply of oil worldwide as new
projects and production came online. Initially, the effects of these changes
were felt only in isolated markets, such as the Canadian and California heavy
oil markets, where drilling and production activity is more sensitive to the
price of oil. Drilling and completion activity in North America then began to
decline due to the greater sensitivity of North American production to prices.
By late 1998, demand throughout the industry had fallen substantially as our
customers' exploration, development and production activities worldwide dropped
in reaction to sharply lower oil prices.

   Low oil prices have also affected the economies of various developing
countries, in particular those in Latin America and the former Soviet Union,
that are heavily dependent on oil exports for growth. Many of these countries
are now experiencing declines in their own economies, which in turn has further
affected the worldwide demand and price for oil.

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

                             SELECTED INDUSTRY DATA

-------------------------------------------------------------------------------
                (1)               (2)                (3)              (3)
                                               NORTH AMERICAN    INTERNATIONAL
              WTI OIL       HENRY HUB GAS         RIG COUNT        RIG COUNT
-------------------------------------------------------------------------------
1998          $11.28           $1.945                 895             671
-------------------------------------------------------------------------------
1997          $18.32           $2.264               1,499             819
-------------------------------------------------------------------------------
1996          $25.39           $2.757               1,195             810
-------------------------------------------------------------------------------

(1) Price per Barrel as of December 31 - Source: Applied Reasoning, Inc.
(2) Price per MM/BTU as of December 31 - Source: Oil World
(3) Average rig count for December - Source: Baker Hughes Rig Count

   The reduction in drilling and production activity impacted our businesses
through lower revenues, pricing pressure and reduced margins. Contributing to
these conditions are the following trends:

    o Low oil prices have reduced the funds available to our clients to explore
      for and produce oil and gas and have made the exploration and production
      of oil reserves in various locations uneconomical.

    o Reduced exploration activity has reduced the demand for the products and
      services provided by us serving the drilling markets. Our Drilling
      Products Division has been the most significantly affected.

    o North American activity has declined more than the decline in
      international activity due to the maturity of the reserves in North
      America and the higher per barrel cost of exploration and production in
      North America.

    o The capital budgets of our customers have been reduced and delayed
      because of industry consolidations and market uncertainties as to future
      oil prices.

    o Reduced demand for our products and services has resulted in pricing
      pressures and reduced margins in most of our markets.

   As we enter 1999, there is substantial uncertainty as to when demand will
stop declining and when a recovery will start. Our view is that we are nearing
the bottom of the cycle and that improvements will slowly begin to be felt near
the end of the year. We believe the principal factor behind a recovery will be
a reduction in the supply of oil as production rates decline due to the current
reduction in drilling activity. Recent proposed production cuts by the oil
producing countries may also result in improved market conditions to the extent
those cuts are actually implemented. Increases in worldwide demand could also
speed up the recovery. We do not expect any material improvements in
industry conditions until sometime in 2000.

   We expect that in light of current market conditions our revenues, operating
income before special charges and net income from continuing operations before
special charges for 1999 will all be substantially down on a year to year basis
absent a significant turn-around by the third quarter of 1999. The extent of the
decline will be a function of when the market stabilizes and begins to recover.
The extreme volatility of our markets, however, makes predictions regarding
results for 1999 difficult to make.


                                       24
<PAGE>   26

RESULTS OF OPERATIONS

   The business environment in which we have operated over the last three years
has experienced extreme changes. Starting in 1996, we began to experience the
first significant improvements in our markets in a number of years. That
improvement continued through 1997 into the first part of 1998, with a material
slow down beginning near the middle of 1998. By the end of 1998, our industry
was in the midst of one of the worse downturns in its history.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

   The following charts contain selected financial data comparing our results
for 1998 and 1997:

<TABLE>
<CAPTION>
 COMPARATIVE FINANCIAL DATA                                      YEAR ENDED              
                                                         ---------------------------
                                                            1998            1997    
                                                         ------------    -----------
                                                                (in thousands)
<S>                                                      <C>             <C>        
   Revenues..........................................    $ 2,010,654     $1,969,089 
   Gross Profit......................................        583,869(a)      580,702 
   Gross Profit %....................................           29.0%          29.5%
   Selling, General and Administrative                                              
     Attributable to Segments........................    $   266,423     $  209,476 
   Corporate General and Administrative..............         26,980         37,816 
   Operating Income..................................        149,048(a)     335,992 
   Interest Income...................................          2,969          8,329 
   Interest Expense..................................         54,497         43,273 
   Net Income from Continuing Operations.............         64,837(a)     196,773 
   EBITDA (b)........................................        319,780(a)     478,923 
</TABLE>

   (a) Includes $195.0 million, $126.8 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 $50.9 million related to the write-off of 
inventory and have 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 and net income. In addition, EBITDA calculations
by one company may not be comparable to another company.

<TABLE>
<CAPTION>
 SALES BY GEOGRAPHIC REGION
                                                                     YEAR ENDED
                                                             -----------------------
                                                                1998           1997
                                                             ------------   --------
<S>                                                             <C>          <C>
 REGION: (a)

   
 U.S.................................................           59%          61%
 Canada..............................................           13%          13%
 Europe..............................................            8%           8%  
 Latin America.......................................            7%           6%  
 Africa and Middle East..............................            7%           5%  
 Other ..............................................            6%           7%  
                                                           -------       ------
     Total...........................................          100%         100%
                                                           =======       ======
</TABLE>
    

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

   Our results for 1998 reflected the volatile industry in which we competed;
trends and factors affecting our businesses varied depending on the quarter.
Our results for 1998 and 1997 were also affected by the following specific
items:

    o Results for 1998 include $195.0 million in pre-tax charges for the merger
      between EVI and Weatherford Enterra, Inc. and charges associated with the
      downturn in our industry.

    o Revenues for the second six months of 1998 declined 14.3% compared to the
      same period in 1997 and 17.4% compared to the first half of 1998.

    o The increase in the 1998 operating income of $344.0 million, before 
      charges of $195.0 million, as compared to 1997 operating income
      of $336.0 million, reflected the strong demand for our products
      in the first half of 1998.



                                       25
<PAGE>   27

    o Businesses acquired in 1997 and 1998 contributed $403.5 million in
      revenues and $25.9 million in operating income in 1998. Revenues and
      operating income in 1997 from the businesses acquired in 1997 were
      $166.5 million and $23.3 million.

    o Businesses sold in 1997 contributed $76.9 million in revenues in 1997.
      Net income for the disposed businesses was $8.3 million in 1997.

    o In 1997 we recorded an extraordinary charge of $9.0 million, net of
      taxes, related to our acquisition of approximately $120.0 million
      principal amount of our 10 1/4% Senior Notes due 2004 and 10 1/4% Senior
      Notes due 2004, Series B.

    o Our interest charges for 1998 reflected higher levels of debt following
      our issuance in November 1997 of $402.5 million principal amount of 5%
      Convertible Subordinated Preferred Equivalent Debentures due 2027 and
      borrowings used to fund acquisitions.

    o Our corporate expenses as a percentage of revenues for 1998 were 1.3% as
      compared to 1.9% for 1997. The percentage decrease from 1997 was
      primarily attributable to the consolidation savings due to our merger.

    o Our effective tax rate on income from continuing operations for 1998 was
      34.8% as compared to 35.5% for 1997.

   1998 SPECIAL CHARGES

     In 1998, we incurred $195.0 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 industry conditions. Of these
charges, $120.0 million was incurred in the second quarter at the time of our
merger and with the initial downturn in the industry. A $75.0 million charge was
incurred in the fourth quarter in response to the previously unanticipated
extent of the decline in our industry which resulted in a need for us to make
additional reductions in our operations and align the cost structure of our
business with current demand. The net after-tax effect of these charges was
$126.8 million (or $1.30 per diluted share). Over $171.4 million of these
charges had been realized as of December 31, 1998, with the remainder of the
charges expected to be fully expended by the second quarter of 1999 in
connection with planned activities. During 1999, we will assess whether any
adjustments or reversals to the remaining accrued special charges are necessary.

     The following chart summarizes the special charges made by us in 1998:

<TABLE>
<CAPTION>

                                   COMPLETION                                                                           BALANCE
                                      AND                                                                                AS OF  
                                    OILFIELD    ARTIFICIAL   COMPRESSION  DRILLING                                    DECEMBER 31,
                                    SERVICES   LIFT SYSTEMS    SERVICES   PRODUCTS  CORPORATE    TOTAL     UTILIZED       1998
                                   ----------  ------------  -----------  --------  ---------  ----------  ---------  ------------ 
                                                                             (in thousands)
<S>                                <C>          <C>          <C>          <C>        <C>        <C>         <C>         <C>
Merger Transaction Costs(1)....    $      --    $       --   $       --   $     --   $ 62,462   $  62,462   $ 62,462    $     --
Severance and Related 
  Costs(2).....................        1,961         5,050           --         --        600       7,611        --        7,611
Facility Closures(3)...........        8,969        13,817           --      5,300         --      28,086     15,257      12,829
Corporate Related Expenses(4)..           --            --           --         --      8,297       8,297      5,177       3,120
Inventory Write-Off(5).........        4,830        17,573           --     28,500         --      50,903     50,903          --
Write-Down of Assets(6).........      29,195         4,360        1,500      1,150      1,436      37,641     37,641          --
                                   ---------    ----------   ----------   --------   --------   ---------   --------    --------
   Total ......................    $  44,955    $   40,800   $    1,500   $ 34,950   $ 72,795   $ 195,000   $171,440    $ 23,560
                                   =========    ==========   ==========   ========   ========   =========   ========    ========
</TABLE>

(1)  The merger related costs were incurred in the second quarter and included
     $32.6 million in severance and termination costs related to approximately
     300 employees and former officers and directors, and other employee
     benefits related to stock grants, in accordance with Weatherford Enterra's
     employment agreements and option plans, and $29.9 million in professional
     and financial advisory fees, filing and registration fees, and printing and
     mailing costs.

(2)  The severance and related costs included in the fourth quarter charges
     were $7.6 million for approximately 1,000 employees specifically
     identified, with terminations to be completed in the first half of 1999,
     in accordance with our announced plan to terminate employees.

(3)  The facility and plant closures costs were $15.3 million in the second
     quarter, all of which have been incurred by year end. These costs related
     primarily to the elimination of duplicated manufacturing, distribution and
     service locations following the merger in May. The facility and plant
     closures of $12.8 million were accrued in the fourth quarter for the
     consolidation and closure of approximately 100 service, manufacturing and
     administrative facilities in response to declining market conditions in the
     fourth quarter.

                                       26
<PAGE>   28

(4)  The corporate related expenses of $5.2 million recorded in the second
     quarter and $3.1 million recorded in the fourth quarter were primarily for
     the relocation of corporate offices, related lease obligations and the
     consolidation of technology centers due to the merger and to align our
     corporate cost structure in light of current conditions.

(5)  The write-off of inventory was $12.4 million in the second quarter and
     $38.5 million in the fourth quarter, which were reported as cost of
     products. These charges relate to the write-off of inventory as a result
     of the combination of EVI's and Weatherford Enterra's operations, the
     rationalization of their product lines, the elimination of certain
     products, services and locations due to the merger and as a result of the
     decline in market conditions.

(6)  The write-down of assets was $24.6 million in the second quarter and $13.0
     million in the fourth quarter. These charges primarily relate to the
     write-down of equipment and other assets as a result of the combination of
     EVI's and Weatherford Enterra's operations, the rationalization of their
     product lines, the elimination of certain products, services and locations
     due to the merger, the industry downturn, and the specific identification
     of assets which are held for sale as a result of the decline in market
     conditions.

   SEGMENT RESULTS

     COMPLETION AND OILFIELD SERVICES

       Our Completion and Oilfield Services Division began the first half of
1998 with strong revenue and income growth. By the second half of the year,
this division began to experience reductions in revenue, operating income and
margins as the rig count declined and demand for its products and services
dropped. This division's North American operations have been the most adversely
affected by the downturn. Revenue declines have continued into the first
quarter of 1999. Although we are continuing to reduce our costs in this
division through reductions in personnel, the declines in revenues have
occurred faster than cost reductions. The revenue reduction has also resulted
in manufacturing and operational inefficiencies in this division due to lower
operating levels. While we believe this division is well positioned for growth
as the industry recovers, results for this division for 1999 will be highly
dependent on timing of improvements in the market.

         The following chart sets forth additional data regarding the results
of our Completion and Oilfield Services Division for 1998 and 1997:

<TABLE>
<CAPTION>

                                                                  YEAR ENDED              
                                                          ---------------------------  
                                                             1998            1997      
                                                          ------------    -----------  
                                                                 (in thousands)
     <S>                                                 <C>             <C>           
     Revenues........................................     $  848,219      $  929,001   
     Gross Profit....................................        272,390(a)      314,870   
     Gross Profit %..................................           32.1%           33.9%  
     Selling, General and Administrative.............     $   99,423      $  102,040   
     Operating Income................................        135,521(a)      215,412   
     EBITDA..........................................        230,239(a)      301,550   
</TABLE>

     (a) Includes merger and other charges of $45.0 million, which consists of 
         $9.0 million for facility closures, $29.2 million for the write-down of
         equipment, $2.0 million for severance and $4.8 million for the write-
         off of inventory. The write-off of inventory has been classified as
         cost of products.

       Material items affecting the results of our Completion and Oilfield
Services Division for 1998 compared to 1997 were:

    o North American revenues for 1998 declined by 22.4% as compared to 1997 due
      to an average rig count reduction of 17.4%.

    o International revenues increased by 10.0% in 1998 to $432.8 million. The
      most significant revenue increases occurred in the African and Middle
      Eastern markets.

                                       27
<PAGE>   29


    o Businesses sold by us in 1997 contributed $76.9 million in revenues in
      1997.

    o Gross profit, before charges of $4.8 million, declined in 1998 by 12.0%
      as revenue in the second half of 1998 dropped by 10.8% as compared to the
      first half of 1998.

    o Selling, general and administrative expenses increased as a percentage of
      revenues from 11.0% in 1997 to 11.7% in 1998. The increase primarily
      reflects a reduced revenue base.

    o Operating income, before charges of $45.0 million, declined in 1998 to
      $180.5 million from $215.4 million in 1997 primarily due to increased
      costs and reduced revenues associated with industry conditions.

     ARTIFICIAL LIFT SYSTEMS

       Our Artificial Lift Systems Division was the first segment of our
business to be affected by the market downturn. Beginning in late 1997 as oil
prices began to fall, demand for this division's products fell as its customers
reduced and deferred purchases of products used to produce oil, in particular
heavy oil. The decline was most pronounced in Canada, where we had just
purchased various companies that served this market. We believe this division's
business has generally bottomed out and we expect that this division will
realize slight sales and income increases during 1999. However, as long as the
price of oil remains depressed, we do not expect demand for this division's
products to increase significantly. As a result, we do not expect this division
to be a significant contributor to income for 1999. Looking beyond 1999, we
expect that as the world's oilfields mature, demand for this division's
products should increase and it should return to greater profitability.
International activity should begin to increase in 1999 as we leverage our
worldwide distribution network to market the products and services offered.

         The following chart sets forth additional data regarding the results
of our Artificial Lift Systems Division for 1998 and 1997:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED              
                                                         ---------------------------  
                                                            1998            1997      
                                                         ------------    -----------  
                                                               (in thousands)
      <S>                                                <C>             <C>          
       Revenues......................................    $   329,196     $  249,476   
       Gross Profit..................................        101,972 (a)     69,806   
       Gross Profit %................................           31.0%          28.0%  
       Selling, General and Administrative...........    $    97,968     $   47,014   
       Operating Income..............................        (19,223)(a)     22,792   
       EBITDA........................................            (40)(a)     31,736   
</TABLE>

       (a) Includes merger and other charges of $40.8 million, primarily
           including $13.8 million for facility closures, $17.6 million for
           the write-off of inventory, $5.0 million for severance and $4.4
           million related to the write-down of equipment. The write-off of
           inventory has been classified as costs of products.

         Material items affecting the results of our Artificial Lift Systems
Division for 1998 compared to 1997 were:

    o The second half of 1998 experienced a decline in revenues of 33.4%
      compared to the first half of 1998.

    o Revenues in 1998 related to 1997 acquisitions were $189.1 million.

    o Gross profit, before charges of $17.6 million, increased to $119.5
      million in 1998 from $69.8 million in 1997 due to improved margins from
      products sold in the first half of 1998.

    o Selling, general and administrative expenses as a percentage of revenues
      increased significantly from 18.8% in 1997 to 29.8% in 1998 due to higher
      amortization of goodwill and other intangibles relating to the 1997 and
      1998 acquisitions for this segment, higher selling costs associated with
      the December 1997 acquisitions of distribution entities and system costs
      primarily related to Year 2000 compliance costs.

    o Operating income, before charges of $40.8 million, was down from $22.8
      million in 1997 to $21.6 million in 1998 due to increased selling,
      general and administrative expenses and reduced revenues associated with
      industry conditions.


                                       28

<PAGE>   30

     COMPRESSION SERVICES

       Our Compression Services Division was the least affected by the recent
declines in market conditions due to the fact that its business is based on
levels of natural gas development and production, which has been more stable
than oil production. Revenues for 1998 were essentially flat compared to 1997
as we spent a large portion of the year working to position this division for
growth. Gross margins and operating income for this division increased in 1998
as we focused on improving manufacturing and operational efficiencies of this
division's operations.

       Looking forward into 1999, we believe that this division is the best
positioned of our operating divisions for growth in 1999 as we expect increased
demand for gas compression services as our customers seek ways to reduce costs.
International demand is also expected to increase as we seek opportunities with
foreign producers through our worldwide infrastructure. We expect this
division's revenues and operating income will also be significantly up for 1999
due to our joint venture with GE Capital described below under the heading
"Acquisitions and Dispositions."

       The following chart sets forth additional data regarding the results of
our Compression Services Division for 1998 and 1997:


<TABLE>
<CAPTION>
                                                                 YEAR ENDED              
                                                         ---------------------------   
                                                            1998            1997       
                                                         ------------    -----------   
                                                               (in thousands)
      <S>                                                <C>             <C>           
       Revenues......................................    $   177,481     $   178,897   
       Gross Profit..................................         39,656          35,105   
       Gross Profit %................................           22.3%           19.6%  
       Selling, General and Administrative...........    $    21,064     $    20,331   
       Operating Income..............................         17,092(a)       14,774   
       EBITDA........................................         40,171(a)       36,440   
</TABLE>
       (a) Includes merger and  other charges of $1.5 million which relates
           primarily to specific identification of excess equipment that is held
           for sale due to the weakening market conditions.

       Material items affecting the results of our Compression Services
Division for 1998 compared to 1997 were:

    o Revenues in 1998 were down slightly from 1997. In the second half of 1998
      revenues were down approximately 3.2% from the first half of 1998.

    o Gross profit as a percentage of revenues increased from 19.6% in 1997
      to 22.3% in 1998. This increase reflected an improvement in the design of
      the compressor packages sold and operational efficiencies.

    o The increase in selling, general and administrative expenses for 1998
      compared to 1997 primarily reflects costs associated with the expansion
      into international markets.

    o Operating income before charges was $18.6 million in 1998 which benefited
      from improved margins.
    
     DRILLING PRODUCTS

       Our Drilling Products Division has been the most affected by the recent
decline in drilling activity. Although revenues for 1998 were up compared to
1997, the increase was attributable to sales from our backlog and prior price
increases. This division also is expected to continue to have declining
revenues throughout the year as its backlog of drill pipe is reduced
substantially by the end of the second quarter of 1999. We currently expect
that sales of premium connections and tubulars will increase slightly as the
year progresses due to inventory reductions at the distributor level. We do
not, however, anticipate any increase in sales volumes of drill pipe during
1999 unless the rig count increases substantially and do not expect the
increased premium sales to offset the revenue and income losses from the drop
in drill pipe sales. In addition, because of the high fixed costs associated
with the manufacturing operations of this division, we expect this division to
operate at a loss for the first half of 1999. The second half results will be 
dependent on the timing of improvements in demand, which we do not expect to 
see until later in 1999 or some time in 2000.


                                       29

<PAGE>   31
       The following chart sets forth additional data regarding the results of
our Drilling Products Division for 1998 and 1997:


<TABLE>
<CAPTION>
                                                                  YEAR ENDED           
                                                          ---------------------------  
                                                             1998            1997      
                                                          ------------    -----------  
                                                                 (in thousands)
      <S>                                                <C>             <C>           
       Revenues......................................     $   655,758     $  611,715   
       Gross Profit..................................         169,851(a)     160,921   
       Gross Profit %................................            25.9%          26.3%  
       Selling, General and Administrative...........     $    47,968     $   40,091   
       Operating Income..............................         115,433(a)     120,830   
       EBITDA........................................         147,384(a)     144,440   
</TABLE>


(a) Includes merger and other charges of $35.0 million, including $5.3 million
for facility closures, $28.5 million for the write-off of inventory and $1.2
million for the write-down of equipment. The write-off of inventory is
classified as cost of products.

       Material items affecting the results of our Drilling Products Division
for 1998 compared to 1997 were:

    o The increase in revenues for 1998 reflects the benefit of sales from
      backlog from 1997 and the first half of 1998. 

    o Sales in the second half of 1998 decreased by 20.5% as compared to the
      first half of 1998. 

    o Premium tubular revenues declined in the second half of 1998 due to a
      decrease in demand as distributors' inventories fell in light of
      prevailing market conditions.

    o In December 1998, we acquired the company that owned our facility in
      Veracruz, Mexico, and canceled the lease associated with that facility. We
      also licensed internationally certain of our rights to some of our Atlas
      Bradford thread line and recorded $9.0 million in revenues from that 
      arrangement.

    o Improved gross profit, before charges of $28.5 million, significantly
      benefited from lower average costs associated with higher production
      volumes during the first half of 1998. The second half of 1998 reflected
      a shift in the sales mix from higher margin product sales to lower margin
      product sales.

    o Selling, general and administrative expenses increased as a percentage of
      revenues from 6.6% in 1997 to 7.3% in 1998. The increase reflects system
      costs primarily associated with Year 2000 compliance costs, as well as
      the amortization of goodwill associated with the 1997 acquisitions in
      this division.

    o Operating income, before charges of $35.0 million, improved from $120.8
      million in 1997 to $150.4 million in 1998 due to favorable operating
      results in the first half of 1998.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

   The following charts contain selected financial data comparing our results
for 1997 and 1996:

<TABLE>
<CAPTION>
     COMPARATIVE FINANCIAL DATA                                      YEAR ENDED           
                                                             ---------------------------  
                                                                1997           1996       
                                                             -----------    ------------  
                                                                   (in thousands)
     <S>                                                    <C>            <C>            
     Revenues..........................................      $1,969,089     $1,467,270    
     Gross Profit......................................         580,702        368,345    
     Gross Profit %....................................            29.5%          25.1%   
     Selling, General and Administrative
       Attributable to Segments........................      $  209,476     $  162,018    
     Corporate General and Administrative..............          37,816         39,304    
     Operating Income..................................         335,992        169,101    
     Interest Income...................................           8,329          4,168    
     Interest Expense..................................          43,273         39,368    
     Net Income from Continuing Operations.............         196,773         92,161    
     EBITDA(a).........................................         478,923        290,931    
</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


                                       30
<PAGE>   32
consideration to their EBITDA. Calculations of EBITDA should not be viewed as a
substitute to calculations under GAAP, in particular cash flow from operations,
operating income and net income. In addition, EBITDA calculations by one
company may not be comparable to another company.

<TABLE>
<CAPTION>
      SALES BY GEOGRAPHIC REGION

                                                                     YEAR ENDED
                                                             ---------------------------
                                                                1997           1996
                                                             ------------   ------------
     <S>                                                            <C>           <C>
     REGION: (a)

     U.S.............................................               61%            63%
     Canada..........................................               13%            10%
     Europe..........................................                8%            10%
     Latin America...................................                6%             5%
     Africa and Middle East..........................                5%             7%
     Other...........................................                7%             5%
                                                               -------        -------
       Total.........................................              100%           100%
                                                               =======        =======
</TABLE>

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

   Our results for 1997 reflected a major improvement over 1996 as we saw
improvements in both the domestic and international rig counts and drilling
activity. These improvements resulted in most of our businesses operating at
near full capacity and increased prices as demand for products and services
exceeded supply. The improvements were generally seen in all of our geographic
markets, with North America realizing the greatest increases. Our businesses
also benefited from prior consolidation efforts and market expansions.

   In addition to the general effect of substantially better market conditions
in 1997 compared to 1996, our results for 1997 and 1996 were affected by the
specific following items:

    o Revenue increases in 1997 reflected the impact of the various
      acquisitions made during 1997, the impact of consolidation, restructuring
      and higher average sales prices which reflect the strength in our markets
      for 1997.

    o Acquisitions in 1997 benefited 1997 revenues by $166.5 million and income
      from continuing operations by $12.3 million. Acquisitions in 1996
      benefited 1997 revenues by $269.2 million and income from continuing
      operations by $24.5 million.

    o Businesses sold by us in 1997 contributed $76.9 million in revenues in
      1997 and $134.3 million in 1996. 

    o Gross profit as a percentage of revenues increased from 25.1% in 1996 to
      29.5% in 1997 due to stronger prices and sales of higher margin products
      and services.

    o Selling, general and administrative costs attributable to segments as a
      percentage of total revenues were flat between 1997 and 1996, despite
      increased amortization of intangibles and costs associated with the
      assimilation of acquired businesses.

    o Our corporate expenses as a percentage of revenues for 1997 were 1.9% as
      compared to 2.7% for 1996. The percentage decrease from 1996 was
      primarily attributable to the growth in 1997 revenues.

    o Our interest charges in 1997 reflected increased indebtedness during 1997
      and our $402.5 million principal amount of the Debentures issued in
      November 1997.

    o Net income for the disposed businesses was $8.3 million in 1997 and $9.6
      million in 1996.

    o We recorded in 1997 an extraordinary charge of $9.0 million, net of
      taxes, related to our acquisition of approximately $120.0 million
      principal amount of our 10 1/4% Senior Notes due 2004 and 10 1/4% Senior
      Notes due 2004, Series B. We also recorded an extraordinary charge of
      $0.7 million, net of taxes, for the early extinguishment of debt in 1996.

    o In 1996, we reported income of $7.5 million, net of taxes, from
      discontinued operations related to our Mallard Division and a gain of
      $66.9 million, net of taxes of $44.6 million, related to the disposition.
      In 1997, we benefited from a one-time pre-tax gain of $3.4 million
      relating to the sale of Parker Drilling Company common stock received in
      connection with the disposition of the Mallard Division.

    o Our effective tax rate on income from continuing operations for 1997 was
      35.5% as compared to 30.5% for 1996. The 1996 effective rate was
      favorably impacted by a $4.0 million tax benefit resulting from a $6.4
      million settlement in October 1996 with the United States Internal
      Revenue Service in connection with the dissolution in October 1990 of an
      oil and gas joint venture.

                                       31
<PAGE>   33

 1996 SPECIAL CHARGES

     In the fourth quarter of 1996, we adopted a plan to close our Bastrop,
Texas, tool joint manufacturing facility and to combine our two packer
facilities through the closure of one facility in Arlington, Texas. In
connection with these decisions, we incurred a charge of $5.8 million
associated with these closures. Of this charge, $4.3 million related to the
tool joint facility closure and relocation of equipment from this facility and
$1.5 million related to the consolidation of our packer facilities and the
closure of one of the plants. We incurred $3.8 million in 1996 for costs
associated with these actions during 1996, including costs relating to the
relocation of equipment at our Bastrop facility to other facilities. We also
accrued $2.0 million as part of the $5.8 million charge for estimated exit
costs that were incurred in 1997 relating to the closure of our Bastrop and
Arlington facilities. These costs included $0.8 million for severance and
termination costs, $0.9 million for the reduction in the carrying value of our
Bastrop facility in light of the intended disposition of the facility and $0.3
million for the termination of the Arlington lease. Approximately 400 of our
employees were affected by these closures. We had substantially completed the
closure of both the Bastrop and Arlington facilities and incurred substantially
all charges related to the closing of these facilities by the end of the second
quarter of 1997.

   SEGMENT RESULTS

     COMPLETION AND OILFIELD SERVICES

         The following chart sets forth certain data regarding the results of
our Completion and Oilfield Services Division for 1997 and 1996:


<TABLE>
<CAPTION>
                                                                  YEAR ENDED           
                                                          ---------------------------  
                                                             1997            1996      
                                                          ------------    -----------  
                                                               (in thousands)
      <S>                                                <C>             <C>           
       Revenues......................................     $   929,001     $   824,639  
       Gross Profit..................................         314,870         233,507  
       Gross Profit %................................            33.9%           28.3% 
       Selling, General and Administrative...........     $   102,040     $    89,253  
       Operating Income..............................         215,412         146,332  
       EBITDA........................................         301,550         226,914  
</TABLE>

       Material items affecting the results of our Completion and Oilfield
Services Division for 1997 compared to 1996 were:

    o The increase in revenues primarily reflects increased volume of activity
      and improved pricing resulting from a 15% increase in worldwide drilling
      activity.

    o The increased use of certain drilling techniques, such as re-entry,
      multi-lateral, horizontal and directional drilling, were also important
      contributors to revenue growth in 1997, particularly in North America.

    o U.S. oilfield services revenues increased 33% to $317.7 million, while
      the U.S. average rig count increased 21%. Oilfield services revenues in
      Canada increased 31% while average Canadian rig count increased 39%.

    o International oilfield services revenues (excluding Canada) increased 18%
      compared to an average rig count increase of 2%. International revenue
      increases were primarily attributable to increased volume of rental and
      service activity, some pricing improvement and the introduction of
      downhole services into new markets.

                                       32
<PAGE>   34

    o Businesses sold by us in 1997 contributed $76.9 million in revenues in
      1997 and $134.3 million in 1996. 

    o Cementation product sales increased 32% over 1996. 

    o Liner hanger sales and service revenues, which included the results of
      Nodeco AS and Aarbakke AS from the date they were acquired in May 1996,
      increased 66% in 1997 over 1996.

    o Gross profit margin, as a percentage of revenues, increased in 1997 to
      33.9% from 28.3% as a result of improved pricing in certain areas and
      increased volume.

    o Selling, general and administrative expenses for 1997 as a percentage of
      revenues were 11.0% compared to 10.8% for 1996. 

    o Completion products operating income increased $15.7 million, or 67%, from
      1996 to 1997, primarily as a result of the increased volume of cementation
      product sales, operating efficiencies and the inclusion of the Nodeco
      operations for the full year of 1997.

     ARTIFICIAL LIFT SYSTEMS

       The following chart sets forth certain data regarding the results of our
Artificial Lift Systems Division for 1997 and 1996:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED            
                                                         ---------------------------   
                                                            1997            1996       
                                                         ------------    -----------   
                                                               (in thousands)
      <S>                                               <C>             <C>            
       Revenues......................................    $   249,476     $  150,816    
       Gross Profit..................................         69,806         42,028    
       Gross Profit %................................           28.0%          27.9%   
       Selling, General and Administrative...........    $    47,014     $   30,361    
       Operating Income..............................         22,792         11,667    
       EBITDA........................................         31,736         17,532    
</TABLE>

       Material items affecting the results of our Artificial Lift Systems
Division for 1997 compared to 1996 were:

    o Revenue growth in our Artificial Lift Systems Division was primarily due
      to increased sales of artificial lift equipment in the Canadian and South
      American markets, and the effects of acquisitions. During 1997, we
      acquired Trico Industries, BMW Monarch, BMW Pump and various small
      artificial lift companies. These acquisitions benefited 1997 revenues by
      $64.9 million and operating income by $6.8 million.

    o Sales of our progressing cavity pump product lines were particularly
      strong in Canada and South America where the heavy oil markets improved.

    o Gross profit, as a percentage of revenues, increased from 27.9% in 1996
      to 28.0% in 1997 as a result of an improvement in this division's
      domestic cost structure and the December 1997 acquisitions of Trico
      Industries, BMW Pump and BMW Monarch. 

    o Selling, general and administrative expenses for 1997 as a percentage of
      revenues was 18.8% compared to 20.1% for 1996 in spite of higher
      amortization and combination expenses related to 1997 acquisitions.

     COMPRESSION SERVICES

       The following chart sets forth certain data regarding the results of our
Compression Services Division for 1997 and 1996:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED            
                                                          ---------------------------   
                                                             1997            1996       
                                                          ------------    -----------   
                                                               (in thousands)
      <S>                                                <C>             <C>            
       Revenues......................................     $   178,897     $  154,503    
       Gross Profit..................................          35,105         29,771    
       Gross Margin %................................            19.6%          19.3%   
       Selling, General and Administrative...........     $    20,331     $   21,938    
       Operating Income..............................          14,774          7,833    
       EBITDA........................................          36,440         31,387    
</TABLE>


                                      33
<PAGE>   35

       Material items affecting the results of our Compression Services
Division for 1997 compared to 1996 were:

    o Revenue increases were primarily due to an increase in manufacturing and
      packaging revenues of 21% to $78.2 million and an improvement of 12% to
      $100.7 million for compressor rental and service revenues.

    o Gross profit increased from 19.3% in 1996 to 19.6% in 1997 due to
      improvements in manufacturing and packaging operations. 

    o Selling, general and administrative expenses for 1997, compared to 1996,
      declined due to cost reductions.

    o Operating income increased due to improved sales, slightly better margins
      and lower selling, general and administrative expenses.

     DRILLING PRODUCTS

       The following chart sets forth certain data regarding the results of our
Drilling Products Division for 1997 and 1996:

<TABLE>
<CAPTION>

                                                                  YEAR ENDED              
                                                          ---------------------------  
                                                             1997            1996      
                                                          ------------    -----------  
                                                                 (in thousands)
      <S>                                                <C>             <C>           
       Revenues......................................     $   611,715     $  337,312   
       Gross Profit..................................         160,921         63,039   
       Gross Margin %................................            26.3%          18.7%  
       Selling, General and Administrative...........     $    40,091     $   20,466   
       Operating Income..............................         120,830         42,573   
       EBITDA........................................         144,440         53,619   
</TABLE>

       Material items affecting the results of our Drilling Products Division
for 1997 compared to 1996 were:

    o Improved results were primarily due to increased demand for drill pipe and
      other drilling tools, strength in premium tubular activity and our
      acquisition of TA Industries, Inc., a premium tubular couplings and
      accessories manufacturer, in April 1997, and the third quarter 1997
      acquisition of XL Systems, Inc., a manufacturer of marine connectors.

    o Drill pipe and other drill stem products sales increased to approximately
      $283.4 million for 1997 from $181.3 million for 1996. The increase in
      demand for drill pipe reflected higher domestic and international
      drilling activity, in particular offshore drilling. Revenues from drill
      pipe sales also reflected higher pricing of products.

    o Premium tubular revenues increased to approximately $307.9 million during
      1997 up from approximately $157.8 million for 1996. The increase in
      premium tubular revenues reflected strong demand in the Gulf of Mexico
      and the acquisition of TA Industries.

    o During 1997, our acquisitions of TA Industries, XL Systems and various
      small acquisitions benefited 1997 revenues in this division by $96.8
      million and benefited its operating income by $16.1 million.

    o Gross profit for this division increased as a percentage of revenues from
      18.7% in 1996 to 26.3% in 1997 due to increased pricing on our products
      and reduced costs resulting from the expansion of our Mexico tool joint
      facility. In the third quarter of 1997, the Mexico facility became fully
      operational, which benefited operations in the second half of 1997 by
      over $3.0 million.

    o Selling, general and administrative expenses for 1997, as a percentage of
      revenues, was 6.6% compared to 6.1% for 1996 and reflected higher
      selling, general and administrative expenses associated with the
      operations of TA Industries as well as the increase in the amortization
      of goodwill and other intangibles.



                                       34
<PAGE>   36

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 line 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 need 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 and for the years ended 1998 and 1997:

<TABLE>
<CAPTION>

                                                                                          
                                                                 1998           1997      
                                                               ----------    ------------ 
                                                                            (in thousands)
   <S>                                                        <C>           <C>           
   Cash and Cash Equivalents..............................     $   40,201     $   74,211  
   Borrowings from Revolving Credit Facilities............        117,279         24,243  
   Letters of Credit Outstanding..........................         29,937         27,900  
   Cumulative Foreign Currency Translation
     Adjustment...........................................        (76,389)       (38,494) 
   International Assets Hedged (U.S. Dollar Equivalent)...         33,365         36,802  
   Net Cash Inflows on Forward Exchange Contracts.........            423          5,200  
</TABLE>

   The reduction in our cash and cash equivalents since December 31, 1997, was
primarily attributable to the acquisition of new businesses for approximately
$138.8 million in cash and capital expenditures for property, plant and
equipment of $205.9 million, offset by net borrowings under revolving credit
facilities of $93.0 million, cash of $100.0 million from a sale and leaseback
that was consummated in the fourth quarter of 1998, and cash flow from
operations of $127.9 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. Borrowings under this facility bear interest at a
variable rate based on the U.S. prime rate or 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 net proceeds from the Debentures were $390.9 million.
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.


                                      35
<PAGE>   37

   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.

   COMPRESSION FINANCING

     Our Compression Services Division entered into a sale and leaseback
arrangement in December 1998 where it was provided with the right to sell up to
$200.0 million of compression units through December 1999 and lease them back
over a five year period under an operating lease. Payments under the lease are
calculated based on rate of return on the purchase price and an agreed
valuation of the leased compressors. Under the terms of the lease, our
Compression Services Division may repurchase the equipment at any time.
Weatherford International has provided for a residual value guarantee at the
end of the term of the lease equal to approximately 85.5% of the appraised
value of the compression units under lease.

     As of December 31, 1998, our Compression Services Division had sold
compressors under this arrangement having an appraised value of $119.6
million and received cash of $100.0 million and a receivable of $19.6 million.
The receivable is classified in other current assets on the accompanying
Consolidated Balance Sheets as the balance is due on demand. The net book value
of the equipment sold was approximately $77.4 million, resulting in a pre-tax
gain of $42.2 million, which may be deferred until the end of the lease.

   CAPITAL EXPENDITURES

     Our capital expenditures for property, plant and equipment during 1998
were $205.9 million and primarily related to drill pipe and tubing, fishing
tools, tubular service equipment, compression rental equipment and the
completion of plant expansions in Canada. Much of the 1998 capital expenditures
related to projects initiated at the end of 1997 and early 1998. Capital
expenditures for 1999 are expected to be approximately $105.0 million.

     Our compression operations are, by their nature, capital intensive and in
the event of growth 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 DISPOSITIONS

     Our company has grown substantially over the years through selective
acquisitions and combinations. The following table summarizes our 1998 and 1997
acquisitions by operating segment:


<TABLE>
<CAPTION>
                                                      1998                                   1997
                                     ---------------------------------------  --------------------------------------
                                                  CASH/ASSUMED     TOTAL                 CASH/ASSUMED      TOTAL
              SEGMENT                 STOCK ($)   LIABILITIES  CONSIDERATION   STOCK ($) LIABILITIES   CONSIDERATION
     -----------------------------   ----------- ------------- -------------  ---------- ------------- -------------
                                                                     (in thousands)
     <S>                              <C>         <C>          <C>            <C>        <C>          <C>
     Completion and Oilfield
       Services...................    $      --   $    83,706   $    83,706   $      --   $    44,505  $    44,505
     Artificial Lift Systems......       30,753        72,234       102,987          --       250,128      250,128
     Compression Services.........           --            --           --           --            --           --
     Drilling Products............           --        73,923        73,923      47,425        70,696      118,121
                                      ---------   -----------   -----------   ---------   -----------  -----------
       Total......................    $  30,753   $   229,863   $   260,616   $  47,425   $   365,329  $   412,754
                                      =========   ===========   ===========   =========   ===========  ===========
</TABLE>

     Subsequent to year end, 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, is the world's second largest provider
of natural gas contract compression services and owns or manages over 4,000
compression units worldwide having more than one million horse power. The pro
forma combined 1998 revenues, operating income and EBITDA for the joint venture
were $256.9 million, $7.3 million and $52.1 million, respectively. 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 


                                      36
<PAGE>   38
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.

     We also recently completed our acquisition of Christiana Companies, Inc.
for approximately 4.0 million shares of Common Stock and $20.0 million cash. In
the acquisition we acquired through Christiana (1) 4.0 million shares of our
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. TLC has a net book value of approximately $8.2 million
and had 1998 revenues of $90.8 million, operating income of $5.8 million and
EBITDA of $12.6 million. We acquired Christiana because it gave us a unique
opportunity to own an interest in TLC for essentially no consideration. We
intend to hold our investment in Christiana as a passive investment.

     Our 1998 and 1997 acquisitions, with the exception of our acquisition XL
Systems, Inc. in 1997, which was accounted for as an immaterial pooling of
interests, were accounted for using the purchase method of accounting. The
results of operations of all such acquisitions are included in the Consolidated
Statements of Income from their dates of acquisition. The 1998 and 1997
acquisitions were not material individually nor in the aggregate for each
applicable year.

     Some of our acquisitions have resulted in substantial goodwill associated
with their operations, including goodwill of approximately $485.3 million
relating to our acquisitions in 1997 and 1998. The amortization expense for
goodwill and other intangibles during 1998 was $23.4 million.

     During 1997 we sold certain non-core businesses. Cash proceeds from these
transactions totaled $68.8 million in 1997.

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 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.

     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.


                                      37
<PAGE>   39

   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 51% of our net assets 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. In 1998, we recorded a $37.9 million adjustment to our equity
account to reflect the net impact of the decline in various foreign currencies
against the U.S. dollar.

     A discussion of our market risk exposures in financial instruments and
additional currency exposures appears below under the heading "Quantitative and
Qualitative Market Risk Disclosure."

NEW ACCOUNTING PRONOUNCEMENTS

   In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for the reporting of
comprehensive income and its components in a full set of general-purpose
financial statements and is effective for years beginning after December 15,
1997. We adopted SFAS No. 130 in the first quarter of 1998.

   In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information. SFAS No. 131, effective for years beginning
after December 15, 1997, requires segment information to be reported on a basis
consistent with that used internally for evaluating segment performance and
deciding how to allocate resources to segments. We have adopted SFAS No. 131
and restated our segment information and related disclosures in accordance with
its requirements.

   In February 1998, the FASB issued SFAS No. 132, Employers' Disclosures About
Pensions and Other Postretirement Benefits. SFAS No. 132 standardizes
disclosure requirements for pensions and other postretirement benefits. SFAS
No. 132 is effective for years beginning after December 15, 1997. We have
adopted SFAS No. 132 in 1998.

   In March 1998, the AICPA issued Statement of Position (SOP) 98-1, Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use. The
SOP provides guidance with respect to accounting for the various types of costs
incurred for computer software developed or obtained for our use. We adopted
SOP 98-1 in 1998. It did not have a significant effect on our consolidated
results of operations or financial position.


                                      38
<PAGE>   40

   In April 1998, the AICPA issued SOP 98-5, Reporting on the Costs of Start-Up
Activities. We do not capitalize start-up cost; thus, the adoption will not
have a significant effect on our consolidated results of operations or
financial position.

   In June 1998, the FASB issued 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. SFAS No. 133 is effective for years beginning after June
15, 1999. We are currently evaluating the impact of SFAS No. 133 on our
consolidated financial statements.

   In October 1998, the FASB issued SFAS No. 134, Accounting for
Mortgage-Backed Securities Retained After the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise. SFAS No. 134 is not applicable
to us and has no impact on our 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 the end of 1998, the first phase of the Year 2000 Plan was completed
with respect to the assessment of our IT and Non-IT systems. The second phase
was also completed by the end of 1998. Work is currently underway in the third
phase of the Year 2000 Plan. The third phase will be completed by the end of
the first quarter of 1999, the fourth phase and the fifth and final phase will
be completed by the end of the third quarter of 1999. Any unexpected delays or
problems that prevent us from completing all phases of the Year 2000 Plan in a
timely manner could have a material adverse impact on us.

   As part of the Year 2000 Plan, we are currently installing Year 2000 ready
business application systems and expect that these installations will be
complete by the end of the third quarter of 1999. We have retained outside
consultants to assist us with the installation of the new software and with the
assessment of the Year 2000 readiness of our IT systems. We expect to retain
additional consultants to assist us in the remediation and testing phases of
the Year 2000 Plan.

   In addition to our assessment and review of our own systems, we have begun
communications 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 expect to
further 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 


                                      39
<PAGE>   41

contractors 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 $10.0
million. We have incurred $6.3 million of such expenditures through December
31, 1998, of which, approximately $5.7 million has been incurred in connection
with the replacement of our business application software and approximately
$0.6 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 expenditures associated with the Year 2000 Plan represent approximately
12% of our MIS Department's budget for 1999. 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 the Company.

     We have not completed the evaluation of 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 the 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.


                                      40

<PAGE>   42
ITEM 7A.  QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES

   We are currently exposed to market risk from changes in foreign currency and
changes in interest rates. A discussion of our market risk exposure in
financial instruments follows.

FOREIGN CURRENCY EXCHANGE RATES

   Because we operate in virtually every oil and gas exploration and production
region in the world we conduct a portion of our business in currencies other
than the U.S. dollar. Although most of our international revenues are
denominated in the local currency, the effects of foreign currency fluctuations
are largely mitigated because local expenses of such foreign operations also
generally are denominated in the same currency. The impact of exchange rate
fluctuations during the years ended 1998, 1997 and 1996 did not have a material
effect on reported amounts of revenues or net income.

   We enter into forward exchange contracts only as a hedge against certain
existing economic exposures, and not for speculative or trading purposes. These
contracts reduce exposure to currency movements affecting existing assets and
liabilities denominated in foreign currencies, such exposure resulting
primarily from trade receivables and payables and intercompany loans. The
future value of these contracts and the related currency positions are subject
to offsetting market risk resulting from foreign currency exchange rate
volatility. The counterparties to these foreign exchange contracts are
creditworthy multinational commercial banks. We believe that the risk of
counterparty nonperformance is immaterial.

   At December 31, 1998 and 1997, we had contracts maturing within the next 60
days to sell $33.4 million and $36.8 million, respectively, in Norwegian
kroner, U.K. pounds sterling, Canadian dollars and Dutch guilders. Our largest
contracts are in Norwegian kroner, $28.8 million and $25.4 million as of
December 31, 1998 and 1997, respectively. Had such respective contracts matured
on December 31, 1998 and 1997, our required cash outlay would have been
minimal.

   Settlement of forward exchange contracts resulted in net cash inflows
totaling $0.4 million, $5.2 million and $1.1 million during the years ended
December 31, 1998, 1997, and 1996, respectively. The net cash inflows vary from
year to year due to differences in the forward rate and the spot rate on the
date of settlement. This difference may result in material net inflows and
outflows if the currency is volatile. For instance, we experienced a $5.2
million net cash inflow in 1997, $4.2 million of which related to the Norwegian
kroner, when the difference between the spot rate at the settlement date and
the forward rate related to the kroner was as much as 8%. Although currencies
could fluctuate in the future and result in either a net inflow or outflow, we
believe that this risk is mitigated because we enter into contracts with terms
of 30 to 60 days. However, there can be no assurance that volatility similar to
or greater than that experienced in 1997 could not occur in the future.

INTEREST RATES

   We are subject to interest rate risk on our long-term fixed interest rate
debt and, to a lesser extent, variable interest rate borrowings. Our long-term
borrowings primarily consist of the $200.0 million principal of the 7 1/4%
Senior Notes due 2006 and the $402.5 million principal of the 5% Convertible
Subordinated Preferred Equivalent Debentures due 2027. Changes in interest
rates would, assuming all other things being equal, cause the fair market value
of debt with a fixed interest rate to increase or decrease, and thus increase
or decrease the amount required to refinance the debt. As of December 31, 1998
and 1997, the fair value of the Senior Notes approximated the carrying value
and the fair market value of the Debentures was $249.6 million and $368.8
million, respectively. The fair value of the Senior Notes is solely dependent
on changes in prevailing interest rates, whereas the fair value of the
Debentures is dependent on prevailing interest rates and our current stock
price as it relates to the conversion price of $80 per share of our Common
Stock.

   We have various other debt instruments but believe that the impact of
changes in interest rates in the near term will not be material to these
instruments.


                                      41
<PAGE>   43
ITEM 8:   Financial Statements and Supplementary Data

        INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES


                                                                         Page
     Report of Independent Public Accountants...........................  43 
     Consolidated Balance Sheets as of December 31, 1998 and 1997.......  44
     Consolidated Statements of Income for each of the three years   
          in the period ended December 31, 1998.........................  45 
     Consolidated Statements of Stockholders' Equity for each of
          the three years in the period ended December 31, 1998.........  46
     Consolidated Statements of Cash Flows for each of the three
          years in the period ended December 31, 1998...................  47
     Notes to Consolidated Financial Statements.........................  48

     Financial Statement Schedule:
        II.   Valuation and Qualifying Accounts and Allowances..........  76


     All other schedules are omitted because they are not required or because
the required information is included in the financial statements or notes
thereto.




                                       42

<PAGE>   44



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Weatherford International, Inc.:

     We have audited the accompanying consolidated balance sheets of
Weatherford International, Inc. (a Delaware corporation) and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1998.  These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Weatherford International, Inc. and subsidiaries as of December 31, 1998 and
1997 and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles.

     Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole.  The Financial Statement
Schedule listed in Part II - Item 8 is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not a required part of
the basic consolidated financial statements.  The Financial Statement Schedule
has been subjected to the auditing procedures applied in our audits of the
basic consolidated financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.


ARTHUR ANDERSEN LLP
Houston, Texas
February 17, 1999




                                       43
<PAGE>   45


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                   ------------------------
                                                                      1998         1997
                                                                   -----------  -----------
<S>                                                                <C>          <C>
ASSETS
CURRENT ASSETS:
 Cash and Cash Equivalents.......................................  $   40,201   $   74,211
 Accounts Receivable, Net of Allowance for Uncollectible Accounts
  of $19,764 in 1998 and $23,473 in 1997.........................     400,886      524,929
 Inventories.....................................................     484,822      455,811
 Deferred Tax Asset..............................................      55,003       44,904
 Other Current Assets............................................     101,480       34,221
                                                                   ----------   ----------
                                                                    1,082,392    1,134,076
                                                                   ----------   ----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
 Land, Buildings and Other Property..............................     237,305      228,178
 Rental and Service Equipment....................................     902,939    1,010,065
 Machinery and Equipment.........................................     521,674      393,317
                                                                   ----------   ----------
                                                                    1,661,918    1,631,560
 Less:  Accumulated Depreciation.................................     823,648      764,747
                                                                   ----------   ----------
                                                                      838,270      866,813
                                                                   ----------   ----------
GOODWILL, NET....................................................     811,034      668,475
OTHER ASSETS.....................................................     100,019       68,546
                                                                   ----------   ----------
                                                                   $2,831,715   $2,737,910
                                                                   ==========   ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Short-Term Borrowings...........................................  $  185,729   $   24,243
 Current Portion of Long-Term Debt...............................      19,346       13,178
 Accounts Payable................................................     135,728      218,810
 Accrued Salaries and Benefits...................................      44,558       63,656
 Current Tax Liability...........................................      25,312       44,317
 Other Accrued Liabilities.......................................     146,168      138,965
                                                                   ----------   ----------
                                                                      556,841      503,169
                                                                   ----------   ----------
LONG-TERM DEBT...................................................     229,663      252,322
DEFERRED INCOME TAXES AND OTHER..................................     148,831      121,370
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
  103,513 Shares in 1998 and 101,958 Shares in 1997..............     103,513      101,958
 Capital in Excess of Par Value..................................   1,052,899    1,018,024
 Treasury Stock, at Cost.........................................    (193,328)    (165,287)
 Retained Earnings...............................................     607,185      542,348
 Accumulated Other Comprehensive Loss ...........................     (76,389)     (38,494)
                                                                   ----------   ----------
                                                                    1,493,880    1,458,549
                                                                   ----------   ----------
                                                                   $2,831,715   $2,737,910
                                                                   ==========   ==========
</TABLE>

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




                                       44
<PAGE>   46


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                      ----------------------------------
                                                         1998        1997        1996
                                                      ----------  ----------  ----------
<S>                                                   <C>         <C>         <C>
REVENUES:
 Products........................................... $1,250,570  $1,097,823   $ 704,350
 Services and Rentals...............................    760,084     871,266     762,920
                                                     ----------  ----------   ---------
                                                      2,010,654   1,969,089   1,467,270
COSTS AND EXPENSES:
 Cost of Products...................................    924,133     807,575     550,292
 Cost of Services and Rentals.......................    502,652     580,812     548,633
 Selling, General and Administrative Attributable to
  Segments..........................................    266,423     209,476     162,018
 Corporate General and Administrative...............     26,980      37,816      39,304
 Equity in Earnings of Unconsolidated Affiliates....     (2,679)     (2,582)     (2,078)
 Merger Costs and Other Charges.....................    144,097          --          --
                                                     ----------  ----------   ---------
                                                      1,861,606   1,633,097   1,298,169
                                                     ----------  ----------   ---------
OPERATING INCOME....................................    149,048     335,992     169,101
OTHER INCOME (EXPENSE):
 Interest Income....................................      2,969       8,329       4,168
 Interest Expense...................................    (54,497)    (43,273)    (39,368)
 Gain on Sale of Marketable Securities..............         --       3,352          --
 Other, Net.........................................      1,868         561      (1,227)
                                                     ----------  ----------   ---------
INCOME BEFORE INCOME TAXES..........................     99,388     304,961     132,674
PROVISION FOR INCOME TAXES..........................     34,551     108,188      40,513
                                                     ----------  ----------   ---------
INCOME FROM CONTINUING OPERATIONS...................     64,837     196,773      92,161
INCOME FROM DISCONTINUED OPERATIONS,
 NET OF TAXES.......................................         --          --       7,468
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS,
 NET OF TAXES.......................................         --          --      66,924
EXTRAORDINARY CHARGE, NET OF TAXES..................         --      (9,010)       (731)
                                                     ----------  ----------   ---------
NET INCOME.......................................... $   64,837  $  187,763   $ 165,822
                                                     ==========  ==========   =========
BASIC EARNINGS (LOSS) PER SHARE:
 Income From Continuing Operations.................. $     0.67  $     2.04   $    1.03
 Income From Discontinued Operations................         --          --        0.08
 Gain on Disposal of Discontinued Operations........         --          --        0.75
 Extraordinary Charge...............................         --       (0.09)      (0.01)
                                                     ----------   ----------  ---------
 Net Income Per Share............................... $     0.67  $     1.95   $    1.85
                                                     ==========  ==========   =========
 Basic Weighted Average Shares Outstanding..........     97,065      96,052      89,842
                                                     ==========  ==========   =========
DILUTED EARNINGS (LOSS) PER SHARE:
 Income From Continuing Operations.................. $     0.66   $     2.01  $    1.01
 Income From Discontinued Operations................         --          --        0.08
 Gain on Disposal of Discontinued Operations........         --          --        0.74
 Extraordinary Charge...............................         --       (0.09)      (0.01)
                                                     ----------   ----------  ---------
 Net Income Per Share............................... $     0.66   $     1.92  $    1.82
                                                     ==========   ==========  =========
 Diluted Weighted Average Shares Outstanding........     97,757       97,562     90,981
                                                     ==========   ==========  =========
</TABLE>

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



                                       45
<PAGE>   47


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                             ACCUMULATED OTHER
                                                                         COMPREHENSIVE INCOME (LOSS)
                                                                         ---------------------------
                                                                            CUMULATIVE
                                                                             FOREIGN    UNREALIZED
                                       COMMON STOCK    CAPITAL IN            CURRENCY    GAIN ON     TREASURY STOCK       TOTAL
                                     -----------------  EXCESS OF  RETAINED TRANSLATION MARKETABLE ------------------- STOCKHOLDERS'
                                      SHARES  $1 PAR    PAR VALUE  EARNINGS ADJUSTMENT SECURITIES   SHARES     AMOUNT     EQUITY
                                     -------  -------- ----------  --------  ---------   -------   ------  ----------- ----------
                                                                                 q
<S>                                   <C>      <C>      <C>        <C>      <C>         <C>      <C>        <C>        <C>
Balance at December 31, 1995......... 85,485  $ 85,485   $698,320  $189,838   $(12,784)  $    --     (265)     $(2,522) $ 958,337  
Total Comprehensive Income...........     --        --         --   165,822      1,304     2,381       --           --    169,507
Shares Issued in Acquisitions........  2,339     2,339     48,395        --         --        --       --           --     50,734
Shares Issued Under Employee
 Benefit Plans.......................     29        29      1,342        --         --        --       20          419      1,790
Stock Grants and Options Exercised...    740       740     12,038        --         --        --      (8)        (394)     12,384
Issuance of Common Stock.............  6,900     6,900     93,960        --         --        --       --           --    100,860
Purchase of Treasury Stock for
Executive Deferred Compensation 
  Plan...............................     --        --         --        --         --        --     (44)        (908)       (908)
                                     -------  -------- ----------  --------  ---------   -------  -------  ----------- ----------
Balance at December 31, 1996......... 95,493    95,493    854,055   355,660   (11,480)     2,381    (297)      (3,405)  1,292,704
Total Comprehensive Income (Loss)....     --        --         --   187,763   (27,014)   (2,381)       --           --    158,368
Effect of Immaterial Pooling.........    946       946      (717)   (1,075)         --        --       --           --       (846)
Replacement Shares (Shares Acquired) 
 from GulfMark Merger................  4,471     4,471    142,788        --         --        --  (4,471)    (147,259)         --
Shares Issued Under Employee
 Benefit Plans.......................     11        11        464        --         --        --       --           --        475
Stock Grants and Options Exercised...  1,037     1,037     12,635        --         --        --      (5)        (247)     13,425
Tax Benefit of Options Exercised.....     --        --      8,799        --         --        --       --           --      8,799
Purchase of Treasury Stock Under
 Stock Repurchase Plan...............     --        --         --        --         --        --    (275)     (11,860)    (11,860)
Purchase of Treasury Stock for
Executive Deferred Compensation 
  Plan ..............................     --        --         --        --         --        --     (48)      (2,516)     (2,516)
                                     -------  -------- ----------  --------  ---------   -------  -------  ----------- ----------
Balance at December 31, 1997.........101,958   101,958  1,018,024   542,348   (38,494)        --  (5,096)    (165,287)  1,458,549
Total Comprehensive Income (Loss)....     --        --         --    64,837   (37,895)        --       --           --     26,942
Shares Issued in an Acquisition......    727       727     30,026        --         --        --       --           --     30,753
Shares Issued Under Employee
 Benefit Plans.......................     12        12        312        --         --        --       --           --        324
Stock Grants and Options Exercised...  2,115     2,115     40,627        --         --        --  (1,240)     (38,215)      4,527
Tax Benefit of Options Exercised.....     --        --      7,760        --         --        --       --           --      7,760
Purchase of Treasury Stock Under
 Stock Repurchase Plan...............     --        --         --        --         --        --    (993)     (37,585)    (37,585)
Purchase of Treasury Stock for
Executive Deferred Compensation 
  Plan...............................     --        --         --        --         --        --     (79)      (2,769)     (2,769)
Retirement of Treasury Stock.........(1,299)   (1,299)   (49,229)        --         --        --    1,299       50,528         --
Recognition of Deferred Compensation 
 Due to Merger.......................     --        --      5,379        --         --        --       --           --      5,379
                                     -------  -------- ----------  --------  ---------   -------  -------  ----------- ----------
Balance at December 31, 1998........ 103,513  $103,513 $1,052,899  $607,185  $(76,389)   $    --  (6,109)   $(193,328) $1,493,880
                                     =======  ======== ==========  ========  =========   =======  =======  =========== ==========
</TABLE>

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




                                       46
<PAGE>   48


                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31,
                                                                      ----------------------------------
                                                                        1998          1997        1996
                                                                      --------     ----------   ---------
<S>                                                                   <C>        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net Income.........................................................  $ 64,837       $187,763   $ 165,822
 Adjustments to Reconcile Net Income to Net Cash Provided
  by Operating Activities:
  Non-Cash Portion of Merger Costs and Other Charges................   124,595             --          --
  Depreciation and Amortization.....................................   170,732        142,931     121,830
  Net Income from Discontinued Operations...........................        --             --      (7,468)
  Gain on Disposal of Discontinued Operations, Net..................        --             --     (66,924)
  Gain on Sale of Assets, Net.......................................   (29,292)      (20,056)     (14,058)
  Extraordinary Charge on Prepayment of Debt, Net...................        --          9,010         731
  Deferred Income Tax Provision (Benefit) from Continuing Operations   (20,503)        35,459       4,138
  Provision for Uncollectible Accounts Receivable...................     2,397         13,248       4,608
  Change in Assets and Liabilities, Net of Effects of Businesses
   Acquired:
   Accounts Receivable..............................................   114,138      (113,009)     (63,562)
   Inventories......................................................   (73,607)     (108,837)     (24,680)
   Other Current Assets.............................................   (39,837)       (2,742)       1,547
   Accounts Payable.................................................   (88,210)        19,216      28,540
   Accrued Current Liabilities......................................   (88,143)         7,209      (5,599)
   Other Assets.....................................................    (1,290)       (5,031)      (2,697)
   Other, Net.......................................................    (7,882)      (13,019)      (22,257)
                                                                      --------   ------------     ---------
   Net Cash Provided by Continuing Operations.......................   127,935        152,142      119,971
   Net Cash Provided by Discontinued Operations.....................        --             --        8,294
                                                                      --------   ------------     ---------
   Net Cash Provided by Operating Activities........................   127,935        152,142      128,265
                                                                      --------   ------------     ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of Businesses, Net of Cash Acquired....................  (138,840)     (321,477)      (80,077)
 Capital Expenditures for Property, Plant and Equipment.............  (205,879)     (212,992)     (172,725)
 Proceeds from Sales of Businesses..................................        --         68,798      326,016
 Proceeds from Sales of Property, Plant and Equipment...............    46,727         30,431       20,215
 Purchase of Short-Term Investment..................................   (20,742)            --           --
 Proceeds from Sale and Leaseback of Equipment......................   100,000             --           --
 Acquisitions and Capital Expenditures of Discontinued Operations...        --             --      (63,136)
 Income Taxes Paid on Disposal of Discontinued Operations...........        --       (62,808)           --
 Proceeds From Sale of Marketable Securities........................        --         23,352           --
 Other, Net.........................................................       589        (6,384)      (15,388)
                                                                      --------   ------------    ---------
   Net Cash Provided (Used) by Investing Activities.................  (218,145)     (481,080)       14,905
                                                                      --------   ------------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Issuance of Long-Term Debt, Net....................................        --        390,911      197,824
 Issuance of Common Stock, Net......................................        --             --      100,860
 Purchases of Treasury Stock........................................   (40,356)      (14,376)         (908)
 Tender of Senior Notes.............................................        --      (119,980)           --
 Proceeds from Stock Option Exercises...............................     3,932         16,352       14,148
 Termination Costs on Retirement of Debt............................        --       (10,752)       (1,125)
 Borrowings (Repayments) Under Short-Term Borrowings, Net...........   113,036         21,319     (121,656)
 Borrowings (Repayments) on Long-Term Debt, Net.....................   (19,561)     (126,425)     (115,761)
 Other Financing Activities, Net....................................       324       (10,111)        4,978
                                                                      --------   ------------    ---------
   Net Cash Provided by Financing Activities........................    57,375        146,938       78,360
                                                                      --------   ------------    ---------
 Effect of Exchange Rate on Cash....................................    (1,175)         (784)         (220)
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS........................................................   (34,010)     (182,784)      221,310
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR......................    74,211        256,995       35,685
                                                                      --------   ------------    ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR............................  $ 40,201        $74,211    $ 256,995
                                                                      ========   ============    =========
</TABLE>

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



                                       47
<PAGE>   49


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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     On May 27, 1998, EVI, Inc. ("EVI") completed a merger with Weatherford
Enterra, Inc. ("WII") and changed its name to EVI Weatherford, Inc. (together
with its subsidiaries, the "Company") (See Note 2).  The merger was accounted
for as a pooling of interests; accordingly, the accompanying financial
statements have been restated to include the results of WII for all periods
presented.  Certain reclassifications of prior year balances have been made to
conform such amounts to corresponding 1998 classifications.

NAME CHANGE

     At the Company's annual stockholders meeting on September 21, 1998, the
stockholders of the Company approved a name change from EVI Weatherford, Inc.
to Weatherford International, Inc.  The Company's common stock, $1.00 par value
("Common Stock"), is listed on the New York Stock Exchange with a new stock
symbol of "WFT".

NATURE OF OPERATIONS

     The Company is one of the world's largest providers of oilfield services 
and equipment for the oil and gas industry.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Weatherford
International, Inc. and all majority-owned subsidiaries.  All material
intercompany accounts and transactions have been eliminated in consolidation.
The Company accounts for its 50% or less-owned affiliates using the equity
method.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ from those
estimates.

INVENTORIES

     Inventories are valued using the first-in, first-out ("FIFO") method and
are stated at the lower of cost or market.

OTHER CURRENT ASSETS

     Other current assets are comprised of non-trade receivables, prepaid
expenses, and short-term investments.  The net increase from December 31, 1997
to December 31, 1998 primarily reflects the receivable of $19.6 million related
to the December 1998 sale and leaseback of compression equipment (See Note 14)
and the fourth quarter purchase of short-term investments in debt securities
for $20.7 million.

DEBT AND EQUITY SECURITIES

     Investments in debt and equity securities are accounted for in accordance
with Statement of Financial Accounting Standards No. 115 ("SFAS No. 115"),
Accounting for Debt and Equity Securities, and accordingly, these investments
are recorded at their fair market value with unrealized gains or losses
recorded as a separate component of stockholders' equity.  The Company has
classified these investments in other current assets as available for sale,
with any other than temporary decline in fair value of securities charged to
earnings.  In April 1997, the Company sold equity securities, comprised of
approximately 3.1 million shares of Parker Drilling Company ("Parker") common
stock, pursuant to a public offering effected by Parker.  As a result, the
Company received net proceeds of approximately $23.4 million and recognized a
pre-tax gain of approximately $3.4 million.  (See Note 15).



                                       48
<PAGE>   50


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

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is carried at cost.  Maintenance and repairs
are expensed as incurred. The costs of renewals, replacements and betterments
are capitalized.  Depreciation on fixed assets is computed using the
straight-line method over the estimated useful lives for the respective
categories.  The Company evaluates potential impairment of property, plant and
equipment and other long-lived assets on an ongoing basis whenever events or
circumstances indicate that carrying amounts may not be recoverable.  The
useful lives of the major classes of property, plant and equipment are as
follows:


<TABLE>
<CAPTION>
                                                              LIFE
                                                        ----------------
<S>                                                      <C>
  Buildings and other property.........................  5  -  45 years
  Rental and service equipment.........................  3  -  15 years
  Machinery and equipment..............................  3  -  20 years
</TABLE>

INTANGIBLE ASSETS AND AMORTIZATION

     The Company's intangible assets are comprised primarily of goodwill and
identifiable intangible assets, principally patents and technology licenses. The
Company periodically evaluates goodwill and other intangible assets, net of
accumulated amortization, for impairment based on the undiscounted cash flows
associated with the asset compared to the carrying amount of that asset.
Management believes that there have been no events or circumstances which
warrant revision to the remaining useful life or which affect the recoverability
of any intangible assets. Goodwill is being amortized on a straight-line basis
over the lesser of the estimated useful life or 40 years. Other identifiable
intangible assets, included as a component of other assets, are amortized on a
straight-line basis over the years expected to be benefited, ranging from 5 to
15 years.

     Amortization expense for goodwill and other intangible assets was
approximately $23.4 million, $15.0 million and $10.8 million for 1998, 1997 and
1996, respectively.  Accumulated amortization for goodwill at December 31, 1998
and 1997 was $48.5 million and $30.1 million, respectively.

ENVIRONMENTAL EXPENDITURES

     Environmental expenditures that relate to the remediation of an existing
condition caused by past operations, and which do not contribute to current or
future revenues, are expensed.  Liabilities for these expenditures are recorded
when it is probable that obligations have been incurred and the costs can be
reasonably estimated.  Estimates are based on currently available facts and
technology, presently enacted laws and regulations and the Company's prior
experience in remediation of contaminated sites.  Liabilities included $7.3
million and $12.7 million of accrued environmental expenditures at December 31,
1998 and 1997, respectively.

STOCK-BASED COMPENSATION

     In 1995, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 123, ("SFAS No. 123"),
Accounting for Stock Based Compensation.  The Company has elected not to adopt
the accounting recognition provisions of SFAS No. 123 and, as permitted, has
continued to use the intrinsic value method of accounting established by
Accounting Principles Board Opinion No. 25 ("APB No. 25") to account for its
stock-based compensation programs.  Under APB No. 25 no compensation expense is
recognized when the exercise price of an employee stock option is equal to the
market price of Common Stock on the grant date.  The Company has adopted SFAS
No. 123 by making the required pro forma disclosures of net earnings and
earnings per share as if the fair value method of accounting under SFAS No. 123
had been applied (See Note 10).

FOREIGN CURRENCY TRANSLATION

     The functional currency for most 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 component of
stockholders' equity.  Currency transaction gains and losses are reflected in 
income for the period.


                                       49
<PAGE>   51


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

     The net decline in the cumulative foreign currency translation adjustment,
as reported in the Consolidated Statements of Stockholders' Equity, from
December 31, 1997 to December 31, 1998 was $37.9 million which primarily
reflects the financial impact of the devaluation of the Canadian and Latin
American currencies as compared to the U.S. dollar.

FOREIGN EXCHANGE CONTRACTS

     The Company enters into foreign exchange contracts only as a hedge against
certain existing economic exposures, and not for speculative or trading
purposes. These contracts reduce exposure to currency movements affecting
specific existing assets and liabilities denominated in foreign currencies,
such exposure resulting primarily from trade receivables and payables and
intercompany loans.  The future value of these contracts and the related
currency positions are subject to offsetting market risks resulting from
foreign currency exchange rate volatility. The counterparties to the Company's
foreign exchange contracts are creditworthy multinational commercial banks.
Management believes that the risk of counterparty nonperformance is immaterial.
At December 31, 1998 and 1997, the Company had contracts maturing within the
next 60 days to sell $33.4 million and $36.8 million, respectively, in
Norwegian kroner, U.K. pounds sterling, Canadian dollars and Dutch guilders.
Had such respective contracts matured on December 31, 1998 and 1997, the
Company's required cash outlay would have been insignificant.

ACCOUNTING FOR INCOME TAXES

     Under Statement of Financial Accounting Standards No. 109 ("SFAS No.
109"), Accounting for Income Taxes, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.

REVENUE RECOGNITION

     The Company recognizes revenue as products are shipped or accepted by the
customer and when service and rentals are provided.  Proceeds from customers
for the cost of oilfield rental equipment that is involuntarily damaged or lost
downhole are reflected as revenues.

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 (See
Note 10).  The effect of the 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027 (the "Debentures") on diluted earnings per share is
anti-dilutive and, thus, has no impact.

     The following reconciles basic and diluted weighted average shares:


<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                          ----------------------
                                                           1998    1997    1996
                                                          ------  ------  ------
<S>                                                       <C>     <C>     <C>
                                                              (in thousands)
 Basic weighted average number of shares outstanding....  97,065  96,052  89,842
 Dilutive effect of stock option and restricted stock
 plans..................................................     692   1,510   1,139
                                                          ------  ------  ------
 Dilutive weighted average number of shares outstanding.  97,757  97,562  90,981
                                                          ======  ======  ======
</TABLE>

NEW REPORTING REQUIREMENTS

     In February 1998, the FASB issued Statement of Accounting Standards No.
132 ("SFAS No. 132"), Employers' Disclosures About Pensions and Other
Postretirement Benefits.  SFAS No. 132 standardizes disclosure requirements for
pensions and other postretirement benefits.  The Company adopted SFAS No. 132
in 1998 (See Note 11).


                                       50
<PAGE>   52


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

     In March 1998, the AICPA issued Statement of Position (SOP) 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use.  The SOP provides guidance with respect to accounting for the
various types of costs incurred for computer software developed or obtained for
the Company's use.  The Company has adopted SOP 98-1.  The adoption did not
have a significant effect on the consolidated results of operations or
financial position.

     In April 1998, the AICPA issued SOP 98-5, Reporting on the Costs of
Start-Up Activities.  The Company does not capitalize start-up cost; thus, the
adoption will not have a significant effect on the consolidated results of
operations or financial position of the Company.

     In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 130 ("SFAS No. 130"), Reporting Comprehensive Income.  SFAS No. 130
establishes standards for the reporting of comprehensive income and its
components in a full set of general-purpose financial statements.  The Company
adopted SFAS No. 130 in 1998 and presents comprehensive income in the
accompanying Consolidated Statements of Stockholders' Equity.  The primary
adjustments and reclassifications to reflect net income on a comprehensive
income basis for the years presented were foreign currency translation
adjustments and the effect of unrealized and realized gains on marketable
securities.

     In June 1998, the FASB issued Statement of Accounting Standards No. 133
("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.  SFAS No.
133 is effective for fiscal years beginning after June 15, 1999.  The Company
is currently evaluating the impact of SFAS No. 133 on its consolidated
financial statements.

     In October 1998, the FASB issued Statement of Accounting Standards No. 134
("SFAS No. 134"), Accounting for Mortgage-Backed Securities Retained After the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise.  SFAS No. 134 is not applicable to the Company and has no impact on
its consolidated financial statements.

2. MERGER AND ACQUISITIONS

     In December 1998, the Company acquired the company that owned the
Veracruz, Mexico facility and cancelled the lease associated with that
facility.  Total consideration for this transaction was cash of $1.5 million
and a note payable of $48.5 million due in March 1999.  The Company also
licensed internationally certain of its rights to some of the Company's Atlas 
Bradford thread lines and recorded approximately $9.0 million in revenue 
from that arrangement.

     On May 27, 1998, EVI completed a merger with WII, merging WII with and
into EVI pursuant to a tax free merger (the "Merger") in which the stockholders
of WII received 0.95 of a share of the Company's Common Stock in exchange for
each outstanding share of WII common stock, approximately 48.9 million shares.
In addition, approximately 1.4 million shares of Common Stock have been
reserved for issuance by the Company for outstanding options under WII's
compensation and benefit plans. The Merger was accounted for as a pooling of
interests.


                                       51
<PAGE>   53


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

     The separate results of EVI and WII and the combined company were as
follows:

<TABLE>
<CAPTION>
                                       January 1 to
                                         May 27,      Year Ended December 31,
                                           1998          1997          1996
                                       ------------  ------------  ------------
<S>                                    <C>           <C>           <C>
                                                    (in thousands)
  Revenues:
   EVI...............................     $505,549    $  892,264    $  478,020
   WII...............................      426,422     1,083,965       994,468
   Merger adjustments................       (4,963)       (7,140)       (5,218)
                                       -----------   -----------   -----------
   Combined..........................     $927,008    $1,969,089    $1,467,270
                                       ===========   ===========   ===========
  Extraordinary Charge, Net of Taxes:
   EVI...............................     $     --    $   (9,010)   $     (731)
   WII...............................           --            --            --
                                       -----------   -----------   -----------
   Combined..........................     $     --    $   (9,010)   $     (731)
                                       ===========   ===========   ===========
  Net Income (Loss):
   EVI...............................     $ 54,045    $   74,685    $   98,166
   WII...............................       48,481       112,900        70,073
   Merger adjustments................       (1,033)          178        (2,417)
                                       -----------   -----------   -----------
   Combined..........................     $101,493    $  187,763    $  165,822
                                       ===========   ===========   ===========
</TABLE>

     Merger adjustments include the elimination of intercompany revenues of
$5.0 million, $7.1 million and $5.2 million and cost of sales of $3.4 million,
$5.7 million and $4.2 million for the five months ended May 27, 1998 and years
ended December 31, 1997 and 1996, respectively.  Merger adjustments for the
years ended December 31, 1997 and 1996 also include the elimination of expenses
of $1.7 million and a gain of $2.7 million, respectively, recorded by WII on
the sale of Arrow Completion Systems, Inc. to EVI in December 1996.

     On February 19, 1998, the Company completed the acquisition of Ampscot
Equipment Ltd. ("Ampscot"), an Alberta corporation, for approximately $57.1
million in cash.  Ampscot is a Canadian-based manufacturer of pumping units.

     On January 15, 1998, the Company completed the acquisition of Taro
Industries Limited ("Taro"), an Alberta corporation, in which approximately 0.8
million shares of Common Stock have been issued to the shareholders of Taro in
exchange for their shares of Taro stock. Taro is a Canadian provider of well
automation, gas compression, and drilling equipment distribution.

     On January 12, 1998, the Company completed the acquisition of the Houston
Well Screen group of companies ("HWS") from Van der Horst Limited, a Singapore
company, for a net purchase price of approximately $27.6 million in cash.  The
HWS acquisition includes the purchase of Van der Horst U.S.A., Inc., which is
the holding company of Houston Well Screen Company and of Houston Well Screen
Asia Pte. Ltd., which has operations in Singapore and Indonesia. HWS makes
wedge-wire screen products for use in oil and gas production and other
applications.

     On December 3, 1997, the Company completed the acquisition of all of the
outstanding shares of BMW Monarch (Lloydminster) Ltd. ("BMW Monarch") and BMW
Pump Inc. ("BMW Pump") for aggregate consideration of approximately $98.8
million in cash, including a final working capital adjustment, and $14.3
million in assumed debt. BMW Pump is a Canadian-based manufacturer of
progressing cavity pumps, and BMW Monarch is a Canadian supplier of progressing
cavity pumps, as well as, other production related oilfield products.

     On December 2, 1997, the Company completed the acquisition of all of the
capital stock of Trico Industries, Inc. ("Trico"), in exchange for $105.0
million in cash and the assumption of $8.7 million of debt. Trico is a
Texas-based manufacturer and distributor of sub-surface reciprocating pumps,
sucker rods, accessories and hydraulic lift systems.


                                       52


<PAGE>   54
                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     On August 25, 1997, the Company completed the acquisition of XLS Holding,
Inc. ("XL") in a transaction accounted for as a pooling of interests. XL
designs, manufactures and markets high performance connectors for marine
applications such as conductors, risers and offshore structural components. In
connection with the acquisition, the Company issued approximately 0.9 million
shares of Common Stock in exchange for all of the equity interests of XL. As
the effect of this business combination is not significant, prior period
financial statements were not restated.

     On May 1, 1997, the Company acquired GulfMark International, Inc.
("GulfMark") pursuant to a merger in which approximately 4.4 million shares of
Common Stock were issued to the stockholders of GulfMark. Prior to the merger,
GulfMark effected a spin-off to its stockholders of its marine transportation
services business. The retained assets of GulfMark that were acquired by the
Company in this transaction consisted of approximately 4.4 million shares of
Common Stock, an erosion control company and certain other miscellaneous
assets.  The 4.4 million shares of Common Stock acquired are classified as
"Treasury Stock, at Cost" on the accompanying Consolidated Balance Sheets.
Because the number of shares of Common Stock issued in the GulfMark acquisition
approximated the number of shares of Common Stock held by GulfMark prior to the
acquisition, the GulfMark acquisition had no material effect on the outstanding
number of shares of Common Stock or net equity of the Company.

     On April 14, 1997, the Company acquired TA Industries, Inc. ("TA"), a
manufacturer of premium couplings and premium accessories, for approximately
$44.1 million in cash and $19.7 million of assumed debt.

     On May 23, 1996, the Company acquired the business and assets of Nodeco
AS, a Norwegian company, and its wholly-owned subsidiary, Aarbakke AS
(collectively, "Nodeco"). Nodeco designs, manufactures, sells, and rents oil
and gas well completion products primarily consisting of liner hanger equipment
and related services, as well as pump packers. The Company paid cash of
approximately $14.4 million and issued 0.7 million shares of its Common Stock.

     The Company has also effected various other 1998, 1997, and 1996
acquisitions for a total consideration of approximately $75.1 million, $82.2
million and $61.6 million, respectively.

     The acquisitions, with the exception of WII and XL, were accounted for
using the purchase method of accounting. The results of operations of all such
acquisitions and XL are included in the Consolidated Statements of Income from
their respective dates of acquisition.  The 1998 and 1997 acquisitions are not
material individually or in the aggregate for each applicable year.

3. MERGER AND OTHER CHARGES

     In 1998, the Company incurred $195.0 million in merger and other charges
relating to the merger between EVI and WII and a reorganization and
rationalization of its businesses in light of industry conditions. Of these
charges, $120.0 million was incurred in the second quarter at the time of our
merger and with the initial downturn in the industry. A $75.0 million charge was
incurred in the fourth quarter in response to the previously unanticipated
extent of the decline in the industry which resulted in a need to make
additional reductions in operations and align the cost structure with current
demand. The net after-tax effect of these charges was $126.8 million. Over
$171.4 million of these charges had been realized as of December 31, 1998, with
the remainder of the charges expected to be fully expended by the second quarter
of 1999 in connection with planned activities. During 1999, we will assess
whether any adjustments or reversals to the remaining accrued special charges
are necessary.

     The following chart summarizes the special charges made in 1998:

<TABLE>
<CAPTION>
                                   COMPLETION                                                                           BALANCE
                                      AND                                                                                AS OF  
                                    OILFIELD    ARTIFICIAL   COMPRESSION  DRILLING                                    DECEMBER 31,
                                    SERVICES   LIFT SYSTEMS    SERVICES   PRODUCTS  CORPORATE    TOTAL     UTILIZED       1998
                                   ----------  ------------  -----------  --------  ---------  ----------  ---------  ------------ 
                                                                             (in thousands)
<S>                                <C>          <C>          <C>          <C>        <C>        <C>         <C>         <C>
Merger Transaction Costs(1)....    $      --    $       --   $       --   $     --   $ 62,462   $  62,462   $ 62,462    $     --
Severance and Related Costs(2).        1,961         5,050           --         --        600       7,611         --       7,611
Facility Closures(3)...........        8,969        13,817           --      5,300         --      28,086     15,257      12,829
Corporate Related Expenses(4)..           --            --           --         --      8,297       8,297      5,177       3,120
Inventory Write-Off(5).........        4,830        17,573           --     28,500         --      50,903     50,903          --
Write-Down of Assets(6).........      29,195         4,360        1,500      1,150      1,436      37,641     37,641          --
                                   ---------    ----------   ----------   --------   --------   ---------   --------    --------
   Total ......................    $  44,955    $   40,800   $    1,500   $ 34,950   $ 72,795   $ 195,000   $171,440    $ 23,560
                                   =========    ==========   ==========   ========   ========   =========   ========    ========
</TABLE>

(1)  The merger related costs were incurred in the second quarter and included
     $32.6 million in severance and termination costs related to approximately
     300 employees and former officers and directors, and other employee
     benefits related to stock grants, in accordance with WII's employment
     agreements and option plans, and $29.9 million in professional and
     financial advisory fees, filing and registration fees, and printing and
     mailing costs.

(2)  The severance and related costs included in the fourth quarter charges were
     $7.6 million for approximately 1,000 employees specifically identified,
     with terminations to be completed in the first half of 1999, in accordance
     with our announced plan to terminate employees.

(3)  The facility and plant closures costs were $15.3 million in the second
     quarter, all of which have been incurred by year end. These costs related
     primarily to the elimination of duplicated manufacturing, distribution and
     service locations following the merger in May. The facility and plant
     closures of $12.8 million were accrued in the fourth quarter for the
     consolidation and closure of approximately 100 service, manufacturing and
     administrative facilities in response to declining market conditions in the
     fourth quarter.

(4)  The corporate related expenses of $5.2 million recorded in the second
     quarter and $3.1 million recorded in the fourth quarter were primarily for
     the relocation of corporate offices, related lease obligations and the
     consolidation of technology centers due to the Merger and to align our
     corporate cost structure in light of current conditions.

(5)  The write-off of inventory was $12.4 million in the second quarter and
     $38.5 million in the fourth quarter, which were reported as cost of
     products. These charges relate to the write-off of inventory as a result of
     the combination of EVI's and WII's operations, the rationalization of their
     product lines, the elimination of certain products, services and locations
     due to the merger and as a result of the decline in market conditions.

(6)  The write-down of assets was $24.6 million in the second quarter and $13.0
    million in the fourth quarter. These charges primarily relate to the
    write-down of equipment and other assets as a result of the combination of
    EVI's and WII's operations, the rationalization of their product lines, the
    elimination of certain products, services and locations due to the merger,
    the industry downturn, and the specific identification of assets which are
    held for sale as a result of the decline in market conditions.


                                       53
<PAGE>   55


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

     The Company adopted a plan to close its Bastrop, Texas, tool joint
manufacturing facility and to combine its two packer facilities through the
closure of one facility in Arlington, Texas, in the fourth quarter of 1996. In
connection with these decisions, the Company incurred a charge of $5.8 million
associated with these closures. Of this charge, $4.3 million related to the
tool joint facility closure and relocation of equipment from this facility and
$1.5 million related to the consolidation of its packer facilities and the
closure of one of the plants.  The Company incurred $3.8 million in 1996 for
costs associated with these actions during 1996, including costs relating to
the relocation of equipment at its Bastrop facility to other facilities.  The
Company also accrued $2.0 million as part of the $5.8 million charge for exit
costs that it expected to be incurred in 1997 relating to the closure of its
Bastrop and Arlington facilities.  Such costs included $0.8 million for
severance and termination costs, $0.9 million for the reduction in the carrying
value of its Bastrop facility in light of the intended plan of disposition of
the facility and $0.3 million for the termination of the Arlington lease.
Approximately 400 employees were affected by these closures. The closure of
both the Bastrop and Arlington facilities had been substantially completed by
June 1997.

4. CASH FLOW INFORMATION

     The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. Other current assets
at December 31, 1998 and 1997 included cash of approximately $3.2 million and
$3.4 million, respectively, which was restricted as a result of exchange
controls in certain foreign countries or cash collateral requirements for
performance bonds, letters of credit, and customs bonds.

     Cash paid during the years ended December 31, 1998, 1997, and 1996 for
interest and income taxes (net of refunds) was as follows:


<TABLE>
<CAPTION>
                                                      1998      1997     1996
                                                    -------  --------  -------
                                                          (in thousands)
<S>                                                 <C>      <C>       <C>
 Interest paid....................................  $52,439  $ 43,389  $28,068
 Income taxes paid, net of refunds................   74,359   121,302   21,367
</TABLE>

     During the years ended December 31, 1998, 1997, and 1996 there were
noncash investing activities of $2.4 million, $24.4 million, and $1.7 million,
respectively, relating to capital leases.

     The following summarizes investing activities relating to acquisitions:


<TABLE>
<CAPTION>
                                                   YEAR ENDED DECEMBER 31,
                                              ---------------------------------
                                                 1998        1997       1996
                                              ----------  ----------  ---------
                                                       (in thousands)
<S>                                           <C>         <C>         <C>
  Fair value of assets, net of cash acquired  $  96,984   $ 212,731   $109,565
  Goodwill..................................    178,616     306,648     95,688
  Total liabilities.........................   (106,007)   (197,902)   (74,442)
  Common Stock issued.......................    (30,753)         --    (50,734)
                                              ---------   ---------   --------
  Cash consideration, net of cash acquired..  $ 138,840   $ 321,477   $ 80,077
                                              =========   =========   ========
</TABLE>

     During the years ended December 31, 1998 and 1997, there were noncash
financing activities of $7.8 million and $8.8 million, respectively, relating to
tax benefits received from the exercise of nonqualified stock options.  These
benefits were recorded as a reduction of income taxes payable and an increase to
capital in excess of par value.



                                       54
<PAGE>   56


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

5. INVENTORIES

     Inventories by category are as follows:


<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                       ------------------
                                                          1998      1997
                                                       --------  --------
                                                        (in thousands)
<S>                                                    <C>       <C>
 Raw materials, components and supplies..............  $212,863  $238,349
 Work in process.....................................    42,650    66,402
 Finished goods......................................   229,309   151,060
                                                       --------  --------
                                                       $484,822  $455,811
                                                       ========  ========
</TABLE>

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

6. SHORT-TERM BORROWINGS


<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             -----------------
                                                               1998     1997
                                                             --------  -------
                                                              (in thousands)
<S>                                                          <C>       <C>
  Revolving credit facilities with an effective 
   interest rate of 5.6% at December 31, 1998..............  $117,279  $24,243
  Short-term bank loans with effective interest rates
   between 5.73% and 6.10%.................................    20,000       --
  Short-term payable due March 1999 with an effective 
   interest rate of 7.00%..................................    48,450       --
                                                             --------  -------
                                                             $185,729  $24,243
                                                             ========  =======
  Weighted average interest rate on short-term borrowings
   outstanding during the year.............................     5.78%    6.57%
</TABLE>

     In June 1996, the Company entered into a new working capital facility and
terminated the Company's prior U.S. working capital facility.  This resulted in
an extraordinary charge of approximately $0.7 million, net of taxes of $0.4
million.

     In May 1998, the Company entered into a new five year unsecured credit 
agreement which 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, and terminated its existing working capital facilities.
Amounts outstanding under the facility accrue interest at a variable rate based
on either the U.S. prime rate or LIBOR. A commitment fee ranging from 0.09% to
0.20% per annum, depending on the credit ratings assigned to the 7 1/4% Senior
Notes due May 15, 2006 (the "7 1/4% Senior Notes"), 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.  As of December 31, 1998, approximately $117.3 million was
outstanding and approximately $1.8 million had been used to support outstanding
letters of credit.

     The Company also has various credit facilities available only for stand-by
letters of credit and bid and performance bonds, pursuant to which funds are
available to the Company to secure performance obligations and certain
retrospective premium adjustments under insurance policies.  The Company had a
total of $16.8 million of such letters of credit and bid and performance bonds
outstanding at December 31, 1998.



                                       55
<PAGE>   57


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

7. LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            ------------------
                                                              1998      1997
                                                            --------  --------
                                                              (in thousands)
<S>                                                         <C>       <C>
  Senior Notes with an effective interest rate of 7.25%,
   due 2006...............................................  $200,000  $200,000
  Industrial Revenue Bonds with variable interest rates,.. 
   between 3.7% and 4.1% at December 31, 1998, due 2002...    11,325    10,840
  Foreign bank debt, denominated in foreign currencies....     9,069     8,152
  Capital lease obligations under various agreements......     9,866    28,376
  Other...................................................    18,749    18,132
                                                            --------  --------
                                                             249,009   265,500
  Less:  amounts due in one year..........................    19,346    13,178
                                                            --------  --------
  Long-term debt..........................................  $229,663  $252,322
                                                            ========  ========
</TABLE>

     The following is a summary of scheduled long-term debt maturities by year
(in thousands):


<TABLE>
<S>           <C>
  1999....................................................   $19,346
  2000....................................................     7,426
  2001....................................................     4,218
  2002....................................................    11,492
  2003....................................................     3,986
  Thereafter..............................................   202,541
                                                            --------
                                                            $249,009
                                                            ========
</TABLE>

     The Company has outstanding $200.0 million of 7 1/4% Senior Notes.  The 7
1/4% Senior Notes are unsecured obligations of the Company. Interest on the 7
1/4% Senior Notes is payable semi-annually on May 15 and November 15 of each
year.  Based on the borrowing rates available to the Company, the fair value of
the 7 1/4% Senior Notes approximates the carrying value at December 31, 1998
and 1997.

     In December 1997, the Company completed a cash tender offer and consent
solicitation (the "Tender Offer") relating to the Company's outstanding $120.0
million 10 1/4% Senior Notes due 2004 (the "Senior Notes").  An aggregate of
$119.98 million principal amount of the Senior Notes were validly tendered by
the Company pursuant to the Tender Offer.  The prepayment of the Senior Notes
resulted in an extraordinary charge of $9.0 million, net of taxes of $5.6
million, or $0.09 per basic share, for the year ended December 31, 1997.  The
extraordinary charge consists of prepayment fees, other professional fees and
the write off of unamortized debt issuance costs.

     The contract terms of the Industrial Revenue Bonds require principal and
interest payments to maturity, occurring in December 2002. In connection with
the Industrial Revenue Bonds, the Company has letters of credit of $11.3
million.

     In 1997, upon the completion of the expansion of the Veracruz, Mexico,
tool joint manufacturing facility, the Company recorded the obligation of $16.3
million under its lease to reflect the terms thereof.  In December 1998, the
lease was terminated in connection with the acquisition of the company that 
owned the Veracruz, Mexico facility (See Note 2).


                                       56
<PAGE>   58


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

8. 5% CONVERTIBLE SUBORDINATED PREFERRED EQUIVALENT DEBENTURES

     In November 1997, the Company completed a private placement of $402.5
million principal amount of 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027.  The net proceeds from the Debentures were $390.9 million.
The Debentures are convertible at a price of $80 per share of Common Stock.  The
Debentures are redeemable by the Company at any time on or after November 4,
2000, at redemption prices described therein, and are subordinated in right of
payment of principal and interest to the prior payment in full of certain
existing and future senior indebtedness of the Company.  The Company also has
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 anytime when the Company is not in default in the payment of
interest.  As evidenced by market transactions, the estimated fair value of the
Debentures was $249.6 million and $368.8 million as of December 31, 1998 and
December 31, 1997, respectively.

9.   STOCKHOLDERS' EQUITY

AUTHORIZED SHARES

     In May 1998, the Company's Restated Certificate of Incorporation was
amended and restated to increase the authorized number of shares of Common
Stock from 80.0 million to 250.0 million.

PREFERRED STOCK

     The Company is authorized to issue up to 3.0 million shares of $1.00 par
value preferred stock.  As of December 31, 1998, none had been issued.

PUBLIC STOCK OFFERINGS

     On July 25, 1996, the Company completed a public offering of 6.9 million
shares of Common Stock. The net proceeds of this offering were approximately
$100.9 million.

STOCK REPURCHASE PLAN

     In December 1997, the WII Board of Directors instituted a stock repurchase
program under which up to $100.0 million of WII common stock could be purchased
in open market transactions or in privately negotiated transactions.  Pursuant
to this program, WII purchased approximately 0.3 million shares of its common
stock in December 1997.  During 1998, WII purchased approximately 1.0 million
shares of its common stock.  In connection with the Merger, the stock
repurchase program has been discontinued and the repurchased shares retired.

10. STOCK-BASED COMPENSATION

STOCK OPTION PLANS

     The Company has a number of stock option plans pursuant to which
directors, officers and other key employees may be granted options to purchase
shares of Common Stock at the fair market value on the date of grant.

     The Company has in effect a 1991 Employee Stock Option Plan ("1991 ESO
Plan"), 1992 Employee Stock Option Plan ("1992 ESO Plan") and a 1998 Employee
Stock Option Plan ("1998 ESO Plan").  Under these plans, options to purchase up
to an aggregate of 8.2 million shares of Common Stock may be granted to
officers and key employees of the Company (including directors who are also key
employees).  At December 31, 1998, approximately 2.2 million options were
available for granting under such plans.

     The Company maintained a Non-Employee Director Stock Option Plan
("Director Plan"), a non-qualified stock option plan.  In 1998, the Director
Plan was terminated to the extent that no additional options will be granted.



                                       57
<PAGE>   59


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

     Stock options vest after one to three years and expire after ten to
thirteen years from the date of grant. Information about the above stock option
plans and predecessor plans, for the three years ended December 31, 1998, is
set forth below:

<TABLE>
<CAPTION>
                                                                             WEIGHTED
                                                                              AVERAGE
                                               NUMBER          RANGE OF       EXERCISE
                                                 OF            EXERCISE        PRICE
                                               SHARES           PRICES       PER SHARE
                                              ----------  ------------------ ---------
<S>                                          <C>          <C>     <C>  <C>     <C>
Options outstanding, December 31, 1995.....   2,739,170   $ 4.69    -  $24.70  $12.39
 Granted...................................     882,218    13.07    -   33.73   19.19
 Exercised.................................    (597,121)    5.75    -   21.92   12.41
 Terminated................................    (358,128)   17.58    -   29.98   20.83
                                              ---------
Options outstanding, December 31, 1996.....   2,666,139     4.69    -   33.73   13.61
 Granted...................................     741,613    27.81    -   32.19   29.05
 Exercised.................................    (936,008)    4.69    -   33.73   11.36
 Terminated................................     (47,908)   11.49    -   29.98   24.72
                                             ----------
Options outstanding, December 31, 1997.....   2,423,836     4.69    -   32.19   19.08
 Granted...................................   4,855,423    18.13    -   50.50   20.33
 Exercised.................................  (1,195,584)    7.11    -   40.76   31.40
 Terminated................................     (24,971)   12.67    -   40.76   35.70
                                             ----------
Options outstanding, December 31, 1998.....   6,058,704     4.69    -   50.50   18.96
                                             ==========
Options exercisable as of December 31, 1998   1,327,446     4.69    -   44.01   16.02
                                             ==========
</TABLE>

     The 6.1 million options outstanding at December 31, 1998, have a weighted
average remaining contractual life of 10.5 years.  The 1.3 million options
exercisable at December 31, 1998, have a weighted average remaining contractual
life of 6.4 years.

PRO FORMA COMPENSATION EXPENSE

     Pro forma information regarding net income and earnings per share is
required by SFAS No. 123 and has been determined as if the Company had
accounted for its stock options under the fair value method as provided
therein. The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions: risk-free interest rates of 5.0% to 7.0%,
expected lives of four to seven years, expected volatility of 38% to 52% and no
expected dividends.  The weighted average fair value of the options granted in
1998, 1997 and 1996 is $11.97, $14.42 and $10.61, respectively.

     Set forth below is a summary of the Company's net income and earnings per
share as reported and pro forma as if the fair value-based method of accounting
defined in SFAS No. 123 had been applied.  For purposes of pro forma
disclosures, the estimated fair value of the options is amortized to expense
over the options' vesting period.  The pro forma information for the year ended
December 31, 1998, reflects the pro forma expense associated with the
accelerated vesting of options in connection with the Merger. The pro forma
information is not meant to be representative of the effects on reported net
income for future years, because as provided by SFAS No. 123, only the effects
of awards granted after January 1, 1995, are considered in the pro forma
calculation.


<TABLE>
<CAPTION>
                                     1998                         1997                  1996
                            ----------------------   ------------------------  ----------------------
                            AS REPORTED  PRO FORMA    AS REPORTED   PRO FORMA  AS REPORTED  PRO FORMA
                            -----------  ---------   -------------  ---------  -----------  ---------
<S>                         <C>          <C>         <C>            <C>        <C>          <C>
Net income (in thousands)....   $64,837    $55,107        $187,763   $183,281     $165,822   $162,933
Basic earnings per share.....      0.67       0.57            1.95       1.91         1.85       1.81
Diluted earnings per share...      0.66       0.56            1.92       1.88         1.82       1.79
</TABLE>



                                       58

<PAGE>   60


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

RESTRICTED STOCK PLANS

     WII had a restricted stock plan for certain officers of WII (the
"Restricted Plan") and a restricted stock plan for non-employee directors of
WII (the "Director Restricted Plan"; collectively, the "Restricted Stock
Plans"), pursuant to which shares of Common Stock were granted.  Shares granted
under the Restricted Stock Plans are subject to certain restrictions on
ownership and transferability when granted. Restrictions applicable to shares
granted under the Restricted Plan lapse in part based on continued employment
and in part based on Company performance.  Restrictions applicable to shares
granted under the Director Restricted Plan were removed in connection with the
Merger and subsequently the plan was terminated.  Restrictions related to
certain shares granted under the Restricted Plan were also removed as a result
of the Merger and subsequently the plan was frozen.  In 1998, the Company
granted 110,150 shares of restricted stock to directors and officers of the
Company.  Of these, 75,000 shares were granted pursuant to a separate agreement
and are not covered under the Restricted Stock Plans.

     The compensation related to the restricted stock grants is deferred and
amortized to expense on a straight-line basis over the period of time the
restrictions are in place.  The unamortized portion is classified as a
reduction of capital in excess of par value in the accompanying Consolidated
Balance Sheets.

     The following table provides a summary of restricted stock activity:


<TABLE>
<CAPTION>
                                                                    NON-EMPLOYEE
                                                         EMPLOYEE     DIRECTOR
                                                          SHARES       SHARES
                                                         ---------  ------------
<S>                                                      <C>        <C>
 Restricted shares outstanding, December 31, 1995......    34,332            --
  Granted..............................................    29,450            --
  Restrictions removed.................................   (35,848)           --
                                                         --------   -----------
 Restricted shares outstanding, December 31, 1996......    27,934            --
  Granted..............................................    86,489        10,296
  Restrictions removed.................................   (25,679)           --
                                                         --------   -----------
 Restricted shares outstanding, December 31, 1997......    88,744        10,296
  Granted..............................................   110,150            --
  Restrictions removed.................................  (116,294)      (10,296)
                                                         --------   -----------
 Restricted shares outstanding, December 31, 1998......    82,600            --
                                                         ========   ===========
 Shares available for future grant as of December 31,
  1998...................................................      --            --
                                                         ========   ===========
 Compensation expense (in thousands):
  1998.................................................  $  4,700       $   352
  1997.................................................     1,146           120
  1996.................................................       418            --
 Deferred compensation at December 31 (in thousands):
  1998.................................................  $  1,563       $    --
  1997.................................................     3,095           352
</TABLE>

EXECUTIVE DEFERRED COMPENSATION PLAN

     In May 1992, the Company's stockholders approved the Executive Deferred
Compensation Stock Ownership Plan (the "EDC Plan"). Under the EDC Plan, a
portion of the compensation for certain key employees of the Company and its
subsidiaries, including officers and employee directors, can be deferred for
payment after retirement or termination of employment.

     The Company has established a grantor trust to fund the benefits under the
EDC Plan. The funds provided to such trust are invested by a trustee
independent of the Company primarily in Common Stock of the Company which is
purchased by the trustee on the open market.  The assets of the trust are
available to satisfy the claims of all general creditors of the Company in the
event of bankruptcy or insolvency. Accordingly, the Common Stock held by the
trust is included in the accompanying Consolidated Statements of Stockholders'
Equity as "Treasury Stock, at Cost" and reflected as such on the Consolidated
Balance Sheets.



                                       59
<PAGE>   61


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

11.  RETIREMENT AND EMPLOYEE BENEFIT PLANS

     The Company has defined contribution plans covering certain of its
employees.  Expenses related to these plans totaled $4.4 million, $3.6 million
and $3.7 million in 1998, 1997 and 1996, respectively.

     The Company has defined benefit pension plans covering certain U.S. and
international employees.  The Company has two U.S. plans, one of which was
terminated in 1998.  The other U.S. plan was acquired as part of the Trico
acquisition in December 1997.  This plan was frozen on December 31, 1998.  With
respect to certain international plans, the Company has purchased irrevocable
annuity contracts to settle certain benefit obligations.  During 1998, the
Company terminated one of its international plans.  Plan benefits are generally
based on years of service and average compensation levels.  The Company's
funding policy is to contribute, at a minimum, the annual amount required under
applicable governmental regulations.  Plan assets are invested primarily in
equity and fixed income mutual funds.



                                       60
<PAGE>   62


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

     Pension expense related to the Company's defined benefit pension plans
included the following components:


<TABLE>
<CAPTION>
                                                   1998     1997    1996
                                                  -------  ------  ------
                                                      (in thousands)
<S>                                               <C>      <C>     <C>
 Service cost--benefits earned during the period  $  822   $ 267   $ 651
 Interest cost on projected benefit obligation..   1,388     386     427
 Expected return on plan assets.................  (1,213)   (391)   (466)
 Net amortization and deferral..................     (19)     48     213
                                                  ------   -----   -----
                                                  $  978   $ 310   $ 825
                                                  ======   =====   =====
</TABLE>

     The following table sets forth summaries of the changes in the benefit
obligations and plan assets, the funded status of the Company's defined benefit
pension plans and the assumptions used in computing such information:


<TABLE>
<CAPTION>
                                                          U.S. PLANS                  NON-U.S. PLANS
                                                     --------------------           ------------------
                                                       1998       1997               1998      1997
                                                     ---------  ---------           -------  ---------
                                                            (in thousands, except percentages)
<C>                                                  <C>        <C>                 <C>      <C>
Change in benefit obligation:
 Projected benefit obligations at beginning of year  $ 17,601   $  1,647            $4,261   $  3,468
 Service cost......................................       634         --               188        267
 Interest cost.....................................     1,244        109               144        277
 Plan participants' contributions..................        --         --                --        104
 Actuarial (gain) loss.............................     2,189        (49)              680        285
 Settlement/curtailment due to plan termination....      (503)        --                --         --
 Acquisition.......................................      (341)    16,002                --         --
 Benefits paid.....................................    (3,155)      (108)           (2,559)      (129)
 Currency translation adjustment...................        --         --                81        (11)
                                                     --------   --------            ------   --------
 Projected benefit obligation at end of year.......  $ 17,669   $ 17,601            $2,795   $  4,261
                                                     ========   ========            ======   ========
Change in plan assets:
 Fair value of plan assets at beginning of year....  $ 17,875   $  1,383            $2,553   $  2,405
 Actual return on plan assets......................     2,432         70              (103)         3
 Employer contribution.............................     1,577        142                --        112
 Plan participants' contributions..................        --         --                --        104
 Acquisition.......................................        --     16,388                --         --
 Benefits paid.....................................    (3,155)      (108)           (2,204)       (71)
 Currency translation adjustment...................        --         --              (246)        --
                                                     --------   --------            ------   --------
 Fair value of plan assets at end of year..........  $ 18,729   $ 17,875            $   --   $  2,553
                                                     ========   ========            ======   ========
Funded status:
 Accumulated benefit obligation less plan assets...  $ (1,060)  $   (274)           $2,034   $    978
 Provision for future salary increases.............        --         --               761        730
                                                     --------   --------            ------   --------
 (Excess) deficit of plan assets over projected
  benefit obligation...............................    (1,060)      (274)            2,795      1,708
 Unrecognized net actuarial gain (loss)............       234       (457)              267        758
 Unrecognized transition obligation................        --         --              (148)       (81)
 Unrecognized prior year service cost..............        --        620              (122)      (124)
                                                     --------   --------            ------   --------
 Accrued (prepaid) benefit costs...................  $   (826)  $   (111)           $2,792     $2,261
                                                     ========   ========            ======   ========
Balance sheet liabilities (assets):
 Prepaid benefit costs.............................  $ (1,663)  $   (386)           $   --   $     --
 Accrued benefit liabilities.......................       837        275             2,792      2,261
                                                     --------   --------            ------   --------
 Accrued (prepaid) benefit costs...................  $   (826)  $   (111)           $2,792   $  2,261  
                                                     ========   ========            ======   ========

 Assumed discount rates............................  5.1%-6.8%       7.3%              5.8%  6.0%-8.0%
 Assumed rates of increase in compensation rates...       4.8%  4.0%-4.8%              3.3%  3.7%-5.0%
 Assumed expected long-term rate of return
  on plan assets...................................  5.5%-8.0%       8.0%               --        8.0%
</TABLE>




                                       61
<PAGE>   63


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

12.  INCOME TAXES

     The components of income before income taxes were as follows:


<TABLE>
<CAPTION>
                                                1998      1997      1996
                                              -------  --------  --------
                                                    (in thousands)
<S>                                           <C>      <C>       <C>
 Domestic...................................  $16,772  $202,297  $ 71,354
 Foreign....................................   82,616   102,664    61,320
                                              -------  --------  --------
                                              $99,388  $304,961  $132,674
                                              =======  ========  ========
</TABLE>

     The Company's income tax provision (benefit) from continuing operations
consisted of the following:


<TABLE>
<CAPTION>
                                         1998       1997     1996
                                       ---------  --------  -------
                                              (in thousands)
<S>                                    <C>        <C>       <C>
 Current
  U.S. federal and state income taxes  $ 21,743   $ 39,623  $14,801
  Foreign............................    33,311     33,106   21,574
                                       --------   --------  -------
   Total Current.....................  $ 55,054   $ 72,729  $36,375
                                       --------   --------  -------
 Deferred
  U.S. federal.......................  $(13,187)  $ 23,405  $ 2,410
  Foreign............................    (7,316)    12,054    1,728
                                       --------   --------  -------
   Total Deferred....................  $(20,503)  $ 35,459  $ 4,138
                                       --------   --------  -------
                                       $ 34,551   $108,188  $40,513
                                       ========   ========  =======
</TABLE>

     Total income tax provision (benefit) was recorded as follows:

<TABLE>
<CAPTION>
                                               1998      1997      1996
                                              -------  --------  --------
                                                    (in thousands)
<S>                                           <C>      <C>       <C>
 Income from continuing operations..........  $34,551  $108,188  $40,513
 Discontinued operations....................       --       --     4,022
 Gain on disposal of discontinued operations       --       --    44,600
 Extraordinary charge.......................       --   (5,640)     (394)
                                              -------  --------  -------
                                              $34,551  $102,548  $88,741
                                              =======  ========  =======
</TABLE>

     The difference between the tax provision at the statutory federal income
tax rate and the tax provision attributable to income from continuing
operations before income taxes for the three years ended December 31, 1998 is
analyzed below:

<TABLE>
<CAPTION>
                                                                 1998      1997      1996
                                                               --------  ---------  -------
                                                                      (in thousands)
<S>                                                            <C>       <C>        <C>
 Statutory federal income tax rate...........................  $34,786   $106,736   $46,436
 Effect of state income tax (net) and Alternative Minimum Tax    3,420        913     4,228
 Effect of non-deductible expenses...........................    9,054      4,259     2,182
 Change in valuation allowance...............................       --     (8,214)   (9,957)
 Effect of foreign income tax, net...........................   (6,447)     8,214        --
 Foreign losses benefited....................................       --         --      (546)
 Foreign Sales Corporation benefit...........................     (412)      (913)      273
 Benefit of tax dispute settlement...........................       --         --    (3,955)
 Effect of acquisitions  and dispositions....................   (4,548)        --        --
 Other.......................................................   (1,302)    (2,807)    1,852
                                                               -------   --------   -------
                                                               $34,551   $108,188   $40,513
                                                               =======   ========   =======
</TABLE>




                                       62
<PAGE>   64


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

     Deferred tax assets and liabilities are recognized for the estimated
future tax effects of temporary differences between the tax basis of an asset
or liability and its reported amount in the financial statements.  The
measurement of deferred tax assets and liabilities is based on enacted tax laws
and rates currently in effect in each of the jurisdictions in which the Company
has operations.

     The change in the valuation allowance in 1997 and 1996 primarily relates
to the utilization of U.S. net operating losses ("NOL") and tax credit
carryforwards and management's assessment that future taxable income will be
sufficient to enable the Company to utilize remaining NOL and tax credit
carryforwards.

     Deferred tax assets and liabilities are classified as current or
noncurrent according to the classification of the related asset or liability
for financial reporting. The components of the net deferred tax asset
(liability) were as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                            --------------------
                                                              1998       1997
                                                            ---------  ---------
                                                               (in thousands)
<S>                                                         <C>        <C>
 Deferred tax assets:
  Domestic and foreign operating losses...................  $  7,852   $ 15,709
  Accrued liabilities and reserves........................    78,532     57,573
  Tax credits.............................................     5,568         --
  Tax benefit transfer leases acquired....................     2,776      3,991
  Other differences between financial and tax basis.......        --      1,126
  Valuation allowance.....................................    (4,716)    (4,716)
                                                            --------   --------
 Total deferred tax assets................................  $ 90,012   $ 73,683
                                                            --------   --------
 Deferred tax liabilities:
  Property and equipment..................................  $(59,442)  $(56,747)
  Unremitted foreign earnings.............................   (10,883)    (6,532)
  Differences between financial and tax basis of inventory    (1,530)   (12,010)
  Goodwill................................................   (20,800)   (13,451)
  Other differences between financial and tax basis.......        --     (4,593)
                                                            --------   --------
 Total deferred tax liability.............................   (92,655)   (93,333)
                                                            --------   --------
 Net deferred tax liability...............................  $ (2,643)  $(19,650)
                                                            ========   ========
</TABLE>

     At December 31, 1998, the Company had $10.1 million of U.S. net operating
losses which were generated by certain subsidiaries prior to their acquisition.
The use of these pre-acquisition operating losses is subject to limitations
imposed by the Internal Revenue Code and is also restricted to the taxable
income of the subsidiaries generating the losses. These U.S. carryforwards, if
not utilized, will expire between 1999 and 2009.

     On October 11, 1996, the Company entered into a $3.9 million tax
settlement plus accrued interest of $2.5 million with the United States
Internal Revenue Service ("I.R.S.") relating to a dispute regarding the tax
impact to the Company upon the dissolution of an oil and gas joint venture in
1990.  The tax liability with respect to the dissolution had been previously
provided for as a deferred tax liability in the Company's consolidated
financial statements.  This settlement resulted in the Company recognizing a
$4.0 million tax benefit in 1996 due to the elimination of certain previously
accrued deferred taxes that will no longer be required to be paid as a result
of this settlement.

13.  DISPUTES, LITIGATION AND CONTINGENCIES

LITIGATION AND OTHER DISPUTES

     The Company is aware of various disputes and potential claims and is a
party in various litigation involving claims against the Company, some of which
are covered by insurance.  Based on facts currently known, the Company believes
that the ultimate liability, if any, which may result from known claims,
disputes and pending litigation, would not have a material adverse effect on
the Company's consolidated financial position or its results of operations with
or without consideration of insurance coverage.



                                       63
<PAGE>   65


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

INSURANCE

     The Company is self-insured for employee health insurance claims and for
workers' compensation claims for certain of its employees.  The amounts in
excess of the self-insured levels are fully insured.  Self-insurance accruals
are based on claims filed and an estimate for significant claims incurred but
not reported.  Although the Company believes that adequate reserves have been
provided for expected liabilities arising from its self-insured obligations, it
is reasonably possible that management's estimates of these liabilities will
change over the near term as circumstances develop.

14.  COMMITMENTS

SALE AND LEASEBACK OF EQUIPMENT

     The Company entered into a sale and leaseback arrangement in December 1998
where it was provided with the right to sell up to $200.0 million of compression
units through December 1999 and lease them back over a five year period under an
operating lease.  Payments under the lease are calculated based on a rate of
return on the purchase price and an agreed valuation of the leased compressors.
Under the terms of the lease, the Company may repurchase the equipment at any
time. The Company has provided for a residual value guarantee at the end of the
term of the lease equal to approximately 85.5% of the appraised value of the
compression units under lease.

     As of December 31, 1998, the Company had sold compressors under this
arrangement, having an appraised value of $119.6 million, and received cash of
$100.0 million and a receivable of $19.6 million.  The receivable is
classified in other current assets on the accompanying Consolidated Balance
Sheets as the balance is due on demand.  The net book value of the equipment
sold was approximately $77.4 million, resulting in a pre-tax gain of $42.2
million, which may be deferred until the end of the lease.

     The lease agreement calls for quarterly payments.  The following table
provides future minimum lease payments (in thousands) under the aforementioned
lease exclusive of any guarantee payments:


<TABLE>
<S>                                                            <C>
  1999.......................................................   $7,491
  2000.......................................................    7,491
  2001.......................................................    7,491
  2002.......................................................    7,491
  2003.......................................................    6,867
                                                               -------
                                                               $36,831
                                                               =======
</TABLE>

OTHER OPERATING LEASES

     The Company is committed under various other noncancelable operating
leases which primarily relate to office space and equipment.

     Future minimum rental commitments under these noncancelable operating
leases are as follows (in thousands):


<TABLE>
<S>           <C>
  1999........................................................  $21,001
  2000........................................................   16,265
  2001........................................................   11,859
  2002........................................................    8,942
  2003........................................................    6,974
  Thereafter..................................................   34,504
                                                                -------
                                                                $99,545
                                                                =======
</TABLE>

     Total rent expense incurred under operating leases was approximately $30.0
million, $27.9 million and $26.4 million for the years ended December 31, 1998,
1997, and 1996, respectively.



                                       64
<PAGE>   66


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

OTHER COMMITMENTS

     In January 1996, the Company entered into a long-term manufacturing and
sales agreement with Oil Country Tubular, Ltd. ("OCTL") pursuant to which OCTL
manufactures drill pipe and premium tubulars for the Company on an exclusive
basis at OCTL's plant in India.

15. DISCONTINUED OPERATIONS AND DISPOSITIONS

     On November 11, 1996, the Company completed the sale of its contract
drilling segment which was comprised of the Mallard Bay contract drilling
division ("Mallard Division") to Parker, in exchange for cash of approximately
$306.9 million and approximately 3.1 million shares of Parker common stock
valued by the Company at approximately $20.0 million. The Company reported a
net gain on the disposal of the Mallard Division of $66.9 million, net of taxes
of $44.6 million.

     The results of operations for the Mallard Division are reflected in the
accompanying Consolidated Statements of Income as "Discontinued Operations, Net
of Taxes."  Condensed results of the Mallard Division discontinued operations
were as follows:

<TABLE>
<CAPTION>
                                                          ELEVEN
                                                       MONTHS ENDED
                                                        NOVEMBER 11,
                                                           1996
                                                      --------------
                                                       (in thousands)
 <S>                                                 <C>
 Revenues...........................................         $81,310
                                                       -------------
 Income before income taxes.........................          11,490
 Provision for income taxes.........................           4,022
                                                      --------------
 Net income.........................................         $ 7,468
                                                      ==============
</TABLE>

     During 1997 and 1996, the Company also sold certain non-core businesses.
Cash proceeds from these transactions totaled $68.8 million and $19.2 million
in 1997 and 1996, respectively.

16.  RELATED PARTY TRANSACTIONS

     The Company incurred legal fees of $3.1 million, $2.7 million and $2.2
million during 1998, 1997 and 1996, respectively, with a law firm in which a
former director and a current executive officer of the Company were partners.

     In 1998, the Company paid Lehman Brothers Inc., an affiliate of Lehman
Brothers Holding Inc., a major stockholder of the Company, approximately
$3.0 million for fees associated with the Merger. In 1997, the Company paid
approximately $2.0 million for dealer management fees associated with the
Tender Offer of the Senior Notes and the Debenture offering. The Company
incurred fees of approximately $6.7 million associated with the Company's
public offering and the disposition of the Mallard Division in 1996. The fee
arrangements associated with these transactions were on terms standard in 
the industry.

17.  SUBSEQUENT EVENTS

     In February 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.  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 the
greater of a market determined third party valuation or 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 we have not
purchased its interest by that time.

     On February 8, 1999, the Company completed the acquisition of Christiana
Companies, Inc. for approximately 4.0 million shares of Common Stock and $20.0
million cash.  In the acquisition, the Company acquired through Christiana (1)
4.0 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 
4.0 million shares of Common Stock acquired will be classified as treasury 
stock.  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.



                                       65
<PAGE>   67


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

18.  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.  In 1998, the Company redefined its business segments into
four separate groups: completion and oilfield services, artificial lift
systems, compression services, and drilling products.  The following
information has been restated to reflect this regrouping.

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

     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 electrical
submersible pumps and hydraulic lift equipment.

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

     The Company's drilling products segment manufactures drill stem products,
premium engineered connections, premium tubulars and marine and subsea
connectors and related accessories.



                                       66
<PAGE>   68


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

     Financial information by industry segment for each of the three years
ended December 31, 1998, is summarized below.


<TABLE>
<CAPTION>
                                 COMPLETION
                                AND OILFIELD   ARTIFICIAL   COMPRESSION       DRILLING
                                  SERVICES    LIFT SYSTEMS  SERVICES          PRODUCTS  CORPORATE    TOTAL
                                ------------  ------------  --------          --------  ---------  ----------
                                                               (in thousands)
<S>                             <C>           <C>           <C>               <C>       <C>        <C>
1998
 Revenues from unaffiliated
  customers...................     $ 848,219     $329,196   $177,481          $655,758  $ --       $2,010,654
 EBITDA, before merger costs
  and other charges (a).......       275,194       40,760     41,671           182,334   (25,179)     514,780
 Merger costs and other
  charges (b).................        44,955       40,800      1,500            34,950    72,795      195,000
 Depreciation and amortization        94,718       19,183     23,079            31,951     1,801      170,732
 Operating income (loss)......       135,521      (19,223)    17,092           115,433   (99,775)     149,048
 Total assets.................     1,007,399      592,370    388,220           764,807    78,919    2,831,715
 Capital expenditures for
  property, plant, and
   equipment..................       107,661       20,946     32,465            42,052     2,755      205,879
 Non-cash portion of merger
  costs and other charges.....        39,481       30,367      1,500            30,500    22,747      124,595
1997
 Revenues from unaffiliated
  customers...................     $ 929,001     $249,476   $178,897          $611,715  $ --       $1,969,089
 EBITDA (a) ..................       301,550       31,736     36,440           144,440   (35,243)     478,923
 Depreciation and amortization        86,138        8,944     21,666            23,610     2,573      142,931
 Operating income (loss)......       215,412       22,792     14,774           120,830   (37,816)     335,992
 Total assets.................       919,198      622,853    441,759           674,388    79,712    2,737,910
 Capital expenditures for
  property, plant, and
   equipment..................       121,422       20,213     35,705            32,682     2,970      212,992
1996
 Revenues from unaffiliated
  customers...................     $ 824,639     $150,816   $154,503          $337,312   $    --   $1,467,270
 EBITDA (a) (c)...............       226,914       17,532     31,387            53,619   (38,521)     290,931
 Depreciation and amortization        80,582        5,865     23,554            11,046       783      121,830
 Operating income (loss) (c)..       146,332       11,667      7,833            42,573   (39,304)     169,101
 Total assets.................       952,445      199,615    414,969           386,245   290,359    2,243,633
 Capital expenditures for
  property, plant, and
   equipment..................       119,201        8,732     30,392            14,332        68      172,725
</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 and net income.  In addition, EBITDA
calculations by one company may not be comparable to another company.

     (b) Includes inventory write-downs of $50.9 million which have been
classified as cost of products in the accompanying Consolidated Statements of
Income.



                                       67
<PAGE>   69


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

     (c) During 1996, the Company incurred a charge of $5.8 million associated
with plant closures.  Of this charge, $4.3 million related to the closure of a
tool joint facility within the drilling products segment and $1.5 million
related to the closure of a packer facility within the completion and oilfield
services segment.  EBIDTA and operating income for 1996 for the drilling
products and completion and oilfield services segments include accruals
included within the $5.8 million charge of $1.5 million and $0.5 million,
respectively, for such plant closures.

FOREIGN OPERATIONS AND EXPORT SALES

     Financial information by geographic segment for each of the three years
ended December 31, 1998, is summarized below.  Revenues are attributable to
countries based on the location of the entity selling products.  Long-lived
assets are long-term assets excluding deferred tax assets of $16.7 million,
$12.8 million, and $18.9 million for 1998, 1997, and 1996, respectively.


<TABLE>
<CAPTION>
                            UNITED                       LATIN
                            STATES       CANADA         AMERICA         EUROPE         AFRICA         OTHER           TOTAL
                          ----------  -------------  --------------  -------------  ------------  -------------  ---------------
                                                                      (in thousands)
<S>                       <C>             <C>             <C>            <C>            <C>           <C>            <C>
1998
 Revenues from
  unaffiliated customers  $1,181,948       $265,229        $138,761       $167,285       $91,307       $166,124       $2,010,654
 Long-lived assets......     950,617        306,490         204,700        151,383        37,758         81,637        1,732,585
1997
 Revenues from
  unaffiliated customers  $1,205,633       $257,478        $118,762       $149,223       $70,037       $167,956       $1,969,089
 Long-lived assets......   1,060,871        133,309         174,845        143,831        15,341         62,874        1,591,071
1996
 Revenues from
  unaffiliated customers  $  928,956       $143,610         $74,109       $148,094       $72,457       $100,044       $1,467,270
 Long-lived assets......     784,438         66,342         100,901        145,811        14,037         51,382        1,162,911
</TABLE>

MAJOR CUSTOMERS AND CREDIT RISK

     Substantially all of the Company's customers are engaged in the energy
industry.  This concentration of customers may impact the Company's overall
exposure to credit risk, either positively or negatively, in that customers may
be similarly affected by changes in economic and industry conditions.  The
Company performs ongoing credit evaluations of its customers and does not
generally require collateral in support of its trade receivables.  The Company
maintains reserves for potential credit losses, and actual losses have
historically been within the Company's expectations.  Foreign sales also
present various risks, including risks of war, civil disturbances and
governmental activities that may limit or disrupt markets, restrict the
movement of funds; result in the deprivation of contract rights or the taking
of property without fair consideration.  Most of the Company's foreign sales,
however, are to large international companies or are secured by letters of
credit or similar arrangements.

     In 1998, 1997, and 1996 there was no individual customer who accounted for
10% of consolidated revenues.



                                       68
<PAGE>   70


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

19.  QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following tabulation sets forth unaudited quarterly financial data for
1998 and 1997.


<TABLE>
<CAPTION>
                                 1ST QTR.         2ND QTR.            3RD QTR.         4TH QTR.               TOTAL
                                 --------         ---------           --------         ---------         ---------------
                                                      (in thousands, except per share amounts)
<S>                              <C>       <C>    <C>        <C>      <C>       <C>    <C>        <C>    <C>         <C>
1998
 Revenues......................  $570,520   (1)   $530,833            $482,454         $426,847          $2,010,654
 Gross Profit..................   186,162   (1)    167,118   (1) (2)   148,259   (1)     82,330    (2)      583,869
 Selling, General and
  Administrative...............    76,911   (1)     71,629   (1)        69,458   (1)     75,405             293,403
 Merger Costs and Other Charges        --          107,647   (1) (2)        --           36,450    (2)      144,097
 Operating Income..............   110,031   (1)    (11,373)  (1)        79,477          (29,087)            149,048
 Net Income....................    61,143          (14,891)  (2)        42,754          (24,169)   (2)       64,837
 Basic EPS:
  Net Income...................  $   0.63         $  (0.15)           $   0.44         $  (0.25)         $     0.67
 Diluted EPS:
  Net Income...................      0.63            (0.15)               0.44            (0.25)               0.66
1997
 Revenues......................  $431,253         $476,999            $509,718         $551,119          $1,969,089
 Gross Profit..................   121,696   (1)    135,840   (1)       153,552   (1)    169,614    (1)      580,702  (1)
 Selling, General and
  Administrative...............    55,217   (1)     60,678   (1)        61,971   (1)     69,426    (1)      247,292  (1)
 Operating Income..............    66,988           75,705              92,283          101,016             335,992
 Income from Continuing
  Operations...................    37,903           45,741              53,726           59,403             196,773
 Net Income....................    37,903           45,741              53,726           50,393    (3)      187,763
 Basic EPS:
  Income from Continuing
   Operations..................  $   0.40         $   0.48            $   0.56         $   0.61          $     2.04
  Net Income...................      0.40             0.48                0.56             0.52    (3)         1.95
 Diluted EPS:
  Income from Continuing
   Operations..................      0.39             0.47                0.55             0.60                2.01
  Net Income...................      0.39             0.47                0.55             0.51    (3)         1.92
</TABLE>

(1)  The first, second, and third quarters of 1998 and all quarters of 1997
     have been restated from amounts previously reported in the Company's
     respective Forms 10-Q and Amendment No. 1 to Form 8-K filed July 21, 1998
     to reclassify certain amounts to conform to current year presentation.

(2)  The Company incurred $120.0 million and $75.0 million of pre-tax merger and
     other costs in the second and fourth quarters of 1998, respectively.  The
     effect of these charges, net of tax, in the second and fourth quarters was
     $78.0 and $48.8 million, respectively. Of these charges, $12.4 million and
     $38.5 million related to the write-off of inventory and have been
     classified as cost of products in the accompanying Consolidated Statements
     of Income.

(3)  Includes the extraordinary charge, net of taxes, of approximately $9.0
     million related to the repayment of the Senior Notes in the fourth quarter
     of 1997.


                                       69
<PAGE>   71
ITEM 9.   CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     None.
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Pursuant to General Instruction G(3), information on directors and
executive officers of the Registrant is incorporated by reference from the
Company's Definitive Proxy Statement to be filed pursuant to Regulation 14A.

ITEM 11.  EXECUTIVE COMPENSATION

    Pursuant to General Instruction G(3), information on executive compensation
is incorporated by reference from the Company's Definitive Proxy Statement to
be filed pursuant to Regulation 14A.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Pursuant to General Instruction G(3), information on security ownership of
certain beneficial owners and management is incorporated by reference from the
Company's Definitive Proxy Statement to be filed pursuant to Regulation 14A.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Pursuant to General Instruction G(3), information on certain relationships
and related transactions is incorporated by reference from the Company's
Definitive Proxy Statement to be filed pursuant to Regulation 14A.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a) The following documents are filed as a part of this report or
             incorporated herein by reference:

              1. The consolidated financial statements of the Company are
                 listed on page 42 of this report.

              2. The financial statement schedule is listed on page 42 of this
                 report.

              3. The exhibits of the Company are listed below under Item 14(c).

         (b) Reports on Form 8-K

              1.  Current Report on Form 8-K/A filed on December 10, 1998,
                  amending Current Report on Form 8-K/A filed on July 16, 1998,
                  and amending Current Report on Form 8-K dated June 15, 1998,
                  reporting the Company's (i) Management's Discussion and
                  Analysis of Financial Condition and Results of Operations on
                  a restated basis and (ii) supplemental restated financial
                  statements as of December 31, 1997 and 1996 and for the three
                  years ended December 31, 1997. 

              2.  Current Report on Form 8-K dated October 22, 1998, announcing
                  the Company's earnings for the quarter ended September 30,
                  1998.

         (c) Exhibits

            2.1   Agreement and Plan of Merger dated as of March 4, 1998, by
                  and between EVI, Inc. and Weatherford Enterra, Inc.
                  (incorporated by reference to Exhibit No. 2.1 to Amendment
                  No. 1 to Form 8-K on Form 8-K/A, File 1-13086, filed March 9,
                  1998).

            2.2   Amendment No. 1 dated as of April 17, 1998, to the Agreement
                  and Plan of Merger dated as of March 4, 1998, by and between
                  EVI, Inc. and Weatherford Enterra, Inc. (incorporated by
                  reference to Exhibit No. 2.2 to Form 8-K, File 1-13086, filed
                  April 21, 1998).



                                       70
<PAGE>   72



            2.3   Amendment No. 2 dated as of April 22, 1998, to the Agreement
                  and Plan of Merger dated as of March 4, 1998, as amended by
                  and between EVI, Inc. and Weatherford Enterra, Inc.
                  (incorporated by reference to Exhibit No. 2.3 to Form 8-K,
                  File 1-13086, filed April 23, 1998).

            2.4   Share Purchase Agreement made and entered into as of January
                  30, 1998, by and among the shareholders of Nika Enterprises
                  Ltd., an Alberta corporation, listed on the signature pages
                  thereto and EVI Oil Tools Canada Ltd., an Alberta corporation
                  (incorporated by reference to Exhibit No. 2.1 to the Form
                  8-K, File 1-13086, filed March 3, 1998).

            2.5   Agreement and Plan of Merger dated as of December 12, 1997,
                  by and among EVI, Inc., Christiana Acquisition, Inc.,
                  Christiana Companies, Inc. and C2, Inc. (incorporated by
                  reference to Exhibit No. 2.1 to Form 8-K, File 1-13086, filed
                  December 31, 1997).

            2.6   Agreement dated as of December 12, 1997, by and among EVI,
                  Inc., Christiana Companies, Inc., Total Logistic Control, LLC
                  and C2, Inc. (incorporated by reference to Exhibit No. 2.2 to
                  Form 8-K, File 1-13086, filed December 31, 1997).

            2.7   Letter Agreement dated December 12, 1997, by and among EVI,
                  Inc., Christiana Acquisition, Inc., Christiana Companies,
                  Inc. and C2, Inc. (incorporated by reference to Exhibit No.
                  2.3 to Form 8-K, File 1-13086, filed December 31, 1997).

            2.8   Amended and Restated Arrangement Agreement by and between
                  Taro Industries Limited, and EVI, Inc. and 756745 Alberta
                  Ltd. and 759572 Alberta Ltd. dated as of December 5, 1997
                  (incorporated by reference to Exhibit No. 2.4 to Form 8-K,
                  File 1-13086, filed December 31, 1997).

            2.9   Stock Purchase Agreement dated as of October 9, 1997, between
                  EVI, Inc. and PACCAR Inc. (incorporated by reference to
                  Exhibit No. 2.1 to Form 8-K, File 1-13086, filed October 21,
                  1997).

            2.10  Stock Purchase Agreement dated as of October 9, 1997, among
                  certain shareholders of BMW Monarch (Lloydminster) Ltd., the
                  shareholders of BMW Pump Inc., the shareholder of Makelki
                  Holdings Ltd., the shareholder of 589979 Alberta Ltd., the
                  shareholders of 600969 Alberta Ltd., the shareholders of
                  391862 Alberta Ltd. and EVI, Inc. (incorporated by reference
                  to Exhibit No. 2.2 to Form 8-K, File 1-13086, filed October
                  21, 1997).

            2.11  Agreement and Plan of Merger dated as of July 16, 1997, as
                  amended, by and among XLS Holding, Inc., EVI, Inc. and GPXL,
                  Inc. (incorporated by reference to Exhibit No. 2.1 to Form
                  8-K, File 1-13086, filed August 26, 1997).

            2.12  Stock Purchase Agreement dated as of February 21, 1997, among
                  Seigo Arai, Kanematsu USA Inc. and Energy Ventures, Inc.
                  (incorporated by reference to Exhibit No. 2.1 to Form 8-K,
                  File 1-13086, filed March 17, 1997).

            2.13  Agreement and Plan of Merger dated as of December 5, 1996,
                  among Energy Ventures, Inc., GulfMark Acquisition Co.,
                  GulfMark International, Inc. and New GulfMark International,
                  Inc. (incorporated by reference to Exhibit No. 2.2 to Form
                  8-K, File 1-13086, filed December 26, 1996).

            2.14  Agreement and Plan of Distribution dated as of December 5,
                  1996, by and among GulfMark International, Inc., New GulfMark
                  International, Inc. and Energy Ventures, Inc. (incorporated
                  by reference to Exhibit No. 2.3 to Form 8-K, File 1-13086,
                  filed December 26, 1996).

            2.15  First Amendment to Agreement and Plan of Merger dated as of
                  March 27, 1997, by and among Energy Ventures, Inc., GulfMark
                  Acquisition Co., GulfMark International, Inc. and GulfMark
                  Offshore, Inc. (incorporated by reference to Exhibit No. 2.3
                  to the Registration Statement on Form S-4, as amended (Reg.
                  No. 333-24133)).

            2.16  Stock Purchase Agreement dated as of September 14, 1996, by
                  and among Parker Drilling Company and Energy Ventures, Inc.
                  (incorporated by reference to Exhibit 2.1 to Form 8-K, File
                  1-13086, filed October 3, 1996).



                                       71
<PAGE>   73


            2.17  Agreement and Plan of Merger dated as of June 20, 1996
                  between Energy Ventures, Inc., TCA Acquisition, Inc. and
                  Tubular Corporation of America (incorporated by reference to
                  Exhibit No. 2.1 to Form 8-K, File 1-13086, filed June 24,
                  1996).

            2.18  Amendment No. 1 dated as of May 26, 1998, to the Agreement
                  and Plan of Merger dated as of December 12, 1997 and to the
                  Agreement dated as of December 12, 1997, by and among EVI,
                  Inc., Christiana Acquisition, Inc., Christiana Companies,
                  Inc., C2, Inc. and Total Logistic Control, LLC (incorporated
                  by reference to Exhibit 2.18 to the Registration Statement on
                  Form S-4, as amended (Reg. No. 333-58741)).

            2.19  Amended and Restated Agreement and Plan of Merger among
                  Weatherford International, Inc., Christiana Acquisition,
                  Inc., Christiana Companies, Inc. and C2, Inc. dated as of
                  October 14, 1998 (incorporated by reference to Exhibit No.
                  2.19 to the Registration Statement on Form S-4 (Reg. No.
                  333-65663)).

            2.20  Amendment No. 2 to Logistic Purchase Agreement by and among
                  Weatherford International, Inc., Total Logistic Control, LLC,
                  Christiana Companies, Inc. and C2, Inc. dated as of October
                  12, 1998 (incorporated by reference to Exhibit No. 2.20 to
                  the Registration Statement on Form S-4 (Reg. No. 333-65663)).

            2.21  Amendment No. 1 to Amended and Restated Agreement and Plan of
                  Merger, by and among Weatherford International, Inc.,
                  Christiana Acquisition, Inc., Christiana Companies, Inc. and
                  C2, Inc. dated as of January 5, 1999 (incorporated by
                  reference to Exhibit No. 2.21 to the Registration Statement
                  on Form S-4 (Reg. No. 333-65663)).

            2.22  Amendment No. 3 to Logistic Purchase Agreement, by and among
                  Weatherford International, Inc., Total Logistic Control, LLC,
                  Christiana Companies, Inc. and C2, Inc. dated as of January
                  5, 1999 (incorporated by reference to Exhibit No. 2.22 to the
                  Registration Statement on Form S-4 (Reg. No. 333-65663)).

           +3.1   Amended and Restated Certificate of Incorporation of the
                  Company.

            3.2   Amended and Restated By-Laws of the Company (incorporated by
                  reference to Exhibit No. 3.2 to Form 8-K, File 1-13086, filed
                  June 2, 1998).

            4.1   See Exhibit Nos. 3.1 and 3.2 for provisions of the Amended
                  and Restated Certificate of Incorporation and Amended and
                  Restated By-Laws of the Registrant defining the rights of the
                  holders of Common Stock.

            4.2   Amended and Restated Credit Agreement dated as of May 27,
                  1998, among EVI Weatherford, Inc., EVI Oil Tools Canada Ltd.,
                  Chase Bank of Texas, National Association, as U.S.
                  Administrative Agent, The Bank of Nova Scotia, as
                  Documentation Agent and Canadian Agent, ABN AMRO Bank, N.V.,
                  as Syndication Agent, and the other Lenders defined therein,
                  including the forms of Notes (incorporated by reference to
                  Exhibit No. 4.1 to the Form 8-K, File 1-13086, filed June 16,
                  1998).

            4.3   Indenture dated May 17, 1996, between Weatherford Enterra,
                  Inc. and Bank of Montreal Trust Company, as Trustee
                  (incorporated by reference to Exhibit 4.1 to Weatherford
                  Enterra, Inc.'s Current Report on Form 8-K, File No. 1-7867,
                  dated May 28, 1996).

            4.4   First Supplemental Indenture dated and effective as of May
                  27, 1998, by and among EVI Weatherford, Inc., the successor
                  by merger to Weatherford Enterra, Inc., and Bank of Montreal
                  Trust Company, as Trustee (incorporated by reference to
                  Exhibit No. 4.1 to Form 8-K, File 1-13086, filed June 2,
                  1998).

            4.5   Form of Weatherford Enterra, Inc.'s 7 1/4% Notes Due May 15,
                  2006 (incorporated by reference to Exhibit 4.2 to Weatherford
                  Enterra, Inc.'s Current Report on Form 8-K, File No. 1-7867,
                  dated May 28, 1996).



                                       72
<PAGE>   74


            4.6   Indenture dated March 15, 1994, among Energy Ventures, Inc.,
                  as Issuer, the Subsidiary Guarantors party thereto, as
                  Guarantors, and Chemical Bank, as Trustee (incorporated by
                  reference to Form 8-K, File 1-13086, filed April 5, 1994).

            4.7   Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
                  Inc. (incorporated by reference to Form 8-K, File 1-13086,
                  filed April 5, 1994).

            4.8   First Supplemental Indenture by and among Energy Ventures,
                  Inc., Prideco, Inc. and Chemical Bank, as trustee, dated June
                  30, 1995 (incorporated by reference to Exhibit No. 4.4 to the
                  Registration Statement on Form S-3 (Reg. No. 33-61933)).

            4.9   Second Supplemental Indenture by and among Energy Ventures,
                  Inc., EVI Arrow, Inc., EVI Watson, Inc. and The Chase
                  Manhattan Bank, as trustee, dated effective as of December 6,
                  1996 (incorporated by reference to Exhibit 4.6 to Form 10-K,
                  File 1-13086, filed March 20, 1997).

            4.10  Third Supplemental Indenture by and among EVI, Inc., Ercon,
                  Inc. and The Chase Manhattan Bank, as trustee, dated
                  effective as of May 1, 1997 (incorporated by reference to
                  Exhibit 99.2 to Form 8-K, File 1-13086, filed October 27,
                  1997).

            4.11  Fourth Supplemental Indenture by and among EVI, Inc., XLS
                  Holding, Inc., XL Systems, Inc. and The Chase Manhattan Bank,
                  as trustee, dated effective as of August 25, 1997
                  (incorporated by reference to Exhibit 99.3 to Form 8-K, File
                  1-13086, filed October 27, 1997).

            4.12  Fifth Supplemental Indenture by and between EVI, Inc. and The
                  Chase Manhattan Bank dated as of December 12, 1997 (including
                  the Form of Note and Form of Exchange Note) (incorporated by
                  reference to Exhibit 4.1 to Form 8-K, File 1-13086, filed
                  December 31, 1997).

            4.13  Indenture dated as of October 15, 1997, between EVI, Inc. and
                  The Chase Manhattan Bank, as Trustee (incorporated by
                  reference to Exhibit No. 4.13 to the Registration Statement
                  on Form S-3 (Reg. No. 333-45207)).

            4.14  First Supplemental Indenture dated as of October 28, 1997,
                  between EVI, Inc. and The Chase Manhattan Bank, as Trustee
                  (including form of Debenture) (incorporated by reference to
                  Exhibit 4.2 to Form 8-K, File 1-13086, filed November 5,
                  1997).

            4.15  Registration Rights Agreement dated November 3, 1997, by and
                  among EVI, Inc., Morgan Stanley & Co. Incorporated,
                  Donaldson, Lufkin & Jenrette Securities Corporation, Credit
                  Suisse First Boston Corporation, Lehman Brothers Inc.,
                  Prudential Securities Incorporated and Schroder & Co. Inc.
                  (incorporated by reference to Exhibit 4.3 to Form 8-K, File
                  1-13086, filed November 5, 1997).

            4.16  Participation Agreement dated December 8, 1998 by and among
                  Weatherford Enterra Compression Company, L.P., ABN AMRO Bank
                  N.V., as Administrative Agent, Arranger and Syndication
                  Agent, Chase Bank of Texas, National Association, and the
                  Lessors listed on Schedule I thereto (incorporated by
                  reference to Exhibit No. 4.16 to the Registration Statement
                  on Form S-4 (Reg. No. 333-65663)).

            4.17  Master Lease Intended as Security dated as of December 8,
                  1998 between Weatherford Enterra Compression Company, L.P.,
                  as Lessee, and ABN AMRO Bank N.V., as Administrative Agent
                  for the Lessors (incorporated by reference to Exhibit No.
                  4.17 to the Registration Statement on Form S-4 (Reg. No.
                  333-65663)).

            4.18  Guaranty Agreement dated as of December 8, 1998 between
                  Weatherford International, Inc. and ABN AMRO Bank N.V., as
                  Administrative Agent for the Lessors (incorporated by
                  reference to Exhibit No. 4.18 to the Registration Statement
                  on Form S-4 (Reg. No. 333-65663)).

           *10.1  Weatherford Enterra, Inc. Non-Employee Director Stock Option
                  Plan, as amended and restated (incorporated by reference to
                  Exhibit 10.1 to Weatherford Enterra Inc.'s Quarterly Report
                  on Form 10-Q for the quarter ended June 30, 1997 (File No.
                  1-7867)).



                                       73
<PAGE>   75


           *10.2  Weatherford Enterra, Inc. 401(k) Savings Plan (incorporated
                  by reference to Exhibit 4.15 to the Company's Registration
                  Statement on Form S-8 (Reg. No. 333-53633)).

           *10.3  Weatherford International Incorporated 1987 Stock Option
                  Plan, as amended and restated (incorporated by reference to
                  Exhibit 10.3 to Weatherford Enterra, Inc.'s Annual Report on
                  Form 10-K for the year ended December 31, 1996 (File No.
                  1-7867)).

           *10.4  Weatherford Enterra, Inc. 1991 Stock Option Plan, as amended
                  and restated (incorporated by reference to Exhibit 10.4 to
                  Weatherford Enterra, Inc.'s Annual Report on Form 10-K for
                  the year ended December 31, 1996 (File No. 1-7867)).

           *10.5  Weatherford Enterra, Inc. Amended and Restated Employee Stock
                  Purchase Plan (incorporated by reference to Exhibit 4.19 to
                  the Company's Registration Statement on Form S-8 (Reg. No.
                  333-53633)).

           *10.6  Weatherford Enterra, Inc. Restricted Stock Incentive Plan, as
                  amended and restated (incorporated by reference to Exhibit
                  10.6 to Weatherford Enterra, Inc.'s Annual Report on Form
                  10-K for the year ended December 31, 1996 (File No. 1-7867)).

           *10.7  Amended and Restated Change of Control Agreement with Jon
                  Nicholson (incorporated by reference to Exhibit 10.1 to
                  Weatherford Enterra, Inc.'s Annual Report on Form 10-K for
                  the year ended December 31, 1996 (File No. 1-7867)).

           *10.8  Change of Control Agreement with Randall D. Stilley
                  (incorporated by reference to Exhibit 10.1 to Weatherford
                  Enterra, Inc.'s Annual Report on Form 10-K for the year ended
                  December 31, 1997 (File No. 1-17867)).

           *10.9  Indemnification Agreements with Robert K. Moses, Jr.
                  (incorporated by reference to Exhibit 10.10 to Weatherford
                  Enterra, Inc.'s Annual Report on Form 10-K for the year ended
                  December 31, 1987 (File No. 1-7867)); Philip Burguieres
                  (incorporated by reference to Exhibit 10.4 to Weatherford
                  Enterra, Inc.'s Quarterly Report on Form 10-Q for the quarter
                  ended June 30, 1991 (File No. 1-7867)); William E. Macaulay
                  (incorporated by reference to Exhibit 10.2 to Weatherford
                  Enterra, Inc.'s Quarterly Report on Form 10-Q for the quarter
                  ended September 30, 1995 (File No. 1-7867)); Jon Nicholson
                  (incorporated by reference to Exhibit 10.2 to Weatherford
                  Enterra, Inc.'s Annual Report on Form 10-K for the year ended
                  December 31, 1996 (File No. 1-7867)); and Randall D. Stilley
                  (incorporated by reference to Exhibit 10.1 to Weatherford
                  Enterra, Inc.'s Annual Report on Form 10-K for the year ended
                  December 31, 1997 (File No. 1-17867)).

          *10.10  Employment Agreement dated as of June 15, 1998, between EVI
                  Weatherford, Inc. and Philip Burguieres (incorporated by
                  reference to Exhibit No. 10.9 to Form 10-Q, File 1-13086,
                  filed August 14, 1998).

          *10.11  Energy Ventures, Inc. Executive Deferred Compensation Stock
                  Ownership Plan and related Trust Agreement (incorporated by
                  reference to Form 10-Q, File 1-13086, filed November 16,
                  1992).
 
          *10.12  First Amendment to Energy Ventures, Inc. Executive Deferred
                  Compensation Stock Ownership Plan dated June 28, 1993
                  (incorporated by reference to Exhibit No. 4.3 to the
                  Registration Statement on Form S-8 (Reg. No. 33-65790)).

          *10.13  Energy Ventures, Inc. Non-Employee Director Deferred
                  Compensation Plan (incorporated by reference to Form 10-Q,
                  File 1-13086, filed November 16, 1992).

          *10.14  Energy Ventures, Inc. 1991 Non-Employee Director Stock Option
                  Plan and Form of Agreement (incorporated by reference to Form
                  10-Q, File 1-13086, filed August 8, 1991).

          *10.15  Energy Ventures, Inc. 1992 Employee Stock Option Plan, as
                  amended (incorporated by reference to Exhibit No. 4.7 to the
                  Registration Statement on Form S-8 (Reg. No. 333-13531)).

          *10.16  Energy Ventures, Inc. Employee Stock Option Plan
                  (incorporated by reference to Exhibit No. 4.1 to the
                  Registration Statement on Form S-8 (Reg. No. 33-31662)).



                                       74
<PAGE>   76


          *10.17  Form of Stock Option Agreement under the Company's Employee
                  Stock Option Plan (incorporated by reference to Exhibit No.
                  4.2 to the Registration Statement on Form S-8 (Reg. No.
                  33-31662)).

          *10.18  Amended and Restated Non-Employee Director Stock Option Plan
                  (incorporated by reference to Exhibit No. 10.1 to Form 10-Q,
                  File 1-13086, filed August 12, 1995).

          *10.19  Employment Agreements with each of Bernard J. Duroc-Danner,
                  James G. Kiley, Frances R. Powell, John C. Coble and Robert
                  Stiles (incorporated by reference to Exhibit No. 10.9 to Form
                  10-K, File 1-13086, filed March 27, 1998).

          *10.20  Employment Agreement dated March 16, 1998, between EVI, Inc.
                  and Curtis W. Huff (incorporated by reference to Exhibit 10.1
                  to the Registrant's Quarterly Report on Form 10-Q for the
                  quarter ended March 31, 1998 (File No. 1-13086)).

         +*10.21  Employment Agreements with Donald R. Galletly, E. Lee Colley,
                  III, Jon R. Nicholson and Randall D. Stilley.

         +*10.22  Weatherford International, Inc. 1998 Employee Stock Option
                  Plan, including form of agreement for officers.

         +*10.23  Form of Stock Option Agreement for Non-Employee Directors
                  dated September 8, 1998.

         +*10.24  Form of Warrant Agreement with Robert K. Moses, Jr. dated
                  September 8, 1998.

         +*10.25  Weatherford International, Inc. 401(k) Savings Plan.

           10.26  Manufacturing and Sales Agreement dated as of January 1,
                  1996, by and between Grant Prideco, S.A. and Oil Country
                  Tubular Limited (incorporated by reference to Exhibit No.
                  10.34 to Form 10-K, File 1-13086, filed March 20, 1996).

           10.27  Amended and Restated Lease Agreement dated May 3, 1996,
                  between Baker Hughes Oilfield Operations, Inc. and Grant
                  Prideco, Inc. (incorporated by reference to Exhibit No. 10.14
                  to Form 10-K, as amended by Form 10-K/A, File 1-13086, filed
                  March 24, 1997).

           10.28  Formation Agreement dated as of February 2, 1999, by and
                  among Weatherford International, Inc., Weatherford Enterra
                  Compression Company, L.P., General Electric Capital
                  Corporation and Global Compression Services, Inc.
                  (incorporated by reference to Exhibit No. 10.1 to Form 8-K,
                  File 1-13086, filed February 5, 1999).

           10.29  Limited Partnership Agreement of Weatherford Global
                  Compression Services, L.P. dated as of February 2, 1999, by
                  and among Weatherford Global Compression Holding, L.L.C.,
                  Weatherford Enterra Compression Company, L.P. and Global
                  Compression Services, Inc. (incorporated by reference to
                  Exhibit No. 10.2 to Form 8-K, File 1-13086, filed February 5,
                  1999).

           10.30  Limited Liability Company Agreement of Weatherford Global
                  Compression Holding, L.L.C. dated as of February 2, 1999, by
                  and between Weatherford Enterra Compression Company, L.P. and
                  Global Compression Services, Inc. (incorporated by reference
                  to Exhibit No. 10.3 to Form 8-K, File 1-13086, filed February
                  5, 1999).

           10.31  Registration Rights Agreement dated as of February 2, 1999,
                  among Weatherford Global Compression Services, L.P.,
                  Weatherford Enterra Compression Company, L.P. and Global
                  Compression Services, Inc. (incorporated by reference to
                  Exhibit No. 10.4 to Form 8-K, File 1-13086, filed February 5,
                  1999).

           10.32  The Woodward, Oklahoma lease agreements as amended
                  (incorporated by reference to Exhibit No. 10.32 to Form 10-K,
                  File 1-13086, filed March 23, 1995).

           +21.1  Subsidiaries of Weatherford International, Inc.



                                       75
<PAGE>   77

           +23.1  Consent of Arthur Andersen LLP.

           +27.1  Financial Data Schedule.

================================

           *      Management Contract or Compensatory Plan or Arrangement

           +      Filed herewith

           As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the
           Company has not filed with this Annual Report on Form 10-K certain
           instruments defining the rights of holders of long-term debt of the
           Company and its subsidiaries, because the total amount of securities
           authorized under any of such instruments does not exceed 10% of the
           total assets of the Company and its subsidiaries on a consolidated
           basis. The Company agrees to furnish a copy of any of such
           instruments to the Securities and Exchange Commission upon request.

           We agree to furnish to any requesting stockholder a copy of any of
           the above named exhibits upon the payment of our reasonable expenses
           of obtaining, duplicating and mailing the requested exhibits. All
           requests for copies of exhibits should be made in writing to our
           Investor Relations Department at 515 Post Oak Blvd., Suite 600,
           Houston, TX 77027.

       (d) Financial Statement Schedule

                                  SCHEDULE II

                WEATHERFORD INTERNATIONAL, INC. AND SUBSIDIARIES

                VALUATION AND QUALIFYING ACCOUNTS AND ALLOWANCES
                  FOR THE THREE YEARS ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>

                                                                    ADDITIONS
                                                            -----------------------
                                                BALANCE AT  CHARGED TO                            BALANCE AT  
                                                BEGINNING   COSTS AND                               END OF      
           DESCRIPTION                          OF PERIOD   EXPENSES    COLLECTIONS   DEDUCTIONS    PERIOD      
           -----------                          ---------   ---------   -----------   ----------   ---------    
                                                                      (in thousands)                            
<S>                                             <C>         <C>         <C>           <C>          <C>          
YEAR ENDED DECEMBER 31, 1998:                                                                                   
   Allowance for uncollectible accounts                                                                         
     receivable .............................   $  23,473   $   2,397   $     679     $  (6,785)   $  19,764    
YEAR ENDED DECEMBER 31, 1997:                                                                                   
   Allowance for uncollectible accounts                                                                         
     receivable .............................   $  16,824   $  13,248   $     112     $  (6,711)   $  23,473    
YEAR ENDED DECEMBER 31, 1996:                                                                                   
   Allowance for uncollectible accounts                                                                         
     receivable .............................   $  16,304   $   4,608   $       4     $  (4,092)   $  16,824    
</TABLE>


All other schedules are omitted because they are not required or because the
information is included in the financial statements or notes thereto.




                                       76
<PAGE>   78
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on March 29, 1999.

                                     WEATHERFORD INTERNATIONAL, INC.



                                     By: /s/ Bernard J. Duroc-Danner
                                        ---------------------------------------
                                             Bernard J. Duroc-Danner
                                         President, Chief Executive Officer,
                                         Chairman of the Board and Director


    Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>


                Signature                                            Title                                 Date
                ---------                                            -----                                 ----

<S>                                                   <C>                                                <C> 
             /s/ Bernard J. Duroc-Danner              President, Chief Executive Officer, Chairman       March 29, 1999
  -------------------------------------------         of the Board and Director,
             Bernard J. Duroc-Danner                  (Principal Executive Officer and
                                                      Principal Financial Officer)

                                                                 
              /s/ Frances R. Powell                   Vice President, Accounting and Controller          March 29, 1999
  --------------------------------------------        (Principal Accounting Officer)           
                Frances R. Powell                     


              /s/ David J. Butters                    Director                                           March 29, 1999
  --------------------------------------------
                David J. Butters


              /s/ Sheldon B. Lubar                    Director                                           March 29, 1999
  --------------------------------------------
                Sheldon B. Lubar


              /s/ Robert B. Millard                   Director                                           March 29, 1999
  --------------------------------------------
                Robert B. Millard


               /s/ Robert A. Rayne                    Director                                           March 29, 1999
  --------------------------------------------
                 Robert A. Rayne


              /s/ Philip Burguieres                   Director                                           March 29, 1999
  --------------------------------------------
                Philip Burguieres


             /s/ William E. Macaulay                  Director                                           March 29, 1999
  --------------------------------------------
               William E. Macaulay


            /s/ Robert K. Moses, Jr.                  Director                                           March 29, 1999
  --------------------------------------------
              Robert K. Moses, Jr.
</TABLE>



                                       77
<PAGE>   79

<TABLE>
<CAPTION>


NUMBER              EXHIBITS
------              --------
<S>           <C>            
2.1           Agreement and Plan of Merger dated as of March 4, 1998, by and
              between EVI, Inc. and Weatherford Enterra, Inc. (incorporated by
              reference to Exhibit No. 2.1 to Amendment No. 1 to Form 8-K on
              Form 8-K/A, File 1-13086, filed March 9, 1998).

2.2           Amendment No. 1 dated as of April 17, 1998, to the Agreement and
              Plan of Merger dated as of March 4, 1998, by and between EVI,
              Inc. and Weatherford Enterra, Inc. (incorporated by reference to
              Exhibit No. 2.2 to Form 8-K, File 1-13086, filed April 21, 1998).

2.3           Amendment No. 2 dated as of April 22, 1998, to the Agreement and
              Plan of Merger dated as of March 4, 1998, as amended by and
              between EVI, Inc. and Weatherford Enterra, Inc. (incorporated by
              reference to Exhibit No. 2.3 to Form 8-K, File 1-13086, filed
              April 23, 1998).

2.4           Share Purchase Agreement made and entered into as of January 30,
              1998, by and among the shareholders of Nika Enterprises Ltd., an
              Alberta corporation, listed on the signature pages thereto and
              EVI Oil Tools Canada Ltd., an Alberta corporation (incorporated
              by reference to Exhibit No. 2.1 to the Form 8-K, File 1-13086,
              filed March 3, 1998).

2.5           Agreement and Plan of Merger dated as of December 12, 1997, by
              and among EVI, Inc., Christiana Acquisition, Inc., Christiana
              Companies, Inc. and C2, Inc. (incorporated by reference to
              Exhibit No. 2.1 to Form 8-K, File 1-13086, filed December 31,
              1997).

2.6           Agreement dated as of December 12, 1997, by and among EVI, Inc.,
              Christiana Companies, Inc., Total Logistic Control, LLC and C2,
              Inc. (incorporated by reference to Exhibit No. 2.2 to Form 8-K,
              File 1-13086, filed December 31, 1997).

2.7           Letter Agreement dated December 12, 1997, by and among EVI, Inc.,
              Christiana Acquisition, Inc., Christiana Companies, Inc. and C2,
              Inc. (incorporated by reference to Exhibit No. 2.3 to Form 8-K,
              File 1-13086, filed December 31, 1997).

2.8           Amended and Restated Arrangement Agreement by and between Taro
              Industries Limited, and EVI, Inc. and 756745 Alberta Ltd. and
              759572 Alberta Ltd. dated as of December 5, 1997 (incorporated by
              reference to Exhibit No. 2.4 to Form 8-K, File 1-13086, filed
              December 31, 1997).

2.9           Stock Purchase Agreement dated as of October 9, 1997, between
              EVI, Inc. and PACCAR Inc. (incorporated by reference to Exhibit
              No. 2.1 to Form 8-K, File 1-13086, filed October 21, 1997).

2.10          Stock Purchase Agreement dated as of October 9, 1997, among
              certain shareholders of BMW Monarch (Lloydminster) Ltd., the
              shareholders of BMW Pump Inc., the shareholder of Makelki
              Holdings Ltd., the shareholder of 589979 Alberta Ltd., the
              shareholders of 600969 Alberta Ltd., the shareholders of 391862
              Alberta Ltd. and EVI, Inc. (incorporated by reference to Exhibit
              No. 2.2 to Form 8-K, File 1-13086, filed October 21, 1997).

2.11          Agreement and Plan of Merger dated as of July 16, 1997, as
              amended, by and among XLS Holding, Inc., EVI, Inc. and GPXL, Inc.
              (incorporated by reference to Exhibit No. 2.1 to Form 8-K, File
              1-13086, filed August 26, 1997).

2.12          Stock Purchase Agreement dated as of February 21, 1997, among
              Seigo Arai, Kanematsu USA Inc. and Energy Ventures, Inc.
              (incorporated by reference to Exhibit No. 2.1 to Form 8-K, File
              1-13086, filed March 17, 1997).

2.13          Agreement and Plan of Merger dated as of December 5, 1996, among
              Energy Ventures, Inc., GulfMark Acquisition Co., GulfMark
              International, Inc. and New GulfMark International, Inc.
              (incorporated by reference to Exhibit No. 2.2 to Form 8-K, File
              1-13086, filed December 26, 1996).
</TABLE>


<PAGE>   80


<TABLE>
<CAPTION>

NUMBER              EXHIBITS
------              --------
<S>           <C>            
2.14          Agreement and Plan of Distribution dated as of December 5, 1996,
              by and among GulfMark International, Inc., New GulfMark
              International, Inc. and Energy Ventures, Inc. (incorporated by
              reference to Exhibit No. 2.3 to Form 8-K, File 1-13086, filed
              December 26, 1996).

2.15          First Amendment to Agreement and Plan of Merger dated as of March
              27, 1997, by and among Energy Ventures, Inc., GulfMark
              Acquisition Co., GulfMark International, Inc. and GulfMark
              Offshore, Inc. (incorporated by reference to Exhibit No. 2.3 to
              the Registration Statement on Form S-4, as amended (Reg. No.
              333-24133)).

2.16          Stock Purchase Agreement dated as of September 14, 1996, by and
              among Parker Drilling Company and Energy Ventures, Inc.
              (incorporated by reference to Exhibit 2.1 to Form 8-K, File
              1-13086, filed October 3, 1996).

2.17          Agreement and Plan of Merger dated as of June 20, 1996 between
              Energy Ventures, Inc., TCA Acquisition, Inc. and Tubular
              Corporation of America (incorporated by reference to Exhibit No.
              2.1 to Form 8-K, File 1-13086, filed June 24, 1996).

2.18          Amendment No. 1 dated as of May 26, 1998, to the Agreement and
              Plan of Merger dated as of December 12, 1997 and to the Agreement
              dated as of December 12, 1997, by and among EVI, Inc., Christiana
              Acquisition, Inc., Christiana Companies, Inc., C2, Inc. and Total
              Logistic Control, LLC (incorporated by reference to Exhibit 2.18
              to the Registration Statement on Form S-4, as amended (Reg. No.
              333-58741)).

2.19          Amended and Restated Agreement and Plan of Merger among
              Weatherford International, Inc., Christiana Acquisition, Inc.,
              Christiana Companies, Inc. and C2, Inc. dated as of October 14,
              1998 (incorporated by reference to Exhibit No. 2.19 to the
              Registration Statement on Form S-4 (Reg. No. 333-65663)).

2.20          Amendment No. 2 to Logistic Purchase Agreement by and among
              Weatherford International, Inc., Total Logistic Control, LLC,
              Christiana Companies, Inc. and C2, Inc. dated as of October 12,
              1998 (incorporated by reference to Exhibit No. 2.20 to the
              Registration Statement on Form S-4 (Reg. No. 333-65663)).

2.21          Amendment No. 1 to Amended and Restated Agreement and Plan of
              Merger, by and among Weatherford International, Inc., Christiana
              Acquisition, Inc., Christiana Companies, Inc. and C2, Inc. dated
              as of January 5, 1999 (incorporated by reference to Exhibit No.
              2.21 to the Registration Statement on Form S-4 (Reg. No.
              333-65663)).

2.22          Amendment No. 3 to Logistic Purchase Agreement, by and among
              Weatherford International, Inc., Total Logistic Control, LLC,
              Christiana Companies, Inc. and C2, Inc. dated as of January 5,
              1999 (incorporated by reference to Exhibit No. 2.22 to the
              Registration Statement on Form S-4 (Reg. No. 333-65663)).

+3.1          Amended and Restated Certificate of Incorporation of the Company.

3.3           Amended and Restated By-Laws of the Company (incorporated by
              reference to Exhibit No. 3.2 to Form 8-K, File 1-13086, filed
              June 2, 1998).

4.1           See Exhibit Nos. 3.1 and 3.2 for provisions of the Amended and
              Restated Certificate of Incorporation and Amended and Restated
              By-Laws of the Registrant defining the rights of the holders of
              Common Stock.

4.2           Amended and Restated Credit Agreement dated as of May 27, 1998,
              among EVI Weatherford, Inc., EVI Oil Tools Canada Ltd., Chase
              Bank of Texas, National Association, as U.S. Administrative
              Agent, The Bank of Nova Scotia, as Documentation Agent and
              Canadian Agent, ABN AMRO Bank, N.V., as Syndication Agent, and
              the other Lenders defined therein,
</TABLE>


<PAGE>   81


<TABLE>
<CAPTION>


NUMBER              EXHIBITS
------              --------
<S>           <C>            
              including the forms of Notes (incorporated by reference to
              Exhibit No. 4.1 to the Form 8-K, File 1-13086, filed June 16,
              1998).

4.3           Indenture dated May 17, 1996, between Weatherford Enterra, Inc.
              and Bank of Montreal Trust Company, as Trustee (incorporated by
              reference to Exhibit 4.1 to Weatherford Enterra, Inc.'s Current
              Report on Form 8-K, File No. 1-7867, dated May 28, 1996).

4.4           First Supplemental Indenture dated and effective as of May 27,
              1998, by and among EVI Weatherford, Inc., the successor by merger
              to Weatherford Enterra, Inc., and Bank of Montreal Trust Company,
              as Trustee (incorporated by reference to Exhibit No. 4.1 to Form
              8-K, File 1-13086, filed June 2, 1998).

4.5           Form of Weatherford Enterra, Inc.'s 7 1/4% Notes Due May 15, 2006
              (incorporated by reference to Exhibit 4.2 to Weatherford Enterra,
              Inc.'s Current Report on Form 8-K, File No. 1-7867, dated May 28,
              1996).

4.6           Indenture dated March 15, 1994, among Energy Ventures, Inc., as
              Issuer, the Subsidiary Guarantors party thereto, as Guarantors,
              and Chemical Bank, as Trustee (incorporated by reference to Form
              8-K, File 1-13086, filed April 5, 1994).

4.7           Specimen 10 1/4% Senior Note due 2004 of Energy Ventures, Inc.
              (incorporated by reference to Form 8-K, File 1-13086, filed April
              5, 1994).

4.8           First Supplemental Indenture by and among Energy Ventures, Inc.,
              Prideco, Inc. and Chemical Bank, as trustee, dated June 30, 1995
              (incorporated by reference to Exhibit No. 4.4 to the Registration
              Statement on Form S-3 (Reg. No. 33-61933)).

4.9           Second Supplemental Indenture by and among Energy Ventures, Inc.,
              EVI Arrow, Inc., EVI Watson, Inc. and The Chase Manhattan Bank,
              as trustee, dated effective as of December 6, 1996 (incorporated
              by reference to Exhibit 4.6 to Form 10-K, File 1-13086, filed
              March 20, 1997).

4.10          Third Supplemental Indenture by and among EVI, Inc., Ercon, Inc.
              and The Chase Manhattan Bank, as trustee, dated effective as of
              May 1, 1997 (incorporated by reference to Exhibit 99.2 to Form
              8-K, File 1-13086, filed October 27, 1997).

4.11          Fourth Supplemental Indenture by and among EVI, Inc., XLS
              Holding, Inc., XL Systems, Inc. and The Chase Manhattan Bank, as
              trustee, dated effective as of August 25, 1997 (incorporated by
              reference to Exhibit 99.3 to Form 8-K, File 1-13086, filed
              October 27, 1997).

4.12          Fifth Supplemental Indenture by and between EVI, Inc. and The
              Chase Manhattan Bank dated as of December 12, 1997 (including the
              Form of Note and Form of Exchange Note) (incorporated by
              reference to Exhibit 4.1 to Form 8-K, File 1-13086, filed
              December 31, 1997).

4.13          Indenture dated as of October 15, 1997, between EVI, Inc. and The
              Chase Manhattan Bank, as Trustee (incorporated by reference to
              Exhibit No. 4.13 to the Registration Statement on Form S-3 (Reg.
              No. 333-45207)).

4.14          First Supplemental Indenture dated as of October 28, 1997,
              between EVI, Inc. and The Chase Manhattan Bank, as Trustee
              (including form of Debenture) (incorporated by reference to
              Exhibit 4.2 to Form 8-K, File 1-13086, filed November 5, 1997).

4.15          Registration Rights Agreement dated November 3, 1997, by and
              among EVI, Inc., Morgan Stanley & Co. Incorporated, Donaldson,
              Lufkin & Jenrette Securities Corporation, Credit Suisse First
              Boston Corporation, Lehman Brothers Inc., Prudential Securities
              Incorporated and Schroder & Co. Inc. (incorporated by reference
              to Exhibit 4.3 to Form 8-K, File 1-13086, filed November 5,
              1997).
</TABLE>


<PAGE>   82

<TABLE>
<CAPTION>

NUMBER              EXHIBITS
------              --------
<S>           <C>            
4.16          Participation Agreement dated December 8, 1998 by and among
              Weatherford Enterra Compression Company, L.P., ABN AMRO Bank
              N.V., as Administrative Agent, Arranger and Syndication Agent,
              Chase Bank of Texas, National Association, and the Lessors listed
              on Schedule I thereto (incorporated by reference to Exhibit No.
              4.16 to the Registration Statement on Form S-4 (Reg. No.
              333-65663)).

4.17          Master Lease Intended as Security dated as of December 8, 1998
              between Weatherford Enterra Compression Company, L.P., as Lessee,
              and ABN AMRO Bank N.V., as Administrative Agent for the Lessors
              (incorporated by reference to Exhibit No. 4.17 to the
              Registration Statement on Form S-4 (Reg. No. 333-65663)).

4.18          Guaranty Agreement dated as of December 8, 1998 between
              Weatherford International, Inc. and ABN AMRO Bank N.V., as
              Administrative Agent for the Lessors (incorporated by reference
              to Exhibit No. 4.18 to the Registration Statement on Form S-4
              (Reg. No. 333-65663)).

*10.1         Weatherford Enterra, Inc. Non-Employee Director Stock Option
              Plan, as amended and restated (incorporated by reference to
              Exhibit 10.1 to Weatherford Enterra Inc.'s Quarterly Report on
              Form 10-Q for the quarter ended June 30, 1997 (File No. 1-7867)).

*10.2         Weatherford Enterra, Inc. 401(k) Savings Plan (incorporated by
              reference to Exhibit 4.15 to the Company's Registration Statement
              on Form S-8 (Reg. No. 333-53633)).

*10.3         Weatherford International Incorporated 1987 Stock Option Plan, as
              amended and restated (incorporated by reference to Exhibit 10.3
              to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the
              year ended December 31, 1996 (File No. 1-7867)).

*10.4         Weatherford Enterra, Inc. 1991 Stock Option Plan, as amended and
              restated (incorporated by reference to Exhibit 10.4 to
              Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the
              year ended December 31, 1996 (File No. 1-7867)).

*10.5         Weatherford Enterra, Inc. Amended and Restated Employee Stock
              Purchase Plan (incorporated by reference to Exhibit 4.19 to the
              Company's Registration Statement on Form S-8 (Reg. No.
              333-53633)).

*10.6         Weatherford Enterra, Inc. Restricted Stock Incentive Plan, as
              amended and restated (incorporated by reference to Exhibit 10.6
              to Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the
              year ended December 31, 1996 (File No. 1-7867)).

*10.7         Amended and Restated Change of Control Agreement with Jon
              Nicholson (incorporated by reference to Exhibit 10.1 to
              Weatherford Enterra, Inc.'s Annual Report on Form 10-K for the
              year ended December 31, 1996 (File No. 1-7867)).

*10.8         Change of Control Agreement with Randall D. Stilley (incorporated
              by reference to Exhibit 10.1 to Weatherford Enterra, Inc.'s
              Annual Report on Form 10-K for the year ended December 31, 1997
              (File No. 1-17867)).

*10.9         Indemnification Agreements with Robert K. Moses, Jr.
              (incorporated by reference to Exhibit 10.10 to Weatherford
              Enterra, Inc.'s Annual Report on Form 10-K for the year ended
              December 31, 1987 (File No. 1-7867)); Philip Burguieres
              (incorporated by reference to Exhibit 10.4 to Weatherford
              Enterra, Inc.'s Quarterly Report on Form 10-Q for the quarter
              ended June 30, 1991 (File No. 1-7867)); William E. Macaulay
              (incorporated by reference to Exhibit 10.2 to Weatherford
              Enterra, Inc.'s Quarterly Report on Form 10-Q for the quarter
              ended September 30, 1995 (File No. 1-7867)); Jon Nicholson
              (incorporated by reference to Exhibit 10.2 to Weatherford
              Enterra, Inc.'s Annual Report on Form 10-K for the year ended
              December 31, 1996 (File No. 1-7867)); and Randall D. Stilley
              (incorporated by reference to Exhibit 10.1 to Weatherford
              Enterra, Inc.'s Annual Report on Form 10-K for the year ended
              December 31, 1997 (File No. 1-17867)).
</TABLE>

<PAGE>   83


<TABLE>
<CAPTION>

NUMBER              EXHIBITS
------              --------
<S>           <C>            
*10.10        Employment Agreement dated as of June 15, 1998, between EVI
              Weatherford, Inc. and Philip Burguieres (incorporated by
              reference to Exhibit No. 10.9 to Form 10-Q, File 1-13086, filed
              August 14, 1998).

*10.11        Energy Ventures, Inc. Executive Deferred Compensation Stock
              Ownership Plan and related Trust Agreement (incorporated by
              reference to Form 10-Q, File 1-13086, filed November 16, 1992).

*10.12        First Amendment to Energy Ventures, Inc. Executive Deferred
              Compensation Stock Ownership Plan dated June 28, 1993
              (incorporated by reference to Exhibit No. 4.3 to the Registration
              Statement on Form S-8 (Reg. No. 33-65790)).

*10.13        Energy Ventures, Inc. Non-Employee Director Deferred Compensation
              Plan (incorporated by reference to Form 10-Q, File 1-13086, filed
              November 16, 1992).

*10.14        Energy Ventures, Inc. 1991 Non-Employee Director Stock Option
              Plan and Form of Agreement (incorporated by reference to Form
              10-Q, File 1-13086, filed August 8, 1991).

*10.15        Energy Ventures, Inc. 1992 Employee Stock Option Plan, as amended
              (incorporated by reference to Exhibit No. 4.7 to the Registration
              Statement on Form S-8 (Reg. No. 333-13531)).

*10.16        Energy Ventures, Inc. Employee Stock Option Plan (incorporated by
              reference to Exhibit No. 4.1 to the Registration Statement on
              Form S-8 (Reg. No. 33-31662)).

*10.17        Form of Stock Option Agreement under the Company's Employee Stock
              Option Plan (incorporated by reference to Exhibit No. 4.2 to the
              Registration Statement on Form S-8 (Reg. No. 33-31662)).

*10.18        Amended and Restated Non-Employee Director Stock Option Plan
              (incorporated by reference to Exhibit No. 10.1 to Form 10-Q, File
              1-13086, filed August 12, 1995).

*10.19        Employment Agreements with each of Bernard J. Duroc-Danner, James
              G. Kiley, Frances R. Powell, John C. Coble and Robert Stiles
              (incorporated by reference to Exhibit No. 10.9 to Form 10-K, File
              1-13086, filed March 27, 1998).

*10.20        Employment Agreement dated March 16, 1998, between EVI, Inc. and
              Curtis W. Huff (incorporated by reference to Exhibit 10.1 to the
              Registrant's Quarterly Report on Form 10-Q for the quarter ended
              March 31, 1998 (File No. 1-13086)).

+*10.21       Employment Agreements with Donald R. Galletly, E. Lee Colley, III,
              Jon R. Nicholson and Randall D. Stilley.

+*10.22       Weatherford International, Inc. 1998 Employee Stock Option Plan,
              including form of agreement for officers.

+*10.23       Form of Stock Option Agreement for Non-Employee Directors dated
              September 8, 1998.

+*10.24       Form of Warrant Agreement with Robert K. Moses, Jr. dated
              September 8, 1998.

+*10.25       Weatherford International, Inc. 401(k) Savings Plan.

10.26         Manufacturing and Sales Agreement dated as of January 1, 1996, by
              and between Grant Prideco, S.A. and Oil Country Tubular Limited
              (incorporated by reference to Exhibit No. 10.34 to Form 10-K,
              File 1-13086, filed March 20, 1996).

10.27         Amended and Restated Lease Agreement dated May 3, 1996, between
              Baker Hughes Oilfield Operations, Inc. and Grant Prideco, Inc.
              (incorporated by reference to Exhibit No. 10.14 to Form 10-K, as
              amended by Form 10-K/A, File 1-13086, filed March 24, 1997).
</TABLE>


<PAGE>   84

<TABLE>
<CAPTION>

NUMBER              EXHIBITS
------              --------
<S>           <C>            
10.28         Formation Agreement dated as of February 2, 1999, by and among
              Weatherford International, Inc., Weatherford Enterra Compression
              Company, L.P., General Electric Capital Corporation and Global
              Compression Services, Inc. (incorporated by reference to Exhibit
              No. 10.1 to Form 8-K, File 1-13086, filed February 5, 1999).

10.29         Limited Partnership Agreement of Weatherford Global Compression
              Services, L.P. dated as of February 2, 1999, by and among
              Weatherford Global Compression Holding, L.L.C., Weatherford
              Enterra Compression Company, L.P. and Global Compression
              Services, Inc. (incorporated by reference to Exhibit No. 10.2 to
              Form 8-K, File 1-13086, filed February 5, 1999).

10.30         Limited Liability Company Agreement of Weatherford Global
              Compression Holding, L.L.C. dated as of February 2, 1999, by and
              between Weatherford Enterra Compression Company, L.P. and Global
              Compression Services, Inc. (incorporated by reference to Exhibit
              No. 10.3 to Form 8-K, File 1-13086, filed February 5, 1999).

10.31         Registration Rights Agreement dated as of February 2, 1999, among
              Weatherford Global Compression Services, L.P., Weatherford
              Enterra Compression Company, L.P. and Global Compression
              Services, Inc. (incorporated by reference to Exhibit No. 10.4 to
              Form 8-K, File 1-13086, filed February 5, 1999).

10.32         The Woodward, Oklahoma lease agreements as amended (incorporated
              by reference to Exhibit No. 10.32 to Form 10-K, File 1-13086,
              filed March 23, 1995).

+21.1         Subsidiaries of Weatherford International, Inc.

+23.1         Consent of Arthur Andersen LLP.

+27.1         Financial Data Schedule.
</TABLE>
================================

*     Management Contract or Compensatory Plan or Arrangement

+     Filed herewith

      As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has
      not filed with this Annual Report on Form 10-K certain instruments
      defining the rights of holders of long-term debt of the Company and its
      subsidiaries, because the total amount of securities authorized under any
      of such instruments does not exceed 10% of the total assets of the
      Company and its subsidiaries on a consolidated basis. The Company agrees
      to furnish a copy of any of such instruments to the Securities and
      Exchange Commission upon request.