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Previous: FINANCIAL ASSET SECURITIES CORP, 424B5, 1997-04-11 |
Next: WEBSECURE INC, NT 10-Q, 1997-04-11 |
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 27, 1997
-------------------------------
3-D GEOPHYSICAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-27564 13-3841601
- --------------------------------------------------------------------------------
(State or other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
7076 South Alton Way, Building H, Englewood, Colorado 80112
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 290-0214
----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.*
(b) Pro Forma Financial Information.*
* Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
3-D GEOPHYSICAL, INC.
By: /s/ Joel Friedman
-----------------------
Name: Joel Friedman
Title: Chairman
Date: April 10, 1997
<PAGE>
GARRETT POWER CHARTERED ACCOUNTANTS
January 24, 1997
Auditors' Report
To the Shareholders of J.R.S. Exploration Company Limited:
We have audited the balance sheets of J.R.S. Exploration Company Limited as at
November 30, 1996 and 1995 and the statements of operations and retained
earnings and changes in financial position for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at November 30, 1996 and 1995
and the results of its operations and changes in its financial position for the
years then ended in accordance with generally accepted accounting principles in
Canada.
/s/ GARRETT POWER
- ---------------------
Chartered Accountants
Calgary, Alberta
<PAGE>
J.R.S. Exploration Company Limited
Balance Sheet
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
November 30
1996 1995
---- ----
ASSETS
Current assets:
<S> <C> <C>
Cash and term deposits $ 346,019 $ 711,698
Accounts receivable 3,666,481 1,855,745
Income taxes recoverable - 35,751
Prepaid expenses 41,780 77,191
Current portion of agreement receivable 100,000 66,666
------------------- ----------------
4,154,280 2,747,051
Fixed assets (Note 2) 4,263,817 5,430,531
Agreement receivable (Note 3) - 33,334
------------------- ----------------
$ 8,418,097 $ 8,210,916
================== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank loan (Note 4) $ 340,000 $ 200,000
Cheques issued in excess of bank balance 724,280 -
Accounts payable (Note 10) 1,808,455 1,395,532
Income taxes payable 509,191 -
Advances from related parties (Note 5) - 160,811
Current portion of long term debt 1,423,050 1,552,533
------------------- ----------------
4,804,976 3,308,876
Long term debt (Note 6) 108,047 1,488,829
Deferred income taxes 34,463 304,538
Shareholders' equity:
Share capital (Note 7) 66 66
Retained earnings 3,470,545 3,108,607
------------------- ----------------
3,470,611 3,108,673
------------------- ----------------
$ 8,418,097 $ 8,210,916
=================== ================
</TABLE>
<PAGE>
J.R.S. Exploration Company Limited
Statement of Operations and Retained Earnings
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Years Ending November 30
1996 1995
---- ----
Revenue:
<S> <C> <C>
Seismic revenue $ 12,532,451 $ 11,074,354
Interest 33,996 71,002
------------------- ----------------
12,566,447 11,145,356
Direct expenses:
Consulting and management 522,338 425,785
Recording equipment repairs and maintenance 2,034,497 1,205,215
Small tools and field supplies 31,765 31,129
Turnkey costs (Note 10) 1,727,969 2,459,422
Vehicle and equipment rentals (Note 10) 371,206 343,969
Vehicle repairs and fuel 472,446 412,325
Wages and benefits, including office 3,669,788 3,146,860
Depreciation 1,950,929 1,971,583
------------------- ----------------
10,780,938 9,996,288
------------------- ----------------
Gross profit 1,785,509 1,149,068
General and administrative expenses (Schedule) 1,230,161 1,238,547
------------------- ----------------
Income (loss) before following 555,348 (89,479)
Gain on sale of fixed assets 68,199 4,507
------------------- ----------------
Income (loss) before provision for income taxes 623,547 (84,972)
Provision for (recovery of) income taxes (Note 8):
Current 531,684 117,514
Deferred (270,075) (182,454)
-------------------- -----------------
261,609 (64,940)
------------------- -----------------
Net income (loss) for the year 361,938 (20,032)
Retained earnings at beginning of year 3,108,607 3,128,639
------------------- ----------------
Retained earnings at end of year $ 3,470,545 $ 3,108,607
=================== ================
</TABLE>
-2-
<PAGE>
J.R.S. Exploration Company Limited
Schedule of General and Administration
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Years Ending November 30
1996 1995
---- ----
<S> <C> <C>
Depreciation $ 29,571 $ 33,406
Entertainment 115,218 77,125
Freight 55,097 33,687
Insurance and licenses 145,736 150,457
Interest and bank charges 23,231 19,435
Interest on long term debt 206,860 396,647
Office and miscellaneous 162,404 189,182
Professional fees 91,500 17,713
Rent, utilities and taxes (Note 10) 130,856 143,816
Telephone 90,935 87,886
Travel 178,753 89,193
------------------- ----------------
$ 1,230,161 $ 1,238,547
================== ===============
</TABLE>
-3-
<PAGE>
J.R.S. Exploration Company Limited
Statement of Changes in Financial Position
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Years Ending November 30
1996 1995
---- ----
Operations:
<S> <C> <C>
Net income (loss) for the year $ 361,938 $ (20,032)
Add: Items not requiring a current cash
outlay --
Depreciation 1,980,500 2,004,989
Deferred income taxes (270,075) (182,454)
Gain on sale of fixed assets (68,199) (4,507)
-------------------- -----------------
Funds from operations 2,004,164 1,797,996
Increase in non-cash working capital (817,460) (270,008)
Investing:
Acquisition of fixed assets: (815,147) (285,410)
Proceeds on sale of fixed assets 69,560 8,150
Decrease in investment tax credits - 55,843
-------------------- -----------------
Cash used in investing (745,587) (221,417)
--------------------- ------------------
Financing:
Decrease in long term debt (1,510,265) (2,079,356)
Decrease in advances from related
parties (160,811) (326,000)
--------------------- ------------------
Cash used in financing (1,671,076) (2,405,356)
--------------------- ------------------
Decrease in cash* (1,229,959) (1,098,785)
Cash at beginning of year 511,698 1,610,483
-------------------- -----------------
Cash at end of year $ (718,261) $ 511,698
==================== =================
</TABLE>
* For the purpose of this statement, cash is defined as cash and term
deposits, net of bank loan and cheques issued in excess of bank balance.
-4-
<PAGE>
J.R.S. Exploration Company Limited
Notes to Financial Statements
November 30, 1996
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES:
Depreciation -
Depreciation is calculated using the straight-line (equipment - 20%) and
declining balance (vehicles - 30%; office - 20%) methods at rates which
will depreciate the assets over their estimated useful lives.
2. FIXED ASSETS:
Fixed assets are recorded at cost and comprised of the following:
<TABLE>
<CAPTION>
1996 1995
Accumulated Net Book Net Book
Cost Depreciation Value Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equipment $ 12,418,707 $ 8,786,264 $ 3,632,443 $ 4,872,841
Vehicles 1,667,303 1,189,929 477,374 411,403
Office 352,732 198,732 154,000 146,287
---------------- ----------------- ----------------- -----------------
$ 14,438,742 $ 10,174,925 $ 4,263,817 $ 5,430,531
============ ============ ============= =============
</TABLE>
3. AGREEMENT RECEIVABLE:
The agreement receivable is unsecured, bears interest at 7% and is
repayable in annual installments of $33,333 plus interest. The 1995 and
1996 installments are in arrears.
4. BANK LOANS:
The revolving bank loans are payable on demand and bear interest at prime
plus 1/2% on the first $250,000 and prime plus 1% on the remainder.
Security on the loan is described in Note 6.
-5-
<PAGE>
J.R.S. Exploration Company Limited
Notes to Financial Statements
November 30, 1996
- --------------------------------------------------------------------------------
5. ADVANCES FROM RELATED PARTIES:
The advances from related parties, including shareholders and companies
controlled by shareholders, are non-interest bearing and have no fixed
terms of repayment. The loans were repaid in fiscal 1996.
<TABLE>
<CAPTION>
6. LONG-TERM DEBT:
1996 1995
---- ----
Bank loans, bearing interest at prime + 1 1/2%,
are payable on demand. The bank has agreed to
accept blended monthly installments of
<S> <C> <C>
$144,000. $ 1,344,424 $ 2,711,997
Finance contracts, bearing interest at rates
ranging from 8.9% to 13%, repayable in
blended monthly installments. The contracts ____________ ___________
will be repaid at various times to April 1999. 186,673 227,367
Loan, repaid in fiscal 1996 - 101,998
1,531,097 3,041,362
Less: amount due within one year 1,423,050 1,552,533
-------------- -------------
$ 108,047 $ 1,488,829
============== =============
</TABLE>
The bank loans are secured by a general security agreement, a debenture
providing a first charge on specific equipment and a floating charge on
all assets of the Company and postponement of claim by certain
shareholders and directors.
The finance contracts are secured by specific equipment and vehicles.
Estimated principal repayments over the next three years are as follows:
1997 $ 1,423,050
1998 $ 98,381
1999 $ 9,666
-6-
<PAGE>
J.R.S. Exploration Company Limited
Notes to Financial Statements
November 30, 1996
- --------------------------------------------------------------------------------
7. SHARE CAPITAL:
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
Authorized -
Unlimited number of Class A voting shares
Unlimited number of Class B non-voting shares
Unlimited number of Class D preferred shares
Issued -
33 Class A voting shares
33 Class B non-voting shares $ 66 $ 66
============== ==============
8. INCOME TAXES:
The income tax provision on the income statements differs from the
expected income tax provision as follows:
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Expected income taxes @ 44.62% $ 278,229 $ (37,677)
Add (deduct) effects of:
Small business tax reduction (51,000) (51,000)
Non deductible expenses 34,380 23,737
---------------- ----------------
$ 261,609 $ (64,940)
============== ================
</TABLE>
9. COMMITMENTS:
Effective January 1, 1997, the Company amended the lease agreement, with
a related company (see Note 10), for their business premises. The amended
lease calls for annual payments of $79,188 and expires in May 2001.
-7-
<PAGE>
J.R.S. Exploration Company Limited
Notes to Financial Statements
November 30, 1996
- --------------------------------------------------------------------------------
10. RELATED PARTY TRANSACTIONS:
The following summarizes transactions and balances with Companies which
are owned by parties related to the shareholders:
1996 1995
---- ----
Pavelow Investments Ltd. $ 96,840 $ 96,840
Rent charged on premises
Malpaso Surveys Ltd.
Survey fees charged $ 218,753 $ 280,707
Balance included in accounts payable $ 30,036 $ 28,109
C.M.J. Holdings Ltd.
Equipment lease charges $ 42,185 $ 42,185
Sale of leased equipment $ 36,500 -
Balance included in accounts payable $ - $ 67,909
-8-
<PAGE>
3-D GEOPHYSICAL INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
3-D J.R.S. U.S.$ Pro Forma Adjusted
Geophysical U.S. GAAP Adjustments Pro Forma
----------- --------- ----------- ---------
ASSETS
<S> <C> <C> <C> <C>
Cash and Cash equivalents 17,624 257 (2,665) A 15,216
Restricted cash 820 - - 820
Accounts receivable
Trade 11,268 2,721 - 13,989
Other 282 - - 282
Deferred income tax asset 108 - - 108
Prepaid expenses and other assets 999 105 (49) B 1,055
-------- ------------ -------- --------
Total current assets 34,034 3,083 (2,714) 34,403
Property and equipment, net 35,529 3,165 124 C 38,818
Goodwill 6,115 - 2,641 D 8,756
Other assets 1,588 - (24) B 1,564
-------- --------------- -------- --------
Total assets 77,266 6,248 27 83,541
======== ============= ======== ========
LIABILITIES
Current liabilities
Current maturities of long-term debt
and capital leases 7,559 1,846 - 9,405
Accounts payable 12,912 1,342 - 14,254
Accrued liabilities 1,560 - - 1,560
Income taxes payable - 378 - 378
Deferred revenue 1,536 - - 1,536
-------- --------------- -------- --------
Total current liabilities 23,567 3,566 - 27,133
======== ============= ======== ========
Long-term debt and capital leases 4,597 80 - 4,677
Deferred income tax liability 937 26 - 963
Stockholders' equity
Preferred stock - - - -
Common Stock 111 - 3 E 114
Additional paid-in capital 51,426 - 2,600 F 54,026
Retained earnings 739 2,575 (2,575) G 739
Cumulative foreign currency
translation adjustments (4,111) 1 (1) G (4,111)
-------- -------------- -------- --------
Total stockholders' equity 48,165 2,576 27 50,768
-------- ------------- -------- --------
Total liabilities and stockholders' equity 77,266 6,248 27 83,541
======== ============= ======== ========
</TABLE>
-9-
<PAGE>
For purpose of these calculations, an exchange rate of $.73 to C$1.00 is used.
A - Cash consideration for the purchase price of J.R.S. Exploration and
Siegfried & Siegfried Resource Consultants, Ltd.
B - Reflects the elimination of a current receivable and long-term receivable
included in other assets in the accompanying pro forma balance sheet due from
Siegfried & Siegfried Resource Consultants, Ltd. totalling C$100,000
(approximately $73,000) that is eliminated upon the acquisition of Siegfried &
Siegfried Resource Consultants, Ltd.
C - Estimated fair market value of recording assets acquired through the
acquisition of Siegfried & Siegfried Resource Consultants, Ltd.
D - Associated goodwill generated through the acquisition of J.R.S. Exploration
and Siegfried & Siegfried Resource Consultants, Ltd. calculated as follows:
<TABLE>
<CAPTION>
(in thousands)
$Canadian $U.S.
--------- -----
<S> <C> <C>
Total Purchase Price 6,850 5,000
Total Purchase Price of Siegfried & Siegfried Ltd. 300 219
Receivable eliminated through acquisition of Siegfried
& Siegfried Ltd. 100 73
-------------------------------
Total Purchase Price 7,250 5,292
Fair market value of underlying net assets and liabilities
of J.R.S. Exploration 3,462 2,527
Estimated fair market value of Siegfried & Siegfried
Resource Consultants, Ltd. assets 170 124
-------------------------------
3,632 2,651
-------------------------------
Goodwill 3,618 2,641
===============================
</TABLE>
E - Par value of shares issued ($.01 per share)
F - Additional paid-in capital
G - Purchase price adjustments eliminating existing retained earnings and
translation adjustments at J.R.S. Exploration
-10-
<PAGE>
3-D GEOPHYSICAL INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
AS OF YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
A
Recapitalized J.R.S. U.S.$ Pro Forma Adjusted
3-D Geophysical U.S. GAAP Adjustments Pro Forma
--------------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues 9,825 8,061 - 17,886
Expenses:
Cost of data acquisition 5,968 5,841 (52) B 11,757
Depreciation and amortization 662 1,435 211 C 2,308
General and administrative expenses 1,038 599 - 1,637
-------- ----------- ---------- ---------
Total operating expenses 7,668 7,875 159 15,702
Operating income 2,157 186 (159) 2,184
Other income (expenses):
Interest expense (803) (303) - (1,106)
Foreign currency transaction gains (120) - - (120)
Miscellaneous 503 55 - 558
--------- ----------- --------- ---------
Income before provision for income 1,737 (62) (159) 1,516
taxes
Provision for income taxes 130 (47) (56) 27
--------- ------------- ---------- ---------
Net income 1,607 (15) (103) 1,489
======== ------------ ---------- ---------
</TABLE>
A - The acquisitions of Geovaluaciones S.A. de C.V. ("Geovaluaciones") and
Procesos Interactivos Avanzados, S.A. de C.V. ("PIASA") which occurred on
February 6, 1996 were treated as a recapitalization of Geovaluaciones and PIASA
with Geovaluaciones (combined with PIASA) as the acquiror and predecessor of 3-D
Geophysical.
B - Elimination of rental expense paid by J.R.S. Exploration to Siegfried &
Siegfried Resource Consultants Ltd. in the amount of $52,000 for the year ended
December 31, 1995.
C - To record amortization of goodwill associated with J.R.S. Exploration and
Siegfried & Siegfried Resource Consultants Ltd. over 15 years and incremental
depreciation associated with the acquisition of the recording assets of
Siegfried and Siegfried Resource Consultants Ltd. in the amount of $176,000 and
$35,000 for the goodwill amortization and asset depreciation, respectively.
-11-
<PAGE>
3-D GEOPHYSICAL INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
A
Recapitalized J.R.S. U.S.$ Pro Forma Adjusted
3-D Geophysical U.S. GAAP Adjustments Pro Forma
<S> <C> <C> <C> <C>
Net revenues 51,754 9,264 - 61,018
Expenses:
Cost of data acquisition 40,032 6,527 (80) B 46,479
Depreciation and amortization 4,106 887 211 C 5,204
General and administrative expenses 6,002 1,464 - 7,466
-------- --------------- ----------- ---------
Total operating expenses 50,140 8,878 131 59,149
Operating income 1,614 386 (131) 1,869
Other income (expenses):
Interest expense (1,021) - - (1,021)
Foreign currency transaction (losses) (91) - - (91)
Miscellaneous 797 75 - 872
-------- -------------- ----------- ---------
Income before provision for income taxes 1,299 461 (131) 1,629
Provision for income taxes 470 193 (46) 617
-------- -------------- ----------- ---------
Income from continuing operations 829 268 (85) 1,012
-------- -------------- ----------- ---------
</TABLE>
A - The acquisitions of Geovaluaciones S.A. de C.V. ("Geovaluaciones") and
Procesos Interactivos Avanzados, S.A. de C.V. ("PIASA") which occurred on
February 6, 1997 were treated as a recapitalization of Geovaluaciones and PIASA
with Geovaluaciones (combined with PIASA) as the acquiror and predecessor of 3-D
Geophysical.
B - Elimination of rental expense paid by J.R.S. Exploration to Siegfried &
Siegfried Resource Consultants Ltd. in the amount of $80,000 for the year ended
December 31, 1995.
C - To record amortization of goodwill associated with J.R.S. Exploration and
Siegfried & Siegfried Resource Consultants Ltd. over 15 years and incremental
depreciation associated with the acquisition of the recording assets of
Siegfried and Siegfried Resource Consultants Ltd. in the amount of $176,000 and
$35,000 for the goodwill amortization and asset depreciation, respectively.
-12-
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