<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TUBOSCOPE INC.
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(Name of Issuer)
Common Stock, $.01 par value
--------------------------------
(Title of Class of Securities)
898600 10 1
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(CUSIP Number)
Wallace K. Chan
Varco International, Inc.
743 North Eckhoff Street
Orange, California 92868
Tel No.: (714) 978-1900
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(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
With a copy to:
Larry M. Meeks, Esq.
Pircher Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90067
Telephone: (310) 201-8900
March 22, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box: [_]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
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*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 898600 10 1
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Varco International, Inc.
I.R.S. Employer Identification No. 95-0472620
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC, BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
California
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH:
7. SOLE VOTING POWER: 8,908,653 Shares*
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 8,908,653 Shares*
10. SHARED DISPOSITIVE POWER: None
11. AGGREGATE AMOUNT BENEFICIALLY
OWNED BY REPORTING PERSON: 8,908,653 Shares*
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [_]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 16.6%
14. TYPE OF REPORTING PERSON: CO
* Varco International, Inc. ("Varco") has the right, under certain
circumstances, to purchase up to 8,908,653 shares of the Common Stock, $.01 par
value, of Tuboscope Inc. ("Tuboscope Common Stock") pursuant to the terms and
conditions of the Tuboscope Stock Option Agreement, dated as of March 22, 2000,
between Tuboscope and Varco. This option is not currently exercisable, and
until the option becomes exercisable and is exercised, Varco does not have any
right to vote (or to direct the voting of) or dispose (or to direct the
disposition of) any shares of Tuboscope Common Stock that may be purchased upon
exercise of the option. Accordingly, Varco expressly disclaims beneficial
ownership of all shares of Tuboscope Common Stock that may be purchased upon
exercise of the option.
<PAGE>
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Statement") relates to the Common Stock,
$.01 par value per share (the "Tuboscope Common Stock"), of Tuboscope Inc., a
Delaware corporation ("Tuboscope"). The principal executive offices of
Tuboscope are located at 2835 Holmes Road, Houston, Texas 77051.
Item 2. Identity and Background.
The name of the person filing this Statement is Varco International, Inc., a
California corporation ("Varco"), with its principal office at 743 North Eckhoff
Street, Orange, California 92868. Varco and its subsidiaries design,
manufacture, sell and rent drilling tools, equipment and integrated systems and
rig instrumentation used for oil and gas well drilling. The name, business
address, present principal occupation or employment, and citizenship of each
director and executive officer of Varco is set forth on Schedule A hereto.
During the last five years, neither Varco, nor to the best of its knowledge, any
of the persons listed on Schedule A attached hereto nor any other person
controlling Varco, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 4 hereof, Varco has entered into the Tuboscope
Stock Option Agreement (as defined in Item 4 below) with Tuboscope. Pursuant to
the Tuboscope Stock Option Agreement, Tuboscope has, among other things, granted
Varco an irrevocable option (the "Option") to acquire up to 8,908,653 shares of
Tuboscope Common Stock (subject to adjustment), at an exercise price per share
equal to $17.00 (the "Exercise Price"). The Option may only be exercised upon
the happening of certain events, which are outlined in Item 4 hereof. If the
Option were to become exercisable, the aggregate exercise price required to
purchase all shares of Tuboscope Common Stock subject to the Option would be
$151,447,101. At any time that the Option is exercisable pursuant to its terms,
Varco may elect, in lieu of exercising the Option to purchase Tuboscope Common
Stock in whole or in part, to require Tuboscope to pay to Varco an amount per
share (the "Spread") equal to the excess, if any, over the Exercise Price of the
higher of (x) the Alternative Purchase Price (as such term is defined in the
Tuboscope Stock Option Agreement) and (y) the average of the closing sales
prices of the Tuboscope Common Stock on the New York Stock Exchange ("NYSE") for
the five trading days ending five days prior to the date notice is given by
Varco to Tuboscope. Varco currently anticipates that all funds to be paid by it
upon any exercise of the Option would be provided by available working capital
and borrowings under its existing Credit Agreement with Union Bank of
California, N.A., Morgan Guaranty Trust Company of New York, and The Chase
Manhattan Bank, or other credit facilities to be arranged prior to exercise.
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No monetary consideration was paid by Varco to Tuboscope in connection with
entering into the Merger Agreement (as such term is defined in Item 4 below) or
the Tuboscope Stock Option Agreement. The description of the Tuboscope Stock
Option Agreement contained herein is qualified in its entirety by reference to
the Tuboscope Stock Option Agreement which is included as Exhibit 10.2 to the
Current Report on Form 8-K filed by Varco on March 24, 2000.
Item 4. Purpose of Transaction.
On March 22, 2000, Varco and Tuboscope entered into a stock option agreement,
dated as of March 22, 2000 (the "Tuboscope Stock Option Agreement") pursuant to
which Tuboscope granted Varco the Option to purchase up to 8,908,653 shares of
Tuboscope Common Stock at the Exercise Price. The number of shares subject to
the option is subject to adjustment in certain circumstances, provided that the
aggregate number of shares purchasable by Varco upon the exercise of the Option
may not exceed 19.9% of the total outstanding shares of Tuboscope Common Stock
immediately prior to the time of such exercise. The Option will, subject to
certain limitations, become exercisable upon the occurrence of an event the
result of which is that Varco is entitled to receive the Tuboscope Termination
Fee (as such term is defined in the Merger Agreement) pursuant to Section
8.03(c) of the Merger Agreement (a "Purchase Event"), as more fully set forth in
the Tuboscope Stock Option Agreement and the Merger Agreement. In no event may
the Total Profit (as such term is defined in the Tuboscope Stock Option
Agreement) of Varco in respect of the Stock Option Agreement and the Tuboscope
Termination Fee exceed $35 million. In addition, in no event may the Option be
exercised for a number of shares as would, as of the date of the notice of
exercise, result in a Notional Total Profit (as such term is defined in the
Tuboscope Stock Option Agreement) to Varco in respect of the Option and the
Tuboscope Termination Fee in excess of $35 million. No Purchase Event has
occurred at the time of this filing.
As described under Item 3 above, at any time that the Option is exercisable
pursuant to its terms, Varco may elect, in lieu of exercising the Option in
whole or in part, to require Tuboscope to pay to Varco an amount per share equal
to the Spread. In addition, in the event that Varco exercises the Option, at
any time prior to 30 days after the first anniversary of the Merger Termination
Date (as such term is defined in the Tuboscope Stock Option Agreement) Varco may
require Tuboscope to repurchase any shares purchased upon such exercise at a
price per share equal to the greater of (i) the Alternative Purchase Price (as
such term is defined in the Tuboscope Stock Option Agreement) and (ii) the
average of the closing sales prices of Tuboscope Common Stock on the NYSE for
the five trading days prior to the date notice is given by Varco to Tuboscope.
Tuboscope generally has a right of first refusal over any shares purchased by
Varco pursuant to the Option until earlier of (i) the occurrence of a Change in
Control Event (as such term is defined in the Tuboscope Stock Option Agreement)
and (ii) 30 days after the first anniversary of the Merger Termination Date. In
addition, if a Change in Control Event has not occurred prior to the first
anniversary of the Merger Termination Date, Tuboscope has the right exercisable
for 30 days following such anniversary to repurchase all, but not less than all,
of the shares purchased pursuant to the Option at the greater of (i) the
Exercise Price and (ii) the average closing price of Tuboscope Common Stock on
the NYSE for the five trading days ending five days prior to the date notice is
given by Tuboscope to Varco.
Varco will have certain rights to require the registration under applicable
securities laws of any shares purchased pursuant to the Option if required for
sale of the shares.
<PAGE>
Varco has granted to Tuboscope a substantially similar option to purchase up to
13,023,985 shares of Varco's Common Stock, at an exercise price of $14.56 per
share pursuant to a stock option agreement (the "Varco Stock Option Agreement"),
dated as of March 22, 2000, the provisions of which substantially correspond to
the related provisions of the Tuboscope Stock Option Agreement. Reference is
hereby made to the Varco Stock Option Agreement and the Tuboscope Stock Option
Agreement (together, the "Stock Option Agreements"), which are included as
Exhibits 10.1 and 10.2, respectively, to the Current Report on Form 8-K filed by
Varco on March 24, 2000, for the full text of their terms, including the
conditions upon which they may be exercised. The Stock Option Agreements are
incorporated herein by reference in their entirety.
The Option was granted by Tuboscope as an inducement to Varco to enter into the
Agreement and Plan of Merger (the "Merger Agreement") dated as of March 22,
2000, by and between Tuboscope and Varco. Pursuant to the Merger Agreement and
subject to the terms and conditions set forth therein (including approval by the
stockholders of Tuboscope and Varco and various regulatory agencies), Varco will
merge with and into Tuboscope (the "Merger") with Tuboscope continuing as the
surviving corporation (the "Surviving Corporation"), and each issued and
outstanding share of Varco's Common Stock (other than dissenting shares and any
shares owned by Varco or Tuboscope) will be converted into 0.7125 shares of
Tuboscope Common Stock. If the Merger is consummated, the Option expires and
cannot be exercised.
Pursuant to the Merger Agreement, at the effective time of the Merger, the
certificate of incorporation of Tuboscope will be amended to change its name to
Varco International, Inc., and as so amended, will be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law. The by-laws of Tuboscope, as in
effect immediately prior to the effective time of the Merger, will be the by-
laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
If the Merger is consummated, the initial Board of Directors of the Surviving
Corporation will consist of 10 members, five to be designated by Tuboscope and
five to be designated by Varco. At the effective time of the Merger, Varco's
Chairman and Chief Executive Officer, George Boyadjieff, will be the Chairman
and Chief Executive Officer of the Surviving Corporation, Tuboscope's President
and Chief Executive Officer, John Lauletta, will be President and Chief
Operating Officer of the Surviving Corporation, and Tuboscope's Chief Financial
Officer, Joseph Winkler, will be Chief Financial Officer of the Surviving
Corporation.
Reference is hereby made to the Merger Agreement, which is included as Exhibit
2.1 to the Current Report on Form 8-K filed by Varco on March 24, 2000, for the
full text of the terms and conditions of the Merger. The Merger Agreement is
incorporated herein by reference in its entirety.
<PAGE>
Item 5. Interest in Securities of the Issuer.
Pursuant to the Option, the Company has the right under certain circumstances to
purchase up to 8,908,653 shares of Tuboscope Common Stock at the Exercise Price,
subject to adjustment in certain events; provided, however, that in no event
will the number of shares for which the Option is exercisable exceed 19.9% of
the shares of Tuboscope Common Stock issued and outstanding immediately prior to
the time of exercise (without giving effect to the shares issued or issuable
under the Option). The Option becomes exercisable under certain conditions
described in Item 4 hereof. Based on the number of shares of Tuboscope Common
Stock outstanding on March 15, 2000, as represented by Tuboscope in the Merger
Agreement, Varco would beneficially own 16.6% of the shares of Tuboscope Common
Stock if the Option were exercised in full. Varco would have sole voting and
dispositive power with respect to any shares acquired upon exercise of the
Option, subject to Tuboscope's right of refusal and repurchase rights described
in Item 4 hereof.
Until the Option is exercised (if at all), Varco has no right to receive
dividends from, or the proceeds from the sale of, the shares of Tuboscope Common
Stock subject to the Option. If the Option is exercised by Varco, Varco or its
designee, if any, would have the sole right to receive dividends on the shares
of Tuboscope Common Stock acquired pursuant thereto.
Prior to the Option's becoming exercisable and being exercised, Varco expressly
disclaims beneficial ownership of the shares of Tuboscope Common Stock subject
to the Option. Neither the filing of this Schedule 13D nor any of its contents
shall be deemed to constitute an admission that Varco is the beneficial owner of
the shares of Tuboscope Common Stock subject to the Option for purposes of
Section 13(d) or 16 of the Securities Exchange Act of 1934, as amended, or for
any other purpose and such beneficial ownership is hereby expressly disclaimed.
Other than in connection with the Option, neither Varco nor, to the best
knowledge of Varco, any of the persons listed on Schedule A hereto beneficially
owns any shares of Tuboscope Common Stock. No transactions in Tuboscope Common
Stock were effected by Varco, or, to the best knowledge of Varco, any of the
persons listed on Schedule A hereto, during the preceding 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Except for the Merger Agreement and the Stock Option Agreements, there are no
contracts, arrangements, understandings or relationships (legal or otherwise)
between Varco, or to the best knowledge of Varco, any of the persons enumerated
in Item 2 and Schedule A, and any other person, with respect to any securities
of Tuboscope, including, but not limited to, transfer or voting of any of
Tuboscope's securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
<PAGE>
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Agreement and Plan of Merger, dated as of March 22, 2000, by
and between Varco International, Inc., a California corporation, and Tuboscope
Inc., a Delaware corporation (incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K of Varco International, Inc. filed on March 24,
2000).
Exhibit 2: Varco Stock Option Agreement, dated as of March 22, 2000, by
and between Tuboscope Inc., a Delaware corporation, as grantee, and Varco
International, Inc., a California corporation, as grantor (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K of Varco
International, Inc. filed on March 24, 2000).
Exhibit 3: Tuboscope Stock Option Agreement, dated as of March 22, 2000,
by and between Varco International, Inc., a California corporation, as grantee,
and Tuboscope Inc., a Delaware corporation, as grantor (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K of Varco
International, Inc. filed on March 24, 2000).
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: March 31, 2000
VARCO INTERNATIONAL, INC.
By: /s/ Donald L. Stichler
----------------------
Donald L. Stichler
Vice President, Controller-Treasurer
and Secretary
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF VARCO INTERNATIONAL, INC.
The name, citizenship, business address, title, present principal
occupation or employment of each of the directors and executive officers of
Varco International, Inc. are set forth below.
<TABLE>
<CAPTION>
Name/Citizenship* Position Employment and Address
- ---------------------------- -------------------------------------- ------------------------------------
<S> <C> <C>
Walter B. Reinhold Chairman Emeritus/Director and c/o Varco International, Inc.
Consultant 743 North Eckhoff Street
Orange, California 92868
George I. Boyadjieff Chairman of the Board and Chief c/o Varco International, Inc.
Executive Officer and Director 743 North Eckhoff Street
Orange, California 92868
Michael W. Sutherlin President and Chief Operating Officer c/o Varco International, Inc.
743 North Eckhoff Street
Orange, California 92868
Wallace K. Chan Vice President-Finance and Chief c/o Varco International, Inc.
Financial Officer 743 North Eckhoff Street
Orange, California 92868
Richard A. Kertson Retired Vice President-Finance and c/o Varco International, Inc.
Chief Financial Officer 743 North Eckhoff Street
Orange, California 92868
Donald L. Stichler Vice President, Controller-Treasurer c/o Varco International, Inc.
and Chief Accounting Officer and 743 North Eckhoff Street
Secretary Orange, California 92868
Robert J. Gondek Vice President and President - M/D c/o Varco International, Inc.
Totco Division 743 North Eckhoff Street
Orange, California 92868
Mark A. Merit Vice President and President - c/o Varco International, Inc.
Shaffer Division 743 North Eckhoff Street
Orange, California 92868
Roger D. Morgan Vice President and President - Varco c/o Varco International, Inc.
Systems Division 743 North Eckhoff Street
Orange, California 92868
</TABLE>
1
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<TABLE>
<CAPTION>
Name/Citizenship* Position Employment and Address
- ---------------------------- -------------------------------------- ------------------------------------
<S> <C> <C>
Dietmar Neidhardt President - Rigtech Division c/o Varco International, Inc.
743 North Eckhoff Street
Orange, California 92868
James G. Renfro President - Varco BJ Division c/o Varco International, Inc.
743 North Eckhoff Street
Orange, California 92868
George S. Dotson Director Director and Vice President
Helmerich & Payne, Inc.
1579 E. 21st Street
Tulsa, Oklahoma 74114
Andre R. Horn Director (Retired Chairman of the Board of
Joy Manufacturing)
c/o Varco International, Inc.
743 North Eckhoff Street
Orange, California 92868
Jack W. Knowlton Director President
The Knowlton Company
369 San Miguel, Suite 200
Newport, Beach, California 92660
Leo J. Pircher Director Partner
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Carroll W. Suggs Director Chairman of the Board, President
and CEO
Petroleum Helicopters, Inc.
2121 Airline Highway, Suite 400
Metaire, Louisiana 70001
Robert A. Teitsworth Director
Independent oil and gas producer
Foothill Properties
250 Newport Center Dr.
Suite 306
Newport Beach, California 92660
Eugene R. White Director
(Retired Chairman of the Board of
Amdahl Corporation)
c/o Varco International, Inc.
743 North Eckhoff Street
Orange, California 92868
</TABLE>
2
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<TABLE>
<CAPTION>
Name/Citizenship* Position Employment and Address
- ---------------------------- -------------------------------------- ------------------------------------
<S> <C> <C>
James D. Woods Director
(Chairman Emeritus of Baker Hughes
Incorporated)
6602 Chase Tower
600 Travis
Houston, Texas 77002
</TABLE>
*Each person listed is a citizen of the United States, except Dietmar Neidhardt,
who is a citizen of the Federal Republic of Germany.
3
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INDEX OF EXHIBITS
Exhibit 1: Agreement and Plan of Merger, dated as of March 22, 2000, by
and between Varco International, Inc., a California corporation, and Tuboscope
Inc., a Delaware corporation (incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K of Varco International, Inc. filed on March 24,
2000).
Exhibit 2: Varco Stock Option Agreement, dated as of March 22, 2000, by
and between Tuboscope Inc., a Delaware corporation, as grantee, and Varco
International, Inc., a California corporation, as grantor (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K of Varco
International, Inc. filed on March 24, 2000).
Exhibit 3: Tuboscope Stock Option Agreement, dated as of March 22, 2000,
by and between Varco International, Inc., a California corporation, as grantee,
and Tuboscope Inc., a Delaware corporation, as grantor (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K of Varco
International, Inc. filed on March 24, 2000).
