<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO CURRENT REPORT ON FORM 8-K
ON
FORM 8-K/A
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 1995
ENERGY VENTURES, INC.
(Exact name of registrant as specified in charter)
Delaware 0-7265 04-2515019
(State of Incorporation) (Commission Filed No.) (I.R.S. Employer
Identification No.)
5 Post Oak Park, Suite 1760,
Houston, Texas 77027-3415
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 297-8400
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<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Page 2
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Prideco, Inc.:
We have audited the accompanying consolidated balance sheets of Prideco, Inc.
(a Texas corporation), and subsidiaries as of June 30, 1995 and 1994, and the
related consolidated statements of income, changes in shareholders' investment
and cash flows 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. Those standards require that we plan and perform the audit to
obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Prideco, Inc., and
subsidiaries as of June 30, 1995 and 1994, and the results of their operations
and their cash flows for the years then ended, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
July 31, 1995
<PAGE> 4
PRIDECO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--JUNE 30, 1995 AND 1994
(Note 1)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash $ 533,189 $ 28,598
Accounts receivable, trade (net of allowance for doubtful accounts
of $84,457 and $58,910, respectively) 8,901,963 6,685,910
Income taxes receivable - 30,560
Inventories 12,536,256 14,940,153
Deferred income taxes (Note 4) 321,314 76,662
Prepaid expenses and other 123,314 650,148
----------- -----------
Total current assets 22,416,036 22,412,031
----------- -----------
INVESTMENT IN JOINT VENTURE (Note 2) 273,830 273,830
----------- -----------
PROPERTY, PLANT AND EQUIPMENT 12,879,214 12,260,479
Less- Accumulated depreciation (5,993,638) (4,858,333)
----------- -----------
Property, plant and equipment, net 6,885,576 7,402,146
----------- -----------
OTHER ASSETS, net 226,966 284,278
----------- -----------
$29,802,408 $30,372,285
=========== ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term notes payable (Note 3) $13,337,849 $ 1,779,649
Accounts payable 4,732,458 3,207,485
Accrued liabilities 1,947,601 1,400,926
Income tax payable 91,616 -
----------- -----------
Total current liabilities 20,109,524 6,388,060
LONG-TERM NOTES PAYABLE, less current maturities (Note 3) 289,143 15,016,878
DEFERRED FEDERAL INCOME TAXES (Note 4) 678,256 643,530
REDEEMABLE PREFERRED STOCK, $.05 par value; 1,891,891 shares
authorized, issued and outstanding (Note 3) 4,048,647 3,859,458
SHAREHOLDERS' INVESTMENT:
Common stock, $.10 par value; 12,608,109 shares authorized,
2,644,775 shares issued and outstanding in 1995 and 1994 264,477 264,477
Additional paid-in capital 350,856 350,856
Retained earnings 4,061,505 3,849,026
----------- -----------
Total shareholders' investment 4,676,838 4,464,359
----------- -----------
$29,802,408 $30,372,285
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
PRIDECO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED JUNE 30, 1995 AND 1994
(Note 1)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
SALES $55,238,997 $46,427,802
COST OF GOODS SOLD 47,192,544 39,839,719
----------- -----------
Gross profit 8,046,453 6,588,083
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,821,387 3,365,960
----------- -----------
Operating income 4,225,066 3,222,123
OTHER INCOME (EXPENSE):
Interest expense (1,444,409) (1,001,895)
Acquisition expenses (1,416,783) -
Other expense, net (190,845) (195,060)
----------- -----------
Income before income taxes 1,173,029 2,025,168
PROVISION (BENEFIT) FOR INCOME TAXES (Note 4):
Current 981,287 499,517
Deferred (209,926) 200,233
----------- -----------
771,361 699,750
----------- -----------
NET INCOME $ 401,668 $ 1,325,418
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
PRIDECO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT
FOR THE YEARS ENDED JUNE 30, 1995 AND 1994
(Note 1)
<TABLE>
<CAPTION>
Common Stock
Issued
--------------------- Additional
Par Paid-In Retained
Shares Value Capital Earnings Total
--------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, June 30, 1993 2,644,775 $264,477 $350,856 $2,883,066 $3,498,399
ACCRETION OF REDEEMABLE
PREFERRED STOCK - - - (359,458) (359,458)
NET INCOME - - - 1,325,418 1,325,418
--------- -------- -------- ---------- ----------
BALANCE, June 30, 1994 2,644,775 264,477 350,856 3,849,026 4,464,359
ACCRETION OF REDEEMABLE
PREFERRED STOCK - - - (189,189) (189,189)
NET INCOME - - - 401,668 401,668
--------- -------- -------- ---------- ----------
BALANCE, June 30, 1995 2,644,775 $264,477 $350,856 $4,061,505 $4,676,838
========= ======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
PRIDECO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1995 AND 1994
(Note 1)
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 401,668 $ 1,325,418
Adjustments to reconcile net income to net cash provided by (used
in) operating activities-
Depreciation and amortization 1,255,894 1,240,061
Provision (benefit) for deferred income taxes (209,926) 200,233
Increase in accounts receivable, net (2,216,053) (2,310,446)
(Increase) decrease in inventories 2,403,897 (5,682,672)
(Increase) decrease in prepaid expenses and other 526,834 (331,286)
Increase in accounts payable 1,524,973 1,081,595
Increase (decrease) in accrued liabilities 546,675 (268,204)
Decrease in income taxes receivable 30,560 469,615
Increase in income taxes payable 91,616 -
----------- ------------
Net cash provided by (used in) operating activities 4,356,138 (4,275,686)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (682,011) (786,773)
Investment in joint venture - (192,191)
----------- ------------
Net cash used in investing activities (682,011) (978,964)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) pursuant to revolving line-of-credit
loan agreement established in March 1994 (2,059,870) 11,532,570
Net payments pursuant to line-of-credit agreement retired in March 1994 - (10,000,000)
Payment on convertible subordinated note payable - (1,000,000)
Payments on long-term notes payable (1,109,666) (292,562)
Proceeds from issuance of term loan pursuant to the Credit
Facility agreement - 5,000,000
----------- ------------
Net cash provided by (used in) financing activities (3,169,536) 5,240,008
----------- ------------
NET INCREASE (DECREASE) IN CASH 504,591 (14,642)
CASH, beginning of year 28,598 43,240
----------- ------------
CASH, end of year $ 533,189 $ 28,598
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
PRIDECO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS, ORGANIZATION AND
SIGNIFICANT ACCOUNTING POLICIES:
Business and Organization
Prideco, Inc. (a Texas corporation), and its wholly owned subsidiaries (the
Company or Prideco) are engaged in the manufacture of drill collars,
heavyweight drill pipe, drill pipe and in the heat-treating of casing and other
steel products. The consolidated financial statements include the accounts of
Prideco and its wholly owned subsidiaries. All significant intercompany
balances have been eliminated in consolidation.
Acquisition of Prideco, Inc.
Effective June 30, 1995, Prideco was acquired by Energy Ventures Inc. (EVI)
through a merger of Grant Acquisition Company, a wholly owned subsidiary of
EVI, with and into Prideco and all preferred and common stock of Prideco was
converted into EVI common stock. The accompanying financial statements as of
June 30, 1995, have been prepared assuming the acquisition was effective on
July 1, 1995. On June 30, 1995, and in connection with the acquisition, EVI
retired all the Prideco outstanding debt under the line of credit and bank term
note (see Note 3). In connection with the acquisition, Prideco recognized
expenses relating to the acquisition in the amount of $1,416,783 which are
reflected in the accompanying statement of income for the year ended June 30,
1995.
Reclassifications
Certain reclassifications have been made in the 1994 statements to conform to
1995 presentation.
Concentration of 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; however, in
certain circumstances, the Company may require letters of credit from its
customers. The Company maintains reserves for potential credit losses, and
actual losses have historically been within the Company's expectations.
Inventories
Inventories are valued at cost, determined on a weighted average method which
approximates first-in, first-out (FIFO) basis but not in excess of net
realizable value. Inventory cost includes material, labor and manufacturing
overhead. Inventories as of June 30, 1995 and 1994, are comprised of the
following:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Raw materials $ 3,435,442 $ 6,404,434
Work in process 5,185,482 4,873,778
Finished products 3,915,332 3,661,941
------------ ------------
Total inventories $ 12,536,256 $ 14,940,153
============ ============
</TABLE>
<PAGE> 9
-2-
Property, Plant and Equipment
Property, plant and equipment are presented at cost. The costs of major
renewals and betterments are capitalized; repairs and maintenance costs are
expensed. Depreciation is computed for financial reporting purposes using both
straight-line and accelerated methods. A summary of the cost of property,
plant and equipment and the estimated useful lives for financial reporting
purposes as of June 30, 1995 and 1994, is as follows:
<TABLE>
<CAPTION>
Estimated
1995 1994 Useful Lives
------------- ------------ ------------
<S> <C> <C> <C>
Land $ 1,001,953 $ 1,001,953 -
Machinery and equipment 9,287,388 8,833,752 5-10 years
Office furniture and fixtures 229,678 217,627 5-7 years
Buildings 2,287,657 2,171,293 30-32 years
Construction in progress 72,538 35,854
------------- ------------
$ 12,879,214 $ 12,260,479
============= ============
</TABLE>
Construction in progress relates to property improvements at the heat treat and
drill collar facilities.
2. INVESTMENT IN JOINT VENTURE:
In July 1993, the Company, through one of its subsidiaries, entered into an
agreement with a Venezuelan company to form a joint venture, Prideco de
Venezuela, S.A. (PDV or the Joint Venture), a Venezuelan corporation. The
purpose of the Joint Venture is to manufacture, assemble, sell and service
heavy-weight drill pipe and drill collars in the Republic of Venezuela. The
Company owns 49 percent of PDV and shares equally in profits and losses of the
Joint Venture. The Company accounts for this investment using the equity
method.
Under the terms of the Joint Venture agreement, the Company contributed
$192,191 in cash and an asset with a carrying value of $81,639 to PDV in fiscal
year 1994. Included in the accompanying consolidated statements of income for
the years ended June 30, 1995 and 1994, is $132,125 and $193,028, respectively,
in sales to the Joint Venture. The accompanying consolidated balance sheet as
of June 30, 1995 and 1994, includes accounts receivable of the Company from PDV
of $73,330 and $17,945, respectively.
During 1995 and 1994, the Company recorded no profits or losses to the
investment as the joint ventures operations were minimal during fiscal 1995 and
1994. Prideco's investment in the Joint Venture was $273,830 at June 30, 1995
and 1994.
3. DEBT:
Line of Credit
On June 30, 1995, and in connection with the acquisition of Prideco (see Note
1), all outstanding debt under the line of credit and term note were paid in
full by EVI.
Through March 1994, the Company had a line of credit with a bank which provided
for borrowings up to the lesser of a borrowing base or $15,000,000. On March
23, 1994, the Company replaced this line of credit with an $18.0 million
revolving credit facility (the Credit Facility) with a bank, which consists of
a $5,000,000 term loan and a revolving line of credit not to exceed a borrowing
base, as defined, or $20 million less all outstanding amounts under the term
loan. Principal amounts borrowed pursuant to the term loan are due in monthly
payments of $84,000. The unpaid balance of the term loan, together with the
unpaid balance of
<PAGE> 10
-3-
all amounts borrowed pursuant to the line of credit, is due on March 23, 1996.
The Credit Facility provides for a prepayment premium equal to 1 percent of
amounts prepaid before March 23, 1996. Amounts outstanding under the revolving
line of credit accrue interest at prime or LIBOR plus various interest rates
(9.7 percent at June 30, 1995) and are secured by substantially all of the
assets of the Company. The Credit Facility agreement requires, among other
things, that the Company (a) declare no dividends, (b) incur no additional
indebtedness and (c) maintain various financial covenants including a maximum
amount of capital expenditures, a maximum ratio of debt to adjusted tangible
net worth, a minimum fixed charge coverage ratio, a minimum current ratio and a
minimum amount of adjusted tangible net worth, all of which are defined by the
Credit Facility agreement.
Long-Term Notes Payable
Notes payable at June 30, 1995 and 1994, consisted of the following:
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
Borrowings pursuant to line-of-credit agreement established in March 1994 $ 9,472,700 $ 11,532,570
Term note payable to a bank 3,740,000 4,748,000
Notes payable to investment groups, bearing interest at 8%, principal and
interest are payable in monthly installments of $2,805 with the unpaid balance
due on August 30, 1998, secured by buildings and land 201,360 218,174
Other notes payable, bearing interest from zero percent to 8%, a portion of which
is secured by buildings and land 212,932 297,783
------------- ------------
13,626,992 16,796,527
Less- Current maturities of long-term notes payable (13,337,849) (1,779,649)
------------- ------------
$ 289,143 $ 15,016,878
============= ============
</TABLE>
The debt outstanding at June 30, 1995, matures as follows:
<TABLE>
<S> <C>
1996 $ 13,337,849
1997 31,136
1998 33,720
1999 224,287
2000 and thereafter -
------------
$ 13,626,992
============
</TABLE>
During the years ended June 30, 1995 and 1994, the Company made interest
payments of $1,341,928 and $1,047,112, respectively.
The Company has bank letters of credit of approximately $356,915 outstanding at
June 30, 1995, to customers, arising out of normal business operations. The
letters of credit expire at various times through fiscal 1996.
Redeemable Preferred Stock
On June 30, 1995, and in connection with the acquisition of Prideco (see Note
1), all preferred stock of Prideco was converted to EVI common stock.
In August 1992, the shareholders of the Company agreed to exchange the
$3,500,000 of subordinated notes payable to them by the Company for 1,891,891
shares of redeemable preferred stock of the Company. The preferred stock is
redeemable at the option of the Company at a redemption price of $1.85 per
share through March 31, 1993, at which time the redemption price increases by 5
percent and will increase by an additional
<PAGE> 11
-4-
5 percent each March 31 until all preferred stock has been fully redeemed. The
difference between the redemption value and the carrying value of the
redeemable preferred stock at the date of issue has been accreted by a charge
to retained earnings during the redemption period. For the period beginning
July 1, 1995, and ending September 30, 1995, each holder of preferred stock
which had not been redeemed at June 30, 1995, shall have the right to convert
all outstanding preferred stock into the Company's common stock, at the rate of
one common share for each .85 shares of preferred stock. The preferred stock
is nonvoting and bears no dividend. In addition, the Company can pay no
dividend on its common stock as long as any preferred stock is outstanding.
4. INCOME TAXES:
The Company accounts for income taxes pursuant to Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109),
which provides, among other things, for the recognition and presentation of
deferred tax assets and liabilities for the future tax consequences of
temporary differences between the financial statement basis and the tax basis
of assets and liabilities using the tax rates in effect during the period when
taxes are actually paid or recovered. Accordingly, income tax provisions will
increase or decrease in the same period in which a change in tax rates is
enacted.
A reconciliation of the statutory tax rates during the period to the effective
tax rate follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Statutory federal income tax rate 34.0% 34.0%
Business combination expenses currently expensed for books 29.0 -
Effect of other nondeductible expenses 2.7 0.6
---- ----
Effective tax rate 65.7% 34.6%
==== ====
</TABLE>
The deferred income tax provision (benefit) for income before income taxes
primarily consisted of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Accruals not currently deductible for tax purposes $ (68,333) $ 17,844
Excess of tax under financial deductions for reserves (177,926) 20,739
Excess of tax over financial deduction related to depreciation 15,576 52,580
Utilization of alternative minimum tax credit carryforward - 171,500
Other 20,757 (62,430)
---------- ----------
Deferred income tax provision (benefit) $ (209,926) $ 200,233
========== ==========
</TABLE>
The primary components of the Company's net current deferred tax assets and net
noncurrent deferred tax liabilities are as follows. No valuation allowance has
been provided on the deferred tax assets at June 30, 1995 and 1994.
<TABLE>
<CAPTION>
June 30
------------------------
1995 1994
---------- ----------
<S> <C> <C>
Excess of tax under financial deduction for reserves $ 197,955 $ 20,029
Book accruals not currently deductible for tax purposes 109,574 69,311
Other 13,785 (12,678)
---------- ----------
Net current deferred tax asset $ 321,314 $ 76,662
========== ==========
Tax depreciation in excess of book depreciation $ 613,213 $ 597,637
Cost capitalized for book purposes 65,043 45,893
---------- ----------
Net noncurrent deferred tax liability $ 678,256 $ 643,530
========== ==========
</TABLE>
<PAGE> 12
-5-
During the year ended June 30, 1995 and 1994, the Company made federal income
tax payments of $872,000 and $500,000, respectively.
5. SIGNIFICANT VENDORS AND CUSTOMERS:
During the years ended June 30, 1995 and 1994, the Company made purchases from
three and two vendors, respectively, which accounted for 39 percent and 27
percent, respectively, of total material purchases.
During the years ended June 30, 1995 and 1994, the Company made sales to one
customer which accounted for 12 percent and 10 percent, respectively, of total
product sales.
6. RELATED PARTIES:
During the year ended June 30, 1995, the Company made sales to and purchases
from affiliates of EVI in the amount of $231,000 and $149,000, respectively.
Included in accounts receivable and accounts payable in the accompanying
balance sheet as of June 30, 1995, is $24,700 and $18,200, respectively, of
receivables from and payables to these affiliates.
7. 401(k) SAVINGS AND RETIREMENT PLAN:
In August 1993, the Company adopted a 401(k) savings and retirement plan (the
Savings Plan). The plan is designed to qualify under Section 401(k) of the
Internal Revenue Code of 1986. Under the terms of the Savings Plan, the
Company is required to make matching contributions equal to 10 percent of each
participant's eligible contributions, up to a maximum of $100 matching
contribution per participant. The Savings Plan also provides for a
discretionary employer contribution to be decided annually by the Company.
During 1995 and 1994, the Company made matching contributions to the Savings
Plan totaling $9,188 and $4,276, respectively. No discretionary employer
contributions were made in fiscal 1995 or 1994.
8. COMMITMENTS AND CONTINGENCIES:
Operating Leases
Operating lease commitments for facilities and equipment require minimum annual
payments of $22,900 for fiscal year 1996, $22,200 for 1997 through 1998 and
$14,800 for 1999. There are no future lease commitments thereafter. Total
rent expense for the years ended June 30, 1995 and 1994, was $64,928 and
$59,393, respectively.
Sales Commitments
The Company has agreements with three of its customers to sell merchandise to
them over the next year for specified prices. The Company's aggregate
commitment under sales agreements was approximately $6,049,833 at June 30,
1995.
<PAGE> 13
(B) PRO FORMA FINANCIAL INFORMATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
The following tables set forth the unaudited pro forma condensed
consolidated statements of income for the Company for the year ended December
31, 1994, and the six months ended June 30, 1995, after giving effect to the
Company's acquisition on June 30, 1995, of Prideco in consideration of
2,255,198 shares of Common Stock. The pro forma financial information assumes
that the acquisition occurred as of January 1, 1994. The Prideco acquisition
was accounted for using the purchase method of accounting.
The unaudited pro forma condensed consolidated statements of income
are based upon estimates and assumptions related to the accounting for the
Prideco acquisition which are subject to subsequent determination and more
detailed analyses, appraisals and evaluations of the specific assets and
liabilities. The final allocation of the purchase price of the Prideco
acquisition may differ from the amounts contained in these unaudited pro forma
condensed consolidated statements of income.
The following unaudited pro forma condensed consolidated statements of
income should be read in conjunction with the Consolidated Financial Statements
of the Company and the related notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 and the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,1995 as well as the
audited consolidated financial statements of Prideco for the fiscal year ended
June 30, 1995 and related notes thereto included elsewhere herein. The
historical results of Prideco for the pro forma condensed consolidated
statements of income reflect the twelve month period ended December 31, 1994
and the six month period ended June 30, 1995, which differs from the audited
June 30, 1995 fiscal year financial statements of Prideco. The pro forma
information is not necessarily indicative of the results that might have
occurred had the Prideco acquisition taken place at the beginning of the period
specified and is not intended to be a projection of future results.
Page 13
<PAGE> 14
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1994
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Prideco
Company Prideco Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
------------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . $ 248,537 $ 50,654 $ --- $ 299,191
------------- ---------- ----------- -------------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . 181,137 43,018 --- 224,155
Selling, general and administrative
expenses . . . . . . . . . . . . . . . 47,931 3,541 422 (a) 51,894
------------- ---------- ----------- -------------
229,068 46,559 422 276,049
------------- ---------- ----------- -------------
Operating income . . . . . . . . . . . . . 19,469 4,095 (422) 23,142
------------- ---------- ----------- -------------
Other income (expense):
Interest expense, net . . . . . . . . . . (13,505) (1,299) 1,236 (b) (13,568)
Other, net . . . . . . . . . . . . . . . 484 (210) --- 274
------------- ---------- ----------- -------------
(13,021) (1,509) 1,236 (13,294)
------------- ---------- ----------- -------------
Income before income taxes . . . . . . . . 6,448 2,586 814 9,848
Provision for income taxes . . . . . . . . (1,806) (921) (269)(c) (2,996)
------------- ---------- ----------- -------------
Income from continuing operations . . . . . $ 4,642 $ 1,665 $ 545 $ 6,852
============= ========== =========== =============
Earnings per share from continuing operations. $ 0.37 $ 0.46
Weighted average shares outstanding . . . . 12,629 14,930
</TABLE>
Page 14
<PAGE> 15
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Six Months Ended June 30, 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Prideco
Company Prideco Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
--------------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . $ 152,407 $ 29,548 $ --- $ 181,955
------------- ----------- ----------- -------------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . 112,806 25,301 --- 138,107
Selling, general and administrative
expenses . . . . . . . . . . . . . . . 26,060 1,981 211 (a) 28,252
------------- ----------- ----------- -------------
138,866 27,282 211 166,359
------------- ----------- ----------- -------------
Operating income . . . . . . . . . . . . . 13,541 2,266 (211) 15,596
------------- ----------- ----------- -------------
Other income (expense):
Interest expense, net. . . . . . . . . . (8,161) (700) 685 (b) (8,176)
Other, net . . . . . . . . . . . . . . . (7) (1,502) 1,417 (c) (92)
-------------- ----------- ----------- --------------
(8,168) (2,202) 2,102 (8,268)
------------- ----------- ----------- -------------
Income before income taxes . . . . . . . . 5,373 64 1,891 7,328
Provision for income taxes . . . . . . . . (1,989) (378) (414)(d) (2,781)
------------- ----------- ----------- -------------
Income (loss) from continuing operations . $ 3,384 $ (314) $ 1,477 $ 4,547
============= =========== =========== =============
Earnings per share from continuing operations $ 0.27 $ 0.30
Weighted average shares outstanding . . . . 12,672 14,914
</TABLE>
Page 15
<PAGE> 16
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma condensed consolidated statements of income. The pro forma
adjustments are based on estimates made by the Company's management using
information currently available. For purposes of preparing these unaudited pro
forma condensed consolidated statements of income, certain assumptions have
been made in allocating the purchase price of Prideco to the assets acquired
and liabilities assumed. As a result, the pro forma adjustments discussed
below are subject to change pending the completion of the detailed evaluation
of the assets acquired and liabilities assumed.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying unaudited pro forma condensed
consolidated statements of income are described below:
(a) To record amortization expense relating to the estimated
$16.9 million excess of cost over the fair market value of net
tangible assets acquired in connection with the acquisition
of Prideco.
(b) To reduce interest expense to reflect the retirement of
Prideco's outstanding debt at the date of acquisition
including revolving lines of credit.
(c) To eliminate expenses incurred by Prideco relating to the
Company's acquisition of Prideco.
(d) To reflect the estimated income tax provision related to the
effect of the pro forma adjustments.
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<PAGE> 17
(C) EXHIBITS.
2.1 Agreement and Plan of Merger dated as of May 22, 1995, as amended by
Amendment No. 1 dated as of June 30, 1995, by and among Prideco, Inc.,
Christiana Companies, Inc., William Chunn, Donald Morris, Sandra
Hamilton, the Company and Grant Acquisition Company.
*23.1 Consent of Arthur Andersen LLP, with respect to financial statements
of Prideco, Inc.
99.1 Press Release of the Company dated July 3, 1995.
- ---------------
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENERGY VENTURES, INC.
Dated: May 7, 1996 /s/Frances R. Powell
---------------------------------------
Frances R. Powell
Vice President, Accounting & Controller
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<PAGE> 19
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------- -----------
23.1 Consent of Arthur Andersen LLP, with respect to financial statements
of Prideco, Inc.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated July 31, 1995 on our audits of the
consolidated financial statements of Prideco, Inc. and subsidiaries included in
the Energy Ventures, Inc. Form 8-K/A dated August 17, 1995, as amended by
Amendment No. 2 to the Form 8-K/A dated May 7, 1996, into the Company's
previously filed Registration Statement File Nos. 33-31662, 33-56384, 33-56386,
33-65790, 33-77960 and 33-64349.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Houston, Texas
May 7, 1996
