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Conformed Copy
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 31, 1997
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-22097-NY 11-2908692
(State or jurisdiction of (Commission (I.R.S. employer
incorporation or organization) File Number) identification number)
5151 San Felipe, Suite 450
Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 621-7911
Former name or former address if changed since last report: Not Applicable
<PAGE>
Purpose of this Amendment
On January 15, 1998, the registrant filed its Form 8-K for the acquisition
of ITS Supply Corporation by a wholly-owned subsidiary, IWC Services, Inc.
Financial information required under Item 7 and Regulation S-B Item 310 was not
available at the time of the filing. The purpose of this amendment is to include
the required proforma information and audited financial statements of the
aquired assets, liabilities assumed and statements of operations.
Item 2. Acquisition or Disposition of Assets.
On December 31, 1997, IWC Services, Inc., a wholly-owned subsidiary of
Boots & Coots International Well Control, Inc. (the " Company"), completed the
acquisition of 100% of the outstanding shares of common stock of ITS Supply
Corporation, a Delaware Corporation ("ITS Supply"), from LaSalle Cattle Company,
Ltd., a Texas Limited Partnership. ITS Supply is a Houston based ISO 9002
certified, materials and equipment procurement, transportation and logistics
company that serves the energy industry world-wide, with offices in Houston,
Venezuela, Peru, Dubai (UAE) and the United Kingdom.
The purchase price for ITS Supply was $6,000,000 US of which $5,000,000 was
funded on January 2, 1998. Of the funding, $4,500,000 was provided to IWC
Services, Inc. by the Company which in turn borrowed the money on 120 day terms
from Geneva Associates, L.L.C. and Main Street Merchant Partners II, L.P. and
$500,000 was provided from working capital. The remaining $1,000,000 was
provided by seller's notes and scheduled to have been paid by IWC Services, Inc.
in installments of $250,000 and $750,000 on January 31, 1998 and on February 28,
1998, respectively. The maturity dates have been extended March 31, 1998. The
purchase price of the shares of common stock was determined through arms'-length
negotiations conducted by the principals of the Company and LaSalle Cattle
Company, Ltd.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial Statements and Pro Forma Financial Information.
The financial statement information required under Regulation S-B Item 310
is included after the signature page as follows:
Proforma Unaudited Combined Balance Sheet, which includes September 30, 1997
Boots & Coots International Well Control, Inc. Balance Sheet unaudited
information, September 30, 1997 International Tool & Supply unaudited detail of
assets purchased and liabilities assumed, proforma adjustments and proforma
unaudited combined balance sheets.
The Twelve Months Ended June 30, 1997 IWC Services, Inc. (the surviving
operating entity of the Boots & Coots International Well Control, Inc.) Income
Statement, the Twelve Months Ended March 31, 1997 International Tool & Supply
Income Statement, proforma adjustments and the proforma unaudited combination
thereof.
The Three Months Ended September 30, 1997 IWC Services, Inc. (the surviving
operating entity of the Boots & Coots International Well Control, Inc.) Income
Statement, the Three Month Ended September 30, 1997 International Tool & Supply
Income Statement, proforma adjustments and the proforma unaudited combination
thereof.
Audited Statement of Assets to be Acquired and Liabilities to be assumed
together with the Auditor's report.
<PAGE>
b. Exhibits.
2.1 Stock Purchase Agreement dated December 31, 1997 between LaSalle
Cattle Company, Ltd. and IWC Services, Inc. Exhibit 2.1 is
incorporated herein by reference to Form 8-K filed January 15,
1998
99.1 Press release dated January 5, 1998. Exhibit 99.1 is incorporated
herein by reference to Form 8-K filed January 15, 1998.
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.
Date: March 16, 1998 Boots & Coots International Well Control, Inc.
By: /s/ Thomas L. Easley
--------------------------------------------
Thomas L. Easley
Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated statements of operations of
the Company for the year ended June 30, 1997 and the three months ended
September 30, 1997 and the unaudited pro forma consolidated balance sheet of the
Company as of September 30, 1997 (the "Unaudited Pro Forma Consolidated
Financial Statements") give effect to (i) the acquisition of ITS Supply
Corporation under the purchase method of accounting, (ii) the borrowing by the
Company of $39.4 million, plus an estimated $475,000 in related financing costs,
to finance the acquisition of ITS Supply Corporation.
The unaudited pro forma consolidated statement of operations for the year
ended June 30, 1997 and the three months ended September 30, 1997 were prepared
assuming that the transactions described above were consummated as of the
beginning of each period presented. The unaudited pro forma consolidated balance
sheet as of September 30, 1997 includes the historical purchase accounting
entries made for the ITS acquisition of Supply Corporation and was prepared
assuming that the transactions described in (ii) and (iii) above were
consummated as of December 31,1997.
The Unaudited Pro Forma Consolidated Financial Statements are based upon
the historical consolidated and combined financial statements of the Company and
ITS Subsidiary and should be read in conjunction with those consolidated and
combined financial statements and historical summary and the notes thereto. The
results of the interim periods presented are not necessarily indicative of the
results to be expected of an entire year.
The pro forma adjustments and the resulting Unaudited Pro Forma
Consolidated Financial Statements have been prepared based upon available
information and certain assumptions and estimates deemed appropriate by the
Company. A final determination of required purchase accounting adjustments, and
the allocation of the purchase price to the assets acquired and liabilities
assumed based on their respective fair values, has not yet been made.
Accordingly, the purchase accounting adjustments for the ITS Supply Corporation
Acquisition reflected in the pro forma information are preliminary and have been
made solely for purposes of developing such information. The Company's
management believes, however, that the pro forma adjustments and the underlying
assumptions and estimates reasonably present the significant effects of the
transactions reflected therein and that any subsequent changes in the underlying
assumptions and estimates will not materially affect the Unaudited Pro Forma
Consolidated Financial Statements presented herein. The Unaudited Pro Forma
Consolidated Financial Statements do not purport to represent what the Company's
financial position or results of operations actually would have been had
acquisition of ITS Supply Corporation, occurred on the dates indicated or to
project the Company's financial position or results of operations for any future
date or period. Furthermore, the Unaudited Pro Forma Consolidated Financial
Statements do not reflect changes that may occur as the result of post-
combination activities and other matters.
<PAGE>
Boots & Coots International Well Control, Inc.
Proforma Statement of Assets Acquired and Liabilities Assumed
September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Boots & Coots
International International Combined
Well Control, tool & Supply, Proforma Proforma
Inc. Inc adjustments Balance Sheet
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments $ 2,754,580 $ 99,347 $ (384,347) $ 2,469,580
Accounts receivable 2,249,357 14,025,559 (13,360,559) 2,914,357
Inventory 1,119,316 579,794 787,875 2,486,985
Prepaid expenses and other 239,903 176,430 104,430 520,763
----------- ----------- ----------- -------------
Total current assets 6,363,156 14,881,130 (12,852,601) 8,391,685
----------- ----------- ----------- -------------
PROPERTY AND EQUIPMENT, at cost
Property and equipment 7,403,168 378,557 229,393 8,011,118
Less: Accumulated depreciation (275,637) (96,123) 96,123 (275,637)
----------- ----------- ----------- -------------
7,127,531 282,434 325,516 7,735,481
OTHER ASSETS, Net 983,626 7,743 2,957,778 3,949,147
----------- ----------- ----------- -------------
Total Assets $14,474,313 $15,171,307 $(9,569,307) $ 20,076,313
=========== =========== =========== =============
CURRENT LIABILITIES:
Accounts payable $ 1,242,994 $ 35,223 $ 66,777 $ 1,344,994
Accrued expenses 96,277 8,071,277 (8,071,277) 96,277
Notes payable-current 2,250,934 - 5,500,000 7,750,934
----------- ----------- ----------- -------------
Total Liabilities 3,590,205 8,106,500 (2,504,500) 9,192,205
----------- ----------- ----------- -------------
Subordinated debt 90,000 - - 90,000
Equity 10,794,108 7,064,807 (7,064,807) 10,794,108
----------- ----------- ----------- -------------
Total Liabilities & Equity $14,474,313 $15,171,307 $(9,569,307) $ 20,076,313
=========== =========== =========== =============
</TABLE>
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Boots & Coots International Well Control, Inc.
Proforma Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Boots & Coots
International International
Well Control, tool & Supply, Proforma Proforma
Inc. Inc adjustments Combined
----------- ------------- ----------- -------------
Twelve Months Twelve Months
Ended June 30, ended March 31,
1997 1997
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
REVENUES $1,662,121 $41,817,234 --- 43,479,355
OPERATING EXPENSES:
Cost of sales 1,320,702 39,246,290 --- 40,566,992
Depreciation & amortization 49,893 82,996 73,850 206,739
General and administrative expenses 772,626 2,477,005 3,946,569
----------- ----------- ----------- -------------
Total operating expenses 2,143,221 41,806,291 73,850 44,220,295
---------- ----------- ----------- -------------
INCOME (LOSS) FROM OPERATIONS (481,100) 10,943 (73,850) (740,940)
---------- ----------- ----------- -------------
Interest-additional --- --- 660,000 (660,000)
Net Income (Loss) Before Taxes $ (481,100) $ 10,943 $ (733,850) $ (1,400,940)
========== =========== =========== =============
</TABLE>
Boots & Coots International Well Control, Inc.
Proforma Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Proforma
Boots & Coots Combined
International International Statement of
Well Control, tool & Supply, Proforma Revenues and
Inc. Inc adjustments Operations
----------- ------------- ----------- -------------
Three Months Three Months
Ended September 30, ended September 30,
1997 1997
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
REVENUES $2,094,510 $16,181,000 18,275,510
OPERATING EXPENSES:
Cost of sales 1,190,639 14,952,000 16,142,639
Depreciation & amortization 196,158 48,000 6,155 250,313
General and administrative expenses 790,242 864,000 1,654,242
----------- ----------- ----------- -------------
Total operating expenses 2,177,039 15,864,000 (6,155) 18,047,194
----------- ----------- ----------- -------------
INCOME (LOSS) FROM OPERATIONS $ (82,529) $ 317,000 (6,155) 228,316
----------- ----------- ----------- -------------
Interest-additional --- --- 165,000 165,000
Net Income (Loss) Before Taxes $ (82,529) $ 317,000 $ (171,155) $ 63,316
========== =========== =========== =============
</TABLE>
<PAGE>
LOGISTICS AND SUPPLY DIVISION OF
ITS INVESTMENTS, INC.
STATEMENT OF ASSETS TO BE ACQUIRED AND
LIABILITIES TO BE ASSUMED
AS OF MARCH 31, 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ITS Investments, Inc.:
We have audited the accompanying statement of assets to be acquired and
liabilities to be assumed of the Logistics and Supply Division of ITS
Investments, Inc. (as defined in Note 1, the Supply Division), as of March 31,
1997, and the related statements of revenues and operating expenses for each of
the two years in the period ended March 31, 1997. These statements are the
responsibility of the Supply Division's management. Our responsibility is to
express an opinion on these 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 statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the statements. We believe that
our audits provide a reasonable basis for our opinion.
The statements have been prepared pursuant to the purchase agreement described
in Note 3 between ITS Supply Corporation and International Tool & Supply
Company, Inc., dated December 31, 1997, and are not intended to be a complete
presentation of the Supply Division's assets and liabilities or its revenues and
operating expenses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets to be acquired and liabilities to be assumed
of the Supply Division as of March 31, 1997, and the revenues and operating
expenses of the Supply Division for each of the two years in the period ended
March 31, 1997, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen
Houston, Texas
March 5, 1998
<PAGE>
LOGISTICS AND SUPPLY DIVISION OF
ITS INVESTMENTS, INC.
STATEMENTS OF ASSETS TO BE ACQUIRED
AND LIABILITIES TO BE ASSUMED
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS TO BE ACQUIRED 1997 1997
- --------------------- -------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments.. $ 304,632 $ 68,857
Accounts receivable.................. 354,670 892,247
Inventory............................ 794,631 1,570,352
Prepaid expenses and other........... 236,050 140,120
---------- ----------
Total current assets.............. 1,689,983 2,671,576
PROPERTY AND EQUIPMENT, at cost:
Property and equipment............... 538,019 926,730
Less- Accumulated depreciation and
amortization...................... (230,092) (340,388)
---------- ----------
307,927 586,342
OTHER ASSETS, net..................... 10,100 26,163
---------- ----------
Total assets to be acquired....... $2,008,010 $3,284,081
========== ==========
LIABILITIES TO BE ASSUMED
- ------------------------------
CURRENT LIABILITIES:
Accounts payable..................... $ 797,876 $1,519,236
Accrued expenses..................... 138,549 82,612
COMMITMENTS AND CONTINGENCIES
---------- ----------
Total liabilities to be assumed...... $ 936,425 $1,601,848
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
LOGISTICS AND SUPPLY DIVISION OF
ITS INVESTMENTS, INC.
STATEMENTS OF REVENUES AND OPERATING EXPENSES
<TABLE>
<CAPTION>
Nine Months
Ended December 31 Year Ended March 31
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES............................. $34,526,687 $25,924,290 $41,817,234 $21,838,145
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Cost of sales....................... 31,512,218 24,182,911 39,246,290 19,774,061
Depreciation........................ 121,169 61,119 82,996 81,492
General and administrative expenses. 2,735,368 1,799,755 2,477,005 2,899,620
----------- ----------- ----------- -----------
Total operating expenses........ 34,368,755 26,043,785 41,806,291 22,755,173
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS........ $ 157,932 $ (119,495) $ 10,943 $ (917,028)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
LOGISTICS AND SUPPLY DIVISION OF
ITS INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
1. BASIS OF PRESENTATION
AND ACCOUNTING POLICIES:
Principles of Combination
The combined financial statements include certain accounts of ITS Supply &
Logistics Inc. (ISLI), ITS Venezuela S.A. (IVSA), ITS Peru S.A. (IPSA) and ITS
Supply & Logistics UK Limited (ISLUK) (collectively, "the Logistics and Supply
Division of ITS Investments, Inc.," or "the Supply Division"), all of which are
corporations that are wholly owned subsidiaries of International Tool & Supply
Company, Inc. (ITSCI) (a Delaware corporation). The accounts included in the
financial statements represent the assets to be acquired and liabilities to be
assumed, along with the related revenues and operating expenses, which are to be
acquired by ITS Supply Corporation (see Note 3). All material intercompany
balances and transactions have been eliminated in combination.
Business
The Supply Division provides procurement and logistical services primarily to
international oil and gas companies.
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 and disclosure of
contingent 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.
Cash and Temporary Cash Investments
For purposes of the statement of assets to be acquired and liabilities to be
assumed, the Supply Division considers all highly liquid debt instruments
purchased with a maturity of three months or less to be temporary cash
investments.
Concentrations of Credit Risk
Financial instruments which potentially subject the Supply Division to
concentrations of credit risk consist principally of trade receivables. The
Supply Division's revenues are derived principally from uncollateralized sales
to customers in the international oil and gas industry. This industry
concentration has the potential to impact the Supply Division's exposure to
credit risk, either positively or negatively, because the customers may be
similarly affected by changes in economic or other conditions. Management of
the Supply Division believes that accounts receivable are well diversified,
thereby reducing potential credit risk to the Supply Division.
<PAGE>
Property and Equipment
Property and equipment is carried at cost. Depreciation of assets is computed
primarily using the straight-line method with three-year to 10-year lives. When
assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period. The cost of maintenance and repairs is
charged to income as incurred; significant renewals and betterments are
capitalized.
Sales to Significant Customers
During the year ended March 31, 1996, sales to one of the Supply Division's
largest customers accounted for approximately 14 percent of the Supply
Division's total revenues. During the year ended March 31, 1997, sales to
another of the Supply Division's largest customers accounted for approximately
54 percent of the Supply Division's total revenues.
Allocation of General
and Administrative Expenses
Included in general and administrative expenses is a portion of ITSCI's general
and administrative expenses that are allocated to the Supply Division based on
its historic expense as a percentage of ITSCI's total general and administrative
expenses, as calculated using the following methods:
a. Percentage of total square footage for office rental expense.
b. Insurance policy rates on revenues and property values for insurance
expenses.
c. Volume of activities for accounting department expenses.
d. Amount of telephone usage for telephone expenses.
e. Percentage of employees for personnel department expenses.
Based on historic trends, the use of these methods resulted in the Supply
Division being responsible for an average of 58 percent of ITSCI's total general
and administrative expenses. This percentage was applied consistently for the
periods presented.
During the years ended March 31, 1997 and 1996, the Supply Division recorded
$51,960 and $136,725 in interest expense related to borrowings held by ITSCI.
As these borrowings will not be acquired in the purchase (see Note 3), the
related interest expense has not been reflected in these financial statements.
<PAGE>
Income Taxes
The Supply Division operated as a subsidiary of ITS Investments, Inc., and ITS
plc, which filed separate federal income tax returns, including the operations
of the Supply Division, and thus the Supply Division did not file separate tax
returns for federal income taxes. Accordingly, no income tax provision has been
made in the accompanying financial statements. Reference is made to the
unaudited pro forma financial statements which reflect the adjustment for the
provision for income taxes.
Reclassifications
Certain reclassifications have been made to conform prior-year amounts to
current-year presentation.
RELATED-PARTY TRANSACTIONS:
The Supply Division leases office space from a company which is owned by a
shareholder and director of ITS plc, the parent company of ITSCI. The lease
expires June 30, 1999. Rent expense totaling $217,000 was paid by ITSCI for the
years ended March 31, 1997 and 1996, and was allocated to general and
administrative expenses of the Supply Division as discussed above.
3. SUBSEQUENT EVENT:
On December 31, 1997, ITSCI entered into an agreement with ITS Supply
Corporation to sell certain assets and liabilities of ISLI and all of its
ownership interest in and all of the issued and outstanding stock of IVSA, IPSA
and ISLUK. The acquired assets included inventory, tangible personal property,
real property and an intercompany receivable from IVSA to ISLI, among others.
Assets excluded from the transaction include accounts receivable and cash of
ISLI. Liabilities assumed include purchase orders for inventory and accounts
payable. Liabilities excluded primarily represent debt and acquisition-related
expenses.
