<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission file number 0-18312
--------------
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 76-0252850
--------------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2835 Holmes Road, Houston, Texas 77051
-------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
(713) 799-5100
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(Registrant's telephone number, including area code)
None
-----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13, or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
The Registrant had 18,517,394 shares of common stock outstanding as of June
30, 1995.
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets -
June 30, 1995 (unaudited) and December 31, 1994 2
Unaudited Consolidated Statements of Income -
For the Three and Six Months Ended June 30, 1995 and 1994 3
Unaudited Consolidated Statements of Cash Flows -
For the Six Months Ended June 30, 1995 and 1994 4
Notes to Unaudited Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 7-9
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 4. Submission of Matters to a vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature Page 11
Exhibit Index 12-15
Appendix A - Financial Data Schedule 16
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
1
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
----------- -------------
<S> <C> <C>
(UNAUDITED)
(IN THOUSANDS)
A S S E T S
-----------
Current assets:
Cash and cash equivalents................................................................. $ 7,788 $ 8,531
Accounts receivable, net.................................................................. 49,746 51,068
Inventory, net............................................................................ 13,815 12,431
Deferred federal income taxes............................................................. 2,701 2,701
Prepaid expenses and other................................................................ 7,513 6,263
-------- --------
Total current assets................................................................... 81,563 80,994
-------- --------
Property and equipment:
Land, buildings and leasehold improvements................................................ 92,815 89,889
Operating equipment....................................................................... 103,090 99,508
Equipment leased to customers............................................................. 3,097 3,079
Accumulated depreciation and amortization................................................. (49,753) (42,581)
-------- --------
Net property and equipment............................................................. 149,249 149,895
Identified intangibles, net................................................................. 31,077 32,139
Goodwill, net............................................................................... 48,381 49,032
Other assets, net........................................................................... 4,698 4,967
-------- --------
Total assets........................................................................... 314,968 $317,027
======== ========
L I A B I L I T I E S A N D E Q U I T Y
------------------------------------------
Current liabilities:
Accounts payable.......................................................................... 13,402 $ 15,010
Accrued liabilities....................................................................... 17,898 19,766
Federal and foreign income taxes payable.................................................. 3,867 3,787
Current portion of long-term debt and short-term borrowings............................... 6,435 6,505
-------- --------
Total current liabilities.............................................................. 41,602 45,068
Long-term debt.............................................................................. 121,920 123,851
Pension liabilities......................................................................... 10,333 9,306
Deferred taxes payable...................................................................... 13,011 13,534
Other liabilities........................................................................... 1,604 1,669
Commitments and contingencies...............................................................
-------- --------
Total liabilities...................................................................... 188,470 193,428
-------- --------
Redeemable Series A Convertible Preferred Stock, $.01 par value, 5,000,000
shares authorized, 100,000 shares issued and outstanding................................... 10,175 10,175
-------- --------
Common stockholders' equity:
Common stock, $.01 par value, 35,000,000 shares authorized, 18,517,394
shares issued and outstanding (18,466,763 at December 31, 1994).......................... 185 184
Paid-in capital.......................................................................... 116,213 115,982
Retained earnings (Accumulated deficit).................................................. 1,095 (1,469)
Cumulative translation adjustment........................................................ (1,170) (1,273)
-------- --------
Total common stockholders' equity...................................................... 116,323 113,424
-------- --------
Total liabilities and equity........................................................... 314,968 $317,027
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
2
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Revenue:
Sale of services............................................ $ 42,600 $ 41,903 $ 83,070 $ 84,084
Sale of products............................................ 2,204 2,554 4,436 5,128
Rental income............................................... 848 782 1,832 1,558
----------- ----------- ----------- -----------
45,652 45,239 89,338 90,770
----------- ----------- ----------- -----------
Costs and expenses:
Cost of services sold....................................... 32,017 31,462 63,324 64,155
Cost of products sold....................................... 1,496 1,383 2,791 2,807
Goodwill amortization....................................... 330 300 651 594
Selling, general and administrative......................... 5,140 5,658 10,337 11,146
Research and engineering costs.............................. 885 669 1,790 1,553
----------- ----------- ----------- -----------
39,868 39,472 78,893 80,255
----------- ----------- ----------- -----------
Operating profit............................................... 5,784 5,767 10,445 10,515
Other expense (income):
Interest expense............................................ 3,166 3,006 6,367 5,823
Interest income............................................. (56) (73) (104) (164)
Foreign exchange............................................ (349) 54 (945) (16)
Other, net.................................................. (97) 413 270 920
----------- ----------- ----------- -----------
Income before income taxes and extraordinary item.............. 3,120 2,367 4,857 3,952
Provision for income taxes..................................... 1,248 876 1,943 1,351
----------- ----------- ----------- -----------
Net income before extraordinary item........................... 1,872 1,491 2,914 2,601
Extraordinary item related to early retirement of
debt, net of income tax benefit of $411,000 in 1994.......... -- (764) -- (764)
----------- ----------- ----------- -----------
Net income..................................................... 1,872 727 2,914 1,837
Dividends applicable to redeemable preferred stock............. 175 175 350 350
----------- ----------- ----------- -----------
Net income applicable to common stock.......................... $ 1,697 $ 552 $ 2,564 $ 1,487
=========== =========== =========== ===========
Earnings per common share:
Income before extraordinary item and after deduction
of preferred stock dividends................................ $0.09 $0.07 $0.14 $0.12
Extraordinary item........................................... -- (0.04) -- (0.04)
----------- ----------- ----------- -----------
Net income................................................... $0.09 $0.03 $0.14 $0.08
=========== =========== ============ ===========
Weighted average number of common shares outstanding........... 18,521,966 18,436,025 18,513,116 18,429,804
=========== =========== ============ ===========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1995 1994
-------- ---------
<S> <C> <C>
(IN THOUSANDS)
Cash flows from operating activities:
Net income.................................................................. $ 2,914 $ 1,837
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................................ 7,650 7,306
Provision (recovery) for losses on accounts receivable................... (119) 68
Benefit for deferred income taxes........................................ (523) (605)
Employee savings plan expense funded by issuance of Common stock......... 231 75
Write-off of unamortized debt fees....................................... -- 1,176
Changes in current assets and liabilities, net of effects of
acquired companies:
Decrease in accounts receivable...................................... 1,441 1,068
Decrease (increase) in inventory..................................... (1,384) 102
Increase in prepaid expenses and other assets........................ (1,288) (1,940)
Decrease in accounts payable, and accrued liabilities................ (3,476) (4,183)
Increase (decrease) in federal and foreign income taxes payable...... 80 (950)
------- --------
Net cash provided by operating activities................................ 5,526 3,954
------- --------
Cash flows used in investing activities:
Capital expenditures........................................................ (3,837) (1,574)
Net assets of acquired companies, net of cash acquired...................... -- (185)
Other liability payments.................................................... -- (517)
Other....................................................................... 177 (1,703)
------- --------
Net cash used in investing activities.................................... (3,660) (3,979)
------- --------
Cash flows provided by financing activities:
Borrowings under financing agreements....................................... 502 69,477
Principal payments under financing agreements............................... (2,503) (66,394)
Foreign currency options.................................................... (258) --
Dividends paid on Redeemable Series A Convertible Preferred Stock........... (350) (350)
------- --------
Net cash provided by (used in) financing activities...................... (2,609) 2,733
------- --------
Net increase (decrease) in cash and cash equivalents.......................... (743) 2,708
Cash and cash equivalents:
Beginning of period......................................................... 8,531 2,492
------- --------
End of period............................................................... $ 7,788 $ 5,200
======= ========
Supplemental disclosure of cash flow information:
Cash paid during the six month period for:
Interest, net............................................................ $ 6,798 $ 5,798
======= ========
Taxes.................................................................... $ 1,973 $ 2,316
======= ========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
AND AS OF DECEMBER 31, 1994
1. ORGANIZATION AND BASIS OF PRESENTATION OF INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying unaudited consolidated financial statements of the
Company and its wholly-owned subsidiaries have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission.
Certain information in footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to these rules and
regulations. The unaudited consolidated financial statements included in
this report reflect all the adjustments which the Company considers
necessary for a fair presentation of the results of operations for the
interim periods covered and for the financial condition of the Company at
the date of the interim balance sheet. Results for the interim periods are
not necessarily indicative of results of the year.
The financial statements included in this report should be read in
conjunction with the audited financial statements and accompanying notes
included in the Company's 1994 Form 10-K, filed under the Securities
Exchange Act of 1934 (Commission File No. 0-18312).
2. INVENTORY
At June 30, 1995 inventories consist of the following (in thousands):
<TABLE>
<S> <C>
Components, subassemblies, and expendable parts............ $10,507
Equipment under production................................. 3,308
-------
$13,815
=======
</TABLE>
3. DIVIDEND RESTRICTIONS
Tuboscope Vetco International Inc.'s (TVI's) Senior Bank Credit Agreement
and $75 million 10.75% Senior Subordinated Notes due April 15, 2003
restrict the ability of TVI to dividend or otherwise make distributions to
the Company. The terms of the Company's Series A Convertible Preferred
Stock restrict the ability of the Company to pay dividends on its Common
Stock.
4. SUMMARIZED FINANCIAL INFORMATION OF REGISTRANT (TVI)
The following is summarized balance sheet information for TVI as of June
30, 1995 and December 31, 1994 and summarized statements of income for the
six months ended June, 1995 and 1994. Certain balances at December 31,
1994 have been reclassified to be consistent with the June 30, 1995
presentation (in thousands).
SUMMARIZED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
ASSETS
------
Current assets................. $ 93,562 $ 84,327
Noncurrent assets.............. 213,569 224,198
-------- --------
Total assets................. $307,131 $308,525
======== ========
LIABILITIES AND EQUITY
----------------------
Current liabilities............ $ 40,558 $ 44,471
Noncurrent liabilities......... 139,998 140,980
Stockholders' equity........... 126,575 123,074
-------- --------
Total liabilities and equity. $307,131 $308,525
======== ========
</TABLE>
5
<PAGE>
4. SUMMARIZED FINANCIAL INFORMATION OF REGISTRANT (TVI) (CONT'D)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------
1995 1994
---- ----
<S> <C> <C>
SUMMARIZED STATEMENTS OF INCOME
Revenue............................................................. $88,207 $89,148
======= =======
Operating profit.................................................... $10,303 $10,835
======= =======
Income before income taxes.......................................... $ 4,454 $ 4,155
======= =======
Net income.......................................................... $ 2,931 $ 1,969
======= =======
</TABLE>
6
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
RESULTS OF OPERATIONS
---------------------
REVENUE. Revenue was approximately $45.7 million and $89.3 million for the
second quarter and first six months of 1995, respectively, compared to $45.2
million and $90.8 million in the same periods of 1994.
Revenue from the Company's Oilfield Services, comprised of Inspection and
Coating, was approximately $34.3 million and $68.4 million for the second
quarter and six months ending June 30, 1995. These results represented
approximately 1% increases of $490,000 and $1.0 million compared to the second
quarter and first six months of 1994, respectively. Inspection revenue was up
$196,000 in the second quarter of 1995 compared to 1994. Second quarter 1994
Inspection results included $2.1 million in Algerian equipment sales with no
corresponding sales in the second quarter of 1995. North America Inspection
revenue was up $416,000 due to increased activity at the Company's Houston
facility and improved Canadian operations as a result of an alliance with a
major oil and gas company. Excluding the Algerian equipment sales in 1994,
International Inspection revenue was up $1.9 million mainly due to an increase
in inspection activity throughout continental Europe, particularly in the
Netherlands. International rig activity increased as the international rig
count was up 3%. North America Coating revenue was down $758,000 (or 10%),
which was reflective of an 8% drop in the North American rig count and a decline
in Coating prices. International Coating revenue was up $979,000 (or 25%) due
to increased volume in Europe which resulted from increased drilling activity by
customers and high revenue for services on non-oilfield goods.
Pipeline Services revenue was $4.0 million and $7.1 million for the second
quarter and first six months of 1995. While greater than the first quarter 1995
results of $3.0 million, the second quarter and first half of 1995 was less than
1994 revenue by $504,000 and $1.2 million, for the same periods, respectively.
The decline was due to lower prices for conventional pipeline inspection
services in the U.S. and project delays in Canada and Saudi Arabia. Although
price pressure on conventional pipeline services is expected to continue in the
second half of 1995, revenue is expected to be greater than the first half based
on the current backlog of orders and the rescheduling of inspection work by
customers from the first half of 1995 to the second half. In addition, the
Company's new TruRes/TM/ "High Resolution" pipeline tools are expected to
improve the overall pricing of Pipeline Services revenue as new tools are
introduced into the market toward the end of 1995.
Industrial Inspection revenue was $3.3 million and $7.0 million for the second
quarter and first six months of 1995, down $1.0 million and $1.4 million from
the same periods in 1994, respectively. The decline was due mainly to less work
in Saudi Arabia.
Mill Systems and Sales revenue was $3.0 million and $5.0 million for the quarter
and six months ending June 30, 1995, respectively, increases of $1.8 million and
$886,000 compared to the same periods of 1994. The increase in second quarter
results was due to revenue earned by NDT Systems (which was acquired in October
of 1994) and Mill equipment sales in the U.S.
Other revenue was $961,000 and $1.9 million for the second quarter and first six
months of 1995, decreases of $346,000 and $740,000 compared to the same periods
of 1994, respectively. The decline was due to lower tank inspection revenue in
the Chicago market and some non-profitable services which have been
discontinued.
GROSS MARGIN AND GROSS PROFIT. Gross profit was approximately $11.8 million
(25.9%) and $22.6 million (25.3%) for the second quarter and first half of 1995,
respectively, compared to $12.1 million (26.7%) and $23.2 million (25.6%) for
the second quarter and first half of 1994, respectively. The primary reason for
the decline was lower revenue and profit margins in Pipeline Services. Gross
margins (defined as revenue minus variable expenses) were 45.7% for the second
quarter of 1995 down from 46.7% in the second quarter of 1994. The gross margin
percent decline was also due to lower Pipeline Services revenue and profit
margins. Profit margins declined in Pipeline Services as a result of a decline
in conventional tool pricing, lower personnel utilization due to project delays
and TruRes/TM/ start-up costs.
7
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE COSTS. Selling, general and administrative
costs were $5.1 million and $10.3 million in the second quarter and first half
of 1995 down $518,000 and $807,000 from the same periods in 1994, respectively.
The decrease was mainly due to lower international overhead costs. The first
half 1995 selling, general, and administrative costs were equal with the second
half of 1994 as the restructuring plan implemented in 1993 and the first half of
1994 began to have a full impact during the third quarter of 1994.
RESEARCH AND ENGINEERING COSTS. Research and engineering costs were $885,000
and $1.8 million for the second quarter and first half of 1995, increases of
$216,000 and $237,000 over the same periods in 1994, respectively. The increase
was mainly due to costs associated with Truscope/TM/, the Company's new high-
speed ultrasonic inspection system.
OPERATING PROFIT. Operating profit was $5.8 and $10.4 million for the second
quarter and first six months of 1995, respectively, compared to $5.8 million and
$10.5 million for the same periods of 1994, as lower profit margins from
Pipeline Services were offset by lower selling, general, and administrative
costs.
INTEREST EXPENSE. Interest expense was $3.2 million and $6.4 million in the
three and six months ended June 30, 1995, increases of $160,000 and $544,000
compared to the same periods of 1994, respectively. The increase was due mainly
to higher interest rates on the Company's variable rate loans.
OTHER EXPENSE (INCOME). Other expense (income), which includes interest income,
foreign exchange, and other expense (net), resulted in a net gain of $502,000
for the second quarter of 1995 compared to a net loss of $394,000 in the second
quarter of 1994. Foreign exchange gains of $349,000 for the second quarter of
1995 were mainly the result of the weaker U.S. dollar and gains on foreign
subsidiaries which have U.S. dollar payables (accounts and notes). Other
expense (net) was a gain of $43,000 for the second quarter of 1995 compared to a
loss of $413,000 in 1994. The 1995 second quarter results included a net gain
of $1.7 million from an arbitration award related to the Company's acquisition
of Vetco Services in 1991 and the accrual of $1.0 million of legal and other
nonoperating costs associated with the Company's Italian affiliate.
The $1.7 million net gain from the arbitration award was the result of a dispute
between the Company and Baker Hughes Incorporated (BHI) over representations and
warranties from BHI which were included in the purchase and sale agreement for
substantially all the foreign operations of Baker Hughes Tubular Services, Inc.
(Vetco Services) in October 1991.
The $1.0 million accrual for the Italian affiliate was established as a result
of preliminary findings from an audit performed by the Company's external
auditors in the second quarter of 1995. The audit was performed due to certain
allegations relating to the former general manager of the Italian operation, who
resigned prior to the commencement of the audit. The final audit report is
expected to include findings which may result in the Italian affiliate being
liable for taxes and other costs associated with a third party vendor. The
accrual established also includes legal and accounting costs expected to be
incurred as a result of the preliminary findings. The approximate annual
revenue from the Italian operation is less than $2.5 million and net assets
approximate $6.5 million.
PROVISION FOR INCOME TAXES. The Company's effective tax rate for the second
quarter of 1995 was 40% compared to 37% in the second quarter of 1994. The 1995
higher effective tax rate was due to losses in certain foreign jurisdictions
which the Company could not benefit on a consolidated basis.
EXTRAORDINARY ITEM, NET OF INCOME TAX EFFECT. On June 30, 1994, refinancing of
TVI's senior secured term loan and revolving credit facility was completed. The
refinancing and related early retirement of existing senior debt resulted in an
extraordinary after-tax charge of $764,000 associated with the write-off of
unamortized debt fees in the second quarter of 1994.
NET INCOME. The second quarter 1995 net income was $1.9 million compared to
$727,000 in the second quarter of 1994 due to the factors discussed above.
8
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
Working capital was approximately $40.0 million at June 30, 1995, an increase of
$4.1 million from $35.9 million at December 31, 1994. The increase in working
capital was mainly due to a $1.4 million increase in inventory, a $1.2 million
increase in prepaid expenses, a $1.6 million decrease in accounts payable, and a
$2.0 million decrease in accrued liabilities. The increase in inventory was
mainly due to a large volume of TK99 coating powder purchased at a large
discount, and an increase in Mill inventory. The increase in prepaid expenses
was due to insurance payments in the second quarter of 1995 (the Company's main
insurance policies are renewed in the second quarter of each year). The
decrease in accounts payable was due to a decline in U.S. trade payables. The
decrease in accrued liabilities was due to restructuring payments made in the
first half of 1995 and employee bonus payments which were accrued in 1994.
These increases in working capital accounts were offset by a $1.3 million
decline in accounts receivable as revenue for the second quarter of 1995 was 12%
less than the fourth quarter of 1994.
Current and long-term debt was $128.3 million at June 30, 1995, a decrease of
$1.1 million from December 31, 1994. The $1.1 million decrease was mainly due
to payments on the Company's senior debt and payments on the debt related to the
Company's Aberdeen facility. The Company's outstanding debt at June 30, 1995
consisted of $75 million of 10.75% Senior Subordinated Notes due 2003, $21
million of term loans due under the Company's Senior Credit Agreement, $20.0
million due under the Company's $35 million revolving credit facility, $5.8
million of notes payable related to the construction of the Aberdeen, Scotland
coating and inspection facility, $2.5 million of notes payable related to the
acquisition of Sound Optical Systems, Inc., $2.0 million of industrial revenue
bonds, and $2.0 million of other outstanding debt.
The Company made capital expenditures of $3.8 million for the first six months
of 1995, compared to $1.6 million in the first six months of 1994. Capital
spending for the first half of 1995 was mainly related to Wellchek/TM/ units in
Europe, Truscope/TM/ (rotary ultrasonic inspection system) and TruRes/TM/ ("high
resolution" pipeline tools). The Company's planned 1995 capital spending is
expected to approximate $7 million.
OTHER. The credit agreement and indenture contain various covenants that limit
the ability of the Company, TVI, and certain subsidiaries to, among other
things, pay dividends, purchase capital stock, incur additional indebtedness,
dispose of assets and transact with affiliates. TVI is also required to
maintain, on a consolidated basis, certain minimum financial ratios, as set
forth in the agreements. In addition to the covenants and financial ratios
mentioned above, the credit agreement contains certain events of default.
Management believes it is in compliance with all covenants in the credit
agreement and indenture.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company received a favorable arbitration award in its dispute with
BHI resulting in a $1.7 million net gain. The arbitration was the
result of a dispute between the Company and BHI over representations
and warranties from BHI which were included in the purchase and sale
agreement for substantially all the foreign operations of Vetco
Services.
The Company has reached an agreement in the Artic Pipe Inspection,
Inc. vs Tuboscope Vetco International Inc. litigation whereby the case
will be dismissed with prejudice.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held June 8, 1995 for the
following purposes:
i) To elect a Board of nine (9) directors; and
ii) To approve an amendment to the amended and restated Stock Option
Plan for Key Employees and Directors of Tuboscope Vetco
International Corporation, providing for an increase in the
number of shares of the Company's Common Stock reserved for
issuance thereunder from 1,399,000 shares to 1,799,000; and
iii) To ratify the selection of Ernst & Young LLP as the Company's
independent auditors; and
iv) To transact such other business as may properly come before
the meeting.
1. Election of Directors
<TABLE>
<CAPTION>
Name For Withheld
---- ---------- --------
<S> <C> <C>
Jerome R. Baier 16,511,617 138,019
Martin G. Hubbard 16,511,617 138,019
William V. Larkin, Jr. 16,511,617 138,019
Eric L. Mattson 16,511,617 138,019
Timothy M. Pennington, III 16,511,617 138,019
Martin R. Reid 16,511,617 138,019
Patrick T. Seaver 16,511,617 138,019
James J. Shelton 16,511,617 138,019
Frederick J. Warren 16,511,617 138,019
</TABLE>
2. Proposal to amend the amended and restated Stock Option Plan for
Key Employees and Directors of Tuboscope Vetco International
Corporation, increasing the number of shares of the Company's
Common Stock reserved for issuance from 1,399,000 shares to
1,799,000:
<TABLE>
<CAPTION>
For Against Abstain
--- --------- -------
<S> <C> <C>
14,872,143 1,590,099 73,369
</TABLE>
3. Ratification of the selection of Ernst & Young as the
Company's independent auditors:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
16,581,354 47,612 20,670
</TABLE>
Item 6. Exhibits and reports of Form 8-K
(a) Exhibits -- Reference is hereby made to the Exhibit Index
commencing on page 12.
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1995.
10
<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.
TUBOSCOPE VETCO
INTERNATIONAL CORPORATION
-------------------------
(Registrant)
Date: August 14, 1995 /s/ Ronald L. Koons
----------------------- ----------------------------------
Ronald L. Koons
Executive Vice President,
Chief Financial Officer and
Treasurer (Duly Authorized Officer,
Principal Financial and Accounting
Officer)
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION NOTE NO.
----------- ------------ --------
<C> <S> <C>
3(a) Restated Certificate of Incorporation, dated March 12, 1990. (Note 7)
3(b) Amended and Restated Bylaws. (Note 2)
3(c) Certificate of Designation of Series A Convertible Preferred (Note 3)
Stock, dated October 22, 1991.
3(d) Certificate of Amendment to Restated Certificate of Incorporation (Note 10)
dated May 12, 1992.
3(e) Certificate of Amendment to Restated Certificate of Incorporation (Note 11)
dated May 10, 1994.
4(a) Stockholders' Agreement, dated May 13, 1988, between the (Note 1)
Company, Brentwood, Hub, the Management Investors, the Other
Investors, and the Institutional Investors, including the Common
Stock Registration Rights Agreement attached thereto as Exhibit A.
4(b) Purchase Agreement, dated May 13, 1988, between the Company, (Note 1)
Tuboscope Acquisition Corporation and the purchasers named on
the execution pages thereto.
4(c) Indenture (including the form of Note), dated as of April 1, 1993, (Note 4)
among Tuboscope Vetco International Inc., the Company and
Norwest Bank Minnesota, National Association, as Trustee,
regarding the 10 3/4% Senior Subordinated Notes due 2003 of
Tuboscope Vetco International Inc.
4(e) Various documentation relating to $1,000,000 Alaska Industrial
Revenue Bond financing. (Not filed herewith pursuant to Item
601(b)(4)(iii) of Regulation S-K. The Company hereby agrees to
furnish copies of relevant documentation to the Securities and
Exchange Commission upon request).
4(f) Various documentation relating to $1,000,000 Wyoming Industrial
Revenue Bond financing. (Not filed herewith pursuant to Item
601(b)(4)(iii) of Regulation S-K. The Company hereby agrees to
furnish copies of relevant documentation to the Securities and
Exchange Commission upon request).
4(g) Plan of Recapitalization. (Note 2)
4(h) Various promissory notes in the aggregate principal amount of
$4,000,000 relating to the acquisition of Sound Optics Systems,
Inc., dba South Optical Systems, Inc. (Not filed herewith pursuant
to Item 601(b)(4)(iii) of Regulation S-K. The Company hereby
agrees to furnish copies of the relevant documentation to the
Securities and Exchange Commission upon request).
4(i) Purchase Agreement, dated as of September 30, 1991, between the (Note 3)
Company and BHI Hughes Incorporated relating to Vetco Services
Acquisition.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION NOTE NO.
----------- ------------ --------
<C> <S> <C>
4(j) Secured Credit Agreement, dated June 30, 1994, between (Note 9)
Tuboscope Vetco International Inc., CTI Inspection Services Inc.,
Tuboscope Vetco Capital Corp, Tuboscope Vetco International
Corporation and ABN AMRO Bank, N.V., as Agent.
10(a) Form of Employment Agreement, dated May 13, 1988, between (Note 1)
Tuboscope Inc., the Company and William V. Larkin and
E. Wayne Overman.
10(b) Savings Investment Plan, dated May 13, 1988, as amended by (Note 1)
First Amendment to Savings Investment Plan.
10(c) Second, Third and Fourth Amendments to Savings Investment Plan. (Note 4)
10(d) Fifth, Sixth and Seventh Amendments to Savings Investment Plan. (Note 8)
10(e) Lease Agreement, dated July 1, 1981, between C.M. Thibodaux (Note 1)
Company, Ltd. and AMF Tuboscope, Inc.
10(f) Lease Agreement between Sam J. Siracusa, John Siracusa, Jr., (Note 1)
Elizabeth Ann Siracusa, Louis Anthony Siracusa, Philomena
Siracusa Archer, Catherine Agnes Siracusa, Maria Josette Siracusa,
Julie Ann Siracusa, the Succession of Joseph C. Siracusa and AMF
Tuboscope, Inc., as amended by letter agreement among the same
parties, dated June 14, 1989.
10(g) Agreement to Purchase, Sell and Sublease, dated June 9, 1980, (Note 1)
between Alaska International Construction, Inc. and AMF
Tuboscope, Inc., as amended by letter agreement, dated June 12,
1980 between the same parties.
10(h) Lease Agreement, dated June 10, 1977, between Batinorest and (Note 1)
A.M.F. France.
10(i) Supplementary Agreement Fixed Rental Scheme, dated May 19, (Note 1)
1989, between Jurong Town Corporation and AMF Far East Pte.
Ltd.
10(j) Lease, dated December 13, 1984, between Barclays Nominees (Note 1)
(KWS) Limited and AMF International Limited, as amended by
Transfer of Whole Agreement, dated November 20, 1987, between
AMF International Limited and Tuboscope Limited.
10(k) Description of Life Insurance Plan. (Note 1)
10(l) Amended and Restated Stock Option Plan for Key Employees of (Note 5)
Tuboscope Vetco International Corporation.
10(m) Form of Revised Incentive Stock Option Agreement. (Note 5)
10(n) Form of Revised Non-Qualified Stock Option Agreement. (Note 5)
10(o) Stock Option Plan for Non-Employee Directors of Tuboscope Vetco (Note 6)
International Corporation.
10(p) Amendment to Stock Option Plan for Non-Employee Directors of (Note 6)
Tuboscope Vetco International Corporation.
10(q) Form of Non-Qualified Stock Option Agreement. (Note 6)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION NOTE NO.
----------- ------------ --------
<C> <S> <C>
10(r) Employee Qualified Stock Purchase Plan. (Note 8)
10(s) Purchase Agreement, dated as of July 20, 1990, by and among Oil (Note 7)
and Gas Manufacturing Company, Inc., F.T. Glascock, Thomas C.
Glascock, J. David Glascock, Hutchison-Hayes International, Inc.,
John F. Joplin, William F. Joplin, Sound Optics Systems, Inc. dba
Sound Optical Systems, Inc. and Tuboscope Inc.
10(t) Form of Employment Agreement, dated July 23, 1990, between (Note 7)
Tuboscope Inc. and Thomas Glascock and William Glascock.
10(u) Purchase Agreement, dated as of September 30, 1991, between the (Note 3)
Company and BHI relating to the Vetco Services Acquisition.
10(v) Amended and Restated Employment Agreement dated June 23, (Note 8)
1993, between the Company, Tuboscope Vetco International Inc.,
and Martin R. Reid.
10(w) Technology Transfer Agreement, dated as of October 29, 1991, (Note 3)
between Tuboscope Inc. and BHI.
10(x) Sublease, dated December 1, 1987, between McDermott (Note 3)
Incorporated and AMF Tuboscope, Inc. as amended by letter
agreement, dated November 10, 1989, between Tuboscope Inc. and
McDermott Incorporated.
10(y) Letter agreement, dated March 5, 1990 amending the Agreement to (Note 3)
Purchase, Sell and Sublease dated June 9, 1980 between AMF
Tuboscope Inc. and Alaska International Construction, Inc. as
amended June 12, 1980.
10(z) Employment Agreement, between Vetco Inspection GmbH an (Note 3)
Gerhard A. Hage.
10(aa) Lease Agreement with respect to Celle, Germany facility. (Note 3)
10(bb) Building Agreement for Land at Jurong, dated May 5, 1983, (Note 3)
between Jurong Town Corporation and Vetco International, Inc.
10(cc) Lease Agreement, dated January 1, 1988, between Mohamed (Note 3)
Alhajri Est. and Vetco Saudi Company.
10(dd) Lease Agreement, dated November 26, 1989, between (Note 3)
Mohammed F. Al-Hajri Est. and Vetco Saudi Arabia Ltd.
10(ee) Lease between J.G.B. Properties Limited and Vetco Inspection (Note 3)
GmbH.
10(ff) Eighth and Ninth Amendment to Savings Investment Plan. (Note 9)
27 Financial Data Exhibit 27
</TABLE>
14
<PAGE>
Note 1 Previously filed by the Registrant in Registration No. 33-31102 and
incorporated by reference herein pursuant to Rule 12b-32 of the
Exchange Act.
Note 2 Previously filed by the Registrant in Registration No. 33-33248 and
incorporated by reference herein pursuant to Rule 12b-32 of the
Exchange Act.
Note 3 Previously filed by the Registrant in File No. 33-43525 and
incorporated by reference herein pursuant to Rule 12b-32 of the
Exchange Act.
Note 4 Previously filed by the Registrant in Registration No. 33-56182 and
incorporated by reference herein pursuant to Rule 12b-32 of the
Exchange Act.
Note 5 Previously filed by the Registrant in Registration No. 33-72150 and
incorporated by reference herein pursuant to Rule 12b-32 of the
Exchange Act.
Note 6 Previously filed by the Registrant in Registration No. 33-72072 and
incorporated by reference herein pursuant to Rule 12b-32 of the
Exchange Act.
Note 7 Previously filed in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990 and incorporated by reference
herein pursuant to Rule 12b-32 of the Exchange Act.
Note 8 Previously filed in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated by reference
herein pursuant to Rule 12b-32 of the Exchange Act.
Note 9 Previously filed in the Quarterly Report on Form 10Q for the quarter
ended June 30, 1994 and incorporated by reference herein pursuant to
Rule 12b-32 of the Exchange Act.
Note 10 Previously filed in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992 and incorporated by reference
herein pursuant to Rule 12b-32 of the Exchange Act.
Note 11 Previously filed in the Company's Proxy Statement for the 1994 Annual
Meeting of Stockholders and incorporated by reference herein pursuant
to Rule 12b-32 of the Exchange Act.
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE EXTRACTED FROM FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 7,788
<SECURITIES> 0
<RECEIVABLES> 51,407
<ALLOWANCES> 1,661
<INVENTORY> 13,815
<CURRENT-ASSETS> 81,563
<PP&E> 199,002
<DEPRECIATION> 49,753
<TOTAL-ASSETS> 314,968
<CURRENT-LIABILITIES> 41,602
<BONDS> 121,920
<COMMON> 185
10,175
0
<OTHER-SE> 116,323
<TOTAL-LIABILITY-AND-EQUITY> 314,968
<SALES> 4,436
<TOTAL-REVENUES> 89,338
<CGS> 2,791
<TOTAL-COSTS> 66,115
<OTHER-EXPENSES> 651
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,367
<INCOME-PRETAX> 4,857
<INCOME-TAX> 1,943
<INCOME-CONTINUING> 2,914
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,914
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
