<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT-AMENDMENT NO. 1
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported)
May 31, 1996
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-18312 76-0252850
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2835 Holmes Road, Houston, Texas 77051
(Address of principal executive offices) (Zip Code)
(713) 799-5100
(Registrant's telephone number, including area code)
-------------------------------------------------------------
(Former name or former address, if changed since last report)
Total Number of Pages: 20
--
Exhibit Index Located at Page 19
--
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
The Registrant hereby amends the following items, financial statements
and exhibits of its Form 8-K Report filed on June 14, 1996.
<TABLE>
<CAPTION>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
<C> <S>
(a) Financial Statements of the Wadeco Group of Companies.
The combined financial statements of the Wadeco Group of Companies
required to be filed pursuant to Item 7 of Form 8-K are attached hereto
as Item 7(a).
(b) Pro Forma Financial Information.
The pro forma financial information required to be filed pursuant
to Item 7 of Form 8-K is attached hereto as Item 7(b).
(c) Exhibits.
23.1 Consent of Price Waterhouse.
</TABLE>
2
<PAGE>
SIGNATURE
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.
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
Date: August 2, 1996 By: /s/ JOSEPH C. WINKLER
-------------------------------------------------
Joseph C. Winkler
Executive Vice President, Chief Financial Officer
and Treasurer
3
<PAGE>
ITEM 7(a)
WADECO GROUP OF COMPANIES
COMBINED
FINANCIAL STATEMENTS
April 30, 1996
4
<PAGE>
May 24, 1996
(May 31, 1996 as to Note 14)
AUDITORS' REPORT
TO THE DIRECTORS OF THE
WADECO GROUP OF COMPANIES
We have audited the combined balance sheet of the WADECO GROUP OF COMPANIES, as
described in Note 1, as at April 30, 1996 and the combined statements of income
and retained earnings and changes in financial position for the year 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In our opinion, these combined financial statements present fairly, in all
material respects, the combined financial position of the WADECO GROUP OF
COMPANIES as at April 30, 1996 and the combined results of their operations and
the combined changes in their financial position for the year then ended in
accordance with Canadian generally accepted accounting principles.
PRICE WATERHOUSE
CHARTERED ACCOUNTANTS
EDMONTON, ALBERTA, CANADA
5
<PAGE>
WADECO GROUP OF COMPANIES
COMBINED BALANCE SHEET
APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash and cash equivalents.................... $ 3,226,700
Accounts receivable, net..................... 4,215,716
Income taxes recoverable..................... 508,335
Inventories (Note 4)......................... 1,703,762
Prepaid expenses............................. 165,082
-----------
9,819,595
PROPERTY, PLANT AND EQUIPMENT, NET (NOTE 5)... 16,417,644
-----------
$26,237,239
===========
LIABILITIES
CURRENT LIABILITIES
Accounts payable............................. $ 720,870
Accrued liabilities (Note 7)................. 484,435
Due to shareholders.......................... 1,748,721
Dividends payable............................ 90,000
Current portion of long-term debt............ 1,986,820
-----------
5,030,846
LONG-TERM DEBT (Note 9)....................... 5,115,061
DEFERRED INCOME TAXES......................... 2,594,610
CONTINGENCIES (Note 10)....................... --
-----------
12,740,517
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 11)....................... 8,811,111
CONTRIBUTED SURPLUS (Note 1).................. 3,510,990
RETAINED EARNINGS............................. 1,174,621
-----------
13,496,722
-----------
$26,237,239
===========
</TABLE>
See accompanying notes.
6
<PAGE>
WADECO GROUP OF COMPANIES
COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
<S> <C>
REVENUE
Rental income.................................. $12,397,511
Sale of services............................... 4,078,232
Sale of products............................... 1,304,252
-----------
17,779,995
EXPENSES
Cost of services provided...................... 8,491,144
Cost of products sold.......................... 876,823
Selling, general and administrative expenses... 2,894,580
Interest expense - long-term debt.............. 623,086
Interest income................................ (127,152)
Gain on sale of equipment...................... (188,244)
Management fees and executive bonuses.......... 1,570,451
-----------
14,140,688
-----------
INCOME BEFORE INCOME TAXES...................... 3,639,307
PROVISION FOR INCOME TAXES (Note 13)
Current........................................ 1,408,443
Deferred....................................... 193,020
-----------
1,601,463
-----------
NET INCOME...................................... 2,037,844
RETAINED EARNINGS AT BEGINNING OF YEAR.......... 6,706,777
DIVIDENDS....................................... (7,570,000)
-----------
RETAINED EARNINGS AT END OF YEAR................ $ 1,174,621
===========
</TABLE>
See accompanying notes.
7
<PAGE>
WADECO GROUP OF COMPANIES
COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................ $ 2,037,844
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation................................... 2,419,920
Gain on sale of equipment...................... (188,244)
Deferred income taxes.......................... 193,020
Change in current assets and liabilities
Accounts receivable.......................... 879,282
Income taxes recoverable..................... (508,335)
Inventories.................................. (196,899)
Prepaid expenses............................. (18,216)
Accounts payable............................. (5,987)
Accrued liabilities.......................... (210,704)
Income taxes payable......................... (1,749,700)
Due to shareholders.......................... 270,451
Dividends payable............................ 90,000
-----------
Net cash provided by operating activities......... 3,012,432
CASH FLOWS USED FOR INVESTING ACTIVITIES
Purchase of plant and equipment................... (941,289)
Proceeds from sale of building and equipment...... 666,564
-----------
Net cash used for investing activities............ (274,725)
CASH FLOWS USED FOR FINANCING ACTIVITIES
Proceeds from long-term debt...................... 309,015
Repayment of long-term debt....................... (2,180,803)
Issuance of common shares......................... 7,000,000
Dividends......................................... (7,570,000)
-----------
NET CASH USED FOR FINANCING ACTIVITIES............ (2,441,788)
-----------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......... 295,919
CASH AND CASH EQUIVALENTS
Beginning of year................................. 2,930,781
-----------
End of year....................................... $ 3,226,700
===========
</TABLE>
See accompanying notes.
8
<PAGE>
WADECO GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
1. BASIS OF ACCOUNTING
COMBINATION
The combined financial statements include the consolidated financial
statements of Wadeco Oilfield Services Ltd. and its wholly-owned
subsidiary, Wadeco Inc., (collectively, "Wadeco") and the financial
statements of Leo's Oilfield Hauling Ltd. ("Leo's") and Polysep Chemicals
Inc. ("Polysep") together with the balance sheets of two inactive
companies, Ashtin Developments Ltd. and D&D Bell Enterprises Inc. These
combined financial statements have been prepared solely for inclusion in
the Form 8-K of Turboscope Vetco International Corporation. They present
the financial position and results of operations of companies under the
common management of the shareholders of the combined companies, and have
been prepared using principles similar to those used in preparing
consolidated financial statements. Comparative financial statements have
not been provided as such financial statements are not deemed necessary
under the rules prescribed by the Securities and Exchange Commission of the
United States.
PUSH-DOWN ACCOUNTING
On April 8, 1993, J & S Hokanson Investments Ltd. purchased 100% of the
common shares of Wadeco for an amount of $5,264,841. At that date, the
book value of net assets of the company amounted to $3,855,595. These
combined financial statements have been prepared using the push-down basis
of accounting which results in the parent's cost of acquiring the company
being assigned to the assets and liabilities of the company. As a result,
the net assets of Wadeco were increased by an amount of $1,409,246, the
excess of the purchase price over book value. That increase, together with
retained earnings at the date of acquisition of $2,101,744, was recorded as
contributed surplus.
2. NATURE OF BUSINESS AND RISK FACTORS
Wadeco is an integrated solids control service company providing
solids/liquids separation and dewatering equipment and service personnel
primarily to the Western Canadian oil and gas drilling market.
Leo's transports oilfield equipment throughout Western Canada to remote
work sites, primarily related to the oil and gas industry.
Polysep is a supplier of specialized chemical products used in
solids/liquids separation and dewatering operations.
The operating results of the Wadeco Group of Companies depend to a large
extent upon the level of drilling for oil and gas in Western Canada.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The companies recognize revenue when services are rendered or goods are
shipped.
CASH AND CASH EQUIVALENTS
The companies consider all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
9
<PAGE>
WADECO GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS...CONTINUED
APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES...CONTINUED
ACCOUNTS RECEIVABLE
Accounts receivable are net of allowances for doubtful accounts of $47,678.
EARNINGS PER COMMON SHARE
The computation of earnings per share has been omitted because these are
special purpose financial statements and the calculation would not be
relevant.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The combined financial statements and related notes, which have been
prepared in conformity with Canadian generally accepted accounting
principles, require the use of management estimates.
INVENTORIES
Inventories are valued at the lower of cost, calculated on the first-in,
first-out method, and net realizable value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at the purchaser's cost, which
includes the push-down adjustment described in Note 1. These assets are
depreciated using the straight-line method at rates calculated to amortize
the cost of the assets, less residual value, over their estimated useful
lives, as follows:
<TABLE>
<S> <C>
Buildings....................... 20 years
Rental equipment................ 5 to 10 years
Service vehicles................ 3 years
Office and computer equipment... 5 years
Shop equipment.................. 5 years
Trucking equipment.............. 10 years
</TABLE>
FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies are recorded in Canadian dollars at the
rates prevailing at the date of the transactions. Amounts receivable or
payable in foreign currencies are translated into Canadian dollars at the
year-end exchange rates.
4. INVENTORIES
<TABLE>
<S> <C>
Products held for resale.................................. $ 317,455
Parts and supplies to be used for equipment maintenance
or to be consumed during operations.................... 1,386,307
----------
$1,703,762
==========
</TABLE>
10
<PAGE>
WADECO GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS...CONTINUED
APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
5. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
------------ ------------ ------------
<S> <C> <C> <C>
Land............................ $ 170,000 $ -- $ 170,000
Buildings....................... 1,631,198 283,118 1,348,080
Rental equipment................ 16,771,275 3,928,142 12,843,133
Service vehicles................ 796,882 375,402 421,480
Office and computer equipment... 333,924 125,586 208,338
Shop equipment.................. 229,969 112,480 117,489
Trucking equipment.............. 1,630,498 321,374 1,309,124
----------- ---------- -----------
$21,563,746 $5,146,102 $16,417,644
=========== ========== ===========
</TABLE>
6. BANK LINE OF CREDIT
Wadeco has an operating line of credit to a maximum of $2,000,000, which
fluctuates with the level of trade accounts receivable. Interest is at
bank prime rate. Leo's has an operating line of credit to a maximum of
$200,000, which fluctuates with the level of trade accounts receivable.
Interest is at bank prime rate plus 1%. Refer to Note 9 for a description
of security for lines of credit.
No amounts had been drawn down against the lines of credit at April 30,
1996.
7. ACCRUED LIABILITIES
<TABLE>
<S> <C>
Accrued liabilities consist of the following:
Accrued compensation................................. $341,974
Accrued taxes other than income taxes................ 110,374
Other................................................ 32,087
--------
$484,435
========
</TABLE>
8. RELATED PARTY TRANSACTIONS
Management fees and executive bonuses totalling $1,570,451 were earned by
shareholders of the combined companies.
During 1996, Wadeco loaned an amount of $2,000,000 to J & S Hokanson
Investments Ltd., its parent company. That amount, together with interest
of $24,685, was repaid during the year.
During 1996, Wadeco sold a building to J & S Hokanson Investments Ltd. for
cash consideration of $256,197, its carrying value.
11
<PAGE>
WADECO GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS...CONTINUED
APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
9. LONG-TERM DEBT
<TABLE>
<S> <C>
Wadeco
Revolving loan payable, with interest at bank prime rate plus
0.5%, repayable in monthly instalments of $100,000
plus interest...................................................... $4,100,000
Loan payable, with interest at bank prime rate plus 0.5%,
repayable in monthly instalments of $41,667 plus interest.......... 1,374,520
Loan payable, with interest at bank prime rate plus 0.5%,
repayable in monthly instalments of $5,556 plus interest........... 933,408
Leo's
Loan payable, with interest at bank prime rate plus 0.5%, repayable
in monthly payments of $17,000 including interest.................. 560,609
Loan payable, with interest at bank prime rate plus 1%, repayable
in monthly payments of $4,167 plus interest........................ 133,344
----------
7,101,881
Less: Current portion.................................................... 1,986,820
----------
$5,115,061
==========
</TABLE>
The Wadeco loans and bank line of credit are secured by buildings and
equipment, a general assignment of book debts, and a fixed and floating
charge demand debenture. The Leo's loans and bank line of credit are
secured by specific equipment and a general assignment of book debts.
Although each of the loans may be called by the bank on demand, they are
expected to continue in accordance with the established repayment terms.
Accordingly, the loans are recorded as long-term debt. Amounts are due as
follows:
<TABLE>
<S> <C>
1997................... $1,986,820
1998................... 1,999,119
1999................... 1,870,173
2000................... 579,049
Amount due after 2000.. 666,720
----------
$7,101,881
==========
</TABLE>
10. CONTINGENCIES
Two former employees have initiated claims, totalling $250,000, against
Wadeco for wrongful dismissal. The outcome of these claims is not
determinable and, accordingly, no liability has been recorded in these
financial statements.
Wadeco has initiated a claim in the amount of $5 million plus interest
against a competitor for breach of fiduciary duty, breach of confidence and
breach of a non-competition agreement. The defendant has initiated a
counter claim in the amount of $250,000. The outcome of these claims is
not determinable and, accordingly, no asset or liability has been recorded
in these financial statements.
12
<PAGE>
WADECO GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS...CONTINUED
APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
11. SHARE CAPITAL
<TABLE>
<S> <C> <C>
Wadeco
Authorized
5,000,000 common shares of no par value................
Issued
15,548 common shares................................... $8,753,851
Leo's
Authorized
Unlimited number of Class A, B, C and D common
shares of no par value.................................
Issued
40 Class A common shares............................... $ 10
15 Class B common shares............................... 56,250
29 Class C common shares............................... 108,750
16 Class D common shares............................... 60,000
--------
225,010
Less: Class C and D common shares held by combined
companies and eliminated on combination................ 168,750
--------
56,260
Polysep
Authorized
Unlimited number of Class A, B, C and D
shares of no par value
Issued
500 Class A shares..................................... 500
200 Class B shares..................................... 200
200 Class C shares..................................... 200
100 Class D shares..................................... 100
--------
1,000
Less: 200 Class B shares held by a combined company and 200
eliminated on combination................................. --------
800
Ashtin Developments
Authorized
Unlimited number of Class A shares of no par
value................................................
Issued
100 Class A shares..................................... 100
D&D Bell Enterprises Inc.
Authorized.............................................
Unlimited number of Class A shares of no par value
Issued
100 Class A shares..................................... 100
-----------
$8,811,111
===========
</TABLE>
On April 30, 1996, Wadeco issued 4,842 common shares to J & S Hokanson
Investments Ltd. for cash consideration of $7,000,000.
13
<PAGE>
WADECO GROUP OF COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS...CONTINUED
APRIL 30, 1996
(ALL AMOUNTS IN CANADIAN DOLLARS)
12. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<S> <C>
Income taxes paid.......................$3,683,670
==========
Interest paid...........................$ 656,387
==========
</TABLE>
13. INCOME TAXES
The reconciliation of the expected to the computed tax provision is as
follows:
<TABLE>
<S> <C>
Tax expense at combined Canadian federal and provincial rate of 44.62%............. $1,623,859
Small business deduction available to Canadian-controlled private companies........ (70,955)
Impact of non-deductible depreciation resulting from push-down accounting.......... 42,233
Other, net......................................................................... 6,326
----------
$1,601,463
==========
</TABLE>
14. SUBSEQUENT EVENTS
On May 31, 1996, Wadeco purchased all of the issued share capital of Leo's,
Polysep, Ashtin Developments Ltd. and D&D Bell Enterprises Inc.
Immediately thereafter, TVI Wadeco Inc., a wholly-owned subsidiary of
Tuboscope Vetco International Corporation, purchased all of the issued
share capital of Wadeco. The amount due to shareholders of $1,748,721 was
repaid at that time.
14
<PAGE>
ITEM 7(b)
TUBOSCOPE/WADECO
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
TUBOSCOPE/
WADECO TUBOSCOPE/
PRO FORMA WADECO
WADECO TUBOSCOPE ACQUISITION PRO FORMA
ASSETS HISTORICAL HISTORICAL ADJUSTMENTS(2) CONSOLIDATION
- -------------------------------------------------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 329 $ 7,912 $ (2,368) $ 5,873
Accounts receivable, net.......................... 5,040 50,449 55,489
Inventory, net.................................... 1,282 14,039 15,321
Deferred federal income taxes..................... -- 2,521 2,521
Prepaid expenses and other........................ 340 6,998 7,338
------- -------- -------- --------
Total current assets........................... 6,991 81,919 (2,368) 86,542
Property and equipment............................. 16,202 155,304 (775) 170,731
Accumulated depreciation and amortization.......... (3,815) (48,146) 3,815 (48,146)
------- -------- -------- --------
Net property and equipment........................ 12,387 107,158 3,040 122,585
Identified intangibles, net........................ -- 18,682 18,682
Goodwill, net...................................... -- 27,856 5,842 33,698
Other assets, net.................................. -- 4,630 4,630
------- -------- --------
Total assets................................... $19,378 $240,245 $ 6,514 $266,137
======= ======== ======== ========
LIABILITIES AND EQUITY
- --------------------------------------------------
Current liabilities:
Accounts payable.................................. $ 985 $ 14,981 $ $ 15,966
Accrued liabilities............................... -- 18,639 1,018 19,657
Federal and foreign income taxes payable.......... 56 2,041 2,097
Current portion of long-term debt................. 1,457 4,300 5,757
------- -------- ------- --------
Total current liabilities...................... 2,498 39,961 1,018 43,477
Long-term debt..................................... 3,935 104,159 16,405 124,499
Pension liabilities................................ -- 9,142 9,142
Deferred taxes payable............................. 2,036 10,025 12,061
Other liabilities.................................. -- 1,368 1,368
------- -------- --------
Total liabilities.............................. 8,469 164,655 17,423 190,547
Redeemable Series A Convertible Preferred Stock.... -- 10,175 10,175
------- -------- --------
Common stockholders' equity:
Common stock, $.01 par value, 60,000,000 shares 1,340 186 (1,340) 186
authorized and 18,639,015 outstanding..........
Paid in-capital................................... 2,597 116,934 (2,597) 116,934
Retained earnings (deficit)....................... 6,972 (49,114) (6,972) (49,114)
Cumulative translation adjustment -- (2,591) (2,591)
------- -------- --------
Total common stockholder's equity.............. 10,909 65,415 (10,909) 65,415
------- -------- -------- --------
Total liabilities and equity................... $19,378 $240,245 $ 6,514 $266,137
======= ======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
15
<PAGE>
TUBOSCOPE/WADECO
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
----------------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
---------------------- ACQUISITION ACQUISITION
WADECO TUBOSCOPE ADJUSTMENTS COMBINED
------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Revenue...................................... $4,401 $ 47,018 $ 51,419
Cost of sales................................ 1,987 35,363 $ 112 (3) 37,462
------- ------------ -------------- ------------
Gross profit................................. 2,414 11,655 (112) 13,957
Selling, general, and administrative costs... 451 5,838 6,289
Write-off of long-term assets................ -- 63,061 63,061
------- ------------ -------------- ------------
Operating profit............................. 1,963 (57,244) (112) (55,393)
Interest expense............................. 78 2,595 328 (4) 3,001
Other expense................................ 149 324 473
------- ------------ -------------- ------------
Income before income taxes................... 1,736 (60,163) (440) (58,867)
Provision (benefit) for income taxes......... 756 (4,574) (176)(6) (3,994)
------- ------------ -------------- ------------
Net income................................... $ 980 $ (55,589) $(264) $ (54,873)
Dividends applicable to Series A
Convertible Preferred Stock................ 0 175 175
------- ------------ -------------- ------------
Net income applicable to common stock........ $ 980 $ (55,764) $(264) $ (55,048)
======= ============ ============== ============
Net income per share......................... $ (2.97) $ (2.93)
============ ============
Weighted average shares...................... 18,759,499 18,759,499
=========== ===========
Depreciation and amortization $ 442 $ 2,572 $ 112 $ 3,126
====== =========== ===== ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
16
<PAGE>
TUBOSCOPE/WADECO
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31, 1995
-----------------------------------------------------------
HISTORICAL PRO FORMA PRO FORMA
----------------------- ACQUISITION ACQUISITION
WADECO TUBOSCOPE ADJUSTMENTS COMBINED
-------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Revenue...................................... $14,270 $ 190,015 $ 204,285
Cost of sales................................ 6,425 138,367 $ 450 (3) 145,242
-------- ------------ -------------- --------------
Gross profit................................. 7,845 51,648 (450) 59,043
Selling, general, and administrative costs... 2,425 24,188 26,613
-------- ------------ -------------- --------------
Operating profit............................. 5,420 27,460 (450) 32,430
Interest expense............................. 494 12,328 1,312 (4) 14,134
Other expense................................ 740 (73) (949)(5) (282)
-------- ------------ -------------- --------------
Income before income taxes................... 4,186 15,205 (813) 18,578
Provision for income taxes................... 2,005 6,386 (325)(6) 8,066
-------- ------------ -------------- --------------
Net income................................... 2,181 8,819 (488) 10,512
Dividends applicable to Series A
Convertible Preferred Stock................ 700 700
-------- ------------ -------------- --------------
Net income applicable to common stock........ $ 2,181 $ 8,119 $ (488) $ 9,812
======== ============ ============== ==============
Net income per share......................... $ 0.44 $ 0.53
=========== ==============
Weighted average shares...................... 18,530,338 18,530,338
=========== ==============
Depreciation and amortization................ $ 1,766 $ 15,037 $ 450 $ 17,253
======= =========== ============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
17
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
(1) Basis of Presentation - The Unaudited Pro Forma Condensed Combined Financial
Statements are presented to give pro forma effect to the acquisition of
Wadeco Oilfield Services Ltd. ("Wadeco") for an aggregate purchase price of
$21,605,000. The purchase price included the assumption of $5,200,000 of
Wadeco debt and cash of $16,405,000.
The purchase method of accounting has been used in preparing the Unaudited
Pro Forma Condensed Combined Financial Statements of the Company with
respect to the acquisition of Wadeco. The statement of income for the three
months ended March 31, 1996 and fiscal year ended December 31, 1995 combines
the results of operations for Tuboscope's three months ended March 31, 1996
and fiscal year ended December 31, 1995 with Wadeco's results for the same
periods. Purchase accounting values have been assigned on a preliminary
basis and will be adjusted upon the completion of a valuation study.
(2) To record Tuboscope's purchase of Wadeco for $16,405,000. The payment was
assumed to be funded through the Company's revolving credit facility.
Adjustments to assets include cash paid of $2,368,000 related to Wadeco's
purchase of Leo's Oilfield Hauling Ltd. and Polysep Chemicals Inc. in May
1996, the elimination of historical accumulated depreciation of $3,815,000,
the estimated set-up of fixed assets of $3,039,000, and goodwill represented
by the excess purchase price over the estimated fair market value of net
tangible assets of $5,842,000. Adjustments to liabilities and equity
include an accrual for a payment of $1,018,000 made to the former owners of
Wadeco subsequent to March 31, 1996, the $16,405,000 payment for the
acquisition of Wadeco as an increase in the revolving credit facility and
the elimination of Wadeco's equity accounts.
(3) To record additional amortization on fixed assets and amortization on
goodwill resulting from the allocation of the purchase price of Wadeco.
Goodwill is amortized over 40 years based on estimated economic life. The
amortization period is consistent with that used by Tuboscope and various
other companies in the oilfield industry.
(4) To record additional interest expense on debt related to the purchase price.
(5) To record elimination of bonus expense paid to previous owners of Wadeco.
(6) To reflect the tax effect on the pro forma adjustments.
18
<PAGE>
EXHIBIT INDEX TO FORM 8-K
<TABLE>
<CAPTION>
Exhibit No. Description Sequentially
Numbered Page
<S> <C> <C>
23.1 Consent of Price Waterhouse 20
</TABLE>
19
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We hereby consent to the incorporation by reference in Registration Statements
on Form S-8 (Form S-8 No. 3354337, No. 33-072072, No. 333-05233, and No.
333-05237) of Tuboscope Vetco International Corporation of our report dated May
24, 1996 (May 31, 1996 as to Note 14) relating to the combined financial
statements of the Wadeco group of companies, which appears on page 5 in
Amendment No.1 of the Current Report on Form 8-K/A of Tuboscope Vetco
International Corporation dated May 31, 1996.
Price Waterhouse
Chartered Accountants
Edmonton, Alberta, Canada
August 2, 1996
20
