<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 March 31, 1996
--------------------
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) 799-510
----------------------------------------------------
(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 18,639,015 shares of common stock outstanding
as of March 31, 1996.
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TUBOSCOPE VETCO INTERNATIONAL CORPORATION
INDEX
<TABLE>
<CAPTION> Page No.
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<S> <C>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets -
March 31, 1996 (unaudited) and December 31, 1995 2
Unaudited Consolidated Statements of Operations -
For the Three Months Ended March 31, 1996 and 1995 3
Unaudited Consolidated Statements of Cash Flows -
For the Three Months Ended March 31, 1996 and 1995 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 6. Exhibits and Reports on Form 8-K 10
Signature Page 11
Exhibit Index 12-16
Appendix A - Financial Data Schedule 17
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
1
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1996
---------- -----------
<S> <C> <C>
(unaudited)
(In thousands)
A S S E T S
-----------
Current assets:
Cash and cash equivalents.................................... $ 7,912 $ 9,394
Accounts receivable, net..................................... 50,449 52,071
Inventory, net............................................... 14,039 14,364
Deferred federal income taxes................................ 2,521 2,521
Prepaid expenses and other................................... 6,998 6,403
-------- --------
Total current assets...................................... 81,919 84,753
-------- --------
Property and equipment:
Land, buildings and leasehold improvements................... 65,720 81,557
Operating equipment.......................................... 86,622 102,257
Equipment leased to customers................................ 2,962 2,930
Accumulated depreciation and amortization.................... (48,146) (46,706)
-------- --------
Net property and equipment................................ 107,158 140,038
Identified intangibles, net.................................... 18,682 29,379
Goodwill, net.................................................. 27,856 47,751
Other assets, net.............................................. 4,630 4,758
-------- --------
Total assets.............................................. $240,245 $306,679
======== ========
L I A B I L I T I E S A N D E Q U I T Y
-------------------------------------------
Current liabilities:
Accounts payable............................................. $ 14,981 $ 14,306
Accrued liabilities.......................................... 18,639 18,705
Federal and foreign income taxes payable..................... 2,041 2,557
Current portion of long-term debt and short-term borrowings.. 4,300 4,562
-------- --------
Total current liabilities................................. 39,961 40,130
Long-term debt................................................. 104,159 107,055
Pension liabilities............................................ 9,142 9,869
Deferred taxes payable......................................... 10,025 16,411
Other liabilities.............................................. 1,368 1,598
Commitments and contingencies..................................
-------- --------
Total liabilities......................................... 164,655 175,063
-------- --------
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,
18,639,015 shares issued and outstanding (18,546,075
at December 31, 1995)........................................ 186 186
Paid-in capital.............................................. 116,934 116,379
Retained earnings (deficit).................................. (49,114) 6,650
Cumulative translation adjustment............................ (2,591) (1,773)
-------- --------
Total common stockholders' equity......................... 65,415 121,441
-------- --------
Total liabilities and equity.............................. $240,245 $306,679
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
2
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TUBOSCOPE VETCO INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1996 1995
------------ -----------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE DATA)
<S> <C> <C>
Revenue:
Sale of services........................... $ 45,418 $ 41,457
Sale of products........................... 873 1,245
Rental income.............................. 727 984
----------- -----------
47,018 43,686
----------- -----------
Costs and expenses:
Cost of services sold...................... 34,731 31,814
Cost of products sold...................... 440 788
Goodwill amortization........................ 192 321
Selling, administrative and general........ 5,001 5,197
Research and engineering costs............. 837 905
Write-off of long-term assets................ 63,061 --
----------- -----------
104,262 39,025
----------- -----------
Operating profit (loss)...................... (57,244) 4,661
Other expense (income):
Interest expense........................... 2,595 3,201
Interest income............................ (31) (91)
Foreign exchange........................... (155) (596)
Other, net................................. 510 410
----------- -----------
Income (loss) before income taxes............ (60,163) 1,737
Provision for (benefit from) income taxes.... (4,574) 695
----------- -----------
Net income (loss)............................ (55,589) 1,042
Dividends applicable to redeemable
preferred stock............................. 175 175
----------- -----------
Net income (loss) applicable to common
stock....................................... $ (55,764) $ 867
=========== ===========
Earnings (loss) per common share:
Income (loss) after deduction of
preferred stock dividends................... $ (2.97) $ .05
Weighted average number of common shares
outstanding................................ 18,759,499 18,504,265
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
3
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TUBOSCOPE VETCO INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
----------- ----------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ (55,589) $ 1,042
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization................ 2,572 3,701
Compensation related to stock plan........... 66 72
Write-off of long-term assets................ 63,061 --
Benefit for deferred income taxes............ (6,386) (488)
Changes in current assets and liabilities:
Accounts receivable....................... 1,622 4,839
Inventory................................. 325 (1,643)
Prepaid expenses and other assets......... (692) (935)
Accounts payable, accrued liabilities
and other................................ 379 (1,224)
Federal and foreign income taxes payable.. (516) (227)
--------- -------
Net cash provided by operating activities.... 4,842 5,137
--------- -------
Cash flow used for investing activities:
Capital expenditures............................. (2,132) (2,105)
Acquisition cost................................. (677) --
Other............................................ (671) (300)
--------- --------
Net cash used for investing activities....... (3,480) (2,405)
--------- --------
Cash flows used for financing
activities:
Principal payments under financing agreements.... (3,158) (980)
Dividends paid on Redeemable Series A
Convertible Preferred Stock..................... (175) (175)
Proceeds from sale of common stock............... 489 68
--------- -------
Net cash used for financing activities....... (2,844) (1,087)
--------- -------
Net increase (decrease) in cash and
cash equivalents.................................. (1,482) 1,645
Cash and cash equivalents:
Beginning of period.............................. 9,394 8,531
--------- -------
End of period.................................... $ 7,912 $10,176
========= =======
Supplemental disclosure of cash flow
information:
Cash paid during the three month period for:
Interest..................................... $ 589 $ 1,481
========== =======
Taxes........................................ $ 2,345 $ 1,224
========== =======
</TABLE>
See notes to unaudited consolidated financial statements.
4
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TUBOSCOPE VETCO INTERNATIONAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
AND AS OF DECEMBER 31, 1995
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 1995 Form 10-K, filed under the Securities
Exchange Act of 1934 (Commission File No. 0-18312).
2. INVENTORY
At March 31, 1996 inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Components, subassemblies, and expendable parts......... $ 10,453
Equipment under production.............................. 3,586
--------
$ 14,039
========
</TABLE>
3. DIVIDEND RESTRICTIONS
Tuboscope Vetco International Inc.'s (TVI's) Senior Bank Credit Agreement
and 10.75% $75 million Senior Subordinated Notes restrict the ability of
TVI to dividend or otherwise make distributions to the Company and prohibit
the Company from paying dividends on its Common Stock. 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 March
31, 1996 and December 31, 1995 and summarized statements of operations for
the three months ended March 31, 1996 and 1995 (in thousands).
<TABLE>
<CAPTION>
SUMMARIZED BALANCE SHEETS
March 31, December 31,
ASSETS 1996 1995
------ --------- --------------
<S> <C> <C>
Current assets................ $ 96,627 $ 98,502
Noncurrent assets............. 148,038 202,833
-------- --------
Total assets................ $244,665 $301,335
======== ========
LIABILITIES AND EQUITY
----------------------
Current liabilities........... $ 38,831 $ 38,463
Noncurrent liabilities........ 123,523 130,617
Stockholders' equity.......... 82,311 132,255
-------- --------
Total liabilities and equity $244,665 $301,335
======== ========
</TABLE>
5
<PAGE>
4. SUMMARIZED FINANCIAL INFORMATION OF REGISTRANT (TVI) (CONT'D)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
SUMMARIZED STATEMENTS OF OPERATIONS 1996 1995
---------- ----------
<S> <C> <C>
Revenue................................. $ 46,746 $ 43,172
Operating profit (loss)................. $(57,107) $ 4,709
Income (loss) before income taxes....... $(51,349) $ 1,413
Net income (loss)....................... $(49,129) $ 904
</TABLE>
5. MERGER WITH D.O.S LTD.
On April 24, 1996, pursuant to that certain Agreement and Plan of Merger
dated as of January 3, 1996 by and among the Company, Grow Acquisition
Limited, a Bermuda corporation and wholly owned subsidiary of the Company
("Grow"), and D.O.S. Ltd., a Bermuda corporation (Drexel), Grow was merged
with and into Drexel (the "Merger"). Upon consummation of the Merger, all of
the outstanding ordinary shares of Drexel were converted into the right to
receive approximately 16.7 million shares of Company Common Stock.
In connection with the Merger, on April 24, 1996 the Company sold to SCF-
III, L.P., a Delaware limited partnership ("SCF"), 4,200,000 shares of
Company Common Stock and warrants to purchase 2,533,000 shares of Company
Common Stock at an exercise price of $10 per share expiring on December 31,
1996, for an aggregate purchase price of $31,000,000 pursuant to certain
Subscription Agreement dated as of January 3, 1996 between the Company and
SCF.
Also in connection with the Merger, on April 24, 1996 Baker Hughes
Incorporated ("Baker Hughes") exchanged all of its 100,000 shares of Series
A Convertible Preferred Stock, par value $.01 per share, of the Company for
1,500,000 shares of Company Common Stock and warrants to purchase 1,250,000
shares of Company Common Stock at an exercise price of $10 per share
expiring on December 31, 1996, pursuant to that certain Exchange Agreement
dated as of January 3, 1996 between the Company and Baker Hughes.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
RESULTS OF OPERATIONS
- ---------------------
REVENUE. Revenue was approximately $47.0 million for the first quarter of 1996
compared to approximately $43.7 million for the first quarter of 1995, an
increase of $3.3 million or 8%.
Revenue from the Company's Oilfield Services, comprised of Inspection and
Coating, was approximately $38.3 million for the first quarter of 1996, up $4.3
million or 13% from $34.0 million in the first quarter of 1995. International
Inspection revenue increased $2.5 million due to a $3.7 million increase in
Latin America inspection revenue as a result of the acquisition of an Argentina
operation in September 1995 and a large contract in Colombia awarded in the
fourth quarter of 1995. The increase in Latin America inspection revenue was
slightly offset by first quarter 1995 equipment sales related to an Algerian
reclamation facility. North America inspection revenue was up $1.4 million due
to improved operations and an expanding customer base in the Company's Houston,
Texas Sheldon Road facility, and a slight improvement in North America rig
activity. Worldwide Coating revenue was up $341,000 or 3% in the first quarter
of 1996 due to equipment sales in Russia, offset partially by a decline in
revenue of $375,000 or 10%, at International Coating plants.
Pipeline Services revenue of $3.2 million for the first three months of 1996
represented an increase of $153,000 or 5% over 1995. Revenue was higher due to
greater pipeline work in Argentina offset to some degree by lower revenue in the
Middle East.
Industrial Inspection revenue was $3.4 million for the first quarter of 1996, a
decrease of $269,000 or 7% compared to 1995. Industrial Inspection revenue
declined as a result of less work at a German nuclear power plant due to weather
problems and lower revenue in the Middle East.
Mill Systems and Sales revenue was $1.6 million for the first quarter of 1996, a
decrease of $400,000 or 19% compared to the same quarter in 1995. The decline
was due to lower equipment sales from the Company's NDT Systems operation.
Other revenue was approximately $500,000 in the first quarter of 1996, down
$400,000 compared to the first quarter of 1995, due to lower revenue from the
Company's tank inspection operations.
GROSS MARGIN AND GROSS PROFIT. Gross profit was approximately $11.7 million or
24.8% for the first quarter of 1996, up from $10.8 million or 24.6% in 1995.
The primary reason for the improvement in gross profit dollars and percent was
lower depreciation and amortization expense of approximately $900,000 in the
first quarter of 1996 compared to 1995 due to the write-off of long-term assets
as discussed below. In addition, gross profit dollars were up due to greater
revenue and operating profit from Latin American operations. These factors were
offset to some degree by a $295,000 increase in operating costs associated with
the sale-leaseback of the Sheldon Road facility which was completed in December
1995.
Gross margins (defined as revenue minus variable expense) were 43.8% and 45.9%
for the first quarter of 1996 and 1995, respectively. Revenue mix resulted in
lower gross margin percentages as the shift to stand alone operations in
Argentina and Colombia from agency arrangements (which had lower revenue, but
higher margins), lower revenue from mill equipment sales, and lower
International Coating revenue which usually provides higher margins, combined to
contribute to lower gross margin percentages.
SELLING, GENERAL AND ADMINISTRATIVE COSTS. Selling, general and administrative
costs were $5.0 million and $5.2 million for the first quarter of 1996 and 1995,
respectively. The decrease was due mainly to lower depreciation costs of
approximately $200,000.
RESEARCH AND ENGINEERING COSTS. Research and engineering costs were $837,000
and $905,000 for the first quarter of 1996 and 1995, respectively. Research
and engineering costs consisted mainly of costs associated with the Company's
Rotary UT Inspection (TruscopeTM) and Hi-Resolution Pipeline (TruResTM)
projects.
WRITE-OFF OF LONG-TERM ASSETS. The first quarter 1996 write-off of long-term
assets of $63.1 million included a writedown of approximately $50.8 million
associated with the Company's adoption of SFAS No. 121 Accounting for the
Impairment of Long-lived Assets and for Long-Lived Assets to Be Disposed Of and
a decision by management to sell certain assets, primarily as a result of the
merger with Drexel, which resulted in additional write-downs of approximately
$12.3 million.
7
<PAGE>
In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of. SFAS No. 121 established "accounting standards for
the impairment of the long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of." The new statement
requires the value of long-lived assets, certain identifiable intangibles, and
goodwill to be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If this change in circumstances or other initial indication has
occurred, the next step in determining whether an asset has been impaired is
performed using the expected future undiscounted cash flows of assets, grouped
at the lowest level for which there are identifiable cash flows, compared to the
carrying value of those assets. If the undiscounted cash flow value is less
than the net carrying value, the amount of impairment is then measured by
comparing the discounted cash flows with the corresponding carrying values of
the assets evaluated. The Company's previous policy was to evaluate the
realizability of long-term assets on an aggregate basis based on undiscounted
cash flows. Management accumulated cash flow information at the lowest asset
grouping levels for which there were identifiable cash flows. These levels were
represented by separate product line operations at individual operating
locations. Based on the data, the Company's adoption of SFAS No. 121 resulted
in a write-down of long-lived assets of approximately $50.8 million in the first
quarter of 1996.
The majority of the SFAS No. 121 write-down was in international locations such
as Italy, Saudi Arabia, Japan, and Germany which have experienced significant
reductions in rig activity and other business declines since the Company's
acquisition of substantially all the foreign operations of Baker Hughes Tubular
Services, Inc. (Vetco Services) in October 1991. In addition, the analysis of
individual U.S. locations by identifiable cash flows for individual asset
locations resulted in additional write-downs.
In addition to the write-down of $50.8 million associated with the adoption of
SFAS No. 121, the Company recognized $12.3 million of write-downs associated
with the decision to sell certain assets. A decision was made to sell the
Company's Corporate Headquarters on Holmes Road in Houston, Texas in the first
quarter of 1996. The decision was made in connection with the Drexel merger and
the Company has recognized a significant write-down represented by the
difference between the facility's net book value and estimated fair value less
costs to sell. A decision has also been made by the Company to sell certain
tank inspection equipment and related operations which are currently performing
below acceptable levels.
OPERATING PROFIT. Excluding the write-off of long-term assets, operating profit
was $5.8 million for the first quarter of 1996 compared to $4.7 million in 1995.
The improvement was due to lower depreciation and amortization expense, and
greater operating profit from Latin American operations, offset by lower gross
margin percentages due to a negative product line mix as discussed above.
INTEREST EXPENSE. Interest expense was $2.6 million for the first three months
of 1996, down from $3.2 million in 1995 due to lower outstanding debt balances.
OTHER EXPENSE (INCOME). Other expense (income), which includes interest income,
foreign exchange, and other expense (net), resulted in net expense of $321,000
for the first quarter of 1996 compared to income of $277,000 in 1995. The first
quarter of 1995 results included foreign exchange gains as a result of the
weaker U.S. dollar and gains on foreign subsidiaries which had U.S. dollar
payables (accounts and notes).
PROVISION FOR INCOME TAXES. The effective tax rate on operating profits,
excluding the write-off of long-term assets, for the quarter ended March 31,
1996 was 38% compared to 40% for the period ended March 31, 1995. The slight
improvement in the rate is due in part to the elimination of non-deductible
goodwill amortization through the SFAS No. 121 write-off. The effective tax
rate of the write-off of long-term assets and the resulting tax consequences was
9%. Included therein is an increase in the valuation allowance against foreign
tax credits and a provision for tax contingencies in foreign jurisdictions.
NET INCOME (LOSS). The first quarter 1996 net loss was $55.6 million compared
to the first quarter 1995 net income of $1.0 million due to the factors
discussed above.
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
For the three months ended March 31, 1996, the Company generated $4.8 million of
cash from operations as compared to $5.1 million for the same period ended
March 31, 1995. The Company's principal use of the cash generated from
operations were for capital expenditures, costs of acquisitions, and debt
payments. At March 31, 1996, working capital was $42.0 million, down
approximately $2.7 million from December 31, 1995. The majority of the decrease
was due to a $1.6 million decrease in accounts receivable as
8
<PAGE>
revenue in the fourth quarter of 1995 was 12% greater than the first quarter of
1996.
For the three months ended March 31, 1996 and 1995 cash flows used for investing
activities were $3.5 million and $2.4 million, respectively. Capital
expenditures consist primarily of routine renovations and additions to property
and equipment. Capital spending for the first quarter of 1996 was related
primarily to the Company's hi-resolution pipeline tool (TruResTM) and
inspection equipment for Latin American operations.
For the three months ended March 31, 1996, net cash used for financing
activities was $2.8 million compared to $1.1 million for the same period in
1995. The majority of the cash flow used for financing activities relates to
principal payments on the Company's debt. Current and long-term debt was $108.5
million at March 31, 1996, a decrease of $3.2 million from December 31, 1995.
The Company's outstanding debt at March 31, 1995 consisted of $75 million of
10.75% Senior Subordinated Notes due 2003, $5.7 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, $4.8 million of notes payable related to the
construction of the Aberdeen, Scotland coating facility, $2.0 million of
industrial revenue bonds, and $1.0 million of other outstanding debt.
The Company had $10.5 million available for borrowing at March 31, 1996 under a
$35 million revolving credit facility. Approximately $5.5 million of this
revolving line of credit facility was used for outstanding letters of credit.
The Company also had $245,000 of outstanding letters of credit against the $1
million letter of credit note under this facility, and approximately $755,000 of
remaining credit available.
TVI's bank credit agreement and Senior Subordinated Notes prohibit the Company
from paying dividends on its Common Stock.
As discussed above, on April 24, 1996 the Company acquired Drexel, sold shares
of its Common Stock and warrants to purchase shares of its Common Stock, and
issued shares of its Common Stock and warrants to purchase shares of its Common
Stock in exchange for all of the outstanding shares of its Series A Convertible
Preferred Stock.
9
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits -- Reference is hereby made to the Exhibit Index
commencing on page 12.
(b) A Report on Form 8-K was filed on January 16, 1996 regarding the
merger with Drexel.
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: May 10, 1996 /s/ Joseph C. Winkler
- ----------------------- ----------------------------------
Joseph C. Winkler
Executive Vice President,
Chief Financial Officer and
Treasurer (Duly Authorized
Officer, Principal Financial
and Accounting Officer)
11
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION NOTE NO.
- ----------- ----------- --------
<S> <C> <C>
2(a) Agreement and Plan of Merger, dated as of January 3, (Note 12)
1996, among Tuboscope Vetco International Corporation,
Grow Acquisition Limited and D.O.S. Ltd.
3(a) Restated Certificate of Incorporation, dated (Note 7)
March 12, 1990.
3(b) Amended and Restated Bylaws. (Note 2)
3(c) Certificate of Designation of Series A (Note 3)
Convertible Preferred Stock, dated October 22, 1991.
3(d) Certificate of Amendment to Restated Certificate (Note 10)
of Incorporation dated May 12, 1992.
3(e) Certificate of Amendment to Restated Certificate (Note 11)
of Incorporation dated May 10, 1994.
4(a) Stockholders' Agreement, dated May 13, 1988, between (Note 1)
the 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 (Note 1)
Company, Tuboscope Acquisition Corporation and the
and the purchasers named on the execution pages
thereto.
4(c) Indenture (including the form of Note), dated as (Note 4)
of April 1, 1993, 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, (Note 3)
between the Company and BHI Hughes Incorporated relating
to Vetco Services Acquisition.
</TABLE>
1
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<TABLE>
<CAPTION>
<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, .V., as Agent.
10(a) Form of Employment Agreement, dated May 13, 1988, (Note 1)
between 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 (Note 4)
Plan.
10(d) Fifth, Sixth and Seventh Amendments to Savings Investment (Note 8)
Plan.
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 (Note 1)
and 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 (Note 6)
Vetco 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>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10(r) Employee Qualified Stock Purchase Plan. (Note 8)
10(s) Purchase Agreement, dated as of July 20, 1990, by and among (Note 7)
Oil 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 (Note 3)
the 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 (Note 3)
to 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 and (Note 3)
Gerhard H. 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 Mohammed (Note 3)
F. Al-Hajri Est. and Vetco Saudi Arabia Ltd.
10(ee) Lease between J.G.B. Properties Limited and Vetco (Note 3)
Inspection GmbH.
10(ff) Eighth and Ninth Amendment to Savings Investment Plan. (Note 9)
10(gg) Subscription Agreement, dated as (Note 12)
of January 3, 1996, by and between Tuboscope Vetco
International Corporation and SCF-III, L.P.
10(hh) Exchange Agreement, dated as of January 3, 1996, among (Note 14)
Tuboscope Vetco International Corporation and Baker Hughes
Incorporated.
</TABLE>
3
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<TABLE>
<CAPTION>
<S> <C>
10(ii) Voting Agreement, dated as of January 3, 1996, among (Note 12)
Tuboscope Vetco International Corporation, D.O.S. Ltd.,
D.O.S. Partners, L.P., Panmell (Holdings), Ltd.
And Zink Industries Limited.
10(jj) Voting Agreement, dated as of January 3, 1996, among (Note 12)
D.O.S. Ltd., Brentwood Associates IV, L.P. and Baker Hughes
Incorporated.
10(kk) Form of Amended and Restated Executive Agreement. (Note 14)
10(ll) First Amendment to Amended and Restated Employment (Note 14)
Agreement between the Company, Tuboscope Vetco
International Inc. and Martin Reid.
10(mm) Third Amendment to General Manager Employment Agreement (Note 14)
between the Company, Tuboscope Vetco International Inc.
and Gerhard H. Hage.
10(nn) Third Amendment to Employment Agreement between the (Note 14)
Company, Tuboscope Vetco International Inc. and William
V. Larkin.
10(oo) Master Lease Agreement, dated December 18, 1995, between (Note 14)
the Company and Heller Financial Leasing, Inc.
27 Financial Data. Exhibit 27
</TABLE>
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
4
<PAGE>
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.
Note 12 Previously filed in the Company's Current Report on Form 8-K filed
on January 16, 1996 and incorporated by reference herein pursuant to
Rule 12b-32 of the Exchange Act.
Note 13 Previously filed in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and incorporated by reference
herein pursuant to Rule 12b-32 of the Exchange Act.
Note 14 Previously filed in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 and incorporated by reference
herein pursant to Rule 12b-32 of the Exchange Act.
5
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<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,912
<SECURITIES> 0
<RECEIVABLES> 50,449
<ALLOWANCES> 966
<INVENTORY> 14,039
<CURRENT-ASSETS> 81,919
<PP&E> 155,304
<DEPRECIATION> 48,146
<TOTAL-ASSETS> 240,245
<CURRENT-LIABILITIES> 39,961
<BONDS> 104,159
10,175
0
<COMMON> 186
<OTHER-SE> 65,229
<TOTAL-LIABILITY-AND-EQUITY> 240,245
<SALES> 873
<TOTAL-REVENUES> 47,018
<CGS> 440
<TOTAL-COSTS> 35,171
<OTHER-EXPENSES> 192
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,595
<INCOME-PRETAX> (60,163)
<INCOME-TAX> (4,574)
<INCOME-CONTINUING> (55,589)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,589)
<EPS-PRIMARY> (2.97)
<EPS-DILUTED> (2.97)
</TABLE>
