<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, 1998
----------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-18312
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TUBOSCOPE INC.
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(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
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(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 44,403,282 shares of common stock outstanding as of
March 31, 1998.
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TUBOSCOPE INC.
INDEX
Page No.
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets -
March 31, 1998 (unaudited) and December 31, 1997 2
Unaudited Consolidated Statements of Operations -
For the Three Months Ended March 31, 1998 and 1997 3
Unaudited Consolidated Statements of Cash Flows -
For the Three Months Ended March 31, 1998 and 1997 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 12-14
Appendix A - Financial Data Schedule 15-16
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
1
<PAGE>
TUBOSCOPE INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
March 31, December 31,
1998 1997
(Unaudited)
(In thousands)
A S S E T S
-----------
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................................... $ 11,830 $ 12,593
Accounts receivable, net........................................... 151,687 144,067
Inventory, net..................................................... 86,077 78,317
Deferred income taxes.............................................. 292 984
Prepaid expenses and other......................................... 11,774 11,755
Total current assets.................................................. 261,660 247,716
Property and equipment:
Land, buildings and leasehold improvements......................... 79,304 79,581
Operating equipment and equipment issued to customers.............. 219,278 208,052
Accumulated depreciation and amortization.......................... (80,910) (77,072)
Net property and equipment............................................ 217,672 210,561
Identified intangibles, net........................................... 23,336 23,315
Goodwill, net......................................................... 207,843 202,301
Other assets, net..................................................... 2,683 2,274
Total assets.......................................................... $713,194 $686,167
======== ========
<CAPTION>
L I A B I L I T I E S A N D E Q U I T Y
-----------------------------------------
Current liabilities:
Accounts payable................................................... $ 49,831 $ 43,350
Accrued liabilities................................................ 62,304 76,596
Income taxes payable............................................... 15,622 15,902
Current portion of long-term debt and short-term borrowings........ 30,067 30,574
Total current liabilities............................................. 157,824 166,422
Long-term debt........................................................ 208,285 187,803
Pension liabilities................................................... 8,966 8,916
Deferred taxes payable................................................ 21,739 22,239
Other liabilities..................................................... 1,350 754
Total liabilities..................................................... 398,164 386,134
Common stockholders' equity:
Common stock, $.01 par value, 60,000,000 shares authorized, 44,403,282
shares issued and outstanding (44,235,591 at December 31, 1997).... 444 442
Paid-in capital.................................................... 296,058 294,402
Retained earnings.................................................. 24,388 10,155
Accumulated other comprehensive income............................. (5,860) (4,966)
Total common stockholders' equity..................................... 315,030 300,033
Total liabilities and equity.......................................... $713,194 $686,167
======== ========
- --------------------------------------------------------------------------------------------------
</TABLE>
See notes to unaudited consolidated financial statements.
2
<PAGE>
TUBOSCOPE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---------- ----------
(In thousands, except
per share data)
<S> <C> <C>
Revenue.............................................. $ 150,181 $ 105,501
Costs and expenses:
Cost of services and products sold................. 103,191 72,574
Goodwill Amortization.............................. 1,505 1,107
Selling, general and administration................ 14,084 11,172
Research and engineering costs..................... 3,413 2,475
---------- ----------
122,193 87,328
---------- ----------
Operating profit..................................... 27,988 18,173
Other expense (income):
Interest Expense................................... 4,353 3,523
Interest Income.................................... (89) (33)
Foreign Exchange................................... 148 132
Other, net......................................... 803 455
---------- ----------
Income before income taxes........................... 22,773 14,096
Provision for income taxes........................... 8,540 5,498
---------- ----------
Net Income........................................... $ 14,233 $ 8,598
========== ==========
Earnings Per Common Share:
Basic Earnings Per Common Share.................... $ 0.32 $ 0.20
========== ==========
Dilutive Earnings Per Common Share................. $ 0.30 $ 0.19
========== ==========
Weighted average number of common shares outstanding:
Basic.............................................. 44,312,198 42,431,996
========== ==========
Dilutive........................................... 47,861,221 44,739,811
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
TUBOSCOPE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
--------- ---------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 14,233 $ 8,598
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 7,421 5,843
Compensation related to employee 401(k) plan......... 194 114
Provision for losses on accounts receivable.......... 244 --
Provision for inventory reserve...................... 24 --
Provision for deferred income taxes.................. 192 514
Changes in assets and liabilities, net of effects
of acquired companies:
Accounts receivable.............................. (7,864) (12,655)
Inventory........................................ (9,728) (3,326)
Prepaid expenses and other assets................ (19) (3,600)
Accounts payable, and accrued liabilities........ (7,811) 8,942
Federal and foreign income taxes payable......... (280) 793
--------- --------
Net cash provided by (used for) operating activities. (3,394) 5,223
--------- --------
Cash flows used for investing activities:
Capital expenditures................................... (9,892) (4,940)
Business acquisitions, net of cash acquired............ (7,874) 1,734
Other.................................................. (1,075) (433)
--------- --------
Net cash used for investing activities............... (18,841) (3,639)
--------- --------
Cash flows provided by (used for) financing activities:
Borrowings under financing agreements.................. 123,845 1,889
Principal payments under financing agreements.......... (103,837) (5,167)
Proceeds from sale of common stock and warrants........ 1,464 1,745
--------- --------
Net cash provided by (used for) financing activities. 21,472 (1,533)
--------- --------
Net increase (decrease) in cash and cash equivalents..... (763) 51
Cash and cash equivalents:
Beginning of period.................................... 12,593 10,407
--------- --------
End of period.......................................... $ 11,830 $ 10,458
========= ========
Supplemental disclosure of cash flow information:
Cash paid during the three month period for:
Interest............................................. $ 4,976 $ 2,541
========= ========
Taxes................................................ $ 8,607 $ 3,634
========= ========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
TUBOSCOPE INC.
Notes to Unaudited Consolidated Financial Statements
For the Three Months Ended March 31, 1998 and 1997
and as of December 31, 1997
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 for the year.
The financial statements included in this report should be read in conjunction
with the Company's 1997 audited consolidated financial statements and
accompanying notes.
2. Inventory
At March 31, 1998 inventories consist of the following (in thousands):
<TABLE>
<S> <C>
Components, subassemblies, and expendable parts.................. $ 49,036
Equipment under production....................................... 37,041
--------
$ 86,077
========
</TABLE>
3. Senior Credit Agreement and Dividend Restrictions
The Company's Senior Credit Agreement restricts the Company from paying
dividends on its capital stock until the total funded debt to capital ratio (as
defined in the Credit Agreement) is not greater than 40%. The Company's total
funded debt to capital ratio (calculated as defined under the Credit Agreement)
was 43.5% at March 31, 1998.
4. $100.0 Million Senior Notes
On February 25, 1998, the Company issued $100.0 million of 7.5% Senior Notes
due 2008 ("Notes"). The Notes are fully and unconditionally guaranteed, on a
joint and several basis, by certain wholly-owned subsidiaries of the Company
(collectively "Guarantor Subsidiaries" and individually "Guarantor"). Each of
the guarantees is an unsecured obligation of the Guarantor and ranks pari
passu with the guarantees provided by and the obligations of such Guarantor
Subsidiaries under the Bank Credit Facility and with all existing and future
unsecured indebtedness of such Guarantor for borrowed money that is not, by
its terms, expressly subordinated in right of payment to such guarantee. A
portion of the net proceeds from the issuance of the Notes was used by the
Company to repay indebtedness outstanding under the Company's Credit
Agreement. The remaining net proceeds will be used to finance future
acquisitions, working capital and general corporate purposes.
5. New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income" which established new rules for the
reporting and display of comprehensive income. SFAS No. 130 requires the
Company's foreign currency translation adjustments to be added to net income
to determine total comprehensive income. Total comprehensive income for the
three months ended March 31, 1998 and 1997 was $13,339,000 and $5,724,000
respectively.
In June 1997, the FASB also issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related
5
<PAGE>
Information" (SFAS No. 131) which establishes standards for the way that
public companies report information about operating segments in both annual
and interim financial statements. SFAS No. 131 also establishes standards for
disclosures about products and services, geographic areas and major customers.
SFAS No. 131 is effective for fiscal years beginning after December 15, 1997.
The Company will adopt SFAS No. 131 retroactively in the fourth quarter of
1998. The adoption of SFAS No. 131 will not affect the Company's results of
operations or financial position, but will increase the Company's disclosure
of segment information.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Three Months Ended March 31, 1998 and 1997
Revenue. Revenue was $150.2 million for the first quarter of 1998, an increase
of $44.7 million, or 42%, compared to $105.5 million in the first quarter of
1997. The increase was due to strong internal growth in several of the
Company's products and markets including international oilfield Inspection,
North America Coating, worldwide Solids Control, and Coiled Tubing & Pressure
Control Products. In addition, revenue increased due to eleven 1997
acquisitions.
Revenue from the Company's Tubular Services, comprised of Inspection, Coating,
and Mill Systems and Sales, was $61.3 million in the first quarter of 1998, up
$17.9 million, or 41%, compared to the first quarter of 1997. The increase in
Tubular Services revenue was due primarily to the March 7, 1997 acquisition of
Fiber Glass Systems, Inc. (a manufacturer of premium fiberglass tubulars used in
corrosive oilfield applications) and three 1997 acquisitions of tubular
inspection service companies. In addition, the Company's international
inspection activity was up in Europe, Latin America, and the Far East. North
America Coating operations also produced strong results with revenue up 25% over
the first quarter of 1997.
Solids Control revenue was $47.5 million in the first three months of 1998, an
increase of $14.3 million, or 43%, compared to the same period of 1997. The
increase was due mainly to 26% internal growth in the U.S. Gulf Coast
operations, 34% internal growth in Latin America operations, and stronger
capital sales in domestic and international markets. In addition, revenue also
increased due to the acquisition of six solids control operations in 1997, all
subsequent to the first quarter.
Coiled Tubing & Pressure Control Products revenue was $29.1 million for the
first quarter of 1998, an increase of $12.3 million, or 74%, over the first
quarter of 1997. The increase was due primarily to increased sales of coiled
tubing units manufactured by the Company's Hydra Rig operation. In addition,
revenue from coiled tubing blowout preventers increased significantly from the
prior year. Results for 1998 also benefited from the acquisition of Tulsa
Equipment Manufacturing in the fourth quarter of 1997. Backlog for the Coiled
Tubing & Pressure Control Products operations was at $48.6 million at March 31,
1998, an increase of 15% from December 31, 1997.
Pipeline and Other Industrial Inspection revenue was $12.3 million in the first
quarter of 1998, up slightly from $12.1 million in 1997, as increased Middle
East industrial inspection revenue was offset by lower Pipeline revenue as a
result of project delays in Latin America.
Gross Profit. Gross profit was $45.5 million in the first quarter of 1998, an
increase of $13.7 million, or 43%, over 1997 first quarter gross profit of $31.8
million. The increase was primarily due to the growth in internal revenue and
the eleven 1997 acquisitions discussed above. Gross profit percent was up
slightly to 30.3% in 1998 from 30.2% in 1997.
Selling, General, and Administrative Costs. Selling, general, and
administrative costs were $14.1 million in the first three months of 1998, an
increase of $2.9 million, or 26%, from $11.2 million in 1997. The increase was
due mainly to the eleven 1997 acquisitions and costs associated with internal
incremental growth. Total worldwide employees increased from 3,597 at the end
of March 31, 1997 to 4,724 at March 31, 1998. Selling, general, and
administrative costs as a percent of revenue was 9.4% in 1998 compared to 10.6%
in 1997.
Research and Engineering Costs. Research and engineering costs were $3.4
million for the three months ended March 31, 1998 compared to $2.5 million in
the same period of 1997. The increase was due mainly to greater engineering
costs in the Company's Pipeline operations associated with the continued
commercial development and enhancement of the Company's TruRes(R) "High-
Resolution" pipeline tools. In addition, research and engineering costs were
up slightly in the Company's Solids Control and Coiled Tubing product lines.
Operating Profit. Operating profit was $28.0 million in the first quarter of
1998 an increase of $9.8 million or 54% compared to 1997. The increase was due
primarily to internal growth in Tubular Services, Solids Control, and Coiled
Tubing & Pressure Control Products, and the 1997 acquisitions.
7
<PAGE>
Interest Expense. Interest expense was $4.4 million for the first quarter of
1998 compared to $3.5 million in the first quarter of 1997. The increase was
due to an increase in debt resulting primarily from the 1997 acquisitions.
Other Expense (Income). Other expense, which includes interest income, foreign
exchange, minority interest, and other expense (income), resulted in a net
expense of $0.9 million in the first quarter of 1998, up slightly from $0.6
million in the same period of 1997.
Provision for Income Taxes. The Company's effective tax rate for the first
quarters of 1998 and 1997 were 37.5% and 39.0%, respectively. These rates are
higher than the domestic rate of 35% due to charges not allowed under domestic
and foreign jurisdictions related to goodwill amortization and foreign earnings
subject to tax rates differing from domestic rates.
Net Income. Net income was $14.2 million in the first quarter of 1998 compared
to $8.6 million for the same period of 1997 due to the factors discussed above.
Financial Condition and Liquidity
March 31, 1998
For the three months ended March 31, 1998, the Company used $3.4 million of cash
for operating activities compared to cash provided by operations in the first
three months of 1997 of $5.2 million. Cash was used in operations during the
first three months of 1998 principally as a result of a $7.9 million increase in
accounts receivable, a $9.7 million increase in inventory, and a net reduction
on accounts payable and accrued liabilities of $7.8 million. The increase in
accounts receivable was due primarily to greater equipment sales related to
Coiled Tubing and Pressure Control Products late in the first quarter of 1998
compared to the end of the fourth quarter of 1997. Inventory increased $9.7
million mainly as a result of greater backlogs and resulting work in process in
Coiled Tubing and Pressure Control Products and greater work in process
associated with anticipated future Mill equipment sales. The decrease in
accounts payable and accrued liabilities was due to 1998 payments made on
acquisitions which were completed late in 1997 and 1998 bonus payments related
to 1997 compensation.
For the three months ended March 31, 1998, the Company used $18.8 million of
cash from investing activities compared to a usage of $3.6 million in the same
period of 1997. Capital expenditures of $9.9 million for the first quarter of
1998 were concentrated primarily in the fast growing Latin America, Canadian,
and Gulf Coast markets for solids control and oilfield inspection equipment. The
Company also incurred capital spending for its high resolution pipeline
inspection units and new Navasota, Texas coating plant in the first quarter of
1998. Business acquisitions of $7.9 million were primarily related to Baytron,
Inc. (Baytron), a provider of drilling instrumentation systems and related
equipment to operators and drilling contractors throughout the Gulf of Mexico.
For the three months ended March 31, 1998, the Company generated $21.5 million
of cash from financing activities. Net borrowings associated with the issue of
$100.0 million of 7 1/2% Senior Notes due 2008 ("Notes") offset to some extent
by the partial repayment of indebtedness outstanding under the Company's Credit
Agreement represented the main source of cash flow. In addition, the Company
generated proceeds from the sale $1.5 million of common stock.
Current and long-term debt was $238.4 million at March 31, 1998, an increase of
$20.0 million from the $218.4 million outstanding at December 31, 1997. The
increase was mainly due to the acquisition of Baytron and 1998 payments on
acquisitions completed late in 1997. The Company's outstanding debt at March
31, 1998 consisted of $100.0 million of Notes, $110.4 million of term loans
due under the Company's Senior Credit Agreement, $11.0 million due under the
Company's $100.0 revolving credit facility, $4.0 million associated with the
acquisition of Gauthier Brothers, $3.9 million associated with the acquisition
of Fiber Glass Systems, Inc., and other debt of $9.1 million.
At March 31, 1998, the Company had outstanding letters of credit of $6.8
million. The available facility on the Company's $100.0 million revolving
credit facility and $5 million swingline facility was $83.7 million and $3.0
million, respectively, at March 31, 1998.
8
<PAGE>
Operating Environment
During the first quarter of 1998, activity levels in the Company's worldwide
markets were generally greater than the first quarter of 1997. However,
commencing in the fourth quarter of 1997 and continuing through the first
quarter of 1998, the average price of West Texas Intermediate Crude (WTI) began
to decline. The average price of WTI was down 31% to $15.83 per barrel in the
first quarter of 1998 compared to the first quarter 1997 average of $22.86 per
barrel. In addition, natural gas prices declined by 13% in the first three
months of 1998 compared to the same period of 1997. While this downturn in oil
and gas prices did not significantly impact the Company's operating results in
the first quarter of 1998, the Company believes that a continuation of such low
price levels for oil and natural gas would impact the rate of the Company's
internal growth in the future.
Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The forward-looking statements are those that
do not state historical facts and are inherently subject to risk and
uncertainties. The forward-looking statements contained herein are based on
current expectations and entail various risks and uncertainties that could cause
actual results to differ materially from those projected in the forward-looking
statements. Such risks and uncertainties include, among others, the cyclical
nature of the oilfield services industry, risks associated with the Company's
significant foreign operations, compliance with environmental laws, risks
associated with growth through the acquisitions and other factors discussed in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
under the caption "Factors Affecting Future Operating Results."
9
<PAGE>
Item 6. Exhibits and reports on 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 March
31, 1998.
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 INC.
(Registrant)
Date: May 14, 1998 /s/ Joseph C. Winkler
- ------------------------ ------------------------------
Joseph C. Winkler
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.
- ----------- ----------- -----------
<S> <C> <C>
2(a) Agreement and Plan of Merger, dated as of January 3, 1996, among Tuboscope Vetco (Note 12)
International Corporation, Grow Acquisition Limited and D.O.S. Ltd.
2(b) Share Purchase Agreement dated as of May 31, 1996 between TVI Wadeco Inc., J & S (Note 15)
Hokanson Investments Ltd., John Hokanson, Douglass Bell, Robert Russell,
Richard Rutherford and Wadeco Oilfield Services. Ltd.
2(c) Stock Purchase and Sale Agreement dated as of September 6, 1996 by and among (Note 16)
Tuboscope Pipeline Services, Inc., Vetco Pipeline Services, Inc., Rauma
USA, Inc. and Rauma Corporation
2(d) Addendum No. 1 to Stock Purchase and Sale Agreement dated as of September 20, 1996 (Note 16)
by and among Tuboscope Pipeline Services, Inc., Vetco Pipeline Services,
Inc., Rauma USA, Inc. and Rauma Corporation
2(e) Addendum No. 2 to Stock Purchase and Sale Agreement dated as of September 20, 1996 (Note 16)
by and among Tuboscope Pipeline Services, Inc., Vetco Pipeline Services, Inc., Rauma
USA, Inc. and Rauma Corporation
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 Stock, dated October 22, (Note 3)
1991.
3(d) Certificate of Amendment to Restated Certificate of Incorporation dated May 12, 1992. (Note 10)
3(e) Certificate of Amendment to Restated Certificate of Incorporation dated May 10, 1994. (Note 11)
3(f) Certificate of Amendment to Restated Certificate of Incorporation dated April 24, 1996 (Note 21)
3(g) Certificate of Amendment to Restated Certificate of Incorporation dated June 3, 1997 (Note 22)
4(a) Stockholders' Agreement, dated May 13, 1988, between the Company, Brentwood, Hub, the (Note 1)
Management Investors, the Other Investors, and the Institutional Investors, including
the Common Stock Registration Rights Agreement attached thereto as Exhibit A.
4(b) Indenture (including the form of Note), dated as of April 1, 1993, among Tuboscope Vetco (Note 4)
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(c) Supplemental Indenture dated as of December 18, 1996, among Tuboscope Vetco (Note 19)
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(d) 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(e) 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(f) 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
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Note No.
- ----------- ----------- -----------
<S> <C> <C>
to furnish copies of the relevant documentation to the Securities Exchange Commission
upon request).
4(g) Amended and Restated Secured Credit Agreement dated as of February 9, 1998 between (Note 24)
Tuboscope Inc. and Chase Bank of Texas, National Association, ABN Amro Bank N.V.,
Houston Agency, and the other Lenders Party Thereto, and ABN Amro Bank N.V., Houston
Agency as Administrative Agent.
4(h) Indenture, dated as of February 25, 1998, between Tuboscope Inc., the Guarantors named (Note 24)
therein and The Bank of New York Trust Company of Florida, as trustee, relating to
$100,000,000 aggregate principal amount of 7 1/2% Senior Notes due 2008.
4(i) Registration Rights Agreement, dated as of February 25, 1998, between Tuboscope Inc., (Note 24)
Credit Suisse First Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc.
and Salomon Brothers Inc.
10(a) Savings Investment Plan, dated May 13, 1998, as amended by First Amendment to Savings (Note 1)
Investment Plan.
10(b) Second, Third and Fourth Amendments to Savings Investment Plan. (Note 4)
10(c) Fifth, Sixth and Seventh Amendments to Savings Investment Plan. (Note 8)
10(d) Supplementary Agreement Fixed Rental Scheme, dated May 19, 1989, between Jurong (Note 1)
Town Corporation and AMF Far East Pte. Ltd.
10(e) Description of Life Insurance Plan. (Note 1)
10(f) Amended and Restated Stock Option Plan for Key Employees of Tuboscope Vetco (Note 5)
International Corporation.
10(g) Form of Revised Incentive Stock Option Agreement. (Note 5)
10(h) Form of Revised Non-Qualified Stock Option Agreement (Note 5)
10(i) Stock Option Plan for Non-Employee Directors of Tuboscope Vetco International (Note 6)
Corporation.
10(j) Amendment to Stock Option Plan for Non-Employee Directors of Tuboscope Vetco (Note 6)
International Corporation.
10(k) Form of Non-Qualified Stock Option Agreement (Note 6)
10(l) Employee Qualified Stock Purchase Plan. (Note 8)
10(m) Purchase Agreement, dated as of September 30, 1991, between the Company and BHI (Note 3)
relating to the Vetco Services Acquisition.
10(o) Technology Transfer Agreement, dated as of October 29, 1991, between Tuboscope Inc. (Note 3)
and BHI.
10(p) Lease Agreement with respect to Celle, Germany facility. (Note 3)
10(q) Building Agreement for Land at Jurong, dated May 5, 1983, between Jurong Town (Note 3)
Corporation and Vetco International Inc.
10(r) Lease between J.G.B. Properties Limited and Vetco Inspection GmbH. (Note 3)
10(s) Eighth and Ninth Amendment to Savings Investment Plan. (Note 9)
10(t) Subscription Agreement, dated as of January 3, 1996, by and between Tuboscope Vetco (Note 12)
International Corporation and SCF-III, L.P.
10(u) Exchange Agreement, dated as of January 3, 1996, among Tuboscope Vetco International (Note 13)
Corporation and Baker Hughes Incorporated.
10(v) Voting Agreement, dated as of January 3, 1996, among Tuboscope Vetco International (Note 12)
Corporation, D.O.S. Ltd., D.O.S. Partners, L.P., Panmell (Holdings), Ltd, and Zink
Industries Limited.
10(w) Voting Agreement, dated as of January 3, 1996, among D.O.S. Ltd., Brentwood (Note 12)
Associates IV, L.P. and Baker Hughes Incorporated.
10(x) Form of Amended and Restated Executive Agreement. (Note 13)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Note No.
- ----------- ----------- ---------
<S> <C> <C>
10(y) Master Lease Agreement, dated December 18, 1995, between the Company and Heller (Note 13)
Financial Leasing, Inc.
10(z) 1996 Equity Participation Plan. (Note 17)
10(aa) D.O.S. Ltd. 1993 Stock Option Plan. (Note 18)
10(bb) Agreement and Plan of Merger dated as of March 7, 1997 by and among Tuboscope (Note 20)
Vetco International Corporation, FGS Acquisition Corp. and Fiber Glass
Systems Inc.
10(cc) Purchase Agreement, dated as of February 19, 1998, between Tuboscope Inc., (Note 24)
Credit Suisse First Boston Corporation, ABN AMRO Incorporated, Chase Securities
Inc. and Salomon Brothers Inc.
21 Subsidiaries (Note 23)
27 Financial Data Exhibit 27
- -----------
</TABLE>
<TABLE>
<CAPTION>
- -----------
<S> <C>
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.
</TABLE>
<TABLE>
<CAPTION>
Exhibit
No. Description
- ----------- -----------
<S> <C>
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 10-Q 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.
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, 1995
and incorporated by reference herein pursuant to Rule 12b-32 of the Exchange Act.
Note 14 Previously filed in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 and
incorporated by reference herein pursuant to Rule 12b-32 of the Exchange Act.
Note 15 Previously filed in the Company's Current Report on Form 8-K filed on June 14, 1996, as amended by
Amendment No. 1 on Form 8-K/A filed on August 2, 1996, and incorporated by reference
herein pursuant to Rule 12b-32 of the Exchange Act.
Note 16 Previously filed in the Company's Current Report on Form 8-K filed on October 7, 1996, as amended by
Amendment No. 1 filed on November 12, 1996, and incorporated by reference herein pursuant to Rule 12b-32
of the Exchange Act.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Description Note No.
- ----------- ----------- ---------
<S> <C> <C>
Note 17 Previously filed by the Company in Registration No. 333-05233 and incorporated by reference
herein pursuant to Rule 12b-32 of the Exchange Act.
Note 18 Previously filed by the Company in Registration No. 333-05237 and incorporated by reference
herein pursuant to Rule 12b-32 of the Exchange Act.
Note 19 Previously filed in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and incorporated by reference herein pursuant to rule 12b-32 of the
Exchange Act.
Note 20 Previously filed in the Company's current report on Form 8-K filed on March 19, 1997, as
amended by Amendment No. 1 filed on May 7, 1997, and incorporated by reference herein
pursuant to Rule 12b-32 of the Exchange Act.
Note 21 Previously filed by the Company as Appendix E in Registration No. 333-01869 and incorporated
by reference herein pursuant to Rule 12b-32 of the Exchange Act.
Note 22 Previously filed in the Company's Proxy Statement for the 1997 Annual Meeting of Stockholders
and incorporated by reference herein pursuant to Rule 12b-32 of the Exchange Act.
Note 23 Previously filed in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 and incorporated by reference herein pursuant to rule 12b-32 of the Exchange Act.
Note 24 Previously filed by Registrant in File No. 333-51115 and incorporated by references herein
pursuant to Rule 12b-32 of the Exchange Act.
</TABLE>
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,830
<SECURITIES> 0
<RECEIVABLES> 151,687
<ALLOWANCES> 4,141
<INVENTORY> 86,077
<CURRENT-ASSETS> 261,660
<PP&E> 298,582
<DEPRECIATION> 80,910
<TOTAL-ASSETS> 713,194
<CURRENT-LIABILITIES> 157,824
<BONDS> 208,285
0
0
<COMMON> 444
<OTHER-SE> 314,586
<TOTAL-LIABILITY-AND-EQUITY> 713,194
<SALES> 58,691
<TOTAL-REVENUES> 150,181
<CGS> 34,962
<TOTAL-COSTS> 103,191
<OTHER-EXPENSES> 1,505
<LOSS-PROVISION> 244
<INTEREST-EXPENSE> 4,353
<INCOME-PRETAX> 22,773
<INCOME-TAX> 8,540
<INCOME-CONTINUING> 14,233
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,233
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.30
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997
<PERIOD-END> DEC-31-1997 SEP-30-1997
<CASH> 12,593 13,585
<SECURITIES> 0 0
<RECEIVABLES> 144,067 133,221
<ALLOWANCES> 3,560 3,729
<INVENTORY> 78,317 68,646
<CURRENT-ASSETS> 247,716 231,949
<PP&E> 287,633 277,091
<DEPRECIATION> 77,072 75,697
<TOTAL-ASSETS> 686,167 645,194
<CURRENT-LIABILITIES> 166,422 151,627
<BONDS> 187,803 176,393
0 0
0 0
<COMMON> 442 442
<OTHER-SE> 299,591 282,207
<TOTAL-LIABILITY-AND-EQUITY> 686,167 645,194
<SALES> 189,892 132,972
<TOTAL-REVENUES> 525,231 372,907
<CGS> 120,460 81,410
<TOTAL-COSTS> 424,306 252,777
<OTHER-EXPENSES> 1,520 3,738
<LOSS-PROVISION> 2,421 1,964
<INTEREST-EXPENSE> 14,456 10,698
<INCOME-PRETAX> 84,949 58,882
<INCOME-TAX> 31,845 22,299
<INCOME-CONTINUING> 53,104 36,583
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 53,104 36,583
<EPS-PRIMARY> 1.22 0.84
<EPS-DILUTED> 1.14 0.80
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 MAR-31-1997
<CASH> 11,947 10,458
<SECURITIES> 0 0
<RECEIVABLES> 123,304 111,673
<ALLOWANCES> 2,670 2,394
<INVENTORY> 61,941 52,137
<CURRENT-ASSETS> 213,575 190,770
<PP&E> 254,273 245,671
<DEPRECIATION> 66,339 63,077
<TOTAL-ASSETS> 591,387 562,195
<CURRENT-LIABILITIES> 128,117 120,926
<BONDS> 193,527 186,715
0 0
0 0
<COMMON> 436 436
<OTHER-SE> 261,399 248,014
<TOTAL-LIABILITY-AND-EQUITY> 591,387 562,195
<SALES> 86,067 32,910
<TOTAL-REVENUES> 231,496 105,501
<CGS> 49,914 20,263
<TOTAL-COSTS> 156,852 72,574
<OTHER-EXPENSES> 2,314 1,107
<LOSS-PROVISION> 650 12
<INTEREST-EXPENSE> 7,090 3,523
<INCOME-PRETAX> 34,812 14,096
<INCOME-TAX> 13,267 5,498
<INCOME-CONTINUING> 21,545 8,598
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 21,545 8,598
<EPS-PRIMARY> 0.50 0.20
<EPS-DILUTED> 0.48 0.19
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996
<PERIOD-END> DEC-31-1996 SEP-30-1996
<CASH> 10,407 13,127
<SECURITIES> 0 0
<RECEIVABLES> 96,083 96,391
<ALLOWANCES> 2,382 2,520
<INVENTORY> 47,170 49,240
<CURRENT-ASSETS> 166,233 174,269
<PP&E> 240,939 216,121
<DEPRECIATION> 59,559 52,450
<TOTAL-ASSETS> 505,165 493,240
<CURRENT-LIABILITIES> 91,840 90,282
<BONDS> 168,229 163,472
0 0
0 0
<COMMON> 416 412
<OTHER-SE> 218,486 215,574
<TOTAL-LIABILITY-AND-EQUITY> 505,165 493,240
<SALES> 93,016 63,084
<TOTAL-REVENUES> 341,431 236,333
<CGS> 58,127 38,062
<TOTAL-COSTS> 362,712 167,852
<OTHER-EXPENSES> 293 971
<LOSS-PROVISION> 0 336
<INTEREST-EXPENSE> 13,414 9,584
<INCOME-PRETAX> (34,988) (47,484)
<INCOME-TAX> 8,238 (2,496)
<INCOME-CONTINUING> (43,226) (49,980)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (6,373) 0
<CHANGES> 0 0
<NET-INCOME> (49,599) (49,980)
<EPS-PRIMARY> (1.35) (1.48)
<EPS-DILUTED> (1.35) (1.48)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996
<PERIOD-END> JUN-30-1996 MAR-31-1996
<CASH> 11,352 7,912
<SECURITIES> 0 0
<RECEIVABLES> 97,018 50,449
<ALLOWANCES> 1,976 966
<INVENTORY> 41,122 14,039
<CURRENT-ASSETS> 164,320 81,919
<PP&E> 211,041 155,304
<DEPRECIATION> 50,820 48,146
<TOTAL-ASSETS> 467,785 240,245
<CURRENT-LIABILITIES> 113,686 39,961
<BONDS> 121,092 104,159
0 10,175
0 0
<COMMON> 411 186
<OTHER-SE> 206,472 65,229
<TOTAL-LIABILITY-AND-EQUITY> 467,785 240,245
<SALES> 33,760 873
<TOTAL-REVENUES> 141,661 47,018
<CGS> 19,604 440
<TOTAL-COSTS> 119,728 35,171
<OTHER-EXPENSES> 348 192
<LOSS-PROVISION> 36 0
<INTEREST-EXPENSE> 6,010 2,595
<INCOME-PRETAX> 58,692 (60,163)
<INCOME-TAX> (1,916) (4,574)
<INCOME-CONTINUING> (56,776) (55,589)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (56,776) (55,589)
<EPS-PRIMARY> (1.86) (2.97)
<EPS-DILUTED> (1.86) (2.97)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 9,394
<SECURITIES> 0
<RECEIVABLES> 52,071
<ALLOWANCES> 955
<INVENTORY> 14,364
<CURRENT-ASSETS> 84,753
<PP&E> 186,744
<DEPRECIATION> 46,706
<TOTAL-ASSETS> 306,679
<CURRENT-LIABILITIES> 40,130
<BONDS> 107,055
10,175
0
<COMMON> 185
<OTHER-SE> 116,379
<TOTAL-LIABILITY-AND-EQUITY> 306,679
<SALES> 7,844
<TOTAL-REVENUES> 190,015
<CGS> 4,258
<TOTAL-COSTS> 137,057
<OTHER-EXPENSES> 1,310
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,328
<INCOME-PRETAX> 15,205
<INCOME-TAX> 6,386
<INCOME-CONTINUING> 8,819
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,819
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
</TABLE>
