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Exhibit 99.1
TUBOSCOPE VETCO INTERNATIONAL INC. 401(K) THRIFT SAVINGS PLAN FINANCIAL
STATEMENTS AND SCHEDULES PREPARED IN ACCORDANCE WITH THE FINANCIAL REPORTING
REQUIREMENTS OF ERISA
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Financial Statements and Supplemental Schedules
Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Year ended December 31, 1999
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Financial Statements and Supplemental Schedules
Year ended December 31, 1999
Contents
<TABLE>
<S> <C>
Report of Independent Auditors............................................. 1
Audited Financial Statements
Statements of Net Assets Available for Benefits............................ 2
Statement of Changes in Net Assets Available for Benefits.................. 3
Notes to Financial Statements.............................................. 4
Supplemental Schedules
Schedule H, Line 4(i) - Schedule of Assets Held for Investment
Purposes at End of Year.................................................. 9
Schedule H, Line 4(j)- Schedule of Reportable Transactions................. 10
</TABLE>
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Report of Independent Auditors
Administrative Committee
Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan as of
December 31, 1999 and 1998, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1999. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes at end of year as of December 31, 1999,
and reportable transactions for the year then ended are presented for purposes
of additional analysis and are not a required part of the financial statements
but are supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedules are the responsibility
of the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
May 30, 2000
1
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
December 31
1999 1998
---------------------------
<S> <C> <C>
Assets
Investments at fair value (Note 4) $45,706,199 $39,244,710
Cash 18,750 3,575
Receivables:
Participant contributions 164,967 202,611
Employer contributions 62,363 78,914
Accrued interest and dividends 26,558 21,727
---------------------------
Total receivables 253,888 303,252
---------------------------
Total assets 45,978,837 39,551,537
Liabilities
Liability for securities purchased - 71,926
---------------------------
Total liabilities - 71,926
---------------------------
Net assets available for benefits $45,978,837 $39,479,611
==========================
</TABLE>
See accompanying notes.
2
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1999
<TABLE>
<S> <C>
Additions to net assets attributed to:
Participant contributions $ 2,820,535
Employer contributions in stock 1,022,136
Rollover contributions 469,957
Investment income 3,068,651
Net appreciation in fair value of investments (Note 4) 4,367,976
Other 161,983
------------
Total additions 11,911,238
Deductions from net assets attributed to:
Benefits paid to participants 5,819,297
Administrative expenses 94,605
------------
Total deductions 5,913,902
Transfers from other qualified plans 501,890
------------
Net increase 6,499,226
Net assets available for benefits at beginning of year 39,479,611
------------
Net assets available for benefits at end of year $ 45,978,837
============
</TABLE>
See accompanying notes.
3
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Notes to Financial Statements
December 31, 1999
1. Description of the Plan
General
The Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan (the "Plan")
is a defined contribution plan which covers domestic employees of Tuboscope
Vetco International Inc. (the "Company"), and certain subsidiaries. Employees
are eligible upon hiring or rehiring by the Company.
The following brief description of the Plan is provided for general information
purposes only. Participants should refer to the Summary Plan Description for a
more complete description of the Plan's provisions.
Participant Contributions
Effective January 1, 1998, the Plan allows participants to contribute from 1% to
20% of their gross salary in any combination of before-tax and after-tax
dollars, subject to limits prescribed by law.
Employer Contributions
The Plan allows for matching contributions by the Company of one-half of each
participant's contributions, up to a maximum of 3% of the participant's salary.
Matching contributions are made by the Company in Company Stock and are valued
at the fair market value as of the date of contribution to the Plan.
Participants may transfer the matching contribution to another fund option at
any time.
The Company may, in its sole discretion, contribute to the Plan for each
participant who elected to defer compensation or make voluntary contributions to
the Plan an additional contribution of one-half of the participant's deferred
compensation and one-half of the participant's voluntary contributions, up to a
maximum of 1% of the participant's salary.
Participant Loans
Participants are allowed to borrow a minimum of $1,000 and a maximum of $50,000.
The amount of a loan may not exceed 50% of the value of the participant's
deferred compensation account and vested employer's contributions account. The
security for a loan extended under the Plan is 50% of the value of the
borrower's vested account balance as determined immediately after the loan is
extended. The administrative
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
committee determines a reasonable interest rate to be applied uniformly and
charged on outstanding loans. The term of a loan is limited to five years unless
the loan is used to acquire the borrower's principal residence.
Vesting
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the participant's employer contributions account, including
actual earnings thereon, is based upon years of continuous service. A
participant vests 20% each year and is 100% vested after five years of credited
service. Full vesting in the participant's employer contributions will also
occur at death, age 60, disability, retirement, or the termination or
discontinuation of the Plan. Forfeitures may be applied to reduce the employer's
contribution.
Payment of Benefits
Upon termination of service, each participant can receive his/her vested amount
in one lump-sum payment or, in certain cases, the participant may defer
withdrawals. In addition, active service withdrawals may be taken at age 59 1/2
and at age 62 in 10% increments once each calendar quarter.
Administrative Expenses
Certain administrative expenses such as legal fees and audit fees are paid by
the Company. The Plan pays all other administrative expenses.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right to
discontinue contributions at any time and to terminate the Plan subject to the
provisions of the Employee Retirement Income Security Act of 1974. In the event
of Plan termination, participants will become fully vested.
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting. Benefit payments to participants are recorded upon distribution.
Certain 1998 amounts have been reclassified to conform to the current year
presentation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes and
schedules. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
Mutual fund investments and Company Stock are valued at fair value, which is
determined using quoted market prices. The Merrill Lynch Retirement Preservation
Trust and participant loans are valued at cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the ex-
dividend date.
3. Income Tax Status
The Plan has received a favorable determination letter from the Internal Revenue
Service dated October 31, 1995 regarding its qualification status under Section
401(a) of the Internal Revenue Code (the "Code") and, therefore, the related
trust is exempt from taxation. The Plan has been amended since receiving the
determination letter. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Company believes the
Plan is being operated in compliance with the applicable requirements of the
Code and, therefore, believes that the Plan is qualified and the related trust
is tax exempt.
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Notes to Financial Statements (continued)
4. Investments
The following presents investments that represent 5 percent or more of the
Plan's net assets:
<TABLE>
<CAPTION>
December 31
1999 1998
--------------------------
<S> <C> <C>
Tuboscope Inc. Common Stock* $ 5,899,868 $ 2,367,445
Merrill Lynch Retirement Preservation Trust 13,093,141 13,246,762
Merrill Lynch Capital Fund Class A 3,526,441 3,913,099
Merrill Lynch Basic Value Fund 5,897,141 5,668,521
Merrill Lynch Global Allocation 2,773,898 2,466,443
Merrill Lynch Corporate Bond Fund Investment Grade Class A 1,711,557 2,062,787
AIM Weingarten Fund 5,740,015 3,841,450
Davis New York Venture Fund 4,410,394 3,367,582
</TABLE>
* Includes both participant-directed and nonparticipant-directed
During 1999, the Plan's investments, including gains and losses in investments
bought and sold, as well as held during the year, appreciated in value as
follows:
<TABLE>
<S> <C>
Tuboscope Common Stock $3,031,679
Mutual funds 1,336,297
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Net appreciation $4,367,976
==========
</TABLE>
7
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Notes to Financial Statements (continued)
5. Employer Stock Fund
Information about the net assets and significant components of the changes in
net assets relating to Tuboscope Inc. common stock is as follows:
<TABLE>
<CAPTION>
December 31
1999 1998
-------------------------
<S> <C> <C>
Net assets:
Common stock $5,899,868 $2,367,445
Contributions receivable 227,330 281,525
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$6,127,198 $2,648,970
==========================
</TABLE>
<TABLE>
<CAPTION>
Year ended
December 31
1999
--------------
<S> <C>
Participant contributions $ 70,983
Employer contributions 1,022,136
Rollover contributions 1,675
Interest and dividends 4,299
Net appreciation in fair value of Common Stock 3,031,679
Benefits paid to participants (365,032)
Administrative expenses (7,822)
Transfers to participant-directed investments (279,690)
--------------
Net increase 3,478,228
Net assets at beginning of year 2,648,970
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Net assets at end of year $ 6,127,198
==============
</TABLE>
8
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Supplemental Schedules
9
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes at End
of Year
EIN: 74-1473942 PN: 001
December 31, 1999
<TABLE>
<CAPTION>
Identity of Current
Issue Description of Investment Cost Value
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
*Tuboscope Inc. Common stock $4,535,231 $ 5,899,868
*Merrill Lynch Retirement Preservation Trust ** 13,093,141
*Merrill Lynch Global Allocation Fund Class A ** 2,773,898
*Merrill Lynch Corporate Bond Fund Investment
Grade Class A ** 1,711,557
*Merrill Lynch Capital Fund, Class A ** 3,526,441
*Merrill Lynch Basic Value Fund ** 5,897,141
AIM Management Weingarten Fund ** 5,740,015
Davis New York Venture Fund ** 4,410,394
*Participant loans Varying maturity dates, bearing
interest at prime plus 1%
(interest rates ranging from 7%
- 10%) ** 2,653,744
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$45,706,199
===========
</TABLE>
* Party-in-interest
** Cost not required for participant-directed investments
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Tuboscope Vetco International Inc. 401(k) Thrift Savings Plan
Schedule H, Line 4(j)- Schedule of Reportable Transactions
EIN: 74-1473942 PN: 001
Year ended December 31, 1999
<TABLE>
<CAPTION>
Current
Value of
Asset on
Identity of Purchase Selling Cost of Transaction Net Gain
Party Involved Description Price Price Asset Date (Loss)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - Series of non-participant directed transactions in excess of 5% of net assets available for benefits
Tuboscope Inc. Company Stock $2,077,221 $ - $2,077,221 $2,077,221 $ -
Tuboscope Inc. Company Stock - 1,576,477 1,426,524 1,576,477 149,953
</TABLE>
Note: Includes both participant-directed and nonparticipant-directed
transactions.
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