Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2011

Condensed Consolidating Financial Information [Abstract]

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

NOTE 9 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Set forth on the following pages are the condensed consolidating financial statements of (i) Allis-Chalmers Energy Inc., (ii) its subsidiaries that are guarantors of the senior notes and revolving credit facility and (iii) the subsidiaries that are not guarantors of the senior notes and revolving credit facility (in thousands):

CONDENSED CONSOLIDATING BALANCE SHEETS
June 30, 2011 (Successor)
(unaudited)

	Allis-Chalmers			Subsidiary		Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors		Non-Guarantors			Adjustments			Total
Assets
Cash and cash equivalents	$	—		$	9,286	$	4,130		$	—		$	13,416
Restricted cash		—			3,784		—			—			3,784
Trade receivables, net		—			102,949		103,193			(31,762	)		174,380
Inventories		—			26,981		23,045			—			50,026
Intercompany receivables		—			87,640		—			(87,640	)		—
Note receivable from affiliate		21,085			—		—			(21,085	)		—
Prepaid expenses and other		12			5,638		14,188			—			19,838
Total current assets		21,097			236,278		144,556			(140,487	)		261,444
Property and equipment, net		—			406,223		269,358			—			675,581
Goodwill		—			179,697		87,731			—			267,428
Other intangible assets, net		—			57,540		37,350			—			94,890
Note receivable from affiliates		1,500			—		—			(1,500	)		—
Investments in affiliates		1,170,166			—		—			(1,170,166	)		—
Other assets		—			4,869		382			—			5,251
Total assets	$	1,192,763		$	884,607	$	539,377		$	(1,312,153	)	$	1,304,594
Liabilities and Stockholders’ Equity
Current maturities of long-term debt	$	—		$	—	$	6,892		$	—		$	6,892
Trade accounts payable		—			21,814		70,708			(31,762	)		60,760
Accrued salaries, benefits and payroll taxes		—			5,465		30,060			—			35,525
Accrued interest		15,020			—		179			—			15,199
Accrued expenses		570			16,882		24,460			—			41,912
Intercompany payables		57,930			—		29,710			(87,640	)		—
Note payable to affiliate		—			—		21,085			(21,085	)		—
Total current liabilities		73,520			44,161		183,094			(140,487	)		160,288
Long-term debt, net of current maturities		446,647			—		8,042			—			454,689
Note payable to affiliate		—			—		1,500			(1,500	)		—
Payable to parent		74,403			—		—			—			74,403
Other long-term liabilities		—			—		17,021			—			17,021
Total liabilities		594,570			44,161		209,657			(141,987	)		706,401
Commitments and Contingencies
Stockholders’ Equity
Common stock		—			3,527		42,963			(46,490	)		—
Capital in excess of par value		600,885			823,395		290,090			(1,113,485	)		600,885
Retained earnings (deficit)		(2,692	)		13,524		(3,333	)		(10,191	)		(2,692	)
Total stockholders’ equity		598,193			840,446		329,720			(1,170,166	)		598,193
Total liabilities and stockholders’ equity	$	1,192,763		$	884,607	$	539,377		$	(1,312,153	)	$	1,304,594

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2011 (Successor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Revenues	$	—		$	96,934		$	123,446		$	(242	)	$	220,138
Operating costs and expenses:
Direct costs		—			57,986			104,884			(242	)		162,628
Depreciation `		—			15,843			7,187			—			23,030
Selling, general and administrative		65			7,995			7,326			—			15,386
Amortization		—			1,592			2,765			—			4,357
Total operating costs and expenses		65			83,416			122,162			(242	)		205,401
Income (loss) from operations		(65	)		13,518			1,284			—			14,737
Other income (expense):
Equity earnings in affiliates, net of tax		11,067			—			—			(11,067	)		—
Interest, net		(9,326	)		(1	)		(732	)		—			(10,059	)
Other		13			107			(154	)		—			(34	)
Total other expense		1,754			106			(886	)		(11,067	)		(10,093	)
Net income (loss) before income taxes		1,689			13,624			398			(11,067	)		4,644
Provision for income taxes		—			(183	)		(2,772	)		—			(2,955	)
Net income (loss)	$	1,689		$	13,441		$	(2,374	)	$	(11,067	)	$	1,689

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Four Months Ended June 30, 2011 (Successor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Revenues	$	—		$	130,882		$	160,271		$	(289	)	$	290,864
Operating costs and expenses:
Direct costs		—			78,879			135,174			(289	)		213,764
Depreciation		—			20,797			9,549			—			30,346
Selling, general and administrative		100			10,997			9,080			—			20,177
Impairment of intangible assets		—			4,400			700			—			5,100
Amortization		—			2,123			3,687			—			5,810
Total operating costs and expenses		100			117,196			158,190			(289	)		275,197
Income (loss) from operations		(100	)		13,686			2,081			—			15,667
Other income (expense):
Equity earnings in affiliates, net of tax		10,191			—			—			(10,191	)		—
Interest, net		(12,801	)		(2	)		(999	)		—			(13,802	)
Other		18			80			(119	)		—			(21	)
Total other expense		(2,592	)		78			(1,118	)		(10,191	)		(13,823	)
Net income (loss) before income taxes		(2,692	)		13,764			963			(10,191	)		1,844
Provision for income taxes		—			(240	)		(4,296	)		—			(4,536	)
Net income (loss) attributed to common stockholders	$	(2,692	)	$	13,524		$	(3,333	)	$	(10,191	)	$	(2,692	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Two Months Ended February 28, 2011 (Predecessor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Revenues	$	—		$	59,044		$	67,923		$	(82	)	$	126,885
Operating costs and expenses:
Direct costs		—			37,335			59,877			(82	)		97,130
Depreciation		—			10,174			4,852			—			15,026
Selling, general and administrative		5,998			15,034			2,720			—			23,752
Amortization		8			678			125			—			811
Total operating costs and expenses		6,006			63,221			67,574			(82	)		136,719
Income (loss) from operations		(6,006	)		(4,177	)		349			—			(9,834	)
Other income (expense):
Equity earnings in affiliates, net of tax		(6,057	)		—			—			6,057			—
Interest, net		(7,253	)		(8	)		(588	)		—			(7,849	)
Other		19			(232	)		335			—			122
Total other expense		(13,291	)		(240	)		(253	)		6,057			(7,727	)
Net income (loss) before income taxes		(19,297	)		(4,417	)		96			6,057			(17,561	)
Provision for income taxes		—			(233	)		(1,503	)		—			(1,736	)
Net loss		(19,297	)		(4,650	)		(1,407	)		6,057			(19,297	)
Preferred stock dividend		(375	)		—			—			—			(375	)
Net loss attributed to common stockholders	$	(19,672	)	$	(4,650	)	$	(1,407	)	$	6,057		$	(19,672	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Four Months Ended June 30, 2011 (Successor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Cash Flows from Operating Activities:
Net income (loss)	$	(2,692	)	$	13,524		$	(3,333	)	$	(10,191	)	$	(2,692	)
Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities:
Depreciation and amortization		—			22,920			13,236			—			36,156
Debt premium amortization		(1,050	)		—			—			—			(1,050	)
Equity earnings in affiliates		(10,191	)		—			—			10,191			—
Impairment of intangible assets		—			4,400			700			—			5,100
Deferred income taxes		—			1			(940	)		—			(939	)
Loss on sale of equipment		—			94			77			—			171
Changes in operating assets and liabilities, net of acquisitions:
Increase in trade receivables		—			(1,342	)		(13,566	)		—			(14,908	)
Increase in inventories		—			(3,481	)		(2,595	)		—			(6,076	)
Increase in prepaid expenses and other current assets		(1	)		(2,655	)		(7,498	)		—			(10,154	)
Decrease (increase) in other assets		—			(322	)		66			—			(256	)
(Decrease) increase in trade accounts payable		—			(5,455	)		7,219			—			1,764
(Decrease) increase in accrued interest		3,741			—			(173	)		—			3,568
(Decrease) increase in accrued expenses		(345	)		(485	)		3,773			—			2,943
(Decrease) increase in accrued salaries, benefits and payroll taxes		—			(3,501	)		7,915			—			4,414
Decrease in other long- term liabilities		—			—			(60	)		—			(60	)
Net cash (used) provided by operating activities		(10,538	)		23,698			4,821			—			17,981
Cash Flows from Investing Activities:
Notes receivable from affiliates		(2,312	)		—			—			2,312			—
Decrease in restricted cash		—			357			—			—			357
Deposits on asset commitments		—			—			(46	)		—			(46	)
Proceeds from sale of property and equipment		—			1,827			53			—			1,880
Purchases of property and equipment		—			(17,479	)		(8,093	)		—			(25,572	)
Net cash used in investing activities		(2,312	)		(15,295	)		(8,086	)		2,312			(23,381	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Four Months Ended June 30, 2011 (Successor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Cash Flows from Financing Activities:
Accounts receivable from affiliates		—			(15,631	)		—			15,631			—
Accounts payable to affiliates		11,782			—			3,849			(15,631	)		—
Note payable to affiliate		—			—			2,312			(2,312	)		—
Payments on long-term debt		(1,885	)		(350	)		(3,537	)		—			(5,772	)
Proceeds from Parent		2,953			—			—			—			2,953
Net cash (used) provided by financing activities		12,850			(15,981	)		2,624			(2,312	)		(2,819	)
Net change in cash and cash equivalents		—			(7,578	)		(641	)		—			(8,219	)
Cash and cash equivalents at beginning of year		—			16,864			4,771			—			21,635
Cash and cash equivalents at end of period	$	—		$	9,286		$	4,130		$	—		$	13,416

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Two Months Ended February 28, 2011 (Predecessor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Cash Flows from Operating Activities:
Net loss	$	(19,297	)	$	(4,650	)	$	(1,407	)	$	6,057		$	(19,297	)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
Depreciation and amortization		8			10,852			4,977			—			15,837
Amortization of deferred issuance costs		366			—			—			—			366
Stock based compensation		6,084			—			—			—			6,084
Equity earnings in affiliates		6,057			—			—			(6,057	)		—
Allowance for bad debts		—			195			—			—			195
Deferred income taxes		—			34			106			—			140
Loss on sale of equipment		—			352			64			—			416
Changes in operating assets and liabilities, net of acquisitions:
Increase in trade receivables		—			(3,714	)		(12,230	)		—			(15,944	)
Increase in inventories		—			(1,434	)		(376	)		—			(1,810	)
Decrease (increase) in prepaid expenses and other current assets		2,057			235			(1,742	)		—			550
Decrease in other assets		—			432			242			—			674
Increase in trade accounts payable		—			8,417			4,537			—			12,954
(Decrease) increase in accrued interest		(4,031	)		—			138			—			(3,893	)
(Decrease) increase in accrued expenses		(15	)		(1,137	)		9,707			—			8,555
Decrease in accrued salaries, benefits and payroll taxes		—			(17	)		(1,662	)		—			(1,679	)
Decrease in other long- term liabilities		—			—			(141	)		—			(141	)
Net cash (used) provided by operating activities		(8,771	)		9,565			2,213			—			3,007
Cash Flows from Investing Activities:
Notes receivable from affiliates		(114	)		—			—			114			—
Increase in restricted cash		—			(4,141	)		—			—			(4,141	)
Purchases of investment interests		—			(1,177	)		—			—			(1,177	)
Deposits on asset commitments		—			—			82			—			82
Proceeds from sale of property and equipment		—			924			85			—			1,009
Purchase of property and equipment		—			(16,931	)		(5,827	)		—			(22,758	)
Net cash used in investing activities		(114	)		(21,325	)		(5,660	)		114			(26,985	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Two Months Ended February 28, 2011 (Predecessor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Cash Flows from Financing Activities:
Accounts receivable from affiliates		—			12,811			—			(12,811	)		—
Accounts payable to affiliates		(23,607	)		—			10,796			12,811			—
Note payable to affiliate		—			—			114			(114	)		—
Payments on long-term debt		—			(567	)		(7,252	)		—			(7,819	)
Net borrowings (repayments) on line of credit		(36,500	)		—			—			—			(36,500	)
Proceeds from Parent		71,450			—			—			—			71,450
Payment of preferred stock dividend		(637	)		—			—			—			(637	)
Exercise of options and restricted stock awards, net of tax		(1,821	)		—			—			—			(1,821	)
Net cash provided by financing activities		8,885			12,244			3,658			(114	)		24,673
Net change in cash and cash equivalents		—			484			211			—			695
Cash and cash equivalents at beginning of year		—			16,380			4,560			—			20,940
Cash and cash equivalents at end of period	$	—		$	16,864		$	4,771		$	—		$	21,635

CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2010 (Predecessor)

	Allis-Chalmers			Subsidiary		Subsidiary		Consolidating			Consolidated
	(Guarantor)			Guarantors		Non-Guarantors		Adjustments			Total
Assets
Cash and cash equivalents	$	—		$	16,380	$	4,560	$	—		$	20,940
Trade receivables, net		—			79,100		77,397		(11,537	)		144,960
Inventories		—			22,066		20,074		—			42,140
Intercompany receivables		—			84,766		—		(84,766	)		—
Note receivable from affiliate		18,359			—		—		(18,359	)		—
Prepaid expenses and other		2,068			3,280		3,925		—			9,273
Total current assets		20,427			205,592		105,956		(114,662	)		217,313
Property and equipment, net		—			461,187		262,047		—			723,234
Goodwill		—			28,944		17,389		—			46,333
Other intangible assets, net		414			27,278		6,207		—			33,899
Debt issuance costs, net		7,405			—		—		—			7,405
Note receivable from affiliates		1,800			—		—		(1,800	)		—
Investments in affiliates		934,274			—		—		(934,274	)		—
Other assets		—			7,390		2,695		—			10,085
Total assets	$	964,320		$	730,391	$	394,294	$	(1,050,736	)	$	1,038,269
Liabilities and Stockholders’ Equity
Current maturities of long-term debt	$	—		$	979	$	14,236	$	—		$	15,215
Trade accounts payable		—			18,634		38,945		(11,537	)		46,042
Accrued salaries, benefits and payroll taxes		—			8,983		23,807		—			32,790
Accrued interest		15,310			—		214		—			15,524
Accrued expenses		1,192			18,504		10,980		—			30,676
Intercompany payables		69,756			—		15,010		(84,766	)		—
Note payable to affiliate		—			—		18,359		(18,359	)		—
Total current liabilities		86,258			47,100		121,551		(114,662	)		140,247
Long-term debt, net of current maturities		466,738			—		11,487		—			478,225
Note payable to affiliate		—			—		1,800		(1,800	)		—
Other long-term liabilities		—			—		8,473		—			8,473
Total liabilities		552,996			47,100		143,311		(116,462	)		626,945
Commitments and contingencies
Stockholders’ Equity
Preferred Stock		34,183			—		—		—			34,183
Common stock		737			3,527		42,963		(46,490	)		737
Capital in excess of par value		429,924			589,676		137,439		(727,115	)		429,924
Retained earnings (deficit)		(53,520	)		90,088		70,581		(160,669	)		(53,520	)
Total stockholders’ equity		411,324			683,291		250,983		(934,274	)		411,324
Total liabilities and stock holders’ equity	$	964,320		$	730,391	$	394,294	$	(1,050,736	)	$	1,038,269

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2010 (Predecessor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Revenues	$	—		$	62,760		$	96,337		$	(453	)	$	158,644
Operating costs and expenses
Direct costs		—			42,300			78,876			(453	)		120,723
Depreciation		—			14,198			6,319			—			20,517
Selling, general and administrative		1,365			7,156			3,593			—			12,114
Amortization		11			959			186			—			1,156
Total operating costs and expenses		1,376			64,613			88,974			(453	)		154,510
Income (loss) from operations		(1,376	)		(1,853	)		7,363			—			4,134
Other income (expense):
Equity earnings in affiliates, net of tax		6,396			—			—			(6,396	)		—
Interest, net		(10,415	)		141			(576	)		—			(10,850	)
Other		16			(254	)		(65	)		—			(303	)
Total other income (expense)		(4,003	)		(113	)		(641	)		(6,396	)		(11,153	)
Net income (loss) before income taxes		(5,379	)		(1,966	)		6,722			(6,396	)		(7,019	)
Provision for income taxes		—			4,408			(2,768	)		—			1,640
Net income (loss)		(5,379	)		2,442			3,954			(6,396	)		(5,379	)
Preferred stock dividend		(637	)		—			—			—			(637	)
Net income (loss) attributed to common stockholders	$	(6,016	)	$	2,442		$	3,954		$	(6,396	)	$	(6,016	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2010 (Predecessor)
(unaudited)

	Allis-Chalmers			Subsidiary			Subsidiary			Consolidating			Consolidated
	(Guarantor)			Guarantors			Non-Guarantors			Adjustments			Total
Revenues	$	—		$	114,642		$	185,700		$	(1,328	)	$	299,014
Operating costs and expenses
Direct costs		—			77,376			152,390			(1,328	)		228,438
Depreciation		—			28,316			12,389			—			40,705
Selling, general and administrative		2,532			14,356			7,289			—			24,177
Amortization		23			1,916			373			—			2,312
Total operating costs and expenses		2,555			121,964			172,441			(1,328	)		295,632
Income (loss) from operations		(2,555	)		(7,322	)		13,259			—			3,382
Other income (expense):
Equity earnings in affiliates, net of tax		8,267			—			—			(8,267	)		—
Interest, net		(20,652	)		214			(1,213	)		—			(21,651	)
Other		30			(1,778	)		(70	)		—			(1,818	)
Total other income (expense)		(12,355	)		(1,564	)		(1,283	)		(8,267	)		(23,469	)
Net income (loss) before income taxes		(14,910	)		(8,886	)		11,976			(8,267	)		(20,087	)
Provision for income taxes		—			10,512			(5,335	)		—			5,177
Net income (loss)		(14,910	)		1,626			6,641			(8,267	)		(14,910	)
Preferred stock dividend		(1,274	)		—			—			—			(1,274	)
Net income (loss) attributed to common stockholders	$	(16,184	)	$	1,626		$	6,641		$	(8,267	)	$	(16,184	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Six Months Ended June 30, 2010 (Predecessor)
(unaudited)

	Allis-Chalmers			Subsidiary			Other Subsidiaries			Consolidating			Consolidated
	(Guarantor)			Guarantors			(Non-Guarantors)			Adjustments			Total
Cash Flows from Operating Activities:
Net income (loss)	$	(14,910	)	$	1,626		$	6,641		$	(8,267	)	$	(14,910	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		23			30,232			12,762			—			43,017
Amortization and write-off of debt issuance costs		1,094			12			—			—			1,106
Stock based compensation		3,001			—			—			—			3,001
Equity earnings in affiliates		(8,267	)		—			—			8,267			—
Deferred taxes		(10,954	)		—			133			—			(10,821	)
Loss (gain) on sale of equipment		—			965			(158	)		—			807
Loss on investment		—			1,466			—			—			1,466
Equity in losses of unconsolidated affiliates		—			260			—			—			260
Changes in operating assets and liabilities:
(Increase) in trade receivables		—			(2,962	)		(22,883	)		—			(25,845	)
(Increase) in inventories		—			(744	)		(1,648	)		—			(2,392	)
Decrease in prepaid expenses and other current assets		—			2,778			6,060			—			8,838
Decrease in other assets		—			127			672			—			799
Increase in trade accounts payable		—			1,285			9,468			—			10,753
(Decrease) increase in accrued interest		76			(16	)		88			—			148
(Decrease) increase in accrued expenses		(58	)		2,243			1,616			—			3,801
(Decrease) increase in accrued salaries, benefits and payroll taxes		—			(195	)		2,140			—			1,945
(Decrease) in other long- term liabilities		—			—			(466	)		—			(466	)
Net Cash Provided By (Used In) Operating Activities		(29,995	)		37,077			14,425			—			21,507
Cash Flows from Investing Activities:
Notes receivable from affiliates		3,293			—			—			(3,293	)		—
Deposits on asset commitments		—			(10,000	)		(96	)		—			(10,096	)
Proceeds from sale of investments		—			368			—			—			368
Proceeds from sale of property and equipment		—			2,416			200			—			2,616
Purchase of property and equipment		—			(18,069	)		(12,920	)		—			(30,989	)
Net Cash Provided By (Used In) Investing Activities		3,293			(25,285	)		(12,816	)		(3,293	)		(38,101	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
For the Six Months Ended June 30, 2010 (Predecessor)
(unaudited)

	Allis-Chalmers			Subsidiary			Other Subsidiaries			Consolidating			Consolidated
	(Guarantor)			Guarantors			(Non-Guarantors)			Adjustments			Total
Cash Flows from Financing Activities:
Accounts receivable from affiliates		—			(27,210	)		(955	)		28,165			—
Accounts payable to affiliates		28,165			—			—			(28,165	)		—
Note payable to affiliate		—			—			(3,293	)		3,293			—
Proceeds from long-term debt		—			—			4,000			—			4,000
Payments on long-term debt		—			(3,116	)		(6,330	)		—			(9,446	)
Payment of preferred stock dividend		(1,274	)		—			—			—			(1,274	)
Debt issuance costs		(189	)		—			—			—			(189	)
Net Cash Provided By (Used In) Financing Activities		26,702			(30,326	)		(6,578	)		3,293			(6,909	)
Net change in cash and cash equivalents		—			(18,534	)		(4,969	)		—			(23,503	)
Cash and cash equivalents at beginning of period		—			31,858			9,214			—			41,072
Cash and cash equivalents at end of period	$	—		$	13,324		$	4,245		$	—		$	17,569