Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements (Tables)

12 Months Ended

Dec. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidating Condensed Statement of Operations

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)

	Year ended December 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	468,073		$	549,295		$	(143,196	)	$	874,172
Operating expenses	—			252,211			462,657			(143,196		)	571,672
Depreciation and amortization	—			77,416			56,637			—			134,053
Total operating gross margin	—			138,446			30,001			—			168,447
General and administration expense (1)	(202		)	(67,083		)	(740		)	—			(68,025		)
Provision for reduction in carrying value of certain assets	—			—			(2,544		)	—			(2,544		)
Gain on disposition of assets, net	—			1,759			2,235			—			3,994
Total operating income (loss)	(202		)	73,122			28,952			—			101,872
Other income and (expense):
Interest expense	(51,439		)	(335		)	(9,930		)	13,884			(47,820		)
Changes in fair value of derivative positions	53			—			—			—			53
Interest income	3,824			1,761			10,749			(13,884		)	2,450
Loss on extinguishment of debt	(5,218		)	—			—			—			(5,218		)
Other	(1		)	(143		)	1,594			—			1,450
Equity in net earnings of subsidiaries	55,430			—			—			(55,430		)	—
Total other income (expense)	2,649			1,283			2,413			(55,430		)	(49,085		)
Income (loss) before income taxes	2,447			74,405			31,365			(55,430		)	52,787
Income tax expense (benefit):
Current	(21,431		)	18,737			15,603			—			12,909
Deferred	(3,137		)	19,454			(3,618		)	—			12,699
Income tax expense (benefit)	(24,568		)	38,191			11,985			—			25,608
Net income (loss)	27,015			36,214			19,380			(55,430		)	27,179
Less: Net (loss) attributable to noncontrolling interest	—			—			164			—			164
Net income (loss) attributable to controlling interest	$	27,015		$	36,214		$	19,216		$	(55,430	)	$	27,015

(1) General and administration expenses for field operations are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)

	Year ended December 31, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	393,738		$	385,279		$	(101,256	)	$	677,761
Operating expenses	—			184,946			329,498			(101,256		)	413,188
Depreciation and amortization	—			65,354			47,663			—			113,017
Total operating gross margin	—			143,438			8,118			—			151,556
General and administration expense (1)	(182		)	(45,758		)	(317		)	—			(46,257		)
Gain on disposition of assets, net	—			775			1,199			—			1,974
Total operating income (loss)	(182		)	98,455			9,000			—			107,273
Other income and (expense):
Interest expense	(37,326		)	(151		)	(8,739		)	12,674			(33,542		)
Interest income	9,863			5,073			41,999			(56,782		)	153
Loss on extinguishment of debt	(2,130		)	—			—			—			(2,130		)
Changes in fair value of derivative positions	55			—			—			—			55
Other	—			(206		)	(626		)	—			(832		)
Equity in net earnings of subsidiaries	43,884			—			—			(43,884		)	—
Total other income (expense)	14,346			4,716			32,634			(87,992		)	(36,296		)
Income (loss) before income taxes	14,164			103,171			41,634			(87,992		)	70,977
Income tax expense (benefit):
Current	(25,406		)	32,781			10,667			—			18,042
Deferred	2,257			15,429			(1,849		)	—			15,837
Income tax expense (benefit)	(23,149		)	48,210			8,818			—			33,879
Net income (loss)	37,313			54,961			32,816			(87,992		)	37,098
Less: Net (loss) attributable to noncontrolling interest	—			—			(215		)	—			(215		)
Net income (loss) attributable to controlling interest	37,313			54,961			33,031			(87,992		)	37,313

______________________

(1) General and administration expenses for field operations are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)

	Year ended December 31, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	375,798		$	426,491		$	(116,055	)	$	686,234
Operating expenses	—			174,955			357,777			(116,055		)	416,677
Depreciation and amortization	—			62,744			49,392			—			112,136
Total operating gross margin	—			138,099			19,322			—			157,421
General and administration expense (1)	(218		)	(30,968		)	(381		)	—			(31,567		)
Impairment and other charges	—			(170,000		)	—			—			(170,000		)
Provision for reduction in carrying value of certain assets	—			(1,350		)	—			—			(1,350		)
Gain on disposition of assets, net	—			2,706			953			—			3,659
Total operating income (loss)	(218		)	(61,513		)	19,894			—			(41,837		)
Other income and (expense):
Interest expense	(26,654		)	(17,889		)	(8,865		)	30,814			(22,594		)
Interest income	18,131			750			12,189			(30,814		)	256
Loss on extinguishment of debt	—			—			—			—			—
Changes in fair value of derivative positions	(110		)	—			—			—			(110		)
Other	—			(315		)	(812		)	—			(1,127		)
Equity in net earnings of subsidiaries	(23,484		)	—			—			23,484			—
Total other income and (expense)	(32,117		)	(17,454		)	2,512			23,484			(23,575		)
Income (loss) before income taxes	(32,335		)	(78,967		)	22,406			23,484			(65,412		)
Income tax expense (benefit):
Current	(13,402		)	27,169			19,841			—			33,608
Deferred	31,518			(57,030		)	(22,863		)	—			(48,375		)
Total income tax expense (benefit)	18,116			(29,861		)	(3,022		)	—			(14,767		)
Net income (loss)	(50,451		)	(49,106		)	25,428			23,484			(50,645		)
Less: Net (loss) attributable to noncontrolling interest	$	—		$	—		$	(194	)	$	—		$	(194	)
Net income (loss) attributable to controlling interest	(50,451		)	(49,106		)	25,622			23,484			(50,451		)

_______________________

(1) General and administration expenses for field operations are included in operating expenses.

Consolidating Condensed Balance Sheet

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

(Dollars in Thousands)

(Unaudited)

	December 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	88,697		$	8,310		$	51,682		$	—		$	148,689
Accounts and notes receivable, net	—			101,299			156,590			—			257,889
Rig materials and supplies	—			3,002			38,779			—			41,781
Deferred costs	—			—			13,682			—			13,682
Deferred income taxes	(57		)	8,435			1,562			—			9,940
Other tax assets	54,524			(46,770		)	16,325			—			24,079
Other current assets	—			9,089			14,134			—			23,223
Total current assets	143,164			83,365			292,754			—			519,283
Property, plant and equipment, net	60			562,148			309,148			—			871,356
Investment in subsidiaries and intercompany advances	1,906,128			(336,570		)	1,667,937			(3,237,495		)	—
Other noncurrent assets	(457,954		)	468,864			250,983			(117,776		)	144,117
Total assets	$	1,591,398		$	777,807		$	2,520,822		$	(3,355,271	)	$	1,534,756
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	25,000		$	—		$	—		$	—		$	25,000
Accounts payable and accrued liabilities	75,268			92,546			261,436			(254,364		)	174,886
Accrued income taxes	—			725			6,541			—			7,266
Total current liabilities	100,268			93,271			267,977			(254,364		)	207,152
Long-term debt	628,781			—			—			—			628,781
Other long-term liabilities	5,037			6,743			15,134			—			26,914
Long-term deferred tax liability	—			51,747			(12,980		)	—			38,767
Intercompany payables	227,504			291,783			422,645			(941,932		)	—
Contingencies	—			—			—			—			—
Stockholders’ equity:
Common stock	20,075			18,049			43,003			(61,052		)	20,075
Capital in excess of par value	657,349			740,438			1,572,919			(2,313,357		)	657,349
Accumulated other comprehensive income	—			—			1,888			—			1,888
Retained earnings (accumulated deficit)	(47,616		)	(424,224		)	208,790			215,434			(47,616		)
Total controlling interest stockholders’ equity	629,808			334,263			1,826,600			(2,158,975		)	631,696
Noncontrolling interest	—			—			1,446			—			1,446
Total Equity	629,808			334,263			1,828,046			(2,158,975		)	633,142
Total liabilities and stockholders’ equity	$	1,591,398		$	777,807		$	2,520,822		$	(3,355,271	)	$	1,534,756

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

(Dollars in Thousands)

(Unaudited)

	December 31, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	42,251		$	11,023		$	34,612		$	—		$	87,886
Accounts and notes receivable, net	(7		)	77,927			90,695			—			168,615
Rig materials and supplies	—			2,835			26,587			—			29,422
Deferred costs	—			—			1,089			—			1,089
Deferred income taxes	—			7,615			1,127			—			8,742
Other tax assets	46,249			(31,136		)	18,411			—			33,524
Other current assets	—			8,708			4,145			—			12,853
Total current assets	88,493			76,972			176,666			—			342,131
Property, plant and equipment, net	60			548,794			244,343			—			793,197
Investment in subsidiaries and intercompany advances	1,492,708			(523,143		)	1,467,617			(2,437,182		)	—
Other noncurrent assets	(378,297		)	370,877			219,196			(91,371		)	120,405
Total assets	$	1,202,964		$	473,500		$	2,107,822		$	(2,528,553	)	$	1,255,733
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	10,000		$	—		$	—		$	—		$	10,000
Accounts payable and accrued liabilities	65,839			94,037			205,864			(227,994		)	137,746
Accrued income taxes	—			612			3,508			—			4,120
Total current liabilities	75,839			94,649			209,372			(227,994		)	151,866
Long-term debt	469,205			—			—			—			469,205
Other long-term liabilities	3,933			6,129			13,120			—			23,182
Long-term deferred tax liability	—			36,894			(16,047		)	—			20,847
Intercompany payables	62,583			43,657			216,369			(322,609		)	—
Contingencies	—			—			—			—			—
Stockholders’ equity:
Common stock	19,818			18,049			43,003			(61,052		)	19,818
Capital in excess of par value	646,217			733,112			1,455,246			(2,188,358		)	646,217
Retained earnings (accumulated deficit)	(74,631		)	(458,990		)	187,530			271,460			(74,631		)
Total controlling interest stockholders’ equity	591,404			292,171			1,685,779			(1,977,950		)	591,404
Noncontrolling interest	—			—			(771		)	—			(771		)
Total Equity	591,404			292,171			1,685,008			(1,977,950		)	590,633
Total liabilities and stockholders’ equity	$	1,202,964		$	473,500		$	2,107,822		$	(2,528,553	)	$	1,255,733

Consolidated Condensed Statements of Cash Flows

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Year Ended December 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	27,015		$	36,214		$	19,380		$	(55,430	)	$	27,179
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	—			77,416			56,637			—			134,053
Loss on extinguishment of debt	5,218			—			—			—			5,218
Gain on disposition of assets	—			(1,759		)	(2,235		)	—			(3,994		)
Deferred income tax expense	(3,137		)	19,454			(3,618		)	—			12,699
Provision for reduction in carrying value of certain assets	—			—			2,544			—			2,544
Expenses not requiring cash	13,173			12			4,579			—			17,764
Equity in net earnings of subsidiaries	(55,430		)	—			—			55,430			—
Change in accounts receivable	(7		)	(12,888		)	(20,617		)	—			(33,512		)
Change in other assets	74,411			(85,520		)	487			—			(10,622		)
Change in accrued income taxes	6,617			(1,052		)	4,889			—			10,454
Change in liabilities	6,934			(877		)	(6,343		)	—			(286		)
Net cash provided by (used in) operating activities	74,794			31,000			55,703			—			161,497
Cash flows from investing activities:
Capital expenditures	—			(94,269		)	(61,376		)	—			(155,645		)
Proceeds from the sale of assets	—			3,725			4,493			—			8,218
Acquisition of ITS, net of cash acquired	—			(6,903		)	(111,088		)	—			(117,991		)
Intercompany dividend payment	—			—			—			—			—
Net cash (used in) investing activities	—			(97,447		)	(167,971		)	—			(265,418		)
Cash flows from financing activities:
Proceeds from debt issuance	350,000			—			—			—			350,000
Proceeds from draw on revolver credit facility	—			—			—			—			—
Repayment of long term debt	(125,000		)	—			—			—			(125,000		)
Repayment of term loan	(50,000		)	—			—			—			(50,000		)
Paydown on revolver credit facility	—			—			—			—			—
Payment of debt issuance costs	(11,172		)	—			—			—			(11,172		)
Payment of debt extinguishment costs	—			—			—			—			—
Excess tax benefit from stock-based compensation	896			—			—			—			896
Intercompany advances, net	(193,072		)	63,734			129,338			—			—
Net cash provided by (used in) financing activities	(28,348		)	63,734			129,338			—			164,724
Net change in cash and cash equivalents	46,446			(2,713		)	17,070			—			60,803
Cash and cash equivalents at beginning of year	42,251			11,023			34,612			—			87,886
Cash and cash equivalents at end of year	$	88,697		$	8,310		$	51,682		$	—		$	148,689

See accompanying notes to unaudited consolidated condensed financial statements.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Year Ended December 31, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	37,313		$	54,961		$	32,816		$	(87,992	)	$	37,098
Adjustments to reconcile net income (loss)to net cash provided by operating activities:
Depreciation and amortization	—			65,354			47,663			—			113,017
Loss on extinguishment of debt	2,130			—			—			—			2,130
Gain on disposition of assets	—			(775		)	(1,199		)	—			(1,974		)
Deferred income tax expense	2,257			15,429			(1,849		)	—			15,837
Expenses not requiring cash	16,558			33,644			(27,602		)	—			22,600
Equity in net earnings of subsidiaries	(43,884		)	—			—			43,884			—
Change in accounts receivable	(445		)	(1,788		)	17,474			—			15,241
Change in other assets	1,649			2,060			(9,200		)	—			(5,491		)
Change in accrued income taxes	(4,055		)	220			(2,267		)	—			(6,102		)
Change in liabilities	3,914			(4,158		)	(2,413		)	—			(2,657		)
Net cash provided by (used in) operating activities	15,437			164,947			53,423			(44,108		)	189,699
Cash flows from investing activities:
Capital expenditures	—			(176,333		)	(15,210		)	—			(191,543		)
Proceeds from the sale of assets	—			2,062			1,875			—			3,937
Intercompany dividend payment	(8,387		)	(4,357		)	(31,364		)	44,108			—
Net cash provided by (used in) investing activities	(8,387		)	(178,628		)	(44,699		)	44,108			(187,606		)
Cash flows from financing activities:
Proceeds from debt issuance	130,000			—			—			—			130,000
Proceeds from draw on revolver credit facility	7,000			—			—			—			7,000
Paydown on senior notes	(125,000		)	—			—			—			(125,000		)
Paydown on term note	(18,000		)	—			—			—			(18,000		)
Paydown on revolver credit facility	—			—			—			—			—
Payment of debt issuance costs	(4,859		)	—			—			—			(4,859		)
Payment of debt extinguishment costs	(555		)	—			—			—			(555		)
Excess tax benefit from stock-based compensation	(662		)	—			—			—			(662		)
Intercompany advances, net	(8,393		)	20,492			(12,099		)	—			—
Net cash provided by (used in) financing activities	(20,469		)	20,492			(12,099		)	—			(12,076		)
Net change in cash and cash equivalents	(13,419		)	6,811			(3,375		)	—			(9,983		)
Cash and cash equivalents at beginning of year	55,670			4,212			37,987			—			97,869
Cash and cash equivalents at end of year	$	42,251		$	11,023		$	34,612		$	—		$	87,886

See accompanying notes to unaudited consolidated condensed financial statements.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Year Ended December 31, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(50,451	)	$	(49,106	)	$	25,428		$	23,484		$	(50,645	)
Adjustments to reconcile net income (loss)to net cash provided by operating activities:
Depreciation and amortization	—			62,744			49,392			—			112,136
Loss on extinguishment of debt	—			—			—			—			—
Gain on disposition of assets	—			(2,706		)	(953		)	—			(3,659		)
Deferred income tax expense	31,518			(57,030		)	(22,863		)	—			(48,375		)
Impairment and other charges	—			170,000			—			—			170,000
Provision for reduction in carrying value of certain assets	—			1,350			—			—			1,350
Expenses not requiring cash	16,411			376			(3,954		)	—			12,833
Equity in net earnings of subsidiaries	23,484			—			—			(23,484		)	—
Change in accounts receivable	(288,333		)	347,344			(65,852		)	—			(6,841		)
Change in other assets	62,173			(16,724		)	16,404			—			61,853
Change in accrued income taxes	(12,852		)	(2,053		)	17,046			—			2,141
Change in liabilities	2,398			(51,351		)	24,045			—			(24,908		)
Net cash provided by (used in) operating activities	(215,652		)	402,844			38,693			—			225,885
Cash flows from investing activities:
Capital expenditures	—			(174,999		)	(15,400		)	—			(190,399		)
Proceeds from the sale of assets	—			4,335			1,200			—			5,535
Proceeds from insurance settlements	—			250			—			—			250
Intercompany dividend payment	—			—			—			—			—
Net cash provided by (used in) investing activities	—			(170,414		)	(14,200		)	—			(184,614		)
Cash flows from financing activities:
Proceeds from debt issuance	50,000			—			—			—			50,000
Paydown on term note	(21,000		)	—			—			—			(21,000		)
Paydown on revolver credit facility	(25,000		)	—			—			—			(25,000		)
Payment of debt issuance costs	(504		)	—			—			—			(504		)
Payment of debt extinguishment costs	—			—			—			—			—
Proceeds from stock options exercised	183			—			—			—			183
Excess tax benefit from stock-based compensation	1,488			—			—			—			1,488
Intercompany advances, net	252,320			(230,535		)	(21,785		)	—			—
Net cash provided by (used in) financing activities	257,487			(230,535		)	(21,785		)	—			5,167
Net change in cash and cash equivalents	41,835			1,895			2,708			—			46,438
Cash and cash equivalents at beginning of year	13,835			2,317			35,279			—			51,431
Cash and cash equivalents at end of year	$	55,670		$	4,212		$	37,987		$	—		$	97,869

See accompanying notes to unaudited consolidated condensed financial statements.