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

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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		)	—
Total liabilities	961,590			443,544			692,776			(1,196,296		)	901,614
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)

	September 30, 2014
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	23,577		$	12,515		$	42,219		$	—		$	78,311
Accounts and notes receivable, net	(1		)	108,637			156,167			—			264,803
Rig materials and supplies	—			727			45,047			—			45,774
Deferred costs	—			—			6,857			—			6,857
Deferred income taxes	—			6,843			1,172			—			8,015
Other tax assets	55,782			(56,829		)	19,169			—			18,122
Other current assets	—			11,754			11,730			—			23,484
Total current assets	79,358			83,647			282,361			—			445,366
Property, plant and equipment, net	(19		)	599,251			313,621			—			912,853
Investment in subsidiaries and intercompany advances	2,822,265			1,232,241			2,273,328			(6,327,834		)	—
Other noncurrent assets	(482,689		)	533,446			233,349			(121,312		)	162,794
Total assets	$	2,418,915		$	2,448,585		$	3,102,659		$	(6,449,146	)	$	1,521,013
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	10,000		$	—		$	—		$	—		$	10,000
Accounts payable and accrued liabilities	67,053			83,258			268,575			(258,175		)	160,711
Accrued income taxes	(5,548		)	11,327			5,974			—			11,753
Total current liabilities	71,505			94,585			274,549			(258,175		)	182,464
Long-term debt	607,500			—			—			—			607,500
Other long-term liabilities	2,866			6,636			8,405			—			17,907
Long-term deferred tax liability	(29		)	60,314			(5,745		)	—			54,540
Intercompany payables	1,082,870			1,017,037			999,057			(3,098,964		)	—
Total liabilities	1,764,712			1,178,572			1,276,266			(3,357,139		)	862,411
Total equity	654,203			1,270,013			1,826,393			(3,092,007		)	658,602
Total liabilities and stockholders’ equity	$	2,418,915		$	2,448,585		$	3,102,659		$	(6,449,146	)	$	1,521,013

Consolidating Condensed Statement of Operations

	Nine Months Ended September 30, 2014
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		396,536			461,460			(132,525		)	$	725,471
Operating expenses	—			222,846			411,070			(132,525		)	501,391
Depreciation and amortization	—			63,343			43,323			—			106,666
Total operating gross margin	—			110,347			7,067			—			117,414
General and administration expense (1)	(195		)	(23,806		)	(1,340		)	—			(25,341		)
Gain (loss) on disposition of assets, net	(79		)	522			(10		)	—			433
Total operating income (loss)	(274		)	87,063			5,717			—			92,506
Other income and (expense):
Interest expense	(35,542		)	(120		)	(6,356		)	8,532			(33,486		)
Interest income	632			553			7,503			(8,532		)	156
Loss on extinguishment of debt	(30,152		)	—			—			—			(30,152		)
Other	—			860			531			—			1,391
Equity in net earnings of subsidiaries	50,591			—			—			(50,591		)	—
Total other income (expense)	(14,471		)	1,293			1,678			(50,591		)	(62,091		)
Income (loss) before income taxes	(14,745		)	88,356			7,395			(50,591		)	30,415
Total Income tax expense (benefit)	(30,443		)	34,187			10,349			—			14,093
Net income (loss)	15,698			54,169			(2,954		)	(50,591		)	16,322
Less: Net income attributable to noncontrolling interest	—			—			624			—			624
Net income (loss) attributable to controlling interest	$	15,698		$	54,169		$	(3,578	)	$	(50,591	)	$	15,698

(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)

	Nine Months Ended September 30, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	345,367		$	388,912		$	(103,428	)	$	630,851
Operating expenses	—			186,708			330,014			(103,428		)	413,294
Depreciation and amortization	—			57,335			40,339			—			97,674
Total operating gross margin	—			101,324			18,559			—			119,883
General and administration expense (1)	(140		)	(48,861		)	(285		)	—			(49,286		)
Gain on disposition of assets, net	—			1,917			842			—			2,759
Total operating income (loss)	(140		)	54,380			19,116			—			73,356
Other income and (expense):
Interest expense	(36,734		)	(167		)	(9,494		)	12,521			(33,874		)
Interest income	3,366			1,584			9,963			(12,521		)	2,392
Loss on extinguishment of debt	(5,218		)	—			—			—			(5,218		)
Changes in fair value of derivative positions	54			—			—			—			54
Other	—			(192		)	(613		)	—			(805		)
Equity in net earnings of subsidiaries	36,330			—			—			(36,330		)	—
Total other income (expense)	(2,202		)	1,225			(144		)	(36,330		)	(37,451		)
Income (loss) before income taxes	(2,342		)	55,605			18,972			(36,330		)	35,905
Income tax expense (benefit)	(19,185		)	27,993			10,033			—			18,841
Net income (loss)	16,843			27,612			8,939			(36,330		)	17,064
Less: Net income attributable to noncontrolling interest	—			—			221			—			221
Net income (loss) attributable to controlling interest	$	16,843		$	27,612		$	8,718		$	(36,330	)	$	16,843

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

Consolidating Condensed Statements of Comprehensive Income (Loss)

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)

	Three Months Ended September 30, 2014
	Parent		Guarantor		Non-Guarantor			Eliminations			Consolidated
Comprehensive income:
Net income (loss)	$	12,566	$	19,980	$	(227	)	$	(19,442	)	$	12,877
Other comprehensive income (loss), net of tax:
Currency translation difference on related borrowings	—		—		(1,780		)	—			(1,780		)
Currency translation difference on foreign currency net investments	—		—		615			—			615
Total other comprehensive income (loss), net of tax:	—		—		(1,165		)	—			(1,165		)
Comprehensive income (loss)	12,566		19,980		(1,392		)	(19,442		)	11,712
Comprehensive (income) attributable to noncontrolling interest	—		—		(289		)	—			(289		)
Comprehensive income (loss) attributable to controlling interest	$	12,566	$	19,980	$	(1,681	)	$	(19,442	)	$	11,423

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)

	Three Months Ended September 30, 2013
	Parent		Guarantor		Non-Guarantor			Eliminations			Consolidated
Comprehensive income:
Net income (loss)	$	7,970	$	10,817	$	11,653		$	(22,322	)	$	8,118
Other comprehensive income (loss), net of tax:
Currency translation difference on related borrowings	—		—		(577		)	—			(577		)
Currency translation difference on foreign currency net investments	—		—		2,098			—			$	2,098
Total other comprehensive income (loss), net of tax:	—		—		1,521			—			1,521
Comprehensive income (loss)	7,970		10,817		13,174			(22,322		)	9,639
Comprehensive (income) attributable to noncontrolling interest	—		—		(53		)	—			(53		)
Comprehensive income (loss) attributable to controlling interest	$	7,970	$	10,817	$	13,121		$	(22,322	)	$	9,586

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended September 30, 2014
	Parent		Guarantor		Non-Guarantor			Eliminations			Consolidated
Comprehensive income:
Net income (loss)	$	15,698	$	54,169	$	(2,954	)	$	(50,591	)	$	16,322
Other comprehensive income (loss), net of tax:
Currency translation difference on related borrowings	—		—		(2,248		)	—			(2,248		)
Currency translation difference on foreign currency net investments	—		—		1,126			—			1,126
Total other comprehensive income (loss), net of tax:	—		—		(1,122		)	—			(1,122		)
Comprehensive income	15,698		54,169		(4,076		)	(50,591		)	15,200
Comprehensive (income) attributable to noncontrolling interest	—		—		(523		)	—			(523		)
Comprehensive income attributable to controlling interest	$	15,698	$	54,169	$	(4,599	)	$	(50,591	)	$	14,677

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended September 30, 2013
	Parent		Guarantor		Non-Guarantor			Eliminations			Consolidated
Comprehensive income:
Net income (loss)	$	16,843	$	27,612	$	8,939		$	(36,330	)	$	17,064
Other comprehensive income (loss), net of tax:
Currency translation difference on related borrowings	—		—		(1,542		)	—			(1,542		)
Currency translation difference on foreign currency net investments	—		—		2,499			—			2,499
Total other comprehensive income (loss), net of tax:	—		—		957			—			957
Comprehensive income	16,843		27,612		9,896			(36,330		)	18,021
Comprehensive (income) attributable to noncontrolling interest	—		—		(83		)	—			(83		)
Comprehensive income attributable to controlling interest	$	16,843	$	27,612	$	9,813		$	(36,330	)	$	17,938

Consolidated Condensed Statements of Cash Flows

ARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended September 30, 2014
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	15,698		$	54,169		$	(2,954	)	$	(50,591	)	$	16,322
Adjustments to reconcile net income (loss):
Depreciation and amortization	—			63,343			43,323			—			106,666
Loss on extinguishment of debt	30,152			—			—			—			30,152
Gain on disposition of assets	79			(522		)	10			—			(433		)
Deferred income tax expense	(15,774		)	12,525			3,322			—			73
Expenses not requiring cash	9,940			(1,538		)	1,739			—			10,141
Equity in net earnings of subsidiaries	(50,591		)	—			—			50,591			—
Change in accounts receivable	—			(1,715		)	(3,473		)	—			(5,188		)
Change in other assets	43,412			(58,441		)	22,583			—			7,554
Change in accrued income taxes	(13,232		)	11,764			(8,929		)	—			(10,397		)
Change in liabilities	(8,213		)	(9,395		)	7,069			—			(10,539		)
Net cash provided by operating activities	11,471			70,190			62,690			—			144,351
Cash flows from investing activities:
Capital expenditures	—			(107,137		)	(43,972		)	—			(151,109		)
Proceeds from the sale of assets	—			1,088			1,206			—			2,294
Acquisition of ITS, net of cash acquired	—			—			—			—			—
Net cash (used in) investing activities	—			(106,049		)	(42,766		)	—			(148,815		)
Cash flows from financing activities:
Proceeds from debt issuance	400,000			—			—			—			400,000
Repayments of long term debt	(425,000		)	—			—			—			(425,000		)
Paydown on term note	(7,500		)	—			—			—			(7,500		)
Payment of debt issuance costs	(7,630		)	—			—			—			(7,630		)
Payment of debt extinguishment costs	(26,214		)	—			—			—			(26,214		)
Excess tax benefit from stock-based compensation	430			—			—			—			430
Intercompany advances, net	(10,677		)	40,064			(29,387		)	—			—
Net cash provided by (used in) financing activities	(76,591		)	40,064			(29,387		)	—			(65,914		)
Net change in cash and cash equivalents	(65,120		)	4,205			(9,463		)	—			(70,378		)
Cash and cash equivalents at beginning of year	88,697			8,310			51,682			—			148,689
Cash and cash equivalents at end of year	$	23,577		$	12,515		$	42,219		$	—		$	78,311

	Nine Months Ended September 30, 2014
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	15,698		$	54,169		$	(2,954	)	$	(50,591	)	$	16,322
Adjustments to reconcile net income (loss):
Depreciation and amortization	—			63,343			43,323			—			106,666
Loss on extinguishment of debt	30,152			—			—			—			30,152
Gain on disposition of assets	79			(522		)	10			—			(433		)
Deferred income tax expense	(15,774		)	12,525			3,322			—			73
Expenses not requiring cash	9,940			(1,538		)	1,739			—			10,141
Equity in net earnings of subsidiaries	(50,591		)	—			—			50,591			—
Change in accounts receivable	—			(1,715		)	(3,473		)	—			(5,188		)
Change in other assets	43,412			(58,441		)	22,583			—			7,554
Change in accrued income taxes	(13,232		)	11,764			(8,929		)	—			(10,397		)
Change in liabilities	(8,213		)	(9,395		)	7,069			—			(10,539		)
Net cash provided by operating activities	11,471			70,190			62,690			—			144,351
Cash flows from investing activities:
Capital expenditures	—			(107,137		)	(43,972		)	—			(151,109		)
Proceeds from the sale of assets	—			1,088			1,206			—			2,294
Acquisition of ITS, net of cash acquired	—			—			—			—			—
Net cash (used in) investing activities	—			(106,049		)	(42,766		)	—			(148,815		)
Cash flows from financing activities:
Proceeds from debt issuance	400,000			—			—			—			400,000
Repayments of long term debt	(425,000		)	—			—			—			(425,000		)
Paydown on term note	(7,500		)	—			—			—			(7,500		)
Payment of debt issuance costs	(7,630		)	—			—			—			(7,630		)
Payment of debt extinguishment costs	(26,214		)	—			—			—			(26,214		)
Excess tax benefit from stock-based compensation	430			—			—			—			430
Intercompany advances, net	(10,677		)	40,064			(29,387		)	—			—
Net cash provided by (used in) financing activities	(76,591		)	40,064			(29,387		)	—			(65,914		)
Net change in cash and cash equivalents	(65,120		)	4,205			(9,463		)	—			(70,378		)
Cash and cash equivalents at beginning of year	88,697			8,310			51,682			—			148,689
Cash and cash equivalents at end of year	$	23,577		$	12,515		$	42,219		$	—		$	78,311

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended September 30, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	16,843		$	27,612		$	8,939		$	(36,330	)	$	17,064
Adjustments to reconcile net income (loss)
Depreciation and amortization	—			57,335			40,339			—			97,674
Loss on extinguishment of debt	5,218			—			—			—			5,218
Gain on disposition of assets	—			(1,917		)	(842		)	—			(2,759		)
Deferred income tax expense	(2,860		)	10,479			5,253			—			12,872
Expenses not requiring cash	10,494			591			(1,157		)	—			9,928
Equity in net earnings of subsidiaries	(36,330		)	—			—			36,330			—
Change in accounts receivable	(899		)	(7,951		)	(19,755		)	—			(28,605		)
Change in other assets	3,045			4,580			(8,971		)	—			(1,346		)
Change in accrued income taxes	358			(85		)	2,604			—			2,877
Change in liabilities	14,222			(2,116		)	306			—			12,412
Net cash provided by operating activities	10,091			88,528			26,716			—			125,335
Cash flows from investing activities:
Capital expenditures	—			(66,956		)	(35,900		)	—			(102,856		)
Proceeds from the sale of assets	—			2,751			2,782			—			5,533
Acquisition of ITS, net of cash acquired	—			(292		)	(117,699		)	—			(117,991		)
Net cash (used in) investing activities	—			(64,497		)	(150,817		)	—			(215,314		)
Cash flows from financing activities:
Proceeds from debt issuance	350,000			—			—			—			350,000
Repayments of long term debt	(125,000		)	—			—			—			(125,000		)
Paydown on term note	(50,000		)	—			—			—			(50,000		)
Payment of debt issuance costs	(10,981		)	—			—			—			(10,981		)
Payment of debt extinguishment costs	—			—			—			—			—
Excess tax benefit from stock-based compensation	531			—			—			—			531
Intercompany advances, net	(127,376		)	(13,781		)	141,157			—			—
Net cash provided by (used in) financing activities	37,174			(13,781		)	141,157			—			164,550
Net change in cash and cash equivalents	47,265			10,250			17,056			—			74,571
Cash and cash equivalents at beginning of year	42,251			11,023			34,612			—			87,886
Cash and cash equivalents at end of year	$	89,516		$	21,273		$	51,668		$	—		$	162,457