Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements

9 Months Ended

Sep. 30, 2011

Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements [Abstract]

Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements

11.	Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements
	Set forth on the following pages are the consolidating condensed financial statements of Parker Drilling. The Company’s 9.125% Notes are guaranteed by substantially all of the restricted subsidiaries of Parker Drilling. There are currently no restrictions on the ability of the restricted subsidiaries to transfer funds to Parker Drilling in the form of cash dividends, loans or advances. Parker Drilling is a holding company with no operations, other than through its subsidiaries. Separate financial statements for each guarantor company are not provided as the company complies with the exception to Rule 3-10(a)(1) of Regulation S-X, set forth in sub-paragraph (f) of such rule. All guarantor subsidiaries are owned 100 percent by the parent company, all guarantees are full and unconditional and all guarantees are joint and several.
	We are providing consolidating condensed financial information of the parent, Parker Drilling, the guarantor subsidiaries, and the non-guarantor subsidiaries as of September 30, 2011 and December 31, 2010 and for the three and nine months ended September 30, 2011 and 2010. The consolidating condensed financial statements present investments in both consolidated and unconsolidated subsidiaries using the equity method of accounting.

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATING CONDENSED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)

	September 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	60,728		$	17,599		$	24,756		$	—		$	103,083
Accounts and notes receivable, net		3,770			86,944			284,419			(198,569	)		176,564
Rig materials and supplies		—			314			28,207			—			28,521
Deferred costs		—			—			4,377			—			4,377
Deferred income taxes		—			4,587			3,793			(31	)		8,349
Other tax assets		56,855			(19,795	)		4,961			—			42,021
Assets held for sale		—			—			5,287			—			5,287
Other current assets		788			5,985			7,674			(2,228	)		12,219
Total current assets		122,141			95,634			363,474			(200,828	)		380,421
Property, plant and equipment, net		79			619,775			252,511			1			872,366
Investment in subsidiaries and intercompany advances		1,104,058			(226,735	)		1,345,295			(2,222,618	)		—
Deferred income tax		25,728			(15,680	)		22,548			154			32,750
Other noncurrent assets		7,655			2,980			12,196			—			22,831
Total assets	$	1,259,661		$	475,974		$	1,996,024		$	(2,423,291	)	$	1,308,368
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	144,224		$	—		$	—		$	—		$	144,224
Accounts payable and accrued liabilities		65,314			91,909			185,703			(200,594	)		142,332
Accrued income taxes		(62	)		(34	)		5,413			—			5,317
Total current liabilities		209,476			91,875			191,116			(200,594	)		291,873
Long-term debt		343,000			—			—			—			343,000
Other long-term liabilities		8,098			8,583			15,564			—			32,245
Long-term deferred tax liability		3,295			—			5,310			—			8,605
Intercompany payables		62,583			43,657			111,659			(217,899	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		19,488			18,049			43,003			(61,052	)		19,488
Capital in excess of par value		635,487			733,120			1,436,369			(2,169,489	)		635,487
Retained earnings (accumulated deficit)		(21,766	)		(419,310	)		193,567			225,743			(21,766	)
Total controlling interest stockholders’ equity		633,209			331,859			1,672,939			(2,004,798	)		633,209
Noncontrolling interest		—			—			(564	)		—			(564	)
Total Equity		633,209			331,859			1,672,375			(2,004,798	)		632,645
Total liabilities and stockholders’ equity	$	1,259,661		$	475,974		$	1,996,024		$	(2,423,291	)	$	1,308,368

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATING CONDENSED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)

	December 31, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	13,835		$	2,317		$	35,279		$	—		$	51,431
Accounts and notes receivable, net		1,179			99,734			215,650			(147,687	)		168,876
Rig materials and supplies		—			(1,655	)		27,182			—			25,527
Deferred costs		—			—			2,229			—			2,229
Deferred income taxes		8,981			297			—			—			9,278
Other tax assets		97,896			(62,678	)		11,211			—			46,429
Assets held for sale		—			—			5,287			—			5,287
Other current assets		557			41,564			30,129			(13,183	)		59,067
Total current assets		122,448			79,579			326,967			(160,870	)		368,124
Property, plant and equipment, net		79			538,005			278,063			—			816,147
Investment in subsidiaries and intercompany advances		996,018			499,987			1,310,792			(2,806,797	)		—
Deferred income tax		60,664			10,776			(10,424	)		—			61,016
Other noncurrent assets		11,538			3,766			17,077			(3,113	)		29,268
Total assets	$	1,190,747		$	1,132,113		$	1,922,475		$	(2,970,780	)	$	1,274,555
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	12,000		$	—		$	—		$	—		$	12,000
Accounts payable and accrued liabilities		55,257			338,626			160,316			(395,428	)		158,771
Accrued income taxes		609			93			3,790			—			4,492
Total current liabilities		67,866			338,719			164,106			(395,428	)		175,263
Long-term debt		460,862			—			—			—			460,862
Other long-term liabilities		7,762			7,610			12,131			2,690			30,193
Long-term deferred tax liability		3,361			21,958			(5,148	)		—			20,171
Intercompany payables		62,583			473,144			103,667			(639,394	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		19,397			18,050			43,003			(61,053	)		19,397
Capital in excess of par value		630,409			733,120			1,436,338			(2,169,458	)		630,409
Retained earnings (accumulated deficit)		(61,493	)		(460,488	)		168,625			291,863			(61,493	)
Total controlling interest stockholders’ equity		588,313			290,682			1,647,966			(1,938,648	)		588,313
Noncontrolling interest		—			—			(247	)		—			(247	)
Total Equity		588,313			290,682			1,647,719			(1,938,648	)		588,066
Total liabilities and stockholders’ equity	$	1,190,747		$	1,132,113		$	1,922,475		$	(2,970,780	)	$	1,274,555

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)

	Three months ended September 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	98,687		$	105,807		$	(27,905	)	$	176,589
Operating expenses		—			41,720			85,097			(27,905	)		98,912
Depreciation and amortization		—			16,124			11,457			—			27,581
Total operating gross margin		—			40,843			9,253			—			50,096
General and administration expense (1)		(45	)		(8,557	)		(158	)		—			(8,760	)
Gain on disposition of assets, net		—			233			390			—			623
Total operating income (loss)		(45	)		32,519			9,485			—			41,959
Other income and (expense):
Interest expense		(6,709	)		(35	)		(3,051	)		4,204			(5,591	)
Interest income		124			188			3,921			(4,204	)		29
Loss on fair value of derivative contracts		(49	)		—			—			—			(49	)
Other		—			(657	)		—			—			(657	)
Equity in net earnings of subsidiaries		25,361			—			—			(25,361	)		—
Total other income and (expense)		18,727			(504	)		870			(25,361	)		(6,268	)
Income (benefit) before income taxes		18,682			32,015			10,355			(25,361	)		35,691
Income tax expense (benefit):
Current		(14,091	)		10,840			5,751			—			2,500
Deferred		12,048			1,650			(1,156	)		—			12,542
Total income tax expense (benefit)		(2,043	)		12,490			4,595			—			15,042
Net income (loss)		20,725			19,525			5,760			(25,361	)		20,649
Less: Net income (loss) attributable to noncontrolling interest		—			—			(76	)		—			(76	)
Net (loss) attributable to controlling interest		20,725			19,525			5,836			(25,361	)		20,725

(1) All field operations general and administration expenses are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)

	Three months ended September 30, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	99,731		$	114,981		$	(42,683	)	$	172,029
Operating expenses		—			64,561			107,804			(42,683	)		129,682
Depreciation and amortization		—			16,049			12,855			—			28,904
Total operating gross margin		—			19,121			(5,678	)		—			13,443
General and administration expense (1)		(37	)		(6,957	)		(70	)		—			(7,064	)
Gain on disposition of assets, net		—			56			1,120			—			1,176
Total operating income (loss)		(37	)		12,220			(4,628	)		—			7,555
Other income and (expense):
Interest expense		(7,403	)		(8,911	)		(4,358	)		14,281			(6,391	)
Interest income		10,492			149			3,685			(14,280	)		46
Loss on extinguishment of debt		—			—			—			—			—
Other		—			(11	)		79			—			68
Equity in net earnings of subsidiaries		(149	)		—			—			149			—
Total other income and (expense)		2,940			(8,773	)		(594	)		150			(6,277	)
Income (benefit) before income taxes		2,903			3,447			(5,222	)		150			1,278
Income tax expense (benefit):
Current		224			165			(3,493	)		—			(3,104	)
Deferred		2,187			1			1,702			—			3,890
Total income tax expense (benefit)		2,411			166			(1,791	)		—			786
Net income (loss)	$	492		$	3,281		$	(3,431	)	$	150		$	492

(1) All field operations general and administration expenses are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)

	Nine months ended September 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	281,527		$	314,221		$	(90,168	)	$	505,580
Operating expenses		—			133,118			267,792			(90,168	)		310,742
Depreciation and amortization		—			46,721			35,790			—			82,511
Total operating gross margin		—			101,688			10,639			—			112,327
General and administration expense (1)		(173	)		(23,282	)		(287	)		—			(23,742	)
Gain on disposition of assets, net		—			1,137			856			—			1,993
Total operating income (loss)		(173	)		79,543			11,208			—			90,578
Other income and (expense):
Interest expense		(20,307	)		(17,854	)		(6,939	)		27,892			(17,208	)
Interest income		18,065			568			9,467			(27,892	)		208
Loss on fair value of derivative contracts		(186	)		—			—			—			(186	)
Other		—			(536	)		14			—			(522	)
Equity in net earnings of subsidiaries		66,120			—			—			(66,120	)		—
Total other income and (expense)		63,692			(17,822	)		2,542			(66,120	)		(17,708	)
Income (benefit) before income taxes		63,519			61,721			13,750			(66,120	)		72,870
Income tax expense (benefit):
Current		(21,973	)		20,608			14,974			—			13,609
Deferred		45,765			(65	)		(25,964	)		—			19,736
Total income tax expense (benefit)		23,792			20,543			(10,990	)		—			33,345
Net income (loss)		39,727			41,178			24,740			(66,120	)		39,525
Less: Net income (loss) attributable to noncontrolling interest		—			—			(202	)		—			(202	)
Net (loss) attributable to controlling interest	$	39,727		$	41,178		$	24,942		$	(66,120	)	$	39,727

(1) All field operations general and administration expenses are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)

	Nine months ended September 30, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	266,116		$	311,865		$	(91,822	)	$	486,159
Operating expenses		—			176,188			267,822			(91,822	)		352,188
Depreciation and amortization		—			47,812			38,692			—			86,504
Total operating gross margin		—			42,116			5,351			—			47,467
General and administration expense (1)		(168	)		(23,623	)		(242	)		—			(24,033	)
Gain on disposition of assets, net		—			1,634			1,926			—			3,560
Total operating income (loss)		(168	)		20,127			7,035			—			26,994
Other income and (expense):
Interest expense		(23,667	)		(26,730	)		(12,609	)		42,497			(20,509	)
Interest income		31,507			547			20,641			(52,497	)		198
Loss on extinguishment of debt		(7,209	)		—			—			—			(7,209	)
Other		1			57			267			—			325
Equity in net earnings of subsidiaries		(6,111	)		—			—			6,111			—
Total other income and (expense)		(5,479	)		(26,126	)		8,299			(3,889	)		(27,195	)
Income (benefit) before income taxes		(5,647	)		(5,999	)		15,334			(3,889	)		(201	)
Income tax expense (benefit):
Current		662			(91	)		4,965			—			5,536
Deferred		(5,257	)		(23	)		595			—			(4,685	)
Total income tax expense (benefit)		(4,595	)		(114	)		5,560			—			851
Net income (loss)	$	(1,052	)	$	(5,885	)	$	9,774		$	(3,889	)	$	(1,052	)

(1) All field operations general and administration expenses are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)

	Nine months ended September 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	39,727		$	41,178		$	24,740		$	(66,120	)	$	39,525
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			46,721			35,790			—			82,511
Gain on disposition of assets		—			(1,137	)		(856	)		—			(1,993	)
Deferred income tax expense		45,765			(65	)		(25,964	)		—			19,736
Expenses not requiring cash		12,666			—			(1,592	)		—			11,074
Equity in net earnings of subsidiaries		(66,120	)		—			—			66,120			—
Change in accounts receivable		(2,591	)		65,716			(67,601	)		—			(4,476	)
Change in other assets		53,150			2,071			(6,352	)		—			48,869
Change in liabilities		(4,887	)		(79,082	)		67,438			—			(16,531	)
Net cash provided by (used in) operating activities		77,710			75,402			25,603			—			178,715
Cash flows from investing activities:
Capital expenditures		—			(132,287	)		(9,554	)		—			(141,841	)
Proceeds from the sale of assets		—			3,073			352			—			3,425
Proceeds from insurance settlements		—			250			—			—			250
Net cash used in investing activities		—			(128,964	)		(9,202	)		—			(138,166	)
Cash flows from financing activities:
Proceeds from issuance of debt		50,000			—			—			—			50,000
Repayments of term loan		(15,000	)		—			—			—			(15,000	)
Repayments on revolver		(25,000	)		—			—			—			(25,000	)
Payment of debt issuance costs		(504	)		—			—			—			(504	)
Proceeds from stock options exercised		183			—			—			—			183
Excess tax benefit from stock-based compensation		1,424			—			—			—			1,424
Intercompany advances, net		(41,920	)		68,844			(26,924	)		—			—
Net cash provided by (used in) financing activities		(30,817	)		68,844			(26,924	)		—			11,103
Net change in cash and cash equivalents		46,893			15,282			(10,523	)		—			51,652
Cash and cash equivalents at beginning of period		13,835			2,317			35,279			—			51,431
Cash and cash equivalents at end of period	$	60,728		$	17,599		$	24,756		$	—		$	103,083

See accompanying notes to unaudited consolidated condensed financial statements.

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)

	Nine months ended September 30, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(1,052	)	$	(5,885	)	$	9,774		$	(3,889	)	$	(1,052	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			47,812			38,692			—			86,504
Loss on extinguishment of debt		7,209			—			—			—			7,209
Gain on disposition of assets		—			(1,634	)		(1,926	)		—			(3,560	)
Deferred income tax expense		(5,257	)		(23	)		595			—			(4,685	)
Expenses not requiring cash		10,740			—			—			—			10,740
Equity in net earnings of subsidiaries		6,111			—			—			(6,111	)		—
Change in accounts receivable		(7,522	)		8,499			2,452			—			3,429
Change in other assets		(3,384	)		1,464			(1,755	)		—			(3,675	)
Change in liabilities		7,838			(17,316	)		299			—			(9,179	)
Net cash provided by (used in) operating activities		14,683			32,917			48,131			(10,000	)		85,731
Cash flows from investing activities:
Capital expenditures		—			(145,422	)		(36,134	)		—			(181,556	)
Proceeds from the sale of assets		—			2,276			2,309			—			4,585
Intercompany dividend payment		—						(10,000	)		10,000			—
Net cash provided by (used in) investing activities		—			(143,146	)		(43,825	)		10,000			(176,971	)
Cash flows from financing activities:
Proceeds from debt issuance		300,000			—			—			—			300,000
Proceeds from draw on revolver credit facility		20,000			—			—			—			20,000
Paydown on Senior notes		(225,000	)		—			—			—			(225,000	)
Paydown on term note		(9,000	)											(9,000	)
Paydown on revolver credit facility		(42,000	)		—			—			—			(42,000	)
Payment of debt issuance costs		(8,001	)		—			—			—			(8,001	)
Payment of debt extinguishment costs		(7,466	)		—			—			—			(7,466	)
Proceeds from stock options exercised		26			—			—			—			26
Excess tax benefit from stock-based compensatio		1,212			—			—			—			1,212
Intercompany advances, net		(82,473	)		111,581			(29,108	)		—			—
Net cash provided by (used in) financing activities		(52,702	)		111,581			(29,108	)		—			29,771
Net change in cash and cash equivalents		(38,019	)		1,352			(24,802	)		—			(61,469	)
Cash and cash equivalents at beginning of period		58,189			1,768			48,846			—			108,803
Cash and cash equivalents at end of period	$	20,170		$	3,120		$	24,044		$	—		$	47,334

See accompanying notes to unaudited consolidated condensed financial statements.