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

12 Months Ended

Dec. 31, 2011

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

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

Note 16 — 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 December 31, 2011 and December 31, 2010 and for the years ended December 31, 2011, 2010 and 2009. 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 STATEMENT OF OPERATIONS

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

	Year ended December 31, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
	(Dollars in Thousands)
	(Unaudited)
Total revenues	$	—		$	376,229		$	426,491		$	(116,074	)	$	686,646
Operating expenses		—			175,465			358,753			(116,074	)		418,144
Depreciation and amortization		—			62,744			49,392			—			112,136
Total operating gross margin		—			138,020			18,346			—			156,366
General and administration expens(1)		(218	)		(30,859	)		(237	)		—			(31,314	)
Impairment and other charges		—			(170,000	)		—			—			(170,000	)
Provision for reduction in carrying value of certainassets		—			(1,350	)		—			—			(1,350	)
Gain on disposition of assets, net		—			2,706			953			—			3,659
Total operating income (loss)		(218	)		(61,483	)		19,062			—			(42,639	)
Other income and (expense):
Interest expense		(26,654	)		(17,889	)		(8,865	)		30,814			(22,594	)
Changes in fair value of derivative positions		(110	)		—			—			—			(110	)
Interest income		18,131			750			12,189			(30,814	)		256
Other		—			(345	)		20			—			(325	)
Equity in net earnings of subsidiaries		(23,484	)		—			—			23,484			—
Total other income and (expense)		(32,117	)		(17,484	)		3,344			23,484			(22,773	)
Income (benefit) 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.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

	Year Ended December 31, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
	(Unaudited)
	(Dollars in Thousands)
Total revenues	$	—		$	366,947		$	401,617		$	(109,089	)	$	659,475
Operating expenses		—			237,584			342,783			(109,089	)		471,278
Depreciation and amortization		—			63,402			51,628			—			115,030
Total operating gross margin		—			65,961			7,206			—			73,167
General and administration expense(1)		(225	)		(30,193	)		(310	)		—			(30,728	)
Provision for reduction in carrying value of certain assets		—			(1,952	)		—			—			(1,952	)
Gain on disposition of assets, net		—			2,067			2,553			—			4,620
Total operating income (loss)		(225	)		35,883			9,449			—			45,107
Other income and (expense):
Interest expense		(30,771	)		(35,640	)		(16,185	)		55,791			(26,805	)
Interest income		42,000			757			23,291			(65,791	)		257
Loss on extinguishment of debt		(7,209	)		—			—			—			(7,209	)
Other		—			88			67			—			155
Equity in net earnings of subsidiaries		(22,962	)		—			—			22,962			—
Total other income and (expense)		(18,942	)		(34,795	)		7,173			12,962			(33,602	)
Income (benefit) before income taxes		(19,167	)		1,088			16,622			12,962			11,505
Income tax expense (benefit):
Current		139			(189	)		27,571			—			27,521
Deferred		(4,845	)		2,323			1,214			—			(1,308	)
Total income tax expense (benefit)		(4,706	)		2,134			28,785			—			26,213
Net income (loss)		(14,461	)		(1,046	)		(12,163	)		12,962			(14,708	)
Less: Net (loss) attributable to noncontrolling interest		—			—			(247	)		—			(247	)
Net income (loss) attributable to controlling interest	$	(14,461	)	$	(1,046	)	$	(11,916	)	$	12,962		$	(14,461	)

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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

	Year Ended December 31, 2009
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
	(Unaudited)
	(Dollars in thousands)
Total revenues	$	—		$	381,145		$	430,430		$	(58,665	)	$	752,910
Operating expenses		—			300,620			313,435			(58,665	)		555,390
Depreciation and amortization		—			65,595			48,380			—			113,975
Total operating gross margin		—			14,930			68,615			—			83,545
General and administration expense(1)		(180	)		(44,973	)		(330	)		—			(45,483	)
Provision for reduction in carrying value of certain assets		—			(3,206	)		(1,440	)		—			(4,646	)
Gain on disposition of assets, net		—			4,190			1,716			—			5,906
Total operating income (loss)		(180	)		(29,059	)		68,561			—			39,322
Other income and (expense):
Interest expense		(33,203	)		(35,838	)		(13,959	)		53,550			(29,450	)
Interest income		43,183			1,184			16,585			(59,911	)		1,041
Other		(3	)		(1,133	)		50			—			(1,086	)
Equity in net earnings of subsidiaries		(20,797	)		—			—			20,797			—
Total other income and (expense)		(10,820	)		(35,787	)		2,676			14,436			(29,495	)
Income (benefit) before income taxes		(11,000	)		(64,846	)		71,237			14,436			9,827
Income tax expense (benefit):
Current		(3,655	)		226			18,853			—			15,424
Deferred		(16,612	)		1			1,747			—			(14,864	)
Total income tax expense (benefit)		(20,267	)		227			20,600			—			560
Net income (loss)		9,267			(65,073	)		50,637			14,436			9,267
Net income attributable to noncontrolling interest		—			—			—			—			—
Net income (loss) attributable to controlling interest	$	9,267		$	(65,073	)	$	50,637		$	14,436		$	9,267

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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

	December 31, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
	(Dollars in Thousands)
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	55,670		$	4,212		$	37,987		$	—		$	97,869
Accounts and notes receivable, net		289,512			94,748			285,326			(485,663	)		183,923
Rig materials and supplies		—			762			29,185			—			29,947
Deferred costs		—			—			3,249			—			3,249
Deferred income taxes		—			5,311			853			486			6,650
Other tax assets		47,834			(25,218	)		2,742			—			25,358
Assets held for sale		—			—			5,315			—			5,315
Other current assets		788			6,381			8,133			—			15,302
Total current assets		393,804			86,196			372,790			(485,177	)		367,613
Property, plant and equipment, net		79			474,942			244,787			1			719,809
Investment in subsidiaries and intercompany advances		720,214			(212,883	)		1,347,719			(1,855,050	)		—
Other noncurrent assets		44,962			66,660			16,839			363			128,824
Total assets	$	1,159,059		$	414,915		$	1,982,135		$	(2,339,863	)	$	1,216,246
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	145,723		$	—		$	—		$	—		$	145,723
Accounts payable and accrued liabilities		60,120			94,056			181,010			(199,936	)		135,250
Accrued income taxes		(205	)		921			4,121			—			4,837
Total current liabilities		205,638			94,977			185,131			(199,936	)		285,810
Long-term debt		337,000			—			—			—			337,000
Other long-term liabilities		8,081			9,474			15,897			—			33,452
Long-term deferred tax liability		1,151			25,232			(11,296	)		847			15,934
Intercompany payables		62,583			43,657			111,619			(217,859	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		19,508			18,049			43,003			(61,052	)		19,508
Capital in excess of par value		637,042			733,120			1,444,091			(2,177,211	)		637,042
Retained earnings (accumulated deficit)		(111,944	)		(509,594	)		194,246			315,348			(111,944	)
Total controlling interest stockholders’ equity		544,606			241,575			1,681,340			(1,922,915	)		544,606
Noncontrolling interest		—			—			(556	)		—			(556	)
Total Equity		544,606			241,575			1,680,784			(1,922,915	)		544,050
Total liabilities and stockholders’ equity	$	1,159,059		$	414,915		$	1,982,135		$	(2,339,863	)	$	1,216,246

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

	December 31, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
	(Unaudited)
	(Dollars in thousands)
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			0			816,147
Investment in subsidiaries and intercompany advances		996,018			499,987			1,310,792			(2,806,797	)		—
Other noncurrent assets		72,202			14,542			6,653			(3,113	)		90,284
Total assets	$	1,190,747		$	1,132,113		$	1,922,475		$	(2,970,780	)	$	1,274,555
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
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

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 liabilities		(10,454	)		(53,404	)		41,091			—			(22,767	)
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
Proceeds from draw on revolver credit facility		—			—			—			—			—
Paydown on senior notes		—			—			—			—			—
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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
	(Unaudited)
	(Dollars in thousands)
Cash flows from operating activities:
Net income (loss)	$	(14,461	)	$	(1,046	)	$	(12,163	)	$	12,962		$	(14,708	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			63,402			51,628			—			115,030
Loss on extinguishment of debt		7,209			—			—			—			7,209
Gain on disposition of assets		—			(2,067	)		(2,553	)					(4,620	)
Deferred income tax expense		(4,845	)		2,323			1,214			—			(1,308	)
Provision for reduction in carrying value of certain assets		—			1,952			—			—			1,952
Expenses not requiring cash		14,829			—			—			—			14,829
Equity in net earnings of subsidiaries		22,962			—			—			(22,962	)		—
Change in accounts receivable		16,178			(14,763	)		19,337			—			20,752
Change in other assets		(2,505	)		(13,454	)		15,365			—			(594	)
Change in liabilities		(144	)		7,793			(22,641	)		—			(14,992	)
Net cash provided by (used in) operating activities		39,223			44,140			50,187			(10,000	)		123,550
Cash flows from investing activities:
Capital expenditures		—			(169,784	)		(49,400	)		—			(219,184	)
Proceeds from the sale of assets		—			4,646			1,829			—			6,475
Intercompany dividend payment		—			—			(10,000	)		10,000			—
Net cash provided by (used in) investing activities		—			(165,138	)		(57,571	)		10,000			(212,709	)
Cash flows from financing activities:
Proceeds from debt issuance		300,000			—			—			—			300,000
Proceeds from draw on revolver credit facility		25,000			—			—			—			25,000
Paydown on Senior notes		(225,000	)		—			—			—			(225,000	)
Paydown on term note		(12,000	)		—			—			—			(12,000	)
Paydown on revolver credit facility		(42,000	)		—			—			—			(42,000	)
Payment of debt issuance costs		(7,976	)		—			—			—			(7,976	)
Payment of debt extinguishment costs		(7,466	)		—			—			—			(7,466	)
Proceeds from stock options exercised		26			—			—			—			26
Excess tax benefit from stock-based compensation		1,203			—			—			—			1,203
Intercompany advances, net		(115,364	)		121,547			(6,183	)		—			—
Net cash provided by (used in) financing activities		(83,577	)		121,547			(6,183	)		—			31,787
Net change in cash and cash equivalents		(44,354	)		549			(13,567	)		—			(57,372	)
Cash and cash equivalents at beginning of period		58,189			1,768			48,846			—			108,803
Cash and cash equivalents at end of period	$	13,835		$	2,317		$	35,279		$	—		$	51,431

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS

	Year Ended December 31, 2009
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
	(Unaudited)
	(Dollars in thousands)
Cash flows from operating activities:
Net income (loss)	$	9,267		$	(65,073	)	$	50,637		$	14,436		$	9,267
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			65,596			48,380			—			113,975
Gain on disposition of assets		—			(4,190	)		(1,716	)		—			(5,906	)
Deferred income tax expense (benefit)		(16,612	)		0			1,747			—			(14,864	)
Provision for reduction in carrying value of certain assets		—			3,206			1,440			—			4,646
Expenses not requiring cash		11,626			—			—			—			11,626
Equity in net earnings of subsidiaries		20,797			—			—			(20,797	)		—
Change in accounts receivable		34,435			(38,905	)		6,126			—			1,656
Change in other assets		(35,604	)		906			8,439			—			(26,259	)
Change in liabilities		17,203			41,411			(41,883	)		—			16,731
Net cash provided by operating activities		41,112			2,952			73,170			(6,361	)		110,872
Cash flows from investing activities:
Capital expenditures		—			(129,281	)		(30,773	)		—			(160,054	)
Proceeds from the sale of assets		—			6,918			2,418			—			9,336
Intercompany dividend payments		—			—			(6,361	)		6,361			—
Net cash used in investing activities		—			(122,363	)		(34,716	)		6,361			(150,718	)
Cash flows from financing activities:
Proceeds from draw on revolver credit facility		4,000			—			—			—			4,000
Paydown on revolver credit facility		(26,000	)		—			—			—			(26,000	)
Proceeds from stock options exercised		199			—			—			—			199
Excess tax benefit from stock-based compensation		(1,848	)		—			—			—			(1,848	)
Intercompany advances, net		(70,598	)		114,321			(43,723	)		—			—
Net cash provided by financing activities		(94,247	)		114,321			(43,723	)		—			(23,649	)
Net increase in cash and cash equivalents		(53,135	)		(5,090	)		(5,270	)		(0	)		(63,495	)
Cash and cash equivalents at beginning of year		111,324			6,858			54,116			—			172,298
Cash and cash equivalents at end of year	$	58,189		$	1,768		$	48,846		$	(0	)	$	108,803