Table of Contents
Registration No. 333-176605
• | The terms of the new notes are identical to the terms of the old notes that were issued on June 1, 2011, except that the new notes will be registered under the Securities Act of 1933 and will not contain restrictions on transfer, registration rights or provisions for additional interest. |
• | We are offering to exchange up to $600,000,000 of our old notes for new notes with materially identical terms that have been registered under the Securities Act of 1933 and are freely tradable. | |
• | We will exchange all old notes that you validly tender and do not validly withdraw before the exchange offer expires for an equal principal amount of new notes. | |
• | The exchange offer expires at 5:00 p.m., New York City time, on October 19, 2011, unless extended. | |
• | Tenders of old notes may be withdrawn at any time prior to the expiration of the exchange offer. | |
• | The exchange of new notes for old notes will not be a taxable event for U.S. federal income tax purposes. |
Page | ||||
ii | ||||
1 | ||||
7 | ||||
8 | ||||
26 | ||||
26 | ||||
27 | ||||
29 | ||||
49 | ||||
67 | ||||
73 | ||||
118 | ||||
119 | ||||
120 | ||||
120 | ||||
120 | ||||
120 | ||||
A-1 |
Table of Contents
• | the level of demand for and supply of oil and natural gas; | |
• | fluctuations in the current and future prices of oil and natural gas; | |
• | the level of activity and developments in the Canadian oil sands; | |
• | the level of drilling and completion activity; | |
• | the level of mining activity in Australia and demand for coal from Australia; | |
• | the level of onshore and offshore oil and natural gas developmental activities; | |
• | general economic conditions and the pace of recovery from the recent recession; | |
• | our ability to find and retain skilled personnel; | |
• | the availability and cost of capital; and | |
• | the other factors identified under the caption “Risks Factors” in this prospectus. |
ii
Table of Contents
1
Table of Contents
Exchange Offer | We are offering to exchange new notes for old notes. | |
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on October 19, 2011, unless we decide to extend it. | |
Condition to the Exchange Offer | The registration rights agreement does not require us to accept old notes for exchange if the exchange offer, or the making of any exchange by a holder of the old notes, would violate any applicable law or interpretation of the staff of the Securities and Exchange Commission. The exchange offer is not conditioned on a minimum aggregate principal amount of old notes being tendered. | |
Procedures for Tendering Old Notes | To participate in the exchange offer, you must follow the procedures established by The Depository Trust Company, which we call “DTC,” for tendering notes held in book-entry form. These procedures, which we call “ATOP,” require that (i) the exchange agent receive, prior to the expiration date of the exchange offer, a computer generated message known as an “agent’s message” that is transmitted through DTC’s automated tender offer program, and (ii) DTC confirm that: | |
• DTC has received your instructions to exchange your notes, and | ||
• you agree to be bound by the terms of the letter of transmittal. | ||
For more information on tendering your old notes, please refer to the section in this prospectus entitled “Exchange Offer — Terms of the Exchange Offer” and “Procedures for Tendering.” | ||
Guaranteed Delivery Procedures | None. | |
Withdrawal of Tenders | You may withdraw your tender of old notes at any time prior to the expiration date. To withdraw, you must submit a notice of withdrawal by telegram, facsimile transmission or letter to the exchange agent using ATOP procedures before 5:00 p.m., New York City time, on the expiration date of the exchange offer. Please refer to the section in this prospectus entitled “Exchange Offer — Withdrawal of Tenders.” | |
Acceptance of Old Notes and Delivery of New Notes | If you fulfill all conditions required for proper acceptance of old notes, we will accept any and all old notes that you properly tender in the exchange offer on or before 5:00 p.m. New York City time on the expiration date. We will return any old note that we do not accept for exchange to you without expense promptly after the expiration date and acceptance of the old notes for exchange. Please refer to the section in this prospectus entitled “Exchange Offer — Terms of the Exchange Offer.” | |
Fees and Expenses | We will bear expenses related to the exchange offer. Please refer to the section in this prospectus entitled “Exchange Offer — Fees and Expenses.” |
2
Table of Contents
Use of Proceeds | The issuance of the new notes will not provide us with any new proceeds. We are making this exchange offer solely to satisfy our obligations under our registration rights agreement. | |
Consequences of Failure to Exchange Old Notes | If you do not exchange your old notes in this exchange offer, you will no longer be able to require us to register the old notes under the Securities Act of 1933 (the Securities Act) except in limited circumstances provided under the registration rights agreement. In addition, you will not be able to resell, offer to resell or otherwise transfer the old notes unless we have registered the old notes under the Securities Act, or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act. | |
U.S. Federal Income Tax Consequences | The exchange of new notes for old notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. Please read “Material United States Federal Income Tax Consequences.” | |
Exchange Agent | We have appointed Wells Fargo Bank, N.A. as exchange agent for the exchange offer. You should direct questions and requests for assistance, additional copies of this prospectus or the letter of transmittal to the exchange agent addressed as follows: | |
Wells Fargo Bank, N.A. Corporate Trust Operations MAC N9303-121 Sixth & Marquette Avenue Minneapolis, MN 55479 | ||
Eligible institutions may make requests by facsimile at(612) 667-6282 and may confirm facsimile delivery by calling(800) 344-5128. |
3
Table of Contents
Issuer | Oil States International, Inc. | |
Notes Offered | $600 million aggregate principal amount of 6.500% senior notes due 2019. | |
Maturity | June 1, 2019. | |
Interest Payment Dates | Interest on the new notes will be paid semi-annually in arrears on June 1 and December 1 of each year commencing on December 1, 2011. Interest on each new note will accrue from the last interest payment date on which interest was paid on the old note tendered in exchange thereof, or, if no interest has been paid on the old note, from the date of the original issue of the old note. | |
Guarantees | Our obligations under the new notes will be fully and unconditionally guaranteed on a senior unsecured basis by our existing material domestic subsidiaries and by certain of our future subsidiaries. See “Description of the Notes — Guarantees.” | |
Ranking | The new notes will be our general unsecured senior obligations. The new notes will: | |
• rank equally in right of payment with all of our existing and future senior indebtedness; | ||
• rank senior in right of payment to any of our future subordinated indebtedness; and | ||
• effectively rank junior in right of payment to all of our existing and future secured indebtedness and other obligations, including borrowings under our credit facilities, to the extent of the value of the assets securing such indebtedness and other obligations. | ||
The guarantees will be the guarantors’ general senior unsecured obligations and will: | ||
• rank equally in right of payment with any existing and future senior indebtedness of such guarantor; | ||
• rank senior in right of payment to any future subordinated indebtedness of such guarantor; and | ||
• effectively rank junior in right of payment to existing and future secured indebtedness and other obligations of such guarantor to the extent of the value of the assets securing such indebtedness and other obligations. | ||
Optional Redemption | We will have the option to redeem the new notes, in whole or in part, at any time on or after June 1, 2014, in each case at the redemption prices described in this prospectus under the heading |
4
Table of Contents
“Description of the Notes — Optional Redemption,” together with any accrued and unpaid interest to the date of redemption. | ||
Prior to June 1, 2014, we may redeem the new notes, in whole or in part, at a “make-whole” redemption price described under “Description of the Notes — Optional Redemption,” together with any accrued and unpaid interest to the date of redemption. | ||
In addition, prior to June 1, 2014, we may, at any time or from time to time, redeem up to 35% of the aggregate principal amount of the notes with the net proceeds of certain equity offerings at a redemption price equal to 106.500% of the principal amount of the new notes, plus any accrued and unpaid interest to the date of redemption. | ||
Mandatory Offers to Purchase | Upon the occurrence of a change of control, holders of the new notes will have the right to require us to purchase all or a portion of the new notes at a price equal to 101% of the principal amount, together with any accrued and unpaid interest to the date of purchase. | |
Certain Covenants | We will issue the new notes under an indenture, dated June 1, 2011, with Wells Fargo Bank, N.A., as trustee. The indenture, among other things, limits our ability and the ability of our restricted subsidiaries to: | |
• incur, assume or guarantee additional indebtedness or issue redeemable stock; | ||
• pay dividends on stock, repurchase stock or redeem subordinated debt; | ||
• make investments; | ||
• enter into transactions with affiliates; | ||
• create liens on our assets; | ||
• sell or otherwise dispose of assets, including capital stock of subsidiaries; | ||
• restrict dividends, loans or other asset transfers from our restricted subsidiaries; and | ||
• consolidate with or merge with or into, or sell all or substantially all of our properties to, another person. | ||
However, many of these covenants will terminate if: | ||
• either Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. assigns the notes an investment grade rating; and | ||
• no default under the indenture exists. | ||
These covenants are subject to important exceptions and qualifications, which are described under “Description of the Notes — Certain Covenants.” |
5
Table of Contents
Transfer Restrictions; Absence of a Public Market for the Notes | The new notes generally will be freely transferable, but will also be new securities for which there will not initially be a market. There can be no assurance as to the development or liquidity of any market for the new notes. We do not intend to apply for a listing of the new notes on any securities exchange or any automated dealer quotation system. | |
Risk Factors | Investing in the notes involves risks. See “Risk Factors” beginning on page 8 for a discussion of certain factors you should consider in evaluating an investment in the new notes. |
6
Table of Contents
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Ratio of earnings to fixed charges | 7.82 | 12.81 | 6.63 | 15.06 | 11.79 | 11.81 |
7
Table of Contents
8
Table of Contents
• | the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest; | |
• | the lenders under our Credit Agreement could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets; and | |
• | we could be forced into bankruptcy or liquidation. |
9
Table of Contents
• | the subsidiary incurred the guarantee with the intent to hinder, delay, or defraud any present or future creditor, or contemplated insolvency with a design to favor one or more creditors to the exclusion of others; or | |
• | the subsidiary did not receive fair consideration or reasonably equivalent value for issuing the subsidiary guarantee and, at the time it issued the subsidiary guarantee, the subsidiary: |
• | was insolvent or became insolvent as a result of issuing the subsidiary guarantee, | |
• | was engaged or about to engage in a business or transaction for which the remaining assets of the subsidiary constituted unreasonably small capital, or | |
• | intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they matured then the court could void or subordinate the subsidiary guarantee in favor of the subsidiary’s other obligations. |
10
Table of Contents
• | the designation of that subsidiary guarantor as an unrestricted subsidiary; | |
• | the release or discharge of any guarantee or indebtedness that resulted in the creation of the guarantee of the notes by such subsidiary guarantor; or | |
• | the sale or other disposition of that subsidiary guarantor. |
11
Table of Contents
• | the level of drilling activity; | |
• | the level of production; | |
• | the levels of oil and natural gas inventories; | |
• | depletion rates; | |
• | the worldwide demand for oil and natural gas; | |
• | the expected cost of finding, developing and producing new reserves; | |
• | delays in major offshore and onshore oil and natural gas field development timetables; | |
• | the level of activity and developments in the Canadian oil sands; | |
• | the level of demand for coal and other natural resources from Australia; | |
• | the availability of attractive oil and natural gas field prospects, which may be affected by governmental actions or environmental activists which may restrict drilling; |
12
Table of Contents
• | the availability of transportation infrastructure, refining capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas; | |
• | global weather conditions and natural disasters; | |
• | worldwide economic activity including growth in underdeveloped countries, such as China and India; | |
• | national government political requirements, including the ability of the Organization of Petroleum Exporting Companies (OPEC) to set and maintain production levels and prices for oil and government policies which could nationalize or expropriate oil and natural gas exploration, production, refining or transportation assets; | |
• | the level of oil and gas production by non-OPEC countries; | |
• | the impact of armed hostilities involving one or more oil producing nations; | |
• | rapid technological change and the timing and extent of alternative energy sources, including liquefied natural gas (LNG) or other alternative fuels; | |
• | environmental regulation; and | |
• | domestic and foreign tax policies. |
13
Table of Contents
14
Table of Contents
• | global economic conditions deteriorate; | |
• | the outlook for future profits and cash flow for any of our reporting units deteriorate as the result of many possible factors, including, but not limited to, increased or unanticipated competition, technology becoming obsolete, reductions in customer capital spending plans, loss of key personnel, adverse legal or regulatory judgment(s), future operating losses at a reporting unit, downward forecast revisions, or restructuring plans; | |
• | costs of equity or debt capital increase further; or | |
• | valuations for comparable public companies or comparable acquisition valuations deteriorate. |
15
Table of Contents
• | war and civil disturbances or other risks that may limit or disrupt markets; | |
• | expropriation, confiscation or nationalization of assets; | |
• | renegotiation or nullification of existing contracts; | |
• | foreign exchange restrictions; | |
• | foreign currency fluctuations; | |
• | foreign taxation; | |
• | the inability to repatriate earnings or capital; | |
• | changing political conditions; | |
• | changing foreign and domestic monetary policies; | |
• | social, political, military and economic situations in foreign areas where we do business and the possibilities of war, other armed conflict or terrorist attacks; and | |
• | regional economic downturns. |
16
Table of Contents
• | issuance of administrative, civil and criminal penalties; | |
• | denial or revocation of permits or other authorizations; | |
• | reduction or cessation in operations; and | |
• | performance of site investigatory, remedial or other corrective actions. |
• | result in increased costs associated with our operations and our customers’ operations; | |
• | increase other costs to our business; | |
• | adversely impact overall drilling activity in the areas in which we operate; | |
• | reduce the demand for carbon-based fuels; and | |
• | reduce the demand for our services. |
17
Table of Contents
• | cap and trade system for emissions; | |
• | increase environmental limits on exploration and production activities; | |
• | repeal of expensing of intangible drilling costs; | |
• | increase of the amortization period for geological and geophysical costs to seven years; | |
• | repeal of percentage depletion; | |
• | limits on hydraulic fracturing or disposal of hydraulic fracturing fluids; | |
• | repeal of the domestic manufacturing deduction for oil and natural gas production; | |
• | repeal of the passive loss exception for working interests in oil and natural gas properties; | |
• | repeal of the credits for enhanced oil recovery projects and production from marginal wells; | |
• | repeal of the deduction for tertiary injectants; | |
• | changes to the foreign tax credit limitation calculation; and | |
• | changes to healthcare rules and regulations. |
• | domestic and international pricing and demand for the natural resource being produced at a given project (or proposed project); | |
• | unexpected problems and delays during the development, construction and projectstart-up which may delay the commencement of production; | |
• | unforeseen and adverse climatic, geological, geotechnical, seismic and mining conditions; | |
• | lack of availability of sufficient water or power to maintain their or our operations; | |
• | lack of availability or failure of the required infrastructure necessary to maintain or to expand their operations; | |
• | the breakdown or shortage of equipment and labor necessary to maintain their or our operations; | |
• | risks associated with the natural resources industry being subject to various regulatory approvals. Such risks may include a Government Agency failing to grant an approval or failing to renew an existing approval, or the approval or renewal not being provided by the Government Agency in a timely manner or the Government Agency granting or renewing an approval subject to materially onerous conditions; | |
• | risks to land titles, mining titles and use thereof as a result of native title claims; | |
• | claims by persons living in close proximity to mining projects, which may have an impact on the consents granted; | |
• | interruptions to the operations of our clients caused by industrial accidents or disputation; and |
• | delays in or failure to commission new infrastructure in time frames so as not to disrupt client operations. |
18
Table of Contents
• | abnormal stoppages in the production or delivery of the products of our clients due to factors such as industrial disruption, infrastructure failure, war, political or civil unrest; | |
• | cost overruns in the provision of new rooms or in other associated or related capital expenditure; | |
• | higher than budgeted costs associated with the provision of accommodations services; | |
• | our clients not renewing their contracts, renewing them on less favorable terms, or other loss of clients; | |
• | failure of our clients to meet their obligations under their contracts; | |
• | extreme weather conditions adversely affecting our operations or the operations of our clients; and | |
• | a major disaster at one or more of our large accommodations facilities involving fire, communicable diseases, criminal acts or other events causing significant reputational damage. |
• | the construction activities of our accommodations business are partially dependent on the supply of appropriate construction and development opportunities; | |
• | development approvals, slow decision making by counterparties, complex construction specifications, changes to design briefs, legal issues and other documentation changes may give rise to delays in completion, loss of revenue and cost over-runs. Delays in completion may, in turn, result in liquidated damages and termination of accommodation supply contracts; | |
• | other time delays that may arise in relation to construction and development include supply of labor, scarcity of construction materials, lower than expected productivity levels, inclement weather conditions, land contamination, cultural heritage claims, difficult site access, or industrial relations issues; | |
• | objections aired by community interest, environmentand/or neighborhood groups which may cause delays in the granting or approvalsand/or the overall progress of a project; | |
• | where we assume design responsibility, design problems or defects may result in rectificationand/or costs or liabilities which we cannot readily recover; and | |
• | we may fail to fulfill our statutory and contractual obligations in relation to the quality of our materials and workmanship, including warranties and defect liability obligations. |
19
Table of Contents
• | retaining key employees of acquired businesses; | |
• | retaining and attracting new customers of acquired businesses; | |
• | retaining supply and distribution relationships key to the supply chain; | |
• | increased administrative burden; | |
• | developing our sales and marketing capabilities; | |
• | managing our growth effectively; | |
• | potential impairment resulting from the overpayment for an acquisition; | |
• | integrating operations; | |
• | operating a new line of business; and | |
• | increased logistical problems common to large, expansive operations. |
20
Table of Contents
• | we may not be able to continue to obtain insurance on commercially reasonable terms; | |
• | we may be faced with types of liabilities that will not be covered by our insurance, such as damages from environmental contamination or terrorist attacks; | |
• | the dollar amount of any liabilities may exceed our policy limits; | |
• | the counterparties to our insurance contracts may pose credit risks; and | |
• | we may incur losses from interruption of our business that exceed our insurance coverage. |
21
Table of Contents
23
Table of Contents
24
Table of Contents
25
Table of Contents
Six Months | ||||||||||||||||||||||||
Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Ratio of earnings to fixed charges | 7.82 | 12.81 | 6.63 | 15.06 | 11.79 | 11.81 |
26
Table of Contents
Six Months Ended | ||||||||||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||
(In thousands, except share data) | ||||||||||||||||||||||||||||
Statements of Income: | ||||||||||||||||||||||||||||
Total revenues | $ | 1,580,758 | $ | 1,126,877 | $ | 2,411,984 | $ | 2,108,250 | $ | 2,948,457 | $ | 2,088,235 | $ | 1,923,357 | ||||||||||||||
Total costs and expenses | 1,370,819 | 1,009,319 | 2,156,402 | 1,989,521 | 2,564,702 | 1,790,449 | 1,625,420 | |||||||||||||||||||||
Operating income | 209,939 | 117,558 | 255,582 | 118,729 | 383,755 | 297,786 | 297,937 | |||||||||||||||||||||
Net income | 136,820 | 78,023 | 168,605 | 59,612 | 219,299 | 200,076 | 194,404 | |||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | 500 | 303 | 587 | 498 | 446 | 284 | 94 | |||||||||||||||||||||
Net income attributable to us | $ | 136,320 | $ | 77,720 | $ | 168,018 | $ | 59,114 | $ | 218,853 | $ | 199,792 | $ | 194,310 | ||||||||||||||
Basic earnings per share: | ||||||||||||||||||||||||||||
Basic earnings per share attributable to us | $ | 2.67 | $ | 1.55 | $ | 3.34 | $ | 1.19 | $ | 4.41 | $ | 4.04 | $ | 3.92 | ||||||||||||||
Shares used in basic net income per share | 51,083 | 50,021 | 50,238 | 49,625 | 49,622 | 49,500 | 49,519 | |||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||||
Diluted earnings per share attributable to us | $ | 2.48 | $ | 1.49 | $ | 3.19 | $ | 1.18 | $ | 4.26 | $ | 3.92 | $ | 3.83 | ||||||||||||||
Shares used in diluted net income per share | 55,061 | 52,188 | 52,700 | 50,219 | 51,414 | 50,911 | 50,773 | |||||||||||||||||||||
Statements of Cash Flows: | ||||||||||||||||||||||||||||
Net cash flows provided by operating activities | $ | 96,635 | $ | 85,855 | $ | 230,922 | $ | 453,362 | $ | 257,464 | $ | 247,899 | $ | 137,367 | ||||||||||||||
Net cash flows used in investing Activities | (231,315 | ) | (74,224 | ) | (889,680 | ) | (102,608 | ) | (246,094 | ) | (310,836 | ) | (114,248 | ) | ||||||||||||||
Net cash flows provided by (used in) financing activities | 164,131 | 6,655 | 649,032 | (296,773 | ) | (1,666 | ) | 60,632 | (11,201 | ) | ||||||||||||||||||
Effect of exchange rate changes on cash | (2,399 | ) | (5,005 | ) | 16,477 | 5,695 | (9,802 | ) | 5,018 | 1,350 | ||||||||||||||||||
Cash and cash equivalents, end of period | 123,304 | 102,948 | 96,350 | 89,742 | 30,199 | 30,592 | 28,396 |
27
Table of Contents
Six Months Ended | ||||||||||||||||||||||||||||
June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||
(In thousands, except share data) | ||||||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||
EBITDA(1) | $ | 300,513 | $ | 179,567 | $ | 379,766 | $ | 238,205 | $ | 495,632 | $ | 385,542 | $ | 372,871 | ||||||||||||||
Capital expenditures, including capitalized interest | 230,253 | 76,077 | 182,207 | 124,488 | 247,384 | 239,633 | 129,591 | |||||||||||||||||||||
Balance sheet data (as of period end): | ||||||||||||||||||||||||||||
Total assets | $ | 3,425,054 | $ | 3,015,999 | $ | 1,932,386 | $ | 2,298,518 | $ | 1,928,669 | $ | 1,569,908 | ||||||||||||||||
Total debt | 1,077,306 | 912,907 | 164,538 | 454,001 | 459,647 | 360,579 | ||||||||||||||||||||||
Stockholders’ equity | 1,851,722 | 1,628,933 | 1,382,066 | 1,235,541 | 1,105,058 | 863,522 |
(1) | The term EBITDA consists of net income plus interest expense, net, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles. You should not consider it in isolation from or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA may not be comparable to other similarly titled measures of other companies. We have included EBITDA as a supplemental disclosure because our management believes that EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures and provides investors a helpful measure for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. We use EBITDA to compare and to monitor the performance of its business segments to other comparable public companies and as one of the primary measures to benchmark for the award of incentive compensation under its annual incentive compensation plan. | |
We believe that net income is the financial measure calculated and presented in accordance with generally accepted accounting principles that is most directly comparable to EBITDA. The following table reconciles EBITDA with our net income, as derived from our financial information (in thousands): |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Net income attributable to us | $ | 136,320 | $ | 77,720 | $ | 168,018 | $ | 59,114 | $ | 218,853 | $ | 199,792 | $ | 194,310 | ||||||||||||||
Depreciation and amortization | 90,390 | 61,678 | 124,202 | 118,108 | 102,604 | 70,703 | 54,340 | |||||||||||||||||||||
Interest expense, net | 21,533 | 6,790 | 15,523 | 14,886 | 20,024 | 20,102 | 22,102 | |||||||||||||||||||||
Income taxes | 52,270 | 33,379 | 72,023 | 46,097 | 154,151 | 94,945 | 102,119 | |||||||||||||||||||||
EBITDA | $ | 300,513 | $ | 179,567 | $ | 379,766 | $ | 238,205 | $ | 495,632 | $ | 385,542 | $ | 372,871 | ||||||||||||||
28
Table of Contents
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
29
Table of Contents
30
Table of Contents
Average Drilling Rig Count for | ||||||||||||||||||||||||||||
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
U.S. Land | 1,744 | 1,385 | 1,510 | 1,042 | 1,813 | 1,695 | 1,559 | |||||||||||||||||||||
U.S. Offshore | 29 | 42 | 31 | 44 | 65 | 73 | 90 | |||||||||||||||||||||
Total U.S. | 1,773 | 1,427 | 1,541 | 1,086 | 1,878 | 1,768 | 1,649 | |||||||||||||||||||||
Canada | 387 | 318 | 351 | 221 | 379 | 343 | 470 | |||||||||||||||||||||
Total North America | 2,160 | 1,745 | 1,892 | 1,307 | 2,257 | 2,111 | 2,119 | |||||||||||||||||||||
31
Table of Contents
Three Months Ended June 30, | Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Well site services — | ||||||||||||||||||||||||||||
Rental tools | $ | 112.7 | $ | 79.1 | $ | 220.2 | $ | 146.6 | $ | 343.0 | $ | 234.1 | $ | 355.8 | ||||||||||||||
Drilling and other | 41.0 | 34.2 | 74.1 | 64.6 | 133.2 | 71.2 | 177.4 | |||||||||||||||||||||
Total well site services | 153.7 | 113.3 | 294.3 | 211.2 | 476.2 | 305.3 | 533.2 | |||||||||||||||||||||
Accommodations | 202.9 | 121.9 | 400.1 | 267.5 | 537.7 | 481.4 | 427.1 | |||||||||||||||||||||
Offshore products | 131.7 | 106.0 | 260.2 | 209.0 | 428.9 | 509.4 | 528.2 | |||||||||||||||||||||
Tubular services | 332.0 | 253.3 | 626.2 | 439.2 | 969.2 | 812.2 | 1,460.0 | |||||||||||||||||||||
Total | $ | 820.3 | $ | 594.5 | $ | 1,580.8 | $ | 1,126.9 | $ | 2,412.0 | $ | 2,108.3 | $ | 2,948.5 | ||||||||||||||
Product costs; service and other costs (“cost of sales and service”) | ||||||||||||||||||||||||||||
Well site services — | ||||||||||||||||||||||||||||
Rental tools | $ | 70.4 | $ | 50.0 | $ | 137.7 | $ | 95.3 | $ | 220.1 | $ | 169.6 | $ | 207.3 | ||||||||||||||
Drilling and other | 29.2 | 28.4 | 54.4 | 53.4 | 105.5 | 58.2 | 114.2 | |||||||||||||||||||||
Total well site services | 99.6 | 78.4 | 192.1 | 148.7 | 325.6 | 227.8 | 321.5 | |||||||||||||||||||||
Accommodations | 108.5 | 73.2 | 216.8 | 155.0 | 314.4 | 278.7 | 245.6 | |||||||||||||||||||||
Offshore products | 98.2 | 77.7 | 194.8 | 155.9 | 316.5 | 377.1 | 394.2 | |||||||||||||||||||||
Tubular services | 310.5 | 240.2 | 587.5 | 416.4 | 917.8 | 756.6 | 1,273.7 | |||||||||||||||||||||
Total | $ | 616.8 | $ | 469.5 | $ | 1,191.2 | $ | 876.0 | $ | 1,874.3 | $ | 1,640.2 | $ | 2,235.0 | ||||||||||||||
32
Table of Contents
Three Months Ended June 30, | Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||||
Well site services — | ||||||||||||||||||||||||||||
Rental tools | $ | 42.3 | $ | 29.1 | $ | 82.5 | $ | 51.3 | $ | 122.9 | $ | 64.5 | $ | 148.5 | ||||||||||||||
Drilling and other | 11.8 | 5.8 | 19.7 | 11.2 | 27.7 | 13.0 | 63.2 | |||||||||||||||||||||
Total well site services | 54.1 | 34.9 | 102.2 | 62.5 | 150.6 | 77.5 | 211.7 | |||||||||||||||||||||
Accommodations | 94.4 | 48.7 | 183.3 | 112.5 | 223.3 | 202.7 | 181.5 | |||||||||||||||||||||
Offshore products | 33.5 | 28.3 | 65.4 | 53.1 | 112.4 | 132.3 | 134.0 | |||||||||||||||||||||
Tubular services | 21.5 | 13.1 | 38.7 | 22.8 | 51.4 | 55.6 | 186.3 | |||||||||||||||||||||
Total | $ | 203.5 | $ | 125.0 | $ | 389.6 | $ | 250.9 | $ | 537.7 | $ | 468.1 | $ | 713.5 | ||||||||||||||
Gross margin as a percentage of revenues | ||||||||||||||||||||||||||||
Well site services — | ||||||||||||||||||||||||||||
Rental tools | 38 | % | 37 | % | 37 | % | 35 | % | 36 | % | 28 | % | 42 | % | ||||||||||||||
Drilling and other | 29 | % | 17 | % | 27 | % | 17 | % | 21 | % | 18 | % | 36 | % | ||||||||||||||
Total well site services | 35 | % | 31 | % | 35 | % | 30 | % | 32 | % | 25 | % | 40 | % | ||||||||||||||
Accommodations | 47 | % | 40 | % | 46 | % | 42 | % | 42 | % | 42 | % | 42 | % | ||||||||||||||
Offshore products | 25 | % | 27 | % | 25 | % | 25 | % | 26 | % | 26 | % | 25 | % | ||||||||||||||
Tubular services | 6 | % | 5 | % | 6 | % | 5 | % | 5 | % | 7 | % | 13 | % | ||||||||||||||
Total | 25 | % | 21 | % | 25 | % | 22 | % | 22 | % | 22 | % | 24 | % |
33
Table of Contents
34
Table of Contents
35
Table of Contents
36
Table of Contents
37
Table of Contents
38
Table of Contents
39
Table of Contents
40
Table of Contents
41
Table of Contents
42
Table of Contents
43
Table of Contents
Due in Less | ||||||||||||||||||||
December 31, 2010 | Total | Than 1 Year | Due in 1-3 Years | Due in 3-5 Years | Due After 5 Years | |||||||||||||||
Contractual obligations: | ||||||||||||||||||||
Total debt, including capital leases(1) | $ | 912,907 | $ | 18,067 | $ | 251,457 | $ | 635,782 | $ | 7,601 | ||||||||||
Non-cancelable operating leases | 42,234 | 10,198 | 15,872 | 9,498 | 6,666 | |||||||||||||||
Purchase obligations | 401,393 | 401,393 | — | — | — | |||||||||||||||
Total contractual cash obligations | $ | 1,356,534 | $ | 429,658 | $ | 267,329 | $ | 645,280 | $ | 14,267 | ||||||||||
(1) | Excludes interest on debt. We cannot predict with any certainty the amount of interest due on our revolving debt due to the expected variability of interest rates and principal amounts outstanding. If we assume interest payment amounts are calculated using the outstanding principal balances, interest rates and foreign currency exchange rates as of December 31, 2010 and include applicable commitment fees, estimated interest payments on our credit facilities and 23/8% Notes would be $29.7 million “due in less than one year”, $50.7 million “due in one to three years” and $39.8 million “due in three to five years”. In the case of our outstanding term loans, applicable principal pay down amounts have been reflected in the interest payment calculations. See Note 8 to the audited consolidated financial statements included in this registration statement for additional information on our credit facilities. |
44
Table of Contents
45
Table of Contents
46
Table of Contents
47
Table of Contents
48
Table of Contents
49
Table of Contents
50
Table of Contents
51
Table of Contents
52
Table of Contents
• | flexible bearings and connector products; | |
• | subsea pipeline products; | |
• | marine winches, mooring systems, cranes and rig equipment; | |
• | conductor casing connections and pipe; | |
• | drilling riser and related repair services; | |
• | blowout preventer stack assembly, integration, testing and repair services; and | |
• | other products and services. |
• | pipeline end manifolds, pipeline end terminals; | |
• | midline tie-in sleds; | |
• | forged steel Y-shaped connectors for joining two pipelines into one; | |
• | pressure-balanced safety joints for protecting pipelines and related equipment from anchor snags or a shifting sea-bottom; | |
• | electrical isolation joints; and | |
• | hot tap clamps that allow new pipelines to be joined into existing lines without interrupting the flow of petroleum product. |
53
Table of Contents
• | repair clamps used to seal leaks and restore the structural integrity of a pipeline; | |
• | mechanical connectors used in repairing subsea pipelines without having to weld; | |
• | misalignment and swivel ring flanges; and | |
• | pipe recovery tools for recovering dropped or damaged pipelines. |
• | elastomer consumable downhole products for onshore drilling and production; | |
• | sound and vibration isolation equipment for the U.S. Navy submarine fleet; | |
• | metal-elastomeric FlexJoints® used in a variety of naval and marine applications; and | |
• | drum-clutches and brakes for heavy-duty power transmission in the mining, paper, logging and marine industries. |
54
Table of Contents
• | wireline and coiled tubing pressure control equipment; | |
• | wellhead isolation equipment; | |
• | pipe recovery systems; | |
• | thru-tubing fishing services; | |
• | hydraulic chokes and manifolds; | |
• | blow out preventers; | |
• | well testing and flowback equipment, including separators and line heaters; | |
• | gravel pack operations on well bores; and | |
• | surface control equipment and down-hole tools utilized by coiled tubing operators. |
55
Table of Contents
• | distribute a broad range of casing and tubing; and | |
• | provide threading, logistical and inventory management services. |
56
Table of Contents
57
Table of Contents
58
Table of Contents
59
Table of Contents
60
Table of Contents
61
Table of Contents
62
Table of Contents
63
Table of Contents
Approximate | ||||
Square | ||||
Location | Footage/Acreage | Description | ||
United States: | ||||
Houston, Texas (lease) | 15,829 | Principal executive offices | ||
Arlington, Texas | 11,264 | Offshore products business office | ||
Arlington, Texas | 36,770 | Offshore products business office and warehouse | ||
Arlington, Texas | 55,853 | Offshore products manufacturing facility | ||
Arlington, Texas (lease) | 63,272 | Offshore products manufacturing facility | ||
Arlington, Texas | 44,780 | Elastomer technology center for offshore products | ||
Arlington, Texas | 60,000 | Molding and aerospace facilities for offshore products | ||
Houston, Texas (lease) | 52,000 | Offshore products business office | ||
Houston, Texas | 25 acres | Offshore products manufacturing facility and yard | ||
Houston, Texas | 22 acres | Offshore products manufacturing facility and yard | ||
Houston, Texas (lease) | 50,750 | Offshore products service facility and office | ||
Lampasas, Texas | 48,500 | Molding facility for offshore products | ||
Lampasas, Texas (lease) | 20,000 | Warehouse for offshore products | ||
Tulsa, Oklahoma | 74,600 | Molding facility for offshore products | ||
Tulsa, Oklahoma (lease) | 14,000 | Molding facility for offshore products | ||
Houma, Louisiana | 40 acres | Offshore products manufacturing facility and yard | ||
Houma, Louisiana (lease) | 20,000 | Offshore products manufacturing facility and yard | ||
Houston, Texas (lease) | 9,945 | Tubular services business office | ||
Tulsa, Oklahoma (lease) | 11,955 | Tubular services business office | ||
Midland, Texas | 60 acres | Tubular yard | ||
Godley, Texas | 31 acres | Tubular yard | ||
Crosby, Texas | 109 acres | Tubular yard | ||
Searcy, Arkansas | 14 acres | Tubular yard | ||
Montoursville, Pennsylvania | 24 acres | Tubular yard | ||
Belle Chasse, Louisiana (own and lease) | 427,020 | Accommodations manufacturing facility and yard | ||
Vernal, Utah (lease) | 21 acres | Accommodations facility and yard | ||
Dickinson, North Dakota (lease) | 26 acres | Accommodations facility and yard | ||
Odessa, Texas | 22 acres | Office, shop, warehouse and yard in support of drilling operations for well site services | ||
Casper, Wyoming | 7 acres | Office, shop and yard in support of drilling operations for well site services |
64
Table of Contents
Approximate | ||||
Square | ||||
Location | Footage/Acreage | Description | ||
Canada: | ||||
Nisku, Alberta | 9 acres | Accommodations manufacturing facility | ||
Spruce Grove, Alberta | 15,000 | Accommodations facility and equipment yard | ||
Grande Prairie, Alberta | 15 acres | Accommodations facility and equipment yard | ||
Grimshaw, Alberta (lease) | 20 acres | Accommodations equipment yard | ||
Edmonton, Alberta | 33 acres | Accommodations manufacturing facility | ||
Edmonton, Alberta (lease) | 86,376 | Accommodations office and warehouse | ||
Edmonton, Alberta (lease) | 16,130 | Accommodations office | ||
Fort McMurray, Alberta (Beaver River and Athabasca Lodges) (lease) | 128 acres | Accommodations facility | ||
Fort McMurray, Alberta (Wapasu Lodge)(lease) | 240 acres | Accommodations facility | ||
Fort McMurray, Alberta (Conklin Lodge)(lease) | 135 acres | Accommodations facility | ||
Fort McMurray, Alberta (Christina Lake Lodge) | 45 acres | Accommodations facility | ||
Fort McMurray, Alberta (Pebble Beach) (lease) | 140 acres | Accommodations facility | ||
Australia: | ||||
Copabella, Queensland, Australia | 198 acres | Accommodations facility | ||
Calliope, Queensland, Australia | 124 acres | Accommodations facility | ||
Narrabri, New South Wales, Australia | 82 acres | Accommodations facility | ||
Wandoan, Queensland, Australia | 51 acres | Accommodations facility | ||
Middlemount, Queensland, Australia | 37 acres | Accommodations facility | ||
Dysart, Queensland, Australia | 34 acres | Accommodations facility | ||
Kambalda, Western Australia, Australia | 27 acres | Accommodations facility | ||
Other International: | ||||
Aberdeen, Scotland (lease) | 15 acres | Offshore products manufacturing facility and yard | ||
Bathgate, Scotland | 3 acres | Offshore products manufacturing facility and yard | ||
Barrow-in-Furness, England (own and lease) | 63,300 | Offshore products service facility and yard | ||
Singapore (lease) | 155,398 | Offshore products manufacturing facility | ||
Singapore (lease) | 71,516 | Offshore products manufacturing facility | ||
Macae, Brazil (lease) | 6 acres | Offshore products manufacturing facility and yard | ||
Rayong Province, Thailand (lease) | 28,000 | Offshore products service and manufacturing facility |
65
Table of Contents
66
Table of Contents
• | file an exchange offer registration statement with the SEC with respect to the exchange offer for the new notes, and | |
• | have the exchange offer completed by the 365th day following issuance of the notes. |
• | will not be able to rely on the interpretation of the staff of the SEC, | |
• | will not be able to tender its old notes in the exchange offer, and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the old notes unless such sale or transfer is made pursuant to an exemption from such requirements. |
67
Table of Contents
• | the exchange offer would violate any by applicable law or applicable interpretation of the staff of the SEC, or | |
• | any holder of the old notes (other than a participating broker-dealer) is not eligible to participate in the exchange offer or, in the case of any holder of the old notes (other than a participating broker-dealer) that participates in the exchange offer, such holder of the old notes does not receive freely tradeable exchange securities on the date of the exchange, or | |
• | upon completion of the exchange offer, any initial purchaser shall so request, under certain circumstances, in connection with any offering or sale of notes. |
68
Table of Contents
• | to delay accepting for exchange any old notes, | |
• | to extend the exchange offer, or | |
• | to terminate the exchange offer, |
69
Table of Contents
70
Table of Contents
• | a book-entry confirmation of such old notes into the exchange agent’s account at DTC; and | |
• | a properly transmitted agent’s message. |
• | any new notes that you receive will be acquired in the ordinary course of your business; | |
• | you have no arrangement or understanding with any person or entity to participate in the distribution of the new notes; | |
• | you are not our “affiliate,” as defined in Rule 405 of the Securities Act of 1933; and | |
• | if you are a broker-dealer that will receive new notes for your own account in exchange for old notes, you acquired those notes as a result of market-making activities or other trading activities and you will deliver a prospectus (or to the extent permitted by law, make available a prospectus) in connection with any resale of such new notes. |
71
Table of Contents
• | all registration and filing fees and expenses; | |
• | all fees and expenses of compliance with federal securities and state “blue sky” or securities laws; | |
• | accounting fees, legal fees incurred by us, disbursements and printing, messenger and delivery services, and telephone costs; and | |
• | related fees and expenses. |
72
Table of Contents
73
Table of Contents
74
Table of Contents
75
Table of Contents
Optional | ||||
Year | Redemption Price | |||
2014 | 104.875 | % | ||
2015 | 103.250 | % | ||
2016 | 101.625 | % | ||
2017 and thereafter | 100.000 | % |
76
Table of Contents
77
Table of Contents
78
Table of Contents
79
Table of Contents
80
Table of Contents
81
Table of Contents
82
Table of Contents
83
Table of Contents
84
Table of Contents
85
Table of Contents
86
Table of Contents
87
Table of Contents
88
Table of Contents
89
Table of Contents
90
Table of Contents
91
Table of Contents
92
Table of Contents
93
Table of Contents
94
Table of Contents
95
Table of Contents
96
Table of Contents
97
Table of Contents
98
Table of Contents
99
Table of Contents
100
Table of Contents
101
Table of Contents
102
Table of Contents
103
Table of Contents
104
Table of Contents
105
Table of Contents
106
Table of Contents
107
Table of Contents
108
Table of Contents
109
Table of Contents
110
Table of Contents
111
Table of Contents
112
Table of Contents
113
Table of Contents
114
Table of Contents
115
Table of Contents
116
Table of Contents
117
Table of Contents
• | you acquire the new notes in the ordinary course of your business; | |
• | you have no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of such new notes in violation of the provisions of the Securities Act; and | |
• | you are not our “affiliate” (within the meaning of Rule 405 under the Securities Act). |
• | in theover-the-counter market; | |
• | in negotiated transactions; | |
• | through the writing of options on the new notes or a combination of such methods of resale; | |
• | at market prices prevailing at the time of resale; | |
• | at prices related to such prevailing market prices; or | |
• | at negotiated prices. |
118
Table of Contents
119
Table of Contents
Three Allen Center
333 Clay Street, Suite 4620
Houston, Texas 77002
Telephone number:(713) 652-0582
120
Table of Contents
OLD 6.50% SENIOR NOTES DUE 2019
OF
OIL STATES INTERNATIONAL, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS
DATED SEPTEMBER 20, 2011
By Registered & Certified Mail: | By Regular Mail or Overnight Courier: | In Person by Hand Only: | ||
WELLS FARGO BANK, N.A. Corporate Trust Operations MAC N9303-121 PO Box 1517 Minneapolis, MN 55480 | WELLS FARGO BANK, N.A. Corporate Trust Operations MAC N9303-121 Sixth & Marquette Avenue Minneapolis, MN 55479 | WELLS FARGO BANK, N.A. 12th Floor - Northstar East Building Corporate Trust Operations 608 Second Avenue South Minneapolis, MN 55402 |
(612) 667-6282
Telephone:
(800) 344-5128
Table of Contents
• | DTC has received your instructions to tender your old notes; and | |
• | you agree to be bound by the terms of this Letter of Transmittal. |
A-2
Table of Contents
A-3
Table of Contents
A-4
Table of Contents
1. | Book-Entry Confirmations. |
2. | Partial Tenders. |
3. | Validity of Tenders. |
4. | Waiver of Conditions. |
5. | No Conditional Tender. |
6. | Request for Assistance or Additional Copies. |
A-5
Table of Contents
7. | Withdrawal. |
8. | No Guarantee of Late Delivery. |
A-6
Table of Contents
Page | ||||
Oil States International, Inc. Audited financial statements | ||||
F-2 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
Oil States International, Inc. Unaudited condensed financial statements | ||||
F-44 | ||||
F-45 | ||||
F-46 | ||||
F-47 | ||||
The MAC Services Group Limited | ||||
F-67 | ||||
F-68 | ||||
F-69 | ||||
F-70 | ||||
F-71 | ||||
F-72 | ||||
Unaudited Pro Forma Financial Information | ||||
F-118 | ||||
F-119 |
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In thousands, except per share amounts) | ||||||||||||
Revenues: | ||||||||||||
Product | $ | 1,282,212 | $ | 1,279,181 | $ | 1,874,262 | ||||||
Service and other | 1,129,772 | 829,069 | 1,074,195 | |||||||||
2,411,984 | 2,108,250 | 2,948,457 | ||||||||||
Costs and expenses: | ||||||||||||
Product costs | 1,147,427 | 1,109,769 | 1,594,139 | |||||||||
Service and other costs | 726,867 | 530,429 | 640,835 | |||||||||
Selling, general and administrative expenses | 150,865 | 139,293 | 143,080 | |||||||||
Depreciation and amortization expense | 124,202 | 118,108 | 102,604 | |||||||||
Impairment of goodwill | — | 94,528 | 85,630 | |||||||||
Acquisition related expenses | 6,959 | — | — | |||||||||
Other operating (income)/expense | 82 | (2,606 | ) | (1,586 | ) | |||||||
2,156,402 | 1,989,521 | 2,564,702 | ||||||||||
Operating income | 255,582 | 118,729 | 383,755 | |||||||||
Interest expense | (16,274 | ) | (15,266 | ) | (23,585 | ) | ||||||
Interest income | 751 | 380 | 3,561 | |||||||||
Equity in earnings of unconsolidated affiliates | 239 | 1,452 | 4,035 | |||||||||
Gains on sale of investment | — | — | 6,160 | |||||||||
Other income/(expense) | 330 | 414 | (476 | ) | ||||||||
Income before income taxes | 240,628 | 105,709 | 373,450 | |||||||||
Income tax provision | (72,023 | ) | (46,097 | ) | (154,151 | ) | ||||||
Net income | $ | 168,605 | $ | 59,612 | $ | 219,299 | ||||||
Less: Net income attributable to noncontrolling interests | 587 | 498 | 446 | |||||||||
Net income attributable to Oil States International, Inc. | $ | 168,018 | $ | 59,114 | $ | 218,853 | ||||||
Basic net income per share attributable to Oil States International, Inc. common stockholders | $ | 3.34 | $ | 1.19 | $ | 4.41 | ||||||
Diluted net income per share attributable to Oil States International, Inc. common stockholders | $ | 3.19 | $ | 1.18 | $ | 4.26 | ||||||
Weighted average number of common shares outstanding (in thousands): | ||||||||||||
Basic | 50,238 | 49,625 | 49,622 | |||||||||
Diluted | 52,700 | 50,219 | 51,414 |
F-4
Table of Contents
December 31, | ||||||||
2010 | 2009 | |||||||
(In thousands, except share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 96,350 | $ | 89,742 | ||||
Accounts receivable, net | 478,739 | 385,816 | ||||||
Inventories, net | 501,435 | 423,077 | ||||||
Prepaid expenses and other current assets | 23,480 | 26,933 | ||||||
Total current assets | 1,100,004 | 925,568 | ||||||
Property, plant and equipment, net | 1,252,657 | 749,601 | ||||||
Goodwill, net | 475,222 | 218,740 | ||||||
Other intangible assets, net | 139,421 | 19,681 | ||||||
Investments in unconsolidated affiliates | 5,937 | 5,164 | ||||||
Other noncurrent assets | 42,758 | 13,632 | ||||||
Total assets | $ | 3,015,999 | $ | 1,932,386 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 304,739 | $ | 208,541 | ||||
Income taxes | 4,604 | 14,419 | ||||||
Current portion of long-term debt and capitalized leases | 181,175 | 464 | ||||||
Deferred revenue | 60,847 | 87,412 | ||||||
Other current liabilities | 2,810 | 4,387 | ||||||
Total current liabilities | 554,175 | 315,223 | ||||||
Long-term debt and capitalized leases | 731,732 | 164,074 | ||||||
Deferred income taxes | 81,198 | 55,332 | ||||||
Other noncurrent liabilities | 19,961 | 15,691 | ||||||
Total liabilities | 1,387,066 | 550,320 | ||||||
Stockholders’ equity: | ||||||||
Oil States International, Inc. stockholders’ equity: | ||||||||
Common stock, $.01 par value, 200,000,000 shares authorized, 54,108,011 shares and 53,047,082 shares issued, respectively, and 50,838,863 shares and 49,814,964 shares outstanding, respectively | 541 | 531 | ||||||
Additional paid-in capital | 508,429 | 468,428 | ||||||
Retained earnings | 1,128,133 | 960,115 | ||||||
Accumulated other comprehensive income | 84,549 | 44,115 | ||||||
Common stock held in treasury at cost, 3,269,148 and 3,232,118 shares, respectively | (93,746 | ) | (92,341 | ) | ||||
Total Oil States International, Inc. stockholders’ equity | 1,627,906 | 1,380,848 | ||||||
Noncontrolling interest | 1,027 | 1,218 | ||||||
Total stockholders’ equity | 1,628,933 | 1,382,066 | ||||||
Total liabilities and stockholders’ equity | $ | 3,015,999 | $ | 1,932,386 | ||||
F-5
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Additional | Comprehensive | |||||||||||||||||||||||||||
Common | Paid-In | Retained | Comprehensive | Income | Treasury | Noncontrolling | ||||||||||||||||||||||
Stock | Capital | Earnings | Income | (Loss) | Stock | Interest | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Balance, December 31, 2007 | $ | 522 | $ | 430,540 | $ | 682,148 | $ | 73,036 | $ | (81,535 | ) | $ | 347 | |||||||||||||||
Net income | 218,853 | $ | 218,853 | 446 | ||||||||||||||||||||||||
Currency translation adjustment | (101,365 | ) | (101,365 | ) | (59 | ) | ||||||||||||||||||||||
Unrealized gain on marketable securities, net of tax | 2,028 | 2,028 | ||||||||||||||||||||||||||
Reclassification adjustment, net of tax | (2,028 | ) | (2,028 | ) | ||||||||||||||||||||||||
Other comprehensive loss | (80 | ) | (80 | ) | ||||||||||||||||||||||||
Comprehensive income | $ | 117,408 | ||||||||||||||||||||||||||
Dividends paid | (213 | ) | ||||||||||||||||||||||||||
Exercise of stock options, including tax benefit | 4 | 12,292 | ||||||||||||||||||||||||||
Amortization of restricted stock compensation | 5,371 | |||||||||||||||||||||||||||
Surrender of stock to pay taxes on restricted stock awards | (863 | ) | ||||||||||||||||||||||||||
Stock option expense | 5,537 | |||||||||||||||||||||||||||
Stock acquired for cash | (9,434 | ) | ||||||||||||||||||||||||||
Other | (7 | ) | 1 | |||||||||||||||||||||||||
Balance, December 31, 2008 | $ | 526 | $ | 453,733 | $ | 901,001 | $ | (28,409 | ) | $ | (91,831 | ) | $ | 521 | ||||||||||||||
Net income | 59,114 | $ | 59,114 | 498 | ||||||||||||||||||||||||
Currency translation adjustment | 72,548 | 72,548 | 199 | |||||||||||||||||||||||||
Other comprehensive loss | (24 | ) | (24 | ) | ||||||||||||||||||||||||
Comprehensive income | $ | 131,638 | ||||||||||||||||||||||||||
Exercise of stock options, including tax benefit | 2 | 3,146 | ||||||||||||||||||||||||||
Amortization of restricted stock compensation | 6,008 | |||||||||||||||||||||||||||
Surrender of stock to pay taxes on restricted stock awards | 3 | (3 | ) | (511 | ) | |||||||||||||||||||||||
Stock option expense | 5,542 | |||||||||||||||||||||||||||
Other | 2 | 1 | ||||||||||||||||||||||||||
Balance, December 31, 2009 | $ | 531 | $ | 468,428 | $ | 960,115 | $ | 44,115 | $ | (92,341 | ) | $ | 1,218 | |||||||||||||||
Net income | 168,018 | $ | 168,018 | 587 | ||||||||||||||||||||||||
Currency translation adjustment | 40,274 | 40,274 | 25 | |||||||||||||||||||||||||
Other comprehensive income | 160 | 160 | ||||||||||||||||||||||||||
Comprehensive income | $ | 208,452 | ||||||||||||||||||||||||||
Dividends paid | (803 | ) | ||||||||||||||||||||||||||
Exercise of stock options, including tax benefit | 9 | 27,380 | ||||||||||||||||||||||||||
Amortization of restricted stock compensation | 6,592 | |||||||||||||||||||||||||||
Surrender of stock to pay taxes on restricted stock awards | 2 | (2 | ) | (1,406 | ) | |||||||||||||||||||||||
Stock option expense | 6,028 | |||||||||||||||||||||||||||
Other | (1 | ) | 3 | 1 | ||||||||||||||||||||||||
Balance, December 31, 2010 | $ | 541 | $ | 508,429 | $ | 1,128,133 | $ | 84,549 | $ | (93,746 | ) | $ | 1,027 | |||||||||||||||
F-6
Table of Contents
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 168,605 | $ | 59,612 | $ | 219,299 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 124,202 | 118,108 | 102,604 | |||||||||
Deferred income tax provision (benefit) | 20,590 | (15,126 | ) | 13,692 | ||||||||
Excess tax benefits from share-based payment arrangements | (4,029 | ) | — | (3,429 | ) | |||||||
Loss on impairment of goodwill | — | 94,528 | 85,630 | |||||||||
Losses (gains) on sale of investment and disposals of assets | 211 | (325 | ) | (6,270 | ) | |||||||
Equity in earnings of unconsolidated subsidiaries, net of dividends | (143 | ) | (1,452 | ) | (2,983 | ) | ||||||
Non-cash compensation charge | 12,620 | 11,550 | 10,908 | |||||||||
Accretion of debt discount | 7,249 | 6,749 | 6,283 | |||||||||
Other, net | 1,583 | 3,693 | 3,254 | |||||||||
Changes in operating assets and liabilities, net of effect from acquired businesses: | ||||||||||||
Accounts receivable | (61,835 | ) | 205,627 | (155,897 | ) | |||||||
Inventories | (75,416 | ) | 200,469 | (281,971 | ) | |||||||
Accounts payable and accrued liabilities | 82,032 | (168,758 | ) | 143,479 | ||||||||
Taxes payable | (22,468 | ) | (38,428 | ) | 66,616 | |||||||
Other current assets and liabilities, net | (22,279 | ) | (22,885 | ) | 56,249 | |||||||
Net cash flows provided by operating activities | 230,922 | 453,362 | 257,464 | |||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures, including capitalized interest | (182,207 | ) | (124,488 | ) | (247,384 | ) | ||||||
Acquisitions of businesses, net of cash acquired | (709,575 | ) | 18 | (29,835 | ) | |||||||
Proceeds from sale of investment and collection of notes receivable | — | 21,166 | 27,381 | |||||||||
Proceeds from sale of buildings and equipment | 2,734 | 2,839 | 4,390 | |||||||||
Other, net | (632 | ) | (2,143 | ) | (646 | ) | ||||||
Net cash flows used in investing activities | (889,680 | ) | (102,608 | ) | (246,094 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Revolving credit borrowings (repayments), net | 347,129 | (294,760 | ) | 1,474 | ||||||||
Term loan borrowings | 300,955 | — | — | |||||||||
Debt and capital lease repayments | (487 | ) | (4,961 | ) | (4,960 | ) | ||||||
Issuance of common stock from share based payment arrangements | 23,361 | 3,460 | 8,868 | |||||||||
Purchase of treasury stock | — | — | (9,563 | ) | ||||||||
Excess tax benefits from share based payment arrangements | 4,029 | — | 3,429 | |||||||||
Payment of financing costs | (24,548 | ) | — | (39 | ) | |||||||
Other, net | (1,407 | ) | (512 | ) | (875 | ) | ||||||
Net cash flows provided by (used in) financing activities | 649,032 | (296,773 | ) | (1,666 | ) | |||||||
Effect of exchange rate changes on cash | 16,477 | 5,695 | (9,802 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents from continuing operations | 6,751 | 59,676 | (98 | ) | ||||||||
Net cash used in discontinued operations — operating activities | (143 | ) | (133 | ) | (295 | ) | ||||||
Cash and cash equivalents, beginning of year | 89,742 | 30,199 | 30,592 | |||||||||
Cash and cash equivalents, end of year | $ | 96,350 | $ | 89,742 | $ | 30,199 | ||||||
F-7
Table of Contents
1. | Organization and Basis of Presentation |
2. | Summary of Significant Accounting Policies |
At December 31, | ||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||
Interest | Carrying | Fair | Carrying | Fair | ||||||||||||||||
Rate | Value | Value | Value | Value | ||||||||||||||||
Principal amount due 2025 | 2 3/8 | % | $ | 175,000 | $ | 354,057 | $ | 175,000 | $ | 243,653 | ||||||||||
Less: unamortized discount | 11,892 | — | 19,141 | — | ||||||||||||||||
Net value | $ | 163,108 | $ | 354,057 | $ | 155,859 | $ | 243,653 | ||||||||||||
F-8
Table of Contents
F-9
Table of Contents
F-10
Table of Contents
F-11
Table of Contents
F-12
Table of Contents
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
Beginning balance | $ | 2,169 | $ | 1,966 | ||||
Provisions for warranty | 1,314 | 2,819 | ||||||
Consumption of liabilities | (1,924 | ) | (2,808 | ) | ||||
Translation and other changes | 17 | 192 | ||||||
Ending balance | $ | 1,576 | $ | 2,169 | ||||
F-13
Table of Contents
3. | Details of Selected Balance Sheet Accounts |
2010 | 2009 | |||||||
Accounts receivable, net: | ||||||||
Trade | $ | 365,988 | $ | 287,148 | ||||
Unbilled revenue | 113,389 | 102,527 | ||||||
Other | 3,462 | 1,087 | ||||||
Total accounts receivable | 482,839 | 390,762 | ||||||
Allowance for doubtful accounts | (4,100 | ) | (4,946 | ) | ||||
$ | 478,739 | $ | 385,816 | |||||
2010 | 2009 | |||||||
Inventories, net: | ||||||||
Tubular goods | $ | 332,720 | $ | 265,717 | ||||
Other finished goods and purchased products | 71,266 | 66,489 | ||||||
Work in process | 45,662 | 43,729 | ||||||
Raw materials | 60,241 | 55,421 | ||||||
Total inventories | 509,889 | 431,356 | ||||||
Allowance for obsolescence | (8,454 | ) | (8,279 | ) | ||||
$ | 501,435 | $ | 423,077 | |||||
Estimated | ||||||||||||
Useful Life | 2010 | 2009 | ||||||||||
Property, plant and equipment, net: | ||||||||||||
Land | $ | 43,411 | $ | 19,426 | ||||||||
Buildings and leasehold improvements | 1-40 years | 193,617 | 165,526 | |||||||||
Machinery and equipment | 2-29 years | 311,217 | 301,900 | |||||||||
Accommodations assets | 3-15 years | 840,002 | 383,332 | |||||||||
Rental tools | 4-10 years | 166,245 | 151,050 | |||||||||
Office furniture and equipment | 1-10 years | 36,325 | 29,817 | |||||||||
Vehicles | 2-10 years | 82,783 | 72,142 | |||||||||
Construction in progress | 113,773 | 65,652 | ||||||||||
Total property, plant and equipment | 1,787,373 | 1,188,845 | ||||||||||
Accumulated depreciation | (534,716 | ) | (439,244 | ) | ||||||||
$ | 1,252,657 | $ | 749,601 | |||||||||
F-14
Table of Contents
2010 | 2009 | |||||||
Accounts payable and accrued liabilities: | ||||||||
Trade accounts payable | $ | 224,543 | $ | 145,200 | ||||
Accrued compensation | 47,760 | 35,834 | ||||||
Insurance liabilities | 8,615 | 8,133 | ||||||
Accrued taxes, other than income taxes | 4,887 | 4,216 | ||||||
Liabilities related to discontinued operations | 2,268 | 2,411 | ||||||
Other | 16,666 | 12,747 | ||||||
$ | 304,739 | $ | 208,541 | |||||
4. | Recent Accounting Pronouncements |
F-15
Table of Contents
5. | Acquisitions and Supplemental Cash Flow Information |
2010 | 2009 | 2008 | ||||||||||
Fair value of assets acquired including intangibles and goodwill | $ | 850,557 | $ | 3,112 | $ | 32,543 | ||||||
Liabilities assumed | (119,386 | ) | (411 | ) | (2,604 | ) | ||||||
Noncash consideration | (7,966 | ) | (379 | ) | — | |||||||
Cash acquired | (13,630 | ) | (2,340 | ) | (104 | ) | ||||||
Cash used in acquisition of businesses | $ | 709,575 | $ | (18 | ) | $ | 29,835 | |||||
Cash and cash equivalents | $ | 12,279 | ||
Accounts receivable | 18,971 | |||
Inventories and other current assets | 2,800 | |||
Property, plant and equipment | 387,579 | |||
Intangible assets | 104,500 | |||
Other noncurrent assets | 5,110 | |||
Total identifiable assets acquired | 531,239 | |||
Accounts payable and accrued liabilities | (10,130 | ) | ||
Current portion of long-term debt | (519 | ) | ||
Other current liabilities | (2,301 | ) | ||
Long-term debt | (86,506 | ) | ||
Deferred income taxes | (13,513 | ) | ||
Other noncurrent liabilities | (142 | ) | ||
Total liabilities assumed | (113,111 | ) | ||
Net identifiable assets acquired | 418,128 | |||
Goodwill | 231,974 | |||
Net assets acquired | $ | 650,102 | ||
F-16
Table of Contents
Year Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(Unaudited) | ||||||||
Revenues | $ | 2,527,330 | $ | 2,195,761 | ||||
Net income attributable to Oil States International, Inc. | 165,284 | 60,000 | ||||||
Net income per share attributable to Oil States International, Inc common stockholders | ||||||||
Basic | $ | 3.29 | $ | 1.21 | ||||
Diluted | $ | 3.14 | $ | 1.19 |
F-17
Table of Contents
F-18
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Interest (net of amounts capitalized) | $ | 7,303 | $ | 7,549 | $ | 16,265 | ||||||
Income taxes, net of refunds | $ | 75,303 | $ | 102,759 | $ | 70,441 | ||||||
Non-cash investing activities: | ||||||||||||
Building capital lease | $ | — | $ | — | 8,304 | |||||||
Non-cash financing activities: | ||||||||||||
Borrowings and assumption of liabilities for business and asset acquisition and related intangibles | $ | 7,966 | $ | 379 | $ | — |
6. | Earnings Per Share (EPS) |
2010 | 2009 | 2008 | ||||||||||
(In thousands, except per share data) | ||||||||||||
Basic earnings per share: | ||||||||||||
Net income attributable to Oil States International, Inc. | $ | 168,018 | $ | 59,114 | $ | 218,853 | ||||||
Weighted average number of shares outstanding | 50,238 | 49,625 | 49,622 | |||||||||
Basic earnings per share | $ | 3.34 | $ | 1.19 | $ | 4.41 | ||||||
Diluted earnings per share: | ||||||||||||
Net income attributable to Oil States International, Inc. | $ | 168,018 | $ | 59,114 | $ | 218,853 | ||||||
Weighted average number of shares outstanding (basic) | 50,238 | 49,625 | 49,622 | |||||||||
Effect of dilutive securities: | ||||||||||||
Options on common stock | 630 | 290 | 419 | |||||||||
23/8% Convertible Senior Subordinated Notes | 1,647 | 203 | 1,271 | |||||||||
Restricted stock awards and other | 185 | 101 | 102 | |||||||||
Total shares and dilutive securities | 52,700 | 50,219 | 51,414 | |||||||||
Diluted earnings per share | $ | 3.19 | $ | 1.18 | $ | 4.26 |
7. | Goodwill and Other Intangible Assets |
F-19
Table of Contents
Well Site Services | ||||||||||||||||||||||||||||
Rental | Drilling | Offshore | Tubular | |||||||||||||||||||||||||
Tools | and Other | Subtotal | Accommodations | Products | Services | Total | ||||||||||||||||||||||
Balance as of December 31, 2008 | ||||||||||||||||||||||||||||
Goodwill | $ | 166,841 | $ | 22,767 | $ | 189,608 | $ | 53,526 | $ | 85,074 | $ | 62,863 | $ | 391,071 | ||||||||||||||
Accumulated Impairment Losses | — | (22,767 | ) | (22,767 | ) | — | — | (62,863 | ) | (85,630 | ) | |||||||||||||||||
166,841 | — | 166,841 | 53,526 | 85,074 | — | 305,441 | ||||||||||||||||||||||
Goodwill acquired | — | — | — | 337 | — | — | 337 | |||||||||||||||||||||
Foreign currency translation and other changes | 2,470 | — | 2,470 | 4,495 | 525 | — | 7,490 | |||||||||||||||||||||
Goodwill impairment | (94,528 | ) | — | (94,528 | ) | — | — | — | (94,528 | ) | ||||||||||||||||||
74,783 | — | 74,783 | 58,358 | 85,599 | — | 218,740 | ||||||||||||||||||||||
Balance as of December 31, 2009 | ||||||||||||||||||||||||||||
Goodwill | 169,311 | 22,767 | 192,078 | 58,358 | 85,599 | 62,863 | 398,898 | |||||||||||||||||||||
Accumulated Impairment Losses | (94,528 | ) | (22,767 | ) | (117,295 | ) | — | — | (62,863 | ) | (180,158 | ) | ||||||||||||||||
74,783 | — | 74,783 | 58,358 | 85,599 | — | 218,740 | ||||||||||||||||||||||
Goodwill acquired | — | — | — | 239,080 | 15,242 | — | 254,322 | |||||||||||||||||||||
Foreign currency translation and other changes | 723 | — | 723 | 1,624 | (187 | ) | — | 2,160 | ||||||||||||||||||||
75,506 | — | 75,506 | 299,062 | 100,654 | — | 475,222 | ||||||||||||||||||||||
Balance as of December 31, 2010 | ||||||||||||||||||||||||||||
Goodwill | 170,034 | 22,767 | 192,801 | 299,062 | 100,654 | 62,863 | 655,380 | |||||||||||||||||||||
Accumulated Impairment Losses | (94,528 | ) | (22,767 | ) | (117,295 | ) | — | — | (62,863 | ) | (180,158 | ) | ||||||||||||||||
$ | 75,506 | $ | — | $ | 75,506 | $ | 299,062 | $ | 100,654 | $ | — | $ | 475,222 | |||||||||||||||
F-20
Table of Contents
December 31, 2010 | December 31, 2009 | |||||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Amortizable intangible assets | ||||||||||||||||
Customer contracts/relationships | $ | 127,124 | $ | 3,848 | $ | 16,128 | $ | 2,636 | ||||||||
Non-compete agreements | 5,117 | 3,704 | 6,656 | 5,946 | ||||||||||||
Patents and other | 18,080 | 3,348 | 9,612 | 4,133 | ||||||||||||
$ | 150,321 | $ | 10,900 | $ | 32,396 | $ | 12,715 | |||||||||
F-21
Table of Contents
8. | Long-term Debt |
2010 | 2009 | |||||||
US revolving credit facility, which matures December 10, 2015, with available commitments up to $500 million; secured by substantially all of our assets; commitment fee on unused portion ranged from 0.375% per annum to 0.500% in 2010 and 0.175% per annum in 2009; variable interest rate payable monthly based on prime or LIBOR plus applicable percentage; weighted average rate was 3.5% for 2010 and 1.4% for 2009 | $ | 345,600 | $ | — | ||||
US term loan, which matures December 10, 2015, of $200 million; 1.25% of aggregate principal repayable per quarter in 2011, 2.5% per quarter thereafter; secured by substantially all of our assets; variable interest rate payable monthly based on prime or LIBOR plus applicable percentage; weighted average rate was 3.5% for 2010 | 200,000 | — | ||||||
Canadian revolving credit facility, which matures on December 10, 2015, with available commitments up to $250 million; secured by substantially all of our assets; commitment fee on unused portion ranged from 0.175% per annum to 0.500% in 2010 and 0.175% per annum in 2009; variable interest rate payable monthly based on the Canadian prime rate or Bankers Acceptance discount rate plus applicable percentage; weighted average rate was 3.6% for 2010 and 1.9% for 2009 | 62,538 | — | ||||||
Canadian term loan, which matures December 10, 2015, of $100 million; 1.25% of aggregate principal repayable per quarter in 2011, 2.5% per quarter thereafter; secured by substantially all of our assets; variable interest rate payable monthly based on prime or LIBOR plus applicable percentage; weighted average rate was 4.5% for 2010 | 100,955 | — | ||||||
23/8% contingent convertible senior subordinated notes, net due 2025 | 163,108 | 155,859 | ||||||
Australian revolving credit facility, which matures on October 15, 2013, of A$75 million; secured by substantially all of our assets; variable interest rate payable monthly based on the Australian prime rate plus applicable percentage | 25,305 | — | ||||||
Subordinated unsecured notes payable to sellers of businesses, interest rate of 6%, which mature in 2012 | 4,000 | — | ||||||
Capital lease obligations and other debt | 11,401 | 8,679 | ||||||
Total debt | 912,907 | 164,538 | ||||||
Less: Current maturities | 181,175 | 464 | ||||||
Total long-term debt | $ | 731,732 | $ | 164,074 | ||||
F-22
Table of Contents
2011 | $ | 181,175 | ||
2012 | 32,618 | |||
2013 | 55,731 | |||
2014 | 30,375 | |||
2015 | 605,407 | |||
Thereafter | 7,601 | |||
$ | 912,907 | |||
F-23
Table of Contents
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Carrying amount of the equity component in additional paid-in capital | $ | 28,449 | $ | 28,449 | ||||
Principal amount of the liability component | $ | 175,000 | $ | 175,000 | ||||
Less: Unamortized discount | 11,892 | 19,141 | ||||||
Net carrying amount of the liability | $ | 163,108 | $ | 155,859 | ||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Interest expense | $ | 11,405 | $ | 10,905 | $ | 10,440 |
As of | ||||
December 31, | ||||
2010 | ||||
Remaining period over which discount will be amortized | 1.5 years | |||
Conversion price | $31.75 | |||
Number of shares to be delivered upon conversion(1) | 2,781,265 | |||
Conversion value in excess of principal amount (in thousands) | $178,251 | |||
Derivative transactions entered into in connection with the convertible notes | None |
(1) | Calculation is based on the Company’s December 31, 2010 closing stock price of $64.09. |
• | a variable rate equal to LIBOR (or, in the case of Canadian dollar denominated loans, the Bankers’ Acceptance discount rate) plus a margin ranging from 2.0% to 3.0%; or | |
• | an alternate base rate equal to the higher of the bank’s prime rate and the federal funds effective rate (or, in the case of Canadian dollar denominated loans, the Canadian Prime Rate). |
F-24
Table of Contents
9. | Retirement Plans |
10. | Income Taxes |
2010 | 2009 | 2008 | ||||||||||
US operations | $ | 68,921 | $ | (41,354 | ) | $ | 220,236 | |||||
Foreign operations | 171,707 | 147,063 | 153,214 | |||||||||
Total | $ | 240,628 | $ | 105,709 | $ | 373,450 | ||||||
F-25
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Current: | ||||||||||||
Federal | $ | 25,237 | $ | 12,403 | $ | 94,082 | ||||||
State | 1,122 | 674 | 5,097 | |||||||||
Foreign | 44,249 | 45,700 | 37,639 | |||||||||
70,608 | 58,777 | 136,818 | ||||||||||
Deferred: | ||||||||||||
Federal | (1,572 | ) | (15,239 | ) | 10,259 | |||||||
State | (58 | ) | (566 | ) | 1,241 | |||||||
Foreign | 3,045 | 3,125 | 5,833 | |||||||||
1,415 | (12,680 | ) | 17,333 | |||||||||
Total Provision | $ | 72,023 | $ | 46,097 | $ | 154,151 | ||||||
2010 | 2009 | 2008 | ||||||||||
Federal tax expense at statutory rates | $ | 84,220 | $ | 36,998 | $ | 130,552 | ||||||
Effect of foreign income tax, net | (12,796 | ) | (12,162 | ) | (10,570 | ) | ||||||
Nondeductible goodwill | — | 18,373 | 24,317 | |||||||||
Nondeductible acquisition costs | 2,315 | — | — | |||||||||
Other nondeductible expenses | 1,454 | 1,518 | 2,586 | |||||||||
State tax expense, net of federal benefits | 1,017 | 127 | 3,800 | |||||||||
Domestic manufacturing deduction | (978 | ) | (80 | ) | (1,212 | ) | ||||||
Uncertain tax positions adjustments | (1,036 | ) | 1,139 | 2,868 | ||||||||
Other, net | (2,173 | ) | 184 | 1,810 | ||||||||
Net income tax provision | $ | 72,023 | $ | 46,097 | $ | 154,151 | ||||||
F-26
Table of Contents
2010 | 2009 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforward | $ | 1,976 | $ | 3,532 | ||||
Allowance for doubtful accounts | 752 | 1,294 | ||||||
Allowance for Inventory obsolescence | 4,775 | 3,802 | ||||||
Employee benefits | 11,823 | 8,889 | ||||||
Deductible goodwill and other intangibles | 10,870 | 12,568 | ||||||
Other | 3,467 | 1,746 | ||||||
Foreign tax credit carryover | 1,259 | 1,900 | ||||||
Other | 3,872 | 2,399 | ||||||
Gross deferred tax asset | 38,794 | 36,130 | ||||||
Less: valuation allowance | 421 | 421 | ||||||
Net deferred tax asset | 38,373 | 35,709 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation | (88,872 | ) | (77,402 | ) | ||||
Deferred revenue | (1,466 | ) | (1,309 | ) | ||||
Intangibles | (13,568 | ) | — | |||||
Accrued liabilities | (1,132 | ) | (543 | ) | ||||
Lower of cost or market | (3,846 | ) | (5,849 | ) | ||||
Convertible notes | (4,218 | ) | (6,766 | ) | ||||
Other | (3,289 | ) | (2,685 | ) | ||||
Deferred tax liability | (116,391 | ) | (94,554 | ) | ||||
Net deferred tax liability | $ | (78,018 | ) | $ | (58,845 | ) | ||
2010 | 2009 | |||||||
Current deferred tax liability | $ | (1,462 | ) | $ | (3,513 | ) | ||
Long-term deferred tax liability | (76,556 | ) | (55,332 | ) | ||||
Net deferred tax liability | $ | (78,018 | ) | $ | (58,845 | ) | ||
F-27
Table of Contents
F-28
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Balance as of January 1st | $ | 4,031 | $ | 4,274 | $ | 2,536 | ||||||
Additions for tax positions of prior years | 128 | 2,136 | 2,270 | |||||||||
Reductions for tax positions of prior years | — | — | (214 | ) | ||||||||
Lapse of the Applicable Statute of Limitations | (1,115 | ) | (2,379 | ) | (318 | ) | ||||||
Balance as of December 31st | $ | 3,044 | $ | 4,031 | $ | 4,274 | ||||||
11. | Commitments and Contingencies |
Operating | ||||
Leases | ||||
2011 | $ | 10,198 | ||
2012 | 8,630 | |||
2013 | 7,242 | |||
2014 | 6,117 | |||
2015 | 3,381 | |||
Thereafter | 6,666 | |||
Total | $ | 42,234 | ||
12. | Stock-Based Compensation |
F-29
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Risk-free weighted interest rate | 2.1 | % | 1.8 | % | 2.6 | % | ||||||
Expected life (in years) | 4.3 | 4.3 | 4.3 | |||||||||
Expected volatility | 55 | % | 55 | % | 37 | % |
Weighted | Weighted | Aggregate | ||||||||||||||
Average | Average | Intrinsic | ||||||||||||||
Exercise | Contractual | Value | ||||||||||||||
Options | Price | Life (Years) | (Thousands) | |||||||||||||
Balance at December 31, 2007 | 1,929,007 | 24.25 | 4.2 | 19,947 | ||||||||||||
Granted | 565,250 | 37.19 | ||||||||||||||
Exercised | (412,529 | ) | 21.50 | |||||||||||||
Forfeited | (134,312 | ) | 30.92 | |||||||||||||
Balance at December 31, 2008 | 1,947,416 | 28.13 | 3.7 | 2,706 | ||||||||||||
Granted | 768,650 | 17.20 | ||||||||||||||
Exercised | (199,615 | ) | 17.33 | |||||||||||||
Forfeited | (34,500 | ) | 32.83 | |||||||||||||
Balance at December 31, 2009 | 2,481,951 | 25.55 | 3.6 | 34,618 | ||||||||||||
Granted | 417,250 | 37.67 | ||||||||||||||
Exercised | (866,436 | ) | 26.96 | |||||||||||||
Forfeited | (65,375 | ) | 27.75 | |||||||||||||
Balance at December 31, 2010 | 1,967,390 | 27.42 | 3.5 | 72,138 |
F-30
Table of Contents
Options Outstanding | ||||||||||||||||||||
Weighted | Options Exercisable | |||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||
Number | Remaining | Average | Number | Average | ||||||||||||||||
Outstanding as of | Contractual | Exercise | Exercisable as of | Exercise | ||||||||||||||||
Range of Exercise Prices | 12/31/2010 | Life | Price | 12/31/2010 | Price | |||||||||||||||
$ 8.33 - $15.36 | 182,125 | 2.20 | $ | 11.69 | 178,000 | $ | 11.60 | |||||||||||||
$16.65 - $16.65 | 574,825 | 4.12 | $ | 16.65 | 93,363 | $ | 16.65 | |||||||||||||
$21.83 - $34.86 | 422,805 | 2.08 | $ | 29.64 | 272,305 | $ | 30.90 | |||||||||||||
$36.53 - $36.53 | 340,000 | 3.13 | $ | 36.53 | 115,500 | $ | 36.53 | |||||||||||||
$36.99 - $36.99 | 14,760 | 2.38 | $ | 36.99 | 11,070 | $ | 36.99 | |||||||||||||
$37.67 - $58.47 | 432,875 | 4.96 | $ | 38.70 | 19,375 | $ | 50.02 | |||||||||||||
$ 8.33 - $58.47 | 1,967,390 | 3.50 | $ | 27.42 | 689,613 | $ | 25.57 |
F-31
Table of Contents
13. | Segment and Related Information |
F-32
Table of Contents
Equity in | ||||||||||||||||||||||||
Revenues from | Depreciation | Operating | Earnings of | |||||||||||||||||||||
Unaffiliated | and | Income | Unconsolidated | Capital | Total | |||||||||||||||||||
Customers | Amortization | (Loss) | Affiliates | Expenditures | Assets | |||||||||||||||||||
2010 | ||||||||||||||||||||||||
Well Site Services — | ||||||||||||||||||||||||
Rental Tools | $ | 342,953 | $ | 40,859 | $ | 47,326 | $ | — | $ | 42,884 | $ | 383,778 | ||||||||||||
Drilling and Other | 133,214 | 24,149 | 576 | — | 10,300 | 108,163 | ||||||||||||||||||
Total Well Site Services | 476,167 | 65,008 | 47,902 | — | 53,184 | 491,941 | ||||||||||||||||||
Accommodations | 537,690 | 45,694 | 151,417 | (25 | ) | 107,347 | 1,491,682 | |||||||||||||||||
Offshore Products | 428,963 | 11,496 | 60,664 | — | 13,299 | 520,944 | ||||||||||||||||||
Tubular Services | 969,164 | 1,301 | 35,941 | 264 | 7,889 | 458,808 | ||||||||||||||||||
Corporate and Eliminations | — | 703 | (40,342 | ) | — | 488 | 52,624 | |||||||||||||||||
Total | $ | 2,411,984 | $ | 124,202 | $ | 255,582 | $ | 239 | $ | 182,207 | $ | 3,015,999 | ||||||||||||
2009 | ||||||||||||||||||||||||
Well Site Services — | ||||||||||||||||||||||||
Rental Tools | $ | 234,121 | $ | 40,900 | $ | (97,844 | ) | $ | — | $ | 31,915 | $ | 340,792 | |||||||||||
Drilling and Other | 71,175 | 26,343 | (16,345 | ) | — | 11,048 | 116,555 | |||||||||||||||||
Total Well Site Services | 305,296 | 67,243 | (114,189 | ) | — | 42,963 | 457,347 | |||||||||||||||||
Accommodations | 481,402 | 37,892 | 140,665 | 203 | 68,381 | 573,011 | ||||||||||||||||||
Offshore Products | 509,388 | 10,945 | 81,049 | — | 12,114 | 510,399 | ||||||||||||||||||
Tubular Services | 812,164 | 1,443 | 41,758 | 1,249 | 354 | 360,652 | ||||||||||||||||||
Corporate and Eliminations | — | 585 | (30,554 | ) | — | 676 | 30,977 | |||||||||||||||||
Total | $ | 2,108,250 | $ | 118,108 | $ | 118,729 | $ | 1,452 | $ | 124,488 | $ | 1,932,386 | ||||||||||||
2008 | ||||||||||||||||||||||||
Well Site Services — | ||||||||||||||||||||||||
Rental Tools | $ | 355,809 | $ | 35,511 | $ | 75,787 | $ | — | $ | 75,077 | $ | 476,460 | ||||||||||||
Drilling and Other(1) | 177,339 | 19,826 | 17,433 | 1,637 | 42,961 | 176,726 | ||||||||||||||||||
Total Well Site Services | 533,148 | 55,337 | 93,220 | 1,637 | 118,038 | 653,186 | ||||||||||||||||||
Accommodations | 427,130 | 34,146 | 120,972 | 1,174 | 108,622 | 495,683 | ||||||||||||||||||
Offshore Products | 528,164 | 11,465 | 89,280 | — | 16,879 | 498,784 | ||||||||||||||||||
Tubular Services | 1,460,015 | 1,390 | 106,470 | 1,224 | 2,198 | 634,758 | ||||||||||||||||||
Corporate and Eliminations | — | 266 | (26,187 | ) | — | 1,647 | 16,107 | |||||||||||||||||
Total | $ | 2,948,457 | $ | 102,604 | $ | 383,755 | $ | 4,035 | $ | 247,384 | $ | 2,298,518 | ||||||||||||
(1) | Subsequent to March 1, 2006, the effective date of the sale of our workover services business, we have classified our equity interest in Boots & Coots and the notes receivable acquired in the transaction as “Drilling and Other.” |
F-33
Table of Contents
United | United | Other | ||||||||||||||||||||||
States | Canada | Australia | Kingdom | Non-US | Total | |||||||||||||||||||
2010 | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 1,708,709 | $ | 512,288 | $ | — | $ | 77,180 | $ | 113,807 | $ | 2,411,984 | ||||||||||||
Long-lived assets | 639,120 | 502,322 | 724,522 | 17,275 | 28,088 | 1,911,327 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 1,460,810 | $ | 460,492 | $ | — | $ | 105,222 | $ | 81,726 | $ | 2,108,250 | ||||||||||||
Long-lived assets | 541,563 | 424,523 | — | 18,352 | 22,327 | 1,006,765 | ||||||||||||||||||
2008 | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 2,353,528 | $ | 406,176 | $ | — | $ | 127,189 | $ | 61,564 | $ | 2,948,457 | ||||||||||||
Long-lived assets | 668,376 | 359,923 | — | 17,232 | 15,425 | 1,060,956 |
14. | Valuation Allowances |
Balance at | Charged to | Deductions | Translation | Balance at | ||||||||||||||||
Beginning of | Costs and | (Net of | and Other, | End of | ||||||||||||||||
Period | Expenses | Recoveries) | Net | Period | ||||||||||||||||
Year Ended December 31, 2010: | ||||||||||||||||||||
Allowance for doubtful accounts receivable | $ | 4,946 | $ | 869 | $ | (1,915 | ) | $ | 200 | $ | 4,100 | |||||||||
Allowance for inventory obsolescence | 8,279 | 1,288 | (510 | ) | (603 | ) | 8,454 | |||||||||||||
Liabilities related to discontinued operations | 2,411 | — | (143 | ) | — | 2,268 | ||||||||||||||
Year Ended December 31, 2009: | ||||||||||||||||||||
Allowance for doubtful accounts receivable | $ | 4,168 | $ | 3,048 | $ | (2,479 | ) | $ | 209 | $ | 4,946 | |||||||||
Allowance for inventory obsolescence | 6,712 | 2,264 | (867 | ) | 170 | 8,279 | ||||||||||||||
Liabilities related to discontinued operations | 2,544 | — | (133 | ) | — | 2,411 | ||||||||||||||
Year Ended December 31, 2008: | ||||||||||||||||||||
Allowance for doubtful accounts receivable | $ | 3,629 | $ | 2,821 | $ | (2,735 | ) | $ | 453 | $ | 4,168 | |||||||||
Allowance for inventory obsolescence | 7,549 | 1,302 | (1,597 | ) | (542 | ) | 6,712 | |||||||||||||
Liabilities related to discontinued operations | 2,839 | — | (295 | ) | — | 2,544 |
F-34
Table of Contents
15. | Quarterly Financial Information (Unaudited) |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
2010 | ||||||||||||||||
Revenues | $ | 532,345 | $ | 594,532 | $ | 588,347 | $ | 696,759 | ||||||||
Gross profit*(1) | 125,835 | 125,050 | 139,745 | 147,060 | ||||||||||||
Net income(1) | 40,243 | 37,477 | 46,346 | 43,952 | ||||||||||||
Basic earnings per share(1) | 0.81 | 0.75 | 0.92 | 0.87 | ||||||||||||
Diluted earnings per share(1) | 0.78 | 0.71 | 0.88 | 0.82 | ||||||||||||
2009 | ||||||||||||||||
Revenues | $ | 667,098 | $ | 456,334 | $ | 456,103 | $ | 528,715 | ||||||||
Gross profit* | 146,889 | 94,642 | 102,258 | 124,264 | ||||||||||||
Net income (loss)(2) | 56,128 | (63,486 | ) | 26,579 | 39,893 | |||||||||||
Basic earnings (loss) per share(2) | 1.13 | (1.28 | ) | 0.54 | 0.80 | |||||||||||
Diluted earnings (loss) per share(2) | 1.13 | (1.28 | ) | 0.53 | 0.78 |
(1) | The gross profit and net income in the fourth quarter of 2010 included $6.3 million in acquisition costs related to the three acquisitions in the quarter. | |
(2) | The net income in the second quarter of 2009 included an after tax loss of $81.2 million, or approximately $1.62 per diluted share, on the impairment of goodwill. | |
Amounts are calculated independently for each of the quarters presented. Therefore, the sum of the quarterly amounts may not equal the total calculated for the year. | ||
* | Represents “revenues” less “product costs” and “service and other costs” included in the Company’s consolidated statements of income. |
16. | Condensed Consolidating Financial Information |
F-35
Table of Contents
Year Ended December 31, 2010 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
REVENUES | ||||||||||||||||||||
Operating revenues | $ | — | $ | 1,698,363 | $ | 713,621 | $ | — | $ | 2,411,984 | ||||||||||
Intercompany revenues | — | 28,359 | 931 | (29,290 | ) | — | ||||||||||||||
Total revenues | — | 1,726,722 | 714,552 | (29,290 | ) | 2,411,984 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of sales and services | — | 1,433,931 | 447,885 | (7,522 | ) | 1,874,294 | ||||||||||||||
Intercompany cost of sales and services | — | 21,294 | 473 | (21,767 | ) | — | ||||||||||||||
Selling, general and administrative expenses | 33,272 | 81,225 | 36,368 | — | 150,865 | |||||||||||||||
Depreciation and amortization expense | 703 | 74,151 | 49,355 | (7 | ) | 124,202 | ||||||||||||||
Acquisition related expenses | 6,468 | 319 | 172 | — | 6,959 | |||||||||||||||
Other operating (income)/expense | (101 | ) | (752 | ) | 935 | — | 82 | |||||||||||||
Operating income (loss) | (40,342 | ) | 116,554 | 179,364 | 6 | 255,582 | ||||||||||||||
Interest expense | (14,906 | ) | (680 | ) | (4,746 | ) | 4,058 | (16,274 | ) | |||||||||||
Interest income | 471 | 1,405 | 2,934 | (4,059 | ) | 751 | ||||||||||||||
Equity in earnings of unconsolidated affiliates | 170,407 | 25,096 | (25 | ) | (195,239 | ) | 239 | |||||||||||||
Other income/(expense) | 33,725 | (31,544 | ) | (1,851 | ) | — | 330 | |||||||||||||
Income before income taxes | 149,355 | 110,831 | 175,676 | (195,234 | ) | 240,628 | ||||||||||||||
Income tax provision | 18,664 | (42,357 | ) | (48,330 | ) | — | (72,023 | ) | ||||||||||||
Net income | 168,019 | 68,474 | 127,346 | (195,234 | ) | 168,605 | ||||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 577 | 10 | 587 | |||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 168,019 | $ | 68,474 | $ | 126,769 | $ | (195,244 | ) | $ | 168,018 | |||||||||
F-36
Table of Contents
Year Ended December 31, 2009 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
REVENUES | ||||||||||||||||||||
Operating revenues | $ | — | $ | 1,455,447 | $ | 652,803 | $ | — | $ | 2,108,250 | ||||||||||
Intercompany revenues | — | 7,005 | 3,363 | (10,368 | ) | — | ||||||||||||||
Total revenues | — | 1,462,452 | 656,166 | (10,368 | ) | 2,108,250 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of sales and services | — | 1,233,878 | 408,748 | (2,428 | ) | 1,640,198 | ||||||||||||||
Intercompany cost of sales and services | — | 4,562 | 3,386 | (7,948 | ) | — | ||||||||||||||
Selling, general and administrative expenses | 30,069 | 75,849 | 33,375 | — | 139,293 | |||||||||||||||
Depreciation and amortization expense | 585 | 75,699 | 41,831 | (7 | ) | 118,108 | ||||||||||||||
Impairment of goodwill | — | 94,528 | — | — | 94,528 | |||||||||||||||
Other operating (income)/expense | (100 | ) | (19,153 | ) | 16,639 | 8 | (2,606 | ) | ||||||||||||
Operating income (loss) | (30,554 | ) | (2,911 | ) | 152,187 | 7 | 118,729 | |||||||||||||
Interest expense | (13,737 | ) | (5,135 | ) | (953 | ) | 4,559 | (15,266 | ) | |||||||||||
Interest income | 4,384 | 235 | 320 | (4,559 | ) | 380 | ||||||||||||||
Equity in earnings of unconsolidated affiliates | 69,012 | 8,675 | 204 | (76,439 | ) | 1,452 | ||||||||||||||
Other income/(expense) | 28,716 | (27,005 | ) | (1,297 | ) | — | 414 | |||||||||||||
Income before income taxes | 57,821 | (26,141 | ) | 150,461 | (76,432 | ) | 105,709 | |||||||||||||
Income tax provision | 3,121 | (2,290 | ) | (46,928 | ) | — | (46,097 | ) | ||||||||||||
Net income | 60,942 | (28,431 | ) | 103,533 | (76,432 | ) | 59,612 | |||||||||||||
Less; Net income attributable to non-controlling interest | — | — | 490 | 8 | 498 | |||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 60,942 | $ | (28,431 | ) | $ | 103,043 | $ | (76,440 | ) | $ | 59,114 | ||||||||
F-37
Table of Contents
Year Ended December 31, 2008 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
REVENUES | ||||||||||||||||||||
Operating revenues | $ | — | $ | 2,338,161 | $ | 610,296 | $ | — | $ | 2,948,457 | ||||||||||
Intercompany revenues | — | 4,558 | 3,895 | (8,453 | ) | — | ||||||||||||||
Total revenues | — | 2,342,719 | 614,191 | (8,453 | ) | 2,948,457 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of sales and services | — | 1,859,289 | 377,864 | (2,179 | ) | 2,234,974 | ||||||||||||||
Intercompany cost of sales and services | — | 3,056 | 3,218 | (6,274 | ) | — | ||||||||||||||
Selling, general and administrative expenses | 25,973 | 81,023 | 36,084 | — | 143,080 | |||||||||||||||
Depreciation and amortization expense | 266 | 63,847 | 38,498 | (7 | ) | 102,604 | ||||||||||||||
Impairment of goodwill | — | 85,630 | — | — | 85,630 | |||||||||||||||
Other operating (income)/expense | (52 | ) | 79 | (1,605 | ) | (8 | ) | (1,586 | ) | |||||||||||
Operating income (loss) | (26,187 | ) | 249,795 | 160,132 | 15 | 383,755 | ||||||||||||||
Interest expense | (12,368 | ) | (4,954 | ) | (4,855 | ) | (1,408 | ) | (23,585 | ) | ||||||||||
Interest income | 4,208 | 2,155 | 1,845 | (4,647 | ) | 3,561 | ||||||||||||||
Equity in earnings of unconsolidated affiliates | 229,752 | 36,754 | 1,174 | (263,645 | ) | 4,035 | ||||||||||||||
Gains on sale of investment | — | 6,160 | — | — | 6,160 | |||||||||||||||
Other income/(expense) | 24,677 | (25,235 | ) | 91 | (9 | ) | (476 | ) | ||||||||||||
Income before income taxes | 220,082 | 264,675 | 158,387 | (269,694 | ) | 373,450 | ||||||||||||||
Income tax provision | (1,229 | ) | (108,831 | ) | (46,289 | ) | 2,198 | (154,151 | ) | |||||||||||
Net income | 218,853 | 155,844 | 112,098 | (267,496 | ) | 219,299 | ||||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 427 | 19 | 446 | |||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 218,853 | $ | 155,844 | $ | 111,671 | $ | (267,515 | ) | $ | 218,853 | |||||||||
F-38
Table of Contents
December 31, 2010 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | (180 | ) | $ | 1,170 | $ | 95,360 | $ | — | $ | 96,350 | |||||||||
Accounts receivable, net | 852 | 303,771 | 174,116 | — | 478,739 | |||||||||||||||
Inventories, net | — | 429,427 | 72,008 | — | 501,435 | |||||||||||||||
Prepaid expenses and other current assets | 6,243 | 10,796 | 6,441 | — | 23,480 | |||||||||||||||
Total current assets | 6,915 | 745,164 | 347,925 | — | 1,100,004 | |||||||||||||||
Property, plant and equipment, net | 1,930 | 394,335 | 856,422 | (30 | ) | 1,252,657 | ||||||||||||||
Goodwill, net | — | 171,135 | 304,087 | — | 475,222 | |||||||||||||||
Other intangible assets, net | — | 34,894 | 104,527 | — | 139,421 | |||||||||||||||
Investments in unconsolidated affiliates | 1,723,711 | 200,652 | 569 | (1,918,995 | ) | 5,937 | ||||||||||||||
Long-term intercompany receivables (payables) | 567,560 | (50,475 | ) | (524,050 | ) | 6,965 | — | |||||||||||||
Other noncurrent assets | 33,562 | 336 | 8,860 | — | 42,758 | |||||||||||||||
Total assets | $ | 2,333,678 | $ | 1,496,041 | $ | 1,098,340 | $ | (1,912,060 | ) | $ | 3,015,999 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 28,650 | $ | 202,503 | $ | 73,585 | $ | 1 | $ | 304,739 | ||||||||||
Income taxes | (31,363 | ) | 30,919 | 5,048 | — | 4,604 | ||||||||||||||
Current portion of long-term debt and capitalized leases | 173,122 | 2,424 | 5,629 | — | 181,175 | |||||||||||||||
Deferred revenue | — | 44,981 | 15,866 | — | 60,847 | |||||||||||||||
Other current liabilities | — | 1,727 | 1,083 | — | 2,810 | |||||||||||||||
Total current liabilities | 170,409 | 282,554 | 101,211 | 1 | 554,175 | |||||||||||||||
Long-term debt and capitalized leases | 536,747 | 9,774 | 185,211 | — | 731,732 | |||||||||||||||
Deferred income taxes | (10,816 | ) | 48,642 | 43,372 | — | 81,198 | ||||||||||||||
Other noncurrent liabilities | 9,432 | 10,141 | 837 | (449 | ) | 19,961 | ||||||||||||||
Total liabilities | 705,772 | 351,111 | 330,631 | (448 | ) | 1,387,066 | ||||||||||||||
Stockholders’ equity | 1,627,906 | 1,144,930 | 766,848 | (1,911,778 | ) | 1,627,906 | ||||||||||||||
Non-controlling interest | — | — | 861 | 166 | 1,027 | |||||||||||||||
Total stockholders’ equity | 1,627,906 | 1,144,930 | 767,709 | (1,911,612 | ) | 1,628,933 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,333,678 | $ | 1,496,041 | $ | 1,098,340 | $ | (1,912,060 | ) | $ | 3,015,999 | |||||||||
F-39
Table of Contents
December 31, 2009 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 7,148 | $ | 148 | $ | 82,446 | $ | — | $ | 89,742 | ||||||||||
Accounts receivable, net | 141 | 231,845 | 153,830 | — | 385,816 | |||||||||||||||
Inventories, net | — | 356,745 | 66,332 | — | 423,077 | |||||||||||||||
Prepaid expenses and other current assets | 3,746 | 14,082 | 9,105 | — | 26,933 | |||||||||||||||
Total current assets | 11,035 | 602,820 | 311,713 | — | 925,568 | |||||||||||||||
Property, plant and equipment, net | 2,145 | 351,670 | 395,823 | (37 | ) | 749,601 | ||||||||||||||
Goodwill, net | — | 148,838 | 69,902 | — | 218,740 | |||||||||||||||
Other intangible assets, net | — | 19,631 | 50 | — | 19,681 | |||||||||||||||
Investments in unconsolidated affiliates | 1,231,680 | 173,544 | 59 | (1,400,119 | ) | 5,164 | ||||||||||||||
Long-term intercompany receivables (payables) | 292,469 | (252,192 | ) | (47,243 | ) | 6,966 | — | |||||||||||||
Other noncurrent assets | 9,562 | 493 | 3,577 | — | 13,632 | |||||||||||||||
Total assets | $ | 1,546,891 | $ | 1,044,804 | $ | 733,881 | $ | (1,393,190 | ) | $ | 1,932,386 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 14,404 | $ | 141,787 | $ | 52,349 | $ | 1 | $ | 208,541 | ||||||||||
Income taxes | (11,069 | ) | 11,082 | 14,406 | — | 14,419 | ||||||||||||||
Current portion of long-term debt and capitalized leases | 30 | 393 | 41 | — | 464 | |||||||||||||||
Deferred revenue | — | 61,167 | 26,245 | — | 87,412 | |||||||||||||||
Other current liabilities | — | 3,364 | 1,023 | — | 4,387 | |||||||||||||||
Total current liabilities | 3,365 | 217,793 | 94,064 | 1 | 315,223 | |||||||||||||||
Long-term debt and capitalized leases | 155,878 | 8,088 | 108 | — | 164,074 | |||||||||||||||
Deferred income taxes | (1,046 | ) | 31,487 | 24,891 | — | 55,332 | ||||||||||||||
Other noncurrent liabilities | 7,846 | 7,052 | 1,242 | (449 | ) | 15,691 | ||||||||||||||
Total liabilities | 166,043 | 264,420 | 120,305 | (448 | ) | 550,320 | ||||||||||||||
Stockholders’ Equity | 1,380,848 | 780,384 | 612,514 | (1,392,898 | ) | 1,380,848 | ||||||||||||||
Non-controlling interest | — | — | 1,062 | 156 | 1,218 | |||||||||||||||
Total stockholders’ equity | 1,380,848 | 780,384 | 613,576 | (1,392,742 | ) | 1,382,066 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,546,891 | $ | 1,044,804 | $ | 733,881 | $ | (1,393,190 | ) | $ | 1,932,386 | |||||||||
F-40
Table of Contents
Year Ended December 31, 2010 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: | $ | (40,342 | ) | $ | 95,961 | $ | 175,303 | $ | — | $ | 230,922 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Capital expenditures, including capitalized interest | (490 | ) | (68,249 | ) | (113,468 | ) | — | (182,207 | ) | |||||||||||
Acquisitions of businesses, net of cash acquired | — | (71,992 | ) | (637,583 | ) | — | (709,575 | ) | ||||||||||||
Proceeds from sale of buildings and equipment | — | 2,260 | 474 | — | 2,734 | |||||||||||||||
Other, net | — | (8,949 | ) | 8,317 | — | (632 | ) | |||||||||||||
Net cash provided by (used in) investing activities | (490 | ) | (146,930 | ) | (742,260 | ) | — | (889,680 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Revolving credit borrowings (repayments), net | 346,742 | — | 387 | — | 347,129 | |||||||||||||||
Term loan borrowings | 200,000 | — | 100,955 | — | 300,955 | |||||||||||||||
Debt and capital lease payments | (30 | ) | (403 | ) | (54 | ) | — | (487 | ) | |||||||||||
Issuance of common stock from share-based payment arrangements | 23,361 | — | — | — | 23,361 | |||||||||||||||
Excess tax benefits from share-based payment arrangements | 4,029 | — | — | — | 4,029 | |||||||||||||||
Payment of financing costs | (24,548 | ) | — | — | — | (24,548 | ) | |||||||||||||
Proceeds from (funding of) accounts and notes with affiliates, net | (514,643 | ) | 52,539 | 462,104 | — | — | ||||||||||||||
Other, net | (1,407 | ) | — | — | — | (1,407 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 33,504 | 52,136 | 563,392 | — | 649,032 | |||||||||||||||
Effect of exchange rate changes on cash | — | (2 | ) | 16,479 | — | 16,477 | ||||||||||||||
Net change in cash and cash equivalents from continuing operations | (7,328 | ) | 1,165 | 12,914 | — | 6,751 | ||||||||||||||
Net cash used in discontinued operations operating activities | — | (143 | ) | — | — | (143 | ) | |||||||||||||
Cash and cash equivalents, beginning of period | 7,148 | 148 | 82,446 | — | 89,742 | |||||||||||||||
Cash and cash equivalents, end of period | $ | (180 | ) | $ | 1,170 | $ | 95,360 | $ | — | $ | 96,350 | |||||||||
F-41
Table of Contents
Year Ended December 31, 2009 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: | $ | (90,736 | ) | $ | 363,176 | $ | 180,922 | $ | — | $ | 453,362 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Capital expenditures, including capitalized interest | (677 | ) | (48,403 | ) | (75,408 | ) | — | (124,488 | ) | |||||||||||
Acquisitions of businesses, net of cash acquired | — | — | 18 | — | 18 | |||||||||||||||
Proceeds from sale of buildings and equipment | — | 2,261 | 578 | — | 2,839 | |||||||||||||||
Proceeds from sale of investments and collection of notes receivable | — | 21,166 | — | — | 21,166 | |||||||||||||||
Other, net | (1 | ) | (153 | ) | (1,989 | ) | — | (2,143 | ) | |||||||||||
Net cash used in investing activities | (678 | ) | (25,129 | ) | (76,801 | ) | — | (102,608 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Revolving credit borrowings (repayments), net | (230,198 | ) | — | (64,562 | ) | — | (294,760 | ) | ||||||||||||
Debt and capital lease payments | (27 | ) | (4,880 | ) | (54 | ) | — | (4,961 | ) | |||||||||||
Issuance of common stock from share-based payment arrangements | 3,460 | — | — | — | 3,460 | |||||||||||||||
Proceeds from (funding of) accounts and notes with affiliates, net | 325,890 | (334,059 | ) | 8,169 | — | — | ||||||||||||||
Other, net | (511 | ) | 941 | (942 | ) | — | (512 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 98,614 | (337,998 | ) | (57,389 | ) | — | (296,773 | ) | ||||||||||||
Effect of exchange rate changes on cash | — | — | 5,695 | — | 5,695 | |||||||||||||||
Net change in cash and cash equivalents from continuing operations | 7,200 | 49 | 52,427 | — | 59,676 | |||||||||||||||
Net cash used in discontinued operations operating activities | — | (133 | ) | — | — | (133 | ) | |||||||||||||
Cash and cash equivalents, beginning of period | (52 | ) | 232 | 30,019 | — | 30,199 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 7,148 | $ | 148 | $ | 82,446 | $ | — | $ | 89,742 | ||||||||||
F-42
Table of Contents
Year Ended December 31, 2008 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: | $ | (70,245 | ) | $ | 192,094 | $ | 135,615 | $ | — | $ | 257,464 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Capital expenditures, including capitalized interest | (1,649 | ) | (128,401 | ) | (117,334 | ) | — | (247,384 | ) | |||||||||||
Acquisitions of businesses, net of cash acquired | — | (22,916 | ) | (6,919 | ) | — | (29,835 | ) | ||||||||||||
Proceeds from sale of buildings and equipment | — | 3,122 | 1,268 | — | 4,390 | |||||||||||||||
Proceeds from sale of investments and collection of notes receivable | — | 27,381 | — | — | 27,381 | |||||||||||||||
Other, net | — | (196 | ) | (450 | ) | — | (646 | ) | ||||||||||||
Net cash used in investing activities | (1,649 | ) | (121,010 | ) | (123,435 | ) | — | (246,094 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Revolving credit borrowings (repayments), net | 12,106 | — | (10,632 | ) | — | 1,474 | ||||||||||||||
Debt and capital lease payments | (24 | ) | (4,836 | ) | (100 | ) | — | (4,960 | ) | |||||||||||
Issuance of common stock fromshare-based payment arrangements | 8,868 | — | — | — | 8,868 | |||||||||||||||
Repurchase of treasury stock | (9,563 | ) | — | — | — | (9,563 | ) | |||||||||||||
Payment of financing costs | (39 | ) | — | — | — | (39 | ) | |||||||||||||
Excess tax benefit from share-based payment arrangements | 3,429 | — | — | — | 3,429 | |||||||||||||||
Proceeds from (funding of) accounts and notes with affiliates, net | 58,295 | (65,895 | ) | 7,600 | — | — | ||||||||||||||
Other, net | (875 | ) | — | — | — | (875 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 72,197 | (70,731 | ) | (3,132 | ) | — | (1,666 | ) | ||||||||||||
Effect of exchange rate changes on cash | — | — | (9,802 | ) | — | (9,802 | ) | |||||||||||||
Net change in cash and cash equivalents from continuing operations | 303 | 353 | (754 | ) | — | (98 | ) | |||||||||||||
Net cash used in discontinued operations operating activities | — | (295 | ) | — | — | (295 | ) | |||||||||||||
Cash and cash equivalents, beginning of period | (355 | ) | 174 | 30,773 | — | 30,592 | ||||||||||||||
Cash and cash equivalents, end of period | $ | (52 | ) | $ | 232 | $ | 30,019 | $ | — | $ | 30,199 | |||||||||
F-43
Table of Contents
Six Months Ended | ||||||||||||||||
Three Months Ended June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenues | $ | 820,317 | $ | 594,532 | $ | 1,580,758 | $ | 1,126,877 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales and services | 616,778 | 469,482 | 1,191,176 | 875,992 | ||||||||||||
Selling, general and administrative expenses | 42,765 | 37,183 | 86,472 | 72,336 | ||||||||||||
Depreciation and amortization expense | 45,238 | 30,600 | 90,390 | 61,678 | ||||||||||||
Other operating (income) expense | 373 | (486 | ) | 2,781 | (687 | ) | ||||||||||
705,154 | 536,779 | 1,370,819 | 1,009,319 | |||||||||||||
Operating income | 115,163 | 57,753 | 209,939 | 117,558 | ||||||||||||
Interest expense, net of capitalized interest | (12,532 | ) | (3,500 | ) | (22,781 | ) | (6,971 | ) | ||||||||
Interest income | 235 | 103 | 1,248 | 181 | ||||||||||||
Other income/(expense) | 490 | (158 | ) | 684 | 634 | |||||||||||
Income before income taxes | 103,356 | 54,198 | 189,090 | 111,402 | ||||||||||||
Income tax expense | (28,887 | ) | (16,590 | ) | (52,270 | ) | (33,379 | ) | ||||||||
Net income | 74,469 | 37,608 | 136,820 | 78,023 | ||||||||||||
Less: Net income attributable to noncontrolling interest | 226 | 131 | 500 | 303 | ||||||||||||
Net income attributable to Oil States International, Inc. | $ | 74,243 | $ | 37,477 | $ | 136,320 | $ | 77,720 | ||||||||
Net income per share attributable to Oil States International, Inc. common stockholders | ||||||||||||||||
Basic | $ | 1.45 | $ | 0.75 | $ | 2.67 | $ | 1.55 | ||||||||
Diluted | $ | 1.34 | $ | 0.71 | $ | 2.48 | $ | 1.49 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 51,231 | 50,146 | 51,083 | 50,021 | ||||||||||||
Diluted | 55,270 | 52,455 | 55,061 | 52,188 |
F-44
Table of Contents
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 123,304 | $ | 96,350 | ||||
Accounts receivable, net | 552,024 | 478,739 | ||||||
Inventories, net | 592,679 | 501,435 | ||||||
Prepaid expenses and other current assets | 29,350 | 23,480 | ||||||
Total current assets | 1,297,357 | 1,100,004 | ||||||
Property, plant, and equipment, net | 1,436,714 | 1,252,657 | ||||||
Goodwill, net | 491,507 | 475,222 | ||||||
Other intangible assets, net | 137,961 | 139,421 | ||||||
Other noncurrent assets | 61,515 | 48,695 | ||||||
Total assets | $ | 3,425,054 | $ | 3,015,999 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 315,672 | $ | 304,739 | ||||
Income taxes | 7,429 | 4,604 | ||||||
Current portion of long-term debt and capitalized leases | 192,556 | 181,175 | ||||||
Deferred revenue | 54,598 | 60,847 | ||||||
Other current liabilities | 6,541 | 2,810 | ||||||
Total current liabilities | 576,796 | 554,175 | ||||||
Long-term debt and capitalized leases | 884,750 | 731,732 | ||||||
Deferred income taxes | 90,774 | 81,198 | ||||||
Other noncurrent liabilities | 21,012 | 19,961 | ||||||
Total liabilities | 1,573,332 | 1,387,066 | ||||||
Stockholders’ equity: | ||||||||
Oil States International, Inc. stockholders’ equity: | ||||||||
Common stock | 546 | 541 | ||||||
Additional paid-in capital | 531,618 | 508,429 | ||||||
Retained earnings | 1,264,453 | 1,128,133 | ||||||
Accumulated other comprehensive income | 150,264 | 84,549 | ||||||
Treasury stock | (96,201 | ) | (93,746 | ) | ||||
Total Oil States International, Inc. stockholders’ equity | 1,850,680 | 1,627,906 | ||||||
Noncontrolling interest | 1,042 | 1,027 | ||||||
Total stockholders’ equity | 1,851,722 | 1,628,933 | ||||||
Total liabilities and stockholders’ equity | $ | 3,425,054 | $ | 3,015,999 | ||||
F-45
Table of Contents
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 136,820 | $ | 78,023 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 90,390 | 61,678 | ||||||
Deferred income tax provision (benefit) | 10,788 | (4,909 | ) | |||||
Excess tax benefits from share-based payment arrangements | (6,198 | ) | (985 | ) | ||||
Non-cash compensation charge | 7,198 | 6,848 | ||||||
Accretion of debt discount | 3,823 | 3,560 | ||||||
Amortization of deferred financing costs | 2,914 | 526 | ||||||
Other, net | (889 | ) | (1,748 | ) | ||||
Changes in operating assets and liabilities, net of effect from acquired businesses: | ||||||||
Accounts receivable | (66,481 | ) | 561 | |||||
Inventories | (88,781 | ) | (51,066 | ) | ||||
Accounts payable and accrued liabilities | 7,802 | 26,840 | ||||||
Taxes payable | 9,977 | (5,344 | ) | |||||
Other current assets and liabilities, net | (10,728 | ) | (28,129 | ) | ||||
Net cash flows provided by operating activities | 96,635 | 85,855 | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions of businesses, net of cash acquired | (212 | ) | — | |||||
Capital expenditures, including capitalized interest | (230,253 | ) | (76,077 | ) | ||||
Other, net | (850 | ) | 1,853 | |||||
Net cash flows used in investing activities | (231,315 | ) | (74,224 | ) | ||||
Cash flows from financing activities: | ||||||||
Revolving credit borrowings and (repayments), net | (428,682 | ) | — | |||||
61/2% senior notes issued | 600,000 | — | ||||||
Term loan repayments | (7,494 | ) | — | |||||
Debt and capital lease repayments | (587 | ) | (255 | ) | ||||
Issuance of common stock from share-based payment arrangements | 9,792 | 7,288 | ||||||
Excess tax benefits from share-based payment arrangements | 6,198 | 985 | ||||||
Payment of financing costs | (12,640 | ) | — | |||||
Other, net | (2,456 | ) | (1,363 | ) | ||||
Net cash flows provided by financing activities | 164,131 | 6,655 | ||||||
Effect of exchange rate changes on cash | (2,399 | ) | (5,005 | ) | ||||
Net increase in cash and cash equivalents from continuing operations | 27,052 | 13,281 | ||||||
Net cash used in discontinued operations — operating activities | (98 | ) | (75 | ) | ||||
Cash and cash equivalents, beginning of period | 96,350 | 89,742 | ||||||
Cash and cash equivalents, end of period | $ | 123,304 | $ | 102,948 | ||||
F-46
Table of Contents
1. | ORGANIZATION AND BASIS OF PRESENTATION |
2. | RECENT ACCOUNTING PRONOUNCEMENTS |
F-47
Table of Contents
3. | DETAILS OF SELECTED BALANCE SHEET ACCOUNTS |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Accounts receivable, net: | ||||||||
Trade | $ | 426,712 | $ | 365,988 | ||||
Unbilled revenue | 124,038 | 113,389 | ||||||
Other | 4,147 | 3,462 | ||||||
Total accounts receivable | 554,897 | 482,839 | ||||||
Allowance for doubtful accounts | (2,873 | ) | (4,100 | ) | ||||
$ | 552,024 | $ | 478,739 | |||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Inventories, net: | ||||||||
Tubular goods | $ | 377,845 | $ | 332,720 | ||||
Other finished goods and purchased products | 78,324 | 71,266 | ||||||
Work in process | 56,401 | 45,662 | ||||||
Raw materials | 89,224 | 60,241 | ||||||
Total inventories | 601,794 | 509,889 | ||||||
Allowance for obsolescence | (9,115 | ) | (8,454 | ) | ||||
$ | 592,679 | $ | 501,435 | |||||
Estimated | June 30, | December 31, | ||||||||||
Useful Life | 2011 | 2010 | ||||||||||
Property, plant and equipment, net: | ||||||||||||
Land | $ | 46,424 | $ | 43,411 | ||||||||
Buildings and leasehold improvements | 1-40 years | 209,074 | 193,617 | |||||||||
Machinery and equipment | 2-29 years | 330,657 | 311,217 | |||||||||
Accommodations assets | 3-15 years | 952,413 | 840,002 | |||||||||
Rental tools | 4-10 years | 179,789 | 166,245 | |||||||||
Office furniture and equipment | 1-10 years | 38,946 | 36,325 | |||||||||
Vehicles | 2-10 years | 87,913 | 82,783 | |||||||||
Construction in progress | 204,308 | 113,773 | ||||||||||
Total property, plant and equipment | 2,049,524 | 1,787,373 | ||||||||||
Accumulated depreciation | (612,810 | ) | (534,716 | ) | ||||||||
$ | 1,436,714 | $ | 1,252,657 | |||||||||
F-48
Table of Contents
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Accounts payable and accrued liabilities: | ||||||||
Trade accounts payable | $ | 241,479 | $ | 224,543 | ||||
Accrued compensation | 38,421 | 47,760 | ||||||
Insurance liabilities | 9,708 | 8,615 | ||||||
Accrued taxes, other than income taxes | 8,132 | 4,887 | ||||||
Liabilities related to discontinued operations | 2,170 | 2,268 | ||||||
Other | 15,762 | 16,666 | ||||||
$ | 315,672 | $ | 304,739 | |||||
4. | EARNINGS PER SHARE |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Basic earnings per share: | ||||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 74,243 | $ | 37,477 | $ | 136,320 | $ | 77,720 | ||||||||
Weighted average number of shares outstanding | 51,231 | 50,146 | 51,083 | 50,021 | ||||||||||||
Basic earnings per share | $ | 1.45 | $ | 0.75 | $ | 2.67 | $ | 1.55 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 74,243 | $ | 37,477 | $ | 136,320 | $ | 77,720 | ||||||||
Weighted average number of shares outstanding | 51,231 | 50,146 | 51,083 | 50,021 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Options on common stock | 679 | 631 | 703 | 615 | ||||||||||||
23/8% Convertible Senior Subordinated Notes | 3,200 | 1,507 | 3,094 | 1,364 | ||||||||||||
Restricted stock awards and other | 160 | 171 | 181 | 188 | ||||||||||||
Total shares and dilutive securities | 55,270 | 52,455 | 55,061 | 52,188 | ||||||||||||
Diluted earnings per share | $ | 1.34 | $ | 0.71 | $ | 2.48 | $ | 1.49 |
5. | BUSINESS ACQUISITIONS AND GOODWILL |
F-49
Table of Contents
Three Months Ended | Six Months Ended | |||||||
June 30, 2010 | June 30, 2010 | |||||||
(Unaudited) | ||||||||
Revenues | $ | 621,203 | $ | 1,178,856 | ||||
Net income attributable to Oil States International, Inc. | 37,828 | 77,571 | ||||||
Net income per share attributable to Oil States International, Inc. common stockholders | ||||||||
Basic | $ | 0.75 | $ | 1.55 | ||||
Diluted | $ | 0.72 | $ | 1.49 |
F-50
Table of Contents
Well Site Services | ||||||||||||||||||||||||||||
Drilling | ||||||||||||||||||||||||||||
Rental | and | Offshore | Tubular | |||||||||||||||||||||||||
Tools | Other | Subtotal | Accommodations | Products | Services | Total | ||||||||||||||||||||||
Balance as of December 31, 2009 | ||||||||||||||||||||||||||||
Goodwill | $ | 169,311 | $ | 22,767 | $ | 192,078 | $ | 58,358 | $ | 85,599 | $ | 62,863 | $ | 398,898 | ||||||||||||||
Accumulated Impairment Losses | (94,528 | ) | (22,767 | ) | (117,295 | ) | — | — | (62,863 | ) | (180,158 | ) | ||||||||||||||||
74,783 | — | 74,783 | 58,358 | 85,599 | — | 218,740 | ||||||||||||||||||||||
Goodwill acquired | — | — | — | 239,080 | 15,242 | — | 254,322 | |||||||||||||||||||||
Foreign currency translation and other changes | 723 | — | 723 | 1,624 | (187 | ) | — | 2,160 | ||||||||||||||||||||
75,506 | — | 75,506 | 299,062 | 100,654 | — | 475,222 | ||||||||||||||||||||||
Balance as of December 31, 2010 | ||||||||||||||||||||||||||||
Goodwill | 170,034 | 22,767 | 192,801 | 299,062 | 100,654 | 62,863 | 655,380 | |||||||||||||||||||||
Accumulated Impairment Losses | (94,528 | ) | (22,767 | ) | (117,295 | ) | — | — | (62,863 | ) | (180,158 | ) | ||||||||||||||||
75,506 | — | 75,506 | 299,062 | 100,654 | — | 475,222 | ||||||||||||||||||||||
Goodwill acquired | — | — | — | 503 | 198 | — | 701 | |||||||||||||||||||||
Foreign currency translation and other changes | 457 | — | 457 | 14,973 | 154 | — | 15,584 | |||||||||||||||||||||
75,963 | — | 75,963 | 314,538 | 101,006 | — | 491,507 | ||||||||||||||||||||||
Balance as of June 30, 2011 | ||||||||||||||||||||||||||||
Goodwill | 170,491 | 22,767 | 193,258 | 314,538 | 101,006 | 62,863 | 671,665 | |||||||||||||||||||||
Accumulated Impairment Losses | (94,528 | ) | (22,767 | ) | (117,295 | ) | — | — | (62,863 | ) | (180,158 | ) | ||||||||||||||||
$ | 75,963 | $ | — | $ | 75,963 | $ | 314,538 | $ | 101,006 | $ | — | $ | 491,507 | |||||||||||||||
F-51
Table of Contents
6. | DEBT |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
U.S. revolving credit facility, which matures December 10, 2015, with available commitments up to $500 million and with an average interest rate of 2.8% for the six month period ended June 30, 2011 | $ | — | $ | 345,600 | ||||
U.S. term loan, which matures December 10, 2015, of $200 million; 1.25% of aggregate principal repayable per quarter in 2011, 2.5% per quarter thereafter; average interest rate of 2.6% for the six month period ended June 30, 2011 | 195,000 | 200,000 | ||||||
Canadian revolving credit facility, which matures December 10, 2015, with available commitments up to $250 million and with an average interest rate of 3.9% for the six month period ended June 30, 2011 | — | 62,538 | ||||||
Canadian term loan, which matures December 10, 2015, of $100 million; 1.25% of aggregate principal repayable per quarter in 2011, 2.5% per quarter thereafter; average interest rate of 3.7% for the six month period ended June 30, 2011 | 101,524 | 100,955 | ||||||
Australian revolving credit facility, which matures October 15, 2013, of A$75 million | — | 25,305 | ||||||
61/2% senior unsecured notes — due June 2019 | 600,000 | — | ||||||
2 3/8% contingent convertible senior subordinated notes, net — due 2025 | 166,931 | 163,108 | ||||||
Subordinated unsecured notes payable to sellers of businesses, fixed interest rate of 6%, which mature in 2012 | 4,000 | 4,000 | ||||||
Capital lease obligations and other debt | 9,851 | 11,401 | ||||||
Total debt | 1,077,306 | 912,907 | ||||||
Less: Current maturities | 192,556 | 181,175 | ||||||
Total long-term debt and capitalized leases | $ | 884,750 | $ | 731,732 | ||||
% of Principal | ||||
Twelve Month Period Beginning June 1, | Amount | |||
2014 | 104.875 | % | ||
2015 | 103.250 | % | ||
2016 | 101.625 | % | ||
2017 | 100.000 | % |
F-52
Table of Contents
June 30, 2011 | December 31, 2010 | |||||||
Carrying amount of the equity component in additional paid-in capital | $ | 28,449 | $ | 28,449 | ||||
Principal amount of the liability component | $ | 175,000 | $ | 175,000 | ||||
Less: Unamortized discount | 8,069 | 11,892 | ||||||
Net carrying amount of the liability component | $ | 166,931 | $ | 163,108 | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Interest expense | $ | 2,968 | $ | 2,835 | $ | 5,901 | $ | 5,638 |
F-53
Table of Contents
June 30, 2011 | ||||
Remaining period over which discount will be amortized | 1.0 years | |||
Conversion price | $31.75 | |||
Number of shares to be delivered upon conversion(1) | 3,321,836 | |||
Conversion value in excess of principal amount (in thousands)(1) | $265,448 | |||
Derivative transactions entered into in connection with the convertible notes | None |
(1) | Calculation is based on the Company’s June 30, 2011 closing stock price of $79.91. |
June 30, 2011 | December 31, 2010 | |||||||||||||||||||
Interest | Carrying | Fair | Carrying | Fair | ||||||||||||||||
Rate | Value | Value | Value | Value | ||||||||||||||||
61/2% Notes | ||||||||||||||||||||
Principal amount due 2019 | 61/2 | % | $ | 600,000 | $ | 606,750 | $ | — | $ | — | ||||||||||
23/8% Notes | ||||||||||||||||||||
Principal amount due 2025 | 23/8 | % | $ | 175,000 | $ | 440,767 | $ | 175,000 | $ | 354,057 | ||||||||||
Less: unamortized discount | 8,069 | — | 11,892 | — | ||||||||||||||||
Net value | $ | 166,931 | $ | 440,767 | $ | 163,108 | $ | 354,057 | ||||||||||||
F-54
Table of Contents
7. | COMPREHENSIVE INCOME AND CHANGES IN COMMON STOCK OUTSTANDING |
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income | $ | 74,469 | $ | 37,608 | $ | 136,820 | $ | 78,023 | ||||||||
Other comprehensive income: | ||||||||||||||||
Foreign currency translation adjustment | 35,052 | (23,788 | ) | 65,715 | (15,203 | ) | ||||||||||
Total other comprehensive income/(loss) | 35,052 | (23,788 | ) | 65,715 | (15,203 | ) | ||||||||||
Comprehensive income | 109,521 | 13,820 | 202,535 | 62,820 | ||||||||||||
Comprehensive income attributable to noncontrolling interest | (226 | ) | (131 | ) | (500 | ) | (303 | ) | ||||||||
Comprehensive income attributable to Oil States International, Inc. | $ | 109,295 | $ | 13,689 | $ | 202,035 | $ | 62,517 | ||||||||
Shares of common stock outstanding — January 1, 2011 | 50,838,863 | |||
Shares issued upon exercise of stock options and vesting of stock awards | 510,685 | |||
Shares withheld for taxes on vesting of restricted stock awards and transferred to treasury | (32,923 | ) | ||
Shares of common stock outstanding — June 30, 2011 | 51,316,625 | |||
8. | STOCK BASED COMPENSATION |
F-55
Table of Contents
9. | INCOME TAXES |
10. | SEGMENT AND RELATED INFORMATION |
Equity in | ||||||||||||||||||||||||
Revenues from | Depreciation | Income/(Loss) of | ||||||||||||||||||||||
Unaffiliated | and | Operating | Unconsolidated | Capital | ||||||||||||||||||||
Three Months Ended June 30, 2011 | Customers | Amortization | Income (Loss) | Affiliates | Expenditures | Total Assets | ||||||||||||||||||
Well site services — Rental tools | $ | 112,658 | $ | 10,299 | $ | 25,103 | $ | — | $ | 18,654 | $ | 410,370 | ||||||||||||
Drilling services | 40,998 | 4,806 | 6,370 | — | 5,754 | 116,672 | ||||||||||||||||||
Total well site services | 153,656 | 15,105 | 31,473 | — | 24,408 | 527,042 | ||||||||||||||||||
Accommodations | 202,943 | 26,195 | 57,750 | (1 | ) | 106,873 | 1,700,385 | |||||||||||||||||
Offshore products | 131,742 | 3,358 | 18,770 | (228 | ) | 3,519 | 588,472 | |||||||||||||||||
Tubular services | 331,976 | 377 | 16,956 | 231 | 2,780 | 521,675 | ||||||||||||||||||
Corporate and eliminations | — | 203 | (9,786 | ) | — | 64 | 87,480 | |||||||||||||||||
Total | $ | 820,317 | $ | 45,238 | $ | 115,163 | $ | 2 | $ | 137,644 | $ | 3,425,054 | ||||||||||||
F-56
Table of Contents
Equity in | ||||||||||||||||||||||||
Revenues from | Depreciation | Income/(Loss) of | ||||||||||||||||||||||
Unaffiliated | and | Operating | Unconsolidated | Capital | ||||||||||||||||||||
Three Months Ended June 30, 2010 | Customers | Amortization | Income (Loss) | Affiliates | Expenditures | Total Assets | ||||||||||||||||||
Well site services — Rental tools | $ | 79,119 | $ | 10,405 | $ | 10,395 | $ | — | $ | 10,446 | $ | 351,981 | ||||||||||||
Drilling services | 34,137 | 6,198 | (1,070 | ) | — | 3,546 | 114,071 | |||||||||||||||||
Total well site services | 113,256 | 16,603 | 9,325 | — | 13,992 | 466,052 | ||||||||||||||||||
Accommodations | 121,956 | 10,707 | 31,300 | — | 20,029 | 615,982 | ||||||||||||||||||
Offshore products | 106,005 | 2,770 | 16,087 | — | 1,942 | 484,852 | ||||||||||||||||||
Tubular services | 253,315 | 341 | 9,297 | 34 | 2,752 | 405,654 | ||||||||||||||||||
Corporate and eliminations | — | 179 | (8,256 | ) | — | 188 | 22,473 | |||||||||||||||||
Total | $ | 594,532 | $ | 30,600 | $ | 57,753 | $ | 34 | $ | 38,903 | $ | 1,995,013 | ||||||||||||
Equity in | ||||||||||||||||||||||||
Revenues from | Depreciation | Income/(Loss) of | ||||||||||||||||||||||
Unaffiliated | and | Operating | Unconsolidated | Capital | ||||||||||||||||||||
Six Months Ended June 30, 2011 | Customers | Amortization | Income (Loss) | Affiliates | Expenditures | Total Assets | ||||||||||||||||||
Well site services — Rental tools | $ | 220,189 | $ | 20,095 | $ | 49,493 | $ | — | $ | 35,495 | $ | 410,370 | ||||||||||||
Drilling services | 74,103 | 9,739 | 8,605 | — | 12,922 | 116,672 | ||||||||||||||||||
Total well site services | 294,292 | 29,834 | 58,098 | — | 48,417 | 527,042 | ||||||||||||||||||
Accommodations | 400,041 | 52,748 | 106,723 | 2 | 168,915 | 1,700,385 | ||||||||||||||||||
Offshore products | 260,184 | 6,692 | 35,520 | (228 | ) | 7,574 | 588,472 | |||||||||||||||||
Tubular services | 626,241 | 728 | 30,002 | 279 | 5,151 | 521,675 | ||||||||||||||||||
Corporate and eliminations | — | 388 | (20,404 | ) | — | 196 | 87,480 | |||||||||||||||||
Total | $ | 1,580,758 | $ | 90,390 | $ | 209,939 | $ | 53 | $ | 230,253 | $ | 3,425,054 | ||||||||||||
Equity in | ||||||||||||||||||||||||
Revenues from | Depreciation | Income/(Loss) of | ||||||||||||||||||||||
Unaffiliated | and | Operating | Unconsolidated | Capital | ||||||||||||||||||||
Six Months Ended June 30, 2010 | Customers | Amortization | Income (Loss) | Affiliates | Expenditures | Total Assets | ||||||||||||||||||
Well site services — Rental tools | $ | 146,622 | $ | 20,915 | $ | 14,772 | $ | — | $ | 17,026 | $ | 351,981 | ||||||||||||
Drilling services | 64,538 | 12,862 | (3,052 | ) | — | 4,537 | 114,071 | |||||||||||||||||
Total well site services | 211,160 | 33,777 | 11,720 | — | 21,563 | 466,052 | ||||||||||||||||||
Accommodations | 267,489 | 21,283 | 78,668 | — | 45,441 | 615,982 | ||||||||||||||||||
Offshore products | 208,998 | 5,575 | 28,708 | — | 5,980 | 484,852 | ||||||||||||||||||
Tubular services | 439,230 | 685 | 15,512 | 64 | 2,843 | 405,654 | ||||||||||||||||||
Corporate and eliminations | — | 358 | (17,050 | ) | — | 250 | 22,473 | |||||||||||||||||
Total | $ | 1,126,877 | $ | 61,678 | $ | 117,558 | $ | 64 | $ | 76,077 | $ | 1,995,013 | ||||||||||||
F-57
Table of Contents
11. | COMMITMENTS AND CONTINGENCIES |
12. | CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
F-58
Table of Contents
Three Months Ended June 30, 2011 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor | Subsidiaries | Guarantors | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
REVENUES | ||||||||||||||||||||
Operating revenues | $ | — | $ | 582,948 | $ | 237,369 | $ | — | $ | 820,317 | ||||||||||
Intercompany revenues | — | 1,645 | 216 | (1,861 | ) | — | ||||||||||||||
Total revenues | — | 584,593 | 237,585 | (1,861 | ) | 820,317 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of sales and services | — | 480,126 | 137,528 | (876 | ) | 616,778 | ||||||||||||||
Intercompany cost of sales and services | — | 778 | 207 | (985 | ) | — | ||||||||||||||
Selling, general and administrative expenses | 9,535 | 19,759 | 13,471 | — | 42,765 | |||||||||||||||
Depreciation and amortization expense | 203 | 19,300 | 25,737 | (2 | ) | 45,238 | ||||||||||||||
Other operating (income)/expense | 49 | (40 | ) | 364 | — | 373 | ||||||||||||||
Operating income (loss) | (9,787 | ) | 64,670 | 60,278 | 2 | 115,163 | ||||||||||||||
Interest expense, net of capitalized interest | (11,061 | ) | (342 | ) | (17,978 | ) | 16,849 | (12,532 | ) | |||||||||||
Interest income | 2,648 | 778 | 13,658 | (16,849 | ) | 235 | ||||||||||||||
Equity in earnings of unconsolidated affiliates | 91,788 | 5,796 | (229 | ) | (97,353 | ) | 2 | |||||||||||||
Other income/(expense) | — | 274 | 214 | — | 488 | |||||||||||||||
Income before income taxes | 73,588 | 71,176 | 55,943 | (97,351 | ) | 103,356 | ||||||||||||||
Income tax provision | 654 | (14,748 | ) | (14,793 | ) | — | (28,887 | ) | ||||||||||||
Net income | 74,242 | 56,428 | 41,150 | (97,351 | ) | 74,469 | ||||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 209 | 17 | 226 | |||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 74,242 | $ | 56,428 | $ | 40,941 | $ | (97,368 | ) | $ | 74,243 | |||||||||
F-59
Table of Contents
Three Months Ended June 30, 2010 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
REVENUES | ||||||||||||||||||||
Operating revenues | $ | — | $ | 425,979 | $ | 168,553 | $ | — | $ | 594,532 | ||||||||||
Intercompany revenues | — | 4,653 | 120 | (4,773 | ) | — | ||||||||||||||
Total revenues | — | 430,632 | 168,673 | (4,773 | ) | 594,532 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of sales and services | — | 363,640 | 107,580 | (1,738 | ) | 469,482 | ||||||||||||||
Intercompany cost of sales and services | — | 2,992 | 43 | (3,035 | ) | — | ||||||||||||||
Selling, general and administrative expenses | 8,077 | 19,997 | 9,109 | — | 37,183 | |||||||||||||||
Depreciation and amortization expense | 179 | 18,763 | 11,660 | (2 | ) | 30,600 | ||||||||||||||
Other operating (income)/expense | — | (139 | ) | (347 | ) | — | (486 | ) | ||||||||||||
Operating income (loss) | (8,256 | ) | 25,379 | 40,628 | 2 | 57,753 | ||||||||||||||
Interest expense | (3,272 | ) | (142 | ) | (119 | ) | 33 | (3,500 | ) | |||||||||||
Interest income | — | 18 | 118 | (33 | ) | 103 | ||||||||||||||
Equity in earnings of unconsolidated affiliates | 48,374 | 8,666 | — | (57,006 | ) | 34 | ||||||||||||||
Other income/(expense) | — | 160 | (352 | ) | — | (192 | ) | |||||||||||||
Income before income taxes | 36,846 | 34,081 | 40,275 | (57,004 | ) | 54,198 | ||||||||||||||
Income tax provision | 631 | (6,843 | ) | (10,378 | ) | — | (16,590 | ) | ||||||||||||
Net income | 37,477 | 27,238 | 29,897 | (57,004 | ) | 37,608 | ||||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 128 | 3 | 131 | |||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 37,477 | $ | 27,238 | $ | 29,769 | $ | (57,007 | ) | $ | 37,477 | |||||||||
F-60
Table of Contents
Six Months Ended June 30, 2011 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
REVENUES | ||||||||||||||||||||
Operating revenues | $ | — | $ | 1,106,232 | $ | 474,526 | $ | — | $ | 1,580,758 | ||||||||||
Intercompany revenues | — | 3,301 | 532 | (3,833 | ) | — | ||||||||||||||
Total revenues | — | 1,109,533 | 475,058 | (3,833 | ) | 1,580,758 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of sales and services | — | 913,322 | 279,454 | (1,600 | ) | 1,191,176 | ||||||||||||||
Intercompany cost of sales and services | — | 1,852 | 381 | (2,233 | ) | — | ||||||||||||||
Selling, general and administrative expenses | 18,934 | 39,403 | 28,135 | — | 86,472 | |||||||||||||||
Depreciation and amortization expense | 388 | 40,806 | 49,199 | (3 | ) | 90,390 | ||||||||||||||
Other operating (income)/expense | 1,082 | (156 | ) | 1,854 | 1 | 2,781 | ||||||||||||||
Operating income (loss) | (20,404 | ) | 114,306 | 116,035 | 2 | 209,939 | ||||||||||||||
Interest expense, net of capitalized interest | (19,472 | ) | (688 | ) | (40,435 | ) | 37,814 | (22,781 | ) | |||||||||||
Interest income | 5,217 | 6,561 | 27,283 | (37,813 | ) | 1,248 | ||||||||||||||
Equity in earnings of unconsolidated affiliates | 169,682 | 12,981 | (226 | ) | (182,384 | ) | 53 | |||||||||||||
Other income/(expense) | — | 424 | 207 | — | 631 | |||||||||||||||
Income before income taxes | 135,023 | 133,584 | 102,864 | (182,381 | ) | 189,090 | ||||||||||||||
Income tax provision | 1,297 | (28,955 | ) | (24,612 | ) | — | (52,270 | ) | ||||||||||||
Net income | 136,320 | 104,629 | 78,252 | (182,381 | ) | 136,820 | ||||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 477 | 23 | 500 | |||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 136,320 | $ | 104,629 | $ | 77,775 | $ | (182,404 | ) | $ | 136,320 | |||||||||
F-61
Table of Contents
Six Months Ended June 30, 2010 | ||||||||||||||||||||
Oil States | Other | |||||||||||||||||||
International, | Subsidiaries | Consolidated Oil | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | States International | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
REVENUES | ||||||||||||||||||||
Operating revenues | $ | — | $ | 753,054 | $ | 373,823 | $ | — | $ | 1,126,877 | ||||||||||
Intercompany revenues | — | 18,208 | 126 | (18,334 | ) | — | ||||||||||||||
Total revenues | — | 771,262 | 373,949 | (18,334 | ) | 1,126,877 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of sales and services | — | 646,042 | 234,712 | (4,762 | ) | 875,992 | ||||||||||||||
Intercompany cost of sales and services | — | 13,518 | 54 | (13,572 | ) | — | ||||||||||||||
Selling, general and administrative expenses | 16,793 | 38,002 | 17,541 | — | 72,336 | |||||||||||||||
Depreciation and amortization expense | 358 | 38,149 | 23,174 | (3 | ) | 61,678 | ||||||||||||||
Other operating (income)/expense | (102 | ) | (263 | ) | (322 | ) | — | (687 | ) | |||||||||||
Operating income (loss) | (17,049 | ) | 35,814 | 98,790 | 3 | 117,558 | ||||||||||||||
Interest expense | (6,499 | ) | (291 | ) | (249 | ) | 68 | (6,971 | ) | |||||||||||
Interest income | — | 48 | 201 | (68 | ) | 181 | ||||||||||||||
Equity in earnings of unconsolidated affiliates | 100,050 | 17,156 | — | (117,142 | ) | 64 | ||||||||||||||
Other income/(expense) | — | 950 | (380 | ) | — | 570 | ||||||||||||||
Income before income taxes | 76,502 | 53,677 | 98,362 | (117,139 | ) | 111,402 | ||||||||||||||
Income tax provision | 1,219 | (7,318 | ) | (27,280 | ) | — | (33,379 | ) | ||||||||||||
Net income | 77,721 | 46,359 | 71,082 | (117,139 | ) | 78,023 | ||||||||||||||
Less: Net income attributable to non-controlling interest | — | — | 305 | (2 | ) | 303 | ||||||||||||||
Net income attributable to Oil States International, Inc. | $ | 77,721 | $ | 46,359 | $ | 70,777 | $ | (117,137 | ) | $ | 77,720 | |||||||||
F-62
Table of Contents
June 30, 2011 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 32,161 | $ | 12,301 | $ | 78,842 | $ | — | $ | 123,304 | ||||||||||
Accounts receivable, net | 1,568 | 322,722 | 227,734 | — | 552,024 | |||||||||||||||
Inventories, net | — | 490,553 | 102,126 | — | 592,679 | |||||||||||||||
Prepaid expenses and other current assets | 3,305 | 4,998 | 21,047 | — | 29,350 | |||||||||||||||
Total current assets | 37,034 | 830,574 | 429,749 | — | 1,297,357 | |||||||||||||||
Property, plant and equipment, net | 1,737 | 419,410 | 1,015,594 | (27 | ) | 1,436,714 | ||||||||||||||
Goodwill, net | — | 172,257 | 319,250 | — | 491,507 | |||||||||||||||
Other intangible assets, net | — | 32,180 | 105,781 | — | 137,961 | |||||||||||||||
Long-term intercompany receivables (payables) | 757,166 | (366,722 | ) | (397,408 | ) | 6,964 | — | |||||||||||||
Other noncurrent assets | 1,993,171 | 220,802 | 11,318 | (2,163,776 | ) | 61,515 | ||||||||||||||
Total assets | $ | 2,789,108 | $ | 1,308,501 | $ | 1,484,284 | $ | (2,156,839 | ) | $ | 3,425,054 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 18,234 | $ | 193,257 | $ | 104,182 | $ | (1 | ) | $ | 315,672 | |||||||||
Income taxes | (43,374 | ) | 47,519 | 3,284 | — | 7,429 | ||||||||||||||
Current portion of long-term debt and capitalized leases | 181,936 | 2,437 | 8,183 | — | 192,556 | |||||||||||||||
Deferred revenue | — | 43,166 | 11,432 | — | 54,598 | |||||||||||||||
Other current liabilities | — | 6,241 | 300 | — | 6,541 | |||||||||||||||
Total current liabilities | 156,796 | 292,620 | 127,381 | (1 | ) | 576,796 | ||||||||||||||
Long-term debt and capitalized leases | 780,005 | 9,571 | 95,174 | — | 884,750 | |||||||||||||||
Deferred income taxes | (8,861 | ) | 48,699 | 50,936 | — | 90,774 | ||||||||||||||
Other noncurrent liabilities | 10,488 | 10,321 | 652 | (449 | ) | 21,012 | ||||||||||||||
Total liabilities | 938,428 | 361,211 | 274,143 | (450 | ) | 1,573,332 | ||||||||||||||
Stockholders’ equity | 1,850,680 | 947,290 | 1,209,288 | (2,156,578 | ) | 1,850,680 | ||||||||||||||
Non-controlling interest | — | — | 853 | 189 | 1,042 | |||||||||||||||
Total stockholders’ equity | 1,850,680 | 947,290 | 1,210,141 | (2,156,389 | ) | 1,851,722 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,789,108 | $ | 1,308,501 | $ | 1,484,284 | $ | (2,156,839 | ) | $ | 3,425,054 | |||||||||
F-63
Table of Contents
December 31, 2010 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | (180 | ) | $ | 1,170 | $ | 95,360 | $ | — | $ | 96,350 | |||||||||
Accounts receivable, net | 852 | 303,771 | 174,116 | — | 478,739 | |||||||||||||||
Inventories, net | — | 429,427 | 72,008 | — | 501,435 | |||||||||||||||
Prepaid expenses and other current assets | 6,243 | 10,796 | 6,441 | — | 23,480 | |||||||||||||||
Total current assets | 6,915 | 745,164 | 347,925 | — | 1,100,004 | |||||||||||||||
Property, plant and equipment, net | 1,930 | 394,335 | 856,422 | (30 | ) | 1,252,657 | ||||||||||||||
Goodwill, net | — | 171,135 | 304,087 | — | 475,222 | |||||||||||||||
Other intangible assets, net | — | 34,894 | 104,527 | — | 139,421 | |||||||||||||||
Investments in unconsolidated affiliates | 1,723,711 | 200,652 | 569 | (1,918,995 | ) | 5,937 | ||||||||||||||
Long-term intercompany receivables (payables) | 567,560 | (50,475 | ) | (524,050 | ) | 6,965 | — | |||||||||||||
Other noncurrent assets | 33,562 | 336 | 8,860 | — | 42,758 | |||||||||||||||
Total assets | $ | 2,333,678 | $ | 1,496,041 | $ | 1,098,340 | $ | (1,912,060 | ) | $ | 3,015,999 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 28,650 | $ | 202,503 | $ | 73,585 | $ | 1 | $ | 304,739 | ||||||||||
Income taxes | (31,363 | ) | 30,919 | 5,048 | — | 4,604 | ||||||||||||||
Current portion of long-term debt and capitalized leases | 173,122 | 2,424 | 5,629 | — | 181,175 | |||||||||||||||
Deferred revenue | — | 44,981 | 15,866 | — | 60,847 | |||||||||||||||
Other current liabilities | — | 1,727 | 1,083 | — | 2,810 | |||||||||||||||
Total current liabilities | 170,409 | 282,554 | 101,211 | 1 | 554,175 | |||||||||||||||
Long-term debt and capitalized leases | 536,747 | 9,774 | 185,211 | — | 731,732 | |||||||||||||||
Deferred income taxes | (10,816 | ) | 48,642 | 43,372 | — | 81,198 | ||||||||||||||
Other noncurrent liabilities | 9,432 | 10,141 | 837 | (449 | ) | 19,961 | ||||||||||||||
Total liabilities | 705,772 | 351,111 | 330,631 | (448 | ) | 1,387,066 | ||||||||||||||
Stockholders’ equity | 1,627,906 | 1,144,930 | 766,848 | (1,911,778 | ) | 1,627,906 | ||||||||||||||
Non-controlling interest | — | — | 861 | 166 | 1,027 | |||||||||||||||
Total stockholders’ equity | 1,627,906 | 1,144,930 | 767,709 | (1,911,612 | ) | 1,628,933 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,333,678 | $ | 1,496,041 | $ | 1,098,340 | $ | (1,912,060 | ) | $ | 3,015,999 | |||||||||
F-64
Table of Contents
Six Months Ended June 30, 2011 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: | $ | (54,893 | ) | $ | 84,969 | $ | 66,559 | $ | — | $ | 96,635 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Capital expenditures, including capitalized interest | (195 | ) | (62,356 | ) | (167,702 | ) | — | (230,253 | ) | |||||||||||
Acquisitions of businesses, net of cash acquired | — | (212 | ) | — | — | (212 | ) | |||||||||||||
Proceeds from (funding of) accounts and notes receivable with affiliates, net | — | (317,224 | ) | 317,224 | — | — | ||||||||||||||
Other, net | — | (1,241 | ) | 391 | — | (850 | ) | |||||||||||||
Net cash provided by (used in) investing activities | (195 | ) | (381,033 | ) | 149,913 | — | (231,315 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Revolving credit borrowings (repayments), net | (346,742 | ) | — | (81,940 | ) | — | (428,682 | ) | ||||||||||||
61/2% senior notes issued | 600,000 | — | — | — | 600,000 | |||||||||||||||
Term loan repayments | (5,000 | ) | — | (2,494 | ) | — | (7,494 | ) | ||||||||||||
Debt and capital lease payments | (10 | ) | (230 | ) | (347 | ) | — | (587 | ) | |||||||||||
Issuance of common stock fromshare-based payment arrangements | 9,792 | — | — | — | 9,792 | |||||||||||||||
Excess tax benefits from share-based payment arrangements | 6,198 | — | — | — | 6,198 | |||||||||||||||
Payment of financing costs | (12,640 | ) | — | — | — | (12,640 | ) | |||||||||||||
Proceeds from (funding of) accounts and notes with affiliates, net | (161,713 | ) | 307,523 | (145,810 | ) | — | — | |||||||||||||
Other, net | (2,456 | ) | — | — | — | (2,456 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 87,429 | 307,293 | (230,591 | ) | — | 164,131 | ||||||||||||||
Effect of exchange rate changes on cash | — | — | (2,399 | ) | — | (2,399 | ) | |||||||||||||
Net change in cash and cash equivalents from continuing operations | 32,341 | 11,229 | (16,518 | ) | — | 27,052 | ||||||||||||||
Net cash used in discontinued operations operating activities | — | (98 | ) | — | — | (98 | ) | |||||||||||||
Cash and cash equivalents, beginning of period | (180 | ) | 1,170 | 95,360 | — | 96,350 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 32,161 | $ | 12,301 | $ | 78,842 | $ | — | $ | 123,304 | ||||||||||
F-65
Table of Contents
Six Months Ended June 30, 2010 | ||||||||||||||||||||
Oil States | Other | Consolidated Oil | ||||||||||||||||||
International, | Subsidiaries | States | ||||||||||||||||||
Inc. (Parent/ | Guarantor | (Non- | Consolidating | International, | ||||||||||||||||
Guarantor) | Subsidiaries | Guarantors) | Adjustments | Inc. | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: | $ | (38,873 | ) | $ | 48,195 | $ | 76,533 | $ | — | $ | 85,855 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Capital expenditures, including capitalized interest | (250 | ) | (28,456 | ) | (47,371 | ) | — | (76,077 | ) | |||||||||||
Other, net | — | 1,337 | 516 | — | 1,853 | |||||||||||||||
Net cash provided by (used in) investing activities | (250 | ) | (27,119 | ) | (46,855 | ) | — | (74,224 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Debt and capital lease payments | (15 | ) | (198 | ) | (42 | ) | — | (255 | ) | |||||||||||
Issuance of common stock from share-based payment arrangements | 7,288 | — | — | — | 7,288 | |||||||||||||||
Excess tax benefits from share-based payment arrangements | 985 | — | — | — | 985 | |||||||||||||||
Proceeds from (funding of) accounts and notes with affiliates, net | 26,887 | (20,554 | ) | (6,333 | ) | — | — | |||||||||||||
Other, net | (1,362 | ) | (1 | ) | — | — | (1,363 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 33,783 | (20,753 | ) | (6,375 | ) | — | 6,655 | |||||||||||||
Effect of exchange rate changes on cash | — | — | (5,005 | ) | — | (5,005 | ) | |||||||||||||
Net change in cash and cash equivalents from continuing operations | (5,340 | ) | 323 | 18,298 | — | 13,281 | ||||||||||||||
Net cash used in discontinued operations operating activities | — | (75 | ) | — | — | (75 | ) | |||||||||||||
Cash and cash equivalents, beginning of period | 7,148 | 148 | 82,446 | — | 89,742 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 1,808 | $ | 396 | $ | 100,744 | $ | — | $ | 102,948 | ||||||||||
F-66
Table of Contents
F-67
Table of Contents
Consolidated | ||||||||
Note | 2010 | |||||||
A$000 | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | 9 | 3,389 | ||||||
Trade and other receivables | 10 | 19,171 | ||||||
Inventories | 11 | 773 | ||||||
TOTAL CURRENT ASSETS | 23,333 | |||||||
NON-CURRENT ASSETS | ||||||||
Receivables | 1,143 | |||||||
Property, plant and equipment | 185,626 | |||||||
Intangible assets | 595 | |||||||
TOTAL NON-CURRENT ASSETS | 187,364 | |||||||
TOTAL ASSETS | 210,697 | |||||||
CURRENT LIABILITIES | ||||||||
Trade and other payables | 14 | 9,758 | ||||||
Interest bearing loans and borrowings | 15 | 609 | ||||||
Income tax payable | 6d | 1,619 | ||||||
Provisions | 16 | 1,474 | ||||||
TOTAL CURRENT LIABILITIES | 13,460 | |||||||
NON-CURRENT LIABILITIES | ||||||||
Interest bearing loans and borrowings | 15 | 41,000 | ||||||
Deferred tax liability | 6e | 3,368 | ||||||
Provisions | 16 | 118 | ||||||
Derivative financial instruments | 17 | 573 | ||||||
TOTAL NON-CURRENT LIABILITIES | 45,059 | |||||||
TOTAL LIABILITIES | 58,519 | |||||||
NET ASSETS | 152,178 | |||||||
EQUITY | ||||||||
Contributed equity | 18 | 110,448 | ||||||
Retained earnings | 41,547 | |||||||
Reserves | 19 | 183 | ||||||
TOTAL EQUITY | 152,178 | |||||||
F-68
Table of Contents
Consolidated | ||||||||
Note | 2010 | |||||||
A$000 | ||||||||
Rendering of services | 82,323 | |||||||
Sale of goods | 30,287 | |||||||
Rental revenue | 437 | |||||||
Other revenue | 4 | 441 | ||||||
Total revenue | 113,488 | |||||||
Changes in inventories of finished goods and work in progress | (91 | ) | ||||||
Raw materials and consumables used | (23,655 | ) | ||||||
Depreciation and amortisation expenses | 5b | (14,368 | ) | |||||
Consultants and advisors | (1,365 | ) | ||||||
Employee benefits expense | 5c | (24,289 | ) | |||||
Freight and travel expenses | (1,023 | ) | ||||||
Rent and occupancy costs | (2,214 | ) | ||||||
Repairs and maintenance expense | (2,019 | ) | ||||||
Other expenses | (1,877 | ) | ||||||
Finance costs | 5d | (3,737 | ) | |||||
Profit before income tax | 38,850 | |||||||
Income tax expense | 6a | (11,333 | ) | |||||
Profit after income tax | 27,517 | |||||||
Other comprehensive income | ||||||||
Unrealised gain from cash flow hedges, net of tax | 424 | |||||||
Total comprehensive income for the period | 27,941 | |||||||
Earnings per share for profit attributable to ordinary equity holders of the parent Basic earnings per share (cents per share) | 8 | 16.67 | ||||||
Diluted earnings per share (cents per share) | 8 | 16.63 |
F-69
Table of Contents
Contributed | Retained | Option | Hedge | |||||||||||||||||
Equity | Earnings | Reserve | Reserve | Total | ||||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | ||||||||||||||||
CONSOLIDATED | ||||||||||||||||||||
Balance at 1 July 2009 | 107,743 | 28,490 | 339 | (825 | ) | 135,747 | ||||||||||||||
Profit for the year | — | 27,517 | — | — | 27,517 | |||||||||||||||
Other comprehensive income | — | — | — | 424 | 424 | |||||||||||||||
Total comprehensive income for the period | — | 27,517 | — | 424 | 27,941 | |||||||||||||||
Transactions with owners in their capacity as owners | ||||||||||||||||||||
Issue of ordinary shares | 2,705 | — | — | — | 2,705 | |||||||||||||||
Equity settled share based payments | — | — | 245 | — | 245 | |||||||||||||||
Dividends | — | (14,460 | ) | — | — | (14,460 | ) | |||||||||||||
Total transactions with owners | 2,705 | (14,460 | ) | 245 | — | (11,510 | ) | |||||||||||||
Balance at 30 June 2010 | 110,448 | 41,547 | 584 | (401 | ) | 152,178 | ||||||||||||||
F-70
Table of Contents
Consolidated | ||||||||
Note | 2010 | |||||||
A$000 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Receipts from customers | 125,292 | |||||||
Payments to suppliers and employees | (74,189 | ) | ||||||
Interest received | 197 | |||||||
Finance costs | (3,737 | ) | ||||||
Income tax paid | (8,656 | ) | ||||||
Net cash provided by operating activities | 20a | 38,907 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Payment for property, plant and equipment | (15,872 | ) | ||||||
Proceeds from the sale of property, plant and equipment | 232 | |||||||
Net cash used in investing activities | (15,640 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from the issue of shares | 2,705 | |||||||
Proceeds from borrowings | 10,000 | |||||||
Repayment of borrowings | (20,130 | ) | ||||||
Proceeds from the repayment of share scheme loans | 345 | |||||||
Dividends paid | (14,331 | ) | ||||||
Net cash used in by financing activities | (21,411 | ) | ||||||
Net increase in cash held | 1,856 | |||||||
Cash at beginning of year | 1,533 | |||||||
Cash at end of year | 9 | 3,389 | ||||||
F-71
Table of Contents
Notes to the Financial Statements
NOTE 1: | CORPORATE INFORMATION |
NOTE 2: | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a) | Basis of preparation |
b) | New accounting Standards and Interpretations |
F-72
Table of Contents
F-73
Table of Contents
c) | Basis of consolidation |
d) | Operating segments |
F-74
Table of Contents
e) | Cash and cash equivalents |
f) | Trade and other receivables |
g) | Inventories |
h) | Derivative financial instruments and hedging |
F-75
Table of Contents
i) | Cash flow hedges |
i) | Non-current assets held for sale |
j) | Other financial assets |
i) | Financial assets at fair value through profit or loss |
F-76
Table of Contents
ii) | Held-to-maturity investments |
iii) | Loans and receivables |
iv) | Available-for-sale financial assets |
k) | Property, plant and equipment |
F-77
Table of Contents
Depreciation | ||||
Class of Fixed Asset | Rate | |||
Buildings | 6.7-30 | % | ||
Plant and equipment | 7.5-50 | % | ||
Leasehold Improvements | 20-33 | % |
l) | Leases |
m) | Impairment of non-financial assets other than goodwill and indefinite life intangibles |
n) | Goodwill and intangibles |
F-78
Table of Contents
o) | Trade and other payables |
F-79
Table of Contents
p) | Interest bearing loans and borrowings |
q) | Provisions and employee benefits |
i) | Wages, salaries and annual leave |
ii) | Long service leave |
r) | Share-based payment transactions |
F-80
Table of Contents
s) | Contributed equity |
t) | Revenue recognition |
i) | Rendering of services |
ii) | Sale of goods |
iv) | Interest revenue |
u) | Income tax |
F-81
Table of Contents
v) | Goods and Services Tax (“GST”) |
F-82
Table of Contents
w) | Earnings per share |
x) | Significant accounting judgements, estimates and assumptions |
i) | Impairment of non-financial assets other than goodwill and indefinite life intangibles |
ii) | Impairment of goodwill and intangibles with indefinite useful lives |
F-83
Table of Contents
NOTE 3: | OPERATING SEGMENTS |
a) | Identification of reportable segments |
b) | Types of products and services |
i) | Accommodation Services |
ii) | Other |
c) | Accounting policies and intersegment transactions |
d) | Major customers |
e) | Customers and assets by area |
F-84
Table of Contents
Accommodation | Segment | Consolidated | ||||||||||||||||||
Services | Other | Total | Eliminations | Total | ||||||||||||||||
2010 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | ||||||||||||||||
Revenue | ||||||||||||||||||||
Revenue from rendering of services | 79,298 | 3,025 | 82,323 | — | 82,323 | |||||||||||||||
Revenue from sale of goods | 28,808 | 1,479 | 30,287 | — | 30,287 | |||||||||||||||
Other revenue | 679 | 199 | 878 | — | 878 | |||||||||||||||
External segment revenue | 108,785 | 4,703 | 113,488 | — | 113,488 | |||||||||||||||
Inter-segment revenue | 366 | 1,025 | 1,391 | (1,391 | ) | — | ||||||||||||||
Total segment revenue | 109,151 | 5,728 | 114,879 | (1,391 | ) | 113,488 | ||||||||||||||
Result | ||||||||||||||||||||
EBITDA | 67,502 | (2,477 | ) | 65,025 | (32 | ) | 64,993 | |||||||||||||
Depreciation | (13,117 | ) | (973 | ) | (14,090 | ) | — | (14,090 | ) | |||||||||||
EBIT | 54,385 | (3,450 | ) | 50,935 | (32 | ) | 50,903 | |||||||||||||
Corporate Overheads | (8,316 | ) | ||||||||||||||||||
Financing costs | (3,737 | ) | ||||||||||||||||||
Profit before income tax | 38,850 | |||||||||||||||||||
Income tax expense | (11,333 | ) | ||||||||||||||||||
Profit after income tax | 27,517 | |||||||||||||||||||
Segment assets | 202,549 | 8,148 | 210,697 | — | 210,697 | |||||||||||||||
Capital expenditure | 14,307 | 1,565 | 15,872 | — | 15,872 | |||||||||||||||
Segment liabilities | 52,294 | 6,225 | 58,519 | — | 58,519 | |||||||||||||||
NOTE 4: | OTHER REVENUE |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Interest | 197 | |||
Other | 244 | |||
441 | ||||
F-85
Table of Contents
NOTE 5: | EXPENSES |
a) | Cost of sales | 23,746 | ||||
b) | Depreciation and amortisation included in statement of comprehensive income Depreciation | 14,325 | ||||
Amortisation of leasehold improvements | 43 | |||||
14,368 | ||||||
c) | Employee benefits expense | |||||
Wages and salaries | 23,172 | |||||
Share-based payments expense | 245 | |||||
Other employee benefits expense | 872 | |||||
24,289 | ||||||
d) | Finance costs | |||||
Interest expense on financial liabilities | 3,737 | |||||
e) | Rental expense on operating leases | |||||
Minimum lease payments | 1,178 | |||||
NOTE 6: | INCOME TAX |
Consolidated | ||||||
2010 | ||||||
A$000 | ||||||
a) | Income tax expense | |||||
The major components of income tax expense are: | ||||||
Current income tax | ||||||
Current income tax charge | 8,919 | |||||
Adjustments in respect of current income tax of previous years | (395 | ) | ||||
Deferred income tax | ||||||
Relating to the origination and reversal of temporary differences | 2,809 | |||||
Income tax expense reported in the statement of comprehensive income | 11,333 | |||||
b) | Amounts charged or credited directly to equity | |||||
Net gain on revaluation of cash flow hedges | 182 | |||||
Income tax expense reported in equity | 182 | |||||
c) | Numerical reconciliation between aggregate tax expense recognised in the statement of comprehensive income and tax expense calculated per the statutory income tax rate | |||||
Total accounting profit before income tax | 38,850 | |||||
At the Parent Entity’s statutory income tax rate of 30% | 11,655 | |||||
Adjustments in respect of current income tax expense of previous years | (395 | ) | ||||
Entertainment | 8 | |||||
Share based payments | 73 | |||||
Other | (8 | ) | ||||
Aggregate income tax expense | 11,333 | |||||
F-86
Table of Contents
Consolidated | ||||||
2010 | ||||||
A$000 | ||||||
d) | Recognised current income tax | |||||
Opening balance | (966 | ) | ||||
Charged to income | (8,919 | ) | ||||
Adjustments in respect of current income tax expense of previous income years | (390 | ) | ||||
Other payments | 8,656 | |||||
Closing balance | (1,619 | ) | ||||
e) | Recognised deferred income tax | |||||
Opening balance | (1,149 | ) | ||||
Charged to income | (2,809 | ) | ||||
Adjustments in respect of current income tax expense of previous income years | 772 | |||||
Charged to equity | (182 | ) | ||||
Closing balance | (3,368 | ) | ||||
Deferred income tax relates at balance date relates to the following: | ||||||
i) Deferred tax asset | ||||||
Provisions and accrued expenses | 1,104 | |||||
Derivatives | 172 | |||||
Transaction costs on equity issue | 410 | |||||
Other | 124 | |||||
1,810 | ||||||
ii) Deferred tax liabilities | ||||||
Property, plant and equipment | 5,178 | |||||
F-87
Table of Contents
NOTE 7: | DIVIDENDS PAID AND PROPOSED |
Consolidated | ||||||
2010 | ||||||
A$000 | ||||||
a) | Recognised amounts | |||||
Declared and paid during the year: | ||||||
Final franked dividend for 2009: A$0.0425 per share franked at a rate of 30% | 7,001 | |||||
Interim franked dividend for 2010 A$0.045 per share franked at a rate of 30% | 7,459 | |||||
14,460 | ||||||
b) | Unrecognised amounts | |||||
Final franked dividend for 2010: A$0.0475 per share franked at a rate of 30% | 7,883 | |||||
After reporting date, the above dividends were proposed for approval at the Company’s Annual General Meeting. These amounts have not been recognised as a liability as at 30 June 2010 but will be brought to account subsequent to balance date. | ||||||
c) | Franking credit balance | |||||
The amount of franking credits available for the subsequent financial year are: | ||||||
i) Franking account balance as at the end of the financial year at 30% | 9,821 | |||||
ii) Franking credits that will arise from the payment of income tax payable as at the end of the financial year | 1,619 | |||||
11,440 | ||||||
The amount of franking credits available for future periods: | ||||||
i) Impact on the franking account of dividends proposed or declared before the financial report was authorised for issue but not recognised as a distribution to equity holders during the period | (3,378 | ) | ||||
8,062 | ||||||
NOTE 8: | EARNINGS PER SHARE |
Consolidated | ||||||
2010 | ||||||
A$000 | ||||||
a) | Earnings used in calculating earnings per share | |||||
Net profit attributable to ordinary equity holders of the parent | 27,517 | |||||
Earnings used in the calculation of basic and diluted EPS | 27,517 | |||||
2010 | ||||||
‘000 | ||||||
b) | Weighted average number of shares | |||||
Weighted average number of ordinary shares for basic earnings per share | 165,053 | |||||
Effect of dilution: | ||||||
Share rights | 401 | |||||
Weighted average number of ordinary shares adjusted for the effect of dilution | 165,454 | |||||
F-88
Table of Contents
NOTE 9: | CASH AND CASH EQUIVALENTS |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Cash at bank and in hand | 3,389 | |||
Reconciliation to statement of cash flows | ||||
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following at 30 June: | ||||
Cash and cash equivalents | 3,389 | |||
NOTE 10: | TRADE AND OTHER RECEIVABLES |
Consolidated | ||||||||
Note | 2010 | |||||||
A$000 | ||||||||
CURRENT | ||||||||
Trade receivables | 19,204 | |||||||
Allowance for impairment loss | 10a | ) | (767 | ) | ||||
18,437 | ||||||||
Prepayments | 422 | |||||||
Other receivables | 311 | |||||||
Related party receivables: | ||||||||
Other related parties | 1 | |||||||
19,171 | ||||||||
NON-CURRENT | ||||||||
Other receivables | 35 | |||||||
Share scheme loan | 1,108 | |||||||
1,143 | ||||||||
F-89
Table of Contents
a) | Allowance for impairment loss |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Movements in the provision for impairment loss were as follows: | ||||
As at 1 July | 219 | |||
Charge for the year | 915 | |||
Receivables written off | (367 | ) | ||
As at 30 June | 767 | |||
Consolidated | ||||||||
2010 | ||||||||
Gross | Allowance | |||||||
A$000 | A$000 | |||||||
Not past due | 10,419 | 60 | ||||||
Past due 0-30 days | 4,282 | 46 | ||||||
Past due31-60 days | 1,418 | 41 | ||||||
Past due61-90 days | 313 | 9 | ||||||
Past due 90 days | 2,772 | 611 | ||||||
19,204 | 767 | |||||||
b) | Fair value and credit risk |
NOTE 11: | INVENTORIES |
Consolidated | ||||
2010 | ||||
A$000 | ||||
CURRENT | ||||
Consumables | 773 | |||
F-90
Table of Contents
NOTE 12: | PROPERTY, PLANT AND EQUIPMENT |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Total freehold land at cost | 10,540 | |||
Buildings at cost | 204,845 | |||
Less: accumulated depreciation | (37,684 | ) | ||
Total buildings | 167,161 | |||
Total land and buildings | 177,701 | |||
Leasehold improvements | ||||
Leasehold improvements at cost | 174 | |||
Less: accumulated amortisation | (154 | ) | ||
Total leasehold improvements | 20 | |||
Plant and equipment | ||||
Plant and equipment at cost | 16,451 | |||
Less: accumulated depreciation | (9,643 | ) | ||
6,808 | ||||
Leased plant and equipment | ||||
Capitalised lease assets | 1,814 | |||
Less: accumulated depreciation | (717 | ) | ||
1,097 | ||||
Total property, plant and equipment | 185,626 | |||
a) | Reconciliation of carrying amounts at the beginning and end of the period |
Consolidated | ||||||||||||||||||||||||
Freehold | Leasehold | Plant and Equipment | ||||||||||||||||||||||
Land | Buildings | Improvements | Owned | Leased | Total | |||||||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | A$000 | |||||||||||||||||||
At 30 June 2009 net of accumulated depreciation | 5,159 | 169,754 | 56 | 6,639 | 1,382 | 182,990 | ||||||||||||||||||
Additions | 4,135 | 9,528 | 7 | 2,175 | 27 | 15,872 | ||||||||||||||||||
Disposals | — | (12 | ) | — | (83 | ) | (19 | ) | (114 | ) | ||||||||||||||
Depreciation charge for the year | — | (12,109 | ) | (43 | ) | (1,923 | ) | (293 | ) | (14,368 | ) | |||||||||||||
Transfer from assets held for sale | 1,246 | — | — | — | — | 1,246 | ||||||||||||||||||
At 30 June 2010 net of accumulated depreciation | 10,540 | 167,161 | 20 | 6,808 | 1,097 | 185,626 | ||||||||||||||||||
F-91
Table of Contents
NOTE 13: | INTANGIBLE ASSETS |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Goodwill at cost | 554 | |||
Licences at cost | 41 | |||
595 | ||||
a) | Reconciliation of carrying amounts at the beginning and end of the period |
Consolidated | ||||||||
Goodwill | Licences | |||||||
A$000 | A$000 | |||||||
Year ended 30 June 2010 | ||||||||
At 1 July 2009 net of accumulated amortisation and impairment | 554 | 48 | ||||||
Additions | — | — | ||||||
Disposals | — | (7 | ) | |||||
At 30 June 2010 net of accumulated amortisation and impairment | 554 | 41 | ||||||
b) | Impairment tests for goodwill and intangibles with indefinite useful lives |
2010 | ||||
A$000 | ||||
Accommodation services | 82 | |||
Laundry services | 513 | |||
595 | ||||
F-92
Table of Contents
NOTE 14: | TRADE AND OTHER PAYABLES |
Consolidated | ||||
2010 | ||||
A$000 | ||||
CURRENT | ||||
Trade payables | 5,915 | |||
Other payables and accrued expenses | 3,843 | |||
Income received in advance | — | |||
9,758 | ||||
NOTE 15: | INTEREST BEARING LOANS AND BORROWINGS |
Consolidated | ||||
2010 | ||||
A$000 | ||||
CURRENT | ||||
Secured liabilities | ||||
Lease liability | 609 | |||
NON-CURRENT | ||||
Secured liabilities | ||||
Bank loan | 40,729 | |||
Lease liability | 271 | |||
41,000 | ||||
a) | Fair values |
F-93
Table of Contents
b) | Assets pledged as security |
Consolidated | ||||||||
Note | 2010 | |||||||
A$000 | ||||||||
CURRENT | ||||||||
Floating charge | ||||||||
Cash and cash equivalents | 9 | 3,389 | ||||||
Trade and other receivables | 10 | 19,171 | ||||||
Inventories | 11 | 773 | ||||||
First mortgage Land held for resale | — | |||||||
Total current assets pledged as security | 23,333 | |||||||
NON-CURRENT | ||||||||
First mortgage | ||||||||
Freehold land and buildings | 12 | 177,701 | ||||||
Finance lease | ||||||||
Leased plant and equipment | 12 | 1,097 | ||||||
Floating charge | ||||||||
Receivables | 10 | 1,143 | ||||||
Other property, plant and equipment | 6,828 | |||||||
Intangible assets | 13 | 595 | ||||||
Total non-current assets pledged as security | 187,364 | |||||||
Total assets pledged as security | 210,697 | |||||||
c) | Defaults and breaches |
F-94
Table of Contents
NOTE 16: | PROVISIONS |
Consolidated | ||||
2010 | ||||
A$000 | ||||
CURRENT | ||||
Warranties | — | |||
Manufacturing contracts | — | |||
Re-structuring costs | — | |||
Annual leave | 1,420 | |||
Long service leave | 54 | |||
1,474 | ||||
NON-CURRENT | ||||
Long service leave | 118 | |||
a) Analysis of total provisions | ||||
Current | 1,474 | |||
Non-current | 118 | |||
1,592 | ||||
b) | Movements in provisions |
Consolidated | ||||||||||||||||
Manufacturing | Restructuring | |||||||||||||||
Warranties | Contracts | Costs | Total | |||||||||||||
A$000 | A$000 | A$000 | A$000 | |||||||||||||
At 1 July 2009 | 183 | 900 | 431 | 1,514 | ||||||||||||
Utilised | — | (900 | ) | (431 | ) | (1,331 | ) | |||||||||
Unused amounts reversed | (183 | ) | — | — | (183 | ) | ||||||||||
At 30 June 2010 | — | — | — | — | ||||||||||||
F-95
Table of Contents
NOTE 17: | DERIVATIVE FINANCIAL INSTRUMENTS |
Consolidated | ||||
2010 | ||||
A$000 | ||||
NON-CURRENT LIABILITIES | ||||
Interest rate swap contracts — cash flow hedges | 573 | |||
Effective Average | ||||
Interest Rate | ||||
Payable | ||||
Consolidated | ||||
2010 | ||||
% | ||||
1-2 years | 9.00 |
Notional Principal | ||||
Consolidated | ||||
2010 | ||||
A$000 | ||||
1-2 years | 25,000 |
F-96
Table of Contents
NOTE 18: | CONTRIBUTED EQUITY |
Consolidated | ||||
2010 | ||||
A$000 | ||||
165,966,692 fully paid ordinary shares | 110,448 | |||
a) | Movement in ordinary shares on issue |
Balance at beginning of year | 107,743 | |||
Shares issued: | ||||
i) 1,229,674 on exercise of options under Employee Share Option Plan | 2,705 | |||
ii) Nil as part of equity raising | — | |||
Associated transaction costs | — | |||
Balance at end of year | 110,448 | |||
b) | Capital risk management |
Consolidated | ||||||||
Note | 2010 | |||||||
A$000 | ||||||||
Total borrowings | 15 | 41,609 | ||||||
Less cash and cash equivalents | 9 | (3,389 | ) | |||||
Net debt | 38,220 | |||||||
Total equity | 152,178 | |||||||
Total capital | 190,398 | |||||||
Gearing ratio | 20.07 | % |
F-97
Table of Contents
NOTE 19: | RESERVES |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Option reserve | 584 | |||
Hedge reserve | (401 | ) | ||
183 | ||||
NOTE 20: | CASH FLOW STATEMENT RECONCILIATION |
Consolidated | ||||
2010 | ||||
A$000 | ||||
a) Reconciliation of net profit after tax to net cash flows from operations | ||||
Net profit | 27,517 | |||
Adjustments for: | ||||
Depreciation | 14,325 | |||
Amortisation | 43 | |||
Net profit on disposal of property, plant and equipment | (107 | ) | ||
Share-based payments expense | 245 | |||
Interest on share scheme loans | (133 | ) | ||
Changes in assets and liabilities: | ||||
Decrease in trade and other receivables | 807 | |||
Increase in inventories | (90 | ) | ||
Decrease in trade and other payables | (4,849 | ) | ||
Decrease in provisions | (1,542 | ) | ||
Increase in current tax liability | 653 | |||
Increase in deferred taxes payable | 2,038 | |||
Cash flows from operations | 38,907 | |||
F-98
Table of Contents
NOTE 21: | RELATED PARTY DISCLOSURES |
a) | Subsidiaries |
% Equity | ||||||||||||
Country of | Interest | |||||||||||
Name | Note | Incorporation | 2010 | |||||||||
The MAC Linen Pty Ltd | Australia | 100 | ||||||||||
The MAC Travel Pty Ltd | (i | ) | Australia | — | ||||||||
MSL Nominees Pty Ltd | Australia | 100 | ||||||||||
MSL Nominees (Karratha) Pty Ltd | Australia | 100 | ||||||||||
The MAC Middlemount Property Trust | Australia | 100 | ||||||||||
The MAC Muswellbrook | ||||||||||||
Property Trust | (ii | ) | Australia | 100 | ||||||||
The MAC Wandoan Property Trust | Australia | 100 | ||||||||||
The MAC Middlemount | ||||||||||||
Property Trust | Australia | 100 | ||||||||||
The Karratha Property Trust | Australia | 100 |
(i) | The MAC Travel Pty Ltd was disposed on 31 October 2009. | |
(ii) | The Muswellbrook Property Trust previously known as The Mackay Property Trust. |
b) | Ultimate parent |
F-99
Table of Contents
Consolidated | ||||
2010 | ||||
A$000 | ||||
c) Transactions with related parties | ||||
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated: | ||||
Purchases made by the Group with other related parties: | ||||
JLM Transport & Logistics Pty Ltd (“JLM”) | ||||
A shared services agreement for shared premises and a transport services arrangement exists between The MAC Services Group Ltd and JLM, a company owned by Marley Holdings Pty Ltd of which Mr MK & KW Maloney have control and a beneficial interest | 894 | |||
Tulla Group Pty Limited | ||||
A shared services agreement exists between The MAC Services Group Ltd and Tulla Group Pty Ltd. Mr MK & KW Maloney control and have a beneficial interest in Tulla Group Pty Ltd | 7 | |||
Taylors Solicitors | ||||
Fees for legal services and advice were paid to Taylors Solicitors, a firm of which Mr JC Taylor is a partner | 35 | |||
Fish’n’Fresh Delites | ||||
The supply of goods by Fish’n’Fresh Delites to The MAC Services Group Ltd. Fish’n’Fresh Delites is an entity of which Mr MK & Mr KW Maloney have an interest | 195 |
NOTE 22: | KEY MANAGEMENT PERSONNEL |
a) | Key management personnel summary |
Key Management Person | Position | |
Kevin W Maloney | Chairman | |
Daryl W Corsie | Director — Non Executive | |
John C Taylor | Director — Non Executive | |
Terrence J Strapp | Director — Non Executive | |
Mark K Maloney | Director — Executive | |
Andrew W Maloney | Alternate Director — Chief Development Officer | |
Stephen L Law | Company Secretary & General Counsel | |
Richard H Saunders | Chief Financial Officer (retired 11 January 2010) | |
Peter L McCann | Chief Financial Officer (appointed 11 January 2010) | |
Christopher H Jury | Chief Operating Officer | |
Rod Cunningham | General Manager — Operations (retired 30 August 2009) | |
Lesley Jolly | Executive General Manager — Human Resources | |
Rachel Maloney | Executive General Manager — Marketing & Communications (appointed to the Executive Committee on 1 July 2009) |
F-100
Table of Contents
Consolidated | ||||
2010 | ||||
A$ | ||||
Short-term employee benefits | 3,019,145 | |||
Post-employment benefits | 210,691 | |||
Share based payment | 146,360 | |||
3,376,196 | ||||
c) | Option and right holdings of key management personnel — consolidated |
Total | ||||||||||||||||||||||||||||||||
Net | Balance at | Vested | Exercisable | Not | ||||||||||||||||||||||||||||
Balance at 1 | Granted as | Options | Change | 30 June | 30 June | 30 June | Exercisable | |||||||||||||||||||||||||
Directors | July 2009 | Remuneration* | Exercised | Other** | 2010 | 2010 | 2010 | 30 June 2010 | ||||||||||||||||||||||||
Kevin W Maloney | 100,000 | — | (100,000 | ) | — | — | — | — | — | |||||||||||||||||||||||
Daryl W Corsie | 83,334 | — | (83,334 | ) | — | — | — | — | — | |||||||||||||||||||||||
John C Taylor | 66,667 | — | (66,667 | ) | — | — | — | — | — | |||||||||||||||||||||||
Terrence Strapp | 133,334 | — | — | (66,667 | ) | 66,667 | — | — | 66,667 | |||||||||||||||||||||||
Mark K Maloney | 66,667 | 156,960 | (66,667 | ) | — | 156,960 | — | — | 156,960 | |||||||||||||||||||||||
Andrew W Maloney | 100,000 | 62,163 | (100,000 | ) | — | 62,163 | — | — | 62,163 | |||||||||||||||||||||||
Executives | ||||||||||||||||||||||||||||||||
Stephen L Law | 100,000 | — | (100,000 | ) | — | — | — | — | — | |||||||||||||||||||||||
Richard H Saunders | 100,000 | — | — | (100,000 | ) | — | — | — | — | |||||||||||||||||||||||
Peter M McCann | — | 26,115 | — | — | 26,115 | — | — | 26,115 | ||||||||||||||||||||||||
Christopher H Jury | 100,000 | 66,655 | (100,000 | ) | — | 66,655 | — | — | 66,655 | |||||||||||||||||||||||
Lesley Jolly | — | 28,136 | — | — | 28,136 | — | — | 28,136 | ||||||||||||||||||||||||
Rachel Maloney | 33,334 | 14,233 | (33,334 | ) | — | 14,233 | — | — | 14,233 | |||||||||||||||||||||||
883,336 | 354,262 | (650,002 | ) | (166,667 | ) | 420,929 | — | — | 420,929 | |||||||||||||||||||||||
* | Granted as Remuneration reflected above includes rights granted under the Executive Long Term Incentive Plan. | |
** | Net Change Other reflected above includes those options that have been forfeited/lapsed by holders during the year under review. |
F-101
Table of Contents
d) | Shareholdings of key management personnel — consolidated |
On | Net | |||||||||||||||||||
Balance at | Received as | Exercise of | Change | Balance at | ||||||||||||||||
1 July 2009 | Compensation | Options | Other** | 30 June 2010 | ||||||||||||||||
Directors | ||||||||||||||||||||
Kevin W Maloney* | *86,655,556 | — | 100,000 | — | 86,755,556 | |||||||||||||||
Daryl W Corsie | 195,834 | — | 83,334 | (20,000 | ) | 259,168 | ||||||||||||||
John C Taylor | 164,167 | — | 66,667 | — | 230,834 | |||||||||||||||
Terrence J Strapp | 50,000 | — | — | — | 50,000 | |||||||||||||||
Mark K Maloney* | *86,709,723 | — | 66,667 | — | 86,776,390 | |||||||||||||||
Andrew W Maloney* | *87,093,056 | — | 100,000 | — | 87,193,056 | |||||||||||||||
Executives | ||||||||||||||||||||
Stephen L Law | 556,904 | — | 100,000 | (236,904 | ) | 420,000 | ||||||||||||||
Richard H Saunders | 162,500 | — | — | (162,500 | ) | — | ||||||||||||||
Christopher H Jury | 200,000 | — | 100,000 | (300,000 | ) | — | ||||||||||||||
Rachel Maloney | 208,334 | 33,334 | — | 241,668 | ||||||||||||||||
88,884,962 | — | 650,002 | (719,404 | ) | 88,815,560 | |||||||||||||||
* | Includes shares held by Marley Holdings Pty Limited. All totals include one entry for Marley Holdings Pty Limited. The affected holdings are noted with an asterisk above. | |
** | Net Change Other refers to shares purchased or sold during the financial year. |
e) | Loans to key management personnel |
Balance at | ||||||||||||||||||||||||
Beginning of | Interest | Interest Not | Balance at | Number of | ||||||||||||||||||||
Period | Charged | Charged | Write-Off | End of Period | Individuals | |||||||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | ||||||||||||||||||||
2010 | 854 | 133 | — | — | 790 | 5 |
Loans Highest | ||||||||||||||||||||||||
Balance at | Interest | Interest Not | Balance at | Balance During | ||||||||||||||||||||
1 July 2009 | Charged | Charged | Write-Off | 30 June 2010 | the Period | |||||||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | A$000 | |||||||||||||||||||
Directors | ||||||||||||||||||||||||
Andrew W Maloney | 350 | 39 | — | — | 350 | 350 | ||||||||||||||||||
Executives | ||||||||||||||||||||||||
Stephen L Law | 204 | 18 | — | — | 160 | 204 | ||||||||||||||||||
Christopher H Jury | 160 | — | — | — | — | 160 |
F-102
Table of Contents
NOTE 23: | SHARE-BASED PAYMENTS |
a) | Employee Share Option Plan — consolidated |
i) | Terms of the Employee Share Option Plan |
ii) | Option pricing model |
F-103
Table of Contents
2010 | 2010 | |||||||
No. | WAEP | |||||||
Outstanding at the | ||||||||
beginning of the year | 1,678,684 | 2.33 | ||||||
Exercised during the year | (1,229,674 | ) | 2.20 | |||||
Lapsed during the year | (349,009 | ) | 2.20 | |||||
Outstanding at the end of the year | 100,001 | 3.45 | ||||||
b) | Executive Long Term Incentive Plan |
i) | Terms of the Executive Long Term Incentive Plan |
TSR Relative to the Comparator Group | ||
Over the Performance Period | % of TSR Grant Vesting | |
Less than the 51st percentile | 0% | |
At the 51st percentile | 50% | |
Above the 51st percentile and less than the 75th percentile | Pro rata between 50% and 100% | |
At or above the 75th percentile | 100% | |
At or above the 90th percentile | 120% (additional 20% rights allocated) |
F-104
Table of Contents
Compound EPS Growth Over the | ||
Performance Period | % of EPS Grant Vesting | |
Less than 8% | 0% | |
8% | 50% | |
More than 8% and up to 12% | Pro rata between 50% and 100% | |
12% and up to 15% | 100% | |
15% or greater | 120% (additional 20% rights allocated) |
ii) | Option pricing model |
2010 | ||||
No. | ||||
Outstanding at the beginning of the year | — | |||
Granted during the year | 401,276 | |||
Outstanding at the end of the year | 401,276 | |||
NOTE 24: | COMMITMENTS |
a) | Leasing commitments |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Within one year | 996 | |||
After one year but not more than five years | 332 | |||
1,328 | ||||
F-105
Table of Contents
b) | Finance lease and hire purchase commitments |
Consolidated | ||||||||
Note | 2010 | |||||||
A$000 | ||||||||
Within one year | 651 | |||||||
After one year but not more than five years | 279 | |||||||
Total minimum lease payments | 930 | |||||||
Less amounts representing finance charges | (50 | ) | ||||||
Present value of minimum lease payments | 880 | |||||||
Included in the financial statements as: | ||||||||
Current interest bearing loans and borrowings | 16 | 609 | ||||||
Non-current interest bearing loans and borrowings | 16 | 271 | ||||||
880 | ||||||||
c) | Commitments relating to capital expenditure |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Capital expenditure commitments contracted for: | ||||
Within one year | 1,987 | |||
NOTE 25: | CONTINGENCIES |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Estimates of the potential financial effect contingent liabilities that may become payable: | ||||
Secured: | ||||
Guarantee provided by the Company’s bankers supported by a floating charge over the Company and the Consolidated Group’s assets for the performance of lease obligations | 1,189 | |||
Unsecured: | ||||
NIL | — | |||
NOTE 26: | FINANCIAL RISK MANAGEMENT OBJECTIVES AND PRINCIPLES |
F-106
Table of Contents
i) | Interest rate risk |
Consolidated | ||||
2010 | ||||
A$000 | ||||
Financial assets | ||||
Cash and cash equivalents | 3,389 | |||
Share scheme loan | 1,108 | |||
Financial liabilities | ||||
Bank loans* | (15,729 | ) | ||
Net exposure | (11,232 | ) | ||
* | Bank loans disclosed above exclude borrowings at a fixed rate under the interest rate swap of A$25,000,000. | |
Interest rate swap contracts outlined in note 17, with a fair value of A$573,000 are exposed to fair value movements if interest rates change. |
F-107
Table of Contents
Consolidated | ||||
2010 | ||||
A$000 | ||||
Change in post tax profit | ||||
+1% (100 basis points) | 86 | |||
−1% (100 basis points) | (86 | ) | ||
Change in other comprehensive income | ||||
+1% (100 basis points) | 210 | |||
−1% (100 basis points) | (214 | ) |
ii) | Foreign currency risk |
iv) | Credit risk |
F-108
Table of Contents
Equivalent S&P Rating | Internally Rated | |||||||||||||||||||
Closely | ||||||||||||||||||||
A+ and | Not Externally | Monitored | No Default | |||||||||||||||||
Above | rated | Customers | Customers | Total | ||||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | ||||||||||||||||
30 June 2010 | ||||||||||||||||||||
Current financial assets | ||||||||||||||||||||
Cash and cash equivalents | 3,389 | — | — | — | 3,389 | |||||||||||||||
Trade and other receivables | — | — | 941 | 18,230 | 19,171 | |||||||||||||||
3,389 | — | 941 | 18,230 | 22,560 | ||||||||||||||||
Non-current financial assets | ||||||||||||||||||||
Receivables | — | 1,143 | — | — | 1,143 | |||||||||||||||
v) | Liquidity risk |
F-109
Table of Contents
Carrying | Contractual | |||||||||||||||||||
Consolidated | Amount | Cash Flows | <6 Months | 6-12 Months | 1-5 Years | |||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | ||||||||||||||||
30 June 2010 | ||||||||||||||||||||
Liquid financial assets | ||||||||||||||||||||
Cash and cash equivalents | 3,389 | 3,389 | 3,389 | — | — | |||||||||||||||
Trade and other receivables | 19,546 | 19,546 | 18,598 | — | 948 | |||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||
Trade and other payables | (9,758 | ) | (9,758 | ) | (9,758 | ) | — | — | ||||||||||||
Interest bearing borrowings | (41,609 | ) | (48,745 | ) | (1,738 | ) | (1,733 | ) | (45,274 | ) | ||||||||||
Financial guarantees | — | (1,189 | ) | (1,189 | ) | — | — | |||||||||||||
Derivative financial liabilities | ||||||||||||||||||||
Interest rate swap contracts | (573 | ) | (586 | ) | (202 | ) | (202 | ) | (182 | ) | ||||||||||
(29,005 | ) | (37,343 | ) | 9,100 | (1,935 | ) | (44,508 | ) | ||||||||||||
vi) | Fair value |
Consolidated | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
A$000 | A$000 | A$000 | A$000 | |||||||||||||
30 June 2010 | ||||||||||||||||
Financial liabilities | ||||||||||||||||
Derivative instruments | — | 573 | — | 573 | ||||||||||||
F-110
Table of Contents
NOTE 27: | EVENTS AFTER BALANCE SHEET DATE |
NOTE 28: | AUDITORS’ REMUNERATION |
Consolidated | ||||
2010 | ||||
A$ | ||||
Remuneration of the auditor of the parent entity for: | ||||
Audit and review of financial reports | 118,450 | |||
Remuneration of the auditor of the parent entity for: | ||||
Taxation services | 8,000 | |||
Consulting and advisory services | 222,724 | |||
349,174 | ||||
NOTE 29: | PARENT ENTITY INFORMATION |
2010 | ||||
A$000 | ||||
Current assets | 22,737 | |||
Total assets | 212,597 | |||
Current liabilities | 13,153 | |||
Total liabilities | 58,239 | |||
Issued capital | 110,448 | |||
Retained earnings | 43,727 | |||
Option reserve | 584 | |||
Hedge reserve | (401 | ) | ||
Total shareholders’ equity | 154,358 | |||
Profit of the parent entity | 27,561 | |||
Total comprehensive income of the parent entity | 27,985 | |||
F-111
Table of Contents
31 Dec 2010 | 31 Dec 2009 | |||||||
A$000 | A$000 | |||||||
Unaudited | ||||||||
Rendering of services | A$ | 48,253 | A$ | 41,244 | ||||
Sale of goods | 19,565 | 15,426 | ||||||
Other revenue | 824 | 84 | ||||||
Total revenue | 68,642 | 56,754 | ||||||
Changes in inventories of finished goods and work in progress | (125 | ) | 36 | |||||
Raw materials and consumables used | (12,937 | ) | (11,629 | ) | ||||
Consultants and advisors | (12,375 | ) | (627 | ) | ||||
Depreciation and amortisation expenses | (7,393 | ) | (7,096 | ) | ||||
Employee benefits expense | (15,869 | ) | (11,200 | ) | ||||
Freight and travel expenses | (650 | ) | (452 | ) | ||||
Rent and occupancy costs | (1,159 | ) | (1,155 | ) | ||||
Other expenses | (2,863 | ) | (3,791 | ) | ||||
Finance costs | (2,798 | ) | (1,684 | ) | ||||
Profit before income tax | 12,473 | 19,156 | ||||||
Income tax expense | (3,532 | ) | (5,367 | ) | ||||
Profit after income tax | A$ | 8,941 | A$ | 13,789 | ||||
Other comprehensive income | ||||||||
Net unrealised gain/(loss) from cash flow hedges taken to equity, net of tax | 184 | 371 | ||||||
Total comprehensive income for the period | A$ | 9,125 | A$ | 14,160 | ||||
F-112
Table of Contents
31 DECEMBER 2010 AND 2009
31 Dec 2010 | 31 Dec 2009 | |||||||
A$000 | A$000 | |||||||
Unaudited | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Receipts from customers | A$ | 75,616 | A$ | 62,667 | ||||
Payments to suppliers and employees | (55,429 | ) | (42,778 | ) | ||||
Interest received | 233 | 115 | ||||||
Interest paid | (2,798 | ) | (1,593 | ) | ||||
Income tax paid | (5,558 | ) | (5,795 | ) | ||||
Net cash provided by operating activities | 12,064 | 12,616 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Payment for property, plant and equipment | (32,285 | ) | (4,004 | ) | ||||
Proceeds from sale of property, plant and equipment | 82 | 108 | ||||||
Repayment of loans from employees | 1,108 | 285 | ||||||
Net cash provided by/(used in) investing activities | (31,095 | ) | (3,611 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from borrowings | 44,206 | 6,000 | ||||||
Repayment of borrowings | (307 | ) | (4,774 | ) | ||||
Dividends paid | (16,126 | ) | (6,935 | ) | ||||
Net cash provided by/(used in) financing activities | 27,773 | (5,709 | ) | |||||
Net increase (decrease) in cash held | 8,742 | 3,296 | ||||||
Cash at beginning of period | 3,389 | 1,533 | ||||||
Cash at end of period | A$ | 12,131 | A$ | 4,829 | ||||
F-113
Table of Contents
F-114
Table of Contents
Accommodation | Consolidated | |||||||||||||||||||||||||||||||||||||||
Services | Other | Segment Total | Eliminations | Total | ||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||||||||
A$000 | A$000 | A$000 | A$000 | A$000 | A$000 | A$000 | A$000 | A$000 | A$000 | |||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||
Revenue from rendering of services | 46,597 | 39,365 | 1,829 | 1,879 | 48,426 | 41,244 | — | — | 48,426 | 41,244 | ||||||||||||||||||||||||||||||
Revenue from sale of goods | 19,565 | 14,176 | — | 1,250 | 19,565 | 15,426 | — | — | 19,565 | 15,426 | ||||||||||||||||||||||||||||||
Other revenue | 212 | 84 | 439 | — | 651 | 84 | — | — | 651 | 84 | ||||||||||||||||||||||||||||||
External segment revenue | 66,374 | 53,625 | 2,268 | 3,129 | 68,642 | 56,754 | — | — | 68,642 | 56,754 | ||||||||||||||||||||||||||||||
Inter-segment revenue | 342 | — | 535 | 482 | 877 | 482 | (877 | ) | (482 | ) | — | — | ||||||||||||||||||||||||||||
Total segment revenue | 66,716 | 53,625 | 2,803 | 3,611 | 69,519 | 57,236 | (877 | ) | (482 | ) | 68,642 | 56,754 | ||||||||||||||||||||||||||||
Result | ||||||||||||||||||||||||||||||||||||||||
EBITDA | 42,493 | 33,845 | (980 | ) | (824 | ) | 41,513 | 33,021 | — | — | 41,513 | 33,021 | ||||||||||||||||||||||||||||
Depreciation | (6,816 | ) | (6,433 | ) | (407 | ) | (663 | ) | (7,223 | ) | (7,096 | ) | — | — | (7,223 | ) | (7,096 | ) | ||||||||||||||||||||||
EBIT | 35,677 | 27,412 | (1,387 | ) | (1,487 | ) | 34,290 | 25,925 | — | — | 34,290 | 25,925 | ||||||||||||||||||||||||||||
Corporate overheads | (19,019 | ) | (5,085 | ) | ||||||||||||||||||||||||||||||||||||
Financing costs | (2,798 | ) | (1,684 | ) | ||||||||||||||||||||||||||||||||||||
Profit before income tax | 12,473 | 19,156 | ||||||||||||||||||||||||||||||||||||||
Income tax expense | (3,532 | ) | (5,367 | ) | ||||||||||||||||||||||||||||||||||||
Profit after income tax | 8,941 | 13,789 | ||||||||||||||||||||||||||||||||||||||
Segment assets | ||||||||||||||||||||||||||||||||||||||||
Segment operating assets | 746,933 | 202,576 | 19,846 | 9,065 | 766,779 | 211,641 | — | — | 766,779 | 211,641 | ||||||||||||||||||||||||||||||
Consolidated | ||||||||
31 Dec | 31 Dec | |||||||
2010 | 2009 | |||||||
A$000 | A$000 | |||||||
(a) Dividends declared and paid during the half-year on ordinary shares: | ||||||||
Final franked dividend for the financial year ended 30 June 2010: 4.75 cents, paid 15 October 2010 (2009: 4.25 cents) | 7,883 | 6,994 | ||||||
Special franked dividend: 5.00 cents, paid 30 December 2010(2009:nil) | 8,298 | — | ||||||
16,181 | 6,994 | |||||||
(b) Dividends proposed and not yet recognized as a liability: | ||||||||
Interim franked dividend for the half-year ended 31 December 2009: 4.5 cents, paid 15 April 2010 | — | 7,413 | ||||||
F-115
Table of Contents
Consolidated | ||||||||
31 Dec | 31 Dec | |||||||
2010 | 2009 | |||||||
A$000 | A$000 | |||||||
Estimates of the future potential financial effect of contingent liabilities that may become payable: | ||||||||
Secured: | ||||||||
Guarantee provided by the Company’s bankers supported by a floating charge over the Company and the Consolidated Group’s assets for the performance of lease obligations | ||||||||
Un-secured: | ||||||||
A statement of claim has been received in respect of a patent infringement. A defence and counter claim has been lodged and Senior Counsel advice is there are strong grounds for a successful defence of the matter | 1,256 | 1,256 | ||||||
F-116
Table of Contents
(All Amounts Expressed in U.S. Dollars)
F-117
Table of Contents
Year Ended December 31, 2010 | ||||||||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||||||
Oil States | The MAC | Adjustments | Combined | |||||||||||||
(In millions of U.S. Dollars, except per share amounts) | ||||||||||||||||
Revenues | $ | 2,412.0 | $ | 114.7 | $ | 2,526.7 | ||||||||||
Costs and expenses: | ||||||||||||||||
Cost of sales and services | 1,874.3 | 47.5 | 1,921.8 | |||||||||||||
Selling, general and administrative expenses | 150.9 | 9.2 | 160.1 | |||||||||||||
Depreciation and amortization expense | 124.2 | 13.5 | $ | 21.2 | (a) | 158.9 | ||||||||||
Acquisition related expenses | 7.0 | 11.2 | 18.2 | |||||||||||||
2,156.4 | 81.4 | 21.2 | 2,259.0 | |||||||||||||
Operating income | 255.6 | 33.3 | (21.2 | ) | 267.7 | |||||||||||
Interest expense | (16.3 | ) | (4.4 | ) | (16.3 | )(b) | (37.0 | ) | ||||||||
Interest income | 0.8 | 0.3 | 1.1 | |||||||||||||
Equity in earnings of unconsolidated affiliates | 0.2 | — | 0.2 | |||||||||||||
Other income | 0.3 | 0.4 | 0.7 | |||||||||||||
Income before income taxes | 240.6 | 29.6 | (37.5 | ) | 232.7 | |||||||||||
Income tax provision | (72.0 | ) | (8.7 | ) | 11.9 | (c) | (68.8 | ) | ||||||||
Net income | $ | 168.6 | $ | 20.9 | $ | (25.6 | ) | $ | 163.9 | |||||||
Less: Net income attributable to noncontrolling interest | 0.6 | — | — | 0.6 | ||||||||||||
Net income attributable to Oil States International, Inc. | $ | 168.0 | $ | 20.9 | $ | (25.6 | ) | $ | 163.3 | |||||||
Net income per share attributable to Oil States International, Inc. common stockholders | ||||||||||||||||
Basic | $ | 3.34 | $ | 3.25 | ||||||||||||
Diluted | $ | 3.19 | $ | 3.10 | ||||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 50.2 | 50.2 | ||||||||||||||
Diluted | 52.7 | 52.7 |
F-118
Table of Contents
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED INCOME STATEMENT
(All Amounts Expressed in U.S. Dollars)
F-119