Exhibit 99.2
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
Introduction to the Unaudited Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated financial information is presented to illustrate the effect of Oil States International, Inc.’s (the “Company”) sale (the “Disposition”) of its tubular services subsidiary, Sooner, Inc. (“Sooner”), to Marubeni-Itochu Tubulars America Inc. (“MITA”) pursuant to the Stock Purchase Agreement (the “Agreement”) by and among MITA, Sooner and the Company dated September 5, 2013. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 and the unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2013 and June 30, 2012 and the years ended December 31, 2012, 2011 and 2010 are based on the historical financial statements of the Company. The unaudited pro forma condensed consolidated financial statements as of June 30, 2013, for the six months ended June 30, 2013 and 2012, and for the year ended December 31, 2012 give effect to the disposition and the related planned repayment of debt with a portion of net proceeds associated with the Disposition as if such transactions had occurred on June 30, 2013 for the unaudited pro forma condensed consolidated balance sheet and on January 1, 2012 for the unaudited pro forma condensed consolidated statements of income. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s historical consolidated financial statements and notes thereto contained in the Company’s 2012 Annual Report on Form 10-K, filed on February 20, 2013, and Form 10-Q for the quarter ended June 30, 2013, filed on July 31, 2013.
The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of operations or the financial position of the Company would have been had the transactions occurred on the respective dates assumed, nor is it necessarily indicative of the Company’s future operating results or financial position. However, the pro forma adjustments reflected in the accompanying unaudited pro forma condensed consolidated financial information reflect estimates and assumptions that the Company’s management believes to be reasonable.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2013
(In Thousands, Except Share Amounts)
Historical | Tubular Services | Pro Forma Adjustments | Pro Forma | |||||||||||||||||
| ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 225,857 | $ | (16,067 | ) | $ | 600,000 | (a) | $ | 663,857 | ||||||||||
| 16,067 | (b) | |||||||||||||||||||
| (2,000 | ) | (c) | ||||||||||||||||||
| (160,000 | ) | (d) | ||||||||||||||||||
Accounts receivable, net | 738,784 | (156,014 | ) | -- | 582,770 | |||||||||||||||
Inventories, net | 698,587 | (433,615 | ) | -- | 264,972 | |||||||||||||||
Prepaid expenses and other current assets | 64,968 | (223 | ) | -- | 64,745 | |||||||||||||||
Total current assets | 1,728,196 | (605,919 | ) | 454,067 | 1,576,344 | |||||||||||||||
Property, plant and equipment, net | 1,858,410 | (23,254 | ) | -- | 1,835,156 | |||||||||||||||
Goodwill, net | 491,846 | - | -- | 491,846 | ||||||||||||||||
Other intangible assets, net | 129,754 | - | -- | 129,754 | ||||||||||||||||
Other noncurrent assets | 64,323 | (6,786 | ) | -- | 57,537 | |||||||||||||||
Total assets | $ | 4,272,529 | $ | (635,959 | ) | $ | 454,067 | $ | 4,090,637 | |||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 251,053 | $ | (118,947 | ) | $ | -- | $ | 132,106 | |||||||||||
Accrued liabilities | 99,958 | (5,211 | ) | -- | 94,747 | |||||||||||||||
Income taxes | 8,146 | (30,803 | ) | 50,032 | (e) | 58,178 | ||||||||||||||
| 30,803 | (f) | |||||||||||||||||||
Current portion of long-term debt and capitalized leases | 20,349 | - | (20,000 | ) | (d) | 349 | ||||||||||||||
Deferred revenue | 66,408 | (17,720 | ) | -- | 48,688 | |||||||||||||||
Other current liabilities | 36,588 | - | -- | 36,588 | ||||||||||||||||
Total current liabilities | 482,502 | (172,681 | ) | 60,835 | 370,656 | |||||||||||||||
Long-term debt and capitalized leases | 1,146,134 | - | (140,000 | ) | (d) | 1,006,134 | ||||||||||||||
Deferred income taxes | 121,968 | (5,277 | ) | -- | 116,691 | |||||||||||||||
Other noncurrent liabilities | 23,589 | - | -- | 23,589 | ||||||||||||||||
Total liabilities | 1,774,193 | (177,958 | ) | (79,165 | ) | 1,517,070 | ||||||||||||||
Stockholders' equity: | ||||||||||||||||||||
Oil States International, Inc. stockholders' and subsidiary equity: | ||||||||||||||||||||
Common stock, $.01 par value, 200,000,000 shares authorized,59,008,138 shares and 58,488,299 shares issued, respectively, and55,148,868 shares and 54,695,473 shares outstanding, respectively | 590 | - | -- | 590 | ||||||||||||||||
Additional paid-in capital | 614,927 | - | -- | 614,927 | ||||||||||||||||
Retained earnings/subsidiary equity | 2,077,909 | (458,001 | ) | 600,000 | (a) | 2,153,140 | ||||||||||||||
| 16,067 | (b) | |||||||||||||||||||
| (50,032 | ) | (e) | ||||||||||||||||||
| (30,803 | ) | (f) | ||||||||||||||||||
| (2,000 | ) | (c) | ||||||||||||||||||
Accumulated other comprehensive income | (62,887 | ) | - | -- | (62,887 | ) | ||||||||||||||
Common stock held in treasury at cost, 3,792,826 and 3,514,789shares, respectively | (133,747 | ) | - | -- | (133,747 | ) | ||||||||||||||
Total Oil States International, Inc. stockholders' equity and subsidiary equity | 2,496,792 | (458,001 | ) | 533,232 | 2,572,023 | |||||||||||||||
Noncontrolling interest | 1,544 | - | -- | 1,544 | ||||||||||||||||
Total stockholders' equity | 2,498,336 | (458,001 | ) | 533,232 | 2,573,567 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 4,272,529 | $ | (635,959 | ) | $ | 454,067 | $ | 4,090,637 | |||||||||||
The accompanying notes are an integral part of these pro forma financial statements.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Six Months ended June 30, 2013
(In Thousands, Except Per Share Amounts)
Historical | Tubular Services | Pro Forma Adjustments | Pro Forma | ||||||||||||||
Revenues: | |||||||||||||||||
Product | $ | 1,126,416 | $ | (780,122 | ) | $ | -- | $ | 346,294 | ||||||||
Service and other | 983,572 | (19,337 | ) | -- | 964,235 | ||||||||||||
| 2,109,988 | (799,459 | ) | -- | 1,310,529 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Product costs | 999,241 | (740,066 | ) | -- | 259,175 | ||||||||||||
Service and other costs | 576,444 | (18,809 | ) | -- | 557,635 | ||||||||||||
Selling, general and administrative expenses | 112,047 | (9,481 | ) | -- | 102,566 | ||||||||||||
Depreciation and amortization expense | 135,537 | (1,209 | ) | -- | 134,328 | ||||||||||||
Other operating expense | (860 | ) | - | -- | (860 | ) | |||||||||||
| 1,822,409 | (769,565 | ) | -- | 1,052,844 | |||||||||||||
Operating income | 287,579 | (29,894 | ) | -- | 257,685 | ||||||||||||
Interest expense, net of capitalized interest | (39,748 | ) | - | 1,776 | (g) | (37,972 | ) | ||||||||||
Interest income | 1,202 | - | -- | 1,202 | |||||||||||||
Equity in earnings (loss) of unconsolidated affiliates | (766 | ) | (65 | ) | -- | (831 | ) | ||||||||||
Other income | 2,291 | (541 | ) | -- | 1,750 | ||||||||||||
Income before income taxes | 250,558 | (30,500 | ) | 1,776 | 221,834 | ||||||||||||
Income tax provision | (71,105 | ) | 11,391 | (622 | ) | (g) | (60,336 | ) | |||||||||
Net income | $ | 179,453 | $ | (19,109 | ) | $ | 1,154 | $ | 161,498 | ||||||||
Less: Net income attributable to noncontrolling interests | 739 | - | - | 739 | |||||||||||||
Net income attributable to Oil States International, Inc. | $ | 178,714 | $ | (19,109 | ) | $ | 1,154 | $ | 160,759 | ||||||||
Net income per share attributable to Oil States International, Inc. common stockholders | |||||||||||||||||
Basic | $ | 3.25 | $ | 2.93 | |||||||||||||
Diluted | $ | 3.22 | $ | 2.90 | |||||||||||||
Weighted average number of common shares outstanding (in thousands): | |||||||||||||||||
Basic | 54,935 | 54,935 | |||||||||||||||
Diluted | 55,477 | 55,477 | |||||||||||||||
The accompanying notes are an integral part of these pro forma financial statements.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Six Months ended June 30, 2012
(In Thousands, Except Per Share Amounts)
Historical | Tubular Services | Pro Forma Adjustments | Pro Forma | ||||||||||||||
Revenues: | |||||||||||||||||
Product | $ | 1,187,841 | $ | (869,690 | ) | $ | -- | $ | 318,151 | ||||||||
Service and other | 1,002,239 | (20,751 | ) | -- | 981,488 | ||||||||||||
| 2,190,080 | (890,441 | ) | -- | 1,299,639 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Product costs | 1,055,971 | (814,305 | ) | -- | 241,666 | ||||||||||||
Service and other costs | 558,990 | (20,136 | ) | -- | 538,854 | ||||||||||||
Selling, general and administrative expenses | 96,592 | (9,229 | ) | -- | 87,363 | ||||||||||||
Depreciation and amortization expense | 104,884 | (1,144 | ) | -- | 103,740 | ||||||||||||
Other operating expense | 137 | - | -- | 137 | |||||||||||||
| 1,816,574 | (844,814 | ) | -- | 971,760 | |||||||||||||
Operating income | 373,506 | (45,627 | ) | -- | 327,879 | ||||||||||||
Interest expense, net of capitalized interest | (35,880 | ) | - | 1,960 | (g) | (33,920 | ) | ||||||||||
Interest income | 539 | - | -- | 539 | |||||||||||||
Equity in earnings (loss) of unconsolidated affiliates | 640 | (388 | ) | -- | 252 | ||||||||||||
Other income | 6,044 | (506 | ) | -- | 5,538 | ||||||||||||
Income before income taxes | 344,849 | (46,521 | ) | 1,960 | 300,288 | ||||||||||||
Income tax provision | (97,901 | ) | 17,360 | (686 | ) | (g) | (81,227 | ) | |||||||||
Net income | $ | 246,948 | $ | (29,161 | ) | $ | 1,274 | $ | 219,061 | ||||||||
Less: Net income attributable to noncontrolling interests | 650 | - | - | 650 | |||||||||||||
Net income attributable to Oil States International, Inc. | $ | 246,298 | $ | (29,161 | ) | $ | 1,274 | $ | 218,411 | ||||||||
Net income per share attributable to Oil States International, Inc. common stockholders | |||||||||||||||||
Basic | $ | 4.78 | $ | 4.24 | |||||||||||||
Diluted | $ | 4.45 | $ | 3.94 | |||||||||||||
Weighted average number of common shares outstanding (in thousands): | |||||||||||||||||
Basic | 51,533 | 51,533 | |||||||||||||||
Diluted | 55,404 | 55,404 | |||||||||||||||
The accompanying notes are an integral part of these pro forma financial statements.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 2012
(In Thousands, Except Per Share Amounts)
Historical | Tubular Services | Pro Forma Adjustments | Pro Forma | ||||||||||||||
Revenues: | |||||||||||||||||
Product | $ | 2,429,139 | $ | (1,735,825 | ) | $ | -- | $ | 693,314 | ||||||||
Service and other | 1,983,949 | (46,074 | ) | -- | 1,937,875 | ||||||||||||
| 4,413,088 | (1,781,899 | ) | -- | 2,631,189 | |||||||||||||
Costs and expenses: | |||||||||||||||||
Product costs | 2,174,000 | (1,642,192 | ) | -- | 531,808 | ||||||||||||
Service and other costs | 1,118,969 | (44,773 | ) | -- | 1,074,196 | ||||||||||||
Selling, general and administrative expenses | 203,651 | (19,107 | ) | -- | 184,544 | ||||||||||||
Depreciation and amortization expense | 230,098 | (2,306 | ) | -- | 227,792 | ||||||||||||
Other operating expense | 2,590 | - | -- | 2,590 | |||||||||||||
| 3,729,308 | (1,708,378 | ) | -- | 2,020,930 | |||||||||||||
Operating income | 683,780 | (73,521 | ) | -- | 610,259 | ||||||||||||
Interest expense, net of capitalized interest | (68,922 | ) | -- | 3,785 | (g) | (65,137 | ) | ||||||||||
Interest income | 1,583 | -- | -- | 1,583 | |||||||||||||
Equity in earnings (loss) of unconsolidated affiliates | 243 | (663 | ) | -- | (420 | ) | |||||||||||
Other income | 10,211 | (938 | ) | -- | 9,273 | ||||||||||||
Income before income taxes | 626,895 | (75,122 | ) | 3,785 | 555,558 | ||||||||||||
Income tax provision | (177,047 | ) | 28,035 | (1,325 | ) | (g) | (150,337 | ) | |||||||||
Net income | $ | 449,848 | $ | (47,087 | ) | $ | 2,460 | $ | 405,221 | ||||||||
Less: Net income attributable to noncontrolling interests | 1,239 | - | - | 1,239 | |||||||||||||
Net income attributable to Oil States International, Inc. | $ | 448,609 | $ | (47,087 | ) | $ | 2,460 | $ | 403,982 | ||||||||
Net income per share attributable to Oil States International, Inc. common stockholders | |||||||||||||||||
Basic | $ | 8.47 | $ | 7.63 | |||||||||||||
Diluted | $ | 8.10 | $ | 7.29 | |||||||||||||
Weighted average number of common shares outstanding (in thousands): | |||||||||||||||||
Basic | 52,959 | 52,959 | |||||||||||||||
Diluted | 55,384 | 55,384 | |||||||||||||||
The accompanying notes are an integral part of these pro forma financial statements.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 2011
(In Thousands, Except Per Share Amounts)
Historical | Tubular Services | Pro Forma Adjustments | Pro Forma | |||||||||||||
Revenues: | ||||||||||||||||
Product | $ | 1,815,526 | $ | (1,348,277 | ) | $ | -- | $ | 467,249 | |||||||
Service and other | 1,663,654 | (26,540 | ) | -- | 1,637,114 | |||||||||||
| 3,479,180 | (1,374,817 | ) | -- | 2,104,363 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Product costs | 1,617,399 | (1,267,416 | ) | -- | 349,983 | |||||||||||
Service and other costs | 981,868 | (24,421 | ) | -- | 957,447 | |||||||||||
Selling, general and administrative expenses | 182,434 | (18,000 | ) | -- | 164,434 | |||||||||||
Depreciation and amortization expense | 188,147 | (1,758 | ) | -- | 186,389 | |||||||||||
Other operating expense | 1,809 | - | -- | 1,809 | ||||||||||||
| 2,971,657 | (1,311,595 | ) | -- | 1,660,062 | ||||||||||||
Operating income | �� | 507,523 | (63,222 | ) | -- | 444,301 | ||||||||||
Interest expense, net of capitalized interest | (57,506 | ) | -- | -- | (57,506 | ) | ||||||||||
Interest income | 1,700 | -- | -- | 1,700 | ||||||||||||
Equity in earnings (loss) of unconsolidated affiliates | (163 | ) | (683 | ) | -- | (846 | ) | |||||||||
Other income | 3,515 | (420 | ) | -- | 3,095 | |||||||||||
Income before income taxes | 455,069 | (64,325 | ) | -- | 390,744 | |||||||||||
Income tax provision | (131,647 | ) | 23,372 | -- | (108,275 | ) | ||||||||||
Net income | $ | 323,422 | $ | (40,953 | ) | $ | -- | $ | 282,469 | |||||||
Less: Net income attributable to noncontrolling interests | 969 | - | -- | 969 | ||||||||||||
Net income attributable to Oil States International, Inc. | $ | 322,453 | $ | (40,953 | ) | $ | -- | $ | 281,500 | |||||||
Net income per share attributable to Oil States International, Inc. common stockholders | ||||||||||||||||
Basic | $ | 6.30 | $ | 5.50 | ||||||||||||
Diluted | $ | 5.86 | $ | 5.12 | ||||||||||||
Weighted average number of common shares outstanding (in thousands): | ||||||||||||||||
Basic | 51,163 | 51,163 | ||||||||||||||
Diluted | 55,007 | 55,007 | ||||||||||||||
The accompanying notes are an integral part of these pro forma financial statements.
OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 2010
(In Thousands, Except Per Share Amounts)
Historical | Tubular Services | Pro Forma Adjustments | Pro Forma | |||||||||||||
Revenues: | ||||||||||||||||
Product | $ | 1,282,212 | $ | (945,887 | ) | $ | -- | $ | 336,325 | |||||||
Service and other | 1,129,772 | (23,278 | ) | -- | 1,106,494 | |||||||||||
| 2,411,984 | (969,165 | ) | -- | 1,442,819 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Product costs | 1,147,427 | (897,454 | ) | -- | 249,973 | |||||||||||
Service and other costs | 726,867 | (20,351 | ) | -- | 706,516 | |||||||||||
Selling, general and administrative expenses | 150,865 | (15,028 | ) | -- | 135,837 | |||||||||||
Depreciation and amortization expense | 124,202 | (1,301 | ) | -- | 122,901 | |||||||||||
Other operating expense | 7,041 | - | -- | 7,041 | ||||||||||||
| 2,156,402 | (934,134 | ) | -- | 1,222,268 | ||||||||||||
Operating income | 255,582 | (35,031 | ) | -- | 220,551 | |||||||||||
Interest expense, net of capitalized interest | (16,274 | ) | - | -- | (16,274 | ) | ||||||||||
Interest income | 751 | - | -- | 751 | ||||||||||||
Equity in earnings (loss) of unconsolidated affiliates | 239 | (264 | ) | -- | (25 | ) | ||||||||||
Other income | 330 | (195 | ) | -- | 135 | |||||||||||
Income before income taxes | 240,628 | (35,490 | ) | -- | 205,138 | |||||||||||
Income tax provision | (72,023 | ) | 13,173 | -- | (58,850 | ) | ||||||||||
Net income | $ | 168,605 | $ | (22,317 | ) | $ | -- | $ | 146,288 | |||||||
Less: Net income attributable to noncontrolling interests | 587 | - | -- | 587 | ||||||||||||
Net income attributable to Oil States International, Inc. | $ | 168,018 | $ | (22,317 | ) | $ | -- | $ | 145,701 | |||||||
Net income per share attributable to Oil States International, Inc. common stockholders | ||||||||||||||||
Basic | $ | 3.34 | $ | 2.90 | ||||||||||||
Diluted | $ | 3.19 | $ | 2.76 | ||||||||||||
Weighted average number of common shares outstanding (in thousands): | ||||||||||||||||
Basic | 50,238 | 50,238 | ||||||||||||||
Diluted | 52,700 | 52,700 | ||||||||||||||
The accompanying notes are an integral part of these pro forma financial statements.
Pro Forma Adjustments
The following pro forma information corresponding to the unaudited pro forma adjustments is presented for illustrative purposes only and does not purport to represent what the actual results of operations or the financial position of the Company would have been had the transactions occurred on the respective dates assumed, nor is it necessarily indicative of the Company’s future operating results or financial position. In addition, the future financial position and future results of operations may vary significantly from the financial position and results of operations reflected by such pro forma adjustments.
The unaudited pro forma condensed consolidated financial information includes the following adjustments.
(a)To reflect anticipated cash proceeds from MITA for the Disposition.
(b)To reflect retention of all cash of Sooner by the Company upon the Disposition.
(c) To reflect anticipated transaction expenses related to the Disposition.
(d) To reflect the application of anticipated net proceeds from the Disposition to repay the Company’s U.S. term loan.
(e) To reflect income taxes estimated to be payable on the estimated gain from the Disposition.
(f) To reflect removal of tax liabilities assumed by the Company through the closing date.
(g) To reflect the reduction in interest expense due to the application of anticipated net proceeds from the Disposition to repay the U.S. term loan and to reflect the tax effect of lower interest at estimated federal and state statutory tax rates.