1
EXHIBIT 99.1
DAILEY INTERNATIONAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Consolidated balance sheets - June 30, 1999 and December 31, 1998 3
Consolidated statements of operations - Six months ended June 30, 1999 and 1998 4
Consolidated statements of cash flows - Six months ended June 30, 1999 and 1998 5
Notes to consolidated financial statements - June 30, 1999 6-19
2
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31,
ASSETS 1999 1998
---------- ----------
(UNAUDITED)
Current assets:
Cash and cash equivalents ................................................... $ 12,599 $ 32,843
Accounts receivable, net .................................................... 27,718 32,803
Accounts receivable from affiliates ......................................... -- 362
Prepaid expenses and other current assets (Note 5) .......................... 7,369 4,778
---------- ----------
Total current assets ...................................................... 47,686 70,786
Revenue-producing tools and inventory, net ................................... 131,975 141,524
Property and equipment, net .................................................. 12,744 13,255
Goodwill, net ................................................................ 21,693 22,275
Investment in joint venture .................................................. 7,734 7,100
Other assets ................................................................. 15,747 17,233
---------- ----------
Total assets .............................................................. $ 237,579 $ 272,173
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities not subject to compromise:
Current liabilities:
Accounts payable and accrued liabilities-prepetition......................... $ 3,225 $ 15,258
Accounts payable and accrued liabilities-postpetition........................ 7,121 --
Accounts payable to affiliates-postpetition.................................. 96 --
Accrued interest on senior notes-prepetition................................. -- 9,797
Income taxes payable-prepetition............................................. 1,753 3,987
Income taxes payable-postpetition ........................................... 2,328 --
Current portion of long-term debt-prepetition................................ 443 1,048
---------- ----------
Total current liabilities not subject to compromise........................ 14,966 30,090
Liabilities subject to compromise:
Senior notes (Note 7)........................................................ 275,000 --
Accrued interest on senior notes (Note 7).................................... 7,409 --
---------- ----------
Total current liabilities subject to compromise............................ 282,409 --
Deferred income taxes ....................................................... 5,986 5,910
Other noncurrent liabilities ................................................ 870 1,298
Long-term debt .............................................................. 68 275,060
Stockholders' equity (deficit):
Preferred stock, $0.01 par value: 5,000,000 shares authorized; none issued .. -- --
Common stock, Class A, $0.01 par value: 20,000,000 shares authorized;
5,703,655 and 5,703,655 issued and 5,129,004 and 5,135,504 outstanding at
June 30, 1999 and December 31, 1998, respectively; Class B, $0.01 par
value: 10,000,000 shares authorized, 5,000,000 shares issued and
outstanding at June 30, 1999 and December 31, 1998, respectively ........... 106 106
Treasury stock (574,651 and 568,151 shares at
June 30, 1999 and December 31, 1998, respectively) ......................... (4,061) (4,048)
Paid-in capital .............................................................. 53,117 52,437
Accumulated other comprehensive loss ......................................... (1,882) (1,026)
Retained earnings (deficit) .................................................. (114,000) (87,654)
---------- ----------
Total stockholders' equity (deficit) ...................................... (66,720) (40,185)
---------- ----------
Total liabilities and stockholders' equity (deficit) ...................... $ 237,579 $ 272,173
========== ==========
See accompanying notes.
3
3
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Revenues:
Rental income ........................... $ 9,752 $ 17,084 $ 19,488 $ 32,775
Sales of products and services .......... 9,480 11,401 20,473 23,150
Underbalanced drilling services ......... 3,809 5,294 11,419 15,874
------------ ------------ ------------ ------------
23,041 33,779 51,380 71,799
Costs and expenses:
Cost of rentals ......................... 8,001 11,494 16,494 21,549
Cost of products and services ........... 5,533 6,219 11,199 12,587
Cost of underbalanced drilling services . 2,835 3,026 7,699 8,791
Selling, general and administrative ..... 7,672 8,545 15,135 16,073
Depreciation and amortization ........... 6,417 6,073 12,827 10,701
Reorganization Costs (Note 5):
Severance and retention ............... 233 -- 1,472 --
Chapter 11 proceedings ................ 970 -- 970 --
Other ................................. 449 -- 449 --
Non-cash compensation ................... 55 286 110 471
Research and development ................ 219 125 451 204
------------ ------------ ------------ ------------
32,384 35,768 66,806 70,376
------------ ------------ ------------ ------------
Operating income (loss) ................... (9,343) (1,989) (15,426) 1,423
Other (income) expense:
Interest income ......................... (155) (1,202) (902) (2,164)
Interest expense (contractual interest
expense of $6,876 and $13,776 for the
three and six months ended June 30,
1999, respectively) (Note 7)........... 4,488 6,536 11,388 11,030
Equity in earnings of joint venture ..... (125) -- (634) --
Other, net .............................. 467 88 195 213
------------ ------------ ------------ ------------
Loss before income taxes and
extraordinary item ...................... (14,018) (7,411) (25,473) (7,656)
Income tax provision (benefit)............. (208) 298 873 1,758
------------ ------------ ------------ ------------
Loss before extraordinary item ............ (13,810) (7,709) (26,346) (9,414)
Extraordinary item, net of taxes .......... -- -- -- (17,579)
------------ ------------ ------------ ------------
Net loss .................................. $ (13,810) $ (7,709) $ (26,346) $ (26,993)
============ ============ ============ ============
Loss per share before extraordinary item:
Basic ................................. $ (1.37) $ (.77) $ (2.62) $ (.97)
============ ============ ============ ============
Diluted ............................... $ (1.37) $ (.77) $ (2.62) $ (.97)
============ ============ ============ ============
Loss per share:
Basic ................................. $ (1.37) $ (.77) $ (2.62) $ (2.79)
============ ============ ============ ============
Diluted ............................... $ (1.37) $ (.77) $ (2.62) $ (2.79)
============ ============ ============ ============
Weighted average shares outstanding:
Basic ................................. 10,049,754 10,027,113 10,063,537 9,678,428
============ ============ ============ ============
Diluted ............................... 10,049,754 10,027,113 10,063,537 9,678,428
============ ============ ============ ============
See accompanying notes.
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4
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
------------------------
1999 1998
--------- ---------
OPERATING ACTIVITIES:
Net loss ............................................................ $ (26,346) $ (26,993)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Extraordinary loss on repurchase of notes ......................... -- 17,579
Depreciation and amortization ..................................... 12,827 10,701
Deferred income taxes ............................................. 77 --
Amortization of debt issuance costs ............................... 432 --
Provision for doubtful accounts ................................... 183 198
Provision for stock awards ........................................ 680 471
Gain on sale and disposition of property and
equipment ........................................................ (116) (22)
Equity income of unconsolidated subsidiary ........................ (634) --
Changes in operating assets and liabilities (net of the effects of
acquisitions):
Accounts receivable trade ........................................ 4,902 (157)
Accounts receivable from/payable to
officers and affiliates ........................................ 458 (488)
Prepaid expenses and other ....................................... (2,340) (6,066)
Accounts payable and accrued liabilities ......................... (6,821) 7,908
Income taxes payable ............................................. 94 965
Reorganization items ............................................. 6,059 --
--------- ---------
Net cash provided by (used in) operating activities before
reorganization items ............................................ (10,545) 4,096
Reorganization items:
Professional fees paid for services rendered
in connection with the Chapter 11 proceeding ................... (1,719) --
Professional fees paid for services expected to be rendered in
connection with the sale of the company ........................ (3,638) --
Severance costs .................................................. (702) --
--------- ---------
Net cash used by reorganization items ............................... (6,059) --
--------- ---------
Net cash provided by (used in) operating activities ................. (16,604) 4,096
INVESTING ACTIVITIES:
Additions to revenue-producing tools and
inventory ........................................................ (6,559) (33,279)
Inventory transferred to cost of rentals ............................ 3,010 4,297
Revenue-producing tools lost in hole,
abandoned and sold ................................................ 1,869 1,158
Additions to property and equipment ................................. (1,100) (3,512)
Proceeds from sale of property and equipment ........................ 803 40
Acquisitions ........................................................ -- (77,037)
Unrealized loss on cash equivalent
investments ...................................................... (137) --
--------- ---------
Net cash used in investing activities ............................... (2,114) (108,333)
FINANCING ACTIVITIES:
Proceeds from the issuance of debt .................................. -- 268,125
Payments on outstanding debt ........................................ (597) (121,748)
Extraordinary loss on repurchase of notes ........................... -- (12,650)
Purchase of treasury stock .......................................... (13) --
--------- ---------
Net cash provided by (used in) financing
activities ........................................................ (610) 133,727
--------- ---------
Effect of foreign exchange rate changes
on cash ........................................................... (916) (427)
--------- ---------
Increase (decrease) in cash and cash
equivalents ....................................................... (20,244) 29,063
Cash and cash equivalents at beginning of
period ............................................................ 32,843 59,837
--------- ---------
Cash and cash equivalents at end of period .......................... $ 12,599 $ 88,900
========= =========
See accompanying notes.
5
5
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. SUBSEQUENT EVENTS
On May 21, 1999, Dailey International Inc. (the "Company") announced that
it and certain of its subsidiaries had entered into an agreement to be acquired
by Weatherford International, Inc.("Weatherford"), a Houston-based oilfield
products and services company. On May 28, 1999, the Company and certain of its
subsidiaries filed petitions for relief under Chapter 11 of the United States
Bankruptcy Code (11 U.S.C. ss. 101, et seq.) (the "Bankruptcy Code") in the
United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court"). The bankruptcy petitions were filed in order to preserve cash, to give
the Company the opportunity to restructure its debt, and to accomplish the
acquisition of the Company by Weatherford. Through the bankruptcy process, the
Company seeks Bankruptcy Court approval to implement a financial restructuring
in accordance with a Joint Plan of Reorganization (the "Plan") and a related
Disclosure Statement, which also were filed with the Bankruptcy Court on May 28,
1999. The Plan is subject to the approval of the requisite number of and amount
of claims represented by certain of the Company's creditors, in addition to the
approval of the Bankruptcy Court. Shortly after filing the petition, the Company
obtained a Bankruptcy Court order to permit the Company to pay its creditors all
pre-petition claims and debts in the ordinary course of business, except for the
Company's Senior Note indebtedness. As a result of the Chapter 11 filing, absent
approval of the Bankruptcy Court, the Company and the subsidiary guarantors are
prohibited from paying, and the Senior Note holders are prohibited from
attempting to collect, the Senior Note indebtedness, which was incurred prior to
the bankruptcy.
The filing of the bankruptcy and the accompanying Plan was contemplated by
the acquisition agreement (the "Acquisition Agreement") dated May 21, 1999,
between the Company, certain of its subsidiaries and Weatherford. The
Acquisition Agreement contemplates that the Company's outstanding $275 million
Senior Note indebtedness will be exchanged pro rata for $185 million in
Weatherford common stock. All outstanding equity securities held by the
Company's equity security holders will be exchanged for $10 million in
Weatherford common stock that will be shared pro rata based on share ownership.
The value of the Weatherford common stock will be fixed as of the date of the
consummation of the acquisition and will be based on an average closing sale
price calculation over a 10 trading-day period preceding the date of
consummation. The closing of the acquisition is subject to a number of
conditions, including the receipt of Bankruptcy Court approval.
Prior to the filing of the bankruptcy, the fundamental terms of the Plan
had been agreed to by the holders of approximately $225 million (82%) of the
outstanding principal amount of the Senior Notes and more than 50% of the
Company's common stock. The Plan contemplates the payment of all trade
creditors' claims as and when they come due in the ordinary course of business
or in full on the effective date of the Plan.
On June 21, 1999, the Company received notice of early termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
On July 12, 1999, the Bankruptcy Court approved the Disclosure Statement,
as modified, and ordered that solicitation materials incorporating the Plan, as
modified, and the Disclosure Statement be served on holders of the class of
claims whose votes were being solicited and that a summary of the Plan and
Disclosure Statement be served on holders of the classes of claims and interests
whose votes were not being solicited (either because those claimants are being
paid in full or are deemed to have rejected the Plan under certain provisions of
the Bankruptcy Code). The Bankruptcy Court also ordered that August 16, 1999 be
fixed as the last day for filing written objections to the Plan and the last day
to submit plan ballots and that the hearing on confirmation on the Plan be set
to commence at 11:00 A.M. Eastern Daylight Time on August 19, 1999. The closing
of the transactions contemplated under the Plan and Acquisition Agreement is
currently anticipated to occur on or about August 31, 1999. Upon and following
the closing, the Company will be a direct or indirect wholly-owned subsidiary of
Weatherford. While the Company does not presently anticipate any delays, due to
the nature of the bankruptcy process and potential for delays involved, no
assurances can be given that the closing will actually occur on or about that
date. In addition, due to the nature of bankruptcy proceedings, it is not
possible to predict the outcome of the Company's bankruptcy proceedings or their
effect on the Company's business.
6
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On May 24, 1999, Mr. Al Kite resigned as interim Chief Executive Officer and
as a director of the Company.
In May 1999, the Company implemented an incentive plan to retain certain key
personnel through December 31, 1999. The total cost of the incentive plan is
approximately $800,000 and is being accrued over the service period.
The Company also has contracts or arrangements with certain employees,
which, as contemplated under the Plan and Acquisition Agreement, would trigger
payments of approximately $4.0 million to those employees. Additionally, at the
closing of the transactions contemplated under the Plan and Acquisition
Agreement the Company is obligated to pay their former interim Chief Executive
Officer a bonus of $385,000.
In July 1999, the Company implemented an incentive plan for certain
operational personnel. The total anticipated cost of the incentive plan is
approximately $700,000 and is being accrued over the service period.
In response to adverse industry conditions, the Company began during the
third quarter of 1998 to review and implement cost saving strategies to reduce
its cost structure to bring it more in line with then current industry
conditions, including consolidating or eliminating operations and reducing
overhead. As a result of these efforts, the Company recorded a reorganization
charge during 1998 of $3.4 million and $2.9 million in 1999 (see Note 5).
The Company currently has no outstanding debt other than under the Senior
Notes (see Note 7) and debt assumed in the IDS acquisition (see Note 4). The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
or classifications of liabilities that may result from the outcome of this
uncertainty.
Consummation of the Plan could materially change the amounts currently
recorded in the financial statements. The financial statements do not give
effect to any adjustment to the carrying value of assets, or amounts and
classifications of liabilities that might be necessary as a consequence of this
matter.
2. BASIS OF PRESENTATION, SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN
The accompanying unaudited consolidated financial statements include the
accounts of Dailey International Inc. and its subsidiaries ("Dailey" or the
"Company") and have been prepared in accordance with United States generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included and such adjustments are of a normal, recurring nature. Operating
results for the six months ended June 30, 1999 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1999. For
further information, reference is made to the consolidated financial statements
and footnotes thereto included in the Company's Form 10-K filed with the
Securities and Exchange Commission on April 1, 1999.
The accompanying consolidated financial statements have been prepared on a
going concern basis of accounting and do not reflect any adjustments that might
result should the Company be unable to continue as a going concern. The
Company's recent losses from operations and the Acquisition Agreement and
bankruptcy filing raise substantial doubt about its ability to continue as a
going concern. The appropriateness of using the going concern basis is dependent
upon, among other things, (i) confirmation of the Plan by the Bankruptcy Court,
and (ii) consummation of the transactions contemplated by the acquisition
agreement with Weatherford.
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130, Reporting Comprehensive Income (SFAS No. 130). SFAS No.
130 established new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this statement had no immediate
impact on the Company's net loss or stockholders' equity. SFAS No. 130 requires
the Company's foreign currency translation adjustments and unrealized gains/loss
on investments to be included in comprehensive income. For the three months
ended June 30, 1999 and 1998, the total comprehensive loss was $14,623,000 and
$8,081,000, respectively. For the six months ended June 30, 1999 and 1998, the
total comprehensive loss was $27,202,000 and $27,612,000, respectively.
Certain reclassifications have been made to the June 30,1998 financial
statements to conform to the 1999 presentation.
3. ORGANIZATION
The accompanying consolidated financial statements reflect the operations
of Dailey International Inc., a Delaware corporation, hereinafter referred to as
the "Company" or "Dailey."
The Company currently manages its operations in two business segments: (1)
downhole products and services and (2) underbalanced drilling services. Downhole
products and services are comprised of the Company's directional drilling
services, electric wireline services, tubing conveyed perforating services and
downhole tool rentals. The Company's underbalanced drilling services were
acquired through the Company's acquisition of Air Drilling International, Inc.
("ADI") in June 1997. Founded in 1945 as a rental tool company, Dailey began
offering directional drilling services in 1984 and currently provides such
services in the Gulf of Mexico, the United States Gulf Coast region, and most
recently, Venezuela, Louisiana and the Austin Chalk formation in Texas. In June
1997, the Company acquired ADI and, as a result, became a leading provider
worldwide of air drilling services for underbalanced drilling applications. In
January 1998, the Company acquired the operating assets and liabilities of
Directional Wireline Services, Inc. ("DWS"), DAMCO Tong Services, Inc. and DAMCO
Services, Inc. (collectively, "DAMCO", and with DWS, "DWS/DAMCO"), which are
headquartered in Houma, Louisiana. DWS/DAMCO provides specialized drilling,
workover, completion and production services to the Gulf of Mexico and Nigerian
markets. In March 1998, the Company acquired Integrated Drilling Systems,
Limited ("IDS"), which is headquartered in Aberdeen, Scotland. IDS manufactures
directional drilling tools. In August 1998, the Company acquired substantially
all of the assets of the directional drilling business of Transocean Petroleum
Technology Limited ("Transocean") located in Aberdeen, Scotland. In December
1998 Dailey, through its subsidiary Air Drilling Services, Inc., acquired
7
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51% of International Nitrogen Services, Inc. ("INS"), a joint venture with MG
Generon, Inc. The company, headquartered in Houston, Texas, provides
non-cryogenic nitrogen generators and production units for use in the on-site
production of nitrogen for injection in downhole drilling of oil and gas.
4. ACQUISITIONS
DWS/DAMCO Acquisition: In January 1998, the Company acquired the operating
assets and liabilities of DWS/DAMCO. The aggregate purchase price for DWS/DAMCO
was $61 million financed with proceeds from a $115 million 9 3/4% senior notes
offering in August 1997 and borrowings under the Company's revolving credit
facility. The acquisition was accounted for under the purchase method of
accounting; accordingly the assets and liabilities of DWS/DAMCO were recorded at
their estimated fair market values as of the date of acquisition. The Company
recorded goodwill of approximately $32.5 million relating to the excess of the
purchase price over the fair market value of the assets, which was to be
amortized over 25 years and result in approximately $1.2 million in amortization
expense per year. Based on the Company's review of long-lived assets, including
goodwill, the remaining unamortized goodwill balance of $31.3 million at
December 31, 1998 was deemed to be fully impaired.
IDS Acquisition: The Company acquired the outstanding capital stock of IDS
in March 1998 (with additional consideration paid in July 1998 in connection
with the resolution of certain contingencies) for approximately $18.8 million in
cash and 1,064,000 shares of Class A Common Stock (309,516 shares were returned
in July 1998), plus assumption of debt of approximately $6.5 million. The IDS
Acquisition was accounted for under the purchase method of accounting. The
assets and liabilities of IDS were recorded at their estimated fair market
values as of the date of acquisition. The Company recorded approximately $20.3
million in goodwill, representing the excess of the purchase price over the
estimated fair market value of the IDS assets, which was to be amortized over 25
years and result in additional annual amortization expense of $788,000. Based on
the Company's review of long-lived assets, including goodwill, the remaining
unamortized goodwill of $19.7 million at December 31, 1998 was deemed to be
fully impaired.
Transocean Acquisition: In August 1998, the Company acquired substantially
all of the assets of the directional drilling business of Transocean located in
Aberdeen, Scotland for $10 million in cash. The Company assumed certain
Transocean directional contracts and operations in the North Sea and Europe. The
Transocean Acquisition was accounted for under the purchase method of
accounting. The assets and liabilities were recorded at their estimated fair
market value as of the date of the acquisition. The Company recorded goodwill of
$1.2 million relating to the excess of purchase price over the fair market value
of the assets, which will be amortized over 25 years and result in approximately
$48,000 in amortization expense per year. The purchase price allocation was
based on preliminary estimates and may be revised at a later date.
INS Acquisition: In December 1998, the Company acquired 51% of INS for
approximately $7.1 million cash, subject to a purchase price adjustment of up to
$500,000 based on future earnings. INS, a joint venture with MG Generon,
provides non-cryogenic nitrogen generators and production units for use in the
on-site production of nitrogen for injection in downhole drilling of oil and gas
wells. The joint venture is accounted for using the equity method of accounting.
5. REORGANIZATION COSTS
Reorganization costs of $2.9 million incurred in 1999 consisted of $702,000
related to the resignation of the former chief financial officer and other
employees, the accelerated vesting of restricted stock awards of $570,000 based
on the October 1997 price of $12.75 per share, $970,000 related to professional
services rendered in connection with the Chapter 11 proceeding, $449,000 for
professional services rendered in connection with the potential sale of the
Company, and $200,000 related to a retention bonus for employees who stay with
the Company through its reorganization.
Prepaid expenses and other current assets include $3.6 million paid to an
investment banker related to the proposed sale of the Company and $300,000
related to payment for professional services to be rendered in the bankruptcy
proceedings. Costs related to the proposed sale of the Company will be
recognized as a reorganization cost when the sale is completed. Costs related
to the professional services rendered will be recognized as a reorganization
cost as incurred.
6. REVENUE-PRODUCING TOOLS AND INVENTORY
JUNE 30, DECEMBER 31,
1999 1998
---------- ----------
(IN THOUSANDS)
Revenue-producing tools ..................... $ 162,490 $ 159,993
Accumulated depreciation .................... (62,983) (53,325)
---------- ----------
99,507 106,668
Inventory:
Components, subassemblies and expendable
parts .................................. 28,229 30,711
Rental tools and expendable parts under
production ............................. 2,408 2,247
Raw materials ............................. 1,831 1,898
---------- ----------
32,468 34,856
---------- ----------
Revenue-Producing Tools and
Inventory ...................... $ 131,975 $ 141,524
========== ==========
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7. BORROWING ARRANGEMENTS AND EXTRAORDINARY ITEM
JUNE 30, DECEMBER 31,
1999 1998
------------- -------------
(IN THOUSANDS)
Debt not Subject to Compromise
9 1/2% Senior Notes ................ $ -- $ 275,000
Loans payable to a bank ............ 508 1,102
Other .............................. 3 6
------------- -------------
511 276,108
Less current portion of long-term
debt ............................ (443) (1,048)
------------- -------------
Total long-term debt ..... 68 275,060
Debt Subject to Compromise
9 1/2% Senior Notes................. 275,000 --
On February 13, 1998, the Company issued $275 million of 9 1/2% Senior
Notes due 2008 (the "Senior Notes"). Of the $268.1 million net proceeds to the
Company, approximately $127.7 million were utilized to repurchase at a premium
of 111% of their principal amount all of the outstanding principal amount of the
Company's 9 3/4% Senior Notes (the "Old Notes") and approximately $7.5 million
were utilized to repay outstanding debt under the Company's revolving credit
facility. As a result of the repurchase of the Old Notes, the Company recorded
an extraordinary loss of approximately $17.6 million, or $1.79 per diluted
share, with no related income tax benefit, representing the excess of the
purchase price for the Old Notes over their carrying value on the date of
repurchase. The Senior Notes are currently unsecured senior obligations of the
Company. The Senior Notes were redeemable at the option of the Company on or
after February 15, 2003 at stipulated redemption prices; however, the filing of
the petitions for relief under Chapter 11 of the Bankruptcy Code on May 28, 1999
constituted an event of default under the terms governing the Senior Notes. As a
result of the event of default, the Senior Notes are classified as a current
liability. In addition, under the terms of the Plan the Senior Notes and related
accrued interest are subject to compromise. Subsequent to the filing of the
petitions, the Company ceased to accrue interest on the Senior Notes as it is
not expected to be an allowed claim. However, had the Company continued to
accrue interest throughout the period, interest expense would have been $6.9
million and $13.8 million for the three and six months ended June 30, 1999.
8. INCOME TAXES
Income tax expense differed from the amount that would have resulted from
applying the U.S. federal statutory tax rate due to foreign income taxes and
withholding taxes with no offsetting benefit from U.S. net operating losses, net
of valuation allowances.
9. REPORTABLE SEGMENTS
The Company has two reportable segments: Downhole Products and Services and
Underbalanced Drilling. The Downhole Products and Services segment primarily
provides downhole tools for rental, directional drilling services, electric
wireline and tubing conveyed perforating services and tubular testing and
handling services. The Underbalanced Drilling segment provides air drilling
services and underbalanced drilling equipment packages.
SIX MONTHS ENDED JUNE 30,
1999 1998
---------- ----------
(IN THOUSANDS)
Revenues:
Downhole Products & Services
Rental Revenue .............. $ 19,488 $ 32,775
Products & Services ......... 18,945 21,083
---------- ----------
Total ................... 38,433 53,858
Underbalanced Drilling
Products & Services .......... 1,528 2,067
Underbalanced Drilling ....... 11,419 15,874
---------- ----------
Total ................... 12,947 17,941
---------- ----------
Total Reportable Segment Revenue .. $ 51,380 $ 71,799
========== ==========
Operating Income (Loss):
Downhole Products & Services ...... $ (4,214) $ 7,446
Underbalanced Drilling ............ (2,154) 427
---------- ----------
Total Reportable Segment
Operating Income (Loss) ........... $ (6,368) $ 7,873
========== ==========
9
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A reconciliation of operating income (loss) from segments to consolidated
total operating loss is as follows:
SIX MONTHS ENDED JUNE 30,
------------------------------
1999 1998
------------ ------------
(IN THOUSANDS)
Operating Income (Loss)
Total Operating Income (Loss) for
Reportable Segments .................. $ (6,368) $ 7,873
Non-Operating Segments
Selling, General and Administrative .. (5,499) (5,969)
Depreciation & Amortization .......... (470) (393)
Reorganization Costs ................. (2,711) --
Non-Cash Compensation Expense ........ (110) (471)
Interest Expense ..................... (11,264) (10,817)
Other Income ........................... 949 2,121
------------ ------------
Consolidated Loss Before Taxes and
Extraordinary Item .................. $ (25,473) $ (7,656)
============ ============
Segment assets:
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
(IN THOUSANDS)
Downhole Products & Services..... $ 144,225 $ 143,084
Underbalanced Drilling........... 71,978 79,578
------------ ------------
Total Assets for Reportable Segments 216,203 222,662
Non-Operating Segment Assets..... 21,376 49,511
------------ ------------
Consolidated Assets.............. $ 237,579 $ 272,173
============ ============
Non-operating segment assets primarily consist of cash and cash equivalents,
corporate property and equipment and certain deferred costs.
10
10
10. CONSOLIDATING FINANCIAL STATEMENTS
On May 28, 1999 the Company and certain of its subsidiaries ("Entities in
Reorganization Proceedings") filed petitions for relief under Chapter 11 of the
United States Bankruptcy Code, while other of its subsidiaries ("Entities Not in
Reorganization Proceedings") did not file. Accordingly, the following condensed
consolidating balance sheets as of June 30, 1999 and December 31, 1998 and the
related condensed consolidating statements of operations for the three and six
months ended June 30, 1999 and 1998 and statements of cash flows for the six
months ended June 30, 1999 and 1998 have been provided. The condensed
consolidating financial statements herein are followed by notes which are an
integral part of these statements.
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 1999
(IN THOUSANDS)
(UNAUDITED)
ASSETS
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
-------------- --------------- ------------- -------------
Current assets:
Cash and cash equivalents ............... $ 10,678 $ 1,921 $ -- $ 12,599
Accounts receivable, net ................ 19,750 7,968 -- 27,718
Prepaid expenses and other current
assets ................................ 6,027 1,342 -- 7,369
-------------- ------------- ------------- -------------
Total current assets ............ 36,455 11,231 -- 47,686
Revenue producing tools and
inventory, net ....................... 105,734 26,241 -- 131,975
Property and equipment, net ............. 9,682 3,062 -- 12,744
Goodwill, net ........................... 21,507 186 -- 21,693
Investments in subsidiaries ............. 75,548 -- (75,548) --
Investment in joint venture ............. 7,734 -- -- 7,734
Intangibles and other assets ............ 11,193 4,554 -- 15,747
-------------- ------------- ------------- -------------
Total assets .................... $ 267,853 $ 45,274 $ (75,548) $ 237,579
============== ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities not subject to compromise:
Current liabilities:
Accounts payable and accrued
liabilities-prepetition............... $ 3,225 $ -- $ -- $ 3,225
Accounts payable and accrued
liabilities-postpetition.............. 4,330 2,791 -- 7,121
Accounts payable to affiliates-
postpetition.......................... (43,872) 43,968 -- 96
Income taxes payable-prepetition......... 1,753 -- -- 1,753
Income taxes payable-postpetition........ (119) 2,447 -- 2,328
Current portion of long-term debt-
prepetition .......................... 14 429 -- 443
------------- ------------- ------------- -------------
Total current liabilities not
subject to compromise.......... (34,669) 49,635 -- 14,966
Liabilities subject to compromise:
Senior notes (Note 7).................... 275,000 -- -- 275,000
Accrued interest on senior notes
(Note 7).............................. 7,409 -- -- 7,409
------------- ------------- ------------- -------------
Total current liabilities subject
to compromise.................. 282,409 -- -- 282,409
Deferred income taxes ................... 1,510 4,476 -- 5,986
Other noncurrent liabilities ............ 342 528 -- 870
Long-term debt .......................... 68 -- -- 68
Stockholders' equity:
Common stock ............................ 114 1,722 (1,730) 106
Treasury stock .......................... (4,061) -- -- (4,061)
Paid in capital ......................... 76,903 23,550 (47,336) 53,117
Accumulated other comprehensive
income (loss) .......................... 28 (1,910) -- (1,882)
Retained earnings (deficit).............. (54,791) (32,727) (26,482) (114,000)
------------- ------------- ------------- -------------
Total stockholders'
equity (deficit)............... 18,193 (9,365) (75,548) (66,720)
------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity (deficit). $ 267,853 $ 45,274 $ (75,548) $ 237,579
============= ============= ============= =============
See accompanying notes.
11
11
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
(IN THOUSANDS)
ASSETS
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
-------------- --------------- ------------ ------------
Current assets:
Cash and cash equivalents ........... $ 31,519 $ 1,324 $ -- $ 32,843
Accounts receivable, net ............ 22,358 10,445 -- 32,803
Accounts receivable from
affiliates ....................... 45,371 (45,009) -- 362
Prepaid expenses and other
current assets ................... 3,420 1,358 -- 4,778
---------- ---------- ---------- ----------
Total current assets ........ 102,668 (31,882) -- 70,786
Revenue producing tools and
inventory, net ................... 114,325 27,199 -- 141,524
Property and equipment, net ......... 10,476 2,779 -- 13,255
Investments in subsidiaries ......... 41,957 -- (41,957) --
Goodwill, net ....................... 22,089 186 -- 22,275
Investment in joint venture ......... 7,100 -- -- 7,100
Intangibles and other assets ........ 12,104 5,129 -- 17,233
---------- ---------- ---------- ----------
Total assets ................ $ 310,719 $ 3,411 $ (41,957) $ 272,173
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities ..................... $ 11,427 $ 3,831 $ -- $ 15,258
Accrued interest on senior
notes ........................... 9,797 -- -- 9,797
Income taxes payable .............. 1,780 2,207 -- 3,987
Current portion of long-term
debt ............................ 35 1,013 -- 1,048
---------- ---------- ---------- ----------
Total current liabilities ... 23,039 7,051 -- 30,090
Deferred income taxes.............. 1,512 4,398 -- 5,910
Other noncurrent liabilities....... 479 819 -- 1,298
Long term debt..................... 275,025 35 -- 275,060
Stockholders' equity:
Common stock ........................ 114 1,723 (1,731) 106
Treasury stock ...................... (4,048) -- -- (4,048)
Paid in capital ..................... 76,223 23,549 (47,335) 52,437
Accumulated other comprehensive
income (loss) .................. 166 (1,192) -- (1,026)
Retained earnings (deficit).......... (61,791) (32,972) 7,109 (87,654)
---------- ---------- ---------- ----------
Total stockholders'
equity (deficit)........... 10,664 (8,892) (41,957) (40,185)
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity
(deficit).................. $ 310,719 $ 3,411 $ (41,957) $ 272,173
========== ========== ========== ==========
See accompanying notes.
12
12
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
(UNAUDITED)
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
-------------- -------------- ------------ ------------
Revenues:
Rental income ....................... $ 8,378 $ 1,374 $ -- $ 9,752
Sales of products and services ...... 8,275 1,205 -- 9,480
Underbalanced drilling services ..... 2,989 820 -- 3,809
------------ ------------ ------------ ------------
19,642 3,399 -- 23,041
Cost and expenses:
Cost of rentals ..................... 6,848 1,170 (17) 8,001
Cost of products and services ....... 4,751 782 -- 5,533
Cost of underbalanced drilling ...... 1,839 996 -- 2,835
Selling, general and
administrative ................... 5,924 1,806 (58) 7,672
Depreciation and amortization ....... 5,297 1,120 -- 6,417
Reorganization costs:
Severance and retention ........... 233 -- -- 233
Chapter 11 proceedings ............ 970 -- -- 970
Other ............................. 449 -- -- 449
Non-cash compensation ............... 55 -- -- 55
Research and development ............ 69 150 -- 219
------------ ------------ ------------ ------------
26,435 6,024 (75) 32,384
------------ ------------ ------------ ------------
Operating income (loss) ............... (6,793) (2,625) 75 (9,343)
Other (income) expense:
Interest income ..................... (158) 3 -- (155)
Interest expense .................... 4,451 37 -- 4,488
Equity in subsidiaries, net
of taxes ......................... 4,232 -- (4,232) --
Equity in earnings of joint venture . (125) -- -- (125)
Other, net .......................... 232 160 75 467
------------ ------------ ------------ ------------
Income (loss) before taxes ............ (15,425) (2,825) 4,232 (14,018)
Income tax provision (benefit) ........ 115 (323) -- (208)
------------ ------------ ------------ ------------
Net income (loss) ..................... $ (15,540) $ (2,502) $ 4,232 $ (13,810)
============ ============ ============ ============
See accompanying notes.
13
13
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
-------------- --------------- ------------ ------------
Revenues:
Rental income .................... $ 14,613 $ 2,471 $ -- $ 17,084
Sales of products and services ... 9,982 1,419 -- 11,401
Underbalanced drilling services .. 3,600 1,694 -- 5,294
------------ ------------ ------------ ------------
28,195 5,584 -- 33,779
Cost and expenses:
Cost of rentals .................. 9,731 1,799 (36) 11,494
Cost of products and services .... 5,024 1,195 -- 6,219
Cost of underbalanced drilling ... 1,335 1,691 -- 3,026
Selling, general and
administrative ................ 6,726 1,941 (122) 8,545
Depreciation and amortization .... 4,885 1,188 -- 6,073
Non-cash compensation ............ 286 -- -- 286
Research and development ......... 58 67 -- 125
------------ ------------ ------------ ------------
28,045 7,881 (158) 35,768
------------ ------------ ------------ ------------
Operating income (loss) ............ 150 (2,297) 158 (1,989)
Other (income) expense:
Interest income .................. (1,178) (24) -- (1,202)
Interest expense ................. 6,394 142 -- 6,536
Equity in subsidiaries, net
of taxes ...................... 2,911 -- (2,911) --
Other, net ....................... (145) 75 158 88
------------ ------------ ------------ ------------
Income (loss) before taxes ......... (7,832) (2,490) 2,911 (7,411)
Income tax provision (benefit) ..... 560 (262) -- 298
------------ ------------ ------------ ------------
Income (loss) before extraordinary
item ............................ (8,392) (2,228) 2,911 (7,709)
------------ ------------ ------------ ------------
Net income (loss) .................. $ (8,392) $ (2,228) $ 2,911 $ (7,709)
============ ============ ============ ============
See accompanying notes.
14
14
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
(UNAUDITED)
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
Revenues:
Rental income .................................. $ 16,735 $ 2,753 $ -- $ 19,488
Sales of products and services ................. 16,303 4,170 -- 20,473
Underbalanced drilling services ................ 5,413 6,006 -- 11,419
------------ ------------ ------------ ------------
38,451 12,929 -- 51,380
Cost and expenses:
Cost of rentals ................................ 14,417 2,124 (47) 16,494
Cost of products and services .................. 9,248 1,951 -- 11,199
Cost of underbalanced drilling ................. 3,233 4,466 -- 7,699
Selling, general and administrative ............ 11,691 3,590 (146) 15,135
Depreciation and amortization .................. 10,573 2,254 -- 12,827
Reorganization costs:
Severance and retention ...................... 1,472 -- -- 1,472
Chapter 11 proceedings ....................... 970 -- -- 970
Other ........................................ 449 -- -- 449
Non-cash compensation .......................... 110 -- -- 110
Research and development ....................... 145 306 -- 451
------------ ------------ ------------ ------------
52,308 14,691 (193) 66,806
------------ ------------ ------------ ------------
Operating income (loss) ......................... (13,857) (1,762) 193 (15,426)
Other (income) expense:
Interest income ................................ (901) (1) -- (902)
Interest expense ............................... 11,303 85 -- 11,388
Equity in subsidiaries, net of taxes ........... 5,754 -- (5,754) --
Equity in earnings of joint venture ............ (634) -- -- (634)
Other, net ..................................... 88 (86) 193 195
------------ ------------ ------------ ------------
Income (loss) before taxes ....................... (29,467) (1,760) 5,754 (25,473)
Income tax provision ............................. 396 477 -- 873
------------ ------------ ------------ ------------
Net income (loss) ................................ $ (29,863) $ (2,237) $ 5,754 $ (26,346)
============ ============ ============ ============
See accompanying notes.
15
15
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
-------------- ---------------- ------------ ------------
Revenues:
Rental income .................... $ 29,078 $ 3,697 $ -- $ 32,775
Sales of products and services ... 18,935 4,215 -- 23,150
Underbalanced drilling services .. 7,338 8,536 -- 15,874
---------- ---------- ---------- ----------
55,351 16,448 -- 71,799
Cost and expenses:
Cost of rentals .................. 18,776 2,867 (94) 21,549
Cost of products and services .... 9,777 2,810 -- 12,587
Cost of underbalanced drilling ... 2,535 6,256 -- 8,791
Selling, general and
administrative ................ 12,882 3,402 (211) 16,073
Depreciation and amortization .... 9,112 1,589 -- 10,701
Non-cash compensation ............ 471 -- -- 471
Research and development ......... 137 67 -- 204
---------- ---------- ---------- ----------
53,690 16,991 (305) 70,376
---------- ---------- ---------- ----------
Operating income (loss) ............ 1,661 (543) 305 1,423
Other (income) expense:
Interest income .................. (2,138) (26) -- (2,164)
Interest expense ................. 10,860 170 -- 11,030
Equity in subsidiaries, net
of taxes ...................... 1,631 -- (1,631) --
Other, net ....................... (262) 170 305 213
---------- ---------- ---------- ----------
Income (loss) before taxes ......... (8,430) (857) 1,631 (7,656)
Income tax provision ............... 927 831 -- 1,758
---------- ---------- ---------- ----------
Income (loss) before extraordinary
item ............................ (9,357) (1,688) 1,631 (9,414)
Extraordinary item ................. (17,579) -- -- (17,579)
---------- ---------- ---------- ----------
Net income (loss) .................. $ (26,936) $ (1,688) $ 1,631 $ (26,993)
========== ========== ========== ==========
See accompanying notes.
16
16
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
(UNAUDITED)
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
-------------- -------------- ------------ ------------
OPERATING ACTIVITIES:
Net loss ........................................ $ (29,863) $ (2,237) $ 5,754 $ (26,346)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Equity in earnings of subsidiaries ............ 5,754 -- (5,754) --
Depreciation and amortization ................. 10,573 2,254 -- 12,827
Deferred income taxes ......................... (1) 78 -- 77
Amortization of debt issuance costs ........... 432 -- -- 432
Provision for doubtful accounts ............... 168 15 -- 183
Provision for stock awards .................... 680 -- -- 680
(Gain) loss on sale and disposition of
property and equipment ..................... (124) 8 -- (116)
Equity income of unconsolidated subsidiary .... (634) -- -- (634)
Changes in operating assets and liabilities,
(net of effects of acquisitions)
Accounts receivable-trade ..................... 2,921 1,981 -- 4,902
Accounts receivable from/payable to
officers and affiliates ..................... (983) 1,441 -- 458
Prepaid expenses and other .................... (2,537) 197 -- (2,340)
Accounts payable and accrued liabilities ...... (6,230) (591) -- (6,821)
Income taxes payable .......................... (145) 239 -- 94
Reorganization items .......................... 6,059 -- -- 6,059
--------- --------- ---------- ----------
Net cash provided by (used in) operating
before reorganization items ................... (13,930) 3,385 -- (10,545)
Reorganization items:
Professional fees paid for services rendered
in connection with the Chapter 11
proceedings ................................ (1,719) -- -- (1,719)
Professional fees paid for services rendered
in connection with the sale of the
Company .................................... (3,638) -- -- (3,638)
Severance costs .............................. (702) -- -- (702)
--------- --------- ---------- ----------
Net cash used by reorganization items ........... (6,059) -- -- (6,059)
--------- --------- ---------- ----------
Net cash used in operating activities ........... (19,989) 3,385 -- (16,604)
INVESTING ACTIVITIES:
Additions to revenue-producing tools and
inventory ...................................... (2,806) (3,753) -- (6,559)
Inventory transferred to cost of rentals ........ 2,644 366 -- 3,010
Revenue-producing tools lost in hole,
abandoned, and sold ............................ -- 1,869 -- 1,869
Additions to property and equipment ............. (709) (391) -- (1,100)
Proceeds from sale of property and equipment .... 714 89 -- 803
Unrealized loss on cash equivalent investments .. (137) -- -- (137)
--------- --------- ---------- ----------
Net cash used in investing activities ........... (294) (1,820) -- (2,114)
FINANCING ACTIVITIES:
Payments on outstanding debt .................... (70) (527) -- (597)
Purchase of treasury stock ...................... (13) -- -- (13)
--------- --------- ---------- ----------
Net cash by (used in) financing activities ...... (83) (527) -- (610)
--------- --------- ---------- ----------
Effect of foreign exchange rate changes on cash.. 1 (917) -- (916)
--------- --------- ---------- ----------
Increase (decrease) in cash and cash equivalents. (20,365) 121 -- (20,244)
Cash and cash equivalents at beginning of period. 31,519 1,324 -- 32,843
--------- --------- ---------- ----------
Cash and cash equivalents at end of period ...... $ 11,154 $ 1,445 $ -- $ 12,599
========= ========= ========== ==========
See accompanying notes.
17
17
DAILEY INTERNATIONAL INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
ENTITIES IN ENTITIES NOT IN
REORGANIZATION REORGANIZATION
PROCEEDINGS PROCEEDINGS ELIMINATIONS CONSOLIDATED
-------------- ---------------- ------------ ------------
OPERATING ACTIVITIES:
Net income (loss) ............................... $ (26,935) $ (1,689) $ 1,631 $ (26,993)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Equity in earnings of subsidiaries ............ 1,631 -- (1,631) --
Extraordinary loss on repurchase of notes ..... 17,579 -- -- 17,579
Depreciation and amortization ................. 9,067 1,634 -- 10,701
Deferred income taxes ......................... (1) 1 -- --
Provision for doubtful accounts ............... 183 15 -- 198
Provision for stock awards .................... 471 -- -- 471
Gain on sale and disposition of
property and equipment ..................... (25) 3 -- (22)
Changes in operating assets and liabilities,
(net of effects of acquisitions):
Accounts receivable-trade ..................... (2,350) 2,193 -- (157)
Accounts receivable from/payable to
officers and affiliates .................... (2,689) 2,201 -- (488)
Prepaid expenses and other .................... (5,985) (81) -- (6,066)
Accounts payable and accrued
liabilities ................................ 5,166 2,742 -- 7,908
Income taxes payable .......................... 685 280 -- 965
------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities .................................... (3,203) 7,299 -- 4,096
INVESTING ACTIVITIES:
Additions to revenue-producing tools and
inventory ...................................... (28,377) (4,902) -- (33,279)
Inventory transferred to cost of rentals ........ 3,880 417 -- 4,297
Revenue-producing tools lost in hole,
abandoned, and sold ............................ 1,293 (135) -- 1,158
Additions to property and equipment ............. (1,998) (1,514) -- (3,512)
Proceeds from sale of property and
equipment ...................................... 40 -- -- 40
Acquisitions .................................... (77,037) -- -- (77,037)
------------ ------------ ------------ ------------
Net cash used in investing activities ........... (102,199) (6,134) -- (108,333)
FINANCING ACTIVITIES:
Proceeds from the issuance of Senior Notes ...... 268,125 -- -- 268,125
Payments on outstanding debt .................... (120,951) (797) -- (121,748)
Extraordinary loss on repurchase of notes ....... (12,650) -- -- (12,650)
------------ ------------ ------------ ------------
Net cash provided by (used in) financing
activities ..................................... 134,524 (797) -- 133,727
------------ ------------ ------------ ------------
Effect of foreign exchange rate changes
on cash ........................................ -- (427) -- (427)
------------ ------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents .................................... 29,122 (59) -- 29,063
Cash and cash equivalents at beginning
of period ...................................... 57,532 2,305 -- 59,837
------------ ------------ ------------ ------------
Cash and cash equivalents at end
of period ...................................... $ 86,654 $ 2,246 $ -- $ 88,900
============ ============ ============ ============
See accompanying notes.
18
18
A. SIGNIFICANT ACCOUNTING POLICIES
Elimination Entries
Revenues and related costs of sales have been presented net of
intercompany transactions.
B. OTHER
Notes 1 through 9 should be read in conjunction with the Condensed
Consolidating Financial Statements.
19