| Schedule of Business Acquisition |
The following details the fair value of the consideration
transferred to effect the ITS Acquisition (dollars in
thousands).
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Cash paid to, or on behalf of, ITS and its equity holders
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$ |
101,000 |
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Cash deposited in escrow
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19,000 |
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Fair value of contingent consideration deposited in escrow for
assets not acquired(1)
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5,000 |
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Total fair value of the consideration transferred
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$ |
125,000 |
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(1) |
Based on the terms of the Agreement,
$5.0 million of the $24.0 million in escrow to be paid to the
seller is contingent upon certain future liabilities that could
become due by ITS in certain jurisdictions. Any payments in
relation to these liabilities will be deducted from the $5.0
million escrow amount and the net balance of the escrow will be
paid to the seller. We estimate that the entire $5.0 million in
escrow will be paid to the seller, and therefore, the estimated
fair value of the consideration in escrow related to these
liabilities is $5.0 million. We do not expect to receive any amount
back from escrow, and therefore did not record a receivable from
the escrow. Any changes to the fair value of the contingent
consideration in the future of less than $5.0 million will result
in recording a receivable from escrow. The receivable will be
recorded at fair value. As of September 30, 2013, the fair
value of the receivable is $0.0 million. |
Preliminary Allocation of Consideration Transferred to Net
Assets Acquired
The following amounts represent the preliminary estimates of fair
value of identifiable assets acquired and liabilities assumed in
the ITS Acquisition and are based on management’s estimates,
judgments and assumptions. These estimates, judgments and
assumptions are subject to change upon final valuation and should
be treated as preliminary values. Management estimated that the
fair value of the net assets acquired less noncontrolling interest
equals consideration paid. Therefore, there was no goodwill
recorded.
The final allocation of consideration will include changes in
(1) amounts deposited in escrow, (2) estimated fair
values of property and equipment, (3) allocations to
intangible assets and liabilities, (4) changes in contingent
consideration, and (5) other assets and liabilities. These
amounts will be finalized as soon as possible, but no later than
one year from the acquisition date.
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April 22, 2013 |
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(In thousands) |
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Cash and cash equivalents
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$ |
7,009 |
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Accounts and notes receivable, net(1)
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48,795 |
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Other current assets
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1,803 |
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Accounts payable and accrued liabilities
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(39,156 |
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Accrued income taxes
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(1,251 |
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Working capital excluding rig materials and supplies
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17,200 |
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Rig materials and supplies
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11,514 |
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Property, plant and equipment, net(2)
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70,339 |
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Investment in joint venture
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4,134 |
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Other noncurrent assets
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2,818 |
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Total tangible assets
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106,005 |
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Deferred income tax assets — current
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222 |
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Deferred income tax assets — noncurrent(3)
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14,153 |
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Intangible assets(4)
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Trade name, developed technology, and customer relationship
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10,000 |
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Indefinite-lived intangible assets
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200 |
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Total assets acquired
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130,580 |
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Other long-term liabilities
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(211 |
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Long-term deferred tax liability
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(2,661 |
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Net assets acquired
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127,708 |
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Less: Noncontrolling interest(5)
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(2,708 |
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Total consideration transferred
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$ |
125,000 |
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(1) |
Gross contractual amounts receivable
totaled $54.7 million as of the acquisition date. |
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(2) |
We recorded an adjustment of $43.7
million to reduce the historical carrying value of the acquired
property, plant and equipment to its estimated fair value. |
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(3) |
In connection with the ITS
Acquisition, we recorded a $7.7 million adjustment to increase
deferred income tax assets primarily related to the differences
between acquisition date estimated fair value and tax basis of
acquired property, plant and equipment. |
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(4) |
We recorded $10.0 million and $0.2
million to reflect the estimated fair values of definite and
indefinite lived intangible assets, respectively, recognized in
connection with the ITS Acquisition. Our depreciation and
amortization expense will reflect this valuation adjustment as the
definite lived intangible assets are amortized in future periods.
Definite lived intangible assets recorded in connection with the
ITS Acquisition, which primarily relate to trade names, customer
relationships, and developed technology will be amortized over a
weighted average period of approximately 3.4 years. |
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(5) |
We recorded an adjustment of $1.0
million to write-down the noncontrolling interest to its estimated
fair value. The estimated fair value of the noncontrolling interest
was calculated as a percentage of the net assets acquired related
to certain subsidiaries in which ITS holds less than a 100 percent
controlling interest. The fair value of the net assets of these
subsidiaries was primarily based on the income approach valuation
model. |
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| Schedule of Pro Forma Information for Business Acquisition |
The following unaudited supplemental pro forma results present
consolidated information for the nine months ended
September 30, 2013 as if the ITS Acquisition had been
completed on January 1, 2012. The pro forma results have
been calculated after applying our accounting policies and include,
among others, (i) the amortization associated with the fair
value of the acquired intangible assets, (ii) interest expense
associated with the Goldman Term Loan and (iii) the impact of
certain fair value adjustments such as a decrease in depreciation
expense related to the write-down in property, plant and equipment.
The pro forma results do not include any potential synergies,
non-recurring charges which result directly from the ITS
Acquisition, cost savings or other expected benefits of the ITS
Acquisition. The pro forma financial information does not
necessarily represent what would have occurred if the transaction
had taken place at the beginning of the period presented and should
not be taken as representative of our future consolidated results
of operations. We have not concluded our integration work.
Accordingly, this pro forma information does not include all costs
related to the integration nor the benefits we expect to realize
from operating synergies.
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Nine Months Ended
September 30, |
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2013 |
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2012 |
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(Dollars in thousands, except per share data) |
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Revenue
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$ |
671,738 |
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$ |
614,679 |
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Net income
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$ |
33,081 |
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$ |
54,927 |
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Net income attributable to Parker Drilling
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$ |
32,629 |
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$ |
55,073 |
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Earnings per share — basic
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$ |
0.27 |
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$ |
0.47 |
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Earnings per share — diluted
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$ |
0.27 |
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$ |
0.46 |
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Basic number of shares
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119,443,260 |
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117,458,365 |
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Diluted number of shares
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121,693,781 |
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118,810,195 |
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