Parker Wellbore Registration of securities issued in business combination transactions

Registration of securities issued in business combination transactions

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

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

3 Months Ended

12 Months Ended

Mar. 31, 2014

Dec. 31, 2013

Text Block [Abstract]

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

12.

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

Set forth on the following pages are the consolidating condensed financial statements of Parker Drilling. The Company’s Secured Credit Agreement and Senior Notes are fully and unconditionally guaranteed by substantially all of our direct and indirect domestic subsidiaries other than immaterial subsidiaries and subsidiaries generating revenues primarily outside the United States, subject to the following customary release provisions:

•

in connection with any sale or other disposition of all or substantially all of the assets of that guarantor (including by way of merger or consolidation) to a person that is not (either before or after giving effect to such transaction) a subsidiary of the Company;

•

in connection with any sale of such amount of capital stock as would result in such guarantor no longer being a subsidiary to a person that is not (either before or after giving effect to such transaction) a subsidiary of the Company;

•

if the Company designates any restricted subsidiary that is a guarantor as an unrestricted subsidiary;

•

if the guarantee by a guarantor of all other indebtedness of the Company or any other guarantor is released, terminated or discharged, except by, or as a result of, payment under such guarantee; or

•

upon legal defeasance or covenant defeasance (satisfaction and discharge of the indenture).

There are currently no restrictions on the ability of the restricted subsidiaries to transfer funds to Parker Drilling in the form of cash dividends, loans or advances. Parker Drilling is a holding company with no operations, other than through its subsidiaries. Separate financial statements for each guarantor company are not provided as the Company complies with the exception to Rule 3-10(a)(1) of Regulation S-X, set forth in sub-paragraph (f) of such rule. All guarantor subsidiaries are owned 100 percent by the parent company.

We are providing consolidating condensed financial information of the parent, Parker Drilling, the guarantor subsidiaries, and the non-guarantor subsidiaries as of March 31, 2014 and December 31, 2013 and for the three months ended March 31, 2014 and 2013. The consolidating condensed financial statements present investments in both consolidated and unconsolidated subsidiaries using the equity method of accounting.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

(Dollars in Thousands)

(Unaudited)


	March 31, 2014
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	30,649		$	15,916		$	46,496		$	—		$	93,061
Accounts and notes receivable, net		(12	)		122,122			142,327			—			264,437
Rig materials and supplies		—			2,578			41,910			—			44,488
Deferred costs		—			—			10,698			—			10,698
Deferred income taxes		(2	)		7,447			1,528			—			8,973
Other tax assets		50,772			(42,985	)		15,526			—			23,313
Other current assets		—			6,122			14,040			—			20,162

Total current assets		81,407			111,200			272,525			—			465,132

Property, plant and equipment, net		(19	)		564,469			309,850			—			874,300
Investment in subsidiaries and intercompany advances		2,043,180			(135,328	)		1,892,995			(3,800,847	)		—
Other noncurrent assets		(450,209	)		475,387			253,763			(118,005	)		160,936

Total assets	$	1,674,359		$	1,015,728		$	2,729,133		$	(3,918,852	)	$	1,500,368

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	18,801		$	—		$	—		$	—		$	18,801
Accounts payable and accrued liabilities		67,464			92,591			262,044			(254,644	)		167,455
Accrued income taxes		(4,420	)		6,767			14,848			—			17,195

Total current liabilities		81,845			99,358			276,892			(254,644	)		203,451

Long-term debt		612,574			—			—			—			612,574
Other long-term liabilities		5,036			6,664			5,827			—			17,527
Long-term deferred tax liability		—			50,229			(9,203	)		—			41,026
Intercompany payables		354,161			514,644			626,054			(1,494,859	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		20,164			18,049			43,003			(61,052	)		20,164
Capital in excess of par value		660,742			740,441			1,572,919			(2,313,360	)		660,742
Retained earnings (accumulated deficit)		(60,163	)		(413,657	)		208,594			205,063			(60,163	)
Accumulated other comprehensive income		—			—			1,783			—			1,783

Total controlling interest stockholders’ equity		620,743			344,833			1,826,299			(2,169,349	)		622,526

Noncontrolling interest		—			—			3,264			—			3,264

Total equity		620,743			344,833			1,829,563			(2,169,349	)		625,790

Total liabilities and stockholders’ equity	$	1,674,359		$	1,015,728		$	2,729,133		$	(3,918,852	)	$	1,500,368

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

(Dollars in Thousands)

(Unaudited)


	December 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	88,697		$	8,310		$	51,682		$	—		$	148,689
Accounts and notes receivable, net		—			101,299			156,590			—			257,889
Rig materials and supplies		—			3,002			38,779			—			41,781
Deferred costs		—			—			13,682			—			13,682
Deferred income taxes		(57	)		8,435			1,562			—			9,940
Other tax assets		54,524			(46,770	)		16,325			—			24,079
Other current assets		—			9,089			14,134			—			23,223

Total current assets		143,164			83,365			292,754			—			519,283

Property, plant and equipment, net		60			562,148			309,148			—			871,356
Investment in subsidiaries and intercompany advances		1,906,128			(336,570	)		1,667,937			(3,237,495	)		—
Other noncurrent assets		(457,954	)		468,864			250,983			(117,776	)		144,117

Total assets	$	1,591,398		$	777,807		$	2,520,822		$	(3,355,271	)	$	1,534,756

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	25,000		$	—		$	—		$	—		$	25,000
Accounts payable and accrued liabilities		75,268			92,546			261,436			(254,364	)		174,886
Accrued income taxes		—			725			6,541			—			7,266

Total current liabilities		100,268			93,271			267,977			(254,364	)		207,152

Long-term debt		628,781			—			—			—			628,781
Other long-term liabilities		5,037			6,743			15,134			—			26,914
Long-term deferred tax liability		—			51,747			(12,980	)		—			38,767
Intercompany payables		227,504			291,783			422,645			(941,932	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		20,075			18,049			43,003			(61,052	)		20,075
Capital in excess of par value		657,349			740,438			1,572,919			(2,313,357	)		657,349
Retained earnings (accumulated deficit)		(47,616	)		(424,224	)		208,790			215,434			(47,616	)
Accumulated other comprehensive income		—			—			1,888			—			1,888

Total controlling interest stockholders’ equity		629,808			334,263			1,826,600			(2,158,975	)		631,696

Noncontrolling interest		—			—			1,446			—			1,446

Total Equity		629,808			334,263			1,828,046			(2,158,975	)		633,142

Total liabilities and stockholders’ equity	$	1,591,398		$	777,807		$	2,520,822		$	(3,355,271	)	$	1,534,756

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)


	Three months ended March 31, 2014
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	123,431		$	149,132		$	(43,338	)	$	229,225
Operating expenses		—			76,548			132,815			(43,338	)		166,025
Depreciation and amortization		—			20,168			14,169			—			34,337

Total operating gross margin		—			26,715			2,148			—			28,863

General and administration expense(1)		(70	)		(8,464	)		(430	)		—			(8,964	)
Gain on disposition of assets, net		(79	)		(81	)		31			—			(129	)

Total operating income (loss)		(149	)		18,170			1,749			—			19,770
Other income and (expense):
Interest expense		(12,715	)		(50	)		(2,499	)		3,225			(12,039	)
Interest income		439			176			2,642			(3,225	)		32
Extinguishment of debt		(29,673	)		—			—			—			(29,673	)
Other		—			128			767			—			895
Equity in net earnings of subsidiaries		10,489			—			—			(10,489	)		—

Total other income (expense)		(31,460	)		254			910			(10,489	)		(40,785	)

Income (benefit) before income taxes		(31,609	)		18,424			2,659			(10,489	)		(21,015	)

Total income tax expense (benefit)		(19,060	)		6,384			4,053			—			(8,623	)

Net income (loss)		(12,549	)		12,040			(1,394	)		(10,489	)		(12,392	)

Less: Net income (loss) attributable to noncontrolling interest		—			—			157			—			157

Net income (loss) attributable to controlling interest	$	(12,549	)	$	12,040		$	(1,551	)	$	(10,489	)	$	(12,549	)

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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	104,342		$	86,300		$	(23,507	)	$	167,135
Operating expenses		—			58,578			81,675			(23,507	)		116,746
Depreciation and amortization		—			18,659			10,853			—			29,512

Total operating gross margin		—			27,105			(6,228	)		—			20,877

General and administration expense(1)		(45	)		(12,732	)		(68	)		—			(12,845	)
Gain on disposition of assets, net		—			1,108			40			—			1,148

Total operating income (loss)		(45	)		15,481			(6,256	)		—			9,180
Other income and (expense):
Interest expense		(10,980	)		(24	)		(3,417	)		4,415			(10,006	)
Interest income		1,569			190			2,715			(4,415	)		59
Loss on extinguishment of debt		—			—			—			—			—
Other		37			101			(303	)		—			(165	)
Equity in net earnings of subsidiaries		179			—			—			(179	)		—

Total other income (expense)		(9,195	)		267			(1,005	)		(179	)		(10,112	)

Income (loss) before income taxes		(9,240	)		15,748			(7,261	)		(179	)		(932	)

Income tax expense (benefit)		(9,832	)		5,589			2,739			—			(1,504	)

Net income (loss)		592			10,159			(10,000	)		(179	)		572

Less: Net income (loss) attributable to noncontrolling interest		—			—			(20	)		—			(20	)

Net income (loss) attributable to controlling interest	$	592		$	10,159		$	(9,980	)	$	(179	)	$	592

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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31, 2014
	Parent			Guarantor		Non-Guarantor			Eliminations			Consolidated
Comprehensive income:
Net income (loss)	$	(12,549	)	$	12,040	$	(1,394	)	$	(10,489	)	$	(12,392	)
Other comprehensive loss, net of tax:
Currency translation difference on related borrowings		—			—		(804	)		—			(804	)
Currency translation difference on foreign currency net investments							699						699

Total other comprehensive loss, net of tax:		—			—		(105	)		—			(105	)

Comprehensive income (loss)		(12,549	)		12,040		(1,499	)		(10,489	)		(12,497	)
Comprehensive (income) loss attributable to noncontrolling interest		—			—		(154	)		—			(154	)

Comprehensive income (loss) attributable to controlling interest	$	(12,549	)	$	12,040	$	(1,653	)	$	(10,489	)	$	(12,651	)

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31, 2013
	Parent		Guarantor		Non-Guarantor			Eliminations			Consolidated
Comprehensive income:
Net income (loss)	$	592	$	10,159	$	(10,000	)	$	(179	)	$	572
Other comprehensive loss, net of tax:
Currency translation difference on related borrowings		—		—		—			—			—
Currency translation difference on foreign currency net investments						—						—

Total other comprehensive loss, net of tax:		—		—		—			—			—

Comprehensive income (loss)		592		10,159		(10,000	)		(179	)		572
Comprehensive (income) loss attributable to noncontrolling interest		—		—		20			—			20

Comprehensive income (loss) attributable to controlling interest	$	592	$	10,159	$	(9,980	)	$	(179	)	$	592

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31, 2014
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(12,549	)	$	12,040		$	(1,394	)	$	(10,489	)	$	(12,392	)
Adjustments to reconcile net income (loss):
Depreciation and amortization		—			20,168			14,169			—			34,337
Loss on extinguishment of debt		29,673			—			—			—			29,673
Gain on disposition of assets		79			81			(31	)		—			129
Deferred income tax expense		(17,472	)		3,891			1,289			—			(12,292	)
Expenses not requiring cash		4,180			129			2,535			—			6,844
Equity in net earnings of subsidiaries		(10,489	)		—			—			10,489			—
Change in accounts receivable		11			(18,803	)		12,566			—			(6,226	)
Change in accrued income taxes		(4,420	)		7,206			(2,636	)		—			150
Change in other assets		12,746			(14,180	)		1,040			—			(394	)
Change in liabilities		(8,476	)		(34	)		305			—			(8,205	)

Net cash provided by (used in) operating activities		(6,717	)		10,498			27,843			—			31,624

Cash flows from investing activities:
Capital expenditures		—			(25,523	)		(11,922	)		—			(37,445	)
Proceeds from the sale of assets		—			472			1,154			—			1,626

Net cash (used in) investing activities		—			(25,051	)		(10,768	)		—			(35,819	)

Cash flows from financing activities:
Proceeds from debt issuance		400,000			—			—			—			400,000
Repayments of long term debt		(416,199	)		—			—			—			(416,199	)
Paydown on term note		(2,500	)		—			—			—			(2,500	)
Payment of debt issuance costs		(7,273	)		—			—			—			(7,273	)
Payment of debt extinguishment costs		(25,796	)		—			—			—			(25,796	)
Excess tax benefit from stock-based compensation		335			—			—			—			335
Intercompany advances, net		102			22,159			(22,261	)		—			—

Net cash provided by (used in) financing activities		(51,331	)		22,159			(22,261	)		—			(51,433	)

Net change in cash and cash equivalents		(58,048	)		7,606			(5,186	)		—			(55,628	)
Cash and cash equivalents at beginning of year		88,697			8,310			51,682			—			148,689

Cash and cash equivalents at end of year	$	30,649		$	15,916		$	46,496		$	—		$	93,061

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	592		$	10,159		$	(10,000	)	$	(179	)	$	572
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			18,659			10,853			—			29,512
Gain on disposition of assets		—			(1,108	)		(40	)		—			(1,148	)
Deferred income tax expense		(8,310	)		2,936			3,767			—			(1,607	)
Expenses not requiring cash		2,951			5,875			(1,647	)		—			7,179
Equity in net earnings of subsidiaries		(179	)		—			—			179			—
Change in accounts receivable		(25	)		(14,540	)		(3,992	)		—			(18,557	)
Change in other assets		(3,051	)		(3,030	)		(1,937	)		—			(8,018	)
Change in accrued income taxes		(630	)		1,141			1,049			—			1,560
Change in liabilities		10,412			3,784			3,551			—			17,747

Net cash provided by operating activities		1,760			23,876			1,604			—			27,240

Cash flows from investing activities:
Capital expenditures		—			(21,998	)		(8,025	)		—			(30,023	)
Proceeds from the sale of assets		—			1,504			46			—			1,550

Net cash (used in) investing activities		—			(20,494	)		(7,979	)		—			(28,473	)

Cash flows from financing activities:
Paydown on term note		(2,500	)		—			—			—			(2,500	)
Payment of debt issuance costs		(307	)		—			—			—			(307	)
Excess tax benefit from stock-based compensation		(159	)		—			—			—			(159	)
Intercompany advances, net		2,447			(8,484	)		6,037			—			—

Net cash provided by (used in) financing activities		(519	)		(8,484	)		6,037			—			(2,966	)

Net change in cash and cash equivalents		1,241			(5,102	)		(338	)		—			(4,199	)
Cash and cash equivalents at beginning of year		42,251			11,023			34,612			—			87,886

Cash and cash equivalents at end of year	$	43,492		$	5,921		$	34,274		$	—		$	83,687

Note 18 — Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements

•

if the Company designates any restricted subsidiary that is a guarantor as an unrestricted subsidiary;

•

if the guarantee by a guarantor of all other indebtedness of the Company or any other guarantor is released, terminated or discharged, except by, or as a result of, payment under such guarantee; or

•

upon legal defeasance or covenant defeasance (satisfaction and discharge of the indenture).

There are currently no restrictions on the ability of the restricted subsidiaries to transfer funds to Parker Drilling in the form of cash dividends, loans or advances. Parker Drilling is a holding company with no operations, other than through its subsidiaries. Separate financial statements for each guarantor company are not provided as the company complies with the exception to Rule 3-10(a)(1) of Regulation S-X, set forth in sub-paragraph (f) of such rule. All guarantor subsidiaries are owned 100 percent by the parent company.

We are providing consolidating condensed financial information of the parent, Parker Drilling, the guarantor subsidiaries, and the non-guarantor subsidiaries as of December 31, 2013 and December 31, 2012 and for the years ended December 31, 2013, 2012, and 2011. The consolidating condensed financial statements present investments in both consolidated and unconsolidated subsidiaries using the equity method of accounting.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)


	Year ended December 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	468,073		$	549,295		$	(143,196	)	$	874,172
Operating expenses		—			252,211			462,657			(143,196	)		571,672
Depreciation and amortization		—			77,416			56,637			—			134,053

Total operating gross margin		—			138,446			30,001			—			168,447

General and administration expense(1)		(202	)		(67,083	)		(740	)		—			(68,025	)
Provision for reduction in carrying value of certain assets		—			—			(2,544	)		—			(2,544	)
Gain on disposition of assets, net		—			1,759			2,235			—			3,994

Total operating income (loss)		(202	)		73,122			28,952			—			101,872

Other income and (expense):
Interest expense		(51,439	)		(335	)		(9,930	)		13,884			(47,820	)
Changes in fair value of derivative positions		53			—			—			—			53
Interest income		3,824			1,761			10,749			(13,884	)		2,450
Loss on extinguishment of debt		(5,218	)		—			—			—			(5,218	)
Other		(1	)		(143	)		1,594			—			1,450
Equity in net earnings of subsidiaries		55,430			—			—			(55,430	)		—

Total other income (expense)		2,649			1,283			2,413			(55,430	)		(49,085	)

Income (loss) before income taxes		2,447			74,405			31,365			(55,430	)		52,787
Income tax expense (benefit):
Current		(21,431	)		18,737			15,603			—			12,909
Deferred		(3,137	)		19,454			(3,618	)		—			12,699

Income tax expense (benefit)		(24,568	)		38,191			11,985			—			25,608

Net income (loss)		27,015			36,214			19,380			(55,430	)		27,179

Less: Net (loss) attributable to noncontrolling interest		—			—			164			—			164

Net income (loss) attributable to controlling interest	$	27,015		$	36,214		$	19,216		$	(55,430	)	$	27,015

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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)


	Year ended December 31, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	393,738		$	385,279		$	(101,256	)	$	677,761
Operating expenses		—			184,946			329,498			(101,256	)		413,188
Depreciation and amortization		—			65,354			47,663			—			113,017

Total operating gross margin		—			143,438			8,118			—			151,556

General and administration expense(1)		(182	)		(45,758	)		(317	)		—			(46,257	)
Gain on disposition of assets, net		—			775			1,199			—			1,974

Total operating income (loss)		(182	)		98,455			9,000			—			107,273

Other income and (expense):
Interest expense		(37,326	)		(151	)		(8,739	)		12,674			(33,542	)
Interest income		9,863			5,073			41,999			(56,782	)		153
Loss on extinguishment of debt		(2,130	)		—			—			—			(2,130	)
Changes in fair value of derivative positions		55			—			—			—			55
Other		—			(206	)		(626	)		—			(832	)
Equity in net earnings of subsidiaries		43,884			—			—			(43,884	)		—

Total other income (expense)		14,346			4,716			32,634			(87,992	)		(36,296	)

Income (loss) before income taxes		14,164			103,171			41,634			(87,992	)		70,977
Income tax expense (benefit):
Current		(25,406	)		32,781			10,667			—			18,042
Deferred		2,257			15,429			(1,849	)		—			15,837

Income tax expense (benefit)		(23,149	)		48,210			8,818			—			33,879

Net income (loss)		37,313			54,961			32,816			(87,992	)		37,098

Less: Net (loss) attributable to noncontrolling interest		—			—			(215	)		—			(215	)

Net income (loss) attributable to controlling interest		37,313			54,961			33,031			(87,992	)		37,313

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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)


	Year ended December 31, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	375,798		$	426,491		$	(116,055	)	$	686,234
Operating expenses		—			174,955			357,777			(116,055	)		416,677
Depreciation and amortization		—			62,744			49,392			—			112,136

Total operating gross margin		—			138,099			19,322			—			157,421

General and administration expense(1)		(218	)		(30,968	)		(381	)		—			(31,567	)
Impairment and other charges		—			(170,000	)		—			—			(170,000	)
Provision for reduction in carrying value of certain assets		—			(1,350	)		—			—			(1,350	)
Gain on disposition of assets, net		—			2,706			953			—			3,659

Total operating income (loss)		(218	)		(61,513	)		19,894			—			(41,837	)

Other income and (expense):
Interest expense		(26,654	)		(17,889	)		(8,865	)		30,814			(22,594	)
Interest income		18,131			750			12,189			(30,814	)		256
Loss on extinguishment of debt		—			—			—			—			—
Changes in fair value of derivative positions		(110	)		—			—			—			(110	)
Other		—			(315	)		(812	)		—			(1,127	)
Equity in net earnings of subsidiaries		(23,484	)		—			—			23,484			—

Total other income and (expense)		(32,117	)		(17,454	)		2,512			23,484			(23,575	)
Income (loss) before income taxes		(32,335	)		(78,967	)		22,406			23,484			(65,412	)
Income tax expense (benefit):
Current		(13,402	)		27,169			19,841			—			33,608
Deferred		31,518			(57,030	)		(22,863	)		—			(48,375	)

Total income tax expense (benefit)		18,116			(29,861	)		(3,022	)		—			(14,767	)
Net income (loss)		(50,451	)		(49,106	)		25,428			23,484			(50,645	)
Less: Net (loss) attributable to noncontrolling interest	$	—		$	—		$	(194	)	$	—		$	(194	)

Net income (loss) attributable to controlling interest		(50,451	)		(49,106	)		25,622			23,484			(50,451	)

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

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

(Dollars in Thousands)

(Unaudited)


	December 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	88,697		$	8,310		$	51,682		$	—		$	148,689
Accounts and notes receivable, net		—			101,299			156,590			—			257,889
Rig materials and supplies		—			3,002			38,779			—			41,781
Deferred costs		—			—			13,682			—			13,682
Deferred income taxes		(57	)		8,435			1,562			—			9,940
Other tax assets		54,524			(46,770	)		16,325			—			24,079
Other current assets		—			9,089			14,134			—			23,223

Total current assets		143,164			83,365			292,754			—			519,283

Property, plant and equipment, net		60			562,148			309,148			—			871,356
Investment in subsidiaries and intercompany advances		1,906,128			(336,570	)		1,667,937			(3,237,495	)		—
Other noncurrent assets		(457,954	)		468,864			250,983			(117,776	)		144,117

Total assets	$	1,591,398		$	777,807		$	2,520,822		$	(3,355,271	)	$	1,534,756

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	25,000		$	—		$	—		$	—		$	25,000
Accounts payable and accrued liabilities		75,268			92,546			261,436			(254,364	)		174,886
Accrued income taxes		—			725			6,541			—			7,266

Total current liabilities		100,268			93,271			267,977			(254,364	)		207,152

Long-term debt		628,781			—			—			—			628,781
Other long-term liabilities		5,037			6,743			15,134			—			26,914
Long-term deferred tax liability		—			51,747			(12,980	)		—			38,767
Intercompany payables		227,504			291,783			422,645			(941,932	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		20,075			18,049			43,003			(61,052	)		20,075
Capital in excess of par value		657,349			740,438			1,572,919			(2,313,357	)		657,349
Accumulated other comprehensive income		—			—			1,888			—			1,888
Retained earnings (accumulated deficit)		(47,616	)		(424,224	)		208,790			215,434			(47,616	)

Total controlling interest stockholders’ equity		629,808			334,263			1,826,600			(2,158,975	)		631,696
Noncontrolling interest		—			—			1,446			—			1,446

Total Equity		629,808			334,263			1,828,046			(2,158,975	)		633,142

Total liabilities and stockholders’ equity	$	1,591,398		$	777,807		$	2,520,822		$	(3,355,271	)	$	1,534,756

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

(Dollars in Thousands)

(Unaudited)


	December 31, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	42,251		$	11,023		$	34,612		$	—		$	87,886
Accounts and notes receivable, net		(7	)		77,927			90,695			—			168,615
Rig materials and supplies		—			2,835			26,587			—			29,422
Deferred costs		—			—			1,089			—			1,089
Deferred income taxes		—			7,615			1,127			—			8,742
Other tax assets		46,249			(31,136	)		18,411			—			33,524
Other current assets		—			8,708			4,145			—			12,853

Total current assets		88,493			76,972			176,666			—			342,131

Property, plant and equipment, net		60			548,794			244,343			—			793,197
Investment in subsidiaries and intercompany advances		1,492,708			(523,143	)		1,467,617			(2,437,182	)		—
Other noncurrent assets		(378,297	)		370,877			219,196			(91,371	)		120,405

Total assets	$	1,202,964		$	473,500		$	2,107,822		$	(2,528,553	)	$	1,255,733

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	10,000		$	—		$	—		$	—		$	10,000
Accounts payable and accrued liabilities		65,839			94,037			205,864			(227,994	)		137,746
Accrued income taxes		—			612			3,508			—			4,120

Total current liabilities		75,839			94,649			209,372			(227,994	)		151,866

Long-term debt		469,205			—			—			—			469,205
Other long-term liabilities		3,933			6,129			13,120			—			23,182
Long-term deferred tax liability		—			36,894			(16,047	)		—			20,847
Intercompany payables		62,583			43,657			216,369			(322,609	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		19,818			18,049			43,003			(61,052	)		19,818
Capital in excess of par value		646,217			733,112			1,455,246			(2,188,358	)		646,217
Retained earnings (accumulated deficit)		(74,631	)		(458,990	)		187,530			271,460			(74,631	)

Total controlling interest stockholders’ equity		591,404			292,171			1,685,779			(1,977,950	)		591,404

Noncontrolling interest		—			—			(771	)		—			(771	)

Total Equity		591,404			292,171			1,685,008			(1,977,950	)		590,633

Total liabilities and stockholders’ equity	$	1,202,964		$	473,500		$	2,107,822		$	(2,528,553	)	$	1,255,733

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)


	Year Ended December 31, 2013
	Parent		Guarantor		Non-Guarantor			Eliminations			Consolidated
Comprehensive income:
Net income	$	27,015	$	36,214	$	19,380		$	(55,430	)	$	27,179
Other comprehensive gain, net of tax:
Currency translation difference on related borrowings		—		—		(1,525	)		—			(1,525	)
Currency translation difference on foreign currency net investments		—		—		3,051			—			3,051

Total other comprehensive gain, net of tax:		—		—		1,526			—			1,526

Comprehensive income		27,015		36,214		20,906			(55,430	)		28,705
Comprehensive (income) loss attributable to noncontrolling interest		—		—		198			—			198

Comprehensive income (loss) attributable to controlling interest	$	27,015	$	36,214	$	21,104		$	(55,430	)	$	28,903

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)


	Year Ended December 31, 2012
	Parent		Guarantor		Non-Guarantor		Eliminations			Consolidated
Comprehensive income:
Net income	$	37,313	$	54,961	$	32,816	$	(87,992	)	$	37,098
Other comprehensive gain, net of tax:
Currency translation difference on related borrowings		—		—		—		—			—
Currency translation difference on foreign currency net investments		—		—		—		—			—

Total other comprehensive gain, net of tax:		—		—		—		—			—

Comprehensive income		37,313		54,961		32,816		(87,992	)		37,098
Comprehensive (income) loss attributable to noncontrolling interest		—		—		215		—			215

Comprehensive income (loss) attributable to controlling interest	$	37,313	$	54,961	$	33,031	$	(87,992	)	$	37,313

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)


	Year ended December 31, 2011
	Parent			Guarantor			Non- Guarantor		Eliminations		Consolidated
Comprehensive income:
Net income	$	(50,451	)	$	(49,106	)	$	25,428	$	23,484	$	(50,645	)
Other comprehensive gain, net of tax:
Currency translation difference on related borrowings		—			—			—		—		—
Currency translation difference on foreign currency net investments		—			—			—		—		—

Total other comprehensive gain, net of tax:		—			—			—		—		—

Comprehensive income		(50,451	)		(49,106	)		25,428		23,484		(50,645	)
Comprehensive (income) loss attributable to noncontrolling interest		—			—			194		—		194

Comprehensive income (loss) attributable to controlling interest	$	(50,451	)	$	(49,106	)	$	25,622	$	23,484	$	(50,451	)

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


	Year Ended December 31, 2013
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	27,015		$	36,214		$	19,380		$	(55,430	)	$	27,179
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			77,416			56,637			—			134,053
Loss on extinguishment of debt		5,218			—			—			—			5,218
Gain on disposition of assets		—			(1,759	)		(2,235	)		—			(3,994	)
Deferred income tax expense		(3,137	)		19,454			(3,618	)		—			12,699
Provision for reduction in carrying value of certain assets		—			—			2,544			—			2,544
Expenses not requiring cash		13,173			12			4,579			—			17,764
Equity in net earnings of subsidiaries		(55,430	)		—			—			55,430			—
Change in accounts receivable		(7	)		(12,888	)		(20,617	)		—			(33,512	)
Change in other assets		74,411			(85,520	)		487			—			(10,622	)
Change in accrued income taxes		6,617			(1,052	)		4,889			—			10,454
Change in liabilities		6,934			(877	)		(6,343	)		—			(286	)

Net cash provided by (used in) operating activities		74,794			31,000			55,703			—			161,497

Cash flows from investing activities:
Capital expenditures		—			(94,269	)		(61,376	)		—			(155,645	)
Proceeds from the sale of assets		—			3,725			4,493			—			8,218
Acquisition of ITS, net of cash acquired		—			(6,903	)		(111,088	)		—			(117,991	)
Intercompany dividend payment		—			—			—			—			—

Net cash (used in) investing activities		—			(97,447	)		(167,971	)		—			(265,418	)

Cash flows from financing activities:
Proceeds from debt issuance		350,000			—			—			—			350,000
Proceeds from draw on revolver credit facility		—			—			—			—			—
Repayment of long term debt		(125,000	)		—			—			—			(125,000	)
Repayment of term loan		(50,000	)		—			—			—			(50,000	)
Paydown on revolver credit facility		—			—			—			—			—
Payment of debt issuance costs		(11,172	)		—			—			—			(11,172	)
Payment of debt extinguishment costs		—			—			—			—			—
Excess tax benefit from stock-based compensation		896			—			—			—			896
Intercompany advances, net		(193,072	)		63,734			129,338			—			—

Net cash provided by (used in) financing activities		(28,348	)		63,734			129,338			—			164,724

Net change in cash and cash equivalents		46,446			(2,713	)		17,070			—			60,803
Cash and cash equivalents at beginning of year		42,251			11,023			34,612			—			87,886

Cash and cash equivalents at end of year	$	88,697		$	8,310		$	51,682		$	—		$	148,689

See accompanying notes to unaudited consolidated condensed financial statements.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


	Year Ended December 31, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	37,313		$	54,961		$	32,816		$	(87,992	)	$	37,098
Adjustments to reconcile net income (loss)to net cash provided by operating activities:
Depreciation and amortization		—			65,354			47,663			—			113,017
Loss on extinguishment of debt		2,130			—			—			—			2,130
Gain on disposition of assets		—			(775	)		(1,199	)		—			(1,974	)
Deferred income tax expense		2,257			15,429			(1,849	)		—			15,837
Expenses not requiring cash		16,558			33,644			(27,602	)		—			22,600
Equity in net earnings of subsidiaries		(43,884	)		—			—			43,884			—
Change in accounts receivable		(445	)		(1,788	)		17,474			—			15,241
Change in other assets		1,649			2,060			(9,200	)		—			(5,491	)
Change in accrued income taxes		(4,055	)		220			(2,267	)		—			(6,102	)
Change in liabilities		3,914			(4,158	)		(2,413	)		—			(2,657	)

Net cash provided by (used in) operating activities		15,437			164,947			53,423			(44,108	)		189,699

Cash flows from investing activities:
Capital expenditures		—			(176,333	)		(15,210	)		—			(191,543	)
Proceeds from the sale of assets		—			2,062			1,875			—			3,937
Intercompany dividend payment		(8,387	)		(4,357	)		(31,364	)		44,108			—

Net cash provided by (used in) investing activities		(8,387	)		(178,628	)		(44,699	)		44,108			(187,606	)

Cash flows from financing activities:
Proceeds from debt issuance		130,000			—			—			—			130,000
Proceeds from draw on revolver credit facility		7,000			—			—			—			7,000
Paydown on senior notes		(125,000	)		—			—			—			(125,000	)
Paydown on term note		(18,000	)		—			—			—			(18,000	)
Paydown on revolver credit facility		—			—			—			—			—
Payment of debt issuance costs		(4,859	)		—			—			—			(4,859	)
Payment of debt extinguishment costs		(555	)		—			—			—			(555	)
Excess tax benefit from stock-based compensation		(662	)		—			—			—			(662	)
Intercompany advances, net		(8,393	)		20,492			(12,099	)		—			—

Net cash provided by (used in) financing activities		(20,469	)		20,492			(12,099	)		—			(12,076	)

Net change in cash and cash equivalents		(13,419	)		6,811			(3,375	)		—			(9,983	)
Cash and cash equivalents at beginning of year		55,670			4,212			37,987			—			97,869

Cash and cash equivalents at end of year	$	42,251		$	11,023		$	34,612		$	—		$	87,886

See accompanying notes to unaudited consolidated condensed financial statements.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


	Year Ended December 31, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(50,451	)	$	(49,106	)	$	25,428		$	23,484		$	(50,645	)
Adjustments to reconcile net income (loss)to net cash provided by operating activities:
Depreciation and amortization		—			62,744			49,392			—			112,136
Loss on extinguishment of debt		—			—			—			—			—
Gain on disposition of assets		—			(2,706	)		(953	)		—			(3,659	)
Deferred income tax expense		31,518			(57,030	)		(22,863	)		—			(48,375	)
Impairment and other charges		—			170,000			—			—			170,000
Provision for reduction in carrying value of certain assets		—			1,350			—			—			1,350
Expenses not requiring cash		16,411			376			(3,954	)		—			12,833
Equity in net earnings of subsidiaries		23,484			—			—			(23,484	)		—
Change in accounts receivable		(288,333	)		347,344			(65,852	)		—			(6,841	)
Change in other assets		62,173			(16,724	)		16,404			—			61,853
Change in accrued income taxes		(12,852	)		(2,053	)		17,046			—			2,141
Change in liabilities		2,398			(51,351	)		24,045			—			(24,908	)

Net cash provided by (used in) operating activities		(215,652	)		402,844			38,693			—			225,885

Cash flows from investing activities:
Capital expenditures		—			(174,999	)		(15,400	)		—			(190,399	)
Proceeds from the sale of assets		—			4,335			1,200			—			5,535
Proceeds from insurance settlements		—			250			—			—			250

Intercompany dividend payment		—			—			—			—			—

Net cash provided by (used in) investing activities		—			(170,414	)		(14,200	)		—			(184,614	)

Cash flows from financing activities:
Proceeds from debt issuance		50,000			—			—			—			50,000
Paydown on term note		(21,000	)		—			—			—			(21,000	)
Paydown on revolver credit facility		(25,000	)		—			—			—			(25,000	)
Payment of debt issuance costs		(504	)		—			—			—			(504	)
Payment of debt extinguishment costs		—			—			—			—			—
Proceeds from stock options exercised		183			—			—			—			183
Excess tax benefit from stock-based compensation		1,488			—			—			—			1,488
Intercompany advances, net		252,320			(230,535	)		(21,785	)		—			—

Net cash provided by (used in) financing activities		257,487			(230,535	)		(21,785	)		—			5,167

Net change in cash and cash equivalents		41,835			1,895			2,708			—			46,438
Cash and cash equivalents at beginning of year		13,835			2,317			35,279			—			51,431

Cash and cash equivalents at end of year	$	55,670		$	4,212		$	37,987		$	—		$	97,869