UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

	[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2014

  

OR

	[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from _________________________ to

 

Commission file number: 001-16337

 

OIL STATES INTERNATIONAL, INC.

 

---

 

(Exact name of registrant as specified in its charter)

 

Delaware	76-0476605
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Three Allen Center, 333 Clay Street, Suite 4620,	77002
Houston, Texas	(Zip Code)
(Address of principal executive offices)

 

(713) 652-0582

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year,

if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES [ X ]

NO [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

YES [X]

NO [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "accelerated filer," "large accelerated filer" and "smaller reporting company in Rule 12b-2 of the Exchange Act.

(Check one):

Large Accelerated Filer [X]	Accelerated Filer [  ]
Non-Accelerated Filer [  ] (Do not check if a smaller reporting company)	Smaller Reporting Company [  ]

                             

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [   ]

NO [X ]

 

The Registrant had 54,080,823 shares of common stock, par value $0.01, outstanding and 6,679,034 shares of treasury stock as of July 31, 2014.

 

 

 

OIL STATES INTERNATIONAL, INC.

 

INDEX

 

		Page No.
	Part I -- FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Financial Statements
	Unaudited Condensed Consolidated Statements of Operations	3
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Consolidated Balance Sheets	5
	Unaudited Condensed Consolidated Statements of Cash Flows	6
	Unaudited Condensed Consolidated Statement of Stockholders’ Equity	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8 – 20
Cautionary Statement Regarding Forward-Looking Statements		21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21 – 32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
	Part II -- OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	34
	(a) Index of Exhibits	34 – 35
Signature Page		36

 

 

 

PART I -- FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

 

		THREE MONTHS ENDED JUNE 30,								SIX MONTHS ENDED JUNE 30,
		2014				2013				2014				2013
Revenues		$	459,607			$	390,789			$	864,844			$	769,649
Costs and expenses:
Cost of sales and services			307,908				265,829				580,280				533,769
Selling, general and administrative expenses			43,039				36,931				84,447				72,069
Depreciation and amortization expense			31,107				26,605				61,894				51,829
Other operating expense			10,008				4,086				11,412				2,349
			392,062				333,451				738,033				660,016
Operating income			67,545				57,338				126,811				109,633
Interest expense			(5,853	)			(10,092	)			(13,898	)			(20,147	)
Interest income			146				163				261				301
Loss on extinguishment of debt			(100,410	)			--				(100,410	)			--
Equity in earnings (losses) of unconsolidated affiliates			122				(95	)			218				(831	)
Other income			688				486				2,119				1,148
Income (loss) from continuing operations before income taxes			(37,762	)			47,800				15,101				90,104
Income tax (expense) benefit			13,646				(18,924	)			(4,496	)			(32,611	)
Net income (loss)from continuing operations			(24,116	)			28,876				10,605				57,493
Net income from discontinued operations, net of tax			16,242				47,660				53,037				121,250
Net income (loss)			(7,874	)			76,536				63,642				178,743
Less: Net income attributable to noncontrolling interest			6				11				18				29
Net income (loss) attributable to Oil States International, Inc.		$	(7,880	)		$	76,525			$	63,624			$	178,714
Net income (loss) attributable to Oil States International, Inc.:
Continuing operations		$	(24,122	)		$	28,865			$	10,587			$	57,464
Discontinued operations			16,242				47,660				53,037				121,250
Net income (loss) attributable to Oil States International, Inc.		$	(7,880	)		$	76,525			$	63,624			$	178,714
Basic net income (loss) per share attributable to Oil States International, Inc. common stockholders from:
Continuing operations		$	(0.45	)		$	0.52			$	0.20			$	1.04
Discontinued operations			0.30				0.87				0.98				2.21
Net income (loss)		$	(0.15	)		$	1.39			$	1.18			$	3.25
Diluted net income (loss) per share attributable to Oil States International, Inc. common stockholders from:
Continuing operations		$	(0.45	)		$	0.52			$	0.20			$	1.04
Discontinued operations			0.30				0.86				0.98				2.18
Net income (loss)		$	(0.15	)		$	1.38			$	1.18			$	3.22
Weighted average number of common shares outstanding:
Basic			53,090				55,061				53,189				54,935
Diluted			53,090				55,582				53,486				55,477

 

The accompanying notes are an integral part of these financial statements.

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

  

	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,
		2014			2013			2014			2013
Net income (loss)	$	(7,874	)	$	76,536		$	63,642		$	178,743
Other comprehensive income (loss):
Foreign currency translation adjustment		23,465			(147,761	)		23,445			(170,101	)
Unrealized gain (loss) on forward contracts, net of tax		1			(94	)		1			117
Total other comprehensive income (loss)		23,466			(147,855	)		23,446			(169,984	)
Comprehensive income (loss)		15,592			(71,319	)		87,088			8,759
Less: Comprehensive income (loss) attributable to noncontrolling interest		48			(34	)		(6	)		(45	)
Comprehensive income (loss) attributable to Oil States International, Inc.	$	15,544		$	(71,285	)	$	87,094		$	8,804

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(In Thousands)

  

		JUNE 30,				DECEMBER 31,
		2014				2013
		(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents		$	64,895			$	599,306
Accounts receivable, net			460,664				620,333
Inventories, net			247,905				266,552
Prepaid expenses and other current assets			57,660				39,716
Total current assets			831,124				1,525,907
Property, plant, and equipment, net			602,640				1,902,789
Goodwill, net			253,837				513,650
Other intangible assets, net			53,743				133,531
Other noncurrent assets			24,199				55,384
Total assets		$	1,765,543			$	4,131,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	104,221			$	149,079
Accrued liabilities			72,790				132,046
Income taxes			8,229				32,679
Current portion of long-term debt and capitalized leases			527				529
Deferred revenue			34,516				50,366
Other current liabilities			15,398				9,137
Total current liabilities			235,681				373,836
Long-term debt and capitalized leases			188,361				972,692
Deferred income taxes			26,108				122,821
Other noncurrent liabilities			16,079				36,618
Total liabilities			466,229				1,505,967
Stockholders’ equity:
Oil States International, Inc. stockholders’ equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 60,759,085 shares and 59,777,766 shares issued, respectively, and 54,302,476 shares and 54,767,284 shares outstanding, respectively			608				592
Additional paid-in capital			666,799				637,438
Retained earnings			1,021,105				2,320,453
Accumulated other comprehensive income (loss)			1,290				(85,675	)
Common stock held in treasury at cost, 6,456,609 and 5,010,482 shares, respectively			(390,672	)			(249,391	)
Total Oil States International, Inc. stockholders’ equity			1,299,130				2,623,417
Noncontrolling interest			184				1,877
Total stockholders’ equity			1,299,314				2,625,294
Total liabilities and stockholders’ equity		$	1,765,543			$	4,131,261

 

The accompanying notes are an integral part of these financial statements.

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONTINUING AND DISCONTINUED OPERATIONS

(In Thousands)

 

		SIX MONTHS ENDED JUNE 30,
		2014				2013
Cash flows from operating activities:
Net income		$	64,209			$	179,453
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			129,445				135,537
Deferred income tax provision			8,929				(538	)
Excess tax benefits from share-based payment arrangements			(4,585	)			(5,329	)
Provision for loss on receivables			2,330				1,555
Non-cash compensation charge			15,470				13,133
Amortization of deferred financing costs			2,703				4,041
Loss on extinguishment of debt			103,865				--
Other, net			876				(687	)
Changes in operating assets and liabilities, net of effect from acquired businesses and net assets of Civeo that were distributed to stockholders:
Accounts receivable			(15,502	)			73,965
Inventories			(5,313	)			(2,059	)
Accounts payable and accrued liabilities			(20,103	)			(29,774	)
Taxes payable			(85,893	)			2,618
Other operating assets and liabilities, net			12,310				(12,933	)
Net cash flows provided by operating activities			208,741				358,982
Cash flows from investing activities:
Capital expenditures, including capitalized interest			(203,417	)			(240,423	)
Proceeds from disposition of property, plant and equipment			3,640				2,633
Other, net			(839	)			(227	)
Net cash flows used in investing activities			(200,616	)			(238,017	)
Cash flows from financing activities:
Revolving credit borrowings and (repayments), net			181,928				(47,901	)
Term borrowings of Civeo			775,000				--
Repayment of 6 1/2% Senior Notes			(630,307	)			--
Repayment of 5 1/8% Senior Notes			(419,794	)			--
Term loan repayments			--				(92,762	)
Cash balances of Civeo in Spin-Off			(298,536	)			--
Issuance of common stock from share-based payment arrangements			7,962				10,388
Purchase of treasury stock			(143,714	)			(1,485	)
Excess tax benefits from share-based payment arrangements			4,585				5,329
Payment of financing costs			(12,525	)			(203	)
Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock			(4,964	)			(3,722	)
Other, net			(261	)			(207	)
Net cash flows used in financing activities			(540,626	)			(130,563	)
Effect of exchange rate changes on cash			(1,910	)			(17,717	)
Net change in cash and cash equivalents			(534,411	)			(27,315	)
Cash and cash equivalents, beginning of period			599,306				253,172
Cash and cash equivalents, end of period		$	64,895			$	225,857

 

The accompanying notes are an integral part of these financial statements.

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(In Thousands)

 

		Common Stock				Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Noncontrolling Interest				Total Stockholders' Equity
Balance, December 31, 2013		$	592			$	637,438			$	2,320,453			$	(85,675	)		$	(249,391	)		$	1,877			$	2,625,294
Net income											63,624												18				63,642
Currency translation adjustment															23,445								(24	)			23,421
Other comprehensive income															1												1
Dividends paid																							(489	)			(489	)
Exercise of stock options, including tax benefit			2				12,545																				12,547
Amortization of restricted stock compensation							12,042																				12,042
Stock option expense							2,060																				2,060
Surrender of stock to pay taxes on restricted stock awards			2				(2	)											(4,964	)							(4,964	)
Stock acquired for cash																			(136,317	)							(136,317	)
Exercise of stock options/stock awards released – discontinued operations							2,727																				2,727
Net income from noncontrolling interests – discontinued operations																							567				567
Spin-Off of Civeo											(1,362,972	)			63,519								(1,765	)			(1,301,218	)
Other			12				(11	)																			1
Balance, June 30, 2014		$	608			$	666,799			$	1,021,105			$	1,290			$	(390,672	)		$	184			$	1,299,314

 

 The accompanying notes are an integral part of these financial statements.

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

    

1.	ORGANIZATION AND BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements of Oil States International, Inc. and its wholly-owned subsidiaries (referred to in this report as we or the Company) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the Commission) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair presentation of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year.

 

On May 30, 2014, we completed the spin-off of our accomodations business into a stand-alone, publicly traded corporation. The results of operations for our accommodations business have been classified as discontinued operations for all periods presented. See Note 2 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information. Unless indicated otherwise, the information in the Notes to the Consolidated Financial Statements relates to our continuing operations.

 

In September 2013, the Company entered into a Stock Purchase Agreement with Marubeni-Itochu Tubulars America, Inc. (Marubeni-Itochu) for the sale of Sooner, Inc. and its subsidiaries (Sooner), which comprised the entirety of the Company’s tubular services segment. The results of operations for our tubular services segment have been classified as discontinued operations for all periods presented.

 

The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions, upon which the financial statements are based, change in future periods, actual amounts may differ from those included in the accompanying condensed consolidated financial statements.

 

The financial statements included in this report should be read in conjunction with the Company’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2013 (the 2013 Form 10-K).

 

2.	SPIN-OFF OF ACCOMMODATIONS BUSINESS (CIVEO)

 

On May 30, 2014, we completed the previously announced spin-off of our accommodations business into a stand-alone, publicly traded corporation (Civeo Corporation, or Civeo) through a tax-free distribution of the accommodations business to the Company’s shareholders (the Spin-Off). After the close of the New York Stock Exchange on May 30, 2014 (the Distribution Date), the stockholders of record as of 5:00 p.m. Eastern time on May 21, 2014 (the Record Date), received two shares of Civeo common stock for each share of Oil States common stock held as of the Record Date.  Following the Distrubution Date, Oil States ceased to own any shares of Civeo common stock. The objectives of the Spin-Off were to allow each respective management team to more effectively focus on the two distinct businesses, to allow each of the Company and Civeo the opportunity to pursue more tailored and aggressive growth strategies, and the optimization of operating efficiencies for each of the Company and Civeo, among other objectives. In connection with the Spin-Off, we received a private letter ruling from the Internal Revenue Service on the tax-free status of the Spin-Off. 

 

In connection with the Spin-Off, we refinanced our existing debt. Specifically, we commenced tender offers for all of our outstanding 5 1/8% Senior Notes due 2023 (5 1/8% Notes) and 6 1/2% Senior Notes due 2019 (6 1/2% Notes).  These tender offers were funded in part with the proceeds of the $750 million special cash dividend paid to us by Civeo in connection with the Spin-Off, using the proceeds from the $775  million term loan entered into by Civeo immediately prior to the consummation of the Spin-Off, and borrowings under our new credit facility and available cash on hand.  See Note 9 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the tender offers and our new credit facility.

 

 In order to effect the Spin-Off and govern our relationship with Civeo after the Spin-Off, we entered into a Separation and Distribution Agreement, an Indemnification and Release Agreement, a Tax Sharing Agreement, an Employee Matters Agreement and a Transition Services Agreement.  The Separation and Distribution Agreement governed the Spin-Off, the distribution of Civeo’s shares of common stock to our stockholders, transfer of assets and intellectual property, and other matters related to our relationship with Civeo.  The Indemnification and Release Agreement provides for cross-indemnities between the Company and Civeo and established procedures for handling claims subject to indemnification and related matters. We evaluated the impact of the indemnifications given and the Civeo indemnifications received as of the Spin-Off date and concluded those fair values were immaterial.

 

  

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

  

The Tax Sharing Agreement governs the respective rights, responsibilities and obligations of the Company and Civeo with respect to the payment of taxes, filing of tax returns, reimbursements of taxes, control of audits and other matters regarding taxes.  In addition, the Tax Sharing Agreement reflects each company’s rights and obligations related to taxes that are attributable to periods prior to and including the Spin-Off date and taxes resulting from transactions effected in connection with the Spin-Off. In general, under the Tax Sharing Agreement, the Company is responsible for all U.S. federal, state, local and foreign income taxes attributable to the Company or any of its subsidiaries for any tax period that begins after the date of the Spin-Off, and Civeo is responsible for all taxes attributable to it or its subsidiaries, whether accruing before, on or after the Spin-Off.  In addition, the Tax Sharing Agreement imposes certain restrictions on Civeo and its subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free status of the Spin-Off and certain related transactions.

 

The Employee Matters Agreement governs the Company’s and Civeo’s compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company, and generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs and provides for the treatment of outstanding equity and other compensation awards and programs of the Company. The Employee Matters Agreement provides that Civeo will generally be responsible for all liabilities and obligations relating to their employees and former employees of the Company’s accommodations business, including all obligations pursuant to any collective bargaining, employment and other agreements between any Civeo employee and the Company. In addition, the Employee Matters Agreement provides that employees of Civeo will cease active participation under all benefit plans sponsored by the Company. The Employee Matters Agreement sets forth the general principles relating to employee matters and also addresses any special circumstances during the transition period. The Employee Matters Agreement also provides that (i) the Spin-Off does not constitute a change in control under existing plans, programs, agreements or arrangements, and (ii) the Spin-Off and the assignment, transfer or continuation of the employment of employees with another entity will not constitute a severance event under the applicable plans, programs, agreements or arrangements.

 

Under the Transition Services Agreement, the Company is providing and/or making available various administrative services and assets to Civeo, for a period of up to nine months beginning on the Distribution Date of the Spin-Off, with a possible extension of one month (an aggregate of ten months.)  The services include: information technology services; treasury services; internal audit services; tax services; legal services; risk management services; and accounting services.  In consideration for such services, Civeo is paying fees to the Company for the services provided, and these fees are generally in amounts intended to allow the Company to recover all of its direct and indirect costs incurred in providing these services.

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

The carrying values of the major categories of assets and liabilities of Civeo, immediately preceding the Spin-Off on May 30, 2014, excluded from our consolidated balance sheet at June 30, 2014, were as follows (in thousands):

 

ASSETS
Current assets:
Cash and cash equivalents		$	298,536
Accounts receivable, net			172,937
Inventories, net			23,669
Prepaid expenses and other current assets			24,880
Total current assets of discontinued operations			520,022
Property, plant, and equipment, net			1,391,458
Goodwill, net			268,464
Other intangible assets, net			75,105
Other noncurrent assets			30,846
Total assets of discontinued operations		$	2,285,895
LIABILITIES
Current liabilities:
Accounts payable			52,441
Accrued liabilities			23,784
Income taxes			320
Deferred revenue			22,456
Other current liabilities			256
Total current liabilities of discontinued operations			99,257
Long-term debt			775,000
Deferred income taxes			83,940
Other noncurrent liabilities			26,480
Total liabilities of discontinued operations		$	984,677

 

See Note 8 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for selected financial information regarding the results of operations of our accommodations business which are reported as discontinued operations.  

 

3.	RECENT ACCOUNTING PRONOUNCEMENTS

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the FASB), which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.

 

In April 2014, the FASB issued guidance on the reporting of discontinued operations which amends the definition for what types of asset disposals are to be considered discontinued operations, and amends the required disclosures for discontinued operations and assets held for sale. The amendments in this update are effective for fiscal periods beginning on or after December 15, 2014, and interim periods within annual periods beginning on or after December 15, 2015. The company is currently evaluating the impact of this standard on its consolidated financial statements. This standard was not early adopted in connection with the Spin-Off. 

 

In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2016 (early adoption is not permitted). The guidance permits the use of either a retrospective or cumulative effect transition method. We have not yet selected a transition method and are currently evaluating the impact of the amended guidance on our consolidated financial position, results of operations and related disclosures.

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

4.	DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

 

Additional information regarding selected balance sheet accounts at June 30, 2014 and December 31, 2013 is presented below (in thousands):

 

		JUNE 30,				DECEMBER 31,
		2014				2013
Accounts receivable, net:
Trade		$	308,707			$	456,114
Unbilled revenue			153,457				163,766
Other			3,960				7,987
Total accounts receivable			466,124				627,867
Allowance for doubtful accounts			(5,460	)			(7,534	)
		$	460,664			$	620,333

 

 

		JUNE 30,				DECEMBER 31,
		2014				2013
Inventories, net:
Finished goods and purchased products		$	99,080			$	91,909
Work in process			48,041				72,903
Raw materials			111,398				111,280
Total inventories			258,519				276,092
Allowance for excess, damaged, or obsolete inventory			(10,614	)			(9,540	)
		$	247,905			$	266,552

 

 

		Estimated				JUNE 30,				DECEMBER 31,
		Useful Life (in years)				2014				2013
Property, plant and equipment, net:
Land						$	27,385			$	76,545
Accommodations assets			--				--				1,535,407
Buildings and leasehold improvements		3-40					173,296				204,455
Machinery and equipment		2-29					434,641				434,578
Completion services equipment		4-10					344,407				314,445
Office furniture and equipment		1-10					30,433				57,026
Vehicles		2-10					123,452				140,156
Construction in progress							45,408				172,252
Total property, plant and equipment							1,179,022				2,934,864
Accumulated depreciation							(576,382	)			(1,032,075	)
						$	602,640			$	1,902,789

 

		JUNE 30,				DECEMBER 31,
		2014				2013
Accrued liabilities:
Accrued compensation		$	36,788			$	71,535
Insurance liabilities			12,416				13,198
Accrued taxes, other than income taxes			6,662				7,619
Accrued interest			303				11,931
Accrued commissions			4,583				3,654
Accrued treasury stock repurchase			--				7,397
Other			12,038				16,712
		$	72,790			$	132,046

 

A significant portion of our accounts receivable, inventories, property, plant and equipment and accrued liabilities at December 31, 2013 was related to our accommodations business. See Note 2 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information.

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

5.	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

 

Our accumulated other comprehensive loss decreased from $85.7 million at December 31, 2013 to accumulated other comprehensive income of $1.3 million at June 30, 2014, primarily as a result of the Spin-Off of Civeo. See Note 2 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information. Prior to the Spin-Off, our accumulated other comprehensive income (loss) was primarily related to fluctuations in the Canadian and Australian dollar exchange rates compared to the U.S. dollar and our Canadian and Australian operations were primarily related to our accommodations business.

 

6.	EARNINGS PER SHARE

 

The numerator (income) and denominator (shares) used for the computation of basic and diluted earnings per share from continuing operations were as follows (in thousands):

 

		THREE MONTHS ENEDED JUNE 30,
		2014								2013
		Income				Shares				Income				Shares
Basic:
Net income (loss) attributable to Oil States International, Inc.		$	(7,880	)						$	76,525
Less: Undistributed net loss allocable to participating securities			--								--
Undistributed net income (loss) applicable to common stockholders			(7,880	)							76,525
Less: Income from discontinued operations, net of tax			(16,242	)							(47,660	)
Add: Undistributed net income from discontinued operations allocable to participating securities			--								--
Income (loss) from continuing operations applicable to Oil States International, Inc. common stockholders – Basic		$	(24,122	)			53,090			$	28,865				55,061
Diluted:
Income (loss) from continuing operations applicable to Oil States International, Inc. common stockholders – Basic		$	(24,122	)			53,090			$	28,865				55,061
Effect of dilutive securities:
Undistributed net income reallocated to participating securities			--				--				--				--
Options on common stock			--				--				--				339
Restricted stock awards and other			--				--				--				182
Income (loss) from continuing operations applicable to Oil States International, Inc. common stockholders – Diluted			(24,122	)			53,090				28,865				55,582
Income from discontinued operations, net of tax, applicable to Oil States International, Inc. common stockholders			16,242								47,660
Undistributed net income reallocated to participating securities			--								--
Net income (loss) attributable to Oil States International, Inc. common stockholders – Diluted		$	(7,880	)			53,090			$	76,525				55,582

 

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

		SIX MONTHS ENDED JUNE 30,
		2014								2013
		Income				Shares				Income				Shares
Basic:
Net income attributable to Oil States International, Inc.		$	63,624							$	178,714
Less: Undistributed net income allocable to participating securities			(797	)							--
Undistributed net income applicable to common stockholders			68,827								178,714
Less: Income from discontinued operations, net of tax			(53,037	)							(121,250	)
Add: Undistributed net income from discontinued operations allocable to participating securities			665								-
Income from continuing operations applicable to Oil States International, Inc. common stockholders – Basic		$	10,455				53,189			$	57,464				54,935
Diluted:
Income from continuing operations applicable to Oil States International, Inc. common stockholders – Basic		$	10,455				53,189			$	57,464				54,935
Effect of dilutive securities:
Undistributed net income reallocated to participating securities			1				--				--				--
Options on common stock			--				280				--				364
Restricted stock awards and other			--				17				--				178
Income from continuing operations applicable to Oil States International, Inc. common stockholders – Diluted			10,456				53,486				57,464				55,477
Income from discontinued operations, net of tax, applicable to Oil States International, Inc. common stockholders			52,373								121,250
Undistributed net income reallocated to participating securities			4								--
Net income attributable to Oil States International, Inc. common stockholders – Diluted		$	62,833				53,486			$	178,714				55,477

 

Our calculation of diluted earnings per share for the three and six months ended June 30, 2014 excluded 457,805 shares and 181,512 shares, respectively, issuable pursuant to outstanding stock options and restricted stock awards, due to their antidilutive effect. Our calculation of diluted earnings per share for the three and six months ended June 30, 2013 excluded 392,416 shares and 392,660 shares, respectively, issuable pursuant to outstanding stock options and restricted stock awards, due to their antidilutive effect.

 

7.	BUSINESS ACQUISITIONS AND GOODWILL

 

On December 2, 2013, we acquired all of the operating assets of Quality Connector Systems, LLC (QCS). Headquartered in Houston, Texas, QCS designs, manufactures and markets a portfolio of proprietary deep and shallow water pipeline connectors for subsea pipeline construction, repair and expansion projects. Subject to customary post-closing adjustments, total cash consideration was $42.3 million. The operations of QCS have been included in our offshore products segment since the acquisition date.

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

Changes in the carrying amount of goodwill for the six month period ended June 30, 2014 were as follows (in thousands):

 

		Well Site Services
		Completion Services				Drilling Services				Subtotal				Accommodations				Offshore Products				Total
Balance as of December 31, 2012
Goodwill		$	201,281			$	22,767			$	224,048			$	295,132			$	118,933			$	638,113
Accumulated Impairment Losses			(94,528	)			(22,767	)			(117,295	)			--				--				(117,295	)
			106,753				--				106,753				295,132				118,933				520,818
Goodwill acquired and purchase price adjustments			1,576				--				1,576				--				26,179				27,755
Foreign currency translation and other changes			(946	)			--				(946	)			(34,076	)			99				(34,923	)
			107,383				--				107,383				261,056				145,211				513,650
Balance as of December 31, 2013
Goodwill			201,911				22,767				224,678				261,056				145,211				630,945
Accumulated Impairment Losses			(94,528	)			(22,767	)			(117,295	)			--				--				(117,295	)
			107,383				--				107,383				261,056				145,211				513,650
Spin-Off of Civeo			--				--				--				(268,463	)			--				(268,463	)
Goodwill acquired and purchase price adjustments			194				--				194				--				917				1,111
Foreign currency translation and other changes			(54	)			--				(54	)			7,407				186				7,539
			107,523				--				107,523				--				146,314				253,837
Balance as of June 30, 2014
Goodwill			202,051				22,767				224,818				--				146,314				371,132
Accumulated Impairment Losses			(94,528	)			(22,767	)			(117,295	)			--				--				(117,295	)
		$	107,523			$	--			$	107,523			$	--			$	146,314			$	253,837

 

 

8.	DISCONTINUED OPERATIONS

 

On May 30, 2014, we completed the Spin-Off of our accommodations business, Civeo Corporation, to the Company’s stockholders. On May 30, 2014, the stockholders of record as of the close of business on the Record Date received two shares of Civeo common stock for each share of Oil States common stock held as of the Record Date. Following the Distribution Date, Oil States ceased to own any shares of Civeo common stock.

 

On September 6, 2013, the Company entered into a Stock Purchase Agreement with Marubeni-Itochu for the sale of Sooner, which comprised the entirety of the Company’s tubular services segment. Total consideration received by the Company was $600 million. We recognized a net gain on disposal of $128.4 million ($84.0 million after-tax) in 2013.

 

In connection with these transactions, the parties entered into transition services agreements for the Company to provide certain information technology applications and infrastructure and various administrative services to Civeo and Sooner during the transition period in exchange for monthly service fees. The transition services agreement between the Company and Sooner expired on February 28, 2014. The transition services agreement between the Company and Civeo is for a period of up to nine months beginning on the Distribution Date of the Spin-Off, with a possible extension of one month (an aggregate of ten months.) The cash flows from the disposed businesses to the Company resulting from the transition services agreements are not significant and do/did not constitute a significant continuing involvement in Civeo or Sooner.

 

Civeo and Sooner, which had previously been presented as separate reporting segments, both meet the criteria for being reported as discontinued operations and have been reclassified from continuing operations. Discontinued operations for the three and six months ended June 30, 2014 reflect the operating results of Civeo through the Distribution Date and adjustments related to the revaluation of outstanding equity awards and options previously awarded to the Sooner employees. Discontinued operations for the three and six months ended June 30, 2013 reflect the operating results of Civeo and Sooner.

 

In connection with the Spin-Off, the holders of our 5 1/8% Notes and 6 1/2% Notes had the right to require the Company to repurchase all of their notes. As such, we allocated a portion of the interest expense related to our outstanding 5 1/8% Notes and 6 1/2% Notes to discontinued operations based on a ratio of the net assets of the accommodations business to the total net assets of the Company, excluding consolidated debt. For the three and six months ended June 30, 2014, we allocated $5.5 million and $13.7 million, respectively, of interest expense related to our outstanding 5 1/8% Notes and 6 1/2% Notes to discontinued operations. For the three and six months ended June 30, 2013, we allocated $7.7 million and $15.6 million, respectively, of interest expense related to our outstanding 5 1/8% Notes and 6 1/2% Notes to discontinued operations. We commenced tender offers for all of our outstanding 5 1/8% Notes and 6 1/2% Notes and redeemed all remaining Notes that were not tendered in connection with the Spin-Off. See Note 9 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the tender offers.  

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

The following table provides the components of net income from discontinued operations, net of tax for each operating segment (in thousands).

 

		Three Months Ended				Three Months Ended				Six Months Ended				Six Months Ended
		June 30, 2014				June 30, 2013				June 30, 2014				June 30, 2013
Revenues
Accommodations		$	151,388			$	244,213			$	404,132			$	540,880
Tubular services		$	--			$	405,546			$	--			$	799,459
Income from Accommodations discontinued operations:
Income from discontinued operations before income taxes		$	15,922			$	44,615			$	61,924			$	129,243
Income tax (expense) benefit			271				(6,857	)			(9,098	)			(27,125	)
Net income from discontinued operations, net of tax		$	16,193			$	37,758			$	52,826			$	102,118
Income from Tubular services discontinued operations:
Income from discontinued operations before income taxes		$	154				15,787			$	336			$	30,501
Income tax (expense) benefit			(105	)			(5,885	)			(125	)			(11,369	)
Net income from discontinued operations, net of tax		$	49			$	9,902			$	211			$	19,132

 

9.

DEBT

 

As of June 30, 2014 and December 31, 2013, long-term debt consisted of the following (in thousands):

 

		June 30, 2014				December 31, 2013
Revolving credit facility, which matures May 28, 2019, with available commitments up to $600 million and with a weighted average interest rate of 1.8% for the six month period ended June 30, 2014		$	181,928			$	--
6 1/2% Senior Unsecured Notes, which were repaid in full during the three month period ended June 30, 2014; original due date of June 2019			--				600,000
5 1/8% Senior Unsecured Notes, which were repaid in full during the three month period ended June 30, 2014; original due date of January 2023			--				366,000
Capital lease obligations and other debt			6,960				7,221
Total debt			188,888				973,221
Less: Current portion			527				529
Total long-term debt and capitalized leases		$	188,361			$	972,692

 

Credit Facility

 

In connection with the Spin-Off, the Company replaced its existing credit facility on May 28, 2014 with a $600 million senior secured revolving credit facility. The Company has an option to increase the maximum borrowings under the new facility to $750 million with additional lender commitments prior to its maturity. The facility matures on May 28, 2019. The credit facility is governed by a Credit Agreement dated as of May 28, 2014 (Credit Agreement) by and among the Company, the Lenders party thereto, Wells Fargo Bank, N.A., as administrative agent, the Swing Line Lender and an Issuing Bank, and Royal Bank of Canada, as Syndication agent, and Compass Bank, as Documentation agent. Amounts outstanding under the credit facility bear interest at LIBOR plus a margin of 1.50% to 2.50%, or at a base rate plus a margin of 0.50% to 1.50%, in each case based on a ratio of the Company’s total leverage to EBITDA (as defined in the Credit Agreement). The Credit Agreement contains customary financial covenants and restrictions. Specifically, we must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA, to consolidated interest expense of at least 3.0 to 1.0 and our maximum leverage ratio, defined as the ratio of total debt to consolidated EBITDA of no greater than 3.25 to 1.0. Each of the factors considered in the calculations of these ratios are defined in the Credit Agreement. EBITDA and consolidated interest, exclude goodwill impairments, debt discount amortization and other non-cash charges. As of June 30, 2014, we were in compliance with our debt covenants. The credit facility also contains negative covenants that limit the Company's ability to borrow additional funds, encumber assets, pay dividends, sell assets and enter into other significant transactions. As of June 30, 2014, we had $181.9 million outstanding under the Credit Agreement and an additional $32.3 million of outstanding letters of credit, leaving $385.8 million available to be drawn under the credit facility. As of June 30, 2014, the Company had approximately $64.9 million of cash and cash equivalents.

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

5 1/8% Senior Unsecured Notes

 

On December 21, 2012, the Company sold $400 million aggregate principal amount of 5 1/8% Senior Notes due 2023 (5 1/8% Notes) through a private placement to qualified institutional buyers. In the fourth quarter of 2013, the Company repurchased $34.0 million aggregate principal amount of the 5 1/8% Notes and, in connection with the Spin-Off, repurchased the remaining $366.0 million aggregate principal amount in the second quarter of 2014 primarily through a tender offer. This tender offer was funded with the proceeds of the $750 million special cash dividend paid to us by Civeo in connection with the Spin-Off, using the proceeds from the $775 million term loan entered into by Civeo immediately prior to the consummation of the Spin-Off, and borrowings under our new Credit Agreement and available cash on hand.   

 

6 1/2% Senior Unsecured Notes

 

On June 1, 2011, the Company sold $600 million aggregate principal amount of 6 1/2% Senior Notes due 2019 (6 1/2% Notes) through a private placement to qualified institutional buyers. In connection with the Spin-Off, the Company repurchased the $600.0 million aggregate principal amount of the 6 1/2% Notes in the second quarter of 2014 primarily through a tender offer. This tender offer was funded with the proceeds of the $750 million special cash dividend paid to us by Civeo in connection with the Spin-Off, using the proceeds from the $775 million term loan entered into by Civeo immediately prior to the consummation of the Spin-Off, and borrowings under our new Credit Agreement and available cash on hand.

 

Loss on Extinguishment of Debit

 

During the second quarter of 2014, we recognized losses on the extinguishment of debt totaling $100.4 million primarily due to the repurchase of our remaining 6 1/2% Notes and 5 1/8% Notes, which resulted in a loss of $96.7 million consisting of the premium paid over book value for the Notes and the write-off of unamortized deferred financing costs associated with the Notes.  The premium paid to repurchase the 6 1/2% and 5 1/8% Notes was due to their fair market value exceeding their book value at the date tendered.  In addition, as a result of the refinancing of our existing credit facility in the second quarter 2014, we recognized a loss on extinguishment of $3.7 million (net of $1.8 million allocated to discontinued operations for the Canadian portion of the facility) from the write-off of unamortized deferred financing costs.

 

Pursuant to Rule 3-10 of Regulation S-X, the Company has in its past periodic reports, including its most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, included in a footnote to its financial statements, condensed consolidating financial information for the Company, the wholly-owned guarantor subsidiaries on a combined basis, the non-wholly owned guarantor subsidiaries on a combined basis, the non-guarantor subsidiaries on a combined basis, consolidating adjustments and the total consolidated amounts. Given the repurchase of all of the outstanding 5 1/8% Notes and 6 1/2% Notes as of June 30, 2014, the Company will no longer be required to present expanded information with respect to the guarantor and non-guarantor subsidiaries.

 

10.	FAIR VALUE MEASUREMENTS

 

The Company’s financial instruments consist of cash and cash equivalents, investments, receivables, payables, bank debt and foreign currency forward contracts. The Company believes that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values.

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

The fair values of the Company’s 6 1/2% Notes and 5 1/8% Notes were estimated based on quoted prices and analysis of similar instruments (Level 2 fair value measurements). The December 31, 2013 carrying values and fair values of these Notes were as follows (in thousands): 

 

		Carrying				Fair
		Value				Value
5 1/8% Notes
Principal amount originally due 2023		$	366,000			$	411,066
6 1/2% Notes
Principal amount originally due 2019		$	600,000			$	639,378

 

11.	CHANGES IN COMMON STOCK OUTSTANDING

 

Shares of common stock outstanding – January 1, 2014			54,767,284
Repurchase of shares – transferred to treasury			(1,396,230	)
Shares issued upon conversion of restricted stock awards as a result of the Spin-Off			565,141
Shares issued upon granting of restricted stock awards, net of forfeitures			208,019
Shares issued upon exercise of stock options			198,746
Shares withheld for taxes on vesting of restricted stock awards and transferred to treasury			(49,897	)
Shares issued upon vesting of deferred stock units			9,413
Shares of common stock outstanding – June 30, 2014			54,302,476

 

12.	STOCK BASED COMPENSATION

 

Pursuant to the Employee Matters Agreement (see Note 2 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q) we made certain adjustments to the exercise price and number of our stock based compensation awards with the intention of generally preserving the intrinsic value of the awards immediately prior to the consummation of the Spin-Off. Each outstanding and unvested restricted stock award and each outstanding stock option of the Company, whether or not exercisable, that was held by a current or former employee of the Company, a director of the Company or a director of Civeo as of immediately prior to the Spin-Off was adjusted such that the holder received an additional number of restricted stock awards or stock options of the Company common stock based on a calculated ratio. For outstanding stock options, the per share exercise price was adjusted by a factor equal to the per share exercise price of the option prior to the Spin-Off divided by the calculated ratio. The calculated ratio was obtained by dividing the pre-Spin-Off price of the Company’s common stock by the post-Spin-Off price of the Company’s common stock. Each outstanding and unvested restricted stock award and each outstanding stock option of the Company, whether or not exercisable, that was held by a current employee of Civeo as of immediately prior to the Spin-Off was cancelled and the holder received a number of restricted stock awards or stock options of Civeo common stock. Adjustments to our stock based compensation awards did not result in additional compensation expense as an equitable adjustment was required to be made as a result of the Spin-Off. As a result of the Spin-Off, the conversions of outstanding equity awards resulted in the issuance of an additional 449,265 restricted stock awards and 395,454 additional stock options and shares available for future awards under the equity plan were increased by 1,876,109 shares to reflect the lower post-Spin-Off stock price of the Company. 

 

The following table presenting a summary of stock option award and restricted stock award activity for the six months ended June 30, 2014 reflects the adjustments discussed above.

 

		Stock Options				Restricted Stock
		Number of Shares				Awards
Outstanding at December 31, 2013			896,905				696,991
Granted			118,950				242,150
Options Exercised/Stock Vested			(198,746	)			(233,446	)
Cancelled			(14,875	)			(20,118	)
Granted in Conversion, as a result of the Spin-Off			395,454				449,265
Outstanding at June 30, 2014			1,197,688				1,134,842

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued) 

 

Stock based compensation pre-tax expense from continuing operations recognized in the three month periods ended June 30, 2014 and 2013 totaled $6.8 million and $5.7 million, or $0.08 and $0.06 per diluted share after tax, respectively. Stock based compensation pre-tax expense from continuing operations recognized in the six month periods ended June 30, 2014 and 2013 totaled $12.5 million and $10.8 million, or $0.16 and $0.12 per diluted share after tax, respectively.

 

At June 30, 2014, $46.7 million of compensation cost related to unvested stock options and restricted stock awards attributable to vesting conditions had not yet been recognized.  

 

13.	INCOME TAXES

 

Income tax expense for interim periods is based on estimates of the effective tax rate for the entire fiscal year. The Company’s income tax provision for the three and six months ended June 30, 2014 was a total tax benefit of $13.6 million, or 36.1% of pretax losses, and total income tax expense of $4.5 million, or 29.8% of pretax income, respectively, compared to income tax expense of $18.9 million, or 39.6% of pretax income, and $32.6 million, or 36.2% of pretax income, respectively, for the three and six months ended June 30, 2013. The decrease in the effective tax rates from the prior year was largely the result of lower domestic earnings as a result of the loss incurred on extinguishment of debt associated with the debt refinancings completed in conjunction with the Spin-Off. Due to the fact that a significant portion of our foreign income was previously derived from our accommodations business, the Spin-Off will have the effect of increasing our effective tax rate in future periods.  

 

14.	SEGMENT AND RELATED INFORMATION

 

In accordance with current accounting standards regarding disclosures about segments of an enterprise and related information, the Company has identified the following reportable segments: well site services and offshore products. The Company’s reportable segments represent strategic business units that offer different products and services. They are managed separately because each business requires different technologies and marketing strategies. Most of the businesses were initially acquired as a unit, and the management at the time of the acquisition was retained. Subsequent acquisitions have been direct extensions to our business segments. Separate business lines within the well site services segment have been disclosed to provide additional detail for that segment.

 

 

 

 

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

 

Financial information by business segment for continuing operations for each of the three and six months ended June 30, 2014 and 2013 is summarized in the following table (in thousands): 

 

Revenues from unaffiliated customers

Depreciation and amortization

Operating income (loss)

Equity in earnings (loss) of unconsolidated affiliates

Capital expenditures

Total assets

Three months ended June 30, 2014