10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
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| | |
þ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | For the Quarterly Period Ended September 30, 2015 |
OR
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| | |
o | | 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 001-35504
FORUM ENERGY TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
|
| | |
Delaware | | 61-1488595 |
(State or other jurisdiction of | | (I.R.S. Employer Identification No.) |
incorporation or organization) | | |
920 Memorial City Way, Suite 1000
Houston, Texas 77024
(Address of principal executive offices)
(281) 949-2500
(Registrant’s telephone number, including area code)
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 þ No o
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 þ No o
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 “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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| | | | | | |
Large accelerated filer þ | | Accelerated filer o | | Non-accelerated filer o | | Smaller reporting company o |
| | | | (Do not check if a 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 o No þ
As of October 23, 2015, there were 90,411,485 common shares outstanding.
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Forum Energy Technologies, Inc. and subsidiaries
Condensed consolidated statements of comprehensive income
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
(in thousands, except per share information) | 2015 | | 2014 | | 2015 | | 2014 |
Net sales | $ | 244,993 |
| | $ | 468,822 |
| | $ | 877,504 |
| | $ | 1,301,039 |
|
Cost of sales | 179,231 |
| | 316,784 |
| | 617,733 |
| | 883,070 |
|
Gross profit | 65,762 |
| | 152,038 |
| | 259,771 |
| | 417,969 |
|
Operating expenses | | | | | | | |
Selling, general and administrative expenses | 57,235 |
| | 81,316 |
| | 197,020 |
| | 230,087 |
|
Transaction expenses | 193 |
| | 1,516 |
| | 433 |
| | 2,326 |
|
Loss (gain) on sale of assets and other | 11 |
| | (85 | ) | | (264 | ) | | 320 |
|
Total operating expenses | 57,439 |
| | 82,747 |
| | 197,189 |
| | 232,733 |
|
Earnings from equity investment | 3,870 |
| | 6,749 |
| | 12,281 |
| | 17,997 |
|
Operating income | 12,193 |
| | 76,040 |
| | 74,863 |
| | 203,233 |
|
Other expense (income) | | | | | | | |
Interest expense | 7,453 |
| | 7,699 |
| | 22,687 |
| | 23,174 |
|
Foreign exchange (gains) losses and other, net | (2,910 | ) | | (5,222 | ) | | (5,511 | ) | | (616 | ) |
Total other expense | 4,543 |
| | 2,477 |
| | 17,176 |
| | 22,558 |
|
Income before income taxes | 7,650 |
| | 73,563 |
| | 57,687 |
| | 180,675 |
|
Provision for income tax expense | 932 |
| | 21,332 |
| | 13,448 |
| | 52,395 |
|
Net income | 6,718 |
| | 52,231 |
| | 44,239 |
| | 128,280 |
|
Less: Income (loss) attributable to noncontrolling interest | (2 | ) | | 5 |
| | (27 | ) | | 2 |
|
Net income attributable to common stockholders | 6,720 |
| | 52,226 |
| | 44,266 |
| | 128,278 |
|
| | | | | | | |
Weighted average shares outstanding | | | | | | | |
Basic | 90,058 |
| | 93,331 |
| | 89,770 |
| | 92,728 |
|
Diluted | 91,687 |
| | 96,198 |
| | 91,576 |
| | 95,631 |
|
Earnings per share | | | | | | | |
Basic | $ | 0.07 |
| | $ | 0.56 |
| | $ | 0.49 |
| | $ | 1.38 |
|
Diluted | $ | 0.07 |
| | $ | 0.54 |
| | $ | 0.48 |
| | $ | 1.34 |
|
| | | | | | | |
| | | | | | | |
Other comprehensive income, net of tax: | | | | | | | |
Net income | 6,718 |
| | 52,231 |
| | 44,239 |
| | 128,280 |
|
Change in foreign currency translation, net of tax of $0 | (18,747 | ) | | (34,474 | ) | | (30,553 | ) | | (21,754 | ) |
Gain (loss) on pension liability | (2 | ) | | — |
| | 68 |
| | 2 |
|
Comprehensive income (loss) | (12,031 | ) | | 17,757 |
| | 13,754 |
| | 106,528 |
|
Less: comprehensive loss (income) attributable to noncontrolling interests | 64 |
| | (32 | ) | | 118 |
| | (20 | ) |
Comprehensive income (loss) attributable to common stockholders | $ | (11,967 | ) | | $ | 17,725 |
| | $ | 13,872 |
| | $ | 106,508 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Forum Energy Technologies, Inc. and subsidiaries
Condensed consolidated balance sheets
(Unaudited)
|
| | | | | | | |
(in thousands, except share information) | September 30, 2015 | | December 31, 2014 |
Assets | | | |
Current assets | | | |
Cash and cash equivalents | $ | 76,185 |
| | $ | 76,579 |
|
Accounts receivable—trade, net | 157,591 |
| | 287,045 |
|
Inventories | 504,756 |
| | 461,515 |
|
Prepaid expenses and other current assets | 39,430 |
| | 32,985 |
|
Costs and estimated profits in excess of billings | 18,449 |
| | 14,646 |
|
Deferred income taxes, net | 20,380 |
| | 22,389 |
|
Total current assets | 816,791 |
| | 895,159 |
|
Property and equipment, net of accumulated depreciation | 196,804 |
| | 189,974 |
|
Deferred financing costs, net | 11,189 |
| | 13,107 |
|
Intangibles | 257,050 |
| | 271,739 |
|
Goodwill | 799,601 |
| | 798,481 |
|
Investment in unconsolidated subsidiary | 56,457 |
| | 49,675 |
|
Other long-term assets | 3,494 |
| | 3,493 |
|
Total assets | $ | 2,141,386 |
| | $ | 2,221,628 |
|
Liabilities and equity | | | |
Current liabilities | | | |
Current portion of long-term debt | $ | 335 |
| | $ | 840 |
|
Accounts payable—trade | 92,244 |
| | 127,757 |
|
Accrued liabilities | 79,241 |
| | 126,890 |
|
Deferred revenue | 9,342 |
| | 10,919 |
|
Billings in excess of costs and profits recognized | 9,111 |
| | 15,785 |
|
Total current liabilities | 190,273 |
| | 282,191 |
|
Long-term debt, net of current portion | 402,556 |
| | 428,010 |
|
Deferred income taxes, net | 94,205 |
| | 98,188 |
|
Other long-term liabilities | 23,409 |
| | 17,318 |
|
Total liabilities | 710,443 |
| | 825,707 |
|
Commitments and contingencies |
| |
|
|
Equity | | | |
Common stock, $0.01 par value, 296,000,000 shares authorized, 98,522,054 and 97,865,278 shares issued | 985 |
| | 979 |
|
Additional paid-in capital | 886,221 |
| | 864,313 |
|
Treasury stock at cost, 8,141,445 and 8,108,983 shares | (133,126 | ) | | (132,480 | ) |
Retained earnings | 743,771 |
| | 699,505 |
|
Accumulated other comprehensive income (loss) | (67,355 | ) | | (36,961 | ) |
Total stockholders’ equity | 1,430,496 |
| | 1,395,356 |
|
Noncontrolling interest in subsidiary | 447 |
| | 565 |
|
Total equity | 1,430,943 |
| | 1,395,921 |
|
Total liabilities and equity | $ | 2,141,386 |
| | $ | 2,221,628 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Forum Energy Technologies, Inc. and subsidiaries
Condensed consolidated statements of cash flows
(Unaudited)
|
| | | | | | | |
| Nine Months Ended September 30, |
(in thousands, except share information) | 2015 | | 2014 |
Cash flows from operating activities | | | |
Net income | $ | 44,239 |
| | $ | 128,280 |
|
Adjustments to reconcile net income to net cash provided by operating activities | | | |
Depreciation expense | 28,721 |
| | 28,274 |
|
Amortization of intangible assets | 20,558 |
| | 20,608 |
|
Share-based compensation expense | 17,090 |
| | 14,334 |
|
Deferred income taxes | (1,528 | ) | | (4,477 | ) |
Earnings from equity investment, net of distributions | (6,782 | ) | | 3,092 |
|
Other | 4,523 |
| | 3,644 |
|
Changes in operating assets and liabilities | | | |
Accounts receivable—trade | 129,601 |
| | (67,793 | ) |
Inventories | (24,729 | ) | | (14,520 | ) |
Prepaid expenses and other current assets | (2,019 | ) | | (6,872 | ) |
Accounts payable, deferred revenue and other accrued liabilities | (81,496 | ) | | 66,744 |
|
Costs and estimated profits in excess of billings, net | (10,472 | ) | | 8,439 |
|
Net cash provided by operating activities | $ | 117,706 |
| | $ | 179,753 |
|
Cash flows from investing activities | | | |
Acquisition of businesses, net of cash acquired | (60,836 | ) | | (38,289 | ) |
Capital expenditures for property and equipment | (28,046 | ) | | (39,932 | ) |
Proceeds from sale of business, property and equipment | 1,699 |
| | 8,735 |
|
Net cash used in investing activities | $ | (87,183 | ) | | $ | (69,486 | ) |
Cash flows from financing activities | | | |
Borrowings under Credit Facility | 79,943 |
| | — |
|
Repayment of long-term debt | (105,985 | ) | | (91,760 | ) |
Excess tax benefits from stock based compensation | 206 |
| | 7,291 |
|
Repurchases of stock | (6,246 | ) | | (1,328 | ) |
Proceeds from stock issuance | 4,618 |
| | 10,332 |
|
Deferred financing costs | — |
| | (6 | ) |
Net cash used in financing activities | $ | (27,464 | ) | | $ | (75,471 | ) |
Effect of exchange rate changes on cash | (3,453 | ) | | (294 | ) |
Net increase (decrease) in cash and cash equivalents | (394 | ) | | 34,502 |
|
Cash and cash equivalents | | | |
Beginning of period | 76,579 |
| | 39,582 |
|
End of period | $ | 76,185 |
| | $ | 74,084 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements
(Unaudited)
1. Organization and basis of presentation
Forum Energy Technologies, Inc. (the "Company"), a Delaware corporation, is a global oilfield products company, serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry. The Company designs, manufactures and distributes products and engages in aftermarket services, parts supply and related services that complement the Company’s product offering.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation.
The Company's investment in an operating entity where the Company has the ability to exert significant influence, but does not control operating and financial policies, is accounted for using the equity method. The Company's share of the net income of this entity is recorded as "Earnings from equity investment" in the condensed consolidated statements of comprehensive income. The investment in this entity is included in "Investment in unconsolidated subsidiary" in the condensed consolidated balance sheets. The Company reports its share of equity earnings within operating income as the investee's operations are integral to the operations of the Company.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company's financial position, results of operations and cash flows have been included. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any other interim period.
These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America ("GAAP") for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2014, which are included in the Company’s 2014 Annual Report on Form 10-K filed with the SEC on February 27, 2015 (the "Annual Report").
2. Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("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 September 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. This new standard specifies that an acquirer in a business combination should recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, eliminating the current requirement to retrospectively account for these adjustments. Additionally, the full effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts should be recognized in the same period as the adjustments to the provisional amounts. The new standard will be effective for the Company for the fiscal year beginning January 1, 2016 and interim periods thereafter.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires companies to measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new standard will be effective for the Company for the fiscal year beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impacts of the adoption of this guidance.
In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires deferred financing costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. The new standard will be effective for the Company for the fiscal year beginning January 1, 2016 and interim periods thereafter. The guidance is not expected to have a material impact on the consolidated financial statements.
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern. The new standard requires management to evaluate whether there are conditions and events that raise substantial doubt about an entity's ability to continue as a going concern for both annual and interim reporting periods. The guidance is effective for the Company for the fiscal year beginning January 1, 2016 and interim periods thereafter. The guidance is not expected to have a material impact on the consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The new standard is to be effective for the fiscal year beginning after December 15, 2017. Companies are able to early adopt the pronouncement, however not before fiscal years beginning after December 15, 2016. The Company is currently evaluating the impacts of the adoption and the implementation approach to be used.
3. Acquisitions
2015 Acquisition
Effective February 2, 2015, the Company completed the acquisition of J-Mac Tool, Inc. ("J-Mac") for consideration of $64.2 million. J-Mac is a Fort Worth, Texas based manufacturer of high quality hydraulic fracturing pumps, power ends, fluid ends and other pump accessories. J-Mac is included in the Production & Infrastructure segment. As the value of certain assets and liabilities are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances that existed at the acquisition date, including any post-closing purchase price adjustments. When the valuation is final, any changes to the preliminary valuation of acquired assets and liabilities could result in adjustments to identified intangibles and goodwill. The following table summarizes the current preliminary fair values of the assets acquired and liabilities assumed at the date of the acquisition (in thousands):
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| | | | |
| | 2015 Acquisition |
Current assets, net of cash acquired | | $ | 37,095 |
|
Property and equipment | | 11,506 |
|
Intangible assets (primarily customer relationships) | | 10,400 |
|
Tax-deductible goodwill | | 15,350 |
|
Current liabilities | | (10,138 | ) |
Long-term liabilities | | (22 | ) |
Net assets acquired | | $ | 64,191 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
2014 Acquisition
Effective May 1, 2014, the Company completed the acquisition of Quality Wireline & Cable, Inc. ("Quality") for consideration of $38.3 million. Quality is a Calgary, Alberta based manufacturer of high-performance cased-hole electro-mechanical wireline cables and specialty cables for the oil and gas industry. Quality is included in the Drilling & Subsea segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of the acquisition (in thousands):
|
| | | | |
| | 2014 Acquisition |
Current assets, net of cash acquired | | $ | 7,596 |
|
Property and equipment | | 3,837 |
|
Intangible assets (primarily customer relationships) | | 11,527 |
|
Non-tax-deductible goodwill | | 20,573 |
|
Current liabilities | | (1,615 | ) |
Deferred tax liabilities | | (3,629 | ) |
Net assets acquired | | $ | 38,289 |
|
Revenues and net income related to the acquisitions were not significant for the year ended December 31, 2014 or the nine months ended September 30, 2015. Pro forma results of operations for the 2015 and 2014 acquisitions have not been presented because the effects were not material to the consolidated financial statements on either an individual or aggregate basis.
4. Inventories
The Company's significant components of inventory at September 30, 2015 and December 31, 2014 were as follows (in thousands):
|
| | | | | | | |
| September 30, 2015 | | December 31, 2014 |
Raw materials and parts | $ | 156,595 |
| | $ | 153,768 |
|
Work in process | 51,636 |
| | 50,913 |
|
Finished goods | 330,180 |
| | 286,290 |
|
Gross inventories | 538,411 |
| | 490,971 |
|
Inventory reserve | (33,655 | ) | | (29,456 | ) |
Inventories | $ | 504,756 |
| | $ | 461,515 |
|
5. Goodwill and intangible assets
Goodwill
The changes in the carrying amount of goodwill from December 31, 2014 to September 30, 2015, were as follows (in thousands):
|
| | | | | | | | | | | |
| Drilling & Subsea | | Production & Infrastructure | | Total |
Goodwill Balance at December 31, 2014 net | $ | 719,860 |
| | $ | 78,621 |
| | $ | 798,481 |
|
Acquisitions | — |
| | 15,350 |
| | 15,350 |
|
Impact of non-U.S. local currency translation | (13,756 | ) | | (474 | ) | | (14,230 | ) |
Goodwill Balance at September 30, 2015 net | $ | 706,104 |
| | $ | 93,497 |
| | $ | 799,601 |
|
Goodwill and intangible assets with indefinite lives are assessed for impairment annually or whenever an event indicating impairment may have occurred. During the quarter ended September 30, 2015, the Company elected to change the
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
date of the Company's annual assessments of goodwill and indefinite lived intangible assets impairment from December 31 to October 1. This is a change in method of applying an accounting principle, which management believes is a preferable alternative as it better aligns the timing of the assessment with our planning and forecasting process and alleviates constraints on accounting resources during our annual reporting process. The change in the assessment date does not delay, accelerate, or avoid a potential impairment charge.
At December 31, 2014, the Company performed its annual impairment test on each of the reporting units and concluded that there had been no impairment because the estimated fair values of each of those reporting units exceeded its carrying value. Relevant events and circumstances which could have a negative impact on goodwill include macroeconomic conditions; industry and market conditions, such as commodity prices; operating cost factors; overall financial performance; the impact of dispositions and acquisitions; and other entity-specific events. Further declines in commodity prices or sustained lower valuation for the Company's common stock could indicate a reduction in the estimate of reporting unit fair value which, in turn, could lead to an impairment of reporting unit goodwill. The Company will continue to monitor events and circumstances which could have a negative impact on estimates of reporting unit fair value. Commodity prices have remained at low levels and the active rig count has continued to decline resulting in a significant decline in the Company’s market capitalization. While the Company incorporated a downturn into its forecasts in the previous annual test, should current conditions worsen, or continue for an extended period of time, the Company may identify and record an impairment charge related to the reporting units previously identified or other intangible assets as a result of an interim impairment test.
Intangible assets
Intangible assets consisted of the following as of September 30, 2015 and December 31, 2014, respectively (in thousands):
|
| | | | | | | | | | | | | |
| September 30, 2015 |
| Gross carrying amount | | Accumulated amortization | | Net amortizable intangibles | | Amortization period (in years) |
Customer relationships | $ | 282,989 |
| | $ | (98,177 | ) | | $ | 184,812 |
| | 4-15 |
Patents and technology | 34,425 |
| | (9,721 | ) | | 24,704 |
| | 5-17 |
Non-compete agreements | 7,339 |
| | (6,233 | ) | | 1,106 |
| | 3-6 |
Trade names | 49,834 |
| | (17,302 | ) | | 32,532 |
| | 10-15 |
Distributor relationships | 22,160 |
| | (13,494 | ) | | 8,666 |
| | 8-15 |
Trademark | 5,230 |
| | — |
| | 5,230 |
| | Indefinite |
Intangible Assets Total | $ | 401,977 |
| | $ | (144,927 | ) | | $ | 257,050 |
| | |
|
| | | | | | | | | | | | | |
| December 31, 2014 |
| Gross carrying amount | | Accumulated amortization | | Net amortizable intangibles | | Amortization period (in years) |
Customer relationships | $ | 284,120 |
| | $ | (84,947 | ) | | $ | 199,173 |
| | 4-15 |
Patents and technology | 31,069 |
| | (8,074 | ) | | 22,995 |
| | 5-17 |
Non-compete agreements | 7,086 |
| | (5,761 | ) | | 1,325 |
| | 3-6 |
Trade names | 48,149 |
| | (14,747 | ) | | 33,402 |
| | 10-15 |
Distributor relationships | 22,160 |
| | (12,546 | ) | | 9,614 |
| | 8-15 |
Trademark | 5,230 |
| | — |
| | 5,230 |
| | Indefinite |
Intangible Assets Total | $ | 397,814 |
| | $ | (126,075 | ) | | $ | 271,739 |
| | |
6. Investment in unconsolidated subsidiary
Effective July 1, 2013, the Company jointly purchased Global Tubing, LLC ("Global Tubing") with an equal partner, with management retaining a small interest. Global Tubing is a Dayton, Texas based provider of coiled tubing strings and related services. The Company's equity investment is reported in the Production & Infrastructure segment and is accounted for using the equity method of accounting. As Global Tubing's products are complementary to the Company’s
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
well intervention and stimulation products and the investment's business is integral to the Company's operations, the earnings from the equity investment are included within operating income.
Condensed financial data for the equity investment in the unconsolidated subsidiary is summarized as follows (in thousands):
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine Months Ended September 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net revenues | $ | 26,033 |
| | $ | 37,204 |
| | $ | 81,513 |
| | $ | 102,113 |
|
Gross profit | 11,731 |
| | 18,253 |
| | 36,505 |
| | 49,160 |
|
Net income | 8,063 |
| | 14,060 |
| | 25,588 |
| | 37,659 |
|
The Company's earnings from equity investment | 3,870 |
| | 6,749 |
| | 12,281 |
| | 17,997 |
|
7. Debt
Notes payable and lines of credit as of September 30, 2015 and December 31, 2014 consisted of the following (in thousands): |
| | | | | | | |
| September 30, 2015 | | December 31, 2014 |
6.25% Senior Notes due October 2021 | $ | 402,497 |
| | $ | 402,801 |
|
Senior secured revolving credit facility | — |
| | 25,000 |
|
Other debt | 394 |
| | 1,049 |
|
Total debt | 402,891 |
| | 428,850 |
|
Less: current maturities | (335 | ) | | (840 | ) |
Long-term debt | $ | 402,556 |
| | $ | 428,010 |
|
Senior Notes Due 2021
The Senior Notes bear interest at a rate of 6.250% per annum, payable on April 1 and October 1 of each year, and mature on October 1, 2021. The Senior Notes are senior unsecured obligations, and are guaranteed on a senior unsecured basis by the Company’s subsidiaries that guarantee the Credit Facility and rank junior to, among other indebtedness, the Credit Facility to the extent of the value of the collateral securing the Credit Facility.
Credit Facility
The Company has a Credit Facility with several financial institutions as lenders that provides for a $600.0 million credit facility with up to $75.0 million available for letters of credit and up to $25.0 million in swingline loans. Subject to terms of the Credit Facility, the Company has the ability to increase the Credit Facility by an additional $300.0 million. The Credit Facility matures in November 2018. Weighted average interest rates under the Credit Facility for the nine months ended September 30, 2015 and for the twelve months ended December 31, 2014 were approximately 2.00%.
As of September 30, 2015, we had no borrowings outstanding under the Credit Facility, $13.3 million of outstanding letters of credit and the capacity to borrow an additional $586.7 million subject to certain limitations in the Credit Facility. There have been no changes to the financial covenants disclosed in Item 8 of the Annual Report and the Company was in compliance with all financial covenants at September 30, 2015.
8. Income taxes
The Company's effective tax rate was 23.3% for the nine months ended September 30, 2015 and 29.0% for the nine months ended September 30, 2014. The tax rate is lower than the comparable period in 2014 primarily due to a higher proportion of our earnings being generated outside the United States in jurisdictions subject to lower tax rates. The effective tax rate can vary from period to period depending on the Company's relative mix of U.S. and non-U.S. earnings. The effective tax rate was 12.2% for the three months ended September 30, 2015 and 29.0% for the three months ended September 30, 2014. The tax rate for the three months ended September 30, 2015 is lower than the comparable
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
period in 2014 primarily due to a higher proportion of our earnings being generated outside the United States in jurisdictions subject to lower tax rates.
9. Fair value measurements
At September 30, 2015, the carrying value of the Credit Facility was $0.0 million. Substantially all of the debt incurs interest at a variable interest rate and, therefore, the carrying amount approximates fair value. The fair value of the debt is classified as a Level 2 measurement because interest rates charged are similar to other financial instruments with similar terms and maturities.
The fair value of the Company’s Senior Notes is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those or similar instruments. At September 30, 2015, the fair value and the carrying value of the Company’s Senior Notes approximated $351.8 million and $402.5 million, respectively. At December 31, 2014, the fair value and the carrying value of the Company’s Senior Notes approximated $378.1 million and $402.8 million, respectively.
There were no outstanding financial assets as of September 30, 2015 and December 31, 2014 that required measuring the amounts at fair value. The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods and there were no transfers between levels of the fair value hierarchy during the nine months ended September 30, 2015.
10. Business segments
The Company’s operations are divided into the following two operating segments, which are our reportable segments: Drilling & Subsea ("D&S") and Production & Infrastructure ("P&I"). The amounts indicated below as "Corporate" relate to costs and assets not allocated to the reportable segments. Summary financial data by segment follows (in thousands):
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Revenue: | | | | | | | |
Drilling & Subsea | $ | 139,073 |
| | $ | 307,454 |
| | $ | 523,850 |
| | $ | 848,474 |
|
Production & Infrastructure | 106,186 |
| | 161,696 |
| | 354,278 |
| | 453,640 |
|
Intersegment eliminations | (266 | ) | | (328 | ) | | (624 | ) | | (1,075 | ) |
Total Revenue | $ | 244,993 |
| | $ | 468,822 |
| | $ | 877,504 |
| | $ | 1,301,039 |
|
| | | | | | | |
Operating income: | | | | | | | |
Drilling & Subsea | $ | 6,675 |
| | $ | 57,929 |
| | $ | 51,261 |
| | $ | 155,330 |
|
Production & Infrastructure | 10,715 |
| | 29,816 |
| | 45,108 |
| | 80,260 |
|
Corporate | (4,993 | ) | | (10,274 | ) | | (21,337 | ) | | (29,711 | ) |
Total segment operating income | 12,397 |
| | 77,471 |
| | 75,032 |
| | 205,879 |
|
Transaction expenses | 193 |
| | 1,516 |
| | 433 |
| | 2,326 |
|
Loss (gain) on sale of assets and other | 11 |
| | (85 | ) | | (264 | ) | | 320 |
|
Income from operations | $ | 12,193 |
| | $ | 76,040 |
| | $ | 74,863 |
| | $ | 203,233 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
A summary of consolidated assets by reportable segment is as follows (in thousands):
|
| | | | | | | | |
| | September 30, 2015 | | December 31, 2014 |
Assets | | | | |
Drilling & Subsea | | $ | 1,525,824 |
| | $ | 1,674,934 |
|
Production & Infrastructure | | 546,712 |
| | 488,225 |
|
Corporate | | 68,850 |
| | 58,469 |
|
Total assets | | $ | 2,141,386 |
| | $ | 2,221,628 |
|
Corporate assets include, among other items, prepaid assets, cash and deferred loan costs.
11. Earnings per share
The calculation of basic and diluted earnings per share for each period presented was as follows (dollars and shares in thousands, except per share amounts):
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine Months Ended September 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net Income attributable to common stockholders | $ | 6,720 |
| | $ | 52,226 |
| | $ | 44,266 |
| | $ | 128,278 |
|
| | | | | | | |
Average shares outstanding (basic) | 90,058 |
| | 93,331 |
| | 89,770 |
| | 92,728 |
|
Common stock equivalents | 1,629 |
| | 2,867 |
| | 1,806 |
| | 2,903 |
|
Diluted shares | 91,687 |
| | 96,198 |
| | 91,576 |
| | 95,631 |
|
Earnings per share | | | | | | | |
Basic earnings per share | $ | 0.07 |
| | $ | 0.56 |
| | $ | 0.49 |
| | $ | 1.38 |
|
Diluted earnings per share | $ | 0.07 |
| | $ | 0.54 |
| | $ | 0.48 |
| | $ | 1.34 |
|
The diluted earnings per share calculation excludes approximately 2.0 million and 0.4 million stock options for the three months ended September 30, 2015 and 2014, respectively, and 1.8 million and 0.5 million stock options for the nine months ended September 30, 2015 and 2014, respectively, because they were anti-dilutive as the option exercise price was greater than the average market price of the common stock.
12. Commitments and contingencies
In the ordinary course of business, the Company is, and in the future could be, involved in various pending or threatened legal actions that may or may not be covered by insurance. Management has reviewed such pending judicial and legal proceedings, the reasonably anticipated costs and expenses in connection with such proceedings, and the availability and limits of insurance coverage, and has established reserves that are believed to be appropriate in light of those outcomes that are considered to be probable and can be reasonably estimated. The reserves accrued at September 30, 2015 and December 31, 2014, respectively, are immaterial. It is management's opinion that the Company's ultimate liability, if any, with respect to these actions is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
13. Stockholders' equity
Share-based compensation
During the nine months ended September 30, 2015, the Company granted 564,950 options and 987,411 shares of restricted stock or restricted stock units, which includes 161,660 performance share awards with a market condition. The stock options were granted with exercise prices of $18.68 and $13.92. Of the restricted stock or restricted stock units granted, 765,523 vest ratably over four years on each anniversary of the grant date. 60,228 shares of restricted stock or restricted stock units were granted to the non-employee members of the Board of Directors, which have a
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
twelve month vesting period from the date of grant. The performance share awards granted may settle for between zero and two shares of the Company's common stock. The number of shares issued pursuant to the performance share awards will be determined based on the total shareholder return of the Company's common stock as compared to a group of peer companies, measured annually over a one year, two year and three-year performance period.
14. Related party transactions
The Company has sold and purchased equipment and services to and from various affiliates of certain directors. The dollar amounts related to these related party activities are not material to the Company’s condensed consolidated financial statements.
15. Condensed consolidating financial statements
The Senior Notes are guaranteed by our domestic subsidiaries which are 100% owned, directly or indirectly, by the Company. The guarantees are full and unconditional, joint and several and on an unsecured basis.
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating statements of comprehensive income |
| | | | | | | | | | |
| | Three months ended September 30, 2015 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Net sales | | $ | — |
| | $ | 182,986 |
| | $ | 83,751 |
| | $ | (21,744 | ) | | $ | 244,993 |
|
Cost of sales | | — |
| | 140,444 |
| | 60,494 |
| | (21,707 | ) | | 179,231 |
|
Gross profit | | — |
| | 42,542 |
| | 23,257 |
| | (37 | ) | | 65,762 |
|
Operating expenses | | | | | | | | | | |
Selling, general and administrative expenses | | — |
| | 41,157 |
| | 16,078 |
| | — |
| | 57,235 |
|
Transaction expenses | | — |
| | 193 |
| | — |
| | — |
| | 193 |
|
Loss (gain) on sale of assets and other | | — |
| | (15 | ) | | 26 |
| | — |
| | 11 |
|
Total operating expenses | | — |
| | 41,335 |
| | 16,104 |
| | — |
| | 57,439 |
|
Earnings from equity investment | | — |
| | 3,870 |
| | — |
| | — |
| | 3,870 |
|
Equity earnings from affiliate, net of tax | | 11,568 |
| | 8,286 |
| | — |
| | (19,854 | ) | | — |
|
Operating income | | 11,568 |
| | 13,363 |
| | 7,153 |
| | (19,891 | ) | | 12,193 |
|
Other expense (income) | | | | | | | | | | |
Interest expense (income) | | 7,458 |
| | (1 | ) | | (4 | ) | | — |
| | 7,453 |
|
Foreign exchange (gains) losses and other, net | | — |
| | (253 | ) | | (2,657 | ) | | — |
| | (2,910 | ) |
Total other expense (income) | | 7,458 |
| | (254 | ) | | (2,661 | ) | | — |
| | 4,543 |
|
Income before income taxes | | 4,110 |
| | 13,617 |
| | 9,814 |
| | (19,891 | ) | | 7,650 |
|
Provision for income tax expense | | (2,610 | ) | | 2,049 |
| | 1,493 |
| | — |
| | 932 |
|
Net income | | 6,720 |
| | 11,568 |
| | 8,321 |
| | (19,891 | ) | | 6,718 |
|
Less: Income (loss) attributable to noncontrolling interest | | — |
| | — |
| | (2 | ) | | — |
| | (2 | ) |
Net income attributable to common stockholders | | 6,720 |
| | 11,568 |
| | 8,323 |
| | (19,891 | ) | | 6,720 |
|
| | | | | | | | | | |
Other comprehensive income, net of tax: | | | | | | | | | | |
Net income | | 6,720 |
| | 11,568 |
| | 8,321 |
| | (19,891 | ) | | 6,718 |
|
Change in foreign currency translation, net of tax of $0 | | (18,747 | ) | | (18,747 | ) | | (18,747 | ) | | 37,494 |
| | (18,747 | ) |
Change in pension liability | | (2 | ) | | (2 | ) | | (2 | ) | | 4 |
| | (2 | ) |
Comprehensive income (loss) | | (12,029 | ) | | (7,181 | ) | | (10,428 | ) | | 17,607 |
| | (12,031 | ) |
Less: comprehensive (income) loss attributable to noncontrolling interests | | — |
| | — |
| | 64 |
| | — |
| | 64 |
|
Comprehensive income (loss) attributable to common stockholders | | $ | (12,029 | ) | | $ | (7,181 | ) | | $ | (10,364 | ) | | $ | 17,607 |
| | $ | (11,967 | ) |
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating statements of comprehensive income |
| | | | | | | | | | |
| | Three months ended September 30, 2014 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Net sales | | $ | — |
| | $ | 330,772 |
| | $ | 179,458 |
| | $ | (41,408 | ) | | $ | 468,822 |
|
Cost of sales | | — |
| | 230,938 |
| | 127,423 |
| | (41,577 | ) | | 316,784 |
|
Gross profit | | — |
| | 99,834 |
| | 52,035 |
| | 169 |
| | 152,038 |
|
Operating expenses | | | | | | | | | | |
Selling, general and administrative expenses | | — |
| | 63,228 |
| | 18,088 |
| | — |
| | 81,316 |
|
Other operating expense | | — |
| | 1,419 |
| | 12 |
| | — |
| | 1,431 |
|
Total operating expenses | | — |
| | 64,647 |
| | 18,100 |
| | — |
| | 82,747 |
|
Earnings from equity investment | | — |
| | 6,749 |
| | — |
| | — |
| | 6,749 |
|
Equity earnings from affiliates, net of tax | | 57,161 |
| | 28,048 |
| | — |
| | (85,209 | ) | | — |
|
Operating income | | 57,161 |
| | 69,984 |
| | 33,935 |
| | (85,040 | ) | | 76,040 |
|
Other expense (income) | | | | | | | | | | |
Interest expense (income) | | 7,593 |
| | 75 |
| | 31 |
| | — |
| | 7,699 |
|
Interest income with affiliate | | — |
| | (1,887 | ) | | — |
| | 1,887 |
| | — |
|
Interest expense with affiliate | | — |
| | — |
| | 1,887 |
| | (1,887 | ) | | — |
|
Foreign exchange (gains) losses and other, net | | — |
| | (744 | ) | | (4,478 | ) | | — |
| | (5,222 | ) |
Total other expense (income) | | 7,593 |
| | (2,556 | ) | | (2,560 | ) | | — |
| | 2,477 |
|
Income before income taxes | | 49,568 |
| | 72,540 |
| | 36,495 |
| | (85,040 | ) | | 73,563 |
|
Provision for income tax expense | | (2,658 | ) | | 15,379 |
| | 8,611 |
| | — |
| | 21,332 |
|
Net income | | 52,226 |
| | 57,161 |
| | 27,884 |
| | (85,040 | ) | | 52,231 |
|
Less: Income (loss) attributable to noncontrolling interest | | — |
| | — |
| | 5 |
| | — |
| | 5 |
|
Net income attributable to common stockholders | | 52,226 |
| | 57,161 |
| | 27,879 |
| | (85,040 | ) | | 52,226 |
|
| | | | | | | | | | |
Other comprehensive income, net of tax: | | | | | | | | | | |
Net income | | 52,226 |
| | 57,161 |
| | 27,884 |
| | (85,040 | ) | | 52,231 |
|
Change in foreign currency translation, net of tax of $0 | | (34,474 | ) | | (34,474 | ) | | (34,474 | ) | | 68,948 |
| | (34,474 | ) |
Comprehensive income (loss) | | 17,752 |
| | 22,687 |
| | (6,590 | ) | | (16,092 | ) | | 17,757 |
|
Less: comprehensive (income) loss attributable to noncontrolling interests | | — |
| | — |
| | (32 | ) | | — |
| | (32 | ) |
Comprehensive income (loss) attributable to common stockholders | | $ | 17,752 |
| | $ | 22,687 |
| | $ | (6,622 | ) | | $ | (16,092 | ) | | $ | 17,725 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating statements of comprehensive income |
| | | | | | | | | | |
| | Nine months ended September 30, 2015 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Net sales | | $ | — |
| | $ | 661,419 |
| | $ | 306,431 |
| | $ | (90,346 | ) | | $ | 877,504 |
|
Cost of sales | | — |
| | 484,338 |
| | 221,940 |
| | (88,545 | ) | | 617,733 |
|
Gross profit | | — |
| | 177,081 |
| | 84,491 |
| | (1,801 | ) | | 259,771 |
|
Operating expenses | | | | | | | | | | |
Selling, general and administrative expenses | | — |
| | 150,955 |
| | 46,065 |
| | — |
| | 197,020 |
|
Transaction expenses | | — |
| | 433 |
| | — |
| | — |
| | 433 |
|
Loss (gain) on sale of assets and other | | — |
| | (73 | ) | | (191 | ) | | — |
| | (264 | ) |
Total operating expenses | | — |
| | 151,315 |
| | 45,874 |
| | — |
| | 197,189 |
|
Earnings from equity investment | | — |
| | 12,281 |
| | — |
| | — |
| | 12,281 |
|
Equity earnings from affiliates, net of tax | | 59,002 |
| | 35,116 |
| | — |
| | (94,118 | ) | | — |
|
Operating income | | 59,002 |
| | 73,163 |
| | 38,617 |
| | (95,919 | ) | | 74,863 |
|
Other expense (income) | | | | | | | | | | |
Interest expense (income) | | 22,670 |
| | 13 |
| | 4 |
| | — |
| | 22,687 |
|
Foreign exchange (gains) losses and other, net | | — |
| | (407 | ) | | (5,104 | ) | | — |
| | (5,511 | ) |
Total other expense (income) | | 22,670 |
| | (394 | ) | | (5,100 | ) | | — |
| | 17,176 |
|
Income before income taxes | | 36,332 |
| | 73,557 |
| | 43,717 |
| | (95,919 | ) | | 57,687 |
|
Provision for income tax expense | | (7,934 | ) | | 14,555 |
| | 6,827 |
| | — |
| | 13,448 |
|
Net income | | 44,266 |
| | 59,002 |
| | 36,890 |
| | (95,919 | ) | | 44,239 |
|
Less: Income (loss) attributable to noncontrolling interest | | — |
| | — |
| | (27 | ) | | — |
| | (27 | ) |
Net income attributable to common stockholders | | 44,266 |
| | 59,002 |
| | 36,917 |
| | (95,919 | ) | | 44,266 |
|
| | | | | | | | | | |
Other comprehensive income, net of tax: | | | | | | | | | | |
Net income | | 44,266 |
| | 59,002 |
| | 36,890 |
| | (95,919 | ) | | 44,239 |
|
Change in foreign currency translation, net of tax of $0 | | (30,553 | ) | | (30,553 | ) | | (30,553 | ) | | 61,106 |
| | (30,553 | ) |
Change in pension liability | | 68 |
| | 68 |
| | 68 |
| | (136 | ) | | 68 |
|
Comprehensive income (loss) | | 13,781 |
| | 28,517 |
| | 6,405 |
| | (34,949 | ) | | 13,754 |
|
Less: comprehensive (income) loss attributable to noncontrolling interests | | — |
| | — |
| | 118 |
| | — |
| | 118 |
|
Comprehensive income (loss) attributable to common stockholders | | $ | 13,781 |
| | $ | 28,517 |
| | $ | 6,523 |
| | $ | (34,949 | ) | | $ | 13,872 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating statements of comprehensive income |
| | | | | | | | | | |
| | Nine Months Ended September 30, 2014 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Net sales | | $ | — |
| | $ | 941,885 |
| | $ | 480,049 |
| | $ | (120,895 | ) | | $ | 1,301,039 |
|
Cost of sales | | — |
| | 659,444 |
| | 342,269 |
| | (118,643 | ) | | 883,070 |
|
Gross profit | | — |
| | 282,441 |
| | 137,780 |
| | (2,252 | ) | | 417,969 |
|
Operating expenses | | | | | | | | | | |
Selling, general and administrative expenses | | — |
| | 176,331 |
| | 53,756 |
| | — |
| | 230,087 |
|
Transaction expenses | | — |
| | 2,326 |
| | — |
| | — |
| | 2,326 |
|
Loss (gain) on sale of assets and other | | — |
| | 639 |
| | (319 | ) | | — |
| | 320 |
|
Total operating expenses | | — |
| | 179,296 |
| | 53,437 |
| | — |
| | 232,733 |
|
Earnings from equity investment | | — |
| | 17,997 |
| | — |
| | — |
| | 17,997 |
|
Equity earnings from affiliates, net of tax | | 143,310 |
| | 59,688 |
| | — |
| | (202,998 | ) | | — |
|
Operating income | | 143,310 |
| | 180,830 |
| | 84,343 |
| | (205,250 | ) | | 203,233 |
|
Other expense (income) | | | | | | | | | | |
Interest expense (income) | | 23,126 |
| | 77 |
| | (29 | ) | | — |
| | 23,174 |
|
Interest income with affiliate | | — |
| | (5,770 | ) | | — |
| | 5,770 |
| | — |
|
Interest expense with affiliate | | — |
| | — |
| | 5,770 |
| | (5,770 | ) | | — |
|
Foreign exchange (gains) losses and other, net | | — |
| | 274 |
| | (890 | ) | | — |
| | (616 | ) |
Total other expense (income) | | 23,126 |
| | (5,419 | ) | | 4,851 |
| | — |
| | 22,558 |
|
Income before income taxes | | 120,184 |
| | 186,249 |
| | 79,492 |
| | (205,250 | ) | | 180,675 |
|
Provision for income tax expense | | (8,094 | ) | | 42,939 |
| | 17,550 |
| | — |
| | 52,395 |
|
Net income | | 128,278 |
| | 143,310 |
| | 61,942 |
| | (205,250 | ) | | 128,280 |
|
Less: Income (loss) attributable to noncontrolling interest | | — |
| | — |
| | 2 |
| | — |
| | 2 |
|
Net income attributable to common stockholders | | 128,278 |
| | 143,310 |
| | 61,940 |
| | (205,250 | ) | | 128,278 |
|
| | | | | | | | | | |
Other comprehensive income, net of tax: | | | | | | | | | | |
Net income | | 128,278 |
| | 143,310 |
| | 61,942 |
| | (205,250 | ) | | 128,280 |
|
Change in foreign currency translation, net of tax of $0 | | (21,754 | ) | | (21,754 | ) | | (21,754 | ) | | 43,508 |
| | (21,754 | ) |
Change in pension liability | | 2 |
| | 2 |
| | 2 |
| | (4 | ) | | 2 |
|
Comprehensive income (loss) | | 106,526 |
| | 121,558 |
| | 40,190 |
| | (161,746 | ) | | 106,528 |
|
Less: comprehensive (income) loss attributable to noncontrolling interests | | — |
| | — |
| | (20 | ) | | — |
| | (20 | ) |
Comprehensive income (loss) attributable to common stockholders | | $ | 106,526 |
| | $ | 121,558 |
| | $ | 40,170 |
| | $ | (161,746 | ) | | $ | 106,508 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating balance sheets |
| | | | | | | | | | |
| | September 30, 2015 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Assets | | | | | | | | | | |
Current assets | | | | | | | | | | |
Cash and cash equivalents | | $ | — |
| | $ | 16,104 |
| | $ | 60,081 |
| | $ | — |
| | $ | 76,185 |
|
Accounts receivable—trade, net | | — |
| | 101,485 |
| | 56,106 |
| | — |
| | 157,591 |
|
Inventories | | — |
| | 386,531 |
| | 128,007 |
| | (9,782 | ) | | 504,756 |
|
Cost and profits in excess of billings | | — |
| | 8,295 |
| | 10,154 |
| | — |
| | 18,449 |
|
Other current assets | | — |
| | 51,104 |
| | 8,706 |
| | — |
| | 59,810 |
|
Total current assets | | — |
| | 563,519 |
| | 263,054 |
| | (9,782 | ) | | 816,791 |
|
Property and equipment, net of accumulated depreciation | | — |
| | 161,710 |
| | 35,094 |
| | — |
| | 196,804 |
|
Deferred financing costs, net | | 11,189 |
| | — |
| | — |
| | — |
| | 11,189 |
|
Intangibles | | — |
| | 193,333 |
| | 63,717 |
| | — |
| | 257,050 |
|
Goodwill | | — |
| | 538,248 |
| | 261,353 |
| | — |
| | 799,601 |
|
Investment in unconsolidated subsidiary | | — |
| | 56,457 |
| | — |
| | — |
| | 56,457 |
|
Investment in affiliates | | 1,362,309 |
| | 593,121 |
| | — |
| | (1,955,430 | ) | | — |
|
Long-term advances to affiliates | | 472,899 |
| | — |
| | 59,628 |
| | (532,527 | ) | | — |
|
Other long-term assets | | — |
| | 2,574 |
| | 920 |
| | — |
| | 3,494 |
|
Total assets | | $ | 1,846,397 |
| | $ | 2,108,962 |
| | $ | 683,766 |
| | $ | (2,497,739 | ) | | $ | 2,141,386 |
|
Liabilities and equity | | | | | | | | | | |
Current liabilities | | | | | | | | | | |
Current portion of long-term debt | | $ | — |
| | $ | 325 |
| | $ | 10 |
| | $ | — |
| | $ | 335 |
|
Accounts payable—trade | | — |
| | 69,069 |
| | 23,175 |
| | — |
| | 92,244 |
|
Accrued liabilities | | 13,405 |
| | 47,117 |
| | 18,719 |
| | — |
| | 79,241 |
|
Deferred revenue | | — |
| | 2,582 |
| | 6,760 |
| | — |
| | 9,342 |
|
Billings in excess of costs and profits | | — |
| | 2,432 |
| | 6,679 |
| | — |
| | 9,111 |
|
Total current liabilities | | 13,405 |
| | 121,525 |
| | 55,343 |
| | — |
| | 190,273 |
|
Long-term debt, net of current portion | | 402,497 |
| | 44 |
| | 15 |
| | — |
| | 402,556 |
|
Long-term payables to affiliates | | — |
| | 532,528 |
| | — |
| | (532,528 | ) | | — |
|
Deferred income taxes, net | | — |
| | 75,002 |
| | 19,203 |
| | — |
| | 94,205 |
|
Other long-term liabilities | | — |
| | 17,554 |
| | 5,855 |
| | — |
| | 23,409 |
|
Total liabilities | | 415,902 |
| | 746,653 |
| | 80,416 |
| | (532,528 | ) | | 710,443 |
|
|