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 March 31, 2016 |
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 May 2, 2016, there were 91,222,347 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 (loss)
(Unaudited)
|
| | | | | | | | |
| | Three months ended March 31, |
(in thousands, except per share information) | | 2016 | | 2015 |
Net sales | | $ | 159,441 |
| | $ | 348,096 |
|
Cost of sales | | 124,884 |
| | 238,970 |
|
Gross profit | | 34,557 |
| | 109,126 |
|
Operating expenses | | | | |
Selling, general and administrative expenses | | 60,013 |
| | 73,560 |
|
Transaction expenses | | 166 |
| | 217 |
|
Loss (gain) on sale of assets and other | | (32 | ) | | (312 | ) |
Total operating expenses | | 60,147 |
| | 73,465 |
|
Earnings from equity investment | | 577 |
| | 4,571 |
|
Operating income (loss) | | (25,013 | ) | | 40,232 |
|
Other expense (income) | | | | |
Interest expense | | 7,133 |
| | 7,627 |
|
Deferred financing costs written off | | 2,588 |
| | — |
|
Foreign exchange (gains) and other, net | | (1,380 | ) | | (6,656 | ) |
Total other expense | | 8,341 |
| | 971 |
|
Income (loss) before income taxes | | (33,354 | ) | | 39,261 |
|
Provision (benefit) for income tax expense | | (10,406 | ) | | 10,605 |
|
Net income (loss) | | (22,948 | ) | | 28,656 |
|
Less: Income (loss) attributable to noncontrolling interest | | (5 | ) | | (16 | ) |
Net income (loss) attributable to common stockholders | | (22,943 | ) | | 28,672 |
|
| | | | |
Weighted average shares outstanding | | | | |
Basic | | 90,477 |
| | 89,482 |
|
Diluted | | 90,477 |
| | 91,469 |
|
Earnings (losses) per share | | | | |
Basic | | $ | (0.25 | ) | | $ | 0.32 |
|
Diluted | | $ | (0.25 | ) | | $ | 0.31 |
|
| | | | |
| | | | |
Other comprehensive income (loss), net of tax: | | | | |
Net income (loss) | | (22,948 | ) | | 28,656 |
|
Change in foreign currency translation, net of tax of $0 | | 3,472 |
| | (37,297 | ) |
Gain (loss) on pension liability | | (43 | ) | | 99 |
|
Comprehensive income (loss) | | (19,519 | ) | | (8,542 | ) |
Less: comprehensive loss (income) attributable to noncontrolling interests | | (93 | ) | | 43 |
|
Comprehensive income (loss) attributable to common stockholders | | $ | (19,612 | ) | | $ | (8,499 | ) |
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) | March 31, 2016 | | December 31, 2015 |
Assets | | | |
Current assets | | | |
Cash and cash equivalents | $ | 131,977 |
| | $ | 109,249 |
|
Accounts receivable—trade, net | 109,203 |
| | 138,597 |
|
Inventories | 416,105 |
| | 424,121 |
|
Prepaid expenses and other current assets | 26,846 |
| | 33,836 |
|
Costs and estimated profits in excess of billings | 14,124 |
| | 12,009 |
|
Total current assets | 698,255 |
| | 717,812 |
|
Property and equipment, net of accumulated depreciation | 180,206 |
| | 186,667 |
|
Deferred financing costs, net | 1,750 |
| | 4,125 |
|
Intangible assets | 240,967 |
| | 246,650 |
|
Goodwill | 671,190 |
| | 669,036 |
|
Investment in unconsolidated subsidiary | 58,296 |
| | 57,719 |
|
Deferred income taxes, net | 779 |
| | 780 |
|
Other long-term assets | 3,126 |
| | 3,253 |
|
Total assets | $ | 1,854,569 |
| | $ | 1,886,042 |
|
Liabilities and equity | | | |
Current liabilities | | | |
Current portion of long-term debt | $ | 82 |
| | $ | 253 |
|
Accounts payable—trade | 75,568 |
| | 76,823 |
|
Accrued liabilities | 55,934 |
| | 58,563 |
|
Deferred revenue | 9,119 |
| | 7,283 |
|
Billings in excess of costs and profits recognized | 4,002 |
| | 8,631 |
|
Total current liabilities | 144,705 |
| | 151,553 |
|
Long-term debt, net of current portion | 396,170 |
| | 396,016 |
|
Deferred income taxes, net | 40,266 |
| | 51,100 |
|
Other long-term liabilities | 31,464 |
| | 29,956 |
|
Total liabilities | 612,605 |
| | 628,625 |
|
Commitments and contingencies |
| |
|
|
Equity | | | |
Common stock, $0.01 par value, 296,000,000 shares authorized, 99,368,477 and 98,605,902 shares issued | 993 |
| | 986 |
|
Additional paid-in capital | 895,307 |
| | 891,248 |
|
Treasury stock at cost, 8,145,802 and 8,145,802 shares | (133,318 | ) | | (133,318 | ) |
Retained earnings | 557,209 |
| | 580,152 |
|
Accumulated other comprehensive income (loss) | (78,717 | ) | | (82,048 | ) |
Total stockholders’ equity | 1,241,474 |
| | 1,257,020 |
|
Noncontrolling interest in subsidiary | 490 |
| | 397 |
|
Total equity | 1,241,964 |
| | 1,257,417 |
|
Total liabilities and equity | $ | 1,854,569 |
| | $ | 1,886,042 |
|
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)
|
| | | | | | | |
| Three Months Ended March 31, |
(in thousands, except share information) | 2016 | | 2015 |
Cash flows from operating activities | | | |
Net income (loss) | $ | (22,948 | ) | | $ | 28,656 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities | | | |
Depreciation expense | 9,284 |
| | 9,513 |
|
Amortization of intangible assets | 6,612 |
| | 6,769 |
|
Share-based compensation expense | 5,084 |
| | 5,031 |
|
Deferred income taxes | (10,832 | ) | | (1,322 | ) |
Deferred loan cost written off | 2,588 |
| | — |
|
Earnings from equity investment, net of distributions | (577 | ) | | (4,571 | ) |
Other | (429 | ) | | 911 |
|
Changes in operating assets and liabilities | | | |
Accounts receivable—trade | 28,764 |
| | 30,238 |
|
Inventories | 9,048 |
| | (37,610 | ) |
Prepaid expenses and other current assets | 6,762 |
| | 1,554 |
|
Accounts payable, deferred revenue and other accrued liabilities | 191 |
| | 12,593 |
|
Costs and estimated profits in excess of billings, net | (6,691 | ) | | (3,275 | ) |
Net cash provided by operating activities | $ | 26,856 |
| | $ | 48,487 |
|
Cash flows from investing activities | | | |
Acquisition of businesses, net of cash acquired | — |
| | (60,836 | ) |
Capital expenditures for property and equipment | (4,261 | ) | | (11,421 | ) |
Proceeds from sale of business, property and equipment | 309 |
| | 662 |
|
Net cash used in investing activities | $ | (3,952 | ) | | $ | (71,595 | ) |
Cash flows from financing activities | | | |
Borrowings of long term and short term debt | 8 |
| | 65,008 |
|
Repayment of long term and short term debt | (199 | ) | | (25,323 | ) |
Repurchases of stock | — |
| | (5,885 | ) |
Proceeds from stock issuance | 165 |
| | 884 |
|
Deferred Financing costs | (513 | ) | | — |
|
Net cash provided by (used in) financing activities | $ | (539 | ) | | $ | 34,684 |
|
Effect of exchange rate changes on cash | 363 |
| | (4,264 | ) |
Net increase in cash and cash equivalents | 22,728 |
| | 7,312 |
|
Cash and cash equivalents | | | |
Beginning of period | 109,249 |
| | 76,579 |
|
End of period | $ | 131,977 |
| | $ | 83,891 |
|
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 three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 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, 2015, which are included in the Company’s 2015 Annual Report on Form 10-K filed with the SEC on February 26, 2016 (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 March and April 2016, the FASB issued Accounting Standards Update ("ASU") No.2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing, and No. 2016-08 Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations. ASU no. 2016-10 amended and clarified the guidance in the new revenue standard on identifying performance obligation and accounting for licenses of intellectual property and addressed the implementation issues. ASU no. 2016-08 amended the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction, which impacts whether an entity reports revenue on a gross or net basis. Both standards will take effect for public companies for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of the adoption of the above guidance.
In March 2016, the FASB issued ASU No.2016-09, Improvements to Employee Share-Based Payment Accounting. This new guidance includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements: a) All excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement; b) Excess tax benefits should be classified along with other income tax cash flows as an operating activity; c) An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur; d) The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions; e) Cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. There are also two additional provisions for non-public entities that do not
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
apply to the Company. The standard will take effect for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is currently evaluating the impact of the adoption of this guidance.
In February 2016, the FASB issued ASU No.2016-02, Leases. Under this new guidance, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of greater than twelve months. The standard will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of this guidance.
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 $61.9 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 Completions segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of the acquisition (in thousands):
|
| | | | |
| | 2015 Acquisition |
Current assets, net of cash acquired | | $ | 36,174 |
|
Property and equipment | | 11,506 |
|
Intangible assets (primarily customer relationships) | | 10,400 |
|
Tax-deductible goodwill | | 13,977 |
|
Current liabilities | | (10,129 | ) |
Long-term liabilities | | (22 | ) |
Net assets acquired | | $ | 61,906 |
|
Revenues and net income related to the acquisitions were not significant for the current and prior periods presented in this report. Pro forma results of operations for 2015 acquisitions have not been presented because the effects were not material to the consolidated financial statements on either an individual or aggregate basis.
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
4. Inventories
The Company's significant components of inventory at March 31, 2016 and December 31, 2015 were as follows (in thousands):
|
| | | | | | | |
| March 31, 2016 | | December 31, 2015 |
Raw materials and parts | $ | 149,790 |
| | $ | 148,372 |
|
Work in process | 36,982 |
| | 38,381 |
|
Finished goods | 301,607 |
| | 315,256 |
|
Gross inventories | 488,379 |
| | 502,009 |
|
Inventory reserve | (72,274 | ) | | (77,888 | ) |
Inventories | $ | 416,105 |
| | $ | 424,121 |
|
5. Goodwill and intangible assets
Goodwill
The changes in the carrying amount of goodwill from December 31, 2015 to March 31, 2016, were as follows (in thousands):
|
| | | | | | | | | | | | | | | |
| Drilling & Subsea | | Completions | | Production & Infrastructure | | Total |
Goodwill Balance at December 31, 2015 | $ | 334,595 |
| | $ | 316,914 |
| | $ | 17,527 |
| | $ | 669,036 |
|
Impact of non-U.S. local currency translation | 326 |
| | 1,619 |
| | 209 |
| | $ | 2,154 |
|
Goodwill Balance at March 31, 2016 | $ | 334,921 |
| | $ | 318,533 |
| | $ | 17,736 |
| | $ | 671,190 |
|
The Company performs its annual impairment tests of goodwill as of October 1. There was no impairment of goodwill during the quarter ended March 31, 2016. Accumulated impairment losses on goodwill were $168.8 million as of March 31, 2016 and December 31, 2015.
Intangible assets
Intangible assets consisted of the following as of March 31, 2016 and December 31, 2015, respectively (in thousands): |
| | | | | | | | | | | | | |
| March 31, 2016 |
| Gross carrying amount | | Accumulated amortization | | Net amortizable intangibles | | Amortization period (in years) |
Customer relationships | $ | 280,381 |
| | $ | (106,206 | ) | | $ | 174,175 |
| | 4-15 |
Patents and technology | 34,359 |
| | (10,739 | ) | | 23,620 |
| | 5-17 |
Non-compete agreements | 7,295 |
| | (6,431 | ) | | 864 |
| | 3-6 |
Trade names | 45,601 |
| | (16,557 | ) | | 29,044 |
| | 10-15 |
Distributor relationships | 22,160 |
| | (14,126 | ) | | 8,034 |
| | 8-15 |
Trademark | 5,230 |
| | — |
| | 5,230 |
| | Indefinite |
Intangible Assets Total | $ | 395,026 |
| | $ | (154,059 | ) | | $ | 240,967 |
| | |
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | |
| December 31, 2015 |
| Gross carrying amount | | Accumulated amortization | | Net amortizable intangibles | | Amortization period (in years) |
Customer relationships | $ | 280,297 |
| | $ | (101,636 | ) | | $ | 178,661 |
| | 4-15 |
Patents and technology | 34,140 |
| | (10,264 | ) | | 23,876 |
| | 5-17 |
Non-compete agreements | 7,269 |
| | (6,292 | ) | | 977 |
| | 3-6 |
Trade names | 45,446 |
| | (15,890 | ) | | 29,556 |
| | 10-15 |
Distributor relationships | 22,160 |
| | (13,810 | ) | | 8,350 |
| | 8-15 |
Trademark | 5,230 |
| | — |
| | 5,230 |
| | Indefinite |
Intangible Assets Total | $ | 394,542 |
| | $ | (147,892 | ) | | $ | 246,650 |
| | |
6. Debt
Notes payable and lines of credit as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands): |
| | | | | | | |
| March 31, 2016 | | December 31, 2015 |
6.25% Senior Notes due October 2021 | $ | 400,000 |
| | $ | 400,000 |
|
Unamortized debt premium | 2,294 |
| | 2,395 |
|
Debt issuance cost | (6,149 | ) | | (6,425 | ) |
Senior secured revolving credit facility | — |
| | — |
|
Other debt | 107 |
| | 299 |
|
Total debt | 396,252 |
| | 396,269 |
|
Less: current maturities | (82 | ) | | (253 | ) |
Long-term debt | $ | 396,170 |
| | $ | 396,016 |
|
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
On February 25, 2016, the Company amended its senior secured credit facility (the "Credit Facility" and such amendment, the "Amended Facility") to reduce commitment fees and provide borrowing capacity for general corporate purposes. The Amended Facility provides for a revolving credit line of up to $200.0 million, including up to $25.0 million available for letters of credit and up to $10.0 million in swingline loans. Availability under the Amended Facility is subject to a borrowing base calculated by reference to eligible accounts receivable in the United States, United Kingdom and Canada, eligible inventory in the United States, and cash on hand.
The Amended Facility reduced the borrowing capacity from $600.0 million to $200.0 million, as such the Company has written off $2.6 million of the deferred financing costs related to the credit facility.
The Credit Facility matures in November 2018. As of March 31, 2016, we had no borrowings outstanding under the Credit Facility, and $10.5 million of outstanding letters of credit. Subsequent to March 31, 2016, upon the completion of the bank's borrowing base audit, the Company had the capacity to borrow an additional $189.5 million subject to certain limitations in the Credit Facility. Weighted average interest rates under the Credit Facility for the twelve months ended December 31, 2015 were approximately 2.00%.
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 March 31, 2016.
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
7. Income taxes
The Company's effective tax rate was 31.2% for the three months ended March 31, 2016 and 27.0% for the three months ended March 31, 2015. The tax rate is higher than the comparable period in 2015 primarily due to the proportion of losses being generated in the United States, which are benefited at a higher statutory tax rate, as compared to 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.
8. Fair value measurements
At March 31, 2016, the Company had no debt outstanding under the Credit Facility, and $10.5 million of outstanding letters of credit. 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 March 31, 2016, the fair value and the carrying value of the Company’s Senior Notes approximated $346.0 million and $402.3 million, respectively. At December 31, 2015, the fair value and the carrying value of the Company’s Senior Notes approximated $334.1 million and $402.5 million, respectively.
There were no outstanding financial assets as of March 31, 2016 and December 31, 2015 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 three months ended March 31, 2016.
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
9. Business segments
Beginning with the first quarter of 2016, the Company realigned its segments. Completions was designated as a separate segment in recognition of the expansion in these operations and its significant growth potential. The Company is reporting its results of operations in the following three operating segments, which are our reportable segments: Drilling & Subsea, Completions and Production & Infrastructure, instead of the original two operating segments. Management’s change in the composition of the Company’s reporting segments was made in order to align with activity drivers and the customers of our product group and to better correspond to the manner in which management will review and evaluate operating performance. This change will be reflected on a retrospective basis in accordance with generally accepted accounting principles, with prior years adjusted to reflect the change in reporting segments. The amounts indicated below as "Corporate" relate to costs and assets not allocated to the reportable operating segments. Summary financial data by segment follows (in thousands):
|
| | | | | | | |
| Three months ended March 31, |
| 2016 | | 2015 |
Revenue: | | | |
Drilling & Subsea | $ | 65,295 |
| | $ | 163,553 |
|
Completions | 34,304 |
| | 94,496 |
|
Production & Infrastructure | 60,511 |
| | 90,523 |
|
Intersegment eliminations | (669 | ) | | (476 | ) |
Total Revenue | $ | 159,441 |
| | $ | 348,096 |
|
| | | |
Operating income (loss): | | | |
Drilling & Subsea | $ | (9,823 | ) | | $ | 19,839 |
|
Completions | (6,458 | ) | | 20,569 |
|
Production & Infrastructure | (1,371 | ) | | 7,990 |
|
Corporate | (7,227 | ) | | (8,261 | ) |
Total segment operating income (loss) | (24,879 | ) | | 40,137 |
|
Transaction expenses | 166 |
| | 217 |
|
Loss (gain) on sale of assets and other | (32 | ) | | (312 | ) |
Income (loss) from operations | $ | (25,013 | ) | | $ | 40,232 |
|
A summary of consolidated assets by reportable segment is as follows (in thousands):
|
| | | | | | | | |
| | March 31, 2016 | | December 31, 2015 |
Assets | | | | |
Drilling & Subsea | | $ | 885,418 |
| | $ | 912,324 |
|
Completions | | 728,531 |
| | 728,745 |
|
Production & Infrastructure | | 188,211 |
| | 187,741 |
|
Corporate | | 52,409 |
| | 57,232 |
|
Total assets | | $ | 1,854,569 |
| | $ | 1,886,042 |
|
Corporate assets include, among other items, prepaid assets, cash and deferred financing costs.
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
10. 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 March 31, 2016 and December 31, 2015, 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.
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 March 31, |
| 2016 | | 2015 |
Net income (loss) attributable to common stockholders | $ | (22,943 | ) | | $ | 28,672 |
|
| | | |
Average shares outstanding (basic) | 90,477 |
| | 89,482 |
|
Common stock equivalents | — |
| | 1,987 |
|
Diluted shares | 90,477 |
| | 91,469 |
|
Earnings(losses) per share | | | |
Basic earnings (losses) per share | $ | (0.25 | ) | | $ | 0.32 |
|
Diluted earnings (losses) per share | $ | (0.25 | ) | | $ | 0.31 |
|
The diluted earnings per share calculation excludes all stock options for the three months ended March 31, 2016 because there is a net loss for the quarter. The diluted earnings per share calculation excludes approximately 1.6 million stock options for the three months ended March 31, 2015, because they were anti-dilutive as the option exercise price was greater than the average market price of the Company's common stock.
12. Stockholders' equity
Share-based compensation
During the three months ended March 31, 2016, the Company granted 818,620 options and 1,670,270 shares of restricted stock or restricted stock units, which includes 257,900 performance share awards with a market condition. The stock options were granted with an exercise price of $9.39. Of the restricted stock or restricted stock units granted, 1,292,553 vest ratably over four years on each anniversary of the date of grant. 119,817 shares of restricted stock or restricted stock units were granted to the non-employee members of the Board of Directors, which have a 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.
13. 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.
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
14. Subsequent Event
In April 2016, the Company completed the acquisition of the wholesale completion packer product line of Team Oil Tools, Inc. The product line includes a wide variety of completion and service tools, including retrievable and permanent packers, bridge plugs, and accessories which are sold to the oilfield service providers, packer repair companies and distributors on a global basis. This product line will be included in the Completions segment.
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 (loss) |
| | | | | | | | | | |
| | Three months ended March 31, 2016 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Net sales | | $ | — |
| | $ | 117,314 |
| | $ | 55,634 |
| | $ | (13,507 | ) | | $ | 159,441 |
|
Cost of sales | | — |
| | 92,614 |
| | 45,132 |
| | (12,862 | ) | | 124,884 |
|
Gross profit | | — |
| | 24,700 |
| | 10,502 |
| | (645 | ) | | 34,557 |
|
Operating expenses | | | | | | | | | | |
Selling, general and administrative expenses | | — |
| | 47,664 |
| | 12,349 |
| | — |
| | 60,013 |
|
Transaction expenses | | — |
| | 166 |
| | — |
| | — |
| | 166 |
|
Loss (gain) on sale of assets and other | | — |
| | (36 | ) | | 4 |
| | — |
| | (32 | ) |
Total operating expenses | | — |
| | 47,794 |
| | 12,353 |
| | — |
| | 60,147 |
|
Earnings from equity investment | | — |
| | 577 |
| | — |
| | — |
| | 577 |
|
Equity earnings from affiliate, net of tax | | (16,614 | ) | | (1,089 | ) | | — |
| | 17,703 |
| | — |
|
Operating income | | (16,614 | ) | | (23,606 | ) | | (1,851 | ) | | 17,058 |
| | (25,013 | ) |
Other expense (income) | | | | | | | | | | |
Interest expense (income) | | 7,148 |
| | (13 | ) | | (2 | ) | | — |
| | 7,133 |
|
Deferred loan costs written off | | 2,588 |
| | — |
| | — |
| | — |
| | 2,588 |
|
Foreign exchange (gains) losses and other, net | | — |
| | (82 | ) | | (1,298 | ) | | — |
| | (1,380 | ) |
Total other expense (income) | | 9,736 |
| | (95 | ) | | (1,300 | ) | | — |
| | 8,341 |
|
Income (loss) before income taxes | | (26,350 | ) | | (23,511 | ) | | (551 | ) | | 17,058 |
| | (33,354 | ) |
Provision (benefit) for income tax expense | | (3,407 | ) | | (6,897 | ) | | (102 | ) | | — |
| | (10,406 | ) |
Net income (loss) | | (22,943 | ) | | (16,614 | ) | | (449 | ) | | 17,058 |
| | (22,948 | ) |
Less: Income (loss) attributable to noncontrolling interest | | — |
| | — |
| | (5 | ) | | — |
| | (5 | ) |
Net income (loss) attributable to common stockholders | | (22,943 | ) | | (16,614 | ) | | (444 | ) | | 17,058 |
| | (22,943 | ) |
| | | | | | | | | | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | |
Net income (loss) | | (22,943 | ) | | (16,614 | ) | | (449 | ) | | 17,058 |
| | (22,948 | ) |
Change in foreign currency translation, net of tax of $0 | | 3,472 |
| | 3,472 |
| | 3,472 |
| | (6,944 | ) | | 3,472 |
|
Change in pension liability | | (43 | ) | | (43 | ) | | (43 | ) | | 86 |
| | (43 | ) |
Comprehensive income (loss) | | (19,514 | ) | | (13,185 | ) | | 2,980 |
| | 10,200 |
| | (19,519 | ) |
Less: comprehensive (income) loss attributable to noncontrolling interests | | — |
| | — |
| | (93 | ) | |
| | (93 | ) |
Comprehensive income (loss) attributable to common stockholders | | $ | (19,514 | ) | | $ | (13,185 | ) | | $ | 2,887 |
| | $ | 10,200 |
| | $ | (19,612 | ) |
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating statements of comprehensive income (loss) |
| | | | | | | | | | |
| | Three months ended March 31, 2015 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Net sales | | $ | — |
| | $ | 269,198 |
| | $ | 120,317 |
| | $ | (41,419 | ) | | $ | 348,096 |
|
Cost of sales | | — |
| | 188,767 |
| | 89,676 |
| | (39,473 | ) | | 238,970 |
|
Gross profit | | — |
| | 80,431 |
| | 30,641 |
| | (1,946 | ) | | 109,126 |
|
Operating expenses | | | | | | | | | | |
Selling, general and administrative expenses | | — |
| | 57,372 |
| | 16,188 |
| | — |
| | 73,560 |
|
Transaction Expense | | — |
| | 217 |
| | — |
| | — |
| | 217 |
|
Loss (gain) on sale of assets and other | | — |
| | (111 | ) | | (201 | ) | | — |
| | (312 | ) |
Total operating expenses | | — |
| | 57,478 |
| | 15,987 |
| | — |
| | 73,465 |
|
Earnings from equity investment | | — |
| | 4,571 |
| | — |
| | — |
| | 4,571 |
|
Equity earnings from affiliates, net of tax | | 33,604 |
| | 16,237 |
| | — |
| | (49,841 | ) | | — |
|
Operating income | | 33,604 |
| | 43,761 |
| | 14,654 |
| | (51,787 | ) | | 40,232 |
|
Other expense (income) | | | | | | | | | | |
Interest expense (income) | | 7,588 |
| | 14 |
| | 25 |
| | — |
| | 7,627 |
|
Foreign exchange (gains) losses and other, net | | — |
| | (185 | ) | | (6,471 | ) | | — |
| | (6,656 | ) |
Total other expense (income) | | 7,588 |
| | (171 | ) | | (6,446 | ) | | — |
| | 971 |
|
Income before income taxes | | 26,016 |
| | 43,932 |
| | 21,100 |
| | (51,787 | ) | | 39,261 |
|
Provision for income tax expense | | (2,656 | ) | | 10,328 |
| | 2,933 |
| | — |
| | 10,605 |
|
Net income | | 28,672 |
| | 33,604 |
| | 18,167 |
| | (51,787 | ) | | 28,656 |
|
Less: Income (loss) attributable to noncontrolling interest | | — |
| | — |
| | (16 | ) | | — |
| | (16 | ) |
Net income attributable to common stockholders | | 28,672 |
| | 33,604 |
| | 18,183 |
| | (51,787 | ) | | 28,672 |
|
| | | | | | | | | | |
Other comprehensive income, net of tax: | | | | | | | | | | |
Net income | | 28,672 |
| | 33,604 |
| | 18,167 |
| | (51,787 | ) | | 28,656 |
|
Change in foreign currency translation, net of tax of $0 | | (37,297 | ) | | (37,297 | ) | | (37,297 | ) | | 74,594 |
| | (37,297 | ) |
Change in pension liability | | 99 |
| | 99 |
| | 99 |
| | (198 | ) | | 99 |
|
Comprehensive income (loss) | | (8,526 | ) | | (3,594 | ) | | (19,031 | ) | | 22,609 |
| | (8,542 | ) |
Less: comprehensive (income) loss attributable to noncontrolling interests | | — |
| | — |
| | 43 |
| | — |
| | 43 |
|
Comprehensive income (loss) attributable to common stockholders | | $ | (8,526 | ) | | $ | (3,594 | ) | | $ | (18,988 | ) | | $ | 22,609 |
| | $ | (8,499 | ) |
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating balance sheets |
| | | | | | | | | | |
| | March 31, 2016 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Assets | | | | | | | | | | |
Current assets | | | | | | | | | | |
Cash and cash equivalents | | $ | — |
| | $ | 40,746 |
| | $ | 91,231 |
| | $ | — |
| | $ | 131,977 |
|
Accounts receivable—trade, net | | — |
| | 71,748 |
| | 37,455 |
| | — |
| | 109,203 |
|
Inventories | | — |
| | 320,110 |
| | 106,044 |
| | (10,049 | ) | | 416,105 |
|
Cost and profits in excess of billings | | — |
| | 4,458 |
| | 9,666 |
| | — |
| | 14,124 |
|
Other current assets | | — |
| | 20,480 |
| | 6,366 |
| | — |
| | 26,846 |
|
Total current assets | | — |
| | 457,542 |
| | 250,762 |
| | (10,049 | ) | | 698,255 |
|
Property and equipment, net of accumulated depreciation | | — |
| | 149,830 |
| | 30,376 |
| | — |
| | 180,206 |
|
Deferred financing costs, net | | 1,750 |
| | — |
| | — |
| | — |
| | 1,750 |
|
Deferred income taxes, net | | — |
| | (1 | ) | | 780 |
| | — |
| | 779 |
|
Intangibles | | — |
| | 181,081 |
| | 59,886 |
| | — |
| | 240,967 |
|
Goodwill | | — |
| | 481,374 |
| | 189,816 |
| | — |
| | 671,190 |
|
Investment in unconsolidated subsidiary | | — |
| | 58,296 |
| | — |
| | — |
| | 58,296 |
|
Investment in affiliates | | 1,175,421 |
| | 517,135 |
| | — |
| | (1,692,556 | ) | | — |
|
Long-term advances to affiliates | | 473,592 |
| | — |
| | 60,031 |
| | (533,623 | ) | | — |
|
Other long-term assets | | — |
| | 2,389 |
| | 737 |
| | — |
| | 3,126 |
|
Total assets | | $ | 1,650,763 |
| | $ | 1,847,646 |
| | $ | 592,388 |
| | $ | (2,236,228 | ) | | $ | 1,854,569 |
|
Liabilities and equity | | | | | | | | | | |
Current liabilities | | | | | | | | | | |
Current portion of long-term debt | | $ | — |
| | $ | 71 |
| | $ | 11 |
| | $ | — |
| | $ | 82 |
|
Accounts payable—trade | | — |
| | 59,272 |
| | 16,296 |
| | — |
| | 75,568 |
|
Accrued liabilities | | 13,145 |
| | 34,388 |
| | 8,401 |
| | — |
| | 55,934 |
|
Deferred revenue | | — |
| | 2,551 |
| | 6,568 |
| | — |
| | 9,119 |
|
Billings in excess of costs and profits | | — |
| | 632 |
| | 3,370 |
| | — |
| | 4,002 |
|
Total current liabilities | | 13,145 |
| | 96,914 |
| | 34,646 |
| | — |
| | 144,705 |
|
Long-term debt, net of current portion | | 396,144 |
| | 15 |
| | 11 |
| | — |
| | 396,170 |
|
Long-term payables to affiliates | | — |
| | 533,623 |
| | — |
| | (533,623 | ) | | — |
|
Deferred income taxes, net | | — |
| | 25,542 |
| | 14,724 |
| | — |
| | 40,266 |
|
Other long-term liabilities | | — |
| | 16,131 |
| | 15,333 |
| | — |
| | 31,464 |
|
Total liabilities | | 409,289 |
| | 672,225 |
| | 64,714 |
| | (533,623 | ) | | 612,605 |
|
| | | | | | | | | | |
Total stockholder's equity | | 1,241,474 |
| | 1,175,421 |
| | 527,184 |
| | (1,702,605 | ) | | 1,241,474 |
|
Noncontrolling interest in subsidiary | | — |
| | — |
| | 490 |
| | — |
| | 490 |
|
Equity | | 1,241,474 |
| | 1,175,421 |
| | 527,674 |
| | (1,702,605 | ) | | 1,241,964 |
|
Total liabilities and equity | | $ | 1,650,763 |
| | $ | 1,847,646 |
| | $ | 592,388 |
| | $ | (2,236,228 | ) | | $ | 1,854,569 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating balance sheets |
| | | | | | | | | | |
| | December 31, 2015 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Assets | | | | | | | | | | |
Current assets | | | | | | | | | | |
Cash and cash equivalents | | $ | — |
| | $ | 36,884 |
| | $ | 72,365 |
| | $ | — |
| | $ | 109,249 |
|
Accounts receivable—trade, net | | — |
| | 85,537 |
| | 53,060 |
| | — |
| | 138,597 |
|
Inventories | | — |
| | 318,360 |
| | 115,165 |
| | (9,404 | ) | | 424,121 |
|
Cost and profits in excess of billings | | — |
| | 6,477 |
| | 5,532 |
| | — |
| | 12,009 |
|
Other current assets | | — |
| | 25,447 |
| | 8,389 |
| | — |
| | 33,836 |
|
Total current assets | | — |
| | 472,705 |
| | 254,511 |
| | (9,404 | ) | | 717,812 |
|
Property and equipment, net of accumulated depreciation | | — |
| | 153,995 |
| | 32,672 |
| | — |
| | 186,667 |
|
Deferred financing costs, net | | 4,125 |
| | — |
| | — |
| | — |
| | 4,125 |
|
Deferred income taxes, net | | — |
| | — |
| | 780 |
| | — |
| | 780 |
|
Intangibles | | — |
| | 186,234 |
| | 60,416 |
| | — |
| | 246,650 |
|
Goodwill | | — |
| | 481,374 |
| | 187,662 |
| | — |
| | 669,036 |
|
Investment in unconsolidated subsidiary | | — |
| | 57,719 |
| | — |
| | — |
| | 57,719 |
|
Investment in affiliates | | 1,188,707 |
| | 514,893 |
| | — |
| | (1,703,600 | ) | | — |
|
Long-term advances to affiliates | | 467,184 |
| | — |
| | 60,221 |
| | (527,405 | ) | | — |
|
Other long-term assets | | — |
| | 2,549 |
| | 704 |
| | — |
| | 3,253 |
|
Total assets | | $ | 1,660,016 |
| | $ | 1,869,469 |
| | $ | 596,966 |
| | $ | (2,240,409 | ) | | $ | 1,886,042 |
|
Liabilities and equity | | | | | | | | | | |
Current liabilities | | | | | | | | | | |
Current portion of long-term debt | | $ | — |
| | $ | 243 |
| | $ | 10 |
| | $ | — |
| | $ | 253 |
|
Accounts payable—trade | | $ | — |
| | $ | 57,529 |
| | $ | 19,294 |
| | $ | — |
| | $ | 76,823 |
|
Accrued liabilities | | 7,027 |
| | 40,874 |
| | 10,662 |
| | — |
| | 58,563 |
|
Deferred revenue | | — |
| | 1,334 |
| | 5,949 |
| | — |
| | 7,283 |
|
Billings in excess of costs and profits recognized | | — |
| | 1,872 |
| | 6,759 |
| | — |
| | 8,631 |
|
Total current liabilities | | 7,027 |
| | 101,852 |
| | 42,674 |
| | — |
| | 151,553 |
|
Long-term debt, net of current portion | | 395,970 |
| | 34 |
| | 12 |
| | — |
| | 396,016 |
|
Long-term payables to affiliates | | — |
| | 527,406 |
| | — |
| | (527,406 | ) | | — |
|
Deferred income taxes, net | | — |
| | 36,937 |
| | 14,163 |
| | — |
| | 51,100 |
|
Other long-term liabilities | | — |
| | 14,533 |
| | 15,423 |
| | — |
| | 29,956 |
|
Total liabilities | | 402,997 |
| | 680,762 |
| | 72,272 |
| | (527,406 | ) | | 628,625 |
|
| | | | | | | | | | |
Total stockholder's equity | | 1,257,019 |
| | 1,188,707 |
| | 524,297 |
| | (1,713,003 | ) | | 1,257,020 |
|
Noncontrolling interest in subsidiary | | — |
| | — |
| | 397 |
| | — |
| | 397 |
|
Equity | | 1,257,019 |
| | 1,188,707 |
| | 524,694 |
| | (1,713,003 | ) | | 1,257,417 |
|
Total liabilities and equity | | $ | 1,660,016 |
| | $ | 1,869,469 |
| | $ | 596,966 |
| | $ | (2,240,409 | ) | | $ | 1,886,042 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating statements of cash flows |
| | | | | | | | | | |
| | Three months ended March 31, 2016 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Cash flows from (used in) operating activities | | $ | 1,670 |
| | $ | 6,093 |
| | $ | 19,093 |
| | $ | — |
| | $ | 26,856 |
|
Cash flows from investing activities | | | | | | | | | | |
Acquisition of businesses, net of cash acquired | | — |
| | — |
| | — |
| | — |
| | — |
|
Capital expenditures for property and equipment | | — |
| | (3,991 | ) | | (270 | ) | | — |
| | (4,261 | ) |
Long-term loans and advances to affiliates | | (1,324 | ) | | 348 |
| | — |
| | 976 |
| | — |
|
Other | | — |
| | 280 |
| | 29 |
| | — |
| | 309 |
|
Net cash provided by (used in) investing activities | | $ | (1,324 | ) | | $ | (3,363 | ) | | $ | (241 | ) | | $ | 976 |
| | $ | (3,952 | ) |
Cash flows from financing activities | | | | | | | | | | |
Borrowings of long-term and short-term debt | | — |
| | 8 |
| | — |
| | — |
| | 8 |
|
Repayment of long-term and short-term debt | | — |
| | (199 | ) | | | | — |
| | (199 | ) |
Long-term loans and advances to affiliates | | — |
| | 1,324 |
| | (348 | ) | | (976 | ) | | — |
|
Deferred financing costs | | (513 | ) | | — |
| | — |
| | — |
| | (513 | ) |
Proceeds from stock issuance | | 167 |
| | (1 | ) | | (1 | ) | | — |
| | 165 |
|
Net cash provided by (used in) financing activities | | $ | (346 | ) | | $ | 1,132 |
| | $ | (349 | ) | | $ | (976 | ) | | $ | (539 | ) |
Effect of exchange rate changes on cash | | — |
| | — |
| | 363 |
| | — |
| | 363 |
|
Net increase (decrease) in cash and cash equivalents | | — |
| | 3,862 |
| | 18,866 |
| | — |
| | 22,728 |
|
Cash and cash equivalents | | | | | | | | | | |
Beginning of period | | — |
| | 36,884 |
| | 72,365 |
| | — |
| | 109,249 |
|
End of period | | $ | — |
| | $ | 40,746 |
| | $ | 91,231 |
| | $ | — |
| | $ | 131,977 |
|
Forum Energy Technologies, Inc. and subsidiaries
Notes to condensed consolidated financial statements (continued)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
Condensed consolidating statements of cash flows |
| | | | | | | | | | |
| | Three Months Ended March 31, 2015 |
| | FET (Parent) | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
| | | | | | (in thousands) | | | | |
Cash flows from (used in) operating activities | | $ | 1,628 |
| | $ | 33,735 |
| | $ | 13,124 |
| | $ | — |
| | $ | 48,487 |
|
Cash flows from investing activities | | | | | | | | | | |
Acquisition of businesses, net of cash acquired | | — |
| | (60,836 | ) | | — |
| | — |
| | (60,836 | ) |
Capital expenditures for property and equipment | | — |
| | (7,626 | ) | | (3,795 | ) | | — |
| | (11,421 | ) |
Long-term loans and advances to affiliates | | (41,979 | ) | | 12,997 |
| | — |
| | 28,982 |
| | — |
|
Other | | — |
| | 175 |
| | 487 |
| | — |
| | 662 |
|
Net cash provided by (used in) investing activities | | $ | (41,979 | ) | | $ | (55,290 | ) | | $ | (3,308 | ) | | $ | 28,982 |
| | $ | (71,595 | ) |
Cash flows from financing activities | | | | | | | | | | |
Repayment of long-term debt | | 39,898 |
| | (207 | ) | | (6 | ) | | — |
| | 39,685 |
|
Long-term loans and advances to affiliates | | — |
| | 41,979 |
| | (12,997 | ) | | (28,982 | ) | | — |
|
Other | | (5,001 | ) | | — |
| | — |
| | — |
| | (5,001 | ) |
Net cash provided by (used in) financing activities | | $ | 34,897 |
| | $ | 41,772 |
| | $ | (13,003 | ) | | $ | (28,982 | ) | | $ | 34,684 |
|
Effect of exchange rate changes on cash | | — |
| | — |
| | (4,264 | ) | | — |
| | (4,264 | ) |
Net increase (decrease) in cash and cash equivalents | | (5,454 | ) | | 20,217 |
| | (7,451 | ) | | — |
| | 7,312 |
|
Cash and cash equivalents | | | | | | | | | | |
Beginning of period | | 5,551 |
| | 4,006 |
| | 67,022 |
| | — |
| | 76,579 |
|
End of period | | $ | 97 |
| | $ | 24,223 |
| | $ | 59,571 |
| | $ | — |
| | $ | |