Guarantor/Non Guarantor Condensed Consolidating Financial Statements

12 Months Ended

Dec. 31, 2018

Guarantor Non-Guarantor Condensed Consolidated Financial Statements

Guarantor/Non Guarantor Condensed Consolidated Financial Statements

Guarantor/Non-Guarantor Condensed Consolidating Financial Statements

Our Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all existing 100% owned domestic subsidiaries, except for Pioneer Services Holdings, LLC. The subsidiaries that generally operate our non-U.S. business concentrated in Colombia do not guarantee our Senior Notes. The non-guarantor subsidiaries do not have any payment obligations under the Senior Notes, the guarantees or the Indenture.

In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, such non-guarantor subsidiary will pay the holders of its debt and other liabilities, including its trade creditors, before it will be able to distribute any of its assets to us. In the future, any non-U.S. subsidiaries, immaterial subsidiaries and subsidiaries that we designate as unrestricted subsidiaries under the Indenture will not guarantee the Senior Notes. As of December 31, 2018, there were no restrictions on the ability of subsidiary guarantors to transfer funds to the parent company.

As a result of the guarantee arrangements, we are presenting the following condensed consolidating balance sheets, statements of operations and statements of cash flows of the issuer, the guarantor subsidiaries and the non-guarantor subsidiaries.

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	December 31, 2018
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	50,350		$	—	$	3,216		$	—		$	53,566
Restricted cash	998			—		—			—			998
Receivables, net of allowance	436			95,030		35,219			196			130,881
Intercompany receivable (payable)	(27,245		)	67,098		(39,853		)	—			—
Inventory	—			9,945		8,953			—			18,898
Assets held for sale	—			3,582		—			—			3,582
Prepaid expenses and other current assets	1,743			3,197		2,169			—			7,109
Total current assets	26,282			178,852		9,704			196			215,034
Net property and equipment	2,022			494,376		28,460			—			524,858
Investment in subsidiaries	574,695			25,370		—			(600,065		)	—
Deferred income taxes	42,585			—		—			(42,585		)	—
Other noncurrent assets	596			511		551			—			1,658
Total assets	$	646,180		$	699,109	$	38,715		$	(642,454	)	$	741,550
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,093		$	26,795	$	6,246		$	—		$	34,134
Deferred revenues	—			95		1,627			—			1,722
Accrued expenses	14,020			49,640		5,056			196			68,912
Total current liabilities	15,113			76,530		12,929			196			104,768
Long-term debt, less unamortized discount and debt issuance costs	464,552			—		—			—			464,552
Deferred income taxes	—			46,273		—			(42,585		)	3,688
Other noncurrent liabilities	1,457			1,611		416			—			3,484
Total liabilities	481,122			124,414		13,345			(42,389		)	576,492
Total shareholders’ equity	165,058			574,695		25,370			(600,065		)	165,058
Total liabilities and shareholders’ equity	$	646,180		$	699,109	$	38,715		$	(642,454	)	$	741,550
	December 31, 2017
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	70,377		$	—	$	3,263		$	—		$	73,640
Restricted cash	2,008			—		—			—			2,008
Receivables, net of allowance	7			93,866		19,174			(42		)	113,005
Intercompany receivable (payable)	(22,955		)	49,651		(26,696		)	—			—
Inventory	—			7,741		6,316			—			14,057
Assets held for sale	—			6,620		—			—			6,620
Prepaid expenses and other current assets	1,238			3,193		1,798			—			6,229
Total current assets	50,675			161,071		3,855			(42		)	215,559
Net property and equipment	2,011			521,080		26,532			—			549,623
Investment in subsidiaries	596,927			20,095		—			(617,022		)	—
Deferred income taxes	38,028			—		—			(38,028		)	—
Other noncurrent assets	496			788		403			—			1,687
Total assets	$	688,137		$	703,034	$	30,790		$	(655,092	)	$	766,869
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	286		$	24,174	$	5,078		$	—		$	29,538
Deferred revenues	—			97		808			—			905
Accrued expenses	12,504			37,814		4,195			(42		)	54,471
Total current liabilities	12,790			62,085		10,081			(42		)	84,914
Long-term debt, less unamortized discount and debt issuance costs	461,665			—		—			—			461,665
Deferred income taxes	—			41,179		—			(38,028		)	3,151
Other noncurrent liabilities	3,586			2,843		614			—			7,043
Total liabilities	478,041			106,107		10,695			(38,070		)	556,773
Total shareholders’ equity	210,096			596,927		20,095			(617,022		)	210,096
Total liabilities and shareholders’ equity	$	688,137		$	703,034	$	30,790		$	(655,092	)	$	766,869

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Year ended December 31, 2018
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	505,936		$	84,161		$	—		$	590,097
Costs and expenses:
Operating costs	—			365,848			64,065			—			429,913
Depreciation	1,127			86,799			5,628			—			93,554
General and administrative	22,506			49,231			2,800			(420		)	74,117
Bad debt expense	—			271			—			—			271
Impairment	—			4,422			—			—			4,422
Gain (loss) on dispositions of property and equipment, net	1			(3,068		)	(54		)	—			(3,121		)
Intercompany leasing	—			(4,860		)	4,860			—			—
Total costs and expenses	23,634			498,643			77,299			(420		)	599,156
Income (loss) from operations	(23,634		)	7,293			6,862			420			(9,059		)
Other income (expense):
Equity in earnings of subsidiaries	8,966			5,669			—			(14,635		)	—
Interest expense, net of interest capitalized	(38,765		)	(16		)	(1		)	—			(38,782		)
Other income (expense)	578			867			(287		)	(420		)	738
Total other income (expense)	(29,221		)	6,520			(288		)	(15,055		)	(38,044		)
Income (loss) before income taxes	(52,855		)	13,813			6,574			(14,635		)	(47,103		)
Income tax (expense) benefit 1	3,844			(4,847		)	(905		)	—			(1,908		)
Net income (loss)	$	(49,011	)	$	8,966		$	5,669		$	(14,635	)	$	(49,011	)
	Year ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	405,106		$	41,349		$	—		$	446,455
Costs and expenses:
Operating costs	—			298,898			31,982			—			330,880
Depreciation	1,242			91,817			5,718			—			98,777
General and administrative	22,869			45,387			1,922			(497		)	69,681
Bad debt expense	—			53			—			—			53
Impairment	—			1,902			—			—			1,902
Gain (loss) on dispositions of property and equipment, net	2			(3,454		)	(156		)	—			(3,608		)
Intercompany leasing	—			(4,860		)	4,860			—			—
Total costs and expenses	24,113			429,743			44,326			(497		)	497,685
Income (loss) from operations	(24,113		)	(24,637		)	(2,977		)	497			(51,230		)
Other income (expense):
Equity in earnings of subsidiaries	4,317			(3,936		)	—			(381		)	—
Interest expense, net of interest capitalized	(27,061		)	20			2			—			(27,039		)
Loss on extinguishment of debt	(1,476		)	—			—			—			(1,476		)
Other income (expense)	54			896			(29		)	(497		)	424
Total other expense, net	(24,166		)	(3,020		)	(27		)	(878		)	(28,091		)
Loss before income taxes	(48,279		)	(27,657		)	(3,004		)	(381		)	(79,321		)
Income tax (expense) benefit 1	(26,839		)	31,974			(932		)	—			4,203
Net income (loss)	$	(75,118	)	$	4,317		$	(3,936	)	$	(381	)	$	(75,118	)
1  The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Continued)

(in thousands)

	Year ended December 31, 2016
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	270,268		$	6,808		$	—		$	277,076
Costs and expenses:
Operating costs	—			194,515			9,434			—			203,949
Depreciation	1,250			106,193			6,869			—			114,312
General and administrative	21,657			38,564			1,515			(552		)	61,184
Bad debt expense	—			156			—			—			156
Impairment	—			12,260			555			—			12,815
Loss on dispositions of property and equipment, net	—			(1,838		)	(54		)	—			(1,892		)
Intercompany leasing	—			(4,860		)	4,860			—			—
Total costs and expenses	22,907			344,990			23,179			(552		)	390,524
Loss from operations	(22,907		)	(74,722		)	(16,371		)	552			(113,448		)
Other income (expense):
Equity in earnings of subsidiaries	(63,374		)	(17,835		)	—			81,209			—
Interest expense, net of interest capitalized	(25,845		)	(88		)	(1		)	—			(25,934		)
Loss on extinguishment of debt	(299		)	—			—			—			(299		)
Other income (expense), net	18			1,430			(338		)	(552		)	558
Total other expense, net	(89,500		)	(16,493		)	(339		)	80,657			(25,675		)
Loss before income taxes	(112,407		)	(91,215		)	(16,710		)	81,209			(139,123		)
Income tax (expense) benefit 1	(15,984		)	27,841			(1,125		)	—			10,732
Net Loss	$	(128,391	)	$	(63,374	)	$	(17,835	)	$	81,209		$	(128,391	)
1  The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Year ended December 31, 2018
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities	$	(51,947	)	$	84,663		$	6,940		$	—		$	39,656
Cash flows from investing activities:
Purchases of property and equipment	(1,077		)	(59,478		)	(6,593		)	—			(67,148		)
Proceeds from sale of property and equipment	—			5,826			38			—			5,864
Proceeds from insurance recoveries	—			1,066			16			—			1,082
	(1,077		)	(52,586		)	(6,539		)	—			(60,202		)
Cash flows from financing activities:
Proceeds from exercise of options	11			—			—			—			11
Purchase of treasury stock	(549		)	—			—			—			(549		)
Intercompany contributions/distributions	32,525			(32,077		)	(448		)	—			—
	31,987			(32,077		)	(448		)	—			(538		)
Net decrease in cash, cash equivalents and restricted cash	(21,037		)	—			(47		)	—			(21,084		)
Beginning cash, cash equivalents and restricted cash	72,385			—			3,263			—			75,648
Ending cash, cash equivalents and restricted cash	$	51,348		$	—		$	3,216		$	—		$	54,564
	Year ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities	$	(41,185	)	$	26,609		$	8,759		$	—		$	(5,817	)
Cash flows from investing activities:
Purchases of property and equipment	(745		)	(56,556		)	(6,407		)	431			(63,277		)
Proceeds from sale of property and equipment	—			12,768			232			(431		)	12,569
Proceeds from insurance recoveries	—			3,344			—			—			3,344
	(745		)	(40,444		)	(6,175		)	—			(47,364		)
Cash flows from financing activities:
Debt repayments	(120,000		)	—			—			—			(120,000		)
Proceeds from issuance of debt	245,500			—			—			—			245,500
Debt issuance costs	(6,332		)	—			—			—			(6,332		)
Purchase of treasury stock	(533		)	—			—			—			(533		)
Intercompany contributions/distributions	(13,454		)	13,835			(381		)	—			—
	105,181			13,835			(381		)	—			118,635
Net increase in cash, cash equivalents and restricted cash	63,251			—			2,203			—			65,454
Beginning cash, cash equivalents and restricted cash	9,134			—			1,060			—			10,194
Ending cash, cash equivalents and restricted cash	$	72,385		$	—		$	3,263		$	—		$	75,648

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Continued)

(in thousands)

	Year ended December 31, 2016
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities	$	(34,496	)	$	40,187		$	(560	)	$	—	$	5,131
Cash flows from investing activities:
Purchases of property and equipment	(452		)	(31,049		)	(880		)	—		(32,381		)
Proceeds from sale of property and equipment	—			7,523			54			—		7,577
Proceeds from insurance recoveries	—			37			—			—		37
	(452		)	(23,489		)	(826		)	—		(24,767		)
Cash flows from financing activities:
Debt repayments	(71,000		)	—			—			—		(71,000		)
Proceeds from issuance of debt	22,000			—			—			—		22,000
Debt issuance costs	(819		)	—			—			—		(819		)
Proceeds from exercise of options	183			—			—			—		183
Proceeds from common stock, net of offering costs	65,430			—						—		65,430
Purchase of treasury stock	(124		)	—			—			—		(124		)
Intercompany contributions/distributions	16,803			(16,698		)	(105		)	—		—
	32,473			(16,698		)	(105		)	—		15,670
Net decrease in cash and cash equivalents	(2,475		)	—			(1,491		)	—		(3,966		)
Beginning cash and cash equivalents	11,609			—			2,551			—		14,160
Ending cash and cash equivalents	$	9,134		$	—		$	1,060		$	—	$	10,194