(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2012 or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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DELAWARE
(State or other jurisdiction of incorporation or organization)
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94-2748530
(I.R.S. Employer Identification No.)
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2603 CAMINO RAMON, SUITE 200, SAN RAMON, CALIFORNIA
(Address of principal executive offices)
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94583
(Zip Code)
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Registrant's telephone number, including area code (408) 945-8600
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101.INS**
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XBRL Instance Document.
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101.SCH**
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XBRL Taxonomy Extension Schema Document.
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101.CAL**
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XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF**
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XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB**
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XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE**
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XBRL Taxonomy Extension Presentation Linkbase Document.
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** Furnished with this Form 10-Q/A. In accordance with Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for the purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.
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Steel Excel Inc.
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/s/ John J. Quicke |
Date: September 10, 2012
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John J. Quicke
Interim President and Chief Executive Officer
(principal executive officer)
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/s/ Mark A. Zorko | ||
Mark A. Zorko
Chief Financial Officer
(principal financial officer)
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Date: September 10, 2012
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Note 3 - Acquisitions (Detail) - Purchase Price Allocation (SWH, Inc [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
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SWH, Inc [Member]
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Cash | $ 3,561 |
Accounts receivable | 7,233 |
Prepaid expense and other current assets | 782 |
Property and equipment | 29,787 |
Identifiable intangible assets | 27,300 |
Other long-term assets | 714 |
Accounts payable | (1,036) |
Accrued expenses and other current liabilities | (6,074) |
Long-term debt | (16,000) |
Capital lease obligations | (1,622) |
Deferred tax liabilities | (5,510) |
Total net identifiable assets | 39,135 |
Goodwill | 23,529 |
Net assets acquired | $ 62,664 |
Note 7 - Long-Lived Assets (Detail) - Intangible Assets, Net (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2012
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Dec. 31, 2011
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Intangible assets cost | $ 47,435 | $ 5,835 |
Intangible assets accumulated amortization | (2,422) | (49) |
Intangible assets net | 45,013 | 5,786 |
Sports-Related [Member] | Customer Relationships [Member]
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Intangible assets cost | 235 | 235 |
Intangible assets accumulated amortization | (43) | (20) |
Intangible assets net | 192 | 215 |
Estimated Useful life | 5 years | 5 years |
Oilfield Service Business [Member] | Customer Relationships [Member]
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Intangible assets cost | 43,100 | 4,700 |
Intangible assets accumulated amortization | (2,169) | (29) |
Intangible assets net | 40,931 | 4,671 |
Estimated Useful life | 10 years | 10 years |
Oilfield Service Business [Member] | Trade Names [Member]
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Intangible assets cost | 4,100 | 900 |
Intangible assets accumulated amortization | (210) | |
Intangible assets net | 3,890 | 900 |
Estimated Useful life | 5 years | 5 years |
Oilfield Service Business [Member]
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Intangible assets cost | 47,200 | 5,600 |
Intangible assets accumulated amortization | (2,379) | (29) |
Intangible assets net | $ 44,821 | $ 5,571 |
Note 5 - Marketable Securities (Detail) - Fair Value and Gross Unrealized Losses of the Available for Sale Securities (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
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Dec. 31, 2011
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Less than 12 months fair value | $ 86,221 | |
Less than 12 month gross unrealized losses | (228) | |
Fair value | 86,221 | |
Gross unrealized losses | (228) | |
US Treasury Securities [Member]
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Less than 12 months fair value | 64,129 | 15,186 |
Less than 12 month gross unrealized losses | (7) | (3) |
Fair value | 64,129 | 15,186 |
Gross unrealized losses | (7) | (3) |
Securities (Assets) [Member]
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Less than 12 months fair value | 3,631 | |
Less than 12 month gross unrealized losses | (208) | |
Fair value | 3,631 | |
Gross unrealized losses | (208) | |
Corporate Debt Securities [Member]
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Less than 12 months fair value | 18,461 | |
Less than 12 month gross unrealized losses | (13) | |
Fair value | 18,461 | |
Gross unrealized losses | $ (13) |
Note 15 - Supplemental Disclosures of Cash Flows (Detail) - Non-cash investing and financing activities (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
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Jun. 30, 2012
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Jul. 01, 2011
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Acquisition of SWH, Inc. through issuance of common stock | $ 54,742 | |
Net unrealized gains on available-for-sale securities, net of taxes | $ 382 | $ 76 |
Note 7 - Long-Lived Assets (Detail) - Estimated Aggregate Future Amortization Expense (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
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Sports-Related [Member]
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2012 (remaining six months) | $ 24 |
2013 | 47 |
2014 | 47 |
2015 | 47 |
2016 | 27 |
192 | |
Oilfield Service Business [Member]
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2012 (remaining six months) | 5,102 |
2013 | 8,534 |
2014 | 6,565 |
2015 | 5,267 |
2016 | 4,216 |
Thereafter | 15,137 |
$ 44,821 |
Note 5 - Marketable Securities (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | |
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Jul. 01, 2011
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Jun. 30, 2012
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Jul. 01, 2011
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Investment Committee Description | The Investment Committee is authorized, among other things, to invest the Company's excess cash directly or allocate investments to outside managers for investment in equity or debt securities, provided that the Investment Committee may not invest more than $25 million in any single investment or with any single asset manager without the Board's approval. | ||
Available-for-sale Securities, Gross Realized Gains | $ 1.5 | $ 0.1 | $ 2.0 |
Available-for-sale Securities, Gross Realized Losses | 0.2 | 0.3 | |
Oilfield Serving, Energy Services, and Related Business [Member]
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Maximum Amount Available for Investing | $ 10 |
Note 13 - Segment Information (Tables)
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Jun. 30, 2012
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Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Note 8 - Liabilities (Detail) (USD $)
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6 Months Ended | 1 Months Ended | 10 Months Ended | 46 Months Ended | |
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Jun. 30, 2012
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Jul. 31, 2011
Term Loan [Member]
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Jun. 30, 2012
Term Loan [Member]
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Jun. 30, 2015
Term Loan [Member]
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Jun. 30, 2012
Revolving Line Of Credit [Member]
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Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | 1,543 | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 20,000,000 | $ 5,000,000 | |||
Line of Credit Facility, Interest Rate Description | The loans are secured by the assets of Sun Well and bear interest, at the option of Sun Well, at LIBOR plus 3.5% or the greater of (a) the bank's prime rate, (b) the Federal Funds Rate plus 1.5%, or (c) the Daily One-Month LIBOR rate plus 1.5% for base rate loans. | ||||
Line of Credit Facility, Periodic Payment, Principal | 1,000,000 | ||||
Proceeds from (Repayments of) Lines of Credit | $ 20,000,000 | $ (5,000,000) |
Note 16 - Related Party Transactions (Detail) (USD $)
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3 Months Ended | 6 Months Ended |
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Jun. 30, 2012
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Jun. 30, 2012
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Number of Directors | 3 | 3 |
Steel Partners Holdings LP [Member] | SWH, Inc [Member]
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Business Acquisition, Cost of Acquired Entity, Purchase Price | $ 62,700,000 | $ 62,700,000 |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares) | 2,027,500 | |
Equity Issuance, Per Share Amount (in Dollars per share) | $ 27 | |
Business Acquisition, Cost of Acquired Entity, Cash Paid | 7,900,000 | 7,900,000 |
Business Acquisition, Affiliate Ownership Description | Affiliates of Steel Partners Holdings L.P. ("Steel Partners") owned approximately 40% of the Company's outstanding common stock and 85% of BNS on May 31, 2012. The Company appointed a special committee (the "Special Committee") comprised solely of independent directors to consider and negotiate the transaction, as did BNS, because of the interest of Steel Partners in each company. The Special Committee, with the assistance of its independent financial advisor, considered a number of factors in negotiating the acquisition price, including, without limitation, the fairness opinion from its financial advisor. As a result of the acquisition, Steel Partners beneficially owns approximately 51.1% of the Company's outstanding common stock as of June 30, 2012. | |
Chief Executive Officer [Member] | Monthly Compensation [Member]
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Related Party Transaction, Amounts of Transaction | 30,000 | |
SP Corporate Services LLC [Member] | Management Fees [Member]
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Related Party Transaction, Expenses from Transactions with Related Party | 300,000 | 500,000 |
SWH, Inc [Member]
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Business Acquisition, Cost of Acquired Entity, Purchase Price | 62,700,000 | 62,700,000 |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares) | 2,027,500 | |
Equity Issuance, Per Share Amount (in Dollars per share) | $ 27 | |
Business Acquisition, Cost of Acquired Entity, Cash Paid | $ 7,900,000 | $ 7,900,000 |
Business Acquisition, Affiliate Ownership Description | Affiliates of Steel Partners Holdings L.P. ("Steel Partners") owned approximately 40% of the Company's outstanding common stock and 85% of BNS on May 31, 2012. As a result of the acquisition, Steel Partners beneficially owns approximately 51.1% of the Company's outstanding common stock. |
Note 3 - Acquisitions (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Business Acquisition, Pro Forma Information [Table Text Block] |
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Eagle Well Services, Inc [Member]
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Schedule of Purchase Price Allocation [Table Text Block] |
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SWH, Inc [Member]
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Schedule of Purchase Price Allocation [Table Text Block] |
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Note 6 - Fair Value Measurements (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
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Dec. 31, 2011
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Cash and Cash Equivalents, Fair Value Disclosure | $ 53,888 | $ 8,601 |
Available-for-sale Securities, Fair Value Disclosure | 249,491 | 317,855 |
Convertible Notes Payable, Current | 346 | 346 |
Commercial Paper [Member] | Cash And Cash Equivalent [Member]
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Available-for-sale Securities, Fair Value Disclosure | 14,800 | |
Commercial Paper [Member] | Marketable Securities [Member]
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Available-for-sale Securities, Fair Value Disclosure | 21,000 | |
Commercial Paper [Member]
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Available-for-sale Securities, Fair Value Disclosure | 35,826 | |
Corporate Debt Securities [Member] | Cash And Cash Equivalent [Member]
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Available-for-sale Securities, Fair Value Disclosure | 2,000 | |
Corporate Debt Securities [Member] | Marketable Securities [Member]
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Available-for-sale Securities, Fair Value Disclosure | 31,800 | |
Corporate Debt Securities [Member]
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Available-for-sale Securities, Fair Value Disclosure | 33,839 | 1,521 |
Cash And Cash Equivalent [Member]
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Cash and Cash Equivalents, Fair Value Disclosure | 54,100 | 8,500 |
Marketable Securities [Member]
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Cash and Cash Equivalents, Fair Value Disclosure | $ 100 | $ 100 |
Note 4 - Stock Benefit Plans (Detail) - Stock Options (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2012
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Outstanding at December 31, 2011 | 94 |
Outstanding at December 31, 2011 (in Dollars per share) | $ 31.89 |
Expired | (29) |
Expired (in Dollars per share) | $ 37.80 |
Outstanding at June 30, 2012 | 65 |
Outstanding at June 30, 2012 (in Dollars per share) | $ 30.54 |
Outstanding at June 30, 2012 | 7 years 277 days |
Outstanding at June 30, 2012 (in Dollars) | $ 4,712,500 |
Options vested and expected to vest at June 30, 2012 | 65 |
Options vested and expected to vest at June 30, 2012 (in Dollars per share) | $ 30.54 |
Options vested and expected to vest at June 30, 2012 | 7 years 277 days |
Options vested and expected to vest at June 30, 2012 (in Dollars) | $ 4,712,500 |
Options exercisable at June 30, 2012 | 40 |
Options exercisable at June 30, 2012 (in Dollars per share) | $ 31.84 |
Options exercisable at June 30, 2012 | 6 years 354 days |
Note 7 - Long-Lived Assets (Detail) (USD $)
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3 Months Ended | 6 Months Ended | |
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Jun. 30, 2012
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Jun. 30, 2012
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Dec. 31, 2011
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Property, Plant and Equipment, Gross | $ 78,946,000 | $ 78,946,000 | $ 21,380,000 |
Impairment of Long-Lived Assets Held-for-use | 1,981,000 | ||
Depreciation | 1,700,000 | 2,800,000 | |
Amortization | 1,600,000 | 2,400,000 | |
Goodwill, Impairment Loss | 1,796,000 | ||
Sun Well [Member] | Assets in Progress [Member]
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Property, Plant and Equipment, Gross | 1,000,000 | 1,000,000 | |
Baseball Heaven [Member] | Assets in Progress [Member]
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Property, Plant and Equipment, Gross | 100,000 | 100,000 | |
The Show [Member]
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Impairment of Long-Lived Assets Held-for-use | 100,000 | ||
Goodwill, Impairment Loss | 1,700,000 | ||
Assets in Progress [Member]
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Property, Plant and Equipment, Gross | 1,067,000 | 1,067,000 | |
Cost of Revenues [Member]
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Depreciation | 1,100,000 | 1,600,000 | |
Selling, General, and Administrative [Member]
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Depreciation | $ 600,000 | $ 1,200,000 |
Note 9 - Commitments and Contingencies (Detail) - Assumed Operating Leases (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
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2012 (remaining six months) | $ 357 |
2013 | 467 |
2014 | 431 |
2015 | 431 |
2016 | 425 |
$ 2,111 |
Note 3 - Acquisitions
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Business Combination Disclosure [Text Block] |
3.
Acquisitions
On
February 9, 2012, the Company acquired the business and
assets of Eagle Well Services, Inc., which after the
transactions operated as Well Services Ltd. (“Well
Services”) for an aggregate purchase price of $48.1
million in cash. Well Services engages in the business of
workover rig well servicing, including down hole well
maintenance and workover, down hole well repairs, well
completions, well recompletions, well drill outs and clean
outs, and well reentry. Well Services is included in the
Company’s oilfield services reporting segment.
The
Company accounted for this acquisition as a business
combination and the total cash consideration of $48.1 million
has been allocated on a preliminary basis to the net assets
acquired based on their respective estimated fair values at
February 9, 2012 as follows:
The
intangible assets acquired consist of customer relationships,
which are being amortized on an accelerated basis over the
estimated useful life of ten years. The $10.1 million
goodwill arises from the growth potential the Company sees
for Well Services, along with expected synergies with the
Company’s current oilfield services businesses, and is
expected to be deductible for tax purposes. The
acquisition-related costs for the purchase of Well Services
included in “Selling, general and administrative”
expenses in the Condensed Statement of Income were $0.2
million for the six-month period ended June 30, 2012. The
Company is in the process of completing its assessment of the
fair value of net assets acquired from the Well Services
acquisition. Therefore, the fair values presented are
provisional pending completion of the final valuation of the
net assets.
On
May 31, 2012, the Company completed its acquisition of SWH,
Inc. (“SWH”), a subsidiary of BNS Holding, Inc.
(“BNS”). SWH’s sole business is Sun Well
Service, Inc. (“Sun Well”), which is a provider
of premium well services to oil and gas exploration and
production companies operating in the Williston Basin in
North Dakota and Montana. Sun Well is included in the
Company’s oilfield services reporting segment.
Pursuant
to the terms of the Share Purchase Agreement, the Company
acquired all of the capital stock of SWH for an acquisition
price aggregating $62.7 million. The aggregate acquisition
price consisted of the issuance of 2,027,500 shares of the
Company’s common stock (valued at $27 per share, the
closing price on May 30, 2012) and cash of $7.9 million.
Affiliates of Steel Partners Holdings L.P. (“Steel
Partners”) owned approximately 40% of the
Company’s outstanding common stock and 85% of BNS on
May 31, 2012.
As
a result of the acquisition, Steel Partners beneficially owns
approximately 51.1% of the Company’s outstanding common
stock. The Company and BNS each appointed a special committee
of independent directors to consider and negotiate the
transaction because of the interest of Steel Partners in each
company.
The
Company accounted for this acquisition as a business
combination and the total acquisition price has been
allocated on a preliminary basis to the net assets acquired
based on their respective estimated fair values at May 31,
2012 as follows:
The
$27.3 million intangible assets acquired consist of customer
relationships and a trade name, which will be amortized on an
accelerated basis over their respective estimated useful
lives of ten and five years, respectively. The $23.5 million
goodwill arises from the growth potential the Company sees
for Sun Well, along with expected synergies with the
Company’s current oilfield services businesses, and is
expected to be non-deductible for tax purposes. The
acquisition-related costs for the purchase of SWH included in
“Selling, general and administrative” expenses in
the Condensed Statements of Income were $1.2 million for
six-month period ended June 30, 2012. The Company is in the
process of completing its assessment of the fair value of net
assets acquired from the SWH acquisition, including but not
limited to the identifiable tangible and intangible assets, a
phantom stock liability and deferred income taxes.
Additionally, due to the relatively low non-affiliate trading
volume of the Company’s common stock, the Company is
also in the process of evaluating the fair value of the stock
issued as consideration in the acquisition. Therefore, the
fair values presented are provisional pending completion of
the final valuation of the net assets and non-cash
consideration.
Additionally,
on May 31, 2012, the business of Well Services was combined
with Sun Well and both businesses now operate out of Sun
Well.
The
results of operations for Well Services and SWH are included
in the accompanying financial statements since their
respective acquisition dates.
Pro
Forma Financial Information
The
following pro forma financial information presents the
combined results of the Company, Rogue Pressure Services, LLC
(acquired December 7, 2011), Well Services and SWH, as if the
acquisitions had occurred at the beginning of the fiscal year
ended December 31, 2011. Such pro forma results are not
necessarily indicative of what would have actually occurred
had the acquisitions been in effect for the entire period.
The pro forma financial information is presented for
informational purposes only and does not purport to represent
the results of future operations. The pro forma results are
as follows:
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Note 9 - Commitments and Contingencies (Detail) - Assumed Capital Leases (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
---|---|
2012 (remaining six months) | $ 258 |
2013 | 489 |
2014 | 458 |
2015 | 458 |
2016 | 51 |
Total minimum lease payments | 1,714 |
Less amount representing interest | (119) |
Present value of net minimum lease payments | 1,595 |
Less current portion | (405) |
Capital lease obligations, net of current portion | $ 1,190 |