Financial Information Related to Guarantor Subsidiaries

3 Months Ended

Mar. 31, 2012

Financial Information Related to Guarantor Subsidiaries [Abstract]

Financial Information Related to Guarantor Subsidiaries

(20) Financial Information Related to Guarantor Subsidiaries

SESI, L.L.C. (Issuer), a 100% owned subsidiary of Superior Energy Services, Inc. (Parent), has $500 million of unsecured 6 3/8% senior notes due 2019 and $800 million of unsecured 7 1/8% senior notes due 2021. The Parent, along with certain of its 100% owned domestic subsidiaries, fully and unconditionally guaranteed the senior notes, and such guarantees are joint and several. Domestic income taxes are paid by the Parent through a consolidated tax return and are accounted for by the Parent. The Company has revised the comparative condensed consolidating financial information to reflect the Parent’s and Issuer’s investments in subsidiaries using the equity method. The following tables present the condensed consolidating balance sheets as of March 31, 2012 and December 31, 2011, and the condensed consolidating statements of operations and cash flows for the three months ended March 31, 2012 and 2011.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidating Balance Sheets

March 31, 2012

(in thousands)

(unaudited)

	Parent			Issuer			Guarantor Subsidiaries			Non—   Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	50,257		$	31,562		$	53,939		$	—		$	135,758
Accounts receivable, net		—			352			886,632			203,570			(54,569	)		1,035,985
Prepaid expenses		141			7,543			34,713			30,395			—			72,792
Inventory and other current assets		—			1,799			257,364			19,066			—			278,229
Total current assets		141			59,951			1,210,271			306,970			(54,569	)		1,522,764
Property, plant and equipment, net		—			7,305			2,194,197			564,808			—			2,766,310
Goodwill		—			—			2,119,476			385,194			—			2,504,670
Notes receivable		—			—			74,750			—			—			74,750
Intercompany notes receivable		—			—			—			15,000			(15,000	)		—
Investments in subsidiaries		1,743,595			3,872,497			195,970			—			(5,812,062	)		—
Equity-method investments		—			67,828			—			1,724			—			69,552
Intangible and other long-term assets, net		—			64,843			400,822			64,647			—			530,312
Total assets	$	1,743,736		$	4,072,424		$	6,195,486		$	1,338,343		$	(5,881,631	)	$	7,468,358
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—		$	6,383		$	244,427		$	111,070		$	(48,895	)	$	312,985
Accrued expenses		95			82,143			158,532			50,427			(6,437	)		284,760
Income taxes payable		38,559			—			—			2,305			—			40,864
Deferred income taxes		16,721			—			—			—			—			16,721
Current portion of decommissioning liabilities		—			—			15,678			—			—			15,678
Current maturities of long-term debt		—			20,000			—			—			—			20,000
Total current liabilities		55,375			108,526			418,637			163,802			(55,332	)		691,008
Deferred income taxes		672,752			—			—			12,142			—			684,894
Decommissioning liabilities		—			—			107,878			2,273			—			110,151
Long-term debt, net		—			1,978,508			—			—			—			1,978,508
Intercompany notes payable		—			15,000			—			—			(15,000	)		—
Intercompany payables/(receivables)		(2,889,199	)		197,441			2,529,678			324,982			(162,902	)		—
Other long-term liabilities		5,954			29,358			24,574			45,057			—			104,943
Stockholders’ equity:
Preferred stock of $.01 par value		—			—			—			—			—			—
Common stock of $.001 par value		157			—			782			4,212			(4,994	)		157
Additional paid in capital		2,832,360			124,271			687,939			680,871			(1,493,081	)		2,832,360
Accumulated other comprehensive
income (loss), net		(21,031	)		(21,031	)		(165	)		(21,031	)		42,227			(21,031	)
Retained earnings (accumulated deficit)		1,087,368			1,640,351			2,426,163			126,035			(4,192,549	)		1,087,368
Total stockholders’ equity (deficit)		3,898,854			1,743,591			3,114,719			790,087			(5,648,397	)		3,898,854
Total liabilities and stockholders’ equity	$	1,743,736		$	4,072,424		$	6,195,486		$	1,338,343		$	(5,881,631	)	$	7,468,358

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidating Balance Sheets

December 31, 2011

(in thousands)

(unaudited)

	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	29,057		$	6,272		$	44,945		$	—		$	80,274
Accounts receivable, net		—			531			437,963			143,444			(41,336	)		540,602
Income taxes receivable		—			—			—			698			(698	)		—
Prepaid expenses		34			3,893			9,796			20,314			—			34,037
Inventory and other current assets		—			1,796			214,381			12,132			—			228,309
Total current assets		34			35,277			668,412			221,533			(42,034	)		883,222
Property, plant and equipment, net		—			2,758			1,096,036			408,574			—			1,507,368
Goodwill		—			—			437,614			143,765			—			581,379
Notes receivable		—			—			73,568			—			—			73,568
Investments in subsidiaries		1,650,049			2,833,659			20,062			—			(4,503,770	)		—
Equity-method investments		—			70,614			—			1,858			—			72,472
Intangible and other long-term assets, net		—			828,447			71,625			30,064			—			930,136
Total assets	$	1,650,083		$	3,770,755		$	2,367,317		$	805,794		$	(4,545,804	)	$	4,048,145
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—		$	4,307		$	128,996		$	86,723		$	(41,381	)	$	178,645
Accrued expenses		164			54,000			105,512			38,503			(605	)		197,574
Income taxes payable		1,415			—			—			—			(698	)		717
Deferred income taxes		831			—			—			—			—			831
Current portion of decommissioning liabilities		—			—			14,956			—			—			14,956
Current maturities of long-term debt		—			—			—			810			—			810
Total current liabilities		2,410			58,307			249,464			126,036			(42,684	)		393,533
Deferred income taxes		285,871			—			—			11,587			—			297,458
Decommissioning liabilities		—			—			108,220			—			—			108,220
Long-term debt, net		—			1,673,351			—			11,736			—			1,685,087
Intercompany payables/(receivables)		(96,989	)		356,668			(253,053	)		(7,276	)		650			—
Other long-term liabilities		5,192			32,380			26,704			45,972			—			110,248
Stockholders’ equity:
Preferred stock of $.01 par value		—			—			—			—			—			—
Common stock of $.001 par value		80			—			—			4,212			(4,212	)		80
Additional paid in capital		447,007			124,271			—			517,209			(641,480	)		447,007
Accumulated other comprehensive income (loss), net		(26,936	)		(26,936	)		—			(26,936	)		53,872			(26,936	)
Retained earnings (accumulated deficit)		1,033,448			1,552,714			2,235,982			123,254			(3,911,950	)		1,033,448
Total stockholders’ equity (deficit)		1,453,599			1,650,049			2,235,982			617,739			(4,503,770	)		1,453,599
Total liabilities and stockholders’ equity	$	1,650,083		$	3,770,755		$	2,367,317		$	805,794		$	(4,545,804	)	$	4,048,145

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidating Statements of Operations

Three Months Ended March 31, 2012

(in thousands)

(unaudited)

	Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	835,172		$	175,052		$	(43,387	)	$	966,837
Cost of services (exclusive of items shown separately below)		—			—			466,413			123,699			(43,345	)		546,767
Depreciation, depletion, amortization and accretion		—			191			85,940			16,465			—			102,596
General and administrative expenses		96			59,978			93,209			22,780			(42	)		176,021
Income (loss) from operations		(96	)		(60,169	)		189,610			12,108			—			141,453
Other income (expense):
Interest expense, net		—			(30,483	)		1,339			(662	)		—			(29,806	)
Earnings (losses) from consolidated subsidiaires		87,637			180,551			12,411			—			(280,599	)		—
Earnings (losses) from equity-method investments, net		—			(287	)		—			—			—			(287	)
Income (loss) from continuing operations before income taxes		87,541			89,612			203,360			11,446			(280,599	)		111,360
Income taxes		35,547			—			—			5,656			—			41,203
Net income (loss) from continuing operations		51,994			89,612			203,360			5,790			(280,599	)		70,157
Discontinued operations, net of income tax		1,926			(1,975	)		(13,179	)		(3,009	)		—			(16,237	)
Net income (loss)	$	53,920		$	87,637		$	190,181		$	2,781		$	(280,599	)	$	53,920

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidating Statements of Comprehensive Income

Three Months Ended March 31, 2012

(in thousands)

(unaudited)

	Parent		Issuer		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	53,920	$	87,637	$	190,181		$	2,781	$	(280,599	)	$	53,920
Change in cumulative translation adjustment		5,905		5,905		(165	)		5,905		(11,645	)		5,905
Comprehensive income (loss)	$	59,825	$	93,542	$	190,016		$	8,686	$	(292,244)		$	59,825

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidating Statements of Operations

Three Months Ended March 31, 2011 *

(in thousands)

(unaudited)

	Parent			Issuer			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	322,655	$	77,701		$	(15,359	)	$	384,997
Cost of services (exclusive of items shown separately below)		—			—			176,845		55,472			(15,295	)		217,022
Depreciation, depletion, amortization and accretion		—			128			45,425		10,271			—			55,824
General and administrative expenses		325			18,553			50,270		15,531			(64	)		84,615
Income (loss) from operations		(325	)		(18,681	)		50,115		(3,573	)		—			27,536
Other income (expense):
Interest expense, net		—			(12,561	)		1,080		(671	)		—			(12,152	)
Intercompany interest income (expense)		—			6,206			—		(6,206	)		—			—
Earnings (losses) from consolidated subsidiaires		23,427			49,706			634		—			(73,767	)		—
Earnings (losses) from equity-method investments, net		—			(878	)		—		905			—			27
Income (loss) from continuing operations before income taxes		23,102			23,792			51,829		(9,545	)		(73,767	)		15,411
Income taxes		4,387			—			—		1,147			—			5,534
Net income (loss) from continuing operations		18,715			23,792			51,829		(10,692	)		(73,767	)		9,877
Discontinued operations, net of income tax		(3,212	)		(365	)		9,249		(46	)		—			5,626
Net income (loss)	$	15,503		$	23,427		$	61,078	$	(10,738	)	$	(73,767	)	$	15,503

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidating Statements of Comprehensive Income

Three Months Ended March 31, 2011 *

(in thousands)

(unaudited)

	Parent		Issuer		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	15,503	$	23,427	$	61,078	$	(10,738	)	$	(73,767	)	$	15,503
Change in cumulative translation adjustment		7,855		7,855		—		7,855			(15,710	)		7,855
Comprehensive income (loss)	$	23,358	$	31,282	$	61,078	$	(2,883	)	$	(89,477	)	$	23,358

* As adjusted for discontinued operations

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31, 2012

(in thousands)

(unaudited)

	Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	53,920		$	87,637		$	190,181		$	2,781		$	(280,599	)	$	53,920
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		—			191			87,047			16,603			—			103,841
Deferred income taxes		(12,133	)		—			—			1,154			—			(10,979	)
Excess tax benefit from stock-based compensation		(843	)		—			—			—			—			(843	)
Stock-based and performance share unit compensation expense		—			10,591			—			—			—			10,591
Retirement and deferred compensation plan expense		—			621			—			—			—			621
(Earnings) losses from consolidated subsidiaries		(87,637	)		(180,551	)		(12,411	)		—			280,599			—
(Earnings) losses from equity-method investments, net of cash received		—			2,787			—			134			—			2,921
Amortization of debt acquisition costs and note discount		—			2,210			—			—			—			2,210
Loss on sale of businesses		—			—			6,649			—			—			6,649
Other reconciling items, net		—			5,373			(2,288	)		396			—			3,481
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable		—			179			(63,263	)		(1,079	)		—			(64,163	)
Inventory and other current assets		—			(3	)		(13,150	)		(2,715	)		—			(15,868	)
Accounts payable		—			2,076			13,060			13,300			—			28,436
Accrued expenses		(69	)		22,717			(74,489	)		(4,505	)		—			(56,346	)
Decommissioning liabilities		—			—			(2,661	)		—			—			(2,661	)
Income taxes		39,080			—			—			(271	)		—			38,809
Other, net		(108	)		(3,749	)		1,903			(4,608	)		—			(6,562	)
Net cash provided by (used in) operating activities		(7,790	)		(49,921	)		130,578			21,190			—			94,057
Cash flows from investing activities:
Payments for capital expenditures		—			(4,738	)		(238,448	)		(30,059	)		—			(273,245	)
Acquisitions of businesses, net of cash acquired		—			(1,229,327	)		106,952			84,134			—			(1,038,241	)
Change in restricted cash held for acquisition of business		—			785,280			—			—			—			785,280
Cash proceeds from sale of businesses		—			185,912			—			—			—			185,912
Other		—			—			2,603			702			—			3,305
Intercompany receivables/payables		(5,739	)		36,370			23,605			(54,236	)		—			—
Net cash used in investing activities		(5,739	)		(226,503	)		(105,288	)		541			—			(336,989	)
Cash flows from financing activities:
Net (payments) borrowings from revolving line of credit		—			(75,000	)		—			—			—			(75,000	)
Proceeds from long-term debt		—			400,000			—			—			—			400,000
Principal payments on long-term debt		—			—			—			(12,546	)		—			(12,546	)
Payment of debt acquisition costs		—			(25,011	)		—			—			—			(25,011	)
Proceeds from exercise of stock options		12,256			—			—			—			—			12,256
Excess tax benefit from stock-based compensation		843			—			—			—			—			843
Proceeds from issuance of stock through employee benefit plans		819			—			—			—			—			819
Other		(389	)		(2,365	)		—			(856	)		—			(3,610	)
Net cash provided by (used in) financing activities		13,529			297,624			—			(13,402	)		—			297,751
Effect of exchange rate changes on cash		—			—			—			665			—			665
Net increase in cash and cash equivalents		—			21,200			25,290			8,994			—			55,484
Cash and cash equivalents at beginning of period		—			29,057			6,272			44,945			—			80,274
Cash and cash equivalents at end of period	$	—		$	50,257		$	31,562		$	53,939			—		$	135,758

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31, 2011

(in thousands)

(unaudited)

	Parent			Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	15,503		$	23,427		$	61,078		$	(10,738	)	$	(73,767	)	$	15,503
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		—			128			48,691			10,544			—			59,363
Deferred income taxes		2,967			—			—			(194	)		—			2,773
Excess tax benefit from stock-based compensation		(5,078	)		—			—			—			—			(5,078	)
Stock-based and performance share unit compensation expense		—			3,686			—			—			—			3,686
Retirement and deferred compensation plan expense		—			123			—			—			—			123
(Earnings) losses from consolidated subsidiaries		(23,427	)		(49,706	)		(634	)		—			73,767			—
(Earnings) losses from equity-method investments, net of cash received		—			878			—			(905)			—			(27	)
Amortization of debt acquisition costs and note discount		—			6,255			—			—			—			6,255
Gain on sale of businesses		—			—			(2,674	)		—			—			(2,674	)
Other reconciling items, net		—			(374	)		(1,108	)		—			—			(1,482	)
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable		—			(3,043	)		67,549			14,328			—			78,834
Inventory and other current assets		—			(17	)		(3,096	)		98			—			(3,015	)
Accounts payable		—			(219	)		1,930			(4,016	)		—			(2,305	)
Accrued expenses		12			(6,365	)		(4,670	)		(2,122	)		—			(13,145	)
Income taxes		(2,436	)		—			—			(122	)		—			(2,558	)
Other, net		(46	)		859			1,705			(826	)		—			1,692
Net cash provided by (used in) operating activities		(12,505	)		(24,368	)		168,771			6,047			—			137,945
Cash flows from investing activities:
Payments for capital expenditures		—			—			(78,773	)		(29,806	)		—			(108,579	)
Cash proceeds from sale of businesses		—			—			5,762			—			—			5,762
Other		—			—			(1,974	)		—			—			(1,974	)
Intercompany receivables/payables		646			66,043			(97,368	)		30,679			—			—
Net cash provided by (used in) investing activities		646			66,043			(172,353	)		873			—			(104,791	)
Cash flows from financing activities:
Net (payments) borrowings from revolving line of credit		—			(19,000	)		—			—			—			(19,000	)
Proceeds from exercise of stock options		6,147			—			—			—			—			6,147
Excess tax benefit from stock-based compensation		5,078			—			—			—			—			5,078
Proceeds from issuance of stock through employee benefit plans		634			—			—			—			—			634
Other		—			(5,830	)		—			(721	)		—			(6,551	)
Net cash provided by (used in) financing activities		11,859			(24,830	)		—			(721	)		—			(13,692	)
Effect of exchange rate changes on cash		—			—			—			893			—			893
Net increase (decrease) in cash and cash equivalents		—			16,845			(3,582	)		7,092			—			20,355
Cash and cash equivalents at beginning of period		—			—			5,493			45,234			—			50,727
Cash and cash equivalents at end of period	$	—		$	16,845		$	1,911		$	52,326		$	—		$	71,082