EX-99.2 3 dex992.htm PRO FORMA FINANCIAL INFORMATION Pro Forma Financial Information

EXHIBIT 99.2

PRO FORMA FINANCIAL INFORMATION

TEAL SUPPLY CO. d/b/a TRIUMPH DRILLING TOOLS, INC.

Unaudited Pro Forma Combined Balance Sheet as of December 31, 2006

Unaudited Pro Forma Combined Statement of Income for the Year Ended December 31, 2006

Notes to Unaudited Pro Forma Combined Financial Statements

 


FLOTEK INDUSTRIES, INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements give effect to the Teal Supply Co. d/b/a Triumph Drilling Tools, Inc. (“Triumph”) acquisition as described in Flotek’s Form 8-K filed on January 10, 2007. The unaudited pro forma combined balance sheet as of December 31, 2006 is presented as if the Triumph acquisition had occurred on that date. The unaudited pro forma combined statement of income for the year ended December 31, 2006 assumes that the Triumph acquisition occurred on January 1, 2006.

The unaudited pro forma combined financial statements should be read in conjunction with (i) the historical consolidated financial statements of Flotek included in its Annual Report on Form 10-K for the year ended December 31, 2006 and (ii) the historical combined financial statements of Triumph included in this Form 8-K. The unaudited pro forma combined financial statements are not necessarily indicative of the financial position that would have been obtained or the financial results that would have occurred if the Triumph acquisition had been consummated on the dates indicated, nor are they necessarily indicative of the financial position or financial results in the future. The pro forma adjustments, as described in the Notes to Pro Forma Combined Financial Statements, are based upon available information and certain assumptions that Flotek’s management believes are reasonable.

 


FLOTEK INDUSTRIES, INC.

PRO FORMA COMBINED BALANCE SHEET

DECEMBER 31, 2006

(Unaudited)

 

     Flotek    (a)
Triumph
   Pro Forma
Adjustments
    Pro Forma
for the
Transactions
     (In thousands of dollars)

ASSETS

          

Current assets:

          

Cash and cash equivalents

   $ 510    $ —      $ —       $ 510

Accounts receivable, net

     19,077      3,429      —         22,506

Inventories, net

     17,899      1,299      (150 )(b)     19,048

Other current assets

     578      —        —         578
                            

Total current assets

     38,064      4,728      (150 )     42,642

Property, plant and equipment, net

     19,302      6,286      12,338  (b)     37,926

Goodwill

     24,185      —        9,202  (c)     33,387

Intangible and other assets, net

     1,339      243      250  (c)     1,832
                            
   $ 82,890    $ 11,257    $ 21,640     $ 115,787
                            

LIABILITIES AND STOCKHOLDERS’ EQUITY

          

Current liabilities:

          

Accounts payable

   $ 9,941    $ 1,182      —       $ 11,123

Accrued liabilities

     7,457      715      —         8,172

Current portion of long-term debt

     2,589      2,180      (2,180 )(d)     2,589

Current portion of deferred tax liability

     675      —        —         675
                            

Total current liabilities

     20,662      4,077      (2,180 )     22,559

Long-term debt, less current portion

     8,185      3,339      27,661  (d)     39,185

Deferred tax liability, less current portion

     534      —        —         534
                            

Total liabilities

     29,381      7,416      25,481       62,278
                            

Stockholders’ equity:

          

Common stock

     1      1      (1 )(e)     1

Additional paid-in capital

     46,661      328      (328 )(e)     46,661

Retained earnings

     6,810      3,512      (3,512 )(e)     6,810

Accumulated other comprehensive income

     37      —        —    (e)     37
                            

Total stockholders’ equity

     53,509      3,841      (3,841 )     53,509
                            
   $ 82,890    $ 11,257    $ 21,640     $ 115,787
                            

 


FLOTEK INDUSTRIES, INC.

PRO FORMA COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2006

(Unaudited)

 

     Flotek     (a)
Triumph
    Pro Forma
Adjustments
    Pro Forma
for the
Transactions
 
     (in thousands, except per share data)  

Revenues

     100,642     $ 15,996     $ —       $ 116,638  

Expenses:

        

Operating and administrative expenses

     78,383       12,180       —         90,563  

Depreciation and amortization

     2,750       1,420       1,285  (f)     5,455  

Research and development

     656       —         —         656  
                                

Total expenses

     81,789       13,600       1,285       96,674  
                                

Income from operations

     18,853       2,396       (1,285 )     19,964  

Other income (expense):

        

Interest expense (original facilities)

     (1,005 )     (341 )     341  (g)     (1,005 )

Interest expense (new facility)

     —         —         (1,990 )(g)     (1,990 )

Other, net

     85       56       —         141  
                                

Total other income (expense)

     (920 )     (285 )     (1,649 )     (2,854 )

Income from before income taxes

     17,933       2,111       (2,934 )     17,110  

Provision for income taxes

     (6,583 )     —         1,027  (h)     (5,556 )
                                

Net income (loss)

   $ 11,350     $ 2,111     $ (1,907 )   $ 11,554  
                                

Basic earnings per common share

   $ 1.31         $ 1.34  

Diluted earnings per common share

   $ 1.22         $ 1.24  

Weighted average common shares used in computing
basic earnings per common share

     8,645           8,645  

Incremental common shares from stock options and warrants

     649           649  
                    

Weighted average common shares used in computing
diluted earnings per common share

     9,294           9,294  
                    


FLOTEK INDUSTRIES, INC.

NOTES TO PRO FORMA FINANCIAL STATEMENTS

(Unaudited)

 

(a)    Triumph financials audited as of September 30, 2006 and December 31, 2005. Amounts as of December 31, 2006 are unaudited.

(b)    Reflects write-down in inventory and step-up in basis of the fixed assets as a result of the acquisition to the lower of fair market value or actual cost.

(c)    Reflects the estimated allocation of the Triumph purchase price to goodwill and other intangibles assets.

(d)    Reflects the repayment of Triumph’s $5.2 million of borrowing under existing credit facilities and the addition of $31 million of term debt taken out by Flotek to fund the acquisition.

(e)    Reflects the elimination of Triumph’s stockholder’s equity.

(f)     Reflects the increase in depreciation expense as a result of the step-up in basis of fixed assets.

(g)    Reflects the elimination of interest expense due to historical debt not being assumed and the interest expense related to cash borrowed to effect the acquisition.

(h)    Reflects the application of 35% tax rate.