financial statements the attached financial statements and ... · actix, celcite, utiba and...

Barry M Frohlinger, Inc copyright 1981 - 2017 1

Financial Statements

The attached financial statements and case work has been prepared by Barry M Frohlinger, Inc.


BOLT SUPPLIERS, INC.

The objective of this exercise is to demonstrate the interrelationships of the balance sheet elements, with business activities. There is a list of business activities during January on page 2. For each business activity, the effect on assets must equal the effect on equities. CAREFULLY REVIEW THESE TWELVE ACTIVITIES and the impacts on the balance sheet.

Barry M Frohlinger

3

The 2010 Annual Report of Bolt Suppliers, Inc. includes the following Statement of Financial Position (Balance Sheet) at December 31, 2010: ASSETS Liabilities and Equity Cash $ 2,000 Short-term loans $ 4,000 Receivables 13,000 Accounts payable 8,300 Inventories 22,000 Accrued salaries payable 500 Prepaid rent 300 Accrued interest payable -- Warehouse & Accrued taxes payable -- equipment, net 31,000 Long-term debt 20,000 Capital stock 25,000 Retained earnings 10,500 Total $ 68,300 Total $ 68,300 The interrelationships of these balance sheet elements are illustrated on the next page by a portrayal of the changes during January 2011. The list of business activities during January is shown below. For each business activity, the effect on assets must equal the effect on liabilities and equity. Bolt is not a manufacturer; it purchases and resells inventory. Most of its business activities are operating activities while only a few are investing activities and financing activities. The January financial statements are shown on the last page: {Statement of Financial Position {Statement of Income & Retained Earnings {Statement of Cash Flows List of January 2011 Business Activities: #1 Purchase merchandise inventory on account--$7,000 #2 Sell merchandise inventory on account: #2a Sales price--$12,000 #2b Cost of inventory sold--$8,000 #3 Borrow on short-term note from bank--$4,000 #4 Collect receivables in cash--$9,500 #5 Pay accounts payable in cash--$9,000 #6 Salaries for January: #6a Pay salaries accrued at January 1--$500 #6b January salaries total $2,000 of which $1,600 are paid #7 Purchase equipment and pay cash--$2,000 #8 Pay an installment of long-term debt--$1,000 #9 Depreciation on warehouse & equipment--$200 #10 Rent on sales office: #10a Use the $300 rent prepaid at Dec. 31 for January #10b Prepay for February rent--$300 #11 Accrue interest for January (none paid)--$200 #12 Accrue income tax (none paid)--$500

5

Balance January Business Activities Balance

12-31-10 #1 #2a #2b #3 #4 #5 #6a #6b #7 #8 #9 #10a #10b #11 #12 1-31-11

Assets

Cash 2,000 4,000 9,500 -9,000 -500 -1,600 -2,000 -1,000 -300 1,100

Receivables 13,000 12,000 -9,500 15,500

Inventories 22,000 7,000 -8,000 21,000

Prepaid Rent 300 -300 300 300

Warehouse &

equip., net 31,000 2,000 -200 32,800 Total 68,300 70,700

Equities

ST loans 4,000 4,000 8,000

Accts.payable 8,300 7,000 -9,000 6,300

Acc. salaries 500 -500 400 400

Acc. interest 0 200 200

Acc. taxes pay.

0 500 500

LT debt 20,000 -1,000 19,000

Capital stock 25,000 25,000

Retained earn. 10,500 12,000 -8,000 -2,000 -200 -300 -200 -500 11,300 Total 68,300 sales c/g/s salaries depr rent int tax 70,700


Statement of Financial Position January 31, 2011

ASSETS EQUITIES Cash $ 1,100 Short-term loans $ 8,000 Receivables 15,500 Accounts payable 6,300 Inventories 21,000 Accrued salaries payable 400 Prepaid rent 300 Accrued interest payable 200 Warehouse & Accrued taxes payable 500 equipment, net 32,800 Long-term debt 19,000 Capital stock 25,000 Retained earnings 11,300 Total $ 70,700 Total $ 70,700

Statement of Income & Retained Earnings Month ended January 31, 2011

Sales $ 12,000 Costs and expenses: Cost of sales 8,000 Salaries 2,000 Depreciation 200 Rent 300 Interest 200 Total costs & expenses 10,700 Income before income taxes 1,300 Less income taxes 500 Net income 800 Add beginning retained earnings 10,500 Ending retained earnings $ 11,300

Statement of Cash Flows Month ended January 31, 2011

Operating Activities: Net income $ 800 Depreciation 200 Increase in receivables (2,500) Decrease in inventories 1,000 Decrease in accounts pay. (2,000) Decrease in accrued salaries payable ( 100) Increase in accrued interest payable 200 Increase in accrued taxes payable 500 Net cash provided by operating activities ( 1,900) Investing Activities: Capital expenditures (2,000) Net cash used for investing activities (2,000) Financing Activities: Short-term borrowing 4,000


Repayments of long-term debt (1,000) Net cash provided by financing activities 3,000 Increase (decrease) in cash $ ( 900) end


TevaPharmaceuticalIndustriesLtd.isanIsraelimultinationalpharmaceuticalcompany

headquarteredinPetahTikva,Israel.Itspecializesprimarilyingenericdrugs,butother

businessinterestsincludeactivepharmaceuticalingredientsandtoalesserextent

proprietarypharmaceuticals.Itisthelargestgenericdrugmanufacturerintheworldand

oneofthe15largestpharmaceuticalcompaniesworldwide.Teva'sfacilitiesarelocated

inIsrael,NorthAmerica,Europe,andSouthAmerica.TevaisamemberofboththeNew

YorkStockExchangetheTelAvivStockExchange.

Teva'searliestpredecessorwasSalomon,Levin,andElsteinLtd.,awholesaledistributor

basedinJerusalemthatwasfoundedin1901.Duringthe1930s,newimmigrantsfrom

EuropefoundedseveralpharmaceuticalcompaniesincludingTeva("Nature"inHebrew).In

1951,TevaraisedcapitalthroughthenewlyfoundedTel-AvivStockExchange.In1980,Teva

continuedtofollowitsvisionofbecomingoneoftheworld'sbiggestpharmaceutical

companiesbyacquiringIkapharm,thenIsrael'ssecondlargestdrugmanufacturer.

In1982,TevawasgrantedapprovalbytheU.S.FoodandDrugAdministration(FDA)forits

KfarSabamanufacturingplant,anessentialmilestoneformarketingpharmaceuticalsinthe

USA.

In2005,Tevaopenedanew,state-of-the-artpharmaceuticalmanufacturingplantinHar

Hotzvim,atechnologyparkinJerusalem.TheplantreceivedFDAapprovalinearly2007.Teva

enteredtheJapanesemarketin2005,andin2008establishedagenericsjointventurewith

Kowa.TevaacquireditsU.S.rivalIvaxCorporationinJanuary2006,Barrin2007and

Ratiopharmin2010.In2010,Tevaannouncedthatitwouldbebuildingitsmaindistribution

centerfortheAmericasinPhiladelphia,PAandwasconsideringopeningitsUSheadquarters

inthearea.InMay2011TevaannounceditwillpurchaseCephalonforUS$6.8billionaspart

ofitsefforttoexpanditspresenceintheproprietarypharmaceuticalssector.

InJuly2015,Allerganagreedtoselloffitsgenericdrugbusiness(ActavisGenerics)toTevafor

$40.5billion($33.75billionincashand$6.75billionworthofshares).On December 2, 2015, Teva announced in a press release that “it has priced its concurrent offerings totaling $6.75 billion, consisting of 54 million American Depositary Shares (or ADS), each representing one Teva ordinary share, at $62.50 per ADS, and 3,375,000 of its 7% Mandatory Convertible Preferred Shares (or MCPS) at $1000 per share.”


Pepsi


AMDOCS

Amdocsisasoftwareandservicesprovidertomorethan300communications,mediaandentertainment

serviceprovidersinmorethan90countries.Itsproductsspanbusinesssupportsystems(BSS),operational

supportsystems(OSS),networkcontrol,optimizationandnetworkfunctionsvirtualizationandothers.

Thecompanyalsooffersmobilefinancialservicestobothserviceprovidersandfinancialinstitutions,aswellas

solutionsforsoftware-powerednetworks,end-to-endcarrier-gradebigdataanalytics,digitallifestyleservices,

andadvertisingandmediaproductsandservicesformediapublishers,adagenciesandadvertisingservice

providers,includingdirectorypublishers.

Amdocsmaintainsofficesonsixcontinentswithsupportanddevelopmentcenterslocatedworldwide,including

Brazil,Canada,Cyprus,India,Ireland,Israel,Mexico,thePhilippines,theUnitedKingdomandtheUSA.

Thecompanywasfoundedin1982asanoffshootofGoldenPages,theIsraeliphonedirectorycompany,which

wasownedbytheAurecGroupheadedbyMorrisKahn.TogetherwithothersatGoldenPages,Kahndeveloped

abillingsoftwareprogramforphonedirectorycompaniesandwithBoazDotanestablishedacompanycalled

AurecInformation&DirectorySystemstomarketthisproduct.In1985,SouthwesternBellCorporationacquired

a50percentownershipshareofAurecInformation,anditsnamewaschangedtoAmdocs.Withintwoyears,

theAurecGroupsoldoffallitsholdingsinAmdocsforalmostUS$1billion.

Between1990and1995Amdocstookitsinitialdiversificationsteps,expandingfirstintothewirelinetelephone

arenaandthenthemobilespace.Overtheyears,Amdocshascontinuedtoexpanditsproductandservices

offerings,bothorganicallyandthroughaseriesofacquisitions,includingITDS,Clarify,DSTINNOVIS,Cramer,

Actix,Celcite,UtibaandComverseBSSassets.ThecompanywentpublicontheNewYorkStockExchangein

1998,movingtotheNASDAQin2014.

In2000,AmdocsacquiredSolectTechnologyGroup,adeveloperofbillingandadministrativesoftwarefor

Internetserviceprovidersandwirelesstelephoneservicecarriers.In2004AmdocspurchasedXACCT,aprovider

ofmediationsoftwaretoCommunicationsServicesProviders.In2005AmdocspurchasedDSTInnovis,avendor

providingend-to-endcustomercareandbillingforbroadband,cable,andsatelliteoperators.In2006Amdocs

purchasedQpassaSeattle-basedcompanywithanAustriansubsidiarythatprovides"solutions"forthe

marketingandmerchandisingofdigitalgoodsandservices.In2007,AmdocspurchasedSigValueTechnologies,

anIsrael-basedvendorofprepaidbillingsystemsformobileoperatorsbasedinlowcostmarkets.InApril2008,

AmdocspurchasedJacobsRimell,theUKbasedproviderof"user-centricservicefulfillmentsolutions.In2010,

AmdocsacquiredMXTelecom,aleadingmobilepaymentsandmessagingaggregator.In2010,Amdocsacquired

theFrenchcompanyStreamezzoaleadingproviderofanSDKandarun-timeforportablerichapplication

developmentandexecutionacrossmulti-models,multi-OSmobileterminals.In2013,AmdocsacquiredActix

andCelcite,andenteredtheNetworkOptimizationServicesmarket.In2015,AmdocsacquiredComverse's

billingbusiness.In2016,AmdocsacquiredcVidya,adeveloperofbigdataanalyticssolutionsto

communicationsanddigitalserviceproviders,includingRevenueAssurance,FraudManagement,Marketing

AnalyticsandDataMonetizationsolutions.


Delek

DelekUSHoldingsisadiversifieddownstreamenergycompanywithoperationsinthreeprimarybusiness

segments:petroleumrefining,logisticsandconveniencestoreretailing.DelekUSisheadquarteredin

Brentwood,Tennesseeandemploysmorethan4,000peopleacrosstheeightstates.TheCompanyhasbeen

publiclytradedontheNewYorkStockExchangesince2006underthetickersymbol"DK".

NicheRefiningOperationsTheRefiningsegmentoperates155,000barrelsperdayincombinedproductioncapacityatrefineriesinTyler,

TexasandElDorado,Arkansas.

SteadyLogisticsSegmentThelogisticssegmentgathers,transportsandstorescrudeoil,aswellasmarkets,distributes,transportsand

storesrefinedproductioninthesoutheastUSandwestTexas.Theseoperationssupporttherefiningsegment

andthirdparties.ThelogisticssegmentconsistsofDelekUS’ownershipinDelekLogisticsPartners,LP,(NYSE:

DKL),whichisagrowthorientedmasterlimitedpartnership.AdditionalinformationregardingDelekLogistics

Partners,LPisavailableatdeleklogistics.com.Currently,DelekUSanditsaffiliatesbeneficiallyowns

approximately62.0percent(includingthe2percentgeneralpartnerinterest)ofDelekLogisticsPartners,LP.

Market-leadingConvenienceStoreOperationsintheSoutheastU.S.TheRetailsegmentmarketsgasoline,dieselandotherrefinedproductsthroughanetworkofapproximately

360company-operatedfuelandconveniencestoreslocatedinsevenstatesunderanumberofregionalbrands,

includingtheMAPCOExpress®,MAPCOMart®,EastCoast®,FastFoodandFuel™,FavoriteMarkets®,Delta

Express®andDiscountFoodMart™brandnames.Ourconveniencestoreoperationswererecentlyranked

amongthe20largestcompany-operatedconveniencestorechainsintheUnitedStates.

Frominception,DelekUSHoldingsstrategicvisionhasbeentomergetheacquisitionsavvyofaprivateequity

firmwiththemanagementandoperationalexpertiseofseasonedenergyindustryveterans.Theresultisa

companythathasbecomeoneofthemoreactiveacquirersofdownstreamenergyassets.Since2001,Delek

hascompletedmultipleacquisitionsintherefining,marketing/logisticsandconveniencestore

industries.Today,theseassetsareheldinthreesegments–DelekRefining,Ltd.,DelekMarketing&Supply,LP

andMAPCOExpress,Inc.–which,collectively,formourassetbase.Themergingofassetsfromacrossthe

downstreamenergysupplychainhaspositionedustobenefitfromadiversifiedrevenuebase–akeyadvantage

whencomparedwith“pure-play”competitorswhoseprofitabilityislinkedtoasinglebusinessorindustry.At

anoperationallevel,thisdiversifiedrevenuebasehasgeneratedconsistentgrowthandprofitabilityforour

shareholdersyearinandyearout.Byleveragingthesynergies,scalabilityandoperationalefficienciesthat

overlapthroughoutourassetportfolio,weareanattractiveinvestmentopportunityinvirtuallyanybusiness

cycle.

Wehaveintegratedourrefineryacquisition,sixconveniencestorechainacquisitionsandapipelineand

terminalacquisitionsinceourformationinMay2001.


Cashflow Company Statement of Cash Flows

For year ended December 31, 2009 DIRECT METHOD INDIRECT METHOD Cash flows from operating activities: Cash flows from operating activities: a Cash received from customers 145 Net income 13 [1] Adjustments to reconcile net income to b Cash paid for production (102) cash provided by operating activities: c Cash paid for selling & administrative ( 25) Depreciation 10 [2] d Cash paid for interest ( 3) Increase in accounts receivable, net ( 6) [3] e Cash paid for income taxes ( 6) Increase in inventories ( 8) [4] f Net cash provided by operations 9 Increase in acct & acc pay - production 1 [5] Decrease in acct & acc pay - sell & adm ( 2) [6] Change in accrued interest payable -- [7] Increase in accrued income tax payable 1 [8] Net cash provided by operations 9 [9] Cash flows from investing activities: Cash flows from investing activities: Capital expenditures ( 9) Capital expenditures ( 9) Payment for long-term investment ( 10) Payment for long-term investment (10) Net cash used in investing activities (19) Net cash used in investing activities (19) Cash flows from financing activities: Cash flows from financing activities: Net repayment of short-term bank loans ( 2) Net repayment of short-term bank loans ( 2) Proceeds from long-term borrowing 20 Proceeds from long-term borrowing 20 Dividends paid ( 4) Dividends paid ( 4) Net cash provided by financing activities 14 Net cash provided by financing activities 14


Net increase in cash 4 Net increase in cash 4


Cashflow Company Financial Statements Balance Sheet December 31, 2009 2008 Cash & marketable securities 8 4 Accounts receivable, net 17 11 Inventories 24 16 Total current assets 49 31 Long-term investments, at cost 10 -- Building & equipment, at cost 94 85 Less accumulated depreciation (42) (32) Total assets 111 84 Short-term bank loans payable 3 5 Accounts & accruals pay. - production 15 14 Accounts & accruals pay. - sell. & adm. 4 6 Accrued interest payable 1 1 Accrued income taxes payable 3 2 Total current liabilities 26 28 Long-term debt, due 2008 20 -- Common stock 26 26 Retained earnings 39 30 Total liabilities & stock. equity 111 84 Statement of Income and Retained Earnings For year ended December 31, 2009 Revenues: Sales revenues 151 Total revenues 151 Expenses: Cost of sales 95 Selling & administrative exp. 23 Depreciation expense 10 Interest expense 3 Income tax expense 7 Total expenses 138 Net income 13 Beginning retained earnings balance 30 Less dividends paid ( 4) Ending retained earnings balance 39


Illustration of Consolidating Statements Grant PrideCo.

Required: Review the financial information and the brief writeup regarding Grant Prideco. 1. Draw the organizational chart for Grant Prideco.

2. Review the financial information for Grant Prideco, XL, Inc.

3. Who is the parent and who are the subsidiaries?

4. Which legal entities have the debt?


The parent Grant Prideco, Inc. is a holding company which means that it holds investments in subsidiaries which are the operating companies, and it has no operating assets such as inventories nor operating revenues such as sales.

Grant PrideCo is the world leader in drill stem technology development and drill pipe manufacturing, sales and service; a global leader in drill bit technology and specialty tools, manufacturing, sales and service; and a provider of an integrated package of large-bore tubular products and services.

The Company’s drill stem and drill bit products are used to drill oil and gas wells while

large-bore tubular products and services are primarily used in completing offshore oil and gas wells. Customers include oil and gas drilling contractors; oil and gas companies; and other oilfield service companies. The firm primarily operates through two business segments: (1) Drilling Products and Services and (2) ReedHycalog.

Drilling Products and Services Segment

The Drilling Products and Services segment manufactures and sells a variety of drill

stem products used for the drilling of oil and gas wells. The principal products sold by this segment are: (1) drill pipe, (2) drill collars and heavyweight drill pipe and (3) drill stem accessories.

The drill stem products wear out through a combination of friction and metal fatigue

and are utilized by customers for a three to five year period assuming regular use. Demand for drill stem products is impacted primarily by changes in drilling activity and worldwide rig activity. However, since drill stem products are not consumables and represent a capital investment, demand for these products also is significantly impacted by the level of inventory held by customers and the perceptions as to future activity and their near-term need for new drill stem products. As a result, even in periods of rising or strong drilling activity, customers may elect to defer purchases until their own inventory reaches levels at which additional purchases are necessary to sustain their existing drilling activities.

Drill Pipe

Drill pipe is the principal tool, other than the rig, required for the drilling of an oil or gas

well. Its primary purpose is to connect the above-surface drilling rig to the drill bit. A drilling rig will typically have an inventory of 10,000 to 30,000 feet of drill pipe depending on the size and service requirements of the rig. When a drilling rig is operating, motors mounted on the rig rotate the drill pipe and drill bit. In addition to connecting the drilling rig to the drill bit, drill pipe provides a mechanism to steer the drill bit and serves as a conduit for drilling fluids and cuttings. Drill pipe is a capital good that can be used for the drilling of multiple wells. Once a well is completed, the drill pipe may be used again in drilling another well until the drill pipe becomes damaged or wears out.

Drill Collars


Drill collars are used in the drilling process to place weight on the drill bit for better control and penetration. Drill collars are located directly above the drill bit and are manufactured from a solid steel bar to provide necessary weight.

ReedHycalog Segment

The ReedHycalog segment is a leading global designer, manufacturer and distributor

of drill bits, hole-opening or hole enlarging tools, coring services and other related technology to the oil and gas industry. All of the products and services are generally sold directly to the upstream oil and gas operators and, to a lesser extent, drilling contractors on turnkey and footage contracts. Competition is based on technical performance, price and service.

The drill bit market consists of two product types: fixed-cutter bits and roller-cone bits. We manufacture and sell both product types on a global basis.

Drilling through subsurface strata to locate oil and gas requires a drill bit to be run on

drill pipe or conveyed with coiled tubing and rotated by surface rig equipment or downhole motors and turbines. Selecting the optimal bit for a particular application represents one of the many challenges faced by oil and gas companies and drilling contractors in planning a well. Similar to the drill stem market, the primary market driver is worldwide drilling activity or, more specifically, total footage drilled. In addition, demand is a function of well depth and complexity with demand for fixed-cutter bits tied more strongly to offshore, directional or horizontal drilling.

Drill bits constitute a very small percentage of total well costs, but are a critical

component of well-construction economics. The time required to drill a well is directly related to a drill bit’s rate of penetration and footage drilled prior to becoming dull and requiring replacement. On a cost-per-foot basis, selecting the appropriate drill bit significantly reduces drilling costs by decreasing drilling time and the number of trips required in and out of a well. Both roller-cone and fixed cutter bits can be used for shallow, land rig operations where bit costs or bit rental rates are a more significant portion of overall costs. Higher performance roller-cone or fixed-cutter bits with better rates of penetration and longer lives offer the most economic choice for offshore and deep wells where rig rates and trip costs are high.

Other Business Data

Research and Engineering

Grant Prideco maintains an active research and engineering program. The program

improves existing products and processes, develops new products and processes and improves engineering standards and practices that serve the changing needs of its customers. Expenditures for research and engineering activities totaled $38.2 million, $33.6 million and $23.7 million in 2008, 2007 and 2006, respectively.

Backlog


As of December 31, 2008, Grant PrideCo had a product backlog of $783 million, of which $779 million is expected to complete during 2009. The firm had a product backlog as of December 31, 2007 and 2006, of $1,158 million and $732 million, respectively. The decrease in product backlog primarily reflects a lower level of new land rigs entering the North American market as compared to last year coupled with capacity additions geared towards reducing customer lead times.

Legal Structure

The Grant Prideco organization consists of the following legal entities. The parent

company is Grant PrideCo, Inc.; the two subsidiaries are, Grant Prideco XL, Inc. and Grant Prideco TCA, Inc. Grant Prideco XL, Inc. has numerous equity investments in affiliates, the most significant is a 50% unconsolidated joint venture, Grant Prideco Jiangsu (GPJ). Grant Prideco TCA, Inc. owns three subsidiaries:

% Ownership Tianjin Grant TPCO (TGP) 60 % H-Tech 54 % Tianjin Grant Prideco (GPT) 85 %

Grant Prideco XL, Inc.

Grant Prideco XL, Inc. STATEMENT OF OPERATIONS Year Ended Dec 31, 2008 Revenues $1,364,328 Cost of sales $823,273 Selling, general and administrative $235,558 Other operating items $5,844 Equity Income in Unconsolidated Affiliates $123,983 Operating Income $423,636 Interest Expense $1,864 Other Income, Net $30,884 Income Before Income Taxes $456,384 Income Tax Provision $(121,126) Net Income $335,258



BALANCE SHEET As of Dec 31, 2008

Current Assets: Cash and cash equivalents $82,319 Accounts receivable, net $249,221 Inventories $310,379 Current deferred tax assets $37,664 Assets held for sale $182,059 Other current assets $566,787 $1,428,429 Property, Plant and Equipment, Net $177,492 Goodwill $187,041 Investment In Unconsolidated Affiliates $254,844 Other Assets $46,036 $2,093,842 Current Liabilities: Short-term borrowings $490 Accounts payable $77,029 Deferred revenues $19,095 Income taxes payable $165,833 Liabilities held for sale $15,792 Other current liabilities $59,940 $338,179 Long-Term Debt $18,766 Deferred Tax Liabilities $28,736 Other Long-Term Liabilities $28,372 Stockholders' Equity $1,679,789 $2,093,842


Grant Prideco XL, Inc. STATEMENTS OF CASH FLOWS (In thousands) Year Ended Dec 31, 2008 Cash Flows From Operating Activities: Net income $335,258 Adjustments to reconcile net income to net cash flow Depreciation and amortization $43,255 Deferred income tax $2,433 Equity income in affiliates, net $(123,983) Stock-based compensation expense $12,144 Deferred compensation expense $1,344 Change in operating assets and liabilities, net Accounts receivable $(45,677) Inventories $(39,033) Other current assets $455 Other assets $1,005 Accounts payable $2,001 Income taxes payable $16,755 Other current liabilities $(19,043) Other, net $4,321 Net cash provided by operating activities $191,235 Cash Flows From Investing Activities: Acquisition of businesses $(3,394) Capital expenditures $(89,432) Proceeds from sale of fixed assets $5,688 Net cash used in investing activities $(87,138) Cash Flows From Financing Activities: Borrowings (repayments) on credit facility, net $- Repayments on debt $- Issuance of debt $15,600 Dividends paid $(147,700) Net cash used in financing activities $(132,100) Effect of Exchange Rate Changes on Cash $733 Net Increase (Decrease) in Cash $(27,270) Cash at Beginning of Year $109,589 Cash at End of Year $82,319


Grant Prideco, Inc.

GRANT PRIDECO INC. STATEMENT OF OPERATIONS Year Ended December 31, 2008 Grant Prideco, Inc.

Grant Prideco,

Inc. Grant Prideco XL,

Inc. Grant Prideco TCA,

Inc. Eliminations Consolidated

Revenues $- $1,364,328 $929,638 $(353,677) $1,940,289 Cost of sales $- $823,273 $487,390 $(346,703) $963,960 Selling, general and administrative $229 $235,558 $110,289 $(6,974) $339,102 Other operating items $- $5,844 $602 $- $6,446 Equity Income in Unconsolidated Affiliates $- $123,983 $- $- $123,983 Equity in Subsidiaries, Net of Taxes $595,690 $- $- $(595,690) $- Operating Income (Loss) $595,461 $423,636 $331,357 $(595,690) $754,764 Interest Expense $(95,619) $1,864 $(447) $- $(94,202) Other Income (Expense), Net $4,753 $30,884 $(7,278) $- $28,359 Income Before Income Taxes $504,595 $456,384 $323,632 $(595,690) $688,921 Income Tax Provision $(26,695) $(121,126) $(53,267) $- $(201,088) Minority Interests $- $- $(9,933) $- $(9,933) Net Income $477,900 $335,258 $260,432 $(595,690) $477,900


GRANT PRIDECO INC. BALANCE SHEET At Dec 31, 2008

Grant Prideco, Inc. Grant Prideco XL, Inc.

Grant Prideco TCA, Inc. Eliminations Consolidated

Current Assets: Cash and cash equivalents $100 $82,319 $78,669 $- $161,088 Accounts receivable, net $- $249,221 $166,304 $- $415,525 Inventories $- $310,379 $217,649 $- $528,028 Current deferred tax assets $101 $37,664 $3,240 $- $41,005 Assets held for sale $- $182,059 $4,499 $- $186,558 Other current assets $- $566,787 $24,715 $(546,308) $45,194 Total Current Assets $201 $1,428,429 $495,076 $(546,308) $1,377,398 Property, Plant and Equipment, Net $- $177,492 $151,990 $- $329,482 Goodwill $- $187,041 $271,717 $- $458,758 Investment In and Advances to Subsidiaries $2,298,891 $- $- $(2,298,891) $- Investment In Unconsolidated Affiliate $- $254,844 $- $- $254,844 Other Assets $5,331 $46,036 $55,739 $- $107,106 Total Assets $2,304,423 $2,093,842 $974,522 $(2,845,199) $2,527,588 Current Liabilities: Short-term borrowings $- $490 $- $- $490 Accounts payable $146 $77,029 $50,361 $- $127,536 Deferred revenues $- $19,095 $1,798 $- $20,893 Income taxes payable $(87,263) $165,833 $(655) $- $77,915 Other liabilities $343,317 $- $202,991 $(546,308) $- Liabilities held for sale $- $15,792 $685 $16,477 Other current liabilities $4,189 $59,940 $34,562 $- $98,691 Total Current Liabilities $260,389 $338,179 $289,742 $(546,308) $342,002 Long-Term Debt $1,474,585 $18,766 $2,350 $- $1,495,701 Deferred Tax Liabilities $2,370 $28,736 $41,599 $- $72,705 Other Long-Term Liabilities $- $28,372 $852 $- $29,224 Minority Interests $- $- $20,877 $- $20,877 Stockholders' Equity $567,079 $1,679,789 $619,102 $(2,298,891) $567,079 $2,304,423 $2,093,842 $974,522 $(2,845,199) $2,527,588


GRANT PRIDECO, INC. (In thousands) CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31, 2008 Grant Prideco, Inc.


Grant Prideco TCA, Inc. Eliminations Consolidated

Net income $477,900 $335,258 $260,432 $(595,690) $477,900 Adjustments to net income to ops cash flow

Depreciation and amortization $1,355 $43,255 $14,176 - $58,786 Deferred income tax $1,455 $2,433 $2,455 $669 $7,012 Equity income in unconsolidated affiliates, net $(237,240) $(123,983) - $381,502 $20,279 Stock-based compensation expense $23 $12,144 $1,319 - $13,486

Deferred compensation expense - $1,344 $1,076 - $2,420 Minority interests in consolidated subsidiaries - - $1,704 - $1,704 Change in operating assets and liabilities, net Accounts receivable - $(45,677) $(24,437) $(28,000) $(98,114)

Inventories - $(39,033) $(3,668) $(66,354) $(109,055) Other current assets - $455 $(5,599) - $(5,144) Other assets - $1,005 $(1,005) $(15,417) $(15,417) Accounts payable - $2,001 $4,420 - $6,421

Income taxes payable $3,577 $16,755 $10,440 $(35,160) $(4,388) Other current liabilities - $(19,043) $1,086 - $(17,957) Other, net - $4,321 $1,893 - $6,214 Net cash provided by operating activities $247,070 $191,235 $264,292 $(358,450) $344,147

Acquisition of businesses, net of cash acquired - $(3,394) - - $(3,394)

Capital expenditures - $(89,432) $(34,080) - $(123,512) Proceeds from sale of fixed assets - $5,688 $4,907 - $10,595

Net cash used in investing activities $- $(87,138) $(29,173) $- $(116,311) Borrowings (repayments) on credit facility, net $(34,600) - - - $(34,600)

Repayments on debt $(34,681) - - - $(34,681) Issuance of debt - $15,600 - - $15,600 Repurchases of common stock $(167,890) - - - $(167,890) Dividends paid $(39,033) $(147,700) $(210,750) $358,450 $(39,033)

Net cash used in financing activities $(276,204) $(132,100) $(210,750) $358,450 $(260,604) Effect of Exchange Rate Changes on Cash - $733 $38 - $771


Net Increase (Decrease) in Cash $(29,134) $(27,270) $24,407 - $(31,997) Cash at Beginning of Year $29,234 $109,589 $54,262 - $193,085

Cash at End of Year $100 $82,319 $78,669 - $161,088

financial statements the attached financial statements and ... · actix, celcite, utiba and...

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