XNYS:WG Willbros Group Inc Quarterly Report 10-Q Filing - 6/30/2012

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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 1-34259

 

 

Willbros Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   30-0513080
(Jurisdiction of incorporation)   (I.R.S. Employer Identification Number)

4400 Post Oak Parkway

Suite 1000

Houston, TX 77027

Telephone No.: 713-403-8000

(Address, including zip code, and telephone number, including

area code, of principal executive offices of registrant)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer   ¨    Accelerated Filer   x
Non-Accelerated Filer   ¨    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the registrant’s Common Stock, $.05 par value, outstanding as of August 2, 2012 was 49,076,550.

 

 

 


Table of Contents

WILLBROS GROUP, INC.

FORM 10-Q

FOR QUARTER ENDED JUNE 30, 2012

 

     Page  

PART I – FINANCIAL INFORMATION

  
  

Item 1. Financial Statements

  
     

Condensed Consolidated Balance Sheets as of June 30, 2012 (Unaudited) and December 31, 2011

     3   
     

Condensed Consolidated Statements of Operations (Unaudited) for the three months and six months ended June 30, 2012 and 2011

     4   
     

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the three months and six months ended June 30, 2012 and 2011

     5   
     

Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June  30, 2012 and 2011

     6   
     

Notes to Condensed Consolidated Financial Statements (Unaudited)

     7   
  

Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     36   
  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     49   
  

Item 4. Controls and Procedures

     50   

PART II – OTHER INFORMATION

  
  

Item 1. Legal Proceedings

     51   
  

Item 1A. Risk Factors

     51   
  

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     51   
  

Item 3. Defaults Upon Senior Securities

     51   
  

Item 4. Mine Safety Disclosures

     51   
  

Item 5. Other Information

     51   
  

Item 6. Exhibits

     52   

SIGNATURE

     53   

EXHIBIT INDEX

     54   


Table of Contents

WILLBROS GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

     June 30,
2012
    December 31,
2011
 
ASSETS   

Current assets:

    

Cash and cash equivalents

   $ 38,481      $ 58,686   

Accounts receivable, net

     321,763        301,515   

Contract cost and recognized income not yet billed

     75,713        37,090   

Prepaid expenses and other assets

     54,275        43,129   

Parts and supplies inventories

     10,565        11,893   

Deferred income taxes

     3,179        1,845   

Assets held for sale

     —          32,758   
  

 

 

   

 

 

 

Total current assets

     503,976        486,916   

Property, plant and equipment, net

     154,897        166,475   

Goodwill

     8,067        8,067   

Other intangible assets, net

     172,281        179,916   

Other assets

     29,580        20,397   
  

 

 

   

 

 

 

Total assets

   $ 868,801      $ 861,771   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY   

Current liabilities:

    

Accounts payable and accrued liabilities

   $ 299,288      $ 221,557   

Contract billings in excess of cost and recognized income

     23,048        18,000   

Current portion of capital lease obligations

     2,140        2,818   

Notes payable and current portion of long-term debt

     40,398        31,623   

Short-term borrowings under revolving credit facility

     59,357        —     

Current portion of settlement obligation of discontinued operations

     8,500        14,000   

Accrued income taxes

     4,916        4,983   

Liabilities held for sale

     —          13,990   

Other current liabilities

     4,985        7,475   
  

 

 

   

 

 

 

Total current liabilities

     442,632        314,446   

Long-term debt

     123,212        230,707   

Capital lease obligations

     2,840        3,646   

Long-term portion of settlement obligation of discontinued operations

     39,000        41,500   

Long-term liabilities for unrecognized tax benefits

     4,366        4,030   

Deferred income taxes

     4,679        2,994   

Other long-term liabilities

     35,668        32,870   
  

 

 

   

 

 

 

Total liabilities

     652,397        630,193   

Contingencies and commitments (Note 12)

    

Stockholders’ equity:

    

Preferred stock, par value $.01 per share, 1,000,000 shares authorized, none issued

     —          —     

Common stock, par value $.05 per share, 70,000,000 shares authorized and 50,046,908 shares issued at June 30, 2012 (49,423,152 at December 31, 2011)

     2,510        2,471   

Capital in excess of par value

     684,201        680,289   

Accumulated deficit

     (473,184     (455,840

Treasury stock at cost, 933,434 shares at June 30, 2012

    

(829,526 at December 31, 2011)

     (11,234     (10,839

Accumulated other comprehensive income

     13,088        14,570   
  

 

 

   

 

 

 

Total Willbros Group, Inc. stockholders’ equity

     215,381        230,651   

Noncontrolling interest

     1,023        927   
  

 

 

   

 

 

 

Total stockholders’ equity

     216,404        231,578   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 868,801      $ 861,771   
  

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

3


Table of Contents

WILLBROS GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2012     2011     2012     2011  

Contract revenue

   $ 499,194      $ 442,674      $ 918,284      $ 766,463   

Operating expenses:

        

Contract

     455,282        392,821        842,239        700,406   

Amortization of intangibles

     3,812        3,917        7,732        7,834   

General and administrative

     34,212        29,521        72,935        68,271   

Settlement of project dispute

     —          8,236        —          8,236   

Changes in fair value of contingent earn-out

     —          —          —          (6,000

Other charges

     34        (58     136        87   
  

 

 

   

 

 

   

 

 

   

 

 

 
     493,340        434,437        923,042        778,834   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     5,854        8,237        (4,758     (12,371

Other income (expense):

        

Interest expense, net

     (7,124     (10,446     (15,018     (25,246

Loss on early extinguishment of debt

     (1,149     (4,124     (3,405     (4,124

Other, net

     24        201        (241     (20
  

 

 

   

 

 

   

 

 

   

 

 

 
     (8,249     (14,369     (18,664     (29,390
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (2,395     (6,132     (23,422     (41,761

Provision (benefit) for income taxes

     1,273        (13,690     2,925        (12,158
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (3,668     7,558        (26,347     (29,603

Income (loss) from discontinued operations net of provision (benefit) for income taxes

     7,376        (9,708     9,675        (17,166
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     3,708        (2,150     (16,672     (46,769

Less: Income attributable to noncontrolling interest

     (328     (311     (672     (582
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Willbros Group, Inc.

   $ 3,380      $ (2,461   $ (17,344   $ (47,351
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of net loss attributable to Willbros Group, Inc.

        

Income (loss) from continuing operations

   $ (3,996   $ 7,247      $ (27,019   $ (30,185

Income (loss) from discontinued operations

     7,376        (9,708     9,675        (17,166
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Willbros Group, Inc.

   $ 3,380      $ (2,461   $ (17,344   $ (47,351
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income (loss) per share attributable to Company shareholders:

        

Income (loss) from continuing operations

   $ (0.08   $ 0.15      $ (0.56   $ (0.64

Income (loss) from discontinued operations

     0.15        (0.20     0.20        (0.36
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 0.07      $ (0.05   $ (0.36   $ (1.00
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income (loss) per share attributable to Company shareholders:

        

Income (loss) from continuing operations

   $ (0.08   $ 0.15      $ (0.56   $ (0.64

Income (loss) from discontinued operations

     0.15        (0.20     0.20        (0.36
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 0.07      $ (0.05   $ (0.36   $ (1.00
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     47,994,987        47,437,024        47,888,192        47,376,507   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     47,994,987        47,776,439        47,888,192        47,376,507   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

WILLBROS GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share amounts)

(Unaudited)

 

      Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2012     2011     2012     2011  

Net income (loss)

   $ 3,708      $ (2,150   $ (16,672   $ (46,769

Other comprehensive income (loss), net of tax

        

Foreign currency translation adjustments

     (512     272        (1,516     3,109   

Changes in derivative financial instruments

     151        (1,232     34        (1,119
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss), net of tax

     (361     (960     (1,482     1,990   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

     3,347        (3,110     (18,154     (44,779

Less: Comprehensive income attributable to noncontrolling interest

     (328     (311     (672     (582
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) attributable to Willbros Group, Inc.

   $ 3,019      $ (3,421   $ (18,826   $ (45,361
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

WILLBROS GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except share and per share amounts)

(Unaudited)

 

     Six Months
Ended June 30,
 
     2012     2011  

Cash flows from operating activities:

    

Net loss

   $ (16,672   $ (46,769

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

(Income) loss from discontinued operations

     (9,675     17,166   

Depreciation and amortization

     26,100        32,664   

Loss on early extinguishment of debt

     3,405        4,124   

Changes in fair value of contingent earnout liability

     —          (6,000

Stock-based compensation

     3,925        3,468   

Amortization of debt issuance cost

     2,188        4,215   

Non-cash interest expense

     1,162        4,158   

Deferred income tax expense (benefit)

     318        (23,993

Settlement of project dispute

     —          8,236   

Provision for bad debts

     462        664   

Other non-cash

     (2,380     (4,059

Changes in operating assets and liabilities:

    

Accounts receivable, net

     (20,378     (2,262

Payments on government fines

     —          (6,575

Contract cost and recognized income not yet billed

     (38,620     (15,653

Prepaid expenses and other assets

     4,899        10,836   

Accounts payable and accrued liabilities

     79,029        66,324   

Accrued income taxes

     (58     864   

Contract billings in excess of cost and recognized income

     4,853        3,823   

Other assets and liabilities

     (8,661     (8,314
  

 

 

   

 

 

 

Cash provided by operating activities of continuing operations

     29,897        42,917   

Cash used in operating activities of discontinued operations

     (10,110     (11,871
  

 

 

   

 

 

 

Cash provided by operating activities

     19,787        31,046   

Cash flows from investing activities:

    

Proceeds from working capital settlement

     —          9,402   

Proceeds from sales of property, plant and equipment

     9,862        15,321   

Purchase of property, plant and equipment

     (7,516     (6,343
  

 

 

   

 

 

 

Cash provided by investing activities of continuing operations

     2,346        18,380   

Cash provided by investing activities of discontinued operations

     15,360        1,092   
  

 

 

   

 

 

 

Cash provided by investing activities

     17,706        19,472   

Cash flows from financing activities:

    

Proceeds from revolver

     25,000        59,357   

Payments on capital leases

     (1,484     (7,199

Payment of revolver and notes payable

     (36,596     (63,841

Payments on term loan

     (46,700     (72,500

Payments to reacquire common stock

     (395     (589

Costs of debt issues

     —          (4,935

Dividend distribution to noncontrolling interest

     (576     (595
  

 

 

   

 

 

 

Cash used in financing activities of continuing operations

     (60,751     (90,302

Cash used in financing activities of discontinued operations

     —          (5
  

 

 

   

 

 

 

Cash used in financing activities

     (60,751     (90,307

Effect of exchange rate changes on cash and cash equivalents

     (1,706     1,691   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (24,964     (38,098

Cash and cash equivalents of continuing operations at beginning of period

     58,686        134,305   

Cash and cash equivalents of discontinued operations at beginning of period

     4,759        6,796   
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

     63,445        141,101   

Cash and cash equivalents at end of period

     38,481        103,003   

Less: cash and cash equivalents of discontinued operations at end of period

     —          (9,336
  

 

 

   

 

 

 

Cash and cash equivalents of continuing operations at end of period

   $ 38,481      $ 93,667   
  

 

 

   

 

 

 

Supplemental disclosures of cash flow information:

    

Cash paid for interest (including discontinued operations)

   $ 11,026      $ 15,927   

Cash paid for income taxes (including discontinued operations)

   $ 3,101      $ 3,926   

Supplemental non-cash investing and financing transactions:

    

Prepaid insurance obtained by note payable

   $ 15,953      $ 6,829   

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

1. The Company and Basis of Presentation

Willbros Group, Inc., a Delaware corporation, and its subsidiaries (the “Company,” “Willbros” or “WGI”), is a global contractor specializing in energy infrastructure, serving the oil and gas, refinery, petrochemical and power industries. The Company’s offerings include engineering, procurement and construction (either individually or as an integrated “EPC” service offering); ongoing maintenance; and other specialty services. The Company’s principal markets for continuing operations are the United States, Canada, and Oman. The Company obtains its work through competitive bidding and through negotiations with prospective clients. Contract values range from several thousand dollars to several hundred million dollars and contract durations range from a few weeks to more than two years.

The accompanying Condensed Consolidated Balance Sheet as of December 31, 2011, which has been derived from audited consolidated financial statements, and the unaudited Condensed Consolidated Financial Statements as of June 30, 2012 and 2011, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles, (“GAAP”) have been condensed or omitted pursuant to those rules and regulations. However, the Company believes the presentations and disclosures herein are adequate to make the information not misleading. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s December 31, 2011 audited Consolidated Financial Statements and notes thereto contained in the Company’s Current Report on Form 8-K dated June 29, 2012, filed June 29, 2012.

In the opinion of management, the unaudited Condensed Consolidated Financial Statements reflect all adjustments necessary to fairly state the financial position as of June 30, 2012, and the results of operations and cash flows of the Company for all interim periods presented. The results of operations and cash flows for the six months ended June 30, 2012 are not necessarily indicative of the operating results and cash flows to be achieved for the full year.

The Condensed Consolidated Financial Statements include certain estimates and assumptions made by management. These estimates and assumptions relate to the reported amounts of assets and liabilities at the dates of the Condensed Consolidated Financial Statements and the reported amounts of revenue and expense during those periods. Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment, goodwill and parts and supplies inventories; quantification of amounts recorded for contingencies, tax accruals and certain other accrued liabilities; valuation allowances for accounts receivable and deferred income tax assets; and revenue recognition under the percentage-of-completion method of accounting, including estimates of progress toward completion and estimates of gross profit or loss accrual on contracts in progress. The Company bases its estimates on historical experience and other assumptions that it believes to be relevant under the circumstances. Actual results could differ from those estimates.

As discussed in Note 14 – Discontinuance of Operations, Held for Sale Operations and Asset Disposals, the Company has disposed of certain assets and operations classified as discontinued operations (collectively the “Discontinued Operations”). Accordingly, these Condensed Consolidated Financial Statements reflect these operations as Discontinued Operations in all periods presented. The disclosures in the Notes to the Condensed Consolidated Financial Statements relate to continuing operations except as otherwise indicated.

Reclassifications – Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. These reclassifications relate to the sale of the assets and operations of InterCon Construction Inc. (“InterCon”) in the fourth quarter of 2011, which were reclassified to Discontinued Operations.

Out-of-Period Adjustments – The Company recorded out-of-period adjustments during the six months ended June 30, 2012 to correct errors to eliminate Cumulative Translation Adjustment balances that stemmed from the dissolution and liquidation of foreign currency based subsidiaries in jurisdictions where the Company no longer conducts business. The net impact of these adjustments for the six months ended June 30, 2012, was an increase to the Company’s income from discontinued operations and a decrease to net loss in the amount of $2,805. The adjustments did not have any impact on the Company’s pre-tax loss or loss from continuing operations for the six months ended June 30, 2012. The Company does not believe these adjustments are material, individually or in the aggregate, to its unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2012 after considering its expected 2012 annual financial results, nor does it believe such items are material to any of its previously issued annual or quarterly financial statements.

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

2. New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued amendments to fair value measurement to achieve common fair value measurement and disclosure requirements in GAAP and International Financial Reporting Standards (“IFRS”). The amendments result from a joint project with the International Accounting Standards Board, which also issued new guidance on fair value measurements. The amendments provide a framework for how companies should measure fair value when used in financial reporting, and sets out required disclosures. The amendments are intended to clarify how fair value should be measured, predominantly converge the U.S. and IFRS guidance, and expand the disclosures that are required. The standard is effective for public entities for interim and annual periods beginning after December 15, 2011, and should be applied prospectively. The implementation of this accounting guidance did not have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued new accounting guidance related to the presentation of comprehensive income in consolidated financial statements. The new accounting guidance requires the presentation of the components of net income and other comprehensive income either in a single continuous financial statement, or in two separate but consecutive financial statements. The accounting standard eliminates the option to present other comprehensive income and its components as part of the statement of stockholders’ equity. This standard is effective for fiscal years beginning after December 15, 2011, including interim periods, and early adoption is permitted. The Company complied with this new accounting guidance during the quarter ended March 31, 2012.

In September 2011, the FASB issued a new accounting standard related to testing goodwill for impairment. The standard gives entities the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step goodwill impairment test. If an entity believes that, as a result of its qualitative assessment, it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. An entity can choose to perform the qualitative assessment on none, some or all of its reporting units. An entity can bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the impairment test. The standard also includes new qualitative indicators that replace those previously used to determine whether an interim goodwill impairment test is required to be performed. This standard is effective for fiscal years beginning after December 15, 2011, including interim periods, and early adoption is permitted. The implementation of this accounting standard did not have a material impact on the Company’s consolidated financial statements.

 

3. Contracts in Progress

Contract cost and recognized income not yet billed on uncompleted contracts arise when recorded revenues for a contract exceed the amounts billed under the terms of the contracts. Contract billings in excess of cost and recognized income arise when billed amounts exceed revenues recorded. Amounts are billable to customers upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of the contract. Also included in contract cost and recognized income not yet billed on uncompleted contracts are amounts the Company seeks to collect from customers for change orders approved in scope but not for price associated with that scope change (unapproved change orders). Revenue for these amounts is recorded equal to the lesser of the expected revenue or cost incurred when realization of price approval is probable. Estimating revenues from unapproved change orders involves the use of estimates, and it is reasonably possible that revisions to the estimated recoverable amounts of recorded unapproved change orders may be made in the near-term. If the Company does not successfully resolve these matters, a reduction in revenues may be required to amounts that have been previously recorded.

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

3. Contracts in Progress (continued)

 

Contract cost and recognized income not yet billed and related amounts billed as of June 30, 2012 and December 31, 2011 was as follows:

 

     June 30,
2012
    December 31,
2011
 

Cost incurred on contracts in progress

   $ 854,392      $ 690,196   

Recognized income

     116,073        94,345   
  

 

 

   

 

 

 
     970,465        784,541   

Progress billings and advance payments

     (917,800     (765,451
  

 

 

   

 

 

 
   $ 52,665      $ 19,090   
  

 

 

   

 

 

 

Contract cost and recognized income not yet billed

   $ 75,713      $ 37,090   

Contract billings in excess of cost and recognized income

     (23,048     (18,000
  

 

 

   

 

 

 
   $ 52,665      $ 19,090   
  

 

 

   

 

 

 

Contract cost and recognized income not yet billed includes $9,683 and $1,367 at June 30, 2012 and December 31, 2011, respectively, on completed contracts.

The balances billed but not paid by customers pursuant to retainage provisions in certain contracts will be due upon completion of the contracts and acceptance by the customer. Based on the Company’s experience with similar contracts in recent years, the majority of the retention balances at each balance sheet date will be collected within the next twelve months. Retainage balances at June 30, 2012 and December 31, 2011, were approximately $17,167 and $22,328, respectively, and are included in accounts receivable.

 

4. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2012, by business segment, are detailed below:

 

      Goodwill      Impairment
Reserves
     Total, Net  

Utility T&D

        

Balance as of December 31, 2011

   $ 8,067       $ —         $ 8,067   

Impairment losses

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Balance as of June 30, 2012

   $ 8,067       $ —         $ 8,067   
  

 

 

    

 

 

    

 

 

 

The changes in the carrying amounts of intangible assets for the six months ended June 30, 2012 are detailed below:

 

     Customer
Relationships
    Trademark /
Tradename
    Non-compete
Agreements
    Technology     Total  

Balance as of December 31, 2011

   $ 162,707      $ 11,984      $ 550      $ 4,675      $ 179,916   

Amortization

     (6,643     (703     (111     (275     (7,732

Other

     —          97        —          —          97   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 30, 2012

   $ 156,064      $ 11,378      $ 439      $ 4,400      $ 172,281   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted Average Remaining Amortization Period

     11.8 yrs        7.9 yrs        2.0 yrs        8.0 yrs     
  

 

 

   

 

 

   

 

 

   

 

 

   

Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 5 to 15 years.

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

4. Goodwill and Other Intangible Assets (continued)

 

Estimated amortization expense for the remainder of 2012 and each of the subsequent five years and thereafter is as follows:

 

Fiscal year:

  

Remainder of 2012

   $ 7,819   

2013

     15,638   

2014

     15,528   

2015

     15,418   

2016

     15,418   

2017

     15,418   

Thereafter

     87,042   
  

 

 

 

Total amortization

   $ 172,281   
  

 

 

 

 

5. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities as of June 30, 2012 and December 31, 2011 were as follows:

 

     June 30,
2012
     December 31,
2011
 

Trade accounts payable

   $ 140,100       $ 94,331   

Accrued contract costs and related liabilities

     52,186         36,409   

Payroll and payroll liabilities

     50,707         40,294   

Accrued insurance

     27,483         25,786   

Other accrued liabilities

     28,812         24,737   
  

 

 

    

 

 

 

Total accounts payable and accrued liabilities

   $ 299,288       $ 221,557   
  

 

 

    

 

 

 

 

6. Long-term Debt

Long-term debt as of June 30, 2012 and December 31, 2011 was as follows:

 

     June 30,
2012
    December 31,
2011
 

Term Loan, net of unamortized discount of $4,308 and $7,138

   $ 124,863      $ 168,733   

Borrowings under Revolving Credit Facility

     59,357        59,357   

6.5% Senior Convertible Notes

     32,050        32,050   

Capital lease obligations

     4,980        6,464   

Other obligations

     6,697        2,190   
  

 

 

   

 

 

 

Total debt

     227,947        268,794   

Less: current portion

     (101,895     (34,441
  

 

 

   

 

 

 

Long-term debt, net

   $ 126,052      $ 234,353   
  

 

 

   

 

 

 

2010 Credit Facility

The Company has a credit agreement dated June 30, 2010 (the “2010 Credit Agreement”), among Willbros United States Holdings, Inc., a subsidiary of the Company (formerly known as Willbros USA, Inc.) as borrower, the Company and certain of its subsidiaries, as Guarantors, the lenders from time to time party thereto (the “Lenders”), Crédit Agricole Corporate and Investment Bank (“Crédit Agricole”), as Administrative Agent, Collateral Agent, Issuing Bank, Revolving Credit Facility Sole Lead Arranger, Sole Bookrunner and Participating Lender, UBS Securities LLC (“UBS”), as Syndication Agent, Natixis, The Bank of Nova Scotia and Capital One, N.A., as Co-Documentation Agents, and Crédit Agricole and UBS as Term Loan Facility Joint Lead Arrangers and Joint Bookrunners. The 2010 Credit Agreement consists of a four-year, $300,000 term loan facility (“Term Loan”) maturing on June 30, 2014 and a three-year revolving credit facility of $175,000 maturing on June 30, 2013 (the “Revolving Credit Facility” or the “2010 Credit Facility”).

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

6. Long Term Debt (continued)

 

The Revolving Credit Facility is available for letters of credit and for revolving loans, which may be used for working capital and general corporate purposes. 100 percent of the Revolving Credit Facility may be used to obtain letters of credit and revolving loans have a sublimit of $150,000. On March 4, 2011, as part of an amendment to the 2010 Credit Agreement, the Company agreed to limit its revolver borrowings to $25,000, with the exception of proceeds from revolving borrowings used to make any payments in respect of both the 2.75% Convertible Senior Notes (the “2.75% Notes”) and the 6.5% Senior Convertible Notes (the “6.5% Notes”), until its Maximum Total Leverage Ratio is 3.00 to 1.00 or less. This amendment did not change the limit on obtaining letters of credit.

During the six months ended June 30, 2012, the Company made payments of $46,700 against its Term Loan that resulted in the recognition of a $3,405 loss on early extinguishment of debt. These losses represent the write-off of unamortized Original Issue Discount and financing costs inclusive of early payment fees.

Interest payable under the 2010 Credit Agreement is determined by the loan type. As of June 30, 2012, the interest rate on the Term Loan (currently a Eurocurrency rate loan) was 9.5% and the interest rate on the Revolving Credit Facility (currently a base rate loan) was 4.2%. Interest payments on the Eurocurrency rate loans are payable in arrears on the last day of such interest period, and, in the case of interest periods of greater than three months, on each business day which occurs at three month intervals from the first day of such interest period. Interest payments on base rate loans are payable quarterly in arrears on the last business day of each calendar quarter.

The table below sets forth the primary covenants in the 2010 Credit Agreement and the status with respect to these covenants as of June 30, 2012.

 

     Covenants
Requirements
   Actual Ratios at
June 30, 2012

Maximum Total Leverage Ratio(1) (debt divided by Covenant EBITDA) should be less than:

   3.50 to 1    3.14

Minimum Interest Coverage Ratio (Covenant EBITDA divided by interest expense as defined in the 2010 Credit Agreement) should be greater than:

   2.75 to 1    3.25

 

(1) 

The Maximum Total Leverage Ratio decreases to 3.25 as of December 31, 2012.

The Maximum Total Leverage Ratio requirement decreased to 3.50 as of June 30, 2012 from 4.75 as of December 31, 2011. The Minimum Interest Coverage Ratio requirement increased to 2.75 as of June 30, 2012 from 2.00 as of December 31, 2011. Depending on its financial performance, the Company may be required to request amendments, or waivers for the primary covenants, dispose of assets, or obtain refinancing in future periods. There can be no assurance that the Company will be able to obtain amendments or waivers, complete asset sales, or negotiate agreeable refinancing terms should it become needed.

The 2010 Credit Agreement also includes customary affirmative and negative covenants, including:

 

   

Limitations on capital expenditures (greater of $70,000 or 25% of EBITDA).

 

   

Limitations on indebtedness.

 

   

Limitations on liens.

 

   

Limitations on certain asset sales and dispositions.

 

   

Limitations on certain acquisitions and asset purchases if certain liquidity levels are not maintained.

A default under the 2010 Credit Agreement may be triggered by events such as a failure to comply with financial covenants or other covenants under the 2010 Credit Agreement; a failure to make payments when due under the 2010 Credit Agreement; a failure to make payments when due in respect of, or a failure to perform obligations relating to, debt obligations in excess of $15,000; a change of control of the Company; and certain insolvency proceedings. A default under the 2010 Credit Agreement would permit Crédit Agricole and the

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

6. Long Term Debt (continued)

 

Lenders to terminate their commitment to make cash advances or issue letters of credit, require the immediate repayment of any outstanding cash advances with interest and require the cash collateralization of outstanding letter of credit obligations. As of June 30, 2012, the Company complied with all covenants under the 2010 Credit Agreement.

In addition, any “material adverse change” could restrict the Company’s ability to borrow under the 2010 Credit Agreement and could be deemed an event of default under the 2010 Credit Agreement. A “material adverse change” is defined as a change in the Company’s business, results of operations, properties or condition that could reasonably be expected to have a material adverse effect, as defined in the 2010 Credit Agreement.

Incurred unamortized debt issue costs associated with the 2010 Credit Agreement are $5,968 and $9,427 as of June 30, 2012 and December 31, 2011, respectively. These debt issue costs are included in “Other assets” at June 30, 2012. These costs will continue to be amortized to interest expense over the remaining terms of the Revolving Credit Facility and Term Loan, respectively.

6.5% Senior Convertible Notes

In December 2005, the Company completed a private placement of $65,000 aggregate principal amount of its 6.5% Notes, pursuant to a purchase agreement. During the first quarter of 2006, the initial purchasers of the 6.5% Notes exercised their options to purchase an additional $19,500 aggregate principal amount of the 6.5% Notes. The primary offering and the purchase option of the 6.5% Notes totaled $84,500. The 6.5% Notes are convertible into shares of the Company’s common stock at a conversion rate of 56.9606 shares of common stock per $1,000 principal amount of notes representing a conversion price of approximately $17.56 per share. The 6.5% Notes are general senior unsecured obligations. Interest is due semi-annually on June 15 and December 15.

The 6.5% Notes mature on December 15, 2012 unless the notes are repurchased or converted earlier. The Company does not have the right to redeem the 6.5% Notes prior to maturity. Upon maturity, the principal amount plus the accrued interest through the day prior to the maturity date is payable only in cash. The 6.5% Notes remain outstanding as of June 30, 2012 and continue to be subject to the terms and conditions of the Indenture governing the 6.5% Notes. An aggregate principal amount of $32,050 remains outstanding (net of $0 discount) and has been classified as current and included within “Notes payable and current portion of long-term debt” on the Consolidated Balance Sheet at June 30, 2012. The holders of the 6.5% Notes have the right to require the Company to purchase the 6.5% Notes for cash upon the occurrence of a Fundamental Change, as defined in the Indenture. In addition to the amounts described above, the Company will be required to pay a “make-whole premium” to the holders of the 6.5% Notes who elect to convert their notes into the Company’s common stock in connection with a Fundamental Change. The make-whole premium is payable in additional shares of common stock and is calculated based on a formula with the premium ranging from 0.0 percent to 28.0 percent depending on when the Fundamental Change occurs and the price of the Company’s stock at the time the Fundamental Change occurs. In the event of a default of $10,000 or more on any credit agreement, including the 2010 Credit Facility, a corresponding event of default would result under the 6.5% Notes.

On September 16, 2011, following receipt of the requisite consents of the holders of the 6.5% Notes, the Company entered into a fourth supplemental indenture (the “Fourth Supplemental Indenture”) to the Indenture for the 6.5% Notes. The Fourth Supplemental Indenture amended Section 6.13 of the Indenture to change the Maximum Total Leverage Ratio to 5.50 to 1.00 during the fiscal quarter ending March 31, 2012, 3.75 to 1.00 during the fiscal quarter ending June 30, 2012 and 3.50 to 1.00 during the fiscal quarters ending September 30, 2012 and December 31, 2012. The Fourth Supplemental Indenture is a debt incurrence test and the calculation of the Maximum Total Leverage Ratio mirrors the calculation in the 2010 Credit Agreement. As of June 30, 2012, the Company complied with the debt incurrence test under the Fourth Supplemental Indenture. In addition, the Fourth Supplemental Indenture conformed the definition of Consolidated EBITDA in the Indenture to the definition of Consolidated EBITDA in the 2010 Credit Agreement. Depending on its financial performance, the Company may be required to request amendments, or waivers for the debt incurrence covenant under the Indenture, dispose of assets, or obtain refinancing in future periods. There can be no assurance that the Company will be able to obtain amendments or waivers, complete asset sales, or negotiate agreeable refinancing terms should it become needed.

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

6. Long Term Debt (continued)

 

Fair Value of Debt

The estimated fair value of the Company’s debt instruments as of June 30, 2012 and December 31, 2011 was as follows:

 

     June 30,
2012
     December 31,
2011
 

Term Loan

   $ 131,419       $ 178,947   

Borrowings under Revolving Credit Facility

     59,357         59,357   

6.5% Senior Convertible Notes

     32,117         31,613   

Capital lease obligations

     4,980         6,464   

Other obligations

     6,697         2,190   
  

 

 

    

 

 

 

Total fair value of debt instruments

   $ 234,570       $ 278,571   
  

 

 

    

 

 

 

The fair values of the Company’s 6.5% Notes were estimated using market prices and are classified within Level 1 of the fair value hierarchy. The Term Loan, revolver borrowings, capital lease obligations and other obligations are classified within Level 2 of the fair value hierarchy. The fair values of these instruments have been estimated using discounted cash flow analysis based on the Company’s incremental borrowing rate for similar borrowing arrangements. A significant increase or decrease in the inputs could result in a directionally opposite change in the fair value of these instruments.

 

7. Retirement Benefits

The Company has defined contribution plans that are funded by participating employee contributions and the Company. The Company matches employee contributions, up to a maximum of five percent of salary, in the form of cash. Company contributions for the six months ended June 30, 2012 and 2011 were $4,201 and $2,081, respectively. Company contributions were suspended at the end of March 2011 and resumed in November 2011.

The Company is also subject to collective bargaining agreements with various unions. As a result, the Company participates with other companies in the unions’ multi-employer pension and other postretirement benefit plans. These plans cover all employees who are members of such unions. The Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Plan Amendments Act of 1980, imposes certain liabilities upon employers who are contributors to a multi-employer plan in the event of the employer’s withdrawal from, or upon termination of, such plan. The Company has no intention to withdraw from these plans. The plans do not maintain information on the net assets and actuarial present value of the plans’ unfunded vested benefits allocable to the Company, and the amounts, if any, for which the Company may be contingently liable, are not ascertainable at this time. Contributions to all union multi-employer pension and other postretirement plans by the Company for the six months ended June 30, 2012 and 2011 were $18,249 and $18,153 respectively.

 

8. Income Taxes

The effective tax rate on continuing operations was a negative 12.5 percent and 29.6 percent for the six months ended June 30, 2012 and 2011, respectively. Tax expense for discrete items for the six months ended June 30, 2012 is $2,914, which is primarily related to foreign tax settlements from 2006 through 2009, increases to foreign uncertain tax positions from 2004 through 2012, tax withholding on planned dividend distributions from foreign affiliates and for Texas Margins Tax. The Company has not recorded the benefit of current year losses in the United States. As of June 30, 2012, U.S. federal and state deferred tax assets continue to be covered by valuation allowances. The ultimate realization of deferred tax assets is dependent upon the generation of future U.S taxable income. The Company considers the impacts of reversing taxable temporary differences, future forecasted income and available tax planning strategies, when forecasting future taxable income and in evaluating whether deferred tax assets are more likely than not to be realized.

The effective tax rate on continuing operations was a negative 53.1 percent and a benefit of 223.3 percent for the three ended June 30, 2012 and June 30, 2011, respectively. Tax expense for discrete items for the three months ended June 30, 2012 is $1,517, which primarily relates to 2008 and 2009 foreign tax settlements, increases to uncertain tax positions for 2004 through 2012, tax withholding on planned dividend distributions from foreign affiliates and Texas Margins Tax.

In April 2011, the Company discontinued its strategy of reinvesting foreign earnings in foreign operations. This change in strategy continues through the June 30, 2012. Due to the current deficit in foreign earnings and profits, the Company does not anticipate a significant tax expense related to future repatriations of foreign earnings in the United States.

The Company expects that the statute of limitations will expire on an uncertain position within the next twelve months. Assuming the statute of limitations expires, the Company will release the reserve in the amount of $575.

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

9. Stockholders’ Equity

The information contained in this note pertains to continuing and discontinued operations.

Stock Ownership Plans

In May 1996, the Company established the Willbros Group, Inc. 1996 Stock Plan (the “1996 Plan”) with 1,125,000 shares of common stock authorized for issuance to provide for awards to key employees of the Company, and the Willbros Group, Inc. Director Stock Plan (the “Director Plan”) with 125,000 shares of common stock authorized for issuance to provide for the grant of stock options to non-employee directors. The number of shares authorized for issuance under the 1996 Plan, and the Director Plan, was increased to 4,825,000 and 225,000, respectively, by stockholder approval. The Director Plan expired August 16, 2006.

In 2006, the Company established the 2006 Director Restricted Stock Plan (the “2006 Director Plan”) with 50,000 shares authorized for issuance to grant shares of restricted stock and restricted stock rights to non-employee directors. The number of shares authorized for issuance under the 2006 Director Plan was increased in 2008 to 250,000 and in 2012 to 550,000, by stockholder approval. On May 26, 2010, the Company established the Willbros Group, Inc. 2010 Stock and Incentive Compensation Plan (the “2010 Plan”) with 2,100,000 shares of common stock authorized for issuance (increased in 2012 to 3,450,000 shares by stockholder approval) to provide for awards to key employees of the Company. All future grants of stock awards to key employees will be made through the 2010 Plan. As a result, the 1996 Plan was frozen, with the exception of normal vesting, forfeiture and other activity associated with awards previously granted under the 1996 Plan. At June 30, 2012, the 2010 Plan had 1,872,637 shares available for grant.

Restricted stock and restricted stock units or rights, also described collectively as restricted stock units (“RSUs”), and options granted to employees vest generally over a three to four year period. Options granted under the 2010 Plan expire 10 years subsequent to the grant date. Upon stock option exercise, common shares are issued from treasury stock. Options granted under the Director Plan are fully vested. Restricted stock and restricted stock rights granted under the 2006 Director Plan vest one year after the date of grant. At June 30, 2012, the 2006 Director Plan had 221,605 shares available for grant. For RSUs granted prior to March of 2009, certain provisions allow for accelerated vesting upon eligible retirement. Additionally, certain provisions allow for accelerated vesting in the event of involuntary termination not for cause or a change of control of the Company. Compensation expense recognized in relation to the accelerated vesting of RSUs due to retirement and separation from the Company, totaled $47 and $28 for the three months ended June 30, 2012 and 2011, respectively, and totaled $481 and $208 for the six months ended June 30, 2012 and 2011, respectively.

Stock-based compensation related to RSUs is recorded based on the Company’s stock price as of the grant date. Expense from stock-based compensation awards totaled $1,837 and $2,067 for the three months ended June 30, 2012 and 2011, respectively, and totaled $3,925 and $3,468 for the six months ended June 30, 2012 and 2011, respectively.

The Company determines fair value of stock options as of its grant date using the Black-Scholes valuation method. No options were granted during the six months ended June 30, 2012 and 2011.

The Company’s stock option activity and related information consist of:

 

     Shares      Weighted-
Average
Exercise
Price
 

Outstanding, January 1, 2012

     227,750       $ 15.28   

Granted

     —           —     

Exercised

     —           —     

Forfeited or expired

     —           —     
  

 

 

    

 

 

 

Outstanding June 30, 2012

     227,750       $ 15.28   
  

 

 

    

 

 

 

Exercisable, June 30, 2012

     227,750       $ 15.28   
  

 

 

    

 

 

 

As of June 30, 2012, the aggregate intrinsic value of stock options outstanding and stock options exercisable was $0. The weighted average remaining contractual term of outstanding options and exercisable options is 2.59 years and 2.59 years, respectively, at June 30, 2012. The total intrinsic value of options exercised was $0 and $0 during the six months ended June 30, 2012 and 2011, respectively. The total fair value of options vested during the six months ended June 30, 2012 and 2011 was $0 and $135, respectively.

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

9. Stockholders’ Equity (continued)

 

The Company’s RSU activity and related information for the six months ended June 30, 2012 consist of:

 

     Shares     Weighted-
Average Grant-
Date Fair Value
 

Outstanding, January 1, 2012

     1,143,011      $ 10.84   

Granted

     872,319        3.82   

Vested

     (477,321     10.74   

Forfeited

     (62,379     7.18   
  

 

 

   

 

 

 

Outstanding, June 30, 2012

     1,475,630      $ 6.87   
  

 

 

   

 

 

 

The total fair value of RSUs vested during the six months ended June 30, 2012 and 2011 was $5,128 and $4,292, respectively.

As of June 30, 2012, there was a total of $8,026 of unrecognized compensation cost, net of estimated forfeitures, related to all non-vested stock-based compensation arrangements granted under the Company’s stock ownership plans. That cost is expected to be recognized over a weighted-average period of 2.39 years.

 

10. Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is based on the weighted average number of shares outstanding during each period and the assumed exercise of potentially dilutive stock options and warrants and vesting of RSUs less the number of treasury shares assumed to be purchased from the proceeds using the average market price of the Company’s stock for each of the periods presented. The Company’s convertible notes are included in the calculation of diluted income per share under the “if-converted” method. Additionally, diluted income (loss) per share for continuing operations is calculated excluding the after-tax interest expense associated with the convertible notes since these notes are treated as if converted into common stock.

Basic and diluted income (loss) per common share from continuing operations for the three months and six months ended June 30, 2012 and 2011 are computed as follows:

 

     Three Months
Ended June 30,
    Six Months
Ended June 30,
 
     2012     2011     2012     2011  

Income (loss) from continuing operations

   $ (3,668   $ 7,558      $ (26,347   $ (29,603

Less: Income attributable to noncontrolling interest

     (328     (311     (672     (582
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations attributable to Willbros Group, Inc. (numerator for basic calculation)

     (3,996     7,247        (27,019     (30,185

Add: Interest and debt issuance costs associated with convertible notes

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations applicable to common shares (numerator for diluted calculation)

   $ (3,996   $ 7,247      $ (27,019   $ (30,185
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding for basic income (loss) per share

     47,994,987        47,437,024        47,888,192        47,376,507   

Weighted average number of potentially dilutive common shares outstanding

     —          339,415        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding for diluted income per share

     47,994,987        47,776,439        47,888,192        47,376,507   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) per common share from continuing operations:

        

Basic

   $ (0.08   $ 0.15      $ (0.56   $ (0.64
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.08   $ 0.15      $ (0.56   $ (0.64
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

10. Income (Loss) Per Share (continued)

 

The Company has excluded shares potentially issuable under the terms of use of the securities listed below from the computation of diluted income (loss) per share, as the effect would be anti-dilutive:

 

     Three Months
Ended June 30,
 
     2012      2011  

6.5% Senior Convertible Notes

     1,825,587         1,825,587   

Stock options

     227,750         177,750   

Warrants to purchase common stock(1)

     —           536,925   

Restricted stock and restricted stock rights

     343,224         —     
  

 

 

    

 

 

 
     2,396,561         2,540,262   
  

 

 

    

 

 

 

 

(1) 

In the fourth quarter of 2011, 536,925 warrants that were issued in conjunction with a private placement of equity in 2006, expired, unexercised.

 

11. Segment Information

The Company’s segments are comprised of strategic businesses that are defined by the industries or geographic regions they serve. Each is managed as an operation with well-established strategic directions and performance requirements. In January 2012, in an effort to manage the Company more effectively, Willbros changed its organizational structure such that its operating results will be reported by the following three segments: Oil & Gas, Utility T&D and Canada. As such, previously reported periods have been recast to conform to this new organization structure. Management evaluates the performance of each operating segment based on operating income. To support the segments, the Company has a focused corporate operation led by the executive management team, which, in addition to oversight and leadership, provides general, administrative and financing functions for the organization. The costs to provide these services are allocated, as are certain other corporate costs, to the three operating segments.

The following tables reflect the Company’s operations by reportable segment for the three months ended June 30, 2012 and 2011:

For the three months ended June 30, 2012:

 

     Oil & Gas      Utility T&D      Canada     Eliminations     Consolidated  

Revenue

   $ 291,406       $ 170,521       $ 37,356      $ (89   $ 499,194   

Operating expenses

     291,018         162,145         40,266        (89     493,340   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ 388       $ 8,376       $ (2,910   $ —          5,854   
  

 

 

    

 

 

    

 

 

   

 

 

   

Other expense

  

    (8,249

Provision for income taxes

  

    1,273   
            

 

 

 

Loss from continuing operations

  

    (3,668

Income from discontinued operations net of provision for income taxes

  

    7,376   
            

 

 

 

Net income

  

    3,708   

Less: Income attributable to noncontrolling interest

  

    (328
            

 

 

 

Net income attributable to Willbros Group, Inc.

  

  $ 3,380   
            

 

 

 

 

16


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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

11. Segment Information (continued)

 

For the three months ended June 30, 2011:

 

     Oil & Gas     Utility T&D      Canada      Eliminations     Consolidated  

Revenue

   $ 250,947      $ 159,112       $ 32,701       $ (86   $ 442,674   

Operating expenses

     244,335        152,556         29,396         (86     426,201   

Settlement of project dispute

     8,236        —           —           —          8,236   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Operating income (loss)

   $ (1,624   $ 6,556       $ 3,305       $ —          8,237   
  

 

 

   

 

 

    

 

 

    

 

 

   

Other expense

  

    (14,369

Benefit for income taxes

  

    (13,690
            

 

 

 

Income from continuing operations

  

    7,558   

Loss from discontinued operations net of benefit for income taxes

  

    (9,708
            

 

 

 

Net loss

  

    (2,150

Less: Income attributable to noncontrolling interest

  

    (311
            

 

 

 

Net loss attributable to Willbros Group, Inc.

  

  $ (2,461
            

 

 

 

The following tables reflect the Company’s operations by reportable segment for the six months ended June 30, 2012 and 2011:

For the six months ended June 30, 2012:

 

     Oil & Gas      Utility T&D     Canada     Eliminations     Consolidated  

Revenue

   $ 537,310       $ 309,834      $ 71,325      $ (185   $ 918,284   

Operating expenses

     536,076         309,865        77,286        (185     923,042   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ 1,234       $ (31   $ (5,961   $ —          (4,758
  

 

 

    

 

 

   

 

 

   

 

 

   

Other expense

  

    (18,664

Provision for income taxes

  

    2,925   
           

 

 

 

Loss from continuing operations

  

    (26,347

Income from discontinued operations net of provision for income taxes

  

    9,675   
           

 

 

 

Net loss

  

    (16,672

Less: Income attributable to noncontrolling interest

  

    (672
           

 

 

 

Net loss attributable to Willbros Group, Inc.

  

  $ (17,344
           

 

 

 

For the six months ended June 30, 2011:

 

     Oil & Gas     Utility T&D     Canada     Eliminations     Consolidated  

Revenue

   $ 417,019      $ 279,656      $ 69,957      $ (169   $ 766,463   

Operating expenses

     419,642        285,339        71,786        (169     776,598   

Changes in fair value of contingent earnout expenses

     —          —          —          —          (6,000

Settlement of project termination

     8,236        —          —          —          8,236   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

   $ (10,859   $ (5,683   $ (1,829   $ —          (12,371
  

 

 

   

 

 

   

 

 

   

 

 

   

Other expense

  

    (29,390

Benefit for income taxes

  

    (12,158
          

 

 

 

Loss from continuing operations

  

    (29,603

Loss from discontinued operations net of provision for income taxes

  

    (17,166
          

 

 

 

Net loss

  

    (46,769

Less: Income attributable to noncontrolling interest

  

    (582
          

 

 

 

Net loss attributable to Willbros Group, Inc.

  

  $ (47,351
          

 

 

 

 

17


Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

11. Segment Information (continued)

 

Total assets by segment as of June 30, 2012 and December 31, 2011 are presented below:

 

     June 30,
2012
     December 31,
2011
 

Oil & Gas

   $ 363,275       $ 263,899   

Utility T&D

     377,712         410,812   

Canada

     61,244         79,998   

Corporate

     66,570         79,054   
  

 

 

    

 

 

 

Total assets, continuing operations

   $ 868,801       $ 833,763   
  

 

 

    

 

 

 

 

12. Contingencies, Commitments and Other Circumstances

Contingencies

Resolution of criminal and regulatory matters

In May of 2008, the United States Department of Justice (the “DOJ”) filed an Information and Deferred Prosecution Agreement (“DPA”) in the United States District Court in Houston concluding its investigation into violations of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), by Willbros Group, Inc. and its subsidiary Willbros International, Inc. (“WII”). Also in May 2008, WGI reached a final settlement with the SEC to resolve its previously disclosed investigation of possible violations of the FCPA and possible violations of the Securities Act and the Securities Exchange Act of 1934, as amended. These investigations stemmed primarily from the Company’s former operations in Bolivia, Ecuador and Nigeria. The settlements together required the Company to pay a total of $32,300 in penalties and disgorgement, over approximately three years, plus post-judgment interest on $7,725, all of which has now been paid. As part of its agreement with the SEC, the Company is subject to a permanent injunction barring future violations of certain provisions of the federal securities laws. As to its agreement with the DOJ, both WGI and WII were subject to the DPA for a period of three years. Among its terms, the DPA provided that, in exchange for WGI’s and WII’s full compliance with the DPA, the DOJ would not continue a criminal prosecution of WGI and WII and with the successful completion of the DPA’s terms, the DOJ would move to dismiss the criminal investigation.

As provided for in the DPA, in 2009, the Company retained a government-approved independent monitor, at the Company’s expense, for a two and one-half year period, who reported to the DOJ on the Company’s compliance with the FCPA and other applicable laws. During the monitorship, the Company provided the monitor with access to information, documents, records, facilities and employees and the monitor filed three written reports with the DOJ. In the reports, the monitor made numerous findings and recommendations to the Company with respect to the improvement of its internal controls and policies and procedures for detecting and preventing violations of applicable anti-corruption laws, and the Company made significant efforts to implement the recommendations.

In the third and final report issued on March 2, 2012, the monitor reviewed the significant changes in the Company since the occurrence of the events leading to filing of the criminal information and the DPA, as well as the Company’s progress in implementing the monitor’s recommendations in the first and second reports. The monitor concluded the third report by certifying that the anti-bribery compliance program of Willbros is appropriately designed and implemented to ensure compliance with the FCPA and other applicable anti-corruption laws. This certification lead to the DOJ filing its motion to dismiss the criminal information and the court’s signing the order of dismissal, with prejudice, on April 2, 2012. The dismissal with prejudice means that the Company may no longer be prosecuted for the offenses listed in the criminal information.

Failure by the Company to abide by the FCPA or other laws could result in prosecution and other regulatory sanctions.

Silver Eagle

Construction and Turnaround Services, LLC (“CTS”) a subsidiary of the Company, has current uncollected invoices totaling $5,525 from Silver Eagle Refining, Inc. (“Silver Eagle”) on a construction and engineering support contract entered into in January 2011. Silver Eagle paid all of CTS’ invoices on the project until July 28, 2011, but has made only one payment after that date. The contract is cost-reimbursable, with labor hours being reimbursable at agreed rates and subcontractor and material costs being reimbursable at cost plus agreed markups.

The contract provides that Silver Eagle has ten days from receipt to dispute an invoice, failing which Silver Eagle will be deemed to have waived its right to withhold payment. No such dispute has ever been timely communicated to CTS.

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

12. Contingencies, Commitments and Other Circumstances (continued)

 

On August 26, 2011, CTS filed a mechanic’s lien on Silver Eagle’s refinery for the full amount of its claim and further, on August 31, 2011, filed an arbitration action against Silver Eagle. Subsequently, CTS filed an action in Utah State Court to foreclose on its mechanic lien. This action is stayed until the arbitration proceedings are completed.

A three-party arbitration panel has been selected and the Company expects the arbitration hearing to occur later this year.

The Company believes its lien rights provide substantial protection in the event Silver Eagle is unable to meet its obligations.

The Company believes that its performance of the project fully conforms to all contractual requirements and that the arbitration proceedings will result in an award in CTS’ favor for the full amount of the outstanding invoices. The Company further believes that any collection risk is mitigated by its lien rights. Accordingly, at June 30, 2012 and December 31, 2011, the Company has not recorded an allowance for doubtful accounts against the outstanding receivable.

Other

In addition to the matters discussed above and in Note 14 – Discontinuance of Operations, Held for Sale Operations and Asset Disposals, the Company is party to a number of other legal proceedings. Management believes that the nature and number of these proceedings are typical for a firm of similar size engaged in a similar type of business and that none of these proceedings is material to the Company’s consolidated results of operations, financial position or cash flows.

Commitments

From time to time, the Company enters into commercial commitments, usually in the form of commercial and standby letters of credit, surety bonds and financial guarantees. Contracts with the Company’s customers may require the Company to secure letters of credit or surety bonds with regard to the Company’s performance of contracted services. In such cases, the commitments can be called upon in the event of failure to perform contracted services. Likewise, contracts may allow the Company to issue letters of credit or surety bonds in lieu of contract retention provisions, where the client withholds a percentage of the contract value until project completion or expiration of a warranty period. Retention commitments can be called upon in the event of warranty or project completion issues, as prescribed in the contracts. At June 30, 2012, the Company had approximately $48,213 of outstanding letters of credit, all of which related to continuing operations. This amount represents the maximum amount of payments the Company could be required to make if these letters of credit are drawn upon. Additionally, the Company issues surety bonds customarily required by commercial terms on construction projects. At June 30, 2012, the Company had bonds outstanding, primarily performance bonds, with a face value at $509,368 related to continuing operations. This amount represents the bond penalty amount of future payments the Company could be required to make if the Company fails to perform its obligations under such contracts. The performance bonds do not have a stated expiration date; rather, each is released when the contract is accepted by the owner. The Company’s maximum exposure as it relates to the value of the bonds outstanding is lowered on each bonded project as the cost to complete is reduced. As of June 30, 2012, no liability has been recognized for letters of credit or surety bonds.

Other Circumstances

Operations outside the United States may be subject to certain risks, which ordinarily would not be expected to exist in the United States, including foreign currency restrictions; extreme exchange rate fluctuations; expropriation of assets; civil uprisings, riots, and war; unanticipated taxes including income taxes, excise duties, import taxes, export taxes, sales taxes or other governmental assessments; availability of suitable personnel and equipment; termination of existing contracts and leases; government instability and legal systems of decrees, laws, regulations, interpretations and court decisions which are not always fully developed and which may be retroactively applied. Management is not presently aware of any events of the type described in the countries in which it operates that would have a material effect on the financial statements, and no such events have been provided for in the accompanying Condensed Consolidated Financial Statements.

Based upon the advice of local advisors in the various work countries concerning the interpretation of the laws, practices and customs of the countries in which the Company operates, management believes the Company follows the current practices in those countries and as applicable under the FCPA. However, because of the nature of these potential risks, there can be no assurance that the Company may not be adversely affected by them in the future.

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

12. Contingencies, Commitments and Other Circumstances (continued)

 

The Company insures substantially all of its equipment in countries outside the United States against certain political risks and terrorism through political risk insurance coverage. The Company has the usual liability of contractors for the completion of contracts and the warranty of its work. Where work is performed through a joint venture, the Company also has possible liability for the contract completion and warranty responsibilities of its joint venture partners. In addition, the Company acts as prime contractor on a majority of the projects it undertakes and is normally responsible for the performance of the entire project, including subcontract work. Management is not aware of any material exposure related thereto which has not been provided for in the accompanying Condensed Consolidated Financial Statements.

The Company attempts to manage contract risk by implementing a standard contracting philosophy to minimize liabilities assumed in the agreements with the Company’s clients. With the acquisitions the Company has made in the last few years, however, there may be contracts or master service agreements in place that do not meet the Company’s current contracting standards. While the Company has made efforts to improve its contractual terms with its clients, this process takes time to implement and the Company is not always successful in achieving improvements. The Company also attempts to mitigate the risk by maintaining primary and excess insurance, of certain specified limits, in the event a loss was to ensue.

See Note 14 – Discontinuance of Operations, Held for Sale Operations and Asset Disposals for discussion of commitments and contingencies associated with Discontinued Operations.

 

13. Fair Value Measurements

The FASB’s standard on fair value measurements defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

Fair Value Hierarchy

The FASB’s standard on fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This standard establishes three levels of inputs that may be used to measure fair value:

 

Level 1     Quoted prices in active markets for identical assets or liabilities.
Level 2     Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities.
Level 3     Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, notes payable, long-term debt and interest rate contracts. The fair value estimates of the Company’s financial instruments have been determined using available market information and appropriate valuation methodologies. All of the Company’s cash and cash equivalents are categorized as Level 1 in accordance with the fair value hierarchy, as all values are based on unadjusted quoted prices for identical assets in an active market that the company has the ability to access.

 

20


Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

13. Fair Value Measurements (continued)

 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company measures its financial assets and financial liabilities at fair value on a recurring basis. The fair value of these financial assets and liabilities was determined using the following inputs as of June 30, 2012:

 

     Total      Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs (Level 2)
     Significant
Other
Unobservable
Inputs (Level 3)
 

Liabilities:

           

Interest rate swaps

   $ 1,930       $ —         $ 1,930       $ —     

Contingent Earnout Liability

In connection with the acquisition of InfrastruX Group, Inc. (“InfrastruX”) on July 1, 2010, InfrastruX shareholders were eligible to receive earnout payments of up to $125,000 if certain EBITDA targets were met during 2010 and 2011. These payments would have been paid to former InfrastruX shareholders who qualified as accredited investors as defined by the SEC in a combination of cash and non-convertible, non-voting preferred stock of the Company, pursuant to the terms within the Merger Agreement, and to non-accredited former InfrastruX shareholders and former holders of InfrastruX RSUs in the form of cash.

As a result, the Company estimated the fair value of the contingent earnout liability based on its probability assessment of InfrastruX’s EBITDA achievements during the earnout period. In developing these estimates, the Company considered its revenue and EBITDA projections, its historical results, and general macro-economic environment and industry trends. This fair value measurement was based on significant revenue and EBITDA inputs not observed in the market, which represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value.

In accordance with the FASB’s standard on business combinations, the Company reviewed the contingent earnout liability on a quarterly basis in order to determine its fair value. Changes in the fair value of the liability were recorded within operating expenses in the period in which the change was made.

The following table represents a reconciliation of the change in the fair value measurement of the contingent earnout liability for the three and six months ended June 30, 2012 and 2011:

 

     Three Months Ended
June 30,
 
     2012      2011  

Beginning balance

   $ —         $ 4,000   

Change in fair value of contingent earnout liability included in operating expenses

     —           —     
  

 

 

    

 

 

 

Ending balance

   $ —         $ 4,000   
  

 

 

    

 

 

 

 

     Six Months Ended
June 30,
 
     2012      2011  

Beginning balance

   $ —         $ 10,000   

Change in fair value of contingent earnout liability included in operating expenses

     —           (6,000
  

 

 

    

 

 

 

Ending balance

   $ —         $ 4,000   
  

 

 

    

 

 

 

The Company recorded a $6,000 adjustment to the estimated fair value of the contingent earnout liability during the six months ended June 30, 2011 due to a decrease in the probability-weighted estimated achievement of InfrastruX’s EBITDA targets as set forth in the Merger Agreement. The remaining contingent liability of $4,000 was written off in the fourth quarter of 2011.

 

21


Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

13. Fair Value Measurements (continued)

 

Hedging Arrangements

The Company attempts to negotiate contracts that provide for payment in U.S. dollars, but it may be required to take all or a portion of payment under a contract in another currency. To mitigate non-U.S. currency exchange risk, the Company seeks to match anticipated non-U.S. currency revenue with expenses in the same currency whenever possible. To the extent it is unable to match non-U.S. currency revenue with expenses in the same currency, the Company may use forward contracts, options or other common hedging techniques in the same non-U.S. currencies. The Company had no derivative financial instruments to hedge currency risk at June 30, 2012 or December 31, 2011.

Interest Rate Swaps

In conjunction with the 2010 Credit Agreement, the Company is subject to hedging arrangements to fix or otherwise limit the interest cost of the Term Loan and the Revolving Credit Facility. The Company is subject to interest rate risk on its debt and investment of cash and cash equivalents arising in the normal course of business, as the Company does not engage in speculative trading strategies.

The Company currently has two interest rate swap agreements outstanding for a total notional amount of $150,000 in order to hedge changes in the variable rate interest expense on $150,000 of the Term Loan and the Revolving Credit Facility LIBOR indexed debt. Under each swap agreement, the Company receives interest at a rate based on the maximum of either three-month LIBOR or 2% and pays interest at a fixed rate of 2.685%, effective March 28, 2012 through June 30, 2014. The swap agreements are designated and qualify as cash flow hedging instruments, with the effective portion of the swaps’ change in fair value recorded in Other Comprehensive Income (“OCI”). The interest rate swaps are deemed to be highly effective hedges, and resulted in no gain or loss recorded for hedge ineffectiveness in the Condensed Consolidated Statements of Operations. Amounts in OCI are reported in interest expense when the hedged interest payments on the underlying debt are recognized. The fair value of each swap agreement was determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates. Amounts of OCI relating to the interest rate swaps expected to be recognized in interest expense in the coming 12 months total $982.

Interest Rate Caps

In September 2010, the Company entered into two interest rate cap agreements for notional amounts of $75,000 each in order to limit its exposure to an increase of the interest rate above 3 percent, effective September 28, 2010 through March 28, 2012. Total premiums of $98 were paid for the interest rate cap agreements. Through June 1, 2011, the cap agreements were designated and qualified as cash flow hedging instruments, with the effective portion of the caps’ change in fair value recorded in OCI. Amounts in OCI and the premiums paid for the caps were reported in interest expense as the hedged interest payments on the underlying debt were recognized during the period when the caps were designated as cash flow hedges. Through June 1, 2011, the interest rate caps were deemed to be highly effective, resulting in an immaterial amount of hedge ineffectiveness recorded. On June 1, 2011, the caps were de-designated due the interest rate being fixed on the underlying debt through the remaining term of the caps; changes in the value of the caps subsequent to that date were reported in earnings. The amount reported in earnings for the undesignated interest rate caps for the six months ended June 30, 2012 and 2011 is immaterial.

 

    

Liability Derivatives

 
    

June 30, 2012

    

December 31, 2011

 
    

Balance Sheet

Location

   Fair Value     

Balance Sheet

Location

   Fair Value  

Interest rate contracts - swaps

   Other current liabilities    $ 923       Other current liabilities    $ 671   

Interest rate contracts - swaps

   Other long-term liabilities      942       Other long-term liabilities      1,173   

Interest rate contracts - swaps

   Accounts payable and accrued liabilities      65       Accounts payable and accrued liabilities      —     
     

 

 

       

 

 

 

Total derivatives

      $ 1,930          $ 1,844   
     

 

 

       

 

 

 

 

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Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

13. Fair Value Measurements (continued)

 

 

For the Three Months Ended June 30,

 

Derivatives in ASC 815 Cash Flow Hedging Relationships

  Amount of Gain
(Loss) Recognized
in OCI on Derivative
(Effective Portion)
   

Location of Gain

or (Loss) Reclassified

from

Accumulated

OCI into Income
(Effective

Portion)

  Amount of Loss
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
   

Location of
Gain or (Loss)
Recognized in
Income on Derivative
(Ineffective Portion)

  Amount of Gain or
(Loss) Recognized
in Income on
Derivative
(Ineffective Portion)
 
    2012     2011         2012     2011         2012     2011  

Interest rate contracts

  $ (107   $ (1,232  

Interest

expense, net

  $ (258   $ (2  

Interest

expense, net

  $ —        $ —     
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

 

Total

  $ (107   $ (1,232     $ (258   $ (2     $ —        $ —     
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

 

 

For the Six Months Ended June 30,

 

Derivatives in ASC 815 Cash Flow Hedging Relationships

  Amount of Gain
(Loss) Recognized
in OCI on Derivative
(Effective Portion)
   

Location of Gain

or (Loss) Reclassified

from

Accumulated

OCI into Income
(Effective

Portion)

  Amount of Loss
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
   

Location of

Gain or (Loss)
Recognized in

Income on

Derivative

(Ineffective

Portion)

  Amount of Gain or
(Loss) Recognized
in Income on
Derivative
(Ineffective Portion)
 
    2012     2011         2012     2011         2012     2011  

Interest rate contracts

  $ (288   $ (1,119  

Interest

expense, net

  $ (322   $ (2  

Interest

expense, net

  $ —        $ —     
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

 

Total

  $ (288   $ (1,119     $ (322   $ (2     $ —        $ —     
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

 

 

14. Discontinuance of Operations, Held for Sale Operations and Asset Disposals

Strategic Decisions

In 2010, the Company recognized that its investment in establishing a presence in Libya, while resulting in contract awards, had not yielded any notice to proceed on these awards. As a result, the Company exited this market due to the project delays coupled with the identification of other more attractive opportunities.

In April 2011, as part of its ongoing strategic evaluation of operations, the Company made the decision to exit the Canadian cross-country pipeline construction market and dispose of the related business.

In October 2011, as part of its ongoing strategic evaluation of operations, the Company approved the sale of InterCon, within the Utility T&D segment.

Nigeria Assets and Nigeria-Based Operations

Litigation and Settlement

On March 29, 2012, the Company and Willbros Global Holdings, Inc., formerly known as Willbros Group, Inc., a Panama corporation (“WGHI”), which is now a subsidiary of the Company, entered into a settlement agreement (the “Settlement Agreement”) with West African Gas Pipeline Company Limited (“WAPCo”) to settle a lawsuit filed against WGHI by WAPCo in 2010 under English law in the London High Court in which WAPCo was seeking $273,650 plus costs and interest. The lawsuit was based upon a parent company guarantee issued by WGHI to WAPCo in connection with a Nigerian project undertaken by a WGHI subsidiary that was later sold to a third party. WAPCo alleged that the third party defaulted in the performance of the project and thereafter brought the lawsuit against WGHI under the parent company guarantee for its claimed losses.

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

14. Discontinuance of Operations, Held for Sale Operations and Asset Disposals (continued)

 

The Settlement Agreement provides that WGHI will make payments to WAPCo over a period of six years totaling $55,500 as follows:

During 2012:

$4,000 on March 31;

$4,000 on June 30;

$4,000 on September 30; and

$2,000 on December 31.

During 2013:

$2,500 on June 30; and

$2,500 on December 31.

During 2014:

$3,750 on June 30; and

$3,750 on December 31.

During 2015:

$4,000 on June 30; and

$4,000 on December 31.

During 2016:

$5,000 on June 30; and

$5,000 on December 31.

During 2017:

$5,500 on June 30; and

$5,500 on December 31.

The Settlement Agreement also provides that the payments due in the years 2015, 2016 and 2017 may be accelerated and become payable in whole or in part within 21 days after filing of the Company’s third quarter results in 2014 in the event the Company achieves a leverage ratio of debt to EBITDA of 2.25 to 1.00 or less or certain other metrics (the “Acceleration Metrics”). In the event the Acceleration Metrics applied during 2014 do not result in payment of the entire outstanding sum, the Acceleration Metrics are applied again in each subsequent year and may result in the acceleration of all or some of the remaining payments in each of those years. The Company timely paid the $4,000 payments that became due on March 31, and June 30, 2012.

WGI and WGHI are jointly and severally liable for payment of the amount due to WAPCo under the Settlement Agreement. WGHI and WGI are subject to a penalty rate of interest and collection efforts in the London court in the event they fail to meet any of the payments required by the Settlement Agreement. Under the Settlement Agreement, WGHI forgoes any right to pursue third parties related to the Nigerian project unless they first assert a claim against WGHI.

The Company currently has no employees working in Nigeria and does not intend to return to Nigeria.

Business Disposals

On October 11, 2011, the Company completed the sale of all assets and operations of InterCon, which was determined to be a non-strategic subsidiary within the Utility T&D segment. The Company received total compensation of $18,749 in cash and $250 in the form of an escrow deposit from the buyer, to be paid in full on or before October 11, 2012. As a result of this transaction, the Company recorded a loss on sale of $2,381 to discontinued operations, net of tax.

Results of Discontinued Operations

The major classes of revenue and income (losses) with respect to the Discontinued Operations are as follows:

 

     Three Months Ended June 30, 2012  
     Canada      WAPCo/
Other
    Libya      Total  

Contract revenue

   $ 1,734       $ —        $ —         $ 1,734   

Operating income (loss)

     9,107         (337     —           8,770   

Income (loss) before income taxes

     9,024         (337     —           8,687   

Provision for income taxes

     1,311         —          —           1,311   

Net income (loss)

   $ 7,713       $ (337   $ —         $ 7,376   

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

14. Discontinuance of Operations, Held for Sale Operations and Asset Disposals (continued)

 

     Three Months Ended June 30, 2011  
     Canada     WAPCo /
Other
    Libya     InterCon      Total  

Contract revenue

   $ 9,039      $ —        $ —        $ 15,662       $ 24,701   

Operating income (loss)

     (9,172     (4,431     (258     359         (13,502

Income (loss) before income taxes

     (8,884     (4,431     (258     356         (13,217

Provision (benefit) for income taxes

     (3,637     —          —          128         (3,509

Net income (loss)

   $ (5,247   $ (4,431   $ (258   $ 228       $ (9,708

 

     Six Months Ended June 30, 2012  
     Canada      WAPCo /
Other
    Libya      Total  

Contract revenue

   $ 30,763       $ —        $ —         $ 30,763   

Operating income (loss)

     12,488         (4,194     —           8,294   

Income (loss) before income taxes

     13,555         (1,389     —           12,166   

Provision for income taxes

     2,491         —          —           2,491   

Net income (loss)

   $ 11,064       $ (1,389   $ —         $ 9,675   

 

     Six Months Ended June 30, 2011  
     Canada     WAPCo /
Other
    Libya     InterCon     Total  

Contract revenue

   $ 92,478      $ —        $ —        $ 20,759      $ 113,237   

Operating loss

     (13,306     (5,609     (296     (3,587     (22,798

Loss before income taxes

     (13,001     (5,609     (296     (3,590     (22,496

Benefit for income taxes

     (4,049     —          —          (1,281     (5,330

Net loss

   $ (8,952   $ (5,609   $ (296   $ (2,309   $ (17,166

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

14. Discontinuance of Operations, Held for Sale Operations and Asset Disposals (continued)

 

Condensed balance sheets with respect to the Discontinued Operations are as follows:

 

     June 30, 2012  
     Canada      WAPCo /
Other
    Libya      Total  

Total assets

   $   —         $ —        $ —         $ —     

Total liabilities

     —           47,500        —           47,500   

Net assets (liabilities) of discontinued operations

   $ —         $ (47,500   $ —         $ (47,500

 

     December 31, 2011  
     Canada      WAPCo /
Other
    Libya     Total  

Total assets

   $ 27,917       $ 1      $ 90      $ 28,008   

Total liabilities

     11,782         57,715        (7     69,490   

Net assets (liabilities) of discontinued operations

   $ 16,135       $ (57,714   $ 97      $ (41,482

 

15. Condensed Consolidating Guarantor Financial Statements

Willbros Group, Inc. (the “Parent”) and its 100% owned U.S. subsidiaries (the “Guarantors”) may fully and unconditionally guarantee, on a joint and several basis, the obligations of the Company under debt securities registered under a universal shelf registration statement on Form S-3 filed by the Company with the SEC. As of June 30, 2012, none of these debt securities have been issued. There are currently no restrictions on the ability of the Guarantors to transfer funds to the Parent in the form of cash dividends or advances. Condensed consolidating financial information for a) the Parent, b) the Guarantors and c) all other direct and indirect subsidiaries (the “Non-Guarantors”) as of June 30, 2012 and December 31, 2011 and for each of the three months and six months ended June 30, 2012 and 2011 follows.

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

15. Condensed Consolidating Guarantor Financial Statements (continued)

 

CONDENSED CONSOLIDATING BALANCE SHEET

 

 

     June 30, 2012  
     Parent      Guarantors      Non-
Guarantors
    Eliminations     Consolidated  

ASSETS

            

Current assets:

            

Cash and cash equivalents

   $ —         $ 22,091       $ 16,390      $ —        $ 38,481   

Accounts receivable, net

     —           279,698         42.065        —          321,763   

Contract cost and recognized income not yet billed

     —           68,160         7,553        —          75,713   

Prepaid expenses and other assets

     6,851         58,838         7,910        (19,324     54,275   

Parts and supplies inventories

     —           5,991         4,574        —          10,565   

Deferred income taxes

     8,269         —           1,310        (6,400     3,179   

Receivables from affiliated companies

     137,524         43,989         —          (181,513     —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total current assets

     152,644         478,767         79,802        (207,237     503,976   

Property, plant and equipment, net

     —           134,140         20,757        —          154,897   

Deferred income taxes

     95,044         —           —          (95,044     —     

Goodwill

     —           8,067         —          —          8,067   

Other intangible assets, net

     —           172,281         —          —          172,281   

Investment in subsidiaries

     22,050         —           —          (22,050     —     

Other assets

     87         28,415         1,078        —          29,580   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total assets

   $ 269,825       $ 821,670       $ 101,637      $ (324,331   $ 868,801   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

            

Current liabilities:

            

Accounts payable and accrued liabilities

   $ 142       $ 263,332       $ 35,814      $ —        $ 299,288   

Contract billings in excess of cost and recognized income

     —           21,557         1,491        —          23,048   

Current portion of capital lease obligations

     —           2,140         —          —          2,140   

Notes payable and current portion of long-term debt

     32,050         8,348         —          —          40,398   

Short-term borrowings under revolving credit facility

     —           59,357         —          —          59,357   

Current portion of settlement obligation of discontinued operations

     —           —           8,500        —          8,500   

Accrued income taxes

     19,124         —           5,116        (19,324     4,916   

Other current liabilities

     207         11,178         —          (6,400     4,985   

Payables to affiliated companies

     —           52,326         129,187        (181,513     —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total current liabilities

     51,523         418,238         180,108        (207,237     442,632   

Long-term debt

     —           123,212         —          —          123,212   

Capital lease obligations

     —           2,840         —          —          2,840   

Long-term portion of settlement obligation of discontinued operations

     —           —           39,000        —          39,000   

Long-term liabilities for unrecognized tax benefits

     1,898         —           2,468        —          4,366   

Deferred income taxes

     —           96,725         2,998        (95,044     4,679   

Other long-term liabilities

     —           34,958         710        —          35,668   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities

     53,421         675,973         225,284        (302,281     652,397   

Stockholders’ equity:

            

Total stockholders’ equity

     216,404         145,697         (123,647     (22,050     216,404   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 269,825       $ 821,670       $ 101,637      $ (324,331   $ 868,801   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

15. Condensed Consolidating Guarantor Financial Statements (continued)

 

CONDENSED CONSOLIDATING BALANCE SHEET

 

 

     December 31, 2011  
     Parent      Guarantors      Non-
Guarantors
    Eliminations     Consolidated  

ASSETS

            

Current assets:

            

Cash and cash equivalents

   $ 188       $ 27,885       $ 30,613      $ —        $ 58,686   

Accounts receivable, net

     109         249,126         52,280        —          301,515   

Contract cost and recognized income not yet billed

     —           36,443         647        —          37,090   

Prepaid expenses and other assets

     14,960         21,094         7,502        (427     43,129   

Parts and supplies inventories

     —           7,553         4,340        —          11,893   

Deferred income taxes

     3,001         8,351         (1,156     (8,351     1,845   

Assets held for sale

     —           —           32,758        —          32,758   

Receivables from affiliated companies

     444,106         77,068         —          (521,174     —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total current assets

     462,364         427,520         126,984        (529,952     486,916   

Property, plant and equipment, net

     —           147,969         18,506        —          166,475   

Deferred income taxes

     103,326         —           33        (103,359     —     

Goodwill

     —           8,067         —          —          8,067   

Other intangible assets, net

     —           179,916         —          —          179,916   

Investment in subsidiaries

     29,860         —           —          (29,860     —     

Other assets

     189         19,519         689        —          20,397   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total assets

   $ 595,739       $ 782,991       $ 146,212      $ (663,171   $ 861,771   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

            

Current liabilities:

            

Accounts payable and accrued liabilities

   $ 57       $ 195,087       $ 26,413      $ —        $ 221,557   

Contract billings in excess of cost and recognized income

     —           16,145         1,855        —          18,000   

Current portion of capital lease obligations

     —           2,822         (4     —          2,818   

Notes payable and current portion of long-term debt

     32,050         —           —          (427     31,623   

Current portion of settlement obligation of discontinued operations

     —           —           14,000        —          14,000   

Accrued income taxes

     11,325         —           2,009        (8,351     4,983   

Liabilities held for sale

     —           —           13,990        —          13,990   

Other current liabilities

     207         1,105         6,163        —          7,475   

Payables to affiliated companies

     318,683         37,039         165,452        (521,174     —     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total current liabilities

     362,322         252,198         229,878        (529,952     314,446   

Long-term debt

     —           230,707         —          —          230,707   

Capital lease obligations

     —           3,648         (2     —          3,646   

Long-term portion of settlement obligation of discontinued operations

     —           —           41,500        —          41,500   

Contingent earnout

     —           —           —          —          —     

Long-term liabilities for unrecognized tax benefits

     1,839         —           2,191        —          4,030   

Deferred income taxes

     —           105,095         1,258        (103,359     2,994   

Other long-term liabilities

     —           31,934         936        —          32,870   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities

     364,161         623,582         275,761        (633,311     630,193   

Stockholders’ equity:

            

Total stockholders’ equity

     231,578         159,409         (129,549     (29,860     231,578   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 595,739       $ 782,991       $ 146,212      $ (663,171   $ 861,771   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

15. Condensed Consolidating Guarantor Financial Statements (continued)

 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 

 

     Six Months Ended June 30, 2012  
     Parent     Guarantors     Non-
Guarantors
    Eliminations     Consolidated  

Contract revenue

   $ —        $ 803,889      $ 114,395      $ —        $ 918,284   

Operating expenses:

          

Contract

     —          732,455        109,784        —          842,239   

Amortization of intangibles

     —          7,732        —          —          7,732   

General and administrative

     1,553        66,387        4,995        —          72,935   

Other charges

     —          136        —          —          136   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (1,553     (2,821     (384     —          (4,758

Other income (expense):

          

Equity in income (loss) of consolidated subsidiaries

     (7,810     —          (672     8,482        —     

Interest expense, net

     (1,128     (13,914     24        —          (15,018

Loss on early extinguishment of debt

     —          (3,405     —          —          (3,405

Other, net

     2,892        (1,529     (1,604     —          (241
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (7,599     (21,669     (2,636     8,482        (23,422

Provision (benefit) for income taxes

     9,745        (7,957     1,137        —          2,925   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (17,344     (13,712     (3,773     8,482        (26,347

Income from discontinued operations net of benefit for income taxes

     —          —          9,675        —          9,675   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (17,344     (13,712     5,902        8,482        (16,672

Less: Income attributable to noncontrolling interest

     —          —          —          (672     (672
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Willbros Group, Inc.

   $ (17,344   $ (13,712   $ 5,902      $ 7,810      $ (17,344
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

15. Condensed Consolidating Guarantor Financial Statements (continued)

 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 

 

     Six Months Ended June 30, 2011  
     Parent     Guarantors     Non-
Guarantors
    Eliminations     Consolidated  

Contract revenue

   $ —        $ 659,643      $ 106,820      $ —        $ 766,463   

Operating expenses:

          

Contract

     —          593,988        106,418        —          700,406   

Amortization of intangibles

     —          7,834        —          —          7,834   

General and administrative

     11,260        49,878        7,133        —          68,271   

Settlement of project dispute

     —          8,236        —          —          8,236   

Changes in fair value of contingent earnout liability

     —          (6,000     —          —          (6,000

Other charges

     —          87        —          —          87   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (11,260     5,620        (6,731     —          (12,371

Other income (expense):

          

Equity in loss of consolidated subsidiaries

     (46,745     —          (582     47,327        —     

Interest expense, net

     (2,136     (23,173     63        —          (25,246

Loss on early extinguishment of debt

     —          (4,124     —          —          (4,124

Other, net

     76        (4,145     4,049        —          (20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (60,065     (25,822     (3,201     47,327        (41,761

Provision (benefit) for income taxes

     (12,714     1,686        (1,130     —          (12,158
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (47,351     (27,508     (2,071     47,327        (29,603

Income from discontinued operations net of benefit for income taxes

     —          (1,158     (16,008     —          (17,166
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (47,351     (28,666     (18,079     47,327        (46,769

Less: Income attributable to noncontrolling interest

     —          —          —          (582     (582
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Willbros Group, Inc.

   $ (47,351   $ (28,666   $ (18,079   $ 46,745      $ (47,351
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

30


Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

15. Condensed Consolidating Guarantor Financial Statements (continued)

 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 

 

     Three Months Ended June 30, 2012  
     Parent     Guarantors     Non-
Guarantors
    Eliminations     Consolidated  

Contract revenue

   $ —        $ 440,765      $ 58,429      $ —        $ 499,194   

Operating expenses:

          

Contract

     —          396,374        58,908        —          455,282   

Amortization of intangibles

     —          3,812        —          —          3,812   

General and administrative

     (5,293     40,241        (736     —          34,212   

Other charges

     —          34        —          —          34   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     5,293        304        257        —          5,854   

Other income (expense):

          

Equity in income (loss) of consolidated subsidiaries

     (3,802     —          (328     4,130        —     

Interest expense, net

     (564     (6,548     (12     —          (7,124

Loss on early extinguishment of debt

     —          (1,149     —          —          (1,149

Other, net

     2,892        (1,683     (1,185     —          24   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     3,819        (9,076     (1,268     4,130        (2,395

Provision for income taxes

     439        —          834        —          1,273   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     3,380        (9,076     (2,102     4,130        (3,668

Income from discontinued operations net of benefit for income taxes

     —          —          7,376        —          7,376   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     3,380        (9,076     5,274        4,130        3,708   

Less: Income attributable to noncontrolling interest

     —          —          —          (328     (328
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Willbros Group, Inc.

   $ 3,380      $ (9,076   $ 5,274      $ 3,802      $ 3,380   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

31


Table of Contents

WILLBROS GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

(Unaudited)

 

15. Condensed Consolidating Guarantor Financial Statements (continued)

 

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

 

 

     Three Months Ended June 30, 2011  
     Parent     Guarantors     Non-Guarantors     Eliminations     Consolidated  

Contract revenue

   $ —        $ 390,171      $ 52,503      $ —        $ 442,674   

Operating expenses:

          

Contract

     —          338,500        54,321        —          392,821   

Amortization of intangibles

     —          3,917        —          —          3,917   

General and administrative

     4,448        28,151        (3,078     —          29,521   

Settlement of project dispute

     —          8,236        —          —          8,236   

Other charges

     —          (58     —          —          (58
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (4,448     11,425        1,260        —          8,237   

Other income (expense):

          

Equity in loss of consolidated subsidiaries

     (6,107     —          (311     6,418        —     

Interest expense, net

     (521     (9,942     17        —          (10,446

Loss on early extinguishment of debt

     —          (4,124     —          —          (4,124

Other, net

     76        (3,945     4,070        —          201   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     (11,000     (6,586     5,036        6,418        (6,132

Benefit for income taxes

     (8,539     (2,960     (2,191     —          (13,690
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (2,461     (3,626     7,227        6,418        7,558   

Income (loss) from discontinued operations net of benefit for income taxes

     —          1,379        (11,087     —          (9,708
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (2,461     (2,247     (3,860    </