UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007

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

FOR THE TRANSITION PERIOD FROM                      TO                     .

Complete Production Services, Inc.

Delaware		72-1503959
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

11700 Old Katy Road,
Suite 300
Houston, Texas		77079
(Address of principal executive offices)		(Zip Code)

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 þ No o

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

Large accelerated filer o       Accelerated filer o       Non-accelerated filer þ

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

Number of shares of the Common Stock of the registrant outstanding as of November 1, 2007: 73,000,074  

 

 

INDEX TO FINANCIAL STATEMENTS

Complete Production Services, Inc.

		Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006			3
Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 30, 2007 and 2006			4
Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2007			5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			36
Item 4. Controls and Procedures.			36
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.			37
Item 1A. Risk Factors.			37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			37
Item 3. Defaults Upon Senior Securities.			37
Item 4. Submission of Matters to a Vote of Security Holders.			38
Item 5. Other Information.			38
Item 6. Exhibits.			38
Signature			39
First Supplemental Indenture
Second Amendment to Credit Agreement
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Balance Sheets

		2007				2006
		(In thousands, except
		share data)
ASSETS
Current assets:
Cash and cash equivalents		$	7,346			$	19,874
Trade accounts receivable, net			317,129				301,764
Inventory, net			62,751				43,930
Prepaid expenses			13,600				24,998
Other current assets			2,976				74
Total current assets			403,802				390,640
Property, plant and equipment, net			975,058				771,703
Intangible assets, net of accumulated amortization of $5,999 and $3,623, respectively			11,151				7,765
Deferred financing costs, net of accumulated amortization of $2,099 and $547, respectively			14,440				15,729
Goodwill			570,493				552,671
Other long-term assets			2,781				1,816
Total assets		$	1,977,725			$	1,740,324
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt		$	866			$	1,064
Accounts payable			57,287				71,370
Accrued liabilities			65,883				57,280
Accrued interest			17,649				4,085
Notes payable			—				17,087
Taxes payable			—				10,519
Total current liabilities			141,685				161,405
Long-term debt			820,549				750,577
Deferred income taxes			116,341				90,805
Minority interest			2,507				2,316
Total liabilities			1,081,082				1,005,103
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 72,273,867 (2006 — 71,418,473) issued			723				714
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding			—				—
Additional paid-in capital			577,599				563,006
Retained earnings			288,712				155,971
Treasury stock, 35,570 shares at cost			(202	)			(202	)
Accumulated other comprehensive income			29,811				15,732
Total stockholders’ equity			896,643				735,221
Total liabilities and stockholders’ equity		$	1,977,725			$	1,740,324

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Operations

		Quarter Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
		(In thousands, except per								(In thousands, except per
		share data)								share data)
Revenue:
Service		$	377,736			$	287,991			$	1,111,176			$	757,530
Product			35,187				34,043				119,529				91,386
			412,923				322,034				1,230,705				848,916
Service expenses			223,557				160,695				631,434				435,529
Product expenses			27,015				25,213				92,480				67,038
Selling, general and administrative expenses			50,258				42,887				156,172				115,085
Depreciation and amortization			35,396				21,005				97,858				53,611
Income from continuing operations before interest, taxes and minority interest			76,697				72,234				252,761				177,653
Interest expense			16,676				9,142				47,365				29,312
Interest income			(484	)			(256	)			(1,012	)			(1,278	)
Income from continuing operations before taxes and minority interest			60,505				63,348				206,408				149,619
Taxes			19,180				23,800				73,894				56,411
Income from continuing operations before minority interest			41,325				39,548				132,514				93,208
Minority interest			(283	)			(121	)			(227	)			23
Income from continuing operations			41,608				39,669				132,741				93,185
Income from discontinued operations (net of tax expense of $0, $169, $0 and $911, respectively)			—				570				—				2,321
Net income		$	41,608			$	40,239			$	132,741			$	95,506
Earnings per share information:
Continuing operations		$	0.58			$	0.57			$	1.85			$	1.45
Discontinued operations		$	—			$	0.01			$	—			$	0.04
Basic earnings per share		$	0.58			$	0.58			$	1.85			$	1.49
Continuing operations		$	0.57			$	0.55			$	1.81			$	1.40
Discontinued operations		$	—			$	0.01			$	—			$	0.03
Diluted earnings per share		$	0.57			$	0.56			$	1.81			$	1.43
Weighted average shares:
Basic			72,191				69,816				71,873				64,216
Diluted			73,495				71,738				73,296				66,587

Consolidated Statements of Comprehensive Income
Quarters and Nine Months Ended September 30, 2007 and 2006 (unaudited)

		Quarter Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
		(In thousands)								(In thousands)
Net income		$	41,608			$	40,239			$	132,741			$	95,506
Change in cumulative translation adjustment			6,227				419				14,079				3,381
Comprehensive income		$	47,835			$	40,658			$	146,820			$	98,887

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statement of Stockholders’ Equity

																						Accumulated
										Additional												Other
		Number				Common				Paid-in				Retained				Treasury				Comprehensive
		of Shares				Stock				Capital				Earnings				Stock				Income				Total
		(In thousands, except share data)
Balance at December 31, 2006			71,418,473			$	714			$	563,006			$	155,971			$	(202	)		$	15,732			$	735,221
Net income			—				—				—				132,741				—				—				132,741
Cumulative translation adjustment			—				—				—				—				—				14,079				14,079
Issuance of common stock:
Exercise of stock options			773,786				8				3,404				—				—				—				3,412
Expense related to employee stock options			—				—				3,110				—				—				—				3,110
Excess tax benefit from share-based compensation			—				—				5,790				—				—				—				5,790
Vested restricted stock			81,608				1				(1	)			—				—				—				—
Amortization of non-vested restricted stock			—				—				2,290				—				—				—				2,290
Balance at September 30, 2007			72,273,867			$	723			$	577,599			$	288,712			$	(202	)		$	29,811			$	896,643

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Cash Flows

		Nine Months Ended
		September 30,
		2007				2006
Cash provided by (used in):		(In thousands)
Operating activities:
Net income		$	132,741			$	95,506
Items not affecting cash:
Depreciation and amortization			97,858				53,978
Deferred income taxes			10,345				6,308
Minority interest			(227	)			23
Excess tax benefit from share-based compensation			(5,790	)			(461	)
Non-cash compensation expense			5,400				2,950
Other			6,721				2,033
Changes in operating assets and liabilities:
Accounts receivable			(15,030	)			(82,986	)
Inventory			(16,532	)			(9,326	)
Prepaid expense and other current assets			11,734				11,149
Accounts payable			(19,829	)			13,764
Accrued liabilities and other			32,757				17,759
Net cash provided by operating activities			240,148				110,697
Investing activities:
Business acquisitions, net of cash acquired			(40,616	)			(168,656	)
Additions to property, plant and equipment			(274,759	)			(215,204	)
Purchase of short-term securities			—				(165,000	)
Proceeds from sale of short-term securities			—				165,000
Proceeds from disposal of capital assets/other			4,935				3,333
Net cash used in investing activities			(310,440	)			(380,527	)
Financing activities:
Issuances of long-term debt			247,307				311,796
Repayments of long-term debt			(177,533	)			(319,961	)
Repayment of notes payable			(17,078	)			(13,659	)
Proceeds from issuances of common stock			3,412				290,087
Deferred financing costs			(200	)			—
Excess tax benefit from share-based compensation			5,790				461
Net cash provided by financing activities			61,698				268,724
Effect of exchange rate changes on cash			(3,934	)			(975	)
Change in cash and cash equivalents			(12,528	)			(2,081	)
Cash and cash equivalents, beginning of period			19,874				11,405
Cash and cash equivalents, end of period		$	7,346			$	9,324
Supplemental cash flow information:
Cash paid for interest, net of interest capitalized		$	31,755			$	28,250
Cash paid for taxes		$	56,177			$	27,873
Significant non-cash investing and financing activities:
Common stock issued for acquisitions		$	—			$	27,359
Debt acquired in acquisition		$	—			$	534

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Notes to Consolidated Financial Statements

1. General:

(a) Nature of operations:

     Complete Production Services, Inc. is a provider of specialized services and products focused on developing hydrocarbon reserves, reducing operating costs and enhancing production for oil and gas companies. Complete Production Services, Inc. focuses its operations on basins within North America and manages its operations from regional field service facilities located throughout the U.S. Rocky Mountain region, Texas, Oklahoma, Louisiana, Arkansas, Kansas, western Canada, Mexico and Southeast Asia.

     References to “Complete”, the “Company”, “we”, “our” and similar phrases are used throughout this Quarterly Report on Form 10-Q and relate collectively to Complete Production Services, Inc. and its consolidated affiliates.

     On September 12, 2005, we completed the combination (the “Combination”) of Complete Energy Services, Inc. (“CES”), Integrated Production Services, Inc. (“IPS”) and I.E. Miller Services, Inc. (“IEM”) pursuant to which the CES and IEM shareholders exchanged all of their common stock for common stock of IPS. The Combination was accounted for using the continuity of interests method of accounting, which yields results similar to the pooling of interest method. Subsequent to the Combination, IPS changed its name to Complete Production Services, Inc.

     On April 20, 2006, we entered into an underwriting agreement in connection with our initial public offering and became subject to the reporting requirements of the Securities Exchange Act of 1934. On April 21, 2006, our common stock began trading on the New York Stock Exchange under the symbol “CPX”. On April 26, 2006, we completed our initial public offering. See Note 8, Stockholders’ Equity.

(b) Basis of presentation:

     The unaudited interim consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the financial position of Complete as of September 30, 2007 and the statements of operations and the statements of comprehensive income for the quarters and nine months ended September 30, 2007 and 2006, as well as the statement of stockholders’ equity for the nine months ended September 30, 2007 and the statements of cash flows for the nine months ended September 30, 2007 and 2006. Certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2006. We believe that these financial statements contain all adjustments necessary so that they are not misleading.

     In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we review our estimates, including those related to impairment of long-lived assets and goodwill, contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

     The results of operations for interim periods are not necessarily indicative of the results of operations that could be expected for the full year. Certain reclassifications have been made to 2006 amounts in order to present these results on a comparable basis with amounts for 2007.

     On January 1, 2007, we began a self-insurance program to pay claims associated with health care benefits provided to certain of our employees in the United States. Pursuant to this program, we have purchased a stop-loss insurance policy from an insurance company. Our accounting policy for this self-insurance program is to accrue expense based upon the number of employees enrolled in the plan at pre-

determined rates. As claims are processed and paid, we compare our claims history to our expected claims in order to estimate incurred but not reported claims. If our estimate of claims incurred but not reported exceeds our current accrual, we record additional expense during the current period.

     In August 2006, our Board of Directors authorized and committed to a plan to sell certain manufacturing and production enhancement product operations of a subsidiary located in Alberta, Canada, which included certain assets located in south Texas. Accordingly, we have revised our statement of operations for the quarter and nine months ended September 30, 2006 to classify these results as discontinued operations. See Note 10, Discontinued Operations.

2. Business combinations:

Acquisitions During the Nine Months Ended September 30, 2007:

     During the nine months ended September 30, 2007, we acquired substantially all the assets or membership interests in four oilfield service businesses for $40,737 in cash, resulting in goodwill of $16,104. Several of these acquisitions are subject to a final working capital adjustment.

     (a) On January 4, 2007, we acquired substantially all of the assets of a company located in LaSalle, Colorado which provides frac tank rental and fresh water hauling services to customers in the Wattenburg Field of the DJ Basin, which supplements our fluid handling and rental business in the Rocky Mountain region.

     (b) On February 28, 2007, we acquired substantially all of the assets of a company located in Greeley, Colorado which provides fluid handling and fresh frac water heating services to customers in the Wattenburg Field of the DJ Basin, which also supplements our fluid handling business in the Rocky Mountain region.

     (c) On April 1, 2007, we acquired substantially all of the assets of a company located in Borger, Texas which provides fluid handling and disposal services to customers in the Texas panhandle. We believe this acquisition complements certain operations that we acquired in 2006 within the Texas panhandle area and broadens our ability to provide fluid handling and disposal services throughout the Mid-continent region.

     (d) On June 8, 2007, we acquired all the membership interests in a business located in Rangely, Colorado which provides rig workover and roustabout services to customers in the Rangely Weber Sand Unit and northern Piceance Basin area. This acquisition expands our geographic reach in the northern Piceance Basin, expands our workover rig capabilities and provides a beneficial customer relationship.

     We accounted for these acquisitions using the purchase method of accounting, whereby the purchase price was allocated to the fair value of net assets acquired, including intangibles and property, plant and equipment at depreciated replacement costs, with the excess recorded as goodwill. Results for each of these acquisitions were included in our accounts and results of operations since the date of acquisition, and goodwill associated with these acquisitions was allocated entirely to the completion and production services business segment. No pro forma disclosure for these acquisitions is provided as we do not deem these acquisitions to be significant to our consolidated operations for the quarter or nine months ended September 30, 2007. The following table summarizes our preliminary purchase price allocations for these acquisitions as of September 30, 2007, each of which is yet to be finalized:

Net assets acquired:
Property, plant and equipment		$	21,833
Non-cash working capital			956
Intangible assets			1,844
Goodwill			16,104
Net assets acquired		$	40,737
Consideration:
Cash, net of cash and cash equivalents acquired		$	40,737

     The purchase price of each of the businesses that we acquire is negotiated as an arm’s length transaction with the seller. We generally evaluate acquisition targets based on an earnings multiple approach, whereby

we consider precedent transactions which we have undertaken and those of others in our industry. To determine the fair value of assets acquired, we generally retain third-party consultants to perform valuation techniques related to identifiable intangible assets and to evaluate property, plant and equipment acquired based upon, at minimum, the replacement cost of the assets. Working capital items are deemed to be acquired at fair market value.

3. Accounts receivable:

		September 30,				December 31,
		2007				2006
Trade accounts receivable		$	260,963			$	260,733
Related party receivables			10,847				12,478
Unbilled revenue			40,819				27,096
Other receivables			9,107				3,888
			321,736				304,195
Allowance for doubtful accounts			4,607				2,431
		$	317,129			$	301,764

4. Inventory:

		September 30,				December 31,
		2007				2006
Finished goods		$	49,753			$	38,877
Manufacturing parts, materials and other			15,138				6,772
			64,891				45,649
Inventory reserves			2,140				1,719
		$	62,751			$	43,930

5. Property, plant and equipment:

						Accumulated
September 30, 2007		Cost				Depreciation				Net Book Value
Land		$	8,274			$	—			$	8,274
Building			16,363				1,504				14,859
Field equipment			975,585				214,310				761,275
Vehicles			80,181				20,727				59,454
Office furniture and computers			12,092				4,362				7,730
Leasehold improvements			16,834				1,894				14,940
Construction in progress			108,526				—				108,526
		$	1,217,855			$	242,797			$	975,058

						Accumulated
December 31, 2006		Cost				Depreciation				Net Book Value
Land		$	5,816			$	—			$	5,816
Building			7,140				840				6,300
Field equipment			746,314				128,553				617,761
Vehicles			60,505				14,152				46,353
Office furniture and computers			9,891				2,712				7,179
Leasehold improvements			12,895				1,164				11,731
Construction in progress			76,563				—				76,563
		$	919,124			$	147,421			$	771,703

     Construction in progress at September 30, 2007 and December 31, 2006 primarily included progress payments to vendors for equipment to be delivered in future periods and component parts to be used in final assembly of operating equipment, which in all cases were not yet placed into service at the time. For the quarter and nine months ended September 30, 2007, we recorded capitalized interest of $891 and $2,781, respectively, related to assets that we are constructing for internal use and amounts paid to vendors under progress payments for assets that are being constructed on our behalf.

6. Notes payable:

     On January 5, 2006, we entered into a note agreement with our insurance broker to finance our annual insurance premiums for the policy year beginning December 1, 2005 through November 30, 2006. As of December 31, 2005, we recorded a note payable totaling $14,584 and an offsetting prepaid asset which included a broker’s fee of $600. We amortized the prepaid asset to expense over the policy term, and incurred finance charges totaling $268 as interest expense related to this arrangement during 2006. This policy was renewed for the policy term beginning December 1, 2006 through November 30, 2007, pursuant to which we recorded a note payable and an offsetting prepaid asset totaling $17,087 as of December 31, 2006, which includes a broker’s fee of approximately $600. This note payable was paid in full during the nine months ended September 30, 2007.

7. Long-term debt:

     The following table summarizes long-term debt as of September 30, 2007 and December 31, 2006:

		2007				2006
U.S. revolving credit facility (a)		$	153,679			$	78,668
Canadian revolving credit facility (a)			12,992				17,575
8.0% senior notes (b)			650,000				650,000
Subordinated seller notes			3,450				3,450
Capital leases and other			1,294				1,948
			821,415				751,641
Less: current maturities of long-term debt and capital leases			866				1,064
		$	820,549			$	750,577

	(a)		We maintain a credit agreement related to a syndicated senior secured credit facility (the “Credit Agreement”). The Credit Agreement was initially comprised of a $310,000 U.S. revolving credit facility that matures in December 2011, and a $40,000 Canadian revolving credit facility (with Integrated Production Services, Ltd., one of our wholly-owned subsidiaries, as the borrower thereof) that matures in December 2011. The Credit Agreement is secured by substantially all of our assets. On June 29, 2007, we amended our Credit Agreement in conjunction with the restructuring of certain legal entities for tax purposes with no material changes to the financial provisions or covenants. On October 19, 2007, we amended our Credit Agreement to increase the borrowing capacity of the U.S. revolving portion of the facility from $310,000 to $360,000. See Note 16, Subsequent Events.
			Subject to certain limitations, we have the ability to elect how interest under the Credit Agreement will be computed. Interest under the Credit Agreement may be determined by reference to (1) the London Inter-bank Offered Rate, or LIBOR, plus an applicable margin between 0.75% and 1.75% per annum (with the applicable margin depending upon our ratio of total debt to EBITDA (as defined in the agreement)), or (2) the Base Rate (i.e., the higher of the Canadian bank’s prime rate or the CDOR rate plus 1.0%, in the case of Canadian loans or the greater of the prime rate and the federal funds rate plus 0.5%, in the case of U.S. loans), plus an applicable margin between 0.00% and 0.75% per annum. If an event of default exists under the Credit Agreement, advances will bear interest at the then-applicable rate plus 2%. Interest is payable quarterly for base rate loans and at the end of applicable interest periods for LIBOR loans, except that if the interest period for a LIBOR loan is six months, interest will be paid at the end of each three-month period.
			The Credit Agreement also contains various covenants that limit our and our subsidiaries’ ability to: (1) grant certain liens; (2) make certain loans and investments; (3) make capital expenditures; (4) make distributions; (5) make acquisitions; (6) enter into hedging transactions; (7) merge or consolidate; or (8) engage in certain asset dispositions. Additionally, the Credit Agreement limits our and our subsidiaries’ ability to incur additional indebtedness if: (1) we are not in pro forma compliance with all terms under the Credit Agreement, (2) certain covenants of the additional indebtedness are more onerous than the covenants set forth in the Credit Agreement, or (3) the additional indebtedness provides for amortization, mandatory prepayment or repurchases of senior unsecured or subordinated debt during the duration of the Credit Agreement with certain exceptions. The Credit Agreement also limits additional secured debt to 10% of our consolidated net worth (i.e., the excess of our assets over the sum of our liabilities plus the minority interests). The Credit Agreement contains covenants which, among other things, require us and our subsidiaries, on a consolidated basis, to maintain specified ratios or conditions as follows (with

			such ratios tested at the end of each fiscal quarter): (1) total debt to EBITDA, as defined in the Credit Agreement, of not more than 3.0 to 1.0; and (2) EBITDA, as defined, to total interest expense of not less than 3.0 to 1.0. We were in compliance with all debt covenants under the amended and restated Credit Agreement as of September 30, 2007.
			Under the Credit Agreement, we are permitted to prepay our borrowings.
			All of the obligations under the U.S. portion of the Credit Agreement are secured by first priority liens on substantially all of the assets of our U.S. subsidiaries as well as a pledge of approximately 66% of the stock of our first-tier foreign subsidiaries. Additionally, all of the obligations under the U.S. portion of the Credit Agreement are guaranteed by substantially all of our U.S. subsidiaries. All of the obligations under the Canadian portions of the Credit Agreement are secured by first priority liens on substantially all of the assets of our subsidiaries. Additionally, all of the obligations under the Canadian portions of the Credit Agreement are guaranteed by us as well as certain of our subsidiaries.
			If an event of default exists under the Credit Agreement, as defined, the lenders may accelerate the maturity of the obligations outstanding under the Credit Agreement and exercise other rights and remedies. While an event of default is continuing, advances will bear interest at the then-applicable rate plus 2%. For a description of an event of default, see our Credit Agreement which was filed with the Securities and Exchange Commission on December 8, 2006 as an exhibit to a Current Report on Form 8-K.
			Borrowings under the U.S. revolving facility bore interest at rates ranging from 6.61% to 8.00% and the Canadian revolving credit facility bore interest at 6.50% at September 30, 2007. For the nine months ended September 30, 2007, the weighted average interest rate on average borrowings under the amended Credit Agreement was 6.74%. There were letters of credit outstanding under the U.S. revolving portion of the facility totaling $20,966, which reduced the available borrowing capacity as of September 30, 2007. We incurred fees calculated at 1.25% of the total amount outstanding under letter of credit arrangements through September 30, 2007. Our available borrowing capacity under the U.S. and Canadian revolving facilities at September 30, 2007 was $135,355 and $27,008 respectively.
	(b)		On December 6, 2006, we issued 8.0% senior notes with a face value of $650,000 through a private placement of debt. These notes mature in 10 years, on December 15, 2016, and require semi-annual interest payments, paid in arrears and calculated based on an annual rate of 8.0%, on June 15 and December 15 of each year, commencing on June 15, 2007. There was no discount or premium associated with the issuance of these notes. The senior notes are guaranteed on a senior unsecured basis by all of our current domestic subsidiaries. The senior notes have covenants which, among other things: (1) limit the amount of additional indebtedness we can incur; (2) limit restricted payments such as a dividend; (3) limit our ability to incur liens or encumbrances; (4) limit our ability to purchase, transfer or dispose of significant assets; (5) purchase or redeem stock or subordinated debt; (6) enter into transactions with affiliates; (7) merge with or into other companies or transfer all or substantially all our assets; and (8) limit our ability to enter into sale and leaseback transactions. We have the option to redeem all or part of these notes on or after December 15, 2011. We can redeem 35% of these notes on or before December 15, 2009 using the proceeds of certain equity offerings. Additionally, we may redeem some or all of the notes prior to December 15, 2011 at a price equal to 100% of the principal amount of the notes plus a make-whole premium. On June 15, 2007, we paid interest associated with these senior notes totaling $27,300.
			Pursuant to a registration rights agreement with the holders of our 8.0% senior notes, on June 1, 2007, we filed a registration statement on Form S-4 with the Securities and Exchange Commission which enabled these holders to exchange their notes for publicly registered notes with identical terms. These holders exchanged 100% of these notes for publicly traded notes on July 25, 2007.
			On August 28, 2007, we entered into a supplement to the indenture governing our 8.0% senior notes, whereby additional domestic subsidiaries became guarantors under the indenture.

8. Stockholders’ equity (unaudited):

(a) Initial Public Offering:

     On April 26, 2006, we sold 13,000,000 shares of our common stock, $.01 par value per share, in our initial public offering. These shares were offered to the public at $24.00 per share, and we recorded proceeds of approximately $292,500 after underwriter fees. Our stock began trading on the New York Stock Exchange on April 21, 2006.

     The following table summarizes the pro forma impact of our initial public offering on earnings per share for the nine months ended September 30, 2006, assuming the 13,000,000 shares had been issued on January 1, 2006. No pro forma adjustments have been made to net income as reported.

		Nine Months Ended
		September 30, 2006
Net income as reported		$	95,506
Basic earnings per share, as reported:
Continuing operations		$	1.45
Discontinued operations		$	0.04
		$	1.49
Basic earnings per share, pro forma:
Continuing operations		$	1.34
Discontinued operations		$	0.04
		$	1.38
Diluted earnings per share, as reported:
Continuing operations		$	1.40
Discontinued operations		$	0.03
		$	1.43
Diluted earnings per share, pro forma:
Continuing operations		$	1.30
Discontinued operations		$	0.03
		$	1.33

(b) Stock-based Compensation—Stock Options:

     We maintain option plans under which stock-based compensation could be granted to employees, officers and directors. Stock option grants under these plans have an exercise price based on the fair value of our common stock on the date of grant. These stock options may be exercised over a five or ten-year period and generally a third of the options vest on each of the first three anniversaries from the grant date. Upon exercise of stock options, we issue our common stock.

     We adopted Statement of Financial Accounting Standards (“SFAS”) No. 123R on January 1, 2006. This pronouncement requires that we measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, with limited exceptions, by using an option pricing model to determine fair value. For employee stock options granted prior to September 30, 2005, the date of our initial filing with the Securities and Exchange Commission, we use the intrinsic value method prescribed by Accounting Principles Board (“APB”) No. 25, as required by SFAS No. 123R. Under this method, we do not recognize compensation cost for stock-based compensation grants that have an exercise price equal to the fair value of the stock on the date of grant. For employee stock options granted between October 1, 2005 and December 31, 2005, we applied the modified prospective transition method to record expense associated with these stock-based awards, as further described in our Annual Report on Form 10-K. For grants of stock-based compensation on or after January 1, 2006, we applied the prospective transition method under SFAS No. 123R, whereby we recognize expense associated with new awards of stock-based compensation ratably, as determined using a Black-Scholes pricing model, over the expected term of the award.

     On January 24, 2007, the Compensation Committee of our Board of Directors authorized the grant of 877,000 stock options and 56,800 shares of non-vested restricted shares, effective January 31, 2007, for issuance to our officers and key members of our management team. Additional shares were authorized for issuance to certain members of senior management and for our directors, pursuant to their annual award of

stock options and restricted stock. Of the authorized stock options, we granted 6,500 and 925,700 options to purchase shares of our common stock during the quarter and nine months ended September 30, 2007, respectively, at an exercise price ranging from $17.67 to $27.11, which represented the fair market value of the shares on the applicable date of grant. Each of these stock options vests over a three-year term at 33 1/3% per year. The fair value of these stock option grants was determined by applying a Black-Scholes option pricing model based on the following assumptions:

		Nine Months
		Ended
		September 30,
Assumptions:		2007
Risk-free rate		4.16% to 4.98%
Expected term (in years)			2.2 to 5.1
Volatility		29% to 38%
Calculated fair value per option		$4.21 to $9.33

     We completed our initial public offering in April 2006. Therefore, we did not have sufficient historical market data in order to determine the volatility of our common stock. In accordance with the provisions of SFAS No. 123R, we analyzed the market data of peer companies and calculated an average volatility factor based upon changes in the closing price of these companies’ common stock for a three-year period. This volatility factor was then applied as a variable to determine the fair value of our stock options granted during the nine months ended September 30, 2007.

     We projected a rate of stock option forfeitures based upon historical experience and management assumptions related to the expected term of the options. After adjusting for these forfeitures, we expect to recognize expense totaling $5,115 over the vesting period of these 2007 stock option grants. For the quarter and nine months ended September 30, 2007, we have recognized expense related to these stock option grants totaling $426 and $1,078, respectively, which represents a reduction of net income before taxes and minority interest. The impact on net income for the quarter and nine months ended September 30, 2007 was a reduction of $291 and $692, respectively, resulting in no impact on diluted earnings per share for the quarter ended September 30, 2007 and a reduction of $0.01 per diluted share for the nine months ended September 30, 2007. The unrecognized compensation costs related to the non-vested portion of these awards was $4,037 as of September 30, 2007 and will be recognized over the applicable remaining vesting periods.

     For the quarters ended September 30, 2007 and 2006, we recognized compensation expense associated with all stock option awards totaling $851 and $604, respectively, resulting in a reduction of net income of $581 and $377, respectively, and a $0.01 reduction in diluted earnings per share for the quarters ended September 30, 2007 and 2006. For the nine months ended September 30, 2007 and 2006, we recognized compensation expense associated with all stock option awards totaling $3,110 and $1,092, respectively, resulting in a reduction of net income of $1,997 and $680, respectively, and a $0.03 and $0.01 reduction in diluted earnings per share for the nine months ended September 30, 2007 and 2006, respectively. Total unrecognized compensation expense associated with outstanding stock option awards at September 30, 2007 was $9,418, or $5,839 net of tax.

     The following tables provide a roll forward of stock options from December 31, 2006 to September 30, 2007 and a summary of stock options outstanding by exercise price range at September 30, 2007:

		Options Outstanding
						Weighted
						Average
						Exercise
		Number				Price
Balance at December 31, 2006			3,864,560			$	9.67
Granted			925,700			$	20.19
Exercised			(773,787	)		$	4.32
Cancelled			(117,737	)		$	16.73
Balance at September 30, 2007			3,898,736			$	13.02

		Options Outstanding												Options Exercisable
						Weighted				Weighted								Weighted				Weighted
		Outstanding at				Average				Average				Exercisable at				Average				Average
		September 30,				Remaining				Exercise				September 30,				Remaining				Exercise
Range of Exercise Price		2007				Life (months)				Price				2007				Life (months)				Price
$2.00			269,300				20			$	2.00				264,369				20			$	2.00
$4.48 – $4.80			609,800				24			$	4.70				349,206				22			$	4.65
$5.00			280,429				46			$	5.00				90,621				27			$	5.00
$6.69			622,666				90			$	6.69				313,825				90			$	6.69
$11.66			448,137				96			$	11.66				138,292				96			$	11.66
$17.60 – $19.87			850,700				112			$	19.83				—				—				—
$22.55 – $24.07			772,704				103			$	23.96				246,848				103			$	23.97
$26.26 – $27.11			45,000				107			$	26.35				—				—				—
			3,898,736				80			$	13.02				1,403,161				59			$	8.72

The total intrinsic value of stock options exercised during the quarter and nine months ended September 30, 2007 was $2,238 and $14,341, respectively. The total intrinsic value of all outstanding stock options at September 30, 2007 was $29,079, of which $16,505 pertained to vested stock options.

(b) Non-vested Restricted Stock:

     We recognize compensation expense associated with grants of non-vested restricted stock which is determined based on the fair value of the shares on the date of grant, and recorded ratably over the applicable vesting period. At September 30, 2007, amounts not yet recognized related to non-vested stock totaled $3,828, which represented the unamortized expense associated with awards of non-vested stock granted to employees, officers and directors under our compensation plans, including $1,465 related to grants made during the nine months ended September 30, 2007. We recognized compensation expense associated with non-vested restricted stock totaling $819 and $630 for the quarters ended September 30, 2007 and 2006, respectively, and $2,290 and $1,818 for the nine-month periods ended September 30, 2007 and 2006, respectively.

     The following table summarizes the change in non-vested restricted stock from December 31, 2006 to September 30, 2007:

		Non-vested
		Restricted Stock
						Weighted
						Average
		Number				Grant Price
Balance at December 31, 2006			690,073			$	8.67
Granted			96,254			$	21.30
Vested			(81,608	)		$	18.66
Forfeited			(3,512	)		$	23.50
Balance at September 30, 2007			701,207			$	9.17

9. Earnings per share:

     We compute basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share includes the weighted average of additional shares associated with the incremental effect of dilutive employee stock options, non-vested restricted stock and contingent shares, as determined using the treasury stock method prescribed by SFAS No. 128, “Earnings Per Share.” The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share for the quarters and nine-month periods ended September 30, 2007 and 2006:

		Quarter Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
						(in thousands)
Weighted average basic common shares outstanding			72,191				69,816				71,873				64,216
Effect of dilutive securities:
Employee stock options			1,013				1,624				1,149				1,664
Non-vested restricted stock			291				298				274				299
Contingent shares (a)			—				—				—				408
Weighted average diluted common and potential common shares outstanding			73,495				71,738				73,296				66,587

     We excluded the impact of anti-dilutive potential common shares from the calculation of diluted weighted average shares for the quarter and nine months ended September 30, 2007. If these potential common shares were included in the calculation, diluted weighted average shares outstanding for the quarter ended September 30, 2007 would have been 73,344,789 shares, or a reduction of 149,827 shares, and diluted weighted average shares for the nine months ended September 30, 2007 would have been 73,096,520 shares, or a reduction of 199,434 shares, respectively. For the quarter and nine months ended September 30, 2006, the diluted weighted average shares outstanding would have been 71,673,526 shares, or a reduction of 64,696 shares, for the quarter ended September 30, 2006, and 66,562,853 shares, or a reduction of 23,814 shares, for the nine months ended September 30, 2006. If these anti-dilutive potential common shares had been included in the calculation of diluted weighted average shares for the periods indicated, there would have been no impact on diluted earnings per share as disclosed for all periods presented in the accompanying statements of operations.

10. Discontinued operations:

     In August 2006, our Board of Directors authorized and committed to a plan to sell certain manufacturing and production enhancement product operations of a subsidiary located in Alberta, Canada, which included certain assets located in south Texas. We revised our financial statements, pursuant to SFAS No. 144, and removed the results of operations of the disposal group from net income from continuing operations, and presented these separately as income from discontinued operations, net of tax, in the accompanying statements of operations for the quarter and nine months ended September 30, 2006. We completed the sale of this disposal group in October 2006.

     The following table summarizes the operating results for this disposal group for the quarter and nine months ended September 30, 2006:

		Quarter Ended				Nine Months Ended
		September 30, 2006				September 30, 2006
Revenue		$	9,154			$	33,434
Income before taxes and minority interest		$	739			$	3,232
Net income		$	570			$	2,321

11. Segment information:

     SFAS No. 131, “Disclosure About Segments of an Enterprise and Related Information,” establishes standards for the reporting of information about operating segments, products and services, geographic areas, and major customers. The method of determining what information to report is based on the way our management organizes the operating segments for making operational decisions and assessing financial performance. We evaluate performance and allocate resources based on net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization and minority interest (“EBITDA”). The calculation of EBITDA should not be viewed as a substitute for calculations under U.S. GAAP, in particular net income. EBITDA calculated by us may not be comparable to the EBITDA calculation of another company.

     We have three reportable operating segments: completion and production services (“C&PS”), drilling services and product sales. The accounting policies of our reporting segments are the same as those used to prepare our unaudited consolidated financial statements as of September 30, 2007. Inter-segment transactions are accounted for on a cost recovery basis.

						Drilling				Product
		C&PS				Services				Sales				Corporate				Total
Quarter Ended September 30, 2007
Revenue from external customers		$	317,170			$	60,566			$	35,187			$	—			$	412,923
Inter-segment revenues		$	—			$	842			$	14,387			$	(15,229	)		$	—
EBITDA, as defined		$	97,070			$	16,701			$	3,901			$	(5,579	)		$	112,093
Depreciation and amortization		$	29,817			$	4,586			$	793			$	200			$	35,396
Operating income (loss)		$	67,253			$	12,115			$	3,108			$	(5,779	)		$	76,697
Capital expenditures		$	64,305			$	12,937			$	2,338			$	701			$	80,281
Nine Months Ended September 30, 2007
Revenue from external customers		$	932,021			$	179,155			$	119,529			$	—			$	1,230,705
Inter-segment revenues		$	332			$	2,708			$	44,168			$	(47,208	)		$	—
EBITDA, as defined		$	302,412			$	53,772			$	14,498			$	(20,063	)		$	350,619
Depreciation and amortization		$	82,235			$	12,238			$	2,173			$	1,212			$	97,858
Operating income (loss)		$	220,177			$	41,534			$	12,325			$	(21,275	)		$	252,761
Capital expenditures		$	223,216			$	42,923			$	6,833			$	1,787			$	274,759
As of September 30, 2007
Segment assets		$	1,584,220			$	271,208			$	97,894			$	24,403			$	1,977,725
Quarter Ended September 30, 2006
Revenue from external customers		$	230,093			$	57,898			$	34,043			$	—			$	322,034
Inter-segment revenues		$	38			$	779			$	15,658			$	(16,475	)		$	—
EBITDA, as defined		$	73,003			$	21,110			$	4,677			$	(5,551	)		$	93,239
Depreciation and amortization		$	16,895			$	2,858			$	574			$	678			$	21,005
Operating income (loss)		$	56,108			$	18,252			$	4,103			$	(6,229	)		$	72,234
Capital expenditures		$	66,326			$	13,758			$	2,594			$	102			$	82,780
Nine Months Ended September 30, 2006
Revenue from external customers		$	604,452			$	153,078			$	91,386			$	—			$	848,916
Inter-segment revenues		$	143			$	2,417			$	36,609			$	(39,169	)		$	—
EBITDA, as defined		$	176,904			$	55,367			$	12,471			$	(13,478	)		$	231,264
Depreciation and amortization		$	43,730			$	7,160			$	1,406			$	1,315			$	53,611
Operating income (loss)		$	133,174			$	48,207			$	11,065			$	(14,793	)		$	177,653
Capital expenditures		$	164,158			$	39,464			$	8,732			$	2,850			$	215,204
As of December 31, 2006
Segment assets		$	1,369,906			$	245,806			$	96,537			$	28,075			$	1,740,324

     We do not allocate net interest expense, tax expense or minority interest to the operating segments. The following table reconciles operating income as reported above to net income from continuing operations for the quarters and nine-month periods ended September 30, 2007 and 2006:

		Quarter Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Segment operating income		$	76,697			$	72,234			$	252,761			$	177,653
Interest expense			16,676				9,142				47,365				29,312
Interest income			(484	)			(256	)			(1,012	)			(1,278	)
Income taxes			19,180				23,800				73,894				56,411
Minority interest			(283	)			(121	)			(227	)			23
Net income from continuing operations		$	41,608			$	39,669			$	132,741			$	93,185

     The product sales business segment results have been adjusted for discontinued operations. See Note 10, Discontinued Operations.

     Changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2007 are summarized below:

						Drilling				Product
		C&PS				Services				Sales				Total
Balance at December 31, 2006		$	505,763			$	34,876			$	12,032			$	552,671
Acquisitions			16,104				—				—				16,104
Contingency adjustment and other (a)			(5,627	)			—				—				(5,627	)
Foreign currency translation			7,345				—				—				7,345
Balance at September 30, 2007		$	523,585			$	34,876			$	12,032			$	570,493

12. Legal matters and contingencies:

     In the normal course of our business, we are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including warranty and product liability claims and occasional claims by individuals alleging exposure to hazardous materials, on the job injuries and fatalities as a result of our products or operations. Many of the claims filed against us relate to motor vehicle accidents which can result in the loss of life or serious bodily injury. Some of these claims relate to matters occurring prior to our acquisition of businesses. In certain cases, we are entitled to indemnification from the sellers of the businesses.

     Although we cannot know the outcome of pending legal proceedings and the effect such outcomes may have on us, we believe that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our financial position, results of operations or liquidity.

     At June 30, 2007, we had accrued $1,600 in additional insurance premium related to a cost-sharing provision of our general liability policy, of which we paid $1,444 in August 2007. Although we do not believe it is probable that we will incur additional costs pursuant to this provision, we cannot be certain that we will not incur additional costs until either existing claims become further developed or until the limitation periods expire for each respective policy year. Any such additional premiums should not have a material adverse effect on our financial position, results of operations or liquidity.

13. Adoption of FASB Interpretation No. 48:

     We adopted FASB Interpretation No. 48 entitled “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,” referred to as “FIN 48,” as of January 1, 2007. FIN 48 clarifies the accounting for uncertain tax positions that may have been taken by an entity. Specifically, FIN 48 prescribes a more-likely-than-not recognition threshold to measure a tax position taken or expected to be taken in a tax return through a two-step process: (1) determining whether it is more likely than not that a tax position will be sustained upon examination by taxing authorities, after all appeals, based upon the technical merits of the position; and (2) measuring to determine the amount of benefit/expense to recognize in the financial statements, assuming taxing authorities have all relevant information concerning the issue. The tax position is measured at the largest amount of benefit/expense that is greater than 50 percent likely of being realized upon ultimate settlement. This pronouncement also specifies how to present a liability for unrecognized tax benefits in a classified balance sheet, but does not change the classification requirements for deferred taxes. Under FIN 48, if a tax position previously failed the more-likely-than-not recognition threshold, it should be recognized in the first subsequent financial reporting period in which the threshold is met. Similarly, a position that no longer meets this recognition threshold, should no longer be recognized in the first financial reporting period that the threshold is no longer met.

     We performed an examination of our tax positions and calculated the cumulative amount of our

estimated exposure by evaluating each issue to determine whether the impact exceeded the 50 percent threshold of being realized upon ultimate settlement with the taxing authorities. Based upon this examination, we determined that the aggregate exposure under FIN 48 did not have a material impact on our financial statements during the nine months ended September 30, 2007. Therefore, we have not recorded an adjustment to our financial statements related to the adoption of FIN 48. We will continue to evaluate our tax positions in accordance with FIN 48, and recognize any future impact under FIN 48 as a charge to income in the applicable period in accordance with the standard. Our tax filings for tax years 2003 to 2006 remain open for examination by taxing authorities.

     Our accounting policy related to income tax penalties and interest assessments is to accrue for these costs and record a charge to selling, general and administrative expense for tax penalties and a charge to interest expense for interest assessments during the period that we take an uncertain tax position through resolution with the taxing authorities or the expiration of the applicable statute of limitations.

     In May 2007, the FASB issued FASB Staff Position FIN 48-1, an amendment to FIN 48, which provides guidance on how an entity is to determine whether a tax position has effectively settled for purposes of recognizing previously unrecognized tax benefits. Specifically, this guidance states that an entity would recognize a benefit when a tax position is effectively settled using the following criteria: (1) the taxing authority has completed its examination including all appeals and administrative reviews; (2) the entity does not plan to appeal or litigate any aspect of the tax position; and (3) it is remote that the taxing authority would examine or reexamine any aspect of the tax position, assuming the taxing authority has full knowledge of all relevant information relative to making their assessment on the position. We will apply this guidance going forward, as applicable.

14. Guarantor and Non-Guarantor Condensed Consolidating Financial Statements:

     On December 6, 2006, we issued 8.0% Senior Notes at a face value of $650,000 in a private placement transaction. On June 1, 2007, we filed a registration statement on Form S-4 with the SEC to register these 8.0% Senior Notes and became subject to the disclosure requirements of SEC Regulation S-X Rule 3-10(f). See Note 16, Subsequent Events. The following tables present the financial data required pursuant to SEC Regulation S-X Rule 3-10(f), which includes: (1) unaudited condensed consolidating balance sheets as of September 30, 2007 and December 31, 2006; (2) unaudited condensed consolidating statements of operations for the quarters ended September 30, 2007 and 2006; (3) unaudited condensed consolidating statements of operations for the nine months ended September 30, 2007 and 2006; and (4) unaudited condensed consolidating statements of cash flows for the nine months ended September 30, 2007 and 2006.

Unaudited Condensed Consolidating Balance Sheet
September 30, 2007

						Guarantor				Non-guarantor				Eliminations/
		Parent				Subsidiaries				Subsidiaries				Reclassifications				Consolidated
		(in thousands)
Current assets
Cash and cash equivalents		$	6,235			$	3,712			$	3,130			$	(5,731	)		$	7,346
Trade accounts receivable, net			33				285,840				31,256				—				317,129
Inventory			—				47,424				15,327				—				62,751
Prepaid expenses and other current assets			4,338				10,526				1,712				—				16,576
Total current assets			10,606				347,502				51,425				(5,731	)			403,802
Property, plant and equipment, net			4,488				906,633				63,937				—				975,058
Investment in consolidated subsidiaries			570,426				116,662				—				(687,088	)			—
Inter-company receivable			1,107,348				11,525				—				(1,118,873	)			—
Goodwill			93,792				426,935				49,766				—				570,493
Other long-term assets, net			15,049				9,804				3,519				—				28,372
Total assets		$	1,801,709			$	1,819,061			$	168,647			$	(1,811,692	)		$	1,977,725
Current liabilities
Current maturities of long-term debt		$	—			$	797			$	69			$	—			$	866
Accounts payable			534				55,954				6,530				(5,731	)			57,287
Accrued liabilities			4,411				52,996				8,476				—				65,883

						Guarantor				Non-guarantor				Eliminations/
		Parent				Subsidiaries				Subsidiaries				Reclassifications				Consolidated
		(in thousands)
Accrued interest			17,564				—				85				—				17,649
Total current liabilities			22,509				109,747				15,160				(5,731	)			141,685
Long-term debt			803,680				3,783				13,086				—				820,549
Inter-company payable			—				1,107,348				11,525				(1,118,873	)			—
Deferred income taxes			78,877				27,757				9,707				—				116,341
Minority interest			—				—				2,507				—				2,507
Total liabilities			905,066				1,248,635				51,985				(1,124,604	)			1,081,082
Stockholders’ equity
Total stockholders’ equity			896,643				570,426				116,662				(687,088	)			896,643
Total liabilities and stockholders’ equity		$	1,801,709			$	1,819,061			$	168,647			$	(1,811,692	)		$	1,977,725

Unaudited Condensed Consolidating Balance Sheet
December 31, 2006

						Guarantor				Non-guarantor				Eliminations/
		Parent				Subsidiaries				Subsidiaries				Reclassifications				Consolidated
		(in thousands)
Current assets
Cash and cash equivalents		$	6,517			$	9,533			$	7,312			$	(3,488	)		$	19,874
Trade accounts receivable, net			32				273,990				27,742				—				301,764
Inventory			—				33,899				10,031				—				43,930
Prepaid expenses and other current assets			1,495				21,307				2,270				—				25,072
Total current assets			8,044				338,729				47,355				(3,488	)			390,640
Property, plant and equipment, net			3,384				713,952				54,367				—				771,703
Investment in consolidated subsidiaries			398,414				91,903				—				(490,317	)			—
Inter-company receivable			1,007,052				—				—				(1,007,052	)			—
Goodwill			93,792				416,515				42,364				—				552,671
Other long-term assets, net			16,473				5,725				3,112				—				25,310
Total assets		$	1,527,159			$	1,566,824			$	147,198			$	(1,500,857	)		$	1,740,324
Current liabilities
Current maturities of long-term debt		$	—			$	923			$	141			$	—			$	1,064
Accounts payable			1,545				64,958				8,355				(3,488	)			71,370
Accrued liabilities			7,361				46,509				7,495				—				61,365
Notes payable			17,087				—				—				—				17,087
Taxes payable			8,065				—				2,454				—				10,519
Total current liabilities			34,058				112,390				18,445				(3,488	)			161,405
Long-term debt			728,668				4,093				17,816				—				750,577
Inter-company payable			—				1,000,870				6,182				(1,007,052	)			—
Deferred income taxes			29,212				51,057				10,536				—				90,805
Minority interest			—				—				2,316				—				2,316
Total liabilities			791,938				1,168,410				55,295				(1,010,540	)			1,005,103
Stockholders’ equity
Total stockholders’ equity			735,221				398,414				91,903				(490,317	)			735,221
Total liabilities and stockholders’ equity		$	1,527,159			$	1,566,824			$	147,198			$	(1,500,857	)		$	1,740,324