Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. | ||
For the fiscal year ended December 31, 2005; or | ||
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||
For the transition period from __________ to __________. |
WARRIOR ENERGY SERVICES CORPORATION |
(Exact name of Registrant as specified in its charter) |
Delaware | 11-2904094 | |
(State or other jurisdiction of Incorporation or organization) | (IRS Employer Identification No.) | |
100 Rosecrest, Columbus, Mississippi | 39701 | |
(Address of Principal Executive Offices) | (Zip Code) |
(662) 329-1047 |
(Registrant’s telephone number, including area code) |
Yes | No |
Yes | No |
Yes | No |
Large accelerated filer | Accelerated filer | Non-accelerated filer |
Yes | No |
Class: Common Stock, par value $.0005 per share | |
Outstanding at March 21, 2006: 2,379,464 shares |
Item Number | Page | ||
Item 1. | Business |
• | Logging Services. The truck or skid-mounted wireline logging services are used to evaluate downhole well conditions such as production patterns, the cement bonding effectiveness between the casing and the formation and formation characteristics such as lithology and porosity. These logging services are provided at various stages of the process of drilling and completing natural gas and oil wells as well as at various times thereafter until the well is depleted, plugged and abandoned. Such services are provided using a wireline unit equipped with an armored cable that is lowered by winch into an existing well. The cable lowers instruments and tools into the well to perform a variety of services and tests. The wireline unit’s instrument cab contains electronic equipment to supply power to the downhole instruments, to receive and record data from those instruments in order to produce the “logs” which define specific characteristics of each formation and to display the data received from downhole. Each of the Company’s wireline units is equipped with a top-of-the-line computer system. | |
• | Pipe Recovery Services. Experienced pipe recovery specialists use specialized “free-point” wireline tools to find the point at which the tubing or drill pipe is stuck in a well. Once the “free-point” (the lowest point in the well where the pipe is still free to move) is located, then the pipe recovery specialist uses his judgment and experience to determine how best to free the pipe. Generally the pipe will be “backed off” (un-screwed) at the joint just above the free-point or the pipe may be cut with explosives, chemical or mechanical cutters just above the free point. Once the pipe is cut it can be removed from the well, allowing the rig crew to go back to “fish” the remaining portion of the tubing or drillpipe with grapples, jars and other specially made tools. | |
• | Perforating Services. Perforating involves positioning a perforation “gun” that contains explosive jet charges down the wellbore next to a productive zone. A detonator is fired and primer cord is ignited, which then detonates the jet charges. The resulting explosion creates holes through the casing and cement and into the formation, thus allowing the formation fluid to flow into the wellbore and be |
produced to the surface. The Company primarily deploys its perforation gun by a conventional wireline cable, if appropriate, or using conventional tubing or drill pipe, which is called tubing conveyed perforating or “TCP.” | ||
• | Mechanical Services. Cased-hole wireline equipment is often used to set plugs, packers, dump cement and make other physical changes to a well bore. The mechanical tools (such as plug setting tools) are usually combined with a logging tool to ensure proper placement of the plug or packer in the well. Mechanical services are often provided along with logging or perforating services on the same trip to the well site and are an integral part of the drilling and completion process. | |
• | Plugging and Abandonment. Cased-hole wireline equipment, pumping equipment and hydraulic jacks are used in the process of permanently closing natural gas and oil wells no longer capable of producing in economic quantities at the end of their productive life. A typical P&A job will include cutting the tubing and/or casing with wireline explosives or other cutters, removing the salvageable tubing with hydraulic jacks and then setting plugs and cementing the well bore. The P&A process generally takes several days to complete. Plugging and abandonment work can provide favorable operating margins and is less sensitive to natural gas and oil pricing than drilling and workover activity since well operators must plug a well in accordance with state or federal regulations when it is no longer productive. |
• | Snubbing Services. Snubbing services use specialized hydraulic well service units that permit an operator to complete underbalanced wells and repair damaged casing, production tubing and downhole production equipment in high-pressure, “live-well” environments. A snubbing unit makes it possible to remove and replace downhole equipment while maintaining pressure in the well. Customers benefit because these operations can be performed without killing the well with heavy fluids, which can damage the productive formations, and because a snubbing rig can perform many applications at a lower cost than other alternatives. Since snubbing is difficult to perform, the snubbing segment of the natural gas and oil services industry is limited to a relatively few operators who have the experience and knowledge required to perform such services safely and efficiently. Applications for snubbing units include “live-well” completions and workovers, underground blowout control, underbalanced completions, underbalanced drilling and the running of tubing, casing or drillpipe into or out of pressurized wellbore. | |
• | Freezing Services. Freezing technology provides wellhead and pipe operations with pressure control and isolation for service and maintenance. Freezing technology involves setting a bentonite gel plug by freezing it in place. Freezing is an economic, |
temporary and nondamaging technology often used with other services, such as hot tapping. It is quickly deployed and applied for fast response, does not damage installations and does not require kill fluids. Freezing technology applications include changing or repairing damaged valves, entire wellheads and controlling pressure in tubing or pipelines. | ||
• | Hot Tapping Services. The Company’s hot tapping services are used to access a contained area that is or may be holding pressure. The procedure can be designed to release the pressure and contents, or in the case of a loaded pipeline, provide access through a valve. Hot tapping is used in a variety of applications, including coiled tubing, wellheads, valves, tubing, drill pipe and drill collars. The Company’s experienced well service personnel can be dispatched 24 hours a day with hot tap drills and the related equipment. The Company’s hot tap equipment can be easily transported by truck, in well service freeze units, or by third-party helicopter. | |
• | Rental Tool Services. The Company rents specialized equipment and tools for the drilling, completion and workover of onshore and offshore natural gas and oil wells. Natural gas and oil producers and drilling contractors often find it more economical to supplement their inventories of tools, drillpipe and other specialized equipment with rental equipment. The Company offers a broad range of rental tools, including: |
• | pressure control equipment; | |
• | drill string equipment; | |
• | pipe handling equipment; | |
• | fishing and downhole tools; | |
• | stabilizers; | |
• | power swivels; | |
• | bottom-hole assemblies; | |
• | handling tools; | |
• | test pumps; | |
• | tubular handling tools; and | |
• | hydraulic torque wrenches. |
• | Fishing Services. The Company provides highly skilled downhole services, including fishing, milling and cutting services, which consist of removing or otherwise eliminating “fish” or “junk” (a piece of equipment, a tool, a part of the drill string or debris) in a well that is causing an obstruction. | |
• | Coiled Tubing, Nitrogen Pumping and Fluid Pumping. The Company is also planning to enter complimentary well intervention product lines in 2006, including coiled tubing, nitrogen pumping and fluid pumping. Coiled tubing units compliment the Company’s snubbing units, providing an alternative conveyance system to deliver completion and workover services. The addition of nitrogen and fluid pumping |
services to the Company’s well intervention segment takes advantage of the synergies believed to exist with the Company’s snubbing and coiled tubing units, which are used to deploy nitrogen and fluids into wells during completion and workover activities. |
Item 1A. | Risk Factors |
The Company’s business depends on the level of activity in the natural gas and oil exploration and production industry and may be adversely affected by industry conditions that are beyond its control. |
• | the supply of and demand for natural gas and oil; | |
• | the current and expected level of domestic and foreign prices for natural gas and oil; |
• | the cost of exploring for, developing, producing and delivering natural gas and oil; | |
• | the decline rates of current production; | |
• | the discovery rates of new natural gas and oil reserves; | |
• | available pipeline and other transportation capacity; | |
• | weather conditions, including tropical storms and hurricanes that can affect natural gas and oil operations over a wide area; | |
• | domestic and worldwide economic conditions; | |
• | political instability in natural gas- and oil-producing countries; | |
• | hostilities, strikes and other disruptions affecting the production and delivery of natural gas and oil; | |
• | variations in governmental regulations and tax laws or the imposition of new governmental requirements on the industry; | |
• | technical advances affecting energy consumption; | |
• | the price and availability of alternative fuels; | |
• | the ability of natural gas and oil producers to raise equity capital and debt financing; and | |
• | merger and divestiture activity among natural gas and oil producers. |
Any decline in natural gas and oil prices, exploration and production activity levels, or the development of natural gas and oil reserves could have a material adverse effect on the Company’s business, financial conditions, results of operations and cash flows. |
Because the natural gas and oil industry is cyclical, the Company’s operating results may fluctuate. |
Operations in the Gulf of Mexico may be adversely impacted by tropical storms and hurricanes. |
There is potential for excess equipment availability in the Company’s industry. |
The Company is highly dependent upon the level of natural gas drilling and workover activity in the United States. |
The Company may be unable to employ a sufficient number of skilled and qualified operational workers and experienced salespeople. |
The Company’s executive officers, senior management and certain other operations personnel are critical to its business, and these officers and personnel may not remain with the Company in the future. |
Because the Company recently acquired Bobcat, its operating history may not be sufficient to evaluate its business and prospects. |
The Company may not be able to integrate successfully Bobcat’s operations into its operations. |
• | operating a significantly larger combined company with operations in natural gas and oil well services in which the Company has not previously been involved; | |
• | managing relationships with new customers; | |
• | integrating personnel with diverse backgrounds and organizational cultures; | |
• | experiencing operational interruptions or the possible loss of key employees, customers or suppliers; | |
• | establishing the internal controls and procedures that the combined company will be required to maintain under the Sarbanes-Oxley Act of 2002; and | |
• | consolidating other corporate and administrative functions. |
If the Company does not experience expected synergies from the Bobcat acquisition, it may not achieve increases in revenues that it hopes to obtain. |
The Company’s inability to control the inherent risks of acquiring and integrating businesses could adversely affect its operations. |
• | retaining and attracting key employees; | |
• | retaining and attracting new customers; | |
• | increased administrative burden; | |
• | developing the Company’s sales and marketing capabilities; | |
• | managing its growth effectively; | |
• | integrating operations; | |
• | operating a new line of business; and | |
• | increased logistical problems common to large, expansive operations. |
If the Company’s planned geographic, fleet and product line expansions are not successful, its financial condition and results of operations could be adversely affected, and it may not achieve increases in revenues that it hopes to realize. |
• | shortages of necessary raw materials or equipment; | |
• | construction delays; | |
• | cost overruns; | |
• | lack of customer demand for the services the Company intends to provide with this new equipment; | |
• | inability to obtain financing; | |
• | difficulties associated with entering into new product lines, including competition from existing service providers and integration with existing operations; and | |
• | shortages of qualified personnel. |
In order to execute its growth strategy, the Company may require additional capital in the future, which may not be available to it. |
The Company’s customer base is concentrated, and loss of a significant customer could cause its revenue to decline substantially. |
The markets in which the Company operates are highly competitive and have relatively few barriers to entry. To be successful, a provider must provide services that meet the specific needs of natural gas and oil exploration and production companies at competitive prices. |
The restrictive and other covenants in the Company’s indebtedness could restrict its operations and make it more vulnerable to adverse economic conditions. Substantially all of the Company’s assets are pledged under its credit facilities. |
• | on or after March 31, 2006, June 30, 2006 and September 30, 2006, for the 3-, 6- and 9-month periods, respectively, then ended of not less than 1.5:1.0; and | |
• | on or after December 31, 2006, for the 12-month period then ended of not less than 1.5:1.0. |
The Company’s operations are subject to hazards inherent in the natural gas and oil industry. These risks may not be fully covered by the Company’s insurance policies. |
The Company is subject to extensive and costly environmental laws and regulations that may require it to take actions that will adversely affect its results of operations. |
• | issuance of administrative, civil and criminal penalties; | |
• | denial or revocation of permits or other authorizations; | |
• | imposition of limitations on the Company’s operations; and | |
• | performance of site investigatory, remedial or other corrective actions. |
The Company’s business could be adversely affected by technological advancements in the future. |
If the Company fails to develop or maintain an effective system of internal controls over financial reporting, it may not be able to accurately report its financial results or prevent fraud. |
A terrorist attack or armed conflict could harm the Company’s business. |
The Company’s operations are subject to seasonal variations in weather conditions. |
Because the Company has no current plans to pay dividends on its common stock, investors must look solely to stock appreciation for a return on their investment in the Company. |
There has been limited trading activity in the Company’s common stock and a more active trading market may not develop. |
The Company’s certificate of incorporation, bylaws and Delaware law contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of its common stock. |
• | the prohibition of stockholder action by written consent, other than by unanimous written consent; | |
• | the ability of the Company’s board of directors to issue up to 2.5 million shares of preferred stock with voting and liquidation rights superior to common stock; and | |
• | limitations on the ability of the Company’s stockholders to call special meetings. | |
• | adverse developments in general economic conditions; | |
• | changes in capital markets; | |
• | adverse developments in the natural gas and oil industry; | |
• | developments in international relations; | |
• | the commencement or expansion of hostilities by the United States or other governments; | |
• | events of terrorism; and | |
• | declines and fluctuations in the prices for natural gas and oil; |
Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties |
Item 3. | Legal Proceedings |
Item 4. | Submission of Matters to a Vote of Security Holders |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Bid Prices | |||||||
2004 | High | Low | |||||
First Quarter | $ | 3.90 | $ | 2.50 | |||
Second Quarter | 4.00 | 1.00 | |||||
Third Quarter | 2.00 | 1.00 | |||||
Fourth Quarter | 2.00 | 1.00 |
Bid Prices | |||||||
2005 | High | Low | |||||
First Quarter | $ | 2.70 | $ | 1.50 | |||
Second Quarter | 6.10 | 1.20 | |||||
Third Quarter | 9.00 | 4.50 | |||||
Fourth Quarter | 12.00 | 10.50 |
Bid Prices | |||||||
2006 | High | Low | |||||
First Quarter (through March 30, 2006) | $ | 19.00 | $ | 10.01 |
Item 6. | Selected Financial Data |
December 31, | ||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||
Revenues(1) | $ | 73,667 | $ | 53,687 | $ | 45,757 | $ | 34,094 | $ | 39,682 | ||||||
Income (loss) from continuing operations | $ | 15,413 | $ | 4,630 | $ | 1,386 | $ | (4,173 | ) | $ | 4,064 | |||||
Net income (loss) per common share – basic | $ | 5.75 | $ | (1.41 | ) | $ | (4.43 | ) | $ | (6.06 | ) | $ | 4.03 | |||
Net income (loss) per common share – diluted | $ | 4.41 | $ | (1.41 | ) | $ | (4.43 | ) | $ | (6.06 | ) | $ | 4.03 | |||
Current assets | $ | 23,106 | $ | 15,665 | $ | 16,035 | $ | 16,117 | $ | 17,366 | ||||||
Total assets | $ | 101,634 | $ | 30,109 | $ | 41,401 | $ | 49,671 | $ | 50,481 | ||||||
Current liabilities | $ | 16,944 | $ | 8,789 | $ | 64,439 | $ | 20,176 | $ | 16,829 | ||||||
Total liabilities(2) | $ | 117,205 | $ | 55,318 | $ | 64,905 | $ | 67,720 | $ | 61,128 | ||||||
Cash dividends | -0- | -0- | - 0 - | - 0 - | - 0 - |
(1) See Note 5 to Notes to Financial Statements for information regarding acquisitions made by the Company. |
(2) See Note 9 to Notes to Financial Statements for information relating to the Company’s outstanding indebtedness. |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operation |
Payments Due By Period | ||||||||||||||||
Contractual Obligations | Total | Prior to December 31, 2006 | January 1, 2007 to December 31, 2008 | January 1, 2009 to December 31, 2011 | January 1, 2012 and thereafter | |||||||||||
Long Term Debt(1) | $ | 78,343,883 | $ | 5,568,880 | $ | 8,729,771 | $ | 64,045,232 | — | |||||||
Capital Leases | — | — | — | — | — | |||||||||||
Purchase Obligations | — | — | — | — | — | |||||||||||
Change of Control Payment | $ | 1,535,388 | $ | 1,535,388 | — | — | — | |||||||||
Other Long-term Liabilities | — | — | — | — | — |
(1) | Does not reflect planned use of proceeds from the Company’s proposed public offering. |
• | a revolving credit facility of up to $15.0 million, but not exceeding a borrowing base of 85% of the book value of eligible accounts receivable, less any reserves GECC may establish from time to time, | |
• | a term loan of $30.0 million, and | |
• | a one-year capital expenditure loan facility of up to $5.0 million, but not exceeding the lesser of 80% of the hard costs of eligible capital equipment and 75% of the forced liquidation value of eligible capital equipment, subject to adjustment by GECC. |
(A) 100% of the first $50.0 million in net proceeds received are to be applied to prepay or redeem the Junior Capital; | |
(B) net proceeds in excess of $50.0 million and up to $75.0 million are to be allocated 40% to prepay or redeem the Junior Capital, 30% to prepay loans outstanding under the Company’s Senior Secured Credit Agreement and 30% to prepay loans outstanding under the Company’s Second Lien Credit Agreement; | |
(C) net proceeds in excess of $75.0 million and up to $100.0 million are to be allocated 60% to prepay or redeem the Junior Capital, 20% to prepay loans outstanding under the Company’s Senior Secured Credit Agreement and 20% to prepay loans outstanding under the Company’s Second Lien Credit Agreement; and | |
(D) net proceeds in excess of $100.0 million are to be allocated 80% to prepay or redeem the Junior Capital, 10% to prepay loans outstanding under the Company’s Senior Secured Credit Agreement and 10% to prepay loans outstanding under the Company’s Second Lien Credit Agreement. |
• | 2.25:1.00 for the fiscal months ending on January 31, 2006 through March 31, 2006; | |
• | 2.25:1.00 for the fiscal months ending on April 30, 2006 through June 30, 2006; | |
• | 2.00:1.00 for the fiscal months ending on July 31, 2006 through September 30, 2006; | |
• | 2.00:1.00 for the fiscal months ending on October 30, 2006 through December 31, 2006; | |
• | 2.00:1.00 for the fiscal months ending on January 31, 2007 through March 31, 2007; and | |
• | 1.75:1.00 for each fiscal month ending thereafter. |
• | $33,000,000 for the fiscal months ending on January 31, 2006 through March 31, 2006; | |
• | $33,000,000 for the fiscal months ending on April 30, 2006 through June 30, 2006; | |
• | $34,000,000 for the fiscal months ending on July 31, 2006 through September 30, 2006; | |
• | $34,000,000 for the fiscal months ending on October 30, 2006 through December 31, 2006; and | |
• | $35,000,000 for each fiscal month ending thereafter. |
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk |
Item 8. | Financial Statements and Supplementary Data |
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
Item 9B. | Other Information |
Item 10. | Directors and Executive Officers of the Registrant |
The current and proposed members of the Company’s board of directors and the Company’s current executive officers and each of their respective ages and positions are as follows:
Name | Age | Position | |||
William L. Jenkins | 52 | Chairman, President and Chief Executive Officer | |||
Robert J. McNally | 35 | Director, Executive Vice President of Operations and Finance | |||
Ron E. Whitter | 44 | Chief Financial Officer | |||
Charles E. Underbrink(1) | 51 | Director | |||
James H. Harrison(1) | 37 | Director | |||
Proposed Directors: | |||||
Gerald M. Hage(2) | 58 | ||||
Robert L. Hollier(2) | 63 | ||||
John T. McNabb, II(2) | 61 |
(1) | Expected to resign from the Company’s board prior to the closing of the Company’s proposed public offering. |
(2) | Expected to be elected to the Company’s board prior to the closing of the Company’s proposed public offering. The Company expects these directors to be deemed “independent directors” by the Company’s board of directors as defined under the rules of the Nasdaq Stock Market. |
Item 11. | Executive Compensation |
Name and Principal Position | Annual Compensation | Long-Term Compensation | All Other Compensation | |||||||||||||||||||
Year | Salary | Bonus | Other Annual Compensation | Securities Underlying Options | Long-Term Incentive Payouts | |||||||||||||||||
William L. Jenkins | 2005 | $ | 350,000 | $ | 171,699 | — | — | — | $ | 1,536,604 | (1)(2) | |||||||||||
President | 2004 | $ | 350,000 | $ | 147,544 | — | — | — | $ | 66,384 | (1)(3) | |||||||||||
2003 | $ | 361,667 | $ | 73,555 | — | — | — | $ | 86,607 | (1)(3) | ||||||||||||
Ron E. Whitter | 2005 | $ | 135,000 | — | — | — | — | $ | 134,000 | (4)(5) | ||||||||||||
Chief Financial | 2004 | $ | 128,333 | — | — | — | — | $ | 9,000 | (4) | ||||||||||||
Officer | 2003 | $ | 102,042 | $ | 16,667 | — | — | — | $ | 9,000 | (4) |
(1) | Includes the premiums paid by the Company on a $1,000,000 insurance policy on the life of Mr. Jenkins which names his wife as beneficiary and owner of the policy. |
(2) | Includes “change of control” (as defined in the agreement) payment of $1.5 million under the terms of Mr. Jenkins’ employment agreement, which was accrued during 2005 and is expected to be paid immediately prior to or concurrently with the closing of the Company’s proposed public offering. |
(3) | Includes loans forgiven under Mr. Jenkins’ January 1, 2002 employment agreement. |
(4) | Includes automobile allowance paid to Mr. Whitter. |
(5) | Includes “change of control” (as defined in the agreement) payment of $125,000 under the terms of Mr. Whitter’s employment agreement. |
Number of Unexercised Options at December 31, 2005 | Value of Unexercised In-the-Money Options At December 31, 2005 (1) | ||||||||||||||||||
Name | Shares Acquired on Exercise | Value Realized | |||||||||||||||||
Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||
William L. Jenkins | -0- | -0- | 300,000 | -0- | $ | 1,344,000 | -0- | ||||||||||||
Ron E. Whitter | -0- | -0- | 40,000 | -0- | $ | 179,200 | -0- |
(1) | Based on the closing sales price on December 31, 2005 of $11.98. |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . |
The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of March 31, 2006 (a) by each person who is known by the Company to own beneficially more than five percent (5%) of the Company’s common stock, (b) by each of the Company’s Directors and named executive officers, and (c) by all Directors and executive officers as a group. As of March 31, 2006, the Company had 2,379,464 shares of common stock outstanding.
Name and Address (1)(2) | Number of Shares Owned | Percentage of Outstanding Shares(3) | |||||
William L. Jenkins(4) | 370,825 | 13.8% | |||||
Robert J. McNally | — | — | |||||
Ron E. Whitter(5) | 40,000 | 1.7% | |||||
Charles E. Underbrink(6) c/o St. James Capital Corp. 4299 San Felipe Suite 120 Houston, TX 77027 | 8,106,670 | 86.4% | |||||
James H. Harrison(7) c/o St. James Capital Corp. 4299 San Felipe - Suite 120 Houston, TX 77027 | 7,266,750 | 79.5% | |||||
SJMB, L.P. (8) c/o SJMB, L.L.C., general partner 4299 San Felipe - Suite 120 Houston, Texas 77027 | 7,266,750 | 79.5% | |||||
Samuel J. Brown, IV(9) St. James Capital Partners, L.P. c/o Overcup Capital, L.L.C., general partner 12202 Overcup Houston, Texas 77024 | 2,072,749 | 46.5% | |||||
Bendover Company(10) Alan W. Mann M. Dale Jowers 1053 The Cliffs Blvd. Montgomery, TX 77356 | 331,424 | 13.9% | |||||
All Directors and Officers as a Group (5 persons) | 8,517,496 | 87.6% |
(1) | This tabular information is intended to conform with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, relating to the determination of beneficial ownership of securities. The tabular information gives effect to the exercise of warrants or options exercisable within 60 days of the date of this table owned in each case by the person or group whose percentage ownership is set forth opposite the respective percentage and is based on the assumption that no other person or group exercise their option. |
(2) | Unless otherwise indicated, the address for each of the above is c/o Warrior Energy Services Corporation, 100 Rosecrest Lane, Columbus, Mississippi 39701. |
(3) | The percentage of outstanding shares calculation is based upon 2,379,464 shares outstanding as of March 31, 2006, except as otherwise noted. |
(4) | Includes 300,000 shares issuable on exercise of options. |
(5) | Includes 40,000 shares issuable on exercise of options. |
(6) | Mr. Underbrink is Chairman of SJMB, L.L.C., which is the general partner of SJMB, L.P. (“SJMB”). Includes an aggregate of 501,748 shares held directly by SJMB and 191,833 shares held directly or indirectly by Mr. Underbrink. Also includes 3,421,502 shares issuable on conversion of notes and accrued interest through March 31, 2006 and 3,343,500 shares issuable on exercise of warrants deemed held beneficially by Mr. Underbrink because of his relationships with SJMB. Also includes 237,574 shares issuable on conversion of notes and accrued interest through March 31, 2006 held directly or indirectly by Mr. Underbrink. Also includes 410,514 shares and 131,880 shares issuable on conversion of notes and accrued interest through March 31, 2006 held by the Underbrink Family Entities (excluding Mr. Underbrink). |
(7) | Mr. Harrison is Chief Financial Officer of SJMB, L.L.C., which is the general partner of SJMB. Includes shares issuable to SJMB on exercise of warrants and conversion of notes and accrued interest through March 31, 2006 that may be deemed held beneficially by Mr. Harrison because of his relationships with SJMB. Mr. Harrison disclaims beneficial ownership of such securities. Other than the holdings of SJMB in which Mr. Harrison disclaims beneficial ownership, Mr. Harrison does not directly or indirectly own any shares. |
(8) | Includes 501,748 shares held by SJMB, as well as an aggregate of 3,421,502 shares issuable to SJMB on conversion of notes and accrued interest through March 31, 2006 and 3,343,500 shares issuable to SJMB on exercise of warrants. See “Item 13. Certain Relationships and Related Transactions.” |
(9) | The general partner of St. James Capital Partners L.P. is Overcup Capital, L.L.C. and Mr. Brown is the Manager of Overcup Capital, L.L.C. Includes an aggregate of 1,340,721 shares of the Company’s common stock issuable to St. James Capital Partners, L.P. on conversion of notes and accrued interest through March 31, 2006 and 732,028 shares on exercise of warrants. See “Item 13. Certain Relationships and Related Transactions.” |
(10) | The Company has relied on the information set forth in Amendment No. 3 to the Schedule 13D filed jointly by such persons on February 3, 2000. |
(a) | (b) | (c) | ||||||||
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
Equity compensation plans approved by security holders | 1,880,000 | $ | 7.50 | 820,200 | ||||||
Equity compensation plans not approved by security holders | -0- | -0- | ||||||||
Total | 1,880,000 | $ | 7.50 | 820,200 |
Item 13. | Certain Relationships and Related Transactions |
Item 14. | Principal Accountant Fees and Services |
Audit Fees | Audit Related Fees | Tax Fees | All Other Fees | ||||||||||
2005 | $ | 260,737 | $ | 280,973 | $ | 49,025 | $ | 21,725 | |||||
2004 | $ | 235,498 | $ | 27,579 | $ | 14,975 | $ | 18,879 |
Item 15. | Exhibits and Financial Statement Schedules |
Exhibit | Designation | |
2.1 | Purchase Agreement by and among Bobcat Pressure Control, Inc., Bobby Joe Cudd Company, Bobby Joe Cudd, Bill Benedick, Steve Johnston and Petro Capital I, L.P. and the Company dated as of December 16, 2005 (incorporated by reference to Exhibit 2.01 to the Company’s Current Report on Form 8-K dated December 16, 2005). | |
3.1.1 | Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on June 21, 1989 (incorporated by reference to the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 1990). | |
3.1.2 | Certificate of Amendment to the Company’s Certificate of Incorporation as filed with the Secretary of State of the State of Delaware on February 13, 2001 (incorporated by reference to the Company’s Registration Statement on Form S-8, effective date March 21, 2001.) | |
3.1.3 | Certificate of Amendment to the Company’s Certificate of Incorporation as filed with the Secretary of State of Delaware and effective on December 27, 2005 (incorporated by reference to Exhibit 3.1.3 of the Company’s Registration Statement on Form S-1 filed with the Commission on February 13, 2006). | |
3.1.4 | Certificate of Ownership and Merger merging Warrior Energy Services Incorporated with and into Black Warrior Wireline Corp. (incorporated by reference to Exhibit 3.1.4 of the Company’s Registration Statement on Form S-1 filed with the Commission on February 13, 2006). | |
3.2 | By-Laws of the Company (incorporated by reference to the Company’s Registration Statement on Form S-18, effective date December 6, 1988). | |
10.1 | Agreement for Purchase and Sale dated June 6, 1997 between Black Warrior Wireline Corp. and St. James Capital Partners, L.P. (incorporated by reference to Exhibit 3 to the Company’s Current Report on Form 8-K dated June 6, 1997). | |
10.2 | $2,000,000 Convertible Promissory Note dated June 6, 1997 issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 4 to the Company’s Current Report on Form 8-K dated June 6, 1997). | |
10.3 | $3,000,000 Bridge Loan Promissory Note dated June 6, 1997 issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 5 to the Company’s Current Report on Form 8-K dated June 6, 1997). |
10.4 | Warrant dated June 6, 1997 to purchase 546,000 shares of Common Stock issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 6 to the Company’s Current Report on Form 8-K dated December 31, 1997). | |
10.5 | Warrant dated June 6, 1997 to purchase 120,000 shares of Common Stock issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 7 to the Company’s Current Report on Form 8-K dated December 31, 1997). | |
10.6 | Registration Rights Agreement between Black Warrior Wireline Corp. and St. James Capital Partners, L.P. dated June 6, 1997 (incorporated by reference to Exhibit 8 to the Company’s Current Report on Form 8-K dated June 6, 1997). | |
10.7 | Agreement for Purchase and Sale dated October 9, 1997 between Black Warrior Wireline Corp. and St. James Capital Partners, L.P. (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K dated October 9, 1997). | |
10.8 | $2,900,000 Convertible Promissory Note dated October 10, 1997 issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K dated October 9, 1997). | |
10.9 | Warrant dated October 10, 1997 to purchase 725,000 shares of Common Stock issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K dated October 9, 1997). | |
10.10 | Amendment No. 1 to Registration Rights Agreement between Black Warrior Wireline Corp. and St. James Capital Partners, L.P. dated October 10, 1997 (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K dated October 9, 1997). | |
10.11 | Asset Purchase Agreement dated as of January 1, 1998 between Black Warrior Wireline Corp. and Phoenix Drilling Services, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 23, 1998). | |
10.12 | Agreement for Purchase and Sale dated January 23, 1998 between Black Warrior Wireline Corp. and St. James Capital Partners, L.P. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 23, 1998). | |
10.13 | $10,000,000 Convertible Promissory Note dated January 23, 1998 issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated January 23, 1998). | |
10.14 | Warrant dated January 23, 1998 to purchase 200,000 shares of Common Stock issued to St. James Capital Partners, L.P. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated January 23, 1998). | |
10.15 | Amendment No. 2 to Registration Rights Agreement between Black Warrior Wireline Corp. and St. James Capital Partners, L.P. dated January 23, 1998 (incorporated by reference to Exhibit 10.5 to the Company’s current Report on Form 8-K dated January 23, 1998). |
10.16 | Second Amended and Restated Credit Agreement dated as of December 16, 2005 among the Company and General Electric Capital Corporation, as agent and lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 16, 2005). | |
10.17 | Second Lien Credit Agreement dated as of December 16, 2005 among the Company and General Electric Capital Corporation, as agent and lender (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 16, 2005). | |
10.18 | Amended and Restated Employment Agreement effective as of January 1, 2002 with William L. Jenkins (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 16, 2005). | |
10.18.1 | Amendment to Extended and Restated Employment Agreement dated January 1, 2002 entered into December 16, 2005 by and between the Company and William L. Jenkins (incorporated by reference to Exhibit 10.03 to the Company’s Current Report on Form 8-K dated December 16, 2005). | |
10.19 | Asset Purchase Agreement dated June 3, 2002 between Multi-Shot, LLC and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 3, 2004). | |
10.20 | First Amendment dated June 10, 2004 to Asset Purchase Agreement between Multi-Shot, LLC and the Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 3, 2004). | |
10.21 | Recapitalization Agreement dated October 6, 2005 between the Company and Charles E. Underbrink, Northgate, L.L.C., Hub, Inc., Charles E. Underbrink IRA, and the Charles E. Underbrink Irrevocable Trust dated 10/10/92 for the benefit of Piper Aurora Underbrink (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 6, 2005). | |
10.22 | Recapitalization Agreement dated October 6, 2005 between the Company and St. James Capital Partners, L.P. (incorporated by reference to Exhibit 10.2 to the company’s Current Report on Form 8-K dated October 6, 2005). | |
10.22.1 | Amendment No. 1 to Recapitalization Agreement dated October 6, 2005 between the Company and St. James Capital Partners, L.P.* | |
10.23 | Recapitalization Agreement dated October 6, 2005 between the Company and SJMB, L.P. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated October 6, 2005). | |
10.23.1 | Amendment No. 1 to Recapitalization Agreement dated October 6, 2005 between the Company and SJMB, L.P.* |
10.24 | Employment Agreement dated as of January 1, 2006 entered into on January 18, 2006 between the Company and Robert McNally (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 18, 2006. | |
10.25 | Employment Agreement dated September 1, 2004 between the Company and Ron Whitter.* | |
10.25.1 | Amendment to Employment Agreement dated September 1, 2004 between the Company and Ron Whitter.* | |
14 | Code of Ethics. (Filed as an Exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.) | |
21 | Subsidiaries. None. | |
23.1 | Consent of Grant Thornton LLP* | |
31.1 | Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a)* | |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)* | |
32.1 | Certification of President and Chief Executive Officer Pursuant to Section 1350 (furnished, not filed)* | |
32.2 | Certification of Chief Financial Officer Pursuant to Section 1350 (furnished, not filed)* |
* Filed or furnished with this Annual Report on Form 10-K |
December 31, 2005 | December 31, 2004 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 701,031 | $ | 2,647,980 | |||
Restricted cash | 214,813 | — | |||||
Accounts receivable, less allowance of $973,143 and $475,449, respectively | 19,998,282 | 8,330,618 | |||||
Other receivables | 215,629 | 216,195 | |||||
Prepaid expenses | 7,314 | 3,030,040 | |||||
Other current assets | 1,969,273 | 1,440,483 | |||||
Total current assets | 23,106,342 | 15,665,316 | |||||
Property, plant and equipment, less accumulated depreciation | 31,750,477 | 12,978,670 | |||||
Other assets | 3,001,036 | 227,828 | |||||
Goodwill (Note 8) | 14,040,182 | 1,237,416 | |||||
Other intangible assets (Note 8) | 29,735,923 | — | |||||
Total assets | $ | 101,633,960 | $ | 30,109,230 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 6,699,944 | $ | 2,056,832 | |||
Accrued salaries and vacation | 2,926,975 | 840,537 | |||||
Other accrued expenses | 1,866,159 | 1,683,541 | |||||
Accrued interest payable | 282,337 | 51,789 | |||||
Current maturities of long-term debt | 5,168,880 | 4,156,770 | |||||
Total current liabilities | 16,944,295 | 8,789,469 | |||||
Long-term debt, less current maturities | 51,252,352 | 6,393,281 | |||||
Non current accrued interest payable to related parties | 18,150,795 | 17,132,739 | |||||
Notes payable to related parties, net of unamortized discount | 21,902,375 | 23,002,375 | |||||
Deferred taxes | 8,955,590 | — | |||||
Total liabilities | 117,205,407 | 55,317,864 | |||||
Commitments and contingencies (Notes 6,9,10,11,15 and 16) | — | — | |||||
Stockholders’ deficit: | |||||||
Preferred stock, $.0005 par value, 2,500,000 shares authorized, none issued at December 31, 2005 or December 31, 2004 | — | — | |||||
Common stock, $.0005 par value, 35,000,000 shares authorized, 2,342,125 and 1,250,415 shares issued and outstanding December 31, 2005 and 2004, respectively | 11,709 | 6,252 | |||||
Additional paid-in capital | 21,698,506 | 20,275,963 | |||||
Accumulated deficit | (36,698,269 | ) | (44,907,456 | ) | |||
Treasury stock, at cost | (583,393 | ) | (583,393 | ) | |||
Total stockholders’ deficit | (15,571,447 | ) | (23,208,634 | ) | |||
Total liabilities and stockholders’ deficit | $ | 101,633,960 | $ | 30,109,230 | |||
2005 | 2004 | 2003 | ||||||||
Revenues | $ | 73,666,923 | $ | 53,686,837 | $ | 45,756,892 | ||||
Operating costs | 43,494,914 | 34,411,488 | 30,460,570 | |||||||
Selling, general and administrative expenses | 9,619,871 | 9,466,169 | 9,257,347 | |||||||
Depreciation and amortization | 5,208,316 | 5,179,237 | 4,652,962 | |||||||
Income from continuing operations | 15,343,822 | 4,629,943 | 1,386,013 | |||||||
Interest expense and amortization of debt discount (Note 6) | (4,096,317 | ) | (4,820,769 | ) | (5,352,129 | ) | ||||
Net gain on sale of fixed assets | 82,671 | 53,173 | 238,516 | |||||||
Change of control expense (Note 6) | 2,705,396 | — | — | |||||||
Other income (expense) | (240,266 | ) | 44,581 | 106,156 | ||||||
Income (loss) from continuing operations before income taxes | 8,384,514 | (93,072 | ) | (3,621,444 | ) | |||||
Provision for income taxes | 175,327 | — | — | |||||||
Income (loss) before discontinued operations | 8,209,187 | (93,072 | ) | (3,621,444 | ) | |||||
Discontinued operations (Note 5) | ||||||||||
Loss from operations of discontinued directional drilling segment (including loss on disposal of $0, $1,317,481 and $0 for the years ended December 31, 2005, 2004 and 2003, respectively) | — | (1,673,361 | ) | (1,916,496 | ) | |||||
Provision for income taxes | — | — | — | |||||||
Net income (loss) | $ | 8,209,187 | $ | (1,766,433 | ) | $ | (5,537,940 | ) | ||
Net income (loss) per share - basic: | ||||||||||
Income(loss) before discontinued operations | $ | 5.75 | $ | (.07 | ) | $ | (2.90 | ) | ||
Discontinued operations | — | (1.34 | ) | (1.53 | ) | |||||
Net income (loss) per share - basic | $ | 5.75 | $ | (1.41 | ) | $ | (4.43 | ) | ||
Net income (loss) per share - diluted: | ||||||||||
Income(loss) before discontinued operations | $ | 4.41 | $ | (.07 | ) | $ | (2.90 | ) | ||
Discontinued operations | — | (1.34 | ) | (1.53 | ) | |||||
Net income (loss) per share - diluted | $ | 4.41 | $ | (1.41 | ) | $ | (4.43 | ) | ||
Common Stock | Treasury Stock | |||||||||||||||||||||
Loan to Shareholder | Shares | Par Value | Paid-In Capital | Accumulated Deficit | Shares | Cost | ||||||||||||||||
Balance, December 31, 2002 | $ | (144,184 | ) | 1,250,415 | $ | 6,252 | $ | 20,275,063 | $ | (37,603,083 | ) | 462 | $ | (583,393 | ) | |||||||
Loan to Shareholder | 82,391 | |||||||||||||||||||||
Net loss for the year ended December 31, 2003 | — | — | — | — | (5,537,940 | ) | — | — | ||||||||||||||
Balance, December 31, 2003 | (61,793 | ) | 1,250,415 | 6,252 | 20,275,963 | (43,141,023 | ) | 462 | (583,393 | ) | ||||||||||||
Loan to Shareholder | 61,793 | |||||||||||||||||||||
Net loss for the year ended December 31, 2004 | — | — | — | — | (1,766,433 | ) | — | — | ||||||||||||||
Balance, December 31, 2004 | — | 1,250,415 | 6,252 | 20,275,963 | (44,907,456 | ) | 462 | (583,393 | ) | |||||||||||||
Shares issued upon conversion of interest | — | 190,400 | 952 | 1,427,048 | ||||||||||||||||||
Shares issued upon conversion of warrants | — | 901,310 | 4,505 | (4,505 | ) | — | — | — | ||||||||||||||
Net income for the year ended December 31, 2005 | — | — | — | — | 8,209,187 | — | — | |||||||||||||||
Balance, December 31, 2005 | $ | — | 2,342,125 | $ | 11,709 | $ | 21,698,506 | $ | (36,698,269 | ) | 462 | $ | (583,393 | ) | ||||||||
2005 | 2004 | 2003 | ||||||||
Cash flows from operating activities: | ||||||||||
Net income (loss) | $ | 8,209,187 | $ | (1,766,433 | ) | $ | (5,537,940 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation | 5,038,250 | 6,630,847 | 7,608,379 | |||||||
Amortization | 170,066 | 387,079 | 83,341 | |||||||
Asset impairment | — | — | 3,113,968 | |||||||
Amortization of debt issue costs | 171,711 | 575,691 | 494,548 | |||||||
Amortization of discount on notes payable | — | 164,313 | 164,306 | |||||||
Amortization of loan to shareholder | — | 61,793 | 82,391 | |||||||
Net recoveries of doubtful accounts | — | (112,652 | ) | (257,534 | ) | |||||
Net gain on disposition of property, plant and equipment | (82,671 | ) | (53,173 | ) | (243,628 | ) | ||||
Loss on disposition of discontinued operations | — | 1,317,481 | — | |||||||
Change in: | ||||||||||
Accounts receivable | (4,784,088 | ) | 734,382 | 4,106,414 | ||||||
Prepaid expenses | 3,022,726 | (2,937,569 | ) | (77,151 | ) | |||||
Other current assets | (11,037 | ) | (289,282 | ) | (455,584 | ) | ||||
Inventories | — | — | (270,292 | ) | ||||||
Other assets | 341,394 | (107,752 | ) | (172,125 | ) | |||||
Accounts payable and accrued liabilities | 5,407,334 | (1,042,631 | ) | 1,954,318 | ||||||
Cash provided by operating activities | 17,482,872 | 3,562,094 | 10,593,411 | |||||||
Cash flows from investing activities: | ||||||||||
Acquisitions of property, plant and equipment | (8,258,043 | ) | (7,472,757 | ) | (3,089,588 | ) | ||||
Purchase of Bobcat Pressure Control, Inc., net of cash acquired | (53,208,735 | ) | — | — | ||||||
Change in restricted cash | (214,813 | ) | 961,551 | (961,551 | ) | |||||
Proceeds from sale of property, plant and equipment | 165,062 | 371,172 | 684,499 | |||||||
Proceeds from sale of discontinued operations | — | 10,349,862 | — | |||||||
Cash provided by (used in) investing activities | (61,516,529 | ) | 4,209,828 | (3,366,640 | ) | |||||
Cash flows from financing activities: | ||||||||||
Proceeds from bank and other borrowings | 55,961,399 | 13,620,025 | 5,434,046 | |||||||
Principal payments on long-term debt, notes payable and capital lease obligations | (11,623,904 | ) | (19,866,741 | ) | (7,215,600 | ) | ||||
Proceeds (payments) from (on) working revolver, net | 214,813 | (3,159,929 | ) | (3,124,596 | ) | |||||
Debt issue costs | (2,465,600 | ) | (378,327 | ) | (48,457 | ) | ||||
Cash provided by (used in) financing activities | 42,086,708 | (9,784,972 | ) | (4,954,607 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (1,946,949 | ) | (2,013,050 | ) | 2,272,164 | |||||
Cash and cash equivalents, beginning of year | 2,647,980 | 4,661,039 | 2,388,866 | |||||||
Cash and cash equivalents, end of year | $ | 701,031 | $ | 2,647,980 | $ | 4,661,030 | ||||
Supplemental disclosure of cash flow information: | ||||||||||
Cash paid during the year for: | ||||||||||
Interest | $ | 2,847,376 | $ | 2,303,791 | $ | 1,644,893 | ||||
Income taxes | $ | — | $ | — | $ | — | ||||
2005 | 2004 | 2003 | ||||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||||
Acquisition of property, plant and equipment financed under capital leases and notes payable | $ | 55,961,399 | $ | 840,921 | $ | 3,259,382 | ||||
Shares issued upon conversion of interest | $ | 1,428,000 | $ | — | $ | — | ||||
Shares issued upon conversion of warrants | $ | — | $ | — | $ | — |
The following table summarizes the estimated fair values of certain assets acquired and liabilities assumed at the date of acquisition (December 16, 2005):
(000’s) | ||||
Current assets | $ | 6,513 | ||
Property, plant and equipment | 15,569 | |||
Other assets | 671 | |||
Goodwill | 12,803 | |||
Intangible assets | 29,841 | |||
Total assets acquired | 65,397 | |||
Current liabilities | (2,999 | ) | ||
Deferred taxes | (8,956 | ) | ||
Long-term debt | (233 | ) | ||
$ | 53,209 | |||
Warrior Energy as reported | Bobcat Prior to Acquisition | Pro Forma Adjustments | Combined | ||||||||||
Revenues | $ | 73,667 | $ | 28,653 | $ | 102,320 | |||||||
Operating costs | 43,495 | 13,235 | 56,730 | ||||||||||
Selling, general and administrative expenses | 9,620 | 4,324 | 13,944 | ||||||||||
Depreciation and amortization | 5,208 | 1,508 | 2,558 | (1) | 9,274 | ||||||||
Income from operations | 15,344 | 9,586 | 22,372 | ||||||||||
Interest expense | 4,096 | 439 | 5,546 | (2) | 9,642 | ||||||||
(439 | )(3) | ||||||||||||
Net gain (loss) on sale of fixed assets | 82 | (78 | ) | 4 | |||||||||
Change of control expense | 2,705 | — | 2,705 | ||||||||||
Other income (expense) | (241 | ) | (5 | ) | (246 | ) | |||||||
Income from operations before income taxes | 8,384 | 9,064 | 9,783 | ||||||||||
Provision for income taxes | 175 | 3,399 | (3,373 | )(4) | 196 | ||||||||
Net income | $ | 8,209 | $ | 5,665 | $ | 9,587 | |||||||
Net income per share - basic | $ | 5.75 | $ | 6.71 | |||||||||
Net income per share - diluted | $ | 4.41 | $ | 4.93 | |||||||||
(1) | To reflect additional depreciation and amortization related to purchase price allocation. |
(2) | To adjust interest expense to reflect borrowings to fund the Bobcat acquisition at the beginning of the period. |
(3) | To reflect payoff the Bobcat debt at the beginning of the period and elimination of the Bobcat interest expense. |
(4) | To reflect utilization of currently available net operating losses against pro forma combined taxable income and applies an alternative minimum tax to the combined pro forma earnings. |
Warrior Energy as reported | Historical Bobcat | Pro Forma Adjustments | Combined | ||||||||||
Revenues | $ | 53,687 | $ | 16,224 | $ | 69,911 | |||||||
Operating costs | 34,412 | 7,297 | 41,709 | ||||||||||
Selling, general and administrative expenses | 9,466 | 3,024 | 12,490 | ||||||||||
Depreciation and amortization | 5,179 | 1,010 | 2,558 | (1) | 8,747 | ||||||||
Gain (loss) from continuing operations | 4,630 | 4,893 | 6,965 | ||||||||||
Interest expense | 4,821 | 606 | 4,651 | (2) | 9,472 | ||||||||
(606 | )(3) | ||||||||||||
Net gain on sale of fixed assets | 53 | (25 | ) | 28 | |||||||||
Other income (loss) | 45 | (13 | ) | 32 | |||||||||
Income (loss) from continuing operations before income taxes | (93 | ) | 4,249 | (2,447 | ) | ||||||||
Provision for income taxes | — | 1,611 | (1,611 | )(4) | — | ||||||||
Income (loss) before discontinued operations | (93 | ) | 2,638 | (2,447 | ) | ||||||||
Discontinued operations | |||||||||||||
Income (loss) from operations of discontinued directional drilling segment | (1,673 | ) | — | (1,673 | ) | ||||||||
Provision for income taxes | — | — | |||||||||||
Net income (loss) | $ | (1,766 | ) | $ | 2,638 | $ | (4,120 | ) | |||||
Net income (loss) per share - basic and diluted: | |||||||||||||
Income (loss) before discontinued operations | $ | (.07 | ) | $ | (1.96 | ) | |||||||
Discontinued operations | (1.34 | ) | (1.34 | ) | |||||||||
Net income (loss) per share - basic and diluted | $ | (1.41 | ) | $ | (3.30 | ) | |||||||
(1) | To reflect additional depreciation and amortization related to purchase price allocation. |
(2) | To adjust interest expense to reflect borrowings to fund the Bobcat acquisition at the beginning of the period. |
(3) | To reflect payoff the Bobcat debt at the beginning of the period and elimination of the Bobcat interest expense. |
(4) | To reflect elimination of Bobcat tax provision for combined pretax loss. |
• | a revolving credit facility of up to $15.0 million, but not exceeding a borrowing base of 85% of the book value of eligible accounts receivable, less any reserves GECC may establish from time to time, | |
• | a term loan of $30.0 million, and | |
• | a one-year capital expenditure loan facility of up to $5.0 million, but not exceeding the lesser of 80% of the hard costs of eligible capital equipment and 75% of the forced liquidation value of eligible capital equipment, subject to adjustment by GECC. |
Year ended December 31, | ||||||||||
2005 | 2004 | 2003 | ||||||||
Net income (loss), as reported | $ | 8,209,187 | $ | (1,766,433 | ) | $ | (5,537,940 | ) | ||
Add: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects(1) | 71,394 | 564,607 | 423,110 | |||||||
Pro forma net income (loss) | $ | 8,280,581 | $ | (1,201,826 | ) | $ | (5,114,830 | ) | ||
Income (loss) per share: | ||||||||||
Basic - as reported | $ | 5.75 | $ | (4.43 | ) | $ | (6.06 | ) | ||
Basic - pro forma | $ | 5.80 | $ | (4.09 | ) | $ | (6.22 | ) | ||
Diluted - as reported | $ | 4.41 | $ | (4.43 | ) | $ | (6.06 | ) | ||
Diluted - pro forma | $ | 4.44 | $ | (4.09 | ) | $ | (6.22 | ) | ||
(1) | Reduction of stock-based compensation expense due to forfeitures exceeding the expense of newly vesting awards. |
2005 | 2004 | 2003 | ||||||||
Interest expense | $ | 3,461,000 | $ | 3,723,000 | $ | 3,849,000 | ||||
Accrued interest | $ | 18,151,000 | $ | 17,133,000 | $ | 14,534,000 |
2005 | 2004 | ||||||
Land and building | $ | 157,250 | $ | 156,250 | |||
Vehicles | 21,171,140 | 15,842,461 | |||||
Operating equipment | 44,576,507 | 23,974,824 | |||||
Office equipment | 1,680,172 | 1,005,591 | |||||
67,585,069 | 40,979,126 | ||||||
Less: accumulated depreciation | 35,834,592 | 28,000,456 | |||||
Net property, plant and equipment | $ | 31,750,477 | $ | 12,978,670 | |||
Goodwill | Intangible assets | Accumulated amortization | ||||||||
Balance at December 31, 2002 | $ | 1,237,416 | $ | — | $ | — | ||||
Balance at December 31, 2003 | 1,237,416 | — | — | |||||||
Balance at December 31, 2004 | 1,237,416 | — | — | |||||||
Acquisition of Bobcat | ||||||||||
Trademarks, trade names | — | 1,224,949 | — | |||||||
Non-compete agreements | — | 2,588,988 | 35,466 | |||||||
Customer relationships | — | 25,422,556 | 69,651 | |||||||
Manufacturing technical expertise | — | 604,547 | — | |||||||
Excess cost over fair value of net assets and related deferred taxes | 12,802,766 | — | — | |||||||
Balance at December 31, 2005 | $ | 14,040,182 | $ | 29,841,040 | $ | 105,117 | ||||
Estimated amortization expense: | ||||
For the year ended December 31, 2006 | $ | 2,557,833 | ||
For the year ended December 31, 2007 | $ | 2,557,833 | ||
For the year ended December 31, 2008 | $ | 2,522,367 | ||
For the year ended December 31, 2009 | $ | 1,694,837 | ||
For the year ended December 31, 2010 | $ | 1,694,837 |
2005 | 2004 | ||||||
Installment notes payable, monthly payments required in varying amounts through July 2007, interest at rates ranging from 2.90% to 7.17%. | $ | 1,206,419 | $ | 2,683,384 | |||
Notes payable to General Electric Capital Corporation, quarterly payments of $1,071,429 through December 2008 with final installment of $17,142,852 due in January 2009, interest at prime plus 2.25% (9.50% at December 31, 2005). | 30,000,000 | 7,866,667 | |||||
Notes payable to General Electric Capital Corporation due in total in March 2009, interest at prime plus 6.00% (13.25% at December 31, 2005). | 25,000,000 | — | |||||
Revolving line of credit to General Electric Capital Corporation, interest at prime plus 0.75% (8.00% at December 31, 2005). | 214,813 | — | |||||
Less: | 56,421,232 | 10,550,051 | |||||
Current portion of long-term debt (see below) | 5,168,880 | 4,156,770 | |||||
Long-term debt, less current maturities | $ | 51,252,352 | $ | 6,393,281 | |||
2005 | 2004 | ||||||
Convertible notes payable to SJCP, principal and interest due in June 2009, interest at 15%. Convertible at $7.50 per share at any time up to 30 business days following maturity | $ | 4,900,000 | $ | 4,900,000 | |||
Convertible note payable to SJMB, principal and interest due in June 2009, interest at 15%. Convertible at $7.50 per share at any time up to 30 business days following maturity | 13,700,000 | 13,700,000 | |||||
Convertible note payable to Falcon Seaboard, principal and interest due in February 2008, interest at 15% Repaid in December 2005. | — | 1,000,000 | |||||
15% convertible notes payable to affiliates of SJMB and certain employees, principal and interest originally due January 2001, extended to June 2009. Convertible at $7.50 per share at anytime up to 30 business days following maturity | 3,302,375 | 3,402,375 | |||||
Less: | 21,902,375 | 23,002,375 | |||||
Current portion of notes payable to related parties (see below) | — | — | |||||
Total long-term notes payable to related parties | $ | 21,902,375 | $ | 23,002,375 | |||
• | a revolving credit facility of up to $15.0 million, but not exceeding a borrowing base of 85% of the book value of eligible accounts receivable, less any reserves GECC may establish from time to time, |
• | a term loan of $30.0 million, and |
• | a one-year capital expenditure loan facility of up to $5.0 million, but not exceeding the lesser of 80% of the hard costs of eligible capital equipment and 75% of the forced liquidation value of eligible capital equipment, subject to adjustment by GECC. |
(A) 100% of the first $50.0 million in net proceeds received are to be applied to prepay or redeem the Junior Capital; | |
(B) net proceeds in excess of $50.0 million and up to $75.0 million are to be allocated 40% to prepay or redeem the Junior Capital, 30% to prepay loans outstanding under our Senior Secured Credit Agreement and 30% to prepay loans outstanding under our Second Lien Credit Agreement; | |
(C) net proceeds in excess of $75.0 million and up to $100.0 million are to be allocated 60% to prepay or redeem the Junior Capital, 20% to prepay loans outstanding under our Senior Secured Credit Agreement and 20% to prepay loans outstanding under our Second Lien Credit Agreement; and | |
(D) net proceeds in excess of $100.0 million are to be allocated 80% to prepay or redeem the Junior Capital, 10% to prepay loans outstanding under our Senior Secured Credit Agreement and 10% to prepay loans outstanding under our Second Lien Credit Agreement. |
scheduled principal payments paid or payable, plus or minus, extraordinary gains or losses which are cash items not included in net income, plus taxes deducted in determining net income to the extent not paid in cash.
Any mandatory prepayments made as provided above are to be applied substantially as follows: first, to any fees then due and payable to GECC, second, to interest then due and payable on the term loan and capital expenditure loan, pro rata between the term loan and capital expenditure loan, third, to prepay the scheduled principal installments on the term loan and capital expenditure loan, allocated pro rata between the term loan and capital expenditure loan, and applied to principal installments in inverse order of maturity, until the term loan and capital expenditure loan have been prepaid in full; fourth, to interest then due and payable on the revolving loan; and fifth, to the principal balance of the revolving loan until the same shall have been paid in full. The revolving loan is permanently reduced by the amount of any such prepayments.
Affirmative and Negative Covenants. Under the Senior Secured Credit Agreement, the Company is obligated to maintain compliance with a number of affirmative and negative covenants. Affirmative covenants the Company must comply with include requirements to maintain our corporate existence and continue the conduct of the Company’s business substantially as conducted in December 2005, promptly pay all taxes and governmental assessments and levies, maintain our corporate books and records, maintain insurance in form and amounts and with insurers reasonably acceptable to GECC, comply with applicable laws and regulations, maintain key man life insurance on the life of William L. Jenkins, provide supplemental disclosure to the lenders, refrain from violating the intellectual property of others, conduct our operations in compliance with environmental laws, provide a mortgage or deed of trust to the lenders granting a first lien on the Company’s real estate upon the request of the lenders, and provide certificates of title on newly acquired equipment with the lender’s lien noted.
Negative covenants the Company may not violate include, among others and subject to limitations and exceptions, (i) forming or acquiring a subsidiary, (ii) merging with, acquiring all or substantially all the assets or stock of, or otherwise combining with or acquiring, another person, (iii) making an investment in or loan to another person, subject to certain exceptions for specified high grade investments so long as there are no revolving loans outstanding, (iv) incurring any indebtedness other than specified permitted indebtedness, (v) entering into any
transaction with an affiliate except in the ordinary course of the Company’s business and on fair and reasonable terms no less favorable than would be obtained in a comparable arm’s length transaction with a non-affiliated person, (vi) making loans to its employees in amounts exceeding $50,000 individually and $250,000 in the aggregate, (vii) issuing any shares of the Company’s common stock if any of its stock or the stock of a subsidiary is pledged to GECC, making any change in its business objectives or operations that could adversely affect repayment of the loans or could reasonably be expected to have or result in a material adverse effect, making any change in its capital structure, including the issuance of any stock, warrants or convertible securities or any revision in the terms of outstanding stock except for permitted payments to holders of subordinated debt and options granted under an existing or future incentive option plan, or amending its charter or by-laws in a manner that would adversely affect its duty or ability to repay the indebtedness, or engaging in any business other than that engaged in by the Company on December 16, 2005; (viii) creating or permitting to exist any liens on its properties or assets, with the exception of (x) those granted to the lenders under the Senior Secured Credit Agreement or in existence on the date of making the loan and permitted re-financings, extensions and renewals of such liens provided the indebtedness secured is not increased and the lien does not attach to any additional property, or (y) liens created after December 16, 2005 by conditional sale or other title retention agreements or in connection with purchase money indebtedness with respect to equipment and fixtures acquired in the ordinary course of business involving the incurrence of an aggregate amount of purchase money indebtedness and capital lease obligations of not more than $2.0 million outstanding at any one time or (z) liens securing the indebtedness under the Second Lien Credit Agreement, (xi) selling any of its properties or other assets, including the stock of any subsidiary, except inventory in the ordinary course of business, obsolete or unused equipment or fixtures with an appraised value not exceeding $200,000 per transaction and $500,000 per year, and other equipment and fixtures with a book value not exceeding $200,000 per transaction and $500,000 per year, (xii) breaching or failing to comply with the various financial covenants in the credit agreement, (xiii) releasing any hazardous material that would violate environmental laws or adversely impact the value of any collateral; (xiv) engaging in a sale leaseback, synthetic lease or similar transaction, (xv) making any restricted payments, including payment of dividends, stock or warrant redemptions, repaying subordinated notes, except as otherwise permitted under the Senior Secured Credit Agreement, rescission of the sale of outstanding stock, subject to certain exceptions including, among others, permitted prepayments or redemptions of Junior Capital using the net proceeds from a public offering of its common stock, payment of reasonable and customary fees to its non-employee directors, reimbursement of the reasonable expenses of St. James Capital Corp., St. James Capital Partners, L.P., SJMB, LP, and SJMB, LLC in an amount not to exceed $60,000 per year, payment of a $274,000 fee to SJMB, L.P. not later than December 31, 2006 or the date the Company complete its first public offering of common stock after December 16, 2005, and “Change of Control” payments (as “Change of Control” is defined in the employment agreements with the parties to receive the payments) on and after December 16, 2005 but before December 31, 2005 in the amount of approximately $1.1 million, and, in connection with in a contemplated public offering of shares of its common stock, in an aggregate amount not to exceed approximately $2.7 million, (xvi) purchasing any real estate in excess of $250,000, (xvii) engaging in any speculative hedging transactions; (xviii) amending or changing the terms of its subordinated debt, (xix) changing or amending the Second Lien Credit Agreement, or (xx) changing or amending the Bobcat acquisition agreement.
• | 2.25:1.00 for the fiscal months ending on January 31, 2006 through March 31, 2006; | |
• | 2.25:1.00 for the fiscal months ending on April 30, 2006 through June 30, 2006; | |
• | 2.00:1.00 for the fiscal months ending on July 31, 2006 through September 30, 2006; | |
• | 2.00:1.00 for the fiscal months ending on October 31, 2006 through December 31, 2006; | |
• | 2.00:1.00 for the fiscal months ending on January 31, 2007 through March 31, 2007; and | |
• | 1.75:1.00 for each fiscal month ending thereafter. |
• | $33,000,000 for the fiscal months ending on January 31, 2006 through March 31, 2006; | |
• | $33,000,000 for the fiscal months ending on April 30, 2006 through June 30, 2006; | |
• | $34,000,000 for the fiscal months ending on July 31, 2006 through September 30, 2006; | |
• | $34,000,000 for the fiscal months ending on October 31, 2006 through December 31, 2006; and | |
• | $35,000,000 for each fiscal month ending thereafter. |
Federal Reserve System plus 0.5%. Subject to the absence of an event of default and fulfillment of certain other conditions, we can elect to borrow or convert any loan and pay the annual interest at the LIBOR rate plus a margin of 7.5%. If an event of default in the nature of a failure to make any payment of principal of, interest on or fees owing in respect to loans when due and payable or the commencement of bankruptcy proceedings involving us has occurred, the annual interest rate is increased by 2% and, if any other default or event of default has occurred and is continuing, GECC may elect to increase the interest rate by that amount.
Collateral. The loan under the Second Lien Credit Agreement is collateralized by a junior lien against substantially all of the Company’s assets, subordinate to the lien under the Senior Secured Credit Agreement.
Fiscal Year | ||||
2006 | $ | 5,168,880 | ||
2007 | 4,602,717 | |||
2008 | 4,506,778 | |||
2009 | 64,045,232 | |||
2010 | — | |||
Thereafter | — | |||
$ | 78,323,607 | |||
Fiscal Year | Operating Leases | |||
2006 | $ | 785,992 | ||
2007 | 507,397 | |||
2008 | 398,373 | |||
2009 | 240,025 | |||
2010 | 76,446 | |||
Thereafter | — | |||
Total minimum lease payments | $ | 2,008,233 | ||
SJCP Expires 12/31/09 | SJMB Expires 12/31/09 | Guarantor affiliated with SJCP Expires 12/31/09 | Lenders affiliated with SJMB Expires 12/31/09 | Falcon Seaboard Expires 12/31/09 | Harris Webb & Garrison Expires 3/15/03 | W. L. Jenkins Employment Agreement Expires 12/31/06 | Total | ||||||||||||||||||
Balance, 12/31/02 | 732,028 | 2,756,250 | 70,000 | 2,570,841 | 180,000 | 38,462 | 250,000 | 6,597,580 | |||||||||||||||||
issuance | 146,250 | 372,516 | 518,766 | ||||||||||||||||||||||
Balance, 12/31/03 | 732,028 | 2,902,500 | 70,000 | 2,943,357 | 180,000 | 38,462 | 250,000 | 7,116,347 | |||||||||||||||||
expirations/cancelled | (1,245,623 | ) | (38,462 | ) | (1,284,084 | ) | |||||||||||||||||||
issuance | 802,856 | 802,856 | |||||||||||||||||||||||
Balance, 12/31/04 | 732,028 | 2,902,500 | 70,000 | 2,500,591 | 180,000 | — | 250,000 | 6,635,118 | |||||||||||||||||
exchange commitment | (488,018 | ) | (1,788,000 | ) | (2,276,019 | ) | |||||||||||||||||||
tender offer exchange | (70,000 | ) | (2,383,341 | ) | (250,000 | ) | (2,703,341 | ) | |||||||||||||||||
Balance, 12/31/05 | 244,009 | 1,114,500 | — | 117,250 | 180,000 | — | — | 1,655,759 | |||||||||||||||||
2005 | 2004 | 2003 | ||||||||
Federal: | ||||||||||
Current | $ | 163,442 | $ | — | $ | — | ||||
Deferred | — | — | — | |||||||
163,442 | — | — | ||||||||
State: | ||||||||||
Current | 11,885 | — | — | |||||||
Deferred | — | — | — | |||||||
11,885 | — | — | ||||||||
Total | $ | 175,327 | $ | — | $ | — | ||||
2005 | 2004 | 2003 | ||||||||
Provision (benefit) at federal statutory rate | $ | 2,850,736 | $ | (600,587 | ) | $ | (1,409,979 | ) | ||
State income taxes, net of federal benefit | 276,689 | (58,292 | ) | (136,851 | ) | |||||
Nondeductible expenses | 86,728 | 103,137 | 105,180 | |||||||
Accrued liabilities and other | — | (522,358 | ) | (117,993 | ) | |||||
Increase (decrease) in valuation allowance | (3,038,826 | ) | 1,078,100 | 1,559,643 | ||||||
Provision (benefit) for federal income taxes | $ | 175,327 | $ | — | $ | — | ||||
2005 | 2004 | ||||||
Gross deferred tax assets: | |||||||
Allowance for doubtful accounts receivable | $ | 159,198 | $ | 177,342 | |||
Accrued bonuses and other | 696,034 | 227,694 | |||||
Operating loss and tax credit carryforwards | 11,142,902 | 13,293,059 | |||||
Goodwill | 1,958,940 | 2,904,108 | |||||
Valuation allowance | (6,441,690 | ) | (14,627,450 | ) | |||
Gross deferred tax asset | 7,515,384 | 1,974,753 | |||||
Gross deferred tax liabilities: | |||||||
Property, plant and equipment | (6,193,290 | ) | (1,862,085 | ) | |||
Other | (112,669 | ) | (112,668 | ) | |||
Intangible assets | (10,165,015 | ) | |||||
Gross deferred tax liability | (16,470,974 | ) | (1,974,753 | ) | |||
Net deferred tax asset (liability) | $ | (8,955,590 | ) | $ | — | ||
For the Year Ended 2005 | For the Year Ended 2004 | For the Year Ended 2003 | ||||||||||||||||||||||||||
Income (Numerator) | Shares (Denominator) | Per Share Amount | Income (Numerator) | Shares (Denominator) | Per Share Amount | Income (Numerator) | Shares (Denominator) | Per Share Amount | ||||||||||||||||||||
Net income (loss) per share - basic | ||||||||||||||||||||||||||||
Income (loss) before discontinued operations and extraordinary items available to common stockholders | $ | 8,209,187 | 1,428,760 | $ | 5.75 | $ | (93,072 | ) | 1,249,953 | $ | (.07 | ) | $ | (3,621,444 | ) | 1,249,953 | $ | (2.90 | ) | |||||||||
Discontinued operations | — | 1,428,760 | — | (1,673,361 | ) | 1,249,953 | (1.34 | ) | (1,916,496 | ) | 1,249,953 | (1.53 | ) | |||||||||||||||
Net income (loss) per share - basic | $ | 8,209,187 | 1,428,760 | $ | 5.75 | $ | (1,766,433 | ) | 1,249,953 | $ | (1.41 | ) | $ | (5,537,940 | ) | 1,249,953 | $ | (4.43 | ) | |||||||||
Net income (loss) per share - diluted | ||||||||||||||||||||||||||||
Income (loss) before discontinued operations and extraordinary items available to common stockholders | $ | 11,670,294 | 2,644,308 | $ | 4.41 | $ | (93,072 | ) | 1,249,953 | $ | (.07 | ) | $ | (3,621,444 | ) | 1,249,953 | $ | (2.90 | ) | |||||||||
Discontinued operations | — | 2,644,308 | — | (1,673,361 | ) | 1,249,953 | (1.34 | ) | (1,916,496 | ) | 1,249,953 | (1.53 | ) | |||||||||||||||
Net loss per share - diluted | $ | 11,670,294 | 2,644,308 | $ | 4.41 | $ | (1,766,433 | ) | 1,249,953 | $ | (1.41 | ) | $ | (5,537,940 | ) | 1,249,953 | $ | (4.43 | ) | |||||||||
Income (Numerator) | Weighted average number of outstanding shares (Denominator) | Amount per share | ||||||||
Basic EPS | ||||||||||
Income available to coomon stockholders | $ | 8,209,187 | 1,428,760 | $ | 5.75 | |||||
Effects of dilutive securities | ||||||||||
Options to purchase common stock | 160,573 | |||||||||
Warrants to purchase common stock | 250,986 | |||||||||
Convertible debt | 803,989 | |||||||||
Interest on convertible debt | 3,461,107 | |||||||||
Income available to common stockholders adjusted for interest expense of assumed conversion of convertible debt | $ | 11,670,294 | 2,644,308 | $ | 4.41 | |||||
Number of Options | Range of Exercise Prices | Weighted Average Exercise Price | Weighted Average Fair Value of Stock at Grant Date | Vesting Provisions | ||||||||||||
Options outstanding, December 31, 2002 | 1,745,200 | $7.50-$66.30 | $ | 7.64 | ||||||||||||
Options cancelled | (200,680 | ) | $ | 7.50 | $ | 7.50 | ||||||||||
(200,680 | ) | |||||||||||||||
Options outstanding, December 31, 2003 | 1,544,520 | $7.50-$66.30 | $ | 7.66 | ||||||||||||
Options cancelled | (484,720 | ) | $ | 7.50 | $ | 7.50 | ||||||||||
(484,720 | ) | |||||||||||||||
Options outstanding, December 31, 2004 | 1,059,800 | $7.50-$26.30 | $ | 7.51 | ||||||||||||
Options outstanding, December 31, 2005 | 1,059,800 | $7.50-$26.30 | $ | 7.51 | ||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||
Exercise Prices | Number Outstanding 12/31/05 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable 12/31/05 | Weighted Average Exercise Price | |||||||||||
$ 7.50 | 1,059,300 | 4.86 | $ | 7.50 | 1,059,300 | $ | 7.50 | |||||||||
$26.30 | 500 | 1.24 | $ | 26.30 | 500 | $ | 26.30 | |||||||||
1,059,800 | 4.86 | $ | 7.51 | 1,059,800 | $ | 7.51 | ||||||||||
2005 | 2004 | 2003 | ||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | ||||
Expected life (years) | 5.00 | 5.00 | 2.09 | |||||||
Expected volatility | 118.41 | % | 115.26 | % | 115.11 | % | ||||
Risk-free interest rate | 4.34 | % | 3.70 | % | 2.98 | % |
Company primarily provides snubbing services utilizing specialized high pressure snubbing equipment that allows an operator to service a well without using other more disruptive means to control the pressure in the well. The Company’s well intervention segment also includes other related oil field services, such as freezing services, hot tapping services, rental tools and fishing services.
Well | ||||||||||
2005 | Wireline | Intervention | Total | |||||||
Segment revenues | $ | 72,897,743 | $ | 769,180 | $ | 73,666,923 | ||||
Segment operating and sg&a expenses | $ | 52,480,688 | $ | 634,097 | $ | 53,114,785 | ||||
Segment depreciation and amortization | $ | 4,974,681 | $ | 233,635 | $ | 5,208,316 | ||||
Segment operating income | $ | 15,442,374 | $ | (98,552 | ) | $ | 15,343,822 | |||
Segment assets | $ | 39,140,833 | $ | 53,537,537 | $ | 92,678,370 | ||||
Segment goodwill | $ | 1,237,416 | $ | 12,802,766 | $ | 14,040,182 |
Sales | Income (loss) from operations | Income (loss) before discontinued operations | Income (loss) before discontinued operations per share | Net income (loss) | Net income (loss), per share | ||||||||||||||
2005 (1) | |||||||||||||||||||
First Quarter | $ | 14,447,772 | $ | 1,597,335 | $ | 646,304 | $ | 0.61 | $ | 646,304 | 0.61 | ||||||||
Second Quarter | 19,700,482 | 4,963,767 | 3,799,015 | 1.89 | 3,799,015 | 1.89 | |||||||||||||
Third Quarter | 17,421,589 | 3,353,162 | 2,273,007 | 1.28 | 2,223,728 | 1.26 | |||||||||||||
Fourth Quarter | 22,097,080 | 5,429,558 | 1,666,188 | 0.79 | 1,540,140 | 0.75 | |||||||||||||
$ | 73,666,923 | $ | 15,343,822 | $ | 8,384,514 | $ | 4.48 | $ | 8,209,187 | $ | 4.41 | ||||||||
2004 | |||||||||||||||||||
First Quarter | $ | 10,539,320 | $ | (386,047 | ) | $ | (1,675,622 | ) | $ | (1.34 | ) | $ | (3,012,079 | ) | $ | (2.41 | ) | ||
Second Quarter | 13,170,348 | 922,411 | (266,031 | ) | (0.21 | ) | (420,742 | ) | (0.34 | ) | |||||||||
Third Quarter | 14,950,787 | 2,188,164 | 951,364 | 0.76 | 847,626 | 0.68 | |||||||||||||
Fourth Quarter | 15,026,382 | 1,905,415 | 897,217 | 0.71 | 818,762 | 0.66 | |||||||||||||
$ | 53,686,837 | $ | 4,629,943 | $ | (93,072 | ) | $ | (0.07 | ) | $ | (1,766,433 | ) | $ | (1.41 | ) | ||||
(1) All quarter per share calculations include addback of interest on convertible debt as well as effect of dilutive securities (see Note 13). |
Warrior Energy Services Corporation | ||
Dated: March 30, 2006 | ||
By: | /s/ William L. Jenkins | |
William L. Jenkins, President |
Signature | Capacity | Date | ||
/s/ William L. Jenkins | President, CEO and Director | March 30, 2006 | ||
(Principal Executive Officer) | ||||
William L. Jenkins | ||||
/s/ Ron E. Whitter | Vice President - Finance | March 30, 2006 | ||
(Principal Financial and Accounting Officer) | ||||
Ron E. Whitter | ||||
/s/ Robert J. McNally | Director | March 30, 2006 | ||
Robert J. McNally | ||||
/s/ Charles E. Underbrink | Director | March 30, 2006 | ||
Charles E. Underbrink | ||||
/s/ James H. Harrison | Director | March 30, 2006 | ||
James H. Harrison |
for the Year Ended December 31, 2005
10.22.1 | Amendment No. 1 to Recapitalization Agreement dated October 6, 2005 between the Company and St. James Capital Partners, L.P. | |
10.23.1 | Amendment No. 1 to Recapitalization Agreement dated October 6, 2005 between the Company and SJMB, L.P. | |
10.25 | Employment Agreement dated September 1, 2004 between the Company and Ron Whitter. | |
10.25.1 | Amendment to Employmenmt Agreement dated September 1, 2004 between the Company and Ron Whitter. | |
23.1 | Consent of Grant Thornton LLP | |
31.1 | Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) | |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) | |
32.1 | Certification of President and Chief Executive Officer Pursuant to Section 1350 (furnished, not filed) | |
32.2 | Certification of Chief Financial Officer Pursuant to Section 1350 (furnished, not filed) |