UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
OCTOBER 9, 1997
BLACK WARRIOR WIRELINE CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-18754 11-2904094
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
3748 HIGHWAY 45 NORTH
COLUMBUS, MISSISSIPPI 39701
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(601) 329-1047
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The following financial
statements of the business acquired are filed as exhibits hereto:
FINANCIAL STATEMENTS OF DIAMONDBACK DIRECTIONAL, INC. AS OF AUGUST 31, 1997
(UNAUDITED), DECEMBER 31, 1996 AND 1995 AND FOR THE EIGHT MONTHS ENDED
AUGUST 31, 1997 AND 1996 (UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31,
1996 AND THE PERIOD MARCH 1, 1995 (INCEPTION OF THE BUSINESS) TO DECEMBER
31, 1995
Report of Independent Accountants
Balance Sheets as of August 31, 1997 (unaudited) and December 31, 1996 and
1995
Statements of Operations for the eight months ended August 31, 1997 and
1996 (unaudited), the year ended December 31, 1996, and the period March 1,
1995 (inception of the business) to December 31, 1995
Statements of Stockholders' Equity for the eight months ended August 31,
1997 (unaudited), the year ended December 31, 1996, and the period March 1,
1995 (inception of the business) to December 31, 1995
Statements of Cash Flows for the eight months ended August 31, 1997 and
1996 (unaudited), the year ended December 31, 1996, and the period March 1,
1995 (inception of the business) to December 31, 1995
Notes to Financial Statements
(B) PRO FORMA FINANCIAL INFORMATION. The following pro forma financial
statements of the registrant are filed as an exhibit hereto:
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BLACK
WARRIOR WIRELINE CORP. AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31,
1996 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
Unaudited Pro Forma Condensed Consolidated Financial Statements
Introduction
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1996
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
nine months ended September 30, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS,
CONTINUED
(C) EXHIBITS.
NONE
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARY
Date: December 22, 1997
-----------------------
By: s/s William Jenkins
--------------------------
William Jenkins, President and Chief Operating Officer
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Sequential
Description Page No.
----------- ----------
Report of Independent Accountants F - 1
Financial Statements of Diamondback Directional, Inc. as of
August 31, 1997 (unaudited) and December 31, 1996 and 1995,
the eight months ended August 31, 1997 and 1996 (unaudited),
the year ended December 31, 1996, and the period March 1,
1995 (inception of the business) to December 31, 1995 F-2 - F-8
Unaudited Pro Forma Condensed Consolidated Financial
Statements of Black Warrior Wireline Corp. and Subsidiaries
for the nine months ended September 30, 1997 and for the
year ended December 31, 1996 F-9 - F-14
REPORT OF INDEPENDENT ACCOUNTANTS
The Stockholders
Diamondback Directional, Inc.
Conroe, Texas
We have audited the accompanying balance sheets of Diamondback Directional, Inc.
(the Company) as of December 31, 1996 and 1995 and the related statements of
operations, stockholders' equity, and cash flows for the year ended December 31,
1996 and the period March 1, 1995 (inception of the business) to December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overal financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Diamondback Directional, Inc.
as of December 31, 1996 and 1995 and the results of its operations and its cash
flows for the year ended December 31, 1996 and the period March 1, 1995
(inception of the business) to December 31, 1995 in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
October 9, 1997
F-6
F-7
DIAMONDBACK DIRECTIONAL, INC.
BALANCE SHEETS
August 31, 1997 (Unaudited) and December 31, 1996 and 1995
August 31, December 31, December 31,
1997 1996 1995
----------------- ---------------- -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 271823 $ 79507 $ 49408
Accounts receivable 2071805 1343255 101560
Prepaid expenses 31822 31235 5850
---------------- --------------- ---------------
Total current assets 2375450 1453997 156818
Property, plant, and equipment, net 123062 48571 54268
Other assets 808 1023 1346
---------------- --------------- ---------------
Total assets $ 2499320 $ 1503591 $ 212432
================ =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1114490 $ 870714 $ 69914
Related party payable 70 70 12911
Notes payable 52546
---------------- --------------- ---------------
F-8
Total current liabilities 1114560 870784 135371
---------------- --------------- ---------------
Stockholders' equity:
Common stock, no par value;
1,000,000 shares authorized,
1,000 shares issued and outstanding 1000 1000 1000
Retained earnings 1383760 631807 76061
---------------- --------------- ---------------
Total stockholders' equity 1384760 632807 77061
---------------- --------------- ---------------
Total liabilities and stockholders'
equity $ 2499320 $ 1503591 $ 212432
================ =============== ===============
The accompanying notes are an integral part of these financial statements.
F-9
DIAMONDBACK DIRECTIONAL, INC.
STATEMENTS OF OPERATIONS
for the eight months ended August 31, 1997 and 1996 (unaudited), the year ended
December 31, 1996, and the period March 1, 1995 (inception of the business)
to December 31, 1995
Period
Eight Months Eight Months March 1, 1995
Ended Ended Year Ended to
August 31, August 31, December 31, December 31,
1997 1996 1996 1995
--------------- ------------- -------------- -------------
(UNAUDITED) (UNAUDITED)
Net revenues $ 6597491 $ 4066602 $ 6099903 $ 1111896
Operating costs 4713765 3024854 4537281 818463
General and administrative expenses 458988 425941 638911 211059
Depreciation 19852 23175 34762 1600
----------- --------- ---------- ----------
Income from operations 1404886 592632 888949 80774
Other income (expense):
Loss on disposal of equipment -35163 -35163
Other 1018 507 760
----------- --------- ----------- ----------
F-10
Income before provision
for state income taxes 1405904 557976 854546 80774
Provision for state income tax -63516 -25867 -38800 -4713
----------- --------- ---------- ----------
Net income $ 1342388 $ 532109 $ 815746 $ 76061
=========== ========= ========== ==========
The accompanying notes are an integral part of these financial statements.
F-11
DIAMONDBACK DIRECTIONAL, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
for the eight months ended August 31, 1997 (unaudited), the year ended December
31, 1996, and the period March 1, 1995 (inception of the business) to
December 31, 1995
Common Stock
----------------------------- Retained Total
Shares Value Earnings Equity
--------- -------------- --------------- --------------
Balance, March 1, 1995 1000 $ 1000 $ 1000
Net income $ 76061 76061
---------- ------------ -------------- -------------
Balance, December 31, 1995 1000 1000 76061 77061
Distributions to shareholders -260000 -260000
Net income 815746 815746
--------- ------------ -------------- -------------
Balance, December 31, 1996 1000 1000 631807 632807
Distribution to shareholders (unaudited) -590435 -590435
Net income (unaudited) 1342388 1342388
--------- ------------ -------------- -------------
F-12
Balance, August 31, 1997 (unaudited) 1000 $ 1000 $ 1383760 $ 1384760
========= ============ ============== =============
The accompanying notes are an integral part of these financial statements.
F-13
DIAMONDBACK DIRECTIONAL, INC.
STATEMENTS OF CASH FLOWS
for the eight months ended August 31, 1997 and 1996 (unaudited), the year ended
December 1996, and the period March 1, 1995 (inception of the business) to
December 31, 1995
Period
Eight Months Eight Months March 1, 1995
Ended Ended Year Ended to
August 31, August 31, December 31, December 31,
1997 1996 1996 1995
--------------- --------------- ------------ -------------
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net income $ 1342388 $ 532109 $ 815746 $ 76061
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 19852 23175 34762 1600
Amortization 215 215 323 269
Loss on disposal of property, plant, and
equipment 35163 35163
Change in:
Accounts receivable -728550 -827797 -1241695 -101560
Prepaid expenses -587 -16923 -25385 -5850
Other assets -1615
F-14
Accounts payable and accrued expenses 243776 533867 800800 69914
Related party payable -12841 12911
---------- --------- ------------- - ------------
Net cash provided
by operating activities 877094 279809 406873 51730
---------- --------- ------------- - ------------
Cash flows from investing activities:
Purchases of property, plant, and equipment -94343 -42819 -64228 -6608
---------- --------- ------------- - ------------
Net cash used in investing
activities -94343 -42819 -64228 -6608
---------- --------- ------------- - ------------
Cash flows from financing activities:
Proceeds from notes payable 35040
Principal payments, notes payable -47440 -52546 -31754
Proceeds from issuance of common stock 1000
Distributions to shareholders -590435 -35000 -260000
---------- --------- ------------- - ------------
Net cash (used in) provided by
financing activities -590435 -82440 -312546 4286
---------- --------- ------------- - ------------
Net increase in cash and cash
equivalents 192316 154550 30099 49408
Cash and cash equivalents, beginning of period 79507 49408 49408
---------- --------- ------------- - ------------
F-15
Cash and cash equivalents, end of period $ 271823 $ 203958 $ 79507 $ 49408
========== ========= ============= ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes $ 38800 $ 4713 $ 4713
========== ========= ============
Supplemental schedule of noncash investing and financing
activities:
Purchase of property, plant, and equipment by
issuance of notes payable $ 49260
===============
The accompanying notes are an integral part of these financial statements.
F-16
DIAMONDBACK DIRECTIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Diamondback Directional, Inc. (the Company), incorporated in the state of Texas,
is an oil and gas well service company which provides directional and horizontal
drilling services to companies primarily in Texas. The Company began operations
on March 1, 1995.
The Company's services are performed primarily by independent contractors,
utilizing their own equipment. The unavailability of such equipment on a timely
basis to meet the Company's needs or an inability to contract with
subcontractors on favorable terms could materially affect the Company's
financial position, results of operations, and cash flows.
The unaudited balance sheet as of August 31, 1997 and the unaudited statements
of operations and cash flows for the eight months ended August 31, 1997 and
1996, in the opinion of management, have been prepared on the same basis as the
audited financial statements and include all significant adjustments, consisting
of normal recurring adjustments, necessary for the fair presentation of the
results of the interim periods. Any data disclosed in these notes to the
financial statements for these periods is also unaudited. Operating results of
the Company for the eight months ended August 31, 1997 are not necessarily
indicative of the results that may have been expected for the entire year ending
December 31, 1997.
2. SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS - The Company considers all investments with an
original maturity of three months or less to be cash equivalents.
PROPERTY, PLANT, AND EQUIPMENT - Property, plant, and equipment is stated at
cost. The cost of maintenance and repairs is charged to expense when incurred;
the cost of betterments is capitalized. The cost of assets sold or otherwise
disposed of and the related accumulated depreciation are removed from the
accounts and the gain or loss on such disposition is included in income.
Depreciation is computed using accelerated methods over the estimated useful
lives of the assets (leasehold improvements years, vehicles and other equipment
- - - 5 to 7 years).
INCOME TAXES - The Company and its stockholders elected to be taxed under the
provisions of Sub-Chapter S of the Internal Revenue Code. Therefore, current
income taxes and deferred income taxes on timing deficiencies are not provided.
However, the Company is still subject to certain state taxes which are provided
for in the financial statements.
F-17
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
F-18
NOTES TO FINANCIAL STATEMENTS, CONTINUED
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amount of the Company's cash
and cash equivalents, accounts receivable, and notes payable approximates fair
value due to the relatively short period to maturity of these instruments.
3. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment includes the following at August 31, 1997
(unaudited) and December 31, 1996 and 1995:
August 31, December 31, December 31,
1997 1996 1995
-------------- -------------- -------------
(UNAUDITED)
Vehicles $ 25575 $ 25575
Leasehold improvements 10155 9540
Drilling equipment 81094 9314 $ 49260
Office equipment 57720 35772 6608
----------- -------------- ------------
174544 80201 55868
Less accumulated depreciation -51482 -31630 -1600
----------- -------------- ------------
Net property, plant, and equipment $ 123062 $ 48571 $ 54268
=========== ============== ============
4. NOTES PAYABLE
F-19
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The Company issued notes payable to finance certain equipment purchases. All
notes were due in 12 equal monthly payments with interest accruing at
approximately 8% per annum.
5. INCOME TAXES
The provision for state income taxes of $38,800 and $4,713 for the year ended
December 31, 1996 and the period March 1, 1995 (inception of the business) to
December 31, 1995, respectively, is primarily for Texas franchise taxes.
6. MAJOR CUSTOMERS
Most of the Company's business activity is with customers engaged in drilling
and operating oil and natural gas wells primarily in Texas. Substantially all of
the Company's accounts receivable at December 31, 1996 and 1995 is from such
customers. Performance in accordance with the credit arrangements is in part
dependent upon the economic condition of the natural gas and oil industries in
Texas. The Company does not require its customers to pledge collateral on its
accounts receivable.
The Company earned revenues in excess of 10% of its total revenues from the
following customers for the year ended December 31, 1996 and the period March 1,
1995 (inception of the business) to December 31, 1995:
Period
Year March 1, 1995
Ended to
December 31, December 31,
1996 1995
----------------- -----------------
Union Pacific Resources $ 1108870 %
Chesapeake Operating 924469
F-20
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Reata Oil and Gas 682074
U. S. Operating $ 463645
H. Bryan Poff 185020
------------ --------------
$ 2715413 $ 648665
============ ==============
7. SUBSEQUENT EVENT
On October 9, 1997, substantially all of the assets and liabilities of
Diamondback Directional, Inc. was sold to Black Warrior Wireline Corp.,
effective September 1, 1997, for approximately $8,920,000 in cash, notes
payable, and common stock.
F-21
NOTES TO FINANCIAL STATEMENTS, CONTINUED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS INTRODUCTION
The accompanying unaudited pro forma condensed consolidated financial statements
reflect the condensed consolidated results of operations of Black Warrior
Wireline Corp. and subsidiaries (the Company) for the year ended December 31,
1996, and the nine months ended September 30, 1997 after giving pro forma effect
to (i) the purchase of Petro - Log, Inc. (Petro - Log), (ii) the purchase of
Dyna Jet, Inc. (Dyna Jet), (iii) the purchase of Diamondback Directional, Inc.
(DDI), and (iv) incurrence of deb and issuance of common stock in connection
with the acquisitions. The purchases of Petro - Log, Dyna Jet, and DDI were all
completed prior to September 30, 1997 and therefore are reflected in the
Company's September 30, 1997 condensed consolidated balance sheet, previously
filed on Form 10-QSB. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the Company's "Management's
Discussion and Analysis of Financial Condition and Results of Operations" an the
respective historical financial statements of the Company, Dyna Jet, Petro -
Log, and DDI and the related notes thereto. The unaudited pro forma information
does not purport to be indicative of actual results that would have been
achieved had the acquisitions actually been completed or had the debt or common
stock been issued as of the dates indicated on the following pages nor which may
be achieved in the future.
F-22
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Black Warrior Wireline Corp. and Subsidiaries
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1996
Black Warrior
Wireline Diamondback
Corp. and Dyna Jet Petro - Log Directional
Subsidiaries (a) Inc. (b) Inc. (c) Inc. (d)
------------------ -------------- --------------- -----------------
Net revenues $ 7582021 $ 514590 $ 1456272 $ 6099903
Operating costs 5116777 175111 1058083 4537281
Selling, general, and administrative expenses 1302994 349685 257552 638911
Depreciation and amortization 574400 43155 75243 34762
------------------ -------------- --------------- -- --------------
Income (loss) from operations 587850 -53361 65394 888949
Interest expense and amortization of debt discount -342197 -1129 -1504 760
Net gain (loss) on sale of fixed assets 76645 -3550 675000 -35163
Other income (loss) 39425 -284
------------------ -------------- --------------- -- --------------
Income (loss) before (provision) benefit
for income taxes and extraordinary gain 361723 -58324 738890 854546
(Provision) benefit for income taxes 65715 -21924 -262000 -38800
------------------ -------------- --------------- -- --------------
(continued)
Pro Forma
Pro Forma Consolidated
Adjustments As Adjusted
----------------- ------------------
Net revenues $ 15652786
Operating costs 10887252
Selling, general, and administrative expenses 2549142
Depreciation and amortization $ 661621 (e) 1389181
----------------- -----------------
Income (loss) from operations -661621 827211
Interest expense and amortization of debt discount -745731 (f) -1089801
Net gain (loss) on sale of fixed assets 712932
Other income (loss) 39141
----------------- -----------------
Income (loss) before (provision) benefit
for income taxes and extraordinary gain -1407352 489483
(Provision) benefit for income taxes 249586 (g) -7423
----------------- -----------------
F-23
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Black Warrior
Wireline Diamondback
Corp. and Dyna Jet Petro - Log Directional
Subsidiaries (a) Inc. (b) Inc. (c) Inc. (d)
------------------ -------------- --------------- -----------------
Income (loss) before extraordinary gain 427438 -80248 476890 815746
Extraordinary gain on extinguishment of debt 1608501
------------------ -------------- --------------- -- --------------
Net income (loss) $ 2035939 $ -80248 $ 476890 $ 815746
==--============== ============== =============== == ==============
Income per common share primary (h):
Income before extraordinary gain $ 0.41
Extraordinary gain 1.55
------------------
Net income per common share $ 1.96
==================
Income per common share fully diluted (i):
Income before extraordinary gain
Extraordinary gain
Net income per common share
Weighted average number of common shares
outstanding:
Primary (h) 1040192
==================
Fully diluted (i)
(continued)
Pro Forma
Pro Forma Consolidated
Adjustments As Adjusted
----------------- ------------------
Income (loss) before extraordinary gain -1157766 482060
Extraordinary gain on extinguishment of debt 1608501
----------------- ------------------
Net income (loss) $ -1157766 $ 2090561
================= ==================
Income per common share primary (h):
Income before extraordinary gain $ 0.22
Extraordinary gain 0.74
------------------
Net income per common share $ 0.96
==================
Income per common share fully diluted (i):
Income before extraordinary gain $ .20
Extraordinary gain .44
------------------
Net income per common share $ .66
==================
Weighted average number of common shares
outstanding: 2177957
==================
Primary (h)
Fully diluted (i) 3531215
==================
See notes to unaudited pro forma condensed consolidated financial statements.
F-24
NOTES TO FINANCIAL STATEMENTS, CONTINUED
BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the nine months ended September 30, 1997
Black Warrior
Wireline Diamondback
Corp. and Petro - Log Directional
Subsidiaries (j) Inc. (k) Inc. (l)
------------------ ---------------- ----------------
Net revenues $ 9218909 $ 612620 $ 6597491
Operating costs 8034800 493313 5172753
Depreciation and amortization 931969 27541 19852
------------------ ---------------- ----------------
Income from operations 252140 91766 1404886
Interest expense and amortization of debt discount -408149 -311
Other income 82374 675000 1018
------------------ ---------------- ----------------
Income (loss) before provision for income taxes -73635 766455 1405904
Provision for income taxes -271774 -63516
------------------ ---------------- ----------------
Net income (loss) $ -73635 $ 494681 $ 1342388
================== ================ ================
Net income (loss) per common share:
(continued)
Pro Forma
Pro Forma Consolidated
Adjustments As Adjusted
----------------- ------------------
Net revenues $ 16429020
Operating costs 13700866
Depreciation and amortization $ 358837 (m) 1338199
----------------- ------------------
Income from operations -358837 1389955
Interest expense and amortization of debt discount -397724 (n) -806184
Other income 758392
----------------- ------------------
Income (loss) before provision for income taxes -756561 1342163
Provision for income taxes -182948 (q) -518238
----------------- ------------------
Net income (loss) $ -939509 $ 823925
================= ==================
Net income (loss) per common share:
F-25
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Black Warrior
Wireline Pro Forma
Corp. and Consolidated
Subsidiaries (j) As Adjusted
------------------ -----------------
Primary (o) $ (0.03) $ .24
================== ================
Fully diluted (p) $ .17
================
Weighted average number of common shares outstanding:
Primary (o) 2313324 3712976
================== ================
Fully diluted (p) 5882234
================
See notes to unaudited pro forma condensed consolidated financial statements.
F-26
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Black Warrior Wireline Corp. and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1996 gives effect to the consolidated results of
operations of the Company for the year ended December 31, 1996, as if the
acquisitions of Petro - Log, Dyna Jet, DDI, and the issuance of debt and common
stock for the acquisitions occurred on January 1, 1996. The unaudited pro forma
condensed consolidated statement of operations for the nine months ended
September 30, 1997 gives effect to the consolidated results of operations of the
Company for the nine months ended September 30, 1997, as if the acquisitions of
Petro - Log and DDI, and the issuance of debt and common stock for these
acquisitions occurred on January 1, 1997. These results are not necessarily
indicative of the consolidated results of operations of the Company as they may
be in the future, or as they might have been had these events been effective at
January 1, 1996 and 1997, respectively. The unaudited pro forma condensed
consolidated financial statements should be read in conjunction with the
historical financial statements of the Company, Petro - Log, Dyna Jet, and DDI
and the related notes thereto.
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 ARE AS FOLLOWS:
(a) Represents the condensed consolidated results of operations of the Company
for the year ended December 31, 1996.
(b) Represents the condensed results of operations of Dyna Jet for the period
January 1, 1996 to November 20, 1996, the acquisition date by the Company.
(c) Represents the condensed results of operations of Petro - Log for the year
ended March 31, 1997. Petro - Log was acquired by the Company on June 9, 1997.
(d) Represents the condensed results of operations of DDI for the year ended
December 31, 1996. DDI was acquired by the Company effective September 1, 1997.
(e) Represents the net increase in depreciation expense ($384,409) and the
increase to amortization ($320,400) of the cost over fair value of net assets
acquired over ten to 25 years as a result of the preliminary purchase price
allocation. Depreciation expense was reduced to $43,188 to reflect the
distribution of certain assets to the former stockholders of Petro - Log and
Dyna Jet.
(f) Reflects the increase in interest costs ($746,686) resulting from additional
debt of $9,540,549 with weighted average interest of 7.8% associated with the
financing of Dyna Jet, Petro - Log, and DDI and the reduction to interest costs
($955) on a note payable to the former stockholder of Dyna Jet.
F-27
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Black Warrior Wireline Corp. and Subsidiaries
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS, CONTINUED
(g) Reflects applicable income tax effects of adjustments ($540,132) and the
increase to provision for income taxes of DDI ($290,546) as if it had been taxed
as a C-Corporation instead of an S-Corporation.
(h) Pro forma weighted average number of common shares outstanding on a primary
basis reflects the increase to common stock equivalents using the treasury stock
method for 666,000 warrants issued on June 9, 1997 in connection with the
issuance of debt. The proceeds of this debt were used to, among other things,
purchase Petro - Log. The pro-forma weighted average also reflects 600,000
additional shares issued on October 25, 1996. The proceeds of this offering were
used to, among other things, purchas Dyna Jet. The pro-forma weighted average
also reflects 647,569 shares of common stock issued to the former owners of DDI
in connection with its acquisition.
(i) Pro forma weighted average number of common shares on a fully diluted basis
reflects the increase in common shares of 1,353,258 using the if converted
method for the Company's convertible debt. Also reflects reduction of interest
expense, net of tax, of $233,630 as a result of the assumed conversion.
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 ARE AS
FOLLOWS:
(j) Represents the condensed consolidated results of operations of the Company
for the nine months ended September 30, 1997.
(k) Represents the condensed results of operations of Petro - Log for the period
January 1, 1997 to June 9, 1997, the date it was acquired.
(l) Represents the condensed results of operations of DDI for the eight months
ended August 31, 1997. DDI was acquired by the Company effective September 1,
1997.
(m) Represents the increase in depreciation expense ($160,170) and the increase
to amortization ($198,667) of the cost over fair value of net assets acquired
over 25 years.
(n) Reflects the increase in interest costs ($397,724) resulting from additional
debt of $9,070,549 with effective interest at 7.8% associated with the financing
of Petro - Log and DDI.
F-28
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(o) Pro forma weighted average number of common shares outstanding reflects the
increase to common stock equivalents using the treasury stock method for 666,000
warrants issued on June 5, 1997, in connection with the issuance of debt. The
proceeds of this debt were used to, among other things, purchase Petro - Log.
The pro-forma weighted average also reflects 647,569 shares of common stock
issued to the former owners of DDI in connection with its acquisition.
(p) Pro forma weighted average number of common shares on a fully diluted basis
reflects the increase in common shares of 1,353,258 using the if converted
method for the Company's convertible debt and the increase to common stock using
the treasury stock method for 725,000 warrants issued on October 9, 1997, in
connection with the issuance of debt. Also reflects reduction of interest
expense, net of tax of $175,225 as a result of the assumed conversion.
(q) Reflects applicable income tax effect of adjustments ($295,059) and the
increase to the provision for income taxes of DDI ($478,007) as if it had been
taxed as a C-Corporation instead of an S-Corporation
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