EX-99.2 5 ex99_2.htm EXHIBIT 99.2 Exhibit 99.2
 
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
AND HYDRAULIC WELL CONTROL
 
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2005

(in thousands except for per share amounts)

(unaudited)

   
HWC
  
B&C
  
Pro Forma
Adjustments
  
Reference
 
Consolidated
 
ASSETS
                      
CURRENT ASSETS:
                      
Cash and cash equivalents
   $
4,738
 $
2,594
   $
-
  
 
     $
7,332
  
 
                             -   
Receivables-net
    
11,351
    
6,142
    
-
          
17,493
  
Inventories-net
    
781
    
-
    
-
          
781
  
Prepaid expenses and other current assets
    
235
    
1,862
    
-
          
2,097
  
Total current assets
    
17,105
    
10,598
    
-
          
27,703
  
                                 
PROPERTY AND EQUIPMENT-net
    
19,283
    
2,462
    
21,129
    
M N
    
42,874
  
DEFERRED TAX ASSET
    
-
    
-
    
-
          
-
  
GOODWILL-net
    
9,340
    
-
    
(4,761
)
  
I, K-R
    
4,579
  
OTHER ASSETS
    
565
    
1,707
    
(1,609
)
  
L T V
    
663
  
Total assets
   $
46,293
   $
14,767
   $
14,759
         $
75,819
  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                
                                 
CURRENT LIABILITIES:
                                
Current maturities of long term debt
   $
-
   $
2,250
  
$
(310
 )   
A C J
  
$
1,940
  
Accrued interest
    
-
    
259
    
(259
)
  
B
    
-
  
Accounts payable and accrued liabilities
    
6,602
    
3,939
    
-
          
10,541
  
Deferred income tax
    
261
    
-
    
-
          
261
  
Income tax payable
    
1,416
    
585
    
-
          
2,001
  
Total current liabilities
    
8,279
    
7,033
    
(569
)
        
14,743
  
                                 
LONG TERM DEBT AND NOTES PAYABLE, net of current maturities
    
-
    
3,600
    
27,882
    
A  H I J
    
31,482
  
Due to affiliates
    
12,886
    
-
    
(12,886
)
  
O
    
-
  
Deferred income tax
    
2,848
          
734
    
P
    
3,582
  
Other liabilities
    
1,277
          
-
    
 
    
1,277
  
Accrued interest net of current portion
    
-
    
339
    
(339
)
  
D
    
-
  
Total Liabilities
    
25,290
    
10,972
    
14,822
          
51,084
  
                                 
COMMITMENTS AND CONTINGENCIES
    
-
    
-
    
-
          
-
  
                                 
STOCKHOLDERS' EQUITY:
                                
Preferred stock ($.00001 par value, 5,000,000 shares authorized, 53,000 issued and outstanding at December 31, 2005)
    
-
    
-
    
-
          
-
  
Common stock ($.00001 par value, 125,000,000 shares authorized, 29,594,000 issued and ourstanding at December 31, 2005)
    
-
                
 
    
-
  
Additional paid in capital
    
18,622
    
71,859
    
2,573
    
E F G K Q
    
93,054
  
Deferred compensation
    
-
    
(225
)
  
-
          
(225
)
Accumulated other comprehensive loss
    
-
    
(1,234
)
  
-
          
(1,234
)
Accumulated earnings (deficit)
    
2,381
    
(66,605
)
  
(2,636
)
  
B D R T V
    
(66,860
)
                                 
Total stockholders' equity
    
21,003
    
3,795
    
(63
)
        
24,735
  
Total liabilities and stockholders' equity
  
$
46,293
  
$
14,767
  
$
14,759
        
$
75,819
  

 
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
AND HYDRAULIC WELL CONTROL
 
PRO FORMA CONDENSED STATEMENT OF OPERATIONS

Year Ended December 31, 2005

(in thousands except for per share amounts)

(unaudited)
 
   
HWC
  
B&C
  
Pro Forma
Adjustments
  
Reference
 
Consolidated
 
REVENUES
  
$
40,117
  
$
29,537
  
$
-
        
$
69,654
  
 
                                
SERVICE AND OTHER COSTS
    
28,300
    
21,586
    
-
          
49,886
  
Selling, general and administrative
    
2,583
    
2,674
    
-
          
5,257
  
Corporate overhead allocation
    
230
    
-
    
(230
)
  
S
    
-
  
Depreciation and amortization
    
3,771
    
714
    
(328
)
  
U
    
4,157
  
                                 
OPERATING INCOME
    
5,233
    
4,563
    
558
          
10,354
  
                                 
INTEREST EXPENSE AND OTHER, NET
    
(105
)
  
(655
)
  
(2,293
)
  
A C H I J V W
    
(3,053
)
                       
 
        
INCOME (LOSS) before income taxes
    
5,128
    
3,908
    
(1,735
)
        
7,301
  
INCOME TAX EXPENSE
    
(2,247
)
  
(1,129
)
              
(3,376
)
                                 
NET INCOME (LOSS)
    
2,881
    
2,779
    
(1,735
)
        
3,925
  
PREFERRED DIVIDENDS REQUIREMENTS & ACCRETIONS
    
-
    
(874
)
  
874
    
E F G
    
-
  
                                 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
  
$
2,881
  
$
1,905
  
$
(861
)
      
$
3,925
  
                                 
Basic Earnings per Common Share:
                                
Net Income
        
$
0.065
              
$
0.067
  
                                 
Weighted Average Common Shares
                                
Outstanding-Basic
          
29,507
    
28,998
    
F K
    
58,505
  
                                 
Diluted Earnings per Common Share:
                                
Net Income
        
$
0.061
              
$
0.065
  
                                 
Weighted Average Common Shares
                                
Outstanding-Diluted
          
31,374
    
28,998
    
F K
    
60,372
  
 
 
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
 
Pro Forma Adjustments for the December 31, 2005 Financial Statements

 
A.
Repay existing subordinated debt of $5,100,000 ($3,600,000 in long term debt and $1,500,000 in current debt) with borrowings under new credit facility, eliminate interest expense of $334,000 net of troubled debt restructuring credits for the twelve months ended December 31, 2005.

 
B.
Settle non-cash troubled debt restructuring current liability of $259,000 as a consequence of repayment of existing subordinated debt.

 
C.
Settle existing current senior debt of $750,000 with borrowings under new credit facility and eliminate interest expense of $53,000 for the twelve months ended December 31, 2005.

 
D.
Settle non-cash troubled debt restructuring long term liability of $339,000 as a result of repayment of existing subordinated debt.

 
E.
Repurchase 50,000 shares of Series A preferred stock of $5,000,000 with borrowings under new credit facility and eliminate dividend expense of $700,000 for the twelve months ended December 31, 2005.

 
F.
Settle accrued dividends and interest of $2,536,000 on Series A preferred stock through issuance of $2,536,000 shares of common stock (valued at $1.00 per share) and eliminate compounded dividends in the amount of $146,000 for the twelve months ended December 31, 2005. The settlement and issuance transactions net to zero within additional paid in capital.

 
G.
Repurchase 2,800 shares of Series C preferred stock for $267,000 with borrowings under new credit facility and eliminate dividend expense of $28,000 for the twelve months ended December 31, 2005.

 
H.
Borrow $2,556,000 under new credit facility at Wells Fargo's prime commercial lending rate, resulting in an increase in interest expense of $210,000 for the twelve months ended December 31, 2005.

 
I.
Issue $15,000,000 subordinated notes as a component of the purchase price in Transaction. An additional $6,166,000 of subordinated notes is due to be issued under the Transaction Agreement as a result of excess net working capital acquired as of December 31, 2005. Increase in interest expense by a total of $2,117,000 for the twelve months ended December 31, 2005.

 
J.
Borrow $9,700,000 under new term loan at Wells Fargo's prime commercial lending rate plus a margin of 0.50%, of which $1,940,000 is current, resulting in an increase in interest expense of $757,000 for the twelve months ended December 31, 2005.

 
K.
Issue 26,462,137 shares of common stock in Transaction for value of $26,462,000.

 
L.
Record capitalized transaction costs of approximately $1,895,000 related to the Transaction (legal fees, accounting fees, appraisal fees, finding fees, etc.), including $931,000 reclassified from other assets at December 31, 2005.

 
M.
Decrease Property, Plant and Equipment by $289,000 to current market value of HWC.

 
N.
Reverse all accumulated depreciation of $21,418,000 of HWC.

 
O.
Contribution to capital of $12,886,000 inter-company payable of HWC.

 
P.
Increase HWC deferred tax liability by $734,000, net purchase accounting adjustment.

 
Q.
Reverse $18,622,000 of common stock and additional paid in capital of HWC.

 
R.
Reverse $2,381,000 retained earnings of HWC.

 
 
S.
Reverse allocation of corporate overhead of $230,000 from OIS.

 
T.
Write off deferred financing costs of $809,000 related to the Prudential subordinated note.

 
U.
Reduce depreciation expense by $328,000 for increase in average useful life of fixed assets.

 
V.
Pay estimated capitalized deferred finance fees of $175,000 and amortize $44,000 in 2005.

 
W.
Reverse other interest expense for HWC and Boots and Coots of $448,000.