EX-99.3 5 d382598dex993.htm UNAUDITED INTERIM FINANCIAL STATEMENTS FOR WYLIE BICE TRUCKING UNAUDITED INTERIM FINANCIAL STATEMENTS FOR WYLIE BICE TRUCKING

Exhibit 99.3

Wylie Bice Trucking, LLC

Unaudited Financial Statements

March 31, 2012


Wylie Bice Trucking, LLC

Index

March 31, 2012

 

 

     Page(s)  

Financial Statements (unaudited)

  

Statements of Financial Position

     2   

Statements of Operations

     3   

Statements of Cash Flows

     4   

Notes to Financial Statements

     5–8   


Wylie Bice Trucking, LLC

Statements of Financial Position

March 31, 2012 and December 31, 2011 (Unaudited)

 

 

(in thousands)              
     March 31, 2012      December 31, 2011  

Assets

     

Current assets

     

Cash and cash equivalents

   $ 1,149       $ 1,773   

Accounts receivable, net

     23,352         28,871   

Prepaid expenses

     426         194   
  

 

 

    

 

 

 

Total current assets

     24,927         30,838   

Property and equipment, net

     11,943         9,793   

Other assets

     190         169   
  

 

 

    

 

 

 

Total assets

   $ 37,060       $ 40,800   
  

 

 

    

 

 

 

Liabilities and Member’s Equity

     

Current liabilities

     

Current maturities of indebtedness

   $ 1,088       $ 1,124   

Current maturities of capital lease obligations

     1,439         972   

Factoring advances liability

     8,890         10,472   

Accounts payable

     5,390         7,041   

Independent owner-operators payable

     9,538         13,689   

Accrued expenses

     387         479   
  

 

 

    

 

 

 

Total current liabilities

     26,732         33,777   

Long-term indebtedness, less current maturities

     3,333         3,187   

Capital lease obligations, less current maturities

     4,107         2,780   
  

 

 

    

 

 

 

Total liabilities

     34,172         39,744   

Member’s equity

     2,888         1,056   
  

 

 

    

 

 

 

Total liabilities and member’s equity

   $ 37,060       $ 40,800   
  

 

 

    

 

 

 

The accompanying notes are an integral part of these financial statements.

 

2


Wylie Bice Trucking, LLC

Statements of Operations

Three Months Ended March 31, 2012 and 2011 (Unaudited)

 

 

(in thousands)    Three Months Ended
March 31,
 
     2012     2011  

Operating revenues

    

Transportation revenues

   $ 26,999      $ 6,558   

Service revenues

     4,313        1,248   
  

 

 

   

 

 

 

Total operating revenues

     31,312        7,806   
  

 

 

   

 

 

 

Operating expenses

    

Purchased transportation

     21,302        4,079   

Compensation

     1,086        529   

Payroll service expense

     1,569        290   

Fuel, supplies and maintenance

     3,372        1,369   

Depreciation

     461        406   

Selling and administrative

     123        101   

Insurance costs

     207        142   

Taxes and licenses

     39        11   

Communication and utilities

     49        21   
  

 

 

   

 

 

 

Total operating expenses

     28,208        6,948   
  

 

 

   

 

 

 

Operating income

     3,104        858   

Interest expense

     415        107   

Interest income

     (1     —     

Other (income) expense

     (3     4   
  

 

 

   

 

 

 

Net income

   $ 2,693      $ 747   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

3


Wylie Bice Trucking, LLC

Statements of Cash Flows

Three Months Ended March 31, 2012 and 2011 (Unaudited)

 

 

(in thousands)    Three Months Ended
March 31,
 
     2012     2011  

Cash flows from operating activities

    

Net income

   $ 2,693      $ 747   

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

    

Depreciation

     461        406   

Bad debt (recovery) expense

     (153     24   

Changes in assets and liabilities

    

Accounts receivables

     5,673        (1,860

Prepaid expenses

     (232     (44

Other assets

     (23     (6

Accounts payable

     (1,651     752   

Independent owner-operators payable

     (4,151     (186

Accrued expenses

     (92     —     
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     2,525        (167
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (184     (560
  

 

 

   

 

 

 

Net cash used in investing activities

     (184     (560
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of long-term loan obligations

     485        —     

Principal payments on long-term loan obligations

     (374     (43

Principal payments on capital lease obligations

     (633     (428

Settlements on factoring advance arrangements

     (1,582     —     

Member (draws) contributions

     (861     1,243   
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (2,965     772   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (624     45   

Cash and cash equivalents

    

Beginning of period

     1,773        530   
  

 

 

   

 

 

 

End of period

   $ 1,149      $ 575   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information

    

Cash paid during the period for Interest

   $ 130      $ 113   

Supplemental disclosure of noncash flow information

    

Capital lease obligations and lease residual guarantees

     2,427        225   

The accompanying notes are an integral part of these financial statements.

 

4


Wylie Bice Trucking, LLC

Notes to Financial Statements (Unaudited)

March 31, 2012

 

 

1. Nature of Business and Operations

Wylie Bice Trucking LLC, incorporated February 26, 2006 in Killdeer, North Dakota (the “Company”), is engaged in the transportation of fresh, flowback and production water, and oil to the unconventional oil and gas market within the Bakken Shale.

 

2. General

The financial statements presented herein have been prepared in conformity with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited 2011 financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of only normal reoccurring adjustments, that are deemed necessary for fair presentation.

 

3. Service Revenues

The components of service revenues are as follows for the three months ended March 31 (in thousands):

 

     2012      2011  

Rental revenue

   $ 109       $ 112   

Water revenue

     1,898         694   

Repair shop revenue

     737         149   

Other revenue

     1,569         293   
  

 

 

    

 

 

 
     $4,313       $ 1,248   
  

 

 

    

 

 

 

 

4. Accounts Receivable

Accounts receivable consisted of the following at (in thousands):

 

     March 31, 2012     December 31, 2011  

Trade accounts receivable

   $ 18,461      $ 26,078   

Receivables due from factoring

     3,736        2,621   

Independent owner-operator receivables

     1,302        731   

Other receivables

     478        281   
  

 

 

   

 

 

 
     23,977        29,711   

Less: Allowance for doubtful accounts

     (625     (840
  

 

 

   

 

 

 
   $ 23,352      $ 28,871   
  

 

 

   

 

 

 

 

5


Wylie Bice Trucking, LLC

Notes to Financial Statements (Unaudited)

March 31, 2012

 

 

The activity in the allowance for doubtful accounts is as follows (in thousands):

 

Balance at December 31, 2010

   $ —     

Adjustment to bad debt expense

     (840

Write-offs, net of recoveries

     —     
  

 

 

 

Balance at December 31, 2011

     (840

Adjustment to bad debt expense

     153   

Write-offs, net of recoveries

     62   
  

 

 

 

Balance at March 31, 2012 (unaudited)

   $ (625
  

 

 

 

Accounts Receivable Factoring

At March 31, 2012 and December 31, 2011, the Company had factored receivables of approximately $3.7 million and $2.6 million, respectively, and a factoring advance liability of approximately $8.9 million and $10.4 million, respectively. As of March 31, 2012 and December 31, 2011, the Company had no outstanding loan balances under this arrangement.

 

5. Property and Equipment

Property and equipment consisted of the following at (in thousands):

 

     March 31, 2012     December 31, 2011  

Land and improvements

   $ 60      $ 60   

Buildings and improvements

     801        801   

Other Equipment

     1,757        1,657   

Trailers, tractors and terminal equipment

     11,894        9,383   
  

 

 

   

 

 

 

Total property and equipment

     14,512        11,901   

Accumulated depreciation

     (2,569     (2,108
  

 

 

   

 

 

 

Property and equipment, net

   $ 11,943      $ 9,793   
  

 

 

   

 

 

 

Depreciation expense was approximately $0.5 million and $0.4 million for the three month periods ended March 31, 2012 and 2011, respectively.

At March 31, 2012 and December 31, 2011, the Company had approximately $7.5 million and $4.7 million, respectively, of fixed assets and approximately $1.3 million and $1.2 million, respectively, of accumulated depreciation related to equipment under capital leases. Equipment under capital leases is included in trailers, tractors and terminal equipment in the above schedule.

 

6


Wylie Bice Trucking, LLC

Notes to Financial Statements (Unaudited)

March 31, 2012

 

 

6. Long-Term Indebtedness

Long-term debt consisted of the following (in thousands):

 

     March 31, 2012     December 31, 2011  

Capital lease obligations

   $ 5,546      $ 3,752   

Equipment loans

     4,421        4,311   
  

 

 

   

 

 

 

Long-term obligations, including current maturities

     9,967        8,063   

Less: Current maturities of long-term obligations (including capital lease obligations)

     (2,527     (2,096
  

 

 

   

 

 

 

Long-term obligations, less current maturities (including capital lease obligations)

   $ 7,440      $ 5,967   
  

 

 

   

 

 

 

Equipment Loans

The Company entered into multiple financing agreements with various lenders for the purchase of tractors, trailers and other equipment. The initial agreements have terms that range from two to five years with interest rates ranging from approximately 4.99% to 17.50%. There are no covenants associated with these financing agreements. The Company records these loans under indebtedness in the statements of financial position.

Lease Agreements

The Company entered into multiple capital leases with various lenders for the purchase of tractors, trailers and other equipment. The leases have interest rates ranging from 4.25% to 12.69%. There are no covenants associated with these financing agreements. The Company records these leases under capital lease obligations in the statements of financial position.

 

7. Transactions With Related Parties

The Company purchased from RM Resources, LLC (“RM”) a company which is 33% owned by Wylie Bice, the owner of the Company, approximately, $1.2 million and $0.2 million for water disposal services for the three month periods ended March 31, 2012 and 2011, respectively. Of this total, approximately, $0.7 million and $0.04 million was included in accounts payable as of March 31, 2012 and March 31, 2011, respectively. The services purchased from RM by the Company are a passthrough of collections received from customers. The Company records water disposal revenues as service revenues with the corresponding expense in fuel, supplies and maintenance.

In the three month period ended March 31, 2012 and 2011, the Company recognized approximately $0.5 million and $0.3 million, respectively, of revenue for services related to equipment rentals to Red Rock Rentals, LLC (“Red Rock”), which is owned by Dean Rodne, 33% owner of RM Resources.

 

7


Wylie Bice Trucking, LLC

Notes to Financial Statements (Unaudited)

March 31, 2012

 

 

The Company performs payroll services, which includes paying driver wages, on behalf of other owner operators. The Company is subsequently reimbursed by the owner operators for those payments. The Company records the reimbursed payroll within service revenues and records a corresponding expense in payroll service expenses.

 

8. Commitments and Contingencies

Litigation

The Company is involved in various legal proceedings that have arisen in the ordinary course of business. In the opinion of the Company’s management, all such proceedings are adequately covered by insurance or, if not so covered, should not materially result in any liability which would have a material adverse effect on the financial position, results of operations or cash flows of the Company.

 

9. Subsequent Events

On May 7, 2012, the Company’s sole member entered into an asset purchase agreement with Quality Carriers, Inc. to sell the operating assets of the Company for $47.6 million, plus potential additional consideration of $11.4 million if certain future operating and performance criteria are satisfied. On June 1, 2012, this sale was consummated for an adjusted purchase price of $51.0 million.

 

8