UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2005
		OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE TRANSITION PERIOD FROM                                  TO
		COMMISSION FILE NUMBER 333-106801

 

INTERLINE BRANDS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

(904) 421-1400

(Registrant’s telephone number, including area code)

 

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

 

The Registrant meets the conditions set forth in General Instruction H(1)(a) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

 

                    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the precedi ng 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes o     No ý*

 

* The Registrant is not required to file this Quarterly Report on Form 10-Q pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  The filing is required, however, pursuant to the terms of the indenture governing the Registrant’s 11.5% senior subordinated notes due 2011.

 

                    Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o     No ý

 

Number of shares of Common Stock outstanding as of May 16, 2005: None

Because the registrant is an indirect wholly owned subsidiary of Interline Brands, Inc., a Delaware corporation, none of the registrant’s outstanding voting stock is held by non-affiliates of the Registrant.  As of the date hereof, 100 shares of the Registrant’s Common Stock were issued and outstanding and held by Interline Brands, Inc., a Delaware corporation.

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TABLE OF CONTENTS

 

 

 

 

 

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements		1
		Unaudited Condensed Consolidated Balance Sheets as of  April 1, 2005 and December 31, 2004	1
		Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended April 1, 2005 and March 26, 2004	2
		Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended April 1, 2005	3
		Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 1, 2005 and March 26, 2004	4
		Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussions and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		21
Item 4.	Controls and Procedures		22
PART II — OTHER INFORMATION			22
Item 1.	Legal Proceedings		22
Item 5.	Other Information		22
Item 6.	Exhibits		22
SIGNATURES			23

 

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PART I. FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS.

 

INTERLINE BRANDS, INC. (A NEW JERSEY CORPORATION) AND SUBSIDIARIES

(A WHOLLY OWNED SUBSIDIARY OF INTERLINE BRANDS, INC., A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

AS OF APRIL 1, 2005 AND DECEMBER 31, 2004

(in thousands, except share and per share data)

		April 1,			December 31,
		2005			2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	10,198		$	69,178
Accounts receivable - trade (net of allowance for doubtful accounts of $7,014 and $6,929)		105,685			98,511
Accounts receivable - other		13,961			17,828
Inventory		146,000			145,532
Prepaid expenses and other current assets		5,092			3,204
Deferred income taxes		11,405			12,084
Total current assets		292,341			346,337
PROPERTY AND EQUIPMENT, net		28,195			28,767
GOODWILL		203,848			203,848
OTHER INTANGIBLE ASSETS, net		81,673			85,361
OTHER ASSETS		9,610			9,067
TOTAL ASSETS		$	615,667		$	673,380
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Revolver		$	17,000		$	—
Current portion of long-term debt		1,000			1,000
Accounts payable		53,925			53,260
Accrued expenses and other current liabilities		19,218			22,180
Accrued interest payable		5,852			3,042
Accrued merger expenses		5,994			6,131
Accrued income taxes payable		1,339			7,372
Total current liabilities		104,328			92,985
LONG-TERM LIABILITIES:
Deferred income taxes		24,899			25,221
Long-term debt, net of current portion		232,025			302,275
TOTAL LIABILITIES		361,252			420,481
COMMITMENTS AND CONTINGENCIES
SENIOR PREFERRED STOCK, $0.01 par value, 1 share authorized and outstanding as of April 1, 2005 and December 31, 2004; at liquidation value		394,637			381,327
STOCKHOLDERS’ EQUITY:
Common stock; no par value, 100 authorized, issued and outstanding as of April 1, 2005 and December 31, 2004		175,039			174,879
Accumulated deficit		(316,078		)	(304,162		)
Accumulated other comprehensive income		817			855
TOTAL STOCKHOLDERS’ EQUITY		(140,222		)	(128,428		)
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY		$	615,667		$	673,380

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

1

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INTERLINE BRANDS, INC. (A NEW JERSEY CORPORATION) AND SUBSIDIARIES

(A WHOLLY OWNED SUBSIDIARY OF INTERLINE BRANDS, INC., A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THREE MONTHS ENDED APRIL 1, 2005 AND MARCH 26, 2004

(in thousands, except share and per share data)

		Three Months Ended
		April 1, 2005			March 26, 2004
NET SALES		$	196,491		$	172,604
COST OF SALES		121,005			106,881
Gross Profit		75,486			65,723
OPERATING EXPENSES :
Selling, general and administrative expenses		53,740			48,257
Depreciation and amortization		3,117			2,983
Total Operating Expense		56,857			51,240
OPERATING INCOME		18,629			14,483
CHANGE IN FAIR VALUE OF INTEREST RATE SWAPS		—			1,104
LOSS ON EXTINGUISHMENT OF DEBT		(10,340		)	—
INTEREST EXPENSE		(6,270		)	(10,194		)
INTEREST INCOME		120			8
OTHER INCOME		168			136
Income before income taxes		2,307			5,537
PROVISION FOR INCOME TAXES		914			2,286
NET INCOME		1,393			3,251
PREFERRED STOCK DIVIDENDS		(13,310		)	(13,261		)
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS		$	(11,917	)	$	(10,010	)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

2

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INTERLINE BRANDS, INC. (A NEW JERSEY CORPORATION) AND SUBSIDIARIES

(A WHOLLY OWNED SUBSIDIARY OF INTERLINE BRANDS, INC., A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY) (UNAUDITED)

THREE MONTHS ENDED APRIL 1, 2005

(in thousands except share data)

										Accumulated
										Other			Total
		Common Stock					(Accumulated			Comprehensive			Stockholders’
		Shares		Amount			Deficit)			Income (Loss)			Equity (Deficiency)
BALANCE, DECEMBER 31, 2004		100		174,879			(304,161		)	855			(128,427		)
Preferred stock dividends							(13,310		)				(13,310		)
Capital contribution from Parent				160									160
Comprehensive income:
Net income							1,393
Foreign currency translation										(38		)
Total comprehensive income													1,355
BALANCE, APRIL 1, 2005		100		$	175,039		$	(316,078	)	$	817		$	(140,222	)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3

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INTERLINE BRANDS, INC. (A NEW JERSEY CORPORATION) AND SUBSIDIARIES

(A WHOLLY OWNED SUBSIDIARY OF INTERLINE BRANDS, INC., A DELAWARE CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED APRIL 1, 2005 AND MARCH 26, 2004

(in thousands)

		April 1, 2005			March 26, 2004
OPERATING ACTIVITIES :
Net Income		$	1,393		$	3,251
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,117			2,983
Amortization and write-off of debt issuance costs		2,685			487
Redemption premium on 11.5% senior subordinated notes		8,050			—
Stock based compensation		238			—
Change in fair value of interest rate swaps		—			(1,104		)
Interest income on shareholder notes		—			12
Deferred income taxes		356			140
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable - trade		(7,174		)	(8,408		)
Accounts receivable - other		1,536			4,411
Inventory		(468		)	817
Prepaid expenses and other current assets		(1,888		)	602
Other assets		(543		)	(150		)
Accrued interest payable		2,810			5,477
Accounts payable		665			6,493
Accrued expenses and other current liabilities		(1,478		)	179
Accrued merger expenses		(111		)	(88		)
Income taxes payable		(6,033		)	1,138
Net cash provided by operating activities		3,155			16,240
INVESTING ACTIVITIES :
Purchase of property and equipment, net		(1,543		)	(1,429		)
Purchase of business, net of cash acquired		(1,009		)	(289		)
Net cash used in investing activities		(2,552		)	(1,718		)
FINANCING ACTIVITIES :
Increase in revolver and swingline, net		17,000			—
Repayment of long-term debt		(70,250		)	(1,750		)
Payment of redemption on 11.5% senior subordinated notes		(8,050		)
Payment of debt issuance costs		—			(218		)
Contribution from Parent, net proceeds from exercise of underwriters over-allotment options		1,755			—
Net cash used in financing activities		(59,545		)	(1,968		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(38		)	(23		)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(58,980		)	12,531
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		69,178			1,612
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	10,198		$	14,143
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for :
Interest		$	1,611		$	4,209
Income taxes (net of refunds)		$	6,595		$	270
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Dividends on preferred stock		$	13,310		$	13,261

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4

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Interline Brands, Inc. (A NEW JERSEY CORPORATION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 (in thousands, except share data)

 

1.           BASIS OF PRESENTATION

 

The accompanying unaudited interim financial statements of Interline Brands, Inc., a New Jersey corporation, and its subsidiaries (“Interline” or the “Company”) (a wholly owned subsidiary of Interline Brands, Inc., a Delaware corporation) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission, which apply to interim financial statements. These unaudited condensed consolidated financial statements do not include all disclosures provided in the annual financial statements and should be read in conjunction with the financial statements and notes thereto contained in the Annual Report on Form 10-K for Interline Brands, Inc. for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on March 31, 2005.

 

All adjustments which are in the opinion of management, necessary for a fair statement of the results for the interim periods presented have been recorded. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

 

During December 2004, a reincorporation merger occurred and Interline Brands, a Delaware corporation, (“Interline Delaware” or “the Parent”) became the parent company of the Company, which in turn became the Parent’s principal operating subsidiary. Immediately following the reincorporation merger, the Parent completed its initial public offering (the “IPO”).

 

Segment Information—The Company is in one industry, the distribution of maintenance, repair and operations, or MRO, products.  In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosure about Segments of an Enterprise and Related Information”, the Company has one operating segment. Our net sales for the three month periods ended April 1, 2005 and March 26, 2004 by product category were approximately (in millions):

 

		Three Months Ended
Product Category		April 1, 2005			March 26, 2004
Plumbing		$	90.4		$	79.4
Electrical		29.5			27.6
Security Hardware		13.7			12.1
Heating, Ventilation and Air Conditioning		13.6			10.2
Hardware		11.8			10.4
Appliances		11.8			10.4
Other		25.7			22.5
Total		$	196.5		$	172.6

 

Stock-based Compensation—The Company and its Parent accounted for the option plans in accordance with APB Opinion No. 25, under which no compensation cost has been recognized for stock option awards. While the Company does not recognize compensation costs for stock options, the

 

5

 

Company does determine what these costs would have been using the method prescribed by SFAS No. 123 for disclosure purposes.

 

The fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model.  There were no options granted in the three months ended April 1, 2005 and options granted under the 2004 Equity Incentive Plan were fully vested as of the grant date.  The following assumptions were used for options granted in 2004 under the 2000 Stock Award Plan: dividend yield of 0%, expected volatility of 0%, risk-free interest rate of 3.48%, and expected life of 5 years.  The fair value of these awards approximated zero.

 

The following table illustrates the effect on net earnings (loss) for the three months ended April 1, 2005 and March 26, 2004 as if the Company had applied the fair value recognition provisions of SFAS No.123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation (in thousands):

 

		Three Months Ended
		April 1, 2005			March 26, 2004
Net Income as reported		$	1,393		$	3,251
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		144			—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax		(144		)	—
Pro forma net income		1,393			3,251
Preferred stock dividends		(13,310		)	(13,261		)
Net (loss) applicable to common shareholders		$	(11,917	)	$	(10,010	)

 

New Accounting Pronouncements—On December 16, 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment,” which is a revision of FASB No. 123, “Accounting for Stock-Based Compensation.”  SFAS No. 123R supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” and amends SFAS No. 95, “Statement of Cash Flows.”  Generally, the approach in SFAS No. 123R is similar to the approach described in SFAS No. 123; however, this Statement requires all share-based payments to employees, including grants of employee stock options, be recognized in the income statement based on their fair values.  Pro forma disclosure will no longer be an alternative to financial statement recognition.

 

On April 14, 2005, the Securities and Exchange Commission (“SEC”) announced that it would provide for a phased-in implementation process for SFAS No. 123R. The SEC now requires that registrants that are not small business issuers adopt SFAS No. 123R’s fair value method of accounting for share-based payments to employees not later than the beginning of the first fiscal quarter in the year beginning after June 15, 2005.  As a result, the Company and its Parent will not be required to adopt SFAS No. 123R until December 31, 2005, the first day of the company’s 2006 fiscal year.  The Company and its Parent are continuing to evaluate the provisions of this Statement, the impact on its consolidated financial statements and the timing and approach to adoption of this Statement.

 

2.              DEBT

 

Long-term debt at April 1, 2005 and December 31, 2004 consists of the following:

 

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		April 1,			December 31,
		2005			2004
Term loan		$	99,750		$	100,000
Note payable		3,275			3,275
11.5% senior subordinated notes		130,000			200,000
		233,025			303,275
Less current portion		(1,000		)	(1,000		)
		$	232,025		$	302,275

 

In May 2003, the Company completed an offering of $200 million of 11.5% senior subordinated notes due 2011 and entered into a new $205.0 million senior secured credit facility which consists of a $140.0 million term loan facility and a $65.0 million revolving loan facility, a portion of which is available in the form of letters of credit.  The net proceeds from the offering of senior subordinated notes and the refinancing of the former credit facility with the new credit facility were used to: (1) repay all outstanding indebtedness under the Company’s former credit facility, (2) redeem all of the 16% senior subordinated notes, (3) pay accrued interest and related redemption premiums on the Company’s former debt, and (4) pay transaction fees and expenses related to the foregoing transactions, which we refer to as the “Refinancing Transactions”.  Debt issuance costs capitalized in connection with the Refinancing Transactions were approximately $13.1 million. An expense of approximately $14.9 million in May 2003 for the early extinguishment of debt resulted from the write-off of the unamortized loan fees and loan discount relating to the Company’s former credit facility and the redemption premium incurred upon redemption of the 16% senior subordinated notes.

 

The $200 million principal amount 11.5% senior subordinated notes due 2011 pay interest each May 15 and November 15, with the first payment made on November 15, 2003.  Prior to May 15, 2006, the Company may redeem up to 35% of the notes using proceeds of certain equity offerings and the Company may redeem all of the notes after May 15, 2007, subject to redemption premiums unless redeemed after May 15, 2009.   The Company elected to redeem $70.0 million of the 11.5% senior subordinated notes using proceeds from the IPO transaction and gave the 30-day notice, required by the indenture agreement, on December 20, 2004.  In January 2005, the Company recorded a loss on extinguishment of debt of $10.3 million, consisting of the write-off of deferred financing costs of $2.3 million and the premium of $8.1 million on the $70.0 million redemption of 11.5% senior subordinated notes.

 

In December 2004 the Company amended its term loan facility and revolving loan facility.  The term loan was reduced to $100.0 million from $140.0 million and the revolving loan facility was increased to $100.0 million from $65.0 million.  As part of the amendment in December 2004, the Company paid down $31.3 million of the term loan using proceeds from Interline Delaware’s IPO transaction.  Borrowings under the amended term loan facility and revolving loan facility bear interest, at the Company’s option, at either LIBOR plus a spread or at the alternate base rate plus a spread. Interest rates in effect on borrowings under the term loan facility at April 1, 2005 ranged from 5.37% for LIBOR based borrowings and 7.0% for prime based borrowings.  Outstanding letters of credit under the revolving loan facility are subject to a per annum fee equal to the applicable spread over the adjusted LIBOR for revolving loans.  The term loan facility matures on December 31, 2010 and the revolving loan facility matures on May 31, 2008.  Debt issuance costs capitalized in connection with the amended credit facility were approximately $1.1 million.

 

As of April 1, 2005, the Company had $73.0 million available under its revolving loan facility.  Total letters of credit issued under this facility as of April 1, 2005 were $10.0 million.  There were $17.0 million in borrowings under the revolving loan facility at April 1, 2005. The credit facility is secured by substantially all of the assets of the Company.

 

7

 

In conjunction with the company’s IPO transaction and the amended credit facility an expense of approximately $0.7 million for early extinguishments of debt resulted from the write-off of the unamortized loan fees relating to the Company’s former credit facility in December 2004. In January 2005 the Company recognized a charge of $2.3 million related to the early extinguishment of $70.0 million of the 11.5% senior subordinated notes.

 

Periodically, the Company enters into derivative financial instruments, including interest rate exchange agreements, to manage its exposure to fluctuations in interest rates on its debt.  All interest rate swap agreements were terminated in conjunction with the IPO in December 2004.

 

The credit facility contains customary affirmative and negative covenants that limit the Company’s ability to incur additional indebtedness, pay dividends on its common stock or redeem, repurchase or retire its common stock or subordinated indebtedness, make certain investments, sell assets, and consolidate, merge or transfer assets, and that require the Company to maintain a maximum debt to cash flow ratio and a minimum interest expense coverage ratio. The Company was in compliance with all covenants at April 1, 2005.

 

In April 2003, the Company issued a non-recourse note payable in the principal amount of $3.3 million for the purchase of an investment. This note, which is secured only by the investment, bears interest at a rate of 4% per annum, with principal due in full in April 2010.

 

The maturities of long-term debt subsequent to April 1, 2005 are as follows:

 

 

 

3.              STOCK OPTION PLANS

 

During 2000, the Company established a Stock Award Plan, (the “2000 Plan”), under which Interline New Jersey may award a total of 6,395 shares of common stock in the form of incentive stock options (which may be awarded to key employees only), nonqualified stock options, stock appreciation rights, or SARs, and restricted stock awards, all of which may be awarded to directors, officers, key employees and consultants.  The exercise price per share for an incentive stock option may not be less than 100% of the fair market value of a share of common stock on the grant date.  The exercise price per share for an incentive stock option granted to a person owning stock possessing more than 10% of the total combined voting power of all classes of stock may not be less than 110% of the fair market value of a share of common stock on the grant date, and may not be exercisable after the expiration of ten years from the date of grant.  The Parent’s compensation committee will determine in its sole discretion whether a SAR is settled in cash, shares or a combination of cash and shares.

 

During 2004, the Parent adopted the 2004 Equity Incentive Plan, (the “2004 Plan”), under which the Parent may award 3,175,000 shares in the form of incentive stock options, nonqualified stock options, stock appreciation rights, or SARs, restricted share units, restricted stock and stock bonus awards, all of which may be awarded to any employee, director, officer or consultant of the Company or the Parent.  Under the terms of the 2004 plan and unless the compensation committee of the Parent determines otherwise, the exercise price of the options will not be less than the fair market value of the common stock at the time of grant.

 

8

 

Upon completion of the Parent’s IPO in December 2004, 175,820 shares of Parent restricted stock were issued to senior management.  The restricted stock awards will vest contingent upon the executive’s continued employment in one-third installments over three years provided that certain pre-established annual percentage increases in our earnings per share are attained.  The restricted stock will also vest if the executive remains in our employ for seven years on the seventh anniversary of the date of grant.  In addition, an aggregate of 10,000 shares of the Parent’s restricted stock were issued to non-employee directors who are not affiliated with any of our principal stockholders.  Such awards will vest over two years.  As a result of these restricted stock awards, the Company expects to incur non-cash charges between $0.4 million and $0.9 million in each of the next three to seven years depending upon the acceleration of vesting of restricted stock.  These two directors also each received 20,000 non-qualified stock options with an exercise price equal to the IPO price of $15.00 per share.  In addition, the Parent issued to management 1,835,218 non-qualified stock options to purchase the Parent’s common stock with an exercise price equal to the IPO price of $15.00 per share and 590,465 non-qualified stock options to purchase the Parent’s common stock with a weighted average exercise price of $24.00 per share.  All of these options were fully vested and exercisable when granted.  However, management will only be permitted to sell shares acquired upon the exercise of the options in 25% increments over four years.

 

A summary of the status of stock option plans to purchase the Parent’s common stock is as follows:

 

						Weighted
		Number		Exercise Price		Average Exercise
		of Shares		Per Share		Price Per Share
Outstanding at December 31, 2004		2,468,009		$15.00 - $1,669.13		$	17.61
2005:
Granted		—		—		—
Cancelled		—		—		—
Outstanding at April 1, 2005		2,468,009		$15.00 - $1,669.13		$	17.61

 

4.              SUBSIDIARY GUARANTORS

 

The Company completed an offering of $200 million principal amount of 11.5% senior subordinated notes in connection with its Refinancing Transactions in 2003, of which $130 million principal amount remains outstanding.  The Company filed a registration statement with the Securities and Exchange Commission with respect to an exchange offer for the 11.5% senior subordinated notes and with respect to resales of the senior subordinated notes by an affiliate of the Company for market-making purposes.  The registration statement was declared effective by the SEC and the exchange offer was consummated.  The Company’s 11.5% senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, on a subordinated basis by Wilmar Holdings, Inc., Wilmar Financial, Inc., and Glenwood Acquisition LLC (100%-owned subsidiaries of Interline).  The guarantees by these subsidiary guarantors (the “Subsidiary Guarantors”) are senior to any of their existing and future subordinated obligations, equal in right of payment with any of their existing and future senior subordinated indebtedness and subordinated to any of their existing and future senior indebtedness.  Accordingly, condensed consolidating financial statements for Interline Brands, Inc. and the Subsidiary Guarantors are presented below.

 

9

 

CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)

INTERLINE BRANDS, INC. (A NEW JERSEY CORPORATION) AND THE SUBSIDIARY GUARANTORS

As of April 1, 2005

 

 

		Company
		Excluding
		Subsidiary			Subsidiary
		Guarantors			Guarantors			Eliminations			Consolidated
		(In thousands, except share and per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	10,159		$	39		$	—		$	10,198
Accounts receivable - trade, net		105,685			—			—			105,685
Accounts receivable - other		13,961			—			—			13,961
Inventory		146,000			—			—			146,000
Prepaid expenses and other current assets		5,081			11			—			5,092
Deferred income taxes		11,405			—			—			11,405
Due from Parent		—			76,186			(76,186		)	—
Investment in subsidiaries		42,078			—			(42,078		)	—
Total current assets		334,369			76,236			(118,264		)	292,341
PROPERTY AND EQUIPMENT, net		28,195			—			—			28,195
GOODWILL		203,848			—			—			203,848
OTHER INTANGIBLE ASSETS, net		81,673			—			—			81,673
OTHER ASSETS		6,336			7,236			(3,962		)	9,610
TOTAL ASSETS		$	654,421		$	83,472		$	(122,226	)	$	615,667
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Revolver		$	17,000		$	—		$	—		$	17,000
Current portion of long-term debt		1,000			—			—			1,000
Accounts payable		53,925			—			—			53,925
Accrued expenses and other current liabilities		19,218			—			—			19,218
Accrued interest payable		5,852			—			—			5,852
Accrued merger expenses		5,994			—			—			5,994
Income taxes payable		(186		)	1,525			—			1,339
Due to subsidiaries		43,554			—			(43,554		)	—
Total current liabilities		146,357			1,525			(43,554		)	104,328
LONG-TERM LIABILITIES:
Deferred income taxes		24,899			—			—			24,899
Long-term debt, net of current portion		228,750			3,275			—			232,025
TOTAL LIABILITIES		400,006			4,800			(43,554		)	361,252
SENIOR PREFERRED STOCK		394,637			—			—			394,637
STOCKHOLDERS’ EQUITY (DEFICIENCY):
Common stock		175,039			—			—			175,039
Additional paid-in-capital		—			43,285			(43,285		)	—
Accumulated deficit		(316,078		)	35,387			(35,387		)	(316,078		)
Accumulated other comprehensive loss		817			—			—			817
TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)		(140,222		)	78,672			(78,672		)	(140,222		)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)		$	654,421		$	83,472		$	(122,226	)	$	615,667

 

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CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)

INTERLINE BRANDS, INC. (A NEW JERSEY CORPORATION) AND THE SUBSIDIARY GUARANTORS

As of December 31, 2004

 

		Company
		Excluding
		Subsidiary			Subsidiary
		Guarantors			Guarantors			Eliminations			Consolidated
		(In thousands, except share and per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	69,110		$	68		$	—		$	69,178
Accounts receivable - trade, net		98,511			—			—			98,511
Accounts receivable - other		17,828			—			—			17,828
Inventory		145,532			—			—			145,532
Prepaid expenses and other current assets		3,196			8			—			3,204
Deferred income taxes		12,084			—			—			12,084
Due from Parent		—			75,892			(75,892		)	—
Investment in subsidiaries		39,745			—			(39,745		)	—
Total current assets		386,006			75,968			(115,637		)	346,337
PROPERTY AND EQUIPMENT, net		28,767			—			—			28,767
GOODWILL		203,848			—			—			203,848
OTHER INTANGIBLE ASSETS, net		85,361			—			—			85,361
OTHER ASSETS		5,793			7,068			(3,794		)	9,067
TOTAL ASSETS		$	709,775		$	83,036		$	(119,431	)	$	673,380
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current portion of long-term debt		$	1,000		$	—		$	—		$	1,000
Accounts payable		53,260			—			—			53,260
Accrued expenses and other current liabilities		22,180			—			—			22,180
Accrued interest payable		3,042			—			—			3,042
Accrued merger expenses		6,131			—			—			6,131
Income taxes payable		3,772			3,600			—			7,372
Due to subsidiaries		43,270			—			(43,270		)	—
Total current liabilities		132,655			3,600			(43,270		)	92,985
LONG-TERM LIABILITIES:
Deferred income taxes		25,221			—			—			25,221
Long-term debt, net of current portion		299,000			3,275			—			302,275
TOTAL LIABILITIES		456,876			6,875			(43,270		)	420,481
SENIOR PREFERRED STOCK		381,327			—			—			381,327
STOCKHOLDERS’ EQUITY (DEFICIENCY):
Common stock		174,879			—			—			174,879
Additional paid-in-capital		—			43,285			(43,285		)	—
Accumulated deficit		(304,162		)	32,876			(32,876		)	(304,162		)
Accumulated other comprehensive loss		855			—			—			855
TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)		(128,428		)	76,161			(76,161		)	(128,428		)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)		$	709,775		$	83,036		$	(119,431	)	$	673,380

 

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