UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2010

 

Commission File No. 1-31753

 

CapitalSource Inc.

(Exact name of registrant as specified in its charter)

 

 

4445 Willard Avenue, 12th Floor
Chevy Chase, MD 20815
(Address of Principal Executive Offices, Including Zip Code)

 

(800) 370-9431

(Registrant’s telephone number, including area code)

 

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 preceding 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 þ     No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ

 

As of April 30, 2010, the number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding was 322,610,909.

 

 

TABLE OF CONTENTS

 

CapitalSource Inc.

 

Consolidated Balance Sheets

 

 

See accompanying notes.

CapitalSource Inc.

 

Consolidated Statements of Operations

 

 

See accompanying notes.

CapitalSource Inc.

 

Consolidated Statement of Shareholders’ Equity

 

 

See accompanying notes.

CapitalSource Inc.

 

Consolidated Statements of Cash Flows

 

 

See accompanying notes.

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

 

CapitalSource Inc. (“CapitalSource,” and together with its subsidiaries other than CapitalSource Bank, the “Parent Company”), a Delaware corporation, is a commercial lender that, through its wholly owned subsidiary, CapitalSource Bank, provides financial products to small and middle market businesses nationwide and provides depository products and services in southern and central California. Prior to the formation of CapitalSource Bank, CapitalSource conducted its commercial lending business through its other subsidiaries. Subsequent to CapitalSource Bank’s formation, substantially all new loans have been originated at CapitalSource Bank. The Parent Company’s commercial lending activities consist primarily of satisfying its existing commitments made prior to CapitalSource Bank’s formation and receiving payments on its existing loan portfolio. Consequently, we expect that our loans at the Parent Company will gradually run off, while CapitalSource Bank’s loan portfolio will continue to grow.

 

We operate as three reportable segments: 1) CapitalSource Bank, 2) Other Commercial Finance, and 3) Healthcare Net Lease. Our CapitalSource Bank segment comprises our commercial lending and banking business activities; our Other Commercial Finance segment comprises our loan portfolio and other business activities in the Parent Company; and our Healthcare Net Lease segment comprises our direct real estate investment business activities.

 

 

Interim Consolidated Financial Statements Basis of Presentation

 

Our interim consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments and eliminations, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods, have been included. The current period’s results of operations are not necessarily indicative of the results that ultimately may be achieved for the year. The interim consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on March 1, 2010 (“Form 10-K”).

 

The financial statements reflect our consolidated accounts, including all of our consolidated subsidiaries and the related consolidated results of operations with all intercompany balances and transactions eliminated in consolidation.

 

Reclassifications

 

Certain amounts in prior period consolidated financial statements have been reclassified to conform to the current period presentation, including the reclassification of certain deferred fees and loan discounts from fee income to interest income or other income in our consolidated statements of operations.

 

Except as discussed below, our accounting policies are described in Note 2, Summary of Significant Accounting Policies, of our audited consolidated financial statements as of December 31, 2009, included in our Form 10-K.

 

New Accounting Pronouncements

 

In June 2009, the Financial Accounting Standards Board (“FASB”) amended its guidance on the accounting for transfers and servicing of financial assets and extinguishments of liabilities and established additional disclosures about transfers of financial assets, including securitization transactions, and where entities have

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

continuing exposure to the risks related to transferred financial assets. It applies to all entities and eliminates the concept of a “qualifying special-purpose entity” and changes the requirements for derecognizing financial assets. This guidance is effective as of the beginning of the first annual reporting period that begins after November 15, 2009 for all transfers occurring subsequent to the adoption date. We adopted this guidance on January 1, 2010, and it did not have a material impact on our consolidated financial statements.

 

In June 2009, the FASB issued new guidance changing how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. This guidance also requires enhanced disclosures about variable interest entities that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity. This guidance also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. It does not change the existing scope for accounting and assessment of variable interest entities, however it adds entities previously considered qualifying special-purpose entities, as the concept of these entities was eliminated. This guidance is effective for the first annual reporting period that begins after November 15, 2009. We adopted this guidance on January 1, 2010. As further explained in Note 5, Commercial Lending Assets and Credit Quality, our adoption has resulted in an increase in our number of variable interest entities. This increase is primarily the result of borrowers that have undergone troubled debt restructuring transactions, requiring us to reconsider whether the borrowers qualify as variable interest entities. However, based on our analysis of each transaction, we have not met the characteristics of a primary beneficiary with respect to these entities, and thus, do not consolidate them. As a result, our adoption of this new guidance did not have a material impact on our consolidated financial statements.

 

In January 2010, the FASB amended its guidance on fair value measurements and disclosure which was intended to improve transparency in financial reporting by requiring enhanced disclosures related to fair value measurements. These new disclosures would provide for disclosure of transfers between Level 1 and Level 2 of the fair value hierarchy, of fair value measurements for each class of assets and liabilities presented, of separate information for purchases, sales, issuances, and settlements in the rollforward of activity of Level 3 fair value measurements, and of valuation techniques used in recurring and nonrecurring fair value measurements for both Level 2 and Level 3 measurements. This guidance is effective for interim and annual reporting periods ending after March 15, 2010, except for the guidance related to purchases, sales, issuances, and settlements in the rollforward of activity of Level 3 fair value measurements, which is effective for annual reporting periods ending after December 31, 2010. We adopted this guidance effective January 1, 2010, and it did not have a material impact on our consolidated financial statements.

 

 

During the year ended December 31, 2009, we sold 82 long-term healthcare facilities with a total net book value of $400.3 million, realizing a pre-tax loss of $9.4 million. In November 2009, we sold 37 long-term healthcare facilities (the “November Sale Assets”) for approximately $100.0 million in cash. In December 2009, in the first step of a multi-step transaction, we sold 40 long-term healthcare facilities (the “Step 1 Assets”) to Omega Healthcare Investors, Inc. (“Omega”) for approximately $184.2 million in cash and approximately 1.4 million shares of Omega common stock valued at $25.6 million. In addition, by acquiring our facilities in the December 2009 closing, Omega became obligated to pay us $59.4 million of indebtedness associated with the Step 1 Assets that Omega fully repaid in February 2010. Step two of the transaction with Omega will include the sale of an additional 40 long-term healthcare facilities (the “Step 2 Assets”) for approximately $65.1 million in cash and the assumption of debt associated with the Step 2 Assets, which totaled $204.3 million as of March 31, 2010. We expect to complete this sale in 2010 subject to obtaining applicable approvals.

 

In December 2009, we received approximately 1.3 million shares of Omega common stock valued at $25.0 million in consideration for a non-refundable option that was exercisable by Omega to acquire an additional 63 of our long-term healthcare facilities (the “Step 3 Assets”) at any time through December 31, 2011. Upon closing

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

of the sale of these properties, Omega would pay us additional consideration of $33.7 million in cash and repay the outstanding debt on the properties, which totaled $261.5 million as of March 31, 2010. The carrying value of the properties as of March 31, 2010 was $333.5 million. In April 2010, we received written notice that Omega was electing to exercise the option to acquire the properties, with a proposed closing date in June 2010.

 

Upon the completion of the sale of the Step 2 Assets and Step 3 Assets, we will exit the skilled nursing home ownership business, but expect to continue to actively provide mortgage and other financing for owners and operators in the long-term healthcare industry.

 

We have presented the financial condition and results of operations of all assets within our Healthcare Net Lease segment, with the exception of the Step 3 Assets, as discontinued operations for all periods presented. Additionally, the results of the discontinued operations include the activities of other healthcare facilities that have been sold since the inception of the business. The Step 3 Assets have been included in our continuing operations as they did not meet the criteria to be held for sale as of March 31, 2010 and December 31, 2009.

 

The condensed balance sheets as of March 31, 2010 and December 31, 2009 for our discontinued operations were as follows:

 

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The condensed statements of operations for the three months ended March 31, 2010 and 2009 for our discontinued operations were as follows:

 

 

For additional information about our direct real estate investments as of March 31, 2010, see Note 8, Direct Real Estate Investments.

 

 

As of March 31, 2010 and December 31, 2009, our cash and cash equivalents and restricted cash balances were as follows:

 

 

 

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

 

 

As of March 31, 2010 and December 31, 2009, our total commercial loan portfolio had an outstanding balance of $8.3 billion and $8.9 billion, respectively. Included in these amounts were loans held for investment, loans held for sale, and a commercial real estate participation interest (“the “A” Participation Interest”). As of March 31, 2010 and December 31, 2009, interest and fee receivables totaled $20.1 million and $29.6 million, respectively.

 

Commercial Real Estate “A” Participation Interest

 

As of March 31, 2010, the carrying value of the “A” Participation Interest was $328.0 million, representing our share of a $2.9 billion pool of commercial real estate loans and related assets, net of a remaining purchase discount of $3.7 million. The activity with respect to the “A” Participation Interest for the period from December 31, 2009 to March 31, 2010 was as follows ($ in thousands):

 

 

The “A” Participation Interest is reported at the outstanding principal balance less the associated discount. Interest income on the “A” Participation Interest is accrued as earned and recorded as a component of interest income on loans in our consolidated statements of operations. The discount is accreted into interest income over the estimated life of the instrument using the interest method. For the three months ended March 31, 2010 and 2009, we recognized $7.8 million and $17.2 million, respectively, in interest income (including accretion) on the “A” Participation Interest.

 

As of March 31, 2010, no allowance for loan losses was deemed necessary with respect to the “A” Participation Interest.

 

Loans Held for Sale

 

Loans held for sale are recorded at the lower of cost or fair value in our consolidated balance sheets. During the three months ended March 31, 2010 and 2009, we recognized a net pre-tax gain and a net pre-tax loss on the sale of

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

loans of $0.1 million and $3.0 million, respectively. As of March 31, 2010 and December 31, 2009, loans held for sale with an outstanding balance of $15.0 million and $0.7 million, respectively, were classified as non-accrual loans.

 

During the three months ended March 31, 2010, loans held for investment with a carrying amount of $29.0 million were transferred to loans held for sale based on management’s intent with respect to the loans, resulting in $0.9 million in losses due to valuation adjustments.

 

Loans Held for Investment

 

Loans held for investment are recorded at the principal amount outstanding, net of deferred loan costs or fees and any discounts received or premiums paid on purchased loans. We maintain an allowance for loan losses for loans held for investment, which is calculated based on management’s estimate of incurred loan losses inherent in our loan portfolio as of the balance sheet date. Activity in the allowance for loan losses related to our loans held for investment for the three months ended March 31, 2010 and 2009, respectively, was as follows:

 

 

As of March 31, 2010 and December 31, 2009, the principal balances of contractually delinquent accruing loans and non-accrual loans were as follows:

 

 

Of our non-accrual loans, $97.7 million were 30-89 days delinquent and $396.8 million were over 90 days delinquent as of March 31, 2010, and $182.5 million were 30-89 days delinquent and $387.8 million were over 90 days delinquent as of December 31, 2009.

 

We consider a loan to be impaired when, based on current information, we determine that it is probable that we will be unable to collect all amounts due in accordance with the contractual terms of the original loan agreement. In this regard, impaired loans include loans where we expect to encounter a significant delay in the collection of, and/or shortfall in the amount of contractual payments due to us. As of March 31, 2010 and December 31, 2009, we had $580.7 million and $597.4 million of impaired commercial loans, respectively, net of allocated reserves of $191.7 million and $116.5 million, respectively. As of March 31, 2010 and December 31, 2009, we had $600.7 million and $517.1 million, respectively, of commercial loans that we assessed as impaired and for which we did not record any allocated reserves based upon our belief that it is probable that we ultimately will collect all principal amounts due.

 

The average balances of impaired commercial loans during the three months ended March 31, 2010 and 2009 were $1.1 billion and $620.8 million, respectively. The total amounts of interest income that were recognized on impaired commercial loans during the three months ended March 31, 2010 and 2009 were $5.1 million and $5.4 million, respectively. The amount of cash basis interest income that was recognized on impaired loans during the three months ended March 31, 2010 was $0.1 million. There was no cash basis interest income recognized for

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

the three months ended March 31, 2009. If the non-accrual commercial loans had performed in accordance with their original terms, interest income would have been increased by $39.5 million and $22.8 million for the three months ended March 31, 2010, and 2009, respectively.

 

During the three months ended March 31, 2010 and 2009, commercial loans with an aggregate carrying value of $200.8 million and $174.9 million, respectively, as of their respective restructuring dates, were involved in troubled debt restructurings. As of March 31, 2010 and December 31, 2009, the balance of loans that had been restructured in troubled debt restructurings were $476.1 million and $426.4 million, respectively. Additionally, loans involved in these troubled debt restructurings are assessed as impaired, generally for a period of at least one year following the restructuring. A loan that has been involved in a troubled debt restructuring might no longer be assessed as impaired one year subsequent to the restructuring, assuming the loan performs under the restructured terms and the restructured terms were at market. The allocated reserves for loans that were involved in troubled debt restructurings were $30.7 million and $25.1 million as of March 31, 2010 and December 31, 2009, respectively.

 

Foreclosed Assets

 

Real Estate Owned (“REO”)

 

When we foreclose on real estate assets that collateralize a loan, we record the assets at their estimated fair value less costs to sell at the time of foreclosure. Upon foreclosure, we evaluate the asset’s fair value as compared to the loan’s carrying amount and record a charge off when the carrying amount of the loan exceeds fair value less costs to sell. For REO determined to be held for sale, subsequent valuation adjustments are recorded as a valuation allowance, which is recorded as a component of other income (expense), net in our consolidated statements of operations. REO that does not meet the criteria of held for sale is classified as held for use and depreciated. Fair value adjustments on REO held for use are recorded only if the carrying amount of an asset is not recoverable and exceeds its fair value. We estimate fair value at the asset’s liquidation value, based on market conditions.

 

As of March 31, 2010 and December 31, 2009, we had $136.3 million and $101.4 million, respectively, of REO classified as held for sale, which was recorded in other assets in our consolidated balance sheets. Activity in REO held for sale for the three months ended March 31, 2010 and 2009 was as follows:

 

 

During the three months ended March 31, 2010 and 2009, we recognized losses of $0.3 million and $49,000, respectively, on the sales of REO held for sale as a component of other income (expense) in the consolidated statements of operations.

 

As of March 31, 2010 and December 31, 2009, we had $12.1 million and $19.7 million, respectively, of REO classified as held for use, which was recorded in other assets in our consolidated balance sheets. During the three months ended March 31, 2010, we recognized impairment losses of $4.6 million on REO held for use as a component of other income (expense) in our consolidated statements of operations. We did not recognize any impairment losses on REO held for use during the three months ended March 31, 2009.

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Other Foreclosed Assets

 

When we foreclose on a borrower whose underlying collateral consists of consumer loans, we record the acquired loans at the estimated fair value less costs to sell at the time of foreclosure. At the time of foreclosure, we record charge offs when the carrying amount of the original loan exceeds the fair value of the acquired loans. We did not record any charge offs for the three months ended March 31, 2009. As of March 31, 2010 and December 31, 2009, we had $108.8 million and $127.2 million, respectively, of loans acquired through foreclosure, net of valuation allowances of $5.2 million and $2.8 million, respectively, which were recorded in other assets in our consolidated balance sheets. We recorded a provision for loan receivables losses of $15.2 million related to loans acquired through foreclosure as a component of other income (expense) in our consolidated statements of operations for the three months ended March 31, 2010. We did not record a provision for loan receivables losses related to loans acquired through foreclosure for the three months ended March 31, 2009.

 

 

Investment Securities, Available-for-Sale

 

As of March 31, 2010 and December 31, 2009, our investment securities, available-for-sale were as follows:

 

 

Included in investment securities, available-for-sale, were discount notes issued by Fannie Mae, Freddie Mac and the FHLB (“Agency discount notes”), callable notes issued by Fannie Mae, Freddie Mac, the FHLB and Federal Farm Credit Bank (“Agency callable notes”), bonds issued by the FHLB (“Agency debt”), commercial and residential mortgage-backed securities issued and guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae (“Agency MBS”), commercial and residential mortgage-backed securities issued by non-government agencies (“Non-agency MBS”), equity securities, corporate debt, an investment in a subordinated note of a collateralized loan obligation, and U.S. Treasury bills. CapitalSource Bank pledged investment securities, available-for-sale with an estimated fair value of $987.2 million and $786.4 million to the FHLB and $15.8 million and $18.1 million to the FRB as sources of borrowing capacity as of March 31, 2010 and December 31, 2009, respectively. CapitalSource Bank also pledged investment securities, available-for-sale with an estimated fair value of $59.8 million to a correspondent bank as collateral for letters of credit and foreign exchange contracts. There were no available-for-sale securities pledged for that purpose at December 31, 2009.

 

During the three months ended March 31, 2010, we sold investment securities, available-for-sale for $20.0 million, recognizing net pre-tax gains of $0.7 million. We did not sell any of these investments during the three months ended March 31, 2009.

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

During the three months ended March 31, 2010, we recorded other-than-temporary impairments in the fair value of our equity securities of $0.3 million as a component of gain (loss) on investments, net in our consolidated statements of operations. During the three months ended March 31, 2009, we recorded other-than-temporary impairments in the fair value of our corporate debt and collateralized loan obligation of $11.7 million and $0.9 million, respectively, as a component of gain (loss) on investments, net in our consolidated statements of operations.

 

During the three months ended March 31, 2010, we recognized $0.8 million, of net unrealized after-tax gains, related to our available-for-sale investment securities, as a component of accumulated other comprehensive income, net in our consolidated balance sheets.

 

As of March 31, 2010 and December 31, 2009, the gross unrealized losses and fair value of investment securities, available-for-sale, that were in an unrealized loss position, were as follows:

 

 

We do not believe that any unrealized losses greater than 12 months in our available-for-sale portfolio as of March 31, 2010 and December 31, 2009 represent an other-than-temporary impairment. These losses are related to agency debt securities and equity securities, and are attributable to fluctuations in market price due to current market conditions.

 

Investment Securities, Held-to-Maturity

 

As of March 31, 2010 and December 31, 2009, the amortized cost of investment securities, held-to-maturity, was $218.8 million and $242.1 million, respectively and consisted of AAA-rated commercial mortgage-backed securities. In addition, CapitalSource Bank pledged investment securities, held-to-maturity, with an amortized cost of $57.2 million and $151.6 million, and $68.4 million and $173.7 million, respectively, and estimated fair value of

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

$59.5 million and $171.4 million, and $70.3 million and $191.8 million, respectively, to the FHLB SF and FRB as sources of borrowing capacity as of March 31, 2010 and December 31, 2009.

 

Contractual Maturities

 

As of March 31, 2010, the contractual maturities of our investment securities, available-for-sale, and investment securities, held-to-maturity, were as follows:

 

 

 

 

Other Investments

 

As of March 31, 2010 and December 31, 2009, our other investments were as follows:

 

 

During the three months ended March 31, 2010 and 2009, we sold other investments for $9.4 million and $2.0 million, respectively, recognizing a net pre-tax gain of $6.4 million and a net pre-tax loss of $1.1 million, respectively. During the three months ended March 31, 2010 and 2009, we recorded other-than-temporary impairments of $2.0 million and $1.3 million, respectively, relating to our investments carried at cost.

 

Residential Mortgage-Backed Securities

 

Prior to the second quarter of 2009, we invested in residential mortgage-backed securities that were issued and guaranteed by Fannie Mae or Freddie Mac (“Agency RMBS”). All our Agency RMBS were collateralized by adjustable rate residential mortgage loans, including hybrid adjustable rate mortgage loans.

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

During the first quarter of 2009, we sold all of our Agency RMBS and unwound all of the related derivatives remaining in our residential mortgage investment portfolio, realizing a gain of $15.3 million as a component of gain on residential mortgage investment portfolio in our consolidated statements of operations.

 

 

The following represents the supplemental consolidating condensed financial information as of March 31, 2010 and December 31 2009 and for the three months ended March 31, 2010 and 2009 of (i) CapitalSource Inc., which as discussed in Note 11, Borrowings, is the issuer of our 2014 Senior Secured Notes, as defined in Note 11, Borrowings, as well as our Senior Debentures and Subordinated Debentures (together, the “Debentures”), (ii) CapitalSource Finance LLC (“CapitalSource Finance”), which is a guarantor of our 2014 Senior Secured Notes and the Debentures, and (iii) our subsidiaries that are not guarantors of the 2014 Senior Secured Notes or the Debentures. CapitalSource Finance, a wholly owned indirect subsidiary of CapitalSource Inc., has guaranteed our 2014 Senior Secured Notes and the Senior Debentures, fully and unconditionally, on a senior basis and has guaranteed the Subordinated Debentures, fully and unconditionally, on a senior subordinate basis. Separate consolidated financial statements of the guarantor are not presented, as we have determined that they would not be material to investors.

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Consolidating Balance Sheet
March 31, 2010
(Unaudited)

 

CapitalSource Inc.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

Consolidating Balance Sheet
December 31, 2009