Attached files
EXHIBIT 99.4
UNIROYAL ENGINEERED PRODUCTS, LLC
UNAUDITED CONDENSED FINANCIAL STATEMENTS
For the Six Months Ended June 29, 2014 and June 30, 2013
UNIROYAL ENGINEERED PRODUCTS, LLC
BALANCE SHEETS
As of June 29, 2014 and June 30, 2013
(Unaudited)
June 29, 2014 | June 30, 2013 | |||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 9,415 | $ | 37,064 | ||||
Marketable Securities | 247,922 | 27,131 | ||||||
Accounts receivable, net | 7,415,458 | 7,346,739 | ||||||
Inventories, net | 10,142,625 | 11,012,108 | ||||||
Other current assets | 180,720 | 172,302 | ||||||
Related party receivable | 102,934 | 1,332,616 | ||||||
Total Current Assets | 18,099,074 | 19,927,960 | ||||||
PROPERTY AND EQUIPMENT | 6,813,850 | 6,324,078 | ||||||
OTHER ASSETS | ||||||||
Intangible assets | 1,336,033 | 1,293,834 | ||||||
Goodwill | 1,079,175 | 1,079,175 | ||||||
Other long-term assets | 727,063 | 749,495 | ||||||
Total Other Assets | 3,142,271 | 3,122,504 | ||||||
TOTAL ASSETS | $ | 28,055,195 | $ | 29,374,542 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Checks issued in excess of bank balance | $ | 355,319 | $ | 717,426 | ||||
Line of credit | 8,187,123 | 10,014,368 | ||||||
Current maturities of long-term debt | 453,379 | 808,508 | ||||||
Current maturities of capital lease obligations | — | 97,496 | ||||||
Accounts payable | 4,211,122 | 4,770,246 | ||||||
Accrued expenses | 1,291,072 | 1,253,764 | ||||||
Current portion of postretirement benefit liability - health and life | 131,714 | 128,291 | ||||||
Total Current Liabilities | 14,629,729 | 17,790,099 | ||||||
LONG-TERM LIABILITIES | ||||||||
Long-term debt | 1,238,942 | 1,673,847 | ||||||
Related party lease financing obligations | 2,017,901 | — | ||||||
Long-term debt to related parties | 2,000,000 | 2,000,000 | ||||||
Postretirement benefit liability - health and life | 2,345,748 | 2,656,202 | ||||||
Postemployment benefit liability - severance | 74,549 | 112,795 | ||||||
Other long-term liabilities | 26,992 | 91,446 | ||||||
Total Long-Term Liabilities | 7,704,132 | 6,534,290 | ||||||
Total Liabilities | 22,333,861 | 24,324,389 |
(Continued)
See accompanying notes to financial statements
1 |
UNIROYAL ENGINEERED PRODUCTS, LLC
BALANCE SHEETS
As of June 29, 2014 and June 30, 2013
(Unaudited)
June 29, 2014 | June 30, 2013 | |||||||
STOCKHOLDERS' EQUITY | ||||||||
Common Stock | 552,750 | 548,875 | ||||||
Additional Paid In Capital | 528,000 | 528,000 | ||||||
Retained Earnings | 3,354,479 | 2,523,279 | ||||||
Accumulated Other Comprehensive Income | 1,286,105 | 1,449,998 | ||||||
Total Stockholders' Equity | 5,721,334 | 5,050,152 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 28,055,195 | $ | 29,374,541 |
See accompanying notes to financial statements
2 |
UNIROYAL ENGINEERED PRODUCTS, LLC
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Six Months Ended June 29, 2014 and June 30, 2013
(Unaudited)
June 29, 2014 | June 30, 2013 | |||||||
NET SALES | $ | 26,240,735 | $ | 27,957,088 | ||||
COST OF GOODS SOLD | 20,611,178 | 22,216,143 | ||||||
Gross Profit | 5,629,557 | 5,740,945 | ||||||
OPERATING EXPENSES | 3,672,464 | 2,988,277 | ||||||
Operating Income | 1,957,093 | 2,752,668 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest and other debt related expense | (511,012 | ) | (413,278 | ) | ||||
Other income | 30,053 | 9,920 | ||||||
Net Other Expense | (480,959 | ) | (403,358 | ) | ||||
NET INCOME | 1,476,134 | 2,349,310 | ||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
Minimum benefit liability adjustment | (294,948 | ) | (255,876 | ) | ||||
Unrealized gain (loss) on effective hedge | ||||||||
Reclassification of amounts to earnings | 33,143 | 31,739 | ||||||
Unrealized loss for the year | (1,561 | ) | (1,903 | ) | ||||
COMPREHENSIVE INCOME | $ | 1,212,768 | $ | 2,123,270 |
See accompanying notes to financial statements
3 |
UNIROYAL ENGINEERED PRODUCTS, LLC
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 29, 2014 and June 30, 2013
(Unaudited)
June 29, 2014 | June 30, 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 1,476,134 | $ | 2,349,310 | ||||
Adjustments to reconcile net income to net cash flows from operating activities | ||||||||
Depreciation | 322,944 | 596,170 | ||||||
Amortization of intangible assets | 30,233 | 29,850 | ||||||
Loss on disposal of property and equipment | — | 1,532 | ||||||
Noncash postemployment health and life benefit | (294,948 | ) | (255,876 | ) | ||||
Amortization of original issue note discount | — | 26,400 | ||||||
Changes in assets and liabilities | ||||||||
Accounts receivable | (734,725 | ) | (1,070,897 | ) | ||||
Inventories | 344,679 | (573,571 | ) | |||||
Other current assets | (7,701 | ) | (28,232 | ) | ||||
Other long-term assets | (249 | ) | — | |||||
Related party receivable | (60,459 | ) | (1,157,616 | ) | ||||
Accounts payable | (23,835 | ) | 664,930 | |||||
Accrued expenses | 188,012 | 1,437 | ||||||
Postretirement benefit liability - health and life | (13,148 | ) | (20,459 | ) | ||||
Postemployment benefit liability - severance | (23,921 | ) | — | |||||
Other long-term liabilities | (2,993 | ) | (2,813 | ) | ||||
Net Cash Flows from Operating Activities | 1,200,023 | 560,165 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures | (418,783 | ) | (80,048 | ) | ||||
Purchase of marketable securities | (138,714 | ) | (27,131 | ) | ||||
Net Cash Flows from Investing Activities | (557,497 | ) | (107,179 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Checks issued in excess of bank balance | (267,271 | ) | (164,550 | ) | ||||
Net payments on line of credit | 222,176 | 357,348 | ||||||
Payments on long-term debt | (91,790 | ) | (254,169 | ) | ||||
Proceeds from issuance of long-term debt | (100,000 | ) | — | |||||
Payments on capital lease obligations | (47,555 | ) | (44,557 | ) | ||||
Net payments on life insurance policies | (154,990 | ) | (120,858 | ) | ||||
Proceeds from issuance of Class B units | — | 3,875 | ||||||
Distributions to members | (213,002 | ) | (256,770 | ) | ||||
Net Cash Flows from Financing Activities | (652,432 | ) | (479,681 | ) | ||||
Net Change in Cash and Cash Equivalents | (9,906 | ) | (26,695 | ) | ||||
CASH AND CASH EQUIVALENTS - Beginning of Year | 19,321 | 63,759 | ||||||
CASH AND CASH EQUIVALENTS - END OF YEAR | $ | 9,415 | $ | 37,064 |
For noncash transactions and supplemental disclosure of cash flow information see Note 2.
See accompanying notes to financial statements
4 |
UNIROYAL ENGINEERED PRODUCTS, LLC
NOTES TO FINANCIAL STATEMENTS
As of and for the Six Months Ended June 29, 2014 and June 30, 2013
NOTE 1 – Basis of Presentation
The interim Condensed Financial Statements of Uniroyal Engineered Products, LLC (the “Company”) are unaudited and should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 29, 2013 and December 30, 2012.
The company's fiscal year is a 52/53 week year depending on the nearest Sunday to December 31. The years ended December 29, 2013 and December 30, 2012 were 52 week years.
In the opinion of the Company, all adjustments necessary for a fair presentation of such Condensed Financial Statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The interim Condensed Financial Statements and notes thereto do not contain certain information included in the Company’s annual Financial Statements and notes thereto.
NOTE 2 – Noncash Transaction and Supplemental Disclosure of Cash Flow Information
During 2013, the company advanced a member $1,157,616 for 2013 tax distributions during the six month period ending June 30, 2013. This amount is included in related party receivables on the accompanying 2013 balance sheets. This receivable was settled in full prior to December 31, 2013.
June 29, 2014 | June 30, 2013 | |||||||
Supplemental disclosure of approximate cash paid for: | ||||||||
Interest | $ | 467,916 | $ | 358,821 |
NOTE 3 – Inventories
Inventories consist of the following as of June 29, 2014 and June 30, 2013:
June 29, 2014 | June 30, 2013 | |||||||
Raw Materials | $ | 2,777,244 | $ | 3,047,338 | ||||
Work-in Process | 1,818,808 | 1,633,436 | ||||||
Finished Goods | 6,300,280 | 6,990,792 | ||||||
10,896,332 | 11,671,566 | |||||||
Less: Allowance for inventory obsolescence | (753,707 | ) | (659,458 | ) | ||||
Total Inventories | $ | 10,142,625 | $ | 11,012,108 |
NOTE 4 – Subsequent Event
On November 10, 2014, the Company was acquired by Invisa, Inc. (“Invisa”) in a stock transaction that included the acquisition of Engineered Products Acquisition Limited (”EPAL”) the holding company for Wardle Storeys (Group) Limited (“Wardle Storeys”), a European manufacturer of textured coatings and polymer films.
5 |
UNIROYAL ENGINEERED PRODUCTS, LLC
NOTES TO FINANCIAL STATEMENTS
As of and for the Six Months Ended June 29, 2014 and June 30, 2013
Invisa made the acquisitions of the Company through its newly formed subsidiary, UEP Holdings, LLC (“UEPH”). The aggregate purchase consideration paid for 100% of the outstanding equity of Uniroyal was preferred ownership interests issued by UEPH having an aggregate face value of $35 million. Invisa purchased EPAL for 100 shares of Invisa’s common stock and Invisa’s guaranty of outstanding EPAL preferred stock retained by the seller having a liquidation preference of £12,518,240 (approximately $20 million). Management of the acquired entities was not altered in the acquisition.
As explained in the Initial 8-K Mr. Howard R. Curd beneficially owned all of Invisa’s outstanding shares of Series A preferred stock and Series B preferred stock; a substantial portion of Invisa’s outstanding Series C Preferred; and approximately 6.8 million shares of Invisa common stock. As a result of this beneficial ownership, Mr. Curd controls in excess of 80% of Invisa voting rights in all matters to come before the Invisa shareholders. Mr. Curd also owned all of the issued and outstanding capital stock of EPAL and a majority of the limited liability company interests of the Company and was a controlling person of the Company and Wardle Storeys before the acquisitions. As a result of this common ownership and as required by current accounting pronouncements, the transaction is treated as a combination between entities under common control and is accounted for in a manner similar to the pooling-of-interest method. The recognized assets and liabilities are transferred at their carrying amounts at the date of the transaction. Further, the companies will be combined retrospectively for prior year comparative information to the extent permitted.
6 |