Attached files
Exhibit 99.4
GENERAL MONITORS, INC.
CONSOLIDATED FINANCIAL REPORT
(Unaudited)
September 30, 2010
GENERAL MONITORS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands)
Unaudited
| Nine Months
Ended September 30 |
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| 2010 | 2009 | |||||||
| Net sales |
$ | 36,443 | $ | 38,308 | ||||
| Other income |
157 | 99 | ||||||
| 36,600 | 38,407 | |||||||
| Costs and expenses |
||||||||
| Cost of products sold |
13,535 | 16,576 | ||||||
| Selling, general and administrative |
9,961 | 9,967 | ||||||
| Research and development |
3,580 | 3,618 | ||||||
| Interest expense |
1 | 2 | ||||||
| Currency exchange gains |
(9 | ) | (63 | ) | ||||
| 27,068 | 30,100 | |||||||
| Income before income taxes |
9,532 | 8,307 | ||||||
| Provision for income taxes |
120 | 166 | ||||||
| Net income |
9,412 | 8,141 | ||||||
See notes to condensed consolidated financial statements.
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GENERAL MONITORS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
Unaudited
| September 30 2010 |
December 31 2009 |
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| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 9,745 | $ | 9,043 | ||||
| Accounts receivable, less allowance for doubtful accounts of $592 and $576 |
8,437 | 8,131 | ||||||
| Inventories |
5,506 | 3,718 | ||||||
| Prepaid expenses and other current assets |
51 | 640 | ||||||
| Total current assets |
23,739 | 21,532 | ||||||
| Property, less accumulated depreciation of $10,865 and $10,561 |
3,188 | 3,292 | ||||||
| Other noncurrent assets |
182 | 65 | ||||||
| Total assets |
27,109 | 24,889 | ||||||
| Liabilities |
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| Current liabilities |
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| Accounts payable |
$ | 1,766 | $ | 1,032 | ||||
| Other current liabilities |
4,431 | 3,075 | ||||||
| Income taxes payable |
48 | 133 | ||||||
| Total current liabilities |
6,245 | 4,240 | ||||||
| Other noncurrent liabilities |
190 | 190 | ||||||
| Total liabilities |
6,435 | 4,430 | ||||||
| Shareholders’ Equity |
||||||||
| Common stock – authorized 800,000 shares of $0.10 par value; issued 79,026 shares |
8 | 8 | ||||||
| Additional paid in capital |
1,821 | 1,821 | ||||||
| Note receivable from shareholder |
(493 | ) | (639 | ) | ||||
| Retained earnings |
19,338 | 19,269 | ||||||
| Total shareholders’ equity |
20,674 | 20,459 | ||||||
| Total liabilities and shareholders’ equity |
27,109 | 24,889 | ||||||
See notes to condensed consolidated financial statements.
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GENERAL MONITORS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Unaudited
| Nine Months Ended September 30 |
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| 2010 | 2009 | |||||||
| Operating Activities |
||||||||
| Net income |
$ | 9,412 | $ | 8,141 | ||||
| Depreciation |
335 | 419 | ||||||
| Other noncurrent assets and liabilities |
(117 | ) | 188 | |||||
| Other, net |
34 | 11 | ||||||
| Operating cash flow before changes in working capital |
9,664 | 8,759 | ||||||
| Accounts receivable |
(306 | ) | (679 | ) | ||||
| Inventories |
(1,788 | ) | 869 | |||||
| Accounts payable and accrued liabilities |
2,005 | (1,107 | ) | |||||
| Prepaid expenses and other current assets |
589 | (17 | ) | |||||
| Decrease (increase) in working capital |
500 | (934 | ) | |||||
| Cash flow from operating activities |
10,164 | 7,825 | ||||||
| Investing Activities |
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| Property additions |
(265 | ) | (884 | ) | ||||
| Cash flow from investing activities |
(265 | ) | (884 | ) | ||||
| Financing Activities |
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| Distributions to shareholders |
(9,343 | ) | (5,111 | ) | ||||
| Collections on shareholder note |
146 | 200 | ||||||
| Cash flow from financing activities |
(9,197 | ) | (4,911 | ) | ||||
| Increase in cash and cash equivalents |
702 | 2,030 | ||||||
| Beginning cash and cash equivalents |
9,043 | 7,165 | ||||||
| Ending cash and cash equivalents |
9,745 | 9,195 | ||||||
See notes to condensed consolidated financial statements.
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GENERAL MONITORS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(1) Basis of Presentation
The condensed consolidated financial statements of General Monitors, Inc. and its wholly-owned subsidiary (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements.
The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The other information in these financial statements is unaudited; however, we believe that all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of these interim periods have been included. The results for interim periods are not necessarily indicative of the results to be expected for the full year.
(2) Inventories
| (In thousands) |
September 30 2010 |
December 31 2009 |
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| Finished products |
$ | 2,930 | $ | 2,599 | ||||
| Raw materials and supplies |
3,292 | 1,920 | ||||||
| 6,222 | 4,519 | |||||||
| Reserve for obsolescence |
716 | 801 | ||||||
| 5,506 | 3,718 | |||||||
(3) Derivative Financial Instruments
The Company enters into certain derivative foreign currency forward contracts that do not meet the GAAP criteria for hedge accounting, but which have the impact of partially offsetting certain foreign currency exposures. These forward contracts are accounted for on a full mark-to-market basis and the related gains or losses are reported in currency exchange gains or losses. At September 30, 2010, the notional amount of open forward contracts was $1.2 million and the unrealized gain on these contracts was immaterial. All open forward contracts will mature during the fourth quarter of 2010.
The fair values of assets and liabilities associated with derivative financial instruments at September 30, 2010 and December 31, 2009 were insignificant. We estimate the fair value of these financial instruments using valuation models with inputs that generally can be verified by observable market conditions and do not involve significant management judgment. Accordingly, the fair values of these financial instruments are classified within Level 2 of the fair value hierarchy.
Losses on foreign exchange contracts are reported in currency exchange losses (gains) and were insignificant for the nine months ended September 30, 2010 and $0.1 million for the nine months ended September 30, 2009.
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(4) Income Taxes
The Company, with the consent of its shareholders, has elected to be taxed under sections of income tax law (federal and various states) which provide that, in lieu of corporate income taxes, the shareholders separately account for their pro rata shares of income, deductions, losses and credits. As a result of this election, no federal income taxes have been recorded in the accompanying financial statements. State income taxes are recorded in accordance with each state’s respective tax law.
(5) Related Party Transactions
The Company transacts business with two companies General Monitors Transnational, LLC and Subsidiaries (GMT) and General Monitors Ireland Limited (GMIL) that are affiliated through certain common ownership and management. GMT provides product components and finished products for resale. In addition, GMT provides services for certain administrative, product development and marketing and sales promotion services, while the Company provides inventory to GMT and GMIL.
The Company also transacts business with Wuxi General Monitors Co., Ltd. (Wuxi) which is affiliated through a 30 percent ownership by GMT. The Company provides product components and finished products for resale.
Related-party transactions for the nine months ended September 30, 2010 and 2009 were as follows:
| Nine Months
Ended September 30 |
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| (In thousands) |
2010 | 2009 | ||||||
| Sales to affiliates (included in net sales) |
$ | 875 | $ | 2,301 | ||||
| Cost of goods sold to affiliates (included in cost of products sold) |
571 | 1,559 | ||||||
| Purchases from affiliates * |
3,944 | 5,277 | ||||||
| Servicing fees from affiliates (included in SG&A and R&D expenses) |
8,048 | 8,132 | ||||||
| Rent charged to affiliates (included in other income) |
55 | 52 | ||||||
| * | Purchases from affiliates are generally charged to inventories and ultimately reported in cost of products sold. |
Related-party balances at September 30, 2010 and December 31, 2009 were as follows:
| (In thousands) |
September 30 2010 |
December 31 2009 |
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| Net due to affiliates |
$ | 1,046 | $ | 448 | ||||
(6) Contingencies
Self-insurance of general liability: The Company acts as a self-insurer for its general liability coverage up to $0.5 million per claim. As of September 30, 2010, the Company is not aware of any amounts to be accrued as claims against the self-insured portion of the coverage.
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Self-insurance of employee medical benefits: For most of the U.S. employees, the Company acts as a self-insurer for its medical, dental and vision claims, with stop-loss coverage for individual medical participant costs over $60,000 per year and an annual cap based on the number of employees. The Company has recorded a liability related to the Company’s self-insurance of its employee medical plan of $0.3 million at September 30, 2010.
(7) Statement of Changes in Shareholders’ Equity
| (In thousands) |
Common Stock |
Additional Paid in Capital |
Note Receivable From Shareholder |
Retained Earnings |
Total Equity |
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| Balance at December 31, 2009 |
$ | 8 | $ | 1,821 | $ | (639 | ) | $ | 19,269 | $ | 20,459 | |||||||||
| Net income |
— | — | — | 9,412 | 9,412 | |||||||||||||||
| Distributions to shareholders |
— | — | — | (9,343 | ) | (9,343 | ) | |||||||||||||
| Collections on note receivable from shareholder |
— | — | 146 | — | 146 | |||||||||||||||
| Balance at September 30, 2010 |
8 | 1,821 | (493 | ) | 19,338 | 20,674 | ||||||||||||||
| (In thousands) |
Common Stock |
Additional Paid in Capital |
Note Receivable From Shareholder |
Retained Earnings |
Total Equity |
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| Balance at December 31, 2008 |
$ | 8 | $ | 1,821 | $ | (839 | ) | $ | 16,244 | $ | 17,234 | |||||||||
| Net income |
— | — | — | 8,141 | 8,141 | |||||||||||||||
| Distributions to shareholders |
— | — | — | (5,111 | ) | (5,111 | ) | |||||||||||||
| Collections on note receivable from shareholder |
— | — | 200 | — | 200 | |||||||||||||||
| Balance at September 30, 2009 |
8 | 1,821 | (639 | ) | 19,274 | 20,464 | ||||||||||||||
On January 1, 2008, the Company sold 3,533 shares of common stock at $222 per share to an existing shareholder for $0.8 million, including $500 in cash and a promissory note. The note receivable, bearing interest at the prime rate, is collateralized by the common stock sold. On October 13, 2010, in connection with the sale of substantially all of the Company’s assets, as further described in Note 9, the balance due was paid in full.
(8) Recently Adopted and Recently Issued Accounting Standards
In May 2009, and as updated in February 2010, the FASB issued a statement that establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, the statement sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. See Note 9 for disclosures.
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In June 2009, the FASB issued a new accounting pronouncement which revises the approach to determine the primary beneficiary of a variable interest entity (VIE) and requires more frequent reassessment of whether a VIE must be consolidated. This accounting pronouncement is effective for the Company beginning in 2010. The adoption of the new standard had no impact on the financial statements.
In October 2009, the FASB issued a new accounting pronouncement which changes the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a consolidated unit. This accounting pronouncement requires significantly expanded disclosures related to a vendor’s multiple deliverable revenue arrangements and is effective for the Company beginning in 2011. The Company is currently evaluating the impact of this pronouncement.
(9) Subsequent Events
On October 13, 2010, the Company sold substantially all of its assets to Mine Safety Appliances Company (MSA). MSA paid cash consideration of approximately $145.0 million, plus the assumption of substantially all of the liabilities of the Company. The sales price is subject to a working capital adjustment. There is no contingent consideration. Approximately $20.0 million of the cash consideration is held in an escrow account to cover potential unrecorded liabilities as of the closing date. Amounts not disbursed to pay unrecorded liabilities will be released to the Company approximately 24 months after the transaction date. The Company is not aware of any amount that currently needs to be disbursed from the escrow account. In connection with the sale, the Company changed its name to GLMNT CORP.
Management has evaluated subsequent events through December 23, 2010, the date the financial statements were issued, and has concluded that all events that would require recognition or disclosure are appropriately reflected in the financial statements.
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