Attached files
Exhibit 99.6
GENERAL MONITORS TRANSNATIONAL, LLC
AND SUBSIDIARIES
(A Limited Liability Company)
CONSOLIDATED FINANCIAL REPORT
(Unaudited)
September 30, 2010
GENERAL MONITORS TRANSNATIONAL, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands)
Unaudited
| Nine Months Ended September 30 |
||||||||
| 2010 | 2009 | |||||||
| Net sales and service revenue |
$ | 22,087 | $ | 23,311 | ||||
| Other income |
538 | 505 | ||||||
| 22,625 | 23,816 | |||||||
| Costs and expenses |
||||||||
| Cost of products sold |
4,675 | 6,665 | ||||||
| Selling, general and administrative |
8,810 | 8,118 | ||||||
| Research and development |
3,425 | 3,858 | ||||||
| Interest |
29 | 70 | ||||||
| Currency exchange gains |
(26 | ) | (7 | ) | ||||
| 16,913 | 18,704 | |||||||
| Income before income taxes |
5,712 | 5,112 | ||||||
| Provision for income taxes |
229 | 175 | ||||||
| Net income |
5,483 | 4,937 | ||||||
| Net income attributable to noncontrolling interests |
(411 | ) | (426 | ) | ||||
| Net income attributable to General Monitors Transnational, LLC |
5,072 | 4,511 | ||||||
See notes to condensed financial statements.
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GENERAL MONITORS TRANSNATIONAL, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
Unaudited
| September 30 2010 |
December 31 2009 |
|||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 6,249 | $ | 6,478 | ||||
| Accounts receivable |
3,066 | 2,584 | ||||||
| Inventories |
1,200 | 852 | ||||||
| Prepaid expenses and other current assets |
63 | 182 | ||||||
| Total current assets |
10,578 | 10,096 | ||||||
| Property, less accumulated depreciation of $2,113 and $1,632 |
8,895 | 8,989 | ||||||
| Deferred tax assets |
39 | 39 | ||||||
| Goodwill |
2,906 | 2,906 | ||||||
| Other noncurrent assets |
5,056 | 4,136 | ||||||
| Total assets |
27,474 | 26,166 | ||||||
| Liabilities |
||||||||
| Current liabilities |
||||||||
| Current portion of long-term debt |
$ | 630 | $ | 630 | ||||
| Accounts payable |
703 | 361 | ||||||
| Accrued expenses and other current liabilities |
1,546 | 2,607 | ||||||
| Income taxes payable |
136 | 55 | ||||||
| Total current liabilities |
3,015 | 3,653 | ||||||
| Long-term debt |
525 | 998 | ||||||
| Total liabilities |
3,540 | 4,651 | ||||||
| Members’ Equity |
||||||||
| Common stock |
96 | 96 | ||||||
| Members’ contributions |
10,300 | 10,300 | ||||||
| Note receivable from member |
(116 | ) | (185 | ) | ||||
| Accumulated other comprehensive (loss) income |
(70 | ) | 14 | |||||
| Retained earnings |
12,042 | 9,732 | ||||||
| Total General Monitors Transnational, LLC members’ equity |
22,252 | 19,957 | ||||||
| Noncontrolling interests |
1,682 | 1,558 | ||||||
| Total equity |
23,934 | 21,515 | ||||||
| Total liabilities and equity |
27,474 | 26,166 | ||||||
See notes to condensed financial statements.
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GENERAL MONITORS TRANSNATIONAL, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Unaudited
| Nine Months Ended September 30 |
||||||||
| 2010 | 2009 | |||||||
| Operating Activities |
||||||||
| Net income |
$ | 5,483 | $ | 4,937 | ||||
| Depreciation and amortization |
619 | 457 | ||||||
| Equity income |
(525 | ) | (445 | ) | ||||
| Other noncurrent assets and liabilities |
(492 | ) | (28 | ) | ||||
| Other, net |
(124 | ) | 76 | |||||
| Operating cash flow before changes in working capital |
4,961 | 4,997 | ||||||
| Trade receivables |
(372 | ) | 953 | |||||
| Inventories |
(348 | ) | 421 | |||||
| Accounts payable and accrued liabilities |
99 | 9 | ||||||
| Income taxes receivable, prepaid expenses and other current assets |
131 | 90 | ||||||
| (Increase) decrease in working capital |
(490 | ) | 1,473 | |||||
| Cash flow from operating activities |
4,471 | 6,470 | ||||||
| Investing Activities |
||||||||
| Property additions |
(216 | ) | (2,084 | ) | ||||
| Cash flow from investing activities |
(216 | ) | (2,084 | ) | ||||
| Financing Activities |
||||||||
| Payments on debt, net |
(1,473 | ) | (1,856 | ) | ||||
| Distributions |
(2,762 | ) | (2,581 | ) | ||||
| Other financing |
(251 | ) | (180 | ) | ||||
| Cash flow from financing activities |
(4,486 | ) | (4,617 | ) | ||||
| Effect of exchange rate changes on cash |
2 | (1 | ) | |||||
| Decrease in cash and cash equivalents |
(229 | ) | (232 | ) | ||||
| Beginning cash and cash equivalents |
6,478 | 4,142 | ||||||
| Ending cash and cash equivalents |
6,249 | 3,910 | ||||||
See notes to condensed financial statements.
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GENERAL MONITORS TRANSNATIONAL, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(1) Basis of Presentation
The condensed consolidated financial statements of General Monitors Transnational, LLC and subsidiaries (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 consolidated 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.
The condensed consolidated financial statements include the accounts of the Company and all subsidiaries. Intercompany accounts and transactions have been eliminated.
(2) Comprehensive Income
Components of comprehensive income are as follows:
| Nine Months Ended September 30 |
||||||||
| (In thousands) |
2010 | 2009 | ||||||
| Net income |
$ | 5,483 | $ | 4,937 | ||||
| Foreign currency translation adjustments |
(120 | ) | 76 | |||||
| Comprehensive income |
5,363 | 5,013 | ||||||
| Comprehensive income attributable to noncontrolling interests |
(375 | ) | (449 | ) | ||||
| Comprehensive income attributable to General Monitors Transnational, LLC |
4,988 | 4,564 | ||||||
Components of accumulated other comprehensive (loss) income are as follows:
| (In thousands) |
September 30 2010 |
December 31 2009 |
||||||
| Cumulative translation adjustments |
$ | (70 | ) | $ | 14 | |||
(3) Goodwill and Intangible Assets
Changes in goodwill and intangible assets, net of accumulated amortization, during the nine months ended September 30, 2010 were as follows:
| (In thousands) |
Goodwill | Intangibles | ||||||
| Net balances at January 1, 2010 |
$ | 2,906 | $ | 2,554 | ||||
| Amortization expense |
— | (232 | ) | |||||
| Net balances at September 30, 2010 |
2,906 | 2,322 | ||||||
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(4) Inventories
| (In thousands) |
September 30 2010 |
December 31 2009 |
||||||
| Raw materials |
$ | 372 | $ | 421 | ||||
| Work in process |
602 | 281 | ||||||
| Raw materials and supplies |
226 | 150 | ||||||
| Total inventories |
1,200 | 852 | ||||||
(5) Related-party Transactions
The Company transacts business with GMI and General Monitors International, Ireland (GMIL) which are affiliated through certain common ownership and management. The Company provides product components and finished products for resale. In addition GMT provides services for certain administrative, new product development and marketing and sales promotion services.
The Company 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:
| (In thousands) |
2010 | 2009 | ||||||
| Sales and service revenue to affiliates (included in net sales and service revenue) |
$ | 19,041 | $ | 20,219 | ||||
| Cost of goods sold to affiliates (included in cost of products sold) |
2,697 | 4,307 | ||||||
| Purchases from affiliates* |
873 | 554 | ||||||
| * | Purchases from affiliates are generally charged to inventories and ultimately reported in cost of products sold. |
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Related-party balances at September 30, 2010 and December 31, 2009 were as follows:
| (In thousands) |
September 30 2010 |
December 31 2009 |
||||||
| Net due from affiliates |
$ | 1,756 | $ | 1,045 | ||||
(6) Income Taxes
The Company is a limited liability company with more than one member and, as such, is automatically taxed as a partnership. Accordingly, the members separately account for their pro rata share of the Company’s items of income deductions, losses and credits. The members may take distributions annually to pay for the applicable member’s share of annual taxes due. Certain subsidiaries of the Company are taxed as regular corporations.
(7) Contingencies
Self insurance of general liability: In the United States, the Company is self-insured for its general liability coverage up to $500,000 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.
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. Medical expenses are included in Cost of Goods Sold or General and Administrative expenses, depending on which department the employee works for.
(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. The adoption of the new statement on June 30, 2009 had no impact on the financial statements.
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
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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.
In June 2009, the FASB issued a statement that amends the consolidation guidance applicable to variable interest entities. The adoption of this statement on January 1, 2010 did not have a material effect on our consolidated financial statements.
(9) Statement of Changes in Shareholders’ Equity
| Common Stock |
Paid in Capital |
Note Receivable | Retained Earnings |
Accumulated Other Comprehensive Income |
Noncontrolling Interest |
Total Equity |
||||||||||||||||||||||
| Balance at December 31, 2009 |
$ | 96 | $ | 10,300 | $ | (185 | ) | $ | 9,732 | $ | 14 | $ | 1,558 | $ | 21,515 | |||||||||||||
| Net income |
— | — | — | 5,072 | — | 411 | 5,483 | |||||||||||||||||||||
| Distributions to stockholders |
— | (2,762 | ) | — | (251 | ) | (3,013 | ) | ||||||||||||||||||||
| Collections on note receivable from member |
— | — | 69 | — | — | — | 69 | |||||||||||||||||||||
| Cumulative translation adjustments |
— | — | — | (84 | ) | (36 | ) | (120 | ) | |||||||||||||||||||
| Balance at September 30, 2010 |
96 | 10,300 | (116 | ) | 12,042 | (70 | ) | 1,682 | 23,934 | |||||||||||||||||||
| Common Stock |
Paid in Capital |
Note Receivable | Retained Earnings |
Accumulated Other Comprehensive Income |
Noncontrolling Interest |
Total Equity |
||||||||||||||||||||||
| Balance at December 31, 2008 |
$ | 96 | $ | 8,297 | $ | (274 | ) | $ | 7,415 | $ | (17 | ) | $ | 1,243 | $ | 16,760 | ||||||||||||
| Net income |
— | — | — | 4,511 | — | 426 | 4,937 | |||||||||||||||||||||
| Distributions to stockholders |
— | (2,581 | ) | — | (180 | ) | (2,761 | ) | ||||||||||||||||||||
| Collections on note receivable from member |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Cumulative translation adjustments |
— | — | — | — | 53 | 23 | 76 | |||||||||||||||||||||
| Balance at September 30, 2009 |
96 | 8,297 | (274 | ) | 9,345 | 36 | 1,512 | 19,012 | ||||||||||||||||||||
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(10) Subsequent Events
On October 13, 2010, the Members of GMT and minority interest shareholders sold all of their ownership interests to Mine Safety Appliances Company (MSA). MSA paid approximately $87.0 million in cash consideration plus the payment of amounts outstanding under the Company’s term loan of approximately $1.2 million due to a bank. Approximately $12.0 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 appropriate members and minority interest shareholders approximately 24 months after the transaction date.
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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