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8-K/A - LIVE FILING - LIONBRIDGE TECHNOLOGIES INC /DE/ | htm_45777.htm |
EX-99.1 - EX-99.1 - LIONBRIDGE TECHNOLOGIES INC /DE/ | exhibit2.htm |
EX-23.1 - EX-23.1 - LIONBRIDGE TECHNOLOGIES INC /DE/ | exhibit1.htm |
EX-99.3 - EX-99.3 - LIONBRIDGE TECHNOLOGIES INC /DE/ | exhibit4.htm |
PRODUCTIVE RESOURCES, LLC
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2012 AND 2011
PRODUCTIVE RESOURCES, LLC
TABLE OF CONTENTS
MARCH 31, 2012 AND 2011
Page
Independent Accountants Review Report |
1 | |||
Financial Statements (Unaudited): |
||||
Consolidated Balance Sheets |
2 | |||
Consolidated Statements of Income and Retained Earnings |
3 | |||
Consolidated Statements of Cash Flows |
4 | |||
Notes to Consolidated Financial Statements |
5-10 |
Michael P. Alerding, CPA Michael E. Farmer, CPA Michael A. Staton, CPA Candace T. Graham, CPA, CSRP |
Alerding & Co., LLC Consultants Certified Public Accountants |
4181 E. 96th Street, Suite 180 Indianapolis, IN 46240 Office: 317.569.4181 Toll Free: 888.922.4941 Fax: 317.569.0564 www.alerdingandco.com |
||
INDEPENDENT ACCOUNTANTS REVIEW REPORT
To the Board of Directors and Member
PRODUCTIVE RESOURCES, LLC
Columbus, Indiana
We have reviewed the accompanying consolidated balance sheets of Productive Resources, LLC as of March 31, 2012 and 2011, and the related consolidated statements of income and retained earnings, and cash flows for the three month periods then ended. This interim financial information is the responsibility of the Companys management.
We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with U.S. Generally Accepted Auditing Standards, the objective of which is the expression of an opinion regarding the financial information as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information in order for it to be in conformity with U.S. Generally Accepted Accounting Principles.
/s/ Alerding & Co
August 2, 2012
PRODUCTIVE RESOURCES, LLC
CONSOLIDATED balance sheets
(UNAUDITED)
MARCH 31, 2012 AND 2011
ASSETS | ||||||||||||||||
2012 | 2011 | |||||||||||||||
Current Assets: | ||||||||||||||||
Cash |
$ | 66,359 | $ | 340,371 | ||||||||||||
Accounts receivable |
1,889,315 | 1,404,037 | ||||||||||||||
Work in process |
879,084 | 686,088 | ||||||||||||||
Prepaid expenses and other |
118,056 | 50,411 | ||||||||||||||
Total current assets | 2,952,814 | 2,480,907 | ||||||||||||||
Property and Equipment: | ||||||||||||||||
Land, building and improvements |
373,616 | 368,025 | ||||||||||||||
Office furniture and equipment |
725,628 | 571,549 | ||||||||||||||
Vehicles |
58,054 | 98,182 | ||||||||||||||
1,157,298 | 1,037,756 | |||||||||||||||
Accumulated depreciation |
(699,762 | ) | (624,994 | ) | ||||||||||||
Property and equipment, net | 457,536 | 412,762 | ||||||||||||||
Other Assets: | ||||||||||||||||
Real estate development |
774,376 | 772,876 | ||||||||||||||
Due from owner |
1,564,153 | 2,297,568 | ||||||||||||||
Other |
12,201 | 12,201 | ||||||||||||||
Total other assets | 2,350,730 | 3,082,645 | ||||||||||||||
$ | 5,761,080 | $ | 5,976,314 | |||||||||||||
LIABILITIES AND MEMBERS EQUITY |
||||||||||||||||
Current Liabilities: | ||||||||||||||||
Line of credit |
$ | 548,000 | $ | 1,019,500 | ||||||||||||
Current maturities of long-term debt |
202,767 | 33,307 | ||||||||||||||
Accounts payable |
88,948 | 40,999 | ||||||||||||||
Accrued payroll and benefits |
271,454 | 329,473 | ||||||||||||||
Deferred income |
41,216 | 7,205 | ||||||||||||||
Accrued lease liability |
20,228 | 19,748 | ||||||||||||||
Accrued 401(k) contribution |
264,674 | 304,662 | ||||||||||||||
Total current liabilities | 1,437,287 | 1,754,894 | ||||||||||||||
Long-Term Debt | 1,208,749 | 978,832 | ||||||||||||||
Total liabilities | 2,646,036 | 2,733,726 | ||||||||||||||
Members Equity: | ||||||||||||||||
Members contribution |
160,188 | 160,188 | ||||||||||||||
Retained earnings |
2,954,856 | 3,082,400 | ||||||||||||||
Total Member's equity | 3,115,044 | 3,242,588 | ||||||||||||||
$ | 5,761,080 | $ | 5,976,314 | |||||||||||||
PRODUCTIVE RESOURCES, LLC
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
THREE MONTH PERIODS ENDED MARCH 31, 2012 AND 2011
2012 | 2011 | |||||||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||||||
Revenues | $ | 2,888,109 | 100.0 | $ | 2,604,828 | 100.0 | ||||||||||||||||||
Cost of Revenues | 1,927,783 | 66.7 | 1,719,724 | 66.0 | ||||||||||||||||||||
Gross profit | 960,326 | 33.3 | 885,104 | 34.0 | ||||||||||||||||||||
Selling, General and Administrative | 633,890 | 21.9 | 518,098 | 19.9 | ||||||||||||||||||||
Income from operations | 326,436 | 11.3 | 367,006 | 14.1 | ||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest expense |
(23,858 | ) | (0.8 | ) | (20,784 | ) | (0.8 | ) | ||||||||||||||||
Other, net |
3,989 | 0.1 | -0- | 0.0 | ||||||||||||||||||||
Total other income (expense), net | (19,869 | ) | (0.7 | ) | (20,784 | ) | (0.8 | ) | ||||||||||||||||
Net income | 306,567 | 10.6 | 346,222 | 13.3 | ||||||||||||||||||||
Retained Earnings, Beginning of Period | 2,679,585 | 2,736,178 | ||||||||||||||||||||||
Dividends and Distributions | (31,296 | ) | -0- | |||||||||||||||||||||
Retained Earnings, End of Period | $ | 2,954,856 | $ | 3,082,400 | ||||||||||||||||||||
PRODUCTIVE RESOURCES, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTH PERIODS ENDED MARCH 31, 2012 AND 2011
2012 | 2011 | |||||||||||||||||||
Cash Flows From Operating Activities: | ||||||||||||||||||||
Net income | $ | 306,567 | $ | 346,222 | ||||||||||||||||
Adjustments to reconcile net income to net cash | ||||||||||||||||||||
provided by operating activities: |
||||||||||||||||||||
Depreciation |
25,215 | 16,333 | ||||||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Accounts receivable |
(319,637 | ) | (92,482 | ) | ||||||||||||||||
Work in process |
(179,794 | ) | (216,129 | ) | ||||||||||||||||
Prepaid expenses |
16,781 | 34,940 | ||||||||||||||||||
Accounts payable |
16,418 | 6,942 | ||||||||||||||||||
Accrued payroll and benefits |
55,978 | 154,327 | ||||||||||||||||||
Deferred income |
36,015 | 7,205 | ||||||||||||||||||
Accrued lease liability |
(3,536 | ) | (2,783 | ) | ||||||||||||||||
Accrued 401(k) contribution |
51,881 | 54,240 | ||||||||||||||||||
Net cash provided by operating activities | 5,888 | 308,815 | ||||||||||||||||||
Cash Flows From Investing Activities: | ||||||||||||||||||||
Capital expenditures | (15,305 | ) | (8,728 | ) | ||||||||||||||||
Real estate development | (1,500 | ) | -0- | |||||||||||||||||
Net cash used in investing activities | (16,805 | ) | (8,728 | ) | ||||||||||||||||
Cash Flows From Financing Activities: | ||||||||||||||||||||
Line of credit, net | 40,000 | 69,500 | ||||||||||||||||||
Principal payments on long-term debt | (53,950 | ) | (11,227 | ) | ||||||||||||||||
Cash overdraft | -0- | (10,334 | ) | |||||||||||||||||
Advances to owner, net | (21,408 | ) | (22,811 | ) | ||||||||||||||||
Net cash provided by (used in) financing activities | (35,358 | ) | 25,128 | |||||||||||||||||
Net increase (decrease) | (46,275 | ) | 325,215 | |||||||||||||||||
Cash, Beginning of Period | 112,634 | 15,156 | ||||||||||||||||||
Cash, End of Period | $ | 66,359 | $ | 340,371 | ||||||||||||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||||||||||||||
Cash paid during the period for interest |
$ | 23,858 | $ | 20,784 | ||||||||||||||||
Non-Cash Investing and Financing Activities: | ||||||||||||||||||||
Dividend and distributions declared for amounts due from owner |
$ | 31,296 | $ | -0- |
1. | SIGNIFICANT ACCOUNTING POLICIES |
The accompanying consolidated financial statements include the accounts of PRODUCTIVE RESOURCES, LLC (PR) and BOOHER PROPERTIES, LLC (BP), collectively referred to as the Company. All material intercompany transactions have been eliminated in consolidation.
Description of Company
PR is a design and engineering firm headquartered in Columbus, Indiana, with other offices in Indianapolis and Bedford, Indiana and St. Louis, Missouri. Design and engineering services include finite element analysis, mechanical engineering, product and tool design, build for testing, and CAD drafting and revisions. Additionally, PR provides temporary contract employees and permanent staffing services under the direct supervision of the client on a fee basis or on a temp-to-direct basis.
BP owns the land and building occupied solely by PR in Columbus, Indiana, and other real estate development properties.
The Companies are under common ownership, and BP is managerially and financially dependent on PR. Accordingly, PR is considered the primary beneficiary of BP as a variable interest entity and, therefore, BP is included in consolidation with PR.
The significant accounting policies followed by the Company in the preparation of the consolidated financial statements are as follows:
Estimates
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Accounts requiring the use of significant estimates include the collectability of accounts receivable and the valuation of work in process.
Revenue Recognition, Deferred Revenue and Work in Process
PR revenues are recognized as the services are performed. Billings and payments received prior to the completion of the services or acceptance by the customer are deferred until completion of the project. Work in process represents services performed on projects that have not been completed.
Accounts Receivable
PR carries its accounts receivable at the amount invoiced less an allowance for doubtful accounts, if considered necessary. On a periodic basis, PR evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a history of past write-offs, collections, and current credit conditions. Customers with amounts past due are contacted by PR personnel for collection and, if unsuccessful, the amount is written-off as uncollectible.
Property, Equipment and Depreciation
Property and equipment are recorded at cost and include expenditures which substantially increase the useful lives of existing assets. Maintenance, repairs, and minor renewals are expensed as incurred. The Company follows the practice of depreciating the cost of property and equipment over their estimated useful lives using the straight-line method of depreciation. The ranges of useful lives used by the Company are as follows:
Ranges of | ||
Description | Useful Lives | |
Building and building improvements
|
7 40 three month periods | |
Office furniture and equipment
|
3 7 three month periods | |
Vehicles
|
4 5 three month periods |
Depreciation expense was $25,215 and $16,333 for the three month periods ended March 31, 2012 and 2011, respectively.
Income Taxes
PR is a limited liability company taxed as an S corporation through May 31, 2012, and BP is a limited liability company reported in the individual income tax return of the owner beginning in 2011 (taxed as a partnership in 2010). Accordingly, the Company incurs no Federal or state income tax liability and the income is included in the tax returns of the member; therefore, no provision for income taxes has been included in the accompanying consolidated financial statements.
Under the terms of the Unit Purchase Agreement (Note 8), effective June 1, 2012, the election of PR to be taxed as an S corporation shall cease, and PR will become a taxable corporation thereafter.
Management of the Company evaluates all significant income tax positions as required by GAAP. Management does not believe the Company has taken any income tax positions that would require the recording of an income tax liability, nor do they believe that there are any unrealized income tax benefits that would be realized within the next twelve months. The Companys Federal and state income tax returns filed remain open and subject to examination beginning with the tax year ended December 31, 2008.
Subsequent Events
Subsequent events have been evaluated through August 2, 2012, which is the date the consolidated financial statements were available for issuance (Note 8).
2. |
LINE OF CREDIT
At March 31, 2012 and 2011, PR has $2,000,000 of available borrowings under a line of credit agreement with a bank requiring monthly payments of interest only on outstanding borrowings at the banks prime lending rate less 0.50% per annum.
In July 2011, PR secured a $500,000 note payable with the same bank as the line of credit, the borrowings from which were directed as a principle reduction of the outstanding borrowings on the line of credit (Note 3).
Borrowings, which are subject to a borrowing base formula, are secured by substantially all assets of PR and are unconditionally guaranteed by the member. The agreement places restrictive covenants on PR, including a minimum debt service coverage ratio and restrictions on additional indebtedness and liens.
Outstanding borrowings were $548,000 and $1,019,500 at March 31, 2012 and 2011, respectively. On June 4, 2012, the outstanding balance was repaid by the member from proceeds received from the sale of the members interest (Note 8), and the line of credit agreement was terminated.
3. | LONG-TERM DEBT |
Long-term debt at March 31, 2012 and 2011 includes the following:
2012 | 2011 | |||||||
BP Note payable to bank; payable in monthly
installments of $5,920 including interest at
5.25% until September 2014, at which time the
remaining balance is due. |
$ | 807,721 | $ | 835,164 | ||||
BP Note payable to bank; payable in monthly
installments of $1,251 including interest at
5.25% until September 2014, at which time the
remaining balance is due. |
170,675 | 176,467 | ||||||
PR Note payable to bank; payable in monthly
installments of $15,119 including interest at
5.5%. |
382,821 | -0- | ||||||
PR Other |
50,299 | 508 | ||||||
1,411,516 | 1,012,139 | |||||||
Less current maturities |
202,767 | 33,307 | ||||||
$ | 1,208,749 | $ | 978,832 | |||||
Annual maturities of long-term debt at March 31, 2012 are as follows:
Period Ending March 31,
2013
|
$ | 202,767 | ||
2014
|
232,841 | |||
2015
|
975,908 | |||
$ | 1,411,516 | |||
The notes payable to bank are secured by the same terms and conditions as the line of credit (Note 2), and the notes payable by BP are further secured by a mortgage on real estate and an assignment of rent.
The PR note payable to bank represents the outstanding balance of the $500,000 borrowing in July 2011 directed as a principle reduction of the outstanding borrowings on the line of credit (Note 2). On June 4, 2012, the outstanding balance of the PR note payable to bank was repaid by the member from proceeds received from the sale of the members interest (Note 8).
4. | OPERATING LEASES |
The PR leases office space for the Indianapolis, St. Louis and Columbus facilities from unrelated parties under the terms of operating leases requiring monthly payments at March 31, 2012 aggregating $20,881 plus a common area maintenance charge. The Indianapolis lease contains a rent escalation clause, and the leases expire at various dates through August 2015.
PR also leases office equipment requiring monthly lease payments expiring at various dates through November 2014.
Future minimum lease payments due to unrelated parties under the terms of non-cancelable operating leases at March 31, 2012 are as follows:
Period Ending March 31,
2013
|
$ | 263,038 | ||
2014
|
257,544 | |||
2015
|
177,785 | |||
2016
|
69,798 | |||
$ | 768,165 | |||
Total lease expense for all operating leases was $100,552 and $94,903 for the three month periods ended March 31, 2012 and 2011, respectively.
5. |
401(K) PROFIT SHARING PLAN
PR has a 401(k) Profit Sharing Plan which covers all eligible employees and provides for a company discretionary tax deferred profit sharing contribution and an employee elective contribution, but with no employer discretionary matching provision. With respect to the employee contribution, a participants contribution may not exceed the maximum amount allowed as determined by the Internal Revenue Code.
With respect to the profit sharing component, each eligible participant is entitled to receive a portion of the discretionary profit sharing contribution based on the relationship of a participants compensation to the total compensation for all participants. PRs profit sharing contributions are fully vested upon five years of continuous service. PR accrued profit sharing contributions to the plan of $51,881 and $54,240 for the three month periods ended March 31, 2012 and 2011, respectively. PR has total accrued profit sharing contributions of $264,674 at March 31, 2012, including $212,793 for the year ended December 31, 2011, and total accrued profit sharing contributions of $304,662 at March 31, 2011, including $250,422 for the year ended December 31, 2010.
6. | RELATED PARTY TRANSACTIONS |
At March 31, 2012 and 2011, PR has a receivable from the member of $1,371,408 and $2,022,811, respectively, which is due upon demand. Additionally, at March 31, 2012 and 2011, BP had $192,745 and $274,757 due from the member, which is due upon demand.
Effective May 31, 2012, PR declared a dividend for the outstanding balance due from the member (Note 8).
7. | CONCENTRATIONS OF CREDIT RISK |
The Company maintains cash in bank deposit accounts which, at times, may exceed the Federally insured limits. The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on cash.
At March 31, 2012 and for the three month period then ended, 63% of PRs accounts receivable where from 3 customers, and 62% of PRs revenues were from 3 customers.
At March 31, 2011 and for the three month period then ended, 89% of PRs accounts receivable were from 4 customers, and 82% of PRs revenues were from the same 4 customers.
8. |
SUBSEQUENT EVENTS
Unit Purchase Agreement
Effective June 1, 2012, the sole member of PR sold his membership interest to an unrelated party under a Unit Purchase Agreement. Effective May 31, 2012, PR issued a dividend to the former member, and the former member repaid indebtedness to the bank from proceeds received as follows:
Due from owner |
$ | 1,385,671 | ||
Vehicles, net |
3,462 | |||
1,389,133 | ||||
Repayment of line of credit |
(637,474 | ) | ||
Repayment of long-term debt |
(371,378 | ) | ||
Dividend, net |
$ | 380,281 | ||
PR entered into a Non-Competition Agreement and an Employment Agreement with the former member of PR for a period of five (5) years from the Effective Date, subject to conditions specified therein, which contains a covenant against competition during the employment term and for two (2) years thereafter. Additionally, Productive Resources, LLC entered into an Employment Agreement with the President of PR for a period of four (4) years from the Effective Date, subject to conditions specified therein, which contains a covenant against competition during the employment term and for one (1) year thereafter.
Operating lease
Effective June 1, 2012, PR entered into an operating lease with BP for the Columbus, IN office facility requiring monthly lease payments of $4,000 through May 2017, with the option to renew the lease for an additional lease term through May 2022. In addition to the base rent, PR is responsible for all costs of occupancy, including real estate taxes, utilities, maintenance and insurance.
Capital lease
PR leased computer equipment under the terms of capital leases having a capitalized cost of $42,537 and requiring monthly lease payments aggregating $1,287, including interest at 9% per annum, through May 2015.