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Table of Contents

Exhibit 99.2

STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

Minneapolis, Minnesota

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Six Months Ended June 30, 2017


Table of Contents

STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

TABLE OF CONTENTS

 

Content   

Page

Number

 

Unaudited Condensed Consolidated Balance Sheet

     3  

Unaudited Condensed Consolidated Statements of Operation

     4  

Unaudited Condensed Consolidated Statement of Cash Flows

     5  

Notes to Unaudited Condensed Consolidated Financial Statements

     6  

 

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Table of Contents

STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

As of June 30, 2017

 

     June 30, 2017  
     (in thousands)  

CURRENT ASSETS

  

Cash and cash equivalents

   $ 550  

Accounts and contracts receivable, net

     9,115  

Contract retainage

     1,909  

Inventories

     2,388  

Prepaid expenses

     910  

Costs and estimated earnings in excess of billings

     3,873  
  

 

 

 

Total Current Assets

     18,745  
  

 

 

 

PROPERTY AND EQUIPMENT, NET

     1,256  
  

 

 

 

OTHER ASSETS

  

Goodwill and intangible assets, net

     2,376  

Other

     377  
  

 

 

 

Total Other Assets

     2,753  
  

 

 

 

TOTAL ASSETS

   $ 22,754  
  

 

 

 

CURRENT LIABILITIES

  

Line of credit and current portion of long-term debt

   $ 4,610  

Accounts payable

     3,224  

Accrued expenses and other liabilities

     1,483  

Billings in excess of costs and estimated earnings

     1,132  

Customer deposits

     1,623  
  

 

 

 

Total Current Liabilities

     12,072  

LONG-TERM LIABILITIES

  

Long-term debt, net of current portion and debt costs

     348  

Other debt

     8,706  
  

 

 

 

Total Liabilities

     21,126  
  

 

 

 

COMMITMENTS AND CONTINGENCIES

  

EQUITY

     1,628  
  

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 22,754  
  

 

 

 

See notes to unaudited condensed consolidated financial statements.

 

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STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2017

 

     Six Months
Ended
June 30, 2017
 
     (in thousands)  

NET SALES

   $ 27,738  

COST OF GOODS SOLD

     21,460  
  

 

 

 

Gross Profit

     6,278  

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     4,294  
  

 

 

 

INCOME FROM OPERATIONS

     1,984  

OTHER INCOME (EXPENSE)

  

Interest expense

     775  
  

 

 

 

INCOME BEFORE INCOME TAXES

     1,209  
  

 

 

 

PROVISION FOR INCOME TAXES

     —    
  

 

 

 

NET INCOME

   $ 1,209  
  

 

 

 

See notes to unaudited condensed consolidated financial statements.

 

4


Table of Contents

STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2017

 

     Six Months
Ended
June 30, 2017
 
     (in thousands)  

CASH FLOWS FROM OPERATING ACTIVITIES

  

Net income

   $ 1,209  

Adjustments from net income to operating cash flows

  

Depreciation and amortization

     287  

Changes in assets and liabilities:

  

Accounts receivable

     (2,510

Contract retainage

     59  

Inventories

     222  

Prepaid expenses and other assets

     (439

Costs and estimated earnings in excess of billings

     (3,176

Accounts payable

     52  

Accrued expenses and other liabilities

     (359

Billings in excess of costs and estimated earnings

     137  

Customer deposits

     1,334  
  

 

 

 

Net Cash Used In Operating Activities

     (3,184
  

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

  

Purchase of property and equipment

     (374
  

 

 

 

Net Cash Used in Investing Activities

     (374
  

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

  

Net advances on line of credit

     4,027  

Payments on long-term debt

     (303

Net change in related party note

     193  

Distributions

     (1,759
  

 

 

 

Net Cash Provided By Financing Activities

     2,158  
  

 

 

 

Net Change in Cash and Cash Equivalents

     (1,400

CASH AND CASH EQUIVALENTS – Beginning of Year

     1,950  
  

 

 

 

CASH AND CASH EQUIVALENTS – END OF YEAR

   $ 550  
  

 

 

 

See notes to unaudited condensed consolidated financial statements.

 

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STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Six Months Ended June 30, 2017

(Dollars in Thousands)

NOTE 1 – Summary of Significant Accounting Policies

Nature of Operations

Stadium Consolidation, LLC owns the majority of the outstanding ownership of Staging Concepts Acquisition, LLC (together, the “Company”) and, as a result, has consolidated those results. Staging Concepts Acquisition, LLC manufactures and installs portable stage platforms and railing systems for stadiums, theatres, auditoriums, and other commercial buildings. All significant intercompany transactions and balances have been eliminated upon consolidation.

Recent Accounting Pronouncements

In May 2014, the FASB issued guidance creating Accounting Standards Codification (“ASC”) Section 606, “Revenue from Contracts with Customers.” The new section will replace Section 605, “Revenue Recognition,” and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards to reconcile previously differing treatment between United States practices and those of the rest of the world and to enhance disclosures related to disaggregated revenue information. The standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The standard also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The Company is still in the process of evaluating the effect of adoption on the consolidated financial statements and is currently assessing contracts with customers. The Company anticipates they will expand their consolidated financial statement disclosures in order to comply with the new standard and has not yet concluded on the transition method upon adoption.

In February 2016, the FASB issued ASU No. 2016-02, “Leases.” ASU No. 2016-02 was issued to increase transparency and comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months) on the balance sheet as a lease liability and a right-of-use asset (as defined). ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, with earlier application permitted. Upon adoption, the lessee will apply the new standard retrospectively to all periods presented or retrospectively using a cumulative effect adjustment in the year of adoption. The Company is currently assessing the effect that ASU No. 2016-02 will have on its results of operations, financial position and cash flows.

 

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STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Six Months Ended June 30, 2017

(Dollars in Thousands)

 

NOTE 2 – Inventory

Inventories consisted of the following as of June 30:

 

     2017  

Raw materials

   $ 1,764  

Work in-process

     792  

Finished goods

     20  
  

 

 

 
     2,576  

Reserve for obsolescence

     (188
  

 

 

 
   $ 2,388  
  

 

 

 

NOTE 3 – Costs and Estimated Earnings on Uncompleted Projects

Percentage of completion results consisted of the following as of June 30:

 

     2017  

Costs incurred on uncompleted projects

   $ 36,640  

Estimated earnings

     14,316  
  

 

 

 
     50,956  

Less billings to date

     (48,215
  

 

 

 
   $ 2,741  
  

 

 

 

The above data is presented in the accompanying balance sheet as follows:

 

Cost and estimated earnings in excess of billings

   $ 3,873  

Billings in excess of costs and estimated earnings

     (1,132
  

 

 

 
   $ 2,741  
  

 

 

 

 

7


Table of Contents

STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Six Months Ended June 30, 2017

(Dollars in Thousands)

 

NOTE 4 – Line of Credit

In September 2015, the Company obtained a revolving line of credit up to $7,000,000 with a bank. The line of credit expires on the earlier of September 2017 or upon default of the Company meeting the obligations defined in the agreement. The line of credit is secured by substantially all assets of the Company. Interest is calculated at the prime plus 1.50%, with a minimum interest rate of 5.00%. As of June 30, 2017, $4.0 million was outstanding under the line of credit. The line of credit also allows the Company to issue letters of credit up to the lessor of $2,000,000 or available borrowing base. Amounts outstanding under the letter of credit accrue interest between 1.50% and 2.00% annually. The Company had $0 outstanding against the available letter of credit balance as of June 30, 2017.

Terms of the lines of credit include, but are not limited to, covenants which require the Company to maintain specified financial ratios and restrict dividends. As of June 30, 2017, the Company was in compliance with all covenants under the agreement.

NOTE 5 – Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of June 30:

 

     2017  

Wages and commissions

   $ 760  

Income taxes

     212  

Other

     511  
  

 

 

 

Accrued Expenses and Other Current Liabilities

   $ 1,483  
  

 

 

 

NOTE 6 – Long-term Debt

In September 2015, the Company obtained a bank note payable “Term Note A” of $3,500,000. Term Note A is due in monthly installments of $48,611 plus interest at the greater of prime plus 1.25% or 5.25%. In January 2016, the Company obtained a bank note payable “Term Note B” of $110,700. Term Note B is due in monthly installments of $1,845 plus interest at the greater of prime plus 1.25% or 5.25%.

 

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Table of Contents

STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Six Months Ended June 30, 2017

(Dollars in Thousands)

 

Unpaid remaining principal under both bank notes payable is due in September 2020. The bank notes payable are secured by substantially all assets of the Company and are subject to various financial and non-financial covenants.

Outstanding amounts on the bank notes payable consisted of the following as of June 30, 2017:

 

Term Note A

   $ 852  

Term Note B

     79  
  

 

 

 

Total long-term debt

     931  

Less: Current portion

     (605
  

 

 

 

Long-Term Portion, net

   $ 326  
  

 

 

 

NOTE 7 – Related Party Notes

2015 Related Party Notes

In September 2015, the Company issued notes totaling $8,000,000 with 12.0% cash interest rate and 16.5% effective interest rate. Unpaid interest accretion is capitalized as principal monthly and was $0.7 million during the six months ended June 30, 2017. The related party notes were provided by entities with preferred A and B units in the Company and are secured by substantially all assets of the Company, but is subordinate to the bank line of credit and bank notes payable. Amounts due under the related party notes, including capitalized, unpaid interest accretion, is due in full in September 2020. Outstanding borrowings were $8.4 million as of June 30, 2017. Amounts are presented net of unamortized debt costs of $0.2 million as of June 30, 2017.

Terms of the agreement, as amended, include, but are not limited to, covenants which require the Company to maintain specified financial ratios, restrictive annual capital expenditures and dividends. As of June 30, 2017, the Company was in compliance with all covenants under the agreement. Cash interest expense in connection with the related party notes was approximately $0.7 million for the six months ended June 30, 2017.

NOTE 8 – Commitments and Contingencies

Legal Proceedings

The Company is party to various legal proceedings incidental to its normal operating activities. Although it is impossible to predict the outcome of such proceedings, management believes, based on the facts currently available, that none of such claims will result in losses that would have a materially adverse effect on the Company’s consolidated financial statements.

 

9


Table of Contents

STADIUM CONSOLIDATION, LLC AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Six Months Ended June 30, 2017

(Dollars in Thousands)

 

NOTE 9 – Subsequent Events

On July 31, 2017, Staging Concepts Acquisition, LLC (SC) entered into a definitive agreement with the Trex Company, Inc. (Trex) and on that date Trex acquired certain assets and assumed certain liabilities of SC for $71.8 million in cash. The purchase price is subject to adjustment pending final determination of working capital at closing.

 

10