EXHIBIT 99.3
FINANCIAL STATEMENTS OF TDC, L.L.C. (formerly Tessenderlo Davison Companies, LLC)
TABLE OF CONTENTS
| Page | ||
| FINANCIAL STATEMENTS AS OF JUNE 30, 2007 (UNAUDITED) AND FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2007 (UNAUDITED): | ||
| Balance Sheet | 1 | |
| Statement of Income | 2 | |
| Statement of Member’s Equity | 3 | |
| Statement of Cash Flows | 4 | |
| Notes to Financial Statements | 5-6 |
TDC, L.L.C.
UNAUDITED BALANCE SHEET
(In Thousands)
| June 30, 2007 | |||
| ASSETS | |||
CURRENT ASSETS: | |||
Cash and cash equivalents | $ | 15,903 | |
Trade accounts receivable, net of allowance for doubtful accounts of $91 | 21,506 | ||
Inventories | 3,891 | ||
Prepaid expenses | 507 | ||
Total current assets | 41,807 | ||
PROPERTY, PLANT AND EQUIPMENT, NET | 10,452 | ||
INTANGIBLE ASSETS, NET | 71,044 | ||
OTHER ASSETS | 1,036 | ||
TOTAL ASSETS | $ | 124,339 | |
LIABILITIES AND MEMBER’S EQUITY | |||
CURRENT LIABILITIES: | |||
Current maturities of long-term debt | $ | 9,371 | |
Accounts payable and accrued expenses: | |||
Trade | 10,113 | ||
Member | 636 | ||
Total current liabilities | 20,120 | ||
LONG-TERM DEBT, excluding current maturities | 79,494 | ||
Total liabilities | 99,614 | ||
MEMBER’S EQUITY | 24,725 | ||
Total member’s equity | 24,725 | ||
TOTAL LIABILITIES AND MEMBER’S EQUITY | $ | 124,339 | |
See accompanying notes to unaudited financial statements.
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TDC, L.L.C.
UNAUDITED STATEMENT OF INCOME
(In Thousands)
| Six Months Ended June 30, 2007 | ||||
SALES | 68,458 | |||
COST OF GOODS SOLD | 47,517 | |||
GENERAL AND ADMINISTRATIVE EXPENSES | 3,332 | |||
OPERATING INCOME | 17,609 | |||
OTHER INCOME (EXPENSE): | ||||
Interest income | 400 | |||
Interest expense | (2,530 | ) | ||
Other expense | (64 | ) | ||
Total other income (expense) | (2,194 | ) | ||
NET INCOME | $ | 15,415 | ||
See accompanying notes to unaudited financial statements.
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TDC, L.L.C.
UNAUDITED STATEMENT OF MEMBER’S EQUITY
(In Thousands)
Balance, January 1, 2007 | 23,787 | |||
Net income | 15,415 | |||
Member interest redeemed | (14,477 | ) | ||
Balance, June 30, 2007 | $ | 24,725 | ||
See accompanying notes to unaudited financial statements.
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TDC, L.L.C.
UNAUDITED STATEMENT OF CASH FLOWS
(In Thousands)
| Six Months Ended June 30, 2007 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Cash received from customers | $ | 70,509 | ||
Cash paid to employees and suppliers | (45,115 | ) | ||
Interest received | 400 | |||
Interest paid | (2,530 | ) | ||
Net cash provided by operating activities | 23,264 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Purchase of land and equipment | (336 | ) | ||
Purchase of member interest | (91,501 | ) | ||
Net cash used in investing activities | (91,837 | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Debt repayment | (8,549 | ) | ||
Proceeds from debt issuance | 92,900 | |||
Debt financing costs | (1,130 | ) | ||
Net cash provided by financing activities | 83,221 | |||
Net increase in cash and cash equivalents | 14,648 | |||
Cash and cash equivalents at beginning of period | 1,255 | |||
Cash and cash equivalents at end of period | $ | 15,903 | ||
The reconciliation of net income to net cash provided by operating activities, as shown above, is as follows: | ||||
Net income | $ | 15,415 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 4,630 | |||
Amortization of deferred financing fees | 94 | |||
Changes in operating assets and liabilities: | ||||
Decrease in receivables, net | 2,051 | |||
Decrease in inventories | 471 | |||
Increase in prepaid expense | (395 | ) | ||
Decrease in deposits | 65 | |||
Increase in accounts payable and accrued expenses | 933 | |||
Net cash provided by operating activities | $ | 23,264 | ||
See accompanying notes to unaudited financial statements.
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TDC, L.L.C.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
These unaudited financial statements of TDC, L.L.C. (the “Company”) as of and for the six months ended June 30, 2007 should be read in conjunction with the audited financial statements for TDC, L.L.C. for the year ended December 31, 2006, included as Exhibit 99.2 of this Form 8-K/A of Genesis Energy, L.P. A description of the organization and a summary of the significant accounting policies of TDC, L.L.C. is included in that exhibit.
| 1. | Acquisition of Member Interest |
On January 31, 2007, the Company acquired the 50% member interest of Tessenderlo Kerley, Inc. (TKI) for $91.5 million, including related acquisition costs, resulting in Davison Petroleum Products, LLC (Davison) becoming its sole member. The Company borrowed the funds for the acquisition under a credit facility obtained by the Company for the acquisition. The purchase price exceeded the fair value of the net working capital acquired by $81.0 million. This excess purchase price was allocated to the tangible and identifiable intangible assets of the Company based on their preliminary fair values, which are not expected to differ materially from the final values. Property, plant and equipment was allocated $8.5 million of the purchase price, which is being amortized over an average useful life of 8 years. $36.7 million of the purchase price was allocated to customer relationships, $1.2 million to a covenant not-to-compete and $34.6 million was allocated to supplier and licensing agreements.
| 2. | Inventories |
Inventories at June 30, 2007 consist of the following (in thousands):
Raw materials | $ | 1,713 | |
Finished goods | 2,178 | ||
| $ | 3,891 | ||
| 3. | Related Party Transactions |
The Company pays its member for certain payroll, insurance, employee benefits, storage, transportation, capital asset rental and other expenses. The amounts paid to its member for the six months ended June 30, 2007 was $4.0 million. The amount owed to its member for those expenses was $0.6 million at June 30, 2007.
No products were sold to its members during the six months ended June 30, 2007.
| 4. | Property, Plant, and Equipment |
Property, plant, and equipment at June 30, 2007 consist of the following (in thousands):
Land | $ | 186 | ||
Machinery and equipment | 11,192 | |||
Construction in progress | 286 | |||
| 11,664 | ||||
Accumulated depreciation | (1,212 | ) | ||
| $ | 10,452 | |||
The Company recognized depreciation of $0.6 million for the six months ended June 30, 2007.
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| 5. | Intangible Assets |
Intangible assets consist of the following (in thousands):
Customer lists and relationships | $ | 38,028 | ||
Covenant not to compete | 1,222 | |||
Supplier and licensing agreements | 35,807 | |||
| 75,057 | ||||
Accumulated amortization | (4,013 | ) | ||
| $ | 71,044 | |||
The Company recognized amortization expense on its intangible assets of $4.0 million during the six months ended June 30, 2007.
| 6. | Long-Term Debt |
Long-term debt at June 30, 2007 consists of the following (in thousands):
Obligation to third party, payments of $42 due monthly, non-interest bearing, obligation matures on August 31, 2009 | $ | 1,083 | ||
Notes payable to Bank, interest at prime rate and principal payments of $2,218 due quarterly, notes mature $57,857 in 2012 and $29,925 in 2014, secured by the assets of the Company | 87,782 | |||
| 88,865 | ||||
Current maturities of long-term debt | (9,371 | ) | ||
| $ | 79,494 | |||
| 7. | Subsequent Events |
On July 25, 2007, the Company was sold by Davison to Genesis Energy, L.P.
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