Exhibit 99.2
Unaudited Condensed Consolidated Financial Statements
Ergotron, Inc. and Subsidiaries
October 2, 2010
Contents
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| Unaudited Condensed Consolidated Financial Statements | | | | |
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| Unaudited condensed consolidated balance sheet | | | 3-4 | |
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| Unaudited condensed consolidated statements of operations | | | 5 | |
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| Unaudited condensed consolidated statements of cash flows | | | 6 | |
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| Notes to unaudited condensed consolidated financial statements | | | 7 | |
Ergotron, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
October 2, 2010
| | | | | |
| | | 2010 | |
| ASSETS | | | | |
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| CURRENT ASSETS | | | | |
| Cash and cash equivalents | | $ | 13,259,038 | |
| Accounts receivable, net of reserves of $2,683,048 | | | 35,653,979 | |
| Inventories | | | 17,405,185 | |
| Prepaid expenses and other assets | | | 1,331,139 | |
| Income taxes receivable | | | 538,385 | |
| Deferred income taxes | | | 1,881,454 | |
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| | | | | |
| Total current assets | | | 70,069,180 | |
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| PROPERTY, PLANT AND EQUIPMENT, net | | | 12,284,895 | |
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| OTHER ASSETS | | | | |
| Goodwill | | | 192,784 | |
| Patents, net | | | 557,218 | |
| Deferred income taxes | | | 453,319 | |
| Other assets | | | 428 | |
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| Total other assets | | | 1,203,749 | |
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| | | $ | 83,557,824 | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Ergotron, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
October 2, 2010
| | | | | |
| | | 2010 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
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| CURRENT LIABILITIES | | | | |
| Current maturities of long-term obligations | | $ | 3,393,750 | |
| Current maturities of other long-term liabilities | | | 18,000 | |
| Accounts payable | | | 39,970,443 | |
| Accrued expenses | | | 5,325,972 | |
| Accrued royalties — related party | | | 788,103 | |
| Income tax payable | | | 1,916,438 | |
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| Total current liabilities | | | 51,412,706 | |
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| LONG-TERM OBLIGATIONS, less current maturities | | | — | |
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| OTHER LONG-TERM LIABILITIES, less current maturities | | | — | |
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| COMMITMENTS AND CONTINGENCIES | | | — | |
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| STOCKHOLDERS’ EQUITY | | | | |
| Class A common stock — $.01 par value; voting — 15,000,000 shares authorized, 8,599,296 shares issued and outstanding at October 2, 2010 | | | 85,993 | |
| Class B common stock — $.01 par value; nonvoting — 2,500,000 shares authorized, 912,300 shares issued and outstanding at October 2, 2010 | | | 9,123 | |
| Undesignated common stock, $.01 par value — 2,500,000 shares authorized, none issued and outstanding | | | — | |
| Additional paid-in capital | | | 14,378,120 | |
| Shareholder note and interest receivable | | | (9,189,554 | ) |
| Retained earnings | | | 27,026,433 | |
| Accumulated other comprehensive loss | | | (164,997 | ) |
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| Total stockholders’ equity | | | 32,145,118 | |
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| | | $ | 83,557,824 | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Ergotron, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months ended October 2, 2010 and October 3, 2009
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| | | 2010 | | | 2009 | |
| Sales | | $ | 147,801,434 | | | $ | 109,207,943 | |
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| Cost of goods sold | | | 94,446,193 | | | | 70,037,255 | |
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| Gross profit | | | 53,355,241 | | | | 39,170,688 | |
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| Operating expenses | | | 31,947,276 | | | | 26,918,903 | |
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| Operating income | | | 21,407,965 | | | | 12,251,785 | |
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| Other income (expense): | | | | | | | | |
| Interest expense | | | (202,570 | ) | | | (339,520 | ) |
| Interest income | | | 78,053 | | | | 22,704 | |
| Other, net | | | 133,960 | | | | 182,160 | |
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| Income before income tax expense | | | 21,417,408 | | | | 12,117,129 | |
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| Income tax expense | | | 7,277,843 | | | | 3,927,435 | |
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| NET INCOME | | $ | 14,139,565 | | | $ | 8,189,694 | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Ergotron, Inc. and Subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended October 2, 2010 and October 3, 2009
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| | | 2010 | | | 2009 | |
| Cash flows from operating activities: | | | | | | | | |
| Net cash provided by operating activities | | $ | 14,524,122 | | | $ | 19,109,391 | |
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| Cash flows from investing activities: | | | | | | | | |
| Purchases of property, plant and equipment | | | (3,152,304 | ) | | | (1,876,615 | ) |
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| Cash flows from financing activities: | | | | | | | | |
| Payments on revolving line of credit | | $ | (8,865,145 | ) | | $ | (39,484,542 | ) |
| Borrowings on revolving line of credit | | | 4,129,283 | | | | 29,500,047 | |
| Repayment of long-term debt | | | (187,500 | ) | | | (187,500 | ) |
| Cash advances and interest on shareholder note receivables | | | (514,057 | ) | | | (736,480 | ) |
| Issuance of common stock, net of shareholder note receivables | | | 83,262 | | | | 69,864 | |
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| Net cash used in financing activities | | | (5,354,157 | ) | | | (10,838,611 | ) |
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| Net increase in cash and cash equivalents | | | 6,017,661 | | | | 6,394,165 | |
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| Cash and cash equivalents at beginning of year | | | 7,241,377 | | | | 1,853,811 | |
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| Cash and cash equivalents at end of year | | $ | 13,259,038 | | | $ | 8,247,976 | |
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| Supplemental disclosures of cash flow information: | | | | | | | | |
| Cash paid during the year for: | | | | | | | | |
| Interest | | $ | 62,791 | | | $ | 214,902 | |
| Income taxes | | $ | 5,966,073 | | | $ | 1,615,669 | |
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| Cash received during the year for: | | | | | | | | |
| Income taxes | | $ | 24,732 | | | $ | 109,787 | |
The impact of changes in foreign currency exchange rates on cash was not material and has been included in net cash provided by operating activities.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Etgotron, Inc. and Subsidiaries
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine months ended October 2, 2010
NOTE A — INTERIM FINANCIAL STATEMENTS
| | | Ergotron, Inc. (“Ergotron” or the “Company”) designs and manufactures digital display and computer mounting solutions including wall and desk mount arms, desk stands, powered and non-powered mobile carts, pivots and vertical lifts. The Company has manufacturing and warehouse facilities in Minnesota, the Netherlands and the Peoples Republic of China, with sales offices, channel distribution partners and customers throughout the world. Ergotron’s core products are designed with patented Constant Force (CF™) lift-and-pivot motion technology, and require less user effort to achieve more motion. Ergotron is a global company focused on channel distribution, consumer, and original equipment manufacturer (OEM) business. |
| | | The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations and cash flows of the Company after elimination of intercompany accounts and transactions, without audit and, in the opinion of management, reflect all adjustments of a normal recurring nature for a fair statement of the interim periods presented. Although certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted, the Company believes that the disclosures included are adequate to make the information presented herein not misleading. Operating results for the nine months ended October 2, 2010 are not necessarily indicative of the results that may be expected for other interim periods or for the year ending December 31, 2010. |
| | | It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the related notes included elsewhere in this amended Form 8-K. |
NOTE B — INVENTORIES
| | | Inventories consisted of the following at October 2, 2010: |
| | | | | |
| | | 2010 | |
| Raw materials and packaging | | $ | 4,933,491 | |
| Work-in-process | | | 146,549 | |
| Finished goods | | | 12,325,145 | |
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| Total inventories | | $ | 17,405,185 | |
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NOTE C — RELATED PARTY TRANSACTIONS
| | | Royalty and License Agreements |
| | | In April 1999, the Company entered into a royalty and license agreement with the majority stockholder of the Company. The Company obtained licenses for the use of patents owned by the majority stockholder until such time as the parties terminate their respective rights under the agreement. In return for the use of the patents, the Company pays royalties to the majority stockholder based on a percentage (0.50% for the first quarter in 2009, 0.75% for the second quarter of 2009 through the first quarter of 2010 and 1.5% beginning in the second quarter of 2010). Royalty fees charged to operations under this royalty agreement were $1,913,651 for the nine months ended October 2, 2010 and $745,710 for the nine months ended October 3, 2009. |
NOTE D — SUBSEQUENT EVENT
| | | On December 17, 2010, Nortek, Inc. acquired Ergotron. |
| | | The Company has evaluated subsequent events through the acquisition date of December 17, 2010. |
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