ACORN PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31,
-----------------------------------
2005 2004
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Assets
Current Assets:
Cash and cash equivalents $ 451 $ 483
Accounts Receivable, net 11,607 10,107
Inventories 15,272 24,939
Prepaid expenses and other current assets 533 517
---------------- ---------------
Total current assets 27,863 36,046
Property, plant and equipment, net 10,254 10,458
Goodwill 7,567 7,567
Deferred financing fees 1,226 1,421
Other intangible assets 349 391
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Total assets $ 47,259 $ 55,883
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Debt in default:
Revolving credit facility $ 10,722 $ -
Long term debt 25,871 -
Revolving credit facility - 11,856
Current portion of long-term debt - 500
Trade accounts payable 3,972 7,256
Accrued expenses and other current liabilities 6,120 6,153
---------------- ---------------
Total current liabilities 46,685 25,765
Long-term debt - 25,606
Accrued pension liability 5,380 4,170
Other long-term liabilities 637 941
---------------- ---------------
Total liabilities 52,702 56,482
Redeemable common stock 329 549
STOCKHOLDERS' DEFICIT
Preferred stock - -
Common stock 78,741 78,741
Contributed capital stock options 452 452
Accumulated other comprehensive loss - minimum penion liability (10,555) (9,278)
Retained defecit (74,410) (71,063)
---------------- ---------------
Total stockholders' deficit (5,772) (1,148)
---------------- ---------------
Total liabilities, redeemable common stock and stockholders' deficit $ 47,259 $ 55,883
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ACORN PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
---------------------------------------------
2005 2004 2003
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Net sales $ 84,458 $ 82,692 $ 82,270
Cost of goods sold 70,070 66,536 62,169
------------ ------------- ------------
Gross profit 14,388 16,156 20,101
Selling, general and administrative expenses 10,716 11,503 12,146
Gain on disposal of fixed assets - (39) (49)
------------ ------------- ------------
Operating income 3,672 4,692 8,004
Interest expense 6,364 4,423 3,272
Other expense 782 1,048 1,529
------------ ------------- ------------
(Loss) income from continuing operations before income taxes (3,474) (779) 3,203
Income tax expense 93 9 60
------------ ------------- ------------
(Loss) income from continuing operations (3,567) (788) 3,143
Income from discontinued operations (including loss of sale of $272) - - 508
------------ ------------- ------------
Net income (loss) (3,567) (788) 3,651
============ ============= ============
ACORN PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31
---------------------------------------------
2005 2004 2003
------------ ------------ -------------
OPERATING ACTIVITIES
Net (loss) income $ (3,567) $ (788) $ 3,651
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Income from discontinued operations - - (508)
Gain on disposal of fixed assets - (39) (49)
Depreciation and amortization 2,124 1,978 1,781
Loss on extinguishment of debt - 455 -
Allowances for doubtful accounts, sales discounts, and other (16) (258) (21)
Compensation paid through issuance of common stock - 120 -
Changes in operating assets and liabilities:
Accounts receivable (1,484) 3,752 (2,164)
Inventories 9,667 811 (5,682)
Prepaids and other current assets (15) (5) 85
Deferred financing fees 195 23 471
Accounts payable and accrued expenses (3,317) (3,215) 3,405
Other assets and liabilities (331) (371) (44)
------------ ------------ -------------
Net cash provided by continuing operations 3,256 2,463 925
Net cash provided by discontinued operations - - 960
------------ ------------ -------------
Net cash provided by operating activities 3,256 2,463 1,885
INVESTING ACTIVITIES
Purchase of fixed assets (1,919) (2,807) (3,579)
Proceeds from sale of fixed assets - 58 173
Proceeds from sale of discontinued operations - - 3,065
------------ ------------ -------------
Net cash used in investing activities (1,919) (2,749) (341)
FINANCING ACTIVITES
Payments on term loans (500) (1,213) (3,215)
Borrowings on term loans 265 16,534 1,500
(Repayments) borrowings on revolver, net (1,134) 1,160 1,354
Payments for redemptions of common stock - (50) (1,526)
Return of capital - (16,500) -
------------ ------------ -------------
Net cash used in financing activities (1,369) (69) (1,887)
------------ ------------ -------------
Net decrease in cash (32) (355) (343)
Cash at beginning of period 483 838 1,181
------------ ------------ -------------
Cash at end of period $ 451 $ 483 $ 838
============ ============ =============
ACORN PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET (LOSS) INCOME TO EBITDA
(IN THOUSANDS)
(UNAUDITED)
YEARS ENDED DECEMBER 31,
-------------------------------------------------
2005 2004 2003
------------- ----------------- -------------
Net (loss) income $ (3,567) $ (788) $ 3,651
Depreciation 2,124 1,978 1,781
Other expense 782 1,048 1,529
Gain on disposal of fixed assets - (39) (49)
Interest expense 6,364 4,423 3,272
Income tax expense 93 9 60
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EBITDA (a) 5,796 6,631 10,244
Adjustments to EBITDA
Income from discontinued operations (b) - - (508)
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Adjusted EBITDA (a) $ 5,796 $ 6,631 $ 9,736
========== ============ ==========
(a) "EBITDA" is calculated as net income before income tax expense, interest
expense, other expense and gain on disposal of fixed assets plus depreciation
and amortization. Adjusted EBITDA is EBITDA adjusted for income from
discontinued operations. Adjusted EBITDA is not intended to represent cash flow
from operations as defined by GAAP and should not be used as an alternative to
net income as an indicator of operating performance or to cash flow as a measure
of liquidity. EBITDA and Adjusted EBITDA are a basis upon which our management
assesses financial performance and covenants. While EBITDA and adjusted EBITDA
are frequently used as a measure of operations and the ability to meet debt
service requirements, they are not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies in the
method of calculation.
(b) During 2003, Acorn completed the sale of its custom injection molding
business. This business generated approximately $4.9 million of net sales and
approximately $0.8 million of income before taxes.
