Exhibit 99.1
| UNITED STATES BANKRUPTCY COURT | ||
| DISTRICT OF NEW HAMPSHIRE | ||
| In re: | Chapter 11 | |
GT ADVANCED TECHNOLOGIES., et. al., | Case No. 14-11916 (HJB) | |
Debtors [1] | Jointly Administered | |
Amended Monthly Operating Report
For the Period of November 30, 2014 to December 31, 2014 [2]
DEBTORS' ADDRESS: 243 Daniel Webster Highway
Merrimack, NH 03054
DEBTORS' ATTORNEYS: PAUL HASTINGS LLP
Park Avenue Tower
75 East 55th Street, First Floor
New York, New York 10022
Telephone: (212) 318-6000
Facsimile: (212) 319-4090
Luc A. Despins, Esq.
Andrew V. Tenzer, Esq.
James T. Grogan, Esq.
This Monthly Operating Report ("MOR") has been prepared solely for the purposes of complying with the monthly reporting requirements applicable in these Chapter 11 cases and is in a format that the Debtors believe is acceptable to the United States Trustee. The financial information contained herein is limited in scope and covers a limited time period. Moreover, such information is preliminary and unaudited, and is not prepared in accordance with accounting principles generally accepted in the United States ("GAAP").
I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.
| /s/ Kanwardev Raja Singh Bal | February 6, 2015 | |
| Kanwardev Raja Singh Bal | Date | |
| Vice President and Chief Financial Officer | ||
Notes:
[1] The Debtors, along with the last four digits of each debtor's tax identification number, as applicable, are: GT Advanced Technologies Inc. (6749), GTAT Corporation (1760), GT Advanced Equipment Holding LLC (8329), GT Equipment Holdings, Inc. (0040), Lindbergh Acquisition Corp. (5073), GT Sapphire Systems Holding LLC (4417), GT Advanced Cz LLC (9815), GT Sapphire Systems Group LLC (5126), and GT Advanced Technologies Limited (1721). The Debtors' corporate headquarters are located at 243 Daniel Webster Highway, Merrimack, NH 03054.
[2] The Monthly Operating Report covers a period coinciding with the Debtors' standard reporting period.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW HAMPSHIRE
In re GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Reporting Period | 11/30/14-12/31/14 | |
| MONTHLY OPERATING REPORT | |||
| Submit copy of report to any official committee appointed in the case | |||
| REQUIRED DOCUMENTS | Form No. | Document Attached | Explanation Attached |
| Monthly Reporting Questionnaire | MOR-1 | Yes | No |
| Schedule of Cash Receipts and Disbursements | MOR-2 | Yes | No |
| Bank Account Reconciliation | MOR-2 (Cont) | Yes | No |
| Copies of Debtor's Bank Reconciliations | No | No | |
| Copies of Debtor's Bank Statements | No | No | |
| Copies of Cash Disbursements Journals | No | No | |
| Statement of Operations | MOR-3 | Yes | No |
| Balance Sheet | MOR-4 | Yes | No |
| Schedule of Post-Petition Liabilities | MOR-5 | Yes | No |
| Copies of IRS Form 6123 or payment receipt | No | No | |
| Copies of tax returns filed during reporting period | No | No | |
| Detailed listing of aged accounts payables | No | No | |
| Accounts Receivable Reconciliation and Aging | MOR-6 | Yes | No |
DISCLOSURES REGARDING DEBTORS’
AMENDMENT
The Company has amended their December 2014 Monthly Operating Report, which was previously filed on February 2, 2015. Amendments were made to (1) MOR-5 to correct an error in the previously filed Summary of Unpaid Post Petition Debts, (2) MOR-3 and the supporting schedule to correct the amount of Reorganization Items, and (3) notes and specific disclosures to correct the language regarding the write off related to Advanced Sapphire Furnaces.
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
MONTHLY REPORTING QUESTIONNAIRE
| Must be completed each month | Yes | No | |
| 1. Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation below. | ü | ||
| 2. Have any funds been disbursed from any account other than a debtor-in-possession account this reporting period? If yes, provide an explanation below. | ü | ||
| 3. Have any payments been made on pre-petition debt, other than payments in the normal course to secured creditors or lessors? If yes, attach listing including date of payment, amount of payment, and name of payee. | ü | ||
| 4. Have any payments been made to professionals? If yes, attach listing including date of payment, amount of payment, and name of payee. | ü | ||
| 5. If the answer to question 3 and/or 4 is yes, were all such payments approved by the Court? | ü | ||
| 6. Have any payments been made to officers, insiders, shareholders, or relatives? If yes, attach listing including date of payment, amount and reason for payment, and name of payee. | ü | ||
| 7. Have all postpetition tax returns been timely filed? If no, provide an explanation below. | ü | ||
| 8. Is the estate current on the payment of post-petition taxes? | ü | ||
| 9. Is the estate insured for the replacement cost of assets and for general liability? If no, provide an explanation below. | ü | ||
| 10. Is workers' compensation insurance in effect? | ü | ||
| 11. Have all current insurance payments been made? Attach copies of all new and renewed insurance policies. | ü | ||
| 12. Are a plan and disclosure statement on file? | ü | ||
| 13. Was there any post-petition borrowing during this reporting period? | ü | ||
| Explanations: | |||
See attached schedules for numbers 3, 4 and 6. | |||
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
| SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS | ||||||||||
| Case No. | Case Name | Bank Cash Receipts [1] | Bank Cash Disbursements [2] | Inter-Debtor Transfers | ||||||
| 14-11916 | GT Advanced Technologies Inc. | $ | — | $ | — | $ | — | |||
| 14-11917 | GT Equipment Holdings, Inc. | — | — | — | ||||||
| 14-11919 | GTAT Corporation | 2,306,730 | (11,287,444 | ) | (26,366,940 | ) | ||||
| 14-11920 | GT Advanced Technologies Limited | 7,614,837 | (4,407,764 | ) | 26,366,940 | |||||
| 14-11922 | Lindbergh Acquisition Corp. | 1,282 | (19 | ) | — | |||||
| 14-11923 | GT Sapphire Systems Group LLC | 462,905 | (863,024 | ) | — | |||||
| 14-11924 | GT Sapphire Systems Holding LLC | — | — | — | ||||||
| 14-11925 | GT Advanced CZ LLC | — | (12,392 | ) | — | |||||
| 14-11929 | GT Advanced Equipment Holding LLC | — | (1,009 | ) | — | |||||
| Total Debtors | $ | 10,385,755 | $ | (16,571,651 | ) | $ | 0 | |||
| DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES | ||||||||||
Total Disbursements [2] | $ | (16,571,651 | ) | |||||||
| Less: Transfers To Debtor In Possession Accounts | N/A | |||||||||
| Plus: Estate Disbursements Made By Outside Sources (I.E. From Escrow Accounts) | N/A | |||||||||
| Total Disbursements For Calculating U.S. Trustee Quarterly Fees | $ | (16,571,651 | ) | |||||||
| Notes: | ||||||||||
| [1] Represents all receipts (excluding intercompany funding activity by and among Debtors). | ||||||||||
| [2] Represents operating disbursements, restructuring disbursements and bank fees (excluding intercompany funding activity between Debtors). | ||||||||||
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
BANK ACCOUNT RECONCILIATIONS [1]
| Entity | Bank | Account No. [2] | Description | Ending Bank Balance | ||
| GT Advanced Cz LLC | Bank of America | 5023 | Deposit Account | $ | 204,610 | |
| GT Advanced Cz LLC | Bank of America | 6497 | Deposit Account | — | ||
| GT Advanced Equipment Holding LLC | Bank of America | 8144 | Deposit Account | 17,173 | ||
| GT Advanced Equipment Holding LLC | Bank of America | 3803 | Investment Account | — | ||
| GT Advanced Technologies Limited | Bank of America US | 7350 | Deposit Account | 24,330,099 | ||
| GT Advanced Technologies Limited | Bank of America Hong Kong | 2014 | Deposit Account | 317,019 | ||
| GT Advanced Technologies Limited | Bank of America Hong Kong | 2022 | Deposit Account | 7,025,905 | ||
| GT Advanced Technologies Limited | Bank of America Hong Kong | 2030 | Deposit Account | — | ||
| GT Advanced Technologies Limited | Bank of America Hong Kong | 2048 | Deposit Account | 0 | ||
| GT Advanced Technologies Limited | Bank of America Hong Kong | 2056 | Deposit Account | 1,602 | ||
| GT Advanced Technologies Limited | Bank of America Hong Kong | 9201 | Deposit Account | 1,330,350 | ||
| GT Sapphire Systems Group LLC | Bank of America | 7965 | Deposit Account | 551,514 | ||
| GT Sapphire Systems Group LLC | Bank of America | 9105 | Deposit Account | — | ||
| GT Sapphire Systems Group LLC | Wells Fargo | 2633 | Operating Account [3] | N/A | ||
| GTAT Corporation | Bank of America | 3294 | Deposit Account | 1,820,742 | ||
| GTAT Corporation | Bank of America | 5002 | Deposit Account | 24 | ||
| GTAT Corporation | Bank of America | 5254 | Investment Account | 49,021,945 | ||
| GTAT Corporation | Bank of America | 4718 | Investment Account | — | ||
| GTAT Corporation | Santander Bank | 8960 | Money Market Account [4] | N/A | ||
| GTAT Corporation | Bank of America | 4487 | Deposit Account | 0 | ||
| GTAT Corporation | Bank of America | 6508 | Utility Account [5] | 176,965 | ||
| GTAT Corporation | Bank of America | 9956 | Collateral Account [6] | 840,028 | ||
| GTAT Corporation d/b/a Crystal Systems | Bank of America | 1546 | Deposit Account | 1,274,555 | ||
| GTAT Corporation d/b/a Crystal Systems | Bank of America | 7590 | Deposit Account | 0 | ||
| Lindbergh Acquisition Corp | Bank of America | 8343 | Deposit Account | $ | 76,643 | |
| Total Debtors Bank Cash | $ | 86,989,174 | ||||
Notes:
[1] As part of the Debtors monthly close process, all bank accounts have been reconciled to the applicable bank statements without exception. The Debtors were authorized to use these accounts on a postpetition basis pursuant to the final order signed on October 9, 2014 approving use of the existing cash management system, banks and financial institutions to honor and process checks and transfers, continued use of intercompany transactions, and authorizing debtors to use existing business forms (Docket No. 0064).
[2] Last four digits of the account number.
[3] The Wells Fargo operating account (account no. 2633) was closed in January.
[4] The Santander money market account (account no. 8960) was closed in October.
[5] Pursuant to a final order on October 30, 2014, the Company created an account for adequate assurance for utility providers (Docket No. 0388).
[6] The Bank of America collateral account (account no. 9956) was opened in December, is used for purposes of holding funds for cash collateralized standby letters of credit.
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
STATEMENT OF OPERATIONS
See Exhibit A.
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
BALANCE SHEET
See Exhibit A.
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
STATUS OF POST-PETITION TAXES [1] [2]
| Beginning Tax Liability | Amount Withheld or Accrued | Amount Paid | Date Paid | Check No. or EFT | Ending Tax Liability | |||||||||
| Federal | ||||||||||||||
| Income Tax Withholding | $ | — | $ | 728,955 | $ | (728,955 | ) | Various | Various | $ | — | |||
| FICA-Employee | — | 341,213 | (341,213) | Various | Various | — | ||||||||
| FICA-Employer | — | 325,256 | (325,256) | Various | Various | — | ||||||||
| Unemployment | — | 5,910 | (5,910) | Various | Various | — | ||||||||
| Income | — | — | — | Various | Various | — | ||||||||
| Other: | — | — | — | Various | Various | — | ||||||||
| Total Federal Taxes | $ | — | $ | 1,401,333 | $ | (1,401,333 | ) | $ | — | |||||
| State and Local | ||||||||||||||
| Income Tax Withholding | $ | — | $ | 184,084 | $ | (184,084 | ) | Various | Various | $ | — | |||
| Sales | 1,042 | 1,194 | 0 | Various | Various | 2,236 | ||||||||
| Use | — | 127 | (127) | Various | Various | — | ||||||||
| Excise | — | — | Various | Various | — | |||||||||
| Unemployment | — | 38,774 | (38,774 | ) | Various | Various | — | |||||||
| Real Property | 0 | 0 | Various | Various | — | |||||||||
| Personal Property | 277,315 | 150,470 | (347) | Various | Various | 427,438 | ||||||||
| Other: | — | 3,467 | (3,467) | Various | Various | — | ||||||||
| Total State and Local | $ | 278,357 | $ | 378,117 | $ | (226,799 | ) | $ | 429,674 | |||||
| Withholding for Employee Healthcare [3] | — | — | — | — | ||||||||||
| Premiums, Pensions & Other Benefits [3] | — | — | — | — | ||||||||||
| Total Taxes | $ | 278,357 | $ | 1,779,450 | $ | (1,628,132 | ) | $ | 429,674 | |||||
SUMMARY OF UNPAID POST-PETITION DEBTS
| Number of Days Past Due | ||||||||||||||||
| Current | 0-30 [8] | 31-60[8] | 61-90 [8] | Over 90 [8] | Total | |||||||||||
Accounts Payable [4], [5] | $ | 2,529,110 | $ | 405,164 | $ | 166,359 | 39,005 | (75 | ) | $ | 3,139,563 | |||||
Amounts Due to Insiders [6] [7] | — | — | — | — | — | — | ||||||||||
| Total Postpetition Debts | $ | 2,529,110 | $ | 405,164 | $ | 166,359 | 39,005 | (75 | ) | $ | 3,139,563 | |||||
Notes:
[1] Copies of IRS Form 6123 and all state, local and federal tax forms and returns can be provided to the UST upon request.
[2] This schedule excludes any taxes related to the Hong Kong entity GT Advanced Technologies Limited.
[3] The Company does withhold premiums for various benefit programs but there were no taxes related to these amounts.
[4] Reflects only trade related payables. Aging schedule excludes accruals and unbilled inventory.
[5] As of the filing of this report, the Company has not fully completed the bifurcation of pre and post-petition invoices. As such, aging may include certain prepetition amounts.
[6] Solely, for purposes of this monthly operating report, the Debtors define “insiders” to include the following: (a) members of the board of directors of GT Advanced Technologies Inc.; and (b) statutory “officers” under section 16 of the Securities Exchange Act. The Debtors do not take any position with respect to: (a) such person’s influence over the control of the Debtors; (b) the management responsibilities or functions of such individual; (c) the decision-making or corporate authority of such individual; or (d) whether such individual could successfully argue that he or she, at the time of receipt of any transfers, was not an “insider” under applicable law (including for the purposes of section 503(c) of the Bankruptcy Code), including the federal securities laws, or with respect to any theories of liability or for any other purpose.
[7] Excludes any accrued but unpaid amounts related to compensation, expense reimbursements and benefits.
[8] Amounts reflected as past due are based upon standard invoice terms for this vendor. In some instances, a past due amount is a result of enhanced terms (typically 45 days from date of invoice) that have been negotiated with the majority of these vendors and they are being paid consistent with past practices. In some instances, past due amounts are for vendors who have filed motions, are taking discovery, are exercising possessory liens, negotiating settlements, or generally raising legal issues that the Debtor is working through.
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
ACCOUNTS RECEIVABLE RECONCILIATION AND AGING
| Accounts Receivable Reconciliation | Amount | ||
Total Accounts Receivable at the beginning of the reporting period | $ | 6,914,013 | |
+ Amounts billed during the period | 7,669,772 | ||
- Amounts collected during the period (Book Cash Receipts) | (6,817,512) | ||
Total Accounts Receivable at the end of the reporting period | $ | 7,766,273 | |
| Accounts Receivable Aging | Amount | ||
0 - 30 days old | $ | 3,597,770 | |
31 - 60 days old | 196,834 | ||
61 - 90 days old | 250,126 | ||
91+ days old | 3,721,542 | ||
Total Accounts Receivable | $ | 7,766,273 | |
Amount considered uncollectible (Bad Debt) | (3,152,298) | ||
Accounts Receivable (Net) | $ | 4,613,975 | |
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
PRE-PETITION DEBT PAYMENTS
Monthly Reporting Questionnaire - #3
| Entity | Vendor Name | Reference | Date | Amount | ||
| GTAT Corporation | ERNEST GODSHALK | A | 12/01/2014 | $ | 600 | |
| GTAT Corporation | SCHWAB RETIREMENT PLAN SERVICES | A | 12/01/2014 | 2,182 | ||
| GTAT Corporation | THOMAS WROE, JR. | A | 12/05/2014 | 1,439 | ||
| GTAT Corporation | UNUM LIFE INSURANCE | B | 12/05/2014 | 367 | ||
| GTAT Corporation | YOLANDA DANIELS | A | 12/11/2014 | 2,550 | ||
| GTAT Corporation | JORDAN LAFONTAINE | A | 12/16/2014 | 1,046 | ||
| GTAT Corporation | THOMAS PHILLIPS | A | 12/16/2014 | 1,165 | ||
| GTAT Corporation | WILLIAM GALLAGHER ASSOCIATES INSURA | B | 12/16/2014 | 44,275 | ||
| GTAT Corporation | NAVIGANT CONSULTING, INC | B | 12/16/2014 | 2,387 | ||
| GTAT Corporation | SCHWAB RETIREMENT PLAN SERVICES | B | 12/16/2014 | 2,604 | ||
| GTAT Corporation | ADP | A | 12/16/2014 | 83 | ||
| GTAT Corporation | CONCEPTS IN BENEFITS, INC. | B | 12/23/2014 | 103 | ||
| Total | $ | 58,800 | ||||
| Key: | ||||
| A | Paid pursuant to the final Order Granting Debtors’ Emergency Motion, Pursuant To Bankruptcy Code Sections 105(A), 363(B), 503(B), 507(A)(4), 507(A)(8), And Bankruptcy Rules 6003 And 6004, For Entry Of Order (A) Authorizing Debtors To (I) Pay Certain Employee Compensation And Benefits And (II) Maintain And Continue Such Benefits And Other Employee related Programs And (B) Authorizing And Directing Banks And Financial Institutions To Honor And Process Checks And Transfers Related To Such Obligations. (Docket No. 0095). | |||
| B | Paid pursuant to the final Order Granting Debtors’ Motion, Pursuant to Bankruptcy Code Sections 105(A), 362(D), and 363(B)(1), and Bankruptcy Rules 6003 and 6004, (A), for Entry of Order Authorizing Debtors to (I) Continue Workers’ Compensation Program and Liability, Property, and Other Insurance Programs and Insurance Programs, and (II) Pay All Obligations in Respect Thereof, and (B) Authorizing and Directing Banks and Financial Institutions to Honor and Process Checks and Transfers Related to Such Obligations (Docket No. 0074). | |||
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
PAYMENTS TO PROFESSIONALS
Monthly Reporting Questionnaire - #4
| Description | Title | Description | Amount | ||
| GTAT Corporation | Paul Hastings LLP | Professional Fees | $ | 1,233,327 | |
| GTAT Corporation | Alvarez and Marsal North America LLC | Professional Fees | 527,359 | ||
| GTAT Corporation | Ropes and Gray | Professional Fees | 303,305 | ||
| GTAT Corporation | Kelley Drye and Warren LLP | Professional Fees | 298,781 | ||
| GTAT Corporation | Ropes and Gray | Professional Fees | 253,466 | ||
| GTAT Corporation | Houlihan Lokey Capital Inc | Professional Fees | 86,161 | ||
| GTAT Corporation | Quinn Emanuel Urguhart Sullivan LLP | Professional Fees | 47,902 | ||
| GTAT Corporation | Devine Millimet | Professional Fees | 33,137 | ||
| GTAT Corporation | Rothschild Inc | Professional Fees | 25,380 | ||
| Total | $ | 2,808,818 | |||
GT ADVANCED TECHNOLOGIES INC. et al., | Case No. | 14-11916 |
| Debtor | Reporting Period | 11/30/14-12/31/14 |
PAYMENTS TO INSIDERS [1]
Monthly Reporting Questionnaire - #6
| Description | Title | Description | Amount | ||
| Gutierrez, Thomas | President and Chief Executive Officer | Payroll / Expenses | $ | 67,250 | |
| Squiller, Daniel | Chief Operating Officer | Payroll / Expenses | 50,210 | ||
| Kim, Hoil | Vice President, Chief Administrative Officer, General Counsel & Secretary | Payroll / Expenses | 35,904 | ||
| Ford, Jeffrey | Vice President and General Manager, DSS Business Development | Payroll / Expenses | 34,168 | ||
| Keck, David | Executive Vice President, Worldwide Sales and Service | Payroll / Expenses | 34,168 | ||
| Bal, Kanwardev R | Vice President and Chief Financial Officer | Payroll / Expenses | 30,149 | ||
| Cote, Kathleen A | Board of Director | Expenses | 1,745 | ||
| Wroe Jr., Thomas | Board of Director | Expenses | 1,455 | ||
| Switz, Robert E | Board of Director | Expenses | $ | 1,351 | |
| Godshalk, Ernest | Board of Director | Expenses | 845 | ||
| Conaway, Michal | Board of Director | Expenses | 538 | ||
| Watson, Noel G | Board of Director | Expenses | 249 | ||
| Total | $ | 258,032 | |||
Notes:
[1] Solely, for purposes of this monthly operating report, the Debtors define “insiders” to include the following: (a) members of the board of directors of GT Advanced Technologies Inc.; and (b) statutory “officers” under section 16 of the Securities Exchange Act. The Debtors do not take any position with respect to: (a) such person’s influence over the control of the Debtors; (b) the management responsibilities or functions of such individual; (c) the decision-making or corporate authority of such individual; or (d) whether such individual could successfully argue that he or she, at the time of receipt of any transfers, was not an “insider” under applicable law (including for the purposes of section 503(c) of the Bankruptcy Code), including the federal securities laws, or with respect to any theories of liability or for any other purpose.
EXHIBIT A
NOTES AND SPECIFIC
DISCLOSURES REGARDING DEBTORS’
STATEMENTS OF OPERATIONS AND BALANCE SHEET
1. Basis of Presentation
The accompanying consolidated financial statements of the Debtors have been prepared solely for the purpose of complying with the monthly reporting requirements of the U.S. Bankruptcy Court of the District of New Hampshire (referred to herein as the "Monthly Operating Report"). The Monthly Operating Report is limited in scope, covers a limited time period and the schedules contained herein were not audited or reviewed by independent accountants nor are they intended to reconcile to any financial statements otherwise prepared or distributed by the Debtors or any of the Debtors' affiliates. Furthermore, because the Debtors’ accounting systems, policies, and practices were developed with a view to producing consolidated financial reporting on a quarterly basis, rather than by legal entity on a monthly basis, it is possible that not all assets or liabilities have been recorded at the correct legal entity of either the Debtors or the non-Debtor affiliates. The Debtors reserve all rights to supplement or amend any schedules contained in this Monthly Operating Report.
The information presented herein is unaudited, subject to further review and material adjustments, and has not been subject to all procedures that would typically be applied to financial information presented in accordance with Generally Accepted Accounting Principles in the United States of America (“US GAAP”), including, but not limited to, accruals, impairment adjustments, fair value assessments, tax provision, and other recurring adjustments considered necessary by the Debtors to fairly state the financial position and results of operations for the interim period(s) presented. As part of this Monthly Operating Report, intangibles, fixed assets and other long lived assets have not been formally tested for impairment as required pursuant to US GAAP. The results of that testing will likely result in significant asset impairment charges; such charges would be reflected in future Monthly Operating Reports. For December, however, adjustments to certain assets were made to reflect the Debtors view of estimated fair value. See additional discussion in Note 3. This Monthly Operating Report does not reflect certain quarter-end and year-end adjustments to assets, liabilities and operating results; such adjustments would be reflected in future Monthly Operating Reports.
As part of their restructuring efforts, the Debtors are reviewing their assets and liabilities on an ongoing basis, including without limitation with respect to intercompany claims and obligations, and nothing contained in this Monthly Operating Report shall constitute a waiver of any of the Debtors’ rights with respect to such assets, liabilities, claims and obligations that may exist.
The Debtors caution readers not to place undue reliance upon the information contained in this Monthly Operating Report. The results herein are not necessarily indicative of results which may be expected from any other period or for the full year and may not necessarily reflect the combined results and financial position of the Debtors in the future.
2. Treatment of Intercompany Transactions
The Monthly Operating Report does not include intercompany balances because the Debtors and their advisors are continuing to review the Debtors’ books and records to determine the accuracy of certain intercompany charges that may be contained in or missing from those books and records. For example, prior to the Petition Date, the parent company, GT Advanced Technologies Inc., did not maintain a ledger of intercompany transactions. Furthermore, the Debtors have not made any determination that tax refunds or attributes are assets or liabilities of a particular Debtor and the Debtors reserve all of their rights on this issue.
Pursuant to the Order, Pursuant to Bankruptcy Code Sections 105(A), 345(B), 363(C)(1), 364(A), 364(B), and 503(B)(1), Bankruptcy Rules 6003 and 6004, (A) Authorizing Debtors to Use Existing Cash Management System, (B) Authorizing and Directing Banks and Financial Institutions to Honor and Process Checks and Transfers, (C) Authorizing Continued Use of Intercompany Transactions, (D)Waiving Requirements of Section 345(B) of Bankruptcy Code and (E) Authorizing Debtors to Use Existing Bank Accounts and Existing Business Forms [Docket No. 64], the Debtors have kept detailed information on all post-Petition Date transfers of cash among the Debtors and such transfers amounted to approximately $26.4 million during the period covered by the Monthly Operating Report, and are laid out in further detail on page 4.
A summary of net intercompany cash transfers from the petition date to the period end of this monthly operating report is shown below:
| Case No. | Case Name | Transferred From | Transferred To | |||||||
| 14-11919 | GTAT Corporation | $ | 31,366,925 | $ | — | |||||
| 14-11920 | GT Advanced Technologies Limited | — | 29,866,276 | |||||||
| 14-11923 | GT Sapphire Systems Group LLC | — | 1,500,649 | |||||||
| $ | 31,366,925 | $ | 31,366,925 | |||||||
3. Treatment of Certain Assets, Liabilities and GAAP Disclosures
The Monthly Operating Report does not contain all disclosures that would be required for presentation in accordance with US GAAP and there can be no assurance that, from the perspective of an investor or potential investor, the Monthly Operating Report is complete. The Debtors' Form 10-Q filed with the SEC on August 7, 2014 was the last filing which included all required US GAAP disclosures. Those disclosures may no longer be relevant to the financial statements included in this Monthly Operating Report.
NOTES AND SPECIFIC
DISCLOSURES REGARDING DEBTORS’
STATEMENTS OF OPERATIONS AND BALANCE SHEET (cont.)
The following general notes regarding certain assets and liabilities should be considered by parties reviewing this Monthly Operating Report.
Notes regarding certain liabilities:
• During the period ending December 31, 2014, based on the Debtors' analysis, previously recorded contingent consideration expense of $15.7M was reversed in connection with a change in probabilities of the remaining earn-out targets in connection with certain acquisitions. As of December 31, 2014, after this reduction, the Debtors maintain a related liability of $5.6M.
• The 2017 and 2020 convertible notes with a principal balance of $220M and $214M are recorded at a carrying value of $177M and $123M, respectively. The amount represented in the liabilities subject to compromise is net of $7M of deferred financing costs. The difference between the carrying value and principal balances reflect fair value adjustments.
• The amounts received from Apple under the Prepayment Agreement are recorded at the principal balance of $439M as a result of the settlement approved on December 15, 2014. Prior Monthly Operating Reports reflected fair value adjustments previously required for GAAP purposes.
• For the period commencing on October 6, 2014 and thereafter, the Debtors stopped accruing interest on both series of the Convertible Notes and the Prepayment amounts until further review of these obligations is completed.
• As a result of the Apple Settlement that was approved on December 15, 2014, the Debtors wrote off the related deferred rent asset, deferred finance fees, deferred revenue and customer deposit which were previously recorded under the Prepayment Agreement. The results of the write off are recorded as Reorganization Items in the December Monthly Operating Report.
• Share-based compensation expenses for employee awards are reflected in the Statement of Operations. Such expenses have been calculated using a methodology consistent with past practice. Share-based compensation expense will continue to be recognized until the final outcome of the equity awards is determined.
Notes regarding certain assets:
• During the period ending December 31, 2014, the Debtors have not yet completed their analysis regarding the fair value of goodwill, and certain intangibles and fixed assets. Certain intangibles, relating to previous acquisitions, have been written down to zero. Additionally certain fixed assets located primarily in the Mesa and Salem facilities and other minor product lines located in other facilities, have been written down to their estimated liquidation value. The write down of these assets was included in restructuring charges and asset impairments in the income statement.
• During the period ending December 31, 2014, reflected in the financial statements is the transfer of Advanced Sapphire Furnaces from fixed assets to inventory, including a write off of previously capitalized amounts related to the setup and installation of the equipment and write off for any material related to products the Debtors expect to discontinue.
Notes regarding Income Taxes:
• During the period ending December 31, 2014, approximately $15M of reserves were released from the accrued income tax – non-current line item due to certain statutes expiring in December 2014.
• During the period ending December 31, 2014, Refundable Income Taxes was adjusted to reflect an estimated $25M tax refund claim related to losses in the US for year ended 2014 which the Debtors intend to carry back to prior years which were profitable.
The Debtors’ financial statements presented herein have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. Certain prepetition liabilities have been reclassified as liabilities subject to compromise. Liabilities subject to compromise currently include debt obligations, amounts due to third parties for goods and services received prior to October 6, 2014, (the date of the voluntary bankruptcy petition) and certain known potential settlement claim amounts.
The Debtors continue to analyze and reconcile assets and liabilities included on the balance sheet, and, therefore, the amounts reflected herein are current estimates and subject to material change as additional analysis and decisions are completed.
STATEMENTS OF OPERATIONS
EXCLUDING INTERCOMPANY ACTIVITY
FOR THE PERIOD ENDED December 31, 2014
($ in 000's)
| Case No. | 14-11916 | 14-11919 | 14-11929 | 14-11917 | 14-11922 | 14-11925 | 14-11924 | 14-11923 | 14-11920 | |||||||||||||
| GT Advanced Technologies Inc. | GTAT Corporation | GT Advanced Equipment Holding LLC | GT Equipment Holdings, Inc. | Lindberg Acquisition Corp | GT Advanced Cz LLC | GT Sapphire Systems Holdings LLC | GT Sapphire Systems Group LLC | GT Advanced Technologies Limited [1] | Non-Debtor Entities | Consolidated | ||||||||||||
| Revenue | — | 1,214 | — | — | — | — | — | 889 | 353 | 1 | 2,457 | |||||||||||
| Total Cost of revenue | — | 134,786 | — | — | — | — | — | 1,260 | 14,406 | 1,062 | 151,515 | |||||||||||
| Gross (loss) Profit | — | (133,573 | ) | — | — | — | — | — | (370 | ) | (14,054 | ) | (1,061 | ) | (149,058 | ) | ||||||
| Research and development | — | 2,625 | — | — | — | — | — | 48 | — | — | 2,673 | |||||||||||
| Selling and marketing | — | 1,265 | — | — | — | — | — | (6 | ) | 527 | 21 | 1,808 | ||||||||||
| General and administrative | — | 3,050 | 1 | — | — | 55 | — | 73 | 1,149 | 138 | 4,465 | |||||||||||
| Contingent consideration (income) expense | — | (15,764 | ) | — | — | — | — | — | — | — | — | (15,764 | ) | |||||||||
| Restructuring charges and asset impairments | — | 82,745 | — | — | — | 1,186 | — | 12,169 | 497 | 52,710 | 149,306 | |||||||||||
| Amortization of Intangible Assets | — | 244 | — | — | — | — | — | 153 | — | 661 | 1,058 | |||||||||||
| Total Operating Expenses | — | 74,164 | 1 | — | — | 1,241 | — | 12,437 | 2,172 | 53,530 | 143,546 | |||||||||||
| Income (loss) from Operations [2] | — | (207,737 | ) | (1 | ) | — | — | (1,241 | ) | — | (12,807 | ) | (16,226 | ) | (54,591 | ) | (292,603 | ) | ||||
| Interest Income | — | 1 | — | — | — | — | — | — | — | 3 | 4 | |||||||||||
| Interest (Expense) | — | — | — | — | — | (9 | ) | — | — | — | — | (9 | ) | |||||||||
| Reorganization Items - Inc / (Exp) | — | 47,306 | — | — | — | — | — | — | (5,704 | ) | — | 41,602 | ||||||||||
| Other Inc (Exp) | — | 59 | — | — | — | — | — | 5 | 2,512 | (2,287 | ) | 289 | ||||||||||
| Income (loss) before Tax | — | (154,590 | ) | (1 | ) | — | — | (1,251 | ) | — | (12,802 | ) | (19,418 | ) | (56,875 | ) | (244,937 | ) | ||||
| (Benefit) provision for income taxes | — | (40,322 | ) | — | — | — | (7,441 | ) | — | — | 19,705 | (814 | ) | (28,872 | ) | |||||||
| Net Income (loss) | — | (114,269 | ) | (1 | ) | — | — | 6,191 | — | (12,802 | ) | (39,123 | ) | (56,062 | ) | (216,065 | ) | |||||
Notes:
[1] Includes immaterial amounts from GT Advanced Technologies GmbH, a non-debtor entity.
[2] Includes share-based compensation expense of $1.8M.
These financial statements and accompanying notes do not purport to represent financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States of America, nor are they intended to be fully reconciled to any financial statements otherwise prepared or distributed by the Debtors or any of the Debtors’ affiliates. This information is unaudited and is subject to further review and potential adjustments. The accompanying disclaimers and notes are an integral part of these financial statements.
BALANCE SHEET
EXCLUDING INTERCOMPANY ACTIVITY
AS OF December 31, 2014
($ in 000's)
| Case No. | 14-11916 | 14-11919 | 14-11929 | 14-11917 | 14-11922 | 14-11925 | 14-11924 | 14-11923 | 14-11920 | |||||||||||||
| GT Advanced Technologies Inc. | GTAT Corporation | GT Advanced Equipment Holding LLC | GT Equipment Holdings, Inc. | Lindbergh Acquisition Corp. | GT Advanced Cz LLC | GT Sapphire Systems Holdings LLC | GT Sapphire Systems Group LLC | GT Advanced Technologies Limited[1] | Non-Debtor Entities | Consolidated | ||||||||||||
| Current Assets | ||||||||||||||||||||||
| Cash and cash equivalents | — | 51,963 | 17 | — | — | 281 | — | 554 | 31,691 | 3,242 | 87,748 | |||||||||||
| Restricted cash | — | 1,017 | — | — | — | — | — | — | 1,330 | — | 2,347 | |||||||||||
| Accounts receivable, net | — | 3,371 | — | — | — | — | — | 894 | 272 | 78 | 4,614 | |||||||||||
| Inventories | — | 407,354 | — | — | — | — | — | 2,292 | 52,509 | 847 | 463,002 | |||||||||||
| Deferred costs | — | 2,162 | — | — | — | — | — | — | 2,197 | — | 4,359 | |||||||||||
| Vendor advances | — | 8,792 | — | — | — | — | — | — | 7,715 | 67 | 16,575 | |||||||||||
| Deferred income taxes | — | — | — | — | — | — | — | — | — | 1,433 | 1,433 | |||||||||||
| Refundable income taxes | — | 26,069 | — | — | — | (1 | ) | — | — | — | — | 26,068 | ||||||||||
| Prepaid expenses and other current assets | — | 14,549 | — | — | — | — | — | 674 | 628 | 273 | 16,124 | |||||||||||
| Total current assets | — | 515,277 | 17 | — | — | 280 | — | 4,414 | 96,341 | 5,940 | 622,270 | |||||||||||
| Property, plant and equipment, net | — | 57,525 | — | — | — | — | — | — | 446 | 391 | 58,362 | |||||||||||
| Intangible assets, net | — | 25,169 | — | — | — | — | — | — | — | — | 25,169 | |||||||||||
| Goodwill | — | 51,363 | — | — | — | 1,197 | — | — | — | 4,328 | 56,888 | |||||||||||
| Deferred cost | — | — | — | — | — | — | — | — | 26,720 | — | 26,720 | |||||||||||
| Other assets | — | 9,153 | — | — | — | 9 | — | 3 | 61,649 | 332 | 71,145 | |||||||||||
Total Assets [2] [3] | — | 658,488 | 17 | — | — | 1,486 | — | 4,417 | 185,156 | 10,991 | 860,555 | |||||||||||
| Current Liabilities | ||||||||||||||||||||||
| Prepayment obligation | — | 439,000 | — | — | — | — | — | — | — | 439,000 | ||||||||||||
| Accounts payable | — | 3,208 | — | — | — | — | — | 496 | 2,013 | 1,140 | 6,856 | |||||||||||
| Accrued expenses and other current liabilities | — | 17,385 | — | — | — | (0) | — | 431 | 7,341 | 2,967 | 28,123 | |||||||||||
| Contingent consideration | — | 0 | — | — | — | — | — | — | — | 3,095 | 3,095 | |||||||||||
| Customer deposits | — | 159 | — | — | — | 1,987 | — | 1,312 | 12,226 | 44 | 15,729 | |||||||||||
| Deferred revenue | — | 14,229 | — | — | — | — | — | 175 | 7,501 | — | 21,905 | |||||||||||
| Accrued income taxes | (8,753 | ) | — | — | — | 8,608 | — | — | 21 | 318 | 194 | |||||||||||
| Total current liabilities | — | 465,227 | — | — | — | 10,595 | — | 2,414 | 29,102 | 7,564 | 514,902 | |||||||||||
| Liabilities Subject to Compromise | 292,557 | 133,322 | — | — | — | 4,197 | — | 1,174 | 53,062 | — | 484,312 | |||||||||||
| Deferred Income taxes | — | — | — | — | — | — | — | — | — | (35 | ) | (35 | ) | |||||||||
| Customer deposits | — | — | — | — | — | — | — | — | 55,598 | — | 55,598 | |||||||||||
| Deferred revenue | — | 151 | — | — | — | — | — | — | 41,335 | — | 41,486 | |||||||||||
| Contingent consideration | — | (0) | — | — | — | — | — | — | — | 218 | 218 | |||||||||||
| Other non-current liabilities | — | 1 | — | — | — | 0 | — | — | — | — | 1 | |||||||||||
| Accrued Income Taxes | — | 5,424 | — | — | — | — | — | — | — | — | 5,424 | |||||||||||
| Total Non-Current Liabilities | — | 5,575 | — | — | — | — | — | — | 96,933 | 184 | 102,692 | |||||||||||
| Stockholder's Equity | — | (174,260 | ) | 41 | — | — | (42,646 | ) | — | (15,722 | ) | 112,348 | (121,112 | ) | (241,351 | ) | ||||||
Total Liabilities and Stockholder's Equity [3] | 292,557 | 429,864 | 41 | — | — | (27,853 | ) | — | (12,134 | ) | 291,445 | (113,365 | ) | 860,555 | ||||||||
Notes:
[1] Includes immaterial amounts from GT Advanced Technologies GmbH, a non-debtor entity.
[2] It would be prohibitively expensive, unduly burdensome, and an inefficient use of estate assets for the Debtors to obtain current market valuation of each of their assets. Accordingly, unless otherwise indicated, this monthly operating report reflect net book values as of the period end. Parties are also cautioned that book value is not, in any way, indicative of the fair market value of any of the Debtors’ assets.
[3] Due to the exclusion of intercompany balances, Total Assets may not equal Total Liabilities and Stockholder's Equity.
[4] Reflects the Debtors' estimated Fair Value.
These financial statements and accompanying notes do not purport to represent financial statements prepared in accordance wit h Generally Accepted Accounting Principles in the United States of America, nor are they intended to be fully reconciled to any financial statements otherwise prepared or distributed by the Debtors or any of the Debtors’ affiliates. Th is information is unaudited and is subject to further review and potential adjustments. The accompanying disclaimers and notes are an integral part of these financial statements.
REORGANIZATION ITEMS, NET
AS OF December 31, 2014
($ in 000's)
| Apple Settlement (write-off of related assets and liabilities) | $ | 44,492 | |||
| Professional fees | (2,872 | ) | |||
| U.S. Trustee fees | (18 | ) | |||
| Total | $ | 41,602 | |||
LIABILITIES SUBJECT TO COMPROMISE
AS OF December 31, 2014
($ in 000's)
| Convertible Notes | $ | 292,557 | |||
| Accounts payable | 141,302 | ||||
| Accrued expenses and other liabilities | 44,303 | ||||
| Contingent Consideration | 5,603 | ||||
| Other non-current liabilities | 547 | ||||
| Total | $ | 484,312 | |||
These financial statements and accompanying notes do not purport to represent financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States of America, nor are they intended to be fully reconciled to any financial statements otherwise prepared or distributed by the Debtors or any of the Debtors’ affiliates. This information is unaudited and is subject to further review and potential adjustments. The accompanying disclaimers and notes are an integral part of these financial statements.