Exhibit 99.1
NEW COLT HOLDING CORP.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012 AND 2011
NEW COLT HOLDING CORP. AND SUBSIDIARY
CONTENTS
Independent Auditors’ Report | 1-2 |
| |
Financial Statements | |
| |
Consolidated Balance Sheets | 3-4 |
Consolidated Statements of Income | 5 |
Consolidated Statements of Comprehensive Income | 6 |
Consolidated Statements of Changes in Stockholders’ Equity | 7 |
Consolidated Statements of Cash Flows | 8 |
| |
Notes to Consolidated Financial Statements | 9-28 |
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors
New Colt Holding Corp. and Subsidiary
Report on the Financial Statements
We have audited the accompanying consolidated balance sheets of New Colt Holding Corp. and Subsidiary (the Company) as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
1
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of New Colt Holding Corp. and Subsidiary as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
New Haven, CT
March 5, 2013, except for the revisions (See Note 16), as to which the date is November 5, 2013
2
NEW COLT HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
DECEMBER 31, 2012 AND 2011
| | 2012 | | 2011 | |
| | | | | |
Assets | | | | | |
| | | | | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 7,496 | | $ | 3,607 | |
Accounts receivable, net of allowance for doubtful accounts and cash discounts of $70 in 2012 and $74 in 2011 | | 8,739 | | 3,996 | |
Inventories, net | | 9,138 | | 6,550 | |
Deferred income taxes | | 2,208 | | 1,778 | |
Prepaid expenses and other current assets | | 1,318 | | 1,389 | |
| | | | | |
Total Current Assets | | 28,899 | | 17,320 | |
| | | | | |
Equipment and Leasehold Improvements - net | | 3,232 | | 2,984 | |
| | | | | |
Other Assets | | | | | |
Deferred income taxes | | 10,909 | | 11,318 | |
Intellectual property | | 6,672 | | 6,679 | |
Goodwill | | 1,043 | | 1,043 | |
Other long-term assets | | 718 | | 244 | |
| | | | | |
Total Other Assets | | 19,342 | | 19,284 | |
| | | | | |
Total Assets | | $ | 51,473 | | $ | 39,588 | |
The accompanying notes are an integral part of these consolidated financial statements.
3
NEW COLT HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(dollars in thousands)
DECEMBER 31, 2012 AND 2011
| | 2012 | | 2011 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
| | | | | |
Current Liabilities | | | | | |
Current portion of capital lease obligations | | $ | 547 | | $ | 515 | |
Accounts payable | | 2,468 | | 1,727 | |
Accounts payable to Colt Defense LLC | | 12,321 | | 2,125 | |
Accrued expenses | | 3,211 | | 2,843 | |
Current portion of accrued employee benefit costs | | 478 | | 443 | |
Customer advances | | 1,172 | | 1,168 | |
| | | | | |
Total Current Liabilities | | 20,197 | | 8,821 | |
| | | | | |
Other Liabilities | | | | | |
Capital lease obligations, less current portion | | 291 | | 838 | |
Accrued employee benefit costs, less current portion | | 10,987 | | 9,551 | |
Deferred income and other liabilities | | 2,572 | | 2,665 | |
| | | | | |
Total Other Liabilities | | 13,850 | | 13,054 | |
| | | | | |
Total Liabilities | | 34,047 | | 21,875 | |
| | | | | |
Stockholders’ Equity | | | | | |
Common stock, $0.01 par value, 200,000 shares authorized, 41,252 and 41,333 shares issued in 2012 and 2011, respectively | | — | | — | |
Paid in capital | | 23,911 | | 23,933 | |
Accumulated deficit | | (2,100 | ) | (2,660 | ) |
Accumulated other comprehensive loss | | (4,385 | ) | (3,560 | ) |
| | | | | |
Total Stockholders’ Equity | | 17,426 | | 17,713 | |
| | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 51,473 | | $ | 39,588 | |
The accompanying notes are an integral part of these consolidated financial statements.
4
NEW COLT HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
| | 2012 | | 2011 | |
| | | | | |
Net Sales | | | | | |
Rifles | | $ | 86,860 | | $ | 12,120 | |
Handguns and other | | 40,599 | | 37,239 | |
Royalty income | | 2,051 | | 1,499 | |
| | | | | |
Total Net Sales | | 129,510 | | 50,858 | |
| | | | | |
Cost of Sales | | 117,736 | | 39,642 | |
| | 11,774 | | 11,216 | |
Selling, General and Administrative Expenses | | 9,155 | | 7,114 | |
| | | | | |
Operating Income | | 2,619 | | 4,102 | |
| | | | | |
Other Income (Expense) | | | | | |
Transaction costs | | (1,116 | ) | — | |
Other, net | | (203 | ) | (168 | ) |
| | | | | |
Total Other Income, net | | (1,319 | ) | (168 | ) |
| | | | | |
Income Before Income Tax Expense | | 1,300 | | 3,934 | |
| | | | | |
Income Tax Expense | | 740 | | 1,693 | |
| | | | | |
Net Income | | $ | 560 | | $ | 2,241 | |
The accompanying notes are an integral part of these consolidated financial statements.
5
NEW COLT HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
| | 2012 | | 2011 | |
| | | | | |
Net Income | | $ | 560 | | $ | 2,241 | |
| | | | | |
Other Comprehensive Income (Loss), net of tax | | | | | |
Pension liability | | (19 | ) | (980 | ) |
Post retirement healthcare liability | | (806 | ) | (971 | ) |
| | | | | |
Total Other Comprehensive Income (Loss), net of tax | | (825 | ) | (1,951 | ) |
| | | | | |
Total Comprehensive Income | | $ | (265 | ) | $ | 290 | |
The accompanying notes are an integral part of these consolidated financial statements.
6
NEW COLT HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
| | Common
Shares
Issued | | Common
Stock | | Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
Loss | | Total | |
Balance - December 31, 2010 | | 41,576 | | $ | — | | $ | 23,951 | | $ | (4,901 | ) | $ | (1,609 | ) | $ | 17,441 | |
Purchase of Common Stock | | (243 | ) | — | | (18 | ) | — | | — | | (18 | ) |
Net Income | | — | | — | | — | | 2,241 | | — | | 2,241 | |
Other Comprehensive Income (Loss) | | | | | | | | | | | | | |
Pension liability | | — | | — | | — | | — | | (980 | ) | (980 | ) |
Post retirement health care liabilities | | — | | — | | — | | — | | (971 | ) | (971 | ) |
Balance - December 31, 2011 | | 41,333 | | — | | 23,933 | | (2,660 | ) | (3,560 | ) | 17,713 | |
Purchase of Common Stock | | (81 | ) | — | | (22 | ) | — | | — | | (22 | ) |
Net Income | | — | | — | | — | | 560 | | — | | 560 | |
Other Comprehensive Income (Loss) | | | | | | | | | | | | | |
Pension liability | | — | | — | | — | | — | | (19 | ) | (19 | ) |
Post retirement health care liabilities | | — | | — | | — | | — | | (806 | ) | (806 | ) |
Balance - December 31, 2012 | | 41,252 | | $ | — | | $ | 23,911 | | $ | (2,100 | ) | $ | (4,385 | ) | $ | 17,426 | |
The accompanying notes are an integral part of these consolidated financial statements.
7
NEW COLT HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
| | 2012 | | 2011 | |
Cash Flows from Operating Activities | | | | | |
Net income | | $ | 560 | | $ | 2,241 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 606 | | 462 | |
Gain on sale of equipment | | — | | (24 | ) |
Amortization of deferred license fee income | | (101 | ) | (101 | ) |
Amortization of deferred royalty income | | (54 | ) | (54 | ) |
Deferred rent expense | | 62 | | 247 | |
Pension curtailment expense | | 334 | | — | |
Provision for deferred income taxes | | 592 | | 1,449 | |
Changes in operating assets and liabilities: | | | | | |
Receivables | | (4,743 | ) | (2,387 | ) |
Inventories | | (2,588 | ) | (2,411 | ) |
Prepaid expenses and other assets | | (64 | ) | (1,012 | ) |
Accounts payable and accrued expenses | | 11,246 | | 5,184 | |
Employee benefit costs | | (238 | ) | (572 | ) |
| | | | | |
Net Cash Provided by Operating Activities | | 5,612 | | 3,022 | |
| | | | | |
Cash Flows from Investing Activities | | | | | |
Purchases of equipment | | (841 | ) | (770 | ) |
Purchase of design rights | | (345 | ) | — | |
Security deposits | | — | | 18 | |
| | | | | |
Net Cash Used in Investing Activities | | (1,186 | ) | (752 | ) |
| | | | | |
Cash Flows from Financing Activities | | | | | |
Payments on capital lease obligations | | (515 | ) | (445 | ) |
Purchase of common stock | | (22 | ) | (18 | ) |
| | | | | |
Net Cash Used in Financing Activities | | (537 | ) | (463 | ) |
| | | | | |
Change in Cash and Cash Equivalents | | 3,889 | | 1,807 | |
| | | | | |
Cash and Cash Equivalents - Beginning | | 3,607 | | 1,800 | |
| | | | | |
Cash and Cash Equivalents - End | | $ | 7,496 | | $ | 3,607 | |
| | | | | |
Supplemental Disclosures of Cash Flow Information | | | | | |
Cash paid for interest | | $ | 69 | | $ | 86 | |
Cash paid for income taxes | | $ | 375 | | $ | 10 | |
The accompanying notes are an integral part of these consolidated financial statements.
8
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 1— BUSINESS AND PRINCIPLES OF CONSOLIDATION
New Colt Holding Corp. (NCHC) has one wholly-owned subsidiary, Colt’s Manufacturing Company LLC (CMC) (collectively, the Company). The Company designs, manufactures and sells handguns and spare parts and also distributes and sells a line of rifles manufactured by Colt Defense LLC sold in the commercial marketplace. The Company also earns royalties related to licensing the use of the Colt trade name through agreements with third parties to promote their products.
The accompanying consolidated financial statements include the accounts of NCHC and CMC. All intercompany transactions and balances have been eliminated from these consolidated fmancial statements.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING’
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the consolidated financial statements of the Company include allowances for excess and slow moving inventories, realization of deferred tax assets, the discount rate used in the valuation of pension and post- retirement health care liabilities, the expected return on pension plan assets and the liability for incurred and reported, and incurred but not yet reported claims for the employee group medical program.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with maturities of three months or less when purchased to be cash equivalents.
9
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company maintains its cash accounts at a high credit quality and federally insured financial institution. Those deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor. Cash deposited at such institutions is normally in excess of the insured limit.
REVENUE AND ACCOUNTS RECEIVABLE RECOGNITION
The Company recognizes revenue and accounts receivable from the sales of its product when ownership of the product transfers to the buyer, primarily upon shipment. Credit is extended based on an evaluation of a customer’s financial condition; generally, collateral is not required. Credit losses are provided for in the financial statements, primarily on a specific identification basis, and have been within management’s expectations. Once a customer is identified as high risk based on the customer’s history and credit worthiness, the Company will provide an allowance for the estimated uncollectible portion. Accounts are considered past due based on the original invoice date. Write-off of uncollectible accounts occurs when all reasonable collection efforts have been made.
INVENTORIES
Inventories are stated at the lower of cost, using the first-in, first-out method, or market. Cost includes materials, labor and manufacturing overhead related to the purchase of materials and parts, and production of products. The Company provides allowances for excess or slow moving inventories as well as inventories whose carrying value is in excess of net realizable value.
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment, including tooling, and leasehold improvements are recorded at cost. Depreciation of equipment (including assets under capital leases) and amortization of leasehold improvements are computed using the straight-line method over the estimated useful life of the assets, which vary from 3 to 15 years, or the life of the lease, whichever is shorter. The Company evaluates equipment and leasehold improvements for impairment when there is an indication that impairment may exist. To date, there have been no impairment losses.
10
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOODWILL AND INTANGIBLE ASSETS
Goodwill and intellectual property with indefinite lives are not amortized but rather are tested annually for impairment as of year-end. Impairment of goodwill and intellectual property would exist if the carrying value of the asset exceeds its estimated fair value. The intellectual property is evaluated annually to determine if useful lives continue to be indefinite. To date there have been no impairments.
SHIPPING AND HANDLING COSTS
Shipping and handling costs are classified within cost of sales on the statements of income.
ADVERTISING COSTS
The Company expenses advertising costs as incurred. The Company incurred advertising and promotional costs of $1,500 and $1,146 in 2012 and 2011, respectively.
WARRANTY COSTS
The Company offers a service agreement in lieu of a warranty. The Company provides a reserve for warranty expense in the period of sale based on past experience. Accrued warranty cost at December 31, 2012 and 2011 was $256 and $210, respectively.
CUSTOMER ADVANCES
Customer advances represent payments by certain customers for products that have not yet been shipped.
DEFERRED LICENSE FEE INCOME
Deferred license fees are amortized to income over the initial term of the license (see Note 15).
TRANSACTION COSTS
Transaction costs consist of legal and professional fees incurred in connection with the exploration of certain strategic alternatives. During the years ended December 31, 2012 and 2011, the Company incurred $1,116 and $0, respectively, in transaction costs.
11
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SELF-FUNDED MEDICAL PLAN AND WORKERS’ COMPENSATION
The Company maintains a self-funded employee group medical plan under which the liability is limited by individual and aggregate stop loss insurance coverage. Included in the accompanying financial statements is a liability for reported claims outstanding, as well as an estimate of incurred but unreported claims, based on the Company’s best estimate of the ultimate cost not covered by stop loss insurance. The actual amount of the claims could differ from the estimated liability recorded of $145 and $90 at December 31, 2012 and 2011, respectively.
TAXES COLLECTED FROM CUSTOMERS
The Company presents taxes collected from customers on a net basis.
INCOME TAXES
Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to the extent that it is more likely than not that the Company will not be able to utilize deferred income tax assets in the future.
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. During 2012 the Company recorded a $260 liability for contingencies. The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2009 and forward, the tax years which remain subject to examination as of December 31, 2012.
12
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments are generally defined as cash, evidence of ownership interest in an entity, or a contractual obligation that both conveys to one entity a right to receive cash or other financial instruments from another entity and imposes on the other entity the obligation to deliver cash or other financial instruments to the first entity. At December 31, 2012, management believes that the carrying value of cash and cash equivalents, receivables and payables approximated fair value because of the short maturity of these financial instruments. At December 31, 2012, management believes that the fair value of the Company’s debt approximated its carrying value based on interest rates available to the Company at the time.
SUBSEQUENT EVENTS
The Company completed its review of subsequent events through March 5, 2013, the date the accompanying financial statements were available to be issued. There were no subsequent events requiring recognition or disclosure in these financial statements.
NOTE 3 — INVENTORIES
The components of inventories at December 31 are as follows:
| | 2012 | | 2011 | |
| | | | | |
Raw materials | | $ | 5,440 | | $ | 5,198 | |
Work-in-process | | 3,844 | | 2,455 | |
Finished goods | | 2,045 | | 1,296 | |
| | | | | |
| | 11,329 | | 8,949 | |
Less allowance for excess and slow moving inventories | | 2,191 | | 2,399 | |
| | | | | |
| | $ | 9,138 | | $ | 6,550 | |
13
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 4 — LINE OF CREDIT
The Company has an available $2,000,000 line of credit agreement with a bank with interest payable on any outstanding amount at a rate equal to LIBOR plus 3.25 percentage points which expires on June 30, 2013. The line of credit is collateralized by the Company’s receivables, inventories, and equipment. Under the loan agreement, the Company is required to maintain specified debt service and interest coverage ratios and a minimum amount of member’s equity. The Company was in compliance with these financial covenants at December 31, 2012. The line of credit was not drawn on during the year ended December 31, 2012.
NOTE 5 — LEASE OBLIGATIONS
Future minimum lease payments at December 31 follow:
| | Capital
Leases | | Operating
Leases | |
2013 | | $ | 584 | | $ | 1,007 | |
2014 | | 247 | | 743 | |
2015 | | 52 | | 743 | |
2016 | | — | | 658 | |
2017 | | — | | 445 | |
Thereafter | | — | | 567 | |
| | | | | |
| | 883 | | $ | 4,163 | |
Less amount representing interest at approximately 6.2% | | 45 | | | |
Present value of net minimum lease payments | | $ | 838 | | | |
No capital leases were entered into during 2012. During 2011, $281 of equipment was acquired by entering into capital leases.
Machinery and equipment under capital lease follows:
| | 2012 | | 2011 | |
Machinery and equipment | | $ | 2,386 | | $ | 2,386 | |
Accumulated depreciation | | 1,111 | | 770 | |
| | $ | 1,275 | | $ | 1,616 | |
14
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 5 — LEASE OBLIGATIONS (CONTINUED)
The Company leased its facility from Colt Defense LLC for $161 per year through October 25, 2012. The lease was extended by mutual agreement at a rate of $349 per year commencing on October 25, 2012. Total lease expense in 2012 and 2011 was $192 and $161, respectively.
Rent expense incurred under all operating leases during 2012 and 2011 was $626 and $417, respectively.
In November 2011, the Company entered into an agreement with Osceola County in Florida to lease a 16,000 square foot facility located in Kissimmee, Florida (the Florida Facility). The Florida Facility was renovated by the County at their cost and the building was made available for occupancy during 2012. The State of Florida contributed $250 of funds to the County to assist with the cost of renovations. The Company is responsible for making a minimum capital investment of $2.5 million, of which $181 had been made through December 31, 2012. The Company entered into a twelve year lease of the Florida Facility. There are no lease payments due during the initial 5 years of the lease and the annual cost of the lease for the remainder of the term of the lease will be $108 per year with the lease expiring on January 15, 2023. The lease expense is being accounted for on a straight-line basis, with an annual charge of $66 being incurred over the term of the lease. At December 31, 2012, deferred lease expense was $82. In connection with these agreements, as amended, the Company is expected to hire a minimum number of employees commencing in 2013. As of December 31, 2012, the Company had not occupied the Florida Facility.
NOTE 6 — PENSION, SAVINGS AND POST-RETIREMENT BENEFITS
The Company has two noncontributory defined benefit pension plans that cover substantially all eligible salaried and hourly employees. The Company has recorded a pension liability, which represents the excess of the accumulated benefit pension obligation over the related pension plan assets.
The Company also provides certain post-retirement health care coverage to retired employees who were subject to the Company’s collective bargaining agreement when they were employees. The cost of these post-retirement benefits is determined actuarially and is recognized in the financial statements during the employees’ active working career. In connection with the Company’s collective bargaining agreement, the Company capped certain retirees to approximately $250 (not in thousands) per employee per month.
15
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 6 —PENSION, SAVINGS AND POST-RETIREMENT BENEFITS (CONTINUED)
Disclosures related to the pension plans and the post-retirement health care coverage for the years ended December 31 are as follows:
| | Pension Plans | | Post Retirement
Healthcare Plan | |
| | 2012 | | 2011 | | 2012 | | 2011 | |
| | | | | | | | | |
Projected benefit obligation at beginning of year | | $ | 8,585 | | $ | 7,212 | | $ | 7,915 | | $ | 6,251 | |
Service cost | | 231 | | 167 | | 156 | | 104 | |
Interest cost | | 387 | | 376 | | 365 | | 376 | |
Actuarial loss | | 698 | | 1,164 | | 1,382 | | 1,587 | |
Benefits paid | | (464 | ) | (334 | ) | (377 | ) | (403 | ) |
| | | | | | | | | |
Projected benefit obligation at end of year | | 9,437 | | 8,585 | | 9,441 | | 7,915 | |
| | | | | | | | | |
Fair value of plan assets at beginning of year | | 6,506 | | 6,151 | | — | | — | |
Employer contributions | | 800 | | 875 | | — | | — | |
Actual return on plan assets | | 571 | | (186 | ) | — | | — | |
Benefits paid | | (464 | ) | (334 | ) | — | | — | |
| | | | | | | | | |
Fair value of plan assets at end of year | | 7,413 | | 6,506 | | — | | — | |
| | | | | | | | | |
Unfunded benefit obligations at end of year | | $ | (2,024 | ) | $ | (2,079 | ) | $ | (9,441 | ) | $ | (7,915 | ) |
The components of the unfunded benefit obligation of the hourly and salary defined benefit plans as of December 31 follow:
| | 2012 | | 2011 | |
| | Hourly | | Salary | | | | Hourly | | Salary | | | |
| | Plan | | Plan | | Total | | Plan | | Plan | | Total | |
| | | | | | | | | | | | | | | | | | | |
Projected Benefit Obligation | | $ | 7,230 | | $ | 2,207 | | $ | 9,437 | | $ | 6,570 | | $ | 2,015 | | $ | 8,585 | |
Fair Value of Plan Assets | | 5,733 | | 1,680 | | 7,413 | | 5,014 | | 1,492 | | 6,506 | |
| | | | | | | | | | | | | |
Unfunded Benefit Obligation | | $ | (1,497 | ) | $ | (527 | ) | $ | (2,024 | ) | $ | (1,556 | ) | $ | (523 | ) | $ | (2,079 | ) |
Effective January 1, 2010, the Company froze the pension benefits under the Salaried Defined Benefits Plan. Accordingly, participants retain the pension benefits already accrued, however no additional benefits will accrue after the effective date of the freeze.
16
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 6 — PENSION, SAVINGS AND POST-RETIREMENT BENEFITS (CONTINUED)
Hourly bargaining unit employees hired after April 1, 2012, were no longer eligible to participate in the Hourly Defined Benefit Plan but were eligible to participate in the Company’s 401K Plan. Effective December 31, 2012, the Company froze the pension benefits under the Hourly Defined Benefit Plan. Accordingly, participants retain the pension benefits already accrued, however no additional benefits will accrue after the effective date of the freeze.
During 2013, the Company expects to make contributions of $696 to the pension plans and payments of $405 for post-retirement health benefits.
The components of the amounts recognized in the Company’s income statement are as follows:
| | Pension Plans | | Post Retirement
Healthcare Plan | |
| | 2012 | | 2011 | | 2012 | | 2011 | |
Service cost | | $ | 231 | | $ | 167 | | $ | 156 | | $ | 104 | |
Interest cost | | 387 | | 376 | | 365 | | 376 | |
Expected return on assets | | (547 | ) | (498 | ) | — | | — | |
Curtailment charge | | 334 | | — | | — | | — | |
Amortization of unrecognized (benefit) prior service cost | | 59 | | 39 | | (104 | ) | (104 | ) |
Amortization of unrecognized loss | | 249 | | 176 | | 143 | | 73 | |
| | | | | | | | | |
Net periodic benefit cost | | $ | 713 | | $ | 260 | | $ | 560 | | $ | 449 | |
Weighted average assumptions are as follows:
| | Pension Plans | | Post Retirement
Healthcare Plan | |
| | 2012 | | 2011 | | 2012 | | 2011 | |
| | | | | | | | | |
Discount rate | | 4.00 | % | 4.50 | % | 3.50 | % | 4.50 | % |
Expected return on plan assets | | 7.50 | % | 8.00 | % | N/A | | N/A | |
During 2012, individual stop loss coverage was deemed to be unnecessary and eliminated as a cost of the plan and excluded from administrative expense, which in 2012 is included as a load to service cost. For the year ended December 31, 2012, the average cost per month was $191 (not in thousands) per employee.
17
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 6 — PENSION, SAVINGS AND POST-RETIREMENT BENEFITS (CONTINUED)
In developing the overall expected long-term return on plan assets assumption, a building block approach was used in which rates of return in excess of inflation were considered separately for equity securities, debt securities and other assets. The excess returns were weighted by the representative target allocation and added along with an appropriate rate of inflation to develop the overall expected long-term return on plan assets.
ESTIMATED FUTURE BENEFIT PAYMENTS
The following benefit payments, which reflect future service, are expected to be paid. The benefit payments are based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2012.
| | Pension
Benefits | | Post Retirement
Health
Benefits | |
| | | | | | | |
2013 | | $ | 520 | | $ | 478 | |
2014 | | 537 | | 500 | |
2015 | | 538 | | 525 | |
2016 | | 536 | | 545 | |
2017 | | 545 | | 558 | |
2018 - 2022 | | 2,743 | | 2,875 | |
401K PLAN
The Company has a contributory savings plan (the 401K Plan) under Section 401(k) of the Internal Revenue Code covering substantially all U.S. employees. The 401K Plan allows participants to make voluntary contributions on a pretax basis, subject to IRS limitations. The 401K Plan provides for discretionary contributions by the Company. No discretionary contributions were made in 2012 or 2011. The Company also provides a match of a portion of salaried employee contributions. For the years ended December 31, 2012 and 2011, total plan expense was $99 and $81, respectively.
18
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 7 — INCOME TAXES
Components of deferred income tax assets at December 31 follow:
| | 2012 | | 2011 | |
| | | | | |
Current Deferred Tax Assets | | | | | |
Inventories | | $ | 1,036 | | $ | 960 | |
Other | | 1,172 | | 818 | |
| | | | | |
| | 2,208 | | 1,778 | |
| | | | | |
Long-Term Deferred Tax Assets | | | | | |
Retirement plans | | 4,104 | | 3,551 | |
Net operating loss carryforwards | | 6,090 | | 6,885 | |
Other | | 715 | | 882 | |
| | | | | |
| | 10,909 | | 11,318 | |
| | | | | |
Total net deferred income tax asset | | $ | 13,117 | | $ | 13,096 | |
The Company has approximately $17,900 of federal income tax operating loss carry forwards which expires beginning in 2020 and no state net operating loss carry forwards at December 31, 2012.
The principal components of income tax expense consist of the following:
| | 2012 | | 2011 | |
| | | | | |
Current | | | | | |
Federal | | $ | 258 | | $ | 33 | |
State | | 154 | | 151 | |
| | | | | |
| | 412 | | 184 | |
Deferred | | 328 | | 1,509 | |
| | | | | |
| | $ | 740 | | $ | 1,693 | |
19
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 8 — STOCKHOLDERS’ EQUITY
The authorized common stock of the Company consists of 200,000 shares, $.01 par value, of which 41,252 and 41,333 shares were issued and outstanding as of December 31, 2012 and 2011, respectively. The Company has also authorized 1,000 shares of Series A Redeemable Preferred Stock, $0.01 par value, of which zero shares are outstanding as of December 31, 2012. In addition, the Company has authorized one share of Series B Redeemable Junior Preferred Stock, par value $0.01. This share was issued to the United Automobile, Aerospace and Agricultural Implement Workers of America (the UAW or the Union) for the benefit of CMC employees who are members of the UAW. At any time after the New Colt Holding Corp. Profit Sharing Plan no longer holds common shares of the Company, the Company may redeem the share for a redemption price of $1.00. The Series B share has no conversion, voting or dividend rights.
The New Colt Holding Corp. Profit Sharing Plan (the Plan) owns 287 shares of common stock of the Company for the benefit of certain of its bargaining unit employees who are members of the UAW. These shares represent less than one percent of the Company’s outstanding common stock at December 31, 2012. The right to participate in this plan was terminated on September 1, 1997 and since then the Company has no obligation to make contributions to the Plan. During 2012, the Company acquired 81 shares for $22 from the Plan on behalf of retirees who had withdrawn from the Plan. During 2011, the Company acquired 243 shares for $18.
The Company has granted 100,431 nonqualified warrants to purchase common stock of the Company. No warrants were exercised during 2012 or 2011. A summary of the status of the outstanding warrants, which all expire on August 8, 2013, follows:
2012 and 2011 | |
Number of | | Warrant Exercise | | Total | |
Warrants | | Price/Share | | Exercise Price | |
11,709 | | $ | 30 | | $ | 351 | |
87,486 | | 39 | | 3,412 | |
1,236 | | 45 | | 56 | |
100,431 | | | | $ | 3,819 | |
| | | | | | | |
20
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 9 — TRANSACTIONS WITH COLT DEFENSE LLC
The Company has entered into various transactions with Colt Defense LLC for various services and product purchases and sales. These are summarized below:
| | 2012 | | 2011 | |
Purchases of commercial rifles and spare parts (a) | | $ | 83,010 | | $ | 11,999 | |
Sales of Marine pistols and spare parts | | 1,261 | | 167 | |
Rent (see Note 5) | | 192 | | 161 | |
Services agreement (b) | | 1,098 | | 430 | |
Utility expense (c) | | 188 | | — | |
Receivables from Colt Defense LLC | | 771 | | 108 | |
Payables to Colt Defense LLC | | 12,321 | | 2,125 | |
| | | | | | | |
(a) Purchases of commercial rifles from Colt Defense LLC are made in accordance with the terms of a memorandum of understanding which expires on December 31, 2013.
(b) The Company entered into a service agreement with Colt Defense LLC which provides for a fee to cover the costs of certain factory, data processing and other services provided to the Company by Colt Defense LLC. This agreement was renewed on July 1, 2012 and has a cost of $1,766 per year. The agreement expires on October 27, 2013 and is renewable annually thereafter.
(c) Effective July 1, 2012, the Company began reimbursing Colt Defense LLC for a pass through of costs for electricity used by the Company.
NOTE 10— ROYALTY INCOME
The Company has licensing agreements with third parties for limited use of the Colt trade name to promote products. Royalty income of $2,051 and $1,499 was recognized in connection with these agreements during 2012 and 2011, respectively, of which $547 and $485 is receivable at December 31, 2012 and 2011, respectively, and included in other current assets on the consolidated balance sheet.
NOTE 11— ROYALTY EXPENSE
The Company pays a third party 50% of income received from certain types of royalty income. Maximum payments under this agreement are subject to a cap. Royalty expense in connection with this agreement was $15 and $9 in 2012 and 2011, respectively.
21
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 12 — COMMITMENTS AND CONTINGENCIES
During 2012, the Union filed a charge with the National Labor Relations Board (NLRB) regarding the opening of the Florida Facility. The Union charged that the Company had not fulfilled certain contractual obligations required by the collective bargaining agreement and that the Company had the obligation to bargain over the opening of a new plant in Florida. The NLRB ruled that the Union’s charge was a matter of contract interpretation and should be arbitrated pursuant to the terms of the collective bargaining agreement. The Union and the Company are currently in the process of selecting an agreeable arbitrator.
In October 2012, two former employees brought actions against the Company for wrongful termination and breach of their employment agreements. Management intends to vigorously respond to the lawsuits and believes the charges are without merit. Discovery depositions have not begun, and at this early stage of litigation the Company is unable to assess whether it is possible that any loss might be incurred which would have a material impact on the accompanying financial statements.
The Company is a defendant in Gary v. Smith and Wesson et.al., a case brought by the City of Gary, Indiana against various gun manufacturers and distributors. The suit is based on a nontraditional theory of public nuisance. Similar suits filed by other governmental agencies have all been dismissed with prejudice, some based on the Protection of Lawful Commerce in Arms Act (PLCAA). The City has taken no steps to advance the case toward trial since 2010 and it is the opinion of our outside counsel that they do not intend to pursue the matter. Moreover, based in part on the advice of legal counsel, the Company believes that the allegations of the lawsuit are without merit and that this litigation is not likely to have a material effect on the financial condition of the Company. There are no other municipal firearm lawsuits pending against the Company.
The Company is involved in other various matters of litigation incidental to the normal conduct of its business. In management’s opinion, the disposition of these matters will not have a material adverse effect on the financial condition or results of operations or cash flows of the Company.
22
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 13 — CONCENTRATION OF RISK
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of trade receivables. Accounts receivable from three customers represented approximately 45.5% of trade receivables at December 31, 2012. During 2012, sales from three customers were approximately 38.8% of net sales, respectively. Accounts receivable from three customers represented approximately 31.5% of trade receivables at December 31, 2011. During 2011, sales from three customers were approximately 20.5% of net sales, respectively.
Approximately 74.4% of the Company’s workforce is subject to a collective bargaining agreement, with the Union, which expires April 1, 2014.
NOTE 14 — OTHER LONG-TERM ASSETS
Other long-term assets at December 31 consisted of the following:
| | Amortized
Period | | 2012 | | 2011 | |
Archive guns | | — | | $ | 110 | | $ | 110 | |
Security deposits | | — | | 268 | | 134 | |
Technical data design rights | | 20 | | 340 | | — | |
| | | | | | | |
| | | | $ | 718 | | $ | 244 | |
NOTE 15 — DEFERRED INCOME AND OTHER LONG-TERM LIABILITIES
Deferred income and other long-term liabilities at December 31 consisted of the following:
| | Amortized
Period | | 2012 | | 2011 | |
Deferred license fees from Colt Defense LLC for use of certain Colt trademarks (a) | | 20 | | $ | 1,110 | | $ | 1,210 | |
Deferred license fees with unrelated party | | 40 | | 1,154 | | 1,208 | |
Deferred lease expense (Note 5) | | | | 308 | | 247 | |
| | | | | | | |
| | | | $ | 2,572 | | $ | 2,665 | |
23
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 15 — DEFERRED INCOME AND OTHER LONG-TERM LIABILITIES (CONTINUED)
(a) Under the terms of the License, Colt Defense LLC received a twenty-year-paid-up license for the limited use of certain Colt trade names, which expires December 31, 2023. Thereafter, the license may be extended for successive five-year periods.
NOTE 16 — REVISIONS TO THE CONSOLIDATED FINANCIAL STATEMENTS
Certain adjustments were identified that affected the Company’s reported results for the years ended December 31, 2012 and 2011, respectively. The adjustments were determined to have an immaterial impact on the consolidated financial statements and related primarily to information and related accounting for the Company’s post-retirement health plan, certain related tax matters and classification of certain balances on the consolidated statements of income and consolidated balance sheets. As a result of the adjustments, the Company concluded that they would revise their consolidated financial statements for the years ended December 31, 2012 and 2011. Based on an analysis of qualitative and quantitative factors, the adjustments were deemed immaterial, individually and in aggregate, to all periods presented.
The effects of the revision on the Company’s Consolidated Statement of Operations for the year ended December 31, 2012 are as follows:
| | December 31, 2012 | |
| | Previously Reported | | Adjustments | | Revised | |
| | | | | | | |
Net Sales - Royalty Income | | $ | — | | $ | 2,051 | | $ | 2,051 | |
Total Net Sales | | 127,459 | | 2,051 | | 129,510 | |
Cost of Sales | | 117,781 | | (45 | ) | 117,736 | |
Gross Profit | | 9,678 | | 2,096 | | 11,774 | |
Selling, General and Administrative Expenses | | 8,594 | | 561 | | 9,155 | |
Operating Income | | 1,084 | | 1,535 | | 2,619 | |
Other Income - Royalty Income | | 2,017 | | (2,017 | ) | — | |
Other Expense - Transaction Costs | | (1,670 | ) | 554 | | (1,116 | ) |
Total Other Income, net | | 144 | | (1,463 | ) | (1,319 | ) |
Income Before Income Tax Expense | | 1,228 | | 72 | | 1,330 | |
Income Tax Expense | | 490 | | 250 | | 740 | |
Net Income | | 738 | | (178 | ) | 560 | |
| | | | | | | | | | |
24
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 16 — REVISIONS TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The effects of the revision on the Company’s Consolidated Statement of Operations for the year ended December 31, 2011 are as follows:
| | December 31, 2011 | |
| | Previously Reported | | Adjustments | | Revised | |
| | | | | | | |
Net Sales - Royalty Income | | $ | — | | $ | 1,499 | | $ | 1,499 | |
Total Net Sales | | 49,359 | | 1,499 | | 50,858 | |
Cost of Sales | | 39,448 | | 194 | | 39,642 | |
Gross Profit | | 9,911 | | 1,305 | | 11,216 | |
Operating Income | | 2,797 | | 1,305 | | 4,102 | |
Other Income - Royalty Income | | 1,611 | | (1,611 | ) | — | |
Income Before Income Tax Expense | | 4,240 | | (306 | ) | 3,934 | |
Income Tax Expense | | 1,833 | | (140 | ) | 1,693 | |
Net Income | | 2,407 | | (166 | ) | 2,241 | |
| | | | | | | | | | |
The effects of the revision in the Company’s Consolidated Statements of Comprehensive Income for the year ended December 31, 2012 are as follows:
| | December 31, 2012 | |
| | Previously Reported | | Adjustments | | Revised | |
| | | | | | | |
Net Income | | $ | 738 | | $ | (178 | ) | $ | 560 | |
Other Comprehensive Income (Loss), net of tax | | | | | | | |
Pension Liability | | (32 | ) | 13 | | (19 | ) |
Post-retirement Healthcare Liability | | (362 | ) | (444 | ) | (806 | ) |
Total Other Comprehensive Income (Loss), net of ta | | (394 | ) | (431 | ) | (825 | ) |
Total Comprehensive Income | | 344 | | (609 | ) | (265 | ) |
| | | | | | | | | | |
The effects of the revision in the Company’s Consolidated Statements of Comprehensive Income for the year ended December 31, 2011 are as follows:
| | December 31, 2011 | |
| | Previously Reported | | Adjustments | | Revised | |
| | | | | | | |
Net Income | | $ | 2,407 | | $ | (166 | ) | $ | 2,241 | |
Other Comprehensive Income (Loss), net of tax | | | | | | | |
Pension Liability | | (1,634 | ) | 654 | | (980 | ) |
Post-retirement Healthcare Liability | | (1,471 | ) | 500 | | (971 | ) |
Total Other Comprehensive Income (Loss), net of ta | | (3,105 | ) | 1,154 | | (1,951 | ) |
Total Comprehensive Income | | (698 | ) | 988 | | 290 | |
| | | | | | | | | | |
25
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 16 — REVISIONS TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The effects of the revision on the Company’s Consolidated Balance Sheet as of December 31, 2012 are as follows:
| | December 31, 2012 | |
| | Previously Reported | | Adjustments | | Revised | |
| | | | | | | |
Current Assets - Cash and Cash Equivalents | | $ | 7,714 | | $ | (218 | ) | $ | 7,496 | |
Current Assets - Deferred Income Taxes | | 1,804 | | 404 | | 2,208 | |
Total Current Assets | | 28,713 | | 186 | | 28,899 | |
Equipment and Leasehold Improvements, net | | 2,982 | | 250 | | 3,232 | |
Other Assets - Deferred Income Taxes | | 7,348 | | 3,561 | | 10,909 | |
Other Assets - Intellectual Property | | 6,679 | | (7 | ) | 6,672 | |
Total Other Assets | | 15,788 | | 3,554 | | 19,342 | |
Total Assets | | 47,483 | | 3,990 | | 51,473 | |
Current Liabilities - Accrued Expenses | | 3,367 | | (156 | ) | 3,211 | |
Current Liabilities - Accrued Employee Benefit Costs | | 1,101 | | (623 | ) | 478 | |
Total Current Liabilities | | 20,976 | | (779 | ) | 20,197 | |
Other Liabilities - Accrued Employee Benefit Costs | | 8,989 | | 1,998 | | 10,987 | |
Other Liabilities - Deferred Income and Other Liabiliti | | 1,717 | | 855 | | 2,572 | |
Total Other Liabilities | | 10,997 | | 2,853 | | 13,850 | |
Total Liabilities | | 31,973 | | 2,074 | | 34,047 | |
Stockholders’ Equity - Accumulated Deficit | | (1,590 | ) | (510 | ) | (2,100 | ) |
Stockholders’ Equity - Accumulated and Other Comprehensive Income | | (6,811 | ) | 2,426 | | (4,385 | ) |
Total Stockholders’ Equity | | 15,510 | | 1,916 | | 17,426 | |
Total Liabilities and Stockholders’ Equity | | 47,483 | | 3,930 | | 51,473 | |
| | | | | | | | | | |
26
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 16 — REVISIONS TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The effects of the revision on the Company’s Consolidated Balance Sheet as of December 31, 2011 are as follows:
| | December 31, 2011 | |
| | Previously Reported | | Adjustments | | Revised | |
Current Assets - Cash and Cash Equivalents | | $ | 3,899 | | $ | (292 | ) | $ | 3,607 | |
Current Assets - Deferred Income Taxes | | 1,331 | | 447 | | 1,778 | |
Total Current Assets | | 17,165 | | 155 | | 17,320 | |
Equipment and Leasehold Improvements, net | | 2,734 | | 250 | | 2,984 | |
Other Assets - Deferred Income Taxes | | 8,163 | | 3,155 | | 11,318 | |
Total Other Assets | | 16,129 | | 3,155 | | 19,284 | |
Total Assets | | 36,028 | | 3,560 | | 39,588 | |
Current Liabilities - Accrued Expenses | | 3,136 | | (293 | ) | 2,843 | |
Current Liabilities - Accrued Employee Benefit Costs | | 1,405 | | (962 | ) | 443 | |
Total Current Liabilities | | 10,076 | | (1,255 | ) | 8,821 | |
Other Liabilities - Accrued Employee Benefit Costs | | 8,171 | | 1,380 | | 9,551 | |
Other Liabilities - Deferred Income and Other Liabiliti | | 1,755 | | 910 | | 2,665 | |
Total Other Liabilities | | 10,764 | | 2,290 | | 13,054 | |
Total Liabilities | | 20,840 | | 1,035 | | 21,875 | |
Stockholders’ Equity - Accumulated Deficit | | (2,328 | ) | (332 | ) | (2,660 | ) |
Stockholders’ Equity - Accumulated and Other Comprehensive Income | | (6,417 | ) | 2,857 | | (3,560 | ) |
Total Stockholders’ Equity | | 15,188 | | 2,525 | | 17,713 | |
Total Liabilities and Stockholders’ Equity | | 36,028 | | 3,560 | | 39,588 | |
| | | | | | | | | | |
27
NEW COLT HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
NOTE 16 — REVISIONS TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The effects of the revision on the Company’s Consolidated Statements of Cash Flows for the year ended December 31, 2012 are as follows:
| | December 31, 2012 | |
| | Previously Reported | | Adjustments | | Revised | |
| | | | | | | |
Cash Flows from Operating Activities: | | | | | | | | | | |
Net Income | | $ | 738 | | $ | (178 | ) | $ | 560 | |
Depreciation and Amortization | | 599 | | 7 | | 606 | |
Amortization of Deferred | | | | | | | |
Royalty Income | | (19 | ) | (35 | ) | (54 | ) |
Deferred Rent Expense | | 82 | | (20 | ) | 62 | |
Provision for Deferred Income Taxes | | 342 | | 250 | | 592 | |
Accounts Payable and Accrued Expenses | | 11,172 | | 74 | | 11,246 | |
Employee Benefit Costs | | (214 | ) | (24 | ) | (238 | ) |
Net Cash Provided by Operating Activities | | 5,538 | | 74 | | 5,612 | |
Change in Cash and Cash Equivalents | | 3,815 | | 74 | | 3,889 | |
Cash and Cash Equivalents - Beginning | | 3,899 | | (292 | ) | 3,607 | |
Cash and Cash Equivalents - End | | 7,714 | | (218 | ) | 7,496 | |
The effects of the revision on the Company’s Consolidated Statements of Cash Flows for the year ended December 31, 2011 are as follows:
| | December 31, 2011 | |
| | Previously Reported | | Adjustments | | Revised | |
| | | | | | | |
Cash Flows from Operating Activities: | | | | | | | |
Net Income | | $ | 2,407 | | $ | (166 | ) | $ | 2,241 | |
Amortization of Deferred Royalty Income | | (166 | ) | 112 | | (54 | ) |
Deferred Rent Expense | | — | | 247 | | 247 | |
Provision for Deferred Income Taxes | | 1,589 | | (140 | ) | 1,449 | |
Employee Benefit Costs | | (769 | ) | 197 | | (572 | ) |
Net Cash Provided by Operating Activities | | 2,772 | | 250 | | 3,022 | |
Cash Flows from Investing Activities | | | | | | | |
Purchases of Equipment | | (520 | ) | (250 | ) | (770 | ) |
Net Cash Used in Investing Activities | | (502 | ) | (250 | ) | (752 | ) |
Cash and Cash Equivalents - Beginning | | 2,092 | | (292 | ) | 1,800 | |
Cash and Cash Equivalents - End | | 3,899 | | (292 | ) | 3,607 | |
| | | | | | | | | | |
28
