Exhibit 99.2
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re: | ) | Case No. 02 B 12059 (Jointly Administered) | |
| ) |
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HA 2003, INC. formerly known as | ) | Chapter 11 | |
HA-LO INDUSTRIES, INC., et al., | ) |
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| ) | Hon. Carol A. Doyle | |
| Debtors and | ) |
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| Debtors-in-Possession, | ||
FILED |
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UNITED STATES BANKRUPTCY COURT |
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NORTHERN DISTRICT OF ILLINOIS |
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DEC 23 2003 |
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KENNETH S. GARDNER, CLERK |
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PS REP. - CC |
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DEBTORS’ POST-SALE MONTHLY OPERATING REPORT
FOR THE PERIOD FROM NOVEMBER 1, 2003 THROUGH NOVEMBER 30, 2003
| Neal L. Wolf (IL ARDC No. 6186361) |
| Todd L. Padnos (IL ARDC No. 6209679) |
| Brett J. Kitei (admitted pro hac vice) |
| LeBOEUF, LAMB, GREENE & MACRAE, LLP |
| One Embarcadero Center, 4th Floor |
| San Francisco, CA 94111 |
| Telephone: (415) 951 1100 |
| Facsimile: (415) 951 1180 |
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| Counsel for Debtors and Debtors-in-Possession |
HA2003, Inc., formerly known as HA-LO Industries, Inc. (“HA-LO”), and its wholly-owned subsidiaries, LW2003, Inc., formerly known as Lee Wayne Corporation (“Lee Wayne”), and Starbelly.com, Inc. (“Starbelly”), debtors and debtors-in-possession in these Chapter 11 cases (collectively, the “Debtors”),(1) hereby submit this post-sale monthly operating report for the period from November 1, 2003 through November 30, 2003.
The customary reporting format provides for financial information of a debtor operating a business. On May 14, 2003, HA-LO and Lee Wayne sold substantially all of their assets to two affiliates of H.I.G. Capital, LLC. These assets included all operating assets of the Debtors. As a result, the Debtors are no longer operating a promotional products business. Given the foregoing, the format for this report has been modified.
Dated: December 22, 2003 | Respectfully submitted, | |
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| /s/ Brett J. Kitei |
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| Neal L. Wolf (IL ARDC No. 6186361) | |
| Todd L. Padnos (IL ARDC No. 6209679) | |
| Brett J. Kitei (admitted pro hac vice) | |
| LeBoeuf, Lamb, Greene & MacRae, LLP | |
| One Embarcadero Center, 4th Floor | |
| San Francisco, CA 94111 | |
| Telephone: (415) 951 1100 | |
| Facsimile: (415) 951 1180 | |
| Counsel for Debtors and Debtors-in-Possession | |
(1) On May 14, 2003, HA-LO and Lee Wayne sold substantially all of their assets to two affiliates of H.I.G. Capital, LLC (the “HIG Buyer”). In connection with this sale, HA-LO and Lee Wayne sold their rights to the names HA-LO and Lee Wayne to the HIG Buyer, subject to the reservation of HA-LO’s and Lee Wayne’s right to use such name in connection with its Chapter 11 case. Thereafter, pursuant to the terms of the Order entered by the Bankruptcy Court on April 4, 2003 authorizing such asset sale, HA-LO and Lee Wayne changed their names to HA2003, Inc. and LW2003, Inc., respectively. Notwithstanding the foregoing, HA2003, Inc. formerly known as HA-LO Industries, Inc. is referred to herein as HA-LO. The use of this definition is for the convenience of the parties to this lawsuit and should not be confused with any business being operated presently by the HIG Buyer under the name of HA-LO.
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TABLE OF CONTENTS
Monthly Operating Report
HA-LO INDUSTRIES, INC. (Case No. 02 B 12059)
For the period of November 1, 2003 through November 31, 2003
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Exhibit A
HA2003, Inc.
Monthly Operating Report - November 2003
Case No. 02 B 12059 (Jointly Administered)
Balance Sheet as at November 30, 2003
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| HA2003, Inc. |
| LW2003, Inc. |
| Starbelly.com |
| Consolidated |
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ASSETS |
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Current Assets |
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Unrestricted Cash and Cash Equivalents |
| 7,642,503 |
| 3,715 |
| — |
| 7,646,218 |
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Accounts Receivable |
| 2,946,651 |
| (388 | ) | — |
| 2,946,262 |
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Note Receivable |
| 5,952,463 |
| — |
| — |
| 5,952,463 |
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Inventories |
| — |
| — |
| — |
| — |
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Prepaid Expenses |
| 123,367 |
| — |
| — |
| 123,367 |
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Professional Retainers |
| — |
| — |
| — |
| — |
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Other Current Assets |
| — |
| — |
| — |
| — |
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TOTAL CURRENT ASSETS |
| 16,664,983 |
| 3,327 |
| — |
| 16,668,310 |
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Property and Equipment |
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| — |
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Real Property and Improvements |
| — |
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| — |
| — |
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Machinery and Equipment |
| — |
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| — |
| — |
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Furniture, Fixtures and Office Equipment |
| — |
| — |
| — |
| — |
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Leasehold Improvements |
| — |
| — |
| — |
| — |
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Vehicles |
| — |
| — |
| — |
| — |
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Less Accumulated Depreciation |
| — |
| — |
| — |
| — |
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TOTAL PROPERTY & EQUIPMENT |
| — |
| — |
| — |
| — |
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Other Assets |
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Loans to Insiders |
| — |
| — |
| — |
| — |
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Other Assets |
| — |
| — |
| — |
| — |
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TOTAL OTHER ASSETS |
| — |
| — |
| — |
| — |
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TOTAL ASSETS |
| 16,664,983 |
| 3,327 |
| — |
| 16,668,310 |
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LIABILITIES AND OWNER EQUITY |
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Liabilities Not Subject to Compromise (Postpetition) |
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Accounts Payable |
| — |
| — |
| — |
| — |
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Taxes Payable |
| 115,870 |
| — |
| — |
| 115,870 |
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Wages Payable |
| — |
| — |
| — |
| — |
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Notes Payable |
| — |
| — |
| — |
| — |
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Reant/Leases - Building/Equipment |
| — |
| — |
| — |
| — |
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Professional Fees |
| 3,826,720 |
| — |
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| 3,826,720 |
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Amounts due Insiders |
| — |
| — |
| — |
| — |
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Other Postpetition Liabilities |
| — |
| 41,666 |
| — |
| 41,666 |
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TOTAL POSTPETITION LIABILITIES |
| 3,942,590 |
| 41,666 |
| — |
| 3,984,256 |
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Liabilities Subject to Compromise (Pre-petition) |
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Secured Debt |
| — |
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Priority Debt |
| — |
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| — |
| — |
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Unsecured Debt |
| 36,595,320 |
| 8,054,233 |
| 5,105,738 |
| 49,755,290 |
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TOTAL PRE-PETITION LIABILITIES |
| 36,595,320 |
| 8,054,233 |
| 5,105,738 |
| 49,755,290 |
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TOTAL LIABILITIES |
| 40,537,910 |
| 8,095,898 |
| 5,105,738 |
| 53,739,546 |
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Owners Equity |
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Capital Stock |
| 461,385,054 |
| 1,000 |
| — |
| 461,386,054 |
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Additional Paid in Capital |
| — |
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Partners’ Capital Account |
| — |
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Owners Equity Account |
| — |
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| — |
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Retained Earning - Pre-petition |
| (80,420,662 | ) | 6,991,016 |
| (305,135,251 | ) | (378,564,897 | ) |
Retained Earning - Postpetition |
| (392,284,534 | ) | (15,084,588 | ) | 300,029,513 |
| (107,339,609 |
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Adjustments to Owners Equity |
| (12,552,785 | ) | — |
| — |
| (12,552,785 | ) |
Postpetition Contributions |
| — |
| — |
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NET OWNERS EQUITY |
| (23,872,927 | ) | (8,092,572 | ) | (5,105,738 | ) | (37,071,237 | ) |
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TOTAL LIABILITIES AND OWNER EQUITY |
| 16,664,983 |
| 3,327 |
| 0 |
| 16,668,310 |
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Exhibit B
HA2003, Inc.
Case No. 02 B 12059 (Jointly Administered)
Monthly Operating Report - November 2003
Date |
| Description |
| Receipts |
| Note |
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11/03/03 |
| ADP TX/FINCL SVC ADP - TAX |
| 11,943.49 |
| Reverse MSS - Taxes for November Severence $50k |
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11/03/03 |
| Marc Simon |
| 19,725.00 |
| funds from escrow for 11/03 severence payroll taxes |
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11/04/03 |
| preference settlement |
| 5,000.00 |
| 1 wire |
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11/12/03 |
| preference settlement |
| 9,500.00 |
| 1 wire |
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11/17/03 |
| ABC Business Forms |
| 15,000.00 |
| preference settlement |
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11/17/03 |
| Amercian Covers Inc |
| 11,789.19 |
| preference settlement |
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11/17/03 |
| Ad Products Bazaar, Inc |
| 13,682.00 |
| preference settlement |
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11/17/03 |
| Ad-Tek Specialties, Inc |
| 5,100.00 |
| preference settlement |
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11/17/03 |
| Anothy Enterprises |
| 1,250.00 |
| preference settlement |
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11/17/03 |
| Cooper & Clement |
| 1,000.00 |
| preference settlement |
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11/17/03 |
| Cyndel Enterprises |
| 6,000.00 |
| preference settlement |
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11/17/03 |
| Del Rey Nut Company |
| 1,000.00 |
| preference settlement |
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11/17/03 |
| Embroidery Masters, Inc |
| 3,166.68 |
| preference settlement |
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11/17/03 |
| Global Marketing International |
| 3,000.00 |
| preference settlement |
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11/17/03 |
| Guardian Alarm Company of Michigan |
| 3,000.00 |
| preference settlement |
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11/17/03 |
| Innovation Specialties |
| 4,000.00 |
| preference settlement |
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11/17/03 |
| United States Nameplate Co. |
| 2,000.00 |
| preference settlement |
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11/17/03 |
| Rothco |
| 5,500.00 |
| preference settlement |
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11/17/03 |
| Olympic Flag & Banner |
| 7,004.00 |
| preference settlement |
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11/17/03 |
| Pencoa |
| 3,500.00 |
| preference settlement |
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11/17/03 |
| Petersen & Lefkofsky PC |
| 2,000.00 |
| preference settlement |
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11/17/03 |
| Picnic at Ascots, Inc |
| 9,000.00 |
| preference settlement |
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11/17/03 |
| Posh Xessories, Inc. |
| 3,000.00 |
| preference settlement |
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11/17/03 |
| Quake City Casuals, Inc |
| 5,534.00 |
| preference settlement |
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11/17/03 |
| The Allen Company (1 of 6 payments) |
| 833.00 |
| preference settlement |
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11/17/03 |
| Digispec |
| 30,000.00 |
| preference settlement |
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11/17/03 |
| Traffic Works, Inc. |
| 1,000.00 |
| preference settlement |
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11/19/03 |
| preference settlement |
| 4,050.00 |
| 1 wire |
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11/21/03 |
| Jumbo CD interest |
| 5,833.33 |
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11/30/03 |
| MM Inerest |
| 327.51 |
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| Total |
| 193,738 |
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1
Exhibit C
HA2003, Inc.
Case No. 02 B 12059 (Jointly Administered)
Monthly Operating Report - November 2003
Clear |
| Check |
| Check # |
| Description |
| Disbursements |
| Note |
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11/03/03 |
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| ADP TX/FINCL SVC ADP - TAX |
| (12,382.48 | ) | Correction - MSS - Taxes for November Severence $50k |
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11/05/03 |
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| ADP Payroll fees |
| (71.58 | ) |
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11/14/03 |
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| ADP Tax Services |
| (56.00 | ) |
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11/17/03 |
| 11/13/03 |
| 1035 |
| FedEx |
| (32.85 | ) |
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11/19/03 |
| 11/13/03 |
| 1034 |
| LeBoeuf, Lamb, Greene & McRae |
| (263,026.05 | ) | July/August 2003 - 80 fees, 100% expenses |
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11/24/03 |
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| ADP TX/FINCL SVC ADP - TAX |
| (12,707.02 | ) | wire for 2001 payroll taxes due to IRS |
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11/25/03 |
| 11/13/03 |
| 1036 |
| US Trustee |
| (8,500.00 | ) | 3rd quarter 2003 fees |
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11/28/03 |
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| ADP TX/FINCL SVC ADP - TAX |
| (20,450.00 | ) | MSS - Taxes for December 2003 Severence $50k |
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| Total |
| (317,226 | ) |
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Exhibit D
HA2003, Inc.
Case No. 02 B 12059 (Jointly Administered)
Monthly Operating Report - November 2003
Premier - intercompany |
| 2,804,414 |
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HIG - assumed float |
| 141,848 |
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Beanstalk - note receivable |
| 362,500 |
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Ha-Lo Holdings, BV (HIG) - note receivable |
| 4,589,963 |
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Upshot Escrow |
| 1,000,000 |
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Total |
| 8,898,725 |
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Exhibit E
HA2003, Inc.
Monthly Operating Report - November 2003
Case No. 02 B 12059 (Jointly Administered)
Mayer Brown Rowe |
| 3,402 |
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Petersen & Lefkofsky |
| 575 |
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Fasken Martineau Dumoulin |
| 2,413 |
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Logan & Co |
| 16,649 |
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Wildman Harrold Allen & Dixon |
| 25,863 |
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Sachnoff & Weaver |
| 34,603 |
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Ungaretti & Harris |
| 4,064 |
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Ernst & Young* |
| 127,599 |
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FTI Consulting* |
| 58,786 |
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Orrick, Herrington* |
| 423,733 |
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Piper Rudnick* |
| 808,740 |
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Saul Ewing* |
| 25,088 |
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Silverman Consulting* |
| 185,704 |
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Sperling & Slater* |
| 961,733 |
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Neal Gerber & Eisenberg* |
| 363,276 |
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LeBoeuf, Lamb Greene & McRae* |
| 457,339 |
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Alix Partners* |
| 289,979 |
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Salans* |
| 37,174 |
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Total |
| 3,826,720 |
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* estimate
Exhibit F
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CASE NAME: HA2003, INC. |
| CASE NO.: 02 B 12059 |
FOR OCTOBER 1 THRU NOVEMBER 30, 2003
Debtors in possession and trustees are required to pay all taxes incurred after the filing of their Chapter 11 petition on an as due basis. Please indicate whether the following post petition taxes or withholdings have been paid currently.
1. |
| Federal Income Taxes |
| Yes ý |
| No o |
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2. |
| FICA withholdings |
| Yes ý |
| No o |
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3. |
| Employee’s withholdings |
| Yes ý |
| No o |
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4. |
| Employer’s FICA |
| Yes ý |
| No o |
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5. |
| Federal Unemployment Taxes |
| Yes ý |
| No o |
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6. |
| State Income Tax |
| Yes ý |
| No o |
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7. |
| State Employee withholdings |
| Yes ý |
| No o |
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8. |
| All other state taxes |
| Yes o |
| No ý |
If any of the above have not been paid, state below the tax not paid, the amounts past due and the date of last payment.
Item 8
• Michigan Foreign Corporation Fee, $23,870 due May 15, 2002 (form not received until September).
• Delaware Franchise Tax, $92,000 due December 1, 2002.
• The aforementioned taxes have not been paid pending resolution of issues relating to authorized, issued and outstanding stock and related capital, the basis for these taxes.
Exhibit G
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CASE NAME: LW2003, INC. |
| CASE NO.: 02 B 13224 |
FOR OCTOBER 1 THRU NOVEMBER 30, 2003
TAX QUESTIONNAIRE
Debtors in possession and trustees are required to pay all taxes incurred after the filing of their Chapter 11 petition on an as due basis. Please indicate whether the following post petition taxes or withholdings have been paid currently.
1. |
| Federal Income Taxes |
| Yes ý |
| No o |
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2. |
| FICA withholdings |
| Yes ý |
| No o |
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3. |
| Employee’s withholdings |
| Yes ý |
| No o |
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4. |
| Employer’s FICA |
| Yes ý |
| No o |
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5. |
| Federal Unemployment Taxes |
| Yes ý |
| No o |
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6. |
| State Income Tax |
| Yes ý |
| No o |
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7. |
| State Employee withholdings |
| Yes ý |
| No o |
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8. |
| All other state taxes |
| Yes ý |
| No o |
If any of the above have not been paid, state below the tax not paid, the amounts past due and the date of last payment.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DECLARATION UNDER PENALTY OF PERJURY
I, MARC S. SIMON, acting as the duly authorized agent for the Debtor in Possession (Trustee) declare under penalty of perjury under the laws of the United States that I have read and I certify that the figures, statements, disbursement itemizations, and account balances as listed in this Monthly Report of the Debtor are true and correct as of the date of this report to the best of my knowledge, information and belief.
| /s/ Marc S. Simon |
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| For the Debtor In Possession (Trustee) | |||
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| Print or type name and capacity of | |||
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| Marc S. Simon |
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| CEO |
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DATED: | 12-22-03 |
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