Exhibit 99.5
Interim Financial Statements of |
|
MARCEL DESROCHERS INC. |
|
Seven-month period ended June 30, 2007 |
MARCEL DESROCHERS INC.
Interim Financial Statements
Seven-month period ended June 30, 2007
Interim Financial Statements | |
| |
Interim Balance Sheet | 1 |
| |
Interim Statement of Earnings | 2 |
| |
Interim Statement of Retained Earnings | 3 |
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Interim Statement of Cash Flows | 4 |
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Notes to Interim Financial Statements | 5 |
MARCEL DESROCHERS INC.
Interim Balance Sheet
June 30, 2007, with comparative figures for November 30, 2006
| | 2007 | | 2006 | |
| | (Unaudited) | | (Audited) | |
| | | | | |
Assets | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 1,968,402 | | $ | 1,388,229 | |
Accounts receivable | | 590,579 | | 1,046,652 | |
Due from a related company, non-interest bearing | | 73,048 | | — | |
Inventories | | 860,072 | | 1,020,977 | |
Future income taxes | | 19,467 | | 19,467 | |
Prepaid expenses | | 45,814 | | 41,949 | |
| | 3,557,382 | | 3,517,274 | |
| | | | | |
Property, plant and equipment | | 2,049,318 | | 2,146,966 | |
| | | | | |
Future income taxes | | 11,822 | | 11,822 | |
| | | | | |
| | $ | 5,618,522 | | $ | 5,676,062 | |
| | | | | | | |
Liabilities and Shareholders’ Equity | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable and accrued liabilities | | $ | 164,463 | | $ | 232,335 | |
Income taxes payable | | 113,940 | | 48,896 | |
Warranty liability | | 31,755 | | 74,102 | |
Dividends payable | | — | | 100,000 | |
Customer deposits | | 60,245 | | — | |
Mortgage loan | | 725,435 | | 776,120 | |
Redeemable shares | | 2,611,807 | | 2,611,807 | |
| | 3,707,645 | | 3,843,260 | |
| | | | | |
Shareholders’ equity: | | | | | |
Share capital | | 1 | | 1 | |
Retained earnings | | 1,910,876 | | 1,832,801 | |
| | 1,910,877 | | 1.832,802 | |
| | | | | |
Contingency (note 2) | | | | | |
Subsequent event (note 3) | | | | | |
| | | | | |
| | $ | 5,618,522 | | $ | 5,676,062 | |
See accompanying notes to financial statements.
1
MARCEL DESROCHERS INC.
Interim Statement of Earnings
Seven-month periods ended June 30, 2007 and June 30, 2006
| | June 30,
2007 | | June 30,
2006 | |
| | (Unaudited) | | (Unaudited) | |
| | | | | |
Sales | | $ | 2,846,584 | | $ | 2,130,383 | |
| | | | | |
Cost of goods sold | | 1,201,202 | | 1,198,689 | |
| | | | | |
Gross profit | | 1,645,382 | | 931,694 | |
| | | | | |
Operating expenses: | | | | | |
Selling, general and administrative | | 325,245 | | 320,654 | |
Research and development | | 475 | | 14,236 | |
Amortization of property, plant and equipment | | 87,757 | | 94,338 | |
Loss on disposal of property, plant and equipment | | 3,963 | | — | |
Interest on long-term debt | | 29,284 | | 28,767 | |
Foreign exchange | | 78,408 | | 26,532 | |
| | 525,132 | | 484,527 | |
| | | | | |
Earnings before other items | | 1,120,250 | | 447,167 | |
| | | | | |
Other items: | | | | | |
Other revenues | | 23,645 | | 16,979 | |
| | 23,645 | | 16,979 | |
| | | | | |
Earnings before income taxes | | 1,143,895 | | 464,146 | |
| | | | | |
Income taxes: | | | | | |
Current | | 345,819 | | — | |
| | 345,819 | | — | |
| | | | | |
Net earnings | | $ | 798,076 | | $ | 464,146 | |
| | | | | | | | |
See accompanying notes to financial statements.
2
MARCEL DESROCHERS INC.
Interim Statement of Retained Earnings
Seven-month period ended June 30, 2007, with comparative figures for the year ended November 30, 2006
| | June 30,
2007 | | November 30,
2006 | |
| | (Unaudited) | | (Audited) | |
| | | | | |
Retained earnings, beginning of period | | $ | 1,832,801 | | $ | 1,349,272 | |
| | | | | |
Dividend on Class A shares | | (720,001 | ) | — | |
| | | | | |
Excess of redemption value of Class A shares over book value | | — | | (149,974 | ) |
| | | | | |
Dividend tax refund, net | | — | | 13,161 | |
| | | | | |
Net earnings | | 798,076 | | 620,342 | |
| | | | | |
Retained earnings, end of period | | $ | 1,910,876 | | $ | 1,832,801 | |
See accompanying notes to financial statements.
3
MARCEL DESROCHERS INC.
Interim Statement of Cash Flows
Seven-month periods ended June 30, 2007 and June 30, 2006
| | June 30, | | June 30, | |
| | 2007 | | 2006 | |
| | (Unaudited) | | (Unaudited) | |
| | | | | |
Cash flows from operating activities: | | | | | |
Net earnings | | $ | 798,076 | | $ | 464,146 | |
Adjustments to: | | | | | |
Amortization of property, plant and equipment | | 87,757 | | 94,338 | |
Loss on disposal of property, plant and equipment | | 3,963 | | — | |
Foreign exchange | | 10,837 | | 6,154 | |
Future income taxes | | — | | (210,455 | ) |
Dividend paid on redeemable shares | | (100,000 | ) | — | |
Net changes in operating assets and liabilities | | 628,183 | | (201,354 | ) |
| | 1,428,816 | | 152,829 | |
| | | | | |
Cash flows from financing activities: | | | | | |
Dividend paid on Class A shares | | (720,001 | ) | — | |
Repayment of long-term debt | | (50,685 | ) | (50,685 | ) |
Redemption of shares | | — | | — | |
Dividend tax refund | | — | | — | |
| | (770,686 | ) | (50,685 | ) |
| | | | | |
Cash flows from investing activities: | | | | | |
Increase in due from a related company | | (73,048 | ) | (375,000 | ) |
Disposals (additions) of (to) property, plant and equipment | | 5,928 | | (6,090 | ) |
Proceeds from disposal of property, plant and equipment | | — | | 700 | |
| | (67,120 | ) | (380,390 | ) |
| | | | | |
Foreign exchange loss on cash and cash equivalents denominated in foreign currency | | (10,837 | ) | (6,154 | ) |
| | | | | |
Net increase (decrease) in cash and cash equivalents | | 580,173 | | (284,400 | ) |
| | | | | |
Cash and cash equivalents, beginning of period | | 1,388,229 | | 1,338,859 | |
| | | | | |
Cash and cash equivalents, end of period | | $ | 1,968,402 | | $ | 1,054,459 | |
| | | | | |
Supplemental cash flow information: | | | | | |
Cash | | $ | 268,260 | | $ | 1,004,102 | |
Cash in foreign currency | | 270,142 | | 50,357 | |
Short-term bond | | 1,430,000 | | — | |
| | | | | |
| | $ | 1,968,402 | | $ | 1,054,459 | |
See accompanying notes to financial statements.
4
MARCEL DESROCHERS INC.
Notes to Interim Financial Statements
Seven-month period ended June 30, 2007
The Company was incorporated under Part 1A of the Quebec Companies Act. Its main business activity is the manufacture of movie theatre equipment.
1.Significant accounting policy:
Basis of presentation:
These interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) using the Canadian dollar as the reporting currency. They have been prepared on a basis consistent with those followed in the most recent audited financial statements. These interim financial statements do not include all of the information and notes required by GAAP for annual financial statements and, therefore, should be read in conjunction with the audited financial statements and notes included in the Company’s audited financial statements for the year ended November 30, 2006.
The results of operations for the interim periods are not necessarily indicative of the results of operations for the full year. Marcel Desrochers Inc. expects seasonality not to be a material factor in quarterly results.
2.Contingency:
The Company is party to claims and litigation arising in the normal course of operations. The Company does not expect the resolution of these matters to have a materially adverse effect on its financial position or results of operations.
3.Subsequent event:
On October 12, 2007, Ballantyne of Omaha Inc., a U.S. publicly listed company, acquired the majority of Marcel Desrochers Inc.’s net assets for $3,400,000 U.S. dollars in cash, subject to post closing adjustments. Excluded from the assets acquired were the building and related indebtedness which were retained by the seller.
4.Supplemental cash flow disclosure and other information:
Net changes in operating assets and liabilities:
| | June 30, | | June 30, | |
| | 2007 | | 2006 | |
| | (Unaudited) | | (Unaudited) | |
| | | | | |
Accounts receivable | | $ | 456,073 | | $ | 200,635 | |
Inventories | | 160,905 | | 56,101 | |
Prepaid expenses | | (3,865 | ) | 8,334 | |
Accounts payable and accrued liabilities | | (67,872 | ) | (35,890 | ) |
Income taxes | | 65,044 | | (386,944 | ) |
Warranty liability | | (42,347 | ) | 2,472 | |
Customer deposits | | 60,245 | | (46,062 | ) |
| | $ | 628,183 | | $ | (201,354 | ) |
5.United States accounting principles:
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in Canada (Canadian GAAP), which, in the case of the Company, conform in all material respects with those in the United States (U.S. GAAP), except as follows:
Redeemable shares
Canadian GAAP requires the classification of shares redeemable at the option of the holder at any time as current liabilities. Pursuant to accounting series release No. 268, presentation in financial statements of redeemable preferred stocks (“ASR 268”), these shares are temporary equity and are classified in a separate section of the balance sheet, after long-term debt and above shareholders’ equity and measured at their redemption amount.
Dividends issued on these redeemable shares classified as current liabilities are charged to earnings under Canadian GAAP, whereas they are recorded as a reduction of retained earnings under ASR 268.
5
MARCEL DESROCHERS INC.
Notes to Interim Financial Statements, Continued
Seven-month period ended June 30, 2007
5.United States accounting principles (continued):
Reconciliation of net income
The following table reconciles the net income as reported on the Statement of Earnings to the net income that would have been reported had the financial statements been prepared in accordance with U.S. GAAP:
| | June 30,
2007 | | June 30,
2006 | |
| | (Unaudited) | | (Unaudited) | |
| | | | | |
Net income in accordance with Canadian GAAP | | $ | 798,076 | | $ | 464,146 | |
Adjustment for dividends declared | | — | | — | |
| | | | | |
Net income in accordance with U.S. GAAP | | $ | 798,076 | | $ | 464,146 | |
Condensed Balance Sheet in accordance with U.S. GAAP
The following summarizes the Balance Sheet amounts in accordance with U.S. GAAP:
| | June 30,
2007 | | November 30,
2006 | |
| | (Unaudited) | | (Audited) | |
| | | | | |
Current assets | | $ | 3,557,382 | | $ | 3,517,274 | |
Non-current assets | | 2,061,140 | | 2,158,788 | |
| | | | | |
| | $ | 5,618,522 | | $ | 5,676,062 | |
| | | | | |
Current liabilities | | $ | 1,095,838 | | $ | 1,231,453 | |
Redeemable shares | | 2,611,807 | | 2,611,807 | |
Shareholders’ equity | | 1,910,877 | | 1,832,802 | |
| | | | | |
Total liabilities and shareholders’ equity | | $ | 5,618,522 | | $ | 5,676,062 | |
6
MARCEL DESROCHERS INC.
Notes to Interim Financial Statements, Continued
Seven-month period ended June 30, 2007
5.United States accounting principles (continued):
Condensed Statement of Cash Flows in accordance with U.S. GAAP
The following summarizes the Statement of Cash Flows in accordance with U.S. GAAP. The differences are due to the treatment of the redeemable shares discussed above.
| | June 30,
2007 | | June 30,
2006 | |
| | (Unaudited) | | (Unaudited) | |
| | | | | |
Operating activities | | $ | 1,528,815 | | $ | 152,829 | |
Financing activities | | (870,685 | ) | (50,685 | ) |
Investing activities | | (67,120 | ) | (380,390 | ) |
Foreign exchange loss on cash and cash equivalents denominated in foreign currency | | (10,837 | ) | (6,154 | ) |
| | | | | |
Increase (decrease) in cash and cash equivalents | | 580,173 | | (284,400 | ) |
| | | | | |
Cash and cash equivalents, beginning of year | | 1,388,229 | | 1,338,859 | |
| | | | | |
Cash and cash equivalents, end of year | | $ | 1,968,402 | | $ | 1,054,459 | |
7
