LAYNE CHRISTENSEN COMPANY FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 28, 2005
LAYNE CHRISTENSEN COMPANY
(Exact Name of Registrant as Specified in Charter)
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Delaware |
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0-20578 |
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48-0920712 |
(State or Other Jurisdiction of
Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.) |
1900 Shawnee Mission Parkway
Mission Woods, Kansas 66205
(Address of Principal Executive Offices)
(913) 362-0510
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CF$ 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4 (c))
Layne Christensen Companys Current Report on Form 8-K filed October 4, 2005, is hereby
amended to (i) include the audited financial statements of Reynolds, Inc. as of December 31, 2004
and 2003, and for each of the three years in the period ended December 31, 2004, 2003 and 2002,
together with the reports of BKD, LLP and PricewaterhouseCoopers, LLP with respect thereto, and the
unaudited financial statements of Reynolds, Inc. as of September 30, 2005 and for the nine months
ended September 30, 2005 and 2004, (ii) include the unaudited pro forma consolidated financial
statements of Layne Christensen Company (Layne, or the Company), pro forma for the merger of
Reynolds, Inc. with and into a wholly-owned subsidiary of Layne, for the year ended January 31,
2005, and for the nine months ended October 31, 2005, and (iii) revise the exhibit index as set
forth in Item 9.01 (c).
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
The audited financial statements of Reynolds, Inc. as of December 31, 2004 and 2003 and for the
years ended December 31, 2004, 2003 and 2002 are included following this Item 9.01(a).
The unaudited financial statements of Reynolds, Inc. as of September 30, 2005 and for the nine
months ended September 30, 2005 and 2004 are included following this Item 9.01(a).
2
Reynolds, Inc.
December 31, 2004, 2003 and 2002
Contents
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Independent Accountants Report of BKD, LLP |
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4 |
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Independent Auditors Report of PricewaterhouseCoopers LLP |
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5 |
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Consolidated Financial Statements as of and for the Year Ended December 31, 2004 and Consolidated
and Combined Financial Statements as of December 31, 2003 and for the Years Ended December 31,
2003 and 2002 |
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Balance Sheets |
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6 |
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Statements of Income |
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7 |
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Statements of Stockholders Equity |
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8 |
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Statements of Cash Flows |
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9 |
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Notes to Financial Statements |
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10 |
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3
Independent Accountants Report
Board of Directors and Stockholders
Reynolds, Inc.
Orleans, Indiana
We have audited the accompanying consolidated balance sheets of Reynolds, Inc. as of
December 31, 2004 and 2003 and the related consolidated statements of income, stockholders
equity and cash flows for the years then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on
these 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 audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Reynolds, Inc. as of December 31, 2004 and
2003, respectively, and the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United States of
America.
/s/ BKD, LLP
February 28, 2005
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1600 W. Bloomfield Road, Suite B
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Bloomington, IN 47403-2043
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812 336-8550
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Fax 812 331-3037 |
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A member of |
bkd.com
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Beyond Your Numbers
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Moores Rowland International |
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of Reynolds, Inc.
and Reynolds Transport Co.:
In our opinion, the accompanying consolidated and combined statements of income, of stockholders
equity and of cash flows present fairly, in all material respects, the results of operations of
Reynolds, Inc. and its subsidiaries and Reynolds Transport Co. (referred to hereafter collectively
as the Company) and their cash flows for the year ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America. These financial
statements are the responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
/s/
PricewaterhouseCoopers LLP
February 28, 2003
Louisville, Kentucky
5
Reynolds, Inc.
Consolidated and Combined Balance Sheets
December 31, 2004 and 2003
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2004 |
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2003 |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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$ |
8,805,014 |
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$ |
4,971,864 |
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Investments |
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11,726,257 |
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4,940,297 |
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Accounts receivable, net of allowance: 2004 - $482,871;
2003 - $50,000 |
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35,221,074 |
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33,142,544 |
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Costs and estimated earnings in excess of billings on
uncompleted contracts |
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4,706,024 |
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4,768,413 |
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Inventories |
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2,360,840 |
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2,391,670 |
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Other current assets |
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17,898 |
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6,333 |
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Total current assets |
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62,837,107 |
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50,221,121 |
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Investments |
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3,155,845 |
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1,047,366 |
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Property and Equipment, net |
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17,991,296 |
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19,861,315 |
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Acquired Intangible Asset, net |
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1,396,043 |
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1,508,326 |
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$ |
85,380,291 |
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$ |
72,638,128 |
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Liabilities and Stockholders Equity |
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Current Liabilities |
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Outstanding checks in excess of bank balance |
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$ |
755,817 |
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$ |
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Current portion of long-term debt |
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2,682,735 |
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3,465,479 |
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Accounts Payable |
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10,116,044 |
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8,087,765 |
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Billings in excess of costs and estimated earnings on uncompleted
contracts |
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16,502,269 |
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14,610,744 |
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Accrued compensation |
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2,119,583 |
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1,354,910 |
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Other accrued expenses |
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1,056,772 |
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543,800 |
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Total current liabilities |
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33,233,220 |
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28,062,698 |
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Long-Term Debt |
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2,791,615 |
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4,823,852 |
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Deferred Income Taxes |
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1,141,000 |
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Stockholders Equity |
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Common Stock, no-par value;
authorized shares: 1,000,000 2004 and 1,001,000 2003;
issued shares: 476,700 2004 and 459,720 2003 |
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4,188,359 |
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1,695,000 |
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Retained Earnings |
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45,167,097 |
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36,915,578 |
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49,355,456 |
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38,610,578 |
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$ |
85,380,291 |
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$ |
72,638,128 |
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See Notes to Consolidated and Combined Financial Statements.
6
Reynolds, Inc.
Consolidated and Combined Statements of Income
Years Ended December 31, 2004, 2003 and 2002
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2004 |
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2003 |
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2002 |
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Contract Revenue Earned |
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$ |
176,961,264 |
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$ |
159,434,332 |
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$ |
165,867,068 |
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Cost of Revenue Earned |
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157,891,315 |
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141,869,749 |
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145,352,352 |
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Gross Profit |
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19,069,949 |
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17,564,583 |
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20,514,716 |
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General and Administrative Expenses |
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9,776,624 |
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9,232,296 |
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9,305,754 |
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Operating Income |
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9,293,325 |
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8,332,287 |
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11,208,962 |
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Other Income (Expense) |
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Gain on sale of property and equipment |
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56,133 |
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81,415 |
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67,471 |
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Interest income |
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193,567 |
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190,966 |
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378,048 |
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Interest expense |
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(263,919 |
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(314,503 |
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(256,156 |
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(14,219 |
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(42,122 |
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189,163 |
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Income Before Income Taxes |
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9,279,106 |
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8,290,165 |
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11,398,325 |
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Provision (Benefit) for Income Taxes |
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(1,351,272 |
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1,515,000 |
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Net Income |
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$ |
10,630,378 |
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$ |
6,775,165 |
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$ |
11,398,325 |
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Basic Earnings Per Share |
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$ |
22.30 |
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$ |
14.74 |
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$ |
25.03 |
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See Notes to Consolidated and Combined Financial Statements.
7
Reynolds, Inc.
Consolidated and Combined Statements of Stockholders Equity
Years Ended December 31, 2004, 2003 and 2002
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Common Stock Issued |
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Retained |
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Shares |
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Amount |
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Earnings |
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Total |
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Balance, January 1, 2002 |
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452,696 |
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$ |
1,312,600 |
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$ |
33,028,788 |
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$ |
33,341,388 |
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Net income |
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11,398,325 |
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11,398,325 |
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Stockholders distributions |
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(9,773,975 |
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(9,773,975 |
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Common stock issued |
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1,000 |
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71,000 |
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71,000 |
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Stock options exercised |
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3,249 |
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136,450 |
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136,450 |
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Common stock repurchased |
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(1,600 |
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(24,000 |
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(89,600 |
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(113,600 |
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Balance, December 31, 2002 |
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455,345 |
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1,496,050 |
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33,563,538 |
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35,059,588 |
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Net income |
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6,775,165 |
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6,775,165 |
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Stockholders distributions |
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(3,423,125 |
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(3,423,125 |
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Common stock issued |
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500 |
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37,500 |
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37,500 |
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Stock options exercised |
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3,875 |
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161,450 |
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161,450 |
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Balance, December 31, 2003 |
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459,720 |
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1,695,000 |
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36,915,578 |
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38,610,578 |
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Net income |
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10,630,378 |
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10,630,378 |
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Reorganization shares redeemed |
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(95 |
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(1,000 |
) |
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(2,378,859 |
) |
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(2,379,859 |
) |
Reorganization shares issued |
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15,000 |
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|
2,379,859 |
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|
2,379,859 |
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Common stock issued |
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|
325 |
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|
26,975 |
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|
26,975 |
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Stock options exercised |
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|
1,750 |
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|
87,525 |
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|
87,525 |
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Balance, December 31, 2004 |
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476,700 |
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$ |
4,188,359 |
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$ |
45,167,097 |
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$ |
49,355,456 |
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See Notes to Consolidated and Combined Financial Statements.
8
Reynolds, Inc.
Consolidated and Combined Statements of Cash Flows
Years Ended December 31, 2004, 2003 and 2002
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2004 |
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2003 |
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2002 |
|
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|
Operating Activities |
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Net income |
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$ |
10,630,378 |
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$ |
6,775,165 |
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$ |
11,398,325 |
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Adjustments to reconcile net income to cash provided by operating activities: |
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Depreciation and amortization |
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6,524,964 |
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7,151,255 |
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6,609,247 |
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Gain on sale of property and equipment |
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(56,133 |
) |
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(81,415 |
) |
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(67,471 |
) |
Deferred income taxes |
|
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(1,141,000 |
) |
|
|
1,141,000 |
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Changes in |
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Accounts receivable |
|
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(2,078,530 |
) |
|
|
1,965,413 |
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(584,772 |
) |
Costs and estimated earnings in excess of billings on
uncompleted contracts |
|
|
62,389 |
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|
284,843 |
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(1,013,645 |
) |
Inventories |
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30,830 |
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425,009 |
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(774,424 |
) |
Other current assets |
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(11,565 |
) |
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514,133 |
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(113,189 |
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Accounts payable |
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2,028,279 |
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(422,096 |
) |
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(1,295,618 |
) |
Billings in excess of costs and estimated earnings on
uncompleted contracts |
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1,891,525 |
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(3,109,223 |
) |
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(7,034,561 |
) |
Accrued expenses |
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1,277,645 |
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(2,153,641 |
) |
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(717,741 |
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Net cash provided by operating activities |
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19,158,782 |
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12,490,443 |
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6,406,151 |
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Investing Activities |
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Proceeds from sale of property and equipment |
|
|
574,605 |
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|
917,142 |
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|
1,401,878 |
|
Purchase of property and equipment |
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(4,065,886 |
) |
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(3,383,653 |
) |
|
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(7,726,988 |
) |
Proceeds
from held-to-maturity securities |
|
|
5,335,405 |
|
|
|
7,561,725 |
|
|
|
4,628,301 |
|
Purchase of
held-to-maturity securities |
|
|
(14,229,844 |
) |
|
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(5,523,015 |
) |
|
|
(4,517,429 |
) |
Purchase of acquired intangible asset |
|
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|
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|
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|
|
(750,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(12,385,720 |
) |
|
|
(427,801 |
) |
|
|
(6,964,238 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net change of outstanding checks in excess of bank balance |
|
|
755,817 |
|
|
|
(2,445,072 |
) |
|
|
2,445,072 |
|
Borrowings under line-of-credit agreement |
|
|
|
|
|
|
|
|
|
|
15,902,000 |
|
Repayments under line-of-credit agreement |
|
|
|
|
|
|
|
|
|
|
(16,402,000 |
) |
Principal payments under long-term debt |
|
|
(3,810,229 |
) |
|
|
(3,469,307 |
) |
|
|
(2,416,765 |
) |
Proceeds
from issuance of notes payable |
|
|
|
|
|
|
|
|
|
|
3,302,461 |
|
Proceeds from common stock issued |
|
|
26,975 |
|
|
|
37,500 |
|
|
|
71,000 |
|
Stockholders distributions |
|
|
|
|
|
|
(3,423,125 |
) |
|
|
(9,773,975 |
) |
Proceeds from stock options exercised |
|
|
87,525 |
|
|
|
161,450 |
|
|
|
136,450 |
|
Common stock retired |
|
|
|
|
|
|
|
|
|
|
(113,600 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(2,939,912 |
) |
|
|
(9,138,554 |
) |
|
|
(6,849,357 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash and Cash Equivalents |
|
|
3,833,150 |
|
|
|
2,924,088 |
|
|
|
(7,407,444 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, Beginning of Year |
|
|
4,971,864 |
|
|
|
2,047,776 |
|
|
|
9,455,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End of Year |
|
$ |
8,805,014 |
|
|
$ |
4,971,864 |
|
|
$ |
2,047,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flows Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
263,919 |
|
|
$ |
314,503 |
|
|
$ |
255,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment and long-term debt |
|
$ |
995,248 |
|
|
$ |
7,400,747 |
|
|
|
|
|
See Notes to Consolidated and Combined Financial Statements.
9
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Reynolds, Inc. earns revenues predominately from the construction of water and sewer lines,
sewer rehabilitation and water and waste water treatment plants. The Companys customers are
principally municipalities and industrial companies. Construction projects are performed
throughout the United States; however, such projects occur primarily in the midwestern and
southeastern United States.
The Companys main office is in Orleans, Indiana with field offices in Birmingham,
Alabama; Baytown, Texas; Fairburn, Georgia; Louisville, Kentucky and Indianapolis,
Indiana.
The wholly-owned subsidiaries of the Company earn revenues from transportation services,
manufacturing of inliner components and royalties and commissions from a license
agreement.
Principles of Consolidation
Effective January 2004, Reynolds, Inc. and Reynolds Transport Co. entered into a tax-free
reorganization agreement. As a result of this agreement, Reynolds Transport Co. became a
wholly-owned subsidiary of Reynolds, Inc. The assets of Reynolds Transport Co. were combined
at historical cost with Reynolds, Inc. since the assets were under the common control of
Reynolds, Inc.
The 2004 consolidated financial statements include Reynolds, Inc. and its wholly-owned
subsidiaries: Reynolds Transport Co., Reynolds Inliner, LLC, Liner Products, LLC, and
Inliner Technologies, LLC. Intercompany accounts are eliminated upon consolidation.
The 2003 and 2002 consolidated and combined financial statements, include Reynolds, Inc.
(consolidated with its wholly-owned subsidiaries) and Reynolds Transport Co. The companies
are commonly controlled and are related in their operation. Intercompany accounts are
eliminated in consolidation and combination.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America 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.
Cash Equivalents
The Company considers all liquid investments with original maturities of three months or less
to be cash equivalents. At December 31, 2004, 2003 and 2002 cash equivalents consisted
primarily of money market accounts with banks and brokers. At December 31, 2004, the
Companys cash accounts exceeded federally insured limits by approximately $24,055,000.
10
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Inventory Pricing
Inventories consist of inliner materials, parts and other items. Inventories are stated at the
lower of cost or market. Costs of inliner materials are determined using the first-in,
first-out (FIFO) method. Costs of parts and other items are determined using the
weighted-average method.
Investments
Debt securities for which the Company has the positive intent and ability to hold until
maturity are classified as held-to-maturity securities and valued at historical cost, adjusted
for amortization of premiums and accretion of discounts computed by the level-yield method.
Realized gains and losses, based on the specifically identified cost of the security, are
included in net income.
Accounts Receivable
Accounts receivable are based on amounts billed to customers. The Company provides an
allowance for doubtful accounts, which is based upon a review of outstanding receivables,
historical collection information and existing economic conditions. Accounts receivable are
ordinarily due 30 days after the issuance of the invoice. Contract retentions are due 30 days
after completion of the project and acceptance by the owner. Delinquent receivables are
written off based on individual credit evaluation and specific circumstances of the customer.
Construction Joint Ventures
The Company, in the normal conduct of its business, enters into joint bid arrangements with
other contractors. The agreements specify each item of the contract to be completed, which
party will complete it and the applicable unit price accepted. Further, to the extent there
may be profits and losses, each party agrees to look only to its separate segment of the
contract and the revenue it generates. The joint venture partner named the sponsor submits all
billings to the customer and collects all revenue when due. Such agreements are treated as
agency agreements for financial statement purposes; however, both parties to the agreements
have joint liability to complete the project.
Property and Equipment
Property and equipment are depreciated over the estimated useful life of each asset. Annual
depreciation is primarily computed by the straight-line method for buildings and the
declining-balance method for other assets. Depreciation expense was $6,392,681,
$7,018,972, and $6,314,038 in 2004, 2003 and 2002, respectively. The lives used for items
within each property classification are as follows:
|
|
|
|
|
|
|
|
|
Years |
|
|
Buildings
|
|
|
31.5 |
|
|
|
Construction Equipment
|
|
|
5 |
|
|
|
Autos and Trucks
|
|
|
5 |
|
|
|
Office Equipment
|
|
|
7 |
|
|
|
11
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Impairment of Long-Lived Assets
At each balance sheet date or as circumstances indicate necessary, a determination is made by
management as to whether the value of long-lived assets, including assets to be disposed of, has
been impaired. The determination is based on several criteria, including, but not limited to,
revenue trends, undiscounted operating cash flows and other operating factors.
Allocation of Equipment Costs
The Company charges each contract for the use of Company-owned equipment based upon
pre-established monthly rates. The actual equipment costs, including depreciation, are
accumulated separately. The difference between amounts charged to contracts and the actual costs
is included in the financial statements within Cost of Revenue Earned.
Acquired Intangible Asset
The Company has recorded an intangible asset related to its investment in a license agreement.
Amortization is calculated by the straight-line method over a 15-year life. Annually, the
Company assesses the implied fair value of the intangible asset and if it is lower than its
carrying amount, the intangible asset is written down to its implied fair value.
Income Taxes
Effective January 1, 2004, the Reynolds Transport Co. became an S Corporation. This election
resulted in the reversal of the $1,141,000 deferred tax liability and a credit to the provision
for income taxes. Previously, deferred tax assets and liabilities were recognized in the
Reynolds Transport Co. financial statements for the tax effects of differences between the
financial statement and tax bases of assets and liabilities.
The Companys stockholders have elected to have the Companys income taxed as an S Corporation
under provisions of the Internal Revenue Code and a similar section of the state income tax law.
Therefore, taxable income or loss is reported to the individual stockholders for inclusion in
their respective tax returns and no provision for federal and state income taxes is included in
these statements.
Revenue and Cost Recognition
Profits from construction contracts and construction joint ventures are generally recognized by
applying percentages of completion for each year to the total estimated profits for the
respective contracts. The length of each contract varies, but is typically about one year. The
percentages of completion are determined by relating the actual costs of work performed to date
to the current estimated total costs of the respective contracts. Contract costs include all
direct material and labor costs and those indirect costs related to contract performance, such
as indirect labor, supplies, tools, repairs and depreciation costs. Selling, general and
administrative costs are charged to expense as incurred.
12
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
When the estimate on a contract indicates a loss, the Companys policy is to record the
entire loss. The cumulative effect of revisions in estimates of total costs or revenue during
the course of the work is reflected in the accounting period in which the facts that caused the
revision first become known. An amount equal to the costs attributable to unapproved change
orders and claims is included in the total estimated revenue when realization is probable.
Profit from claims is recorded in the year such claims are resolved. Because of the inherent
uncertainties in estimating costs and revenues, it is at least reasonably possible that the
estimates used could change in the near term.
Revenues from transportation services are recognized at the time of shipment.
Revenues from manufactured products are recognized on the date goods are shipped from the
factory and title is transferred.
Royalty and commission revenues from the KMG license agreement are recognized at the time of
service.
Earnings Per Share
Earnings per common share are based upon the weighted average number of common and dilutive
equivalent shares outstanding. Options to purchase common stock are included based on the
treasury stock method for dilutive earnings per share except when their effect is antidilutive.
Options to purchase 6,025, 7,825 and 11,451 shares have been excluded
from weighted average shares in 2004, 2003 and 2002, respectively, as their effect was antidilutive.
Stock Option Plan
At December 31, 2004, the Company has a stock-based employee compensation plan, which is
described more fully in Note 13. The Company accounts for this plan under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation cost is reflected in net income,
as all options granted under this plan had an exercise price equal to the market value of the
underlying common stock on the grant date. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.
13
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31 |
|
2004 |
|
2003 |
|
2002 |
|
Net income, as reported |
|
$ |
10,630,378 |
|
|
$ |
6,775,165 |
|
|
$ |
11,398,325 |
|
Less: Total stock-based
employee compensation cost
determined under the fair
value based method |
|
|
(55,000 |
) |
|
|
(60,000 |
) |
|
|
(10,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income |
|
$ |
10,575,378 |
|
|
$ |
6,715,165 |
|
|
$ |
11,388,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic as reported |
|
$ |
22.30 |
|
|
$ |
14.74 |
|
|
$ |
25.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic pro forma |
|
$ |
22.18 |
|
|
$ |
14.61 |
|
|
$ |
24.99 |
|
|
|
|
Disclosure About Fair Value of Financial Instruments
Fair value is the estimated amount at which financial assets or liabilities could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale.
Cash and cash equivalents, receivables, accounts payable, bank loans payable and long-term debt
have carrying values that approximate fair values. Investment fair values equal quoted market
prices, if available. If quoted market prices are not available, fair value is estimated based
on quoted market prices of similar securities.
Reclassifications
Certain reclassifications have been made to the 2003 and 2002 financial statements to conform to
the 2004 financial statement presentation. These reclassifications had no effect on net
earnings.
14
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Note 2: Investments
The amortized cost and approximate fair values of held-to-maturity securities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
2003 |
|
|
Current |
|
Noncurrent |
|
Current |
|
Noncurrent |
|
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost |
|
$ |
11,726,257 |
|
|
$ |
3,155,845 |
|
|
$ |
4,940,297 |
|
|
$ |
1,047,366 |
|
Unrealized gains |
|
|
702 |
|
|
|
809 |
|
|
|
2,159 |
|
|
|
|
|
Unrealized losses |
|
|
(28,872 |
) |
|
|
(16,244 |
) |
|
|
(1,802 |
) |
|
|
(359 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate fair
value |
|
$ |
11,698,087 |
|
|
$ |
3,140,410 |
|
|
$ |
4,940,654 |
|
|
$ |
1,047,007 |
|
|
|
|
Maturities of held-to-maturity debt investments at December 31, 2004:
|
|
|
|
|
|
|
|
|
|
|
Amortized |
|
Approximate |
|
|
Cost |
|
Fair Value |
|
|
|
One year or less |
|
$ |
11,726,257 |
|
|
$ |
11,698,087 |
|
After one through five years |
|
|
3,155,845 |
|
|
|
3,140,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
14,882,102 |
|
|
$ |
14,838,497 |
|
|
|
|
Note 3: Accounts Receivable
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
2003 |
|
|
|
Billed |
|
$ |
21,992,083 |
|
|
$ |
22,031,987 |
|
Retainage |
|
|
13,333,166 |
|
|
|
10,770,573 |
|
Related party |
|
|
378,696 |
|
|
|
389,984 |
|
Less allowance for doubtful accounts |
|
|
(482,871 |
) |
|
|
(50,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
35,221,074 |
|
|
$ |
33,142,544 |
|
|
|
|
15
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Note 4: Contracts in Progress
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
2003 |
|
|
|
Costs incurred on uncompleted contracts |
|
$ |
247,688,410 |
|
|
$ |
223,041,355 |
|
Estimated earnings |
|
|
16,811,704 |
|
|
|
13,622,099 |
|
|
|
|
|
|
|
264,500,114 |
|
|
|
236,663,454 |
|
Billings to date |
|
|
(276,296,359 |
) |
|
|
(246,505,785 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(11,796,245 |
) |
|
$ |
(9,842,331 |
) |
|
|
|
Included in the accompanying balance sheet under the following captions:
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
2003 |
|
|
|
Costs and estimated earnings in excess of billings on
uncompleted contracts |
|
$ |
4,706,024 |
|
|
$ |
4,768,413 |
|
Billings in excess of costs and estimated earnings on
uncompleted contracts |
|
|
(16,502,269 |
) |
|
|
(14,610,744 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(11,796,245 |
) |
|
$ |
(9,842,331 |
) |
|
|
|
Note 5: Inventories
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
2003 |
|
|
|
Reynolds Inliner, LLC materials |
|
$ |
912,935 |
|
|
$ |
1,005,974 |
|
Liner Products, LLC raw materials |
|
|
1,096,400 |
|
|
|
1,021,924 |
|
Parts and other |
|
|
351,505 |
|
|
|
363,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,360,840 |
|
|
$ |
2,391,670 |
|
|
|
|
16
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Note 6: Property and Equipment
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
|
|
Land |
|
$ |
332,926 |
|
|
$ |
332,926 |
|
Buildings |
|
|
4,312,850 |
|
|
|
4,312,850 |
|
Construction equipment |
|
|
28,703,238 |
|
|
|
28,591,881 |
|
Autos and trucks |
|
|
22,819,460 |
|
|
|
22,818,697 |
|
Office equipment |
|
|
683,805 |
|
|
|
653,691 |
|
Other |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
|
|
|
|
56,952,279 |
|
|
|
56,810,045 |
|
Less accumulated depreciation |
|
|
(38,960,983 |
) |
|
|
(36,948,730 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
17,991,296 |
|
|
$ |
19,861,315 |
|
|
|
|
Note 7: Acquired Intangible Asset
The Company holds certain patents and trademarks, acquired from KMG Kanal-Muller-Gruppe GmbH
(KMG), for the use of certain sewer rehabilitation technology (the KMG License). These
patents and trademarks were assigned to the Company in conjunction with the cancellation of
an agreement with KMG which licensed the technology to the Company. The technology is used
in providing the Companys services and is also sub-licensed to third parties. The
intangible asset is being carried at the acquisition cost and is being amortized over fifteen
years, the expected economic life of the technology.
The carrying basis and accumulated amortization of the recognized intangible asset at
December 31, 2004 and 2003 was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
|
Gross |
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|
Accumulated |
|
|
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amortization |
|
|
|
|
Amortized intangible asset
KMG License |
|
$ |
1,684,249 |
|
|
$ |
288,206 |
|
|
$ |
1,684,249 |
|
|
$ |
175,923 |
|
|
|
|
Amortization expense for the years ended December 31, 2004 and 2003 was $112,283.
Amortization expense for the year ended December 31, 2002 was $63,640. Estimated amortization
expense for each of the following five years is:
|
|
|
|
|
2005 |
|
$ |
112,000 |
|
2006 |
|
|
112,000 |
|
2007 |
|
|
112,000 |
|
2008 |
|
|
112,000 |
|
2009 |
|
|
112,000 |
|
17
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Note 8: Line of Credit
The Company has a $10,000,000 revolving line of credit expiring on June 30, 2006. At December 31,
2004, 2003 and 2002, there were no borrowings against this line. The line is collateralized by
substantially all of the Companys assets. Interest varies with the banks prime rate, which was
5% on December 31, 2004 and is payable monthly.
The Company also has a $500,000 revolving line of credit due on demand. At December 31, 2004,
2003, and 2002, there were no borrowings against this line. The line is collateralized by
substantially all of the Companys assets. Interest varies with the banks prime rate, which was
5% on December 31, 2004 and is payable monthly.
In conjunction with Liner Products, LLC and Inliner Technologies, LLC, Reynolds, Inc. is party
to and co-guarantor to a $3,500,000 revolving line of credit expiring in January 2006. At
December 31, 2004, 2003 and 2002, there were no borrowings against the line. The line is
collateralized by substantially all of the Companys assets. Interest varies with the banks
prime rate, which was 5% on December 31, 2004 and is payable monthly.
Note 9: Long-term Debt
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
|
|
Equipment contracts notes payable (A) |
|
$ |
1,241,141 |
|
|
$ |
1,862,248 |
|
Notes payable, bank (B) |
|
|
4,233,209 |
|
|
|
6,427,083 |
|
|
|
|
|
|
|
5,474,350 |
|
|
|
8,289,331 |
|
Less current maturities |
|
|
(2,682,735 |
) |
|
|
(3,465,479 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,791,615 |
|
|
$ |
4,823,852 |
|
|
|
|
|
|
|
(A) |
|
Due from January 2004 through January 2006; monthly payments including
interest ranging from $1,480 to $23,000, interest rates range from 0% to 3.6%;
secured by various equipment. |
|
(B) |
|
Due from October 2006 to December 2007; monthly payments plus interest
ranging from $42,000 to $52,000, interest ranges from 4.42% to 4.92% or from 2% to
2.5% plus one-month LIBOR, secured by various equipment. |
Aggregate annual maturities of long-term debt and payments at December 31, 2004 are:
|
|
|
|
|
2005 |
|
$ |
2,682,735 |
|
2006 |
|
|
1,809,348 |
|
2007 |
|
|
982,267 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,474,350 |
|
|
|
|
|
18
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
The notes payable contain certain covenants including restrictions on the incurrence of
additional indebtedness and liens, investments, acquisitions, transfer or sale of assets,
transactions with affiliates, payment of dividends and certain financial maintenance covenants,
including among others, fixed charge coverage, maximum debt to tangible net worth and minimum
ratio of current assets to current liabilities. The Company was in compliance with its
covenants as of December 31, 2004.
Note 10: Income Taxes
The provision for income taxes includes these components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Taxes currently payable (benefit) |
|
$ |
(210,272 |
) |
|
$ |
374,000 |
|
|
$ |
|
|
Deferred income taxes (benefit) |
|
|
(1,141,000 |
) |
|
|
1,141,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) |
|
$ |
(1,351,272 |
) |
|
$ |
1,515,000 |
|
|
$ |
|
|
|
|
|
A reconciliation of income tax expense at the statutory rate to the Companys
actual income tax expense is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Computed at the statutory rate (34%) |
|
$ |
3,154,897 |
|
|
$ |
2,818,656 |
|
|
$ |
3,875,430 |
|
Increase (decrease) resulting from
S corporations and partnership income |
|
|
(3,154,897 |
) |
|
|
(1,860,076 |
) |
|
|
(3,875,430 |
) |
State income taxes |
|
|
(132,570 |
) |
|
|
222,420 |
|
|
|
|
|
Reversal of federal deferred taxes |
|
|
(1,047,000 |
) |
|
|
|
|
|
|
|
|
Other |
|
|
(171,702 |
) |
|
|
334,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual tax expense (benefit) |
|
$ |
(1,351,272 |
) |
|
$ |
1,515,000 |
|
|
$ |
|
|
|
|
|
19
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
The tax effects of temporary differences related to deferred taxes shown on the
balance sheets were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes |
|
$ |
|
|
|
$ |
32,000 |
|
|
$ |
|
|
Net
operating loss carry forward |
|
|
|
|
|
|
|
|
|
|
257,940 |
|
Valuation
allowance |
|
|
|
|
|
|
|
|
|
|
(71,323 |
) |
|
|
|
|
|
|
|
|
|
|
32,000 |
|
|
|
186,617 |
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
(1,173,000 |
) |
|
|
(186,617 |
) |
|
|
|
Net deferred tax liability |
|
$ |
|
|
|
$ |
(1,141,000 |
) |
|
$ |
|
|
|
|
|
The above net deferred tax liability is presented on the balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Deferred tax liability long-term |
|
$ |
|
|
|
$ |
(1,141,000 |
) |
|
$ |
|
|
|
|
|
Note 11: Pension and Profit-Sharing Plans
Pension Plan
The Company has a defined-contribution 401(k) plan covering all employees not covered by a
collective bargaining agreement. The plan allows employees to contribute up to 15% of their
pay on a pre-tax basis. The Companys funding policy is to annually contribute such amounts
as the Company may determine to be appropriate. Contributions to the plan were approximately
$159,000, $153,000 and $141,000 for the years ended December 31, 2004, 2003, and 2002,
respectively.
The Company also made contributions of approximately $868,000, $892,000, and $920,000 for
the years ended December 31, 2004, 2003 and 2002, respectively, to collectively bargained,
multi-employer, defined benefit pension plans in accordance with provisions of labor
contracts, generally based on the number of hours worked. Under the construction industry
exemption provisions of the Multi-employer Pension Plan Amendments Act of 1980, the Company
has no withdrawal liability for unfunded vested benefits relating to these plans.
20
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Note 12: Related Party Transactions
Included in the financial statements are the following amounts that resulted from related
party transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Transactions with Companies
related through common
ownership: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
324,877 |
|
|
$ |
350,969 |
|
|
$ |
230,000 |
|
Cost of revenue earned |
|
|
50,240 |
|
|
|
47,750 |
|
|
|
20,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with Stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
53,819 |
|
|
|
39,015 |
|
|
|
52,797 |
|
Accounts payable |
|
|
|
|
|
|
374,645 |
|
|
|
84,705 |
|
Note 13: Employee Stock Option Plan
The Company has a fixed option plan under which key employees are offered stock at
fair value (as established by the Board of Directors on a yearly basis) and granted
additional stock options at the same price. Typically, an options maximum term is
four years and not more than 25% of the total stock options may be exercised each year.
A summary of the status of the plan at December 31, 2004, 2003 and 2002 changes during the
years then ended is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
Shares |
|
|
Exercise Price |
|
|
Shares |
|
|
Exercise Price |
|
|
Shares |
|
|
Exercise Price |
|
|
|
|
Outstanding beginning of year |
|
|
7,825 |
|
|
$ |
46.43 |
|
|
$ |
11,451 |
|
|
$ |
44.11 |
|
|
|
13,700 |
|
|
$ |
41.64 |
|
Granted |
|
|
|
|
|
|
|
|
|
|
500 |
|
|
|
75.00 |
|
|
|
1,000 |
|
|
|
74.00 |
|
Exercised |
|
|
(1,750 |
) |
|
|
50.01 |
|
|
|
(3,875 |
) |
|
|
41.66 |
|
|
|
(3,249 |
) |
|
|
41.98 |
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired |
|
|
(50 |
) |
|
|
61.00 |
|
|
|
(251 |
) |
|
|
71.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, end of year |
|
|
6,025 |
|
|
$ |
45.27 |
|
|
|
7,825 |
|
|
$ |
46.53 |
|
|
|
11,451 |
|
|
$ |
44.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable end of year |
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
The fair value of options granted is estimated on the date of the grant using the
Black-Scholes method with the following weighted-average assumptions :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Dividend per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Risk-free interest rate |
|
|
1.39 |
% |
|
|
1.03 |
% |
|
|
1.65 |
% |
Expected life of options |
|
4 years |
|
4 years |
|
4 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average fair value of
options granted during the year |
|
$ |
|
|
|
$ |
11.67 |
|
|
$ |
13.72 |
|
The following table summarizes information about stock options under the plan outstanding
at December 31, 2004.
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Remaining |
Exercise Price |
|
Outstanding |
|
|
Contractual Life |
|
$40 |
|
|
5,000 |
|
|
|
5 |
|
$61 |
|
|
150 |
|
|
|
1 |
|
$71 |
|
|
500 |
|
|
|
2 |
|
$75 |
|
|
375 |
|
|
|
3 |
|
Note 14: Earnings Per Share
Earnings per share were computed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Net Income |
|
$ |
10,630,378 |
|
|
$ |
6,775,165 |
|
|
$ |
11,398,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares |
|
|
476,700 |
|
|
|
459,720 |
|
|
|
455,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share |
|
$ |
22.30 |
|
|
$ |
14.74 |
|
|
$ |
25.03 |
|
|
|
|
22
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Note 15: Lines of Business
The Company groups its operations into two lines of business Construction and Inliner. The
two lines of business operate as and are separate legal entities. The accounting policies for
each line are the same as those described in the summary of significant accounting policies.
Financial information for the Companys lines of business is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Contract Revenue Earned |
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
130,166,378 |
|
|
$ |
118,900,668 |
|
|
$ |
140,749,860 |
|
Inliner |
|
|
46,794,886 |
|
|
|
40,533,664 |
|
|
|
25,117,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
176,961,264 |
|
|
$ |
159,434,332 |
|
|
$ |
165,867,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment Contract
Revenue Eliminated
in Consolidation and
Combination |
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
6,600,000 |
|
|
$ |
8,842,188 |
|
|
$ |
11,051,378 |
|
Inliner |
|
|
7,990,814 |
|
|
|
8,609,810 |
|
|
|
3,998,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
14,590,814 |
|
|
$ |
17,451,998 |
|
|
$ |
15,050,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
5,320,198 |
|
|
$ |
5,462,026 |
|
|
$ |
8,781,523 |
|
Inliner |
|
|
3,973,127 |
|
|
|
2,870,261 |
|
|
|
2,427,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,293,325 |
|
|
$ |
8,332,287 |
|
|
$ |
11,208,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
50,268,960 |
|
|
$ |
49,294,826 |
|
|
|
|
|
Inliner |
|
|
19,284,920 |
|
|
|
16,349,402 |
|
|
|
|
|
Corporate |
|
|
15,826,411 |
|
|
|
6,993,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
85,380,291 |
|
|
$ |
72,638,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
23
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Total contract revenue earned by line of business before adjustments and eliminations
includes both revenue to unaffiliated customers (as reported in the Companys consolidated
and combined statements of income and stockholders equity) and intersegment contract
revenue. Intersegment contract revenue is accounted for by the same method as contract
revenue to unaffiliated customers.
Depreciation and amortization and capital expenditures related to the lines of business are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
|
|
Deprecation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
5,631,584 |
|
|
$ |
6,272,402 |
|
|
$ |
6,026,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inliner |
|
|
809,545 |
|
|
|
784,644 |
|
|
|
477,339 |
|
Corporate |
|
|
83,835 |
|
|
|
94,209 |
|
|
|
105,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,524,964 |
|
|
$ |
7,151,255 |
|
|
$ |
6,609,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
4,496,001 |
|
|
$ |
9,511,895 |
|
|
$ |
5,733,487 |
|
Inliner |
|
|
543,227 |
|
|
|
1,262,999 |
|
|
|
1,965,801 |
|
Corporate |
|
|
21,906 |
|
|
|
9,506 |
|
|
|
27,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,061,134 |
|
|
$ |
10,784,400 |
|
|
$ |
7,726,988 |
|
|
|
|
Operating income is contract revenue earned less cost of revenue earned and general and
administrative expenses. In computing operating income, none of the following have been
added or deducted; other income (expense) or provision (benefit) for income taxes.
Identifiable assets by line of business are those assets that are used in the Companys
operations in each industry.
Note 16: Significant Estimates and Concentrations
Accounting principles generally accepted in the United States of America require disclosure
of certain significant estimates and current vulnerabilities due to certain concentrations.
Estimates related to calculating the current estimated total costs and revenue of contracts
in process are included in Note 1 under the heading Revenue and Cost Recognition. Other
matters include the following:
General Litigation
The Company is subject to claims and lawsuits that arise primarily in the ordinary course of
business. It is the opinion of management that the disposition or ultimate resolution of such
claims and lawsuits will not have a material adverse effect on the consolidated financial
position of the Company.
24
Reynolds, Inc.
Notes to Consolidated and Combined Financial Statements
December 31, 2004, 2003 and 2002
Labor Agreement
Approximately 50% of the Companys employees are covered by collective bargaining agreements.
Collective bargaining agreements covering approximately 58% of these employees expire within
the next year.
Major Customers
The Company has net sales to two major customers (defined as a customer who provided in
excess of 10% of total revenue), which approximated 25% and 9% of net sales in 2004 and 2003,
respectively. The Company had no customers which met the definition of major customer in
2002.
Future Change in Accounting Principle
The Financial Accounting Standards Board recently issued Statement No. 123R Share-Based
Payment which requires the Company to recognize compensation cost for options awards. The
Company expects to first apply the new statement during fiscal year ending December 31, 2006
by using a modified version of prospective application. The impact of applying the new
statement has not yet been determined.
In November 2004, the FASB issued Statement No. 151, Inventory Costs, an amendment of ARB No.
43, Chapter 4. This statement clarifies that items such as idle facility expense, excessive
spoilage, double freight, and re-handling costs should be classified as a current-period
charge. The Statement also requires the allocation of fixed production overhead to inventory
based on the normal capacity of the production facilities. The Statement is effective for
inventory costs incurred during fiscal years beginning after June 15, 2005. The Company has
not yet determined the impact that this new pronouncement will have on the Companys
consolidated financial statements.
In December 2004, the FASB issued Statement 153, Exchanges of Nonmonetary Assets, an amendment
of APB Opinion No. 29. Statement No. 29 generally provides that exchanges of nonmonetary
assets should be measured based on the fair value of the assets exchanged subject to exception
for exchanges involving similar productive assets with a general exception for exchanges that
do not have commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result of the
exchange. This Statement is effective for nonmonetary asset exchanges in periods beginning
after June 15, 2005. The Company has not yet determined the impact that this new
pronouncement will have on the Companys consolidated financial statements.
25
Reynolds, Inc.
September 30, 2005 and 2004
Contents
Unaudited Consolidated Financial Statements as of September 30, 2005 and for the nine months
ended September 30, 2005 and 2004
|
|
|
|
|
Balance Sheet |
|
|
27 |
|
Statements of Income |
|
|
28 |
|
Statements of Cash Flows |
|
|
29 |
|
Notes to Financial Statements |
|
|
30 |
|
26
Reynolds, Inc.
Unaudited Consolidated Balance Sheet
September 30, 2005
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
Accounts receivable, net of allowance: $163,742 |
|
$ |
48,302,325 |
|
Costs and estimated earnings in excess of billings on
uncompleted contracts |
|
|
4,838,988 |
|
Inventories |
|
|
2,657,100 |
|
Other current assets |
|
|
351,208 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
56,149,621 |
|
|
|
|
|
|
|
|
|
|
Property and Equipment, net |
|
|
17,472,865 |
|
|
|
|
|
|
Acquired Intangible Asset, net |
|
|
1,311,830 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
74,934,316 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
Outstanding checks in excess of bank balance |
|
$ |
542,365 |
|
Accounts payable |
|
|
19,180,085 |
|
Billings in excess of costs and estimated earnings on uncompleted
contracts |
|
|
10,141,918 |
|
Accrued compensation |
|
|
2,753,448 |
|
Other accrued expenses |
|
|
1,934,556 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
34,552,372 |
|
|
|
|
|
|
|
|
|
|
Stockholders Equity |
|
|
|
|
Common stock, no-par value ; authorized shares: 1,000,000;
issued shares: 478,425 |
|
|
2,638,035 |
|
Retained earnings |
|
|
37,743,909 |
|
|
|
|
|
|
|
|
40,381,944 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
74,934,316 |
|
|
|
|
|
See Notes to Consolidated Financial Statements.
27
Reynolds, Inc.
Unaudited Consolidated Statements of Income
Nine Months Ended September 30, 2005 and 2004
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
|
2004 |
|
|
|
|
Contract Revenue Earned |
|
$ |
150,089,222 |
|
|
$ |
132,302,053 |
|
|
|
|
|
|
|
|
|
|
Cost of Revenue Earned |
|
|
131,368,986 |
|
|
|
118,175,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
18,720,236 |
|
|
|
14,126,704 |
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses |
|
|
8,793,644 |
|
|
|
7,959,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
9,926,592 |
|
|
|
6,166,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
Loss on sale of property and equipment |
|
|
(47,930 |
) |
|
|
|
|
Interest income |
|
|
320,098 |
|
|
|
98,715 |
|
Interest expense |
|
|
(114,969 |
) |
|
|
(187,967 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157,199 |
|
|
|
(89,252 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
|
10,083,791 |
|
|
|
6,077,491 |
|
|
|
|
|
|
|
|
|
|
Benefit from Income Taxes |
|
|
|
|
|
|
(1,515,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
10,083,791 |
|
|
$ |
7,592,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share |
|
$ |
21.08 |
|
|
$ |
15.93 |
|
|
|
|
See Notes to Consolidated Financial Statements.
28
Reynolds, Inc.
Unaudited Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2005 and 2004
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
|
2004 |
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
10,083,791 |
|
|
$ |
7,592,491 |
|
Adjustments to reconcile net income to cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,361,897 |
|
|
|
5,035,741 |
|
Loss (gain) on sale of property and equipment |
|
|
36,097 |
|
|
|
(42,584 |
) |
Deferred income taxes |
|
|
|
|
|
|
(1,141,000 |
) |
Changes in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(13,081,252 |
) |
|
|
(1,548,433 |
) |
Costs and estimated earnings in excess of billings on
uncompleted contracts |
|
|
(170,094 |
) |
|
|
(977,289 |
) |
Inventories |
|
|
(296,260 |
) |
|
|
68,812 |
|
Other current assets |
|
|
(333,310 |
) |
|
|
948 |
|
Accounts payable |
|
|
9,064,041 |
|
|
|
2,874,740 |
|
Billings in excess of costs and estimated earnings on
uncompleted contracts |
|
|
(6,323,220 |
) |
|
|
(1,643,247 |
) |
Accrued expenses |
|
|
1,511,648 |
|
|
|
390,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
4,853,338 |
|
|
|
10,610,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Proceeds from sale of property and equipment |
|
|
202,041 |
|
|
|
152,850 |
|
Purchase of property and equipment |
|
|
(3,854,928 |
) |
|
|
(3,510,835 |
) |
Proceeds from investments |
|
|
14,882,102 |
|
|
|
|
|
Purchase of investments |
|
|
(755,818 |
) |
|
|
(3,453,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
10,330,935 |
|
|
|
(6,811,791 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
Net change of outstanding checks in excess of bank balance |
|
|
542,366 |
|
|
|
|
|
Principal payments under long-term debt |
|
|
(5,616,812 |
) |
|
|
(3,103,684 |
) |
Proceeds from common stock issued |
|
|
37,200 |
|
|
|
26,975 |
|
Stockholders distributions |
|
|
(19,329,928 |
) |
|
|
|
|
Proceeds from stock options exercised |
|
|
254,025 |
|
|
|
87,525 |
|
Common stock retired |
|
|
(18,600 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(23,989,287 |
) |
|
|
(2,989,184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Cash and Cash Equivalents |
|
|
(8,805,014 |
) |
|
|
809,993 |
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, Beginning of Period |
|
|
8,805,014 |
|
|
|
4,971,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End of Period |
|
$ |
|
|
|
$ |
5,781,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flows Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
114,969 |
|
|
$ |
187,967 |
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment and long-term debt |
|
$ |
142,462 |
|
|
$ |
752,766 |
|
See Notes to Consolidated Financial Statements.
29
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
Nine Months Ended September 30, 2005 and 2004
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Reynolds, Inc. earns revenues predominately from the construction of water and sewer lines,
sewer rehabilitation and water and waste water treatment plants. The Companys customers are
principally municipalities and industrial companies. Construction projects are performed
throughout the United States; however, such projects occur primarily in the midwestern and
southeastern United States.
The Companys main office is in Orleans, Indiana with field offices in Birmingham,
Alabama; Baytown, Texas; Fairburn, Georgia; Louisville, Kentucky and Indianapolis,
Indiana.
The wholly-owned subsidiaries of the Company earn revenues from transportation services,
manufacturing of inliner components and royalties and commissions from a license
agreement.
On September 28, 2005, the Company was acquired by Layne Christensen Company (Layne), a
publicly traded company providing services and products to the water resources, mineral
exploration, geoconstruction and energy markets. Reynolds will continue to operate as a
separate unit within Layne and the acquisition had no effect on the stand alone financial
statements of Reynolds.
Principles of Consolidation
Effective January 2004, Reynolds, Inc. and Reynolds Transport Co. entered into a tax-free
reorganization agreement. As a result of this agreement, Reynolds Transport Co. became a
wholly-owned subsidiary of Reynolds, Inc. The assets of Reynolds Transport Co. were combined
at historical cost with Reynolds, Inc. since the assets were under the common control of
Reynolds, Inc. The consolidated financial statements include Reynolds, Inc. and its
wholly-owned subsidiaries: Reynolds Transport Co., Reynolds Inliner, LLC, Liner Products, LLC,
and Inliner Technologies, LLC. Intercompany accounts are eliminated upon consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America 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.
Cash Equivalents
The Company considers all liquid investments with original maturities of three months or less
to be cash equivalents.
30
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
Nine Months Ended September 30, 2005 and 2004
Inventory Pricing
Inventories consist of inliner materials, parts and other items. Inventories are stated at the
lower of cost or market. Costs of inliner materials are determined using the first-in, first-out
(FIFO) method. Costs of parts and other items are determined using the weighted-average method.
Investments
Debt securities for which the Company has the positive intent and ability to hold until
maturity are classified as held-to-maturity securities and valued at historical cost, adjusted
for amortization of premiums and accretion of discounts computed by the level-yield method.
Realized gains and losses, based on the specifically identified cost of the security, are
included in net income.
Accounts Receivable
Accounts receivable are based on amounts billed to customers. The Company provides an
allowance for doubtful accounts, which is based upon a review of outstanding receivables,
historical collection information and existing economic conditions. Accounts receivable are
ordinarily due 30 days after the issuance of the invoice. Contract retentions are due 30 days
after completion of the project and acceptance by the owner. Delinquent receivables are
written off based on individual credit evaluation and specific circumstances of the customer.
Construction Joint Ventures
The Company, in the normal conduct of its business, enters into joint bid arrangements with
other contractors. The agreements specify each item of the contract to be completed, which
party will complete it and the applicable unit price accepted. Further, to the extent there may
be profits and losses, each party agrees to look only to its separate segment of the contract
and the revenue it generates. The joint venture partner named the sponsor submits all billings
to the customer and collects all revenue when due. Such agreements are treated as agency
agreements for financial statement purposes; however, both parties to the agreements have joint
liability to complete the project.
Property and Equipment
Property and equipment are depreciated over the estimated useful life of each asset. Annual
depreciation is primarily computed by the straight-line method for buildings and the
declining-balance method for other assets. Depreciation expense was $4,277,685 and
$4,951,529, for the nine months ended September 30, 2005 and 2004, respectively. The lives
used for items within each property classification are as follows:
|
|
|
|
|
|
|
Years |
|
Buildings |
|
|
31.5 |
|
Construction Equipment |
|
|
5 |
|
Autos and Trucks |
|
|
5 |
|
Office Equipment |
|
|
7 |
|
31
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
Nine Months Ended September 30, 2005 and 2004
Impairment of Long-Lived Assets
At each balance sheet date or as circumstances indicate necessary, a determination is made by
management as to whether the value of long-lived assets, including assets to be disposed of, has
been impaired. The determination is based on several criteria, including, but not limited to,
revenue trends, undiscounted operating cash flows and other operating factors.
Allocation of Equipment Costs
The Company charges each contract for the use of Company-owned equipment based upon
pre-established monthly rates. The actual equipment costs, including depreciation, are
accumulated separately. The difference between amounts charged to contracts and the actual costs
is included in the financial statements within Cost of Revenue Earned.
Acquired Intangible Asset
The Company has recorded an intangible asset related to its investment in a license agreement.
Amortization is calculated by the straight-line method over a 15-year life. Annually, the
Company assesses the implied fair value of the intangible asset and if it is lower than its
carrying amount, the intangible asset is written down to its implied fair value.
Income Taxes
Effective January 1, 2004, the Reynolds Transport Co. became an S Corporation. This election
resulted in the reversal of the deferred tax liability and a credit to the provision for income
taxes. Previously, deferred tax assets and liabilities were recognized in the Reynolds Transport
Co. financial statements for the tax effects of differences between the financial statement and
tax bases of assets and liabilities.
The Companys stockholders have elected to have the Companys income taxed as an S Corporation
under provisions of the Internal Revenue Code and a similar section of the state income tax law.
Therefore, taxable income or loss is reported to the individual stockholders for inclusion in
their respective tax returns and no provision for federal and state income taxes is included in
these statements.
Revenue and Cost Recognition
Profits from construction contracts and construction joint ventures are generally recognized by
applying percentages of completion for each year to the total estimated profits for the
respective contracts. The length of each contract varies, but is typically about one year. The
percentages of completion are determined by relating the actual costs of work performed to date
to the current estimated total costs of the respective contracts. Contract costs include all
direct material and labor costs and those indirect costs related to contract performance, such as
indirect labor, supplies, tools, repairs and depreciation costs. Selling, general and
administrative costs are charged to expense as incurred.
32
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
Nine Months Ended September 30, 2005 and 2004
When the estimate on a contract indicates a loss, the Companys policy is to record the
entire loss. The cumulative effect of revisions in estimates of total costs or revenue during the
course of the work is reflected in the accounting period in which the facts that caused the
revision first become known. An amount equal to the costs attributable to unapproved change
orders and claims is included in the total estimated revenue when realization is probable. Profit
from claims is recorded in the year such claims are resolved. Because of the inherent
uncertainties in estimating costs and revenues, it is at least reasonably possible that the
estimates used could change in the near term.
Revenues from transportation services are recognized at the time of shipment.
Revenues from manufactured products are recognized on the date goods are shipped from the factory
and title is transferred.
Royalty and commission revenues from the KMG license agreement are recognized at the time of
service.
Earnings Per Share
Earnings per common share are based upon the weighted average number of common and dilutive
equivalent shares outstanding. Options to purchase common stock are included based on the
treasury stock method for dilutive earnings per share except when their effect is antidilutive.
There were no dilutive stock options for the nine months ended September 30, 2005 or 2004.
Earnings per share were computed as follows:
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
|
2004 |
|
|
|
|
Net Income |
|
$ |
10,083,791 |
|
|
$ |
7,592,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares |
|
|
478,425 |
|
|
|
476,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share |
|
$ |
21.08 |
|
|
$ |
15.93 |
|
|
|
|
Stock Option Plan
The Company had a stock-based employee compensation plan accounted for under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation cost is reflected in net income, as
all options granted under this plan had an exercise price equal to the market value of the
underlying common stock on the grant date. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.
33
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
Nine Months Ended September 30, 2005 and 2004
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
|
2004 |
|
|
|
|
Net income, as reported |
|
$ |
10,083,791 |
|
|
$ |
7,592,491 |
|
Less: Total stock-based
employee compensation
cost determined under
the fair value based
method |
|
|
(41,000 |
) |
|
|
(41,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income |
|
$ |
10,042,791 |
|
|
$ |
7,551,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
Basic as reported |
|
$ |
21.08 |
|
|
$ |
15.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic pro forma |
|
$ |
20.99 |
|
|
$ |
15.84 |
|
|
|
|
Disclosure About Fair Value of Financial Instruments
Fair value is the estimated amount at which financial assets or liabilities could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale. Cash
and cash equivalents, receivables, accounts payable, bank loans payable and long-term debt have
carrying values that approximate fair values. Investment fair values equal quoted market prices,
if available. If quoted market prices are not available, fair value is estimated based on quoted
market prices of similar securities.
Note 2: Accounts Receivable
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
Billed |
|
$ |
32,393,677 |
|
Retainage |
|
|
16,072,390 |
|
Less allowance for doubtful accounts |
|
|
(163,742 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
48,302,325 |
|
|
|
|
|
Note 3: Inventories
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
Reynolds Inliner, LLC materials |
|
$ |
966,343 |
|
Liner Products, LLC raw materials |
|
|
1,350,586 |
|
Parts and other |
|
|
340,171 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,657,100 |
|
|
|
|
|
34
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
Nine Months Ended September 30, 2005 and 2004
Note 4: Property and Equipment
|
|
|
|
|
|
|
September 30, |
|
|
|
2005 |
|
Land |
|
$ |
332,926 |
|
Buildings |
|
|
4,312,850 |
|
Construction equipment |
|
|
27,672,863 |
|
Autos and trucks |
|
|
23,490,818 |
|
Office equipment |
|
|
489,362 |
|
|
|
|
|
|
|
|
56,298,819 |
|
Less accumulated depreciation |
|
|
(38,825,954 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
17,472,865 |
|
|
|
|
|
Note 5: Acquired Intangible Asset
The Company holds certain patents and trademarks, acquired from KMG Kanal-Muller-Gruppe GmbH
(KMG), for the use of certain sewer rehabilitation technology (the KMG License). These
patents and trademarks were assigned to the Company in conjunction with the cancellation of
an agreement with KMG which licensed the technology to the Company. The technology is used
in providing the Companys services and is also sub-licensed to third parties. The
intangible asset is being carried at the acquisition cost and is being amortized over fifteen
years, the expected economic life of the technology.
The carrying basis and accumulated amortization of the recognized intangible asset at
September 30, 2005:
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
|
|
Gross |
|
|
|
|
|
|
Carrying |
|
|
Accumulated |
|
|
|
Amount |
|
|
Amortization |
|
Amortized intangible asset
|
|
|
|
|
|
|
|
|
KMG License |
|
$ |
1,684,249 |
|
|
$ |
372,419 |
|
|
|
|
Amortization expense for the nine months ended September 30, 2005 and 2004 was $84,212.
35
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
September 30, 2005 and 2004
Note 6: Lines of Business
The Company groups its operations into two lines of business Construction and Inliner. The
two lines of business operate as and are separate legal entities. The accounting policies for
each line are the same as those described in the summary of significant accounting policies.
Financial information for the Companys lines of business is presented below:
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
|
2004 |
|
|
|
|
Contract Revenue Earned |
|
|
|
|
|
|
|
|
Construction |
|
$ |
109,447,897 |
|
|
$ |
95,593,786 |
|
Inliner |
|
|
40,641,235 |
|
|
|
36,609,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
150,089,222 |
|
|
$ |
132,203,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
|
Construction |
|
$ |
6,668,686 |
|
|
$ |
2,967,748 |
|
Inliner |
|
|
4,187,906 |
|
|
|
3,198,995 |
|
|
|
|
|
|
$ |
10,856,593 |
|
|
$ |
6,166,743 |
|
|
|
|
Note 7: Significant Estimates and Concentrations
Accounting principles generally accepted in the United States of America require disclosure of
certain significant estimates and current vulnerabilities due to certain concentrations.
Estimates related to calculating the current estimated total costs and revenue of contracts in
process are included in Note 1 under the heading Revenue and Cost Recognition. Other matters
include the following:
General Litigation
The Company is subject to claims and lawsuits that arise primarily in the ordinary course of
business. It is the opinion of management that the disposition or ultimate resolution of such
claims and lawsuits will not have a material adverse effect on the consolidated financial
position of the Company.
Labor Agreement
Approximately 50% of the Companys employees are covered by collective bargaining agreements.
Collective bargaining agreements covering approximately 58% of these employees expire within
the next year.
36
Reynolds, Inc.
Notes to Unaudited Consolidated Financial Statements
September 30, 2005 and 2004
Future Change in Accounting Principle
The Financial Accounting Standards Board recently issued Statement No. 123R Share-Based
Payment which requires the Company to recognize compensation cost for options awards. The
Company expects to first apply the new statement during fiscal year ending December 31, 2006
by using a modified version of prospective application. The impact of applying the new
statement has not yet been determined.
In November 2004, the FASB issued Statement No. 151, Inventory Costs, an amendment of ARB No.
43, Chapter 4. This statement clarifies that items such as idle facility expense, excessive
spoilage, double freight, and re-handling costs should be classified as a current-period
charge. The Statement also requires the allocation of fixed production overhead to inventory
based on the normal capacity of the production facilities. The Statement is effective for
inventory costs incurred during fiscal years beginning after June 15, 2005. The Company has
not yet determined the impact that this new pronouncement will have on the Companys
consolidated financial statements.
In December 2004, the FASB issued Statement 153, Exchanges of Nonmonetary Assets, an amendment
of APB Opinion No. 29. Statement No. 29 generally provides that exchanges of nonmonetary
assets should be measured based on the fair value of the assets exchanged subject to exception
for exchanges involving similar productive assets with a general exception for exchanges that
do not have commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result of the
exchange. This Statement is effective for nonmonetary asset exchanges in periods beginning
after June 15, 2005. The Company has not yet determined the impact that this new
pronouncement will have on the Companys consolidated financial statements.
37
(b) Pro forma financial information.
Unaudited Pro Forma Condensed Consolidated Financial Information
On September 28, 2005 (the Closing Date), the Company acquired 100% of the outstanding stock of
Reynolds, Inc. (Reynolds), a privately held company and a major supplier of products and services
to the water and wastewater industries. The acquisition will expand the capabilities of the
Companys Water Resources division in the areas of water and wastewater infrastructure. Reynolds
primary service lines include designing and building of water and wastewater treatment plants,
water and wastewater transmission lines, cured in place pipe (CIPP) services for sewer
rehabilitation, water supply wells and Ranney collector wells. For convenience, the acquisition
has been treated as being effective October 1, 2005. The purchase price for Reynolds was
$112,356,000, consisting of $60,000,000 cash, 2,222,216 shares of Layne common stock (valued at
$45,053,000), cash purchase price adjustments of $6,120,000 (to be paid in future periods) and
costs of $1,183,000. Layne common stock was valued in the transaction based upon the five-day
average of the closing price of the stock two days before and two days after the terms of the
acquisition were agreed to and publicly announced. The cash purchase price adjustments consist
primarily of an adjustment to be paid based on the amount by which working capital at the Closing
Date exceeded a threshold amount established in the purchase agreement. This amount will be paid
to the Reynolds shareholders beginning twenty-four months following the Closing Date based on the
collection of certain contract retainage amounts. Of the cash and stock consideration, $9,000,000
and 333,333 shares of Layne common stock were placed in escrow to secure certain representations,
warranties and indemnifications under the purchase agreement (the Escrow Fund). The Escrow Fund
will be released to the Reynolds shareholders twenty-four months following the Closing Date,
subject to any pending claims.
In addition, there is a contingent consideration up to a maximum of $15,000,000 (the Earnout
Amount), which is based on Reynolds operating performance over a period of thirty-six months
following the Closing Date (the Earnout Period). The Earnout Amount is based on a multiple of
Reynolds earnings before interest, taxes, depreciation and amortization which exceed a threshold
amount during the Earnout Period. If earned, the contingent payment will be paid 60% in cash and
40% in Layne common stock, subject to stockholder approval of the shares to be issued, if required.
Any shares not approved for issuance will be paid in cash.
The unaudited pro forma condensed financial information is presented assuming the acquisition
occurred as of February 1, 2004. Laynes fiscal year end is January 31 and Reynolds is December
31. Therefore, the pro forma statements of income herein combine Laynes statement of income for
the year ended January 31, 2005 with Reynolds statement of income for the year ended December 31,
2004, and Laynes statement of income for the nine-month period ended October 31, 2005 with
Reynolds statement of income for the eight-months ended September 30, 2005. Laynes statement of
income for the nine-month period includes one month of the operations of Reynolds resulting in a
total of nine months being included in the condensed consolidated pro forma financial information
for the interim period.
The unaudited pro forma condensed consolidated financial statements are based upon available
information and upon certain estimates and assumptions as described in the Notes to the Unaudited
Pro Forma Condensed Consolidated Financial Statements. The allocation of the purchase price of
Reynolds is preliminary and is subject to revisions when the Company receives final information
regarding the fair value of the assets and liabilities acquired, including appraisals and other
analyses. Such revisions may be significant and will be recorded by the Company as further
adjustments to the purchase price allocation. The purchase price is detailed as follows (in
thousands):
38
|
|
|
|
|
Purchase consideration: |
|
|
|
|
Debt financed cash consideration |
|
$ |
60,000 |
|
Value of common stock issued |
|
|
45,053 |
|
Cash purchase price adjustments |
|
|
6,120 |
|
Transaction costs |
|
|
1,183 |
|
|
|
|
|
Total purchase consideration |
|
$ |
112,356 |
|
|
|
|
|
Based on the Companys preliminary allocation of the purchase price, the acquisition had the
following effect on the Companys consolidated financial position (in thousands):
|
|
|
|
|
Working capital |
|
$ |
21,597 |
|
Long-lived and other non-current assets |
|
|
17,885 |
|
Goodwill |
|
|
72,874 |
|
|
|
|
|
Total |
|
$ |
112,356 |
|
|
|
|
|
These estimates and assumptions are preliminary and have been made solely for purposes of
developing these unaudited pro forma condensed consolidated financial statements and are based
upon, and should be read in conjunction with, our historical financial statements and the related
notes to such financial statements and the historical financial statements of Reynolds.
The unaudited pro forma condensed consolidated financial statements and notes thereto contain
forward-looking statements that involve risks and uncertainties. Therefore, our actual results may
vary materially from those discussed herein. Laynes unaudited pro forma condensed consolidated
financial statements do not purport to be indicative of the results that would have been reported
had such events actually occurred on the dates specified, nor are they indicative of our future
results.
39
Layne Christensen Company and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended January 31, 2005
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Layne |
|
|
Reynolds |
|
|
|
|
|
|
|
|
|
Historical |
|
|
Historical |
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
|
|
|
|
|
|
January 31, |
|
|
December 31, |
|
|
Pro Forma |
|
|
Layne |
|
|
|
2005 |
|
|
2004 |
|
|
Adjustments |
|
|
Pro Forma |
|
Revenues |
|
$ |
343,462 |
|
|
$ |
176,961 |
|
|
|
|
|
|
$ |
520,423 |
|
Cost of revenues (exclusive of
depreciation shown below) |
|
|
250,244 |
|
|
|
157,891 |
|
|
|
($8,934 |
) (1) |
|
|
399,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
93,218 |
|
|
|
19,070 |
|
|
|
8,934 |
|
|
|
121,222 |
|
Selling, general and administrative expenses |
|
|
60,214 |
|
|
|
9,777 |
|
|
|
2,409 |
(1) |
|
|
72,400 |
|
Depreciation, depletion and amortization |
|
|
14,441 |
|
|
|
|
|
|
|
6,525 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
(2) |
|
|
23,966 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of affiliates |
|
|
2,637 |
|
|
|
|
|
|
|
|
|
|
|
2,637 |
|
Interest |
|
|
(3,221 |
) |
|
|
|
|
|
|
(3,342 |
) (3) |
|
|
(6,563 |
) |
Other, net |
|
|
1,220 |
|
|
|
(14 |
) |
|
|
|
|
|
|
1,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
before income taxes |
|
|
19,199 |
|
|
|
9,279 |
|
|
|
(6,342 |
) |
|
|
22,136 |
|
Income tax expense (benefit) |
|
|
9,215 |
|
|
|
(1,351 |
) |
|
|
2,486 |
(4) |
|
|
10,350 |
|
Minority interest |
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
|
9,967 |
|
|
|
10,630 |
|
|
|
(8,828 |
) |
|
|
11,769 |
|
Loss on discontinued operations, net of income
tax benefit of $127 |
|
|
(213 |
) |
|
|
|
|
|
|
|
|
|
|
(213 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,754 |
|
|
$ |
10,630 |
|
|
|
($8,828 |
) |
|
$ |
11,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
$ |
0.80 |
|
Loss from discontinued operations, net
of income taxes |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
$ |
0.78 |
|
|
|
|
|
|
|
|
|
|
$ |
0.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
$ |
0.78 |
|
Loss from discontinued operations, net
of income taxes |
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
$ |
0.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
and dilutive shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
|
12,563 |
|
|
|
|
|
|
|
2,222 |
(5) |
|
|
14,785 |
|
Dilutive stock options |
|
|
368 |
|
|
|
|
|
|
|
|
|
|
|
368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
|
12,931 |
|
|
|
|
|
|
|
|
|
|
|
15,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated and Combined Financial Statements.
40
Layne Christensen Company and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Nine Months Ended October 31, 2005
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Layne |
|
|
Reynolds |
|
|
Reynolds |
|
|
|
|
|
|
|
|
|
Historical |
|
|
Historical |
|
|
Historical |
|
|
|
|
|
|
|
|
|
Nine Months |
|
|
Nine Months |
|
|
One Month |
|
|
|
|
|
|
|
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
|
|
|
|
|
|
|
October 31, |
|
|
September 30, |
|
|
January 31, |
|
|
Pro Forma |
|
|
Layne |
|
|
|
2005 |
|
|
2005 |
|
|
2005 |
|
|
Adjustments |
|
|
Pro Forma |
|
Revenues |
|
$ |
316,286 |
|
|
$ |
150,089 |
|
|
$ |
12,323 |
(6 |
) |
|
|
|
|
$ |
454,052 |
|
Cost of revenues (exclusive of
depreciation shown below) |
|
|
232,326 |
|
|
|
131,369 |
|
|
|
11,632 |
|
|
|
($5,384 |
) (1) |
|
|
346,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
83,960 |
|
|
|
18,720 |
|
|
|
691 |
|
|
|
5,384 |
|
|
|
107,373 |
|
Selling, general and administrative expenses |
|
|
49,196 |
|
|
|
8,793 |
|
|
|
703 |
|
|
|
1,509 |
(1) |
|
|
58,795 |
|
Depreciation, depletion and amortization |
|
|
13,122 |
|
|
|
|
|
|
|
|
|
|
|
3,875 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,250 |
(2) |
|
|
19,247 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of affiliates |
|
|
3,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,244 |
|
Interest |
|
|
(3,653 |
) |
|
|
|
|
|
|
|
|
|
|
(2,507 |
) (3) |
|
|
(6,160 |
) |
Other, net |
|
|
1,004 |
|
|
|
157 |
|
|
|
27 |
|
|
|
|
|
|
|
1,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
before income taxes |
|
|
22,237 |
|
|
|
10,084 |
|
|
|
15 |
|
|
|
(4,757 |
) |
|
|
27,550 |
|
Income tax expense (benefit) |
|
|
10,618 |
|
|
|
|
|
|
|
|
|
|
|
2,053 |
(4) |
|
|
12,671 |
|
Minority interest |
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
|
11,569 |
|
|
|
10,084 |
|
|
|
15 |
|
|
|
(6,809 |
) |
|
|
14,829 |
|
Loss on discontinued operations,
net of income taxes of $0 |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
11,565 |
|
|
$ |
10,084 |
|
|
$ |
15 |
|
|
|
($6,809 |
) |
|
$ |
14,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.97 |
|
Loss from discontinued operations, net
of income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
0.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.94 |
|
Loss from discontinued operations, net
of income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
$ |
0.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
and dilutive shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding basic |
|
|
12,988 |
|
|
|
|
|
|
|
|
|
|
|
2,222 |
(5) |
|
|
15,210 |
|
Dilutive stock options |
|
|
515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding diluted |
|
|
13,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
41
Layne Christensen Company and Subsidiaries
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Pro Forma Adjustments:
1. |
|
Certain Reynolds amounts, primarily depreciation and certain selling, general and
administrative expenses, have been reclassified to conform to Laynes financial statement
presentation. |
|
2. |
|
To reflect the increase in depreciation expense resulting from the incremental value of
equipment acquired with an estimated useful life of five years. At this time management has
not completed the final appraisals of the assets and liabilities of Reynolds. As a result,
the final appraisal could differ materially from the estimate presented herein. |
|
3. |
|
To reflect the increase in interest expense resulting from the issuance of debt to finance
the cash portion of the purchase price. The interest rate on new debt of $60,000,000 is
assumed to be 5.57%, Laynes approximate variable interest rate under its Credit Agreement as
of October 31, 2005. A change of 1/8% in the interest rate would result in a change in
interest expense of $75,000 before taxes. |
|
4. |
|
To reflect the income tax effect of increased interest expense, depreciation expense and the
change in tax status of Reynolds from a non-taxable entity to a taxable entity at the blended
federal and state statutory rate of 38.64%. |
|
5. |
|
To reflect the increase in shares of common stock outstanding issued as part of the purchase
price. The shares were assumed to be issued as of the beginning of each period presented.
Options issued concurrent with the acquisition are assumed to be anti-dilutive as the average
price of Layne stock during the periods was lower than the exercise price of the options. |
|
6. |
|
Laynes statement of income for the nine months ended October 31, 2005 includes one month of
the results of operations of Reynolds. As a result, the one month period ended January 31,
2005 is subtracted from Reynolds nine month period ended September 30, 2005 resulting in
eight months of Reynolds being combined with Laynes statement of income for the nine months
ended October 31, 2005. |
42
(c) Exhibits.
|
|
|
4.1*
|
|
Amended and Restated Loan Agreement, dated as of
September 28, 2005, by and among Layne Christensen Company, LaSalle Bank
National Association, as Administrative Agent and as Lender, and the
other Lenders listed therein. |
|
|
|
4.2*
|
|
Letter Amendment No. 2 to Master Shelf Agreement,
dated as of September 28, 2005, by and among Layne Christensen Company,
Prudential Investment Management, Inc., The Prudential Insurance Company
of America, Pruco Life Insurance Company, Security Life of Denver
Insurance Company and such other Purchasers of the Notes as may be named
in the Master Shelf Agreement from time to time. |
|
|
|
10.1*
|
|
Reynolds Division of Layne Christensen Company
Cash Bonus Plan, dated September 28, 2005. |
|
|
|
10.2*
|
|
Agreement and Plan of Merger, dated August 30,
2005, among Layne Christensen Company, Layne Merger Sub 1, Inc.,
Reynolds, Inc. and the Stockholders of Reynolds, Inc. listed on the
signature pages thereto. |
|
|
|
23.1
|
|
Consent of BKD, LLP. |
|
|
|
23.2
|
|
Consent of PricewaterhouseCoopers, LLP. |
|
|
|
99.1*
|
|
Press Release issued by Layne Christensen
Company, dated September 30, 2005. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
|
|
|
LAYNE CHRISTENSEN COMPANY |
|
|
|
|
|
|
|
|
|
Date:
December 20, 2005
|
|
By:
|
|
/s/ A. B. Schmitt
|
|
|
|
|
|
|
Name: Andrew B. Schmitt |
|
|
|
|
|
|
Title: President and Chief Executive Officer |
|
|
43