Ellen, this is all taken from the 1997 Annual Report.
In October 1997, the Company acquired 100% of the outstanding shares of Central Engineering Company and it's related real estate for $8,174,000. The purchase price consisted of 250,000 shares of Cade's common stock and approximately $7,723,000 in cash. The cash portion of the purchase price was financed through additional bank borrowings, pursuant to which the Company's existing credit facility was increased from approximately $10.3 million to $19.8 million. In addition, cash required at acquisition was reduced as a result of on-hand cash balances at Cenco of $2,893,000. The purchase agreement contained a provision requiring escrow of $400,000 until July 1998 to satisfy certain indemnity obligations of the former Cenco shareholders to the Company. Accordingly, the total purchase price amount may be adjuster to reflect draws against the escrow or recognition of additional acquisition costs.
The acquisition of Cenco has been accounted for using the purchase method of accounting. The excess purchase price, including direct costs of acquisition, over the fair value of the net assets acquired, totaling approximately $2,862,000 was recorded as goodwill. The fair values of the assets acquired and the liabilities assumed were as follows: current assets of $9,354,000; property, plant and equipment of $2,736,000; total assets of $14,952,000, and current liabilities of $6,410,000. The results of Cenco's operations have been included in the Company's financial statements from the date of it's acquisition.
Note payable to bank of $1,460,000 at December 31, 1997, represents borrowing under the Company's $9,000,000 unsecured line of credit, which bears interest at the bank's announced prime interest rate less .50% (8.0% at December 31, 1997) and is subject to annual renewal each year starting in April 1999. Also, at the Company's option, increments of not less than $500,000 of the outstanding line of credit may be placed at a Eurodollar-based rate plus 2.1% (none at December 31, 1997) for fixed periods not to exceed 90 days. Up to $3,500,000 ($2,696,000 at December, 1997) of the line of credit may be committed to support letters of credit and foreign exchange contracts, but at no time may the total of such commitments and advances under the line of credit exceed $9,000,000. The line of credit will become secured by substantially all the Company's and subsidiaries tangible assets in the event the ratio of debt to tangible net worth exceeds two-to-one.
In October 1997, the Company and the bank executed an amended and restated loan agreement to increase it's line of credit facility, facilitate the acquisition of Cenco and refinance a portion of it's then long term debt. This amended and restated agreement provides for interest rate reduction on all floating-rate debt if certain future financial conditions are met. The weighted-average interest rate on short-term borrowings for the years ended December 31, 1997 and 1996 was 7.8% and was 8.7% for 1995.
Long term debt consists of: (as of December 31,1997)
Term Note A payable to bank in quarterly installments of $178,571, commencing January 1998 - $3,571,429
Term Note B payable to bank in quarterly principal and interest installments of $118,624, commencing January 1998, with unpaid balance due November 2002 - $4,000,000
Term Note C payable to bank in quarterly installments of $270,833, commencing January 1998 - $3,250,000
Subordinated notes payable in four equal annual payments beginning November 1996, interest at 6.0% payable semi-annually - $1,430,520 (1996 $2,145,780)
Note payable to bank in monthly installments to July 2005 - $542,209 (1996 $567,263)
Mortgage note payable to bank in monthly installments commencing April 1997 to February 2001, with unpaid balance due March 2002 - $370,000
Term note payable to bank in quarterly installments of $128,571 - $0 (1996 $3,085,714)
Limited obligation revenue bonds - $0 (1996 $146,250)
Capital lease obligations, interest rates ranging from 7.75% to 12.71%, due through March 2002 - $531,394 (1996 $452,394)
Total $13,695,552 (1996 6,397,401)
Current maturities $3,012,998 (1996 $1,558,220)
Grand total $10,682,554 (1996 $4,839,181
During 1997, the Company entered into forward currency contracts to hedge certain firm commitments for the delivery of goods and services for four construction contracts denominated in foreign currencies. The purpose of the Company's foreign currency hedging activity is to protect it from the risk that the eventual dollar cash flows resulting from the delivery of goods and services to international customers will be adversely affected by changes in exchange rates. At December 31, 1997 the Company had forward currency contracts, all with a maturity of less than one year, to exchange British pounds, Thailand bahts and Singapore dollars for U.S. dollars in the amounts of $4,175,000, $6,066,000 and $3,383,000, respectively. Such contracts are designated as a hedge of a firm commitment for construction contracts denominated in foreign currencies, and any gains and losses are deferred and included in the measurement of the construction contracts profitability. There were no significant unrealized gains or losses related to foreign currency contracts at December 31, 1997.
Goodwill is being amortized over 30 to 40 years using the straight-line method. Accumulated amortization was $768,000 and $645,000 at December 31, 1997 and 1996, respectively. It is the Company's policy to carry goodwill only if the projected undiscounted cash flows acquired businesses over the remaining amortization periods exceed such recorded amounts of goodwill.
Management has determined that the carrying values of cash equivalents, trade accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments.
Management has also determined that the carrying value of it's current and long-term debt and note payable to bank approximate market value as they largely bear interest at rates that vary with the bank's prime lending rate. It is not practical to estimate the fair value of the subordinated notes due to these notes being non-marketable and subordinated to all other debt.
Ellen it appears you and Ditchdigger have some bad blood for one another. If you feel he has broken any rules report him to SI, if you feel he is disrespectful or disruptive ignore him, if you feel you must combat with him please take it to private message. If you are seriously looking to invest in CADE I think if you research them well (which it appears you are capable of doing without Ditchhdiggers or My help)you will find a very good company with a promising future. Good Luck.
Joe |
