EX-99.3 4 dex993.htm UNAUDITED BALANCE SHEET OF TDC, L.L.C. Unaudited Balance Sheet of TDC, L.L.C.

EXHIBIT 99.3

FINANCIAL STATEMENTS OF TDC, L.L.C. (formerly Tessenderlo Davison Companies, LLC)

TABLE OF CONTENTS

 

     Page
FINANCIAL STATEMENTS AS OF JUNE 30, 2007 (UNAUDITED) AND FOR THE SIX-MONTH
PERIOD ENDED JUNE 30, 2007 (UNAUDITED):
  
Balance Sheet    1
Statement of Income    2
Statement of Member’s Equity    3
Statement of Cash Flows    4
Notes to Financial Statements    5-6


TDC, L.L.C.

UNAUDITED BALANCE SHEET

(In Thousands)

 

     June 30,
2007
ASSETS   

CURRENT ASSETS:

  

Cash and cash equivalents

   $ 15,903

Trade accounts receivable, net of allowance for doubtful accounts of $91

     21,506

Inventories

     3,891

Prepaid expenses

     507
      

Total current assets

     41,807

PROPERTY, PLANT AND EQUIPMENT, NET

     10,452

INTANGIBLE ASSETS, NET

     71,044

OTHER ASSETS

     1,036
      

TOTAL ASSETS

   $ 124,339
      

LIABILITIES AND MEMBER’S EQUITY

  

CURRENT LIABILITIES:

  

Current maturities of long-term debt

   $ 9,371

Accounts payable and accrued expenses:

  

Trade

     10,113

Member

     636
      

Total current liabilities

     20,120

LONG-TERM DEBT, excluding current maturities

     79,494
      

Total liabilities

     99,614

MEMBER’S EQUITY

     24,725
      

Total member’s equity

     24,725
      

TOTAL LIABILITIES AND MEMBER’S EQUITY

   $ 124,339
      

See accompanying notes to unaudited financial statements.

 

1


TDC, L.L.C.

UNAUDITED STATEMENT OF INCOME

(In Thousands)

 

     Six Months Ended
June 30, 2007
 

SALES

     68,458  

COST OF GOODS SOLD

     47,517  

GENERAL AND ADMINISTRATIVE EXPENSES

     3,332  
        

OPERATING INCOME

     17,609  

OTHER INCOME (EXPENSE):

  

Interest income

     400  

Interest expense

     (2,530 )

Other expense

     (64 )
        

Total other income (expense)

     (2,194 )
        

NET INCOME

   $ 15,415  
        

See accompanying notes to unaudited financial statements.

 

2


TDC, L.L.C.

UNAUDITED STATEMENT OF MEMBER’S EQUITY

(In Thousands)

 

Balance, January 1, 2007

     23,787  

Net income

     15,415  

Member interest redeemed

     (14,477 )
        

Balance, June 30, 2007

   $ 24,725  
        

See accompanying notes to unaudited financial statements.

 

3


TDC, L.L.C.

UNAUDITED STATEMENT OF CASH FLOWS

(In Thousands)

 

     Six Months
Ended
June 30, 2007
 

CASH FLOWS FROM OPERATING ACTIVITIES:

  

Cash received from customers

   $ 70,509  

Cash paid to employees and suppliers

     (45,115 )

Interest received

     400  

Interest paid

     (2,530 )
        

Net cash provided by operating activities

     23,264  

CASH FLOWS FROM INVESTING ACTIVITIES:

  

Purchase of land and equipment

     (336 )

Purchase of member interest

     (91,501 )
        

Net cash used in investing activities

     (91,837 )

CASH FLOWS FROM FINANCING ACTIVITIES:

  

Debt repayment

     (8,549 )

Proceeds from debt issuance

     92,900  

Debt financing costs

     (1,130 )
        

Net cash provided by financing activities

     83,221  
        

Net increase in cash and cash equivalents

     14,648  

Cash and cash equivalents at beginning of period

     1,255  
        

Cash and cash equivalents at end of period

   $ 15,903  
        

The reconciliation of net income to net cash provided by operating activities, as shown above, is as follows:

  

Net income

   $ 15,415  

Adjustments to reconcile net income to net cash provided by operating activities:

  

Depreciation and amortization

     4,630  

Amortization of deferred financing fees

     94  

Changes in operating assets and liabilities:

  

Decrease in receivables, net

     2,051  

Decrease in inventories

     471  

Increase in prepaid expense

     (395 )

Decrease in deposits

     65  

Increase in accounts payable and accrued expenses

     933  
        

Net cash provided by operating activities

   $ 23,264  
        

See accompanying notes to unaudited financial statements.

 

4


TDC, L.L.C.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

These unaudited financial statements of TDC, L.L.C. (the “Company”) as of and for the six months ended June 30, 2007 should be read in conjunction with the audited financial statements for TDC, L.L.C. for the year ended December 31, 2006, included as Exhibit 99.2 of this Form 8-K/A of Genesis Energy, L.P. A description of the organization and a summary of the significant accounting policies of TDC, L.L.C. is included in that exhibit.

 

1. Acquisition of Member Interest

On January 31, 2007, the Company acquired the 50% member interest of Tessenderlo Kerley, Inc. (TKI) for $91.5 million, including related acquisition costs, resulting in Davison Petroleum Products, LLC (Davison) becoming its sole member. The Company borrowed the funds for the acquisition under a credit facility obtained by the Company for the acquisition. The purchase price exceeded the fair value of the net working capital acquired by $81.0 million. This excess purchase price was allocated to the tangible and identifiable intangible assets of the Company based on their preliminary fair values, which are not expected to differ materially from the final values. Property, plant and equipment was allocated $8.5 million of the purchase price, which is being amortized over an average useful life of 8 years. $36.7 million of the purchase price was allocated to customer relationships, $1.2 million to a covenant not-to-compete and $34.6 million was allocated to supplier and licensing agreements.

 

2. Inventories

Inventories at June 30, 2007 consist of the following (in thousands):

 

Raw materials

   $  1,713

Finished goods

     2,178
      
   $ 3,891
      

 

3. Related Party Transactions

The Company pays its member for certain payroll, insurance, employee benefits, storage, transportation, capital asset rental and other expenses. The amounts paid to its member for the six months ended June 30, 2007 was $4.0 million. The amount owed to its member for those expenses was $0.6 million at June 30, 2007.

No products were sold to its members during the six months ended June 30, 2007.

 

4. Property, Plant, and Equipment

Property, plant, and equipment at June 30, 2007 consist of the following (in thousands):

 

Land

   $ 186  

Machinery and equipment

     11,192  

Construction in progress

     286  
        
     11,664  

Accumulated depreciation

     (1,212 )
        
   $ 10,452  
        

The Company recognized depreciation of $0.6 million for the six months ended June 30, 2007.

 

5


5. Intangible Assets

Intangible assets consist of the following (in thousands):

 

Customer lists and relationships

   $ 38,028  

Covenant not to compete

     1,222  

Supplier and licensing agreements

     35,807  
        
     75,057  

Accumulated amortization

     (4,013 )
        
   $ 71,044  
        

The Company recognized amortization expense on its intangible assets of $4.0 million during the six months ended June 30, 2007.

 

6. Long-Term Debt

Long-term debt at June 30, 2007 consists of the following (in thousands):

 

Obligation to third party, payments of $42 due monthly, non-interest bearing, obligation matures on August 31, 2009

   $ 1,083  

Notes payable to Bank, interest at prime rate and principal payments of $2,218 due quarterly, notes mature $57,857 in 2012 and $29,925 in 2014, secured by the assets of the Company

     87,782  
        
     88,865  

Current maturities of long-term debt

     (9,371 )
        
   $ 79,494  
        

 

7. Subsequent Events

On July 25, 2007, the Company was sold by Davison to Genesis Energy, L.P.

 

6