EX-99.2 3 c18521exv99w2.htm BALANCE SHEET OF PETROFLAX S.A.(UNAUDITED) exv99w2
 

Exhibit 99.2
Petroflax S.A.
Balance Sheet as of June 30, 2007,
Statements of Income and Cash Flows for the Six Month Periods Ended June 30, 2007 and 2006

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Petroflax S.A.
Financial Statements (unaudited)
         
    Page
Financial Statements
        
Balance Sheet as of June 30, 2007 (unaudited)
     3  
Income Statements for the Six Month Periods Ended June 30, 2007 and 2006 (unaudited)
     4  
Statements of Cash Flows for the Six Month Periods Ended June 30, 2007 and 2006 (unaudited)
     5  
 
        
Notes to Financial Statements (unaudited)
     6-7  

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Petroflax S.A.
Balance Sheet as of June 30, 2007 (Unaudited)
(amounts in USD, except share data)
         
    2007  
Current Assets
        
Cash & equivalents
   $ 606,251  
Accounts receivable, net of $18,995 allowance
     1,708,323  
Inventory
     571,218  
Other
     202,682  
     
Total current Assets
     3,088,474  
 
        
Property, Plant & Equipment, net
     3,547,357  
     
Total assets
   $ 6,635,831  
     
 
        
Current Liabilities
        
Short term debt
   $ 2,805,097  
Trade accounts payable
     1,014,545  
Due to shareholder
     746,827  
Other
     280,569  
     
Total current liabilities
     4,847,038  
 
        
Shareholders’ Equity
        
Share capital, $19.50 par value, 20,000 shares authorized and 18,000 shares outstanding
     320,616  
Treasury stock
     (682,560 )
Retained earnings
     1,527,954  
Restricted retained earnings
     294,868  
Accumulated other comprehensive income
     327,915  
     
Total equity
     1,788,793  
     
 
        
Total liabilities & equity
   $ 6,635,831  
     

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Petroflax S.A.
Income Statements (Unaudited)
For the Six Month Periods Ended June 30
(amounts in USD)
                 
    2007   2006
     
Revenues
   $ 5,344,186     $ 4,043,433  
Operating costs and expenses:
                
Cost of sales
     4,065,846       2,929,027  
Depreciation
     116,913       90,997  
Selling, general & administrative expense
     404,339       216,654  
     
 
                
Total operating costs
     4,587,098       3,236,678  
     
 
                
Operating income
     757,088       806,755  
 
                
Interest expense
     71,718       27,170  
     
 
                
Income before income taxes
     685,370       779,585  
 
                
Income taxes
     90,400       123,021  
     
 
                
Net income
   $ 594,970     $ 656,564  
     

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Petroflax S.A.
Statements of Cash Flows (Unaudited)
For the Six Month Periods Ended June 30
(amounts in USD)
                 
    2007   2006
     
Operating activities
                
Net income
   $ 594,970     $ 656,564  
Adjustments to reconcile net income to cash provided by operating activities:
                
Depreciation expense
     116,913       90,997  
Asset write-offs
     —       49,600  
Changes in operating assets and liabilities:
                
Accounts receivable
     (619,660 )     (342,366 )
Inventory
     200,201       82,985  
Other current assets
     149,106       22,020  
Trade accounts payable
     (37,373 )     140,825  
Other liabilities
     26,311       69,972  
Other non-current liabilities
     (55,502 )     8,834  
Other
     —       (3,856 )
     
Cash provided by operating activities
   $ 374,966     $ 775,575  
     
 
                
Investing activities
                
Cash paid for property, plant & equipment
     (907,054 )     (186,657 )
Proceeds from disposals
     331,536       —  
     
Cash used in investing activities
   $ (575,518 )   $ (186,657 )
     
 
                
Financing activities
                
Payment of dividends
     (577,208 )     (527,666 )
Bank borrowings
     929,519       174,224  
Payments on shareholder loans
     (9,333 )     (55,634 )
     
Cash provided by financing activities
   $ 342,978     $ (409,076 )
     
 
                
Effect of exchange rates on cash & equivalents
     48,322       24,453  
     
Change in cash
   $ 190,748     $ 204,295  
Cash & equivalents, January 1,
     415,503       245,703  
     
Cash & equivalents, June 30,
   $ 606,251     $ 449,998  
     

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Petroflax S.A.
Notes to Financial Statements (Unaudited)
(amounts in USD)
1.   DESCRIPTION OF THE BUSINESS
    Established in 1994, Petroflax S.A. (“Petroflax” or the “Company”) is a joint-stock company with 100% Romanian capital. The Company’s primary operations are located in Peatra Neamt, Romania.
 
    The Company principally manufactures rolls and sheets of foil and expanded polyethylene-based products, which are used as construction applications, sports and leisure products, and wrapping materials.
 
    Approximately 50% of the Company’s sales are generated outside of Romania.
 
    The Company maintains the books in new Romanian Lei (RON) according to Romanian accounting standards. For US GAAP, reconciliation was made from the statutory accounting, starting with January 1, 2006.
    Currency Translation
 
    The functional currency of Petroflax is Romanian Lei. The financial statements and notes to the financial statements as presented herein have been translated to United States dollars using the end-of-period exchange rate for assets and liabilities and the period’s average exchange rate for revenue and expense components, with any resulting translation adjustments included in shareholders’ equity as the only component of accumulated other comprehensive income. Foreign currency transaction gains and losses resulting from transactions executed in currencies other than the Company’s functional currency are included in the results of operations.
2.   INVENTORIES
    The major components of inventories as of June 30, 2007 are as follows:
         
    2007
             
Finished goods
   $ 405,145  
Raw materials
     166,073  
     
 
   $ 571,218  
     

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3.   PROPERTY, PLANT & EQUIPMENT
    Property, plant and equipment at June 30, 2007 consists of the following:
         
    2007
     
Land, buildings and improvements
   $ 1,459,023  
Machinery and equipment
     1,914,365  
Other, including construction-in-progress
     796,886  
     
 
        
 
     4,170,274  
Less: Accumulated depreciation
     (622,917 )
     
 
   $ 3,547,357  
     
4.   DEBT
 
    The Company’s debt as of June 30, 2007 consists of the following:
         
OTP Bank
   $ 898,070  
BRD-Groupe Societe Generale
     1,040,268  
Alpha Bank
     760,742  
Other
     106,017  
 
      
 
        
Total debt
   $ 2,805,097  
 
      
 
    The Company’s debt instruments are subject to various covenants the Company is required to comply with. As of June 30, 2007 the Company had not complied with certain of these covenants. Breach of such covenants may expose the Company to penalties and interest, or in some cases cause the debt to be callable by the banks. As a result, all debt is classified as current. These covenant violations did
not cause the debt to be called and all debt was settled in connection with the sale of the Company in July 2007 (see footnote 6).
 
 
5.   RELATED PARTIES
 
    As of June 30, 2007, the Company has $746,827 payable to a shareholder for the repurchase of his shares by the Company.
 
    During the six month periods ended June 30, 2007 and 2006, the Company had purchases from related parties, primarily parties under common ownership, for transportation services, vehicle rentals, inventory and sales promotion. Total purchases from related parties totaled approximately $325,000 and $255,000 for the six months ended June 30, 2007 and 2006, respectively. As of June 30, 2007 the Company had approximately $11,500 payable to related parties for such activities. Such amount is recorded as a component of trade accounts payable.
 
6.   SUBSEQUENT EVENTS
 
    On July 4, 2007, Pregis GmbH acquired all of the Company’s outstanding share capital for approximately $12 million, including estimated direct costs of the acquisition. Pregis GmbH is a subsidiary of Pregis Corporation, an international manufacturer, marketer and supplier of protective packaging products and specialty packaging products.
 
    The rubber and recycling business and certain other assets were sold or transferred and thus carved out of the Company prior to its acquisition by Pregis GmbH. In 2006, the rubber and recycling business generated sales amounting to $395,000.

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