Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 29, 2014

Impacts of correcting the previously recorded immaterial out-of-period adjustments and the reclassification of business development expenses

Schedule of adjustments to previously reported income statement - Income/ (Expense)

	Adjustments to
	Previously Reported Income
	Statement - Income / (Expense)
	Three Months Ended			Six Months Ended
For the years ended	June 30, 2013			June 30, 2013
Net sales	$	(23	)	(23	)
Cost of sales	65			79
Gross profit	(88		)	(102	)
Selling and commissions (A)	(130		)	(209	)
Research and development	1			2
General and administrative (B)	(222		)	(217	)
Business development (C)	169			244
Operating income	94			78
Other (income) / expense (C)	(192		)	(267	)
Income tax expense	57			57
Net income (loss) (B)	229			288

(A) Primarily relates to the reclassification of $132 of armorers training expenses from selling and commissions to cost of sales.

(B) Primarily relates to the timing of recognition of certain professional fees.

(C) Primarily relates to the reclassification of transaction costs incurred in connection with contemplated merger and acquisition activities from other expense/(income) to business development.

Consolidated Statements of Operations

Restatement of Previously Issued Consolidated Financial Statements

Colt Defense LLC and Subsidiaries

Consolidated Statement of Operations

(In thousands of dollars)

(Unaudited)

	Three months ended June 30, 2013									Six months ended June 30, 2013
							As Revised									As Revised
	As						in this Quarterly			As						in this Quarterly
	Previously						Report on			Previously						Report on
	Reported			Adjustments			Form 10-Q			Reported			Adjustments			Form 10-Q
Net sales	$	64,235		$	(23	)	$	64,212		$	128,084		$	(23	)	$	128,061
Cost of sales	45,765			65			45,830			90,863			79			90,942
Gross Profit	18,470			(88		)	18,382			37,221			(102		)	37,119
Operating expenses:
Selling and commissions	3,582			(130		)	3,452			6,756			(209		)	6,547
Research and development	1,480			1			1,481			2,299			2			2,301
General and administrative	3,237			(222		)	3,015			6,962			(217		)	6,745
	8,299			(351		)	7,948			16,017			(424		)	15,593
Business development	—			169			169			—			244			244
Certain transaction costs	416			—			416			416			—			416
Total operating expenses	8,715			(182		)	8,533			16,433			(180		)	16,253
Operating income	9,755			94			9,849			20,788			78			20,866
Other expense/(income):
Interest expense	6,069			—			6,069			12,063			—			12,063
Other (income)/expense, net	(493		)	(192		)	(685		)	(1,205		)	(267		)	(1,472		)
Total other expenses, net	5,576			(192		)	5,384			10,858			(267		)	10,591
Income (loss) before provision for income taxes	4,179			286			4,465			9,930			345			10,275
Income tax expense	21			57			78			702			57			759
Net income (loss)	$	4,158		$	229		$	4,387		$	9,228		$	288		$	9,516

Consolidated Statements of Comprehensive Income (Loss)

Restatement of Previously Issued Consolidated Financial Statements

Colt Defense LLC and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(In thousands of dollars)

(Unaudited)

	For the Three Months Ended June 30, 2013
							As Revised
	As						in this Quarterly
	Previously						Report on
	Reported			Adjustments			Form 10-Q
Net income (loss)	$	4,158		$	229		$	4,387
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment:
Foreign currency translation gains (losses)	(1,020		)	(15		)	(1,035		)
Pension and postretirement benefit liabilities:
Other comprehensive income (loss) arising during the period	—			—			—
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss)	117			—			117
	117			—			117
Comprehensive income (loss)	$	3,255		$	214		$	3,469

Consolidated Statements of Comprehensive Income (Loss)

(In thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2013
							As Revised
	As						in this Quarterly
	Previously						Report on
	Reported			Adjustments			Form 10-Q
Net income (loss)	$	9,228		$	288		$	9,516
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment:
Foreign currency translation gains (losses)	(1,597		)	(14		)	(1,611		)
Pension and postretirement benefit liabilities:
Other comprehensive income (loss) arising during the period	—			—			—
Reclassification adjustment for unrecognized prior service costs and unrecognized loss included in net income (loss)	250			—			250
	250			—			250
Comprehensive income (loss)	$	7,881		$	274		$	8,155

Consolidated Statements of Changes in Cash Flows

Restatement of Previously Issued Consolidated Financial Statements

Colt Defense LLC and Subsidiaries

Consolidated Statement of Changes in Cash Flows

(In thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2013
							As Revised
	As						in this Quarterly
	Previously						Report on
	Reported			Adjustments			Form 10-Q
Operating Activities
Net income (loss)	$	9,228		$	288		$	9,516
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization	2,368			—			2,368
Amortization of financing fees	828			—			828
Amortization of debt discount	206			—			206
Deferred income taxes	15			—			15
Other non-cash items	(17		)	—			(17		)
Changes in operating assets and liabilites, net of acquisition:
Accounts receivable	(11,852		)	16			(11,836		)
Inventories	(11,148		)	—			(11,148		)
Prepaid expense and other current assets	(333		)	(177		)	(510		)
Accounts payable and accrued expense	2,145			(223		)	1,922
Accrued pension and retirement liabilities	(658		)	112			(546		)
Customer advances and deferred income	(577		)	—			(577		)
Other	96			—			96
Net cash (used in) provided by operating activities	(9,699		)	16			(9,683		)
Investing Activities
Purchase of property and equipment	(3,260		)	—			(3,260		)
Change in restricted cash	5			—			5
Net cash used in investing activities	(3,255		)	—			(3,255		)
Financing Activities
Line of credit advances	74			—			74
Purchase of common units	(14,000		)	—			(14,000		)
Distributions paid to members	(1,357		)	—			(1,357		)
Net cash used financing activities	(15,283		)	—			(15,283		)
Effect of exchange rates on cash and cash equivalents	(527		)	(16		)	(543		)
Change in cash and cash equivalents	(28,764		)	—			(28,764		)
Cash and cash equivalents, beginning of period	42,373			—			42,373
Cash and cash equivalents, end of period	$	13,609		$	—		$	13,609