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Home My WebLink AboutTeam Contracting r- . . r " y- r~ r~ r' [ . L [" r [~ L L L L L t. L~ , L I Audited Financial Statements Team Contracting, LLC December 31, 2005 and 2004 MELHISER ENDRES TUCKER CPA's P.C. 301 EAST ELM STREET P.O. Box 107 NEW ALBANY, IN 47150 B12.945.5236 BOO.2.TUCKER www.METCPA.cOM 219 NORTH CAPITOL AVENUE 2ND FLOOR CORYDON, IN 471 12 812.738.3777 812.738.7703 ! l f I i ~ {'\ ( I I { [ i r \/' f 1 I f I. I l {\. TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana FINANCIAL STATEMENTS December 31, 2005 and 2004 CONTENTS Title Page INDEPENDENT AUDITOR'S REPORT ....................................................................... 3 BALANCE SHEETS .. ........................ ......... .......................... ...... .............. ...................... 4-5 STATEMENTS OF MEMBERS' EQUITy.... .................... .............. .............................. 6 STATEMENTS OF IN COME........................................ .................. ................... ............ 7-8 STATEMENTS OF CASH FLO WS ........... ........... ..................... .................................... 9-10 NOTES TO FINANCIAL STATEMENTS ..................................................................... 11-17 MELHISE:R ENDRES TUCKER . CERTI~IED PUBLIC ACCOUNTANTS . PRDF'ES5IDNALCORPORATION I I f" I I I I I I I C I I I I I I 1;- I~ I M... '. ! c=-___-, ,----1 .. .......... . III ,_..JI i /'!I ~-; Ii I r-~ II .... 11~~=-~~~j MELHISER ENDRES TUCKER NORMAN L. MELHISER, CPA TOM R. lUCKER, CPA .JOSEPH L. BROWN, CPA MARC .J. Mcr: ORMICK. CPA DOUGLAS A. YORK, CPA TERRY L. GRAHAM, CPA W. ISSAC ORWICK, CPA ANITA M. ASHER, CPA RICHARD N. ROBINSON, CPA .JUAN R. RODRIGUEZ, CPA EDWARD D. ENDRES, CPA 11 943 - 1997) CPA's P.O. WWW.ME:TCPA.COM INDEPENDENT AUDITOR'S REPORT February 28, 2006 Board of Directors TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana 47143 We have audited the accompanying balance sheets of TEAM CONTRACTING, LLC as of December 31, 2005 and 2004, and the related statements of income, members' equity, and cash flows for the years then ended. These financial statements are the responsibilityofthe Company's 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 audits 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. The Company has not applied provisions of Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, which is a departure from generally accepted accounting principles. The financial statement impact of this departure has not been determined. In our opinion, except for the effects of not following the provisions of Consolidation of Variable Interest Entities as discussed in the preceding paragraph, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of TEAM CONTRACTING, LLC as of December 31,2005 and 2004, 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. MELHISER ENDRES TUCKER 1.4 C2P... _ (~ -Q.A-<L ~ 301 EAST ELM STREET. NEW ALBANY, .IN 47150 . PHONE: B 12-945-5236 . FAX: 812-949-4095 219 NORTH CAPITOL. AVE., 2ND FLOOR. CORYDON, IN 471 12 . PHONE: 812-738-3777 . FAX: B 12-738-8845 TOTAL CURRENT ASSETS $ 1,180,215 $ 1,118,548 757,197 712,644 2,980 0 211,477 36,860 2,151,869 1,868,052 ',1 I I I I I I I I I I I I I I I I I I ~ r TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana BALANCE SHEETS Decem ber 3 ] :m05 2004 ASSETS CURRENT ASSETS Cash Contracts Receivable - Trade Employee Receivables Costs in Excess of Billings FIXED ASSETS Furniture & Fixtures Small Tools Machinery & Equipment Trucks & Autos Leasehold Improvements TOTAL ASSETS 79,205 47,321 100,131 90,408 3,166,303 2,6l1,540 624,1 73 624, I 73 6,537 3 ,44 7 3,976,349 3,376,889 (1.796 ,462) (IJ 54,580) 2.179,887 2,022,309 $ 4,331,756 $ 3,890.361 Less Accumulated Depreciation NET FIXED ASSETS r See Notes to Financial Statements, -4- MELHISER ENDRES TUCKER . CERTlnED PUBLIC ACCOUNTANTS . PRO.ESSIONAL CORPORATION I I (\ , I I I I I I I r- I I I I I I Ir\ I I TEAM CONTRACTING, LLC 149]2 Railroad Street Memphis, Indiana BALANCE SHEETS December 31 2005 2004 LIABILITIES CURRENT LIABILITIES Note Payable - Bank $ 199,900 $ 0 Current Portion of Long-Term Debt 642,941 431,474 Accounts Payable 674,090 416,175 Accmed Expenses 76.640 57,978 Accrued Payroll 33,961 32,785 Billings in Excess of Cost 84,134 53,720 TOTAL CURRENT LIABILITIES 1,711,666 992,132 LONG-TERM LIABILITIES Installment Loans 1,327,247 1,229,891 Less Current Portion of Long- Tenn Debt (642.94]) (431.474) TOTAL LONG-TERM LIABILITIES 684,306 798.4 17 TOT AL LIABILITIES 2,395,972 1,790,549 MEMBERS' EQUITY Members' Equity 1.935.784 2,099,812 TOTAL LIABILITIES & MEMBERS' EQUITY $ 4.33 I ,756 $ 3,890,361 See Notes to Financial Statements. -5- f,/:[.:_!-')~'.F.;~ E'NDRES TUCKER . CERTIFIED PUBL.IC ACCOUNTANTS . PROFESSIONAL CORPORATION I I r' I I I I I I I r- I I I I I I II' I' I " BALANCE - December 31, 2003 TEAM CONTRACTING, LLC 14912 Railroad Street I Memphis, Indiana STATEMENTS OF MEMBERS' EQUITY SI,790,111 Net Income for the Year Ended December 31,2004 725,972 Members' Draws BALANCE - December 31, 2004 ( 416,271) 2,099,812 Net Loss for the Year Ended December 3 ], 2005 (55,743) Members' Draws Members' Contributions BALANCE - December 31,2005 See Notes to Financial Statements. -6- (224,679) 116,394 $) .935.784 fv';C.'i. HI:;:;C~ ENDRES TUCKER . CERTIFIED PUBLIC ACCOUNTANTS . PRDF'ESS1DNAL-. CORPORATION I I r\ I I I I I I I r I I I I I I Ir I I e CONTRACT REVENUE DIRECT COSTS Labor Pa)Toll Taxes Materials Equipment Rental Equipment Fuel, Oil, Grease Mobilization Equipment Repairs & Maintenance Subcontract Other Outside Trucking Depreciation TOTAL DIRECT COSTS GROSS PROFIT OPERA TING EXPENSES Auto Expenses Insurance Employee Benefits Legal and Accounting Office Supplies Advertising & Promotion Bank Charges Interest Licenses & Pemlits Postage and Freight Depreciation Repairs and Maintenance Miscellaneous See Notes to Financial Statements. -7- "I'!C.L~.~.:.':::'C~' ENDRES TUCKER . TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana STATEMENTS OF INCOME For the Year Ended December 3 ] 2005 2004 $ 7,]58,58~ $ ] ],616,242 1,298,848 1,722,479 ] 14,269 ]47,698 1,744,580 2,498,17] 132,658 237,42] 106,210 97,335 46.169 32,]63 4,889 J2,828 ],539,05] 3,800,264 ] 42,072 ] ]4,000 206,915 525,424 382,437 320,486 5,718.098 9,508,269 1,440,484 2;107,973 74,787 228,845 ] 17,677 23,479 9,279 9,773 1,037 64,300 6,179 ],783 80,945 21,390 69,105 67,640 132,017 108,775 46,875 22,039 ] 2,939 1,350 29,25] 5,778 1,878 77 ,637 124,693 43,367 CERTIF"fED PUBLIC ACCOUNTANTS . PROFESSIONAL CORPORATION I I r\ I- I I I I I I r I I I I I I IF'\ , I I ~ OPERA TING EXPENSES (Continued) Rent Supplies Radios/Pagers/Cellular Phones Utilities Meals and Entertainment Dues and Subscriptions Plan Fees and Deposits Wages Payroll Taxes TOTAL OPERATING EXPENSES TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana ST A TEMENTS OF INCOME For the Year Ended December 3 I 2005 2004 313,735 300,000 21 41 15,329 12,898 12,4]9 8,964 3,678 4,170 4,976 6,110 4,173 2,94] 425,380 350,850 37,423 30,085 1,525,7]3 1.390,298 (85,229) 717,675 NET INCOME (LOSS) BEFORE OTHER INCOME OTHER INCOME Interest Income Other Income Gain on Sale of Assets TOTAL OTHER INCOME NET INCOME (LOSS) See Notes to Financial Statements. -8- $ 7,448 7,474 2,638 323 19,400 500 29.486 8,297 (55,743) $ 725,972 ~-..IjC:'h!--<!SC.R ENDRES TUCKER . CE:RTIFIED PUBLIC ACCOUNTANTS . PROFESSIONAL CORPORATION I I r'\ I I I I I I I (~ I I I I I I 1,,- I I t TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana STATEMENTS OF CASH FLOWS For the Year Ended December 31 2005 2004 CASH FLOWS FROM OPERA TlNG ACTIVITIES Cash Received from Customers $ 6,986,342 $ 12,440,831 Interest Received 7.448 7.474 6,993,790 12,448,305 Cash Paid to Suppliers (6,455,236) (I] ,260,227) Interest Paid (64,300) (9.257) NET CASH PROVIDED BY OPERATING ACTIVITIES 474,254 ],178,82] CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (95,1 63) (3 ]4,647) Sale of Assets ] 9 .400 500 NET CASH USED BY INVESTING ACTIVITIES (75,763) (314,]47) CASH FLOWS FROM FINANCING ACTIVITIES Principal Payments on Loans ( 428,439) ( 406,443) Distributions to Members (224,679) (4]6,27]) Loan Proceeds 199,900 121,345 Contributions from Members 116.394 0 NET CASH USED BY FINANCING ACTIVITIES (336,824 ) (70 1,369) NET INCREASE IN CASH AND CASH EQUIVALENTS 6],667 ] 63,305 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,118.548 955.243 CASH AND CASH EQUIVALENTS AT END OF YEAR $ U80.215 $ 1.118.548 SUPPLEMENTAL DISCLOSURES Non-cash investing and financing transaction: Capital Expenditures S (525,796) $ (J ,223,673) Loan Proceeds 525,796 ],223,673 See Notes to Financial Statements. -9- rJjCL'-:i':::Ef~ ENDRES TUCKER . CERTIFIED PUBLIC ACCOUNTANTS . PROf7ESSIONAL CORPORATION I I f\: I" I I I I I I [- I I I I I I Ir I I t1 -11- TEAM CONTRA.CTING, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31, 2005 and 2004 NOTE A - GENERAL INFORMATION Nature of Operation The Company was organized as a limited liability company on June 27, 1995. The Company is engaged primarily in commercial construction for business and municipalities in Kentucky and Southern Indiana. Income Taxes The LLC with the consent of its members, has elected under the Internal Revenue Code to be taxed as a partnership. In lieu of partnership income taxes, the members are taxed individually on their proportionate share of the LLC's taxable income. Therefore, no liability or expense for federal income taxes has been included in the financial statements. NOTE B - SIGNIFICANT ACCOlJNTING POLICIES Method of Accounting Profits on long-term projects are being recorded on the basis of the Company's estimates of the percentage of completion of individual projects. Under this method, the Company records that percentage of estimated total income on each project that incurred costs to date bear to estimated total costs, after giving effect to estimates of costs to complete based upon most recent information. This method does not alter the use of the basic accrual method as the over-aIl method of accounting. As the long-term projects extend over one or more years, revision in cost and profit estimates during the course of the work are reflected in the accounting period in which the facts requiring the revision become kno\\.u. Profits on short-term commercial work are recorded upon the substantial completion of each project. The Company's records are maintained using the accrual method of accounting which recognizes revenue when earned, and costs when incurred, rather than when coIlected or paid. This method results in proper matching of income and expenses to determine income or loss for a specific period of time. The asset, "Costs and estimated earnings in excess ofbiIlings on uncompleted contracts," represents revenues recognized in excess of amounts billed. The liability, "Billings in excess of costs and estimated earnings on uncompleted contracts," represents billings in excess of revenues recognized. "'>:i..:'L.r-liS.ER ENDRES TUCKER . CERTIFIED PUBLIC ACCOUNTANTS . PROF'ESSIONAL CORPORATION I I r\ I I I I I I I r- I I I I I I t IE' \' I I TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31, 2005 and 2004 NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued) -12- Fixed Assets Fixed asset costs are depreciated and amortized over the expected useful life of the individual asset as required by generally accepted accounting principles. The straight- line and accelerated methods are used in calculating depreciation. Disposal of Fixed Assets The Company's policy with respect to retirements, sales and disposals of equipment is to remove the cost of the asset and the accumulated depreciation from the accounts. The resulting gain or loss is reported on the Statement of Income under Other Income or Expense. Trade-In Of Fixed Assets The Company's policy with respect to trade-ins of fixed assets is to remove the cost of the asset traded and the related accumulated depreciation from the accounts. The remaining basis of the asset traded-in is added to the cost ofthe asset acquired. No gain. or loss is recognized on trade-ins. Repair And Maintenance Expenditures are charged to operations as incurred for maintenance, repairs and renewals which do not materially extend the useful life of the property. Cash Equivalents F or purposes of the Statement of Cash Flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Accounts Receivable The Company charges any uncollectible accounts directly to current operations. All accounts at December 31,2005 and 2004, are thought to be collectible. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. fv-:f:.:L~...;~SER Er;..JDRES TUCKER . CERTIFIED PUBLIC ACCOUNTANTS PROFESSIONAL CORPORATION I I 0, I I I I I I I r~ I I I I I I Ic>. I I t. TEAM CONTRACTING, LLC 1491,2 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31 , 2005 and 2004 NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value of Financial Instruments The fair value of the installment loan is estimated based on interest rates for the same or similar debt offered to the Company having the same or similar remaining maturities and collateral required. Advertising Advertising costs, which are principally included in operating expenses, are expensed as incurred. Advertising expense was $ 9,773 and $ 12,939 for the years ended December 31,2005 and 2004, respectively. NOTE C - CONTRACTS RECEIVABLE Contracts Receivable consist of: December 31 2005 2004 Amounts Billed for: Contracts Completed and In Progress Retainage $ 608,359 148,838 $ 467,434 245,210 Total $ 757.197 $712.644 NOTE D - UNCOMPLETED CONTRACTS -13- Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows: December 31 2005 2004 Costs Incurred on Uncompleted Contracts Estimated Earnings to Date $ $ 3,763,517 386.081 4,149,598 4.166.458 Billings to Date 880,094 306,591 1,186,685 1,059,342 $ 127.343 $ (16.861)) r.1}::~_H:SF..;:.r ENDRES TUCKER . CERTIFIED PUBLIC ACCOUNTANTS . PROFESSIONAL CORPORATION I I r I' I I I I I I C I I I I I I I fi' I I lJ -14- TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31, 2005 and 2004 NOTE D - lfN"COMPLETED CONTRACTS (Continued) Included in the accompanying balance sheet under the following captions are: Decem ber 3 1 2005 2004 Costs and Estimated Earnings in Excess Of Billings on Uncompleted Contracts Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts $ 211.477 $ 36.860 $ 84.134 $ 53.720 NOTE E - DEPRECIATION Depreciation was computed using straight-line method. The MACRS system is used for income tax reporting. Because the entity is an LLC and taxed as a partnership, no adjustments have been made for the tax effect of these differences in depreciation methods. The Company's book and tax depreciation for the years ending December 31 are as follows: 2005 2004 Book $ 463.382 $ 398.123 Tax $ 434.164 $ 1.231.527 f"'L:.HJ!::-.~E.~F~ ENDRES TUCKER . CERTIFIED PUBLIC ACCOUNTANTS . PROFESSIONAL CORFlORATIDN I I f\ I I I I I I I t= I I I I I I In I I p TEAM CONTRACTING, LLC 1491,2 Rai !road Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31,2005 and 2004 NOTE F - CONCENTRA nON OF CREDIT RISK The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral from its customers. The cash balances the Company maintains in individual banks exceeds the $ 100,000 maximum insurable by the Federal Deposit Insurance Corporation. The excess cash balances at December 31,2005 and December 31,2004 are $ 1,109,675 and $ 1,304,401, respectively. NOTE G - RELATED PARTY TRANSACTIONS The Company leases its office and shop facilities from Team Properties, LLC which is a separate partnership with the same ownership percentage as Team Contracting, LLC. The lease was entered into on July 31, 1997, for the term of one year, and on a month to month basis thereafter. The monthly rental amount is $ 25,000. Total amount paid to Team Properties. LLC for the years ending December 31,2005 and 2004 was $300,000 and $300,000, respectively. Additionally, a receivable was due from Team Properties, LLC at December 31,2005 in the amount of$30,654 for renovation work performed on the building owned by Team Properties, LLC. NOTE H - EQUIPMENT -15- The Company leases equipment from various vendors periodically. There are no formal leases for this equipment. The equipment is leased as needed. There were nO outstanding due lease payments at December 31,2005. tv'C~f-t;SE~i~ ENDRES TUCKE.R ~ CERTIFIED PUBLIC ACCOUNTANTS PRDF'"E.5510NAL CORPORATION I. Q ~\ I I I I I I I [~ I I I I I I In I I TEAM CONTRACTING, LLC 14912 Railroad Street I Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31, 2005 and 2004 NOTE I - INSTALLMENT LOANS -16- Lender & Monthly Interest No. Of Balance Balance Collateral Payment Rate Payments 12/31/05 12/31/04 Chase 2005 Chevy 3500 $ 894 5.91 36 $ 15,365 $ 24,107 Ford Credit 2001 Ford F450 785 0.00 36 0 6,282 2004 Ford Truck 779 7.99 48 16,543 23,588 2005 Ford Truck 641 7.99 48 13,618 19,417 2005 Ford Truck 775 4.99 36 12,693 20,424 2005 Ford Truck 889 1.95 36 0 24,311 2005 Ford Truck 866 8.49 48 25,289 32,533 Caterpillar Financial Services Corporation 4 CAT Units 14,199 5.00 36 192,764 336,447 CA T Wheel Loader 2,750 5.00 36 57,703 84,620 8 CAT Backhoe Loaders & 4 CAT Excavators 19,726 5.00 36 467,476 658,162 2 CAT Track Loaders 15,026 1.96 36 525,796 0 $ 1.327.247 $ 1.229.891 Three of the loans obtained from Caterpillar Financial Services Corporation are non- interest bearing loans that are secured by the equipment. They were discounted at an imputed interest rate of5%. t"~E::_rilsr:h: ENDRES TUCKER . CERTIF1ED PUBl..lC ACCOUNTANTS PROF"ESSIONAL CORPORATION I. t; I f I- I I I I I I r I I I I I I I~~ t I I TEAM CONTRACTING, LLC 14912 Railroad Street I Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31, 2005 and 2004 NOTE I - INSTALLMENT LOANS (Continued) Maturities oflong-term debt are as follows: Year Ended December 31 Amount 2006 2007 2008 $ 642,941 493,526 190,780 NOTE J - RETIREMENT PLAN Effective January 1, 1997, the Company established the Team Contracting, LLC 401(k) Salary Reduction Plan and Trust. Under this plan, eligible employees are permitted to make elective deferrals of 1 % up to 15% of their compensation. The Company has agreed to contribute a discretionary match of25% of each employee's elective deferral amount up to the first 5% of participants' compensation. Total employer contribution expense for the years ended December 31,2005 and 2004 was $ 11,805 and $ 15,757, respectively. NOTE K - LINE OF CREDIT The Company has a revolving line of credit with a total limit of $ 1,000,000. The available line of credit is personally guaranteed by the members and secured by the assets of the Company. The interest rate is 1.0 percent below the prime rate and has a maturity date of August 22, 2006. At December 31, 2005 and 2004, the Company had an outstanding balance of $ 199,900 and $ 0, respectively on this line of credit. -17- !'~~ c~~--,~,f:'-F' ENDRES TUCKER . CERTIFIE.D PUBLIC ACCOUNTANTS . PROFESSIONAL CORPORATION