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Home My WebLink AboutFinancial Statement f\ A udited Financial Statements Team Contracting, LLC December 31,2006 and 2005 , i r' r) r\ ! r\ TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana FINANCIAL STATEMENTS December 31,2006 and 2005 CONTENTS Title Page INDEPENDENT AUDITOR 'S REPORT .................. ..................................................... 3 BALA N('E Sll EEl'S... ............ ..... '" ............. ..................... .................... ...... .................... 4-5 STATEMENTS OF MEMBERS' EQUITy.................................................................... 6 STATE M ENTS OF IN COME................. .......................................... .... ................. ......... 7-8 STATEM ENTS OF CASH FLOWS ... .............. ..................... .............. .................. ......... 9-10 NOTES TO FINANCIAL STATEMENTS ............................ ......................................... 11-17 r\ -', /- 'I \,\" ///1 r --'-'--J \ // I '\/ I I I . MELHISER ENDRES TUCKER INDEPENDENT AUDITOR'S REPORT N[.H~MAN L.. MELHISER, CPA TUM R. TUCKER, CPA ,.I(j~::;Fi:'1H L.. BROWN, CPA Mt".c d. MCCORMICK, CPA DLIUGLAS A. YORK, CPA T"..f"~YL. GRAHAM, CPA W. ISSAC ORWICK, CPA ANITA M. ASHER, CPA r~Ir.:.'-1AI~D N. ROBINSON, CPA ..JU.A" f~. RODRIGUEZ, CPA EDW/\PD D. ENDRES, CPA ( 1 942 - 1997) CPA's P.C. April 4, 2007 WWW.METCPA.COM Board of Directors TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana47143 We have audited the accompanying balance sheets of TEAM CONTRACTING, LLC as of December 31, 2006 and 2005, and the related statements of income, members' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. r 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. 46R, 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 31,2006 and 2005, 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. 1"'"""""" -,. '. MELll/SER ENDRES TUCKER ~~T~ 3D 1 E^".;r ELM STRF JeT . NEW Al "ANY, IN 47150 . PHClNE: B 1 2,945'5236 . FAX: B 1 2'949-4095 69'.:'=1 ..... fl,LVI[vV [)J:tIVF . Cr,lRYCHJN . IN 4"71 1 2. . ":JHC1NE'.: B 1 2~ 7 38-3 7 77 . FAX: Lif % "'7 3 f]".r: F'! 4 5 (\ TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana BALANCE SHEETS 1\ See Notes to Financial Statements. -4- I I I I I I I I I I I I I ,I ~ . - ~\ 1 TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana BALANCE SHEETS December 31. 2006 2005 LIABILITIES CURRENT LIABILITIES. Note Payable - Bank $ - $ 199,900 Current Portion of Long-Term Debt 504,610 642,941 Accounts Payable 906,162 674,090 Accrued Expenses 13,634 76,640 Accrued Payroll 32,834 33,961 Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts 63,248 84,134 TOTAL CURRENT LIABILITIES 1,520,488 1,711,666 LONG-TERM LIABILITIES Note Payable - Bank 450,000 Installment Loans 777,464 1,327,247 Less Current Portion of Long-Term Debt (504,610) (642,941 ) TOTAL LONG-TERM LIABILITIES 722,854 684,306 TOTAL LlABILlTIES 2,243,342 2,395,972 MEMBERS' EQUITY Members' Equity I ,73 1,604 1,935,784 TOTAL LIABILITIES & MEMBERS' EQUITY $ 3,974,946 $ 4,331,756 0i See Notes to Financial Statements. -5- 1'. . TEAM CONTRACTING, LLC 149) 2 Railroad Street Memphis, Indiana STATEMENTS OF MEMBERS' EQUITY BALANCE - December 30, 2004 $ 2,099,812 Net Income / (Loss) for the Year Ended December 3 1,2005 (55,743) Members'Draws (224,679) Members' Contributions 116,394 BALANCE - December 31, 2005 1,935,784 Net Income / (Loss) for the Year Ended December 31, 2006 (511,725) Members' Draws (143,867) E\ Members' Contributions 451,412 BALANCE - December 31, 2006 $ 1,731,604 r-'\ i See Notes to Financial Statements. -6- ,~ TEAM CONTRACTING, LL<: 14912 Railroad Street Memphis, Indiana STATEMENTS OF INCOMI: For the Year Ended Decem ber 3 I , IQQQ 2005 CON~rJ.{M'T REVENUE $ 7,688,264 $ 7,158,582 DIRECT COSTS Labor 1,674,015 1,298,&48 Payroll Taxes 146,507 I ] 4,269 Materials 2,465,339 1,744,580 Equipment Rental 290,069 ] 32,658 Equipment Fuel, Oil, Grease 173,209 106,210 Mobilization 61,586 46,169 Equipment Repairs & Maintenance 49,700 4,&89 Subcontract I, I 09,996 1,539,051 Other 70,]61 ]42,072 {-, Outside Trucking 102,075 206,9]5 Depreciation 465,969 382,437 TOTAL DIRECT COSTS 6,608,626 5,718,098 GROSS PROFIT 1,079,638 ] ,440,484 OPERATING EXPENSES Auto Expenses 75,760 74,787 Insurance 208,761 228,845 Employee Benefits 106,352 ] ]7,677 Legal and Accounting 34,164 23,479 Office Supplies 26,218 9,279 Advertising & Promotion 7,230 9,773 Bank Charges 1,216 1,037 Interest 79,762 64,300 Licenses & Permits 3,130 6,179 Postage and Freight 2,779 1,783 Depreciation 70,862 80,945 Repairs and Maintenance 82,406 21,390 Miscellaneous 40,574 69,] 05 ,r-\ See Notes to Financial Statements, -7- (\ TEAM CONTnACTING, LLC 149) 2 Railroad Street Memphis, Indiana STATEMENTS OF INCOME OPERATING EXPENSES (Continu@ Rent Supplies Radios/Pagers/Cellular Phones Utilities Meals and Entertainment Dues and Subscriptions Plan Fees and Deposits Wages Payroll Taxes TOTAL OPERATING EXPENSES NET INCOME (LOSS) BEFORE OTHER INCOME OTHER INCOME Interest Income Other Income Gain on Sale of Assets For the Year Ended Dec~nber 3 L 2006 275,000 254 17,850 33,877 390 4,393 6,162 505,372 44,229 1.626,741 (547,103) 28,775 6,603 TOTAL OTHER INCOME NET INCOME (LOSS) $ (511,725) $ "'--" f \ See Notes to Financial Statements. -8- 2005 313,735 21 15,329 12,419 3,678 4,976 4,173 425,380 37.423 1.525.713 (85,229) 7,448 2,638 19,400 35,378 29.486 (55,743) r\ TEAM CONTRACTING, LLC 14912 Rai lroad Street Memphis, Indiana STA TEMENTS OF CASH FLOWS For the Year Ended December 31. 200f2 2005 C.6S.JllJ,OWS tROM OPERA TINC] ACTIVITIES Cash Received from Customers 5; 7,560.315 $ 6.986.342 Interest Received 28,775 7,448 7,589,090 6,993,790 Cash Paid to Suppliers (7,300,432) (6,455.236 ) Interest Paid (79,762) (64,300) NET CASI I PROVIDED BY OPERATING ACTIVITIES 208,896 474.254 CASI) FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (222,172) (95,163) Sale of Assets 19,400 NET CASII USED BY INVESTING ACTIVITIES . (222,172) (75,763) r ~f)SJl FLOWS FROM FINANCING ACTIVITIES Principal Payments on Loans (1,454,172) ( 428,439) Distributions to Members (143,867) (224,679) I ,oan Proceeds 1,000,000 199,900 Contributions from Members 451,412 116,394 NET CASH USED BY FINANCING ACTIVITIES ( 146,(27) (336,824) NET INCREASE IN CASH AND CASH EQUIV ALENTS (159,903) 61,667 CASII AND CASII EQUIVALENTS AT BEGINNING OF YEAR 1,180,2\5 1,118,548 CASI! AND CASH EQUIV ALENTS AT END OF YEAR $ 1,020,312 $ 1,180,215 SlIPPLEMENTAL DISCLOSURES Non-cash investing and financing transaction: Capital Expenditures $ ( 154,488) $ (525,796) I,Oill] Proceeds 154,488 525.796 ".--... ,. \ See Notes to Financial Statements. -9- r TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana STA TEMENTS OF CASH FLOWS For the Year Ended Deccmber 3 L 2006 2005 REqJNCllJLU!S)N Q!.:J'-lJ:T INCOME (LOS~) TO NET CASII tI~QYJJ2U2.H.L(2.l2n0TING ACTIVITIES Net Income (Loss) $ (511,725) $ (55.743) Adjustments to Reconcile Net Income (Loss) To Net Cash Provided hy Opcrations: Depreciatioll Sale of Assets (Increase) Decrease in Receivables (Increase) Decrease in Costs and Estimated Earnings In Excess of Billings Oil Uncompleted Contracts Increase (Decrease) in Accounts Payable Increase (Dccrease) in Accrued Payroll Increase (Decrease) in Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts Increase (Decrease) in Accrued Expenses Net Adjustments 536.831 463,382 (19,400) ( 134,552) (47,533) 171.290 (127,343) 232,072 257,913 (1,127) 1.176 (20,886) ( 16,860) (63,007) 18,662 720.621 529,997 $ 208,896 $ 474,254 NET CASH PROVIDED BY OPERATING ACTIVITIES See Notes to Financial Statements. -10- r " TEAM CONTRACTING, LLC J 4912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31, 2006 and 2005 NOTE A - GENERAL INFORMATION Nature of Operation The Company was organized as a limited liability company on June 27, ] 995. 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. ..('""", i r ,I NOTE B - SIGNIFICANT ACCOUNTING POLICIES Method of Accounting Profits on long-ternl projects are being recorded on the basis of the Company's estimates ofthe 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-all 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 known. Profits on short-tenn 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 collected or paid. This method results in proper matching of income and expenses to determine income or loss for a specific period of time. r\ The asset, "Costs and estimated earnings in excess of billings 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. - J 1 - TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANC1AL STATEMENTS December 3],2006 and 2005 NOTE B - SIGNIFICANT ACCOUNT]NG POLICIES (Continued) 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 llsed 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 of the 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 For 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. Contracts Receivable Contracts receivable consist of outstanding billings due for the construction of various projects are based on contracted prices. The company has not provided an allowance for doubtful accounts based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Noruml contracts receivable are due 30 days after the issuance of the invoice. Contract retentions are due 30 days after completion of the project and acceptance by the owner. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. The Company charges any uncollectible accounts directly to current operations. All accounts at December 3] , 2006 and 2005 are thought to be collectible. - 12 -" " TEAM CONTHACTING, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31,2006 and 2005 NOTE B - SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of Estimates The preparation offinancial 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. 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 $7,230 and $9,773 for the years ended December 3], 2006 and 2005, respectively. NOTE C - CONTRACTS RECEIVABLE Contracts Receivable consist of: December 3], 2006 2005 Amounts Billed For: Contracts Completed and In Progress Retainage $739,324 155,405 $608,359 148,838 Total $894 729 :.......-...:.~~-==:= mLJ 97 r' - 13 - TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 31,2006 and 2005 NOTE D - UNCOMPLETED CONTRACTS Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows: December 31, 2006 2005 Costs Incurred on Uncompleted Contracts Estimated Earnings to Date Billings to Date $4,713,564 794,384 5,507,948 5,531,009 ~ 03.061) $ 880,094 306,59 ] 1,186,685 1,059,342 ~ I11J43 Included in the accompanying balance sheet under the following captions are: December 31, 2006 2005 Costs and Estimated Earnings in Excess Of Billings on Uncompleted Contracts Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts $40.187 $211.477 $63248 U4J31 NOTE E - DEPRECIATION Depreciation for financial statement purposes 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 eircct of these differences in depreciation methods. The Company's book and tax depreciation for the years ending December 31, are as follows: Book 2006 $236.83 t 2005 $463381 Tax $231~ 5_Q $434.] 64 - 14 - r\ TEAM CONTRACTING, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 3 I , 2006 and 2005 NOTE F - CONCENTRATION OF CREDIT RISK The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral 1rori1 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, 2006 and 2005 are $1,037,245 and $1,109,675, respectively. ,r--\ i , ...', I NOTE G - RELATED PARTY TRANSACTIONS The Company leases its otlice 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, ] 997, for the term of one year, and on a month to month basis thereafter. The monthly rental amount is $25,000. Total amounts paid to Team Properties, LLC for the years ending December 31,2006 and 2005 was $275,000 and $300,000, respectively. NOTE H - OPERATING LEASES The Company leases equipment from various vendors periodically. There are no fonnal leases for this equipment. The equipment is leased as needed. There were no outstanding due lease payments at December 3 I, 2006. (' - 15 - TEAM CONTRACTIN(;, LLC 14912 Railroad Street Memphis, Indiana NOTES TO FINANCIAL STATEMENTS December 3 I, 2006 and 2005 NOTE] - INSTALLMENT LOANS Balance Lender & Monthly Interest No. Of December 3 ] , Collateral Payment Rate Payments 2006 2005 Chase 2005 Chevy 3500 $894 5.91 36 . $. 4,396 $ 15,365 Ford Credit 2004 Ford Truck 779 7.99 48 7,450 16,543 2005 Ford Truck 64] 7.99 48 6,194 13,618 2005 Ford Truck 775 4.99 36 3,081 12,693 2005 Ford Truck 866 8.49 48 16,013 25,289 Caterpillar Financial Services Corp. 4 CAT Units 14,199 5.00 36 14,477 192,764 CAT Wheeloader 2,750 5.00 36 24,294 57,703 8 CAT Backhoe Loaders & 4 CAT Excavators I 9,726 5.00 36 230,792 467,476 2 CAT Track Loaders ] 5,026 1.85 36 339,308 525,796 2 CAT Sweepers 1,162 8.2 36 27,737 0 CAT Excavator ] ,626 0 36 56,9] 5 0 CNH Capital Case Forklift 1,885 4.21 33 46,807 0 'LJ..]7464 $1.327,247 ___c~,.= 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 ri imputed interest rate of 5%. - 16 - . ~ ~.. TI<:AM CONTRACTING, LLC 14912 Railroad Street Memphis; Indiana NOTES TO fTNANCIAL STATEMENTS December 31, 2006 and 2005 NOTE I - INST AILMENT LOANS (Continued) Maturities of long-tenn debt are as follows: Year Ended December 31, Amount 2007 2008 2009 $504,610 245,421 27,433 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 I % 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 31,2006 and 2005 was $11,570 and $11,805, 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 variable at the prime rate and the line has a maturity date of February 1, 2008. At December 31, 2006 and 2005, the Company had an outstanding balance of $450,000 and $199,900, respectively on this line of credit. - 17 -