EX-99.2 4 d897265dex992.htm EX-99.2 EX-99.2
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Exhibit 99.2

ERICKSON OIL PRODUCTS, INC.

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Three Months Ended

December 31, 2014 and 2013


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ERICKSON OIL PRODUCTS, INC. AND SUBSIDIARIES

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     Page
Number
 
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS   

Unaudited Condensed Consolidated Balance Sheets

     1   

Unaudited Condensed Consolidated Statements of Operations

     3   

Unaudited Condensed Consolidated Statements of Cash Flows

     4   

Notes to Unaudited Condensed Consolidated Financial Statements

     6   


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ERICKSON OIL PRODUCTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED

BALANCE SHEETS

 

     December 31,
2014
    September 30,
2014
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 3,919,500     $ 4,630,300  

Receivables:

    

Trade accounts, less allowance for doubtful accounts of $32,000 and $30,000 at December 31, 2014 and September 30, 2014, respectively

     2,333,000       2,849,300  

Current maturities of notes receivable—stockholders and employees

     79,200       68,400  

Inventories

     4,775,100       4,593,700  

Prepaid expenses and other current assets

     879,700       4,020,900  
  

 

 

   

 

 

 

Total current assets

  11,986,500     16,162,600  
  

 

 

   

 

 

 

Other assets:

Notes receivable - stockholders and employees, less current maturities

  6,871,100     6,669,600  

Rental properties, at cost, less accumulated depreciation

  615,500     619,600  

Goodwill

  266,000     266,000  
  

 

 

   

 

 

 

Total other assets

  7,752,600     7,555,200  
  

 

 

   

 

 

 

Property and equipment, at cost:

Land

  12,149,900     12,118,300  

Buildings

  26,020,600     25,985,600  

Equipment and fixtures

  35,244,700     35,102,100  

Construction in progress—stores

  22,800     2,900  

Less: Accumulated depreciation

  (48,071,000 )   (47,323,800 )
  

 

 

   

 

 

 

Total property and equipment, net

  25,367,000     25,885,100  
  

 

 

   

 

 

 

Total assets

$ 45,106,100   $ 49,602,900  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ERICKSON OIL PRODUCTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED

BALANCE SHEETS

 

     December 31,
2014
     September 30,
2014
 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Current maturities of long-term debt

   $ 335,600      $ 340,200  

Revolving credit agreement

     —           3,000,000  

Accounts payable

     7,758,100        9,919,000  

Accrued expenses

     4,378,000        5,276,700  

Income taxes payable

     2,026,100         1,340,600  

Deferred income taxes

     56,800         241,900  
  

 

 

    

 

 

 

Total current liabilities

  14,554,600     20,118,400  
  

 

 

    

 

 

 

Long-term liabilities:

Long-term debt, less current maturities

  1,222,600     1,254,900  

Long-term payable to stockholder, former stockholder, and employee

  1,127,300     1,350,100  

Deferred revenue

  —        12,500  

Asset retirement obligation

  240,100     237,300  

Deferred income taxes

  4,212,000     4,335,400  
  

 

 

    

 

 

 

Total long-term liabilities

  6,802,000     7,190,200  
  

 

 

    

 

 

 

Total liabilities

  21,356,600     27,308,600  
  

 

 

    

 

 

 

Stockholders’ equity:

Common stock, $100 par value per share; 250 shares authorized; issued 25.5 shares

  2,600     2,600  

Additional paid-in capital

  153,000     153,000  

Retained earnings

  23,593,900     22,138,700  
  

 

 

    

 

 

 

Total stockholders’ equity

  23,749,500     22,294,300  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

$ 45,106,100   $ 49,602,900  
  

 

 

    

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ERICKSON OIL PRODUCTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

For The Three Months Ended December 30, 2014 and 2013

 

     Three Months
Ended December
31, 2014
    Three Months
Ended December
31, 2013
 

Net sales

   $ 75,210,500     $ 80,508,500  

Cost of goods sold

     64,804,900       72,010,300  
  

 

 

   

 

 

 

Gross profit

  10,405,600     8,498,200  

Other operating income, principally rental and lottery income

  490,500     501,700  
  

 

 

   

 

 

 

Gross profit and other operating income

  10,896,100     8,999,900  

Operating expenses

  8,503,000     8,087,200  
  

 

 

   

 

 

 

Operating income

  2,393,100     912,700  
  

 

 

   

 

 

 

Other income (expense):

Interest income

  18,600     18,400  

Interest expense

  (12,400 )   (18,300 )

Other, net

  31,400     32,200  
  

 

 

   

 

 

 

Total other income (expense)

  37,600     32,300  
  

 

 

   

 

 

 

Income before income taxes

  2,430,700     945,000  

Federal and state income tax expense

  975,500     401,100  
  

 

 

   

 

 

 

Net income

$ 1,455,200   $ 543,900  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ERICKSON OIL PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Three Months
Ended
December 31,
2014
    Three Months
Ended
December 31,
2013
 

Cash flows from operating activities:

    

Net income

   $ 1,455,200     $ 543,900  

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

    

Depreciation

     762,300       715,200  

Accretion on asset retirement obligation

     2,800       2,800  

Deferred revenue

     (12,500 )     (75,000

Deferred income taxes

     (308,500 )     (53,100

Changes in current assets and liabilities:

    

Trade receivables

     516,300       1,151,400  

Inventories

     (181,400 )     (697,700 )

Prepaid expenses and other current assets

     3,141,200       3,685,900  

Accounts payable

     (2,160,900 )     (3,431,700 )

Accrued expenses

     (898,700 )     (980,100 )

Income taxes receivable and payable

     685,500        (121,900 )
  

 

 

   

 

 

 

Net cash flows provided by operating activities

  3,001,300     739,700  
  

 

 

   

 

 

 

Cash flows from investing activities:

Purchases of property and equipment

  (240,100 )   (598,900 )

Net receipts from (payments to) stockholders and employees

  (435,100 )   (500,000 )
  

 

 

   

 

 

 

Net cash flows used in investing activities

  (675,200 )   (1,098,900 )
  

 

 

   

 

 

 

Cash flows from financing activities:

Repayments of borrowings under revolving credit agreement

  (3,000,000 )   —     

Proceeds from long-term debt

  79,900     38,000  

Payments on long-term debt

  (116,800 )   (100,000 )
  

 

 

   

 

 

 

Net cash flows provided by (used in) financing activities

  (3,036,900 )   (62,000 )
  

 

 

   

 

 

 

Net change in cash and cash equivalents

  (710,800 )   (421,200 )

Cash and cash equivalents - beginning of year

  4,630,300     3,126,800  
  

 

 

   

 

 

 

Cash and cash equivalents - end of year

$ 3,919,500   $ 2,705,600  
  

 

 

   

 

 

 

(CONTINUED)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ERICKSON OIL PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(CONTINUED)

 

     Three Months
Ended
December 31,
2014
     Three Months
Ended
December 31,
2013
 

Supplemental disclosures of cash flow information:

     

Cash payments for:

     

Interest

   $ 7,800      $ 10,500  
  

 

 

    

 

 

 

Income taxes

$ 598,500   $ 576,000  
  

 

 

    

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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ERICKSON OIL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Three Months Ended December 31, 2014 and 2013

Note 1 Summary of Significant Accounting Policies

Nature of Operations

Erickson Oil Products, Inc. and Subsidiaries (the “Company”) operates 66 retail gas station/convenience stores and 1 liquor store in Wisconsin, Minnesota, Michigan and South Dakota. Revenue from retail sales is recognized at the time of sale. The Company grants credit to individuals through credit card arrangements in each of these trade areas.

Basis of Presentation and Accounting Estimates

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements included the accounts of Erickson Oil Products, Inc. and its wholly owned subsidiaries, Freedom Valu Centers, Inc., Erickson Transport Corporation of Wisconsin, and Village Wine & Spirits, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.

Interim Financial Statements

The accompanying interim condensed consolidated financial statements and related disclosures are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) on the same basis as the corresponding audited consolidated financial statements for the year ended September 30, 2014, and in the opinion of management, include all adjustments of a normal recurring nature considered necessary to present fairly the Company’s financial position as of December 31, 2014, and the results of its operations and cash flows for the periods presented. Operating results for the three months ended December 31, 2014, are not necessarily indicative of the results that may be expected for the year ending September 30, 2015, or any other future periods. The balance sheet as of September 30, 2014, was derived from the audited consolidated financial statements for the year ended September 30, 2014. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted. These unaudited condensed consolidated financial statements should be read in conjunction with the corresponding audited consolidated financial statements and accompanying notes for the year ended September 30, 2014.

Note 2 Related Party Transactions

The Company had outstanding notes receivable from related parties totaling $6,950,300 and $6,738,000 as of December 31, 2014 and September 30, 2014, respectively. The unsecured notes, bearing interest at .95 percent to 3.25 percent, mature at various times through 2022. The following is a summary of maturities of all related-party notes receivable as of December 31, 2014:


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Years Ending

September 30,

      

2015

   $ 79,200  

2016

     818,400  

2017

     69,700  

2018

     70,900  

2019

     1,285,400  

Thereafter

     4,626,700  
  

 

 

 
  6,950,300  

Less: Current maturities

  (79,200 )
  

 

 

 
$ 6,871,100  
  

 

 

 

Interest income on these notes amounted to $16,900 and $17,100 for the three months ended December 31, 2014 and 2013, respectively. The Company had interest receivable on these notes of $14,700 as of December 31, 2014 and September 30, 2014.

The Company also has long-term payables to its stockholder, former stockholder and employee totaling $1,127,300 and $1,350,100 at December 31, 2014 and September 30, 2014, respectively. Interest is charged at the short-term applicable federal rate (0.36 percent as of December 31, 2014).

The Company leases space at one of its convenience store locations to a company related through common ownership. The lease expired December 2013. Rent received under this agreement was $18,300 for the three months ended December 31, 2013.

The Company has demand notes payable to related parties (see Note 3).

The Company leases office, warehouse, liquor store facility, and seven convenience store locations from related parties.

Note 3 Long-term Debt

During 2013, the Company entered into revolving credit agreements that provide advances up to $6,500,000, subject to a borrowing base calculation. Interest is payable monthly at the LIBOR rate (.15% at December 31, 2014), plus 2.75% with a floor of 3%. The financing commitments call for a personal guarantee of the Company’s stockholder and is secured by certain Company receivables, inventory and property. There was an outstanding balance of $0 and $3,000,000 under these agreements at December 31, 2014 and September 30, 2014, respectively. The agreements are subject to certain financial covenants (a). The agreements expire November 2016 if not renewed.

Long-term debt consists of the following:


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     December 31,      September 30,  
     2014      2014  

Revolving term loans payable to bank, variable interest at LIBOR plus 2.75% with a floor of 3% and an option to fix the rate within a specified period, maturing various dates through December 2021, guaranteed by the Company’s stockholder, availability declines in accordance with the original payment terms, available balance was $5,442,900 at December 31, 2014 (a).

   $  —        $  —    

Term note payable to bank, due in monthly installments of principal and interest of $20,900 with interest at 3.5% through December 2016, secured by specifically identified real properties of the Company, guaranteed by the Company’s stockholder (a).

     484,200         542,400   

Demand notes payable to related parties, of which none are reflected in current maturities since they will not be demanded within the year, interest at prime, unsecured.

     960,900         916,100   

Term note payable to bank, due in monthly installments of $8,400, including interest at a variable rate of interest equal to 5.5% through February 2016, secured by specifically identified equipment of the Company, guaranteed by the Company’s stockholder.

     113,100         136,600   
  

 

 

    

 

 

 
  1,558,200      1,595,100   

Less: Current maturities

  (335,600   (340,200
  

 

 

    

 

 

 

Total long-term debt, less current maturities

$ 1,222,600    $ 1,254,900   
  

 

 

    

 

 

 

 

(a) The agreements contain certain financial covenants including but not limited to maintaining certain debt to EBITDA and fixed charge ratios.

Principal maturities of long-term debt are as follows:

 

Years Ending

September 30,

      

2015

   $ 335,600  

2016

     1,222,600  
  

 

 

 
$ 1,558,200  
  

 

 

 

Interest expense on related-party notes was $5,900 and $6,800 for the three months ended December 31, 2014 and 2013, respectively.


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Note 4 Federal and State Income Taxes

The Company’s provision for income taxes charged to operations for the three months ended December 31, 2014 and 2013 consists of the following:

 

     2014      2013  

Current tax expense

   $ 1,284,000      $ 648,800  

Deferred tax expense

     (308,500 )      (74,400
  

 

 

    

 

 

 

Total

$ 975,500   $ 574,400  
  

 

 

    

 

 

 

Deferred taxes applicable to other comprehensive income

$ —      $ —     
  

 

 

    

 

 

 

Note 5 Deferred Compensation

The Company has adopted an unfunded long-term executive benefit plan for certain key employees. The key employees may elect to defer a percentage of any bonus they receive, not less than 50 percent, to the plan. The key employees vest over a period of five years. The total liability was $659,200 and $523,000 as of December 31, 2014 and September 30, 2014, respectively. Subsequent to year end, there was a change in control of the Company (see Note 6) and the key employees became 100% vested. On February 11, 2015, the deferred compensation liability was paid in full.

Note 6 Subsequent Events

Subsequent events have been evaluated for recognition or disclosure through April 28, 2015, which is the date that the unaudited condensed consolidated financial statements were available to be issued.

Erickson Acquisition

On February 12, 2015, CrossAmerica Partners LP completed the acquisition of all of the outstanding capital stock of the Company and certain related assets from GST Non-Exempt Family Trust Created Under the David B. Erickson Revocable Trust UAD May 12, 2010 and GST Exempt Family Trust Created Under the David B. Erickson Revocable Trust UAD May 12, 2010 (collectively, the “Stock Sellers”), and certain real estate from Team Investments, LLC (together with the Stock Sellers, the “Sellers”). The selling price was $85 million, subject to certain post-closing adjustments and indemnification and environmental remediation escrows.