grumley nano tech. minutes of meeting with cfo rapid growth outstripped prior auditors prior...
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Minutes of meeting with CFO Primary accounting estimates Inventory obsolence Allowance for uncollectible accounts Growth has outstripped the abilities of the revenue cycle system ---- Therefore CEO and VP Sales allowed to override the controls Debt covenantdebt to equity < 123%TRANSCRIPT
Grumley Nano Tech
Minutes of meeting with CFO
• Rapid growth outstripped prior auditors• Prior auditors inability in the international arena• Prior auditors took a conservative approach to GAAP• Growth and profit targets are a stretch• Equipment – 12 year operating lease• $47 M sale through the CEO’s cousin – older products– Unconditional 90 day right of return
Minutes of meeting with CFO
Primary accounting estimatesInventory obsolenceAllowance for uncollectible accounts
Growth has outstripped the abilities of the revenue cycle system ---- Therefore CEO and VP Sales allowed to override the controls
Debt covenant debt to equity < 123%
Letter from Predecessor
Aggressive approach to GAAP – challengesReorganization chargesGrumley growing Strategic intent to service mid-sized clientsHe will be out of the country extending his firm’s international capabilities
08 Summary of Sales & Returns
08 Tad's Summary of Sales and Returnsthru
first second third three 33.33% projected
sales 554,883 671,016 693,193 1,919,092 639,697 2,558,789returns 118,992 73,121 34,660 226,773 75,591 302,364Net Sales 435,891 597,895 658,533 1,692,319 564,106 2,256,425
12 Select Financial Datawith w/o restructure 0
2,009
Sales 4.4% 2,543,993 1.6% 2,477,529 0.7% 2,454,187 2,437,721Cost of sales 2.9% 1,904,802 2.1% 1,890,250 -0.1% 1,849,411 1,850,766Gross Profit 8.9% 639,191 0.1% 587,279 3.0% 604,776 586,955Operating exp -21.2% 279,553 -4.9% 337,336 -6.7% 331,034 354,841R&D -32.3% 113,739 -38.8% 102,823 -12.7% 146,661 167,998Restructure 0 0 0 0Operating Income 245,899 147,120 127,081 64,116Restructure 0 0 97,562 30,744something missing 23,543 17,164 26,350 10,732Before tax 222,356 129,956 3,169 22,640Income tax 35,922 21,319 5,746 0Net Income 186,434 108,637 -2,577 22,640
2012 2011 2010
12 Select Financial Datawith w/o restructure 1
2,009
Sales 4.4% 2,543,993 1.6% 2,477,529 0.7% 2,454,187 2,437,721Cost of sales 2.9% 1,904,802 2.1% 1,890,250 -0.1% 1,849,411 1,850,766Gross Profit 8.9% 639,191 0.1% 587,279 3.0% 604,776 586,955Operating exp -16.6% 296,053 -2.7% 345,436 -6.7% 331,034 354,841R&D -32.3% 113,739 -38.8% 102,823 -12.7% 146,661 167,998Restructure -16,500 -8,100 0 0Operating Income 245,899 147,120 127,081 64,116Restructure 0 0 97,562 30,744something missing 23,543 17,164 26,350 10,732Before tax 222,356 129,956 3,169 22,640Income tax 35,922 21,319 5,746 0Net Income 186,434 108,637 -2,577 22,640
2012 2011 2010
12 Select Financial Datawith w/o restructure 2
2,009
Sales 4.4% 2,543,993 1.6% 2,477,529 0.7% 2,454,187 2,437,721Cost of sales 2.9% 1,904,802 2.1% 1,890,250 -0.1% 1,849,411 1,850,766Gross Profit 8.9% 639,191 0.1% 587,279 3.0% 604,776 586,955Operating exp -16.6% 296,053 -2.7% 345,436 -6.7% 331,034 354,841R&D -32.3% 113,739 -38.8% 102,823 -12.7% 146,661 167,998Restructure 0 0 0 0Operating Income 229,399 139,020 127,081 64,116Restructure -16,500 -8,100 97,562 30,744something missing 23,543 17,164 26,350 10,732Before tax 222,356 129,956 3,169 22,640Income tax 35,922 21,319 5,746 0Net Income 186,434 108,637 -2,577 22,640
2012 2011 2010
Debt to Equitywithout saleto cousin
663,975 663,975611,019 611,019
1,274,994 1,274,9941,062,495 47,000 1,015,495
debt to equity 1.200 1.256