Figure 8-9

Pinnacle Manufacturing Financial Statements

Pinnacle Manufacturing Company

Income Statement
For the Year ended December 31
2011 2010 2009

Net sales $150,737,628 $148,586,037 $144,686,413

Cost of goods sold 109,284,780 106,255,499 101,988,165
Gross profit 41,452,848 42,330,538 42,698,248
Operating expenses 37,177,738 38,133,969 37,241,108
Income from operations 4,275,110 4,196,569 5,457,140
Other revenues and gains — — —
Other expenses and losses 2,181,948 2,299,217 2,397,953
Income before income tax 2,093,162 1,897,352 3,059,187
Income tax 883,437 858,941 1,341,536
Net income for the year 1,209,725 1,038,411 1,717,651
Earnings per share $1.21 $1.04 $1.72

Pinnacle Manufacturing Company

Balance Sheet
As of December 31

Assets 2011 2010 2009

Current assets
Cash and cash equivalents $7,721,279 $7,324,846 $8,066,545
Net receivables 13,042,165 8,619,857 7,936,409
Inventory 32,236,021 25,537,198 25,271,503
Other current assets 172,278 143,206 131,742
Total current assets 53,171,743 41,625,107 41,406,199
Property, plant and equipment 62,263,047 61,635,530 58,268,732
Total assets $ 115,434,790 $ 103,260,637 $ 99,674,931

Liabilities
Current liabilities
Accounts payable $ 12,969,686 $ 9,460,776 $ 7,586,374
Short/current long-term debt 15,375,819 10,298,668 9,672,670
Other current liabilities 2,067,643 1,767,360 1,682,551
Total current liabilities 30,413,148 21,526,804 18,941,595
Long-term debt 24,420,090 22,342,006 22,379,920
Total liabilities 54,833,238 43,868,810 41,321,515

Stockholders’ equity
Common stock 1,000,000 1,000,000 1,000,000
Additional paid-in capital 15,717,645 15,717,645 15,717,645
Retained earnings 43,883,907 42,674,182 41,635,771
Total stockholders’ equity 60,601,552 59,391,827 58,353,416
Total liabilities & stockholders’ equity $115,434,790 $103,260,637 $99,674,931
Pinnacle Manufacturing Company
Balance Sheet - All Divisions
As of December 31

2011 2010 2009

ASSETS Dollar Value Dollar Value Dollar Value

CURRENT ASSETS
Cash and cash equivalents $ 7,721,279 $ 7,324,846 $ 8,066,545
Accounts receivable: Trade 14,008,633 9,586,325 8,879,352
Less: Allowance for bad debts (966,468) (966,468) (942,943)
Inventory 32,236,021 25,537,198 25,271,503
Prepaid expenses 119,081 106,353 102,650
Deposits 53,197 36,853 29,092
Total current assets 53,171,743 41,625,107 41,406,199

PROPERTY, PLANT, AND EQUIPMENT

Land 11,490,036 11,490,036 4,159,580
Automobiles 266,071 220,313 220,313
Accum. depreciation: Automobiles (198,218) (166,835) (122,769)
Office equipment 5,494,707 5,238,368 4,924,055
Accum.depreciation: Office equipment (2,962,472) (2,136,395) (1,417,025)
Manufacturing equipment 13,918,820 11,543,824 11,179,813
Accum. depreciation: Manufacturing equipment (3,319,983) (2,796,754) (2,429,272)
Manufacturing building 41,106,800 38,056,625 38,056,625
Accum. depreciation: Manufacturing building (11,098,836) (8,410,681) (7,074,110)
Office building 13,262,479 13,025,447 13,025,447
Accum.depreciation: Office building (5,696,357) (4,428,418) (2,253,925)
Total property, plant, and equipment 62,263,047 61,635,530 58,268,732
TOTAL ASSETS $ 115,434,790 $ 103,260,637 $ 99,674,931

LIABILITIES AND STOCKHOLDERS' EQUITY

- -
CURRENT LIABILITIES
Note payable: Bank $ 11,459,080 $ 10,257,598 $ 9,631,600
Accounts payable: Trade 12,969,686 9,460,776 7,586,374
Current portion of long-term debt 3,916,739 41,070 41,070
Accrued payroll and withholding taxes 1,593,276 1,263,461 1,238,454
Accrued interest 229,575 196,545 178,478
Federal income taxes payable 244,792 307,354 265,619
Total current liabilities 30,413,148 21,526,804 18,941,595

LONG-TERM DEBT 24,420,090 22,342,006 22,379,920

STOCKHOLDERS' EQUITY
Common stock: $1 par value
Authorized: 1,500,000 shares
Issued and outstanding: 1,000,000 shares 1,000,000 1,000,000 1,000,000
Additional paid-in capital 15,717,645 15,717,645 15,717,645
Retained earnings 43,883,907 42,674,182 41,635,771
Total stockholders' equity 60,601,552 59,391,827 58,353,416
- -
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 115,434,790 $ 103,260,637 $ 99,674,931
Pinnacle Manufacturing Company
Income Statement - All Divisions
For the Year Ended December 31

2011 2010 2009

Dollar Value Dollar Value Dollar Value

Sales 150,918,731 148,764,555 144,860,245

Sales Returns and Allowances 181,103 178,518 173,832
Cost of Sales* 109,284,780 106,255,499 101,988,165
Gross Profit 41,452,848 42,330,538 42,698,248
OPERATING EXPENSES-Allocated
Salaries-Management 2,281,266 2,387,993 2,295,081
Salaries-Office 315,169 296,681 306,856
Licensing and certification fees 190,650 172,883 162,279
Security 550,603 637,580 630,353
Insurance 93,197 103,842 108,491
Medical benefits 23,721 29,453 28,810
Advertising 162,512 178,009 165,678
Business publications 6,989 5,555 774
Property taxes 22,585 178,009 175,692
Bad debts 841,699 1,034,060 992,094
Depreciation expense 5,336,783 4,641,982 4,367,565
Accounting fees 273,956 297,777 299,789
Total operating expenses-Allocated 10,099,130 9,963,824 9,533,462
OPERATING EXPENSES-Direct
Salaries-Sales 14,970,669 15,327,777 14,904,392
Wages Rental 491,794 595,389 575,725
Wages-Mechanics 1,113,539 1,339,626 1,333,411
Wages-Warehouse 4,891,065 5,340,271 5,473,249
Garbage collection 27,649 29,771 37,969
Payroll benefits 2,657,889 2,937,730 2,894,300
Rent- Warehouse 802,855 764,346 758,345
Telephone 32,402 45,173 57,867
Utilities 262,393 267,005 274,365
Postage 89,763 133,518 151,278
Linen service 17,282 12,350 16,083
Repairs and maintenance 166,985 168,405 178,213
Cleaning service 89,800 81,589 78,088
Legal service 396,016 190,540 152,238
Fuel 286,547 341,192 279,512
Travel and entertainment 103,389 103,842 100,479
Pension expense 228,555 237,350 127,011
Office supplies 149,828 148,340 171,109
Miscellaneous 300,188 105,931 144,012
Total operating expenses-Direct 27,078,608 28,170,145 27,707,646
Total Operating Expenses 37,177,738 38,133,969 37,241,108
Operating Income 4,275,110 4,196,569 5,457,140
Other Expense-Interest 2,181,948 2,299,217 2,397,953
Income Before Taxes 2,093,162 1,897,352 3,059,187
Federal Income Taxes 883,437 858,941 1,341,536
Net Income 1,209,725 1,038,411 1,717,651
* Details of manufacturing expenses are
not included in this schedule.
Pinncacle Manufacturing Company

Income Statement - Welburn Division

For the Year Ended December 31

2011 2010 2009

$ Value $ Value $ Value
Sales 122,585,513 120,830,903 117,639,471
Sales Returns and Allowances 127,673 124,975 121,694
Cost of Sales* 90,373,709 87,905,900 84,375,503
Gross Profit 32,084,131 32,800,028 33,142,274
OPERATING EXPENSES-Allocated
Salaries-Management 1,851,775 1,934,168 1,858,914
Salaries-Office 255,833 240,298 248,539
Licensing and certification fees 139,951 127,659 119,829
Security 446,938 516,406 510,552
Insurance 75,647 84,103 87,868
Medical benefits 19,389 24,032 23,507
Advertising 131,917 144,181 134,193
Business publications 4,213 2,981 415
Property taxes 17,873 144,181 142,304
Bad debts 687,885 831,572 797,823
Depreciation expense 4,206,533 3,759,789 3,537,525
Accounting fees 223,534 240,196 241,817
Total operating expenses-Allocated 8,061,488 8,049,566 7,703,286
OPERATING EXPENSES-Direct
Salaries-Sales 12,579,213 12,694,443 12,343,793
Wages Rental - - -
Wages-Mechanics - - -
Wages-Warehouse 4,006,809 4,325,377 4,433,082
Garbage collection - - -
Payroll benefits 2,039,389 2,379,426 2,344,248
Rent- Warehouse 670,746 623,389 618,494
Telephone 25,901 36,045 46,175
Utilities 194,700 216,266 222,226
Postage 77,924 108,136 122,519
Linen service 14,126 10,510 13,685
Repairs and maintenance 123,450 117,538 124,383
Cleaning service 65,853 66,085 63,250
Legal service 115,735 131,334 104,934
Fuel 217,964 276,343 226,387
Travel and entertainment 80,265 84,103 81,380
Pension expense 187,891 192,240 102,872
Office supplies 121,617 120,149 138,590
Miscellaneous 57,147 57,910 78,729
Total operating expenses-Direct 20,578,730 21,439,294 21,064,747
Total operating expenses 28,640,218 29,488,860 28,768,033
OPERATING INCOME 3,443,913 3,311,168 4,374,241

* Details of manufacturing expenses are not

included in this schedule.
Pinnacle Manufacturing Company

Income Statement - Solar-Electro Division

For the Year Ended December 31

2011 2010 2009

$ Value $ Value $ Value
Sales 22,605,731 21,680,289 21,126,896
Sales Returns and Allowances 43,825 38,773 37,756
Cost of Sales* 17,008,377 16,156,496 15,507,635
Gross Profit 5,553,529 5,485,020 5,581,505
OPERATING EXPENSES-Allocated
Salaries-Management 338,015 352,230 338,525
Salaries-Office 46,697 43,759 45,259
Licensing and certification fees 19,303 15,287 14,350
Security 81,580 94,046 92,980
Insurance 13,808 15,319 16,005
Medical benefits 3,537 4,376 4,280
Advertising 24,078 26,255 24,436
Business publications 874 542 76
Property taxes 3,264 26,255 25,913
Bad debts 120,493 157,730 151,328
Depreciation expense 889,483 684,667 644,192
Accounting fees 39,666 44,689 44,992
Total operating expenses-Allocated 1,580,798 1,465,155 1,402,336
OPERATING EXPENSES-Direct
Salaries-Sales 2,192,482 2,402,414 2,336,053
Wages Rental - - -
Wages-Mechanics - - -
Wages-Warehouse 695,918 787,698 807,312
Garbage collection - - -
Payroll benefits 478,669 433,321 426,916
Rent- Warehouse 103,983 109,403 108,544
Telephone 4,730 6,567 8,412
Utilities 53,278 39,383 40,468
Postage 7,131 19,695 22,315
Linen service 2,578 1,490 1,941
Repairs and maintenance 34,121 39,383 41,677
Cleaning service 20,694 12,033 11,516
Legal service 268,954 45,950 36,714
Fuel 53,975 50,326 41,229
Travel and entertainment 18,196 15,319 14,822
Pension expense 34,297 33,988 18,187
Office supplies 22,199 21,880 25,238
Miscellaneous 234,892 42,982 58,433
Total operating expenses-Direct 4,226,097 4,061,832 3,999,777
Total operating expenses 5,806,895 5,526,987 5,402,113
OPERATING INCOME -253,366 -41,967 179,392

* Details of manufacturing expenses are

not included in this schedule.
Pinnacle Manufacturing Company

Income Statement - Machine-Tech Division

For the Year Ended December 31

2011 2010 2009

$ Value $ Value $ Value
Sales 5,727,487 6,253,363 6,093,878
Sales Returns and Allowances 9,605 14,770 14,382
Cost of Sales* 1,902,694 2,193,103 2,105,027
Gross Profit 3,815,188 4,045,490 3,974,469
OPERATING EXPENSES-Allocated
Salaries-Management 91,476 101,595 97,642
Salaries-Office 12,638 12,624 13,057
Licensing and certification fees 31,396 29,937 28,100
Security 22,086 27,128 26,820
Insurance 3,742 4,420 4,618
Medical benefits 795 1044 1022
Advertising 6,517 7,573 7,048
Business publications 1,902 2,032 283
Property taxes 1,448 7,573 7,475
Bad debts 33,321 44,759 42,942
Depreciation expense 240,767 197,527 185,850
Accounting fees 10,756 12,891 12,983
Total operating expenses-Allocated 456,844 449,103 427,840
OPERATING EXPENSES-Direct
Salaries-Sales 198,978 230,922 224,543
Wages Rental 491,794 595,389 575,724
Wages-Mechanics 1,113,539 1,339,627 1,333,411
Wages-Warehouse 188,339 227,196 232,853
Garbage collection 27,649 29,771 37,970
Payroll benefits 139,832 124,984 123,136
Rent- Warehouse 28,126 31,554 31,306
Telephone 1,771 2,560 3,280
Utilities 14,415 11,357 11,670
Postage 4,708 5,688 6,445
Linen service 579 350 457
Repairs and maintenance 9,414 11,484 12,153
Cleaning service 3,253 3,472 3,322
Legal service 11,327 13,255 10,590
Fuel 14,608 14,522 11,897
Travel and entertainment 4,928 4,420 4,277
Pension expense 6,368 11,121 5,951
Office supplies 6,012 6,312 7,281
Miscellaneous 8,141 5,035 6,856
Total operating expenses-Direct 2,273,781 2,669,019 2,643,122
Total operating expenses 2,730,625 3,118,122 3,070,962
OPERATING INCOME 1,084,563 927,368 903,507

* Details of manufacturing expenses are

not included in this schedule.