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Anacomp Financial Statement Analysis

Autor:   •  February 23, 2016  •  Case Study  •  604 Words (3 Pages)  •  653 Views

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Financial Statement Analysis

Assignment 1  “Anacomp”        

        

11 February 2015
Semester 2, Period 1

2014/2015

Student Name (Student Number), Tutorial Group Number

___________________________________________________________________________

  1. Anacomp, RTS associates, 4 banks, 20 review banks and officers and directors of Anacomp
  2.         - Anacomp had an agreement november 1979 with RTS Associates.
  • Anacomp devolps the CIS system for RTS Associates
  • RTS pays Anacomp a fee of $6 million of which $2.2 million was paid in 1980
  • Anacomp agrees to market CIS for 5 years
  • RTS had the right to extend the 5 years with an additional 5 years or cancel it if Anacomp did not market CIS good
  • RTS pays Anacomp: $1,44 million provided by partners, $3,25 million by bank loan, $2,2 million loan from Anacomp to RTS
  • If the devolpment expenses exceeded $6 million Anacomp agreed to give an extra $1,5 millionto RTS to complete the CIS system
  • Officers and director of Anacomp own 38,5% of the shares in RTS
  • Anacomp got a deal with four banks for $1,5 million each
  • 20 banks pay $150.000 non-refundable fee to be an advisory bank
  • Anacomp buys CIS from RTS for $16 million

Anacomp will have the majority of the risk because they can loose the most money. 2,2 million + 1,5 million = 3,7 million

RTS stands to gain the most because they own the CIS system

Shareholders are worse off, there’s $16 million paid for CIS and only $7,5 million costs of devolpment. Good returns for RTS but not for Anacomp shareholders

                   3) If the project is succesful

     Management has 38,5% of the stake in the partnership they may buy CIS without succes

4)         - off balance sheet financing

        - Devolpment costs offset against devolpment fee

if completed in-house: Expenses are recorded but the reveneus won’t be recorded, the CIS system at that time allowed to be capitalized at cost and out house development at market value.

Accelerated recognition of revenues

Deffered recognition of expenses

        Enchances reported net income

...

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