Independent Auditors’ Report To the Board of Directors and Stockholders Stockho lders of Excelsior Corporation: We have audited the accompanying consolidated financial statements of Excelsior Corporation, hich comprise the !alance sheet as of Decem!er "#, $%x#, and the related consolidated statements of income, changes in stockholders& e'uity and cash flos for the year then ended, and the related notes to the financial statements( Management’s Management’s Responsibility for the Financial Statement )anagement is responsi!le for the preparation and fair presentation of these consolidated financial statements in accordance ith accounting principles generally accepted in the *nited States of +merica this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, hether due to fraud or error( Auditors’ Responsibility -ur responsi!ility is to express an opinion on these consolidated financial statements !ased on our audit( We conducted our audit in accordance acco rdance ith auditing standards generally accepted in the *nited States of +merica( Those standards re'uire that e plan and perform the audit to o!tain reasona!le assurance a!out hether the financial statements are free of material misstatement( +n audit involves performing procedures to o!tain audit evidence a!out the amounts and disclosures in the financial statements( The procedures selected depend on the auditors& .udgment, including the assessment of the risks of material material misstatement to the financial statements, hether due to fraud or error( /n making those risk assessments, the auditor considers financial statements in order to design audit procedures that are appropriate in the in the circumstances, !ut not for the purpose of exp ressing an opinion on the effectiveness of the entity&s internal internal control( +ccordingly, e express no such opinion( +n audit also includes evaluating the appropriateness of accounting policies used and the reasona!leness of significant accounting estimates made !y management, as ell as evaluating the overall presentation of the financial statements( We !elieve that the audit evidence e have o!tained is sufficient and appropriate to provide a !asis for our audit opinion( Basis for Qualified Opinion The corporation has declined to disclose data a!out the de!enture agreements in the notes to the financial statements( The de!enture agreement restricts the payment of future cash dividends to earnings after Decem!er "#, $%0#( /n our opinion, these agreements should have !een disclosed ithin the notes of the financial statements in order to con form ith accounting principles generally accepted in the *nited States of +merica( Qualified Opinion
/n our opinion, the financial statements referred to a!ove present fairly, in all material respects, the financial position of Excelsior Corporation as of Decem!er "#, $%x#, and the results of their operations and their cash flos for the year then ended in accordance ith accounting principles generally accepted in the *nited States of +merica( Emphasis-of-Matter +s discussed in 1ote ## to the financial statements, the corporation is a defendant in a lasuit in hich the outcome is highly uncertain( /f the case is settled in favor of the plaintiff, Excelsior ill !e re'uired to pay a su!stantial amount of cash that might re'uire the sale of certain assets( 1ormal accounts receiva!le confirmation procedures ere not a!le to !e performed, !ut alternate procedures ere used to validate the receiva!les( /n our opinion, the alternate procedures ere satisfactory( +s discussed in 1ote #$, during the year presented in the financial statements, Excelsior Corporation changed its method of accounting for long2term construction contracts and properly reflected the effect of the change( We are satisfied ith Excelsior&s .ustification for making the change( -ur opinion is not modified ith respect to these matters( Silver Bell, +ri3ona 4e!ruary #%, $%x$
Roscoe & Jones, Ltd
