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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
![]() | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the Fiscal Quarter Ended September 30, 2001 | ||
or | ||
![]() | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
GLASSTECH, INC.
(Exact name of registrant as specified in its charter)
Delaware | 33-32185-01 | 13-3440225 | ||
(State or other jurisdiction of incorporation or organization) | (Commission file number) | (IRS Employer Identification No.) |
Ampoint Industrial Park, 995 Fourth Street, Perrysburg, Ohio (Address of principal executive offices) | 43551 (Zip Code) |
Registrant’s telephone number, including area code: (419)-661-9500
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No
The number of shares common stock, $.01 par value as of November 9, 2001 was 1,000.
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The condensed consolidated financial statements presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Since the following condensed unaudited financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements. Accordingly they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing in the Annual Report on Form 10-K for the fiscal year ended June 30, 2001, as filed with the Securities and Exchange Commission on September 28, 2001. The interim results of operations are not necessarily indicative of results for the entire year.
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GLASSTECH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, 2001 | June 30, 2001 | ||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 85 | $ | 6,197 | |||||||
Accounts receivable: | |||||||||||
Contracts: | |||||||||||
Uncompleted, including unbilled amounts of $2,556 and $1,563 | 3,729 | 6,637 | |||||||||
Completed | 1,120 | 1,371 | |||||||||
Trade, less allowance of $40 for doubtful accounts | 1,843 | 1,810 | |||||||||
6,692 | 9,818 | ||||||||||
Inventory: | |||||||||||
Replacement and service parts | 1,959 | 1,798 | |||||||||
Furnace and other | 680 | 680 | |||||||||
2,639 | 2,478 | ||||||||||
Prepaid expenses | 515 | 341 | |||||||||
Total current assets | 9,931 | 18,834 | |||||||||
Property, plant and equipment, net | 4,422 | 4,656 | |||||||||
Other assets: | |||||||||||
Patents, less accumulated amortization of $7,340 and $6,908 | 10,943 | 11,375 | |||||||||
Goodwill, less accumulated amortization of $10,805 and $10,176 | 39,620 | 40,249 | |||||||||
Deferred financing costs and other | 1,761 | 1,919 | |||||||||
Total other assets | 52,324 | 53,543 | |||||||||
$ | 66,677 | $ | 77,033 | ||||||||
Liabilities and capital deficiency | |||||||||||
Current liabilities: | |||||||||||
Revolving Credit Facility | $ | 1,527 | $ | 3,000 | |||||||
Accounts payable | 4,387 | 3,772 | |||||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 1,240 | 4,344 | |||||||||
Accrued liabilities: | |||||||||||
Interest | 2,231 | 4,462 | |||||||||
Contract costs | 1,733 | 1,844 | |||||||||
Salaries and wages | 854 | 1,315 | |||||||||
Other | 904 | 893 | |||||||||
5,722 | 8,514 | ||||||||||
Total current liabilities | 12,876 | 19,630 | |||||||||
Long-term debt | 69,705 | 69,679 | |||||||||
Nonpension postretirement obligation | 502 | 493 | |||||||||
Capital deficiency: | |||||||||||
Common stock $.01 par value; 1,000 shares authorized, issued and outstanding | — | — | |||||||||
Additional capital | 11,722 | 11,722 | |||||||||
Note receivable from parent | (656 | ) | (656 | ) | |||||||
Deficit | (27,472 | ) | (23,835 | ) | |||||||
Total capital deficiency | (16,406 | ) | (12,769 | ) | |||||||
$ | 66,677 | $ | 77,033 | ||||||||
See accompanying notes.
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GLASSTECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
Three Months Ended | ||||||||
September 30, | ||||||||
2001 | 2000 | |||||||
Net revenue | $ | 9,788 | $ | 10,415 | ||||
Cost of goods sold | 7,143 | 7,153 | ||||||
Gross profit | 2,645 | 3,262 | ||||||
Selling, general and administrative expenses | 1,814 | 2,056 | ||||||
Research and development expenses | 975 | 887 | ||||||
Amortization expense | 1,061 | 1,061 | ||||||
Operating loss | (1,205 | ) | (742 | ) | ||||
Interest expense | (2,444 | ) | (2,417 | ) | ||||
Other income – net | 12 | 26 | ||||||
Net loss | $ | (3,637 | ) | $ | (3,133 | ) | ||
See accompanying notes.
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GLASSTECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended September 30, | ||||||||||||
2001 | 2000 | |||||||||||
Operating activities: | ||||||||||||
Net loss | $ | (3,637 | ) | $ | (3,133 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Depreciation and amortization | 1,458 | 1,501 | ||||||||||
Accretion of debt discount | 26 | 27 | ||||||||||
Nonpension postretirement benefit obligation expense in excess of payments | 9 | 9 | ||||||||||
Changes in assets and liabilities affecting operations: | ||||||||||||
Accounts receivable | 3,126 | (3,568 | ) | |||||||||
Inventory | (161 | ) | (178 | ) | ||||||||
Prepaid expenses | (174 | ) | (149 | ) | ||||||||
Accounts payable | 615 | (82 | ) | |||||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | (3,104 | ) | 3,843 | |||||||||
Accrued liabilities | (2,792 | ) | (2,593 | ) | ||||||||
Net cash used in operating activities | (4,634 | ) | (4,323 | ) | ||||||||
Investing activities | ||||||||||||
Additions to property, plant and equipment | (6 | ) | (34 | ) | ||||||||
Other | 1 | 1 | ||||||||||
Net cash used in investing activities | (5 | ) | (33 | ) | ||||||||
Financing activities | ||||||||||||
Revolving credit facility | (1,473 | ) | - | |||||||||
Net cash used in financing activities | (1,473 | ) | - | |||||||||
Decrease in cash and cash equivalents | (6,112 | ) | (4,356 | ) | ||||||||
Cash and cash equivalents at beginning of period | 6,197 | 5,668 | ||||||||||
Cash and cash equivalents at end of period | $ | 85 | $ | 1,312 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid during the period for the following: | ||||||||||||
Interest | $ | 4,489 | $ | 4,463 | ||||||||
See accompanying notes.
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GLASSTECH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
1. Background and Basis of Presentation
Effective July 2, 1997, Glasstech, Inc. (the “Company”) was acquired by Glasstech Holding Co. (“Holding”) (the “Transaction”). In connection with the Transaction, Holding, a holding company formed for the purpose of completing the Transaction, formed a wholly owned subsidiary, Glasstech Sub Co. (“Sub Co.”) which acquired all of the outstanding stock of the Company. Subsequently, Sub Co. was merged into the Company. Holding conducts no significant activities other than managing its investment in the Company. The acquisition was accounted for under the purchase method of accounting for financial reporting purposes and the purchase price was allocated to the underlying net assets acquired. The Transaction resulted in the Company having substantial goodwill and increased debt.
The condensed consolidated balance sheet as of June 30, 2001 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
In June 2001 the FASB issued Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.” Under the new rule, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. The Company will apply the new accounting rules for goodwill beginning July 1, 2002 but has not yet determined the effects of these statements on the earnings and financial position of the Company.
2. Notes Payable and Long-Term Debt
In connection with the Transaction, the Company issued $70,000 of 123/4% Senior Notes due 2004. Interest on the Senior Notes is payable semi-annually on each January 1 and July 1. The terms of the Senior Notes do not require any scheduled principal payments prior to maturity.
The Company also entered into a revolving credit facility (the “Credit Facility”) in connection with the Transaction. The Credit Facility is available to fund working capital requirements as needed, and to secure standby letters of credit. The Credit Facility provides for borrowings up to $13,000 (including standby letters of credit), subject to a borrowing base of certain qualifying assets up to a maximum of $7,000. Any borrowings or standby letters of credit above $7,000 must be cash collateralized. The Credit Facility provides for interest on outstanding borrowings at the LIBOR rate plus 2.5% (6.0% at September 30, 2001), payable monthly. The Credit Facility is secured by substantially all of the assets of the Company. At September 30, 2001, the borrowing base approximated $6,356, on which the Company had outstanding borrowings of $1,527 and standby letters of credit of $1,300.
The Senior Notes and Credit Facility, as amended, contain numerous financial and other covenants which include the maintenance of certain levels of earnings as defined, restrictions on the payment of dividends and the incurrence of additional indebtedness as well as other types of business activities and investments. In November 2001, in order to remain in compliance, the Company’s Credit Facility was amended to modify the fixed charge coverage ratio covenant for the first fiscal quarter ended September 30, 2001. Furthermore, the amendment permitted the Company to borrow under the Credit Facility until February 14, 2002 without regard to whether or not it is in compliance with the fixed charge coverage ratio for the second fiscal quarter ending December 31, 2001. The Company believes that it is in material compliance with all covenants as amended.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
Certain statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section and the attached financial statements, in the Company’s press releases and in oral statements made by or with the approval of an authorized executive officer of the Company constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. These may include statements projecting, forecasting or estimating the Company’s performance and industry trends. The achievement of projections, forecasts or estimates is subject to certain risks and uncertainties. Actual results and events may differ materially from those that were projected, forecasted or estimated. The applicable risks and uncertainties include general economic and industry conditions that affect all international businesses, as well as matters that are specific to the Company and the markets it serves.
General risks that may impact the achievement of such forecasts include: compliance with new laws and regulations; significant raw material price fluctuations; currency exchange rate fluctuations; business cycles; and political uncertainties. Specific risks to the Company include the risk of recession in the markets and industries in which its products are sold; the concentration of a significant portion of the Company’s revenues from customers whose equipment needs are located in the Asia-Pacific region; the concentration of a substantial percentage of the Company’s sales with a few major customers, several of whom have significant manufacturing presence in the Asia-Pacific region; the timing of new system orders and the timing of payments due on such orders; changes in installation schedules, which could lead to deferral of progress payments or unanticipated production costs; new or emerging technologies from current competitors, customers’ in-house engineering departments and others; competition from current competitors, customers’ in-house engineering departments and others; and the emergence of a substitute for glass. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company’s plans and objectives will be achieved.
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, as filed with the Securities and Exchange Commission on September 28, 2001. The interim results of operations, historical results and percentage relationships set forth in this MD&A section and the financial statements, including trends that might appear, should not be taken as indicative of future operations.
General Overview
The Company designs and assembles glass bending and tempering (i.e., strengthening) systems that are used by glass manufacturers and processors in the conversion of flat glass into safety glass. Systems are sold worldwide, primarily to automotive glass manufacturers and processors and, to a lesser extent, to architectural glass manufacturers and processors. Revenues generated by the sale of new systems are referred to below as “Original Equipment.”
The Company has an installed base of approximately 400 systems in 45 countries on six continents. As a result of its installed base and the relatively long useful life of a system, the Company also engages in sales of aftermarket products and services (retrofit of systems with upgrades, tooling used to shape glass parts, replacement parts and technical services). Revenues generated by these types of products are referred to below as “Aftermarket.”
In this MD&A section all dollars amounts are in thousands, unless otherwise indicated.
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Revenues
For financial reporting purposes, the Company includes in income the ratable portion of profits on uncompleted contracts determined in accordance with the stage of completion measured by the percentage of costs incurred to estimated total costs of each contract (generally, Original Equipment, system retrofits and tooling). Unbilled amounts included in uncompleted contract accounts receivables represent revenues recognized in excess of amounts billed. Billings in excess of costs and estimated earnings on uncompleted contracts represent amounts billed in excess of revenues recognized. Revenue from sales other than contracts (spare parts and engineering services) is recognized when the products are shipped.
Selling Expense
The Company maintains an in-house sales staff and uses the services of commissioned agents around the world for the sale of Original Equipment and Aftermarket products and services. In addition, the Company maintains a sales and engineering support office in the United Kingdom. The substantial majority of the Company’s Original Equipment is sold directly to the largest glass manufacturers and processors in the world or their affiliates.
Research and Development
The Company believes it is the technological leader in the design and assembly of glass bending systems. The Company works with customers to identify product needs and market requirements. Periodically, the Company enters into joint development agreements with customers. From time to time, the Company allocates a portion of its research and development resources to complete the transition from new product development to new product introduction. When the Company does this, these expenses are charged directly to the contracts relating to the introduction of new products. The Company considers research and development expenses and new product introductions a very integral part of its future success.
Management Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.
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Results of Operations
The following table sets forth the amounts and the percentage of total net revenue for certain revenue and expense items for the periods indicated:
Three months Ended | ||||||||||||||||||
September 30, | ||||||||||||||||||
2001 | 2000 | |||||||||||||||||
Net revenue (a) | ||||||||||||||||||
Original Equipment | $ | 5,914 | 60.4 | % | $ | 5,611 | 53.9 | % | ||||||||||
Aftermarket | 3,874 | 39.6 | 4,804 | 46.1 | ||||||||||||||
Total net revenue | 9,788 | 100.0 | 10,415 | 100.0 | ||||||||||||||
Cost of goods sold (a) | 7,143 | 73.0 | 7,153 | 68.7 | ||||||||||||||
Gross profit | 2,645 | 27.0 | 3,262 | 31.3 | ||||||||||||||
Selling, general and administrative | 1,814 | 18.5 | 2,056 | 19.7 | ||||||||||||||
Research and development expense | 975 | 10.0 | 887 | 8.5 | ||||||||||||||
Amortization expense (b) | 1,061 | 10.8 | 1,061 | 10.2 | ||||||||||||||
Operating loss | (1,205 | ) | (12.3 | ) | (742 | ) | (7.1 | ) | ||||||||||
Amortization expense (b) | 1,061 | 10.8 | 1,061 | 10.2 | ||||||||||||||
Depreciation expense | 238 | 2.5 | 282 | 2.7 | ||||||||||||||
EBITDA | $ | 94 | 1.0 | % | $ | 601 | 5.8 | % | ||||||||||
(a) | Contract revenues and cost of goods sold are recognized on a percentage completion basis measured by the percentage of costs incurred to the estimated total costs of each contract. | |
(b) | Amortization expense excludes the amortization of deferred financing costs, which is included with interest expense. |
Three months Ended September 30, 2001 compared with the Three months Ended September 30, 2000
Net revenue for the three months ended September 30, 2001 decreased $627, or 6.0%, to $9,788 from $10,415 for the three months ended September 30, 2000. Original Equipment revenue increased $303, or 5.4%, to $5,914 for the three months ended September 30, 2001 compared to $5,611 for the three months ended September 30, 2000. Aftermarket revenue decreased $930, or 19.4% to $3,874 for the three months ended September 30, 2001 from $4,804 for the three months ended September 30, 2000. The decrease in aftermarket revenue was primarily the result of a decrease in retrofit and tooling revenue partially offset by slight increases in other aftermarket revenue. Retrofit and tooling revenues fluctuate based on customer demands and are influenced by a variety of factors, including economic conditions and the customers’ retrofit schedules and the timing of automotive manufacturers’ design changes, which may impact the release of tooling orders.
A significant portion of the Company’s net revenue is generated from customers outside the United States. For the three months ended September 30, 2001, Original Equipment revenue from foreign customers decreased to $3,213 (54.3% of total Original Equipment revenue) as compared to $4,024 (71.7% of total Original Equipment revenue) for the three months ended September 30, 2000. The percentage of aftermarket revenue from foreign customers increased to 60.1% of total aftermarket revenue for the three months ended September 30, 2001 compared to 57.9% for the three months ended September 30, 2000. The portion of the Company’s net revenue generated from customers outside the United States can fluctuate from time to time depending on location of contract signings.
Gross profit decreased $617 to $2,645, at a gross margin percentage of 27.0% for the three months ended September 30, 2001 compared to $3,262, at a gross margin of 31.3% for the three months ended September 30, 2000. The decline in the gross profit and gross margin is the result of the current mix of contracts.
Selling, general and administrative expenses decreased $242, or 11.8%, to $1,814 for the three months ended September 30, 2001 as compared to $2,056 for the three months ended September 30, 2000. This decrease in fiscal 2002 was primarily the result of non-recurring sales and marketing expense related to a bi-annual trade show in fiscal year 2001.
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Research and development expenses increased $88 or 9.9% to $975 for the three months ended September 30, 2001 as compared to $887 for the three months ended September 30, 2000, due to an increase in project costs partially offset by decreases in utilities, depreciation and other costs.
Operating loss increased $463 to $1,205 for the three months ended September 30, 2001 as compared to $742 for the three months ended September 30, 2000. The increase in operating loss was the result of the decline in gross profit as well as the increase in research and development expenses, partially offset by the decrease in selling, general and administrative expenses.
No income tax expense or benefit has been provided in the three months ended September 30, 2001 and 2000 due to the recorded loss and the uncertainty related to the future realization of such amounts.
Net loss was $3,637 for the three months ended September 30, 2001 compared to a net loss of $3,133 for the three months ended September 30, 2000. The increase in net loss was the result of the increase in the operating loss.
EBITDA, which is defined as operating profit plus depreciation and amortization, was $94 for the three months ended September 30, 2001 compared to $601 for the three months ended September 30, 2000. The decrease in EBITDA was the result of the increase in operating loss.
Liquidity and Capital Resources
The Transaction and the operating results of the current quarter and fiscal 2001 have significantly impacted the Company’s liquidity and capital resources. The Company’s primary sources of liquidity are funds provided by operations and amounts available under the Credit Facility. The Senior Notes do not require any principal payments prior to maturity. Interest payments on the Senior Notes of $4,464 are due each January 1, and July 1. The Credit Facility is available to fund working capital requirements as needed and to secure standby letters of credit. The Credit Facility provides for borrowings up to $13,000 (including standby letters of credit), subject to a borrowing base of certain qualifying assets up to a maximum of $7,000. Any borrowings or standby letters of credit above $7,000 must be cash collateralized. The Credit Facility is secured by substantially all of the assets of the Company. At September 30, 2001, the borrowing base approximated $6,356, on which the Company had outstanding borrowings of $1,527 and standby letters of credit of $1,300. The Company believes it is in material compliance with all covenants.
The Company’s ability to generate positive cash flow has been negatively affected by the lower level of contract signings in fiscal 2001 and 2000. In addition, the Company has incurred significant losses in fiscal 2001 and the first quarter of fiscal 2002. Management has been actively working on these matters, and has implemented cost reduction and revenue growth initiatives. Furthermore, management is negotiating to expand amounts available under its Credit Facility as well as seeking other sources of financing.
In September 2001, the Company’s Credit Facility was amended to modify the fixed charge coverage ratio covenant for the fourth fiscal quarter ended June 30, 2001. This amendment permits the Company to borrow under the Credit Facility until November 14, 2001 without regard to whether or not it is in compliance with the fixed charge coverage ratio for the first fiscal quarter ending September 30, 2001. In November 2001, the Company further amended the Credit Facility to modify the fixed charged coverage ratio covenant for the fiscal quarter ended September 30, 2001 and permit the Company to borrow under the Credit Facility until February 14, 2002.
At September 30, 2001, the Company had only a nominal amount of cash on hand and $3,529 available to borrow under the Credit Facility. If the Company’s cash flow from operations does not improve substantially during the quarter ending December 31, 2001 or the Company is unable to expand its borrowing ability under its existing Credit Facility then, absent some other type of cash infusion, it will not have sufficient cash to make its interest payment due under the Senior Notes on January 2, 2002.
The Company’s ability to continue as a going concern is dependent on its ability to generate cash from new contract signings coupled with the success of the initiatives described above. There can be no assurance, however, that the Company will be able to successfully achieve new signings or implement any of these initiatives.
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Net cash provided by operating activities can vary significantly from quarter to quarter due to the number of new system signings and the amount and timing of new system payments. In most instances, progress payments on new system orders are invoiced or received in advance of revenue recognition. When progress payments are invoiced or received in advance of such revenue recognition, the Company increases current liabilities represented by its billings in excess of costs and estimated earnings on uncompleted contracts. When the revenue is earned, the Company recognizes the revenue and reduces the billings in excess of costs and estimated earnings on uncompleted contract balances. Net cash used in operating activities for the three months ended September 30, 2001 was $4,634 whereas for the three months ended September 30, 2000, net cash used in operating activities was $4,323. This increase in net cash used in operating activities for the three months ended September 30, 2001 was due in part to the decrease in new original equipment signings and the timing of new system payments.
The Company has a backlog (on a percentage of completion basis) at September 30, 2001 of $9,433 as compared to $13,455 at June 30, 2001. The Company expects to complete a substantial majority of this backlog within the next 12 months. Original equipment and aftermarket signings for the three months ended September 30, 2001 were $5,871 compared to $22,595 for the three months ended September 30, 2000. The mix of signings by type and breakdown by geographic region for the first quarter of fiscal 2002 compared to the first quarter of fiscal 2001 is as follows:
• | Automotive signings, as a percentage of total signings, decreased to 60% for the first quarter of fiscal 2002 compared to 92% for the first quarter of fiscal 2001. Architectural signings, as a percentage of total signings, increased to 40% for the first quarter of fiscal 2002 compared to 8% for the first quarter of fiscal 2001. | ||
• | The mix of signings by geographic region, as a percentage of total signings, changed significantly between the periods. Signings in the Americas (North, Central and South America) increased to 55% for the first quarter of fiscal 2002 compared to 11% for the first quarter of fiscal 2001. Signings in Europe increased to 13% for the first quarter of fiscal 2002 compared to 9% for the first quarter of fiscal 2001. Signings in the Asia-Pacific region decreased to 32% for the first quarter of fiscal 2002 compared to 80% for the first quarter of fiscal 2001. The Company continues to see quoting activity and contract signings for the Asia-Pacific region and the Company believes that given world demographics and long term economic trends, the Asia-Pacific region will continue to represent a significant market for the Company’s products. |
Capital expenditures, including demonstration furnaces classified as fixed assets, were $6 for the three months ended September 30, 2001 and $34 for the three months ended September 30, 2000. Future capital expenditures, excluding demonstration furnaces, used to replace or improve operating equipment and facilities are estimated to be less than $250 for the year. In addition, the Company intends to make periodic replacements and improvements on demonstration furnaces, which are used for customer demonstrations and research and development purposes. Demonstration furnaces, which outlive their usefulness for customer demonstrations or research and development purposes, or both, may be refurbished and sold or put to other applicable uses.
As of June 30, 2001, the Company had net operating loss (“NOL”) carryforwards for regular and alternative minimum tax purposes of approximately $61,657 and $58,070, respectively, which expire in the years 2009 through 2016.
The Company’s business is subject to rapid fluctuations due to changes in the world markets for the end products produced by its equipment (largely in the cyclical markets of automobiles and construction), currency fluctuations, the local economies of those countries where users and potential users of the Company’s equipment are located, geopolitical events and other macroeconomic forces largely beyond the ability of the Company to predict or control. Except as discussed above, management is not currently aware of any trends, demands, commitments or uncertainties which will or which are reasonably likely to result in a material change in the Company’s liquidity.
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ITEM 3. MARKET RISK EXPOSURES
Based on the Company’s current operations and business practices, the Company does not believe that it has any significant exposure to interest rate, foreign currency, commodity price, or equity price market risks.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims that arise from time to time in the ordinary course of its business. Management believes that the amount of any ultimate liability with respect to these actions will not have a material adverse effect on the financial condition or results of operations of the Company.
ITEM 5. OTHER INFORMATION
The Company may, from time to time, repurchase its Senior Notes in the open market, in privately negotiated transactions or by other means, depending on market conditions. To date, the Company has not purchased any Senior Notes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) | Exhibits |
2.1(a) | Agreement and Plan of Merger | |
2.2(a) | Amendment to Agreement and Plan of Merger | |
3.1(a) | Restated Certificate of Incorporation of the Registrant | |
3.2(a) | By-laws of the Registrant | |
4.1(a) | Indenture (including form of Note) | |
4.2(a) | First Supplemental Indenture | |
10.1(a) | Financing and Security Agreement between Bank of America, N.A., (f/k/a NationsBank, N.A.) and the Registrant | |
10.1.1(b) | Second Amendment to Financing and Security Agreement between Bank of America, N.A., (f/k/a NationsBank, N.A.) and the Registrant | |
10.1.2(c) | Third Amendment to Financing and Security Agreement between Bank of America, N.A., (f/k/a NationsBank, N.A.) and the Registrant | |
10.1.3(d) | Fourth Amendment to Financing and Security Agreement between Bank of America, N.A., (f/k/a NationsBank, N.A.) and the Registrant | |
10.1.4(e) | Fifth Amendment to Financing and Security Agreement between UPS Capital Corporation (successor-in-interest to Bank of America, N.A., f/k/a NationsBank, N.A.) and the Registrant | |
10.1.5(f) | Sixth Amendment to Financing and Security Agreement between UPS Capital Corporation (successor-in-interest to Bank of America, N.A., f/k/a NationsBank, N.A.) and the Registrant | |
10.2(a) | Plant and Office Lease | |
10.3(a) | Warehouse Lease | |
10.4(a) | Advisory Agreement between the Registrant and Key Equity Capital Corporation | |
10.5(a) | Form of Exchange Agent Agreement between United States Trust Company of New York and the Registrant | |
10.6(a) | Employment Agreement among Glasstech Holding Co., the Registrant and John S. Baxter | |
10.7(a) | Employment Agreement among Glasstech Holding Co., the Registrant and Mark D. Christman | |
10.8(a) | Employment Agreement among Glasstech Holding Co., the Registrant and Larry E. Elliott | |
10.9(a) | Employment Agreement among Glasstech Holding Co., the Registrant and Ronald A. McMaster | |
10.10(a) | Employment Agreement among Glasstech Holding Co., the Registrant and James P. Schnabel, Jr. | |
10.11(a) | Employment Agreement among Glasstech Holding Co., the Registrant and Diane S. Tymiak | |
10.12(a) | Employment Agreement among Glasstech Holding Co., the Registrant and Kenneth H. Wetmore | |
10.13(a) | Securities Purchase Agreement between the Registrant, as successor to Glasstech Sub Co., and CIBC Wood Gundy Securities Corp. | |
10.14(a) | Registration Rights Agreement between the Registrant, as successor to Glasstech Sub Co., and CIBC Wood Gundy Securities Corp. |
(a) | Incorporated by reference from the Company’s Registration Statement on Form S-4 (Registration No. 333-34391) (the “Form S-4”) filed on August 26, 1997. Each of the above exhibits has the same exhibit number in the Form S-4. | ||
(b) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on February 11, 1999. | ||
(c) | Incorporated by reference from the Company’s Annual Report on Form 10-K filed on September 23, 1999. | ||
(d) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on November 13, 2000. | ||
(e) | Incorporated by reference from the Company’s Annual Report on Form 10-K filed on September 28, 2001. | ||
(f) | Filed herewith |
(b) | No reports on Form 8-K were filed during the fiscal quarter covered by this report. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
GLASSTECH, INC., a Delaware Corporation | ||
Date: November 14, 2001 | /s/ Mark D. Christman Mark D. Christman President and Chief Executive Officer | |
Date: November 14, 2001 | /s/ Diane S. Tymiak Diane S. Tymiak Vice President, Treasurer and Chief Financial Officer (Principal Accounting Officer) |
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