1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION OR 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 26, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
LDM Technologies, Inc.
(Exact name of registrant as specified in its charter)
Michigan 333-21819 38-2690171
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2500 Executive Hills Drive, Auburn Hills, Michigan 48326
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 858-2800
Indicate by check mark whether the registrant has filed all reports required to
be filed by sections 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days.
YES X NO
Number of shares common stock outstanding as of May 5, 2000: 600
Total pages: 22
Listing of exhibits: _____
2
LDM TECHNOLOGIES, INC.
INDEX
Page No.
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets, March 26, 2000 and
September 26, 1999 3
Condensed Consolidated Statements of Income, three months ended
March 26, 2000 and March 28, 1999 4
Condensed Consolidated Statements of Income, six months ended
March 26, 2000 and March 28, 1999 5
Condensed Consolidated Statements of Cash Flows, six months ended 6
March 26, 2000 and March 28, 1999
Notes to Condensed Consolidated Financial Statements 7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF 17
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II OTHER INFORMATION
Item 1 Legal Proceedings Not applicable
Item 2 Changes in Securities Not applicable
Item 3 Defaults upon Senior Securities Not applicable
Item 4 Submission of Matters to a Vote of Security Not applicable
Holders
Item 5 Other information Not applicable
Item 6 Exhibits and Reports on Form 8-K (a) Exhibit 27-Financial
Data Schedule
Signatures 22
2
3
LDM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
MARCH 26, 2000 SEPTEMBER 26, 1999
(UNAUDITED) (NOTE)
-------------- ------------------
ASSETS
Current assets:
Cash $ 2,059 $ 4,317
Accounts receivable 90,580 79,434
Raw materials 12,155 12,827
Work in process 2,094 1,872
Finished goods 5,978 6,084
Mold costs 14,306 12,706
Refundable income taxes 1,385
Deferred income taxes 2,417 1,947
Other current assets 2,075 1,960
-------- --------
Total current assets 131,664 122,532
Net property, plant and equipment 107,196 121,116
Goodwill, net 57,520 59,688
Debt issue costs, net 4,831 5,126
Equity investment in affiliates 3,216 2,091
Notes receivable from affiliate 2,730 895
Other assets 693 695
-------- --------
Totals $307,850 $312,143
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan $ 32,044 $ 33,276
Accounts payable 61,722 55,120
Accrued liabilities 21,281 17,976
Accrued interest 2,959 3,599
Accrued compensation 6,917 7,988
Income taxes payable 887
Current maturities of long-term debt 11,564 11,564
-------- --------
Total current liabilities 137,374 129,523
Long-term debt due after one year 154,065 168,262
Deferred income taxes 1,954 1,438
STOCKHOLDERS' EQUITY
Common Stock (par value $.10, issued and outstanding
600 shares; authorized 100,000 shares)
Additional paid-in capital 94 94
Retained earnings 13,418 12,525
Accumulated other comprehensive income 945 301
-------- --------
Total stockholders' equity 14,457 12,920
-------- --------
Totals $307,850 $312,143
======== ========
Note: The balance sheet at September 26, 1999 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See notes to condensed consolidated financial statements.
3
4
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income
(dollars in thousands)
UNAUDITED
THREE MONTHS ENDED
MARCH 26, 2000 MARCH 28, 1999
-------------- --------------
Revenues:
Net product sales $ 123,465 $ 111,179
Net mold sales 14,238 22,547
--------- ---------
137,703 133,726
Cost of Sales
Cost of product sales 101,000 89,747
Cost of mold sales 14,193 22,339
--------- ---------
115,193 112,086
--------- ---------
Gross margin 22,510 21,640
Selling, general and administrative expenses 15,865 15,151
--------- ---------
Operating profit 6,645 6,489
Interest expense (5,661) (5,625)
Equity in net income (loss) of affiliates 207 (1,333)
Unrealized loss on foreign currency (675) (766)
translation
Other (expense) income, net (54) 54
---------- ---------
Income (loss) before income taxes 462 (1,181)
Provision for income taxes 915 806
--------- ---------
Net income (loss) $ (453) $ (1,987)
========== ==========
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income for the
three months ended March 28, 1999. Other comprehensive income for the three
months ended March 26, 2000 was $536 and relates to foreign currency
translation.
4
5
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income
(dollars in thousands)
UNAUDITED
SIX MONTHS ENDED
MARCH 26, 2000 MARCH 28, 1999
-------------- --------------
Revenues:
Net product sales $ 242,393 $ 243,616
Net mold sales 20,704 28,205
--------- ---------
263,097 271,821
Cost of Sales
Cost of product sales 197,038 196,506
Cost of mold sales 20,647 28,639
--------- ---------
217,685 225,145
--------- ---------
Gross margin 45,412 46,676
Selling, general and administrative expenses 31,220 30,771
--------- ---------
Operating profit 14,192 15,905
Interest expense (10,333) (10,822)
Equity in net income (loss) of affiliates (22) (1,316)
Unrealized loss on foreign currency (799) (728)
translation
Other (expense) income, net 27 (268)
--------- ----------
Income before income taxes 3,065 2,771
Provision for income taxes 2,172 3,056
--------- ---------
Net income (loss) $ 893 $ (285)
========= ==========
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income for the
six months ended March 28, 1999. Other comprehensive income for the six months
ended March 26, 2000 was $644 and relates to foreign currency translation.
5
6
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(UNAUDITED)
SIX MONTHS ENDED
MARCH 26, 2000 MARCH 28, 1999
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 11,929 $ 11,014
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (5,677) (8,151)
Proceeds from sale of assets of Kenco Plastics to DBM Technologies 5,515
joint venture
Proceeds from disposal of property, plant and equipment 8,258
Equity contributed to affiliate (49)
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES 2,532 (2,636)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances to affiliates (1,108) (1,803)
Proceeds from long-term debt issuance, net of $249 issuance costs in
1999; $182 in 2000 (182) 7,251
Payments on long-term debt (14,197) (5,401)
Net borrowings (repayments) on lines of credit (1,232) (6,307)
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (16,719) (6,260)
--------- ---------
Net cash change (2,258) 2,118
Cash at beginning of period 4,317 3,317
--------- ---------
Cash at end of period $ 2,059 $ 5,435
========= =========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 11,246 $ 10,410
========= =========
See notes to condensed consolidated financial statements.
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LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six-month periods ended March
26, 2000 are not necessarily indicative of the results that may be expected for
the fiscal year ending September 24, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto in the Company's annual
report on Form 10-K for the year ended September 26, 1999.
2. SALE OF BLOWMOLDING MACHINERY AND EQUIPMENT TO DBM TECHNOLOGIES, LLC
Effective as of December 31, 1998, the Company entered into a joint venture (DBM
joint venture) that is 49% owned by the Company, and 51% owned by an independent
third party. The Company sold the Kenco business and most of its net current
assets to the DBM joint venture for an amount equal to the net book value of the
assets sold. The sales price of the net current assets approximated $8.8
million.
The Company initially leased all machinery and equipment of the Kenco business
to the joint venture, and is subleasing to the joint venture all real properties
in the Kenco operations.
As part of the original transaction, the Company provided a subordinated $1.8
million loan to the joint venture and guaranteed $1.0 million of the joint
venture line of credit borrowings. As a result of those terms, and the
relatively small amount of equity contributed to the joint venture by the
independent third party, the Company retained substantially all of the risks of
ownership. The investment is treated as an equity investment for accounting
purposes, but the Company has recorded 100% of the joint venture losses as
equity losses.
On December 8, 1999, the Company sold all of the machinery and equipment of the
Kenco business to the joint venture for $10.3 million, the approximate net book
value of the machinery and equipment. Proceeds from the sale were comprised of
$8.3 million in cash and an additional $2.0 million subordinated note payable to
the Company from the joint venture.
As part of the transaction, the joint venture refinanced its line of credit,
which released the Company from the $1 million guarantee discussed above.
The joint venture's new senior lender required the Company to subordinate all
amounts due from the joint venture at the time of refinancing. As a result, the
previous subordinated note payable to the Company was canceled and replaced with
a new subordinated note payable approximating $5.6 million. This amount is
comprised of the $2.0 million related to the machinery and equipment purchase,
$1.9 million related to the original subordinated note payable plus accrued
interest, and $1.7 million related to unpaid machinery and equipment rentals and
miscellaneous other unpaid trade amounts. The new subordinated note payable
bears interest at 9.5% and is payable in equal quarterly installments beginning
June 1, 2000 and shall be fully paid on or before December 8, 2004. Equity
losses have been netted against the notes in consolidation.
3. COMMITMENTS AND CONTINGENCIES
There have been no significant changes in commitments and contingencies from the
matters described in footnote 12 of the Company's consolidated financial
statements as of and for the fiscal year ended September 26, 1999.
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4. SUPPLEMENTAL GUARANTOR INFORMATION
The $110 million 10 3/4% Senior Subordinated Notes due 2007, the Senior Credit
Facility, the standby letters of credit with respect to the $8.8 million
Multi-Option Adjustable Rate Notes, the $4.4 million Variable Rate Demand
Limited Obligation Revenue Bonds and the Senior Term and Capital Expenditures
Line of Credit are obligations of LDM Technologies, Inc. The obligations are
guaranteed fully, unconditionally and jointly and severally by LDM Technologies
Company and LDM Holding Canada, Inc. The non-guarantor subsidiaries are Como,
LDM Germany, LDM Mexico, and LDM Holding Mexico, Inc. LDM Mexico and Como are
currently inactive.
Supplemental consolidating financial information of LDM Technologies, Inc., LDM
Canada (including the related holding company guarantors) and combined Como, LDM
Mexico, and LDM Germany (the non-guarantor subsidiaries) is presented below (in
thousands). Investments in subsidiaries are presented on the equity method of
accounting. Separate financial statements of the guarantors are not provided
because management has concluded that the summarized financial information below
provides sufficient information to allow investors to separately determine the
nature of the assets held by and the operations of LDM Technologies, Inc., and
the guarantor and non-guarantor subsidiaries.
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9
LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of March 26, 2000
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------ ------------- ------------- ------------
ASSETS
Current assets:
Cash $ 29 $ 2,030 $ 2,059
Accounts receivable 72,226 $ 14,750 3,604 90,580
Raw materials 9,096 1,738 1,321 12,155
Work in process 1,373 451 270 2,094
Finished goods 4,843 986 149 5,978
Mold costs 9,201 5,037 68 14,306
Deferred income taxes 2,417 2,417
Other current assets 1,630 445 2,075
--------- -------- -------- --------- --------
Total current assets 100,815 23,407 7,442 131,664
Net property, plant and
equipment 89,674 13,768 3,754 107,196
Investment in subsidiaries and 12,230 (9,014) 3,216
affiliates
Notes receivable from affiliates 17,623 (14,893) 2,730
Goodwill, net 57,520 57,520
Debt issue costs, net 4,831 4,831
Other assets 693 693
--------- -------- -------- --------- --------
Totals $ 283,386 $ 37,175 $ 11,196 $ (23,907) $307,850
========= ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Revolving loan $ 32,044 $ 32,044
Accounts payable 45,469 $ 12,871 $ 3,905 (523) 61,722
Accrued liabilities 17,234 3,001 1,046 21,281
Accrued interest 2,959 2,959
Accrued compensation 5,009 468 1,440 6,917
Income taxes payable 887 887
Current maturities of
long-term debt 11,564 11,564
--------- -------- -------- --------- --------
Total current liabilities 115,166 16,340 6,391 (523) 137,374
Long-term debt due after one year 154,065 10,532 11,268 (21,800) 154,065
Deferred income taxes 665 1,289 1,954
STOCKHOLDERS' EQUITY
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 13,418 3,164 (10,373) 7,209 13,418
Accumulated other comprehensive
income (22) 967 945
---------- -------- -------- --------- --------
Total stockholders' equity 13,490 9,014 (6,463) (1,584) 14,457
--------- -------- -------- --------- --------
Totals $ 283,386 $ 37,175 $ 11,196 $ (23,907) $307,850
========= ======== ======== --------- ========
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of September 26, 1999 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------ ------------ ------------- ------------
ASSETS
Current assets:
Cash $ 2,184 $2,133 $4,317
Accounts receivable 60,613 $13,748 5,073 79,434
Raw materials 9,456 1,941 1,430 12,827
Work in process 1,336 240 296 1,872
Finished goods 4,977 692 415 6,084
Mold costs 10,193 2,379 134 12,706
Refundable income taxes 1,312 73 1,385
Deferred income taxes 1,947 1,947
Other current assets 1,817 143 1,960
-------- ------- ------- ------- --------
Total current assets 93,835 19,216 9,481 122,532
Net property, plant and equipment, at cost 102,017 14,650 4,449 121,116
Investment in subsidiaries and affiliates 10,269 $(8,178) 2,091
Note receivable affiliates 17,175 (16,280) 895
Goodwill 59,688 59,688
Debt issue costs 5,126 5,126
Other 695 695
-------- ------- ------- ------- --------
Totals $288,805 $33,866 $13,930 ($24,458) $312,143
======== ======= ======= ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Revolving loan $ 33,276 $33,276
Accounts payable 39,231 $11,300 $4,635 ($46) 55,120
Accrued liabilities 14,004 2,420 1,552 17,976
Accrued interest 3,599 3,599
Accrued compensation 5,988 282 1,718 7,988
Current maturities of long-term debt 11,564 11,564
-------- ------- ------- ------- --------
Total current liabilities 107,662 14,002 7,905 (46) 129,523
Long-term debt due after one year 168,262 10,532 10,897 (21,429) 168,262
Deferred income taxes 284 1,154 1,438
STOCKHOLDERS' EQUITY
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 12,525 2,328 (8,138) 5,810 12,525
Accumulated other comprehensive income (loss) (22) 323 301
-------- ------- ------- ------- --------
Total stockholders' equity 12,597 8,178 (4,872) (2,983) 12,920
-------- ------- ------- ------- --------
Total liabilities and stockholders' equity $288,805 $33,866 $13,930 ($24,458) $312,143
======== ======= ======= ======== ========
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Income for the
Three-Months Ended March 26, 2000
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------- ------------ ------------- ------------
Revenues:
Net product sales $ 96,693 $ 19,191 $ 7,581 $123,465
Net mold sales 14,166 72 14,238
--------- -------- -------- ------- --------
110,859 19,191 7,653 137,703
Cost of Sales
Cost of product sales 75,652 17,579 7,769 101,000
Cost of mold sales 14,193 14,193
--------- -------- -------- ------- --------
89,845 17,579 7,769 115,193
--------- -------- -------- ------- --------
Gross margin 21,014 1,612 (116) 22,510
Selling, general and administrative
expenses 14,558 818 489 15,865
--------- -------- -------- ------- --------
Operating profit (loss) 6,456 794 (605) 6,645
Interest expense (5,632) (323) (193) 487 (5,661)
Equity in net loss of subsidiaries
and affiliates (956) 1,163 207
Unrealized loss on foreign currency
translation 67 (742) (675)
Other income (expense), net 427 6 (487) (54)
--------- -------- -------- ------- --------
Income (loss) before income taxes 295 544 (1,540) 1,163 462
Provision (credit) for income taxes 748 167 915
--------- -------- -------- ------- --------
Net income (loss) $ (453) $ 377 $ (1,540) $ 1,163 $ (453)
========= ======== ======== ======= ========
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12
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Income for the
Three-Months Ended March 28, 1999
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------ ------------ ------------- ------------
Revenues:
Net product sales $ 85,294 $ 13,916 $ 11,969 $111,179
Net mold sales 21,661 886 22,547
--------- -------- -------- ------- --------
106,955 13,916 12,855 133,726
Cost of Sales
Cost of product sales 65,033 12,683 12,031 89,747
Cost of mold sales 21,496 843 22,339
--------- -------- -------- ------- --------
86,529 12,683 12,874 112,086
--------- -------- -------- ------- --------
Gross margin 20,426 1,233 (19) 21,640
Selling, general and administrative
expenses 13,973 280 898 15,151
--------- -------- -------- ------- --------
Operating profit (loss) 6,453 953 (917) 6,489
Interest expense (5,543) (307) (225) 450 (5,625)
Equity in net loss of subsidiaries (1,005) (328) (1,333)
and affiliates
Unrealized loss on foreign currency
translation (766) (766)
Other income (expense), net 536 (32) (450) 54
--------- -------- -------- -------- --------
Income (loss) before income taxes 441 614 (1,908) (328) (1,181)
Provision (credit) for income taxes 504 286 16 806
--------- -------- -------- -------- --------
Net income (loss) $ (63) $ 328 $ (1,924) $ (328) $ (1,987)
========= ======== ======== ======== ========
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13
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Income
for the Six-Months Ended March 26, 2000
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------ ------------ ------------- ------------
Revenues:
Net product sales $ 189,294 $ 37,530 $ 15,569 $242,393
Net mold sales 20,632 72 20,704
--------- -------- -------- ------- --------
209,926 37,530 15,641 263,097
Cost of Sales
Cost of product sales 146,647 34,855 15,536 197,038
Cost of mold sales 20,647 20,647
--------- -------- -------- ------- --------
167,294 34,855 15,536 217,685
--------- -------- -------- ------- --------
Gross margin 42,632 2,675 105 45,412
Selling, general and administrative
expenses 29,109 1,126 985 31,220
--------- -------- -------- ------- --------
Operating profit (loss) 13,523 1,549 (880) 14,192
Interest expense (10,286) (597) (354) 904 (10,333)
Equity in net loss of subsidiaries
and affiliates (1,421) 1,399 (22)
Unrealized loss on foreign currency
translation 202 (1,001) (799)
Other income (expense), net 903 28 (904) 27
--------- -------- -------- -------- --------
Income (loss) before income taxes 2,719 1,182 (2,235) 1,399 3,065
Provision (credit) for income taxes 1,826 346 2,172
--------- -------- -------- ------- --------
Net income (loss) $ 893 $ 836 $ (2,235) $ 1,399 $ 893
========= ======== ======== ======= ========
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14
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Income
for the Six-Months Ended March 28, 1999
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------ ------------ ------------- ------------
Revenues:
Net product sales $ 190,925 $ 29,460 $ 23,231 $243,616
Net mold sales 27,275 18 912 28,205
--------- -------- -------- ------- --------
218,200 29,478 24,143 271,821
Cost of Sales
Cost of product sales 145,625 26,985 23,896 196,506
Cost of mold sales 27,773 866 28,639
--------- -------- -------- ------- --------
173,398 26,985 24,762 225,145
--------- -------- -------- ------- --------
Gross Margin 44,802 2,493 (619) 46,676
Selling, general and administrative
expenses 28,339 563 1,869 30,771
--------- -------- -------- ------- --------
Operating profit (loss) 16,463 1,930 (2,488) 15,905
Interest expense (10,643) (611) (492) 924 (10,822)
Equity in net loss of subsidiaries (787) (529) (1,316)
and joint ventures
Unrealized loss on foreign currency
translation (728) (728)
Other income (expense), net 771 (115) (924) (268)
--------- -------- -------- ------- --------
Income (loss) before income taxes
and minority interest 5,804 1,204 (3,708) (529) 2,771
Provision (credit) for income taxes 2,566 453 37 3,056
--------- -------- -------- ------- --------
Net income (loss) $ 3,238 $ 751 $ (3,745) $ (529) $ (285)
========= ======== ======== ======= ========
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Cash Flows
for the Six-Months Ended March 26, 2000
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor
Inc. Canada Subsidiaries Consolidated
------------- ------ ------------ ------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 12,381 $ 22 $ (474) $ 11,929
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (5,418) (259) (5,677)
Proceeds from disposal of property, plant, and equipment 8,258 8,258
Equity contributed to affiliate (49) (49)
-------- -------- -------- --------
NET CASH PROVIDED (USED) FOR INVESTING ACTIVITIES 2,791 (259) 2,532
CASH FLOW FROM FINANCING ACTIVITIES
Borrowing (to)/from affiliates (1,716) 237 371 (1,108)
Costs associated with debt acquisition (182) (182)
Payments on long-term debt (14,197) (14,197)
Net proceeds from lines of credit borrowings (1,232) (1,232)
-------- -------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (17,327) 237 371 (16,719)
-------- -------- -------- --------
Net cash change (2,155) (103) (2,258)
Cash at beginning of period 2,184 2,133 4,317
-------- -------- -------- --------
Cash at end of period $ 29 $ $ 2,030 $ 2,059
======== ======== ======== ========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 9,575 $ 1,143 $ 528 $ 11,246
======== ======== ======== ========
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16
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Cash Flows
for the Six-Months Ended March 28, 1999
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor
Inc. Canada Subsidiaries Consolidated
------------ ------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 7,033 $ 1,750 $ 2,231 $ 11,014
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (7,848) (289) (14) (8,151)
Proceeds from disposal of Kenco Plastics Division 5,515 5,515
--------- -------- -------- --------
NET CASH USED FOR INVESTING ACTIVITIES (2,333) (289) (14) (2,636)
CASH FLOW FROM FINANCING ACTIVITIES
Borrowing (to)/from affiliates (1,803) (1,803)
Costs associated with debt acquisition (249) (249)
Proceeds from long-term debt 7,500 7,500
Payments on long-term debt (5,401) (5,401)
Net proceeds from lines of credit borrowings (5,393) (914) (6,307)
--------- -------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (5,346) (914) (6,260)
--------- -------- -------- --------
Net cash change (646) 1,461 1,303 2,118
Cash at beginning of period 673 1,317 1,327 3,317
--------- -------- -------- --------
Cash at end of period $ 27 $ 2,778 $ 2,630 $ 5,435
========= ======== ======== ========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 8,693 $ 954 $ 763 $ 10,410
========= ======== ======== ========
16
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. When used in this report, the words
"anticipate," "believe," "estimate" and "expect" and similar expressions are
generally intended to identify forward-looking statements. Readers are cautioned
that any forward-looking statements, including statements regarding the intent,
belief or current expectations of the Company or its management, are not
guarantees of future performance and involve risks and uncertainties, and that
the actual results may differ materially from those in the forward-looking
statements as a result of various factors including, but not limited to: (i)
general economic conditions in the markets in which the Company operates or will
operate; (ii) fluctuations in worldwide or regional automobile and light and
heavy truck production, (iii) labor disputes involving the Company or its
significant customers or suppliers; (iv) changes in practices and/or policies of
the Company's significant customers toward outsourcing automotive components and
systems; (v) foreign currency and exchange fluctuations; (vi) factors affecting
the ability of the Company or its key suppliers to resolve Year 2000 issues in a
timely manner; and (vii) other risks detailed from time to time in the Company's
filings with the Securities and Exchange Commission. The Company does not intend
to update these forward-looking statements.
OVERVIEW
The Company's operating profit for the quarter and six months ended March 26,
2000 have retreated slightly as a percentage of sales compared to the same
periods in 1999. This is the result of continued losses at the Company's
facility in Beienheim, Germany and slight setbacks in its North American
operations.
The Company closed its quarter ended December 19, 1999 one week early to allow
for Year 2000 testing. As a result, the quarter ended March 26, 2000 contains 14
weeks versus a 13 week quarter for the preceding year. The extra week included
in the quarter ended March 26, 2000 resulted in product sales of $6.8 million.
RESULTS OF CONTINUING OPERATIONS
QUARTER ENDED MARCH 26, 2000 COMPARED TO QUARTER ENDED MARCH 28, 1999
NET SALES: Net sales for the three-month period ended March 26, 2000 (second
quarter 2000) were $137.7 million versus $133.7 million for the three-month
period ended March 28, 1999 (second quarter 1999). This is an increase of $4.0
million or 3.0%. The increase is the result of increased product sales related
to the extra week discussed above, offset by a decrease in mold sales, as well
as the elimination of Como Products as a consolidating entity. The Company sold
a major portion of its interest in Como Products in April, 1999.
Second quarter 2000 net sales were comprised of $123.5 million of automotive
product sales and $14.2 million of mold sales. Second quarter 1999 automotive
product sales were $107.6 million, consumer and other product sales were $3.6
million and mold sales were $22.5 million.
The automotive product sale increase of $15.9 million is attributable to the
extra week of operations mentioned above ($6.8 million) and volumes related to
programs launched during the third and fourth quarters of fiscal year 1999 ($9.1
million). The mold sale decrease of $8.3 million also relates to programs
launched in the third and fourth quarters of fiscal year 1999.
GROSS MARGIN: Gross margin was $22.5 million or 16.3% of net sales for second
quarter 2000 versus $21.6 million or 16.2% for the second quarter 1999. Second
quarter 2000 gross margin related to product sales was $22.5 million or 18.2% of
net product sales compared to $21.4 million or 19.3% of net product sales for
the second quarter of 1999. The decrease in gross margin related to product
sales is the result of continued losses at the Company's facility in Beienheim,
Germany and slight setbacks in North American operations.
SELLING, GENERAL, AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for second
quarter 2000 were $15.9 million or 11.5% of net sales, compared to $15.2 million
or 11.3% of net sales, for second quarter 1999.
The increase relates to new product development initiatives.
INTEREST EXPENSE: Interest expense was $5.7 million for second quarter 2000
compared to $5.6 million for second quarter 1999.
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INCOME TAXES: The provision for income taxes for second quarter 2000 was $0.9
million on a pretax income of $0.5 million. The tax rate for second quarter 2000
was 198.1%. The high effective tax rate was caused by certain nondeductible
expenses and an increase in the estimated effective tax rate for the year.
SIX MONTHS ENDED MARCH 26, 2000 COMPARED TO SIX MONTHS ENDED MARCH 28, 1999
NET SALES: Net sales for the six-month period ended March 26, 2000 (first half
2000) were $263.1 million versus $271.8 million for the six-month period ended
March 28, 1999 (first half 1999). This is a decrease of $8.7 million or 3.2%.
First half 2000 net sales were comprised of $242.4 million of automotive product
sales and $20.7 million of mold sales. First half 1999 automotive product sales
were $235.8 million, consumer product sales were $7.8 million, and mold sales
were $28.2 million. Of first half 1999 product sales, $14.7 million were related
to the Company's Kenco Division, which is no longer consolidated due to the DBM
joint venture.
The automotive product sale increase of $6.6 million would be $21.3 million if
the Kenco sales which are no longer consolidated, were taken into account. This
increase is the result of new programs launched in the third and fourth quarters
of fiscal year 1999, and overruns of programs expected to balance out in early
fiscal year 2000. The mold sales decrease relates to programs launched in the
third and fourth quarters of fiscal year 1999.
GROSS MARGIN: Gross margin was $45.4 million or 17.3% of net sales for first
half 2000 versus $46.7 million or 17.2% for the first half 1999. First half 2000
gross margin related to product sales was $45.4 million or 18.7% of net product
sales compared to $47.1 million or 19.3% of net product sales for the first half
of 1999. The decrease in gross margin related to product sales is primarily the
result of continued losses at the Company's Beienheim, Germany facility and
slight setbacks in its North American operations.
SELLING, GENERAL, AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for first
half 2000 were $31.2 million or 11.9% of net sales, compared to $30.8 million or
11.3% of net sales, for first half 1999. The increase relates to new product
development initiatives.
INTEREST EXPENSE: Interest expense was $10.3 million for first half 2000
compared to $10.8 million for first half 1999. The decreased interest expense
was due to scheduled principal repayments on existing senior debt.
INCOME TAXES: The provision for income taxes for first half 2000 was $2.2
million with an effective tax rate of 70.9% compared with an effective rate of
110.3% for first half 1999. The high rates for both periods relate to certain
nondeductible expenses, and the loss of foreign tax credits.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund working capital needs,
to meet required debt obligations, and to fund capital expenditures for facility
maintenance and expansion. The Company believes that its future cash flows from
operations, combined with its revolving credit availability, will be sufficient
to meet its planned debt service, capital requirements and internal growth
opportunities for the foreseeable future. Potential growth from acquisitions
will be funded from a variety of sources, including cash flow from operations
and additional indebtedness. As of March 26, 2000, the Company had $154.1
million of long-term debt outstanding, $43.6 million of revolving loans and
current maturities of long-term debt outstanding and $18.9 million of borrowing
availability under its revolving credit facilities.
Cash provided by operating activities in the first half of 2000 was $11.9
million compared to $11.0 million in the first half of 1999. The increase in
cash provided by operating activities was the result of the sales growth
described above.
Capital expenditures for the first half of 2000 were $5.7 million compared to
$8.2 million for the first half of 1999. The Company believes that its capital
expenditures will be approximately $19.0 million in fiscal year 2000. The
majority of the Company's fiscal 2000 capital expenditures will be used to
facilitate new programs launching in fiscal 2000, and to increase painting
capacity for programs launching in fiscal years 2000 and 2001. However, the
Company's capital expenditures may be greater than currently anticipated as the
result of new business opportunities.
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The Company's liquidity is affected by both the cyclical nature of its business
and levels of net sales to its major customers. The Company's ability to meet
its working capital and capital expenditure requirements and debt obligations
will depend on its future operating performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond its control. However, the Company believes that its
existing borrowing ability and cash flow from operations will be sufficient to
meet its liquidity requirements in the foreseeable future.
YEAR 2000 COMPLIANCE
As of the date of this filing, the Company has not experienced any disruptions
in its operations due to Year 2000 compliance related issues and has been able
to process transactions and engage in normal business activities. No Year 2000
compliance issues have been encountered, or are anticipated, that would have a
material impact on the Company.
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PART II - OTHER INFORMATION
Item 1 Legal Proceedings Not applicable
Item 2 Changes in Securities Not applicable
Item 3 Defaults upon Senior Securities Not applicable
Item 4 Submission of Matters to a Vote of Security Not applicable
Holders
Item 5 Other information Not applicable
Item 6 Exhibits and Reports on Form 8-K (a) Exhibit 27-Financial Data
Schedule
The Company did not file any reports on Form 8-K during the quarter for which
this report is filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LDM TECHNOLOGIES, INC.
By: /s/ G. E. Borushko
-----------------------------
Gary E. Borushko
Chief Financial Officer
/s/ B. N. Frederick
-----------------------------
Bradley N. Frederick
Chief Accounting Officer
Date: May 10, 2000
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
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