1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 17, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 333-21819
LDM TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHIGAN 38-2690171
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (248) 858-2800
Indicate by check mark whether the registrant (1) 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 of common stock outstanding as of January 26, 2001: 600
Total pages: 17
Listing of exhibits:
1
2
LDM TECHNOLOGIES, INC.
INDEX
Page No.
-------------
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets, December 17, 2000 and
September 24, 2000 3
Condensed Consolidated Statements of Operations, three months
ended December 17, 2000 and December 19, 1999 4
Condensed Consolidated Statements of Cash Flows, three months
ended December 17, 2000 and December 19, 1999 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 15
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 Holders Not applicable
Item 5 Other Information Not applicable
Item 6 Exhibits and Reports on Form 8-K Not applicable
Signature Page
2
3
LDM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
DECEMBER 17, 2000 SEPTEMBER 24, 2000
(UNAUDITED) (NOTE)
---------------------- -----------------------
ASSETS
Current assets:
Cash $ 6,057 $ 4,640
Accounts Receivable 62,039 74,335
Raw materials 10,846 12,107
Work in process 1,900 1,745
Finished goods 7,584 7,180
Mold costs 14,265 12,981
Refundable income taxes 982 1,071
Deferred income taxes 2,709 3,051
Other current assets 2,123 2,501
---------------------- ----------------------
Total current assets 108,505 119,611
Net property, plant and equipment 107,938 106,605
Goodwill, net 54,126 55,269
Debt issue costs, net 4,117 4,360
Equity investments in affiliates 5,301 4,800
Note receivable from affiliate 1,017
Deposits for assets to be leased 10,702 4,791
Other assets 769 770
----------------------
Totals $ 291,458 $ 297,223
====================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving loan $ 29,648 $ 34,643
Accounts payable 50,356 52,964
Accrued liabilities 25,054 21,050
Accrued interest 5,072 2,704
Accrued compensation 6,479 7,469
Current maturities of long-term debt 11,543 11,543
---------------------- ----------------------
Total current liabilities 128,152 130,373
Long-term debt due after one year 145,200 148,460
Deferred income taxes 4,035 4,450
STOCKHOLDERS' EQUITY
Common Stock (par value $.10, issued
and outstanding 600 shares; authorized
100,000 shares)
Additional paid-in capital 94 94
Retained earnings 12,236 12,112
Accumulated other comprehensive income 1,741 1,734
---------------------- ----------------------
Total stockholders' equity 14,071 13,940
---------------------- ----------------------
Totals $ 291,458 $ 297,223
====================== ======================
Note: The balance sheet at September 24, 2000 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 Operations
(dollars in thousands)
(Unaudited)
Three Months Ended
-------------------------------------------------------------
December 17, 2000 December 19, 1999
---------------------- --------------------
Revenues
Net product sales $ 99,752 $ 118,929
Net mold sales 10,337 6,467
---------------------- --------------------
110,089 125,396
Cost of Sales
Cost of product sales 80,133 96,038
Cost of mold sales 9,295 6,454
---------------------- --------------------
89,428 102,492
---------------------- --------------------
Gross Margin 20,661 22,904
Selling, general and administrative 15,372 15,354
expenses ---------------------- --------------------
Operating profit 5,289 7,550
Interest expense (4,092) (4,653)
Equity in net loss of unconsolidated
subsidiaries (764) (229)
International currency exchange losses (186) (123)
Other income (expense), net (82) 60
---------------------- --------------------
Income before income taxes 165 2,605
Provision for income taxes 41 1,257
---------------------- --------------------
Net income $ 124 $ 1,348
====================== ====================
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income.
4
5
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Three Months Ended
-----------------------------------------------
December 17, 2000 December 19, 1999
------------------- ------------------
Net cash provided (used) by operating activities $ 21,479 $ (607)
Cash flows from investing activities
Additions to property, plant and equipment (6,069) (2,482)
Proceeds from disposal of property, plant and equipment 251 8,258
Deposits for assets to be leased (5,911)
------------------- ------------------
Net cash provided (used) for investing activities (11,729) 5,776
Cash flows from financing activities
Costs associated with debt acquisition (10) (73)
Advances to affiliates (68) (549)
Payments on long-term debt (3,260) (11,515)
Net borrowings (repayments) on line of credit (4,995) 5,758
------------------- ------------------
Net cash used for financing activities (8,333) (6,379)
------------------- ------------------
Net cash change 1,417 (1,210)
Cash at beginning of period 4,640 4,317
------------------- ------------------
Cash at end of period $ 6,057 $ 3,107
=================== ==================
Supplemental information
Depreciation and amortization $ 5,988 $ 5,785
=================== ==================
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 of 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 month periods ending December 17,
2000 and December 19, 1999 are not necessarily indicative of the results that
may be expected for the year ending September 30, 2001. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended September 24, 2000.
The Company closed its quarter ended December 17, 2000 one week early to allow
for the Christmas holiday and automotive shutdown. The quarter ended December
19, 1999 was also closed one week early to allow for Year 2000 testing. Both
quarters contain 12 weeks.
2. Revenue Recognition
The Company and its consolidated subsidiaries recognize revenue when legal title
transfers to the customer, generally when goods are shipped to the customer.
Molds used in the Company operations are requisitioned by the Company's
customers and are purchased from mold builders who design and construct the
molds under Company supervision. Upon acceptance of the molds, title is passed
to customers and revenue is recognized.
As a result of the issuance of Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements," ("SAB 101") along with related
interpretations and pronouncements by the SEC and other accounting standards
setting bodies, the Company is evaluating the effects on its revenue recognition
policies, particularly those related to tooling sales. The Company is required
to adopt the guidance in SAB 101 in fiscal 2001. Effects on net income, if any,
are not expected to be material.
3. Sale of Blowmolding Machinery and Equipment to DBM Technologies, LLC
DBM Technologies, LLC ("DBM") is a minority owned blowmolding business formed
December 31, 1998, of which the Company owns 49%.
On December 8, 1999, the Company sold all of the machinery and equipment of the
Kenco business to DBM 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 DBM.
DBM's new senior lender required the Company to subordinate all amounts due from
DBM 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. No payments have been made on the
subordinated note payable to date.
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LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
The Company's investment in DBM is treated as an equity investment for
accounting purposes, but the Company has recorded 100% of DBM's losses as equity
losses. As of December 17, 2000, the Company has written off all investments in
and receivables from DBM through equity losses.
4. 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 24, 2000.
5. Derivative Financial Instruments
In May 2000 the Company entered into an interest rate swap agreement to manage
its exposure to fluctuations in interest rates. The swap is based on a notional
amount of $50 million. The Company pays to the bank counterparty based on a rate
of a) 9.25% through January 2002, and b) three-month LIBOR plus 3.65%,
thereafter through January 2007. The Company receives from the bank counterparty
based on a rate of 10.75%. The swap is cancelable by either party at any time.
Upon cancellation the Company is required to pay to or receive from the bank
counterparty, the negative or positive value of the swap, respectively.
In November 2000 the Company entered into an interest rate collar agreement with
the bank counterparty. The collar is based on a notional amount of $50 million.
Under the collar, the Company pays the bank couterparty if three-month LIBOR
falls below 5.75% and receives from the bank counterparty if three-month LIBOR
exceeds 8.75%.
The Company has adopted Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended ("FAS
133"), as of September 25, 2000. The effect upon adoption was not material.
Under FAS 133, fair values of the swap and the collar are reported on the
balance sheet with changes in fair value reported in the statement of
operations. Accordingly, the Company has reflected the fair value of these
derivatives as a liability of $583,000 which is included as a component of
accrued liabilities. The change in fair value for the three months ended
December 17, 2000 was an expense of $390,000, which has been included as a
component of other income (expense), net.
6. Income Taxes
The effective tax rate for the first quarter of 2001 was 24.8% compared to 48.3%
for the first quarter 2000. The interim effective rates are estimated based upon
fiscal year operating forecasts. The effective tax rates differ from statutory
rates due to foreign taxes in excess of tax credits and certain nondeductible
expenses.
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8
LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
7. 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 and the $4.4 million Variable Rate Demand
Limited Obligation Revenue Bonds and the Senior Term and Capital Expenditures
Line of Credit are all 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. As discussed in the
Company's 10K for the year ended September 24, 2000 the only non-guarantor
subsidiary remaining in the consolidated financial statements is LDM Germany.
Supplemental consolidating financial information of LDM Technologies, Inc., LDM
Canada (including the related holding company guarantors) 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 December 17, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, Non-Guarantor Consolidating
Inc. LDM Canada Subsidiaries Entries Consolidated
ASSETS
Current assets:
Cash $ 25 $ 4,243 $ 1,789 $ 6,057
Accounts receivable 53,326 6,412 2,301 62,039
Raw material 7,515 2,184 1,147 10,846
Work in process 1,251 375 274 1,900
Finished goods 6,050 1,300 234 7,584
Mold costs 6,009 7,599 657 14,265
Prepaid expenses 2,068 123 (68) 2,123
Refundable income taxes 982 982
Deferred income taxes 2,709 2,709
------------------ --------------- ---------------- ---------------- --------------
Total current assets 79,935 22,236 6,334 108,505
Net property, plant and equipment 91,360 13,591 2,987 107,938
Investment in subsidiaries and 13,614 $ (8,313) 5,301
affiliates
Note receivable affiliates 13,565 (13,565)
Goodwill 54,126 54,126
Debt issue costs 4,117 4,117
Deposits for assets to be leased 10,702 10,702
Other 769 769
------------------ --------------- ---------------- ---------------- --------------
$ 268,188 $ 35,827 $ 9,321 $ (21,878) $ 291,458
================== =============== ================ ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan $ 29,648 $ 29,648
Accounts payable 38,469 $ 10,333 $ 3,044 $ (1,490) 50,356
Accrued liabilities 18,420 5,314 1,320 25,054
Accrued interest 5,072 5,072
Accrued compensation 4,366 460 1,653 6,479
Current maturities of long-term debt 11,543 11,543
------------------ --------------- ---------------- ---------------- --------------
Total current liabilities 107,518 16,107 6,017 (1,490) 128,152
Long-term debt due after one year 145,200 10,532 11,704 (22,236) 145,200
Deferred income taxes 3,162 873 4,035
Stockholders' equity:
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 12,236 2,465 (13,106) 10,641 12,236
Accumulated other comprehensive (22) 1,763 1,741
income (loss)
------------------ --------------- ---------------- ---------------- --------------
Total stockholders' equity 12,308 8,315 (8,400) 1,848 14,071
------------------ --------------- ---------------- ---------------- --------------
Total liabilities and stockholders' $ 268,188 $ 35,827 $ 9,321 $ (21,878) $ 291,458
equity
================== =============== ================ ================ ==============
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10
LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of September 24, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, Non-Guarantor Consolidating
Inc. LDM Canada Subsidiaries Entries Consolidated
ASSETS
Current assets:
Cash $ 29 $ 2,622 $ 1,989 $ $ 4,640
Accounts receivable 64,138 7,900 2,297 74,335
Raw material 8,767 2,134 1,206 12,107
Work in process 1,333 301 111 1,745
Finished goods 5,741 1,022 417 7,180
Mold costs 6,750 6,303 (72) 12,981
Prepaid expenses 2,311 247 (57) 2,501
Refundable income taxes 1,071 1,071
Deferred income taxes 3,051 3,051
----------------- --------------- ---------------- ---------------- --------------
Total current assets 93,191 20,529 5,891 119,611
Net property, plant and equipment 90,201 13,356 3,048 106,605
Investment in subsidiaries and 13,631 (8,831) 4,800
affiliates
Note receivable affiliates 14,558 (13,541) 1,017
Goodwill 55,269 55,269
Debt issue costs 4,360 4,360
Deposits for assets to be leased 4,791 4,791
Other 770 770
----------------- --------------- ---------------- ---------------- --------------
$ 276,771 $ 33,885 $ 8,939 $ (22,372) $ 297,223
================= =============== ================ ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan $ 34,643 $ 34,643
Accounts payable 41,647 $ 9,436 $ 3,260 $ (1,379) 52,964
Accrued liabilities 16,221 3,679 1,150 21,050
Accrued interest 2,704 2,704
Accrued compensation 5,988 337 1,144 7,469
Current maturities of long-term debt 11,543 11,543
----------------- --------------- ---------------- ---------------- --------------
Total current liabilities 112,746 13,452 5,554 (1,379) 130,373
Long-term debt due after one year 148,460 10,532 11,647 (22,179) 148,460
Deferred income taxes 3,381 1,069 4,450
Stockholders' equity:
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 12,112 2,982 (12,961) 9,979 12,112
Accumulated other comprehensive income
(loss) (22) 1,756 1,734
----------------- --------------- ---------------- ---------------- --------------
Total stockholders' equity 12,184 8,832 (8,262) 1,186 13,940
----------------- --------------- ---------------- ---------------- --------------
Total liabilities and stockholders'
equity $ 276,771 $ 33,885 $ 8,939 $ (22,372) $ 297,223
================= =============== ================ ================ ==============
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for Three Months
ended December 17, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
--------------- -------------- ---------------- ---------------- ---------------
Revenues:
Net product sales $ 82,525 $ 11,722 $ 5,455 $ 99,752
Net mold sales 10,315 22 10,337
--------------- -------------- ---------------- ---------------- ---------------
92,890 11,722 5,477 110,089
Cost of Sales
Cost of product sales 63,207 11,699 5,227 80,133
Cost of mold sales 9,295 9,295
--------------- -------------- ---------------- ---------------- ---------------
72,502 11,699 5,227 89,428
--------------- -------------- ---------------- ---------------- ---------------
Gross Margin 20,388 23 250 20,661
Selling, general and administrative 14,721 253 398 15,372
expenses
--------------- -------------- ---------------- ---------------- ---------------
Operating profit (loss) 5,667 (230) (148) 5,289
Interest expense (4,066) (272) $246 (4,092)
Other income (expense), net 161 3 (246) (82)
International currency exchange losses (186) (186)
Equity in net loss of subsidiaries
and affiliates (1,426) 662 (764)
--------------- -------------- ---------------- ---------------- ---------------
Income (loss) before income taxes 336 (688) (145) 662 165
Provision for income taxes 212 (171) 41
--------------- -------------- ---------------- ---------------- ---------------
Net income (loss) $ 124 $ (517) $ (145) $ 662 $ 124
=============== ============== ================ ================ ===============
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12
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for Three Months
ended December 19, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
--------------- -------------- ---------------- ---------------- ---------------
Revenues:
Net product sales $ 92,601 $ 18,340 $ 7,988 $ 118,929
Net mold sales 6,467 6,467
--------------- -------------- ---------------- ---------------- ---------------
99,068 18,340 7,988 125,396
Cost of Sales
Cost of product sales 70,995 17,276 7,767 96,038
Cost of mold sales 6,454 6,454
--------------- -------------- ---------------- ---------------- ---------------
77,449 17,276 7,767 102,492
--------------- -------------- ---------------- ---------------- ---------------
Gross Margin 21,619 1,064 221 22,904
Selling, general and administrative 14,550 308 496 15,354
expenses
--------------- -------------- ---------------- ---------------- ---------------
Operating profit (loss) 7,069 756 (275) 7,550
Interest expense (4,653) (274) (161) $435 (4,653)
Other income (expense), net 475 20 (435) 60
International currency exchange losses 136 (259) (123)
Equity in net loss of subsidiaries
and affiliates (465) 236 (229)
--------------- -------------- ---------------- ---------------- ---------------
Income (loss) before income taxes 2,426 638 (695) 236 2,605
Provision for income taxes 1,078 179 1,257
--------------- -------------- ---------------- ---------------- ---------------
Net income (loss) $ 1,348 $ 459 $ (695) $ 236 $ 1,348
=============== ============== ================ ================ ===============
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13
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for Three Months
ended December 17, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor
Inc. Canada Subsidiaries Consolidated
------------- ---------- ------------- -------------
Net cash provided (used) by operating activities $ 19,248 $ 2,345 $ (114) $ 21,479
Cash flows from investing activities
Additions to property, plant and equipment (5,202) (724) (143) (6,069)
Proceeds from disposal of property, plant and equipment 251 251
Deposits for assets to be leased (5,911) (5,911)
------------- ---------- ------------- -------------
Net cash provided (used) by investing activities (10,862) (724) (143) (11,729)
Cash flows from financing activities
Borrowing (to)/from affiliates (125) 57 (68)
Costs associated with debt acquisition (10) (10)
Payments on long-term debt (3,260) (3,260)
Net repayments on line of credit borrowings (4,995) (4,995)
------------- ---------- ------------- -------------
Net cash provided (used) by financing activities (8,390) 57 (8,333)
------------- ---------- ------------- -------------
Net cash change (4) 1,621 (200) 1,417
Cash at beginning of period 29 2,622 1,989 4,640
------------- ---------- ------------- -------------
Cash at end of period $ 25 $ 4,243 $ 1,789 $ 6,057
============= ========== ============= =============
Supplemental information:
Depreciation and amortization $ 5,295 $ 489 $ 204 $ 5,988
============= ========== ============= =============
13
14
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for Three Months
ended December 19, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor
Inc. Canada Subsidiaries Consolidated
------------- ---------- ------------- -------------
Net cash provided (used) by operating activities $ (1,692) $ 313 $ 772 $ (607)
Cash flows from investing activities
Additions to property, plant and equipment (2,169) (313) (2,482)
Proceeds from disposal of property, plant and equipment 8,258 8,258
------------- ---------- ------------- -------------
Net cash provided (used) by investing activities 6,089 (313) 5,776
Cash flows from financing activities
Borrowing (to)/from affiliates (720) 171 (549)
Costs associated with debt acquisition (73) (73)
Payments on long-term debt (11,515) (11,515)
Net proceeds from line of credit borrowings 5,758 5,758
------------- ---------- ------------- -------------
Net cash provided (used) by financing activities (6,550) 171 (6,379)
------------- ---------- ------------- -------------
Net cash change (2,153) 943 (1,210)
Cash at beginning of period 2,184 2,133 4,317
------------- ---------- ------------- -------------
Cash at end of period $ 31 $ $ 3,076 $ 3,107
============= ========== ============= =============
Supplemental information:
Depreciation and amortization $ 4,911 $ 522 $ 352 $ 5,785
============= ========== ============= =============
14
15
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 section, 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; (ii)
fluctuations in worldwide or regional automobile and light and heavy truck
production, (iii) labor disputes involving the Company or its significant
customers; (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; and (vi) 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 closed its quarter ended December 17, 2000 one week early to allow
for the Christmas holiday and automotive shutdown. The quarter ended December
19, 1999 was also closed one week early to allow for Year 2000 testing. Both
quarters contain 12 weeks.
RESULTS OF OPERATIONS
QUARTER ENDED DECEMBER 17, 2000 COMPARED TO THE QUARTER ENDED
DECEMBER 19, 1999
Net sales for the quarter ended December 17, 2000 ("first quarter 2001") were
$110.1 million, a decrease of $15.3 million or 12.2% from the quarter ended
December 19, 1999 ("first quarter 2000"). First quarter 2001 net sales were
comprised of approximately $99.8 million of automotive product sales and $10.3
million of tooling sales. The decline in net sales is primarily the result of
softening automotive builds.
Gross margin was $20.7 million or 18.8% of net sales for the first quarter 2001
compared with $22.9 million or 18.3% of net sales for the first quarter 2000.
First quarter 2001 gross margin related to automotive product sales was $19.6
million or 19.6% of net product sales compared to $22.9 million or 19.3% of net
product sales for the first quarter of 2000.
Selling, General and Administrative (SG&A) expense for the first quarter 2001
was $15.4 million, or 14.0% of net sales compared to $15.4 million, or 12.3% of
net sales for the first quarter of 2000. The increase in first quarter 2001 as a
percentage of sales is the result of lower automotive sales.
Interest expense for the first quarter 2001 was $4.1 million compared to $4.7
million for the first quarter 2000. The decrease in interest expense is
primarily due to scheduled debt repayments and debt repayment related to the
sale of the Company's blowmolding machinery and equipment in December 1999.
The effective tax rate for the first quarter of 2001 was 24.8% compared to 48.3%
for the first quarter 2000. The interim effective rates are estimated based upon
fiscal year operating forecasts. The effective tax rates differ from statutory
rates due to foreign taxes in excess of tax credits and certain nondeductible
expenses.
15
16
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 its future cash flow from
operations, combined with its revolving credit availability will be sufficient
to meet its planned debt service, capital requirements, and internal growth
opportunities. As of December 17, 2000, the Company had $145.2 million of
long-term debt outstanding, $41.2 million of revolving loans and current
maturities of long-term debt outstanding, and $15.5 million of borrowing
availability under its revolving credit facility.
Cash provided by operating activities in first quarter 2001 was $21.5 million
compared to $0.6 million of cash used by operating activities in the first
quarter 2000. The increase is due to a concerted effort to collect customer
receivables within credit terms in addition to reductions in operating expenses.
Capital expenditures for first quarter 2001 were $6.1 million compared to $2.5
million for first quarter 2000. The Company believes its capital expenditures
will be approximately $24.0 million in fiscal year 2001. The majority of the
Company's fiscal year 2001 capital expenditures will be used to facilitate new
programs launching in fiscal year 2001 and to increase painting capacity for
programs launching in fiscal year 2001 and 2002. However, the Company's capital
expenditures may be greater than currently anticipated as the result of new
business opportunities.
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.
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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/ Gary E. Borushko
--------------------------
Gary E. Borushko
Chief Financial Officer
By: /s/ Bradley N. Frederick
--------------------------
Bradley N. Frederick
Director of Finance
Chief Accounting Officer
Dated: January 31, 2001
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