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 25, 2001
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 4, 2001: 600
Total pages: 21
Listing of exhibits: 20
2
LDM TECHNOLOGIES, INC.
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets, March 25, 2001 and
September 24, 2000 3
Condensed Consolidated Statements of Income, three months ended
March 25, 2001 and March 26, 2000 4
Condensed Consolidated Statements of Income, six months ended
March 25, 2001 and March 26, 2000 5
Condensed Consolidated Statements of Cash Flows, six months ended 6
March 25, 2001 and March 26, 2000
Notes to Condensed Consolidated Financial Statements 7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF 18
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 20
Signatures 21
2
3
LDM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
MARCH 25, 2001 SEPTEMBER 24, 2000
(UNAUDITED) (NOTE)
---------------------- -----------------------
ASSETS
Current assets:
Cash $1,051 $4,640
Accounts Receivable 61,688 74,335
Raw materials 10,250 12,107
Work in process 1,494 1,745
Finished goods 5,846 7,180
Mold costs 19,710 12,981
Refundable income taxes 828 1,071
Deferred income taxes 3,220 3,051
Other current assets 2,280 2,501
---------------------- ----------------------
Total current assets 106,367 119,611
Net property, plant and equipment 110,347 106,605
Goodwill, net 52,965 55,269
Debt issue costs, net 4,013 4,360
Equity investments in affiliates 5,550 4,800
Note receivable from affiliate 37 1,017
Deposits for assets to be leased 819 4,791
Other assets 769 770
---------------------- ----------------------
Totals $280,867 $297,223
====================== ======================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Revolving loan $18,616 $34,643
Accounts payable 48,241 52,964
Accrued liabilities 29,250 21,050
Accrued interest 2,499 2,704
Accrued compensation 5,209 7,469
Current maturities of long-term debt 4,814 11,543
---------------------- ----------------------
Total current liabilities 108,629 130,373
Long-term debt due after one year 159,268 148,460
Deferred income taxes 3,543 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 7,601 12,112
Accumulated other comprehensive income 1,732 1,734
---------------------- ----------------------
Total stockholders' equity 9,427 13,940
---------------------- ----------------------
Totals $280,867 $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 Income
(dollars in thousands)
UNAUDITED
THREE MONTHS ENDED
MARCH 25, 2001 MARCH 26, 2000
-------------- --------------
Revenues:
Net product sales $ 94,181 $ 123,465
Net mold sales 14,464 14,238
--------- ---------
108,645 137,703
Cost of Sales
Cost of product sales 82,499 101,000
Cost of mold sales 12,639 14,193
--------- ---------
95,138 115,193
--------- ---------
Gross margin 13,507 22,510
Selling, general and administrative expenses 14,138 15,865
--------- ---------
Operating profit (631) 6,645
Interest expense (4,852) (5,661)
Equity in net income of unconsolidated
subsidiaries 249 207
International currency exchange losses (48) (675)
Other expense, net (1,181) (54)
---------- ----------
Income (loss) before income taxes (6,463) 462
Provision (credit) for income taxes (1,825) 915
---------- ---------
Net income (loss) $ (4,638) $ (453)
========== ==========
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income for the
three months ended March 25, 2001. 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 25, 2001 MARCH 26, 2000
---------------- ----------------
Revenues:
Net product sales $ 193,933 $ 242,393
Net mold sales 24,802 20,704
--------- ---------
218,735 263,097
Cost of Sales
Cost of product sales 162,632 197,038
Cost of mold sales 21,933 20,647
--------- ---------
184,565 217,685
--------- ---------
Gross margin 34,170 45,412
Selling, general and administrative expenses 29,513 31,220
--------- ---------
Operating profit 4,657 14,192
Interest expense (8,944) (10,333)
Equity in loss of unconsolidated
subsidiaries (513) (22)
International currency exchange losses (231) (799)
Other (expense) income, net (1,264) 27
---------- ---------
Income before income taxes (6,295) 3,065
Provision (credit) for income taxes (1,784) 2,172
---------- ---------
Net income (loss) $ (4,511) $ 893
========== =========
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income for the
six months ended March 25, 2001. 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 25, 2001 MARCH 26, 2000
---------------- ----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 17,601 $ 11,929
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (13,303) (5,677)
Proceeds from disposal of property, plant and equipment 251 8,258
Reimbursement of deposits for assets to be leased 3,972
Equity contributed to affiliate (49)
--------- ----------
NET CASH USED FOR INVESTING ACTIVITIES (9,080) 2,532
CASH FLOWS FROM FINANCING ACTIVITIES
Advances to affiliates (1,108)
Proceeds from long-term debt issuance, net of $162 issuance costs in
2001; $182 in 2000 9,838 (182)
Payments on long-term debt (5,921) (14,197)
Net borrowings (repayments) on lines of credit (16,027) (1,232)
---------- ----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (12,110) (16,719)
---------- ----------
Net cash change (3,589) (2,258)
Cash at beginning of period 4,640 4,317
--------- ---------
Cash at end of period $ 1,051 $ 2,059
========= =========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 12,228 $ 11,246
========= =========
See notes to condensed consolidated financial statements.
6
7
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, 2001 are not necessarily indicative of the results that may be expected for
the fiscal year ending September 30, 2001. 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 24, 2000.
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's 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
Company's 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.
7
8
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 March 25, 2001, 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 counterparty 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 $1,580 which is included as a component of accrued
liabilities. The change in fair value for the six months ended March 25, 2001
was an expense of $1,387, which has been included as a component of other income
(expense), net.
6. Income Taxes
The effective tax benefit rate for the first six months of 2001 was 28.3%
compared to a tax provision rate of 70.9% for the first six months of 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.
8
9
LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
7. Senior Debt Refinancing
As of March 23, 2001, the Company amended and restated its Revolving Credit
Facility and Term Loan Facility. As part of the transaction, approximately $10
million of additional term loan financing was acquired. Proceeds from the Term
Loan financing were used to pay down amounts outstanding on its Revolving Credit
Facility. Both amended and restated facilities expire on January 21, 2005.
Monthly principal repayments of $649 thousand, related to the amended and
restated Term Loan Facility, will commence October 1, 2001.
Covenants related to the amended and restated facilities are consistent with
those of the facilities replaced.
Both amended and restated facilities carry interest at rates that are .25%
higher than those of the facilities replaced.
8. 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 of the guarantor and
non-guarantor subsidiaries.
9
10
LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of March 25, 2001
(unaudited)
(dollars in thousands)
LDM Non-Guarantor Consolidating
Technologies, Inc. LDM Canada Subsidiaries Entries Consolidated
ASSETS
Current assets:
Cash $ 25 $ 547 $ 479 $ $ 1,051
Accounts receivable 49,972 8,917 2,799 61,688
Raw material 6,673 2,255 1,322 10,250
Work in process 1,038 326 130 1,494
Finished goods 4,918 770 158 5,846
Mold costs 12,908 5,483 1,319 19,710
Prepaid expenses 1,951 294 35 2,280
Refundable income taxes 828 828
Deferred income taxes 3,220 3,220
----------------- --------------- ---------------- ---------------- --------------
Total current assets 81,533 18,592 6,242 106,367
Net property, plant and equipment 94,118 13,265 2,964 110,347
Investment in subsidiaries and
affiliates 12,879 $ (7,329) 5,550
Note receivable affiliates 11,280 (11,243) 37
Goodwill 52,965 52,965
Debt issue costs 4,013 4,013
Deposits for assets to be leased 819 819
Other 769 769
----------------- --------------- ---------------- ---------------- --------------
$ 258,376 $ 31,857 $ 9,206 $ (18,572) $ 280,867
================= =============== ================ ================ ==============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Lines of credit and revolving loan $ 18,616 $ 18,616
Accounts payable 38,108 $ 6,755 $ 3,456 $ (78) 48,241
Accrued liabilities 21,259 6,703 1,288 29,250
Accrued interest 2,499 2,499
Accrued compensation 2,985 527 1,697 5,209
Current maturities of long-term debt 4,814 4,814
----------------- --------------- ---------------- ---------------- --------------
Total current liabilities 88,281 13,985 6,441 (78) 108,629
Long-term debt due after one year 159,268 10,131 11,736 (21,867) 159,268
Deferred income taxes 3,132 411 3,543
Stockholders' equity:
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 7,601 1,480 (13,646) 12,166 7,601
Accumulated other comprehensive income
(loss) 1,732 1,732
----------------- --------------- ---------------- ---------------- --------------
Total stockholders' equity 7,695 7,330 (8,971) 3,373 9,427
----------------- --------------- ---------------- ---------------- --------------
Total liabilities and stockholders'
equity $ 258,376 $ 31,857 $ 9,206 $ (18,572) $ 280,867
================= =============== ================ ================ ==============
10
11
LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of September 24, 2000 (Unaudited)
(dollars in thousands)
LDM Non-Guarantor Consolidating
Technologies, LDM Canada Subsidiaries Entries Consolidated
Inc.
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
affiliates 13,631 (8,831) 4,800
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
================= =============== ================ ================ ==============
11
12
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Income for the
Three-Months Ended March 25, 2001
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------ ------------ ------------- ------------
Revenues:
Net product sales $ 74,538 $ 14,253 $ 5,390 $ 94,181
Net mold sales 11,655 2,774 35 14,464
--------- -------- -------- ------- --------
86,193 17,027 5,425 108,645
Cost of Sales
Cost of product sales 61,526 15,371 5,602 82,499
Cost of mold sales 10,207 2,432 12,639
--------- -------- -------- ------- --------
71,733 17,803 5,602 95,138
--------- -------- -------- ------- --------
Gross margin 14,460 (776) (177) 13,507
Selling, general and administrative
expenses 13,468 301 369 14,138
--------- -------- -------- ------- --------
Operating profit (loss) 992 (1,077) (546) (631)
Interest expense (4,823) (309) 280 (4,852)
Equity in net income (loss) of
subsidiaries and affiliates (1,278) 1,527 249
International currency exchange
losses (48) (48)
Other income (expense), net (907) 6 (280) (1,181)
---------- -------- -------- -------- ---------
Loss before income taxes (6,016) (1,434) (540) 1,527 (6,463)
Credit for income taxes (1,378) (447) (1,825)
---------- --------- -------- ------- ---------
Net income (loss) $ (4,638) $ (987) $ (540) $ 1,527 $ (4,638)
========== ========= ======== ======= =========
12
13
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 income (loss) of
subsidiaries and affiliates (956) 1,163 207
International currency exchange
gains (losses) 67 (742) (675)
Other income (expense), net 427 6 (487) (54)
--------- -------- -------- -------- --------
Income (loss) before income taxes 295 544 (1,540) 1,163 462
Provision for income taxes 748 167 915
--------- -------- -------- -------- --------
Net income (loss) $ (453) $ 377 $ (1,540) $ 1,163 $ (453)
========= ======== ======== ======== ========
13
14
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Income
for the Six-Months Ended March 25, 2001
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor Consolidating
Inc. Canada Subsidiaries Entries Consolidated
------------- ------ ------------ ------------- ------------
Revenues:
Net product sales $ 157,114 $ 25,975 $ 10,844 $193,933
Net mold sales 21,970 2,774 58 24,802
---------- --------- --------- -------- ---------
179,084 28,749 10,902 218,735
Cost of Sales
Cost of product sales 124,733 27,071 10,828 162,632
Cost of mold sales 19,502 2,431 21,933
---------- --------- --------- -------- ---------
144,235 29,502 10,828 184,565
---------- --------- --------- -------- ---------
Gross margin 34,849 (753) 74 34,170
Selling, general and administrative
expenses 28,190 555 768 29,513
---------- --------- --------- -------- ---------
Operating profit (loss) 6,659 (1,308) (694) 4,657
Interest expense (8,889) (581) 526 (8,944)
Equity in net income (loss) of
subsidiaries and affiliates (2,701) 2,188 (513)
International currency exchange gains
(losses) (231) (231)
Other income (expense), net (746) 8 (526) (1,264)
---------- --------- --------- -------- ---------
Income (loss) before income taxes (5,677) (2,120) (686) 2,188 (6,295)
Provision for income taxes (1,166) (618) (1,784)
---------- --------- --------- -------- ---------
Net income (loss) $ (4,511) $ (1,502) $ (686) $ 2,188 $ (4,511)
========== ========= ========= ======== =========
14
15
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 income (loss) of
subsidiaries and affiliates (1,421) 1,399 (22)
International currency exchange gains
(losses) 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 for income taxes 1,826 346 2,172
--------- -------- -------- -------- --------
Net income (loss) $ 893 $ 836 $ (2,235) $ 1,399 $ 893
========= ======== ======== ======== ========
15
16
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Cash Flows
for the Six-Months Ended March 25, 2001
(unaudited)
(dollars in thousands)
LDM
Technologies, LDM Nonguarantor
Inc. Canada Subsidiaries Consolidated
------------- ------ ------------ ------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 18,496 $ 367 $ (1,262) $ 17,601
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (11,942) (1,024) (337) (13,303)
Proceeds from disposal of property, plant, and equipment 251 251
Refund of deposits for assets to be leased 3,972 3,972
--------- -------- -------- --------
NET CASH PROVIDED (USED) FOR INVESTING ACTIVITIES (7,719) (1,024) (337) (9,080)
CASH FLOW FROM FINANCING ACTIVITIES
Borrowing (to)/from affiliates 1,329 (1,418) 89
Costs associated with debt acquisition 9,838 9,838
Payments on long-term debt (5,921) (5,921)
Net proceeds from lines of credit borrowings (16,027) (16,027)
--------- -------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (10,781) (1,418) 89 (12,110)
--------- -------- -------- --------
Net cash change (4) (2,075) (1,510) (3,589)
Cash at beginning of period 29 2,622 1,989 4,640
--------- -------- -------- --------
Cash at end of period $ 25 $ 547 $ 479 $ 1,051
========= ======== ======== ========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 10,692 $ 1,115 $ 421 $ 12,228
========= ======== ======== ========
16
17
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
========= ======== ======== ========
17
18
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; 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's operating profit for both the quarter and six months ended March
25, 2001 has decreased as a percentage of sales compared to the same periods in
2000. This is the result of a softening in vehicle builds as OEMs corrected
on-hand inventories during the Company's second fiscal quarter of fiscal year
2001.
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 contained 12 weeks. As a result, the quarters ended March 25, 2001 and
March 26, 2000 each contain 14 weeks.
RESULTS OF CONTINUING OPERATIONS
QUARTER ENDED MARCH 25, 2001 COMPARED TO QUARTER ENDED MARCH 26, 2000
NET SALES: Net sales for the three-month period ended March 25, 2001 (second
quarter 2001) were $108.6 million versus $137.7 million for the three-month
period ended March 26, 2000 (second quarter 2000). This is a decrease of $29.1
million or 21.1%. The decrease is the result of a softening in vehicle builds as
OEMs corrected on-hand inventories during second quarter 2001.
Second quarter 2001 net sales were comprised of $94.2 million of automotive
product sales and $14.5 million of mold sales. Second quarter 2000 net sales
were comprised of $123.5 million of automotive product sales and $14.2 million
of mold sales.
The automotive product sale decrease of $29.3 million is attributable to the
correction of OEM on-hand inventory mentioned above. The mold sale increase of
$0.3 million relates to programs launched during second quarter 2001 as well as
products to be launched in third and fourth quarters of fiscal year 2001.
GROSS MARGIN: Gross margin was $13.5 million or 12.4% of net sales for second
quarter 2001 versus $22.5 million or 16.3% for the second quarter 2000. Second
quarter 2001 gross margin related to product sales was $11.7 million or 12.4% of
net product sales compared to $22.5 million or 18.2% of net product sales for
the second quarter of 2000. The decrease in gross margin related to product
sales is the result of lower sales volumes which affected the Company's ability
to absorb fixed overhead, launch inefficiencies in the Company's Exterior
Products Division, as well as costs related to a new Exterior Products facility
that will be launching new product in the next six to twelve months.
SELLING, GENERAL, AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for second
quarter 2001 were $14.1 million or 13.0% of net sales, compared to $15.9 million
or 11.5% of net sales, for second quarter 2000. The dollar decrease relates to
cutbacks at the Company's Auburn Hills facility to mitigate the effects of
softening automotive builds.
INTEREST EXPENSE: Interest expense was $4.9 million for second quarter 2001
compared to $5.7 million for second quarter 2000. The decrease reflects the
effect of scheduled repayments on existing senior debt as well as a reduction in
interest rates related to variable rate borrowings.
INCOME TAXES: The credit for income taxes for second quarter 2001 was $1.8
million on a pretax loss of $6.5 million. The tax benefit rate for second
quarter 2001 was 28.2%. 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.
18
19
SIX MONTHS ENDED MARCH 25, 2001 COMPARED TO SIX MONTHS ENDED MARCH 26, 2000
NET SALES: Net sales for the six-month period ended March 25, 2001 (first half
2001) were $218.7 million versus $263.1 million for the six-month period ended
March 26, 2000 (first half 2000). This is a decrease of $44.4 million or 16.9%.
First half 2001 net sales were comprised of $193.9 million of automotive product
sales and $24.8 million of mold sales. First half 2000 net sales were comprised
of $242.4 million of automotive product sales and $20.7 million of mold sales.
The automotive product sales decrease of $48.5 million is attributable to the
correction of OEM on-hand inventory mentioned above. The mold sale increase of
$4.1 million relates to programs launched during second quarter 2001 as well as
products to be launched in third and fourth quarters of fiscal year 2001.
GROSS MARGIN: Gross margin was $34.2 million or 15.6% of net sales for first
half 2001 versus $45.4 million or 17.3% for first half 2000. First half 2001
gross margin related to product sales was $31.3 million or 16.1% of net product
sales compared to $45.4 million or 18.7% of net product sales for first half
2000. The decrease in gross margin related to product sales is the result of
lower sales volumes which affected the Company's ability to absorb fixed
overhead, launch inefficiencies in the Company's Exterior Products Division, as
well as costs related to a new Exterior Products facility that will be launching
new product in the next six to twelve months.
SELLING, GENERAL, AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for first
half 2001 were $29.5 million or 13.5% of net sales, compared to $31.2 million or
11.9% of net sales for first half 2001. The dollar decrease relates to cutbacks
at the Company's Auburn Hills facility to mitigate the effects of softening
automotive builds.
INTEREST EXPENSE: Interest expense was $8.9 million for first half 2001 compared
to $10.3 million for first half 2000. The decrease reflects the effect of
scheduled repayments on existing senior debt as well as a reduction in interest
rates related to variable rate borrowings.
INCOME TAXES: The credit for income taxes for first half 2001 was $1.8 million
with an effective tax benefit rate of 28.3% compared to an effective provision
rate of 70.9% for first half 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.
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 25, 2001, the Company had $159.3
million of long-term debt outstanding, $23.4 million of revolving loans and
current maturities of long-term debt outstanding and $23.0 million of borrowing
availability under its revolving credit facilities.
Cash provided by operating activities in the first half of 2001 was $17.6
million compared to $11.9 million in the first half of 2000. The increase in
cash provided by operating activities was the result of focused collections
efforts and continued supplier development resulting in payment terms more
favorable to the Company.
Capital expenditures for first half 2001 were $13.3 million compared to $5.7
million for first half 2000. The Company believes that 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 years 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. 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.
19
20
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 The Company did not file any reports on
Form 8-K during the quarter for which this
report is filed.
20
21
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 9, 2001
21