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 June 24, 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 (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 common stock outstanding as of August 3, 2001: 600
Total pages:
Listing of exhibits:
2
LDM TECHNOLOGIES, INC.
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets, June 24, 2001 and
September 24, 2000 3
Condensed Consolidated Statements of Income, three months ended
June 24, 2001 and June 25, 2000 4
Condensed Consolidated Statements of Income, nine months ended
June 24, 2001 and June 25, 2000 5
Condensed Consolidated Statements of Cash Flows, nine months ended
June 24, 2001 and June 25, 2000 6
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 20
Item 2 Changes in Securities 20
Item 3 Defaults upon Senior Securities 20
Item 4 Submission of Matters to a Vote of Security Holders 20
Item 5 Other Information 20
Item 6 Exhibits and Reports on Form 8-K 20
Index to Exhibits
Signature Page 21
2
3
LDM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands, unless otherwise noted)
JUNE 24, 2001 SEPTEMBER 24, 2000
(UNAUDITED) (NOTE)
----------- ------
ASSETS
Current assets:
Cash $ 25 $ 4,640
Accounts Receivable 65,337 74,335
Raw materials 9,651 12,107
Work in process 1,439 1,745
Finished goods 5,519 7,180
Mold costs 22,850 12,981
Refundable income taxes 1,836 1,071
Deferred income taxes 3,022 3,051
Other current assets 1,938 2,501
-------- --------
Total current assets 111,617 119,611
Net property, plant and equipment 110,932 106,605
Goodwill, net 51,802 55,269
Debt issue costs, net 4,494 4,360
Equity investments in affiliates 5,550 4,800
Note receivable from affiliate 1,017
Deposits for assets to be leased 2,011 4,791
Other assets 769 770
-------- --------
Totals $287,175 $297,223
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Revolving loan $ 17,539 $ 34,643
Accounts payable 52,390 52,964
Accrued liabilities 29,436 21,050
Accrued interest 6,107 2,704
Accrued compensation 5,164 7,469
Current maturities of long-term debt 6,791 11,543
-------- --------
Total current liabilities 117,427 130,373
Long-term debt due after one year 156,991 148,460
Deferred income taxes 3,035 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 7,976 12,112
Accumulated other comprehensive income 1,652 1,734
-------- --------
Total stockholders' equity 9,722 13,940
-------- --------
Totals $287,175 $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 contained herein.
3
4
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income
(dollars in thousands, unless otherwise noted)
UNAUDITED
THREE MONTHS ENDED
JUNE 24, 2001 JUNE 25, 2000
------------- -------------
Revenues:
Net product sales $ 102,193 $ 113,722
Net mold sales 8,153 8,183
--------- ---------
110,346 121,905
Cost of Sales
Cost of product sales 87,168 92,312
Cost of mold sales 6,696 7,055
--------- ---------
93,864 99,367
--------- ---------
Gross Margin 16,482 22,538
Selling, general and administrative expenses 12,932 15,755
--------- ---------
Operating profit 3,550 6,783
Interest expense (4,221) (4,849)
Equity in net income (loss) of unconsolidated
Subsidiaries (49) 318
International currency exchange gains (losses) 160 (487)
Other income, net 218 202
--------- ---------
Income (loss) before income taxes (342) 1,967
Provision (credit) for income taxes (717) 1,345
--------- ---------
Net income $ 375 $ 622
========= =========
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income for the
three months ended June 24, 2001. Other comprehensive income for the three
months ended June 25, 2000 was $209 and relates to foreign currency translation.
4
5
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income
(dollars in thousands, unless otherwise noted)
UNAUDITED
NINE MONTHS ENDED
JUNE 24, 2001 JUNE 25, 2000
------------- -------------
Revenues:
Net product sales $ 296,127 $ 356,116
Net mold sales 32,953 28,889
------------ -----------
329,080 385,005
Cost of Sales
Cost of product sales 249,799 289,351
Cost of mold sales 28,629 27,702
------------ -----------
278,428 317,053
------------ -----------
Gross Margin 50,652 67,952
Selling, general and administrative expenses 42,445 46,975
----------- -----------
Operating profit 8,207 20,977
Interest expense (13,165) (15,182)
Equity in net income (loss) of
unconsolidated subsidiaries (563) 296
International currency exchange losses (71) (1,287)
Other income (expense), net (1,045) 229
------------ -----------
Income (loss) before income taxes (6,637) 5,033
Provision (credit) for income taxes (2,501) 3,517
------------ -----------
Net income (loss) $ (4,136) $ 1,516
=========== ===========
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income for the
nine months ended June 24, 2001. Other comprehensive income for the nine months
ended June 25, 2000 was $853 and relates to foreign currency translation.
5
6
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands, unless otherwise noted)
UNAUDITED
NINE MONTHS ENDED
JUNE 24, 2001 JUNE 25, 2000
----------------- ----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 25,367 $ 27,947
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (18,759) (10,927)
Proceeds from disposal of property, plant and equipment 251 8,258
Reimbursement of deposits for assets to be leased 2,780
Equity contributed to affiliate (49)
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (15,728) (2,718)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt issuance, net of issuance
costs of $929 in 2001, $182 in 2000 9,071 (182)
Payments on long-term debt (6,221) (17,157)
Net borrowings (repayments) on lines of credit (17,104) (4,487)
Advances to affiliates (1,597)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES (14,254) (23,423)
--------- ---------
Net cash change (4,615) 1,806
Cash at beginning of period 4,640 4,317
--------- ---------
Cash at end of period $ 25 $ 6,123
========= =========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 17,735 $ 17,195
========= =========
See notes to condensed consolidated financial statements.
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LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, unless otherwise noted)
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 nine-month periods ended June
24, 2001 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 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 mold 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 certified 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 it'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 to LDM 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.
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. The Company has written off all investments in and receivables from DBM
through equity losses.
7
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LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, unless otherwise noted)
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%.
In June 2001 the Company cancelled the interest rate swap entered into in May
2000 in exchange for entering into a new swap agreement. The new swap is also
based on a notional amount of $50 million. The Company pays to the bank
counterparty based on a rate of three-month LIBOR plus 5.30% through January
2007, except in circumstances described in the following paragraph. The Company
receives from the bank counterparty based on a rate of 10.75%. The swap is
cancelable by the bank counterparty in January 2004 and every six months
thereafter. 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 June 2001 the Company replaced the interest rate collar agreement entered
into in November 2000 with a convertible interest rate collar through the bank
counterparty. The collar is based on a notional amount of $50 million. Under the
convertible collar, through January 2004, if three-month LIBOR falls below 3.5%,
the Company pays to the bank counterparty based on a fixed interest rate of
10.5%. If three-month LIBOR exceeds 7.1%, the Company receives payment from the
bank counterparty. From January 2004 through January 2007, if three-month LIBOR
falls below 4.75% the Company pays to the bank counterparty based on a fixed
interest rate of 10.75%. If three-month LIBOR exceeds 7.1%, the Company receives
payment from the bank counterparty.
The Company paid an upfront premium of $200 and forgave an interest receivable
payment, related to the May 2000 interest rate swap agreement, of approximately
$300 due from the bank counterparty to initiate the interest rate swap and
collar changes in June 2001 described above.
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 $890 which is included as a component of accrued
liabilities. The change in fair value for the nine months ended June 24, 2001
was an expense of $1,207, which has been included as a component of other income
(expense), net.
8
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LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, unless otherwise noted)
6. Income Taxes
The effective tax benefit rate for the first nine months of 2001 was 37.7%
compared to a tax provision rate of 69.9% for the first nine 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.
7. Senior Debt Refinancing
On 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, 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.
8. Supplemental Guarantor Information
The $110 million 10 3/4% Senior Subordinated Notes due 2007, the Senior
Revolving 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 Loan 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 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 June 24, 2001 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM Technologies, Consolidating
Inc. LDM Canada LDM Germany Entries Consolidated
---- ---------- ----------- ------- ------------
ASSETS
Current assets:
Cash $ 25 $ 25
Accounts receivable 52,305 $ 10,008 $ 3,024 65,337
Raw material 6,234 2,285 1,132 9,651
Work in process 1,006 274 159 1,439
Finished goods 4,407 988 124 5,519
Mold costs 15,295 5,675 1,880 22,850
Prepaid expenses 1,619 287 32 1,938
Refundable income taxes 1,836 1,836
Deferred income taxes 2,925 97 3,022
--------- ---------- --------- ---------
Total current assets 85,652 19,614 6,351 111,617
Net property, plant and equipment 94,788 13,212 2,932 110,932
Investment in subsidiaries and affiliates 12,069 $ (6,519) 5,550
Note receivable affiliates 10,799 (10,799)
Goodwill 51,802 51,802
Debt issue costs 4,494 4,494
Deposits for assets to be leased 2,011 2,011
Other 769 769
--------- ---------- --------- --------- ---------
$ 262,384 $ 32,826 $ 9,283 $ (17,318) $ 287,175
========= ========== ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan $ 17,539 $ 17,539
Accounts payable 40,068 $ 8,912 $ 3,645 $ (235) 52,390
Accrued liabilities 20,648 6,739 2,049 29,436
Accrued interest 6,107 6,107
Accrued compensation 3,135 524 1,505 5,164
Current maturities of long-term debt 6,791 6,791
--------- ---------- --------- --------- ---------
Total current liabilities 94,288 16,175 7,199 (235) 117,427
Long-term debt due after one year 156,991 10,131 11,736 (21,867) 156,991
Deferred income taxes 3,035 3,035
Stockholders' equity:
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 7,976 670 (14,247) 13,577 7,976
Accumulated other comprehensive income 1,652 1,652
--------- ---------- --------- --------- ---------
Total stockholders' equity 8,070 6,520 (9,652) 4,784 9,722
--------- ---------- --------- --------- ---------
Total liabilities and stockholders' equity $ 262,384 $ 32,826 $ 9,283 $ (17,318) $ 287,175
========= ========== ========= ========= =========
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of September 24, 2000 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM Technologies, Consolidating
Inc. LDM Canada LDM Germany 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 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
========= ========== ========= ========= =========
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for the
Three-Months Ended June 24, 2001 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM
Technologies, LDM LDM Consolidating
Inc. Canada Germany Entries Consolidated
------------- ------ ------- ------- ------------
Revenues:
Net product sales $ 81,729 $ 15,651 $ 4,813 $102,193
Net mold sales 7,006 1,147 8,153
--------- -------- -------- --------
88,735 16,798 4,813 110,346
Cost of Sales
Cost of product sales 65,474 16,726 4,968 87,168
Cost of mold sales 5,720 976 6,696
--------- -------- -------- --------
71,194 17,702 4,968 93,864
--------- -------- -------- --------
Gross margin 17,541 (904) (155) 16,482
Selling, general and
administrative expenses 12,190 290 452 12,932
--------- -------- -------- --------
Operating profit (loss) 5,351 (1,194) (607) 3,550
Interest expense (4,186) (291) $ 256 (4,221)
Equity in net loss of subsidiaries
and affiliates (1,460) 1,411 (49)
International currency
exchange gain 160 160
Other income, net 468 6 (256) 218
--------- -------- -------- -------- --------
Income (loss) before income
taxes 173 (1,325) (601) 1,411 (342)
Credit for income taxes (202) (515) (717)
--------- -------- -------- ------- --------
Net income (loss) $ 375 $ (810) $ (601) $ 1,411 $ 375
========= ======== ======== ======= ========
12
13
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for the
Three-Months Ended June 25, 2000 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM
Technologies, LDM LDM Consolidating
Inc. Canada Germany Entries Consolidated
------------- ------ ------- ------- ------------
Revenues:
Net product sales $ 93,238 $ 13,851 $ 6,633 $113,722
Net mold sales 8,053 130 8,183
--------- -------- -------- --------
101,291 13,851 6,763 121,905
Cost of Sales
Cost of product sales 72,543 13,080 6,689 92,312
Cost of mold sales 7,055 7,055
--------- -------- -------- --------
79,598 13,080 6,689 99,367
--------- -------- -------- --------
Gross Margin 21,693 771 74 22,538
Selling, general and administrative
expenses 15,031 299 425 15,755
--------- -------- -------- --------
Operating profit (loss) 6,662 472 (351) 6,783
Interest expense (4,829) (298) (175) $ 453 (4,849)
Equity in net income (loss) of
subsidiaries and affiliates (560) 878 318
International currency exchange
losses (125) (362) (487)
Other income (expense), net 621 34 (453) 202
--------- -------- -------- ------- --------
Income (loss) before income taxes 1,894 83 (888) 878 1,967
Provision for income taxes 1,272 73 1,345
--------- -------- -------- ------- --------
Net income (loss) $ 622 $ 10 $ (888) $ 878 $ 622
========= ======== ======== ======= ========
13
14
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations
for the Nine-Months Ended June 24, 2001 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM
Technologies, LDM LDM Consolidating
Inc. Canada Germany Entries Consolidated
------------- ------ ------- ------- ------------
Revenues:
Net product sales $ 238,873 $ 41,627 $ 15,657 $296,127
Net mold sales 28,975 3,920 58 32,953
--------- -------- -------- --------
267,818 45,547 15,715 329,080
Cost of Sales
Cost of product sales 190,206 43,797 15,796 249,799
Cost of mold sales 25,222 3,407 28,629
--------- -------- -------- --------
215,428 47,204 15,796 278,428
--------- -------- -------- --------
Gross margin 52,390 (1,657) (81) 50,652
Selling, general and
administrative expenses 40,380 845 1,220 42,445
--------- -------- -------- --------
Operating profit (loss) 12,010 (2,502) (1,301) 8,207
Interest expense (13,076) (872) $ 783 (13,165)
Equity in net loss of
subsidiaries and affiliates (4,161) 3,598 (563)
International currency exchange
losses (71) (71)
Other income (expense), net (277) 15 (783) (1,045)
---------- -------- -------- -------- --------
Loss before income taxes (5,504) (3,445) (1,286) 3,598 (6,637)
Credit for income taxes (1,368) (1,133) (2,501)
--------- -------- -------- ------- --------
Net income (loss) $ (4,136) $ (2,312) $ (1,286) $ 3,598 $ (4,136)
========= ======== ======== ======= ========
14
15
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations
for the Nine-Months Ended June 25, 2000 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM
Technologies, LDM LDM Consolidating
Inc. Canada Germany Entries Consolidated
------------- ------ ------- ------- ------------
Revenues:
Net product sales $ 282,532 $ 51,382 $ 22,202 $ $356,116
Net mold sales 28,686 203 28,889
--------- -------- -------- ------- --------
311,218 51,382 22,405 385,005
Cost of Sales
Cost of product sales 219,190 47,936 22,225 289,351
Cost of mold sales 27,702 27,702
--------- -------- -------- ------- --------
246,892 47,936 22,225 317,053
--------- -------- -------- ------- --------
Gross Margin 64,326 3,446 180 67,952
Selling, general and
administrative expenses 44,140 1,425 1,410 46,975
--------- -------- -------- ------- --------
Operating profit (loss) 20,186 2,021 (1,230) 20,977
Interest expense (15,114) (895) (529) 1,356 (15,182)
Equity in net income (loss) of
subsidiaries and affiliates (1,982) 2,278 296
International currency exchange losses 77 (1,364) (1,287)
Other income (expense), net 1,524 61 (1,356) 229
--------- -------- -------- -------- --------
Income (loss) before income
taxes 4,614 1,264 (3,123) 2,278 5,033
Provision for income taxes 3,098 419 3,517
--------- -------- -------- ------- --------
Net income (loss) $ 1,516 $ 845 $ (3,123) $ 2,278 $ 1,516
========= ======== ========= ======= ========
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Cash Flows
for the Nine-Months Ended June 24, 2001 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM
Technologies, LDM LDM
Inc. Canada Germany Consolidated
------------- ------ ------- ------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 26,675 $ 257 $ (1,565) $ 25,367
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (16,638) (1,608) (513) (18,759)
Proceeds from disposal of property, plant, and 251 251
equipment
Refund of deposits for assets to be leased 2,780 2,780
--------- -------- -------- --------
NET CASH PROVIDED (USED) FOR INVESTING ACTIVITIES (13,607) (1,608) (513) (15,728)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from long-term debt issuance 10,000 10,000
Borrowing (to)/from affiliates 1,182 (1,271) 89
Costs associated with debt acquisition (929) (929)
Payments on long-term debt (6,221) (6,221)
Net repayments on line of credit borrowings (17,104) (17,104)
--------- -------- -------- -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (13,072) (1,271) 89 (14,254)
--------- -------- -------- -------
Net cash change (4) (2,622) (1,989) (4,615)
Cash at beginning of period 29 2,622 1,989 4,640
--------- -------- -------- -------
Cash at end of period $ 25 $ $ $ 25
========= ======== ======== =======
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 15,354 $ 1,752 $ 629 $17,735
========= ======== ======== =======
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LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Cash Flows
for the Nine-Months Ended June 25, 2000 (Unaudited)
(dollars in thousands, unless otherwise noted)
LDM
Technologies, LDM LDM
Inc. Canada Germany Consolidated
------------- ------ ------- ------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 24,441 $ 3,540 $ (34) $ 27,947
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (10,575) (352) (10,927)
Proceeds from disposal of property, plant, and equipment 8,258 8,258
Equity contributed to affiliate (49) (49)
--------- -------- -------- --------
NET CASH USED FOR INVESTING ACTIVITIES (2,366) (352) (2,718)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (to)/from affiliates (2,404) 243 564 (1,597)
Debt issuance costs (182) (182)
Payments on long-term debt (17,157) (17,157)
Repayments on line of credit borrowings (4,487) (4,487)
--------- -------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (24,230) 243 564 (23,423)
--------- -------- -------- --------
Net cash change (2,155) 3,431 530 1,806
Cash at beginning of period 2,184 - 2,133 4,317
--------- -------- -------- --------
Cash at end of period $ 29 $ 3,431 $ 2,663 $ 6,123
========= ======== ======== ========
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 14,499 $ 1,709 $ 987 $ 17,195
========= ======== ======== ========
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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; (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's operating profit for both the quarter and nine months ended June
24, 2001 has decreased compared to the same periods in 2000. This is the result
of a softening in vehicle builds, new product launched in the current fiscal
year, and the start up of a new exterior products facility.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 24, 2001 COMPARED TO QUARTER ENDED JUNE 25, 2000
NET SALES: Net sales for the three-month period ended June 24, 2001 ("third
quarter 2001") were $110.3 million, a decrease of $11.6 million, or 9.5%, from
net sales of $121.9 million for the three-month period ended June 25, 2000
("third quarter 2000"). Third quarter 2001 net sales were comprised of $102.2
million of automotive product sales and $8.1 million of mold sales. Third
quarter 2000 net sales were comprised of $113.7 million of automotive product
sales and $8.2 million of mold sales. For the third quarter 2001, automotive
product sales decreased $11.5 million and mold sales were unchanged from third
quarter 2000. The automotive product sales decrease is the result of softening
automotive builds.
GROSS MARGIN: Gross margin was $16.5 million or 15.0% of net sales for third
quarter 2001. Third quarter 2001 gross margin related to automotive product
sales was $15.0 million or 14.7% of net automotive product sales compared to
$21.4 million or 18.8% of net automotive product sales for third quarter 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 third
quarter 2001 were $12.9 million, or 11.7% of net sales, compared to $15.8
million, or 13.0% of net sales, for third quarter 2000. The decrease relates to
cutbacks at the Company's Auburn Hills corporate office facility to mitigate the
effects of softening automotive builds.
INTEREST EXPENSE: Interest expense was $4.2 million for third quarter 2001
compared to $4.8 million for third 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 benefit for income taxes for third quarter 2001 was $717
thousand with an effective tax benefit rate of 209.6%, as compared to $1.3
million with an effective tax rate of 68.4% for third quarter 2000. The interim
effective rates are estimated based upon fiscal year operating forecasts. The
interim benefit rate for third quarter 2001 was affected by a change in forecast
for anticipated annual income tax rate. 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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19
NINE MONTHS ENDED JUNE 24, 2001 COMPARED TO NINE MONTHS ENDED JUNE 25, 2000
NET SALES: Net sales for the nine-month period ended June 24, 2001 ("Year to
date June 2001") were $329.1 million, a decrease of $55.9 million, or 14.5%,
from net sales of $385.0 million for the nine-month period ended June 25, 2000
("Year to date June 2000"). Year to date June 2001 net sales were comprised of
approximately $296.1 million of automotive product sales and $33.0 million of
mold sales. Year to date June 2000 net sales were comprised of approximately
$356.1 million of automotive product sales and $28.9 million of mold sales.
The automotive sales decrease of $60.0 million for Year to date June 2001 as
compared to Year to date June 2000, is the result of softening automotive builds
as well as the timing of new product launches. The mold sales increase of $4.1
million relates to programs launched in the second and third quarters of fiscal
year 2001.
GROSS MARGIN: Gross margin was $50.7 million or 15.4% of net sales for Year to
date June 2001. Year to date June 2001 gross margin related to product sales was
$46.3 million or 15.6% of net automotive product sales compared to $66.7 million
or 18.7% of net automotive product sales for Year to date June 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, and 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 Year to
date June 2001 were $42.4 million, or 12.9% of net sales, compared to $47.0
million, or 12.2% of net sales, for Year to Date June 2000. The dollar decrease
relates to cutbacks at the Company's Auburn Hills corporate office facility to
mitigate the effects of softening automotive builds.
INTEREST EXPENSE: Interest expense was $13.2 million for Year to date June 2001
compared to $15.2 million for Year to date June 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 Year to date June 2001 was $2.5
million with an effective tax rate of 37.7%, as compared to a provision of $3.5
million with an effective tax rate of 69.9% for Year to date June 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 make necessary capital expenditures
for facility maintenance and expansion. The Company believes that 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. Potential growth from acquisitions will be funded
from a variety of sources, including cash flow from operations and additional
indebtedness. As of June 24, 2001, the Company had $157.0 million of long-term
debt outstanding, $24.3 million of revolving loans and current maturities of
long-term debt outstanding and $28.5 million of borrowing availability under its
revolving credit facility.
Cash provided by operating activities Year to date June 2001 was $25.4 million
compared to $27.9 million Year to date June 2000.
Capital expenditures Year to date June 2001 were $18.8 million compared to $10.9
million Year to date June 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. 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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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.
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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: August 8, 2001
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