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 23, 2001
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 February 1, 2002: 600
Total pages: 18
Listing of exhibits:
1
LDM TECHNOLOGIES, INC.
INDEX
Page No.
-------------
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets, December 23, 2001 and
September 30, 2001 3
Condensed Consolidated Statements of Operations, three months
ended December 23, 2001 and December 17, 2000 4
Condensed Consolidated Statements of Cash Flows, three months ended
December 23, 2001 and December 17, 2000 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 15
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK 17
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
LDM TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
DECEMBER 23, 2001 SEPTEMBER 30, 2001
(UNAUDITED) (NOTE)
---------------------- -----------------------
ASSETS
Current assets:
Cash $1,260 $2,320
Accounts receivable 72,061 48,819
Raw materials 7,772 9,163
Work in process 1,295 1,633
Finished goods 5,507 5,885
Mold costs 26,807 19,588
Refundable income taxes 1,796 1,683
Deferred income taxes 3,066 2,612
Other current assets 2,269 2,517
---------------------- ----------------------
Total current assets 121,833 94,220
Net property, plant and equipment 101,200 104,526
Goodwill, net 50,639 50,639
Debt issue costs, net 4,038 4,258
Equity investments in affiliate 6,350 6,050
Deferred income taxes 1,135 1,715
Other assets 208 904
---------------------- ----------------------
Totals $285,403 $262,312
====================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $60,591 $53,153
Accrued liabilities 35,775 19,032
Accrued interest 5,191 2,555
Accrued compensation 3,506 2,813
Current maturities of long-term debt 8,735 8,735
---------------------- ----------------------
Total current liabilities 113,798 86,288
Lines of credit and revolving debt 16,259 18,181
Long-term debt due after one year 152,471 155,047
STOCKHOLDERS' EQUITY
Common stock (par value; $.10, issued
and outstanding 600 shares,
authorized 100,000 shares)
Additional paid-in capital 94 94
Retained earnings 2,781 2,702
---------------------- ----------------------
Total stockholders' equity 2,875 2,796
---------------------- ----------------------
Totals $285,403 $262,312
====================== ======================
Note: The balance sheet at September 30, 2001 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See notes to condensed consolidated financial statements.
3
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(dollars in thousands)
(Unaudited)
Three Months Ended
-------------------------------------------------------------
December 23, 2001 December 17, 2000
---------------------- --------------------
Net sales $95,430 $99,752
Cost of sales 80,382 79,091
---------------------- --------------------
Gross margin 15,048 20,661
Selling, general and administrative
expenses 10,754 15,372
---------------------- --------------------
Operating profit 4,294 5,289
Interest expense (3,759) (4,092)
Equity in income (losses) of affiliates,
net 300 (764)
International currency exchange losses (308) (186)
Other income (expense), net (431) (82)
---------------------- --------------------
Income (loss) before income taxes 96 165
Provision (credit) for income taxes 17 41
---------------------- --------------------
Net income (loss) $79 $124
====================== ====================
See notes to condensed consolidated financial statements.
Total comprehensive income is not materially different from net income.
Effect of Adopting Financial Accounting Standards No. 142
Three Months Ended
-------------------------------------------------------------
December 23, 2001 December 17, 2000
---------------------- --------------------
Reported net income $79 $124
Add back: Goodwill amortization, net of
income taxes 792
---------------------- --------------------
Adjusted net income (loss) $79 $916
====================== ====================
4
LDM TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Three Months Ended
-----------------------------------------------
December 23, 2001 December 17, 2000
------------------- ------------------
Net cash provided by operating activities $4,945 $21,479
Cash flows from investing activities
Additions to property, plant and equipment (1,435) (6,069)
Proceeds from disposal of property, plant and equipment 251
Deposits for assets to be leased (5,911)
------------------- ------------------
Net cash provided (used) for investing activities (1,435) (11,729)
Cash flows from financing activities
Advances to affiliates (68)
Payments on long-term debt (2,576) (3,260)
Net repayments on line of credit (1,922) (4,995)
Costs associated with debt acquisition (72) (10)
------------------- ------------------
Net cash used for financing activities (4,570) (8,333)
------------------- ------------------
Net cash change (1,060) 1,417
Cash at beginning of period 2,320 4,640
------------------- ------------------
Cash at end of period $1,260 $6,057
=================== ==================
Supplemental information
Depreciation $4,759 $4,826
Goodwill amortization 1,162
------------------- ------------------
Total depreciation and amortization $4,759 $5,988
=================== ==================
See notes to condensed consolidated financial statements.
5
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 23,
2001 and December 17, 2000 are not necessarily indicative of the results that
may be expected for the year ending September 29, 2002. 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 30, 2001.
Effective October 1, 2001, the Company elected to early adopt Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.
Under the new standard, goodwill is no longer amortized but is subject to annual
impairment tests in accordance with the Statement. Application of the
non-amortization provision of Statement No. 142 resulted in an increase to
pretax income of $1.2 million for the three months ended December 23, 2001.
The Company closed its quarters ended December 23, 2001 and December 17, 2000
one week early to allow for the Christmas holiday and automotive shutdown. 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.
Shipping and handling costs are included in cost of sales.
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 evaluated the effects on its revenue recognition
policies, particularly those related to customer reimbursable tooling. As a
result, customer reimbursements for tooling for all periods presented have been
reclassified from net sales to a reduction of cost of sales. There was no impact
to net earnings or equity resulting from this reclassification.
3. Commitments and Contingencies
There have been no significant changes in commitments and contingencies from the
matters described in footnote 11 of the Company's consolidated financial
statements as of and for the fiscal year ended September 30, 2001.
6
LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
4. Derivative Financial Instruments
The Company's fair values of the swap and the collar (refer to footnote 1 of the
Company's consolidated financial statements as of and for the fiscal year ended
September 30, 2001) are reported on the balance sheet with changes in fair
value reported in the statement of operations in accordance with Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities," as amended ("FAS 133"). The Company has reflected the
fair value of these derivatives as a liability of $1.9 million which is included
as a component of accrued liabilities. The change in fair value for the three
months ended December 23, 2001, and three months ended December 17, 2000
resulted in an expense of $438 thousand and $391 thousand, respectively, which
has been included as a component of other income (expense), net.
5. Income Taxes
The effective tax rate for the first quarter of 2002 was 17.7% compared to 24.8%
for the first quarter 2001. 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.
6. Related Party Transactions
The Company has a consulting arrangement with a company owned by one of its
shareholders in which payments are made for consulting services rendered.
Amounts paid for these services are included in selling, general and
administrative expenses and were $1.6 million for the fiscal year ended
September 30, 2001. To date in fiscal year 2002, no payments have been made to
this consulting company.
The Company and its two shareholders are party to a binding stock redemption
agreement. Upon the death of either shareholder, the Company is required to
purchase and the shareholder's estate is required to sell all of the
shareholder's stock at a price equal to $17 million. This amount payable
includes the proceeds of the life insurance policies owned by the Company on the
shareholder's life.
The Company is required to purchase and maintain life insurance policies of $17
million on the lives of each of the shareholders for as long as the Stock
Redemption Agreement is in effect. The aggregate premium for these policies
presently approximates $0.7 million per year. Further, the Company is prohibited
from assigning, pledging or borrowing against these life insurance policies
without the consent of the insured shareholder.
The Agreement may be terminated by mutual agreement of all parties
7
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, the $4.4 million Variable Rate Demand
Limited Obligation Revenue Bonds and the Senior Term and Capital Expenditures
Line of Credit are obligations of LDM Technologies, Inc. The obligations are
guaranteed fully, unconditionally and jointly and severally by LDM Canada and
certain holding companies. Upon the divestiture of LDM Germany effective
September 30, 2001 there are no non-guarantor subsidiaries remaining.
Supplemental consolidating financial information of LDM Technologies, Inc. and
LDM Canada (including the related holding company guarantors) is presented
below. 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.
8
LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of December 23, 2001 (Unaudited)
(dollars in thousands)
LDM Consolidating
Technologies, LDM Canada Entries Consolidated
Inc.
ASSETS
Current assets:
Cash $ 98 $ 1,162 $ 1,260
Accounts receivable 64,407 7,654 72,061
Raw materials 6,436 1,336 7,772
Work in process 1,085 210 1,295
Finished goods 5,003 504 5,507
Mold costs 25,561 1,246 26,807
Prepaid expenses 2,219 50 2,269
Refundable income taxes 1,786 10 1,796
Deferred income taxes 3,066 3,066
----------------- --------------- ---------------- --------------
Total current assets 109,661 12,172 121,833
Net property, plant and equipment 89,170 12,030 101,200
Investment in subsidiaries and
affiliates 10,386 $ (4,036) 6,350
Note receivable affiliates 10,233 (10,233)
Goodwill 50,639 50,639
Debt issue costs 4,038 4,038
Deferred income taxes 1,135 1,135
Other 208 208
----------------- --------------- ---------------- --------------
$ 275,470 $ 24,202 $ (14,269) $ 285,403
================= =============== ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 53,110 $ 8,066 $ (585) $ 60,591
Accrued liabilities 33,785 1,990 35,775
Accrued interest 5,191 5,191
Accrued compensation 3,044 462 3,506
Current maturities of long-term debt 8,735 8,735
----------------- --------------- ---------------- --------------
Total current liabilities 103,865 10,518 (585) 113,798
Lines of credit and revolving debt 16,259 16,259
Long-term debt due after one year 152,471 9,647 (9,647) 152,471
Stockholders' equity:
Common stock 5,850 (5,850)
Additional paid-in capital 94 94
Retained earnings 2,781 (1,813) 1,813 2,781
----------------- --------------- ---------------- --------------
Total stockholders' equity 2,875 4,037 (4,037) 2,875
----------------- --------------- ---------------- --------------
Total liabilities and stockholders'
equity $ 275,470 $ 24,202 $ (14,269) $ 285,403
================= =============== ================ ==============
9
LDM TECHNOLOGIES, INC.
Condensed Consolidating Balance Sheet as of September 30, 2001 (Unaudited)
(dollars in thousands)
LDM Consolidating
Technologies, LDM Canada Entries Consolidated
Inc.
ASSETS
Current assets:
Cash $ 23 $ 2,297 $ 2,320
Accounts receivable 41,426 7,393 48,819
Raw materials 7,159 2,004 9,163
Work in process 1,266 367 1,633
Finished goods 5,354 531 5,885
Mold costs 19,221 367 19,588
Prepaid expenses 2,462 55 2,517
Refundable income taxes 1,683 1,683
Deferred income taxes 2,565 47 2,612
----------------- --------------- ---------------- --------------
Total current assets 81,159 13,061 94,220
Net property, plant and equipment 91,819 12,707 104,526
Investment in subsidiaries and
affiliates 10,102 $ (4,052) 6,050
Note receivable affiliates 10,685 (10,685)
Goodwill 50,639 50,639
Debt issue costs 4,258 4,258
Deferred income taxes 1,715 1,715
Other 904 904
----------------- --------------- ---------------- --------------
$ 251,281 $ 25,768 $ (14,737) $ 262,312
================= =============== ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 44,678 $ 9,028 $ (553) $ 53,153
Accrued liabilities 17,713 1,319 19,032
Accrued interest 2,555 2,555
Accrued compensation 1,576 1,237 2,813
Current maturities of long-term debt 8,735 8,735
----------------- --------------- ---------------- --------------
Total current liabilities 75,257 11,584 (553) 86,288
Lines of credit and revolving debt 18,181 18,181
Long-term debt due after one year 155,047 10,131 (10,131) 155,047
Stockholders' equity:
Common stock 5,850 (5,850)
Additional paid-in capital 94 94
Retained earnings 2,702 (1,797) 1,797 2,702
----------------- --------------- ---------------- --------------
Total stockholders' equity 2,796 4,053 (4,053) 2,796
----------------- --------------- ---------------- --------------
Total liabilities and stockholders'
equity $ 251,281 $ 25,768 $ (14,737) $ 262,312
================= =============== ================ ==============
10
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for Three Months
ended December 23, 2001 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM Consolidating
Inc. Canada Entries Consolidated
--------------- -------------- ----------------- ---------------
Net sales $80,621 $14,809 $95,430
Cost of Sales 66,814 13,568 80,382
--------------- -------------- ----------------- ---------------
Gross Margin 13,807 1,241 15,048
Selling, general and administrative
expenses 10,101 653 10,754
--------------- -------------- ----------------- ---------------
Operating profit (loss) 3,706 588 4,294
Interest expense (3,733) (264) $238 (3,759)
Other income (expense), net (193) (238) (431)
International currency exchange losses (308) (308)
Equity in net loss of subsidiaries
and affiliates 284 16 300
--------------- -------------- ----------------- ---------------
Income (loss) before income taxes 64 16 16 96
Provision for income taxes (15) 32 17
--------------- -------------- ----------------- ---------------
Net income (loss) $79 $(16) $16 $79
=============== ============== ================= ===============
11
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Operations for Three Months Ended
December 17, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM LDM Consolidating
Inc. Canada Germany Entries Consolidated
--------------- -------------- ---------------- ---------------- ---------------
Net sales $82,525 $11,772 $5,455 $99,752
Cost of Sales 62,137 11,749 5,205 79,091
--------------- -------------- ---------------- ---------------- ---------------
Gross Margin 20,388 23 250 20,661
Selling, general and administrative
expenses 14,721 253 398 15,372
--------------- -------------- ---------------- ---------------- ---------------
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
=============== ============== ================ ================ ===============
12
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Cash Flows for Three Months Ended
December 23, 2001 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM
Inc. Canada Consolidated
------------- ---------- -------------
Net cash provided (used) by operating activities $5,695 $(750) $4,945
Cash flows from investing activities
Additions to property, plant and equipment (1,502) 67 (1,435)
------------- ---------- -------------
Net cash provided (used) by investing activities (1,502) 67 (1,435)
Cash flows from financing activities
Borrowing (to)/from affiliates 452 (452)
Costs associated with debt acquisition (72) (72)
Payments on long-term debt (2,576) (2,576)
Net repayments on line of credit borrowings (1,922) (1,922)
------------- ---------- -------------
Net cash provided (used) by financing activities (4,118) (452) (4,570)
------------- ---------- -------------
Net cash change 75 (1,135) (1,060)
Cash at beginning of period 23 2,297 2,320
------------- ---------- -------------
Cash at end of period $98 $ 1,162 $1,260
============= ========== =============
Supplemental information:
Depreciation and amortization $4,149 $610 $4,759
============= ========== =============
13
LDM TECHNOLOGIES, INC.
Condensed Consolidating Statement of Cash Flows for Three Months Ended
December 17, 2000 (Unaudited)
(dollars in thousands)
LDM
Technologies, LDM LDM
Inc. Canada Germany 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
============= ========== ============= =============
14
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 quarters ended December 23, 2001 and December 17, 2000
one week early to allow for the Christmas holiday and automotive shutdown. Both
quarters contain 12 weeks.
Effective October 1, 2001, the Company elected to early adopt Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.
Under the new standard, goodwill is no longer amortized but is subject to annual
impairment tests in accordance with the Statement. Application of the
non-amortization provision of Statement No. 142 resulted in an increase to
pretax income of $1.2 million for the three months ended December 23, 2001.
RESULTS OF OPERATIONS
QUARTER ENDED DECEMBER 23, 2001 COMPARED TO THE QUARTER ENDED
DECEMBER 17, 2000
Net sales for the quarter ended December 23, 2001 ("first quarter 2002") were
$95.4 million, a decrease of $4.4 million or 4.4% from the quarter ended
December 17, 2000 ("first quarter 2001"). The decline in net sales is due to the
sale of LDM Germany, effective September 30, 2001, offset by increased volumes
on programs which LDM's North American operations service.
Gross margin was $15.0 million or 15.7% of net sales for the first quarter 2002
compared with $20.7 million or 20.7% of net sales for the first quarter 2001.
The decline in gross margin is due to the incurrence of fixed costs related to a
new manufacturing facility in Romulus, Michigan. New product launches are
scheduled in this facility in the second and third quarters of fiscal year 2002,
which will assist in covering fixed costs that are currently being incurred.
Selling, General and Administrative (SG&A) expense for the first quarter 2002
was $10.8 million, or 11.3% of net sales compared to $15.4 million, or 15.4% of
net sales for the first quarter of 2001. The decrease in first quarter 2002 is
the result of cost cutting efforts undertaken in mid-year 2001 to mitigate the
potential effects of an economic slow down in the U.S. coupled with the effect
of adopting Statement of Financial Accounting Standards No. 142 (FAS 142). The
adoption of FAS 142 resulted in not amortizing goodwill in the first quarter
2002. Goodwill amortized in first quarter 2001 was $1.2 million.
15
Interest expense for the first quarter 2002 was $3.8 million compared to $4.1
million for the first quarter 2001. The decrease in interest expense is due to
scheduled debt repayments and a decrease in variable interest rates.
The effective tax rate for the first quarter of 2002 was 17.7% compared to 24.8%
for the first quarter 2001. 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.
At December 23, 2001, the Company had deferred tax assets of $4.2 million. The
Company evaluates the necessity for a valuation allowance on deferred tax assets
by taxing jurisdiction. Deferred tax assets in the United States and Canada
relate primarily to net operating loss carryforwards (NOL's).
In Canada, the Company has recognized a valuation allowance of $634,000.
In the United States, the NOL expires in 2021. Realization of the deferred tax
assets in the United States is dependent in part upon a tax planning strategy
related to an affiliate of the Company and also on future taxable income. Both
of these are dependent upon a number of factors including, but not limited to,
sufficient levels of earnings before income taxes and the effective execution of
the tax planning strategy. Based on consideration of historical and future
earnings before income taxes, the Company believes it is more likely than not
that the deferred tax assets, beyond those specifically reserved, will be
realized.
The Company evaluates its deferred taxes and related valuation allowances
quarterly. If at any time the Company believes that current or future taxable
income will not support the basis for recognizing the benefit of the deferred
tax assets, valuation allowances are provided accordingly.
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 23, 2001, the Company had $161.2 million of
long-term debt outstanding, $16.3 million of revolving loans and current
maturities of long-term debt outstanding, and $28.8 million of borrowing
availability under its revolving credit facility.
Cash provided by operating activities in first quarter 2002 was $4.9 million
compared to $21.5 million in the first quarter 2001. The decrease is due to
billings for customer owned tooling late in first quarter 2002, which caused an
increase in accounts receivable. It is anticipated that all customer tool
billings will be collected in the second quarter of fiscal year 2002.
Capital expenditures for first quarter 2002 were $1.4 million compared to $6.1
million for first quarter 2001. The Company believes its capital expenditures
will be approximately $7.5 million in fiscal year 2002. The majority of the
Company's fiscal year 2002 capital expenditures will be used to facilitate new
programs launching in fiscal years 2002 and 2003.
The Company's liquidity is affected by both the cyclical nature of its business
and the level 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.
16
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Company's exposure to market risk
since September 30, 2001.
17
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: February 8, 2002
18