1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-KA
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 6, 1998
LDM Technologies, Inc.
----------------------
(Exact name of registrant as specified in its charter)
Michigan 333-21819 38-269-0171
-------- --------- -----------
(State or other jurisdiction of (Commission (I.R.S. Employer
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
2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 6, 1998, LDM Technologies, Inc., a Michigan corporation
("Registrant"), pursuant to the terms of an Acquisition Agreement dated December
23, 1997 ("Agreement") between Tadim, Inc., Huron Plastics Group, Inc.
(collectively "Huron Plastics Group") and certain selling shareholders and
Registrant filed as Exhibit 1 to this report on Form 8-K, purchased
substantially all of the operating assets (consisting of plant, equipment and
inventory and located in Texas, USA) of Tadim, Inc. and 100% of the issued
common stock of Huron Plastics Group, Inc., a Michigan corporation.
The aggregate purchase price paid for the stock of Huron Plastics
Group, Inc. and the business and net assets of Tadim, Inc. was $68.9 million
cash. The funds required for the purchase were acquired by the Registrant under
a new term loan of $66 million and additional advances under its Senior Credit
Facility with BankAmerica Business Credit, Inc., as agent, for itself and a
group of banks.
There was no material relationship between Huron Plastics Group or any
of its affiliates and the Registrant or any of its affiliates, any director of
officer of the Registrant, or any associate of any such director or officer.
Huron Plastics Group is engaged in the business of manufacturing and
distributing molded plastic components for sale principally to North American
automobile manufacturers and their suppliers. The business and operations of
Huron Plastics Group will be continued by the Registrant substantially as they
were conducted prior to the acquisition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements are filed as part of this report on
Form 8-K.
(a) Financial Statements of business acquired:
(1) Combined Financial Statements of Huron Plastics Group for the
years ended March 31, 1997 and 1996 with Report of Independent
Auditors.
(2) Pro Forma financial information: Unaudited Pro Forma
Consolidated Financial Information of Registrant giving effect
to the acquisition referred to in Item 2 above.
(3) Unaudited Condensed Combined Interim Financial Statements of
Huron Plastics Group for the nine months ended December 28,
1997 and December 29, 1996.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
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
Dated: April 22, 1998
4
Huron Plastics Group
Combined Financial Statements
Years ended March 31, 1997 and 1996
CONTENTS
Report of Independent Auditors........................................ 1
Audited Combined Financial Statements
Combined Balance Sheets............................................... 2
Combined Statements of Operations and Retained Earnings............... 4
Combined Statements of Cash Flows..................................... 5
Notes to Combined Financial Statements................................ 6
5
Report of Independent Auditors
Boards of Directors
Huron Plastics Group
We have audited the accompanying combined balance sheets of Huron Plastics Group
as of March 31, 1997 and 1996, and the related combined statements of operations
and retained earnings, and cash flows for the years then ended. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Huron Plastics Group
at March 31, 1997 and 1996 and the combined results of their operations and
their cash flows for the years then ended in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Detroit, Michigan
July 2, 1997
1
6
Huron Plastics Group
Combined Balance Sheets
MARCH 31
1997 1996
--------------------------------
ASSETS (NOTE 2)
Current assets:
Cash $ 102,671 $ 8,185
Trade accounts receivable, less allowances of
$316,000 in 1997 and $190,000 in 1996 14,947,291 14,037,291
Inventories:
Raw materials 3,256,422 2,439,985
Finished goods 3,142,254 2,458,671
--------------------------------
Total inventories 6,398,676 4,898,656
Customer tooling in progress 5,790,428 2,995,738
Federal income taxes receivable 581,996 126,400
Deferred income taxes 155,000 345,000
Prepaid expenses and other current assets 194,453 43,358
--------------------------------
Total current assets 28,170,515 22,454,628
Property, plant and equipment:
Land 341,747 341,747
Buildings and improvements 3,541,992 3,503,230
Machinery and equipment 32,947,915 29,915,223
--------------------------------
36,831,654 33,760,200
Less accumulated depreciation (16,009,013) (12,928,388)
--------------------------------
Net property, plant and equipment 20,822,641 20,831,812
Intangibles (Note 1) 742,481 1,511,481
Deposits 1,562,845 505,372
Investments in affiliates (Note 6) 1,291,668 1,477,994
--------------------------------
$ 52,590,150 $ 46,781,287
================================
2
7
Huron Plastics Group
Combined Balance Sheets
MARCH 31
1997 1996
----------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank (Note 2) $ 4,401,000 $ 3,612,076
Trade accounts payable 9,854,232 7,509,954
Accrued expenses 3,378,918 1,375,531
Compensation and amounts withheld therefrom 1,139,338 872,218
Current maturities of long-term liabilities (Note 2) 4,105,909 3,585,909
-------------------------------
Total current liabilities 22,879,397 16,955,688
Other liabilities:
Long-term liabilities, less current maturities (Note 2) 9,576,303 11,309,545
Deferred income taxes 2,131,000 1,888,000
-------------------------------
11,707,303 13,197,545
Redeemable common stock (Note 4) 13,412,759 12,618,759
Stockholders' equity (Notes 2 and 4):
Common stock--Huron Plastics Group, Inc. 79,122 79,122
Tadim, Inc. 20,000 20,000
Additional paid-in capital 752,936 752,936
Retained earnings 3,738,633 3,157,237
-------------------------------
4,590,691 4,009,295
-------------------------------
$52,590,150 $46,781,287
===============================
See accompanying notes.
3
8
Huron Plastics Group
Combined Statements of Operations and Retained Earnings
YEAR ENDED MARCH 31
1997 1996
----------------------------------
Net sales $ 88,133,666 $ 70,307,414
Costs and expenses:
Cost of products sold 71,063,923 56,579,254
Selling, general and administrative (Note 6) 13,576,163 12,538,383
Interest 2,105,959 2,494,772
------------------------------
86,746,045 71,612,409
------------------------------
Earnings (loss) from operations 1,387,621 (1,304,995)
Other income (expense):
Equity in (loss) earnings of affiliates (186,326) 96,397
Tooling, net 282,101 1,377,198
------------------------------
Earnings before income taxes 1,483,396 168,600
Federal income taxes (Note 5):
Current 1,135,000 202,000
Deferred credit (433,000) (41,000)
------------------------------
702,000 161,000
------------------------------
Net earnings 781,396 7,600
Retained earnings at beginning of year 3,157,237 3,525,987
Dividends to Tadim, Inc. stockholders (200,000) (200,000)
Dividends to Huron Advanced Technologies, Inc.
stockholders (176,350)
------------------------------
Retained earnings at end of year $ 3,738,633 $ 3,157,237
==============================
See accompanying notes.
4
9
Huron Plastics Group
Combined Statements of Cash Flows
YEAR ENDED MARCH 31
1997 1996
----------------------------------
OPERATING ACTIVITIES
Net earnings $ 781,396 $ 7,600
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation 3,266,587 2,756,040
Amortization of intangibles 769,000 719,000
Increase in redeemable common stock (Note 4) 794,000 714,423
Loss on sale of property and equipment 160,263 --
Deferred income taxes 433,000 41,000
Equity in earnings of affiliates and other 186,326 (104,597)
Change in operating assets and liabilities:
Accounts receivable (910,000) 178,682
Inventories (1,500,020) (707,157)
Customer tooling in progress (2,794,690) 1,220,241
Accounts payable and accrued expenses 4,347,665 (218,092)
Compensation and amounts withheld therefrom 267,119 122,653
Federal income taxes (455,596) (80,000)
Prepaid expenses and other current assets (151,095) 91,779
---------------------------
Net cash provided by operating activities 5,193,955 4,741,572
INVESTING ACTIVITIES
Purchases of property and equipment (3,417,678) (3,153,079)
Deposits (1,057,473) 217,732
---------------------------
Net cash used in investing activities (4,475,151) (2,935,347)
FINANCING ACTIVITIES
Net proceeds from note payable to bank 788,924 (5,702,924)
Payments on long-term liabilities and capital lease obligations (1,213,242) (5,560,367)
Proceeds from borrowings on long-term debt -- 9,392,240
Dividends paid to Tadim, Inc. stockholders (200,000) (200,000)
Dividends paid to Huron Advanced Technologies, Inc. stockholders -- (176,350)
---------------------------
Net cash used in financing activities (624,318) (2,247,401)
---------------------------
Increase (decrease) in cash 94,486 (441,176)
Cash at beginning of year 8,185 449,361
---------------------------
Cash at end of year $ 102,671 $ 8,185
===========================
See accompanying notes.
5
10
Huron Plastics Group
Notes to Combined Financial Statements
March 31, 1997
NATURE OF THE BUSINESS
Huron Plastics Group manufactures plastic injection molded parts for the
automotive industry.
1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The combined financial statements of Huron Plastics Group include the accounts
of Huron Plastics Group, Inc. and, its wholly-owned subsidiaries, and Tadim,
Inc., and Huron Advanced Technologies, Inc. In June 1995, Huron Advanced
Technologies, Inc. was merged into Huron Plastics Group, Inc. and was accounted
for as a combination of companies under common control in a manner similar to a
pooling of interests.
All intercompany accounts and transactions have been eliminated in combination.
The Companies have common management.
Investment in affiliates, owned more than 20 percent but not in excess of 50
percent, are accounted for on the equity method.
INVENTORIES
Inventories are stated at the lower of cost, as determined by the last-in,
first-out method, or market. Current cost of LIFO inventories exceeds their
balance sheet carrying amount by approximately $215,000 and $202,000 in March
31, 1997 and 1996, respectively.
PROPERTY, PLANT AND EQUIPMENT
Properties are recorded at cost and include amounts related to capital leases.
Depreciation, including amortization of amounts related to capital leases, is
computed by the straight-line method based upon the estimated useful lives of
the respective assets, or, in the case of leasehold improvements, over the term
of the lease if shorter than the estimated useful lives of the assets.
INCOME TAXES
Deferred taxes result from certain inventory costs, depreciation, investments in
affiliates and other less significant temporary differences between taxable
income and income for financial reporting purposes.
6
11
Huron Plastics Group
Notes to Combined Financial Statements (continued)
March 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Tadim, Inc. has elected to be treated as an S Corporation under the provisions
of the Internal Revenue Code; therefore, no income taxes have been provided.
USE OF ESTIMATES
The preparation of the financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CREDIT RISK
Substantially all the accounts receivable are from major domestic automotive
manufacturers and their suppliers. Huron Plastics Group generally does not
require collateral from its customers. Credit losses from customers have been
minimal and within management's expectations.
INTANGIBLE ASSETS
Intangible assets, amortized by the straight-line method over the lives
indicated in the table below at March 31, are as follows:
1997 1996 LIFE
-----------------------------------------
Goodwill $3,435,847 $3,435,847 10 Years
Consulting agreement 3,750,000 3,750,000 10
Technology agreement 75,000 75,000 3
-----------------------------
7,260,847 7,260,847
Less accumulated amortization 6,518,366 5,749,366
-----------------------------
$ 742,481 $1,511,481
=============================
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12
Huron Plastics Group
Notes to Combined Financial Statements (continued)
March 31, 1997
2. NOTE PAYABLE AND LONG-TERM LIABILITIES
Short-term borrowings payable on demand and bearing interest at .25% over the
bank's prime rate through October 1996 and at prime thereafter (8.5% at March
31, 1997) were available to Huron Plastics Group up to $8,000,000 under a
revolving credit agreement.
Long-term liabilities at March 31 are comprised of the following:
1997 1996
--------------------------
Term note payable to bank in monthly installments of $176,667
plus interest at .5% over prime, balance due
March 31, 2001 $8,656,667 $10,600,000
Term notes payable to bank in monthly installments of
$90,909 plus interest at 7.55% per annum, balance due
June 1, 1999 2,454,545 3,545,454
Term notes payable to bank in monthly installments of
$56,583 plus interest at .5% per over prime, balance due
June 1, 1999 2,196,000
Consulting agreement with a stockholder, payable in
quarterly installments of $93,750 through March, 1998
375,000 750,000
---------------------------
13,682,212 14,895,454
Less current maturities 4,105,909 3,585,909
---------------------------
$9,576,303 $11,309,545
===========================
Substantially all of Huron Plastics Group's assets are pledged as collateral for
repayment of the bank debt.
The bank credit agreement contains various restrictive covenants including the
maintenance of stipulated levels of working capital, tangible net worth, total
debt, and limits capital expenditures and dividends with which the Company was
in compliance as of March 31, 1997.
Under the most restrictive of these provisions none of Huron Plastics Group's
retained earnings were free of restriction at March 31, 1997.
Maturities of long term liabilities for the four fiscal years following 1997
are: 1998--$4,105,909; 1999--$3,889,909; 2000--$3,071,727; and 2001--$2,614,667.
Interest paid approximated $1,401,000 and $1,138,000 in 1997 and 1996,
respectively.
The Company has guaranteed the debt of $750,000 of a partnership of which
certain stockholders represent a majority interest as of March 31, 1997.
8
13
Huron Plastics Group
Notes to Combined Financial Statements (continued)
March 31, 1997
3. LEASES
Huron Plastics Group leases certain facilities and equipment under agreements
which expire at various dates through 2002. In most cases, the lessors are
partnerships in which certain stockholders represent a majority interest.
Future minimum lease payments by fiscal year ending March 31 under operating
leases are as follows:
1998 $1,840,926
1999 1,625,198
2000 1,463,998
2001 1,087,894
2002 1,101,531
Total rental expense approximated $1,749,745 and $1,434,000 in 1997 and 1996,
respectively.
4. STOCKHOLDERS' EQUITY
The common stock authorized and outstanding at March 31 is as follows:
1997 1996
----------------------------
Huron Plastics Group, Inc., no par value:
Authorized shares 1,000,000 1,000,000
Outstanding shares 872,755 872,755
Tadim, Inc., no par value:
Authorized shares 60,000 60,000
Outstanding shares 20,000 20,000
The owner of 793,633 shares (91%) of the Huron Plastics Group, Inc. common stock
has entered into an agreement with the President of Huron Plastics Group, Inc.
which assigns the voting rights of his shares to the President.
The 91% stockholder who has assigned his voting rights has an agreement with
Huron Plastics Group, Inc. which provides that Huron Plastics Group, Inc. may
purchase his shares at anytime at a current price of $15.90 per share but
generally increasing 6% per year to $24 per share at April 1, 2003. If Huron
Plastics Group, Inc. has not exercised its option to purchase these shares by
April 1, 2003, it must purchase them at that time. Payment under this agreement
has been guaranteed by Tadim, Inc.
9
14
Huron Plastics Group
Notes to Combined Financial Statements (continued)
March 31, 1997
4. STOCKHOLDERS' EQUITY (CONTINUED)
The agreement also requires that upon the death of the 91% stockholder,
Huron Plastics Group, Inc. purchase his shares at a price (currently $15.90 per
share) set forth in the agreement. Huron Plastics Group, Inc. is required to
maintain at least $1,000,000 of insurance on the life of this stockholder. Upon
his death, the purchase price must be paid in cash to the extent of the proceeds
from the life insurance policy and any remaining balance may be paid in cash or
by a promissory note payable over a period ending April 1, 2003.
The redeemable stock has been classified as debt in the combined balance sheet
because of the mandatory redemption provisions of this agreement. Annual
increases in the redemption price of the redeemable common stock are charged to
operations as interest expense and amounted to $794,000 in 1997 and $714,000 in
1996.
Under the terms of a Stockholder Agreement between the Huron Plastics Group,
Inc. and owners of 4% of the common stock of Huron Plastics Group, Inc. such
stockholders can tender shares owned for purchase first by the President of
Huron Plastics Group, Inc. and then by Huron Plastics Group, Inc.. Further, upon
the death or permanent disability of a stockholder, Huron Plastics Group, Inc.
is required to purchase the shares owned by that stockholder, at a per share
priced defined by the Stockholder Agreement.
5. FEDERAL INCOME TAXES
A reconciliation of the provision for federal income taxes and the amount
computed by applying the statutory rate of 34% to the earnings of Huron Plastics
Group, Inc. and subsidiaries before federal income taxes is as follows:
1997 1996
----------------------------
Federal income tax (credit) at statutory rate $347,000 $(132,000)
Increase resulting from:
Amortization of goodwill 117,000 117,000
Increase in redeemable common stock 270,000 243,000
Other (32,000) (67,000)
---------------------------
$702,000 $161,000
===========================
Income taxes paid in 1997 and 1996 totaled $750,000 and $200,000, respectively.
The tax effects of the temporary differences which create the Company's
deferred tax assets and liabilities are as follows:
Deferred Deferred
Tax Tax
Asset Liability
--------- -----------
March 31, 1997:
Depreciation $2,115,229
Affiliate earnings 15,771
Accrued compensation $185,367
Other accrued expenses (30,367)
-------- ----------
$155,000 $2,131,000
======== ==========
March 31, 1996:
Depreciation $1,872,697
Affiliate earnings 15,303
Accrued compensation $164,807
Other accrued expenses 180,193
-------- ----------
$345,000 $1,888,000
======== ==========
10
15
Huron Plastics Group
Notes to Combined Financial Statements (continued)
March 31, 1997
6. INVESTMENT IN AFFILIATES
In September 1994, Huron Plastics Group, Inc. acquired 30% of Sunningdale
Plastic Industries Ltd., a manufacturing company in Singapore, for $1,225,000.
In November 1994, Huron Plastics Group, Inc. acquired 25% of Pyramid Mold Inc.,
a tooling company, for $110,000.
The Company's investments in affiliates at March 31, include the following:
1997 1996
------------------------------
Sunningdale $1,115,276 $1,328,670
Pyramid 176,392 149,324
------------------------------
$1,291,668 $1,477,994
==============================
7. OTHER MATTERS
Huron Plastics Group has a contributory profit-sharing plan that covers
substantially all employees. Discretionary contributions, which are based on a
percentage of net earnings as defined by the plan approximated $91,000 in 1997,
and matching contributions approximated $168,000 and $141,000 in 1997 and 1996,
respectively.
11
16
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed consolidated statements of operations
of LDM Technologies, Inc. (the "Company") for the fiscal year ended
September 28, 1997 and the quarter ended December 28, 1997, give effect to the
Molmec Acquisition, the Kendallville Acquisition, the Senior Credit Facility
and the Initial Offering (each as defined below, collectively the "1997
Transactions"), the Kenco and the Beienheim Acquisitions (each as defined
below, collectively the "Previous 1998 Transactions") and the Huron Plastics
Group Acquisition and new Term Loan as if such transactions had occurred on
September 30, 1996. The unaudited pro forma condensed consolidated balance
sheet at December 28, 1997 gives effect to the Huron Plastics Group Acquisition
and New Term Loan as if such transactions had occurred on that date. The
allocation of the purchase price to the assets and liabilities of Huron
Plastics Group as reflected below is a preliminary estimate. The actual
allocation, when finalized, may differ. The 1997 Transactions and Previous 1998
Transactions are reflected in the historical balance sheet at December 28,
1997. The unaudited pro forma consolidated financial information does not
purport to represent what the Company's financial position or results of
operations would actually have been had the transactions occurred on the dates
indicated above or to project the Company's results of operations for any
future period. This unaudited pro forma consolidated financial information
should be read in conjunction with the accompanying notes, the historical
financial statements of Huron Plastics Group, including the notes thereto,
included elsewhere herein and the historical financial statements of the
Company, including the notes thereto, included in the Company's Annual Report
on Form 10-K for the year ended September 28, 1997.
17
LDM Technologies, Inc.
Unaudited ProForma Condensed Consolidated Statements of Operations
For The Year Ended September 28, 1997
(dollars in thousands)
Adjustments Huron
Adjustments for Previous LDM, as Adjusted Plastics Huron Plastics
LDM for 1997 1998 for Previous Group Group Proforma Pro
Consolidated Transactions(a) Transactions(b) Transactions Historical Adjustments Forma
---------------------------------------------------------------------------------------------------------------
Net sales:
Product sales $261,103 $29,125 $86,224 $376,452 $92,013 $468,465
Mold sales 31,917 2,393 8,028 42,338 17,941 60,279
---------------------------------------------------------------------------------------------------------------
293,020 31,518 94,252 418,790 109,954 528,744
Cost of sales:
Product cost of
sales 210,532 19,751 74,706 304,989 74,720 $ 832 (c) 380,291
Mold cost of
sales 30,398 2,150 6,204 38,752 17,265 56,017
---------------------------------------------------------------------------------------------------------------
240,930 21,901 80,910 343,741 91,985 832 436,308
---------------------------------------------------------------------------------------------------------------
Gross margin 52,090 9,617 13,342 75,049 17,969 92,436
---------------------------------------------------------------------------------------------------------------
Selling,
general and
administrative
expenses 35,561 5,713 6,553 47,827 14,025 1,814 (d) 63,666
---------------------------------------------------------------------------------------------------------------
Operating profit 16,529 3,904 6,789 27,222 3,944 (2,646) 28,520
Interest expense 11,076 2,985 3,039 17,100 2,330 3,145 (e) 22,575
Other, net 444 (76) 368 (145) 223
---------------------------------------------------------------------------------------------------------------
Income before
income taxes
and minority
interest 5,009 919 3,826 9,754 1,759 (5,791) 5,722
Provision for
income taxes 2,088 368 1,972 4,428 508 (1,943) (f) 2,993
---------------------------------------------------------------------------------------------------------------
Income
before minority
interest 2,921 551 1,854 5,326 1,251 (3,848) 2,729
Minority
interest 142 142 142
---------------------------------------------------------------------------------------------------------------
Net income $3,063 $551 $1,854 $5,468 $1,251 $ (3,848) $2,871
===============================================================================================================
18
LDM Technologies, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three-month Period Ended December 28, 1997
(dollars in thousands)
LDM as Huron
Adjustment Adjusted Plastics Huron Plastics
LDM for Beienheim for Beienheim Group Group Pro
Historical Transaction Transaction Historical Adjustments Forma
------------------------------------------------------------------------------------------------------
Net sales:
Product sales $ 93,707 $ 5,292 $ 98,999 $ 24,891 $ 123,890
Mold sales 6,589 661 7,250 2,953 10,203
---------------------------------------------------------------------------------------------------
100,296 5,953 106,249 27,844 134,093
Cost of sales:
Product cost of
sales 76,536 5,282 81,818 19,498 $ (32) (c) 101,284
Mold cost of
sales 5,838 445 6,283 2,957 9,240
---------------------------------------------------------------------------------------------------
82,374 5,727 88,101 22,455 (32) 110,524
---------------------------------------------------------------------------------------------------
Gross margin 17,922 226 18,148 5,389 23,569
Selling,
general and
administrative
expenses 11,097 200 11,297 4,064 454 (d) 15,815
---------------------------------------------------------------------------------------------------
Operating profit 6,825 26 6,851 1,325 (422) 7,754
Interest expense 3,933 133 4,066 594 775 (e) 5,435
Other, net 122 7 129 129
---------------------------------------------------------------------------------------------------
Income before
income taxes
and minority
interest 2,770 (114) 2,656 731 (1,197) 2,190
Provision for
income taxes 1,308 (49) 1,259 272 (387) (f) 1,144
---------------------------------------------------------------------------------------------------
Income before
minority
interest 1,462 (65) 1,397 459 (810) 1,046
Minority
interest 48 48 48
---------------------------------------------------------------------------------------------------
Net income $ 1,510 $ (65) $ 1,445 $ 459 $ (810) $ 1,094
===================================================================================================
19
LDM Technologies, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended September 28, 1997 and
the Three-month Period Ended December 28, 1997
(dollars in thousands)
(a) To adjust the Company's historical results of operations for the
1997 Transactions as if such transactions had occurred on September 30,
1996. On January 22, 1997, the Company consummated the acquisition of
the business and certain net assets of Molmec, Inc. (the "Molmec
Acquisition"). The results of operations of the Molmec business are
included in the Company's results of operations effective on the
acquisition date. On May 1, 1997, the Company consummated the
acquisition of the business and net assets of the Kendallville Plant of
Aeroquip, Inc. (the "Kendallville Acquisition"). The results of
operations of the Kendallville Plant are included in the Company's
results of operations effective on the acquisition date. On January 22,
1997, the Company issued $110 million aggregate principal amount of its
10 3/4% Senior Subordinated Notes, the proceeds of which were used to
repay certain outstanding borrowings, to fund the Molmec acquisition
and for general corporate purposes (the "Initial Offering"). In
connection with the Initial Offering, the Company obtained a new senior
credit facility (the "Senior Credit Facility").
(b) To adjust the Company's historical results of operations for the
Kenco Acquisition and ASG Beienheim Acquisition as if such acquisitions
had occurred on September 30, 1996. On September 30, 1997, the Company
consummated the acquisition of the stock of Kenco Plastics, Inc. (a
Michigan corporation), Kenco Plastics, Inc. (a Kentucky corporation),
and the business and net assets of Narens Design and Engineering, Inc.
On November 25, 1997, a newly formed subsidiary of the Company, named
Anja Verwaltungsgesellschaft mbh, pursuant to the terms of an
Acquisition Agreement dated November 12, 1997 between Aeroquip-Vickers
International GmbH, purchased substantially all of the assets of ASG
Beienheim, a unit of the Aeroquip-Sterling division of Aeroquip.
(c) To reduce depreciation due to property, plant and equipment write
down and increase cost of goods sold due to increase of inventory to
net realizable value.
(d) To eliminate previous goodwill amortization and provide goodwill
amortization related to the acquisition of Huron Plastics Group by the
Company, assuming a 15-year amortization period.
(e) To eliminate interest related to prior debt and redeemable stock and
provide interest expense related to debt acquired for the Huron
Plastics Group transaction.
(f) To adjust for the tax effect of (c), (d), and (e), assuming an
effective tax rate of 40%.
20
LDM Technologies, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 28, 1997
(dollars in thousands)
Huron Huron Plastics
Plastics Group Pro Forma
Group Adjustments Pro Forma
LDM Historical Historical
------------------------------------------------------------------------
ASSETS
Current assets:
Cash $8,365 $281 ($281) (a) $ 8,365
Accounts Receivable 58,711 16,366 75,077
Inventories 19,944 7,537 961 (b) 28,442
Mold costs 18,887 4,541 23,428
Deferred income taxes 4,726 155 4,881
Other current assets 1,956 309 212 (c) 2,477
------------------------------------------------------------------
Total current assets 112,589 29,189 892 142,670
Net property, plant and equipment 96,695 21,335 (1,394) (d) 116,636
Goodwill 45,880 185 28,301 (e) 74,366
Debt issue costs 6,709 6,709
Other assets 561 3,554 4,115
------------------------------------------------------------------
Totals $262,434 $54,263 $27,799 $344,496
==================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loans $37,681 $8,893 ($6,300) (a) $ 40,274
Accounts payable 33,960 9,375 43,335
Accrued liabilities 16,975 2,316 (353) (c) 18,938
Accrued interest 5,693 5,693
Accrued compensation 3,942 3,942
Advance mold payments from customers 11,881 11,881
Income taxes payable 2,719 2,719
Current maturities of long-term debt 1,961 4,265 735 (a) 6,961
------------------------------------------------------------------
Total current liabilities 114,812 24,849 (5,918) 133,743
Long-term debt due after one year 121,660 6,852 54,148 (a) 182,660
Deferred income taxes 3,789 2,131 5,920
Notes payable due to affiliates 87 87
Minority interests 231 231
Redeemable preferred stock 14,008 (14,008)
Stockholders' Equity:
Common Stock 99 (99) (f)
Additional paid-in capital 94 753 (753) (f) 94
Retained earnings 21,863 5,571 (5,571) (f) 21,863
Foreign currency translation adjustments (102) (102)
------------------------------------------------------------------
Total stockholders' equity 21,855 20,431 (20,431) 21,855
------------------------------------------------------------------
Totals $262,434 $54,263 $27,799 $344,496
==================================================================
21
LDM Technologies, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 28, 1997
(dollars in thousands)
(a) To eliminate Huron Plastics Group outstanding debt and adjust for the
increase in debt related to the acquisition.
(b) To increase inventories to fair value.
(c) To conform Huron Plastics Group property tax accounting to the
Company's accounting policies.
(d) To eliminate real estate not purchased with the business and record net
property, plant, and equipment at fair value.
(e) To record goodwill related to the acquisition of Huron Plastics Group.
(f) To eliminate the historical stockholders' equity of Huron Plastics
Group.
22
Huron Plastics Group
Condensed Combined Balance Sheet
(dollars in thousands)
As of
December 31, 1997 March 31, 1997
----------------------------------------------
(Unaudited) (See note)
ASSETS
Current Assets: $ 281 $ 103
Accounts Receivable 16,366 14,947
Inventories 7,537 6,399
Mold Costs 4,541 5,790
Deferred income taxes 155 155
Other current assets 309 776
-----------------------------------------
Total current assets 29,189 28,170
Net property, plant and equipment 21,335 20,823
Goodwill 185 742
Other assets 3,554 2,855
-----------------------------------------
Totals $54,263 $52,590
=========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loans $ 8,893 $ 4,401
Accounts payable 9,375 13,233
Accrued compensation 2,316 1,139
Current maturities of long-term debt 4,265 4,106
-----------------------------------------
Total current liabilities 24,849 22,879
Long-term debt due after one year 6,852 9,576
Deferred income taxes 2,131 2,131
Redeemable common stock 14,008 13,413
Stockholders' Equity:
Common Stock 99 99
Additional paid-in capital 753 753
Retained earnings 5,571 3,739
-----------------------------------------
Total stockholders' equity 6,423 4,591
-----------------------------------------
Totals $54,263 $52,590
=========================================
See accompanying notes.
NOTE: The balance sheet at March 31, 1997 has been derived from the audited
combined 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.
23
Huron Plastics Group
Condensed Combined Interim Statements of Income
(dollars in thousands)
Nine Months Ended
-------------------------------------------
December 31, 1997 December 31, 1996
-------------------------------------------
(Unaudited) (Unaudited)
Revenues:
Net product sales $72,899 $65,340
Net mold sales 13,818 5,829
-------------------------------------------
86,707 71,169
Cost of Sales
Cost of product sales 57,337 51,887
Cost of mold sales 13,168 5,497
-------------------------------------------
70,505 57,384
-------------------------------------------
Gross Margin 16,202 13,785
Selling, general and administrative expenses 11,644 9,945
-------------------------------------------
Operating profit 4,558 3,840
Interest expense (1,814) (1,526)
Other income (expense), net 541 (410)
-------------------------------------------
Income before income taxes 3,285 1,904
Provision for income taxes 1,078 973
-------------------------------------------
Net Income $2,207 $931
===========================================
See accompanying notes.
24
Huron Plastics Group
Condensed Combined Interim Statement of Cash Flows
(dollars in thousands)
Nine Months Ended
----------------------------------------------------
December 31, 1997 December 31, 1996
----------------------------------------------------
(Unaudited) (Unaudited)
NET CASH PROVIDED BY OPERATING ACTIVITIES $1,930 $1,037
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (3,199) (2,295)
Proceeds from disposals of property, plant and
equipment 7 2
---------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (3,192) (2,293)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt issuance 520 1,818
Payments on long-term debt (3,085) (2,693)
Net repayments on line of credit borrowings 4,492 3,068
Dividends paid (487) (200)
---------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 1,440 1,993
Net cash change 178 737
Cash at beginning of period 103 8
---------------------------------------------
Cash at end of period $ 281 $ 745
=============================================
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $3,245 $2,863
=============================================
See accompanying notes.
25
Huron Plastics Group
Notes to Condensed Combined Interim Financial Statements
December 31, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited condensed 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 nine-month period ended December 28,
1997 are not necessarily indicative of the results that may be expected for the
year ending March 31, 1998. For further information, refer to the audited
financial statements and footnotes thereto in the Company's annual financial
statements included elsewhere herein.
2. SUBSEQUENT EVENT
On February 6, 1998 the entire issued stock of Huron Plastics Group, Inc.
and the business and net assets of Tadim, Inc. were acquired by LDM
Technologies, Inc. for a preliminary consideration of approximately $69 million.