SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACTOF 1934
For the quarterly period ended June 30, 1998. Commission file number
001-13337
STONERIDGE, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Ohio 34-1598949
-------------------------------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
9400 East Market Street, Warren, Ohio 44484
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(Address of Principal Executive Offices) (Zip Code)
(330) 856-2443
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Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No .
----- -----
The number of Common Shares, without par value, outstanding as of August 12,
1998: 22,397,311
STONERIDGE, INC.
INDEX
Page No.
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1998 2
and December 31, 1997
Condensed Consolidated Statements of Income for the three 3
months and six months ended June 30, 1998 and 1997
Condensed Consolidated Statements of Cash Flows for the 4
six months ended June 30, 1998 and 1997
Notes to Condensed Consolidated Financial Statements 5-7
Item 2. Management's Discussion and Analysis of 8-11
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market 11
Risk
Part II Other Information 12-13
Signatures 14
Exhibit Index 15
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
1998 1997
----------------- -----------------
(unaudited) (audited)
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 2,045 $ 1,338
Accounts receivable, net 54,964 57,873
Inventories 40,910 38,594
Deferred income taxes 5,932 5,829
Prepaid expenses and other 9,320 6,842
----------------- -----------------
Total current assets 113,171 110,476
----------------- -----------------
PROPERTY, PLANT AND EQUIPMENT, net 57,284 58,696
OTHER ASSETS:
Goodwill and other intangible assets, net 46,512 46,892
Investments and other 25,431 19,009
----------------- -----------------
TOTAL ASSETS $242,398 $235,073
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 160 $ 456
Accounts payable 30,217 31,459
Accrued expenses and other 29,483 31,105
Accrued shareholder distributions -- 2,600
----------------- -----------------
Total current liabilities 59,860 65,620
----------------- -----------------
LONG-TERM DEBT, net of current portion 4,287 9,139
DEFERRED INCOME TAXES 2,869 3,104
----------------- -----------------
Total long term liabilities 7,156 12,243
----------------- -----------------
SHAREHOLDERS' EQUITY:
Preferred shares, without par value, 5,000 authorized,
none issued -- --
Common shares, without par value, 60,000 authorized,
22,397 outstanding at June 30, 1998 and December
31, 1997, stated at -- --
Additional paid-in capital 141,506 141,506
Retained earnings 34,105 15,930
Cumulative currency translation adjustment (229) (226)
----------------- -----------------
Total shareholders' equity 175,382 157,210
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $242,398 $235,073
================= =================
The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated balance sheets.
2
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands except for per share data)
Three months ended Six months ended
June 30, June 30,
------------------------------ -------------------------------
1998 1997 1998 1997
---------- ----------- ----------- ------------
NET SALES $121,763 $110,723 $252,979 $218,787
COST AND EXPENSES
Cost of goods sold 92,143 83,485 191,656 165,610
Selling, general and administrative expenses 14,939 12,986 30,604 25,212
------------ ------------- ------------- -------------
Operating income 14,681 14,252 30,719 27,965
Gain on sale of equipment --- --- --- (1,733)
Interest expense, net 266 950 540 1,863
------------ ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 14,415 13,302 30,179 27,835
Provision for income taxes 5,622 189 12,004 325
------------ ------------- ------------- -------------
NET INCOME $ 8,793 $ 13,113 $ 18,175 $ 27,510
============ ============= ============= =============
BASIC AND DILUTED NET INCOME
PER SHARE $0.39 $0.94 $0.81 $1.97
============ ============= ============= =============
WEIGHTED AVERAGE SHARES
OUTSTANDING 22,397 13,964 22,397 13,964
============ ============= ============= =============
1997 PRO FORMA INCOME DATA:
Income before income taxes $ 14,415 $ 13,302 $ 30,179 $ 27,835
Pro forma adjustment - provision for
income taxes 5,622 5,373 12,004 11,412
------------ ------------- ------------- -------------
Pro forma net income $ 8,793 $ 7,929 $ 18,175 $ 16,423
============ ============= ============= =============
Pro forma net income per share $0.39 $0.36 $0.81 $0.76
============ ============= ============= =============
Pro forma weighted average shares
outstanding 22,397 21,640 22,397 21,640
============ ============= ============= =============
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated statements.
3
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the six months ended
June 30,
------------------------------
1998 1997
------------- -------------
OPERATING ACTIVITIES:
Net income $18,175 $ 27,510
Adjustments to reconcile net income to net cash
from operating activities-
Depreciation and amortization 7,221 6,138
Deferred income taxes (978) --
Gain on sale of equipment -- (1,733)
Other -- 175
Changes in operating assets and liabilities-
Accounts receivable, net 2,907 (4,195)
Inventories (2,287) (1,031)
Prepaid expenses and other (1,921) (456)
Other assets, net (1,384) (332)
Accounts payable (1,255) 5,014
Accrued expenses and other (2,012) 4,839
------------- -------------
Net cash from operating activities 18,466 35,929
------------- -------------
INVESTING ACTIVITIES:
Capital expenditures (4,565) (6,373)
Proceeds from sale of equipment 12 2,504
Increase in notes to affiliates (5,361) --
------------- -------------
Net cash from investing activities (9,914) (3,869)
------------- -------------
FINANCING ACTIVITIES:
Cash distributions paid (2,600) (12,575)
Repayments of long-term debt (4,477) (2,369)
Net repayments under credit facility (768) (17,466)
------------- -------------
Net cash from financing activities (7,845) (32,410)
------------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 707 (350)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,338 357
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,045 $ 7
============= =============
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated statements.
4
STONERIDGE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except for share and per share data)
1. The accompanying condensed consolidated financial statements have been
prepared by Stoneridge, Inc. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. The
information furnished in the condensed consolidated financial statements
includes normal recurring adjustments and reflects all adjustments which
are, in the opinion of management, necessary for a fair presentation of
such financial statements. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that
the disclosures are adequate to make the information presented not
misleading, it is suggested that these condensed consolidated financial
statements be read in conjunction with the audited financial statements and
the notes thereto included in the Company's 1997 Annual Report to
Shareholders.
The results of operations for the three and six months ended June 30, 1998
are not necessarily indicative of the results to be expected for the full
year.
2. On October 10, 1997, the Company completed an initial public offering of
6,727,500 Common Shares at $17.50 per share (the "Offering"). The Company
received net cash proceeds of $108,693 from the Offering. Net proceeds of
the Offering were used to fund a payment to the pre-offering shareholders
of approximately $83,000 as an S Corporation Distribution ("S Corporation
Distribution") and the remaining proceeds were used to repay net borrowings
under the Company's credit facility. Concurrent with the Offering, certain
officers and directors of the Company purchased 510,181 Common Shares
("Management Reinvestment") resulting in net proceeds of $8,326.
Immediately prior to the completion of the Offering, the Company amended
its Articles of Incorporation to change the authorized capital shares of
the Company from 37,724 shares of Class A Common Shares (voting), without
par value, and 87,276 shares of Class B Common Shares (non-voting), without
par value, to 60,000,000 Common Shares, and 5,000,000 Preferred Shares,
without par value. In addition, the amended Articles of Incorporation
provided that each Class A Common Share and Class B Common Share
automatically became 139.0856 Common Shares. All applicable share and per
share data in the accompanying unaudited condensed consolidated financial
statements have been adjusted accordingly.
Concurrent with the Offering, the Company acquired, through a share
exchange, the remaining 55% of Berifors AB ("Berifors") it did not own, in
exchange for 757,063 Common Shares, of which 52,500 Common Shares were held
in escrow pending final closing in February 1998. The acquisition was
accounted for as a purchase and the excess of the cost over the fair value
of assets acquired, totaling $10,439, was reflected as goodwill which will
be amortized over 40 years on a straight-line basis. As of October 10,
1997, the accounts of Berifors AB were consolidated in the financial
statements of the Company.
5
3. Pro forma net income assumes that the Company was subject to income taxes
as a C Corporation for all income statement periods presented.
Pro forma net income per share has been calculated by dividing pro forma
net income per share by the weighted average number of Common Shares
outstanding as of June 30, 1997 (13,964,448), the number of Common Shares
issued in connection with the exercise of share options (438,119), the
number of Common Shares issued in connection with the Offering (6,727,500),
and the number of Common Shares issued in connection with the Management
Reinvestment (510,181).
4. Inventories are valued at the lower of cost or market, determined by using
the last-in, first-out (LIFO) method of inventory accounting. Inventory
cost includes material, labor and overhead and consists of the following:
December
June 30, 1998 31, 1997
-------------- ---------
Raw materials $24,054 $24,725
Work in progress 10,629 9,397
Finished goods 8,698 6,723
Less-LIFO reserve (2,471) (2,251)
---------- ----------
Total $40,910 $38,594
========== ==========
5. Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income."
SFAS 130 establishes new rules for the reporting and display of
comprehensive income and its components. The adoption of SFAS 130 requires
that certain items including currency translation adjustments be included
in other comprehensive income, which prior to adoption were reported
separately in shareholders' equity.
The component of comprehensive income, net of related tax, was as follows:
Three months ended Six months ended
June 30, 1998 June 30, 1998
------------------- -------------------
Net income $8,793 $18,175
Currency translation adjustment, net of
income taxes (93) (3)
------------------- -------------------
Comprehensive income $8,700 $18,172
=================== ===================
Accumulated other comprehensive income (deficit), net of related tax, at
June 30, 1998 was comprised of currency translation adjustments and totaled
($229). The accumulated comprehensive income adjustments and accumulated
balance were zero for the three months ended and the six months ended June
30, 1997, consequently prior year financial statements do not require
reclassification to conform to SFAS 130.
6
6. On August 4, 1998, the Company entered into a new credit agreement. The new
credit facility has a $125,000 borrowing limit and expires on July 31,
2003. The $125,000 borrowing limit includes sublimits of $20,000 for
borrowings denominated in certain foreign currencies and $10,000 for swing
line credit facility borrowings. Swing line credit facility borrowings are
defined as borrowings for working capital requirements with maturities of
less than 30 days. Interest on general credit facility borrowings are
payable quarterly at the Company's option at either (i) the prime rate or
(ii) LIBOR plus a margin of 0.4% to 1.0%, and interest on foreign
denominated borrowings are payable quarterly at the eurocurrency rate, as
defined in the credit facility, plus a margin of 0.4% to 1.0%. The interest
rate margins of 0.4% to 1.0% are determined based on the Company's total
debt to earnings before interest, income taxes, depreciation and
amortization expenses (EBITDA), as defined in the credit facility. Interest
on swing line borrowings are payable quarterly at the quoted money market
rate, as of the dates funds are borrowed, as defined in the credit
facility.
The Company has entered into a $25,000 interest rate swap agreement with a
member of its bank group whereby its contractual interest rate was swapped
through February 1999 for a fixed rate of 5.795% plus a margin of 0.4% to
1.0%, depending upon the Company's total debt to EBITDA ratio, as defined
in the credit facility. The notional amount under the swap agreement
remains at $25,000 through maturity. Additionally, the Company has entered
into a separate $20,000 interest rate swap agreement with a member of its
bank group whereby its contractual interest rate was swapped through August
1999 for a fixed rate of 6.28% plus a margin of 0.4% to 1.0%, depending
upon the Company's total debt to EBITDA ratio, as defined in the credit
facility, provided the LIBOR rate is less than 7.50%. This swap agreement
is ineffective when the LIBOR rate is equal to or greater than 7.50%. The
notional amount under the swap agreement remains at $20,000 through
maturity. The Company is exposed to credit loss under the swap agreements
in the event of nonperformance by the bank.
As of June 30, 1998, the Company would have paid approximately $157 to the
bank had it elected to terminate these interest rate swaps agreements. The
Company has accrued these termination costs in these financial statements,
as the outstanding credit facility borrowings were less than the combined
notional amount of the swap agreements.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Six Months Ended June 30, 1998 Compared To Six Months Ended June 30, 1997
- -------------------------------------------------------------------------
Net Sales. Net sales for the six months ended June 30, 1998 increased by $34.2
million, or 15.6%, to $253.0 million from $218.8 million for the same period in
1997. Sales of core electrical and electronic components, modules, and systems
increased by $42.9 million, or 25.3%, to $212.9 million during the first six
months of 1998 compared with $170.0 million for the same period in 1997. Sales
related to Berifors AB the acquisition, which was completed concurrently with
the Company's initial public offering in October 1997, accounted for $20.8
million of the $42.9 million increase in the first six months of 1998. Excluding
the impact of the Berifors AB acquisition, sales revenue of core products
increased by $22.1 million, or 13.0%, compared with the same period in 1997.
Sales of contract manufacturing wire harnesses of $40.0 million were $8.7
million, or 17.9%, lower than 1997 reflecting declining customer production
levels. As expected, contract manufacturing sales declined to 15.8% of the
Company's total sales revenue for the first six months of 1998 compared with
22.3% of total sales for the same period in 1997.
Sales for the six months ended June 30, 1998 for North America increased $12.6
million to $230.8 million from $218.2 million for the same period in 1997.
North American sales accounted for 91.2% of total sales for the six months ended
June 30, 1998 compared with 99.7% for the same period in 1997. Sales outside
North America increased $21.6 million to $22.2 million from $0.6 million for the
same period in 1997. This increase was due primarily to the Berifors
acquisition. Sales outside North America accounted for 8.8% of total sales for
the six months ended June 30, 1998 compared with 0.3% for the same period in
1997.
Cost of Goods Sold. Cost of goods sold for the first six months of 1998
increased by $26.1 million, or 15.7%, to $191.7 million from $165.6 million in
the first six months of 1997. As a percentage of sales, cost of goods sold
increased to 75.8% in 1998 from 75.7% in 1997.
Selling, General and Administrative Expenses. Selling, general and
administrative (SG&A) expenses for the first six months of 1998 increased by
$5.4 million, or 21.4%, to $30.6 million from $25.2 million in the same period
in 1997. As a percentage of sales, SG&A expenses increased to 12.1% for 1998
from 11.5% in 1997. The increase reflected the consolidation of Berifors AB,
which accounted for $2.7 million of the increase. In addition, the Company
increased its investment in product development, which accounted for $2.6
million, $1.3 million relating to Berifors AB. Other marketing, support and
administrative overhead costs increased an additional $1.4 million due to higher
sales levels and expenditures related to business development activities.
Interest Expense. Interest expense for the first six months of 1998 decreased by
$1.3 million, or 71.0%, to $0.6 million from $1.9 million in the first six
months of 1997. The decrease was due to a lower average outstanding
indebtedness.
Other Income. Other income for the first six months of 1997 was $1.7 million
which represented a gain on the sale of equipment.
8
Income Before Income Taxes. As a result of the foregoing, income before taxes
increased by $2.3 million for the first six months of 1998 to $30.2 million from
$27.8 million in 1997. Excluding the one-time gain on sale of equipment, the
increase in income before taxes would have been $4.0 million or 15.6%.
Provision for Income Taxes. The Company recognized provisions for income taxes
of $12.0 million and $0.3 million for federal, state and foreign income taxes
for the first six months of 1998 and 1997, respectively. This increase in the
tax provision was due to the change in tax status from an S corporation to a C
corporation. Accordingly, had the Company been subject to federal and state
income taxes at the corporate level for all of 1997, the Company would have
recorded provisions for income taxes of approximately $11.4 million for the six
months ended June 30, 1997.
Net Income. Net income decreased by $9.3 million to $18.2 million in the first
six months of 1998 from $27.5 million in the first six months of 1997 due to the
change in tax status from an S corporation to a C corporation. Had the Company
been subject to federal and state income taxes at the corporate level, the
Company's pro forma net income would have been $16.4 for the six months ended
June 30, 1997.
Three Months Ended June 30, 1998 Compared To Three Months Ended June 30, 1997
- -----------------------------------------------------------------------------
Net Sales. Net sales for the quarter ended June 30, 1998 increased by $11.1
million, or 10.0%, to $121.8 million from $110.7 million for the same period in
1997. Sales of core electrical and electronic components, modules, and systems
increased by $18.7 million, or 21.9%, to $104.5 million during the second
quarter of 1998 compared with $85.8 million for the same period in 1997. Sales
related to Berifors AB accounted for $10.7 million of the $18.7 million increase
in the second quarter of 1998. Excluding the impact of the Berifors AB
acquisition, sales revenue of core products increased by $8.0, million or 9.4%,
compared with the same period in 1997.
Sales of contract manufacturing wire harnesses of $17.2 million were $7.6
million, or 30.9%, lower than 1997 reflecting declining customer production
levels. As expected, contract manufacturing sales declined to 14.2 % of the
Company's total sales revenue for the second quarter of 1998 compared with 22.5%
of total sales for the same period in 1997.
Sales for the quarter ended June 30, 1998 for North America decreased $0.2
million to $110.2 million from $110.4 million for the same period in 1997.
North American sales accounted for 90.5% of total sales for the quarter ended
June 30, 1998 compared with 99.7% for the same period in 1997. Sales outside
North America increased $11.3 million to $11.6 million from $0.3 million for the
same period in 1997. The increase was due primarily to the Berifors
acquisition. Sales outside North America accounted for 9.5% of total sales for
the quarter ended June 30, 1998 compared with 0.3% for the same period in 1997.
Cost of Goods Sold. Cost of goods sold for the second quarter of 1998 increased
by $8.7 million, or 10.4%, to $92.1 million from $83.4 million in the second
quarter of 1997. As a percentage of sales, cost of goods sold increased to 75.7%
in 1998 from 75.4% in 1997.
9
Selling, General and Administrative Expenses. SG&A expenses for the second
quarter of 1998 increased by $1.9 million, or 14.6%, to $14.9 million from $13.0
million in the same period in 1997. As a percentage of sales, SG&A expenses
increased to 12.3% for 1998 from 11.7% in 1997. The increase reflected the
consolidation of Berifors AB, which accounted for $1.1 million of the increase.
In addition, the Company increased its investment in product development, which
accounted for $1.0 million, $0.4 million relating to Berifors AB. Other
marketing, support and administrative overhead costs increased an additional
$0.3 million due to higher sales levels and expenditures related to business
development activities.
Interest Expense. Interest expense for the second quarter of 1998 decreased by
$0.7 million, or 72.0%, to $0.3 million from $1.0 million in the second quarter
of 1997. The decrease was due to a lower average outstanding indebtedness.
Income Before Income Taxes. As a result of the foregoing, income before taxes
increased by $1.1 million for the second quarter of 1998 to $14.4 million from
$13.3 million in 1997.
Provision for Income Taxes. The Company recognized provisions for income taxes
of $5.6 million and $0.2 million for federal, state and foreign income taxes for
the second quarters of 1998 and 1997, respectively. This increase in the tax
provision was due to the change in tax status from an S corporation to a C
corporation. Accordingly, had the Company been subject to federal and state
income taxes at the corporate level for all of 1997, the Company would have
recorded provisions for income taxes of approximately $5.4 million for the
quarter ended June 30, 1997.
Net Income. Net income decreased by $4.3 million to $8.8 million in the second
quarter of 1998 from $13.1 million in the second quarter of 1997 due to the
change in tax status from an S corporation to a C corporation. Had the Company
been subject to federal and state income taxes at the corporate level, the
Company's pro forma net income would have been $7.9 for the quarter ended June
30, 1997.
General Motors Work Stoppage. The ongoing General Motors work stoppage
adversely impacted basic and diluted earnings per share for the second quarter
of 1998 by approximately $0.04 per share.
Liquidity and Capital Resources
- -------------------------------
Net cash provided from operating activities was $18.5 million and $35.9 million
for the six months ended June 30, 1998 and 1997, respectively. The decrease in
net cash from operating activities of $17.4 million was due to the decrease in
net income of $9.3 million and an increase in working capital requirements and
other operating assets of $8.1 million.
Net cash used for investing activities was $9.9 million and $3.9 million for the
six months ended June 30, 1998 and 1997, respectively. The increase in cash
used for investing activities of $6.0 million was the result of higher net
capital expenditures of $0.7 million and the issuance of notes receivable to
affiliates of $5.3 million.
10
Net cash used for financing activities was $7.8 million and $32.4 million for
the six months ended June 30, 1998 and 1997, respectively. A final cash
distribution to pre-Offering shareholders of $2.6 million occurred during the
six month period ended June 30, 1998 while cash distributions were $12.6 million
for the six months ended June 30, 1997. Repayments of long term debt were $4.5
million and $2.4 million for the six months ended June 30, 1998 and 1997,
respectively.
As a result of the forgoing , net borrowings under the credit facility decreased
$0.8 million and $17.5 million for the six months ended June 30, 1998 and 1997,
respectively.
The Company had a $125.0 million unsecured credit facility (of which $0.0
million was outstanding as of June 30, 1998), which was scheduled to expire on
June 30, 2002. On August 4, 1998, the Company entered into a new credit
agreement that replaced the credit facility that existed on June 30, 1998.
Interest on the credit facility was payable at the Company's option at either
prime rate or LIBOR plus 0.40% to 1.0%. Currently the Company borrows at LIBOR
plus 0.40%. The Company has entered into two interest rate swap agreements with
notional amounts of $25.0 and $20.0 million. The interest rate swap agreements
exchange the variable interest rate on the credit facility for fixed rates. The
Company is exposed to credit loss under the swap agreements in the event of
nonperformance by the bank. As of June 30, 1998, the Company would have paid
approximately $0.2 million to the bank had it elected to terminate these
interest rate swap agreements. The Company has accrued these termination costs
in these financial statements, as the outstanding credit facility borrowings
were less than the combined notional amounts of the swap agreements.
ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable.
11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- -----------------------------
In the ordinary course of business, the Company is involved in various legal
proceedings, workers' compensation and product liability disputes. The Company
is of the opinion that the ultimate resolution of these matters will not have a
material adverse effect on the results of operations or the financial position
of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- -----------------------------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- -------------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ---------------------------------------------------------------
(a) The Annual Meeting of Shareholders of Stoneridge, Inc. was held
on May 4, 1998.
(b) The following matter was submitted to a vote at the meeting
(1) The election of the following nominees as directors of the Company.
The vote with respect to each nominee was as follows:
Nominee For Withheld
------- --- --------
D. M. Draime 19,971,805 2,425,506
Cloyd J. Abruzzo 19,969,597 2,427,714
Avery S. Cohen 19,926,208 2,471,103
Richard E. Cheney 19,930,866 2,406,445
Sheldon J. Epstein 19,975,547 2,421,764
Earl L. Linehan 19,970,647 2,426,664
No matters were voted on at the Annual Meeting of Shareholders or otherwise
during the quarter.
12
ITEM 5. OTHER INFORMATION
- -----------------------------
As of the date of the 1998 Annual Shareholders' Meeting, Rule 14a-4 (c) under
the Securities and Exchange Act of 1934 provided that a proxy could grant
discretionary authority to vote on matters at the annual shareholders meeting if
(i) the person or persons soliciting the proxy did not know that such matters
were to be presented at the annual shareholders' meeting at least a reasonable
time before the solicitation and (ii) a specific statement to that effect is
made in the proxy statement or form of proxy. In a recent release by the
Securities and Exchange Commission, Rule 14a-14 (c) was revised to remove the
ambiguity of a "reasonable time" and establish a bright-line test for when
proxies could grant discretionary authority to vote on matters not submitted to
the company in compliance with Rule 14a-8.
As revised, Rule 14a-4 (c) provides that a proxy can grant discretionary
authority to vote on matters at an annual shareholders' meeting if (i) the
company has not received notice of the matter at least 45 days before the date
on which the company first mailed its proxy materials for the prior years annual
shareholders meeting and (ii) a specific statement that the company has not
received such notice is included in the proxy statement or form of proxy. As a
result of the revisions, the Company hereby gives notice to all shareholders
that the deadline for submitting non-Rule 14a-8 shareholder proposals for the
Company's 1999 Annual Shareholders' Meeting is February 14, 1999. Any
shareholder proposals submitted after February 14, 1999, will be considered
untimely for purposes of Rules 14a-4 and 14a-5(e)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------------------
(a) Exhibits
10.8 Credit Agreement among Stoneridge, Inc., as Borrower, the Lending
Institutions Named Therein, as Lenders, and National City Bank as
Swing Line Lender and as Administrative Agent.
27.1 Financial Data Schedule for the six months ended June 30, 1998
(b) Reports on Forms 8-K
None.
13
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.
STONERIDGE, INC.
Date: August 12, 1998 /s/ CLOYD J. ABRUZZO
--------------------------
Cloyd J. Abruzzo
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1998 /s/ KEVIN P. BAGBY
---------------------------
Kevin P. Bagby
Treasurer and Chief Financial Officer
(Principal Financial and
Chief Accounting Officer)
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STONERIDGE, INC.
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
10.8 Credit Agreement, among Stoneridge, Inc., as Borrower, the Lending
Institutions Named Therein, as Lenders, and National City Bank, as Swing
Line Lender and as Administrative Agent, filed herewith.
27.1 Financial Data Schedule for the six months ended June 30, 1998, filed
herewith.
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