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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-3252
LEXINGTON PRECISION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-1830121
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
767 THIRD AVENUE, NEW YORK, NY 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(212) 319-4657
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT DATE)
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 such 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_
COMMON STOCK, $0.25 PAR VALUE, 4,828,036 SHARES AS OF MAY 8, 2000
(INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE)
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2
LEXINGTON PRECISION CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................................1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................13
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........22
PART II. OTHER INFORMATION
Item 3. Defaults on Senior Securities......................................23
Item 6. Exhibits and Reports on Form 8-K...................................23
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31
-------------------------------
2000 1999
-------- --------
Net sales $ 37,666 $ 34,496
Cost of sales 31,834 29,404
-------- --------
Gross profit 5,832 5,092
Selling and administrative expenses 3,019 3,066
-------- --------
Income from operations 2,813 2,026
Interest expense 2,437 2,342
-------- --------
Income (loss) before income taxes and
extraordinary item 376 (316)
Income tax provision 113 (79)
-------- --------
Income (loss) before extraordinary item 263 (237)
Extraordinary gain on repurchase of debt, net of
applicable income taxes -- 1,371
-------- --------
Net income $ 263 $ 1,134
======== ========
Per share data:
Basic and diluted net income (loss) before
extraordinary item $ 0.05 $ (0.06)
Extraordinary gain on repurchase of debt, net of
applicable income taxes -- 0.32
-------- --------
Basic and diluted net income available to
common stockholders $ 0.05 $ 0.26
======== ========
See notes to consolidated financial statements.
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LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEET
(THOUSANDS OF DOLLARS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
ASSETS:
Current assets:
Cash $ 77 $ 8
Accounts receivable 23,632 24,098
Inventories 9,796 9,492
Prepaid expenses and other current assets 2,148 2,229
Deferred income taxes 1,676 1,676
-------- --------
Total current assets 37,329 37,503
-------- --------
Plant and equipment:
Land 2,343 1,570
Buildings 23,606 23,566
Equipment 101,648 96,694
-------- --------
127,597 121,830
Accumulated depreciation 62,558 60,041
-------- --------
Plant and equipment, net 65,039 61,789
-------- --------
Excess of cost over net assets of businesses acquired 8,383 8,462
-------- --------
Other assets 3,299 3,573
-------- --------
$114,050 $111,327
======== ========
See notes to consolidated financial statements. (continued on next page)
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LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEET (CONTINUED)
(THOUSANDS OF DOLLARS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2000 1999
----------- -------------
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current liabilities:
Accounts payable $ 13,234 $ 8,597
Accrued expenses 9,527 9,794
Short-term debt 67,745 98,069
Debt in default 27,412 --
--------- ---------
Total current liabilities 117,918 116,460
--------- ---------
Long-term debt, excluding current portion 113 116
--------- ---------
Deferred income taxes and other long-term liabilities 1,892 1,884
--------- ---------
Series B preferred stock, at redemption value of $200 per share 660 660
Excess of redemption value over par value (330) (330)
--------- ---------
Series B preferred stock, at par value of $100 per share 330 330
--------- ---------
Stockholders' deficit:
Common stock, $0.25 par value, 10,000,000 shares
authorized, 4,828,036 and 4,348,951 shares issued,
respectively 1,207 1,087
Additional paid-in-capital 12,953 12,160
Accumulated deficit (20,363) (20,493)
Cost of common stock in treasury, 85,915 shares at
December 31, 1999 -- (217)
--------- ---------
Total stockholders' deficit (6,203) (7,463)
--------- ---------
$ 114,050 $ 111,327
========= =========
See notes to consolidated financial statements.
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LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31
-----------------------------------
2000 1999
------- -------
OPERATING ACTIVITIES:
Net income $ 263 $ 1,134
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary gain on repurchase of debt -- (1,828)
Depreciation 2,874 2,640
Amortization included in operating expense 394 435
Amortization included in interest expense 49 50
Changes in operating assets and liabilities that
provided (used) cash:
Accounts receivable 466 (2,087)
Inventories (304) 267
Prepaid expenses and other assets 129 (243)
Accounts payable 4,637 1,041
Accrued expenses (267) (953)
Other (39) 58
------- -------
Net cash provided by operating activities 8,202 514
------- -------
INVESTING ACTIVITIES:
Purchases of plant and equipment (6,151) (1,888)
Decrease in equipment deposits 156 63
Proceeds from sales of equipment 29 6
Expenditures for tooling owned by customers (189) (204)
------- -------
Net cash used by investing activities (6,155) (2,023)
------- -------
FINANCING ACTIVITIES:
Net increase in short-term debt 66 1,844
Proceeds from issuance of long-term debt -- 9,292
Repayment of long-term debt (1,981) (7,478)
Repurchase of debt -- (1,980)
Other (63) (43)
------- -------
Net cash provided (used) by financing activities (1,978) 1,635
------- -------
Net increase in cash 69 126
Cash at beginning of period 8 103
------- -------
Cash at end of period $ 77 $ 229
======= =======
See notes to consolidated financial statements.
-4-
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The unaudited interim consolidated financial statements include the
accounts of Lexington Precision Corporation and its subsidiaries (collectively,
the "Company"). The consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, the consolidated financial statements do not include all the
information and footnotes included in the Company's annual consolidated
financial statements. Significant accounting policies followed by the Company
are set forth in Note 1 to the consolidated financial statements in the
Company's annual report on Form 10-K for the year ended December 31, 1999.
In the opinion of management, the unaudited interim consolidated
financial statements contain all adjustments necessary to present fairly the
financial position of the Company at March 31, 2000, and the Company's results
of operations and cash flows for the three-month periods ended March 31, 2000
and 1999. All such adjustments were of a normal recurring nature.
The results of operations for the three-month period ended March 31,
2000, are not necessarily indicative of the results to be expected for the full
year or for any succeeding quarter.
The Company's consolidated financial statements have been presented on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
The Company's 12 3/4% senior subordinated notes, which have an
outstanding principal balance of $27,412,000, matured on February 1, 2000. The
Company is in default in respect of the 12 3/4% senior subordinated notes
because it did not make the payments of principal, in the amount of $27,412,000,
and interest, in the amount of $1,748,000, on the 12 3/4% senior subordinated
notes that were due on the maturity date.
On December 28, 1999, the Company commenced a consent solicitation
seeking consents of the holders of the 12 3/4% senior subordinated notes to
extend the maturity date of the 12 3/4% senior subordinated notes to February 1,
2003. At the date of issuance of this Form 10-Q, sufficient consents had not
been received to effect the extension. The consent solicitation has been
extended several times and is currently scheduled to expire on June 15, 2000.
The holders of substantially all of the Company's other indebtedness
have entered into agreements that have enabled the Company to continue to
operate its business without interruption, notwithstanding the default on the 12
3/4% senior subordinated notes.
- The lenders extending loans under the Company's revolving line of
credit and the lenders providing secured, amortizing term loans
have waived the cross-default provisions with respect to the
default relating to the 12 3/4% senior subordinated notes and
have amended certain covenants to eliminate defaults that would
otherwise have occurred because all of the Company's secured,
amortizing term loans have been classified as current liabilities
in the consolidated financial statements.
- The holder of the Company's 12% secured term note, in the
outstanding principal amount of $1,370,000, has extended the
maturity date of that note to July 31, 2000.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- The holder of the Company's 10 1/2% senior note, in the
outstanding principal amount of $7,500,000, has extended the
maturity date of that note to August 1, 2000, and has waived the
cross-default provision with respect to the default relating to
the 12 3/4% senior subordinated notes.
- The holder of the Company's 14% junior subordinated
non-convertible notes, in the outstanding principal amount of
$347,000, has extended the maturity date of those notes to August
1, 2000, has deferred the interest payments on those notes that
were due on February 1 and May 1, 2000, to August 1, 2000, and
has waived the cross-default provisions with respect to the
default relating to the 12 3/4% senior subordinated notes.
- The holders of the Company's 14% junior subordinated convertible
notes, which were outstanding on December 31, 1999, in the
aggregate principal amount of $1,000,000, have deferred the
interest payments on those notes that were due on February 1,
2000, to August 1,2000, and have waived the cross-default
provisions with respect to the default relating to the 12 3/4%
senior subordinated notes. On February 1, 2000, the 14% junior
subordinated convertible notes were converted into 440,000 shares
of the Company's common stock.
Since January 31, 2000, the Company has made all scheduled payments of
interest and principal on all of its indebtedness other than the 12 3/4% senior
subordinated notes, and the Company has continued to borrow under its revolving
line of credit and its equipment lines of credit.
At the date of issuance of this Form 10-Q, the Company has not been able
to obtain the necessary consents to extend the maturity date of the 12 3/4%
senior subordinated notes. If the Company is unable to restructure or refinance
the 12 3/4% senior subordinated notes or any of the other indebtedness maturing
during 2000, the Company may be forced to seek relief from its creditors under
the Federal bankruptcy code. Any proceeding under the Federal bankruptcy code
could have a material adverse effect on the Company's results of operations and
financial position. The consolidated financial statements do not include any
adjustments to the amounts or classification of assets or liabilities to reflect
this uncertainty.
NOTE 2 -- INVENTORIES
Inventories at March 31, 2000, and December 31, 1999, are set forth
below (dollar amounts in thousands):
MARCH 31, DECEMBER 31,
2000 1999
---------------- ----------------
Finished goods $ 3,739 $ 3,565
Work in process 2,620 2,503
Raw materials and purchased parts 3,437 3,424
--------- --------
$ 9,796 $ 9,492
========= ========
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 -- ACCRUED EXPENSES
At March 31, 2000, and December 31, 1999, accrued expenses included
accrued interest expense of $2,583,000 and $1,751,000, respectively. (See also
Note 1, "Basis of Presentation.")
NOTE 4 -- DEBT
Debt at March 31, 2000, and December 31, 1999, is set forth below
(dollar amounts in thousands):
MARCH 31, DECEMBER 31,
2000 1999
--------- -----------
Short-term debt:
Revolving line of credit $21,534 $21,468
Secured, amortizing term loans 36,982 38,960
12% secured term note 1,370 1,370
10 1/2% senior note 7,500 7,500
12 3/4% senior subordinated notes -- 27,412
14% junior subordinated notes 347 1,347
------- -------
Subtotal 67,733 98,057
Plus current portion of long-term debt 12 12
------- -------
Total short-term debt 67,745 98,069
------- -------
Debt in default:
12 3/4% senior subordinated notes 27,412 --
------- -------
Long-term debt:
Retirement obligations 125 128
Less current portion 12 12
------- -------
Total long-term debt 113 116
------- -------
Total debt $95,270 $98,185
======= =======
REVOLVING LINE OF CREDIT
Although the revolving line of credit expires on April 1, 2002, loans
outstanding thereunder have been classified as short-term debt because the
Company's cash receipts are automatically used to reduce such loans on a daily
basis, by means of a lock-box sweep arrangement, and the lender has the ability
to modify certain terms of the revolving line of credit without the approval of
the Company. The loans were also classified as short-term debt because the
Company has only received a waiver through August 1, 2000, of the cross-default
provisions of the revolving line of credit.
At March 31, 2000, availability under the revolving line of credit
totaled $2,079,000, before outstanding checks of $1,537,000 were deducted. At
March 31, 2000, and December 31, 1999, loans outstanding under the revolving
line of credit accrued interest at the London Interbank Offered Rate (LIBOR)
plus 2 1/2% and the prime rate. At March 31, 2000, the prime rate was 9% and
LIBOR was 6.1%.
-7-
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SECURED, AMORTIZING TERM LOANS
Secured, amortizing term loans outstanding at March 31, 2000, and
December 31, 1999, are set forth below (dollar amounts in thousands):
MARCH 31, DECEMBER 31,
2000 1999
--------- ---------
Term loans payable in equal monthly principal installments based on a
180-month amortization schedule, final maturities in 2001, 8.37% $ 2,629 $ 2,688
Term loans payable in equal monthly principal installments, final
maturities in 2002, LIBOR plus 2 3/4% 1,651 1,837
Term loan payable in equal monthly principal installments based on a
180-month amortization schedule, final maturity in 2002, 9.37% 1,271 1,298
Term loan payable in equal monthly principal installments based on a
180-month amortization schedule, final maturity in 2002, 9% 2,481 2,531
Term loans payable in equal monthly principal installments, final
maturities in 2002, prime rate and LIBOR plus 2 1/2% 1,909(1) 2,139(1)
Term loan payable in equal monthly principal installments, final
maturity in 2003, prime rate 545 590
Term loan payable in equal monthly principal installments, final
maturity in 2003, prime rate and LIBOR plus 2 1/2% 341(1) 371(1)
Term loans payable in equal monthly principal installments, final
maturities in 2004, LIBOR plus 2 3/4% 1,396 1,479
Term loan payable in equal monthly principal installments, final
maturity in 2004, prime rate and LIBOR plus 2 1/2% 1,132 1,199
Term loans payable in equal monthly principal installments, final
maturities in 2004, prime rate and LIBOR plus 2 1/2% 11,244(1) 11,947(1)
Term loan payable in equal monthly principal installments, final
maturity in 2005, LIBOR plus 2 3/4% 987 1,067
Term loan payable in equal monthly principal installments, final
maturity in 2005, prime rate and LIBOR plus 2 1/2% 1,276(1) 1,336(1)
Term loan payable in equal monthly principal installments, final
maturity in 2006, prime rate 497 518
Term loans payable in equal monthly principal installments, final
maturities in 2006, prime rate and LIBOR plus 2 1/2% 9,623(1) 9,960(1)
--------- ---------
$ 36,982 $ 38,960
========= =========
(1) Maturity date can be accelerated by the lender if the Company's
revolving line of credit expires prior to the stated maturity date of the term
loan.
The loans outstanding under the Company's revolving line of credit and
the secured, amortizing term loans listed above are collateralized by
substantially all of the assets of the Company, including accounts receivable,
inventories, equipment, certain real estate, and the stock of its wholly-owned
subsidiary, Lexington Rubber Group, Inc.
-8-
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10 1/2% SENIOR NOTE
The 10 1/2% senior note, due August 1, 2000, is an unsecured obligation
of the Company. The holder of this note has waived the cross-default provision
with respect to the default relating to the 12 3/4% senior subordinated notes.
These notes are senior in right of payment to the 12 3/4 senior subordinated
notes and the 14% junior subordinated notes.
12 3/4% SENIOR SUBORDINATED NOTES
The 12 3/4% senior subordinated notes, which matured on February 1,
2000, are unsecured obligations of the Company that are subordinated in right of
payment to all of the Company's existing and future senior debt, including loans
under the revolving line of credit, the secured, amortizing term loans, the 12%
secured term note, and the 10 1/2% senior note. The Company is in default in
respect of the 12 3/4% senior subordinated notes because it did not make the
payments of principal, in the amount of $27,412,000, and interest, in the amount
of $1,748,000, on the 12 3/4% senior subordinated notes that were due on
February 1, 2000. For more information regarding the status of the 12 3/4%
senior subordinated notes, refer to Note 1, "Basis of Presentation."
14% JUNIOR SUBORDINATED NOTES
The 14% junior subordinated convertible notes and the 14% junior
subordinated nonconvertible notes are unsecured obligations of the Company. The
14% junior subordinated convertible notes, which had an aggregate principal
amount of $1,000,000, were converted into 440,000 shares of common stock on
February 1, 2000. The 14% junior subordinated nonconvertible notes are due on
August 1, 2000, and are subordinated in right of payment to all existing and
future senior debt of the Company, including loans under the revolving line of
credit, the secured, amortizing term loans, the 12% secured term note, the 10
1/2% senior note, and the 12 3/4% senior subordinated notes. The holders of the
14% junior subordinated notes have deferred, until August 1, 2000, the interest
payments that were due on February 1 and May 1, 2000, and waived the
cross-default provisions with respect to the default relating to the 12 3/4%
senior subordinated notes.
RESTRICTIVE COVENANTS
Certain of the Company's financing arrangements contain covenants that
set minimum levels of working capital, net worth, and cash flow coverage. The
covenants also place certain restrictions and limitations on the Company's
business and operations, including the incurrence or assumption of additional
debt, the level of past-due trade accounts payable, the sale of all or
substantially all of the Company's assets, the purchase of plant and equipment,
the purchase of common stock, the redemption of preferred stock, and the payment
of cash dividends. In addition, substantially all of the Company's financing
agreements include cross-default provisions.
From time to time, certain of the financial covenants contained in the
Company's various loan agreements have been amended or waived in order to
maintain or otherwise ensure current or future compliance by the Company. For
more information regarding recent amendments to and waivers of the Company's
various loan agreements, refer to Note 1, "Basis of Presentation."
-9-
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 -- INCOME TAXES
During the first quarter of 2000, the Company recorded income tax
expense of $113,000, which consisted of estimated federal alternative minimum
tax and state income tax.
At March 31, 2000, and December 31, 1999, the Company's net deferred
income tax assets were fully offset by a valuation allowance.
NOTE 6 -- NET INCOME (LOSS) PER COMMON SHARE
The calculations of basic and diluted net income or loss per common
share for the three-month periods ended March 31, 2000 and 1999, are set forth
below (in thousands, except per share amounts).
THREE MONTHS ENDED
MARCH 31
------------------------
2000 1999
---- ----
Numerators:
Income (loss) before extraordinary item $ 263 $ (237)
Preferred stock dividends (7) (8)
Excess of redemption value over par value of
preferred stock redeemed during year (11) (11)
-------- --------
Numerator for basic and diluted net income (loss)
per share-- income available to common stockholders
before extraordinary item 245 (256)
Extraordinary gain, net of applicable income taxes - 1,371
-------- --------
Numerator for basic and dilutived net income
per share-- income available to common
stockholders after extraordinary item $ 245 $1,115
======== ========
Denominators:
Denominator for basic net income (loss) per share--
weighted-average common shares 4,641 4,263
Adjustments to derive denominator for diluted net income
(loss) per share:
Conversion of 14% junior subordinated convertible notes
into 440,000 common shares 150 -
Issuance of 125,000 shares of restricted common stock 37 -
-------- --------
Denominator for diluted net income (loss) per share--
adjusted weighted average common shares 4,828 4,263
======== ========
Per share data:
Basic and diluted net income (loss) per common share
before extraordinary item $ 0.05 $ (0.06)
Extraordinary gain, net of applicable income taxes - 0.32
-------- --------
Basic and diluted net income available to common
stockholders $ 0.05 $ 0.26
======== ========
-10-
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7 -- SEGMENTS
Information relating to the Company's operating segments and its
corporate office for the three-month periods ended March 31, 2000 and 1999, is
summarized below (dollar amounts in thousands):
THREE MONTHS ENDED
MARCH 31
--------------------------------
2000 1999
--------- ---------
NET SALES:
Rubber Group $ 28,971 $ 24,960
Metals Group 8,695 9,536
--------- ---------
Total net sales $ 37,666 $ 34,496
========= =========
INCOME (LOSS) FROM OPERATIONS:
Rubber Group $ 3,719 $ 3,316
Metals Group (297) (695)
Corporate office (609) (595)
--------- ---------
Total income from operations $ 2,813 $ 2,026
========= =========
ASSETS:
Rubber Group $ 74,331 $ 68,198
Metals Group 37,225 38,656
Corporate office 2,494 2,554
--------- ---------
Total assets $ 114,050 $ 109,408
========= =========
DEPRECIATION AND AMORTIZATION (1):
Rubber Group $ 2,039 $ 1,964
Metals Group 1,210 1,106
Corporate office 19 5
--------- ---------
Total depreciation and amortization $ 3,268 $ 3,075
========= =========
CAPITAL EXPENDITURES:
Rubber Group $ 4,067 $ 1,024
Metals Group 2,083 815
Corporate office 1 49
--------- ---------
Total capital expenditures $ 6,151 $ 1,888
========= =========
(1) Does not include amortization of deferred
financing expenses, which totaled $49,000
and $50,000 during the three-month periods
ended March 31, 2000 and 1999, respectively.
-11-
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8 -- EXTRAORDINARY ITEM
During the three-month period ended March 31, 1999, the Company
repurchased $3,808,000 principal amount of its 12 3/4% senior subordinated notes
for $1,980,000 plus accrued interest. The Company recorded an extraordinary
gain, net of applicable income taxes, of $1,371,000 as a result of the
repurchase.
NOTE 9 -- PLANT CLOSURE
In May 1999, the Company closed a 21,000 square foot diecasting
facility in Manchester, New York. For the three-month period ended March 31,
1999, the Manchester facility had net sales of $448,000 and a loss from
operations of $119,000.
-12-
15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Some of our statements in this section are "forward-looking statements,"
as that term is defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements usually can be identified by our use of words like
"believes," "expects," "may," "will," "should," "anticipates," "estimates,"
"projects," or the negative thereof. They may be used when we discuss strategy,
which typically involves risk and uncertainty, and they generally are based upon
projections and estimates rather than historical facts and events.
Forward-looking statements are subject to a number of risks and
uncertainties that could cause our actual results or performance to be
materially different from the future results or performance expressed in or
implied by those statements. Some of those risks and uncertainties are:
- increases and decreases in business awarded to us by our
customers,
- unanticipated price reductions for our products as a result of
competition,
- unanticipated operating results and cash flows,
- increases or decreases in capital expenditures,
- changes in economic conditions,
- strength or weakness in the North American automotive market,
- changes in the competitive environment,
- changes in interest rates,
- the possibility of product warranty claims,
- labor interruptions at our facilities or at our customers'
facilities, and
- our inability to obtain additional borrowings or to refinance our
existing indebtedness.
Because we have substantial borrowings for a company our size and
because those borrowings require us to make substantial interest and principal
payments, any negative event may have a greater adverse effect upon us than it
would have on a company of the same size that has less debt.
Our results of operations for any particular period are not necessarily
indicative of the results to be expected for any one or more succeeding periods.
Consequently, the use of forward-looking statements should not be regarded as a
representation that any of the projections or estimates expressed in or implied
by those forward-looking statements will be realized, and actual results may
vary materially. We cannot assure you that any of the forward-looking statements
contained herein will prove to be accurate.
All forward-looking statements are expressly qualified by the
discussion above.
-13-
16
RESULTS OF OPERATIONS-- FIRST QUARTER OF 2000 VERSUS FIRST QUARTER OF 1999
The following table sets forth our consolidated operating results for
the first quarters of 2000 and 1999 (dollar amounts in thousands):
THREE MONTHS ENDED MARCH 31
-----------------------------------------
2000 1999
------------------ ------------------
Net sales $ 37,666 100.0% $ 34,496 100.0%
Cost of sales 31,834 84.5 29,404 85.2
--------- ------- --------- -------
Gross profit 5,832 15.5 5,092 14.8
Selling and administrative expenses 3,019 8.0 3,066 8.9
--------- ------- --------- -------
Income from operations 2,813 7.5 2,026 5.9
Add back depreciation and
amortization (1) 3,268 8.6 3,075 8.9
--------- ------- --------- -------
Earnings before interest, taxes,
depreciation, and amortization (2) $ 6,081 16.1% $ 5,101 14.8%
========= ======= ========= =======
Net cash provided by operating
activities (3) $ 8,202 21.8% $ 514 1.4%
========= ======= ========= =======
(1) Does not include amortization of deferred financing expenses,
which totaled $49,000 and $50,000 during the first quarters of
2000 and 1999, respectively, and which is included in interest
expense in the consolidated financial statements.
(2) Earnings before interest, taxes, depreciation, and amortization,
which is commonly referred to as EBITDA, is not a measure of
performance under accounting principles generally accepted in the
United States and should not be used as a substitute for income
from operations, net income, net cash provided by operating
activities, or other operating or cash flow statement data
prepared in accordance with generally accepted accounting
principles. We have presented data related to EBITDA because we
believe that EBITDA is used by investors as supplemental
information to evaluate the operating performance of a business,
including its ability to incur and to service debt. In addition,
our definition of EBITDA may not be the same as the definition of
EBITDA used by other companies.
(3) The calculation of net cash provided by operating activities is
detailed in the consolidated statement of cash flows that is part
of our consolidated financial statements in Part I, Item 1.
The discussion that follows sets forth our analysis of the
operating results of the Rubber Group, the Metals Group, and the corporate
office.
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RUBBER GROUP
The Rubber Group manufactures silicone and organic rubber components
primarily for automotive industry customers. Any material reduction in the level
of activity in the automotive industry may have a material adverse effect on the
results of operations of the Rubber Group and on our company taken as a whole.
The following table sets forth the operating results of the Rubber
Group for the first quarters of 2000 and 1999 (dollar amounts in thousands):
THREE MONTHS ENDED MARCH 31
-----------------------------------------
2000 1999
------------------ ------------------
Net sales $ 28,971 100.0% $ 24,960 100.0%
Cost of sales 23,581 81.4 20,022 80.2
--------- ------ --------- ------
Gross profit 5,390 18.6 4,938 19.8
Selling and administrative expenses 1,671 5.8 1,622 6.5
--------- ------ --------- ------
Income from operations 3,719 12.8 3,316 13.3
Add back depreciation and
amortization 2,039 7.1 1,964 7.9
--------- ------ --------- ------
Earnings before interest, taxes,
depreciation, and amortization $ 5,758 19.9% $ 5,280 21.2%
========= ====== ======== ======
During the first quarter of 2000, net sales of the Rubber Group
increased by $4,011,000, or 16.1%, compared to the first quarter of 1999. This
increase was primarily due to increased unit sales of connector seals for
automotive wiring systems, and, to a lesser extent, increased unit sales of
insulators for automotive ignition wire sets, components for medical devices,
and tooling, offset, in part, by price reductions on certain automotive
components.
During the first quarter of 2000, income from operations totaled
$3,719,000, an increase of $403,000, or 12.2%, compared to the first quarter of
1999. Cost of sales as a percentage of net sales increased during the first
quarter of 2000 to 81.4% of net sales from 80.2% of net sales during the first
quarter of 1999, primarily due to higher employee benefit costs and increased
expenses for maintenance of tooling and equipment.
Selling and administrative expenses as a percentage of net sales
decreased during the first quarter of 2000 compared to the first quarter of
1999, primarily because those expenses are partially fixed in nature.
During the first quarter of 2000, EBITDA increased to $5,758,000, an
increase of $478,000, or 9.1%, compared to the first quarter of 1999.
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METALS GROUP
The Metals Group manufactures aluminum die castings and machines
aluminum, brass, and steel components, primarily for automotive industry
customers. Any material reduction in the level of activity in the automotive
industry may have a material adverse effect on the results of operations of the
Metals Group and on our company taken as a whole.
Since 1997, we have been implementing a strategy designed to improve
the profitability and growth potential of the Metals Group by eliminating the
production of a large number of diverse, short-run components and by building
productive capacity to manufacture higher-volume components for customers in
target markets. The repositioning has entailed a shift to a new customer base
and has required that our manufacturing facilities be structured and equipped to
run high-volume parts efficiently and accurately. The repositioning of the
Metals Group has caused us to experience underabsorption of fixed overhead
resulting from the cut-back in short-run business. Additionally, the Metals
Group has incurred expenses for the implementation of improved quality systems,
expenses related to moving equipment and upgrading buildings, costs related to
establishing relationships with major new customers, and costs resulting from
inefficiencies experienced during the rollout of new products. These factors and
the fact that new high-volume business is limited at this stage of the
transition adversely affected the results of operations of the Metals Group
during the first quarters of 2000 and 1999.
In May 1999, we closed a 21,000 square foot diecasting facility in
Manchester, New York. For the three-month period ended March 31, 1999, the
Manchester facility had net sales of $448,000 and a loss from operations of
$119,000.
The following table sets forth the operating results of the Metals
Group for the first quarters of 2000 and 1999 (dollar amounts in thousands):
THREE MONTHS ENDED MARCH 31
---------------------------------------------------
2000 1999
---------------------- ----------------------
Net sales $ 8,695 100.0% $ 9,536 100.0%
Cost of sales 8,253 94.9 9,382 98.4
------- ------- ------- -------
Gross profit 442 5.1 154 1.6
Selling and administrative expenses 739 8.5 849 8.9
------- ------- ------- -------
Loss from operations (297) (3.4) (695) (7.3)
Add back depreciation and
amortization 1,210 13.9 1,106 11.6
------- ------- ------- -------
Earnings before interest, taxes
depreciation, and amortization $ 913 10.5% $ 411 4.3%
======= ======= ======= =======
During the first quarter of 2000, net sales of the Metals Group
decreased by $841,000, or 8.8%, compared to the first quarter of 1999. This
decrease resulted primarily from a reduction in low-volume business, the
shutdown of the Manchester facility, and reduced sales of tooling.
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The Metals Group recorded a loss from operations of $297,000 during the
first quarter of 2000, compared to a loss from operations of $695,000 during the
first quarter of 1999. Cost of sales as a percentage of net sales decreased from
98.4% during the first quarter of 1999 to 94.9% during the first quarter of 2000
due to a reduction in material cost as a percentage of net sales, which resulted
primarily from reduced sales of tooling, and reduced maintenance expenses.
Selling and administrative expenses as a percentage of net sales
decreased during the first quarter of 2000 compared to the first quarter of
1999, primarily due to reductions in fees for professional services and
recruiting and relocation expenses.
During the first quarter of 2000, EBITDA increased to $913,000, an
increase of $502,000, or 122.1%, compared to the first quarter of 1999.
CORPORATE OFFICE
Expenses of the corporate office, which are not included in the
operating results for the Rubber Group or the Metals Group, represent
administrative expenses incurred primarily at our New York and Cleveland
offices. Expenses of the corporate office are consolidated with the selling and
administrative expenses of the Rubber Group and the Metals Group in our
consolidated financial statements.
The following table sets forth the operating results of the corporate
office for the first quarters of 2000 and 1999 (dollar amounts in thousands):
THREE MONTHS ENDED
MARCH 31
-------------------------
2000 1999
---- ----
Loss from operations (609) (595)
Add back: depreciation and
amortization 19 5
---- ----
Earnings before interest, taxes,
depreciation, and amortization (590) (590)
==== ====
INTEREST EXPENSE
During the first quarters of 2000 and 1999, interest expense totaled
$2,437,000 and $2,342,000, respectively. Interest expense includes amortization
of deferred financing expenses, which totaled $49,000, and
$50,000, during the first quarters of 2000 and 1999, respectively. The increase
in interest expense was primarily the result of increases in average interest
rates on our floating rate debt.
INCOME TAXES
During the first quarter of 2000, the provision for income taxes was
$113,000, which consisted of estimated federal alternative minimum tax and state
income tax.
At March 31, 2000, and December 31, 1999, our net deferred income tax
assets were fully offset by a valuation allowance.
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LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
During the first quarter of 2000, our operating activities provided
$8,202,000 of cash.
Accounts payable increased by $4,637,000. This increase was caused
primarily by an increase of $3,192,000 in payables related to the purchase of
plant, equipment, and customer-owned tooling and increased purchases of raw
materials and supplies to support higher levels of production.
INVESTING ACTIVITIES
During the first quarter of 2000, our investing activities used
$6,155,000 of cash, primarily for capital expenditures. Capital expenditures
attributable to the Rubber Group, the Metals Group, and the corporate office
totaled $4,067,000, $2,083,000, and $1,000, respectively. Capital expenditures
for the first quarter of 2000 included $5,338,000 for equipment and $813,000 for
land and buildings. We presently project that capital expenditures will total
approximately $20,900,000 during 2000, including $18,200,000 for equipment and
$2,700,000 for land and buildings. Capital expenditures for the Rubber Group and
the Metals Group are projected to total approximately $14,300,000 and
$6,600,000, respectively. At March 31, 2000, we had outstanding commitments to
purchase plant and equipment of $6,103,000, of which $4,695,000 is expected to
be expended during 2000, and $1,408,000 is expected to be expended in 2001. (See
also "Liquidity," in Part I, Item 2.)
FINANCING ACTIVITIES
During the first quarter of 2000, our financing activities used
$1,978,000 of cash, primarily to make schedule monthly payments on our secured,
amortizing term loans. Also, on February 1, 2000, our 14% junior subordinated
convertible notes, in the aggregate principal amount of $1,000,000, were
converted into 440,000 shares of common stock. During April 2000, we obtained
two new secured, amortizing term loans in the aggregate amount of $1,340,000,
which refinanced loans outstanding under the revolving line of credit.
LIQUIDITY
We finance our operations with cash from operating activities and a
variety of financing arrangements, including term loans and loans under our
revolving line of credit. Our ability to borrow under our revolving line of
credit, which expires on April 1, 2002, is subject to covenant compliance and
certain availability formulas based on the levels of our accounts receivable and
inventories. At May 11, 2000, availability under our revolving line of credit
totaled $2,285,000 before outstanding checks of $1,078,000 were deducted. We
have two equipment lines of credit that are used to finance, through five-year
or seven-year term loans, all or a portion of the purchase price of certain
equipment. As of March 31, 2000, we had unused availability under our equipment
lines of credit of $2,600,000.
We have substantial borrowings for a company our size. Because those
borrowings require us to make substantial interest and principal payments, any
negative event may have a greater adverse effect upon us than if we had less
debt. During the first quarter of 2000, our aggregate indebtedness, excluding
accounts payable, decreased by $2,915,000. During 2000, interest payments are
projected to be approximately $10,100,000 and principal payments on secured,
amortizing term loans are projected to total approximately $8,800,000.
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21
We had a net working capital deficit of $80,589,000 at March 31, 2000,
compared to a net working capital deficit of $78,957,000 at December 31, 1999.
Substantially all of our assets are pledged as collateral for certain
of our indebtedness. Certain of our financing arrangements contain covenants
with respect to the maintenance of minimum levels of working capital, net worth,
and cash flow coverage and other covenants that place certain restrictions on
our business and operations, including covenants relating to the incurrence or
assumption of additional debt, the level of past-due trade accounts payable, the
sale of all or substantially all of our assets, the purchase of plant and
equipment, the purchase of common stock, the redemption of preferred stock, and
the payment of cash dividends. In addition, substantially all of our financing
agreements include cross-default provisions.
From time to time, certain of the financial covenants contained in the
Company's various loan agreements have been amended or waived in order to
maintain or otherwise ensure current or future compliance by the Company.
During 2000, $36,629,000 of our indebtedness has matured or is
scheduled to mature. This indebtedness is comprised of the following:
- the 12 3/4% senior subordinated notes, in the outstanding
principal amount of $27,412,000, which matured on February 1,
2000;
- the 12% secured term note, in the outstanding principal amount of
$1,370,000, which matures on July 31, 2000;
- the 10 1/2% senior note, in the outstanding principal amount of
$7,500,000, which matures on August 1, 2000; and
- the 14% junior subordinated nonconvertible notes, in the
outstanding principal amount of $347,000, which mature on August
1, 2000.
We are currently engaged in a consent solicitation which commenced on
December 28, 1999, seeking consents of the holders of our 12 3/4% senior
subordinated notes to an extension of the maturity date of the 12 3/4% senior
subordinated notes to February 1, 2003. If the consent solicitation is
completed, we will pay a 1% fee to consenting holders and increase the interest
rate payable on the notes to the rates set forth in the following table:
PERIOD INTEREST RATE
February 1, 2000 - January 31, 2001 13 1/2%
February 1, 2001 - July 31, 2001 15 1/2%
August 1, 2001 - January 31, 2002 16%
February 1, 2002 - July 31, 2002 17%
August 1, 2002 - January 31, 2003 18%
We are in default in respect of the 12 3/4% senior subordinated notes
because we did not make the payments of principal, in the amount of $27,412,000,
and interest, in the amount of $1,748,000, on the 12 3/4% senior subordinated
notes that were due on February 1, 2000. We have extended the consent
solicitation through June 15, 2000, and we plan to amend the consent
solicitation to seek waivers of the events of default that occurred as a result
of our failure to make the payments of principal and interest.
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We can give no assurance that we will be able to obtain the necessary consents
to extend the maturity date of the 12 3/4% senior subordinated notes.
In order to enable us to continue our operations, notwithstanding the
default in respect of our 12 3/4% senior subordinated notes, we have obtained
the following agreements from the holders of substantially all of our other
indebtedness:
- The lenders extending loans under our revolving line of credit
and the lenders providing secured, amortizing term loans have
waived the cross-default provisions with respect to the default
relating to the 12 3/4% senior subordinated notes through August
1, 2000, and have amended certain covenants to eliminate defaults
that would otherwise have occurred because all of our secured,
amortizing term loans were classified as current liabilities in
our consolidated financial statements.
- The holder of our 12% secured term note, in the outstanding
principal amount of $1,370,000, has extended the maturity date of
that note from January 31, 2000, to July 31, 2000; that note has
no cross-default provision with respect to the default relating
to the 12 3/4% senior subordinated notes.
- The holder of our 10 1/2% senior note, in the outstanding
principal amount of $7,500,000, has extended the maturity date of
that note from February 1, 2000, to August 1, 2000, and has
waived the cross-default provisions with respect to the default
relating to the 12 3/4% senior subordinated notes.
- The holder of our 14% junior subordinated nonconvertible notes,
in the outstanding principal amount of $347,000, has extended the
maturity date of those notes from May 1, 2000, to August 1, 2000,
has deferred the interest payments on those notes that were due
on February 1 and May 1, 2000, to August 1, 2000, and has waived
the cross-default provisions with respect to the default relating
to the 12 3/4% senior subordinated notes.
- The holders of our 14% junior subordinated convertible notes,
which were outstanding on December 31, 1999, in the aggregate
principal amount of $1,000,000, have deferred the interest
payments on those notes that were due on February 1, 2000, to
August 1, 2000, and have waived the cross-default provision with
respect to the default relating to the 12 3/4% senior
subordinated notes. On February 1, 2000, the junior subordinated
convertible notes were converted into 440,000 shares of our
common stock.
Since January 31, 2000, we have made all scheduled payments of interest
and principal on all of our indebtedness, other than the 12 3/4% senior
subordinated notes, and we have continued to borrow under our revolving line of
credit and our equipment lines of credit.
To date, we have been unable to obtain the necessary consents to the
extension of our 12 3/4% senior subordinated notes. If we are unable to
restructure or refinance all of our matured or maturing indebtedness, we may be
forced to seek relief from our creditors under the Federal bankruptcy code. Any
proceeding under the Federal bankruptcy code could have a material adverse
effect on our results of operations and financial position.
We currently believe, although we can give you no assurance, that our
cash flow from operations, borrowings available to us under existing financing
arrangements, and additional borrowings that we believe we will be able to
obtain should be adequate to meet our projected working capital and
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debt service requirements (excluding amounts needed to refinance the $36,629,000
of indebtedness that has matured or is scheduled to mature during 2000) and to
fund projected capital expenditures through December 31, 2000. We estimate that,
in addition to our cash flow from operations and borrowings under our revolving
line of credit, we will require approximately $11,500,000 of new borrowings
during 2000 to meet our working capital and debt service requirements (excluding
amounts needed to refinance the $36,629,000 of indebtedness that has matured or
is scheduled to mature during 2000) and to fund projected capital expenditures.
If cash flows from operations or availability under existing and new
financing arrangements fall below expectations, we may be forced to delay
anticipated capital expenditures, reduce operating expenses, extend accounts
payable balances beyond terms that we believe are customary in the industries in
which we operate, and/or consider other alternatives designed to improve our
liquidity. Certain of these events or actions could have a material adverse
effect on our results of operations and financial position. In addition, if we
are unable to refinance, renegotiate, or extend the indebtedness that has
matured or is scheduled to mature during the second quarter of 2000, we may be
forced to seek relief from our creditors under the Federal bankruptcy code. Any
proceeding under the Federal bankruptcy code could have a material adverse
effect on our results of operations and financial position.
RECENTLY ISSUED ACCOUNTING STANDARDS
ACCOUNTING FOR PRE-PRODUCTION COSTS RELATED TO LONG-TERM SUPPLY
ARRANGEMENTS
In September 1999, the Emerging Issues Task Force of the Financial
Accounting Standards Board issued Abstract Number 99-5, "Accounting for
Pre-Production Costs Related to Long-Term Supply Arrangements" (Abstract 99-5),
which is effective for design and development costs incurred after December 31,
1999. Abstract 99-5 requires that, in the absence of a contractual guarantee of
reimbursement, design and development costs incurred with respect to products to
be sold under long-term supply arrangements are to be expensed as incurred.
Costs incurred to design and develop molds, dies, and other tools that are owned
by the customer and are to be used by the supplier to manufacture products for
sale under long-term supply arrangements are to be capitalized as long as the
supplier is performing under the supply arrangement. The adoption of Abstract
99-5 during the first quarter of 2000 did not have a significant effect on our
results of operations or financial position.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not invest in or trade market risk sensitive instruments. We also
do not have any foreign operations or any significant amount of foreign sales
and, therefore, we believe that our exposure to foreign currency exchange rate
risk is minimal.
At March 31, 2000, we had $52,135,000 of outstanding floating-rate debt
at interest rates equal to either LIBOR plus 2 1/2%, LIBOR plus 2 3/4%, or the
prime rate. Currently we do not purchase derivative financial instruments to
hedge or reduce our interest rate risk. As a result, changes in either LIBOR or
the prime rate affect the rates at which we borrow funds under these agreements.
At March 31, 2000, we had outstanding $43,135,000 of fixed rate
long-term debt with a weighted-average interest rate of 11.76%, of which
$36,629,000 has matured or is scheduled to mature during 2000. If we are able to
refinance or extend the matured or maturing debt, it may be at interest rates
that are significantly higher than the weighted-average interest rate on the
matured or maturing debt. In connection with our solicitation of consents to
extend the maturity date of our $27,412,000 of outstanding 12 3/4% senior
subordinated notes from February 1, 2000, to February 1, 2003, we have offered
to increase the interest rates thereon to the rates set forth in the following
table:
PERIOD INTEREST RATE
February 1, 2000 - January 31, 2001 13 1/2%
February 1, 2001 - July 31, 2001 15 1/2%
August 1, 2001 - January 31, 2002 16%
February 1, 2002 - July 31, 2002 17%
August 1, 2002 - January 31, 2003 18%
If the consent solicitation is successful and all of the senior
subordinated notes remain outstanding during 2000, 2001, and 2002, we will pay
$188,000, $765,000, and $1,256,000 more interest during those respective periods
than if the interest rate were to remain at 12 3/4%. For more information
regarding the status of the consent solicitation, you should refer to
Management's Discussion and Analysis of Financial Condition and Results of
Operations - "Liquidity," in Part I, Item 2, and Note 1 to the consolidated
financial statements in Part I, Item 1.
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PART II. OTHER INFORMATION
ITEM 3. DEFAULTS ON SENIOR SECURITIES
(a) We are in default in respect of our 12 3/4% senior subordinated notes
because we did not make the payments of principal, in the amount of $27,412,000,
and interest, in the amount of $1,748,000, that were due on February 1, 2000.
For more information regarding the default in respect of the 12 3/4% senior
subordinated notes, refer to "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity" which is incorporated
by reference herein.
(b) We did not pay dividends in the aggregate amount of $7,000 on our $8
Cumulative Convertible Preferred Stock, Series B, for the quarterly period ended
March 15, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following exhibits are filed herewith:
10-1 Amendment No. 9 to Credit Facility and Security Agreement
dated as of December 31, 1999, among LPC, LRGI, and Bank
One, NA
10-2 New Equipment Term Note dated April 24, 2000, between
Lexington Precision Corporation ("LPC") and Congress
Financial Corporation ("Congress")
10-3 New Equipment Term Note dated April 24, 2000, between
Lexington Rubber Group, Inc. ("LRGI") and Congress
10-4 Agreement relating to 14% Junior Subordinated Notes dated
April 30, 2000, between LPC and Michael A. Lubin
10-5 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated April 30, 2000, among LPC,
Michael A. Lubin, and Warren Delano
10-6 Note Amendment No. 2 to Note dated as of April 30, 2000,
between LPC and Tri-Links Investment Trust, as successor to
Nomura Holding America, Inc.
10-7 Fourth Amendment Agreement dated April 30, 2000, between
LRGI and Paul H. Pennell
10-8 Agreement dated as of April 30, 2000, among LPC, LRGI, and
Congress
10-9 Agreement dated as of April 30, 2000, between LPC and The
CIT Group/Equipment Financing, Inc.
10-10 Agreement dated as of April 30, 2000, among LPC, LRGI, and
Bank One, NA
10-11 Amendment to Financing Agreements dated May 12, 2000,
between LPC and Congress
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10-12 Amendment to Financing Agreements dated May 12, 2000,
between LRGI and Congress
27-1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
On January 11, 2000, we filed a report on Form 8-K, which reported
that, on December 28, 1999, we issued a press release announcing that we had
commenced a consent solicitation with respect to our 12 3/4% senior subordinated
notes due February 1, 2000, and disclosed the terms of the consent solicitation.
On February 4, 2000, we filed a report on Form 8-K, which reported
that (1) on January 27, 2000, we issued a press release announcing that we had
extended the expiration date of the consent solicitation with respect to our 12
3/4% senior subordinated notes due February 1, 2000, from January 27, 2000, to
January 31, 2000, (2) on January 31, 2000, we issued a press release announcing
that we had extended the expiration date of the consent solicitation to February
15, 2000, and (3) on February 1, 2000, we issued a press release announcing that
we had not made the payments of principal, in the amount of $27,412,000, and
interest, in the amount of $1,748,000, on our 12 3/4% senior subordinated notes,
which matured on February 1, 2000, and that we had entered into certain
agreements with all of our secured and unsecured lenders, other than the holders
of the 12 3/4% senior subordinated notes, and disclosed the terms of those
agreements.
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LEXINGTON PRECISION CORPORATION
FORM 10-Q
MARCH 31, 2000
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.
LEXINGTON PRECISION CORPORATION
(Registrant)
May 11, 2000 By: /s/ Michael A. Lubin
- ------------ ---------------------
Date Michael A. Lubin
Chairman of the Board
May 11, 2000 By: /s/ Warren Delano
- ------------ ------------------
Date Warren Delano
President
May 11, 2000 By: /s/ Dennis J. Welhouse
- ------------ -----------------------
Date Dennis J. Welhouse
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Exhibit Location
------ ------- --------
10-1 Amendment No. 9 to Credit Facility and Filed with this Form 10-Q
Security Agreement dated as of December 31,
1999, among LPC, LRGI, and Bank One, NA
10-2 New Equipment Note dated April 24, 2000, Filed with this Form 10-Q
between Lexington Precision Corporation
("LPC") and Congress Financial Corporation
("Congress")
10-3 New Equipment Note dated April 24, 2000, Filed with this Form 10-Q
between Lexington Rubber Group, Inc.
("LRGI") and Congress
10-4 Agreement relating to 14% Junior Subordinated Filed with this Form 10-Q
Notes dated April 30, 2000, between LPC
and Michael A. Lubin
10-5 Agreement relating to Junior Subordinated Filed with this Form 10-Q
Convertible Increasing Rate Note dated
April 30, 2000, among LPC, Michael A. Lubin,
and Warren Delano
10-6 Note Amendment No. 2 to Note dated as of Filed with this Form 10-Q
April 30, 2000, between LPC and Tri-Links
Investment Trust, as successor to Nomura
Holding America, Inc.
10-7 Fourth Amendment Agreement dated April 30, Filed with this Form 10-Q
2000, between LRGI and Paul H. Pennell
10-8 Agreement dated as of April 30, 2000, among Filed with this Form 10-Q
LPC, LRGI, and Congress
10-9 Agreement dated as of April 30, 2000, between Filed with this Form 10-Q
LPC and CIT Group/Equipment Financing, Inc.
10-10 Agreement dated as of April 30, 2000, among Filed with this Form 10-Q
LPC, LRGI, and Bank One, NA
10-11 Amendment to Financing Agreements dated Filed with this Form 10-Q
May 12, 2000, between LPC and Congress
10-12 Amendment to Financing Agreements dated Filed with this Form 10-Q
May 12, 2000, between LRGI and Congress
27-1 Financial Data Schedule Filed with this Form 10-Q