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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 2002
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 OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 319-4657
---------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.25 PAR VALUE
(TITLE OF CLASS)
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Act). [ ]
The aggregate market value of the registrant's Common Stock, $0.25 par value per
share, held by non-affiliates of the registrant, as of June 30, 2002, was
approximately $1,979,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement to be issued in connection with its
2003 Annual Meeting of Stockholders (the "Proxy Statement") are incorporated by
reference into Part III. Only those portions of the Proxy Statement which are
specifically incorporated by reference are deemed filed as part of this report
on Form 10-K.
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LEXINGTON PRECISION CORPORATION
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business...................................................................................... 1
Item 2. Properties.................................................................................... 5
Item 3. Legal Proceedings............................................................................. 5
Item 4. Submission of Matters to a Vote of Security Holders........................................... 5
PART II
Item 5. Market for Our Common Stock and Other Stockholder Matters..................................... 6
Item 6. Selected Financial Data....................................................................... 7
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 8
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.................................... 21
Item 8. Financial Statements and Supplementary Data.................................................. 23
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......... 52
PART III
Item 10. Directors and Executive Officers of the Registrant........................................... 53
Item 11. Executive Compensation....................................................................... 53
Item 12. Security Ownership of Certain Beneficial Owners and Management............................... 53
Item 13. Certain Relationships and Related Transactions............................................... 53
Item 14. Controls and Procedures...................................................................... 53
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................. 54
PART I
ITEM 1. BUSINESS
We were incorporated in Delaware in 1966. Substantially all of our
business is conducted in the continental United States. Through our two
operating segments, the Rubber Group and the Metals Group, we manufacture rubber
and metal components that are sold to other manufacturers.
In 2002, net sales of the Rubber Group totaled $98,880,000, or
79.2% of our consolidated net sales. The Rubber Group manufactures connector
seals used in automotive wiring systems and insulators used in automotive
ignition wire sets. We believe that we are the leading manufacturer of these
types of components in North America. During 2002, sales to automotive customers
represented 87.3% of the total net sales of the Rubber Group. The Rubber Group
also manufactures molded rubber components used in a variety of medical devices,
such as drug delivery systems and syringes.
In 2002, net sales of the Metals Group totaled $25,972,000, or
20.8% of our consolidated net sales. The Metals Group manufactures aluminum die
castings and machines components from aluminum, brass, and steel bars. During
2002, sales to automotive customers represented 86.3% of the total net sales of
the Metals Group.
Financial data and other information about our operating segments
can be found in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Part II, Item 7, and in Note 10, "Segments," of our
consolidated financial statements in Part II, Item 8.
PRINCIPAL END-USES FOR OUR PRODUCTS
The following table summarizes our net sales during 2002, 2001,
and 2000, by the type of product in which our components were utilized (dollar
amounts in thousands):
YEARS ENDED DECEMBER 31
-------------------------------------------------------------------------
2002 2001 2000
---------------------- ---------------------- -----------------------
Automobiles and light trucks $108,752 87.1% $107,818 85.4% $119,572 86.4%
Medical devices 11,705 9.4 9,732 7.7 8,694 6.3
Other 4,395 3.5 8,652 6.9 10,036 7.3
-------- -------- -------- -------- -------- --------
$124,852 100.0% $126,202 100.0% $138,302 100.0%
======== ======== ======== ======== ======== ========
-1-
The following table summarizes net sales of the Rubber Group and the
Metals Group during 2002, 2001, and 2000, by the type of product in which each
segment's components were utilized (dollar amounts in thousands):
YEARS ENDED DECEMBER 31
-----------------------------------------------------------------
2002 2001 2000
------------------- ------------------- -------------------
Rubber Group:
Automobiles and light trucks $ 86,345 87.3% $ 81,493 89.0% $ 93,073 91.1%
Medical devices 11,705 11.9 9,732 10.7 8,694 8.5
Other 830 0.8 307 0.3 404 0.4
-------- -------- -------- -------- -------- --------
$ 98,880 100.0% $ 91,532 100.0% $102,171 100.0%
======== ======== ======== ======== ======== ========
Metals Group:
Automobiles and light trucks $ 22,407 86.3% $ 26,325 75.9% $ 26,499 73.3%
Industrial equipment 1,104 4.2 4,631 13.4 5,097 14.1
Other 2,461 9.5 3,714 10.7 4,535 12.6
-------- -------- -------- -------- -------- --------
$ 25,972 100.0% $ 34,670 100.0% $ 36,131 100.0%
======== ======== ======== ======== ======== ========
MAJOR CUSTOMERS
Our largest customer is Delphi Corporation. During 2002, 2001, and 2000,
our net sales to Delphi totaled $25,181,000, $24,388,000, and $28,782,000, which
represented 20.2%, 19.3%, and 20.8%, respectively, of our net sales. Net sales
of rubber components to Delphi during 2002, 2001, and 2000 represented 25.1%,
25.8%, and 27.3%, respectively, of the Rubber Group's net sales. No other
customer accounted for more than 10% of our net sales during 2002, 2001, or
2000. Loss of a significant amount of business from Delphi or any of our other
large customers would have a material adverse effect on our operations if that
business were not substantially replaced by additional business from existing or
new customers. For information about our contractual arrangements with Delphi
refer to "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Part II, Item 7.
MARKETING AND SALES
Our marketing and sales effort is carried out by management personnel
and account managers.
RAW MATERIALS
Our principal raw materials are silicone and organic rubber compounds,
aluminum ingots, and aluminum, steel, and brass bars. Each of our principal raw
materials has been readily available at competitive prices from several major
manufacturers and we anticipate that those materials will continue to be readily
available at competitive prices for the foreseeable future.
PATENTS AND TRADEMARKS
We do not currently hold any patents, trademarks, or licenses that we
consider to be material to the success or operation of our business.
-2-
SEASONAL VARIATIONS
Our business generally is not subject to significant seasonal variation;
however, we generally experience decreased sales during the third calendar
quarter of each year due to shutdowns of our customers' plants in July as a
result of vacations and model-year changeovers, and during the fourth calendar
quarter of each year due to shutdowns of our customers' plants for vacations and
holidays in December.
BACKLOG
Sales of our products are made pursuant to a variety of arrangements and
practices. Our customers regularly revise release schedules to correspond to
their own production requirements. We believe that the aggregate value of
scheduled releases outstanding on our books at any time cannot be considered
firm backlog because those releases may be revised at any time. We also believe
that increases or decreases in the aggregate value of scheduled releases are not
necessarily indicative of any trend in our net sales.
COMPETITION
The markets we compete in are characterized by intense price competition
and increasing customer requirements for quality and service. We compete for
business primarily on the basis of quality, service, engineering capability, and
price. We encounter substantial competition from a large number of manufacturing
companies. Our competitors range from small and medium-sized specialized firms
to large diversified companies, many of which have resources substantially
greater than ours. Additionally, some of our customers have internal
manufacturing operations that compete with us.
RESEARCH AND DEVELOPMENT
During 2002, 2001, and 2000, we spent approximately $924,000, $890,000,
and $850,000, respectively, on our research and development activities. Our
research and development activities include the following:
- developing materials that cost less and perform better,
- developing new, more efficient manufacturing processes,
- improving quality and reducing scrap,
- designing components to be easier to manufacture, and
- designing components to perform better in their final
application.
PRODUCT LIABILITY RISKS
We are subject to potential product liability risks inherent in the
manufacture and sale of components. Although there are no claims against us that
we believe will have a material adverse effect upon our business, financial
position, or results of operations, we cannot assure you that any existing or
future claims will not have a material adverse effect on us. Although we
maintain insurance coverage for product liability, we cannot assure you that, in
the event of a claim, the insurance coverage would apply or that, in the event
of an award arising out of a claim, the amount of any applicable insurance
coverage would be sufficient to satisfy the award.
-3-
ENVIRONMENTAL COMPLIANCE
Our operations are subject to numerous laws and regulations controlling
the discharge of materials into the environment or otherwise relating to the
protection of the environment. Although we make expenditures relating to the
protection of the environment, compliance with environmental laws and
regulations has not had a significant impact on our capital spending
requirements, earnings, or competitive position. We cannot assure you that
changes in environmental laws and regulations, or in the interpretation or
enforcement of those laws and regulations, will not require material
expenditures in the future.
EMPLOYEES
We believe that our employee relations are generally good. The following
table shows the number of our employees at December 31, 2002, 2001, and 2000.
DECEMBER 31
--------------------------------
2002 2001 2000
---- ---- ----
Rubber Group 876 807 869
Metals Group 260 299 416
Corporate Office 7 7 5
----- ----- -----
1,143 1,113 1,290
===== ===== =====
At December 31, 2002 and 2001, employees at the Rubber Group included
301 and 263 hourly workers at two plant locations that were subject to
collective bargaining agreements, which expire on December 11, 2004 and October
19, 2004, respectively. At December 31, 2000, employees at the Rubber Group
included 66 hourly workers at one location that were subject to a collective
bargaining agreement.
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
The Company does not currently maintain an internet website and
therefore we do not make available through a website our annual report on Form
10-K, our quarterly reports on Form 10-Q or our current reports on Form 8-K and
all amendments to these reports. We will furnish free of charge, upon written
request to the President of the Company at 767 Third Avenue, New York, NY 10017,
a paper copy of the reports that we file with the Commission. The reports that
have been filed electronically with the Securities and Exchange Commission (the
Commission) are also accessible on the Commission's website at
http://www.sec.gov.
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ITEM 2. PROPERTIES
The following table shows the location and square footage of our
manufacturing facilities at December 31, 2002:
SQUARE
LOCATION FEET
- ----------------------------------- ----------
Rubber Group:
Jasper, Georgia 100,000
LaGrange, Georgia 85,000
North Canton, Ohio 42,000
Vienna, Ohio 64,000
Rock Hill, South Carolina 63,000
-------
Total Rubber Group 354,000
-------
Metals Group:
Casa Grande, Arizona 64,000
Lakewood, New York 103,000
Rochester, New York 60,000
-------
Total Metals Group 227,000
-------
Total Company 581,000
=======
All of our facilities, except those in Jasper, Georgia, and Rochester,
New York, are encumbered by mortgages. All of our plants are general
manufacturing facilities suitable for our operations. We believe that our
facilities are adequate to meet our current operating needs. We closed our
manufacturing facility in Casa Grande, Arizona in 2002. For more information
about the closing, refer to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Part II, Item 7.
We occupy, in the aggregate, 6,000 square feet of office space for
corporate executive and administrative purposes. We lease an office in
Cleveland, Ohio, and reimburse an affiliate for the cost of leasing an office in
New York City.
ITEM 3. LEGAL PROCEEDINGS
We are subject to various claims and legal proceedings covering a wide
range of matters that arise in the ordinary course of our business activities.
It is our policy to record accruals for claims and legal proceedings when we
consider a loss to be probable and we can reasonably estimate the amount of that
loss. The various actions to which we are or may in the future be a party are at
various stages of completion. Although we cannot assure you as to the outcome of
existing or potential litigation, we currently believe, based upon the
information currently available to us, that the outcome of those actions will
not have a material adverse effect upon our financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matters to a vote of security holders during the
fourth quarter of 2002.
-5-
PART II
ITEM 5. MARKET FOR OUR COMMON STOCK AND OTHER STOCKHOLDER MATTERS
Our common stock is traded in the over-the-counter market. At March 22,
2003, there were approximately 786 holders of record of our common stock.
Trading in shares of our common stock is limited. During 2002 and 2001, trading
data for our stock was available on the OTC Bulletin Board operated by the
National Association of Securities Dealers, Inc. (NASD). The following table
sets forth prices at which transactions in our common stock were reported on the
OTC Bulletin Board:
YEARS ENDED DECEMBER 31
-----------------------------------------------
2002 2001
---------------------- ----------------------
HIGH LOW HIGH LOW
---------- --------- ---------- ---------
First quarter $0.32 $0.31 $0.88 $0.75
Second quarter $0.50 $0.32 $0.70 $0.40
Third quarter $0.40 $0.32 $0.68 $0.45
Fourth quarter $0.53 $0.35 $0.50 $0.30
We are not able to determine whether retail markups, markdowns, or
commissions were included in the above prices. We believe that eight brokerage
firms currently make a market in our common stock, although both bid and asked
quotations may be limited.
We have not paid dividends on our common stock since 1979, and we have
no current plans to reinstate the payment of dividends. In addition, we are
currently restricted from paying cash dividends on our common stock and on our
series B preferred stock and from redeeming any shares of series B preferred
stock because a payment default exists on our senior subordinated notes. We are
currently in arrears with respect to the payment of thirteen quarterly dividends
aggregating $86,000 on the series B preferred stock and with respect to the
redemption of 1,350 shares of series B preferred stock that we did not redeem on
each of November 30, 2002, 2001, and 2000 at an aggregate redemption price of
$270,000. Because we are in arrears with respect to more than five dividend
payments on the series B preferred stock, the holders of the series B preferred
stock are entitled to elect two persons to serve on our Board of Directors until
the annual meeting of stockholders following the date on which all such
arrearages have been paid in full.
-6-
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data,
including the reconciliation of income from operations to earnings before
interest, taxes, depreciation, and amortization (EBITDA), for each of the years
in the five-year period ended December 31, 2002 (dollar amounts in thousands,
except per share amounts). The financial data has been derived from our
consolidated financial statements, which have been audited by Ernst & Young LLP,
independent certified public accountants. This information is not necessarily
indicative of the results of future operations and should be read in conjunction
with, and is qualified by, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Part II, Item 7, and our consolidated
financial statements in Part II, Item 8.
YEARS ENDED DECEMBER 31
----------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
SUMMARY OF OPERATIONS:
Net sales $ 124,852 $ 126,202 $ 138,302 $ 134,372 $ 120,598
Cost of sales 110,718 109,055 120,726 111,598 102,394
--------- --------- --------- --------- ---------
Gross profit 14,134 17,147 17,576 22,774 18,204
Selling and administrative expenses 8,658 9,911 10,923 12,153 11,006
Plant closure costs 609 -- -- -- --
Impairment of long-lived assets -- 2,047 -- 335 --
Income from insurance company
demutualization -- (1,274) -- -- --
--------- --------- --------- --------- ---------
Income from operations 4,867 6,463 6,653 10,286 7,198
Interest expense (7,220) (8,534) (9,913) (9,632) (9,772)
Gain on sale of securities 248 -- -- -- --
Income tax provision (benefit) (538) 80 (161) 133 132
Extraordinary gain on repurchase of
debt, net of applicable income taxes -- -- -- 1,542 --
--------- --------- --------- --------- ---------
Net income (loss) $ (1,567) $ (2,151) $ (3,099) $ 2,063 $ (2,706)
========= ========= ========= ========= =========
Net income (loss) per diluted common
share $ (0.32) $ (0.45) $ (0.65) $ 0.46 $ (0.65)
========= ========= ========= ========= =========
OTHER DATA:
Net cash provided by operating activities $ 16,231 $ 17,561 $ 22,136 $ 5,624 $ 8,013
========= ========= ========= ========= =========
Income from operations $ 4,867 $ 6,463 $ 6,653 $ 10,286 $ 7,198
Add back: depreciation and amortization
included in income from operations 11,865 13,103 13,490 12,728 11,451
--------- --------- --------- --------- ---------
EBITDA (1) $ 16,732 $ 19,566 $ 20,143 $ 23,014 $ 18,649
========= ========= ========= ========= =========
Capital expenditures $ 5,230 $ 6,408 $ 13,936 $ 10,328 $ 14,877
DECEMBER 31
----------------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
FINANCIAL POSITION:
Current assets $ 32,991 $ 34,146 $ 36,968 $ 37,503 $ 32,198
Current liabilities 101,061 107,074 117,147 116,460 40,228
--------- --------- --------- --------- ---------
Net working capital deficit $ (68,070) $ (72,928) $ (80,179) $ (78,957) $ (8,030)
========= ========= ========= ========= =========
Total assets $ 92,145 $ 99,877 $ 110,289 $ 111,327 $ 108,325
Long-term debt, excluding current portion $ 1,117 $ 2,000 $ 104 $ 116 $ 74,953
Series B preferred stock $ 330 $ 330 $ 330 $ 330 $ 375
Total stockholders' deficit $ (13,199) $ (11,659) $ (9,536) $ (7,463) $ (9,451)
(1) EBITDA is not a measure of performance under accounting principles
generally accepted in the United States and should not be considered in
isolation or used as a substitute for income from operations, net
-7-
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 EBITDA here and elsewhere in this
Form 10-K because this measure is used by investors, as well as our own
management, to evaluate the operating performance of our business,
including its ability to incur and to service debt. Our definition of
EBITDA may not be the same as the definition of EBITDA used by other
companies.
ITEM 7. 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 and the credit and securities markets,
- the possibility of product warranty or other liability claims,
- labor interruptions at our facilities or at our customers'
facilities,
- the impact on our operations of the defaults on our indebtedness,
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 upon 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.
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.
-8-
RESULTS OF OPERATIONS -- COMPARISON OF 2002, 2001, AND 2000
The following table sets forth our consolidated operating results for
2002, 2001, and 2000 and the reconciliation of income from operations to
earnings before interest, taxes, depreciation, and amortization (EBITDA) (dollar
amounts in thousands):
YEARS ENDED DECEMBER 31
------------------------------------------------------------
2002 2001 2000
----------------- ------------------ ------------------
Net sales $ 124,852 100.0% $ 126,202 100.0% $ 138,302 100.0%
Cost of sales 110,718 88.7 109,055 86.4 120,726 87.3
--------- ------ --------- ------- --------- -------
Gross profit 14,134 11.3 17,147 13.6 17,576 12.7
Selling and administrative expenses 8,658 6.9 9,911 7.9 10,923 7.9
Plant closure costs (1) 609 0.5 -- -- -- --
Impairment of long-lived assets (1) -- -- 2,047 1.6 -- --
Income from insurance company demutualization (2) -- -- (1,274) (1.0) -- --
--------- ------ --------- ------- --------- -------
Income from operations 4,867 3.9 6,463 5.1 6,653 4.8
Add back: depreciation and amortization (3) 11,865 9.5 13,103 10.4 13,490 9.8
--------- ------ --------- ------- --------- -------
EBITDA (4) $ 16,732 13.4% $ 19,566 15.5% $ 20,143 14.6%
========= ====== ========= ======= ========= =======
Net cash provided by operating activities (5) $ 16,231 13.0% $ 17,561 13.9% $ 22,136 16.0%
========= ====== ========= ======= ========= =======
(1) In 2002, we closed our metal machining facility in Casa Grande, Arizona. As
of December 31, 2001, we recorded a provision of $2,047,000 to write down
the value of certain of the facility's assets to fair value, and, during
2002, we incurred costs of $609,000 to close the facility. For more
information, refer to the discussion of the results of operations of the
Metals Group in this section.
(2) During December 2001, we received 53,103 shares of common stock of
Principal Financial Group, Inc. (Principal) as a result of the
demutualization of Principal Mutual Holding Company, a mutual insurance
company and predecessor to Principal. For more information, refer to the
discussion of the results of operations of the Corporate Office in this
section.
(3) Does not include amortization of deferred financing expenses, which totaled
$440,000, $192,000, and $216,000, in 2002, 2001, and 2000, respectively,
and which is included in interest expense in the consolidated financial
statements.
(4) EBITDA, is not a measure of performance under accounting principles
generally accepted in the United States and should not be considered in
isolation or 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 EBITDA here and elsewhere in this Form 10-K
because this measure is used by investors, as well as our own management,
to evaluate the operating performance of our business, including its
ability to incur and to service debt. Our definition of EBITDA may not be
the same as the definition of EBITDA used by other companies.
-9-
(5) 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 II, Item 8.
Our net sales for 2002 were $124,852,000, compared to net sales of
$126,202,000 for 2001, a decrease of $1,350,000, or 1.1%. The decrease in net
sales was principally a result of an $8,195,000 reduction in sales to former
customers of our Arizona facility, which we closed in 2002. EBITDA for 2002 was
$16,732,000, or 13.4% of net sales, compared to EBITDA of $19,566,000, or 15.5%
of net sales, for 2001.
The discussion that follows sets forth our analysis of the operating
results of the Rubber Group, the Metals Group, and the Corporate Office for the
years ended December 31, 2002, 2001, and 2000.
RUBBER GROUP
The Rubber Group manufactures silicone and organic rubber components
primarily for automotive industry customers. During 2002, 2001, and 2000, sales
to automotive industry customers represented 87.3%, 89.0%, and 91.1%,
respectively, of the Rubber Group's net sales. Any significant reduction in the
level of activity in the automotive industry could have a material adverse
effect on the results of operations of the Rubber Group and on our company as a
whole
The three largest customers of the Rubber Group accounted for 45.6%,
46.7%, and 49.1% of the Rubber Group's net sales during 2002, 2001, and 2000,
respectively. Loss of a significant amount of business from any of the Rubber
Group's large customers would have a material adverse effect upon the Rubber
Group and upon our company as a whole if that business were not substantially
replaced by additional business from existing or new customers.
The following table sets forth the operating results of the Rubber Group
for 2002, 2001, and 2000 and the reconciliation of the Rubber Group's income
from operations to its EBITDA (dollar amounts in thousands):
YEARS ENDED DECEMBER 31
---------------------------------------------------------------------
2002 2001 2000
------------------- ------------------- --------------------
Net sales $ 98,880 100.0% $ 91,532 100.0% $102,171 100.0%
Cost of sales 83,503 84.4 75,949 83.0 85,750 83.9
-------- -------- -------- -------- -------- --------
Gross profit 15,377 15.6 15,583 17.0 16,421 16.1
Selling and administrative expenses 4,612 4.7 5,194 5.7 5,937 5.8
-------- -------- -------- -------- -------- --------
Income from operations 10,765 10.9 10,389 11.3 10,484 10.3
Add back: depreciation and amortization 7,786 7.9 8,484 9.3 8,554 8.3
-------- -------- -------- -------- -------- --------
EBITDA $ 18,551 18.8% $ 18,873 20.6% $ 19,038 18.6%
======== ======== ======== ======== ======== ========
During 2002, net sales of the Rubber Group increased by $7,348,000, or
8.0%, compared to 2001. The increase in net sales was primarily due to increased
unit sales of automotive components, which resulted primarily from an increase
in the level of activity in the automotive industry and an increase in
-10-
our share of business at certain existing customers and, to a lesser extent,
increased sales of components for medical devices. The increase in net sales
during 2002 was offset, in part, by price reductions on certain automotive
components.
Delphi Corporation is the Rubber Group's largest customer. During 2002,
2001, and 2000, the Rubber Group's net sales to Delphi totaled $24,837,000,
$23,660,000, and $27,908,000, respectively, which represented 25.1%, 25.8%, and
27.3%, respectively, of the Rubber Group's net sales. Substantially all of the
Rubber Group's sales to Delphi are connector seals for automotive wiring systems
that are sold pursuant to an agreement that expires on December 31, 2004. Under
the terms of that agreement, we provided Delphi with significant price
reductions effective July 16, 2001, with further price reductions in each of the
years covered by the agreement. The price reductions granted to Delphi on July
16, 2001, reduced net sales during 2002 and 2001 by $4,366,000 and $2,588,000,
respectively.
Cost of sales as a percentage of net sales increased during 2002 to
84.4% of net sales from 83.0% of net sales during 2001, primarily because of (1)
increased costs for sorting and repair of components, which were caused by
quality problems in manufacturing a certain type of connector seal, (2)
underabsorption of overhead at our captive tool-making operation, which was
caused by a reduction in customer tooling orders for a number of months, (3)
delays in completing the cost reduction plans that were initiated in connection
with the price reductions granted to Delphi on July 16, 2001, (4) increased
workers' compensation expense, and (5) increased maintenance expenses. The
increases in these components of cost of sales were partially offset by lower
depreciation expense.
Selling and administrative expenses as a percentage of net sales
decreased during 2002 compared to 2001, primarily because of reduced European
selling expenses, the elimination of goodwill amortization as required by
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," which we adopted on January 1, 2002, and a reduction in bad
debt expense. These decreases were partially offset by an increase in management
incentive compensation.
During 2002, income from operations was $10,765,000, an increase of
$376,000, or 3.6%, compared to 2001. EBITDA for 2002 was $18,551,000, or 18.8%
of net sales, compared to $18,873,000, or 20.6% of net sales, for 2001.
During 2001, net sales of the Rubber Group decreased by $10,639,000, or
10.4%, compared to 2000. This decrease was primarily due to decreased unit sales
of insulators for automotive ignition wire sets, which resulted primarily from a
reduction in the level of activity in the automotive industry, and price
reductions on certain automotive components, offset, in part, by increased unit
sales of components for medical devices.
Cost of sales as a percentage of net sales decreased during 2001 to
83.0% of net sales from 83.9% of net sales during 2000, primarily because our
insulators division improved operating efficiencies and reduced scrap and
because we did not incur fees of a consulting firm that was retained during
2000, at a cost of $1,013,000.
Selling and administrative expenses as a percentage of net sales
decreased during 2001 compared to 2000, primarily because wages and employee
benefits, selling and office supply expenses, and depreciation expense all
decreased when compared to 2000. These increases were offset, in part, by a
$163,000 increase in bad debt expense related to the filing of a chapter 11
bankruptcy petition by one of the Rubber Group's customers.
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During 2001, income from operations was $10,389,000, a decrease of
$95,000, or 0.9%, compared to 2000. EBITDA for 2001 was $18,873,000, or 20.6% of
net sales, compared to $19,038,000, or 18.6% of net sales, for 2000.
METALS GROUP
The Metals Group manufactures aluminum die castings and machines
components from aluminum, brass, and steel bars. During 2002, 2001, and 2000,
net sales to automotive industry customers represented 86.3%, 75.9%, and 73.3%,
respectively, of the Metals Group's net sales. Any material reduction in the
level of activity in the automotive industry could have a material adverse
effect on the results of operations of the Metals Group and on our company as a
whole.
The three largest customers of the Metals Group accounted for 57.3%,
45.9%, and 50.9% of the Metals Group's net sales during 2002, 2001, and 2000,
respectively. Loss of a significant amount of business from any of the Metals
Group's large customers would have a material adverse effect upon the Metals
Group and upon our company as a whole if that business were not substantially
replaced by additional business from existing or new customers.
The following table sets forth the operating results of the Metals Group
for 2002, 2001, and 2000 and the reconciliation of the Metals Group's loss from
operations to its EBITDA (dollar amounts in thousands):
YEARS ENDED DECEMBER 31
----------------------------------------------------------------
2002 2001 2000
----------------- ----------------- ------------------
Net sales $ 25,972 100.0% $ 34,670 100.0% $ 36,131 100.0%
Cost of sales 27,215 104.8 33,106 95.5 34,976 96.8
-------- ------- --------- ------- --------- --------
Gross profit (1,243) (4.8) 1,564 4.5 1,155 3.2
Selling and administrative expenses 1,582 6.1 2,587 7.5 2,741 7.6
Plant closure costs 609 2.3 - - - -
Impairment of long-lived assets - - 2,047 5.9 - -
-------- ------- --------- ------- --------- --------
Loss from operations (3,434) (13.2) (3,070) (8.9) (1,586) (4.4)
Add back: depreciation and amortization 4,026 15.5 4,531 13.1 4,849 13.4
-------- ------- --------- ------- --------- --------
EBITDA $ 592 2.3% $ 1,461 4.2% $ 3,263 9.0%
======== ======= ========= ======= ========= ========
During the fourth quarter of 2001, we were notified that the Metals
Group's largest customer would cease purchasing components from the Metals Group
after December 31, 2001. During 2001, the customer purchased $5,937,000 of
machined metal components that were manufactured primarily at the Metals Group's
Arizona facility. As a result of the reduction in sales at the Arizona facility,
we closed the facility in 2002 and recorded, as of December 31, 2001, an
impairment charge of $2,047,000 to reduce to fair market value the carrying
value of the Arizona facility's land and building and certain metal
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machining equipment idled by the loss of this business. The idled assets are
currently classified in property, plant, and equipment and are being depreciated
at the rate of $17,000 per month. These assets will be reclassified as assets
held for sale if and when they meet the criteria set forth in Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (FAS 144), which we adopted on January 1, 2002.
At December 31, 2002, the book value of the assets remaining to be disposed of
at the Arizona facility totaled $1,937,000, which includes $1,737,000 for the
land and building and $200,000 for equipment. The cost to hold the building and
the remaining equipment is currently projected to total approximately $465,000
per annum, which includes $265,000 for building maintenance, property taxes,
insurance, and security services and $200,000 for depreciation expense.
The following table sets forth certain operating data of the Arizona
facility for 2002 and 2001 and the reconciliation of the Arizona facility's
income from operations to its EBITDA (dollar amounts in thousands):
YEAR ENDED
DECEMBER 31
------------------------
2002 2001
Net sales $ 332 $ 8,954
======= =======
Operating loss before nonrecurring charges $(1,290) $ (523)
------- -------
Nonrecurring charges:
Plant closure costs:
Severance and other employee termination costs 246 --
Asset relocation costs 209 --
Other costs 154 --
------- -------
Subtotal 609 --
Impairment of long-lived assets -- 2,047
------- -------
609 2,047
------- -------
Operating loss (1,899) (2,570)
Add back: depreciation and amortization 527 1,658
------- -------
EBITDA $(1,372) $ (912)
======= =======
During 2002, net sales of the Metals Group decreased by $8,698,000, or
25.1%, compared to 2001. The decrease resulted primarily from an $8,195,000
reduction in sales to former customers of the Arizona facility.
During 2002, operating losses other than plant closure costs at the
Arizona facility resulted primarily from the underabsorption of operating costs
due to minimal sales and poor operating efficiencies while the facility was
being shut down, and, to a lesser extent, from the cost of maintaining,
insuring, protecting, and depreciating the facility and the remaining equipment.
Cost of sales as a percentage of net sales increased during 2002 to
104.8% of net sales from 95.5% of net sales during 2001, primarily due to
minimal sales and operating inefficiencies incurred at the Arizona facility
while the facility was being closed, excess costs and production inefficiencies
caused by the transfer of certain business and equipment from Arizona to the
Rochester, New York, facility, the cost
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of maintaining, insuring, protecting, and depreciating the Arizona facility and
the remaining equipment, reduced efficiencies on certain high-volume automotive
components due to increased customer quality standards, and an adverse change in
product mix caused by the start-up of new products and the loss of certain
mature components.
Selling and administrative expenses as a percentage of net sales
decreased during 2002 compared to 2001, primarily because of the closing of the
Arizona facility, a reduction in bad debt expense, and reduced depreciation
expense.
During 2002, the loss from operations was $3,434,000, compared to a loss
from operations of $3,070,000 during 2001. Excluding the $609,000 of plant
closure costs, the loss from operations during 2002 was $2,825,000. Excluding
the entire loss incurred at the Arizona facility during 2002, the loss from
operations during 2002 was $1,535,000. EBITDA was $592,000 or 2.3% of net sales,
compared to $1,461,000, or 4.2% of net sales, for 2001.
During 2001, net sales of the Metals Group decreased by $1,461,000, or
4.0%, compared to 2000. This decrease resulted primarily from a planned
reduction in low-volume business during 2001.
Cost of sales as a percentage of net sales decreased during 2001 to
95.5% of net sales from 96.8% of net sales during 2000, primarily due to
improved operating efficiencies, reduced indirect labor costs, reduced operating
and repair costs, and lower depreciation and amortization expenses, offset, in
part, by startup costs on certain new products and a provision of $362,000 for
inventory losses related to the loss of the Group's largest customer, discussed
above.
As discussed previously, during February 2002, we decided to close the
Arizona facility. In accordance with the provisions of FAS 144, we recorded, as
of December 31, 2001, an impairment charge of $2,047,000 to reduce to fair
market value the carrying value of the land and building at the Arizona facility
and certain metal machining equipment currently idled by the loss of this
business. Our estimate of fair market value was based on appraisals of the
assets.
Selling and administrative expenses as a percentage of net sales
decreased during 2001 compared to 2000, primarily due to reduced employee
recruitment and relocation expenses, lower office expenses, and reduced
consulting fees related to the installation of new computer systems, which were
offset, in part, by a $220,000 increase in bad debt expense related to the
filing of chapter 11 bankruptcy petitions by two of the Metals Group's
customers.
During 2001, the loss from operations was $3,070,000 compared to a loss
from operations of $1,586,000 during 2000. Excluding the provision for asset
impairment, the loss from operations during 2001 was $1,023,000. EBITDA was
$1,461,000, or 4.2% of net sales, compared to $3,263,000, or 9.0% of net sales,
in 2000.
CORPORATE OFFICE
Corporate Office expenses, which are not included in the operating
results of the Rubber Group or the Metals Group, represent administrative
expenses incurred primarily at our New York and Cleveland offices. Corporate
Office expenses are consolidated with the selling and administrative expenses of
the Rubber Group and the Metals Group in our consolidated financial statements.
-14-
The following table sets forth the operating results of the Corporate
Office for 2002, 2001, and 2000 and the reconciliation of the corporate office's
loss from operations to its EBITDA (dollar amounts in thousands):
YEARS ENDED DECEMBER 31
-------------------------------------
2002 2001 2000
---- ---- ----
Administrative expenses $ 2,464 $ 2,130 $ 2,245
Income from insurance company
demutualization - (1,274) -
--------- -------- --------
Loss from operations (2,464) (856) (2,245)
Add back: depreciation and
amortization (1) 53 88 87
--------- -------- --------
EBITDA $ (2,411) $ (768) $ (2,158)
========= ======== ========
(1) Excludes amortization of deferred financing expenses, which totaled
$440,000, $192,000, and $216,000, in 2002, 2001, and 2000, respectively,
and which is included in interest expense in the consolidated financial
statements.
During December of 2001, a mutual insurance company, Principal Mutual
Holding Company, underwent a demutualization and converted to a stock company,
Principal Financial Group, Inc., (Principal). We were a member of the mutual
insurance company as a policyholder and received 53,103 shares of common stock
of Principal as a result of the demutualization. In accordance with Financial
Accounting Standards Board Emerging Issue Task Force Bulletin 99-4, "Accounting
for Stock Received from the Demutualization of a Mutual Insurance Company," we
recorded these shares at fair value by using the published closing price for the
stock on December 31, 2001.
Excluding the income from the insurance company demutualization,
Corporate Office expenses increased by 15.7% in 2002, primarily because of
increased legal and professional fees, increased directors' fees and expenses,
and higher premiums for directors and officers insurance and fiduciary liability
insurance.
INTEREST EXPENSE
During 2002, 2001, and 2000, interest expense totaled $7,220,000,
$8,534,000, and $9,913,000, respectively. During 2002, 2001, and 2000, interest
expense included amortization of deferred financing expenses of $440,000,
$192,000, and $216,000, respectively. The decrease in interest expense in 2002
was caused primarily by lower rates of interest on our floating rate
indebtedness and a reduction in the amount of borrowings outstanding, offset, in
part, by fees paid during 2002 to the lenders providing loans under our
revolving line of credit to extend the expiration date of the revolving line of
credit beyond April 1, 2002.
-15-
GAIN ON SALE OF SECURITIES
During the fourth quarter of 2002, we sold the 53,103 shares of
Principal common stock that we received during the fourth quarter of 2001 and
realized a pre-tax gain of $248,000 on the sale.
INCOME TAX PROVISION (BENEFIT)
The income tax benefit recorded during 2002 results from a refund of
alternative minimum taxes, currently estimated to be approximately $643,000,
which were paid in earlier periods, offset, in part, by state income tax
expense. During 2002, we received $148,000 of the alternative minimum tax refund
and we currently anticipate that the balance of $495,000 will be refunded to us
during 2003.
During 2001, the income tax provision consisted of state income taxes.
During 2000, the income tax benefit consisted primarily of the refund of
federal income tax expensed in a prior period.
For additional information concerning income taxes and related matters,
see Note 9 to our consolidated financial statements in Part II, Item 8.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
During 2002, our operating activities provided $16,231,000 of cash.
Accounts receivable decreased by $2,342,000. The decrease was caused primarily
by a decrease in product sales during November and December of 2002 compared to
November and December of 2001, a reduction in accounts receivable for tooling,
and the payment by one customer of approximately $450,000 of invoices in advance
of their scheduled due dates. Accounts payable decreased by $1,279,000. During
2002, $167,000 of accounts payable were converted into unsecured, amortizing
term notes and $246,000 of accounts payable were eliminated because we returned
a piece of equipment purchased in 2001. Accrued interest expense increased by
$4,137,000, reflecting the accrual of interest on our senior, unsecured note,
our senior subordinated notes, and our junior subordinated notes.
INVESTING ACTIVITIES
During 2002, our investing activities used $3,104,000 of cash, primarily
for capital expenditures. We presently project that capital expenditures will
total approximately $7,264,000 in 2003, primarily for equipment. Capital
expenditures for the Rubber Group, the Metals Group, and the Corporate Office,
are projected to total $6,196,000, $1,046,000, and $22,000, respectively, during
2003. We project that approximately $807,000 will be expended to rebuild or
replace existing equipment, and approximately $6,457,000 will be expended to
effect cost reductions and expand productive capacity.
At December 31, 2002, we had outstanding commitments to purchase
equipment aggregating $1,019,000.
FINANCING ACTIVITIES
During 2002, our financing activities used $11,563,000 of cash,
primarily as a result of $10,194,000 of payments on our secured and unsecured,
amortizing term notes and a $750,000 reduction in borrowings under our revolving
line of credit.
-16-
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 is subject to certain availability formulas based on the levels of our
accounts receivable and inventories. Our revolving line of credit is currently
scheduled to expire on April 4, 2003. At March 25, 2003 the aggregate principal
amount outstanding under our revolving line of credit was $19,477,000. We intend
to replace the revolving line of credit with a revolving line of credit provided
by a new lender or to negotiate an extension of the April 4, 2003, expiration
date with our existing lender. We can give no assurance, however, that we will
be able to replace or extend the revolving line of credit on favorable terms or
at all. At December 31, 2002, availability under our revolving line of credit
totaled $2,094,000 before outstanding checks of $971,000 were deducted.
Substantially all of our assets are pledged as collateral for various of
our borrowings. A number of our financing arrangements contain covenants with
respect to the maintenance of minimum levels of 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 arrangements
include cross-default provisions.
From time to time, our lenders have agreed to waive, amend, or eliminate
certain of the financial covenants contained in our various financing agreements
in order to maintain or otherwise ensure our current or future compliance.
During 2002, covenants requiring minimum levels of working capital were
eliminated from three of our financing agreements, and, during 2003,
noncompliance with the net worth covenant under one of our loan agreements was
waived. In the event that we are not in compliance with any of our covenants in
the future and our lenders do not agree to amend, waive, or eliminate those
covenants, the lenders would have the right to declare the borrowings under
their financing agreements to be due and payable.
We are in default in the payment of our senior subordinated notes and
our senior, unsecured note, which have outstanding principal amounts of
$27,412,000 and $7,500,000, respectively, and accrued interest, as of December
31, 2002, of $11,941,000 and $703,000, respectively. In addition, our revolving
line of credit is currently scheduled to expire on April 4, 2003, we have
$643,000 of unsecured, amortizing term notes and $347,000 of junior subordinated
notes that are scheduled to mature during 2003, and we have $11,122,000 of
scheduled principal payments on our secured, amortizing term notes during 2003.
We estimate that, at existing contractual and market rates, the interest expense
on all of our debt during 2003 will be approximately $7,000,000. Interest paid
during 2002, 2001, and 2000 totaled $2,663,000, $4,838,000, and $6,214,000.
We had a net working capital deficit of $68,070,000 at December 31,
2002, compared to a net working capital deficit of $72,928,000 at December 31,
2001. The net working capital deficit exists primarily because the majority of
our debt is in default or subject to short-term waivers of cross defaults. As
discussed in more detail below, we are in the process of negotiating extensions
or refinancings of all of our matured and maturing debt, although there can be
no assurance that we will be successful in this effort. If our debt were
refinanced on the terms that are set forth below, we estimate that our monthly
interest expense would be approximately $670,000.
We have been in default on our 12 3/4% senior subordinated notes since
February 1, 2000, when 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 that
date. On July 10, 2002, we commenced an exchange offer for the
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12 3/4% senior subordinated notes. The exchange offer was amended on March 7,
2003. If the amended exchange offer is consummated, at least 99% of the 12 3/4%
senior subordinated notes will be exchanged for new 11 1/2% senior subordinated
notes due August 1, 2007, in a principal amount equal to the principal amount of
the 12 3/4% senior subordinated notes being exchanged plus the accrued and
unpaid interest thereon through the day before the date the amended exchange
offer is consummated, which accrued interest will total $470.000 for each $1,000
principal amount of 12 3/4% senior subordinated notes, assuming the amended
exchange offer is consummated on April 8, 2003. Interest on the 11 1/2% senior
subordinated notes will accrue from the date the amended exchange offer is
consummated, and will be payable on each May 1, August 1, November 1, and
February 1. Each $1,000 principal amount of 11 1/2% senior subordinated notes
will be issued together with warrants to purchase ten shares of common stock at
a price of $3.50 per share at any time from January 1, 2004, through August 1,
2007. If the amended exchange offer is consummated, we will pay a participation
fee of 3% of the principal amount of 12 3/4% senior subordinated notes that are
exchanged. Our senior, secured lenders and the holders of the junior
subordinated notes have waived the cross-default provisions with respect to the
default on the senior subordinated notes through April 4, 2003, and May 1, 2003,
respectively. The current expiration date of the amended exchange offer is
April 3, 2003. One of the conditions to the consummation of the amended exchange
offer is the tender for exchange of at least 99% of the senior subordinated
notes. As of March 26, 2003, we have received tenders of $27,209,000 principal
amount of 12 3/4% senior subordinated notes, or 99.3% of the notes. However,
there are additional conditions to the consummation of the amended exchange
offer that may not be satisfied by the expiration date.
We have reached an agreement with the holders of our 14% junior
subordinated notes on the terms of a restructuring of those notes. If the
restructuring is completed, we will exchange new 12 1/2% junior subordinated
notes due November 1, 2007, for the existing 14% junior subordinated notes. The
accrued interest on the 14% junior subordinated notes for the period November 1,
1999, through the day before the restructuring is consummated, which will total
$202,000, assuming the restructuring is consummated on April 8, 2003, will be
converted into shares of our common stock at a price of $2.27 per share.
Interest on the 12 1/2% junior subordinated notes will accrue from the date the
restructuring is consummated, and will be payable on each May 1, August 1,
November 1, and February 1. Each $1,000 principal amount of 12 1/2% junior
subordinated notes will be issued with warrants to purchase ten shares of common
stock at a price of $3.50 per share at any time from January 1, 2004, through
November 1, 2007. If the restructuring is completed, we will also pay a
participation fee of 3% of the principal amount of 14% junior subordinated
notes.
On April 30, 2002, the maturity date of the senior, unsecured note, the
holder of the note rejected our proposal for a restructuring and our request for
a three-month extension. We did not pay the principal, in the amount of
$7,500,000, and interest, in the amount of $78,000, on April 30, 2002, and we
have not made any payments on the senior, unsecured note since that date. If the
other aspects of the financial restructuring program are completed, we have
proposed to repurchase the senior, unsecured note for $5,550,000 in cash plus
interest on that amount from November 1, 2002, to the date the amended exchange
offer is consummated, at the prime rate. Our senior, secured lenders and the
holders of the junior subordinated notes have waived the cross-default
provisions with respect to the default on the senior, unsecured note through
April 4, 2003, and May 1, 2003, respectively.
We are currently in discussions with several lenders regarding a
refinancing of our senior, secured credit facilities.
We can give no assurance that we will be able to consummate the amended
exchange offer, restructure the senior, unsecured note, or refinance our senior,
secured financing arrangements on satisfactory terms. If we are unable to do so,
we may file a petition under the federal bankruptcy code in order to carry out a
debt restructuring plan on terms substantially similar to those discussed above
or on
-18-
other terms. Although we believe that such a restructuring could be accomplished
without material disruption to our operations, any such proceeding involves
considerable risks and uncertainties and could have a material adverse effect on
our business, results of operations, cash flows, and financial position. The
consolidated financial statements do not include any adjustments to the amounts
or classifications of assets or liabilities to reflect those risks.
INFLATION
We generally attempt to pass through to our customers fluctuations in
raw material costs; however, many of our customers will not accept price
increases from us to compensate for increases in labor and overhead expenses
that result from inflation. To offset inflationary increases in costs that we
cannot pass through to our customers and to maintain or improve our operating
margins, we attempt to improve our production efficiencies and manufacturing
processes.
ENVIRONMENTAL MATTERS
We have been named from time to time as one of numerous potentially
responsible parties or third-party defendants under applicable environmental
laws for restoration costs at waste-disposal sites, and as a defendant or
potential defendant in various other environmental law matters. It is our policy
to record accruals for matters of these types when we deem a loss to be probable
and we can reasonably estimate the amount of that loss. The various actions to
which we are or may in the future be a party are at various stages of
completion; although we can give you no assurance as to the outcome of existing
or potential environmental litigation, based upon the information currently
available to us, we believe that the outcome thereof will not have a material
adverse effect upon our financial position. You will find information concerning
certain other commitments and contingencies affecting us in Note 12 to our
consolidated financial statements in Part II, Item 8.
QUARTERLY FINANCIAL DATA
For quarterly financial data please refer to Note 15 to our consolidated
financial statements in Part II, Item 8.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our accounting policies are more fully described in Note 1, "Summary of
Significant Accounting Policies," to our consolidated financial statements in
Part II, Item 8. As set forth in Note 1, the preparation of our consolidated
financial statements in conformity with generally accepted accounting principles
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent liabilities at the date
of the consolidated financial statements, and the reported amount of revenues
and expenses during each reporting period. The accuracy of our estimates is
subject to an inherent amount of risk. Future events and their impact on our
results of operations or financial position cannot be determined with absolute
certainty. Although we strive to use our best judgment in making estimates,
actual results could vary materially from our estimates.
As a manufacturer of rubber and metal components, we believe that the
most critical accounting policies inherent in the preparation of our
consolidated financial statements include (1) estimates of the recoverability of
accounts receivable and inventory, (2) estimates used to determine liabilities
related to environmental matters, litigation, income taxes, restructuring
reserves, and other contingencies, and (3) the valuation of long-lived assets.
-19-
The process of making estimates takes into account historical
experience, specific facts and circumstances, present and projected economic and
business conditions, projected unit volumes, projected operating efficiencies,
and any other relevant factors and assumptions. The valuation of long-lived
assets is based on such factors as estimated, undiscounted, future cash flows
before interest and taxes over relatively long periods of time and estimates of
the fair values of business units and assets. Although the Company believes that
its estimates of future cash flows are reasonable, changes in assumptions
regarding future unit volumes, pricing, operating efficiencies, material, labor,
and overhead costs, and other factors could significantly affect the Company's
cash flow projections. We reevaluate our estimates whenever factors relevant to
the making of a critical estimate change.
Our consolidated financial statements have been prepared assuming that
we will continue as a going concern. There exists substantial doubt about our
ability to continue as a going concern and our ability to realize our assets and
discharge our liabilities in the ordinary course of business. Our consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or to amounts and
classification of liabilities that may be necessary if we are unable to continue
as a going concern.
RECENTLY ISSUED ACCOUNTING STANDARDS
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 142, GOODWILL AND OTHER
INTANGIBLE ASSETS
In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets" (FAS 142), which is effective for all fiscal periods beginning after
December 15, 2001. FAS 142 prohibits the amortization of goodwill, but requires
goodwill to be tested annually for impairment in accordance with the
requirements set forth in FAS 142. Other intangible assets will continue to be
amortized over their useful lives. We adopted the provisions of FAS 142 on
January 1, 2002. The elimination of goodwill amortization pursuant to FAS 142
increased the income from operations of the Rubber Group and the Metals Group by
$284,000 and $32,000, respectively, during 2002. Since adoption, the Company has
determined that its goodwill is not impaired.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 144, ACCOUNTING FOR THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (FAS 144), which is effective for
all fiscal periods beginning after December 15, 2001. FAS 144 sets forth the
conditions under which an impairment charge should be recognized for long-lived
assets to be held and used, except for goodwill, assets to be disposed of by
sale, and assets to be disposed of other than by sale. Our adoption of FAS 144
on January 1, 2002, did not affect our results of operations or financial
position during 2002.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 146, ACCOUNTING FOR COST
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
In June 2002, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities" (FAS 146), which is effective for all
restructuring, exit, or disposal activities that are initiated after December
31, 2002. FAS 146 requires that a liability for a cost associated with an exit
or disposal activity be recognized when the liability is incurred rather than at
the date on which an entity commits to a plan to restructure, exit, or dispose
of a facility. This statement applies, but is not limited to, termination
benefits provided to current employees, contract termination costs, and costs
incurred to consolidate facilities or
-20-
relocate employees. We currently do not believe that our adoption of FAS 146
during the first quarter of 2003 will adversely affect our results of operations
or financial position, although FAS 146 may change the time period in which we
recognize costs associated with future restructuring, exit, or disposal
activities.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 148, ACCOUNTING FOR
STOCK-BASED COMPENSATION - TRANSITION AND DISCLOSURE
In December 2002, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" (FAS 148). FAS 148 amends Financial
Accounting Standard No. 123, "Accounting for Stock Based Compensation" (FAS
123), which provides entities with alternative methods of transition should they
decide to voluntarily change from the intrinsic value method of recognizing
stock based compensation as permitted under APB 25 to the fair value method. FAS
148 also amends FAS 123 to require disclosure in both annual and interim
financial statements about the method of recognizing stock-based compensation.
No stock options were outstanding during 2002, 2001, or 2000.
ITEM 7A. 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 December 31, 2002, we had $35,049,000 of outstanding floating-rate
debt at interest rates equal to either LIBOR plus 2 1/2%, LIBOR plus 2 3/4%,
prime rate plus 1%, prime rate plus 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 December 31, 2002, we had outstanding $37,200,000 of fixed-rate,
long-term debt with a weighted-average interest rate of 12.6%, of which
$34,912,000 has matured. We have received tenders of over 99% of our 12 3/4%
senior subordinated notes in exchange for new 11 1/2% senior subordinated notes
due August 1, 2007, in a principal amount equal to the principal amount of the
existing 12 3/4% senior subordinated notes being exchanged plus the accrued and
unpaid interest thereon through the day before the date the exchange is
effected, which accrued interest will total $470.000 for each $1,000 principal
amount of 12 3/4% senior subordinated notes exchanged, if the exchange offer is
consummated on April 8, 2003. The holder of our 14% junior subordinated notes
has agreed to exchange the $347,000 principal amount of those notes for new 12
1/2% junior subordinated notes due November 1, 2007, and to convert the accrued
interest on the notes into shares of common stock. If the other aspects of the
financial restructuring are completed, we have proposed to repurchase our
$7,500,000 senior, unsecured note for $5,550,000 plus interest on that amount
from November 1, 2002, to the date of repurchase, at the prime rate.
If the financial restructuring is completed on the terms currently
negotiated, we estimate that our monthly interest expense would be approximately
$670,000 and that a one percentage point increase or decrease in the applicable
short-term rate would increase or decrease our monthly interest expense by
approximately $34,000.
For further information about our indebtedness, we recommend that you
also read Note 5 to our consolidated financial statements in Part II, Item 8.
-21-
THIS PAGE INTENTIONALLY LEFT BLANK
-22-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS
Page
----
Report of Independent Auditors.........................................................24
Consolidated Statement of Operations for the Years Ended
December 31, 2002, 2001, and 2000....................................................25
Consolidated Balance Sheet at December 31, 2002 and 2001...............................26
Consolidated Statement of Stockholders' Deficit for
the Years Ended December 31, 2002, 2001, and 2000....................................28
Consolidated Statement of Cash Flows for the Years Ended
December 31, 2002, 2001, and 2000....................................................29
Notes to Consolidated Financial Statements.............................................30
-23-
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Lexington Precision Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheet of Lexington
Precision Corporation and its subsidiaries at December 31, 2002 and 2001, and
the related consolidated statements of operations, stockholders' deficit, and
cash flows for each of the three years in the period ended December 31, 2002.
Our audits also included the financial statement schedule contained in Part IV,
Item 14, of the Company's report on Form 10-K. These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and schedule
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Lexington Precision Corporation and its subsidiaries at December 31, 2002 and
2001, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 2002, in conformity
with accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
The accompanying consolidated financial statements have been prepared
assuming that Lexington Precision Corporation will continue as a going concern.
As more fully described in Notes 1 and 5, the Company has approximately
$71,000,000 of short-term debt, including $27,412,000 principal amount of senior
subordinated notes that matured on February 1, 2000, and that have not been
paid. Substantial doubt exists about the Company's ability to refinance, extend,
amend, or exchange such obligations. As a result, there is substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments to the amounts or
classifications of assets or liabilities to reflect this uncertainty.
As discussed in Notes 1 and 17 to the consolidated financial statements,
effective January 1, 2002, the Company changed its method of accounting for
goodwill in accordance with the adoption of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets."
Ernst & Young LLP
Cleveland, Ohio
March 26, 2003
-24-
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31
-------------------------------------------
2002 2001 2000
---- ---- ----
Net sales $ 124,852 $ 126,202 $ 138,302
Cost of sales 110,718 109,055 120,726
--------- --------- ---------
Gross profit 14,134 17,147 17,576
Selling and administrative expenses 8,658 9,911 10,923
Plant closure costs 609 -- --
Impairment of long-lived assets -- 2,047 --
Income from insurance company demutualization -- (1,274) --
--------- --------- ---------
Income from operations 4,867 6,463 6,653
Interest expense (7,220) (8,534) (9,913)
Gain on sale of securities 248 -- --
--------- --------- ---------
Income (loss) before income taxes (2,105) (2,071) (3,260)
Income tax provision (benefit) (538) 80 (161)
--------- --------- ---------
Net income (loss) $ (1,567) $ (2,151) $ (3,099)
========= ========= =========
Per share data:
Basic and diluted net income (loss) applicable to
common stockholders $ (0.32) $ (0.45) $ (0.65)
========= ========= =========
See notes to consolidated financial statements.
-25-
LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEET
(THOUSANDS OF DOLLARS)
DECEMBER 31
-------------------------
2002 2001
---- ----
ASSETS:
Current assets:
Cash $ 1,753 $ 189
Marketable securities -- 1,274
Accounts receivable, net 16,411 18,753
Inventories, net 8,841 8,493
Prepaid expenses and other current assets 3,682 3,523
Deferred income taxes 2,304 1,914
-------- --------
Total current assets 32,991 34,146
-------- --------
Plant and equipment:
Land 2,314 2,309
Buildings 22,935 22,601
Equipment 113,291 111,206
-------- --------
138,540 136,116
Accumulated depreciation 89,511 80,792
-------- --------
Plant and equipment, net 49,029 55,324
-------- --------
Goodwill, net 7,831 7,831
-------- --------
Other assets, net 2,294 2,576
-------- --------
$ 92,145 $ 99,877
======== ========
See notes to consolidated financial statements. (continued on next page)
-26-
LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEET (CONTINUED)
(THOUSANDS OF DOLLARS)
DECEMBER 31
-----------------------------
2002 2001
---- ----
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current liabilities:
Accounts payable $ 10,798 $ 12,077
Accrued expenses, excluding accrued interest 6,256 5,848
Accrued interest expense 12,875 8,738
Short-term debt 69,665 77,794
Current portion of long-term debt 1,467 2,617
--------- ---------
Total current liabilities 101,061 107,074
--------- ---------
Long-term debt, excluding current portion 1,117 2,000
--------- ---------
Deferred income taxes and other long-term liabilities 2,836 2,132
--------- ---------
Series B preferred stock, $100 par value, at
redemption value 660 660
Excess of redemption value over par value (330) (330)
--------- ---------
Series B preferred stock at par value 330 330
--------- ---------
Stockholders' deficit:
Common stock, $0.25 par value, 10,000,000 shares
authorized, 4,828,036 shares issued
at December 31, 2002 and 2001 1,207 1,207
Additional paid-in-capital 12,960 12,960
Accumulated deficit (27,366) (25,826)
--------- ---------
Total stockholders' deficit (13,199) (11,659)
--------- ---------
$ 92,145 $ 99,877
========= =========
See notes to consolidated financial statements.
-27-
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
(THOUSANDS OF DOLLARS)
ADDITIONAL TOTAL
COMMON PAID-IN- ACCUMULATED TREASURY STOCKHOLDERS'
STOCK CAPITAL DEFICIT STOCK DEFICIT
----- ------- ------- ----- -------
Balance at December 31, 1999 $ 1,087 $ 12,160 $(20,493) $ (217) $ (7,463)
Net loss -- -- (3,099) -- (3,099)
Issuance of 125,000
shares of restricted stock 10 (90) (137) 217 --
Amortization of restricted stock
grants -- -- 26 -- 26
Conversion of junior
subordinated notes into 440,000
shares of common stock 110 890 -- -- 1,000
-------- -------- -------- -------- --------
Balance at December 31, 2000 1,207 12,960 (23,703) -- (9,536)
Net loss -- -- (2,151) -- (2,151)
Amortization of restricted stock
grants -- -- 28 -- 28
-------- -------- -------- -------- --------
Balance at December 31, 2001 1,207 12,960 (25,826) -- (11,659)
Net loss -- -- (1,567) -- (1,567)
Amortization of restricted stock
grants -- -- 27 -- 27
-------- -------- -------- -------- --------
Balance at December 31, 2002 $ 1,207 $ 12,960 $(27,366) $ -- $(13,199)
======== ======== ======== ======== ========
See notes to consolidated financial statements.
-28-
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
YEARS ENDED DECEMBER 31
------------------------------------
2002 2001 2000
---- ---- ----
OPERATING ACTIVITIES:
Net income (loss) $(1,567) $(2,151) $(3,099)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 11,047 11,923 12,059
Amortization included in operating expense 818 1,180 1,431
Amortization included in interest expense 440 192 216
Income from insurance company demutualization -- (1,274) --
Provision for impairment loss on long-lived assets -- 2,047 --
Gain on sales of marketable securities (248) -- --
Changes in operating assets and liabilities that
provided (used) cash:
Accounts receivable, net 2,342 1,159 4,186
Inventories, net (348) 2,616 (1,617)
Prepaid expenses and other assets (278) (31) (1,093)
Accounts payable (866) (1,677) 8,396
Accrued expenses, excluding interest expense 408 (76) (2,119)
Accrued interest expense 4,137 3,504 3,483
Other long term liabilities 314 23 (13)
Other 32 126 306
-------- -------- --------
Net cash provided by operating activities 16,231 17,561 22,136
-------- -------- --------
INVESTING ACTIVITIES:
Purchases of plant and equipment (4,618) (6,081) (13,936)
Proceeds from sales of marketable securities 1,522 -- --
Decrease in equipment deposits 205 56 447
Proceeds from sales of equipment 147 195 313
Expenditures for tooling owned by customers (688) (646) (1,076)
Other 328 (241) 416
-------- -------- --------
Net cash used by investing activities (3,104) (6,717) (13,836)
-------- -------- --------
FINANCING ACTIVITIES:
Net decrease in revolving line of credit (750) (2,992) (2,291)
Proceeds from issuance of amortizing term notes -- 2,000 2,460
Repayment of amortizing term notes (10,194) (9,263) (8,254)
Other (619) (465) (158)
-------- -------- --------
Net cash used by financing activities (11,563) (10,720) (8,243)
-------- -------- --------
Net increase in cash 1,564 124 57
Cash at beginning of year 189 65 8
-------- -------- --------
Cash at end of year $ 1,753 $ 189 $ 65
======== ======== ========
See notes to consolidated financial statements
-29-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Lexington
Precision Corporation and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities at the date
of the consolidated financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.
MARKETABLE SECURITIES
Marketable securities held by the Company are classified as available
for sale and consist of equity securities, which are stated at fair value as
determined by quoted market prices. Unrealized holding gains or losses on
marketable securities, net of applicable income taxes, are reported as a
separate component of comprehensive income and included as part of the Company's
accumulated deficit until realized. Realized gains or losses are based on the
first-in, first-out specific identification method. During 2002, realized gains
from the sales of marketable securities totaled $248,000.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out method)
or market. Inventory levels by principal classification are set forth below
(dollar amounts in thousands):
DECEMBER 31
---------------------
2002 2001
---- ----
Finished goods $ 3,580 $ 3,727
Work in process 2,493 2,060
Raw materials and purchased parts 2,768 2,706
------ ------
$ 8,841 $ 8,493
====== ======
PLANT AND EQUIPMENT
Plant and equipment are carried at cost less accumulated depreciation.
Depreciation is calculated principally on the straight-line method over the
estimated useful lives of the various assets (15 to 32 years for buildings and 3
to 8 years for equipment). When an asset is retired or otherwise disposed of,
the related cost and accumulated depreciation are eliminated. Maintenance and
repair expenses are charged against income as incurred, while major improvements
that increase the useful life of plant and equipment are capitalized.
Maintenance and repair expenses were $7,409,000, $6,405,000, and $7,817,000 for
2002, 2001, and 2000, respectively.
-30-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
VALUATION OF LONG-LIVED ASSETS
The Company evaluates long-lived assets, such as plant and equipment and
other long-term amortizable assets, for impairment when events or changes in
circumstances indicate that the carrying value of the assets may not be fully
recoverable. To perform this evaluation the Company compares the aggregate,
estimated, undiscounted future cash flows before interest and taxes of an asset
or group of assets to its carrying value. If such estimated, cash flows are less
than the carrying value of the asset or asset group, an impairment loss is
recognized for the difference between the estimated fair value and the carrying
value of the asset or asset group. Although the Company believes that its
estimates of future cash flows are reasonable, changes in assumptions regarding
future unit volumes, pricing, operating efficiencies, material, labor, and
overhead costs, and other factors could significantly affect the Company's cash
flow projections.
Effective, January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" (FAS 144), which did not affect its results of operations or
financial position.
GOODWILL
Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (FAS 142).
FAS 142 prohibits the amortization of goodwill but requires goodwill to be
tested for impairment annually using a fair value approach. The elimination of
goodwill amortization pursuant to FAS 142 increased the income from operations
of the Rubber Group and the Metals Group by $284,000 and $32,000, respectively,
during 2002. At December 31, 2002 and December 31, 2001, our unamortized
purchased goodwill balance was $7,831,000. Of this amount, $7,624,000 was
assigned to the Rubber Group and $207,000 was assigned to the Metals Group. At
December 31, 2002 and 2001, accumulated amortization of goodwill totaled
$4,158,000. For additional information, see Note 17.
DEFERRED FINANCING EXPENSES
Deferred financing expenses are amortized over the lives of the related
debt instruments.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses are recorded as expenses in the year
incurred. These costs totaled $924,000, $890,000, and $850,000 during 2002,
2001, and 2000, respectively.
NET INCOME OR LOSS PER COMMON SHARE
Basic net income or loss per common share is computed using the
weighted-average number of common shares outstanding. Diluted net income or loss
per share is calculated after giving effect to all potential common shares that
were dilutive, using the treasury stock method. Potential common shares are
securities (such as convertible debt securities and convertible preferred stock)
that do not have a current right to participate in earnings but could do so in
the future by virtue of their option or conversion rights.
-31-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REVENUE RECOGNITION
All of the Company's revenues result from the sale of rubber and metal
components. The Company recognizes revenue from the sale of components upon the
passage of title and risk of loss to the customers according to shipping
schedules and terms of sale mutually agreed to by the Company and its customers.
STOCK BASED EMPLOYEE COMPENSATION PLAN
The Company's restricted stock award plan, which expired on December 31,
2001, permitted it to award restricted shares of its common stock to officers
and key employees. Shares awarded under the plan are accounted for using the
intrinsic value method in accordance with the provisions of Accounting
Principles Board Opinion Number 25 (APB 25), "Accounting for Stock Issued to
Employees." Compensation expense equal to the market value of the shares on the
date of grant is charged to earnings over the vesting period of the shares,
while the unamortized value of the restricted shares is recorded as a reduction
of stockholders' equity.
In December 2002, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" (FAS 148). FAS 148 amends Financial
Accounting Standard No. 123, "Accounting for Stock Based Compensation" (FAS
123), which provides entities with alternative methods of transition should they
decide to voluntarily change from the intrinsic value method of recognizing
stock based compensation as permitted under APB 25 to the fair value method. FAS
148 also amends FAS 123 to require disclosure in both annual and interim
financial statements about the method of recognizing stock based compensation.
No stock options were outstanding during 2002, 2001, or 2000.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 146, ACCOUNTING FOR COST
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
In June 2002, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities" (FAS 146), which is effective for all
restructuring, exit, or disposal activities that are initiated after
December 31, 2002. FAS 146 requires that a liability for a cost associated with
an exit or disposal activity be recognized when the liability is incurred rather
than at the date on which an entity commits to a plan to restructure, exit, or
dispose of a facility. This statement applies, but is not limited to,
termination benefits provided to current employees, contract termination costs,
and cost incurred to consolidate facilities or relocate employees. The Company
currently does not believe that the adoption of FAS 146 during the first quarter
of 2003 will adversely affect its results of operations or financial position,
although FAS 146 may change the time period in which the Company recognizes
costs associated with future restructuring, exit, or disposal activities.
BASIS OF PRESENTATION
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
ability to refinance, extend, amend, or exchange substantially all of its
outstanding debt, as more fully described below, is subject to risks and
uncertainties. As a result, there is substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial
-32-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
statements do not include any adjustments to the amounts or classification of
assets or liabilities to reflect this uncertainty.
The Company has been in default on its 12 3/4% senior subordinated notes
since February 1, 2000, when it 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 that date. On July 10, 2002, the Company commenced an exchange offer for the
12 3/4% senior subordinated notes. The exchange offer was amended on March 7,
2003. If the amended exchange offer is consummated, at least 99% of the 12 3/4%
senior subordinated notes will be exchanged for new 11 1/2% senior subordinated
notes due August 1, 2007, in a principal amount equal to the principal amount of
the 12 3/4% senior subordinated notes being exchanged plus the accrued and
unpaid interest thereon through the day before the date the amended exchange
offer is consummated, which accrued interest, will total $470.000 for each
$1,000 principal amount of 12 3/4% senior subordinated notes assuming the
amended exchange offer is consummated on April 8, 2003. Interest on the 11 1/2%
senior subordinated notes will accrue from the date the amended exchange offer
is consummated, and will be payable on each May 1, August 1, November 1, and
February 1. Each $1,000 principal amount of 11 1/2% senior subordinated notes
will be issued with warrants to purchase ten shares of common stock at a price
of $3.50 per share at any time from January 1, 2004, through August 1, 2007. If
the amended exchange offer is consummated, the Company will pay a participation
fee of 3% of the principal amount of 12 3/4% senior subordinated notes that are
exchanged. The Company's senior, secured lenders and the holder of the junior
subordinated notes have waived the cross-default provisions with respect to the
default on the senior subordinated notes through April 4, 2003, and May 1, 2003,
respectively. The current expiration date of the amended exchange offer is
April 3, 2003. One of the conditions to the consummation of the amended exchange
offer is the tender for exchange of at least 99% of the senior subordinated
notes. As of March 26, 2003, the Company has received tenders of $27,209,000
principal amount of 12 3/4% senior subordinated notes, or 99.3% of the notes.
However, there are additional conditions to the consummation of the amended
exchange offer that may not be satisfied by the expiration date.
The Company has reached an agreement with the holders of its 14% junior
subordinated notes on the terms of a restructuring of those notes. If the
restructuring is completed, the Company will exchange new 12 1/2% junior
subordinated notes due November 1, 2007, for the existing 14% junior
subordinated notes. The accrued interest on the 14% junior subordinated notes
for the period November 1, 1999, through the day before the restructuring is
consummated, which will total $202,000 assuming the restructuring is consummated
on April 8, 2003, will be converted into shares of the Company's common stock at
a price of $2.27 per share. Interest on the 12 1/2% junior subordinated notes
will accrue from the date the restructuring is consummated, and will be payable
on each May 1, August 1, November 1, and February 1. Each $1,000 principal
amount of 12 1/2% junior subordinated notes will be issued with warrants to
purchase ten shares of common stock at a price of $3.50 per share at any time
from January 1, 2004, through November 1, 2007. If the restructuring is
completed, the Company also will pay a participation fee of 3% of the principal
amount of 14% junior subordinated notes.
On April 30, 2002, the maturity date of the senior, unsecured note, the
holder of the note rejected the Company's proposal for a restructuring and the
Company's request for a three-month extension. The Company did not pay the
principal, in the amount of $7,500,000, and interest, in the amount of $78,000,
on April 30, 2002, and the Company has not made any payments on the note since
that date. If the other aspects of the financial restructuring program are
completed, the Company has proposed to repurchase the senior, unsecured note for
$5,550,000, plus interest from November 1, 2002, to the date the amended
exchange offer is consummated, at the prime rate. The Company's senior, secured
lenders and the holders of the junior subordinated notes have waived the
cross-default provisions with respect to the default on the senior, unsecured
note through April 4, 2003 and May 1, 2003, respectively.
-33-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company is currently in discussions with several lenders regarding a
refinancing of its senior, secured credit facilities.
The Company can give no assurance that it will be able to consummate the
amended exchange offer, restructure the senior, unsecured note, or refinance its
senior, secured financing arrangements on satisfactory terms. If the Company is
unable to do so, it may file a petition under the federal bankruptcy code in
order to carry out a debt restructuring plan on terms substantially similar to
those discussed above or on other terms. Although the Company believes that such
a restructuring could be accomplished without material disruption to its
operations, any such proceeding involves considerable risks and uncertainties
and could have a material adverse effect on the Company's operations and
financial position.
NOTE 2 -- PREPAID EXPENSES AND OTHER CURRENT ASSETS
At December 31, 2002 and 2001, other current assets included $2,092,000
and $1,728,000, respectively, of tooling manufactured or purchased by the
Company pursuant to purchase orders issued by customers of the Company. Upon
customer approval of the components produced by such tooling, which normally
takes less than 90 days, the customer is obligated to pay for the tooling in
accordance with previously agreed-upon terms.
NOTE 3 -- OTHER NONCURRENT ASSETS
The Company has paid for a portion of the cost of certain tooling that
was purchased by customers and is being used by the Company to produce
components under long-term supply arrangements. The payments have been recorded
as a noncurrent asset and are being amortized on a straight-line basis over
three years or, if shorter, the period during which the tooling is expected to
produce components. At December 31, 2002 and 2001, other noncurrent assets
included $991,000 and $1,094,000, respectively, representing the unamortized
portion of such capitalized payments. During 2002, 2001, and 2000, the Company
amortized $791,000, $836,000, and $1,090,000, respectively, of such capitalized
payments.
NOTE 4 -- ACCRUED EXPENSES, EXCLUDING INTEREST EXPENSE
Accrued expenses, excluding interest expense, at December 31, 2002 and
2001, are summarized below (dollar amounts in thousands):
DECEMBER 31
----------------------
2002 2001
---- ----
Employee fringe benefits $3,682 $3,432
Salaries and wages 1,031 684
Taxes 665 610
Other 878 1,122
------ ------
$6,256 $5,848
====== ======
-34-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 -- DEBT
Debt at December 31, 2002 and 2001, is set forth below (dollar amounts
in thousands):
DECEMBER 31
---------------------
2002 2001
---- ----
Short-term debt:
Revolving line of credit $ 15,435 $ 16,185
Secured, amortizing term notes 18,971 26,350
Senior unsecured note 7,500 7,500
Senior subordinated notes 27,412 27,412
Junior subordinated notes 347 347
-------- --------
Subtotal 69,665 77,794
Current portion of long-term debt 1,467 2,617
-------- --------
Total short-term debt $ 71,132 $ 80,411
-------- --------
Long-term debt:
12% secured term note $ 1,119 $ 1,336
Unsecured, amortizing term notes 643 2,868
Other 822 413
-------- --------
2,584 4,617
Less current portion (1,467) (2,617)
-------- --------
Total long-term debt $ 1,117 $ 2,000
-------- --------
Total Debt $ 72,249 $ 82,411
======== ========
REVOLVING LINE OF CREDIT
The Company's revolving line of credit is currently scheduled to expire
on April 4, 2003. The Company intends to replace the revolving line of credit
with a revolving line of credit provided by a new lender or to negotiate an
extension of the April 4, 2003, expiration date with its existing lender. The
Company can give no assurance that it will be able to replace or extend the
revolving line of credit.
At December 31, 2002, availability under the revolving line of credit
totaled $2,094,000, before outstanding checks of $971,000 were deducted. At
December 31, 2002, loans outstanding under the revolving line of credit accrued
interest at one percent over the prime rate. At December 31, 2002, 2001, and
2000, the weighted-average interest rates on borrowings under the revolving line
of credit were 5.25%, 4.49%, and 9.24%, respectively
The loans outstanding under the Company's revolving line of credit are
collateralized by substantially all of the assets of the Company, including
accounts receivable, inventories, equipment, certain real estate, and the stock
of Lexington Rubber Group, Inc., a subsidiary of the Company.
The lenders providing loans under the Company's revolving line of credit
have waived the cross-default provisions with respect to the defaults on the
senior subordinated notes and the senior, unsecured note through April 4, 2003.
-35-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECURED, AMORTIZING TERM NOTES
Secured, amortizing term loans outstanding at December 31, 2002 and
2001, are set forth below (dollar amounts in thousands):
DECEMBER 31
------------------------------
2002 2001
---- ----
Term notes payable in equal monthly principal installments based on a 180-month
amortization schedule, final maturities in 2003, prime rate
plus 3/4% (5.0% at December 31, 2002) $ 1,988 $ 2,221
Term notes payable in equal monthly principal installments, final maturities
in 2002, LIBOR plus 2 3/4% -- 344
Term note payable in equal monthly principal installments based on a
180-month amortization schedule, final maturity in 2003, prime rate
plus 3/4% (5.0% at December 31, 2002) 978 1,084
Term note payable in equal monthly principal installments based on a
180-month amortization schedule, final maturity in 2003, prime rate
plus 3/4% (5.0% at December 31, 2002) 1,927 2,128
Term notes payable in equal monthly principal installments, final maturity
in 2002, prime rate and LIBOR plus 2 1/2% -- (1) 305 (1)
Term note, payable in equal monthly principal installments, final maturity
in 2003, prime rate (4.25% at December 31, 2002) 45 227
Term notes payable in equal monthly principal installments, final maturity
in 2003, prime rate plus one percent (5.25% at December 31, 2002) 10 (1) 131 (1)
Term note payable in equal monthly principal installments, final maturity
in 2003, LIBOR plus 2 3/4% (4.18% at December 31, 2002) 107 427
Term notes payable in equal monthly principal installments, final maturity
in 2004, LIBOR plus 2 3/4% (4.13% at December 31, 2002) 476 810
Term note payable in equal monthly principal installments, final maturity
in 2004, prime rate and LIBOR plus 2 1/2% (4.0% at December 31, 2002) 386 657
Term notes payable in equal monthly principal installments, final maturity
in 2004, prime rate plus one percent (5.25% at December 31, 2002) 3,846 (1) 6,325 (1)
Term note payable in equal monthly principal installments, final maturity
in 2005, LIBOR plus 2 1/2% (3.88% at December 31, 2002) 579 802
Term note payable in equal monthly principal installments, final maturity
in 2005, prime rate plus one percent (5.25% at December 31, 2002) 609 (1) 852 (1)
Term note payable in equal monthly principal installments, final maturity
in 2006, prime rate (4.25% at December 31, 2002) 270 352
Term notes payable in equal monthly principal installments, final maturity
in 2006, prime rate plus one percent (5.25% at December 31, 2002) 4,847 (1) 6,086 (1)
Term notes payable in equal monthly principal installments, final maturity
in 2007, prime rate plus one percent (5.25% at December 31, 2002) 2,903 (1) 3,599 (1)
------- -------
$18,971 $26,350
======= =======
(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 note. The revolving line of credit is currently scheduled to
expire on April 4, 2003.
At December 31, 2002 and 2001, the scheduled principal payments on the
secured, amortizing term notes that were payable within one year totaled
$11,122,000 and $12,728,000, respectively. In
-36-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
addition, the portions of the secured, amortizing term notes that are due more
than one year after the date of the consolidated financial statements were
classified as short-term debt because the Company's lenders had granted waivers,
for a period of less than one year, of the cross-default provisions of such term
notes with respect to the default on the senior subordinated notes or because
the revolving line of credit was scheduled to expire in less than one year.
The secured, amortizing term notes are collateralized by substantially
all of the assets of the Company, including accounts receivable, inventories,
equipment, certain real estate, and the stock of Lexington Rubber Group, Inc.
SENIOR UNSECURED NOTE
The senior, unsecured note, which matured on April 30, 2002, is senior
in right of payment to the senior subordinated notes and the junior subordinated
notes. The senior, unsecured note bore interest at 10 1/2% per annum until
August 1, 2000, when the effective interest rate increased to 12 1/2%. The
Company has not paid the principal of the note, and, since April 1, 2002, the
Company has not made any interest payments on the senior, unsecured note. At
December 31, 2002, the accrued and unpaid interest on the senior, unsecured note
totaled $703,000.
SENIOR SUBORDINATED NOTES
The 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 secured debt and to the payment of
the senior, unsecured note. The senior subordinated notes currently accrue
interest at 12 3/4% per annum. On February 1, 2000, the Company did not make the
payments of interest and principal then due on the senior subordinated notes in
the amounts of $1,748,000 and $27,412,000, respectively, and the Company has not
made any payments on the senior subordinated notes since that date. At
December 31, 2002, the accrued and unpaid interest on the senior subordinated
notes totaled $11,941,000. For a more detailed discussion of the status of the
senior subordinated notes, refer to Note 1.
JUNIOR SUBORDINATED NOTES
The junior subordinated convertible notes and the junior subordinated
nonconvertible notes are unsecured obligations of the Company. The $1,000,000
principal amount of junior subordinated convertible notes were converted into
440,000 shares of common stock on February 1, 2000. The junior subordinated
nonconvertible notes are due on May 1, 2003, and are subordinated in right of
payment to all existing and future secured debt of the Company, the senior,
unsecured note, and the senior subordinated notes. The junior subordinated notes
currently bear interest at 14% per annum. The holders of the junior subordinated
notes have deferred until May 1, 2003, the interest payments that were due on or
after February 1, 2000, and have waived their cross-default provisions with
respect to the default on the senior, unsecured note and the senior subordinated
notes. At December 31, 2002, the accrued and unpaid interest on the junior
subordinated convertible and nonconvertible notes totaled $189,000.
-37-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12% SECURED TERM NOTE
The 12% secured term note is payable in sixty equal, monthly
installments of principal and interest that commenced on November 30, 2001. The
12% secured term note has no cross-default provision with respect to the default
on the senior subordinated notes or the senior, unsecured note.
UNSECURED, AMORTIZING TERM NOTES
The unsecured, amortizing term notes mature in 2003, and are a series of
notes that are payable in seventeen equal monthly principal installments, with
interest at the prime rate in effect on the date each note was issued. At
December 31, 2002, the weighted average interest rate on the notes was 5.6%.
NON-CASH INVESTING AND FINANCING ACTIVITIES
During 2002, the Company purchased equipment under capitalized lease
obligations in the amount of $365,000 and obtained seller-provided financing for
the purchase of equipment in the aggregate amount of $247,000.
LETTERS OF CREDIT
At December 31, 2002 and 2001, the Company had outstanding irrevocable
letters of credit totaling $1,341,000 and $1,238,000, respectively. The letters
of credit guaranteed certain payments that may be required under the Company's
self-insured workers' compensation program.
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, the Company's lenders have agreed to waive, amend, or
eliminate certain of the financial covenants contained in its various note
agreements in order to maintain or otherwise ensure the Company's current or
future compliance. During 2002, covenants requiring minimum levels of working
capital were eliminated from three of the Company's financing agreements, and,
during 2003, the Company's noncompliance with the net worth covenant under one
of its loan agreements was waived. In the event that the Company is not in
compliance with any of its covenants in the future and its lenders do not agree
to amend, waive, or eliminate those covenants, the lenders would have the right
to declare the borrowings under their note agreements to be due and payable. For
a more detailed discussion of recent amendments to and waivers under the
Company's various note agreements, refer to Note 1.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company believes that, at December 31, 2002, the fair values of the
secured, amortizing term loans and the loans outstanding under the revolving
line of credit approximated the principal amounts of such loans.
-38-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Since January 1, 2000, the Company is unaware of any trading activity in
the senior subordinated notes. The Company has no basis to express an opinion as
to the fair market value of the senior subordinated notes or the junior
subordinated notes. If the other aspects of the Company's financial
restructuring plan are completed, the Company expects to repurchase the senior,
unsecured note for $5,550,000, plus interest from November 1, 2002, to the date
the Company purchases the senior, unsecured note, at the prime rate.
FINANCIAL LEVERAGE AND LIQUIDITY
The Company is in default in the payment of its senior subordinated
notes and its senior, unsecured note, which have outstanding principal amounts
of $27,412,000 and $7,500,000, respectively, and accrued interest, as of
December 31, 2002, of $11,941,000 and $703,000, respectively. In addition, the
revolving line of credit is currently scheduled to expire on April 4, 2003, the
Company has $643,000 of unsecured, amortizing term notes and $347,000 of junior
subordinated notes that are scheduled to mature during 2003, and the Company has
$11,122,000 of scheduled principal payments on its secured, amortizing term
notes during 2003. The Company currently estimates that, at existing contractual
and market rates, the interest expense on all of its debt during 2003 will be
approximately $7,000,000. Interest paid during 2002, 2001, and 2000 totaled
$2,663,000, $4,838,000, and $6,214,000, respectively.
NOTE 6 -- PREFERRED STOCK
SERIES B PREFERRED STOCK
At December 31, 2000, there were outstanding 3,300 shares of the
Company's $8 cumulative convertible preferred stock, series B, par value $100
per share. Each share of series B preferred stock is (1) entitled to one vote,
(2) redeemable for $200 plus accumulated and unpaid dividends, (3) convertible
into 14.8148 shares of common stock (subject to adjustment), and (4) entitled,
upon voluntary or involuntary liquidation and after payment of the debts and
other liabilities of the Company, to a liquidation preference of $200 plus
accumulated and unpaid dividends. Redemptions of $90,000 are scheduled on
November 30 of each year in order to retire 450 shares of series B preferred
stock annually. The Company failed to make the scheduled redemption on each of
November 30, 2000, 2001, and 2002, as discussed in more detail below. All of the
outstanding series B preferred stock is scheduled to be redeemed during the
years 2003 through 2007. For accounting purposes, when series B preferred stock
is redeemed, the series B preferred stock account is reduced by the $100 par
value of each share redeemed, and paid-in-capital is charged for the $100 excess
of redemption value over par value of each share redeemed. Under the terms of
the series B preferred stock, the Company may not declare any cash dividends on
its common stock if there exists a dividend arrearage on the series B preferred
stock.
Because the Company is in default in the payment of its senior,
unsecured note and its senior subordinated notes, the Company is prohibited from
making any dividend payments on or redemptions of the series B preferred stock
until it cures the payment defaults. At December 31, 2002, the Company was in
arrears in the payment of twelve dividends on the series B preferred stock in
the aggregate amount of $79,000 and in the redemption of 1,350 shares of series
B preferred stock in the amount of $270,000.
OTHER AUTHORIZED PREFERRED STOCK
The Company's restated certificate of incorporation provides that the
Company is authorized to issue 2,500 shares of 6% cumulative convertible
preferred stock, series A, par value $100 per share. No shares of series A
preferred stock have been issued.
-39-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company's restated certificate of incorporation also provides that
the Company is authorized to issue 2,500,000 shares of other preferred stock
having a par value of $1 per share. No shares of $1 par value preferred stock
have been issued.
NOTE 7 -- COMMON STOCK
COMMON STOCK, $.25 PAR VALUE
At December 31, 2002, 2001, and 2000, there were 4,828,036 shares of the
Company's common stock outstanding, and 48,889 shares were reserved for issuance
on the conversion of the series B preferred stock.
In January 2000, the Company awarded to key employees of the Company,
under a restricted stock award plan, 125,000 shares of common stock, of which
85,915 represented treasury shares and 39,085 shares represented authorized but
previously unissued shares.
In February 2000, the holders of the Company's junior subordinated
convertible notes converted the $1,000,000 principal amount of the notes into
440,000 shares of the Company's common stock in accordance with the terms of the
notes.
Because the Company is currently in default in respect of the senior
subordinated notes, the Company cannot pay cash dividends on, or redeem any
shares of, its capital stock.
RESTRICTED STOCK AWARD PLAN
The Company had a restricted stock award plan that permitted it to award
restricted shares of common stock to officers and other key employees. In
January 2000, the Company awarded 125,000 shares of restricted common stock to
key employees of the Company. Under the terms of the restricted stock award
plan, the restricted shares vest over the five-year period following the date of
grant. The individuals who received restricted shares are entitled to receive
cash dividends (if any) and to vote their unvested shares. During 2001, no
shares of restricted common stock were awarded. The restricted stock award plan
expired on December 31, 2001.
NOTE 8 -- EMPLOYEE BENEFIT PLANS
RETIREMENT AND SAVINGS PLAN
The Company maintains a retirement and savings plan pursuant to Section
401 of the Internal Revenue Code (a "401(k)" plan). All employees of the Company
are entitled to participate in the 401(k) plan after meeting the eligibility
requirements. Effective January 1, 2003, employees may generally contribute up
to 60% of their annual compensation but not more than prescribed dollar amounts
established by the United States Secretary of the Treasury. Employee
contributions, up to a maximum of 6% of an employee's compensation, are matched
50% by the Company. During 2002, 2001, and 2000, matching contributions made by
the Company totaled $591,000, $637,000, and $696,000, respectively. Company
contributions to the 401(k) plan vest at a rate of 20% per year commencing in
the participant's second year of service until the participant becomes fully
vested after six years of service.
-40-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INCENTIVE COMPENSATION PLAN
The Company has an incentive compensation plan that provides for the
payment of annual cash bonus awards to certain officers and key employees of the
Company. The Compensation Committee of the Company's Board of Directors, which
consists of two directors who are not employees of the Company, oversees the
administration of the incentive compensation plan and approves the cash bonus
awards. Bonus awards for eligible divisional employees are typically based upon
the attainment of predetermined targets for earnings before interest, taxes,
depreciation, and amortization (EBITDA) at each division. Bonus awards for
corporate officers are typically based upon the attainment of predetermined
consolidated EBITDA targets. The consolidated financial statements included
provisions for bonuses totaling $623,000, $243,000, and $349,000 for 2002, 2001,
and 2000, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company maintains programs to fund certain costs related to a
prescription drug card program for retirees of one of its former divisions and
to fund insurance premiums for certain retirees of one of its divisions. At
December 31, 2002, the Company's accumulated postretirement benefit obligation
totaled $411,000. Prior to January 1, 2003, the Company amortized its transition
obligation over the remaining life expectancy of the participants, which equated
to an annual rate of $57,000. Effective January 1, 2003, the Company revised the
life expectancy of the participants in the prescription drug program and, as a
result, the Company will begin to amortize its unamortized transition obligation
at the rate of $23,000 per year during 2003.
A reconciliation of the changes in the Company's post-retirement
obligations at December 31, 2002 and 2001, is set forth below (dollar amounts in
thousands):
DECEMBER 31
-----------------------
2002 2001
Accumulated postretirement benefit obligation at
beginning of year $ 413 $ 361
Interest cost 28 26
Benefits paid (47) (55)
Actuarial loss 17 81
----- -----
Accumulated postretirement benefit obligation at
end of year 411 413
Plan assets at fair market value -- --
----- -----
Unfunded accumulated postretirement benefit obligation
at end of year 411 413
Unrecognized transition obligation (122) (179)
Unrecognized net gain 2 23
----- -----
Accrued benefit cost $ 291 $ 257
===== =====
-41-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net annual postretirement benefit costs for 2002, 2001, and 2000, are
summarized below (dollar amounts in thousands):
YEARS ENDED DECEMBER 31
-------------------------------
2002 2001 2000
---- ---- ----
Service cost $-- $-- $--
Interest cost 28 26 23
Net amortization and deferral 54 48 33
--- --- ---
Net annual postretirement benefit cost $82 $74 $56
=== === ===
The weighted-average annual rate of increase in the per capita cost of
covered benefits for the prescription drug card program is assumed to be 11% in
2002 and is projected to decrease gradually thereafter until it reaches 5% in
2011. Changing the assumed rate of increase in the prescription drug cost by one
percentage point in each year would not have a significant effect on the
accumulated postretirement benefit obligation. The Company's program to fund
certain insurance premiums for retirees of one of its divisions has a defined
dollar benefit and is therefore unaffected by increases in health care costs.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation at December 31, 2002 and 2001, was 7.25%.
NOTE 9 -- INCOME TAXES
The components of the provisions for income taxes related to operations
in 2002, 2001, and 2000, are set forth below (dollar amounts in thousands):
YEARS ENDED DECEMBER 31
---------------------------------
2002 2001 2000
---- ---- ----
Current:
Federal $(643) $ -- $(214)
State 105 80 53
----- ----- -----
(538) 80 (161)
Deferred:
Federal -- -- --
----- ----- -----
Income tax provision (benefit) $(538) $ 80 $(161)
===== ===== =====
The income tax benefit recorded during 2002 results from a refund of
alternative minimum taxes, currently estimated to be approximately $643,000,
which were paid in earlier periods, offset, in part, by state income tax
expense. During 2002, we received $148,000 of the alternative minimum tax refund
and we currently anticipate that the balance of $495,000 will be refunded to us
during 2003.
During 2000, the income tax benefit consisted primarily of the refund of
federal income tax expensed in a prior period.
Excluding the receipt of refunds of prior years' income taxes, income
taxes paid during 2002, 2001, and 2000 totaled $80,000, $125,000, and $113,000,
respectively.
-42-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The difference between the Company's income tax provision (benefit) in
2002, 2001, and 2000 and the income taxes that would have been payable at the
federal statutory rate is reconciled as follows (dollar amounts in thousands):
YEARS ENDED DECEMBER 31
--------------------------------------------
2002 2001 2000
---- ---- ----
Federal statutory income tax provision $ (719) $ (704) $(1,108)
Change in valuation allowance 69 588 963
Amortization of nondeductible goodwill -- 107 107
State income taxes, net of federal benefit 78 53 57
Adjustment of prior year's tax -- -- (214)
Other 34 36 34
------- ------- -------
Income tax provision (benefit) $ (538) $ 80 $ (161)
======= ======= =======
The following table sets forth the deferred tax assets and the deferred
tax liabilities of the Company at December 31, 2002 and 2001 (dollar amounts in
thousands):
DECEMBER 31
---------------------------
2002 2001
------ ------
Deferred tax assets:
Net operating losses and tax credit carryforwards:
Federal net operating losses $ 5,934 $ 5,031
State net operating losses 1,779 1,787
Federal alternative minimum taxes 864 1,552
Investment tax credit 100 100
Other tax credit 81 81
-------- --------
Total tax carryforwards 8,758 8,551
Deductible temporary differences:
Impairment of long-lived assets 693 696
Asset loss reserves 414 341
Tax inventory over book 305 498
Deferred compensation liabilities 31 36
Vacation accruals 318 341
Other accruals 231 261
Deferred financing costs and other 27 27
-------- --------
Total deferred tax assets 10,777 10,751
Valuation allowance (6,785) (6,716)
-------- --------
Net deferred tax assets 3,992 4,035
Deferred tax liabilities:
Tax over book depreciation 3,992 3,602
Unrealized gain on marketable securities -- 433
-------- --------
Net deferred taxes $ -- $ --
======== ========
During 2002, the Company's valuation allowance increased by $69,000,
primarily due to the net loss incurred by the Company during 2002.
-43-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2002, the Company had net operating loss carryforwards
for federal income tax purposes of $17,454,000, which expire in the years 2005
through 2017 and alternative minimum tax credits of $864,000, which can be used
to offset future payments of regular federal income taxes, if any, without any
time limitations.
NOTE 10 -- SEGMENTS
DESCRIPTION OF SEGMENTS AND PRODUCTS
The Company has two operating segments, the Rubber Group and the Metals
Group. The Rubber Group produces seals used in automotive wiring systems,
insulators for automotive ignition wire sets, and components for medical
devices. The Metals Group manufactures aluminum die castings and machines
components from aluminum, brass, and steel bars for sale primarily to automotive
suppliers and industrial equipment manufacturers. The Rubber Group and the
Metals Group conduct substantially all of their business in the continental
United States. At December 31, 2002, approximately 26% of the Company's
employees were subject to collective bargaining agreements that expire in 2004.
MEASUREMENT OF SEGMENT PROFIT OR LOSS
The Company evaluates performance based upon several measures, including
income from operations and earnings before interest, taxes, depreciation, and
amortization, which is frequently referred to as EBITDA. The Company's
definition of EBITDA may not be the same as the definition of EBITDA used by
other companies. EBITDA is not a measure of performance under accounting
principles generally accepted in the United States. While EBITDA should not be
considered in isolation or used as a substitute for net income, cash flows from
operating activities, or other operating or cash flow statement data prepared in
accordance with accounting principles generally accepted in the United States.
EBITDA is used by investors, as well as the Company's management, to evaluate
the Company's financial performance, including its ability to incur and to
service debt.
The accounting policies of the Company's operating segments are the
same as those described in Note 1, "Summary of Significant Accounting Policies,"
except that debt, deferred financing expenses, interest expense, and income tax
expense are recorded at the Corporate Office. Corporate Office expenses that are
not considered direct expenses of the Rubber Group or the Metals Group are not
allocated to those segments for purposes of evaluating operating performance.
FACTORS MANAGEMENT USED TO IDENTIFY REPORTABLE SEGMENTS
Although all of the Company's production facilities are similar
manufacturing operations, selling to similar customers, the Company presents
financial data for the Rubber Group and the Metals Group because of the
significant difference in financial performance between those segments.
INDUSTRY CONCENTRATION; RELIANCE ON LARGE CUSTOMERS AND CREDIT RISK
During 2002, 2001, and 2000, net sales to customers in the automotive
industry totaled $108,752,000, $107,818,000, and $119,572,000, respectively,
which represented 87.1%, 85.4%, and 86.4%, respectively, of the Company's net
sales. At December 31, 2002 and 2001, accounts receivable from automotive
customers totaled $15,205,000 and $17,646,000, respectively. The Company
operates primarily in the domestic automotive market, which has been
characterized by intense price competition and increasing customer requirements
for quality and service. These factors, among others, may have a
-44-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
sudden and an adverse affect on the operating results and financial condition of
our customers, and, in turn, the collectibility of the Company's accounts
receivable from those customers. The Company attempts to mitigate this risk of
loss through ongoing evaluations of automotive market conditions, examinations
of customer financial statements, and discussions with customer management as
deemed necessary. Provisions for credit losses are based upon historical
experience and such ongoing evaluations of the financial condition of the
Company's customers. The Company generally does not require collateral from its
customers to support the extension of trade credit. At December 31, 2002 and
2001, the Company had reserves for credit losses of $662,000 and $669,000,
respectively.
During the fourth quarter of 2001, two automotive customers of the
Company filed petitions for protection from creditors under Chapter 11 of the
federal bankruptcy code. The unpaid, outstanding pre-petition accounts
receivable from the two customers as of December 31, 2001, totaled $1,068,000.
During 2002, one these companies who was indebted to us in the amount of
$727,000 on the date of their filing under Chapter 11 of the Federal Bankruptcy
Code, paid us $679,000 in full settlement of all claims.
During 2002, 2001, and 2000, the Company's net sales to Delphi
Corporation, totaled $25,181,000, $24,388,000, and $28,782,000. Sales to Delphi
in 2002, 2001, and 2000, represented 20.2%, 19.3%, and 20.8%, respectively, of
the Company's net sales and 25.1%, 25.8%, and 27.3%, respectively, of the Rubber
Group's net sales. As of December 31, 2002, 2001, and 2000, accounts receivable
due from Delphi represented 25.3%, 22.7%, and 25.8% of the Company's total trade
receivable balances. No other customer accounted for more than 10% of the
Company's net sales during 2002, 2001, or 2000. In 2002, the three largest
customers of the Rubber Group, including Delphi, accounted for 45.6% of the
Rubber Group's net sales and, as of December 31, 2002, 51.8% of the Company's
total trade receivable balances. In 2002, the three largest customers of the
Metals Group accounted for 57.3% of the Metals Group's net sales and, as of
December 31, 2002, 43.6% of the Company's total trade receivable balances. Loss
of a significant amount of business from Delphi or any of the Company's other
large customers would have a material adverse effect on the Company if such
business were not substantially replaced by additional business from existing or
new customers.
Most of the connector seals that the Company sells to Delphi are subject
to an agreement that expires on December 31, 2004. Under the terms of that
agreement, the Company provided Delphi with significant price reductions
effective July 16, 2001, with further price reductions in each of the years
covered by the agreement. The price reductions granted to Delphi on July 16,
2001, reduced net sales during 2002 and 2001 by $4,366,000 and $2,588,000,
respectively.
CORPORATE OFFICE
The net loss from operations at the Corporate Office consists primarily
of general administrative expenses that are not a result of any activity carried
on by either the Rubber Group or the Metals Group. Corporate Office expenses
include the compensation and benefits of the Company's executive officers and
corporate staff, rent on the office space occupied by these individuals, general
corporate legal fees, and certain insurance expenses. Assets of the Corporate
Office include primarily cash, marketable securities, certain prepaid expenses
and other miscellaneous current assets, deferred tax assets, and deferred
financing expenses.
-45-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEGMENT FINANCIAL DATA
Information relating to the Company's operating segments and the
Corporate Office for 2002, 2001, and 2000 is summarized below (dollar amounts in
thousands):
YEARS ENDED DECEMBER 31
-------------------------------------------------
2002 2001 2000
---- ---- ----
NET SALES:
Rubber Group $ 98,880 $ 91,532 $ 102,171
Metals Group 25,972 34,670 36,131
--------- --------- ---------
Total net sales $ 124,852 $ 126,202 $ 138,302
========= ========= =========
INCOME (LOSS) FROM OPERATIONS (1):
Rubber Group $ 10,765 $ 10,389 $ 10,484
Metals Group (3,434) (3,070) (1,586)
--------- --------- ---------
Subtotal 7,331 7,319 8,898
Corporate Office (2,464) (856) (2,245)
--------- --------- ---------
Total income from operations $ 4,867 $ 6,463 $ 6,653
========= ========= =========
DEPRECIATION AND AMORTIZATION (2):
Rubber Group $ 7,786 $ 8,484 $ 8,554
Metals Group 4,026 4,531 4,849
--------- --------- ---------
Subtotal 11,812 13,015 13,403
Corporate Office 53 88 87
--------- --------- ---------
Total depreciation and amortization $ 11,865 $ 13,103 $ 13,490
========= ========= =========
CAPITAL EXPENDITURES (3):
Rubber Group $ 3,690 $ 5,116 $ 10,355
Metals Group 1,536 1,281 3,580
--------- --------- ---------
Subtotal 5,226 6,397 13,935
Corporate Office 4 11 1
--------- --------- ---------
Total capital expenditures $ 5,230 $ 6,408 $ 13,936
========= ========= =========
ASSETS:
Rubber Group $ 64,439 $ 68,823 $ 71,549
Metals Group 22,454 27,287 35,905
--------- --------- ---------
Subtotal 86,893 96,110 107,454
Corporate Office 5,252 3,767 2,835
--------- --------- ---------
Total assets $ 92,145 $ 99,877 $ 110,289
========= ========= =========
(1) During 2002, the loss from operations at the Metals Group includes costs
of $609,000 incurred to close the Group's metal machining facility in
Arizona, and $1,290,000 of other losses related to the Arizona facility.
During 2001, the loss from operations at the Metals Group includes a
provision for asset impairment of $2,047,000, related to the planned
closure of the Arizona facility. During 2001, the loss from operations
at the Corporate Office was reduced by $1,274,000 as a result of the
demutualization of an insurance company.
(2) Excludes amortization of deferred financing expenses, which totaled
$440,000, $192,000, and $216,000, during 2002, 2001, and 2000,
respectively, and which is included in interest expense in the
consolidated financial statements.
(3) Capital expenditures for 2002 includes $365,000 of equipment purchased
under capitalized lease obligations and $247,000 of equipment obtained
with seller-provided financing. Capital expenditures for 2001, includes
$327,000 of equipment purchased under capitalized lease obligations.
-46-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 -- NET INCOME OR LOSS PER COMMON SHARE
The calculations of basic and diluted net income or loss per common
share for 2002, 2001, and 2000, are set forth below (in thousands, except per
share amounts). The pro forma conversion of the Company's $8 cumulative
convertible preferred stock, series B, was not dilutive. During 2000, the pro
forma conversion of the Company's 14% junior subordinated convertible notes,
prior to their conversion into 440,000 shares of the Company's common stock on
February 1, 2000, was not dilutive. As a result, the calculation of diluted net
income or loss per common share set forth below do not reflect pro forma
conversion of the series B preferred stock or the 14% junior subordinated
convertible notes.
For purposes of the earnings per share calculation, earnings are reduced
by (1) preferred stock dividends and (2) the amount by which payments made to
redeem preferred stock exceeded the par value of such shares. During 2002, 2001,
and 2000, the Company did not pay any dividends on, or redeem any shares of, the
series B preferred stock. The Company's failure to pay dividends on the series B
preferred stock, or to redeem shares of series B preferred stock during 2002,
2001, and 2000 reduced the Company's net loss per share by one cent per share
during each year.
YEARS ENDED DECEMBER 31
-------------------------------
2002 2001 2000
---- ---- ----
Numerator -- income (loss) applicable to commonstockholders $(1,567) $(2,151) $ (3,099)
======= ======== ========
Denominator -- weighted average common shares 4,828 4,828 4,781
======= ======= ========
Basic and diluted net income (loss) applicable to common
stockholders $(0.32) $ (0.45) $ (0.65)
======= ======= ========
NOTE 12 -- COMMITMENTS AND CONTINGENCIES
PURCHASE COMMITMENTS
At December 31, 2002, the Company had outstanding commitments to
purchase equipment of $1,019,000.
LEASES
The Company is lessee under various operating leases relating to storage
and office space, temporary office units, and equipment. Total rent expense
under operating leases aggregated $436,000, $410,000, and $400,000 for 2002,
2001, and 2000, respectively. At December 31, 2002, future minimum lease
commitments under noncancelable operating leases totaled $258,000, $149,000,
$116,000, and $65,000 for 2003, 2004, 2005, and 2006, respectively. Commitments
subsequent to 2006 are not significant.
LEGAL ACTIONS
The Company is subject to various claims and legal proceedings covering
a wide range of matters that arise in the ordinary course of its business
activities. It is the Company's policy to record accruals for
-47-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
such matters when a loss is deemed probable and the amount of such loss can be
reasonably estimated. The various actions to which the Company is or may in the
future be a party are at various stages of completion. Although there can be no
assurance as to the outcome of existing or potential litigation, the Company
believes, based upon the information currently available to it, that the outcome
of such actions will not have a material adverse effect upon its financial
position.
OTHER
The Company maintains insurance coverage for certain aspects of its
business and operations. Based on the Company's evaluation of the various risks
to which it may be exposed, the Company has elected to retain a portion of the
potential losses that it could experience in the future through the use of
various deductibles, limits, and retentions. These forms of self-insurance
subject the Company to possible future liability for which it is partially or
completely uninsured. Although there can be no assurance that it will be
successful in its efforts, the Company attempts to limit future liability
through, among other things, the ongoing training and education of its
employees, the use of safety programs, the ongoing testing and evaluation of the
safety and suitability of its workplace environments, the development of sound
business practices, and the exercise of care and judgment in the negotiation of
contracts.
NOTE 13 -- RELATED PARTIES
The Chairman of the Board and the President of the Company are the two
largest holders of the Company's common stock. They are also the holders of the
junior subordinated notes, and, together with affiliates, the holders of
$1,500,000 principal amount of the senior subordinated notes. In February 2000,
the Chairman of the Board and the President of the Company converted the junior
subordinated convertible notes in the principal amount of $1,000,000 into
440,000 shares of common stock.
The Chairman of the Board and the President of the Company are partners
of an investment banking firm that is retained by the Company to provide
management and investment banking services. The annual fee for such services has
been set at $500,000 for 2003. Additionally, the firm may receive incentive
compensation tied to the Company's operating performance and other compensation
for specific transactions completed by the Company with the assistance of the
firm. The Company also has agreed to reimburse the firm for certain expenses.
During each of 2002, 2001, and 2000, the Company paid the firm fees of $500,000.
During 2002, 2001, and 2000, the Company reimbursed the firm for expenses of
$196,000, $223,000, and $269,000, respectively.
NOTE 14 -- PLANT CLOSURES - ASSET IMPAIRMENT CHARGE
During the fourth quarter of 2001, the Company was notified that the
Metal Group's largest customer would cease purchasing components from the Metals
Group after December 31, 2001. During 2001, the customer purchased $5,937,000 of
machined metal components that were manufactured primarily at the Metals Group's
Arizona facility. As a result of the reduction in sales at the Arizona facility,
we closed the facility in 2002 and recorded, as of December 31, 2001, an
impairment charge of $2,047,000 to reduce to fair market value the carrying
value of the Arizona facility's land and building and certain metal machining
equipment idled by the loss of this business. The Company's estimate of fair
value was based on appraisals of the assets. The idled assets are currently
classified in property, plant, and equipment and are being depreciated at the
rate of $17,000 per month. These assets will be reclassified as assets held for
sale if and when they meet the criteria set forth in Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" (FAS 144), which we adopted on January 1, 2002. At
December 31, 2002, the book value of the assets remaining to be
-48-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
disposed of at the Arizona facility totaled $1,937,000, which includes
$1,737,000 for the land and building and $200,000 for equipment. The cost to
hold the building and the remaining equipment is projected to total
approximately $465,000 per annum, which includes approximately $265,000 for
building maintenance, property taxes, insurance, and security services and
$200,000 for depreciation expense.
The following table sets forth certain operating data of the Arizona
facility for 2002 and 2001 (dollar amounts in thousands):
YEAR ENDED
DECEMBER 31
---------------------
2002 2001
---- ----
Net sales $ 332 $ 8,954
======= =======
Operating loss before nonrecurring charges $(1,290) $ (523)
------- -------
Nonrecurring charges:
Plant closure costs:
Severance and other employee termination costs 246 --
Asset relocation costs 209 --
Other costs 154 --
------- -------
Subtotal 609 --
Impairment of long-lived assets -- 2,047
------- -------
609 2,047
------- -------
Operating loss $(1,899) $(2,570)
======= =======
Depreciation included in facility's operating loss $ 527 $ 1,658
======= =======
During 2002, operating losses other than plant closure costs resulted
primarily from the underabsorption of operating costs incurred due to minimal
sales and poor operating efficiencies while the facility was being shut down,
and, to a lesser extent, from the cost of maintaining, insuring, protecting, and
depreciating the building and the remaining equipment in the facility.
-49-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial data for the eight quarters ended December 31, 2002,
is set forth below (dollar amounts in thousands, except per share amounts).
QUARTERS ENDED 2002 QUARTERS ENDED 2001
------------------------------------------------ ---------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------- ------- -------- -------- ------- ------- -------- -------
Net sales $ 30,244 $ 32,996 $ 32,342 $ 29,270 $ 32,968 $ 33,831 $ 30,070 $ 29,333
Gross profit 2,968 4,640 4,212 2,314 4,419 5,638 3,745 3,345
Net income
(loss) (1,626) 207 227 (375) (381) 755 (532) (1,993)
Per share data:
Basic and
diluted net income
(loss) applicable to
common stockholders $ (0.34) $ 0.04 $ 0.05 $ (0.08) $ (0.08) $ 0.16 $ (0.11) $ (0.41)
Results of operations for the first quarter of 2002 included a pre-tax
charge of $522,000, or $0.11 per share, for costs incurred to close the
Company's facility in Casa Grande, Arizona. Results of operations for the fourth
quarter of 2002 included a pre-tax gain of $248,000, or $0.05 per share,
resulting from the sale of marketable securities. Results of operations for the
fourth quarter of 2001 included (1) a pre-tax gain of $1,274,000, or 26 cents
per share, resulting from the demutualization of an insurance company and (2) a
pre-tax loss of $2,047,000, or 42 cents per share, resulting from a provision
for asset impairment. For additional information see Note 14.
NOTE 16 -- INCOME FROM INSURANCE COMPANY DEMUTUALIZATION
During December 2001, a mutual insurance company, Principal Mutual
Holding Company, underwent a demutualization and converted to a stock company,
Principal Financial Group, Inc. (Principal). The Company was a member of the
mutual insurance company as a policyholder and received 53,103 shares of common
stock of Principal as a result of the demutualization. In accordance with
Financial Accounting Standards Board Emerging Issue Task Force Bulletin 99-4,
"Accounting For Stock Received from the Demutualization of a Mutual Insurance
Company," on December 31, 2001, the Company recorded these shares at fair value
of $1,274,000 by using the published closing price for the stock on that date.
The income resulting from the demutualization and the receipt of common stock is
presented in the Company's consolidated statement of operations for 2001 as a
separate line item. During the fourth quarter of 2002, the Company sold all
53,103 shares of its Principal common stock and realized a pre-tax gain of
$248,000.
NOTE 17 -- GOODWILL
On January 1, 2002, the Company adopted Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" (FAS 142). The
-50-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
standard, among other things, prohibits the amortization of goodwill and other
intangible assets with indefinite useful lives, and requires that goodwill be
reviewed for impairment at least annually and written down to fair value if
found to be impaired. Prior to the adoption of FAS No. 142, goodwill was
amortized over forty years.
At December 31, 2002, there was $7,831,000 of unamortized goodwill
recorded as an asset in the Company's consolidated balance sheet, including
$7,624,000 related to the Rubber Group and $207,000 related to the Metals Group.
The Company has determined that its goodwill is not impaired.
The following table shows the pro forma effect on net income and net
income per share for 2002, 2001, and 2000, if FAS 142 had been effective for
those periods and goodwill had not been amortized.
YEARS ENDED DECEMBER 31
---------------------------------------
2002 2001 2000
---- ---- ----
Net loss, as reported $ (1,567) $ (2,151) $ (3,099)
Add back amortization of goodwill, net of
applicable income taxes -- 316 315
--------- --------- ---------
Adjusted net loss $ (1,567) $ (1,835) $ (2,784)
========= ========= =========
Per share data:
Net loss per common share, as reported $ (0.32) $ (0.45) $ (0.65)
Add back amortization of goodwill, net of
applicable income taxes -- 0.07 0.07
--------- --------- ---------
Adjusted net loss per common share $ (0.32) $ (0.38) $ (0.58)
========= ========= =========
-51-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
- 52 -
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 is incorporated by reference to the
sections entitled "Election of Directors" and "Executive Officers" in the
Company's proxy statement to be issued in connection with its 2003 Annual
Meeting of Stockholders and to be filed with the Securities and Exchange
Commission (the Commission) not later than 120 days after December 31, 2002.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 is incorporated by reference to the
section entitled "Executive Compensation" in the Company's proxy statement to be
issued in connection with its 2003 Annual Meeting of Stockholders and to be
filed with the Commission not later than 120 days after December 31, 2002.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 is incorporated by reference to the
section entitled "Security Ownership" and "Equity Compensation Plan Information"
in the Company's proxy statement to be issued in connection with its 2003 Annual
Meeting of Stockholders and to be filed with the Commission not later than 120
days after December 31, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is incorporated by reference to the
section entitled "Certain Relationships and Transactions" in the Company's proxy
statement to be issued in connection with its 2003 Annual Meeting of
Stockholders and to be filed with the Commission not later than 120 days after
December 31, 2002.
ITEM 14. CONTROLS AND PROCEDURES
During the 90-day period prior to the date of this report, an evaluation
was performed under the supervision, and with the participation, of our
management, including our principal executive officers and our chief financial
officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on that evaluation, our principal executive
officers and our chief financial officer concluded that our disclosure controls
and procedures are effective to provide us with timely notice of material
information required to be disclosed in periodic reports filed with the U.S.
Securities and Exchange Commission. We also reviewed our internal controls, and
there have been no significant changes in our internal controls or in other
factors that could significantly affect our internal controls subsequent to the
date of our previous evaluation.
- 53 -
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The consolidated financial statements of Lexington Precision
Corporation (LPC) and its wholly owned subsidiaries, Lexington
Rubber Group, Inc. (LRGI) and Lexington Precision GmbH, are
included in Part II, Item 8.
2. FINANCIAL STATEMENT SCHEDULE
Schedule II, "Valuation and Qualifying Accounts and Reserves," is
included in this Part IV, Item 14, on page 70. All other schedules
are omitted because the required information is not applicable, not
material, or included in the consolidated financial statements or
the notes thereto.
3. EXHIBITS
3-1 Articles of Incorporation and Restatement thereof
3-2 By-Laws, as amended
3-3 Certificate of Correction dated September 21, 1976
3-4 Certificate of Ownership and Merger dated May 24, 1977
3-5 Certificate of Ownership and Merger dated May 31, 1977
3-6 Certificate of Reduction of Capital dated December 30, 1977
3-7 Certificate of Retirement of Preferred Shares dated December
30, 1977
3-8 Certificate of Reduction of Capital dated December 28, 1978
3-9 Certificate of Retirement of Preferred Shares dated December
28, 1978
3-10 Certificate of Reduction of Capital dated January 9, 1979
3-11 Certificate of Reduction of Capital dated December 20, 1979
3-12 Certificate of Retirement of Preferred Shares dated December
20, 1979
3-13 Certificate of Reduction of Capital dated December 16, 1982
3-14 Certificate of Reduction of Capital dated December 17, 1982
3-15 Certificate of Amendment of Restated Certificate of
Incorporation dated September 26, 1984
3-16 Certificate of Retirement of Stock dated September 24, 1986
- 54 -
\
3-17 Certificate of Amendment of Restated Certificate of
Incorporation dated November 21, 1986
3-18 Certificate of Retirement of Stock dated January 15, 1987
3-19 Certificate of Retirement of Stock dated February 22, 1988
3-20 Certificate of Amendment of Restated Certificate of
Incorporation dated January 6, 1989
3-21 Certificate of Retirement of Stock dated August 17, 1989
3-22 Certificate of Retirement of Stock dated January 9, 1990
3-23 Certificate of the Designations, Preferences and Relative
Participating, Optional and Other Special Rights of 12%
Cumulative Convertible Exchangeable Preferred Stock, Series
C, and the Qualifications, Limitations and Restrictions
thereof dated January 10, 1990
3-24 Certificate of Ownership and Merger dated April 25, 1990
3-25 Certificate of Elimination of 12% Cumulative Convertible
Exchangeable Preferred Stock, Series C, dated June 4, 1990
3-26 Certificate of Retirement of Stock dated March 6, 1991
3-27 Certificate of Retirement of Stock dated April 29, 1994
3-28 Certificate of Retirement of Stock dated January 6, 1995
3-29 Certificate of Retirement of Stock dated January 5, 1996
3-30 Certificate of Retirement of Stock dated January 6, 1997
3-31 Certificate of Retirement of Stock dated January 9, 1998
3-32 Certificate of Retirement of Stock dated January 13, 1999
3-33 Certificate of Retirement of Stock dated January 26, 2000
4-1 Certificate of Designations, Preferences, Rights and Number
of Shares of Redeemable Preferred Stock, Series B
4-2 Purchase Agreement dated as of February 7, 1985, between LPC
and L&D Precision Limited Partnership ("L&D Precision") and
exhibits thereto
4-3 Amendment Agreement dated as of April 27, 1990, between LPC
and L&D Precision with respect to Purchase Agreement dated as
of February 7, 1985
4-4 Recapitalization Agreement dated as of April 27, 1990,
between LPC and L&D Woolens Limited Partnership ("L&D
Woolens") and exhibits thereto
- 55 -
4-5 Specimen of Junior Subordinated Convertible Increasing Rate
Note, due May 1, 2000
4-6 Specimen of 14% Junior Subordinated Note, due May 1, 2000
4-7 Indenture dated as of August 1, 1993, between LPC and IBJ
Schroder Bank & Trust Company, as Trustee
4-8 Specimen of 12.75% Senior Subordinated Note, due February 1,
2000
4-9 Note Purchase Agreement dated October 27, 1997, between LPC
and Nomura Holding America, Inc. ("Nomura")
4-10 Specimen of 10.5% Senior Unsecured Note due February 1, 2000,
from LPC to Nomura
4-11 Note amendment dated January 28, 2000, between LPC and Nomura
4-12 Agreement dated January 31, 2000, between LPC and Nomura
4-13 Agreement relating to Junior Subordinated Convertible
Increasing Rate Notes dated January 31, 2000, among LPC,
Michael A. Lubin, and Warren Delano
4-14 Agreement relating to 14% Junior Subordinated Notes dated
January 31, 2000, between LPC and Michael A. Lubin
10-1 Purchase agreement dated as of February 7, 1985, between LPC
and L&D Precision and exhibits thereto
10-2 Amendment agreement dated as of April 27, 1990, between LPC
and L&D Precision with respect to purchase agreement dated as
of February 7, 1985
10-3 *Lexington Precision Corporation Flexible Compensation Plan,
as amended
10-4 *1986 Restricted Stock Award Plan, as amended
10-5 *Lexington Precision Corporation Retirement & Savings Plan,
as amended
10-6 *Description of 2002 Compensation Arrangements with Lubin,
Delano, & Company
10-7 *Corporate Office 2002 Management Cash Bonus Plan
10-8 Consent and Amendment Letter Agreement between Chemical Bank
of New Jersey and LPC dated as of December 29, 1993
- 56 -
10-9 Promissory Note of LRGI dated November 30, 1988, payable to
the order of Paul H. Pennell in the original principal amount
of $3,530,000
10-10 Guaranty dated as of November 30, 1988, from LPC to Paul H.
Pennell
10-11 Amendment agreement dated as of November 30, 1991, between
LRGI and Paul H. Pennell
10-12 Release and Notice Agreement dated as of March 31, 1993,
between LRGI and Paul H. Pennell
10-13 Recapitalization Agreement dated as of April 27, 1990,
between LPC and L&D Woolens and exhibits thereto
10-14 Accounts Financing Agreement [Security Agreement] dated as of
January 11, 1990, between Congress Financial Corporation
("Congress") and LPC
10-15 Accounts Financing Agreement [Security Agreement] dated as of
January 11, 1990, between Congress and LRGI
10-16 Covenants Supplement to Accounts Financing Agreement
[Security Agreement] dated as of January 11, 1990, between
Congress and LPC
10-17 Covenants Supplement to Accounts Financing Agreement
[Security Agreement] dated as of January 11, 1990, between
Congress and LRGI
10-18 Letter dated April 11, 1990, from LPC and Wise Die Casting,
Inc. to Congress
10-19 Letter Agreement dated February 28, 1991, between LPC and
Congress amending certain financing agreements and consent
thereto of LRGI
10-20 Letter Agreement dated February 28, 1991, between LRGI and
Congress amending certain financing agreements and consent
thereto of LPC
10-21 Letter Agreement dated January 14, 1994, between LPC and
Congress amending certain financing agreements and consent
thereto of LRGI
10-22 Letter Agreement dated January 14, 1994, between LRGI and
Congress amending certain financing agreements and consent
thereto of LPC
10-23 Letter Agreement dated March 25, 1994, between Congress and
LPC, and consent thereto of LRGI
10-24 Letter Agreement dated March 25, 1994, between Congress and
LRGI, and consent thereto of LPC
- 57 -
10-25 Letter Agreement dated as of August 1, 1994, between LPC and
Congress amending certain financing agreements and consent
thereto of LRGI
10-26 Letter Agreement dated as of August 1, 1994, between LRGI and
Congress amending certain financing agreements and consent
thereto of LPC
10-27 Trade Financing Agreement Supplement to Accounts Financing
Agreement [Security Agreement] dated as of July 19, 1994,
between LPC and Congress
10-28 Letter Agreement dated January 13, 1995, between LRGI and
Congress amending certain financing agreements and consent
thereto of LPC
10-29 Letter Agreement dated January 31, 1995, between LPC and
Congress amending certain financing agreements and consent
thereto of LRGI
10-30 Letter Agreement dated January 31, 1995, between LRGI and
Congress amending certain financing agreements and consent
thereto of LPC
10-31 Amendment to Financing Agreements dated August 1, 1995, from
LPC in favor of Congress
10-32 Amendment to Financing Agreements dated August 1, 1995, from
LRGI in favor of Congress
10-33 Amendment to Financing Agreements dated January 16, 1996,
from LPC in favor of Congress
10-34 Term Promissory Note dated January 16, 1996, in the amount of
$375,000 from LPC in favor of Congress
10-35 Term Promissory Note dated January 16, 1996, in the amount of
$450,000 from LPC in favor of Congress
10-36 Amendment to Financing Agreements dated February 28, 1999,
from LPC in favor of Congress Congress
10-37 Amendment to Financing Agreements and Consent dated March 14,
1996, from LPC in favor of Congress
10-38 Amendment to Financing Agreements and Consent dated March 14,
1996, from LRGI in favor of Congress
10-39 Term Note dated May 31, 1996, from LPC in favor of Congress
10-40 Amendment to Financing Agreements dated August 21, 1996, from
LRGI in favor of Congress
10-41 Amendment to Financing Agreements dated August 21, 1996, from
LPC in favor of Congress 10-42 Amendment to Financing
Agreements dated January 31, 1997, from LPC in favor of
Congress
- 58 -
10-42 Amendment to Financing Agreements dated January 31, 1997,
from LPC in favor of Congress
10-43 Amendment to Financing Agreements dated January 31, 1997,
from LRGI in favor of Congress
10-44 Credit Facility and Security Agreement and Rider A to Credit
Facility and Security Agreement dated January 31, 1997, from
LPC and LRGI in favor of Bank One, Akron, NA ("Bank One")
10-45 Promissory Note (Equipment Term Loan) dated January 31, 1997,
from LPC and LRGI in favor of Bank One
10-46 Promissory Note (North Canton Term Loan) dated January 31,
1997, from LPC and LRGI in favor of Bank One
10-47 Promissory Note (Vienna Term Loan) dated January 31, 1997,
from LPC and LRGI in favor of Bank One
10-48 Promissory Note (Casa Grande Note) dated January 31, 1997,
from LPC and LRGI in favor of Bank One
10-49 Promissory Note (LaGrange Term Loan) dated January 31, 1997,
from LPC and LRGI in favor of Bank One
10-50 Promissory Note (North Canton Equipment Loan) dated January
31, 1997, from LPC and LRGI in favor of Bank One
10-51 Fourth Amended and Restated Promissory Note dated March 11,
1997, from LRGI in favor of Congress
10-52 Fourth Amended and Restated Promissory Note dated March 11,
1997, from LPC in favor of Congress
10-53 Amendment to Financing Agreements dated March 11, 1997, from
LRGI in favor of Congress
10-54 Amendment to Financing Agreements dated March 11, 1997, from
LPC in favor of Congress
10-55 Loan and Security Agreement and Rider A to Loan and Security
Agreement dated March 19, 1997, from LPC in favor of The CIT
Group/Equipment Financing, Inc. ("CIT")
10-56 Promissory Note dated March 19, 1997, from LPC in favor of
CIT
10-57 Amendment to Financing Agreements and Consent dated April 17,
1997, between LPC and Congress
10-58 Amendment to Financing Agreements and Consent dated April 17,
1997, between LRGI and Congress
- 59 -
10-59 First Amendment Agreement dated April 17, 1997, among LPC,
LRGI, and Bank One
10-60 Specimen of Amended and Restated Promissory Note dated April
17, 1997, of LPC and LRGI to Bank One
10-61 Specimen of Promissory Note dated August 29, 1997, from LPC
to CIT
10-62 Note Purchase Agreement dated October 27, 1997, between LPC
and Nomura
10-63 Specimen of 10.5% Senior Unsecured Note due February 1, 2000,
from LPC to Nomura
10-64 Amendment No. 1 to Credit Facility and Security Agreement
dated December 31, 1997, among LPC, LRGI, and Bank One
10-65 Amendment No. 2 to Credit Facility and Security Agreement
dated March 20, 1998, among LPC, LRGI, and Bank One
10-66 Promissory Note dated March 31, 1998, from LPC in favor of
CIT
10-67 New Equipment Term Note dated June 26, 1998, from LPC in
favor of Congress
10-68 Second Amendment Agreement dated May 1, 1998, from LRGI in
favor of Paul H. Pennell
10-69 Amendment No. 1 to Loan and Security Agreement dated June 30,
1998, between LPC and CIT
10-70 Amendment No. 3 to Credit Facility and Security Agreement
dated June 30, 1998, among LPC, LRGI, and Bank One
10-71 Amendment to Financing Agreements and Consent dated August
13, 1998, between LPC and Congress
10-72 Amendment to Financing Agreements and Consent dated August
13, 1998, between LRGI and Congress
10-73 Amendment to Financing Agreements and Consent dated October
20, 1998, between LPC and Congress
10-74 Amendment to Financing Agreements and Consent dated October
20, 1998, between LRGI and Congress
10-75 Amendment No. 2 to Loan and Security Agreement dated November
30, 1998, between LPC and CIT
10-76 New Equipment Term Note dated December 16, 1998, between LPC
and Congress
- 60 -
10-77 Amendment to Financing Agreements dated January 28, 1999,
between LPC and Congress
10-78 Amendment to Financing Agreements dated January 28, 1999,
between LRGI and Congress
10-79 Term Promissory Note dated January 28, 1999, between LRGI and
Congress
10-80 Term Promissory Note dated January 28, 1999, between LPC and
Congress
10-81 Fifth Amended and Restated Promissory Note dated January 28,
1999, between LPC and Congress
10-82 Amendment No. 6 to Credit Facility and Security Agreement
dated January 31, 1999, among LPC, LRGI, and Bank One
10-83 Fifth Amendment Agreement dated March 10, 1999, among LPC,
LRGI, and Bank One
10-84 Promissory Note (Additional Equipment Term Loan) dated March
10, 1999, among LPC, LRGI, and Bank One
10-85 Promissory Note dated March 30, 1999, between LPC and CIT
10-86 Amendment No. 3 to Loan and Security Agreement dated March
30, 1999, between LPC and CIT
10-87 Amendment to Financing Agreements dated March 31, 1999,
between LPC and Congress
10-88 Term Promissory Note dated March 31, 1999, between LPC and
Congress
10-89 Amendment to Financing Agreements dated March 31, 1999,
between LRGI and Congress
10-90 Term Promissory Note dated March 31, 1999, between LRGI and
Congress
10-91 Promissory Note dated July 29, 1999, between LPC and CIT
10-92 New Equipment Term Note dated July 30, 1999, between LRGI and
Congress
10-93 Amendment to Financing Agreements dated October 1, 1999,
between LPC and Congress
10-94 Amendment to Financing Agreements dated October 1, 1999,
between LRGI and Congress
10-95 New Equipment Note dated December 6, 1999, between LRGI and
Congress
10-96 Term Promissory Note dated December 30, 1999, between LPC and
Congress
- 61 -
10-97 Sixth Amended and Restated Promissory Note dated December
30, 1999, between LPC and Congress
10-98 Amendment to financing agreements dated December 30, 1999,
between LPC and Congress
10-99 Amendment no. 5 to Loan and Security Agreement dated
December 31, 1999, between LPC and CIT
10-100 Amendment no. 8 to Credit Facility and Security Agreement
dated December 31, 1999 among LPC, LRGI, and Bank One
10-101 Note amendment dated January 28, 2000, between LPC and
Nomura
10-102 Agreement dated January 31, 2000, between LPC and Nomura
10-103 Third amendment agreement between LRGI and Paul H. Pennell
10-104 Agreement dated January 31, 2000, among LPC, LRGI, and
Congress
10-105 Agreement dated January 31, 2000, between LPC and CIT
10-106 Agreement dated January 31, 2000, among LPC, LRGI, and Bank
One
10-107 Amendment no. 9 to Credit Facility and Security Agreement
dated as of December 31, 1999, among LPC, LRGI, and Bank One
10-108 New equipment note dated April 24, 2000, between LPC and
Congress
10-109 New equipment note dated April 24, 2000, between LRGI and
Congress
10-110 Agreement relating to 14% Junior Subordinated Notes dated
April 30, 2000, between LPC and Michael A. Lubin
10-111 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated April 30, 2000, among LPC,
Michael A. Lubin, and Warren Delano
10-112 Note amendment no. 2 to note dated as of April 30, 2000,
between LPC and Tri-Links Investment Trust, as successor to
Nomura
10-113 Fourth amendment agreement dated April 30, 2000, between
LRGI and Paul H. Pennell
10-114 Agreement dated as of April 30, 2000, among LPC, LRGI, and
Congress
10-115 Agreement dated as of April 30, 2000, between LPC and CIT
10-116 Agreement dated as of April 30, 2000, among LPC, LRGI, and
Bank One
- 62 -
10-117 Amendment to financing agreements dated May 12, 2000,
between LPC and Congress
10-118 Amendment to financing agreements dated May 12, 2000,
between LRGI and Congress
10-119 Promissory note dated June 26, 2000, between LPC and CIT
10-120 Amendment No. 4 to Loan and Security Agreement dated June
26, 2000, between LPC and CIT
10-121 Amendment No. 10 to Credit Facility and Security Agreement
dated as of June 30, 2000, between LPC, LRGI, and Bank One
10-122 Agreement relating to 14% Junior Subordinated Notes dated
July 31, 2000, between LPC and Michael A. Lubin
10-123 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated July 31, 2000, among LPC, Michael
A. Lubin, and Warren Delano
10-124 Note amendment No. 3 to Note dated as of July 31, 2000,
between LPC and Tri-Links Investment Trust, as successor to
Nomura
10-125 Fifth amendment agreement dated July 31, 2000, between LRGI
and Paul H. Pennell
10-126 Agreement dated as of July 31, 2000, among LPC, LRGI, and
Congress
10-127 Agreement dated as of July 31, 2000, between LPC and CIT
10-128 Agreement dated as of July 31, 2000, among LPC, LRGI, and
Bank One
10-129 Congress covenant waiver dated August 11, 2000
10-130 Congress covenant amendment dated as of August 31, 2000
10-131 Agreement relating to 14% Junior Subordinated Notes dated
October 31, 2000, between LPC and Michael A. Lubin
10-132 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated October 31, 2000, among LPC,
Michael A. Lubin, and Warren Delano
10-133 Note amendment No. 4 to Note dated as of October 31, 2000,
between LPC and Tri-Links Investment Trust, as successor to
Nomura
10-134 Sixth amendment agreement dated October 31, 2000, between
LRGI and Paul H. Pennell
10-135 Agreement dated as of October 31, 2000, among LPC, LRGI, and
Congress
- 63 -
10-136 Agreement dated as of October 31, 2000, between LPC and CIT
10-137 Agreement dated as of October 31, 2000, among LPC, LRGI, and
Bank One
10-138 Congress covenant amendment dated November 30, 2000
10-139 Amendment No. 6 to Loan and Security Agreement dated
December 31, 2000, between LPC and CIT
10-140 Amendment No. 12 to Credit Facility and Security Agreement
dated December 31, 2000, between LPC, LRGI, and Bank One
10-141 Amendment No. 11 to Credit Facility and Security Agreement
dated January 31, 2001, between LPC, LRGI, and Bank One
10-142 Agreement relating to 14% Junior Subordinated Notes dated
January 31, 2001, between LPC and Michael A. Lubin
10-143 Agreement relating to Junior Subordinated Convertible
Increasing Rate Notes dated January 31, 2001, between LPC,
Michael A. Lubin, and Warren Delano
10-144 Note amendment No.4 relating to Note dated as of January 31,
2001, between LPC and Tri-Links Investment Trust, as
successor to Nomura
10-145 Seventh amendment agreement dated January 31, 2001 between
LRGI and Paul Pennell
10-146 Agreement dated January 31, 2001, between LPC, LRGI, and
Congress
10-147 Agreement dated January 31, 2001, between LPC and CIT
10-148 Agreement dated January 31, 2001, between LPC, LRGI, and
Congress
10-149 New Equipment Term Note date February 8, 2001, between LRG
and Congress
10-150 Letter agreement dated February 8, 2001, between Congress
and LRGI, and consent thereto of LPC
10-151 Letter agreement dated February 8, 2001, between Congress
and LPC, and consent thereto of LRGI
10-152 Agreement relating to 14% Junior Subordinated Notes dated as
of April 30, 2001, between LPC and Michael A. Lubin
10-153 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of April 30, 2001, among LPC,
Michael A. Lubin, and Warren Delano
10-154 Amendment No. 6 to Note dated as of April 30, 2001, between
LPC and Tri-Links Investment Trust, as successor to Nomura
10-155 Eight amendment agreement dated April 30, 2001, between LRGI
and Paul H. Pennell
- 64 -
10-156 Agreement dated as of April 30, 2001, among LPC, LRGI, and
Congress
10-157 Agreement dated as of April 30, 2001, between LPC and CIT
10-158 Agreement dated as of April 30, 2001, among LPC, LRGI, and
Bank One
10-159 Agreement relating to 14% Junior Subordinated Notes dated as
of July 31, 2001, between LPC and Michael A. Lubin
10-160 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of July 31, 2001, among LPC,
Michael A. Lubin, and Warren Delano
10-161 Amendment No. 7 to Note dated as of July 31, 2001, between
LPC and Tri-Links Investment Trust, as successor to Nomura
10-162 Ninth amendment agreement dated July 31, 2001, between LRGI
and Paul H. Pennell
10-163 Agreement dated as of July 31, 2001, among LPC, LRGI, and
Congress
10-164 Congress covenant amendment dated June 29, 2001
10-165 Agreement dated as of July 31, 2001, between LPC and CIT
10-166 Agreement dated as of July 31, 2001, among LPC, LRGI, and
Bank One
10-167 Amendment to promissory note dated July 31, 2001, between
LPC, LRGI, and Bank One
10-168 Amendment to promissory note dated July 31, 2001, between
LPC, LRGI, and Bank One
10-169 Bank One covenant amendment dated June 30, 2001
10-170 ** Long term contract between Delphi Automotive Systems LLC
and Lexington Connector Seals
10-171 Agreement relating to 14% Junior Subordinated Notes dated as
of October 31, 2001, between LPC and Michael A. Lubin
10-172 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of October 31, 2001, among
LPC, Michael A. Lubin, and Warren Delano
10-173 Amendment No. 8 to Note dated as of October 31, 2001,
between LPC and Tri-Links Investment Trust, as successor to
Nomura
10-174 Tenth amendment agreement dated as of October 31, 2001,
between LRGI and Paul H. Pennell
- 65 -
10-175 Agreement dated as of October 31, 2001, among LPC, LRGI, and
Congress
10-176 Congress covenant amendment dated as of August 30, 2001
10-177 Agreement dated as of October 31, 2001, between LPC and CIT
10-178 Agreement dated as of October 31, 2001, among LPC, LRGI, and
Bank One
10-179 Agreement relating to 14% Junior Subordinated Notes dated as
of January 31, 2002, between LPC and Michael A. Lubin
10-180 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of January 31, 2002, among
LPC, Michael A. Lubin, and Warren Delano
10-181 Amendment No. 9 to Note dated as of January 31, 2002,
between LPC and Tri-Links investment Trust, as successor to
Nomura
10-182 Agreement dated as of January 31, 2002, among LPC, LRGI, and
Congress
10-183 Agreement dated as of January 31, 2002, between LPC and CIT
10-184 Agreement dated as of January 31, 2002, among LPC, LRGI, and
Bank One
10-185 Extension letter dated March 28, 2002 from Bank One to LPC
10-186 Congress covenant amendment dated March 29, 2002
10-187 Bank One covenant amendment dated as of December 31, 2001
10-188 CIT covenant amendment dated as of February 28, 2002
10-189 Agreement dated as of March 29, 2002, among LPC, LRGI, and
Congress
10-190 Agreement relating to 14% Junior Subordinated Noted dated as
of April 30, 2002, between LPC and Michael A. Lubin
10-191 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of April 30, 2002, among LPC,
Michael A. Lubin, and Warren Delano
10-192 Agreement dated as of April 30, 2002, among LPC, LRGI, and
Bank One
10-193 Sixth Amendment Agreement dated April 1, 2002, between LPC,
LRGI, and Bank One
10-194 Agreement dated as of April 30, 2002, between LPC and CIT
10-195 Agreement relating to 14% Junior Subordinated Notes dated as
of June 30, 2002, between LPC and Michael A. Lubin
- 66 -
10-196 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of July 31, 2002, among LPC,
Michael A. Lubin, and Warren Delano
10-197 Agreement dated as of June 28, 2002, between LPC and
Congress
10-198 Agreement dated as of June 28, 2002, between LRGI and
Congress
10-199 Agreement dated as of April 30, 2002 among LPC, LRGI, and
Bank One
10-200 Agreement dated July 31, 2002, among LPC, LRGI, and Bank One
10-201 Seventh Amendment Agreement dated June 26, 2002, between
LPC, LRGI, and Bank One
10-202 Agreement dated as of April 30, 2002, between LPC and CIT
10-203 Agreement dated as of July 31, 2002, between LPC and CIT
10-204 Agreement relating to 14% Junior Subordinated Notes dated as
of October 31, 2002, between LPC and Michael A. Lubin
10-205 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of October 31, 2002, among
LPC, Michael A. Lubin, and Warren Delano
10-206 Agreement dated as of August 29, 2002, between LPC and
Congress
10-207 Agreement dated as of August 29, 2002, between LRGI and
Congress
10-208 Agreement dated as of September 2, 2002, among LPC, LRGI,
and Congress
10-209 Agreement dated as of October 31, 2002, between LPC and
Congress
10-210 Agreement dated as of October 31, 2002, between LRGI and
Congress
10-211 Agreement dated as of October 31, 2002, among LPC, LRGI, and
Congress
10-212 Amendment No. 16 to Credit Facility and Security Agreement
dated as of July 31, 2002, among LPC, LRGI, and Bank One
10-213 Eighth Amendment Agreement dated September 20, 2002, between
LPC, LRGI, and Bank One
10-214 Agreement dated as of October 31, 2002, among LPC, LRGI, and
Bank One
10-215 Ninth Amendment Agreement dated November 1, 2002, between
LPC, LRGI, and Bank One
10-216 Amendment No. 8 to Loan and Security Agreement dated as of
August 31, 2002, between LPC and CIT
- 67 -
10-217 Agreement dated as of October 31, 2002, between LPC and CIT
10-218 Agreement relating to 14% Junior Subordinated Notes dated as
of January 31, 2003, between LPC and Michael A. Lubin
10-219 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated as of January 31, 2003, among
LPC, Michael A. Lubin, and Warren Delano
10-220 Agreement dated as of January 3, 2003, between LPC and
Congress
10-221 Agreement dated as of January 3, 2003, between LRGI and
Congress
10-222 Agreement dated as of January 3, 2003, among LPC, LRGI, and
Congress
10-223 Agreement dated as of February 14, 2003, between LPC and
Congress
10-224 Agreement dated as of February 14, 2003, between LRGI and
Congress
10-225 Agreement dated as of February 17, 2003, among LPC, LRGI,
and Congress
10-226 Agreement dated as of January 31, 2003, between LPC and CIT
10-227 Tenth Amendment Agreement dated January 2, 2003, between
LPC, LRGI, and Bank One
10-228 Agreement dated as of January 31, 2003, among LPC, LRGI, and
Bank One
10-229 Eleventh Amendment Agreement dated February 17, 2003,
between LPC, LRGI, and Bank One
10-230 Agreement dated as of March 28, 2003, among LPC, LRGI, and
Bank One
21-1 Significant Subsidiary of Registrant
99-1 Certification of Michael A. Lubin, Chairman of the Board and
Co-Principal Executive Officer of the registrant, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99-2 Certification of Warren Delano, President and Co-Principal
Executive Officer of the registrant, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99-3 Certification of Dennis J. Welhouse, Chief Financial Officer
and Principal Financial Officer of the registrant, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
* Indicates a management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to
Item 14(a)(3).
- 68 -
** This Exhibit has been filed in redacted form pursuant to a
request for confidential treatment, filed separately with
the Securities and Exchange Commission pursuant to Rule
24b-2.
Note: Pursuant to section (b)(4)(iii) of item 601 of Regulation
S-K, LPC agrees to furnish to the Commission upon request
documents defining the rights of other holders of long-term
debt.
(b) REPORTS ON FORM 8-K
On October 18, 2002, we filed a report on Form 8-K that included a
press release dated October 18,, 2002, stating that we were extending the
expiration date of our offer to exchange our senior subordinated notes from
October 18, 2002, to 12 midnight, New York City Time on October 31, 2002, unless
further extended.
On October 31, 2002, we filed a report on Form 8-K that included a
press release dated October 31, 2002, stating that we were extending the
expiration date of our offer to exchange our senior subordinated notes from
October 31, 2002, to 12 midnight, New York City Time on November 15, 2002,
unless further extended.
On November 13, 2002, we filed a report on Form 8-K that included a
press release dated November 13, 2002, stating that we were extending the
expiration date of our offer to exchange our senior subordinated notes from
November 15, 2002, to 12 midnight, New York City Time on December 4, 2002,
unless further extended.
On December 4, 2002, we filed a report on Form 8-K that included a
press release dated December 4, 2002, stating that we were extending the
expiration date of our offer to exchange our senior subordinated notes from
December 4, 2002, to 12 midnight, New York City Time on December 20, 2002,
unless further extended.
On December 20, 2002, we filed a report on Form 8-K that included a
press release dated December 20, 2002, stating that we were extending the
expiration date of our offer to exchange our senior subordinated notes from
December 20, 2002, to 12 midnight, New York City Time on January 10, 2003,
unless further extended.
- 69 -
LEXINGTON PRECISION CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(THOUSANDS OF DOLLARS)
BALANCE AT CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND FROM AT END
OF PERIOD EXPENSES RESERVES OF PERIOD
--------- -------- -------- ---------
ALLOWANCE FOR
DOUBTFUL ACCOUNTS
-----------------
Year ended December 31, 2002 $ 669 $ 211 $ 218 $ 662
Year ended December 31, 2001 181 523 35 669
Year ended December 31, 2000 248 7 74 181
Year ended December 31, 1999 197 73 22 248
INVENTORY RESERVE
-----------------
Year ended December 31, 2002 $ 1,370 $ 558 $ 866 $ 1,062
Year ended December 31, 2001 872 1,135 637 1,370
Year ended December 31, 2000 777 617 522 872
Year ended December 31, 1999 591 302 116 777
- 70 -
SIGNATURES
Pursuant to the requirements of Section 13 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)
By: /s/ Warren Delano
----------------------------
Warren Delano, President
March 28, 2003
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 28, 2003:
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS:
/s/ Michael A. Lubin
- --------------------------------------------
Michael A. Lubin, Chairman of the Board
/s/ Warren Delano
- --------------------------------------------
Warren Delano, President and Director
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Dennis J. Welhouse
- --------------------------------------------
Dennis J. Welhouse, Senior Vice President
and Chief Financial Officer
DIRECTORS:
/s/ William B. Conner
- --------------------------------------------
William B. Conner, Director
/s/ Kenneth I. Greenstein
- --------------------------------------------
Kenneth I. Greenstein, Secretary and
Director
/s/ Joseph A. Pardo
- --------------------------------------------
Joseph A. Pardo, Director
/s/ Elizabeth H. Ruml
- --------------------------------------------
Elizabeth H. Ruml, Director
- 71 -
CERTIFICATIONS
I, Michael A. Lubin, certify that:
1. I have reviewed this annual report on Form 10-K of Lexington Precision
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 28, 2003
--------------
/s/ Michael A. Lubin
------------------------------
Michael A. Lubin
Chairman of the Board
(Co-Principal Executive Officer)
- 72 -
I, Warren Delano, certify that:
1. I have reviewed this annual report on Form 10-K of Lexington Precision
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 28, 2003
---------------
/s/ Warren Delano
----------------------------
Warren Delano
President
(Co-Principal Executive Officer)
- 73 -
I, Dennis J. Welhouse, certify that:
1. I have reviewed this annual report on Form 10-K of Lexington Precision
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 28, 2003
--------------
/s/ Dennis J. Welhouse
--------------------------------
Dennis J. Welhouse
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
- 74 -
EXHIBIT INDEX
Exhibit
Number Exhibit Location
- ------ ------- --------
3-1 Articles of Incorporation and Restatement Incorporated by reference from Exhibit 3-1 Lexington
thereof Precision Corporation's (the "Company") to the
Company's Form 10-K for the year ended May 31, 1981
located under Securities and Exchange Commission File
No. 0-3252 ("1981 10-K")
3-2 By-laws, as amended Incorporated by reference from Exhibit 3-2 to
1998 10-K
3-3 Certificate of Correction dated September Incorporated by reference from Exhibit 3-3 to the
21, 1976 Company's Form 10-K for the year ended May 31, 1983
located under Securities and Exchange Commission File
No. 0-3252 ("1983 10-K")
3-4 Certificate of Ownership and Merger dated Incorporated by reference from Exhibit 3-4 to
May 24, 1977 1983 10-K
3-5 Certificate of Ownership and Merger dated Incorporated by reference from Exhibit 3-5 to
May 31, 1977 1983 10-K
3-6 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-6 to
December 30, 1977 1983 10-K
3-7 Certificate of Retirement of Preferred Shares Incorporated by reference from Exhibit 3-7 to
dated December 30, 1977 1983 10-K
3-8 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-8 to
December 28, 1978 1983 10-K
3-9 Certificate of Retirement of Preferred Shares Incorporated by reference from Exhibit 3-9 to
dated December 28, 1978 1983 10-K
3-10 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-10 to
January 9, 1979 1983 10-K
3-11 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-11 to
December 20, 1979 1983 10-K
3-12 Certificate of Retirement of Preferred Shares Incorporated by reference from Exhibit 3-12 to
dated December 20, 1979 1983 10-K
3-13 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-13 to
December 16, 1982 1983 10-K
3-14 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-14 to
December 17, 1982 1983 10-K
3-15 Certificate of Amendment of Restated Incorporated by reference from Exhibit 3-15 to the
Certificate of Incorporation dated September Company's Form 10-K for the year ended May 31, 1985
26, 1984 located under Securities and Exchange Commission File
No. 0-3252
3-16 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 4-3 to the
September 24, 1986 Company's Registration Statement on Form S-2 located
under Securities and Exchange Commission File No. 33-
9380 ("1933 Act Registration Statement")
3-17 Certificate of Amendment of Restated Incorporated by reference from Exhibit 3-17 to the
Certificate of Incorporation dated November Company's Form 10-K for the year ended May 31, 1987
21, 1986 located under Securities and Exchange Commission File
No. 0-3252
3-18 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 4-5 to
January 15, 1987 Amendment No. 1 to 1933 Act Registration Statement
3-19 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-19 to the
February 22, 1988 Company's Form 10-K for the year ended May 31, 1989
located under Securities and Exchange Commission File
No. 0-3252 ("May 31, 1989 10-K")
3-20 Certificate of Amendment of Restated Incorporated by reference from Exhibit 3-20 to May 31,
Certificate of Incorporation dated January 6, 1989 10-K
1989
3-21 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-21 to May 31,
August 17, 1989 1989 10-K
3-22 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-22 to the
January 9, 1990 Company's Form 10-K for the seven months ended
December 31, 1989 located under Securities and
Exchange Commission File No. 0-3252 ("December 31,
1989 10-K")
3-23 Certificate of the Designations, Preferences Incorporated by reference from Exhibit 3-1 to the
and Relative Participating, Optional and Other Company's Form 10-Q for the quarter ended November
Special Rights of 12% Cumulative 30, 1989 located under Securities and Exchange
Convertible Exchangeable Preferred Stock, Commission File No. 0-3252 ("November 30, 1989
Series C, and the Qualifications, Limitations 10-Q")
and Restrictions thereof dated January 10,
1990
3-24 Certificate of Ownership and Merger dated Incorporated by reference from Exhibit 3-24 to
April 25, 1990 December 31, 1989 10-K
3-25 Certificate of Elimination of 12% Cumulative Incorporated by reference from Exhibit 3-25 to the
Convertible Exchangeable Preferred Stock, Company's Form 10-K for the year ended December 31,
Series C, dated June 4, 1990 1990 located under Securities and Exchange
Commission File No. 0-3252 ("1990 10-K")
3-26 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-26 to
March 6, 1991 1990 10-K
- 2 -
3-27 Certificate of Retirement of Stock dated April Incorporated by reference from Exhibit 3-27 to
29, 1994 1994 10-K
3-28 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-28 to
January 6, 1995 1994 10-K
3-29 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-29 to
January 5, 1996 1995 10-K
3-30 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-30 to
January 6, 1997 1996 10-K
3-31 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-31 to
January 9, 1998 1997 10-K
3-32 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-32 to
January 13, 1999 1998 10-K
3-33 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-33 to
January 26, 2000 1999 10-K
4-1 Certificate of Designations, Preferences, Incorporated by reference from Exhibit 3-3 to
Rights and Number of Shares of Redeemable 1981 10-K
Preferred Stock, Series B
4-2 Purchase Agreement dated as of February 7, Incorporated by reference from Exhibit 4-1 to the
1985, between LPC and L&D Precision Company's Form 8-K dated February 7, 1985 (date of
Limited Partnership ("L&D Precision") and earliest event reported) located under Securities and
exhibits thereto Exchange Commission File No. 0-3252
4-3 Amendment Agreement dated as of April 27, Incorporated by reference from Exhibit 10-2 to
1990, between LPC and L&D Precision with 1990 10-K
respect to Purchase Agreement dated as of
February 7, 1985
4-4 Recapitalization Agreement dated as of April Incorporated by reference from Exhibit 4-10 to
27, 1990, between LPC and L&D Woolens December 31, 1989 10-K
Limited Partnership ("L&D Woolens") and
exhibits thereto
4-5 Specimen of Junior Subordinated Convertible Incorporated by reference from Exhibit 4-11 to
Increasing Rate Note, due May 1, 2000 December 31, 1989 10-K
4-6 Specimen of 14% Junior Subordinated Note, Incorporated by reference from Exhibit 10-2 to the
due May 1, 2000 Company's Form 8-K dated December 10,1993 (date of
earliest event reported) located under Securities and
Exchange Commission File No. 0-3252
4-7 Indenture dated as of August 1, 1993, Incorporated by reference from Exhibit 4-2 to the
between LPC and IBJ Schroder Bank & Company's Form 8-K dated January 18, 1994 (date of
Trust Company, as Trustee earliest event reported) located under Securities and
Exchange Commission File No. 0-3252
- 3 -
4-8 Specimen of 12.75% Senior Subordinated Included in Exhibit 4-7 hereto
Note, due February 1, 2000
4-9 Note Purchase Agreement dated October 27, Incorporated by reference from Exhibit 10-2 to the
1997, between LPC and Nomura Holding Company's Form 10-Q for the quarter ended June 30,
America, Inc. ("Nomura") 1997 located under Securities and Exchange
Commission File No. 0-3252 ("June 30, 1997 Form
10-Q")
4-10 Specimen of 10.5% Senior Unsecured Note Incorporated by reference from Exhibit 10-3 to June 30,
due February 1, 2000, from LPC to Nomura 1997 Form 10-Q
4-11 Note Amendment dated January 28, 2000, Incorporated by reference from Exhibit 4-11 to
between LPC and Nomura 1999 10-K
4-12 Agreement dated January 31, 2000, between Incorporated by reference from Exhibit 4-12 to
LPC and Nomura 1999 10-K
4-13 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 4-13 to
Convertible Increasing Rate Notes among 1999 10-K
LPC, Michael A. Lubin, and Warren Delano
4-14 Agreement relating to 14% Junior Incorporated by reference from Exhibit 4-14 to
Subordinated Notes between LPC and 1999 10-K
Michael A. Lubin
10-1 Purchase Agreement dated as of February 7, See Exhibit 4-2 hereto
1985, between LPC and L&D Precision and
exhibits thereto
10-2 Amendment Agreement dated as of April 27, See Exhibit 4-3 hereto
1990, between LPC and L&D Precision with
respect to Purchase Agreement dated as of
February 7, 1985
10-3 Lexington Precision Corporation Flexible Incorporated by reference from Exhibit 10-3 to the
Compensation Plan, as amended Company's Form 10-K for the year ended December 31,
1991 located under Securities and Exchange
Commission File No. 0-3252 ("1991 10-K")
10-4 1986 Restricted Stock Award Plan, as Incorporated by reference from Exhibit 10-38 to
amended December 31, 1989 10-K
10-5 Lexington Precision Corporation Retirement Incorporated by reference from Exhibit 10-5 to
and Savings Plan, as amended December 31, 1998 10-K
10-6 Description of 2001 Compensation Filed with this Form 10-K
Arrangements with Lubin, Delano, &
Company
10-7 Corporate Office 2001 Management Cash Filed with this Form 10-K
Bonus Plan
- 4 -
10-8 Consent and Amendment Letter Agreement Incorporated by reference from Exhibit 10-1 to the
between Chemical Bank of New Jersey and Company's Form 8-K dated December 30, 1993 (date of
LPC dated as of December 29, 1993 earliest event reported) located under Securities and
Exchange Commission File No. 0-3252
10-9 Promissory Note dated November 30, 1988, Incorporated by reference from Exhibit 10-32 to May
of LRGI payable to the order of Paul H. 31, 1989 10-K
Pennell in the original principal amount of
$3,530,000
10-10 Guaranty dated as of November 30, 1988, Incorporated by reference from Exhibit 10-33 to May
from LPC to Paul H. Pennell 31, 1989 10-K
10-11 Amendment Agreement dated as of Incorporated by reference from Exhibit 10-28 to
November 30, 1991, between LRGI and Paul 1991 10-K
H. Pennell
10-12 Release and Notice Agreement dated as of Incorporated by reference from Exhibit 10-40 to the
March 31, 1993, between LRGI and Paul H. Company's Form 10-K for the year ended December 31,
Pennell 1992 located under Securities and Exchange
Commission File No. 0-3252
10-13 Recapitalization Agreement dated as of April See Exhibit 4-4 hereto
27, 1990, between LPC and L&D Woolens
and exhibits thereto
10-14 Accounts Financing Agreement [Security Incorporated by reference from Exhibit 4-2 to
Agreement] dated as of January 11, 1990, November 30, 1989 10-Q
between Congress Financial Corporation
("Congress") and LPC
10-15 Accounts Financing Agreement [Security Incorporated by reference from Exhibit 4-3 to
Agreement] dated as of January 11, 1990, November 30, 1989 10-Q
between Congress and LRGI
10-16 Covenants Supplement to Accounts Incorporated by reference from Exhibit 10-49 to
Financing Agreement [Security Agreement] 1990 10-K
dated as of January 11, 1990, between
Congress and LPC
10-17 Covenants Supplement to Accounts Incorporated by reference from Exhibit 10-50 to
Financing Agreement [Security Agreement] 1990 10-K
dated as of January 11, 1990, between
Congress and LRGI
10-18 Letter dated April 11, 1990, from LPC and Incorporated by reference from Exhibit 10-51 to
Wise Die Casting, Inc. to Congress 1990 10-K
10-19 Letter Agreement dated February 28, 1991, Incorporated by reference from Exhibit 10-54 to
between LPC and Congress amending certain 1990 10-K
financing agreements and consent thereto of
LRGI
- 5 -
10-20 Letter Agreement dated February 28, 1991, Incorporated by reference from Exhibit 10-56 to
between LRGI and Congress amending 1990 10-K
certain financing agreements and consent
thereto of LPC
10-21 Letter Agreement dated January 14, 1994, Incorporated by reference from Exhibit 10-26 to the
between LPC and Congress amending certain Company's Form 10-K for the year ended December 31,
financing agreements and consent thereto of 1993 located under Securities and Exchange
LRGI Commission File No. 0-3252 ("1993 10-K")
10-22 Letter Agreement dated January 14, 1994, Incorporated by reference from Exhibit 10-27 to
between LRGI and Congress amending 1993 10-K
certain financing agreements and consent
thereto of LPC
10-23 Letter Agreement dated March 25, 1994, Incorporated by reference from Exhibit 10-30 to
between Congress and LPC, and consent 1993 10-K
thereto of LRGI
10-24 Letter Agreement dated March 25, 1994, Incorporated by reference from Exhibit 10-31 to
between Congress and LRGI, and consent 1993 10-K
thereto of LPC
10-25 Letter Agreement dated as of August 1, Incorporated by reference from Exhibit 10-1 to the
1994, between LPC and Congress amending Company's Form 10-Q for the quarter ended September
certain financing agreements and consent 30, 1994 located under Securities and Exchange
thereto of LRGI Commission File No. 0-3252 ("September 30, 1994
10-Q")
10-26 Letter Agreement dated as of August 1, Incorporated by reference from Exhibit 10-2 to
1994, between LRGI and Congress September 30, 1994 10-Q
amending certain financing agreements and
consent thereto of LPC
10-27 Trade Financing Agreement Supplement to Incorporated by reference from Exhibit 10-3 to
Accounts Financing Agreement [Security September 30, 1994 10-Q
Agreement] dated as of July 19, 1994,
between LPC and Congress
10-28 Letter Agreement dated January 13, 1995, Incorporated by reference from Exhibit 10-32 to
between LRGI and Congress amending 1994 Form 10-K
certain financing agreements and consent
thereto of LPC
10-29 Letter Agreement dated January 31, 1995, Incorporated by reference from Exhibit 10-34 to
between LPC and Congress amending certain 1994 Form 10-K
financing agreements and consent thereto of
LRGI
10-30 Letter Agreement dated January 31, 1995, Incorporated by reference from Exhibit 10-36 to
between LRGI and Congress amending 1994 Form 10-K
certain financing agreements and consent
thereto of LPC
- 6 -
10-31 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-1 to the
August 1, 1995, from LPC in favor of Company's Form 10-Q for the quarter ended September
Congress 30, 1995 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1995
Form 10-Q")
10-32 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-2 to
August 1,1995, from LRGI in favor of September 30, 1995 Form 10-Q
Congress
10-33 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-49 to the
January 16, 1996, from LPC in favor of Company's Form 10-K for the year ended December 31,
Congress 1995 located under Securities and Exchange
Commission File No.0-3252 ("1995 Form 10-K")
10-34 Term Promissory Note dated January 16, Incorporated by reference from Exhibit 10-50 to
1996, in the amount of $375,000 from LPC 1995 Form 10-K
in favor of Congress
10-35 Term Promissory Note dated January 16, Incorporated by reference from Exhibit 10-51 to
1996, in the amount of $450,000 from LPC 1995 Form 10-K
in favor of Congress
10-36 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-62 to
February 28, 1996, from LPC in favor of 1995 Form 10-K
Congress
10-37 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-63 to
Consent dated March 14, 1996, from LPC in 1995 Form 10-K
favor of Congress
10-38 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-64 to
Consent dated March 14, 1996, from LRGI 1995 Form 10-K
in favor of Congress
10-39 Term Note dated May 31, 1996, from LPC Incorporated by reference from Exhibit 10-1 to the
in favor of Congress Company's Form 10-Q for the quarter ended June 30,
1996 located under Securities and Exchange
Commission File No. 0-3252
10-40 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-3 to the
August 21, 1996, from LRGI in favor of Company's Form 10-Q for the quarter ended September
Congress 30, 1996 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1996
Form 10-Q")
10-41 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-4 to
August 21, 1996, from LPC in favor of September 30, 1996 Form 10-Q
Congress
- 7 -
10-42 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-42 to the
January 31, 1997, from LPC in favor of Company's Form 10-K for the year ended December 31,
Congress 1996 located under Securities and Exchange
Commission File No. 0-3252 ("1996 Form 10-K")
10-43 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-43 to
January 31, 1997, from LRGI in favor of 1996 Form 10-K
Congress
10-44 Credit Facility and Security Agreement and Incorporated by reference from Exhibit 10-44 to
Rider A to Credit Facility and Security 1996 Form 10-K
Agreement dated January 31, 1997, from
LPC and LRGI in favor of Bank One, Akron,
NA ("Bank One")
10-45 Promissory Note (Equipment Term Loan) Incorporated by reference from Exhibit 10-45 to
dated January 31, 1997, from LPC and LRGI 1996 Form 10-K
in favor of Bank One
10-46 Promissory Note (North Canton Term Loan) Incorporated by reference from Exhibit 10-46 to
dated January 31, 1997, from LPC and LRGI 1996 Form 10-K
in favor of Bank One
10-47 Promissory Note (Vienna Term Loan) dated Incorporated by reference from Exhibit 10-47 to
January 31, 1997, from LPC and LRGI in 1996 Form 10-K
favor of Bank One
10-48 Promissory Note (Casa Grande Note) dated Incorporated by reference from Exhibit 10-48 to
January 31, 1997, from LPC and LRGI in 1996 Form 10-K
favor of Bank One
10-49 Promissory Note (LaGrange Term Loan) Incorporated by reference from Exhibit 10-49 to
dated January 31, 1997, from LPC and LRGI 1996 Form 10-K
in favor of Bank One
10-50 Promissory Note (North Canton Equipment Incorporated by reference from Exhibit 10-50 to
Loan) dated January 31, 1997, from LPC 1996 Form 10-K
and LRGI in favor of Bank One
10-51 Fourth Amended and Restated Promissory Incorporated by reference from Exhibit 10-51 to
Note dated March 11, 1997, from LRGI in 1996 Form 10-K
favor of Congress
10-52 Fourth Amended and Restated Promissory Incorporated by reference from Exhibit 10-52 to
Note dated March 11, 1997, from LPC in 1996 Form 10-K
favor of Congress
- 8 -
10-53 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-53 to
March 11, 1997, from LRGI in favor of 1996 Form 10-K
Congress
10-54 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-54 to
March 11, 1997, from LPC in favor of 1996 Form 10-K
Congress
10-55 Loan and Security Agreement and Rider A to Incorporated by reference from Exhibit 10-55 to
Loan and Security Agreement dated March 1996 Form 10-K
19, 1997, from LPC in favor of The CIT
Group/Equipment Financing, Inc. ("CIT")
10-56 Promissory Note dated March 19, 1997, Incorporated by reference from Exhibit 10-56 to
from LPC in favor of CIT 1996 Form 10-K
10-57 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-1 to the
Consent dated April 17, 1997, between LPC Company's Form 10-Q for the quarter ended March 31,
and Congress 1997 located under Securities and Exchange
Commission File No. 0-3252 ("March 31, 1997 Form
10-Q")
10-58 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-2 to March
Consent dated April 17, 1997, between LRGI 31, 1997 Form 10-Q
and Congress
10-59 First Amendment Agreement dated April 17, Incorporated by reference from Exhibit 10-3 to March
1997, among LPC, LRGI, and Bank One 31, 1997 Form 10-Q
10-60 Specimen of Amended and Restated Incorporated by reference from Exhibit 10-4
Promissory Note dated April 17, 1997, of March 31, 1997 Form 10-Q
LPC and LRGI to Bank One
10-61 Specimen of Promissory Note dated August Incorporated by reference from Exhibit 10-1 to the
29, 1997, from LPC Company's Form 10-Q for the quarter ended June 30,
1997 located under Securities and Exchange
Commission File No. 0-3252 ("June 30, 1997 Form
10-Q")
10-62 Note Purchase Agreement dated October 27, Incorporated by reference from Exhibit 10-2 to June 30,
1997, between LPC and Nomura 1997 Form 10-Q
10-63 Specimen of 10.5% Senior Unsecured Note Incorporated by reference from Exhibit 10-3 to June 30,
due February 1, 2000, from LPC to Nomura 1997 Form 10-Q
- 9 -
10-64 Amended No. 1 to Credit Facility and Incorporated by reference from Exhibit 10-65 to the
Security Agreement dated Company's Form 10-K for the year ended December 31,
December 31, 1997, among LPC, LRGI, and 1997 located under Securities and Exchange
Bank One Commission File No. 0-3252 ("1997 Form 10-K")
10-65 Amendment No. 2 to Credit Facility and Incorporated by reference from Exhibit 10-66 to
Security Agreement dated March 20, 1998, 1997 Form 10-K
among LPC, LRGI, and Bank One
10-66 Promissory Note dated March 31, 1998, Incorporated by reference from Exhibit 10-1 to the
from LPC in favor of CIT Company's Form 10-Q for the quarter ended March 31,
1998 located under Securities and Exchange
Commission File No. 0-3252 ("March 31, 1998 Form
10-Q")
10-67 New Equipment Term Note dated Incorporated by reference from Exhibit 10-1 to the
June 26, 1998, from LPC in favor of Company's Form 10-Q for the quarter ended June 30,
Congress 1998 located under Securities and Exchange
Commission File No. 0-3252 ("June 30, 1998 Form
10-Q")
10-68 Second Amendment Agreement dated May 1, Incorporated by reference from Exhibit 10-2 to the
1998, from LRGI in favor of Paul H. Pennell Company's Form 10-Q for the quarter ended June 30,
1998 located under Securities and Exchange
Commission File No. 0-3252 ("June 30, 1998 Form
10-Q")
10-69 Amendment No. 1 to Loan and Security Incorporated by reference from Exhibit 10-1 to the
Agreement dated June 30, 1998, between Company's Form 10-Q for the quarter ended September
LPC and CIT 30, 1998 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1998
Form 10-Q")
10-70 Amendment No. 3 to Credit Facility and Incorporated by reference from Exhibit 10-2 to the
Security Agreement dated June 30, 1998, Company's Form 10-Q for the quarter ended September
among LPC, LRGI, and Bank One 30, 1998 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1998
Form 10-Q")
10-71 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-3 to the
Consent dated August 13, 1998, between Company's Form 10-Q for the quarter ended September
LPC and Congress 30, 1998 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1998
Form 10-Q")
- 10 -
10-72 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-4 to the
Consent dated August 13, 1998, between Company's Form 10-Q for the quarter ended September
LRGI and Congress 30, 1998 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1998
Form 10-Q")
10-73 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-5 to the
Consent dated October 20, 1998, between Company's Form 10-Q for the quarter ended September
LPC and Congress 30, 1998 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1998
Form 10-Q")
10-74 Amendment to Financing Agreements and Incorporated by reference from Exhibit 10-6 to the
Consent dated October 20, 1998, between Company's Form 10-Q for the quarter ended September
LRGI and Congress 30, 1998 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1998
Form 10-Q")
10-75 Amendment No. 2 to Loan and Security Incorporated by reference from Exhibit 10-76 to
Agreement dated November 30, 1998, 1998 Form 10-K
between LPC and CIT
10-76 New Equipment Term Note dated December Incorporated by reference from Exhibit 10-77 to
16, 1998, between LPC and Congress 1998 Form 10-K
10-77 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-78 to
January 28, 1999, between LPC and 1998 Form 10-K
Congress
10-78 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-79 to
January 28, 1999, between LRGI and 1998 Form 10-K
Congress
10-79 Term Promissory Note dated January 28, Incorporated by reference from Exhibit 10-80 to
1999, between LRGI and Congress 1998 Form 10-K
10-80 Term Promissory Note dated January 28, Incorporated by reference from Exhibit 10-81 to
1999, between LPC and Congress 1998 Form 10-K
10-81 Fifth Amended and Restated Promissory Incorporated by reference from Exhibit 10-82 to
Note dated January 28, 1999, between LPC 1998 Form 10-K
and Congress
10-82 Amendment No. 6 to Credit Facility and Incorporated by reference from Exhibit 10-83 to
Security Agreement dated January 31, 1999, 1998 Form 10-K
among LPC, LRGI, and Bank One
- 11 -
10-83 Fifth Amendment Agreement dated March Incorporated by reference from Exhibit 10-84 to
10, 1999, among LPC, LRGI, and Bank One 1998 Form 10-K
10-84 Promissory Note (Additional Equipment Incorporated by reference from Exhibit 10-85 to
Term Loan) dated March 10, 1999, among 1998 Form 10-K
LPC, LRGI, and Bank One
10-85 Promissory Note dated March 30, 1999, Incorporated by reference from Exhibit 10-86 to
between LPC and CIT 1998 Form 10-K
10-86 Amendment No. 3 to Loan and Security Incorporated by reference from Exhibit 10-87 to
Agreement dated March 30, 1999, between 1998 Form 10-K
LPC and CIT
10-87 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-1 to the
March 31, 1999, between LPC and Congress Company's Form 10-Q for the quarter ended March 31,
1999 located under Securities and Exchange
Commission File No. 0-3252 ("March 31, 1999 Form
10-Q")
10-88 Term Promissory Note dated March 31, Incorporated by reference from Exhibit 10-2 to the
1999, between LPC and Congress Company's Form 10-Q for the quarter ended March 31,
1999 located under Securities and Exchange
Commission File No. 0-3252 ("March 31, 1999 Form
10-Q")
10-89 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-3 to the
March 31, 1999, between LRGI and Company's Form 10-Q for the quarter ended March 31,
Congress 1999 located under Securities and Exchange
Commission File No. 0-3252 ("March 31, 1999 Form
10-Q")
10-90 Term Promissory Note dated March 31, Incorporated by reference from Exhibit 10-4 to the
1999, between LRGI and Congress Company's Form 10-Q for the quarter ended March 31,
1999 located under Securities and Exchange
Commission File No. 0-3252 ("March 31, 1999 Form
10-Q")
10-91 Promissory Note dated July 29, 1999, Incorporated by reference from Exhibit 10-1 to the
between LPC and CIT Company's Form 10-Q for the quarter ended June 30,
1999 located under Securities and Exchange
Commission File No. 0-3252 ("June 30, 1999 Form
10-Q")
10-92 New Equipment Note dated July 30, 1999, Incorporated by reference from Exhibit 10-2 to the
between LRG and Congress Company's Form 10-Q for the quarter ended June 30,
1999 located under Securities and Exchange
Commission File No. 0-3252 ("June 30, 1999 Form
10-Q")
- 12 -
10-93 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-1 to the
October 1, 1999, between LPC and Company's Form 10-Q for the quarter ended September
Congress 30, 1999 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1999
Form 10-Q")
10-94 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-2 to the
October 1, 1999, between LRG and Company's Form 10-Q for the quarter ended September
Congress 30, 1999 located under Securities and Exchange
Commission File No. 0-3252 ("September 30, 1999
Form 10-Q")
10-95 New Equipment Note dated December 6, Incorporated by reference from Exhibit 10-96 to
1999, between LRGI and Congress 1999 Form 10-K
10-96 Term Promissory Note dated December 30, Incorporated by reference from Exhibit 10-97 to
1999, between LPC and Congress 1999 Form 10-K
10-97 Sixth Amended and Restated Promissory Incorporated by reference from Exhibit 10-98 to
Note dated December 30, 1999, between 1999 Form 10-K
LPC and Congress
10-98 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-99 to
December 30, 1999, between LPC and 1999 Form 10-K
Congress
10-99 Note Amendment No. 5 to Loan and Security Incorporated by reference from Exhibit 10-100 to
Agreement dated December 31, 1999, 1999 Form 10-K
between LPC and CIT
10-100 Amendment No. 8 to Credit Facility and Incorporated by reference from Exhibit 10-101 to
Security Agreement dated December 31, 1999 Form 10-K
1999, among LPC, LRGI, and Bank One
10-101 Note Amendment dated January 28, 2000, Incorporated by reference from Exhibit 10-102 to
between LPC and Nomura 1999 Form 10-K
10-102 Agreement dated January 31, 2000, between Incorporated by reference from Exhibit 10-103 to
LPC and Nomura 1999 Form 10-K
10-103 Third Amendment Agreement between LRGI Incorporated by reference from Exhibit 10-104 to
and Paul H. Pennell 1999 Form 10-K
10-104 Agreement dated January 31, 2000, among Incorporated by reference from Exhibit 10-105 to
LPC, LRGI, and Congress
10-105 Agreement dated January 31, 2000, between Incorporated by reference from Exhibit 10-106 to
LPC and CIT 1999 Form 10-K
- 13 -
10-106 Agreement dated January 31, 2000, among Incorporated by reference from Exhibit 10-107 to
LPC, LRGI, and Bank One 1999 Form 10-K
10-107 Amendment No. 9 to Credit Facility and Incorporated by reference from Exhibit 10-1 to the
Security Agreement dated as of December Company's Form 10-Q for the quarter ended March 31,
31,1999, among LPC, LRGI, and Bank One 2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-108 New Equipment Note dated April 24, 2000, Incorporated by reference from Exhibit 10-2 to the
between LPC and Congress Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-109 New Equipment Note dated April 24, 2000, Incorporated by reference from Exhibit 10-3 to the
between LRGI and Congress Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-110 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-4 to the
Subordinated Notes dated April 30, 2000, Company's Form 10-Q for the quarter ended March 31,
between LPC and Michael A. Lubin 2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-111 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-5 to the
Convertible Increasing Rate Note dated April Company's Form 10-Q for the quarter ended
30, 2000, among LPC, Michael A. Lubin, March 31, 2000 located under Securities and Exchange
and Warren Delano Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-112 Note Amendment No. 2 to Note dated as of Incorporated by reference from Exhibit 10-6 to the
April 30, 2000, between LPC and Tri-Links Company's Form 10-Q for the quarter ended March 31,
Investment Trust, as successor to Nomura 2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-113 Fourth Amendment Agreement dated April Incorporated by reference from Exhibit 10-7 to the
30, 2000, between LRGI and Paul H. Pennell Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
- 14 -
10-114 Agreement dated as of April 30, 2000, Incorporated by reference from Exhibit 10-8 to the
among LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-115 Agreement dated as of April 30, 2000, Incorporated by reference from Exhibit 10-9 to the
between LPC and CIT Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-116 Agreement dated as of April 30, 2000, Incorporated by reference from Exhibit 10-10 to the
among LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-117 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-11 to the
May 12, 2000, between LPC and Congress Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-118 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-12 to the
May 12, 2000, between LRGI and Congress Company's Form 10-Q for the quarter ended March 31,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2000 Form
10-Q")
10-119 Promissory Note dated June 26, 2000, Incorporated by reference from Exhibit 10-1 to the
Between LPC and CIT Company's Form 10-Q for the quarter ended June 30,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-120 Amendment No. 4 to Loan and Security Incorporated by reference from Exhibit 10-2 to the
Agreement dated June 26, 2000, between Company's Form 10-Q for the quarter ended June 30,
LPC and CIT 2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-121 Amendment No. 10 to Credit Facility and Incorporated by reference from Exhibit 10-3 to the
Security Agreement dated as of June 30, Company's Form 10-Q for the quarter ended June 30,
2000, between LPC, LRGI, and Bank One 2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
- 15 -
10-122 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-4 to the
Subordinated Notes dated July 31, 2000, Company's Form 10-Q for the quarter ended June 30,
between LPC and Michael A. Lubin 2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-123 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-5 to the
Convertible Increasing Rate Note dated July Company's Form 10-Q for the quarter ended June 30,
31, 2000, among LPC, Michael A. Lubin, 2000 located under Securities and Exchange
and Warren Delano Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-124 Note Amendment No. 3 to Note dated as of Incorporated by reference from Exhibit 10-6 to the
July 31, 2000, between LPC and Tri-Links Company's Form 10-Q for the quarter ended June 30,
Investment Trust, as successor to Nomura 2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-125 Fifth Amendment Agreement dated July 31, Incorporated by reference from Exhibit 10-7 to the
2000, between LRGI and Paul H. Pennell Company's Form 10-Q for the quarter ended June 30,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-126 Agreement dated as of July 31, 2000, among Incorporated by reference from Exhibit 10-8 to the
LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended June 30,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-127 Agreement dated as of July 31, 2000, Incorporated by reference from Exhibit 10-9 to the
between LPC and CIT Company's Form 10-Q for the quarter ended June 30,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-128 Agreement dated as of July 31, 2000, among Incorporated by reference from Exhibit 10-10 to the
LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended June 30,
2000 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2000 Form
10-Q")
10-129 Congress Covenant Waiver Incorporated by reference from Exhibit 10-1 to the
Company's Form 10-Q for the quarter ended September
30, 2000 located under Securities and Exchange
Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
- 16 -
10-130 Congress Covenant Amendment dated as of Incorporated by reference from Exhibit 10-2 to the
August 31, 2000 Company's Form 10-Q for the quarter ended September
30, 2000 located under Securities and Exchange
Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-131 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-3 to the
Subordinated Notes dated October 31, 2000, Company's Form 10-Q for the quarter ended September
between LPC and Michael A. Lubin 30, 2000 located under Securities and Exchange
Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-132 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-4 to the
Convertible Increasing Rate Note dated Company's Form 10-Q for the quarter ended September
October 31, 2000, among LPC, Michael A. 30, 2000 located under Securities and Exchange
Lubin, and Warren Delano Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-133 Note Amendment No. 4 to Note dated as of Incorporated by reference from Exhibit 10-5 to the
October 31, 2000, between LPC and Tri- Company's Form 10-Q for the quarter ended September
Links Investment Trust, as successor to 30, 2000 located under Securities and Exchange
Nomura Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-134 Sixth Amendment Agreement dated October Incorporated by reference from Exhibit 10-6 to the
31, 2000, between LRGI and Paul H. Pennell Company's Form 10-Q for the quarter ended September
30, 2000 located under Securities and Exchange
Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-135 Agreement dated as of October 31, 2000, Incorporated by reference from Exhibit 10-7 to the
among LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended September
30, 2000 located under Securities and Exchange
Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-136 Agreement dated as of October 31, 2000, Incorporated by reference from Exhibit 10-8 to the
between LPC and CIT Company's Form 10-Q for the quarter ended September
30, 2000 located under Securities and Exchange
Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-137 Agreement dated as of October 31, 2000, Incorporated by reference from Exhibit 10-9 to the
among LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended September
30, 2000 located under Securities and Exchange
Commission file No. 0-3252 ("September 30, 2000 Form
10-Q")
10-138 Congress Covenant Amendment dated Incorporated by reference from Exhibit 10-139 to 2000
November 30, 2000 Form 10-K
- 17 -
10-139 Amendment No. 6 to Loan and Security Incorporated by reference from Exhibit 10-140 to 2000
Agreement dated December 31, 2000, Form 10-K
between LPC and CIT
10-140 Amendment No. 12 to Credit Facility and Incorporated by reference from Exhibit 10-141 to 2000
Security Agreement dated December 31, Form 10-K
2000, between LPC, LRGI, and Bank One
Amendment No. 11 to Credit Facility and Incorporated by reference from Exhibit 10-142 to 2000
10-141 Security Agreement dated January 31, 2001, Form 10-K
between LPC, LRGI, and Bank One
10-142 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-143 to 2000
Subordinated Notes dated January 31, 2001, Form 10-K
between LPC and Michael A. Lubin
10-143 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-144 to 2000
Convertible Increasing Rate Notes dated Form 10-K
January 31, 2001, between LPC, Michael A.
Lubin, and Warren Delano
10-144 Note Amendment No. 5 relating to Note Incorporated by reference from Exhibit 10-145 to 2000
dated as of January 31, 2001, between LPC Form 10-K
and Tri-Links Investment Trust, as
successor to Nomura
10-145 Seventh Amendment Agreement dated Incorporated by reference from Exhibit 10-146 to 2000
January 31, 2001, between LRGI and Paul Form 10-K
Pennell
10-146 Agreement dated January 31, 2001, between Incorporated by reference from Exhibit 10-147 to 2000
LPC, LRGI, and Congress Form 10-K
10-147 Agreement dated January 31, 2001, between Incorporated by reference from Exhibit 10-148 to 2000
LPC and CIT Form 10-K
10-148 Agreement dated January 31, 2001, between Incorporated by reference from Exhibit 10-149 to 2000
LPC, LRGI, and Bank One Form 10-K
10-149 New Equipment Term Note dated Incorporated by reference from Exhibit 10-150 to 2000
February 8, 2001, between LRGI and Form 10-K
Congress
- 18 -
10-150 Letter Agreement dated February 8, 2001, Incorporated by reference from Exhibit 10-151 to 2000
between Congress and LRGI, and consent Form 10-K
thereto of LPC
10-151 Letter Agreement dated February 8, 2001, Incorporated by reference from Exhibit 10-152 to 2000
between Congress and LPC, and consent Form 10-K
thereto of LRGI
10-152 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-1 to the
Subordinated Notes dated as of April 30, Company's Form 10-Q for the quarter ended
2001, between LPC and Michael A. Lubin March 31, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2001
Form 10-Q")
10-153 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-2 to the
Convertible Increasing Rate note dated as of Company's Form 10-Q for the quarter ended
April 30, 2001, among LPC, Michael A. March 31, 2001 located under Securities and Exchange
Lubin, and Warren Delano Commission file No. 0-3252 ("March 31, 2001
Form 10-Q")
10-154 Amendment no. 6 to note dated as of Incorporated by reference from Exhibit 10-3 to the
April 30, 2001, between LPC and Tri-Links Company's Form 10-Q for the quarter ended
Investment Trust, as successor to Nomura March 31, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2001
Form 10-Q")
10-155 Eighth amendment agreement dated Incorporated by reference from Exhibit 10-4 to the
April 30, 2001, between LRGI and Paul Company's Form 10-Q for the quarter ended
Pennell March 31, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2001
Form 10-Q")
10-156 Agreement dated as of April 30, 2001, Incorporated by reference from Exhibit 10-5 to the
among LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended
March 31, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2001
Form 10-Q")
10-157 Agreement dated as of April 30, 2001, Incorporated by reference from Exhibit 10-6 to the
between LPC and CIT Company's Form 10-Q for the quarter ended
March 31, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2001
Form 10-Q")
10-158 Agreement dated as of April 30, 2001, Incorporated by reference from Exhibit 10-7 to the
among LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended
March 31, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("March 31, 2001
Form 10-Q")
- 19 -
10-159 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-1 to the
Subordinated Notes dated as of July 31, Company's Form 10-Q for the quarter ended
2001, between LPC and Michael A. Lubin June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-160 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-2 to the
Convertible Increasing Rate note dated as of Company's Form 10-Q for the quarter ended
July 31, 2001, among LPC, Michael A. June 30, 2001 located under Securities and Exchange
Lubin, and Warren Delano Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-161 Amendment no. 7 to note dated as of Incorporated by reference from Exhibit 10-3 to the
July 31, 2001, between LPC and Tri-Links Company's Form 10-Q for the quarter ended
Investment Trust, as successor to Nomura June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-162 Ninth amendment agreement dated July 31, Incorporated by reference from Exhibit 10-4 to the
2001, between LRGI and Paul Pennell Company's Form 10-Q for the quarter ended
June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-163 Agreement dated as of July 31, 2001, among Incorporated by reference from Exhibit 10-5 to the
LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended
June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-164 Congress covenant amendment dated Incorporated by reference from Exhibit 10-6 to the
June 29, 2001 Company's Form 10-Q for the quarter ended
June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-165 Agreement dated as of July 31, 2001, Incorporated by reference from Exhibit 10-7 to the
between LPC and CIT Company's Form 10-Q for the quarter ended
June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-166 Agreement dated as of July 31, 2001, among Incorporated by reference from Exhibit 10-8 to the
LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended
June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
- 20 -
10-167 Amendment to promissory note dated Incorporated by reference from Exhibit 10-9 to the
July 31, 2001, between LPC, LRGI, and Company's Form 10-Q for the quarter ended
Bank One June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-168 Amendment to promissory note dated Incorporated by reference from Exhibit 10-10 to the
July 31, 2001, between LPC, LRGI, and Company's Form 10-Q for the quarter ended
Bank One June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-169 Bank One covenant amendment dated June Incorporated by reference from Exhibit 10-11 to the
30, 2001 Company's Form 10-Q for the quarter ended
June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-170 Long term contract between Delphi Incorporated by reference from Exhibit 10-12 to the
Automotive Systems LLC and Lexington Company's Form 10-Q for the quarter ended
Connector Seals June 30, 2001 located under Securities and Exchange
Commission file No. 0-3252 ("June 30, 2001
Form 10-Q")
10-171 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-1 to the
Subordinated Notes dated as of October 31, Company's Form 10-Q for the quarter ended
2001, between LPC and Michael A. Lubin September 30, 2001 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
10-172 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-2 to the
Convertible Increasing Rate note dated as of Company's Form 10-Q for the quarter ended
October 31, 2001, among LPC, Michael A. September 30, 2001 located under Securities and
Lubin, and Warren Delano Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
10-173 Amendment no. 8 to note dated as of Incorporated by reference from Exhibit 10-3 to the
October 31, 2001, between LPC and Tri- Company's Form 10-Q for the quarter ended
Links Investment Trust, as successor to September 30, 2001 located under Securities and
Nomura Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
10-174 Tenth amendment agreement dated Incorporated by reference from Exhibit 10-4 to the
October 31, 2001, between LRGI and Paul Company's Form 10-Q for the quarter ended
Pennell September 30, 2001 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
- 21 -
10-175 Agreement dated as of October 31, 2001, Incorporated by reference from Exhibit 10-5 to the
among LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended
September 30, 2001 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
10-176 Congress covenant amendment dated as of Incorporated by reference from Exhibit 10-6 to the
August 30, 2001 Company's Form 10-Q for the quarter ended
September 30, 2001 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
10-177 Agreement dated as of October 31, 2001, Incorporated by reference from Exhibit 10-7 to the
between LPC and CIT Company's Form 10-Q for the quarter ended
September 30, 2001 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
10-178 Agreement dated as of October 31, 2001, Incorporated by reference from Exhibit 10-8 to the
among LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended
September 30, 2001 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2001 Form 10-Q")
10-179 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-179 to 2001
Subordinated Notes dated as of January 31, Form 10-K
2002, between LPC and Michael A. Lubin
10-180 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-180 to 2001
Convertible Increasing Rate note dated as of Form 10-K
January 31, 2002, among LPC, Michael A.
Lubin, and Warren Delano
10-181 Amendment no. 9 to note dated as of Incorporated by reference from Exhibit 10-181 to 2001
January 31, 2002, between LPC and Tri- Form 10-K
Links Investment Trust, as successor to
Nomura
10-182 Agreement dated as of January 31, 2002, Incorporated by reference from Exhibit 10-182 to 2001
among LPC, LRGI, and Congress Form 10-K
10-183 Agreement dated as of January 31, 2002, Incorporated by reference from Exhibit 10-183 to 2001
between LPC and CIT Form 10-K
10-184 Agreement dated as of January 31, 2002, Incorporated by reference from Exhibit 10-184 to 2001
among LPC, LRGI, and Bank One Form 10-K
10-185 Extension letter dated March 28, 2002 from Incorporated by reference from Exhibit 10-185 to 2001
Bank One to LPC Form 10-K
- 22 -
10-186 Congress covenant amendment dated Incorporated by reference from Exhibit 10-186 to 2001
March 29, 2002 Form 10-K
10-187 Bank One covenant amendment dated as of Incorporated by reference from Exhibit 10-187 to 2001
December 31, 2001 Form 10-K
10-188 CIT covenant amendment dated as of Incorporated by reference from Exhibit 10-188 to 2001
February 28, 2002 Form 10-K
10-189 Agreement dated as of March 29, 2002 Incorporated by reference from Exhibit 10-189 to 2001
among LPC, LRGI, and Congress Form 10-K
10-190 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-1 to the
Subordinated Noted dated as of April 30, Company's Form 10-Q for the quarter ended
2002, between LPC and Michael A. Lubin March 31, 2002 located under Securities and Exchange
Commission file No. 0-3252
("March 31, 2002 Form 10-Q")
10-191 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-2 to the
Convertible Increasing Rate note dated as of Company's Form 10-Q for the quarter ended
April 30, 2002, among LPC, Michael A. March 31, 2002 located under Securities and Exchange
Lubin, and Warren Delano Commission file No. 0-3252
("March 31, 2002 Form 10-Q")
10-192 Agreement dated as of April 30, 2002, Incorporated by reference from Exhibit 10-3 to the
among LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended
March 31, 2002 located under Securities and Exchange
Commission file No. 0-3252
("March 31, 2002 Form 10-Q")
10-193 Sixth Amendment Agreement dated Incorporated by reference from Exhibit 10-4 to the
April 1, 2002, between LPC, LRGI, and Company's Form 10-Q for the quarter ended
Bank One March 31, 2002 located under Securities and Exchange
Commission file No. 0-3252
("March 31, 2002 Form 10-Q")
10-194 Agreement dated as of April 30, 2002, Incorporated by reference from Exhibit 10-5 to the
between LPC and CIT Company's Form 10-Q for the quarter ended
March 31, 2002 located under Securities and Exchange
Commission file No. 0-3252
("March 31, 2002 Form 10-Q")
10-195 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-1 to the
Subordinated Notes dated as of June 30, Company's Form 10-Q for the quarter ended
2002, between LPC and Michael A. Lubin June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
- 23 -
10-196 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-2 to the
Convertible Increasing Rate Note dated as Company's Form 10-Q for the quarter ended
of July 31, 2002, among LPC, Michael A. June 30, 2002 located under Securities and Exchange
Lubin, and Warren Delano Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
10-197 Agreement dated as of June 28, 2002, Incorporated by reference from Exhibit 10-3 to the
between LPC and Congress Company's Form 10-Q for the quarter ended
June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
10-198 Agreement dated as of June 28, 2002, Incorporated by reference from Exhibit 10-4 to the
between LRGI and Congress Company's Form 10-Q for the quarter ended
June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
10-199 Agreement dated as of April 30, 2002 among Incorporated by reference from Exhibit 10-5 to the
LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended
June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
10-200 Agreement dated July 31, 2002, among LPC, Incorporated by reference from Exhibit 10-6 to the
LRGI, and Bank One Company's Form 10-Q for the quarter ended
June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
10-201 Seventh Amendment Agreement dated Incorporated by reference from Exhibit 10-7 to the
June 26, 2002, between LPC, LRGI, and Company's Form 10-Q for the quarter ended
Bank One June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
10-202 Agreement dated as of April 30, 2002, Incorporated by reference from Exhibit 10-8 to the
between LPC and CIT Company's Form 10-Q for the quarter ended
June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
10-203 Agreement dated as of July 31, 2002, Incorporated by reference from Exhibit 10-9 to the
between LPC and CIT Company's Form 10-Q for the quarter ended
June 30, 2002 located under Securities and Exchange
Commission file No. 0-3252
("June 30, 2002 Form 10-Q")
- 24 -
10-204 Agreement relating to 14% Junior Incorporated by reference from Exhibit 10-1 to the
Subordinated Notes dated as of October 31, Company's Form 10-Q for the quarter ended
2002, between LPC and Michael A. Lubin September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-205 Agreement relating to Junior Subordinated Incorporated by reference from Exhibit 10-2 to the
Convertible Increasing Rate Note dated as Company's Form 10-Q for the quarter ended
of October 31, 2002, among LPC, Michael September 30, 2002 located under Securities and
A. Lubin, and Warren Delano Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-206 Agreement dated as of August 29, 2002, Incorporated by reference from Exhibit 10-3 to the
between LPC and Congress Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-207 Agreement dated as of August 29, 2002, Incorporated by reference from Exhibit 10-4 to the
between LRGI and Congress Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-208 Agreement dated as of September 2, 2002, Incorporated by reference from Exhibit 10-5 to the
among LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-209 Agreement dated as of October 31, 2002, Incorporated by reference from Exhibit 10-6 to the
between LPC and Congress Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-210 Agreement dated as of October 31, 2002, Incorporated by reference from Exhibit 10-7 to the
between LRGI and Congress Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-211 Agreement dated as of October 31, 2002, Incorporated by reference from Exhibit 10-8 to the
among LPC, LRGI, and Congress Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
- 25 -
10-212 Amendment No. 16 to Credit Facility and Incorporated by reference from Exhibit 10-9 to the
Security Agreement dated as of July 31, Company's Form 10-Q for the quarter ended
2002, among LPC, LRGI, and Bank One September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-213 Eighth Amendment Agreement dated Incorporated by reference from Exhibit 10-10 to the
September 20, 2002, between LPC, LRGI, Company's Form 10-Q for the quarter ended
and Bank One September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-214 Agreement dated as of October 31, 2002, Incorporated by reference from Exhibit 10-11 to the
among LPC, LRGI, and Bank One Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-215 Ninth Amendment Agreement dated Incorporated by reference from Exhibit 10-12 to the
November 1, 2002, between LPC, LRGI, Company's Form 10-Q for the quarter ended
and Bank One September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-216 Amendment No. 8 to Loan and Security Incorporated by reference from Exhibit 10-13 to the
Agreement dated as of August 31, 2002, Company's Form 10-Q for the quarter ended
between LPC and CIT September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-217 Agreement dated as of October 31, 2002, Incorporated by reference from Exhibit 10-14 to the
between LPC and CIT Company's Form 10-Q for the quarter ended
September 30, 2002 located under Securities and
Exchange Commission file No. 0-3252
("September 30, 2002 Form 10-Q")
10-218 Agreement relating to 14% Junior Filed with this Form 10-K
Subordinated Notes dated as of January 31,
2003, between LPC and Michael A. Lubin
10-219 Agreement relating to Junior Subordinated Filed with this Form 10-K
Convertible Increasing Rate Note
10-220 Agreement dated as of January 3, 2003, Filed with this Form 10-K
between LPC and Congress
10-221 Agreement dated as of January 3, 2003, Filed with this Form 10-K
between LRGI and Congress
- 26 -
10-222 Agreement dated as of January 3, 2003, Filed with this Form 10-K
among LPC, LRGI, and Congress
10-223 Agreement dated as of February 14, 2003, Filed with this Form 10-K
between LPC and Congress
10-224 Agreement dated as of February 14, 2003, Filed with this Form 10-K
between LRGI and Congress
10-225 Agreement dated as of February 17, 2003, Filed with this Form 10-K
among LPC, LRGI, and Congress
10-226 Agreement dated as of January 31, 2003, Filed with this Form 10-K
between LPC and CIT
10-227 Tenth Amendment Agreement dated January Filed with this Form 10-K
2, 2003, between LPC, LRGI, and Bank One
10-228 Agreement dated as of January 31, 2003, Filed with this Form 10-K
among LPC, LRGI, and Bank One
10-229 Eleventh Amendment Agreement dated Filed with this Form 10-K
February 17, 2003, between LPC, LRGI, and
Bank One
10-230 Agreement dated as of March 28, 2003 Filed with this Form 10-K
among LPC, LRGI, and Bank One
21-1 Significant Subsidiary of Registrant
99-1 Certification of Michael A. Lubin, Chairman Filed with this Form 10-K
of the Board and Co-Principal Executive
Officer of the registrant, pursuant to 18
U.S.C. Section 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99-2 Certification of Warren Delano, President Filed with this Form 10-K
and Co-Principal Executive Officer of the
registrant, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99-3 Certification of Dennis J. Welhouse, Chief Filed with this Form 10-K
Financial Officer and Principal Financial
Officer of the registrant, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
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