FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 0-21139
DURA AUTOMOTIVE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 38-3185711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4508 IDS CENTER 55402
MINNEAPOLIS, MINNESOTA (Zip Code)
(Address of principal executive offices)
(612) 342-2311
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since
last report)
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the Registrant's Class A common stock, par
value $.01 per share, at July 31, 1998 was 8,996,417 shares. The number of
shares outstanding of the Registrant's Class B common stock, par value $.01 per
share, at July 31, 1998 was 3,342,380 shares.
PART I
ITEM 1 OF PART I SET FORTH IN THE COMPANY'S REPORT ON FORM 10-Q FOR THE PERIOD
ENDED JUNE 30, 1998 PREVIOUSLY FILED ON AUGUST 14, 1998 IS HEREBY AMENDED AND
RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
ITEM 1 - FINANCIAL INFORMATION
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS - UNAUDITED)
Three Months Ended June 30,
-----------------------------
1998 1997
--------- ---------
Revenues $ 187,433 $ 115,350
Cost of sales 155,414 96,111
--------- ---------
Gross profit 32,019 19,239
Selling, general and administrative expenses 11,723 7,579
Amortization expense 2,345 891
--------- ---------
Operating income 17,951 10,769
Interest expense, net 5,870 1,957
--------- ---------
Income before provision for income taxes
and minority interest 12,081 8,812
Provision for income taxes 4,914 3,712
Minority interest 622 -
--------- ---------
Income before extraordinary item 6,545 5,100
Extraordinary item - loss on early
extinguishment of debt, net 643 -
--------- ---------
Net income $ 5,902 $ 5,100
--------- ---------
--------- ---------
Basic earnings per share:
Income before extraordinary item $ 0.70 $ 0.58
Extraordinary item (0.07) -
--------- ---------
Net income $ 0.63 $ 0.58
--------- ---------
--------- ---------
Diluted earnings per share:
Income before extraordinary item $ 0.67 $ 0.58
Extraordinary item (0.06) -
--------- ---------
Net income $ 0.61 $ 0.58
--------- ---------
--------- ---------
The accompanying notes are an integral part of these condensed
consolidated statements.
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS - UNAUDITED)
Six Months Ended June 30,
-----------------------------
1998 1997
--------- ---------
Revenues $ 313,179 $ 222,717
Cost of sales 259,885 186,896
--------- ---------
Gross profit 53,294 35,821
Selling, general and administrative expenses 20,883 15,475
Amortization expense 3,596 1,774
--------- ---------
Operating income 28,815 18,572
Interest expense, net 8,808 3,853
--------- ---------
Income before provision for income taxes
and minority interest 20,007 14,719
Provision for income taxes 8,188 6,075
Minority interest 698 -
--------- ---------
Income before extraordinary item 11,121 8,644
Extraordinary item - loss on early
extinguishment of debt, net 643 -
--------- ---------
Net income $ 10,478 $ 8,644
--------- ---------
--------- ---------
Basic earnings per share:
Income before extraordinary item $ 1.23 $ 0.98
Extraordinary item (0.07) -
--------- ---------
Net income $ 1.16 $ 0.98
--------- ---------
--------- ---------
Diluted earnings per share:
Income before extraordinary item $ 1.20 $ 0.98
Extraordinary item (0.07) -
--------- ---------
Net income $ 1.13 $ 0.98
--------- ---------
--------- ---------
The accompanying notes are an integral part of these condensed
consolidated statements.
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
June 30, December 31,
Assets 1998 1997
- ---------------------------------------------------------------- ------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 14,289 $ 4,148
Accounts receivable 147,642 79,032
Inventories 43,869 30,301
Other current assets 32,876 24,800
--------- ---------
Total current assets 238,676 138,281
Property, plant and equipment, net 162,378 101,538
Goodwill, net 381,364 160,063
Deferred income taxes and other assets, net 48,435 19,382
--------- ---------
$ 830,853 $ 419,264
--------- ---------
--------- ---------
Liabilities and Stockholders' Investment
- ----------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt $ 4,816 $ 2,241
Accounts payable 85,129 49,153
Accrued liabilities 84,135 36,583
--------- ---------
Total current liabilities 174,080 87,977
Long-term debt, net of current maturities 282,382 178,081
Other noncurrent liabilities 112,525 51,498
--------- ---------
Mandatorily redeemable convertible trust preferred securities 55,250 -
Stockholders' investment:
Preferred stock - -
Common stock - Class A 86 42
Common stock - Class B 33 46
Additional paid-in capital 158,621 63,402
Retained earnings 51,506 41,028
Cumulative translation adjustment (3,630) (2,810)
--------- ---------
Total stockholders' investment 206,616 101,708
--------- ---------
$ 830,853 $ 419,264
--------- ---------
--------- ---------
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS - UNAUDITED)
Six Months Ended June 30,
-----------------------------
1998 1997
--------- ---------
OPERATING ACTIVITIES:
Net income $ 10,478 $ 8,644
Adjustments to reconcile net income to
net cash provided by (used in) operating activities -
Depreciation and amortization 11,135 6,826
Extraordinary loss on extinguishment of debt 643 -
Changes in other operating items (22,636) (9,505)
--------- ---------
Net cash provided by (used in) operating activities (380) 5,965
--------- ---------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (157,839) (21,181)
Capital expenditures, net (10,061) (5,227)
Other, net (221) -
--------- ---------
Net cash used in investing activities (168,121) (26,408)
--------- ---------
--------- ---------
FINANCING ACTIVITIES:
Proceeds from borrowings 185,803 138,225
Repayment of debt (153,844) (108,675)
Proceeds from issuance of common stock
and exercise of stock options 95,006 -
Proceeds from issuance of preferred securities 52,525 -
Other, net 244 220
--------- ---------
Net cash provided by financing activities 179,734 29,770
--------- ---------
EFFECT OF EXCHANGE RATES ON CASH (1,092) (215)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,141 9,112
CASH AND CASH EQUIVALENTS:
Beginning of period 4,148 1,667
--------- ---------
End of period $ 14,289 $ 10,779
--------- ---------
--------- ---------
The accompanying notes are an integral part of these condensed
consolidated statements.
-5-
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying condensed consolidated financial statements have been
prepared by Dura Automotive Systems, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished in the condensed consolidated
financial statements includes normal recurring adjustments and reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of such financial statements. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Although the
Company believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these condensed consolidated
financial statements be read in conjunction with the audited financial
statements and the notes thereto included in the Company's 1997 Annual
Report to Stockholders.
Revenues and operating results for the three and six months ended June 30,
1998 are not necessarily indicative of the results to be expected for the
full year.
2. Inventories consisted of the following (in thousands):
Jun. 30, 1998 Dec. 31, 1997
------------- -------------
Raw materials $ 21,467 $ 15,562
Work-in-process 14,414 9,126
Finished goods 7,988 5,613
------------- -------------
$ 43,869 $ 30,301
------------- -------------
------------- -------------
3. On June 17, 1998, the Company completed a public offering of 3,100,000
shares of its Class A common stock at an offering price of $32.75 per share
("Offering"). Net proceeds to the Company, after underwriting discounts and
offering expenses, were approximately $95.0 million. Proceeds from the
Offering were used to retire outstanding indebtedness. Certain stockholders
of the Company converted 1,308,000 shares of Class B common stock of the
Company into Class A stock and sold such Class A stock concurrent with the
Offering. In addition, an employee of the Company exercised an option to
acquire 5,000 shares of Class A common stock at an exercise price of $14.50
per share, and sold such Class A shares concurrent with the Offering. On
July 1, 1998 the underwriters, pursuant to their over-allotment option,
purchased an additional 400,000 Class A shares resulting in additional net
proceeds of approximately $12.4 million to the Company.
4. Basic earnings per share were computed by dividing net income by the
weighted average number of Class A and Class B common shares outstanding
during the periods. Diluted earnings per share include (i) the effects of
outstanding stock options using the treasury stock
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method and (ii) the conversion of the Preferred Securities from their date
of issuance on March 20, 1998 as follows (in thousands, except per share
data):
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
------- ------- ------- -------
Net income $ 5,902 $ 5,100 $10,478 $ 8,644
Dividends on mandatorily redeemable
convertible preferred securities, net of tax 622 - 698 -
------- ------- ------- -------
Net income applicable to common
stockholders - diluted $ 6,524 $ 5,100 $11,176 $ 8,644
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of Class A
common shares outstanding 4,859 3,842 4,516 3,828
Weighted average number of Class B
common shares outstanding 4,452 4,963 4,553 4,975
Dilutive effect of outstanding stock options
after application of the treasury stock
method 114 58 92 57
Dilutive effect of mandatorily redeemable
convertible preferred securities, assuming
conversion 1,289 - 723 -
------- ------- ------- -------
Diluted shares outstanding 10,714 8,863 9,884 8,860
------- ------- ------- -------
------- ------- ------- -------
Basic earnings per share $ 0.63 $ 0.58 $ 1.16 $ 0.98
------- ------- ------- -------
------- ------- ------- -------
Diluted earnings per share $ 0.61 $ 0.58 $ 1.13 $ 0.98
------- ------- ------- -------
------- ------- ------- -------
5. In May 1997, the Company acquired the automotive parking brake business
from Excel Industries, Inc. for approximately $2.9 million. The acquisition
increased the Company's penetration of the parking brake market and
expanded the Company's relationship with Chrysler. The pro forma effects of
this transaction are not material to the Company's results of operations
for the six months ended June 30, 1997.
In August 1997, the Company acquired GT Automotive Systems, Inc. ("GT
Automotive"), for approximately $45.0 million in cash and assumed
indebtedness, plus contingent payments. GT Automotive designs and
manufactures column-mounted shifter systems and turn signal and tilt lever
assemblies for North American OEMs. The acquisition of GT Automotive,
combined with the Company's existing position in console-based shifter
systems, increased the Company's share of the North American shifter
market. In addition, the acquisition added Nissan as a customer.
In December 1997, the Company purchased approximately 19% of the
outstanding common stock of Thixotech Inc. ("Thixotech") for approximately
$0.5 million. The Company also loaned Thixotech an additional $2.8 million
pursuant to notes which are convertible into additional common stock of
Thixotech at the Company's option. If exercised, the Company could own a
majority of Thixotech. Thixotech is currently pursuing the development of
an alternative manufacturing technology for component parts.
In December 1997, the Company acquired REOM Industries (Aust) Pty Ltd.
("REOM"), an Australian designer and manufacturer of jacks and parking
brakes, for approximately $3.7
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million. The acquisition added market penetration in parking brakes, added
a new product (jacks) and established a presence in the Pacific Rim. The
pro forma effects of this transaction are not material to the Company's
results of operations for the six month period ended June 30, 1997.
In March 1998, the Company acquired Universal Tool & Stamping Co., Inc.
("Universal"), a manufacturer of jacks for the North American automotive
industry, for approximately $18.0 million. The acquisition provided the
Company with a market presence for jacks in North America and added Honda
as a significant new customer.
In April 1998, the Company acquired all of the outstanding equity interests
of Trident Automotive plc ("Trident"). Trident had revenues of
approximately $300 million in 1997, of which 69 percent was derived from
sales of cable assemblies, principally to the automotive OEM market, and
the balance from door handle assemblies, lighting and other products.
Approximately 68 percent of Trident's revenues were generated in North
America, 27 percent in Europe and the remainder in Latin America. Trident's
operations are headquartered in Michigan with manufacturing and technical
facilities in Michigan, Tennessee, Arkansas, Canada, the United Kingdom,
Germany, France and Brazil. Pursuant to the terms of the agreement, the
Company acquired all of the outstanding equity interests of Trident for
total consideration of $87.5 million in cash. In addition, the Company
assumed $75 million of Trident's outstanding 10% Senior Subordinated Notes
due 2005. The Company also repaid Trident's outstanding senior indebtedness
of approximately $53 million. The acquisition of Trident was financed with
borrowings under a new credit facility which is further described in Note
6.
The acquisitions of GT Automotive, REOM, Universal and Trident have been
accounted for using the purchase method of accounting and, accordingly, the
assets acquired and liabilities assumed have been recorded at fair value as
of the dates of acquisition, with the excess purchase price recorded as
goodwill. The assets and liabilities have been recorded based upon
preliminary estimates of fair value. The Company is further evaluating the
fair value of certain assets acquired and liabilities assumed. As a result,
the final evaluation will likely result in adjustments to the preliminary
allocations which may result in changes to goodwill.
The accompanying unaudited pro forma condensed results of operations for
the six months ended June 30, 1998 give effect to the acquisitions of
Universal and Trident, the Offering and the offering of the Convertible
Trust Preferred Securities, which is further described in Note 7, as if
such transactions had occurred at the beginning of the period and exclude
the effects of the extraordinary loss. The following unaudited pro forma
results of operations for the six months ended June 30, 1997 give effect to
the transactions described above and the acquisition of GT Automotive as if
such transactions had been completed at the beginning of the period. The
1998 results of operations of Trident for the period prior to its
acquisition date, which are included in the unaudited pro forma financial
information, reflect pretax charges of approximately $3.6 million relating
to the recognition of obligations to certain Trident customers. The
unaudited pro forma information does not purport to represent what the
Company's results of operations would actually have been if such
transactions in fact had
-8-
occurred at such date or to project the Company' results of future
operations (in thousands, except per share data):
Six Months Ended June 30,
--------------------------
1998 1997
-------- --------
Revenues $425,570 $435,127
-------- --------
-------- --------
Operating income $ 31,446 $ 35,218
-------- --------
-------- --------
Net income $ 11,585 $ 14,952
-------- --------
-------- --------
Basic earnings per share $ 0.92 $ 1.22
-------- --------
-------- --------
Diluted earnings per share $ 0.92 $ 1.19
-------- --------
-------- --------
6. Long-term debt consisted of the following (in thousands):
June 30, December 31,
1998 1997
--------- ---------
Bank Credit Agreement:
Term loans $ 96,384 $ -
Revolving credit facilities 106,182 -
Trident 10% senior subordinated notes 75,000 -
Old Bank Credit Agreement - 165,158
Other 9,632 15,164
--------- ---------
287,198 180,322
Less-current maturities (4,816) (2,241)
--------- ---------
Total long-term debt $ 282,382 $ 178,081
--------- ---------
--------- ---------
On April 30, 1998 in connection with the acquisition of Trident, the
Company entered into a new $402.5 million credit agreement ("Credit
Agreement"). The Credit Agreement provided for revolving credit facilities
of $225 million, term loans of $100 million, an acquisition facility of $30
million and a twelve month interim loan of $47.5 million. Proceeds from the
Offering were partially used to retire the interim loan and $3.6 million of
the term loans. The Credit Agreement has a term of five years and
borrowings bear interest at the lenders reference rate or the Eurocurrency
rate. The interest rate on borrowings outstanding under the Credit
Agreement ranged from 6.875% to 8.625% as of June 30, 1998. The Credit
Agreement contains various restrictive covenants which limit indebtedness,
investments, rental obligations and cash dividends. The Credit Agreement
also requires the Company to maintain certain financial ratios including
minimum liquidity and interest coverage. The Company was in compliance with
the covenants as of June 30, 1998. Borrowings under the Credit Agreement
are collateralized by the assets of the Company.
The Credit Agreement provides the Company with the ability to denominate a
portion of its revolving credit borrowings in foreign currencies up to an
amount equal to $100.0 million. As of June 30, 1998, $93.5 million of
borrowings were denominated in US dollars, $5.5 million of borrowings were
denominated in Canadian dollars, $2.0 million of borrowings were
denominated in Australian dollars, $3.9 million of borrowings were
denominated in Deutsche Marks, and $1.3 million in British pound sterling.
-9-
In connection with the termination of the Company's former credit facility,
the Company wrote-off deferred financing costs of approximately $643,000,
net of income taxes. This charge is reflected as an extraordinary item in
the accompanying statement of operations.
In December 1997, Trident issued $75 million aggregate principal amount
senior subordinated notes. The notes bear interest at 10%, payable
semiannually, and are due in December 2005.
7. On March 20, 1998, Dura Automotive Systems Capital Trust (the "Issuer"), a
wholly owned statutory business trust of the Company, completed the
offering of $55.3 million of its 7 1/2% Convertible Trust Preferred
Securities ("Preferred Securities"), resulting in net proceeds to the
Company of approximately $52.6 million. The Preferred Securities are
redeemable, in whole or part, on or after March 31, 2001 and all Preferred
Securities must be redeemed no later than March 31, 2028. The Preferred
Securities are convertible, at the option of the holder into Class A common
stock of the Company at a rate of 0.5831 shares of Class A common stock for
each Preferred Security, which is equivalent to a conversion price of $42
7/8 per share. The net proceeds of the offering were used to repay
outstanding indebtedness. Dividends on the Preferred Securities, net of the
related income tax benefit, are reflected as minority interest in the
accompanying condensed consolidated statements of operations.
No separate financial statements of the Issuer have been included herein.
The Company does not consider that such financial statements would be
material to holders of Preferred Securities because (i) all of the voting
securities of the Issuer are owned, directly or indirectly, by the Company,
a reporting company under the Exchange Act, (ii) the Issuer has no
independent operations and exists for the sole purpose of issuing
securities representing undivided beneficial interests in the assets of the
Issuer and investing the proceeds thereof in 7 1/2% Convertible
Subordinated Debentures due March 31, 2028 issued by the Company and (iii)
the obligations of the Issuer under the Preferred Securities are fully and
unconditionally guaranteed by the Company.
8. Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement established standards for reporting
and display of comprehensive income and its components. Comprehensive
income reflects the change in equity of a business enterprise during a
period from transactions and other events and circumstances from non-owner
sources. For the Company, comprehensive income represents net income
adjusted for foreign currency translation adjustments. Comprehensive income
was approximately $3.3 million and $4.0 million for the three months ended
June 30, 1998 and 1997, respectively and approximately $7.4 million for
each of the six month periods ended June 30, 1998 and 1997.
9. During February 1998, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits," effective for fiscal years beginning after
December 31, 1997. SFAS No. 132 revises certain of the disclosure
requirements, but does not change the measurement or recognition of those
plans. SFAS No. 132 superceded SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The adoption of SFAS No. 132
will result in
-10-
revised and additional disclosures, but will have no effect on the
financial position, results of operations, or liquidity of the Company.
The FASB issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" effective for years beginning after June 15, 1999. SFAS
No. 133 establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge criteria are met. Special accounting for qualifying hedges
allow a derivative's gains or losses to offset related results on the
hedged item in the income statement and requires that a company must
formally document, designate and assess the effectiveness of transactions
that receive hedge accounting. The Company has not yet quantified the
impacts of adopting SFAS No. 133 and has not yet determined the timing of
adoption.
10. Supplemental cash flow information (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
------ ------ ------ ------
Cash paid for -
Interest $6,393 $2,248 $9,452 $3,521
Income taxes 4,996 2,019 7,406 2,294
-11-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DURA AUTOMOTIVE SYSTEMS, INC.
Date: March 3, 1999 By /s/ Stephen E.K. Graham
------------------------------------------
Stephen E.K. Graham
Vice President, Chief Financial Officer
(principal accounting and financial
officer)
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