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 September 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 October 30, 1998 was 9,013,755 shares. The number of
shares outstanding of the Registrant's Class B common stock, par value $.01 per
share, at October 30, 1998 was 3,329,303 shares.
PART I
ITEM 1 OF PART I SET FORTH IN THE COMPANY'S REPORT ON FORM 10-Q FOR THE PERIOD
ENDED SEPTEMBER 30, 1998 PREVIOUSLY FILED ON NOVEMBER 13, 1998 IS HEREBY AMENDED
AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
ITEM 1 - FINANCIAL INFORMATION
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS - UNAUDITED)
Three Months Ended September 30,
---------------------------------
1998 1997
-------- --------
Revenues $185,204 $101,862
Cost of sales 153,345 86,413
-------- --------
Gross profit 31,859 15,449
Selling, general and administrative expenses 13,103 7,497
Amortization expense 3,128 1,032
-------- --------
Operating income 15,628 6,920
Interest expense, net 5,377 2,299
-------- --------
Income before provision for income taxes
and minority interest 10,251 4,621
Provision for income taxes 4,403 1,964
Minority interest - dividends on trust
preferred securities, net 599 -
-------- --------
Net income $ 5,249 $ 2,657
-------- --------
-------- --------
Basic earnings per share $ 0.43 $ 0.30
-------- --------
-------- --------
Diluted earnings per share $ 0.43 $ 0.30
-------- --------
-------- --------
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)
Nine Months Ended September 30,
-------------------------------
1998 1997
--------- ---------
Revenues $ 498,383 $ 324,579
Cost of sales 413,230 273,309
--------- ---------
Gross profit 85,153 51,270
Selling, general and administrative expenses 33,986 22,972
Amortization expense 6,724 2,806
--------- ---------
Operating income 44,443 25,492
Interest expense, net 14,185 6,152
--------- ---------
Income before provision for income taxes
and minority interest 30,258 19,340
Provision for income taxes 12,591 8,039
Minority interest - dividends on trust -
preferred securities, net 1,297
--------- ---------
Income before extraordinary item 16,370 11,301
Extraordinary item - loss on early
extinguishment of debt, net 643 -
--------- ---------
Net income $ 15,727 $ 11,301
--------- ---------
--------- ---------
Basic earnings per share:
Income before extraordinary item $ 1.61 $ 1.28
Extraordinary item (0.06) -
--------- ---------
Net income $ 1.55 $ 1.28
--------- ---------
--------- ---------
Diluted earnings per share:
Income before extraordinary item $ 1.58 $ 1.27
Extraordinary item (0.05) -
--------- ---------
Net income $ 1.53 $ 1.27
--------- ---------
--------- ---------
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)
September 30, December 31,
Assets 1998 1997
- ---------------------------------------------------------------- ------------- ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 13,014 $ 4,148
Accounts receivable, net 163,270 79,032
Inventories 54,083 30,301
Other current assets 43,401 24,800
--------- ---------
Total current assets 273,768 138,281
Property, plant and equipment, net 180,776 101,538
Goodwill and other assets, net 401,267 160,063
Other assets, net 49,026 19,382
--------- ---------
$ 904,837 $ 419,264
--------- ---------
--------- ---------
Liabilities and Stockholders' Investment
- ----------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt $ 7,906 $ 2,241
Accounts payable 93,059 49,153
Accrued liabilities 106,351 36,583
--------- ---------
Total current liabilities 207,316 87,977
Long-term debt, net of current maturities 238,771 178,081
Senior subordinated notes 75,000 -
Other noncurrent liabilities 99,221 51,498
--------- ---------
Total current liabilities 412,992 229,579
--------- ---------
Mandatorily redeemable convertible trust preferred securities 55,250 -
Stockholders' investment:
Preferred stock - -
Common stock - Class A 90 42
Common stock - Class B 33 46
Additional paid-in capital 171,252 63,402
Retained earnings 56,755 41,028
Cumulative translation adjustment 1,149 (2,810)
--------- ---------
Total stockholders' investment 229,279 101,708
--------- ---------
$ 904,837 $ 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)
Nine Months Ended September 30,
-------------------------------
1998 1997
--------- ---------
OPERATING ACTIVITIES:
Net income $ 15,727 $ 11,301
Adjustments to reconcile net income to
net cash provided by (used in) operating activities -
Depreciation and amortization 19,357 9,170
Extraordinary loss on extinguishment of debt 643 -
Changes in other operating items (46,261) (24,379)
--------- ---------
Net cash used in operating activities (10,534) (3,908)
--------- ---------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (190,779) (64,273)
Capital expenditures, net (16,426) (6,157)
Other, net (167) -
--------- ---------
Net cash used in investing activities (207,372) (70,430)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from borrowing 242,188 234,770
Repayments of debt (177,161) (156,831)
Proceeds from issuance of common stock
and exercise of stock options 107,441 -
Proceeds from issuance of preferred securities 52,525 -
Other, net 444 343
--------- ---------
Net cash provided by financing activities 225,437 78,282
--------- ---------
EFFECT OF EXCHANGE RATES ON CASH 1,335 (191)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,866 3,753
CASH AND CASH EQUIVALENTS:
Beginning of period 4,148 1,667
--------- ---------
End of period $ 13,014 $ 5,420
--------- ---------
--------- ---------
The accompanying notes are an integral part of these condensed
consolidated statements.
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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.
Revenues and operating results for the three and nine months ended
September 30, 1998 are not necessarily indicative of the results to be
expected for the full year.
2. Inventories consisted of the following (in thousands):
Sept. 30, 1998 Dec. 31, 1997
-------------- -------------
Raw materials $ 21,844 $ 15,562
Work-in-process 17,213 9,126
Finished goods 15,026 5,613
-------------- -------------
Total inventories $ 54,083 $ 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 Nine Months
Ended Sept. 30, Ended Sept. 30,
1998 1997 1998 1997
------- ------- ------- -------
Net income $ 5,249 $ 2,657 $15,727 $11,301
Dividends on mandatorily redeemable
convertible preferred securities, net of tax 599 - 1,297 -
------- ------- ------- -------
Net income applicable to common
stockholders - diluted $ 5,848 $ 2,657 $17,024 $11,301
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of Class A
common shares outstanding 9,000 3,869 6,011 3,842
Weighted average number of Class B
common shares outstanding 3,342 4,940 4,149 4,963
Dilutive effect of outstanding stock options
after application of the treasury stock
method 76 65 86 59
Dilutive effect of mandatorily redeemable
convertible preferred securities, assuming
conversion 1,289 - 912 -
------- ------- ------- -------
Diluted shares outstanding 13,707 8,874 11,158 8,864
------- ------- ------- -------
------- ------- ------- -------
Basic earnings per share $ 0.43 $ 0.30 $ 1.55 $ 1.28
------- ------- ------- -------
------- ------- ------- -------
Diluted earnings per share $ 0.43 $ 0.30 $ 1.53 $ 1.27
------- ------- ------- -------
------- ------- ------- -------
5. In January 1997, the Company acquired all of the outstanding common stock
of the VOFA Group ("VOFA") for approximately $38.0 million in cash and
assumed indebtedness, plus contingent payments. VOFA designs and
manufactures shifter cables and other light duty cables for the European
automotive and industrial markets from facilities in Dusseldorf, Gehren and
Daun, Germany and Barcelona, Spain.
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 nine months ended September 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
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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 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 nine month
period ended September 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 $75.0 million of Trident's outstanding 10% Senior Subordinated
Notes due 2005. The Company also repaid Trident's outstanding senior
indebtedness of approximately $53.0 million. The acquisition of Trident was
financed with borrowings under a new credit facility which is further
described in Note 6.
In August 1998, the Company acquired the hinge business ("Hinge") of Tower
Automotive, Inc. for approximately $37.0 million. Hinge, which has annual
revenues of approximately $50.0 million, manufactures automotive hood and
deck lid hinges.
The acquisitions of GT Automotive, REOM, Universal, Trident and Hinge 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 nine months ended September 30, 1998 give effect to the acquisitions of
Universal, Trident and Hinge, 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
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operations for the nine months ended September 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 occurred at such date or to project the Company'
results of future operations (in thousands, except per share data):
Nine Months Ended September 30,
------------------------------------
1998 1997
-------------- -------------
Revenues $ 645,765 $ 659,015
-------------- -------------
-------------- -------------
Operating income $ 49,102 $ 48,108
-------------- -------------
-------------- -------------
Net income $ 17,390 $ 18,396
-------------- -------------
-------------- -------------
Basic earnings per share $ 1.41 $ 1.50
-------------- -------------
-------------- -------------
Diluted earnings per share $ 1.41 $ 1.48
-------------- -------------
-------------- -------------
6. Long-term debt consisted of the following (in thousands):
September 30, December 31,
1998 1997
------------- ------------
Bank Credit Agreement:
Term loans $ 96,577 $ -
Revolving credit facilities 140,449 -
Trident 10% senior subordinated 75,000 -
Old Bank Credit Agreement - 165,158
Other 9,651 15,164
--------- --------
321,677 180,322
Less-current maturities (7,906) (2,241)
--------- --------
Total long-term debt $ 313,771 $ 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 $225.0 million, term loans of $100.0 million, an acquisition facility of
$30.0 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 4.6% to 8.5% as of September 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
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Company was in compliance with the covenants as of September 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 September 30, 1998, $126.5 million of
borrowings were denominated in US dollars, $5.3 million of borrowings were
denominated in Canadian dollars, $2.1 million of borrowings were
denominated in Australian dollars, $4.2 million of borrowings were
denominated in Deutsche Marks, and $2.4 million in British pound sterling.
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 $8.0 million and $2.5 million for the three months ended
September 30, 1998
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and 1997, respectively and approximately $15.4 million and $9.9 million for
the nine months period ended September 30, 1998 and 1997, respectively.
The Financial Accounting Standards Board ("FASB") has issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
effective for fiscal years beginning after December 15, 1997. SFAS No. 131
requires disclosure of business and geographic segments in the consolidated
financial statements of the Company. The Company will adopt SFAS No. 131 in
1998 and is currently analyzing the impact it will have on the disclosures
in its financial statements.
The FASB has also 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. The adoption of SFAS No. 132 will result in revised and
additional disclosures, but will have no effect on the financial position,
results of operations, or liquidity of the Company.
In June 1998 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 or method of adoption.
9. Supplemental cash flow information (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1998 1997 1998 1997
------- ------- ------- -------
Cash paid for -
Interest $ 6,407 $ 2,031 $15,859 $ 5,552
Income taxes 2,398 1,680 9,804 3,974
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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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