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Previous: ILLUMINATED MEDIA INC, RW, 1997-06-13 |
Next: MUNICIPAL INVESTMENT TR FD MULTISTATE SER 312 DEF ASSET FDS, 487, 1997-06-13 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 333-21819
LDM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2690171
(State or other jurisdiciton of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 EXECUTIVE HILLS DRIVE
AUBURN HILLS, MICHIGAN 48326
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (810) 858-2800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days.
YES NO X
---- ----
Number of shares of common stock oustanding as of June 10, 1997: 600
<PAGE> 2
LDM TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page No.
<S> <C>
ITEM 1 FINANCIAL STATMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets, March 30, 1997 and September 29, 1996 3
Condensed Consolidated Statements of Income, Three months ended March 30, 1997
and March 24, 1996 4
Condensed Consolidated Statements of Income, Six months ended March 30, 1997
and March 24, 1996 5
Condensed Consolidated Statements of Cash Flows, Six months ended March 30, 1997
and March 24, 1996 6
Notes to Condensed Consolidated Financial Statements 7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 18
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 22
ITEM 2. CHANGES IN SECURITIES 22
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 22
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 22
ITEM 5. OTHER INFORMATION 22
SIGNATURE PAGE 23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
INDEX TO EXHIBITS 24
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
</TABLE>
2
<PAGE> 3
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 30, SEPTEMBER 29,
1997 1996
(UNAUDITED) (Note)
----------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $4,153 $2,122
Accounts Receivable 45,016 35,482
Raw materials 9,837 7,713
Work in process 1,534 1,368
Finished goods 5,260 2,752
Mold costs 13,727 7,129
Deferred income taxes 783 829
Other current assets 1,219 454
----------- -------------
Total current assets 81,529 57,849
Cash and equivalents restricted as to use 658
Net property, plant and equipment 80,649 58,956
Goodwill and other intangibles 41,988 1,298
----------- -------------
Totals $204,166 $118,761
=========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan in default $20,935
Lines of credit and revolving loans $1,885
Long-term debt in default 27,422
Accounts payable 30,642 30,834
Accrued liabilities 11,045 7,394
Accrued interest 2,308 204
Accrued compensation 3,452 4,202
Advance mold payments from customers 8,568 3,661
Income taxes payable 1,678 2,095
Current maturities of long-term debt 1,157 1,320
----------- -------------
Total current liabilities 60,735 98,067
Long-term debt due after one year 122,618 2,109
Deferred income taxes 813 841
Minority interests 336 422
Stockholders' Equity:
Common Stock (par value $.10, issued and
outstanding 600 shares; authorized 100,000 shares)
Additional paid-in capital 94 94
Retained earnings 19,652 17,290
Foreign currency translation adjustments (82) (62)
----------- -------------
Total stockholders' equity 19,664 17,322
----------- -------------
Totals $204,166 $118,761
=========== =============
</TABLE>
Note: The balance sheet at September 29, 1996 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See notes to condensed consolidated financial statements contained herein.
3
<PAGE> 4
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
-------------------------
THREE MONTHS ENDED
-------------------------
March 30, March 24,
1997 1996
---------- -------------
<S> <C> <C>
Revenues:
Net product sales $68,457 $44,575
Net mold sales 12,156 7,367
------- -------
80,613 51,942
Cost of Sales
Cost of product sales 54,115 36,661
Cost of mold sales 11,925 6,797
------- -------
66,040 43,458
------- -------
Gross margin 14,573 8,484
Selling, general and administrative expenses 8,865 6,667
------- -------
Operating profit 5,708 1,817
Interest expense (2,857) (874)
Other (expense) income, net (40) 330
------- -------
Income from continuing operations before income
taxes and minority interest 2,811 1,273
Provision for income taxes 942 693
------- -------
Income from continuing operations before minority
interest 1,869 580
Minority interest loss 35 46
------- -------
Income from continuing operations 1,904 626
Income from discontinued operations 14
------- -------
Net income $ 1,904 $ 640
======= =======
</TABLE>
See accompanying notes
4
<PAGE> 5
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
--------------------------
SIX MONTHS ENDED
--------------------------
March 30, March 24,
1997 1996
--------- ----------
<S> <C> <C>
Revenues:
Net product sales $119,516 $ 91,981
Net mold sales 13,362 13,108
-------- --------
132,878 105,089
Cost of Sales
Cost of product sales 97,640 76,393
Cost of mold sales 12,717 12,015
-------- --------
110,357 88,408
-------- --------
Gross margin 22,521 16,681
Selling, general and administrative expenses 15,128 13,394
-------- --------
Operating profit 7,393 3,287
Interest expense (3,981) (1,773)
Other income, net 254 223
-------- --------
Income from continuing operations before income
taxes, minority interest, and extraordinary item 3,666 1,737
Provision for income taxes 1,390 1,340
-------- --------
Income from continuing operations before minority
interest and extraordinary item 2,276 397
Minority interest loss 86 58
-------- --------
Income from continuing operations before
extraordinary item 2,362 455
Income from discontinued operations 28
-------- --------
Income before extraordinary item 2,362 483
Extraordinary gain on debt refinancing, no income tax effect 754
-------- --------
Net income $ 2,362 $ 1,237
======== ========
</TABLE>
See accompanying notes
5
<PAGE> 6
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
FOR SIX MONTHS FOR SIX MONTHS
ENDED ENDED
MARCH 30, MARCH 24,
1997 1996
---------------- ------------
<S> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ($977) $2,176
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (8,782) (7,466)
Proceeds from disposals of property, plant and equipment 2
Use of investments restricted to property, plant and equipment 658 3,685
Purchase of Molmec net of $2,705 cash acquired (52,609)
------------ ---------
NET CASH USED FOR INVESTING ACTIVITIES (60,731) (3,781)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt net of $5,399 and $208 debt
issuance costs in 1997 and 1996, respectively 104,601 9,199
Payments on long-term debt (21,812) (2,643)
Net repayments on line of credit borrowings (19,050) (5,358)
------------ ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 63,739 1,198
NET CASH CHANGE 2,031 (407)
Cash at beginning of period 2,122 1,138
----------- ----------
Cash at end of period $4,153 $731
=========== ==========
</TABLE>
6
<PAGE> 7
LDM TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month and three-month periods
ending March 30, 1997 and March 24, 1996 are not necessarily indicative of the
results that may be expected for the year ending September 28, 1997. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual financial statements
included in the Company's Form S-4 Registration Statement, file number
333-21819 declared effective April 29, 1997.
2. IMPACT OF ACCOUNTING STANDARD ADOPTED IN THE FISCAL
YEAR ENDING IN SEPTEMBER, 1997
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company's former policy was to measure an impairment loss for assets held for
use based upon expected undiscounted future cash flows. The Company adopted
Statement 121 in the first quarter of the fiscal year ending September 28,
1997, and based on current circumstances, no impairment losses are required to
be recognized.
3. EXTRAORDINARY ITEM
In November 1996, LDM Technologies Company, an indirect subsidiary of the
Company, retired notes payable to Barclays Bank of Canada and Gentra Canada,
resulting in a $753,510 extraordinary gain on extinguishment. Because of the
1996 Canadian operating losses, there was no tax effect related to the gain.
7
<PAGE> 8
LDM TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. PURCHASE OF MOLMEC
On January 22, 1997, the Company purchased the business and certain net assets
of Molmec, Inc. (a manufacturer of automotive under the hood plastics products)
for approximately $55 million. The acquisition was financed by the issuance of
debt as described in note 6.
The acquisition was accounted for using the purchase method. Accordingly, the
assets acquired and liabilities assumed are recorded at fair values and the
excess of the purchase price over the net assets acquired was recorded as
goodwill which will be amortized over 15 years using the straight-line method.
The pro forma unaudited results of operations for the six months ended March 30,
1997 and March 24, 1996, assuming consummation of the purchase and issuance of
the debt, as of September 25, 1995, as described in note 6, are as follows:
<TABLE>
<CAPTION>
For six months ended
March 30, 1997 March 24, 1996
-------------- --------------
(dollars in thousands)
<S> <C> <C>
Net sales $158,004 $149,149
Net income (loss) $2,255 ($838)
</TABLE>
8
<PAGE> 9
LDM TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. ISSUANCE OF DEBT
On January 22, 1997, the Company issued, in a private placement (the "Initial
Offering"), $110 million aggregate principal amount of its 10 3/4% Senior
Subordinated Notes due 2007, Series A (the "Notes"). The net proceeds of the
Initial Offering, which amounted to approximately $105 million, were
used to repay debt in default amounting to $37.8 million, to repay a $3
million note payable to a former shareholder, to fund the acquisition described
in note 5 and for general corporate purposes. In addition, the Company
obtained a new senior credit facility which provides available borrowings of
$45 million under revolving loans. The Company also obtained a replacement
letter of credit with respect to its $8.8 million Multi-Option Adjustable Rate
Notes.
On February 14, 1997 the Company filed a registration statement on Form S-4 to
register $110 million aggregate principal amount of its 10 3/4 % Senior
Subordinated Notes due 2007, Series B (the"Exchange Notes"). The Exchange Notes
have identical terms and conditions as the Notes, except for certain transfer
restrictions relating to the Notes. The Company's registration statement was
declared effective on April 29, 1997 by the Commission. As of May 28, 1997, the
day the exchange offer expired, $109 million Exchange Notes were exchanged
for the Notes. The Notes and the Exchange Notes are guaranteed by certain
subsidiaries of the Company, namely LDM Holdings, L.L.C., LDM Canada Limited
Partnership and LDM Canada, but will not be guaranteed by Como or LDM
Technologies S. de R.L. Neither LDM Holdings, L.L.C. nor LDM Canada Limited
Partnership have investments or activities other than their ownership
interests in LDM Technologies Company. Supplemental financial information for
the guarantor and nonguarantor subsidiaries is disclosed below.
6. SUBSEQUENT EVENT
On April 25, 1997, the Company acquired certain assets of a U.S. manufacturer
of automotive air vents for a purchase price of approximately $6.545 million,
subject to certain price adjustments. Net sales for the entity were
approximately $15.5 million for the twelve month period ended March 30, 1997 of
which approximately $5.9 million were sales to the Company. The acquisition
will allow the Company to vertically integrate and increase its instrument
panel manufacturing capabilities.
7. SUPPLEMENTAL GUARANTOR INFORMATION
The $110 million 10 3/4% Senior Subordinated Notes due 2007, the Senior Credit
Facility and the standby letter of credit with respect to the $8.8 million
Multi-Option Adjustable Rate Notes are obligations of LDM Technologies, Inc.
The obligations are guaranteed fully, unconditionally and jointly and
severally by LDM Canada and certain other subsidiaries, as described in note 6.
Non-guarantor subsidiaries are Como, a 75% owned subsidiary and LDM
Technologies S. de R.L., a 99% owned subsidiary.
Supplemental consolidating financial information of LDM Technologies, Inc., LDM
Canada and the nonguarantor subsidiaries is presented below.
9
<PAGE> 10
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AS OF MARCH 30, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
------------- ------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $3,465 $367 $321 $ $4,153
Trade accounts receivable 38,370 6,507 2,164 (2,025) 45,016
Raw materials 6,790 1,514 1,533 9,837
Work in process 1,162 191 181 1,534
Finished goods 4,239 613 408 5,260
Mold costs 5,761 2,757 5,209 13,727
Deferred income taxes 578 205 783
Other current assets 959 210 50 1,219
--------------------------------------------------------------------
Total current assets 61,324 12,159 10,071 (2,025) 81,529
Property, plant, and equipment less
accumulated depreciation 60,612 17,578 2,459 80,649
Notes receivable due from affiliates 19,891 900 (20,791)
Investment in subsidiaries 336 (336)
Other assets 41,709 112 167 41,988
--------------------------------------------------------------------
Totals $183,872 $29,849 $13,597 ($23,152) $204,166
====================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan $ $ $1,885 $ $1,885
Accounts payable 21,909 8,606 2,555 (2,428) 30,642
Accrued liabilities 9,131 1,693 331 (110) 11,045
Accrued interest 2,308 2,308
Accrued payroll and withholding taxes 2,564 426 462 3,452
Advance mold payments from customers 960 812 6,796 8,568
Income taxes payable 2,243 (565) 1,678
Current portion of long-term debt 850 399 (92) 1,157
--------------------------------------------------------------------
Total current liabilities 39,965 11,537 11,863 (2,630) 60,735
Long-term debt - net of current portion 122,530 88 122,618
Deferred income taxes 498 315 813
Notes payable due to affilitates 15,417 262 (15,679)
Minority interest in subsidiaries 336 336
Stockholders' Equity
Common Stock (par value $.10, issued and
outstanding 600 shares; authorized 100,000 shares) 5,850 1 (5,851)
Additional paid-in capital 94 133 (133) 94
Retained earnings 20,847 (2,873) 935 743 19,652
Foreign currency translation adjustment (62) (82) 0 62 (82)
--------------------------------------------------------------------
Total stockholders' equity 20,879 2,895 1,069 (5,179) 19,664
--------------------------------------------------------------------
Totals $183,872 $29,849 $13,597 ($23,152) $204,166
====================================================================
</TABLE>
10
<PAGE> 11
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 29, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
------------- ------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $9 $17 $2,096 $ $2,122
Trade accounts receivable 24,257 9,405 3,132 (1,312) 35,482
Raw materials 4,274 2,250 1,189 7,713
Work in process 950 279 139 1,368
Finished goods 1,833 488 431 2,752
Mold costs 5,503 399 1,227 7,129
Deferred income taxes 624 205 829
Other current assets 165 218 71 454
-------------------------------------------------------------------
Total current assets 37,615 13,056 8,490 (1,312) 57,849
Cash & equivalents restricted to property, plant
and equipment 658 658
Property, plant, and equipment less
accumulated depreciation 40,441 16,040 2,475 58,956
Notes receivable due from affiliates 3,909 (3,909)
Investment in subsidiaries 514 (514)
Other assets 548 165 585 1,298
-------------------------------------------------------------------
Totals $83,685 $29,261 $11,550 ($5,735) $118,761
===================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan in default $15,500 $3,634 $1,801 $ $20,935
Long-term debt in default 17,781 9,641 27,422
Accounts payable 18,152 11,896 2,091 (1,305) 30,834
Accrued liabilities 4,401 845 2,148 7,394
Accrued interest 204 204
Accrued payroll and withholding taxes 4,202 4,202
Advance mold payments from customers 45 3,616 3,661
Income taxes payable 2,087 8 2,095
Current portion of long-term debt 1,168 4 148 1,320
-------------------------------------------------------------------
Total current liabilities 63,495 26,073 9,804 (1,305) 98,067
Long-term debt - net of current portion 1,920 2 187 2,109
Deferred income taxes 526 315 841
Notes payable due to affilitates 3,909 (3,909)
Minority interest in subsidiaries 422 422
Stockholders' Equity
Common Stock (par value $.10, issued and
outstanding 600 shares; authorized 100,000 shares) 1,350 1 (1,351)
Additional paid-in capital 94 133 (133) 94
Retained earnings 17,290 (2,011) 1,110 901 17,290
Foreign currency translation adjustment (62) (62) 62 (62)
-------------------------------------------------------------------
Total stockholders' equity 17,322 (723) 1,244 (521) 17,322
-------------------------------------------------------------------
Totals $83,685 $29,261 $11,550 ($5,735) $118,761
===================================================================
</TABLE>
11
<PAGE> 12
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED
MARCH 30, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
----------- -------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Net product sales $53,886 $10,084 $4,851 ($364) $68,457
Net mold sales 9,848 603 1,705 12,156
---------------------------------------------------------------------
63,734 10,687 6,556 (364) 80,613
Cost of Sales
Cost of product sales 40,803 8,794 4,882 (364) 54,115
Cost of mold sales 9,891 580 1,454 11,925
---------------------------------------------------------------------
50,694 9,374 6,336 (364) 66,040
---------------------------------------------------------------------
Gross margin 13,040 1,313 220 14,573
Selling, general and administrative expenses 8,224 195 446 8,865
---------------------------------------------------------------------
Operating profit (loss) 4,816 1,118 (226) 5,708
Interest expense (2,697) (416) (62) 318 (2,857)
Other income (expense), net 169 89 20 (318) (40)
Equity in net income of subsidiaries 647 (647)
---------------------------------------------------------------------
Income (loss) from continuing operations before income
taxes and minority interest 2,935 791 (268) (647) 2,811
Provision for income taxes 1,031 (89) 942
---------------------------------------------------------------------
Income (loss) from continuing operations before
minority interest 1,904 791 (179) (647) 1,869
Minority interest loss 35 35
---------------------------------------------------------------------
Net income (loss) $1,904 $791 ($144) ($647) $1,904
=====================================================================
</TABLE>
12
<PAGE> 13
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED MARCH
24, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
--- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net product sales $33,373 $6,593 $5,223 ($614) $44,575
Net mold sales 6,111 1,152 104 7,367
------------------------------------------------------------------------------
39,484 7,745 5,327 (614) 51,942
Cost of Sales
Cost of product sales 25,343 6,799 5,022 (503) 36,661
Cost of mold sales 5,758 1,053 97 (111) 6,797
------------------------------------------------------------------------------
31,101 7,852 5,119 (614) 43,458
------------------------------------------------------------------------------
Gross margin 8,383 (107) 208 8,484
Selling, general and administrative expenses 5,662 519 486 6,667
------------------------------------------------------------------------------
Operating profit (loss) 2,721 (626) (278) 1,817
Interest expense (508) (302) (64) (874)
Other income (expense), net 204 127 (1) 330
Equity in net loss of subsidiaries (673) 673
------------------------------------------------------------------------------
Income (loss) from continuing operations before
taxes and minority interest 1,744 (801) (343) 673 1,273
Provision for income taxes 1,118 (306) (119) 693
------------------------------------------------------------------------------
Income (loss) from continuing operations before
minority interest 626 (495) (224) 673 580
Minority interest loss 46 46
------------------------------------------------------------------------------
Income (loss) from continuing operations before
extraordinary item 626 (495) (178) 673 626
Income from discontinued operations, net of
income taxes and minority interest 14 14
------------------------------------------------------------------------------
Net income (loss) $640 ($495) ($178) $673 $640
==============================================================================
</TABLE>
13
<PAGE> 14
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR SIX MONTHS ENDED MARCH 30,
1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
---- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net product sales $ 91,302 $ 18,242 $ 10,790 ($818) $119,516
Net mold sales 10,724 914 1,724 13,362
-------------------------------------------------------------------------------
102,026 19,156 12,514 (818) 132,878
Cost of Sales
Cost of product sales 69,760 18,073 10,625 (818) 97,640
Cost of mold sales 10,396 852 1,469 12,717
-------------------------------------------------------------------------------
80,156 18,925 12,094 (818) 110,357
-------------------------------------------------------------------------------
Gross margin 21,870 231 420 22,521
Selling, general and administrative
expenses 13,451 713 964 15,128
-------------------------------------------------------------------------------
Operating profit (loss) 8,419 (482) (544) 7,393
Interest expense (3,505) (728) (124) 376 (3,981)
Other income (expense), net 255 348 27 (376) 254
Equity in net loss of subsidiaries (617) 617
-------------------------------------------------------------------------------
Income (loss) from continuing operations
before income taxes and minority interest 4,552 (862) (641) 617 3,666
Provision for income taxes 2,190 (579) (221) 1,390
-------------------------------------------------------------------------------
Income (loss) from continuing operations
before minority interest 2,362 (283) (420) 617 2,276
Minority interest loss 86 86
-------------------------------------------------------------------------------
Net income (loss) $2,362 ($283) ($334) $617 $ 2,362
===============================================================================
</TABLE>
14
<PAGE> 15
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR SIX MONTHS
ENDED MARCH 24, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
------------- -------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net product sales $67,513 $15,100 $10,595 ($1,227) $ 91,981
Net mold sales 10,298 2,503 307 13,108
----------------------------------------------------------------------------------
77,811 17,603 10,902 (1,227) 105,089
Cost of Sales
Cost of product sales 53,405 14,043 9,940 (995) 76,393
Cost of mold sales 9,705 2,354 290 (334) 12,015
----------------------------------------------------------------------------------
63,110 16,397 10,230 (1,329) 88,408
----------------------------------------------------------------------------------
Gross Margin 14,701 1,206 672 102 16,681
Selling, general and administrative
expenses 11,314 1,071 1,009 13,394
----------------------------------------------------------------------------------
Operating profit (loss) 3,387 135 (337) 102 3,287
Interest expense (1,083) (560) (126) (4) (1,773)
Other income (expense), net 200 121 (98) 223
Equity in net income of subsidiaries 79 (79)
----------------------------------------------------------------------------------
Income (loss) from continuing operations
before income taxes and minority interest 2,583 (304) (463) (79) 1,737
Provision for income taxes 1,374 118 (152) 1,340
----------------------------------------------------------------------------------
Income (loss) from continuing operations
before minority interest 1,209 (422) (311) (79) 397
Minority interest loss 58 58
----------------------------------------------------------------------------------
Income (loss) from continuing operations
before extraordinary item 1,209 (422) (253) (79) 455
Income from discontinued operations, net of
income taxes and minority interest 28 28
----------------------------------------------------------------------------------
Income (loss) before extraordinary item 1,237 (422) (253) (79) 483
Extraordinary gain on debt refinancing,
no income tax effect 754 754
----------------------------------------------------------------------------------
Net income (loss) $1,237 $332 $(253) ($79) $1,237
==================================================================================
</TABLE>
15
<PAGE> 16
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED MARCH 30,
1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
---- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ($196) $785 ($1,566) $ ($977)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant, and equipment (5,906) (2,583) (293) (8,782)
Proceeds from disposals of property, plant,
and equipment 2 2
Use of investments restricted to property,
plant and equipment 658 658
Purchase of Molmec net of $2,705 cash acquired (52,609) (52,609)
-----------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (57,855) (2,583) (293) (60,731)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt net of $5,399 debt
issuance costs 89,172 15,429 104,601
Payments on long-term debt (12,165) (9,647) (21,812)
Net proceeds from line of credit borrowings (15,500) (3,634) 84 (19,050)
---------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 61,507 2,148 84 63,739
Net cash change 3,456 350 (1,775) 2,031
Cash at beginning of period 9 17 2,096 2,122
---------------------------------------------------------------------
Cash at end of period $3,465 $367 $321 $ $4,153
=====================================================================
</TABLE>
16
<PAGE> 17
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED MARCH 24,
1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
--- ------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $1,988 $261 ($73) $ $2,176
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant, and equipment (6,259) (645) (562) (7,466)
Proceeds from disposals of property, plant, and equipment
Use of investments restricted to property, plant and equipment 3,685 3,685
---------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (2,574) (645) (562) (3,781)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt net of $208 of debt issuance costs 7,792 1,407 9,199
Payments on long-term debt (2,643) (2,643)
Net proceeds from line of credit borrowings (4,963) (1,035) 640 (5,358)
---------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 186 372 640 1,198
Net cash change (400) (12) 5 (407)
Cash at beginning of period 811 55 272 1,138
---------------------------------------------------------
Cash at end of period $411 $43 $277 $ $731
=========================================================
</TABLE>
17
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF CONTINUING OPERATIONS
QUARTER ENDED MARCH 30, 1997 COMPARED TO QUARTER ENDED MARCH 24, 1996
NET SALES: Net sales for the three month period ended March 30, 1997 ("second
quarter 1997") were $80.6 million, an increase of $28.7 million, or 55.2%, from
the three month period ended March 24, 1996 ("second quarter 1996"). Second
quarter 1997 net sales were comprised of $63.6 million of automotive product
sales, $4.9 million of consumer and other product sales, and $12.1 million of
mold sales. The strong sales growth was mainly attributable to increased
automotive product sales related to the Company's January 22, 1997 acquisition
of Molmec, Inc. and continued strength of production parts related to the Ford
F-Series truck program and the General Motors Grand Prix program.
GROSS MARGIN: Gross margin was $14.6 million, or 18.1% of net sales, for
second quarter 1997 compared to $8.5 million, or 16.3% of net sales, for
second quarter 1996. The increase was primarily due to the Molmec
acquisition and improved profitability of the Company's Canadian automotive
operation.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for
second quarter 1997 were $8.9 million, or 11.0% of net sales, compared to
$6.7 million, or 12.8% of net sales, for second quarter 1996. The
reduction of SG&A as a percentage of net sales was the result of
increased net sales discussed above.
INTEREST EXPENSE: Interest expense was $2.9 million for second quarter 1997
compared to $0.9 million for second quarter of 1996. The increased
interest expense was primarily due to the incurrence of additional debt related
to the Molmec acquisition.
INCOME TAXES: The provision for income taxes for second quarter 1997
was $0.9 million with an effective tax rate of 33.5%, as compared to $0.7
million with an effective tax rate of 54.4% for second quarter 1996. The
lower effective tax rate is due to utilization of Canadian tax benefits
not available in the 1996 period and certain accruals in 1996 for settlement of
prior year's income tax liabilities.
18
<PAGE> 19
SIX MONTHS ENDED MARCH 30, 1997 COMPARED TO SIX MONTHS ENDED MARCH 24, 1996
NET SALES: Net sales for the six month period ended March 30, 1997 ("first
half 1997") were $132.9 million, an increase of $27.8 million, or 26.4%, from
the six month period ended March 24, 1996 ("first half 1996"). First half 1997
net sales were comprised of approximately $109.5 million of automotive
product sales, $10.0 million of consumer and other product sales, and $13.4
million of mold sales. The strong sales growth was mainly attributable to
increased automotive product sales related to the Company's January 22, 1997
acquisition of Molmec, Inc. and continued strength of the Company's existing
products.
GROSS MARGIN: Gross margin was $22.5 million, or 16.9% of net sales, for
first half 1997 compared to $16.7 million, or 15.9% of net
sales, for first half 1996. The increase was primarily due to the
Molmec acquisition and increased net sales discussed above.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for first
half 1997 were $15.1 million, or 11.4% of net sales, compared
to $13.4 million, or 12.7% of net sales, for first half 1996. The
reduction of SG&A as a percentage of net sales was the result of
increased net sales discussed above.
INTEREST EXPENSE: Interest expense was $4.0 million for first half 1997
compared to $1.8 million for first half 1996. The increased interest expense
was primarily due to the incurrence of additional debt related to the Molmec
acquisition.
INCOME TAXES: The provision for income taxes for first half 1997 was $1.4
million with an effective tax rate of 37.9%, as compared to $1.3 million with
an effective tax rate of 77.1% for first half 1996. The lower
effective tax rate is due to utilization of Canadian tax benefits not
available in 1996 and certain accruals in 1996 for settlement of prior year's
income tax liabilities.
ACQUISITION OF MOLMEC: On January 22, 1997, the Company acquired
substantially all the assets of Molmec for approximately $57.6 million in cash
and the assumption of certain liabilities including $5.0 million of
indebtedness and $11.6 million of current liabilities. Molmec is an industry
leader in the design, manufacture and integration of fluid and air management
components and under the hood assemblies. Molmec's net sales and net income
for the year ended December 31, 1996 were $88.1 million and $7.7 million,
respectively.
19
<PAGE> 20
SENIOR SUBORDINATED NOTES AND NEW SENIOR CREDIT FACILITY: On January 22, 1997,
the Company issued senior subordinated notes in the aggregate principal amount
of $110.0 million bearing interest at 10.75% annually. The proceeds were
primarily used to fund the purchase of Molmec and to retire certain of the
Company's existing indebtedness. Also in January of 1997, the Company
obtained a new senior credit facility which provides available borrowings of
up to $45.0 million under revolving loans.
DOMESTIC BUSINESS ACQUISITION SUBSEQUENT TO MARCH 30, 1997: On April 25,
1997, the Company consummated the acquisition of certain assets of a U.S.
manufacturer of automotive air vents for approximately $6.5 million. Net
sales for the entity were approximately $15.5 million for the twelve month
period ended March 30, 1997 of which approximately $5.9 million were sales to
the Company.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's principal capital requirements are to fund working capital needs,
to meet required debt obligations, and capital expenditures for facility
maintenance and expansion. The Company believes its future cash flow from
operations , combined with its revolving credit availability will be sufficient
to meet its planned debt service, capital requirements and internal growth
opportunities. Potential growth from acquisitions will be funded from a variety
of sources including, cash flow from operations and permitted additional
indebtedness. As of March 30, 1997, the Company had $122.6 million of long term
debt outstanding and $33.9 million of borrowing availability under its
revolving credit facility.
Cash used by operating activities in the six month period ended March 30, 1997
was $1.0 million compared to $2.2 million of cash provided by operating
activities in the six month period ended March 24, 1996. The reduction in cash
provided by operating activities was the result of higher accounts receivable
and inventory balances resulting from the addition of Molmec and increased
levels of accrued mold costs related to programs to be launched in the next
twelve months.
Capital expenditures for the six month period ended March 30, 1997 were $8.8
million compared to $7.5 million for the six month period ended March 24, 1996.
Fiscal year 1997 capital expenditures include several injection molding
machines, secondary equipment related to the F-Series Truck program and
expenditures related to the Auburn Hills Design Center.
The Company believes its capital expenditures (exclusive of any potential
acquisitions) will be approximately $9.0 million to $13.5 million in each of
the fiscal years ended September 1997, 1998 and 1999. However, the Company's
capital expenditures may be greater than currently anticipated as the result of
new business opportunities.
20
<PAGE> 21
The Company's liquidity is affected by both the cyclical nature of its business
and levels of net sales to its major customers. The Company's ability to meet
its working capital and capital expenditure requirements and debt obligations
will depend on its future operating performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond its control. However, the Company believes that
its existing borrowing ability and cash flow from operations will be sufficient
to meet its liquidity requirements in the foreseeable future.
21
<PAGE> 22
PART II - OTHER INFORMATION
<TABLE>
<S> <C> <C>
ITEM 1. Legal Proceedings. Not applicable.
ITEM 2. Changes in Securities. Not applicable.
ITEM 3. Defaults upon Senior Not applicable.
Securities.
ITEM 4. Submission of Matters to a
Vote of Security Holders. Not applicable.
ITEM 5. Other Information. Not applicable.
ITEM 6. Exhibits and Reports on
Form 8-K (a) Exhibit 27-Financial Data Schedule
(b) Not applicable
</TABLE>
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report or amendment thereto to be
signed on its behalf by the undersigned.
LDM TECHNOLOGIES, INC.
By: /s/ GARY E. BORUSHKO
---------------------------
Gary E. Borushko
Chief Financial Officer
/s/ GARY E. BORUSHKO
---------------------------
Gary E. Borushko
Chief Financial Officer
/s/ JOSEPH E. BLAKE
---------------------------
Joseph E. Blake
Director of Finance
(chief accounting officer)
23
<PAGE> 24
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Data Schedule
24
<TABLE> <S> <C>
<ARTICLE> CT
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-30-1997
<TOTAL-ASSETS> 204,166
0
0
<COMMON> 0
<OTHER-SE> 19,570
<TOTAL-LIABILITY-AND-EQUITY> 204,166
<TOTAL-REVENUES> 132,878
<INCOME-TAX> 1,390
<INCOME-CONTINUING> 2,362
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,362
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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