<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 December 28, 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 jurisdiction 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 (248) 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 X NO
Number of shares of common stock outstanding as of February 6, 1998: 600
Total pages: 21
Listing of exhibits:
<PAGE> 2
LDM TECHNOLOGIES, INC.
<TABLE>
<CAPTION>
INDEX
PAGE NO.
--------
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets, December 28, 1997 and September 28, 1997 3
Condensed Consolidated Statements of Income, three months ended
December 28, 1997 and December 29, 1996 4
Condensed Consolidated Statements of Cash Flows, three months ended
December 28, 1997 and December 29, 1996 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 15
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings Not applicable.
ITEM 2 Changes in Securities Not applicable.
ITEM 3 Defaults upon Senior Securities Not applicable.
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.
Signatures
</TABLE>
<PAGE> 3
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 28, 1997 SEPTEMBER 28, 1997
(UNAUDITED) (NOTE)
----------------- ------------------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 8,365 $ 4,633
Accounts Receivable 58,711 45,811
Raw materials 12,593 8,988
Work in process 2,185 1,626
Finished goods 5,166 4,434
Mold costs 18,887 13,825
Deferred income taxes 4,726 4,627
Other current assets 1,956 2,054
--------- ---------
Total current assets 112,589 85,998
Net property, plant and equipment 96,695 82,259
Goodwill, net 45,880 36,791
Debt issue costs, net 6,709 5,733
Other assets 561 1,014
--------- ---------
Totals $ 262,434 $ 211,795
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loans $ 37,681 $ 3,530
Accounts payable 33,960 28,152
Accrued liabilities 16,975 13,107
Accrued interest 5,693 2,555
Accrued compensation 3,942 4,616
Advance mold payments from customers 11,881 11,082
Income taxes payable 2,719 1,249
Current maturities of long-term debt 1,961 979
--------- ---------
Total current liabilities 114,812 65,270
Long-term debt due after one year 121,660 122,261
Deferred income taxes 3,789 3,513
Note payable to affiliates 87 87
Minority interest 231 279
Stockholders' Equity:
Common Stock (par value $.10, issued and outstanding 600 shares; authorized
100,000 shares)
Additional paid-in capital 94 94
Retained earnings 21,863 20,353
Foreign currency translation adjustments (102) (62)
--------- ---------
Total stockholders' equity 21,855 20,385
--------- ---------
Totals $ 262,434 $ 211,795
========= =========
</TABLE>
Note: The balance sheet at September 28, 1997 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.
<PAGE> 4
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
------------------------------------------
THREE MONTHS ENDED
------------------------------------------
DECEMBER 28, 1997 DECEMBER 29, 1996
----------------- -----------------
<S> <C> <C>
Revenues
Net product sales $ 93,707 $ 51,059
Net mold sales 6,589 1,206
--------- ---------
100,296 52,265
Cost of Sales
Cost of product sales 76,536 43,525
Cost of mold sales 5,838 792
--------- ---------
82,374 44,317
--------- ---------
Gross margin 17,922 7,948
Selling, general and administrative expenses 11,097 6,263
--------- ---------
Operating profit 6,825 1,685
Interest expense (3,933) (1,124)
Other income, net (122) 294
--------- ---------
Income before income taxes and minority interest 2,770 855
Provision for income taxes 1,308 448
--------- ---------
Income before minority interest 1,462 407
Minority interest 48 51
========= =========
Net income $ 1,510 $ 458
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
-----------------------------------------
THREE MONTHS ENDED
-----------------------------------------
DECEMBER 28, 1997 DECEMBER 29, 1996
----------------- -----------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 7,855 $ 4,492
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (958) (5,300)
Proceeds from disposal of property, plant and equipment 166 2
Use of investments restricted to property, plant and equipment 279
Good faith deposit for purchase of Molmec, Inc. (2,000)
Good faith deposit for purchase of Huron Plastics Group, Inc. (1,000)
Purchase of LDM Germany (9,706)
Purchase of Kenco Plastics net of $500 cash acquired (27,000)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (38,498) (7,019)
CASH FLOWS FROM FINANCING ACTIVITIES
Costs associated with debt acquisition (167) (443)
Proceeds from long-term debt issuance 876
Payments on long-term debt (845) (683)
Net borrowings on line of credit 34,511 3,351
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 34,375 2,225
-------- --------
Net cash change 3,732 (302)
Cash at beginning of period 4,633 2,122
======== ========
Cash at end of period $ 8,365 $ 1,820
======== ========
SUPPLEMENTAL INFORMATION
Depreciation and amortization $ 3,955 $ 1,979
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 6
LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
1. BASIS OF PRESENTATION
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 of 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 three month periods ending December
1997 and 1996 are not necessarily indicative of the results that may be expected
for the year ending September 27, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended September 28, 1997.
2. PURCHASES OF MOLMEC, AEROQUIP KENDALLVILLE - INDIANA FACILITY, KENCO
PLASTICS, AND AEROQUIP BEIENHEIM - GERMANY FACILITY
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 $55.9 million. The acquisition was financed by the issuance of
debt as described in note 4.
On April 25, 1997, the Company purchased the business and certain net assets of
Aeroquip, Inc.'s Kendallville, Indiana Facility (a manufacturer of automotive
plastic air register vents). The purchase price was approximately $6.9 million.
The acquisition was financed with working capital.
<PAGE> 7
LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
On September 30, 1997, the Company acquired the entire voting stock of Kenco
Plastics, Inc. (Michigan) and Kenco Plastics, Inc. (Kentucky) and the business
and net tangible assets of Narens Design and Engineering, Inc. for approximately
$27.1 million in cash. The acquisition was financed with additional borrowings
under the existing Senior Credit Facility.
On November 25, 1997, the Company acquired the business and certain assets
comprising the `Beienheim' plant of Aeroquip Corporation for approximately $8.6
million in cash subject to certain adjustments. The acquisition was financed
with additional borrowings under the existing Senior Credit Facility.
Each of the above described acquisitions were accounted for using the purchase
method. Accordingly, the assets acquired and liabilities assumed were 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 three months ended
December 28, 1997 and December 29, 1996, assuming consummation of the purchases
and issuance of the debt as described in note 4 had occurred on September 30,
1996, are as follows:
<TABLE>
<CAPTION>
For three months ended
December 28, 1997 December 29, 1996
----------------- -----------------
(dollars in thousands)
<S> <C> <C>
Net sales $106,249 $98,510
Net income $1,445 $1,192
</TABLE>
3. ACQUISITION SUBSEQUENT TO FIRST QUARTER 1998
On February 6, 1998, LDM acquired the stock of Huron Plastics Group, Inc. and
substantially all the assets of Tadim, Inc. (collectively referred to herein as
"HPG") for $65.1 million in cash and the assumption of certain liabilities. The
transaction was funded with proceeds from a $66.0 million dollar term loan
issued by the Company's senior lender. HPG's sales and net income for its fiscal
year ended March 31, 1997 were $88.1 million and $0.8 million, respectively. HPG
manufactures a wide variety of interior trim, underhood and functional
components for many automotive customers, including Ford, Chrysler, General
Motors, Bundy, TRW, and Johnson Controls.
4. ISSUANCE OF DEBT
On January 22, 1997, the Company issued $110 million aggregate principal amount
of its 10 3/4% Senior Subordinated Notes due 2007. The net proceeds, which
amounted to approximately $105 million, were used to repay debt in default
amounting to $37.8 million, to repay the $3 million note payable to a former
shareholder, to fund the Molmec acquisition described in note 2, 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.
5. COMMITMENTS AND CONTINGENCIES
There have not been any significant changes in commitments and contingencies
from the matters described in footnote 12 of the Company's consolidated
financial statements as of and for the year ended September 28, 1997.
<PAGE> 8
LDM TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
6. 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. and
are guaranteed fully, unconditionally and jointly and severally by LDM
Technologies Company, ("LDM Canada") and certain holding companies (LDM
Holdings L.L.C., and LDM Canada Limited Partnership). Distributions by the
guarantor subsidiaries to the Company are restricted so long as the above
described Notes are outstanding. Non-guarantor subsidiaries consist of Como, a
75% owned subsidiary, and LDM Germany (`Beienheim'), a wholly-owned subsidiary.
Supplemental consolidating financial information of LDM Technologies, Inc., LDM
Canada, and nonguarantor subsidiaries is presented below.
<PAGE> 9
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 28, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
---- ------ ------------ ------- ------------
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $28 $4,712 $3,625 $8,365
Accounts receivable 50,453 4,499 6,078 ($2,319) 58,711
Notes receivable from affiliates 18,672 (18,672)
Raw materials 8,385 1,378 2,830 12,593
Work in process 1,794 215 176 2,185
Finished goods 4,447 395 324 5,166
Mold costs 4,070 11,845 2,972 18,887
Deferred income taxes 4,521 205 4,726
Other current assets 1,819 62 75 1,956
-------------------------------------------------------------------------------
Total current assets 94,189 23,106 16,285 (20,991) 112,589
Net property, plant and equipment 74,078 15,516 7,101 96,695
Investment in subsidiaries 13,389 (13,389)
Goodwill, net 45,829 51 45,880
Debt issue costs, net 6,709 6,709
Other assets 556 5 561
-------------------------------------------------------------------------------
Totals $234,750 $38,622 $23,442 ($34,380) $262,434
===============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loans $35,284 $2,397 $37,681
Accounts payable 27,220 $5,636 4,362 ($3,258) 33,960
Accrued liabilities 11,509 3,938 1,528 16,975
Accrued interest 5,693 5,693
Accrued compensation 1,991 324 1,627 3,942
Advance mold payments from customers 10,800 1,081 11,881
Income taxes payable 3,316 (597) 2,719
Current maturities of long-term debt 1,742 219 1,961
-------------------------------------------------------------------------------
Total current liabilities 86,755 20,698 10,617 (3,258) 114,812
Long-term debt due after one year 121,660 121,660
Deferred income taxes 3,512 (38) 315 3,789
Note payable to affiliates 15,409 350 (15,672) 87
Minority interest 231 231
Stockholders' Equity
Common stock 5,857 11,759 (17,616)
Additional paid-in capital 94 126 (126) 94
Retained earnings 22,560 (3,304) 315 2,292 21,863
Foreign currency translation adjustments (62) (40) (102)
-------------------------------------------------------------------------------
Total stockholders' equity 22,592 2,553 12,160 (15,450) 21,855
-------------------------------------------------------------------------------
Totals $234,750 $38,622 $23,442 ($34,380) $262,434
===============================================================================
</TABLE>
<PAGE> 10
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 28, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
---- ------ ------------ ------- ------------
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $12 $4,598 $23 $4,633
Accounts receivable 40,102 6,688 1,773 ($2,752) 45,811
Notes receivable from affiliates 16,098 (16,098)
Raw materials 6,046 1,422 1,520 8,988
Work in process 1,173 310 143 1,626
Finished goods 3,674 382 378 4,434
Mold costs 3,887 8,902 1,036 13,825
Deferred income taxes 1,852 2,575 200 4,627
Other current assets 1,851 121 82 2,054
---------------------------------------------------------------------------------
Total current assets 74,695 24,998 5,155 (18,850) 85,998
Net property, plant and equipment 64,073 16,239 1,947 82,259
Investment in subsidiaries 4,536 (4,536)
Goodwill, net 36,791 36,791
Debt issue costs, net 5,733 5,733
Other assets 680 334 1,014
---------------------------------------------------------------------------------
Totals $186,508 $41,237 $7,436 ($23,386) $211,795
=================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loans $1,700 $1,830 $3,530
Accounts payable 21,262 $7,802 2,260 ($3,172) 28,152
Accrued liabilities 10,236 2,070 801 13,107
Accrued interest 2,555 2,555
Accrued compensation 3,895 286 435 4,616
Advance mold payments from customers 10,102 980 11,082
Income taxes payable 1,631 8 (390) 1,249
Current maturities of long-term debt 881 98 979
---------------------------------------------------------------------------------
Total current liabilities 42,160 20,268 6,014 (3,172) 65,270
Long-term debt due after one year 122,256 5 122,261
Deferred income taxes 1,490 1,709 314 3,513
Note payable to affiliates 15,408 350 (15,671) 87
Minority interest 279 279
Stockholders' Equity
Common stock 5,857 1 (5,858)
Additional paid-in capital 94 126 (126) 94
Retained earnings 20,291 (2,010) 631 1,441 20,353
Foreign currency translation adjustments (62) (62)
---------------------------------------------------------------------------------
Total stockholders' equity 20,323 3,847 758 (4,543) 20,385
---------------------------------------------------------------------------------
Totals $186,508 $41,237 $7,436 ($23,386) $211,795
=================================================================================
</TABLE>
<PAGE> 11
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED
DECEMBER 28, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
---- ------ ------------ ------- ------------
Revenues:
<S> <C> <C> <C> <C> <C>
Net product sales $77,082 $9,807 $7,046 ($228) $93,707
Net mold sales 6,541 43 5 6,589
--------------------------------------------------------------------------------
83,623 9,850 7,051 (228) 100,296
Cost of Sales
Cost of product sales 60,600 9,238 6,926 (228) 76,536
Cost of mold sales 5,799 32 7 5,838
--------------------------------------------------------------------------------
66,399 9,270 6,933 (228) 82,374
--------------------------------------------------------------------------------
Gross margin 17,224 580 118 17,922
Selling, general and administrative expenses 10,197 364 536 11,097
--------------------------------------------------------------------------------
Operating profit (loss) 7,027 216 (418) 6,825
Interest expense (3,885) (419) (62) 433 (3,933)
Other income (expense), net 591 (263) (17) (433) (122)
Equity in net loss of subsidiaries (744) 744
--------------------------------------------------------------------------------
Income (loss) before income taxes and minority 2,989 (466) (497) 744 2,770
interest
Provision (credit) for income taxes 1,527 (38) (181) 1,308
--------------------------------------------------------------------------------
Income (loss) before minority interest 1,462 (428) (316) 744 1,462
Minority interest 48 48
--------------------------------------------------------------------------------
Net income (loss) $1,510 ($428) ($316) $744 $1,510
================================================================================
</TABLE>
<PAGE> 12
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THREE MONTHS ENDED
DECEMBER 29, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, LDM NONGUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
---- ------ ------------ ------- ------------
Revenues:
<S> <C> <C> <C> <C> <C>
Net product sales $37,416 $8,158 $5,939 ($454) $51,059
Net mold sales 876 311 19 1,206
---------------------------------------------------------------------------
38,292 8,469 5,958 (454) 52,265
Cost of Sales
Cost of product sales 28,957 9,279 5,743 (454) 43,525
Cost of mold sales 505 272 15 792
---------------------------------------------------------------------------
29,462 9,551 5,758 (454) 44,317
---------------------------------------------------------------------------
Gross margin 8,830 (1,082) 200 7,948
Selling, general and administrative expenses 5,227 518 518 6,263
---------------------------------------------------------------------------
Operating profit (loss) 3,603 (1,600) (318) 1,685
Interest expense (808) (312) (62) 58 (1,124)
Other income (expense), net 86 259 7 (58) 294
Equity in net loss of subsidiaries (1,315) 1,315
---------------------------------------------------------------------------
Income (loss) before income taxes and minority 1,566 (1,653) (373) 1,315 855
interest
Provision (credit) for income taxes 1,159 (579) (132) 448
---------------------------------------------------------------------------
Income (loss) before minority interest 407 (1,074) (241) 1,315 407
Minority interest 51 51
---------------------------------------------------------------------------
Net income (loss) $458 ($1,074) ($241) $1,315 $458
===========================================================================
</TABLE>
<PAGE> 13
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THREE MONTHS ENDED
DECEMBER 28, 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 $6,782 $177 $898 ($2) $7,855
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (864) (58) (36) (958)
Proceeds from disposals of property, plant and equipment 166 166
Good faith deposit for Huron Plastics, Inc. (1,000) (1,000)
Purchase of LDM Germany (9,706) (9,706)
Purchase of Kenco, net of $500 cash acquired (27,000) (27,000)
-----------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (38,404) (58) (36) (38,498)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing (to)/from affiliates (2,054) 2,052 2
Costs associated with debt acquisition (167) (167)
Proceeds from long-term debt 876 876
Payments on long-term debt (601) (5) (239) (845)
Net proceeds from line of credit borrowings 33,584 927 34,511
-----------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 31,638 (5) 2,740 2 34,375
-----------------------------------------------------------------------------
Net cash change 16 114 3,602 3,732
Cash at beginning of period 12 4,598 23 4,633
=============================================================================
Cash at end of period $28 $4,712 $3,625 $ $8,365
=============================================================================
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $3,165 $499 $291 $3,955
=============================================================================
</TABLE>
<PAGE> 14
LDM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THREE MONTHS ENDED
DECEMBER 29, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, NON GUARANTOR
INC. LDM CANADA SUBSIDIARY CONSOLIDATED
---- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $2,183 $2,239 $70 $4,492
Cash flows from investing activities
Additions to property, plant and equipment (2,886) (2,192) (222) (5,300)
Proceeds from disposals of property, plant and equipment 2 2
Use of investments restricted to property, plant and equipment 279 279
Good faith deposit for purchase of Molmec (2,000) (2,000)
--------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (4,605) (2,192) (222) (7,019)
CASH FLOWS FROM FINANCING ACTIVITIES
Costs associated with debt acquisition (443) (443)
Payments on long-term debt (683) (683)
Net proceeds (repayments) from (on) line of credit borrowings 3,549 (60) (138) 3,351
--------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,423 (60) (138) 2,225
--------------------------------------------------------------------
Net cash change 1 (13) (290) (302)
Cash at beginning of period 9 17 2,096 2,122
--------------------------------------------------------------------
Cash at end of period $10 $4 $1,806 $1,820
====================================================================
SUPPLEMENTAL INFORMATION:
Depreciation and amortization $1,251 $534 $194 $1,979
====================================================================
</TABLE>
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company's financial results for the quarter ended December 28, 1997 (first
quarter of fiscal 1998) continue to reflect the positive impact of its strategic
initiatives, which include its acquisitions over the last twelve months and
efforts to control costs.
FIRST QUARTER 1998 ACQUISITIONS
KENCO: On September 30, 1997, the Company acquired the entire outstanding stock
of Kenco Plastics, Inc. of Michigan, Kenco Plastics, Inc. of Kentucky and the
business and net tangible assets of Narens Design and Engineering, Inc.
(collectively referred to herein as "Kenco") for approximately $27.1 million in
cash. The acquisition was financed with additional borrowings under the
Company's Senior Credit Facility. Kenco designs and manufactures a full range
of blow molded plastic parts including HVAC components, air induction
components, functional components, and fluid reservoirs at six manufacturing
locations in Michigan, Kentucky, and Tennessee. Kenco's customers include
Chrysler, Ford, General Motors, Mercedes, Mitsubishi, and Toyota. Kenco's net
sales for the twelve month period ended September 28, 1997 were approximately
$60.5 million.
BEIENHEIM: On November 25, 1997, the Company acquired substantially all of the
operating assets of Aeroquip Vickers International GmbH, related to its
manufacturing operation located in Beienheim Germany for approximately $9.1
million in cash, and the assumption of approximately $2.5 million of
liabilities, subject to certain adjustments. The acquisition was made through
the Company's newly formed German subsidiary and was financed with additional
borrowings under the Company's Senior Credit Facility. The Beienheim facility
manufactures various interior trim components, exterior trim components, and
under the hood components supplied primarily to European automotive OEM's.
Beienheim's customers include Ford, Opel, and Audi. Net sales for the Beienheim
facility over the twelve month period ended September 28, 1997 were
approximately $33.0 million.
FISCAL YEAR 1997 ACQUISITIONS
MOLMEC: On January 22, 1997, LDM acquired substantially all the assets of Molmec
for approximately $55.9 million in cash and the assumption of certain
liabilities including $4.6 million of indebtedness and $8.4 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.
KENDALLVILLE: On April 25, 1997, the Company acquired certain assets of Aeroquip
Corporation's Kendallville Indiana plant for $7.2 million in cash. The
Kendallville plant manufactures automotive air vents.
ACQUISITION SUBSEQUENT TO FIRST QUARTER 1998
On February 6, 1998, LDM acquired the stock of Huron Plastics Group, Inc. and
substantially all the assets of Tadim, Inc. (collectively referred to herein as
"HPG") for $65.1 million in cash and the assumption of certain liabilities. The
transaction was funded with proceeds from a $66.0 million dollar term loan
issued by the Company's senior lender. HPG's sales and net income for its fiscal
year ended March 31, 1997 were $88.1 million and $0.8 million, respectively. HPG
manufactures a wide variety of interior trim, underhood and functional
components for many automotive customers, including Ford, Chrysler, General
Motors, Bundy, TRW, and Johnson Controls.
<PAGE> 16
RESULTS OF OPERATIONS
QUARTER ENDED DECEMBER 28, 1997 COMPARED TO THE QUARTER ENDED DECEMBER 29, 1996
Net sales for the quarter ended December 28, 1997 ("first quarter 1998") were
$100.3 million, an increase of $48.0 million, or 91.9%, from the quarter ended
December 29, 1996 ("first quarter 1997"). First quarter 1998 net sales were
comprised of approximately $89.0 million of automotive product sales, $4.7
million of consumer and other product sales and $6.6 million of tooling sales.
The growth in net sales is primarily the result of acquisitions described
previously herein.
Gross margin was $17.9 million or 17.9% of net sales for the first quarter 1998
compared with $7.9 million or 15.2% of net sales for the first quarter 1997.
First quarter 1998 gross margin related to product sales was $17.2 million or
18.3% of net product sales compared to $7.5 million or 14.8% of net product
sales for the first quarter of 1997. The increase in gross margin related to
product sales is the result of the relative favorability of the product sales
gross margin provided by the aforementioned acquisitions and operating
improvements made at the Company's other manufacturing facilities.
Selling, General and Administrative (SG&A) expense for the first quarter 1998
was $11.1 million, or 11.1% of net sales compared to $6.3 million, or 12.0% of
net sales for the first quarter of 1997. The reduction in SG&A expense
(expressed as a percentage of net sales) is the result of relatively low SG&A
expenses related to the Company's recent acquisitions.
Interest expense for the first quarter of 1998 was $3.9 million compared to $1.1
million for the first quarter of 1997. The increase in interest expense is
primarily due to the additional outstanding debt related to the aforementioned
acquisitions and the incremental interest expense related to the January 1997
refinancing of the Company's debt with the issuance of $110.0 million of 10 3/4%
Senior Subordinated Notes due 2007.
The provision for income taxes made for the first quarter of 1998 was $1.3
million. The effective tax rate for the first quarter of 1998 was 47.3% compared
to 52.4%. The rate difference relates principally to certain nondeductible
expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund working capital needs,
to meet required debt obligations, and to fund 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 December 28, 1997, the Company had $121.7 million of
long-term debt outstanding, $39.6 million of revolving loans and current
maturities of long-term debt outstanding, and $15.6 million of borrowing
availability under its revolving credit facility.
Cash provided by operating activities in first quarter 1998 was $7.9 million
compared to $4.5 million of cash provided by operating activities in the same
period in 1997. The increase in cash provided by operating activities was
primarily the result of additional earnings and non-cash expenses related to the
Company's previously mentioned acquisitions.
Capital expenditures for first quarter 1998 were $1.0 million compared to $5.3
million for first quarter 1997. The Company believes its capital expenditures
(exclusive of the HPG acquisition) will be approximately $20.0 million in fiscal
year 1998, and approximately $15 million in fiscal years 1999 and 2000. The
majority of the Company's fiscal 1998 capital expenditures will be used to
facilitize for new programs launching in fiscal 1999, install a new
enterprise-wide information system and upgrade certain elements of the newly
acquired facilities to LDM standards. However, the Company's capital
expenditures may be greater than currently anticipated as the result of new
business opportunities.
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.
<PAGE> 17
YEAR 2000 COMPLIANCE
The information technology systems at LDM are not Year 2000 compliant. On or
before June 30, 1999, LDM plans to have purchased, implemented, and tested new
information technology systems that are fully Year 2000 compliant. The
expenditure required to replace LDM's existing information technology systems
with Year 2000 compliant systems is estimated to be $1 to $3 million over the
next one and a half years.
<PAGE> 18
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 Securities. Not applicable.
ITEM 4. Submission of Matters to a Vote Not applicable.
of Security Holders.
ITEM 5. Other Information. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibit 27-Financial Data Schedule
(b) The registrant filed a Current Report
on form 8-K dated September 30, 1997 as to the Kenco
acquisition and filed a Current Report on form 8-K
dated November 25, 1997 as to the Bereheim acquisition.
</TABLE>
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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
-------------------
Director of Finance
Chief Accounting Officer
Date: February 11, 1998
<PAGE> 20
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1998
<PERIOD-START> SEP-29-1997
<PERIOD-END> DEC-28-1997
<CASH> 8,365
<SECURITIES> 0
<RECEIVABLES> 58,711
<ALLOWANCES> 151
<INVENTORY> 19,944
<CURRENT-ASSETS> 112,589
<PP&E> 171,612
<DEPRECIATION> 74,918
<TOTAL-ASSETS> 262,434
<CURRENT-LIABILITIES> 114,812
<BONDS> 123,621
0
0
<COMMON> 0
<OTHER-SE> 21,855
<TOTAL-LIABILITY-AND-EQUITY> 262,434
<SALES> 100,296
<TOTAL-REVENUES> 100,296
<CGS> 82,374
<TOTAL-COSTS> 82,374
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,933
<INCOME-PRETAX> 2,770
<INCOME-TAX> 1,308
<INCOME-CONTINUING> 1,462
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,510
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
