<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended September 24, 2000.
[ ] 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 333-21819
---------------
LDM TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Character)
MICHIGAN 38-2690171
(STATE OR OTHER JURISDICTION OF (IRS 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
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
NONE
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [X] No [ ]
As of December 8, 2000, 600 shares of Common Stock of the Registrant were
outstanding. There is no public trading market for the Common Stock.
<PAGE> 2
PART I
Item 1. Business
GENERAL
LDM Technologies, Inc. (the "Company" or "LDM") is a leading Tier 1 designer
and manufacturer of highly engineered plastic instrument panel and interior trim
components, exterior trim components and under the hood components supplied
primarily to North American automotive original equipment manufacturers (OEMs).
Suppliers that sell directly to OEMs are referred to herein as "Tier 1"
suppliers. The Company is a full service supplier with advanced computer design
and engineering capabilities that have enabled it to penetrate OEM new product
programs during the concept stage of the product life cycle and promote
long-term customer relationships. The Company is also a supplier to other Tier
1's. The Company operates a Design Center in Auburn Hills, Michigan to enhance
its conceptual design and development capabilities.
The Company, a privately held Michigan corporation, was incorporated in 1985
to pursue acquisitions in the automotive industry. In 1986, the Company began to
focus on the market for highly engineered plastic components when it acquired
Arrow Molded Plastics, Inc. In 1993, the Company strengthened its presence in
this market with the acquisition of Knapp Plastics Ltd., a manufacturer of
exterior trim components and in 1994, purchased selected assets of Windsor
Plastic Products Ltd., a manufacturer of instrument panel components.
In fiscal year 1997 the Company completed its acquisition of substantially
all the assets of Molmec, Inc., a manufacturer of under the hood products (the
"Molmec" Acquisition). The Company also completed its acquisition of Aeroquip's
Kendallville, Indiana facility in fiscal year 1997 (the "Kendallville"
Acquisition).
On September 30, 1997, the Company purchased the entire voting stock of
Kenco Plastics, Inc., a manufacturer of blowmolded under the hood products (the
"Kenco" Acquisition).
On November 25, 1997, the Company acquired the business and certain net
assets of Aeroquip-Vickers International GmbH (the "Beienheim" Acquisition). The
business is located in Beienheim, Germany and manufactures interior and under
the hood products, primarily for European OEM's.
On February 6, 1998, the Company acquired the stock of Huron Plastics Group,
Inc. and substantially all of the assets of Tadim, Inc. (collectively the "HPG"
Acquisition). HPG is a manufacturer of under the hood and functional products
for sale to OEM's and Tier I automotive suppliers.
Effective as of December 31, 1998, the Company entered into a joint venture
(the DBM joint venture) that is 49% owned by the Company, and 51% owned by an
independent third party. The Company sold the Kenco business and most of its net
current assets to the DBM joint venture and leased all machinery and equipment
of the Kenco business to the DBM joint venture. In December 1999, the Company
sold the machinery and equipment of the Kenco business to the DBM joint venture.
In June 2000, the DBM joint venture was certified by the Michigan Minority
Business Development Council to operate as a minority-owned company.
On April 15, 1999, the Company sold a majority of its ownership stake in GL
Industries of Indiana, Inc. d/b/a Como Products, to an independent third party.
Como is a producer of injection molded plastic consumer products. The sale was
made to allow management to focus on the Company's core automotive business.
Through a combination of the acquisitions and divestitures described above
and internal growth, the Company's net sales and EBITDA have increased from
approximately $217.8 million and $16.5 million, in fiscal year 1996 to
approximately $496.4 million and $45.2 million, respectively, in fiscal year
2000, which represents compound annual growth rates of 23% and 29%,
respectively.
<PAGE> 3
INDUSTRY OVERVIEW
The North American automotive industry is currently experiencing a number of
trends which are significant to the Company's business.
Increasing Utilization of Plastic. In recent years, OEMs have focused
their efforts on developing and employing lower cost and lighter materials,
such as plastic, in the design of components. Plastic provides OEMs with a
number of design advantages over metal including increased design
flexibility and aesthetic appeal, resistance to corrosion and improved
fuel-efficiency performance due to lighter weight materials. Substituting
plastic for metal can also reduce manufacturing costs by eliminating
machining costs, reducing painting costs, facilitating assembly, minimizing
tooling costs and consolidating the number of parts used in a vehicle. The
Company believes that while the majority of the opportunities for converting
metal into plastic have already occurred in exterior and interior trim
applications, there are significant growth opportunities in the use of
plastic in under-the-hood components. Suppliers of under-the-hood
components, such as the Company, are increasingly being asked to develop
complex under-the-hood systems, including plastic transmission covers that
consolidate engine mounts and drive shaft seals and battery trays that
integrate fluid reservoirs.
Expansion of OEM Supplier Responsibilities. Since the 1980s, OEMs such as
Ford, General Motors and DaimlerChrysler have been actively reducing their
supplier base to include only those suppliers which accept significant
responsibility for product management and meet increasingly strict standards
for product quality, on time delivery and manufacturing costs. These
suppliers are expected to control many aspects of the production of system
components, including design, development, component sourcing,
manufacturing, quality assurance, testing and delivery to the customer's
assembly plant.
Globalization of the OEM Supplier Base. Several OEMs have announced
certain models designed for the world automobile market ("World Car"). This
departure from the historical practice of designing separate models for each
regional market will generally require suppliers to establish international
design and manufacturing capabilities through internal development, joint
ventures or acquisitions. As a result, certain domestic and European OEMs
have encouraged their existing suppliers to establish foreign production
support for World Car programs.
Market-based Pricing. In an effort to reduce costs and to ensure the
affordability and competitiveness of their products, OEMs are sourcing
automotive components using a market-based pricing approach. In using such a
market-based approach, OEMs establish a target price, or the price the
market is willing to pay for a vehicle, and systematically divide this price
into system and component target prices. In addition, under market-based
pricing, the OEMs often require annual price reductions for the vehicle's
systems and components. As a result, the market-based approach to pricing
has generally required automotive suppliers to focus on continually reducing
product costs while improving quality standards.
AUTOMOTIVE PRODUCTS
The Company designs and manufactures highly-engineered plastic instrument
panel and interior trim components, exterior trim components and under-the-hood
components. In recent years, the Company has significantly expanded its design
and engineering capabilities which provide the Company with a competitive
advantage in obtaining new business. The Company's three automotive lines of
business are as follows:
Instrument Panel Components and Interior Trim Components. The Company
focuses on the production of complex products such as instrument panel
subassemblies which require the integration of multiple components. Instrument
panel components manufactured by the Company include cluster finish panels,
center trim panels, air vents, coin and cup holders, ashtrays, gloveboxes,
telephone holders and consoles. Certain products in this line of business demand
functional aesthetics appeal and typically require the Company to provide
innovative and design intensive solutions for application requirements
stipulated by OEMS. Historically, the Company's largest customer for its
instrument panel components has been Ford.
<PAGE> 4
Exterior Trim Components. Exterior trim systems manufactured by the Company
include front and rear bumper fascias, end caps, body side claddings and
moldings, rocker panels and grills. The Company's broad range of exterior trim
class A painting capabilities provides it with a competitive advantage in
supplying exterior trim to domestic and foreign OEMs. The Company is able to
provide both high-bake high solids painting, which is traditionally preferred by
domestic OEMs, and low-bake, two component painting, which is preferred by
foreign OEMs. Historically, LDM's largest customer for its exterior trim
components has been General Motors.
Under-the-Hood/Functional Components. The Company is a designer and
manufacturer of fluid and air management components for under-the-hood
applications such as cowl vent assemblies, fluid reservoirs including degas
bottles, battery trays and covers, air deflectors and sight shields. The Company
believes that it supplies the majority of Ford's cowl vent assemblies for North
American car and truck platforms. OEMs are increasingly substituting plastic for
metal in under-the-hood components and systems in an effort to reduce cost,
noise and weight, to enhance design flexibility, to improve airflow and to
increase aesthetic appeal. Historically, the largest customer for its
under-the-hood components has been Ford.
CUSTOMERS
The Company's principal customers are Ford, General Motors and
DaimlerChrysler for which it supplies components and subassemblies for a variety
of light duty trucks, minivans and passenger cars. While the Company's products
are generally used on a diverse group of over 80 models, the Company's sales and
marketing efforts have been directed towards those sectors of the automotive
market which have experienced strong consumer demand and growth in sales.
The approximate percentage of net production sales to the principal
customers of the Company for the twelve-month period ended September 24, 2000
are show below:
<TABLE>
<CAPTION>
Year Ended
September 24, 2000
------------------
<S> <C>
Ford/Visteon ............................................................ 45.2%
General Motors .......................................................... 30.1%
DaimlerChrysler.......................................................... 4.8%
Other Automotive......................................................... 18.2%
Non-Automotive........................................................... 1.7%
---
Total.......................................................... 100.0%
=====
</TABLE>
The Company's customers typically award purchase orders on a limited source
basis that normally cover components to be supplied for a particular car model.
Such purchase orders generally provide for supplying the customer's requirements
for a model year, although, in practice, such purchase orders are typically
renewed until the component is redesigned or eliminated in a model change.
Products under development are assigned a selling price which is reevaluated
from time to time during the product development cycle. Prior to production, the
Company and the customer generally agree on a final price, which, in some
instances, may be subject to negotiated price reductions or increases over the
term of the project. Consequently, the Company's ability to improve operating
performance is generally dependent primarily on its ability to reduce costs and
operate more efficiently.
<PAGE> 5
The Company has been chosen as a supplier for a variety of light trucks
(including pick-up trucks, minivans, full size vans and sport utility vehicles)
and passenger car models. The following table presents an overview of the major
models, for which the Company currently produces components for its OEM
customers:
<TABLE>
<CAPTION>
Customer Model
----------------------------------------------------------------------------
<S> <C>
General Motors-truck.......................................... Astro/Safari
Blazer/Bravada/Jimmy
Sonoma Pick-up/S10 Pick-up
GMC Sierra/Silverado
Venture/Silhouette/Trans Sport
Yukon
Suburban
Tahoe
Escalade
Denali
General Motors-car............................................ Grand Am
Alero
Aurora/Riviera
Cavalier/Sunbird/Sunfire
Corvette
Firebird/Camaro
Grand Prix/Cutlass
Intrigue
Lumina
Malibu
Monte Carlo
Park Avenue
Saturn/Z
Seville
Astra (Opel)
Vectra (Opel)
Park Avenue
Bonneville
Regal
Impala
Envoy
Zaphira (Opel minivan)
Ford-truck.................................................... Econoline
Expedition
Explorer
Escapade/Tribute
F-Series Truck
Ranger
Villager/Quest
Windstar
Navigator
Excursion
Ford-car...................................................... Continental
Contour/Mystique
Crown Victoria/Grand Marquis
Escort (US and Europe)
Mark VIII
Mustang
Thunderbird /Lincoln LS
Taurus/Sable
Lincoln Town Car
Focus/Mercury Cougar
Jaguar X200/X400
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
DaimlerChrysler-truck......................................... Caravan/Voyager/Town & Country
Dakota
Grand Cherokee/Cherokee
Ram Pick-up/Van
Durango
Wrangler
DaimlerChrysler-car........................................... Avenger/Sebring
Breeze/Cirrus/Stratus
Concord/Intrepid
LHS 300
Neon
Viper
</TABLE>
DESIGN AND PRODUCT ENGINEERING
The Company is a full service Tier I supplier with advanced engineering
capabilities which enable it to design innovative, high-quality products that
provide value to its customers. The Company has a Design Center in Auburn Hills,
Michigan to provide an environment for trend-setting conceptual design and
product development. The Company has made other significant investments in
conceptual design capabilities that allow it to participate in the earliest
stages of programs. For instance, the Company has embraced computer-aided
simulation directly linked to customer computer networks as a means to reduce
the cost and time required to develop new products. The industrial design
activity has augmented the Company's traditional modeling methods with
computer-aided technology which reduces staff requirements as well as
simplifying the integration of design and engineering functions. The Company has
transitioned from computer-aided design shell to solid modeling which provides a
direct link to rapid prototyping. The Company's design staff employs
state-of-the-art ALIAS and CATIA computer software and hardware to provide
three-dimensional virtual modeling and product animation. Analytical tools
employed include finite element analysis for structural analysis, kinematics for
mechanisms, computational fluid dynamics for airflow studies and moldfilling
analysis for injection molding optimization and warp prediction.
MANUFACTURING
The Company's OEM customers are focusing on suppliers capable of delivering
quality products, controlling manufacturing costs and integrating, through
design capabilities, multiple components into larger systems. The Company has
responded to this challenge by implementing a lean manufacturing program and
adopting advanced processing technology.
The Company's lean manufacturing program has focused on "kanban" production
scheduling and materials management techniques and labor productivity
improvements. Kanban management techniques are characterized by flexible
production scheduling as well as vendor scheduling, reduced work queues, more
frequent vendor deliveries and reduced inventory levels. Through kanban, the
Company has experienced increased inventory turnover and generally reduced
inventory levels.
The Company continually seeks to achieve labor productivity improvement and
has established a work environment which encourages employee involvement in
identifying and eliminating waste. A key factor in the Company's operations is
maintaining the flexibility to respond to the demands of different product runs
and changing product delivery requirements while continuously increasing
production efficiency.
The Company believes its broad base of class A paint application
capabilities positions it well for supplying the domestic and foreign exterior
trim market. The Company is able to provide both high-bake high solids painting,
which is traditionally preferred by domestic OEMs, and low-bake, two component
painting, which is preferred by foreign OEMs. The Company has also recently
developed paint application technology utilizing innovative robotic applications
which has enabled the Company to reduce costs by improving paint transfer
efficiency.
<PAGE> 7
The Company has been recognized as a quality supplier by its OEM customers
and has received Ford's Q1 Award and has been nominated for DaimlerChrysler's
Pentastar Award. The majority of the Company's facilities are QS 9000 certified
and the remaining facilities are in the process of being certified.
MARKETING
Sales of the Company's products to OEMs are made directly by the Company's
sales and engineering force, headquartered in Michigan. Through the sales and
engineering office, the Company services its OEM customers and manages its
continuing programs of product design improvement and development. The Company's
sales and engineering force currently consists of approximately 100 individuals,
including several who are located periodically at various OEMs' offices in order
to facilitate the development of new programs.
COMPETITION
The automotive supplier industry in which the Company competes is highly
competitive. A large number of actual or potential competitors exist including
the internal component supply operations of the OEMs as well as independent
suppliers, many of which are larger than the Company. The Company believes its
principal competitors in its three lines of business include: Progressive
Dynamics Inc., Summit Polymers Inc. and Manchester Plastics, a business unit of
Collins & Aikman Corporation, in instrument panel components; Magna
International Inc., Visteon, Meridian, Plastics Omnium and Venture Holdings
Corporation, in exterior trim components; and Key Plastics Inc. and Lacks
Industries in under-the-hood components.
The Company principally competes for new business both at the initial
development of new models and upon the redesign of existing models by its major
customers. New model development generally begins two to four years prior to the
marketing of such models to the public. Because of the large investment by OEMs
and Tier I suppliers in tooling and the long lead time required to commence
production, OEMs and Tier I suppliers generally do not change a supplier during
a model production run.
RAW MATERIALS
The principal raw materials used by the Company are engineered plastic
resins such as nylon, polypropylene, polycarbonate and
acrylonitrile-butadiene-styrene, paint, and steel for production molds, all of
which are available from many sources. The resins used in the Company's business
historically have been subject to price fluctuations. In the past, the Company
has been unable to pass price increases in resins through to its customers.
There can be no assurance that a material increase in the price of resin will
not adversely affect the Company's results of operations. The Company has not
experienced significant raw material shortages and does not anticipate
significant raw material shortages in the foreseeable future.
EMPLOYEES
As of September 24, 2000, the Company's workforce included 3,631 employees,
of which 714 were salaried workers, and 2,917 were hourly workers including
temporary and part-time employees. The Company has 426 hourly employees
represented by the Canadian Automobile Workers union at its Leamington, Canada
facility. The Company's three-year contract with the bargaining unit for the
Leamington facility expires January 15, 2001. None of the Company's other
employees are subject to collective bargaining agreements. The Company has not
experienced any work stoppages and considers relations with its employees to be
good.
<PAGE> 8
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to a wide variety of
international, federal, state and local laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials, substances and wastes, the
remediation of contaminated soil and groundwater, and the health and safety of
employees (collectively, "Environmental Laws"). As such, the nature of the
Company's operations exposes it to the risk of claims with respect to such
matters and there can be no assurance that material costs or liabilities will
not be incurred in connection with such claims.
The Company has taken steps, including the installation of an Environmental,
Health and Safety group to reduce the environmental risks associated with its
operations and believes that it is currently in substantial compliance with
applicable Environmental Laws. See Item 7 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Environmental."
Item 2. Properties
The Company conducts molding, painting and assembly operations in
approximately 1.7 million square feet of space in a total of 18 manufacturing
locations. The utilization and capacity of the Company's facilities fluctuates
based upon the mix of components the Company produces and the vehicle models for
which they are being produced. Detail of each manufacturing location is
scheduled below:
<TABLE>
<CAPTION>
LOCATION OWNED/LEASED SQUARE FOOTAGE
--------- ------------ --------------
<S> <C> <C>
Circleville, OH Owned 71,300
Napoleon, OH Leased 150,000
Franklin, TN Owned 122,000
Kendallville, IN Owned 60,000
Byesville, OH Owned 160,000
Romulus, MI Leased 250,000
Leamington, Ontario, Canada Owned 200,000
New Hudson, MI Owned 57,900
Hartland, MI Owned 44,600
Fowlerville, MI Owned 65,000
Clarkston, MI Owned 21,600
Croswell, MI Leased 80,900
St. Clair, MI Leased 35,000
St. Clair, MI Owned 29,100
Harlingen, TX Leased 42,900
Port Huron, MI Leased 71,000
Port Huron, MI Leased 71,000
Beienheim, Germany Leased 140,000
</TABLE>
In October 1996 the Company relocated its principal executive offices and
design and engineering staff from Troy, Michigan to Auburn Hills, Michigan. The
Auburn Hills offices are owned by the Company. The Company believes that its
facilities and equipment are in good condition and are adequate for the
Company's present and anticipated future operations.
Item 3. Legal Proceedings
There are no material legal proceedings pending against the Company or its
subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
<PAGE> 9
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters
There is no public trading market for the Company's Common Stock. As of
September 24, 2000, there were two holders of record of the Registrant's Common
Stock.
Item 6. Selected Financial Data
Summary Financial Data
(dollars in thousands)
The following table sets forth summary historical financial data of LDM
Technologies, Inc. for the fiscal years ended September 29, 1996, September 28,
1997, September 27, 1998, September 26, 1999, and September 24, 2000 The
following table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the historical
consolidated financial statements of LDM presented elsewhere in this document.
<TABLE>
<CAPTION>
SEPT. 29 SEPT. 28 SEPT. 27 SEPT. 26 SEPT. 24
1996 1997 1998 1999 2000
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Statement of operations
data
Net sales $ 217,759 $ 293,020 $ 483,224 $ 530,498 $ 496,376
Cost of sales 182,896 240,929 404,001 441,514 409,964
Gross margin 34,863 52,091 79,223 88,984 86,412
Selling, general and
administrative
expenses 26,418 35,561 56,607 63,401 62,302
Interest expense 3,280 11,076 19,814 21,067 19,955
Impairment of long-lived
assets 10,523
Income (loss) from
continuing operations,
before extraordinary
item 1,173 3,063 (7,067) (761) (413)
Other financial data
Cash flows from operating
activities $ 12,912 $ 9,336 $ 19,547 $ 26,611 $ 31,985
EBITDA (a) 16,473 28,182 42,598 45,136 45,200
Depreciation and
amortization 8,006 11,955 19,866 22,025 23,653
Capital expenditures 20,286 12,776 14,143 22,003 14,580
Ratio of earnings to
fixed
charges(b) 1.9 1.4 .6 1.1 1.1
Ratio of EBITDA to
interest expense 5.0 2.5 2.2 2.1 2.3
Ratio of debt to EBITDA 3.1 4.5 5.3 4.7 4.3
Balance sheet data
Cash $ 2,122 $ 4,632 $ 3,317 $ 4,317 $ 4,640
Total assets 119,125 212,187 327,651 312,143 297,723
Total debt 51,786 126,770 224,444 213,102 194,646
Stockholder's equity 17,322 20,385 13,358 12,920 13,940
</TABLE>
<PAGE> 10
(a) EBITDA is defined as income (loss) from continuing operations before the
effect of extraordinary items plus the following: interest, income taxes,
depreciation and amortization. EBITDA is presented because it is a widely
accepted financial indicator of a company's ability to incur and service
debt. EBITDA is not, and should not be, used as an indicator or alternative
to operating income, net income (loss) or cash flow as reflected in the
Consolidated Financial Statements, is not intended to represent funds
available for debt service, dividends, reinvestment or other discretionary
uses, is not a measure of financial performance under generally accepted
accounting principles, should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles and may not be compared to other
similarly-titled measures of other companies. A reconciliation of net
income to EBITDA is as follows:
<TABLE>
<CAPTION>
SEPT. 29 SEPT. 28 SEPT 27 SEPT. 26 SEPT. 24
1996 1997 1998 1999 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Income (loss) $ 1,869 $ 3,063 $(7,067) $ (761) $ (413)
Add (deduct) the following:
Extraordinary Item (754) - -
Discontinued operations 58 - -
Adjustment for impairment of
long-lived assets - - 10,523
Provision for income
taxes 4,014 2,088 (538) 2,805 2,005
Interest expense 3,280 11,076 19,814 21,067 19,955
Depreciation and
amortization 8,006 11,955 19,866 22,025 23,653
------- ------- ------- ------- -------
EBITDA $16,473 $28,182 $42,598 $45,136 $45,200
======= ======= ======= ======= =======
</TABLE>
(b) For purposes of the ratio of earnings to fixed charges, (i) earnings
include income from continuing operations before the following: income
taxes, extraordinary items, minority interests, and fixed charges and (ii)
fixed charges include interest on all indebtedness, amortization of
deferred financing costs and the portion of rental expense that the Company
believes to be representative of interest. For the year ended September 27,
1998, earnings were inadequate to cover fixed charges by $7,966.
<PAGE> 11
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. When used in this report, the words
"anticipate," "believe," "estimate," and "expect" and similar expressions are
generally intended to identify forward-looking statements. Readers are cautioned
that any forward-looking statements, including statements regarding the intent,
belief or current expectations of the Company or its management, are not
guarantees of future performance and involve risks and uncertainties, and that
the actual results may differ materially from those in the forward-looking
statements as a result of various factors including, but not limited to: (i)
general economic conditions in the markets in which the Company operates; (ii)
fluctuations in worldwide or regional automobile and light and heavy truck
production, (iii) labor disputes involving the Company or its significant
customers; (iv) changes in practices and/or policies of the Company's
significant customers toward outsourcing automotive components and systems; (v)
foreign currency and exchange fluctuations; and (vi) other risks detailed from
time to time in the Company's filings with the Securities and Exchange
Commission. The Company does not intend to update these forward-looking
statements.
GENERAL
LDM is a leading Tier I designer and manufacturer of highly engineered
plastic instrument panel and interior trim components, exterior trim components
and under-the-hood components supplied primarily to North American automotive
OEMs. LDM supplies components and subassemblies for a variety of light duty
trucks, sport utility vehicles, minivans and passenger cars. Automotive products
under development are assigned a selling price which is reevaluated from time to
time during the product development cycle. Prior to production, the Company and
the customer generally agree on a final price, which, in some instances, may be
subject to negotiated price reductions or increases over the term of the
project. Consequently, the Company's ability to improve operating performance is
generally dependent primarily on its ability to reduce costs and operate more
efficiently. Molds used in LDM's operations are requisitioned by LDM's customers
and are purchased from mold builders who design and construct the molds under
LDM supervision. Upon acceptance of the molds, title is passed to customers and
revenue is recognized.
RESULTS OF CONTINUING OPERATIONS
YEAR ENDED SEPTEMBER 24, 2000 COMPARED TO YEAR ENDED SEPTEMBER 26, 1999
NET SALES: Net sales for fiscal year 2000 were $496.4 million, a decrease of
$34.1 million, or 6.4%, from $530.5 million in fiscal year 1999. For fiscal year
2000, net sales were comprised of $452.0 million of automotive product sales,
and $44.4 million of mold sales.
Automotive product sales in fiscal year 2000 were $452.0 million, a decrease of
$8.1 million, or 1.8%, from $460.1 million in fiscal year 1999. The automotive
sales decrease is due to the Company's sale of its blowmolding division on
December 31, 1998. Fiscal year 1999 automotive sales include $14.7 million of
blowmolded automotive products. Non-blowmolded automotive product sales
increased $6.6 million or 1.5% due principally to products launched in the
fourth quarter of fiscal year 1999. There were no consumer and other product
sales in fiscal year 2000, compared to $7.8 million in fiscal year 1999. This
decrease is the result of LDM's sale of a majority of its interest in Como
Products on April 15, 1999.
Mold sales in fiscal year 2000 were $44.4 million, a decrease of $18.2 million,
or 29.1% from $62.6 million in fiscal year 1999. The decrease relates to the
launch of significant products during fiscal year 1999 that was not repeated in
fiscal year 2000. Significant launch activities are expected to resume in mid
fiscal year 2001.
GROSS MARGIN: Gross margin was $86.4 million, or 17.4% of net sales, for fiscal
year 2000 compared to $89.0 million, or 16.8% of net sales, for fiscal year
1999.
Gross margin related to automotive product sales was $84.1 million, or 18.6% of
net automotive product sales in fiscal year 2000 compared to $86.9 million or
18.9% of net automotive product sales in fiscal year 1999.
<PAGE> 12
Gross margin related to mold sales was $2.2 million or 5.2% of mold sales in
fiscal year 2000 compared to $1.9 million or 3.0% of mold sales in fiscal year
1999.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for fiscal
2000 were $62.3 million, or 12.6% of net sales, compared to $63.4 million, or
12.0% of net sales, for fiscal year 1999. The percentage increase is a factor of
reduced sales in fiscal year 2000, but reflects additional investment in
research and development and new product design required to ensure future sales
and remain a full service supplier.
INTEREST EXPENSE: Interest expense was $20.0 million for fiscal year 2000,
compared to $21.1 million for fiscal year 1999. The decrease relates to
reduction of principal through debt repayments offset by increased variable
interest rates.
EQUITY IN LOSSES OF AFFILIATES: Equity in losses of affiliates was $0.9 million
for fiscal year 2000, compared to $1.5 million for fiscal year 1999. The
decrease was the result of strengthened results at Sunningdale, of which the
Company owns 22%.
INTERNATIONAL CURRENCY EXCHANGE LOSS: Currency exchange loss was $2.2 million
for fiscal year 2000, compared to $1.1 million for fiscal year 1999. The
increased loss of $1.1 million was the result of continued weakening of the
German mark against the U.S. dollar during fiscal year 2000.
OTHER INCOME: Other income was $0.6 million for fiscal year 2000, compared to
$0.1 million for fiscal year 1999. The increase was due to additional interest
charged to DBM related to DBM's equipment subordinated note payable to the
Company, discussed below, as well as a decrease in losses on the sale of
property, plant and equipment.
INCOME TAXES: The provision for income taxes for fiscal year 2000 was $2.0
million with an effective tax rate of 125.9% as compared to $2.8 million with an
effective tax rate of 137.2% for fiscal year 1999. The high effective tax rates
are the result of certain non-deductible expenses and foreign tax in excess of
foreign tax credits.
YEAR ENDED SEPTEMBER 26, 1999 COMPARED TO YEAR ENDED SEPTEMBER 27, 1998
NET SALES: Net sales for fiscal year 1999 were $530.5 million, an increase of
$47.3 million, or 9.8%, from $483.2 million in fiscal year 1998. For fiscal year
1999, net sales were comprised of $460.1 million of automotive product sales,
$7.8 million of consumer and other product sales, and $62.6 million of mold
sales.
Automotive product sales in fiscal year 1999 were $460.1 million, an increase of
$39.2 million, or 9.3%, from $420.9 million in fiscal year 1998. The is the
result of recognizing a full year of HPG sales offset by the loss of nine months
of blowmolding sales due to the DBM joint venture. Consumer and other product
sales were $7.8 million in fiscal year 1999 compared to $18.1 million in fiscal
year 1998. This decrease of $10.3 million, or 56.9%, is the result of LDM's sale
of Como Products on April 15, 1999. Mold sales in fiscal year 1999 were $62.6
million, an increase of $18.3 million, or 41.3% from $44.3 million in fiscal
year 1998. The increase is due to certain programs that launched during the
Company's fiscal fourth quarter. 1999 mold sales were comprised of $61.7 million
of automotive mold sales and $0.9 million of consumer and other mold sales.
GROSS MARGIN: Gross margin was $89.0 million, or 16.8% of net sales, for fiscal
year 1999 compared to $79.2 million, or 16.4% of net sales, for fiscal year
1998.
Gross margin related to automotive product sales was $86.9 million, or 18.9% of
net automotive product sales in fiscal year 1999 compared to $75.8 million or
18.0% of net automotive product sales in fiscal year 1998.
Gross margin related to consumer and other sales was $0.2 million, or 0.3% of
net consumer and other sales in fiscal year 1999 compared to $0.2 million or
0.2% of net consumer and other sales in fiscal year 1998.
Gross margin related to mold sales was $1.9 million or 3.0% of mold sales in
fiscal year 1999 compared to $3.2 million or 7.2% of mold sales in fiscal year
1998.
<PAGE> 13
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES: SG&A expenses for fiscal
1999 were $63.4 million, or 12.0% of net sales, compared to $56.6 million, or
11.7% of net sales, for fiscal year 1998.
INTEREST EXPENSE: Interest expense was $21.1 million for fiscal year 1999,
compared to $19.8 million for fiscal year 1998. The increase is the result of a
full year of interest related to debt acquired to purchase HPG.
EQUITY IN LOSSES OF AFFILIATES: Equity in losses of affiliates was $1.5 million
for fiscal year 1999, compared to $0.3 million for fiscal year 1998. The
increase was the result of equity losses related to the DBM joint venture which
offset equity income in Sunningdale.
INTERNATIONAL CURRENCY EXCHANGE LOSS: Currency exchange loss was $1.1 million
for fiscal year 1999, compared to $0.1 million for fiscal year 1998. The
increased loss of $1.0 million was the result of a weakening German mark and
Canadian dollar against the U.S. dollar during fiscal year 1999.
OTHER INCOME: Other income was $0.1 million for fiscal year 1999, compared to
$0.2 million for fiscal year 1998. The decrease was due to interest charged to
DBM related to DBM's subordinated note payable to the Company, offset by losses
on the sale of property, plant and equipment.
INCOME TAXES: The provision for income taxes for fiscal year 1999 was $2.8
million with an effective tax rate of 137.2%, as compared to a tax benefit of
$0.5 million with an effective tax benefit rate of 6.8% for fiscal year 1998.
The low effective benefit rate and high effective tax rate is the result of
certain non-deductible expenses and foreign tax in excess of foreign tax
credits.
DBM TECHNOLOGIES JOINT VENTURE: On December 31, 1998, the Company entered into a
joint venture (DBM joint venture) that is 49% owned by the Company, and 51%
owned by an independent third party. The Company sold the Kenco business and
most of its net current assets to the DBM joint venture at an amount equal to
the net book value of the net current assets. The sales prices of the net
current assets approximated $8.8 million.
The Company leased all machinery and equipment of the Kenco business to the DBM
joint venture, and sublet to the joint venture all real properties in the
Kenco operations.
Under terms of the agreement, the Company provided a subordinated $1.8 million
loan to the DBM joint venture and guaranteed $1.0 million of the DBM joint
venture line of credit borrowings. As a result of these terms, and the
relatively small amount of equity contributed to the DBM joint venture by the
independent third party, the Company retained substantially all of the risks of
ownership.
On December 8, 1999, the Company sold to the DBM joint venture the machinery and
equipment previously leased to the DBM joint venture. Proceeds from the sale
approximated $10.3 million, the machinery and equipment's net book value.
Proceeds included $8.3 million in cash and an additional $2.0 million
subordinated note payable to the Company from the DBM joint venture. As part of
this transaction, the joint venture's line of credit borrowings were refinanced
which released the Company from the $1.0 million guarantee discussed above.
The investment in the DBM joint venture is treated as an equity investment for
accounting purposes, but the Company has recorded 100% of the DBM joint venture
losses as equity losses.
SALE OF COMO PRODUCTS: On April 15, 1999, all of the assets and liabilities of
GL Industries of Indiana, Inc. (d/b/a Como Products), a 75% owned subsidiary of
the Company, were sold to New GLI, Inc., an Indiana corporation, which is now
doing business as "Como Products." A new independent partner joined the business
(New GLI) and purchased all but 36.75% of the Company's stake in New GLI for a
minimal amount. Under terms of the purchase agreement, the Company accepted a
subordinated note from New GLI for approximately $0.5 million, which represents
previous loans, accrued interest, and working capital advances from the Company
to Como. The note has been fully reserved on the Company's books.
The Company's ownership percentage in New GLI is now less than 50%. As a
result, New GLI's results are reported as equity earnings. As part of this
transaction, the Company was released from all guarantees on Como's line of
credit borrowings.
<PAGE> 14
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 September 24, 2000 the Company had $160.0 million of
long-term debt outstanding and $16.4 million of borrowing availability under its
revolving credit facility.
Cash provided by operating activities in fiscal year 2000 was $32.0 million
compared to $26.6 million of cash provided by operating activities in the same
period in 1999.
Capital expenditures for fiscal year 2000 were $14.6 million compared to $22.0
million for fiscal year 1999. Fiscal 2000 capital expenditures include several
injection molding machines and secondary equipment.
The Company believes its capital expenditures (exclusive of any potential
acquisitions) will be approximately $33 million in the fiscal year ended
September 2001, and $20.0 million in each of the fiscal years ended September
2002 and 2003. In fiscal year 2001, approximately $19 million will be spent to
equip the Company's new plant in Romulus, Michigan, and to launch new product
late in the fiscal year. 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.
ENVIRONMENTAL:
The Company was named as a Defendant in a lawsuit in connection with a failed
landfill in Byesville, Ohio. The lawsuit sought contribution from the Company as
a potentially responsible party for allegedly generating waste that was disposed
of at the landfill. During fiscal year 1999, the Company settled this matter for
a nominal amount. The Company also received correspondence regarding a failed
landfill site near Circleville, Ohio. The Company was identified as a
potentially responsible party for alleged waste disposal at the Circleville
landfill. The Company believes that, based on the available information, the
ultimate liability with respect to these issues will not materially exceed
$50,000 and charged that amount to expense in the quarter ended March 30, 1997.
MARKET RISK
DERIVATIVE FINANCIAL INSTRUMENTS
In May 2000 the Company entered into an interest rate swap agreement to manage
its exposure to fluctuations in interest rates. The swap is based on a notional
amount of $50 million. The Company pays to the bank counterparty based on a rate
of a) 9.25% through January 2002 and b) three-month LIBOR plus 3.65% thereafter
through January 2007. The Company receives from the bank counterparty based on a
rate of 10.75%. The swap is cancelable by either party at any time. Upon
cancellation the Company is required to pay to or receive from the bank
counterparty, the negative or positive value of the swap, respectively. As of
September 24, 2000, the fair value of the swap was a liability of approximately
$360,000.
<PAGE> 15
In November 2000 the Company entered into an interest rate collar agreement with
the bank counterparty. The collar is based on a notional amount of $50 million.
Under the collar, the Company pays the bank couterparty if three-month LIBOR
falls below 5.75% and receives from the bank counterparty if three-month LIBOR
exceeds 8.75%.
FOREIGN CURRENCY RISK
QUANTITATIVE AND QUALITATIVE ANALYSIS
A portion of the Company's operations consists of manufacturing and sales
activities in foreign jurisdictions. The Company manufactures its products in
the United States, Canada, and Germany and sells the products in those markets
as well. As a result, the Company's financial results could be significantly
affected by factors such as changes in foreign currency exchange rates or weak
economic conditions in the foreign markets in which the Company distributes its
products. The Company's operating results are exposed to changes in exchange
rates between the U.S. dollar and the Canadian dollar, and the U.S. dollar and
the German mark.
In Canada, the Company operates in both the U.S. and the Canadian dollar, and is
funded by a U.S. dollar loan from the parent Company. The functional currency is
the U.S. dollar. The Company is exposed to exchange gains or losses on current
assets and liabilities denominated in the Canadian dollar.
In Germany, the functional currency is the German mark, in which all operating
cash-flows are denominated. The German operation is also funded by a U.S. dollar
loan from the parent Company. The Company is exposed to exchange gains or losses
on current assets and liabilities and its U.S. dollar denominated loan
denominated in the German mark.
As of September 24, 2000, the Company's net assets subject to foreign currency
translation risk is $6,218. The potential loss from a hypothetical 10% adverse
change in quoted foreign currency exchange rates would be approximately $622.
The model assumes a parallel shift in foreign currency exchange rates. Exchange
rates rarely move in the same direction. This assumption may overstate the
impact of changing exchange rates on individual assets and liabilities
denominated in a foreign currency.
INTEREST RATE RISK
QUALITATIVE AND QUANTITATIVE ANALYSIS
The Company's variable interest expense is sensitive to changes in the general
level of U.S. interest rates. Some of the Company's interest expense is fixed
through long-term borrowings to mitigate the impact of such potential exposure.
<TABLE>
<CAPTION>
2001 2002 2003 2004 2005 Thereafter Total FMV
---- ---- ---- ---- ---- ---------- ----- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate (maturity) - - - - - $110,000 $110,000 $78,100
Fixed rate % (average) 10.75% 10.75%
Variable rate (maturity) $11,543 $64,513 $520 $540 $585 $6,945 $84,646 $84,646
Variable rate % (future rates) 8.52% 8.52% 8.52% 8.52% 8.52% 8.52% 8.52%
</TABLE>
<PAGE> 16
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted as a separate section of this Form
10-K. See Item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable
PART III
Item 10. Directors and Executive Officers of the Registrant
The names and ages of all executive officers and directors of the Company
are as follows:
<TABLE>
<CAPTION>
HAS SERVED
IN POSITION
NAME AGE POSITION SINCE
------------------------- --- -------- ------------
<S> <C> <C> <C>
Joe Balous............... 75 Chairman of the Board, Secretary and Director 1985
Richard J. Nash.......... 56 Chief Executive Officer and Director 1985
Robert C. Vamos.......... 54 President 1997
Gary E. Borushko......... 55 Chief Financial Officer 1987
</TABLE>
Directors of the Company are elected each year at the Annual Meeting of
Stockholders to serve for the ensuing year or until their successors are elected
and qualified. The officers of the Company are elected each year at the Annual
Meeting of the Board of Directors to serve for the ensuing year or until their
successors are elected and qualified.
Each of the directors of the Company has had the same principal occupation
during the past five years.
Item 11. Executive Compensation
The following table sets forth the compensation paid to each of the
Company's five highest paid executive officers and significant employees for
fiscal year 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME YEAR SALARY BONUS COMPENSATION COMPENSATION
--------------------------------- ---- --------- ----------- --------------------- -----------------
<S> <C> <C> <C> <C> <C>
Richard J. Nash 2000 $ 956,741 $ 1,679,880 $ 61,963 (4) $ 3,200 (1)
Chief Executive Officer and Director 1999 850,000 1,000,000 -- 5,000 (1)
1998 550,000 1,000,000 -- 3,750 (1)
Joe Balous 2000 -- -- $ 1,800,310 (2) --
Chairman of the Board and Secretary 1999 -- -- 1,595,000 (2) --
1998 -- -- 1,340,000 (2) --
Gary E. Borushko 2000 $ 250,010 $ 185,000 $ 25,000 (4) --
Chief Financial Officer 1999 263,344 185,000 -- --
1998 230,015 361,700 -- --
Robert C. Vamos 2000 $ 300,000 $ 135,000 $ 6,042 (4) $ 3,200 (1)
President 1999 298,077 135,000 -- 5,000 (1)
1998 289,075 100,000 -- 1,000 (1)
Vincent P. Buscemi 2000 $ 190,998 $ 35,640 $ 96,000 (3) --
Group Vice President - Sales 1999 190,550 35,640 96,000 (3) --
1998 190,531 45,000 96,000 (3) --
</TABLE>
<PAGE> 17
This table does not include any value that might be attributable to certain job
related benefits, the amount of which for any executive officer does not exceed
the lesser of $50,000 or 5% of combined salary and bonus for such executive
officer.
(1) Represents contributions to the Company's 401 (k) plan.
(2) Consulting fees paid to a management company owned by Joe Balous.
(3) Represents sales commission paid to a company owned by such individual.
(4) Represents club dues and miscellaneous expenses included in employee's W-2.
The Company does not pay director fees to its two directors. The Company
does not have a Compensation Committee and Messrs. Nash and Balous
participate in all deliberations concerning executive officer compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management
All of the outstanding capital stock of the Company is owned beneficially
and equally by Messrs. Richard J. Nash and Joe Balous.
Item 13. Certain Relationships and Related Transactions.
The Company and its two stockholders entered into a stock redemption agreement
which provides that upon the death of either stockholder, the Company is
required to purchase, and their respective estates are required to sell, all of
the capital stock of the Company owned by such stockholder, as the case may be,
at a price equal to $50.0 million, which amount would be payable upon receipt of
the proceeds of life insurance policies owned by the Company on each of the
lives of the stockholders. Pursuant to the terms of the stock redemption
agreement, the Company is required to maintain life insurance policies of $50.0
million on the lives of Mr. Nash and Mr. Balous. The annual premiums for such
policies of insurance are approximately $2,200,000.
During 1998, Como transferred equipment with a net book value of
approximately $609,000 to LDM. In exchange for the equipment, LDM relieved Como
of its liability for accrued corporate charges and other accounts payable of
approximately $604,000, which had been included in Como's accrued liabilities in
prior years.
During fiscal year 2000, the Company paid consulting fees of $ 1,800,310 to
a management company owned by Joe Balous. The nature of the services performed
by Mr. Balous are development of corporate policy and strategic planning,
integration of recent acquisitions, and overseeing facilities construction and
leasehold improvements.
The terms of these leases are not the result of arms-length bargaining;
however, the Company believes that such leases and other transactions described
above are on terms no less favorable to the Company than could be obtained if
such leases or arrangements were arms-length transactions with non-affiliated
persons.
It is the Company's policy to continue future transactions with its
affiliates as long as the terms of such transactions are fair and reasonable and
no less favorable to the Company than could have been obtained through
arms-length negotiations with an independent third party.
<PAGE> 18
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements
The following consolidated financial statements of LDM Technologies,
Inc. and subsidiaries filed herewith.
Consolidated Balance Sheets at September 24, 2000 and September 26,
1999.
Consolidated Statements of Operations for each of the years in the
three-year period ended September 24, 2000.
Consolidated Statements of Stockholders' Equity for each of the years
in the three-year period ended September 24, 2000.
Consolidated Statements of Cash Flows for each of the years in the
three-year period ended September 24, 2000.
Notes to Consolidated Financial Statements.
All Schedules have been omitted because they are not applicable or are
not required or the information to be set forth therein is included in
the Consolidated Financial Statements or Notes thereto.
<PAGE> 19
EXHIBITS
The Exhibits marked with one asterisk below were filed as
Exhibits to the Registration Statement of the Company on Form S-4
(No. 333-21819). The Exhibit marked with two asterisks below was
filed as an Exhibit to the Form 8-K of the Company dated
September 30, 1997. The Exhibit marked with three asterisks below
was filed as an Exhibit to the Form 10-K of the Company dated
December 28, 1998. The exhibits marked with four asterisks below
were filed as an Exhibit to the Form 10-K of the Company dated
December 27, 1999. These are incorporated herein by reference,
the Exhibit numbers in brackets being those in such Registration
Statement, Form 10-K or Form 8-K Report.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
<S> <C>
3.1 Articles of Incorporation of LDM Technologies, Inc. (the
"Company"), as amended [3.1]*
3.2 By-laws of the Company [3.5]*
4.1 Indenture dated as of January 15, 1997 by and among the
Company, LDM Holdings, LDM Partnership, LDM Canada and IBJ
Schroder Bank & Trust Company, as Trustee [4.1]*
4.2 Form of 10 3/4% Senior Subordinated Note Due 2007, Series B
[4.2]* 4.3 Form of Guarantee [4.3]*
10.1(a) Loan and Security Agreement dated as of January 22, 1997 ("Loan
Agreement") by and between the Company, as Borrower, and
BankAmerica Business Credit, Inc. ("BankAmerica"), as Agent for
the Lenders [10.2]*
10.1(b) First Amendment to Loan Agreement dated May 1, 1997.
[10.1(b)]***
10.1(c) Amendment No. 2 and Affirmation of Guaranties to Loan Agreement
dated as of July 14, 1997. [10.1(c)]***
10.1(d) Amendment No. 3 and Affirmation of Guaranties to Loan Agreement
dated as of September 30, 1997. [10.1(d)]***
10.1(e) Amendment No. 4 and Affirmation of Guaranties to Loan Agreement
dated as of November 25, 1997. [10.1(e)]***
10.2 Intellectual Property Security Agreement dated as of January
22, 1997 made by the Company in favor of BankAmerica, as Agent
for Lenders [10.4]*
10.3 Stock Purchase Agreement among the Company and the various
stockholders of Kenco Plastics, Inc., a Michigan corporation,
and Kenco Plastics, Inc., a Kentucky corporation, and Narens
Design & Engineering Co., a Michigan corporation, dated
September 30, 1997 [1].**
10.4 Asset Purchase Agreement between LDM Technologies, Inc. (a
Michigan corporation) and DBM Technologies, LLC (a Michigan
limited liability company) dated December 31, 1998.****
10.5 Asset Purchase Agreement between GL Industries, Inc. (an
Indiana corporation) and New GLI, Inc. (an Indiana corporation)
dated April 15, 1999.****
11 Statement of Ratio of Earnings to Fixed Charges
21 Subsidiaries and Affiliates of the Company
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K. No reports on Form 8-K were filed
by the Registrant for the year ended September 24, 2000.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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 on the fifteenth day of
December, 2000.
LDM TECHNOLOGIES, INC.
By: /s/ Richard J. Nash
--------------------------
Richard J. Nash
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Gary E. Borushko
--------------------------
Gary E. Borushko
(Chief Financial Officer)
By: /s/ Brad N. Frederick
--------------------------
Brad N. Frederick
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on December 10, 1997.
Signature Title
--------- -----
/s/ Joe Balous Director
---------------------------
Joe Balous
/s/ Richard J. Nash Director
---------------------------
Richard J. Nash
<PAGE> 21
Report of Independent Auditors
Board of Directors of LDM Technologies, Inc.
We have audited the accompanying consolidated balance sheets of LDM
Technologies, Inc. as of September 24, 2000 and September 26, 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended September 24, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of LDM Technologies,
Inc. at September 24, 2000 and September 26, 1999, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended September 24, 2000 in conformity with accounting principles generally
accepted in the United States.
Detroit, Michigan ERNST & YOUNG LLP
December 1, 2000
<PAGE> 22
LDM Technologies, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
SEPTEMBER 24, SEPTEMBER 26,
2000 1999
----------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 4,640 $ 4,317
Accounts receivable 74,335 79,434
Inventories 21,032 20,783
Mold costs 12,981 12,706
Prepaid expenses 2,501 1,960
Refundable income tax 1,071 1,385
Deferred income taxes 3,051 1,947
----------------------------------------------
Total current assets 119,611 122,532
Net property, plant and equipment 106,605 121,116
Equity investments in affiliates 4,800 2,091
Note receivable from affiliate 1,017 895
Goodwill, net of accumulated amortization of $14,777 in
2000 and $10,358 in 1999 55,269 59,688
Debt issue costs, net of accumulated
amortization of $3,916 in 2000 and $2,969 in 1999 4,360 5,126
Deposits for assets to be leased 4,791
Other 770 695
----------------------------------------------
Total assets $ 297,223 $ 312,143
==============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan $ 34,643 $ 33,276
Accounts payable 52,964 55,120
Accrued liabilities 23,754 21,575
Accrued compensation 7,469 7,988
Current maturities of long-term debt 11,543 11,564
----------------------------------------------
Total current liabilities 130,373 129,523
Long-term debt due after one year 148,460 168,262
Deferred income taxes 4,450 1,438
Stockholders' equity:
Common stock ($.10 par value; 100,000 shares
authorized, 600 shares issued and outstanding) - -
Additional paid in capital 94 94
Retained earnings 12,112 12,525
Accumulated other comprehensive income 1,734 301
----------------------------------------------
Total stockholders' equity 13,940 12,920
----------------------------------------------
Total liabilities and stockholders' equity $ 297,223 $ 312,143
==============================================
</TABLE>
See accompanying notes.
F2
<PAGE> 23
LDM Technologies, Inc.
Consolidated Statements of Operations
(in thousands)
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 24, SEPTEMBER 26, SEPTEMBER 27,
2000 1999 1998
-----------------------------------------------------
<S> <C> <C> <C>
Net sales:
Product sales $ 451,979 $ 467,912 $ 438,960
Mold sales 44,397 62,586 44,264
------------ ------------ ------------
496,376 530,498 483,224
Cost of sales:
Product cost of sales 367,862 380,856 362,983
Mold cost of sales 42,102 60,658 41,018
------------ ------------ ------------
409,964 441,514 404,001
------------ ------------ ------------
Gross margin 86,412 88,984 79,223
Selling, general and administrative
expenses 62,302 63,401 56,607
Interest 19,955 21,067 19,814
Equity in losses of affiliates, net 891 1,480 285
Adjustment for impairment of goodwill - - 10,523
International currency exchange losses 2,235 1,138 122
Other, net (563) (146) (244)
------------ ------------ ------------
84,820 86,940 87,107
------------ ------------ ------------
Income (loss) before income taxes
and minority interest 1,592 2,044 (7,884)
Provision (credit) for income taxes 2,005 2,805 (538)
------------ ------------ ------------
Loss before minority interest (413) (761) (7,346)
Minority interest 279
------------ ------------ ------------
Net loss $ (413) $ (761) $ (7,067)
============= ============= =============
</TABLE>
See accompanying notes.
F3
<PAGE> 24
LDM Technologies, Inc.
Consolidated Statements of Stockholders' Equity
(in thousands except common shares and common stock)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON COMMON PAID-IN RETAINED COMPREHENSIVE
SHARES STOCK CAPITAL EARNINGS INCOME (LOSS) TOTAL
------ ----- ------- -------- ------------- -----
(IN DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Balance at September 28, 1997 600 60 94 20,353 (61) 20,386
Comprehensive Income:
Net loss for 1998 (7,067) (7,067)
Currency translation adjustment 39 39
---------
Comprehensive loss (7,028)
--------- --------- --------- ---------- --------- ---------
Balance at September 27, 1998 600 60 94 13,286 (22) 13,358
Comprehensive Income:
Net income for 1999 (761) (761)
Currency translation adjustment 323 323
---------
Comprehensive income (438)
--------- --------- --------- ---------- --------- ---------
Balance at September 26, 1999 600 60 94 12,525 301 12,920
Comprehensive Income:
Net loss for 2000 (413) (413)
Currency translation adjustment 1,433 1,433
---------
Comprehensive income 1,020
--------- --------- --------- ---------- --------- ---------
Balance at September 24, 2000 600 $ 60 $ 94 $ 12,112 $ 1,734 $ 13,940
========= ========= ========= ========== ========= =========
</TABLE>
F4
<PAGE> 25
LDM Technologies, Inc.
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 24, SEPTEMBER 26, SEPTEMBER 27,
2000 1999 1998
----------------- ----------------- ------------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $ (413) $ (761) $ (7,067)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 23,653 22,025 19,866
International currency exchange losses 2,235 1,138 122
Adjustment for impairment of long-lived assets - - 10,523
Equity in losses of affiliates, net 891 1,480 285
(Gain) loss on sale of property and equipment 239 (155) 97
Deferred income taxes 2,138 955 (2,033)
Other - 2,766 -
Changes in assets and liabilities, net of the effect of 1998
acquisitions and 1999 divestitures:
Accounts and notes receivable 5,099 (10,739) (4,960)
Inventory and mold costs (524) 8,052 (2,153)
Prepaid expenses (616) (508) 979
Accounts payable and accrued liabilities (1,031) 3,356 5,668
Income taxes payable 314 (998) (1,780)
------------- -------------- -------------
Net cash provided by operating activities 31,985 26,611 19,547
INVESTING ACTIVITIES
Additions to property, plant and equipment (14,580) (22,003) (14,143)
Deposits for assets to be leased (4,791)
Purchase of Kenco Plastics (net of $500 cash acquired) (26,641)
Purchase of LDM Technologies, GmbH (9,703)
Purchase of Huron Plastics Group (net of $1,835 cash acquired) (67,140)
Proceeds from disposal of property and equipment 8,270 1,010 814
Sale of Kenco business net of $98 equity contribution 6,935
Net disbursement to unconsolidated affiliate (1,924) (1,465)
------------- -------------- -------------
Net cash used for investing activities (13,025) (15,523) (116,813)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt, (net of debt issuance
costs of $181 in 2000, $272 in 1999, and $1,540 in 1998) (181) 7,228 63,992
Payments on notes payable and long-term debt (19,823) (12,979) (4,809)
Net proceeds (repayments) from borrowings on line of credit 1,367 (4,337) 36,767
-------------- -------------- -------------
Net cash provided by (used in) financing activities (18,637) (10,088) 95,950
-------------- -------------- -------------
Net increase (decrease) in cash 323 1,000 (1,316)
Cash at beginning of year 4,317 3,317 4,633
------------- -------------- -------------
Cash at end of year $ 4,640 $ 4,317 $ 3,317
============= ============== =============
</TABLE>
See accompanying notes.
F5
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of LDM Technologies,
Inc. (the "Company") and its subsidiaries, LDM Holdings Canada, Inc., LDM
Technologies Company, LLC ("LDM Canada"), LDM Technologies, GmbH, ("LDM
Germany"), LDM Holdings Mexico, Inc., LDM Technologies, S.de R.L. ("LDM Mexico")
and G.L. Industries of Indiana, Inc. and successor company ("Como"). All
subsidiaries are wholly owned with the exception of Como (75% owned through
April 14, 1999, 36.75% owned thereafter), and LDM Mexico (99% owned). As of
September 24, 2000 and September 26, 1999, the Company, LDM Canada and LDM
Germany are the only subsidiaries which are still consolidated.
Sunningdale Plastics Ltd ("Sunningdale") is a Singapore based injection molder
of which the Company owned 30% through fiscal year 1999. In fiscal year 2000
Sunningdale received equity contributions from a new owner which reduced the
Company's ownership to 22%. DBM Technologies, LLC ("DBM') is a minority owned
blowmolding concern formed December 31, 1998, of which the Company owns 49%.
Como, Sunningdale and DBM are accounted for under the equity method. As further
discussed in Note 2, the Company records 100% of the losses of DBM as equity in
losses of affiliates.
All intercompany accounts and transactions have been eliminated in
consolidation.
DESCRIPTION OF BUSINESS
The Company's domestic automotive operations are conducted through divisions
and, in Canada and Germany, through LDM Canada and LDM Germany. Such operations
principally consist of manufacturing of molded and blow-molded plastic interior
and exterior trim, under the hood, and powertrain components for sale
principally to several North American automobile manufacturers and their
suppliers.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company operates with a 52/53 week fiscal year ending on the last Sunday in
September. The fiscal years ended September 24, 2000, September 26, 1999, and
September 27, 1998, all included 52 weeks.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FOREIGN CURRENCY TRANSLATION
During the 1997 fiscal year, as a result of a U.S. dollar based re-financing and
the volume of U.S. dollar denominated sales and operating costs, the Company
determined that the functional currency of LDM Canada should be the U.S. dollar.
Accordingly long lived assets and inter company debt has been translated at the
historical rate and exchange differences arising on translation have been
included in 2000, 1999, and 1998 operations. Accumulated other comprehensive
income consists of translation adjustments for LDM Germany (for which the local
currency is the functional currency).
F6
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
RESEARCH AND DEVELOPMENT COSTS
The Company and its subsidiaries expense research and development costs as
incurred. Such amounts were $526, $338 and $216 for 2000, 1999 and 1998,
respectively.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The following is a roll-forward of the Company's allowance for doubtful
accounts:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Allowance for doubtful accounts beginning $2,998 $772
Provision for bad debts 250 2,268
Uncollectible accounts written off (2,038) (42)
---------------- ---------------
Allowance for doubtful accounts ending $1,210 $2,998
================ ===============
</TABLE>
INVENTORIES
Inventories are stated at the lower of cost or market using the first-in,
first-out method. Inventories at September 24, 2000 and September 26, 1999
consist of the following:
<TABLE>
<CAPTION>
2000 1999
----------- ------------
<S> <C> <C>
Raw materials and supplies $ 12,107 $ 12,827
Work-in-process 1,745 1,872
Finished goods 7,180 6,084
----------- ------------
Total $ 21,032 $ 20,783
=========== ============
</TABLE>
PREPRODUCTION COSTS
Preproduction design and development costs are expensed as incurred except in
circumstances when contractual reimbursement arrangements exist.
REVENUE RECOGNITION
The Company and its consolidated subsidiaries recognize revenue when legal title
transfers to the customer, generally when goods are shipped to the customer.
Molds used in the Company operations are requisitioned by the Company's
customers and are purchased from mold builders who design and construct the
molds under Company supervision. Upon acceptance of the molds, title is passed
to customers and revenue is recognized.
As a result of the issuance of Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements," ("SAB 101") along with related
interpretations and pronouncements by the SEC and other accounting standards
setting bodies, the Company is evaluating the effects on its revenue recognition
policies, particularly those related to tooling sales. The Company is required
to adopt the guidance in SAB 101 in the first quarter of fiscal 2001. Effects on
net income, if any, are not expected to be material.
F7
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
DEPRECIATION AND AMORTIZATION
Depreciation of property, plant and equipment is determined principally using
the straight-line method based upon the following estimated useful lives:
ESTIMATED USEFUL
LIFE (YEARS)
Buildings and improvements 10 - 20
Machinery and equipment 3 - 12
Transportation equipment 3 - 10
Furniture and fixtures 3 - 12
Leasehold improvements are amortized using the straight-line method over the
useful life of the improvement or the term of the lease, whichever is less.
Goodwill is amortized over its estimated useful economic life of 15 years.
Debt issue costs are amortized over the term of the associated debt.
IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING GOODWILL
Impairment losses are recorded on long-lived assets used in operations when
indicators (i.e. recurring operating losses, negative cash flows, etc.) of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the asset's carrying amount. Impairment losses are
determined based on the estimated shortfall of discounted cash flows.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Short and long-term debt: The carrying amounts of the Company's borrowings
under its short-term revolving credit agreements approximate their fair
value. The Company's Senior Subordinated Notes carry fixed interest rates.
Smith Barney currently makes a market for the Notes. As of September 24,
2000, the average of the bid and asking price was 71.0 giving a fair market
value of $31.9 million below stated value ($110 million). The remainder of
the Company's long-term debt carries variable interest rates and,
accordingly, the carrying amount approximates fair value.
DERIVATIVE FINANCIAL INSTRUMENTS
In May 2000 the Company entered into an interest rate swap agreement to manage
its exposure to fluctuations in interest rates. The swap is based on a notional
amount of $50 million. The Company pays to the bank counterparty based on a rate
of a) 9.25% through January 2002 and b) three-month LIBOR plus 3.65% thereafter
through January 2007. The Company receives from the bank counterparty based on a
rate of 10.75%. The swap is cancelable by either party at any time. Upon
cancellation the Company is required to pay to or receive from the bank
counterparty, the negative or positive value of the swap, respectively. As of
September 24, 2000, the fair value of the swap was a liability of approximately
$360.
In November 2000 the Company entered into an interest rate collar agreement with
the bank counterparty. The collar is based on a notional amount of $50 million.
Under the collar, the Company pays the bank couterparty if three-month LIBOR
falls below 5.75% and receives from the bank counterparty if three-month LIBOR
exceeds 8.75%.
F8
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
The Company has not adopted Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended ("FAS
133"), as of September 24, 2000. Differentials received or paid under the
interest rate swap agreement are classified as adjustments to interest expense
through September 24, 2000. Effective September 25, 2000, the Company will be
required to adopt FAS 133. Under FAS 133, fair values of the swap and the collar
will be reported on the balance sheet with changes in fair value reported in the
statement of operations. The effect upon adoption will not be material.
2. ACQUISITIONS, JOINT VENTURE AND DIVESTITURE
On September 30, 1997, the Company purchased the entire voting stock of Kenco
Plastics, Inc. (a Michigan corporation) and Kenco Plastics, Inc. (a Kentucky
corporation) and the business and net tangible assets of Narens Design &
Engineering Company (collectively known as "Kenco Plastics") for a consideration
of $27.1 million in cash. The fair value of the net tangible assets acquired
amounted to $17.7 million.
On November 25, 1997, the Company acquired the business and certain net assets
of Aeroquip-Vickers International GmbH (the Company created a new entity, "LDM
Technologies, GmbH") for a consideration of $9.7 million in cash and the
assumption of certain liabilities. The fair value of the net tangible assets
acquired amounted to $9.7 million. The new entity is referred to herein as LDM
Germany.
On February 6, 1998, the Company acquired the stock of Huron Plastics Group,
Inc. and substantially all of the assets of Tadim, Inc. (collectively known as
"HPG") for $69.0 million in cash and the assumption of certain liabilities. The
fair value of the net tangible assets acquired amounted to $37.7 million.
A summary of the allocation of purchase price of each of the acquisitions during
the year ended September 27, 1998 is given below:
<TABLE>
<CAPTION>
KENCO LDM
PLASTICS GERMANY HPG
-------- ------- ---
<S> <C> <C> <C>
Current assets $ 12,576 $ 6,143 $ 30,047
Net property, plant and equipment 11,638 6,132 21,703
Other assets - - 1,354
Long term debt - -
Other liabilities (6,510) (2,540) (15,356)
---------- ---------- ---------
Net tangible assets 17,704 9,735 37,748
Goodwill 9,438 - 31,227
---------- ---------- ---------
Cost $ 27,142 $ 9,735 $ 68,975
========== ========== =========
</TABLE>
All of the above acquisitions have been accounted for using the purchase method.
Accordingly, the assets acquired and the liabilities assumed have been recorded
at fair values and the excess of the purchase price over the net tangible assets
acquired recorded as goodwill to be amortized over 15 years. The results of
operations of the above acquisitions have been included in the consolidated
financial statements from the date of acquisition.
Effective as of December 31, 1998, the Company entered into a joint venture (DBM
joint venture) that is 49% owned by the Company, and 51% owned by an independent
third party. The Company sold the Kenco business and most of its net current
assets to DBM at an amount equal to the net book value of the net current
assets. The sales price of the net current assets approximated $8.8 million.
As a result of the relatively small amount of equity contributed to DBM by the
independent third party, the Company retained substantially all of the risks of
ownership. The investment is treated as an equity investment for accounting
purposes, but the Company will record 100% of the joint venture losses as equity
losses, if any, up to its investment and subordinated loan amounts. Such losses
were $3,600 and $2,413 for 2000 and 1999, respectively and have been reflected
in the consolidated financial statements as a component of Equity in losses of
affiliates, net.
F9
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
On December 8, 1999, the Company sold all of the machinery and equipment of the
Kenco business to DBM for $10.3 million, the approximate net book value of the
machinery and equipment. Proceeds from the sale were comprised of $8.3 million
in cash and an additional $2.0 million subordinated note payable to the Company
from DBM. As part of the transaction, DBM refinanced its line of credit which
released the Company from a $1 million guarantee to the previous senior lender.
DBM's new senior lender required the Company to subordinate all amounts due from
DBM at the time of refinancing. As a result, the previous subordinated note
payable was canceled and replaced with a new subordinated note payable
approximating $5.6 million. This amount is comprised of the $2.0 million related
to the machinery and equipment purchase, $1.9 million related to the original
subordinated note payable plus accrued interest, and $1.7 million related to
unpaid machinery and equipment rentals and miscellaneous other unpaid trade
amounts. The new subordinated note payable bears interest at 9.5% and is payable
in equal quarterly installments over five years. As of September 24, 2000, no
such amounts have been paid.
On April 15, 1999, the Company reduced its ownership in Como from 75% to 36.75%
through a series of transactions involving a new investor. The Company
concurrently wrote off all amounts due from and investments in Como. Como's net
sales and net loss for the year ended September 27, 1998 were $18.1 million and
$1.5 million, respectively. Como's net sales and net income for the six month
period ended March 28, 1999 were $8.6 million and $0.1 million, respectively.
3. SEGMENT AND GEOGRAPHICAL DATA
The Company had operated in two industries; automotive components and consumer
products. The Company's automotive components operations include the design and
manufacture of plastic injection molded and blow molded products for certain
original equipment manufacturers of cars, minivans and sport utility vehicles.
The Company's automotive products include exterior and interior trim, under the
hood components, and powertrain components. The Company has one consumer
products plant which manufactures plastic molded products for the consumer
appliance, office products and commercial furniture markets. The Company sold
all but 36.75% of its stake in its consumer products plant effective April 15,
1999. The Company also contributed substantially all of the business and net
current assets of its blow molded operations to a joint venture, which is still
49% owned by the Company, effective December 31, 1998.
For the purpose of FAS 131, "Disclosures about Segments of an Enterprise and
Related Information," the Company is presented as one segment, being automotive
plastics components. The consumer products operations are considered
insignificant with sales of $20,201 and losses of $(1,484) during the year ended
1998.
The following provides a summary of selected financial information by geographic
area:
<TABLE>
<CAPTION>
SEPTEMBER 24, 2000
-------------------------------------------------------
Revenues (a) Long-Lived Assets Net Income (loss)
-------------------------------------------------------
<S> <C> <C> <C>
United States $ 404,489 $ 90,201 $ 3,756
LDM Canada 62,931 13,356 654
LDM Germany 28,956 3,048 (4,823)
-------------------------------------------------------
Consolidated total $ 496,376 $ 106,605 $ (413)
=======================================================
</TABLE>
F10
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
<TABLE>
<CAPTION>
SEPTEMBER 26, 1999
-------------------------------------------------------
Revenues (a) Long-Lived Assets Net Income (loss)
-------------------------------------------------------
<S> <C> <C> <C>
United States $ 432,857 $ 102,017 $ 3,489
LDM Canada 64,090 14,650 1,166
LDM Germany 33,551 4,449 (5,416)
-------------------------------------------------------
Consolidated total $ 530,498 $ 121,116 $ (761)
=======================================================
SEPTEMBER 27, 1998
-------------------------------------------------------
Revenues (a) Long-Lived Assets Net Income (loss)
-------------------------------------------------------
<S> <C> <C> <C>
United States $ 394,882 $ 98,045 $ (7,638)
LDM Canada 65,399 14,498 3,293
LDM Germany 22,943 5,658 (2,722)
-------------------------------------------------------
Consolidated total $ 483,224 $ 118,201 $ (7,067)
=======================================================
</TABLE>
(a) Revenues are attributed to countries based on point of manufacturing.
During the years ended September 2000, 1999,and 1998, approximately 98% of
consolidated sales were to customers in the automotive industry. Following is a
summary of customers that accounted for more than 10% of consolidated net
product sales as of each fiscal year end:
<TABLE>
<CAPTION>
2000 1999 1998
------------------------------------------------------
<S> <C> <C> <C>
Ford Motor Company $ 204,589 $ 161,429 $ 169,293
General Motors Corporation 135,837 133,987 151,880
</TABLE>
4. IMPAIRMENT OF LONG-LIVED ASSETS
After its acquisition on September 30, 1997, the Kenco business performed
significantly below original expectations, causing management to undertake a
strategic review of the future viability of the business.
In contemplation of the sale of the Kenco business to DBM, the Company evaluated
the on-going value of the long-lived assets (goodwill and tangible fixed assets)
associated with the Kenco business, as they were held-for-use by LDM. Based upon
this evaluation, the Company determined that assets with carrying amounts of
$19,528 were impaired and wrote them down by $8,952 to their fair value in 1998.
Fair value was based on projected future cash flows to be generated by the Kenco
business, under its new ownership, discounted at a market rate of interest. In
determining future cash flows the Company developed its best estimate of
operating cash flows over the life of the goodwill and tangible fixed assets,
which was fifteen years.
F11
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
The following presents a summary of the net assets of Kenco as of September 27,
1998:
<TABLE>
<CAPTION>
<S> <C>
Assets
Cash $ 509
Accounts receivable 9,086
Inventory 3,561
Other current assets 1,551
---------
Total current assets 14,707
Property, plant and equipment 9,005
---------
Total assets 23,712
Accrued expenses $ (4,352)
---------
Net assets $ 19,360
=========
</TABLE>
The following presents a summary of operations of Kenco included in the
Company's consolidated statement of operations:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 26, 1999 SEPTEMBER 27, 1998
------------------ ------------------
<S> <C> <C>
Revenue $ 14,677 $ 61,603
Cost of goods sold 14,115 58,733
---------- ----------
Gross margin 562 2,870
Selling, general and administrative expenses 600 4,068
-------- --------
Operating loss before interest and income taxes $ (38) $ (1,198)
======== ========
</TABLE>
5. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Interest paid $ 20,134 $ 20,744 $ 17,643
Income taxes paid (refunded) $ (372) $ 2,945 $ 2,176
Interest capitalized $ 351 $ 706 $ 185
</TABLE>
6. PROPERTY, PLANT AND EQUIPMENT
At September 24, 2000 and September 26, 1999, property, plant and equipment
consists of the following:
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
Land, buildings and improvements $ 44,080 $ 43,252
Machinery and equipment 129,877 118,964
Transportation equipment 2,437 2,366
Furniture and fixtures 8,238 7,186
Construction in process 2,210 3,774
-------------------------------
Total, at cost 186,843 175,542
Less accumulated depreciation (80,238) (63,318)
-------------------------------
Net property, plant, and equipment
used in operations 106,605 112,224
Net property, plant, and equipment
leased to DBM Technologies - 8,892
-------------------------------
Net property, plant and equipment $ 106,605 $ 121,116
===============================
</TABLE>
F12
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
7. LINES OF CREDIT AND REVOLVING DEBT
On January 22, 1997, the Company entered into a five-year Senior Credit
Facility. At September 24, 2000, the Senior Credit Facility is secured by
substantially all of the assets of the Company and its guarantors (LDM Holdings,
L.L.C., LDM Canada Limited Partnership and LDM Technologies Company). The Senior
Credit Facility provides for available advances equal to (i) 85% of eligible
accounts receivable, plus (ii) the lesser of $12,000 or 60% of eligible
inventory, up to a maximum availability of $63,000. The Senior Credit Facility
provides for the issuance of commercial and stand-by letters of credit up to a
portion of the $63,000 Senior Credit Facility. The Senior Credit Facility bears
interest at rates based upon a prime or LIBOR rate, in each case plus an
applicable basis point spread; and provides that the Company will pay an
issuance fee with respect to letters of credit based on a percentage of the full
amount of such letters of credit, and an unused line fee equal to a percentage
of the unused portion of the Senior Credit Facility. The Senior Credit Facility
contains customary covenants, including financial covenants relating to, among
other things, fixed charge coverage ratios, capital expenditure limitations and
profitability.
The Company had borrowings outstanding under the Senior Credit Facility at
September 24, 2000 and September 26, 1999 of $34,643 and $33,276, respectively.
Borrowings available under the Senior Credit Facility were $16,000 and $18,300
at September 24, 2000 and September 26, 1999, respectively.
The weighted average interest rate on all short-term borrowings as of September
24, 2000 and September 26, 1999 was 9.51% and 8.13%, respectively.
8. LONG-TERM DEBT
On January 22, 1997, the Company issued, in a private placement, 10 3/4% Senior
Subordinated Notes due 2007, Series A, with an aggregate principal amount of
$110,000.
The Indenture under which the Notes were issued contains certain covenants,
including limitations on the following matters: (i) the incurrence of additional
indebtedness, (ii) the issuance of preferred stock by subsidiaries, (iii) the
creation of liens, (iv) restricted payments, (v) the sales of assets and
subsidiary stock, (vi) mergers and consolidations, (vii) payment restrictions
affecting subsidiaries and (viii) transactions with affiliates.
Interest on the Notes is payable semi-annually at 10 3/4%. The Notes are subject
to redemption on or after January 15, 2002, at the option of the Company, in
whole or in part, at redemption prices ranging from 105.375% to 100% of the
principal amount. At September 24, 2000 the Notes are guaranteed by certain
subsidiaries of the Company, namely LDM Holdings, L.L.C., LDM Canada Limited
Partnership and LDM Canada, but not by LDM Mexico or LDM Germany. Supplemental
financial information for the guarantor and non-guarantor subsidiaries is
disclosed in Note 14.
The Notes rank subordinate in right of payment to all existing and future Senior
Debt.
The Company has a letter of credit that secures its $8,800 Multi-Option
Adjustable Rate Notes and on acquisition of Molmec assumed Molmec's Variable
Rate Demand Limited Obligation Revenue Bonds with an aggregate principal amount
of $2,640.
F13
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
On February 6, 1998, the Company entered into an additional term and capital
expenditure line of credit. The term line of credit is not to exceed the lesser
of (i) $66,000, or (ii) the sum of (A) one hundred percent (100%) of the
appraised orderly liquidation value of Equipment of the Company's operations in
the United States and Canada; plus (B) eighty percent (80%) of the fair market
value of all owned Real Estate of the Company's operations in the United States
and Canada. The capital expenditure line of credit is not to exceed the lesser
of (i) $10,000, or (ii) eighty percent (80%) of actual invoiced cost of the
equipment. These obligations, totaling a maximum availability of $76,000 at
September 24, 2000, are subject to interest at a Base or LIBOR Rate plus a
variable margin as set forth in the loan agreement. These loans are also subject
to fees equal to .375% per annum on an average daily unused facility for the
immediate preceding month. The loans are repayable in monthly installments of
$887 in addition to an annual payment due the first day of the fourth month
after the end of each fiscal year of 50% of any excess cash flow (as defined in
the loan agreement) for such fiscal year. The lines of credit contain customary
covenants, including financial covenants relating to, among other things, fixed
charge coverage ratios, capital expenditure limitations and profitability. The
Company may terminate these obligations upon written notice and full payment of
principal and accrued interest.
The Company had borrowings outstanding under the term and capital expenditure
line of credit at September 24, 2000 of $39,563. Borrowings available under the
term and capital expenditure line of credit were $1,500 at September 24, 2000,
and September 26, 1999.
Long-term debt at September 24, 2000 and September 26, 1999 consists of the
following:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Senior Subordinated Notes due 2007. $ 110,000 $ 110,000
Term and capital expenditure line of credit,
principal payable in monthly installments of
$887, at Base or LIBOR plus margin
(8.86% at September 24, 2000). Balance 39,563 58,464
repayable February 2002.
Multi-Option Adjustable Rate Notes, principal
payable in various annual installments
ranging from $300 to $780 through
April 1, 2015, plus interest payable monthly
at the higher of the 30 day commercial paper
rate or 90 day commercial paper
rate (6.59% at September 24, 2000). Borrowings
are collateralized by the corporate
headquarters facility which has a carrying value
of approximately $15,293 at September 24, 2000 7,800 8,080
Variable Rate Demand Limited Obligation Revenue
Bonds, principal payable in various annual
installments through December 1, 2009,
ranging from $630 to $160, plus variable interest
(subject to a maximum of 12%), payable
semi-annually (4.55% at September 24, 2000),
collaterized by a letter of credit. 2,640 3,235
Other - 47
-------------------------------
Total $ 160,003 $ 179,826
Current maturities of long-term debt (11,543) (11,564)
-------------------------------
Long-term debt due after one year $ 148,460 $ 168,262
===============================
</TABLE>
LDM Technologies, Inc. has the option to convert the interest rate on the
Multi-Option Adjustable Rate Notes to the Six Month, One Year, Three Year, Five
Year, Seven Year, or the Fixed Interest Rates Modes.
F14
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
Annual maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
<S> <C> <C>
2001 11,543
2002 29,870
2003 520
2004 540
2005 585
Thereafter 116,945
-------------
Total $ 160,003
=============
</TABLE>
9. RELATED PARTY TRANSACTIONS
Como leases its general office and plant facilities, in addition to certain
computer and manufacturing equipment, from corporations whose directors and
stockholders include Como's minority stockholder. Lease rental payments made to
these corporations for 1998 were $467.
During 1998, Como transferred equipment with a net book value of approximately
$609 to LDM. In exchange for the equipment, LDM relieved Como of its liability
for accrued corporate charges and other accounts payable of approximately $604.
See discussion regarding stock redemption agreement in footnote 12.
10. INCOME TAXES
The Company's provision for income taxes for the years ended September 24, 2000,
September 26, 1999, and September 27, 1998 is comprised of the following:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Domestic:
Federal:
Current $ (45) $ 1,594 $ 121
Deferred 1,633 325 (2,692)
----------- ----------- -----------
1,588 1,919 (2,571)
State and local:
Current (88) 213 (253)
Deferred 360 100
----------- ----------- -----------
272 313 (253)
Foreign:
Current 43 850
Deferred 145 530 1,436
----------- ----------- -----------
145 573 2,286
----------- ----------- -----------
Total income tax provision $ 2,005 $ 2,805 $ (538)
=========== =========== ===========
</TABLE>
F15
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
Deferred income taxes are provided for the temporary differences between the
financial reporting basis and tax basis of the Company's assets and liabilities.
At September 24, 2000 and September 26, 1999 deferred tax assets and liabilities
are comprised of the following:
<TABLE>
<CAPTION>
2000 1999
---------------------------
<S> <C> <C>
Deferred tax assets:
Investment in affiliates $ 238
Loss carryovers $ 408 723
Capital loss carryovers 198 198
Goodwill 2,869 3,228
Accounts receivable 519 1,198
Inventory 1,063 1,687
Other accrued liabilities 139 88
Employee benefits 1,186 1,158
--------------------------
Total deferred tax assets 6,382 8,518
Less valuation allowances (344) (407)
--------------------------
Total net deferred tax asset 6,038 8,111
Deferred tax liabilities:
Other accrued liabilities 283 412
Property, plant and equipment 7,154 7,190
--------------------------
Total deferred tax liabilities 7,437 7,602
--------------------------
Net deferred tax asset (liability) $ (1,399) $ 509
==========================
</TABLE>
A reconciliation of the Company's income tax expense at the federal statutory
tax rate to the actual income tax expense follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 24, SEPTEMBER 26, SEPTEMBER 27,
2000 1999 1998
---------------- ---------------- ---------------
<S> <C> <C> <C>
Tax at federal statutory rate of 34% $ 540 $ 695 $ (2,681)
State and local taxes, net of
federal tax effect 179 207 (299)
Settlement of prior years' income
tax liabilities (1,056)
Nondeductible expenses 1,130 1,242 838
Foreign tax in excess of
foreign tax credits 154 821 1,781
Deferred tax valuation allowance 385 685
Other, net 2 (231) 343
---------- ----------- ----------
Provision for income taxes $ 2,005 $ 2,805 $ (538)
========== =========== ==========
</TABLE>
For Canadian income tax purposes, approximately $765 of net operating losses are
available at September 24, 2000 for carryover against taxable income in future
years. These carryovers expire in 2004. The net operating loss carry forwards
include timing differences, principally tax depreciation in excess of financial
statement depreciation, of approximately $4,326, for which a $1,477 deferred tax
liability has been recorded.
11. RETIREMENT AND PROFIT SHARING PLANS
The Company provides defined contribution retirement plans to substantially all
employees of LDM Technologies, Inc. Contributions by the Company, which are
different for each individual plan, are based on matching 50% of employees
contributions, up to a maximum range of 3-4 % of earnings or five hundred to one
thousand dollars. Costs under the plans amounted to $863, $912, and $378, in
2000, 1999, and 1998, respectively.
F16
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
12. COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases certain of its facilities, furniture and fixtures, and
equipment. Rental expense, including short-term cancelable leases, approximated
$6,639, $8,310 and $6,367 for the years ended September 24, 2000, September 26,
1999 and September 27, 1998, respectively. Future commitments under
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C> <C>
2001 $ 4,949
2002 3,717
2003 3,076
2004 2,353
2005 2,019
Thereafter 3,981
----------
Total $ 20,095
==========
</TABLE>
STOCK REDEMPTION AGREEMENT
The Company and its two shareholders are party to a binding stock redemption
agreement providing the following:
Upon the death of either shareholder, the Company is required to purchase and
the shareholder's estate is required to sell all of the shareholder's stock at a
price equal to $50,000. This amount is payable upon receipt of the proceeds of
the life insurance policies owned by the Company on the shareholder's life. Any
shortfall between the insurance proceeds and the amount payable to the
shareholder's estate will require funding by the Company, subject to
restrictions in the Company's loan agreements.
The Company is required to purchase and maintain life insurance policies of
$50,000 on the lives of each of the shareholders for as long as the Stock
Redemption Agreement is in effect. The aggregate premium for these policies
presently approximates $2.2 million per year. Further, the Company is prohibited
from assigning, pledging or borrowing against these life insurance policies
without the consent of the insured shareholder.
The Agreement may be terminated by mutual agreement of all parties or by any
shareholder with respect to that shareholder's stock only.
CONTINGENCIES
Environmental Matters
The Company previously received correspondence regarding curing two separate
failed landfill sites. In each case, the Company was identified as a potentially
responsible party for its alleged waste disposal at such landfills. In the first
case, a lawsuit was brought against the Company for which the USEPA subsequently
agreed to provide contribution protection on payment of a nominal fee. In the
second case, the Company has no reason to believe that any liability associated
with the particular landfill will materially exceed the recorded liability of
$50; however the ultimate outcome of such matters cannot be predicted with
certainty.
LITIGATION
The Company accrues contingent liabilities when it is probable that future costs
will be incurred and such costs can be reasonably estimated. Such accruals are
based on developments to date, the Company's estimates of the outcomes of these
matters and its experience in contesting, litigating and settling other matters.
As the scope of the liabilities becomes better defined, there will be changes in
the estimates of future costs; however, the Company does not believe any such
changes will have a material effect on the Company's future results of
operations and financial condition or liquidity.
F17
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
13. UNCONSOLIDATED AFFILIATES
The Company has a less than fifty percent equity interest in DBM of which the
Company owns 49%, and Sunningdale of which the Company owns 22% as of September
24, 2000. As of September 26, 1999, the Company owned 30% of Sunningdale. These
significant investments are accounted for under the equity method. Equity
earnings/loss are reported as share of joint venture loss on the operating
statement, and as investment in joint venture on the balance sheet. Financial
information on the Company's significant equity method investments, Sunningdale
and DBM, is as follows:
<TABLE>
<CAPTION>
2000
Sunningdale DBM
------------------------------------------
<S> <C> <C>
Current assets $ 29,835 $ 12,931
Noncurrent assets 14,651 10,242
Current liabilities 19,272 15,553
Noncurrent liabilities 3,264 13,261
Minority interest 430
Net sales 54,448 53,197
Income (loss) from continuing operations 14,261 (1,606)
Net income (loss) 12,314 (3,600)
Percent of income/loss recognized 22% 100%
Amount included in Equity in losses of
affiliates, net $ 2,709 $ (3,600)
<CAPTION>
1999
Sunningdale DBM
-------------------- ---------------------
<S> <C> <C>
Current assets $ 14,940 $ 13,531
Noncurrent assets 11,610 10,242
Current liabilities 16,630 15,553
Noncurrent liabilities 2,502 13,261
Minority interest 343
Net sales 27,002 41,669
Income (loss) from continuing operations 5,135 (1,961)
Net income (loss) 3,308 (2,413)
Percent of income/loss recognized 30% 100%
Amount included in Equity in losses of
affiliates, net $ 992 $ (2,413)
</TABLE>
No other equity method investment was significant for 1998, 1999 or 2000.
14. SUPPLEMENTAL GUARANTOR INFORMATION
The $110 million 10 3/4% Senior Subordinated Notes due 2007, the Senior Credit
Facility, the standby letters of credit with respect to the $8.8 million
Multi-Option Adjustable Rate Notes, the $4.4 million Variable Rate Demand
Limited Obligation Revenue Bonds and the Senior Term and Capital Expenditures
Line of Credit are obligations of LDM Technologies, Inc. The obligations are
guaranteed fully, unconditionally and jointly and severally by LDM Canada and
certain holding companies as described above. The non-guarantor subsidiaries are
Como and LDM Germany. Upon the divestiture of Como as discussed in Note 2,
effective April 15, 1999, the only non-guarantor subsidiary remaining in the
consolidated financial statements is LDM Germany.
Supplemental consolidating financial information of LDM Technologies, Inc., LDM
Canada (including the related holding company guarantors) and combined Como and
LDM Germany (the "non-guarantor subsidiaries") is presented below. Investments
in subsidiaries are presented on the equity method of accounting. Separate
financial statements of the guarantors are not provided because management has
concluded that the summarized financial information below provides sufficient
information to allow investors to separately determine the nature of the assets
held by and the operations of LDM Technologies, Inc., and the guarantor and
non-guarantor subsidiaries.
F18
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING BALANCE SHEET AT SEPTEMBER 24, 2000
<TABLE>
<CAPTION>
LDM Non-Guarantor Consolidating
Technologies, LDM Canada Subsidiaries Entries Consolidated
Inc.
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $ 29 $ 2,622 $ 1,989 $ $ 4,640
Accounts receivable 64,138 7,900 2,297 74,335
Inventories 15,841 3,457 1,734 21,032
Mold costs 6,750 6,303 (72) 12,981
Prepaid expenses 2,311 247 (57) 2,501
Refundable income taxes 1,071 1,071
Deferred income taxes 3,051 3,051
----------------- --------------- ---------------- ---------------- --------------
Total current assets 93,191 20,529 5,891 119,611
Net property, plant and equipment 90,201 13,356 3,048 106,605
Investment in subsidiaries and 13,631 (8,831) 4,800
affiliates
Note receivable affiliates 14,558 (13,541) 1,017
Goodwill 55,269 55,269
Debt issue costs 4,360 4,360
Other 5,561 5,561
----------------- --------------- ---------------- ---------------- --------------
$ 276,771 $ 33,885 $ 8,939 $ (22,372) $ 297,223
================= =============== ================ ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan $ 34,643 $ 34,643
Accounts payable 41,647 $ 9,436 $ 3,260 $ (1,379) 52,964
Accrued liabilities 18,925 3,679 1,150 23,754
Accrued compensation 5,988 337 1,144 7,469
Current maturities of long-term debt 11,543 11,543
----------------- --------------- ---------------- ---------------- --------------
Total current liabilities 112,746 13,452 5,554 (1,379) 130,373
Long-term debt due after one year 148,460 10,532 11,647 (22,179) 148,460
Deferred income taxes 3,381 1,069 4,450
Stockholders' equity:
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 12,112 2,982 (12,961) 9,979 12,112
Accumulated other comprehensive
income (loss) (22) 1,756 1,734
----------------- --------------- ---------------- ---------------- --------------
Total stockholders' equity 12,184 8,832 (8,262) 1,186 13,940
----------------- --------------- ---------------- ---------------- --------------
Total liabilities and stockholders' $ 276,771 $ 33,885 $ 8,939 $ (22,372) $ 297,223
equity ================= =============== ================ ================ ==============
</TABLE>
F19
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING BALANCE SHEET AT SEPTEMBER 26, 1999
<TABLE>
<CAPTION>
LDM
TECHNOLOGIES, NON-GUARANTOR CONSOLIDATING
INC. LDM CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $ 2,184 $ - $ 2,133 $ $ 4,317
Accounts receivable 60,613 13,748 5,073 79,434
Inventories 15,769 2,873 2,141 20,783
Mold costs 10,193 2,379 134 12,706
Prepaid expenses 1,817 143 1,960
Refundable income taxes 1,312 73 1,385
Deferred income taxes 1,947 1,947
----------------- --------------- ---------------- ---------------- --------------
Total current assets 93,835 19,216 9,481 122,532
Net property, plant and equipment 102,017 14,650 4,449 121,116
Investment in subsidiaries 10,269 (8,178) 2,091
Note receivable affiliates 17,175 (16,280) 895
Goodwill 59,688 59,688
Debt issue costs 5,126 5,126
Other 695 695
----------------- --------------- ---------------- ---------------- --------------
$ 288,805 $ 33,866 $ 13,930 $ (24,458) $ 312,143
================= =============== ================ ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit and revolving loan $ 33,276 $ 33,276
Accounts payable 39,231 $ 11,300 $ 4,635 $ (46) 55,120
Accrued liabilities 17,603 2,420 1,552 21,575
Accrued compensation 5,988 282 1,718 7,988
Current maturities of long-term debt 11,564 11,564
----------------- --------------- ---------------- ---------------- --------------
Total current liabilities 107,662 14,002 7,905 (46) 129,523
Long-term debt due after one year 168,262 10,532 10,897 (21,429) 168,262
Deferred income taxes 284 1,154 1,438
Stockholders' equity:
Common stock 5,850 2,943 (8,793)
Additional paid-in capital 94 94
Retained earnings 12,525 2,328 (8,138) 5,810 12,525
Accumulated other comprehensive income
(loss) (22) 323 301
----------------- --------------- ---------------- ---------------- --------------
Total stockholders' equity 12,597 8,178 (4,872) (2,983) 12,920
----------------- --------------- ---------------- ---------------- --------------
Total liabilities and stockholders'
equity $ 288,805 $ 33,866 $ 13,930 $ (24,458) $ 312,143
================= =============== ================ ================ ==============
</TABLE>
F20
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 24, 2000
<TABLE>
<CAPTION>
UNCONSOLIDATED
----------------------------------------------------
LDM NON-
TECHNOLOGIES, LDM GUARANTOR CONSOLIDATING CONSOLIDATED
INC. CANADA SUBSIDIARIES ENTRIES
------------------ ---------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Net sales:
Product sales $ 363,137 $ 61,580 $ 27,262 $ $ 451,979
Mold sales 41,352 1,351 1,694 44,397
------------------ ---------- ---------------- ------------------ -----------------
404,489 62,931 28,956 496,376
Cost of sales:
Product cost of sales 281,882 58,094 27,886 367,862
Mold cost of sales 39,691 1,351 1,060 42,102
------------------ ---------- ---------------- ------------------ -----------------
321,573 59,445 28,946 409,964
------------------ ---------- ---------------- ------------------ -----------------
Gross margin 82,916 3,486 10 86,412
Selling, general and
administrative expenses 58,743 1,700 1,859 62,302
Interest 19,864 1,193 706 (1,808) 19,955
Equity in losses of
subsidiaries and
affiliates net 5,060 (4,169) 891
International currency
exchange losses
(gains) (33) 2,268 2,235
Other, net (2,198) (173) 1,808 (563)
------------------ ---------- ---------------- ------------------ -----------------
81,469 2,687 4,833 (4,169) 84,820
------------------ ---------- ---------------- ------------------ -----------------
Income (loss) from
continuing operations
before income taxes 1,447 799 (4,823) 4,169 1,592
Provision for income
taxes 1,860 145 2,005
------------------ ---------- ---------------- ------------------ -----------------
Net income (loss) $ (413) $ 654 $ (4,823) $ 4,169 $ (413)
================== ========== ================ ================== =================
</TABLE>
F21
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 26, 1999
<TABLE>
<CAPTION>
UNCONSOLIDATED
----------------------------------------------------
LDM NON-
TECHNOLOGIES, LDM GUARANTOR CONSOLIDATING CONSOLIDATED
INC. CANADA SUBSIDIARIES ENTRIES
------------------ ---------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Net sales:
Product sales $ 367,301 $ 59,677 $ 40,934 $ $ 467,912
Mold sales 56,842 4,413 1,331 62,586
------------------ ---------- ---------------- ------------------ -----------------
424,143 64,090 42,265 530,498
Cost of sales:
Product cost of sales 281,868 55,745 43,243 380,856
Mold cost of sales 55,461 4,331 866 60,658
------------------ ---------- ---------------- ------------------ -----------------
337,329 60,076 44,109 441,514
------------------ ---------- ---------------- ------------------ -----------------
Gross margin 86,814 4,014 (1,844) 88,984
Selling, general and
administrative expenses 60,862 1,042 1,497 63,401
Interest 20,952 1,225 853 (1,963) 21,067
Equity in losses of
subsidiaries and
affiliates, net 4,946 (3,466) 1,480
International currency
exchange losses 8 1,130 1,138
Other, net (1,379) (730) 1,963 (146)
------------------ ---------- ---------------- ------------------ -----------------
85,381 2,275 2,750 (3,466) 86,940
------------------ ---------- ---------------- ------------------ -----------------
Income (loss) from
continuing operations
before income taxes 1,433 1,739 (4,594) 3,466 2,044
Provision (credit) for
income taxes 2,194 573 38 2,805
------------------ ---------- ---------------- ------------------ -----------------
Net income (loss) $ (761) $ 1,166 $ (4,632) $ 3,466 $ (761)
================== ========== ================ ================== =================
</TABLE>
F22
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 27, 1998
<TABLE>
<CAPTION>
UNCONSOLIDATED
------------------------------------------------------
LDM
TECHNOLOGIES, LDM NON-GUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales:
Product sales $ 349,218 $ 51,228 $ 38,641 $ (127) $ 438,960
Mold sales 25,589 14,172 4,503 44,264
------------ ------------ ------------- ---------- -------------
374,807 65,400 43,144 (127) 483,224
Cost of sales:
Product cost of sales 278,818 44,443 39,849 (127) 362,983
Mold cost of sales 24,643 12,154 4,221 41,018
------------ ------------ ------------- ---------- -------------
303,461 56,597 44,070 (127) 404,001
------------ ------------ ------------- ---------- -------------
Gross margin 71,346 8,803 (926) 79,223
Selling, general and
administrative expenses 52,664 1,195 2,748 56,607
Equity in net income of
subsidiaries 187 - - (187) -
Interest 19,703 1,633 860 (2,382) 19,814
Equity in loss of
affiliate 285 - - - 285
Adjustment for
impairment of
long-lived assets 10,523 - - - 10,523
International currency
exchange losses
(gains) 542 (420) 122
Other, net (2,627) (146) 147 2,382 (244)
------------ ------------ ------------- ---------- -------------
80,735 3,224 3,335 (187) 87,107
------------ ------------ ------------- ---------- -------------
Income (loss) from
continuing operations
before income taxes
and minority interest (9,389) 5,579 (4,261) 187 (7,884)
Provision (credit) for
income taxes (2,769) 2,286 (55) (538)
------------ ------------ ------------- ---------- -------------
Income (loss) from
continuing operations
before minority interest (6,620) 3,293 (4,206) 187 (7,346)
Minority interest loss 279 - - 279
------------ ------------ ------------- ---------- -------------
Net income (loss) $ (6,341) $ 3,293 $ (4,206) $ 187 $ (7,067)
============ ============ ============= ========== =============
</TABLE>
F23
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 24, 2000
<TABLE>
<CAPTION>
UNCONSOLIDATED
-------------------------------------
LDM NON-
TECHNOLOGIES, LDM GUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (413) $ 654 $ (4,823) $ 4,169 $ (413)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Equity in subsidiaries losses 4,169 (4,169)
Equity in losses of affiliates, net 891 891
Depreciation and amortization 19,960 2,292 1,401 23,653
Currency exchange (gain) loss (33) 2,268 2,235
(Gain) loss on sale of
property and equipment 241 (2) 239
Deferred income taxes 1,993 145 2,138
Changes in assets and liabilities:
Accounts and notes receivable (3,525) 5,848 2,776 5,099
Inventory and mold costs 3,371 (4,508) 613 (524)
Prepaid expenses (569) (104) 57 (616)
Accounts payable and accrued
liabilities 3,738 (517) (3,186) (1,066) (1,031)
Refundable income taxes 241 73 314
--------------------------------------------------------------------------------------------
Net cash provided by operating
activities 30,097 3,848 (894) (1,066) 31,985
INVESTING ACTIVITIES
Additions to property, plant and
equipment (13,352) (1,228) (14,580)
Deposits for leases to be reimbursed (4,791) (4,791)
Equity contributed to affiliate (49) (49)
Proceeds from disposal of property,
and equipment 8,268 2 8,270
Disbursements to affiliates (3,691) 1,816 (1,875)
Payments from affiliates 750 (750) -
--------------------------------------------------------------------------------------------
Net cash (used for) provided by
investing activities (13,615) (1,226) 750 1,066 (13,025)
FINANCING ACTIVITIES
Proceeds from issuance of long term
debt (181) (181)
Payments on long-term debt (19,823) (19,823)
Net proceeds from Line of
Credit/Revolver 1,367 1,367
--------------------------------------------------------------------------------------------
Net cash provided (used) by
financing activities (18,637) (18,637)
--------------------------------------------------------------------------------------------
Net increase (decrease) in cash (2,155) 2,622 (144) - 323
Cash at beginning of year 2,184 2,133 - 4,317
--------------------------------------------------------------------------------------------
Cash at end of year $ 29 $ 2,622 $ 1,989 $ - $ 4,640
============================================================================================
</TABLE>
F24
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 26, 1999
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------------
LDM NON-
TECHNOLOGIES, LDM GUARANTOR CONSOLIDATING
INC. CANADA SUBSIDIARIES ENTRIES CONSOLIDATED
-------------- ------------------ ------------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (761) $ 1,166 $ (4,632) $ 3,466 $ (761)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Equity in subsidiaries losses 3,466 (3,466)
Equity in losses of 1,480
affiliates, net 1,480
Reserve for trade receivables and
notes receivable from unconsolidated
subsidiary 2,766 2,766
Depreciation and amortization 18,702 1,977 1,346 22,025
International exchange losses 8 1,130 1,138
(Gain) loss on sale of property and
equipment 381 190 (726) (155)
Deferred income taxes 455 530 (30) 955
Changes in assets and liabilities,
net of the effect of the 1999 joint
venture and divestiture
Accounts and notes
receivable (7,957) (2,899) 117 (10,739)
Inventory and mold costs 7,460 (3,685) 4,277 8,052
Prepaid expenses (502) (7) 1 (508)
Accounts payable and accrued
liabilities (1,063) 4,822 (461) 58 3,356
Income taxes payable (108) (923) 33 (998)
--------------- ------------------ ------------------- ------------------- ----------------
Net cash provided by operating
activities 24,319 1,179 1,055 58 26,611
INVESTING ACTIVITIES
Additions to property, plant and
equipment (19,639) (2,319) (45) (22,003)
Proceeds from sale of Kenco business
and net current assets to DBM joint
venture (net of $98 equity
contribution) 6,935 6,935
Proceeds from disposal of property,
and equipment 1,010 1,010
Disbursements to affiliates (3,989) 1,748 (2,241)
Payments from affiliates 2,049 (1,273) 776
--------------- ------------------ ------------------- ------------------- ----------------
Net cash (used for) provided by
investing activities (13,634) (2,319) (45) 475 (15,523)
FINANCING ACTIVITIES
Proceeds from issuance of
long term debt 7,228 749 (749) 7,228
Payments on long-term debt (12,979) (177) (39) 216 (12,979)
Net proceeds from Line of
Credit/Revolver (3,423) (914) (4,337)
--------------- ------------------ ------------------- ------------------- ----------------
Net cash provided (used) by
financing activities (9,174) (177) (204) (533) (10,088)
--------------- ------------------ ------------------- ------------------- ----------------
Net increase (decrease) in cash 1,511 (1,317) 806 1,000
Cash at beginning of year 673 1,317 1,327 3,317
--------------- ------------------ ------------------- ------------------- ----------------
Cash at end of year $ 2,184 $ - $ 2,133 $ $ 4,317
=============== ================== =================== =================== ================
</TABLE>
F25
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN 000'S, UNLESS OTHERWISE NOTED)
14. SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 27, 1998
<TABLE>
<CAPTION>
UNCONSOLIDATED
-------------------------------------------------
LDM NON-GUARANTOR
TECHNOLOGIES, LDM SUBSIDIARIES CONSOLIDATING
INC. CANADA ENTRIES CONSOLIDATED
------------------- ----------------- -------------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (6,341) $ 3,293 $ (4,206) $ 187 $ (7,067)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Equity in subsidiaries losses 187 - (187) -
Equity in loss of affiliate 285 - - - 285
Depreciation and amortization 16,260 1,974 1,632 19,866
International currency exchange
(gains) losses 542 (420) 122
Adjustment for impairment of
long-lived assets 10,523 - - - 10,523
(Gain) loss on sale of property
and equipment 36 61 97
Deferred income taxes (3,370) 1,421 (84) (2,033)
Changes in assets and
liabilities, net of the
effect of the 1998
acquisitions
Accounts and notes receivable (775) (4,905) (791) 1,511 (4,960)
Inventory and mold costs (6,584) 6,129 (1,698) (2,153)
Prepaid expenses 1,025 (32) (13) 979
Accounts payable and accrued
liabilities 9,947 (7,862) 3,583 5,668
Income taxes payable (2,982) 846 356 (1,780)
------------- ----------- ------------ ------------ -------------
Net cash provided by operating
activities 18,211 1,406 (1,580) 1,511 19,547
INVESTING ACTIVITIES
Purchase of Kenco (net of $500 cash
received in acquisition) (26,641) (26,641)
Additions to property, plant and
equipment (12,083) (370) (1,690) (14,143)
Purchase of Huron Plastics (net of
$1,835 cash received in acquisition) (67,140) (67,140)
Proceeds from disposal of property,
and equipment 622 192 814
Purchase of LDM Technologies, GmbH (9,703) (9,703)
Disbursements to affiliates (7,837) 7,837 -
Payments from affiliates 10,073 (10,073) -
------------ ----------- ------------ ------------ ------------
Net cash (used for) provided by
investing activities (112,709) (370) (1,498) (2,236) (116,813)
FINANCING ACTIVITIES
Proceeds from issuance of long term
debt 63,992 3,869 (3,869) 63,992
Payments on long-term debt (4,809) (4,317) (278) 4,595 (4,809)
Net proceeds from Line of 35,976 791 36,767
Credit/Revolver
------------ ----------- ------------ ------------ ------------
Net cash provided (used) by
financing activities 95,159 (4,317) 4,382 726 95,950
------------ ----------- ------------ ------------ ------------
Net increase (decrease) in cash 661 (3,281) 1,304 - (1,316)
Cash at beginning of year 12 4,598 23 4,633
------------ ----------- ------------ ------------ ------------
Cash at end of year $ 673 $ 1,317 $ 1,327 $ - $ 3,317
============ =========== ============ ============ ============
</TABLE>
F26
<PAGE> 47
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
11 Statement of Ratio of Earnings to Fixed Charges
21 Subsidiaries and Affiliates of the Company
27 Financial Data Schedule
</TABLE>
