- --------------------------------------------------------------------------------
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UNITED STATES
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 DECEMBER 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 001-13581
------------------------
NOBLE INTERNATIONAL, LTD.
(Exact name of the registrant as specified in its charter)
<TABLE>
<S> <C>
MICHIGAN 38-3139487
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
<TABLE>
<S> <C>
33 BLOOMFIELD HILLS PARKWAY, SUITE 155
BLOOMFIELD HILLS, MICHIGAN 48304
(Address of principal executive offices) (Zip Code)
</TABLE>
------------------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (248) 433-3093
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which registered
<S> <C>
COMMON STOCK, NO PAR VALUE AMERICAN STOCK EXCHANGE
</TABLE>
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. /x/
The aggregate market value of the shares of common stock, no par value
('Common Stock') held by non-affiliates of the registrant as of February 20,
1998, was approximately $34.4 million based upon the average of the high and low
sales prices for the Common Stock on the American Stock Exchange on such date.
The number of shares of the registrant's Common Stock outstanding as of
February 20, 1998 was 7,160,168.
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
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<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL DEVELOPMENT OF BUSINESS
Noble International, Ltd. ('Noble') was incorporated on October 3, 1993 in
the State of Michigan. Since its formation in 1993, Noble has completed seven
acquisitions (the 'Acquisitions'). As used in this Annual Report (the 'Report'),
'Company' refers to Noble and its subsidiaries and their combined operations,
after consummation of all the Acquisitions.
On January 1, 1997, the Company acquired all of the outstanding capital
stock of Skandy Corp. ('Skandy') from Richard G. Skandalaris, the sole
shareholder of Skandy, in exchange for 133,686 shares of the Company's common
stock, no par value ('Common Stock') (the 'Skandy Acquisition'). Skandy is the
sales and marketing subsidiary of the Company.
On March 1, 1997, the Company, through its wholly-owned subsidiary Utilase
Production Processing, Inc. ('UPP'), acquired certain assets of Utilase, Inc.
('Utilase') (the 'UPP Acquisition'). The UPP Acquisition purchase price was
$850,000, evidenced by a promissory note (secured by the assets acquired). UPP
provides the Company with both laser production welding and laser cutting
capabilities, which the Company provides to customers such as GM and Chrysler,
as well as to non-automotive customers.
In July 1996, the Company acquired newly issued shares representing a 37.5%
minority interest in Noble Metal Products, Inc. ('NMP') (formerly DCT Component
Systems, Inc.) (the 'Initial NMP Acquisition') and, effective April 7, 1997, the
Company acquired an additional 7.5% interest in NMP from the former president of
NMP for an aggregate price of $1.00. The Company has also acquired the balance
of NMP's outstanding capital stock from NMP's other shareholders effective
November 24, 1997, for $1,000,000 in cash (the 'Final NMP Acquisition'). NMP
provides progressive die stamping and operates one of only a few stamping
facilities approved by Chrysler to provide extrusion stampings. Competitive
Technologies Investment Company ('CTIC'), was purchased by the Company, through
Noble Land Holdings, Inc. (a wholly-owned subsidiary formed for the purpose of
the CTIC acquisition), concurrent with the consummation of the Final NMP
Acquisition for no additional consideration other than assumption of the debt
encumbering properties owned by CTIC aggregating approximately $4.4 million at
December 31, 1997.
On November 24, 1997, the Company acquired all of the outstanding shares of
Utilase (the 'Utilase Acquisition'). The Utilase Acquisition purchase price was
$8.2 million in cash, and an aggregate of approximately $10.1 million in
principal amount of promissory notes. Utilase provides production and prototype
laser processing services.
In November 1997, the Company completed an initial public offering of 3.3
million shares of Common Stock resulting in gross proceeds of $29.7 million (the
'Offering').
In February 1998, the Company initiated a plan for the realignment of its
seven operating subsidiaries in order to provide greater integration of
operations. Noble formed Noble Metal Technologies, Inc. ('NMT') and Noble
Components & Systems, Inc. ('NCS') as wholly-owned subsidiaries and will
contribute the capital stock of its other subsidiaries to NMT and NCS. The
Company plans to conduct its metal processing and production operations through
UPP, Utilase and NMP, as wholly-owned subsidiaries of NMT. The Company plans to
conduct its component and systems business through Cass River Coatings, Inc. dba
Vassar Industries ('Vassar'), Monroe Engineering Products, Inc. ('Monroe'),
Prestolock International, Ltd. ('Prestolock') and Skandy, as wholly-owned
subsidiaries of NCS.
2
<PAGE>
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
See Note L to the Consolidated Financial Statements of the Company included
elsewhere in this Report.
NARRATIVE DESCRIPTION OF BUSINESS
The Company is a full service, independent supplier of automotive
components, component assemblies and value-added services to the automotive
industry. The Company's customers include original equipment manufacturers
('OEMs'), such as General Motors ('GM'), Chrysler Corporation ('Chrysler'), Ford
Motor Company ('Ford') and Mitsubishi Motors Manufacturing of America
('Mitsubishi'), and Tier I suppliers, such as Textron Automotive Company,
GM/Delphi and United Technologies, Inc. The Company is a Tier II supplier that
provides integrated manufacturing, design, planning, engineering and other
value-added services to the automotive market.
The Company's operations include, among other things: (i) laser welding of
tailored blanks and laser welding and cutting of components; (ii) automotive
component manufacturing utilizing progressive die stamping; (iii) design,
engineering and assembly of automotive glovebox latches and other automotive
component systems; (iv) painting and coating of automotive and non-automotive
components; (v) other value-added services such as prototyping of automotive
components and die design and construction; and (vi) assembly, machining and
distribution of components used in machine tooling.
PRODUCTS AND SERVICES
Laser Welding and Cutting of Components
The Company provides laser welding and cutting services for a variety of
automotive components. The process of laser welding involves the concentration
of a beam of light, producing energy densities of 16 to 20 million watts per
square inch, at the point where two metal pieces are to be joined. Laser welding
allows rapid weld speeds with low heat input, thus minimizing topical distortion
of the metal and resulting in ductile and formable welds that have mechanical
properties comparable to, or in some cases superior to, the metal being welded.
Laser welds provide improved visual aesthetics as well as less likelihood of the
rattling associated with multi-piece, spot-welded assemblies. The process of
laser cutting involves the same concentrated light-beam production of energy,
but uses a different wavelength and mode.
Some of the laser processes performed by UPP for the Company include the
laser welding of latch strike plates for Chrysler's B-van doors and the welding
of covers onto fuel chargers as an aftermarket part. In addition, UPP also
provides laser cutting services for the reverse transmission bands on certain
Chrysler trucks and the hydroform rails for GM's Chevrolet Corvettes.
Laser Welding of Tailored Blanks
Utilase supplies laser welded tailored blanks to the automotive industry.
Laser welding of blanks offers significant advantages over other blank welding
technologies, including cost, weight and safety benefits. Utilase has developed
a technology and production process that permits it to produce laser welded
blanks more quickly and with higher quality and tolerance levels than its
competitors. In 1995, the UltraLight Steel Auto Body Consortium, a worldwide
industry association of steel producers, commissioned a study which concluded
that laser welded tailored blanks will play a significant role in car
manufacturing in the next decade as the automotive industry is further
challenged to produce lighter cars for better fuel economy, with enhanced safety
features and lower manufacturing costs. In addition, the study identified 18
potential applications for laser welding of tailored blanks per vehicle. An
additional 13 potential applications have been identified by Utilase.
Conventional blanks are cut from a single steel coil and possess a uniform
thickness, strength, coating and alloy. In many cases, a particular product
requires a part to possess different characteristics in certain areas. When
conventional blanks are used, achieving these differences requires
reinforcements and additional processing or the use of material with the
required characteristic throughout the entire part. In
3
<PAGE>
addition, when conventional blanks are used, blanks must be stamped separately
prior to being welded together. This results in increased design, assembly and
tooling costs, as well as increased waste associated with cutting irregularly
shaped parts for reinforcement from single sheets of steel.
Tailored blanks are combinations of flat sheet metal of varying thickness,
strength, coating and/or alloy which, when welded together prior to stamping,
result in a product that possesses the desired characteristics in the
appropriate areas of the finished stampings. The use of tailored blanks in
automotive applications results in cost, weight and safety benefits. Use of
tailored blanks frequently decreases the number of dies required to produce the
finished product and eliminates the spot welds required to fasten reinforcements
to conventional blanks. Steel utilization is also improved as a result of the
ability to assemble smaller, irregular parts into a single tailored blank. In
addition, by permitting the use of varying weights of steel and eliminating the
need for reinforcements, tailored blanks can result in decreased vehicle weight
and improved gas mileage. For each reinforcement included in a sub-assembly
produced using conventional blanks, costs are incurred for design, development,
engineering, prototyping and die tryout. The use of tailored blanks eliminates
these costs and shortens the product development cycle.
Tailored blanks improve dimensional accuracy by decreasing the number of
separate components, eliminating the need for reinforcements and decreasing
required assembly operations. This results in improved fit and finish, reduced
wind noise and a quieter ride. Because tailored blanks are stamped after
welding, the welds have higher reliability than spot welds made on conventional
blanks after stamping. Weld defects on tailored blanks, if any, are likely to
become apparent upon stamping, resulting in improved quality control. Tailored
blanks can also improve the crashworthiness ratings of automobiles since their
welds are stiffer and provide continuous load-carrying ability.
Design and Engineering
The development of new automobile models generally begins two to five years
prior to the marketing of such models to the public. The Company's engineering
staff typically works with OEM and Tier I engineers early in the development
phase to design components to meet OEM or Tier I specifications on new or
redesigned models. The Company presently offers engineering services for all its
products.
The Company designs, engineers and assembles automobile glovebox latches
under the brand name Prestolock(Registered). The design and engineering of a new
Prestolock(Registered) latch begins two to three years prior to actual
production. After a new latch is designed, the Company produces prototype
latches and builds the required tooling for production parts. The Company then
contracts with manufacturers for the various component parts of the latch and
begins the assembly planning process.
Prestolock's engineers are included in the planning and design phase by
both GM and Chrysler, and remain up to date with the new body platforms under
consideration by the OEMs and Tier I instrument panel suppliers. Automotive
glovebox latches are required to comply with certain safety standards and to be
engineered to fit securely into the glovebox.
Stamping, Painting and Assembly
The Company, through NMP, manufactures a variety of automotive components
utilizing progressive die stampings. Progressive die stamping is a process in
which steel is passed through a series of dies in a stamping press in order to
form the steel into three-dimensional parts. NMP's stamping presses range in
size from 75 tons to 800 tons, providing the flexibility to stamp flat-rolled
steel and steel blanks ranging in thickness from .028 inches to .25 inches.
NMP's products are sold primarily to both OEMs and Tier I suppliers. NMP's
stamping operations also include the production of parts through extrusion
stamping, a process that involves the forcing of steel through a die opening, by
restricting movement in other directions, in order to produce a product of
uniform cross-sectional shape. NMP operates one of only a few stamping
facilities approved by Chrysler to provide extrusion stampings.
Through Vassar, the Company also provides painting and coating services to
OEMs and Tier I suppliers on automotive components consigned to the Company for
processing and re-delivery to the customer on a just-in-time basis. Since 1986,
Vassar has operated as a dedicated GM/Delphi supplier,
4
<PAGE>
painting steering column component parts for GM/Delphi's Saginaw Steering
Division. As an extension of its relationship with GM/Delphi, the Company also
provides steering column sequencing and other assembly services.
The Company also provides other value-added services such as prototyping
and mold design and construction. The Company also designs, engineers and
produces precision tools and dies for use in its own stamping operations.
Distribution of Tooling Components
The Company, through Monroe, distributes tooling components, including
adjustable handles, hand wheels, plastic knobs, levers, handles, hydraulic
clamps, drills, jigs and permanent magnets to non-automotive customers. The
Company's primary tooling component product line is Kipp(Registered) brand
standard and heavy duty adjustable handles, representing approximately one-half
of its tooling component sales. The Company also distributes Elesa(Registered)
brand high tensile plastic hand wheels, knobs, handles and levers, representing
approximately one-quarter of tooling component sales. Although most tooling
component products are sold off the shelf, the Company does perform some light
machining of parts for custom orders.
The Company is the primary North American distributor for Kipp(Registered)
products and holds the U.S. patent rights to Kipp(Registered) adjustable
handles. The Company also holds non-exclusive rights to distribute
Elesa(Registered) products throughout North America.
MARKETING
Automotive Supply
The Company's salesmen and project managers are involved in product
planning and spend a significant amount of time consulting with OEM engineers in
order to facilitate the integration of the Company's products into future
automotive models.
Orders for tailored blanks are typically placed by OEMs directly with
producers of coiled steel. Further processing steps, such as blanking, are done
either by the steel producer or by an independent processor sub-contracted by
the steel producer. Project managers at Utilase work closely with OEMs during
the design phase to promote the specification of Utilase as the processor prior
to the placing of orders by OEMs with steel producers. Relationships with
domestic steel producers are also maintained in order to obtain sub-contracting
work for which no processor has been specified by an OEM.
Tooling Components
The Company's tooling component products are sold through catalogs as well
as through a network of regional distributors of Kipp(Registered) and
Elesa(Registered) products. There are approximately 78 wholesale distributors
located throughout the United States offering the Company's products. These
distributors sell to industrial manufacturing companies such as GM, Chrysler,
Caterpillar Inc. and Deere & Company. In addition, there are three distributors
of the Company's products in Canada and one in Mexico.
RAW MATERIALS
The raw materials required for the Company's operations include steel,
paint, plastic and gases such as carbon dioxide and argon. The Company obtains
its raw materials from a variety of suppliers. With the exception of Monroe's
purchase of tooling components from Kipp(Registered) and Elesa,(Registered) the
Company does not believe that it is dependent upon any of its suppliers despite
concentration of purchasing of certain materials from a few sources.
Approximately 65% of the paint used at Vassar is purchased from a single
supplier, although other suppliers of the same or similar materials are readily
available. The Company typically purchases its raw materials on a purchase order
basis as needed and has generally been able to obtain adequate supplies of raw
materials for its operations.
5
<PAGE>
PATENTS AND TRADEMARKS
The Company holds the registered U.S. trademarks 'Presto(Registered)' and
'Prestolock(Registered)' used in connection with its glovebox latch business.
The Company also holds U.S. Patent No. 4,598,614 entitled 'Hand Lever Turning
Mechanism' which provides the Company with the exclusive right to distribute
certain Kipp(Registered) brand adjustable handles, which incorporate such
technology, in the United States. Utilase has proprietary technology and
equipment that constitute trade secrets which it has chosen not to register in
order to avoid public disclosure thereof.
SEASONALITY
The Company's business is largely dependent upon the automotive industry
which is highly cyclical and is dependent on consumer spending. In addition, the
automotive component supply industry is somewhat seasonal. Increased revenues
and operating income are generally experienced during the second calendar
quarter as a result of the automotive industry's spring selling season, the peak
sales and production period of the year. Decreased revenues and operating income
are generally experienced during July and December of each year as a result of
scheduled OEM plant shut downs for vacations and holidays, as well as
changeovers in production lines for the new model year.
CUSTOMERS
Sales to the automotive industry constitute a substantial portion of the
Company's net sales. The Company's remaining sales are primarily to the tooling
component industry. In 1997, sales to the automotive industry accounted for
approximately 72% of the consolidated net sales of the Company (91% of its pro
forma combined net sales giving effect to all of the Acquisitions) with GM,
Chrysler, Ford and Mitsubishi, including their respective Tier I suppliers,
accounting for substantially all of the Company's historical and pro forma net
sales to the automotive industry.
Historically, the Company's primary customer for
Prestolock(Registered) latches has been GM, with the Company currently supplying
approximately 58% of GM's glovebox latch requirements. Beginning in 1997, the
Company also began supplying glovebox latches to Chrysler and management
anticipates, based upon Chrysler's current production estimates, that the
Company will supply approximately 42% of Chrysler's 1998 model year
requirements.
COMPETITION
Both the automotive component supply and tooling component industries are
highly competitive. Competition in the sale of all of the Company's products is
primarily based on engineering, product design, process capability, quality,
cost, delivery and responsiveness. Many of the Company's competitors are larger
and have greater financial and other resources than the Company. The Company
believes that its performance record places it in a strong competitive position.
In addition, with respect to certain of its products, some of the Company's
competitors, such as GM/Delphi, are divisions of its OEM customers.
ENVIRONMENTAL MATTERS
The Company is subject to environmental laws and regulations concerning
emissions to the air, discharges to waterways, and generation, handling,
storage, transportation, treatment and disposal of waste materials. The Company
is also subject to other Federal and state laws and regulations regarding health
and safety matters. Each of the Company's production facilities has permits and
licenses allowing and regulating air emissions and water discharges. The Company
believes that it is currently in compliance with applicable environmental and
health and safety laws and regulations.
EMPLOYEES
As of December 31, 1997, the Company had approximately 705 employees,
including 378 production employees, 21 engineering employees, 55 sales and
clerical employees and 96 management and administrative employees, as well as
approximately 77 leased production workers at Prestolock and
6
<PAGE>
78 leased production workers at Utilase. All of the Company's operations are
non-union except for Vassar, whose production workers are represented by the
AFL-CIO. The AFL-CIO workers have been out on strike since August 1, 1997,
however, production at Vassar has not been impacted due to the hiring of
replacement workers. There has been no other recent history of labor strikes or
unrest at any of the Company's facilities. The Company believes that its
relations with its employees are satisfactory.
ITEM 2. PROPERTIES.
All of the Company's current operations, with the exception of two assembly
plants, are conducted at facilities located in the greater Detroit area of
Michigan. The Company's existing facilities are adequate for current operations.
The following is a summary of the location, ownership status, size and
function of each of the Company's facilities:
<TABLE>
<CAPTION>
OWNED APPROXIMATE
OR SIZE
FACILITY LOCATION LEASED (SQ.FT.) PRIMARY USE
- ------------------------------------------------------- --------- ----------- ----------------------------
<S> <C> <C> <C>
Bloomfield Hills Pkwy, Bloomfield Hills, Michigan Leased 10,145 Executive Offices,
Prestolock Sales and
Engineering
Enterprise Drive, Vassar, Michigan Owned 30,000 Painting and Assembly
Sherman Street, Vassar, Michigan Leased 14,600 Painting and Assembly
El Paso, Texas Leased 24,200 Prestolock Assembly
34683 Centaur, Clinton Township, Michigan Owned 9,250 Warehouse
34660 Centaur, Clinton Township, Michigan Owned 54,470 Stamping
34706 Centaur, Clinton Township, Michigan Owned 12,692 Warehouse and Engineering
34728 Centaur, Clinton Township, Michigan Owned 13,675 Warehouse
34635 Nova, Mt. Clemens, Michigan Owned 12,200 Die Maintenance
Woodward Avenue, Bloomfield Hills, Michigan Leased 1,417 Tooling Component Sales
Harbor Springs, Michigan Owned 9,600 Tooling Component Warehouse
Distribution Facility
20201 Hoover Road, Detroit, Michigan Leased 11,110 Utilase Production Process
20101 Hoover Road, Detroit, Michigan Leased 210,000 Laser Welding and Tailored
Blanks
Brantford, Ontario, Canada Leased 89,330 Laser Welding and Tailored
Blanks
</TABLE>
- ------------------
(1) Purchased pursuant to a Land Contract dated April 30, 1996 from the former
controlling shareholder of Monroe who is currently an affiliate of the
Company, for an aggregate purchase price of $500,000 payable in monthly
installments of interest only at the rate of 12% per annum with all
outstanding principal and accrued interest due April 30, 1998.
(2) The Hoover Road facilities are leased from entities controlled by an
affiliate of the Company.
7
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
On May 6, 1997, Utilase filed an action in United States District Court,
Eastern District of Michigan, against Olympic Steel, Inc. for breach of
contract, misappropriation of trade secrets, and tortious interference of
contract. Following the Utilase Acquisition, the former principal shareholder of
Utilase, which is controlled by James Bronce Henderson III, will continue to
have the right to control the actions of Utilase with respect to the litigation,
including decisions with respect to whether to bring actions against additional
parties, subject to the requirement of the Company's reasonable consent for any
settlement. Any cash or property recovered in connection with the litigation
will be divided equally with such former principal shareholder of Utilase and
the Company's portion will be deposited into a sinking fund to be applied
against payment of the Utilase promissory notes delivered by the Company in
connection with the Utilase Acquisition.
Except for the foregoing, the Company is not a party to any legal
proceedings other than routine litigation incidental to its business, none of
which is material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
8
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the American Stock Exchange
('AMEX') under the symbol NIL. The Common Stock commenced trading on AMEX on
November 19, 1997 as a result of the Company's initial public offering. Prior to
that date there was no public market for the Common Stock. The high and low
closing sale prices for the Common Stock during the period from November 19,
1997 to December 31, 1997, as reported on AMEX, were $9.25 and $6.75,
respectively.
As of February 20, 1998 there were approximately 43 record holders and
approximately 1300 beneficial owners of the Company's Common Stock.
DIVIDENDS
The Company has not declared or paid any dividends on its Common Stock
since its incorporation. The Company currently intends to retain any earnings to
support its growth strategy and operation and does not anticipate paying cash
dividends in the foreseeable future. Payment of future dividends, if any, will
be at the discretion of the Company's Board of Directors after taking into
account various factors, including the Company's financial condition, operating
results, current and anticipated cash needs and plans for expansion. In
addition, the payment of dividends by the Company on the Common Stock is
restricted by the Company's current bank loan agreements. Further, the
promissory notes delivered by the Company in connection with the acquisition of
Utilase requires the consent of the holders of 67% of the aggregate outstanding
principal amount thereof for the Company to declare or pay any dividends on the
Common Stock, other than in shares of capital stock.
RECENT SALES OF UNREGISTERED SECURITIES
No securities of the Company that were not registered under the Securities
Act of 1933 have been issued or sold by the Company during the period covered by
this report, except for the following:
<TABLE>
<CAPTION>
DATE OF NUMBER AND CLASS OF
NAME OR CLASS OF PERSON SALE SHARES CONSIDERATION
- -------------------------------------- ------- -------------------- --------------------------------------
<S> <C> <C> <C>
Richard G. Skandalaris 1/1/97 133,686 shares of Issued pursuant to a Stock Exchange
Common Stock Agreement between Noble and Skandy
Twenty-First Century Off-Shore Fund, 7/30/97 38,000 shares of $3.8 million
Ltd. Series A Preferred
Stock
Twenty-First Century Off-Shore Fund, 7/30/97 64,838 shares of Issued in connection with concurrent
Ltd. Common Stock sale of Series A Preferred for no
additional consideration
</TABLE>
The Company believes that the foregoing transactions were exempt from the
registration provisions of the Securities Act of 1933 pursuant to Section 4(2)
of such Act.
9
<PAGE>
USE OF PROCEEDS OF OFFERING
The Company's initial public offering of 3,300,000 shares of Common Stock
pursuant to a Registration Statement on Form S-1 (Reg. No. 333-27149) was
declared effective by the Securities and Exchange Commission on November 18,
1997 (the 'Offering'). The Offering closed on November 24, 1997. The managing
underwriters of the Offering were BlueStone Capital Partners, L.P. and Rodman &
Renshaw, Inc. The 3,300,000 shares of Common Stock were offered and sold at a
price of $9.00 per share. The net proceeds received by the Company from the sale
of the 3,300,000 shares of Common Stock were $26,258,000 after deducting
underwriting discounts and offering expenses. The Company used the net proceeds
as follows:
<TABLE>
<CAPTION>
PERCENTAGE
OF NET
USE OF NET PROCEEDS DOLLAR AMOUNT PROCEEDS
- ------------------------------------------------------------------------------------ ------------- ----------
<S> <C> <C>
Reduction of financial institution debt(1).......................................... $13,348,000 50.8%
Payments relating to Utilase Acquisition(2)......................................... 10,450,000 39.8%
Payments relating to Final NMP Acquisition(3)....................................... 1,960,000 7.5%
Payments relating to prior Acquisitions(4).......................................... 500,000 1.9%
------------- ----------
Total.......................................................................... $26,258,000 100.0%
------------- ----------
------------- ----------
</TABLE>
- ------------------
(1) Includes: (i) $4.0 million for the repayment in full of amounts outstanding
under NMP's revolving line of credit facility with CIT Group/Credit Finance,
Inc. ('CIT'); (ii) $2.89 million for the repayment in full of the Company's
term loan with Comerica Bank ('Comerica'); (iii) $2.2 million for the
repayment in full of NMP's term loan with CIT; and (iv) $4.26 million for
the partial repayment of amounts outstanding under Utilase's equipment
purchase credit facility with Comerica.
(2) Includes: (i) the $8.2 million cash portion of the Utilase stock purchase
price; (ii) $1.4 million payable to various employees and shareholders of
Utilase and its parent company, DCTI, in consideration of their covenants
not to compete; and (iii) $850,000 for the final payment due to the former
shareholders of Utilase in connection with the UPP Acquisition.
(3) Includes: (i) $1.0 million for the purchase of the 55% interest in NMP and
(ii) $960,000 to repay NMP's loan from DCTI assumed by the Company in
connection with the Final NMP Acquisition, which loan bears interest at the
rate of 10% per annum and which matured on the consummation of the Final NMP
Acquisition.
(4) Includes $500,000 payable in connection with the Monroe Acquisition.
10
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ITEM 6. SELECTED FINANCIAL DATA.
The following selected historical financial data as of and for each of the
four fiscal years in the period ended December 31, 1997 is derived from the
audited financial statements of Noble and should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere herein.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------
1994 1995 1996 1997
--------- --------- --------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS:
Net sales............................................... $ 3,305 $ 4,442 $ 16,187 $ 24,363
Cost of goods sold...................................... 2,261 2,911 10,587 16,777
--------- --------- --------- ---------
Gross profit............................................ 1,044 1,531 5,600 7,586
Selling, general and administrative expense............. 915 1,030 5,088 5,698
--------- --------- --------- ---------
Operating profit........................................ 129 501 512 1,888
Equity in loss of unconsolidated subsidiary............. -- -- 95 126
Interest income......................................... -- -- (5) (49)
Interest expense........................................ 24 24 555 755
Sundry, net............................................. (1) (29) (64) (63)
--------- --------- --------- ---------
Earnings (loss) before income taxes and minority
interest............................................. 106 506 (69) 1,119
Minority interest....................................... 38 67 -- 23
Income tax expense...................................... 8 30 7 379
--------- --------- --------- ---------
Net earnings (loss) $ 60 $ 409 $ (76) $ 717
--------- --------- --------- ---------
--------- --------- --------- ---------
Preferred dividend -- -- $ 144
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings (loss) on common shares.................... $ 60 $ 409 $ (76) $ 573
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings (loss) per common share(1)................. $ .03 $ .10 $ (.02) $ .13
--------- --------- --------- ---------
Weighted average common shares outstanding.............. 1,535,170 2,807,390 3,820,390 4,285,134
OTHER FINANCIAL INFORMATION:
EBITDA(2)............................................... $ 121 $ 566 $ 999 $ 2,830
Ratio of EBITDA to interest expense..................... 5.0x 23.6x 1.8x 3.7x
Cash flow from:
Operating............................................ $ (214) 392 913 264
Investing............................................ (429) (203) 270 (12,519)
Financing............................................ 645 (191) (713) 14,136
--------- --------- --------- ---------
Net cash flow........................................... $ 2 $ (2) $ 470 $ 1,881
--------- --------- --------- ---------
--------- --------- --------- ---------
CONSOLIDATED BALANCE SHEET DATA:
Total assets............................................ $ 1,189 $ 1,785 $ 11,533 $ 67,101
Working capital (deficiency)............................ 295 349 (817) 5,564
Total debt.............................................. 213 218 8,675 28,264
Shareholders' equity.................................... 355 624 729 27,610
</TABLE>
- ------------------
(1) Net earnings (loss) per common share data for 1994 and 1995 have been
presented to reflect the pro forma tax effects attributable to Prestolock
being taxed under Subchapter S of the Internal Revenue Code through December
31, 1995.
(2) EBITDA represents income before income taxes, plus interest expense and
depreciation and amortization expense. EBITDA is not presented as, and
should not be considered, an alternative measure of operating results or
cash flows from operations (as determined in accordance with generally
accepted accounting principles), but is presented because it is a widely
accepted financial indicator of a company's ability to incur and service
debt. While commonly used, however, EBITDA is not identically calculated by
companies presenting EBITDA and is, therefore, not necessarily an accurate
means of comparison and may not be comparable to similarly titled measures
disclosed by the Company's competitors.
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information set forth in 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' below includes 'forward looking
statements' within the meaning of Section 27A of the Securities Act of 1933, and
is subject to the safe harbor created by that section. Factors that could cause
actual results to differ materially from those contained in the forward looking
statements are set forth in 'Management's Discussion and Analysis of Financial
Condition and Results of Operations.'
OVERVIEW
The Company is a full service, independent supplier of automotive
components, component assemblies and value-added services to the automotive
industry. Pursuant to its strategic acquisition program, the Company has, since
its formation in 1993, completed seven acquisitions. The Company completed its
first acquisition in February 1994 by acquiring the assets of Prestolock. In
January 1996, the Company completed the acquisition of all of the outstanding
shares of Vassar and Monroe. In July 1996, the Company acquired a minority
interest in NMP. In January 1997, the Company acquired all of the outstanding
capital stock of Skandy. In March 1997, the Company, through UPP, acquired
certain assets of Utilase. Concurrently with the consummation of the Offering on
November 24, 1997, the Company also acquired all of the outstanding shares of
Utilase and the balance of the shares of NMP.
Prestolock commenced operations in February 1994, and subsequently incurred
significant engineering and other start-up costs to improve its market position
as a provider of glovebox latches to the automotive industry. The historical
operating results which include these costs are not necessarily indicative of
future operating results. As a result of the acquisition of Vassar, in January
1996, the Company enhanced its relationship with GM/Delphi, which the Company
regards as a first step in realizing its strategy of providing multiple,
integrated services to its automotive customers. NMP has experienced continued
improvement in its operating results over the past three years. As a result of
changes in NMP and the affiliation with Skandy, UPP and Utilase, it is
anticipated that NMP's operating results in the future will vary from historical
operating results due to strengthened sales efforts and the ability to provide
assembled products using production laser welding processes. The results of UPP
and Utilase are also expected to be impacted by the addition of a dedicated
sales force. Management believes Utilase's growth has been limited by the funds
available for both working capital requirements and capital expenditures for
expanding capacity. The proceeds of the Offering, the increased availability
created under the Company's new $35 million revolving line of credit and the
cash generated from operations are expected to cause Utilase's future operating
results to differ from its historical operating results.
The following analysis of the financial condition and results of operations
of the Company should be read in conjunction with 'Selected Financial Data' and
the consolidated financial statements, including the notes thereto, of the
Company included elsewhere in this Report. Except for the historical information
contained herein, the discussion in this Report contains or may contain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed herein. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed herein and elsewhere in this Report. Historical results are not
necessarily indicative of trends in operating results for any future periods.
For example, labor interruptions at customers' plants during 1997 have resulted
in lost sales and earnings before income taxes for the Company of $1.5 million
and $0.5 million, respectively. In addition, a recent strike at Vassar has
resulted in an estimated $0.3 million in increased costs bringing the total
strike related reduction in earnings before income taxes to $0.8 million over
the 1997 fiscal year.
12
<PAGE>
RESULTS OF OPERATIONS
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
(Pro Forma and Historical)
The following table sets forth certain financial data for the Company both
on a pro forma basis (giving effect to the Acquisitions) and on a historical
basis. The pro forma information may not be indicative of actual results that
would have been achieved if the Acquisitions had occurred at the beginning of
the periods. See 'Pro Forma Financial Data' included as Exhibit 99.1 to this
Report and the financial statements and notes thereto appearing elsewhere in
this Report.
RESULTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
PRO FORMA COMBINED YEAR ENDED
YEAR ENDED DECEMBER 31,
DECEMBER 31, ------------------
1997 1996 1997
------------------ ------- -------
<S> <C> <C> <C>
Net sales.......................................................... $ 61,632 $16,187 $24,363
Cost of goods sold................................................. 44,743 10,587 16,777
------------------ ------- -------
Gross profit....................................................... 16,889 5,600 7,586
Selling, general, and administrative expense....................... 11,225 5,088 5,698
------------------ ------- -------
Operating profit................................................... 5,664 512 1,888
Interest expense................................................... 1,333 555 755
Sundry, net........................................................ (376) (64) (14)
------------------ ------- -------
Earnings (loss) before income taxes and minority interest.......... 4,707 (69) 1,119
Minority interest................................................ 23 -- 23
Income tax expense................................................. 1,592 7 379
------------------ ------- -------
Net earnings (loss)................................................ $ 3,092 $ (76) $ 717
------------------ ------- -------
------------------ ------- -------
</TABLE>
Net Sales. The Company's pro forma combined net sales increased by $45.4
million, or 280.8%, to $61.6 million for the year ended December 31, 1997 from
$16.2 million on a historical basis for the year ended December 31, 1996. The
increase in sales is primarily a result of the acquisition of Utilase which
contributed sales of $17.4 million, or 107.4%, and the acquisition of NMP which
contributed sales of $24.8 million, or 153.1%.
The Company's historical net sales increased by $8.2 million, or 50.5%, to
$24.4 million from $16.2 million. The increase in sales is due to the
acquisition of Utilase increasing sales $2.5 million, or 15.4%, the acquisition
of NMP increasing sales $2.5 million, or 15.4%, the acquisition of UPP
increasing sales $1.1 million, or 6.8%, and an increase in Prestolock's sales of
$1.2 million, or 7.4%, to $6.7 million from $5.5 million, which was primarily
attributable to new business for the GM and Chrysler glovebox latches.
Cost of Goods Sold. The Company's pro forma combined cost of goods sold
increased $34.2 million, or 322.6%, to $44.7 million for the year ended December
31, 1997 from $10.6 million on a historical basis for the year ended December
31, 1996. As a percent of net sales, pro forma combined cost of goods sold
increased to 72.6% from 65.4% of pro forma net sales primarily due to the
acquisition of NMP which had a cost of goods sold as a percent of net sales of
87.3% for the year ended December 31, 1997.
The Company's historical cost of goods sold increased $6.2 million, or
58.5%, to $16.8 million for the year ended December 31, 1997 from $10.6 million
for the year ended December 31, 1996. As a percent of net sales, cost of goods
sold increased to 68.9% from 65.4% of net sales primarily due to the acquisition
of NMP which had a cost of goods sold as a percent of net sales of 88.9% for the
year ended December 31, 1997.
13
<PAGE>
Gross Profit. As a result of the foregoing factors, the Company's pro
forma combined gross profit increased $11.3 million, or 201.8%, to $16.9 million
for the year ended December 31, 1997 from $5.6 million for the year ended
December 31, 1996.
The Company's gross profit increased by $2.0 million, or 35.7%, to $7.6
million for the year ended December 31, 1997 from $5.6 million for the prior
year period.
Selling, General and Administrative Expenses. Pro forma combined selling,
general and administrative expenses increased $6.1 million, or 119.6%, to $11.2
million for the year ended December 31, 1997 from $5.1 million for the year
ended December 31, 1996. For the period ended December 31, 1997, selling,
general and administrative expenses as a percent of net sales was 18.2%, as
compared to 31.4% for the year ended December 31, 1996. Selling, general and
administrative expenses increased due to the acquisition of Utilase by $3.9
million, or 87.2%, and due to the acquisition of NMP by $2.1 million, or 41.2%.
Selling, general and administrative expenses of the Company increased by
$0.6 million, or 12.0%, for the year ended December 31, 1997 as compared to the
year ended December 31, 1996, due to the acquisitions of Utilase and NMP.
Operating Profit. As a result of the foregoing factors, the Company's pro
forma combined operating profit increased by $5.2 million, or 1,040%, to $5.7
million for the year ended December 31, 1997 from $0.5 million for the prior
year.
The Company's operating profit increased by $1.4 million, or 280.0%, to
$1.9 million for the year ended December 31, 1997 from $0.5 million for the year
ended December 31, 1996.
Interest Expense. Pro forma combined interest expense increased $0.8
million, or 160.0%, to $1.3 million for the year ended December 31, 1997 from
$0.5 million for the year ending December 31, 1996. The increase was primarily
due to the acquisition of Utilase.
The Company's interest expense increased $0.2 million, or 36.0%, to $0.8
million for the year ended December 31, 1997 from $0.6 million for the prior
year period, primarily due to the financing obtained to support increased sales
as well as the financing of the Utilase and NMP acquisitions.
Net Earnings. As a result of the foregoing factors, the Company's pro
forma combined net earnings increased by $3.2 million to $3.1 million for the
period ended December 31, 1997 from $(0.1) million for the period ended December
31, 1996, after providing for income tax.
The Company's consolidated net earnings increased by $0.8 million to $0.7
million for the year ended December 31, 1997 from $(0.1) million for the year
ended December 31, 1996, primarily due to the acquisitions of Utilase, NMP and
UPP.
Fiscal Year Ended December 31, 1996 Compared to Fiscal Year Ended December 31,
1995 (Historical)
Net Sales. Net sales increased $11.8 million, or 264%, to $16.2 million
for the year ended December 31, 1996 from $4.4 million for the year ended
December 31, 1995. The increase was primarily attributable to the acquisitions
of Monroe and Vassar and new business at Prestolock relating to glovebox latches
for GM. The acquisition of Monroe increased sales by $5.1 million, or 114.8%,
for the year ended December 31, 1996. The acquisition of Vassar increased sales
by $5.5 million, or 122.9%, for the year ended December 31, 1996. The Prestolock
sales increased the Company's net sales by $1.1 million, or 24.7%, to $5.5
million for the year ended December 31, 1996.
Cost of Goods Sold. Cost of goods sold increased $7.7 million, or 263.7%,
to $10.6 million for the year ended December 31, 1996 from $2.9 million for the
year ended December 31, 1995. As a percentage of net sales, cost of goods sold
decreased to 65.4% for the year ended December 31, 1996 from 65.5% for the year
ended December 31, 1995. The increase in cost of goods sold was primarily
attributable to the acquisitions of Monroe and Vassar which increased the
Company's cost of goods sold by $2.0 million and $4.4 million, respectively, for
the year ended December 31, 1996, and the increased expenses at Prestolock
related to the Company's investment in developing future glovebox latches.
14
<PAGE>
Gross Profit. As a result of the foregoing factors, gross profit increased
$4.1 million, or 265.6%, to $5.6 million for the year ended December 31, 1996
from $1.5 million for the year ended December 31, 1995.
Selling General and Administrative Expenses. Selling, general and
administrative expenses increased $4.1 million, or 393.8%, to $5.1 million for
the year ended December 31, 1996 from $1.0 million for the year ended December
31, 1995. The increase in selling, general and administrative expenses was
primarily attributable to: (i) the Monroe and Vassar acquisitions, which
increased such expenses by $1.6 million and $1.0 million, respectively, for the
year ended December 31, 1996; (ii) an increase of $1.1 million for the year
ended December 31, 1996, due to the establishment of Noble as a holding company
and a bonus to Robert J. Skandalaris; and (iii) an increase of $0.3 million, or
34.4%, at Prestolock due to increased commissions on net sales, increased
personnel and expenses incurred to move administration and engineering to
Michigan.
Operating Profit. As a result of the foregoing factors, operating profit
increased $10,849, or 2.2%, to $0.5 million for the year ended December 31,
1996.
Interest Expense. Interest expense increased $0.5 million, to $0.6 million
for the year ended December 31, 1996 from $23,836 for the year ended December
31, 1995. This increase was primarily attributable to the financing of the
acquisitions of Monroe and Vassar. Included in the interest expense for 1996 is
imputed interest of $0.12 million on a related party note arising from the
acquisition of Monroe.
Net Earnings (Loss). As a result of the foregoing factors, net earnings
decreased $0.5 million to a net loss of $76,363 for the year ended December 31,
1996 from net earnings of $0.4 million for the prior year after providing for
the income tax effect.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements have historically been satisfied through a
combination of cash flow from operations, equipment financing, bank financing
and loans from shareholders. The Company's working capital needs and capital
equipment requirements have increased as a result of the growth of the Company
and are expected to continue to increase as a result of anticipated growth in
laser welded blanks, glovebox latch, and assembly operations. The anticipated
increase in required working capital and capital equipment requirements, are
expected to be met from the cash flow from operations, equipment financing and
revolving credit borrowings. As of December 31, 1997, the Company had working
capital of approximately $5.6 million.
The Company generated cash flow from operations of $0.2 million for the
year ended December 31, 1997. Cash flow from operating activities in the period
was primarily the result of net earnings, depreciation and amortization offset
by changes in working capital necessary to support increased sales. The Company
used cash in investing activities of $(12.5) million for the year ended December
31, 1997. Cash used in investing activities during the year ended December 31,
1997 was primarily the result of the purchase of NMP and Utilase and the
purchase of property, plant and equipment. The Company generated $14.2 million
in cash flow from financing activities for the year ended December 31, 1997. The
financing activities in the period were primarily the result of net repayments
of bank debt used to finance the Company's operations, long term debt incurred
for the purchase of Utilase, and the proceeds from the Offering.
On December 30, 1997, the Company entered into an Amended and Restated Loan
Agreement with Comerica Bank which provides the Company with a $35 million
revolving line of credit facility (the 'New Comerica Line'). The New Comerica
Line has a term of three years, is secured by a first priority security interest
in the assets of the Company and its subsidiaries and provides for the issuance
of up to $1 million in standby or documentary letters of credit. The New
Comerica Line replaces the Company's and its subsidiaries' approximately $3.5
million of prior existing revolving credit facilities and approximately $3.7
million in original principal amount of term debt ($2.9 of which was still
outstanding at December 30, 1997). The Company paid an up front fee of 25 basis
points ($87,500) to Comerica in connection with the New Comerica Line.
15
<PAGE>
The New Comerica Line may be utilized for general corporate purposes,
including working capital and acquisition financing. The New Comerica Line
provides the Company with borrowing options for advances under the facility of
either a 'Eurocurrency Rate' (Comerica's Eurodollar rate as adjusted for
reserves and other regulatory requirements) or a 'Base Rate' (the higher of
Comerica's prime rate or the federal funds rate plus 200 basis points), plus an
applicable margin (ranging from 0% to 2.25%) based upon the Company's ratio of
funded debt to EBITDA (earnings before interest expense, income taxes,
depreciation and amortization expense). The New Comerica Line is subject to
customary financial and other covenants including, but not limited to,
limitations on payment of dividends, limitations on consolidations, mergers, and
sales of assets, and bank approval on acquisitions over $20 million.
The Company has, on a pro forma combined basis, from time to time been in
violation of certain of its financial debt ratio covenants and covenants
relating to the issuance of preferred stock and the payment of preferred stock
dividends, requiring it to obtain waivers of default from its lenders. In
addition, the Company has from time to time had to negotiate extensions relating
to the payment of several of its debt obligations. As of the date of this
Report, however, the Company is in compliance with all of its debt covenants.
The liquidity provided by the reduction of the Company's existing credit
facilities, combined with cash flow from operations is expected to be sufficient
to meet the Company's currently anticipated working capital and capital
expenditure needs for existing debt service and operations, for at least 12
months. There can be no assurance, however, that such funds will not be expended
prior thereto due to changes in economic conditions or other unforeseen
circumstances, requiring the Company to obtain additional financing prior to the
end of such 12-month period. In addition, the Company intends to pursue, as part
of its business strategy, future growth through opportunistic acquisitions of
assets or companies involved in the automotive component supply industry, which
acquisitions may involve the expenditure of significant funds. Depending upon
the nature, size and timing of future acquisitions, the Company may be required
to obtain additional debt or equity financing in connection with such future
acquisitions. There can be no assurance, however, that additional financing will
be available to the Company, when and if needed, on acceptable terms or at all.
INFLATION
Inflation generally affects the Company by increasing the interest expense
of floating rate indebtedness and by increasing the cost of labor, equipment and
raw materials. The Company does not believe that inflation has had any material
effect on its business over the past three years.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
NOBLE INTERNATIONAL, LTD. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants..................................... 17
Consolidated Balance Sheets--December 31, 1997 and 1996................................ 18
Consolidated Statements of Operations--For the years ended December 31, 1997, 1996 and
1995................................................................................. 20
Consolidated Statement of Shareholders' Equity--For the years ended December 31, 1997,
1996 and 1995........................................................................ 21
Consolidated Statements of Cash Flows--For the years ended December 31, 1997, 1996 and
1995................................................................................. 22
Notes to Consolidated Financial Statements............................................. 24
</TABLE>
16
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Noble International, Ltd.
We have audited the accompanying consolidated balance sheets of Noble
International, Ltd. (a Michigan corporation) and Subsidiaries as of December 31,
1997 and 1996 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. 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 generally accepted auditing
standards. 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 our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above,
present fairly, in all material respects, the consolidated financial position of
Noble International, Ltd. and Subsidiaries as of December 31, 1997 and 1996, and
the consolidated results of their operations and their consolidated cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
/s/ Grant Thornton LLP
Detroit, Michigan
February 12, 1998
17
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 471,412 $ 2,352,814
Accounts receivable, trade, net of allowance for doubtful accounts of $10,148
and $168,932 at December 31, 1996 and 1997, respectively.................... 1,566,551 11,507,622
Due from shareholder........................................................... 60,000 --
Inventories.................................................................... 2,285,361 5,276,420
Prepaid expenses and other assets.............................................. 177,012 290,832
Deferred income taxes.......................................................... -- 158,000
----------- -----------
Total current assets................................................... 4,560,336 19,585,688
Property, plant and equipment, net............................................... 1,848,759 20,891,089
Other assets:
Goodwill, net of accumulated amortization of $272,007 and $645,307 at December
31, 1996 and 1997, respectively............................................. 5,026,254 24,822,746
Covenants not to compete, net of accumulated amortization of $16,667 at
December 31, 1997........................................................... -- 1,383,333
Sundry......................................................................... 97,164 418,305
----------- -----------
5,123,418 26,624,384
----------- -----------
$11,532,513 $67,101,161
----------- -----------
----------- -----------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
LIABILITIES AND EQUITY
Current Liabilities:
Note payable to bank........................................................... $ 1,402,708 $ --
Current maturities of long-term debt........................................... 1,059,021 717,285
Current maturities of notes payable--related parties........................... 882,613 2,386,792
Current maturities of capital lease obligations -- 74,891
Accounts payable............................................................... 1,359,127 7,055,130
Accrued liabilities............................................................ 666,673 3,495,552
Income taxes payable........................................................... 7,200 291,848
----------- -----------
Total current liabilities................................................. 5,377,342 14,021,498
Long-term debt, excluding current maturities..................................... 3,830,477 13,766,144
Notes payable--related parties, excluding current maturities..................... 1,500,000 10,286,281
Capital lease obligations, excluding current maturities.......................... -- 183,150
Investment in unconsolidated subsidiary.......................................... 95,239 --
Deferred income taxes............................................................ -- 384,000
Commitments and contingencies (Note I)........................................... -- --
Preferred stock of subsidiary.................................................... -- 850,000
Shareholders' equity:
Preferred stock, $100 par value, 10% cumulative, authorized 150,000 shares..... -- --
Common stock, no par value, authorized 20,000,000 shares, issued and
outstanding 3,726,482 and 7,160,168 shares in 1996 and 1997, respectively... 1,036,634 27,344,242
Retained earnings (accumulated deficit)........................................ (307,179) 265,846
----------- -----------
729,455 27,610,088
----------- -----------
$11,532,513 $67,101,161
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
19
<PAGE>
NOBLE INTERNATIONAL LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
---------- ----------- -----------
<S> <C> <C> <C>
Net sales........................................................ $4,442,225 $16,186,811 $24,363,138
Cost of goods sold............................................... 2,910,696 10,587,175 16,776,942
Gross profit.............................................. 1,531,529 5,599,636 7,586,196
Selling, general and administrative expenses..................... 1,030,263 5,087,521 5,698,331
---------- ----------- -----------
Operating profit.......................................... 501,266 512,115 1,887,865
Other income (expense):
Equity in loss of unconsolidated subsidiary.................... -- (95,239) (125,884)
Interest income................................................ -- 4,632 48,852
Interest expense............................................... (23,836) (555,058) (754,800)
Sundry, net.................................................... 29,036 64,387 62,853
---------- ----------- -----------
5,200 (581,278) (768,979)
---------- ----------- -----------
Earnings (loss) before income taxes and minority
interest............................................... 506,466 (69,163) 1,118,886
Minority interest................................................ 67,195 -- 22,961
---------- ----------- -----------
Earnings (loss) before income taxes.............................. 439,271 (69,163) 1,095,925
Income tax expense............................................. 30,562 7,200 378,900
---------- ----------- -----------
Net earnings (loss)....................................... 408,709 (76,363) 717,025
Preferred stock dividends........................................ -- -- 144,000
---------- ----------- -----------
Earnings (loss) on common shares................................. $ 408,709 $ 76,363 $ 573,025
---------- ----------- -----------
---------- ----------- -----------
Basic and diluted earnings (loss) per common share............... $ (.02) $ .13
----------- -----------
----------- -----------
Proforma earnings data:
Earnings before income taxes as reported....................... $ 439,271
Pro forma income tax expense................................... 169,000
----------
Pro forma net earnings......................................... $ 270,271
----------
----------
Pro forma net earnings per share............................... $ .10
----------
----------
</TABLE>
The accompanying notes are an integral part of these financial statements
20
<PAGE>
NOBLE INTERNATIONAL LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
RETAINED
EARNINGS
PREFERRED COMMON (ACCUMULATED
STOCK STOCK DEFICIT) TOTAL
---------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 (2,673,704 shares)... $ -- $ 341,909 $ 12,817 $ 354,726
Dividend payable to Prestolock shareholders..... -- -- (139,067) (139,067)
Net earnings.................................... -- -- 408,709 408,709
---------- ----------- ------------ -----------
Balance at December 31, 1995.................... -- 341,909 282,459 624,368
Transfer of capital attributable to termination
of Prestolock S-Corporation election.......... -- 513,275 (513,275) --
Net loss........................................ -- -- (76,363) (76,363)
Issuance of 1,052,778 shares of common stock.... -- 181,450 -- 181,450
---------- ----------- ------------ -----------
Balance at December 31, 1996.................... -- 1,036,634 (307,179) 729,455
Issuance of 38,000 shares of preferred stock.... 3,446,600 -- -- 3,446,600
Issuance of 198,524 shares of common stock...... -- 402,900 -- 402,900
Issuance of 3,300,000 shares of common stock.... -- 26,258,108 -- 26,258,108
Dividends paid on preferred stock............... -- -- (144,000) (144,000)
Redemption of 38,000 shares of preferred
stock......................................... (3,446,600) -- -- (3,446,600)
Redemption of 64,838 shares of common stock..... -- (353,400) -- (353,400)
Net earnings.................................... -- -- 717,025 717,025
---------- ----------- ------------ -----------
Balance at December 31, 1997.................... $ -- $27,344,242 $ 265,846 $27,610,088
---------- ----------- ------------ -----------
---------- ----------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
21
<PAGE>
NOBLE INTERNATIONAL LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
---------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................................ $ 408,709 $ (76,363) $ 717,025
Adjustments to reconcile net earnings to net cash provided by
operations
Loss on disposal of asset................................. -- 1,571 --
Depreciation of property, plant and equipment............. 103,040 247,339 588,878
Provision for doubtful accounts........................... 8,205 -- 200,715
Amortization of goodwill.................................. -- 265,885 389,967
Deferred income taxes..................................... -- -- 71,900
Equity in loss of unconsolidated subsidiary -- 95,239 125,884
Minority interest......................................... 67,195 -- --
Stock issued in exchange for services..................... -- 32,000 --
Changes in operating assets and liabilities, net of effects of
acquisitions
Increase in accounts receivable........................... (208,401) (63,963) (565,177)
(Increase) decrease in inventories........................ (220,874) (14,760) 81,949
Decrease (increase) in prepaid expenses................... 26,379 (173,020) (60,948)
Decrease (increase) in other assets....................... 5,544 -- (88,833)
Increase (decrease) in accounts payable................... 185,872 488,947 (1,818,435)
Increase in income taxes payable.......................... -- 7,200 284,648
Increase in accrued liabilities........................... 16,170 102,427 235,512
---------- ----------- -----------
Net cash provided by operating activities............ 391,839 912,502 163,085
Cash flows from investing activities:
Purchase of property, plant and equipment...................... (202,451) (362,801) (1,867,803)
Acquisitions of businesses, net of cash acquired............... -- 632,947 (9,251,567)
Payment for covenants not-to-compete........................... -- -- (1,400,000)
---------- ----------- -----------
Net cash (used in) provided by investing
activities........................................ (202,451) 270,146 (12,519,370)
Cash flows from financing activities:
Proceeds from notes payable--related parties................... -- 1,310,000 --
Repayments of notes payable--related parties................... (60,348) (26,499) (2,315,000)
Capital lease payments......................................... (49,600) -- (6,873)
Proceeds from issuance of common stock......................... -- -- 26,611,508
Proceeds from issuance of preferred stock...................... -- -- 3,446,600
Redemption of preferred stock.................................. -- -- (3,446,600)
Acquisition of common stock.................................... -- -- (353,400)
Prestolock shares acquired by minority shareholders............ 10,000 -- --
Redemption of preferred stock of subsidiary.................... -- -- (75,000)
</TABLE>
22
<PAGE>
NOBLE INTERNATIONAL LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
--------- ----------- ------------
<S> <C> <C> <C>
Cash flows From financing activities--(Continued)
Dividends paid................................................... -- -- (144,000)
Distributions to shareholders of acquired entities............... (62,009) (1,282,859) --
Proceeds from long-term debt..................................... -- 4,213,151 --
Payments on long-term debt....................................... (20,348) (6,164,034) (11,764,018)
Net proceeds from note payable to bank........................... (9,081) 1,237,708 2,284,470
--------- ----------- ------------
Net cash (used in) provided by financing activities.... (191,386) (712,533) 14,237,687
--------- ----------- ------------
Net (decrease) increase in cash........................ (1,998) 470,115 1,881,402
Cash at beginning of period........................................ 3,295 1,297 471,412
--------- ----------- ------------
Cash at end of period.............................................. $ 1,297 $ 471,412 $ 2,352,814
--------- ----------- ------------
--------- ----------- ------------
Supplemental cash flow disclosure
Cash paid for:
Interest...................................................... $ 22,000 $ 21,000 $ 843,292
--------- ----------- ------------
--------- ----------- ------------
Taxes......................................................... $ -- $ 8,000 $ 30,000
--------- ----------- ------------
--------- ----------- ------------
Fair value of assets acquired, including goodwill.................. $ 6,207,434 $ 50,238,224
Liabilities assumed................................................ (907,436) (30,852,103)
Debt issued........................................................ (6,221,719) (10,134,554)
Cash paid.......................................................... 288,774 --
----------- ------------
Net cash (acquired) paid........................................... $ (632,947) $ 9,251,567
----------- ------------
----------- ------------
</TABLE>
Supplemental Disclosure of Non-cash Financing Activity:
During 1995, the Company entered into capital lease transactions for
equipment aggregating $109,491.
During 1996, the Company borrowed $500,000 under a land contract to
purchase land and a building owned by a former shareholder of Monroe.
During 1996, the Company financed the $6,350,000 acquisition price of
a subsidiary, of which, through December 31, 1996, $5,850,000 had been
paid.
During 1996, notes payable--related party of $61,040 were retired by
the issuance of 50,132 shares of the Company's common stock.
During 1997, the Company acquired Skandy Corp. by issuance of 133,686
shares of common stock valued at $49,500.
During 1997, the Company financed the purchase of $883,293 of
machinery and equipment by the issuance of notes payable.
During 1997, the Company financed $10,134,554 of the $18,334,554
acquisition price of Utilase.
During 1997, the Company converted $596,551 of accounts payable to
notes payable related party.
The accompanying notes are an integral part of these financial statements
23
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE A-- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements as of and for the year
ended December 31, 1996, include Noble International, Ltd and its wholly-owned
subsidiaries, Prestolock International, Ltd. ('Prestolock'); Monroe Engineering
Products, Inc. ('Monroe') and Cass River Coating, Inc. (dba Vassar Industries,
'Vassar'). ('Noble' or collectively the 'Company'). At December 31, 1997, and
for the year then ended, the consolidated financial statements also include
Skandy Corp. ('Skandy'), Utilase Production Process, Inc. ('UPP'), Noble Metal
Products, Inc. (formerly DCT Component Systems, Inc. 'NMP'), Utilase, Inc.
('Utilase') and Noble Land Holdings, Inc.
The consolidated financial statements as of December 31, 1995 and for year
then ended include Noble and Prestolock. Prior to January 1, 1996, Noble and
Prestolock had a common controlling shareholder. Effective January 1, 1996,
Noble acquired Prestolock by issuing 2,673,704 shares of Noble common stock in
exchange for all of the issued and outstanding stock of Prestolock. This
transaction has been accounted for in a manner similar to a pooling of interests
due to the common control.
The effect of the Prestolock consolidation on net earnings and related per
share amounts for the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Increase in net earnings............................................... $348,924
Increase in earnings per share......................................... $ .12
</TABLE>
The assets of Prestolock were recorded at their historical cost basis and
no goodwill was recorded.
All significant intercompany balances and transactions have been eliminated
in consolidation.
NATURE OF OPERATIONS
Noble is a holding company which through its subsidiaries manufactures a
variety of components and provides design, engineering, painting, assembly and
other services primarily for the automotive industry. One of its subsidiaries is
a distributor of tooling components. (see Note L) The principal market for its
products is the United States.
SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all investments with a
maturity of less than three months are considered to be cash equivalents.
24
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE A-- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--(CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market.
UNBILLED CUSTOMER TOOLING
The costs to manufacture and supply customer-owned tooling are recorded as
unbilled tooling costs when incurred. Amounts incurred are charged to cost of
sales and revenue is recognized when the tooling is shipped and billed to
customers.
PROPERTY, PLANT AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided for
using the straight line and various accelerated methods over the estimated
useful lives of the assets which range from 5 to 39 years for buildings and
improvements and 3 to 10 years for machinery and equipment. Expenditures for
maintenance and repairs are charged to expense as incurred.
GOODWILL
Goodwill is the excess of cost over the fair value of net assets acquired
and is amortized over a 20 year period on the straight line method. On an
ongoing basis, management reviews the valuation and amortization of goodwill. As
part of the review, the Company estimates the value of and the estimated
undiscounted future net earnings expected to be generated by the related
subsidiary to determine that no impairment has occurred.
INCOME TAXES
Through December 31, 1995, Prestolock was taxed under Subchapter S of the
Internal Revenue Code. As a result, federal income taxes were payable personally
by the shareholders of Prestolock. Accordingly, the financial statements for
1995 do not provide for federal income taxes attributable to Prestolock's
earnings.
The Company records the provision for federal and state income taxes
pursuant to Statement of Financial Accounting Standards No. 109, 'Accounting for
Income Taxes.' ('Statement 109')
Under the asset and liability method mandated by Statement 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and the effect
of operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the period that includes
the enactment date.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include long-term debt. The carrying
value of the debt approximates its estimated fair value based upon rates and
terms available for loans with similar characteristics.
25
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE A-- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--(CONTINUED)
MINORITY INTEREST
Minority interest at 1995 represents the minority shareholders' interest in
Prestolock. Minority interest amounted to 12% at December 31, 1995. Dividends
paid on preferred stock issued by NMP in 1997 are reflected as minority
interest.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common
shares outstanding during each year. The 133,686 shares issued in January 1997
in connection with the Skandy transaction (Note I) have been deemed outstanding
for all periods presented for purposes of computing earnings per share. The
weighted average number of shares outstanding for both basic and diluted
earnings per share during 1995, 1996 and 1997 was 2,807,390, 3,820,390,
4,285,134, respectively. The warrants issued to the Company's underwriters in
connection with its initial public offering (Note K) were not included in the
computation of diluted earnings per share for 1997 as the effect would be
antidilutive.
During 1997, the Financial Accounting Standards Board (the 'FASB') issued
Statement of Financial Accounting Standards ('SFAS') No. 128, 'Earnings Per
Share', which is effective for financial statements issued after December 15,
1997. The new standard eliminates primary and fully diluted earnings per share
and requires presentation of basic and diluted earnings per share together with
disclosure of how the per share amounts were computed. Basic earnings per share
excludes dilution and is computed by dividing income available to common
shareholders by the weighted-average common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. The Company adopted this pronouncement at
December 31, 1997. All per share data in the accompanying consolidated financial
statements has been restated to reflect application of this new pronouncement.
NEW PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, 'Reporting of Comprehensive
Income' ('SFAS 130'), which establishes standards for reporting and display of
comprehensive income and its components (revenues, expense, gains, and losses)
in a full set of financial statements. This statement also requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. This statement
is effective for fiscal years beginning after December 15, 1997. Earlier
application is permitted. Reclassification of financial statements for earlier
periods provided for comparative purposes is required. The Company does not
anticipate that adoption of SFAS 130 will have material effect on the
consolidated financial statements.
In June 1997, the FASB issued SFAS No. 131, 'Disclosure about Segments of
an Enterprise and Related Information' ('SFAS 131'), which establishes standards
for the way that public business
26
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE A-- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES--(CONTINUED)
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. This
statement also establishes standards for related disclosures about products and
services, geographic areas, and major customers. This statement requires the
reporting of financial and descriptive information about an enterprise's
reportable operating segments. This statement is effective for financial
statements for periods beginning after December 15, 1997. In the initial year of
adoption, comparative information for earlier years is to be restated. The
Company does not anticipate that the adoption of SFAS 131 will have a material
effect on the consolidated financial statements.
NOTE B--INVENTORIES
The major components of inventories were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Raw materials and purchased parts.............................. $ 434,776 $1,116,708
Work in process................................................ 4,987 383,069
Finished goods................................................. 1,565,427 2,765,339
Unbilled customer tooling...................................... 280,171 1,011,304
---------- ----------
$2,285,361 $5,276,420
---------- ----------
---------- ----------
</TABLE>
NOTE C--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
---------- -----------
<S> <C> <C>
Buildings and improvements.................................... $1,199,077 $ 5,556,196
Machinery and equipment....................................... 881,813 11,477,983
Furniture and fixtures........................................ 93,445 798,984
---------- -----------
2,174,335 17,833,163
Less accumulated depreciation and amortization................ 379,376 962,858
---------- -----------
1,794,959 16,870,305
Land.......................................................... 53,800 753,800
Equipment in process.......................................... -- 3,266,984
---------- -----------
$1,848,759 $20,891,089
---------- -----------
---------- -----------
</TABLE>
NOTE D--LINE OF CREDIT AND LONG-TERM DEBT
At December 31, 1996, the Company, had a secured line of credit facility
with a bank, which allowed it to borrow up to $3,000,000 subject to qualified
accounts receivable and inventory. At December 31, 1996 the outstanding balance
was $1,402,708 and availability was $2,163,000. Interest was payable monthly at
one percent over the bank's prime lending rate. The facility expired on April
30, 1997. Subsequent amendments to the agreement increased the borrowing base to
$3,500,000. At December 30, 1997, the Agreement was amended and the line of
credit was replaced with a revolving credit facility.
27
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE D--LINE OF CREDIT AND LONG-TERM DEBT--(CONTINUED)
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
---------- -----------
<S> <C> <C>
Revolving credit facility dated December 30, 1997 with interest at prime less 1%
or a Eurodollar based rate, elected by the Company at the time of each advance,
(effective rate of 7.5% as December 31, 1997). The facility provides for
borrowings up to $35,000,000. Interest is payable monthly on prime rate based
advances and no less frequently than quarterly on Eurodollar rate based
advances. The agreement contains covenants that require the Company to maintain
certain financial ratios, limits the dollar value of annual capital expenditures
and restricts the payment of dividends. The facility is collateralized by
substantially all of the Company's assets and matures on December 31, 2000...... $ -- $11,810,997
Term note, payable in monthly installments of $78,125 commencing on January 1,
1997, plus interest at 1.5% above the bank's prime lending rate. The note was
collateralized by accounts receivable, inventory, equipment, and the issued and
outstanding common stock of the company and the Company's subsidiaries. The note
is due December 2000............................................................ 3,750,000 --
Term note, payable in monthly installments, of $5,600, including interest at one
percent above the bank's prime lending rate (effective rate of 8.5% at December
31, 1997). The note is secured by real estate and is due September 2001......... 463,151 439,137
Unsecured term note, payable in monthly installments of $2,500 plus interest at a
rate of 5%. The note is due September 2001...................................... 141,750 111,750
Land contract, payable in monthly installments of $7,280, including interest at a
rate of 8%. The note is secured by a building and is due September 2004......... 503,331 454,476
Term loans, payable in monthly installments of $15,000, including interest at a
rate of 8%, increasing to $20,000 in August, 1998............................... -- 185,175
Unsecured term loan, calling for monthly interest payments at a rate of 12%,
through July 1, 1998, thereafter principal payments of $6,879 plus interest at a
rate of 8% through June 1, 2003................................................. -- 412,763
Term loans, payable in monthly installments of $31,542, including interest at a
rate of 8.25%. The loans are collateralized by various property and equipment
and are due in November, 2000................................................... -- 919,365
Other............................................................................. 31,266 149,941
---------- -----------
4,889,498 14,483,604
Less current maturities........................................................... 1,059,021 717,285
---------- -----------
$3,830,477 $13,766,319
---------- -----------
---------- -----------
</TABLE>
28
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE D--LINE OF CREDIT AND LONG-TERM DEBT--(CONTINUED)
The aggregate maturities of long-term debt by year as of December 31, 1997
are as follows:
<TABLE>
<S> <C>
1998................................................................ $ 717,285
1999................................................................ 546,003
2000................................................................ 12,349,029
2001................................................................ 518,703
2002................................................................ 155,339
Thereafter.......................................................... 197,245
-----------
$14,483,604
-----------
-----------
</TABLE>
NOTE E--LEASES
The Company leases buildings and equipment under operating leases with
unexpired terms ranging from a month to month basis to eight years. Rent expense
for all operating leases was approximately $69,900, $193,000 and $355,000 for
the years ended December 31, 1995, 1996 and 1997, respectively.
The future minimum lease payments under these operating leases are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED RELATED NON-RELATED
DECEMBER 31, PARTY PARTY TOTAL
- ---------------------------------------------------------- ---------- ----------- ----------
<S> <C> <C> <C>
1998...................................................... $ 391,372 $ 278,667 $ 670,039
1999...................................................... 403,114 268,040 671,154
2000...................................................... 415,207 257,412 672,619
2001...................................................... 427,835 257,412 685,247
2002...................................................... 144,404 278,236 422,640
Thereafter................................................ -- 655,200 655,200
---------- ----------- ----------
$1,781,932 $ 1,994,967 $3,776,899
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
The Company has capital lease agreements for computer equipment and
machinery. At December 31, 1996 and 1997, property and equipment recorded under
capital lease includes $125,529 and $303,646, respectively and accumulated
depreciation includes $50,004 and $18,922, respectively.
The future minimum lease payments under these capital leases are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, AMOUNT
- ----------------------------------------------------------------------- --------
<S> <C>
1998................................................................... $ 96,433
1999................................................................... 69,748
2000................................................................... 58,149
2001................................................................... 56,302
2002................................................................... 25,221
--------
Total.................................................................. 305,853
Less amount representing interest...................................... (47,812)
--------
Present value of net minimum lease payments............................ 258,041
Less amount representing current portion............................... (74,891)
--------
Non-current portion.................................................... $183,150
--------
--------
</TABLE>
29
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE F--INCOME TAXES
Income taxes have been charged to operations as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1996 1997
------- ------------ --------
<S> <C> <C> <C>
Current:
Federal..................................................... $ -- $7,200 $307,000
State and local............................................. 30,562 -- --
------- ------------ --------
30,562 7,200 307,000
Deferred:
Federal..................................................... -- -- 71,900
------- ------------ --------
$30,562 $7,200 $378,900
------- ------------ --------
------- ------------ --------
</TABLE>
A reconciliation of the actual federal income tax expense to the expected
amounts computed by applying the statutory tax rate percent to earnings or
losses before income taxes is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1996 1997
--------- ------------ ---------
<S> <C> <C> <C>
Expected federal income tax (benefit)...................... $ 149,350 $(23,500) $ 373,000
Prestolock earnings not subject to tax..................... (118,630) -- --
Nondeductible items........................................ -- 10,200 20,000
Utilization of net operating loss.......................... (20,900) -- --
State taxes................................................ (10,391) -- --
Increase in valuation allowance............................ -- 15,000 43,000
Surtax exemption and other, net............................ 571 5,500 (57,100)
--------- ------------ ---------
Actual income tax expense.................................. $ -- $ 7,200 $ 378,900
--------- ------------ ---------
--------- ------------ ---------
</TABLE>
Deferred income tax assets and liabilities at December 31, 1996 are not
significant. The tax effects of temporary differences that give rise to
significant deferred tax assets and liabilities at December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
DEFERRED DEFERRED TAX
TAX ASSETS LIABILITIES
---------- ------------
<S> <C> <C>
Depreciation and amortization...................................... $ -- $384,000
Accrued expenses not currently deductible.......................... 158,000 --
Investment in unconsolidated subsidiary............................ 75,000 --
Net operating loss carryovers...................................... 144,000 --
---------- ------------
377,000 384,000
Less: valuation allowance.......................................... (219,000) --
---------- ------------
$158,000 $384,000
---------- ------------
---------- ------------
</TABLE>
At December 31, 1997, the Company had approximately $423,000 in net
operating loss carryovers relating to NMP's net operating loss for the period
from January 1, 1997 to the date of acquisition. The use of these operating
losses is limited, in part to future taxable income, if any, generated by NMP
and maybe further limited to the amount that can be utilized on an annual basis.
These net operating loss carryovers expire in 2012.
30
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE G--RELATED PARTY TRANSACTIONS
Notes payable to related parties consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
---------- -----------
<S> <C> <C>
Land contract, payable to the former principal shareholder and an officer of
Monroe, interest only payments due monthly at an annual interest rate of 12%.
The contract is secured by real estate acquired in connection with the purchase
of Monroe and is due May 1, 1998................................................ $ 500,000 $ 500,000
Term note, payable to the former principal shareholder of, and an officer of
Monroe, with imputed interest at 8.5%. The note was secured by a personal
guaranty of an officer of Noble and was due on earlier of the closing of a
public offering of Noble's common stock or December 31, 1997.................... 487,613 --
Unsecured demand notes, payable to a related party, interest only payments due
monthly at an annual interest rate of 10%....................................... 390,000 390,000
Unsecured term note payable to the principal shareholder of Noble due in April
2000 with interest at 7%. Amounts outstanding are subordinated to the bank
financing discussed in Note D................................................... 1,000,000 1,000,000
Promissory note to DCT, Inc. payable in monthly installments of $35,901, including
interest at 10%. The note matures on June 1, 1999............................... -- 596,551
Unsecured subordinated promissory notes payable to DCT, Inc. and an officer of
Utilase due in November, 2001. Amounts outstanding are subordinated to bank
financing and accrue interest at 6% per annum. If certain principal balances are
not maintained, interest shall accrue at 4% over the prime rate not to exceed
13%. The notes restrict the payment of dividends................................ -- 10,186,522
Other............................................................................. 5,000 --
---------- -----------
2,382,613 12,673,073
Less current maturities........................................................... 882,613 2,386,792
---------- -----------
$1,500,000 $10,286,281
---------- -----------
---------- -----------
</TABLE>
The aggregate maturities of notes payable to related parties as of December
31, 1997 are as follows:
<TABLE>
<S> <C>
1998................................................................ $ 2,386,792
1999................................................................ 2,169,993
2000................................................................ 4,358,477
2001................................................................ 3,757,811
-----------
$12,673,073
-----------
-----------
</TABLE>
NOTE H--SIGNIFICANT CUSTOMERS
For the year ended December 31, 1995, three customers accounted for 68%
(42%, 14% and 12%) of net sales.
31
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE H--SIGNIFICANT CUSTOMERS--(CONTINUED)
The Company had one customer which accounted for 37% and 25% of
consolidated net sales in 1996 and 1997, respectively.
NOTE I--ACQUISITIONS
NOBLE METAL PRODUCTS, INC.
On July 1, 1996, the Company acquired 1,343 shares of common stock of NMP,
representing 37.5% of NMP's outstanding stock in exchange for $1. Effective
April 7, 1997 Noble acquired 269 shares for nominal consideration from the
president of NMP upon his severance thereby increasing Noble's ownership to 45%.
Condensed financial information of NMP as of December 31, 1996 and for the year
then ended, follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Balance Sheet Data
Current Assets............................................................. $ 7,188,030
Current Liabilities........................................................ $ 8,892,215
(Deficit).................................................................. $(3,686,546)
Operating Data
Net Sales.................................................................. $22,988,115
Gross Profit............................................................... $ 2,542,579
Net loss................................................................... $ (387,524)
</TABLE>
Concurrent with the closing of the Company's initial public offering in
November, 1997, Noble acquired the remaining issued and outstanding shares of
NMP in exchange for $1,000,000.
Simultaneously with the acquisition of the remaining NMP shares, the
Company acquired Competitive Technologies Investment Company (CTIC) an entity
controlled by the prior majority shareholder of NMP. CTIC owns the facilities
out of which NMP operates. As consideration for the purchase, the Company
assumed debt of approximately $4,400,000 underlying the properties.
The acquisition of the NMP shares in 1996 and April 1997 was accounted for
under the equity method of accounting, and accordingly the Company's
proportionate share of NMP's results of operations for the period from July 1,
1996 through November 23, 1997 is reflected in the accompanying financial
statements as equity in losses of unconsolidated affiliate. Effective with the
purchase of the remaining shares, NMP's operations have been included in the
consolidated results of operations.
MONROE ENGINEERING PRODUCTS, INC.
Effective January 1, 1996, Noble acquired all of the outstanding shares of
Monroe Engineering Products, Inc. (Monroe) in exchange for $6,350,000 payable in
installments over 16 months. At December 31, 1996, $500,000 including imputed
interest was outstanding. This was paid during 1997. The Company also acquired
the real estate utilized by Monroe for $500,000 pursuant to the terms of a land
contract which requires monthly interest payments of $4,931 for two years ending
May 1, 1998 at which point the entire principal amount is due.
Simultaneously with the acquisition, the Company entered into an Employment
and Deferred Compensation Agreement with one of the selling shareholders
providing for the employment of such
32
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE I--ACQUISITIONS--(CONTINUED)
person by the Company for 28 months and at an annual salary of $200,000 and
payments of $2,000 per month for a three year period commencing May 1, 1998.
The acquisition of Monroe has been accounted for under the purchase method,
and accordingly the results of operations of Monroe from January 1, 1996 are
included in the accompanying financial statements.
VASSAR INDUSTRIES
Effective January 1, 1996, the Company acquired all of the common stock of
Vassar in exchange for $200,000.
In addition, the Company entered into consulting agreements with the
selling shareholders of Vassar whereby the Company agreed to pay to such selling
shareholders $1,800,000 as follows: twenty-four monthly payments of $25,000
followed by sixty monthly installments of $20,000. Certain of these agreements
were amended as described below. The Company's obligations under the agreement
have been collateralized by the equipment and fixtures at Vassar.
The shareholders of Vassar retain an option to repurchase 25% of the stock
of Vassar for $1 which expires when the Company's obligations under the
consulting agreements are discharged.
During 1997, the Company and two of the selling shareholders representing
twenty percent of the commitment referred to above, amended their consulting
agreements. Pursuant to the terms of the amendment, these consultants received
an aggregate of $109,000. This payment satisfied the Company's obligations under
the amendment. In July, 1996, the Company satisfied its obligation pursuant to a
third consulting agreement by issuing 7,687 shares of its common stock. In March
1997, two of the selling shareholders sued the Company for payments allegedly
owed pursuant to their consulting agreements. The Company believes it was
entitled to cease payments under these agreements due to breaches of covenants
not to compete. During the year ended December 31, 1996, $120,000 was paid to
these consultants.
The acquisition of Vassar has been accounted for as a purchase, and,
accordingly, the results of operations of Vassar from January 1, 1996 are
included in the accompanying financial statements.
The following unaudited pro forma consolidated results of operations for
the year ended December 31, 1995 is presented as if the Monroe and Vassar
acquisitions had been made at January 1, 1995. The unaudited pro forma
information is not necessarily indicative of either the results of operations
that would have occurred had the purchase been made at January 1, 1995 or the
future results of the combined operations.
<TABLE>
<S> <C>
Net sales........................................................... $15,992,703
Net earnings........................................................ $ 1,078,744
Earnings per share, basic and diluted............................... $ .40
</TABLE>
SKANDY CORP.
Effective January 1, 1997, the Company acquired 100% of the issued and
outstanding common shares of Skandy Corp. (Skandy) in exchange for 133,686
shares of the Company's stock. Skandy is a manufacturers representative firm and
was owned by a relative of the principal shareholder of the Company. The
acquisition of Skandy Corp. has been accounted for in a manner similar to a
pooling of interests. The 133,686 shares were valued at $49,500, which
approximated Skandy's net book value at the date of this acquisition.
33
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE I--ACQUISITIONS--(CONTINUED)
UTILASE, INC.
Effective March 1, 1997, Utilase Production Process, Inc. a newly formed,
wholly-owned subsidiary (UPP) of Noble acquired certain of the operating assets
of Utilase, Inc. (Utilase) a wholly-owned subsidiary of DCT, Inc. DCT, Inc. is
controlled by the same principals who controlled NMP prior to the DCT
acquisition by the Company. The purchase price was $850,000 represented by a
non-interest bearing note, collateralized by the acquired assets. The note was
paid in November, 1997. UPP provides laser welding, cutting and heat treating of
metal products for the automotive industry. The debt and assets acquired were
recorded at approximately $814,000, the discounted value of the note at 8.50%.
On April 7, 1997 the Company entered into a stock purchase agreement
whereby the Company agreed to acquire all of the outstanding stock of Utilase,
Inc. (see above). The stock purchase agreement provides for a purchase price of
$8,200,000 payable in cash from the proceeds of a public offering, and
$10,134,554 in subordinated promissory notes. Included in accrued liabilities at
December 31, 1997 is approximately $1,050,000 provided as due DCT, Inc. in
connection with the acquisition. Additionally, certain individuals received
payments of $1,400,000 in exchange for covenants not to compete. The Company
also agreed to issue 11,698 shares of its common stock annually for a period of
five years commencing in 1999, as partial consideration for one of these
covenants. This transaction closed concurrent with the closing of the Company's
initial public offering (Note K) on November 23, 1997. The accompanying
consolidated financial statements include the results of Utilase's operations
for the acquisition date through December 31, 1997.
Pursuant to the terms of the purchase agreement, the controlling
shareholder of DCT, Inc. and Utilase was, upon consummation of the Company's
initial public offering, appointed chairman of the Company's Board of Directors.
The following unaudited consolidated results of operations for the years
ended December 31, 1997 and 1996 is presented as if the NMP and Utilase
acquisitions and the Company's initial public offering had been made effective
January 1, 1996. The unaudited pro forma information is not necessarily
indicative of either the results of operations that would have occurred had the
transactions been made at January 1, 1996 or the future results of combined
operations.
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Net sales.................................................... $48,480,000 $61,632,000
Net earnings................................................. $ 1,220,000 $ 3,092,000
Earnings per share, basic and diluted........................ $ .16 $ .40
</TABLE>
NOTE J--PREFERRED STOCK
Effective December 31, 1996, in connection with the retirement by NMP of a
$1,000,000 promissory note to a related party through the exchange of 10,000
shares of NMP's 10% cumulative mandatory redeemable preferred stock, the Company
entered into an exchange agreement with the holder of the NMP preferred.
Pursuant to the agreement, at any time subsequent to the completion of the
Company's initial public offering, the NMP preferred shares are convertible into
an equivalent number of preferred shares of the Company. The Company's preferred
shares will have similar rights and preferences as provided for by the NMP
shares. On April 1, 1997 the Company authorized 150,000 shares of preferred
stock.
34
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE K--STOCKHOLDERS' EQUITY
On April 1, 1997, the board of directors and shareholders of the Company
approved an increase in the number of authorized common shares to 20,000,000.
On September 11, 1997, the Board of Directors approved a 334.213 to 1 stock
split. All share and per share data have been restated to reflect the stock
split.
Effective July 30, 1997, Noble issued 38,000 shares of its Series A, 10%
cumulative preferred shares and 64,838 common shares to an off-shore investment
fund in exchange for $3,800,000. The investment manager of this fund is a
limited liability company of which Noble's chief executive officer is a manager.
The preferred stock was redeemable at the option of Noble at par value plus
accrued dividends. The proceeds from the issuance of the preferred and common
shares were allocated based on their estimated relative fair values at the date
of issuance. $3,446,600 and $353,400 was allocated to the preferred and common
shares, respectively. On December 22, 1997, the Company redeemed both the
preferred and common stock in exchange for $3,800,000. Dividends of $144,000
were paid on the preferred shares during the period from July 30, 1997 through
December 22, 1997.
On November 23, 1997, the Company completed the public offering of
3,300,000 shares of its common stock at $9 per share, resulting in net proceeds
of $26,258,108. In connection with the public offering, the Company granted its
underwriters warrants to purchase at the underwriter's option, up to 330,000
shares of common stock at an exercise price of $10.80 per share or a cashless
exercise pursuant to a formula stipulated in the agreement which is based on the
increase in the market price of the Company's common shares beyond $10.80 per
share. The warrants become exercisable in November, 1998 and expire in November,
2002. In the event the warrants are exercised, the issuance of the common stock
will be considered an additional cost of the offering.
Concurrent with the closing of its public offering, the Company adopted a
stock option plan (the 1997 Plan). The plan provides for the grant to employees,
officers, directors, consultants and independent contractors non-qualified stock
options as well as for the grant to employees of qualified stock options. The
plan has a ten year term. Under the 1997 plan, 700,000 shares of the Company's
common shares have been reserved for issuance.
The Plan is administered by the Compensation Committee of the Board of
Directors, which has the authority, subject to certain limitations, to grant
options and to establish the terms and conditions for vesting and exercise
thereof. The exercise price of the incentive stock options granted will be no
less than the fair market value of the common stock on the date of grant. The
exercise price of its non-qualified options is required to be no less than the
fair market value of the common stock on the date of grant. The terms of the
options will not exceed ten years from the date of grant. No options were
granted during 1997.
The Company intends to account for the stock options plan under APB Opinion
No. 25, 'Accounting for Stock Issued To Employees.' The disclosures required by
SFAS No. 123, 'Accounting for Stock Based Compensation' will be provided.
NOTE L--INDUSTRY SEGMENTS
In 1995, the Company's operations were restricted to automotive component
supply.
Effective for the year ended December 31, 1996, the Company classifies its
operations into two industry segments: automotive component supply (Prestolock
and Vassar) and tooling component supply
35
<PAGE>
NOBLE INTERNATIONAL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE L--INDUSTRY SEGMENTS--(CONTINUED)
(Monroe). The Company's operations by business segment for the year ended
December 31, 1996 follows:
<TABLE>
<CAPTION>
AUTOMOTIVE TOOLING
COMPONENT COMPONENT
SUPPLY SUPPLY CORPORATE CONSOLIDATED
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales........................................ $11,088,560 $5,098,251 $ -- $ 16,186,811
Operating profit (loss).......................... 175,306 1,469,624 (1,132,815) 512,115
Identifiable assets.............................. 3,902,299 7,272,313 357,901 11,532,513
Depreciation and amortization.................... 232,684 280,540 -- 513,224
Capital expenditures............................. 362,801 500,000 -- 862,801
Investment in unconsolidated subsidiary.......... (95,239) -- -- (95,239)
Equity in loss of unconsolidated subsidiary...... (95,239) -- -- (95,239)
</TABLE>
For the year ended December 31, 1997, Automotive Component Supply relates
to NMP, Prestolock, Skandy, UPP, Utilase and Vassar, Tooling Component Supply
consists of Monroe and Corporate relates to Noble and Noble Land Holding, Inc.
The Company's operations by business segment for the year ended December 31,
1997 follows:
<TABLE>
<CAPTION>
AUTOMOTIVE TOOLING
COMPONENT COMPONENT
SUPPLY SUPPLY CORPORATE CONSOLIDATED
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales........................................ $18,892,173 $5,352,302 $ 118,663 $ 24,363,138
Operating profit (loss).......................... 962,369 1,793,925 (868,429) 1,887,865
Identifiable assets.............................. 55,041,949 7,195,402 4,863,810 67,101,161
Depreciation and amortization.................... 675,583 281,001 22,261 978,845
Capital expenditures............................. 2,506,205 12,750 162,141 2,681,096
Equity in loss of unconsolidated subsidiary...... (125,884) -- -- --
</TABLE>
36
<PAGE>
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 following table sets forth the name and age of each director and
executive officer, the year he was first elected a director and his position(s)
with the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITIONS HELD
- ------------------------------------------ --- -------- ------------------------------------------
<S> <C> <C> <C>
James Bronce Henderson III................ 46 1997 Chairman of the Board
Robert J. Skandalaris..................... 45 1993 Chief Executive Officer and Director
Lloyd P. Jones III........................ 48 -- President
Christopher L. Morin...................... 39 1997 Chief Operating Officer and Director
Richard J. Reason......................... 70 1997 Director
Timothy F. Healy.......................... 45 1997 Director
Daniel J. McEnroe......................... 35 1997 Director
Anthony R. Tersigni....................... 48 1997 Director
Richard V. Balgenorth..................... 50 -- Chief Financial Officer and Vice
President--Corporate Development
Michael C. Azar........................... 34 -- General Counsel, Vice President--
Administration and Secretary
Richard G. Skandalaris.................... 43 -- Vice President--Sales
Kenneth M. Pachla......................... 33 -- Vice President--Finance
</TABLE>
JAMES BRONCE HENDERSON III joined the Company's Board of Directors as its
Chairman in November 1997. Mr. Henderson has served as the Chairman and Chief
Executive Officer of NMP, Inc., a privately held automotive supplier, since
1989. Mr. Henderson has served on the Chrysler CEO Round Table since July 1995
and is a past chairman of the Michigan/Japan Foundation. Mr. Henderson serves as
Chairman of the Board of Directors pursuant to an agreement entered into in
connection with the Company's 1997 acquisition of NMP.
ROBERT J. SKANDALARIS, the Company's founder, currently serves as Chief
Executive Officer and Director. Prior to founding the Company in 1993, Mr.
Skandalaris was Vice Chairman and a shareholder of The Oxford Investment Group,
Inc., a Michigan-based merchant banking firm and served as Chairman and Chief
Executive Officer of Acorn Asset Management, a privately held investment
advisory firm. Mr. Skandalaris began his career as a Certified Public Accountant
with the national accounting firm of Touche Ross & Co. Mr. Skandalaris also
serves as Manager of Twenty-First Century Advisors, LLC, an investment fund
manager, which acts as the investment manager of two funds, one of which,
Twenty-First Century Off-Shore Fund, Ltd. is publicly traded on the Irish Stock
Exchange.
LLOYD P. JONES III joined the Company as President in February 1998. Prior
to joining the Company, Mr. Jones served as Executive Vice President of A.G.
Simpson, a Tier I automotive supplier. From 1993 to 1996, Mr. Jones served as
Vice President of Sales for Masco Tech Stamping Technologies, Inc., a Tier I
automotive supplier of a broad range of products. Mr. Jones also served as
Executive Vice President of Sales and Marketing of Magna International, Inc., a
multi-billion dollar Tier I supplier of a diverse line of automotive parts.
37
<PAGE>
CHRISTOPHER L. MORIN joined the Company's Board of Directors in November
1997. Mr. Morin joined the Company as its Chief Operating Officer in June 1997.
From July 1994 to June 1997, Mr. Morin was the Chief Operating Officer of Talon
Automotive LLC, a privately held automotive supplier with over $200 million in
annual revenues. Prior to joining Talon Automotive LLC in 1994, Mr. Morin was
the Vice President of Operations for Irvin Automotive Products, an operating
division of Takata North America. Mr. Morin began his career as a production
supervisor and has held positions in materials, quality, sales and marketing and
operations.
RICHARD J. REASON joined the Company's Board of Directors in November 1997.
In 1968, Mr. Reason founded Monroe, which was acquired by the Company in January
1996, and has served as President of Monroe since inception.
TIMOTHY F. HEALY joined the Company's Board of Directors in November 1997.
Mr. Healy is the President and Chief Operating Officer of Irvin Automotive
Products, an operating division of Takata North America. Mr. Healy joined Irvin
Automotive Products in 1987, holding management positions in sales, marketing
and operations before being appointed President in January 1994. Prior to
joining Irvin Automotive Products, Mr. Healy held various sales and marketing
positions with Diversified General, now operating as Gen-Corp., and Indian Head
Industries.
DANIEL J. MCENROE joined the Company's Board of Directors in November 1997.
Since 1995, Mr. McEnroe has been the Treasurer of Detroit Diesel Corporation.
Mr. McEnroe also serves as a member of the board of directors and as a
representative on the credit committee of Detroit Diesel Capital Corporation.
Prior to joining Detroit Diesel Corporation, Mr. McEnroe served as Assistant
Treasurer of Penske Corporation, a privately held holding company whose
operating entities include Detroit Diesel Corporation. Mr. McEnroe has been a
Certified Public Accountant since 1985 and a Chartered Financial Analyst since
1991.
ANTHONY R. TERSIGNI, ED.D. joined the Company's Board of Directors in
November 1997. Dr. Tersigni is the President and Chief Executive Officer of St.
John Health System, an integrated health delivery system headquartered in
Detroit, Michigan. Prior to joining St. John Health System in 1985, Dr. Tersigni
was President and Chief Executive Officer of Oakland General Health Systems,
Inc., in Madison Heights, Michigan. Dr. Tersigni holds a doctorate in
Organizational Development.
RICHARD V. BALGENORTH joined the Company in May 1996. Mr. Balgenorth also
served as a member of the Company's Board of Directors from December 1996 until
November 1997. From 1990 to 1996, Mr. Balgenorth was Vice President of the
Mergers and Acquisitions Group in NBD Bank's Capital Markets Division. Mr.
Balgenorth began his career as a Certified Public Accountant with the national
accounting firm of Arthur Andersen LLP.
MICHAEL C. AZAR joined the Company in November 1996. Mr. Azar also served
as a member of the Company's Board of Directors from December 1996 until
November 1997. Prior to joining the Company, Mr. Azar was employed as General
Counsel to River Capital, Inc., an investment banking firm, from January through
November 1996. From 1988 to 1995, Mr. Azar practiced law with the firm of Mason,
Steinhardt, Jacobs and Perlman in Southfield, Michigan.
RICHARD G. SKANDALARIS joined the Company in November 1997 and became Vice
President of Sales in March 1998. Mr. Skandalaris previously served as President
of Prestolock. Prior to joining Prestolock, Mr. Skandalaris served as President
of Skandy. Richard G. Skandalaris is the brother of Robert J. Skandalaris.
KENNETH M. PACHLA joined the Company in March 1998 as Vice President of
Finance. In February 1997, Mr. Pachla joined Noble Metal Products, Inc.
(formerly DCT Component Systems, Inc.) where he served as Controller. Prior to
that, Mr. Pachla acted as the division controller of Lundington Distributors,
Inc., a wholesale distributor of magazines and books. Mr. Pachla has been a
Certified Public Accountant since 1986. Mr. Pachla began his career with the
national accounting firm of Ernst & Young.
38
<PAGE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1997, there were no meetings of
the Board of Directors; however, actions were taken with the unanimous written
consent of the directors. The Board of Directors does not have a standing
nominating committee. Nominating functions are performed by the entire Board of
Directors. James Bronce Henderson III, Daniel J. McEnroe and Anthony R.
Tersigni, all of whom are outside directors, serve on the Board's Audit
Committee. Timothy F. Healy, Daniel J. McEnroe and Anthony R. Tersigni all of
whom are outside directors, serve on the Board's Compensation Committee. Both
the Audit Committee and the Compensation Committee were established in
connection with the Company's initial public offering of common stock in
November 1997 and held their first meetings in February 1998, and, therefore, no
committee meetings were held during the fiscal year ended December 31, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than 10%
of a registered class of the Company's equity securities to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission (the 'SEC'). Officers, directors and greater than 10%
beneficial owners are also required by rules promulgated by the SEC to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required, the
Company believes that during the period from November 18, 1997 (the inception of
Section 16(a) reporting obligations for the Company's officers, directors and
greater than 10% beneficial owners) through December 31, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY CASH COMPENSATION TABLE
The following table sets forth the total compensation earned by the Chief
Executive Officer and all other executive officers who earned in excess of
$100,000 per annum during any of the Company's last three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)
------------------------------------------
RESTRICTED
STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS
- -------------------------------------------------------------- ---- -------- -------- ----------
<S> <C> <C> <C> <C>
Robert J. Skandalaris, 1997 $174,232 -- --
Chief Executive Officer and Director........................ 1996 $ 94,000 $960,000(2) --
Richard V. Balgenorth, Chief Financial Officer................ 1997 $137,500 -- --
Mark A. Davis, Former President, General Counsel and
Director(3)................................................. 1996 $112,400 -- $ 32,000(4)
Richard G. Skandalaris, Vice President-Sales(5)............... 1997 $150,000 --
</TABLE>
- ------------------
(1) Does not include any value that might be attributable to job-related
personal benefits, the annual value of which has not exceeded the lesser of
10% of annual salary plus bonus or $50,000 for each executive officer.
(Footnotes continued on next page)
39
<PAGE>
(Footnotes continued from previous page)
(2) Mr. Skandalaris agreed to forego any bonus for the year ended December 31,
1997. See '--Employment Agreement.'
(3) Mr. Davis served as an officer and director of the Company from July 1996 to
October 1996. Prior thereto Mr. Davis was employed as an officer of
Prestolock from January 1996 to July 1996. Compensation set forth in the
table includes Mr. Davis' salaries at Prestolock and the Company.
(4) Represents the book value of shares of Common Stock issued to Mr. Davis on
January 1, 1996. These shares were subsequently repurchased from Mr. Davis
when he left the Company in October 1996 by Robert J. Skandalaris, as
assignee of the Company's right to repurchase pursuant to Mr. Davis'
Shareholder's Agreement with the Company.
(5) Represents Mr. Skandalaris' salary as President of Prestolock. Mr.
Skandalaris became an executive officer of the Company in March 1998.
1997 STOCK OPTION PLAN
On November 24, 1997, the Board of Directors of the Company adopted,
subject to obtaining shareholder approval, the Noble International, Ltd. 1997
Stock Option Plan (the '1997 Plan'). The 1997 Plan provides for the grant to
employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as for the grant of stock options to
employees that qualify as incentive stock options under Section 422 of the
Internal Revenue Code of 1986 ('Code'). Although the Company has approximately
700 employees technically eligible to participate in the 1997 Plan, it is
anticipated the stock options will be granted only to a limited number of
management level personnel. The 1997 Plan terminates on November 24, 2007. The
purpose of the 1997 Plan is to enable the Company to attract and retain
qualified persons as employees, officers and directors and others whose services
are required by the Company, and to motivate such persons by providing them with
an equity participation in the Company. The 1997 Plan reserved 700,000 shares of
the Company's Common Stock for issuance, subject to adjustment upon occurrence
of certain events affecting the capitalization of the Company.
The 1997 Plan is administered by the Compensation Committee of the Board of
Directors (the 'Committee'), which has, subject to specified limitations, the
full authority to grant options and establish the terms and conditions for
vesting and exercise thereof. The exercise price of incentive stock options
granted under the 1997 Plan is required to be no less than the fair market value
of the Common Stock on the date of grant (110% in the case of a greater than 10%
shareholder). The exercise price of non-qualified stock options is required to
be no less than 85% of the fair market value of the Common Stock on the date of
grant. Options may be granted for terms of up to 10 years (5 years in the case
of incentive stock options granted to greater than 10% shareholders). No
optionee may be granted incentive stock options such that the fair market value
of the options which first become exercisable in any one calendar year exceeds
$100,000. If an optionee ceases to be employed by, or ceases to have a
relationship with the Company, such optionee's options expire six months after
termination of the employment or consulting relationship by reason of death, one
year after termination by reason of permanent disability, immediately upon
termination for cause and three months after termination for any other reason.
In order to exercise an option granted under the 1997 Plan, the optionee
must pay the full exercise price of the shares being purchased. Payment may be
made either: (i) in cash; (ii) at the discretion of the Committee, by delivering
shares of Common Stock already owned by the optionee that have a fair market
value equal to the applicable exercise price; or (iii) in the form of such other
consideration as may be determined by the Committee and permitted by applicable
law.
Subject to the foregoing, the Committee has broad discretion to describe
the terms and conditions applicable to options granted under the 1997 Plan. The
Committee may at any time discontinue granting options under the 1997 Plan or
otherwise suspend, amend or terminate the 1997 Plan and may, with the consent of
an optionee, make such modification of the terms and conditions of such
optionee's option as the Committee shall deem advisable. However, the Committee
has no authority to make any amendment
40
<PAGE>
or modifications to the 1997 Plan or any outstanding option which would: (i)
increase the maximum number of shares which may be purchased pursuant to options
granted under the 1997 Plan, either in the aggregate or by an optionee, except
in connection with certain antidilution adjustments; (ii) change the designation
of the class of employees eligible to receive qualified options; (iii) extend
the term of the 1997 Plan or the maximum option period thereunder; (iv) decrease
the minimum qualified option price or permit reductions of the price at which
shares may be purchased for qualified options granted under the 1997 Plan,
except in connection with certain antidilution adjustments; or (v) cause
qualified stock options issued under the 1997 Plan to fail to meet the
requirements of incentive stock options under Section 422 of the Code. Any such
amendment or modification shall be effective immediately, subject to shareholder
approval thereof within 12 months before or after the effective date. No option
may be granted during any suspension or after termination of the 1997 Plan.
The 1997 Plan is designed to meet the requirements of an incentive stock
option plan as defined in Code Section 422. As a result, an optionee will
realize no taxable income, for federal income tax purposes, upon either the
grant of an incentive stock option under the 1997 Plan or its exercise, except
that the difference between the fair market value of the stock on the date of
exercise and the exercise price is included as income for purposes of
calculating Alternative Minimum Tax. If no disposition of the shares acquired
upon exercise is made by the optionee within two years from the date of grant or
within one year from the date the shares are transferred to the optionee, any
gain realized upon the subsequent sale of the shares will be taxable as a
capital gain. In such case, the Company will be entitled to no deduction for
federal income tax purposes in connection with either the grant or the exercise
of the option. If, however, the optionee disposes of the shares within either of
the periods mentioned above, the optionee will realize earned income in an
amount equal to the excess of the fair market value of the shares on the date of
exercise (or the amount realized on disposition if less) over the exercise
price, and the Company will be allowed a deduction for a corresponding amount.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no compensation, as
such, for their service as members of the Board. Directors who are not employees
of the Company receive an attendance fee of $1,000 for each Board meeting or
committee meeting attended in person by that director and $250 for each
telephonic Board meeting or committee meeting in which such director
participated; however, fees for in-person meetings of the Board and committees
may not exceed $1,000 per day. All directors are reimbursed for expenses
incurred in connection with attendance at meetings. In addition, directors are
eligible to participate in the Company's 1997 Stock Option Plan.
EMPLOYMENT AGREEMENT
The Company entered into an Employment Agreement (the 'Employment
Agreement') with Robert J. Skandalaris, its Chief Executive Officer, dated April
2, 1997. The Employment Agreement provides for an initial term of three years,
with an unlimited number of successive three-year renewals subject to the
election by either party not to renew the Employment Agreement. The Employment
Agreement provides for a base salary of $225,000 per annum commencing May 1,
1997 and continuing for the remainder of the term of employment. Mr. Skandalaris
is also entitled to an incentive bonus for each fiscal year in an amount to be
determined by the Compensation Committee of the Board (other than for 1997, for
which year Mr. Skandalaris agreed to forego any bonus) as well as to participate
in any executive bonus or other incentive compensation program adopted by the
Company. In the event Mr. Skandalaris' employment is terminated by the Company,
without cause, or by reason of his death or disability, or in the event the
Employment Agreement is not renewed, the Company is obligated to pay to Mr.
Skandalaris, as severance and/or liquidated damages, an amount equal to three
times his annual base salary at the time of termination plus any incentive bonus
due under the Employment Agreement. Prior to April 1, 1997, the Company did not
have an employment agreement with Mr. Skandalaris.
41
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
Compensation Philosophy
The Compensation Committee, which was established in connection with the
Company's initial public offering of common stock in November 1997, is
responsible for developing and recommending the Company's executive compensation
policies to the Board of Directors. The executive compensation philosophy of the
Company is to (i) attract and retain qualified management to run the business
efficiently and guide the Company's growth in both existing and new markets,
(ii) establish a link between management compensation and the achievement of the
Company's annual and long-term performance goals, and (iii) recognize and reward
individual initiative and achievement.
Base Salaries
Base salaries for new management employees will be based primarily on the
responsibilities of the position and the experience of the individual, with
reference to the competitive marketplace for management talent, measured in
terms of executive compensation offered by comparable companies in related
businesses. Increases in base salaries will be based upon the performance of the
executive officers as compared to pre-established goals.
Cash Bonuses
Cash bonuses may be awarded to executive officers based in part on the
overall financial performance of the Company and in part on the performance of
the executive officer. The financial performance of the Company will be measured
by revenue and operating income growth and actual performance against budgeted
performance.
Stock Options
The Compensation Committee believes the 1997 Stock Option Plan aligns
management's long-term interests with shareholder interests, as the ultimate
compensation is based upon the Company's stock performance. The Compensation
Committee also believes the 1997 Stock Option Plan is a cost effective method of
providing key management with long-term compensation. The performance of the
executive officers will be measured against pre-established goals determined at
the beginning of the year.
Sincerely,
Timothy F. Healy
Daniel J. McEnroe
Anthony R. Tersigni
COMPENSATION COMMITTEE
42
<PAGE>
PERFORMANCE GRAPH
The following graph demonstrates the cumulative total return, on an indexed
basis, to the shareholders of the Company's Common Stock in comparison with the
Russell 2000 Index and an industry index of ten publicly traded companies
operating primarily in Standard Industrial Classification 371 ('Industry
Index'). The Industry Index was selected because the companies included therein
are engaged in the manufacturing of automotive parts, accessories and equipment
with market capitalizations similar to that of the Company. The Industry Index
consists of: Walbro Corp., Autocam Corp., R & B, Inc., IMPCO Technologies, Inc.,
Defiance, Inc., Safety Components International, Inc., Newcor, Inc., Williams
Controls, Inc., Hilite Industries, Inc. and Secom General Corp. The graph
assumes $100 invested on November 19, 1997 (the date the Common Stock commenced
trading on AMEX) in the Common Stock, in the Russell 2000 Index and in the
Industry Index. The historical stock performance shown on the graph is not
necessarily indicative of future price performance.
[INSERT GRAPH]
<TABLE>
<CAPTION>
NOVEMBER 19, 1997 DECEMBER 31, 1997
----------------- -----------------
<S> <C> <C>
The Company............................................................. 100 97.9
Russell 2000 Index...................................................... 100 101.5
Industry Index.......................................................... 100 96.0
</TABLE>
43
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information, as of February 20, 1998, with
respect to the beneficial ownership of the Company's Common Stock by: (i) each
person known by the Company to own more than 5% of the Company's Common Stock;
(ii) each director and nominee for director; (iii) each officer of the Company
named in the Summary Compensation Table; and (iv) all officers and directors of
the Company as a group. Except as otherwise indicated, each shareholder listed
below has sole voting and investment power with respect to the shares
beneficially owned by such person.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP CLASS
- --------------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Robert J. Skandalaris(2)............................................................... 3,092,156 43.19%
Christopher L. Morin................................................................... -- --
Richard V. Balgenorth.................................................................. 83,554 1.17%
James Bronce Henderson III............................................................. 133,686 1.87%
Richard J. Reason...................................................................... 10,000 0.14%
Timothy F. Healy....................................................................... -- --
Daniel J. McEnroe...................................................................... -- --
Anthony R. Tersigni.................................................................... -- --
All Directors and Officers as a group (12 persons)..................................... 3,593,452 50.19%
</TABLE>
- ------------------
(1) The address of each named person is 33 Bloomfield Hills Parkway, Suite 155,
Bloomfield Hills, Michigan 48304.
(2) Includes 150,396 shares of Common Stock held by Robert J. Skandalaris as
custodian for his three minor children; and 534,742 shares of Common Stock
over which Mr. Skandalaris exercises voting power pursuant to certain Voting
Agreements and Powers of Attorney. See 'Item 13. Certain Relationships and
Related Transactions.'
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Monroe Acquisition
Effective January 1, 1996, the Company acquired Monroe Engineering
Products, Inc. (the 'Monroe Acquisition') from Richard J. Reason, individually
and as trustee of a revocable trust, and from an irrevocable trust for the
benefit of Mr. Reason's children. Mr. Reason is a member of the Company's Board
of Directors and currently serves as the President and a director of Monroe. The
aggregate consideration was $6.85 million, including: (i) a stock purchase price
of $6.35 million, payable in installments over 16 months; and (ii) a real estate
purchase price of $500,000, payable pursuant to a Land Contract which provides
for monthly interest payments at the rate of 12% per annum and a principal
balloon payment on April 30, 1998. The obligations of the Company under the Land
Contract are guaranteed by Robert J. Skandalaris, the Company's Chief Executive
Officer. Concurrent with the Monroe Acquisition, Monroe entered into a 28-month
employment agreement with Mr. Reason, which provides for an annual salary of
$200,004, as well as deferred compensation payments of $2,000 per month, for a
three-year period commencing May 1, 1998.
NMP Acquisition and Related Matters
On July 1, 1996, the Company acquired newly issued shares representing a
37.5% interest in NMP for $1 and the option to acquire an additional 14.1% of
NMP's outstanding shares from NMP's other shareholders, including James Bronce
Henderson III, Chairman of the Company's Board of Directors, for $1. On June 9,
1997, NMP assigned to the Company its rights under a Stock Redemption Agreement
between NMP and Peter Raab, a former officer and employee of NMP, pursuant to
which the Company
44
<PAGE>
exercised its rights to acquire Mr. Raab's 7.5% interest in NMP for $1. Upon
consummation of the Offering, the Company acquired the remaining shares of NMP
for $1 million, repaid NMP's $960,000 loan from DCT, Inc. ('DCTI'), an entity
controlled by Mr. Henderson, and agreed that Mr. Henderson would serve as a
member of the Company's Board and its Chairman until December 31, 1999.
Prior to the Final NMP Acquisition, NMP leased five facilities aggregating
approximately 102,287 square feet from CTIC, an entity controlled by Mr.
Henderson, at an aggregate rent of $47,000 per month. CTIC was acquired by the
Company, through Noble Land Holdings, Inc. (a wholly-owned subsidiary formed for
the purpose of the CTIC acquisition), concurrent with the Final NMP Acquisition
for no additional consideration other than assumption of the debt encumbering
such properties aggregating approximately $4.4 million, which debt was paid from
the proceeds of the Public Offering and the Company's line of credit with
Comerica Bank. These facilities are encumbered by a mortgage securing the
Company's line of credit.
Skandy Acquisition
Effective January 1, 1997, the Company acquired all of the outstanding
capital stock of Skandy from Richard G. Skandalaris, the sole shareholder of
Skandy, in exchange for 133,686 shares of the Company's common stock. Richard G.
Skandalaris, who became the Company's Vice President of Sales in March 1998, is
the brother of Robert J. Skandalaris, the Company's President and Chief
Executive Officer.
UPP Acquisition
On March 1, 1997, the Company, through its wholly-owned subsidiary UPP,
acquired certain assets of Utilase, then a majority-owned subsidiary of DCTI.
The purchase price was $850,000, payable by delivery of the Company's promissory
note (secured by the assets acquired). The $850,000 promissory note was paid
upon the consummation of the Offering.
UPP leases 11,110 square feet of space in Detroit, Michigan from an entity
controlled by Mr. Henderson pursuant to a three-year lease expiring February 28,
2000, at an annual base rent of $38,885. The Company believes that such lease is
at least as favorable to the Company as could be obtained from an unaffiliated
third party.
Utilase Acquisition
On April 7, 1997, the Company entered into a Stock Purchase Agreement with
Utilase and its shareholders (including DCTI), providing for the acquisition of
all of the outstanding capital stock of Utilase. The Utilase Acquisition was
consummated concurrently with the Offering. The Stock Purchase Agreement
provided for a purchase price of $8.2 million in cash and the delivery of
promissory notes in four series (the 'Utilase Notes') in the aggregate original
principal amount of $10.1 million. The Utilase Notes mature in series on the
anniversary of the closing of the Utilase Acquisition in 1998, 1999, 2000 and
2001. The first three series of Utilase Notes bear interest at the rate of 6%
per annum until maturity after which they become callable by the holder and bear
interest at the rate of 4% per annum over Comerica Bank's prime lending rate not
to exceed 13% per annum. The final series bears interest at the rate of 6.5% per
annum until maturity, increasing to 4% per annum over Comerica Bank's prime
lending rate not to exceed 13% per annum thereafter. The Utilase Notes require
consent of the holders of at least 67% of the aggregate outstanding principal
amount for the Company to (a) declare or pay any dividend or other distribution
on its shares (other than in shares of capital stock) or (b) redeem or set apart
funds for the purchase or redemption of any shares of its capital stock, except,
subject to certain limitations, pursuant to the Shareholders Agreements
discussed below. If the Company is in default, consent is also required for the
Company to (1) effect any sale, lease or other conveyance, other than as
security for a loan from a senior lender, of all or substantially all of the
assets of the Company, (2) effect any consolidation or merger involving the
Company (except solely to, with or among the Company and its subsidiaries), (3)
effect any reclassification or other change of any stock or any recapitalization
of the Company, or (4) permit any subsidiary to issue or sell stock of such
subsidiary, except to the Company or any wholly owned subsidiary of the Company.
The Utilase Notes are guaranteed by Utilase.
45
<PAGE>
In connection with the Utilase Acquisition Mr. Henderson also received
$200,000 in exchange for his covenant not to compete with Utilase for the longer
of seven years from the closing of the Utilase Acquisition or two years from the
date he ceases to be a director of the Company. Mr. Henderson's covenant not to
compete terminates in the event of a default under the Utilase Notes which is
not cured within 60 days.
Utilase leases an approximately 210,000 square foot facility in Detroit,
Michigan from an entity controlled by Mr. Henderson pursuant to a five-year
lease expiring April 30, 2002. Pursuant to the terms of the lease, Utilase is
acquiring occupancy of the larger building in stages, with one-half having been
acquired in August 1997 and the balance to be acquired in April 1998.
Other Matters
Certain shareholders of the Company have entered into voting agreements and
powers of attorney with the Company granting to Robert J. Skandalaris an
irrevocable proxy to vote their shares of Common Stock on all matters. These
voting agreements also bind after-acquired shares and shares transferred to
third parties. An aggregate of 534,742 shares, representing 7.5% of the
outstanding shares, are subject to such voting agreements. These shares are
owned by James D. Skandalaris, Richard G. Skandalaris, George J. Skandalaris,
Joseph J. Skandalaris and Robert J. Skandalaris as trustee for his minor
children. In July 1997, Shareholders Agreements were entered into between the
Company and certain employee-shareholders, including Richard V. Balgenorth and
Michael C. Azar, the Chief Financial Officer and General Counsel of the Company,
respectively, which provide the Company with the option to repurchase their
shares of Common Stock upon death or termination of employment, based upon a
book value formula.
On January 15, 1996, the Company received a loan of $300,000 from James D.
Skandalaris, the father of Robert J. Skandalaris, evidenced by an unsecured
promissory note with interest at 10% per annum, payable monthly, with the
principal balance due upon demand. In addition, on March 1, 1994, James D.
Skandalaris made a loan of $90,000 to Prestolock, evidenced by an unsecured
demand note with interest only payments due monthly at a rate of 10% per annum.
Effective June 30, 1997, James D. Skandalaris entered into a letter agreement
with the Company and Prestolock providing that no demand for repayment of the
principal balance of either the January 15, 1996 or March 1, 1994 notes will be
made until after December 30, 1998.
On April 30, 1996, Robert J. Skandalaris made a loan of $1 million to the
Company evidenced by an unsecured promissory note due on April 30, 2000, bearing
interest at the rate of 7% per annum with interest only payable monthly.
Effective July 30, 1997, the Company issued 38,000 shares of its Series A
Preferred Stock, and 64,838 shares of Common Stock, to Twenty-First Century
Off-Shore Fund, Ltd., a Bahamian open-ended corporation ('Twenty-First
Century'), for $3.8 million. The investment manager of Twenty-First Century is a
limited liability company in which Robert J. Skandalaris is a member. On
December 22, 1997, the Company redeemed the Series A Preferred Stock and 64,838
shares of Common Stock from Twenty-First Century for an aggregate redemption
price of $3.8 million.
46
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements [Filed under Item 8 above.]
Financial Statement Schedules
Not applicable.
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
.1* 2 Stock Purchase Agreement dated April 7, 1997 among the Company, Utilase, Inc., the Shareholders of
Utilase, Inc.
3.3 Amended and Restated Bylaws of the Company.
4.2* Forms of Series A Subordinated Promissory Notes.
4.3* Forms of Series B Subordinated Promissory Notes.
4.4* Forms of Series C Subordinated Promissory Notes.
4.5* Forms of Series D Subordinated Promissory Notes.
10.8* Stock Purchase Agreement dated January 1, 1996 among the Company and Cass River Coatings, Inc., Gene
Oldford, Kevin Redding, Chris Frampton, Jan Wojeichowski, Pat Patterson, and Jim Lamb.
10.15* Stock Option Agreement dated January 31, 1996 between Cass River Coatings, Inc. and Gene Oldford, Kevin
Redding, Chris Frampton, Jan Wojeichowski, Pat Patterson, and Jim Lamb.
10.18* Stock Purchase Agreement dated January 1, 1996 between the Company and Richard J. Reason, individually
and as Trustee of his Revocable Living Trust dated April 9, 1979 and The Richard J. Reason Irrevocable
Trust for the Benefit of Victoria Aldrich and Peter Reason dated October 12, 1992.
10.19* Promissory Note dated January 1, 1996 in the original principal amount of $2,231,000 delivered by the
Company in favor of The Richard J. Reason Irrevocable Trust for the Benefit of Victoria Aldrich and Peter
Reason dated October 12, 1992.
10.20* Promissory Note dated January 1, 1996 in the original principal amount of $4,119,000 delivered by the
Company in favor of Richard J. Reason, Trustee of his Revocable Living Trust dated April 9, 1979.
10.21* Guaranty of Robert Skandalaris ($500,000) dated January 1, 1996 for the benefit of The Richard J. Reason
Irrevocable Trust for the Benefit of Victoria Aldrich and Peter Reason dated October 12, 1992.
10.22* Land Contract dated April 30, 1996 between RichardnJ. Reason Agreement of Trust dated April 9, 1979 and
Monroe Engineering Products, Inc.
10.23* Guaranty of Robert Skandalaris dated April 30, 1996 of Monroe Engineering Products, Inc.'s obligations
under Land Contract.
10.24* Employment and Deferred Compensation Agreement dated January 1, 1996 between Monroe Engineering Products,
Inc. and Richard Reason, as amended December 30, 1996.
10.26* Stock Purchase Agreement dated July 1, 1996, between DCT Component Systems, Inc., a Michigan corporation,
James Bronce Henderson III, David C. Stone, the Company, and Peter Raab.
10.27* Stock Redemption Agreement dated July 1, 1996 between Peter Raab and DCT Components Systems, Inc.
10.28* Management Agreement dated July 1, 1996 between DCT Component Systems, Inc. and the Company.
10.29* Voting Agreement and Irrevocable Proxies dated July 1, 1996 by and among DCT Component Systems, Inc.,
James Bronce Henderson III, and David C. Stone, and Robert Skandalaris as the representative of the
Company.
10.30* Shareholder Agreement among the Company, James Bronce Henderson III, David C. Stone, Peter Raab and DCT
Component Systems, Inc. dated July 1, 1996.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
- --------
10.31* Executive Bonus Pool for DCT Components Systems, Inc.
<C> <S>
10.32* License Agreement dated July 1, 1996, by and between James Bronce Henderson III and John C. Fox as
licensors, and DCT Component Systems, Inc., as licensee.
10.36* Line of Credit Promissory Note ($960,000) made by DCT Component Systems, Inc. in favor of DCT Companies,
Inc.
10.37* Put Agreement dated December 31, 1996 by DCT Component Systems, Inc. in favor of RichardnJ. Reason as
Trustee of the Richard J. Reason Revocable Living Trust dated April 9, 1979 and agreed to by the Company.
10.38* Conversion Agreement dated December 31, 1996 among DCT Component Systems, Inc., the Company and Holder.
10.41* Asset Purchase Agreement dated February 28, 1997 and effective March 1, 1997 between Utilase Production
Process, Inc. and Utilase, Inc.
10.42* Promissory Note dated February 28, 1997 made by the Company and Utilase Production Process, Inc. in favor
of Utilase, Inc. in the principal amount of $850,000.
10.43* Security Agreement dated February 28, 1997 among the Company and Utilase Production Process, Inc. and
Utilase, Inc.
10.44* Escrow Agreement dated April 7, 1997 among the Company, Utilase, Inc., and Jaffe, Raitt, Heuer & Weiss.
10.45* Form of Non-Compete Agreement between Utilase, Inc. and James Bronce Henderson III.
10.46* Form of Non-Compete Agreement between the Company and Jeffrey A. Moss.
10.47* Form of Non-Compete Agreement between Utilase, Inc. and DCT, Inc.
10.48* Employment Agreement dated April 7, 1997 between Utilase, Inc. and John K. Baysore.
10.49* Registration Rights Agreement dated April 7, 1997 among the Company, Utilase, Inc., James Bronce
Henderson III and Jeffrey A. Moss.
10.50* Shareholders' Agreement dated April 7, 1997 among the Company, Utilase, Inc., Robert J. Skandalaris and
James Bronce Henderson III.
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule.
99.1 Pro Forma Financial Data
</TABLE>
- ------------------
* Incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 333-27149).
(b) Reports on Form 8-K.
Not applicable.
48
<PAGE>
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.
Dated: March 4, 1998
NOBLE INTERNATIONAL, LTD.
By: _____/s/ ROBERT J. SKANDALARIS____
Robert J. Skandalaris
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the persons on behalf of the registrant in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ----------------------------------------------- --------------
<C> <S> <C>
/s/ ROBERT J. SKANDALARIS Chief Executive Officer and Director (Principal March 4, 1998
- ------------------------------------------ Executive Officer)
Robert J. Skandalaris
/s/ RICHARD V. BALGENORTH Chief Financial Officer (Principal Financial March 4, 1998
- ------------------------------------------ and Accounting Officer)
Richard V. Balgenorth
/s/ JAMES BRONCE HENDERSON III Chairman of the Board of Directors March 4, 1998
- ------------------------------------------
James Bronce Henderson III
/s/ CHRISTOPHER L. MORIN Chief Operating Officer and Director March 4, 1998
- ------------------------------------------
Christopher L. Morin
/s/ RICHARD J. REASON Director March 4, 1998
- ------------------------------------------
Richard J. Reason
/s/ TIMOTHY F. HEALY Director March 4, 1998
- ------------------------------------------
Timothy F. Healy
/s/ DANIEL J. MCENROE Director March 4, 1998
- ------------------------------------------
Daniel J. McEnroe
/s/ ANTHONY R. TERSIGNI Director March 4, 1998
- ------------------------------------------
Anthony R. Tersigni
</TABLE>
49
Exhibit 3.3
AMENDED AND RESTATED
BYLAWS
OF
NOBLE INTERNATIONAL, LTD.
A Michigan Corporation
ARTICLE I
OFFICE
1.1 Registered Office. The registered office of Noble
International, Ltd., a Michigan corporation (hereinafter called the
"Corporation"), shall be located at such place in the State of Michigan as has
been most recently designated in the files of the Michigan Department of
Commerce, either by the articles of incorporation or by a certificate of change
of registered office or annual report changing the location of such office. The
Corporation may also have an office or offices at such other place or places
within and without the State of Michigan as the board of directors may from time
to time determine.
1.2 Principal Office. The principal office for the transaction
of the business of the Corporation shall be 33 Bloomfield Hills Parkway, Suite
155, Bloomfield Hills, Michigan 48304. The Board of Directors (hereinafter
called the "Board") is hereby granted full power and authority to change the
principal office from one location to another.
1.3 Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Michigan, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 Annual Meetings. Annual meetings of the shareholders of
the Corporation for the purpose of electing directors and for the transaction of
such other business as may properly come before such meetings in accordance with
Section 2.11 of these Bylaws may be held at such time, date and place as the
Board shall determine by resolution.
2.2 Special Meetings. A special meeting of the shareholders
for the transaction of any proper business may be called at any time only by the
Board.
2.3 Place of Meetings. All meetings of the shareholders shall
be held at such places within or without the State of Michigan, as may from time
to time be designated by the Board and specified in the respective notices or
waivers of notice thereof.
1
<PAGE>
2.4 Notice of Meetings.
(a) Except as otherwise required by law, written notice of
each meeting of the shareholders, whether annual or special, shall be given not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each shareholder of record entitled to vote at such meeting. If mailed,
notice is given when deposited in the United States mail, postage prepaid,
directed to the shareholder at his address as it appears on the records of the
Corporation. Except as otherwise expressly required by law, no publication of
any notice of a meeting of the shareholders shall be required. Every notice of a
meeting of the shareholders shall state the place, date and hour of the meeting,
and in the case of a special meeting, shall also state the purpose or purposes
for which the meeting is called. Notice of any meeting of shareholders shall not
be required to be given to any shareholder who shall have waived such notice and
such notice shall be deemed waived by any shareholder who shall attend such
meeting in person or by proxy, except as a shareholder who shall attend such
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Except as otherwise expressly required by law, notice of any adjourned
meeting of the shareholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
(b) Whenever notice is required to be given to any
shareholder to whom (i) notice of two consecutive annual meetings, and all
notices of meetings or of the taking of action by written consent without a
meeting to such person during the period between such two consecutive annual
meetings, or (ii) all, and at least two, payments (if sent by first class mail)
of dividends or interest on securities during a twelve-month period, have been
mailed addressed to such person at his address as shown on the records of the
Corporation and have been returned undeliverable, the giving of such notice to
such person shall not be required. Any action or meeting which shall be taken or
held without notice to such person shall have the same force and effect as if
such notice had been duly given. If any person shall deliver to the Corporation
a written notice setting forth his then current address, the requirement that
notice be given to such person shall be reinstated. In the event that the action
taken by the Corporation is such as to require the filing of a certificate under
any of the other sections, the certificate need not state that notice was not
given to persons to whom notice was not required to be given pursuant to this
section.
2.5 Quorum. Except as provided by law, the holders of record
of a majority in voting interest of the shares of stock of the Corporation
entitled to be voted thereat, present in person or by proxy, shall constitute a
quorum for the transaction of business at any meeting of the shareholders of the
Corporation or any adjournment thereof. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum, and by any greater number of shares otherwise required to
take such action by applicable law or the Certificate of Incorporation. In the
absence of a quorum at any meeting or any adjournment thereof, a majority in
voting interest of the shareholders present in person or by proxy and entitled
to vote thereat or, in the absence therefrom of all the shareholders, any
officer entitled to preside at, or to act as secretary of, such meeting may
adjourn such meeting from time to time. At any such adjourned meeting at which a
quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
2.6 Voting.
2
<PAGE>
(a) Each shareholder shall, at each meeting of the
shareholders, be entitled to vote in person or by proxy each share or fractional
share of the stock of the Corporation having voting rights on the matter in
question and which shall have been held by him and registered in his name on the
books of the Corporation:
(i) on the date fixed pursuant to Section 2.10 of
these Bylaws as the record date for the determination of shareholders entitled
to notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed,
then (A) at the close of business on the day next preceding the day on which
notice of the meeting shall be given or (B) if notice of the meeting shall be
waived, at the close of business on the day next preceding the day on which the
meeting shall be held.
(b) Voting shall in all cases be subject to the provisions
of the Michigan Business Corporation Act and to the following provisions:
(i) Subject to Section 2.6(b)(vii), shares held by an
administrator, executor, guardian, conservator, custodian or other fiduciary may
be voted by such holder either in person or by proxy, without a transfer of such
shares into the holder's name; and shares standing in the name of a trustee may
be voted by the trustee, either in person or by proxy, but no trustee shall be
entitled to vote shares held by such trustee without a transfer of such shares
into the trustee's name.
(ii) Shares standing in the name of a receiver may be
voted by such receiver; and shares held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into the receiver's
name if authority to do so is contained in the order of the court by which such
receiver was appointed.
(iii) Subject to the provisions of the Michigan
Business Corporation Act, and except where otherwise agreed in writing between
the parties, a shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(iv) Shares standing in the name of a minor may be
voted and the Corporation may treat all rights incident thereto as exercisable
by the minor, in person or by proxy, whether or not the Corporation has notice,
actual or constructive, of the non-age, unless a guardian of the minor's
property has been appointed and written notice of such appointment given to the
Corporation.
(v) Shares standing in the name of another
corporation, domestic or foreign, may be voted by such officer, agent or proxy
holder as the bylaws of such other corporation may prescribe or, in the absence
of such provision, as the Board of Directors of such other corporation may
determine or, in the absence of such determination, by the chairman of the
board, president or any vice president of such other corporation, or by any
other person authorized to do so by the board, president or any vice president
of such other corporation. Shares which are purported to be executed in the name
of a corporation (whether or not any title of the person signing is indicated)
shall be presumed to be voted or the proxy executed in accordance with the
provisions of this subdivision, unless the contrary is shown.
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(vi) Shares of its own stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors in such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes.
(vii) Shares held by the Corporation in a fiduciary
capacity, and shares of the Corporation held in a fiduciary capacity by any
subsidiary, shall not be entitled to vote on any matter, except to the extent
that the settlor or beneficial owner possesses and exercises a right to vote or
to give the Corporation binding instructions as to how to vote such shares.
(viii) If shares stand of record in the names of two
or more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a shareholder voting
agreement or otherwise, or if two or more persons (including proxyholders) have
the same fiduciary relationship respecting the same shares, unless the Secretary
of the Corporation is given written notice to the contrary and is furnished with
a copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect:
(A) If only one votes, such act binds all;
(B) If more than one vote, the act of the
majority so voting binds all;
(C) If more than one vote, but the vote is
evenly split on any particular matter, each fraction may vote the securities in
question proportionately. If the instrument so filed or the registration of the
shares shows that any such tenancy is held in unequal interests, a majority or
even split for the purpose of this section shall be a majority or even split in
interest.
(c) Any such voting rights may be exercised by the shareholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such shareholder or by his attorney thereunto authorized
and delivered to the secretary of the meeting. A validly executed proxy which
does not state that it is irrevocable shall continue in full force and effect
unless revoked by the person executing it, prior to the vote pursuant thereto,
by a writing delivered to the Corporation stating that the proxy is revoked or
by a subsequent proxy executed by, or attendance at the meeting and voting in
person by the person executing the proxy; provided, however, that no such proxy
shall be valid after the expiration of three (3) years from the date of such
proxy, unless otherwise provided in the proxy. The revocability of a proxy that
states on its face that it is irrevocable shall be governed by the provisions of
the Michigan Business Corporation Act.
(d) At any meeting of the shareholders all matters, except as
otherwise provided in the Articles of Incorporation, in these Bylaws or by law,
shall be decided by the vote of a majority in voting interest of the
shareholders present in person or by proxy and entitled to vote thereat and
thereon, a quorum being present.
(e) The vote at any meeting of the shareholders on any
question need not be written ballot, unless so directed by the chairman of the
meeting; provided, however, that any election of directors at any meeting must
be conducted by written ballot upon demand made by any shareholder or
shareholders present at the meeting before the voting begins. On a vote by
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ballot each ballot shall be signed by the shareholder voting, or by his proxy,
if there be such proxy, and it shall state the number of shares voted.
2.7 No Action Without a Meeting. No action which is required
to be taken or which may be taken at any annual or special meeting of
shareholders may be taken without a meeting.
2.8 List of Shareholders. The Secretary of the Corporation
shall prepare and make, at least ten (10) days before every meeting of
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any shareholder who is
present.
2.9 Judges. If at any meeting of the shareholders a vote by
written ballot shall be taken on any question, the chairman of such meeting may
appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at such meeting with strict impartiality and according to the best of his
ability. Such judges shall: (i) decide upon the qualification of the voters;
(ii) report the number of shares represented at the meeting and entitled to vote
on such question; (iii) conduct the voting and accept the votes; and (iv) when
the voting is completed, ascertain and report the number of shares voted
respectively for and against the question. Reports of judges shall be in writing
and subscribed and delivered by them to the Secretary of the Corporation. The
judges need not be shareholders of the Corporation, and any officer of the
Corporation may be a judge on any question other than a vote for or against a
proposal in which he shall have a material interest.
2.10 Fixing Date for Determination of Shareholders of Record.
(a) In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the Board,
and which record date shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting.
(b) In order that the Corporation may determine the
shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the shareholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining shareholders
for any such purpose shall be at the close of business on the day on which the
Board adopts the resolution relating thereto.
If no record is fixed by the Board, the record date for
determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
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the day next preceding the day on which the meeting is held. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
2.11 Shareholder Proposals at Annual Meetings.
(a) If any shareholder notifies the Corporation of his
intention to present a proposal for action at a forthcoming meeting of the
Corporation's shareholders, the Corporation shall set forth the proposal in its
proxy statement and identify it in its form of proxy and provide means by which
security holders can specify a choice between approval or disapproval of, or
abstention with respect to, such proposal. Notwithstanding the foregoing, the
Corporation shall not be required to include the proposal in its proxy statement
or form of proxy unless the shareholder (herein the "proponent") has complied
with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934,
as amended:
(1) At the time he submits the proposal, the
proponent shall be a record or beneficial owner of at least 1% or $1,000 in
market value of securities entitled to be voted at the meeting and have held
such securities for at least one year, and he shall continue to own such
securities through the date on which the meeting is held. If the Corporation
requests documentary support for a proponent's claim that he is the beneficial
owner of at least 1% or $1,000 in market value of such voting securities of the
Corporation or that he has been a beneficial owner of the securities for one or
more years, the Corporation shall make such request within 14 calendar days
after receiving the security holder proposal and the proponent shall furnish
appropriate documentation within 21 calendar days after receiving the request.
Appropriate documentation of the proponent's claim of beneficial ownership shall
include:
(i) a written statement by a record owner or an
independent third party, accompanied by the proponent's written statement that
the proponent intends to continue ownership of such securities through the date
on which the meeting is held; or
(ii) a copy of a Schedule 13D, Schedule 13G, Form
13F, Form 3 and/or Form 4, or amendments thereto, filed with the Securities and
Exchange Commission and furnished to the Corporation by the proponent, provided
that such filings indicate the proponent's beneficial ownership as of or prior
to the date on which the relevant one year period commences, and are supported
by
(A) a copy of all subsequent amendments
reporting a change in ownership level,
(B) the proponent's affidavit, declaration,
affirmation or other similar document provided for under applicable state law
attesting that the proponent continued to be the beneficial owner of at least 1%
or $1,000 in market value of such voting securities of the Corporation
throughout the required one year period and as of the date of the affidavit,
declaration, affirmation or other similar document provided for under applicable
state law, and
(C) the proponent's written statement that
the proponent intends to continue ownership of such securities through the date
on which the meeting is held.
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In the event the Corporation includes the proponent's proposal in its proxy
soliciting material for the meeting and the proponent fails to comply with the
requirement that he continuously hold such securities through the meeting date,
the Corporation shall not be required to include any proposals submitted by the
proponent in its proxy material for any meeting held in the following two
calendar years.
(2) At the time he submits a proposal, a proponent
shall provide Corporation in writing with his name, address, the number of the
Corporation's voting securities that he holds of record or beneficially, the
dates upon which he acquired such securities, and documentary support for a
claim of beneficial ownership. A proposal may be presented at the meeting either
by the proponent or his representative who is qualified under state law to
present the proposal on the proponent's behalf at the meeting. In the event that
the proponent or his representative fails, without good cause, to present the
proposal for action at the meeting, the Corporation shall not be required to
include any proposals submitted by the proponent in its proxy solicitation
material for any meeting held in the following two calendar years.
(3) The proponent shall submit his proposal
sufficiently far in advance of the meeting so that it is received by the
Corporation within the following time periods:
(i) A proposal to be presented at an annual
meeting shall be received at the Corporation's principal executive offices not
less than 120 days in advance of the date of the Corporation's proxy statement
released to security holders in connection with the previous year's annual
meeting of security holders, except that if no annual meeting was held in the
previous year or the date of the annual meeting has been changed by more than 30
calendar days from the date contemplated at the time of the previous year's
proxy statement, a proposal shall be received by the Corporation a reasonable
time before the solicitation is made.
(ii) A proposal to be presented at any meeting
other than an annual meeting specified in paragraph (a)(3)(i) of this section
shall be received a reasonable time before the solicitation is made.
(b) The number of proposals, forms of supporting
statement, identification of the proponent in the Corporation's proxy statement
and circumstances under which the Corporation may omit a proposal shall be
determined in accordance with Rule 14a-8 under the Securities Exchange Act of
1934, as amended.
2.12 Notice of Shareholder Nominees.
(a) Nominations of persons for election to the Board of
the Corporation shall be made only at a meeting of shareholders and only (i) by
or at the direction of the Board or (ii) by any shareholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in Section 2.11. Such shareholder's notice shall
set forth: (i) as to each person whom the shareholder proposes to nominate for
election or re-election as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to the Securities
Exchange Act of 1934, as amended, (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); and (ii) as to the shareholder giving the notice (A) the name and
address, as they appear on the Corporation's books, of such shareholder, and (B)
the class and number of shares of the Corporation which are beneficially owned
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by such shareholder. Notwithstanding the foregoing, nothing in this Section 2.12
shall be interpreted or construed to require the inclusion of information about
any such nominee in any proxy statement distributed by, at the discretion of, or
on behalf of the Board.
(b) The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 2.12, and if the
chairman should so determine, the chairman shall so declare to the meeting and
the defective nomination shall be disregarded.
ARTICLE III
BOARD OF DIRECTORS
3.1 General Powers. The property, business and affairs of the
Corporation shall be managed by or under the direction of the Board.
3.2 Number and Term of Office. The number of directors shall
be no less than seven (7) and no more than eleven (11) or such other number as
may be fixed by the shareholders at any annual meeting or special meeting or by
the Board at any regular or special meeting, subject in either case to the
provisions of the Certificate of Incorporation. Directors need not be
shareholders. The initial number of directors shall be seven (7). Each director
shall hold office until the next annual meeting and until a successor has been
elected and qualified, or he resigns, or he is removed in a manner consistent
with these Bylaws.
3.3 Election of Directors. The directors shall be elected
annually by the shareholders of the Corporation and the persons receiving the
greatest number of votes in accordance with the system of voting established by
these Bylaws shall be the directors.
3.4 Resignation and Removal of Directors. Any director of the
Corporation may resign at any time by giving written notice to the Corporation.
Any such resignation shall take effect at the time specified therein, or, if the
time be not specified, it shall take effect immediately upon its receipt; and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any or all of the directors may be removed
with or without cause if such removal is approved by the affirmative vote of a
majority of the outstanding shares entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director before his term of office expires.
3.5 Vacancies. Except as otherwise provided in the Certificate
of Incorporation, any vacancy in the Board, whether because of death,
resignation, disqualification, an increase in the number of directors or any
other cause, may be filled by a majority of the remaining directors, though less
than a quorum. Each director so chosen to fill a vacancy shall hold office until
his successor shall have been elected and qualified or until he shall resign or
shall have been removed in the manner hereinafter provided.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
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3.6 Place of Meeting, Etc. The Board may hold any of its
meetings at such place or places within or without the State of Michigan as the
Board may from time to time by resolution designate or as shall be designated by
the person or persons calling the meeting or in the notice or a waiver of notice
of any such meeting. Directors may participate in any regular or special meeting
of the Board by means of conference telephone or similar communications
equipment pursuant to which all persons participating in the meeting of the
Board can hear each other, and such participation shall constitute presence in
person at such meeting.
3.7 First Meeting. The Board shall meet as soon as practicable
after each annual election of directors and notice of such first meeting shall
not be required.
3.8 Regular Meetings. Regular meetings of the Board may be
held at such times as the Board shall from time to time by resolution determine.
If any day fixed for a regular meeting shall be a legal holiday at the place
where the meeting is to be held, then the meeting shall be held at the same hour
and place on the next succeeding business day not a legal holiday. Except as may
be required by law or specified herein, notice of regular meetings need not be
given.
3.9 Special Meetings. Special meetings of the Board shall be
held whenever called by the Chairman of the Board, the President or any two or
more directors. Except as otherwise provided by law or by these Bylaws, notice
of the time and place of each such special meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at least
five (5) days before the day on which the meeting is to be held, or shall be
sent to him at such place by telegraph or cable or be delivered personally not
less than forty-eight (48) hours before the time at which the meeting is to be
held. Except where otherwise required by law or by these Bylaws, notice of the
purpose of a special meeting need not be given. Notice of any meeting of the
Board shall not be required to be given to any director who is present at such
meeting, except a director who shall attend such meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
3.10 Quorum and Manner of Acting. Except as otherwise provided
in these Bylaws, in the Certificate of Incorporation or by law, the presence of
a majority of the authorized number of directors shall be required to constitute
a quorum for the transaction of business, at any meeting of the Board, and all
matters shall be decided at any such meeting, a quorum being present, by the
affirmative votes of a majority of the directors present. A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, provided any action taken is approved by at least a
majority of the required quorum for such meeting. In the absence of a quorum, a
majority of directors present at any meeting may adjourn the same from time to
time until a quorum shall be present. Notice of an adjourned meeting need not be
given. The directors shall act only as a Board, and the individual directors
shall have no power as such.
3.11 Action by Consent. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
3.12 Compensation. The directors shall receive only such
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him on account of his attendance at
any meetings of the Board or Committees of the Board. Neither the payment of
such
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compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
3.13 Committees of Directors.
(a) The Board may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the Corporation. Any such committee, to the
extent provided in the resolution of the Board and except as otherwise limited
by law, shall have and may exercise all the powers and authority of the Board in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
provided, however, that no such committee shall have the power or authority to
act on behalf of the Board with regard to:
(i) the approval of any action which, under the
Michigan Business Corporation Act, also requires shareholders' approval or
approval of the outstanding shares;
(ii) the filling of vacancies on the Board of
Directors or in any committees;
(iii) the fixing of compensation of the directors for
serving on the Board or on any committee;
(iv) the amendment or repeal of Bylaws or the
adoption of new Bylaws;
(v) the amendment or repeal of any resolution of the
Board of Directors which by its express terms is not so amendable or repealable;
(vi) a distribution to the shareholders of the
Corporation, except at a rate or in a periodic amount or within a price range
determined by the Board of Directors; or
(vii) the appointment of any other committees of the
Board of Directors or the members thereof.
(b) Meetings and action of committees shall be governed
by, and held and taken in accordance with, the provisions of these Bylaws
dealing with the place of meetings, regular meetings, special meetings and
notice, quorum, waiver of notice, adjournment, notice of adjournment and action
without meeting, with such changes in the context of these Bylaws as are
necessary to substitute the committee and its members for the Board of Directors
and its members, except that the time or regular meetings of committees may be
determined by resolutions of the Board of Directors. Notice of special meetings
of committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The Board of Directors or a
committee may adopt rules for the government of such committee not inconsistent
with the provisions of these Bylaws.
Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board. In the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member.
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3.14 Other Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more non-employee directors and one or more other
disinterested persons, who need not be directors, for the purpose of providing
advice to the Board regarding any matter, including but not limited to the
compensation of officers and other key employees. For the purposes of this
Section, a "disinterested person" means any person having no significant
interest in the actions of the committee, as determined by the Board. Any such
committee, to the extent provided in the resolution of the Board and except as
otherwise limited by law, shall assist the Board in exercising its powers and
authority in the management of the business and affairs of the Corporation, but
shall not itself exercise such powers and authority. Any such committee shall
keep written minutes of its meetings and report the same to the Board at the
next regular meeting of the Board. In the absence or disqualification of a
member of any such committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint any disinterested person to act at the meeting
in the place of any such absent or disqualified member. The compensation and
reimbursement of expenses of the members of any such committee shall be
determined by resolution passed by a majority of the whole Board. Neither the
payment of such compensation nor the reimbursement of such expenses shall be
construed to preclude any such member from serving the Corporation or its
subsidiaries in any other capacity and receiving compensation therefor.
3.15 Certain Transactions. In the absence of fraud, no contract
or other transaction between the Corporation and any other corporation, and no
act of the Corporation, shall in any way be affected or invalidated by the fact
that any of the directors of the Corporation are financially or otherwise
interested in, or are directors or officers of, such other corporations; and, in
the absence of fraud, any director, individually, or any firm of which any
director may be a member, may be a party to, or may be financially or otherwise
interested in, any contract or transaction of the Corporation; provided, in any
case, that the fact that he or such firm is so interested shall be disclosed or
shall have been known to the Board of Directors or committee. Any director of
the Corporation who is also a director or officer of any such other corporation
or who is so interested may be counted in determining the existence of a quorum
at any meeting of the Board of Directors of the Corporation that shall authorize
any such contract, act or transaction, and may vote thereat to authorize any
such contract, act or transaction, with full force and effect as if he were not
such director or officer of such other corporation or not so interested.
ARTICLE IV
OFFICERS
4.1 Corporate Officers.
(a) The officers of the Corporation shall be a Chairman of
the Board, a President (Chief Executive Officer), one or more Vice Presidents
(the number thereof and their respective titles to be determined by the Board),
a Secretary, Chief Operating Officer, Chief Financial Officer (Treasurer) and
such other officers as may be appointed at the discretion of the Board in
accordance with the provisions of Section 4.1(b).
(b) In addition to the officers specified in Section
4.1(a), the Board may appoint such other officers as the Board may deem
necessary or advisable, including one or more Assistant Secretaries and one or
more Assistant Treasurers, each of whom shall hold office for such period, have
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such authority and perform such duties as the Board may from time to time
determine. The Board may delegate to any officer of the Corporation or any
committee of the Board the power to appoint, remove and prescribe the duties of
any officer provided for in this Section 4.1(b).
(c) Any number of offices may be held by the same person.
4.2 Election, Term of Office and Qualifications. The officers
of the Corporation, except such officers as may be appointed in accordance with
Sections 4.1(b) or 4.5, shall be appointed annually by the Board at the first
meeting thereof held after the election of the Board. Each officer shall hold
office until such officer shall resign or shall be removed by the Board (either
with or without cause) or otherwise disqualified to serve, or the officer's
successor shall be appointed and qualified.
4.3 Removal. Any officer of the Corporation may be removed,
with or without cause, at any time at any regular or special meeting of the
Board by a majority of the directors of the Board at the time in office or,
except in the case of an officer appointed by the Board, by any officer of the
Corporation or committee of the Board upon whom or which such power of removal
may be conferred by the Board.
4.4 Resignations. Any officer may resign at any time by giving
written notice of his resignation to the Board, the President or the Secretary
of the Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time is not specified, upon receipt thereof by the Board,
President or Secretary, as the case may be; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
4.5 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or other cause may be filled for the
unexpired portion of the term thereof in the manner prescribed in these Bylaws
for regular appointments or elections to such office.
4.6 Chairman of the Board. The Chairman of the Board of the
Corporation shall preside at all meetings of the shareholders and at all
meetings of the Board in the absence of the Chief Executive Officer.
4.7 Chief Executive Officer. The Chief Executive Officer shall
have, subject to the control of the Board, general and active supervision and
management over the business of the Corporation and over its several subordinate
officers, assistants, agents and employees. He shall preside at all meetings of
the Board of Directors. The Chief Executive Officer shall have such other powers
and duties as may from time to time be assigned to him by the Board or as
prescribed by the Bylaws. In the absence of the President he shall assume powers
and duties of the President as are delegated to him by a majority of the Board
of Directors.
4.8 President. The President shall have, subject to the control
of the Board and Chief Executive Officer, general and active supervision and
management over the business of the Corporation and over its several subordinate
officers, assistants, agents and employees. The President shall have such other
powers and duties as may from time to time be assigned to him by the Chief
Executive Officer, the Board or as prescribed by the Bylaws. In the absence of
the Chief Executive Officer, he shall assume the powers and duties of the Chief
Executive Officer as are delegated to him by a majority of the Board of
Directors.
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4.9 Vice Presidents. Each Vice President shall have such power
and perform such duties as the Board may from time to time prescribe. The Vice
Presidents shall have such other powers and duties as may from time to time be
assigned to him by the Chief Executive Officer, President and the Board or as
prescribed by the Bylaws.
4.10 Chief Operating Officer. The Chief Operating Officer shall
have, subject to the control of the Chief Executive Officer, President, and the
Board, general and active supervision and management over the operations of the
Corporation, the subsidiaries, and over its several subordinate officers,
assistants, agents and employees. The Chief Operating Officer shall have such
other powers and duties as may from time to time be assigned to him by the Chief
Executive Officer, President and the Board or as prescribed by the Bylaws.
4.11 Chief Financial Officer (Treasurer). The Chief Financial
Officer (Treasurer) shall supervise, have custody of, and be responsible for all
funds and securities of the Corporation. The Chief Financial Officer (Treasurer)
shall deposit all such funds in the name of the Corporation in such banks, trust
companies or other depositories as shall be selected by the Board or in
accordance with authority delegated by the Board. The Chief Financial Officer
(Treasurer) shall receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever. The Chief Financial Officer (Treasurer)
shall exercise general supervision over expenditures and disbursements made by
officers, agents and employees of the Corporation and the preparation of such
records and reports in connection therewith as may be necessary or desirable.
The Chief Financial Officer (Treasurer) shall, in general, perform all other
duties incident to the office of Chief Financial Officer (Treasurer) and such
other duties as from time to time may be assigned to the Chief Financial Officer
(Treasurer) by the Board.
4.12 Secretary. The Secretary shall have the duty to record the
proceedings of all meetings of the Board, of the shareholders, and of all
committees of which a secretary shall not have been appointed in one or more
books provided for that purpose. The Secretary shall see that all notices are
duly given in accordance with these Bylaws and as required by law; shall be
custodian of the seal of the Corporation and shall affix and attest the seal to
all documents to be executed on behalf of the Corporation under its seal; and,
in general, he shall perform all the duties incident to the office of Secretary
and such other duties as may from time to time be assigned to him by the Board.
4.13 Compensation. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board. None of such officers
shall be prevented from receiving such compensation by reason of the fact that
he is also a director of the Corporation. Nothing contained herein shall
preclude any officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving proper compensation therefor.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS,
BANK ACCOUNTS, ETC.
5.1 Execution of Contracts. The Board, except as in these
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name of and
on behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by these Bylaws, no
13
<PAGE>
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any account.
5.2 Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such person shall give such bond, if any, as the
Board may require.
5.3 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the Chief Financial Officer, (or any other officer or officers,
assistant or assistants, agent or agents or attorney or attorneys of the
Corporation who shall from time to time be determined by the Board), may
endorse, assign and deliver checks, drafts and other orders for the payment of
money which are payable to the order of the Corporation.
5.4 General and Special Bank Accounts. The Board may from time
to time authorize the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may select
or as may be selected by any officer or officers, assistant or assistants, agent
or agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFER
6.1 Certificates for Stock.
(a) The shares of the Corporation shall be represented by
certificates, provided that the Board may provide by resolution or resolutions
that some or all of any or all classes or series of its stock shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board, every holder of
stock represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate, in such form as
the Board shall prescribe, signed by, or in the name of, the Corporation by the
President or Vice President, and by the Chief Financial Officer (Treasurer) or
an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation representing the number of shares registered in certificate form.
Any of or all of the signatures on the certificates may be a facsimile. In case
any officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any such certificates, shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued,
such certificate may nevertheless be issued by the Corporation with the same
effect as though the person who signed such certificate, or whose facsimile
signature shall have been placed thereupon, were such officer, transfer agent or
registrar at the date of issue.
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<PAGE>
(b) A record shall be kept of the respective names of the
persons, firms or corporations owning the stock represented by such
certificates, the number and class of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of cancellation, the
respective dates of cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be canceled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so canceled, except in cases provided
for in Section 6.4.
6.2 Transfers of Stock. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by such holder's attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary, or with a transfer clerk or
a transfer agent appointed as provided in Section 6.3, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
6.3 Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these Bylaws, concerning the
issue, transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
6.4 Lost, Stolen, Destroyed and Mutilated Certificates. In any
case of loss, theft, destruction or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sum as the Board may direct; provided, however, that a new
certificate may be issued without requiring any bond when, in the judgment of
the Board, it is proper to do so.
6.5 Payment for Shares. Certificates for shares may be issued
prior to full payment under such restrictions and for such purposes as the Board
may provide; provided, however, that on any certificate issued to represent any
partly paid shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated.
ARTICLE VII
INDEMNIFICATION
7.1 Third Party Proceeding. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to a
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, other
than an action by or in the right of the Corporation, by reason of the fact that
he or she is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, partner, or
trustee of another foreign or domestic corporation, partnership, joint venture,
trust, or other enterprise, whether for profit or not, against expenses,
including attorneys' fees, judgments, penalties, fines and amounts paid in
15
<PAGE>
settlement actually and reasonably incurred by him or her in connection with the
action, suit, or proceeding, If the person acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the Corporation or its shareholders, and the person submits a written claim for
indemnification as hereinafter provided, and with respect to a criminal action
or proceeding, if the person had no reasonable cause to believe his or her
conduct was unlawful, and the person submits a written claim for indemnification
as hereinafter provided. The termination of an action, suit, or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Corporation or its shareholders,
or, with respect to a criminal action or proceeding, did not have reasonable
cause to believe that his or her conduct was unlawful. The right to
indemnification conferred in this Section shall be a contract right. The
Corporation may, by action of its Board of Directors, or by action of any person
to whom the Board of Directors has delegated such authority, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
7.2 Derivative Shareholder Liability. The Corporation shall
indemnify any person who was or is a party to or is threatened to be made a
party to a threatened, pending, or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, partner, or
trustee of another foreign or domestic corporation, partnership, joint venture,
trust, or other enterprise, whether for profit or not, against expenses,
including attorneys' fees, and amounts paid in settlement actually and
reasonably incurred by the person in connection with the action or suit, if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the Corporation or its shareholders,
and the person submits a written claim of indemnification as hereinafter
provided. However, indemnification shall not be made for a particular action,
issue, or matter in which the person has been found liable to the Corporation
unless and only to the extent that the court in which the action or suit was
brought (or another court of competent jurisdiction) has determined upon
application that, despite the adjudication of liability but in view of all the
relevant circumstances, the person is fairly and reasonably entitled to
indemnification for the reasonable expenses he or she incurred. The right to
indemnification conferred in this Section shall be a contract right. The
Corporation may, by action of its Board of Directors, or by action of any person
to whom the Board of Directors has delegated such authority, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
7.3 Determination of Indemnification. Any indemnification under
Section 7.1 or 7.2 of this Article, unless ordered by a court, shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification of the director or officer is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Section 7.1 or 7.2 of this Article and upon an evaluation of the reasonableness
of expenses and amounts paid in settlement. This determination and evaluation
shall occur within 30 days after a written claim for indemnification has been
received by the Corporation, and shall be made in any of the following ways:
(1) By a majority vote of a quorum of the board consisting
of directors who are not parties or threatened to be made parties to the action,
suit or proceeding;
16
<PAGE>
(2) If the quorum described in subparagraph (1) is not
obtainable, then by a majority of a committee duly designated by the board and
consisting solely of two or more directors not at the time parties or threatened
to be made parties to the action, suit, or proceeding;
(3) By independent legal counsel in a written opinion,
which counsel shall be selected in one of the following ways:
(A) By the board or its committee in the manner
prescribed in subparagraphs (1) and (2),
(B) If a quorum of the board cannot be obtained under
subparagraph (1) and a committee cannot be designated under subparagraph (2), by
the board;
(4) By all independent directors who are not parties or
threatened to be made parties to the action, suit, or proceeding; and
(5) By the shareholders, but shares held by directors,
officers, employees, or agents who are parties or threatened to be made parties
to the action, suit, or proceeding may not be voted.
In the designation of a committee under subparagraph (2) or in
the selection of independent legal counsel under subparagraph (3)(B),
all directors may participate.
If a person is entitled to indemnification under Sections 7.1
or 7.2 of this Article for a portion of expenses, including reasonable
attorneys' fees, judgments, penalties, fines, and amounts paid in
settlement, but not for the total amount thereof, the Corporation shall
indemnify the person for the portion of the expenses, judgments,
penalties, fines, or amounts paid in settlement for which the person is
entitled to be indemnified.
7.4 Payment of Defense Expenses in Advance. The Corporation
shall pay or reimburse the reasonable expenses incurred by a director or officer
who is a party or threatened to be made a party to an action, suit, or
proceeding in advance of final disposition of the proceeding if all of the
following apply:
(1) The person furnishes the Corporation a written
affirmation of his or her good faith belief that he or she has met the
applicable standard of conduct set forth in Sections 7.1 and 7.2.
(2) The person furnishes the Corporation a written
undertaking, executed personally or on his or her behalf to repay the advance if
it is ultimately determined that he or she did not meet the standard of conduct.
(3) A determination is made that the facts then known to
those making the determination would not preclude indemnification under this
section or the Michigan Business Corporation Act.
17
<PAGE>
The undertaking shall be by unlimited general obligation of
the person on whose behalf advances are made but need not be secured.
Determination of payments under Section 7.4 shall be made in the manner
described in Section 7.3(1)-(5).
7.5 Right of Officer or Director to Bring Suit. If a claim for
indemnification under this Section is not paid in full by the Corporation within
forty-five (45) days after a written claim has been received by the Corporation,
the officer or director who submitted the claim (hereinafter the "indemnitee")
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit
or in a suit brought by the Corporation to recover advances, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
claim. In any action brought by the indemnitee to enforce a right under this
Section (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where the
required undertaking, if any, has been tendered to the Corporation) it shall be
a defense that, and in any action brought by the Corporation to recover advances
the Corporation shall be entitled to recover such advances if, the indemnitee
has not met the applicable standard of conduct set forth in Section 7.1 or
Section 7.2. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the indemnitee is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Sections 7.1 or 7.2, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its shareholders) that the indemnitee has not met such
applicable standard of conduct, shall be a defense to an action brought by the
indemnitee or create a presumption that the indemnitee has not met the
applicable standard of conduct. In any action brought by the indemnitee to
enforce a right hereunder or by the Corporation to recover payments by the
Corporation of advances, the burden of proof shall be on the Corporation.
7.6 Other Indemnification. The indemnification or advancement
of expenses provided under Sections 7.1 through 7.5 is not exclusive to other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under the Corporation's Articles of Incorporation, bylaws, or a
contractual agreement. However, the total amount of expenses advanced or
indemnified from all sources combined shall not exceed the amount of actual
expenses incurred by the person seeking indemnification or advancement of
expenses. The indemnification provided for in Sections 7.1 through 7.5 continues
as to a person who ceases to be a director, officer, partner, or trustee and
shall inure to the benefit of the heirs, executors, and administrations of the
person.
7.7 Liability Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of
18
<PAGE>
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him or her and incurred by him or her in
any such capacity or arising out of his or her status as such, whether or not
the Corporation would have power to indemnify him or her against liability under
the Michigan Business Corporation Act or this section.
7.8 Definitions. For purposes of this section, "the
Corporation" includes all constituent corporations absorbed in a consolidation
or merger and the resulting or surviving corporation, so that a person who is or
was a director, officer, employee, or agent of the constituent corporation or is
or was serving at the request of the constituent corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise whether for
profit or not shall stand in the same position under the provisions of this
paragraph with respect to the resulting or surviving corporation as the person
would if he or she had served the resulting or surviving corporation in the same
capacity.
7.9 Employee Benefit Plans. For purposes of this section,
"other enterprises" shall include employee benefit plans; "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit plan;
and "serving at the request of the Corporation" shall include any service as a
director or officer of the Corporation which imposes duties on, or involves
services by, the director or officer with respect to an employee benefit plan,
its participants or beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be considered to have acted
in a manner "not opposed to the best interests of the Corporation or its
shareholders" as referred to in Sections 7.1 and 7.2.
7.10 Severability. The invalidity or unenforceability of any
provision of this Article VII shall not effect the validity or enforceability of
the remaining provisions of this Article VII.
ARTICLE VIII
MISCELLANEOUS
8.1 Seal. The Board shall provide a corporate seal, which shall
be in the form of a circle and shall bear the name of the Corporation and words
and figures showing that the Corporation was incorporated in the State of
Michigan and the year of incorporation.
8.2 Waiver of Notices. Whenever notice is required to be given
by these Bylaws or the Articles of Incorporation or by law, the person entitled
to said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice. Attendance
of a person at a meeting (whether in person or by proxy in the case of a meeting
of shareholders) shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of any regular or special meeting of the shareholders, directors
or members of a committee of directors need be specified in any written waiver
of notice.
8.3 Amendments. These Bylaws may be amended, altered, changed,
added to or repealed by the affirmative vote of a majority of shares entitled to
vote at any regular or special meeting of the shareholders if notice of the
proposed amendment, alteration, change, addition or repeal be contained in the
notice of the meeting, or by the affirmative vote of a majority of the Board at
a regular or special meeting of the Board; provided that, any Bylaws made by the
affirmative vote of a majority of the Board as provided herein may be amended,
altered, changed, added to or repealed by the affirmative vote of a majority of
the shares entitled to vote at any regular or special meeting of the
shareholders.
8.4 Representation of Other Corporations. The President, any
Vice President or the Secretary of this Corporation is authorized to vote,
represent and exercise on behalf of this Corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
this Corporation. The authority herein granted to said officers to vote or
represent on behalf of this Corporation any and all shares held by this
19
<PAGE>
Corporation in any other corporation or corporations may be exercised either by
such officers in person or by any person authorized to do so by proxy or power
of attorney duly executed by said officers.
8.5 Stock Purchase Plans. The Corporation may adopt and carry
out a stock purchase plan or agreement or stock option plan or agreement
providing for the issue and sale for such consideration as may be fixed of its
unissued shares, or of issued shares acquired or to be acquired, to one or more
of the employees or directors of the Corporation or of a subsidiary or to a
trustee on their behalf and for the payment for such shares in installments or
at one time, and may provide for aiding any such persons in paying for such
shares by compensation for services rendered, promissory notes, or otherwise.
Any stock purchase plan or agreement or stock option plan or agreement
may include, among other features, the fixing of eligibility for participation
therein, the class and price of shares to be issued or sold under the plan or
agreement, the number of shares which may be subscribed for, the method of
payment therefor, the reservation of title until full payment therefor, the
effect of the termination of employment and option or obligation on the part of
the Corporation to repurchase the shares, the time limits of and termination of
the plan and any other matters, not in violation of applicable law, as may be
included in the plan as approved or authorized by the Board or any committee of
the Board.
8.6 Construction and Definitions. Unless the context requires
otherwise, the general provisions, rules of construction and definitions in the
Michigan Business Corporation Act shall govern the construction of these Bylaws.
Without limiting the generality of this provision, the singular number includes
the plural, the plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
20
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CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of Noble
International, Ltd., a Michigan corporation; and
2. That the foregoing Bylaws, comprising twenty (20) pages,
constitute the Bylaws of said Corporation as duly adopted and approved by the
directors of said Corporation by unanimous written consent effective as of
February 9, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said Corporation effective as of February 25, 1998.
/s/ Michael C. Azar
-------------------------------
Michael C. Azar, Secretary
21
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of
Name Incorporation Assumed Names
- ------------------------------------ ---------------------- ----------------------------
<S> <C> <C>
Prestolock International, Ltd. Michigan
Monroe Engineering Products, Inc. Michigan
Cass River Coatings, Inc. Michigan Vassar Industries
Noble Metal Products, Inc.* Michigan
Skandy Corp. Michigan
Utilase Production Process, Inc. Michigan
Utilase, Inc. Michigan Blank Welding Technologies
Utilase Canada, Inc. Ontario, Canada
Noble Land Holdings, Inc. Michigan
Noble Metal Technologies, Inc. Michigan
Noble Components & Systems, Inc. Michigan
</TABLE>
- ----------------
*Formerly DCT Component Systems, Inc.
Exhibit 99.1
PRO FORMA FINANCIAL DATA
Introduction
The following pro forma financial data is based upon the historical
financial statements of Noble International, Ltd. (the "Company") and has been
prepared to illustrate the effects of the November 1997 acquisitions of Noble
Metal Products, Inc. ("NMP") (formerly DCT Components Systems, Inc.), which
included the acquisition of Competitive Technologies Investment Company
("CTIC"), and Utilase, Inc. ("Utilase") (collectively the "Closing
Acquisitions"), as well as the November 1997 initial public offering of the
Company's Common Stock (the "Offering"). The effects of the Offering proceeds
have been isolated from the effects of the Closing Acquisitions, except to the
extent that the Offering proceeds were used to finance the Closing Acquisitions.
The pro forma financial data gives effect to the Closing Acquisitions and the
Offering as if they had been completed on January 1, 1997. The Closing
Acquisitions are reflected using the purchase method of accounting for business
combinations.
The pro forma financial data is provided for comparative purposes only
and does not purport to represent the actual results of operations of the
Company that actually would have been obtained if the Closing Acquisitions had
been consummated on the date specified, nor is it necessarily indicative of the
results of operations that may be achieved in the future.
Adjustments to the pro forma combined operating results for the Closing
Acquisitions and the Offering include changes in depreciation and amortization
to reflect the cost basis of assets acquired; changes to selling, general and
administrative expenses to remove non-recurring expenses and salaries to
officers and shareholders; changes in interest expense to reflect debt incurred
in financing the Closing Acquisitions; and changes to the provision for income
taxes to reflect reductions resulting from the pro forma adjustments. The pro
forma financial data is based upon certain assumptions and adjustments described
in the notes thereto and should be read in conjunction therewith.
<PAGE>
NOBLE INTERNATIONAL, LTD. AND ACQUIRED BUSINESSES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------------
Noble Closing
Noble Metal Acquisitions and Adjusted Pro
International, Products, Related Proceeds Forma
Ltd. Inc. Utilase, Inc. Adjustments (a) Combined
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 24,363 $22,284 $14,985 $ 61,632
Cost of sales 16,777 19,411 8,555 44,743
- ----------------------------------------------------------------------------------------------------------------------------------
Gross profit 7,586 2,873 6,430 16,889
Selling, general and
administrative expense 5,698 2,190 3,228 1,120(b) 11,225
(91)(c)
(528)(d)
85(e)
(477)(f)
- ----------------------------------------------------------------------------------------------------------------------------------
Operating profit 1,888 683 3,202 (109) 5,664
Interest expense 755 926 530 (342)(g) 2,642
(90)(h)
863(i)
Sundry, net (37) 10 232 22(j) 353
126(k)
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes 1,096 (233) 2,904 (392) 3,375
Income tax expense 379 (17) 1,097 (311)(l) 1,147
- ----------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) 717 (216) 1,807 (81) 2,228
Preferred stock
dividends 144 71 -- 215
- ----------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) on common shares $ 573 $ (287) $ 1,807 ($81) $ 2,013
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings per
common share $ 0.13
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 4,285,134
<CAPTION>
- --------------------------------------------------------------------------------
Other
Proceeds Pro Forma
Adjustments Combined
- -------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 61,632
Cost of sales 44,743
- --------------------------------------------------------------------------------
Gross profit 16,889
Selling, general and
administrative expense 11,225
- --------------------------------------------------------------------------------
Operating profit 5,664
Interest expense (1,309)(m) 1,333
Sundry, net 353
- --------------------------------------------------------------------------------
Earnings (loss) before income taxes 1,309 4,684
Income tax expense 445(n) 1,592
- --------------------------------------------------------------------------------
Net earnings (loss) 864 3,092
Preferred stock
dividends 215
- --------------------------------------------------------------------------------
Net earnings (loss) on common shares $ 864 $ 2,877
- --------------------------------------------------------------------------------
Earnings per
common share $ 0.40
- --------------------------------------------------------------------------------
Weighted average common shares outstanding 7,187,326
</TABLE>
The pro forma financial data is provided for comparative purposes only and
does not purport to represent the actual results of operations of the Company
that would have been obtained, nor is it necessarily indicative of the results
of operations that may be achieved in the future.
- ------------------
(a) Includes adjustments directly attributable to the acquisitions of NMP and
Utilase, including the application of proceeds of the Offering related
thereto.
(b) Reflects amortization of goodwill over 20 years relating to the Utilase
Acquisition totaling $695,999, amortization of goodwill over 20 years
relating to the Final NMP Acquisition totaling $224,208, and amortization
over 7 years of the covenants not to compete obtained in connection with the
Utilase Acquisition totaling $200,000.
(c) Reflects the reversal of bonus expense at Utilase to actual for 1997
totaling $91,000.
(d) Reflects the elimination of rent expense in the amount of $528,200 as a
result of the purchase of CTIC.
(e) Reflects additional depreciation of $84,736 resulting from the purchase of
CTIC.
(f) Reflects the corporate allocation expenses incurred by Utilase which ceased
upon its acquisition by Noble.
(g) Reflects the capitalization of interest expense at Utilase in connection
with construction in progress totaling $341,815.
(h) Reflects the interest expense savings totaling $89,834 resulting from the
repayment of the 10%, $960,000 payable to NMP.
(i) Reflects additional interest expense of $291,134 relating to the purchase
of CTIC and imputed interest expense of $571,653 relating to the promissory
notes delivered in connection with the Utilase Acquisition.
(j) Reflects additional rent income of $22,500 attributable to the purchase of
CTIC.
(k) Reflects elimination of the equity loss in the unconsolidated affiliate,
NMP, totaling $125,884.
(l) Reflects the tax effect of the pro forma adjustment amounting to $231,769
and the presumed utilization of the NMP loss for the year ended December
31, 1997 providing a total benefit of $79,390.
(m) Reflects interest expense savings totaling $1,309,074 resulting from the
reduction of debt through application of the Offering proceeds. These
savings include the repayment of debt totaling $14.055 million at a weighted
average interest rate of 10.3%. Debt included approximately $700,000 of
prepaid Offering expenses.
(n) Reflects the tax effects, at 34%, of the Offering proceeds adjustments.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's consolidated financial statements for the year ended
December 31, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001034258
<NAME> Noble International, Ltd.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
<EXCHANGE-RATE> 1
<CASH> 2,353
<SECURITIES> 0
<RECEIVABLES> 11,508
<ALLOWANCES> 169
<INVENTORY> 5,276
<CURRENT-ASSETS> 19,586
<PP&E> 20,891
<DEPRECIATION> 963
<TOTAL-ASSETS> 67,101
<CURRENT-LIABILITIES> 14,021
<BONDS> 0
850
0
<COMMON> 27,344
<OTHER-SE> 266
<TOTAL-LIABILITY-AND-EQUITY> 67,101
<SALES> 24,363
<TOTAL-REVENUES> 24,363
<CGS> 16,777
<TOTAL-COSTS> 16,777
<OTHER-EXPENSES> 14
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 755
<INCOME-PRETAX> 1,096
<INCOME-TAX> 379
<INCOME-CONTINUING> 717
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 717
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
