FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT 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 registrant as specified in its charter)
Delaware 38-3139487
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
33 Bloomfield Hills Parkway, Suite 155, Bloomfield Hills, Michigan 48304
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(Address of principal executive offices)
(Zip Code)
(248) 433-3093
----------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (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 / /
The number of shares of the registrant's common stock, no par value,
outstanding as of September 30, 1999 was 7,208,083.
<PAGE>
NOBLE INTERNATIONAL, LTD.
FORM 10-Q INDEX
This report contains "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. Statements regarding future operating performance, new programs
expected to be launched and other future prospects and developments are based
upon current expectations and involve certain risks and uncertainties that could
cause actual results and developments to differ materially. Potential risks and
uncertainties include such factors as demand for the company's products,
pricing, the company's growth strategy, including its ability to consummate and
successfully integrate future acquisitions, industry cyclicality and
seasonality, the company's ability to continuously improve production
technologies, activities of competitors and other risks detailed in the
company's Annual Report on Form 10-K for the year ended December 31, 1998 and
other filings with the Securities and Exchange Commission.
PAGE
PART I - FINANCIAL INFORMATION................................................3
Item 1. Financial Statements.................................................3
Consolidated Balance Sheets as of September 30, 1999
(unaudited) and December 31, 1998....................................3
Consolidated Statements of Earnings (unaudited) for the
Three Month Periods and Nine Month Periods Ended September 30,
1999 and 1998........................................................4
Consolidated Statements of Cash Flows (unaudited) for the
Nine Month Periods Ended September 30, 1999 and 1998.................5
Consolidated Statements of Comprehensive Income (unaudited)
for the Three Month Periods and Nine Month Periods Ended
September 30, 1999 and 1998..........................................6
Notes to Consolidated Interim Financial Statements...................7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........12
PART II - OTHER INFORMATION...................................................13
Item 1. Legal Proceedings...................................................13
Item 2. Changes in Securities and Use of Proceeds...........................13
Item 3. Defaults Upon Senior Securities.....................................13
Item 4. Submission of Matters to a Vote of Security Holders.................13
Item 5. Other Information...................................................13
Item 6. Exhibits and Reports on Form 8-K....................................13
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------- ------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 2,322 $ 2,541
Accounts receivable, trade 29,981 22,393
Inventories 18,112 13,376
Prepaid expenses and other assets 2,072 1,215
Deferred income taxes 257 265
------------------- ------------------
Total Current Assets 52,744 39,790
Property, plant and equipment, net 84,575 63,715
Other assets
Goodwill 48,044 46,307
Covenants not to compete 1,533 1,740
Sundry 2,296 2,071
------------------- ------------------
Total Other Assets 51,873 50,118
------------------- ------------------
$ 189,192 $ 153,623
=================== ==================
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt $ 1,189 $ 1,117
Current maturities of notes payable - related parties 1,000 1,552
Accounts payable 16,573 16,144
Accrued liabilities 8,362 12,251
Income taxes payable 442 392
------------------- ------------------
Total Current Liabilities 27,566 31,456
Long-term debt, excluding current maturities 86,747 57,677
Notes payable - related parties, excluding current maturities 4,250 5,149
Convertible subordinated debentures 21,750 20,769
Junior subordinated notes 3,359 3,359
Deferred income taxes 3,355 1,865
Preferred stock of subsidiaries 1,308 1,308
Redeemable preferred stock 550 700
Shareholders' equity
Preferred stock, $100 par value, 10% cumulative,
authorized 150,000 shares - -
Paid-in capital - warrants, $10 per common share exercise
price, 105,000 and 90,000 warrants outstanding
in 1998 and 1999, respectively 121 141
Common stock, no par value, authorized 20,000,000
shares, issued and outstanding 7,156,825 and 7,208,083
shares in 1998 and 1999, respectively 27,779 27,338
Retained earnings 11,592 5,244
Accumulated comprehensive gain (loss) 815 (1,383)
------------------- ------------------
40,307 31,340
------------------- ------------------
$ 189,192 $ 153,623
=================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- ------------------------------------
1999 1998 1999 1998
------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 37,898 $ 22,711 $ 116,660 $ 56,455
Cost of goods sold 28,854 17,263 84,803 41,805
------------------ ----------------- ----------------- -----------------
Gross profit 9,044 5,448 31,857 14,650
Selling, general and
administrative expenses 5,360 3,454 17,278 9,572
------------------ ----------------- ----------------- -----------------
Operating profit 3,684 1,994 14,579 5,078
Other income (expense)
Interest income 24 - 62 -
Interest (expense) (1,734) (906) (4,717) (1,594)
Sundry, net 14 16 209 43
------------------ ----------------- ----------------- -----------------
(1,696) (890) (4,446) (1,551)
------------------ ----------------- ----------------- -----------------
Earnings before income taxes and
minority interest 1,988 1,104 10,133 3,527
Minority interest - 19 - 39
------------------ ----------------- ----------------- -----------------
Earnings before income taxes 1,988 1,085 10,133 3,488
Income tax expense 713 469 3,722 1,373
------------------ ----------------- ----------------- -----------------
Net earnings 1,275 616 6,411 2,115
Preferred stock dividends 12 - 47 -
------------------ ----------------- ----------------- -----------------
Net earnings on common shares $ 1,263 $ 616 $ 6,364 $ 2,115
================== ================= ================= =================
Basic earnings per common share:
Earnings per common share $ 0.18 $ 0.09 $ 0.89 $ 0.30
------------------ ----------------- ----------------- -----------------
Earnings per common share - assuming
dilution:
Net earnings on common shares $ 1,263 $ 616 $ 6,364 $ 2,115
Proforma reduction in interest
on convertible debentures 245 - 402 -
------------------ ----------------- ----------------- -----------------
Proforma net earnings on common
shares assuming dilution $ 1,508 $ 616 $ 6,766 $ 2,115
================== ================= ================= =================
Earnings per common share assuming
dilution $ 0.16 $ 0.08 $ 0.82 $ 0.29
------------------ ----------------- ----------------- -----------------
Basic weighted average common shares
outstanding 7,203,003 7,161,877 7,180,202 7,161,827
------------------ ----------------- ----------------- -----------------
Diluted weighted average common shares
and equivalents 8,990,564 7,345,771 8,291,555 7,271,782
------------------ ----------------- ----------------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------------------
1999 1998
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 6,411 $ 2,115
Adjustments to reconcile net earnings to
net cash provided by operations
Depreciation of property, plant and equipment 4,698 2,131
Amortization of goodwill 2,357 1,224
Deferred income taxes 1,420 (276)
Changes in operating assets and liabilities, net of business acquisition
(Increase) Decrease in accounts receivable (5,945) (521)
(Increase) Decrease in inventories (3,490) (886)
(Increase) Decrease in prepaid expenses (843) (1,085)
(Increase) Decrease in other assets (1,247) (5,700)
Increase (Decrease) in accounts payable (19) 782
Increase (Decrease) in income taxes payable 49 (254)
Increase (Decrease) in accrued liabilities (3,418) 231
------------ ------------
Net cash (used) by operating activities (27) (2,239)
Cash flows from investing activities
Purchase of property, plant and equipment (23,766) (13,767)
Acquisitions of businesses, net of cash acquired (4,168) (30,509)
------------ ------------
Net cash (used in) investing activities (27,934) (44,276)
Cash flows from financing activities
Proceeds from notes payable - related parties - 23
Repayments of notes payable - related parties (1,451) (1,881)
Capital lease financing 147 -
Capital lease payments (167) (128)
Net proceeds from issuance (redemption) of common stock 161 (6)
Issuance of convertible subordinated debentures - 20,769
Redemption of redeemable preferred stock (150) -
Dividends paid (47) -
Redemption of preferred stock of subsidiary - (113)
Payments on long-term debt (706) (852)
Net proceeds on note payable to bank 29,819 29,918
------------ ------------
Net cash provided by financing activities 27,606 47,730
Effect of exchange rate changes on cash 136 (51)
------------ ------------
Net increase (decrease) in cash (219) 1,164
Cash at beginning of period 2,541 2,353
------------ ------------
Cash at end of period $ 2,322 $ 3,517
============ ============
Supplemental Cash Flow Disclosure
Cash paid for:
Interest $ 5,433 $ 1,182
============ ============
Taxes $ 1,461 $ 1,296
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net earnings $ 1,263 $ 616 $ 6,364 $ 2,115
Other comprehensive income (loss),
equity adjustment from foreign translation 246 (1,112) 2,198 (1,298)
------------- ------------- ------------- -------------
Comprehensive income (loss) $ 1,509 $ (496) $ 8,562 $ 817
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
NOBLE INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Note A--Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, the financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and such
adjustments are of a normal recurring nature.
The accompanying consolidated interim financial statements as of and for the
nine months ended September 30, 1998, include Noble International, Ltd. and its
wholly-owned subsidiaries, Noble Component Technologies, Inc. ("NCT"); Monroe
Engineering Products, Inc. ("Monroe"), Cass River Coating, Inc. (dba Vassar
Industries, "Vassar"), Skandy Corp. ("Skandy"), Utilase Production Process, Inc.
("UPP"), Noble Metal Forming, Inc. ("NMF"), Noble Metal Processing, Inc.
("NMP"), Noble Land Holdings, Inc. ("Land Holdings"), Noble Canada, Inc. ("Noble
Canada"), Noble Canada Holdings Limited ("NCH") and Tiercon Plastics, Inc.
("TPI"), Noble Components & Systems, Inc. ("NCS"), Noble Technologies, Inc.
("NTI"), Noble Metal Processing Canada, Inc. ("NMPC") and Tiercon Industries,
Inc. ("Tiercon") (collectively, "Noble" or the "Company"). At December 31, 1998,
and for the period ended September 30, 1999, the consolidated interim financial
statements also include Noble Canada II, Inc. ("Noble Canada II"), Tiercon
Coatings, Inc. ("TCI"), and Noble Metal Processing-Midwest, Inc. ("NMPW"), and
Noble Canada Holdings II Ltd. ("NCHII"). On July 31, 1999 TPI, TCI and Noble
Canada II were amalgamated with and into Tiercon. Simultaneously, NCH NCHII and
Noble Canada were amalgamated with and into Noble Canada. TPI and TCI continue
to operate as separate divisions of Tiercon.
Results for interim periods should not be considered indicative of results for a
full year. The year-end consolidated balance sheet was derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
Note B--Inventories
Inventories at September 30, 1999 and December 31, 1998 consisted of the
following (in thousands):
September 30, December 31,
1999 1998
------------- ------------
Raw materials and purchased parts $ 8,500 $ 4,626
Work in process 1,428 1,661
Finished goods 4,498 4,122
Unbilled customer tooling 3,686 2,967
-------- -------
$ 18,112 $ 13,376
7
<PAGE>
Note C--Industry Segments
The Company classifies its operating subsidiaries into three industry segments
based on types of products and services: metal processing (NMP, NMPC, NMPW, NMF,
UPP and Land Holdings), plastics and coatings (NCT, TPI, TCI and Vassar) and
distribution (Monroe). The metal processing group provides a variety of laser
welding, metal blanking, forming, slitting, cutting and die construction
products and services utilizing proprietary laser weld and light die technology.
The plastics and coatings group manufactures a wide variety of plastic
automotive trim components and provides comprehensive coatings services. Both
the metal processing and plastics and coatings groups sell direct to automotive
OEM's and Tier I suppliers. Monroe distributes tooling components.
Transactions between the metal processing, plastics and coatings and
distribution segments are not significant and have been eliminated. Interest
expense is allocated to each segment based on the segments actual borrowings
from the corporate headquarters, together with a partial allocation of corporate
general and administrative expenses. Revenues from external customers are
identified geographically based on the customer's shipping destination.
The Company's operations by business segment for the nine months ended September
30, 1999 follows (in thousands):
<TABLE>
<CAPTION>
Metal Plastics & Segment
Processing Coatings Distribution Totals
----------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Revenues from external customers $ 59,880 $ 53,698 $ 3,082 $ 116,660
Interest income 4 58 - 62
Interest expense 3,787 3,351 146 7,284
Depreciation and amortization 4,266 2,265 214 6,745
Segment profit pre tax 6,484 1,633 819 8,936
Segment assets 96,681 82,435 6,717 185,833
Expenditure for segment assets 10,469 13,234 31 23,734
Reconciliation to consolidated amounts
Earnings
Total earnings for reportable segments $ 8,936
Unallocated corporate headquarters expense 1,197
--------
Earnings before income taxes $ 10,133
--------
Assets
Total assets for reportable segments $185,833
Corporate headquarters 3,359
--------
Total consolidated assets $189,192
========
Other Significant Items
<CAPTION>
Segment Consolidated
Totals Adjustments Totals
--------- ----------- ------------
Interest expense $ 7,284 $ (2,567) $ 4,717
Expenditures for segment assets 23,734 32 23,766
Depreciation and amortization 6,745 310 7,055
</TABLE>
8
<PAGE>
Geographic Information
Long-Lived
Revenues Assets
------------ -----------
United States $ 87,480 $ 77,336
Canada 28,188 53,166
Mexico 965 2,117
Europe/other 27 -
------------ -----------
Total $ 116,660 $ 132,619
============ ===========
The Company's operations by business segment for the nine months ended September
30, 1998 follows (in thousands):
<TABLE>
<CAPTION>
Metal Plastics & Segment
Processing Coatings Distribution Totals
----------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Revenues from external customers $ 37,063 $ 15,472 $ 3,290 $ 56,455
Interest expense 1,580 860 311 2,751
Depreciation and amortization 2,374 747 209 3,330
Segment profit (loss) pre tax 2,824 (603) 1,082 3,303
Segment assets 73,117 40,542 7,103 120,762
Expenditure for segment assets 12,083 1,594 2 13,679
Reconciliation to consolidated amounts
Earnings
Total earnings for reportable segments $ 3,303
Unallocated corporate headquarters expense 185
---------
Earnings before income taxes and extraordinary item $ 3,488
=========
Assets
Total assets for reportable segments $ 120,762
Corporate headquarters 2,762
---------
Total consolidated assets $ 123,524
=========
Other Significant Items
<CAPTION>
Segment Consolidated
Totals Adjustments Totals
--------- ----------- ------------
Interest expense $ 2,751 $ (1,157) $ 1,594
Expenditures for segment assets 13,679 88 13,767
Depreciation and amortization 3,330 25 3,355
</TABLE>
Geographic Information
Long-Lived
Revenues Assets
------------ -----------
United States $ 44,366 $ 61,670
Canada 11,570 19,337
Mexico 519 -
------------ -----------
Total $ 56,455 $ 81,007
============ ===========
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net Sales. Net sales for the three months September 30, 1999 increased
66.9% to $37.898 million from $22.711 million for the comparable quarter of
1998. Net sales for the nine months ended September 30, 1999 increased 106.6% to
$116.660 million from $56.455 million for the comparable nine months of 1998.
The increase in sales is substantially due to the acquisitions of TPI in July
1998, the acquisitions of TCI and NMPW in October 1998, higher laser welded
blank sales at NMP and the negative impact of the General Motors strike on the
six months ended September 30, 1998. TPI and TCI sales combined represented
43.3% and 60.1% of the increased sales, respectively, for the three and nine
month periods ended September 30, 1999. NMPW sales represented 24.8% and 18.7%
of the increased sales, respectively, for the three and nine month period ended
September 30, 1999.
Cost of Goods Sold. As a percent of net sales, cost of goods sold for
the three month period ended September 30, 1999 remained flat at 76.1% as
compared with 76.0% for the prior year period and for the nine month period
ended September 30, 1999, decreased to 72.7% from 74.1% compared to the prior
year period. The increase in cost of goods sold as a percent of net sales for
the three months ended September 30, 1998, as compared with the percent of net
sales for the nine months ended September 30, 1998, is primarily due to the
inclusion of TPI, which had significantly higher cost of goods sold as a percent
of net sales than the Company's other operations, and the reduced volume of
sales due to the General Motors' strike. Cost of goods sold as a percent of
sales for the three months ended September 30, 1999 were affected by costs and
inefficiencies associated with initiating production at a new coatings facility,
launching new automotive programs in the Plastics & Coatings segment, steel
supplier shortages, disruption to DiamlerChrysler production schedules from the
hurricane in North Carolina which in turn affected the Metal Processing segment,
and other cyclical factors associated with automotive OEM model year changeovers
and production schedules. The decrease in cost of goods sold as a percentage of
net sales for the nine months ended September 30, 1999 compared to the prior
period is primarily due to higher sales volumes and increased operating
efficiencies.
Gross Profit. The Company's gross profit increased by 66.0% to $9.044
million for the three months ended September 30, 1999 from $5.448 million for
the comparable quarter of 1998. Gross profit for the nine months ended September
30, 1999 increased by 117.5% to $31.857 million from $14.650 million for the
comparable period of 1998.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1.906 million, or 55.2% for the three
month period ended September 30, 1999 and for the nine month period increased by
$7.706 million, or 80.5% as compared to the comparable periods of 1998. The
increase in selling, general and administrative expenses was due primarily to
the acquisitions of TCI and NMPW for the three month period ended September 30,
1999 and the acquisitions of TPI, TCI and NMPW for the nine months ended
September 30, 1999. Notwithstanding the increased level of expenses, selling,
general and administrative expenses actually decreased as a percentage of net
sales from 15.2% for the third quarter of 1998 to 14.1% for the third quarter of
1999. Selling, general and administrative expenses as a percent of net sales
decreased from 17.0% for the nine months ended September 30, 1998 to 14.8% for
the nine months ended September 30, 1999. The decreases in percentage of sales
are substantially the result of spreading corporate overhead costs over a larger
sales base.
Operating Profit. As a result of the foregoing factors, operating
profit increased to $3.684 million for the three months ended September 30, 1999
compared with $1.994 million in the prior period, an increase of 84.8%. For the
nine months ended September 30, 1999, operating profit increased to $14.579
million, an increase of 187.1%.
10
<PAGE>
Interest Expense. Interest expense increased 91.4% to $1.734 million
for the three months ended September 30, 1999 from $.906 million for the
comparable quarter of the prior year. Interest expense for the nine months ended
September 30, 1999 increased 195.9% to $4.717 million from $1.594 million for
the comparable nine months of the prior year. The increase is primarily due to
higher levels of long term debt incurred to finance the acquisitions of TPI, TCI
and NMPW, as well as additions of property, plant and equipment and working
capital to support increased sales.
Net Earnings. As a result of the foregoing factors, net earnings on
common shares increased by $.647 million to $1.263 million for the three months
ended September 30, 1999 from earnings of $.616 million for the prior period.
Net earnings on common shares for the nine months ended September 30, 1999
increased by $4.249 million to $6.364 million from earnings of $2.115 million
for the prior period.
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. 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 September
30, 1999, the Company had working capital of approximately $25.178 million.
The Company generated cash flow from earnings, depreciation,
amortization and deferred income taxes of $14.886 million for the nine months
ended September 30, 1999, which was offset by increases in expenditures for
working capital and operating assets. The Company used cash in investing
activities of $27.934 million for the nine months ended September 30, 1999. Cash
used in investing activities included $23.766 million for the purchase of
property, plant and equipment, $3.885 million for the acquisition of certain
assets of Jebco Manufacturing, Inc. in August 1999 and $.283 million for the
acquisition of certain assets of BEL-Tronics CSD in February 1999. Expenditures
for property, plant and equipment were primarily to fund equipment purchases for
TCI's new coating facility which was completed in September 1999, equipment
purchases by NMP and TPI and expansion of NMPW facilities. The Company generated
$27.606 million in cash flow from financing activities for the nine months ended
September 30, 1999. The financing activities in the period were primarily
borrowings on the Company's revolving credit facility offset by repayment of
other financing obligations.
The Company maintains a $105 million secured revolving credit facility
(the "Credit Facility") with a syndicate of banks. The Credit Facility expires
in December 2002, is secured by the assets of Noble and its subsidiaries and
provides for the issuance of up to $5 million in standby or documentary letters
of credit. The Credit Facility replaced an existing $70 million facility in June
1999. The Credit Facility may be utilized for general corporate purposes,
including working capital and acquisition financing, and provides the Company
with borrowing options for multi-currency loans. Borrowing options include a
eurocurrency rate or a base rate. Advances under the Credit Facility during the
nine months ended September 30, 1999 bore interest at the rate of 7.6% per
annum. The Credit Facility 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 $25 million. The Company is in compliance with the terms of
the Credit Facility.
11
<PAGE>
The liquidity provided by the Company's 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 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 regularly
reviews, as part of its business strategy, future growth through opportunistic
acquisitions which may involve the expenditure of significant funds. Depending
upon the nature, size and timing of future acquisitions, if any, 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.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. As a result, by the year 2000, computer systems and
software used by many companies will need to be upgraded to comply with such
"Year 2000" requirements. The Company has conducted an evaluation of the actions
necessary to ensure that its business critical computer systems will be able to
function without disruption with respect to the application of dating systems in
the year 2000. As a result of this evaluation, the Company has upgraded,
replaced and tested certain of its information and other computer systems so as
to be able to operate without disruption due to Year 2000 issues. The Company
has evaluated and will continue to evaluate the ability of its key suppliers to
operate without disruption due to Year 2000 issues. The Company's remedial
actions are substantially completed and based on information currently
available, the Company does not anticipate the costs of its remedial actions
will be material to the Company's results of operations and financial condition
and are being expensed as incurred.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to the impact of foreign currency fluctuations.
International revenues from the Company's foreign subsidiaries were
approximately 25% of the total revenues for the nine months ended September 30,
1999. The Company's primary foreign currency exposure is the Canadian Dollar.
The Company manages its exposures to foreign currency assets and earnings
primarily by funding certain foreign currency denominated assets with
liabilities in the same currency and, as such, certain exposures are naturally
offset.
A portion of the Company's assets are based in its foreign operations
and are translated into U.S. Dollars at foreign currency exchange rates in
effect as of the end of each period, with the effect of such translation
reflected as a separate component of shareholders' equity. Accordingly, the
Company's consolidated shareholders' equity will fluctuate depending on the
weakening or strengthening of the U.S. Dollar against the respective foreign
currency.
The Company's financial results are affected by changes in U.S. and
foreign interest rates. The Company does not hold financial instruments that are
subject to market risk (interest rate risk and foreign exchange risk).
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable.
Item 2. Changes in Securities and Use of Proceeds
On September 30, 1999, a holder of the Company's 6% Convertible
Subordinated Debentures (the "Debentures") converted $158,000 in principal
amount of Debentures and was issued 11,039 shares of the Company's common stock.
The Debentures were sold in July 1998 as part of the Company's private offering
of $20.76 million in principal amount of Debentures pursuant to Regulation S
under the Securities Act of 1933 as amended.
Item 3. Defaults Upon Senior Securities
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
Item 5. Other Information
Inapplicable.
Item 6. Exhibits and Reports on Form 8-K
27.1 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBLE INTERNATIONAL, LTD.
Dated: November 15, 1999 By:
------------------------------
Daniel W. Sampson,
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
interim financial statements of the Company for the nine months ended September
30, 1999 and is qualified in its entirety by reference to such interim financial
statements.
</LEGEND>
<CIK> 0001034258
<NAME> Noble International, Ltd.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 2,322
<SECURITIES> 0
<RECEIVABLES> 29,981
<ALLOWANCES> 0
<INVENTORY> 18,112
<CURRENT-ASSETS> 52,744
<PP&E> 84,575
<DEPRECIATION> 0
<TOTAL-ASSETS> 189,192
<CURRENT-LIABILITIES> 27,566
<BONDS> 25,109
0
0
<COMMON> 27,779
<OTHER-SE> 1,858
<TOTAL-LIABILITY-AND-EQUITY> 189,192
<SALES> 116,660
<TOTAL-REVENUES> 116,660
<CGS> 84,803
<TOTAL-COSTS> 84,803
<OTHER-EXPENSES> 17,278
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,717
<INCOME-PRETAX> 10,133
<INCOME-TAX> 3,722
<INCOME-CONTINUING> 6,411
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,411
<EPS-BASIC> 0.89
<EPS-DILUTED> 0.82
</TABLE>
