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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 June 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
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NOBLE INTERNATIONAL, LTD.
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(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
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(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 June 30, 1999 was 7,194,810.
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<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.
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION......................................................................3
Item 1. Financial Statements.......................................................................3
Consolidated Balance Sheets as of June 30, 1999
(unaudited) and December 31, 1998...............................................................3
Consolidated Statements of Earnings (unaudited) for the
Three Month Periods and Six Month Periods Ended June 30, 1999 and 1998..........................4
Consolidated Statements of Cash Flows (unaudited) for the
Six Month Periods Ended June 30, 1999 and 1998..................................................5
Consolidated Statements of Comprehensive Income (unaudited)
for the Three Month Periods and Six Month Periods Ended June 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
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1999 1998
--------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 3,352 $ 2,541
Accounts receivable, trade 25,272 22,393
Inventories 15,081 13,376
Prepaid expenses and other assets 1,619 1,215
Deferred income taxes 249 265
--------- ---------
Total Current Assets 45,573 39,790
Property, plant and equipment, net 78,146 63,715
Other assets
Goodwill 45,752 46,307
Covenants not to compete 1,602 1,740
Sundry 2,445 2,071
--------- ---------
Total Other Assets 49,799 50,118
--------- ---------
$ 173,518 $ 153,623
========= =========
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt $ 1,153 $ 1,117
Current maturities of notes payable - related parties 1,000 1,552
Accounts payable 15,211 16,144
Accrued liabilities 10,714 12,251
Income taxes payable 397 392
--------- ---------
Total Current Liabilities 28,475 31,456
Long-term debt, excluding current maturities 71,994 57,677
Notes payable - related parties, excluding current maturities 4,500 5,149
Convertible subordinated debentures 21,134 20,769
Junior subordinated notes 3,359 3,359
Deferred income taxes 3,309 1,865
Preferred stock of subsidiaries 1,308 1,308
Redeemable preferred stock 625 700
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 7,194,810
shares in 1998 and 1999, respectively 27,779 27,338
Retained earnings 10,345 5,244
Accumulated comprehensive gain (loss) 569 (1,383)
--------- ---------
38,814 31,340
--------- ---------
$ 173,518 $ 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 Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 39,415 $ 16,310 $ 78,762 $ 33,744
Cost of goods sold 28,330 11,875 55,949 24,542
----------- ----------- ----------- -----------
Gross profit 11,085 4,435 22,813 9,202
Selling, general and
administrative expenses 6,067 3,144 11,918 6,118
----------- ----------- ----------- -----------
Operating profit 5,018 1,291 10,895 3,084
Other income (expense)
Interest income 35 - 38 -
Interest (expense) (1,410) (307) (2,983) (688)
Sundry, net 5 1 195 27
----------- ----------- ----------- -----------
(1,370) (306) (2,750) (661)
----------- ----------- ----------- -----------
Earnings before income taxes 3,648 985 8,145 2,423
Income tax expense 1,339 391 3,009 904
----------- ----------- ----------- -----------
Net earnings 2,309 594 5,136 1,519
Preferred stock dividends 18 20 35 20
----------- ----------- ----------- -----------
Net earnings on common shares $ 2,291 $ 574 $ 5,101 $ 1,499
=========== =========== =========== ===========
Basic earnings per common share:
Earnings per common share $ 0.32 $ 0.08 $ 0.71 $ 0.21
----------- ----------- ----------- -----------
Earnings per common share - assuming dilution:
Net earnings on common shares $ 2,291 $ 574 $ 5,101 $ 1,499
Proforma reduction in interest on convertible debentures 157 - 157 -
----------- ----------- ----------- -----------
Proforma net earnings on common shares assuming dilution $ 2,448 $ 574 $ 5,258 $ 1,499
=========== =========== =========== ===========
Earnings per common share assuming dilution $ 0.29 $ 0.08 $ 0.66 $ 0.21
----------- ----------- ----------- -----------
Basic weighted average common shares outstanding 7,177,998 7,156,825 7,168,612 7,157,958
----------- ----------- ----------- -----------
Diluted weighted average common shares and equivalents 8,511,264 7,156,825 8,006,052 7,157,958
----------- ----------- ----------- -----------
</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>
Six Months Ended
June 30,
---------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 5,136 $ 1,519
Adjustments to reconcile net earnings to
net cash provided by operations
Depreciation of property, plant and equipment 2,970 1,205
Amortization of goodwill 1,647 708
Deferred income taxes 1,422 (33)
Changes in operating assets and liabilities, net of business acquisition
Decrease (increase) in accounts receivable (2,478) 834
Increase in inventories (1,445) (856)
Increase in prepaid expenses (390) (713)
Decrease (increase) in other assets (370) 1,134
Increase (decrease) in accounts payable (1,277) 1,328
Decrease in income taxes payable (7) (74)
Decrease in accrued liabilities (1,171) (736)
-------- --------
Net cash provided by operating activities 4,037 4,316
Cash flows from investing activities
Purchase of property, plant and equipment (16,379) (10,316)
Acquisitions of businesses, net of cash acquired (283) -
-------- --------
Net cash (used in) investing activities (16,662) (10,316)
Cash flows from financing activities
Repayments of notes payable - related parties (1,201) (1,830)
Capital lease financing 147 -
Capital lease payments (93) (45)
Net proceeds from issuance (redemption) of common stock 181 (6)
Redemption of redeemable preferred stock (75) -
Dividends paid (35) (20)
Redemption of preferred stock of subsidiary - (75)
Payments on long-term debt (427) (440)
Net proceeds (payments) on note payable to bank 14,941 6,639
-------- --------
Net cash provided by financing activities 13,438 4,223
Effect of exchange rate changes on cash (2) (125)
-------- --------
Net increase (decrease) in cash 811 (1,902)
Cash at beginning of period 2,541 2,353
-------- --------
Cash at end of period $ 3,352 $ 451
======== ========
Supplemental cash flow disclosure
Cash paid for:
Interest $ 3,424 $ 646
======== ========
Taxes $ 1,461 $ 1,011
======== ========
</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 Six Months Ended
June 30, June 30,
------------------------ ------------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net earnings $ 2,291 $ 574 $ 5,101 $ 1,499
Other comprehensive income (loss),
equity adjustment from foreign translation 1,387 (151) 1,952 (186)
------- ------- ------- -------
Comprehensive income $ 3,678 $ 423 $ 7,053 $ 1,313
======= ======= ======= =======
</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 six
months ended June 30, 1998, include Noble International, Ltd. and its
wholly-owned subsidiaries, Noble Component Technologies, Inc. (formerly
Prestolock International, Ltd., "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. (formerly DCT Component Systems, Inc., "NMF"), Noble Metal Processing, Inc.
(formerly Utilase, Inc., "NMP") and Noble Land Holdings, Inc. ("Land Holdings")
(collectively, "Noble" or the "Company"). At December 31, 1998, and for the
period ended June 30, 1999, the consolidated interim financial statements also
include Noble Canada, Inc. ("Noble Canada"), Noble Canada II, Inc. ("Noble
Canada II"), Tiercon Plastics, Inc. (formerly Triam Plastics, Inc., "TPI"),
Tiercon Coatings, Inc. (formerly Centrifugal Coaters, Inc., "TCI"), and Noble
Metal Processing-Midwest, Inc. (formerly H&H Steel Processing, Inc. "NMPW"),
Noble Canada Holdings Limited ("NCH"), Noble Canada Holdings II Ltd. ("NCHII"),
Noble Components & Systems, Inc. ("NCS"), Noble Technologies, Inc. ("NTI"),
Noble Metal Processing Canada, Inc. ("NMPC") and Tiercon Industries, Inc.
("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 June 30, 1999 and December 31, 1998 consisted of the following
(in thousands):
June 30, December 31,
1999 1998
-------- ------------
Raw materials and purchased parts $ 6,011 $ 4,626
Work in process 2,075 1,661
Finished goods 3,909 4,122
Unbilled customer tooling 3,086 2,967
-------- --------
$ 15,081 $ 13,376
7
<PAGE>
Note C--Industry Segments
The Company classifies its companies into three industry segments based on types
of products and services: metal processing (NMPW, NMP, NMPC, 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 1
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 segment's 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 six months ended June 30,
1999 follows (in thousands):
Metal Plastics & Segment
Processing Coatings Distribution Totals
---------- ---------- ------------ -------
Revenues from external customers $ 40,254 $ 36,445 $ 2,063 $ 78,762
Interest income - 38 - 38
Interest expense 2,373 2,117 103 4,593
Depreciation and amortization 2,848 1,450 142 4,440
Segment profit pre tax 5,043 1,955 522 7,520
Segment assets 87,109 75,851 6,764 169,724
Expenditure for segment assets 6,872 9,540 6 16,418
Reconciliation to consolidated amounts
Earnings
Total earnings for reportable segments $ 7,520
Unallocated corporate headquarters expense 625
--------
Earnings before income taxes $ 8,145
========
Assets
Total assets for reportable segments $169,724
Corporate headquarters 3,794
--------
Total consolidated assets $173,518
========
Other Significant Items
Segment Consolidated
Totals Adjustments Totals
------- ----------- ------------
Interest expense $ 4,593 $ (1,610) $ 2,983
Expenditures for segment assets 16,418 18 16,436
Depreciation and amortization 4,440 177 4,617
8
<PAGE>
Geographic Information
Long-Lived
Revenues Assets
-------- ----------
United States $ 59,420 $ 71,923
Canada 18,187 49,915
Mexico 1,078 2,060
Europe/other 77 -
--------- ---------
Total $ 78,762 $ 123,898
========= =========
The Company's operations by business segment for the six months ended June 30,
1998 follows (in thousands):
Metal Plastics & Segment
Processing Coatings Distribution Totals
---------- ---------- ------------ -------
Revenues from external customers $ 25,584 $ 5,451 $ 2,709 $ 33,744
Interest expense 1,039 188 222 1,449
Depreciation and amortization 1,551 205 140 1,896
Segment profit (loss) pre tax 1,923 (330) 768 2,361
Segment assets 59,583 6,219 7,228 73,030
Expenditure for segment assets 9,534 756 - 10,290
Reconciliation to consolidated amounts
Earnings
Total earnings for reportable segments $ 2,361
Unallocated corporate headquarters expense 62
--------
Earnings before income taxes and
extraordinary item $ 2,423
========
Assets
Total assets for reportable segments $ 73,030
Corporate headquarters 138
--------
Total consolidated assets $ 73,168
========
Other Significant Items
Segment Consolidated
Totals Adjustments Totals
------- ----------- ------------
Interest expense $ 1,449 $ (761) $ 688
Expenditures for segment assets 10,290 26 10,316
Depreciation and amortization 1,896 17 1,913
Geographic Information
Long-Lived
Revenues Assets
-------- ----------
United States $ 26,512 $ 50,825
Canada 7,096 2,363
Mexico 136 -
--------- ---------
Total $ 33,744 $ 53,188
========= =========
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 ended June 30, 1999 increased
141.7% to $39.415 million from $16.310 million for the comparable quarter of
1998. Net sales for the six months ended June 30, 1999 increased 133.4% to
$78.762 million from $33.744 million for the comparable six months of 1998. The
increase in sales is substantially due to the acquisitions of TPI, TCI and NMPW,
higher laser welded blank sales from NMP and the impact of the General Motors
strike on the three month period ended June 30, 1998. TPI and TCI, which were
acquired in July and October 1998, respectively, contributed sales of $14.054
million and $29.604 million, respectively, for the three and six month periods
ended June 30, 1999. TPI and TCI sales represented 60.8% and 65.8% of the
increased sales, respectively, for the three and six month periods ended June
30, 1999. NMPW, which was acquired in October 1998, contributed sales of $3.904
million and $7.479 million, respectively, for the three and six month periods
ended June 30, 1999. NMPW sales represented 16.9% and 16.6% of the increased
sales, respectively, for the three and six month period ended June 30, 1999.
Cost of Goods Sold. Cost of goods sold increased 138.6% to $28.330
million for the three months ended June 30, 1999 from $11.875 million for the
comparable quarter of 1998. Cost of goods sold increased 128.0% to $55.949
million for the six months ended June 30, 1999 from $24.542 million for the
comparable period of 1998. As a percent of net sales, cost of goods sold for the
three month period ended June 30, 1999 decreased to 71.9% from 72.8% compared to
prior year period and for the six month period ended June 30, 1999, decreased to
71.0% from 72.7% compared to prior year period. The decrease in cost of goods
sold as a percentage of net sales in the current year is primarily due to higher
sales volumes and increased operating efficiencies.
Gross Profit. The Company's gross profit increased by 149.9% to $11.085
million for the three months ended June 30, 1999 from $4.435 million for the
comparable quarter of 1998. Gross profit for the six months ended June 30, 1999
increased by 147.9% to $22.813 million from $9.202 million for the comparable
period of 1998.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $2.923 million, or 93.0% for the three
month period ended June 30, 1999 and for the six month period increased by
$5.800 million, or 94.8% as compared to the comparable periods of 1998 due
primarily to the acquisitions of TPI, TCI and NMPW. Notwithstanding the
increased level of expenses, selling, general and administrative expenses
actually decreased as a percentage of net sales from 19.3% for the second
quarter of 1998 to 15.4% for the second quarter of 1999. Selling, general and
administrative expenses as a percent of net sales decreased from 18.1% for the
six months ended June 30, 1998 to 15.1% for the six months ended June 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 by $3.727 million to $5.018 for the three months ended June 30,
1999 compared with $1.291 million in the prior period, an increase of 288.7%.
For the six months ended June 30, 1999, operating profit increased by $7.811
million compared with $3.084 million in the prior period, an increase of 253.3%.
Interest Expense. Interest expense increased 359.3% to $1.410 million
for the three months ended June 30, 1999 from $.307 million for the comparable
quarter of the prior year. Interest expense for the six months ended June 30,
1999 increased 333.6% to $2,983 million from $688 million for the comparable six
months of the prior year. The increase is primarily due to
10
<PAGE>
higher long term debt 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 $1.717 million to $2.291 million for the three months
ended June 30, 1999 from earnings of $.574 million for the prior period. Net
earnings on common shares for the six months ended June 30, 1999 increased by
$3.602 million to $5.101 million from earnings of $1.499 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 June 30,
1999, the Company had net working capital of approximately $17.098 million.
The Company generated cash flow from operations of $4.037 for the six
months ended June 30, 1999. Cash generated by operations in the period was
primarily the result of cash provided by net earnings, depreciation and
amortization, partially offset by increases in working capital and operating
assets. The Company used cash in investing activities of $16.662 million for the
six months ended June 30, 1999. Cash used in investing activities included
$16.379 million for the purchase of property, plant and equipment, 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 part
of the equipment purchases for TCI's new coating facility which is nearing
completion, equipment purchases by NMP and expansion of NMPW facilities. The
Company generated $13.438 million in cash flow from financing activities for the
six months ended June 30, 1999. The financing activities in the period were
primarily borrowings on the Company's line of credit 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 facility. 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 six months ended
June 30, 1999 bore interest at the rate of 7.4% 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.
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 intends to
pursue, 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
11
<PAGE>
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.
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 is
also evaluating 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 six months ended June 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 is 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
Inapplicable
Item 3. Defaults Upon Senior Securities.
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on April 26,
1999. Daniel W. Sampson, Jonathan P. Rye, Richard K. Mastain, Michael R.
Hottinger, Lloyd P. Jones, III, Daniel J. McEnroe, Mark T. Behrman, Robert J.
Skandalaris and Anthony R. Tersigni were elected to the Company's Board of
Directors. Each of the nominees, other than Messrs. Rye and Mastain, was an
incumbent director. Of the 7,158,482 shares issued, outstanding and entitled to
vote at the Annual Meeting, 5,700,179 shares were voted in favor of Messrs.
Sampson, Mastain, Hottinger, Jones, McEnroe, Behrman, Skandalaris and Tersigni
while 8,000 shares were withheld from voting. Shares totaling 5,699,979 were
voted in favor of Mr. Rye and 8,200 shares were withheld from voting.
At the Annual Meeting, the Company's shareholders also approved a
proposal to change the Company's state of incorporation from Michigan to
Delaware, with 3,961,607 shares voted for approval, 161,812 shares voted against
and 4,950 shares abstaining. In addition, a proposal to amend the Company's
Bylaws to provide for the establishment of a classified Board of Directors was
approved with 3,961,606 shares voted for approval, 165,712 shares voted against
and 4,350 shares abstaining. The ratification of Grant Thornton LLP as
independent public accountants of the Company was also approved, with 5,676,409
shares voted for approval, 27,450 shares voted against and 4,370 shares
abstaining.
Item 5. Other Information.
Inapplicable.
Item 6. Exhibits and Reports on Form 8-K
27.1 Financial Data Schedule
13
<PAGE>
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: August 13, 1999 By:
-------------------------------
Daniel W. Sampson,
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the interim
financial statements of the Company for the six months ended June 30, 1999 and
is qualified in its entirety by reference to such interim financial statements.
</LEGEND>
<CIK> 0001034258
<NAME> Noble International, Ltd.
<MULTIPLIER> 1000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 3352
<SECURITIES> 0
<RECEIVABLES> 25272
<ALLOWANCES> 0
<INVENTORY> 15081
<CURRENT-ASSETS> 45573
<PP&E> 78146
<DEPRECIATION> 0
<TOTAL-ASSETS> 173518
<CURRENT-LIABILITIES> 28475
<BONDS> 24493
0
0
<COMMON> 27779
<OTHER-SE> 1933
<TOTAL-LIABILITY-AND-EQUITY> 173518
<SALES> 78762
<TOTAL-REVENUES> 78762
<CGS> 55949
<TOTAL-COSTS> 55949
<OTHER-EXPENSES> 11918
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2983
<INCOME-PRETAX> 8145
<INCOME-TAX> 3009
<INCOME-CONTINUING> 5136
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5136
<EPS-BASIC> 0.71
<EPS-DILUTED> 0.66
</TABLE>
