================================================================================
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 March 31, 2000
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
------------------------------------------------------------------------
(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, $.001 par
value, outstanding as of March 31, 2000 was 7,222,552.
================================================================================
<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, 1999 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 March 31, 2000
(unaudited) and December 31, 1999........................................................................3
Consolidated Statements of Earnings (unaudited) for the
Three Month Periods Ended March 31, 2000 and 1999........................................................4
Consolidated Statements of Cash Flows (unaudited) for the
Three Month Periods Ended March 31, 2000 and 1999........................................................5
Consolidated Statements of Comprehensive Income (unaudited)
for the Three Month Periods Ended March 31, 2000 and 1999................................................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..............................................13
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>
March 31, December 31,
ASSETS 2000 1999
------------------ -------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 225 $ 685
Accounts receivable, trade 18,331 14,088
Inventories 6,266 6,919
Prepaid expenses and other assets 992 1,789
Income taxes currently refundable 22 1,438
Deferred income taxes 258 258
Net assets of discontinued operations 1,329 67,210
------------------ -------------------
Total Current Assets 27,423 92,387
Property, plant and equipment, net 57,713 54,628
Other assets
Goodwill 24,317 24,716
Covenants not to compete 930 981
Sundry 1,615 2,093
------------------ -------------------
Total Other Assets 26,862 27,790
------------------ -------------------
$ 111,998 $ 174,805
================== ===================
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt $ 688 $ 778
Current maturities of notes payable - related parties - 5,000
Accounts payable 10,442 9,784
Accrued liabilities 3,575 4,846
Income taxes payable 6,660 -
------------------ -------------------
Total Current Liabilities 21,365 20,408
Long-term debt, excluding current maturities 15,546 86,915
Convertible subordinated debentures 16,475 21,536
Junior subordinated notes 3,359 3,359
Deferred income taxes 2,221 2,221
Redeemable preferred stock 513 513
Shareholders' equity
Preferred stock, $100 par value, 10% cumulative,
authorized 150,000 shares - -
Paid-in capital - warrants, $10 per common share exercise
price, 90,000 warrants outstanding 121 121
Common stock, $.001 par value, authorized 20,000,000
shares, issued and outstanding 7,241,698 and 7,222,552
shares in 1999 and 2000, respectively 27,693 27,993
Retained earnings 24,992 12,005
Accumulated comprehensive loss (287) (266)
------------------ -------------------
52,519 39,853
------------------ -------------------
$ 111,998 $ 174,805
================== ===================
</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
March 31,
---------------------------------------
2000 1999
------------------- -----------------
<S> <C> <C>
Net sales $ 25,064 $ 20,990
Cost of goods sold 17,013 13,274
------------------- -----------------
Gross profit 8,051 7,716
Selling, general and
administrative expenses 3,870 4,123
------------------- -----------------
Operating profit 4,181 3,593
Other income (expense)
Interest income 3 -
Interest (expense) (515) (532)
Sundry, net 10 190
------------------- -----------------
(502) (342)
Earnings from continuing operations before income taxes
------------------- -----------------
and extraordinary item 3,679 3,251
Income tax expense 1,371 1,229
------------------- -----------------
Net earnings from continuing operations before extraordinary item 2,308 2,022
Preferred stock dividends 14 17
Net earnings from continuing operations on common shares
------------------- -----------------
before extraordinary item 2,294 2,005
Net earnings (loss) from discontinued operations (115) 805
Gain on sale of discontinued operations (less income tax of $6,660) 11,200 -
------------------- -----------------
Net earnings before extraordinary item 13,379 2,810
Extraordinary item - loss from extinguishment of debt (less income tax of $203) (394) -
Net earnings on common shares $ 12,985 $ 2,810
=================== =================
Basic earnings per common share:
Earnings per common from continuing operations before extraordinary item $ 0.32 $ 0.28
------------------- -----------------
Earnings per common share - discontinued operations $ 1.53 $ 0.11
------------------- -----------------
Extraordinary item - loss from extinguishment of debt $ (0.06) $ -
------------------- -----------------
Earnings per common share $ 1.79 $ 0.39
------------------- -----------------
Earnings per common share - assuming dilution:
Net earnings from continuing operations and before extraordinary item $ 2,294 $ 2,005
Proforma reduction in interest on convertible debentures 62 -
------------------- -----------------
Proforma net earnings from continuing operations before extraordinary item 2,356 2,005
Net earnings (loss) from discontinued operations (115) 805
Gain on sale of discontinued operations (less income tax of $6,660) 11,200 -
------------------- -----------------
Proforma net earnings before extraordinary item 13,441 2,810
Extraordinary item - loss from extinguishment of debt (less income tax of $203) (394) -
------------------- -----------------
Proforma net earnings on common shares assuming dilution $ 13,047 $ 2,810
=================== =================
Earnings per common share - assuming dilution:
Earnings per common from continuing operations before extraordinary item $ 0.29 $ 0.27
------------------- -----------------
Earnings per common share - discontinued operations $ 1.42 $ 0.10
------------------- -----------------
Extraordinary item - loss from extinguishment of debt $ (0.05) $ -
------------------- -----------------
Earnings per common share $ 1.66 $ 0.37
------------------- -----------------
Basic weighted average common shares outstanding 7,234,051 7,208,675
------------------- -----------------
Diluted weighted average common shares and equivalents 7,858,882 7,505,689
------------------- -----------------
</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>
Three Months Ended
March 31,
-----------------------------------------
2000 1999
------------------- ------------------
<S> <C> <C>
Cash flows from operating activities
Net earnings from continuing operations $ 1,914 $ 2,022
Adjustments to reconcile net earnings to
net cash provided by operations
Interest paid in kind 354 313
Depreciation of property, plant and equipment 1,349 1,160
Amortization of goodwill 481 416
Deferred income taxes - (55)
Changes in operating assets and liabilities, net of business acquisition
Increase in accounts receivable (4,243) (1,517)
Decrease (increase) in inventories 653 (193)
Decrease in prepaid expenses 797 3
Decrease in other assets 447 55
Increase in accounts payable 658 3,894
Decrease in income taxes payable 1,416 1,006
Decrease in accrued liabilities (998) (1,376)
------------------- ------------------
Net cash provided by continuing operations 2,828 5,728
Net cash used by discontinued operations (115) (7,071)
Net cash from sale of discontinued operations 83,639 -
------------------- ------------------
Net cash provided (used) by operations 86,352 (1,343)
Cash flows from investing activities
Purchase of property, plant and equipment (4,434) (4,169)
------------------- ------------------
Net cash (used in) investing activities (4,434) (4,169)
Cash flows from financing activities
Repayments of notes payable - related parties (5,000) (664)
Capital lease payments (12) (9)
Net proceeds used for redemption of common stock (300) (12)
Redemption of convertible subordinated debentures (5,688) -
Redemption of redeemable preferred stock - (37)
Dividends paid (14) (17)
Payments on long-term debt (234) (275)
Net proceeds (repayments) on note payable to bank (71,130) 6,027
------------------- ------------------
Net cash provided (used) by financing activities (82,378) 5,013
Effect of exchange rate changes on cash - (35)
------------------- ------------------
Net decrease in cash (460) (534)
Cash at beginning of period 685 810
------------------- ------------------
Cash at end of period $ 225 $ 276
=================== ==================
Supplemental Cash Flow Disclosure
Cash paid for:
Interest $ 923 $ 1,562
=================== ==================
Taxes $ - $ 45
=================== ==================
</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
March 31,
----------------------------
2000 1999
------------- -------------
<S> <C> <C>
Net earnings $12,985 $ 2,810
Other comprehensive income (loss),
equity adjustment from foreign currency translation (21) 61
------------- -------------
Comprehensive income $12,964 $ 2,871
============= =============
</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
three months ended March 31, 2000 and for the period ended December 31, 1999,
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"), Tiercon Plastics, Inc. ("TPI"), Noble Components & Systems,
Inc. ("NCS"), Noble Technologies, Inc. ("NTI"), Noble Metal Processing Canada,
Inc. ("NMPC"), Noble Canada II, Inc. ("Noble Canada II"), Tiercon Coatings, Inc.
("TCI"), Noble Metal Processing-Midwest, Inc. ("NMPW"), and Noble Canada
Holdings II Ltd. ("NCHII") and Tiercon Industries, Inc. ("Tiercon")
(collectively, "Noble" or the "Company"). 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 continued
to operate as separate divisions of Tiercon. All significant intercompany
balances and transactions have been eliminated in consolidation.
Discontinued operations include all of the companies previously classified as
the Company's plastics and coatings industry segment (Noble Canada, Tiercon,
NCT, and Vassar). On December 24, 1999 the Company executed a definitive
agreement to sell these operations and the sale was completed on January 11,
2000 (Note B). Results of these operations are reported as discontinued
operations in the Consolidated Financial Statements for all periods presented.
The assets and liabilities of these operations have been reported in the
Consolidated Balance Sheet as net assets of discontinued operations.
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, 1999.
During the three months ended March 31, 2000, the Company redeemed $5.688
million of its 6% Convertible Subordinated Debentures. The unamortized portion
of issuance costs related to the redeemed debentures together with premium and
certain transaction costs were accordingly expensed and are reported as an
extraordinary item.
Note B - Sale of Plastics and Coatings Segment
On January 11, 2000 the Company completed the sale of all of the outstanding
capital stock of its subsidiary, Noble Canada, including Noble Canada's
wholly-owned subsidiary Tiercon (the sale of Noble Canada and Tiercon is
hereinafter referred to as the ("Tiercon Sale"). In addition, as part of the
7
<PAGE>
Tiercon Sale, the Company through its wholly owned subsidiary NCS, sold all of
the outstanding capital stock of NCS's wholly owned subsidiaries Vassar and NCT.
The sales price for Noble Canada, Vassar and NCT was approximately $83.270
million in cash, plus the conversion of 137,938 shares of the preferred stock of
Noble Canada into common stock of Noble Canada (the preferred shares of Noble
Canada were exchangeable into common stock of the Company). The Company retained
certain real property previously owned by Vassar, valued at approximately $.839
million, and $1.8 million of accounts receivable of Tiercon. In addition, the
aggregate sales price for the Tiercon Sale is subject to adjustment based on the
working capital of Tiercon, Vassar and NCT. Pursuant to terms of the agreement,
the final purchase price adjustment will be made subject to post closing
requirements.
Note C--Inventories
Inventories at March 31, 2000 and December 31, 1999 consisted of the following
(in thousands):
March 31, December 31,
2000 1999
----------- -------------
Raw materials and purchased parts $ 1,848 $ 2,437
Work in process 597 649
Finished goods 2,217 2,607
Unbilled customer tooling 1,604 1,226
---------- --------
$ 6,266 $ 6,919
Note D--Industry Segments
The Company classifies its operating subsidiaries into two industry segments
based on types of products and services: metals processing (NMP, NMPC, NMPW,
NMF, UPP and Land Holdings) 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 metal processing group sells direct to
automotive OEM's and Tier I suppliers. Monroe distributes tooling components.
Transactions between the metal processing 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 three months ended March
31, 2000 follows (in thousands):
Metal Segment
Processing Distribution Totals
---------- ------------ ----------
Revenues from external customers $ 23,948 $ 1,116 $ 25,064
Interest income - - -
Interest expense 1,461 35 1,496
Depreciation and amortization 1,659 74 1,733
8
<PAGE>
Segment profit pre tax 3,002 271 3,273
Segment assets 100,608 6,676 107,284
Expenditure for segment assets 4,452 12 4,464
<TABLE>
<S> <C>
Reconciliation to consolidated amounts
Earnings
Total earnings for reportable segments $ 3,273
Unallocated corporate headquarters expense 406
--------
Earnings from continuing operations before income
taxes and extraordinary item $ 3,679
========
Assets
Total assets for reportable segments $107,284
Net assets of discontinued operations 1,329
Corporate headquarters 3,385
--------
Total consolidated assets $111,998
========
</TABLE>
Other Significant Items
Segment Consolidated
Totals Adjustments Totals
---------- ----------- ------------
Interest expense $ 1,496 $ (981) $ 515
Expenditures for segment assets 4,464 (30) 4,434
Depreciation and amortization 1,733 97 1,830
Geographic Information
Long-Lived
Revenues Assets
---------- ----------
United States $ 20,460 $ 79,115
Canada 4,572 2,915
Mexico 32 -
---------- ---------
Total $ 25,064 $ 82,030
========== =========
The Company's operations by business segment for the three months ended March
31, 1999 follows (in thousands):
Metal Segment
Processing Distribution Totals
---------- ------------- ----------
Revenues from external customers $ 19,906 $ 1,084 $ 20,990
Interest expense 1,192 55 1,247
Depreciation and amortization 1,448 71 1,519
Segment profit pre tax 2,752 290 3,042
Segment assets 84,551 6,862 91,413
Expenditure for segment assets 4,115 5 4,120
9
<PAGE>
<TABLE>
<S> <C>
Reconciliation to consolidated amounts
Earnings
Total earnings for reportable segments $ 3,042
Unallocated corporate headquarters expense 209
--------
Earnings from continuing operations before income
taxes and extraordinary item $ 3,251
========
Assets
Total assets for reportable segments $ 91,413
Net assets of discontinued operations 53,272
Corporate headquarters 4,517
--------
Total consolidated assets $149,202
========
</TABLE>
Other Significant Items
Segment Consolidated
Totals Adjustments Totals
---------- ----------- ------------
Interest expense $ 1,247 $ (715) $ 532
Expenditures for segment assets 4,120 49 4,169
Depreciation and amortization 1,519 57 1,576
Geographic Information
Long-Lived
Revenues Assets
------------ -----------
United States $ 17,324 $ 70,072
Canada 3,666 2,254
------------ ----------
Total $ 20,990 $ 72,326
============ ===========
10
<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 March 31, 2000 increased
19.4% to $25.064 million from $20.990 million for the comparable quarter of
1999. The increase in sales is substantially due to higher laser welded blank
sales at NMP, increased steel processing at NMPW and sales arising from
acquisition of the Jebco assets in August 1999 (the "Jebco Acquisition").
Cost of Goods Sold. As a percent of net sales, cost of goods sold for
the three month period ended March 31, 2000 increased to 67.9% as compared with
63.2% for the prior year period. The increase in cost of goods sold as a percent
of net sales for the three months ended March 31, 2000 is primarily due to
higher material cost required to produce certain new business, including sales
arising from the Jebco Acquisition, and the inclusion of costs for certain plant
personnel previously reported in selling, general and administrative expenses.
Gross Profit. The Company's gross profit increased by 4.3% to $8.051
million for the three months ended March 31, 2000 from $7.716 million for the
comparable period of 1999.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by $.253 million, or 6.1% for the three month
period ended March 31, 2000 as compared to the comparable period of 1999. The
decrease in selling, general and administrative expenses was due primarily to
reductions in overhead expenses and to the reclassification of costs for certain
plant personnel to cost of goods sold for the three months ended March 31, 2000.
Operating Profit. As a result of the foregoing factors, operating
profit increased to $4.181 million for the three months ended March 31, 2000
compared with $3.593 million in the prior period, an increase of 16.4%.
Interest Expense. Interest expense decreased 3.2% to $.515 million for
the three months ended March 31, 2000 from $.532 million for the comparable
quarter of the prior year.
Net Earnings. As a result of the foregoing factors, net earnings from
continuing operations before extraordinary item increased by $.289million to
$2.294 million for the three months ended March 31, 2000 from earnings of $2.005
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 stockholders. 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 March 31,
2000, the Company had working capital of approximately $6.058 million. Working
capital at March 31, 2000, included $1.329 million net assets of discontinued
operations and $6.660 million of income taxes payable, substantially all of
which is related to sale of the discontinued operations. Total debt includes all
borrowing related to both continuing and discontinued operations.
11
<PAGE>
The Company generated cash flow from continuing operations of $2.828
million for the three months ended March 31, 2000. Net cash provided from
continuing operations was primarily the result of net earnings and depreciation
and amortization and lower inventories, prepaid expenses, other assets, income
taxes currently refundable, partially offset by higher accounts receivable and
lower accrued liabilities. The Company used cash in discontinued operations of
$.115 million prior to the Tiercon Sale on January 11, 2000 for the three months
ended March 31, 2000. The Company generated cash of $83.639 million during the
three months ended March 31, 2000, net of related cash expenses, from the
Tiercon Sale. Cash used in investing activities of $4.434 million for the three
months ended March 31, 2000 was for purchase of property, plant and equipment.
The Company used cash in financing activities of $82.378 million for the three
months ended March 31, 2000. Proceeds from the Tiercon Sale sale were used to
reduce amounts borrowed under the Company's secured revolving credit facility
(the "Credit Facility") with Comerica Bank, N.A. The Company repaid a $5.000
million term note payable to the Chief Executive Officer of the Company,
redeemed $5.688 million of 6% Convertible Subordinated Debentures and
repurchased $.3 million of its common shares. Expenditures for property, plant
and equipment were primarily to fund equipment purchases for NMP's new facility
in Shelbyville, Kentucky which is scheduled for completion by June 2000 and to
begin commercial production in August 2000.
The amount of the Credit Facility was $105 million at December 31, 1999,
subsequently amended to a $50 million facility following the Tiercon Sale and
use of $86.0 million cash proceeds to repay borrowings outstanding under the
Credit Facility. The Credit Facility expires in May 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 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 three months ended March 31,
2000 bore interest at the rate of approximately 8.2% 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 and the Tiercon Sale, 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.
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
a material effect on its business over the past two years.
12
<PAGE>
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 18% of the total revenues for the three months ended March 31,
2000. 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).
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable.
Item 2. Changes in Securities and Use of Proceeds
During February 2000, the Company redeemed $5.688 million of its 6%
Convertible Subordinated Debentures (the "Debentures"), financed with proceeds
from the Company's Credit Facility. 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: May 15, 2000 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 three months ended March 31,
2000 and is qualified in its entirety by reference to such interim financial
statements.
</LEGEND>
<CIK> 1034258
<NAME> Noble International, Ltd.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.000
<CASH> 225
<SECURITIES> 0
<RECEIVABLES> 18,331
<ALLOWANCES> 0
<INVENTORY> 6,266
<CURRENT-ASSETS> 27,423
<PP&E> 57,713
<DEPRECIATION> 0
<TOTAL-ASSETS> 111,998
<CURRENT-LIABILITIES> 21,365
<BONDS> 19,834
0
0
<COMMON> 27,693
<OTHER-SE> 513
<TOTAL-LIABILITY-AND-EQUITY> 111,998
<SALES> 25,064
<TOTAL-REVENUES> 25,064
<CGS> 17,013
<TOTAL-COSTS> 17,013
<OTHER-EXPENSES> 3,843
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 515
<INCOME-PRETAX> 3,665
<INCOME-TAX> 1,371
<INCOME-CONTINUING> 2,294
<DISCONTINUED> 11,085
<EXTRAORDINARY> (394)
<CHANGES> 0
<NET-INCOME> 12,985
<EPS-BASIC> 1.79
<EPS-DILUTED> 1.66
</TABLE>
