SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________
Commission file number 333-58131
OXFORD AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-3262809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1250 STEPHENSON HIGHWAY, TROY MICHIGAN 48083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 577-1400
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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
309,750 shares of the registrant's Common Stock
were outstanding as of July 31, 1998.
PAGE
<PAGE>
PART I. FINANCIAL INFORMATION
Oxford Automotive, Inc.
Consolidated Statements of Operations
(Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<S> <C> <C>
Three Months Three Months
Ended Ended
June 30, 1998 June 30, 1997
(unaudited) (unaudited)
Net Sales $139,902 $ 91,960
Cost of Sales 128,263 81,452
Gross Profit 11,639 10,508
Selling, general and
administrative expenses 7,799 2,902
------- -------
Operating Income 3,840 7,606
Other income (expense):
Interest income 18 111
Interest expense (4,431) (1,909)
Other income 323 37
------- -------
Income before income taxes (250) 5,845
Income taxes (100) 2,338
------- -------
Net income (150) 3,507
------- -------
Accrued dividends and accretion
on redeemable preferred stock 330 335
------- -------
Net income (loss) applicable to
common stock $ (480) $ 3,172
======= =======
Net income (loss)
per share (basic and diluted) $(1.55) $10.24
======= =======
Weighted average
shares outstanding 309,750 309,750
======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements
PAGE
<PAGE>
Oxford Automotive, Inc.
Consolidated Balance Sheets
(Dollars In Thousands, Except Per Share Amounts)
June 30, March 31,
1998 1998
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,831 $ 18,321
Accounts Receivable, trade 66,837 65,273
Reimbursable Tooling 11,680 13,315
Inventory 31,659 21,305
Unexpended Bond Proceeds 4,217 4,159
Deferred Income Taxes 5,415 4,399
Refundable Income Taxes 679 1,601
Prepaid Expenses and other
Current Assets 2,783 2,803
-------- --------
Total Current Assets 132,101 131,176
Property, Plant and Equipment, net 190,620 163,708
Marketable securities 6,077 8,627
Other noncurrent assets 30,113 10,116
Deferred income taxes 7,002 6,405
-------- --------
Total Assets $365,913 $320,032
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 30,351 $ 52,214
Restructuring reserve 5,462 6,363
Employee Compensation 7,074 4,808
Other current liabilities 13,254 12,242
Current portion of
long-term debt 9,109 10,965
-------- --------
Total Current Liabilities 65,250 86,592
LONG-TERM LIABILITIES
Pension liability 4,646 4,727
Post retirement medical benefits 39,847 35,992
Deferred Taxes 15,661 15,332
Other non current 4,029 2,596
Long Term Debt 194,504 128,483
-------- --------
Total Liabilities 323,937 273,722
PAGE
<PAGE>
Oxford Automotive, Inc.
Consolidated Balance Sheets (continued)
(Dollars In Thousands, Except Per Share Amounts)
June 30, March 31,
1998 1998
(unaudited)
Redeemable Series A $3.00
Cumulative Preferred Stock,
$100 stated value - 457,541
shares authorized, 397,539 shares
issued and outstanding at
June 30, 1998, and
March 31, 1998 40,522 40,192
SHAREHOLDERS' EQUITY
Common stock 1,050 1,050
Retained earnings 4,270 4,750
Accumulated other
comprehensive income (loss) (3,866) 318
-------- --------
1,454 6,118
-------- --------
Total liabilities &
shareholders' equity $365,913 $320,032
======== ========
See accompanying Notes to Consolidated Financial Statements
PAGE
<PAGE>
Oxford Automotive, Inc.
Consolidated Statement of Cash Flows
(Dollars In Thousands, Except Per Share Amounts)
For the Three For the Three
Months Ended Months Ended
June 30, 1998 June 30, 1997
(unaudited) (unaudited)
OPERATING ACTIVITIES
Net Income $ (150) $ 3,507
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation and amortization 6,513 4,308
Deferred income taxes (1,284) 315
Changes in operating assets and
liabilities affecting cash
Accounts receivable, trade 10,222 6,115
Reimbursable tooling 1,493 (577)
Inventories 1,350 (1,212)
Prepaid expenses and other assets (8) (560)
Other assets 40 (442)
Accounts payable (27,865) (7,016)
Restructuring reserve (901) (290)
Employee compensation (603) 1,486
Accrued expenses and other liabilities (738) (1,197)
Income taxes payable/refundable 922 1,929
Other noncurrent liabilities (122) (91)
-------- --------
Net cash provided by (used in) operating
activities (11,131) 6,275
-------- --------
INVESTING ACTIVITIES
Purchase of business, net of cash
acquired (53,465) -
Net purchase of property, plant
and equipment (6,174) (3,577)
-------- -------
Net cash used in investing activities (59,639) (3,577)
FINANCING ACTIVITIES
Net Proceeds (payments) on borrowings 66,021 (83,360)
Principal repayments on borrowing
arrangements (1,856) 124,814
Debt financing costs (619) -
-------- --------
Net cash provided by financing activities 63,546 41,454
<PAGE>
<PAGE>
Oxford Automotive, Inc.
Consolidated Statement of Cash Flows (continued)
(Dollars In Thousands, Except Per Share Amounts)
For the Three For the Three
Months Ended Months Ended
June 30, 1998 June 30, 1997
(unaudited) (unaudited)
Effect of exchange rate
changes on cash (2,266) (54)
Net increase (decrease) in cash
and cash equivalents (9,490) 44,098
Cash and cash equivalents
at beginning of period 18,321 9,671
-------- --------
Cash and cash equivalents
at end of period $ 8,831 $ 53,769
======== ========
See accompanying Notes to Consolidated Financial Statements
<PAGE>
<PAGE>
Oxford Automotive, Inc.
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Oxford Automotive, Inc. (the "Company") have been prepared in accordance with
Rule 10-01 of Regulation S-X and do not include all the information and notes
required by generally accepted accounting principles for complete financial
statements. All adjustments, which include only normal recurring adjustments
that are, in the opinion of management, necessary for a fair presentation of
the results of the interim periods have been made. The results of operations
for such interim periods are not necessarily indicative of results of
operations for a full year. The unaudited condensed financial statements
should be read in conjunction with the Company's consolidated audited
financial statements and notes thereto for the year ended March 31, 1998.
2. INVENTORIES
Inventories are comprised of the following:
June 30, March 31,
1998 1998
Raw materials $ 14,472 $ 6,737
Finished goods and work-in-process 18,356 15,135
-------- --------
32,828 21,872
LIFO and other reserves (1,169) (567)
-------- --------
$ 31,659 $ 21,305
======== ========
The Company does not separately identify finished goods from work-in-process.
3. SENIOR SUBORDINATED NOTES
On April 1, 1998 the Company issued $35.0 million of unsecured 10 1/8% Senior
Subordinated Notes due 2007, Series B (the "Series B Notes"). The Series B
Notes are substantially identical to and rank pari passu in right of payment
with the $125.0 million of unsecured 10 1/8% Senior Subordinated Notes due
2007 issued by the Company on June 24, 1997 (the "Series A Notes"). The
Series A Notes and the Series B Notes are collectively referred to as the
"Notes". The Notes pay interest semi-annually on June 15 and December 15. The
Notes provide for certain covenants, including limitations on: indebtedness,
restricted payments, distributions, sale of assets, affiliate transactions and
merger and consolidation. The Company has optional redemption rights
beginning June 15, 2002.
PAGE
<PAGE>
The Notes are limited to $160.0 million aggregate principal amount. The net
proceeds to the Company from the sale of the Series B Notes were approximately
$37.6 million (after the inclusion of approximately $2.0 million in premium
and accrued interest of approximately $1.0 million paid by the initial
purchaser of the Series B Notes and the deduction of estimated expenses of
approximately $0.4 million). The Company used all of the net proceeds in
connection with the acquisition of the Suspension Division of Eaton
Corporation (the "Suspension Division"). See Note 4.
The Company filed a Registration Statement on Form S-4 ("Registration
Statement") with the Securities and Exchange Commission in order to effect the
exchange of the Series B Notes for new Series B Notes, with substantially the
same terms as the Series B Notes except with respect to certain transfer
restrictions and registration rights. On July 9, 1998, the Registration
Statement was declared effective by the Securities and Exchange Commission and
the exchange offer is scheduled to expire on August 12, 1998.
4. ACQUISITION
On April 1, 1998, the Company purchased the assets of the Suspension Division
of Eaton Corporation (the "Suspension Division") for cash of approximately
$53.5 million, including the investment in the Metalcar joint venture. The
acquisition was financed through the proceeds of the Notes described in Note
3, including the issuance of the Series B Notes and cash on hand. The
acquisition was recorded in accordance with the purchase method of accounting.
Accordingly, results of operations are included only for the periods
subsequent to acquisition. The purchase price plus direct cost of the
acquisition will be allocated to the assets acquired and liabilities assumed
based on their estimated fair values at the date of acquisition. The
unaudited financial statements reflect the preliminary allocation of purchase
price, as the allocation has not been finalized.
PAGE
<PAGE>
5. STATEMENT OF RETAINED EARNINGS (In Thousands, Except Per Share Amounts)
<TABLE>
<S> <C> <C> <C> <C> <C>
Foreign Net
Currency Retained Unrealized gain
Common Translation Earnings on Marketable
Stock Adjustment (Deficit) Securities Total
Balances at
March 31, 1998 $1,050 $(651) $4,750 $ 969 $6,118
Net Income (150) (150)
Foreign Currency
translation adjustments (2,266) (2,266)
Accrued dividends and
accretion of redeemable
preferred stock (330) (330)
Unrealized gain on
marketable securities (1,918) (1,918)
------ ------- ------ ------ ------
Balances at
June 30, 1998 $1,050 $(2,917) $4,270 $ (949) $1,454
====== ======= ====== ====== ======
</TABLE>
<PAGE>
<PAGE>
6. Effective April 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, (SFAS 130"), "Reporting Comprehensive
Income." SFAS 130 requires the presentation of "comprehensive income"
in a separate financial statement. Comprehensive income includes net
income or loss and "other comprehensive income," which comprises such
items as foreign currency translation adjustments, minimum pension
liability adjustments, and unrealized gains and losses on marketable
securities classified as available-for-sale. SFAS 130 does not change
the accounting for these items; rather, it promulgates the presentation
of comprehensive income, which was not previously presented. The
Company's total comprehensive income was as follows:
Three Months Three Months
Ended Ended
June 30, 1998 June 30, 1997
(unaudited) (unaudited)
Net Income (loss) ($150) $3,507
------ ------
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustment (2,266) (54)
Net unrealized gain on
marketable securities (1,918)
------ ------
Other comprehensive income (loss) (4,184) (54)
------ ------
Total comprehensive income (loss) (4,334) 3,453
====== ======
7. CONDENSED CONSOLIDATING INFORMATION
The Notes are guaranteed by certain of the Company's wholly-owned
subsidiaries, including BMG Holdings, Inc., Howell Industries, Inc.,
Lobdell Emery Corporation, Oxford Suspension, Inc., Oxford suspension
Ltd., and RPI Holdings, Inc. (the Guarantor Subsidiaries). The Notes
are not guaranteed by the Company's other consolidated subsidiary,
Oxford Automotriz de Mexico S.A. de C.V. (the Non-guarantor Subsidiary).
The guarantee of the Notes by the Company and the Guarantor Subsidiaries
is full and unconditional. The following unaudited condensed
consolidated financial information presents the financial position,
results of operations and cash flows of (i) the Company as if it
accounted for its subsidiaries on the equity method, (ii) the Guarantor
Subsidiaries on a combined basis and (iii) the Non-guarantor Subsidiary.
Condensed consolidated financial information for the interim periods
prior to June 30, 1998 are not presented because the non-guarantors
during those periods were inconsequential, individually and in the
aggregate, to the consolidated financial statements, and management has
determined that they would not be material to investors.
PAGE
<PAGE>
Condensed Consolidating Balance Sheets
June 30, 1998
(Dollar Amount in thousands)
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Non-guarantor Guarantor Eliminations/
Parent subsidiary subsidiaries adjustments Consolidated
Assets
Current assets
Cash and cash
equivalents $ - $ 205 $ 8,626 $ - $ 8,831
Receivables (net) 10,183 334 66,021 (9,701) 66,837
Inventories 0 92 31,567 31,659
Refundable income
taxes 0 0 679 679
Reimbursable Tooling 0 0 11,680 11,680
Deferred income taxes 558 0 4,857 5,415
Unexpended bond proceeds 0 0 4,217 4,217
Prepaid expenses and
other current assets 318 405 2,060 2,783
-------- ------ -------- -------- --------
Total current assets 11,059 1,036 129,707 (9,701) 132,101
Marketable securities 6,077 0 0 6,077
Other noncurrent assets 6,877 98 17,838 24,813
Deferred income taxes 632 0 6,370 7,002
Property, plant and
equipment, net 2,731 4,342 183,547 190,620
Investment in
consolidated
subsidiaries 91,225 0 739 (86,664) 5,300
-------- ------ -------- -------- --------
Total assets $118,601 $5,476 $338,201 $(96,365) $365,913
======== ====== ======== ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 1,620 $(150) $ 28,881 $ - $ 30,351
Employee compensation 425 276 6,373 7,074
Intercompany accounts (80,712) 7,430 73,282 0
Restructuring reserve 0 0 5,462 5,462
Accrued expenses and
other current
liabilities 867 106 21,982 (9,701) 13,254
Current portion
of borrowings 0 0 9,109 9,109
------ ------ -------- ------ --------
Total current
liabilities (77,800) 7,662 145,089 (9,701) 65,250
Pension liability 0 0 4,646 4,646
Post retirement
medical benefits
liability 0 0 39,847 39,847
Deferred income taxes 279 (717) 16,099 15,661
Other noncurrent
liabilities 0 26 4,003 4,029
Long-term borrowings-
less current portion 191,751 0 2,753 194,504
-------- ------ -------- ------- --------
Total liabilities 114,230 6,971 212,437 (9,701) 323,937
Redeemable preferred
stock 0 0 40,522 40,522
Shareholders' equity
Common Stock 1,050 0 81,560 (81,560) 1,050
Accumulated other
comprehensive
income (loss) (949) (102) (2,815) - (3,866)
Retained earnings 4,270 (1,393) 6,497 (5,104) 4,270
-------- ------ -------- -------- --------
Total liabilities
and shareholders'
equity $118,601 $5,476 $338,201 $(96,365) $365,913
======== ====== ======== ======== ========
</TABLE>
<PAGE>
<PAGE>
Condensed Consolidating Statement of Operations
For the Three Months ended June 30, 1998
(Dollar Amounts in thousands)
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Non-guarantor Guarantor Eliminations/
Parent subsidiary subsidiaries adjustments Consolidated
Sales $ - $ 331 $139,571 $ - $139,902
Cost of sales 755 127,508 128,263
----- ----- -------- ---- --------
Gross profit (424) 12,063 11,639
Selling, general
and administrative
expenses (182) - 7,981 7,799
----- ----- -------- ---- --------
Operating income 182 (424) 4,082 3,840
Other income (expense)
Other 9 314 323
Interest expense (80) 4,493 4,413
----- ----- -------- ---- --------
Income before
income taxes 262 (415) (97) (250)
Income taxes 105 (141) (64) (100)
----- ----- -------- ---- --------
Income before
equity in income
of consolidated
subsidiaries 157 (274) (33) (150)
Equity in income
of consolidated
subsidiaries (307) 307
----- ----- -------- ---- --------
Net income $(150) $(274) $ (33) $307 $ (150)
===== ===== ======== ==== ========
</TABLE>
PAGE
<PAGE>
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended June 30, 1998
(Dollar Amounts in thousands)
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Non-guarantor Guarantor
Parent subsidiary subsidiaries Consolidated
Net cash provided by (used in)
operating activities $(25,858) $890 $13,837 $(11,131)
-------- ---- ------- --------
Investing activities
Purchase of businesses,
net of cash acquired (53,465) - - (53,465)
Purchase of property,
plant and equipment (654) (759) (4,761) (6,174)
-------- ---- ------- --------
Net cash used in
investing activities (54,119) (759) (4,761) (59,639)
Financing activities
Net proceeds (payments)
on borrowings 66,923 - (902) 66,021
Principal repayments
on borrowing
arrangements (1,856) (1,856)
Debt financing costs (619) - - (619)
-------- ---- ------- --------
Net cash provided by
(used in)financing
activities 66,304 - (2,758) 63,546
Effect of foreign
currency rate
fluctuation on cash - (248) (2,018) (2,266)
Net increase (decrease)
in cash (13,673) (117) 4,300 (9,490)
Cash at beginning
of period 13,673 322 4,326 18,321
-------- ---- ------- --------
Cash at end
of period $ - $205 $ 8,626 $ 8,831
======== ==== ======= ========
</TABLE>
8. RECLASSIFICATION
Certain amounts in the prior periods' statements have been reclassified to
conform to the current periods' presentation.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended June 30, 1998
versus three months ended June 30, 1997
Results of Operations
The three months ended June 30, 1998 statements of operations for Oxford
Automotive, Inc. (the "Company") include the results of operations for all
subsidiaries, including its principal operating subsidiaries, BMG North
America Limited, Lobdell Emery Corporation ("Lobdell"), Howell Industries,
Inc. ("Howell"), RPI Holdings, Inc. ("RPIH"), and Oxford Suspension, Inc. and
Oxford Suspension Ltd. (collectively the "Suspension Division"). Lobdell was
acquired on January 10, 1997, Howell was acquired August 13, 1997, RPIH was
acquired on November 25, 1997, and the Suspension Division was acquired on
April 1, 1998. Each was accounted for using the purchase method of accounting.
Therefore, the three month statements of operations for the period ended June
30, 1997 do not include the operating results of Howell, RPIH or the
Suspension Division.
The following table sets forth, for the periods indicated, certain accounts
from the Company's statements of operations and should be read in conjunction
with the unaudited condensed consolidated financial statements and related
notes included elsewhere herein.
(Dollars in millions)
Three Months Ended Three Months Ended
June 30, 1998 June 30, 1997
Net Sales $139.9 100.0% $92.0 100.0%
Gross Profit 11.6 8.3% 10.5 11.4%
Operating
Income 3.8 2.7% 7.6 8.3%
Net Interest
Expense 4.4 3.1% 1.8 2.0%
Net income (loss) (.2) - % 3.5 3.8%
Memo: EBITDA 10.7 7.6% 12.0 13.0%
NET SALES -- Net sales for the three months ended June 30, 1998 were $139.9
million. This represents an increase of $47.9 million as compared to net
sales for the three months ended June 30, 1997 of $92.0 million. The overall
increase is primarily the result of the acquisitions made since the prior year
($62.2 million). This increase was offset by the impact of the recently ended
General Motors strike ($8.7 million), volume reductions on certain passenger
car platforms and the impact of discontinued models.
GROSS PROFIT -- Gross profit was $11.6 million or 8.3% of net sales for the
three months ended June 30, 1998 as compared to $10.5 million or 11.4% of net
sales for the three months ended June 30, 1997. This represents an increase
of $1.1 million as compared to the prior year. The gross profit increase is
related to the incremental sales resulting from the acquisitions, offset by
the impact of the General Motors strike. The decrease in gross margin
percentage is a result of the loss of sales during the General Motors strike,
the inclusion of the Suspension Division operations at lower than average
margins and the start up of certain Mexican operations. In addition, the
margins have been reduced for the impact of ongoing product launches (Saturn
LS, Windstar and CAMI J2). Continued efforts are being made through plant
and capacity rationalization and maximization of asset utilization to improve
the overall performance of the operations. The Company recently announced the
closure of its Delhi, Ontario facility and move of the production to the
Company's Cambridge, Ontario facility. The closure will provide an overall
reduction of fixed costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") -- SG&A expenses were
$7.8 million or 5.6% of net sales as compared to $2.9 million or 3.2% of net
sales for the three months ended June 30, 1997. The increase in both
percentage of sales and expenditure levels is primarily due to the need to
provide the necessary resources to support customer engineering requirements,
global program management and the continued growth initiatives of the
organization (both internally and through acquisition). Newly awarded major
programs for General Motors (closure panels and rear underbody components for
a new platform to be assembled solely in Mexico and chassis components for the
North American production of a global platform), as well as ongoing product
launches require a significant amount of engineering and program management
support.
OPERATING INCOME -- Income from operations was $3.8 million or 2.7% of net
sales for the three months ended June 30, 1998 as compared to $7.6 million or
8.3% of net sales for the three months ended June 30, 1997. The reduction was
due primarily to the General Motors strike ($3.3 million), product launches
and the engineering and administrative support cost increases discussed above.
INTEREST EXPENSE Net Interest expense for the three months ended June 30,
1998 was $4.4 million or 3.1% of net sales as compared to $1.8 million or 2.0%
of net sales for the year ended March 31, 1997. The overall increase in
expense was due primarily to the issuance of the $125.0 million of 10 1/8%
Senior Subordinated Notes due 2007 (the "Series A Notes") on June 24, 1997 and
the issuance of $35.0 million of 10 1/8% Senior Subordinated Notes due 2007,
Series B (the "Series B Notes" and together with the Series A Notes,
collectively, the "Notes") on April 1, 1998. The Notes represent both
incremental borrowing as well as an increased interest rate as compared to
outstanding debt of the prior period. The Series A Notes were issued at an
effective rate of 10.125% while the Series B Notes were issued an effective
interest rate of approximately 9.25%.
INCOME TAX An income tax benefit of $0.1 million was recorded for the three
months ended June 30, 1998 as compared to a $2.3 million expense provision for
the three months ended June 30, 1997. The decrease of $2.4 million is a
result of a reduction of $5.6 million in income before taxes for the three
months ended June 30, 1998 as compared to the previous year.
NET INCOME The Company reported a net loss of $0.2 million for the three
months ended June 30, 1998, a decrease of $3.7 million as compared to $3.5
million profit for the three months ended June 30, 1997. The decline in
earnings was primarily a result of increased interest expense of $2.6
million, and the impact of the General Motors strike ($2.0 million).
EBITDA Earnings Before Interest, Taxes and Depreciation and Amortization
(EBITDA) was $10.7 million for the three months ended June 30,1998 as compared
to $12.0 million for the three months ended June 30, 1997. The overall
decrease is primarily a result of the impact of the General Motors strike,
partially offset by the added EBITDA related to acquisitions.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Net income adjusted for non-cash charges (depreciation and amortization and
deferred taxes generated approximately $5.1 million of cash for the three
months ended June 30, 1998. Cash also increased during the period based on an
overall decrease in accounts receivable, inventories, and reimbursable tooling
($13.1 million). Offsetting the increase in cash was a net decrease in
accounts payable and other working capital requirements of $27.2 million. The
decrease in accounts payable was related to progress payments for customer
tooling and capital previously accrued at year end and reduced levels as a
result of the General Motors strike. During the first quarter ended June 30,
1998, the Company used approximately $59.6 million for investing activities,
including the acquisitions of the Suspension Division ($53.5 million). These
investing activities were supported substantially by the issuance of the
Series B Notes as described below and line of credit borrowings.
The Company currently has approximately $85.0 million available under its
credit facility with NBD Bank on behalf of itself and as agent for a syndicate
of other lenders (the "Senior Credit Facility"). At June 30, 1998, the
Company had $ 29.9 million outstanding under the line of credit and $9.5
million in outstanding letters of credit to support certain Industrial
Development Revenue Bonds and workers compensation commitments.
During the three months ended June 30, 1998, the Company received net proceeds
of $36.4 million from the offering of its Series B Notes, after the payment of
$0.6 million in issuance costs. The Series B Notes were issued April 1, 1998
and are substantially identical to, and rank pari passu in right of payment
with the Series A Notes.
The Company used the net proceeds from the Series B Notes as well as available
cash for the acquisition of the Suspension Division and related expenses.
The Company believes its application of the Note proceeds has enhanced its
ability to meet its growth and business objectives. However, interest
payments on the Notes will represent a significant liquidity requirement for
the Company. The Company will be required to make scheduled semi-annual
interest payments on the Notes of approximately $8.1 million on June 15 and
December 15 each year until their maturity on June 15, 2007 or until the Notes
are redeemed.
Capital expenditures were $6.5 million, or 4.7% of net sales for the three
months ended June 30, 1998 as compared to $3.6 million or 3.9% of net sales
for the three months ended June 30, 1997. The increase of $2.9 million was due
primarily to customer programs (the 1999 model year Saturn LS) and press and
equipment upgrades. Other capital expenditures included health and safety
items and computer and network upgrades.
For fiscal 1999, the Company's capital expenditures are expected to be $34.9
million; consisting of a $14.8 million investment to support new business and
increase capacity; $10.5 million for press automation, rebuilds and
improvements; $2.0 million in computer system and network upgrades and $7.6
million in other expenditures, including health, safety, environmental, cost
reduction and maintenance items.
The Company believes that the operations of the Suspension Division will
enhance the Company's ability to develop key suspension components. The
Company believes that the acquisition of the Suspension Division will have a
positive impact on the Company's results of operations for the fiscal year
ending March 31, 1999 and thereafter.
The fluctuation in shareholders' equity for foreign currency adjustments of
($2.3 million) is due to the Company's long-term investment in Canada.
This adjustment reflects the relative weakening of the Canadian dollar, and
has no impact on cash flow.
The reduction in shareholders' equity for holdings of marketable securities
of ($1.9 million) is due to stock price fluctuation of the Company's strategic
investment in a synergistic company.
The Company believes that cash generated from operations, together with
amounts available under the Senior Credit Facility will be adequate to meet
its debt service requirements, capital expenditures and working capital needs
for the foreseeable future, although no assurance can be given in this regard.
The Company's future operating performance and ability to service or refinance
the Series A and Series B Notes and to extend or refinance its other
indebtedness will be subject to future economic conditions and to financial,
business and other factors that are beyond the Company's control.
IMPACT OF GENERAL MOTORS STRIKE
During a portion of the three months ended June 30, 1998, substantially all of
General Motors vehicle production was shut down due to two local strikes in
Flint, Michigan. General Motors is a significant customer of the Company and
the prolonged shutdown had an adverse effect on the Company's results of
operations for the three months ended June 30, 1998. The Company took all
steps necessary to lessen the overall impact. The effect of the strike (now
recently ended) on the first quarter financial results was as follows:
(Dollars in millions)
Sales $(8.7)
Gross Profit (3.3)
Net Income (2.0)
EBITDA (3.3)
The effects of the General Motors strike are expected to adversely impact the
2nd quarter as well. The Company expects that a portion of the sales lost
during the strike will be recovered in the 2nd and 3rd quarters.
YEAR 2000
The Company is continuing to work on resolving any potential impact of the
Year 2000 on the processing of information by the Company's information
systems. The Company is currently on schedule to meet all assessments,
remediation and compliance requirements. The Company is utilizing both
internal employees and external contractors for these activities. Having
completed the inventory, the Company believes that the Year 2000 remediation
and testing activities will not have a material impact on the Company's
financial position, results of operations, or cash flows in future periods.
Software and hardware upgrades and updates will be expensed, while any major
hardware and software replacements will be leased or capitalized/amortized
over the useful life of the equipment. Most of these potential hardware
upgrades occur regularly as a normal part of business through technology
upgrades.
FORWARD-LOOKING STATEMENTS
This report contains statements relating to such matters as anticipated
financial performance, business prospects and other matters that may be
construed as forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. In addition, the Company may
from time to time publish or communicate other statements that could also be
construed to be forward-looking statements. These statements are or will be
based on the Company's estimates, assumptions and projections, and are subject
to risks and uncertainties, including those specifically listed below, that
could cause actual results to differ materially from those included in the
forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development and results of operations of the Company include the following:
(1) the original equipment manufacturer ("OEM") supplier industry is highly
cyclical and, in large part, impacted by the strength of the economy
generally, by prevailing interest rates and by other factors which may have an
effect on the level of sales of automotive vehicles; (2) future price
reductions, increased quality standards or additional engineering capabilities
may be required by the OEMs, which are able to exert considerable pressure on
their suppliers; (3) the OEMs may decide to in-source some of the work
currently performed by the Company; (4) work stoppages and slowdowns may be
experienced by OEMs and their Tier 1 suppliers, as a result of labor disputes;
(5) there may be a significant decrease in sales of vehicles using the
Company's products or the loss by the Company of the right to supply any of
such products to its major customers; (6)increased competition could arise in
the OEM supplier industry; (7) changing federal, state, local and foreign
laws, regulations and ordinances relating to environmental matters could
affect the Company's operations; and (8) there may be unfavorable currency
exchange rates relative to the U.S. dollar, which could impact the Company's
operations.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Pursuant to a shareholder consent, dated June 15, 1998, in lieu of an annual
shareholder meeting, the existing board of directors of the registrant was
re-elected in its entirety. The written consents of shareholders holding
251,450 of the registrant's 309,750 shares of common stock outstanding were
received and voted in favor of each member of the board.
Item 6. Exhibits and Reports on Form 8-K.
(a) A list of Exhibits included as part of this report is set forth in
the Exhibit Index which immediately precedes such exhibits and is incorporated
herein by reference.
(b) A report on Form 8-K, dated April 1, 1998, was filed by the
registrant on April 16, 1998; such Report contained information under Item 2
(Acquisition or Disposition of Assets) with respect to the acquisition of the
Suspension Division of Eaton Corporation (the "Suspension Division"). The
Item 7 financial statements of the Suspension Division and the required pro
forma financial information relating to the Suspension Division were filed by
amendment on June 15, 1998.
<PAGE>
<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.
Dated: August 13, 1998 OXFORD AUTOMOTIVE, INC.
By: /s/ DONALD C. CAMPION
Donald C. Campion
Senior Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Asset Purchase Agreement, dated as of March 13, 1998,
between Oxford Automotive, Inc. and Eaton Corporation
(previously filed as Exhibit 2.1 to the Registrant's
Form 8-K dated April 1, 1998, and incorporated herein
by reference)
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS
AS OF AND FOR THE PERIOD ENDING JUNE 30,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<PERIOD-TYPE> 3-MOS
<CASH> 8,831
<SECURITIES> 0
<RECEIVABLES> 66,837
<ALLOWANCES> 400
<INVENTORY> 31,659
<CURRENT-ASSETS> 132,101
<PP&E> 190,620
<DEPRECIATION> 28,712
<TOTAL-ASSETS> 365,913
<CURRENT-LIABILITIES> 65,250
<BONDS> 161,811
40,522
0
<COMMON> 1,050
<OTHER-SE> 404
<TOTAL-LIABILITY-AND-EQUITY> 365,913
<SALES> 139,902
<TOTAL-REVENUES> 139,902
<CGS> 128,263
<TOTAL-COSTS> 128,263
<OTHER-EXPENSES> 7,799
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,431
<INCOME-PRETAX> (250)
<INCOME-TAX> (100)
<INCOME-CONTINUING> (150)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (150)
<EPS-PRIMARY> (1.55)
<EPS-DILUTED> (1.55)
</TABLE>
