<PAGE> 1
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, 1999
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 333-75849
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, 1999
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1999 1998
(unaudited) (unaudited)
<S> <C> <C>
Net sales $ 206,361 $ 139,902
Cost of sales 185,032 128,263
--------- ---------
Gross profit 21,329 11,639
Selling, general and
administrative expenses 12,523 7,799
Gain on sale of equipment (505)
--------- ---------
Operating income 9,311 3,840
Other income (expense):
Interest expense (7,115) (4,413)
Other income 315 323
--------- ---------
Income before income taxes 2,511 (250)
Income taxes (1,089) 100
--------- ---------
Net income (loss) 1,422 (150)
Accrued dividends and accretion on
redeemable preferred stock 330 330
--------- ---------
Net income (loss) applicable to
common stock $ 1,092 $ (480)
========= =========
Net income (loss) Per share
(basic and diluted) $ 3.53 $ (1.55)
========= =========
Weighted average shares outstanding 309,750 309,750
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE> 3
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
June30, March 31,
1999 1999
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 22,540 $ 19,008
Accounts Receivable, trade 145,788 152,281
Reimbursable tooling 26,983 23,201
Inventory 55,068 48,104
Deferred income taxes 2,178 3,669
Prepaid expenses and other
current assets 18,859 18,225
-------- --------
Total Current Assets 271,416 264,488
Other noncurrent assets 26,816 29,677
Deferred income taxes 25,901 25,366
Property, Plant and equipment, net 259,449 223,399
-------- --------
Total Assets $583,582 $542,930
======== ========
LIABILITIES SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $110,983 $109,343
Restructuring reserve 11,459 8,747
Other current liabilities 46,073 54,444
Current portion of long-term debt 9,037 11,504
-------- --------
Total Current Liabilities 177,552 184,038
LONG TERM LIABILITIES
Pension liability 9,696 7,069
Post retirement medical benefits 43,551 42,703
Deferred taxes 9,956 11,867
Other non current 7,507 3,648
Long term debt 292,886 252,358
-------- --------
Total Liabilities 541,148 501,683
</TABLE>
3
<PAGE> 4
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
(unaudited)
<S> <C> <C>
Redeemable Series A $3.00
Cumulative preferred stock,
$100 stated value -457,541
shares authorized, 397,539 shares
issued and outstanding at
June 30, 1999, and
March 31, 1999 40,649 40,319
SHAREHOLDERS' EQUITY
Common stock 1,050 1,050
Accumulated other
comprehensive income (loss) (6,940) (6,705)
Retained earnings 7,675 6,583
--------- ---------
1,785 928
--------- ---------
Total liabilities &
shareholders' equity $ 583,582 $ 542,930
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE> 5
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
June 30, June 30,
1999 1998
(unaudited) (unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 1,422 $ (150)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation and amortization 7,577 6,513
Deferred income taxes (1,064) (1,284)
Gain (496)
Changes in operating assets and
liabilities affecting cash
Accounts receivable, trade 12,733 10,222
Inventories (324) 1,350
Reimbursable tooling (3,953) 1,493
Prepaid expenses and other assets (533) (8)
Other noncurrent assets (5,591) 40
Accounts payable (1,102) (27,865)
Restructuring reserve (736) (901)
Accrued expenses and other liabilities (13,097) (1,341)
Income taxes payable/refundable 922
Other noncurrent liabilities 2,461 (122)
-------- --------
Net cash provided by (used in) operating
activities (2,703) (11,131)
-------- --------
INVESTING ACTIVITIES
Purchase of business, net of cash acquired 59 (53,465)
Purchase of property, plant
and equipment (8,989) (6,174)
Proceeds from sale of equipment 728
-------- --------
Net cash used in investing activities (8,202) (59,639)
FINANCING ACTIVITIES
Net proceeds (payments) on borrowings 14,789 27,121
Proceeds from borrowing arrangements 37,044
Debt financing costs (619)
-------- --------
Net cash provided by financing activities 14,789 63,546
</TABLE>
5
<PAGE> 6
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
June 30, June 30,
1999 1998
(unaudited) (unaudited)
<S> <C> <C>
Effect of exchange rate
changes on cash (352) (2,266)
Net increase (decrease) in cash
and cash equivalents 3,532 (9,490)
Cash and cash equivalents
at beginning of period 19,008 18,321
--------- ---------
Cash and cash equivalents
at end of period $ 22,540 $ 8,831
========= =========
</TABLE>
See accompanying Notes of Consolidated Financial Statements
6
<PAGE> 7
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, 1999.
2. INVENTORIES (Dollars in thousands)
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
<S> <C> <C>
Raw materials
Finished goods and work-in-process 26,508 $ 23,154
33,315 28,646
-------------------- ------------------
LIFO and other reserves 59,823 51,800
(4,755) (3,696)
-------------------- ------------------
$ 55,068 $ 48,104
==================== ==================
</TABLE>
The Company does not separately identify finished goods from work-in-process.
3. SENIOR SUBORDINATED NOTES
On April 1, 1998 we issued $35.0 million of unsecured 10 1/8% Senior
Subordinated Notes due 2007, Series B (the "Series B Notes"). On December 8,
1998, we issued $40.0 million of unsecured 10 1/8% Senior Subordinated Notes due
2007, Series C (the "Series C Notes"). The Series B Notes and Series C 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
us on June 24, 1997 (the "Series A Notes"). The Series A Notes, the Series B
Notes and the Series C 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. We have optional redemption rights beginning June 15, 2002. The
Notes are limited to $250.0 million aggregate principal amount.
On June 9, 1999 we completed an exchange offer for our outstanding Notes.
Pursuant to the exchange offer, all of the Series C Notes and $159.6 million
aggregate principal amount of the Series A and Series B Notes were exchanged for
our registered 10 1/8% Senior Subordinated Notes due 2007, Series D, which are
substantially identical to, and rank pari passu in right of payment with the
Notes.
4. ACQUISITION
On June 28, 1999 we acquired, through a wholly owned, indirect subsidiary, 100%
of the shares of Gebr. Wackenhut GmbH Karosserie-und Fahrzeugfabrik
("Wackenhut"). Wackenhut is a supplier of complex pressings, welded assemblies,
complete truck cabs, cataphoretic coatings and finish paint applications and
operates three facilities in Germany located in the Nagold area near Stuttgart.
Wackenhut is an unrestricted subsidiary under our debt agreements. Pursuant to
the terms of the acquisition, we agreed to pay DM 1 for the Wackenhut shares,
provide DM 5 million in additional paid in capital, restructure approximately DM
63.4 million in
7
<PAGE> 8
bank debt, and purchase approximately DM 18.6 million in bank and shareholder
debt for DM 1. The acquisition agreement provides for the restructuring of
Wackenhut's credit facilities and provides additional financing of approximately
DM 16.6 million under a line of credit and up to DM 45.0 million to fund capital
expenditures to support plant expansion and modernization. The purchase price
plus direct cost of the acquisition will be allocated to the assets acquired and
liabilities assumed based on their estimated fair market values at the date of
acquisition. The unaudited financial statements reflect the preliminary
allocation of purchase price, as the allocation has not been finalized.
5. SHAREHOLDERS' EQUITY (In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Accumulated
Other
Common Comprehensive Retained
Stock Income Earnings Total
<S> <C> <C> <C> <C>
Balances at March 31, 1999 $ 1,050 ($6,705) $ 6,583 $ 928
Net Income 1,422 1,422
Foreign Currency
translation adjustments (235) (235)
Accrued dividends and
accretion of redeemable
preferred stock (330) (330)
------- ----------- -------- -------
Balances at June 30, 1999 $ 1,050 ($6,940) $ 7,675 $ 1,785
======= =========== ======== =======
</TABLE>
6. COMPREHENSIVE INCOME
The Company's total comprehensive income was as follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1999 1998
<S> <C> <C>
Net income (loss) $ 1,422 $ (150)
---------------- ------------------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment (235) (2,266)
Net unrealized loss on marketable securities 0 (1,918)
---------------- ------------------
Other comprehensive
income (loss) (235) (4,184)
---------------- ------------------
Total comprehensive income (loss) $ 1,187 $ (4,334)
================ ==================
</TABLE>
8
<PAGE> 9
7. CONDENSED CONSOLIDATING INFORMATION
The Notes are guaranteed by certain of our 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"). As of June 30, 1999 the Notes were not guaranteed by
our other consolidated subsidiaries, including Oxford Automotive
Europe, Oxford Automotriz de Mexico S.A. de C.V., Oxford Automotive France,
Cofimeta S.A. and Wackenhut (the "Non-Guarantor Subsidiaries"). As of June 30,
1998 the Notes were not guaranteed by Oxford Automotriz de Mexico S.A. de C.V.
Cofimeta was acquired in February 1999, therefore while they are included in the
consolidated balance sheet ended March 31, 1999, they are excluded from the
reporting for the three months ended June 30, 1998. Wackenhut was acquired
June 28, 1999, therefore they are excluded from the reporting for
the period ended March 31, 1999 and for the three months ending June 30, 1998.
The guarantee of the Notes by the Guarantor Subsidiaries is full and
unconditional, joint and several. 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 Subsidiaries.
9
<PAGE> 10
CONDENSED CONSOLIDATING BALANCE SHEETS
JUNE 30, 1999
(DOLLAR AMOUNT IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash
equivalents $ 7,036 $ 15,384 $ 120 $ $ 22,540
Receivables (net) 80 48,929 96,779 145,788
Inventories 20,151 34,917 55,068
Reimbursable Tooling 9,786 8,472 8,725 26,983
Deferred income taxes 536 1,642 2,178
Prepaid expenses and
other current assets 553 14,157 4,149 18,859
-------------- ---------------- -------------- --------------- -------------
Total current assets 17,991 107,093 146,332 0 271,416
Other noncurrent assets 11,031 8,702 32,984 52,717
Property, plant and
equipment, net 6,678 60,189 192,582 259,449
Investment in
consolidated
subsidiaries 91,808 45,166 (136,974) 0
-------------- ---------------- -------------- ---------------- --------------
Total assets $ 127,508 $ 175,984 $ 417,064 $ (136,974) $ 583,582
============== ================ ============== ================ ==============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 9,911 $ 33,575 $ 67,497 $ 110,983
Intercompany accounts (119,860) 9,716 110,144 0
Restructuring reserve 9,840 1,619 11,459
Accrued expenses and
other current
liabilities (4,285) 28,363 21,995 46,073
Current portion
of borrowings 6,234 2,803 9,037
-------------- ---------------- --------------- ---------------- --------------
Total current liabilities (114,234) 87,728 204,058 0 177,552
</TABLE>
10
<PAGE> 11
CONDENSED CONSOLIDATING BALANCE SHEETS (CONTINUED)
JUNE 30, 1999
(DOLLAR AMOUNT IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Pension liability 2,421 7,275 9,696
Post retirement 43,551 43,551
Medical benefits
liability
Deferred income taxes 9,956 9,956
Other non-current
liabilities 5,832 1,675 7,507
Long-term borrowings
less current portion 233,017 43,895 15,974 292,886
-------------- ------------ --------------- -------------- ---------------
Total liabilities 118,783 139,876 282,489 541,148
Redeemable preferred
stock 40,649 40,649
Shareholder's equity
common stock 1,050 39,882 91,002 (130,884) 1,050
Accumulated other
Comprehensive
Income (loss) (3,584) (3,356) (6,940)
Retained earnings 7,675 (190) 6,280 (6,090) 7,675
-------------- ------------ -------------- -------------- ---------------
Total Shareholders' equity 8,725 36,108 93,926 (136,974) 1,785
-------------- ------------ -------------- -------------- ---------------
Total liabilities
Shareholder's equity $ 127,508 $ 175,984 $ 417,064 $ (136,974) $ 583,582
============== ============ ============== ============== ===============
</TABLE>
11
<PAGE> 12
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 1999
(DOLLAR AMOUNT IN THOUSANDS)
<TABLE>
<CAPTION>
Non-guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash
equivalents $ 9,741 $ 9,158 $ 109 $ $ 19,008
Receivables (net) 114 45,345 106,822 152,281
Inventories 14,402 33,702 48,104
Reimbursable Tooling 3,010 8,766 11,425 23,201
Deferred income taxes 536 3,133 3,669
Prepaid expenses and
other current assets 2,151 13,174 2,900 18,225
-------------- ---------------- -------------- --------------- -------------
Total current assets 15,552 90,845 158,091 0 264,488
Other noncurrent assets 10,898 13,572 30,573 55,043
Property, plant and
equipment, net 4,003 28,259 191,137 223,399
Investment in
consolidated
subsidiaries 87,546 45,166 (132,712) 0
-------------- ---------------- -------------- --------------- -------------
Total assets $ 117,999 $ 132,676 $ 424,967 $ (132,712) $542,930
============== ================ ============== =============== =============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 2,046 $ 34,906 $ 72,391 $ 109,343
Intercompany accounts (130,223) 4,573 125,650 0
Restructuring reserve 6,676 2,071 8,747
Accrued expenses and
other current
liabilities 5,432 24,596 24,416 54,444
Current portion
of borrowings 1,877 6,301 3,326 11,504
-------------- ---------------- -------------- --------------- -------------
Total current liabilities (120,868) 77,052 227,854 0 184,038
</TABLE>
12
<PAGE> 13
CONDENSED CONSOLIDATING BALANCE SHEETS (CONTINUED)
MARCH 31, 1999
(DOLLAR AMOUNT IN THOUSANDS)
<TABLE>
<CAPTION>
Non-guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Pension liability 7,069 7,069
Post retirement
Medical benefits
liability 42,703 42,703
Deferred income taxes and other 1,975 13,540 15,515
Long-term borrowings
less current portion 231,234 20,070 1,054 252,358
-------------- ------------ -------------- ------------- --------------
Total liabilities 110,366 99,097 292,220 501,683
Redeemable preferred
stock 40,319 40,319
Shareholder's equity
common stock 1,050 37,045 91,002 (128,047) 1,050
Accumulated other
Comprehensive 0
Income (loss) (1,955) (4,750) (6,705)
Retained earnings 6,583 (1,511) 6,176 (4,665) 6,583
-------------- ------------ -------------- ------------- --------------
Total Shareholders' equity 7,633 33,579 92,428 (132,712) 928
-------------- ------------ -------------- ------------- --------------
Total liabilities
Shareholder's equity $ 117,999 $ 132,676 $ 424,967 $ (132,712) $ 542,930
============== ============ ============== ============== ==============
</TABLE>
13
<PAGE> 14
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
(DOLLAR AMOUNT IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor
Parent Subsidiaries Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Sales $ $ 54,489 $ 151,872 $206,361
Cost of sales 47,776 137,256 185,032
--------- --------- --------- --------- --------
6,713 14,616 21,329
Gross profit
Selling, general and
administrative
expenses (722) 3,926 9,319 12,523
Restructuring provision 0
Gain on sale of assets (505) 0 (505)
--------- --------- --------- --------- --------
Operating income 722 3,292 5,297 0 9,311
Other income
(expense) 28 287 315
Interest expense (1,277) (1,093) (4,745) (7,115)
--------- --------- --------- --------- --------
Income before
income taxes (555) 2,227 839 0 2,511
Income taxes 222 (906) (405) (1,089)
--------- --------- --------- --------- --------
Income before equity
in income of
consolidated
subsidiaries (333) 1,321 434 0 1,422
Equity in income of
consolidated
subsidiaries 1,755 0 (1,755)
--------- --------- --------- --------- --------
Net income $ 1,422 $ 1,321 $ 434 ($ 1,755) $ 1,422
========= ========= ========= ========= ========
</TABLE>
14
<PAGE> 15
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor
Parent Subsidiary Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Sales $ $ 331 $ 139,571 $ 139,902
Cost of sales 755 127,508 128,263
--------- --------- --------- --------- ---------
(424) 12,063 11,639
Gross profit
Selling, general and
administrative
expenses (182) 7,981 7,799
Gain on sale of assets 0 0
--------- --------- --------- --------- ---------
Operating income 182 (424) 4,082 0 3,840
Other income
(expense) 9 314 323
Interest expense 80 (4,493) (4,413)
--------- --------- --------- --------- ---------
Income before
income taxes 262 (415) (97) 0 (250)
Income taxes (105) 141 64 100
--------- --------- --------- --------- ---------
Income before equity
in income of
consolidated
subsidiaries 157 (274) (33) 0 (150)
Equity in income of
consolidated
subsidiaries (307) 307 0
--------- --------- --------- --------- ---------
Net income $ (150) $ (274) $ (33) $ 307 $ (150)
========= ========= ========= ========= =========
</TABLE>
15
<PAGE> 16
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non Guarantor Guarantor
Parent Subsidiaries Subsidiaries Consolidated
<S> <C> <C> <C> <C>
Net cash provided by
(used in)
operating activities $ 194 $ 5,621 $ (8,518) $ (2,703)
-------- -------- -------- --------
INVESTING ACTIVITIES
Purchase of businesses,
net of cash acquired 59 59
Purchase of property,
plant and equipment (2,805) $ 279 (5,735) (8,261)
-------- -------- -------- --------
Net cash used in
investing activities (2,805) 338 (5,735) (8,202)
FINANCING ACTIVITIES
Net proceeds (payments)
on borrowings (94) 620 14,263 14,789
Principal repayments
on borrowing
arrangements 0
Debt financing costs 0
-------- -------- -------- --------
Net cash provided by
(used in)
financing activities (94) 620 14,263 14,789
Effect of foreign
currency rate
fluctuation on cash (353) 1 (352)
Net increase (decrease)
in cash (2,705) 6,226 11 3,532
Cash at beginning
of period 9,741 9,158 109 19,008
-------- -------- -------- --------
Cash at end of period $ 7,036 $ 15,384 $ 120 $ 22,540
======== ======== ======== ========
</TABLE>
16
<PAGE> 17
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non Guarantor Guarantor
Parent subsidiary subsidiaries Consolidated
<S> <C> <C> <C> <C>
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 0 (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 $ 0 $ 205 $ 8,626 $ 8,831
======== ======== ======== ========
</TABLE>
8. RECLASSIFICATIONS -- Certain amounts in the prior periods' statements have
been reclassified to conform to the current periods' presentation.
17
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended June 30, 1999 as compared to the three months
ended June 30, 1998
Results of Operations
The three months ended June 30, 1999 statement of operations for Oxford
Automotive, Inc.(the "Company") includes the results of operations for
substantially all subsidiaries, including the following principal operating
subsidiaries: BMG North America Limited, Lobdell Emery Corporation ("Lobdell"),
Howell Industries, Inc. ("Howell"), RPI Holdings, Inc. ("RPIH"), Oxford
Suspension, Inc. and Oxford Suspension Ltd. (collectively the "Suspension
Division"), and Cofimeta S.A. ("Cofimeta"). Lobdell was acquired on January 10,
1997, Howell was acquired August 13, 1997, RPIH was acquired on November 25,
1997, the Suspension Division was acquired on April 1, 1998 and Cofimeta was
acquired on February 5, 1999. The company acquired Wackenhut GmbH on June 28,
1999. Each was accounted for using the purchase method of accounting. Based on
its acquisition date, the three month statement of operations for the period
ended June 30, 1999 does not include operating results for Wackenhut. In
addition, the three month statement of operations for the period ended June 30,
1998 does not include the operating results of Cofimeta or Wackenhut.
The following table sets forth, for the periods indicated, certain accounts from
the Company's statement of operations and should be read in conjunction with
the unaudited condensed consolidated financial statements and related notes
included elsewhere herein.
(Dollars in millions)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1999 June 30, 1998
<S> <C> <C> <C> <C>
Net Sales $206.4 100.0% $139.9 100.0%
Gross Profit 21.3 10.3% 11.6 8.3%
Selling, general
and administrative 12.5 6.1% 7.8 5.6%
Operating Income 9.3 4.5% 3.8 2.7%
Net Interest expense 7.1 3.4% 4.4 3.1%
Net income (loss) 1.4 0.7% (0.2) (0.1)%
Memo: EBITDA 17.2 8.3% 10.7 7.6%
</TABLE>
NET SALES -- Net sales for the three months ended June 30, 1999 were $206.4
million. This represents an increase of $66.5 million as compared to net sales
for the three months ended June 30, 1998 of $139.9 million. The overall increase
is primarily the result of the acquisitions made since the prior year ($50.4
million). A portion of the increase is due to the negative impact on net sales
for the three months ended June 30, 1998 resulting from the General Motors
strike ($8.7 million). The balance of the increase is a result of the start up
of the Saturn LS program, the Windstar mini-van and the continued production
strength of the industry wide light truck and sport utility vehicle platforms.
18
<PAGE> 19
GROSS PROFIT -- For the three months ended June 30, 1999, gross profit increased
to $21.3 million or 10.3% of net sales as compared to $11.6 million or 8.3% of
net sales for the prior year. The gross profit and gross margin increases are
related to the profit impact of the General Motors sales rebound from the prior
year strike and successful product launches and fixed cost reductions achieved
as a result of plant rationalization. Facility closures, such as the recently
announced Hamilton, Indiana facility provide fixed cost reductions, as well as
productivity increases after product relocation. The gross profit and gross
margin increases also reflect the year over year reduction in launch costs
related to the Windstar program and other productivity improvement efforts, such
as, automation, quick die change and other improvements. Gross profit also
increased on incremental sales resulting from acquisitions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") - For the three months
ended June 30, 1999, SG&A expenses were $12.5 million ( 6.1% of net sales), an
increase of $4.7 million as compared to SG&A for the three month period ended
June 30, 1998 of $7.8 million (5.6% of net sales). The increase can be directly
associated to the recent European acquisitions, including the establishment and
staffing of a European technical center. In addition, the continued domestic
support required for upcoming program awards contributed to the increase. We
continue to expand its support of a growing number of worldwide customers.
OPERATING INCOME - For the three months ended June 30, 1999, operating income
increased to $9.3 million or 4.5% of net sales as compared to $3.8 million or
2.7% of net sales for the prior year. The increase is a result of operating
income related to the gross profit increase, due in part to productivity
improvement initiatives, and SG&A variances as explained above as well as
acquisitions made during the period.
INTEREST EXPENSE - For the three months ended June 30, 1999, net interest
expense was $7.1 million, an increase of $2.7 million, as compared to $4.4
million for the same period last year. The increase can be attributed to
the Series C Senior Subordinated Notes Due 2007 (issued December 8, 1998),
the outstanding debt of acquisitions and the interim financing of customer
tooling for current program launches.
NET INCOME - For the three months ended June 30, 1999, the Company reported net
income of $1.4 million, an increase of $1.6 million as compared to a prior year
net loss of $0.2 million. The increase in earnings was the result of overall
plant profitability initiatives, the General Motors strike sales rebound and net
income generated by acquisitions.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Net income adjusted for non-cash charges (depreciation and amortization and
deferred taxes) generated approximately $7.9 million of cash for the three
months ended June 30, 1999. Cash increased by $7.4 million during the period
based on an overall decrease in accounts receivable, inventories, reimbursable
tooling and accounts payable. The increase was offset by an overall decrease
($17.0 million) in accrued expenses, other assets and cash payments related to
restructuring reserves. During the three months ended June 30, 1999, the Company
used approximately $8.2 million for investing activities, including the
acquisition of Wackenhut. These investing activities were supported
substantially by operating cash flows and borrowings under the line of credit.
The cash generated by financing activities was made up primarily of $14.8
million of net proceeds from line of credit borrowings.
At June 30, 1999 we had approximately $119.4 million available under our credit
facility with Bank One on behalf of itself and as agent for a syndicate of other
lenders (the "Senior Credit Facility"). At June 30, 1999, we had $16.0 million
outstanding under the line of credit and $4.6 million in outstanding letters of
credit to support certain Industrial Development Revenue Bonds and workers
compensation commitments.
As of the date of its acquisition, Wackenhut carried indebtedness with a face
value of DM 63.4 million. The debt includes a DM 40.0 million term note and a DM
35.0 million revolving line of credit (DM 23.4 million outstanding at close).
The term note calls for semi-annual principal payments of DM 2.5 million
beginning in March 2004 and has been discounted at a market rate of 10%. For US
GAAP purposes, Wackenhut had outstanding indebtedness of US $24.2 million at
June 30, 1999. We have also secured DM 45.0 million of additional financing to
assist with capital expenditures and future growth. No amounts were outstanding
under the additional financing. This indebtedness is nonrecourse with respect to
the Company.
We believe the application of the proceeds from our 10 1/8% Senior Subordinated
Notes due 2007 has enhanced our ability to meet our growth and business
objectives. However, interest payments on the notes will represent a significant
liquidity requirement for us. We will be required to make scheduled semi-annual
interest payments on the notes of approximately $10.1 million on June 15 and
December 15 each year until their maturity on June 15, 2007 or until the notes
are redeemed.
19
<PAGE> 20
Capital expenditures were $9.0 million, or 4.4% of net sales for the three
months ended June 30, 1999 as compared to $6.2 million or 4.4% of net sales for
the three months ended June 30, 1998. The increase of $2.8 million was due
primarily to cost reduction and productivity improvement projects and new
customer programs. Other capital expenditures included health and safety items,
computer and network upgrades and Y2K support.
For fiscal 2000, our capital expenditures are expected to be $39.8 million,
consisting of $25.2 million to support new business and increase capacity, $11.0
million for maintenance, rebuilds and improvements and $3.6 million in other
expenditures, including health, safety and environmental.
We believe that cash generated from operations, together with amounts available
under the Senior Credit Facility will be adequate to meet our debt service
requirements, capital expenditures and working capital needs for the foreseeable
future, although no assurance can be given in this regard. Our future operating
performance and ability to service or refinance our 10 1/8% Senior Subordinated
Notes due 2007 and to extend or refinance our other indebtedness will be subject
to future economic conditions and to financial, business and other factors that
are beyond our control.
RAMOS ARIZPE - MEXICO FACILITY
On March 31, 1999, we entered into a cross-border asset usage facility through a
wholly-owned Mexican subsidiary for the acquisition of new equipment for and
construction of a new facility being built in Ramos Arizpe, Mexico. Under U.S.
Generally Accepted Accounting Principles, this transaction is classified as an
operating lease. The approximately 330,000 sq. ft. facility will support a
General Motors hood, door and underbody assembly program (SUV/ Hybrid vehicle)
slated to begin production in April 2000. The program is expected to generate
approximately $90.0 million of annual sales when in full production. We were
awarded substantially all closure panels and rear underbody components for the
program. Plant rationalization has allowed for the transfer of equipment already
owned to the facility. The lease payments for the facility will be approximately
$5.6 million per year. The award of the program is in line with our expected
growth into Mexico and is seen as key to our future success in that country.
YEAR 2000
We are aware of the potential impact of the millennium change on business. In
response, we have created a Year 2000 project team to perform inventory,
remediation, and testing of possibly affected systems. The Year 2000 project
team is coordinated at the corporate level with support from senior management.
Key individuals at the facility level are executing the Year 2000 efforts. We
have also employed some external Year 2000 contractors to assist with compliance
in some areas. We are following the Year 2000 guidelines set forth by the
Automotive Industry Action Group ("AIAG") and are reporting Year 2000 status
quarterly to the AIAG.
We have broken the Year 2000 program into the following assessment areas:
business computer systems, desktop computing, network infrastructure, voice
systems, shop floor systems, non-information technology items, and
suppliers/business partners. As it relates to the AIAG areas for evaluation, we
do not have dedicated product-testing facilities nor do our products contain any
computer chips. We have completed Year 2000 remediation in North America with
the remainder related to our recent acquisitions in Europe to be finalized by
September 30, 1999. In addition, we are committed to complete Year 2000 testing
by September 30, 1999. We will continue Year 2000 compliance testing throughout
1999 to ensure that regression does not occur.
We have completed a thorough assessment of all manufacturing, administrative and
management software. We have begun to upgrade certain software modules and/or
code to comply with AIAG Year 2000 guidelines and timing. At the same time, we
are implementing new software where compliance through upgrade could not be
achieved in either a timely or cost effective manner. We recently achieved Year
2000 compliance for all of our North American software. We expect to be
completed in Europe by September 30, 1999. Further, we initiated the move to a
common software system as we continue the implementation effort across all
facilities.
We continue to assess the Year 2000 readiness of our external suppliers,
business partners, and service providers to ensure that business associations
will not be negatively impacted by the Year 2000 date. We will use alternate
sourcing and contingency planning in situations that threaten our ability to
deliver products or conduct business. Since these other companies are in various
stages of Year 2000 readiness, we will be monitoring their progress throughout
1999, assessing associated risks, and taking a course of action to ensure
business continuity.
20
<PAGE> 21
In addition to efforts of our internal staff, we are using external resources to
complete the project. The cost of external resources for fiscal 1998 totaled
$0.3 million and the total capital spending for fiscal 1998 was $1.4 million of
which, approximately $0.4 million relates to software projects. In fiscal 1999,
the external costs were $0.4 million, which related to remediation activities
derived from Year 2000 testing, and capital expenditures were $0.5 million. For
the year ending March 31, 2000, the external costs for Europe will approximate
$0.3 million which will relate to any remediation activities derived from Year
2000 testing, and the remaining capital expenditures will approximate $0.5
million.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, we are exposed to market risk
associated with fluctuations in foreign exchange rates and interest rates. We
conservatively manage these risks through the use of derivative financial
instruments in accordance with management's guidelines.
We enter into all hedging transactions for periods consistent with the
underlying exposures. We do not enter into derivative instruments for trading
purposes.
Foreign Exchange. We enter into foreign currency forward contracts to
protect ourselves from adverse currency rate fluctuations on foreign currency
commitments. These commitments are generally for terms of less than one year.
The foreign currency contracts are executed with banks that we believe are
creditworthy and are denominated in currencies of major industrialized
countries. The gains and losses relating to the foreign currency forward and
option contracts are deferred and included in the measurement of the foreign
currency transaction subject to the hedge. We believe that any gain or loss
incurred on foreign currency forward contracts is offset by the direct effects
of currency movements on the underlying transactions.
We have performed a quantitative analysis of our overall currency rate
exposure at June 30, 1999. Based on this analysis, a 10% change in currency
rates would not have a material effect on our earnings.
Interest Rates. We generally manage risk associated with interest rate
movements through the use of or combination of variable and fixed rate debt. Our
exposure as a result of variable interest rates relates primarily to outstanding
floating rate debt instruments that are indexed to U.S. or European Monetary
Union short-term money market rates.
We have performed a quantitative analysis of our overall interest rate
exposure at June 30, 1999. Based on this analysis, a 10% change in the average
cost of our variable rate debt would not have a material effect on our earnings.
FORWARD-LOOKING STATEMENTS
This report contains statements relating to such matters as anticipated
financial performance, business prospects, year 2000 issues 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.
21
<PAGE> 22
PART II. OTHER INFORMATION
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 8K/A, dated February 5, 1999 was filed by the
registrant on April 20, 1999; such report contained information under
Item 7 (Financial Statements, Pro Forma Financial Information and
Exhibits) with respect to the acquisition of Cofimeta S.A. and included
the required financial statements of Cofimeta as well as the required
pro forma financial information relating to Cofimeta.
(c) A report on Form 8-K, dated June 28, 1999, was filed by the registrant
on June 28, 1999; such report contained information under Item 5 (Other
Events) with respect to the acquisition of Wackenhut GmbH.
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 16,1999 OXFORD AUTOMOTIVE, INC.
By: /s/ AURELIAN BUKATKO
--------------------
Aurelian Bukatko
Senior Vice
President and Chief
Financial Officer
(Principal
Accounting and
Financial Officer)
<PAGE> 23
EXHIBIT INDEX
EXHIBIT NO DESCRIPTION
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, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> JUN-30-1999
<CASH> 22,540
<SECURITIES> 0
<RECEIVABLES> 145,788
<ALLOWANCES> 4,506
<INVENTORY> 55,068
<CURRENT-ASSETS> 271,416
<PP&E> 259,449
<DEPRECIATION> 53,313
<TOTAL-ASSETS> 583,582
<CURRENT-LIABILITIES> 177,552
<BONDS> 203,017
0
40,649
<COMMON> 1,050
<OTHER-SE> 735
<TOTAL-LIABILITY-AND-EQUITY> 583,582
<SALES> 206,361
<TOTAL-REVENUES> 206,361
<CGS> 185,032
<TOTAL-COSTS> 185,032
<OTHER-EXPENSES> 12,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,115
<INCOME-PRETAX> 2,511
<INCOME-TAX> 1,089
<INCOME-CONTINUING> 1,422
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,422
<EPS-BASIC> 3.53
<EPS-DILUTED> 3.53
</TABLE>
