<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, 2000
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, 2000
<PAGE> 2
PART I. FINANCIAL INFORMATION
OXFORD AUTOMOTIVE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
2000 1999
<S> <C> <C>
Net sales $206,158 $206,361
Cost of sales 182,070 185,032
-------------------- --------------------
Gross profit 24,088 21,329
Selling, general and
administrative expenses 12,440 12,275
Gain on sale of equipment (7) (505)
-------------------- --------------------
Operating income 11,655 9,559
Other income (expense):
Interest expense, net (8,230) (7,115)
Other income 112 315
-------------------- --------------------
Income before income taxes 3,537 2,759
Income tax provision (1,482) (1,337)
-------------------- --------------------
Net income 2,055 1,422
Accrued dividends and accretion on
redeemable preferred stock 330 330
-------------------- --------------------
Net income applicable to
common stock $1,725 $1,092
==================== ====================
Net income per share
(basic and diluted) $5.57 $3.53
==================== ====================
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>
June 30, March 31,
2000 2000
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $7,416 $17,643
Trade receivables, net 131,595 139,912
Inventories 57,393 53,187
Refundable income taxes 2,911 2,027
Reimbursable tooling 25,338 25,038
Deferred income taxes 2,889 2,374
Prepaid expenses and other
current assets 39,603 38,228
-------------- --------------
Total Current Assets 267,145 278,409
Other noncurrent assets 41,425 34,876
Deferred income taxes 33,638 34,278
Property, plant and equipment, net 261,930 251,249
-------------- --------------
Total Assets $604,138 $598,812
============== ==============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable $149,602 $144,701
Restructuring reserve 5,142 4,089
Accrued expenses and other current
liabilities 52,792 59,529
Current portion of borrowings 11,190 11,055
-------------- --------------
Total Current Liabilities 218,726 219,374
LONG TERM LIABILITIES
Pension liability 9,576 9,601
Post retirement medical benefits
liability 47,919 46,953
Deferred income taxes 6,316 7,294
Other noncurrent liabilities 9,651 8,289
Long-term borrowings-less current
portion 266,524 262,621
-------------- --------------
Total Liabilities 558,712 554,132
</TABLE>
3
<PAGE> 4
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
(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, 2000 and
March 31, 2000 40,777 40,451
SHAREHOLDERS' EQUITY
Common stock 1,050 1,050
Accumulated other
comprehensive loss (10,995) (9,690)
Retained earnings 14,594 12,869
------------- ------------
4,649 4,229
------------- ------------
Total Liabilities &
Shareholders' Equity $604,138 $598,812
============= ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE> 5
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS 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,
2000 1999
(unaudited) (unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $2,055 $1,422
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation and amortization 9,104 7,577
Deferred income taxes (782) (1,064)
Gain on sale of equipment (7) (496)
Changes in operating assets and
liabilities affecting cash
Trade receivables, net 22,055 12,733
Inventories (2,659) (324)
Reimbursable tooling 363 (3,953)
Prepaid expenses and other assets (1,039) (533)
Other noncurrent assets (2,088) (5,591)
Accounts payable (4,520) (1,102)
Restructuring reserve 209 (736)
Accrued expenses and other liabilities (11,429) (13,097)
Accrued taxes refundable (701)
Other noncurrent liabilities 1,113 2,461
----------------- ------------------
Net cash provided by (used in) operating
activities 11,674 (2,703)
----------------- ------------------
INVESTING ACTIVITIES
Purchase of business, net of cash acquired (11,686) 59
Purchase of property, plant
and equipment (12,299) (8,989)
Proceeds from sale of equipment 12 728
----------------- ------------------
Net cash used in investing activities (23,973) (8,202)
----------------- ------------------
FINANCING ACTIVITIES
Net proceeds on borrowings 2,573 14,789
Debt financing costs (378)
----------------- ------------------
Net cash provided by financing activities 2,195 14,789
----------------- ------------------
</TABLE>
5
<PAGE> 6
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS 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,
2000 1999
(unaudited) (unaudited)
<S> <C> <C>
Effect of exchange rate
changes on cash (123) (352)
--------------------- --------------------
Net (decrease) increase in cash
and cash equivalents (10,227) 3,532
Cash and cash equivalents
at beginning of period 17,643 19,008
--------------------- --------------------
Cash and cash equivalents
at end of period $7,416 $22,540
===================== ====================
</TABLE>
SEE ACCOMPANYING NOTES TO 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, 2000.
Recently Issued Accounting Pronouncements
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivatives Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133 - an amendment of FASB No. 133." Statement No. 137 defers the effective date
of Statement No. 133 by one year to fiscal years beginning after June 15, 2000.
Accordingly, the Company plans to adopt Statement No. 133 beginning with the
Fiscal Year ended March 31, 2001. Implementation of this Statement is not
expected to have a material impact on the Company's results of operations.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB
No. 101 provides guidance on applying generally accepted accounting principles
to the recognition, presentation, and disclosure of revenue in financial
statements. The Company does not believe that the adoption of the SAB will have
a material effect on the Company's financial position or its results of
operations.
2. INVENTORIES (Dollars in thousands)
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
<S> <C> <C>
Raw materials $26,129 $24,870
Finished goods and work-in-process 35,041 32,607
-------------------- ------------------
61,170 57,477
LIFO and other reserves (3,777) (4,290)
-------------------- ------------------
$57,393 $53,187
==================== ==================
</TABLE>
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"). On December 8,
1998, the Company 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 the Company 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 acquisitions. The Company has optional redemption rights beginning
June 15, 2002. The Notes are limited to $250.0 million aggregate principal
amount.
On June 9, 1999, the Company 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.
7
<PAGE> 8
4. ACQUISITION
On February 16, 2000, the Company acquired the automotive engineering, design
and prototype service business of Farley Inc. (the "Technology Division"). The
purchase price for the Technology Division was $6.3 million including closing
costs, subject to a Closing Date working capital adjustment, if applicable. On
the Closing Date, $5.1 million of the total purchase price was paid to Farley
and $1.0 million was placed in escrow, pending any applicable purchase price
adjustment or indemnification claim. The acquisition of the Technology Division
was financed from the Company's available working capital. The Technology
Division is a full service provider of early phase product design as well as a
leader in large die prototyping and complex weld assemblies. The division also
provides supplemental design and engineering services to the automotive OEMs and
Tier 1 suppliers. The acquisition has been recorded in accordance with the
purchase method of accounting. Accordingly, the purchase price plus direct costs
of the acquisition have been allocated to the assets acquired and liabilities
assumed based on their estimated fair values at the date of acquisition and the
Technology Division's operating results have been included with those of the
Company since the date of acquisition.
On April 3, 2000 (the "Closing Date"), pursuant to a Purchase and Sale
Agreement, dated as of February 5, 2000 (the "Purchase Agreement"), among a
wholly-owned indirect subsidiary of the Company (the "Purchaser") and Agostino
Gessaroli, Irene Salezzi, Denis Gessaroli, Luana Gessaroli, Officine Meccaniche
Gessaroli S.p.A., and Gess.cardi Gessaroli Agostino & C. S.a.s (collectively,
"Sellers") the Purchaser acquired the Group Gessaroli business of Sellers (the
"Gessaroli Group"). The purchase price was ITL 24.0 billion ($11.8 million US)
plus up to ITL 5.3 billion ($2.7 million US) for the payment of income taxes and
debt, subject to a Closing Date net asset adjustment, if applicable. On the
Closing Date, ITL 21.6 billion ($10.7 million US) of the total purchase price
was paid to Sellers and ITL 2.4 billion ($1.2 million US) was held back, pending
any applicable purchase price adjustment or indemnification claim. The Gessaroli
Group's integrated manufacturing operations cover all functions of design,
engineering, die and mold construction, parts production and assembly for its
metal formed components, modules and injection molded products. The Company
intends to continue and expand the current operations of the Gessaroli Group.
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, 2000 $1,050 ($9,690) $12,869 $4,229
Net income 2,055 2,055
Foreign currency
translation adjustments (1,305) (1,305)
Accrued dividends and
accretion of redeemable
preferred stock (330) (330)
----------------------------------------------------- --------------
Balances at June 30, 2000 $1,050 ($10,995) $14,594 $4,649
===================================================== ==============
</TABLE>
8
<PAGE> 9
6. COMPREHENSIVE INCOME
The Company's total comprehensive income was as follows:
<TABLE>
<CAPTION>
June 30, June 30,
2000 1999
<S> <C> <C>
Net income $2,055 $1,422
---------------- ----------------
Other comprehensive
loss, net of tax:
Foreign currency translation adjustment (1,305) (235)
---------------- ----------------
Other comprehensive loss (1,305) (235)
---------------- ----------------
Total comprehensive income $ 750 $1,187
================ ================
</TABLE>
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, 2000, the Notes were not guaranteed by certain of
our other consolidated subsidiaries, including Oxford Automotive Europe, Oxford
Automotriz de Mexico S.A. de C.V., Oxford Automotive France, Cofimeta S.A.,
Wackenhut and Gessaroli (the "Non-Guarantor Subsidiaries"). As of June 30, 1999,
the Notes were not guaranteed by Oxford Automotriz de Mexico S.A. de C.V. ,
Oxford Automotive France, Cofimeta S.A. and Wackenhut. Wackenhut was acquired
June 28,1999, therefore it is excluded from the statement of operations for the
three month period ended June 30, 1999. Gessaroli was acquired April 3, 2000,
therefore it is excluded from the reporting for the period ended March 31, 2000
and is included only for the post acquisition period for the three months ended
June 30, 2000.
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. Management does not believe that separate financial
statements of the Guarantor Subsidiaries are material to investors of the Notes.
9
<PAGE> 10
CONDENSED CONSOLIDATING BALANCE SHEETS
JUNE 30, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor Eliminations/
Parent Subsidiaries Subsidiaries Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents $665 $5,934 $817 $ $7,416
Trade receivables, net 9,616 47,500 74,479 131,595
Inventories 25,936 31,457 57,393
Refundable income taxes 738 (5) 2,178 2,911
Reimbursable tooling 18,465 7,426 (553) 25,338
Deferred income taxes 400 596 1,893 2,889
Prepaid expenses and
other current asset 4,116 30,927 4,560 39,603
------------ ---------------- ------------ --------------- --------------
Total current assets 34,000 118,314 114,831 267,145
Other noncurrent assets 17,802 6,212 17,411 41,425
Deferred income taxes 15,971 17,667 33,638
Property, plant and
equipment, net 8,572 62,740 190,618 261,930
Investment in
subsidiaries 106,564 58,033 (164,597)
------------ ---------------- ------------ --------------- --------------
Total assets $166,938 $203,237 $398,560 ($164,597) $604,138
============ ================ ============ =============== ==============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $49,579 $53,451 $46,572 $ $149,602
Intercompany accounts (121,493) (895) 122,388
Restructuring reserve 4,525 617 5,142
Accrued expenses and
other current
liabilities 1,817 36,313 14,662 52,792
Current portion
of borrowings 3,875 7,262 53 11,190
------------ ---------------- ------------ --------------- --------------
Total current liabilities (66,222) 100,656 184,292 218,726
</TABLE>
10
<PAGE> 11
CONDENSED CONSOLIDATING BALANCE SHEETS (CONTINUED)
JUNE 30, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor Eliminations/
Parent Subsidiaries Subsidiaries Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Pension liability (31) 2,213 7,394 9,576
Post retirement
medical benefits liability 47,919 47,919
Deferred income taxes (1,934) 22 8,228 6,316
Other non current
liabilities 6,035 3,616 9,651
Long-term borrowings
less current portion 218,890 39,246 8,388 266,524
--------- ------------ --------- ---------- -----------
Total liabilities 150,703 148,172 259,837 558,712
Redeemable preferred stock 40,777 40,777
Shareholder's equity
Common stock 1,050 45,994 103,459 (149,453) 1,050
Accumulated other
comprehensive loss (7,358) (3,637) (10,995)
Retained earnings (deficit) 15,185 16,429 (1,876) (15,144) 14,594
--------- ------------ --------- ---------- -----------
Total shareholders' equity 16,235 55,065 97,946 (164,597) 4,649
Total liabilities and
shareholder's equity $166,938 $203,237 $398,560 ($164,597) $604,138
========= ============ ========= ========== ===========
</TABLE>
11
<PAGE> 12
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor Eliminations/
Parent Subsidiaries Subsidiaries Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents $8,563 $8,839 $241 $ $17,643
Trade receivables, net 12,372 41,952 85,588 139,912
Inventories 20,462 32,725 53,187
Refundable income taxes 3,515 (1,488) 2,027
Reimbursable tooling 19,843 6,120 (925) 25,038
Deferred income taxes 388 1,986 2,374
Prepaid expenses and
other current assets 6,809 26,620 4,799 38,228
--------------- ----------------- --------------- ---------------- --------------
Total current assets 51,490 103,993 122,926 278,409
Other noncurrent assets 11,389 448 23,039 34,876
Deferred taxes 16,930 17,348 34,278
Property, plant and
equipment, net 8,536 51,857 190,856 251,249
Investment in
subsidiaries 104,719 45,766 (150,485)
--------------- ----------------- --------------- ---------------- --------------
Total assets $176,134 $173,228 $399,935 ($150,485) $598,812
=============== ================= =============== ================ ==============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $53,517 $40,822 $50,362 $ $144,701
Intercompany accounts (133,574) 1,485 132,089
Restructuring reserve 3,335 754 4,089
Accrued expenses and
other current
liabilities 12,443 33,070 14,016 59,529
Current portion
of borrowings 4,500 6,423 132 11,055
--------------- ----------------- --------------- ---------------- --------------
Total current liabilities (63,114) 85,135 197,353 219,374
</TABLE>
12
<PAGE> 13
'
CONDENSED CONSOLIDATING BALANCE SHEETS (CONTINUED)
MARCH 31, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor Eliminations/
Parent Subsidiaries Subsidiaries Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Pension liability 2,175 7,426 9,601
Post retirement
medical benefits liability 46,953 46,953
Deferred income taxes (1,997) 9,291 7,294
Other non current
liabilities 4,631 3,658 8,289
Long-term borrowings
less current portion 226,734 35,690 197 262,621
--------------- ------------- --------------- -------------- ---------------
Total liabilities 161,623 127,631 264,878 554,132
Redeemable preferred
stock 40,451 40,451
Shareholder's equity
Common stock 1,050 39,882 97,349 (137,231) 1,050
Accumulated other
comprehensive
loss (6,914) (2,776) (9,690)
Retained earnings (defict) 13,461 12,629 33 (13,254) 12,869
--------------- ------------- --------------- -------------- ---------------
Total shareholders' equity 14,511 45,597 94,606 (150,485) 4,229
Total liabilities and
shareholder's equity $176,134 $173,228 $399,935 ($150,485) $598,812
=============== ============= =============== ============== ===============
</TABLE>
13
<PAGE> 14
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor Eliminations /
Parent Subsidiaries Subsidiaries Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Net sales $73,728 $132,430 $ $206,158
Cost of sales 62,603 119,467 182,070
---------------- ----------------- --------------- ---------------- ----------------
Gross profit 11,125 12,963 24,088
Selling, general and
administrative
expenses (1,217) 3,735 9,922 12,440
Gain on sale of equipment (7) (7)
---------------- ----------------- --------------- ---------------- ----------------
Operating income 1,217 7,390 3,048 11,655
Interest expense, net (1,308) (1,432) (5,490) (8,230)
Other income 85 13 14 112
---------------- ----------------- --------------- ---------------- ----------------
Income (loss) before
income taxes (6) 5,971 (2,428) 3,537
Income tax (provision)
benefit (152) (2,170) 840 (1,482)
---------------- ----------------- --------------- ---------------- ----------------
Income (loss) before
equity in income of
consolidated
subsidiaries (158) 3,801 (1,588) 2,055
Equity in income of
consolidated
subsidiaries 2,213 (2,213)
---------------- ----------------- --------------- ---------------- ----------------
Net income (loss) $2,055 $3,801 ($1,588) ($2,213) $2,055
================ ================= ================ ================ ================
</TABLE>
14
<PAGE> 15
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Non-Guarantor Guarantor Eliminations/
Parent Subsidiaries Subsidiaries Adjustments Consolidated
<S> <C> <C> <C> <C> <C>
Net sales $ $ 54,489 $ 151,872 $ $206,361
Cost of sales 47,776 137,256 185,032
-------------- -------------- -------------- -------------- --------------
Gross profit 6,713 14,616 21,329
Selling, general and
administrative
expenses (819) 3,926 9,168 12,275
Gain on sale of
equipment (505) (505)
-------------- -------------- -------------- -------------- --------------
Operating income 819 3,292 5,448 9,559
Interest expense, net (1,277) (1,093) (4,745) (7,115)
Other income 28 287 315
-------------- -------------- -------------- -------------- --------------
Income before
income taxes (458) 2,227 990 2,759
Income taxes 125 (906) (556) (1,337)
-------------- -------------- -------------- -------------- --------------
Income before equity
in income of
consolidated
subsidiaries (333) 1,321 434 1,422
Equity in income of
consolidated
subsidiaries 1,755 (1,755)
-------------- -------------- -------------- -------------- --------------
Net income $ 1,422 $ 1,321 $ 434 ($1,755) $ 1,422
============== ============== ============== ============== ===============
</TABLE>
15
<PAGE> 16
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2000
(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 $7,437 $4,724 ($487) $11,674
------------- ------------------ ----------------- -----------------
INVESTING ACTIVITIES
Purchase of businesses,
net of cash acquired (6,111) (5,575) (11,686)
Purchase of property,
plant and equipment (379) (4,652) (7,268) (12,299)
Proceeds from sale
of equipment 12 12
------------- ------------------ ----------------- -----------------
Net cash used in
investing activities (6,490) (10,227) (7,256) (23,973)
------------- ------------------ ----------------- -----------------
FINANCING ACTIVITIES
Net proceeds (payments)
on borrowings (8,469) 2,729 8,313 2,573
Debt financing costs (378) (378)
------------- ------------------ ----------------- -----------------
Net cash provided by
(used in)
financing activities (8,847) 2,729 8,313 2,195
------------- ------------------ ----------------- -----------------
Effect of foreign
currency rate
fluctuation on cash (125) 2 (123)
------------- ------------------ ----------------- -----------------
Net increase (decrease)
in cash and cash equivalents (7,900) (2,899) 572 (10,227)
Cash and cash equivalents at beginning
of period 8,565 8,837 241 17,643
------------- ------------------ ----------------- -----------------
Cash and cash equivalents at end of period $665 $5,938 $813 $7,416
============= ================== ================= =================
</TABLE>
16
<PAGE> 17
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
Purchase of property, 59 59
plant and equipment (2,805) 279 (6,463) (8,989)
Proceeds from sale of equipment 728 728
---------------- -------------------- -------------------- --------------------
Net cash provided by (used in)
investing activities (2,805) 338 (5,735) (8,202)
---------------- -------------------- -------------------- --------------------
FINANCING ACTIVITIES
Net proceeds (payments) on borrowings (94) 620 14,263 14,789
---------------- -------------------- -------------------- --------------------
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 and cash equivalents (2,705) 6,226 11 3,532
Cash and cash equivalents at beginning
of period 9,741 9,158 109 19,008
---------------- -------------------- -------------------- --------------------
Cash and cash equivalents at end of period $7,036 $15,384 $120 $22,540
================ ==================== ==================== ====================
</TABLE>
8. RECLASSIFICATIONS
Certain amounts in the prior periods' statements have been
reclassified to conform to the current periods' presentation.
17
<PAGE> 18
9. SEGMENT INFORMATION
Effective April 1, 1998, the Company adopted SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information". This statement
establishes reportable standards for reporting information about
operating segments in annual financial statements and related disclosures
about products and geographic areas. The Company has one reportable
segment in the global automotive original equipment supply industry. Net
sales and operating income (loss) are attributed to geographic regions
based upon their location of origin. Net sales, operating income (loss)
and identifiable assets by geographic area are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
-------------------------
2000 1999
<S> <C> <C>
Net sales
United States $ 81,337 $ 103,514
Canada 51,093 48,358
Mexico 6,248 4,079
France 45,688 50,410
Other Europe 21,792
------------ -----------
$ 206,158 $ 206,361
============ ===========
</TABLE>
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
------------ -----------
(unaudited)
<S> <C> <C>
Identifiable assets
United States $ 260,648 $ 284,085
Canada 119,254 123,815
Mexico 34,602 27,265
France 110,960 121,219
Other Europe 78,674 42,428
------------ -----------
$ 604,138 $ 598,812
============ ===========
</TABLE>
10. SUBSEQUENT EVENTS
On August 1, 2000, the Company entered into an amended and restated credit
agreement with Citicorp USA, Inc. as Administrative Agent and Collateral Agent,
Comerica Bank as Syndication Agent, Credit Suisse First Boston as Documentation
Agent and Salomon Smith Barney, Inc. as Arranger and Book Manager, providing for
a $50.0 million term loan and a $125.0 million revolving credit facility for
working capital and other general corporate purposes. The Credit Agreement
expires on July 31, 2004.
On August 2, 2000 (the "Closing Date") pursuant to a share purchase and
sales agreement, dated August 2, 2000, (the "Purchase Agreement"), among Oxford
Automotive Mecanismes et Decoupage Fin II SAS, a wholly-owned indirect
subsidiary of the Company and Aries Industries, S.A. (the "Seller") the Company
acquired all of the issued and outstanding shares of Aries Industries Mecanismes
et Decoupage Fin S.A. ("AIMDF") from the Seller. The purchase price was FF 430
million, subject to possible downward adjustments for minimum net assets as of
the Closing Date and minimum EBITDA for twelve months after the Closing Date.
On the Closing Date, FF 350 million less approximately FF 60 million in
financial indebtedness assumed or approximately FF 290 million was paid to the
seller. The remaining purchase price of FF 80 million, subject to any applicable
purchase price adjustment or indemnification claim, is payable in two equal
installments on the second and third anniversaries of the Closing Date, subject
to the possible early payment of up to 10 million of the deferred payments if
certain conditions relating to the minimum EBITDA adjustment are met. For the
year ended December 31, 1999, AIMDF had net sales of approximately US $160
million. The consideration provided for in the Purchase Agreement for the
shares of AIMDF was determined by the Company after a complete review of the
business and negotiations between representatives of the Company and the Seller.
The acquisition of AIMDF was financed from the Company's available European
working capital and approximately US $10 million from its senior credit
facility with Citicorp USA Inc. as Administrative Agent and Collateral Agent.
AIMDF's integrated manufacturing operations cover all functions of design,
engineering, parts production and assembly of door, hood and decklid hinges,
latches, sliding door mechanisms, paring brakes, jacks, fine blanking, hot
rolled profiles and other metal formed components. The Company intends to
continue and expand the current operations of AIMDF.
18
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended June 30, 2000
As compared to the three months ended June 30, 1999
Results of Operations
The three months ended June 30, 2000 statement of operations for Oxford
Automotive, Inc. (the "Company") include 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"), and Oxford
Suspension, Inc. and Oxford Suspension Ltd. (collectively the "Suspension
Division"), Cofimeta S.A. ("Cofimeta"), Wackenhut GmbH ("Wackenhut"), the
automotive, design and prototype service business of Farley, Inc. ("Technology
Division") and the Gessaroli Group. 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, Cofimeta was acquired on
February 5, 1999, Wackenhut GmbH was acquired on June 28, 1999, the Gessaroli
Group was acquired on April 3, 2000 and the Technology Division was acquired on
February 16, 2000. Each was accounted for using the purchase method of
accounting. Based on the above, the three month statement of operations for the
period ended June 30, 1999 does not include the operating results of Wackenhut,
the Technology Division or the Gessaroli Group.
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)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 2000 June 30, 1999
<S> <C> <C> <C> <C>
Net sales $206.2 100.0% $206.4 100.0%
Gross profit 24.1 11.7% 21.3 10.3%
Selling, general &
administrative 12.4 6.0% 12.3 6.0%
Operating income 11.7 5.7% 9.6 4.7%
Net interest expense 8.2 4.0% 7.1 3.4%
Net income 2.1 1.0% 1.4 0.7%
Memo: EBITDA 20.8 10.1% 17.5 8.5%
</TABLE>
NET SALES -- Net sales for the three months ended June 30, 2000 were $206.2
million. This represents a decrease of $0.2 million as compared to net sales for
the three months ended June 30, 1999 of $206.4 million. Excluding the impact of
acquisitions made since the prior year ($25.9 million), the overall decrease is
the result of the year over year impact of foreign exchange and the balance out
of certain General Motors' light truck and SUV platforms. The decrease was
partially offset by the launch of components for the Pontiac Aztek (General
Motors hybrid vehicle), the Saturn LS and Chrysler AN/DN, as well as
increased content on the PSA Saxo 106.
GROSS PROFIT -- For the three months ended June 30, 2000, gross profit increased
to $24.1 million or 11.7% of net sales as compared to $21.3 million or 10.3% of
net sales for the same period in the prior year. The gross profit and gross
margin increases are related to the successful launches of the Pontiac Aztek and
the Saturn LS, fixed cost reductions achieved as a result of plant
rationalization, and gross profit related to acquisitions. These increases also
reflect improvements in quick die change and press utilization.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") -- For the three months
ended June 30, 2000, SG&A expenses increased to $12.4 million or 6.0% of net
sales as compared to $12.3 million or 6.0% of net sales for the same
19
<PAGE> 20
period in the prior year. For the first quarter of fiscal 2000 as compared to
the first quarter of fiscal 1999, the level of spending remained constant,
although the Company continued to support an increased level of ongoing and new
customer program launches. This was achieved as a result of the continued effort
to maximize global synergies (technical centers in the United States and Europe)
in the areas of program and tool management, product innovation and commercial
support. The three months ended June 30, 2000 also included spending as a result
of the acquisitions made since the prior year.
OPERATING INCOME -- For the three months ended June 30, 2000, operating income
increased to $11.7 million or 5.7% of net sales as compared to $9.6 million or
4.7% of net sales for the same period in the prior year. The increase is a
result of operating income related to gross margin improvements, controlled SG&A
spending as well as acquisitions made during the period, as explained above.
INTEREST EXPENSE -- For the three months ended June 30, 2000, net interest
expense was $8.2 million, an increase of $1.1 million, as compared to $7.1
million for the same period last year. The increase can be attributed to
acquisitions during the period, the interim financing of customer tooling and
higher incremental borrowing rates on variable rate debt.
NET INCOME - For the three months ended June 30, 2000, the Company reported net
income of $2.1 million, an increase of $0.7 million as compared to net income of
$1.4 million for the same period in the prior year. The increase in earnings was
the result of overall operational performance 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 $10.4 million of cash for the three
months ended June 30, 2000. A net change in working capital items generated
$14.9 million of cash during the period. The increase in cash was offset by a
decrease in accrued expenses and other noncurrent liabilities of $10.3 million
and in increase in prepaid and other assets of $3.3 million. During the period,
the Company used approximately $24.0 million for investing activities, including
the acquisition of the Gessaroli Group ($11.7 million) and capital expenditures
of approximately $12.3 million.
At June 30, 2000, the Company had approximately $113.1 million available under
our credit facility with Bank One, Michigan on behalf of itself and as agent for
a syndicate of other lenders. At June 30, 2000, the Company had $28.5 million
outstanding under the line of credit and $3.4 million in outstanding letters of
credit to support workers' compensation commitments. The balance outstanding
under the working capital revolver includes the prepayment of the outstanding
balance of the term loan of $27.4 million. This payment was made in
contemplation of the recent amendment described below.
On August 1, 2000, in conjunction with the AIMDF acquisition, the Company
entered into an amended and restated credit agreement with Citicorp USA, Inc. as
Administrative Agent and Collateral Agent, providing for a $50.0 million term
loan and a $125.0 million revolving credit facility (the "Senior Credit
Facility"). The use of the proceeds was to consummate the acquisition of AIMDF
and for general corporate purposes which may include acquisitions. The
obligations under the Senior Credit Facility are secured by substantially all of
the Company's assets and the assets of certain of the Company's subsidiaries.
The Senior Credit Facility contains certain customary covenants, including
reporting and other affirmative covenants, financial covenants, and negative
covenants, as well as customary events of default, including non-payment of
principal, violation of covenants, and cross-defaults to certain other
indebtedness, including the indebtedness evidenced by the notes described below.
The Company believes the application of the proceeds from its 10 1/8% Senior
Subordinated Notes due 2007 has enhanced its ability to meet its growth and
business objectives. However, interest payments on the notes represent a
significant liquidity requirement for the Company. The Company is 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.
20
<PAGE> 21
Capital expenditures were $12.3 million, or 6.0% of net sales for the three
months ended June 30, 2000 as compared to $9.0 million, or 4.4% of net sales for
the three months ended June 30, 1999. The increase of $3.3 million was due
primarily to acquisitions and included spending to support customer programs and
for cost reduction and productivity improvement projects. Other capital
expenditures included health and safety items, and computer and network
upgrades.
For fiscal 2001, the Company's capital expenditures are expected to be $54.3
million, consisting of $37.7 million to support new business and increase
capacity, $7.5 million for maintenance, rebuilds and improvements and $9.1
million in other expenditures, including health, safety and environmental.
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 its
10 1/8% Senior Subordinated Notes due 2007 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, the Company is exposed to market risk
associated with fluctuations in foreign exchange rates and interest rates. The
Company conservatively manages these risks through the use of derivative
financial instruments in accordance with management's guidelines.
The Company enters into all hedging transactions for periods consistent with the
underlying exposures. The Company does not enter into derivative instruments for
trading purposes.
Foreign Exchange. The Company enters into foreign currency forward contracts to
protect itself 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 the Company believes
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. The Company believes that any gain or
loss incurred on foreign currency forward contracts is offset by the direct
effects of currency movements on the underlying transactions.
The Company has performed a quantitative analysis of our overall currency rate
exposure at June 30, 2000. Based on this analysis, a 10% change in currency
rates would not have a material effect on the Company's earnings.
Interest Rates. The Company generally manages risk associated with interest rate
movements through the use of or combination of variable and fixed rate debt. The
Company's 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.
The Company has performed a quantitative analysis of its overall interest rate
exposure at June 30, 2000. Based on this analysis, a 10% change in the average
cost of the Company's variable rate debt would not have a material effect on its
earnings.
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
21
<PAGE> 22
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.
22
<PAGE> 23
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) (i) Report on Form 8-K, dated April 3, 2000, was filed by the Company
on April 18, 2000; such report contained information under Item 2 with
respect to the acquisition of the Gessaroli Group.
(ii) A report on Form 8K/A, dated February 16, 2000 was filed by the
Company on May 2, 2000; such report contained information under Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits)
with respect to the acquisition of the Technology Division and
included the required financial statements of the Technology Division
as well as the required pro forma financial information relating to
the Technology Division.
(iii) A report on Form 8K/A, dated April 3, 2000 was filed by the
Company on June 20, 2000; such report contained information under Item
7 relating to the absence of a requirement to file Financial
Statements and Pro Forma Financial Information with respect to the
acquisition of the Gessaroli Group.
23
<PAGE> 24
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 14, 2000 OXFORD AUTOMOTIVE, INC.
By: /s/ AURELIAN BUKATKO
Aurelian Bukatko
Senior Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
24
<PAGE> 25
EXHIBIT INDEX
EXHIBIT NO DESCRIPTION
4.1 Third Amended and Restated Credit Agreement, dated as of July 31,
2000, among Oxford Automotive, Inc., the Borrowing Subsidiaries
and the Lenders identified therein and Citicorp USA, Inc. as
Administrative Agent and Collateral Agent.
4.2 Amended and Restated Pledge and Security Agreement, dated as of
August 1, 2000 in favor of Citicorp USA, Inc. as Collateral
Agent.
4.3 Amended and Restated Guaranty, dated as of August 1, 2000, in
favor of Citicorp USA, Inc. as Administrative Agent and
Collateral Agent.
27 Financial Data Schedule
