<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For The Quarterly Period ended September 30, 1998
Commission File Number 0-6955
WALBRO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
38-1358966
(I.R.S. Employer ID No.)
6242 Garfield Street, Cass City, MI 48726
(Address of principal executive offices) (Zip Code)
(517) 872-2131
Registrant's telephone number, including area code
Indicate by check mark whether the registrant 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 (of for such shorter period that the registrant
was required to file such reports) and 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 November 11, 1998
Common Stock (one class): 8,688,294
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements of Walbro Corporation and
subsidiaries (the "Company") have been prepared by the Company without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
condensed consolidated financial statements of the Company should be read in
conjunction with the financial statements and the notes thereto included in the
Company's Form 10-K as filed with the Securities and Exchange Commission for the
year ended December 31, 1997.
The financial information presented reflects all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of the results for interim periods presented. The
results for the interim periods are not necessarily indicative of the results to
be expected for the year.
1
<PAGE> 3
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
9/30/98 12/31/97
------- --------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 26,371 $ 13,539
ACCOUNTS RECEIVABLE, NET 176,867 144,985
INVENTORIES, NET 52,771 56,207
OTHER CURRENT ASSETS 23,770 25,924
------------- --------------
TOTAL CURRENT ASSETS 279,779 240,655
PROPERTY, PLANT & EQUIPMENT:
LAND, BUILDINGS & IMPROVEMENTS 98,882 95,329
MACHINERY & EQUIPMENT 297,137 297,032
------------- --------------
SUBTOTAL 396,019 392,361
LESS: ACCUMULATED DEPRECIATION (123,370) (116,991)
------------- --------------
NET PROPERTY, PLANT & EQUIPMENT 272,649 275,370
OTHER ASSETS:
GOODWILL, NET 32,182 32,803
JOINT VENTURES, INVESTMENTS & OTHER 65,645 61,765
------------- --------------
TOTAL OTHER ASSETS 97,827 94,568
------------- --------------
TOTAL ASSETS $ 650,255 $ 610,593
============= ==============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
2
<PAGE> 4
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
9/30/98 12/31/97
------- --------
(Unaudited)
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
CURRENT PORTION LONG-TERM DEBT $ 751 $ 13,960
NOTES PAYABLE-BANKS 18,895 26,204
ACCOUNTS PAYABLE 117,718 84,209
ACCRUED LIABILITIES 43,936 41,009
----------- -----------
TOTAL CURRENT LIABILITIES 181,300 165,382
LONG-TERM LIABILITIES:
LONG-TERM DEBT, NET OF CURRENT 311,268 291,393
OTHER LONG-TERM LIABILITIES 16,006 14,952
----------- -----------
TOTAL LONG-TERM LIABILITIES 327,274 306,345
COMPANY-OBLIGATED MANDATORILY REDEEMABLE CON-
VERTIBLE PREFERRED SECURITIES OF WALBRO CAPITAL
TRUST HOLDING SOLELY CONVERTIBLE DEBENTURES 69,000 69,000
STOCKHOLDERS' EQUITY
COMMON STOCK, $.50 PAR VALUE; 4,344 4,341
AUTHORIZED 25,000,000;
OUTSTANDING 8,688,294 IN 1998 AND
8,682,595 IN 1997
PAID-IN CAPITAL 66,204 66,151
RETAINED EARNINGS 35,127 33,938
ACCUMULATED OTHER COMPREHENSIVE INCOME (32,994) (34,564)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 72,681 69,866
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 650,255 $ 610,593
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
3
<PAGE> 5
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
09/30/98 09/30/97 09/30/98 09/30/97
-------- ------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $ 165,648 $ 146,523 $ 503,076 $ 454,384
COST OF SALES & EXPENSES:
COST OF SALES 138,682 125,911 422,109 387,169
SELLING AND ADMINISTRATIVE EXPENSES 13,802 11,893 39,394 36,551
RESEARCH & DEVELOPMENT EXPENSES 4,298 4,727 13,425 11,951
------------ ----------- ----------- -----------
OPERATING INCOME 8,866 3,992 28,148 18,713
OTHER EXPENSE (INCOME):
INTEREST EXPENSE, NET 7,412 5,950 22,385 17,779
ROYALTY INCOME, NET (488) (485) (1,603) (2,797)
OTHER (INCOME) EXPENSE (225) 142 (1,165) 401
------------ ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES,
MINORITY INTEREST, AND JOINT VENTURES 2,167 (1,615) 8,531 3,330
PROVISION FOR INCOME TAXES (519) 1,019 (2,446) (474)
MINORITY INTEREST (1,433) (1,318) (4,234) (3,715)
EQUITY IN INCOME OF JOINT VENTURES 323 728 827 3,219
------------ ----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 538 (1,186) 2,678 2,360
EXTRAORDINARY ITEM, NET OF TAX 0 0 (1,473) 0
-- -- ------- --
NET INCOME $ 538 $ (1,186) $ 1,205 $ 2,360
============ =========== =========== ===========
BASIC INCOME PER SHARE BEFORE
- - -----------------------------
EXTRAORDINARY ITEM $ 0.06 ($0.14) $ 0.31 $ 0.27
- - -------------------
EXTRAORDINARY ITEM PER SHARE -- -- (0.17) --
----------- ----------- ----------- -----------
BASIC NET INCOME PER SHARE $ 0.06 ($0.14) $ 0.14 $ 0.27
- - --------------------------
=========== =========== =========== ===========
DILUTED NET INCOME PER SHARE $ 0.06 ($0.14) $ 0.14 $ 0.27
- - ----------------------------
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 8,688,282 8,664,420 8,685,512 8,657,507
- - -----------------------------------
DILUTIVE OPTIONS ISSUED TO EXECUTIVES 0 57,341 0 27,088
- - -------------------------------------
----------- ----------- ----------- -----------
DILUTED SHARES OUTSTANDING 8,688,282 8,721,761 8,685,512 8,684,595
- - --------------------------
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE> 6
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
09/30/98 09/30/97
-------- --------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 1,205 $ 2,360
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 28,224 25,741
(GAIN) LOSS ON DISPOSITION OF ASSETS 268 1,802
MINORITY INTEREST 94 148
(INCOME) OF JOINT VENTURES (827) (3,219)
CHANGES IN ASSETS AND LIABILITIES:
DEFERRED INCOME TAXES (967) 141
PENSION OBLIGATIONS & OTHER 321 (1,829)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 42,392 21,692
ACCOUNTS RECEIVABLE, NET (27,073) (30,831)
INVENTORIES (7,134) (11,651)
PREPAID EXPENSES AND OTHER 33 (1,476)
--------- ---------
TOTAL ADJUSTMENTS 35,331 518
--------- ---------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 36,536 2,878
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF FIXED ASSETS (24,320) (54,383)
PURCHASE OF OTHER ASSETS (618) (1,364)
INVESTMENT IN JOINT VENTURES & OTHER (781) (2,450)
PROCEEDS FROM DISPOSAL OF ASSETS 6,644 6,221
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (19,075) (51,976)
CASH FLOWS FROM FINANCING ACTIVITIES:
BORROWINGS UNDER LINES-OF-CREDIT 130,676 124,686
REPAYMENTS UNDER LINES-OF-CREDIT (74,789) (138,462)
DEBT REPAYMENTS (58,231) (936)
PROCEEDS FROM ISSUANCE OF STOCK
& OPTIONS 56 69,176
FINANCING FEES PAID (2,290) (3,491)
CASH DIVIDENDS PAID (868) (2,596)
--------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (5,446) 48,377
EFFECT OF EXCHANGE RATE CHANGES ON CASH 817 (4,769)
--------- ---------
NET INCREASE (DECREASE) IN CASH 12,832 (5,490)
CASH AND CASH EQUIVALENTS BEGINNING BALANCE 13,539 18,213
--------- ---------
CASH AND CASH EQUIVALENTS ENDING BALANCE $ 26,371 $ 12,723
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE> 7
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NEW CREDIT FACILITY
In May 1998 the Company received a new $150 million credit agreement,
consisting of a $125 million revolving line of credit (Revolving Credit
Facility) and a $25 million capital expenditure facility (Capital Expenditure
Facility).
Under the terms of the Credit Agreement, for the first year of the
facility, the Revolving Credit Facility will bear interest at either the London
Interbank Offered Rate (LIBOR), plus 2.25% or at the Prime Rate, plus 0.25%.
Availability under the Revolving Credit Facility is subject to a borrowing base,
consisting of 85% of eligible accounts receivable of the Company and certain of
its subsidiaries, 60% of certain raw materials and finished goods inventory and
70% of commodity raw material resin inventory, less customary reserves. In
addition, the Revolving Credit Facility provides for a $25 million sub-facility
for the issuance of letters of credit. The Capital Expenditure Facility
initially bears interest at the rate equal to the prime rate, plus 0.50% or
LIBOR, plus 2.50%. Amounts drawn under the Capital Expenditure Facility are
repayable in 20 equal quarterly principal installments, beginning one quarter
after such draw.
Each of the Revolving Credit Facility and the Capital Expenditure
Facility (collectively, the New Credit Facility) is available for a period of
five years after closing. If the Revolving Credit Facility is terminated by the
Company during the first three years, certain pre-payment fees may be
applicable.
The New Credit Facility contains a number of covenants, including
financial covenants such as a fixed charge ratio and a senior secured funded
indebtedness to EBITDA (earnings before interest, taxes, depreciation and
amortization) ratio, and restrictions on additional indebtedness, liens, capital
expenditures, mergers and sales of assets. Obligations outstanding under the
Revolving Credit Facility are secured by accounts receivable, inventory and
general intangibles of the Company and certain subsidiaries, and also are
secured by a pledge of the stock of certain of the material domestic
subsidiaries of the Company and 65% of the stock of the material foreign
subsidiaries of the Company. Each advance under the Capital Expenditure Facility
is secured by the item of equipment purchased with the proceeds of such advance.
The collateral for the Capital Expenditure Facility will not constitute
collateral for the Revolving Credit Facility. In addition, certain of the
subsidiaries of the Company will provide guarantees of the obligations under the
New Credit Facility. Proceeds of the New Credit Facility were initially used to
pay off $30 million under the previous credit facility; to pay off the Purchase
Money Loan Agreement; and to pay off the $45 million Senior Notes due 2004,
including an early retirement premium of $2.0 million. The remaining funds will
be used to finance capital expenditures and to meet working capital needs.
6
<PAGE> 8
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (con't)
(2) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories include raw material and component parts, work-in-process
and finished products. Work-in-process and finished products inventories include
material, labor and manufacturing overhead costs.
Inventories are comprised of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
(in thousands)
<S> <C> <C>
Raw materials and components $28,324 $30,857
Work-in-process 7,693 6,545
Finished products 16,754 18,805
------- -------
$52,771 $56,207
------- -------
</TABLE>
(3) COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130 "Reporting
Comprehensive Income." The impact of adoption has been to include changes in
deferred compensation, unrealized gain or loss on securities and foreign
currency translation, which have not been recognized in determining net income,
in a new presentation of comprehensive income, as presented below.
WALBRO CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Nine Months Ended
09/30/98 09/30/97
-------- --------
(in thousands)
<S> <C> <C>
Net income $ 1,205 $ 2,360
--------- ----------
Foreign currency translation 1,628 (20,555)
Unrealized gains (losses) on securities ( 196) ( 486)
Deferred compensation 138 542
--------- ----------
Other comprehensive income (loss) 1,570 (20,499)
--------- ----------
Comprehensive income (loss) $ 2,775 $ (18,139)
========= ==========
</TABLE>
7
<PAGE> 9
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (con't)
(4) LIGONIER DISPOSITION
In June 1998, the Company sold its steel fuel rail manufacturing plant
in Ligonier, Indiana to a Michigan-based investment group.
(5) ACCOUNTING POLICIES FOR FINANCIAL INSTRUMENTS
In order to manage exposure to fluctuations in foreign currency exchange rates,
the Company regularly enters into forward currency exchange contracts. Gains or
losses on contracts that hedge specific foreign currency commitments are
deferred and recognized in net income in the period in which the related
transaction is consummated. A foreign currency commitment qualifies for hedge
accounting treatment when the related transaction is firm in nature and
non-cancelable by the Company. Gains or losses on contracts that hedge net
investments in foreign joint ventures or subsidiaries are recognized as
cumulative translation adjustments in stockholders' equity. Gains or losses on
forward currency exchange contracts that do not qualify as hedges are recognized
as other income or expense in the current period.
As of September 30, 1998, there were no foreign currency contracts outstanding.
For the three months ended September 30, 1998, the Company had no foreign
currency contracts.
8
<PAGE> 10
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
as of September 30, 1998
-------------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
----------- ------------- ------------ ------- -----
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ (484) $ 13,237 $ 13,618 $ -- $ 26,371
Accounts receivable, net 84,998 47,675 44,194 176,867
Accounts receivable, intercompany (96,850) 6,587 113,784 (23,521) --
Inventories, net 20,382 31,387 1,002 52,771
Prepaid expenses and other 6,493 7,198 1,078 -- 14,769
Deferred and refundable income taxes -- 1,217 7,784 -- 9,001
-------------------------------------------------------------------------------
Total current assets 14,539 107,301 181,460 (23,521) 279,779
-------------------------------------------------------------------------------
PLANT AND EQUIPMENT, NET 116,164 148,749 7,628 108 272,649
-------------------------------------------------------------------------------
OTHER ASSETS:
Funds held for construction -- -- -- -- --
Joint ventures 10,359 18,126 -- -- 28,485
Investments 130,822 24,492 69,684 (222,947) 2,051
Goodwill, net 14,000 11,165 (1,524) 8,541 32,182
Notes receivable 2,000 8,265 -- (8,265) 2,000
Deferred income taxes -- 4,568 4,178 -- 8,746
Other 8,455 3,046 12,862 -- 24,363
-------------------------------------------------------------------------------
Total other assets 165,636 69,662 85,200 (222,671) 97,827
-------------------------------------------------------------------------------
Total assets $ 296,339 $ 325,712 $ 274,288 $ (246,084) $650,255
===============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 726 $ 25 $-- $-- $ 751
Bank and other borrowings -- 18,895 -- -- 18,895
Accounts payable 40,514 68,147 9,057 -- 117,718
Accrued liabilities 16,038 36,420 11,827 (21,269) 43,016
Dividends payable -- 920 -- -- 920
-------------------------------------------------------------------------------
Total current liabilities 57,278 124,407 20,884 (21,269) 181,300
-------------------------------------------------------------------------------
LONG-TERM LIABILITIES
Long-term debt, less current portion 166,103 14,930 173,786 (43,551) 311,268
Pension obligations 2,818 2,667 7,042 -- 12,527
Deferred income taxes -- 2,551 (105) -- 2,446
Minority interest -- 1,033 -- -- 1,033
-------------------------------------------------------------------------------
Total long-term liabilities 168,921 21,181 180,723 (43,551) 327,274
-------------------------------------------------------------------------------
REDEEMABLE PREFERRED STOCK -- 69,000 -- -- 69,000
STOCKHOLDERS' EQUITY
Common stock, $.50 par value;
authorized 25,000,000; outstanding
8,688,294 in 1998; 8,682,595 in 1997 -- 25,667 4,344 (25,667) 4,344
Paid-in capital -- 72,663 66,204 (72,663) 66,204
Retained earnings 72,645 32,746 35,127 (105,391) 35,127
Deferred compensation -- (241) -- (241)
Minimum pension liability adjustment -- -- -- -- --
Unrealized gain on securities available for sale -- -- (128) -- (128)
Cumulative translation adjustments (2,505) (19,952) (32,625) 22,457 (32,625)
-------------------------------------------------------------------------------
Total stockholders' equity 70,140 111,124 72,681 (181,264) 72,681
-------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 296,339 $ 325,712 $ 274,288 $ (246,084) $ 650,255
===============================================================================
</TABLE>
9
<PAGE> 11
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
as of December 31, 1997
--------------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
------------ ------------ ------------ ------- -----
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ (744) $ 13,431 $ 852 $ -- $ 13,539
Accounts receivable, net 80,936 63,194 855 144,985
Accounts receivable, intercompany (144,222) (37,755) 171,052 10,925 --
Inventories, net 26,086 29,012 1,109 56,207
Prepaid expenses and other 5,988 9,549 1,868 -- 17,405
Deferred and refundable income taxes 470 1,253 6,796 -- 8,519
-------------------------------------------------------------------------------
Total current assets (31,486) 78,684 182,532 10,925 240,655
-------------------------------------------------------------------------------
PLANT AND EQUIPMENT, NET 123,635 144,423 7,204 108 275,370
-------------------------------------------------------------------------------
OTHER ASSETS:
Funds held for construction -- -- -- -- --
Joint ventures 10,739 15,942 -- -- 26,681
Investments 117,720 24,433 50,959 (189,851) 3,261
Goodwill, net 14,342 11,444 (1,524) 8,541 32,803
Notes receivable -- 6,499 196,198 (202,571) 126
Deferred income taxes -- 4,001 4,178 -- 8,179
Other 9,045 2,860 11,613 -- 23,518
-------------------------------------------------------------------------------
Total other assets 151,846 65,179 261,424 (383,881) 94,568
-------------------------------------------------------------------------------
Total assets $ 243,995 $ 288,286 $ 451,160 $ (372,848) $610,593
===============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 7,026 $ 76 $ 6,858 $ -- $ 13,960
Bank and other borrowings -- 26,204 -- -- 26,204
Accounts payable 21,540 55,730 6,939 -- 84,209
Accrued liabilities 1,103 18,699 20,127 (708) 39,221
Dividends payable -- 920 868 -- 1,788
-------------------------------------------------------------------------------
Total current liabilities 29,669 101,629 34,792 (708) 165,382
-------------------------------------------------------------------------------
LONG-TERM LIABILITIES
Long-term debt, less current portion 164,581 11,818 339,809 (224,815) 291,393
Pension obligations 2,505 2,625 6,693 -- 11,823
Deferred income taxes -- 2,077 -- -- 2,077
Minority interest -- 1,052 -- -- 1,052
-------------------------------------------------------------------------------
Total long-term liabilities 167,086 17,572 346,502 (224,815) 306,345
-------------------------------------------------------------------------------
REDEEMABLE PREFERRED STOCK -- 69,000 -- -- 69,000
STOCKHOLDERS' EQUITY
Common stock, $.50 par value;
authorized 25,000,000; outstanding
8,688,294 in 1998; 8,682,595 in 1997 -- 23,935 4,341 (23,935) 4,341
Paid-in capital -- 72,819 66,151 (72,819) 66,151
Retained earnings 49,827 28,747 33,938 (78,574) 33,938
Deferred compensation -- -- (379) -- (379)
Minimum pension liability adjustment -- -- -- -- --
Unrealized gain on securities available for sale -- -- 68 -- 68
Cumulative translation adjustments (2,587) (25,416) (34,253) 28,003 (34,253)
-------------------------------------------------------------------------------
Total stockholders' equity 47,240 100,085 69,866 (147,325) 69,866
-------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 243,995 $ 288,286 $ 451,160 $ (372,848) $610,593
===============================================================================
</TABLE>
10
<PAGE> 12
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
-----------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
NET SALES $ 264,286 $ 257,454 $ 2,175 $ (20,839) $ 503,076
COSTS AND EXPENSES
Cost of sales 218,973 222,069 1,906 (20,839) 422,109
Selling, administration & other expenses 20,417 20,240 12,162 52,819
-----------------------------------------------------------------------------
24,896 15,145 (11,893) -- 28,148
Interest expense, net 7,147 2,333 12,905 22,385
Royalty income, net (1,947) 344 -- -- (1,603)
Foreign currency exchange loss(gain) (6) 27 1 -- 22
Other (915) 654 (926) -- (1,187)
-----------------------------------------------------------------------------
Income before provision for income taxes,
minority interest, equity in (income) loss
of joint ventures and subsidiaries 20,617 11,787 (23,873) -- 8,531
Provision for income taxes (6,575) (4,529) 8,658 -- (2,446)
Minority Interest -- (4,234) -- -- (4,234)
Equity in income (loss) of joint ventures (161) 988 -- -- 827
Equity in income (loss) of subsidiaries 4,896 -- 17,893 (22,789)
-----------------------------------------------------------------------------
Net Income Before Extraordinary Item $ 18,777 $ 4,012 $ 2,678 $ (22,789) $ 2,678
=============================================================================
Extraordinary Item $ (1,473) (1,473)
-----------------------------------------------------------------------------
Net Income $ 18,777 $ 4,012 $ 1,205 $ (22,789) $ 1,205
=============================================================================
</TABLE>
11
<PAGE> 13
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
----------------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
NET SALES $ 232,577 $ 238,899 $ 1,594 $ (18,686) $ 454,384
COSTS AND EXPENSES:
Cost of sales 198,273 206,124 1,458 (18,686) 387,169
Selling, administration & other expenses 24,930 16,535 7,037 -- 48,502
----------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 9,374 16,240 (6,901) -- 18,713
OTHER EXPENSE (INCOME):
Interest expense, net 8,750 1,423 7,606 -- 17,779
Royalty income, net (3,247) 450 -- (2,797)
Foreign currency exchange loss(gain) (40) 337 26 -- 323
Other 54 11 13 -- 78
----------------------------------------------------------------------------------
Income before provision for income taxes, --
minority interest, equity in (income) loss
of joint ventures and subsidiaries 3,857 14,019 (14,546) -- 3,330
Provision for income taxes (1,373) (5,025) 5,924 -- (474)
Minority Interest (279) (3,436) -- -- (3,715)
Equity in income (loss) of joint ventures 1,084 2,135 -- -- 3,219
Equity in income (loss) of subsidiaries 8,097 -- 10,982 (19,079) --
----------------------------------------------------------------------------------
Net Income Before Extraordinary Item $ 11,386 $ 7,693 $ 2,360 $ (19,079) $ 2,360
==================================================================================
Extraordinary Item
----------------------------------------------------------------------------------
Net Income $ 11,386 $ 7,693 $ 2,360 $ (19,079) $ 2,360
==================================================================================
</TABLE>
12
<PAGE> 14
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
-------------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
------------ ------------ ------------ ------- -----
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities $ 18,478 $ 21,371 $ (3,313) $ -- $ 36,536
------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment (8,197) (16,512) 389 -- (24,320)
Acquisitions, net of cash acquired -- -- -- -- --
Purchase of other assets 3,378 (575) (3,421) -- (618)
Investment in joint ventures and other (8,841) 3,164 4,896 -- (781)
Proceeds/(payments) of intercompany note rec. -- -- -- -- --
Proceeds from disposal of assets 2,220 491 3,933 -- 6,644
------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities (11,440) (13,432) 5,797 -- (19,075)
------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving
line-of-credit agreements (2,906) 58,793 -- 55,887
Debt repayments (6,778) (6,044) (45,409) -- (58,231)
Proceeds from issuance of long-term debt -- -- -- -- --
Proceeds from issuance of stock
and options -- -- 56 -- 56
Financing fees paid -- -- (2,290) -- (2,290)
Cash dividends paid -- -- (868) -- (868)
------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities (6,778) (8,950) 10,282 -- (5,446)
------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH -- 817 -- -- 817
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 260 (194) 12,766 -- 12,832
CASH AND CASH EQUIV. AT BEGIN OF YEAR (744) 13,431 852 -- 13,539
------------------------------------------------------------------------------
CASH AND CASH EQUIV. AT END OF PERIOD $ (484) $ 13,237 $ 13,618 $ -- $ 26,371
==============================================================================
</TABLE>
13
<PAGE> 15
WALBRO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
-------------------------------------------------------------------------------
Walbro
Corporation Consolidation
Guarantor Nonguarantor (Parent and Elimination Consolidated
Subsidiaries Subsidiaries Corporation) Entries Total
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ 34,727 $ 20,971 $ (52,820) $ -- $ 2,878
-------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment (27,638) (26,522) (223) -- (54,383)
Acquisitions, net of cash acquired -- -- -- -- --
Purchase of other assets (545) (762) (57) -- (1,364)
Investment in joint ventures and other (14,656) 4,109 8,097 -- (2,450)
Proceeds/(payments) of intercompany note rec. -- -- -- -- --
Proceeds from disposal of assets 7,619 (2,862) 1,464 -- 6,221
-------------------------------------------------------------------------------
Net cash provided by(used in) investing activities (35,220) (26,037) 9,281 -- (51,976)
-------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving
line-of-credit agreements -- 4,678 (18,454) -- (13,776)
Debt repayments (515) (13) (408) -- (936)
Proceeds from issuance of long-term debt -- (69,000) 69,000 -- --
Proceeds from issuance of stock
and options -- 69,000 176 -- 69,176
Financing fees paid -- -- (3,491) -- (3,491)
Cash dividends paid -- -- (2,596) -- (2,596)
-------------------------------------------------------------------------------
Net cash provided by(used in) financing activities (515) 4,665 44,227 -- 48,377
-------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH -- (4,769) -- -- (4,769)
-------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (1,008) (5,170) 688 -- (5,490)
CASH AND CASH EQUIV. AT BEGIN OF YEAR 299 17,779 135 -- 18,213
-------------------------------------------------------------------------------
CASH AND CASH EQUIV. AT END OF PERIOD $ (709) $ 12,609 $ 823 $ -- $ 12,723
===============================================================================
</TABLE>
14
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 VS. THREE MONTHS ENDED SEPTEMBER 30, 1997
Net sales in the third quarter of 1998 increased 13.0% to $165.6
million compared to $146.5 million for the same period of 1997. Net sales of
automotive products increased 11.5% to $118.4 million for the third quarter of
1998 compared to $106.2 million for the same period of 1997, primarily because
of increases sales of new plastic fuel tank programs in the U.S., in South Korea
and at Walbro Automotive Europe ("WAE"). Net sales at WAE were $50.5 million in
the third quarter of 1998 compared to $41.9 million in the third quarter of 1997
with the 20.4 % increase due mostly to sales related to new programs, as
currency accounted for three percentage points of the increase. The General
Motors strikes during the third quarter of 1998 reduced net sales by
approximately $4.0 million in the U.S. In the quarter, U.S. automotive products
had no sales of steel fuel rails compared to $6.1 million of net sales for the
same 1997 period from the Company's former Ligonier, Indiana facility, which was
sold in the second quarter of 1998. Net sales in Brazil were down 22.3% for the
third quarter of 1998 compared to the same period of 1997 due to unstable
economic conditions and poor vehicle sales in that market.
Net sales of small engine products increased 16.7% to $37.0 million for
the third quarter of 1998 compared to $31.7 million for the same period in 1997.
Sales of most small engine products increased during the quarter. Net sales in
the Peoples Republic of China ("PRC") increased 93.1% for the third quarter of
1998 compared to weak sales during the third quarter of 1997. Net sales of
ignition system products increased 23.3% for the 1998 third quarter compared to
the 1997 third quarter due to new orders from customers.
Net sales to the aftermarket increased 31.4% to $9.2 million for the
third quarter of 1998 compared to $7.0 million for the same period in 1997.
Sales of aftermarket products increased in the third quarter of 1998 because of
stronger demand for automotive aftermarket products.
Cost of sales for the third quarter of 1998 increased 10.2% to $138.7
million compared to $125.9 million for the same period of 1997, while cost of
sales as a percent of net sales declined to 83.7% compared to 85.9% for the same
1997 period. Cost of sales as a percent of sales at WAE was 89.6% for the third
quarter of 1998 compared to 86.3% for the third quarter of 1997 because of
increased launch costs for new plastic fuel tank systems programs. For U.S.
automotive products, gross margin increased to 20.5% compared to 13.3% for the
third quarter of 1997. The higher gross
15
<PAGE> 17
margin was due to higher sales volume and improved efficiency at our Ossian,
Indiana, and Meriden, Connecticut, fuel tank system facilities. In addition, the
sale of the Company's former Ligioner, Indiana facility in the second quarter
helped improve gross margin in comparison with 1997.
In small engine products, gross margin decreased to 13.1% for the
quarter compared to 14.0% for the same period in 1997 primarily because of the
costs of closing the Company's Singapore facility and moving production to
existing facilities in Japan and Mexico. These costs were partially offset by
higher volume at the company's facilities in Japan, Mexico and the PRC. In
aftermarket products, gross margin increased to 28.5% for the third quarter
compared to 26.2% for the same period in 1997 because of higher sales volume.
Selling and administrative ("S & A") expenses increased 16.1% for the
third quarter of 1998 compared to the third quarter of 1997. S & A increased as
a percent of sales (from 8.1% in the third quarter of 1997 to 8.3% for the third
quarter of 1998). S & A expenses increased because of higher state income taxes
and higher personnel related costs, additional expenses of a new facility in
South Korea and closing costs of the Singapore facility.
Research and development ("R & D") expenses decreased 9.1% for the
third quarter of 1998 compared to the same period in 1997. Most of the decreased
R & D expenses resulted from a temporary shift of R & D resources to support
production start-up of new plastic tank programs. The level of effort expended
to develop new products to meet U.S. EPA regulations for automotive evaporative
emissions and for small engine exhaust emissions has not changed.
Interest expense increased because of a higher cost of funds and
increased borrowings for additional working capital required to support sales
growth and for capital expenditures. A description of the borrowings is provided
under Liquidity and Capital Resources.
Provision for income taxes was $0.5 million for the third quarter of
1998 compared to a $1.0 million tax credit for the third quarter of 1997.
The equity in income from joint ventures in the third quarter of 1998
was $0.3 million, $0.4 million lower than the comparable period in 1997 due to
start-up costs at VITEC, the Company's joint venture in Detroit's Empowerment
Zone.
Net income for the third quarter of 1998 was $0.5 million compared to
net loss of $1.2 million for the same period last year, as a result of the
reasons described above. Net income per share for the third quarter of 1998 was
$.06 compared to net loss per share of $.14 for the third quarter of 1997.
16
<PAGE> 18
NINE MONTHS ENDED SEPTEMBER 30, 1998 VS. NINE MONTHS ENDED SEPTEMBER 30, 1997
Net sales for the first nine months of 1998 increased 10.7% to $503.1
million compared to $454.4 million for the same period of 1997. Almost all of
the increased net sales for the first nine months of 1998 compared to the same
period of 1997 occurred for the reasons stated above. Net sales of automotive
products increased 10.0% to $364.9 million for the first nine months of 1998
compared to $331.6 million for the same period of 1997. WAE net sales declined
slightly to $149.5 million in 1998 compared to $149.9 million for the first nine
months of 1997. Net sales of small engine products increased 13.2% to $108.6
million for the first nine months of 1998 compared to $95.9 million for the same
period of 1997. Net sales to the aftermarket increased 28.9% to $25.4 million
for the first nine months of 1998 compared to $19.7 million for the same period
of 1997.
Cost of sales for the first nine months of 1998 increased 9.0% to
$422.1 million compared to $387.2 million for the same period of 1997. Cost of
sales as a percent of net sales was 83.9% for the first nine months of 1998
compared to 85.2% for the same period of 1997. The higher gross margin for the
first nine months of 1998 resulted from the following: higher sales volume and
improved efficiency at the Meriden, Connecticut and Ossian, Indiana fuel tank
system facilities; higher sales volume at the Company's small engine products
facilities in Japan, Mexico and the PRC; and higher sales volume of automotive
aftermarket products.
S & A expenses increased by 7.8% for the first nine months of 1998
compared to the same period of 1997. R & D expenses increased by 12.3% for the
first nine months of 1998 compared to the same period of 1997. The increase in
S & A expenses and R & D expenses for the nine month period was due to the
reasons stated above.
Royalty income was $1.6 million for the first nine months of 1998, down
from $2.8 million for the same 1997 period due to weaker foreign economies and
the stronger U.S. dollar.
Other income was $1.2 million for the first nine months of 1998
compared to a $0.4 million loss for the same period of 1997. The increased
income was due to a gain on the sale of fixed assets.
The provision for income taxes was $2.4 million for the first nine
months of 1998 compared to $0.5 million for the same period of 1997 because of
higher taxable income.
The equity in income from joint ventures was $0.8 million for the first
nine months of 1998 compared to the 1997 income of $3.2 million for the same
period. The decrease occurred in 1998 for the reasons as stated above.
17
<PAGE> 19
Extraordinary item of $1.5 million occurred in the second quarter of
1998 and reflects costs associated with early extinguishment of long-term debt,
net of tax.
Net income for the first nine months of 1998 was $1.2 million, a
decrease of 50.0% compared to net income of $2.4 million for the same period of
1997. The decrease was due to the reasons described above. Net income per share
was $.14 for the first nine months of 1998 compared to $.27 for the first nine
months of 1997.
Foreign Currency Transactions
Approximately 48% of the Company's sales during the first nine months
of 1998 were derived from manufacturing operations in Europe, Asia, South
America and Mexico. The financial position and the results of operations of the
Company's subsidiaries in Europe (approximately 30% of sales), South America
(approximately 2% of sales) and Japan, South Korea and PRC (approximately 6% of
sales) are measured in the local currency of the countries in which they operate
and translated into U.S. dollars. The effects of foreign currency fluctuations
in these countries are somewhat mitigated by the fact that expenses are
generally incurred in the same currencies in which sales are generated, and the
reported income of these subsidiaries will be higher or lower depending on a
weakening or strengthening of the U.S. dollar.
For the Company's subsidiary in Singapore (approximately 2% of sales)
the expenses are generally incurred in the local currency, but sales are
generated in U.S. dollars; therefore, results of operations are more directly
influenced by a weakening or strengthening of the local currency. The Company's
subsidiary in Mexico (approximately 8% of sales) operates as a maquiladora, or
contract manufacturer, where certain direct manufacturing expenses are incurred
in the local currency and sales are generated in U.S. dollars. Thus, results of
operations of the Company's subsidiary in Mexico are also more directly
influenced by a weakening or strengthening of the local currency.
Approximately 48% of the Company's assets at September 30, 1998, are
based in its foreign operations and are translated into U.S. dollars at foreign
currency exchange rates in effect as of the end of each period. Accordingly, the
Company's consolidated shareholders' equity will fluctuate depending upon the
weakening or strengthening of the U.S. dollar. In addition, the Company has
equity investments in unconsolidated joint ventures in Argentina, Brazil,
France, Japan, and Mexico. The Company's reported income from these joint
ventures will be higher or lower depending upon a weakening or strengthening of
the U.S. dollar.
The Company's strategy for management of currency risk relies primarily
upon the use of forward currency exchange contracts to manage its exposure to
foreign currency fluctuations related to its operations in foreign countries, to
manage certain of
18
<PAGE> 20
its firm transaction commitments in foreign currencies, and to hedge its equity
investment in certain foreign joint ventures.
The Year 2000 Issue
The year 2000 issue ("Y2K") is the result of computer programs that
were written using two digits (rather than four) to define the applicable year.
Any of the Company's computer programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000, which
could result in miscalculations or system failures. The Company is working to
resolve the potential impact of the Y2K on the processing of date-sensitive
information and has conducted an evaluation of the impact of the issue at all
locations. The evaluation included computer programs used for management
information systems and computer programs used to electronically control
manufacturing equipment and other devices. The Company makes exclusive use of
purchased computer programs and systems.
The Company is actively participating in the Automotive Industry Action
Group ("AIAG") for Y2K and is using the AIAG procedures and standards as the
guideline for compliance. The Company's plan for compliance includes: (1) obtain
compliance certificates from vendors for all existing systems that are already
Y2K compliant; (2) obtain revised software for existing systems, purchase of new
computer programs and purchase of replacement computer hardware for
non-compliant systems; (3) test and implement all new computer software and
hardware by June 30, 1999; and (4) obtain compliance certificates from all
significant vendors by June 30, 1999.
The estimated cost of the Company's Y2K compliance is approximately
$2.0 million for purchase of computer software and hardware. All of the
implementation and testing will be done by existing staff. No other impact is
expected because of Y2K.
Liquidity and Capital Resources
As of September 30, 1998, the Company had outstanding $19.6 million in
short-term debt, including current portion of long-term debt, and $311.3 million
in long-term debt. The approximate minimum principal payments required on the
Company's long-term debt in each of the five fiscal years subsequent to December
31, 1997 are $14.0 million in 1998, $7.4 million in 1999, $30.0 million in 2000,
$7.5 million in 2001, $6.8 million in 2002 and $239.6 million thereafter.
In May 1998, the Company obtained a $150 Credit Facility consisting of
$125 million revolving line of credit and a $25 million capital expenditure
facility. The new credit facility is available for five years. Proceeds of the
new credit facility was initially used to pay off $30 million under the previous
credit facility; to pay off the Purchase Money Loan Agreement; and to pay off
the $45 million Senior Notes due 2004 including an early retirement premium of
$2.0 million. In addition, the remaining funds will be used to finance capital
expenditures and to meet working capital needs. At September 30, 1998, the
Company had borrowed $82.5 million on the revolving line of credit and $2.7
million of the capital expenditure facility. See footnote (1) to Consolidated
Financial Statements for further information.
The Company's plans for 1998 capital expenditures for facilities,
equipment and tooling total approximately $40 million. The Company intends to
finance the capital expenditures with the new credit facility and cash from
operations.
19
<PAGE> 21
As of September 30, 1998, accounts receivable amounted to $176.9
million, an increase of $21.6 million, compared to $155.3 million at September
30, 1997. The increase was due to higher sales and increased receivables for
customer tooling related to new programs. The average collection period at
September 30, 1998 was 85.4 days compared to the average collection period at
September 30, 1997 of 91.0 days.
Management believes that the Company's long-term cash needs will
continue to be provided principally by operating activities supplemented, to the
extent required, by borrowing under the Company's existing and future credit
facilities. Management expects to replace these credit facilities as they expire
with comparable facilities.
Safe Harbor Statement Under The Private Securities Litigation Reform Act of
1995
The statements contained in this discussion that are not historical
facts are forward-looking statements subject to the safe harbor created by the
Securities Litigation Reform Act of 1995. Whenever possible, the Company has
identified these forward-looking statements by words such as "anticipating,"
"believes," "estimates," "expects," and similar expressions. The Company
cautions readers of this discussion that a number of important factors could
cause the Company's actual consolidated results for 1998 and beyond to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company. These important factors include, without limitation,
changes in demand for automobiles and light trucks, relationships with
significant customers, price pressures, the timing and structure of future
acquisitions or dispositions including the restructuring program announced
during the fourth quarter of 1997, impact of environmental regulations, the year
2000 computer issue, continued availability of adequate funding sources,
currency and other risks inherent in international sales, and general economic
and business conditions. These important factors and other factors which could
affect the Company's results are more fully disclosed in the Company's filings
with the Securities and Exchange Commission. Readers of this discussion are
referred to such filings. The Company assumes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
20
<PAGE> 22
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed with this report:
Exhibit No.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On July 8, 1998, a report of Form 8-K filed by the Company during the
quarter ended September 30, 1998 was filed reporting the issuance of a
press release announcing the adoption of a stockholder rights plan.
21
<PAGE> 23
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.
WALBRO CORPORATION
(Registrant)
Dated: November 13, 1998 /s/ Frank E. Bauchiero
----------------------
Frank E. Bauchiero, President and
Chief Executive Officer
Dated: November 13, 1998 /s/ Michael A. Shope
----------------------
Michael A. Shope
Chief Financial Officer and Treasurer
22
<PAGE> 24
Index to Exhibits
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 26,371
<SECURITIES> 0
<RECEIVABLES> 176,867
<ALLOWANCES> 0
<INVENTORY> 52,771
<CURRENT-ASSETS> 279,779
<PP&E> 396,019
<DEPRECIATION> 123,370
<TOTAL-ASSETS> 650,255
<CURRENT-LIABILITIES> 181,300
<BONDS> 311,268
69,000
0
<COMMON> 4,344
<OTHER-SE> 68,337
<TOTAL-LIABILITY-AND-EQUITY> 650,255
<SALES> 503,076
<TOTAL-REVENUES> 503,076
<CGS> 422,109
<TOTAL-COSTS> 422,109
<OTHER-EXPENSES> 50,051
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,385
<INCOME-PRETAX> 8,531
<INCOME-TAX> 2,446
<INCOME-CONTINUING> 2,678
<DISCONTINUED> 0
<EXTRAORDINARY> (1,473)
<CHANGES> 0
<NET-INCOME> 1,205
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
