<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended July 3, 1999.
[_] 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 333-49429-01
Prestolite Electric Holding, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 94-3142033
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2100 Commonwealth Blvd., Ste 300, Ann Arbor, Michigan 48105
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(Address of principal executive offices) (Zip Code)
(734) 913-6600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, address, and former fiscal year, if changed since last report)
Indicate whether the registrant (1) has files 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 the filing requirements for
the past 90 days.
Yes X No ____________
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Number of common shares outstanding
Class: as of August 11, 1999
Common Stock 1,993,000
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EXPLANATORY NOTE TO FORM 10-Q/A
This amended quarterly report on Form 10-Q/A amends Note 4 to the condensed
consolidated financial statements contained in Item 1 of the Company's quarterly
report on Form 10-Q for the quarter ended July 3, 1999, as filed with the
Securities and Exchange Commission on August 12, 1999. The Machinery and
Equipment and the Accumulated Depreciation detail lines of the table each change
by $2,593,000, amending the details of net Property, Plant and Equipment.
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PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Prestolite Electric Holding, Inc. and Subsidiaries
(including Prestolite Electric Incorporated)
Condensed Consolidated Balance Sheet
(in thousands, except share amounts)
<TABLE>
<CAPTION>
July 3, December 31,
1999 1998
--------------- ---------------
<S> <C> <C>
Assets
Current Assets:
Cash $ 1,614 $ 896
Accounts receivable, net of allowances 48,771 51,352
Inventories, net 54,283 52,082
Defered tax asset 2,711 2,134
Prepaid and other current assets 2,469 2,286
--------------- ---------------
Total current assets 109,848 108,750
Property, plant and equipment, net 55,241 56,064
Deferred tax asset 1,002 1,002
Investments 4,880 4,996
Intangible assets 11,128 11,528
Long-term receivables, pension assets and assets
of discontinued operations 5,699 5,807
--------------- ---------------
Total assets $ 187,798 $ 188,147
=============== ===============
Liabilities
Current Liabilities:
Revolving credit $ 6,733 $ 4,935
Current portion of long-term debt 3,166 2,401
Accounts payable 23,839 26,088
Accrued liabilities 22,475 27,135
--------------- ---------------
Total current liabilities 56,213 60,559
Long-term debt 141,209 133,416
Other non-current liabilities 2,133 3,090
--------------- ---------------
Total liabilities 199,555 197,065
Stockholders' equity
Common stock, par value $.01, 5,000,000 shares
authorized, 1,993,000 shares issued and outstanding
at July 3, 1999 and December 31, 1998, respectivley 2 2
Paid-in capital 16,623 16,623
Retained earnings (accumulated deficit) (1,221) (404)
Notes receivable, employees' stock purchase, 7.74% due 2002 (513) (559)
Foreign currency translation adjustment (2,199) (131)
Treasury stock, 1,310,000 shares on July 3, 1999 and
December 31, 1998, respectively (24,449) (24,449)
--------------- ---------------
Total stockholders' equity (11,757) (8,918)
--------------- ---------------
Total liabilities and stockholders' equity $ 187,798 $ 188,147
=============== ===============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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Prestolite Electric Holding, Inc. and Subsidiaries
(including Prestolite Electric Incorporated)
Condensed Consolidated Unaudited Statements of Operations
(in thousands except share amounts)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
--------------------------------- ---------------------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 65,761 $ 72,848 $ 130,519 $ 147,373
Cost of goods sold 53,794 57,888 104,298 117,919
------------- ------------- ------------- -------------
Gross profit 11,967 14,960 26,221 29,454
Selling, general and administrative 9,641 9,832 19,314 19,638
Costs associated with option repurchase - - - 2,101
Restructuring charge - - - 980
------------- ------------- ------------- -------------
Operating income 2,326 5,128 6,907 6,735
Interest expense 4,114 3,245 7,886 6,526
Other expense (income) (917) (436) (1,048) (522)
------------- ------------- ------------- -------------
Income from continuing operations before
extraordinary loss and income taxes (871) 2,319 69 731
Loss (benefit) from unconsolidated subsidiaries 26 - 116 -
Provision for (benefit from) income taxes (202) 869 770 263
------------- ------------- ------------- -------------
Income from continuing operations (695) 1,450 (817) 468
Extraordinary loss, net of taxes of $716 - - - 1,275
------------- ------------- ------------- -------------
Net income (loss) $ (695) $ 1,450 (817) $ (807)
============= ============= ============= =============
Other comprehensive income (expense):
Foreign currency translation adjustment $ (569) $ (968) $ (2,068) $ (927)
------------- ------------- ------------- -------------
Comprehensive income (expense) $ (1,264) $ 482 $ (2,885) $ (1,734)
============= ============= ============= =============
Basic earnings per common share
Income from continuing operations $ (0.35) $ 0.73 $ (0.41) $ 0.22
Extraordinay item $ - $ - $ - $ (0.59)
------------- ------------- ------------- --------------
Net income (loss) $ (0.35) $ 0.73 $ (0.41) $ (0.37)
============= ============= ============= =============
Diluted earnings per common share
Income from continuing operations $ (0.35) $ 0.69 $ (0.41) $ 0.20
Extraordinay item $ - $ - $ - $ (0.56)
------------- ------------- ------------- -------------
Net income (loss) $ (0.35) $ 0.69 $ (0.41) $ (0.36)
============= ============= ============= =============
Basic shares outstanding 1,993,000 1,993,000 1,993,000 2,160,774
Dilutive shares outstanding 2,126,314 2,103,860 2,126,386 2,284,495
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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Prestolite Electric Holding, Inc. and Subsidiaries
(including Prestolite Electric Incorporated)
Condensed Consolidated Unaudited Statements of Operations
(in thousands)
<TABLE>
<CAPTION>
For the six months ended
----------------------------------------
July 3, July 4,
1999 1998
--------------- ----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (817) $ (807)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Loss on debt refinancing - 1,991
Option repurchase - 2,101
Cash provided by (used in) discontinued operations - 1,548
Depreciation 5,196 5,391
Amortization 947 486
Loss (gain) on sale of property, plant, and equipment 65 (122)
Loss from unconsolidated subsidiaries 116 -
Deferred taxes (577) (1,431)
Changes in working capital items (7,152) 3,707
------------ -------------
Net cash provided by operating activities (2,222) 12,864
Cash Flows from Investing Activities:
Capital expenditures (4,353) (5,557)
Proceeds from disposal of fixed assets 5 12
Acquisition of:
Lucas businesses - (48,209)
Roberts Remanufacturing (2,958) -
Investment in affiliates (650) (1,500)
------------ -------------
Net cash provided by investing activities (7,956) (55,254)
Cash Flows from Financing Activities:
Net increase (decrease) in revolving credit 9,505 (1,377)
Payments on long-term debt - (31,146)
Proceeds from borrowings 765 125,000
Costs related to new borrowings, including loss on refinancing - (5,785)
Purchase of treasury stock, options and warrants, employee stock 46 (29,895)
receivable
Borrowings (payments) on capital leases 100 (33)
Other financing costs, net (14) (6,773)
------------ -------------
Net cash from financing activities 10,402 49,991
Effect of exchange rate changes on cash 494 (237)
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Net increase (decrease) in cash 718 7,364
Cash - beginning of period 896 455
------------ -------------
Cash - end of period $ 1,614 $ 7,819
============ =============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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Prestolite Electric Holding, Inc. and Subsidiaries
(including Prestolite Electric Incorporated)
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1: General Information
Prestolite Electric Holding, Inc. conducts all of its operations through its
wholly-owned principal subsidiary, Prestolite Electric Incorporated. There are
no material differences between the financial statements of Prestolite Electric
Holding, Inc. and Prestolite Electric Incorporated (collectively, "Prestolite,"
"us," "we" or the "Company").
These unaudited condensed consolidated financial statements have been prepared
by us in accordance with Rule 10-01 of Regulation S-X and have been prepared on
a basis consistent with our audited financial statements for the year ended
December 31, 1998. These statements reflect all adjustments, consisting only of
items of a normal recurring nature, which are, in the opinion of management,
necessary for the fair statement of the consolidated financial condition and
consolidated results of operations for the interim period presented.
Certain information and footnote disclosures normally included in the
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements and the related notes should be read in conjunction with our audited
financial statements, the notes to those statements and the other material
included in our Annual Report on Form 10-K for the year ended December 31, 1998.
The year-end 1998 condensed balance sheet data was derived from our audited
financial statements, but does not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. The results of operations for the three- and six-month periods
ended July 3, 1999 are not necessarily indicative of the operating results that
may be expected for the full year or any other interim period.
Genstar Capital Corporation and Company management own all of the equity
securities of Prestolite Electric Holding, Inc.
Note 2: Acquisitions
On January 15, 1999, we acquired a remanufacturing business unit from Roberts
Generator for $2.9 million. This business unit operates as Roberts
Remanufacturing and rebuilds alternators and starter motors for specialty
applications. We financed this purchase with funds borrowed under our United
States revolving line of credit.
On January 22, 1998 Prestolite acquired the heavy duty products division of
Lucas Industries, plc. (a U. K. corporation), Lucas South Africa and Lucas
Indiel Argentina S. A., collectively referred to as "the Lucas Acquisition," for
approximately $44.3 million in cash, net of cash acquired and including the
assumption of approximately $3.2 million in debt, inventory purchases of
approximately $1.4 million during 1998, and up to $4.1 million for certain
accounts receivable as they are collected ($1,074,000 paid during 1998, no
payments during the first quarter of 1999, and $0.1 million paid during the
second quarter of 1999). In addition, Prestolite has agreed to pay Lucas up to
an additional $6.6 million if certain operating targets are achieved in
Argentina in 1999 and 2000 and up to $ 4.9 million if certain fully reserved
receivables are collected. No liability for this $11.5 million is accrued, as
management does not consider
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payment probable. Any future payments will be recorded as an adjustment to the
purchase price. In addition, on January 22, 1998, Prestolite Electric
Incorporated completed the offering of $125 million of 9.625% Senior Notes due
2008 (the "Notes"). The proceeds of the Notes funded the Lucas Acquisition and
repaid approximately $42 million of our outstanding indebtedness. Approximately
$29.7 million of the proceeds were also used for the repurchase of common stock,
warrants and options to purchase common stock. These transactions are more fully
described in our Annual Report on Form 10-K for the year ended December 31,
1998.
In conjunction with these transactions, during the first quarter of 1998 the
Company charged operations for $2.1 million for the repurchase of options and
recorded an extraordinary charge of $1.275 million, net of tax benefit, related
to the debt refinancing. The Company also recorded a $0.98 million restructuring
charge in the first quarter of 1998 related to costs anticipated to be incurred
at the Company's existing facilities as a result of the Lucas Acquisition.
Note 3: Inventories
Inventories are summarized as follows (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
As of As of
July 3, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Raw Material $ 18,050 $ 15,014
Work in Progress 15,257 16,171
Finished Goods 20,976 20,897
------------- -------------
$ 54,283 $ 52,082
============= =============
</TABLE>
Note 4: Property, Plant and Equipment
Property, Plant and Equipment consists of the following (in thousands of U.S.
dollars):
<TABLE>
<CAPTION>
As of As of
July 3, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Land & Buildings $ 29,662 $ 29,433
Machinery & Equipment 57,232 54,863
Construction in Progress 3,618 2,699
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Total, at Cost 90,512 86,995
Accumulated Depreciation (35,271) (30,931)
-------------- --------------
Net $ 55,241 $ 56,064
============== ==============
</TABLE>
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Note 5: Investments
Investments consist of the following (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
As of As of
July 3, December 31,
1999 1998
------------- -------------
<S> <C> <C>
DAX Industries, Inc. (35% interest) $ 1,715 $ 1,869
Ecoair Corp. (7% interest, at cost) 2,000 2,000
Prestolite Asia Ltd. (50% interest) 568 530
Auto Ignition, Ltd. (4% interest, at cost) 597 597
------------- -------------
$ 4,880 $ 4,996
============== ==============
</TABLE>
Note 6: Debt
In 1998 we issued $125 million of 9.625% (interest payable semiannually)
unsecured senior notes. The senior notes mature on February 1, 2008 but may be
redeemed earlier at our option under conditions specified in the indenture
pursuant to which the senior notes were issued. The senior notes are senior
unsecured obligations of Prestolite Electric Incorporated and are fully and
unconditionally guaranteed on a senior unsecured basis by Prestolite Electric
Holding, Inc. The senior notes are subordinated to our secured credit
facilities, to the extent of the value of the assets securing such indebtedness,
including the secured facilities described below. The senior notes are also
subordinated to the indebtedness of any subsidiary of Prestolite Electric
Incorporated, including the indebtedness of its United Kingdom subsidiary. The
proceeds were used to refinance existing debt, fund the acquisition of the Lucas
businesses and to repurchase certain Prestolite Electric Holding, Inc.
securities. The senior notes are more fully described in our Prospectus dated
June 26, 1998.
In connection with the issuance of the Notes, we entered into new credit
agreements in the U. S. and the U. K. The U. S. agreement consists of a $23.0
million revolving credit facility ($17.1 million available at July 3, 1999)
which is advanced according to a formula based on eligible accounts receivable
and inventory levels. The borrowings are collateralized by all U. S. accounts
receivable and inventories and mature on July 31, 2000. Interest is payable at
the bank's prime rate (7.75 percent at July 3, 1999) or at the "London Late
Eurodollar" rate plus 2.75 percent at our option. In certain situations these
rates may be increased by 0.125 percent.
The U. K. agreement allows us to borrow up to (Pounds)7.0 million ((Pounds)5.5
million available at July 3, 1999) and is advanced based on eligible U. K.
accounts receivable. Interest is payable at the bank's base rate, 6.75 percent
at July 3, 1999. This agreement expires in April 2002.
In Argentina and South Africa, we have arrangements with several banks which
allow our subsidiaries in these countries to discount or borrow against accounts
receivable, generally at the prime rates of the banks involved. Those rates
ranged from 16.5 percent to 21.3 percent at July 3, 1999. Total available
credit in Argentina and South Africa at July 3, 1999 was approximately $4.6
million.
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Debt consists of the following (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
As of As of
July 3, December 31,
1999 1998
-------------- --------------
<S> <C> <C>
U. S. Bank Debt $ 14,551 $ 3,366
U.S. Unpresented Checks 1,490 385
U. K. Bank Debt 4,761 8,132
Argentina Bank Debt 2,809 2,120
South Africa Bank Debt 931 269
Senior Notes 125,000 125,000
Capital Lease Obligations 1,296 1,196
Other Debt 270 284
-------------- --------------
Total Debt 151,108 140,752
Current Maturities 9,899 7,336
-------------- --------------
Long Term Debt $ 141,209 $ 133,416
============== ==============
Cash 1,614 896
-------------- --------------
Total Debt net of Cash $ 149,494 $ 139,856
============== ==============
</TABLE>
Note 7: Segment Reporting
In 1998, the Company adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. Prior quarter information is restated to
conform with the provisions of SFAS No. 131. Prestolite operates in four
principal geographic regions. Sales in South Africa and Argentina consist
largely of products for the automotive market while sales of products in the
United States and United Kingdom consist largely of products for non-automotive
applications. Sales between geographic segments and between operating segments
are priced at cost plus a standard markup.
Sales to external customers, based on country of origin, is as follows (in
thousands of U.S. dollars):
<TABLE>
<CAPTION>
North United South
America Kingdom Argentina Africa Total
-------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
For quarter ended July 3, 1999 $ 35,401 $ 16,286 $ 10,809 $ 3,265 $ 65,761
For quarter ended July 4, 1998 34,066 17,767 17,555 3,460 72,848
For six months ended July 3, 1999 $ 70,988 $ 32,985 $ 20,120 $ 6,426 $ 130,519
For six months ended July 4, 1998 70,279 38,903 31,296 6,895 147,373
</TABLE>
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During 1998, the Company began to manage itself on the basis of three business
units (Heavy Duty Systems, Electric Vehicle Systems, and Automotive Systems) and
to evaluate the performance of its segments based on earnings before interest
expense, taxes, depreciation and amortization and excluding restructuring and
option repurchase charges ("EBITDA"). Corporate overhead and certain other
charges are not allocated to the divisions. Segment assets are not currently
broken out in the normal course of managing segment operations; accordingly,
such information is not available for disclosure. In accordance with SFAS No.
131, the operating results for the quarters ended July 3, 1999 and July 4, 1998
are summarized by operating segment (in thousands of U.S. dollars) below:
<TABLE>
<CAPTION>
Heavy Electric
Duty Vehicle Automotive
Systems Systems Systems Unallocated
Division Division Divison Costs Total
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Sales to external customers:
For quarter ended July 3, 1999 $ 31,659 $ 18,262 $ 15,840 $ 65,761
For quarter ended July 4, 1998 32,466 18,771 21,611 72,848
EBITDA:
For quarter ended July 3, 1999 4,231 1,856 1,655 $ (1,469) 6,273
For quarter ended July 4, 1998 4,500 2,941 2,431 (1,423) 8,449
Sales to external customers:
For six months ended July 3, 1999 64,462 35,871 30,186 130,519
For six months ended July 4, 1998 68,119 39,813 39,441 147,373
EBITDA:
For six months ended July 3, 1999 10,132 4,155 2,651 (2,956) 13,982
For six months ended July 4, 1998 9,941 6,095 3,370 (3,191) 16,215
</TABLE>
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A reconciliation of EBITDA to income from continuing operations before income
taxes follows (in thousands of U.S. dollars):
<TABLE>
<CAPTION>
For the three months ended
July 3, July 4,
1999 1998
---------------- ---------------
<S> <C> <C>
EBITDA for reporting segments $ 6,273 $ 8,449
Depreciation and amortization 3,056 2,885
Loss (income) in unconsolidated subsidiaries 26 -
Interest expense 4,114 3,245
---------------- ---------------
Income from continuing operations before income taxes $ (871) $ 2,319
================ ===============
</TABLE>
<TABLE>
<CAPTION>
For the six months ended
July 3, July 4,
1999 1998
---------------- ---------------
<S> <C> <C>
EBITDA for reporting segments $ 13,982 $ 16,215
Depreciation and amortization 6,143 5,877
Loss (income) in unconsolidated subsidiaries 116 -
Option repurchase - 2,101
Restructuring - 980
Interest expense 7,886 6,526
---------------- ---------------
Income from continuing operations before income taxes $ 69 $ 731
================ ===============
</TABLE>
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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.
Date: August 24, 1999 By: /s/ KENNETH C. CORNELIUS
---------------------------
Kenneth C. Cornelius
Senior Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
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