SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 333-33572
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DIAMOND TRIUMPH AUTO GLASS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2758853
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 DIVISION STREET, KINGSTON, PENNSYLVANIA 18704
(Address, including zip code of principal executive offices)
(570) 287-9915
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports to be filed by Section 13 or Section 15(d) of the Securities and
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 [ ]
As of August 10, 2000, there were 1,000,000 shares outstanding of
Diamond's Common Stock ($.01 par value) and 35,000 shares outstanding of
Diamond's Series A 12% Senior Redeemable Cumulative Preferred Stock ($.01
par value).
<PAGE>
DIAMOND TRIUMPH AUTO GLASS, INC.
Form 10-Q
For the Quarter Ended June 30, 2000
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
June 30, 2000 and December 31, 1999...................... 3
Condensed Statements of Operations - Three Months Ended
June 30, 2000 and 1999................................... 4
Condensed Statements of Operations - Six Months Ended
June 30, 2000 and 1999................................... 5
Condensed Statements of Cash Flows - Six Months Ended
June 30, 2000 and 1999................................... 6
Notes to Condensed Financial Statements...................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation........................ 8
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds.................... 12
Item 6. Exhibits and Reports on Form 8-K............................. 12
Signature.................................................... 13
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIAMOND TRIUMPH AUTO GLASS, INC.
CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
--------------- -----------------
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $44 $94
Accounts receivable, net 15,452 10,895
Other receivables 396 189
Inventories 11,714 12,620
Prepaid expenses 988 962
Deferred income taxes 3,081 3,081
--------------- --------------
Total current assets 31,675 27,841
--------------- --------------
Equipment and leasehold improvements, net 6,727 7,693
Deferred loan costs and senior notes discount, net 6,532 7,502
Deferred income taxes 42,592 44,082
Other assets 408 401
--------------- --------------
Total assets $87,934 $87,519
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $11,149 $7,950
Accrued expenses:
Payroll and related items 3,383 3,314
Accrued interest 2,344 2,363
Accrued income taxes 1,406 1,216
Other 675 362
--------------- --------------
Total accrued expenses 7,808 7,255
--------------- --------------
Total current liabilities 18,957 15,205
--------------- --------------
Long-term debt:
Credit facility 1,500 7,500
Senior notes 100,000 100,000
--------------- --------------
Total long-term debt 101,500 107,500
--------------- --------------
Total liabilities 120,457 122,705
--------------- --------------
Series A 12% senior redeemable cumulative preferred stock -
par value $0.01 per share; authorized 100,000 shares; issued
and outstanding 35,000 shares in 2000 and 1999, at liqudation
preference value 45,667 43,046
--------------- --------------
Stockholders' equity (deficit):
Common stock, 2000 and 1999 par value $0.01 per share; authorized
1,100,000 shares; issued and outstanding 1,000,000 shares 10 10
Additional paid-in capital 50,126 52,747
Retained earnings (accumulated deficit) (128,326) (130,989)
--------------- --------------
Total stockholders' equity (deficit) (78,190) (78,232)
--------------- --------------
Total liabilities and stockholders' equity (deficit) $87,934 $87,519
=============== ==============
</TABLE>
See notes to condensed financial statements
3
<PAGE>
DIAMOND TRIUMPH AUTO GLASS, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Three Months Ended
June 30, 2000 June 30, 1999
------------------ ------------------
Net sales $49,153 $43,361
Cost of sales 15,407 13,228
---------- ----------
Gross profit 33,746 30,133
Operating expenses 27,799 25,393
---------- ----------
Income from operations 5,947 4,740
Other (income) expense:
Interest income (6) (1)
Interest expense 2,677 2,800
---------- ----------
2,671 2,799
---------- ----------
Income before provision for income taxes 3,276 1,941
Provision for income taxes 1,306 777
---------- ----------
Net income 1,970 1,164
Preferred stock dividends 1,329 1,182
---------- ----------
Net income (loss) applicable to common
stockholders $641 ($18)
========== ==========
See notes to condensed financial statements
4
<PAGE>
DIAMOND TRIUMPH AUTO GLASS, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
---------------- ----------------
Net sales $93,818 $84,773
Cost of sales 29,271 26,070
----------- ----------
Gross profit 64,547 58,703
Operating expenses 53,838 49,159
----------- ----------
Income from operations 10,709 9,544
Other (income) expense:
Interest income (44) (12)
Interest expense 5,483 5,518
----------- ----------
5,439 5,506
----------- ----------
Income before provision for income taxes and
extraordinary loss on extinguishment
of debt 5,270 4,038
Provision for income taxes 2,103 1,615
----------- ----------
Net income before extraordinary item 3,167 2,423
Extraordinary loss on extinguishment of debt,
net of income taxes of $336 504 -
----------- ----------
Net income 2,663 2,423
Preferred stock dividends 2,621 2,329
----------- ----------
Net income applicable to common stockholders $42 $94
=========== ==========
See notes to condensed financial statements
5
<PAGE>
DIAMOND TRIUMPH AUTO GLASS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
---------------- ----------------
OPERATING ACTIVITIES
Net cash provided by operating activities $6,703 $191
---------- ----------
INVESTING ACTIVITIES
Capital expenditures (444) (1,294)
Proceeds from sale of equipment 18 68
Increase in other assets (8) (21)
---------- ----------
Net cash used in investing activities (434) (1,247)
---------- ----------
FINANCING ACTIVITIES
Net proceeds from bank facility 8,750 12,500
Payments on bank facility (14,750) (11,500)
Deferred loan cost (319) -
---------- ----------
Net cash (used in)/provided by financing
activities ($6,319) $1,000
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (50) (56)
Cash and cash equivalents, beginning of period 94 301
---------- ----------
Cash and cash equivalents, end of period $44 $245
========== ==========
See notes to condensed financial statements
6
<PAGE>
Diamond Triumph Auto Glass, Inc.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Note 1. Significant Accounting Policies
These interim financial statements are unaudited but, in the
opinion of management, reflect all adjustments (consisting
only of normal recurring adjustments) necessary to present
fairly the data for these periods. The interim financial
statements should be read in conjunction with the audited
financial statements and notes thereto contained in Diamond's
Annual Report on Form 10-K for the fiscal year ended December
31, 1999. Diamond's results for interim periods are not
normally indicative of results to be expected for the fiscal
year. Diamond's business is somewhat seasonal, with the first
and fourth calendar quarters of each year traditionally being
its slowest periods of activity. This reduced level of sales
has historically resulted in less operating income during the
first and fourth calendar quarters of each year. The severity
of weather also has an impact on Diamond's sales and operating
income, with severe winter weather generating increased sales
and income and mild winters generating lower sales and income.
Deferred Loan Costs - In March 2000, unamortized deferred loan
costs of $504 (net of income taxes of $336) related to the old
revolving credit facility were recorded as an extraordinary
loss on the extinguishment of outstanding debt under the old
credit facility, which was repaid with borrowings under the
new credit facility.
Preferred Stock - At June 30, 2000 and December 31, 1999, the
liquidation value of the Preferred Stock recorded on Diamond's
Balance Sheet was $45,667 and $43,046, respectively, which
includes dividends of $10,667 and $8,046, respectively, added
to the liquidation value.
Long-Term Debt:
Credit Facility - On March 27, 2000, Diamond entered into a
new credit facility. The new credit facility has an initial
term of four years and provides for revolving advances of up
to the lesser of: (1) $25,000; (2) the sum of 85% of Diamond's
Eligible Accounts Receivable (as defined in the new credit
facility) plus 85% of Diamond's Eligible Inventory (as defined
in the new credit facility), less certain reserves; or (3) an
amount equal to 1.5 times Diamond's EBITDA (as defined in the
new credit facility) for the prior twelve months. A portion of
the new credit facility, not to exceed $3,000, is available
for the issuance of letters of credit. Borrowings under the
new credit facility bear interest, at Diamond's discretion, at
either the Chase Manhattan Bank Rate (as defined in the new
credit facility) or LIBOR, plus a margin of 0.50% for the
Chase Manhattan Rate and 2.25% for the LIBOR Rate. In
addition, a commitment fee of 0.25% is charged against any
unused balance of the new credit facility. Interest rates are
subject to increases or reductions based upon Diamond meeting
certain EBITDA levels. The proceeds of the new credit facility
are available for working capital requirements and for general
corporate purposes. The new credit facility is secured by
first priority security interests in all of Diamond's tangible
and intangible assets. In addition, the new credit facility
contains certain restrictive covenants including, among other
things, the maintenance of a minimum EBITDA level for the
prior twelve months, as well as restrictions on additional
indebtedness, dividends and certain other significant
transactions.
Senior Notes - On April 27, 2000, Diamond commenced an offer
to exchange up to $100,000,000 in aggregate principal amount
of its new 9 1/4% Senior Notes due 2008 (the "New Notes") for
any and all of its outstanding 9 1/4% Senior Notes due 2008
(the "Old Notes"). The terms of the New Notes are
substantially identical to the terms of the Old Notes, except
for certain transfer restrictions and registration rights
relating to the Old Notes. The exchange offer relating to the
New Notes was registered under the Securities Act of 1933, as
amended, pursuant to a registration statement that was
declared effective by the Securities and Exchange Commission
on April 27, 2000. In June 2000, the exchange offer was
consummated with 100% of the outstanding Old Notes being
exchanged for the New Notes.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The following table summarizes Diamond's historical results of
operations and historical results of operations as a
percentage of sales for the six and three months ended June
30, 2000 and 1999.
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
-------------------------------- -----------------------------
2000 1999 2000 1999
--------------- --------------- ------------- --------------
$ % $ % $ % $ %
------ ------ ------ ----- ------ ----- ----- ----
(dollars in millions) (dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales .......................... 93.8 100.0 84.8 100.0 49.2 100.0 43.3 100.0
Cost of Sales ...................... 29.3 31.2 26.1 30.8 15.4 31.3 13.2 30.5
---- ----- ---- ----- ---- ----- ---- -----
Gross Profit ....................... 64.5 68.8 58.7 69.2 33.8 68.7 30.1 69.5
Operating Expenses ................. 53.8 57.4 49.2 58.0 27.8 56.5 25.4 58.7
---- ----- ---- ----- ---- ----- ---- -----
Income From Operations ............. 10.7 11.4 9.5 11.2 6.0 12.2 4.7 10.9
Interest Income .................... (0.1) (0.1) -- -- -- -- -- --
Interest Expense ................... 5.5 5.9 5.5 6.5 2.7 5.5 2.8 6.5
---- ----- ---- ----- ---- ----- ---- -----
5.4 5.8 5.5 6.5 2.7 5.5 2.8 6.5
---- ----- ---- ----- ---- ----- ---- -----
Income before provision for income
taxes and extraordinary
loss on etinguishment of debt ..... 5.3 5.7 4.0 4.7 3.3 6.7 1.9 4.4
Provision for income taxes ......... 2.1 2.2 1.6 1.9 1.3 2.6 0.7 1.6
---- ----- ---- ----- ---- ----- ---- -----
Net income before extraordinary item 3.2 3.4 2.4 2.8 2.0 4.1 1.2 2.8
Extraordinary loss on extinguishment
of debt, net of taxes ............ 0.5 0.5 -- -- -- -- -- --
---- ----- ---- ----- ---- ----- ---- -----
Net income ......................... 2.7 2.9 2.4 2.8 2.0 4.1 1.2 2.8
==== ===== ==== ===== ==== ===== ==== =====
EBITDA (1) ......................... 12.2 13.0 10.8 12.7 6.7 13.6 5.4 12.5
</TABLE>
---------
(1) EBITDA represents income before taxes, interest expense,
depreciation and amortization expense. While EBITDA is not
intended to represent cash flow from operations as defined by
GAAP and should not be considered as an indicator of operating
performance or an alternative to cash flow (as measured by
GAAP) as a measure of liquidity, it is included herein to
provide additional information with respect to Diamond's
ability to meet its future debt service, capital expenditure
and working capital requirements.
Six Months Ended June 30, 2000 Compared to Six Months Ended
June 30, 1999
Net Sales. Net sales for the six months ended June
30, 2000 increased by $9.0 million, or 10.6%, to $93.8 million
from $84.8 million for the six months ended June 30, 1999.
Replacement unit volume increased 3.4% during the six months
ended June 30, 2000 compared to the six months ended June 30,
1999. Diamond experienced an increase in its average revenue
per replacement unit for the six months ended June 30, 2000
compared to the six months ended June 30, 1999. The increase
in Diamond's average revenue per replacement unit was
primarily attributable to an increase in demand related to
inclement weather conditions experienced throughout a large
portion of Diamond's network in the first quarter of 2000 and
an increased percentage of higher revenue-generating
replacement units. In addition, during the six months ended
June 30, 2000, there was a net opening of two new service
centers.
8
<PAGE>
Gross Profit. Gross profit for the six months ended
June 30, 2000 increased by $5.8 million, or 9.9%, to $64.5
million from $58.7 million for the six months ended June 30,
1999. The increase in gross profit for the six months ended
June 30, 2000 was due to an increase in net sales and average
revenue per replacement unit as discussed above. Gross profit
as a percentage of net sales for the six months ended June 30,
2000 decreased to 68.8% from 69.2% for the six months ended
June 30, 1999. The decrease in gross profit percentage for the
six months ended June 30, 2000 was due to an increase in
product costs compared to the six months ended June 30, 1999,
which was partially offset by an increase in average revenue
per replacement unit.
Operating Expenses. Operating expenses for the six
months ended June 30, 2000 increased by $4.6 million, or 9.3%,
to $53.8 million from $49.2 million for the six months ended
June 30, 1999. The increase in operating expenses for the six
months ended June 30, 2000 was primarily attributable to the
expansion of capacity within Diamond's existing service center
network and an increase in vehicle related expenses, primarily
increased fuel costs. Operating expenses as a percentage of
sales decreased to 57.4% for the six months ended June 30,
2000 from 58.0% for the six months ended June 30, 1999. The
decrease in operating expenses as a percentage of sales is
primarily attributable to an increase in net sales and
increased efficiencies within the service center and back
office operations.
Depreciation and amortization expense for the period
ending June 30, 2000 increased by $0.2 million, or 16.7%, to
$1.4 million from $1.2 million for the same period in 1999.
This increase is attributable to an increase in amortization
expense related to the implementation of certain sales,
billing and financial systems software.
Income From Operations. Income from operations was
$10.7 million for the six months ended June 30, 2000 versus
$9.5 million for the same period ending June 30, 1999. Income
from operations as a percentage of sales increased to 11.4%
for the six months ended June 30, 2000 from 11.2% for the six
months ended June 30, 1999. The increases were attributable to
the increase in net sales and gross profit and a decrease in
operating expenses as a percentage of sales due to the factors
discussed above.
Interest Expense. Interest expense for the six months
ended June 30, 2000 and June 30, 1999 remained constant at
$5.5 million. Cash interest expense was $5.0 million for the
six months ended June 30, 2000 compared to $5.1 million for
the six months ended June 30, 1999.
Net Income Before Extraordinary Item. Net income
before the extraordinary item for the six months ended June
30, 2000 increased by $0.8 million, or 33.3%, to $3.2 million
from $2.4 million for the six months ended June 30, 1999. This
increase was due to the $1.2 million increase in income from
operations as discussed above.
Net Income. Net income for the six months ended June
30, 2000 increased by $0.3 million, or 12.5%, to $2.7 million
from $2.4 million for the six months ended June 30, 1999. Net
income as a percentage of sales increased to 2.9% for the six
months ended June 30, 2000 from 2.8% for the six months ended
June 30, 1999. The increase in net income and net income
margin during the six months ended June 30, 2000 compared to
the six months ended June 30, 1999 was primarily due to the
increase in income from operations as discussed above. This
increase was offset by a $0.5 million extraordinary loss, net
of taxes, related to the extinguishment of debt under the old
credit facility, which was repaid with borrowings under the
new credit facility.
EBITDA. EBITDA was $12.2 million for the six months
ended June 30, 2000, representing an increase of $1.4 million,
or 13.0%, as compared to $10.8 million for the six months
ended June 30, 1999. EBITDA as a percentage of sales increased
to 13.0% for the six months ended June 30, 2000 from 12.7% for
the six months ended June 30, 1999. The increase in EBITDA and
EBITDA margin for the six months ended June 30, 2000 was
primarily due to the increase in sales compared to the six
months ended June 30, 1999, and a decrease in operating
expenses as a percentage of sales as discussed above.
9
<PAGE>
Three Months Ended June 30, 2000 Compared to Three Months
Ended June 30, 1999
Net Sales. Net sales for the three months ended June
30, 2000 increased by $5.9 million, or 13.6%, to $49.2 million
from $43.3 million for the three months ended June 30, 1999.
Replacement unit volume increased 3.2% during the three months
ended June 30, 2000 compared to the three months ended June
30, 1999. Diamond experienced an increase in its average
revenue per replacement unit for the three months ended June
30, 2000 compared to the three months ended June 30, 1999. The
increase in Diamond's average revenue per replacement unit was
primarily attributable to an increased percentage of higher
revenue-generating replacement units.
Gross Profit. Gross profit for the three months ended
June 30, 2000 increased by $3.7 million, or 12.3%, to $33.8
million from $30.1 million for the three months ended June 30,
1999. The increase in gross profit for the three months ended
June 30, 2000 was due to an increase in net sales and average
revenue per replacement unit as discussed above. Gross profit
as a percentage of net sales for the three months ended June
30, 2000 decreased to 68.7% from 69.5% for the three months
ended June 30, 1999. The decrease in gross profit percentage
for the three months ended June 30, 2000 was due to an
increase in product costs compared to the three months ended
June 30, 1999, which was partially offset by an increase in
average revenue per replacement unit.
Operating Expenses. Operating expenses for the three
months ended June 30, 2000 increased by $2.4 million, or 9.4%,
to $27.8 million from $25.4 million for the three months ended
June 30, 1999. The increase in operating expenses for the
three months ended June 30, 2000 was primarily attributable to
the expansion of capacity within Diamond's existing service
center network and an increase in vehicle related expenses,
primarily increased fuel costs. Operating expenses as a
percentage of sales decreased to 56.5% for the three months
ended June 30, 2000 from 58.7% for the three months ended June
30, 1999. The decrease in operating expenses as a percentage
of sales is primarily attributable to an increase in net sales
and increased efficiencies within the service center and back
office operations.
Depreciation and amortization expense for the period
ending June 30, 2000 increased by $0.1 million, or 16.7%, to
$0.7 million from $0.6 million for the same period in 1999.
This increase is attributable to an increase in amortization
expense related to the implementation of certain sales,
billing and financial systems software.
Income From Operations. Income from operations
increased by $1.3 million, or 27.7%, to $6.0 million from $4.7
million for the three months ended June 30, 1999. Income from
operations as a percentage of sales increased to 12.2% for the
three months ended June 30, 2000 from 10.9% for the three
months ended June 30, 1999. These increases were attributable
to the increase in net sales and gross profit and decrease in
operating expenses as a percentage of sales due to the factors
discussed above.
Interest Expense. Interest expense for the three
months ended June 30, 2000 decreased $0.1 million to $2.7
million from $2.8 million for the three months ended June 30,
1999. Cash interest expense was $2.4 million for the three
months ended June 30, 2000 compared to $2.5 million for the
three months ended June 30, 1999.
Net Income. Net income for the three months ended
June 30, 2000 increased by $0.8 million, or 66.7%, to $2.0
million from $1.2 million for the three months ended June 30,
1999. Net income as a percentage of sales increased to 4.1%
for the three months ended June 30, 2000 from 2.8% for the
three months ended June 30, 1999. The increase in net income
and net income margin during the three months ended June 30,
2000 compared to the three months ended June 30, 1999 was
primarily due to the higher income from operations and lower
interest expense as discussed above.
EBITDA. EBITDA was $6.7 million for the three months
ended June 30, 2000, representing an increase of $1.3 million,
or 24.1%, as compared to $5.4 million for the three months
ended June 30, 1999. EBITDA as a percentage of sales increased
to 13.6% for the three months ended June 30, 2000 from 12.5%
for the three months ended June 30, 1999. The increase in
EBITDA and EBITDA margin for the three
10
<PAGE>
months ended June 30, 2000 was primarily due to the increase
in net sales compared to the three months ended June 30, 1999
and a decrease in operating expenses as a percentage of sales
as discussed above.
Liquidity and Capital Resources
Diamond's need for liquidity will arise primarily
from the interest payable on the senior notes, the new credit
facility and the funding of Diamond's capital expenditures and
working capital requirements. There are no mandatory principal
payments on the senior notes prior to their maturity on April
1, 2008 and, except to the extent that the amount outstanding
under the new credit facility exceeds the borrowing base
thereunder, no required payments of principal on the new
credit facility prior to its expiration on March 27, 2004.
Net Cash Provided by Operating Activities. Net cash
provided by operating activities for the six months ended June
30, 2000 increased by $6.5 million to $6.7 million from $0.2
million for the six months ended June 30, 1999. The increase
was primarily attributable to lower working capital
requirements in the six months ended June 30, 2000 compared to
the six months ended June 30, 1999. In particular, there was a
decrease in inventory for the six months ended June 30, 2000
of $0.9 million compared to a $1.2 million inventory increase
for the six months ended June 30, 1999. In addition, accounts
receivable increased $5.1 million for the six months ended
June 30, 2000 compared to a $6.7 million increase for the six
months ended June 30, 1999.
Net Cash Used in Investing Activities. Net cash used
in investing activities for the six months ended June 30, 2000
was $0.4 million compared to $1.2 million in the six months
ended June 30, 1999. The primary reason for the variance was a
decrease in capital expenditures.
Net Cash Used in/Provided by Financing Activities.
Net cash used by financing activities in the six months ended
June 30, 2000 was $6.3 million compared to $1.0 million
provided by financing activities in the six months ended June
30, 1999. During the six months ended June 30, 2000, Diamond
repaid $6.0 million, net of outstanding borrowings under its
credit facility and paid $0.3 million in loan costs.
Capital Expenditures. Capital expenditures for the
six months ended June 30, 2000 were $0.4 million, as compared
to $1.3 million for the six months ended June 30, 1999.
Capital expenditures for the six months ended June 30, 2000
were made primarily to fund the continued upgrade of Diamond's
management information systems.
Liquidity. Management believes that Diamond will have
adequate capital resources and liquidity to satisfy its debt
service obligations, working capital needs and capital
expenditure requirements, including those related to the
opening of new service centers for the foreseeable future.
Diamond's capital resources and liquidity are expected to be
provided by Diamond's net cash provided by operating
activities and borrowings under the credit facility.
Forward-Looking Statements
Readers are cautioned that there are statements
contained in this report which are "forward-looking"
statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Act"). Forward-looking
statements include statements which are predictive in nature,
which depend upon or refer to future events or conditions,
which include words such as "expects," "anticipates,"
"intends," "plans," "believes," "estimates," or similar
expressions. In addition, any statements concerning future
financial performance (including future revenues, earnings or
growth rates), ongoing business strategies or prospects, and
possible future actions, which may be provided by management,
are also forward-looking statements as defined by the Act.
Forward-looking statements are based on current expectations
and projections about future events and are subject to risks,
uncertainties, and assumptions about Diamond, economic and
market factors and the industries in which Diamond does
business, among other things. These statements are not
guarantees of future performance and Diamond has no specific
intention to update these statements.
11
<PAGE>
These forward-looking statements, like any
forward-looking statements, involve risks and uncertainties
that could cause actual results to differ materially from
those projected or anticipated. The risks and uncertainties
include the effect of overall economic and business
conditions, the demand for Diamond's products and services,
regulatory uncertainties, the impact of competitive products
and pricing, changes in customers' ordering patterns and
potential system interruptions. This list should not be
construed as exhaustive. Our prospectus dated April 27, 2000
relating to our exchange offer details some of the important
risk factors.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
On March 31, 1998: (1) Diamond declared and paid a
dividend of 3,500 shares of Series A 12% Senior Redeemable
Cumulative Preferred Stock to each of Kenneth Levine and
Richard Rutta; (2) Kenneth Levine and Richard Rutta
transferred all of the issued and outstanding shares of each
of Diamond's affiliated entities to Diamond in consideration
for which Diamond issued 6,950,000 shares of Common Stock to
Kenneth Levine and Richard Rutta (which shares of Common Stock
were subsequently repurchased by Diamond other than 100,00
shares of Common Stock owned by each of Kenneth Levine and
Richard Rutta); (3) Green Equity Investors II, L.P. purchased
(A) 770,000 shares of Common Stock for aggregate consideration
equal to $15.4 million, and (B) 28,000 shares of Series A 12%
Senior Redeemable Cumulative Preferred Stock for an aggregate
consideration of $28.0 million; and (4) Norman Harris and
Michael A. Sumsky purchased an aggregate of 30,000 shares of
Common Stock for aggregate consideration of $600,000. The
securities issued in these transactions were not registered
under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to the exemption provided under Section 4(2)
thereof for transactions not involving a public offering.
On March 31, 1998, Diamond sold $100.0 million in
aggregate principal amount of its 9 1/4% Senior Notes Due 2008
in a private offering to First Union Capital Markets, BT Alex.
Brown Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation. The securities issued in this transaction were
not registered under the Securities Act pursuant to the
exemption provided under Section 4(2) thereof for transactions
not involving a public offering.
Exchange Offer
On April 27, 2000, Diamond commenced an offer to
exchange up to $100,000,000 in aggregate principal amount of
its new 9 1/4% Senior Notes due 2008 (the "New Notes") for any
and all of its outstanding 9 1/4% Senior Notes due 2008 (the
"Old Notes"). The terms of the New Notes are substantially
identical to the terms of the Old Notes, except for certain
transfer restrictions and registration rights relating to the
Old Notes. The exchange offer relating to the New Notes was
registered under the Securities Act of 1933, as amended,
pursuant to a registration statement that was declared
effective by the Securities and Exchange Commission on April
27, 2000. In June 2000, all of the outstanding Old Notes were
exchanged for the New Notes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
quarter ended June 30, 2000.
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<PAGE>
SIGNATURE
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.
DIAMOND TRIUMPH AUTO GLASS, INC.
Date: August 10, 2000 By: /s/ Michael A. Sumsky
--------------------------------------
Name: Michael A. Sumsky
Title: Executive Vice President
Chief Financial Officer and
General Counsel (Principal
Financial and Chief Accounting
Officer)
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