<PAGE> 1
As filed with the Securities and Exchange Commission on February 14, 1997
================================================================================
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 quarterly period ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-21362
-------------------
HARVARD INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Florida 21-0715310
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2502 N. Rocky Point Drive, Suite 960
Tampa, Florida 33607
(Address of Principal Executive Offices) (Zip Code)
(813) 288-5000
(Registrant's telephone number, including area code)
-------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes (X) No ( )
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of Registrant's Common Stock, as of February
1, 1997, was 7,017,767.
================================================================================
<PAGE> 2
HARVARD INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION: PAGE
----
<S> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets
December 31, 1996 (Unaudited) and September 30, 1996 (Audited)................................... 2
Consolidated Statements of Operations (Unaudited)
Three Months Ended December 31, 1996 and 1995.................................................... 3
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended December 31, 1996 and 1995.................................................... 4
Notes to Consolidated Financial Statements (Unaudited)..................................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations........................................................................................ 14
PART II. OTHER INFORMATION:
Item 5. Other Information.................................................................................. 17
Item 6. Exhibits and Reports on Form 8-K................................................................... 17
SIGNATURES................................................................................................. 18
</TABLE>
1
<PAGE> 3
HARVARD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND SEPTEMBER 30, 1996
(In thousands of dollars)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
ASSETS (Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $ 1,317 $ 1,107
Accounts receivable, net.......................................... 80,793 99,581
Inventories....................................................... 60,756 53,901
Prepaid expenses and other current assets......................... 1,818 1,637
------------ ------------
Total current assets....................................... 144,684 156,226
Property, plant and equipment, net.................................. 298,179 300,673
Intangible assets, net.............................................. 123,422 127,250
Other assets, net................................................... 35,087 33,556
------------ ------------
$ 601,372 $ 617,705
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt................................. $ 25,016 $ 1,487
Accounts payable.................................................. 73,483 89,073
Accrued expenses.................................................. 72,221 66,949
Income taxes payable.............................................. 4,651 5,875
------------ ------------
Total current liabilities.................................. 175,371 163,384
Long-term debt...................................................... 358,724 359,116
Postretirement benefits other than pensions......................... 101,638 100,464
Other .............................................................. 27,019 25,970
------------ ------------
Total liabilities.......................................... 662,752 648,934
------------ ------------
14 1/4% Pay-In-Kind Exchangeable Preferred Stock,
($119,357 liquidation value at December 31, 1996 - includes
$4,107 of undeclared dividends payable September 30, 1997)..... 118,719 114,495
------------ ------------
Shareholders' deficiency:
Common Stock, $.01 par value; 30,000,000 shares authorized;
shares issued and outstanding: 7,015,338 at December 31,
1996 and 7,014,357 at September 30, 1996........................ 70 70
Additional paid-in capital........................................ 38,033 42,245
Additional minimum pension liability.............................. (1,767) (1,767)
Foreign currency translation adjustment........................... (1,959) (1,964)
Accumulated deficit............................................... (214,476) (184,308)
------------ ------------
Total shareholders' deficiency........................... (180,099) (145,724)
------------ ------------
Commitments and contingent liabilities..............................
$ 601,372 $ 617,705
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
- 2 -
<PAGE> 4
HARVARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Unaudited)
(In thousands of dollars, except share and per share data)
<TABLE>
<CAPTION>
Three months ended
-----------------------------
December 31, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Sales............................................................... $ 187,261 $ 210,536
------------- -----------
Costs and expenses:
Cost of sales.................................................... 190,462 188,350
Selling, general and administrative.............................. 10,205 10,254
Interest expense................................................. 12,188 10,050
Amortization of goodwill......................................... 3,828 2,582
Other (income) expense, net...................................... 258 124
------------- -----------
Total costs and expenses..................................... 216,941 211,360
------------- -----------
Loss before income taxes............................................ (29,680) (824)
Provision for income taxes.......................................... 488 900
------------- -----------
Net (loss).......................................................... $ (30,168) $ (1,724)
============= ===========
PIK preferred dividends and accretion............................... $ 4,224 $ 3,710
============= ===========
Net loss attributable to common shareholders........................ $ (34,392) $ (5,434)
============= ===========
Primary per common and common equivalent share:
Loss per common and common equivalent share...................... $ (4.90) $ (0.78)
============= ===========
Weighted average number of common and common equivalent
shares outstanding.............................................. 7,015,093 6,994,907
============= ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
- 3 -
<PAGE> 5
HARVARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
Three months ended
---------------------------
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows related to operating activities:
Loss from continuing operations......................................... $ (30,168) $ (1,724)
Add back (deduct) items not affecting cash and cash equivalents:
Depreciation and amortization......................................... 17,236 12,509
Loss on disposition of property, plant and equipment
and property held for sale........................................... 308 291
Postretirement benefits............................................... 1,666 1,928
Changes in operating assets and liabilities of continuing operations,
net of effects from acquisitions and reorganization items:
Accounts receivable.................................................. 18,788 6,743
Inventories.......................................................... (6,855) (7,052)
Other current assets................................................. (181) 395
Accounts payable..................................................... (15,590) (576)
Accrued expenses and income taxes payable............................ 3,857 (3,172)
Other noncurrent liabilities......................................... 1,101 495
------------ ------------
Net cash provided by (used in) continuing operations.................... (9,838) 9,837
------------ ------------
Cash flows related to investing activities:
Acquisition of property, plant and equipment............................ (9,910) (8,578)
Cash flows related to discontinued operations........................... - 1,858
Proceeds from disposition of property, plant and equipment.............. 3 663
Net change in other noncurrent accounts................................. (1,084) 197
------------ ------------
Net cash used in investing activities................................... (10,991) (5,860)
------------ ------------
Cash flows related to financing activities:
Net borrowings under financing agreement................................ 23,529 -
Proceeds from exercise of stock options................................. 12 -
Repayments of long-term debt............................................ (392) (673)
Pension fund payments pursuant to PBGC settlement agreement............ (1,500) (1,500)
Payment of EPA settlements.............................................. (610) (571)
------------ ------------
Net cash provided by (used in) financing activities..................... 21,039 (2,744)
------------ ------------
Net increase (decrease) in cash and cash equivalents...................... 210 1,233
Beginning of period...................................................... 1,107 19,925
------------ ------------
End of period............................................................ $ 1,317 $ 21,158
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
- 4 -
<PAGE> 6
HARVARD INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 AND 1995
(Unaudited)
(In thousands of dollars, except share and per share data)
NOTE 1
The interim consolidated financial statements are unaudited but, in the
opinion of management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results for the
periods presented. The results of operations for any interim period are not
necessarily indicative of the results to be expected for the full year. These
interim consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the year ended
September 30, 1996 included in the Company's Annual Report on Form 10-K.
NOTE 2
At December 31, 1996, the accrued costs of discontinued operations
("ESNA matter") are primarily related to legal costs, fines and penalties,
subcontractor costs and severance pay. The ultimate cost of disposition of the
ESNA matter, as well as the required funding of such cost, is dependent upon
future events, the outcomes of which are not determinable at the present time.
Such outcomes could have a material effect on the Company's financial condition,
results of operations and/or liquidity. If it is ultimately determined that the
deviations from specifications and certifications made in connection therewith,
constitute violations of various statutory and regulatory provisions, the
Company may, among other things, be subject to criminal prosecution, treble
damages and penalties under the Civil False Claims Act or Racketeer Influenced
and Corrupt Organization Act, as well as administrative sanctions, such as
debarment from future government contracting.
NOTE 3
During the three months ended December 31, 1996, the Company recorded an
increase of $4,224 in its 14 1/4% Pay-In-Kind Exchangeable Preferred Stock
("PIK Preferred Stock") and a corresponding deduction in additional
paid-in-capital to recognize (i) an accrual of 25% of the required 1997
dividend which is payable in shares of PIK Preferred Stock on September 30,
1997 and (ii) the accretion of the related difference between the fair value of
such stock at August 23, 1992 and redemption value.
NOTE 4
Net loss per common share is computed by dividing net loss after
deducting accrued dividends and accretion related to PIK Preferred Stock by the
weighted average number of common shares outstanding. No consideration was given
in either period to equivalent shares related to stock options since such
options are anti-dilutive.
-5-
<PAGE> 7
NOTE 5
The Company is also a party to various claims and routine litigation
arising in the normal course of its business. Based on information currently
available, management of the Company believes, after consultation with legal
counsel, that the result of such claims and litigation, except for the
uncertainties related to ESNA discussed in Note 2, will not have a material
effect on the financial position or results of operations of the Company.
NOTE 6
The differences between the statutory federal income tax rate and the
Company's effective income tax rates result principally from having an
operating profit in Canada and an operating loss in the U.S.
NOTE 7
On December 20, 1996, the Company obtained an amendment to its financing
agreement whereby the required EBITDA covenant was changed from the cumulative
quarterly requirements of $12,092; $26,177; $48,042; and $63,607 for the year
ending September 30, 1997 to $ 1,000; $11,000; $32,000; and $48,000.
NOTE 8
Both the 12% Notes and the 11 1/8% Notes are guarantied on a senior
unsecured basis, pursuant to guaranties (the Guaranties) by all of the
Company's wholly-owned direct and certain of its wholly-owned indirect domestic
subsidiaries (the Guarantors). Both Notes are unconditionally guarantied,
jointly and severally, on a senior unsecured basis, by each of the Guarantors
under such Guarantor's guaranty (a Guaranty). Each Guaranty by a Guarantor is
limited in amount to an amount not to exceed the maximum amount that can be
guarantied by that Guarantor without rendering the Guaranty, as it relates to
such Guarantor, voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer. As such, a Guaranty could be effectively subordinated
to all other indebtedness (including guaranties and other contingent
liabilities) of the applicable Guarantor, and, depending on the amount of such
indebtedness, a Guarantor's liability on its Guaranty could be reduced to zero.
The Company conducts all of its automotive business through and derives
virtually all of its income from its subsidiaries. Therefore, the Company's
ability to make required principal and interest payments with respect to the
Company's indebtedness (including the Notes) and other obligations depends on
the earnings of its subsidiaries and on its ability to receive funds from its
subsidiaries through dividends or other payments. The ability of its
subsidiaries to pay such dividends or make payments on intercompany
indebtedness or otherwise will be subject to applicable state laws.
Upon the sale or other disposition of a Guarantor or the sale or
disposition of all or substantially all of the assets of a Guarantor (in each
case other than to the Company or an affiliate of the Company) permitted by the
indentures governing the Notes, such Guarantor will be released and relieved
from all of its obligations under its Guaranty.
The following condensed consolidating information presents:
1. Condensed balance sheets as of December 31, 1996 and September
30, 1996 and condensed statements of operations and cash flows for the three
months ended December 31, 1996 and 1995.
-6-
<PAGE> 8
2. The Parent Company and Combined Guarantor Subsidiaries with
their investments in subsidiaries accounted for on the equity method.
3. Elimination entries necessary to consolidate the Parent Company
and all of its subsidiaries.
4. The Parent Company, pursuant to the terms of an interest
bearing note with Guarantor Subsidiaries, has included in their allocation of
expenses, interest expense for the three months ended December 31, 1996 and
1995, respectively.
The Company believes that providing the following condensed consolidating
information is of material interest to investors in the Notes and has not
presented separate financial statements for each of the Guarantors.
-7-
<PAGE> 9
HARVARD INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1996
(In thousands of dollars)
<TABLE>
<CAPTION>
Combined Combined
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $ 4,996 $ 205 $ (3,884) $ - $ 1,317
Accounts receivable, net...................... 5,238 70,190 5,365 - 80,793
Inventories................................... 4,822 52,795 3,139 - 60,756
Prepaid expenses and other current assets..... 755 1,047 16 - 1,818
--------- ---------- ---------- ---------------- -----------
Total current assets...................... 15,811 124,237 4,636 - 144,684
Investment in Subsidiaries...................... 283,204 41,907 - (325,111) -
Property, plant and equipment, net.............. 4,532 283,539 10,108 - 298,179
Intangible assets, net.......................... - 123,422 - - 123,422
Intercompany receivables........................ 412,341 233,388 35,225 (680,954) -
Other assets.................................... 27,060 7,991 36 - 35,087
--------- ---------- ---------- ---------------- -----------
$ 742,948 $ 814,484 $ 50,005 $ (1,006,065) $ 601,372
========= ========== ========== ================ ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt............. $ 3,404 $ 21,612 $ - $ - $ 25,016
Accounts payable.............................. 2,127 68,596 2,760 - 73,483
Accrued expenses.............................. 29,677 42,563 (19) - 72,221
Income taxes payable.......................... (982) 1,245 4,388 - 4,651
--------- ---------- ---------- ---------------- -----------
Total current liabilities................. 34,226 134,016 7,129 - 175,371
Long-term debt.................................. 300,445 58,279 - - 358,724
Postretirement benefits other than pensions.... - 101,638 - - 101,638
Intercompany payables........................... 465,703 215,251 - (680,954) -
Other........................................... 3,954 22,096 969 - 27,019
--------- ---------- ---------- ---------------- -----------
Total liabilities......................... 804,328 531,280 8,098 (680,954) 662,752
--------- ---------- ---------- ---------------- -----------
PIK Preferred................................... 118,719 - - - 118,719
--------- ---------- ---------- ---------------- -----------
Shareholders' equity (deficiency):
Common stock and additional
paid-in-capital............................. 38,103 73,054 135 (73,189) 38,103
Additional minimum pension liability.......... (1,767) (1,767) - 1,767 (1,767)
Foreign currency translation adjustment....... (1,959) (1,959) (1,959) 3,918 (1,959)
Retained earnings (deficit)................... (214,476) 213,876 43,731 (257,607) (214,476)
--------- ---------- ---------- ---------------- -----------
Total shareholders' equity (deficit)........ (180,099) 283,204 41,907 (325,111) (180,099)
--------- ---------- ---------- ---------------- -----------
$ 742,948 $ 814,484 $ 50,005 $ (1,006,065) $ 601,372
========= ========== ========== ================ ===========
</TABLE>
-8-
<PAGE> 10
HARVARD INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1996
(In thousands of dollars)
<TABLE>
<CAPTION>
Combined Combined
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ (1,655) $ 4,367 $ (1,605) $ - $ 1,107
Accounts receivable, net........................ 5,925 88,124 5,532 - 99,581
Inventories..................................... 5,056 46,312 2,533 - 53,901
Prepaid expenses and other current assets....... 372 1,265 - - 1,637
---------- ---------- -------------- ---------- -----------------
Total current assets.......................... 9,698 140,068 6,460 - 156,226
Investment in Subsidiaries........................ 296,822 41,877 - (338,699) -
Property, plant and equipment, net................ 4,747 286,575 9,351 - 300,673
Intangible assets, net............................ - 127,250 - - 127,250
Intercompany receivables.......................... 394,988 222,486 16,134 (633,608) -
Other assets...................................... 25,428 8,092 36 - 33,556
---------- ---------- -------------- ---------- -----------------
$ 731,683 $ 826,348 $ 31,981 $ (972,307) $ 617,705
========== ========== ============== ========== =================
LIABILITIES AND SHAREHOLDERS'
DEFICIENCY
Current liabilities:
Current portion of long-term debt............... $ - $ 1,487 $ - $ - $ 1,487
Accounts payable................................ 3,711 81,975 3,387 - 89,073
Accrued expenses ............................... 19,947 47,002 - - 66,949
Income taxes payable ........................... 5 1,169 4,701 - 5,875
---------- ---------- -------------- ---------- -----------------
Total current liabilities.................. 23,663 131,633 8,088 - 163,384
Long-term debt.................................... 300,445 58,671 - - 359,116
Postretirement benefits other than
pensions...................................... - 100,464 - - 100,464
Intercompany payables............................. 435,038 217,523 (18,953) (633,608) -
Other............................................. 3,766 21,235 969 - 25,970
---------- ---------- -------------- ---------- -----------------
Total liabilities.......................... 762,912 529,526 (9,896) (633,608) 648,934
---------- ---------- -------------- ---------- -----------------
PIK Preferred..................................... 114,495 - - - 114,495
---------- ---------- -------------- ---------- -----------------
Shareholders' deficiency:
Common stock and additional
paid-in-capital............................... 42,315 73,054 135 (73,189) 42,315
Additional minimum pension liability............ (1,767) (1,767) - 1,767 (1,767)
Foreign currency translation adjustment......... (1,964) (1,952) (1,952) 3,904 (1,964)
Accumulated deficit............................. (184,308) 227,487 43,694 (271,181) (184,308)
---------- ---------- -------------- ---------- -----------------
Total shareholders' deficiency............. (145,724) 296,822 41,877 (338,699) (145,724)
---------- ---------- -------------- ---------- -----------------
$ 731,683 $ 826,348 $ 31,981 $ (972,307) $ 617,705
========== ========== ============== ========== =================
</TABLE>
-9-
<PAGE> 11
HARVARD INDUSTRIES, INC.
CONSOLIDATING INCOME STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996
(In thousands of dollars)
<TABLE>
<CAPTION>
Combined Combined
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Elimination Consolidated
---------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Sales.............................................. $ 6,991 $ 174,502 $ 5,768 $ - $ 187,261
---------- ---------- ---------- ---------- --------------
Costs and expenses:
Cost of sales.................................... 6,580 178,779 5,103 - 190,462
Selling, general and administrative.............. 2,558 7,647 - - 10,205
Interest expense................................. 9,246 2,897 45 - 12,188
Amortization of goodwill......................... - 3,828 - - 3,828
Other (income) expense, net...................... (46) 301 3 - 258
Equity in (income) loss of
subsidiaries................................... 24,201 (37) - (24,164) -
Allocated expenses............................... (5,380) 4,961 419 - -
---------- ---------- ---------- ---------- --------------
Total costs and expenses..................... 37,159 198,376 5,570 (24,164) 216,941
---------- ---------- ---------- ---------- --------------
Income (loss) before income taxes.................. (30,168) (23,874) 198 24,164 (29,680)
Provision for income taxes......................... - 327 161 - 488
---------- ---------- ---------- ---------- --------------
Net income (loss)............................... $ (30,168) $ (24,201) $ 37 $ 24,164 $ (30,168)
========== ========== ========== ========== ==============
</TABLE>
-10-
<PAGE> 12
HARVARD INDUSTRIES, INC.
CONSOLIDATING INCOME STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995
(In thousands of dollars)
<TABLE>
<CAPTION>
Combined Combined
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Elimination Consolidated
------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Sales............................................. $ 9,004 $ 194,137 $ 7,395 $ - $ 210,536
---------- ---------- ---------- ---------- -------------
Costs and expenses:
Cost of sales................................... 8,238 173,948 6,164 188,350
Selling, general and administrative............. 2,774 7,479 1 - 10,254
Interest expense................................ 9,220 830 - 10,050
Amortization of goodwill........................ - 2,582 - - 2,582
Other (income) expense, net..................... 62 44 18 - 124
Equity in (income) loss of subsidiaries........ (2,025) (243) - 2,268 -
Allocated expenses.............................. (6,178) 5,665 513 - -
---------- ---------- ---------- ---------- -------------
Total costs and expenses.................... 12,091 190,305 6,696 2,268 211,360
---------- ---------- ---------- ---------- -------------
Income (loss) before income taxes................. (3,087) 3,832 699 (2,268) (824)
Provision for income taxes........................ (1,363) 1,807 456 - 900
---------- ---------- ---------- ---------- -------------
Net income (loss).............................. $ (1,724) $ 2,025 $ 243 $ (2,268) $ (1,724)
========== ========== ========== ========== =============
</TABLE>
-11-
<PAGE> 13
HARVARD INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1996
(In thousands of dollars)
<TABLE>
<CAPTION>
Combined Combined
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Elimination Consolidated
------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows related to operating activities:
Net income (loss)............................................. $ (30,168) $ (24,201) $ 37 $ 24,164 $ (30,168)
Add back (deduct) items not affecting
cash and cash equivalents:
Equity in (income) loss of subsidiaries..................... 24,201 (37) - (24,164) -
Depreciation and amortization............................... 760 16,269 207 - 17,236
Disposition of property, plant and
equipment and property held for sale....................... - 308 - - 308
Postretirement benefits..................................... - 1,666 - - 1,666
Changes in operating assets and liabilities:
Accounts receivable......................................... 687 17,934 167 - 18,788
Inventories................................................. 234 (6,483) (606) - (6,855)
Other current assets........................................ (383) 218 (16) - (181)
Accounts payable............................................ (1,584) (13,379) (627) - (15,590)
Accrued expenses and income taxes payable................... 8,904 (4,715) (332) - 3,857
Other noncurrent liabilities................................. - 1,101 - - 1,101
------------- ------------ ----------- ---------- -----------
Net cash provided by (used in) operations................... 2,651 (11,319) (1,170) - (9,838)
------------- ------------ ----------- ---------- -----------
Cash flows related to investing activities:
Acquisition of property, plant and equipment.................. (5) (8,903) (1,002) - (9,910)
Proceeds to date from sale of discontinued operations......... - - - - 0
Proceeds from disposition of property,
plant and equipment......................................... - 3 - - 3
Net change in other noncurrent accounts....................... (129) (993) 38 - (1,084)
------------- ------------ ----------- ---------- -----------
Net cash provided by (used in) investing activities............. (134) (9,893) (964) - (10,991)
------------- ------------ ----------- ---------- -----------
Cash flows related to financing activities:
Net borrowings under revolver................................. 3,404 20,125 - - 23,529
Proceeds from exercise of stock options....................... 12 - - - 12
Repayments of long-term debt.................................. - (392) - - (392)
Pension fund payment pursuant to PBGC settlement agreement.... (1,500) - - - (1,500)
Payment of EPA settlements.................................... (511) (99) - - (610)
Net changes in intercompany balances.......................... 2,729 (2,584) (145) - -
------------- ------------ ----------- ---------- -----------
Net cash provided by (used in) financing activities............ 4,134 17,050 (145) - 21,039
------------- ------------ ----------- ---------- -----------
Net increase (decrease) in cash and cash equivalents............ 6,651 (4,162) (2,279) - 210
Cash and cash equivalents:
Beginning of period........................................... (1,655) 4,367 (1,605) - 1,107
------------- ------------ ----------- ---------- -----------
End of period................................................. $ 4,996 $ 205 $ (3,884) $ - $ 1,317
============= ============ =========== ========== ===========
</TABLE>
-12-
<PAGE> 14
HARVARD INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1995
(In thousands of dollars)
<TABLE>
<CAPTION>
Combined Combined
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Elimination Consolidated
------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows related to operating activities:
Income (loss) from continuing operations.......................$ (1,724) $ 2,025 $ 243 $ (2,268) $ (1,724)
Add back (deduct) items not affecting
cash and cash equivalents:
Equity in (income) loss of subsidiaries...................... (2,025) (243) - 2,268 -
Depreciation and amortization................................ 880 11,378 251 - 12,509
Loss on disposition of property, plant and
equipment and property held for sale........................ - 291 - - 291
Postretirement benefits...................................... - 1,928 - - 1,928
Changes in operating assets and liabilities:
Accounts receivable.......................................... 57 7,641 (955) - 6,743
Inventories.................................................. (440) (6,739) 127 - (7,052)
Other current assets......................................... (403) 797 1 - 395
Accounts payable............................................. 1,276 (2,337) 485 - (576)
Accrued expenses and income taxes payable.................... 5,716 (11,091) 2,192 11 (3,172)
Other noncurrent liabilities................................. - 495 - - 495
---------- ---------- ---------- ----------- ------------
Net cash provided by (used in) operations.............. 3,337 4,145 2,344 11 9,837
---------- ---------- ---------- ----------- ------------
Cash flows related to investing activities:
Acquisition of property, plant and equipment................... (253) (7,834) (491) - (8,578)
Cash flows related to discontinued operations.................. 1,858 - - - 1,858
Proceeds from disposition of property, plant and equipment..... - 663 - - 663
Net change in other noncurrent accounts........................ (343) 3,977 (3,457) 20 197
---------- ---------- ---------- ----------- ------------
Net cash provided by (used in) investing activities.............. 1,262 (3,194) (3,948) 20 (5,860)
---------- ---------- ---------- ----------- ------------
Cash flows related to financing activities:
Repayments of long-term debt................................... (8) (665) - - (673)
Pension fund payments pursuant to PBGC settlement agreement ... - (1,500) - - (1,500)
Payment of EPA settlements..................................... (469) (15) (87) - (571)
Net changes in intercompany balances........................... (3,666) 4,626 (960) -
---------- ---------- ---------- ----------- ------------
Net cash provided by (used in) financing activities............. (4,143) 2,446 (1,047) 0 (2,744)
---------- ---------- ---------- ----------- ------------
Net increase (decrease) in cash and cash equivalents............. 456 3,397 (2,651) 31 1,233
Cash and cash equivalents:
Beginning of period............................................ 18,645 (2,180) 3,491 (31) 19,925
---------- ---------- ---------- ----------- ------------
End of period..................................................$ 19,101 $ 1,217 $ 840 $ - $ 21,158
========== ========== ========== =========== ============
</TABLE>
-13-
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(In thousands of dollars)
FORWARD - LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking
statements. Additional written or oral forward-looking statements may be made
by the Company from time to time, in filings with the Securities and Exchange
Commission or otherwise. Such forward-looking statements are within the
meaning of that term in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such statements may include, but
not be limited to, projections of revenues, income or losses, capital
expenditures, plans for future operations, financing needs or plans, plans
relating to products or services of the Company, as well as assumptions
relating to the foregoing.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Consequently,
future events and actual results could differ materially from those set forth
in, contemplated by, or underlying the forward-looking statements. Statements
in this Quarterly Report, particularly the Notes to Consolidated Financial
Statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," describe factors, among others, that could contribute to
or cause such differences. Other factors that could contribute to or cause such
differences include failure to achieve desired productivity results of the
Doehler-Jarvis operations, unanticipated increases in launch and other operating
costs, a reduction in, or inconsistent demand for passenger cars and light
trucks, the inability to finalize the definitive agreements for the program
modifications with the major customer, described below, the inability to attain
future EBITDA requirements under the Company's Financing Agreement, failure of
the Company to sell off its Harman Automotive and non-core Harvard Interiors
operations or other factors and earlier than anticipated and/or increased costs
of resolving the ESNA matter.
GENERAL
The Company's results of operations have been adversely impacted
during the three months ended December 31, 1996 by the following conditions:
decline in sales; losses related to a Manifold Program between Doehler-Jarvis
and a major customer which was launched in fiscal 1995; operational
inefficiencies at Doehler-Jarvis' Toledo and Pottstown plants, including the
impact of significant overtime resulting from operating the Toledo plant on a
seven day week basis; and the effects of the October 1996 General Motors "GM"
strike. As a result, Doehler-Jarvis operations incurred negative gross margins
(cost of sales exceeded revenues) of over 10% for its entire operation,
including the Manifold Program.
On July 25, 1996, the Company reached an agreement in principle with a
major customer to program modifications to the Manifold Program discussed above.
The Company and the customer have gone forward with certain elements of the
agreement. The Company and the customer are in the process of negotiating
definitive documents concerning the program modifications for the Manifold
Program. There is no assurance that the negotiations will be concluded
successfully.
-14-
<PAGE> 16
RESULTS OF OPERATIONS
Three Months Ended December 31, 1996 Compared to Three Months Ended December
31,1995
Sales. Consolidated sales decreased $23,275, or 11.1%. Approximately
$10,000 of the decrease relates to sales declines in Harman Automotive and
Harvard Interiors both of which are available for sale and approximately $6,000
is attributable to a 13.4% decline in average aluminum prices that were passed
on to customers. The balance of the decline was due primarily to the October
1996 GM strike and lower tooling sales.
Gross Profit. The consolidated gross profit expressed as a percentage
of sales (the "gross profit margin") decreased from 10.5% to a gross loss of
1.7%. The decrease in the gross profit margin resulted primarily from
operational inefficiencies at the Company's Doehler-Jarvis subsidiary, from the
effects of decreased sales mentioned above and increased depreciation
expense.
Selling, General and Administrative Expenses. Selling,general and
administrative expenses remained constant for both periods. As a percentage of
sales, such expenses increased from 4.9% to 5.4%.
Interest Expense. Interest expense increased from $10,050 to $12,188, or
21.3%. The increase in interest expense results from borrowings in the current
period under its Financing Agreement.
Goodwill. The increase of $1,246 in goodwill amortization is
attributable to the change in the life of goodwill amortization related to the
acquisition of Doehler-Jarvis from 15 years to 10 years.
Provision for Income Taxes. The decrease in the provision for income
taxes results from a decrease in operating profit in Canada.
Net Loss. The net loss increased from $1,724 to $30,168 for the reasons
described above.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended December 31, 1995, the Company generated
$9,837 of cash from operations while there was a negative cash from operations
of $9,838 for the three months ended December 31, 1996. The Company increased
its borrowings under its Financing Agreement to fund the negative cash flow from
operations, investing activities of $10,991 and various payments related to
financing activities aggregating approximately $2,500. The Company had a
deficiency of earnings over fixed charges and dividends on preferred stock of
$33,904 and $4,534 for the three months ended December 31, 1996 and 1995,
respectively.
Financing Agreement. The Company's borrowing under the revolving credit portion
of its Financing Agreement amounted to $32,363 at December 31, 1996 and standby
letters of credit outstanding amounted to $18,500. The Company expects it will
be required to borrow to the maximum available amount under the Financing
Agreement for the balance of the year. The Company at December 31, 1996 has
reflected in its balance sheet as long-term debt its $30,000 term loan and
$8,834 of its revolving line of credit, since it is in compliance with the
EBITDA requirements of its Financing Agreement, as amended. The Company expects
to be in compliance with such quarterly convenant through September 30, 1997.
There is no assurance, however, that the Company ultimately will be in
compliance with such future requirements. Also, based on current projections,
the Company expects that its accounts receivable collateral will exceed the
collateral required under the borrowing limits of its Financing Agreement. The
Company has had preliminary discussions with The CIT Group/Business Credit,
Inc., regarding increasing the Company's line of credit, to permit using the
additional projected borrowing capacity if necessary. There can be no
assurance, however, that such an increase in the line of credit will occur.
Other. See "Capital Expenditures" with respect to the adoption by the Company
of other short-term strategic alternatives.
-15-
<PAGE> 17
Capital Expenditures. The Company expects that approximately $12,000 of
its forecasted capital expenditures for 1997 will be handled as operating leases
under a commitment letter, dated January 24, 1997 with Sun Financial Group,
Inc./ GATX Corporation. Approximately $4,000 of equipment was funded under this
arrangement on February 10, 1997. The Company also intends, if necessary, to
use the net proceeds from any possible sale of Harman to reduce revolving loans
allowing additional flexibility to fund capital expenditures. There is no
assurance that such sale of Harman will occur, in which case the Company will
pursue more operating leases and/or delay capital expenditures to the extent
practical. The Company is also in the process of investigating other short-term
strategic alternatives including, among other things, the sale of certain assets
and businesses.
Loss of Ford Business. Effective January 1997, the Company was advised
by Ford Motor Company that approximately $8,000 of sales during the year ended
September 30, 1996 (related to mid-size passenger car front wheel drive aluminum
transmission housings) would be resourced to a competitor due to the inability
of the Doehler-Jarvis Toledo plant to maintain delivery dates compatible with
customer demands. This resulted from the over-capacity situation at this plant.
The Company retained a nationally prominent management consulting firm to
address this problem.
ESNA. The Company believes that the 1997 estimated costs of the ESNA
matter, exclusive of possible fines, damages and penalties, if any, will not be
material. Such costs relate to carrying costs of the Union, N.J. facility,
severance payments, subcontract costs and costs associated with the Company's
ongoing participation in the Department of Defense Voluntary Disclosure
Program. However, the ultimate cost of disposition of this matter, as well as
the required funding of such costs, depends upon future events, the outcomes of
which are not determinable at the present time, including the Company receiving
favorable consideration from the government as a result of its admission into
the Voluntary Disclosure Program. Such outcomes could have a material effect
on the Company's financial condition, results of operations and/or liquidity.
If it is ultimately determined that the deviations from specifications and
certifications made in connection therewith constitute violations of various
statutory and regulatory provisions, the Company may, among other things, be
subject to criminal prosecution, treble damages and penalties under the Civil
False Claims Act or Racketeer Influenced and Corrupt Organization Act, as well
as administrative sanctions, such as debarment from future government
contracting.
Outlook for 1997. The Company is currently forecasting a net loss for
both the second quarter and the year ending September 30, 1997.
-16-
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On February 12, 1997, Mr. Vincent J. Naimoli, Chairman of the Board,
President and Chief Executive Officer of the Company resigned from these
positions. The Company's Board of Directors accepted the resignation and named
Mr. John W. Adams as Chairman of the Board and Chief Executive Officer and Mr.
Roger L. Burtraw as President. Mr. Naimoli will continue his involvement with
the Company as a consultant, and will assist the Board in the search for a new
Chief Executive Officer.
Mr. Adams has been a member of the Board of Directors since October
1994. He has been President of Smith Management Company, an investment firm,
since 1984. Mr. Burtraw has been Executive Vice President of the Company since
August 1995 and Senior Vice President from January 1993 to August 1995. Prior
to that, he was President of the Company's subsidiary, The Kingston-Warren
Corporation, from April 1991 to January 1993.
In connection with Mr. Naimoli's resignation, the Company, Mr. Naimoli
and his affiliated corporation entered into a Termination, Consulting and
Release Agreement, dated as of February 12, 1997, a copy of which is filed as
Exhibit 10.29 to this Quarterly Report on Form 10-Q, and which is incorporated
herein by reference thereto.
The Ratio of Earnings to Fixed Charges and Dividends on Preferred
Stock, and the supporting computation thereof, are filed as Exhibit 12.1 to
this Quarterly Report on Form 10-Q and are incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
10.29 Termination, Consulting and Release Agreement, dated as of February 12,
1997, among the Registrant, Anchor Industries International, Inc. and
Vincent J. Naimoli.
12.1 Computation of Ratio of Earnings to Fixed Charges and Dividends on
Preferred Stock.
27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K:
A Current Report on form 8-K was filed under date of October 30, 1996
during the quarter ended December 31, 1996, with respect to the Financing
Agreement between the Company and The CIT Group/Business Credit, Inc., as
Agent and Lender.
-17-
<PAGE> 19
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 authorized
HARVARD INDUSTRIES INC
----------------------
(Registrant)
February 14, 1997 /s/ Joseph J. Gagliardi
------------------------------
Joseph J. Gagliardi
Vice President Finance and
Chief Financial Officer
(Principal Financial Officer)
February 14, 1997 /s/ William J. Warren
------------------------------
William J. Warren
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
-18-
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
NO.
<S> <C>
10.29 Termination, Consulting and Release Agreement, dated as of February 12,
1997, among the Registrant, Anchor Industries International, Inc. and
Vincent J. Naimoli.
12.1 Computation of Ratio of Earnings to Fixed Charges and Dividends on
Preferred Stock.
27 Financial Data Schedule (for SEC use only).
</TABLE>
<PAGE> 1
Exhibit 10.29
TERMINATION, CONSULTING AND RELEASE AGREEMENT
TERMINATION, CONSULTING AND RELEASE AGREEMENT dated as of
February 12, 1997 (the "Agreement") among Harvard Industries, Inc. a Florida
corporation (the "Company"), Anchor Industries International, Inc., a Florida
corporation ("AII"), and Vincent J. Naimoli (the "Executive").
WHEREAS, AII was previously retained by the Company to provide the
management services and expertise of the Executive to the Company and the
Executive was employed by the Company as its Chairman of the Board of Directors,
Chief Executive Officer and President, in each case, on the terms and conditions
set forth in the Amended and Restated Management and Option Agreement dated as
of August 16, 1996 between the Company and AII (the "Prior Agreement");
WHEREAS, the Company and AII wish to terminate the management
services relationship between the Company and AII and the Executive desires to
resign his employment and all of his positions with the Company and its direct
and indirect subsidiaries and affiliates effective as of the date hereof,
subject to the terms and conditions set forth below;
WHEREAS, the Company is prepared to make certain payments to AII and
to make certain benefits available to the Executive, each as described herein,
in consideration for the undertakings of AII and the Executive described herein;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the adequacy of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
<PAGE> 2
2
1. Termination of Prior Agreement. Each of the Company, AII and the
Executive hereby consents to the termination of the Prior Agreement, which
shall, effective as of the date hereof, be deemed terminated and of no further
force and without further obligation of any party thereunder; provided, however,
that it is expressly agreed and understood that each of (i) Section 6 of the
Prior Agreement (relating to AII's rights with respect to Option I and Option
II), (ii) Section 9 of the Prior Agreement (relating to the Company's covenants
with respect to share authorization, listing and registration rights), (iii)
Section 8 of the Prior Agreement (relating to certain representations and
warranties) and (iv) Section 10 of the Prior Agreement (relating to certain
Company indemnification undertakings) shall survive the termination of the Prior
Agreement.
2. Resignation; Full Satisfaction
(a) The Executive hereby resigns, effective as of the date
hereof, from the Executive's positions as Chairman of the Board, President and
Chief Executive Officer of the Company and from all other positions and
directorships that the Executive holds with the Company and its direct and
indirect subsidiaries and affiliates.
(b) AII hereby resigns, effective as of the date hereof, from
its appointment and employment by the Company pursuant to the Prior Agreement
and from all other positions that AII holds with the Company and its direct and
indirect subsidiaries and affiliates.
(c) Each of AII and the Executive acknowledges and agrees
that, except as expressly set forth in this Section 2 and in Sections 1, 3, 4
and 9 of this Agreement, neither AII nor the Executive will be entitled to any
other compensation
<PAGE> 3
3
or benefits from the Company or its direct or indirect subsidiaries and
affiliates, including, without limitation, any other severance or termination
benefits (whether pursuant to the Prior Agreement, or otherwise); provided that
(i) it is agreed that nothing in this Agreement shall constitute a waiver of the
Executive's rights to vested benefits, if any, under any Company retirement or
group health plan in respect of his services to the Company prior to the date
hereof ("Vested Benefits") and (ii) notwithstanding the termination of the Prior
Agreement as of the date hereof, AII shall continue to receive the compensation
described in Section 3(a) of the Prior Agreement through and including March 1,
1997 (the "Consulting Commencement Date") and to be entitled to reimbursement of
business expenses incurred by AII through and including the Consulting
Commencement Date pursuant to the first sentence of Section 7 of the Prior
Agreement. Each of AII and the Executive hereby acknowledges that, as of the
date hereof, AII and the Executive have been paid all monies due to AII and the
Executive from the Company and its direct or indirect subsidiaries and
affiliates on account of wages, wage supplements, compensation, commissions,
bonuses, vacation, benefits and all other entitlements in respect of AII's and
the Executive's services prior to the date hereof.
3. Consulting Arrangement.
(a) Effective as of the Consulting Commencement Date, the
Company hereby retains AII to make the Executive's services available to the
Company, and the Executive hereby agrees to serve, as a consultant to the
Company during the three year period commencing as of the Consulting
Commencement Date and ending on the third anniversary of the Consulting
Commencement Date (the "Consulting Term"), subject to earlier termination of the
Consulting Term due to the
<PAGE> 4
4
Executive's or AII's willful breach of the provisions of Sections 5, 7 or 8 of
this Agreement.
(b) During the Consulting Term, AII and the Executive shall
render such advice and services relating to the business and strategic business
plan of the Company as may be reasonably requested by the Company and shall
assist the Company, to the extent requested, in its efforts to recruit a new
Chief Executive Officer, it being understood that such services shall be
incidental to, and shall not materially interfere with, the Executive's other
professional activities and shall not, in any event, occupy more than twenty
(20) hours of the Executive's business time in any one month period. The Company
shall provide the Executive with reasonable advance notice prior to requiring
the Executive to perform any services hereunder. In carrying out his duties as
consultant, the Executive shall report to the Chief Executive Officer of the
Company. In addition, the Executive agrees to cooperate with the Company during
the Consulting Term and thereafter by making himself reasonably available to
testify on behalf of the Company or its direct or indirect subsidiaries and
affiliates in any action, suit or proceeding, whether civil, criminal,
administrative, or investigative, relating to events that occurred during AII
and the Executive's employment with the Company or during the Consulting Term,
and to assist the Company and its direct or indirect subsidiaries and affiliates
in any such action, suit or proceeding by providing information and meeting and
consulting with the Board of Directors of the Company or their representatives
or counsel or representatives or counsel to the Company or any of its direct or
indirect subsidiaries and affiliates, as reasonably requested by the Board of
Directors of the Company or such representatives or counsel.
<PAGE> 5
5
(c) The Company shall reimburse the Executive for reasonable
and documented out-of-pocket expenses incurred in connection with the
performance of consulting services hereunder.
(d) From and after the date hereof, the Executive shall cease
to be an employee of the Company and its affiliates and shall not be entitled to
participate in any employee benefit plan or other benefits or conditions of
employment available to the employees of the Company or its affiliates; provided
that (i) (A) until the earliest to occur of (x) the third anniversary of the
Consulting Commencement Date, (y) the Executive's eligibility for coverage under
another group health or other medical plan in connection with his employment
(including self employment) by another employer (excluding for theses purposes
until the eighteen (18) month anniversary of the Consulting Commencement Date,
however, any coverage that the Executive may currently be eligible to receive),
and (z) the Executive's or AII's willful breach of any of the provisions of
Sections 5, 7, or 8 of this Agreement, (the "Continuation Period"), to the
extent permitted by the Company's group health and medical plans, the Executive
shall be entitled to receive continued coverage under the Company's group health
and medical plans as if the Executive were an active employee of the Company,
and (B) from and after the expiration of the Continuation Period, the Executive
shall be entitled to COBRA continuation coverage under the Company's group
health and medical plans to the extent provided by law; and (ii) if the
arrangements described in clause (i) above are not permitted by the Company's
group health and medical plans, (A) from and after the date hereof the Executive
shall be entitled to COBRA continuation coverage to the extent permitted by law
and (B) until the expiration of the Continuation Period, the Company shall be
responsible
<PAGE> 6
6
for the excess of (I) the premium cost to the Executive of such COBRA
continuation coverage over (II) the premium cost from to time to active
executive employees of the Company with respect to similar coverage under the
Company's group health and medical plans and during the portion of the
Continuation Period, if any, after which COBRA continuation coverage is no
longer available to the Executive, the Company will reimburse the Executive for
the actual cost incurred by the Executive in obtaining alternative medical
coverage; provided that the reimbursement obligation of the Company shall not
exceed the Company's actual cost for providing coverage for an active executive
employee of the Company. In addition, the Company, AII and the Executive agree
to use their reasonable efforts to cause (i) an amendment to the Split Dollar
Life Insurance Agreement relating to that certain life insurance policy
currently maintained by the Company pursuant to Section 4(b) of the Prior
Agreement (the "Policy"), substantially in the form of Exhibit I hereto, to be
executed by the Company and the Trustee of the Vincent J. Naimoli 1992 Insurance
Trust and (ii) an amendment to the Assignment Agreement relating to the Policy,
substantially in the form attached as Exhibit A to Exhibit I hereto, to be
executed by the Trustee of the Vincent J. Naimoli 1992 Insurance Trust.
(e) The Executive shall have no authority to act as an agent
of the Company or its direct or indirect subsidiaries and affiliates, except on
authority specifically so delegated by the Chairman of the Board or the Board of
Directors of the Company, and he shall not represent himself to the contrary to
any person or entity, and the Executive shall not direct the work of any
employee of the Company or its direct or indirect subsidiaries and affiliates or
make any management decisions
<PAGE> 7
7
or undertake to commit the Company or its direct or indirect subsidiaries and
affiliates to any action in relation to third parties.
4. Compensation.
(a) In consideration for the termination of the Prior
Agreement, the consulting services to be provided by AII and the Executive
herein and the covenants of AII and the Executive contained herein, the Company
agrees to pay AII the amount of $41,666.00 per month with respect to the first
twelve (12) months of the Consulting Term on the 15th day of each such month,
and the amount of $104,166.67 per month with respect to the remaining
twenty-four (24) months of the Consulting Term on the 15th day of each such
month (collectively, the "Compensation"). AII shall be entitled to the payment
of the Compensation regardless of the extent to which the Executive's consulting
services are requested hereunder; provided that the Company's obligation to make
any further payments of the Compensation hereunder shall immediately cease upon
the termination of the Consulting Term due to the Executive's or AII's willful
breach of any of the provisions set forth in Sections 5, 7 or 8 of this
Agreement.
(b) The Company agrees to continue to use the services of Nice
& Easy Travel on substantially the same terms and conditions that it has been
utilizing its services to date in the ordinary course of business for the one
year period commencing on the date hereof. Thereafter, the Company agrees that
it will continue to use the services of Nice & Easy Travel during the remainder
of the Consulting Term so long as the price and level of services provided by
Nice & Easy Travel is at least as favorable as that of other travel agency
services available to the Company. The Company's obligation under this Section
4(b) shall terminate immediately upon
<PAGE> 8
8
the termination of the Consulting Term due to the Executive's or AII's willful
breach of the provisions of Sections 5, 7 or 8 of this Agreement.
(c) The Company agrees to continue to pay the monthly fees, up
to $2,100 per month, incurred by Executive with respect to the apartment located
in New York City that he is currently using until the first anniversary of the
date hereof. The Company's obligation under this Section 4(c) shall terminate
immediately upon the termination of the Consulting Term due to the Executive's
or AII's willful breach of the provisions of Sections 5, 7 or 8 of this
Agreement.
5. Release By AII and the Executive.
(a) As a material inducement for the Company to enter into
this Agreement and to pay the AII and the Executive the amounts and provide the
benefits contemplated hereunder, each of AII and the Executive, on behalf of
themselves, their agents, assignees, attorneys, successors, assigns (and in the
case of the Executive, his heirs and executors), agrees to and does hereby fully
and completely forever release the Company and its subsidiaries, affiliates,
predecessors and successors and all of their respective past and/or present
officers, directors, partners, members, managing members, managers, employees,
agents, representatives, administrators, attorneys, insurers and fiduciaries in
their individual and/or representative capacities (hereinafter collectively
referred to as "Employer Releasees"), from any and all causes of action, suits,
agreements, promises, damages, disputes, controversies, contentions,
differences, judgments, claims, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialities, covenants, contracts, variances,
trespasses, extents, executions and demands of any kind whatsoever, which AII or
the Executive or their heirs, executors, administrators, successors and assigns
(as applicable) ever had, now
<PAGE> 9
9
have or may have against the Employer Releasees or any of them, in law,
admiralty or equity, whether known or unknown to AII or the Executive, for,
upon, or by reason of, any matter, course or thing whatsoever from the beginning
of the world to the date of this Agreement, including, without limitation, in
connection with or in relationship to AII's or the Executive's employment or
other service relationship with the Company or its affiliates, the termination
any such employment or service relationship, and all matters referred to in the
Prior Agreement and any applicable employment, compensatory or equity
arrangement with the Company or its respective affiliates; provided that such
released claims shall not include any claims to enforce AII's or the Executive's
rights under, or with respect to, (A) this Agreement (including the provisions
of the Prior Agreement that have expressly been made to survive the termination
of the Prior Agreement pursuant to Section 1 hereof) and (B) any Vested Benefits
(such released claims are collectively referred to herein as the "Released
Executive Claims").
(b) Notwithstanding the generality of clause (a) above, the
Released Executive Claims include, without limitation, (i) any and all claims
under Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act of 1967, the Civil Rights Act of 1971, the Civil Rights Act of
1991, the Fair Labor Standards Act, the Employee Retirement Income Security Act
of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act
of 1993, and any and all other federal, state or local laws, statutes, rules and
regulations pertaining to employment or otherwise, and (ii) any claims for
wrongful discharge, breach of contract, fraud, misrepresentation or any
compensation claims, or any other claims under any statute, rule or regulation
or under the common law, including
<PAGE> 10
10
compensatory damages, punitive damages, attorney's fees, costs, expenses and all
claims for any other type of damage or relief.
6. Release By the Company.
(a) As a material inducement for AII and the Executive to
enter into this Agreement, the Company agrees to and does hereby fully and
completely forever release each of AII and the Executive, and their heirs,
executors, administrators, successors and assigns (as applicable) (hereinafter
collectively referred to as "AII Releasees") from any and all causes of action,
suits, agreements, promises, damages, disputes, controversies, contentions,
differences, judgments, claims, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialities, covenants, contracts, variances,
trespasses, extents, executions and demands of any kind whatsoever that the
Company ever had, now has or may have against the AII Releasees, in law,
admiralty or equity, whether known or unknown to the Company, for, upon, or by
reason of, any matter, course or thing whatsoever from the beginning of the
world to the date of this Agreement, including, without limitation, in
connection with or in relationship to AII's or the Executive's employment or
other service relationship with the Company or its affiliates, the termination
any such employment or service relationship, and all matters referred to in the
Prior Agreement and any applicable employment, compensatory or equity
arrangement with the Company or its affiliates; provided that such released
claims shall not include (i) any claims to enforce the Company's rights under
this Agreement (including the provisions of the Prior Agreement that have
expressly been made to survive the termination of the Prior Agreement pursuant
to Section 1 hereof) and (ii) any claims that involve fraud or willful
misconduct on the part of the Executive, or, in
<PAGE> 11
11
connection with his position as a director of the Company, otherwise involve
claims for liability that cannot be eliminated under Section 607.0831 of the
Florida Business Corporation Law, if applicable, or under Section 102(7) of the
General Corporation Law of Delaware, if applicable (such released claims are
collectively referred to herein as the "Released Employer Claims").
7. Certain Additional Agreements.
(a) Each of AII and the Executive on the one hand, and the
Company, on the other hand, represents, covenants and agrees to the other that
neither they, nor their agents, assignees, attorneys, heirs or executors (as
applicable) have commenced, continued or joined in, and will not hereafter
commence, continue, or join in, any lawsuit, arbitration or other action
asserting any Released Executive Claim or Released Employer Claim, respectively,
against the other (including the AII Releasees and the Employer Releasees) or in
any other manner attempt to assert any Released Executive Claim or Released
Employer Claims, respectively, against the other (including the AII Releasees
and the Employer Releasees).
(b) Each of the parties hereto understands and agrees that the
Company's payment of amounts hereunder and AII's and the Executive's signing of
this Agreement do not in any way indicate that the Company or AII or the
Executive has any viable claims against the other or that any party hereto
admits any liability to the other whatsoever.
8. Confidentiality and Other Covenants.
(a) Confidentiality. Each of AII and the Executive agrees that
they shall not at any time (whether during or after the Consulting Term)
disclose or use for their own benefit or purposes or the benefit or purposes of
any other person
<PAGE> 12
12
or entity (other than the Company and its direct or indirect subsidiaries and
affiliates) any trade secrets, information, data or other confidential
information relating to current or former customers, development programs,
costs, marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans, or other
business and affairs of the Company or its direct or indirect subsidiaries and
affiliates generally; provided that the foregoing shall not apply to information
which is generally known to the public other than as a result of AII's or the
Executive's breach of this covenant. AII and the Executive agree that they will
promptly return to the Company all memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way relating
to the business of the Company or its direct or indirect subsidiaries and
affiliates. Each of AII and the Executive further agrees that they will not
retain or use for their own account at any time any trade names, trademark or
other proprietary business designation used or owned in connection with the
business of the Company or its direct or indirect subsidiaries and affiliates.
(b) Non-Solicitation. Each of AII and the Executive agrees
that they will not at any time prior to the scheduled expiration of the
Consulting Term directly or indirectly solicit, or induce, any employee or
client of the Company or its direct or indirect subsidiaries or affiliates to
terminate his or her employment or client relationship with the Company or its
direct or indirect subsidiaries or affiliates. In addition, each of AII and the
Executive agrees that they will not directly or indirectly employ or offer
employment to any person who was employed by the Company or its direct or
indirect subsidiaries or affiliates unless such person shall have ceased to be
employed by the Company or its direct or indirect subsidiaries or affiliates for
a
<PAGE> 13
13
period of at least twelve (12) months; provided that the restriction set forth
in this sentence shall not apply (i) with respect to any such person who shall
have ceased to be employed by the Company or its direct or indirect subsidiaries
or affiliates as a result of a termination by their employer without cause, (ii)
after the one year anniversary of the Consulting Commencement Date, with respect
to any of the individuals previously disclosed to the Company's Board of
Directors who prior to January 1, 1993 were employed by any company with respect
to which the Executive served as Chief Executive Officer during the time that
the Executive served as the Chief Executive Officer of such company and (iii) to
the employee whose name has previously been given, in writing, to the Company.
As to the employee referred to in clause (iii), the Company agrees that, during
the Consulting Term, the arrangements currently in effect with respect to such
employee's duties, and the arrangements for AII to compensate the Company with
respect to certain services performed for AII by such employee, shall remain in
effect as long as such employee remains employed by the Company. Notwithstanding
anything to the contrary in this Section 8(b), prior to contacting an employee
of the Company with a view towards offering employment to such employee, the
Executive may request consent to do so, by a letter to the then Chief Executive
Officer of the Company, who will respond within a reasonable time to such
request for consent.
(c) Non-Disparagement.
(i) Each of AII and the Executive agrees that they
shall not at any time (whether during or after the Consulting Term) make
negative statements or representations, or otherwise communicate negatively,
directly or indirectly, in writing or orally, or otherwise, or take any action
which may, directly
<PAGE> 14
14
or indirectly, disparage or be damaging to the Company or its direct or indirect
subsidiaries or affiliates or any of their respective current or former
customers, successors, officers, directors, employees, business or reputation,
other than to the extent reasonably necessary in order (x) to assert a bona fide
claim that is not a Released Executive Claim or (y) give appropriate testimony
in a legal or regulatory proceeding.
(ii) The Company agrees that it shall not at any time
(whether during or after the Consulting Term) make negative statements or
representations, or otherwise communicate negatively, directly or indirectly, in
writing or orally, or otherwise, or take any action which may, directly or
indirectly, disparage or be damaging to AII or the Executive, other than to the
extent reasonably necessary in order (x) to assert a bona fide claim that is not
a Released Employer Claim or (y) give appropriate testimony in a legal or
regulatory proceeding.
(iii) Each of AII, the Executive and the Company
agree that a press release substantially in the form attached hereto as Exhibit
II announcing the Executive's resignation from the Company shall not violate
this Section 8(c).
(d) Remedies. Each of AII and the Executive acknowledges and
agrees that the remedies available to the Company at law for a breach or
threatened breach of any of the provisions of Section 8 would be inadequate and,
in recognition of this fact, each of AII and the Executive agrees that, in the
event of a breach or threatened breach, in addition to any remedies at law, the
Company shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy
<PAGE> 15
15
that may then be available. The Company acknowledges and agrees that the
remedies available to AII and the Executive at law for a breach or threatened
breach of any of the provisions of Section 8(c) would be inadequate and, in
recognition of this fact, the Company agrees that, in the event of a breach or
threatened breach, in addition to any remedies at law, AII and the Executive
shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy that may then be available.
9. Legal Fees. The Company will reimburse the Executive for the
reasonable legal fees incurred by the Executive in connection with the
negotiation and preparation of this Agreement up to a maximum of $20,000, and,
in addition, for reasonable legal fees incurred by the Executive in any
successful action to defend or enforce this Agreement or successful action to
collect payments (in the form of cash compensation or otherwise) from the
Company under this Agreement or the securities issuable under Section 6 of the
Prior Agreement.
10. Acknowledgment; Effectiveness.
(a) The Executive acknowledges that he has read this Agreement
carefully, has been advised to consult an attorney and any other advisors of his
choice, and fully understands that by signing below the Executive is giving up
any right that he may have to sue or bring any Released Executive Claims against
the Employer Releasees. The Executive acknowledges that he has not been forced
or pressured in any manner whatsoever to sign this Agreement and the Executive
agrees to all its terms voluntarily. To the extent that Executive has executed
this Agreement within less than twenty-one (21) days after its delivery to the
Executive, the Executive
<PAGE> 16
16
acknowledges that his decision to execute this Agreement prior to the expiration
of such twenty-one (21) day period was entirely voluntary.
(b) The Executive has not relied on any representations,
promises or agreements of any kind made to him in connection with his decision
to accept the terms of the Agreement except for those set forth in this
Agreement.
(c) The parties hereto agree, and the Executive understands,
that the Executive has seven (7) days from the date he has signed this Agreement
below to revoke this Agreement and the release contained herein, that this
Agreement will not become effective until the eighth (8th) day following the
date that the Executive has signed this Agreement, and that the Company will
have no obligation to make the payments set forth in this Agreement unless and
until this Agreement becomes effective.
11. Entire Agreement; Amendment. This Agreement, together with
provisions of the Prior Agreement referred to in Section 1 hereof, sets forth
the entire understanding of the parties with respect to the subject matter
hereof and cannot be amended or modified except by a writing signed by all such
parties.
12. Governing Law; Severability. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Florida, without
giving effect to the choice-of-law provisions thereof. If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of such portion shall not affect
the force, effect and validity of the remaining portion hereof. With respect to
any suit, action or proceeding relating to
<PAGE> 17
17
this Agreement or to the transactions contemplated hereby ("Proceedings"), each
party irrevocably (i) submits to the exclusive jurisdiction of the courts of the
State of Florida and (ii) waives any objection that it may have at any time to
the laying of venue of any Proceedings brought in any such court, waives any
claim that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings, that such
court does not have jurisdiction over such party.
13. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
14. Notices. Any and all notices or consents required or permitted
to be given under any of the provisions of this Agreement shall be in writing or
by written telecommunication and delivered either by hand delivery or by
registered or certified mail, return receipt requested, to the relevant
addresses set out below, in which event they shall be deemed to have been duly
given upon receipt.
If to AII or the Executive, at:
Anchor Industries International, Inc.
2502 North Rocky Point Drive
Tampa, Florida 33607
Attention: Vincent J. Naimoli
Telecopy: (813) 287-2521
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Neil Leff, Esq.
Telecopy: (212) 735-3628
If to the Company, at:
<PAGE> 18
18
Harvard Industries, Inc.
c/o Smith Management Company
885 Third Avenue - 34th Floor
New York, New York 10022
Attention: John W. Adams
Telecopy: (212) 751-9502
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Judith R. Thoyer, Esq.
Telecopy: (212) 373-2085
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
HARVARD INDUSTRIES, INC.
By: /s/ JOHN W. ADAMS
----------------------------
Name: John W. Adams
Title: On behalf of the
Board of Directors
ANCHOR INDUSTRIES INTERNATIONAL, INC.
By:
----------------------------
Name: Vincent J. Naimoli
Title: Chairman and Chief
Executive Officer
-------------------------------
Vincent J. Naimoli
<PAGE> 19
EXHIBIT I
AMENDMENT
THIS AMENDMENT ("Amendment") is made as of this 12th day of
February, 1997 by and between Harvard Industries, Inc., (the "Company") and
Raymond A. Naimoli, as Trustee (the "Trustee") of the Vincent J. Naimoli 1992
Insurance Trust (the "Trust"), to that certain Split Dollar Life Insurance
Agreement Collateral Assignment Method dated as of the 26th day of March, 1996
by and between the Company and the Trustee (the "Agreement").
WHEREAS, the Company, Anchor Industries International, Inc. ("AII"),
and Vincent J. Naimoli (the "Executive") have entered into a Termination,
Consulting and Release Agreement dated as of the date hereof pursuant to which,
among other things, the Amended and Restated Management and Option Agreement
among the Company, AII and the Executive (the "AII Agreement") shall be
terminated;
WHEREAS, the parties hereto wish to amend the Agreement to provide
that the Agreement shall not terminate upon the termination of the AII Agreement
and to provide that the Company's premium contribution obligations shall
hereinafter cease, as more fully set forth below.
NOW, THEREFORE, the parties named above agree as follows:
Capitalized terms used herein without definition have the meanings
specified in the Agreement.
<PAGE> 20
2
SECTION 1. Paragraph 8 of the Agreement is hereby modified by
deleting Subparagraph (b) such that the Agreement shall not terminate as a
result of the termination of the "AII Agreement".
SECTION 2. Paragraph 4 of the Agreement is hereby modified to (i)
provide that the Company's obligation to make annual premium payments shall
cease as of the date hereof, and to relieve the Company from any further
obligation to bonus the Executive an amount equal to the economic benefit of the
life Insurance protection enjoyed by the under the Policy, or otherwise and (ii)
provide that the Executive shall cause the Trustee to make annual premium
payments to the Trust in an amount equal to the annual premiums previously
payable by the Company pursuant to Paragraph 4 without giving effect to this
Amendment.
SECTION 3. The Collateral Assignment of Split Dollared Policy, dated
March 26, 1996, by the Trustees and the Corporation shall be amended as set
forth in the attached Exhibit A (the "Amended Collateral Assignment").
SECTION 4. This Amendment shall not be effective unless and until
the Company shall receive acknowledgment from John Hancock Mutual Life Insurance
Company that it has received the Amended Collateral Assignment. Upon receipt of
such acknowledgment, this Amendment shall be deemed to have become effective as
of the date first above written. Except as expressly modified hereby, the terms
and conditions of the Agreement shall remain in full force and effect. All
references in the Agreement shall, from and after the date hereof, be deemed to
refer to the Agreement as amended hereby.
<PAGE> 21
3
SECTION 5. This Amendment (and the Agreement as amended hereby)
shall bind all parties, their successors and assigns and any Policy beneficiary.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
HARVARD INDUSTRIES, INC.
21-0715310 By: /s/ RICHARD T. DAWSON
- ------------------------------ ---------------------------
Employer Identification Number
CATHERINE HALPRIN
- ------------------------------ -------------------------------
Witness Raymond A. Naimoli, as Trustee
Vincent J. Naimoli 1992 Insurance Trust
Agreed and Acknowledged
- ----------------------------
Vincent J. Naimoli
<PAGE> 22
EXHIBIT A
AMENDMENT
THIS AMENDMENT ("Assignment Amendment") is made as of this 12th day
of February, 1997 by Raymond A. Naimoli, as Trustee (the "Trustee") of the
Vincent J. Naimoli 1992 Insurance Trust (the "Trust"), to the Assignment (the
"Assignment"), dated March 26, 1996, by the Trustee to Harvard Industries, Inc.
(the "Company").
WHEREAS, the Company, Anchor Industries International, Inc. ("AII"),
and Vincent J. Naimoli (the "Executive") have entered into a Termination,
Consulting and Release Agreement dated as of the date hereof pursuant to which,
among other things, the Amended and Restated Management and Option Agreement
among the Company, AII and the Executive (the "AII Agreement") shall be
terminated;
WHEREAS, the parties hereto have amended that certain Split Dollar
Life Insurance Agreement Collateral Assignment Method dated as of the 26th day
of March, 1996 by and between the Cmopany and the Trustee (the "Agreement") to
provide that the Agreement shall not terminate upon the termination of the AII
Agreement and to provide that the Company's premium contribution obligations
shall hereinafter cease, as more fully set forth therein;
WHEREAS, it is a condition of the effectiveness of the Amendment to
the Agreement that this Assignment Amendment be executed and delivered to John
Hancock Mutual Insurance Company;
NOW, THEREFORE, the Trustee named agrees as follows:
A new provision shall be added to the Assignment to read as follows:
<PAGE> 23
2
13. Notwithstanding anything to the contrary in this Assignment, the
minimum amount covered under this Assignment pursuant to Sections 3 and 4 hereof
shall be $360,734.43 (the cash surrender value as of February 11, 1997) and the
maximum amount shall be $396,218 (the total premiums paid by the Company less
the PS58 cost as of February 11, 1997).
IN WITNESS WHEREOF, this Amendment to the Assignment is executed as
of February 12, 1997.
------------------------------
Raymond A. Naimoli, Trustee
<PAGE> 24
EXHIBIT II
APPROVED FOR PUBLICATION: DATE:
----------- ---------
RELEASE: Immediately
CONTACT: Richard T. Dawson Stephen J. Kasser
Vice President-General Counsel PUBLIC COMMUNICATIONS INC.
HARVARD INDUSTRIES 813//226-2772
813/288-5000 813/460-1422
JOHN W. ADAMS NAMED CHAIRMAN AND CEO
OF HARVARD INDUSTRIES, INC.
ROGER L. BURTRAW APPOINTED PRESIDENT
---------------
VINCENT J. NAIMOLI WILL CONTINUE AS CONSULTANT TO COMPANY
Tampa, Fla. -- (February 00, 1997) -- Harvard Industries, Inc.
(NASDAQ-HAVA), a major producer of automotive OEM parts and accessories, today
announced that its Board of Directors has accepted the resignation of Vincent J.
Naimoli as Chairman, President and CEO of the Company. The Board has elected
John W. Adams as Chairman and CEO and Roger L. Burtraw as President of the
Company. Naimoli will continue his involvement with the Company, as a
consultant, and will assist the Board in its search for a new CEO.
"During the past four years we have been able to position Harvard as a
growth company in an increasingly consolidated and international automotive
supplier marketplace," Naimoli said.
"More than anything, this is a lifestyle issue for me," Naimoli explained.
"I have been privileged to lead Harvard Industries through major changes and
have set the stage for the future. However, I believe it would be very
difficult to continue to
<PAGE> 25
2
manage Harvard while fulfilling my other business obligations and still have
time for my family and civic and charitable involvement."
Chairman and CEO John W. Adams was elected a Director of Harvard in
October 1994. He has been President of Smith Management Company, an investment
firm, since 1984.
Adams stated that he intends to remain as CEO until the Company finds a
new chief executive with appropriate industry experience to lead the Company for
the future. He noted that the Company's future challenge has to be to reverse
its poor financial results for fiscal 1996 and its continuing losses into the
first quarter of 1997, in both cases attributable primarily to the poor
performance of its Doehler-Jarvis subsidiary.
Roger L. Burtraw has been Executive Vice President of the Company since
August 1995 and Senior Vice President from January 1993 to August 1995. Prior to
that, he was President of the Company's subsidiary, Kingston-Warren, from April
1991 to January 1993.
Harvard Industries Inc., through its subsidiaries, designs, develops and
manufactures a broad range of components for original equipment manufacturers,
producing cars and light trucks in North America and abroad.
(35-6475.rel) # # #
<PAGE> 1
EXHIBIT 12.1
HARVARD INDUSTRIES INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
DIVIDENDS ON PREFERRED STOCK
(In thousands of dollars)
<TABLE>
<CAPTION>
Three months ended
December 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Pre-tax income (loss) from continuing operations............... $ (29,680) $ (824)
Add: Fixed charges............................................. 12,513 10,284
---------- ----------
Income as adjusted............................................. $ (17,167) $ 9,460
========== ==========
Fixed charges:
Interest on indebtedness................................... $ 12,188 $ 10,050
Portion of rents representative of the interest factor..... 325 234
---------- ----------
Fixed charges.............................................. 12,513 10,284
Dividends on preferred stock and accretion..................... 4,224 3,710
---------- ----------
Fixed charges and dividends on preferred stock................. $ 16,737 $ 13,994
========== ==========
Ratio of earnings over fixed charges and dividends
on preferred stock ........................................ n/a x n/a x
Deficiency of earnings over fixed charges and
dividends on preferred stock............................... $ (33,904) (4,534)
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,317
<SECURITIES> 0
<RECEIVABLES> 80,793
<ALLOWANCES> 0
<INVENTORY> 60,756
<CURRENT-ASSETS> 144,684
<PP&E> 433,103
<DEPRECIATION> 134,924
<TOTAL-ASSETS> 601,372
<CURRENT-LIABILITIES> 175,371
<BONDS> 358,724
118,719
0
<COMMON> 70
<OTHER-SE> (180,169)
<TOTAL-LIABILITY-AND-EQUITY> 601,372
<SALES> 187,261
<TOTAL-REVENUES> 187,261
<CGS> 190,462
<TOTAL-COSTS> 190,462
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,188
<INCOME-PRETAX> (29,680)
<INCOME-TAX> 488
<INCOME-CONTINUING> (30,168)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,168)
<EPS-PRIMARY> (4.90)
<EPS-DILUTED> 0
</TABLE>
