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Previous: DBS INDUSTRIES INC, 10QSB, EX-27, 2000-11-14 |
Next: GLASSTECH INC, 10-Q, EX-10.1.3, 2000-11-14 |
UNITED STATES
FORM 10-Q
(Mark one)
| [X] | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
or
| [ ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
GLASSTECH, INC.
|
Delaware
|
33-32185-01 | 13-3440225 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission file number) |
(IRS Employer Identification No.) |
||
|
Ampoint Industrial Park, 995 Fourth Street, Perrysburg, Ohio (Address of principal executive offices) |
43551 (Zip Code) |
|||
Registrant’s telephone number, including area code: (419)-661-9500
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 [ ] |
The number of shares common stock, $.01 par value as of November 3, 2000 was 1,000.
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The condensed consolidated financial statements presented herein are unaudited but, in the opinion of management, reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Since the following condensed unaudited financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements. Accordingly they should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing in the Annual Report on Form 10-K for the fiscal year ended June 30, 2000, as filed with the Securities and Exchange Commission on September 27, 2000. The interim results of operations are not necessarily indicative of results for the entire year.
2
GLASSTECH, INC.
| September 30, 2000 | June 30, 2000 | ||||||||||
|
Assets
|
|||||||||||
|
Current assets:
|
|||||||||||
|
Cash and cash equivalents
|
$ | 1,312 | $ | 5,668 | |||||||
|
Accounts receivable:
|
|||||||||||
|
Contracts:
|
|||||||||||
|
Uncompleted, including unbilled amounts of $1,755 and $2,211
|
8,457 | 4,820 | |||||||||
|
Completed
|
1,434 | 1,626 | |||||||||
|
Trade, less allowance of $40 for doubtful accounts
|
1,754 | 1,631 | |||||||||
| 11,645 | 8,077 | ||||||||||
|
Inventory:
|
|||||||||||
|
Replacement and service parts
|
1,853 | 1,675 | |||||||||
|
Furnace and other
|
687 | 687 | |||||||||
| 2,540 | 2,362 | ||||||||||
|
Prepaid expenses
|
428 | 279 | |||||||||
|
Total current assets
|
15,925 | 16,386 | |||||||||
|
Property, plant and equipment, net
|
5,401 | 5,650 | |||||||||
|
Other assets:
|
|||||||||||
|
Patents, less accumulated amortization of $5,613 and $5,181
|
12,670 | 13,102 | |||||||||
|
Goodwill, less accumulated amortization of $8,289 and $7,660
|
42,136 | 42,765 | |||||||||
|
Deferred financing costs and other
|
3,049 | 3,208 | |||||||||
|
Total other assets
|
57,855 | 59,075 | |||||||||
| $ | 79,181 | $ | 81,111 | ||||||||
|
Liabilities and capital deficiency
|
|||||||||||
|
Current liabilities:
|
|||||||||||
|
Accounts payable
|
$ | 2,704 | $ | 2,786 | |||||||
|
Billings in excess of costs and estimated earnings on
uncompleted contracts
|
6,132 | 2,289 | |||||||||
|
Accrued liabilities:
|
|||||||||||
|
Interest
|
2,231 | 4,462 | |||||||||
|
Salaries and wages
|
951 | 1,232 | |||||||||
|
Contract costs
|
877 | 876 | |||||||||
|
Other
|
891 | 973 | |||||||||
| 4,950 | 7,543 | ||||||||||
|
Total current liabilities
|
13,786 | 12,618 | |||||||||
|
Long-term debt
|
69,598 | 69,572 | |||||||||
|
Nonpension postretirement obligation
|
465 | 456 | |||||||||
|
Capital deficiency:
|
|||||||||||
|
Common stock $.01 par value; 1,000 shares authorized, issued and
outstanding
|
— | — | |||||||||
|
Additional capital
|
15,750 | 15,750 | |||||||||
|
Shareholder’s basis reduction
|
(4,028 | ) | (4,028 | ) | |||||||
|
Deficit
|
(16,390 | ) | (13,257 | ) | |||||||
|
Total capital deficiency
|
(4,668 | ) | (1,535 | ) | |||||||
| $ | 79,181 | $ | 81,111 | ||||||||
See accompanying notes.
3
GLASSTECH, INC.
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2000 | 1999 | |||||||
|
Net revenue
|
$ | 10,415 | $ | 9,194 | ||||
|
Cost of goods sold
|
7,153 | 5,774 | ||||||
|
Gross profit
|
3,262 | 3,420 | ||||||
|
Selling, general and administrative expenses
|
2,056 | 1,807 | ||||||
|
Research and development expenses
|
887 | 953 | ||||||
|
Amortization expense
|
1,061 | 1,061 | ||||||
|
Operating loss
|
(742 | ) | (401 | ) | ||||
|
Interest expense
|
(2,417 | ) | (2,417 | ) | ||||
|
Other income — net
|
26 | 40 | ||||||
|
Net loss
|
$ | (3,133 | ) | $ | (2,778 | ) | ||
See accompanying notes.
4
GLASSTECH, INC.
| Three Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2000 | 1999 | |||||||||||
|
Operating activities:
|
||||||||||||
|
Net loss
|
$ | (3,133 | ) | $ | (2,778 | ) | ||||||
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
|
Depreciation and amortization
|
1,501 | 1,577 | ||||||||||
|
Nonpension postretirement benefit obligation expense in excess
of payments
|
9 | 6 | ||||||||||
|
Accretion of debt discount
|
27 | 27 | ||||||||||
|
Changes in assets and liabilities affecting operations:
|
||||||||||||
|
Accounts receivable
|
(3,568 | ) | (2,490 | ) | ||||||||
|
Inventory
|
(178 | ) | 564 | |||||||||
|
Prepaid expenses
|
(149 | ) | (127 | ) | ||||||||
|
Accounts payable
|
(82 | ) | (1 | ) | ||||||||
|
Billings in excess of costs and estimated earnings on
uncompleted contracts
|
3,843 | 1,051 | ||||||||||
|
Accrued liabilities
|
(2,593 | ) | (2,387 | ) | ||||||||
|
Net cash used in operating activities
|
(4,323 | ) | (4,558 | ) | ||||||||
|
Investing activities
|
||||||||||||
|
Additions to property, plant and equipment
|
(34 | ) | (17 | ) | ||||||||
|
Other
|
1 | — | ||||||||||
|
Net cash used in investing activities
|
(33 | ) | (17 | ) | ||||||||
|
Financing activities
|
||||||||||||
|
Other
|
— | 14 | ||||||||||
|
Net cash provided by financing activities
|
— | 14 | ||||||||||
|
Decrease in cash and cash equivalents
|
(4,356 | ) | (4,561 | ) | ||||||||
|
Cash and cash equivalents at beginning of period
|
5,668 | 8,661 | ||||||||||
|
Cash and cash equivalents at end of period
|
$ | 1,312 | $ | 4,100 | ||||||||
|
Supplemental disclosure of cash flow information:
|
||||||||||||
|
Cash paid (received) during the period for the following:
|
||||||||||||
|
Interest
|
$ | 4,463 | $ | 4,463 | ||||||||
|
Income taxes
|
$ | — | $ | (21 | ) | |||||||
See accompanying notes.
5
GLASSTECH, INC.
1. Background and Basis of Presentation
Effective July 2, 1997, Glasstech, Inc. (the “Company”) was acquired by Glasstech Holding Co. (“Holding”) (the “Transaction”). In connection with the Transaction, Holding, a holding company formed for the purpose of completing the Transaction, formed a wholly owned subsidiary, Glasstech Sub Co. (“Sub Co.”) which acquired all of the outstanding stock of the Company. Subsequently, Sub Co. was merged into the Company. Holding has no significant activities other than its investment in the Company. The acquisition was accounted for under the purchase method of accounting for financial reporting purposes and the purchase price was allocated to the underlying net assets acquired. The Transaction resulted in the Company having substantial goodwill and increased debt.
In connection with accounting for the Transaction, the Company applied the provisions of Emerging Issues Task Force Issue 88-16 (EITF 88-16), whereby the carryover equity interests of certain shareholders from the “Predecessor Company” (the Company prior to the transaction) to the “Successor Company” (the Company subsequent to the Transaction) were recorded at their predecessor basis. As a result, shareholder’s equity of the Successor Company was reduced by $4,028 with a corresponding reduction to the value of goodwill acquired.
The condensed consolidated balance sheet as of June 30, 2000 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
2. Notes Payable and Long-Term Debt
In connection with the Transaction, the Company issued $70,000 of 12 3/4% Senior Notes due 2004 (the “Old Notes”) in a private offering exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The offering of the Old Notes was also structured to permit resales under Rule 144A of the 1933 Act. In connection with the issuance of the Old Notes, the Company received from Holding warrants to purchase 877 shares of common stock of Holding valued at $750. These warrants were issued to the initial purchasers of the Old Notes. On December 2, 1997, the Company consummated an exchange offer (the “Exchange Offer”) of its $70,000 Series B 12 3/4% Senior Notes Due 2004 (the “New Notes”), which were registered under the 1933 Act, for the Old Notes. The terms of the New Notes are substantially identical to the terms of the Old Notes and as used herein, will be referred to as the “Senior Notes.” Interest on the Senior Notes is payable semi-annually on each January 1 and July. The terms of the Senior Notes do not require any scheduled principal payments prior to maturity.
The Company also entered into a revolving credit facility (the “Credit Facility”) in connection with the Transaction. The Credit Facility is available to fund working capital requirements as needed and secure standby letters of credit. The Credit Facility provides for borrowings up to $13,000 (including standby letters of credit), subject to a borrowing base of certain qualifying assets up to a maximum of $7,000. Any borrowings or standby letters of credit above $7,000 must be cash collateralized. The Credit Facility provides for interest on outstanding borrowings at the LIBOR rate plus 2.5%, payable semi-annually, and is secured by substantially all of the assets of the Company. At September 30, 2000, the Company had no outstanding borrowings, $1,162 in standby letters of credit secured and the borrowing base is $7,000.
The Senior Notes and Credit Facility, as amended, contain numerous financial and other covenants which include the maintenance of certain levels of earnings as defined, restrictions on the payment of dividends and additional indebtedness as well as other types of business activities and investments. The Company believes that it is in material compliance with all such covenants.
6
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Forward-Looking Statements
Certain statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section and the attached financial statements, in the Company’s press releases and in oral statements made by or with the approval of an authorized executive officer of the Company constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. These may include statements projecting, forecasting or estimating the Company’s performance and industry trends. The achievement of projections, forecasts or estimates is subject to certain risks and uncertainties. Actual results and events may differ materially from those that were projected, forecasted or estimated. Applicable risks and uncertainties include general economic and industry conditions that affect all international businesses, as well as matters that are specific to the Company and the markets it serves.
General risks that may impact the achievement of such forecasts include: compliance with new laws and regulations; significant raw material price fluctuations; currency exchange rate fluctuations; business cycles; and political uncertainties. Specific risks to the Company include the risk of recession in the international markets and industries in which its products are sold; the concentration of a significant portion of the Company’s revenues from customers whose equipment needs are located in the Asia-Pacific region (Australia, China, Indonesia, Japan, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan, and Thailand); the concentration of a substantial percentage of the Company’s sales with a few major customers, several of whom have significant manufacturing presence in the Asia-Pacific region; the timing of new system orders and the timing of payments due on such orders; changes in installation schedules, which could lead to deferral of progress payments or unanticipated production costs; new or emerging technologies from current competitors, customers’ in-house engineering departments and others; competition from current competitors, customers’ in-house engineering departments and others; and the emergence of a substitute for glass. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company’s plans and objectives will be achieved.
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000, as filed with the Securities and Exchange Commission on September 27, 2000. The interim results of operations, historical results and percentage relationships set forth in this MD&A section and the financial statements, including trends that might appear, should not be taken as indicative of future operations.
General Overview
The Company designs and assembles glass bending and tempering (i.e., strengthening) systems which are used by glass manufacturers and processors in the conversion of flat glass into safety glass. Systems are sold worldwide, primarily to automotive glass manufacturers and processors and, to a lesser extent, to architectural glass manufacturers and processors. Revenues generated by the sale of new systems are referred to below as “Original Equipment.”
The Company has an installed base of approximately 400 systems in 45 countries on six continents. As a result of its installed base and the relatively long useful life of a system, the Company also engages in sales of aftermarket products and services (retrofit of systems with upgrades, tooling used to shape glass parts, replacement parts and technical services). Revenues generated by these types of products are referred to below as “Aftermarket.”
In this MD&A section all dollars amounts are in thousands, unless otherwise indicated.
7
Revenues
For financial reporting purposes, the Company includes in income the ratable portion of profits on uncompleted contracts determined in accordance with the stage of completion measured by the percentage of costs incurred to estimated total costs of each contract (generally, Original Equipment, system retrofits and tooling). Unbilled amounts included in uncompleted contract receivables represent revenues recognized in excess of amounts billed. Billings in excess of costs and estimated earnings on uncompleted contracts represent amounts billed in excess of revenues recognized. Revenue from sales other than contracts (spare parts and engineering services) is recognized when the products are shipped.
Selling Expense
The Company maintains an in-house sales staff and uses the services of commissioned agents around the world for the sale of Original Equipment and Aftermarket products and services. In addition, the Company maintains a sales and engineering support office in the United Kingdom. The substantial majority of the Company’s Original Equipment is sold directly to the largest glass manufacturers and processors in the world or their affiliates.
Research and Development
The Company believes it is the technological leader in the design and assembly of glass bending systems. The Company works with customers to identify product needs and market requirements. Periodically, the Company enters into joint development agreements with customers. From time to time, the Company allocates a portion of its research and development resources to complete the transition from new product development to new product introduction. When the Company does this, these expenses are charged directly to the contracts relating to the introduction of new products. The Company considers research and development expenses and new product introductions a very integral part of its future success.
Management Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
8
Results of Operations
The following table presents the amounts and the percentage of total net revenue for certain revenue and expense items for the periods indicated:
| Three months Ended | ||||||||||||||||||
| September 30, | ||||||||||||||||||
| 2000 | 1999 | |||||||||||||||||
|
Net revenue (a)
|
||||||||||||||||||
|
Original Equipment
|
$ | 5,611 | 53.9 | % | $ | 5,360 | 58.3 | % | ||||||||||
|
Aftermarket
|
4,804 | 46.1 | 3,834 | 41.7 | ||||||||||||||
|
Total net revenue
|
10,415 | 100.0 | 9,194 | 100.0 | ||||||||||||||
|
Cost of goods sold (a)
|
7,153 | 68.7 | 5,774 | 62.8 | ||||||||||||||
|
Gross profit
|
3,262 | 31.3 | 3,420 | 37.2 | ||||||||||||||
|
Selling, general and administrative
|
2,056 | 19.7 | 1,807 | 19.7 | ||||||||||||||
|
Research and development expense
|
887 | 8.5 | 953 | 10.4 | ||||||||||||||
|
Amortization expense (b)
|
1,061 | 10.2 | 1,061 | 11.5 | ||||||||||||||
|
Operating loss
|
$ | (742 | ) | (7.1 | )% | $ | (401 | ) | (4.4 | )% | ||||||||
|
Amortization expense (b)
|
1,061 | 10.2 | 1,061 | 11.5 | ||||||||||||||
|
Depreciation expense
|
282 | 2.7 | 356 | 3.9 | ||||||||||||||
|
EBITDA
|
$ | 601 | 5.8 | % | $ | 1,016 | 11.0 | % | ||||||||||
| (a) | Contract revenues and cost of goods sold are recognized on a percentage completion basis measured by the percentage of costs incurred to the estimated total costs of each contract. |
| (b) | Amortization expense excludes the amortization of deferred financing costs, which is included with interest expense. |
Three months Ended September 30, 2000 compared with the Three months Ended September 30, 1999
Net revenue for the three months ended September 30, 2000 increased $1,221, or 13.3%, to $10,415 from $9,194 for the three months ended September 30, 1999. Original Equipment revenue increased $251, or 4.7%, to $5,611 for the three months ended September 30, 2000 compared to $5,360 for the three months ended September 30, 1999. Aftermarket revenue increased $970, or 25.3% to $4,804 for the three months ended September 30, 2000 from $3,834 for the three months ended September 30, 1999. The increase in aftermarket revenue was primarily the result of an increase in retrofit and tooling revenue partially offset by a decline in spare parts and engineering service revenue. Retrofit and tooling revenues fluctuate based on customer demands and are influenced by a variety of factors, including economic conditions and the customers’ retrofit schedules and the timing of automotive manufacturers’ design changes, which may impact the release of tooling orders.
A significant portion of the Company’s net revenue is generated from customers outside the United States. For the three months ended September 30, 2000, Original Equipment revenue from foreign customers increased to $4,024 (71.7% of total Original Equipment revenue) as compared to $3,097 (57.8% of total Original Equipment revenue) for the three months ended September 30, 1999. The percentage of aftermarket revenue from foreign customers increased to 57.9% of total aftermarket revenue for the three months ended September 30, 2000 compared to 50.7% for the three months ended September 30, 1999. For the three months ended September 30, 2000 and 1999 approximately 21.7% and 15.1%, respectively, of the Company’s net revenue was derived from sales of products to customers located in the Asia-Pacific region. The portion of the Company’s net revenue generated from customers outside the United States can fluctuate from time to time depending on location of contract signings.
Gross profit decreased $158, or 4.6%, to $3,262 for the three months ended September 30, 2000 as compared to $3,420 for the three months ended September 30, 1999. The gross margin decreased to 31.3% from 37.2% due primarily to the current mix of contracts.
Selling, general and administrative expenses increased $249, or 13.8%, to $2,056 for the three months ended September 30, 2000 as compared to $1,807 for the three months ended September 30, 1999. This increase was primarily the result of an increase in marketing expense related to a bi-annual trade show.
9
Research and development expenses decreased $66 or 6.9% to $887 for the three months ended September 30, 2000 as compared to $953 for the three months ended September 30, 1999 as a result of decreases in utility usage and depreciation.
Operating loss increased $341 to $742 for the three months ended September 30, 2000 as compared to $401 for the three months ended September 30, 1999. Operating loss, as a percentage of revenue was 7.1% for the three months ended September 30, 2000 and 4.4% for the three months ended September 30, 2000. The increase in operating loss was the result of the decline in gross profit as well as the increase in selling, general and administrative expenses.
No income tax expense or benefit has been provided in the three months ended September 30, 2000 and 1999 due to the recorded loss and the uncertainty related to the future realization of such amounts.
Net loss was $3,133 for the three months ended September 30, 2000 compared to a net loss of $2,778 for the three months ended September 30, 1999. The net loss was the result of the increase in operating loss.
EBITDA, which is defined as operating profit plus depreciation and amortization, was $601 for the three months ended September 30, 2000 compared to $1,016 for the three months ended September 30, 1999. The decrease in EBITDA was the result of the increase in operating loss.
Liquidity and Capital Resources
The Company’s liquidity and capital resources were significantly impacted by the Transaction. The Company’s primary sources of liquidity are funds provided by operations and amounts available under the Credit Facility. The Senior Notes do not require any principal payments prior to maturity. The Credit Facility is available to fund working capital requirements as needed and secure standby letters of credit. The Credit Facility provides for borrowings up to $13,000 (including standby letters of credit), subject to a borrowing base of certain qualifying assets up to a maximum of $7,000. Any borrowings or standby letters of credit above $7,000 must be cash collateralized. The Credit Facility is secured by substantially all of the assets of the Company and at September 30, 2000, the Company had no outstanding borrowings, $1,162 in secured standby letters of credit and the borrowing base was $7,000. The Company believes it is in material compliance with all covenants in the Senior Notes and Credit Facility as amended.
Net cash provided by operating activities can vary significantly from quarter to quarter due to the number of new system signings and the amount and timing of new system payments. In most instances, progress payments on new system orders are invoiced or received in advance of revenue recognition. When progress payments are invoiced or received in advance of such revenue recognition, the Company increases current liabilities represented by its billings in excess of costs and estimated earnings on uncompleted contracts. When the revenue is earned, the Company recognizes the revenue and reduces the billings in excess of costs and estimated earnings on uncompleted contract balances. Net cash used in operating activities for the three months ended September 30, 2000 was $4,323 whereas for the three months ended September 30, 1999, net cash used in operating activities was $4,558. This decrease in net cash used in operating activities for the three months ended September 30, 2000 was due in part to the timing of payments for new system signings.
The Company has a backlog (on a percentage of completion basis) at September 30, 2000 of $29,358 as compared to $17,394 at June 30, 2000. The Company expects to complete a substantial majority of this backlog within the next 12 months. Signings for the three months ended September 30, 2000 were $22,595 compared to $20,017 for the three months ended September 30, 1999. The mix of signings by type and breakdown by and geographic region for the first quarter of fiscal 2001 compared to the first quarter of fiscal 2000 is as follows:
| • | Automotive signings, as a percentage of total signings, increased to 92% for the first quarter of 2001 compared to 79% for the first quarter of 2000. Architectural signings, as a percentage of total signings, decreased to 8% for the first quarter of 2001 compared to 21% for the first quarter of 2000. |
10
| • | The mix of signings by geographic region, as a percentage of total signings, changed significantly between the periods. Signings in the Americas (North, Central and South America) decreased to 11% for the first quarter of fiscal 2001 compared to 50% for the first quarter of fiscal 2000. Signings in Europe decreased to 9% for the first quarter of fiscal 2001 compared to 48% for the first quarter of fiscal 2000. Signings in the Asia-Pacific region increased to 80% for the first quarter of fiscal 2001 compared to 2% for the first quarter of fiscal 2000. |
Capital expenditures, including demonstration furnaces classified as fixed assets, were $34 for the three months ended September 30, 2000 and $17 for the three months ended September 30, 1999. Future capital expenditures, excluding demonstration furnaces, used to replace or improve operating equipment and facilities are estimated to be less than $1,300 for the year. In addition, the Company intends to make periodic replacements and improvements on demonstration furnaces, which are used for customer demonstrations and research and development purposes. Demonstration furnaces, which outlive their usefulness for customer demonstrations or research and development purposes, or both, may be refurbished and sold or put to other applicable uses.
As of June 30, 2000, the Company had net operating loss (“NOL”) carryforwards for regular and alternative minimum tax purposes of approximately $46,559 and $43,372, respectively, which expire in the years 2009 through 2015.
Although the Company’s ability to generate cash has been affected by the increased interest costs resulting from the Transaction and the lower level of contract signings in fiscal 2000 and 1999, management believes that internally generated funds, together with amounts available under the Credit Facility, will be sufficient to satisfy the Company’s operating cash and capital expenditure requirements, make required payments under the Credit Facility and make scheduled interest payments on the Senior Notes. However, the ability of the Company to satisfy its obligations will ultimately be dependent upon the Company’s future operating and financial performance, including increasing contract signings, and upon its ability to renew or refinance borrowings or to raise additional equity capital as necessary. The Company’s business is subject to rapid fluctuations due to changes in the world markets for the end products produced by its equipment (largely in the cyclical markets of automobiles and construction), currency fluctuations, the local economies of those countries where users and potential users of the Company’s equipment are located, geopolitical events and other macroeconomic forces largely beyond the ability of the Company to predict or control. Except as discussed below, management is not currently aware of any trends, demands, commitments or uncertainties which will or which are reasonably likely to result in a material change in the Company’s liquidity.
During fiscal 1999, 2000, and for the three months ended September 30, 2000 approximately 28.1%, 11.8%, and 21.7% of the Company’s net revenue was derived from sales of products to customers located in the Asia-Pacific region (Australia, China, Indonesia, Japan, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan, and Thailand).
The Company has experienced a recent increase in quoting activity and contract signings for the Asia-Pacific region. However, it is not possible to predict with certainty the timing of contract signings or geographic areas into which equipment will be delivered in fiscal 2001. The Company will continue to monitor the situation in the Asia-Pacific region. Notwithstanding the current economic conditions in the Asia-Pacific region, the Company believes that given world demographics and long term economic trends, the Asia-Pacific region will continue to represent a significant market for the Company’s products and it intends to continue its presence in this area.
ITEM 3. MARKET RISK EXPOSURES
Based on the Company’s current operations and business practices, the Company does not believe that it has any significant exposure to interest rate, foreign currency, commodity price, or equity price market risks.
11
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims that arise from time to time in the ordinary course of its business. Management believes that the amount of any ultimate liability with respect to these actions will not have a material adverse effect on the financial condition or results of operations of the Company.
ITEM 5. OTHER INFORMATION
The Company may, from time to time, repurchase its Senior Notes in the open market, in privately negotiated transactions or by other means, depending on market conditions. To date, the Company has not purchased any Senior Notes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
|
2.1(a)
|
Agreement and Plan of Merger | |
|
2.2(a)
|
Amendment to Agreement and Plan of Merger | |
|
3.1(a)
|
Restated Certificate of Incorporation of the Registrant | |
|
3.2(a)
|
By-laws of the Registrant | |
|
4.1(a)
|
Indenture (including form of Note) | |
|
4.2(a)
|
First Supplemental Indenture | |
|
10.1(a)
|
Financing and Security Agreement between Bank of America, N.A. (f/k/a NationsBank, N.A.) and the Registrant | |
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10.1.1(b)
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Second Amendment to Financing and Security Agreement between Bank of America, N.A. (f/k/a NationsBank N.A.) and the Registrant | |
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10.1.2(c)
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Third Amendment to Financing and Security Agreement between Bank of America, N.A. (f/k/a NationsBank N.A.) and the Registrant | |
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10.1.3(d)
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Fourth Amendment to Financing and Security Agreement between Bank of America, N.A. (f/k/a NationsBank N.A.) and the Registrant | |
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10.2(a)
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Plant and Office Lease | |
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10.3(a)
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Warehouse Lease | |
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10.4(a)
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Advisory Agreement between the Registrant and Key Equity Capital Corporation | |
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10.5(a)
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Form of Exchange Agent Agreement between United States Trust Company of New York and the Registrant | |
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10.6(a)
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Employment Agreement among Glasstech Holding Co., the Registrant and John S. Baxter | |
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10.7(a)
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Employment Agreement among Glasstech Holding Co., the Registrant and Mark D. Christman | |
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10.8(a)
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Employment Agreement among Glasstech Holding Co., the Registrant and Larry E. Elliott | |
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10.9(a)
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Employment Agreement among Glasstech Holding Co., the Registrant and Ronald A. McMaster | |
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10.10(a)
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Employment Agreement among Glasstech Holding Co., the Registrant and James P. Schnabel, Jr. | |
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10.11(a)
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Employment Agreement among Glasstech Holding Co., the Registrant and Diane S. Tymiak | |
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10.12(a)
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Employment Agreement among Glasstech Holding Co., the Registrant and Kenneth H. Wetmore | |
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10.13(a)
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Securities Purchase Agreement between the Registrant, as successor to Glasstech Sub Co., and CIBC Wood Gundy Securities Corp. | |
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10.14(a)
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Registration Rights Agreement between the Registrant, as successor to Glasstech Sub Co., and CIBC Wood Gundy Securities Corp. | |
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27.1(d)
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Financial Data Schedule |
| (a) | Incorporated by reference from the Company’s Registration Statement on Form S-4 (Registration No. 333-34391) (the “Form S-4”) filed on August 26, 1997. Each of the above exhibits has the same exhibit number in the Form S-4. |
| (b) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on February 11, 1999. |
| (c) | Incorporated by reference from the Company’s Annual Report on Form 10-K filed on September 23, 1999. |
| (d) | Filed herewith. |
(b) No reports on Form 8-K were filed during the fiscal quarter covered by this report.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GLASSTECH, INC., a Delaware Corporation | ||
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Date: November 13, 2000
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/s/ Mark D. Christman | |
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Mark D. Christman President and Chief Executive Officer |
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Date: November 13, 2000
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/s/ Diane S. Tymiak | |
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Diane S. Tymiak Vice President, Treasurer and Chief Financial Officer (Principal Accounting Officer) |
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