<PAGE> 1
UNITED STATES
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 period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission file Numbers: 333-34475
---------
VENTURE HOLDINGS TRUST
(Exact name of registrant as specified in its charter)
Michigan 3714 38-6530870
(Primary standard industrial classification code number)
VEMCO, INC.
Michigan 38-2737797
VENTURE INDUSTRIES CORPORATION
Michigan 38-2034680
VENTURE MOLD & ENGINEERING CORPORATION
Michigan 38-2556799
VENTURE LEASING COMPANY
Michigan 38-2777356
VEMCO LEASING, INC.
Michigan 38-2777324
VENTURE HOLDINGS CORPORATION
Michigan 38-2793543
VENTURE SERVICE COMPANY
Michigan 38-3024165
(State or other (Exact name of registrant as
jurisdiction of specified in its charter) (I.R.S. Employer
incorporation or Identification
organization) Number)
--------------------
33662 James J. Pompo
Fraser, Michigan 48026
(810) 294-1500
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
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 . No X .
---- ----
<PAGE> 2
The common stock of each of the registrants, except for Venture Holdings Trust,
is owned by Venture Holdings Trust.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE #
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -
As of September 30, 1997 and 1996 and
December 31, 1996 ................................................................... 1
Consolidated Income Statements -
Three months and Nine months ended September 30, 1997
and September 30, 1996 .............................................................. 2
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1997
and September 30, 1996. ............................................................. 3
Notes to Consolidated Financial Statements .......................................... 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations .......................................................................... 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .................................................... 9
Signatures ..................................................................................... 10
</TABLE>
<PAGE> 4
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VENTURE HOLDINGS TRUST
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997 AND 1996 AND DECEMBER 31, 1996
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30 December 31
------------------ -----------
ASSETS 1997 1996 1996
----- ----- ----
CURRENT ASSETS:
<S> <C> <C> <C>
Cash and cash equivalents $ 1,881 $ 11,515 $ 15,436
Accounts receivable 168,459 119,439 129,668
Inventories 49,829 56,261 51,100
Prepaid expenses 11,664 16,083 14,213
-------- -------- --------
Total current assets 231,833 203,298 210,417
Property, Plant and Equipment, Net 204,104 207,803 203,975
Goodwill 54,693 50,353 51,748
Other Assets 20,832 23,749 17,588
Deferred Tax Assets 13,439 0 14,339
-------- -------- --------
Total Assets $524,901 $485,203 $498,067
======== ======== ========
LIABILITIES AND TRUST PRINCIPAL
CURRENT LIABILITIES:
Accounts payable $ 63,607 $ 79,795 $ 84,821
Accrued payroll and taxes 8,231 4,368 7,352
Accrued interest 4,094 377 4,954
Accrued expenses 11,844 14,679 19,255
Current portion of long-term debt 3,721 10,199 10,632
-------- -------- --------
Total current liabilities 91,497 109,418 127,014
Other Liabilities 11,805 35,392 15,912
Deferred Tax Liabilities 13,273 0 13,018
Long Term Debt 344,176 286,011 289,364
Trust Principal 64,150 54,382 52,759
-------- -------- --------
Total Liabilities and Trust Principal $524,901 $485,203 $498,067
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-1-
<PAGE> 5
VENTURE HOLDINGS TRUST
CONSOLIDATED STATEMENTS OF INCOME AND TRUST PRINCIPAL
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
1997 1996 1997 1996
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $136,415 $99,001 $456,530 $224,795
COST OF PRODUCT SOLD 118,522 90,784 380,682 192,914
-------- ------- -------- --------
GROSS PROFIT 17,893 8,217 75,848 31,881
SELLING GENERAL AND
ADMINISTRATIVE EXPENSE 13,534 5,869 42,097 15,594
PAYMENTS TO BENEFICIARY IN
LIEU OF TRUST DISTRIBUTIONS 0 0 472 666
-------- ------- -------- --------
INCOME FROM OPERATIONS 4,359 2,348 33,279 15,621
INTEREST EXPENSE 6,344 4,668 20,551 12,077
-------- ------- -------- --------
(LOSS) INCOME BEFORE
EXTRAORDINARY ITEM (1,985) (2,320) 12,728 3,544
EXTRAORDINARY LOSS ON
RETIREMENT OF DEBT 0 2,738 0 2,738
-------- ------- -------- --------
(LOSS) INCOME BEFORE TAXES (1,985) (5,058) 12,728 806
TAX (BENEFIT) PROVISION (77) (78) 1,337 (78)
-------- ------- -------- --------
NET (LOSS) INCOME (1,908) (4,980) 11,391 884
TRUST PRINCIPAL,
BEGINNING OF PERIOD 66,058 59,362 52,759 53,498
-------- ------- -------- --------
TRUST PRINCIPAL,
END OF PERIOD $ 64,150 $54,382 $ 64,150 $ 54,382
======== ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE> 6
VENTURE HOLDINGS TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 11,391 $ 884
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 24,579 14,864
Change in accounts receivable (38,790) (25,571)
Change in inventories 1,271 (13,089)
Change in prepaid expenses 2,548 (5,749)
Change in other assets (4,667) (9,033)
Change in accounts payable (21,214) 28,923
Change in accrued expenses (7,392) 692
Change in other liabilities (4,107) 19,401
Change in deferred taxes 1,156 0
-------- --------
Net cash (used in) provided by operating activities (35,225) 11,322
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (22,040) (57,087)
Goodwill (4,190) (48,429)
-------- --------
Net cash (used in) investing activities (26,230) (105,516)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit agreement (35,000) 82,937
Proceeds from issuance of debt 205,000 75,386
Principal payments on debt (122,100) (72,715)
-------- --------
Net cash provided by financing activities 47,900 85,608
-------- --------
NET INCREASE (DECREASE) IN CASH (13,555) (8,586)
CASH AT BEGINNING OF PERIOD 15,436 20,101
-------- --------
CASH AT END OF PERIOD $ 1,881 $ 11,515
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $ 21,323 $ 8,080
======== ========
Cash paid during the period for taxes $ 124 $ 0
======== ========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 7
VENTURE HOLDINGS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. FINANCIAL STATEMENT PRESENTATION
Information as of and for the three and the nine months ended September
30, 1997 and 1996 is unaudited but includes all adjustments, consisting of
normal recurring adjustments, which in the opinion of management are
necessary for a fair presentation of financial position, results of
operations and cash flows. In accordance with the instructions for the
completion of the Quarterly Report on Form 10-Q, certain information and
footnote disclosures necessary to comply with generally accepted
accounting principles have been condensed or omitted.
The financial statements should be read in conjunction with the Company's
Registration Statement on Form S-4 under the Securities Act of 1933 which
contains audited financial statements as of December 31, 1996 and 1995 and
for the three years ended December 31, 1996. The results of operations
for any interim period are not necessarily indicative of the results of
operations for a full year.
The Trust owns all of the outstanding capital stock of Venture Industries
Corporation, Vemco, Inc., Venture Mold & Engineering Corporation, Venture
Industries Canada, Ltd., Venture Leasing Company, Vemco Leasing, Inc.,
Venture Holdings Corporation and Venture Service Company. As used herein,
"the Trust" refers to Venture Holdings Trust, while "the Company" refers
to the Trust and the Subsidiaries taken as a whole.
Separate financial statements for the Trust and each Subsidiary are not
included in this report because each entity (other than Venture Canada) is
jointly and severally liable for the Company's senior bank credit agreement
(the "Senior Credit Agreement") and 9 1/2% Senior Notes due 2005 (the
"Senior Notes"); and each entity (including Venture Canada) is
jointly and severally liable for the Company's 9 3/4% Senior Subordinated
Notes due 2004 (the "Senior Subordinated Notes") either as a co-issuer or
as a guarantor. In addition, the aggregate total assets, net earnings
and net equity of the subsidiaries of the Trust (including Venture Canada)
are substantially equivalent to the total assets, net earnings and
net equity of the Company on a consolidated basis. Venture Canada
represents less than 1% of total assets, net earnings, trust principal and
operating cash flow.
2. INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of the following: September 30 December 31
1997 1996 1996
------- ------- ----
<S> <C> <C> <C>
Raw material $24,929 $24,155 $23,406
Work-in process - manufactured parts 4,535 4,267 4,573
Work-in-process - molds 11,297 18,155 12,347
Finished goods 9,068 9,684 10,774
------- ------- -------
Total $49,829 $56,261 $51,100
======= ======= =======
</TABLE>
3. BUSINESS ACQUISITIONS
Effective August 26, 1996, the Trust acquired Bailey Corporation and its
subsidiaries. The acquisition was accounted for as a purchase with the
purchase price allocated over the estimated fair value of the assets and
liabilities assumed, resulting in goodwill of $54 million at September 30,
1997. The goodwill is being amortized over 30 years using the
straight-line method. Bailey's assets and liabilities are included in the
accompanying consolidated balance sheets at values representing the final
allocated purchase price.
Effective June 3, 1996, the Company acquired certain assets from AutoStyle
Plastics, Inc. for a purchase price of $6.7 million and entered into a
capital lease for all property, plant and equipment. The acquisition was
accounted for as a purchase with the purchase price allocated over the
estimated fair value of the assets and liabilities assumed, resulting in
goodwill of $2.6 million. The goodwill is being amortized over 30 years
using the straight-line method.
-4-
<PAGE> 8
4. DEBT
<TABLE>
<CAPTION>
Debt consists of the following: September 30 December 31
------------------ -----------
1997 1996 1996
------- ------- ----
<S> <C> <C> <C>
Revolving credit agreement with fluctuating $ 56,000 $ 82,717 $ 91,000
interest rates, currently from 7.4375% to 9.0%
Series B senior notes payable, Due 2005
with interest at 9.5% 205,000 0 0
Term loan A with interest at 8.375% 0 75,000 74,450
Term loan B with interest at 8.875% 0 45,000 44,550
Senior subordinated notes payable
with interest at 9.75% 78,940 78,940 78,940
Capital leases with interest at 8.25%
to 11.5% 3,772 7,087 6,194
Installment notes payable with
interest at 5.85% to 11.75% 4,185 7,466 4,862
-------- -------- --------
Total 347,897 296,210 299,996
Less current portion of debt 3,721 10,199 10,632
-------- -------- --------
Total $344,176 $286,011 $289,364
======== ======== ========
</TABLE>
In the third quarter of 1997, the Trust and each of its wholly-owned
subsidiaries, other than Venture Industries Canada, Ltd. (collectively,
the "Issuers") issued $205 million of Senior Notes. $116 million of the
net proceeds was used to repay Term loans "A and B" under the Senior
Credit Agreement. In addition, approximately $83 million was used to pay
down the amount outstanding under the revolving credit portion of the
Senior Credit Agreement. In connection with the Senior Notes certain
subsidiaries were merged and or liquidated into other subsidiaries. On
August 27, 1997, the Issuers filed a registration statement on Form S-4
registering the Issuers' Series B 9 1/2% Senior Notes due 2005 (the
"Registration Statement"), to be offered in exchange for the Senior Notes.
The Registration Statement was declared effective by the Securities and
Exchange Commission as of 1:00 p.m. on October 29, 1997.
Simultaneously with the issuance of the Senior Notes, the Senior Credit
Agreement was amended and now provides for borrowings of up to the lesser
of a borrowing base or $200 million under a revolving credit facility.
The Company had outstanding letters of credit totaling approximately $2.5
million as of September 30, 1997.
The Senior Credit Agreement, Senior Notes and Senior Subordinated Notes
contain certain restrictive covenants relating to cash flow, capital
expenditures, debt, trust principal, trust distributions, leases, and
liens on assets.
5. RELATED PARTY TRANSACTIONS
The Company has entered into various transactions with entities that the
sole beneficiary of the Trust owns or controls. These transactions
include leases of real estate, usage of machinery, equipment and
facilities, purchases and sales of inventory, performance of manufacturing
related services, administrative services, insurance activities, and
payment and receipt of sales commissions. Since the Company operates for
the benefit of the sole beneficiary, the terms of these transactions are
not the result of arms'-length bargaining; however, the Company believes
that such transactions are on terms no less favorable to the Company than
would be obtained if such transactions or arrangements were arms'-length
transactions with non-affiliated persons.
The result of these related party transactions is a net receivable, which
is included in accounts receivable as follows:
<TABLE>
<CAPTION>
September 30 December 31
---------------- -----------
1997 1996 1996
------- ------- -----------
<S> <C> <C> <C>
Net Accounts Receivable $23,679 $10,614 $14,976
Net Accounts Payable 2,015 802 2,269
------- ------- -------
Net Accounts Receivable $21,664 $ 9,812 $12,707
======= ======= =======
</TABLE>
-5-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion and analysis contains a number of "forward looking
statements" within the meaning of the Securities Exchange Act of 1934 and are
subject to a number of risks and uncertainties. Such factors include, among
others, the following: international, national and local general economic and
market conditions; demographic changes; the size and growth of the automobile
market or the plastic automobile component market; the ability of the Company
to sustain, manage or forecast its growth; the size, timing and mix of purchases
of the Company's products; new product development and introduction; existing
government regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; dependence upon original equipment
manufacturers; liability and other claims asserted against the Company;
competition; the loss of significant customers or suppliers; fluctuations and
difficulty in forecasting operating results; changes in business strategy or
development plans; business disruptions; product recalls; warranty costs; the
ability to attract and retain qualified personnel; the ability to protect
technology; retention of earnings; and control and the level of affiliated
transactions.
The following table sets forth, for the period indicated, the Company's
consolidated statements of income expressed as a percentage of sales. This
table and the subsequent discussion should be read in conjunction with the
consolidated financial statements and related notes.
<TABLE>
<CAPTION>
For The For The Nine Month
Three Month Period Ended Period Ended
September 30, September 30,
-------------------------- --------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of product sold 86.9 91.7 83.4 85.8
----- ----- ----- -----
Gross profit 13.1 8.3 16.6 14.2
Selling, general and administrative expense 9.9 5.9 9.2 6.9
Payments to beneficiary in lieu of trust
distributions 0.0 0.0 0.1 0.3
----- ----- ----- -----
Income from operations 3.2 2.4 7.3 7.0
Interest expense 4.7 4.7 4.5 5.4
----- ----- ----- -----
(Loss) Income before extraordinary item (1.5) (2.3) 2.8 1.6
Extraordinary loss on retirement of debt 0.0 2.8 0.0 1.2
----- ----- ----- -----
(Loss) Income before taxes (1.5) (5.1) 2.8 0.4
Tax (benefit) provision (0.1) (0.1) 0.3 0.0
----- ----- ----- -----
Net (loss) income (1.4) % (5.0) % 2.5 % 0.4 %
===== ===== ===== =====
</TABLE>
THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE AND
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996.
The period to period comparisons are substantially affected by the acquisitions
of Bailey and Autostyle ("Venture Grand Rapids"). The operations of the
companies acquired have been and continue to be rationalized among the various
manufacturing facilities to optimize plant capacity and utilization. In
connection with the sale of the Senior Notes, the subsidiaries of the Trust that
had conducted the business of Autostyle and Bailey were merged or otherwise
consolidated with the Issuers and such subsidiaries separate existence ceased.
Net sales for the three and nine months ended September 30, 1997 increased
$37.4 million and $231.7 million, compared to the three and nine months ended
September 30, 1996, respectively. This is a 37.8% increase to $136.4 million
for the three months ended September 30, 1997 and a 103.1% increase to $456.5
million for the nine months ended September 30, 1997, compared to $99.0 million
and $224.8 million, respectively, for the same periods of 1996. The increase
in sales in 1997 is primarily a result of the additional sales from the Bailey
and Venture Grand Rapids acquisitions, which total $34.1 million and $207.6
million for the three and nine months ended September 30,1997. The remainder of
the increase in sales of $3.3 million and $24.1 million relate to increased
volumes in the core comparable business offset by planned reductions in the
selling price mandated by customers to offset expected annual productivity
improvements.
Gross profit for the three months ended September 30, 1997 increased $9.7
million, or 117.8%, to $17.9 million compared to $8.2 for the three months ended
September 30, 1996. Gross profit for the nine months ended September 30, 1997
increased $44.0 million, or 137.9% to $75.9 million, compared to $31.9 million
for the nine months ended September 30, 1996. The increase in gross profit for
the quarter is due primarily to the increase in sales arising from the Bailey
and Venture Grand Rapids acquisitions. Gross profit as a percentage of sales
increased 4.8% and 2.4% for the three and nine months ended September 30, 1997,
respectively, as compared to the same periods in 1996. The increase in gross
profit as a percentage of sales is primarily attributable to the cost reduction
efforts at Bailey over the last year. However, gross profit as a percentage of
sales decreased 3.1% and 2.2% for the three and nine months ended September 30,
1997
- 6 -
<PAGE> 10
compared to the three and six months ended June 30, 1997, respectively. This
decrease in gross profit as a percentage of sales is attributable to
rationalization of plant capacities, model changeover cost, and selling price
reductions, which have become industry practice in recent years, as OEM
customers continue to expect annual productivity improvements on the part of
the supplier. As anticipated, tooling sales, as a percent to total sales,
decreased in the nine months ended September 30, 1997 compared to the six
months ended June 30, 1997, principally due to the timing of revenue
recognition under the completed contract method and an overall increase in
total sales. The Company expects to realize revenue under these contracts,
which generally account for higher margins than sales of components, in the
last three months of the year.
Selling, general and administrative expenses increased $7.6 million, or 130.6%
for the three months ended September 30, 1997 to $13.5 million, compared to
$5.9 million in the same period of 1996. During the nine months ended
September 30, 1997, selling, general and administrative expenses increased
$26.5 million, or 169.9% to $42.1 million, compared to $15.6 million for the
nine months ended September 30, 1996. As a percentage of net sales, selling,
general and administrative expenses increased to 9.9% for the third quarter and
increased to 9.2% for the nine months ended September 30, 1997, compared to
5.9% and 6.9%, respectively, in the corresponding periods of 1996. However,
selling, general and administrative expenses have been increasing at a
slower rate over the last nine months.
Payments to the beneficiary of the Trust, in the amounts generally equal to
taxes incurred by the beneficiary as a result of the activities of the Trust's
subsidiaries which have elected S corporation tax status, totaled $0.4 million
for the nine months ended September 30, 1997. No payments were made in the
third quarter of 1997 and 1996. These amounts were paid as compensation rather
than as distributions of Trust principal. As a result of state tax law
changes, the Company may pay such amounts to the beneficiary as distributions
of Trust principal in the future, rather than as compensation.
As a result of the foregoing, income from operations in the nine months ended
September 30, 1997 increased $17.7 million, or 113.0%, to $33.3 million,
compared to $15.6 million in the same period of 1996. Income from operations
increased $2.0 million, or 85.7%, to $4.4 million for the three months ended
September 30, 1997, compared to $2.3 million in the three months ended
September 30, 1996. As a percentage of net sales, income from operations
increased to 3.2% in the third quarter of 1997 from 2.4% in the third quarter
of 1996. For the nine months ended September 30, 1997 and 1996, income from
operations as a percentage of net sales increased to 7.3% from 7.0%,
respectively.
Interest expense increased $1.6 million and $8.5 million to $6.3 million and
$20.6 million, respectively, in the three and nine months ended September 30,
1997, compared to $4.7 million and $12.1 million in the same periods of 1996.
The increase is the result of financing of the acquisitions and increased
working capital needs.
As a result of the foregoing, net loss for the three months ended September
30, 1997 decreased $3.1 million, to $(1.9) million compared to $(5.0) million
for the three months ended September 30, 1996. Net income for the nine months
ended September 30, 1997 increased $10.5 million, to $11.4 million, compared to
$0.9 million in the nine months ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated working capital was $140.3 million at September 30,
1997 compared to $93.9 million at September 30, 1996, an increase of $46.4
million. The Company's working capital ratio increased to 2.53x at September
30, 1997 from 1.86x at September 30, 1996. This increase is due to an increase
in current assets, principally accounts receivable, in addition to an overall
net reduction in current liabilities. Net cash used in operating activities was
$35.2 million for the nine months ended September 30, 1997 compared to net cash
provided of $11.3 million for the same period in 1996. This decrease is due
primarily to the increase in accounts receivable and decrease in accounts
payable.
-7-
<PAGE> 11
Capital expenditures were $22.0 million for the nine months ended September 30,
1997 compared to $57.1 million for the same period in 1996. During the first
nine months of 1996, the majority of the capital expenditures were a result of
the acquisition of the assets of Bailey Corporation. The Company continues to
upgrade machinery and equipment and paint lines at all facilities to handle
expected increased volumes and general reconditioning of equipment.
Net cash provided by financing activities was $47.9 million for the nine months
ended September 30, 1997 compared to net cash provided of $85.6 million for the
same period in 1996. The decrease is principally the result of the financing
for the acquisitions made in 1996.
The Senior Credit Agreement permits the Company to borrow up to the lesser of a
borrowing base computed as a percentage of accounts receivable and inventory or
$200 million less the amount of any letters of credit issued against the Senior
Credit Agreement. At September 30, 1997, the Company had $141.5 million of
availability thereunder. The Senior Credit Agreement and each of the
indentures for the Senior Notes and the Senior Subordinated Notes contain
various covenants. As of September 30, 1997, the Company was in material
compliance with all such covenants.
The Company believes that its existing cash balances, operating cash flow,
borrowings under its bank credit facility and other short term arrangements
will be sufficient to fund working capital needs, capital expenditures required
for the operation of its business and debt service requirements through the end
of 1999.
NEW ACCOUNTING STANDARDS
In June, 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
effective for fiscal years beginning after December 15, 1997. This statement
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. This statement also requires that an entity display an amount
representing total comprehensive income for the period in that financial
statement. In addition, this statement requires that an entity classify items of
other comprehensive income by their nature in a financial statement. For
example, other comprehensive income may include foreign currency items, minimum
pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. Reclassification of financial
statements for earlier periods, provided for comparative purposes, is required.
This new accounting statement is not expected to have a material impact on the
Company's consolidated financial statements. The Company will adopt this
accounting standard on January 1, 1998, as required.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," effective for fiscal years beginning after
December 15, 1997. This statement establishes standards for reporting
information about operating segments in annual financial statements and requires
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas and major customers Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. This statement requires reporting segment profit or loss, certain
specific revenue and expense items and segment assets. It also requires
reconciliations of total segment revenues, total segment profit or loss, total
segment assets, and other amounts disclosed for segments to corresponding
amounts reported in the consolidated financial statements. Restatement of
comparative information for earlier periods presented is required in the
initial year of application. Interim information is not required until the
second year of application, at which time comparative information is required.
The Company has not determined the impact that the adoption of this new
accounting standard will have on its consolidated financial statement
disclosures. The Company will adopt this accounting standard on January 1,
1998, as required.
- 8 -
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
EXHIBIT NO. DESCRIPTION
3.1 ** Restated Articles of Incorporation of Vemco, Inc. filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form
S-4, effective October 29, 1997 and incorporated herein by
reference
3.2 ** Restated Articles of Incorporation of Venture Industries
Corporation filed as Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and incorporated
herein by reference
3.3 ** Restated Articles of Incorporation of Venture Mold & Engineering
Corporation filed as Exhibit 3.3 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and
incorporated herein by reference
3.4 ** Restated Articles of Incorporation of Venture Leasing Company
filed as Exhibit 3.4 to the Registrant's Registration Statement
on Form S-4, effective October 29, 1997 and incorporated herein
by reference
3.5 ** Restated Articles of Incorporation of Vemco Leasing, Inc. filed
as Exhibit 3.5 to the Registrant's Registration Statement on Form
S-4, effective October 29, 1997 and incorporated herein by
reference
3.6 ** Restated Articles of Incorporation of Venture Holdings
Corporation filed as Exhibit 3.6 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997
and incorporated herein by reference
3.7 ** Restated Articles of Incorporation of Venture Service Company
filed as Exhibit 3.7 to the Registrant's Registration Statement
on Form S-4, effective October 29, 1997 and incorporated herein
by reference
4.1 ** Indenture for 9 1/2% Senior Notes due 2005 (including form
of Notes) filed as Exhibit 4.1 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and
incorporated herein by reference
4.2 ** Registration Rights Agreements, dated as of July 9, 1997 among
Venture Holdings Trust, Vemco, Inc. Venture Industries
Corporation, Venture Holdings Corporation Inc., Venture Leasing
Company, Venture Mold & Engineering Corporation and Venture
Service Company as Issuers, and First Chicago Capital Markets,
Inc., as Initial Purchaser filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-4, effective October
29, 1997 and incorporated herein by reference
4.3 ** Form of Series B Notes filed as Exhibit 4.4 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997
and incorporated herein by reference
10.1 ** Amended and Restated Credit Agreement dated as of July 9, 1997 by
and among Venture Holdings Trust, certain Borrowing Subsidiaries
(as defined therein), the Lenders party thereto and NBD Bank, as
Agent filed as Exhibit 10.2 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and incorporated
herein by reference
10.2 ** Corporate Opportunity Agreement, dated February 16, 1994, by and
between Larry J Winget and Comerica Bank, as Indenture Trustee
filed as Exhibit 10.3 to the Registrant's Registration Statement
on Form S-4, effective October 29, 1997 and incorporated herein by
reference
10.2.1 ** Agreement dated July 9, 1997 by Larry J. Winget to be bound by the
terms of the Corporate Opportunity Agreement, filed as Exhibit
10.2 for the benefit of the holders of the Issuers' 9 1/2% Senior
Notes due 2005 filed as Exhibit 10.3.1 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997
and incorporated herein by reference
10.3 ** License Agreement as to Proprietary Technologies and Processes
dated July 2, 1997 between Larry J. Winget and Venture Industries
Corporation, Vemco, Inc., Venture Mold & Engineering Corporation,
Venture Industries Canada Ltd., Vemco Leasing, Inc. Venture
Holdings Corporation and Venture Holdings Trust filed as Exhibit
10.30 to the Registrant's Registration Statement on Form S-4,
effective October 29, 1997 and incorporated herein by reference
10.4 ** License Agreement as to Patents dated July 2, 1997 between Larry
J. Winget and Venture Industries Corporation, Vemco, Inc., Venture
Mold & Engineering Corporation, Venture Industries Canada Ltd.,
Vemco Leasing, Inc. Venture Holdings Corporation and Venture
Holdings Trust filed as Exhibit 10.31 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997 and
incorporated herein by reference
27.1 * Financial Data Schedule
________________
* Filed herewith
** Previously filed
(b) Reports on Form 8-K.
The Company was not required to file a current report on
Form 8-K during the quarter ended September 30, 1997 and
none were filed during that period.
- 9 -
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VENTURE HOLDINGS TRUST, VEMCO, INC.,
VENTURE INDUSTRIES CORPORATION, VENTURE
MOLD & ENGINEERING CORPORATION, VENTURE
LEASING COMPANY, VEMCO LEASING, INC.,
VENTURE HOLDINGS CORPORATION, VENTURE
SERVICE COMPANY AND VENTURE INDUSTRIES
CANADA, LTD.
Date: November 14, 1997 /s/ Michael G. Torakis
---------------------------------------
Michael G. Torakis
President and
Chief Financial Officer
Signing on behalf of each registrant
and as principal financial officer of
each registrant.
- 10 -
<PAGE> 14
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
3.1 ** Restated Articles of Incorporation of Vemco, Inc. filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form
S-4, effective October 29, 1997 and incorporated herein by
reference
3.2 ** Restated Articles of Incorporation of Venture Industries
Corporation filed as Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and incorporated
herein by reference
3.3 ** Restated Articles of Incorporation of Venture Mold & Engineering
Corporation filed as Exhibit 3.3 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and
incorporated herein by reference
3.4 ** Restated Articles of Incorporation of Venture Leasing Company
filed as Exhibit 3.4 to the Registrant's Registration Statement
on Form S-4, effective October 29, 1997 and incorporated herein
by reference
3.5 ** Restated Articles of Incorporation of Vemco Leasing, Inc. filed
as Exhibit 3.5 to the Registrant's Registration Statement on Form
S-4, effective October 29, 1997 and incorporated herein by
reference
3.6 ** Restated Articles of Incorporation of Venture Holdings
Corporation filed as Exhibit 3.6 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997
and incorporated herein by reference
3.7 ** Restated Articles of Incorporation of Venture Service Company
filed as Exhibit 3.7 to the Registrant's Registration Statement
on Form S-4, effective October 29, 1997 and incorporated herein
by reference
4.1 ** Indenture for 9 1/2% Senior Notes due 2005 (including form
of Notes) filed as Exhibit 4.1 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and
incorporated herein by reference
4.2 ** Registration Rights Agreements, dated as of July 9, 1997 among
Venture Holdings Trust, Vemco, Inc. Venture Industries
Corporation, Venture Holdings Corporation Inc., Venture Leasing
Company, Venture Mold & Engineering Corporation and Venture
Service Company as Issuers, and First Chicago Capital Markets,
Inc., as Initial Purchaser filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-4, effective October
29, 1997 and incorporated herein by reference
4.3 ** Form of Series B Notes filed as Exhibit 4.4 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997
and incorporated herein by reference
10.1 ** Amended and Restated Credit Agreement dated as of July 9, 1997 by
and among Venture Holdings Trust, certain Borrowing Subsidiaries
(as defined therein), the Lenders party thereto and NBD Bank, as
Agent filed as Exhibit 10.2 to the Registrant's Registration
Statement on Form S-4, effective October 29, 1997 and incorporated
herein by reference
10.2 ** Corporate Opportunity Agreement, dated February 16, 1994, by and
between Larry J Winget and Comerica Bank, as Indenture Trustee
filed as Exhibit 10.3 to the Registrant's Registration Statement
on Form S-4, effective October 29, 1997 and incorporated herein by
reference
10.2.1 ** Agreement dated July 9, 1997 by Larry J. Winget to be bound by the
terms of the Corporate Opportunity Agreement, filed as Exhibit
10.2 for the benefit of the holders of the Issuers' 9 1/2% Senior
Notes due 2005 filed as Exhibit 10.3.1 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997
and incorporated herein by reference
10.3 ** License Agreement as to Proprietary Technologies and Processes
dated July 2, 1997 between Larry J. Winget and Venture Industries
Corporation, Vemco, Inc., Venture Mold & Engineering Corporation,
Venture Industries Canada Ltd., Vemco Leasing, Inc. Venture
Holdings Corporation and Venture Holdings Trust filed as Exhibit
10.30 to the Registrant's Registration Statement on Form S-4,
effective October 29, 1997 and incorporated herein by reference
10.4 ** License Agreement as to Patents dated July 2, 1997 between Larry
J. Winget and Venture Industries Corporation, Vemco, Inc., Venture
Mold & Engineering Corporation, Venture Industries Canada Ltd.,
Vemco Leasing, Inc. Venture Holdings Corporation and Venture
Holdings Trust filed as Exhibit 10.31 to the Registrant's
Registration Statement on Form S-4, effective October 29, 1997 and
incorporated herein by reference
27.1 * Financial Data Schedule
________________
* Filed herewith
** Previously filed
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF VENTURE HOLDINGS TRUST FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000864167
<NAME> VENTURE HOLDINGS TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,881
<SECURITIES> 0
<RECEIVABLES> 171,193
<ALLOWANCES> (2,734)
<INVENTORY> 49,829
<CURRENT-ASSETS> 231,833
<PP&E> 316,426
<DEPRECIATION> (112,322)
<TOTAL-ASSETS> 524,901
<CURRENT-LIABILITIES> 91,497
<BONDS> 344,176
0
0
<COMMON> 0
<OTHER-SE> 64,150
<TOTAL-LIABILITY-AND-EQUITY> 524,901
<SALES> 456,530
<TOTAL-REVENUES> 456,530
<CGS> 380,682
<TOTAL-COSTS> 422,779
<OTHER-EXPENSES> 472
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,973<F1>
<INCOME-PRETAX> 12,728
<INCOME-TAX> 1,337
<INCOME-CONTINUING> 11,391
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,391
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> INCLUDES THE BALANCE OF THE "AMORTIZATION OF DEBT EXPENSE AND DEBT
DISCOUNT"
</FN>
</TABLE>
