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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 quarterly period ended June 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ______ to ______
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Commission file number 0-22580
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JPE, Inc.
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of
incorporation or organization)
38-2958730
(I.R.S. Employer Identification No.)
900 Victors Way, Suite 140, Ann Arbor, Michigan, 48108
(Address of principal executive offices) (Zip Code)
(313) 662-2323
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed, since last report)
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 / /
As of June 30, 1997, there were 4,602,180 shares of the registrant's common
stock outstanding.
This Quarterly Report on Form 10-Q contains 16 pages, of which this is page 1.
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<PAGE>
JPE, INC.
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets .................. 3
- At June 30, 1997 and 1996 (unaudited)
and December 31, 1996
Consolidated Statements of Income ...................... 4
- For the Three and Six Months Ended
June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows .................. 5
- For the Six Months Ended June 30, 1997
and 1996 (unaudited)
Notes to Unaudited Consolidated Condensed
Financial Statements ................................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ........ 9
Part II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders ..................................... 15
Item 6. Exhibits and Reports on Form 8-K ....................... 15
Signature ....................................................... 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JPE, INC.
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in Thousands, Except Share Data)
<CAPTION>
At June 30, At Dec. 31,
1997 1996 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............ $ 200 $ 385 $ 1,316
Accounts receivable, net ............. 40,630 30,439 26,829
Inventory ............................ 41,165 32,655 37,963
Other current assets ................. 11,152 2,100 8,688
-------- -------- --------
Total current assets ............... 93,147 65,579 74,796
Property, plant and equipment, net ..... 72,980 52,368 69,281
Goodwill, net .......................... 31,985 31,997 27,068
Other assets ........................... 2,774 1,846 3,580
-------- -------- --------
Total assets ....................... $200,886 $151,790 $174,725
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .... $ 1,212 $ 107 $ 323
Short-term debt ...................... 8,678 -- 8,120
Accounts payable ..................... 25,795 16,105 17,643
Accrued liabilities .................. 9,288 5,222 6,190
Income taxes payable ................. -- 716 382
-------- -------- --------
Total current liabilities .......... 44,973 22,150 32,658
Accrued liabilities .................... 1,643 1,223 1,547
Deferred income taxes .................. 3,453 3,238 3,184
Long-term debt, non-current ............ 116,052 85,018 101,558
-------- -------- --------
Total liabilities .................. 166,121 111,629 138,947
-------- -------- --------
Shareholders' equity:
Preferred stock, 3,000,000
authorized, no shares issued
and outstanding ..................... -- -- --
Common stock, 15,000,000
authorized, 4,602,180 and
4,582,480 shares issued and
outstanding at June 30, 1997
and December 31, 1996,
respectively; 4,582,480 shares
issued and outstanding at
June 30, 1996, no par value ......... 28,026 27,921 27,921
Retained earnings .................... 6,752 12,240 7,857
Foreign currency translation
adjustment .......................... (13) -- --
-------- -------- --------
Total shareholders' equity 34,765 40,161 35,778
-------- -------- --------
Total liabilities and
shareholders' equity $200,886 $151,790 $174,725
======== ======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
JPE, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1997 and 1996
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales .................. $ 77,006 $ 55,979 $ 145,031 $ 103,590
Cost of goods sold ......... 65,553 44,691 124,617 83,426
--------- --------- --------- ---------
Gross profit ............. 11,453 11,288 20,414 20,164
Selling, general and
administrative expenses ... 7,794 6,312 14,643 11,981
Discontinuance of stamping
operations ................ 2,250 -- 2,250 --
--------- --------- --------- ---------
Operating profit ......... 1,409 4,976 3,521 8,183
Other expense .............. 104 -- 176 --
Interest expense, net ...... 2,471 1,879 4,614 3,534
--------- --------- --------- ---------
Income (loss) before
income taxes ............ (1,166) 3,097 (1,269) 4,649
Income tax expense
(benefit) ................. (176) 1,235 (164) 1,855
--------- --------- --------- ---------
Net income (loss) ........ $ (990) $ 1,862 $ (1,105) $ 2,794
========= ========= ========= =========
Earnings (loss) per
common share .............. $ (0.22) $ 0.41 $ (0.24) $ 0.61
========= ========= ========= =========
Weighted average shares
outstanding ............... 4,602 4,591 4,606 4,585
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
JPE, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(Amounts in Thousands)
(Unaudited)
<CAPTION>
Six Months
Ended
June 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ................................. $ (1,105) $ 2,794
Loss on disposal of fixed assets .................. 24 --
Discontinuance of stamping operations ............. 2,250 --
Adjustments to reconcile net income
(loss) to net cash provided by (used
for) operating activities:
Depreciation and amortization .................. 4,678 3,604
Changes in operating assets and
liabilities:
Accounts receivable .......................... (11,890) (7,029)
Inventory .................................... (1,531) 2,418
Other current assets ......................... (937) 539
Accounts payable ............................. 5,277 949
Accrued liabilities .......................... (222) (405)
Income taxes ................................. (382) 542
Deferred income taxes ........................ 269 311
-------- -------
Net cash provided by (used for)
operating activities ...................... (3,569) 3,723
Cash flows from investing activities:
Purchase of property and equipment ................. (7,425) (5,996)
Acquisition of BATCO ............................... (5,518) --
-------- -------
Net cash used for
investing activities ...................... (12,943) (5,996)
Cash flows from financing activities:
Net borrowings under revolving loan ................ 14,275 11,850
Repayments of notes payable ........................ (1,297) (10,100)
Net borrowings under Canadian credit
facility ......................................... 1,537 --
Net borrowings under a capital lease ............... 900 --
Sale of common stock ............................... 77 410
Tax benefit from stock options ..................... 28 210
------- -------
Net cash provided by
financing activities ...................... 15,520 2,370
Currency translation ............................... (124) --
Cash and cash equivalents:
Net increase (decrease) in cash .................... (1,116) 97
Cash and cash equivalents,
beginning of period ............................... 1,316 288
------- -------
Cash and cash equivalents,
end of period ..................................... $ 200 $ 385
======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
<PAGE>
JPE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Amounts in Thousands)
A. BASIS OF PRESENTATION:
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, the financial statements do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. The consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto contained in the JPE, Inc. Annual Report and Form 10-K for the year
ended December 31, 1996 and the Form 10-Q for the quarter ended March 31,
1997.
B. INVENTORY:
Inventories by component are as follows:
<TABLE>
<CAPTION>
June 30, 1997 June 30, 1996 Dec. 31, 1996
------------- ------------- -------------
<S> <C> <C> <C>
Finished goods ..... $16,673 $13,897 $15,457
Work in process .... 5,712 4,102 4,811
Raw material ....... 16,150 11,065 15,116
Tooling ............ 2,630 3,591 2,579
------- ------- -------
$41,165 $32,655 $37,963
======= ======= =======
</TABLE>
C. NEW FINANCIAL ACCOUNTING STANDARDS:
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share." This
standard requires a change in method for computing and presenting earnings
per share effective for the period ending after December 15, 1997. The
Company has reviewed this statement and believes there will be no material
change in its reported earnings per share amounts.
<PAGE>
D. BATCO ACQUISITION:
On April 16, 1997, Dayton Parts, Inc., a wholly-owned subsidiary of JPE,
Inc., acquired all of the capital stock of Brake, Axle and Tandem Company
("BATCO") for $5.5 million in cash. In addition to the cash paid, the
purchase agreement also includes an "earn-out" provision which will
increase the purchase price by up to $3.9 million if certain sales levels
are achieved over the next three years. The value of assets and liabilities
assumed for the purchase was the following:
Accounts receivable and other current assets ................ $ 1,975
Inventory ................................................... 2,078
Property, plant and equipment ............................... 379
Goodwill .................................................... 5,551
Deferred tax asset .......................................... 657
-------
Total assets .............................................. 10,640
Accounts payable ............................................ 2,875
Accrued expenses ............................................ 1,573
Debt ........................................................ 674
-------
Total liabilities ......................................... 5,122
Total, net ................................................ $ 5,518
=======
The following unaudited pro forma summary for the six months ended June 30,
1997 and 1996 assumes that the acquisitions of JPE Canada and BATCO had
occurred on January 1, 1996. The significant adjustments relate to the
inclusion of amortization of goodwill, an increase in interest expense
based on an increase in long-term obligations, a decrease in commissions
expense at JPE Canada, additional or reduced depreciation on the
revaluation of property, plant and equipment and the related income tax
effects (amounts in thousands, except per share amounts):
Six months ending June 30,
1997 1996
---- ----
Revenues ................................ $150,541 $153,379
Operating Profit ........................ 3,250 11,819
Income (loss) before income taxes ....... (1,701) 7,323
Net income (loss) ....................... (1,355) 4,495
Earnings (loss) per common share ........ (.29) .98
<PAGE>
E. DISCONTINUANCE OF STAMPING OPERATIONS:
On May 15, 1997, the Company announced a plan to discontinue its stamping
operations at its East Tawas, Michigan facility of Starboard Industries,
Inc., a wholly-owned subsidiary of the Company. The plan includes
resourcing stamped parts to third party suppliers, the sale of stamping
assets and a reduction in the Starboard workforce. As a result of this
plan, the Company recorded a charge of $2.25 million comprised of the
following:
Loss on sale of fixed assets ................................ $1,348
Severance expenses .......................................... 365
Adjustment to scrap value of inventory ...................... 407
Other ....................................................... 130
------
Total ..................................................... $2,250
======
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto filed with the Company's Annual Report on
Form 10-K to assist in understanding the Company's results of operations, its
financial position, cash flows, capital structure and other relevant financial
information.
FORWARD LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains, and from time to time the Company
expects to make, certain forward-looking statements regarding its business,
financial condition and results of operations. In connection with the "Safe
Harbor" provisions of the Private Securities Reform Act of 1995 (the "Reform
Act"), the Company intends to caution readers that there are several important
factors that could cause the Company's actual results to differ materially from
those projected in its forward-looking statements, whether written or oral, made
herein or that may be made from time to time by or on behalf of the Company.
Readers are cautioned that such forward-looking statements are only predictions
and that actual events or results may differ materially. The Company undertakes
no obligation to publicly release the results of any revisions to the
forward-looking statements to reflect events or circumstances or to reflect the
occurrence of unanticipated events.
The Company wishes to ensure that any forward-looking statements are accompanied
by meaningful cautionary statements in order to comply with the terms of the
safe harbor provided by the Reform Act. Accordingly, the Company has set forth a
list of important factors that could cause the Company's actual results to
differ materially from those expressed in forward-looking statements or
predictions made herein and from time to time by the Company. Specifically, the
Company's business, financial condition and results of operations could be
materially different from such forward-looking statements and predictions as a
result of (i) customer pressures that could impact sales levels and product mix,
including customer sourcing decisions, customer evaluation of market pricing on
products produced by the Company and customer cost-cutting programs; (ii) the
impact on the Company's operations and cash flows caused by labor strikes or
work stoppages at the Company's OEM customers; (iii) operational difficulties
encountered during the launch of major new OEM programs; (iv) the ability of the
Company to integrate acquisitions into its existing operations and achieve
expected cost savings; (v) the ability of the Aftermarket Group to balance the
cyclical nature of the OEM industry; and (vi) the availability of funds to the
Company for strategic acquisitions and capital investments to enhance existing
production and distribution capabilities.
<PAGE>
RESULTS OF OPERATIONS
SECOND QUARTER ENDED JUNE 30, 1997 COMPARED
TO SECOND QUARTER ENDED JUNE 30, 1996
Net sales for the quarter ended June 30, 1997 were $77.0 million compared to
$56.0 million for the three months ended June 30, 1996. The net sales increase
of 38% is attributable to the acquisition of JPE Canada Inc. ("JPE Canada") and
Brake, Axle and Tandem Company ("BATCO") in December 1996 and April 1997,
respectively. JPE Canada is a Canadian supplier of injection-molded plastic
exterior trim to Original Equipment Manufacturers ("OEM's") and BATCO is a
supplier of brake hardware, wheel attaching and suspension parts for the heavy
duty truck and trailer aftermarket. For the quarter ended June 30, 1997, net
sales for the Company were approximately 66% to OEM customers and 34% to
Aftermarket customers.
Gross profit increased 1.5% to $11.5 million for the three months ended June 30,
1997 as compared with $11.3 million for the comparable period of the prior year.
The gross profit percentages were 14.9% and 20.2% for 1997 and 1996,
respectively. The second quarter of 1996 includes a recovery of $890,000 in
costs from an OEM customer related to the cancellation of a trim program.
Adjusting for this recovery, gross profit percentages were 14.9% and 18.6% for
the quarter ending June 30, 1997 and 1996, respectively. This decline in gross
profit percentage is due primarily to the acquisition of JPE Canada which was
purchased out of bankruptcy in December 1996. The Company has an on-going
turn-around plan to improve JPE Canada's profitability through reducing scrap,
premium freight, and overtime while improving productivity. The results of this
plan have been reflected in improvements in JPE Canada's gross profit, which
increased from 0.1% in the first quarter of 1997 to 4.8% in the second quarter
of 1997. Management believes that JPE Canada will show further improvement in
its gross profit percentage with the continued execution of this turn-around
plan. In addition to JPE Canada, the decline in gross profit percentage can be
attributed to lower performance at the Company's Starboard Industries, Inc.
subsidiary. The decline in Starboard's performance is a result of production
difficulties, higher scrap and pricing issues in its stamping operations.
Selling, general and administrative expenses increased 23.5% to $7.8 million for
the three months ended June 30, 1997 from $6.3 million for the three months
ended June 30, 1996. The increase is a result of the acquisitions of JPE Canada
and BATCO, as discussed above. The percentage of selling, general and
administrative expenses to net sales was 10.1% for the quarter ended June 30,
1997 as compared to 11.3% for the comparable period of the prior year. The
decline in this percentage is attributable to the acquisition of JPE Canada
which has a lower administrative overhead structure than the other JPE
businesses.
<PAGE>
During the second quarter of 1997, management implemented a plan to improve the
operating results of its Starboard business, primarily by discontinuing its
stamping operations by September 30, 1997. The plan includes resourcing the
stamped parts to other third-party suppliers, the sale of its stamping assets,
reducing the workforce and a major re-layout of Starboard's East Tawas, Michigan
production facility to improve productivity of its roll-forming and co-extrusion
operations. Management made this decision based on the negative impact the
stamping business had on the operating results of Starboard and the OEM Trim
Group as a whole. As a result of this discontinuance of stamping operations, the
Company recorded a charge of $2.25 million relating to the loss on disposal of
assets, employee severances and other costs directly related to the stamping
business.
The operating profits for JPE's U.S. operations continue to improve over the
1996 second half performance as shown in the table below, adjusted for
non-recurring charges:
<TABLE>
<CAPTION>
Quarter Ended Operating Profit Percent of Sales
- ------------- ---------------- ----------------
<S> <C> <C>
September 30, 1996 $ 993,000 2.0%
December 31, 1996 $1,307,000 2.9%
March 31, 1997 $2,685,000 5.2%
June 30, 1997 $3,444,000 5.8%
</TABLE>
These improvements are attributable to stronger operating performances in our
OEM and Aftermarket businesses as a result of action plans instituted in the
second half of 1996. These action plans are continuing to be examined and
refined for further operating enhancements in order to reach a goal of an
operating profit margin in excess of 7% for the Company's operations by the end
of the calendar year, although there can be no assurances that this level will
be reached.
In addition to improvements in the Company's U.S. operations, JPE Canada has
also shown improvement as a result of its ongoing turnaround plan as shown in
the table below:
<TABLE>
<CAPTION>
Operating Profit
Quarter Ended (Loss) Percent of Sales
- ------------- ---------------- ----------------
<S> <C> <C>
March 31, 1997 $(568,000) (3.6)%
June 30, 1997 214,000 1.2%
</TABLE>
These improvements are the result of management's turnaround plan for JPE Canada
mentioned above.
<PAGE>
Net interest expense increased to $2.5 million for the three months ended June
30, 1997 as compared to $1.9 million for the three months ended June 30, 1996.
The higher interest cost is attributable to the funds borrowed to finance the
JPE Canada and BATCO acquisitions; a higher average debt level as a result of
capital investments made in the Company's OEM and Aftermarket businesses; and
increased customer tooling balances related to several new 1997 and 1998
launches in the OEM trim group.
Income tax benefit for the quarter ended June 30, 1997 was $176,000 as compared
to income tax expense of $1.2 million for the same period in 1996. The benefit
is primarily the result of the charge recorded for the discontinuance of
stamping operations and the pretax loss at the Company's Canadian operation.
Net loss for the three months ended June 30, 1997 was $990,000 as compared to
net income of $1.9 million in the second quarter of 1996. The decrease is a
result of the factors summarized above. Loss per share for the second quarter of
1997 was $0.22 as compared to earnings per share of $0.41 during the same period
in 1996. The net loss for the quarter includes a loss of $1.5 million or $0.32
per share due to the after-tax effect of the charge recorded for the
discontinuance of Starboard's stamping operations.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Net sales for the six months ended June 30, 1997 were $145.0 million compared to
$103.6 million for the six months ended June 30, 1996. The net sales increase of
40% is attributable to the acquisition of JPE Canada and BATCO in December 1996
and April 1997, respectively. For the six months ended June 30, 1997, net sales
for the Company were approximately 70% to OEM customers and 30% to Aftermarket
customers.
Gross profit increased 1.2% to $20.4 million for the three months ended June 30,
1997 as compared with $20.2 million for the comparable period of the prior year.
The gross profit percentages were 14.1% and 19.5% for 1997 and 1996,
respectively. The second quarter of 1996 includes a recovery of $890,000 from an
OEM customer related to the cancellation of a trim program. Adjusting for this
cost recovery, the gross profit percentages were 14.1% and 18.6%. The remaining
decline in gross profit percentage is due primarily to the acquisition of JPE
Canada which was purchased out of bankruptcy in December 1996 and lower
operating performance at the Company's Starboard Industries, Inc. subsidiary.
See discussion for the second quarter for management's plan to improve JPE
Canada's and Starboard's performance.
Selling, general and administrative expenses increased 22.2% to $14.6 million
for the six months ended June 30, 1997 from $12.0 million for the six months
ended June 30, 1996. The increase is a result of the acquisitions of JPE Canada
and BATCO as discussed above. The percentage of selling, general and
administrative expenses to net sales was 10.1% for the six months ending June
30, 1997 as compared to 11.6% for the comparable period of the prior year. The
decline in this percentage is attributable to the acquisition of JPE Canada
which has a lower overhead structure than the other JPE businesses.
<PAGE>
See second quarter section for discussion on the charge recorded for the
discontinuance of stamping operations and quarterly operating profit
improvements.
Net interest expense increased to $4.6 million for the six months ended June 30,
1997 as compared to $3.5 million for the six months ended June 30, 1996. The
higher interest cost is attributable to the factors mentioned in the quarterly
discussion above.
Income tax benefit for the six months ending June 30, 1997 was $164,000 as
compared to income tax expense of $1.9 million for the same period in 1996. The
benefit is a result of the charge recorded for the discontinuance of stamping
operations and the pretax loss at the Company's Canadian operation.
Net loss for the six months ended June 30, 1997 was $1.1 million as compared to
net income of $2.8 million over the same period in 1996. The decrease is a
result of the factors summarized above. Loss per share for the first six months
of 1997 was $0.24 as compared to earnings per share of $0.61 during the same
period in 1996. The net loss includes a loss of $1.5 million or $0.32 per share
due to the after-tax effect of the charge recorded for the discontinuance of
Starboard's stamping operations and a loss of $690,000 or $0.15 per share
relating to the operations of JPE Canada.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund business acquisitions,
working capital needs and capital additions to enhance existing production
technologies and capabilities. Historically, the Company has used cash flows
generated by operations, borrowings under its credit agreements and equity
financing to meet these needs.
The Company's principal source of liquidity for the U.S. operations is the $110
million Third Amended and Restated Credit Agreement dated December 31, 1996.
This agreement was amended on April 16, 1997 to increase the commitment by $10
million for the purchase of BATCO and to provide further liquidity for working
capital needs. At June 30, 1997, the amount outstanding under this agreement was
$106.5 million. This Credit Agreement matures on October 31, 1998. Management is
currently evaluating various options to refinance, restructure or extend this
facility and believes it will be successful in completing these activities prior
to the maturity date. The Company has received a waiver from its Banks on the
covenant default which resulted from the charge for discontinuing stamping
operations at its Starboard Industries, Inc. subsidiary.
<PAGE>
The Company's JPE Canada subsidiary has a credit agreement with a Canadian bank
to fund its operating requirements and capital expenditures. At June 30, 1997,
the borrowings under this facility total approximately $18 million. Repayment
terms of borrowings under this facility vary based on the nature of the advance.
Currently, $8.7 million is classified as short-term debt because the portion of
the credit agreement for operating requirements is payable on demand or on
December 31, 1997. The total commitment for operating needs is approximately
$10.1 million through December 31, 1997, reducing to $8.5 million in 1998 (Cdn
$14 million and $12 million, respectively). The term portion of this agreement
aggregates approximately $9.2 million with monthly principal payments beginning
in October 1997 of approximately $72,000 (Cdn $100,000). It is anticipated that
the cash flow from the Canadian operations will fund these future payments.
Working capital at June 30, 1997 increased to $48.2 million as compared to $42.1
million at December 31, 1996. The increase in working capital is due primarily
to increased customer tooling balances as a result of several new programs
related to 1997 and 1998 launches for the Company's OEM trim group. Management
is anticipating collection of these tooling costs in the third and fourth
quarter of 1997. Customer tooling costs are normally incurred prior to the
production of parts and, upon approval by the customer, these tooling costs are
reimbursed by the customer. The delay between the expenditure of funds for
tooling and reimbursement by the customer can be several months depending on the
program and the customer. In addition, at December 31, 1996, receivables and
inventories were low due to the holiday shut down by our OEM customers. Cash
used by operations was $3.6 million for the reasons mentioned above. Capital
spending for the six months ending June 30, 1997 totaled $7.4 million. These
funds were provided through the various credit agreements. The Company expects
that it will satisfy its debt service, working capital and capital expenditure
requirements through cash flows generated by operations and, to the extent
necessary, through borrowings under the credit agreements.
<PAGE>
PART II. OTHER INFORMATION
JPE, INC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of JPE, Inc. was held on May 15, 1997, for
the purpose of electing two directors of JPE, Inc. for a term to expire in 2000
and one director of JPE, Inc. for a term to expire in 1998. Proxies for the
meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act
of 1934 and there was no solicitation in opposition to management's
solicitations.
Management's nominees for directors as listed in the proxy statement were
elected with the following votes:
Shares Shares
Voted "For" "Withheld"
John Psarouthakis 2,687,508 5,300
Otto Gago 2,687,258 5,550
C. William Mercurio 2,687,508 5,300
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
None
b. Reports on Form 8-K:
On April 30, 1997, Registrant filed a report on Form 8-K
reporting the acquisition of all of the capital stock of Brake,
Axle and Tandem Company.
On May 14, 1997, Registrant filed Amendment 1 to Form 8-K/A
containing financial statements for Registrant's acquisition of
all of the capital stock of Brake, Axle and Tandem Company.
<PAGE>
JPE, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JPE, Inc.
By: /s/ James F. Fahrner
-----------------------
James J. Fahrner
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Date: August 14, 1997
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 200
<SECURITIES> 0
<RECEIVABLES> 40,630
<ALLOWANCES> 0
<INVENTORY> 41,165
<CURRENT-ASSETS> 93,147
<PP&E> 90,108
<DEPRECIATION> 17,128
<TOTAL-ASSETS> 200,886
<CURRENT-LIABILITIES> 44,973
<BONDS> 116,052
0
0
<COMMON> 34,765
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 200,886
<SALES> 145,031
<TOTAL-REVENUES> 145,031
<CGS> 124,617
<TOTAL-COSTS> 139,260
<OTHER-EXPENSES> 2,426
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,614
<INCOME-PRETAX> (1,264)
<INCOME-TAX> (164)
<INCOME-CONTINUING> (1,105)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,105)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
