<PAGE> 1
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended APRIL 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
Commission file number: 1-11592
HAYES WHEELS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
DELAWARE 13-3384636
(State or other Jurisdiction of Incorporation or Organization) (IRS Employer Identification No.)
</TABLE>
38481 HURON RIVER DRIVE,
ROMULUS, MICHIGAN 48174
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code: (313) 941-2000
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 OF THE REGISTRANT'S COMMON STOCK OUTSTANDING AS OF JUNE
10, 1997 WAS 22,390,518 SHARES.
________________________________________________________________________________
This report consists of 16 pages.
1
<PAGE> 2
HAYES WHEELS INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION: PAGE
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Operations ......................................................... 3
Consolidated Balance Sheets ................................................................... 4
Consolidated Statements of Cash Flows ......................................................... 5
Notes to Consolidated Financial Statements .................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ......... 14
PART II OTHER INFORMATION:
Item 1. Legal Proceedings ............................................................................. 15
Item 2. Changes in Registered Securities .............................................................. 15
Item 3. Defaults upon Senior Securities ............................................................... 15
Item 4. Submission of Matters to a Vote of Security Holders ........................................... 16
Item 5. Other Information ............................................................................. 15
Item 6. (a)Exhibits ................................................................................... 15
Item 6. (b)Reports on Form 8-K ........................................................................ 15
SIGNATURES .............................................................................................. 16
</TABLE>
UNLESS OTHERWISE INDICATED REFERENCES TO THE "COMPANY" MEAN HAYES WHEELS
INTERNATIONAL, INC. AND ITS SUBSIDIARIES AND REFERENCE TO A FISCAL YEAR MEANS
THE COMPANY'S YEAR ENDED JANUARY 31 OF THE FOLLOWING YEAR (E.G., FISCAL 1997
MEANS THE PERIOD BEGINNING FEBRUARY 1, 1997, AND ENDING JANUARY 31, 1998).
2
<PAGE> 3
THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY. THESE FORWARD
LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN
BE GIVEN THAT ANY OF SUCH MATTERS WILL BE REALIZED. FACTORS THAT MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD
LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBLITIES: (1)
COMPETITIVE PRESSURE IN THE COMPANY'S INDUSTRY INCREASES SIGNIFICANTLY; (2)
GENERAL ECONOMIC CONDITIONS ARE LESS FAVORABLE THAN EXPECTED; (3) THE COMPANY'S
DEPENDENCE ON THE AUTOMOTIVE INDUSTRY (WHICH HAS HISTORICALLY BEEN CYCLICAL);
(4) CHANGES IN THE FINANCIAL MARKETS AFFECTING THE COMPANY'S FINANCIAL
STRUCTURE AND THE COMPANY'S COST OF CAPITAL AND BORROWED MONEY; AND (5) THE
UNCERTAINITIES INHERENT IN INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY
FLUCTUATIONS. THE COMPANY HAS NO DUTY UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 TO UPDATE THE FORWARD LOOKING STATEMENTS IN THIS QUARTERLY
REPORT ON FORM 10-Q AND THE COMPANY DOES NOT INTEND TO PROVIDE SUCH UPDATES.
3
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
1997 1996
---- ----
<S> <C> <C>
Net sales ................................................... $ 250.2 $ 156.2
Cost of goods sold .......................................... 212.2 133.6
------- -------
Gross profit ........................................... 38.0 22.6
Marketing, general and administration ....................... 8.9 6.7
Engineering and product development ......................... 2.3 1.8
Amortization of intangibles ................................. 2.3 1.1
Other income, net (0.7) (0.5)
------- -------
Earnings from operations ............................... 25.2 13.5
Interest expense, net ....................................... 18.4 3.6
------- -------
Earnings before taxes on income and minority interest .. 6.8 9.9
Income tax provision ........................................ 2.9 3.8
------- -------
Earnings before minority interest ...................... 3.9 6.1
Minority interest ........................................... 0.1 --
------- -------
Net income ............................................. $ 3.8 $ 6.1
======= =======
Per share income:
Net income .................................................. $ 0.17 $ 0.17
======= =======
Weighted average shares outstanding (in thousands) ......... 22,390 35,148
======= =======
Dividends declared per share ............................... $ --- $ 0.008
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(MILLIONS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
April 30, Jan. 31,
1997 1997
---- ----
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents ......................................... $ 24.8 $ 47.5
Receivables (less allowance of $2.2 million at April 30, 1997
and January 31, 1997) ............................................ 152.6 145.2
Inventories ....................................................... 87.3 82.9
Prepaid expenses and other ........................................ 8.1 13.9
-------- -------
Total current assets ....................................... 272.8 289.5
Property, plant and equipment:
Land .............................................................. 20.7 20.1
Buildings ......................................................... 103.2 98.0
Machinery and equipment ........................................... 518.0 515.2
-------- -------
641.9 633.3
Accumulated depreciation .......................................... (155.3) (146.9)
-------- -------
Net property, plant and equipment .......................... 486.6 486.4
Goodwill and other assets ............................................... 394.0 407.2
-------- -------
Total assets ...................................................... $1,153.4 $1,183.1
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Bank borrowings ................................................... $ 6.4 $ 5.6
Current portion of long-term debt ................................. 23.6 23.9
Accounts payable and accrued liabilities .......................... 221.3 244.8
-------- --------
Total current liabilities .................................. 251.3 274.3
Noncurrent liabilities:
Long-term debt .................................................... 681.6 686.3
Deferred income taxes ............................................. -- --
Pension and other long-term liabilities ........................... 252.2 255.3
Minority interest ................................................. 8.4 8.3
-------- --------
Total noncurrent liabilities ............................... 942.2 949.9
Commitments and contingencies (Note 4)
Stockholders' equity (deficit):
Preferred stock, 25,000,000 shares authorized, none issued ........ -- --
Common stock, par value $0.01 per share:
Voting - authorized 99,000,000; and outstanding, 22,231,492 ..... 0.2 0.2
Nonvoting - authorized 1,000,000; and outstanding, 159,026 ...... -- --
Additional paid in capital ........................................ 43.6 43.6
Accumulated deficit ............................................... (78.3) (82.2)
Foreign currency translation adjustment ........................... (3.4) (0.5)
Pension liability adjustment ...................................... (2.2) (2.2)
-------- --------
Total stockholders' equity (deficit) ....................... (40.1) (41.1)
-------- --------
Total liabilities and stockholders' equity (deficit) .............. $1,153.4 $1,183.1
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(MILLIONS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three months ended
April 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................... $ 3.8 $ 6.1
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Depreciation and tooling amortization .............................. 12.3 7.3
Amortization of intangibles ........................................ 3.8 1.5
Increase in deferred taxes ......................................... -- 0.9
Changes in operating assets and liabilities:
Increase in receivables ........................................... (14.2) (3.8)
(Increase) decrease in inventories ................................ (8.3) 5.4
Decrease in prepaid expenses and other ............................ 5.2 1.1
Decrease in accounts payable and accrued liabilities .............. (5.0) (11.1)
Decrease in other long-term liabilities ........................... (2.1) (1.9)
------- ------
Cash provided by (used for) operating activities ............... (4.5) 5.5
Cash flows from investing activities:
Acquisition of property, plant and equipment ....................... (16.7) (23.4)
Other, net.... ..................................................... (0.2) (3.5)
------- ------
Cash used for investing activities ............................. (16.9) (26.9)
Cash flows from financing activities:
Increase (decrease) in short-term bank borrowings and loans ........ 1.3 (2.9)
Dividend paid to stockholders ...................................... -- (0.3)
Increase (decrease) in bank revolving loan & other domestic loans .. (3.0) 23.6
------- ------
Cash provided by (used for) financing activities ............... (1.7) 20.4
Effect of exchange rate changes on cash and cash equivalents .......... 0.4 --
------- ------
Decrease in cash and cash equivalents .......................... (22.7) (1.0)
Cash and cash equivalents at beginning of year ........................ 47.5 1.8
------- ------
Cash and cash equivalents at end of period ............................ $ 24.8 $ 0.8
======= ======
Supplemental data:
Cash paid for interest ............................................. $ 11.8 $ 1.2
Cash paid for income taxes ......................................... $ 0.1 $ 0.1
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(UNAUDITED)
(MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by
management and in the opinion of management, contain all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position of the Company as of April 30, 1997, and January 31, 1997,
and the results of its operations and cash flows for the three months ended
April 30, 1997 and 1996. The consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1997. Results for interim periods are not necessarily indicative
of those to be expected for the year.
(2) INVENTORIES
The major classes of inventory are as follows:
<TABLE>
<CAPTION>
APRIL 30, JAN. 31,
1997 1997
---- ----
<S> <C> <C>
Raw materials $28.6 $32.0
Work-in-process 25.3 21.1
Finished goods 33.4 29.8
----- -----
Total $87.3 $82.9
===== =====
</TABLE>
(3) COMMITMENTS AND CONTINGENCIES
At April 30, 1997, management believes that the Company was in compliance
with its various financial covenants. Management expects that the Company will
remain in compliance with its financial covenants in all material respects
through the period ending April 30, 1998.
The Company is party to various litigation. Management believes that the
outcome of these lawsuits will not have a material adverse effect on the
consolidated operations or financial condition of the Company.
(4) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS
In connection with the Merger and as part of the financing thereof, the
Company issued and sold $250 million aggregate principal amount of its 11%
Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes") in a
public offering. The Senior Subordinated Notes are general unsecured
obligations of the Company, subordinated in right of payment to all existing
and future senior indebtedness of the Company, and are guaranteed by certain of
the Company's domestic subsidiaries.
The following condensed consolidating financial information presents:
(1) Condensed consolidating financial statements as of April 30, 1997
and January 31, 1997 and for the three month periods ended April 30,
1997 and 1996, of (a) Hayes Wheels International, Inc., the parent;
(b) the guarantor subsidiaries; (c) the nonguarantor subsidiaries;
and (d) the Company on a consolidated basis, and
(2) Elimination entries necessary to consolidate Hayes Wheels
International, Inc., the parent, with guarantor and nonguarantor
subsidiaries.
Investments in foreign subsidiaries are accounted for by the parent on the
equity method (domestic subsidiaries are accounted for by the parent on the
cost method) for purposes of the consolidating presentation. The principle
elimination entries eliminate investments in subsidiaries and intercompany
balances and transactions.
7
<PAGE> 8
Condensed Consolidating Statements of Operations
For the Quarter Ended April 30, 1997
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidaries Subsidaries Eliminations Total
------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales 76.8 140.5 33.4 (0.5) 250.2
Cost of goods sold 67.0 118.1 27.6 (0.5) 212.2
------ ------- ------ ------ -------
Gross profit 9.8 22.4 5.8 - 38.0
Marketing, general and administration 2.0 5.1 1.8 - 8.9
Engineering and product development 0.6 1.4 0.3 - 2.3
Amortization of intangibles 0.3 2.0 - - 2.3
Other income, net - - (0.7) - (0.7)
------ ------- ------ ------ -------
Earnings (loss) from operations 6.9 13.9 4.4 - 25.2
Interest expense, net 7.5 10.0 0.9 - 18.4
Equity in earnings of consolidated subsidiaries (2.6) - - 2.6 -
------ ------- ------ ------ -------
Earnings (loss) before taxes on income, 2.0 3.9 3.5 (2.6) 6.8
and minority interest
Income tax (benefit) provision (0.6) 2.0 1.5 - 2.9
------ ------- ------ ------ -------
Earnings (loss) before minority interest 2.6 1.9 2.0 (2.6) 3.9
Minority interest - - - 0.1 0.1
------ ------- ------ ------ -------
Net income(loss) 2.6 1.9 2.0 (2.7) 3.8
====== ======= ====== ====== =======
</TABLE>
For the Quarter Ended April 30, 1996
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidaries Subsidaries Eliminations Total
------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales 66.5 70.2 20.5 (1.0) 156.2
Cost of goods sold 59.2 58.9 16.5 (1.0) 133.6
------ ------ ------ ------ -------
Gross profit 7.3 11.3 4.0 - 22.6
Marketing, general and administration 2.3 3.3 1.1 - 6.7
Engineering and product development 1.1 0.4 0.3 - 1.8
Amortization of intangibles 0.5 0.6 - - 1.1
Other income, net 0.1 - (0.6) - (0.5)
------ ------ ------ ------ -------
Earnings (loss) from operations 3.3 7.0 3.2 - 13.5
Interest expense, net 1.5 2.0 0.1 - 3.6
Equity in earnings of consolidated subsidiaries (1.7) - - 1.7 -
------ ------ ------ ------ -------
Earnings (loss) before taxes on income 3.5 5.0 3.1 (1.7) 9.9
Income tax provision 0.6 1.8 1.4 - 3.8
------ ------ ------ ------ -------
Net income(loss) 2.9 3.2 1.7 (1.7) 6.1
====== ====== ====== ====== =======
</TABLE>
<PAGE> 9
Condensed Consolidating Balance Sheet
As of April 30, 1997
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidaries Subsidaries Eliminations Total
---------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents 27.8 (8.2) 5.2 - 24.8
Receivables 57.1 62.5 33.0 - 152.6
Inventories 36.8 39.4 11.1 - 87.3
Prepaid expenses and other 2.1 4.0 2.2 (0.2) 8.1
--------- -------- -------- --------- --------
Total current assets 123.8 97.7 51.5 (0.2) 272.8
Property, plant and equipment 230.4 294.4 117.1 - 641.9
Accumulated depreciation (51.8) (71.5) (32.0) - (155.3)
--------- -------- -------- --------- --------
Net property, plant and equipment 178.6 222.9 85.1 486.6
Goodwill and other assets 336.9 319.0 11.3 (273.2) 394.0
--------- -------- -------- --------- --------
Total assets 639.3 639.6 147.9 (273.4) 1,153.4
========= ======== ======== ========= ========
Bank borrowings - - 6.4 - 6.4
Current portion of long-term debt 17.5 - 6.1 - 23.6
Accounts payable and accrued liabilities 89.0 94.4 38.1 (0.2) 221.3
--------- -------- -------- --------- --------
Total current liabilities 106.5 94.4 50.6 (0.2) 251.3
Long-term debt 655.2 - 26.4 - 681.6
Deferred income taxes (30.2) 17.9 12.3 - (0.0)
Minority interest - 0.2 - 8.2 8.4
Pension and other long-term liabilities 143.7 100.8 12.8 (5.1) 252.2
Parent loans (230.5) 226.5 4.0 - -
--------- -------- -------- --------- --------
Total noncurrent liabilities 538.2 345.4 55.5 3.1 942.2
Common stock 0.2 - - - 0.2
Additional paid-in capital 43.5 104.5 33.5 (137.9) 43.6
Retained earnings (accumulated deficit) (42.0) 95.4 9.7 (141.4) (78.3)
Cumulative translation adjustment (4.9) (0.1) (1.4) 3.0 (3.4)
Pension liability adjustment (2.2) - - - (2.2)
--------- -------- -------- --------- --------
Total stockholders' equity (deficit) (5.4) 199.8 41.8 (276.3) (40.1)
Total liabilities and stockholders'
equity (deficit) 639.3 639.6 147.9 (273.4) 1,153.4
========= ======== ======== ========= ========
</TABLE>
<PAGE> 10
Condensed Consolidating Balance Sheet
As of January 31, 1997
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidaries Subsidaries Eliminations Total
------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents 41.2 (0.6) 6.9 - 47.5
Receivables 51.0 62.9 31.3 - 145.2
Inventories 36.4 34.5 12.0 - 82.9
Prepaid expenses and other 3.3 3.5 7.4 (0.3) 13.9
-------- -------- ------- -------- ---------
Total current assets 131.9 100.3 57.6 (0.3) 289.5
Property, plant and equipment 249.2 267.9 116.2 - 633.3
Accumulated depreciation (49.1) (67.1) (30.7) - (146.9)
-------- -------- ------- -------- ---------
Net property, plant and equipment 200.1 200.8 85.5 - 486.4
Goodwill and other assets 345.8 323.9 12.6 (275.1) 407.2
-------- -------- ------- -------- ---------
Total assets 677.8 625.0 155.7 (275.4) 1,183.1
======== ======== ======= ======== =========
Bank borrowings - - 5.6 - 5.6
Current portion of long-term debt 17.4 - 6.5 - 23.9
Accounts payable and accrued liabilites 105.2 97.7 42.2 (0.3) 244.8
-------- -------- ------- -------- ---------
Total current liabilities 122.6 97.7 54.3 (0.3) 274.3
Long-term debt 658.3 - 28.0 - 686.3
Deferred income taxes (31.1) 18.0 13.1 - -
Minority interest - 0.2 - 8.1 8.3
Pension and other long-term liabilities 143.2 103.3 12.1 (3.3) 255.3
Parent loans (211.2) 208.0 3.2 - 0.0
-------- -------- ------- -------- ---------
Total noncurrent liabilities 559.2 329.5 56.4 4.8 949.9
Common stock 0.2 - - - 0.2
Additional paid-in capital 43.5 104.5 33.5 (137.9) 43.6
Retained earnings (accumulated deficit) (44.5) 93.4 9.5 (140.6) (82.2)
Cumulative translation adjustment (1.0) (0.1) 2.0 (1.4) (0.5)
Pension liability adjustment (2.2) - - (2.2)
-------- -------- ------- -------- ---------
Total stockholders' equity (deficit) (4.0) 197.8 45.0 (279.9) (41.1)
Total liabilities and stockholders'
equity (deficit) 677.8 625.0 155.7 (275.4) 1,183.1
======== ======== ======= ======== =========
</TABLE>
<PAGE> 11
Condensed Consolidating Statements of Cash Flows
For the Quarter Ended April 30, 1997
<TABLE>
<CAPTION>
Guarantor Nonguarantor
Parent Subsidaries Subsidaries Eliminations
------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Cash flows provided from (used by)
operating activities 0.2 (1.6) (0.7) (2.4)
Cash flows from investing activities:
Acquisition of property, plant and equipment (3.0) (4.7) (9.0) -
Other, net (7.6) 5.0 2.4 -
------- ------- ------- ------
Cash used by investing activities (10.6) 0.3 (6.6) -
Cash flows from financing activities:
Increase (decrease) in foreign bank borrowings and loan - - 1.3 -
Increase (decrease) in bank revolving loan and other
domestic loans (3.0) - - -
------- ------- ------- ------
Cash provided by financing activities (3.0) - 1.3 -
Increase (decrease) in parent loans and advances (20.0) 18.5 (0.9) 2.4
Effect of exchange rates of cash and cash equivalents 0.4
Net increase (decrease) in cash and cash equivalents (33.4) 17.2 (6.5) -
Cash and cash equivalents at beginning of period 41.2 (0.6) 6.9 -
------- ------- ------- ------
Cash and cash equivalents at end of period 7.8 16.6 0.4 -
======= ======= ======= ======
<CAPTION>
Consolidated
Total
------------
<S> <C>
Cash flows provided from (used by)
operating activities (4.5)
Cash flows from investing activities:
Acquisition of property, plant and equipment (16.7)
Other, net (0.2)
------
Cash used by investing activities (16.9)
Cash flows from financing activities:
Increase (decrease) in foreign bank borrowings and loan 1.3
Increase (decrease) in bank revolving loan and other
domestic loans -
------
Cash provided by financing activities 1.3
Increase (decrease) in parent loans and advances -
Effect of exchange rates of cash and cash equivalents 0.4
Net increase (decrease) in cash and cash equivalents (22.7)
Cash and cash equivalents at beginning of period 47.5
------
Cash and cash equivalents at end of period 24.8
======
</TABLE>
For the Quarter Ended April 30, 1996
<TABLE>
<CAPTION>
Guarantor Nonguarantor
Parent Subsidaries Subsidaries Eliminations
-------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Cash flows provided from (used by)
operating activities 0.2 3.5 3.5 (1.7)
Cash flows from investing activities:
Acquisition of property, plant and equipment (20.4) (1.7) (1.3) -
Other, net (3.7) 0.2 - -
------- ------- ------- -------
Cash used by investing activities (24.1) (1.5) (1.3) -
Cash flows from financing activities:
Increase (decrease) in foreign bank borrowings and loans - - (2.9) -
Dividends paid to stockholders (0.3) - - -
Increase (decrease) in bank revolving loan and other
domestic loans 23.6 - - -
------- ------- ------- -------
Cash provided by financing activities 23.3 - (2.9) -
Increase (decrease) in parent loans and advances (0.1) (2.0) 0.4 1.7
Effect of exchange rates of cash and cash equivalents
Net increase (decrease) in cash and cash equivalents (0.7) - (0.3) -
Cash and cash equivalents at beginning of period 1.0 0.1 0.7 -
------- ------- ------- -------
Cash and cash equivalents at end of period 0.3 0.1 0.4 -
======= ======= ======= =======
<CAPTION>
Consolidated
Total
------------
<S> <C>
Cash flows provided from (used by)
operating activities 5.5
Cash flows from investing activities:
Acquisition of property, plant and equipment (23.4)
Other, net (3.5)
-------
Cash used by investing activities (26.9)
Cash flows from financing activities:
Increase (decrease) in foreign bank borrowings and loans (2.9)
Dividends paid to stockholders (0.3)
Increase (decrease) in bank revolving loan and other
domestic loans 23.6
-------
Cash provided by financing activities 20.4
Increase (decrease) in parent loans and advances 0.0
Effect of exchange rates of cash and cash equivalents
Net increase (decrease) in cash and cash equivalents (1.0)
Cash and cash equivalents at beginning of period 1.8
-------
Cash and cash equivalents at end of period 0.8
=======
</TABLE>
<PAGE> 12
HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED)
(MILLIONS OF DOLLARS UNLESS OTHERWISE STATED)
(5) SUBSEQUENT EVENTS
On June 6, 1997, the Company, Cromodora, Wheels S.p.A., Lemmerz Holding
GmbH ("Lemmerz") and the shareholders of Lemmerz entered into a definitive
acquisition agreement, pursuant to which the Company will purchase the capital
stock of Lemmerz for (i) $200 million in cash and (ii) convertible preferred
stock of the Company, which following shareholder approval, will automatically
convert into 5 million shares of the Company's common stock.
8
<PAGE> 13
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 1997 COMPARED TO THE THREE MONTHS ENDED APRIL 30,
1996
The Company's net sales for the first quarter of fiscal 1997 increased by
$94.0 million or 60% compared to the first quarter of fiscal 1996. This
increase was attributable to the additional sales contributed by Motor Wheel
which was acquired effective July 2, 1996, and increased volume in both the
North American and European Aluminum Wheel groups.
The Company's gross profit for the first quarter of fiscal 1997 increased
to $38.0 million or 15.2% of net sales compared to $22.6 million or 14.5% of
net sales for the first quarter of fiscal 1996. The increase in margin
percentage is attributable to increased volume and strong productivity at the
Company's North American and European aluminum wheel facilities.
Marketing, general and administrative expenses were $2.2 million higher
for the first quarter of fiscal 1997 as compared with the first quarter of
fiscal 1996. However, these costs have decreased from 4.3% of net sales for
the first quarter of fiscal 1996 to 3.6% of net sales for the current period
due to synergies being recognized as a result of the consolidation of the Hayes
Wheels and Motor Wheel headquarters.
Amortization of intangibles increased by $1.2 million as compared with the
first quarter of fiscal 1996. This increase is due to increased goodwill
recognized as a result of the acquisition of Motor Wheel.
Interest expense was $18.4 million for the first quarter of fiscal 1997,
an increase of $14.8 million over the same period for fiscal 1996. This
increase was caused by increased debt as a result of the acquisition of Motor
Wheel.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company used $4.5 million in cash for operating activities during the
first quarter of fiscal 1997; a reduction of $10.0 million from the same period
in fiscal 1996. This increased use of cash was caused by lower net income
attributable to increased interest expense and an increased use of working
capital due to additional facilities obtained with the acquisition of Motor
Wheel.
Capital expenditures for the quarter were $16.7 million. These
expenditures were primarily for additional machinery and equipment increasing
production capacity at our North American and European facilities to meet
future customer requirements for fabricated aluminum and FFC wheels. The
Company anticipates that total capital expenditures for fiscal 1997 will be
approximately $77.0 million.
The Company is party to a credit agreement dated June 27, 1996 ("the
Credit Agreement") with Canadian Imperial Bank of Canada of Commerce ("CIBC"),
and Merrill Lynch Capital Corporation (together the "Managing Agents").
Pursuant to the Credit Agreement, among other things, the Managing Agents have
committed to lend to the Company $423.5 million in the form of a senior secured
term loan facility, such aggregate amount being allocated among (i) a Tranche
A Term Loan facility in an aggregate principal amount of up to $198.5 million,
(ii) a Tranche B Term Loan facility in an aggregate principal amount of up to
$125 million and (iii) a Tranche C Term Loan facility in an aggregate principal
amount of up to $100 million (collectively, the "Facilities"), and up to $220
million in the form of a senior secured revolving credit facility (the
"Revolving Facility", and together with the Facilities, the "Loans"). The
Facilities are guaranteed by the Company and all of its existing and future
domestic subsidiaries. The Facilities are secured by a first priority lien in
substantially all of the properties and assets of the Company and its domestic
subsidiaries, now owned or acquired later, including a pledge of all of the
shares of certain of the Company's existing and future domestic subsidiaries
and 65% of the shares of certain of the Company's existing and future foreign
subsidiaries. As of April 30, 1997, there was $420.4 million outstanding under
these Facilities and $220 million available under the Revolving Facility.
9
<PAGE> 14
At April 30, 1997, management believes that the Company was in compliance
with its various financial covenants. Management expects that the Company will
remain in compliance with its financial covenants in all material respects
through the period ending April 30, 1998.
10
<PAGE> 15
PART II OTHER INFORMATION:
Item 1. Legal Proceedings
None.
Item 2. Changes in Registered Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports of Form 8-K
The Company filed a Current Report on Form 8-K dated June 6, 1997 with respect
to the Purchase Agreement dated as of June 6, 1997, by and between Hayes Wheels
International, Inc., Cromodora, Wheels S.p.A., Lemmerz Holding GmbH and the
shareholders of Lemmerz Holding GmbH.
11
<PAGE> 16
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.
HAYES WHEELS INTERNATIONAL, INC.
June 13, 1997 By: /s/ William D. Shovers
----------------------------------------
William D. Shovers
Vice President--Chief Financial Officer
and Principal Accounting Officer
12
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<S> <C> <C>
27 -- Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<CASH> 24800
<SECURITIES> 0
<RECEIVABLES> 152600
<ALLOWANCES> 0
<INVENTORY> 87300
<CURRENT-ASSETS> 272800
<PP&E> 641900
<DEPRECIATION> (155300)
<TOTAL-ASSETS> 1153400
<CURRENT-LIABILITIES> 251300
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> (40300)
<TOTAL-LIABILITY-AND-EQUITY> 1153400
<SALES> 250200
<TOTAL-REVENUES> 250200
<CGS> 212200
<TOTAL-COSTS> 212200
<OTHER-EXPENSES> 12800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18400
<INCOME-PRETAX> 6800
<INCOME-TAX> 2900
<INCOME-CONTINUING> 3800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3800
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
