<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 AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from .......... to ..........
Commission File No. 1-12394
DETROIT DIESEL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 38-2772023
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
13400 OUTER DRIVE WEST, DETROIT, MICHIGAN 48239-4001
(Address of principal executive offices, including zip code)
313-592-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
COMMON STOCK $0.01 PAR VALUE 24,697,316 SHARES
Class Outstanding at August 8, 1996
This report contains 18 pages. The exhibit index is on page 16.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1996 and 1995 3
Consolidated Balance Sheets at June 30, 1996
and December 31, 1995 4
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1996 and 1995 5
Notes to Unaudited Consolidated Financial Statements 6
Independent Accountants' Review Reports 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURE 15
EXHIBIT INDEX 16
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DETROIT DIESEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net revenues $ 491.3 $ 552.5 $ 970.1 $1,083.1
Cost of sales 378.6 427.6 745.2 833.6
----- ----- ----- -----
Gross profit 112.7 124.9 224.9 249.5
Expenses:
Selling and administrative 69.4 80.0 141.1 159.1
Research and development 27.0 23.2 51.5 46.9
Interest 2.6 2.5 5.4 5.4
Special charge (Note 4) 38.3 - 38.3 -
----- ----- ----- -----
Total 137.3 105.7 236.3 211.4
(Loss) income before income taxes
and minority interests (24.6) 19.2 (11.4) 38.1
Provision for income taxes (8.6) 6.3 (4.0) 12.9
Minority interests .2 .2 .5 .5
----- ----- ----- -----
Net (loss) income $ (16.2) $ 12.7 $ (7.9) $ 24.7
===== ===== ===== =====
Primary net (loss) income per $ (.66) $ .51 $ (.32) $ 1.00
share === === === ====
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
3
<PAGE> 4
DETROIT DIESEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DEC. 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS (Unaudited)
CURRENT ASSETS:
Cash $ 4.8 $ 5.1
Accounts and notes receivable, net of allowances of $5.7 and $5.2, respectively 304.3 283.9
Inventories 301.0 282.4
Prepaid expenses, deferred charges and other current assets 14.1 11.4
Deferred tax assets 57.5 56.8
------- -------
TOTAL CURRENT ASSETS 681.7 639.6
PROPERTY, PLANT AND EQUIPMENT -
Net of accumulated depreciation of $113.5 and $100.0, respectively 279.4 256.4
DEFERRED TAX ASSETS 25.7 15.7
INTANGIBLE ASSETS, NET 102.4 101.8
OTHER ASSETS 31.2 31.6
------- -------
TOTAL ASSETS $1,120.4 $1,045.1
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 25.2 $ 29.2
Accounts payable 285.3 275.0
Accrued expenses 158.7 191.0
Deferred tax liabilities 1.1 1.3
Current portion of long-term debt and capital leases 2.6 2.4
------- -------
TOTAL CURRENT LIABILITIES 472.9 498.9
LONG-TERM DEBT AND CAPITAL LEASES 126.4 58.5
OTHER LIABILITIES 169.9 138.6
DEFERRED TAX LIABILITIES 31.4 26.8
DEFERRED INCOME 6.7 7.0
MINORITY INTERESTS 5.5 4.9
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.01 per share; no shares issued - -
Common stock, par value $0.01 per share;
24.7 million shares issued and outstanding .2 .2
Additional paid-in capital 217.8 217.4
Retained earnings 97.2 105.1
Additional minimum pension liability (6.7) (6.7)
Currency translation adjustment (.5) (5.0)
Deferred compensation on restricted stock (.4) (.6)
------- -------
TOTAL STOCKHOLDERS' EQUITY 307.6 310.4
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,120.4 $1,045.1
======= =======
</TABLE>
4
See accompanying Notes to Unaudited Consolidated Financial Statements.
<PAGE> 5
DETROIT DIESEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (7.9) $ 24.7
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
Depreciation and amortization 16.3 17.4
Changes in assets and liabilities which provided (used) cash:
Accounts and notes receivable (18.2) (65.4)
Inventories (17.3) (20.6)
Prepaid expenses, deferred charges and other current
assets (2.5) 1.6
Deferred taxes (6.9) (8.9)
Accounts payable 7.6 109.0
Accrued expenses and other liabilities (1.5) 28.6
Intangible and other assets 1.0 (1.6)
------ -------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (29.4) 84.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (32.7) (34.4)
Proceeds from sale of property, plant and equipment 1.1 .3
Investments in and advances to affiliates (.2) (1.6)
Proceeds from sales of subsidiaries -- 11.3
Proceeds from sale of investment -- 10.0
Acquisitions of consolidated subsidiaries -- (130.3)
Dividend received from unconsolidated affiliate -- .3
------ -------
NET CASH USED IN INVESTING ACTIVITIES (31.8) (144.4)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments on) proceeds from notes payable (4.4) 2.4
Net proceeds from long-term debt 65.4 65.4
------ -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 61.0 67.8
EFFECT OF EXCHANGE RATE CHANGES ON CASH (.1) .2
------ -------
NET (DECREASE) INCREASE IN CASH (.3) 8.4
CASH AT THE BEGINNING OF THE PERIOD 5.1 11.3
------ -------
CASH AT THE END OF THE PERIOD $ 4.8 $ 19.7
====== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 5.5 $ 4.7
====== =======
Income Taxes $ 6.2 $ 15.5
====== =======
Noncash investing and financing activities:
Capital lease obligations incurred $ 2.3
======
Contribution of assets to joint venture $ .5
======
Issuance of deferred stock $ .4
======
</TABLE>
See accompanying notes to Unaudited Consolidated Financial Statements.
5
<PAGE> 6
DETROIT DIESEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS.
The accompanying unaudited 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 Detroit Diesel Corporation and its
majority-owned subsidiaries ("Detroit Diesel" or the "Company") as of June 30,
1996 and the results of its operations for the three and six month periods
ended June 30, 1996 and 1995 and its cash flows for the six month periods ended
June 30, 1996 and 1995.
The unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements included in the
Company's 1995 Annual Report to Stockholders. The results of operations for
the three and six month periods ended June 30, 1996 will not necessarily be
indicative of the operating results for the full year.
Certain reclassifications have been made to prior year amounts to
conform with the classifications used in 1996.
NOTE 2 - INVENTORIES.
At June 30, 1996 and December 31, 1995, inventories (principally using
the first-in, first-out method) consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DEC. 31,
($ in millions) 1996 1995
---- ----
<S> <C> <C>
Productive $175.0 $163.6
Service parts 91.0 85.7
Remanufacturing parts 27.0 25.6
Non-productive 8.0 7.5
------ ------
$301.0 $282.4
====== ======
The components of productive inventory are:
Raw materials 44% 49%
Work in process 21% 21%
Finished product 35% 30%
</TABLE>
NOTE 3 - INTANGIBLE ASSETS.
Intangible assets include goodwill of $79.9 million and $78.9 million
at June 30, 1996 and December 31, 1995, respectively. Accumulated amortization
of intangible assets as of June 30, 1996 and December 31, 1995 was $11.0
million and $9.0 million, respectively.
6
<PAGE> 7
DETROIT DIESEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - SPECIAL CHARGE.
During the three month period ended June 30, 1996, the Company
recorded a special charge of $38.3 million for product coverage expenses and to
reduce the value of an investment in Mexico to its estimated fair value.
NOTE 5 - NET INCOME (LOSS) PER SHARE.
Primary net loss per share for the three and six month periods ended
June 30, 1996 was computed by dividing net income by the weighted average
number of common shares outstanding (24,697,316) plus the weighted average
dilutive effect of the Company's incentive stock options (301 and 317)
determined using the treasury stock method.
Primary net income per share for the three and six month periods ended
June 30, 1995 was computed by dividing net income by the weighted average
number of common shares outstanding (24,676,649) plus the weighted average
dilutive effect of the Company's incentive stock options (31,384 and 38,343)
determined using the treasury stock method.
NOTE 6 - COMMITMENTS AND CONTINGENCIES.
The Company is contingently liable for letters of credit and
guarantees to banks aggregating approximately $30 million as of June 30, 1996.
7
<PAGE> 8
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders
Detroit Diesel Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
Detroit Diesel Corporation and subsidiaries (the "Company") as of June 30,
1996, and the related condensed consolidated statements of operations and cash
flows for the three-month and six-month periods ended June 30, 1996 and 1995
included in the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996. These consolidated financial statements are the responsibility
of the Company's management. We were furnished with the report of other
accountants on their review of the interim financial information of VM Motori
S.p.A. (a consolidated subsidiary), whose total assets constituted 27% of
consolidated total assets at June 30, 1996, and whose total revenues
constituted 14% and 13% of consolidated total revenues for the respective
three-month and six-month periods ended June 30, 1996, and 12% and 13% of
consolidated total revenues for the respective three-month and six-month
periods ended June 30, 1995.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is an expression of an opinion regarding the consolidated financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not aware of
any material modifications that should be made to such consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1995, and the related consolidated statements of income, stockholders' equity
and cash flows, for the year then ended (not presented herein); and in our
report dated February 7, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the condensed consolidated balance sheet at December 31, 1995 included in
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which such information has been derived.
/s/Deloitte & Touche LLP
Detroit, Michigan
July 24, 1996
8
<PAGE> 9
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Shareholders and Board of Directors
Detroit Diesel Corporation
We have reviewed the consolidated interim financial statements of VM Motori
S.p.A. and Subsidiaries as of June 30, 1996 and for the six-month period then
ended. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the consolidated interim financial statements for them to be
in conformity with generally accepted accounting principles in the United
States of America.
/s/ Reconta Ernst & Young
Bologna, Italy
July 16, 1996
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The percentage relationships between net revenues and other elements
of the Company's Consolidated Statements of Operations for the comparative
reporting periods were:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of sales 77.1% 77.4% 76.8% 77.0%
---- ---- ---- ----
Gross profit 22.9% 22.6% 23.2% 23.0%
Expenses:
Selling and administrative 14.1% 14.5% 14.5% 14.7%
Research and development 5.5% 4.2% 5.3% 4.3%
Interest .5% .4% .6% .5%
Special charge 7.8% - 4.0% -
---- ---- ---- ----
Total 27.9% 19.1% 24.4% 19.5%
(Loss) income before income taxes and minority interests (5.0%) 3.5% (1.2%) 3.5%
Provision for income taxes (1.7%) 1.2% (.4%) 1.2%
Minority interests - - - -
---- ---- ---- ----
Net (loss) income (3.3%) 2.3% (.8%) 2.3%
==== ==== ==== ====
The Company's net revenues for each of its markets were:
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
(In millions) 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
On-Highway Truck $ 190 $ 245 $ 384 $ 489
Construction & Industrial 92 90 179 177
Automotive 55 57 107 119
Coach & Bus 53 48 104 93
Marine 44 42 82 76
Power Generation 33 38 64 72
Military 24 32 50 57
---- ---- ---- ------
Total $ 491 $ 552 $ 970 $1,083
==== ==== ==== ======
</TABLE>
10
<PAGE> 11
THREE AND SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE THREE AND SIX MONTHS
ENDED JUNE 30, 1995
NET REVENUES. Net revenues for the three months ended June 30, 1996
were $491.3 million, a decrease of $61.2 million, or 11% from $552.5 million
for the comparable period of 1995. Net revenues for the six months ended June
30, 1996 were $970.1 million, a decrease of $113 million or 10% from $1,083.1
million for the comparable period last year. The decrease in net revenues
reflects the decline of the on-highway heavy-duty truck market in which sales
of the Company's products declined 22% and 21% for the three months and six
months ended June 30, 1996, respectively, from the comparable periods of 1995.
Also contributing to the decrease were automotive market revenues which
decreased approximately 4% and 10% for the three months and six months ended
June 30, 1996, respectively, when compared to the same period of 1995,
principally due to timing of customer requirements resulting from model
changeovers and the launch of new product programs scheduled for the latter
half of the year. Power generation revenues declined 13% for the three months
ended June 30, 1996 and 11% for the six months ended June 30, 1996 compared to
the three and six months ended June 30, 1995 resulting from continued weak
demand in the Far East region. The Company also experienced a decrease in
military market revenues of 25% and 12% for the three months and six months
ended June 30, 1996 compared to the same periods in 1995 reflecting the timing
of engine kits sold overseas and reduced defense budget levels.
The coach and bus, construction and industrial, and marine markets
partially offset decreases in other markets reflecting revenue increases of
10%, 2% and 5%, respectively, in the second quarter of 1996 compared to 1995
and 12%, 1% and 8%, respectively, during the first six months of 1996 compared
to 1995. In addition, service part sales and revenues from the Company's
remanufacturing subsidiary reflected gains over the prior year partially
offsetting the effects of the reduced truck market.
GROSS PROFIT. Gross profit for the three months ended June 30, 1996
was $112.7 million, or 22.9% of net revenues, compared to $124.9 million, or
22.6% of net revenues for the corresponding period of 1995. For the six months
ended June 30, 1996, gross profit was $224.9 million, or 23.2% of net revenues,
compared to $249.5 million, or 23.0% of net revenues for the corresponding
period of 1995. The increase in gross profit as a percent of net revenues
reflects the Company's ability to reduce costs, especially manufacturing
overtime and purchased material, combined with favorable product sales mix.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses for the three months ended June 30, 1996 were $69.4 million, or 14.1%
of net revenues, compared to $80.0 million, or 14.5% of net revenues for the
corresponding period of 1995. For the six months ended June 30, 1996, selling
and administrative expenses were $141.1 million, or 14.5% of net revenues,
compared to $159.1 million, or 14.7% of net revenues for the corresponding
period of 1995. The decreases in selling and administrative expenses as a
percent of net revenues are attributable to salaried workforce reductions and
the sale and reduced ownership of subsidiaries in the fourth quarter of 1995.
11
<PAGE> 12
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
of $27.0 million for the three months and $51.5 million for the six months
ended June 30, 1996 were $3.8 million and $4.6 million higher than the
corresponding periods of 1995. The increases are attributable to continued
development of the new Series 2000 and Series 4000 engines, off-highway
emissions efforts and increased product engineering at the company's Italian
subsidiary, VM Motori S.p.A. ("VM"), for domestic and international
applications.
SPECIAL CHARGE. Second quarter results include a special charge of
$36.3 million for product coverage expenses associated with variability in
component machining affecting a limited number of engines used in specific duty
cycles. Additionally, the Company reduced the carrying value of an investment
in Mexico by $2 million to its estimated fair value.
INTEREST EXPENSE. Interest expense of $2.6 million for the three
months and $5.4 million for the six months ended June 30, 1996, was consistent
with the same periods in 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes is
reported during the interim reporting periods on the basis of the Company's
estimated annual effective tax rate for the taxable jurisdictions in which the
Company operates. The Company's estimated effective annual tax rate for 1996
has increased to 35% from 32.5% due to the use of certain investment tax
incentives during 1995 associated with VM.
NET LOSS/INCOME. Net loss for the three months ended June 30, 1996
was $16.2 million, versus net income of $12.7 million for the comparable period
of 1995. Net loss for the six months ended June 30, 1996 was $7.9 million
versus net income of $24.7 million for the comparable period of 1995.
Excluding the special charge, net income would have been $8.7 million and $17.0
million for the three and six months ended June 30, 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary sources of liquidity have been
cash provided by operations and bank borrowings under various revolving lines
of credit and bank notes, including the Company's $300 million revolving line
of credit, of which approximately $186 million was available as of June 30,
1996. The Company's subsidiary, VM, has an additional $59 million in
unsecured, short term lines of credit with several banks, of which
approximately $53 million was available at June 30, 1996.
Cash used by operations for the six months ended June 30, 1996 was
$29.4 million, reflecting the Company's net loss for the period, adjusted for
non-cash items, and changes in working capital.
Capital expenditures were $32.7 million and $34.4 million for the
first six months of 1996 and 1995, respectively, and were used to enhance the
production lines of the Company's Series 60 and Series 55 engines, to upgrade
engineering facilities and equipment, and to upgrade facilities and equipment
at the Company's subsidiaries.
12
<PAGE> 13
The Company is subject to risks of changes in foreign currency
exchange rates due to its operations located outside of the United States,
particularly in Italy and Mexico where the Company has subsidiary activities.
During the first half of 1996, the increase in value of the Italian Lira
compared to the U.S. dollar resulted in favorable translation adjustments
relating to the Company's investment in VM. Changes in the value of the
Mexican Peso had no material impact on the Company's investments during the
first half of 1996.
The Company expects that it will be able to satisfy on-going cash
requirements (including capital expenditures for environmental compliance and
other projects), for the next 12 months and thereafter, with cash flow from
operations, supplemented, if necessary, by borrowings under its revolving lines
of credit.
PROSPECTIVE INFORMATION
The Company anticipates continued reduced demand in the North American
heavy-duty truck market compared to 1995, which will result in lower sales of
the Company's engines, particularly the Series 60 engine, in this market.
RESTRUCTURING
During the fourth quarter of 1995, the Company recorded a $10 million
before tax charge related to a restructuring plan which involved reducing
approximately 5% of its salaried workforce. Accordingly, the Company estimates
that this has resulted in savings of salaries and benefit expenses of
approximately $2.0 million in the first half of 1996 compared to the first half
of 1995. During the first six months of 1996, the Company charged $7.4 million
to the reserve associated with the plan's implementation.
CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR" UNDER THE PRIVATE SECURITIES
REFORM ACT OF 1995
This document may include projections, forecasts and other
forward-looking statements about the Company, the industry in which it competes
and the markets it serves. The achievement of such projections, forecasts and
other forward-looking statements is subject to certain risks and uncertainties,
fully detailed in the "Cautionary Statement for purposes of 'Safe Harbor' under
the Private Securities Act of 1995" in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, which is on file with the Securities and
Exchange Commission.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NUMBER DESCRIPTION
15 Letter Re: unaudited interim financial information
27 Financial Data Schedule
(b) The Company was not required to file a Form 8-K during the three months
ended June 30, 1996.
14
<PAGE> 15
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.
DETROIT DIESEL CORPORATION
Date: August 12, 1996 By: /s/ J. Randall Lawrence
------------------------
J. Randall Lawrence
Its: Senior Vice President-Finance
and Chief Financial Officer
(Principal Financial Officer)
15
<PAGE> 16
EXHIBIT INDEX
The following constitutes the exhibits to the Quarterly Report on Form
10-Q of the Company for the three and six months ended June 30, 1996:
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT PAGE NUMBER
- - -------------- ------- -----------
<S> <C> <C>
15 Letter Re: unaudited interim financial information 17
27 Financial Data Schedule 18
</TABLE>
16
<PAGE> 1
EXHIBIT 15
Detroit Diesel Corporation
13400 Outer Drive West
Detroit, Michigan 48239-4001
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Detroit Diesel Corporation and subsidiaries for the periods
ended June 30, 1996 and 1995, as indicated in our report dated July 24, 1996
(which report indicated our reliance on the review report of other accountants
with respect to their review of the interim financial statements of VM Motori,
S.p.A., a consolidated subsidiary); because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, is
incorporated by reference in Registration Statement Nos. 33-84468, 33-84470 and
333-02024 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Act.
/s/Deloitte & Touche LLP
Detroit, Michigan
August 8, 1996
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,800
<SECURITIES> 0
<RECEIVABLES> 304,300
<ALLOWANCES> 5,700
<INVENTORY> 301,000
<CURRENT-ASSETS> 681,700
<PP&E> 392,900
<DEPRECIATION> 113,500
<TOTAL-ASSETS> 1,120,400
<CURRENT-LIABILITIES> 472,900
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> 307,400
<TOTAL-LIABILITY-AND-EQUITY> 1,120,400
<SALES> 970,100
<TOTAL-REVENUES> 970,100
<CGS> 745,200
<TOTAL-COSTS> 745,200
<OTHER-EXPENSES> 230,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,400
<INCOME-PRETAX> (11,400)
<INCOME-TAX> (4,000)
<INCOME-CONTINUING> (7,900)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,900)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> (0.32)
</TABLE>
