<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
JUNE 30, 1998.
-------------
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 24,702,066 SHARES
---------------------------- -----------------
Class Outstanding at July 31, 1998
This report contains 16 pages. The exhibit index is on page 14.
<PAGE> 2
Detroit Diesel Corporation Form 10-Q (continued)
TABLE OF CONTENTS
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Statements of Income for the
Three and Six Months Ended June 30, 1998 and 1997 3
Consolidated Balance Sheets at June 30, 1998
and December 31, 1997 4
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1998 and 1997 5
Notes to Unaudited Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 12
SIGNATURE 13
EXHIBIT INDEX 14
2
<PAGE> 3
Detroit Diesel Corporation Form 10-Q (continued)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DETROIT DIESEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 556.3 $ 557.4 $ 1,145.1 $ 1,077.1
Cost of sales 425.3 431.4 879.7 828.9
--------- --------- ----------- -----------
Gross profit 131.0 126.0 265.4 248.2
Expenses:
Selling and administrative 88.0 86.3 179.2 169.6
Research and development 23.7 23.8 48.2 49.3
Interest 2.7 3.4 6.0 6.6
--------- --------- ----------- -----------
Total 114.4 113.5 233.4 225.5
--------- --------- ----------- -----------
Income before income taxes and 16.6 12.5 32.0 22.7
minority interests
Provision for income taxes 6.1 5.1 11.8 8.9
Minority interests 0.1 0.1
--------- --------- ----------- -----------
Net income $ 10.4 $ 7.4 $ 20.1 $ 13.8
========= ========= =========== ===========
Basic net income per share $ .42 $ .30 $ .81 $ .56
========= ========= =========== ===========
Diluted net income per share $ .42 $ .30 $ .81 $ .56
========= ========= =========== ===========
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
3
<PAGE> 4
Detroit Diesel Corporation Form 10-Q (continued)
DETROIT DIESEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DEC. 31,
1998 1997
---- ----
ASSETS (Unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 2.5 $ 3.2
Receivables, net of allowances of $5.3 and $4.4, respectively 345.3 318.8
Inventories 320.4 305.8
Prepaid expenses, deferred charges and other current assets 14.4 13.0
Deferred tax assets 55.1 52.1
---------- ----------
TOTAL CURRENT ASSETS 737.7 692.9
PROPERTY, PLANT AND EQUIPMENT -
Net of accumulated depreciation of $172.5 and $153.7, respectively 298.1 298.3
DEFERRED TAX ASSETS 17.6 18.4
INTANGIBLE ASSETS, NET 117.2 104.8
OTHER ASSETS 43.2 42.1
---------- ----------
TOTAL ASSETS $ 1,213.8 $ 1,156.5
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 21.1 $ 44.7
Accounts payable 311.5 297.0
Accrued expenses 199.2 175.0
Current portion of long-term debt and capital leases 4.4 6.9
---------- ----------
TOTAL CURRENT LIABILITIES 536.2 523.6
LONG-TERM DEBT AND CAPITAL LEASES 84.0 73.8
OTHER LIABILITIES 197.0 182.5
DEFERRED TAX LIABILITIES 26.8 25.3
DEFERRED INCOME 5.7 5.9
MINORITY INTERESTS .7 .6
COMMITMENTS AND CONTINGENCIES (NOTE 7)
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 .2 .2
Additional paid-in capital 224.2 224.2
Retained earnings 158.9 138.8
Additional minimum pension adjustment (9.7) (9.7)
Currency translation adjustment (10.2) (8.7)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 363.4 344.8
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,213.8 $ 1,156.5
========== ==========
</TABLE>
4
<PAGE> 5
Detroit Diesel Corporation Form 10-Q (continued)
DETROIT DIESEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1998 1997
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 20.1 $ 13.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 23.4 18.5
Changes in assets and liabilities which provided (used) cash:
Accounts and notes receivable (24.7) (29.2)
Inventories (14.7) 3.3
Prepaid expenses, deferred charges and other current assets (1.4) 5.6
Deferred taxes (.6) (4.8)
Accounts payable 14.1 39.4
Accrued expenses and other liabilities 36.2 5.3
Other assets (7.0) 6.1
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 45.4 58.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (20.1) (33.8)
Proceeds from sale of property, plant and equipment 1.5 (.3)
Investments in and advances to affiliates - (2.5)
Acquisition of subsidiaries, net of dispositions (13.1) 2.9
------- -------
NET CASH USED IN INVESTING ACTIVITIES (31.7) (33.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from notes payable (23.2) 7.9
Net proceeds from (repayments of) long-term debt 8.5 (25.8)
Exercise of stock options .1
------- -------
NET CASH USED IN FINANCING ACTIVITIES (14.6) (17.9)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS .2 .1
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (.7) 6.5
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 3.2 3.0
------- -------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 2.5 $ 9.5
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 6.4 $ 6.5
======= =======
Income Taxes $ 8.8 $ 1.5
======= =======
Noncash investing and financing activities:
Issuance of debt to acquire subsidiary $ 7.2
=======
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
5
<PAGE> 6
Detroit Diesel Corporation Form 10-Q (continued)
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,
1998 and December 31, 1997 and the results of its operations for the three and
six month periods ended June 30, 1998 and 1997 and its cash flows for the six
month periods ended June 30, 1998 and 1997.
The unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements included in the Company's
1997 Annual Report to Stockholders. The results of operations for the three and
six month periods ended June 30, 1998 will not necessarily be indicative of the
operating results of the full year.
NOTE 2 - INVENTORIES.
JUNE 30, DEC. 31,
($ in millions) 1998 1997
---- ----
(Unaudited)
Productive $ 184.9 $ 178.4
Service parts 95.6 90.7
Remanufactured parts 33.7 30.4
Non-productive 6.2 6.3
------------ ------------
$ 320.4 $ 305.8
============ ============
The components of productive inventory are:
Material 54% 49%
Work in process 22% 24%
Finished product 24% 27%
NOTE 3 - INTANGIBLE ASSETS.
Intangible assets include goodwill of $80.0 million and $65.1 million
at June 30, 1998 and December 31, 1997, respectively. Accumulated amortization
of intangible assets as of June 30, 1998 and December 31, 1997 was $22.5 million
and $18.8 million, respectively.
NOTE 4 - NET INCOME PER SHARE.
Basic net income per share represents net income available to common
stockholders divided by the weighted average number of common shares outstanding
during the period. For the three and six months ended June 30, 1998, the
weighted average number of shares outstanding were 24,701,899 and 24,701,858,
respectively. The weighted average number of shares outstanding were
24,699,566 for the three and six months ended June 30, 1997, respectively.
6
<PAGE> 7
Detroit Diesel Corporation Form 10-Q (continued)
Diluted net income per share represents net income available to common
stockholders divided by the weighted average number of common shares outstanding
during the period plus the weighted average dilutive effect of the Company's
incentive stock options outstanding during the period calculated using the
treasury stock method. The dilutive effect of the Company's incentive stock
options for the three and six months ended June 30, 1998 were 102,768 shares and
82,891 shares, respectively. The dilutive effect of the Company's incentive
stock options for the three and six months ended June 30, 1997 were 40,687
shares and 13,964 shares, respectively.
NOTE 5 - COMMITMENTS AND CONTINGENCIES.
The Company is contingently liable for letters of credit and guarantees
to banks aggregating $45.1 million at June 30, 1998.
NOTE 6 - COMPREHENSIVE INCOME.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standard No. 130, "Reporting Comprehensive Income," which requires
that all items recognized as components of other comprehensive income be
reported in the financial statements. Comprehensive income for the Company
generally represents items that are reported as components of stockholders'
equity in accordance with generally accepted accounting principles but have not
been recognized as part of net income. For example, other comprehensive income
for the Company may include foreign currency translation adjustments, minimum
pension liability adjustments, and deferred compensation on restricted stock.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
------- ------ ------- -------
<S> <C> <C> <C> <C>
Net income $ 10.4 $ 7.4 $ 20.1 $ 13.8
Other comprehensive income:
Foreign currency translation adjustment (0.6) (0.1) (1.5) (3.1)
Deferred compensation on restricted stock - - - 0.1
------- ------ ------- -------
Total other comprehensive income (0.6) (0.1) (1.5) (3.0)
------- ------ ------- -------
Comprehensive income $ 9.8 $ 7.3 $ 18.6 $ 10.8
======= ====== ======= =======
</TABLE>
Note 7 - CONTINGENCY.
Various heavy duty diesel engine manufacturers, including the Company,
are having on-going discussions with the U.S. Environmental Protection Agency,
the U.S. Department of Justice and the California Air Resources Board to
address concerns about the level of NOx emissions from heavy duty diesel
engines under certain driving conditions. The outcome of these discussions
could have a material impact on the Company's Financial Results. Please refer
to the Company's 1997 Form 10-k and the Management's Discussion and Analysis
section of this Form 10-Q for more information.
7
<PAGE> 8
Detroit Diesel Corporation Form 10-Q (continued)
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 Income for the comparative reporting
periods were:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of sales 76.5% 77.4% 76.8% 77.0%
----- ----- ----- -----
Gross profit 23.5% 22.6% 23.2% 23.0%
Expenses:
Selling and administrative 15.8% 15.5% 15.6% 15.7%
Research and development 4.3% 4.3% 4.2% 4.6%
Interest 0.5% 0.6% 0.5% 0.6%
----- ----- ----- -----
Total 20.6% 20.4% 20.3% 20.9%
----- ----- ----- -----
Income before income taxes 2.9% 2.2% 2.9% 2.1%
Provision for income taxes 1.9% 0.9% 1.0% 0.8%
Minority interests - - - -
----- ----- ----- -----
Net income 1.9% 1.3% 1.9% 1.3%
===== ===== ===== =====
</TABLE>
The Company's net revenues for each of its markets were:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
($ In millions) 1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
On-Highway $ 326 $ 306 $ 658 $ 582
Off-Road 154 144 314 281
Automotive 45 70 108 141
Power Generation 31 37 65 73
------ ------ ------ ------
Net revenues $ 556 $ 557 $1,145 $1,077
====== ====== ====== ======
</TABLE>
THREE AND SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE THREE AND SIX MONTHS
ENDED JUNE 30, 1997
NET REVENUES. Net revenues for the three months ended June 30, 1998
were $556.3 million compared to $557.4 million for the comparable period in
1997. Net revenues for the six-month period ended June 30, 1998 increased 6%,
compared to the same period in 1997, to $1,145.1 million.
8
<PAGE> 9
Detroit Diesel Corporation Form 10-Q (continued)
Total heavy-duty engine shipments for the three months and six months
ended June 30, 1998 were approximately 22,300 units and 45,300 units,
respectively, and represents increases of 6% and 13% over the comparable
periods of 1997. Total unit shipments for the three months and six months
ended June 30, 1998 decreased approximately 16% and 4%, respectively, when
compared to the same periods of 1997. The decrease in total unit shipments is
the result of decreases in automotive unit sales as the Company completed
production of the IBC Frontera program and shipments for other customer
applications declined relative to 1997 record levels.
Net revenues in the on-highway market increased 7% and 13% for the
three months and six months ended June 30, 1998, respectively. Strong revenues
in this area reflect consistent demand for the Company's Series 60 engine in
on-highway and coach applications and reflect the strength of the North
American On-Highway Heavy Duty Truck market. Net revenues in the off-road market
increased 7% and 12% for the three and six months ended June 30, 1998,
respectively. The increases in this market reflect shipments of the
Company's Series 2000 and Series 4000 engines combined with strong military
revenues, partially offset by a decline in two-cycle revenues. Automotive
market revenues decreased from record 1997 revenues reflecting the completion
of certain programs as discussed above. Unit volumes and revenues in this
market are expected to remain below 1997 levels for the remainder of 1998.
GROSS PROFIT. Gross profit for the three months ended June 30, 1998 was
$131.0 million, or 23.5%, an increase of $5.0 million or .9 points over the same
period last year. Gross profit for the six-month period ended June 30, 1998
was $265.4 million, an increase of $17.2 million or .2 points over the
corresponding period in 1997.
The increase in gross profit for these periods is attributed to
favorable product mix of heavy-duty engines combined with fewer automotive units
during the period and the Company's cost reduction efforts.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses for the three months ended June 30, 1998 were $88.0 million or 15.8% of
net revenues, compared to $86.3 million or 15.5% of net revenues for the
corresponding period in 1997. Selling and administrative expenses for the six
months ended June 30, 1998 were $179.2 million or 15.6% of net revenues,
compared to $169.6 million or 15.7% for the corresponding period in 1997.
The increase in selling and administrative expenses are related to
the increases in unit volumes for the Company's heavy duty engine products
offset by the Company's focus on expense controls in the selling and
administrative areas.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
for the three months ended June 30, 1998 were $23.7 million, level with the
same period in 1997. Research and development expenses for the six months ended
June 30, 1998 were $48.2 million, a decrease of $1.1 million from the same
period last year.
The decrease year to date June 30, 1998 compared to the same period in
the prior year relates primarily to decreased spending on Series 2000/4000
engine development as these new products were launched in late 1997, offset by
spending associated with product enhancements and emissions related efforts.
INTEREST EXPENSE. Interest expense decreased $0.7 million and $0.6
million for the three and six month periods ending June 30, 1998 compared to the
same periods in 1997. Interest expense decreased due to lower levels of capital
expenditures during the first six months of 1998
9
<PAGE> 10
Detroit Diesel Corporation Form 10-Q (continued)
compared to the same period in 1997. Capital expenditures decreased $13.7
million to $20.1 million for the first six months of 1998 compared to the same
period in 1997.
INCOME TAX EXPENSE. Income tax expense is reported during 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
estimates that its annual effective tax rate for 1998 is approximately 37%.
NET INCOME. Net income for the three months ended June 30, 1998 was
$10.4 million compared to $7.4 million for the comparable period in 1997. Net
income for the six months ended June 30, 1998 was $20.1 million compared to
$13.8 million for the comparable period in 1997.
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 $263 million was available as of June 30, 1998.
Additionally, the Company's subsidiary, VM Motori S.p.A. ("VM"), has $51.6
million in unsecured, short-term lines of credit with several banks, of which
approximately $44.5 million was available at June 30, 1998.
Cash provided by operations for the six months ended June 30, 1998 was
approximately $45.4 million. Capital expenditures were $20.1 million for the
first six months of 1998 and were used to upgrade existing machinery, equipment
and tooling.
The Company is subject to risks of changes in foreign currency exchange
rates due to its operations located outside of the United States. Changes in
foreign currency exchange rates are generally reported as a component of
stockholders' equity. Changes in the value of the Italian Lira, the Singapore
Dollar and the Brazilian Real impact the Company's translation adjustments.
Additionally, the Company has recorded liabilities approximating 25.1 million in
Deutsche Marks ("DM") as of June 30, 1998. Changes in the value of the DM versus
the United States Dollar will affect the Company's results of operations and
financial position.
The Company is in the process of addressing its compliance with Year
2000 issues related to its manufacturing systems, business computer systems, and
software and hardware products. The Company is in the process of updating its
current systems and software to a new operating environment, and the
modifications are expected to be completed by the end of 1998 to permit
sufficient test time during 1999. The Company is also reviewing its software and
hardware and is developing appropriate plans to ensure year 2000 compliance. The
Company believes that the costs associated with Year 2000 compliance will not be
material to its results of operations or financial position, although the total
cost of compliance is not yet known.
As discussed in the Company's 1997 Form 10-K, heavy-duty diesel
engine manufacturers, including the Company, are having on-going discussions
with the U.S. Environmental Protection Agency
10
<PAGE> 11
Detroit Diesel Corporation Form 10-Q (continued)
("EPA"), the U.S. Department of Justice and the California Air Resources
Board ("CARB") to address concerns about the level of NOx emissions from
heavy-duty diesel engines under certain driving conditions. The Company
believes its engines are in compliance with the applicable emissions standards
and fully supports cooperative efforts of industry and government to meet
increasingly stringent standards. Both the EPA and CARB have issued conditional
certificates of conformity on certain 1998 on-highway diesel engine families.
The Company is hopeful that an agreement with the Government can be reached,
however, any such agreement could have a material impact on the Company's
financial results. Please refer to the Company's 1997 Form 10-K on file with
the Securities and Exchange Commission for more information.
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 $300 million
revolving line of credit.
PROSPECTIVE INFORMATION
The Company anticipates continued improvement in financial performance
throughout the remainder of 1998, based upon current forecasts, primarily
generated through a continued emphasis on cost reduction activities and
operating performance enhancements, combined with moderate overall revenue
growth. Cost reduction programs such as Continuous Customer Value Improvement
(CCVI) and PowerEvolution, a comprehensive remake of the Company's off-road
products and services designed to update product technology, broaden its power
range, improve efficiency and increase shareholder value, are expected to have
a positive impact on operating margins and earnings in 1998 and into the
future. Shipments of the Series 2000 and Series 4000 engines in off-road
markets are expected to increase, while the transition of certain customer
programs within the automotive sector is expected to result in lower unit
volume in 1998.
The Company's primary production facility located in Michigan employs
approximately 2,000 employees represented by the International Union, The United
Automobile, Aerospace and Agricultural Implement Workers of America, Local 163
("UAW") under a four-year collective bargaining agreement which expires on
August 30, 1998. The Company has commenced negotiations with the UAW and has no
reason to believe it will not reach a satisfactory new agreement.
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, 1997, which is on file with the Securities and
Exchange Commission.
11
<PAGE> 12
Detroit Diesel Corporation Form 10-Q (continued)
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
11 Statement of Computation of Earnings Per Share
27 Financial Data Schedule
12
<PAGE> 13
Detroit Diesel Corporation Form 10-Q (continued)
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, 1998
By: /s/ R. E. Belts
-------------------------------
R. E. Belts
Its: Senior Vice President-Finance
and Chief Financial Officer
(Principal Financial Officer)
13
<PAGE> 14
Detroit Diesel Corporation Form 10-Q (continued)
EXHIBIT INDEX
The following constitutes the exhibits to the Quarterly Report on Form
10-Q of the Company for the period ended June 30, 1998:
SEQUENTIAL
PAGE
EXHIBIT EXHIBIT ----
NUMBER ------- NUMBER
------- ------
11 Statement of Computation of Earnings Per Share 15
27 Financial Data Schedule 16
14
<PAGE> 1
Detroit Diesel Corporation Form 10-Q (continued)
EXHIBIT 11
Detroit Diesel Corporation
Statement of Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic net income per share
Net income $ 10,400,000 $ 7,400,000 $ 20,100,000 $ 13,800,000
Weighted average number of shares outstanding 24,701,899 24,699,566 24,701,858 24,699,566
------------- ------------- ------------- -------------
Basic net income per share $ 0.42 $ 0.30 $ 0.81 $ 0.56
============= ============= ============= =============
Diluted net income per share:
Net income $ 10,400,000 $ 7,400,000 $ 20,100,000 $ 13,800,000
Weighted average number of shares outstanding 24,701,899 24,699,566 24,701,858 24,699,566
Dilutive effect of stock options 102,768 (1) 40,687 (2) 82,891 (1) 13,964 (2)
------------- ------------- ------------- -------------
Weighted average number of shares outstanding 24,804,667 24,740,253 24,784,749 24,713,530
------------- ------------- ------------- -------------
Diluted net income per share $ 0.42 $ 0.30 $ 0.81 $ 0.56
============= ============= ============= =============
</TABLE>
(1) Represents the weighted average dilutive effect of 301,310,
265,250, 103,750, 20,000, 2,500 and 219,250 stock options
exercisable at $20.00, $17.00, $23.75, $21.81, $23.94 and $22.69
per share, respectively, calculated using the treasury stock
method.
(2) Represents the weighted average dilutive effect of 300,250,
267,500, 106,000 and 5,000 stock options exercisable at $20.00,
$17.00, $23.75 and $18.00 per share, respectively, calculated
using the treasury stock method.
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,500
<SECURITIES> 0
<RECEIVABLES> 350,647
<ALLOWANCES> 5,347
<INVENTORY> 320,400
<CURRENT-ASSETS> 737,700
<PP&E> 470,600
<DEPRECIATION> 172,500
<TOTAL-ASSETS> 1,213,800
<CURRENT-LIABILITIES> 536,200
<BONDS> 84,000
0
0
<COMMON> 200
<OTHER-SE> 363,200
<TOTAL-LIABILITY-AND-EQUITY> 1,213,800
<SALES> 1,145,100
<TOTAL-REVENUES> 1,145,100
<CGS> 879,700
<TOTAL-COSTS> 879,700
<OTHER-EXPENSES> 226,386
<LOSS-PROVISION> 1,014
<INTEREST-EXPENSE> 6,000
<INCOME-PRETAX> 32,000
<INCOME-TAX> 11,800
<INCOME-CONTINUING> 20,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,100
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.81
</TABLE>
