<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1998
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 0-21803
AFTERMARKET TECHNOLOGY CORP.
----------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-4486486
- ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
900 Oakmont Lane - Suite 100, Westmont, IL 60559
- ------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (630) 455-6000
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 April 20, 1998, there were 20,030,290 shares of common stock of the
Registrant outstanding.
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AFTERMARKET TECHNOLOGY CORP.
FORM 10-Q
TABLE OF CONTENTS
Page Number
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets at March 31, 1998 (unaudited)
and December 31, 1997 ..................................... 3
Consolidated Statements of Income (unaudited) for the Three
Months Ended March 31, 1998 and 1997 ...................... 4
Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 1998 and 1997................. 5
Notes to 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
SIGNATURES............................................................. 13
EXHIBIT INDEX.......................................................... 14
EXHIBIT 11. - Statement Re Computation of Net Income Per Share......... 15
Note: Items 1 - 5 of Part II are omitted because they are not applicable.
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<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,132 $ 78
Accounts receivable, net 86,099 53,761
Inventories 101,525 76,166
Prepaid and other assets 9,823 4,706
Refundable income taxes - 1,011
Deferred income taxes 3,953 3,478
---------- ------------
Total current assets 206,532 139,200
Property, plant and equipment:
Land 1,672 -
Buildings 9,860 -
Machinery and equipment 34,393 19,335
Autos and trucks 3,503 2,712
Furniture and fixtures 6,454 3,139
Leasehold improvements 9,181 6,058
---------- ------------
65,063 31,244
Less accumulated depreciation and amortization (15,319) (6,830)
---------- ------------
49,744 24,414
Debt issuance costs, net 5,819 4,260
Cost in excess of net assets acquired, net 260,347 200,393
Other assets 2,268 410
---------- ------------
Total assets $524,710 $368,677
---------- ------------
---------- ------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $33,834 $16,055
Accrued payroll and related costs 7,959 5,820
Accrued interest payable 2,847 6,253
Other accrued expenses 8,813 4,904
Bank lines of credit 2,146 4,596
Income taxes payable 518 -
Acquisition notes payable 1,463 1,435
Due to former owners 1,409 1,614
---------- ------------
Total current liabilities 58,989 40,677
12% Series B and D Senior Subordinated Notes 121,238 121,288
Acquisition notes payable 9,303 9,097
Amount drawn on revolving credit facility 139,925 11,100
Deferred compensation 3,113 3,042
Deferred income taxes 8,525 8,044
Stockholders' equity:
Preferred stock, $.01 par value; shares
autorized - 5,000,000;
Issued and outstanding shares - none - -
Common stock, $.01 par value; shares authorized
- 30,000,000; Issued and outstanding shares
- 19,898,296 and 19,577,274 at March 31, 1998
and December 31, 1997, respectively 199 195
Additional paid-in capital 133,844 131,604
Retained earnings 49,434 43,494
Cumulative translation adjustment 140 136
---------- ------------
Total stockholders' equity 183,617 175,429
---------- ------------
Total liabilities and stockholders' equity $524,710 $368,677
---------- ------------
---------- ------------
</TABLE>
SEE ACCOMPANYING NOTES.
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<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Net sales
$107,001 $ 82,688
Cost of sales 69,523 51,113
------------ ------------
Gross profit 37,478 31,575
Selling, general and
administrative expense 21,106 17,459
Amortization of intangible assets 1,488 984
------------ ------------
Income from operations 14,884 13,132
Interest and other income 651 701
Interest expense 5,185 4,524
------------ ------------
Income before income taxes
and extraordinary item 10,350 9,309
Provision for income taxes 4,047 3,742
------------ ------------
Income before extraordinary item 6,303 5,567
Extraordinary item - net of income tax
benefit of $242 and $2,520 for 1998
and 1997 363 3,749
------------ ------------
Net income $ 5,940 $ 1,818
------------ ------------
------------ ------------
Basic earnings per common share:
Income before extraordinary item $ 0.32 $ 0.33
Extraordinary item (0.02) (0.22)
------------ ------------
Net income $ 0.30 $ 0.11
------------ ------------
------------ ------------
Weighted average number of common shares
outstanding 19,780 16,981
------------ ------------
------------ ------------
Diluted earnings per common share:
Income before extraordinary item $ 0.30 $ 0.29
Extraordinary item (0.02) (0.20)
------------ ------------
Net income $ 0.28 $ 0.09
------------ ------------
------------ ------------
Weighted average number of common and
common equivalent shares outstanding 21,266 18,866
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES.
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<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
------------ ------------
<S> <C> <C>
(Unaudited)
OPERATING ACTIVITIES:
Net Income $ 5,940 $ 1,818
Adjustments to reconcile net income to
net cash used in operating activities:
Extraordinary item 605 6,269
Depreciation and amortization 2,840 1,679
Amortization of debt issuance costs 262 220
Provision for losses on accounts receivable 155 273
Loss (gain) on sale of equipment 5 (7)
Deferred income taxes 257 160
Changes in operating assets and liabilities
(net of acquired businesses):
Accounts receivable (11,269) (4,487)
Inventories (3,527) (1,338)
Prepaid and other assets (4,504) 238
Accounts payable and accrued expenses 4,625 (12,549)
------------ ------------
Net cash used in operating activities (4,611) (7,724)
------------ ------------
INVESTING ACTIVITIES:
Purchases of equipment and leasehold improvements (1,312) (2,209)
Acquisition of companies, net of cash received (113,498) (12,184)
Proceeds from sale of equipment 194 11
------------ ------------
Net cash used in investing activities (114,616) (14,382)
------------ ------------
FINANCING ACTIVITIES:
Borrowings on revolving credit facility, net 128,825 25,000
Borrowings (payments) on bank lines of credit, net (2,450) 78
Payment of debt issuance costs (2,425) (739)
Redemption of senior subordinated notes - (44,800)
Proceeds from exercise of stock options 536 -
Payments on amounts due to former owners (205) -
------------ ------------
Net cash provided by (used in) financing activities 124,281 (20,461)
------------ ------------
Increase (decrease) in cash and cash equivalents 5,054 (42,567)
Cash and cash equivalents at beginning of period 78 46,498
------------ ------------
Cash and cash equivalents at end of period $ 5,132 $ 3,931
------------ ------------
------------ ------------
Cash paid during the period for:
Interest $ 7,938 $ 9,836
Income taxes $ 166 $ 306
</TABLE>
SEE ACCOMPANYING NOTES
- 5 -
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
Notes to Consolidated Financial Statements
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Aftermarket Technology Corp. (the "Company") as of March 31, 1998 and for the
three months ended March 31, 1998 and 1997 have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they 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 (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
Certain prior-year amounts have been reclassified to conform to the 1998
presentation.
NOTE 2: INVENTORIES
Inventories are stated at the lower of cost (first in, first out method) or
market:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- ------------------
<S> <C> <C>
Raw materials, including core inventories $29,554 $24,788
Work-in-process 3,054 3,125
Finished goods 68,917 48,253
-------- -------
$101,525 $76,166
-------- -------
-------- -------
</TABLE>
Finished goods include purchased parts which are available for sale.
NOTE 3: REVOLVING CREDIT FACILITY
In March 1998, the credit agreement for the Company's $100.0 million
credit facility with The Chase Manhattan Bank, as agent (the "Bank"), was
amended and restated as a new credit facility comprised of a $100.0 million
revolving portion and a $120.0 million term loan portion (the "New Credit
Facility") to finance the Company's working capital requirements, future
acquisitions and the acquisition of Autocraft (See Note 4). Amounts advanced
under the New Credit Facility are secured by substantially all assets of the
Company. Amounts advanced under the revolving portion of the New Credit
Facility will become due on December 31, 2003, although the Company may
prepay outstanding advances in whole or in part without incurring any premium
or penalty. The term loan portion of the New Credit Facility is due and
payable in quarterly installments beginning in September 1998 and ending on
December 31, 2003 as outlined in the agreement.
NOTE 4: ACQUISITIONS
In January 1997, the Company acquired all of the outstanding capital stock
of REPCO Industries ("REPCO"), a Texas based distributor of transmission
repair parts, for a purchase price of approximately $12.3 million, including
transaction fees and related expenses. Goodwill recorded approximated $6.8
million.
-6-
<PAGE>
In July 1997, the Company acquired substantially all of the assets of
ATS Remanufacturing ("ATS"), a remanufacturer of automatic transmissions and
related components located in Gastonia, North Carolina. In August 1997, the
Company acquired all of the outstanding capital stock of Trans Mart, Inc.
("Trans Mart"), a distributor of automatic and standard transmission parts
and related drive train components based in Florence, Alabama. To complete
these acquisitions, the Company made cash payments totaling $12.9 million and
$27.9 million for ATS and Trans Mart, respectively, including transaction
fees and related expenses. In addition, the ATS acquisition calls for
subsequent payments due on each of the first eight anniversaries of the
closing date. Substantially all of these additional payments, which will
aggregate up to approximately $19.0 million (present value $13.9 million as
of March 31, 1998), are contingent upon the attainment of certain sales
levels by ATS, which the Company believes are more likely than not to be
attained. Goodwill recorded for ATS and Trans Mart approximated $26.1
million and $20.9 million, respectively.
In November 1997, the Company acquired all of the outstanding capital
stock of Metran Automatic Transmission Parts Corp. ("Metran"), a New York
based distributor of automatic and manual transmission parts and related
drive train components, for a purchase price of approximately $8.1 million,
including transaction fees and related expenses. Goodwill recorded
approximated $5.2 million.
On March 6, 1998, the Company acquired substantially all the assets of the
OEM Division of Autocraft Industries, Inc. ("Autocraft"), a remanufacturer
and distributor of drivetrain and electronic parts used in the warranty and
aftermarket repair of passenger cars and light trucks. The purchase price
consists of approximately $115.7 million, including transaction fees and
related expenses, paid at closing and up to an additional $12.5 million to be
paid in 1999 based on the performance of the OEM Division's European
operations during 1998. Goodwill recorded approximated $62.0 million, which
would increase by up to an additional $12.5 million dependent on the
potential 1999 payment described above.
These acquisitions have been accounted for under the purchase method of
accounting. Accordingly, the allocation of the cost of the acquired assets
and liabilities has been made on the basis of the estimated fair value.
Goodwill for all acquisitions is amortized over a period not to exceed 40
years on a straight-line basis. The consolidated financial statements
include the operating results of each business from the date of acquisition.
NOTE 5: EXTRAORDINARY ITEM
The extraordinary item in 1998 consists of a pre-tax charge of $0.6
million related to the write-off of previously capitalized debt issuance
costs in connection with a restatement and amendment of the credit agreement
for the revolving credit facility in March 1998.
The extraordinary item in 1997 of $3.8 million, net of income tax benefit
of $2.5 million, consists largely of a pre-tax charge of $5.7 million related
to the early redemption of $40.0 million in principal amount of the Company's
12% Senior Subordinated Notes due 2004 (the "Senior Notes"), consisting of
the early redemption premium charge of $4.3 million plus unamortized deferred
financing fees of $1.4 million. The extraordinary item also includes a
pre-tax charge of $0.6 million related to the restructuring of the Company's
revolving credit facility. Both events occurred in February 1997.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENT NOTICE
Certain statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations that are not
related to historical results are forward-looking statements. Actual results
may differ materially from those projected or implied in the forward-looking
statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in Item 1.
"Business--Certain Factors Affecting the Company" contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. Further,
certain forward-looking statements are based upon assumptions as to future
events that may not prove to be accurate.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998 COMPARED
TO THE THREE MONTH PERIOD ENDED MARCH 31, 1997.
Income before extraordinary item increased $0.7 million, or 13.2%, from
$5.6 million for the three months ended March 31, 1997 to $6.3 million for
the three months ended March 31, 1998. Revenue growth was achieved from both
of the Company's primary customer groups: independent transmission
rebuilders, general repair shops, distributor and retail automotive parts
stores (the "Independent Aftermarket"); and original equipment manufacturers
("OEMs"). Approximately 60.1% of the revenue growth was from the Independent
Aftermarket, primarily through three strategic acquisitions: REPCO, Trans
Mart and Metran, which were acquired on January 31, 1997, August 15, 1997 and
November 15, 1997, respectively. Growth achieved from OEM customers was due
to the acquisitions of ATS and Autocraft, which were acquired on July 31,
1997 and March 6, 1998, respectively. In general, costs and expenses also
increased; however, overall the Company was able to spread its overhead
expenses over a larger revenue base, which contributed to the comparatively
higher income before extraordinary item for the quarter.
Net income increased $4.1 million, or 226.7%, from $1.8 million for the
three months ended March 31, 1997 to $5.9 million for the three months ended
March 31, 1998. In March 1998, the Company amended and restated the credit
agreement for the credit facility and recorded a $0.4 million extraordinary
charge, net of related income tax benefit. The Company recorded a $3.8
million extraordinary charge, net of related income tax benefit, for the
three months ended March 31, 1997. The extraordinary charge recorded in 1997
related primarily to the early redemption of $40.0 million of the Senior
Notes in February 1997, and to a lesser extent to the restructuring of the
Company's revolving credit facility.
On a per share basis, income before extraordinary item increased from
$0.29 per diluted share for the three months ended March 31, 1997 to $0.30
per diluted share for the three months ended March 31, 1998. After giving
effect to the extraordinary charges in the two periods, net income per
diluted share increased from $0.09 to $0.28. The number of shares used in
the per diluted share calculations were 18.9 million for the three months
ended March 31, 1997 and 21.3 million for the three months ended March 31,
1998. The increase in shares resulted primarily from the Company's public
offering of Common stock in October 1997.
Management expects that income for the quarter ending June 30, 1998 will
remain flat compared to the quarter ended June 30, 1997. However,
significant earnings growth is anticipated during the second half of 1998.
See "Net Sales."
-8-
<PAGE>
NET SALES
Net sales increased $24.3 million, or 29.4%, from $82.7 million for the
three months ended March 31, 1997 to $107.0 million for the three months
ended March 31, 1998. Incremental net sales of $27.9 million for the three
months ended March 31, 1998 were generated by the companies acquired in 1997
and 1998 (REPCO, ATS, Trans Mart, Metran and Autocraft).
Excluding the benefits of the REPCO, Trans Mart and Metran acquisitions,
net sales to Independent Aftermarket customers during the first quarter of
1998 decreased $1.0 million, or 2.4%, compared with the same quarter in the
prior year. In addition to the effects of the mild winter noted below, some
shortages of converter core prevented filling orders with certain
transmission shop customers. Recent new sources and improved tracking have
helped to alleviate this issue going forward. Sales to retail store
customers continue to be weak, therefore the Company has continued to
concentrate its sales efforts on other parts of the Independent Aftermarket.
Sales to retail store customers represented 3.8% of net sales during the
first quarter of 1998 compared with 8.4% of net sales in the same quarter in
the prior year.
Excluding the benefit of the ATS and Autocraft acquisitions, net sales to
OEM customers during the quarter ended March 31, 1998 decreased $2.6 million,
or 6.4%, compared with the same quarter in the prior year. Management
believes that the mild winter across much of the U.S. and Canada has reduced
the need for transmission replacement. In addition, management believes that
net sales to Chrysler have been affected by the implementation by Chrysler
dealers of a new diagnostic procedure that the Company developed as part of
its customer service program. This procedure enables the dealer to more
accurately determine what is wrong with a unit and appears to have resulted
in an increase in the percentage of units repaired by the dealers as opposed
to replaced with remanufactured units. Management expects that this will be
more than offset by the increased number of units available for
remanufacturing as new model years and new transmission types are introduced.
However, no assurance can be given that this will occur. Net sales to
Chrysler Corporation represented 24.3% of total net sales for the three
months ended March 31, 1998, as compared to 34.7% for the three months ended
March 31, 1997.
Management expects that net sales to OEM customers will remain soft
through the end of the quarter ending June 30, 1998 as OEMs adjust excess
inventory that resulted from the reduced need to replace transmissions during
the mild winter. However, net sales to OEM customers are expected to improve
during the second half of 1998. This will be due in part to net sales of
remanufactured rear wheel drive transmissions to Chrysler, which are expected
to begin during the second half of the year.
GROSS PROFIT
Gross profit as a percentage of net sales decreased from 38.2% for the
three months ended March 31, 1997 to 35.0% for the three months ended March
31, 1998. This decrease was principally due to the acquisitions of Trans Mart
and Metran in the second half of 1997 and the acquisition of Autocraft in
March of 1998. These recent acquisitions have lower gross profit margins than
the consolidated company.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") increased $3.6
million, or 20.9%, from $17.5 million for the three months ended March 31,
1997 to $21.1 million for the three months ended March 31, 1998. The higher
SG&A resulted largely from the ongoing incremental expenses of the companies
acquired in 1997 and 1998 (REPCO, ATS, Trans Mart, Metran and Autocraft). As
a percentage of net sales, SG&A decreased from 21.1% to 19.7% between the two
periods. This decrease was principally due to companies acquired in 1997 and
1998.
Included in SG&A expenses are non-cash charges totaling $0.2 million in
1998 and $0.5 million in 1997. These charges represent the pro rata portion
for each period of deferred
-9-
<PAGE>
compensation expense relating to the difference between the exercise price
and the intrinsic value for financial statement presentation purposes of
stock options granted by the Company in 1996. The Company expects to
recognize additional compensation expense aggregating $0.9 million over the
balance of the respective vesting periods of the options, which generally
range from three to five years from the date of grant.
AMORTIZATION OF INTANGIBLE ASSETS
Amortization of intangible assets increased $0.5 million, or 51.2%, from
$1.0 million for the three months ended March 31, 1997 to $1.5 million for
the three months ended March 31, 1998. The increase resulted from the
additional intangible assets arising from the acquisitions of REPCO, ATS,
Trans Mart, Metran and Autocraft.
INCOME FROM OPERATIONS
Principally as a result of the factors described above, income from
operations increased $1.8 million, or 13.3%, from $13.1 million for the three
months ended March 31, 1997 to $14.9 million for the three months ended March
31, 1998. As a percentage of net sales, income from operations decreased
from 15.9% to 13.9%.
INTEREST EXPENSE
Interest expense increased $0.7 million, or 14.6%, from $4.5 million for
the three months ended March 31, 1997 to $5.2 million for the three months
ended March 31, 1998. The higher interest expense was largely due to the
$120.0 million term loan portion of the Credit Facility, which was
established in order to finance the Autocraft acquisition on March 6, 1998.
EXTRAORDINARY ITEM
An extraordinary item in the amount of $0.4 million ($0.6 million, net of
related income tax benefit of $0.2 million) was recorded during the three
months ended March 31, 1998. This amount was related to the write-off of
previously capitalized debt issuance costs in connection with the restatement
and amendment of the credit agreement for the New Credit Facility.
An extraordinary item in the amount of $3.8 million ($6.3 million, net
of related income tax benefit of $2.5 million) was recorded during the three
months ended March 31, 1997. This amount was comprised of (i) a $5.7 million
charge resulting from the early redemption of $40.0 million of the Senior
Notes in February 1997, which included the payment of a 12% early redemption
premium and the write-off of related debt issuance costs and (ii) a charge of
$0.6 million for the write-off of previously capitalized debt issuance costs
in connection with the termination of the Company's previous revolving credit
facility.
-10-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had total cash and cash equivalents on hand of $5.1 million at
March 31, 1998, representing an increase in net cash of $5.1 million for the
three months then ended. Net cash used in operating activities was $4.6
million for the three-month period, including the scheduled semi-annual
interest payment of $7.2 million on the Senior Notes made February 1, 1998.
Net cash used in investing activities was $114.6 million for the period,
including $113.5 million (net of $2.2 million of cash received) for the
acquisition of Autocraft and $1.3 million in capital expenditures largely for
remanufacturing equipment. Net cash provided by financing activities of
$124.3 million was primarily from net borrowings of $128.8 million made under
the New Credit Facility, partially offset by $2.5 million in payments on bank
lines of credit and $2.4 million in payment of debt issuance costs related to
the New Credit Facility.
In March 1998 the credit agreement for the Company's credit facility was
amended and restated to provide the New Credit Facility, which consists of a
$120.0 million term loan facility in addition to the existing $100.0 million
revolving facility. The Company borrowed $120.0 million under the term loan
facility on March 6, 1998 to purchase Autocraft and pay related transaction
expenses, pay debt issuance costs related to the New Credit Facility and
contribute to its current working capital requirements. The term loan is
payable in quarterly installments through December 31, 2003 and bears
interest at a rate of at either (i) the Alternate Base Rate plus a specified
margin or (ii) the Eurodollar Rate plus a specified margin. The "Alternate
Base Rate" is equal to the highest of (a) the Bank's prime rate, (b) the
secondary market rate for three-month certificates of deposit plus 1.0% and
(c) the federal funds rate plus 0.5%, in each case as in effect from time to
time. The "Eurodollar Rate" is the rate offered by the Bank for eurodollar
deposits for one, two, three, six or, if available by all lenders, nine
months (as selected by the Company) in the interbank eurodollar market in the
approximate amount of the Bank's share of the advance under the New Credit
Facility. The applicable margins for both Alternate Base Rate and Eurodollar
Rate loans are subject to a quarterly adjustment based on the Company's
leverage ratio as of the end of the four fiscal quarters then completed. The
Alternate Base Rate margin is currently zero and the Eurodollar margin is
currently at 1.0%.
As of March 31, 1998, the Company had approximately $77.6 million
available under the revolving portion on the New Credit Facility.
The Company believes that cash on hand, cash flow from operations and
existing borrowing capacity will be sufficient to fund its ongoing operations
and its budgeted capital expenditures. In pursuing future acquisitions, the
Company will continue to consider the effect any such acquisition costs may
have on its liquidity. In order to consummate such acquisitions, the Company
may need to seek funds through additional borrowings or equity financing.
-11-
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
Part II. Other Information
Items 1 - 5 are not applicable.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Statement Re Computation of Net Income Per Share
(b) Reports on Form 8-K
During the quarter ended March 31, 1998 the Company filed the
following reports on Form 8-K:
(1) Report dated February 11, 1998 reporting under Item 5
that on February 10, 1998 the Company had entered into an
agreement with Autocraft Industries, Inc. to acquire
substantially all the assets of Autocraft's OEM Division.
(2) Report dated February 26, 1998 reporting under Item 5 (i)
the financial results for the quarter and year ended
December 31, 1997 and related earnings release dated
February 23, 1998, and (ii) additional financial
information as disclosed in a securities analyst/investor
meeting held on February 24, 1998.
(3) Report dated March 6, 1998 reporting under Item 2 the
completion of the Company's purchase of substantially all
the assets of the OEM Division of Autocraft Industries,
Inc.
-12-
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
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.
AFTERMARKET TECHNOLOGY CORP.
Date: April 30, 1998 /s/ John C. Kent
------------------------ -------------------------------------
John C. Kent, Chief Financial Officer
* John C. Kent is signing in the dual capacities as i) the principal
financial officer, and ii) a duly authorized officer of the company.
-13-
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
EXIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Paper (P) or
Number Description Electronic (E)
- ------------ ------------------------------------------------- --------------
<S> <C> <C>
11 Statement Re Computation of Net Income Per Share (P)
27.1 & 27.2 Financial Data Schedules (E)
</TABLE>
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<PAGE>
EXHIBIT 11
AFTERMARKET TECHNOLOGY CORP.
STATEMENT RE COMPUTATION OF NET INCOME PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
------------ ------------
<S> <C> <C>
(Unaudited)
Income before extraordinary item $ 6,303 $ 5,567
Extraordinary item - net of income tax benefit 363 3,749
----------- -----------
Net income per statements of income $ 5,940 $ 1,818
----------- -----------
----------- -----------
Shares:
Weighted average common shares outstanding 19,780 16,981
Net effect of stock options and warrants
outstanding, calculated using the treasury
stock method at the average price for the period 1,486 1,885
----------- -----------
Total 21,266 18,866
----------- -----------
----------- -----------
Diluted earnings per common share:
Income before extraordinary item $ 0.30 $ 0.29
Extraordinary item, net of income tax benefit (0.02) (0.20)
----------- -----------
Net income per share $ 0.28 $ 0.09
----------- -----------
----------- -----------
</TABLE>
-15-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5132
<SECURITIES> 0
<RECEIVABLES> 87338
<ALLOWANCES> 1239
<INVENTORY> 101525
<CURRENT-ASSETS> 206532
<PP&E> 65063
<DEPRECIATION> 15319
<TOTAL-ASSETS> 524710
<CURRENT-LIABILITIES> 58989
<BONDS> 121238
0
0
<COMMON> 199
<OTHER-SE> 183418
<TOTAL-LIABILITY-AND-EQUITY> 524710
<SALES> 107001
<TOTAL-REVENUES> 107652
<CGS> 69523
<TOTAL-COSTS> 91962
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 155
<INTEREST-EXPENSE> 5185
<INCOME-PRETAX> 10350
<INCOME-TAX> 4047
<INCOME-CONTINUING> 6303
<DISCONTINUED> 0
<EXTRAORDINARY> 363
<CHANGES> 0
<NET-INCOME> 5940
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.28
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 46,498,249 3,930,983 4,507,699 3,462,541
<SECURITIES> 0 0 0 0
<RECEIVABLES> 40,106,014 45,668,963 45,756,973 53,588,358
<ALLOWANCES> 1,326,476 1,491,327 1,363,358 1,558,032
<INVENTORY> 60,586,056 67,838,394 69,097,688 77,068,636
<CURRENT-ASSETS> 151,052,040 120,860,966 123,444,180 138,696,231
<PP&E> 21,056,671 23,662,382 26,327,566 29,092,607
<DEPRECIATION> 3,574,276 4,268,803 4,970,300 5,831,360
<TOTAL-ASSETS> 320,746,624 296,822,615 299,985,984 361,730,342
<CURRENT-LIABILITIES> 47,680,912 62,179,029 58,883,618 42,327,799
<BONDS> 161,981,356 121,436,441 121,386,865 121,340,364
0 0 0 0
0 0 0 0
<COMMON> 169,808 168,808 170,346 170,682
<OTHER-SE> 105,662,548 107,509,675 113,510,685 119,357,315
<TOTAL-LIABILITY-AND-EQUITY> 320,746,624 296,822,615 299,985,984 361,730,342
<SALES> 272,878,458 82,688,871 168,098,556 256,489,896
<TOTAL-REVENUES> 274,059,931 83,390,350 169,106,736 257,946,932
<CGS> 166,810,941 51,113,124 103,160,222 157,678,910
<TOTAL-COSTS> 225,390,995 69,392,520 140,614,344 214,461,494
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 667,857 164,851 273,321 869,161
<INTEREST-EXPENSE> 20,287,419 4,523,722 9,022,672 13,967,446
<INCOME-PRETAX> 27,713,660 9,309,257 19,196,399 28,648,831
<INCOME-TAX> 11,415,000 3,749,315 7,717,558 11,517,489
<INCOME-CONTINUING> 16,298,660 5,567,331 11,478,841 17,131,342
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 3,749,315 3,749,315 3,749,315
<CHANGES> 0 0 0 0
<NET-INCOME> 16,298,660 1,818,016 7,729,526 13,382,027
<EPS-PRIMARY> 1.15 0.11 0.46 0.79
<EPS-DILUTED> 1.02 0.09 0.41 0.71
</TABLE>
