-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ib4RN98URZJerVCR2aSAV19z0ybUTZl7VyKGOtmHNjegkIm+q0iJwIT8mg1wf4Ox Vge4gT/xJVJD/IMIM4I8mQ== 0001005477-01-002117.txt : 20010326 0001005477-01-002117.hdr.sgml : 20010326 ACCESSION NUMBER: 0001005477-01-002117 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20010323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELAMEX SA DE CV CENTRAL INDEX KEY: 0001009302 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-27992 FILM NUMBER: 1577797 BUSINESS ADDRESS: STREET 1: AVENIDA INSURGENTES NO 4145-B OTE STREET 2: CD JUAREZ CHICHUAHUA CITY: MEXICO CP 32340 STATE: O5 BUSINESS PHONE: 9157748333 MAIL ADDRESS: STREET 1: ELAMEX SA DE CV STREET 2: 220 N KANSAS, SUITE 566 CITY: EL PASO STATE: TX ZIP: 79901 10-Q/A 1 0001.txt 10-Q/A ================================================================================ FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------------- (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2000 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: 0-27992 ELAMEX, S.A. de C.V. (Exact name of registrant as specified in its charter) Mexico Not Applicable (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) Avenida Insurgentes No. 4145-B Ote. Cd. Juarez, Chihuahua Mexico C.P. 32340 (Address of principal executive offices) (Zip code) (915) 774-8252 Registrant's telephone number, including area code in El Paso, Texas 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 Class I Common Stock, no par value of the Registrant outstanding as of August 15 2000 was: 6,866,100 EXPLANATORY NOTE: This amendment on Form 10-Q/A amends the Registrant's Quarterly Report Form 10-Q for the quarter ended June 30, 2000, as filed by the Registrant on August 15, 2000, and is being filed to reflect the restatement of the Registrant's unaudited consolidated condensed financial statements (see Note 2 to the unaudited consolidated condensed financial statements). ELAMEX, S.A. DE C.V. AND SUBSIDIARIES TABLE OF CONTENTS
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Consolidated Condensed Balance Sheets as of June 30, 2000 and December 31, 1999 ...................................................................................... 1 Unaudited Consolidated Condensed Statements of Operations for the twenty-six and thirteen week periods ended June 30, 2000 and July 02, 1999 ............................................. 2 Unaudited Consolidated Condensed Statements of Cash Flows for the twenty-six week periods ended June 30, 2000 and July 02, 1999 ............................................. 3 Notes to Unaudited Consolidated Condensed Financial Statements ............................ 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...... 7 Item 3. Qualitative and Quantitative Disclosures About Market Risk ................................ 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings ..................................................................... 10 Item 2. Changes in Securities and use of proceeds ............................................. 10 Item 3. Defaults upon Senior Securities ....................................................... 10 Item 4. Submission of Matters to a Vote of Security Holders ................................... 10 Item 5. Other Information ..................................................................... 10 Item 6. Exhibits and Reports on Form 8-K ...................................................... 10 SIGNATURES............................................................................................... 11
PART I FINANCIAL INFORMATION ITEM 1. Financial Statements ELAMEX, S.A. DE C.V. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (In U. S. Dollars) (Unaudited)
June 30, 2000 (As Restated December 31, See Note 2) 1999 ----------------- -------------- Assets Current assets: Cash and cash equivalents $ 46,030,499 $ 7,164,115 Receivables Trade accounts, net 21,281,398 30,757,105 Other receivables 4,237,275 2,371,984 ------------- ------------- Total receivables, net 25,518,673 33,129,089 Inventories, net 6,201,842 21,211,814 Refundable income taxes 1,084,992 Prepaid expenses 5,192,676 1,294,200 ------------- ------------- Total current assets 82,943,690 63,884,210 Property, plant and equipment, net 44,528,554 52,874,539 Goodwill, net of accumulated amortization 9,701,173 9,948,662 Other assets, net 487,574 516,582 ------------- ------------- $ 137,660,991 $ 127,223,993 ============= ============= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,981,801 $ 19,807,188 Accrued expenses 5,647,650 5,235,091 Notes payable and current portion of long-term debt 8,165,004 4,364,289 Taxes payable 676,953 606,092 Deferred income taxes, net 99,430 4,991,335 ------------- ------------- Total current liabilities 34,570,838 35,003,995 Long-term debt, excluding current portion 18,652,661 26,454,901 Other liabilities 141,379 208,412 Deferred income taxes, net 1,623,474 451,484 ------------- ------------- Total liabilities 54,988,352 62,118,792 Minority interest 740,365 1,677,446 Commitments and contingencies -- -- Stockholders' equity: Common stock, 22,400,000 shares authorized, 7,400,000 issued and 6,866,100 outstanding 35,060,468 35,060,468 Retained earnings 49,389,938 30,885,419 Treasury stock (2,518,132) (2,518,132) ------------- ------------- Total stockholders' equity 81,932,274 63,427,755 ------------- ------------- $ 137,660,991 $ 127,223,993 ============= =============
See Notes to Unaudited Consolidated Condensed Financial Statements 1 ELAMEX, S.A. DE C.V. AND SUBSIDIARIES Consolidated Condensed Statements of Operations (In U. S. Dollars) (Unaudited)
13 Weeks Ended 26 Weeks Ended ----------------------------------- --------------------------------- June 30, 2000 July 02, 1999 June 30, 2000 July 02, 1999 (As Restated (As Restated See Note 2) See Note 2) ----------------- ---------------- --------------- ---------------- Net sales $ 46,693,079 $ 32,195,276 $ 98,019,073 $ 63,695,983 Cost of sales 45,377,105 28,735,459 94,127,256 57,317,731 ----------------- ---------------- --------------- ---------------- Gross Profit 1,315,974 3,459,817 3,891,817 6,378,252 ----------------- ---------------- --------------- ---------------- Operating expenses: General & administrative 4,367,870 1,954,298 7,096,388 3,873,756 Selling 467,150 429,508 992,158 920,075 Research and development -- 453,547 -- 1,003,145 ----------------- ---------------- --------------- ---------------- Total operating expenses 4,835,020 2,837,353 8,088,546 5,796,976 ----------------- ---------------- --------------- ---------------- Operating (loss) income (3,519,046) 622,464 (4,196,729) 581,276 ----------------- ---------------- --------------- ---------------- Other income (expense): Interest income 450,784 215,233 562,989 491,656 Interest expense (705,382) (129,303) (1,662,951) (209,797) Other, net 469,532 308,260 898,598 518,024 Gain on sale of EMS operation 20,535,390 -- 20,535,390 -- ----------------- ---------------- --------------- ---------------- Total other income 20,750,324 394,190 20,334,026 799,883 ----------------- ---------------- --------------- ---------------- Income before income taxes and minority interest 17,231,278 1,016,654 16,137,297 1,381,159 Income tax (benefit) provision (1,210,144) 251,644 (1,430,141) 525,875 ----------------- ---------------- --------------- ---------------- Income before minority interest 18,441,422 765,010 17,567,438 855,284 Minority interest 572,463 37,089 937,081 401,333 ----------------- ---------------- --------------- ---------------- Net income $ 19,013,885 $ 802,099 $ 18,504,519 $ 1,256,617 ================= ================ =============== ================ Net income per common share - basic and diluted $ 2.77 $ 0.12 $ 2.70 $ 0.18 ================= ================ =============== ================ Shares used to compute net (loss) income per share - basic and diluted 6,866,100 6,866,100 6,866,100 6,866,100 ================= ================ =============== ================
See Notes to Unaudited Consolidated Condensed Financial Statements 2 ELAMEX, S.A. DE C.V. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (In U. S. Dollars) (Unaudited)
26 Weeks Ended ------------------------------------------------- June 30, July 02, 2000 1999 ---------------------- -------------------- (As Restated See Note 2) ---------------------- -------------------- Cash flows from operating activities: Net income $ 18,504,519 $ 1,256,617 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 3,051,878 2,368,903 Gain on sale of EMS operation (20,535,390) -- Minority interest in loss of consolidated subsidiaries (937,081) (401,333) Deferred income taxes (3,719,915) (3,335,877) Loss on sale of equipment -- 146,587 Change in operating assets and liabilities, net of effects from sale of EMS operation for 2000: Trade accounts receivable (646,361) (47,191) Other receivables (2,043,502) (597,034) Related party note receivable -- 6,210,149 Inventories 1,783,733 (973,975) Refundable income taxes 1,084,992 -- Prepaid expenses (3,999,880) 1,107,949 Other assets (35,467) 69,739 Accounts payable 5,527,317 (8,924) Accrued expenses 194,435 1,241,332 Taxes payable 70,861 -- Other liabilities (67,033) 61,959 ------------ ------------ Net cash (used in) provided by operating activities (1,766,894) 7,098,901 ------------ ------------ Cash flows from investing activities: Purchase of property, plant and equipment (6,359,417) (1,622,658) Proceeds from sale of equipment -- 111,505 Proceeds from sale of EMS operation 51,146,867 -- ------------ ------------ Net cash provided by (used in) investing activities 44,787,450 (1,511,153) ------------ ------------ Cash flows from financing activities: Proceeds from notes payable 3,800,715 -- Repayment of long-term debt (7,802,240) -- Principal repayments of capital lease obligations (152,647) (290,331) Minority interest contribution -- 163,936 ------------ ------------ Net cash used in financing activities (4,154,172) (126,395) ------------ ------------ Net increase in cash and cash equivalents 38,866,384 5,461,353 Cash and cash equivalents, beginning of period 7,164,115 5,697,035 ------------ ------------ Cash and cash equivalents, end of period $ 46,030,499 $ 11,158,388 ============ ============
See Notes to Unaudited Consolidated Condensed Financial Statements 3 ELAMEX, S.A. DE C.V. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (1) GENERAL The accompanying consolidated condensed financial statements of Elamex, S.A. de C.V., and subsidiaries ("Elamex" or the "Company") are unaudited and certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. While management of the Company believes that the disclosures presented are adequate to make the information presented not misleading, interim consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's 1999 annual report on Form 10-K. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial position as of June 30, 2000, the results of operations for the twenty-six and thirteen week periods ended June 30, 2000 and July 02, 1999 and cash flows for the twenty-six week periods ended June 30, 2000 and July 2, 1999. The consolidated condensed balance sheet as of December 31, 1999 is derived from the December 31, 1999 audited consolidated financial statements. The results of operations for the twenty-six and thirteen week periods ended June 30, 2000 are not necessarily indicative of the results to be expected for the entire year. (2) RESTATEMENT Subsequent to the issuance of the Company's unaudited condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2000, certain matters came to the attention of the Company's management that indicated potential errors were made in the financial statements of its Qualcore joint venture. The Company conducted an internal investigation of Qualcore's accounting and financial reporting practices and based upon the results of the investigation, concluded that certain transactions had been improperly accounted for during the quarters ended March 31, 2000 and June 30, 2000. The primary errors for the three and six-month periods ended June 30, 2000 were: o Unrecorded and improperly billed freight invoices from late production runs that resulted in chartered air freight deliveries in order to meet customer demand; o Expenses improperly capitalized related to the construction and start-up of the Celaya plant; and o Other unrecorded expenses, primarily unrecorded expenses incurred on behalf of contract customers and provisions for obsolete inventories As a result, the accompanying unaudited condensed consolidated financial statements as of June 30, 2000 and for the three and six-month periods then ended have been restated from the amounts previously reported. A summary of the significant effects of the restatement is as follows:
Thirteen-weeks Ended Twenty-six Weeks Ended June 30, 2000 June 30, 2000 As Previously As Previously Reported As Restated Reported As Restated -------- ----------- -------- ----------- Net sales......................................... $ 47,105,974 $ 46,693,079 $ 98,532,455 $ 98,019,073 Gross profit...................................... 2,305,116 1,315,974 5,054,446 3,891,817 Operating expenses................................ 4,721,020 4,835,030 7,914,546 8,088,546 Income before income taxes and minority interest.. 18,306,998 17,231,278 17,556,205 16,137,297 Minority interest................................. 35,000 572,463 228,058 937,081 Net income ....................................... 19,552,142 19,013,885 19,214,404 18,504,519 Net income per common share - basic and diluted... 2.85 2.77 2.80 2.70
4
As of June 30, 2000 As Previously Reported As Restated ----------------- ---------------- Accounts receivable - trade......................... $ 21,779,188 $ 21,281,398 Other receivables................................... 4,346,646 4,237,275 Inventories, net.................................... 6,249,842 6,201,842 Prepaid expenses.................................... 5,254,566 5,192,676 Property, plant & equipment, net.................... 44,912,930 44,528,554 Total assets ....................................... 138,762,418 137,660,791 Accrued expenses.................................... 5,330,169 5,647,650 Minority interest .................................. 1,449,388 740,365 Retained earnings .................................. 50,099,823 49,389,938
(3) GAIN ON DISPOSITION OF EMS OPERATION Effective May 23, 2000 the Company sold its contract electronics manufacturing services (EMS) operation for cash proceeds of approximately $51.2 million and realized a pre-tax gain of $20.5 million. The EMS operation had revenues of approximately $26.8 million through May 23, 2000, which represented 28% of consolidated revenues of the Company for the twenty-six week period ended June 30, 2000. (4) INVENTORIES
Inventories consist of the following: June 30, December 31, 2000 1999 ---------------- ---------------- Raw materials $ 4,307,125 $ 16,550,810 Work-in-process 865,025 1,510,236 Finished goods 1,105,389 4,204,528 ---------------- ---------------- 6,277,539 22,265,574 Reserve for excess and obsolete inventory (75,697) (1,053,760) ---------------- ---------------- $ 6,201,842 $ 21,211,814 ================ ================
(5) FOREIGN CURRENCY TRANSLATION Included in "other, net" in the accompanying unaudited consolidated condensed statements of operations are foreign exchange (losses) gains of ($8,382) and $(96,040) for the thirteen and twenty-six weeks ended June 30, 2000 respectively and $35,354 and $30,441 for the thirteen and twenty-six weeks ended July 02, 1999 respectively. 5
Assets and liabilities denominated in pesos are summarized as follows in U. S. dollars: June 30, December 31, 2000 1999 ------------------ ------------------ Cash and cash equivalents $ 1,461,159 $ 121,077 Other receivables 2,993,504 1,917,023 Prepaid expenses 480,936 4,489,299 Other assets, net 141,655 598,237 Accounts payable (501,688) (1,828,987) Accrued expenses and other liabilities (6,383,167) (7,215,736) ------------------ ------------------ Net non-U.S. currency position $ (1,807,601) $ (1,919,087) ================== ==================
(6) INCOME TAXES The Company has applied Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Under SFAS No.109, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for the estimated future effects of tax loss carryforwards. Deferred tax assets are reduced by any tax benefit, the realization of which is not considered to be more likely than not. In accordance with SFAS No.109, the Company has calculated taxes based on its operations subject to tax in Mexico as well as its operations subject to tax in the U.S., resulting in an overall effective tax rate for the twenty-six weeks ended June 30, 2000 of a benefit of approximately 8%. The primary differences between the overall effective tax rate and the statutory rates of 35% for both Mexico and the U.S. are basis differences in the shares of the EMS operation disposed of in the quarter ended June 30, 2000, currency and inflationary gains and losses in Mexico and non-deductible goodwill in the U.S. In addition, the Company has established a valuation allowance to offset the tax benefit associated with certain asset tax carryforwards of individual Mexican subsidiaries and Qualcore tax loss carryforwards, as realization of those benefits are not considered more likely than not at this time. (7) EARNINGS PER SHARE Basic and diluted net income per share ("EPS") for the thirteen and twenty-six week periods ended June 30, 2000 and July 02, 1999 were calculated using the weighted average number of common shares outstanding during each period. The weighted average number of common shares outstanding for the thirteen and twenty-six week periods ended June 30, 2000 and July 02, 1999 were 6,866,100. The Company has no dilutive securities. (8) NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities which is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Given the Company's current operations and policies, management believes that the adoption of SFAS 133 will not have a material impact on the consolidated financial statements of the Company. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101). SAB 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB 101, as amended, is effective beginning in the fourth quarter of 2000. Given the Company's current operations and policies, the adoption of SAB101 is not expected to have a material impact on the consolidated financial statements of the Company. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS GENERAL Subsequent to the issuance of the Company's unaudited condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2000, certain matters came to the attention of the Company's management that indicated potential errors were made in the financial statements of its Qualcore joint venture. The Company conducted an internal investigation of Qualcore's accounting and financial reporting practices and based upon the results of the investigation, concluded that certain transactions had been improperly accounted for during the quarters ended March 31, 2000 and June 30, 2000. The primary errors for the three and six-month periods ended June 30, 2000 were: o Unrecorded and improperly billed freight invoices from late production runs that resulted in chartered air freight deliveries in order to meet customer demand; o Expenses improperly capitalized related to the construction and start-up of the Celaya plant; and o Other unrecorded expenses, primarily unrecorded expenses incurred on behalf of contract customers and provisions for obsolete inventories As a result, the accompanying unaudited condensed consolidated financial statements as of June 30, 2000 and for the three and six-month periods then ended have been restated from the amounts previously reported. The following Management's Discussion and Analysis of Financial Conditions and Results of Operations gives effect to the restatement. The following table sets forth statements of operations data as a percentage of net sales, derived from the unaudited consolidated condensed financial statements included elsewhere herein, for each period presented, unless otherwise indicated.
PERCENTAGE OF NET SALES (UNAUDITED) Thirteen weeks ended Twenty-six weeks ended ------------------------------- ------------------------------ June 30, 2000 July 02, 1999 June 30, 2000 July 02, 1999 ------------- ------------- ------------- ------------- Net sales.............................. 100% 100% 100% 100% Cost of sales.......................... 97.2 89.3 96.0 90.0 Gross profit........................... 2.8 10.7 4.0 10.0 Selling, general and administrative 10.4 7.4 8.3 7.5 expenses............................. Research and development............... - 1.4 - 1.6 Operating (loss) income................ (7.5) 1.9 (4.3) 0.9 Other income .......................... 44.4 1.2 20.7 1.3 Income before income taxes and 36.9 3.2 16.5 2.2 minority interest.................... Income tax (benefit) provision......... (2.6) 0.8 (1.5) 0.8 Income before minority interest........ 39.5 2.4 17.9 1.3 Minority interest...................... 1.2 0.1 1.0 0.6 Net income ............................ 40.7% 2.5% 18.9% 2.0%
NET SALES Net sales for the thirteen weeks ended June 30, 2000 increased 45% to $46.6 million from $32.2 million for the comparable period in 1999. Net sales for the twenty-six weeks ended June 30, 2000 increased 54% to $98 million from $63.7 million for the comparable period in 1999. The increase in sales during the first two quarters was primarily attributable to the Precision Tool and Die operation, which was acquired in the third Quarter of 1999 and to growth in sales in our Plastics and metal stamping operations, partially offset by the sale of the EMS operation in May 2000. GROSS PROFIT Gross Profit decreased 62% to $1.3 million or 2.8% of sales for the thirteen weeks ended June 30, 2000, as compared to $3.5 million or 10.7% of sales, for the same period of the prior year. Gross profit decreased 39% to $3.9 million or 4% of sales for the twenty-six weeks ended June 30, 2000, as compared to $6.4 million or 10% of sales, for the same period of the prior year. This decrease in gross margin was due to an increase in peso denominated labor costs of 13% in the first quarter of this year; a higher cost of sales associated with Precision's higher material content; and an upward revaluation 7 of the mexican peso against the U.S. dollar resulting in higher dollar equivalent costs of peso denominated non-labor expenses. SELLING, GENERAL AND ADMINISTRATIVE AND RESEARCH AND DEVELOPMENT EXPENSES Operating expenses increased 70.4% to $4.8 million for the thirteen weeks ended June 30, 2000, compared to $2.8 million for the same period of the prior year. Operating expenses increased 39.5% to $8.1 million for the twenty-six weeks ended June 30, 2000, compared to $5.8 million for the same period of the prior year. The increase is primarily due to a non-recurring severance personnel and management costs directly resulting from the sale of the EMS operation, the consolidation of Precision and peso denominated cost increases with no offsetting effect in the exchange rate. The increase in operating expenses was partially offset by a decrease in R&D expenses related to the Optimag operation sold in October of the prior year. OTHER INCOME Other income for the thirteen weeks ended June 30, 2000 was $20.8 million and $394 thousand for the thirteen weeks ended July 02, 1999. Other income for the twenty-six weeks ended June 30, 2000 was $20.3 million and $800 thousand for the thirteen weeks ended July 02, 1999. During the second quarter, the Company recognized a gain of $20.5 million as a result of the sale of the EMS operation. During the first quarter of 2000, Elamex recognized a gain on the sale of securities of $445 thousand. These gains were offset by an increase in net interest expense of $341 thousand for the thirteen-week period and $1.4 million for the twenty-six week period, over the prior year comparable period, due primarily to the financing cost of acquiring Precision. INCOME TAXES Income tax provision decreased to a benefit of $1.2 million for the thirteen weeks ended June 30, 2000 from a provision of $0.3 million for the thirteen weeks ended July 2, 1999. Income tax provision decreased to a benefit of $1.4 million for the twenty-six weeks ended June 30, 2000 from a provision of $0.5 million for the twenty-six weeks ended July 2, 1999. The reduction in the tax provision is due primarily to a basis difference in the shares of the EMS operation disposed of in the second quarter ended June 30, 2000. NET INCOME Net income for the thirteen weeks ended June 30, 2000 was $19 million and $802 thousand for the thirteen weeks ended July 02, 1999. Net income for the twenty-six weeks ended June 30, 2000 was $18.5 million and $1.3 million for the twenty-six weeks ended July 02, 1999. Basic and diluted net income per common share for the thirteen weeks ended June 30, 2000 was $2.77 and $0.12 for the thirteen weeks ended July 02, 1999. Basic and diluted net income per common share for the twenty-six weeks ended June 30, 2000 was $2.7 and $0.18 for the twenty-six weeks ended July 02, 1999. At June 30, weighted average shares outstanding were 6,866,100, which is equal to weighted average shares outstanding for the same period in 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital (defined as current assets minus current liabilities) as of June 30, 2000 increased by $20.6 million from December 31, 1999 primarily due to an increase in cash of $38.9 million, a decrease of current deferred income taxes accrued of $4.9 million partially offset by a decrease in receivables of $7 million, a decrease in inventories of $15 million and an increase in notes payable and current portion of long term debt of $3.8 million. The increase in cash of $38.9 million was primarily due to the proceeds from the sale of EMS operation. A portion of the sale proceeds was used to repay the outstanding balance of a revolving credit facility that had been used to fund the acquisition of Precision; the rest will be used to increase our market share in our custom component manufacturing operations such as metal stamping and plastics injection molding and our shelter services through acquisitions and green field investments. Under its several credit agreements, the Company has committed to maintain certain financial covenants: (a) A leverage ratio (defined as the ratio of the sum of funded debt less cash equivalent to EBITDA), not in excess of 2.7 to 1.0 (b) Tangible Net Worth equal to or greater than $45 million (c) Interest Coverage Ratio not less than 2.5 to 1.0 8 (d) Current Ratio not less than 1.25 to 1.0 (e) Receivables Collection Ratio not less than $4.5 million As of the end of the quarter ended June 30, 2000, the Company was in compliance with all of the above financial ratios. During the first two quarters of 2000, the Company invested $6.7 million in property, plant & equipment. These investments were primarily to complete the installation of the new 1100 metric ton press and powder paint line in Precision in the amount of $4.4 million, leasehold improvements to our recently completed Las Torres plant for $800 thousand, and investment of $1 million in machinery and equipment in our Qualcore operation in Mexico. NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS NO. 133, Accounting for Derivative Instruments and Hedging Activities and is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Given the Company's current operations and policies, the adoption of SFAS 133 is not expected to have a material impact on the financial statements of the Company. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB101"). SAB 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB 101, as amended, is effective beginning in the fourth quarter of 2000. Given the Company's current operations and policies, the adoption of SAB101 is not expected to have a material impact on the consolidated financial statements of the Company. FORWARD LOOKING COMMENTS This Form 10-Q/A includes forward-looking statements that involve risks and uncertainties, including, but not limited to, risks associated with the Company's future growth and profitability, the ability of the Company to continue to increase sales to existing customers and to new customers and the effects of competitive and general economic conditions. There can be no assurance that the Company's principal customers will continue to purchase products and services from the Company at current levels, if at all, and the loss of one or more major customers could have a material adverse effect on the Company's results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Elamex's functional currency is the U.S. dollar and is exposed to the risk of currency fluctuations of the Mexican Peso against the U.S. dollar. Elamex's currency fluctuation risk management objective is to limit the impact of currency fluctuations. Elamex has adopted a policy of not engaging in future contracts with the purpose of hedging U.S. dollar/Peso revenues or costs, with the exception of regular treasury operations to cover operating requirements for up to thirty days. Elamex and certain of its subsidiaries are exposed to some market risk due to the floating interest rate under its revolving lines of credit, notes payable and long-term debt. Floating-rate obligations aggregated $26.8 million at June 30, 2000, inclusive of amounts borrowed under short-term and long-term credit facilities. A 1.0 % increase in interest rates would result in a $268 thousand annual increase in interest expense on the existing principal balance. The Company has determined that it is not necessary to participate in interest rate-related derivative financial instruments because it currently does not expect significant short-term increases in interest rates charged under its borrowings. 9 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of Security Holders during the period covered by this report. ITEM 5. OTHER INFORMATION Elamex, S.A. de C.V. intends to provide periodic reports pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. It expects that its annual reports will be filed on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, or equivalent forms, following the customary time deadlines therefor; but, as a foreign private issuer, it is entitled to report on Form 20-F and Form 6-K and it hereby reserves all of its rights to use such forms or their equivalent as permitted for such an issuer under applicable laws, rules and regulations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits EXHIBIT NUMBER DESCRIPTION 3 Estatutos Sociales (By-Laws) of the Registrant (including English translation).* *Filed as an exhibit to the Company's Registration Statement on Form S-1, file No. 333-01768 27 Financial Data Schedule (b) Reports on Form 8-K The Company filed one report on Form 8-K during the quarter ended June 30, 2000. i) On June 6, 2000, the Company filed a Form 8-K reporting the sale of its contract electronics manufacturing services operation. 10 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, in Ciudad Juarez, Chihuahua, Mexico. ELAMEX, S.A. de C.V. Date: March 22, 2001 BY: /s/ Hector M. Raynal -------------------------------------- Hector M. Raynal PRESIDENT AND CHIEF EXECUTIVE OFFICER (DULY AUTHORIZED OFFICER) Date: March 22, 2001 BY: /s/ Daniel L. Johnson --------------------------------------- Daniel L. Johnson VICE-PRESIDENT OF FINANCE AND CHIEF FINANCIAL OFFICER
11 EX-27 2 0002.txt FDS--
5 The financial data schedule contains financial information extracted from the restated consolidated condensed financial statements of Elamex, S.A. de C.V. as of and for the six-month period ended June 30, 2000 and is qualified in its entirety by reference to such consolidated condensed financial statements. 6-MOS DEC-31-2000 JUN-30-2000 46,030 0 26,195 676 6,202 82,944 60,230 (15,701) 137,661 34,571 0 0 0 35,060 46,872 137,661 98,019 98,019 94,127 8,089 (21,434) 0 1,100 16,137 (1,430) 17,567 0 0 0 18,505 2.70 2.70
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