-----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, GniCmwzQlKrYGffLj+oVWLfeAlfccCAtB9kqqN70+y0GlB1qM9s7vk+V1WN//laG VCbEAZXFUkArB33rqfTQyw== 0001036050-99-000503.txt : 19990318 0001036050-99-000503.hdr.sgml : 19990318 ACCESSION NUMBER: 0001036050-99-000503 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990131 FILED AS OF DATE: 19990317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELCO REMY INTERNATIONAL INC CENTRAL INDEX KEY: 0001046859 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 351909253 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13683 FILM NUMBER: 99567182 BUSINESS ADDRESS: STREET 1: 2902 ENTERPRISE DRIVE CITY: ANDERSON STATE: IN ZIP: 46013 BUSINESS PHONE: 7657786499 MAIL ADDRESS: STREET 1: 2902 ENTERPRISE DRIVE CITY: ANDERSON STATE: IN ZIP: 46013 10-Q 1 DELCO REMY INTERNATIONAL, INC FORM 10-Q UNITED STATES 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 January 31,1999 ---------------- OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From ____________________ to _________________ Commission File Number 1-13683 . -------------------------------------------------- Delco Remy International, Inc. . - ------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 35-1909253 . - ------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2902 Enterprise Drive, Anderson, Indiana 46013 . - ------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (765) 778-6499 . - ------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable . - ------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report ) 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: Number of common shares outstanding Class as of March 12, 1999 ----- -------------------- Common Stock - Class A 18,151,656 Common Stock - Class B 6,278,055 1 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS ------------------------------ Condensed Consolidated Statements of Operations Delco Remy International, Inc. and Subsidiaries (Unaudited)
Three-Month Period Six-Month Period Ended January 31 Ended January 31 ------------------------------ ---------------------------------- 1999 1998 1999 1998 ------------------------------ ---------------------------------- (in thousands dollars, except per share amounts) Net sales $ 222,324 $ 193,259 $ 455,109 $ 402,279 Cost of goods sold 175,014 154,061 366,027 324,938 ------------- ------------ ------------- -------------- Gross profit 47,310 39,198 89,082 77,341 Selling, engineering, and administrative expenses 26,487 21,230 49,711 42,166 ------------- ------------ ------------- -------------- Operating income 20,823 17,968 39,371 35,175 Interest expense 11,266 10,129 21,669 20,650 ------------- ------------ ---------------- -------------- Income from continuing operations before income taxes, minority interest in income of subsuduarues, income from unconsolidated joint ventures, deemed dividend on preferred stock converison, and preferred dividend requirement of subsidiary 9,557 7,839 17,702 14,525 Income taxes 3,727 3,020 6,904 5,695 Minority interest in income of subsidiaries (821) (482) (1,582) (1,021) Income from unconsolidated joint ventures 847 - 2,028 - Deemed dividend on preferred stock conversion - (1,639) - (1,639) Preferred dividend requirement of subsidiary - (234) - (645) ------------- ------------ ------------- -------------- Income from continuing operations 5,856 2,464 11,244 5,525 Extraordinary item: Write-off of debt issuance costs (less applicable tax benefit) - (1,803) - (1,803) ------------- ------------ ------------- -------------- Net income $ 5,856 $ 661 $ 11,244 $ 3,722 ============= ============ ============= ============== Basic earnings per common share: Income before extraordinary item $ 0.25 $ 0.13 $ 0.47 $ 0.33 Extraordinary (write-off debt issuance costs) - (0.10) - (0.11) ------------- ------------ ------------- -------------- Net income $ 0.25 $ 0.04 $ 0.47 $ 0.22 ============= ============ ============= ============== Diluted earnings per common share: Income before extraordinary item $ 0.23 $ 0.12 $ 0.43 $ 0.29 extraordinary item (write-off of debt issuance costs) - (0.09) - (0.09) ------------- ------------- ------------- -------------- Net income $ 0.23 $ 0.03 $ 0.43 $ 0.19 ============= ============= ============= ==============
See Notes to Condensed Consolidated Financial Statements 2 Condensed Consolidated Balance Sheets Delco Remy International, Inc. and Subsidiaries
January 31, July 31, 1999 1998 ---------------- ----------------- (in thousands of dollars ASSETS (Unaudited) ------ Current assets: Cash and cash equivalents $ 10,141 $ 8,113 Trade accounts receivable, net 139,914 126,896 Other receivables 17,574 9,846 Inventories 220,784 198,437 Deferred income taxes 18,606 21,653 Other current assets 9,712 4,685 ---------------- ----------------- Total current assets 416,731 369,630 Property and equipment 231,695 208,537 Less accumulated depreciation 58,678 50,568 ---------------- ----------------- Property and equipment, Net 173,017 157,969 Deferred financing costs 12,073 10,786 Goodwill (less accumulated amortization) 133,428 115,446 Net assets held for disposal 14,477 14,894 Investment in joint ventures 14,501 12,474 Other assets 5,148 3,798 ---------------- ----------------- Total assets $ 769,375 $ 684,997 ================ ================= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 94,047 $ 85,804 Accrued interest payable 10,886 9,581 Accrued restructuring charges 24,900 35,519 Other liabilities and accrued expenses 35,613 37,318 Current portion of long-term debt 3,360 1,948 ---------------- ----------------- Total current liabilities 168,806 170,170 Deferred income taxes 1,769 1,241 Long-term debt, less current portion 461,690 393,806 Post-retirement benefits other than pensions 18,407 16,495 Accrued pension benefits 5,031 4,628 Commitments and contingencies Other noncurrent liabilities 5,953 3,967 Minority interest in subsidiaries 12,030 10,450 Stockholders' equity: Common Stock: Class A shares 182 182 Class B shares 63 63 Paid-in capital 106,392 106,392 Retained deficit (4,951) (16,194) Cumulative translation adjustment (4,172) (4,074) Stock purchase plan (1,825) (2,129) ---------------- ----------------- Total stockholders' equity 95,689 84,240 ---------------- ----------------- Total liabilities and stockholders' equity $ 769,375 $ 684,997 ================ =================
See Notes to Condensed Consolidated Financial Statements 3 Condensed Consolidated Statements of Cash Flows Delco Remy International, Inc. and Subsidiaries (Unaudited)
Six Month Period Ended January 31 ------------------------------------------------- 1999 1998 ------------------------------------------------- (in thousands of dollars) Operation activities: Net income $ 11,244 $ 3,722 Extraordinary items - 1,803 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 8,512 8,402 Amortization 3,103 2,325 Minority interest in income of subsidiaries 1,582 1,021 Income from unconsolidated joint ventures (2,028) - Deferred income taxes 3,047 2,021 Post-retirement benefits other than pensions 1,912 - Accrued pension benefits 403 - Non-cash interest expense 767 1,658 Preferred dividend requirement of subsidiary - 645 Deemed dividend on preferred stock conversion - 1,639 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (3,616) (10,345) Inventories (10,917) (20,777) Accounts payable 1,604 5,932 Other current assets and liabilities (14,884) (40) Accrued restructuring charges (10,619) (2,621) Other non-current assets and liabilities, net (581) (5,169) --------- ---------- Net cash used in operating activities (10,471) (9,784) Investing activities: Acquisitions, net of cash acquired (40,148) (29,898) Purchases of property and equipment (11,161) (11,809) Investment in joint ventures - (2,601) --------- ---------- Net cash used in investing activities (51,309) (44,308) Financing activities: Proceeds from initial public offering - 51,336 Proceeds from issuances of long-term debt - 145,000 Payments on long-term debt - (147,257) Net borrowings under revolving line of credit and other 63,855 809 --------- ---------- Net cash provided by financing activities 63,855 49,888 Effect of exchange rate changes on cash (47) (1,446) --------- ---------- Net increase (decrease) in cash and cash equivalents 2,028 (5,650) Cash and cash equivalents at beginning of period 8,113 10,050 --------- ---------- Cash and cash equivalents at end of period $ 10,141 $ 4,400 ========= ==========
See Notes to Condensed Consolidated Financial Statements 4 DELCO REMY INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of dollars) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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 adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended January 31, 1999 are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at July 31, 1998 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended July 31, 1998 in Form 10-K. 2. Inventories Inventories consisted of the following:
January 31, July 31, 1999 1998 ------------------------------------------------------------------------------- Raw material $ 126,061 $ 102,281 Work-in-process 37,345 36,742 Finished goods 57,378 59,414 -------- ------- Total $ 220,784 $ 198,437 --------------------------------------------------------------------------------
3. Comprehensive Income In the first quarter of fiscal 1999, the Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. This standard requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income includes certain items that historically have been excluded from the calculation of net income. The Company's other comprehensive income consists of unrealized gains and losses on the translation of the assets and liabilities of its foreign operations. Comprehensive income (loss) was $6,488 and $(364) for the three-month period ending January 31, 1999 and 1998, respectively and $11,146 and $2,276 for the six-month period ending January 31,1999 and 1998, respectively. 5 4. Share and Per Share Information The basic and diluted earnings per common share are determined using the numerator and denominator calculated as follows:
- --------------------------------------------------------------------------------------------------------------- Three-Month Period Ended Six-Month Period Ended January 31, January 31, - --------------------------------------------------------------------------------------------------------------- 1999 1998 1999 1998 ----------------------------------------------------------- Numerator: Income from continuing operations $ 5,856 $ 2,464 $ 11,244 $ 5,525 Extraordinary item - (1,803) - (1,803) ----------------------------------------------------------- Numerator for basic and diluted earnings per share $ 5,856 $ 661 $ 11,244 $ 3,722 =========================================================== Denominator (in thousands of shares): Denominator for basic earnings per share (weighted 23,842 18,878 23,808 17,000 average shares) Effect of dilutive securities: Warrants 1,680 1,677 1,680 1,677 Employee stock options - 7 - 4 Stock purchase plan 351 523 398 523 ----------------------------------------------------------- Denominator for diluted earnings per share (weighted average shares and assumed conversions) 25,873 21,085 25,886 19,204 - ---------------------------------------------------------------------------------------------------------------
5. Acquisitions On November 13, 1998, Reman Holdings, Inc., a wholly owned subsidiary of the Company purchased 100% of the Common Stock of Williams Technologies, Inc. ("Williams") from The W.W. Williams Company for approximately $40,000 in cash, less Williams' intercompany and third-party debt and subject to working capital and other adjustments. The purchase was funded through proceeds from the Company's Senior Credit Facility. The acquisition was treated as a purchase for accounting purposes and resulted in goodwill of approximately $19,261 which is being amortized over 35 years. Results of operations for Williams are included in the Company's consolidated results from the acquisition date. Williams is a remanufacturer of automatic transmissions and torque converters for automotive and medium and heavy duty truck applications. Its primary market is the dealer network of major North American and foreign original equipment vehicle manufacturers. The Company does not currently anticipate any significant changes in the operation of the business of Williams. The unaudited pro forma consolidated results of operations for the six months ended January 31, 1999 and 1998, assuming the acquisition of Williams had been consummated on the first day of each period and that the acquisition of Ballantrae on December 22, 1997 had been consummated on August 1, 1997, are as follows: 6
- --------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Six Months Ended January 31, 1999 January 31, 1998 - --------------------------------------------------------------------------------------------------------------------------------- Net sales $ 465,226 $ 430,653 --------- --------- Income before extraordinary item 11,517 6,267 --------- --------- Net income $ 11,517 $ 4,464 ========= ========= Basic earnings per common share before extraordinary item $ 0.48 $ 0.37 ======= ====== Basic earnings per common share $ 0.48 $ 0.26 ======= ====== Fully diluted earnings per common share before extraordinary item $ 0.44 $ 0.33 ======= ====== Fully diluted earnings per common share $ 0.44 $ 0.23 ======= ======
The pro forma consolidated financial information does not purport to present what the Company's consolidated results of operations would actually have been if the acquisitions had occurred at the beginning of each period and is not intended to project future results of operations. 6. Senior Credit Facility On November 13, 1998, the Company amended its Senior Credit Facility. Pursuant to the Senior Credit Facility, as amended, revolving loans are available in the aggregate principal amount of $300 million for general purposes (including acquisitions). The Company has the option of paying an interest rate of one bank's prime rate or a LIBOR-based rate. The Senior Credit Facility contains various covenants which include, among other things: (i) limitations on additional borrowings and encumbrances; (ii) the maintenance of certain financial ratios and compliance with certain financial tests and limitations; (iii) limitations on cash dividends paid; (iv) limitations on investments and capital expenditures; and (v) limitations on leases and sales of assets. The Senior Credit Facility is collateralized by a lien on substantially all assets of the Company and its domestic subsidiaries and by all the capital stock of such subsidiaries held by the Company or any such other subsidiary. The Senior Credit Facility terminates on October 31, 2003. 7. Financial Information for Subsidiary Guarantors and Non-Guarantor Subsidiaries The Company conducts a significant portion of its business through subsidiaries. The Senior Notes and the Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally, by certain direct and indirect subsidiaries (the Subsidiary Guarantors). Certain of the Company's subsidiaries do not guarantee the Senior Notes or the Senior Subordinated Notes (the Non-Guarantor Subsidiaries). The claims of creditors of Non-Guarantor Subsidiaries have priority over the rights of the Company to receive dividends or distributions from such subsidiaries. Presented below is condensed consolidating financial information for the Company, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries at January 31, 1999 and July 31, 1998 and for the three month and six month periods ended January 31, 1999 and 1998. The equity method has been used by the Company with respect to investments in subsidiaries. The equity method has been used by Subsidiary Guarantors with respect to investments in Non-Guarantor Subsidiaries. Separate financial statements for Subsidiary Guarantors are not presented based on management's determination that they do not provide additional information that is material to investors. 7 The following table sets forth the Guarantor and direct Non-Guarantor Subsidiaries:
- -------------------------------------------------------------------------------------- Guarantor Subsidiaries Non-Guarantor Subsidiaries - -------------------------------------------------------------------------------------- Delco Remy America, Inc. Autovill RT Ltd. Ballantrae Corporation Remy UK Limited Tractech Inc. Delco Remy Mexico, S. de R.L. de C.V. Nabco, Inc. Delco Remy International (Europe) GmbH The A & B Group, Inc. Remy India Holdings, Inc. A & B Enterprises, Inc. Remy Korea Holdings, Inc. Dalex, Inc. Delco Remy Brazil, Ltda. A & B Cores, Inc. Publitech, Inc. R & L Tool Company, Inc. World Wide Automotive Distributors, Inc. MCA, Inc. of Mississippi Tractech (Ireland) Ltd. Power Investments, Inc. Kraftube, Inc. Franklin Power Products, Inc. Power Investments Canada Ltd. International Fuel Systems, Inc. Alberta Ltd. Marine Drive Systems, Inc. Central Precision Limited Marine Corporation of America Western Reman Ltd. (Canada) Powrbilt Products, Inc. Engine Rebuilders Ltd. Western Reman, Inc. Reman Transport Ltd. World Wide Automotive, Inc. Electro Diesel Rebuild Williams Technologies, Inc. Electro-Rebuild Tunisie S.A.R.L. (Tunisia)
8
DELCO REMY INTERNATIONAL, INC. Condensed Consolidating Statement of Operations For the Three Months Ended January 31, 1999 Delco Remy International Inc. Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated -------------- ----------- ------------ ------------ -------------- Net sales.............................. $ - $ 223,288 $ 65,595 $ (66,559)(a) $ 222,324 Cost of goods sold..................... - 187,371 54,202 (66,559)(a) 175,014 --------- ---------- --------- --------- ---------- Gross profit........................... - 35,917 11,393 - 47,310 Selling, engineering, and administrative expenses............... 2,926 18,127 5,434 - 26,487 --------- ---------- --------- --------- ---------- Operating (loss) income................ (2,926) 17,790 5,959 - 20,823 Interest expense....................... (6,664) (4,097) (505) - (11,266) --------- ---------- --------- --------- ---------- (Loss) income from continuing operations before income tax (benefit), minority interest in income of subsidiaries, equity earnings of subsidiaries, income from unconsolidated joint ventures........................ (9,590) 13,693 5,454 - 9,557 Income taxes (benefit)................. (628) 2,595 1,760 - 3,727 Minority interest in income of subsidiaries.......................... - (650) (171) - (821) Equity in earnings of subsidiaries..... 14,818 - - (14,818)(b) - Income from unconsolidated joint ventures.............................. - - 847 847 --------- ---------- --------- --------- ---------- Net income (loss) $ 5,856 $ 10,448 $ 4,370 $ (14,818) $ 5,856 ========= ========== ========= ========== ========== (a) Elimination of intercompany sales and cost of sales. (b) Elimination of equity in net income (loss) from consolidated subsidiaries.
9
DELCO REMY INTERNATIONAL, INC. Condensed Consolidating Statement of Operations For the Six Month Period Ended January 31, 1999 Delco Remy International Inc. Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated -------------- ----------- ------------ -------------- --------------- Net sales.............................. $ - $ 458,228 $ 120,596 $ (123,715)(a) $ 455,109 Cost of goods sold..................... - 390,345 99,397 (123,715)(a) 366,027 -------------- ----------- ----------- ----------- ------------- Gross profit........................... - 67,883 21,199 89,082 Selling, engineering, and administrative expenses............... 5,108 34,689 9,914 49,711 -------------- ----------- ----------- ----------- ------------- Operating (loss) income................ (5,108) 33,194 11,285 39,371 Interest expense....................... 13,831 7,316 522 21,669 -------------- ----------- ----------- ----------- ------------- (Loss) income from continuing operations before income tax (benefit), minority interest in income of subsidiaries, equity in earnings of subsidiaries and income from unconsolidated joint ventures...... (18,939) 25,878 10,763 17,702 Income taxes (benefit)................. (2,334) 6,035 3,203 - 6,904 Minority interest in income of subsidiaries....................... - (1,238) (344) (1,582) Equity in earnings of subsidiaries..... 27,849 - - (27,849)(b) - Income from unconsolidated joint - 2,028 2,028 ventures.............................. -------------- ----------- ----------- ----------- ------------ Net income (loss)...................... $ 11,244 $ 18,605 $ 9,244 $ (27,849) $ 11,244 ============== =========== =========== =========== ============ (a) Elimination of intercompany sales and cost of sales. (b) Elimination of equity in net income (loss) from consolidated subsidiaries.
10 Delco Remy International, Inc. Condensed Consolidated Statement of Operations For the Three Months Ended January 31, 1998 (in thousands of dollars)
Delco Remy International Inc. Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated ---------------------------------------------------------------------------- Net sales $ - $199,596 $28,128 $(34,465) (a) $193,259 Cost of goods sold - 164,692 23,834 (34,465) (a) 154,061 ---------------------------------------------------------------------------- Gross profit - 34,904 4,294 - 39,198 Selling, engineering, & administrative expenses 654 18,352 2,224 - 21,230 ---------------------------------------------------------------------------- Operating income (loss) (654) 16,552 2,070 - 17,968 Interest expense 5,760 4,285 84 - 10,129 ---------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes (benefit), minority interest in income of subsidiaries, equity in earnings of subsidiaries deemed dividend on preferred stock conversion, and preferred dividend requirements of subsidiary (6,414) 12,267 1,986 - 7,839 Income taxes (benefit) (2,471) 4,726 765 - 3,020 Minority interest in income of subsidiary - (436) (46) - (482) Equity in earnings of subsidiary 4,604 - - (4,604) (b) - Deemed dividend on preferred stock conversion - - - (1,639) (c) (1,639) Preferred dividend requirement of subsidiary - - - (234) (c) (234) --------------------------------------------------------------------------- Income (loss) from continuing operations 661 7,105 1,175 (6,477) 2,464 Extraordinary item: Write-off of debt issuance costs (less applicable income tax benefit) - (1,803) - - (1,803) --------------------------------------------------------------------------- Net income (loss) $ 661 $ 5,302 $ 1,175 $ (6,477) $ 661 ===========================================================================
(a) Elimination of intercompany sales and cost of sales. (b) Elimination of equity in net income (loss) from consolidated subsidiaries. (c) Recording of preferred dividend requirement of subsidiary and deemed dividend on preferred stock conversion 11 Delco Remy International, Inc. Condensed Consolidated Statement of Operations For the Six Months Ended January 31, 1998 (in thousands of dollars)
Delco Remy International Inc. Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated ------------------------------------------------------------------------- Net sales $ - $413,240 $53,940 $(64,901) (a) $402,279 Cost of goods sold - 344,177 45,662 (64,901) (a) 324,938 ------------------------------------------------------------------------- Gross profit - 69,063 8,278 - 77,341 Selling, engineering, & administrative expenses 1,514 35,935 4,717 - 42,166 ------------------------------------------------------------------------- Operating income (loss) (1,514) 33,128 3,561 - 35,175 Interest expense 10,568 9,992 90 - 20,650 ------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes (benefit), minority interest in income of subsidiaries, equity earnings of subsidiaries deemed dividend on preferred stock conversion, and preferred dividend requirement of subsidiary (12,082) 23,136 3,471 - 14,525 Income taxes (benefit) (4,738) 9,072 1,361 - 5,695 Minority interest in income of subsidiary - (944) (77) - (1,021) Equity in earnings of subsidiary 11,066 - - (11,066) (b) - Deemed dividend on preferred stock conversion - - - (1,639) (c) (1,639) Preferred dividend requirement of subsidiary - - - (645) (c) (645) ------------------------------------------------------------------------- Income (loss) from continuing operations 3,722 13,120 2,033 (13,350) 5,525 Extraordinary item: Write-off of debt issuance costs (less applicable income tax benefit) - (1,803) - - (1,803) ------------------------------------------------------------------------- Net income (loss) $ 3,722 $ 11,317 $ 2,033 $(13,350) $ 3,722 =========================================================================
- ---------------------------------- (a) Elimination of intercompany sales and cost of sales. (b) Elimination of equity in net income (loss) from consolidated subsidiaries. (c) Recording of preferred dividend requirement of subsidiary and deemed dividend on preferred stock conversion 12
DELCO REMY INTERNATIONAL, INC. Condensed Consolidating Balance Sheet January 31, 1999 Delco Remy International Inc. Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated ---------------------------------------------------------------------------------------------- Assets: Current assets: Cash and cash equivalents....... $ - $ 1,796 $ 8,345 $ - $ 10,141 Trade accounts receivable....... - 122,361 17,553 - 139,914 Other receivables............... 1,776 10,526 5,272 - 17,574 Inventories..................... - 181,493 39,291 - 220,784 Deferred income taxes........... 6,578 11,961 67 - 18,606 Other current assets............ 2,804 6,579 329 - 9,712 ---------- ---------- ---------- ------------ ------------- Total current assets............... 11,158 334,716 70,857 - 416,731 Property and equipment............. 20 199,440 32,235 - 231,695 Less accumulated depreciation...... 20 51,959 6,699 - 58,678 --------- ---------- ---------- ------------ ------------- - 147,481 25,536 - 173,017 Deferred financing costs........... 8,898 3,138 37 - 12,073 Goodwill, net...................... - 110,790 22,638 - 133,428 Net assets held for disposal....... - 14,477 - - 14,477 Investment in affiliates........... 333,085 - - (318,584)(a) 14,501 Other assets....................... 3,631 683 834 - 5,148 --------- ---------- ---------- ------------ ------------- Total assets....................... $ 356,772 $ 611,285 $ 119,902 $ (318,584) $ 769,375 ========= ========== ========== ============ ============= Liabilities and stockholders' equity: Current liabilities: Accounts payable................ $ 243 $ 79,815 $ 13,989 $ - $ 94,047 Intercompany accounts........... (42,440) 37,489 4,951 - - Accrued interest payable........ 9,001 1,885 - - 10,886 Accrued restructuring charges........................ - 24,900 - - 24,900 Other liabilities and accrued expenses.............. 1,012 31,144 3,457 - 35,613 Current portion of long term debt..................... - 1,018 2,342 - 3,360 --------- ---------- ---------- ------------ ------------- Total current liabilities.......... (32,184) 176,251 24,739 - 168,806 Deferred income taxes.............. 1,761 40 (32) - 1,769 Long-term debt, less current portion........................... 285,000 163,962 12,728 - 461,690 Post-retirement benefits other than pensions..................... - 18,407 - - 18,407 Accrued pension benefit............ - 5,031 - - 5,031 Other non-current liabilities...... 2,334 2,253 1,366 - 5,953 Minority interest in subsidiaries...................... - 9,886 2,144 - 12,030 Stockholders' equity: Common stock: Class A shares....... 182 - - - 182 Class B shares....... 63 - - - 63 Paid-in capital.......... 106,392 - - - 106,392 Subsidiary investment.... - 211,587 58,446 (270,033)(a) - Retained earnings (deficit)............... (4,951) 22,998 25,553 (48,551)(b) (4,951) Cumulative translation adjustment.............. - 870 (5,042) - (4,172) Stock purchase plan...... (1,825) - - - (1,825) ---------- ---------- ---------- ------------ ------------- Total stockholders' equity (deficit)........ 99,861 235,455 78,957 (318,584) 95,689 ---------- ---------- ---------- ------------ ------------- Total liabilities and stockholders' equity (deficit).................. $ 356,772 $ 611,285 $ 119,902 $ (318,584) $769,375 ========== ========== ========== ============ ============= (a) Elimination of investments in subsidiaries. (b) Elimination of investments in subsidiaries' earnings.
13 Delco Remy International, Inc. Condensed Consolidating Balance Sheet July 31, 1998 (in thousands of dollars)
Delco Remy International Inc. Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated ------------- ---------- ------------ ------------ --------- ASSETS: Current assets: Cash and cash equivalents.................. $-- $125 $7,988 $-- $8,113 Trade accounts receivable.................. -- 106,543 20,353 -- 126,896 Other receivables.......................... -- 8,161 1,685 -- 9,846 Recoverable income taxes................... -- 1,802 -- -- 1,802 Inventories................................ -- 165,150 33,287 -- 198,437 Deferred income taxes...................... 6,428 15,225 -- -- 21,653 Other current assets....................... -- 2,405 478 -- 2,883 ---------- ---------- ---------- ----------- --------- Total current assets....................... 6,428 299,411 63,791 -- 369,630 Property and equipment..................... 20 178,146 30,371 -- 208,537 Less accumulated depreciation.............. 20 44,769 5,779 -- 50,568 ---------- ---------- ---------- ----------- --------- Property and equipment, net -- 133,377 24,592 -- 157,969 Deferred financing costs................... 9,437 1,312 37 -- 10,786 Goodwill, net.............................. -- 93,673 21,773 -- 115,446 Net assets held for disposal............... -- 14,894 -- -- 14,894 Investments in affiliates and joint ventures.................................. 261,541 -- -- (249,067)(a)(b) 12,474 Other assets............................... 2,523 876 399 -- 3,798 ---------- --------- -------- ---------- -------- Total assets............................... $279,929 $543,543 $110,592 $(249,067) $684,997 ========== ========== ======== ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT): Current liabilities: Accounts payable........................... $130 $71,180 $14,494 $-- $85,804 Intercompany accounts...................... (79,839) 82,869 (3,030) -- -- Accrued interest payable................... 9,001 580 -- -- 9,581 Accrued restructuring charges.............. -- 35,519 -- -- 35,519 Other liabilities and accrued expenses..... 2,751 30,505 4,062 -- 37,318 Current portion of long-term debt.......... -- 961 987 -- 1,948 ---------- ---------- --------- ----------- ---------- Total current liabilities.................. (67,957) 221,614 16,513 -- 170,170 Deferred income taxes...................... (25,431) 23,755 2,917 -- 1,241 Long-term debt, less current portion....... 285,000 101,218 7,588 -- 393,806 Post-retirement benefits other than pensions.................................. -- 16,495 -- -- 16,495 Accrued pension benefits................... -- 4,628 -- -- 4,628 Other non-current liabilities.............. 3 3,802 162 -- 3,967 Minority interests in subsidiaries........ -- 8,650 1,800 -- 10,450 Stockholders' equity (deficit): Common stock: Class A shares........................... 182 -- -- -- 182 Class B shares........................... 63 -- -- -- 63 Paid-in capital............................ 106,392 -- -- -- 106,392 Subsidiary investments..................... -- 158,988 69,377 (228,365)(a) -- Retained earnings (deficit)................ (16,194) 4,393 16,309 (20,702)(b) (16,194) Cumulative translation adjustment.......... -- -- (4,074) -- (4,074) Stock purchase plan........................ (2,129) -- -- -- (2,129) ---------- ---------- --------- ----------- ---------- Total stockholders' equity (deficit)....... 88,314 163,381 81,612 (249,067) 84,240 ---------- ---------- --------- ----------- ---------- Total liabilities and stockholders' equity (deficit)................................. $279,929 $543,543 $110,592 $(249,067) $684,997 ========== ========== ========= =========== ==========
(a) Elimination of investments in subsidiaries. (b) Elimination of investments in subsidiaries' earnings. 14 DELCO REMY INTERNATIONAL, INC. Condensed Consolidating Statement of Cash Flows For the Six Month Period Ended January 31, 1999
Delco Remy International Inc. Non- (Parent Subsidiary Guarantor Company Only) Guarantors Subsidiaries Eliminations Consolidated -------------- ---------- ------------ ------------ ------------ Operating Activities: Net income (loss)...................................... $ 11,244 $ 18,605 $ 9,244 $(27,849) $ 11,244 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation - 7,306 1,206 - 8,512 Amortization 576 2,282 245 - 3,103 Minority Interest in income of subsidiaries - 1,236 346 - 1,582 Income from unconsolidated joint ventures - - (2,028) - (2,028) Equity in earnings of subsidiary.................... (27,849) - - 27,849 (a) - Deferred income taxes............................... (150) 3,264 (67) - 3,047 Post-retirement benefits other than pensions........ - 1,912 - - 1,912 Accrued pension benefits............................ - 403 - - 403 Non-cash interest expense........................... 546 221 - - 767 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable............................ - (6,616) 3,000 - (3,616) Inventories.................................... - (4,913) (6,004) - (10,917) Accounts payable............................... 113 1,996 (505) - 1,604 Intercompany accounts.......................... 51,484 (50,956) (528) - - Other current assets and liabilities........... 1,215 (12,644) (3,455) - (14,884) Accrued restructuring.......................... - (10,619) - - (10,619) Other non-current assets and liabilities, net............................... 2,969 481 (4,031) - (581) -------- -------- ------- -------- -------- Net cash provided by (used in) operating activities........................................... 40,148 (48,042) (2,577) - (10,471) Investing activities: Acquisition, net of cash acquired..................... (40,148) - - - (40,148) Purchase of property and equipment.................... - (8,081) (3,080) - (11,161) -------- -------- ------- -------- -------- Net cash used in investing activities................. (40,148) (8,081) (3,080) - (51,309) Financing activities: Other financing activities............................ - 57,794 6,061 - 63,855 -------- -------- ------- -------- -------- Net provided by financing activities.................. - 57,794 6,061 - 63,855 -------- -------- ------- -------- -------- Effect of exchange rate changes on cash............... - - (47) - (47) -------- -------- ------- -------- -------- Net increase in cash and cash equivalents............. - 1,671 357 - 2,028 Cash and cash equivalents at beginning of period...... - 125 7,988 - 8,113 -------- -------- ------- -------- -------- Cash and cash equivalents at end of period............ $ - $ 1,796 $ 8,345 $ - $ 10,141 ======== ======== ======= ======== ========
(a) Elimination of equity in earnings of subsidiary. 15 Delco Remy International, Inc. Condensed Consolidating Statement of Cash Flows For the Six Months Ended January 31, 1998 ( in thousands of dollars )
Delco Remy International Inc. (Parent Non- Company Subsidiary Guarantor Only) Guarantors Subsidiaries Eliminations Consolidated ---------------------------------------------------------------------------------- Operating Activities: Net income (loss) $ 3,722 $ 11,317 $ 2,033 $(13,350) $ 3,722 Extraordinary item - 1,803 - - 1,803 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation - 7,820 582 - 8,402 Amortization 72 2,114 139 - 2,325 Equity in earnings of subsidiary (11,066) - - 11,066(a) - Deferred income taxes (4,467) 6,869 (381) - 2,021 Non-cash interest expense 1,396 262 - - 1,658 Minority interest in subsidiary - 944 77 - 1,021 Preferred dividend requirement of Subsidiary - - - 645(b) 645 Deemed dividend on preferred stock conversion - - 1,639(b) 1,639 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable - (10,458) 113 - (10,345) Inventories - (17,894) (2,883) - (20,777) Accounts payable - 6,861 (929) - 5,932 Intercompany accounts (143,978) 148,095 (4,117) - - Other current assets and liabilities 5,511 (2,363) (3,188) - (40) Accrued restructuring - (2,621) - - (2,621) Other non-current assets and Liabilities, net (6,727) (6,337) 7,895 - (5,169) --------------------------------------------------------------------------- Net cash (used by) provided by operating activities (155,537) 146,412 (659) - (9,784) --------------------------------------------------------------------------- Investing activities: Acquisition, net of cash acquired (29,898) - - - (29,898) Purchase of property and equipment - (8,215) (3,594) - (11,809) Investment in affiliates (2,601) - - - (2,601) --------------------------------------------------------------------------- Net cash used in investing activities (32,499) (8,215) (3,594) - (44,308) --------------------------------------------------------------------------- Financing activities: Proceeds from issuance of long term debt 145,000 - - - 145,000 Payments on long-term debt (8,300) (138,957) - - (147,257) Other financing activities - 257 552 809 Proceeds from initial public offering 51,336 - - - 51,336 --------------------------------------------------------------------------- Net cash provided by (used in) financing activities 188,036 (138,700) 552 - 49,888 --------------------------------------------------------------------------- Effect of exchange rate changes on cash - - (1,446) - (1,446) Net decrease in cash and cash equivalents - (503) (5,147) - (5,650) Cash and cash equivalents at beginning of year - 1,504 8,546 - 10,050 --------------------------------------------------------------------------- Cash and cash equivalents at end of year $ - $ 1,001 $ 3,399 $ - $ 4,400 =========================================================================== - -------------------------
(a) Elimination of equity in earnings of subsidiary. (b) Recording of preferred dividend requirement of subsidiary and deemed dividend on preferred stock conversion 16 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations
Three Months Ended Six Months Ended Ending January 31, Ending January 31, 1999 1998 1999 1998 (Thousands of Dollars) Amount % Amount % Amount % Amount % Net Sales $222,324 100.0% $193,259 100.0% $455,109 100.0% $402,279 100.0% Cost of Sales 175,014 78.7% 154,061 79.7% 366,027 80.4% 324,938 80.8% -------------------- ------------------- ------------------- ------------------- Gross Profit 47,310 21.3% 39,198 20.3% 89,082 19.6% 77,341 19.2% Selling, Engineering, and Administrative Expense 26,487 11.9% 21,230 11.0% 49,711 10.9% 42,166 10.5% -------------------- ------------------- ------------------- ------------------- Operating Income 20,823 9.4% 17,968 9.3% 39,371 8.7% 35,175 8.7% Interest Expense 11,266 5.1% 10,129 5.2% 21,669 4.8% 20,650 5.1% Provision for Income Taxes 3,727 1.7% 3,020 1.6% 6,904 1.5% 5,695 1.4% Minority Interest (821) -0.4% (482) -0.2% (1,582) -0.3% (1,021) -0.3% Income from unconsolidated joint ventures 847 0.4% - 0.0% 2,028 0.4% - 0.0% Preferred Dividend Requirement of Subsidiary - 0.0% (234) -0.1% - 0.0% (645) -0.2% Non-recurring deemed dividend on preferred stock - 0.0% (1,639) -0.8% - 0.0% (1,639) -0.4% conversion Write-Off of Debt Issuance Costs Net of Tax - 0.0% (1,803) -0.9% - 0.0% (1,803) -0.4% -------------------- ------------------- ------------------- ------------------- Net Income $ 5,856 2.6% $ 661 0.3% $ 11,244 2.5% $ 3,722 0.9% ==================== =================== =================== ===================
Three Months Ended January 31, 1999 Compared to Three Months Ended January 31, 1998 Net Sales Net sales were $222.3 million for the three months ended January 31, 1999, an increase of $29.1 million, or 15.0%, from $193.3 million for the comparable period of 1998. This increase was due to growth in the Company's aftermarket business, including the effect of the acquisitions of Williams (November 1998), Electro Diesel Rebuild (July 1998) and Lucas Varity (April 1998). Growth in aftermarket sales also reflected stronger market demand and the addition of new customers and distribution. OEM sales were up due primarily to the acquisition of Ballantrae in December 1997 and increased automotive and heavy duty demand. Gross Profit Gross profit was $47.3 million in the second quarter compared to $39.2 million in the second quarter of fiscal 1998, an increase of $8.1 million, or 20.7%. This growth reflects the acquisitions and volume increases discussed above. As a percentage of net sales, gross profit improved to 21.3% from 20.3% due to sales growth, a higher mix of aftermarket sales and improved productivity and quality. Selling, Engineering and Administrative Expenses Selling, engineering, and administrative (SE&A) expenses of $26.5 million were up $5.3 million, or 24.8%, from $21.2 million in the comparable period of fiscal 1998 and, as a percentage of sales, were 11.9% versus 11.0%. The effect of the Ballantrae and Williams 17 acquisitions were largely offset by continued emphasis on overall cost control. Operating Income Operating income was $20.8 million for the three months ended January 31, 1999, an increase of $2.9 million, or 15.9%, from the second quarter of fiscal 1998. As a percentage of net sales, operating income was essentially unchanged at 9.4% versus 9.3% in 1998. The growth in sales and gross profit was partially offset by the increase in SE&A expense, as discussed above. Interest Expense Interest expense of $11.3 million in the second quarter was up $1.1 million, or 11.2%, compared to $10.1 million in the second quarter last year. The Company's weighted average interest rate declined year over year as funds generated from the initial public offering in December 1997 were used to repay higher interest rate debt. This was more than offset by increased utilization of the Senior Credit Facility since the refinancing to fund acquisitions and business growth. Income Taxes Income taxes for the three months ended January 31, 1999 were $3.7 million compared to $3.0 million in the second quarter of fiscal 1998. The Company's consolidated effective income tax rate varies between 39% and 40% based on income levels and other factors involving the states and countries in which the Company does business. Non-recurring Deemed Dividend of Preferred Stock Conversion. In December 1997, a deemed dividend of subsidiary arose from the exchange of the redeemable exchangeable preferred stock of subsidiary for the excess of the fair value of the 8% Subordinated Debenture over the carrying value of the redeemable exchangeable preferred stock of subsidiary resulting in a non-recurring charge of $1.6 million for the three month period ending January 31, 1998. Write Off of Debt Issuance Cost. In December 1997, certain debt was retired with the proceeds from the senior notes and initial public offering. Unamortized issuance costs, net of income taxes, of $1.8 million relating to the retired debt was written off in the three month period ended January 31, 1998. Six Months Ended January 31, 1999 Compared to Six Months Ended January 31, 1998 Net Sales Net sales of $455.1 million in the first half of fiscal 1999 were up $52.8 million, or 13.1%, compared with the first half of fiscal 1998. This increase was driven by the acquisitions discussed above, strong market demand, new customers and distribution in the aftermarket and increased demand in the automotive and heavy duty OEM markets. Sales in the first two months of the first quarter were negatively affected by the GM strike in the summer of 1998; the strike ended at the beginning of the Company's first quarter and demand from GM returned to prior levels gradually throughout the quarter. Gross Profit Gross profit of $89.1 million increased $11.7 million, or 15.2%, from the first half of fiscal 1998 due to acquisitions and sales volume growth. As a percentage of net sales, gross profit improved from 19.2% to 19.6% in 1999 due to the higher mix of aftermarket sales and improved productivity. The slow ramp up of demand from GM following the strike negatively affected profitability in the first quarter through less than normal utilization of plant capacity during that period. Selling, Engineering and Administrative Expenses SE&A expenses of $49.7 million were up $7.5 million, or 17.9%, from $42.2 million in the first six months of fiscal 1998 and , as a percentage of sales, were 10.9% versus 10.5%. The effect of the Ballantrae and Williams acquisitions were mostly offset by continued emphasis on overall cost control. Operating Income Operating income was $39.4 million in the first half of fiscal 1999, an increase of $4.2 million, or 11.9%, from the first half of fiscal 1998. As a percentage of net sales, operating income was 8.7% in both years, as the growth in sales and gross profit was mostly offset by the increase in SE&A expense. Interest Expense Interest expense of $21.7 million was up $1.0 million, or 4.9%, compared to $20.7 million in the first half last year. The lower weighted average interest rate was mostly offset by increased utilization of the Senior Credit Facility. Income Taxes Income taxes for the six months ended January 31, 1999 were $6.9 million compared to $5.7 million in 1998. The effective income tax rate approximated 39% in both periods. 18 Non-recurring Deemed Dividend of Preferred Stock Conversion. In December 1997, a deemed dividend of subsidiary arose from the exchange of the redeemable exchangeable preferred stock of subsidiary for the excess of the fair value of the 8% Subordinated Debenture over the carrying value of the redeemable exchangeable preferred stock of subsidiary resulting in a non-recurring charge of $1.6 million for the six month period ending January 31, 1998. Write Off of Debt Issuance Cost. In December 1997, certain debt was retired out of the proceeds from the senior notes and initial public offering. Unamortized issuance costs, net of income taxes, of $1.8 million relating to the retired debt was written off in the six month period ended January 31, 1998. Liquidity and Capital Resources The Company's liquidity needs include required debt service, working capital needs and the funding of capital expenditures. The Company does not currently have any significant maturities of long-term debt prior to 2006 other than the senior credit facility and the 8% Subordinated Debenture. Cash interest expense for the six months ended January 31, 1999 was $20.9 million. Non-cash interest accrued during the six months ended January 31, 1999 was $.8 million, or 3.5% of total interest expense. Cash used in operating activities in the first half of fiscal 1999 of $10.5 million compares with cash used of $9.8 million in the first half of fiscal 1998. Increased earnings, excluding non-cash charges, and smaller increases in accounts receivable and inventories were offset by higher cash restructuring payments and increases in other current assets. Cash used in investing activities of $51.3 million in the first two quarters of 1999 was $7.0 million higher than cash used in the comparable period of fiscal 1998 due to cash payments for acquisitions. The Company's capital expenditures were $11.2 million for the six months ended January 31, 1999. The Company has budgeted capital expenditures of approximately $14.8 million for the remainder of fiscal year 1999. Planned capital expenditures consist primarily of production equipment for the Company's new focus plants. Cost reduction programs account for a significant portion of planned capital expenditures and include upgrades in machinery technology, new quality standards and environmental compliance. Cash provided by financing activities of $63.9 million in the first half of 1999, consisting primarily of borrowing under the Senior Credit Facility, was up from $49.9 million provided in the first half of 1998.The Company's initial public offering of 4.6 million shares of Class A Common Stock in December 1997 and January 1998 generated net proceeds of $51.3 million. The Company also issued 8 5/8% Senior Subordinated Notes with net proceeds of $141.4 million in December 1997. These proceeds were used to pay off debt with higher interest rates and less favorable terms. On January 31, 1999 the debt to total capitalization of the Company was 83% as compared to 79% on January 31, 1998. The Company's principal sources of cash to fund its liquidity needs consist of net cash from operating activities and borrowings under the Senior Credit Facility. As discussed in Note 6 to the Condensed Consolidated Financial Statements, the Company amended its senior credit facility on November 13, 1998. As a result of this amendment, revolving loans are now available in the aggregate principal amount of $300 million. As of February 28, 1999, approximately $128.6 million remained available. The Company believes that cash generated from operations, together with the amounts available under the Senior Credit Facility, will be adequate to meet its debt service requirements, capital expenditures and working capital needs for the foreseeable future, although no assurance can be given in this regard. The Company's future operating performance and ability to service, extend, or refinance its indebtedness will be subject to future economic conditions and to financial, business and other factors that are beyond the Company's control. 19 Seasonality The Company's business is moderately seasonal, as its major OEM customers historically have one- to two-week summer shutdowns of operations during the fourth fiscal quarter. In addition, the Company typically has shut down its own operations for one week each July, depending on backlog, scheduled maintenance and inventory buffers, as well as an additional week during the December holidays. Consequently, the Company's second and fourth quarter results reflect the effects of these shutdowns. Year 2000 Readiness Disclosure The Company has established remediation plans for all mission-critical systems and processes potentially affected by the Year 2000 end. Implementation of these plans should be substantially complete by the end of calendar year 1999. A description of the specific phases of these plans and their expected completion dates is provided in the Company's latest report on Form 10-K. Foreign Sales Approximately 24% of the Company's sales are derived from sales made to customers in foreign countries. Because of these foreign sales, the Company's business is subject to the risks of doing business abroad, including currency exchange rate fluctuations, limits on repatriation of funds, compliance with foreign laws and other economic and political uncertainties. 20 PART II. OTHER INFORMATION ---------------------------- Item 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- The Company held its Annual Meeting of Shareholders on December 17, 1998. Matters voted upon by proxy were: The election of directors for terms expiring at the Company's next annual meeting of shareholders and the ratification of the Board of Directors' appointment of Ernst & Young LLP, Certified Public Accountants, as independent accountants to examine the financial statements of the Company for the fiscal year 1999.
Voted For Voted Against Abstained ---------- ------------- --------- Election of Directors: Harold K. Sperlich 16,062,974 0 53,189 Thomas J. Snyder 16,062,544 0 53,619 E. H. Billig 16,063,024 0 53,139 Richard M. Cashin, Jr. 15,485,844 0 630,319 Michael A. Delaney 16,062,974 0 53,189 James R. Gerrity 16,063,074 0 53,089 Robert J. Schultz 16,077,874 0 38,289 Proposal to ratify Ernst & Young, LLP as the Company's independent accountants 16,104,413 7,509 4,241
Item 5. Other Information - ------- ----------------- DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS From time to time, the Company makes oral and written statements that may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the "Act") or by the SEC in its rules, regulations and releases. The Company desires to take advantage of the "safe harbor" provisions in the Act for forward-looking statements made from time to time, including, but not limited to, the forward-looking statements relating to the future performance of the Company contained in Management's Discussion and Analysis, and Notes to Condensed Consolidated Financial Statements and other statements made in this Form 10-Q and in other filings with the SEC. The Company cautions readers that any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks. Item 6. Exhibits and Reports on Form 8-K. - ------- --------------------------------- (a) Exhibits 27 Financial Data Schedule (Filed via EDGAR only) (b) Reports on Form 8-K On November 24, 1998 the Company filed a current report on Form 8-K to report its purchase of 100% of the common stock of Williams Technology, Inc., a wholly owned subsidiary of W.W. Williams Company, on November 13, 1998. On January 27, 1999 the Company amended its report on Form 8-K relative to the acquisition of Williams Technology, Inc., providing financial statements of Williams and pro forma financial information. 21 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. DELCO REMY INTERNATIONAL, INC. ------------------------------ (Registrant) /s/ David L. Harbert Date: March 17, 1999 By: ________________________________ David L. Harbert Executive Vice President and Chief Financial Officer /s/ David E. Stoll Date: March 17, 1999 By: ________________________________ David E. Stoll Vice President and Controller Chief Accounting Officer 22 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the condensed consolidated balance sheet and consolidated statement of operations for Delco Remy International, Inc. and subsidiaries and is qualified in its entirety by reference to such financial statements. 1000 6-MOS JUL-31-1999 AUG-01-1998 JAN-31-1999 10,141 0 142,814 2,900 220,784 416,731 231,695 58,678 769,375 168,806 461,690 0 0 245 95,444 769,375 455,109 455,109 366,027 366,027 48,811 900 21,669 17,702 6,904 11,244 0 0 0 11,244 .47 .43
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