-----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, ULraQLjCtyLN0FxGS93EgnrtOajlDr+5R8mpk8oWGGWE261XAqDzEjQ42XCDvjWU pWFdTXwWRosNw7HoTXxukg== 0001125282-01-500972.txt : 20010622 0001125282-01-500972.hdr.sgml : 20010622 ACCESSION NUMBER: 0001125282-01-500972 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010621 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARVARD INDUSTRIES INC CENTRAL INDEX KEY: 0000046012 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 210715310 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01044 FILM NUMBER: 1664882 BUSINESS ADDRESS: STREET 1: 3 WERNER WAY #210 STREET 2: C/O HARVARD INDUSTRIES INC CITY: LEBANON STATE: NJ ZIP: 08833 BUSINESS PHONE: 9084374100 MAIL ADDRESS: STREET 1: 3 WERNER WAY #210 STREET 2: C/O HARVARD INDUSTRIES INC CITY: LEBANON STATE: NJ ZIP: 08833 FORMER COMPANY: FORMER CONFORMED NAME: HARVARD BREWING CO DATE OF NAME CHANGE: 19710315 10-Q 1 b312174_10q.txt QUARTERLY REPORT As filed with the Securities and Exchange Commission on June , 2001 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q ---------------- |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 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 No. 0-21362 HARVARD INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) Delaware 21-0715310 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3 Werner Way Lebanon, New Jersey 08833 (Address of principal executive offices) (Zip Code) (908) 437-4100 Registrant's telephone number, including area code Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes |X| No |_| APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of Registrant's Common Stock, as of June 4, 2001, was 10,019,883. =============================================================================== HARVARD INDUSTRIES, INC. INDEX
Page ---- PART I. Financial Information: Item 1. Financial Statements: Consolidated Balance Sheets ............................................................ 3 September 30, 2000 (Audited) and March 31, 2001 (Unaudited) ............................ 3 Consolidated Statements of Operations (Unaudited) ...................................... 4 Three Months Ended March 31, 2001 ...................................................... 5 Six Months Ended March 31, 2001 ........................................................ 4 Three Months Ended March 31, 2000 ...................................................... 5 Six Months Ended March 31, 2000 ........................................................ 4 Consolidated Statements of Cash Flows (Unaudited) ...................................... 6 Six Months Ended March 31, 2001 ........................................................ 6 Six Months Ended March 31, 2000 ........................................................ 6 Notes to Consolidated Financial Statements-(Unaudited)...................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................................... 12 PART II. Other Information: ................................................................... 16 Item 1. Legal Proceedings................................................................... 16 Item 2. Changes in Securities............................................................... 16 Item 3. Defaults Upon Senior Securities..................................................... 16 Item 4. Submission of Matters to a Vote of Securities Holders............................... 16 Item 5. Other Information................................................................... 16 Item 6. Exhibits and Reports on Form 8-K.................................................... Signatures.................................................................................. 17
2 HARVARD INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 AND MARCH 31, 2001 (in thousands of dollars)
September 30, March 31, 2000 2001 ------------- ----------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents...................... $ 2,705 $ 3,671 Accounts receivable, net....................... 32,742 34,030 Inventories.................................... 20,494 20,436 Prepaid expenses and other current assets...... 4,760 4,766 --------- --------- Total current assets ........................ 60,701 62,903 Property, plant and equipment, net............. 75,477 74,161 Intangible assets, net ........................ 134,965 113,659 Other assets, net.............................. 6,280 6,042 --------- --------- Total assets ................................ $ 277,423 $ 256,765 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings.......................... 4,599 27,728 Accounts payable............................... 32,738 23,026 Accrued expenses............................... 35,147 34,491 Income taxes payable........................... 975 500 --------- --------- Total current liabilities ................... 73,459 85,745 Postretirement benefits other than pensions.... 100,966 100,114 Other.......................................... 60,930 60,032 --------- --------- Total liabilities ........................... 235,355 245,891 COMMITMENTS AND CONTINGENCIES ................... -- -- SHAREHOLDERS' EQUITY: Common stock $.01 par value; 50,000,000 shares authorized; 10,942,927 shares issued at September 30, 2000 and 10,591,872 shares issued at March 31, 2001...................... 109 106 Additional paid-in capital..................... 174,891 174,894 Accumulated deficit............................ (127,770) (158,379) Cost of shares of common stock in treasury (813,006 shares at September 30, 2000 and 1,072,955 shares at March 31, 2001)........... (5,315) (5,315) Accumulated other comprehensive income .......... 153 (432) --------- --------- Total shareholders' equity .................. 42,068 10,874 --------- --------- Total liabilities and shareholders' equity .. $ 277,423 $ 256,765 ========= =========
See accompanying notes to consolidated financial statements. 3 HARVARD INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS SIX MONTHS ENDED MARCH 31, 2000 AND SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED) (in thousands of dollars, except share and per share data)
Six Months Six Months Ended Ended March 31, 2000 March 31, 2001 -------------- -------------- Sales ....................................... $ 173,677 $ 124,223 Cost of sales ............................... 153,448 120,651 ---------- ---------- Gross profit ............................ 20,229 3,572 Selling, general and administrative expense . 13,333 9,629 Amortization of intangible assets ........... 21,310 21,306 Interest expense ............................ 432 1,465 (Gain) on sale of operations ................ (7,170) -- Other (income) expense, net ................. 713 1,253 ---------- ---------- Loss before income taxes .................... (8,389) (30,081) Provision for income taxes .................. 823 528 ---------- ---------- Net loss ................................ $ (9,212) $ (30,609) ========== ========== Basic and diluted earnings per share Net loss per share ...................... $ (0.94) $ (3.15) ========== ========== Weighted average number of common shares outstanding................................ 9,770,783 9,711,070 ========== ==========
See accompanying notes to consolidated financial statements. 4 HARVARD INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000 AND THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED) (in thousands of dollars, except share and per share data)
Three Months Three Months Ended Ended March 31, 2000 March 31, 2001 -------------- -------------- Sales ....................................... $ 90,053 $ 61,937 Cost of sales ............................... 78,609 55,448 ---------- ---------- Gross profit ............................ 11,444 6,489 Selling, general and administrative expense . 7,065 3,453 Amortization of intangible assets ........... 10,810 10,653 Interest expense ............................ 194 829 Other (income) expense, net ................. 203 395 ---------- ---------- Loss before income taxes .................... (6,828) (8,841) Provision for income taxes .................. 438 290 ---------- ---------- Net loss ................................ $ (7,266) $ (9,131) ========== ========== Basic and diluted earnings per share Net loss per share ...................... $ (0.73) $ (0.96) ========== ========== Weighted average number of common shares outstanding................................ 9,891,758 9,487,951 ========== ==========
See accompanying notes to consolidated financial statements. 5 HARVARD INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 2000 AND SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED) (in thousands of dollars)
Six Months Six Months Ended Ended March 31, March 31, 2000 2001 ---------- ---------- CASH FLOWS RELATED TO OPERATING ACTIVITIES: Net loss........................................... $ (9,212) $(30,609) Add back (deduct) items not affecting cash and cash equivalents Depreciation .................................... 4,231 4,533 Amortization .................................... 21,430 21,426 (Gain) on sale of operations .................... (7,170) -- (Gain) loss on disposition of property, plant and equipment.................................. (11) 452 Changes in operating assets and liabilities Accounts receivable ............................. (4,986) (1,259) Inventories ..................................... (422) (470) Other current assets ............................ (179) (6) Accounts payable ................................ 5,601 (9,712) Accrued expenses and income taxes payable ....... (14,904) (1,785) Other noncurrent ................................ (1,727) (1,279) -------- -------- Net cash used in operations.................... $ (7,349) $(18,709) -------- -------- CASH FLOWS RELATED TO INVESTING ACTIVITIES: Acquisition of property, plant and equipment....... (8,681) (3,579) Net proceeds from sale of operations............... 9,825 125 -------- -------- Net cash provided by (used in) investing activities........................................ 1,144 (3,454) -------- -------- CASH FLOWS RELATED TO FINANCING ACTIVITIES: Net borrowings (repayments) under financing/credit agreements........................................ -- 23,129 Purchase of treasury stock......................... (5,245) -- -------- -------- Net cash (used in) provided by financing activities........................................ (5,245) 23,129 -------- -------- Net increase (decrease) in cash and cash equivalents....................................... (11,450) 966 CASH AND CASH EQUIVALENTS, beginning of period ...... 21,840 2,705 -------- -------- CASH AND CASH EQUIVALENTS, end of period ............ $ 10,390 $ 3,671 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid...................................... $ 5 $ 938 Income taxes paid.................................. $ 1,500 $ 1,115 ======== ========
See accompanying notes to consolidated financial statements. 6 HARVARD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of dollars, except share and per share data) (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 notes 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 six month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending September 30, 2001. The balance sheet at September 30, 2000 has been derived from the audited financial statements at that date. For further information, refer to the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 2000. The consolidated financial statements included herein have been prepared assuming that the Company will continue as a going concern. The Company suffered a loss from operations for the six months ended March 31, 2001 and subsequent to that date such losses have continued. In addition, at March 31, 2001, the Company has a working capital deficit of $(22,842) and an accumulated deficit of $(158,379) and was in violation of certain loan covenants that gave the Company's lender the potential right to accelerate the due date of their loans, which are scheduled to expire September 30, 2001. As discussed more fully in Note 4, the lender and the Company have amended such agreements with respect to such defaults, which resulted in, among other revisions, a $5,000 decrease in the Company's available credit facility but did not accelerate the due date. In addition, effective May 31, 2001, the Company refinanced its outstanding revolving credit facility with a $75,000 credit facility including a revolving credit facility and senior secured and junior secured term loans. Management believes, based upon the results to date and the projected results for the remainder of fiscal 2001, that funds available under the new credit facilities and other available sources will be sufficient to meet its cash requirements in the next twelve months. On November 24, 1998 (the "Effective Date"), the Company emerged from Chapter 11 reorganization under the United States Bankruptcy Code. In connection with its emergence from Chapter 11 bankruptcy proceedings, the Company implemented "Fresh Start Reporting," as of November 29, 1998 (its normal interim closing date), as set forth in Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" (SOP 90-7), issued by the American Institute of Certified Public Accountants. "Fresh Start Reporting" was required because there was more than a 50% change in the ownership of the Company. Accordingly, all assets and liabilities were restated to reflect their respective fair values. The reorganization value of the Company was determined by management, with assistance from Chanin Kirkland Messina LLC, independent financial professionals. The methodology employed involved estimation of enterprise value (i.e., the market value of the Company's debt and stockholders' equity which was determined to be $275,000), taking into account a discounted cash flow analysis (Enterprise Value). The discounted cash flow analysis was based on five-year cash flow projections prepared by management. The reorganization value of the Company was determined to be $552,428 as of November 29, 1998. The portion of the reorganization value which cannot be attributed to specific tangible or identifiable intangible assets of the reorganized Company has been reported as "Reorganization value in excess of amounts allocable to identifiable assets." This intangible asset is being amortized using the straight-line method over 5 years. The Company selected a useful life of 5 years based on the Company's previous experience, methodologies employed by independent financial experts and the Company's turnaround business strategy. 7 HARVARD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) -- (Continued) (in thousands of dollars, except share and per share data) (1) Basis of Presentation -- (Continued) The Company continually evaluates whether changes have occurred that would require revision of the remaining estimated useful life of the reorganization value in excess of amounts allocable to identifiable assets or render such assets not recoverable. To determine if reorganization value in excess of amounts allocable to identifiable assets is recoverable, the Company compares the net carrying amounts to undiscounted projected cash flows. If the reorganization asset is not recoverable, the Company would record an impairment based on the difference between the net carrying amount and fair value. (2) Disposition of Businesses Condensed operating data of operations disposed or being disposed of are as follows--
Six Months Six Months Ended Ended March 31, March 31, 2000 2001 ---------- ---------- Sales ............................................... $34,280 $ 23,909 Gross profit ........................................ 1,828 (2,902)
On December 21, 1999, the Company sold the land and building and certain machinery and equipment of the Ripley, Tennessee facility of its Hayes-Albion subsidiary for approximately $2,325 in cash. The Company recognized a gain of $1,109 on this transaction. On December 28, 1999, the Company sold its Farmington Hills facility for gross proceeds of $5,500 in cash and entered into a leaseback agreement with the buyer. The lease has been accounted for as an operating lease, with a term of eight years. The Company recognized a gain of $1,149 on this transaction and deferred $2,028 of gain to be amortized as a reduction of rent expense. On October 30, 2000, the Company announced its intention to close its Pottstown Precision Castings, Inc. plant operating in Pottstown, Pennsylvania during 2001. Despite the cooperation of its union, the United Auto Workers, and substantial investments in management and the physical plant, severe price competition in the aluminum die casting industry prevented the operation from establishing a profitable business. Severance and related costs for 64 salaried and 327 hourly employees of approximately $3,500 and facility related costs of approximately $1,000 were recognized as a component of cost of sales during the period ended December 31, 2000. As of March 31, 2001, severance and related payments of approximately $203 have been made. Cash payments relating to the shutdown are anticipated to be completed by March 2002. A closure supply agreement has been signed with the plant's major customer and the facility should cease operations by September 2001. On November 8, 2000, the Company sold the plastic fan product line of its Hayes-Albion Jackson, Michigan facility for gross proceeds of $175 in cash and a future earnout of a maximum of $900 based on future revenues of the product line. The Company recorded a loss of $443 on this transaction based on cash proceeds received and will record gains on the future earnout, if any, as realized. (3) Inventories Inventories consist of the following:
September 30, March 31, 2000 2001 ------------- ----------- (Unaudited) Finished goods .................................. $ 7,748 $10,072 Work-in-process ................................. 3,029 1,761 Tooling ......................................... 1,447 1,076 Raw materials ................................... 8,270 7,527 ------- ------- Total inventories ............................... $20,494 $20,436 ======= =======
8 HARVARD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) -- (Continued) (in thousands of dollars, except share and per share data) (4) Long-Term Debt and Credit Agreements On September 30, 1999, the Company put in place a new $50,000 revolving credit facility with General Electric Capital Corporation ("GECC"). The Facility is secured by substantially all of the assets of the Company. The interest rate is base rate (prime rate) plus 1.25% or LIBOR plus 2.50% (interest rate at June 30, 2000 was 10.75%). Effective March 31, 2000, and at the end of each ensuing quarter the interest rate may be adjusted (up or down) prospectively based upon the Company's achievement of consolidated financial performance targets. The facility commitment terminates on September 30, 2001. The Company had $26,003 and $4,599 outstanding under the facility, in addition to $6,314 and $7,114 of letters of credit outstanding as of March 31, 2001 and September 30, 2000 respectively. In addition, the Company, through its wholly- owned Canadian subsidiary, has a $3,000 Canadian dollar overdraft facility that has $1,725 U.S. Dollar equivalent outstanding on March 31, 2001. For the period ended September 30, 2000, the Company failed to meet certain financial covenants. This resulted in the $50,000 revolving credit facility being converted to an asset-based facility by GECC effective January 1, 2001, which reduced borrowing availability by approximately $15,000. On May 10, 2001, the credit agreement with GECC was amended, which, among other things, increased the borrowing capacity to a maximum of $45,000. Effective May 31, 2001, the Company entered into two new credit facilities. One facility, with the CIT Group/Business Credit Inc., Citicorp USA Inc. ("CIT/Citicorp"), provides for a Senior Secured asset-based borrowings of up to $45,000 under a revolving credit facility and $20,000 of Senior Secured Term Loans. The other facility, with Hilco Capital LP ("Hilco"), provides for a Junior Secured Term Loan of $10,000. The revolving credit facility has a term of three (3) years and has an interest rate equal to the base rate (prime rate) plus 1.75%. The $10,000 Senior Secured Term Loan A has a term of two (2) years and an interest rate equal to the base rate plus 1.75%. Monthly installment payments of principal of approximately $208 are to be made in the fourth through sixth months following the closing date and monthly principal payments of approximately $521 are to be made in the seventh through the twenty-third months following the closing date with the balance of the loan due on the twenty-fourth month following the closing date. The $10,000 Senior Secured Term Loan B has a term of three (3) years and has an interest rate equal to the base rate plus 2.50%. Monthly installment payments of principal of approximately $417 are to be made in the twenty-fifth through the thirty- fifth months following the closing date with the balance of the loan due on the thirty-sixth month following the closing date. The $10,000 Junior Secured Term Loan has a term of three (3) years and has an interest rate equal to the base rate plus 7.00% but not less than 15.00% and PIK interest equal to 4% of the outstanding loan balance per annum. The loan is payable in full on the third (3) anniversary of the closing date. The proceeds of these facilities were used to repay the GECC credit facility in its entirety. In addition, Hilco and the Company entered into a security purchase agreement which gave Hilco the continuing right to acquire up to 5% of the outstanding common stock of the Company, on a fully-diluted basis, for a price of $0.01 per share and the right to purchase additional shares at the lesser of $0.85 per share or the sale price in a subsequent share issuance, if additional shares of the Company are issued, in order to maintain a 5% ownership interest in the Company. On June 4, 2001, Hilco acquired 500,966 shares of the Company's stock for par value. (5) Restructuring Charges On November 30, 2000, the Company implemented a reduction in force of 31 salaried employees to adjust operations staffing levels to the current business volume. A restructuring charge relating to severance and related costs of $2,000 was recorded as a component of selling, general and administrative expense during the period ended December 31, 2000. As of March 31, 2001, related payments of approximately $553 have been made and the program should be completed by December 2001. 9 HARVARD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) -- (Continued) (in thousands of dollars, except share and per share data) (6) Earnings per Common Share Basic EPS is calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is calculated by dividing income available to common shareholders, adjusted to add back dividends or interest on convertible securities, by the weighted average number of shares of common stock outstanding plus additional common shares that could be issued in connection with potentially dilutive securities. Although on June 4, 2001, 10,019,883 of the Company's 50,000,000 authorized shares were outstanding, net of 1,072,955 shares of treasury stock, the Company's Chapter 11 Plan of Reorganization, which became effective on November 24, 1998, requires it to issue additional shares to certain claimants in the Bankruptcy case. The exact number of shares to be issued is presently unknown, as certain claims are unliquidated and others are disputed as to amount or validity. However, management estimates that approximately 500,000 additional shares will be issued in the process of resolving claims. The issuance of additional shares will not involve additional consideration, and therefore no accounting recognition other than the impact on outstanding share and per share amounts is expected. The Company's Plan of Reorganization also provides for holders of its Old Common Stock and PIK Preferred Stock to receive in the aggregate approximately 633,000 warrants, expiring November 23, 2003, permitting the purchase of new common shares at an exercise price of $41.67 per share. Seven members of the Company's Board of Directors have each been granted 20,000 shares which vest over five (5) years. A total of 120,000 shares were issued as one director declined the grant. Seven members were granted 3,000 shares each on April 4, 2000, which vest immediately. A total of 141,000 shares were issued to directors. An incentive plan has been authorized by the Board of Directors providing for a grant of options to certain members of senior management. As of March 31, 2001, 1,845,000 shares have been awarded under this plan. All of the above options and warrants have been excluded from the computation of earnings per share as their effect would be antidilutive. On October 5, 1999, the Company used part of the proceeds of the sale of the assets of its Kingston-Warren subsidiary to purchase 762,000 shares of its common stock in a private transaction at an aggregate cost of approximately $4,999. The Company repurchased an additional 51,006 shares during the year ended September 30, 2000 at an aggregate cost of $316. The Company's Chapter 11 Plan of Reorganization ("Plan") incorporated an agreement with the Pension Benefit Guarantee Corporation ("PBGC"), requiring the Company to issue New Shares to the PBGC as security for Harvard's obligation to make required payments to its qualified defined benefit retirement plans. No monetary consideration was received by the Company in exchange for the issuance of the shares. The agreement provided that the PBGC would surrender all or part of the shares if Harvard paid the required amounts in a timely fashion for a period specified in the agreement. In May of 2000, the PBGC agreed, by amendment to the agreement, to surrender approximately 660,000 shares to the Company. Of the surrendered shares, 399,106 were cancelled and 259,949 were retained by the Company as treasury shares. 10 HARVARD INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) -- (Continued) (in thousands of dollars, except share and per share data) (7) Comprehensive Income
Six Months Six Months Ended Ended March 31, March 31, 2000 2001 ---------- ---------- Net loss ............................................ $(9,212) $ (30,609) Other comprehensive income: Foreign currency translation adjustment ............. 150 (585) ------- --------- Comprehensive income (loss) ......................... $(9,062) $(31,194) ======= =========
(8) Subsequent Events On May 1, 2001, the Company announced its intention to close the Jackson, Michigan facility and move substantially all the production to its Bryan, Ohio facility. The shutdown plan will affect approximately 69 hourly and 16 salaried employees. The Company failed to meet certain financial covenants at September 30, 2000 and, as a result, on January 1, 2001 the revolving credit facility was converted to an asset-based loan by GECC, effectively reducing borrowing availability by approximately $15,000. The credit agreement with GECC was amended on May 10, 2001 which, among other things, increased borrowing capacity to a maximum of $45,000. Effective May 31, 2001, the Company entered into two new credit facilities. These include a loan and letter of credit facility with CIT/Citicorp that provides for a Senior Secured asset-based revolving credit facility of up to $45,000 and Senior Secured Term Loans aggregating to $20,000 and a Junior Secured Term Loan of $10,000 with Hilco (see Note 4). The proceeds from these facilities were used to pay off the GECC facility in its entirety. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands of dollars) Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time, in filings with the Securities and Exchange Commission or otherwise. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements may include, but not be limited to, projections of revenues, income or losses, covenants provided for in the financing agreements, capital expenditures, plans for future operations, financing needs or plans, plans relating to products or services of the Company, as well as assumptions relating to the foregoing. In addition, when used in this discussion, the words "anticipates," "believes," "estimates," "expects," "intends," "plans" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, including, but not limited to, product demand, pricing, market acceptance, risk of dependence on third party suppliers, intellectual property rights and litigation, risks in product and technology development and other risk factors detailed in the Company's Securities and Exchange Commission filings, some of which cannot be predicted or quantified based on current expectations. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Statements in this Quarterly Report, particularly in the Notes to Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations," describe factors, among others, that could contribute to or cause such differences. Other factors that could contribute to or cause such differences include unanticipated increases in launch and other operating costs, a reduction and inconsistent demand for passenger cars and light trucks, labor disputes, capital requirements, adverse weather conditions, and increases in borrowing costs. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Results of Operations In the fourth (4th) quarter of calendar 2000, the North American automotive industry experienced a significant decline in sales and as a result the OEMs have significantly reduced production schedules during the fourth (4th) quarter of calendar 2000 and the first (1st) and second (2nd) quarters of calendar 2001 to reduce their inventory levels. The current industry forecast, per JD Power and Associates, of North American production for cars and light trucks in calendar 2001 is approximately 16 million units, down from approximately 17.3 million units in calendar 2000, and the industry expects to recover from this inventory correction in the second half of calendar 2001. 12 Six months ended March 31, 2000 compared to the six months ended March 31, 2001 The following table is included solely for use in comparative analysis of results of operations, and to complement management's discussion and analysis. Certain reclasses have been made to present the results on a comparable basis.
Six Months Six Months Ended Ended March 31, March 31, 2000 2001 ---------- ---------- Sales ............................................... $173,677 $124,223 Cost of sales ....................................... 153,448 116,151 -------- -------- Gross profit .................................... 20,229 8,072 Selling, general and administrative expenses ........ 13,333 7,629 -------- -------- Operating income (a) ................................ 6,896 443 Interest expense .................................... 432 1,465 Amortization of intangible assets ................... 21,310 21,306 Restructuring charges ............................... -- 6,500 (Gain) Loss on sale of operations ................... (7,170) 443 Other (income) expense, net ......................... 713 810 -------- -------- (Loss) before income taxes .......................... (8,389) (30,081) Provision for income taxes .......................... 823 528 -------- -------- Net (loss) .......................................... $ (9,212) $(30,609) ======== ========
- --------------- (a) Includes depreciation expense of $4,231 and $4,533 for the periods ended March 31, 2000 and 2001 respectively. Sales. Consolidated sales decreased $49,454 from $173,677 to $124,223 or 28.5%. The sales decrease is due primarily to the overall slowdown in car and light truck demand in North America. Gross Profit. The consolidated gross margin, expressed as a percentage of sales, decreased from 11.6% to 6.5%. The gross profit decreased by $12,157 primarily due to significantly reduced car and light truck volume and the resulting additional operational inefficiencies due to reduced capacity utilization. Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased from $13,333 to $7,629 primarily due to reductions in staffing and spending as a result of lower than anticipated business volume for the period ended March 31, 2001 and non-recurring charges of $1,200 relating to a failed acquisition for the period ended March 31, 2000. Interest Expense. Interest expense increased from $432 to $1,465 as a result of higher borrowing levels resulting from the significant slowdown in the North American car and light truck demand. Restructuring Charges. During the period ended March 31, 2001 the Company recorded a restructuring charge of $4,500 for the shut-down of its Pottstown, Pennsylvania facility and $2,000 for severance and related costs for a reduction in force in salaried support staff. (Gain) Loss on Sale of Operations. During the period ended March 31, 2000 the Company recorded a gain on the sale of the Ripley, Tennessee land and building of $1,109, a gain on the sale leaseback of the Farmington Hills, Michigan facility of $1,149, a gain of $362 on the sale of the Bolivar, Tennessee land and building and a $4,550 reduction to the loss on the sale of Kingston-Warren, recorded in September 1999, which represents a post-closing adjustment. During the period ended March 31, 2001 the Company recorded a loss on the sale of the plastic fan product line of $443. Net loss. Net (loss) increased from $(9,212) to $(30,609) for the reasons described above. 13 Three months ended March 31, 2001 compared to the three months ended March 31, 2000 The following table is included solely for use in comparative analysis of results of operations, and to complement management's discussion and analysis. Certain reclasses have been made to present the results on a comparable basis.
Three Months Three Months Ended Ended March 31, March 31, 2000 2001 ------------ ------------ Sales ........................................... $90,053 $ 61,937 Cost of sales ................................... 78,609 55,448 ------- -------- Gross profit ................................ 11,444 6,489 Selling, general and administrative expenses .... 7,065 3,453 ------- -------- Operating income (a) ............................ 4,379 3,036 Interest expense ................................ 194 829 Amortization of intangible assets ............... 10,810 10,653 Other (income) expense, net ..................... 203 395 ------- -------- (Loss) before income taxes ...................... (6,828) (8,841) Provision for income taxes ...................... 438 290 ------- -------- Net (loss) ...................................... $(7,266) $(9,131) ======= ========
- --------------- (a) Includes depreciation expense of $2,172 and $2,228 for the periods ended March 31, 2000 and 2001 respectively. Sales. Consolidated sales decreased $28,116 from $90,053 to $61,937or 31.2%. The sales decrease is due primarily to the overall slowdown in North American car and light truck demand. Gross Profit. The consolidated gross margin, expressed as a percentage of sales, decreased from 12.7% to 10.5%. The gross profit decrease of $4,955 was due to reduced car and light truck volume partially offset by aggressive cost containment measures. Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased from $7,065 to $3,453 primarily due to staff reduction and cost containment measures as a result of lower than anticipated business volume in the period ended March 31, 2001 and a non-recurring charge of $1,200 for a failed acquisition in the period ended March 31, 2000. Interest Expense. Interest expense increased from $194 to $829 due to higher borrowing levels resulting from lower business volume. Net loss. Net (loss) increased from $(7,266) to $(9,131) for the reasons described above. Liquidity and Capital Resources For the six months ended March 31, 2001, the Company had cash (used by) operations of $(18,709) compared to cash (used by) operations of $(7,349) for the six months ended March 31, 2000. The decrease was primarily due to reduced earnings due to lower volume and a non-recurring increase in accounts payable in the prior year. The Company had $26,003 outstanding under its GECC facility in addition to $6,314 of letters of credit and had borrowing availability of approximately $7,687 as of March 31, 2001. In addition, the Company, through its wholly- owned Canadian subsidiary, had $1,725 U.S. dollar equivalent outstanding on a $3,000 Canadian dollar overdraft facility with Canadian Imperial Bank of Commerce ("CIBC"). The Company failed to meet certain financial covenants at September 30, 2000 and, as a result, on January 1, 2001 the revolving credit facility was converted to an asset-based loan by GECC, effectively reducing borrowing availability by 14 approximately $15,000. The credit agreement with GECC was amended on May 10, 2001, which, among other things, increased the borrowing capacity to a maximum of $45,000. Effective May 31, 2001, the Company entered into two new credit facilities. These include a loan and letter of credit facility with CIT/Citicorp that provides for a Senior Secured asset-based revolving credit facility for up to $45,000 and Senior Secured Term Loan borrowings of $20,000 and a Junior Secured Term Loan of $10,000 with Hilco (see Note 11). The proceeds from these facilities were used to pay off the GECC facility in its entirety. Management believes, based upon the results to date and the projected results for the remainder of fiscal 2001, that funds available under the new credit facilities and other available sources will be sufficient to meet its cash requirements in the next twelve months. Capital Expenditures. Capital expenditures for property, plant and equipment for the six month period ended March 31, 2001 were $3,579, principally for machinery and equipment required in the ordinary course of business. The Company is currently projecting to spend approximately $6,500 for machinery and equipment in 2001. The projected capital expenditures are required for new business and on-going cost savings programs necessary to maintain the Company's competitive position, and the balance is for normal replacement. The actual timing of capital expenditures for new business may be impacted by customer delays and acceleration of program launches and the Company's continual review of the priority of the timing of capital expenditures. Quantitative and Qualitative Disclosure about Market Risk Management does not believe that there is any material market risk exposure with respect to derivative or other financial instruments that are required to be disclosed. 15 PART II OTHER INFORMATION Item 1. Legal Proceedings On June 11, 1999, Doehler-Jarvis, Inc. and Harvard Industries, Inc. (the "Companies") filed a declaratory judgment action in the United States District Court for the Eastern District of Pennsylvania seeking a declaration that the termination of certain insurance benefits, including health insurance benefits, to individuals on the seniority list when they retired from active or inactive employee status at Doehler-Jarvis facilities in Pottstown, Pennsylvania or Toledo, Ohio after July 16, 1999, and/or their eligible surviving spouses and/or eligible dependents does not violate the Employee Retirement Income Security Act ("ERISA") or any other law, applicable collective bargaining agreement, or contract. Thomas E. Kopystecki was named as the representative of the proposed class of defendants. On June 23, 1999, John C. Gilbert, Eugene Appling, Robert A. LaClair, John E. Malkulan, Christiane J. Myers, Kenneth McKnight, Thomas F. Klejta, and Fern M. Yerger, on behalf of themselves and a class of persons similarly situated filed an action against the Companies in the United States District Court for the Northern District of Ohio seeking a declaration that the termination of insurance benefits violates ERISA and the Labor Management Relations Act ("LMRA") and seeking unspecified damages resulting from the anticipated termination of benefits. The Companies filed a motion to transfer the Ohio action to Pennsylvania because the Pennsylvania action was the first filed action and is the more convenient forum for the resolution of the issues. The United States District Court for the Eastern District of Pennsylvania dismissed the Pennsylvania action finding that the United States District Court for the Northern District of Ohio was a more appropriate venue. The motion by the Companies to transfer the Ohio action was denied. The U.S. District Court (N.D. Ohio) granted the retirees' Motion for Summary Judgement and the matter is currently pending before the U.S. District Court (N.D. Ohio) to determine what, if any, damages were incurred. The companies filed an appeal with the U.S. 6th Circuit Court of Appeals. Based on information currently available, management of the Company believes, after consultation with legal counsel, that the result of such claims and litigation will not have a material adverse effect on the financial position or results of operations of the Company. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information On May 1, 2001, the Company announced its intention to close the Jackson, Michigan facility and move substantially all the production to its Bryan, Ohio facility. The shutdown plan will affect approximately 69 hourly and 16 salaried employees. The Company failed to meet certain financial covenants at September 30, 2000 and, as a result, on January 1, 2001 the revolving credit facility was converted to an asset-based loan by GECC, effectively reducing borrowing availability by approximately $15,000. The credit agreement with GECC was amended on May 10, 2001 which, among other things, increased borrowing capacity to a maximum of $45,000. Effective May 31, 2001, the Company entered into two new credit facilities. These include a loan and letter of credit facility with CIT/Citicorp that provides for a Senior Secured asset-based revolving credit facility of up to $45,000 and Senior Secured Term Loans aggregating to $20,000 and a Junior Secured Term Loan of $10,000 with Hilco (see Note 4). The proceeds from these facilities were used to pay off the GECC facility in its entirety. (a) Exhibits None (b) Reports on Form 8-K: None 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Date: June 20, 2001 HARVARD INDUSTRIES, INC. By: ------------------------------------ Roger G. Pollazzi Chairman of the Board Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title --------- ----- Executive Vice President and Chief Financial Officer - ---------------------------------------- (Principal Financial Officer) Theodore W. Vogtman Vice President, Controller and Treasurer (Principal - ---------------------------------------- Accounting Officer) Kevin L. B. Price
17 EX-27 2 b312174_fds.txt FDS ARTICLE 5
5 1,000 6-MOS SEP-30-2001 OCT-01-2000 MAR-31-2000 3,671 0 34,030 0 20,436 62,903 95,083 (20,922) 256,765 85,745 0 0 0 106 10,768 256,765 124,223 124,223 120,651 130,280 22,559 0 1,465 (30,081) 528 (30,609) 0 0 0 (30,609) (3.15) (3.15)
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