-----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, KXHIASM0SGajPp3jIchguIpqX8SAhrxBdAxks1DyuVCfL/tyOxPuKk2Vj4/VkLGd bbimQEXBEnP+ggWWW9WX3Q== 0000062418-98-000006.txt : 19990101 0000062418-98-000006.hdr.sgml : 19990101 ACCESSION NUMBER: 0000062418-98-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 ITEM INFORMATION: FILED AS OF DATE: 19981231 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK IV INDUSTRIES INC CENTRAL INDEX KEY: 0000062418 STANDARD INDUSTRIAL CLASSIFICATION: GASKETS, PACKAGING AND SEALING DEVICES & RUBBER & PLASTIC HOSE [3050] IRS NUMBER: 231733979 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08862 FILM NUMBER: 98779629 BUSINESS ADDRESS: STREET 1: 501 JOHN JAMES AUDUBON PKWY STREET 2: P O BOX 810 CITY: AMHERST STATE: NY ZIP: 14266-0810 BUSINESS PHONE: 7166894972 MAIL ADDRESS: STREET 1: 501 JOHN JAMES AUDUBON PARKWAY STREET 2: P O BOX 810 CITY: AMHERST STATE: NY ZIP: 14266-0810 FORMER COMPANY: FORMER CONFORMED NAME: MARK FOUR HOMES INC DATE OF NAME CHANGE: 19770921 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 F O R M 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 16, 1998 ----------------------- MARK IV INDUSTRIES, INC. - ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware - ------------------------------------------------------------------------ (State or other jurisdiction of incorporation) 1-8862 23-1733979 - ----------------------- --------------------------- (Commission File Number) (IRS Employer Identification No.) 501 John James Audubon Pkwy., Amherst, New York 14226-0810 - ------------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (716) 689-4972 ------------------- ________________________________________________________________________ (Former name or former address, if changed since last report.) 2 Item 5 - Other Events - --------------------- On January 4, 1999, the Registrant will distribute to its shareholders of record at the close of business on December 18, 1998 its Fiscal 1999 Third Quarter Quarterly Report (the "Report"). A copy of the Report is attached hereto as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS - --------------------------------------------------------------------------- (a) Financial Statements of Business Acquired. - Not applicable. (b) Pro Forma financial Information. - Not applicable. (c) Exhibits. 99.1 Copy of Fiscal 1999 Third Quarter Quarterly Report, distributed January 4, 1999 to the Registrant's shareholders of record at the close of business on December 18, 1998. 3 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MARK IV INDUSTRIES, INC. BY: /s/ Richard L. Grenolds ------------------------ Richard L. Grenolds Vice President and Chief Accounting Officer Dated: December 31, 1998 ----------------- EX-99.1 2 4 EXHIBIT 99.1 Quarterly Report Third Quarter Fiscal 1999 AMHERST, N.Y., December 16, 1998 - Mark IV Industries, Inc. (NYSE: IV) today reported results for its third fiscal quarter and nine months ended November 30, 1998. Operating Results In the quarter, diluted earnings per share before special items increased ten percent, to 46 cents from 42 cents last year, while income before special items was $27.0 million in the period compared to $27.3 million last year. Sales for the period increased three percent, to $580.2 million from $564.1 million, while operating income (income before special items, interest expense and taxes) in this year's third quarter was $60.0 million versus $60.8 million in fiscal 1998. Diluted weighted average shares outstanding decreased six percent in the quarter, to 63.0 million from 67.3 million in fiscal 1998, due to the company's stock repurchase program. All share and share related amounts are diluted. In addition, as planned and previously discussed, the company took a $40 million (63 cents per share) after-tax charge in the third quarter, primarily to reposition its automotive aftermarket business unit, resulting in a loss for the period of $13.0 million (17 cents per share) versus last year's net income of $16.7 million (26 cents per share). Last year's period reflects an extraordinary charge for early debt extinguishment of $10.6 million (16 cents per share) after taxes. For the first nine months of fiscal 1999, earnings before special items were $74.8 million ($1.22 per share) compared to $84.9 million ($1.30 per share) last year. Sales for the nine-month period increased seven percent, to $1.76 billion from $1.66 billion last year. Operating income for the period was down ten percent, to $166.9 million from $184.9 million in fiscal 1998. Net income for the nine months ended November 30, 1998, decreased to $32.2 million (58 cents per share) from $74.3 million ($1.14 per share) last year, reflecting the previously mentioned repositioning charge of $40 million, as well as an extraordinary after-tax charge for early debt extinguishment of $2.6 million (four cents per share) taken in the first quarter. In fiscal 1998, net income for the first nine months of the year includes an early debt extinguishment charge of $10.6 million (16 cents per share) taken in the third quarter. 5 Reflecting on positive developments in the year, Sal H. Alfiero, chairman and chief executive officer of Mark IV, said, "Fiscal 1999, although a difficult and changing year, is proving to be about in line with our expectations as detailed at the start of the year, with the exception of the GM strike, which was not expected at that time, but ultimately did occur during the second quarter, resulting in a cost to the company of five cents per share. As anticipated, this year's third quarter marked our return to positive quarterly earnings comparisons. Our operating income margin, before the repositioning charge as a percentage of revenue, improved to 10.3 percent from nine percent in the first half of the year. Through the nine-month period, free cash flow increased by $151 million over last year, including an operating working capital reduction of $42 million exclusive of the repositioning charge. The restructuring initiated in fiscal 1997 has finally been completed. Looking forward, further improvements are expected in the fourth quarter and into the following fiscal year, particularly as it relates to the aftermarket repositioning. "In October, we announced plans to open a North American manufacturing facility/technical center in Montreal, Canada, to provide injection molded/welded nylon air intake manifolds for automotive OEM customers in North America. The facility, which is expected to start up in the second half of next fiscal year, is approximately 175,000 square feet and will employ 150 to 200 people initially. Use of this air intake technology, acquired with the October 1997 purchase of LPI Systemes Moteurs, of France, will result in lower costs and a lighter weight product, with more efficient airflow, leading to improved engine performance and, most importantly, lower emissions. "While the new technology has been in use in Europe for the past decade--where it has achieved a 50 percent penetration of the new vehicle market--it is an emerging technology in North America. The potential for this product in North America affords us an opportunity to add $80-$100 million to our revenue base over the next two to three years, as new engine designs increasingly incorporate these new types of manifolds. At this point, we have been awarded contracts for application of the new technology commencing with the 2000 model year vehicles." Automotive Aftermarket Repositioning Charge Mark IV has instituted a plan to reposition its automotive aftermarket business, which accounts for approximately 20 percent of the company's total revenue. This sector of the company's business has been negatively impacted by fundamental changes taking place in the aftermarket. Revenue growth rates and margins have been on the decline over the past several years, due to slowing demand resulting from improvements in the quality and performance of components and systems being supplied to the automotive OEM market. The effect has been to defer, or in some cases eliminate, the need for replacement parts. In addition, significant consolidation within the distribution channels has increased pricing pressures, reduced margins and affected terms of sale, requiring increased working capital. 6 These factors have led Mark IV to reposition its aftermarket business in order to better align its assets with the company's business base in this sector. In that context, Mr. Alfiero said, "A pre-tax charge of $66.0 million, or $40 million after taxes, has been reflected in this year's third quarter results. Nearly half of the pre-tax charge consists of non-cash items primarily related to inventory and fixed asset write-offs. The balance of the charge includes employee-related transition and other costs incurred in the current fiscal year needed to complete the restructuring program begun in the latter part of fiscal 1997, and employee-related and other cash costs associated with the aftermarket repositioning. "Our aftermarket plan includes consolidation of distribution facilities, the elimination of low margin, slow-moving product lines, a reduction of inventory levels, rationalization of our customer base, and employee reductions. As a result of these actions, we expect to realize improved margins and reduced capital employed, while continuing to provide our customers with the same high level quality of products and service." Earnings Outlook Mr. Alfiero went on to state that, "As we look at our fourth quarter and next fiscal year, we believe that we will experience improvements both quarter- over-quarter and year-over-year. However, there are a number of factors which are negatively impacting us presently and we believe will continue to do so in the next year. "Latin America, Australia/Asia, Agricultural Equipment and Petrochemical Markets, both domestic and foreign, and a general weakening manufacturing sector of our domestic economy, will negatively affect the company's earnings outlook from planned levels in the fourth quarter and next fiscal year. "In addition to the above market- and geographical-related conditions, the company will reduce pension income assumptions from its over funded pension plans to reflect more conservative estimates going forward as a result of the extreme capital markets volatility experienced this year. While this will reduce book income, it has no impact on cash earnings to the company. Net earnings of the pension assets are retained by the plan and used to fund future retirement benefits without the need for the company to provide cash funding on an annual basis. The Mark IV retirement plan is and has been in an over funded position for the past ten years. "In all of the above geographical locations, the company is operating profitably and expects to continue to do so for the balance of this year and next. However, the negative pressures being felt in Brazil and Australia, coupled with severe slowdowns in worldwide agricultural and petrochemical markets, and start-up costs in bringing new facilities on line, will reduce the level of profitability expected from these markets. 7 "While there are a number of factors that will positively affect the company's earnings, including an increasing benefit flow from the completed restructuring, sales increases resulting from new products, and increased content per vehicle on new auto builds, the net result will be a lowering of diluted earnings per share expectations of five to seven cents in the fourth quarter (from 44 cents to 37-39 cents, versus 36 cents last year). "Additionally, next year's expectation will be tempered by all of the factors outlined above, including revised pension income estimates, and the anticipated impact will be to lower fiscal year 2000 earnings expectations from $1.90 to a range of $1.65 to $1.75 per diluted share. "We believe the depressed market and geographic conditions are temporary in nature, and that there will be a recovery over time. Our strategies with regard to markets and products is to stay the course, and our actions will be flexible enough so as to take advantage of any mitigation of these conditions. "Management's view of the company's future prospects is reflected by the fact that, since March 1997 to date, Mark IV has repurchased an aggregate of 12.0 million shares of common stock, with 8.5 million being bought in this fiscal year. The company has 4.7 million shares remaining under its currently authorized share repurchase program." Mr. Alfiero added, "The continuing improvement in cash flow, completion of our restructuring program, and implementation of the aftermarket repositioning, bodes well for future earnings prospects. The capital being invested, and the research and development programs being pursued, will help us maintain leadership positions in the market segments we serve. Our internal focus on cash flow, customer service, and new technologies and product development, coupled with an aggressive but selective acquisition effort, will enhance our competitive position and secure added value for our shareholders." This report contains forward-looking statements that involve risk and uncertainties as detailed from time to time in the company's SEC reports, including its report on Form 10-K for its fiscal year ended February 28, 1998. These risks and uncertainties could affect the company's actual results and cause them to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the company. Mark IV Industries, Inc. is a $2.2 billion global manufacturing company headquartered in the Buffalo suburb of Amherst, New York, employing 17,000 people worldwide. The company's core technologies include power transmission, fluid transfer and filtration systems and components for global industrial and automotive markets. For more information on Mark IV, visit the company's web site at http://www.mark-iv.com. 8 Consolidated Statements of Income (Unaudited) (Amounts in thousands, except per share data) Three Months Ended Nine Months Ended November 30, November 30, ------------------ ----------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net sales $580,200 $564,100 $1,763,200 $1,655,300 -------- -------- ---------- ---------- Operating costs: Cost of products sold 392,700 381,600 1,209,700 1,116,000 Selling and administration 88,400 88,300 270,500 260,200 Research and development 13,700 12,700 42,500 36,500 Depreciation and amortization 25,400 20,700 73,600 57,700 -------- -------- ---------- ---------- Total operating costs 520,200 503,300 1,596,300 1,470,400 -------- -------- ---------- ---------- Operating income 60,000 60,800 166,900 184,900 Interest expense 17,700 16,800 50,100 46,700 -------- -------- ---------- ---------- Income before taxes and special items 42,300 44,000 116,800 138,200 Provision for income taxes 15,300 16,700 42,000 53,300 -------- -------- ---------- ---------- Income before special items 27,000 27,300 74,800 84,900 Repositioning charge, net of tax benefits (40,000) - (40,000) - -------- -------- ---------- ---------- Income (loss) before extraordinary item (13,000) 27,300 34,800 84,900 Extraordinary loss from early extinguishment of debt, net of tax benefits - (10,600) (2,600) (10,600) -------- -------- ---------- ---------- NET INCOME (LOSS) $(13,000) $ 16,700 $ 32,200 $ 74,300 ======== ======== ========== ========== Net income (loss) per share of common stock: Basic: Income before special items $ .50 $ .43 $ 1.29 $ 1.32 Repositioning charge (.74) - (.69) - -------- -------- ---------- ---------- Income (loss) before extraordinary item (.24) .43 .60 1.32 Extraordinary loss - (.17) (.04) (.16) -------- -------- ---------- ---------- NET INCOME (LOSS) $ (.24) $ .26 $ .56 $ 1.16 ======== ======== ========== ========== Diluted: Income before special items $ .46 $ .42 $ 1.22 $ 1.30 Repositioning charge (.63) - (.60) - -------- -------- ---------- ---------- Income (loss) before extraordinary item (.17) .42 .62 1.30 Extraordinary loss - (.16) (.04) (.16) -------- -------- ---------- ---------- NET INCOME (LOSS) $ (.17) $ .26 $ .58 $ 1.14 ======== ======== ========== ========== Weighted average number of shares outstanding: Basic 54,500 63,700 57,900 64,300 ======== ======== ========== ========== Diluted 63,000 67,300 66,500 65,800 ======== ======== ========== ========== 9 Consolidated Condensed Balance Sheets (Dollars in thousands) November 30, 1998 February 28, 1998 (Unaudited) ----------------- ----------------- Assets Accounts receivable, net $ 460,300 $ 466,400 Inventories 364,300 393,400 Other current assets 146,000 226,500 ---------- ---------- Total current assets 970,600 1,086,300 Pension and other non-current assets 239,300 226,600 Property, plant and equipment, net 664,900 668,400 Goodwill 431,300 439,200 ---------- ---------- TOTAL ASSETS $2,306,100 $2,420,500 ========== ========== Liabilities & Stockholders' Equity Current debt $ 66,200 $ 206,900 Accounts payable and other current liabilities 429,700 421,000 ---------- ---------- Total current liabilities 495,900 627,900 ---------- ---------- Long-term debt 934,600 793,900 Other non-current liabilities 263,800 246,700 Stockholders' equity 611,800 752,000 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,306,100 $2,420,500 ========== ========== -----END PRIVACY-ENHANCED MESSAGE-----