-----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, JWyU3QTmHeyJJTZttCXlczsi8GPyPsaHvoe6Rex6oDLEbD1Ww4mo6I7bICnPBJ5N GY8SdHl5HHeVLJS+2sWtvA== 0000810745-96-000001.txt : 19960518 0000810745-96-000001.hdr.sgml : 19960518 ACCESSION NUMBER: 0000810745-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960516 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTOR WHEEL CORP CENTRAL INDEX KEY: 0000810745 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 381741793 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-11958 FILM NUMBER: 96568782 BUSINESS ADDRESS: STREET 1: 2501 WOODLAKE C CITY: OKEMOS STATE: MI ZIP: 48864-5955 BUSINESS PHONE: 5173375700 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 Commission file number 33-11958 MOTOR WHEEL CORPORATION (Exact name of registrant as specified in its charter) Ohio 38-1741793 (State or other jurisdiction of (I.R.S. Employer incorporation or organization)Identification No.) 2501 WOODLAKE CIRCLE, OKEMOS, MICHIGAN 48864-5955 (Address of principal executive offices) (517) 337-5700 (Registrant's telephone number) 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 practical date. COMMON SHARES NO PAR VALUE -- 1,100 SHARES OUTSTANDING AS OF MAY 13, 1996 Page 1 of 10 pages INDEX MOTOR WHEEL CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets -- March 31, 1996 and December 31, 1995 Condensed consolidated income statements -- Three months ended March 31, 1996 and 1995 Condensed consolidated statements of cash flows -- Three months ended March 31, 1996 and 1995 Notes to condensed consolidated financial statements -- March 31, 1996 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K SIGNATURES
PART I. FINANCIAL INFORMATION Item 1. Financial Statements MOTOR WHEEL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands) March 31, December 31, 1996 1995 ASSETS Current assets: Cash and equivalents 319 1,344 Accounts receivable, net of allowance of $250 in 1996 and in 1995 32,018 32,294 Inventories - Note B 34,082 31,943 Prepaid expenses and other current assets 4,115 5,459 Total current assets 70,534 71,040 Property, plant and equipment 217,148 215,362 Less accumulated depreciation, amortization and valuation allowance 140,241 136,385 76,907 78,977 Investments in equity affiliates 6,499 7,374 Other assets 13,034 12,087 Total assets 166,974 169,478 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable 28,519 30,123 Accrued liabilities 22,399 26,087 Short-term borrowings 12,021 5,000 Total current liabilities 62,939 61,210 Long-term debt 125,000 125,000 Other long-term liabilities 60,947 60,953 Shareholders' equity (deficit): Common stock, no par value, authorized 2,500 shares, outstanding 1,100 shares 1 1 Additional paid-in capital 29,844 29,844 Retained-earnings deficit (111,757) (107,530) Total shareholders' equity (deficit) (81,912) (77,685) Total liabilities and shareholders' equity (deficit) 166,974 169,478 See notes to condensed consolidated financial statements.
MOTOR WHEEL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
(Dollars in thousands except per share amounts) Three Months Ended March 31, 1996 1995 Net sales 79,590 105,605 Costs of goods sold 73,497 91,776 Gross profit 6,093 13,829 Selling, administrative and general 4,136 4,626 Research and development 1,240 1,891 Interest expense 4,302 4,513 Other (income) expense 631 (354) Income (loss) before taxes (4,216) 3,153 Provision for income taxes 11 29 Net income (loss) (4,227) 3,124 Preferred stock dividend accrued plus accretion - 471 Net income (loss) available to common shareholder (4,227) 2,653 Income (loss) per common share: Net income (loss) per common share (3,843) 2,412 See notes to condensed consolidated financial statements.
MOTOR WHEEL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands) Three Months Ended March 31, 1996 1995 Cash Flows From Operating Activities Net income (loss) (4,227) 3,124 Adjustments to reconcile net income (loss) to net cash used for operating activities: Depreciation and amortization 4,542 4,901 Postretirement benefits other than pensions 710 600 Debt issuance amortization 208 208 Equity in net (income) loss of affiliates 875 (431) Changes in operating assets and liabilities (7,681) (12,667) Net cash used for operating activities (5,573) (4,265) Cash Flows From Investing Activities Additions to property, plant and equipment (2,480) (4,094) Disposals of property, plant and equipment 7 3 Net cash used for investing activities (2,473) (4,091) Cash Flows From Financing Activities Proceeds from revolving credit loans with financial institutions 7,021 7,780 Net cash provided by financing activities 7,021 7,780 Decrease in cash (1,025) (576) Cash at beginning of year 1,344 966 Cash at end of period 319 390 See notes to condensed consolidated financial statements.
MOTOR WHEEL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 1996 NOTE A -- 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 for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Adjustments consisted of only normal recurring accruals. Operating results for the three month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. NOTE B -- INVENTORIES
Inventories are comprised of: March 31, December 31, 1996 1995 (Dollars in thousands) Raw materials and supplies 13,441 15,315 Work in process 6,939 6,536 Finished product 18,455 14,863 38,835 36,714 Less excess of FIFO cost over LIFO (2,088) (1,971) Less valuation allowance (2,665) (2,800) ------ ------ 34,082 31,943
NOTE C -- INCOME (LOSS) PER COMMON SHARE Income (loss) per common share amounts are based on the weighted average number of common shares outstanding and give effect to increasing preferred stock dividend requirements in 1995. The weighted average number of common shares outstanding was 1,100 for the periods presented. NOTE D -- CONTINGENCIES The Company, in the normal course of business, is involved in various legal actions. Management, after taking into consideration legal counsels' evaluations, is of the opinion that the outcome thereof will not have a material impact on the financial position, operating results or cash flows of the Company. NOTE D -- CONTINGENCIES (Continued) In addition, the Company is party to various environmental clean-up and product liability matters. At the time of the acquisition of the Company from Goodyear in December 1986 (the "Acquisition"), Goodyear agreed to be responsible for, and to indemnify the Company with respect to, all liabilities, claims and obligations for environmental pollutants, or other substances generated prior to December 30, 1986, for the plants then owned by the Company, and April 1, 1987, for the plants previously owned by Goodyear. Also at the time of the Acquisition, Goodyear agreed to indemnify the Company for all costs and liabilities arising from any product warranty, product liability, other claims or obligations for products manufactured by the Company prior to December 30, 1986 and for products manufactured by Goodyear at the Akron, Ohio plant prior to April 1, 1987. After taking into consideration both the Goodyear indemnification and actions taken by the Company since the Acquisition to limit the Company's exposure in these matters, management is of the opinion that the outcome thereof will not have a material impact on the financial position, operating results or cash flows of the Company. NOTE E -- OTHER EVENTS On March 28, 1996, MWC Holdings, Inc. ("Holdings"), the holder of all of the Company's outstanding common shares, signed a definitive Agreement and Plan of Merger (the "Merger Agreement") which provides for the merger of Holdings with and into Hayes Wheels International, Inc. ("HWI"). At the effective time of the merger, the separate corporate existence of Holdings shall thereupon cease and HWI shall continue as the surviving corporation. Pursuant to the merger, the Company will become a wholly-owned subsidiary of HWI. The Board of Directors of both Holdings and HWI approved the Merger Agreement and the transactions contemplated thereby at their respective meetings held on March 28, 1996. In connection with the merger and the related financings, it is anticipated that all of the outstanding 11-1/2% Senior Notes due 2000 of the Company will be redeemed in accordance with their terms. Consummation of the merger is subject to various conditions, including: (i) receipt of approval by the stockholders of Holdings and HWI of the Merger Agreement and the merger; (ii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) filing and effectiveness of a Proxy and Registration Statement; (iv) receipt of financing necessary to consummate the transactions; and (v) satisfaction of certain other conditions. The merger is expected to be consummated in mid-summer 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Total sales in the first quarter of 1996 were $79.6 million compared to $105.6 million in the same period of 1995. Automotive sales were $50.9 million in the first quarter of 1996, a decrease of $17.0 million from the same period of 1995. This decrease was due primarily to a resourcing program by one of the Company's principal customers that has been and continues to be implemented. This resourcing program only impacts the Company's level of automotive wheel sales and was a consideration in the Company's decision to close its Mendota, Illinois manufacturing facility. Sales of automotive brake products also decreased as selected production shutdowns by customers, to control their inventory levels, impacted some of the Company's higher volume brake components. Commercial highway sales were $28.7 million in the first quarter of 1996, a decrease of $9.0 million from the same period of 1995 and is attributable to a significant downturn in the production of heavy-duty trucks and trailers compared to record production levels in the first quarter of 1995. The Company's gross profit for the quarter of 1996 was $6.1 million, or 7.7% of net sales, compared to $13.8 million, or 13.1% of net sales, for the same period of 1995. The lower sales volume is the primary reason for the decreased level of gross profit but the Company has also experienced certain manufacturing inefficiencies and incurred other transition costs as its previously disclosed plans to cease operations at certain manufacturing facilities are being implemented. Closure of the Mendota facility is in process as the Company is consolidating all automotive wheel production in its Bowling Green, Kentucky facility with an anticipated completion by the end of the third quarter of 1996. In addition, the Company is implementing certain aspects of its plan to close its automotive brake manufacturing facility in Ypsilanti, Michigan and continues to evaluate options with respect to satisfying its expected long-term production requirements. Military wheel production equipment which was previously located at the Company's now closed Lansing, Michigan facility is in the process of being installed at the Akron, Ohio facility. Management expects that these closings will result in improvements in financial performance primarily through reductions in fixed manufacturing costs and lower variable costs. Selling, administrative and general expense together with research and development expense decreased to $5.4 million in the first quarter of 1996 compared to $6.5 million in the same period of 1995 as a result of actions initiated by the Company during the fourth quarter of 1995, which were affected during the first quarter of 1996, to bring this expense category in line with the lower sales volume. Interest expense was $4.3 million in the first quarter of 1996 compared to $4.5 million in the same period of 1995. Other expense was $0.6 million in the first quarter of 1996 compared to other income of $0.4 million in the same period of 1995. The primary component of this other category is the Company's share of the results of Alumitech, a 50% owned joint venture which produces aluminum wheels. The Company had minimal income tax expense and therefore the resulting net loss for the first quarter of 1996 was $4.2 million compared to net income of $3.1 million in the same period of 1995. CAPITAL RESOURCES AND LIQUIDITY The Company has a revolving credit agreement through March 1998, which provides borrowing capacity up to $50 million, subject to limitations based on the value of the Company's inventory and receivables. At March 31, 1996, the Company used $12.0 million for short-term borrowings and $12.5 million for letters of credit with excess availability of $17.1 million. Net cash used for operating activities was $5.6 million in the first quarter of 1996 as compared to $4.3 million in the same period of 1995. The principal usage of cash during the first quarter of 1996 was for an inventory build program in one of the company's plants in anticipation of the termination of a labor agreement. Cash provided by net income (loss), as adjusted for non-cash charges, was $2.1 million while cash requirements to support operating assets and liabilities was $7.7 million. These amounts are both lower than the comparable amounts in the same period of 1995 due to the lower sales volume. Net cash used for investing activities was $2.5 million in the first quarter of 1996 as compared to $4.1 million for the same period of 1995 as the Company has adjusted its plans for investment in property, plant and equipment to be in line with the lower sales volume. Net cash provided by financing activities was $7.0 million in the first quarter of 1996 as compared to $7.8 million for the same period of 1995. The Company has utilized borrowings under the revolving credit agreement to support its cash requirements for operating assets and liabilities. The Company's availability under the revolving credit agreement is expected to be adequate to support its working capital requirements. Management believes that cash generated by operations will be sufficient to meet the Company's expected operating needs (including cash requirements related to plant closures), planned capital expenditures and interest payments. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. 2(b) Agreement and Plan of Merger, dated as of March 28, 1996, between MWC Holdings, Inc. and Hayes Wheels International, Inc. is incorporated by reference to Exhibit 2 to the Hayes Wheels International, Inc. Form 8-K, dated March 28, 1996. There were no reports on Form 8-K filed during the quarter. 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. Date: May 14, 1996 MOTOR WHEEL CORPORATION By: /s/ Richard W. Tuley Richard W. Tuley President By: /s/ Thomas R. Collins Thomas R. Collins Vice President and Treasurer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----