-----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, Kzu9HHMeIYj6P2RpWaFrUnrQNxmd4IXW+b7g7fNTV/exSV20CDpBiK8130bhzbE+ wwkLMJtu+eDCocY6gLQF+w== 0000950124-97-003376.txt : 19970616 0000950124-97-003376.hdr.sgml : 19970616 ACCESSION NUMBER: 0000950124-97-003376 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970613 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAYES WHEELS INTERNATIONAL INC CENTRAL INDEX KEY: 0000893670 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 133384636 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11592 FILM NUMBER: 97623708 BUSINESS ADDRESS: STREET 1: 38481 HURON RIVER DR CITY: ROMULUS STATE: MI ZIP: 48174 BUSINESS PHONE: 3139412000 MAIL ADDRESS: STREET 1: 38481 HURON RIVER DR CITY: RONULUS STATE: MI ZIP: 48174 10-Q 1 FORM 10-Q 1 ________________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended APRIL 30, 1997 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: 1-11592 HAYES WHEELS INTERNATIONAL, INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE 13-3384636 (State or other Jurisdiction of Incorporation or Organization) (IRS Employer Identification No.)
38481 HURON RIVER DRIVE, ROMULUS, MICHIGAN 48174 (Address of Principal Executive Offices)(Zip Code) Registrant's telephone number, including area code: (313) 941-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / THE NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK OUTSTANDING AS OF JUNE 10, 1997 WAS 22,390,518 SHARES. ________________________________________________________________________________ This report consists of 16 pages. 1 2 HAYES WHEELS INTERNATIONAL, INC. QUARTERLY REPORT ON FORM 10-Q TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION: PAGE Item 1. Financial Statements Consolidated Statements of Operations ......................................................... 3 Consolidated Balance Sheets ................................................................... 4 Consolidated Statements of Cash Flows ......................................................... 5 Notes to Consolidated Financial Statements .................................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ......... 14 PART II OTHER INFORMATION: Item 1. Legal Proceedings ............................................................................. 15 Item 2. Changes in Registered Securities .............................................................. 15 Item 3. Defaults upon Senior Securities ............................................................... 15 Item 4. Submission of Matters to a Vote of Security Holders ........................................... 16 Item 5. Other Information ............................................................................. 15 Item 6. (a)Exhibits ................................................................................... 15 Item 6. (b)Reports on Form 8-K ........................................................................ 15 SIGNATURES .............................................................................................. 16
UNLESS OTHERWISE INDICATED REFERENCES TO THE "COMPANY" MEAN HAYES WHEELS INTERNATIONAL, INC. AND ITS SUBSIDIARIES AND REFERENCE TO A FISCAL YEAR MEANS THE COMPANY'S YEAR ENDED JANUARY 31 OF THE FOLLOWING YEAR (E.G., FISCAL 1997 MEANS THE PERIOD BEGINNING FEBRUARY 1, 1997, AND ENDING JANUARY 31, 1998). 2 3 THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY. THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH MATTERS WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBLITIES: (1) COMPETITIVE PRESSURE IN THE COMPANY'S INDUSTRY INCREASES SIGNIFICANTLY; (2) GENERAL ECONOMIC CONDITIONS ARE LESS FAVORABLE THAN EXPECTED; (3) THE COMPANY'S DEPENDENCE ON THE AUTOMOTIVE INDUSTRY (WHICH HAS HISTORICALLY BEEN CYCLICAL); (4) CHANGES IN THE FINANCIAL MARKETS AFFECTING THE COMPANY'S FINANCIAL STRUCTURE AND THE COMPANY'S COST OF CAPITAL AND BORROWED MONEY; AND (5) THE UNCERTAINITIES INHERENT IN INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY FLUCTUATIONS. THE COMPANY HAS NO DUTY UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 TO UPDATE THE FORWARD LOOKING STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q AND THE COMPANY DOES NOT INTEND TO PROVIDE SUCH UPDATES. 3 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS) (UNAUDITED)
Three Months Ended April 30, 1997 1996 ---- ---- Net sales ................................................... $ 250.2 $ 156.2 Cost of goods sold .......................................... 212.2 133.6 ------- ------- Gross profit ........................................... 38.0 22.6 Marketing, general and administration ....................... 8.9 6.7 Engineering and product development ......................... 2.3 1.8 Amortization of intangibles ................................. 2.3 1.1 Other income, net (0.7) (0.5) ------- ------- Earnings from operations ............................... 25.2 13.5 Interest expense, net ....................................... 18.4 3.6 ------- ------- Earnings before taxes on income and minority interest .. 6.8 9.9 Income tax provision ........................................ 2.9 3.8 ------- ------- Earnings before minority interest ...................... 3.9 6.1 Minority interest ........................................... 0.1 -- ------- ------- Net income ............................................. $ 3.8 $ 6.1 ======= ======= Per share income: Net income .................................................. $ 0.17 $ 0.17 ======= ======= Weighted average shares outstanding (in thousands) ......... 22,390 35,148 ======= ======= Dividends declared per share ............................... $ --- $ 0.008 ======= =======
See accompanying notes to consolidated financial statements. 4 5 HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (MILLIONS OF DOLLARS) (UNAUDITED)
April 30, Jan. 31, 1997 1997 ---- ---- ASSETS ------ Current assets: Cash and cash equivalents ......................................... $ 24.8 $ 47.5 Receivables (less allowance of $2.2 million at April 30, 1997 and January 31, 1997) ............................................ 152.6 145.2 Inventories ....................................................... 87.3 82.9 Prepaid expenses and other ........................................ 8.1 13.9 -------- ------- Total current assets ....................................... 272.8 289.5 Property, plant and equipment: Land .............................................................. 20.7 20.1 Buildings ......................................................... 103.2 98.0 Machinery and equipment ........................................... 518.0 515.2 -------- ------- 641.9 633.3 Accumulated depreciation .......................................... (155.3) (146.9) -------- ------- Net property, plant and equipment .......................... 486.6 486.4 Goodwill and other assets ............................................... 394.0 407.2 -------- ------- Total assets ...................................................... $1,153.4 $1,183.1 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- Current liabilities: Bank borrowings ................................................... $ 6.4 $ 5.6 Current portion of long-term debt ................................. 23.6 23.9 Accounts payable and accrued liabilities .......................... 221.3 244.8 -------- -------- Total current liabilities .................................. 251.3 274.3 Noncurrent liabilities: Long-term debt .................................................... 681.6 686.3 Deferred income taxes ............................................. -- -- Pension and other long-term liabilities ........................... 252.2 255.3 Minority interest ................................................. 8.4 8.3 -------- -------- Total noncurrent liabilities ............................... 942.2 949.9 Commitments and contingencies (Note 4) Stockholders' equity (deficit): Preferred stock, 25,000,000 shares authorized, none issued ........ -- -- Common stock, par value $0.01 per share: Voting - authorized 99,000,000; and outstanding, 22,231,492 ..... 0.2 0.2 Nonvoting - authorized 1,000,000; and outstanding, 159,026 ...... -- -- Additional paid in capital ........................................ 43.6 43.6 Accumulated deficit ............................................... (78.3) (82.2) Foreign currency translation adjustment ........................... (3.4) (0.5) Pension liability adjustment ...................................... (2.2) (2.2) -------- -------- Total stockholders' equity (deficit) ....................... (40.1) (41.1) -------- -------- Total liabilities and stockholders' equity (deficit) .............. $1,153.4 $1,183.1 ======== ========
See accompanying notes to consolidated financial statements. 5 6 HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (MILLIONS OF DOLLARS) (UNAUDITED)
For the Three months ended April 30, 1997 1996 ---- ---- Cash flows from operating activities: Net income ........................................................... $ 3.8 $ 6.1 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and tooling amortization .............................. 12.3 7.3 Amortization of intangibles ........................................ 3.8 1.5 Increase in deferred taxes ......................................... -- 0.9 Changes in operating assets and liabilities: Increase in receivables ........................................... (14.2) (3.8) (Increase) decrease in inventories ................................ (8.3) 5.4 Decrease in prepaid expenses and other ............................ 5.2 1.1 Decrease in accounts payable and accrued liabilities .............. (5.0) (11.1) Decrease in other long-term liabilities ........................... (2.1) (1.9) ------- ------ Cash provided by (used for) operating activities ............... (4.5) 5.5 Cash flows from investing activities: Acquisition of property, plant and equipment ....................... (16.7) (23.4) Other, net.... ..................................................... (0.2) (3.5) ------- ------ Cash used for investing activities ............................. (16.9) (26.9) Cash flows from financing activities: Increase (decrease) in short-term bank borrowings and loans ........ 1.3 (2.9) Dividend paid to stockholders ...................................... -- (0.3) Increase (decrease) in bank revolving loan & other domestic loans .. (3.0) 23.6 ------- ------ Cash provided by (used for) financing activities ............... (1.7) 20.4 Effect of exchange rate changes on cash and cash equivalents .......... 0.4 -- ------- ------ Decrease in cash and cash equivalents .......................... (22.7) (1.0) Cash and cash equivalents at beginning of year ........................ 47.5 1.8 ------- ------ Cash and cash equivalents at end of period ............................ $ 24.8 $ 0.8 ======= ====== Supplemental data: Cash paid for interest ............................................. $ 11.8 $ 1.2 Cash paid for income taxes ......................................... $ 0.1 $ 0.1
See accompanying notes to consolidated financial statements. 6 7 HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED APRIL 30, 1997 AND 1996 (UNAUDITED) (MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED) (1) BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared by management and in the opinion of management, contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of April 30, 1997, and January 31, 1997, and the results of its operations and cash flows for the three months ended April 30, 1997 and 1996. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997. Results for interim periods are not necessarily indicative of those to be expected for the year. (2) INVENTORIES The major classes of inventory are as follows:
APRIL 30, JAN. 31, 1997 1997 ---- ---- Raw materials $28.6 $32.0 Work-in-process 25.3 21.1 Finished goods 33.4 29.8 ----- ----- Total $87.3 $82.9 ===== =====
(3) COMMITMENTS AND CONTINGENCIES At April 30, 1997, management believes that the Company was in compliance with its various financial covenants. Management expects that the Company will remain in compliance with its financial covenants in all material respects through the period ending April 30, 1998. The Company is party to various litigation. Management believes that the outcome of these lawsuits will not have a material adverse effect on the consolidated operations or financial condition of the Company. (4) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS In connection with the Merger and as part of the financing thereof, the Company issued and sold $250 million aggregate principal amount of its 11% Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes") in a public offering. The Senior Subordinated Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company, and are guaranteed by certain of the Company's domestic subsidiaries. The following condensed consolidating financial information presents: (1) Condensed consolidating financial statements as of April 30, 1997 and January 31, 1997 and for the three month periods ended April 30, 1997 and 1996, of (a) Hayes Wheels International, Inc., the parent; (b) the guarantor subsidiaries; (c) the nonguarantor subsidiaries; and (d) the Company on a consolidated basis, and (2) Elimination entries necessary to consolidate Hayes Wheels International, Inc., the parent, with guarantor and nonguarantor subsidiaries. Investments in foreign subsidiaries are accounted for by the parent on the equity method (domestic subsidiaries are accounted for by the parent on the cost method) for purposes of the consolidating presentation. The principle elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. 7 8 Condensed Consolidating Statements of Operations For the Quarter Ended April 30, 1997
Guarantor Nonguarantor Consolidated Parent Subsidaries Subsidaries Eliminations Total ------- ----------- ------------ ------------ ------------ Net sales 76.8 140.5 33.4 (0.5) 250.2 Cost of goods sold 67.0 118.1 27.6 (0.5) 212.2 ------ ------- ------ ------ ------- Gross profit 9.8 22.4 5.8 - 38.0 Marketing, general and administration 2.0 5.1 1.8 - 8.9 Engineering and product development 0.6 1.4 0.3 - 2.3 Amortization of intangibles 0.3 2.0 - - 2.3 Other income, net - - (0.7) - (0.7) ------ ------- ------ ------ ------- Earnings (loss) from operations 6.9 13.9 4.4 - 25.2 Interest expense, net 7.5 10.0 0.9 - 18.4 Equity in earnings of consolidated subsidiaries (2.6) - - 2.6 - ------ ------- ------ ------ ------- Earnings (loss) before taxes on income, 2.0 3.9 3.5 (2.6) 6.8 and minority interest Income tax (benefit) provision (0.6) 2.0 1.5 - 2.9 ------ ------- ------ ------ ------- Earnings (loss) before minority interest 2.6 1.9 2.0 (2.6) 3.9 Minority interest - - - 0.1 0.1 ------ ------- ------ ------ ------- Net income(loss) 2.6 1.9 2.0 (2.7) 3.8 ====== ======= ====== ====== =======
For the Quarter Ended April 30, 1996
Guarantor Nonguarantor Consolidated Parent Subsidaries Subsidaries Eliminations Total ------ ----------- ------------ ------------ ------------ Net sales 66.5 70.2 20.5 (1.0) 156.2 Cost of goods sold 59.2 58.9 16.5 (1.0) 133.6 ------ ------ ------ ------ ------- Gross profit 7.3 11.3 4.0 - 22.6 Marketing, general and administration 2.3 3.3 1.1 - 6.7 Engineering and product development 1.1 0.4 0.3 - 1.8 Amortization of intangibles 0.5 0.6 - - 1.1 Other income, net 0.1 - (0.6) - (0.5) ------ ------ ------ ------ ------- Earnings (loss) from operations 3.3 7.0 3.2 - 13.5 Interest expense, net 1.5 2.0 0.1 - 3.6 Equity in earnings of consolidated subsidiaries (1.7) - - 1.7 - ------ ------ ------ ------ ------- Earnings (loss) before taxes on income 3.5 5.0 3.1 (1.7) 9.9 Income tax provision 0.6 1.8 1.4 - 3.8 ------ ------ ------ ------ ------- Net income(loss) 2.9 3.2 1.7 (1.7) 6.1 ====== ====== ====== ====== =======
9 Condensed Consolidating Balance Sheet As of April 30, 1997
Guarantor Nonguarantor Consolidated Parent Subsidaries Subsidaries Eliminations Total ---------- ------------- ------------- ------------ ------------ Cash and cash equivalents 27.8 (8.2) 5.2 - 24.8 Receivables 57.1 62.5 33.0 - 152.6 Inventories 36.8 39.4 11.1 - 87.3 Prepaid expenses and other 2.1 4.0 2.2 (0.2) 8.1 --------- -------- -------- --------- -------- Total current assets 123.8 97.7 51.5 (0.2) 272.8 Property, plant and equipment 230.4 294.4 117.1 - 641.9 Accumulated depreciation (51.8) (71.5) (32.0) - (155.3) --------- -------- -------- --------- -------- Net property, plant and equipment 178.6 222.9 85.1 486.6 Goodwill and other assets 336.9 319.0 11.3 (273.2) 394.0 --------- -------- -------- --------- -------- Total assets 639.3 639.6 147.9 (273.4) 1,153.4 ========= ======== ======== ========= ======== Bank borrowings - - 6.4 - 6.4 Current portion of long-term debt 17.5 - 6.1 - 23.6 Accounts payable and accrued liabilities 89.0 94.4 38.1 (0.2) 221.3 --------- -------- -------- --------- -------- Total current liabilities 106.5 94.4 50.6 (0.2) 251.3 Long-term debt 655.2 - 26.4 - 681.6 Deferred income taxes (30.2) 17.9 12.3 - (0.0) Minority interest - 0.2 - 8.2 8.4 Pension and other long-term liabilities 143.7 100.8 12.8 (5.1) 252.2 Parent loans (230.5) 226.5 4.0 - - --------- -------- -------- --------- -------- Total noncurrent liabilities 538.2 345.4 55.5 3.1 942.2 Common stock 0.2 - - - 0.2 Additional paid-in capital 43.5 104.5 33.5 (137.9) 43.6 Retained earnings (accumulated deficit) (42.0) 95.4 9.7 (141.4) (78.3) Cumulative translation adjustment (4.9) (0.1) (1.4) 3.0 (3.4) Pension liability adjustment (2.2) - - - (2.2) --------- -------- -------- --------- -------- Total stockholders' equity (deficit) (5.4) 199.8 41.8 (276.3) (40.1) Total liabilities and stockholders' equity (deficit) 639.3 639.6 147.9 (273.4) 1,153.4 ========= ======== ======== ========= ========
10 Condensed Consolidating Balance Sheet As of January 31, 1997
Guarantor Nonguarantor Consolidated Parent Subsidaries Subsidaries Eliminations Total ------ ----------- ------------ ------------ ------------ Cash and cash equivalents 41.2 (0.6) 6.9 - 47.5 Receivables 51.0 62.9 31.3 - 145.2 Inventories 36.4 34.5 12.0 - 82.9 Prepaid expenses and other 3.3 3.5 7.4 (0.3) 13.9 -------- -------- ------- -------- --------- Total current assets 131.9 100.3 57.6 (0.3) 289.5 Property, plant and equipment 249.2 267.9 116.2 - 633.3 Accumulated depreciation (49.1) (67.1) (30.7) - (146.9) -------- -------- ------- -------- --------- Net property, plant and equipment 200.1 200.8 85.5 - 486.4 Goodwill and other assets 345.8 323.9 12.6 (275.1) 407.2 -------- -------- ------- -------- --------- Total assets 677.8 625.0 155.7 (275.4) 1,183.1 ======== ======== ======= ======== ========= Bank borrowings - - 5.6 - 5.6 Current portion of long-term debt 17.4 - 6.5 - 23.9 Accounts payable and accrued liabilites 105.2 97.7 42.2 (0.3) 244.8 -------- -------- ------- -------- --------- Total current liabilities 122.6 97.7 54.3 (0.3) 274.3 Long-term debt 658.3 - 28.0 - 686.3 Deferred income taxes (31.1) 18.0 13.1 - - Minority interest - 0.2 - 8.1 8.3 Pension and other long-term liabilities 143.2 103.3 12.1 (3.3) 255.3 Parent loans (211.2) 208.0 3.2 - 0.0 -------- -------- ------- -------- --------- Total noncurrent liabilities 559.2 329.5 56.4 4.8 949.9 Common stock 0.2 - - - 0.2 Additional paid-in capital 43.5 104.5 33.5 (137.9) 43.6 Retained earnings (accumulated deficit) (44.5) 93.4 9.5 (140.6) (82.2) Cumulative translation adjustment (1.0) (0.1) 2.0 (1.4) (0.5) Pension liability adjustment (2.2) - - (2.2) -------- -------- ------- -------- --------- Total stockholders' equity (deficit) (4.0) 197.8 45.0 (279.9) (41.1) Total liabilities and stockholders' equity (deficit) 677.8 625.0 155.7 (275.4) 1,183.1 ======== ======== ======= ======== =========
11 Condensed Consolidating Statements of Cash Flows For the Quarter Ended April 30, 1997
Guarantor Nonguarantor Parent Subsidaries Subsidaries Eliminations ------ ----------- ------------- ------------ Cash flows provided from (used by) operating activities 0.2 (1.6) (0.7) (2.4) Cash flows from investing activities: Acquisition of property, plant and equipment (3.0) (4.7) (9.0) - Other, net (7.6) 5.0 2.4 - ------- ------- ------- ------ Cash used by investing activities (10.6) 0.3 (6.6) - Cash flows from financing activities: Increase (decrease) in foreign bank borrowings and loan - - 1.3 - Increase (decrease) in bank revolving loan and other domestic loans (3.0) - - - ------- ------- ------- ------ Cash provided by financing activities (3.0) - 1.3 - Increase (decrease) in parent loans and advances (20.0) 18.5 (0.9) 2.4 Effect of exchange rates of cash and cash equivalents 0.4 Net increase (decrease) in cash and cash equivalents (33.4) 17.2 (6.5) - Cash and cash equivalents at beginning of period 41.2 (0.6) 6.9 - ------- ------- ------- ------ Cash and cash equivalents at end of period 7.8 16.6 0.4 - ======= ======= ======= ====== Consolidated Total ------------ Cash flows provided from (used by) operating activities (4.5) Cash flows from investing activities: Acquisition of property, plant and equipment (16.7) Other, net (0.2) ------ Cash used by investing activities (16.9) Cash flows from financing activities: Increase (decrease) in foreign bank borrowings and loan 1.3 Increase (decrease) in bank revolving loan and other domestic loans - ------ Cash provided by financing activities 1.3 Increase (decrease) in parent loans and advances - Effect of exchange rates of cash and cash equivalents 0.4 Net increase (decrease) in cash and cash equivalents (22.7) Cash and cash equivalents at beginning of period 47.5 ------ Cash and cash equivalents at end of period 24.8 ======
For the Quarter Ended April 30, 1996
Guarantor Nonguarantor Parent Subsidaries Subsidaries Eliminations -------- ----------- ------------ ------------ Cash flows provided from (used by) operating activities 0.2 3.5 3.5 (1.7) Cash flows from investing activities: Acquisition of property, plant and equipment (20.4) (1.7) (1.3) - Other, net (3.7) 0.2 - - ------- ------- ------- ------- Cash used by investing activities (24.1) (1.5) (1.3) - Cash flows from financing activities: Increase (decrease) in foreign bank borrowings and loans - - (2.9) - Dividends paid to stockholders (0.3) - - - Increase (decrease) in bank revolving loan and other domestic loans 23.6 - - - ------- ------- ------- ------- Cash provided by financing activities 23.3 - (2.9) - Increase (decrease) in parent loans and advances (0.1) (2.0) 0.4 1.7 Effect of exchange rates of cash and cash equivalents Net increase (decrease) in cash and cash equivalents (0.7) - (0.3) - Cash and cash equivalents at beginning of period 1.0 0.1 0.7 - ------- ------- ------- ------- Cash and cash equivalents at end of period 0.3 0.1 0.4 - ======= ======= ======= ======= Consolidated Total ------------ Cash flows provided from (used by) operating activities 5.5 Cash flows from investing activities: Acquisition of property, plant and equipment (23.4) Other, net (3.5) ------- Cash used by investing activities (26.9) Cash flows from financing activities: Increase (decrease) in foreign bank borrowings and loans (2.9) Dividends paid to stockholders (0.3) Increase (decrease) in bank revolving loan and other domestic loans 23.6 ------- Cash provided by financing activities 20.4 Increase (decrease) in parent loans and advances 0.0 Effect of exchange rates of cash and cash equivalents Net increase (decrease) in cash and cash equivalents (1.0) Cash and cash equivalents at beginning of period 1.8 ------- Cash and cash equivalents at end of period 0.8 =======
12 HAYES WHEELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED APRIL 30, 1996 AND 1995 (UNAUDITED) (MILLIONS OF DOLLARS UNLESS OTHERWISE STATED) (5) SUBSEQUENT EVENTS On June 6, 1997, the Company, Cromodora, Wheels S.p.A., Lemmerz Holding GmbH ("Lemmerz") and the shareholders of Lemmerz entered into a definitive acquisition agreement, pursuant to which the Company will purchase the capital stock of Lemmerz for (i) $200 million in cash and (ii) convertible preferred stock of the Company, which following shareholder approval, will automatically convert into 5 million shares of the Company's common stock. 8 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED APRIL 30, 1997 COMPARED TO THE THREE MONTHS ENDED APRIL 30, 1996 The Company's net sales for the first quarter of fiscal 1997 increased by $94.0 million or 60% compared to the first quarter of fiscal 1996. This increase was attributable to the additional sales contributed by Motor Wheel which was acquired effective July 2, 1996, and increased volume in both the North American and European Aluminum Wheel groups. The Company's gross profit for the first quarter of fiscal 1997 increased to $38.0 million or 15.2% of net sales compared to $22.6 million or 14.5% of net sales for the first quarter of fiscal 1996. The increase in margin percentage is attributable to increased volume and strong productivity at the Company's North American and European aluminum wheel facilities. Marketing, general and administrative expenses were $2.2 million higher for the first quarter of fiscal 1997 as compared with the first quarter of fiscal 1996. However, these costs have decreased from 4.3% of net sales for the first quarter of fiscal 1996 to 3.6% of net sales for the current period due to synergies being recognized as a result of the consolidation of the Hayes Wheels and Motor Wheel headquarters. Amortization of intangibles increased by $1.2 million as compared with the first quarter of fiscal 1996. This increase is due to increased goodwill recognized as a result of the acquisition of Motor Wheel. Interest expense was $18.4 million for the first quarter of fiscal 1997, an increase of $14.8 million over the same period for fiscal 1996. This increase was caused by increased debt as a result of the acquisition of Motor Wheel. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company used $4.5 million in cash for operating activities during the first quarter of fiscal 1997; a reduction of $10.0 million from the same period in fiscal 1996. This increased use of cash was caused by lower net income attributable to increased interest expense and an increased use of working capital due to additional facilities obtained with the acquisition of Motor Wheel. Capital expenditures for the quarter were $16.7 million. These expenditures were primarily for additional machinery and equipment increasing production capacity at our North American and European facilities to meet future customer requirements for fabricated aluminum and FFC wheels. The Company anticipates that total capital expenditures for fiscal 1997 will be approximately $77.0 million. The Company is party to a credit agreement dated June 27, 1996 ("the Credit Agreement") with Canadian Imperial Bank of Canada of Commerce ("CIBC"), and Merrill Lynch Capital Corporation (together the "Managing Agents"). Pursuant to the Credit Agreement, among other things, the Managing Agents have committed to lend to the Company $423.5 million in the form of a senior secured term loan facility, such aggregate amount being allocated among (i) a Tranche A Term Loan facility in an aggregate principal amount of up to $198.5 million, (ii) a Tranche B Term Loan facility in an aggregate principal amount of up to $125 million and (iii) a Tranche C Term Loan facility in an aggregate principal amount of up to $100 million (collectively, the "Facilities"), and up to $220 million in the form of a senior secured revolving credit facility (the "Revolving Facility", and together with the Facilities, the "Loans"). The Facilities are guaranteed by the Company and all of its existing and future domestic subsidiaries. The Facilities are secured by a first priority lien in substantially all of the properties and assets of the Company and its domestic subsidiaries, now owned or acquired later, including a pledge of all of the shares of certain of the Company's existing and future domestic subsidiaries and 65% of the shares of certain of the Company's existing and future foreign subsidiaries. As of April 30, 1997, there was $420.4 million outstanding under these Facilities and $220 million available under the Revolving Facility. 9 14 At April 30, 1997, management believes that the Company was in compliance with its various financial covenants. Management expects that the Company will remain in compliance with its financial covenants in all material respects through the period ending April 30, 1998. 10 15 PART II OTHER INFORMATION: Item 1. Legal Proceedings None. Item 2. Changes in Registered 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 None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule (b) Reports of Form 8-K The Company filed a Current Report on Form 8-K dated June 6, 1997 with respect to the Purchase Agreement dated as of June 6, 1997, by and between Hayes Wheels International, Inc., Cromodora, Wheels S.p.A., Lemmerz Holding GmbH and the shareholders of Lemmerz Holding GmbH. 11 16 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. HAYES WHEELS INTERNATIONAL, INC. June 13, 1997 By: /s/ William D. Shovers ---------------------------------------- William D. Shovers Vice President--Chief Financial Officer and Principal Accounting Officer 12 17 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE ------- ----------- ------------ 27 -- Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JAN-31-1998 FEB-01-1997 APR-30-1997 24800 0 152600 0 87300 272800 641900 (155300) 1153400 251300 0 0 0 200 (40300) 1153400 250200 250200 212200 212200 12800 0 18400 6800 2900 3800 0 0 0 3800 0.17 0.17
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