-----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, F5oMH+OA7exEK6vqrzETikgnnFLQlLPhMRE7AUXrOIe/cSsJzMakkEYU1ENqBlzL pfhR1bBeEJO9bfTYJLnEoA== 0000950124-98-003404.txt : 19980615 0000950124-98-003404.hdr.sgml : 19980615 ACCESSION NUMBER: 0000950124-98-003404 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980612 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAYES LEMMERZ 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: SEC FILE NUMBER: 001-11592 FILM NUMBER: 98647586 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 FORMER COMPANY: FORMER CONFORMED NAME: HAYES WHEELS INTERNATIONAL INC DATE OF NAME CHANGE: 19951214 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, 1998 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 LEMMERZ INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 13-3384636 (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: (734) 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 9, 1998 WAS 30,091,305 SHARES. ================================================================================ 2 HAYES LEMMERZ INTERNATIONAL, INC. QUARTERLY REPORT ON FORM 10-Q TABLE OF CONTENTS
PAGE ---- PART I. FINANCIAL INFORMATION: 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................................... 8 PART II. OTHER INFORMATION: Item 1. Legal Proceedings........................................... 10 Item 2. Changes in Registered Securities............................ 10 Item 3. Defaults upon Senior Securities............................. 10 Item 4. Submission of Matters to a Vote of Security Holders......... 10 Item 5. Other Information........................................... 10 Item 6. (a) Exhibits................................................ 10 Item 6. (b) Reports on Form 8-K..................................... 10 Signatures............................................................. 11
UNLESS OTHERWISE INDICATED, REFERENCES TO THE "COMPANY" MEAN HAYES LEMMERZ INTERANATIONAL, 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 1998 MEANS THE PERIOD BEGINNING FEBRUARY 1, 1998, AND ENDING JANUARY 31, 1999). 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 MATIERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (1) COMPETITIVE PRESSURE IN THE COMPANY'S INDUSTRY INCREASES SIGNIFICANTLY; (2) GENERAL ECONOMIS 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 MONEY; AND (5) THE UNCERTAINTIES 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. 2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (MILLIONS OF DOLLARS, EXCEPT SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED APRIL 30, ---------------- 1998 1997 ---- ---- Net sales................................................... $413.9 $250.2 Cost of goods sold.......................................... 341.8 212.2 ------ ------ Gross profit.............................................. 72.1 38.0 Marketing, general and administration....................... 15.2 8.9 Engineering and product development......................... 4.4 2.3 Amortization of intangible assets........................... 3.9 2.3 Other income, net........................................... (1.3) (0.7) ------ ------ Earnings from operations.................................. 49.9 25.2 Interest and other financing costs, net..................... 24.2 18.4 ------ ------ Earnings before taxes on income and minority interest..... 25.7 6.8 Income tax provision........................................ 10.8 2.9 ------ ------ Earnings before minority interest......................... 14.9 3.9 Minority interest........................................... 0.2 0.1 ------ ------ Net income................................................ $ 14.7 $ 3.8 ====== ====== Basic net income per share.................................. $ 0.49 $ 0.17 ====== ====== Diluted net income per share................................ $ 0.45 $ 0.17 ====== ======
See accompanying notes to consolidated financial statements. 3 4 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (MILLIONS OF DOLLARS)
APRIL 30, JANUARY 31, 1998 1998 --------- ----------- (UNAUDITED) ASSETS ------ Current assets: Cash and cash equivalents................................. $ 25.8 $ 23.1 Receivables (less allowance of $4.3 million at April 30, 1998 and January 31, 1998) (Note 4).................... 153.3 217.8 Inventories (Note 3)...................................... 145.8 131.5 Prepaid expenses and other................................ 7.4 10.0 -------- -------- Total current assets................................... 332.3 382.4 Property, plant and equipment: Land...................................................... 15.3 15.6 Buildings................................................. 165.8 154.7 Machinery and equipment................................... 678.0 622.3 -------- -------- 859.1 792.6 Accumulated depreciation.................................. (148.9) (122.2) -------- -------- Net property, plant and equipment...................... 710.2 670.4 Goodwill and other assets................................... 705.6 706.1 -------- -------- Total assets........................................... $1,748.1 $1,758.9 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY -------------------------------------- Current liabilities: Bank borrowings........................................... $ 26.0 $ 23.6 Current portion of long-term debt......................... 10.3 14.4 Accounts payable and accrued liabilities.................. 335.4 334.9 -------- -------- Total current liabilities.............................. 371.7 372.9 Noncurrent liabilities: Long-term debt............................................ 855.3 882.6 Deferred income taxes..................................... 41.5 34.8 Pension and other long-term liabilities................... 304.9 301.5 Minority interest......................................... 5.8 5.6 -------- -------- Total noncurrent liabilities........................... 1,207.5 1,224.5 Commitments and contingencies: (Note 5) Stockholders' equity: Preferred stock, 25,000,000 shares authorized, none issued or outstanding......................................... -- -- Common stock, par value $0.01 per share: Voting -- authorized 99,000,000; issued and outstanding, 27,441,819 at April 30, 1998 and 27,439,419 at January 31, 1998........................ 0.3 0.3 Nonvoting -- authorized 5,000,000; issued and outstanding, 2,649,026 at April 30, 1998 and January 31, 1998.............................................. -- -- Additional paid in capital................................ 229.4 229.4 Accumulated deficit....................................... (36.1) (50.8) Accumulated other comprehensive income.................... (24.7) (17.4) -------- -------- Total stockholders' equity............................. 168.9 161.5 -------- -------- Total liabilities and stockholders' equity............. $1,748.1 $1,758.9 ======== ========
See accompanying notes to consolidated financial statements. 4 5 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (MILLIONS OF DOLLARS) (UNAUDITED)
THREE MONTHS ENDED APRIL 30, ---------------- 1998 1997 ---- ---- Cash flows from operating activities: Net income................................................ $ 14.7 $ 3.8 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and tooling amortization.................. 15.8 12.3 Amortization of intangibles and debt issuance costs.... 5.8 3.8 Increase in deferred taxes............................. 7.4 -- Changes in operating assets and liabilities: (Increase) decrease in receivables................... (19.9) (14.2) Increase in inventories.............................. (10.7) (8.3) Decrease in prepaid expenses and other............... 2.4 5.2 Decrease in accounts payable and accrued liabilities......................................... (13.1) (5.0) Decrease in other long-term liabilities.............. (11.3) (2.1) ------ ------ Cash used for operating activities................ (8.9) (4.5) Cash flows from investing activities: Acquisition of property, plant and equipment.............. (31.5) (16.7) Proceeds from assumption of future commitments in acquisition............................................ 12.0 -- Other, net................................................ 7.5 (0.2) ------ ------ Cash used for investing activities..................... (12.0) (16.9) Cash flows used for financing activities: Increase (decrease) in short-term bank borrowings and loans.................................................. (29.1) 1.3 Decrease in bank revolving loan & other long-term loans... (34.7) (3.0) Net proceeds under accounts receivable securitization program................................................ 87.2 -- ------ ------ Cash provided by (used for) financing activities....... 23.4 (1.7) Effect of exchange rate changes on cash and cash equivalents............................................... 0.2 0.4 ------ ------ Increase (decrease) in cash and cash equivalents....... 2.7 (22.7) Cash and cash equivalents at beginning of year.............. 23.1 47.5 ------ ------ Cash and cash equivalents at end of period.................. $ 25.8 $ 24.8 ====== ====== Supplemental data: Cash paid for interest.................................... $ 11.5 $ 11.8 Cash paid for income taxes................................ $ 1.8 $ 0.1
See accompanying notes to consolidated financial statements. 5 6 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED APRIL 30, 1998 AND 1997 (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, 1998, and January 31, 1998, and the results of its operations and cash flows for the three months ended April 30, 1998 and 1997. 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, 1998. Results for interim periods are not necessarily indicative of those to be expected for the year. During the first quarter of fiscal 1998, the Company purchased the remaining 50% equity in its aluminum wheel joint venture in Somerset, Kentucky, Aluminum Wheel Technology, Inc. (2) SUMMARY OF NEW ACCOUNTING PRONOUNCEMENTS During 1997, the Financial Accounting Standards Board ("FASB") issued Statement No. 130, "Reporting Comprehensive Income" which establishes standards for the reporting and display of comprehensive income. Comprehensive income is defined as all changes in a Company's net assets except changes resulting from transactions with shareholders. It differs from net income in that certain items currently recorded to equity would be a part of comprehensive income. Comprehensive income must be reported in a financial statement with the cumulative total presented as a component of equity. This statement was adopted by the Company effective February 1, 1998. The components of comprehensive income for the three months ended April 30, 1998 and 1997 are as follows:
APRIL 30, APRIL 30, 1998 1997 --------- --------- Net income.................................................. $14.7 $ 3.8 Cumulative translation adjustments.......................... (7.3) (2.9) ----- ----- Total comprehensive income................................ $ 7.4 $ 0.9 ===== =====
(3) INVENTORIES The major classes of inventory are as follows:
APRIL 30, JANUARY 31, 1998 1998 --------- ----------- Raw materials............................................... $ 47.4 $ 40.9 Work-in-progress............................................ 38.8 37.6 Finished goods.............................................. 59.6 53.0 ------ ------ Total..................................................... $145.8 $131.5 ====== ======
(4) ACCOUNTS RECEIVABLES SECURITIZATION In April 1998, the Company entered into a three-year trade securitization agreement pursuant to which the Company and certain of its subsidiaries sold, and will continue to sell on an on-going basis, a portion of their accounts receivable to Hayes Lemmerz Funding Corporation ("Funding Co."), a wholly owned 6 7 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) THREE MONTHS ENDED APRIL 30, 1998 AND 1997 (UNAUDITED) (MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED) (4) ACCOUNTS RECEIVABLES SECURITIZATION -- (CONTINUED) subsidiary of the Company. Accordingly, the Company and such subsidiaries, irrevocably and without recourse, transferred and will transfer substantially all of their U.S. dollar denominated trade accounts receivable to Funding Co. Funding Co. then sold and will sell such trade accounts receivable to an independent issuer of receivable-backed commercial paper. The trade receivable securitization agreement was accounted for as a sale of receivables in accordance with FASB No. 125 "Accounting for Transfers and Servicing of Financial Assets & Extinguishments of Liabilities." The Company has collection and administrative responsibilities with respect to all the receivables which are sold. (5) COMMITMENTS AND CONTINGENCIES At April 30, 1998, 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, 1999. 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. (6) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS In connection with the Company's merger with MWC Holdings, Inc. on July 2, 1996 and as part of the financing thereof, the Company issued and sold $250 million in aggregate principal amount of its 11% senior subordinated notes due 2006 (the "11% Notes") in a public offering. The 11% 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. In connection with the Company's acquisition of Lemmerz Holding GmbH on June 30, 1997 (the "Lemmerz Acquisition"), the Company issued and sold $400 million in aggregate principal amount of its 9 1/8% senior subordinated notes due 2007 (the "9 1/8% Notes") in two offerings under Rule 144A of the Securities Act. The 9 1/8% Notes are general unsecured obligations of the Company, ranking pari passu with the 11% Notes and are guaranteed by certain of the same domestic subsidiaries of the Company as the guaranteed 11% Notes. The following condensed consolidating financial information presents: (1) Condensed consolidating financial statements as of April 30, 1998 and January 31, 1998 and for the three month periods ended April 30, 1998 and 1997, of (a) Hayes Lemmerz 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 Lemmerz International, Inc., the parent, with the 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 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) THREE MONTHS ENDED APRIL 30, 1998 AND 1997 (UNAUDITED) (MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED) (6) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET APRIL 30, 1998
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------ ------------ ------------ Cash and cash equivalents.............. $ -- $ (0.1) $ 25.9 $ -- $ 25.8 Receivables............................ 6.6 24.9 121.8 -- 153.3 Inventories............................ 38.0 44.8 63.0 -- 145.8 Prepaid expenses and other............. 0.9 3.9 2.8 (0.2) 7.4 ------- ------ ------ ------- -------- Total current assets.............. 45.5 73.5 213.5 (0.2) 332.3 Property, plant and equipment.......... 166.0 363.3 329.8 -- 859.1 Accumulated depreciation............... (4.3) (96.7) (47.9) -- (148.9) ------- ------ ------ ------- -------- Net property, plant and equipment....................... 161.7 266.6 281.9 -- 710.2 Goodwill and other assets.............. 759.1 307.1 282.0 (642.6) 705.6 ------- ------ ------ ------- -------- Total assets...................... $ 966.3 $647.2 $777.4 $(642.8) $1,748.1 ======= ====== ====== ======= ======== Bank borrowings........................ $ -- $ -- $ 26.0 $ -- $ 26.0 Current portion of long-term debt...... 2.9 -- 7.4 -- 10.3 Accounts payable and accrued liabilities.......................... 93.3 122.0 120.1 -- 335.4 ------- ------ ------ ------- -------- Total current liabilities......... 96.2 122.0 153.5 -- 371.7 Long-term debt......................... 820.4 -- 34.9 -- 855.3 Deferred income taxes.................. (7.5) 19.9 29.1 -- 41.5 Minority interest...................... -- 0.3 5.4 0.1 5.8 Pension and other long-term liabilities.......................... 103.4 95.7 110.6 (4.8) 304.9 Parent loans........................... (247.2) 218.4 28.8 -- -- ------- ------ ------ ------- -------- Total noncurrent liabilities...... 669.1 334.3 208.8 (4.7) 1,207.5 Common stock........................... 0.3 -- -- -- 0.3 Additional paid-in capital............. 246.9 90.9 276.1 (384.5) 229.4 Retained earnings (accumulated deficit)............................. (40.6) 99.9 160.8 (256.2) (36.1) Accumulated other comprehensive income............................... (5.6) 0.1 (21.8) 2.6 (24.7) ------- ------ ------ ------- -------- Total stockholders' equity........ 201.0 190.9 415.1 (638.1) 168.9 Total liabilities and stockholders' equity............................... $ 966.3 $647.2 $777.4 $(642.8) $1,748.1 ======= ====== ====== ======= ========
8 9 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) THREE MONTHS ENDED APRIL 30, 1998 AND 1997 (UNAUDITED) (MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED) (6) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET AS OF JANUARY 31, 1998
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------ ------------ ------------ Cash and cash equivalents.............. $ 4.6 $ 0.1 $ 18.4 $ -- $ 23.1 Receivables............................ 36.3 63.0 118.5 -- 217.8 Inventories............................ 32.9 43.2 55.4 -- 131.5 Prepaid expenses and other............. 1.5 3.3 5.4 (0.2) 10.0 ------- ------ ------ ------- -------- Total current assets............ 75.3 109.6 197.7 (0.2) 382.4 Property, plant and equipment.......... 156.6 320.6 315.4 -- 792.6 Accumulated depreciation............... 1.5 (85.9) (37.8) -- (122.2) ------- ------ ------ ------- -------- Net property, plant and equipment.... 158.1 234.7 277.6 -- 670.4 Goodwill and other assets.............. 752.2 303.6 300.8 (650.5) 706.1 ------- ------ ------ ------- -------- Total assets.................... $ 985.6 $647.9 $776.1 $(650.7) $1,758.9 ======= ====== ====== ======= ======== Bank borrowings........................ $ -- $ -- $ 23.6 $ -- $ 23.6 Current portion of long-term debt...... 2.9 -- 11.5 -- 14.4 Accounts payable and accrued liabilities.......................... 71.5 128.4 135.2 (0.2) 334.9 ------- ------ ------ ------- -------- Total current liabilities....... 74.4 128.4 170.3 (0.2) 372.9 Long-term debt......................... 841.9 -- 40.7 -- 882.6 Deferred income taxes.................. (7.5) 17.9 24.4 -- 34.8 Minority interest...................... -- 0.2 5.3 0.1 5.6 Pension and other long-term liabilities.......................... 83.6 85.4 135.4 (2.9) 301.5 Parent loans........................... (212.5) 219.7 (7.2) -- -- ------- ------ ------ ------- -------- Total noncurrent liabilities.... 705.5 323.2 198.6 (2.8) 1,224.5 Common stock........................... 0.3 -- -- -- 0.3 Additional paid-in capital............. 246.9 104.5 272.9 (394.9) 229.4 Retained earnings (accumulated deficit)............................. (30.6) 91.7 144.4 (256.3) (50.8) Accumulated other comprehensive income............................... (10.9) 0.1 (10.1) 3.5 (17.4) ------- ------ ------ ------- -------- Total stockholders' equity...... 205.7 196.3 407.2 (647.7) 161.5 ------- ------ ------ ------- -------- Total liabilities and stockholders' equity............................... $ 985.6 $647.9 $776.1 $(650.7) $1,758.9 ======= ====== ====== ======= ========
9 10 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) THREE MONTHS ENDED APRIL 30, 1998 AND 1997 (UNAUDITED) (MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED) (6) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED APRIL 30, 1998
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------ ------------ ------------ Net sales............................... $73.2 $183.2 $159.3 $(1.8) $413.9 Cost of goods sold...................... 63.0 152.2 128.4 (1.8) 341.8 ----- ------ ------ ----- ------ Gross profit............................ 10.2 31.0 30.9 -- 72.1 Marketing, general and administration... 2.4 4.9 7.9 -- 15.2 Engineering and product development..... 0.3 1.4 2.7 -- 4.4 Amortization of intangibles............. 0.3 2.1 1.5 -- 3.9 Other income, net....................... (0.6) 0.1 (0.8) -- (1.3) ----- ------ ------ ----- ------ Earnings from operations................ 7.8 22.5 19.6 -- 49.9 Interest expense, net................... 11.3 12.0 0.9 -- 24.2 ----- ------ ------ ----- ------ Earnings (loss) before taxes on income, and minority interest................. (3.5) 10.5 18.7 -- 25.7 Income tax provision.................... 4.5 4.2 2.1 -- 10.8 ----- ------ ------ ----- ------ Earnings (loss) before minority interest.............................. (8.0) 6.3 16.6 -- 14.9 Minority interest....................... -- 0.1 0.1 -- 0.2 ----- ------ ------ ----- ------ Net income(loss)........................ $(8.0) $ 6.2 $ 16.5 $ -- $ 14.7 ===== ====== ====== ===== ======
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED APRIL 30, 1997
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES 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 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 and minority interest................. 2.0 3.9 3.5 (2.6) 6.8 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 ===== ====== ====== ===== ======
10 11 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) THREE MONTHS ENDED APRIL 30, 1998 AND 1997 (UNAUDITED) (MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED) (6) GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE QUARTER ENDED APRIL 30, 1998
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------ ------------ ------------ Cash flows provided from (used by) operating activities.................................... $(23.9) $ 32.7 $(17.7) $ -- $ (8.9) Cash flows from investing activities: Acquisition of property, plant and equipment................................... (9.5) (11.1) (10.9) -- (31.5) Proceeds from assumption of future commitments in acquisition.............................. 12.0 -- -- -- 12.0 Other, net.................................... (11.6) 14.0 5.1 -- 7.5 ------ ------ ------ ----- ------ Cash used by investing activities........... (9.1) 2.9 (5.8) -- (12.0) Cash flows from financing activities: Decrease in short-term bank borrowings and loans....................................... -- (26.5) (2.6) -- (29.1) Decrease in bank revolving loan & other long-term loans............................. (21.4) (8.0) (5.3) -- (34.7) Net proceeds under accounts receivable securitization program...................... 87.2 -- -- -- 87.2 ------ ------ ------ ----- ------ Cash provided by financing activities....... 65.8 (34.5) (7.9) -- 23.4 Increase (decrease) in parent loans and advances...................................... (37.4) (1.3) 38.7 -- -- Effect of exchange rates of cash and cash equivalents................................... -- -- 0.2 -- 0.2 ------ ------ ------ ----- ------ Net increase (decrease) in cash and cash equivalents............................... (4.6) (0.2) 7.5 -- 2.7 Cash and cash equivalents at beginning of period........................................ 4.6 0.1 18.4 -- 23.1 ------ ------ ------ ----- ------ Cash and cash equivalents at end of period...... $ -- $ (0.1) $ 25.9 $ -- $ 25.8 ====== ====== ====== ===== ======
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE QUARTER ENDED APRIL 30, 1997
GUARANTOR NONGUARANTOR CONSOLIDATED PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------ ------------ ------------ Cash flows provided from (used by) operating activities.................................... $ 0.2 $ (1.6) $ (0.7) $(2.4) $ (4.5) Cash flows from investing activities: Acquisition of property, plant and equipment................................... (3.0) (4.7) (9.0) -- (16.7) Other, net.................................... (7.6) 5.0 2.4 -- (0.2) ------ ------ ------ ----- ------ Cash used by investing activities........... (10.6) 0.3 (6.6) -- (16.9) Cash flows from financing activities: Increase in foreign bank borrowings and loans....................................... -- -- 1.3 -- 1.3 Decrease in bank revolving loan & other long term loans.................................. (3.0) -- -- -- (3.0) ------ ------ ------ ----- ------ Cash provided by financing activities....... (3.0) -- 1.3 -- (1.7) 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 -- 0.4 ------ ------ ------ ----- ------ Net increase (decrease) in cash and cash equivalents............................... (33.4) 17.2 (6.5) -- (22.7) Cash and cash equivalents at beginning of period........................................ 41.2 (0.6) 6.9 -- 47.5 ------ ------ ------ ----- ------ Cash and cash equivalents at end of period...... $ 7.8 $ 16.6 $ 0.4 $ -- $ 24.8 ====== ====== ====== ===== ======
11 12 HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) THREE MONTHS ENDED APRIL 30, 1998 AND 1997 (UNAUDITED) (MILLIONS OF DOLLARS, UNLESS OTHERWISE STATED) (7) SUBSEQUENT EVENTS On May 19, 1998, the Company purchased an additional 50.7% of the common equity and 46.2% of the preferred equity in its joint venture in Brazil, Borlem S.A. Emprendimentos Industriais ("Borlem"). This purchase increases the Company's ownership of Borlem to 98.7% of the common equity and 87% of the preferred equity, with the remaining shares being held by the public. On June 10, 1998, the Company acquired 100% of the common stock of Min-Cer, S.A. de C.V., Mexico's largest heavy-duty hub, drum and wheel manufacturer. 12 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended April 30, 1998 Compared to the Three Months Ended April 30, 1997 The Company's net sales for the first quarter of fiscal 1998 were $413.9 million, an increase of 65.4% as compared to net sales for the first quarter of fiscal 1997. This increase was due to the additional sales contributed by Lemmerz, which was acquired effective June 30, 1997, and higher sales in the North American and European Aluminum Wheel groups and the Automotive Brake and Commercial Highway businesses in North America. The Company's gross profit for the first quarter of fiscal 1998 increased to $72.1 million or 17.4% of net sales as compared to $38.0 million or 15.2% of net sales for the first quarter of fiscal 1997. This increase in margin was attributable to the increased revenues and improved productivity in all of the Company's businesses. Marketing, general and administrative expenses were $15.2 million or 3.7% of net sales for the first quarter of fiscal 1998 as compared to $8.9 million or 3.6% of net sales for the same period of fiscal 1997. This increase was attributable to additional costs incurred as a result of the Lemmerz Acquisition. The Company believes that marketing, general and administrative costs as a percent of net sales will improve as the expected savings are realized as a result of the Lemmerz Acquisition. Engineering and product development costs were $4.4 million or 1.0% of net sales for the first quarter of fiscal 1998 as compared to $2.3 million or 0.9% of net sales for the first quarter of fiscal 1997. The Company believes that engineering and product development costs as a percent of sales will improve even as these costs increase to successfully develop new products. Amortization of intangibles increased by $1.6 million to $3.9 million for the first quarter of fiscal 1998. This increase is attributable to the increased goodwill recognized as a result of the Lemmerz Acquisition. Interest expense was $24.2 million for the first quarter of fiscal 1998, an increase of $5.8 million over the same period of fiscal 1997. This increase was due to the increase in debt as a result of the Lemmerz Acquisition. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company's operations used $8.9 million in cash during the first quarter of fiscal 1998, a decrease of $4.4 million as compared to the same period of fiscal 1997. This decrease in cash flow was attributable primarily to higher working capital requirements related to the Lemmerz Acquisition. Capital expenditures for the quarter amounted to $31.5 million. These capital expenditures were primarily for additional machinery and equipment to increase production capacity at the Company's North American and European Aluminum Wheel facilities to meet expected future customer requirements for fabricated aluminum and FFC(TM) wheels. The Company anticipates capital expenditures for fiscal 1998 will be approximately $110.0 million relating primarily to new vehicle platforms, cost reduction programs and maintenance. As of April 30, 1998, the Company was party to an amended credit agreement dated June 30, 1997 (the "Amended Credit Agreement") with Canadian Imperial Bank of Commerce ("CIBC") and Merrill Lynch Capital Corporation ("Merrill Lynch"), as managing agents. Pursuant to the Amended Credit Agreement, a syndicate of lenders agreed to lend to the Company up to $470.5 million in the form of senior secured term loan facilities, such aggregate amount being allocated among (i) a Tranche A-1 Term Loan facility in an aggregate principal amount of up to $173.0 million, (ii) a Tranche A-2 Term Loan facility in an aggregate principal amount of up to $100 million, (iii) a Tranche B Term Loan facility in an aggregated principal 13 14 amount of up to $109 million and (iv) a Tranche C Term Loan facility in an aggregate principal amount of up to $88.5 million, and up to $270 million in the form of a senior secured revolving credit facility. Such term loan facilities and revolving facility are guaranteed by the Company and all of its existing and future material domestic subsidiaries. Such term loan facilities and revolving facility are secured by a first priority lien in substantially all of the properties and assets of the Company and its material domestic subsidiaries, now owned or acquired later, including a pledge of all of the shares of certain of the Company's existing and future material domestic subsidiaries and 65% of the shares of certain of the Company's existing and future foreign subsidiaries. As of April 30, 1998, there was $173.8 million outstanding under the term loan facilities and $231.7 million available under the revolving facility. On June 12, 1998, the Company amended the Amended Credit Agreement and thereby (a) eliminated (and repaid the outstanding principal balance of) the Tranche A-1, B and C Term Loans and (b) increased the revolving credit facility to $400 million. In April 1998, the Company entered into a three-year agreement pursuant to which the Company and certain of its subsidiaries sold, and will continue to sell on an on-going basis, a portion of their accounts receivable to Hayes Lemmerz Funding Corporation ("Funding Co."), a wholly owned subsidiary of the Company. Accordingly, the Company and such subsidiaries, irrevocably and without recourse, transferred and will transfer substantially all of their U.S. dollar denominated trade accounts receivable to Funding Co. Funding Co. then sold and will sell such trade accounts receivable to an independent issuer of receivable- backed commercial paper. The Company has collection and administrative responsibilities with respect to all the receivables which are sold. At April 30, 1998, management believes that the Company was in compliance with the various covenants under the agreements pursuant to which it may borrow money. Management expects that the Company will remain in material compliance with these covenants through the period ending April 30, 1999. OTHER MATTERS The Company has conducted a comprehensive review of its computer systems and related computer-controlled manufacturing and quality systems to identify the systems that could be affected by the "Year 2000" issue and is developing an implementation plan to resolve the issue. The Year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a major system failure or miscalculations. The Company presently believes that, with modifications to existing software and converting to new software, the Year 2000 problem will not pose significant operational problems for the Company's computer systems as so modified and converted and, as such, the Company believes that the cost of modification and conversion related to the Year 2000 problem will not have a material adverse effect on the results of operations or financial condition of the Company. However, if such modifications and conversions are not completed timely, the Year 2000 problem may have a material impact on the operations of the Company. 14 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 None. (b) Reports of Form 8-K None. 15 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 LEMMERZ INTERNATIONAL, INC. By: /s/ D. N. Vermilya ------------------------------------ D.N. Vermilya Corporate Controller and Chief Accounting Officer June 12, 1998 16 17 Exhibit Index -------------
Exhibit No. Description - ----------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JAN-31-1999 FEB-01-1998 APR-30-1998 25800 0 153300 (4300) 145800 332300 859100 (148900) 1748100 371700 0 300 0 0 168600 1748100 413900 413900 341800 341800 22200 0 24200 25700 10800 14700 0 0 0 14700 0.49 0.45
-----END PRIVACY-ENHANCED MESSAGE-----