UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NO. 1-13683
DELCO REMY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
35-1909253 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 2902 Enterprise Drive |
||
| Anderson, Indiana |
46013 | |
| (Address of principal executive offices) |
(Zip Code) |
(765) 778-6499
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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 BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN EXCHANGE ACT RULE 12B-2).
Yes ¨ No x
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT’S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
| Outstanding | ||
| Common Stock—Class A |
1,000 | |
| Common Stock—Class B |
2,485,337.49 | |
| Common Stock—Class C |
16,687 |
Delco Remy International, Inc. and Subsidiaries
| PART I FINANCIAL INFORMATION |
Page | |||||
| Item 1 |
||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
| 6 | ||||||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 | ||||
| Item 3 |
26 | |||||
| Item 4 |
26 | |||||
| PART II OTHER INFORMATION |
||||||
| Item 1 |
27 | |||||
| Item 2 |
29 | |||||
| Item 3 |
29 | |||||
| Item 4 |
29 | |||||
| Item 5 |
29 | |||||
| Item 6 |
29 | |||||
| 30 | ||||||
| 31 | ||||||
2
PART I FINANCIAL INFORMATION
Delco Remy International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
| March 31 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
12,946 |
|
$ |
12,426 |
| ||
| Trade accounts receivable, net |
|
170,286 |
|
|
142,972 |
| ||
| Other receivables |
|
12,941 |
|
|
11,594 |
| ||
| Inventories |
|
309,636 |
|
|
281,024 |
| ||
| Deferred income taxes |
|
14,939 |
|
|
14,423 |
| ||
| Assets of discontinued operations |
|
3,321 |
|
|
40,493 |
| ||
| Other current assets |
|
15,599 |
|
|
15,317 |
| ||
| Total current assets |
|
539,668 |
|
|
518,249 |
| ||
| Property and equipment |
|
295,845 |
|
|
290,035 |
| ||
| Less accumulated depreciation |
|
(167,312 |
) |
|
(132,995 |
) | ||
| Property and equipment, net |
|
128,533 |
|
|
157,040 |
| ||
| Deferred financing costs, net |
|
16,420 |
|
|
17,268 |
| ||
| Goodwill, net |
|
120,835 |
|
|
118,962 |
| ||
| Investments in joint ventures |
|
11,365 |
|
|
11,891 |
| ||
| Deferred income taxes |
|
10,078 |
|
|
13,013 |
| ||
| Other assets |
|
16,360 |
|
|
16,396 |
| ||
| Total assets |
$ |
843,259 |
|
$ |
852,819 |
| ||
| Liabilities and stockholders’ deficit |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
158,536 |
|
$ |
138,515 |
| ||
| Accrued interest |
|
13,678 |
|
|
9,743 |
| ||
| Accrued restructuring charges |
|
16,493 |
|
|
5,161 |
| ||
| Liabilities of discontinued operations |
|
6,922 |
|
|
17,244 |
| ||
| Other liabilities and accrued expenses |
|
81,341 |
|
|
65,482 |
| ||
| Current portion of debt |
|
28,751 |
|
|
30,190 |
| ||
| Total current liabilities |
|
305,721 |
|
|
266,335 |
| ||
| Long-term debt, less current portion |
|
597,566 |
|
|
596,382 |
| ||
| Post-retirement benefits other than pensions |
|
17,277 |
|
|
23,553 |
| ||
| Accrued pension benefits |
|
16,424 |
|
|
14,427 |
| ||
| Accrued restructuring charges |
|
8,319 |
|
|
4,651 |
| ||
| Other non-current liabilities |
|
11,453 |
|
|
12,285 |
| ||
| Commitments and contingencies |
||||||||
| Minority interest in subsidiaries |
|
19,383 |
|
|
17,850 |
| ||
| Redeemable preferred stock |
|
281,630 |
|
|
274,074 |
| ||
| Stockholders’ equity: |
||||||||
| Common stock: |
||||||||
| Class A shares |
|
— |
|
|
— |
| ||
| Class B shares |
|
3 |
|
|
3 |
| ||
| Class C shares |
|
— |
|
|
— |
| ||
| Retained deficit |
|
(397,313 |
) |
|
(340,673 |
) | ||
| Accumulated other comprehensive loss |
|
(17,204 |
) |
|
(16,068 |
) | ||
| Total stockholders’ deficit |
|
(414,514 |
) |
|
(356,738 |
) | ||
| Total liabilities and stockholders’ deficit |
$ |
843,259 |
|
$ |
852,819 |
| ||
See Notes to Condensed Consolidated Financial Statements
3
Delco Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands)
| Three Month Period Ended March 31 |
||||||||
| 2003 |
2002 |
|||||||
| Net sales |
$ |
256,570 |
|
$ |
248,738 |
| ||
| Cost of goods sold |
|
213,139 |
|
|
205,608 |
| ||
| Gross profit |
|
43,431 |
|
|
43,130 |
| ||
| Selling, general and administrative expenses |
|
26,446 |
|
|
22,988 |
| ||
| Restructuring charges (credits) |
|
45,085 |
|
|
(4,375 |
) | ||
| Operating income (loss) |
|
(28,100 |
) |
|
24,517 |
| ||
| Interest expense, net |
|
(14,116 |
) |
|
(13,876 |
) | ||
| Other non-operating income |
|
224 |
|
|
19 |
| ||
| Income (loss) from continuing operations before income taxes, minority interest, loss from unconsolidated joint ventures and cumulative effect of change in accounting principle |
|
(41,992 |
) |
|
10,660 |
| ||
| Income tax expense |
|
5,260 |
|
|
3,430 |
| ||
| Minority interest |
|
213 |
|
|
(1,803 |
) | ||
| Loss from unconsolidated joint ventures |
|
(715 |
) |
|
(1,200 |
) | ||
| Net income (loss) from continuing operations before cumulative effect of change in accounting principle |
|
(47,754 |
) |
|
4,227 |
| ||
| Discontinued operations: |
||||||||
| Loss from discontinued operations (including estimated gain on disposal of $2.4 million in the first quarter of 2003) |
|
(1,330 |
) |
|
(5,448 |
) | ||
| Income tax benefit |
|
— |
|
|
(2,127 |
) | ||
| Loss from discontinued operations |
|
(1,330 |
) |
|
(3,321 |
) | ||
| Cumulative effect of change in accounting principle, net |
|
— |
|
|
(74,176 |
) | ||
| Net loss |
|
(49,084 |
) |
|
(73,270 |
) | ||
| Preferred dividends |
|
7,556 |
|
|
6,759 |
| ||
| Net loss attributable to common stockholders |
$ |
(56,640 |
) |
$ |
(80,029 |
) | ||
See Notes to Condensed Consolidated Financial Statements
4
Delco Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
| Three Month Period Ended March 31 |
||||||||
| 2003 |
2002 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ |
(49,084 |
) |
$ |
(73,270 |
) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Cumulative effect of change in accounting principle |
||||||||