UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| (Mark One) | ||
| x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| For the quarterly period ended July 31, 2002 | ||
or |
||
| o |
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 | 13-3384636 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
|
| 15300 Centennial Drive | 48167 | |
| Northville, Michigan | (Zip Code) | |
| (Address of principal executive offices) |
Registrant’s telephone number, including area code:
(734) 737-5000
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 o
The number of shares of common stock outstanding as of September 16, 2002 was 28,455,995 shares.
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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 | 2 | |||||
| Consolidated Balance Sheets | 3 | |||||
| Consolidated Statements of Cash Flows | 4 | |||||
| Notes to Consolidated Financial Statements | 5 | |||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 30 | ||||
| Item 4. | Controls and Procedures | 30 | ||||
| PART II. OTHER INFORMATION | ||||||
| Item 1. | Legal Proceedings | 31 | ||||
| Item 2. | Changes in Securities and Use of Proceeds | 32 | ||||
| Item 3. | Defaults upon Senior Securities | 32 | ||||
| Item 4. | Submission of Matters to a Vote of Security Holders | 32 | ||||
| Item 5. | Other Information | 32 | ||||
| Item 6. | Exhibits and Reports on Form 8-K | 32 | ||||
| Signatures | 33 | |||||
| Certifications | 34 | |||||
UNLESS OTHERWISE INDICATED, REFERENCES TO THE “COMPANY” MEAN HAYES LEMMERZ 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 2002 MEANS THE PERIOD BEGINNING FEBRUARY 1, 2002, AND ENDING JANUARY 31, 2003). 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 POSSIBILITIES: (1) THE OUTCOME AND CONSEQUENCES OF THE COMPANY’S CHAPTER 11 PROCEEDINGS; (2) COMPETITIVE PRESSURE IN THE COMPANY’S INDUSTRY INCREASES SIGNIFICANTLY; (3) GENERAL ECONOMIC CONDITIONS ARE LESS FAVORABLE THAN EXPECTED; (4) THE COMPANY’S DEPENDENCE ON THE AUTOMOTIVE INDUSTRY (WHICH HAS HISTORICALLY BEEN CYCLICAL); (5) CHANGES IN THE FINANCIAL MARKETS AFFECTING THE COMPANY’S FINANCIAL STRUCTURE AND THE COMPANY’S COST OF CAPITAL AND BORROWED MONEY; AND (6) 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.
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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
(Debtor-in-Possession as of December 5, 2001)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions of dollars, except share amounts)
(Unaudited)
| Three Months | Six Months | ||||||||||||||||
| Ended July 31, | Ended July 31, | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
Net sales |
$ | 504.0 | $ | 518.5 | $ | 990.7 | $ | 1,059.5 | |||||||||
Cost of goods sold |
465.7 | 484.9 | 907.3 | 968.2 | |||||||||||||
Gross profit |
38.3 | 33.6 | 83.4 | 91.3 | |||||||||||||
Marketing, general and administration |
23.0 | 25.9 | 50.6 | 52.2 | |||||||||||||
Engineering and product development |
5.5 | 5.7 | 10.5 | 11.6 | |||||||||||||
Amortization of goodwill |
— | 6.6 | — | 13.3 | |||||||||||||
Equity in losses of joint ventures |
— | 0.2 | — | 0.5 | |||||||||||||
Asset impairments and other restructuring charges |
18.1 | 7.0 | 25.3 | 38.0 | |||||||||||||
Loss on investment in joint venture |
— | 3.8 | — | 3.8 | |||||||||||||
Other (income) expense, net |
(1.1 | ) | 1.4 | (3.7 | ) | 1.3 | |||||||||||
Reorganization items |
5.4 | — | 27.9 | — | |||||||||||||
Loss from operations |
(12.6 | ) | (17.0 | ) | (27.2 | ) | (29.4 | ) | |||||||||
Interest expense, net (excluding $29.6 million and $58.3 million not accrued on
liabilities subject to compromise for the three months and six months ended
July 31, 2002, respectively) |
17.9 | 48.8 | 34.7 | 92.9 | |||||||||||||
Loss before taxes on income, minority interest and
extraordinary gain |
(30.5 | ) | (65.8 | ) | (61.9 | ) | (122.3 | ) | |||||||||
Income tax provision (benefit) |
(3.3 | ) | 4.1 | (2.4 | ) | 10.4 | |||||||||||
Loss before minority interest and extraordinary gain |
(27.2 | ) | (69.9 | ) | (59.5 | ) | (132.7 | ) | |||||||||
Minority interest |
0.8 | 1.0 | 1.5 | 1.8 | |||||||||||||
Loss before extraordinary gain |
(28.0 | ) | (70.9 | ) | (61.0 | ) | (134.5 | ) | |||||||||
Extraordinary gain, net of tax |
— | 2.7 | — | 2.7 | |||||||||||||
Net loss |
$ | (28.0 | ) | $ | (68.2 | ) | $ | (61.0 | ) | $ | (131.8 | ) | |||||
Basic net loss per share: |
|||||||||||||||||
Loss before extraordinary gain |
$ | (0.98 | ) | $ | (2.49 | ) | $ | (2.14 | ) | $ | (4.73 | ) | |||||
Extraordinary gain, net of tax |
— | 0.09 | — | 0.09 | |||||||||||||
Basic net loss per share |
$ | (0.98 | ) | $ | (2.40 | ) | $ | (2.14 | ) | $ | (4.64 | ) | |||||
Diluted net loss per share: |
|||||||||||||||||
Loss before extraordinary gain |
$ | (0.98 | ) | $ | (2.49 | ) | $ | (2.14 | ) | $ | (4.73 | ) | |||||
Extraordinary gain, net of tax |
— | 0.09 | — | 0.09 | |||||||||||||
Diluted net loss per share |
$ | (0.98 | ) | $ | (2.40 | ) | $ | (2.14 | ) | $ | (4.64 | ) | |||||
See accompanying notes to consolidated financial statements.
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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
(Debtor-in-Possession as of December 5, 2001)
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share amounts)
| July 31, | January 31, | |||||||||||
| 2002 | 2002 | |||||||||||
| (Unaudited) | ||||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 43.7 | $ | 45.2 | ||||||||
Receivables |
272.7 | 266.2 | ||||||||||
Inventories |
179.5 | 155.2 | ||||||||||
Prepaid expenses and other |
43.2 | 36.3 | ||||||||||
Total current assets |
539.1 | 502.9 | ||||||||||
Property, plant and equipment, net |
958.6 | 965.4 | ||||||||||
Goodwill and other assets |
912.4 | 889.8 | ||||||||||
Total assets |
$ | 2,410.1 | $ | 2,358.1 | ||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||||||
Current liabilities: |
||||||||||||
DIP facility |
$ | 6.8 | $ | — | ||||||||
Bank borrowings and other notes |
22.0 | 25.1 | ||||||||||
Current portion of long-term debt |
38.1 | 14.5 | ||||||||||
Accounts payable and accrued liabilities |
308.1 | 250.0 | ||||||||||
Total current liabilities |
375.0 | 289.6 | ||||||||||
Long-term debt, net of current portion |
57.9 | 83.5 | ||||||||||
Pension and other long-term liabilities |
310.6 | 312.2 | ||||||||||
Minority interest |
14.3 | 11.8 | ||||||||||
Liabilities subject to compromise |
2,138.5 | 2,121.0 | ||||||||||
Commitments and contingencies |
||||||||||||
Stockholders’ deficit: |
||||||||||||
Preferred stock, 25,000,000 shares authorized, none issued
or outstanding |
— | — | ||||||||||
Common stock, par value $0.01 per share: |
||||||||||||
Voting — authorized 99,000,000 shares; 27,708,419
shares issued; 25,806,969 shares outstanding |
0.3 | 0.3 | ||||||||||
Nonvoting — authorized 5,000,000 shares; issued and
outstanding, 2,649,026 shares |
— | — | ||||||||||
Additional paid in capital |
235.1 | 235.1 | ||||||||||
Common stock in treasury at cost, 1,901,450 shares |
(25.7 | ) | (25.7 | ) | ||||||||
Accumulated deficit |
(603.4 | ) | (542.4 | ) | ||||||||
Accumulated other comprehensive loss |
(92.5 | ) | (127.3 | ) | ||||||||
Total stockholders’ deficit |
(486.2 | ) | (460.0 | ) | ||||||||
Total liabilities and stockholders’ deficit |
$ | 2,410.1 | $ | 2,358.1 | ||||||||
See accompanying notes to consolidated financial statements.
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HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
(Debtor-in-Possession as of December 5, 2001)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(Unaudited)
| Six Months | ||||||||||
| Ended July 31, | ||||||||||
| 2002 | 2001 | |||||||||
Cash flows from operating activities: |
||||||||||
Net loss |
$ | (61.0 | ) | $ | (131.8 | ) | ||||
Adjustments to reconcile net loss to net cash provided by
(used for) operating activities: |
||||||||||
Depreciation and tooling amortization |
65.0 | 61.2 | ||||||||
Amortization of goodwill |
— | 13.3 | ||||||||
Amortization of deferred financing fees |
2.6 | 3.8 | ||||||||
Change in deferred income taxes |
0.5 | 6.0 | ||||||||
Asset impairments and other restructuring charges |
25.3 | 38.0 | ||||||||
Loss on investment in joint venture |
— | 3.8 | ||||||||
Minority interest |
1.5 | 1.8 | ||||||||
Equity in losses (earnings) of joint ventures |
— | 0.5 | ||||||||
Gain on sale of assets and businesses |
(0.3 | ) | — | |||||||
Extraordinary gain |
— | (4.2 | ) | |||||||
Changes in operating assets and liabilities that increase
(decrease) cash flows: |
||||||||||
Receivables |
1.3 | (9.4 | ) | |||||||
Inventories |
(21.1 | ) | 2.7 | |||||||
Prepaid expenses and other |
(6.3 | ) | 1.2 | |||||||
Accounts payable and accrued liabilities |
26.6 | (10.2 | ) | |||||||
Chapter 11 items: |
||||||||||
Reorganization items |
27.9 | — | ||||||||
Accrued interest on Credit Agreement |
25.9 | — | ||||||||
Payments related to Chapter 11 Filings |
(36.8 | ) | — | |||||||
Cash provided by (used for) operating activities |
51.1 | (23.3 | ) | |||||||
Cash flows from investing activities: |
||||||||||
Purchase of property, plant, equipment and tooling |
(44.8 | ) | (76.7 | ) | ||||||
Proceeds from sale of assets and businesses |
9.0 | — | ||||||||
Purchase of businesses |
(7.2 | ) | — | |||||||
Proceeds from termination of cross-currency swap
agreements |
— | 14.6 | ||||||||
Other, net |
(1.5 | ) | (12.9 | ) | ||||||
Cash used for investing activities |
(44.5 | ) | (75.0 | ) | ||||||
Cash flows from financing activities: |
||||||||||
Change in borrowings under DIP facility |
5.8 | — | ||||||||
Changes in bank borrowings and revolving facility |
(17.6 | ) | 192.8 | |||||||
Proceeds from refinancing, net of related fees |
— | 435.4 | ||||||||
Repayment of bank borrowings and revolving facility from
refinancing |
— | (371.3 | ) | |||||||
Repayment of long-term debt from refinancing |
— | (36.6 | ) | |||||||
Payments on accounts receivable securitization |
— | (71.6 | ) | |||||||
Fees to amend Credit Agreement |
— | (2.7 | ) | |||||||
Cash provided by (used for) financing activities |
(11.8 | ) | 146.0 | |||||||