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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 September 30, 2002.   Commission file number 001-13337

STONERIDGE, INC.

——————————————————————————

(Exact Name of Registrant as Specified in Its Charter)

Ohio   34-1598949
 
(State or Other Jurisdiction of Incorporation or Organization)
  (I.R.S. Employer Identification No.)
     
9400 East Market Street, Warren, Ohio   44484
 
(Address of Principal Executive Offices)   (Zip Code)

(330) 856-2443

——————————————————————–

Registrant’s Telephone Number, Including Area Code

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 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 Common Shares, without par value, outstanding as of November 14, 2002 was 22,399,311.

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STONERIDGE, INC.

INDEX

  Page No.
Part I   Financial Information  
   
     Item 1. Financial Statements  
      Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001 2
      Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2002 and 2001 3
      Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 4
      Notes to Condensed Consolidated Financial Statements 5-17
      Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18-22
      Item 3. Quantitative and Qualitative Disclosure About Market Risk 23
      Item 4. Controls and Procedures 23
   
Part II   Other Information 24
   
Signatures 25
   
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 26-27

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

    September 30,   December 31,  
    2002   2001  
   
 
 
    (Unaudited)   (Audited)  
ASSETS
                  
                   
CURRENT ASSETS:
                  
Cash and cash equivalents
   $ 29,079     $ 4,369    
Accounts receivable, net
     107,017       91,018    
Inventories, net
     53,230       54,504    
Prepaid expenses and other
     10,018       15,538    
Deferred income taxes
     8,432       7,316    
   
 
 
Total current assets
     207,776       172,745    
   
 
 
PROPERTY, PLANT AND EQUIPMENT, net
     111,949       118,061    
OTHER ASSETS:
                  
Goodwill, net
     255,292       345,392    
Investments and other, net
     31,652       30,645    
   
 
 
TOTAL ASSETS
   $ 606,669     $ 666,843    
   
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
                  
                   
CURRENT LIABILITIES:
                  
Current portion of long-term debt
   $ 1,881     $ 41,621    
Accounts payable
     51,452       50,792    
Accrued expenses and other
     57,050       33,933    
   
 
 
Total current liabilities
     110,383       126,346    
   
 
 
LONG-TERM LIABILITIES:
                  
Long-term debt, net of current portion
     272,946       249,720    
Deferred income taxes
     12,933       24,352    
Other liabilities
     94       6,818    
   
 
 
Total long-term liabilities
     285,973       280,890    
   
 
 
SHAREHOLDERS' EQUITY:
                  
Preferred shares, without par value, 5,000 authorized, none issued
     --       --    
Common shares, without par value, 60,000 authorized, 22,399
                  
issued and outstanding at September 30, 2002 and 22,397 at
                  
December 31, 2001, with no stated value
     --       --    
Additional paid-in capital
     141,516       141,506    
Retained earnings
     72,917       126,157    
Accumulated other comprehensive loss
     (4,120 )     (8,056 )  
   
 
 
Total shareholders' equity
     210,313       259,607    
   
 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 606,669     $ 666,843    
   
 
 

The accompanying notes to the condensed consolidated financial statements are an integral part of these condensed consolidated statements.

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STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

(in thousands except for per share data)

    For the three months   For the nine months
    ended September 30,   ended September 30,
   
 
    2002   2001   2002   2001  
                   
NET SALES
   $ 158,441     $ 136,361     $ 488,229     $ 444,461  
COSTS AND EXPENSES:
                                
Cost of goods sold
     118,842       106,122       361,156       339,410  
Selling, general and administrative expenses
     23,783       25,766       68,915       77,906  
 
  
 
 
 
OPERATING INCOME
     15,816       4,473       58,158       27,145  
Interest expense, net
     9,378       7,205       26,154       22,573  
Other expense, net
     9       285       349       463  
 
  
 
 
 
INCOME (LOSS) BEFORE INCOME TAXES
     6,429       (3,017 )     31,655       4,109  
Provision (Benefit) for income taxes
     2,231       (1,204 )     11,454       1,325  
 
  
 
 
 
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS AND
                                
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
     4,198       (1,813 )     20,201       2,784  
Extraordinary loss, net of tax
     --       --       3,607       --  
 
  
 
 
 
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
                                
ACCOUNTING CHANGE
     4,198       (1,813 )     16,594       2,784  
Cumulative effect of accounting change, net of tax
     --       --       (69,834 )     --  
 
  
 
 
 
NET INCOME (LOSS)
   $ 4,198     $ (1,813 )   $ (53,240 )   $ 2,784  
 
  
 
 
 
BASIC NET INCOME (LOSS) PER SHARE:
                                
Income (loss) before extraordinary loss and cumulative effect of
                                
accounting change
   $ 0.19     $ (0.08 )   $ 0.90     $ 0.12  
Extraordinary loss, net of tax
     --       --       (0.16 )     --  
Cumulative effect of accounting change, net of tax
     --       --       (3.12 )     --  
 
  
 
 
 
Basic net income (loss) per share
   $ 0.19     $ (0.08 )   $ (2.38 )   $ 0.12  
 
  
 
 
 
DILUTED NET INCOME (LOSS) PER SHARE:
                                
Income (loss) before extraordinary loss and cumulative effect of
                                
accounting change
   $ 0.19     $ (0.08 )   $ 0.89     $ 0.12  
Extraordinary loss, net of tax
     --       --       (0.16 )     --  
Cumulative effect of accounting change, net of tax
     --       --       (3.08 )     --  
 
  
 
 
Diluted net income (loss) per share
   $ 0.19     $ (0.08 )   $ (2.35 )   $ 0.12  
 
  
 
 
 

The accompanying notes to the condensed consolidated financial statements are an integral part of these condensed consolidated statements.

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STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(in thousands)

    For the nine months ended  
    September 30,  
   
 
    2002   2001  
   
 
 
OPERATING ACTIVITIES:
                  
Net (loss) income
   $ (53,240 )   $ 2,784    
Adjustments to reconcile net (loss) income to net cash provided by operating
                  
activities-
                  
Depreciation and amortization
     19,395       21,423    
Deferred income taxes
     6,816       1,652    
(Gain) loss on sale of fixed assets
     (156 )     6    
Equity in loss (earnings) of unconsolidated subsidiaries
     1,148       (63 )  
Extraordinary loss
     3,607       --    
Cumulative effect of accounting change
     69,834       --    
Changes in operating assets and liabilities-
                  
Accounts receivable
     (13,645 )     (8,373 )  
Inventories
     2,448       10,607    
Prepaid expenses and other
     7,248       (3,285 )  
Other assets
     (37 )     1,847    
Accounts payable
     (342 )     95    
Accrued expenses and other
     24,914       5,896    
 
  
 
 
Net cash provided by operating activities
     67,990       32,589    
 
  
 
 
INVESTING ACTIVITIES:
                  
Capital expenditures
     (9,902 )     (20,896 )  
Proceeds from sale of fixed assets
     298       --    
Other
     2       262    
 
  
 
 
Net cash used by investing activities
     (9,602 )     (20,634 )  
 
  
 
 
FINANCING ACTIVITIES:
                  
Proceeds from issuance of senior notes
     200,000       --    
Extinguishment of revolving facility
     (37,641 )     --    
Extinguishment of term debt
     (226,139 )     --    
Net (repayments) borrowings under revolving facilities
     (44,677 )     18,290    
Proceeds from long-term debt
     100,000       1,381    
Repayments of long-term debt
     (9,648 )     (31,675 )  
Debt issuance costs
     (10,694 )     (1,223 )  
Interest rate swap termination costs
     (5,274 )     --    
 
  
 
 
Net cash used by financing activities
     (34,073 )     (13,227 )  
 
  
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
                  
EQUIVALENTS
     395       (88 )  
NET CHANGE IN CASH AND CASH EQUIVALENTS
     24,710       (1,360 )  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
     4,369       5,594    
 
  
 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
   $  29,079     $ 4,234    
 
  
 
 

The accompanying notes to the condensed consolidated financial statements are an integral part of these condensed consolidated statements.

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STONERIDGE, INC. AND SUBSIDIARIES