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 SEPTEMBER 30, 2004
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
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)
DELCO REMY INTERNATIONAL, INC.
(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 RULE 12B-2 OF THE EXCHANGE ACT).
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 as of November 1, 2004 | ||
| Common Stock – Class B |
2,503,024.48 |
Remy International, Inc. and Subsidiaries
| Page | ||||
| PART I |
FINANCIAL INFORMATION |
|||
| Item 1 |
Financial Statements |
|||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
27 | ||
| Item 3 |
37 | |||
| Item 4 |
37 | |||
| PART II |
OTHER INFORMATION |
|||
| Item 1 |
38 | |||
| Item 2 |
39 | |||
| Item 3 |
39 | |||
| Item 4 |
40 | |||
| Item 5 |
40 | |||
| Item 6 |
40 | |||
| 41 | ||||
| 42 | ||||
2
PART I FINANCIAL INFORMATION
| Item 1. | Financial Statements |
Remy International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| IN THOUSANDS, At |
September 30, 2004 |
December 31, 2003 |
||||||
| (unaudited) | ||||||||
| Assets: |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 72,987 | $ | 21,207 | ||||
| Trade accounts receivable, net |
155,912 | 143,439 | ||||||
| Other receivables |
19,870 | 14,806 | ||||||
| Inventories |
214,466 | 198,400 | ||||||
| Assets of discontinued operations |
1,283 | 67,397 | ||||||
| Other current assets |
14,955 | 13,712 | ||||||
| Total current assets |
479,473 | 458,961 | ||||||
| Property, plant and equipment |
310,124 | 292,332 | ||||||
| Less accumulated depreciation |
182,556 | 167,529 | ||||||
| Property, plant and equipment, net |
127,568 | 124,803 | ||||||
| Deferred financing costs, net |
16,082 | 13,968 | ||||||
| Goodwill, net |
106,364 | 100,862 | ||||||
| Investments in joint ventures |
5,594 | 5,721 | ||||||
| Other assets |
17,847 | 19,661 | ||||||
| Total assets |
$ | 752,928 | $ | 723,976 | ||||
| Liabilities and Stockholders’ Deficit: |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 155,211 | $ | 154,350 | ||||
| Accrued interest |
18,876 | 9,837 | ||||||
| Accrued restructuring |
6,074 | 10,402 | ||||||
| Liabilities of discontinued operations |
3,467 | 11,453 | ||||||
| Other liabilities and accrued expenses |
91,932 | 121,499 | ||||||
| Current maturities of long-term debt |
26,015 | 31,397 | ||||||
| Total current liabilities |
301,575 | 338,938 | ||||||
| Long-term debt, net of current portion (Note 9) |
612,136 | 593,003 | ||||||
| Deferred income taxes |
490 | 644 | ||||||
| Post-retirement benefits other than pensions |
16,813 | 16,431 | ||||||
| Accrued pension benefits |
12,467 | 13,073 | ||||||
| Accrued restructuring |
6,582 | 8,801 | ||||||
| Other non-current liabilities |
6,530 | 6,918 | ||||||
| Commitments and contingencies |
||||||||
| Minority interest |
9,839 | 15,193 | ||||||
| Redeemable preferred stock |
— | 306,969 | ||||||
| Stockholders’ deficit: |
||||||||
| Common stock: |
||||||||
| Class A shares |
— | — | ||||||
| Class B shares |
3 | 3 | ||||||
| Class C shares |
— | — | ||||||
| Paid-in capital |
334,336 | — | ||||||
| Retained deficit |
(533,717 | ) | (560,193 | ) | ||||
| Accumulated other comprehensive loss |
(14,126 | ) | (15,804 | ) | ||||
| Total stockholders’ deficit |
(213,504 | ) | (575,994 | ) | ||||
| Total liabilities and stockholders’ deficit |
$ | 752,928 | $ | 723,976 | ||||
See notes to the condensed consolidated financial statements.
3
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months |
Nine Months |
||||||||||||||
| IN THOUSANDS, For the three & nine months ended September 30, |
2004 |
2003 |
2004 |
2003 |
|||||||||||
| Net sales |
$ | 254,271 | $ | 246,677 | $ | 795,331 | $ | 728,698 | |||||||
| Cost of goods sold |
204,239 | 199,015 | 640,736 | 592,815 | |||||||||||
| Gross profit |
50,032 | 47,662 | 154,595 | 135,883 | |||||||||||
| Selling, general and administrative expenses |
27,731 | 23,947 | 83,974 | 74,551 | |||||||||||
| Restructuring charges |
142 | 2,663 | 1,516 | 47,263 | |||||||||||
| Operating income |
22,159 | 21,052 | 69,105 | 14,069 | |||||||||||
| Interest expense, net |
14,208 | 13,845 | 44,378 | 41,426 | |||||||||||
| Loss on early extinguishment of debt (Note 9) |
— | — | 7,939 | — | |||||||||||
| Income (loss) from continuing operations before income taxes, minority interest and loss (income) from unconsolidated joint ventures |
7,951 | 7,207 | 16,788 | (27,357 | ) | ||||||||||
| Income tax expense |
3,364 | 2,085 | 4,448 | 11,494 | |||||||||||
| Minority interest |
769 | 1,466 | 2,139 | 2,225 | |||||||||||
| Loss (income) from unconsolidated joint ventures |
(67 | ) | 182 | 701 | 5,909 | ||||||||||
| Net income (loss) from continuing operations |
3,885 | 3,474 | 9,500 | (46,985 | ) | ||||||||||
| Discontinued operations: |
|||||||||||||||
| Income (loss) from discontinued operations, net of tax |
(25 | ) | (833 | ) | 966 | (3,881 | ) | ||||||||
| Gain on disposal of discontinued operations, net of tax |
43,162 | — | 43,377 | 2,417 | |||||||||||
| Net income (loss) from discontinued operations, net of tax |
43,137 | (833 | ) | 44,343 | (1,464 | ) | |||||||||
| Net income (loss) |
47,022 | 2,641 | 53,843 | (48,449 | ) | ||||||||||
| Accretion for redemption of preferred stock |
9,459 | 8,477 | 27,367 | 24,418 | |||||||||||
| Net income (loss) attributable to common stockholders |
$ | 37,563 | $ | (5,836 | ) | $ | 26,476 | $ | (72,867 | ) | |||||
See notes to the condensed consolidated financial statements.
4
Remy International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| IN THOUSANDS, For the nine months ended September 30, |
2004 |
2003 |
||||||
| Cash Flows from Operating Activities: |
||||||||
| Net income (loss) attributable to common stockholders |
$ | 26,476 | $ | (72,867 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
| Loss (income) from discontinued operations |
(966 | ) | 3,881 | |||||
| Gain on disposal of discontinued operations |
(43,377 | ) | (2,417 | ) | ||||
| Depreciation |
14,618 | 15,455 | ||||||
| Amortization |
2,023 | 1,091 | ||||||
| Non-cash interest expense |
2,939 | 3,770 | ||||||
| Loss on early extinguishment of debt (Note 9) |
7,939 | — | ||||||
| Accretion for redemption of preferred stock |
27,367 | 24,418 | ||||||
| Minority interest |
2,139 | 2,225 | ||||||
| Loss from unconsolidated joint ventures |
701 | 5,909 | ||||||
| Deferred income taxes |
(145 | ) | 3,737 | |||||
| Post-retirement benefits other than pensions |
382 | (5,840 | ) | |||||
| Accrued pension benefits |
(606 | ) | 1,516 | |||||
| Restructuring charges |
1,516 | 47,263 | ||||||
| Cash payments for restructuring charges |
(7,798 | ) | (14,392 | ) | ||||
| Changes in operating assets and liabilities, net of acquisitions and restructuring charges: |
||||||||
| Accounts receivable |
(12,345 | ) | (21,007 | ) | ||||
| Inventories |
(16,086 | ) | (23,596 | ) | ||||
| Accounts payable |
(252 | ) | 3,648 | |||||
| Other current assets and liabilities |
(15,621 | ) | 15,413 | |||||
| Other non-current assets and liabilities, net |
(4,836 | ) | (1,446 | ) | ||||
| Net cash used in operating activities of continuing operations |
(15,932 | ) | (13,239 | ) | ||||
| Cash Flows from Investing Activities: |
||||||||
| Acquisitions, net of cash acquired |
(24,751 | ) | (9,546 | ) | ||||
| Net proceeds on sale of businesses |
102,987 | 27,876 | ||||||
| Purchases of property, plant and equipment |
(15,429 | ) | (11,986 | ) | ||||
| Net cash provided by investing activities of continuing operations |
62,807 | 6,344 | ||||||
| Cash Flows from Financing Activities: |
||||||||