-----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, K6jw50VZXMvcl1kRurnQC3swlEWovVL/R3vyzX1C0Pg0dX5Q3h2A34AIqz05UzLU 4OuBOWbeKEhf31Me+kxoYw== 0000929624-99-001636.txt : 19990825 0000929624-99-001636.hdr.sgml : 19990825 ACCESSION NUMBER: 0000929624-99-001636 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990703 FILED AS OF DATE: 19990824 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRESTOLITE ELECTRIC HOLDING INC CENTRAL INDEX KEY: 0001057053 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 943142033 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 333-49429-01 FILM NUMBER: 99698434 BUSINESS ADDRESS: STREET 1: 2100 COMMONWEALTH BLVD CITY: ANN ARBOR STATE: MI ZIP: 48105 BUSINESS PHONE: 3139136600 MAIL ADDRESS: STREET 1: 2100 COMMONWEALTH BLVD CITY: ANN ARBOR STATE: MI ZIP: 48105 FORMER COMPANY: FORMER CONFORMED NAME: PEI HOLDINGS INC DATE OF NAME CHANGE: 19980304 10-Q/A 1 FORM 10-Q/A FOR PERIOD ENDED JULY 3, 1999 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A-1 (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 3, 1999. [_] 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 333-49429-01 Prestolite Electric Holding, Inc. --------------------------------- (Exact name of registrant as specified in its charter) Delaware 94-3142033 -------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2100 Commonwealth Blvd., Ste 300, Ann Arbor, Michigan 48105 -------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (734) 913-6600 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, address, and former fiscal year, if changed since last report) Indicate whether the registrant (1) has files 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 the filing requirements for the past 90 days. Yes X No ____________ --------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Number of common shares outstanding Class: as of August 11, 1999 Common Stock 1,993,000 Page 1 EXPLANATORY NOTE TO FORM 10-Q/A This amended quarterly report on Form 10-Q/A amends Note 4 to the condensed consolidated financial statements contained in Item 1 of the Company's quarterly report on Form 10-Q for the quarter ended July 3, 1999, as filed with the Securities and Exchange Commission on August 12, 1999. The Machinery and Equipment and the Accumulated Depreciation detail lines of the table each change by $2,593,000, amending the details of net Property, Plant and Equipment. Page 2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Condensed Consolidated Balance Sheet (in thousands, except share amounts)
July 3, December 31, 1999 1998 --------------- --------------- Assets Current Assets: Cash $ 1,614 $ 896 Accounts receivable, net of allowances 48,771 51,352 Inventories, net 54,283 52,082 Defered tax asset 2,711 2,134 Prepaid and other current assets 2,469 2,286 --------------- --------------- Total current assets 109,848 108,750 Property, plant and equipment, net 55,241 56,064 Deferred tax asset 1,002 1,002 Investments 4,880 4,996 Intangible assets 11,128 11,528 Long-term receivables, pension assets and assets of discontinued operations 5,699 5,807 --------------- --------------- Total assets $ 187,798 $ 188,147 =============== =============== Liabilities Current Liabilities: Revolving credit $ 6,733 $ 4,935 Current portion of long-term debt 3,166 2,401 Accounts payable 23,839 26,088 Accrued liabilities 22,475 27,135 --------------- --------------- Total current liabilities 56,213 60,559 Long-term debt 141,209 133,416 Other non-current liabilities 2,133 3,090 --------------- --------------- Total liabilities 199,555 197,065 Stockholders' equity Common stock, par value $.01, 5,000,000 shares authorized, 1,993,000 shares issued and outstanding at July 3, 1999 and December 31, 1998, respectivley 2 2 Paid-in capital 16,623 16,623 Retained earnings (accumulated deficit) (1,221) (404) Notes receivable, employees' stock purchase, 7.74% due 2002 (513) (559) Foreign currency translation adjustment (2,199) (131) Treasury stock, 1,310,000 shares on July 3, 1999 and December 31, 1998, respectively (24,449) (24,449) --------------- --------------- Total stockholders' equity (11,757) (8,918) --------------- --------------- Total liabilities and stockholders' equity $ 187,798 $ 188,147 =============== ===============
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 3 Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Condensed Consolidated Unaudited Statements of Operations (in thousands except share amounts)
For the three months ended For the six months ended --------------------------------- --------------------------------- July 3, July 4, July 3, July 4, 1999 1998 1999 1998 ------------- ------------- ------------- ------------- Net Sales $ 65,761 $ 72,848 $ 130,519 $ 147,373 Cost of goods sold 53,794 57,888 104,298 117,919 ------------- ------------- ------------- ------------- Gross profit 11,967 14,960 26,221 29,454 Selling, general and administrative 9,641 9,832 19,314 19,638 Costs associated with option repurchase - - - 2,101 Restructuring charge - - - 980 ------------- ------------- ------------- ------------- Operating income 2,326 5,128 6,907 6,735 Interest expense 4,114 3,245 7,886 6,526 Other expense (income) (917) (436) (1,048) (522) ------------- ------------- ------------- ------------- Income from continuing operations before extraordinary loss and income taxes (871) 2,319 69 731 Loss (benefit) from unconsolidated subsidiaries 26 - 116 - Provision for (benefit from) income taxes (202) 869 770 263 ------------- ------------- ------------- ------------- Income from continuing operations (695) 1,450 (817) 468 Extraordinary loss, net of taxes of $716 - - - 1,275 ------------- ------------- ------------- ------------- Net income (loss) $ (695) $ 1,450 (817) $ (807) ============= ============= ============= ============= Other comprehensive income (expense): Foreign currency translation adjustment $ (569) $ (968) $ (2,068) $ (927) ------------- ------------- ------------- ------------- Comprehensive income (expense) $ (1,264) $ 482 $ (2,885) $ (1,734) ============= ============= ============= ============= Basic earnings per common share Income from continuing operations $ (0.35) $ 0.73 $ (0.41) $ 0.22 Extraordinay item $ - $ - $ - $ (0.59) ------------- ------------- ------------- -------------- Net income (loss) $ (0.35) $ 0.73 $ (0.41) $ (0.37) ============= ============= ============= ============= Diluted earnings per common share Income from continuing operations $ (0.35) $ 0.69 $ (0.41) $ 0.20 Extraordinay item $ - $ - $ - $ (0.56) ------------- ------------- ------------- ------------- Net income (loss) $ (0.35) $ 0.69 $ (0.41) $ (0.36) ============= ============= ============= ============= Basic shares outstanding 1,993,000 1,993,000 1,993,000 2,160,774 Dilutive shares outstanding 2,126,314 2,103,860 2,126,386 2,284,495
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 4 Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Condensed Consolidated Unaudited Statements of Operations (in thousands)
For the six months ended ---------------------------------------- July 3, July 4, 1999 1998 --------------- ---------------- Cash Flows from Operating Activities: Net income (loss) $ (817) $ (807) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Loss on debt refinancing - 1,991 Option repurchase - 2,101 Cash provided by (used in) discontinued operations - 1,548 Depreciation 5,196 5,391 Amortization 947 486 Loss (gain) on sale of property, plant, and equipment 65 (122) Loss from unconsolidated subsidiaries 116 - Deferred taxes (577) (1,431) Changes in working capital items (7,152) 3,707 ------------ ------------- Net cash provided by operating activities (2,222) 12,864 Cash Flows from Investing Activities: Capital expenditures (4,353) (5,557) Proceeds from disposal of fixed assets 5 12 Acquisition of: Lucas businesses - (48,209) Roberts Remanufacturing (2,958) - Investment in affiliates (650) (1,500) ------------ ------------- Net cash provided by investing activities (7,956) (55,254) Cash Flows from Financing Activities: Net increase (decrease) in revolving credit 9,505 (1,377) Payments on long-term debt - (31,146) Proceeds from borrowings 765 125,000 Costs related to new borrowings, including loss on refinancing - (5,785) Purchase of treasury stock, options and warrants, employee stock 46 (29,895) receivable Borrowings (payments) on capital leases 100 (33) Other financing costs, net (14) (6,773) ------------ ------------- Net cash from financing activities 10,402 49,991 Effect of exchange rate changes on cash 494 (237) ------------ ------------- Net increase (decrease) in cash 718 7,364 Cash - beginning of period 896 455 ------------ ------------- Cash - end of period $ 1,614 $ 7,819 ============ =============
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 5 Prestolite Electric Holding, Inc. and Subsidiaries (including Prestolite Electric Incorporated) Notes to Unaudited Condensed Consolidated Financial Statements Note 1: General Information Prestolite Electric Holding, Inc. conducts all of its operations through its wholly-owned principal subsidiary, Prestolite Electric Incorporated. There are no material differences between the financial statements of Prestolite Electric Holding, Inc. and Prestolite Electric Incorporated (collectively, "Prestolite," "us," "we" or the "Company"). These unaudited condensed consolidated financial statements have been prepared by us in accordance with Rule 10-01 of Regulation S-X and have been prepared on a basis consistent with our audited financial statements for the year ended December 31, 1998. These statements reflect all adjustments, consisting only of items of a normal recurring nature, which are, in the opinion of management, necessary for the fair statement of the consolidated financial condition and consolidated results of operations for the interim period presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements and the related notes should be read in conjunction with our audited financial statements, the notes to those statements and the other material included in our Annual Report on Form 10-K for the year ended December 31, 1998. The year-end 1998 condensed balance sheet data was derived from our audited financial statements, but does not include all information and footnotes required by generally accepted accounting principles for complete financial statements. The results of operations for the three- and six-month periods ended July 3, 1999 are not necessarily indicative of the operating results that may be expected for the full year or any other interim period. Genstar Capital Corporation and Company management own all of the equity securities of Prestolite Electric Holding, Inc. Note 2: Acquisitions On January 15, 1999, we acquired a remanufacturing business unit from Roberts Generator for $2.9 million. This business unit operates as Roberts Remanufacturing and rebuilds alternators and starter motors for specialty applications. We financed this purchase with funds borrowed under our United States revolving line of credit. On January 22, 1998 Prestolite acquired the heavy duty products division of Lucas Industries, plc. (a U. K. corporation), Lucas South Africa and Lucas Indiel Argentina S. A., collectively referred to as "the Lucas Acquisition," for approximately $44.3 million in cash, net of cash acquired and including the assumption of approximately $3.2 million in debt, inventory purchases of approximately $1.4 million during 1998, and up to $4.1 million for certain accounts receivable as they are collected ($1,074,000 paid during 1998, no payments during the first quarter of 1999, and $0.1 million paid during the second quarter of 1999). In addition, Prestolite has agreed to pay Lucas up to an additional $6.6 million if certain operating targets are achieved in Argentina in 1999 and 2000 and up to $ 4.9 million if certain fully reserved receivables are collected. No liability for this $11.5 million is accrued, as management does not consider Page 6 payment probable. Any future payments will be recorded as an adjustment to the purchase price. In addition, on January 22, 1998, Prestolite Electric Incorporated completed the offering of $125 million of 9.625% Senior Notes due 2008 (the "Notes"). The proceeds of the Notes funded the Lucas Acquisition and repaid approximately $42 million of our outstanding indebtedness. Approximately $29.7 million of the proceeds were also used for the repurchase of common stock, warrants and options to purchase common stock. These transactions are more fully described in our Annual Report on Form 10-K for the year ended December 31, 1998. In conjunction with these transactions, during the first quarter of 1998 the Company charged operations for $2.1 million for the repurchase of options and recorded an extraordinary charge of $1.275 million, net of tax benefit, related to the debt refinancing. The Company also recorded a $0.98 million restructuring charge in the first quarter of 1998 related to costs anticipated to be incurred at the Company's existing facilities as a result of the Lucas Acquisition. Note 3: Inventories Inventories are summarized as follows (in thousands of U.S. dollars):
As of As of July 3, December 31, 1999 1998 ------------- ------------- Raw Material $ 18,050 $ 15,014 Work in Progress 15,257 16,171 Finished Goods 20,976 20,897 ------------- ------------- $ 54,283 $ 52,082 ============= =============
Note 4: Property, Plant and Equipment Property, Plant and Equipment consists of the following (in thousands of U.S. dollars):
As of As of July 3, December 31, 1999 1998 ------------- ------------- Land & Buildings $ 29,662 $ 29,433 Machinery & Equipment 57,232 54,863 Construction in Progress 3,618 2,699 -------------- -------------- Total, at Cost 90,512 86,995 Accumulated Depreciation (35,271) (30,931) -------------- -------------- Net $ 55,241 $ 56,064 ============== ==============
Page 7 Note 5: Investments Investments consist of the following (in thousands of U.S. dollars):
As of As of July 3, December 31, 1999 1998 ------------- ------------- DAX Industries, Inc. (35% interest) $ 1,715 $ 1,869 Ecoair Corp. (7% interest, at cost) 2,000 2,000 Prestolite Asia Ltd. (50% interest) 568 530 Auto Ignition, Ltd. (4% interest, at cost) 597 597 ------------- ------------- $ 4,880 $ 4,996 ============== ==============
Note 6: Debt In 1998 we issued $125 million of 9.625% (interest payable semiannually) unsecured senior notes. The senior notes mature on February 1, 2008 but may be redeemed earlier at our option under conditions specified in the indenture pursuant to which the senior notes were issued. The senior notes are senior unsecured obligations of Prestolite Electric Incorporated and are fully and unconditionally guaranteed on a senior unsecured basis by Prestolite Electric Holding, Inc. The senior notes are subordinated to our secured credit facilities, to the extent of the value of the assets securing such indebtedness, including the secured facilities described below. The senior notes are also subordinated to the indebtedness of any subsidiary of Prestolite Electric Incorporated, including the indebtedness of its United Kingdom subsidiary. The proceeds were used to refinance existing debt, fund the acquisition of the Lucas businesses and to repurchase certain Prestolite Electric Holding, Inc. securities. The senior notes are more fully described in our Prospectus dated June 26, 1998. In connection with the issuance of the Notes, we entered into new credit agreements in the U. S. and the U. K. The U. S. agreement consists of a $23.0 million revolving credit facility ($17.1 million available at July 3, 1999) which is advanced according to a formula based on eligible accounts receivable and inventory levels. The borrowings are collateralized by all U. S. accounts receivable and inventories and mature on July 31, 2000. Interest is payable at the bank's prime rate (7.75 percent at July 3, 1999) or at the "London Late Eurodollar" rate plus 2.75 percent at our option. In certain situations these rates may be increased by 0.125 percent. The U. K. agreement allows us to borrow up to (Pounds)7.0 million ((Pounds)5.5 million available at July 3, 1999) and is advanced based on eligible U. K. accounts receivable. Interest is payable at the bank's base rate, 6.75 percent at July 3, 1999. This agreement expires in April 2002. In Argentina and South Africa, we have arrangements with several banks which allow our subsidiaries in these countries to discount or borrow against accounts receivable, generally at the prime rates of the banks involved. Those rates ranged from 16.5 percent to 21.3 percent at July 3, 1999. Total available credit in Argentina and South Africa at July 3, 1999 was approximately $4.6 million. Page 8 Debt consists of the following (in thousands of U.S. dollars):
As of As of July 3, December 31, 1999 1998 -------------- -------------- U. S. Bank Debt $ 14,551 $ 3,366 U.S. Unpresented Checks 1,490 385 U. K. Bank Debt 4,761 8,132 Argentina Bank Debt 2,809 2,120 South Africa Bank Debt 931 269 Senior Notes 125,000 125,000 Capital Lease Obligations 1,296 1,196 Other Debt 270 284 -------------- -------------- Total Debt 151,108 140,752 Current Maturities 9,899 7,336 -------------- -------------- Long Term Debt $ 141,209 $ 133,416 ============== ============== Cash 1,614 896 -------------- -------------- Total Debt net of Cash $ 149,494 $ 139,856 ============== ==============
Note 7: Segment Reporting In 1998, the Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. Prior quarter information is restated to conform with the provisions of SFAS No. 131. Prestolite operates in four principal geographic regions. Sales in South Africa and Argentina consist largely of products for the automotive market while sales of products in the United States and United Kingdom consist largely of products for non-automotive applications. Sales between geographic segments and between operating segments are priced at cost plus a standard markup. Sales to external customers, based on country of origin, is as follows (in thousands of U.S. dollars):
North United South America Kingdom Argentina Africa Total -------------- --------------- -------------- -------------- -------------- For quarter ended July 3, 1999 $ 35,401 $ 16,286 $ 10,809 $ 3,265 $ 65,761 For quarter ended July 4, 1998 34,066 17,767 17,555 3,460 72,848 For six months ended July 3, 1999 $ 70,988 $ 32,985 $ 20,120 $ 6,426 $ 130,519 For six months ended July 4, 1998 70,279 38,903 31,296 6,895 147,373
Page 9 During 1998, the Company began to manage itself on the basis of three business units (Heavy Duty Systems, Electric Vehicle Systems, and Automotive Systems) and to evaluate the performance of its segments based on earnings before interest expense, taxes, depreciation and amortization and excluding restructuring and option repurchase charges ("EBITDA"). Corporate overhead and certain other charges are not allocated to the divisions. Segment assets are not currently broken out in the normal course of managing segment operations; accordingly, such information is not available for disclosure. In accordance with SFAS No. 131, the operating results for the quarters ended July 3, 1999 and July 4, 1998 are summarized by operating segment (in thousands of U.S. dollars) below:
Heavy Electric Duty Vehicle Automotive Systems Systems Systems Unallocated Division Division Divison Costs Total -------------- -------------- -------------- -------------- -------------- Sales to external customers: For quarter ended July 3, 1999 $ 31,659 $ 18,262 $ 15,840 $ 65,761 For quarter ended July 4, 1998 32,466 18,771 21,611 72,848 EBITDA: For quarter ended July 3, 1999 4,231 1,856 1,655 $ (1,469) 6,273 For quarter ended July 4, 1998 4,500 2,941 2,431 (1,423) 8,449 Sales to external customers: For six months ended July 3, 1999 64,462 35,871 30,186 130,519 For six months ended July 4, 1998 68,119 39,813 39,441 147,373 EBITDA: For six months ended July 3, 1999 10,132 4,155 2,651 (2,956) 13,982 For six months ended July 4, 1998 9,941 6,095 3,370 (3,191) 16,215
Page 10 A reconciliation of EBITDA to income from continuing operations before income taxes follows (in thousands of U.S. dollars):
For the three months ended July 3, July 4, 1999 1998 ---------------- --------------- EBITDA for reporting segments $ 6,273 $ 8,449 Depreciation and amortization 3,056 2,885 Loss (income) in unconsolidated subsidiaries 26 - Interest expense 4,114 3,245 ---------------- --------------- Income from continuing operations before income taxes $ (871) $ 2,319 ================ ===============
For the six months ended July 3, July 4, 1999 1998 ---------------- --------------- EBITDA for reporting segments $ 13,982 $ 16,215 Depreciation and amortization 6,143 5,877 Loss (income) in unconsolidated subsidiaries 116 - Option repurchase - 2,101 Restructuring - 980 Interest expense 7,886 6,526 ---------------- --------------- Income from continuing operations before income taxes $ 69 $ 731 ================ ===============
Page 11 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. Date: August 24, 1999 By: /s/ KENNETH C. CORNELIUS --------------------------- Kenneth C. Cornelius Senior Vice President and Chief Financial Officer (principal financial and accounting officer) Page 12 -----END PRIVACY-ENHANCED MESSAGE-----