10-Q 1 k62227e10-q.txt FORM 10-Q 1 UNITED STATES 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 March 31, 2001 Commission file number 1-5985 ------ NEWCOR, INC. ------------ (Exact name of registrant as specified in its charter) DELAWARE 38-0865770 -------------------------------- ------------------------------------ (State of incorporation) (I.R.S. Employer Identification No.) 43252 Woodward Ave., Suite 240 Bloomfield Hills, Michigan 48302 -------------------------------- ------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (248) 253-2400 -------------- 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 ( ). APPLICABLE ONLY TO CORPORATE ISSUERS: As of May 4, 2001, the Registrant had 4,949,068 outstanding shares of common stock, $1.00 par value, the Registrant's only class of common stock. 2 PART I. FINANCIAL INFORMATION NEWCOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Three Months Ended March 31, March 31, 2001 2000 ---- ---- Sales $ 45,797 $ 69,179 Cost of sales 42,044 58,777 ---------- ---------- Gross margin 3,753 10,402 Selling, general and administrative expenses 4,592 5,765 Amortization expense 1,034 1,030 ---------- ---------- Operating income (loss) (1,873) 3,607 Other expense: Interest expense (3,642) (3,650) Other professional fees (300) - Other expense, net (139) (134) ---------- ---------- Loss before income taxes (5,954) (177) Income tax benefit (2,025) (60) ---------- ---------- Net loss $ (3,929) $ (117) ========== ========== Amounts per share of common stock: Net loss - basic and diluted $ (0.79) $ (0.02) Weighted average common shares outstanding 4,949 4,934
The accompanying notes are an integral part of the condensed consolidated financial statements 2 3 NEWCOR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
March 31, December 31, 2001 2000 ---- ---- ASSETS Current assets: Cash and cash equivalents $ 361 $ 704 Accounts receivable 28,515 33,219 Inventories 17,670 15,061 Other current assets 4,738 3,913 ----------- ----------- Total current assets 51,284 52,897 Property, plant and equipment, net of accumulated depreciation of $36,214 at 3/31/01 and $33,924 at 12/31/00 52,826 54,609 Cost in excess of assigned value of acquired companies, net of amortization 66,778 67,812 Debt issuance costs and other non-current assets 16,267 13,994 ------------ ----------- Total assets $ 187,155 $ 189,312 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 2,312 $ 2,312 Accounts payable 21,265 22,474 Other accrued liabilities 8,914 13,701 ----------- ----------- Total current liabilities 32,491 38,487 Long-term debt 142,812 134,943 Other non-current liabilities 8,973 9,074 ----------- ----------- Total liabilities 184,276 182,504 ----------- ----------- Shareholders' equity: Common stock 5,019 5,019 Capital in excess of par 2,415 2,415 Treasury stock (489) (489) Accumulated other comprehensive income (223) (223) Retained earnings (3,843) 86 ------------ ----------- Total shareholders' equity 2,879 6,808 ----------- ----------- Total liabilities and shareholders' equity $ 187,155 $ 189,312 =========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements 3 4 NEWCOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Three Months Ended ------------------ March 31, March 31, 2001 2000 ---- ---- Operating Activities: Net (loss) income $ (3,929) $ (117) Depreciation 2,287 2,431 Amortization 1,034 1,030 Deferred taxes (2,025) (60) Other, net (369) 231 Changes in operating assets and liabilities, net (4,726) (13,480) -------- ---------- Net cash used in operating activities (7,728) (9,965) -------- ---------- Investing Activities: Capital expenditures (1,124) (940) Proceeds from sale of assets 620 - -------- ---------- Net cash used in investing activities (504) (940) -------- ---------- Financing Activities: Net borrowings on revolving credit line 8,455 10,260 Repayment of term note (500) (500) Payments on capital lease (66) Issuance of common stock 114 -------- ---------- Net cash provided by financing activities 7,889 9,874 -------- ---------- Decrease in cash (343) (1,031) Cash and cash equivalents, beginning of period 704 1,731 -------- ---------- Cash and cash equivalents, end of period $ 361 $ 700 ======== ==========
The accompanying notes are an integral part of the condensed consolidated financial statements 4 5 NEWCOR, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included, and such adjustments are of a normal recurring nature. Results for interim periods should not be considered indicative of results for a full year. Certain amounts from the prior year have been reclassified to conform to the current period's presentation. Approximately 96,000 common stock options were excluded from the calculation of diluted earnings per share because they would have been antidulutive for all periods presented. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2000. Note 2. Financing The Company completed the issuance of $125 million of 9.875% Senior Subordinated Notes due 2008 (the "Notes") on March 4, 1998. Interest on the Notes is payable semi-annually on March 1 and September 1 of each year. The Notes will mature on March 1, 2008. The Notes are unsecured and will be redeemable, in whole or in part, at the option of the Company, on or after March 1, 2003. The terms of the Notes required the Company to suspend its cash dividend. The Company's credit agreement was amended on January 25, 2001 and March 31, 2001 to ease certain restrictive covenants, reduce the total bank commitment to $30.0 million and extend the expiration date of the Facility. The amendments provide that the Company may borrow, under its line of credit, an amount equal to 80% of qualified domestic accounts receivable. The current expiration of the Facility is March 31, 2002. The revolving credit agreement is collateralized by substantially all of the Company's non-real estate assets and by Rochester Gear, Inc.'s real estate. At March 31, 2001, the Company had borrowings outstanding of $8.5 million under such facility and borrowing availability of $11.0 million using the criteria established in the revolving credit agreement, as amended. Note 3. Inventory Inventories are summarized as follows:
March 31, December 31, 2001 2000 ---- ---- Cost and estimated earnings of uncompleted contracts in excess of related billings of $1,300 at 3/31/01 and $128 at 12/31/00 $ 4,387 $ 1,969 Raw materials 4,880 5,721 Work in process and finished goods 8,403 7,371 ---------- ---------- $ 17,670 $ 15,061 ========== ==========
Costs and estimated earnings of uncompleted contracts in excess of related billings represents revenue recognized under the percentage of completion method in excess of amounts billed. Note 4. Comprehensive Income Other comprehensive income for the three months ended March 31, 2001 and 2000 was zero, as the only component of other comprehensive income for these periods was the minimum pension liability adjustment which is determined on an annual basis at the end of each fiscal year. 5 6 Note 5. Segment Reporting The Company is organized into three business segments: the Precision Machined Products segment, the Rubber and Plastic segment and the Special Machines segment. The Precision Machined Products segment produces transmission, powertrain and engine components and assemblies for the automotive, medium and heavy-duty truck, and agricultural vehicle industries. The Rubber and Plastic segment produces cosmetic and functional seals and boots and functional engine compartment products primarily for the automotive industry. The Special Machines segment designs and manufactures welding, assembly, forming, heat treating and testing machinery and equipment for the automotive, appliance and other industries. Other is primarily composed of corporate activities. The accounting policies of the segments are the same as those of the Company. There are no intersegment sales and management does not allocate all corporate expenses to the segments. The Company evaluates the performance of its segments and allocates resources to them based on operating income from continuing operations. Information by operating segment is summarized below:
Precision Machined Rubber and Special Products Plastic Machines Other Total -------- ------- -------- ----- ----- Sales to unaffiliated customers Three months ended March 31, 2001 $ 32,778 $ 9,161 $ 3,858 $ 45,797 2000 49,877 13,261 6,041 69,179 Operating income Three months ended March 31, 2001 $ 365 $ (316) $ (179) $ (709) $ (839) 2000 3,410 1,242 1,019 (1,034) 4,637 Identifiable assets March 31, 2001 $ 121,459 $ 31,448 $ 13,197 $ 21,051 $ 187,155 December 31, 2000 122,945 31,117 15,059 20,191 189,312
A reconciliation of operating income for reportable segments to consolidated operating income is as follows:
Three Months Ended ------------------ March 31, March 31, 2001 2000 ---- ---- Operating income for reportable segments $ (130) $ 5,671 Other operating loss, mainly unallocated corporate and other expenses (709) (1,034) Amortization expense (1,034) (1,030) --------- ---------- Consolidated operating income (loss) $ (1,873) $ 3,607 ========== ==========
Note 6. Recent Pronouncement In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133). The Company adopted FAS 133 on January 1, 2001. Adoption of FAS 133 did not have a significant impact on the Company's financial statements. 6 7 Note 7. Condensed Consolidating Information The Notes and the Facility of Newcor, Inc. are guaranteed by all of its wholly-owned subsidiaries, including Grand Machining Co., Newcor Technologies, Inc, Deco International, Inc., Turn-Matic Inc., Rochester Gear, Inc., and Plastronics Plus, Inc (the Guarantor Subsidiaries). The guarantee of the Notes and the Facility by the Guarantor Subsidiaries is full and unconditional. The following condensed financial information presents the financial position, results of operations and cash flows of the Company as if it accounted for its subsidiaries on the equity method and the Guarantor Subsidiaries on a combined basis. Deferred income taxes are accounted for through intercompany accounts. 7 8 NEWCOR, INC. CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS QUARTER ENDED MARCH 31, 2001 (In thousands)
Guarantor Eliminations/ Parent Subsidiaries Adjustments Consolidated Sales $ 22,654 $ 23,143 $ - $ 45,797 Cost of sales 20,707 21,337 42,044 ---------- ---------- ---------- --------- Gross margin 1,947 1,806 3,753 Selling, general and administrative expense 2,723 1,869 4,592 Amortization expense 430 604 1,034 ---------- ---------- ---------- --------- Operating income (1,206) (667) (1,873) Other income (expense): Interest expense (3,576) (66) (3,642) Other professional fees (300) (300) Other (54) (85) (139) ---------- ---------- ---------- --------- Net loss before income taxes and equity in income of consolidated subsidiaries (5,136) (818) (5,954) Income tax benefit (1,747) (278) (2,025) ---------- ---------- ---------- --------- Net loss before equity in income of consolidated subsidiaries (3,389) (540) (3,929) Equity in income of consolidated subsidiaries (540) (540) ----------- ---------- ----------- --------- Net loss $ (3,929) $ (496) $ (496) $ (3,929) ========== ========== ========== =========
8 9 NEWCOR, INC. CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS QUARTER ENDED MARCH 31, 2000 (In thousands)
Guarantor Eliminations/ Parent Subsidiaries Adjustments Consolidated Sales $ 33,666 $ 35,513 $ - $ 69,179 Cost of sales 27,921 30,856 58,777 ---------- ---------- ---------- --------- Gross margin 5,745 4,657 10,402 Selling, general and administrative expense 3,637 2,128 5,765 Amortization expense 459 571 1,030 ---------- ---------- ---------- --------- Operating income 1,649 1,958 3,607 Other income (expense): Interest expense (3,650) (3,650) Other (68) (66) (134) ---------- ---------- ---------- --------- Income (loss) before income taxes and equity in income of consolidated subsidiaries (2,069) 1,892 (177) Income tax (benefit) provision (703) 643 (60) ---------- ---------- ---------- --------- Income (loss) before equity in income of consolidated subsidiaries (1,366) 1,249 (117) Equity in income of consolidated subsidiaries 1,249 (1,249) ---------- ---------- ---------- --------- Net income (loss) $ (117) $ 1,249 $ (1,249) $ (117) ========== ========== ========== =========
9 10 NEWCOR, INC. CONDENSED CONSOLIDATING BALANCE SHEETS MARCH 31, 2001 (In thousands)
Guarantor Eliminations/ Parent Subsidiaries Adjustments Consolidated Assets Current Assets: Cash and cash equivalents $ 361 $ - $ - $ 361 Accounts receivable 15,151 13,364 28,515 Inventories 10,235 7,435 17,670 Prepaid expenses and other 3,193 1,545 4,738 ---------- ---------- ---------- --------- Total current assets 28,940 22,344 51,284 Property, plant and equipment, net 24,490 28,336 52,826 Cost in excess of assigned value of acquired companies, net of amortization 27,216 39,562 66,778 Other non-current assets 15,991 276 16,267 Investment in subsidiaries 74,377 (74,377) ---------- ---------- ---------- --------- Total assets $ 171,014 $ 90,518 $ (74,377) $ 187,155 ========== ========== ========== ========= Liabilities Current Liabilities: Current portion of long-term debt $ 2,000 $ 312 $ - $ 2,312 Accounts payable 10,792 10,473 21,265 Other accrued liabilities 6,439 2,475 8,914 ---------- ---------- ---------- --------- Total current liabilities 19,231 13,260 32,491 Long-term debt 133,788 9,024 142,812 Intercompany 20,156 (20,156) - Other non-current liabilities 8,823 150 8,973 ---------- ---------- ---------- --------- Total liabilities 181,998 2,278 184,276 ---------- ---------- ---------- --------- Shareholders' Equity Common stock 5,019 5,019 Capital in excess of par 2,415 67,181 (67,181) 2,415 Accumulated other comprehensive income (223) (223) Retained earnings (17,706) 21,059 (7,196) (3,843) Treasury stock at cost (489) (489) ---------- ---------- ---------- --------- Total shareholders' equity (10,984) 88,240 (74,377) 2,879 ---------- ---------- ---------- --------- Total liabilities and shareholders' equity $ 171,014 $ 90,518 $ (74,377) $ 187,155 ========== ========== ========== =========
10 11 NEWCOR, INC. CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2000 (In thousands)
Guarantor Eliminations/ Parent Subsidiaries Adjustments Consolidated Assets Current Assets: Cash and cash equivalents $ 704 $ - $ - $ 704 Accounts receivable 21,059 12,160 33,219 Inventories 8,194 6,867 15,061 Prepaid expenses and other 2,448 1,465 3,913 ---------- ---------- ---------- --------- Total current assets 32,405 20,492 52,897 Property, plant and equipment, net 25,347 29,262 54,609 Cost in excess of assigned value of acquired companies, net of amortization 29,279 38,533 67,812 Other non-current assets 13,706 288 13,994 Investment in subsidiaries 91,377 (91,377) ---------- ---------- ---------- --------- Total assets $ 192,114 $ 88,575 $ (91,377) $ 189,312 ========== ========== ========== ========= Liabilities Current Liabilities: Current portion of long-term debt $ 2,000 $ 312 $ - $ 2,312 Accounts payable 12,948 9,526 22,474 Other accrued liabilities 11,063 2,638 13,701 ---------- ---------- ---------- --------- Total current liabilities 26,011 12,476 38,487 Long-term debt 125,833 9,110 134,943 Intercompany 34,841 (34,841) Other non-current liabilities 8,924 150 9,074 ---------- ---------- ---------- --------- Total liabilities 195,609 (13,105) 182,504 ---------- ---------- ---------- --------- Shareholders' Equity Common stock 5,019 5,019 Capital in excess of par 2,415 84,181 (84,181) 2,415 Accumulated other comprehensive income (223) (223) Retained earnings (10,217) 17,499 (7,196) 86 Treasury stock at cost (489) (489) ---------- ---------- ---------- --------- Total shareholders' equity (3,495) 101,680 (91,377) 6,808 ---------- ---------- ---------- --------- Total liabilities and shareholders' equity $ 192,114 $ 88,575 $ (91,377) $ 189,312 ========== ========== ========== =========
11 12 NEWCOR, INC. CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS QUARTER ENDED MARCH 31, 2001 (In thousands)
Guarantor Eliminations/ Parent Subsidiaries Adjustments Consolidated Cash used in operating activities $ (7,516) $ (212) $ - $ (7,728) ---------- ---------- ---------- --------- Investing Activities Capital expenditures (782) (342) (1,124) Proceeds from sale of capital assets 620 620 ---------- ---------- ---------- --------- Net cash provided by (used in) investing activities (782) 278 (504) ---------- ---------- ---------- --------- Financing Activities Net borrowings on revolving credit line 8,455 8,455 Payments on capital lease (66) (66) Repayment of term note (500) (500) ---------- ---------- ---------- --------- Net cash provided by financing activities 7,889 7,889 ---------- ---------- ---------- --------- Decrease in cash (343) (343) Cash and cash equivalents, beginning of year 704 704 ---------- ---------- ---------- --------- Cash and cash equivalents, end of year $ 361 $ - $ - $ 361 ========== ========== ========== =========
12 13 NEWCOR, INC. CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS QUARTER ENDED MARCH 31, 2000 (In thousands)
Guarantor Eliminations/ Parent Subsidiaries Adjustments Consolidated Cash provided by (used in) operating activities $ (10,520) $ 555 $ - $ (9,965) ---------- ---------- ---------- --------- Investing Activities Capital expenditures (385) (555) (940) ---------- ---------- ---------- --------- Net cash used in investing activities (385) (555) (940) ---------- ---------- ---------- --------- Financing Activities Net borrowings on revolving credit line 10,260 10,260 Repayment of term note (500) (500) Issuance of common stock 114 114 ---------- ---------- ---------- --------- Net cash provided by financing activities 9,874 9,874 ---------- ---------- ---------- --------- Decrease in cash (1,031) (1,031) Cash and cash equivalents, beginning of year 1,731 1,731 ---------- ---------- ---------- --------- Cash and cash equivalents, end of year $ 700 $ - $ - $ 700 ========== ========== ========== =========
13 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW Newcor, Inc. (the "Company") is organized into three business segments: the Precision Machined Products segment, the Rubber and Plastic segment and the Special Machines segment. The Precision Machined Products segment produces transmission, powertrain and engine components and assemblies for the automotive, medium and heavy-duty truck, and agricultural vehicle industries. The Rubber and Plastic segment produces cosmetic and functional seals and boots and functional engine compartment products primarily for the automotive industry. The Special Machines segment designs and manufactures welding, assembly, forming, heat treating and testing machinery and equipment for the automotive, appliance and other industries. RESULTS OF OPERATIONS Sales of $45.8 million for the quarter ended March 31, 2001 decreased $23.4 million, or 33.8%, as compared with sales of $69.2 million for the same quarter of 2000. Sales for the Precision Machined Products segment decreased $17.1 million, or 34.3%, to $32.8 million. This was primarily due to lower sales in the automotive market of $8.8 million, or 33.1% from the comparable period in the prior year. In addition, sales to the heavy-duty truck market declined $6.2 million, or 36.9%, to $10.7 million as compared to $16.9 million in the first quarter of 2000. Sales to the agricultural market declined $2.1 million or 28.2% to $5.3 million for the quarter ended March 31, 2001 compared to $7.4 million in the same quarter of 2000. In the automotive market the general industry decline accounted for $5.9 million and the loss of sales from certain OEM's accounted for $2.9 million. In both the heavy-duty truck and agricultural markets the lower sales were due to general industry conditions. Sales for the Rubber and Plastic segment decreased $4.1 million, or 30.9%, from the same quarter in 2000. Inventory adjustments at one automotive OEM customer accounted for most of this decline. Sales for the Special Machines segment decreased $2.2 million, or 36.1%, to $3.8 million from $6.0 million in the first quarter of 2000. At December 31, 1999 Special Machines segment had a backlog of $7.2 million compared with a backlog of $5.0 million at December 31, 2000 resulting in lower production in the first quarter of 2001. Gross margin was $3.8 million, or 8.2% of sales, for the quarter ended March 31, 2001 compared with $10.4 million, or 15.0% of sales, for the same period of 2000. The gross margin and gross margin percentage decrease is a direct result of the lower sales in all the markets the Company serves partially offset by productivity improvements. Productivity improvements are evidenced through a reduction in headcount of 26.6% in production related employees from March 31, 2000 to March 31, 2001. Gross margin for the quarter ended March 31, 2000 in the Precision Machined Products segment included one-time expense of $0.7 million incurred in the first quarter of 2000 for early settlement of a union contract. Selling, general and administrative expenses ("SG&A") was $4.6 million for the quarter ended March 31, 2001 and $5.8 million for the quarter ended March 31, 2000 a decrease of $1.2 million, or 20.7%. The decrease in SG&A expense was primarily due to cost savings measures taken throughout the Company, including elimination of certain consulting services, salaried headcount consolidations, and reduced management incentives. Selling, general and administrative headcount decreased 14.6% in the first quarter of 2001 from the same period of 2000. Consolidated operating loss for the first quarter of 2001 was $1.9 million, or 4.1% of sales, compared with operating income of $3.6 million, or 5.2% of sales for the same period one year ago. The decrease in operating income was due primarily to the decrease in gross margin noted above offset by the lower SG&A costs also noted above. Operating income for the Precision Machined Products segment was $0.4 in the quarter ended March 31, 2001 compared with $3.4 million in the same period of 2000. The decrease in operating was primarily due to loss of sales in the heavy-duty truck market. Operating loss for the Rubber and Plastic segment was $0.3 million in the quarter ended March 31, 2001 compared to operating income of $1.2 million in the same period of 2000. The decrease in operating income is primarily due to the decline in automotive market sales. Operating loss for the Special Machines segment was $0.2 in the quarter ended March 31, 2001 compared with operating income of $1.1 million in the same period of 2000. The decrease in operating income was primarily due to the decrease revenue and the profitability of contracts in progress within with segment. 14 15 LIQUIDITY AND CAPITAL RESOURCES The Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") were $1.4 million for the quarter ended March 31, 2001. On March 1, 2001, the Company paid $6.1 million of interest related to the semi-annual payment on the $125 million of 9.875% Senior Subordinated Notes due 2008 (the "Notes"). In addition, the Company's capital expenditures for the quarter ended March 31, 2001 were $1.1 million. The Company generated net cash of $0.8 million from accounts receivable, inventory and accounts payable during the first quarter of 2001. The Company had borrowings of $8.5 million at March 31, 2001 on its Senior Credit Facility and current borrowing availability of an additional $11.0 million. The Company is highly leveraged as a result of the Notes. The Company's ability to make scheduled payments of principal of, or to pay the interest on, or to refinance, its indebtedness (including the Notes) or to fund planned capital expenditures will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. In order to ensure that the benefit of tax carryovers and credits are realized, the Company has identified certain business strategies, which would be used to generate taxable income. Although the Company believes that the identified strategies are both prudent and feasible, there can no assurance that such strategies, if and when implemented, will be effective and thus may not result in realization of the deferred tax asset. If due to changing circumstances it is determined the strategy will not produce the intended result, a valuation allowance will be established in the period in which such determination is made. The Company believes that, through a combination of cash flow from operations and available credit under the Facility it will have adequate cash available to service debt obligations, fund capital improvements and maintain adequate working capital. However, there can be no assurance that given further deterioration in our markets or in the operational performance of the Company or due to circumstances beyond the control of the Company that sufficient liquidity will be available in the future. CAUTIONARY STATEMENTS UNDER THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements contained in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section constitute "forward-looking statements" within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from those included in or suggested by such forward-looking statements, including without limitation: the cyclical nature of the industries served by the Company, all of which have encountered significant downturns in the past; the level of production by and demand from the Company's principal customers, upon which the Company is substantially dependent, including the three major domestic automobile manufacturers, American Axle, Inc., Deere & Company and Detroit Diesel, Inc.; whether, when and to what extent expected orders materialize; the impact on the Company of actions by its competitors, some of which are significantly larger and have greater financial and other resources than the Company. All forward-looking statements in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section are qualified by such factors. The Company disclaims any obligation to update any such forward-looking statements. 15 16 NEWCOR, INC. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits None. (b) Reports on Form 8-K None. 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. NEWCOR, INC. ---------------------------- Registrant Date: May 10, 2001 /s/ James J. Connor ---------------------------- James J. Connor President and Chief Executive Officer 16