-----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, L9W8GcfKneMH2vIrgdhOx7xIOXgSnj122LoqlaSnSNRKsGiRENTAQPNvE1JyCNmP eIPo7ADHgJY2wwO3iWRoWA== 0000897101-98-000841.txt : 19980817 0000897101-98-000841.hdr.sgml : 19980817 ACCESSION NUMBER: 0000897101-98-000841 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUND INTERNATIONAL HOLDINGS INC CENTRAL INDEX KEY: 0000820526 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 411568618 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16319 FILM NUMBER: 98688439 BUSINESS ADDRESS: STREET 1: 911 LUND BLVD CITY: ANOKA STATE: MN ZIP: 55303 BUSINESS PHONE: 6127802520 MAIL ADDRESS: STREET 2: 911 LUND BLVD CITY: ANOKA STATE: MN ZIP: 55303 FORMER COMPANY: FORMER CONFORMED NAME: LUND ENTERPRISES INC DATE OF NAME CHANGE: 19891019 FORMER COMPANY: FORMER CONFORMED NAME: FLEX CORP /DE/ DATE OF NAME CHANGE: 19880218 10-Q 1 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 June 30, 1998 [ ] 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 0-16319 LUND INTERNATIONAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 41-1568618 (State or other jurisdiction (I.R.S. Employer of organization) Identification No.) 911 LUND BOULEVARD ANOKA, MINNESOTA 55303 Registrant's telephone number, including area code: (612) 576-4200 (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 the 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the latest practicable date. As of August 13, 1998, 5,263,370 shares of the registrant's common stock, $.10 par value, and 1,493,398 shares of the Company's Class B-1 common stock, $.01 par value, were issued and outstanding. LUND INTERNATIONAL HOLDINGS, INC. QUARTERLY REPORT ON FORM 10-Q INDEX Page Number ------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets 1-2 at June 30, 1998 (Unaudited) and December 31, 1997 Consolidated Statements of Operations (Unaudited) 3 Three months ended June 30, 1998 and 1997 Consolidated Statements of Operations (Unaudited) 4 Six months ended June 30, 1998 and 1997 Consolidated Statements of Cash Flows (Unaudited) 5 Six months ended June 30, 1998 and 1997 Notes to Condensed Consolidated Financial Statements (Unaudited) 6-8 Report of Independent Accountants 9 Item 2. Management's Discussion and Analysis of Financial 10-18 Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 6. Exhibits and Reports on Form 8-K 20 Signatures 21 PART I. FINANCIAL INFORMATION Item 1. Financial Statements LUND INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands) June 30, December 31, 1998 1997 ----------- ----------- (unaudited) ASSETS Current assets: Cash and temporary cash investments $ 1,650 $ 6,790 Restricted cash 445 1,123 Accounts receivable, net 23,394 21,450 Inventories 16,913 17,994 Deferred income taxes 3,168 3,517 Other current assets 3,115 1,591 -------- -------- Total current assets 48,685 52,465 Property and equipment, net 20,410 20,621 Intangibles, net 67,599 68,778 Restricted cash and marketable securities 554 595 Other assets 2,079 1,568 -------- -------- Total assets $139,327 $144,027 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. 1 LUND INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED ($ in thousands, except per share data) June 30, December 31, 1998 1997 --------- ----------- (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, trade $ 7,347 $ 7,521 Accrued expenses 6,982 15,786 Long-term debt, current portion 3,165 1,700 --------- --------- Total current liabilities 17,494 25,007 Long-term debt, less current portion 56,970 52,927 Deferred income taxes 2,289 2,352 Other liabilities 129 1,227 --------- --------- Total liabilities 76,882 81,513 --------- --------- Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; authorized 2,000 shares; 1,493 issued and outstanding at December 31, 1997 -- 15 Common stock, $.10 par value; authorized 25,000 shares; 5,263 issued and outstanding at June 30, 1998, and 5,268 issued and outstanding at December 31, 1997 526 527 Class B common stock, $.01 par value; authorized 3,000 shares; 1,493 issued and outstanding at June 30, 1998 15 -- Additional paid-in capital 30,857 30,884 Unearned deferred compensation -- (57) Retained earnings 31,047 31,145 --------- --------- Total stockholders' equity 62,445 62,514 --------- --------- Total liabilities and stockholders' equity $ 139,327 $ 144,027 ========= ========= The accompanying notes are an integral part of the consolidated financial statements. 2 LUND INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ($ in thousands, except per share data) Three Months Ended June 30, 1998 1997 -------- -------- Net sales $ 29,897 $ 12,112 Cost of goods sold 20,603 7,898 -------- -------- Gross profit 9,294 4,214 -------- -------- Operating expenses General and administrative 2,940 1,075 Selling and marketing 3,413 1,790 Research and development 694 333 Amortization of intangibles 586 31 -------- -------- Total operating expenses 7,633 3,229 -------- -------- Income from operations 1,661 985 -------- -------- Other income (expense) Interest expense (1,377) (79) Interest income 26 187 Other, net (15) (3) -------- -------- Other income (expense), net (1,366) 105 -------- -------- Income before income taxes 295 1,090 Income tax expense 132 286 -------- -------- Net income $ 163 $ 804 ======== ======== Net income per share: Basic $ 0.03 $ 0.18 ======== ======== Diluted $ 0.02 $ 0.18 ======== ======== Weighted average common shares 6,412 4,376 ======== ======== Weighted average common and common equivalent shares 6,761 4,394 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. 3 LUND INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ($ in thousands, except per share data) Six Months Ended June 30, 1998 1997 -------- --------- Net sales $ 57,082 $ 22,553 Cost of goods sold 39,824 14,809 -------- -------- Gross profit 17,258 7,744 -------- -------- Operating expenses General and administrative 5,507 2,207 Selling and marketing 6,689 3,267 Research and development 1,450 659 Amortization of intangibles 1,167 62 -------- -------- Total operating expenses 14,813 6,195 -------- -------- Income from operations 2,445 1,549 -------- -------- Other income (expense) Interest expense (2,725) (151) Interest income 81 355 Other, net (13) (35) -------- -------- Other income (expense), net (2,657) 169 -------- -------- Income (loss) before income taxes (212) 1,718 Income tax expense (benefit) (114) 447 -------- -------- Net income (loss) $ (98) $ 1,271 ======== ======== Net income per share: Basic $ (0.02) $ 0.29 ======== ======== Diluted $ (0.02) 0.29 ======== ======== Weighted average common shares 5,841 4,375 ======== ======== Weighted average common and common equivalent shares 5,841 4,394 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. 4 LUND INTERNATIONAL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ($ in thousands)
Six Months Ended June 30, 1998 1997 --------- --------- Cash flows from operating activities: Net (loss) income $ (98) $ 1,271 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation 1,762 544 Amortization 1,371 123 Deferred income taxes 286 72 Provision for (reduction in) doubtful accounts 126 (43) Provision for obsolete inventories 74 69 Other 50 1 Changes in operating assets and liabilities: Accounts receivable (1,869) (365) Inventories 417 381 Other assets (1,279) 155 Accounts payable, trade (896) (73) Accrued expenses (6,480) 86 Other liabilities (41) -- -------- -------- Net cash (used in) provided by operating activities (6,577) 2,221 -------- -------- Cash flows from investing activities: Purchase of Deflecta-Shield common stock (2,840) -- Purchases of property and equipment (1,602) (572) Change in restricted cash and marketable securities 719 (285) Purchase of marketable securities -- (6,877) Proceeds from sales and redemptions of marketable securities -- 5,290 Other investing activities -- (119) -------- -------- Net cash used in investing activities (3,723) (2,563) -------- -------- Cash flows from financing activities: Principal payments on long-term debt (48,994) -- Proceeds from long-term debt 54,502 -- Change in book overdraft 853 -- Proceeds from issuance of common stock -- 11 Payment of other liabilities (140) (69) Debt issuance costs (1,061) -- -------- -------- Net cash provided by (used in) financing activities 5,160 (58) -------- -------- Net decrease in cash and temporary cash investments (5,140) (400) Cash and temporary cash investments: Beginning of period 6,790 678 -------- -------- End of period $ 1,650 $ 278 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 5 LUND INTERNATIONAL HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in thousands except per share amounts) A - Principles of Consolidation The accompanying consolidated financial statements include the accounts of Lund International Holdings, Inc. and its wholly-owned subsidiaries, Deflecta-Shield Corporation (and its subsidiaries), Lund Industries, Incorporated, Lund Acquisition Corp., and Lund FSC, Inc. (collectively referred to as "Holdings" or the "Company"). The consolidated balance sheet as of June 30, 1998, the consolidated statements of operations for the three and six months ended June 30, 1998 and 1997, and the consolidated statements of cash flows for the six months ended June 30, 1998 and 1997 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. The results of operations for any interim period are not necessarily indicative of results for the full year. The December 31, 1997 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. These financial statements should be read in conjunction with the Company's audited consolidated financial statements and related notes for the six month period ended December 31, 1997, which were included in the Company's Transition Annual Report on Form 10-K for the six month period ended December 31, 1997. The financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in the Company's annual financial statements and notes. B - Acquisition of Deflecta-Shield Corporation Effective December 30, 1997, Holdings, through a wholly-owned subsidiary, acquired Deflecta-Shield Corporation ("Deflecta-Shield"), a manufacturer of fiberglass, plastic and aluminum appearance accessories and supplier of suspension systems for light trucks. Deflecta-Shield also supplies accessories to the heavy truck market. The aggregate purchase price of $78,919 represents cash paid of $76,800 for 100% of the outstanding shares of Deflecta-Shield common stock at $16 per share and direct acquisition costs of $2,119. As of December 31, 1997, the Company had paid $75,879 in cash to acquire 98.8% of the outstanding shares of Deflecta-Shield. During the three months ended March 31, 1998, the Company made payments of $2,840 to purchase the remaining 1.2% of Deflecta-Shield common stock and related direct acquisition costs. In connection with the acquisition, the Company obtained $42,000 in bridge financing in the form of a tender loan facility to acquire 98.8% of the outstanding shares of Deflecta-Shield. On February 27, 1998, Holdings refinanced its tender loan facility with a new consolidated $87,000 loan facility. The consolidated loan facility includes two long-term notes totaling $41,600, a revolving credit facility of $30,000 and an acquisition facility of $15,000. 6 LUND INTERNATIONAL HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in thousands except per share amounts) The following selected unaudited pro forma information is being provided to present a summary of the combined results of Lund and Deflecta-Shield as if the acquisition had occurred as of January 1, 1997, giving effect to purchase accounting adjustments. The pro forma data is for informational purposes only and may not necessarily reflect the results of operations of Holdings had the acquired business operated as part of the Company for the period presented. Three Months Ended Six Months Ended June 30, 1997 June 30, 1997 ------- ------- Net sales $30,537 $57,871 Net income 736 768 Basic and diluted net income per share .17 .18 C - Inventories Inventories consisted of the following: June 30, December 31, 1998 1997 ------- ------- Raw materials $ 9,210 $ 9,949 Finished goods and work in process 7,703 8,045 ======= ======= $16,913 $17,994 ======= ======= D - Earnings per Share Effective December 31, 1997, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share", and has disclosed basic and diluted net income (loss) per share for the three and six months ended June 30, 1998 and 1997, in accordance with this standard. The Company incurred a net loss for the six months ended June 30, 1998 and, accordingly, excluded common equivalent shares from the diluted earnings per share computation as their effect is anti-dilutive. The Company was profitable for the three months ended June 30, 1998 and 1997 and the six months ended June 30, 1997, consequently, the calculation of diluted income per share includes 349,000, 18,000 and 19,000, respectively, of common equivalent shares representing the dilutive impact of stock options. At June 30, 1998, the Company had 737,000 stock options outstanding that may be dilutive in future periods. E - Contingencies Discussion of legal matters is cross-referenced to this Form 10-Q, Part II, Item 1, Legal Proceedings and should be considered an integral part of the consolidated financial statements and notes thereto. 7 LUND INTERNATIONAL HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in thousands except per share amounts) F - New Accounting Standards In the first quarter of 1998, the Company adopted SFAS No. 130, "Reporting of Comprehensive Income". This standard requires the display and reporting of comprehensive income, which includes all changes in stockholders' equity with the exception of additional investments by or distributions to stockholders. Comprehensive income for the Company includes net income (loss), and the changes in unrealized holding gains (losses) on marketable securities that are charged or credited to the respective account within stockholders' equity. Comprehensive income for the three and six months ended June 30, 1998 and 1997 was as follows (in thousands):
Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 ------ ------ ------ ------ Net (loss) income $ 163 $ 804 $ (98) $1,271 Changes in unrealized holding gains on marketable securities 0 23 0 25 ------ ------ ------ ------ Comprehensive (loss) income $ 163 $ 827 $ (98) $1,296 ====== ====== ====== ======
The Financial Accounting Standards Board issued SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information". SFAS No. 131 establishes standards for reporting operating segment information in both annual reports and interim financial reports issued to shareholders. The Company is reviewing the requirements of SFAS No. 131, but has not determined if it will present segment information beyond the one segment currently presented. SFAS No. 131 is required to be adopted effective with year-end 1998 reporting. G - Stock Transaction In April 1998, the 1,493,398 of Series A Preferred Stock outstanding at December 31, 1997 was converted on a one-to-one basis to Class B-1 common stock. H - Credit Agreement As of June 30, 1998, the Company was not in compliance with one of the financial covenants of its credit agreement between the Company and Heller Financial, Inc. ("Lender"). The Company has received a waiver from the Lender for the covenant violation. * * * * * PricewaterhouseCoopers LLP, the Company's independent accountants, have performed a review of the unaudited interim consolidated financial statements included herein and their report thereon accompanies this filing. 8 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Lund International Holdings, Inc.: We have reviewed the accompanying condensed consolidated balance sheet of Lund International Holdings, Inc. (the Company) as of June 30, 1998, the related consolidated statements of operations for the three months and six months ended June 30, 1998 and 1997, and consolidated statements of cash flows for the six months ended June 30, 1998 and 1997. These consolidated financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for the financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1997, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the six month period then ended (not presented herein); and in our report dated March 17, 1998, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1997, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ PRICEWATERHOUSECOOPERS LLP PRICEWATERHOUSECOOPERS LLP Minneapolis, Minnesota July 29, 1998 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL OVERVIEW: Lund International Holdings, Inc. ("Holdings" or the "Company"), through its wholly-owned subsidiaries, Lund Industries, Incorporated ("Lund") and Deflecta-Shield Corporation and its subsidiaries ("Deflecta-Shield"), designs, manufactures, markets and distributes appearance automotive aftermarket accessories and other products for light trucks, sport utility vehicles and vans ("light trucks") and for heavy trucks. The products directed at the light truck market include visors, bug shields/hood protectors, running boards, tonneau covers and other appearance accessories. In addition, Deflecta-Shield is a leading original equipment manufacturer ("OEM") of accessories for the light truck and heavy truck markets and also supplies suspension systems for light trucks. The Company acquired 98.8% of the outstanding common stock of Deflecta-Shield in December 1997 and the balance of its shares in February 1998 (the "Acquisition"). The Company paid $76.8 million for the outstanding shares of Deflecta-Shield, approximately $2.1 million for direct transaction costs, and $9.4 million to retire Deflecta-Shield's long-term debt. The Acquisition was accounted for under the purchase method of accounting, which required the Company to recognize a $572,000 increase in cost of goods sold in the first quarter of 1998 to reflect the write-up of Deflecta-Shield's finished goods and work-in-process acquired by the Company. Effective January 1, 1998, the Company began reporting consolidated results of operations, which include the results of Deflecta-Shield's operations. In connection with the Acquisition, the Company entered into a credit facility syndicated to ten financial institutions for an aggregate of $87 million. At June 30, 1998, the Company had drawn down $41.6 million outstanding against the term loan component and $14.14 million against the $30 million revolver component of the credit facility. The credit facility also includes an acquisition facility of $15 million. In September 1997, the Company's Board of Directors approved a change in fiscal year end from June 30 to December 31. RESULTS OF OPERATIONS: (In thousands, except earnings per share) Certain pro forma information is included for comparative purposes. The pro forma information assumes the Acquisition was completed on January 1, 1997. 10 The following tables set forth the percentage relationship to net sales of certain items in the Company's consolidated statements of operations for the periods indicated:
Three Months Ended ----------------------------------------------------------------------------------------------- June 30, 1998 June 30, 1997 Pro Forma June 30, 1997 ----------------------------- ----------------------------- ---------------------------- Net sales $ 29,897 100.0% $ 12,112 100.0% $30,537 100.0% Gross profit 9,294 31.1 4,214 34.8 10,496 34.4 General and administrative 2,940 9.8 1,075 8.9 2,721 8.9 Selling and marketing 3,413 11.4 1,790 14.8 3,718 12.2 Research and development 694 2.3 333 2.7 641 2.1 Amortization of intangibles 586 2.0 31 0.3 601 2.0 Income from operations 1,661 5.6 985 8.1 2,815 9.2 Other income (expense), net (1,366) (4.6) 105 0.9 (1,366) (4.5) Income tax (benefit) expense 132 0.4 286 2.4 713 2.3 Net (loss) income 163 0.5 804 6.6 736 2.4 Six Months Ended ----------------------------------------------------------------------------------------------- June 30, 1998 June 30, 1997 Pro Forma June 30, 1997 ----------------------------- ----------------------------- ---------------------------- Net sales $ 57,082 100.0% $ 22,553 100.0% $57,871 100.0% Gross profit 17,258 30.2 7,744 34.3 18,976 32.8 General and administrative 5,507 9.6 2,207 9.8 5,490 9.5 Selling and marketing 6,689 11.7 3,267 14.5 6,892 11.9 Research and development 1,450 2.5 659 2.9 1,259 2.2 Amortization of intangibles 1,167 2.0 62 0.3 1,221 2.1 Income from operations 2,445 4.3 1,549 6.9 4,114 7.1 Other income (expense), net (2,657) (4.7) 169 0.7 (2,602) (4.5) Income tax (benefit) expense (114) (0.2) 447 2.0 744 1.3 Net (loss) income (98) (0.2) 1,271 5.6 768 1.3 The following tables set forth the Company's net sales by product line: Three Months Ended ----------------------------------------------------------------------------------------------- June 30, 1998 June 30, 1997 Pro Forma June 30, 1997 ----------------------------- ----------------------------- ---------------------------- Hood Shields/Bug Deflectors $ 7,734 25.9% 3,164 26.1% $ 8,544 28.0% Running Boards 3,618 12.2 2,487 20.6 4,645 15.2 External Visors 3,028 10.1 3,223 26.6 3,461 11.3 Suspension Products 2,908 9.7 N/A N/A 2,546 8.3 Tool Boxes 2,494 8.3 N/A N/A 1,253 4.1 Tonneau Covers 1,264 4.2 925 7.6 1,240 4.1 Other External Light Truck Appearance Accessories 4,401 14.7 2,313 19.1 5,194 17.0 Heavy Truck 4,450 14.9 N/A N/A 3,654 12.0 -------- ----- -------- ----- -------- ----- Total $ 29,897 100.0% $ 12,112 100.0% $ 30,537 100.0% ======== ===== ======== ===== ======== =====
11
Six Months Ended ----------------------------------------------------------------------- June 30, 1998 June 30, 1997 Pro Forma June 30, 1997 ---------------------- ------------------- ----------------------- Hood Shields/Bug Deflectors $ 14,324 25.1% $ 5,387 23.9% $ 14,873 25.7% Running Boards 7,335 12.9 4,618 20.5 9,491 16.4 External Visors 6,420 11.2 6,569 29.1 6,980 12.1 Suspension Products 5,425 9.5 N/A N/A 5,275 9.1 Tool Boxes 4,791 8.4 N/A N/A 2,739 4.7 Tonneau Covers 2,382 4.2 1,538 6.8 2,102 3.6 Other External Light Truck Appearance Accessories 7,993 14.0 4,441 19.7 9,494 16.4 Heavy Truck 8,412 14.7 N/A N/A 6,917 12.0 -------- ----- -------- ----- -------- ----- Total $ 57,082 100.0% $ 22,553 100.0% $ 57,871 100.0% ======== ===== ======== ===== ======== =====
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997 (ACTUAL AND PRO FORMA): NET SALES: Net sales for the three month period ended June 30, 1998 were $29,897, an increase of $17,785 over net sales of $12,112 for the three month period ended June 30, 1997, reflecting the consolidation of Deflecta-Shield's results in 1998. Compared to 1997 pro forma, net sales for the three month period ended June 30, 1998 decreased $640, or 2.1%. Net sales of heavy truck products, aluminum products, suspension systems, and OEM products increased $3,014, or 25.8%, while net sales of custom and aftermarket plastic and fiberglass products were $3,654, or 19.4%, below last year's pro forma comparable period. The majority of plastic and fiberglass products were below the comparable pro forma period with the largest product line shortfall in fiberglass running boards. The decline in the plastic and fiberglass product lines corresponded to a drop in sales to warehouse distributors that are realizing more competition from original equipment manufactures and retail chains. During the same period, net sales of toolboxes and heavy truck products were up 99.0% and 21.8%, respectively, as a result of new product lines and new customers. COST OF GOODS SOLD AND GROSS PROFIT: The gross profit margin for the three months ended June 30, 1998 was 31.1% compared to 34.8% for the three months ended June 30, 1997. The gross profit margin for the three months ended June 30, 1997 on a pro forma basis was 34.4%. The 3.3 percentage points decrease in gross margin in 1998 compared to pro forma 1997 was attributable to product promotions for aftermarket plastic and fiberglass products, a shift in product sales mix, raw material and labor rate increases, absorbing fixed warehouse, distribution, and manufacturing costs that do not immediately decrease with a corresponding drop in sales, and the added costs of new facilities in Illinois and Indiana. GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses were $2,940, or 9.8% of net sales for the three month period ended June 30, 1998, compared to $1,075 or 8.9% of net sales for the comparable three month period ended June 30, 1997. On a pro forma basis for 1997, general and administrative expenses were $2,721 or 8.9% of net sales. The increase of $219 for the three months ended June 30, 1998 over the 1997 comparable pro forma period was due to salary increases, training and implementation of a new information system, personnel recruiting and relocations, relocation of the Oklahoma tonneau production to Illinois, and a contractual indemnification of a legal judgment against a former shareholder on the sale of his stock. These increases have been partially offset by reduced professional fees and bonuses. 12 SELLING AND MARKETING EXPENSES: Selling and marketing expenses were $3,413 or 11.4% of net sales for the three month period ended June 30, 1998, compared to $1,790, or 14.8% of net sales, for the three month period ended June 30, 1997. Selling and marketing expenses were $3,718, or 12.2% of net sales for the 1997 comparable pro forma period. The decrease of $305 in 1998 from the 1997 pro forma period is the result of reductions in variable selling expenses such as cooperative customer advertising and commissions that decreased proportionately with a commensurate drop in aftermarket plastic and fiberglass net sales. RESEARCH AND DEVELOPMENT EXPENSES: Research and development expenses were $694, or 2.3% of net sales for the three months ended June 30, 1998, compared to $333 or 2.7% of net sales for the three month period ended June 30, 1997. On a pro forma basis, research and development expenses were $641, or 2.1% of net sales for the three months ended June 30, 1997. The increase of $53 between the three month period ended June 30, 1998 and the pro forma three month period ended June 30, 1997 was due to increased personnel and development costs for new products and applications. AMORTIZATION OF INTANGIBLES: Amortization expense was $586 for the three month period ended June 30, 1998, compared to $31 for the three month period ended June 30, 1997. On a pro forma basis, amortization was $601 for the three months ended June 30, 1997. The increase in amortization in 1998 and pro forma 1997 over actual 1997 reflects the increased goodwill associated with the Acquisition. OTHER INCOME (EXPENSE), NET: Other income (expense), net, was $1,366 of expense for the three month period ended June 30, 1998, compared to $105 of income for the three month period ended June 30, 1997. On a pro forma basis for 1997, other income (expense), net, was $1,366 of expense. The increase in expense in 1998 and pro forma 1997 over actual 1997 reflects the increased interest on borrowings related to the Acquisition and the reduction of interest income due to the use of the Company's cash reserves to help fund the Acquisition. INCOME TAX EXPENSE (BENEFIT): The Company recorded a tax expense for the three months ended June 30, 1998, resulting in an effective income tax rate of 44.7% compared to 26.2% for the three months ended June 30, 1998. The Company's effective tax rate is substantially higher than the comparable prior period and higher than the statutory federal income tax rate of 34% due to amortization of non-deductible goodwill recorded in connection with the Acquisition and the elimination of tax exempt interest generated from marketable securities in the prior year. NET INCOME PER SHARE: The Company's net income for the three months ended June 30, 1998 decreased $641 to $163, or $.02 per share, from a net income of $804, or $.18 per share, for the three months ended June 30, 1997. On a pro forma basis, net income was $736, or $.17 per share, for the comparable period of 1997. 13 SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997 (ACTUAL AND PRO FORMA): NET SALES: Net sales for the six month period ended June 30, 1998 were $57,082, an increase of $34,529 over net sales of $22,553 for the six month period ended June 30, 1997, reflecting the consolidation of Deflecta-Shield's results in 1998. Compared to 1997 pro forma, net sales for the six month period ended June 30, 1998 decreased $789, or 1.4%. While net sales improved by $4,848, or 21.2%, in heavy truck products, aluminum products, suspension systems, and OEM products, net sales of custom and aftermarket plastic and fiberglass products were $5,637, or 16.1%, below last year's pro forma comparable period. The majority of plastic and fiberglass products were below the comparable pro forma period with the largest decline in fiberglass running boards. The decline in the plastic and fiberglass product lines corresponded to a drop in sales to warehouse distributors that are realizing more competition from original equipment manufactures and retail chains. During the same period, net sales of toolboxes and heavy truck products were up 74.9% and 21.6%, respectively, as a result of new product lines and new customers. COST OF GOODS SOLD AND GROSS PROFIT: The gross profit margin for the six months ended June 30, 1998 was 30.2% compared to 34.3% for the six months ended June 30, 1997. The gross profit margin for the six months ended June 30, 1997 on a pro forma basis was 32.8%. The 2.6 percentage points decrease in gross margin in 1998 compared to pro forma 1997 was attributable to product promotions for aftermarket plastic and fiberglass products, absorbing fixed warehouse, distribution, and manufacturing costs that do not immediately decrease with a corresponding drop in sales, added costs of new facilities, and the incremental impact of inventory write-offs from recording inventories at fair market value as a result of the acquisition and merger with Deflecta-Shield. GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses were $5,507, or 9.6% of net sales for the six month period ended June 30, 1998, compared to $2,207 or 9.8% of net sales for the comparable six month period ended June 30, 1997. On a pro forma basis for 1997, general and administrative expenses were $5,490, or 9.5% of net sales. The slight increase of $17 for the six months ended June 30, 1998 over the 1997 comparable pro forma period is due to salary increases, training and implementation of a new information system, personnel recruiting and relocations, relocation of the Oklahoma tonneau production to Illinois, and a contractual indemnification of a legal judgment against a former shareholder on the sale of his stock. These increases have been partially offset by reductions in expenses for professional fees, headcount, and bonuses. SELLING AND MARKETING EXPENSES: Selling and marketing expenses were $6,689 or 11.7% of net sales for the six month period ended June 30, 1998, compared to $3,267, or 14.5% of net sales for the six month period ended June 30, 1997. Selling and marketing expenses were $6,892, or 11.9% of net sales for the 1997 comparable pro forma period. The decrease in 1998 of $203 from the 1997 pro forma period was the result of reductions in variable selling expenses such as cooperative customer advertising and commissions that decrease proportionately with sales volumes primarily in aftermarket plastic and fiberglass net sales. 14 RESEARCH AND DEVELOPMENT EXPENSES: Research and development expenses were $1,450, or 2.5% of net sales for the six months ended June 30, 1998, compared to $659 or 2.9% of net sales for the six month period ended June 30, 1997. On a pro forma basis, research and development expenses were $1,259, or 2.2% of net sales for the six months ended June 30, 1997. The increase of $191 between the six month period ended June 30, 1998 and the pro forma six month period ended June 30, 1997 was due to increased personnel and development costs for new products and applications. AMORTIZATION OF INTANGIBLES: Amortization expense was $1,167 for the six month period ended June 30, 1998, compared to $62 for the six month period ended June 30, 1997. On a pro forma basis, amortization was $1,221 for the six months ended June 30, 1997. The increase in amortization in 1998 and pro forma 1997 over actual 1997 reflects the increased goodwill associated with the Acquisition. OTHER INCOME (EXPENSE), NET: Other income (expense), net, was $2,657 of expense for the six month period ended June 30, 1998, compared to $169 of income for the six month period ended June 30, 1997. On a pro forma basis for 1997, other income (expense), net, was $2,602 of expense. The increase in expense in 1998 and pro forma 1997 over actual 1997 reflects the increased interest on borrowings related to the Acquisition and the reduction of interest income due to the use of the Company's cash reserves to help fund the Acquisition. INCOME TAX EXPENSE (BENEFIT): The Company recorded a tax benefit for the six months ended June 30, 1998, resulting in an effective income tax rate of 53.8% compared to 26.0% for the six months ended June 30, 1998. The Company's effective tax rate is substantially higher than the comparable prior period and higher than the statutory federal income tax rate of 34.0% due to amortization of non-deductible goodwill recorded in connection with the Acquisition and the elimination of tax exempt interest generated from marketable securities in the prior year. NET INCOME PER SHARE: The Company's net income for the six months ended June 30, 1998 decreased $1,369 to a net loss of $98, or $.02 per share, from a net income of $1,271, or $.29 per share, for the six months ended June 30, 1997. On a pro forma basis, net income was $768, or $.18 per share, for the comparable period of 1997. LIQUIDITY AND CAPITAL RESOURCES: Cash used in operating activities for the six months ended June 30, 1998 was $6,577 compared to cash provided by operating activities of $2,221 for the six months ended June 30, 1997. The significant cash used in operating activities in 1998 reflects the net loss for the six months and the payment of Acquisition related liabilities in 1998, such as the settlement of Deflecta-Shield stock options and acquisition fees. Cash used in investing activities were $3,723 and $2,563 for the six months ended June 30, 1998 and 1997, respectively. The 1998 amount principally reflects aggregate payments of $2,840 to purchase the remaining 1.2% of Deflecta-Shield common stock on February 27, 1998 and the payment of direct acquisition costs. In addition, the Company purchased property and equipment of $1,602 in the first six months of 1998. 15 Net cash provided by financing activities for the six months ended June 30, 1998 was $5,150. Cash provided by financing activities reflected the increased borrowings under the Company's $87,000 loan facility to pay off its "interim" or "short-term" tender loan facilities and Deflecta-Shield's revolving credit loan, and finance the remaining Acquisition costs and Acquisition-related expenses. The Company expects to fund its operations through operating cash flow and the use of a $30,000 revolving credit line based on an eligible percentage of inventories and receivables. As of June 30, 1998, the Company had borrowed $14,140 and had availability of $15,860 under the credit facility. The Company believes that its revolving credit facility and operating cash flows will be sufficient to satisfy its working capital requirements, required debt principal payments and operating capital expenditures. As of June 30, 1998, the Company was not in compliance with one of the financial covenants of its credit agreement between the Company and Heller Financial, Inc. ("Lender"). The Company has received a waiver from the Lender for the covenant violation. The Company anticipates that certain financial covenants will be modified prior to the end of third quarter 1998. In addition, individual acquisitions of less than $5,000 can be financed under the $15,000 Acquisition line. For any significant future acquisitions or capital expenditures, the Company will be required to raise funds through re-negotiation of the current facility, a new credit facility or new equity offerings. While the Company remains committed to continued growth through acquisitions and continues to evaluate acquisitions, the Company currently is not actively engaged in negotiations regarding any acquisitions. In July 1998, the Company issued a press release announcing that it will construct a 104,000 square foot addition to its corporate headquarters in Anoka, Minnesota with a completion date in early 1999. The expansion which will be financed from its revolving credit facility at a cost of approximately $4.2 million will allow for the consolidation of its 130,000 square foot distribution facility currently located in Indianola, Iowa. The Company is currently underway with the necessary software conversion and programming modifications to comply with the Year 2000 computer software issues for significant portions of its software and computer systems. Costs to be incurred for Year 2000 compliant systems were estimated at approximately $700,000 over 1998 and 1999 of which a portion will be capitalized and the remainder charged to earnings in the respective years. The Company does not expect these activities to materially impact earnings. OUTLOOK: The acquisition of Deflecta-Shield brings to the Company significant new product lines and operational strengths to address new market channels. Historically, Lund had distributed its products principally through warehouse distributors. With increased sales of light trucks over the past few years, both the national automotive retailers and OEMs are participating in the distribution of automotive appearance accessories. The consolidation of Lund and Deflecta-Shield provides the Company with the ability to integrate Lund's design and marketing strengths with Deflecta-Shield's operational and engineering strengths, ultimately allowing the Company to effectively participate with the traditional warehouse distributors as well as the automotive retail and OEM channels. 16 The shifting of a portion of sales away from warehouse distributors to retail and OEM channels has resulted in increased competition within the warehouse distributor channel and created pricing pressures, especially as it relates to the Company's plastic and fiberglass product lines. The Company currently has a strong presence with the majority of the warehouse distributors and is looking to maintain its relationships with them by responding to their need for competitively priced products. This may require some changes in the Company's product lines and product mix. The Deflecta-Shield acquisition brings an increased OEM presence in both the light truck and heavy truck markets, especially in key product lines such as bug shields/hood protectors. The Company is currently rolling out a retail sales program to the major retail automotive chains, which are integrating accessories into their product offerings. Management believes future growth will come from both OEM and retail channels, while maintaining a leadership position with the warehouse distributors. The automotive accessory market is currently going through significant consolidation in both the manufacturing and distribution areas. The Company expects to take advantage of this consolidation with both new product development and acquisitions to become the market leader in all product categories in which it competes. The long-term goal of the Company is to become the low cost producer by increasing product line sales volume through acquisition, product line rationalization and facility consolidation to improve capacity utilization. This effort will be enhanced by improved plant efficiencies, consolidation of purchasing and quality improvements through improved engineering and QS9000 initiatives. During 1998, the Company will incur expenditures to maximize the synergistic benefits it hopes to obtain from the Deflecta-Shield acquisition by consolidating and internalizing bug shield production, consolidating operations with Deflecta-Shield's existing cut and sew operations, integrating information systems into a single platform, centralizing accounting and combining the aftermarket marketing and sales functions. The full potential of the Acquisition savings will not be realized until 1999 at the earliest. EFFECTS OF INFLATION: Although increases in costs of certain materials and labor could adversely affect operations, the Company generally has been able to increase its selling prices to offset increased costs. Price competition, however, particularly in the plastic and fiberglass product lines, could affect the ability of the Company to increase its selling prices and thus such increased costs may be absorbed by the Company and have an impact on gross profit. 17 FORWARD LOOKING STATEMENTS: Statements made herein relating to future financial results, the effects of the Acquisition, company operations, trends and market analysis, Year 2000 compliance, among others, and statements which use the words "believe", "anticipate", "expect", or similar words, are forward-looking statements made under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties which could cause results to differ materially from those anticipated. Among the factors that could cause anticipated results of the Acquisition to differ materially are the following: inability to obtain expected efficiencies, or to obtain them in a timely manner; inability to effectively manage a larger enterprise, to integrate Lund and Deflecta-Shield or to control costs associated with such integration; and the representations, warranties and covenants made in the merger agreement proving to be materially untrue. In addition, both Lund's and Deflecta-Shield's business and operations (and anticipated results) include the following risk factors: consumer preference changes; risk of expansion into new distribution channels; delays in designing, developing, testing or shipping of products; increased competition; general economic developments and trends; developments and trends in the light truck and automotive accessory market; sales of heavy trucks, which are cyclical; the timely development and introduction of competitive new products by the Company and acceptance of those products; and increased costs. This is not an exhaustive list and the Company may supplement this list in future filings or releases or in connection with the making of forward-looking statements. 18 PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 4. Submission of Matters to a Vote of Security Holders On April 21, 1998, the Company held its annual meeting of stockholders. At the meeting, Lawrence C. Day, David E. Dovenberg, Ira D. Kleinman, William J. McMahon, Robert R. Schoeberl, Dennis W. Vollmershausen and Harvey J. Wertheim were elected to serve as directors of the Company for 1998. The Company's 1998 Stock Option Incentive Plan and the conversion of the Company's Series A Preferred Stock and terms of the Class B-1 Common Stock were approved. The appointment of PricewaterhouseCoopers LLP (Coopers & Lybrand L.L.P. prior to its July 1, 1998 merger with Price Waterhouse LLP) as the Company's independent accountants for 1998 was also approved. The following table provides the number of votes for, against, withheld, as well as the number of abstentions and broker non-votes as to each matter submitted to a vote of stockholders at the meeting. Matter:
Withheld Broker Election of Directors For Authority Against Abstention Non-Votes - ----------------------------------- ------------------- ---------------- -------------- ------------------ ---------------- Lawrence C. Day 4,511,543 25,793 David E. Dovenberg 4,512,483 24,853 Ira D. Kleinman 4,511,383 25,953 William J. McMahon 4,513,043 24,293 Robert R. Schoeberl 4,512,643 24,693 Dennis W. Vollmershausen 4,511,443 25,893 Harvey J. Wertheim 4,513,083 24,253 Approval of the 1998 Stock Option 3,517,441 238,703 10,433 770,759 Incentive Plan Approval of the Conversion of 3,694,649 57,810 14,118 770,759 Series A Preferred Stock and Terms of the Class B-1 Common Stock Approval of Independent 4,516,353 7,540 13,443 Accountants
19 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 15 An awareness letter from the Company's independent accountants regarding unaudited interim financial statements. 10.63 Employment letter between the Company and Richard D. Minehart, Jr. 10.64 Employment letter between the Company and Ronald C. Fox. 27.1 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1998. 20 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 13, 1998 LUND INTERNATIONAL HOLDINGS, INC. (Registrant) By: /s/ William J. McMahon --------------------------------------------- William J. McMahon President and Chief Executive Officer By: /s/ Ronald C. Fox --------------------------------------------- Ronald C. Fox Chief Financial Officer 21 EX-15 2 AWARENESS LETTER EXHIBIT 15 Securities and Exchange Commission 450 Fifth Street N.W. Washington D.C. 20549 RE: Lund International Holdings, Inc. Registrations on Form S-8 and Form S-3 We are aware that our report dated July 29, 1998 on our reviews of the interim consolidated financial information of Lund International Holdings, Inc. (the Company) for the three and six month periods ended June 30, 1998 and 1997, and included in the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 1998, is incorporated by reference in the Company's Registration Statements on Form S-8 (Registration Nos. 333-46263, 33-64083 and 33-37160). Pursuant to Rule 436(c), under the Securities Act of 1933, this report should not be considered part of the Registration Statements prepared or certified by us within the meaning of Section 7 and 11 of that Act. /s/ PRICEWATERHOUSECOOPERS LLP PRICEWATERHOUSECOOPERS LLP Minneapolis, Minnesota August 14, 1998 EX-10.63 3 EMPLOYMENT LETTER EXHIBIT 10.63 March 10, 1998 Richard Minehart, Jr. c/o Belmor Autotron 6460 W. Cortland Avenue Chicago IL 60707 RE: POSITION WITH LUND INTERNATIONAL HOLDINGS, INC. Dear Dick: As per our recent discussion, Lund International Holdings, Inc. ("LIH") is offering you the position of Chief Operating Officer. This correspondence sets out the terms of our offer to you, except for the terms of our employee handbook, Insider Trading Policy, Insider Trading Compliance Program, and the Relocation Reimbursement Policy, which reflect the current policies and procedures of LIH, which are subject to change, and apply to you. A copy of the employee handbook, Insider Trading Policy, Insider Trading Compliance Program, and the Relocation Reimbursement Policy have been provided to you under separate cover. If the terms offered in this letter are acceptable to you, please sign the letter at the bottom. We hope that you will accept our offer and look forward to making you part of our management team. POSITION: Chief Operating Officer. You will perform duties as directed by, and report to, the Chief Executive Officer and/or President of the Company. LIH reserves the right to modify your job responsibilities at its discretion. EFFECTIVE EMPLOYMENT START DATE: March 23, 1998 - -------------------------------- BASE SALARY: $160,000 on an annual basis - ------------ BONUS: You will be eligible for any bonus plan offered by LIH and will be in the sixty percent (60%) bonus bracket for the current Short Term Incentive Plan for 1998. Lund International Holdings, Inc. reserves the right to change the bonus plan at the end of any plan year as applied to the following or next plan year. Also, each bonus plan will be evaluated for any particular year, and it is understood that future bonus plans have not been adopted and have yet to be determined or approved. BENEFITS: You are entitled to all current benefits offered to other employees who are in an equivalent position with LIH. In addition, you will continue to receive the special medical coverage, "Exec-u-care", provided to you as a member of the Senior Management Team. STOCK OPTION PLAN: After you are hired, you will be eligible, effective as of March 1, 1998, or your first day of actual employment, to receive a total Fifty Thousand (50,000) stock options of Lund International Holdings, Inc., with Ten Thousand (10,000) vesting on the anniversary date of your first full year of employment, and Ten Thousand (10,000) vesting on your successive anniversary dates of employment thereafter, until all options have vested. You must be employed on each anniversary date with no break in service for the stock options to vest. The vesting schedule would be accelerated in the event of a "Change of Control", as defined and set forth in the stock option plan. The stock options are subject to, and will be issued according to, our stock option plan and may require board and/or stockholder approval. VACATIONS: You will be eligible for a three (3) week paid vacation, accruing according to LIH current vacation benefits. RELOCATION EXPENSES: You will be eligible for LIH's relocation program, as modified from time to time by LIH. A copy of LIH's relocation policy has been provided to you. In addition, you are entitled to the following benefits related to your move to Minnesota: 1. All of your reimbursed relocation expenses will be "grossed up" on your year-end W-2 statement. 2. In the event you have not sold your home in Illinois following your purchase of a home in Minnesota, the Company will pay up to six (6) months of an equivalent mortgage amount, exclusive of taxes, as compared to your mortgage payment in Illinois on your home in Minnesota. After the six (6) month period, if you have not sold your home in Illinois, you will be responsible for all mortgage payments for your Minnesota home and your Illinois home. 3. You agree that you will make every good faith effort to sell your home in Illinois, accepting any fair market value offer in an arm's length transaction from prospective buyers. In the event you are unable to sell your home in Illinois, as described in this letter, for an amount that is not a net loss to you, and you have a good faith arm's length offer that will result in a net loss to you, you shall provide all documentation to LIH to prove the net loss to you. Once this documentation has established that you will suffer a net loss, you agree that LIH has the right of first refusal on any good faith offer from an arm's length buyer, which means that LIH has the right to buy your home rather than the buyer offering an amount that results in a net loss to you, or pay the documented net loss amount to you. If you fail to allow LIH the right of first refusal, you agree that LIH will have no further obligation to pay any mortgage payments, as set-out in this letter, or any net loss amounts to you, as described in this paragraph. Further, LIH has no obligation and is not bound by the terms of this letter, as those relate to the sale of your Illinois home, in the event you sell your Illinois home in a transaction that is not at arm's length, and not at a fair market value price. 4. You will not be required to move to Minnesota until June of 1998. LIH will pay reasonable and previously authorized travel expenses for you to travel to your home in Illinois every weekend. LIH will pay for your reasonable and previously authorized living expenses in Minnesota until you have purchased your home in Minnesota. 5. The minimum brokerage fee associated with selling your current residence (and additional lot in Illinois) will be paid by LIH (if you so desire to sell the lot). 2 AUTOMOBILE: During your term of employment with LIH, you will be provided with a late model light truck or sport utility vehicle for your use, subject to the approval of the President of LIH. In the position of Chief Operating Officer, you will be provided with confidential, trade secret, and/or proprietary information of Lund International Holdings, Inc., and its subsidiaries, Deflecta-Shield Corporation, and its subsidiaries, whether actually merged or not, which includes Lund Industries, Incorporated and/or any company acquired by Lund International Holdings, Inc. or its subsidiaries, or any restructured entities, (collectively referred to in this letter as the "Company"). This includes, but is not limited to, the following confidential, trade secret and/or proprietary information: 1. Sales activities, sales records, sales histories and/or how sales have developed or changed in a particular geographical area or market or for a particular product; customer lists and/or vendor lists; and 2. The quantity of products purchased from the Company by its customers and the prices paid, the Company's purchasing activities, advertising and promotional activities, past and present, potential sales and/or markets, market strategies; and 3. Products' specifications, materials, costs; development of new products; inventions, modifications of current products, and information pertaining to all aspects of the Company's research and development; and 4. The quantity of various products purchased from the Company and/or the product mix as they relate to overall sales of all products and/or a particular product; and 5. The reasons for the use by the Company of certain methods of attachment of its products to the vehicles; manufacturing processes and/or costs and/or time and/or labor studies; the products' designs, dimensions, and tolerances; and 6. The quantity of materials purchased from suppliers and/or the reason for the use of certain materials; and 7. Shipping methods, pricing, profit margins per products; and 8. The financial information which is not made public in the Company's press releases, quarterly reports, Securities and Exchange Filings and/or the Company's annual reports; and 9. Information concerning the Company's management, financial conditions, financial operations, purchasing activities, marketing plans, strategic plans, information systems, communication systems, planning activities, operational activities and plans, investor relations activities, interdepartmental communication or operational communication activities and business plans; and 3 10. All other types and categories of information which are generally understood by persons involved in the automotive industry and any manufacturing operations to be trade secrets, and/or confidential information and/or proprietary information. You agree that you will not disclose or use at any time, only as limited by law, in any manner any confidential trade secret and/or proprietary information as defined in this letter, or elsewhere, or subsequently revealed to you to be confidential, a trade secret or proprietary information. You agree in the event your employment with LIH is terminated, whether voluntarily or otherwise, and/or your are separated from your employment with LIH, that you, for a period of nine (9) months from the date of separation of your employment, shall not engage or participate in (whether as an employee, shareholder, owner, officer, director, partner, consultant, advisor, principal, agent, or in any other capacity) any business which engages in the invention, design, development, marketing, and/or selling, and/or distributing, and/or manufacturing of products competitive with those which are then listed in the Company's current catalogs or marketing materials, and/or such products which the Company has, in the preceding one (1) year before your separation, or at your separation from employment, under design, development, modification, alteration, or purchase from another company, or for which conception has occurred. You further agree that you will not, for a period of nine (9) months from the date of your separation of employment with LIH, whether voluntarily or otherwise, engage in or participate in, in any capacity, the solicitation of or the attempt to solicit any potential or actual product designer, supplier, customer, and/or distributor, and/or manufacturer of the Company's that you have had contact with for the two (2) years preceding your separation from employment. This restriction encompasses any business which engages in the invention, design, development, marketing, and/or selling, and/or distributing, and/or manufacturing of products competitive with those which are then listed in the Company's current catalogs or marketing materials, and/or such products which the Company has, in the preceding one (1) year before your separation, or at your separation from employment, under design, development, modification, alteration, or purchase from another company, or for which conception has occurred. You also agree that for a period of nine (9) months from your separation from employment with LIH, whether voluntarily or otherwise, that you will not hire or offer to hire any of the Company's directors, officers, employees, and/or agents, or attempt to and/or entice them to discontinue their relationship with the Company, and/or attempt to divert and/or divert any potential or actual product designer, customer, distributor, manufacturer, and/or supplier of the Company's that you have had contact with for the two (2) years preceding your separation from employment. Your obligations under this covenant not to compete shall apply to any geographical area in which the Company has engaged in business before and during your employment through production, operations, promotional, sales, distribution, or marketing activities, or has otherwise established its good will, business reputation, or 4 any potential or actual product designer, or customer, or supplier, or distributor or manufacturing relations during the two (2) years preceding your separation from employment. These confidentiality and non-compete terms of this agreement extend beyond the termination and/or separation of your employment and shall continue in full force and effect after the termination and/or separation of your employment or this agreement. You agree to always keep confidential and to not use any trade secret and/or proprietary information, as limited by applicable law. You agree that at the time of your termination and/or separation of employment with LIH, that you will promptly deliver to the Company all confidential, trade secret, or proprietary information and all Company property, equipment and materials. This agreement refers to Lund International Holdings, Inc. and its subsidiaries, and Deflecta-Shield Corporation, and its subsidiaries, and any restructured entities, because you will be privy to all operations of Lund International Holdings, Inc. and its subsidiaries', or restructured entities' confidential information, operations and trade secret or proprietary information. If you accept Lund International Holdings, Inc.'s offer of employment, you understand that it is not for a particular time period, and that either you or Lund International Holdings, Inc. may terminate the employment relationship at any time for any reason or no reason. This agreement is not to be interpreted as an agreement for continued employment, because either party may terminate it at any time. In the event you are terminated without cause, you shall be paid, exclusive of any bonuses or other remuneration, one (1) year of your base salary effective on the date of termination, if you sign a full and complete release of all claims against the Company. However, you will not be entitled in any way to one (1) year of your base salary, if you voluntarily terminate your employment with the Company, or you are terminated for cause, or you decline to execute the full and final release. LIH will pay to you any and all vacation benefits you have earned under the LIH's then current vacation policy. CHANGE IN CONTROL OF DEFLECTA-SHIELD CORPORATION LIH recognizes that under the terms of your prior employment agreement with Deflecta-Shield Corporation (which is voided as set forth below in this letter), you had the benefit of change in control provisions, which LIH recognizes have been triggered by the funding of the Tender Offer Credit Facility, as of December 30, 1997. Consequently, LIH agrees that you will be paid a lump sum Severance Payment equal to one (1) year's base salary. In addition, LIH will pay you Severance Payment equal to 100% of one (1) year's potential bonus, which is equal to 60% of your base salary. These Severance Payments will be paid in the event either you or LIH terminate your employment with LIH any time during the time period of December 30, 1997 through and including December 30, 1999. As of December 31, 1999, the "Change of Control" provisions set forth below with respect to a "Change of Control" of LIH will then govern any change of control benefits to which you may be entitled. You understand and agree that you shall not be allowed to receive concurrent severance benefits under the change of control provisions in this paragraph and the "Change in Control" provisions of LIH below, because you 5 understand and agree that you are entitled to only one severance benefit from December 30, 1997 through December 30, 1999, and a different severance benefit after December 31, 1999. CHANGE IN CONTROL OF LIH In the event there is a "Change in Control" as defined in this letter, a lump sum severance payment equal to one (1) year's base pay will be paid to you in the event of a "Change of Control" of LIH and your subsequent termination of employment within six (6) months of such "Change of Control". This termination of employment may be effected at either the discretion of LIH or at your discretion. The lump sum severance payment will be made within thirty (30) days of the termination date. A "Change of Control" of Lund International Holdings, Inc. shall be deemed to have occurred if (i) any person or entity becomes the beneficial owner, directly or indirectly, of securities representing in excess of fifty percent (50%) of the voting securities of Lund International Holdings, Inc. except for (x) persons who, on March 1, 1998 together with their respective affiliates or associates as such terms are defined under Section 203 of the Delaware General Corporation Law own securities representing in excess of forty percent (40%) of the voting securities of Lund International Holdings, Inc.; or (y) any affiliates or associates identified in (x) to which any person identified in (x) transfers all or any portion of such voting securities (the persons in (x) and (y) being referred to herein as a "40% Holder"); (ii) Lund International Holdings sells or otherwise disposes of all or substantially all of its assets , Inc. in a single transaction or series of related transactions; (iii) persons who, at the beginning of any twelve (12) consecutive month period, constitute the Board of Directors of Lund International Holdings, Inc., at the end of such period cease to constitute a majority of the Board of Directors of Lund International Holdings, Inc. unless (a) prior to September 9, 2000, the nomination or appointment of each new Director was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who were Directors at the beginning of such period or (b) on or after September 9, 2000, the nomination or appointment of each new Director was approved or is ratified by a then 40% Holder or by any Director authorized by such 40% Holder to exercise such approval (either pursuant to that certain Amended and Restated Governance Agreement, dated as of November 25, 1997, among Lund International Holdings, Inc., LIH Holdings, LLC and LIH Holdings II, LLC, or otherwise); (iv) Lund International Holdings, Inc. merges or combines with or into any other person or entity and the stockholders of Lund International Holdings, Inc. immediately prior to the consummation of the merger own less than fifty percent (50%) of the outstanding voting securities of the surviving entity upon consummation of the merger. It is Lund International Holdings, Inc.'s understanding that you are not subject to any agreements or restrictions arising out of any prior employment or consulting relationship, and that by accepting this offer of employment, you will not be breaching or violating any other obligations. If any breach of a prior obligation occurs, LIH reserves the right to withdraw this offer of employment. This agreement may be severed, if any portion is determined to be unenforceable or void, with the other terms remaining in full force and effect. Also, this agreement will 6 be interpreted under the laws of the State of Minnesota and the United States of America, and is binding on the parties, their heirs, successors, personal representative and assigns. This agreement supersedes, revokes, or voids all other offers, or agreements, oral or written made by Lund International Holdings, Inc., or its subsidiaries, regarding any position with Lund International Holdings, Inc., or any position with any of its subsidiaries. This agreement also supersedes, revokes, or voids all other offers, or agreements, oral or written you may have or have had with Deflecta-Shield Corporation or its subsidiaries, which you agree shall be null, void, and superseded by this employment agreement with Lund International Holdings, Inc. when you sign at the bottom of this letter. This letter does not effect the terms of your stock option plan accelerating the vesting of your stock options with Deflecta-Shield Corporation as a result of the November 25, 1997, Merger Agreement between Lund International Holdings, Inc. and Deflecta-Shield Corporation. Further, as to the use by you of Lund's apartment for employees in Minnesota, you agree the use of the apartment prior to the execution of this letter was and is in your capacity as an employee of Deflecta-Shield Corporation. Please accept our offer for the position of Chief Operating Officer by executing this agreement at the bottom. Thank you for your time and interest in employment with Lund International Holdings, Inc. Please feel free to call me at your convenience if you have any questions. I look forward to your response in the very near future. Sincerely, William J. McMahon William J. McMahon ------------------------- President and Chief Executive Officer Accepted by: /s/ Richard D. Minehart, Jr. ----------------------------- Richard D. Minehart, Jr. Dated: March 10, 1998 --------------- 7 EX-10.64 4 EMPLOYMENT LETTER EXHIBIT 10.64 May 27, 1998 Ronald C. Fox c/o Lund International Holdings, Inc. 911 Lund Boulevard Anoka MN 55303-1090 RE: POSITION WITH LUND INTERNATIONAL HOLDINGS, INC. Dear Ron: As per our recent discussion, Lund International Holdings, Inc. ("LIH") is offering you the position of Chief Financial Officer. This correspondence sets out the terms of our offer to you, except for the terms of our employee handbook, Insider Trading Policy, Insider Trading Compliance Program, and the Relocation Reimbursement Policy, which reflect the current policies and procedures of LIH, which are subject to change, and apply to you. A copy of the employee handbook, Insider Trading Policy, Insider Trading Compliance Program, and the Relocation Reimbursement Policy have been provided to you, prior to April 1, 1998, under separate cover. If the terms offered in this letter are acceptable to you, please sign the letter at the bottom. POSITION: Chief Financial Officer. Under the current organizational structure, you will perform duties as directed by, and report to, the Chief Executive Officer of the LIH. LIH reserves the right to modify your job responsibilities at its discretion. EMPLOYMENT START DATE IN POSITION OF VICE PRESIDENT OF FINANCE: April 2, 1998 If your employment with LIH is terminated, whether voluntarily or involuntarily, within three (3) years of the above Employment Start Date, LIH will pay your reasonable moving expenses back to Colorado. Costs to relocate your private residence to Colorado are as outlined in the terms of the relocation paragraph in this letter. In other words, the terms and conditions that apply to your moving to Minnesota will apply to your move to Colorado. If your employment with LIH is voluntarily terminated within three (3) years of the above Employment Start Date, you will be entitled to three (3) months of your base salary. Separate severance or settlement amounts are outlined on pages 5-6 of this letter. APPOINTMENT TO CHIEF FINANCIAL OFFICER POSITION DATE: May 27, 1998 - ----------------------------------------------------- BASE SALARY: $130,000 on an annual basis. - ------------ BONUS: You will be eligible for any bonus plan offered by LIH and will be in the thirty-five percent (35%) bonus bracket for the current Short Term Incentive Plan for 1998. LIH reserves the right to change the bonus plan at the end of any plan year as applied to the following or next plan year. Also, each bonus plan will be evaluated for any particular year, and it is understood that future bonus plans have not been adopted and have yet to be determined or approved. BENEFITS: You are entitled to all benefits offered to other employees who are in an equivalent position with LIH. In addition, you will continue to receive the special medical coverage, "Exec-u-care", provided to you as a member of the Senior Management Team. STOCK OPTION PLAN: In addition to the Thirty Thousand (30,000) LIH stock options you received at the time of employment with LIH on April 2, 1998, you will receive an additional Ten Thousand (10,000) LIH stock options, according to the terms of the stock option plan. For all stock options, none vest on either April 2, 1998 or May 27, 1998, but a certain number vest on the first anniversary date of the grant of options, and each year thereafter on the grant date, as follows: The Thirty Thousand (30,000) stock options will vest at a rate of Six Thousand (6,000) per year on each April 2 (excluding 1998) until all options have vested; the Ten Thousand (10,000) stock options will vest at a rate of Two Thousand (2,000) per year on each May 27 (excluding 1998) until all options have vested. In addition, before any stock options vest, you must be employed on each anniversary date of the grant of the stock options with no break in service. The vesting schedule would be accelerated in the event of a "Change of Control", as defined and set forth in the stock option plan. The stock options are subject to, and will be issued according to, our stock option plan and may require board and/or stockholder approval. VACATIONS: You will be eligible for a three (3) week paid vacation, accruing according to LIH's current vacation benefits. RELOCATION EXPENSES: You will be eligible for LIH's relocation program, as modified from time to time by LIH. A copy of LIH's relocation policy has been provided to you. In addition, you are entitled to the following benefits related to your move to Minnesota: 1. All reimbursed relocation expenses will be "grossed up" on your year-end W-2 statement. 2. In the event you have not sold your home in Colorado following your purchase of a home in Minnesota, LIH will pay up to six (6) months of an equivalent mortgage amount, exclusive of taxes, as compared to your mortgage payment in Colorado, on your home in Minnesota. After the six (6) month period, if you have not sold your home in Colorado, you will be responsible for all mortgage payments for your Minnesota home and your Colorado home. 3. You agree that you will make every good faith effort to sell your home in Colorado, accepting any fair market value offer in an arm's length transaction from prospective buyers. In the event you are unable to sell your home in Colorado, as described in this letter, for an amount that is not a net loss to you, and you have a good faith arm's length offer that will result in a net loss to you, you shall provide all documentation to LIH to prove the net loss to you. Once this documentation has 2 established that you will suffer a net loss, you agree that LIH has the right of first refusal on any good faith offer from an arm's length buyer offering an amount that results in a net loss to you, or pay the documented net loss amount to you. If you fail to allow LIH the right of first refusal, you agree that LIH will have no further obligation to pay any mortgage payments, as set out in this letter, or any net loss amounts to you, as described in this paragraph. Further LIH has no obligation and is not bound by the terms of this letter, as those relate to the sale of your Colorado home, in the event you sell your Colorado home in a transaction that is not at arm's length, and not at a fair market value price. 4. You will not be required to move to Minnesota until June of 1998. LIH will pay reasonable and previously authorized travel expenses for you to travel to your home in Colorado every weekend. LIH will pay for your reasonable and previously authorized living expenses in Minnesota until you have purchased your home in Minnesota. AUTOMOBILE: During your employment with LIH, you will be provided with a late model light truck or sport utility vehicle for your use, subject to the approval of the Chief Executive Officer of LIH. In the position of Chief Financial Officer of LIH, you will be provided with confidential, trade secret, and/or proprietary information of Lund International Holdings, Inc., and its subsidiaries, Deflecta-Shield Corporation, and its subsidiaries, whether actually merged or not, which includes Lund Industries, Incorporated and/or any company acquired by Lund International Holdings, Inc. or its subsidiaries, or any restructured entities, (collectively referred to in this letter as the "Company"). This includes, but is not limited to, the following confidential, trade secret and/or proprietary information: 1. Sales activities, sales records, sales histories and/or how sales have developed or changed in a particular geographical area or market or for a particular product; customer lists and/or vendor lists; and 2. The quantity of products purchased from the Company by its customers and the prices paid, the Company's purchasing activities, advertising and promotional activities, past and present, potential sales and/or markets, market strategies; and 3. Products' specifications, materials, costs; development of new products; inventions, modifications of current products, and information pertaining to all aspects of the Company's research and development; and 4. The quantity of various products purchased from the Company and/or the product mix as they relate to overall sales of all products and/or a particular product; and 5. The reasons for the use by the Company of certain methods of attachment of its products to the vehicles; manufacturing processes and/or costs and/or time and/or labor studies; the products' designs, dimensions, and tolerances; and 3 6. The quantity of materials purchased from suppliers and/or the reason for the use of certain materials; and 7. Shipping methods, pricing, profit margins per products; and 8. The financial information which is not made public in the Company's press releases, quarterly reports, Securities and Exchange Filings and/or the Company's annual reports; and 9. Information concerning the Company's management, financial conditions, financial operations, purchasing activities, marketing plans, strategic plans, information systems, communication systems, planning activities, operational activities and plans, investor relations activities, interdepartmental communication or operational communication activities and business plans; and 10. All other types and categories of information which are generally understood by persons involved in the automotive industry and any manufacturing operations to be trade secrets, and/or confidential information and/or proprietary information. You agree that you will not disclose or use at any time, only as limited by law, in any manner any confidential trade secret and/or proprietary information as defined in this letter, or elsewhere, or subsequently revealed to you to be confidential, a trade secret or proprietary information. You agree in the event your employment with LIH is terminated, whether voluntarily or otherwise, and/or your are separated from your employment with LIH, that you, for a period of six (6) months from the date of separation of your employment, shall not engage or participate in (whether as an employee, shareholder, owner, officer, director, partner, consultant, advisor, principal, agent, or in any other capacity) any business which engages in the invention, design, development, marketing, and/or selling, and/or distributing, and/or manufacturing of products competitive with those which are then listed in the Company's current catalogs or marketing materials, and/or such products which the Company has, in the preceding one (1) year before your separation, or at your separation from employment, under design, development, modification, alteration, or purchase from another company, or for which conception has occurred. You further agree that you will not, for a period of six (6) months from the date of your separation of employment with LIH, whether voluntarily or otherwise, engage in or participate in, in any capacity, the solicitation of or the attempt to solicit any potential or actual product designer, supplier, customer, and/or distributor, and/or manufacturer of the Company's that you have had contact with for the two (2) years preceding your separation from employment. This restriction encompasses any business which engages in the invention, design, development, marketing, and/or selling, and/or distributing, and/or manufacturing of products competitive with those which are then listed in the Company's current catalogs or marketing materials, and/or such products which the 4 Company has, in the preceding one (1) year before your separation, or at your separation from employment, under design, development, modification, alteration, or purchase from another company, or for which conception has occurred. You also agree that for a period of six (6) months from your separation from employment with the LIH, whether voluntarily or otherwise, that you will not hire or offer to hire any of the Company's directors, officers, employees, and/or agents, or attempt to and/or entice them to discontinue their relationship with the Company, and/or attempt to divert and/or divert any potential or actual product designer, customer, distributor, manufacturer, and/or supplier of the Company's that you have had contact with for the two (2) years preceding your separation from employment. Your obligations under this covenant not to compete shall apply to any geographical area in which the Company has engaged in business before and during your employment through production, operations, promotional, sales, distribution, or marketing activities, or has otherwise established its good will, business reputation, or any potential or actual product designer, or customer, or supplier, or distributor or manufacturing relations during the two (2) years preceding your separation from employment. These confidentiality and non-compete terms of this agreement extend beyond the termination and/or separation of your employment and shall continue in full force and effect after the termination and/or separation of your employment or this agreement. You agree to always keep confidential and to not use any trade secret and/or proprietary information, as limited by applicable law. You agree that at the time of your termination and/or separation of employment with LIH, that you will promptly deliver to the Company all confidential, trade secret, or proprietary information and all Company property, equipment and materials. This agreement refers to LIH and its subsidiaries, Deflecta-Shield Corporation and its subsidiaries, and any restructured entities, because you will be privy to all operations of LIH and its subsidiaries', or restructured entities' confidential information, operations and trade secret or proprietary information. If you accept LIH's offer of the position of Chief Financial Officer, you understand that your employment is not for a particular time period, and that either you or LIH may terminate the employment relationship at any time for any reason or no reason. This agreement is not to be interpreted as an agreement for continued employment, because either party may terminate it at any time. In the event you are terminated without cause, you shall be paid, exclusive of any bonuses or other remuneration, six (6) months of your base salary effective on the date of termination, if you sign a full and complete release of all claims against the Company. However, you will not be entitled in any way to six (6) months of your base salary, if you voluntarily terminate your employment with the LIH, or you are terminated for cause, or you decline to execute the full and final release. Payment of any base salary under this paragraph does not alter LIH's agreement to pay you three (3) months base salary under the "Employment Start Date in Position of Vice President of Finance" provision on the 5 first page of this letter, if you voluntarily terminate your employment within three (3) years of April 2, 1998. At your separation from employment, for whatever reason, LIH will pay to you any and all vacation benefits you have earned under LIH's then current vacation policy. It is LIH's understanding that you are not subject to any agreements or restrictions arising out of any prior employment or consulting relationship, and that by accepting this offer of employment, you will not be breaching or violating any other obligations. If any breach of a prior obligation occurs, LIH reserves the right to withdraw this offer of the position of Chief Financial Officer. This agreement may be severed, if any portion is determined to be unenforceable or void, with the other terms remaining in full force and effect. Also, this agreement will be interpreted under the laws of the State of Minnesota and the United States of America, and is binding on the parties, their heirs, successors, personal representative and assigns. This agreement supersedes, revokes, or voids all other offers, or agreements, oral or written made by LIH, or its subsidiaries, regarding any position with LIH, or any position with any of its subsidiaries. This agreement also supersedes, revokes, or voids all other offers, or agreements, oral or written you may have or have had with Deflecta-Shield Corporation, or any or its subsidiaries, which you agree shall be null, void, and superseded by this employment letter agreement with LIH when you sign at the bottom of this letter. Further, as to the use by you of LIH's apartment for employees in Minnesota, you agree the use of the apartment prior to the execution of this letter was and is in your capacity as an employee of Deflecta-Shield Corporation. If you have any questions, please feel free to contact me. Sincerely, /s/ William J. McMahon - ----------------------- William J. McMahon President and Chief Executive Officer Accepted by: /s/ Ronald C. Fox ---------------- Ronald Fox Dated: May 27, 1998 ------------ 6 POLICY/PROCEDURE Process: Employee Transfer/Relocation Expenses Policy No.: HR0008 Revision No.: 1 Date 8/20/97 Authorization 1.0 OBJECTIVE To provide assistance to an employee when transferred. 2.0 SCOPE The area senior manager secures approval from the CEO prior to any relocation. The Human Resources Department coordinates activities. Accounting is provided a budget from the area senior manager and Human Resources. This policy applies to any transfers when the distance is greater than 100 miles. 3.0 POLICY 3.1 The company pays a seller's reasonable and customary closing costs in the case of a home sale. 3.2 The company pays a reasonable and customary Realtor's fee in the case of a home sale. 3.3 The company pays reasonable moving expenses including packaging and unpackaging of household goods. The moving company is contracted for by the company. 3.4 The company pays for reasonable temporary housing for up to three months duration. 3.5 The company pays a meal per diem of $25 while the employee is provided temporary housing. 3.6 The company provides for two visits per month to the employee's home at the company's authorized and reasonable expense. 3.7 The company provides for two home buying/rental trips for the employee and spouse at the company's authorized and reasonable expense. 3.8 The company provides up to 1% in loan commitment fees when the employee purchases a home. 3.9 The company may provide a bridge loan under certain circumstances and at current market rates to assist an employee in the purchase of a home. 3.10 The company provides a flat payment of 2% of base annual salary for incidental moving and relocation expenses paid at closing or equivalent time. 7 EX-27 5 FINANCIAL DATA SCHEDULE
5 0000820526 LUND INTERNATIONAL HOLDINGS, INC 1,000 US DOLLARS 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 1 2,095 0 25,220 1,826 16,913 48,685 20,410 5,488 139,327 17,494 56,970 0 0 541 61,904 139,327 57,082 57,082 39,824 54,637 0 126 2,725 (212) (114) 0 0 0 0 (98) (0.02) (0.02)
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