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 quarter ended March 31, 2003 Commission File Number 33-24317
JORDAN INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
Illinois 36-3598114
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
ArborLake Centre, Suite 550 60015
1751 Lake Cook Road (Zip Code)
Deerfield, Illinois
(address of Principal Executive Offices)
Registrant's telephone number, including Area Code: (847) 945-5591
Former name, former address and former fiscal year, if changed since last
report: Not applicable.
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 twelve (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 ninety (90) days.
Yes X No
------- -------
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes No X
------- -------
The number of shares outstanding of Registrant's Common Stock as of
May 13, 2003: 98,501.0004.
2
JORDAN INDUSTRIES, INC.
INDEX
Part I. Page No.
- ------- --------
Condensed Consolidated Balance Sheets at March 31, 2003
(Unaudited) and December 31, 2002 3
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 2003 and 2002 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 2003 and 2002 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II.
- --------
Other Information 13
Signatures 14
Officer Certificates 15
3
JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
March 31, December 31,
2003 2002
-------- --------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $25,264 $20,109
Accounts receivable, net 119,501 109,101
Inventories 142,601 130,453
Income tax receivable 3,745 3,745
Prepaid expenses and other current assets 28,498 25,857
-------- --------
Total Current Assets 319,609 289,265
Property, plant and equipment, net 100,091 101,907
Investments in and advances to affiliates 44,885 42,353
Goodwill, net 246,151 245,351
Other assets 29,037 30,368
-------- --------
Total Assets $739,773 $709,244
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY (NET
CAPITAL DEFICIENCY)
Current Liabilities:
Accounts payable $68,383 $58,631
Accrued liabilities 81,155 78,582
Advance deposits 2,995 1,420
Current portion of long-term debt 28,786 34,893
-------- --------
Total Current Liabilities 181,319 173,526
Long-term debt, less current portion 738,695 715,516
Other non-current liabilities 14,818 14,484
Deferred income taxes 4,415 2,904
Minority interest 217 278
Preferred stock 2,389 2,342
Shareholder's Equity (net capital deficiency):
Common stock $.01 par value: 100,000 shares
authorized and 98,501 shares issued and
outstanding 1 1
Additional paid-in capital 2,116 2,116
Accumulated other comprehensive loss (6,205) (11,877)
Accumulated deficit (197,992) (190,046)
--------- ---------
Total Shareholder's Equity (net capital
deficiency) (202,080) (199,806)
--------- ---------
Total Liabilities and Shareholder's
Equity (net capital deficiency) $739,773 $709,244
======== ========
See accompanying notes to condensed consolidated financial statements.
4
JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED
March 31,
------------------
2003 2002
---- ----
Net sales $169,707 $165,492
Cost of sales, excluding
depreciation 111,755 105,129
Selling, general and
administrative expenses,
excluding depreciation 40,390 41,424
Depreciation 5,598 5,345
Amortization of goodwill
and other intangibles 61 295
Management fees and other (246) 613
--------- ---------
Operating income 12,149 12,686
Other (income) expenses:
Interest expense 20,753 23,183
Interest income (267) (86)
Other (3,393) 69
--------- ---------
17,093 23,166
Loss before income taxes, minority
interest and cumulative effect of
change in accounting principle (4,944) (10,480)
Provision (benefit) for income taxes 3,016 (1,385)
--------- ---------
Loss before minority interest and
cumulative effect of change in
accounting principle (7,960) (9,095)
Minority interest (61) 45
--------- ---------
Loss before cumulative effect of
change in accounting principle (7,899) (9,140)
Cumulative effect of change in
accounting principle, net of tax - 87,065
--------- ---------
Net loss $(7,899) $(96,205)
========= =========
See accompanying notes to condensed consolidated financial statements.
5
JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED
March 31,
------------------
2003 2002
---- ----
Cash flows from operating activities:
Net loss $ (7,899) $(96,205)
Adjustments to reconcile net loss to net
cash used in operating activities:
Cumulative effect of accounting change - 87,065
Depreciation and amortization 5,659 5,640
Amortization of deferred financing fees 1,543 1,440
Minority interest (61) 45
Non-cash interest - 5,938
Gain on disposal of fixed assets (3,725) -
Other 63 -
Changes in operating assets and liabilities:
Increase in current assets (25,189) (12,174)
Increase (decrease) in current liabilities 13,900 (1,921)
Increase in non-current assets (2,789) (237)
Increase in non-current liabilities 1,845 860
--------- --------
Net cash used in operating activities (16,653) (9,549)
Cash flows from investing activities:
Proceeds from sale of fixed assets 3,744 100
Capital expenditures (3,220) (2,285)
Additional purchase price payments - (574)
Other - (100)
--------- --------
Net cash provided by (used in) investing
activities 524 (2,859)
Cash flows from financing activities:
Proceeds from revolving credit facilities, net 23,423 12,270
Repayment of long-term debt (7,245) (3,242)
Proceeds from other borrowings 602 -
Other 180 (4)
--------- --------
Net cash provided by financing
activities 16,960 9,024
Effect of exchange rate changes on cash 4,324 (1,051)
--------- --------
Net increase (decrease) in cash and cash equivalents 5,155 (4,435)
Cash and cash equivalents at beginning of period 20,109 26,050
--------- --------
Cash and cash equivalents at end of period $ 25,264 $21,615
========= ========
See accompanying notes to condensed consolidated financial statements.
6
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
A. Organization
The unaudited condensed consolidated financial statements, which reflect all
adjustments that management believes necessary to present fairly the results
of interim operations and are of a normal recurring nature, should be read in
conjunction with the Notes to the Consolidated Financial Statements (including
the Summary of Significant Accounting Policies) included in the Company's
audited consolidated financial statements for the year ended December 31,
2002, which are included in the Company's Annual Report filed on Form 10-K for
such year (the "2002 10-K"). Results of operations for the interim periods are
not necessarily indicative of annual results of operations.
B. Goodwill Impairment
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
142, Goodwill and Other Intangible Assets, on January 1, 2002, and recorded a
non-cash pretax goodwill impairment charge of $108,595 ($87,065 after-tax),
which was recorded as a cumulative effect of a change in accounting principle
in the Company's consolidated statements of operations.
C. Inventories
Inventories are summarized as follows:
March 31, December 31,
2003 2002
------------ ------------
Raw materials $53,241 $ 52,450
Work-in-process 27,487 20,417
Finished goods 61,873 57,586
-------- --------
$142,601 $130,453
======== ========
D. Comprehensive Income (Loss)
Total comprehensive income (loss) for the three months ended March 31, 2003
and 2002 is as follows:
Three Months ended
March 31,
--------------------
2003 2002
---- ----
Net loss $(7,899) $(96,205)
Foreign currency translation 5,672 (2,451)
------ ---------
Comprehensive loss $(2,227) $(98,656)
======== =========
E. Sale of Subsidiaries
Effective on January 1, 2002, the Company sold its subsidiary, Flavorsource,
Inc, ("Flavorsource") to Flavor & Fragrance Group Holdings, Inc. ("FFG") for a
$10,100 note. FFG's Chief Executive Officer is Mr. Quinn, and its stockholders
include Mr. Jordan, Mr. Quinn, Mr. Zalaznick, and Mr. Boucher, who are
directors and stockholders of the Company, as well as other partners,
principals, and associates of The Jordan Company, who are also stockholders of
the Company. As the transaction was among entities under common control, the
difference between the note received and the net assets of Flavorsource of
$473 was reflected as a credit to retained earnings in the first quarter of
2002. Flavorsource is a developer and compounder of flavors for use in
beverages of all kinds, including coffee, tea, juices, and cordials, as well
as bakery products and ice cream and dairy products. Flavorsource was part
of the Consumer & Industrial Products segment prior to its disposal.
7
JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
F. Additional Purchase Price Agreements
The Company had a deferred purchase price agreement relating to its
acquisition of Yearntree in December 1999. The agreement was based on
Yearntree achieving certain agreed upon cumulative net income before interest
and taxes for the 24 months beginning January 1, 2000 and ending December 31,
2001. On March 8, 2002, the Company paid $574 related to the above agreement.
The Company also has a deferred purchase price agreement relating to its
acquisition of Teleflow in July 1999. The agreement is based upon Teleflow
achieving certain agreed upon earnings before interest, taxes, depreciation,
and amortization for each year through the year ended December 31, 2002. The
Company paid $750, $328 and $260 related to this agreement in April 2003, 2002
and 2001, respectively.
The Company has a contingent purchase price agreement relating to its
acquisition of Deflecto in 1998. The agreement is based on Deflecto achieving
certain earnings before interest and taxes and is payable on April 30, 2008.
If Deflecto is sold prior to April 30, 2008, the agreement is payable 120 days
after the transaction.
Kinetek has a contingent purchase price agreement relating to its acquisition
of Motion Control on December 18, 1997. The terms of this agreement provide
for additional consideration to be paid to the sellers. The agreement is
exercisable at the sellers' option during a five year period beginning in
2003. When exercised, the additional consideration will be based on Motion
Control's operating results over the two preceding fiscal years. Payments, if
any, under the contingent agreement will be placed in a trust and paid out in
cash over a four-year period, in annual installments according to a schedule,
which is included in the agreement. Additional consideration, if any, will be
recorded as an addition to goodwill.
G. Business Segment Information
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" for the Company's business segment disclosures. There have been
no changes from the Company's December 31, 2002 consolidated financial
statements with respect to segmentation or the measurement of segment profit
or loss.
H. Income taxes
The provision (benefit) for income taxes differs from the amount of income tax
benefit computed by applying the United States federal income tax rate to loss
before income taxes, minority interest, and cumulative effect of change in
accounting principle. A reconciliation of the differences is as follows:
Three Months ended Three Months ended
March 31, 2003 March 31, 2002
------------------ ------------------
Computed statutory tax benefit $(1,730) $(3,668)
Increase (decrease) resulting from:
Increase in valuation allowance 4,252 1,856
Disallowed meals and entertainment 82 112
State and local tax and other 412 315
------- --------
Provision (benefit) for income taxes $3,016 $(1,385)
======= ========
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the 2002 10-K and the financial statements and the related notes
thereto.
Results of Operations
Summarized below are the net sales, operating income (loss) and operating
margins (as defined) for each of the Company's business segments for the three
month periods ended March 31, 2003 and 2002. This discussion reviews the
following segment data and certain of the consolidated financial data for the
Company.
Three Months Ended
March 31,
--------------------
2003 2002
---- ----
Net Sales:
Specialty Printing and Labeling $20,241 $19,774
Jordan Specialty Plastics 27,865 25,173
Jordan Auto Aftermarket 36,622 38,180
Kinetek 71,252 68,198
Consumer and Industrial Products 13,727 14,167
-------- --------
Total $169,707 $165,492
======== ========
Operating Income (Loss):
Specialty Printing and Labeling $(418) $(974)
Jordan Specialty Plastics 1,755 1,870
Jordan Auto Aftermarket 3,352 5,256
Kinetek 8,808 9,715
Consumer and Industrial Products (969) (1,134)
-------- --------
Total(a) $ 12,528 $ 14,733
======== ========
Operating Margin(b)
Specialty Printing and Labeling (2.1)% (4.9)%
Jordan Specialty Plastics 6.3% 7.4%
Jordan Auto Aftermarket 9.2% 13.8%
Kinetek 12.4% 14.3%
Consumer and Industrial Products (7.1)% (8.0)%
Total(b) 7.4% 8.9%
- ---------------------
(a) Before corporate overhead of $379 and $2,047 for the three months ended
March 31, 2003 and 2002, respectively.
(b) Operating margin is operating income (loss) divided by net sales.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
Specialty Printing and Labeling. As of March 31, 2003, the Specialty
Printing and Labeling group ("SPL") consisted of JII Promotions, Valmark,
Pamco, and Seaboard.
Net sales for the three months ended March 31, 2003 increased $0.5 million, or
2.4%, over the same period in 2002. This increase was primarily due to higher
sales of calendars, school annuals, and ad specialties at JII Promotions, $0.2
million, $0.2 million, and $0.3 million, respectively, increased sales of
membrane switches at Valmark, $0.1 million, and higher sales of labels at
Pamco, $0.3 million. These increases were partially offset by lower sales of
screen-printed products and rollstock at Valmark, $0.3 million and $0.1
million, respectively, and decreased sales of folding boxes at Seaboard, $0.2
million.
Operating loss for the three months ended March 31, 2003 decreased $0.6
million, or 57.1%, from the same period in 2002. Operating loss decreased at
JII Promotions and Valmark, $0.1 million each, and operating income increased
at Pamco and Seaboard, $0.2 million each. Operating income increases at all of
the SPL companies are the result of various cost cutting and efficiency
initiatives.
Jordan Specialty Plastics. As of March 31, 2003, the Jordan Specialty
Plastics group ("JSP") consisted of Beemak, Sate-Lite, and Deflecto.
Net sales for the three months ended March 31, 2003 increased $2.7 million, or
10.7%, over the same period in 2002. This increase was primarily due to higher
sales of plastic hospital supplies at Sate-Lite, $0.4 million, and increased
sales of hardware and office products at Deflecto, $1.9 million, and $1.5
million, respectively. Partially offsetting these increases were lower sales
of Tilt Bins, bike reflectors and other miscellaneous products at Sate-Lite,
$0.4 million, $0.1 million, and $0.3 million, respectively, and decreased
sales of injection-molded products at Beemak, $0.3 million.
Operating income for the three months ended March 31, 2003 decreased $0.1
million, or 6.2%, from the same period in 2002. Operating income decreased at
Beemak and Deflecto, $0.3 million and $0.1 million, respectively, while
operating loss decreased at Sate-Lite $0.3 million. Decreased operating income
at Deflecto and Beemak are due to pricing pressures on their raw materials
including resins and acrylic. The decrease in operating loss at Sate-Lite is
due to cost cutting measures and ongoing headcount reductions.
Jordan Auto Aftermarket. As of March 31, 2003, the Jordan Auto
Aftermarket group ("JAAI") consisted of Dacco, Alma and Atco.
Net sales for the three months ended March 31, 2003 decreased $1.6 million, or
4.1%, from the same period in 2002. This decrease was primarily due to lower
sales of remanufactured torque converters and other soft parts at Dacco and
decreased sales of drive trains at Alma. Partially offsetting these decreases
were higher sales of driers and accumulators and steel fittings at Atco.
Operating income for the three months ended March 31, 2003 decreased $1.9
million, or 36.2%, from the same period in 2002. This decrease was primarily
due to lower operating income at Dacco and Alma, partially offset by increased
operating income at Atco and lower corporate expenses. Operating income at
Dacco and Alma was down due to the decreased sales discussed above, while
operating income at Atco benefited from increased sales of driers,
accumulators and fittings.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
Kinetek. As of March 31, 2003, the Kinetek group consisted of Imperial,
Gear, Merkle-Korff, FIR, ED&C, Motion Control, Advanced DC and DeSheng.
Net sales for the three months ended March 31, 2003 increased $3.1 million, or
4.5% from the same period in 2002. Sales in Kinetek's motors segment increased
$2.9 million, or 6.0% for the quarter. Sales of subfractional motor products
increased 7.3%, led by strong demand for general business motor products (such
as those used in restaurant, lottery and medical applications). Sales of
fractional and integral motor products increased 5.1%, driven by the addition
of sales from DeSheng ($2.3 million), and by the impact of Euro currency
translation on sales by FIR. These increases in sales of fractional and
integral motor products were partially offset by lower demand for products
sold in the U.S., principally for those used in material handling and golf car
end markets. Demand for products in the U.S. floor care market and all markets
in Europe was essentially flat with the first quarter of 2002. Sales in
Kinetek's controls segment increased $0.2 million, or 0.8%, over 2002 results.
This resulted from a $0.6 million increase in sales of conveyor controls
driven by share market gains, offset by a $0.4 million decrease in sales of
elevator controls due to general market sluggishness.
Total operating income for the first quarter of 2003 declined $0.9 million, or
9.3%, from the same quarter of the previous year. This decrease was primarily
due to lower operating income in the motors segment, $0.2 million, or 1.7%
below the same period in 2002, and increased corporate expenses. Operating
income for the controls segment was $2.7 million, which was $0.1 million, or
4.3% higher than in 2002's first quarter. The decline in operating income was
due to lower gross margins at Kinetek's DeSheng subsidiary where profitability
is much lower than at Kinetek's other businesses. This decline in gross margin
was partially offset by modestly lower operating expenses throughout Kinetek's
subsidiaries.
Consumer and Industrial Products. As of March 31, 2003, the Consumer
and Industrial Products group consisted of Cape, Welcome Home, Cho-Pat, and
GramTel.
Net sales for the three months ended March 31, 2003 decreased $0.4 million, or
3.1%, from the same period in 2002. This decrease was primarily due to lower
retail sales at Welcome Home, $0.1 million, the divestiture of ISMI in
December 2002, $0.4 million, and the shutdown of Online Environs in September
2002, $0.2 million. Partially offsetting these decreases were higher sales of
home accessories at Cape, $0.1 million, and increased sales of data storage
and disaster recovery services at GramTel, $0.2 million.
Operating loss for the three months ended March 31, 2003 decreased $0.2
million, or 14.6%, from the same period in 2002. This decrease was primarily
due to a decrease in operating loss at GramTel, $0.1 million, and the shutdown
of Online Environs, which generated a $0.2 million operating loss in the first
quarter of 2002. Partially offsetting these increases was lower operating
income at Cape, $0.1 million.
Consolidated Results: (See Condensed Consolidated Statement of Operations).
Net sales for the three months ended March 31, 2003 increased $4.2 million, or
2.6%, over the same period in 2002. This increase was due to higher sales of
ad specialties at JII Promotions, labels at Pamco, plastic hospital supplies
at Sate-Lite, hardware and office products at Deflecto, driers and
accumulators at Atco, motors and controls at Kinetek, and data storage and
11
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
disaster recovery services at GramTel. Partially offsetting these increases
were lower sales of screen-printed products at Valmark, folding boxes at
Seaboard, Tilt Bins at Sate-Lite, injection-molded products at Beemak, and
remanufactured torque converters and drive trains at JAAI. In addition, sales
decreased due to the divestiture of ISMI in December 2002 and the shutdown of
Online Environs in September 2002.
Operating income for the three months ended March 31, 2003 decreased $0.5
million, or 4.2%, from the same period in 2002. This decrease was due to
pricing pressures on raw materials at Deflecto and Beemak, lower sales at
Dacco and Alma, and lower gross margins at Kinetek's DeSheng subsidiary.
Partially offsetting these decreases were cost cutting and efficiency
initiatives at SPL, ongoing headcount reductions at Sate-Lite, increased sales
at Atco, lower operating expenses at various Kinetek subsidiaries and lower
corporate expenses. In addition, operating income benefited from the shutdown
of Online Environs, as mentioned above.
Liquidity and Capital Resources.
In general, the Company requires liquidity for working capital, capital
expenditures, interest, taxes, debt repayment and its acquisition strategy. Of
primary importance are the Company's working capital requirements, which
increase whenever the Company experiences strong incremental demand or
geographical expansion.
The Company had approximately $138.3 million of working capital at March 31,
2003 compared to approximately $115.7 million at the end of 2002.
Operating activities. Net cash used in operating activities for the three
months ended March 31, 2003 was $16.7 million compared to net cash used in
operating activities of $9.5 million during the same period in 2002. The
increase in cash used is primarily due to unfavorable working capital
variances compared with the same period in 2002.
Investing activities. Net cash provided by investing activities for the three
months ended March 31, 2003 was $0.5 million compared to net cash used in
investing activities of $2.9 million during the same period in 2002. The
decrease in cash used is primarily due to the proceeds from the sale of fixed
assets in the current year.
Financing activities. Net cash provided by financing activities for the three
months ended March 31, 2003 was $17.0 million compared to net cash provided by
financing activities of $9.0 million during the same period in 2002. This
change is primarily due to net revolver borrowings of $23.4 million in the
current year as compared to $12.3 million in the prior year, partially offset
by the increase in repayment of long-term debt in the current year of $4.0
million.
The Company is party to two credit agreements under which the Company is able
to borrow up to $145.0 million to fund acquisitions, provide working capital
and for other general corporate purposes. The credit agreements mature in 2005
and 2006. The agreements are secured by a first priority security interest in
substantially all of the Company's assets. As of May 13, 2003, the Company had
approximately $30.8 million of available funds under these arrangements.
The Company may, from time to time, use cash, including cash generated from
borrowings under its credit agreement, to purchase either its 11 3/4% Senior
Subordinated Discount Debentures due 2009 or its 10 3/8% Senior Notes due
2007, or any combination thereof, through open market purchases, privately
12
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
negotiated purchases or exchanges, tender offers, redemptions or otherwise,
and may, from time to time, pursue various refinancing or financial
restructurings, including pursuant to current solicitations and waivers
involving those securities, in each case, without public announcement or prior
notice to the holders thereof, and if initiated or commenced, such purchases
or offers to purchase may be discontinued at any time.
The Company's aggregate business has a certain degree of seasonality. JII
Promotions and Welcome Home's sales are somewhat stronger toward year-end due
to the nature of their products. Calendars at JII Promotions have an annual
cycle and home furnishings and accessories at Welcome Home are popular holiday
gifts.
Quantitative And Qualitative Disclosures About Market Risks
The Company's debt obligations are primarily fixed-rate in nature and, as
such, are not sensitive to changes in interest rates. At March 31, 2003, the
Company had $60.7 million of variable rate debt outstanding. A one percentage
point increase in interest rates would increase the annual amount of interest
paid by approximately $0.6 million. The Company does not believe that its
market risk financial instruments on March 31, 2003 would have a material
effect on future operations or cash flows.
The Company is exposed to market risk from changes in foreign currency
exchange rates, including fluctuations in the functional currency of foreign
operations. The functional currency of operations outside the United States is
the respective local currency. Foreign currency translation effects are
included in accumulated other comprehensive income in shareholder's equity.
Controls and Procedures
The Company's CEO and CFO have concluded, based on an evaluation within 90
days of the filing date of this report, that the Company's disclosure controls
and procedures are effective for gathering, analyzing and disclosing
information required to be disclosed in the Company's reports filed under the
Securities Exchange Act of 1934. There have been no significant changes in the
Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of the foregoing evaluation.
13
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
14
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.
JORDAN INDUSTRIES, INC.
May 13, 2003 By: /s/ Thomas C. Spielberger
-------------------------
Thomas C. Spielberger
Senior Vice President,
Chief Financial Officer
15
CERTIFICATE
I, John W. Jordan II, certify that:
1) I have reviewed this quarterly report on Form 10-Q of Jordan Industries,
Inc;
2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 13, 2003
/s/ John W. Jordan II
---------------------------
Name: John W. Jordan II
Title: Chairman and CEO
16
CERTIFICATE
I, Thomas C. Spielberger, certify that:
1) I have reviewed this quarterly report on Form 10-Q of Jordan Industries,
Inc;
2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 13, 2003
/s/ Thomas C. Spielberger
---------------------------
Name: Thomas C. Spielberger
Title: SVP, CFO