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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 0-21139
DURA AUTOMOTIVE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 38-3185711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2791 RESEARCH DRIVE 48309
ROCHESTER HILLS, MICHIGAN (Zip Code)
(Address of principal executive offices)
(248) 299-7500
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the Registrant's Class A common stock, par
value $.01 per share, at August 1, 2003 was 16,591,340 shares. The number of
shares outstanding of the Registrant's Class B common stock, par value $.01 per
share, at August 1, 2003 was 1,761,150 shares.
DURA AUTOMOTIVE SYSTEMS, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations for the
Three Months Ended June 30, 2003 and 2002 (unaudited)
Condensed Consolidated Statements of Operations for the Six
Months Ended June 30, 2003 and 2002 (unaudited)
Condensed Consolidated Balance Sheets at June 30, 2003
(unaudited) and December 31, 2002
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2003 and 2002 (unaudited)
Notes to Condensed Consolidated Financial Statements
(unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
- 2 -
ITEM 1: FINANCIAL INFORMATION
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS - UNAUDITED)
Three Months Ended June 30,
---------------------------
2003 2002
--------- ---------
Revenues $ 606,430 $ 638,383
Cost of sales 528,172 544,893
--------- ---------
Gross profit 78,258 93,490
Selling, general and administrative expenses 38,900 34,360
Facility consolidation and other charges 1,758 1,863
Amortization expense 71 219
--------- ---------
Operating income 37,529 57,048
Interest expense, net 20,688 20,952
Loss on early extinguishment of debt - 5,520
--------- ---------
Income from continuing operations before provision for
income taxes and minority interest 16,841 30,576
Provision for income taxes 6,049 11,935
Minority interest - dividends on trust preferred securities, net 663 601
--------- ---------
Income from continuing operations 10,129 18,040
Gain (loss) from discontinued operations, net 711 (26,030)
--------- ---------
Net income (loss) $ 10,840 $ (7,990)
========= =========
Basic earnings (loss) per share:
Income from continuing operations $ 0.55 $ 1.00
Discontinued operations 0.04 (1.45)
--------- ---------
Net income (loss) $ 0.59 $ (0.45)
========= =========
Basic shares outstanding 18,290 17,935
========= =========
Diluted earnings (loss) per share:
Income from continuing operations $ 0.55 $ 0.94
Discontinued operations 0.03 (1.31)
--------- ---------
Net income (loss) $ 0.58 $ (0.37)
========= =========
Diluted shares outstanding 19,691 19,913
========= =========
The accompanying notes are an integral part of these condensed consolidated
statements.
- 3 -
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS - UNAUDITED)
Six Months Ended June 30,
-------------------------
2003 2002
----------- -----------
Revenues $ 1,199,235 $ 1,222,241
Cost of sales 1,044,548 1,049,319
----------- -----------
Gross profit 154,687 172,922
Selling, general and administrative expenses 77,435 67,375
Facility consolidation and other charges 2,024 1,863
Amortization expense 141 543
----------- -----------
Operating income 75,087 103,141
Interest expense, net 41,374 43,420
Loss on early extinguishment of debt - 5,520
----------- -----------
Income from continuing operations before provision for
income taxes and minority interest 33,713 54,201
Provision for income taxes 12,123 19,301
Minority interest - dividends on trust preferred securities, net 1,326 1,243
----------- -----------
Income from continuing operations 20,264 33,657
Loss from discontinued operations, net (267) (30,423)
----------- -----------
Income before accounting change 19,997 3,234
Cumulative effect of change in accounting, net - (205,192)
----------- -----------
Net income (loss) $ 19,997 $ (201,958)
=========== ===========
Basic earnings (loss) per share:
Income from continuing operations $ 1.11 $ 1.88
Discontinued operations (0.02) (1.70)
Cumulative effect of change in accounting - (11.48)
----------- -----------
Net income (loss) $ 1.09 $ (11.30)
=========== ===========
Basic shares outstanding 18,275 17,875
=========== ===========
Diluted earnings (loss) per share:
Income from continuing operations $ 1.09 $ 1.77
Discontinued operations (0.01) (1.55)
Cumulative effect of change in accounting - (10.41)
----------- -----------
Net income (loss) $ 1.08 $ (10.19)
=========== ===========
Diluted shares outstanding 19,674 19,706
=========== ===========
The accompanying notes are an integral part of these condensed consolidated
statements.
- 4 -
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
June 30, December 31,
2003 2002
----------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 162,968 $ 143,237
Accounts receivable, net 316,649 245,615
Inventories 120,968 114,573
Current portion of derivative instruments 15,000 15,825
Other current assets 119,181 103,875
Current assets of discontinued operations - 32,041
----------- ------------
Total current assets 734,766 655,166
----------- ------------
Property, plant and equipment, net 448,775 444,479
Goodwill, net 806,155 774,983
Noncurrent portion of derivative instruments 22,712 14,698
Deferred income taxes and other assets, net 45,431 47,607
----------- ------------
$ 2,057,839 $ 1,936,933
=========== ============
Liabilities and Stockholders' Investment
Current liabilities:
Accounts payable $ 262,581 $ 216,045
Accrued liabilities 215,808 193,973
Current maturities of long-term debt 5,325 7,154
Current liabilities of discontinued operations - 25,931
----------- ------------
Total current liabilities 483,714 443,103
----------- ------------
Long-term debt, net of current maturities 1,115,583 1,099,577
Other noncurrent liabilities 135,376 134,201
Mandatorily redeemable convertible trust preferred securities 55,250 55,250
Stockholders' investment:
Common stock - Class A 165 165
Common stock - Class B 18 17
Additional paid-in capital 347,399 347,065
Treasury stock (1,975) (1,974)
Retained deficit (107,406) (127,403)
Accumulated other comprehensive income (loss) 29,715 (13,068)
----------- ------------
Total stockholders' investment 267,916 204,802
----------- ------------
$ 2,057,839 $ 1,936,933
=========== ============
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
- 5 -
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS - UNAUDITED)
Six Months Ended June 30,
-------------------------
2003 2002
--------- ---------
OPERATING ACTIVITIES:
Income from continuing operations $ 20,264 $ 33,657
Adjustments to reconcile income from continuing
operations to net cash provided by operating activities -
Depreciation and amortization 37,543 34,191
Deferred income taxes 227 844
Changes in other operating items (22,342) 51,709
--------- ---------
Net cash provided by operating activities 35,692 120,401
--------- ---------
INVESTING ACTIVITIES:
Net proceeds from disposition of businesses - 31,122
Capital expenditures, net (19,862) (24,611)
--------- ---------
Net cash (used in) provided by investing activities (19,862) 6,511
--------- ---------
FINANCING ACTIVITIES:
Repayments of revolving credit facilities - (62,324)
Long-term borrowings 15,505 165,039
Repayments of long-term borrowings (19,480) (466,665)
Proceeds from issuance of senior notes - 350,000
Debt issue costs - (10,964)
Proceeds from issuance of common stock and
exercise of stock options 335 3,704
Other, net (1) 239
--------- ---------
Net cash used in financing activities (3,641) (20,971)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,700 5,697
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM
CONTINUING OPERATIONS 13,889 111,638
NET CASH FLOW FROM DISCONTINUED OPERATIONS 5,842 (19,748)
CASH AND CASH EQUIVALENTS:
Beginning of period 143,237 32,289
--------- ---------
End of period $ 162,968 $ 124,179
========= =========
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest $ 39,193 $ 39,812
Cash paid for income taxes $ 6,800 $ 6,555
The accompanying notes are an integral part of these condensed consolidated
statements.
- 6 -
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
General - Dura Automotive Systems, Inc. (a Delaware Corporation) and
subsidiaries ("Dura") designs and manufactures components and systems primarily
for the global automotive industry. Dura has over 57 manufacturing and product
development facilities located in the United States, Brazil, Canada, Czech
Republic, France, Germany, Mexico, Portugal, Slovakia, Spain and the United
Kingdom.
We have prepared the condensed consolidated financial statements of Dura,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. The information furnished in the condensed consolidated
financial statements includes normal recurring adjustments and reflects all
adjustments which are, in our opinion, necessary for a fair presentation of the
results of operations and statements of financial position for the interim
periods presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such rules and regulations. We believe that the disclosures
are adequate to make the information presented not misleading when read in
conjunction with the financial statements and the notes thereto included in our
Annual Report on Form 10-K, as filed with the Securities and Exchange Commission
for the period ended December 31, 2002.
Revenues and operating results for the six months ended June 30, 2003 are
not necessarily indicative of the results to be expected for the full year.
2. INVENTORIES
Inventories consisted of the following (in thousands):
June 30, December 31,
2003 2002
-------- ------------
Raw materials $ 61,350 $ 62,016
Work-in-process 29,070 22,225
Finished goods 30,548 30,332
-------- ------------
$120,968 $ 114,573
======== ============
3. STOCKHOLDERS' INVESTMENT
Earnings (Loss) Per Share
Basic earnings (loss) per share were computed by dividing net income by the
weighted average number of Class A and Class B common shares outstanding during
the period. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 128, an entity that reports a discontinued operation, an
extraordinary item, or the cumulative effect of an accounting change in a period
shall use income from continuing operations, adjusted for preferred dividends,
as the control number in determining whether those potential common shares are
dilutive or antidilutive. As a result, diluted earnings (loss) per share, and
all other diluted per share amounts presented, were computed utilizing the same
number of potential common shares used in computing the diluted per share amount
for income from continuing operations, regardless if those amounts were
antidilutive to their respective basic per share amounts, as follows (in
thousands, except per share amounts):
- 7 -
Three months Six months
ended June 30, ended June 30,
--------------------- ---------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net income (loss) $ 10,840 $ (7,990) $ 19,997 $(201,958)
Interest expense on mandatorily redeemable
convertible preferred securities, net of tax 663 601 1,326 1,243
--------- --------- --------- ---------
Net income (loss) applicable to common
stockholders - diluted $ 11,503 $ (7,389) $ 21,323 $(200,715)
========= ========= ========= =========
Weighted average number of Class A
common shares outstanding 16,529 15,717 16,514 15,244
Weighted average number of Class B
common shares outstanding 1,761 2,218 1,761 2,631
--------- --------- --------- ---------
18,290 17,935 18,275 17,875
Dilutive effect of outstanding stock options
after application of the treasury stock method 112 689 110 542
Dilutive effect of mandatorily redeemable
convertible preferred securities, assuming
conversion 1,289 1,289 1,289 1,289
--------- --------- --------- ---------
Diluted shares outstanding 19,691 19,913 19,674 19,706
========= ========= ========= =========
Basic earnings (loss) per share $ 0.59 $ (0.45) $ 1.09 $ (11.30)
========= ========= ========= =========
Diluted earnings (loss) per share $ 0.58 $ (0.37) $ 1.08 $ (10.19)
========= ========= ========= =========
Stock-Based Compensation Plans
Dura has elected to continue accounting for its stock-based compensation
plans under APB Opinion No. 25, "Accounting for Stock Issued to Employees",
under which no compensation cost has been recognized during the six months ended
June 30, 2003 and 2002, as the exercise prices of all options are equal to the
market value of Dura's stock on the grant date. Had compensation cost for these
plans been determined as required under SFAS No. 123, "Accounting for
Stock-Based Compensation", Dura's pro forma net income (loss) and pro forma
earnings (loss) per share would have been as follows (in thousands, except per
share amounts):
- 8 -
Three months ended Six months ended
June 30, June 30,
------------------------ --------------------------
2003 2002 2003 2002
--------- ----------- ----------- -----------
Net income (loss)
As Reported - Basic $ 10,840 $ (7,990) $ 19,997 $ (201,958)
Pro Forma $ 9,883 $ (8,838) $ 18,160 $ (203,572)
As Reported - Diluted $ 11,503 $ (7,389) $ 21,323 $ (200,715)
Pro Forma $ 10,546 $ (8,237) $ 19,486 $ (202,329)
Basic earnings (loss) per share
As Reported $ 0.59 $ (0.45) $ 1.09 $ (11.30)
Pro Forma $ 0.54 $ (0.49) $ 0.99 $ (11.39)
Diluted earnings (loss) per share
As Reported $ 0.58 $ (0.37) $ 1.08 $ (10.19)
Pro Forma $ 0.54 $ (0.41) $ 0.99 $ (10.27)
The effect of the stock issued under the Employee Stock Purchase Plan was
not material for 2003 and 2002. The fair value of each option grant is estimated
on the date of the grant using the Black-Scholes option-pricing model with the
following weighted average assumptions: risk-free interest rates of 2.0 percent
and 3.1 percent, expected life of four years and an average expected volatility
of 85 percent and 81 percent for the quarters ended June 30, 2003 and 2002,
respectively. For the six months ended June 30, 2003 and 2002, the following
weighted average assumptions were used: risk-free interest rates of 2.5 percent
and 3.1 percent, expected life of four years and an average expected volatility
of 82 percent and 81 percent, respectively.
4. ACQUISITIONS
On June 19, 2003, Dura reached an agreement with Heywood Williams Group PLC
(United Kingdom) to acquire its Creation Group, a premier designer and
manufacturer of windows, doors and specialty products for the North American
recreation vehicle, motor vehicle accessories and manufactured housing markets.
The Creation Group, headquartered in Elkhart, Indiana, had 2002 revenues of $145
million, and has approximately 1,100 employees at 10 facilities in Indiana, Ohio
and Pennsylvania. Financial terms of the deal included a purchase price of $57
million, subject to a working capital adjustment and an earn out provision of an
additional $3 million if the acquired entity achieves certain financial targets.
Dura used cash on hand to finance the transaction, which closed on July 23,
2003. The acquisition will be accounted for using the purchase method of
accounting and, accordingly, the assets acquired and liabilities assumed will be
recorded at fair value as of the date of acquisition, with the excess purchase
price recorded as goodwill. The pro forma effects of this transaction are not
material to Dura's results of operations.
5. DISCONTINUED OPERATIONS
During the fourth quarter of 2002, Dura adopted a plan to divest its
Mechanical Assemblies Europe business, as it believed this business would not
assist Dura in reaching its strategic growth and profitability targets for the
future. The Mechanical Assemblies Europe business generated annualized revenues
of approximately $111.9 million from facilities in Grenoble and Boynes, France;
and Woodley, Nottingham and Stourport, UK. In March 2003, Dura completed the
divestiture of its Mechanical Assemblies Europe business to Magal Engineering
and members of the local management group, located in Woodley, England.
- 9 -
The Mechanical Assemblies Europe divestiture was treated as a discontinued
operation under SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". The results of operations of the Mechanical Assemblies
Europe business and the related charges have been classified as discontinued
operations in the consolidated statements of operations, and prior periods have
been recast to present Mechanical Assemblies Europe as a discontinued operation
in all periods presented.
In conjunction with that decision, Dura recorded a loss from the European
Mechanical Assemblies business of approximately $107.4 million in the fourth
quarter of 2002, of which approximately $15.0 million will be paid for in cash.
Including the previously disclosed and reported divestiture of the Steering Gear
product line in the second quarter of 2002 and the European pedal product line
in the third quarter of 2002, the total loss from discontinued operations for
the year ended December 31, 2002 was $126.6 million, on which no tax benefit was
recorded. These losses related primarily to asset write-downs of $53.3 million,
contractual commitments and transaction related costs of $15.0 million, and
year-to-date operating losses of $58.3 million. The operating losses included a
pension settlement charge of $18.1 million and facility consolidation costs
related to the Steering and Pedal product line disposals completed in the second
and third quarter of 2002 of $19.2 million and $2.4 million, respectively.
During the quarter ended March 31, 2003, as part of the final negotiations
surrounding the disposal, a net positive adjustment of $0.9 million was recorded
upon disposal of the discontinued operations, which, when included with the loss
from operations of approximately $1.9 million, resulted in a net loss from
discontinued operations of approximately $1.0 million in the quarter. An
additional net positive adjustment of $0.7 million was recorded during the
second quarter from a more favorable settlement of retained liabilities than
anticipated, resulting in a net loss from discontinued operations of
approximately $0.3 million in the six months ended June 30, 2003.
At June 30, 2003, Dura had reserves related to the divestiture of the
European Mechanical Assemblies business of $18.5 million, including estimated
severance, facility consolidation and other contractual commitments. The
severance payments are anticipated to be complete by December 31, 2003. The
contractual commitments related to the facilities retained by Dura, principally
lease costs, are anticipated to be completed in 2021.
Net assets of discontinued operations included the following (in
thousands):
December 31,
2002
------------
Assets:
Cash, accounts receivable and inventories $ 31,457
Notes receivable, prepaids and other assets 584
Liabilities:
Accounts payable 21,808
Accrued liabilities 4,123
------------
Net assets of discontinued operations 6,110
Less - Current portion asset (6,110)
------------
Noncurrent portion asset $ -
============
- 10 -
Summary operating results of the discontinued operations are as follows (in
thousands):
Three months Six months
ended June 30, ended June 30,
--------------------- -----------------------
2003 2002 2003 2002
----- --------- -------- ---------
Revenues $ - $ 28,900 $ 14,992 $ 61,224
Cost of sales - 32,417 16,053 67,825
----- --------- -------- ---------
Gross loss - (3,517) (1,061) (6,601)
Selling, general and administrative expenses - 1,277 787 2,529
Facility consolidation and other charges - 19,225 - 19,225
Amortization expense - 71 - 143
----- --------- -------- ---------
Operating loss - (24,090) (1,848) (28,498)
Interest expense, net - 21 29 99
Provision for income taxes - 1,919 - 1,826
----- --------- -------- ---------
Net loss from discontinued operations $ - $ (26,030) $ (1,877) $ (30,423)
===== ========= ======== =========
6. FACILITY CONSOLIDATION AND OTHER CHARGES
Business Exits
In November 2001, Dura entered into a definitive agreement to divest its
Plastic Products business for total proceeds of approximately $41.0 million. The
transaction closed on January 28, 2002. The Plastic Products business designed,
engineered, and manufactured plastic components for a wide variety of automotive
vehicle applications, focusing on the metal to plastic conversion and dual
plastic applications markets. This business employed approximately 750 people in
three facilities located in Mishawaka, Indiana; Bowling Green, Kentucky; and
Jonesville, Michigan and generated approximately $80.0 million in annual
revenue. Two members of Dura's Board of Directors are members of management of
an investor group which is general partner of the controlling shareholder of the
acquiring company. Dura recorded a noncash charge of approximately $7.4 million
in the fourth quarter of 2001 for the estimated loss upon divestment. In the
second quarter of 2002, Dura recorded an additional $1.9 million charge related
to final negotiation of purchase price adjustments. The effect of this
divestiture on future operating results will not be significant.
Facility Consolidation
During the second quarter of 2003, in order to improve capacity
utilization, Dura announced a plan to exit its Fulton, Kentucky facility in
North America. This action resulted in a second quarter 2003 restructuring
charge of $1.5 million, including severance of $0.3 million and facility closure
and other costs of $1.2 million. The decision to close the Fulton facility
resulted in a reduction in the work force of approximately 27 salaried and 277
hourly employees, of which 1 salaried and 28 hourly have been let go as of June
30, 2003. These restructuring actions are anticipated to be complete by June 30,
2004. Costs incurred and charged to the reserve as of June 30, 2003 amounted to
$1.2 million in facility closure and other costs. The effect of the costs
expensed as incurred are reflected as facility consolidation and other charges
in the June 30, 2003 consolidated statement of operations and were accounted for
in accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities" (see Note 13). Dura expects to incur additional
restructuring charges related to the exit of the Fulton facility of $6.4 million
through the end of 2003, including severance of $1.3 million and facility
closure and other costs of $5.1 million.
- 11 -
During the fourth quarter of 2002, Dura continued to evaluate its worldwide
capacity utilization and opportunities for cost reductions. As a result, Dura
announced a plan to exit its Livonia, Michigan facility and its Cauvigny, France
facilities. These actions resulted in a fourth quarter 2002 restructuring charge
of $12.9 million. The charge related to the consolidation of the Livonia
facility included severance related costs of $0.7 million, asset impairment of
$3.2 million and other facility consolidation costs of $0.1 million. Dura also
expensed as incurred certain other costs of $0.2 million during the first
quarter of 2003 and $0.3 million during the second quarter of 2003. The charge
related to the consolidation of the Cauvigny facility included severance related
costs of $7.7 million and asset impairment of $1.2 million. Additionally, Dura
made an adjustment to reverse previously recorded facility consolidation
reserves of $0.3 million during the fourth quarter of 2002.
Costs incurred and charged to the reserve related to the consolidation of
these two facilities as of June 30, 2003 amounted to $0.4 million in severance
related costs.
The decision to exit these two facilities resulted in a reduction in the
work force of approximately 228 salaried and 127 hourly employees, of which 10
salaried and 88 hourly have been let go as of June 30, 2003. These restructuring
actions are anticipated to be complete by December 31, 2003.
During the third quarter of 2002, in order to improve capacity utilization,
Dura announced a plan to combine its Benton Harbor, Michigan and Butler, Indiana
facilities in North America. This action resulted in a third quarter 2002
restructuring charge of $1.1 million, including severance of $0.6 million and
facility closure costs of $0.5 million. Additionally, Dura expensed as incurred
certain equipment relocation costs of $0.1 million. The decision to close the
Benton Harbor facility resulted in a reduction in the work force of
approximately 12 salaried and 44 hourly employees, all of which have been let go
as of June 30, 2003. These restructuring actions are anticipated to be complete
by September 30, 2003. Dura expensed as incurred certain equipment relocation
costs of $0.3 million and other costs of $0.4 million during the fourth quarter
of 2002, and an additional $0.1 million of other costs during the first quarter
of 2003 related to the closure of the Benton Harbor facility. Costs incurred and
charged to the reserve as of June 30, 2003 amounted to $0.5 million in severance
related costs and $0.5 million in facility closure costs. The effect of the
costs expensed as incurred are reflected as facility consolidation and other
charges in the June 30, 2003 consolidated statement of operations.
7. ACQUISITION INTEGRATIONS
Dura has developed and implemented the majority of the facility
consolidation plans designed to integrate the operations of past acquisitions.
As of June 30, 2003, purchase liabilities recorded in conjunction with the
acquisitions included approximately $12.0 million for costs associated with the
shutdown and consolidation of certain acquired facilities and $2.7 million for
severance and other related costs. Costs incurred and charged to these reserves
amounted to $0.5 million related to acquired facilities during the quarter ended
June 30, 2003. The remaining employee terminations and facility consolidations
were completed by the end of 2002 except for certain contractual obligations,
principally facility lease obligations that extend beyond that date.
- 12 -
8. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
June 30, December 31,
2003 2002
------------ --------------
Credit Agreement:
Tranche C term loan $ 148,875 $ 149,250
Senior notes 350,000 350,000
Subordinated notes 566,370 556,632
Senior notes - derivative
instrument adjustment 37,712 30,523
Other 17,951 20,326
------------ --------------
1,120,908 1,106,731
Less - Current maturities (5,325) (7,154)
------------ --------------
Total long-term debt $ 1,115,583 $ 1,099,577
============ ==============
In March 1999, Dura entered into an amended and restated $1.15 billion
credit agreement ("Credit Agreement"). The Credit Agreement originally provided
for revolving credit facilities of $400.0 million, a $275.0 million tranche A
term loan, a $275.0 million tranche B term loan and a $200.0 million interim
term loan facility.
In April 2002, Dura completed the offering of $350.0 million 8 5/8 percent
senior unsecured notes ("Senior Notes"), due April 2012. The interest on the
Senior Notes is payable semi-annually beginning October 15, 2002. Net proceeds
from this offering of approximately $341.0 million were used to repay the
outstanding balance of the $275.0 million tranche A term loan, and a portion of
the $275.0 million tranche B term loan. Dura then replaced the remaining tranche
B term loan with a $150.0 million tranche C term loan. In addition, the
revolving credit facility was decreased to $390.0 million. Borrowings under the
tranche C term loan are based on LIBOR and are due and payable in December 2008
with no early payment penalties. In conjunction with these transactions, Dura
obtained an amendment to the Credit Agreement to allow for the Senior Notes
offering and to further adjust certain financial covenants. Dura also entered
into a fixed to floating interest rate swap (notional amount of $325.0 million)
with various financial institutions that more closely mirrors the cost of its
bank debt (see Note 10). In connection with the repayment of borrowings
outstanding under the Credit Agreement, Dura wrote-off debt issuance costs of
approximately $3.4 million, consisting of a loss of $5.5 million net of an
income tax benefit of $2.1 million, during the second quarter of 2002. In
accordance with the adoption of SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections",
effective January 1, 2003, Dura reclassified the $5.5 million loss to a
component of income from continuing operations and the related income tax
benefit of $2.1 million to the provision for income taxes.
As of June 30, 2003, rates on borrowings under the Credit Agreement are
based on LIBOR and were 3.82 percent. The revolving credit facility is available
until March 2005. Borrowings under the interim loan were due and payable in
September 2000, and, as further discussed below, were repaid in April 1999. The
Credit Agreement contains various restrictive covenants which limit
indebtedness, investments, rental obligations and cash dividends. The Credit
Agreement also requires Dura to maintain certain financial ratios including debt
and interest coverage. Dura was in compliance with the covenants as of June 30,
2003. Borrowings under the Credit Agreement are collateralized by substantially
all assets of Dura.
- 13 -
The Credit Agreement provides Dura with the ability to denominate a portion
of its revolving credit borrowings in foreign currencies up to an amount equal
to $150.0 million. As of June 30, 2003, Dura had no borrowings outstanding under
the revolver.
Dura also utilizes uncommitted overdraft facilities to satisfy the
short-term working capital requirements of its foreign subsidiaries. At June 30,
2003, Dura had $0.4 million outstanding under its overdraft facilities. At June
30, 2003, Dura had overdraft facilities available from banks of approximately
$54.0 million.
In April 1999, Dura completed the offering of $300.0 million and Euro 100.0
million of 9 percent senior subordinated notes ("Subordinated Notes"), due May
2009. The interest on the Subordinated Notes is payable semi-annually. Net
proceeds from this offering of approximately $394.7 million were used to repay
the $200.0 million interim term loan, approximately $78.1 million to retire
other indebtedness and approximately $118.9 million was used for general
corporate purposes. In June 2001, Dura completed a similar offering of 9 percent
senior subordinated notes due May 2009 with a face amount of $158.5 million. The
interest on these notes is also payable semi-annually. Unamortized discount and
debt issuance costs were approximately $8.5 million, yielding an imputed
interest rate of 10 percent. Net proceeds of approximately $147.1 million were
used to reduce the borrowings outstanding under the revolving credit facility.
These notes are collateralized by guarantees of certain of Dura's subsidiaries.
9. BUSINESS COMBINATIONS, GOODWILL AND INTANGIBLE ASSETS
In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires all
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method of accounting. Under SFAS No. 142, goodwill and intangible
assets with indefinite lives are no longer amortized, but reviewed for
impairment annually, or more frequently if impairment indicators arise.
Separable intangible assets that are not deemed to have indefinite lives will
continue to be amortized over their useful lives, but with no maximum life. The
amortization provisions of SFAS No. 142 apply to goodwill and intangible assets
acquired after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, Dura adopted SFAS No. 142 effective January 1,
2002.
Upon completion of the required assessments under SFAS No. 142, it was
determined that the fair market value of the goodwill assigned to Dura's Control
Systems and Other Operating Companies reporting units was lower than its book
value, resulting in a transitional impairment charge of approximately $205.2
million, representing the write-off of 25 percent of the Control Systems
reporting unit goodwill and 100 percent of the Other Operating Companies
reporting unit goodwill. The write-off was recorded as a cumulative effect of a
change in accounting principle in Dura's consolidated statement of operations
for the quarter ended March 31, 2002. There have been no changes in the carrying
value of goodwill since December 31, 2002, other than fluctuations due to
changes in foreign currency exchange rates.
During the second quarter of 2003, Dura performed its annual impairment
assessment related to goodwill and other intangible assets. Based upon Dura's
annual assessment, no impairment of goodwill or other intangible assets has
occurred.
10. DERIVATIVES AND HEDGING ACTIVITIES
Dura is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. Dura does not enter into derivatives or
other financial instruments for trading or speculative purposes. Dura enters
into financial instruments to
- 14 -
manage and reduce the impact of changes in foreign currency exchange rates and
interest rates. The counter parties to these financial instruments are major
financial institutions.
Dura uses forward exchange contracts to hedge its foreign currency exposure
related to the interest payments under its outstanding Euro 100.0 million
denominated Subordinated Notes. Dura designated these contracts at their
inception as a cash flow hedge. At June 30, 2003, Dura had an outstanding
contract to purchase Euro 4.5 million (approximately $5.2 million), representing
the interest payments due during 2003. The estimated fair value of these foreign
exchange contracts based upon market quotes was approximately $5.1 million. The
net unrealized loss of approximately $0.1 million is included in accumulated
other comprehensive income in the accompanying June 30, 2003 condensed
consolidated balance sheet.
In June 2003, in connection with the $150.0 million tranche C term loan,
Dura entered into floating to fixed interest rate swaps (notional amount of
$145.0 million) with various financial institutions. At their inception Dura
designated these contracts to qualify for the short-cut method for hedge
accounting. At June 30, 2003, these swap contracts outstanding had a fair value
based upon market quotes of approximately $0.1 million and this amount is
included in accumulated other comprehensive income in the accompanying June 30,
2003 condensed consolidated balance sheet.
In April 2002, in connection with the Senior Notes offering, Dura entered
into fixed to floating interest rate swaps (notional amount of $325.0 million)
with various financial institutions. At their inception Dura designated these
contracts as fair value hedges. At June 30, 2003, these swap contracts
outstanding had a fair value based upon market quotes of approximately $37.7
million and this amount is included in the consolidated balance sheet as of June
30, 2003.
11. COMPREHENSIVE INCOME (LOSS)
Comprehensive income reflects the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources. For Dura, comprehensive income (loss) represents net income
(loss) adjusted for foreign currency translation adjustments, minimum pension
liability and the deferred gain/ loss on derivative instruments utilized to
hedge Dura's interest and foreign exchange exposures. Comprehensive income
(loss) for the periods is as follows (in thousands):
Three months ended Six months ended
June 30, June 30,
------------------------ -----------------------
2003 2002 2003 2002
--------- --------- ---------- ----------
Net income (loss) $ 10,840 $ (7,990) $ 19,997 $ (201,958)
Other comprehensive income:
Foreign currency
translation adjustment 47,122 46,110 42,214 39,079
Minimum pension liability (98) - (124) -
Derivative instruments (40) (1,102) 693 (699)
--------- --------- ---------- ----------
Comprehensive income (loss) $ 57,824 $ 37,018 $ 62,780 $ (163,578)
========= ========= ========== ==========
12. LEGAL, ENVIRONMENTAL AND WARRANTY
Dura is subject to various legal actions and claims incidental to its
business, including those arising out of alleged defects, product warranties,
employment-related matters and environmental matters. For
- 15 -
example, Dura faces an inherent business risk of exposure to product liability
and warranty claims in the event that its products fail to perform as expected
and such failure of our products results, or is alleged to result, in bodily
injury and/or property damage. OEMs are increasingly requiring their outside
suppliers to guarantee or warrant their products and bear the costs of repair
and replacement of such products under new vehicle warranties. Depending on the
terms under which Dura supplies products to an OEM, an OEM may hold Dura
responsible for some or all of the repair or replacement costs of defective
products under new vehicle warranties when the product supplied did not perform
as represented. Dura's policy is to record reserves for legal, environmental and
customer warranty costs on a case by case basis at the time it believes such
amount is probable and estimable and to review these determinations on a
quarterly basis, or more frequently, as additional information is obtained. Dura
has established reserves for issues that are probable and estimable in amounts
management believes are adequate to cover reasonable adverse judgments. Dura
determines its warranty reserve based on identified claims and the estimated
ultimate projected claim cost. The final amounts determined to be due related to
these matters could differ significantly from recorded estimates. Dura carries
insurance for certain legal matters including product liability; however, it no
longer carries insurance for warranty matters, as the cost and availability for
such insurance, in the opinion of management, is cost prohibitive or not
available. The following presents a summary of Dura's legal, environmental and
warranty position (in thousands):
Balance at December 31, 2002 $ 35,066
Reductions for payments made (4,766)
Additional reserves recorded 1,092
Changes in pre-existing reserves 1,943
---------
Balance at June 30, 2003 $ 33,335
=========
13. NEW ACCOUNTING PRONOUNCEMENTS
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS
No. 150 requires issuers to classify as liabilities (or assets in some
circumstances) three classes of freestanding financial instruments that embody
obligations for the issuer. Generally, SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and is otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. The adoption of this statement is not anticipated to have a material
effect of Dura's results of operations or financial position.
In January 2003, the FASB issued FASB Interpretation No. ("FIN") 46,
"Consolidation of Variable Interest Entities". The Interpretation addresses the
consolidation of variable interest entities, including entities commonly
referred to as special purpose entities. Dura is required to apply FIN 46 to all
new variable interest entities created or acquired after January 31, 2003. For
variable interest entities created or acquired prior to February 1, 2003, Dura
is required to apply FIN No. 46 beginning on July 1, 2003. Dura is currently
assessing the impact of the adoption of this statement and believes it will
result in a reclassification of the Convertible Trust Preferred Securities
("Preferred Securities") from the mezzanine section of the balance sheet to
other long-term liabilities. In addition, Dura believes the adoption of this
statement will result in a reclassification of Minority Interest - Dividends on
Trust Preferred Securities, Net, from its current classification in the
statement of operations to a component of interest expense on a gross basis.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," which amends SFAS No. 123,
"Accounting for Stock-Based Compensation." SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirement of SFAS No. 123 to require more prominent and
more frequent disclosures in financial statements of the effects of stock-based
compensation. The transition guidance and annual disclosure provisions of SFAS
No. 148 are effective for fiscal years ending after December 15, 2002. The
interim disclosure provisions are effective for financial reports containing
condensed financial
- 16 -
statements for interim periods beginning after December 15, 2002. The adoption
of the new disclosure provisions of SFAS No. 148 (see Note 3) did not impact
Dura's consolidated balance sheet or results of operations.
In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". FIN 45 clarifies the requirements for a guarantor's
accounting for and disclosure of certain guarantees issued and outstanding. The
initial recognition and initial measurement provisions of FIN 45 are applicable
to guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. The adoption of FIN 45 did not
have a significant impact on Dura's consolidated balance sheet or results of
operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between SFAS No.
146 and EITF 94-3 relates to SFAS No. 146's requirements for the timing of
recognizing a liability for a cost associated with an exit or disposal activity.
SFAS No. 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under EITF 94-3
a liability for an exit cost was recognized at the date of an entity's
commitment to an exit plan. SFAS No. 146 must be applied prospectively for exit
or disposal activities that are initiated after December 31, 2002. SFAS No. 146
also increases the disclosure requirements associated with exit or disposal
activities. During the second quarter of 2003, Dura applied the provisions of
SFAS No. 146 in connection with its decision to exit its Fulton, Kentucky
facility. The adoption did not significantly impact Dura's current financial
position or results of operations. Dura will continue to apply the provisions of
SFAS No. 146 as further exit or disposal activities are initiated in the future.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This statement eliminates the automatic classification of gain or
loss on extinguishment of debt as an extraordinary item of income and requires
that such gain or loss be evaluated for extraordinary classification under the
criteria of APB Opinion No. 30 "Reporting Results of Operations." This statement
also requires sale-leaseback accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions, and makes
various other technical corrections to existing pronouncements. This statement
was effective for Dura beginning January 1, 2003. The application of this
statement during the second quarter of 2002 in connection with certain financing
transactions resulted in a reclassification of the write-off of debt issuance
costs from an extraordinary item to a component of income from continuing
operations.
14. RELATED PARTY TRANSACTION
In November 2001, Dura entered into a definitive agreement to divest its
Plastic Products business for total proceeds of approximately $41.0 million. The
transaction closed on January 28, 2002. Two members of Dura's Board of Directors
are members of management of an investor group, which is general partner of the
controlling shareholder of the acquiring company.
In 1999, Dura and its former chairman, who is currently a member of Dura's
Board of Directors, formed Automotive Aviation Partners, LLC ("AAP") to
facilitate purchase of a corporate airplane. Dura owns 25 percent of AAP and
Dura's former chairman owns 75 percent. Each party provided guarantees for their
ownership percent in favor of the AAP's lending institution; Dura's guarantee is
for $1.25 million. In 2001, Dura loaned approximately $1.2 million to AAP (the
"Dura Loan") to enable it to make a principal and interest payment to the
lending institution. The former chairman has personally
- 17 -
guaranteed repayment of 75 percent of this loan. The Dura Loan was due and
payable in October 2002. Subsequently, Dura and its former chairman established
a repayment schedule with respect to the former chairman's guarantee, for which
the initial payment has been received.
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
The following condensed consolidating financial information presents
balance sheets, statements of operations and of cash flows related to Dura's
business. Each Guarantor, as defined, is a direct or indirect wholly owned
subsidiary of Dura and has fully and unconditionally guaranteed the 9% senior
subordinated notes issued by Dura Operating Corp., on a joint and several basis.
Separate financial statements and other disclosures concerning the Guarantors
have not been presented because management believes that such information is not
material to investors.
- 18 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS AS OF JUNE 30, 2003
(AMOUNTS IN THOUSANDS - UNAUDITED)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 87,255 $ 1,070 $ 74,643 $ - $ 162,968
Accounts receivable, net 22,451 83,751 210,447 - 316,649
Inventories 10,655 36,043 74,270 - 120,968
Current portion of derivative
instruments 15,000 - - - 15,000
Other current assets 24,105 20,056 75,020 - 119,181
Due from affiliates 153,724 43,214 5,444 (202,382) -
------------ ------------ ------------ ------------ ------------
Total current assets 313,190 184,134 439,824 (202,382) 734,766
------------ ------------ ------------ ------------ ------------
Property, plant and equipment, net 59,173 116,628 272,974 - 448,775
Investment in subsidiaries 962,658 22,500 72,834 (1,057,992) -
Notes receivable from affiliates 172,985 526,179 41,169 (740,333) -
Goodwill, net 421,835 81,332 302,988 - 806,155
Noncurrent portion of derivative
instruments 22,712 - - - 22,712
Other assets, net 49,570 (3,906) (233) - 45,431
------------ ------------ ------------ ------------ ------------
Total Assets $ 2,002,123 $ 926,867 $ 1,129,556 $ (2,000,707) $ 2,057,839
============ ============ ============ ============ ============
Liabilities and Stockholders'
Investment
Current liabilities:
Accounts payable $ 36,620 $ 77,726 $ 148,235 $ - $ 262,581
Accrued liabilities 69,731 27,857 118,220 - 215,808
Current maturities of long-term debt 1,500 62 3,763 - 5,325
Due to affiliates 47,561 126,898 27,923 (202,382) -
------------ ------------ ------------ ------------ ------------
Total current liabilities 155,412 232,543 298,141 (202,382) 483,714
------------ ------------ ------------ ------------ ------------
Long-term debt, net of current
maturities 147,385 20 14,096 - 161,501
Senior notes 350,000 - - - 350,000
Subordinated notes 566,370 - - - 566,370
Senior notes - derivative instrument
adjustment 37,712 - - - 37,712
Other noncurrent liabilities 61,681 12,362 61,333 - 135,376
Notes payable to affiliates 402,228 121,154 216,951 (740,333) -
------------ ------------ ------------ ------------ ------------
Total liabilities 1,720,788 366,079 590,521 (942,715) 1,734,673
------------ ------------ ------------ ------------ ------------
Mandatorily redeemable convertible
trust preferred securities 55,250 - - - 55,250
Stockholders' investment 226,085 560,788 539,035 (1,057,992) 267,916
------------ ------------ ------------ ------------ ------------
Total Liabilities and
Stockholders' Investment $ 2,002,123 $ 926,867 $ 1,129,556 $ (2,000,707) $ 2,057,839
============ ============ ============ ============ ============
- 19 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED JUNE 30, 2003
(AMOUNTS IN THOUSANDS - UNAUDITED)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
Revenues $ 86,260 $ 230,959 $ 302,335 $ (13,124) $ 606,430
Cost of sales 79,735 192,792 268,769 (13,124) 528,172
------------ ------------ ------------ ------------ ------------
Gross profit 6,525 38,167 33,566 - 78,258
Selling, general and administrative
expenses 16,197 7,112 15,591 - 38,900
Facility consolidation and other charges 294 1,435 29 - 1,758
Amortization expense 60 1 10 - 71
------------ ------------ ------------ ------------ ------------
Operating income (10,026) 29,619 17,936 - 37,529
Interest expense (income), net 18,266 (27) 2,449 - 20,688
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations
before provision for income taxes and
minority interest (28,292) 29,646 15,487 - 16,841
Provision (benefit) for income taxes (8,569) 9,546 5,072 - 6,049
Equity in earnings of affiliates, net (30,048) - (1,002) 31,050 -
Minority interest - dividends on trust
preferred securities, net 663 - - - 663
Dividends from affiliates (1,178) - - 1,178 -
------------ ------------ ------------ ------------ ------------
Income from continuing operations 10,840 20,100 11,417 (32,228) 10,129
Loss from discontinued operations - - 711 - 711
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 10,840 $ 20,100 $ 12,128 $ (32,228) $ 10,840
============ ============ ============ ============ ============
- 20 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 2003
(AMOUNTS IN THOUSANDS - UNAUDITED)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
Revenues $ 171,512 $ 461,587 $ 592,515 $ (26,379) $ 1,199,235
Cost of sales 159,374 386,610 524,943 (26,379) 1,044,548
------------ ------------ ------------ ------------ ------------
Gross profit 12,138 74,977 67,572 - 154,687
Selling, general and administrative
expenses 32,024 14,198 31,213 - 77,435
Facility consolidation and other charges 487 1,508 29 - 2,024
Amortization expense 119 3 19 - 141
------------ ------------ ------------ ------------ ------------
Operating income (20,492) 59,268 36,311 - 75,087
Interest expense (income), net 36,104 (55) 5,325 - 41,374
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations
before provision for income taxes and
minority interest (56,596) 59,323 30,986 - 33,713
Provision (benefit) for income taxes (17,146) 19,116 10,153 - 12,123
Equity in earnings of affiliates, net (58,383) - (1,909) 60,292 -
Minority interest - dividends on trust
preferred securities, net 1,326 - - - 1,326
Dividends from affiliates (2,390) - - 2,390 -
------------ ------------ ------------ ------------ ------------
Income from continuing operations 19,997 40,207 22,742 (62,682) 20,264
Loss from discontinued operations - - (267) - (267)
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 19,997 $ 40,207 $ 22,475 $ (62,682) $ 19,997
============ ============ ============ ============ ============
- 21 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED JUNE 30, 2003
(AMOUNTS IN THOUSANDS)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
OPERATING ACTIVITIES:
Income from continuing operations $ 19,997 $ 40,207 $ 22,742 $ (62,682) $ 20,264
Adjustments to reconcile income (loss)
from continuing operations to net cash
provided by operating activities:
Depreciation and amortization 5,405 10,855 21,283 - 37,543
Deferred income taxes (245) 245 227 - 227
Equity in earnings of affiliates and
minority interest (58,383) - (1,909) 60,292 -
Changes in other operating items 15,069 (1,890) (35,521) - (22,342)
------------ ------------ ------------ ------------ ------------
Net cash provided by operating activities (18,157) 49,417 6,822 (2,390) 35,692
------------ ------------ ------------ ------------ ------------
INVESTING ACTIVITIES:
Capital expenditures, net (2,542) (5,078) (12,242) - (19,862)
------------ ------------ ------------ ------------ ------------
FINANCING ACTIVITIES:
Long-term borrowings 542 - 14,963 - 15,505
Repayments of long-term borrowings (375) (42) (19,063) - (19,480)
Debt financing (to) from affiliates 18,579 (41,348) 22,769 - -
Proceeds from issuance of common stock
and exercise of stock options 335 - - - 335
Other, net (1) - - - (1)
Dividends paid - (2,390) - 2,390 -
------------ ------------ ------------ ------------ ------------
Net cash (used in) provided by financing
activities 19,080 (43,780) 18,669 2,390 (3,641)
EFFECT OF EXCHANGE RATE
CHANGES ON CASH 9,196 - (7,496) - 1,700
------------ ------------ ------------ ------------ ------------
NET CHANGE IN CASH AND CASH
EQUIVALENTS FROM CONTINUING
OPERATIONS 7,577 559 5,753 - 13,889
NET CASH FLOW FROM
DISCONTINUED OPERATIONS - - 5,842 - 5,842
CASH AND CASH EQUIVALENTS:
Beginning of period 79,678 511 63,048 - 143,237
------------ ------------ ------------ ------------ ------------
End of period $ 87,255 $ 1,070 $ 74,643 $ - $ 162,968
============ ============ ============ ============ ============
- 22 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2002
(AMOUNTS IN THOUSANDS)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 79,678 $ 511 $ 63,048 $ - $ 143,237
Accounts receivable, net 18,155 65,038 162,422 - 245,615
Inventories 12,378 37,705 64,490 - 114,573
Current poriton of derivative
instruments 15,825 - - - 15,825
Other current assets 31,335 19,579 52,961 - 103,875
Current assets of discontinued
operations - - 32,041 - 32,041
Due from affiliates 138,066 43,052 3,870 (184,988) -
------------ ------------ ------------ ------------ ------------
Total current assets 295,437 165,885 378,832 (184,988) 655,166
------------ ------------ ------------ ------------ ------------
Property, plant and equipment, net 62,024 122,827 259,628 - 444,479
Investment in subsidiaries 839,678 22,501 70,925 (933,104) -
Notes receivable from affiliates 251,329 516,734 42,961 (811,024) -
Goodwill, net 421,835 81,332 271,816 - 774,983
Noncurrent portion of derivative
instruments 14,698 - - - 14,698
Other assets, net 53,343 (3,903) (1,833) - 47,607
------------ ------------ ------------ ------------ ------------
Total Assets $ 1,938,344 $ 905,376 $ 1,022,329 $ (1,929,116) $ 1,936,933
============ ============ ============ ============ ============
Liabilities and Stockholders'
Investment
Current liabilities:
Accounts payable $ 37,511 $ 65,413 $ 113,121 $ - $ 216,045
Accrued liabilities 59,473 24,712 109,788 - 193,973
Current maturities of long-term debt 1,500 84 5,570 - 7,154
Current liabilities of discontinued
operations - - 25,931 - 25,931
Due to affiliates 46,495 107,641 30,852 (184,988) -
------------ ------------ ------------ ------------ ------------
Total current liabilities 144,979 197,850 285,262 (184,988) 443,103
------------ ------------ ------------ ------------ ------------
Long-term debt, net of current
maturities 147,760 39 14,623 - 162,422
Senior notes 350,000 - - - 350,000
Subordinated notes 556,632 - - - 556,632
Senior notes - derivative instrument
adjustment 30,523 - - - 30,523
Other noncurrent liabilities 64,119 12,939 57,143 - 134,201
Notes payable to affiliates 384,020 175,109 251,895 (811,024) -
------------ ------------ ------------ ------------ ------------
Total liabilities 1,678,033 385,937 608,923 (996,012) 1,676,881
------------ ------------ ------------ ------------ ------------
Mandatorily redeemable convertible
trust preferred securities 55,250 - - - 55,250
Stockholders' investment 205,061 519,439 413,406 (933,104) 204,802
------------ ------------ ------------ ------------ ------------
Total Liabilities and
Stockholders' Investment $ 1,938,344 $ 905,376 $ 1,022,329 $ (1,929,116) $ 1,936,933
============ ============ ============ ============ ============
- 23 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED JUNE 30, 2002
(AMOUNTS IN THOUSANDS)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
Revenues $ 468,517 $ (77,618) $ 257,952 $ (10,468) $ 638,383
Cost of sales 403,239 (73,436) 225,558 (10,468) 544,893
------------ ------------ ------------ ------------ ------------
Gross profit (loss) 65,278 (4,182) 32,394 - 93,490
Selling, general and administrative
expenses 18,341 1,451 14,568 - 34,360
Facility consolidation and other charges 1,863 - - - 1,863
Amortization expense 184 1 34 - 219
------------ ------------ ------------ ------------ ------------
Operating income (loss) 44,890 (5,634) 17,792 - 57,048
Interest expense (income), net 13,051 (28) 7,929 - 20,952
Loss on early extinguishment of debt 5,520 - - - 5,520
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations
before provision for income taxes and
minority interest 26,319 (5,606) 9,863 - 30,576
Provision for income taxes 3,232 6,378 2,325 - 11,935
Equity in losses (earnings) of affiliates, net 210,621 - (1,439) (209,182) -
Minority interest - dividends on trust
preferred securities, net 601 - - - 601
Dividends from affiliates (825) - - 825 -
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations (187,310) (11,984) 8,977 208,357 18,040
Loss from discontinued operations - - (26,030) - (26,030)
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (187,310) $ (11,984) $ (17,053) $ 208,357 $ (7,990)
============ ============ ============ ============ ============
- 24 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 2002
(AMOUNTS IN THOUSANDS)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
Revenues $ 561,683 $ 197,816 $ 486,934 $ (24,192) $ 1,222,241
Cost of sales 492,758 153,164 427,589 (24,192) 1,049,319
------------ ------------ ------------ ------------ ------------
Gross profit 68,925 44,652 59,345 - 172,922
Selling, general and administrative
expenses 31,353 7,885 28,137 - 67,375
Facility consolidation and other charges 1,863 - - - 1,863
Amortization expense 474 3 66 - 543
------------ ------------ ------------ ------------ ------------
Operating income 35,235 36,764 31,142 - 103,141
Interest expense (income), net 27,154 (50) 16,316 - 43,420
Loss on early extinguishment of debt 5,520 - - - 5,520
------------ ------------ ------------ ------------ ------------
Income from continuing operations before
provision for income taxes and
minority interest 2,561 36,814 14,826 - 54,201
Provision for income taxes 4,374 12,113 2,814 - 19,301
Equity in losses (earnings) of affiliates, net 200,737 - (2,581) (198,156) -
Minority interest - dividends on trust
preferred securities, net 1,243 - - - 1,243
Dividends from affiliates (1,835) - - 1,835 -
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations (201,958) 24,701 14,593 196,321 33,657
Loss from discontinued operations - - (30,423) - (30,423)
------------ ------------ ------------ ------------ ------------
Income (loss) before accounting change (201,958) 24,701 (15,830) 196,321 3,234
Cumulative effect of change in accounting,
net - - (205,192) - (205,192)
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (201,958) $ 24,701 $ (221,022) $ 196,321 $ (201,958)
============ ============ ============ ============ ============
- 25 -
15. CONDENSED CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
(Continued)
DURA AUTOMOTIVE SYSTEMS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED JUNE 30, 2002
(AMOUNTS IN THOUSANDS)
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
OPERATING ACTIVITIES:
Income (loss) from continuing operations $ (201,958) $ 24,701 $ 14,593 $ 196,321 $ 33,657
Adjustments to reconcile income (loss)
from continuing operations to net cash
provided by operating activities:
Depreciation and amortization 6,894 11,312 15,985 - 34,191
Deferred income taxes 3,361 3,876 (6,393) - 844
Equity in (earnings) losses of affiliates and
minority interest 200,737 - (2,581) (198,156) -
Changes in other operating items 306,753 62,735 (317,779) - 51,709
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities 315,787 102,624 (296,175) (1,835) 120,401
------------ ------------ ------------ ------------ ------------
INVESTING ACTIVITIES:
Net proceeds from disposition of businesses 31,122 - - - 31,122
Capital expenditures, net (3,231) (4,751) (16,629) - (24,611)
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) investing
activities 27,891 (4,751) (16,629) - 6,511
------------ ------------ ------------ ------------ ------------
FINANCING ACTIVITIES:
Repayments of revolving credit facilities (59,267) - (3,057) - (62,324)
Long-term borrowings 150,542 - 14,497 - 165,039
Repayments of long-term borrowings (399,792) (56) (66,817) - (466,665)
Proceeds from issuance of senior notes 350,000 - - - 350,000
Debt issue costs (10,964) - - - (10,964)
Debt financing (to) from affiliates (335,380) (96,403) 431,783 - -
Proceeds from issuance of common stock
and exercise of stock options 3,704 - - - 3,704
Other, net 239 - - - 239
Dividends paid - (1,835) - 1,835 -
------------ ------------ ------------ ------------ ------------
Net cash (used in) provided by financing
activities (300,918) (98,294) 376,406 1,835 (20,971)
EFFECT OF EXCHANGE RATE
CHANGES ON CASH 7,461 - (1,764) - 5,697
------------ ------------ ------------ ------------ ------------
NET CHANGE IN CASH AND CASH
EQUIVALENTS FROM CONTINUING
OPERATIONS 50,221 (421) 61,838 - 111,638
NET CASH FLOW FROM
DISCONTINUED OPERATIONS - - (19,748) - (19,748)
CASH AND CASH EQUIVALENTS:
Beginning of period 10,661 1,889 19,739 - 32,289
------------ ------------ ------------ ------------ ------------
End of period $ 60,882 $ 1,468 $ 61,829 $ - $ 124,179
============ ============ ============ ============ ============
- 26 -
16. SUBSEQUENT EVENTS
On July 3, 2003, Dura commenced a tender offer for all of the
outstanding Class B Common Stock and associated preferred share purchase rights
(together, the "Class B Shares") of Methode Electronics, Inc. ("Methode") at a
price of $23.00 per share in cash. As of June 5, 2003, there were 1,087,305
shares of Class B Common Stock outstanding. Methode's Class A Common Stock is
not subject to the tender offer. The tender offer is subject to customary
conditions, including a majority of Methode's Class B shares on a fully diluted
basis being tendered and not withdrawn and the holders of Class B Common Stock
continuing to have the right to elect directors representing up to approximately
75 percent of Methode's board of directors. The offer is not subject to due
diligence or financing.
On July 21, 2003, Methode announced that it had redeemed 750,000 shares
of the Class B Common Stock held by the William J. McGinley Marital trusts and
affiliated family members (collectively, the "McGinley Stockholders") at $22.75
per share. Methode and the McGinley Stockholders agreed to engage in a merger
transaction which will result in all of the remaining holders of Class B Shares
receiving $23.55 per share. After such redemption, there were 337,305 shares of
Class B Common Stock outstanding.
On July 23, 2003, Dura completed its acquisition of Creation Group. The
acquisition will be accounted for using the purchase method of accounting and,
accordingly, the assets acquired and liabilities assumed will be recorded at
fair value as of the date of acquisition, with the excess purchase price
recorded as goodwill.
On August 5, 2003, Dura amended its tender offer in response to the
redemption of Class B Shares by Methode to increase the price to be paid to
$50.00 per Class B share from $23.00 per Class B share and to commit, upon
completion of the offer, to fund a special distribution of $0.35 per share to
the holders of Class A Common Stock. The tender offer is currently scheduled to
expire on August 18, 2003.
- 27 -
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial
condition and results of operations ("MD&A") should be read in conjunction with
the MD&A included in our Annual Report on Form 10-K for the year ended December
31, 2002.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2003 TO THE THREE MONTHS ENDED
JUNE 30, 2002
Revenues - Revenues for the three months ended June 30, 2003 were
$606.4 million, a decrease of $32.0 million, or 5.0%, from $638.4 million for
the three months ended June 30, 2002. Factors that unfavorably impacted sales
included decreased volumes in the North American automotive market along with
the continued weaknesses in the European automotive and the recreation vehicle
markets. Further decreases related to a decrease in sales related to the run-out
of Dura's conventional window regulator business. Offsetting these unfavorable
items were the strengthening of the European currencies in relation to the U.S.
dollar as well as an increase in net new business in Dura's core products.
Cost of Sales - Cost of sales for the three months ended June 30, 2003
were $528.2 million, a decrease of $16.7 million, or 3.1%, from $544.9 million
for the three months ended June 30, 2002. Cost of sales as a percentage of
revenues for the second quarter of 2003 increased to 87.1% for 2003 compared to
85.4% in the second quarter of 2002. The increase is primarily the result of a
change in the revenue mix between regions, as the European region represented a
greater percentage of Dura's revenue in the second quarter of 2003 than in the
second quarter of 2002, impacted by the strengthening of the European currencies
in relation to the U.S. dollar. Also contributing to the increase were the
impact of increased employee benefit costs and the weakness in the recreation
vehicle market.
Selling, General, and Administrative - Selling, general, and
administrative expenses for the three months ended June 30, 2003 were $38.9
million, an increase of $4.5 million, or 13.1%, from $34.4 million for the three
months ended June 30, 2002. As a percentage of revenue, selling, general and
administrative expenses increased to 6.4% for 2003 compared to 5.4% in the
second quarter of 2002. The increase in cost is primarily the result of the
impact of increased employee benefit costs, higher insurance premiums and
foreign exchange in the second quarter of 2003. Dura's goal is to reallocate
certain of the selling, general and administrative expenses to further support
organic growth while obtaining a 6.0% expense as a percentage of revenue.
Facility Consolidation and Other Charges - During the second quarter of
2003, in order to improve capacity utilization, Dura announced a plan to exit
its Fulton, Kentucky facility in North America. This action resulted in a second
quarter 2003 restructuring charge of $1.5 million, including severance of $0.3
million and facility closure and other costs of $1.2 million. The decision to
close the Fulton facility resulted in a reduction in the work force of
approximately 27 salaried and 277 hourly employees, of which 1 salaried and 28
hourly have been let go as of June 30, 2003. These restructuring actions are
anticipated to be complete by June 30, 2004. Costs incurred and charged to the
reserve as of June 30, 2003 amounted to $1.2 million in facility closure and
other costs. The effect of the costs expensed as
-28-
incurred are reflected as facility consolidation and other charges in the June
30, 2003 consolidated statement of operations and were accounted for in
accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities" (see Note 13). Dura expects to incur additional
restructuring charges related to the exit of the Fulton facility of $6.4 million
through the end of 2003, including severance of $1.3 million and facility
closure and other costs of $5.1 million.
During the fourth quarter of 2002, Dura continued to evaluate its
worldwide capacity utilization and opportunities for cost reductions. As a
result, Dura announced a plan to exit its Livonia, Michigan facility and its
Cauvigny, France facility. These actions resulted in a fourth quarter 2002
restructuring charge of $12.9 million. The charge related to the consolidation
of the Livonia facility included severance related costs of $0.7 million, asset
impairment of $3.2 million and other facility consolidation costs of $0.1
million. Dura also expensed as incurred certain other costs of $0.2 million
during the first quarter of 2003 and $0.3 million during the second quarter of
2003. The charge related to the consolidation of the Cauvigny facility included
severance related costs of $7.7 million and asset impairment of $1.2 million.
Additionally, Dura made an adjustment to reverse previously recorded facility
consolidation reserves of $0.3 million during the fourth quarter of 2002.
Amortization Expense - Amortization expense for the three months ended
June 30, 2003, was $0.1 million, which is basically flat compared to $0.2
million for the three months ended June 30, 2002.
Interest Expense - Interest expense for the three months ended June 30,
2003 was $20.7 million, a decrease of $0.3 million, or 1.3%, from $21.0 million
for the three months ended June 30, 2002. The decrease in interest expense is
due to lower average interest rates on LIBOR based borrowings in the second
quarter of 2003.
Loss on Early Extinguishment of Debt - In connection with the repayment
of borrowings outstanding under the Credit Agreement, Dura wrote-off debt
issuance costs of approximately $3.4 million, consisting of a loss of $5.5
million net of an income tax benefit of $2.1 million, during the second quarter
of 2002. In accordance with the adoption of SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections", effective January 1, 2003, Dura reclassified the $5.5 million loss
to a component of income from continuing operations and the related income tax
benefit of $2.1 million to the provision for income taxes.
Income Taxes - The effective income tax rate was 35.9% for the three
months ended June 30, 2003 and 39.0% for the three months ended June 30, 2002.
The decrease in the effective tax rate relates primarily to differences in the
earnings composition by country from quarter to quarter. The overall effective
rates differed from statutory rates as a result of lower combined foreign tax
rates, the effects of state taxes and the provision of a valuation allowance on
certain losses in foreign jurisdictions.
Minority Interest - Minority interest for the three months ended June
30, 2003 and June 30, 2002 represents dividends, net of income tax benefits, on
the 7 1/2 percent Preferred Securities which were issued on March 20, 1998.
Discontinued Operations - During the fourth quarter of 2002, Dura
adopted a plan to divest its Mechanical Assemblies Europe business, as it
believed this business would not assist Dura in reaching its strategic growth
and profitability targets for the future. The Mechanical Assemblies Europe
business generated annualized revenues of approximately $111.9 million from
facilities in Grenoble and Boynes, France; and Woodley, Nottingham and
Stourport, UK. In March 2003, Dura completed the divestiture of its Mechanical
Assemblies Europe business to Magal Engineering and members of the local
management group, located in Woodley, England.
The Mechanical Assemblies Europe divestiture was treated as a
discontinued operation under SFAS No. 144. The results of operations of the
Mechanical Assemblies Europe business and the related charges have been
classified as discontinued operations in the consolidated statements of
operations, and prior periods have been recast to present Mechanical Assemblies
Europe as a discontinued operation in all periods presented.
During the quarter ended March 31, 2003, as part of the final
negotiations surrounding the disposal, a net positive adjustment of $0.9 million
was recorded upon disposal of the discontinued operations, which, when included
with the loss from operations of approximately $1.9 million, resulted in a net
loss from discontinued operations of approximately $1.0 million in the quarter.
An additional net positive
-29-
adjustment of $0.7 million was recorded during the second quarter from a more
favorable settlement of retained liabilities than anticipated, resulting in a
net loss from discontinued operations of approximately $0.3 million in the six
months ended June 30, 2003.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2003 TO THE SIX MONTHS ENDED JUNE
30, 2002
Revenues - Revenues for the six months ended June 30, 2003 were
$1,199.2 million, a decrease of $23.0 million, or 1.9%, from $1,222.2 million
for the six months ended June 30, 2002. Factors that unfavorably impacted sales
included decreased volumes in the North American automotive market along with
the continued weaknesses in the European automotive and the recreation vehicle
markets. Further decreases related to a decrease in sales related to the run-out
of Dura's conventional window regulator business. Offsetting these unfavorable
items were the strengthening of the European currencies in relation to the U.S.
dollar as well as an increase in net new business in Dura's core products.
Cost of Sales - Cost of sales for the six months ended June 30, 2003
were $1,044.5 million, a decrease of $4.8 million, or 0.4%, from $1,049.3
million for the six months ended June 30, 2002. Cost of sales as a percentage of
revenues for the first six months of 2003 increased to 87.1% for 2003 compared
to 85.9% in the first six months of 2002. The increase is primarily the result
of a change in the revenue mix between regions, as the European region
represented a greater percentage of Dura's revenue in the first six months of
2003 than in the first six months of 2002, impacted by the strengthening of the
European currencies in relation to the U.S. dollar. Also contributing to the
increase were the impact of increased employee benefit costs and the weakness in
the recreation vehicle market.
Selling, General, and Administrative - Selling, general, and
administrative expenses for the six months ended June 30, 2003 were $77.4
million, an increase of $10.1 million, or 14.9%, from $67.4 million for the six
months ended June 30, 2002. As a percentage of revenue, selling, general and
administrative expenses increased to 6.5% for 2003 compared to 5.5% in the first
six months of 2002. The increase in cost is primarily the result of the impact
of increased employee benefit costs, higher insurance premiums and foreign
exchange in the first six months of 2003. Dura's goal is to reallocate certain
of the selling, general and administrative expenses to further support organic
growth while obtaining a 6.0% expense as a percentage of revenue.
Facility Consolidation and Other Charges - During the second quarter of
2003, in order to improve capacity utilization, Dura announced a plan to exit
its Fulton, Kentucky facility in North America. This action resulted in a second
quarter 2003 restructuring charge of $1.5 million, including severance of $0.3
million and facility closure and other costs of $1.2 million. The decision to
close the Fulton facility resulted in a reduction in the work force of
approximately 27 salaried and 277 hourly employees, of which 1 salaried and 28
hourly have been let go as of June 30, 2003. These restructuring actions are
anticipated to be complete by June 30, 2004. Costs incurred and charged to the
reserve as of June 30, 2003 amounted to $1.2 million in facility closure and
other costs. The effect of the costs expensed as incurred are reflected as
facility consolidation and other charges in the June 30, 2003 consolidated
statement of operations and were accounted for in accordance with SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" (see Note
13). Dura expects to incur additional restructuring charges related to the exit
of the Fulton facility of $6.4 million through the end of 2003, including
severance of $1.3 million and facility closure and other costs of $5.1 million.
-30-
During the fourth quarter of 2002, Dura continued to evaluate its
worldwide capacity utilization and opportunities for cost reductions. As a
result, Dura announced a plan to exit its Livonia, Michigan facility and its
Cauvigny, France facility. These actions resulted in a fourth quarter 2002
restructuring charge of $12.9 million. The charge related to the consolidation
of the Livonia facility included severance related costs of $0.7 million, asset
impairment of $3.2 million and other facility consolidation costs of $0.1
million. Dura also expensed as incurred certain other costs of $0.2 million
during the first quarter of 2003 and $0.3 million during the second quarter of
2003. The charge related to the consolidation of the Cauvigny facility included
severance related costs of $7.7 million and asset impairment of $1.2 million.
Additionally, Dura made an adjustment to reverse previously recorded facility
consolidation reserves of $0.3 million during the fourth quarter of 2002.
During the third quarter of 2002, in order to improve capacity
utilization, Dura announced a plan to combine its Benton Harbor, Michigan and
Butler, Indiana facilities in North America. This action resulted in a third
quarter 2002 restructuring charge of $1.1 million, including severance of $0.6
million and facility closure costs of $0.5 million. Additionally, Dura expensed
as incurred certain equipment relocation costs of $0.1 million. The decision to
close the Benton Harbor facility resulted in a reduction in the work force of
approximately 12 salaried and 44 hourly employees, all of which have been let go
as of June 30, 2003. These restructuring actions are anticipated to be complete
by September 30, 2003. Dura expensed as incurred certain equipment relocation
costs of $0.3 million and other costs of $0.4 million during the fourth quarter
of 2002, and an additional $0.1 million of other costs during the first quarter
of 2003 related to the closure of the Benton Harbor facility. The effect of the
costs expensed as incurred are reflected as facility consolidation and other
charges in the consolidated statements of operations.
Amortization Expense - Amortization expense for the six months ended
June 30, 2003, was $0.1 million, which is basically flat compared to $0.5
million for the six months ended June 30, 2002.
Interest Expense - Interest expense for the six months ended June 30,
2003 was $41.4 million, a decrease of $2.0 million, or 4.7%, from $43.4 million
for the six months ended June 30, 2002. The decrease in interest expense is due
to lower average interest rates on LIBOR based borrowings in the first six
months of 2003.
Loss on Early Extinguishment of Debt - In connection with the repayment
of borrowings outstanding under the Credit Agreement, Dura wrote-off debt
issuance costs of approximately $3.4 million, consisting of a loss of $5.5
million net of an income tax benefit of $2.1 million, during the second quarter
of 2002. In accordance with the adoption of SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections", effective January 1, 2003, Dura reclassified the $5.5 million loss
to a component of income from continuing operations and the related income tax
benefit of $2.1 million to the provision for income taxes.
Income Taxes - The effective income tax rate was 36.0% for the six
months ended June 30, 2003 and 35.6% for the six months ended June 30, 2002. The
increase in the effective tax rate relates primarily to differences in the
earnings composition by country from quarter to quarter. The overall effective
rates differed from statutory rates as a result of lower combined foreign tax
rates, the effects of state taxes and the provision of a valuation allowance on
certain losses in foreign jurisdictions.
Minority Interest - Minority interest for the six months ended June 30,
2003 and June 30, 2002 represents dividends, net of income tax benefits, on the
7 1/2 percent Preferred Securities which were issued on March 20, 1998.
Discontinued Operations - During the fourth quarter of 2002, Dura
adopted a plan to divest its Mechanical Assemblies Europe business, as it
believed this business would not assist Dura in reaching its strategic growth
and profitability targets for the future. The Mechanical Assemblies Europe
business generated annualized revenues of approximately $111.9 million from
facilities in Grenoble and Boynes, France; and Woodley, Nottingham and
Stourport, UK. In March 2003, Dura completed the divestiture of its Mechanical
Assemblies Europe business to Magal Engineering and members of the local
management group, located in Woodley, England.
The Mechanical Assemblies Europe divestiture was treated as a
discontinued operation under SFAS No. 144. The results of operations of the
Mechanical Assemblies Europe business and the related
-31-
charges have been classified as discontinued operations in the consolidated
statements of operations, and prior periods have been recast to present
Mechanical Assemblies Europe as a discontinued operation in all periods
presented.
During the quarter ended March 31, 2003, as part of the final
negotiations surrounding the disposal, a net positive adjustment of $0.9 million
was recorded upon disposal of the discontinued operations, which, when included
with the loss from operations of approximately $1.9 million, resulted in a net
loss from discontinued operations of approximately $1.0 million in the quarter.
An additional net positive adjustment of $0.7 million was recorded during the
second quarter from a more favorable settlement of retained liabilities than
anticipated, resulting in a net loss from discontinued operations of
approximately $0.3 million in the six months ended June 30, 2003.
Adoption of SFAS No. 141 and 142 - In July 2001, the FASB issued SFAS
No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 141 requires all business combinations initiated
after June 30, 2001 to be accounted for using the purchase method of accounting.
Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no
longer amortized, but reviewed annually, or more frequently if impairment
indicators arise. Separable intangible assets that are not deemed to have
indefinite lives will continue to be amortized over their useful lives, but with
no maximum life. The amortization provisions of SFAS No. 142 apply to goodwill
and intangible assets acquired after June 30, 2001. With respect to goodwill and
intangible assets acquired prior to July 1, 2001, Dura adopted SFAS No. 142
effective January 1, 2002.
Upon completion of the required assessments under SFAS No. 142, it was
determined that the fair market value of the goodwill assigned to Dura's Control
Systems and Other Operating Companies reporting units was lower than its book
value, resulting in a transitional impairment charge of approximately $205.2
million, representing the write-off of 25 percent of the Control Systems
reporting unit goodwill and 100 percent of the Other Operating Companies
reporting unit goodwill. The write-off was recorded as a cumulative effect of a
change in accounting principle in Dura's consolidated statement of operations
for the quarter ended March 31, 2002. There have been no changes in the carrying
value of goodwill since December 31, 2002, other than fluctuations due to
changes in foreign currency exchange rates.
During the second quarter of 2003, Dura performed its annual impairment
assessment related to goodwill and other intangible assets. Based upon Dura's
annual assessment, no impairment of goodwill or other intangible assets has
occurred.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 2003, Dura provided cash from operations
of $35.7 million, compared to $120.4 million in 2002. Cash generated from
operations before changes in working capital items was $58.0 million for the
first six months of 2003 compared to $68.7 million for 2002. Working capital
used cash of $22.3 million in the first six months of 2003 compared to $51.7
million generated in 2002. This reduction in cash generated from working capital
is primarily the result of the strengthening of the European currencies in
relation to the US dollar.
Net cash used in investing activities was $19.9 million for the first
six months of 2003 compared to $6.5 million provided in 2002. Net capital
expenditures totaled $19.9 million for the first six months of 2003. The capital
expenditures were primarily for equipment and dedicated tooling purchases
related to new or replacement programs. This compares with net capital
expenditures of $24.6 million and net proceeds from disposition of the Plastic
Products business of $31.1 million in 2002.
Net cash used in financing activities totaled $3.6 million for the
first six months of 2003 compared to $21.0 million in 2002, principally for the
repayment of outstanding indebtedness.
-32-
In March 1999, Dura entered into an amended and restated $1.15 billion
credit agreement ("Credit Agreement"). The Credit Agreement originally provided
for revolving credit facilities of $400.0 million, a $275.0 million tranche A
term loan, a $275.0 million tranche B term loan and a $200.0 million interim
term loan facility.
In April 2002, Dura completed the offering of $350.0 million 8 5/8
percent senior unsecured notes ("Senior Notes"), due April 2012. The interest on
the Senior Notes is payable semi-annually beginning October 15, 2002. Net
proceeds from this offering of approximately $341.0 million were used to repay
the outstanding balance of the $275.0 million tranche A term loan, and a portion
of the $275.0 million tranche B term loan. Dura then replaced the remaining
tranche B term loan with a $150.0 million tranche C term loan. In addition, the
revolving credit facility was decreased to $390.0 million. Borrowings under the
tranche C term loan are based on LIBOR and are due and payable in December 2008
with no early payment penalties. In conjunction with these transactions, Dura
obtained an amendment to the Credit Agreement to allow for the Senior Notes
offering and to further adjust certain financial covenants. Dura also entered
into a fixed to floating interest rate swap (notional amount of $325.0 million)
with various financial institutions that more closely mirrors the cost of its
bank debt (see Note 10). In connection with the repayment of borrowings
outstanding under the Credit Agreement, Dura wrote-off debt issuance costs of
approximately $3.4 million, consisting of a loss of $5.5 million net of an
income tax benefit of $2.1 million, during the second quarter of 2002. In
accordance with the adoption of SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections",
effective January 1, 2003, Dura reclassified the $5.5 million loss to a
component of income from continuing operations and the related income tax
benefit of $2.1 million to the provision for income taxes.
As of June 30, 2003, rates on borrowings under the Credit Agreement are
based on LIBOR and were 3.82 percent. The revolving credit facility is available
until March 2005. Borrowings under the interim loan were due and payable in
September 2000, and, as further discussed below, were repaid in April 1999. The
Credit Agreement contains various restrictive covenants, which limit
indebtedness, investments, rental obligations and cash dividends. The Credit
Agreement also requires Dura to maintain certain financial ratios including debt
and interest coverage. Dura was in compliance with the covenants as of June 30,
2003. Borrowings under the Credit Agreement are collateralized by substantially
all assets of Dura.
The Credit Agreement provides Dura with the ability to denominate a
portion of its revolving credit borrowings in foreign currencies up to an amount
equal to $150.0 million. As of June 30, 2003, Dura had no borrowings outstanding
under the revolver.
Dura also utilizes uncommitted overdraft facilities to satisfy the
short-term working capital requirements of its foreign subsidiaries. At June 30,
2003, Dura had $0.4 million outstanding under its overdraft facilities. At June
30, 2003, Dura had overdraft facilities available from banks of approximately
$54.0 million. Dura believes the borrowing availability under its credit
agreement, uncommitted overdraft facilities and funds generated by operations,
should provide liquidity and capital resources to pursue its business strategy
for the foreseeable future, with respect to working capital, capital
expenditures, and other operating needs. Dura estimates its 2003 capital
expenditures will be approximately $70.0 million.
In April 1999, Dura completed the offering of $300.0 million and Euro
100.0 million of 9 percent senior subordinated notes ("Subordinated Notes"), due
May 2009. The interest on the Subordinated Notes is payable semi-annually. Net
proceeds from this offering of approximately $394.7 million were used to repay
the $200.0 million interim term loan, approximately $78.1 million to retire
other indebtedness and approximately $118.9 million was used for general
corporate purposes. In June 2001, Dura completed a similar offering of 9 percent
senior subordinated notes due May 2009 with a face
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amount of $158.5 million. The interest on these notes is also payable
semi-annually. Unamortized discount and debt issuance costs were approximately
$8.5 million, yielding an imputed interest rate of 10 percent. Net proceeds of
approximately $147.1 million were used to reduce the borrowings outstanding
under the revolving credit facility. These notes are collateralized by
guarantees of certain of Dura's subsidiaries.
Dura is limited as to its ability to declare or make certain dividend
payments or other distributions of assets under its Credit Agreement and
indentures. Certain distributions are permitted including a company stock
purchase program, tax sharing arrangements and distributions as required under
Dura's Preferred Securities.
QUARTERLY RESULTS OF OPERATIONS AND SEASONALITY
Dura typically experiences decreased revenues and operating income
during the third calendar quarter of each year due to production shutdowns at
OEMs for model changeovers and vacations. The recreational vehicle market is
seasonal in that sales in the fourth quarter are normally at reduced levels.
EFFECTS OF INFLATION
Inflation potentially affects Dura in two principal ways. First, a
significant portion of Dura's debt is tied to prevailing short-term interest
rates which may change as a result of inflation rates, translating into changes
in interest expense. Second, general inflation can impact material purchases,
labor and other costs. In many cases, Dura has limited ability to pass through
inflation-related cost increases due to the competitive nature of the markets
that Dura serves. In the past few years, however, inflation has not been a
significant factor.
FOREIGN CURRENCY TRANSACTIONS
A significant portion of Dura's revenues during the three and six
months ended June 30, 2003 were derived from manufacturing operations in Europe,
Canada and Latin America. The results of operations and the financial position
of Dura's operations in these countries are principally measured in their
respective currencies and translated into U.S. dollars. The effects of foreign
currency fluctuations in such countries are somewhat mitigated by the fact that
expenses are generally incurred in the same currencies in which revenues are
generated. The reported income of these subsidiaries will be higher or lower
depending on a weakening or strengthening of the U.S. dollar against the
respective foreign currencies.
A significant portion of Dura's assets at June 30, 2003 are based in
its foreign operations and are translated into U.S. dollars at foreign currency
exchange rates in effect as of the end of each period, with the effect of such
translation reflected as a separate component of stockholders' investment.
Accordingly, Dura's consolidated stockholders' investment will fluctuate
depending upon the weakening or strengthening of the U.S. dollar against the
respective foreign currencies.
Dura's strategy for management of currency risk relies primarily upon
conducting its operations in such countries' respective currencies and Dura may,
from time to time, engage in hedging programs intended to reduce Dura's exposure
to currency fluctuations.
NEW ACCOUNTING PRONOUNCEMENTS
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS
No. 150 requires issuers to classify as liabilities (or assets in some
circumstances) three classes of freestanding financial instruments that embody
obligations for the issuer. Generally, SFAS No. 150 is effective for financial
instruments entered into or
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modified after May 31, 2003 and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of this
statement is not anticipated to have a material effect of Dura's results of
operations or financial position.
In January 2003, the FASB issued FASB Interpretation No. ("FIN") 46,
"Consolidation of Variable Interest Entities". The Interpretation addresses the
consolidation of variable interest entities, including entities commonly
referred to as special purpose entities. Dura is required to apply FIN 46 to all
new variable interest entities created or acquired after January 31, 2003. For
variable interest entities created or acquired prior to February 1, 2003, Dura
is required to apply FIN No. 46 beginning on July 1, 2003. Dura is currently
assessing the impact of the adoption of this statement and believes it will
result in a reclassification of the Preferred Securities from the mezzanine
section of the balance sheet to other long-term liabilities. In addition, Dura
believes the adoption of this statement will result in a reclassification of
Minority Interest - Dividends on Trust Preferred Securities, Net, from its
current classification in the statement of operations to a component of
interest expense on a gross basis.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," which amends SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, SFAS
No. 148 amends the disclosure requirement of SFAS No. 123 to require more
prominent and more frequent disclosures in financial statements of the effects
of stock-based compensation. The transition guidance and annual disclosure
provisions of SFAS No. 148 are effective for fiscal years ending after December
15, 2002. The interim disclosure provisions are effective for financial reports
containing condensed financial statements for interim periods beginning after
December 15, 2002. The adoption of the new disclosure provisions of SFAS No. 148
(see Note 3) did not impact Dura's consolidated balance sheet or results of
operations.
In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". FIN 45 clarifies the requirements for a guarantor's
accounting for and disclosure of certain guarantees issued and outstanding. The
initial recognition and initial measurement provisions of FIN 45 are applicable
to guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. The adoption of FIN 45 did not
have a significant impact on Dura's consolidated balance sheet or results of
operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between SFAS No.
146 and EITF 94-3 relates to SFAS No. 146's requirements for the timing of
recognizing a liability for a cost associated with an exit or disposal activity.
SFAS No. 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under EITF 94-3
a liability for an exit cost was recognized at the date of an entity's
commitment to an exit plan. SFAS No. 146 must be applied prospectively for exit
or disposal activities that are initiated after December 31, 2002. SFAS No. 146
also increases the disclosure requirements associated with exit or disposal
activities. During the second quarter of 2003, Dura applied the provisions of
SFAS No. 146 in connection with its decision to exit its Fulton, Kentucky
facility. The adoption did not significantly impact Dura's current financial
position or results of operations. Dura will continue to apply the provisions of
SFAS No. 146 as further exit or disposal activities are initiated in the future.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This statement eliminates the automatic classification of gain or
loss on extinguishment of debt as an extraordinary item of income and requires
that such gain or loss be evaluated for extraordinary classification under the
criteria of APB
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Opinion No. 30 "Reporting Results of Operations." This statement also requires
sale-leaseback accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions, and makes various other
technical corrections to existing pronouncements. This statement was effective
for Dura beginning January 1, 2003. The application of this statement during
the second quarter of 2002 in connection with certain financing transactions
resulted in a reclassification of the write-off of debt issuance costs from an
extraordinary item to a component of income from continuing operations.
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in
this Form 10-Q, including without limitation the statements under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are,
or may be deemed to be, forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended. When used in this Form 10-Q, the words "anticipate,"
"believe," "estimate," "expect," "intends," and similar expressions, as they
relate to Dura, are intended to identify forward-looking statements. Such
forward-looking statements are based on the beliefs of Dura's management as well
as on assumptions made by and information currently available to Dura at the
time such statements were made. Various economic and competitive factors could
cause actual results to differ materially from those discussed in such
forward-looking statements, including factors which are outside the control of
Dura, such as risks relating to: (i) the degree to which Dura is leveraged; (ii)
Dura's reliance on major customers and selected models; (iii) the cyclicality
and seasonality of the automotive market; (iv) the failure to realize the
benefits of recent acquisitions and joint ventures; (v) obtaining new business
on new and redesigned models; (vi) Dura's ability to continue to implement its
acquisition strategy; and (vii) the highly competitive nature of the automotive
supply industry. All subsequent written and oral forward-looking statements
attributable to Dura or persons acting on behalf of Dura are expressly qualified
in their entirety by such cautionary statements.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In June 2003, in connection with the $150.0 million tranche C term
loan, Dura entered into floating to fixed interest rate swaps (notional amount
of $145.0 million) with various financial institutions. At their inception Dura
designated these contracts to qualify for the short-cut method for hedge
accounting. At June 30, 2003, these swap contracts outstanding had a fair value
based upon market quotes of approximately $0.1 million and this amount is
included in accumulated other comprehensive income in the accompanying June 30,
2003 condensed consolidated balance sheet.
In April 2002, in connection with the Senior Notes offering, Dura
entered into fixed to floating interest rate swaps (notional amount of $325.0
million) with various financial institutions. At their inception Dura designated
these contracts as fair value hedges. At June 30, 2003, these swap contracts
outstanding had a fair value based upon market quotes of approximately $37.7
million and this amount is included in the consolidated balance sheet as of June
30, 2003.
There have been no other material changes to our exposures to market
risk since December 31, 2002.
ITEM 4: CONTROLS AND PROCEDURES
As of the end of the period covered by this report, an evaluation was
carried out under the supervision and with the participation of Dura management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934). Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of these disclosure
controls and procedures were effective. No significant changes were made
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in our internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.
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PART II. OTHER INFORMATION
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings:
Other than as reported in Dura's 2002 Annual Report on Form 10-K under
the caption "Legal Proceedings," Dura is not currently a party to any
material pending legal proceedings, other than routine matters
incidental to the business of Dura.
Item 4. Submission of Matters to a Vote of Security Holders:
The annual Meeting of Stockholders of Dura Automotive Systems, Inc. was
held on May 20, 2003. At the meeting, the following matters were
submitted to a vote of the stockholders of Dura:
1. The election of nine directors to serve for one year be
beginning at the 2003 annual stockholders' meeting and
expiring at the 2004 annual stockholders' meeting. Each of the
nominees stockholders' meeting and expiring at the 2003 annual
stockholders' meeting. Each of the nominees Scott D. Rued,
Robert E. Brooker, Jr., Lawrence A. Denton, Jack K. Edwards,
James O. Futterknecht, Jr., S.A. Johnson, J. Richard Jones,
Karl F. Storrie and Ralph R. Whitney, Jr. were elected. Each
of the individuals nominated to serve as a director received
at least 26,631,007 votes, representing 87.3% of the shares
eligible to vote.
2. The adoption of an amendment to the Company's Employee Stock
Discount Purchase Plan. This amendment would increase the
number of Class A shares available for purchase under the Plan
from 500,000 shares to 1,000,000 shares. The amendment to the
Employee Stock Discount Purchase Plan was approved by
30,188,831 shares, or 98.9% of those eligible to vote.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
31.1 Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
31.2 Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None
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SIGNATURE
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.
DURA AUTOMOTIVE SYSTEMS, INC.
Date: August 13, 2003 By /s/ David R. Bovee
------------------
David R. Bovee
Vice President, Chief Financial Officer
(principal accounting and financial
officer)
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EXHIBIT INDEX
Exhibit 31.1 Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Exhibit 31.2 Certification Pursuant to Rule 13a-14(a) and 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002