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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
/ X / Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended September 28, 2002.
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period From
to .
---------------- ----------------
Commission file Number 333-49429-01
PRESTOLITE ELECTRIC HOLDING, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-3142033
-------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2311 Green Road, Ste. B., Ann Arbor, Michigan 48105
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(734) 913 - 6600
-----------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, address, and former fiscal year, if changed since last report)
Indicate whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Number of common shares outstanding
Class: as of November 8, 2002
Common Stock 1,977,000
Page 1
FORM 10-Q
TABLE OF CONTENTS
Part I: Financial Information
Item 1: Condensed Consolidated Balance Sheets 3
at September 28, 2002 (unaudited) and December 31, 2001
Condensed Consolidated Statements of Operations 4
Three and Nine months ended September 28, 2002 (unaudited)
and September 29, 2001 (unaudited)
Condensed Consolidated Statements of Cash Flows 5
Six months ended September 28, 2002 (unaudited)
and September 29, 2001 (unaudited)
Notes to Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial 15
Condition and Results of Operations
Item 4: Internal Controls and Procedures 20
Part II: Other Information 21
Signatures 22
Certification of the Chief Executive Officer pursuant to 23
Section 302 of the Sarbanes-Oxley Act of 2002
Certification of the Chief Financial Officer pursuant to 24
Section 302 of the Sarbanes-Oxley Act of 2002
Page 2
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 28, December 31,
2002 2001
------------------- --------------------
Assets (Unaudited)
Current Assets:
Cash $ 1,738 $ 2,907
Accounts receivable, net of allowances 30,424 24,900
Inventories, net 39,556 40,889
Prepaid and other current assets 3,788 4,280
------------------- --------------------
Total current assets 75,506 72,976
Property, plant and equipment, net 32,274 33,831
Investments 577 577
Goodwill 3,931 3,677
Other intangibles 3,506 3,414
Long-term receivables and pension assets 3,255 4,184
Net assets of discontinued operations 2,441 5,714
------------------- --------------------
Total assets $121,490 $124,373
=================== ====================
Liabilities
Current Liabilities:
Revolving credit $ 11,136 $ 6,834
Current portion of long-term debt 546 402
Accounts payable 16,392 18,351
Accrued liabilities 12,860 14,007
------------------- --------------------
Total current liabilities 40,934 39,594
Long-term debt 104,426 105,008
Other non-current liabilities 748 1,754
------------------- --------------------
Total liabilities 146,108 146,356
Minority interest 5,007 3,367
Stockholders' equity (deficit)
Common stock, par value $.01, 5,000,000 shares authorized, 1,977,000 and
1,985,000 shares issued and outstanding
at September 28, 2002 and December 31, 2001, respectively 2 2
Paid-in capital 16,623 17,269
Accumulated deficit (6,072) (6,131)
Notes receivable, employees' stock purchase, 7.74% due 2002 (272) (395)
Foreign currency translation adjustment (15,158) (11,470)
Treasury stock, 1,326,000 and 1,318,000 shares on
September 28, 2002 and December 31, 2001, respectively (24,748) (24,625)
------------------- --------------------
Total stockholders' equity (deficit) (29,625) (25,350)
------------------- --------------------
Total liabilities and stockholders' equity (deficit) $121,490 $124,373
=================== ====================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Page 3
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
For the three months ended For the nine months ended
-------------------------------------------- ---------------------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2002 2001 2002 2001
--------------------- ------------------- -------------------- ---------------
Net sales $ 43,152 $ 39,144 $120,535 $123,326
Cost of goods sold 32,789 31,080 91,506 98,721
--------------------- ------------------- -------------------- ---------------
Gross profit 10,363 8,064 29,029 24,605
Selling, general and administrative 5,047 5,623 16,143 16,200
Cost (benefit) associated with
change in option value (647) - (647) -
Argentina bad debt provision - 1,500 - 1,500
Severance charges 1,700 2,127 1,880 3,237
--------------------- ------------------- -------------------- ---------------
Operating income 4,263 (1,186) 11,653 3,668
Interest expense 2,816 3,501 8,432 9,844
Foreign exchange (gains) losses 62 (13) 1,025 19
Lease guarantee charge - - 400 -
Minority interest expense 741 398 1,641 398
Other expense (income) (94) (46) (132) (11)
--------------------- ------------------- -------------------- ---------------
Income (loss) before income taxes 738 (5,026) 287 (6,582)
Provision (benefit) from income taxes (238) (398) 228 (491)
--------------------- ------------------- -------------------- ---------------
Income (loss) before extraordinary item 976 (4,628) 59 (6,091)
Extraordinary item -
Gain on senior note repurchase, net of
taxes - - - 391
--------------------- ------------------- -------------------- ---------------
Net income (loss) 976 (4,628) 59 (5,700)
Other comprehensive income (loss):
Foreign currency translation
adjustment 540 619 (3,688) (877)
--------------------- ------------------- -------------------- ---------------
Comprehensive income (loss) $ 1,516 $ (4,009) $ (3,629) $ (6,577)
===================== =================== ==================== ===============
Basic and diluted earnings per common share
Income (loss) from operations $ 0.49 $ (2.33) $ 0.03 $ (3.07)
Extraordinary item - Gain on sr. note
repurch. - - - 0.20
--------------------- ------------------- -------------------- ---------------
Net income (loss) $ 0.49 $ (2.33) $ 0.03 $ (2.87)
===================== =================== ==================== ===============
Basic and diluted weighted average
shares outstanding 1,977,000 1,985,000 1,985,000 1,985,000
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Page 4
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the nine months ended
----------------------------------------------
September 28, September 29,
2002 2001
-------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 59 $ (5,700)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation 4,424 5,415
Amortization 537 931
Minority interest income 1,641 398
Cost (benefit) associated with change in option value (647) -
Gain on senior note purchase - (660)
Loss (gain) on sale of property, plant, and equipment 4 (44)
Deferred gain on sale and leaseback (144) (258)
Deferred taxes 19 (484)
Changes in working capital items (9,043) (8,219)
-------------------- --------------------
Net cash provided by (used in) continuing operating activities (3,150) (8,621)
Net cash provided by (used in) discontinued operations 2,865 (180)
-------------------- --------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (285) (8,801)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,133) (3,252)
Proceeds from disposal of fixed assets 6 203
Acquisition of Mosal (179) -
-------------------- --------------------
NET CASH USED IN INVESTING ACTIVITIES (3,306) (3,049)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in revolving line of credit 2,892 2,290
Payments on long-term debt (863) (1,113)
Proceeds from borrowings 362 2,016
Senior note repurchase - (1,065)
Purchase of treasury stock, options and warrants, employee stock receivable - 51
Borrowings (payments) on capital leases (300) (120)
Other financing costs, net (8) (33)
-------------------- --------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,083 2,026
Effect of exchange rate changes on cash 339 461
-------------------- --------------------
Net increase (decrease) in cash (1,169) (9,363)
Cash - beginning of period 2,907 10,181
-------------------- --------------------
CASH - END OF PERIOD $ 1,738 $ 818
==================== ====================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Page 5
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: GENERAL INFORMATION
Prestolite Electric Holding, Inc. conducts all of its operations through its
wholly-owned principal subsidiary, Prestolite Electric Incorporated. There are
no material differences between the financial statements of Prestolite Electric
Holding, Inc. and Prestolite Electric Incorporated (collectively, "Prestolite,"
"us," "we" or the "Company").
These unaudited consolidated financial statements have been prepared by us in
accordance with Rule 10-01 of Regulation S-X and have been prepared on a basis
consistent with our audited financial statements for the year ended December 31,
2001. These statements reflect all adjustments, including items of a normal
recurring nature, which are, in the opinion of management, necessary for the
fair presentation of the consolidated financial position, results of operations,
and cash flows for the interim periods presented.
Certain information and footnote disclosures normally included in the
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial statements
and the related notes should be read in conjunction with our audited financial
statements, the notes to those statements and the other material included in our
Annual Report on Form 10-K for the year ended December 31, 2001. The results of
operations for the three and nine-month periods ended September 28, 2002 are not
necessarily indicative of the operating results that may be expected for the
full year or any other interim period.
On January 22, 2002, the 1,920,000 shares of Prestolite Electric Holding, Inc.
formerly held by Genstar Capital Corporation were distributed to the 39
shareholders of Genstar Capital Corporation. The voting power associated with
the shares is exercised by Genstar Capital Corporation.
NOTE 2: ARGENTINA
Beginning in 1991 the Argentine government maintained the value of its currency
such that one Argentine peso equaled one U.S. dollar. During the second half of
2001, Argentina suffered a severe economic and monetary crisis. During most of
December 2001 and early January 2002 the banks in Argentina were closed. On
January 14, 2002, the banks reopened and the Argentina peso traded at $0.606 per
peso (1.65 pesos per dollar). The peso traded at $0.3396 (2.94 pesos per dollar)
on March 30, 2002 and as a result of using this rate, we recorded a first
quarter 2002 foreign exchange loss of $585,000 and a charge to other
comprehensive income of $4.4 million representing the cumulative translation
adjustment. The peso traded at $0.2597 ($3.85 pesos per dollar) on June 30,
2002. As a result, we recorded a second quarter 2002 foreign exchange loss of
$198,000 and an additional charge of $1.5 million to other comprehensive income.
The peso traded at $0.2688 ($3.72 pesos per dollar) on September 28, 2002. As a
result, we recorded a third quarter 2002 foreign exchange loss of $30,000 and
other comprehensive income of $142,000 representing the cumulative translation
adjustment.
Page 6
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
As discussed in Note 6, our practice in Argentina had been to borrow funds by
discounting post-dated checks received from our customers. Because Argentine
banks stopped lending during the second half of 2001, we provided financial
support to our Argentine subsidiary from North America, increasing the amount
lent to that subsidiary by $5.3 million during the year. During 2001 our
Argentine subsidiary reduced the non-debt discounted checks outstanding by $3.5
million and bank debt outstanding by $1.2 million. During the first quarter of
2002, we provided an additional $1.8 million of support to the Argentine
subsidiary, including $0.2 million associated with the MOSAL transaction
discussed in Note 7. In addition, our Argentine subsidiary reduced their
discounted checks outstanding and bank debt to zero. During each of the second
and third quarters, we provided $0.3 million of additional support, for a year
to date total of $2.4 million.
NOTE 3: DISCONTINUED OPERATIONS
On August 4, 2000, we sold our direct current electric motor business, our
battery charger business, and our switch business to Ametek, Inc. The adjusted
sale price was approximately $57.4 million, including $3.8 million and $0.5
million in escrow at December 31, 2001 and September 28, 2002, respectively.
Net assets related to discontinued operations at September 28, 2002 and December
31, 2001 are presented below (in thousands):
As of As of
September 28, December 31,
2002 2001
--------------------- ---------------------
(Unaudited)
Decatur facility held for sale $ 3,246 $ 3,254
Escrow and receivable 524 3,802
Accrued transaction costs and estimated sale price reductions (929) (1,342)
Lease guarantee provision - Thermadyne (400) -
--------------------- ---------------------
Total $ 2,441 $ 5,714
===================== =====================
In conjunction with the 1997 sale of our welding equipment business to
Thermadyne Holdings Corporation, Prestolite guaranteed annual lease payments of
$447,000 for a facility through October 31, 2006. In April 2002, Thermadyne,
which is operating under Chapter 11, notified Prestolite that Thermadyne was
unwilling to honor their Prestolite-guaranteed lease commitment, but were
willing to occupy a portion of the space at a reduced rate. In July 2002 we
reached a tentative agreement with Thermadyne whereby they will continue to
lease a portion of the space in question at a reduced rate. We expect to find
another tenant for the balance of the space. We recorded a charge of $0.4
million in the second quarter reflecting the estimated cost of this agreement.
Page 7
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS
In July 2001 the Financial Accounting Standards Board issued Statement of
Accounting Standard No. 142, "Goodwill and Other Intangible Assets" (SFAS 142).
SFAS 142 supercedes APB No. 17 and eliminated the then current requirement to
amortize goodwill and indefinite-lived intangible assets, addressed the
amortization of intangible assets with a defined life and impairment testing and
recognition for goodwill and intangible assets. SFAS No. 142 is effective for
2002. Accordingly, we have adopted SFAS No. 142 and will no longer amortize
goodwill. Goodwill will instead be assessed for impairment at least annually.
Under FAS 142, we were required to test all existing goodwill for impairment as
of January 1, 2002. We have completed this test and no recording of impairment
was required.
Changes in goodwill for the nine months ended September 28, 2002 follow (in
thousands):
Goodwill, December 31, 2001 $ 3,677
Impact of changes in foreign currency 254
----------------------
Goodwill, September 28, 2002 $ 3,931
======================
SFAS 142 does not provide for restatement of our results of operations for
periods ending prior to January 2002. Our results of operations for the quarter
and nine months ended September 29, 2001 included goodwill amortization expense
of $170,000 and $529,000, respectively, which affected the net loss by $113,000
and $349,000, respectively. Excluding the effect of goodwill amortization, our
reported net loss for the third quarter of 2001 would have been reduced from
$4.6 million to $4.5 million and our net loss for the nine months would have
been reduced from $5.7 million to $5.4 million. Our net loss per common share
would have been reduced from $2.33 to $2.27 per common share for the third
quarter and from $2.87 to $2.70 per common share for the nine months.
The following table summarizes the amortizable intangibles and changes for the
nine months ended September 28, 2002 (in thousands):
North South
America America Asia Total
------------------ --------------------- ------------------ -----------------
Balance at
December 31, 2001 $2,678 $ 84 $ 652 $ 3,414
Year to date
amortization expense (370) (89) (79) (538)
Additions - 406 71 477
Change in foreign exchange - 153 - 153
------------------ --------------------- ------------------ -----------------
Balance at
September 28, 2002 $2,308 $ 554 $ 644 $ 3,506
================== ===================== ================== =================
Page 8
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 5: INVENTORIES
Inventories are summarized as follows (in thousands):
As of As of
September 28, December 31,
2002 2001
--------------------- ----------------------
(Unaudited)
FIFO cost:
Raw material $ 21,912 $ 17,509
Work in progress 3,142 3,695
Finished goods 17,840 22,372
--------------------- ----------------------
Total FIFO cost $ 42,894 $ 43,576
Adjustment to LIFO cost 628 801
Reserves (3,966) (3,488)
--------------------- ----------------------
$ 39,556 $ 40,889
===================== ======================
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
As of As of
September 28, December 31,
2002 2001
---------------------- -------------------
(Unaudited)
Land & buildings $ 16,109 $ 17,463
Machinery & equipment 50,693 47,482
Construction in progress 1,781 1,957
---------------------- -------------------
Total, at cost $ 68,583 $ 66,902
Accumulated depreciation (36,309) (33,071)
---------------------- -------------------
Net $ 32,274 $ 33,831
====================== ===================
Page 9
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 7: DEBT
Debt consists of the following (in thousands):
As of As of
September 28, December 31,
2002 2001
--------------------- ---------------------
(Unaudited)
North America
Senior unsecured notes, 9.625% $ 100,108 $ 100,108
Revolving credit and float 2,892 789
--------------------- ---------------------
Total 103,000 100,897
United Kingdom
Overdraft facility 5,195 3,739
Term loans 4,568 5,401
South Africa 1,041 747
Argentina - 125
China 362 -
--------------------- ---------------------
Total 11,166 10,012
Total term, revolving credit and
senior debt 114,166 110,909
Capital lease obligations 886 1,212
Other 1,056 123
--------------------- ---------------------
Consolidated total 116,108 112,244
Less current maturities 11,682 7,236
--------------------- ---------------------
Consolidated long term debt $ 104,426 $ 105,008
--------------------- ---------------------
Cash 1,738 2,907
--------------------- ---------------------
Total debt net of cash $ 114,370 $ 109,337
===================== =====================
Our U.S. bank borrowing arrangements consist of a total of $13.5 million in
revolving credit and letter of credit facilities. Interest is payable on amounts
borrowed under the revolving credit facility at the bank's prime rate plus up to
another 0.75% depending upon amounts borrowed and our Funded Debt Ratio. We were
paying interest at 5.25% at September 28, 2002. The letter of credit fee is 2%
of amounts drawn. Both U.S. facilities are collateralized by eligible accounts
receivable and inventory. On September 28, 2002, $2.3 million of the revolving
credit and $1.1 million of letters of credit were outstanding.
The 9.625% (interest payable semiannually) senior notes are senior unsecured
obligations of Prestolite Electric Incorporated and are fully and
unconditionally guaranteed on a senior unsecured basis by Prestolite Electric
Holding, Inc. The notes mature on February 1, 2008, and are redeemable at our
option, in whole or in part, beginning on February 1, 2003 at amounts from
104.8125% to 100% of the principal plus accrued interest. The senior notes are
more fully described in our Prospectus dated June 26, 1998.
Page 10
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Our U.K. agreement consists of a (pound sterling)2.0 million fixed rate term
loan, a (pound sterling)2.0 million floating rate term loan, a (pound
sterling)1.4 million floating rate term loan and a (pound sterling)2.8 million
overdraft facility. Interest on the fixed rate loan is 8.144% while interest on
the floating-rate term loans and the overdraft facilities are at 1.375% above
the bank's base rate (4% at September 28, 2002). The term loans are repayable
in sixty monthly payments through January 2004 (fixed rate), November 2003 and
January 2005. The U.K. loans are collateralized by eligible receivables and
fixed assets in the United Kingdom. We had no unused availability from the U.K.
loans as of September 28, 2002.
In Argentina we had arrangements with several banks that allowed us to borrow by
discounting post-dated checks given to us by our customers. Depending on the
details of the arrangement with each bank, the resulting borrowing was recorded
as debt or as the sale of the underlying receivable. At September 28, 2002 and
December 31, 2001 we had, in addition to the debt shown in the table above, zero
and $263,000 of discounted checks which we recorded as the sale of a receivable.
There was no Argentine bank debt outstanding at September 28, 2002. In March
2002 our Argentine subsidiary acquired an Argentine corporation ("MOSAL") with
certain tax benefits for 4.0 million Argentine pesos, 500,000 pesos in cash and
3.5 million pesos due over the next three years. The 3.5 million pesos are shown
as $0.9 million of other debt.
In South Africa we borrow from a bank at the bank's prime lending rate. This
loan is supported by a pledge of South African receivables.
In China, the joint venture obtained a bank loan in the second quarter for Rmb
3.0 million ($362,000 translated at 8.28 Rmb to U.S. dollar on September 28,
2002). The term of this agreement is for six months at an interest rate of
4.62%.
We classified $11.7 million of debt as current at September 28, 2002. This
consisted of principal payments of $1.7 million due in the United Kingdom,
principal payments of $0.2 million due on lease rental obligations, $0.3 million
due for the MOSAL obligations, and $9.5 million of revolving debt which we
expect (but are not obligated) to pay down over the following twelve months.
The senior notes and bank arrangements mentioned above contain various covenants
including maintenance of certain financial ratios and limits on (a) issuance of
additional debt or preferred stock; (b) the payment of dividends and purchases,
redemptions or retirements of common stock; (c) investments; (d) sale of assets
and capital stock of subsidiaries; and (e) certain consolidations, mergers,
transfers of assets and certain other transactions with affiliates. Our U.S.
bank covenants require us to maintain a Funded Debt Ratio of not more than 7:1
and a Fixed Charge Coverage Ratio of not less that 1:1, as those terms are
defined in our bank agreements. The foreign facilities contain covenants that
pertain to the foreign operations.
Page 11
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 8: STOCK OPTIONS AND WARRANTS
During the third quarter of 2002 we recorded a benefit of $647,000 for the
decline in fair market value relative to the aggregate exercise price of certain
stock options whose terms were extended in the prior year.
NOTE 9: GEOGRAPHIC REGIONS
Prestolite operates in five principal geographic regions; each region's revenue
and operating performance is managed and reported separately. We evaluate
operating performance based on earnings before interest expense, taxes,
depreciation, amortization and certain other charges (EBITDA). Corporate
overhead and certain other charges are not allocated to the business/geographic
units. Sales from Africa and South America consist largely of products for the
automotive market while sales of products from North America and Europe consist
largely of products for non-automotive applications. In 2001 we began operation
of a joint venture in China, Prestolite Electric Beijing, Ltd., selling products
primarily for heavy duty vehicle applications.
Page 12
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Sales, assets and EBITDA are summarized by geographic region as follows (in
thousands):
North South
America Europe America Africa Asia Other Total
------- ------- ------- ------- ------- ------- -------
Sales to external customers, based on point of shipment
For quarter ended:
September 28, 2002 * $25,128 $ 9,017 $ 3,349 $ 1,450 $ 4,208 $ -- $ 43,152
September 29, 2001 * $19,323 $ 8,976 $ 6,931 $ 1,511 $ 2,403 $ -- $ 39,144
For six months ended:
September 28, 2002 * $70,845 $26,845 $ 8,051 $ 4,069 $11,085 $ -- $120,535
September 29, 2001 * $59,008 $29,030 $27,121 $ 5,764 $ 2,403 $ -- $123,326
Long-lived assets as of:
September 28, 2002 * $11,909 $14,790 $ 2,035 $ 1,046 $ 2,494 $ -- $ 32,274
December 31, 2001 $12,413 $14,673 $ 3,354 $ 1,084 $ 2,307 $ -- $ 33,831
Goodwill as of:
September 28, 2002 * $ 1,061 $ 2,870 $ -- $ -- $ -- $ -- $ 3,931
December 31, 2001 $ 1,061 $ 2,616 $ -- $ -- $ -- $ -- $ 3,677
Sales to external customers, based on location of customers
For quarter ended:
September 28, 2002 * $22,398 $ 7,390 $ 3,281 $ 1,382 $ 7,115 $ 1,586 $ 43,152
September 29, 2001 * $17,985 $ 7,463 $ 6,893 $ 1,502 $ 4,655 $ 646 $ 39,144
For nine months ended:
September 28, 2002 * $65,247 $23,061 $ 7,722 $ 3,986 $17,937 $ 2,582 $120,535
September 29, 2001 * $54,167 $25,145 $26,967 $ 5,830 $ 9,765 $ 1,452 $123,326
Unallocated
EBITDA Costs
For quarter ended:
September 28, 2002 * $ 4,473 $ 1,268 $ 1,014 $ 240 $ 1,527 $(1,455) $ 7,067
September 29, 2001 * $ 3,578 $ 1,439 $ (83) $ (19) $ 662 $ (896) $ 4,681
For nine months ended:
September 28, 2002 * $12,015 $ 3,915 $ 2,413 $ 487 $ 3,630 $(4,481) $17,979
September 29, 2001 * $10,059 $ 4,580 $ 1,884 $ 317 $ 662 $(2,740) $14,762
* Unaudited
Page 13
PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
A reconciliation of unaudited EBITDA to income (loss) from operations before
income taxes and extraordinary item follows (in thousands):
September 28, September 29, September 28, September 29,
2002 2001 2002 2001
------------ ----------- ------------- ------------
EBITDA $ 7,067 $ 4,681 $ 17,979 $ 14,762
Less:
Depreciation and amortization 1,657 2,194 4,961 6,346
Lease guarantee charge -- -- 400 --
Severance 1,700 2,127 1,880 3,237
Costs associated with option repricing (647) -- (647) --
Argentina bad debt adjustment -- 1,500 -- 1,500
Exchange loss 62 (13) 1,025 19
Interest expense 2,816 3,501 8,432 9,844
Minority interest 741 398 1,641 398
----------- ----------- ----------- -----------
Income (loss) from operations
before income taxes and
extraordinary item $ 738 $ (5,026) $ 287 $ (6,582)
=========== =========== =========== ===========
Page 14
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
OVERVIEW
We manufacture alternators, starter motors and other items for heavy duty,
automotive, defense and industrial markets. These are supplied under the
"Prestolite," "Leece-Neville," and "Indiel" brand names for original equipment
and aftermarket application on a variety of vehicles and industrial equipment.
Most of our products are component parts used on diesel and gasoline engines,
sold to both aftermarket customers and original equipment manufacturers. We sell
our products to a variety of markets, in terms of both end-use and geography.
We operate in five principal geographic regions. While each region primarily
sells in its own area, no location sells exclusively into its geographic region.
In 2001 we began operation of a joint venture in China, Prestolite Electric
Beijing, Ltd., manufacturing and selling alternators and starter motors
primarily for heavy duty vehicle applications.
Our North American and European facilities produce alternators, starter motors,
inline pumps, and other products, primarily for installation on diesel engines
used in the heavy duty, defense, marine and industrial markets. These facilities
are located in Arcade, NY; Florence, KY; Garfield, NJ; Acton, England; and
Leyland, England.
The African and South American facilities manufacture lighter duty alternators
and starter motors. These facilities are located in Johannesburg, South Africa;
and in Buenos Aires, San Lorenzo, and San Luis, Argentina. The Argentina
operation also manufactures distributors. In both South Africa and Argentina a
significant portion of our sales are to the automotive aftermarket, and a
portion of those aftermarket sales are products purchased for resale.
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 28, 2002 COMPARED TO QUARTER ENDED SEPTEMBER 29, 2001
Sales for the quarter ended September 28, 2002 were $43.2 million, an increase
of $4.1 million, or 10.2%, from $39.1 million in the third quarter of 2001. The
sales increase is attributable to the sales posted by China for 2002 of $4.2
million as compared to $2.4 million in 2001. Also contributing to the increase
were North American sales of $25.1 million for the third quarter of 2002
compared to North American sales of $19.3 million for the same period of 2001, a
30.0% increase. This increase resulted from higher defense product and original
equipment sales with commercial aftermarket sales about level. Offsetting these
increases were Argentinean sales of $3.3 million in the third quarter of 2002
compared to $6.9 million in the same period of 2001, a 51.7% decrease, mostly
attributable to the devaluation of the peso. European and South African sales
were steady, at $9.0 million and $1.5 million respectively for the third
quarters of both 2002 and 2001.
Gross profit was $10.4 million in the third quarter of 2002, or 24.0% of sales.
This compares to gross profit of $8.1 million, or 20.6% of sales, in the third
quarter of 2001. Continued control of product costs and improvement in our
Argentine cost structure (partly because of the peso devaluation) contributed to
the improvement. In addition, our gross margins have benefited from the
performance of our China joint venture.
Page 15
Selling, general, and administrative expense was $5.0 million, or 11.7% of sales
for the third quarter of 2002, a decrease of $0.6 million, or 10.2%, from $5.6
million, or 14.4% of sales, in the third quarter of 2001. The decrease in
selling, general, and administrative expense is the result of the Argentina peso
devaluation and the elimination of goodwill amortization.
During the third quarter of 2002 we recorded severance charges of $1.7 million,
primarily related to workforce reduction in the United Kingdom. During the third
quarter of 2001 we recorded severance charges of $2.1 million primarily related
to workforce reductions in Argentina. In 2001 we also recorded an extra $1.5
million charge to cover expected bad debt losses in Argentina. Also during the
third quarter of 2002, we recorded a $647,000 benefit related to the decline in
fair value of certain stock options.
Operating income in the third quarter of 2002 was $4.3 million, or 9.9% of
sales, an improvement of $5.5 million from the operating loss of $1.2 million in
the third quarter of 2001. This was due to the factors discussed above.
Other income was $94,000 in the third quarter of 2002 compared to other income
of $46,000 in the third quarter of 2001. This consists primarily of
miscellaneous income, royalty expense, and trademark expense.
Interest expense was $2.8 million in the third quarter of 2002, a decrease of
$0.7 million compared to $3.5 million in the third quarter of 2001. This
decrease is primarily due to the reductions in Argentina debt, partially offset
by increased debt in the United States.
The benefit from income taxes was $238,000, for the third quarter of 2002 as
compared to the $398,000 benefit from income taxes for the third quarter of
2001. The provision for taxes in the United States and China has been largely
offset by the benefit of taxes related to severance costs in the United Kingdom.
Argentina and South Africa have made no provisions for taxes and expect not to
pay taxes related to income for the period due to loss carry-forwards for which
no benefit was previously recorded
NINE MONTHS ENDED SEPTEMBER 28, 2002 COMPARED TO NINE MONTHS ENDED SEPTEMBER 29,
2001
Sales for the nine months ended September 28, 2002 were $120.5 million, a
decrease of $2.8 million, or 2.2% from the same period of 2001. The sales
decline is mostly attributable to the South American sales of $8.0 million in
the first nine months of 2002, a decrease of $19.1 million, or 70.3%, from sales
of $27.1 million in the first nine months of 2001, mostly as a result of the
peso devaluation. Also contributing to the decline in sales were European sales
of $26.5 million, a decrease of $2.5 million or 8.8% from the first nine months
of 2001 and African sales of $4.1 million, a decrease of $1.7 million or 29.4%
from the first nine months of 2001. These sales decreases were partially offset
by North American sales of $70.8 million, an increase of $11.8 million, or
20.1%, from sales of $59.0 million in the first nine months of 2001. This
increase is a result of defense product sales up 94% and original equipment
sales up 31% over the same period in 2001. The declines were also partially
offset by the sales from China of $11.1 million, an increase of $8.7 million or
361.3% from sales of $2.4 million reported in the first nine months of 2001.
Page 16
Gross profit was $29.0 million in the first nine months of 2002, or 24.1 % of
sales. This compares to gross profit of $24.6 million, or 20.0% of sales, in the
first nine months of 2001. Continued control of product costs and improvement in
our Argentine cost structure (partly because of the peso devaluation)
contributed to the improvement. In addition, our gross margins have benefited
from the performance of our China joint venture.
Selling, general, and administrative expense was $16.1 million, or 13.4% of
sales for the first nine months of 2002, a decrease of $57,000, or 0.4%, from
$16.2 million, or 13.1% of sales, in the first nine months of 2001. The decrease
in selling, general, and administrative expense is largely attributable to the
Argentina peso devaluation and to the elimination of goodwill amortization. An
increase in expense was incurred in our China operation as a result of the nine
month results reported in 2002 compared to four months in 2001.
During the nine months of 2002 we recorded severance charges of $1.9 million,
primarily related to workforce reductions in the United Kingdom. During the nine
months of 2001 we recorded severance charges of $3.2 million primarily related
to workforce reductions in Argentina. In 2001 we also recorded an extra $1.5
million charge to cover expected bad debt losses in Argentina. Also during the
third quarter of 2002, we recorded a $647,000 benefit related to the decline in
fair value of certain stock options.
Operating income in the first nine months of 2002 was $11.7 million, or 9.7% of
sales, an increase of $8.0 million, from the $3.7 million in the first nine
months of 2001. This was due to the factors discussed above.
Other income was $132,000 in the first nine months of 2002 compared to other
income of $11,000 in the first nine months of 2001. This consists primarily of
miscellaneous income, royalty expense, and trademark expense. In 2002 we also
recorded a $125,000 benefit resulting from the demutualization of an insurance
provider during the second quarter.
Interest expense was $8.4 million in the first nine months of 2002, a decrease
of $1.4 million compared to $9.8 million in the first nine months of 2001. This
decrease is primarily due to the reductions in Argentina debt and partially
offset by increased debt in the United States.
The provision for income taxes was $228,000 for the first nine months of 2002 as
compared to the $491,000 benefit from income taxes for the first nine months of
2001. The provision for taxes in the United States and China has been largely
offset by the benefit of taxes related to severance costs in the United Kingdom.
Argentina and South Africa have made no provisions for taxes and expect not to
pay taxes related to income for the period due to loss carry-forwards for which
no benefit was previously recorded.
In April 2002, Thermadyne Holdings Corporation, which is operating under Chapter
11, notified Prestolite that Thermadyne is unwilling to honor their
Prestolite-guaranteed lease commitment, although they may be willing to occupy a
portion of the space at a reduced rate. In conjunction with the 1997 sale of its
welding equipment business to Thermadyne, Prestolite guaranteed annual lease
payments of $447,000 at the facility in question through October 31, 2006. In
July 2002 a tentative agreement was reached with Thermadyne whereby they will
continue to lease a portion of the space in question at a reduced rate. We
expect to find another tenant for the
Page 17
balance of the space. To reflect the expected cost of this arrangement, we
recorded a charge of $0.4 million in the second quarter of 2002.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in continuing operating activities was $3.2 million in the nine months
ended September 28, 2002. Capital spending (not including the MOSAL transaction)
for the nine months of 2002 was $3.1 million, a decrease of $100,000 from the
first nine months of 2001. Of the $3.1 million, $1.5 million was spent in the
United States and $1.6 million outside the United States. Planned capital
expenditures consist primarily of expenditures to reduce costs through
automation, replace existing equipment and enable us to manufacture new
products.
Debt, net of cash, increased from $109.3 million at December 31, 2001 to $114.4
million at September 28, 2002, an increase of $5.1 million. Factors contributing
to this change include the $3.1 million of capital spending, $0.6 million
related to exchange rate changes in the U.K., the increase in accounts
receivable related to the increased sales volume, and the increase in inventory
to support increased OE product and new product investments. We received funds
from an escrow deposit of $3.3 million in February 2002 and have spent $0.3
million as it related to the transaction costs and facility arrangements of the
discontinued operations.
We had a cash balance of $1.7 million and revolving credit facilities with banks
in the United States and United Kingdom under which additional borrowings of
$9.7 million were available based on the September 28, 2002 levels of eligible
receivables and inventory which are collateralized to support that debt in the
United States. During the first quarter ended March 30, 2002, our Argentine
subsidiary reduced their bank debt by $1.3 million and their non-debt discounted
receivables by $4.0 million. They no longer have any outstanding bank debt or
discounted receivables. We do not anticipate borrowing in Argentina in the near
term as we expect operating cash flow to provide short term liquidity needs. In
South Africa we borrow from a bank, collateralized by accounts receivable, at
the bank's prime lending rate. No additional borrowings were available under the
South African credit agreement on September 28, 2002.
We expect our liquidity needs to consist primarily of working capital needs,
scheduled payments under certain contractual obligations, and scheduled payments
of principal and interest on our indebtedness. We expect our short-term
liquidity needs to be provided by operating cash flows and borrowings under our
revolving credit facilities. We expect to fund our long-term liquidity needs
from our operating cash flows, the issuance of debt and/or equity securities,
and bank borrowings.
We believe that cash flows from operations, our existing cash balances and
amounts available under these revolving credit facilities will provide adequate
funds for on going operation, planned capital expenditures, investments, and
debt service for at least the next twelve months. Estimates as to working
capital needs and other expenditures may be materially affected if the foregoing
sources are not available or do not otherwise provide sufficient funds to meet
our obligations.
Page 18
NEW ACCOUNTING PRONOUNCEMENTS
In July 2001 the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 141, "Business Combinations" (SFAS 141), and No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141 replaces APB No. 16
and eliminates the pooling-of-interests method for any business combinations
after June 30, 2001. SFAS 142 superceded APB No. 17 and eliminated the
requirement to amortize goodwill and indefinite-lived intangible assets,
addressed the amortization of intangible assets with a defined life and
impairment testing and recognition for goodwill and intangible assets. SFAS No.
142 is effective for 2002. Accordingly, we have adopted SFAS 142 and will no
longer amortize goodwill. Goodwill will instead be assessed for impairment at
least annually.
In June and August of 2001, the Financial Accounting Standards Board approved
Statements of Financial Accounting Standards No. 143 "Accounting for Asset
Retirement Obligations" ("SFAS 143") and No. 144 "Accounting for the Impairment
or Disposal of Long Lived Assets" ("SFAS 144") which are effective January 1,
2003 and January 1,2002, respectively, for the Company. SFAS 143 requires that
an existing legal obligation associated with the retirement of a tangible
long-lived asset be recognized as a liability when incurred and the amount of
the liability be initially measured at fair value. Under SFAS 144, a single
accounting method was established for long-lived assets to be disposed of. SFAS
144 requires the Company to recognize an impairment loss only if the carrying
amount is less than the fair value of the asset less costs to sell. The Company
has adopted the provisions of SFAS 144 effective January 1, 2002. SFAS 144 did
not have a material impact on the financial results of the company.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB No. 13, and Technical Corrections." With the
rescission of SFAS No. 4 and 64, only gains and losses from extinguishments of
debt that meet the criteria of APB No. 30 would be classified as extraordinary
items. The Company is currently reviewing the impact of this provision as well
as the other provisions of this statement and will adopt it effective with our
2003 fiscal year-end.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS 146 requires that a liability for costs
associated with exit or disposal activities be recognized when the liability is
incurred rather than when an entity commits to an exit plan. SFAS 146 also
provides that the liability be initially measured at fair value. The statement
is effective for the Company beginning January 1, 2003. Management will evaluate
the impact of SFAS upon adoption.
FORWARD-LOOKING STATEMENTS
This form 10-Q contains, in addition to historical information, forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. All statements other than statements of historical fact included herein
may contain forward-looking statements. Forward-looking statements generally can
be identified by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "estimate", "anticipate", "believe", or "continue" or the
negative thereof or variations thereon or similar terminology. Such
forward-looking statements are based upon information currently available in
which our management shares its knowledge and judgment about factors that they
believe may materially affect our performance. We make the forward-looking
statements in good faith and believe them to have a reasonable basis.
Page 19
However, such statements are speculative, speak only as of the date
made and are subject to certain risks, uncertainties and assumptions. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results could vary materially from those
anticipated, estimated or expected. Factors that might cause actual results to
differ materially from those in such forward-looking statements include, but are
not limited to, those discussed in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations." All subsequent written and oral
statements that we make are qualified in their entirety by these factors.
ITEM 4: CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the President and Chief Executive Officer and the Chief
Financial Officer of the Company, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13-a14. Based upon that evaluation, the principal executive
officers and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries)
required to be included in the Company's periodic SEC filings.
Subsequent to the evaluation, there were no significant changes in internal
controls or other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Page 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K
We have not filed any reports on Form 8-K during the
quarterly period ended September 28, 2002.
(b) Exhibits
99.1 Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
Page 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 14, 2002 By:/s/ Kenneth C. Cornelius
------------------------
Kenneth C. Cornelius
Senior Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
Page 22
CERTIFICATION ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Prestolite Electric Holding, Inc.
(the Company) on Form 10-Q for the period ending September 28, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the Report):
I, P. Kim Packard, Chief Executive Officer of the Company. Certify, pursuant to
Rule 13a-14, as adopted pursuant to ss. 302 of the Sarbanes-Oxley Act of 2002,
that:
(1) I have reviewed this quarterly report on Form 10-Q of the Company;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, nor are the
statements misleading with respect to the period covered by this
quarterly report;
(3) Based on my knowledge, the financial statements and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the Company as of, and for, the
periods presented in this quarterly report;
(4) Prestolite Electric Holding, Inc.'s other certifying officers and
I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the Company and we have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the Company, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b. Evaluated the effectiveness of the Company's disclosure
controls and procedures as of a date within 90 days prior to
the filing of this quarterly report (the Evaluation Date); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.
(5) The Company's other certifying officers and I have disclosed,
based on our most recent evaluation, to our auditors and the audit
committee of our board of directors:
a. All significant deficiencies in the design of operation of
internal controls which could adversely affect our ability to
record, process, summarize, and report financial data and have
identified for our auditors and material weaknesses in
internal controls; and
b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in our internal
controls.
(6) The Company's other certifying officers and I have indicated in
this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 8, 2002 By: /s/ P. Kim Packard
-------------------
P. Kim Packard, President and
Chief Executive Officer
Page 23
CERTIFICATION ADOPTED PURSUANT TO
SECTION 302 THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Prestolite Electric Holding, Inc.
(the Company) on Form 10-Q for the period ending September 28, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the Report):
I, Kenneth C. Cornelius, Chief Financial Officer of the Company. Certify,
pursuant to Rule 13a-14, as adopted pursuant to ss. 302 of the Sarbanes-Oxley
Act of 2002, that:
(1) I have reviewed this quarterly report on Form 10-Q of the Company;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, nor are the
statements misleading with respect to the period covered by this
quarterly report;
(3) Based on my knowledge, the financial statements and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the Company as of, and for, the
periods presented in this quarterly report;
(4) The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Company and we have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the Company, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b. Evaluated the effectiveness of the Company's disclosure
controls and procedures as of a date within 90 days prior to
the filing of this quarterly report (the Evaluation Date); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.
(5) The Company's other certifying officers and I have disclosed,
based on our most recent evaluation, to our auditors and the audit
committee of our board of directors:
a. All significant deficiencies in the design of operation of
internal controls which could adversely affect our ability to
record, process, summarize, and report financial data and
have identified for our auditors and material weaknesses in
internal controls; and
b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in our
internal controls.
(6) The Company's other certifying officers and I have indicated in
this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 8, 2002 By: /s/ Kenneth C. Cornelius
-------------------------
Kenneth C. Cornelius,
Senior Vice President and
Chief Financial Officer
Page 24
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
EX-99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002