Harvard Industries, Inc. Reports Third Quarter Results
31 July 1997
Harvard Industries, Inc. Reports Third Quarter Results
TAMPA, Fla., July 31 -- Harvard Industries, Inc., (Debtor-In-
Possession "DIP"), a major producer of OEM automotive parts and accessories
which, together with substantially all of its subsidiaries, filed a voluntary
petition for relief under chapter 11 of the United States Bankruptcy Code on
May 8, 1997, in the United States District Court for the District of Delaware,
today reported on a going concern basis financial results which do not reflect
reorganization or liquidation values. Consolidated net sales amounted to
$217,914,000 for the three months ended June 30, 1997, compared with
$222,300,000 for the three months ended June 30, 1996. Consolidated net sales
for the nine months ended June 30, 1997 and 1996 amounted to $614,401,000 and
$633,657,000, respectively.
In connection with the chapter 11 filing, the Company discontinued the
accrual of interest expense on its senior notes ($300,000,000 face value).
Accordingly, for the three and nine month periods ended June 30, 1997,
interest expense attributable to the senior notes of $5,102,000 (May 8, 1997
through June 30, 1997) was not accrued. In addition, the Company discontinued
the accrual of dividends and accretions on the Company's 14 1/4% PIK preferred
stock. As a result, for the three and nine month periods ended June 30, 1997,
dividends and accretions in the aggregate amount of $2,530,000 (May 8, 1997
through June 30, 1997) were not accrued.
After deducting accrued dividends and accretions relating to the Company's
14 1/4% PIK preferred stock of $1,694,000 (April 1, 1997 through May 8, 1997)
and $3,711,000 for the quarters ended June 30, 1997 and 1996 respectively, the
consolidated net loss for the quarter ended June 30, 1997 attributable to
common shares amounted to $29,985,000, or a net loss of $4.27 per common
share, compared with a consolidated net loss of $14,808,000, or a net loss of
$2.12 per common share, for the quarter ended June 30, 1996.
After deducting accrued dividends and accretions relating to the Company's
14 1/4% PIK preferred stock of $10,142,000 for the nine months ended June 30,
1997 and $11,133,000 for the nine months ended June 30, 1996, the consolidated
net loss for the nine months ended June 30, 1997 attributable to common shares
amounted to $236,755,000, or a net loss of $33.73 per common share. This
compares with a consolidated net loss of $44,916,000, or a net loss of $6.42
per common share, for the nine months ended June 30, 1996.
The Company's operating results for the third quarter ended June 30, 1997
continue to be adversely affected by negative operating results at its
Doehler-Jarvis, Harman Automotive and Harvard Interiors operating units.
The Company reported that it is continuing to pursue the sale of its
Doehler-Jarvis subsidiary, as well as its Harman Automotive subsidiary and its
Harvard Interiors division. Harvard has engaged Stump and Co., investment
advisors, to dispose of the Harvard Interiors division. The Company received
an unsolicited proposal, which it is evaluating and negotiating, with respect
to the Material Handling Division of Kingston-Warren. If a transaction for
the sale of Harman Automotive is not consummated, the Company intends to
review the feasibility of liquidating such subsidiary.
The operating units designated for sale or disposition contributed
substantially to the Company's consolidated losses for the three and nine
months ended June 30, 1997. For the three and nine months ended June 30, 1997
those operating units reported net sales of $96,544,000 and $279,401,000, and
incurred losses of $10,755,000 and $34,100,000 (excluding interest expense,
other income (expense) and impairment of assets write-offs; offset by the
material handling division's operating income).
Consolidated EBITDA (earnings before interest expense, taxes, depreciation
and amortization and the non-cash portion of charges related to the
recognition of post retirement benefits other than pensions) totaled
$9,390,000 for the two months ended June 30, 1997. Pursuant to the DIP
financing agreement, the Company was required to achieve cumulative
consolidated EBITDA of $5,200,000 for such period. Consolidated EBITDA
amounted to $9,168,000 for the three months ended June 30, 1997 and was
$13,723,000 for the nine months ended June 30, 1997.
As has been the case historically, the Company's fourth quarter will be
adversely affected due to customer plant shutdowns for vacations and change-
over to new models. The Company expects to be in compliance with the
cumulative consolidated EBITDA covenant of $11,000,000 provided in the DIP
Financing Agreement for the five months ending September 30, 1997. With
respect to the covenant in the DIP financing agreement relating to a
$10,000,000 limitation on capital expenditures for the period May 8, 1997 to
September 30, 1997, the Company is currently in discussions with the agent for
the DIP lending syndicate to obtain the necessary consent to exceed the
$10,000,000 limitation. Capital Expenditures for the period May 8, 1997 to
June 30, 1997 amounted to approximately $6,000,000. While there is no
assurance that such consent will be obtained, the Company expects to receive
such consent.
At June 30, 1997, the amount borrowed by the Company under its DIP
revolving credit line was to $3,932,000, the letters of credit outstanding
were to $12,222,000 and the DIP term loan was $65,000,000, of which $9,750,000
is due within one year from June 30, 1997. The revolver balance was reduced
from $40,244,000 on May 8, 1997, due to the timing of cash collections at the
end of the month and due to certain suppliers extending credit terms to the
Company. The Company believes the DIP financing will enable the Company to
continue normal operations during the chapter 11 proceedings.
At June 30, 1997, post petition accounts payable amounted to $28,797,000.
As of July 28, 1997, borrowings under the revolving credit aggregated
$2,747,000 and letters of credit outstanding amounted to $12,289,000.
This release contains forward-looking statements. Additional written or
oral forward-looking statements may be made by the Company from time to time,
in filings with the Securities and Exchange Commission, or otherwise. Such
forward-looking statements are within the meaning of that term in Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Such statements may include, but not be limited to, projections of
revenues, income or losses, covenants provided for in the DIP financing
agreement capital expenditures, plans for future operations, financing needs
or plans, plans relating to products or services of the Company, as well as
the assumptions relating to the foregoing.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Consequently,
future events and actual results could differ materially from those set forth
in, contemplated by, or underlying the forward-looking statements. Other
factors that could contribute to or cause such differences include the effects
of the bankruptcy filing upon suppliers, vendors and customers, unanticipated
increases in launch and other operating costs, and a reduction in, and
inconsistent demand for, passenger cars and light trucks.
Harvard Industries, Inc., through its subsidiaries, designs, develops and
manufactures a broad range of components for original equipment manufacturers,
producing cars and light trucks in North America and abroad.
HARVARD INDUSTRIES, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND SEPTEMBER 30, 1996
(In thousands of dollars)
June 30, September 30,
1997 1996
ASSETS (Unaudited)
(Audited)
Current assets:
Cash and cash equivalents $4,308 $1,107
Accounts receivable, net 86,345 99,581
Inventories 55,239 53,901
Prepaid expenses and other
current assets 3,224 1,637
Total current assets 149,116 156,226
Property, plant and equipment,
net 273,080 300,673
Intangible assets, net 4,813 127,250
Other assets, net 24,244 33,556
$451,253 $617,705
LIABILITIES AND SHAREHOLDERS'
DEFICIENCY
Current liabilities:
Current portion of Debtor-in-possession
(DIP) loans $13,682 $---
Current portion of long term
debt 1,587 1,487
Accounts payable 28,797 89,073
Accrued expenses 56,376 66,949
Income taxes payable 2,361 5,875
Total current liabilities 102,803 163,384
Liabilities subject to
compromise 397,236 ---
Long-term debt 74,332 359,116
Postretirement benefits other
than pensions 105,031 100,464
Other 29,667 25,970
Total liabilities 709,069 648,934
14 1/4% Pay-In-Kind Exchangeable
Preferred Stock, (At June 30, 1997 -
includes $10,142 of undeclared
accrued dividends) 124,637 114,495
Shareholders' deficiency:
Common Stock, $.01 par value;
30,000,000 shares authorized;
shares issued and outstanding:
7,026,437 at June 30, 1997 and
7,014,357 at September 30,
1996 70 70
Additional paid-in capital 32,135 42,245
Additional minimum pension
liability (1,767) (1,767)
Foreign currency translation
adjustment (1,970) (1,964)
Accumulated deficit (410,921) (184,308)
Total shareholders'
deficiency (382,453) (145,724)
Commitments and contingent
liabilities $451,253 $617,705
HARVARD INDUSTRIES, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
(In thousands of dollars, except share and per share data)
Three months ended Nine months ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
Sales $217,914 $222,300 $614,401 $633,657
Costs and expenses:
Cost of sales 211,609 208,275 612,043 593,051
Selling, general and
administrative 10,832 10,335 35,422 32,534
Interest expense
(contractual interest of
$ 13,924 and $ 38,196
for the three
and nine months
of 1997) 8,822 10,918 33,154 31,279
Amortization of goodwill 396 2,582 8,052 7,746
Other (income) expense,
net 947 535 2,744 629
Impairment of long-lived
assets --- --- 134,987 ---
Total costs and expenses 232,606 232,645 826,402 665,239
Loss before reorganization
items and income
taxes (14,692) (10,345) (212,001) (31,582)
Reorganization items (13,232) --- (13,232) ---
Loss before and income
taxes (27,924) (10,345) (225,233) (31,582)
Provision for income
taxes 367 752 1,380 2,201
Net loss $(28,291) $(11,097) $(226,613) $(33,783)
PIK preferred dividends and
accretion ( contractual $ 4,224
and $ 12,672 for the three
and nine months
of 1997) $1,694 $3,711 $10,142 $11,133
Net loss attributable to
common
shareholders $(29,985) $(14,808) $(236,755) $(44,916)
Primary per common and common
equivalent share:
Loss per common and common
equivalent share $(4.27) $(2.12) $(33.73) $(6.42)
Weighted average number of
common and common
equivalent shares
outstanding 7,024,080 6,999,407 7,018,778 6,997,157
HARVARD INDUSTRIES, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
(In thousands of dollars)
Nine months ended
June 30, June 30,
1997 1996
Cash flows related to
operating activities:
Loss from continuing
operations before
reorganization items $(213,381) $(33,783)
Add back (deduct) items
not affecting cash
and cash equivalents:
Depreciation and amortization 47,997 40,875
Impairment of long-lived
assets 134,987 ---
Loss on disposition of
property, plant and
equipment and property
held for sale 1,769 918
Postretirement benefits 5,145 5,768
Write-off of deferred
debt expense 1,792 ---
Senior notes interest
accrued not paid 9,728 ---
Changes in operating assets
and liabilities of
continuing operations,
net of effects from
acquisitions and
reorganization items:
Accounts receivable 13,236 (16,024)
Inventories (1,338) 879
Other current assets (1,587) (376)
Accounts payable (60,704) (2,006)
Accounts payable prepetition 82,246 ---
Accrued expenses and
income taxes payable (12,992) (12,281)
Other noncurrent liabilities 7,126 (986)
Net cash used in
continuing operations
before reorganization items 14,014 (17,016)
Net cash used by
reorganization items (1,224) ---
Net cash used in
continuing operations 12,790 (17,016)
Cash flows related
to investing activities:
Acquisition of
property, plant and
equipment (30,540) (28,560)
Cash flows related to
discontinued operations 212 3,541
Proceeds from disposition
of property, plant and
equipment 622 663
Net change in other
noncurrent accounts (490) 585
Net cash used in
investing activities (30,196) (23,771)
Cash flows related to
financing activities:
Net payments under
financing/credit agreement (38,834) 31,000
Net borrowings under
DIP financing agreement 68,931 ---
Deferred DIP financing costs (2,200) ---
Proceeds from sale of
stock/exercise of stock options 32 37
Repayments of long-term debt (1,099) (2,074)
Pension fund payments pursuant
to PBGC settlement agreement(4,500) (4,500)
Payment of EPA settlements (1,723) (2,493)
Net cash provided by
financing activities 20,607 21,970
Net increase (decrease)
in cash and cash equivalents 3,201 (18,817)
Beginning of period 1,107 19,925
End of period $4,308 $1,108
SOURCE Harvard Industries, Inc.