FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
------------------- ---------------------
Commission File Number: 001-13581
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NOBLE INTERNATIONAL, LTD.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-3139487
-------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
28213 Van Dyke Road, Warren, MI 48093
-------------------------------------
(Address of principal executive offices)
(Zip Code)
(586) 751-5600
---------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
(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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of shares of the registrant's common stock, $.001 par value,
outstanding as of November 14, 2002 was 7,715,387.
NOBLE INTERNATIONAL, LTD.
FORM 10-Q INDEX
This report contains statements (including certain projections and business
trends) accompanied by such phrases as "assumes," "anticipates," "believes,"
"expects," "estimates," "projects," "will" and other similar expressions, that
are "forward looking statements" as defined in the Private Securities Litigation
Reform Act of 1995. Statements regarding future operating performance, new
programs expected to be launched and other future prospects and developments are
based upon current expectations and involve certain risks and uncertainties that
could cause actual results and developments to differ materially. Potential
risks and uncertainties include such factors as demand for the company's
products, pricing, the company's growth strategy, including its ability to
consummate and successfully integrate future acquisitions, industry cyclicality,
fuel prices and seasonality, the company's ability to continuously improve
production technologies, activities of competitors and other risks detailed in
the company's Annual Report on Form 10-K for the year ended December 31, 2001
and other filings with the Securities and Exchange Commission. These forward
looking statements are made only as of the date hereof.
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION.............................................................................3
ITEM 1: FINANCIAL STATEMENTS...........................................................................3
Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001.........3
Consolidated Statements of Earnings (unaudited) for the Three Month and Nine Month Periods
Ended September 30, 2002 and 2001..........................................................4
Consolidated Statements of Cash Flows (unaudited) for the Nine Month Periods Ended
September 30, 2002 and 2001................................................................5
Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Month
Periods Ended September 30, 2002 and 2001..................................................6
Notes to Consolidated Interim Financial Statements.............................................7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.........15
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................18
ITEM 4: DISCLOSURE CONTROLS...........................................................................18
PART II - OTHER INFORMATION...............................................................................20
ITEM 1: LEGAL PROCEEDINGS.............................................................................20
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS.....................................................20
ITEM 3: DEFAULTS UPON SENIOR SECURITIES...............................................................20
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................20
ITEM 5: OTHER INFORMATION.............................................................................20
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K..............................................................20
2
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands)
SEPTEMBER 30, DECEMBER 31,
2002 2001
(unaudited)
------------ -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 5,494 $ 943
Accounts receivable, trade - net 29,558 32,553
Inventories 22,889 20,496
Deferred tax asset 506 506
Income taxes refundable 474 474
Prepaid expenses 5,508 2,723
--------- ---------
Total Current Assets 64,429 57,695
Property, Plant & Equipment, net 48,020 46,992
Other Assets:
Goodwill 40,755 40,755
Covenants not to compete 953 1,140
Other assets 11,378 10,357
--------- ---------
Total Other Assets 53,086 52,252
--------- ---------
TOTAL ASSETS $ 165,535 $ 156,939
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 26,977 $ 21,229
Accrued liabilities 5,806 12,824
Current maturities of long-term debt 252 51,035
Income taxes payable 2,143 -
--------- ---------
Total Current Liabilities 35,178 85,087
Long-Term Liabilities:
Deferred income taxes 2,658 2,658
Convertible subordinated debentures 16,109 16,110
Junior subordinated notes 3,461 3,440
Long-term debt, excluding current maturities 55,847 809
Putable common stock - 1,203
Redeemable preferred stock - 250
--------- ---------
Total Long-Term Liabilities 78,075 24,470
STOCKHOLDERS' EQUITY
Paid-in capital - warrants, $10 per common share
exercise price, 90,000 warrants outstanding 121 121
Common stock, $.001 par value, authorized 20,000,000 shares, issued
7,627,400 and 7,519,186 shares in 2002 and 2001, respectively 23,953 22,872
Retained earnings 28,734 24,857
Accumulated comprehensive loss (526) (468)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 52,282 47,382
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 165,535 $ 156,939
========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
3
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except for per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2002 2001 2002 2001
-----------------------------------------------------------------------------------------------------------------------------
NET SALES
Products $ 41,526 $ 19,380 $ 124,228 $ 49,842
Services 16,500 15,838 49,499 45,471
----------- ----------- ----------- -----------
TOTAL NET SALES 58,026 35,218 173,727 95,313
COST OF GOODS SOLD
Products 34,867 15,341 104,275 37,301
Services 13,279 12,468 39,655 35,630
----------- ----------- ----------- -----------
TOTAL COST OF GOODS SOLD 48,146 27,809 143,930 72,931
GROSS MARGIN 9,880 7,409 29,797 22,382
SELLING, GENERAL & ADMINISTRATIVE 7,241 6,524 20,537 17,173
----------- ----------- ----------- -----------
OPERATING PROFIT 2,639 885 9,260 5,209
Earnings/(Loss) from Unconsolidated Affiliate - 160 - (50)
OTHER INCOME/(EXPENSE)
Interest income 272 183 752 1,465
Interest expense (980) (1,141) (2,504) (3,761)
Other, net (36) 1,132 70 1,652
----------- ----------- ----------- -----------
TOTAL OTHER INCOME/(EXPENSE) (744) 174 (1,682) (644)
EARNINGS BEFORE INCOME TAXES 1,895 1,219 7,578 4,515
Income tax expense (benefit) 257 (509) 2,368 1,845
Preferred stock dividends - 8 10 27
----------- ----------- ----------- -----------
NET EARNINGS BEFORE EXTRAORDINARY ITEM 1,638 1,720 5,200 2,643
Extraordinary item - gain on acquisition (less income tax of $268) 315 - 315 -
----------- ----------- ----------- -----------
NET EARNINGS ON COMMON SHARES $ 1,953 $ 1,720 $ 5,515 $ 2,643
=========== =========== =========== ===========
BASIC EARNINGS PER COMMON SHARE:
Earnings per share before extraordinary item $ 0.24 $ 0.26 $ 0.77 $ 0.40
Extraordinary gain 0.05 - 0.05 -
----------- ----------- ----------- -----------
Basic earnings per common share $ 0.29 $ 0.26 $ 0.82 $ 0.40
=========== =========== =========== ===========
DILUTED EARNINGS PER COMMON SHARE
Earnings per share before extraordinary item $ 0.23 $ 0.24 $ 0.71 $ 0.40
Extraordinary gain 0.04 - 0.04 -
----------- ----------- ----------- -----------
Diluted earnings per common share $ 0.26 $ 0.24 $ 0.75 $ 0.40
=========== =========== =========== ===========
Dividends declared and paid $ 0.08 $ 0.075 $ 0.24 $ 0.225
=========== =========== =========== ===========
Basic weighted average common shares outstanding 6,786,114 6,605,988 6,755,757 6,632,073
Diluted weighted average common shares outstanding 8,088,882 7,777,913 8,078,942 6,656,789
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
2002 $ 2,001
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 5,525 $ 2,670
Adjustments to reconcile net earnings to
net cash provided by operations
Interest paid in kind - 962
Loss from unconsolidated entity - 50
Depreciation of property, plant and equipment 4,281 3,472
Amortization of intangible assets 205 1,975
Deferred income taxes - (958)
Loss (gain) on sale of property and equipment (44) 221
Changes in assets and liabilities
(Increase) decrease in accounts receivable 2,995 (4,080)
Increase in inventories (2,393) (3,372)
Increase in prepaid expenses (2,785) (3,637)
Decrease in other operating assets 496 95
Increase in accounts payable 5,748 6,216
Increase (decrease) in income taxes payable 2,143 (1,668)
Increase (decrease) in accrued liabilities (7,018) 679
-------- --------
Net cash provided by operating activities 9,153 2,625
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (12,262) (5,278)
Proceeds from sale of property, plant and equipment 6,997 2,378
S.E.T. Industries, Inc. Note Receivable - 24,734
Increase in other assets (1,524) (1,466)
-------- --------
Net cash provided by (used in) investing activities (6,789) 20,368
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock (121) (1,274)
Capital lease payments (56) (58)
Redemption of convertible subordinated debentures (1) -
Preferred dividends declared and paid (10) (27)
Dividends on common declared and paid (1,628) (1,497)
Redemption of preferred stock of subsidiary (250) (112)
Payments on long-term debt (125) (966)
Net borrowings (repayments) on note payable to bank 4,436 (19,713)
-------- --------
Net cash provided by (used in) financing activities 2,245 (23,647)
Effect of exchange rate changes on cash (58) (170)
-------- --------
Net increase (decrease) in cash 4,551 (824)
Cash at beginning of period 943 1,091
-------- --------
Cash at end of period $ 5,494 $ 267
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for:
Interest $ 2,787 $ 2,557
======== ========
Taxes $ 29 $ 1,569
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
5
NOBLE INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
2002 2001 2002 2001
------- ------- ------- -------
Net earnings on common shares $ 1,953 $ 1,720 $ 5,515 $ 2,643
Other comprehensive income (loss), equity adjustment
from foreign currency translation, net of tax $ (176) $ (111) $ (58) (170)
------- ------- ------- -------
Comprehensive income, net of tax $ 1,777 $ 1,609 $ 5,457 $ 2,473
======= ======= ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
6
NOBLE INTERNATIONAL, LTD.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, the financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and such
adjustments are of a normal recurring nature.
The accompanying consolidated financial statements as of September 30, 2002 and
for the year ended December 31, 2001, include Noble International, Ltd. and its
wholly-owned subsidiaries, Noble Component Technologies ("NCT"); Monroe
Engineering Products, Inc. ("Monroe"), Skandy Corp. ("Skandy"), Noble Metal
Forming, Inc. ("NMF"), Noble Metal Processing, Inc. ("NMP"), Noble Land
Holdings, Inc. ("Land Holdings"), Noble Metal Processing-Midwest, Inc. (formerly
H&H Steel Processing, Inc.) ("NMPM"), Noble Manufacturing Group, Inc. ("NMG"),
(formerly Noble Technologies, Inc.), Noble Metal Processing Canada, Inc.
("NMPC"), Noble Metal Processing - Kentucky, LLC ("NMPK"), Noble Logistic
Services, Inc. ("NLS"), Noble Logistic Services, Inc. (formerly Assured
Transportation & Delivery, Inc. and Central Transportation & Delivery, Inc.,
collectively "NLS-CA"), Noble Logistic Services, Inc. (formerly Dedicated
Services, Inc.) ("NLS-TX"), Pro Motorcar Products, Inc. ("PMP"), Pro Motorcar
Distribution, Inc. ("PMD") and Noble Construction Equipment, Inc. ("NCE")
(formerly Construction Equipment Direct, Inc. ("CED")), (collectively, "Noble"
or the "Company") from the date of acquisition to the date of disposition, if
applicable.
Results for interim periods should not be considered indicative of results for a
full year. The December 31, 2001 consolidated balance sheet was derived from
audited financial statements, but does not include all disclosures required by
accounting principles generally accepted in the United States of America. For
further information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001.
In February 2002, the market price requirement of 107,452 shares of the
Company's putable common stock that was issued in connection with the
acquisition of Dedicated Services, Inc. in 2000 was met, resulting in the put
option expiring. Therefore, the common stock was reclassified from long-term
debt to stockholders' equity.
On April 1, 2002, the Company converted its $7.6 million note receivable,
including interest, from SET Enterprises, Inc. ("SET") into preferred stock of
SET. The preferred stock is non-voting and is redeemable at the Company's option
in 2007. The Company agreed to convert the subordinated promissory note to
preferred stock in order to assist SET in obtaining capital without appreciably
decreasing the Company's repayment rights or jeopardize SET's minority status.
Management believes that continued support of SET furthers the joint strategic
objectives of the two companies.
On April 22, 2002, the Company completed a sale and leaseback transaction of its
Shelbyville, Kentucky facility to the Company's Chief Executive Officer. The
sale price was $6.2 million which was equal to the book value of the property.
The proceeds of the transaction were used to reduce the Company's debt under its
current credit facility. The lease has a term of five years and provides for
monthly rent of $70,000. The sale price and rent amount were determined by the
estimated fair value of the property and estimated prevailing lease rates for
similar properties. Although the Company did not obtain an independent valuation
of the property or the terms of the transaction, it
7
believes the terms of the sale and leaseback were at least as favorable to Noble
as terms that could have been obtained from an unaffiliated third party.
On May 9, 2002 the Company's current credit facility was increased to $60.0
million from $52.5 million. The credit facility expires in November 2002. The
Company has a binding commitment from its lender on a new $60.0 million credit
facility that will take effect in December 2002 and will expire in 2005.
Therefore, the Company has reclassified its current credit facility from current
liabilities to long-term liabilities.
On June 20, 2002 the Company filed a registration statement on Form S-2 and
subsequently amended, concerning an offering of .95 million shares of its common
stock. On October 1, 2002 the Securities and Exchange Commission declared the
registration statement effective. On October 4, 2002 the Company completed the
sale of 925,000 shares of its common stock. The transaction provided net
proceeds to the Company of $9.1 million. The Company used the proceeds to reduce
its senior debt.
Basic earnings per share are based upon the weighted average number of shares
outstanding during each quarter. Calculation of diluted earnings per share
assumes the exercise of common stock options and warrants when dilutive, and the
impact of restricted stock and the assumed conversion of convertible debt, when
not anti-dilutive. The following tables reconcile the numerator and denominator
to calculate basic and diluted earnings on common shares before extraordinary
item for the three months and nine months ended September 30, for 2002 and 2001
(in thousands, except share and per share amounts; per share amounts are subject
to rounding).
Three months ended September 30,
-----------------------------------------------------------------------------------
2002 2001
--------------------------------------- ----------------------------------------
Net Earnings Shares Per share Net Earnings Shares Per share
(Numerator) (Denominator) Amounts (Numerator) (Denominator) Amounts
------------ ------------- ---------- ------------ ------------- ----------
Basic earnings per common share
Earnings from continuing operations on common
shares before extraordinary item $ 1,638 6,786,114 $ 0.24 $ 1,720 6,605,988 $ 0.26
Effect of dilutive securities:
Contingently issuable shares 27,737 - 23,394 -
Convertible debentures 187 1,125,590 (0.01) 185 1,125,784 (0.01)
Warrants 16,988 - -
Stock Options - 132,453 - - 22,747 -
--------- --------- ---------- --------- --------- ----------
Earnings from continuing operations per common
share assuming dilution $ 1,825 8,088,882 $ 0.23 $ 1,905 7,777,913 $ 0.25
========= ========= ========== ========= ========= ==========
Nine months ended September 30,
-----------------------------------------------------------------------------------
2002 2001
--------------------------------------- ----------------------------------------
Net Earnings Shares Per share Net Earnings Shares Per share
(Numerator) (Denominator) Amounts (Numerator) (Denominator) Amounts
------------ ------------- ---------- ------------ ------------- ----------
Basic earnings per common share
Earnings from continuing operations on common
shares before extraordinary item $ 5,200 6,755,757 $ 0.77 $ 2,643 6,632,073 $ 0.40
Effect of dilutive securities:
Contingently issuable shares 27,737 - 23,394 -
Convertible debentures 548 1,125,590 (0.04) -
Warrants 13,771 - -
Stock Options - 156,087 (0.02) - 1,322 -
--------- --------- -------- --------- --------- --------
Earnings from continuing operations per common
share assuming dilution $ 5,748 8,078,942 $ 0.71 $ 2,643 6,656,789 $ 0.40
========= ========= ======== ========= ========= ========
8
NOTE B--INVENTORIES
Inventories at September 30, 2002 and December 31, 2001 consisted of the
following (in thousands):
September 30, 2002 December 31, 2001
------------------ -----------------
Raw materials and purchased parts $ 15,351 $ 14,047
Work in process 3,630 2,367
Finished goods 3,908 3,907
Unbilled customer tooling - 175
------------------ -----------------
$ 22,889 $ 20,496
================== =================
NOTE C--INDUSTRY SEGMENTS
The Company classifies its operations into three industry segments based on
types of products and services: automotive (NMPK, NMPC, NMP, NMPM, NMF, NMG, NCT
and Land Holdings), heavy equipment (NCE) and logistics (NLS-TX, NLS-CA, Monroe,
PMP and PMD). The automotive group provides a variety of laser welding, metal
blanking and die construction products and services utilizing proprietary laser
weld and light die technology. The heavy equipment group designs and
manufactures sub assemblies and final assemblies of heavy equipment used
primarily in the construction and earth-moving industry. The logistics group
provides same day package delivery services to a variety of customers and sells
tooling components, paint and coatings related products to end users as well as
distributors. The automotive group sells direct to automotive OEMs and Tier I
suppliers. The heavy equipment group sells direct to OEMs and through an
established network of dealers.
Transactions between the automotive, heavy equipment and logistics segments are
not significant and have been eliminated in the statements. Interest expense is
allocated to each segment based on the segment's actual borrowings from the
corporate headquarters, together with a partial allocation of corporate general
and administrative expenses. Revenues from external customers are identified
geographically based on the customer's shipping destination.
The Company's operations by business segment and geography for three months
ended September 30, 2002 follow (in thousands):
HEAVY SEGMENT
AUTOMOTIVE EQUIPMENT LOGISTICS TOTALS
------------------------------------------------------
Revenues from external customers $ 30,559 $ 9,932 $ 17,535 $ 58,026
Interest expense 534 134 499 1,167
Depreciation and amortization 1,437 24 79 1,540
Segment profit (loss) pre tax 2,565 135 (562) 2,138
Segment assets 92,744 21,338 39,968 154,050
Expenditures for segment assets 2,417 354 113 2,884
9
RECONCILIATION TO CONSOLIDATED AMOUNTS
EARNINGS
Total earnings for reportable segments $ 2,138
Unallocated corporate headquarters loss (244)
-----------
Earnings before income taxes and
extraordinary item $ 1,894
===========
ASSETS
Total assets for reportable segments $ 154,050
Corporate headquarters 11,485
-----------
Total consolidated assets $ 165,535
===========
GEOGRAPHIC INFORMATION
LONG-LIVED
REVENUES ASSETS
-----------------------------
United States $ 50,973 $ 88,281
Canada 7,053 1,447
Other - -
----------- ----------
Total $ 58,026 $ 89,728
=========== ==========
OTHER SIGNIFICANT ITEMS
SEGMENT CONSOLIDATED
TOTALS ADJUSTMENTS TOTALS
------------------------------------------
Interest expense $ 1,167 $ (187) $ 980
Expenditures for segment assets 2,884 10 2,894
Depreciation and amortization 1,540 61 1,601
The Company's operations by business segment and geography for the three months
ended September 30, 2001 follow (in thousands):
HEAVY SEGMENT
AUTOMOTIVE EQUIPMENT LOGISTICS TOTALS
-----------------------------------------------------
Revenues from external customers $ 18,365 $ - $ 16,853 $ 35,218
Interest expense 466 - 603 1,069
Depreciation and amortization 1,277 - 486 1,763
Segment profit (loss) pre tax 1,426 - (322) 1,104
Segment assets 67,124 - 40,016 107,140
Expenditures for segment assets 1,048 - 34 1,082
10
RECONCILIATION TO CONSOLIDATED AMOUNTS
EARNINGS
Total earnings for reportable segments $ 1,104
Unallocated corporate headquarters income 115
----------
Earnings before income taxes $ 1,219
==========
ASSETS
Total assets for reportable segments $ 107,140
Corporate headquarters 19,682
----------
Total consolidated assets $ 126,822
==========
GEOGRAPHIC INFORMATION
LONG-LIVED
REVENUES ASSETS
------------------------
United States $ 31,067 $ 86,338
Canada 4,144 1,539
Other 7 -
---------- ---------
Total $ 35,218 $ 87,877
========== =========
OTHER SIGNIFICANT ITEMS
SEGMENT CONSOLIDATED
TOTALS ADJUSTMENTS TOTALS
-------------------------------------------
Interest expense $ 1,069 $ 72 $ 1,141
Expenditures for segment assets 1,082 (194) 888
Depreciation and amortization 1,763 61 1,824
11
The Company's operations by business segment and geography for the nine months
ended September 30, 2002 follow (in thousands):
HEAVY SEGMENT
AUTOMOTIVE EQUIPMENT LOGISTICS TOTALS
-----------------------------------------------------------
Revenues from external customers $ 86,840 $ 34,119 $ 52,768 $ 173,727
Interest expense 1,369 343 1,459 3,171
Depreciation and amortization 4,028 24 217 4,269
Segment profit (loss) pre tax 7,400 1,076 (270) 8,206
Segment assets 92,744 21,338 39,968 154,050
Expenditures for segment assets 11,340 512 219 12,071
RECONCILIATION TO CONSOLIDATED AMOUNTS
EARNINGS
Total earnings for reportable segments $ 8,206
Unallocated corporate headquarters loss (628)
Earnings before income taxes and -----------
extraordinary item $ 7,578
===========
ASSETS
Total assets for reportable segments $ 154,050
Corporate headquarters 11,485
-----------
Total consolidated assets $ 165,535
-----------
GEOGRAPHIC INFORMATION
LONG-LIVED
REVENUES ASSETS
----------------------------
United States $ 159,526 $ 88,281
Canada 14,201 1,447
Other - -
---------- ---------
Total $ 173,727 $ 89,728
========== =========
OTHER SIGNIFICANT ITEMS
SEGMENT CONSOLIDATED
TOTALS ADJUSTMENTS TOTALS
--------------------------------------------
Interest expense $ 3,171 $ (667) $ 2,504
Expenditures for segment assets 12,071 191 12,262
Depreciation and amortization 4,269 217 4,486
12
The Company's operations by business segment and geography for the nine months
ended September 30, 2001 follow (in thousands):
HEAVY SEGMENT
AUTOMOTIVE EQUIPMENT LOGISTICS TOTALS
-------------------------------------------------
Revenues from external customers $ 46,443 $ - $ 48,870 $ 95,313
Interest expense 1,825 - 1,924 3,749
Depreciation and amortization 3,786 - 1,475 5,261
Segment profit (loss) pre tax 3,737 - (1,461) 2,276
Segment assets 67,124 - 40,016 107,140
Expenditures for segment assets 5,337 - 130 5,467
RECONCILIATION TO CONSOLIDATED AMOUNTS
EARNINGS
Total earnings for reportable segments $ 2,276
Unallocated corporate headquarters income 2,239
----------
Earnings before income taxes $ 4,515
==========
Assets
Total assets for reportable segments $ 107,140
Corporate headquarters 19,682
----------
Total consolidated assets $ 126,822
----------
GEOGRAPHIC INFORMATION
LONG-LIVED
REVENUES ASSETS
-----------------------
United States $ 86,055 $ 86,338
Canada 9,190 1,539
Other 68 -
--------- --------
Total $ 95,313 $ 87,877
========= ========
OTHER SIGNIFICANT ITEMS
SEGMENT CONSOLIDATED
TOTALS ADJUSTMENTS TOTALS
-------------------------------------------
Interest expense $ 3,749 $ 12 $ 3,761
Expenditures for segment assets 5,467 (189) 5,278
Depreciation and amortization 5,261 186 5,447
NOTE D - RESTRUCTURING RESERVE
The restructuring reserve of $3.9 million recorded in December 2000, which had a
balance of $1.5 million at December 31, 2001, was reduced by $0.75 million
during the first quarter of 2002 for lease costs incurred on vacated property
and losses incurred in connection with the sale of certain real estate. During
the second quarter of 2002 the reserve was reduced by $0.2 million related to
repair of vacated facilities and $0.1 million related to final rent obligation
of vacated facilities. During the third quarter of 2002 the reserve was reduced
by $0.2 million primarily associated with the Company's relocation. The balance
in the restructuring reserve at September 30, 2002 was
13
$0.25 million and represents the expected costs associated with real estate that
is being marketed for sale. Resolution on these items is expected by December
31, 2002.
NOTE E - ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001 and applies to all goodwill and other intangible assets
recognized in an entity's statement of financial position at that date,
regardless of when those assets were initially recognized. The Company adopted
this statement on January 1, 2002, and goodwill will no longer be amortized. As
of September 30, 2002 the Company has goodwill of $40.8 million.
A reconciliation of previously reported net income and earnings per share
related to the amounts adjusted for the exclusion of goodwill amortization net
of the related income tax effect follows (per share amounts are subject to
rounding):
GOODWILL AND ADOPTION OF STATEMENT NO. 142
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------- ------------------------------
(in thousands,except per share amounts) 2002 2001 2002 2001
------------ ------------ -------------- -----------
Reported net income $ 1,953 $ 1,720 $ 5,515 $ 2,643
Add: Goodwill amortization, net of tax - 463 - 1,431
------------ ------------ -------------- -----------
Adjusted net income $ 1,953 $ 2,183 $ 5,515 $ 4,074
============ ============ ============== ===========
Reported basic earnings per share $ 0.29 $ 0.26 $ 0.82 $ 0.40
Add: Goodwill amortization, net of tax - 0.07 - 0.21
------------ ------------ -------------- -----------
Adjusted basic earnings per share $ 0.29 $ 0.33 $ 0.82 $ 0.61
============ ============ ============== ===========
Reported diluted earnings per share $ 0.26 $ 0.24 $ 0.75 $ 0.40
Add: Goodwill amortization, net of tax - 0.06 - 0.21
------------ ------------ -------------- -----------
Adjusted diluted earnings per share $ 0.26 $ 0.30 $ 0.75 $ 0.61
============ ============ ============== ===========
For the nine-month period ended September 30, 2002 no goodwill or other
intangible assets were acquired, impaired or disposed.
Covenants not to compete are amortized over the life of the agreement, typically
three to ten years. Amortization expense for the nine months ended September 30,
2002 and 2001 were $0.2 million and $0.2 million, respectively. Annual pre-tax
amortization of covenants not to compete are estimated as follows:
Fiscal Year (in thousands)
2003 $ 285
2004 267
2005 76
2006 65
2007 65
Thereafter 122
14
NOTE F - EXTRAORDINARY ITEM
On September 30, 2002 the Company closed the allocation period regarding the
acquisition of Noble Construction Equipment ("NCE"). As a result, the Company
recognized a $0.3 million after-tax extraordinary gain on the transaction
resulting from certain post-closing working capital adjustments.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales. Net sales for the nine months ended September 30, 2002
reached $173.7 million, an increase of $78.4 million, or 82.3%, compared to the
same period of 2001. For the third quarter ending September 30, 2002, net sales
grew to $58.0 million, an increase of $22.8 million, or 64.8%, compared to the
third quarter of 2001. The increase in sales is attributable to increased
revenue from all operating segments. The automotive segment increased sales
66.4% for the quarter and 87.0% for the nine-month period. These increases were
primarily the result of increased value-added sales resulting from the
utilization of laser-welded components on more vehicle models and platforms. In
addition, the automotive segment's revenue was positively impacted by increased
steel sales. The logistics segment experienced increased sales of 4.2% for the
quarter and 8.0% for the nine-month period as this segment continues to execute
its strategy. Net sales were also positively impacted in 2002 by the inclusion
of net sales of the heavy equipment segment of $9.9 million and $34.1 million
for the three and nine month periods, respectively. The heavy equipment segment
was acquired in December 2001.
Cost of Sales. Cost of sales for the nine-month period ended September
30, 2002 increased by $71.0 million to $143.9 million, an increase of 97.4%
compared to the same period in 2001. For the third quarter ending September 30,
2002, cost of sales increased by $20.3 million, or 73.1%, compared to the third
quarter of 2001. These increases were primarily the result of increased net
sales across all segments, increased steel purchases and the inclusion of the
heavy equipment segment acquired in December 2001. Cost of sales as a percentage
of sales increased from 76.5% for the nine-month period September 30, 2001 to
82.8% for the same period in 2002. For the third quarter of 2001 and 2002, cost
of sales as a percentage of sales was 79.0% and 83.0% respectively. The increase
in the percentage of cost of sales to sales for the quarter and nine months
periods is due to the increased steel sales in the automotive segment as it
transitions to a full service supplier from a toll processor, as well as the
inclusion of the heavy equipment segment, which has higher cost of sales as a
percentage of sales than our other operating segments. The logistics segment
experienced an increase in costs of sales as a percentage of sales of 2.1%, from
76.3% to 78.4% for the third quarter of 2001 and 2002 respectively, and an
increase of 2.3%, from 75.6% to 77.9% for the nine-month period of 2001 and
2002.
Gross Margin. Gross margin increased $7.4 million to $29.8 million for
the nine months ending September 30, 2002, or 33.1%, from $22.4 million for the
comparable period in 2001. For the third quarter, gross margin increased by $2.5
million to $9.9 million, or an increase of 33.4% compared to a gross margin of
$7.4 million for the same quarter in 2001. The increase was primarily the result
of the inclusion of the heavy equipment segment as well as higher sales in the
other operating segments. Gross margin as a percentage of sales decreased from
23.5% in the 2001 nine-month period to 17.2% in the 2002 period. For the third
quarter of 2002, gross margin as a percentage of sales decreased from 21.0% in
2001 to 17.0% in 2002. The decrease in gross margin as a percentage of sales was
primarily the result of increased steel sales within the automotive segment and
the inclusion of the heavy equipment segment, as noted above.
15
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $3.3 million, or 19.6%, to $20.5 million
for the nine-month period ended September 30, 2002 as compared to $17.2 million
in the comparable period of 2001. For the third quarter of 2002, these expenses
grew by $0.7 million, or 11.0%, to $7.2 million compared to $6.5 million in the
same period in 2001. This increase was primarily the result of the inclusion of
the heavy equipment segment, acquired in December 2001 and the National Steel
reserve of $0.7 million and $0.5 million for the nine months and three months of
2002 respectively. The increase was partially offset by expense reductions in
the logistics segment. As a percentage of net sales, selling, general and
administrative expenses decreased to 11.8% for the nine months ended September
30, 2002 from 18.0% for the nine months ended September 30, 2001. For the third
quarter the decrease went from 18.5% in 2001 to 12.5% in 2002.
Operating Profit. As a result of the foregoing factors, operating
profit increased $4.1 million, or 77.8%, to $9.3 million for the nine-month
period ended September 30, 2002 from $5.2 million for the same period in 2001.
For the third quarter ended September 30, 2002, operating profit increased by
$1.7 million, or 198.2%, to $2.6 million from $0.9 million in the same quarter
of 2001. As a percentage of net sales, operating profit decreased slightly to
5.3% for the nine months ended September 30, 2002 from 5.5% for the nine months
ended September 30, 2001. For the three-month period ended September 30, 2002
operating profit as a percentage of net sales increased substantially from 2.5%
in 2001 to 4.5% in 2002.
Interest Income. Interest income decreased by $0.7 million, or 48.7% to
$0.8 million for the nine-month period ended September 30, 2002 from $1.5
million for the same period in 2001. For the three-month period ended September
30, 2002, interest income increased by $0.1 million, or 48.5% to $0.3 million
from $0.2 million for the same period in 2001. The increase was the result of
lower notes receivable balances related to the sale of a business in 2001.
Interest Expense. Interest expense decreased 33.4%, to $2.5 million,
for the nine months ended September 30, 2002 from $3.8 million for the
comparable period of 2001. For the three-month period ended September 30, 2002
the reduction was 14.1% to $1.0 million. The reduction was the result of lower
interest rates.
Other Income(Expense). Other income/(expense) decreased $1.2 million
for the three month period ended September 30, 2002. The decrease was primarily
the result of the recording of $1.0 million of fee income related to the
arrangement of financing for SET Enterprises, Inc. in connection with its
purchase of NMF and NMPM in 2001. For the nine months ended September 30, 2002
other income decreased $1.6 million due to the recording of the $1.0 million of
fee income discussed above and the assignment of rights related to a prior
acquisition of $0.6 million during 2001.
Income Tax Expense. Income tax expense for the nine-month period ended
September 30, 2002 increased 28.3%, or $0.5 million, to $2.4 million from $1.8
million for the comparable period in 2001. The third quarter expense increased
150.5% or $0.8 million to $0.3 million from $(0.5) million for the third quarter
of 2001. The nine-month increase is primarily the result of higher pre-tax
profit. The increase in the third quarter of 2002 compared to the same quarter
of 2001 was due to increased earnings. In addition, the 2002 quarter included an
accrual to return adjustment reducing income taxes by $0.4 million and the 2001
quarter included a $1.1 million reduction in taxes related to tax planning
strategies.
Net Earnings. As a result of the foregoing factors, net earnings for
the nine-month period ended September 30, 2002 increased, including an
extraordinary gain of $0.3 million, to $5.5 million from $2.6 million for the
comparable period of the prior year, an increase of 108.7%. For the third
quarter, net income increased 13.5% to $2.0 million from $1.7 million in the
third quarter of 2001.
16
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements have historically been satisfied
through a combination of cash flows from operations, and equity and debt
financing. The Company's working capital needs and capital equipment
requirements have increased as a result of the growth of the Company and are
expected to continue to increase as a result of anticipated growth. The
anticipated increase in required working capital and capital equipment
requirements are expected to be met from cash flow from operations, equipment
financing, revolving credit borrowings and equity financing.
The Company generated cash from operations of $9.2 million for the nine
months ended September 30, 2002 compared to $2.6 million for the same period in
2001. Net cash provided by operations was primarily the result of net income,
increased accounts payable, depreciation, decreased accounts receivable, and
increased income taxes payable, which was partially offset by a decrease in
accrued liabilities and an increase in inventories and prepaid expenses. Net
cash used in investing activities of $6.8 million for the nine months ended
September 30, 2002 was primarily due to purchases of property, plant and
equipment, partially offset by the sale of property, plant and equipment.
Financing activities provided cash of $2.2 million for the nine months ended
September 30, 2002 primarily from net borrowings on the Company's Credit
Facility.
In February 2002, one of the Company's customers, National Steel, Inc.
filed for Chapter 11 bankruptcy protection. The Company has a pre-petition
account receivable in the amount of approximately $1.2 million. The Company is
currently evaluating possible options for collection and has created a reserve
of $0.7 million for the possible uncollectible amount of this receivable. This
reserve was based on the Company's best estimate. The Company does not
anticipate any loss of sales due to this event.
The amount of the Company's revolving credit facility with Comerica
Bank (the "Credit Facility") was $50 million at December 31, 2001, subsequently
amended to $60.0 million in May 2002. The Credit Facility expires on November
30, 2002. The Company has a commitment from its lender on a new $60.0 million
Credit Facility that will take effect in December 2002 and will expire in 2005.
Therefore, the Company has reclassified its current Credit Facility from current
liabilities to long-term liabilities. The Credit Facility is secured by the
assets of Noble and its subsidiaries and provides for the issuance of up to $5.0
million in standby or documentary letters of credit. The Credit Facility may be
utilized for general corporate purposes, including working capital and
acquisition financing, and provides the Company with borrowing options for
multi-currency loans. Borrowing options include a euro-currency rate or a base
rate. Advances under the Credit Facility during the nine months ended September
30, 2002 bore interest at the rate of approximately 4.04% per annum. The Credit
Facility is subject to customary financial and other covenants including, but
not limited to, limitations on payment of dividends, limitations on
consolidations, mergers, and sales of assets, and bank approval on acquisitions
over $25.0 million ($15 million under the new facility). The Company is in
compliance with the terms of the Credit Facility. The Company currently
guarantees $10.0 million of SET Enterprises, Inc.'s senior debt that matures in
2003. As of the date of this report, the Company does not believe the lender
will call the guarantee.
On April 22, 2002, the Company completed a sale and leaseback
transaction of its Shelbyville, Kentucky facility to the Company's Chief
Executive Officer. The sale price was $6.2 million which was equal to the book
value of the property. The proceeds of the transaction were used to reduce the
Company's debt under the Credit Facility. The lease has a term of five years and
provides for monthly rent of $70,000. The sale price and rent amount were
determined by the estimated fair value of the property and estimated prevailing
lease rates for similar properties. Although the Company did not obtain an
independent valuation of the property or the terms of the transaction,
management believes the terms of the sale and leaseback were at least as
favorable to Noble as terms that could have been obtained from an unaffiliated
third party.
17
The liquidity provided by the Company's Credit Facility and committed
Credit Facility is expected to be sufficient to meet the Company's currently
anticipated working capital and capital expenditure needs for at least twelve
months. There can be no assurance, however, that such funds will not be expended
prior thereto due to changes in economic conditions or other unforeseen
circumstances, requiring the Company to obtain additional financing prior to the
end of such twelve-month period. In addition, the Company regularly reviews, as
part of its business strategy, future growth through opportunistic acquisitions
which may involve the expenditure of significant funds. Depending upon the
nature, size and timing of future acquisitions, if any, the Company may be
required to obtain additional debt or equity financing in connection with such
future acquisitions. There can be no assurance, however, that additional
financing will be available to the Company, when and if needed, on acceptable
terms or at all.
SUBSEQUENT EVENT
On October 4, 2002 the Company completed the sale of 925,000 shares of its
common stock. The transaction provided net proceeds to the Company of $9.1
million. The Company used the proceeds to reduce its senior debt.
INFLATION
Inflation generally affects the Company by increasing the interest
expense of floating rate indebtedness and by increasing the cost of labor,
equipment and raw materials. The Company does not believe that inflation has had
a material effect on its business over the past two years.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to the impact of foreign currency fluctuations.
International revenues from the Company's foreign subsidiaries were
approximately 8.2% of the total revenues for the nine months ended September 30,
2002 and 12.2% for the third quarter ended September 30, 2002. For the
comparable periods in 2001 international revenues from the Company's foreign
subsidiaries were 9.7% and 11.8%, respectively. The Company's primary foreign
currency exposure is to the Canadian Dollar. The Company manages its exposure to
foreign currency assets and earnings primarily by funding certain foreign
currency denominated assets with liabilities in the same currency and, as such,
certain exposures are naturally offset.
As of September 30, 2002 only 1.6% of the Company's long-lived assets
are based in its foreign subsidiaries compared to 1.8% as of September 30, 2001.
These assets 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' equity. Accordingly, the
Company's consolidated stockholders' equity will fluctuate depending on the
weakening or strengthening of the U.S. Dollar against the respective foreign
currency.
The Company's financial results are affected by changes in U.S. and
foreign interest rates. The Company does not hold financial instruments that are
subject to market risk (interest rate risk and foreign exchange risk).
ITEM 4: DISCLOSURE CONTROLS
Within the 90-day period prior to the filing date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management,
18
including the Chief Executive Officer and the Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. Based
upon, and as of the date of this evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that our 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. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to the date the Company carried out its evaluation.
19
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
Inapplicable.
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
Inapplicable.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
Inapplicable.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
ITEM 5: OTHER INFORMATION
Inapplicable.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Certification Pursuant to 18 U.S.C. 1350 of Robert J. Skandalaris.
99.2 Certification Pursuant to 18 U.S.C. 1350 of David V. Harper.
(b) The following reports on Form 8-K were filed during the period ending
September 30, 2002:
(i) Report on Form 8-K filed on September 20, 2002, concerning the
adjustment of the Company's diluted earnings per share for the
six months ended June 30, 2002.
(ii) Report on Form 8-K filed on September 23, 2002 concerning
modifications to its underwriting agreement regarding the
Company's convertible subordinated debt.
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.
NOBLE INTERNATIONAL, LTD.
Dated: November 14, 2002 By: /s/ DAVID V. HARPER
-------------------------------------------
David V. Harper,
Vice President and Chief Financial Officer
20
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert J. Skandalaris, certify with respect to the Quarterly Report of Noble
International, Ltd. on Form 10-Q for the quarterly period ended September 30,
2002 ("Report") that:
1. I have reviewed the Report;
2. Based on my knowledge, the Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by the Report;
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in the Report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
the Report (the "Evaluation Date"); and
c) presented in the Report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons fulfilling the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in the 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 their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 14, 2002 By:/s/ ROBERT J. SKANDALARIS
-------------------------------------
Name: Robert J. Skandalaris
Title: Chief Executive Officer (Principal
Executive Officer) of Noble International, Ltd.
21
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David V. Harper, certify with respect to the Quarterly Report of Noble
International, Ltd. on Form 10-Q for the quarterly period ended September 30,
2002 ("Report") that:
1. I have reviewed the Report;
2. Based on my knowledge, the Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by the Report;
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in the Report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
the Report (the "Evaluation Date"); and
c) presented in the Report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons fulfilling the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in the 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 their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 14, 2002 By:/s/ DAVID V. HARPER
--------------------------------------
Name: David V. Harper
Title: Chief Financial Officer (Principal
Financial Officer) of Noble International, Ltd.
22
10-Q 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