U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
Commission file number 0-24690
CLARION TECHNOLOGIES, INC.
(Name of Registrant as specified in its charter)
Delaware 91-1407411
(State of Incorporation) (I.R.S. Employer Identification No.)
235 Central Avenue, Holland, Michigan 49423
(Address of principal executive offices)
Issuer's telephone number: (616) 494-8885
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities and Exchange Act of 1934 during the past 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. [X] Yes [ ] No
The number of shares outstanding of registrant's common stock was 23,551,356 as
of May 15, 2001.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
First Quarter Ended
-------------------
March 31, 2001 April 1, 2000
-------------- -------------
Net sales $ 28,801 $ 25,085
Cost of sales 27,109 21,371
---------- ----------
Gross profit 1,692 3,714
Selling, general and administrative expenses 2,810 2,334
Impairment and other nonrecurring charges 1,500 -
---------- ----------
Operating income (loss) (2,618) 1,380
Interest expense (2,237) (1,230)
Other income (expense), net (93) 48
---------- ----------
Income (loss) before provision for income taxes (4,948) 198
Provision for income taxes 212 118
---------- ----------
Net Income (Loss) $ (5,160) $ 80
=========== ==========
Net income (loss) $ (5,160) $ 80
Preferred stock dividends declared (554) (548)
---------- ----------
Loss attributable to common shareholders $ (5,714) $ (468)
========== ==========
Average shares outstanding (basic and diluted) 23,531 19,876
========== ==========
Loss per share (basic and diluted) $ (.24) $ (.02)
========== ==========
( ) Denotes deduction.
See accompanying notes to condensed consolidated financial statements.
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CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, 2001 December 30, 2000
(UNAUDITED) (AUDITED)
-------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 324 $ 4,679
Accounts receivable, net 26,471 18,643
Inventories 5,744 5,375
Prepaid expenses and other current assets 313 549
----------- ----------
Total current assets 32,852 29,246
Property, plant and equipment, net 52,559 53,626
Other assets:
Goodwill, net 26,954 27,341
Deferred program costs 2,341 2,398
Deferred financing costs, net 1,246 1,192
Other 2 2
----------- ----------
$ 115,954 $ 113,805
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,154 $ 21,013
Accrued liabilities and dividends payable 6,908 5,817
Current portion of long-term debt 242 1,580
----------- ----------
Total current liabilities 34,304 28,410
Long-term debt, net of current portion 65,879 65,924
Other liabilities 2,228 250
----------- ----------
Total liabilities 102,411 94,584
Value of common shares subject to redemption 2,550 2,550
Shareholders' equity:
Preferred stock 15,702 15,702
Common stock 24 24
Additional paid-in capital 33,237 33,201
Accumulated deficit (37,970) (32,256)
----------- ----------
Total shareholders' equity 10,993 16,671
----------- ----------
$ 115,954 $ 113,805
=========== ==========
( ) Denotes deduction.
See accompanying notes to condensed consolidated financial statements.
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CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
First Quarter Ended
-------------------
March 31, 2001 April 1, 2000
--------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (5,160) $ 80
Depreciation and amortization 1,912 1,480
Impairment and other nonrecurring charges 1,500 -
Changes in operating assets and liabilities (566) (2,923)
Other, net - (207)
----------- ----------
Cash used in operating activities (2,314) (1,570)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,094) (443)
Business acquisitions, net of cash acquired - (27,255)
Other - 3
----------- ----------
Cash used in investing activities (1,094) (27,695)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term debt - (3,500)
Proceeds from long-term borrowings - 49,800
Payment of deferred financing costs (155) -
Repayments of long-term debt (828) (21,053)
Proceeds from issuance of capital stock 36 32
Preferred stock dividends paid - (425)
----------- ----------
Cash provided by (used in) financing activities (947) 24,854
----------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,355) (4,411)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 4,679 6,560
----------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 324 $ 2,149
=========== ==========
( ) Denotes reduction in cash and cash equivalents.
See accompanying notes to condensed consolidated financial statements.
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CLARION TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Clarion Technologies, Inc. and Subsidiaries (collectively referred to as
"Clarion" or the "Company") include all adjustments, consisting of normal
recurring accruals, which the Company considers necessary for a fair
presentation of the results of operations for the periods shown. The financial
statements have been prepared in accordance with the instructions to Form 10-Q
and, therefore, do not include all information and footnotes necessary for a
fair presentation of consolidated financial position, results of operations and
cash flows in conformity with accounting principles generally accepted in the
United States. The results of operations for any interim period are not
necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-KSB for the fiscal
year ended December 30, 2000.
2. INVENTORIES
Inventories are stated at the lower of first-in, first-out cost or market. The
components of inventories are as follows (in thousands):
March 31, December 30,
2001 2000
------------------- ------------------
Raw materials $3,203 $3,222
Work in progress 1,710 1,152
Finished goods 831 1,001
------------------- ------------------
$5,744 $5,375
=================== ==================
3. BUSINESS ACQUISITIONS
On July 21, 2000, the Company acquired the net working capital of Small Parts -
NAPCO, L.L.C. ("Small Parts"), a manufacturer of plastic injection molded parts.
The cash purchase price, including transaction-related costs, was $3.5 million.
On February 1, 2000, the Company acquired substantially all of the assets of
Drake Products Corporation ("Drake"), a plastic injection-molding firm serving
consumer products and automotive original equipment manufacturers (OEMs) and
tier-one suppliers. Consideration for the acquisition included 2,000,000 shares
of Clarion common stock with a fair value of $3.8 million, $25.6 million in cash
and the issuance of two subordinated promissory notes totaling $5.1 million. The
Company also assumed $6.9 million of liabilities. In related transactions, the
Company acquired the real property used by Drake for $2.6 million in cash and
the issuance of a $1.0 million promissory note.
-5-
The following unaudited pro forma consolidated results of operations are
presented as if the acquisition of Drake had been made at the beginning of the
earliest period presented (in thousands, except per share data). The historical
operating results of Small Parts were not material and have not been included in
the pro forma amounts below.
Quarter Ended
April 1, 2000
-------------
Net sales $ 29,032
Net loss attributable to common shareholders (468)
Loss attributable to common shareholders per share
(basic and diluted) (.02)
The unaudited pro forma information is not necessarily indicative of the results
of operations that would have occurred had the purchases been made at the
beginning of the period presented or of the future results of the combined
operations.
4. GEOGRAPHIC AND SEGMENT DATA
The Company operates in a single geographic location, North America, and in a
single reportable business segment, plastic injection molding. The accounting
policies of this reportable business segment are the same as those described in
the summary of significant accounting policies in the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 30, 2000.
5. IMPAIRMENT AND OTHER NONRECURRING CHARGES
On March 16, 2001, the Company announced the closing of one of its manufacturing
facilities in Greenville, Michigan. The plant closing will result in the
transfer of employees and related production to other Company facilities.
Management has accrued a nonrecurring pre-tax charge of $1.5 million related to
the closing to cover various exit costs ($0.7 million) and anticipated losses on
the sale of the property, plant and certain equipment ($0.8 million). The
closing activities are expected to be substantially completed by the end of the
second quarter of 2001. As of the end of the first quarter of 2001, there have
been no payments against the liability recorded for exit costs.
In the fourth quarter of fiscal 2000, the Company incurred impairment and other
nonrecurring charges totaling $2.3 million related to its Small Parts operation
as a result of the termination of certain customer relationships and other
transition activities. All nonrecurring expenses had been incurred and charged
against the related liabilities as of December 30, 2000.
6. SUBSEQUENT EVENTS
Effective April 17, 2001, the Company negotiated an amendment to the senior
credit facility that provides for the following:
- The maturity of the facility has been amended from February 28, 2003 to
April 30, 2002.
- The term loan portion of the credit facility, prior to amendment, provided
for principal payments of $0.3 million per month until February 28, 2002
and $0.4 million monthly thereafter. The amendment provides for principal
payments at various times between July 1, 2001 and December 31, 2001
totaling $0.3 million, with remaining outstanding balances due at maturity
of the facility.
- Interest rate margins have been increased by 0.25% and 0.75% for borrowing
under the prime rate option for revolving credit and term loans,
respectively, and by 1.0% for term loan borrowings under the LIBOR option.
- The banks have provided an additional $1.0 million term loan that will be
due in full at maturity of the credit facility on April 30, 2002. This term
loan provides immediate additional liquidity and is guaranteed by one of
the Company's Directors. A warrant to purchase common stock will be issued
to the Director in consideration for this guarantee.
- The revolving credit limit has been increased from $15.0 million to $17.0
million, subject to an asset-based borrowing calculation. This increase
will provide up to $2.0 million of additional liquidity depending on
inventory and accounts receivable levels.
-6-
- All prior covenant violations and default remedies have been waived through
April 30, 2002, and covenants have been reset for the remainder of the term
of the credit facility.
On April 17, 2001, the Company also negotiated an amendment to our subordinated
credit facility that provides for the following:
- Interest payments from March 31, 2001 will accrue, but not be paid prior to
the maturity of the senior credit facility on April 30, 2002. This deferred
interest will remain a future obligation of the Company. During the period
of interest deferral, the interest rate will increase to 15.0%. The
interest rate will return to 12.0% upon payment of the deferred interest.
- An additional $3.0 million of capital was funded by the original
subordinated lender and certain Company Directors and executive officers
through this amended credit facility. In addition to cash interest as
provided under the subordinated credit agreement, the providers of this
capital received a warrant to purchase 3.0 million shares of Clarion common
stock for $.0001 per share. The warrant expires 10 years from the date of
issuance.
- All prior covenant violations and default remedies have been permanently
waived and covenants have been reset for the remainder of the term of the
credit facility.
Effective April 6, 2001, the terms of the Company's convertible preferred stock
were amended. The dividend rate on the outstanding stock has been reduced to 12%
from 14% of the liquidation value and dividends, at the option of the Company,
may be paid in either common stock or cash. However, the liquidation value was
increased from $8.00 to $10.00 as of April 6, 2001. The rate will increase back
to 14% and then 16% if the preferred stock is not redeemed by certain specified
dates. In addition, the conversion features of the preferred stock were changed
such that it is convertible at the option of the holder at any time, unless
previously redeemed, into shares of common stock of the Company at a conversion
rate of 3.33 shares of common stock for each share of preferred stock through
March 31, 2002, at which time the conversion rate becomes 5 shares of common
stock per share of preferred stock, subject to adjustment in certain events. The
Company may at any time redeem all or any portion of the convertible preferred
stock for $10.00 per share plus all accrued and unpaid dividends thereon. The
preferred stock has a mandatory redemption date of March 31, 2003, subject to
any existing contractual agreements that may prohibit such redemption. The
amended senior credit agreement does not, however, allow for such cash dividend
payments prior to April 30, 2002 unless approved by the lenders.
On April 10, 2001, the Company announced its decision to discontinue the tooling
segment of the business. No plan of action has been adopted and therefore no
accrual has been recorded in the consolidated financial statements.
7. ADOPTION OF NEW ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities" and
amended this Statement with Statements No. 137 and 138. The Company adopted the
Statements as of the beginning of the first quarter of 2001. The Statements did
not have any effect on the Condensed Consolidated Statements of Operations or
Condensed Consolidated Balance Sheets since the Company has no derivative
instruments and has not entered into any hedging agreements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
The following information should be read in conjunction with the accompanying
Condensed Consolidated Financial Statements of the Company and the Management's
Discussion and Analysis of Financial Condition and Results of Operations set
forth in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 30, 2000.
The Company is a full-service custom injection molder, providing rapid
prototyping and design models, mold design and engineering services, mold
manufacturing, injection molding and post-molding assembly to a diverse base of
customers in the automotive, heavy truck, office furniture and consumer goods
industries. Clarion's business strategy is to create, through acquisitions and
internal growth, one of the largest full-service custom injection molding
businesses in the highly fragmented plastic injection-molding industry to serve
customers in the Company's target markets.
The Company has completed several key acquisitions during the past two years,
which included a business combination effective on February 1, 2000, for the
assets of Drake Products Corporation, a full-service plastic injection molding
firm, and the real properties used by the Drake operations. This business
combination was accounted for as a purchase and accordingly, financial data in
the Management's Discussion and Analysis of Financial Condition and Results of
Operations only include operating results for this company subsequent to the
effective acquisition date, which impacts the comparability of results between
the periods presented.
-7-
RESULTS OF OPERATIONS
The table below summarizes the components of the Company's Condensed
Consolidated Statements of Operations as a percentage of net sales:
First Quarter Ended
-------------------
March 31, 2001 April 1, 2000
-------------- -------------
Net sales 100.0% 100.0%
Cost of sales 94.1% 85.2%
------- --------
Gross profit 5.9% 14.8%
Selling, general and administrative expenses 9.8% 9.3%
Impairment and other nonrecurring charges 5.2% -
------- --------
Operating income (loss) (9.1%) 5.5%
Interest expense (7.8%) (4.9%)
Other income (expense), net (0.3%) 0.2%
------- --------
Income (loss) before provision for income taxes (17.2%) 0.8%
Provision for income taxes 0.7% 0.5%
------- --------
NET INCOME (LOSS) (17.9%) 0.3%
======= ========
Net sales
Net sales of $28.8 million in the first quarter of 2001 were $3.7 million
(14.7%) higher than net sales of $25.1 million in the first quarter of 2000. The
increase was primarily due to the inclusion of sales from Drake for the full
quarter in 2001, whereas the same period in 2000 only included net sales for two
months. Also positively impacting net sales was an increase in volumes at our
Montpelier facility due to a new program in the heavy truck industry and an
increase in tooling sales due to the launch of this new program at Montpelier
and an additional new tool project. These increases were offset by a decrease in
OEM automotive sales related to economic downturns in the automotive industry.
Gross profit
Gross profit, as a percentage of 2001 net sales, was 5.9% for the first quarter,
compared to 14.8% in the corresponding period of 2000. The decrease was
primarily attributable to an increase in prices of resin which, in some cases,
we have not been able to pass on to our customers, competitive pressures on
pricing to retain current and attract new customers, and lower plant utilization
due to reduced sales in the OEM automotive industry as noted above.
Impairment and other nonrecurring charges
On March 16, 2001, the Company announced the closing of one of its manufacturing
facilities in Greenville, Michigan. The plant closing will result in the
transfer of employees and related production to other Company facilities.
Management has accrued a nonrecurring pre-tax charge related to the closing of
$1.5 million to cover various exit costs ($0.7 million) and anticipated losses
on the sale of the property, plant and certain equipment ($0.8 million). The
closing activities are expected to be substantially completed by the end of the
second quarter of 2001.
-8-
Selling, general and administrative expenses
Selling, general and administrative ("SG&A") expenses increased $0.5 million
(21.7%) from $2.3 million in the prior year first quarter to $2.8 million in the
first quarter of 2001. As a percentage of net sales, SG&A expense in the first
quarter increased from 9.3% in 2000 to 9.8% in 2001. The increase in spending
was due to additional expenses associated with adding the Drake operations
during the first quarter of 2000.
Interest expense
Interest expense for the first quarter of 2001 increased $1.0 million (83.3%) to
$2.2 million from $1.2 million for the comparable quarter in 2000. The increase
in interest expense for the quarter was primarily due to financing the Drake
business acquisition during the first quarter of 2000, the acquisition of Small
Parts, and funding of capital expenditures. In addition, the Company's effective
interest rate has increased as additional debt has been obtained and the related
bank financing fees are being amortized.
Income taxes
The Company's effective income tax rates for all periods presented differed from
the applicable statutory rates primarily due to nondeductible goodwill
amortization, Michigan Single Business Tax, and fully reserving federal income
tax benefits associated with net operating losses. The federal tax benefits from
net operating loss carryforwards will only be recognized as the Company
generates taxable income in future periods.
Net loss
The Company recorded a net loss of $5.2 million for the first quarter of 2001
compared to net income of $0.1 million in the same period of 2000. The reduction
of net income in 2001 compared to 2000 is due to lower gross margins, increased
interest expense, and an impairment and other nonrecurring charge.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, the Company had total cash balances of $0.3 million and
negative working capital of $1.5 million compared to $4.7 million of cash and
working capital of $1.8 million at December 30, 2000. Accounts receivable
increased by $7.9 million (42.0%) from $18.6 million at December 30, 2000 to
$26.5 million at March 31, 2001. Inventories increased by $0.4 million (6.9%)
over the same period. The decrease in working capital is attributable to
incurring $0.7 million of nonrecurring charges related to the closing of a
manufacturing facility and a $6.1 million increase in accounts payable, which
are offset by increases in accounts receivable and inventories. Net cash used in
operating activities was $2.3 million in the first quarter of 2001, which is an
increase of $0.7 million of the $1.6 million of net cash used in the first
quarter of 2000. The decline in operating cash flows used in operations was
impacted by the increase in inventories and accounts receivable related to
higher 2001 first quarter sales related to customer orders received during the
last month of the quarter.
Investing activities consisted primarily of capital expenditures in first
quarter 2001 compared to business acquisitions in first quarter 2000. $1.1
million was used for capital expenditures in 2001 compared to $0.4 million in
2000. Capital expenditures in 2001 consisted primarily of new molding equipment
and investments in plant automation. During the first quarter of 2000, the
Company acquired Drake and used $27.3 million of cash; no acquisitions occurred
during first quarter 2001.
Financing activities used $0.9 million of net cash in 2001 as compared to
providing $24.9 million in 2000. A significant credit agreement was entered into
in the first quarter of 2000 in connection with the Drake acquisition,
-9-
which included amounts for the acquisition and to refinance other revolving
credit and term debt agreements. Financing activities also included the use of
cash totaling $0.4 million in 2000 for preferred stock dividends. During the
first quarter of 2001, financing activities included repayment of debt and
proceeds of common stock issuances related to the Employees Stock Purchase Plan.
As shown in the Company's most recent annual report Form 10-KSB, the Company
incurred significant net losses in each of the past two fiscal years and is
highly leveraged. At March 31, 2001, the Company was also experiencing liquidity
constraints as noted by the full use of the borrowing capacity under the
revolving credit facility and delayed customer payments on outstanding accounts
receivable, that have in turn caused extended payment periods to vendors. In
addition, current market conditions in two of the industries the Company serves,
heavy truck and automotive, indicate that a decline in overall unit sales for
OEMs can be expected in 2001 as compared to 2000. This anticipated decline in
OEM sales could result in adverse financial conditions that may be experienced
throughout the supply chain within these industries, and therefore, could
negatively affect our operations in 2001.
In response to debt covenant violations at the end of the preceding fiscal year
end and in anticipation of continued tight liquidity, we have negotiated a
comprehensive restructuring of our senior and subordinated credit facilities and
convertible preferred stock as discussed in note 6 to the Condensed Consolidated
Financial Statements in Part I, Item I. Management believes that this
restructuring, combined with operational changes, will provide us with
sufficient capital resources to meet our needs through the coming year, reduce
past due amounts owed to our vendors and satisfy the restructured debt service
requirements.
TAX CONSIDERATIONS
The Company has net operating loss ("NOL") carryforwards for tax purposes that
are available to offset future taxable income. However, there are federal tax
laws that restrict or eliminate NOL carryforwards when certain changes of
control occur. A 50% change of control, which is calculated over a rolling
three-year period, may cause the Company to lose some or all of its NOL
carryforward benefits. Due to the significant number of equity transactions that
have occurred in recent years the Company believes there have been changes in
control, however, the Company also believes there are currently no restrictions
that would eliminate the future cash benefits from utilizing its NOL
carryforwards. As the Company executes it strategy of growth through
acquisitions, there are likely to be more transactions in the future involving
private or public sales of equity securities. The Company cannot make any
assurances that such transactions will not result in the loss of NOL
carryforward benefits in the future due to changes in control.
INFLATION
The Company does not believe that sales of its products are affected materially
by inflation, although there can be no assurance that inflation will not affect
sales in the future. The Company does believe that its financial performance
could be adversely affected by inflation in the plastic resin market. The
primary plastic resins used by the Company are produced from petrochemical
feedstock mostly derived from natural gas liquids. Supply and demand cycles in
the petrochemical industry, which are often impacted by OPEC policies, can cause
substantial price fluctuations. Consequently, plastic resin prices may increase
as a result of changes in natural gas liquid prices and the capacity, supply and
demand for resin and petrochemical feedstock from which they are produced.
In many instances the Company has been able to pass through changes in the cost
of its raw materials to customers in the form of price increases. However, there
is no assurance that the Company will be able to continue such pass throughs, or
that the timing of such pass throughs will coincide with the Company's increased
costs. To the extent that increases in the cost of plastic resin cannot be
passed on to customers, or that the duration of time lags associated with a pass
through becomes significant, such increases may have an adverse impact on gross
profit margins and the overall profitability of the Company.
CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION
The statements contained in this document or incorporated by reference that are
not historical facts are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform
-11-
Act of 1995. The forward-looking statements are based on management's current
expectations or beliefs and are subject to a number of risks and uncertainties.
In particular, any statement contained herein regarding the consummation and
benefits of future acquisitions, as well as expectations with respect to future
sales, operating efficiencies, and product expansion are subject to known and
unknown risks, uncertainties and contingencies, many of which are beyond the
control of the Company, which may cause actual results, performance or
achievements to differ materially from those described in the forward looking
statements. Factors which may cause actual results to differ materially from
those contemplated by the forward-looking statements, include, among other
things: overall economic and business conditions; the demand for the Company's
goods and services; competitive factors in the industries in which the Company
competes; increases in production or material costs that cannot be recouped in
product pricing; changes in government regulations; changes in tax requirements
(including tax rate changes, new tax laws and revised tax law interpretations);
interest rate fluctuations and other capital market conditions; the ability to
achieve anticipated synergies and other cost savings in connection with
acquisitions; and the timing, impact and other uncertainties of future
acquisitions. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is a change in interest rates in
connection with its outstanding variable rate short-term and long-term debt. An
increase in interest rates of 1% could result in the Company incurring an
additional $0.4 million in annual interest expense. Conversely, a decrease in
interest rates of 1% could result in the Company saving $0.4 million in annual
interest expense. The Company does not expect such market risk exposure to have
a material adverse effect on the Company. The Company does not enter into market
risk sensitive instruments for trading purposes.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently involved in any material lawsuits. The Company is
subject to claims and litigation in the ordinary course of its business, but
does not believe that any such claim or litigation will have a material adverse
effect on its consolidated financial position, results of operations or cash
flow.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the first quarter ended March 31, 2001, the Company did not issue any
unregistered shares of its Common Stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Refer to Liquidity and Capital Resources Section within Management's Discussion
and Analysis of Financial Condition and Results of Operations in Part I, Item II
and Note 6 to the Condensed Consolidated Financial Statements in Part I, Item I.
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) Exhibits
No exhibits required.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
-12-
SIGNATURES
In accordance with Section 13 or 15(d) 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.
CLARION TECHNOLOGIES, INC.
Date: May 15, 2001 /s/ Greg Bego
Greg Bego, Acting Chief Financial Officer
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