x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934.
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934.
|
Delaware
|
95-4486486
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification No.)
|
1400
Opus Place - Suite 600, Downers Grove, IL
|
60515
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
PART
I.
|
Financial
Information
|
Item
1.
|
Financial
Statements:
|
PART
II.
|
Other
Information
|
CONSOLIDATED
BALANCE SHEETS
|
|||||||
(In
thousands, except share and per share data)
|
|||||||
June
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(Unaudited)
|
|||||||
Assets
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
5,610
|
$
|
45,472
|
|||
Accounts
receivable, net
|
78,504
|
71,881
|
|||||
Inventories
|
58,356
|
50,058
|
|||||
Prepaid
and other assets
|
3,689
|
4,396
|
|||||
Refundable
income taxes
|
1,490
|
689
|
|||||
Deferred
income taxes
|
12,372
|
11,446
|
|||||
Assets
of discontinued operations
|
5,982
|
18,562
|
|||||
Total
current assets
|
166,003
|
202,504
|
|||||
Property,
plant and equipment, net
|
51,995
|
54,153
|
|||||
Debt
issuance costs, net
|
743
|
1,981
|
|||||
Goodwill
|
146,653
|
146,176
|
|||||
Intangible
assets, net
|
579
|
292
|
|||||
Other
assets
|
1,625
|
427
|
|||||
Assets
of discontinued operations
|
-
|
2,247
|
|||||
Total
assets
|
$
|
367,598
|
$
|
407,780
|
|||
Liabilities
and Stockholders' Equity
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
36,377
|
$
|
41,294
|
|||
Accrued
expenses
|
18,098
|
23,130
|
|||||
Credit
facility
|
-
|
10,062
|
|||||
Amounts
due to sellers of acquired companies
|
76
|
94
|
|||||
Deferred
compensation
|
136
|
136
|
|||||
Liabilities
of discontinued operations
|
3,546
|
4,757
|
|||||
Total
current liabilities
|
58,233
|
79,473
|
|||||
Amount
drawn on credit facility, less current portion
|
49,200
|
80,623
|
|||||
Deferred
compensation, less current portion
|
2,062
|
847
|
|||||
Other
long-term liabilities
|
2,074
|
2,200
|
|||||
Deferred
income taxes
|
24,851
|
23,407
|
|||||
Stockholders'
Equity:
|
|||||||
Preferred
stock, $.01 par value; shares authorized - 2,000,000; none
issued
|
-
|
-
|
|||||
Common
stock, $.01 par value; shares authorized - 30,000,000;
|
|||||||
Issued
(including shares held in treasury) - 27,096,220 and 26,539,926
|
|||||||
as
of June 30, 2006 and December 31, 2005, respectively
|
271
|
265
|
|||||
Additional
paid-in capital
|
221,484
|
212,678
|
|||||
Retained
earnings
|
81,454
|
77,890
|
|||||
Accumulated
other comprehensive income
|
2,271
|
1,186
|
|||||
Unearned
compensation
|
-
|
(1,160
|
)
|
||||
Common
stock held in treasury, at cost - 4,991,690 and 4,774,374
shares
|
|||||||
as
of June 30, 2006 and December 31, 2005, respectively
|
(74,302
|
)
|
(69,629
|
)
|
|||
Total
stockholders' equity
|
231,178
|
221,230
|
|||||
Total
liabilities and stockholders' equity
|
$
|
367,598
|
$
|
407,780
|
|||
See
accompanying notes.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|||||||||||||
(In
thousands, except per share data)
|
|||||||||||||
For
the three months ended June 30,
|
For
the six months ended June 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
(Unaudited)
|
(Unaudited)
|
||||||||||||
Net
sales:
|
|||||||||||||
Products
|
$
|
55,864
|
$
|
65,301
|
$
|
113,571
|
$
|
122,025
|
|||||
Services
|
66,157
|
33,793
|
127,856
|
64,990
|
|||||||||
Total
net sales
|
122,021
|
99,094
|
241,427
|
187,015
|
|||||||||
Cost
of sales:
|
|||||||||||||
Products
|
43,739
|
48,697
|
89,297
|
91,667
|
|||||||||
Services
|
51,836
|
25,431
|
101,445
|
48,649
|
|||||||||
Total
cost of sales
|
95,575
|
74,128
|
190,742
|
140,316
|
|||||||||
Gross
profit
|
26,446
|
24,966
|
50,685
|
46,699
|
|||||||||
Selling,
general and administrative expense
|
13,659
|
12,018
|
26,234
|
23,485
|
|||||||||
Amortization
of intangible assets
|
30
|
32
|
61
|
63
|
|||||||||
Exit,
disposal, certain severance and other charges
|
581
|
348
|
687
|
434
|
|||||||||
Operating
income
|
12,176
|
12,568
|
23,703
|
22,717
|
|||||||||
Interest
income
|
43
|
408
|
468
|
1,210
|
|||||||||
Other
income (expense), net
|
(98
|
)
|
624
|
(71
|
)
|
600
|
|||||||
Equity
in income of investee
|
-
|
20
|
-
|
-
|
|||||||||
Write-off
of debt issuance costs
|
-
|
-
|
(1,691
|
)
|
-
|
||||||||
Interest
expense
|
(919
|
)
|
(1,920
|
)
|
(2,757
|
)
|
(3,871
|
)
|
|||||
Income
from continuing operations before income taxes
|
11,202
|
11,700
|
19,652
|
20,656
|
|||||||||
Income
tax expense
|
4,390
|
4,270
|
7,111
|
7,539
|
|||||||||
Income
from continuing operations
|
6,812
|
7,430
|
12,541
|
13,117
|
|||||||||
Gain
(loss) from discontinued operations,
|
|||||||||||||
net
of income taxes
|
(48
|
)
|
24
|
(8,977
|
)
|
(313
|
)
|
||||||
Net
income
|
$
|
6,764
|
$
|
7,454
|
$
|
3,564
|
$
|
12,804
|
|||||
Per
common share - basic:
|
|||||||||||||
Income
from continuing operations
|
$
|
0.31
|
$
|
0.35
|
$
|
0.58
|
$
|
0.62
|
|||||
Gain
(loss) from discontinued operations
|
$
|
-
|
$
|
-
|
$
|
(0.41
|
)
|
$
|
(0.01
|
)
|
|||
Net
income
|
$
|
0.31
|
$
|
0.35
|
$
|
0.16
|
$
|
0.60
|
|||||
Weighted
average number of common shares
|
|||||||||||||
outstanding
|
21,780
|
21,255
|
21,722
|
21,213
|
|||||||||
Per
common share - diluted:
|
|||||||||||||
Income
from continuing operations
|
$
|
0.31
|
$
|
0.35
|
$
|
0.57
|
$
|
0.61
|
|||||
Gain
(loss) from discontinued operations
|
$
|
-
|
$
|
-
|
$
|
(0.41
|
)
|
$
|
(0.01
|
)
|
|||
Net
income
|
$
|
0.31
|
$
|
0.35
|
$
|
0.16
|
$
|
0.60
|
|||||
Weighted
average number of common and
|
|||||||||||||
common
equivalent shares outstanding
|
22,024
|
21,436
|
21,989
|
21,414
|
|||||||||
See
accompanying notes.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|||||||
(In
thousands)
|
|||||||
For
the six months ended June 30,
|
|||||||
2006
|
2005
|
||||||
(Unaudited)
|
|||||||
Operating
Activities:
|
|||||||
Net
income
|
$
|
3,564
|
$
|
12,804
|
|||
Adjustments
to reconcile net income to net cash provided by
|
|||||||
operating
activities - continuing operations:
|
|||||||
Net
loss from discontinued operations
|
8,977
|
313
|
|||||
Write-off
of debt issuance costs
|
1,691
|
-
|
|||||
Depreciation
and amortization
|
6,646
|
6,544
|
|||||
Noncash
stock-based compensation
|
1,118
|
447
|
|||||
Amortization
of debt issuance costs
|
333
|
661
|
|||||
Adjustments
to provision for losses on accounts receivable
|
96
|
128
|
|||||
Loss
on sale of equipment
|
185
|
3
|
|||||
Deferred
income taxes
|
495
|
6,165
|
|||||
Changes
in operating assets and liabilities,
|
|||||||
net
of businesses acquired or discontinued/sold:
|
|||||||
Accounts
receivable
|
(6,223
|
)
|
(12,856
|
)
|
|||
Inventories
|
(6,884
|
)
|
4,300
|
||||
Prepaid
and other assets
|
(84
|
)
|
2,152
|
||||
Accounts
payable and accrued expenses
|
(9,080
|
)
|
(9,575
|
)
|
|||
Net
cash provided by operating activities - continuing
operations
|
834
|
11,086
|
|||||
Net
cash provided by operating activities - discontinued
operations
|
4,279
|
811
|
|||||
Investing
Activities:
|
|||||||
Purchases
of property, plant and equipment
|
(4,143
|
)
|
(10,830
|
)
|
|||
Purchases
of available-for-sale securities
|
(2,911
|
)
|
-
|
||||
Purchase
of assets of a business
|
(1,746
|
)
|
-
|
||||
Proceeds
from sales of available-for-sale securities
|
1,741
|
-
|
|||||
Proceeds
from redemption of note receivable from sale of business
|
-
|
8,365
|
|||||
Proceeds
from sale of equipment
|
24
|
-
|
|||||
Net
cash used in investing activities - continuing operations
|
(7,035
|
)
|
(2,465
|
)
|
|||
Net
cash provided by (used in) investing activities - discontinued
operations
|
110
|
(15
|
)
|
||||
Financing
Activities:
|
|||||||
Payments
on term debt
|
(90,685
|
)
|
(15,834
|
)
|
|||
Borrowings
on revolving credit facility, net
|
49,200 | - | |||||
Payment
of debt issuance costs
|
(786
|
)
|
-
|
||||
Proceeds
from exercise of stock options
|
7,363
|
1,173
|
|||||
Tax
benefit from stock-based award transactions
|
1,492
|
-
|
|||||
Payments
on amounts due to sellers of acquired companies
|
(25
|
)
|
(2,425
|
)
|
|||
Repurchases
of common stock for treasury
|
(4,673
|
)
|
(280
|
)
|
|||
Net
cash used in financing activities
|
(38,114
|
)
|
(17,366
|
)
|
|||
Effect
of exchange rate changes on cash and cash equivalents
|
64
|
(32
|
)
|
||||
Decrease
in cash and cash equivalents
|
(39,862
|
)
|
(7,981
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
45,472
|
18,085
|
|||||
Cash
and cash equivalents at end of period
|
$
|
5,610
|
$
|
10,104
|
|||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
2,944
|
$
|
3,348
|
|||
Income
taxes, net
|
1,456
|
1,116
|
|||||
See
accompanying notes.
|
Note
1.
|
Basis
of Presentation
|
Note
2.
|
Inventories
|
June
30, 2006
|
December
31, 2005
|
||||
Raw
materials, including core inventories
|
$
|
47,989
|
$
|
42,742
|
|
Work-in-process
|
1,756
|
1,538
|
|||
Finished
goods
|
8,611
|
5,778
|
|||
$
|
58,356
|
$
|
50,058
|
Note
3.
|
Property,
Plant and Equipment
|
June
30, 2006
|
December
31, 2005
|
|||||
Property,
plant and equipment
|
$
|
127,903
|
$
|
124,697
|
||
Accumulated
depreciation
|
(75,908
|
)
|
(70,544
|
)
|
||
$
|
51,995
|
$
|
54,153
|
Note
4.
|
Goodwill
and Intangible Assets
|
|
Drivetrain
|
Logistics
|
Other/Unallocated
|
Consolidated
|
||||||||
Balance
at December 31, 2005
|
$
|
127,068
|
$
|
18,973
|
$
|
135
|
$
|
146,176
|
||||
Effect
of exchange rate changes from the translation of U.K.
subsidiary
|
477
|
−
|
−
|
477
|
||||||||
Balance
at June 30, 2006
|
$
|
127,545
|
$
|
18,973
|
$
|
135
|
$
|
146,653
|
June
30, 2006
|
December
31, 2005
|
|||||
Intangible
assets
|
$
|
1,615
|
$
|
1,261
|
||
Less:
Accumulated amortization
|
(1,036
|
)
|
(969
|
)
|
||
$
|
579
|
$
|
292
|
Estimated
Amortization Expense
|
||
2006
(remainder)
|
$
|
124
|
2007
|
241
|
|
2008
|
138
|
|
2009
|
55
|
|
2010
|
1
|
Note
5.
|
Warranty
Liability
|
Balance
at December 31, 2005
|
$
|
2,499
|
|
Warranties
issued
|
625
|
||
Claims
paid/settlements
|
(449
|
)
|
|
Changes
in liability for pre-existing warranties
|
(292
|
)
|
|
Balance
at June
30, 2006
|
$
|
2,383
|
Note
6.
|
Credit
Facilities
|
Note
7.
|
Comprehensive
Income
|
For
the three months ended June 30,
|
For
the six months ended June 30,
|
|||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||
Net
income
|
$
|
6,764
|
$
|
7,454
|
$
|
3,564
|
$
|
12,804
|
||||
Other
comprehensive income (loss):
|
||||||||||||
Currency
translation adjustments
|
856
|
(851
|
)
|
1,075
|
(1,401
|
)
|
||||||
Unrealized
gain (loss) on available-for-sale securities, net of income
taxes
|
(34
|
)
|
−
|
10
|
−
|
|||||||
$
|
7,586
|
$
|
6,603
|
$
|
4,649
|
$
|
11,403
|
Note
8.
|
Repurchases
of Common Stock
|
Note
9.
|
Stock-Based
Compensation
|
|
For
the three months ended June 30, 2005
|
For
the six
months
ended
June
30, 2005
|
||||
Income
from continuing operations as reported
|
$
|
7,430
|
$
|
13,117
|
||
Stock-based
employee compensation costs included in the determination of income
from
continuing operations as reported,
net
of income taxes
|
117
|
284
|
||||
Stock-based
employee compensation costs that would have been included in the
determination of income from continuing operations if the fair
value based
method had been applied to all awards, net of income taxes
|
(924
|
)
|
(1,535
|
)
|
||
Pro
forma income from continuing operations as if the fair value based
method
had been applied to all awards
|
$
|
6,623
|
$
|
11,866
|
||
Basic
earnings per common share:
|
||||||
Income
from continuing operations as reported
|
$
|
0.35
|
$
|
0.62
|
||
Pro
forma as if the fair value based method had been applied to all
awards
|
$
|
0.31
|
$
|
0.56
|
||
Diluted
earnings per common share:
|
||||||
Income
from continuing operations as reported
|
$
|
0.35
|
$
|
0.61
|
||
Pro
forma as if the fair value based method had been applied to all
awards
|
$
|
0.31
|
$
|
0.55
|
For
the six months ended June 30,
|
For
the years ended December 31,
|
|||||||||||
2006
|
2005
|
2004
|
2003
|
|||||||||
Expected
volatility
|
38.11
|
%
|
39.39
|
%
|
65.71
|
%
|
78.77
|
%
|
||||
Risk-free
interest rates
|
5.01
|
%
|
3.69
|
%
|
3.05
|
%
|
2.95
|
%
|
||||
Expected
lives
|
3.7
years
|
2.5
years
|
3.7
years
|
4.3
years
|
|
Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
(in years)
|
|
Aggregate
Intrinsic
Value
|
||||
Outstanding
at January 1, 2006
|
1,798,139
|
$
|
18.43
|
||||||
Granted
at market price
|
200,998
|
$
|
24.63
|
||||||
Exercised
|
(462,690
|
)
|
$
|
15.91
|
|||||
Forfeited
|
(8,000
|
)
|
$
|
14.89
|
|||||
Outstanding
at June 30, 2006
|
1,528,447
|
$
|
20.03
|
7.3
|
$
|
9,168
|
|||
Vested
and expected to vest at June 30, 2006
|
1,499,390
|
$
|
19.98
|
7.2
|
$
|
9,101
|
|||
Exercisable
at June 30, 2006
|
1,131,946
|
$
|
20.18
|
6.7
|
$
|
7,093
|
Options
Outstanding
|
Options
Exercisable
|
||||||||||||||
Range
of
Exercise
Prices
|
Shares
|
Weighted-
Average
Remaining
Contractual
Life
|
Weighted-
Average
Exercise
Prices
|
Shares
|
Weighted-
Average
Exercise
Prices
|
||||||||||
|
|||||||||||||||
$4.56
- $7.00
|
42,165
|
4.8
years
|
$
|
5.01
|
42,165
|
$
|
5.01
|
||||||||
$7.01 -
$12.00
|
97,499
|
5.8
years
|
$
|
10.08
|
86,166
|
$
|
10.09
|
||||||||
$12.01
- $15.00
|
398,827
|
7.6
years
|
$
|
14.49
|
220,657
|
$
|
14.43
|
||||||||
$15.01
- $20.00
|
292,958
|
8.2
years
|
$
|
16.55
|
286,958
|
$
|
16.49
|
||||||||
$20.01
- $30.00
|
696,998
|
7.0
years
|
$
|
26.96
|
496,000
|
$
|
27.91
|
||||||||
1,528,447
|
7.3
years
|
$
|
20.03
|
1,131,946
|
$
|
20.18
|
|
Number
of Shares
|
Weighted
Average
Grant-Date
Fair Value
|
||
Unvested
balance at January 1, 2006
|
144,121
|
$
|
15.38
|
|
Granted
|
93,604
|
$
|
24.65
|
|
Vested
|
(52,791
|
)
|
$
|
15.44
|
Forfeited
|
(3,167
|
)
|
$
|
15.65
|
Unvested
balance at June 30,
2006
|
181,767
|
$
|
20.13
|
Note
10.
|
Segment
Information
|
Drivetrain
|
Logistics
|
Consolidated
|
|||||||
For
the three months ended June 30, 2006:
|
|||||||||
Net
sales from external customers
|
$
|
55,864
|
$
|
66,157
|
$
|
122,021
|
|||
Exit,
disposal, certain severance and other charges
|
581
|
−
|
581
|
||||||
Operating
income
|
4,584
|
7,592
|
12,176
|
For
the three months ended June 30, 2005:
|
||||||||
Net
sales from external customers
|
$
|
65,301
|
$
|
33,793
|
$
|
99,094
|
||
Exit,
disposal, certain severance and other charges
|
−
|
348
|
348
|
|||||
Operating
income
|
9,280
|
3,288
|
12,568
|
For
the six months ended June 30, 2006:
|
||||||||
Net
sales from external customers
|
$
|
113,571
|
$
|
127,856
|
$
|
241,427
|
||
Exit,
disposal, certain severance and other charges
|
687
|
−
|
687
|
|||||
Operating
income
|
10,117
|
13,586
|
23,703
|
For
the six months ended June 30, 2005:
|
||||||||
Net
sales from external customers
|
$
|
122,025
|
$
|
64,990
|
$
|
187,015
|
||
Exit,
disposal, certain severance and other (credits) charges
|
(20
|
)
|
454
|
434
|
||||
Operating
income
|
15,928
|
6,789
|
22,717
|
Note
11.
|
Exit,
Disposal, Certain Severance and Other
Charges
|
Termination
Benefits
|
|||
Reserve
as of December 31, 2005
|
$
|
260
|
|
Provision
|
687
|
||
Payments
|
(857
|
)
|
|
Adjustment
|
3
|
||
Reserve
as of June 30, 2006
|
$
|
93
|
Exit
/ Other Costs
|
Loss
on Write-Down
of
Assets
|
Total
|
|||||||
Reserve
as of December 31, 2005
|
$
|
83
|
$
|
200
|
$
|
283
|
|||
Payments
|
(18
|
)
|
- |
(18
|
)
|
||||
Asset
write-offs
|
−
|
(200
|
)
|
(200
|
)
|
||||
Adjustment
|
(3
|
)
|
−
|
(3
|
)
|
||||
Reserve
as of June 30, 2006
|
$
|
62
|
$
|
−
|
$
|
62
|
Note
12.
|
Discontinued
Operations
|
For
the three months ended June 30,
|
For
the six months ended June 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Exit
from Independent Aftermarket
|
|||||||||||||
Income
(loss) from closure and pending disposition of businesses
|
$
|
211
|
$
|
−
|
$
|
(12,459
|
)
|
$
|
−
|
||||
Operating
income (loss)
|
(584
|
)
|
39
|
(1,040
|
)
|
(360
|
)
|
||||||
Income
(loss) before income taxes
|
(373
|
)
|
39
|
(13,499
|
)
|
(360
|
)
|
||||||
Income
tax benefit (expense)
|
325
|
(15
|
)
|
4,522
|
131
|
||||||||
Income
(loss) from Independent Aftermarket, net of income taxes
|
(48
|
)
|
24
|
(8,977
|
)
|
(229
|
)
|
||||||
Disposal
of Gastonia Operations:
|
|||||||||||||
Loss
before income taxes
|
−
|
−
|
−
|
(131
|
)
|
||||||||
Income
tax benefit
|
−
|
−
|
−
|
47
|
|||||||||
Loss
from Gastonia operation, net of income taxes
|
−
|
−
|
−
|
(84
|
)
|
||||||||
Gain
(loss) from discontinued operations, net of income taxes
|
$
|
(48
|
)
|
$
|
24
|
$
|
(8,977
|
)
|
$
|
(313
|
)
|
Note
13.
|
Contingencies
|
Note
14.
|
Subsequent
Event
|
·
|
an
increase in volumes in our Logistics segment, primarily related to
an
increase in our base business with Cingular and the launch and roll-out
of
new business added during 2005 with Cingular, and to a lesser extent,
Nokia, LG, T-Mobile and Thales;
|
·
|
lower
volumes of Ford and Chrysler transmissions we believe to be primarily
associated with inventory corrections in our customers’ distribution
channels; we believe these inventory corrections were largely completed
during the second quarter of 2006;
|
·
|
a
reduction in volume of DaimlerChrysler remanufactured transmissions
due to
DaimlerChrysler’s decision not to use remanufactured transmissions for
warranty repairs generally for model years 2003 and later,
resulting in one less model year being in our warranty program each
year
(in 2005 DaimlerChrysler reversed this decision so we expect to see
an
increase in warranty volume in the future as they begin
to add later models and model years to the warranty
program); and
|
·
|
scheduled
price reductions to certain customers in our Drivetrain and Logistics
segments pursuant to recent contract
renewals.
|
·
|
an increase in volumes in our Logistics segment, primarily related to an increase in our base business with Cingular and the launch and roll-out of new business added during 2005 with Cingular, and to a lesser extent, Nokia, LG, T-Mobile and Thales; and |
·
|
an
increase in volume of medium/heavy duty remanufactured transmissions
in
our Drivetrain segment related to the roll-out of the program we
launched
for Allison in the fourth quarter of 2005 (under the terms of our
remanufacturing program with Allison, we are required to purchase
the
transmission core; accordingly, our results for the three months
ended
June 30, 2006 reflect $5.3 million for core included in both net
sales and
cost of goods sold);
|
·
|
lower
volumes of Ford and Chrysler transmissions we believe to be primarily
associated with inventory corrections in our customers’ distribution
channels; we believe these inventory corrections were largely completed
during the second quarter of 2006;
|
·
|
a
reduction in volume of DaimlerChrysler remanufactured transmissions
due to
DaimlerChrysler’s decision not to use remanufactured transmissions for
warranty repairs generally for model years 2003 and later, resulting
in
one less model year being in our warranty program each year (in 2005
DaimlerChrysler reversed this decision so we expect to see an increase
in
warranty volume in the future as they begin to add later models and
model
years to the warranty program); and
|
·
|
scheduled
price reductions to certain customers in our Drivetrain and Logistics
segments pursuant to recent contract
renewals.
|
For
the Three Months
Ended June 30,
|
|||||||||||||
2006
|
2005
|
||||||||||||
Net
sales
|
$
|
55.9
|
100.0
|
%
|
$
|
65.3
|
100.0
|
%
|
|||||
Segment
profit
|
$
|
4.6
|
8.2
|
%
|
$
|
9.3
|
14.2
|
%
|
·
|
lower
volumes of Ford and Chrysler transmissions we believe to be primarily
associated with inventory corrections in our customers’ distribution
channels; we believe these inventory corrections were largely completed
during the second quarter of 2006;
|
·
|
the impact of a 2005 sale of
$2.6 million
of transmission components at cost relating to end-of-life support
for an
OEM transmission program that ceased production in late 2000;
|
·
|
a
reduction in volume of DaimlerChrysler remanufactured transmissions
due to
DaimlerChrysler’s decision not to use remanufactured transmissions for
warranty repairs generally for model years 2003 and later,
resulting in one less model year being in our warranty program each
year
(in 2005 DaimlerChrysler reversed this decision so we expect to see
an
increase in warranty volume in the future as they begin
to add later models and model years to the warranty
program); and
|
·
|
scheduled
price reductions to certain customers pursuant to recent contract
renewals,
|
·
|
an
increase in volume of medium/heavy duty remanufactured transmissions
related to the roll-out of the program we launched for Allison in
the
fourth quarter of 2005 (under the terms of our remanufacturing program
with Allison, we are required to purchase the transmission core;
accordingly, our results for the three months ended June 30, 2006
reflect
$5.3 million for core included in both net sales and cost of goods
sold);
and
|
·
|
an
increase in volume of Honda remanufactured
transmissions.
|
For
the Three Months
Ended June 30,
|
||||||||||||
2006
|
2005
|
|||||||||||
Net
sales
|
$
|
66.2
|
100.0
|
%
|
$
|
33.8
|
100.0
|
%
|
||||
Segment
profit
|
$
|
7.6
|
11.5
|
%
|
$
|
3.3
|
9.8
|
%
|
·
|
new
business wins in our Logistics segment, including our test and repair
program, and an
increase in our base logistics business with Cingular;
|
·
|
benefits
from our on-going lean and continuous improvement program and other
cost
reduction initiatives;
|
·
|
the
launching of our medium/heavy
duty remanufactured transmission program with Allison; and
|
·
|
an
increase in volume of Honda remanufactured
transmissions,
|
·
|
lower
volumes of Ford and Chrysler transmissions we believe to be primarily
associated with inventory corrections in our customers’ distribution
channels; we believe these inventory corrections were largely completed
during the second quarter of 2006;
and
|
·
|
scheduled
price reductions to certain customers in our Drivetrain and Logistics
segments pursuant to recent contract
renewals;
|
·
|
a
reduction in volume of DaimlerChrysler remanufactured transmissions
due to
DaimlerChrysler’s decision not to use remanufactured transmissions for
warranty repairs generally for model years 2003 and later,
resulting in one less model year being in our warranty program each
year
(in 2005 DaimlerChrysler reversed this decision so we expect to see
an
increase in warranty volume in the future as they begin
to add later models and model years to the warranty
program); and
|
·
|
an
increase in new business and product development cost in our Drivetrain
segment.
|
·
|
an
increase in volumes in our Logistics
segment, primarily related to an increase in our base business with
Cingular and the launch and roll-out of new business added during
2005
with Cingular, and to a lesser extent, Nokia, LG, T-Mobile and Thales;
and
|
·
|
an
increase in volume of medium/heavy duty remanufactured transmissions
in
our Drivetrain segment related to the roll-out of the program we
launched
for Allison in the fourth quarter of 2005 (under the terms of our
remanufacturing program with Allison, we are required to purchase
the
transmission core; accordingly, our results for the six months ended
June
30, 2006 reflect $11.8 million for core included in both net sales
and
cost of goods sold);
|
·
|
lower
volumes of Ford and Chrysler transmissions we believe to be primarily
associated with inventory corrections in our customers’ distribution
channels; we believe these inventory corrections were largely completed
during the second quarter of 2006;
|
·
|
a
reduction in volume of DaimlerChrysler remanufactured transmissions
due to
DaimlerChrysler’s decision not to use remanufactured transmissions for
warranty repairs generally for model years 2003 and later,
resulting in one less model year being in our warranty program each
year
(in 2005 DaimlerChrysler reversed this decision so we expect to see
an
increase in warranty volume in the future as they begin
to add later models and model years to the warranty
program); and
|
·
|
scheduled
price reductions to certain customers in our Drivetrain and Logistics
segments pursuant to recent contract
renewals.
|
For
the Six Months
Ended June 30,
|
|||||||||||||
2006
|
2005
|
||||||||||||
Net
sales
|
$
|
113.6
|
100.0
|
%
|
$
|
122.0
|
100.0
|
%
|
|||||
Segment
profit
|
$
|
10.1
|
8.9
|
%
|
$
|
15.9
|
13.0
|
%
|
·
|
lower
volumes of Ford and Chrysler
transmissions we believe to be primarily associated with inventory
corrections in our customers’ distribution channels; we believe these
inventory corrections were largely completed during the second quarter
of
2006;
|
·
|
the
impact of a 2005 sale of $2.9 million of transmission components
at cost
relating to end-of-life support for an OEM transmission program that
ceased production in late 2000;
|
·
|
a
reduction in volume of DaimlerChrysler remanufactured transmissions
due to
DaimlerChrysler’s decision not to use remanufactured transmissions for
warranty repairs generally for model years 2003 and later,
resulting in one less model year being in our warranty program each
year
(in 2005 DaimlerChrysler reversed this decision so we expect to see
an
increase in warranty volume in the future as they begin
to add later models and model
years to the warranty program); and
|
·
|
scheduled
price reductions to certain customers pursuant to recent contract
renewals,
|
·
|
an
increase in volume of medium/heavy duty remanufactured transmissions
related to the roll-out of the program we launched for Allison in
the
fourth quarter of 2005 (under the terms of our remanufacturing program
with Allison, we are required to purchase the transmission core;
accordingly, our results for the six months ended June 30, 2006 reflect
$11.8 million for core included in both net sales and cost of goods
sold);
and
|
·
|
an
increase in volume of Honda remanufactured
transmissions.
|
For
the Six Months
Ended June 30,
|
|||||||||||||
2006
|
2005
|
||||||||||||
Net
sales
|
$
|
127.9
|
100.0
|
%
|
$
|
65.0
|
100.0
|
%
|
|||||
Segment
profit
|
$
|
13.6
|
10.6
|
%
|
$
|
6.8
|
10.5
|
%
|
·
|
$6.2
million for accounts receivable primarily as the result of increased
sales
volumes to customers in our Logistics segment,
|
·
|
$6.9
million for inventories primarily related to increased test and repair
volume in our Logistics segment;
and
|
·
|
$9.1
million for accounts payable and accrued
expenses primarily due to the payment of 2005 incentive compensation
and
the settlement of payables pursuant to the purchase of a portion
of a
business from one of our
suppliers
|
Period
|
Total
number
of
Shares
Purchased
|
Weighted-
Average
Price
Paid
per Share
|
Total
Number
of
Shares
Purchased
as
Part
of a
Publicly
Announced
Plan
|
Maximum
Number
of
Shares
that May
Yet
Be
Purchased
Under
the Plan (1)
|
|||||
April
1-30, 2006
|
-
|
$
|
−
|
-
|
-
|
||||
May
1-31, 2006
|
3,833
|
$
|
24.80
|
3,833
|
235,865
|
||||
June
1-30, 2006
|
7,692
|
$
|
24.88
|
7,692
|
235,865
|
Votes
|
||
For
|
Against
|
|
Robert
L. Evans
|
19,696,107
|
470,475
|
Curtland
E. Fields
|
19,696,257
|
470,325
|
Dr.
Michael J. Hartnett
|
19,318,927
|
847,655
|
Donald
T. Johnson, Jr.
|
19,639,791
|
526,791
|
Michael
D. Jordan
|
19,696,257
|
470,325
|
S.
Lawrence Prendergast
|
19,025,495
|
1,141,087
|
Edward
Stewart
|
19,318,777
|
847,805
|
For
|
Against
|
Nonvotes
and
Abstentions
|
14,181,413
|
5,118,598
|
114,304
|
AFTERMARKET TECHNOLOGY CORP. | ||
|
|
|
Date: July 25, 2006 | By: | /s/ Todd R. Peters |
Todd R. Peters, Vice President and Chief Financial Officer |
·
|
Todd
R. Peters is signing in the dual capacities as i) the principal
financial
officer, and ii) a duly authorized officer of the
company.
|