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.
|
ATC TECHNOLOGY CORPORATION |
(Exact
Name of Registrant as Specified in its
Charter)
|
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)
|
AFTERMARKET TECHNOLOGY CORP. |
(Former
Name as Reported in the Last Form 10-Q Report Filed by the
Registrant)
|
Page
Number
|
||
PART
I.
|
Financial
Information
|
|
Item
1.
|
Financial
Statements:
|
|
Item
2.
|
||
Item
3.
|
||
Item
4.
|
||
PART
II.
|
Other
Information
|
|
Item
2.
|
||
Item
4.
|
||
Item
6.
|
||
CONSOLIDATED
BALANCE SHEETS
|
|||||||
(In
thousands, except share and per share data)
|
|||||||
June
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
(Unaudited)
|
|||||||
Assets
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$ | 7,223 | $ | 40,149 | |||
Accounts
receivable, net
|
91,839 | 70,887 | |||||
Inventories
|
74,114 | 63,994 | |||||
Prepaid
and other assets
|
4,084 | 3,136 | |||||
Refundable
income taxes
|
2,455 | 2,036 | |||||
Deferred
income taxes
|
8,217 | 7,740 | |||||
Assets
of discontinued operations
|
292 | 2,408 | |||||
Total
current assets
|
188,224 | 190,350 | |||||
Property,
plant and equipment, net
|
57,666 | 56,462 | |||||
Debt
issuance costs, net
|
428 | 507 | |||||
Goodwill
|
132,375 | 132,375 | |||||
Intangible
assets, net
|
112 | 211 | |||||
Long-term
investments
|
5,036 | 3,019 | |||||
Other
assets
|
2,051 | 1,244 | |||||
Assets
of discontinued operations
|
- | 5,206 | |||||
Total
assets
|
$ | 385,892 | $ | 389,374 | |||
Liabilities
and Stockholders' Equity
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$ | 35,990 | $ | 34,756 | |||
Accrued
expenses
|
23,672 | 34,495 | |||||
Book
overdraft
|
2,340 | - | |||||
Income
taxes payable
|
1,281 | 3,308 | |||||
Deferred
compensation
|
124 | 124 | |||||
Liabilities
of discontinued operations
|
1,345 | 789 | |||||
Total
current liabilities
|
64,752 | 73,472 | |||||
Amount
drawn on credit facility
|
6,300 | - | |||||
Deferred
compensation, less current portion
|
5,336 | 3,308 | |||||
Other
long-term liabilities
|
3,073 | 2,819 | |||||
Liabilities
related to uncertain tax positions
|
1,607 | 1,608 | |||||
Deferred
income taxes
|
29,589 | 27,654 | |||||
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) - 27,605,232
and 27,479,944
|
|||||||
as
of June 30, 2008 and December 31, 2007, respectively
|
276 | 275 | |||||
Additional
paid-in capital
|
234,810 | 232,312 | |||||
Retained
earnings
|
142,903 | 125,336 | |||||
Accumulated
other comprehensive income
|
3,675 | 3,766 | |||||
Common
stock held in treasury, at cost - 6,577,152 and 5,328,423
shares
|
|||||||
as
of June 30, 2008 and December 31, 2007, respectively
|
(106,429 | ) | (81,176 | ) | |||
Total
stockholders' equity
|
275,235 | 280,513 | |||||
Total
liabilities and stockholders' equity
|
$ | 385,892 | $ | 389,374 | |||
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,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||
(Unaudited)
|
(Unaudited)
|
||||||||||||||
Net
sales:
|
|||||||||||||||
Services
|
$ | 86,512 | $ | 69,195 | $ | 171,269 | $ | 137,627 | |||||||
Products
|
49,110 | 61,162 | 93,895 | 123,999 | |||||||||||
Total
net sales
|
135,622 | 130,357 | 265,164 | 261,626 | |||||||||||
Cost
of sales:
|
|||||||||||||||
Services
|
66,493 | 50,155 | 127,626 | 101,788 | |||||||||||
Products
|
40,072 | 45,296 | 76,221 | 92,702 | |||||||||||
Products
- exit, disposal, certain severance and other charges
|
- | 713 | - | 713 | |||||||||||
Total
cost of sales
|
106,565 | 96,164 | 203,847 | 195,203 | |||||||||||
Gross
profit
|
29,057 | 34,193 | 61,317 | 66,423 | |||||||||||
Selling,
general and administrative expense
|
14,409 | 15,551 | 27,779 | 28,718 | |||||||||||
Amortization
of intangible assets
|
36 | 60 | 87 | 119 | |||||||||||
Exit,
disposal, certain severance and other charges
|
152 | 513 | 1,118 | 513 | |||||||||||
Operating
income
|
14,460 | 18,069 | 32,333 | 37,073 | |||||||||||
Interest
income
|
106 | 101 | 406 | 185 | |||||||||||
Other
income, net
|
28 | 37 | 99 | 64 | |||||||||||
Interest
expense
|
(247 | ) | (276 | ) | (375 | ) | (694 | ) | |||||||
Income
from continuing operations before income taxes
|
14,347 | 17,931 | 32,463 | 36,628 | |||||||||||
Income
tax expense
|
5,387 | 6,293 | 12,418 | 13,379 | |||||||||||
Income
from continuing operations
|
8,960 | 11,638 | 20,045 | 23,249 | |||||||||||
Gain
(loss) from discontinued operations, net of income taxes
|
34 | (1,566 | ) | (2,478 | ) | (3,503 | ) | ||||||||
Net
income
|
$ | 8,994 | $ | 10,072 | $ | 17,567 | $ | 19,746 | |||||||
Per
common share - basic:
|
|||||||||||||||
Income
from continuing operations
|
$ | 0.43 | $ | 0.53 | $ | 0.94 | $ | 1.07 | |||||||
Gain
(loss) from discontinued operations
|
$ | - | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.16 | ) | ||||
Net
income
|
$ | 0.43 | $ | 0.46 | $ | 0.82 | $ | 0.91 | |||||||
Weighted
average number of common shares
|
|||||||||||||||
outstanding
|
21,002 | 21,777 | 21,422 | 21,714 | |||||||||||
Per
common share - diluted:
|
|||||||||||||||
Income
from continuing operations
|
$ | 0.42 | $ | 0.53 | $ | 0.93 | $ | 1.06 | |||||||
Gain
(loss) from discontinued operations
|
$ | - | $ | (0.07 | ) | $ | (0.11 | ) | $ | (0.16 | ) | ||||
Net
income
|
$ | 0.42 | $ | 0.46 | $ | 0.81 | $ | 0.90 | |||||||
Weighted
average number of common and
|
|||||||||||||||
common
equivalent shares outstanding
|
21,187 | 22,104 | 21,645 | 22,022 | |||||||||||
See
accompanying notes.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|||||||
(In
thousands)
|
|||||||
For
the six months ended June 30,
|
|||||||
2008
|
2007
|
||||||
(Unaudited)
|
|||||||
Operating
Activities:
|
|||||||
Net
income
|
$ | 17,567 | $ | 19,746 | |||
Adjustments
to reconcile net income to net cash (used in) provided by
|
|||||||
operating
activities - continuing operations:
|
|||||||
Net
loss from discontinued operations
|
2,478 | 3,503 | |||||
Depreciation
and amortization
|
7,348 | 7,380 | |||||
Noncash
stock-based compensation
|
2,253 | 1,804 | |||||
Amortization
of debt issuance costs
|
79 | 79 | |||||
Adjustments
to provision for losses on accounts receivable
|
8 | (118 | ) | ||||
(Gain)
loss on sale of equipment
|
(18 | ) | 42 | ||||
Deferred
income taxes
|
1,458 | 5,382 | |||||
Changes
in operating assets and liabilities,
|
|||||||
net
of businesses discontinued/sold:
|
|||||||
Accounts
receivable
|
(20,965 | ) | 8,873 | ||||
Inventories
|
(10,127 | ) | (2,566 | ) | |||
Prepaid
and other assets
|
(351 | ) | (479 | ) | |||
Accounts
payable and accrued expenses
|
(9,307 | ) | 10,129 | ||||
Net
cash (used in) provided by operating activities - continuing
operations
|
(9,577 | ) | 53,775 | ||||
Net
cash provided by (used in) operating activities - discontinued
operations
|
574 | (3,821 | ) | ||||
Investing
Activities:
|
|||||||
Purchases
of property, plant and equipment
|
(7,998 | ) | (14,563 | ) | |||
Purchases
of available-for-sale securities
|
(2,088 | ) | (2,364 | ) | |||
Proceeds
from sales of available-for-sale securities
|
- | 1,812 | |||||
Repayment
of note receivable from sale of business
|
125 | - | |||||
Proceeds
from sale of property, plant and equipment
|
22 | 22 | |||||
Net
cash used in investing activities - continuing operations
|
(9,939 | ) | (15,093 | ) | |||
Net
cash provided by (used in) investing activities - discontinued
operations
|
2,412 | (525 | ) | ||||
Financing
Activities:
|
|||||||
Borrowings
(payments) on revolving credit facility, net
|
6,300 | (17,800 | ) | ||||
Net
change in book overdraft
|
2,340 | (5,059 | ) | ||||
Proceeds
from exercise of stock options
|
205 | 2,934 | |||||
Tax
benefit from stock-based award transactions
|
24 | 673 | |||||
Repurchases
of common stock for treasury
|
(25,253 | ) | (484 | ) | |||
Net
cash used in financing activities
|
(16,384 | ) | (19,736 | ) | |||
Effect
of exchange rate changes on cash and cash equivalents
|
(12 | ) | 66 | ||||
(Decrease)
increase in cash and cash equivalents
|
(32,926 | ) | 14,666 | ||||
Cash
and cash equivalents at beginning of period
|
40,149 | 7,835 | |||||
Cash
and cash equivalents at end of period
|
$ | 7,223 | $ | 22,501 | |||
Cash
paid during the period for:
|
|||||||
Interest
|
$ | 314 | $ | 470 | |||
Income
taxes, net
|
11,531 | 2,671 | |||||
See
accompanying notes.
|
Note
1.
|
Basis
of Presentation
|
Note
2.
|
Inventories
|
June
30, 2008
|
December
31, 2007
|
||||
Raw
materials, including core inventories
|
$ | 65,730 | $ | 57,695 | |
Work-in-process
|
1,254 | 1,467 | |||
Finished
goods
|
7,130 | 4,832 | |||
Total
inventories
|
$ | 74,114 | $ | 63,994 |
Note
3.
|
Property,
Plant and Equipment
|
June
30, 2008
|
December
31, 2007
|
||||||
Property,
plant and
equipment
|
$ | 152,490 | $ | 144,172 | |||
Accumulated
depreciation
|
(94,824 | ) | (87,710 | ) | |||
Total
property, plant and equipment, net
|
$ | 57,666 | $ | 56,462 |
Note
4.
|
Warranty
Liability
|
For
the three months ended June 30,
|
For
the six months ended June 30,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||
Balance
at beginning of period
|
$ | 2,061 | $ | 2,038 | $ | 2,154 | $ | 1,985 | |||||||
Warranties
issued
|
333 | 395 | 650 | 788 | |||||||||||
Claims
paid / settlements
|
(101 | ) | (243 | ) | (482 | ) | (571 | ) | |||||||
Changes
in liability for pre-existing warranties
|
(393 | ) | 5 | (422 | ) | (7 | ) | ||||||||
Balance
at end of period
|
$ | 1,900 | $ | 2,195 | $ | 1,900 | $ | 2,195 |
Note
5.
|
Credit
Facility
|
Note
6.
|
Comprehensive
Income
|
For
the three months ended June 30,
|
For
the six months ended June 30,
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
Net
income
|
$ | 8,994 | $ | 10,072 | $ | 17,567 | $ | 19,746 | ||||
Other
comprehensive income (loss):
|
||||||||||||
Currency
translation adjustments
|
1 | 260 | (14 | ) | 281 | |||||||
Change
in unrealized gain (loss) on available-
for-sale
securities, net of income taxes
|
– | 87 | (77 | ) | 98 | |||||||
Total comprehensive income | $ | 8,995 | $ | 10,419 | $ | 17,476 | $ | 20,125 |
Note
7.
|
Stock-Based
Compensation
|
Stock
Options
|
Restricted Stock(1)
|
||||
Outstanding
at January 1, 2008
|
1,514,727 | 224,625 | |||
Granted
at market price
|
258,777 | 111,122 | |||
Exercised
|
(14,166
|
) | (83,839 | ) | |
Forfeited/expired
|
(26,496 | ) | (16,524 | ) | |
Outstanding
at June 30, 2008
|
1,732,842 | 235,384 |
Note
8.
|
Repurchases
of Common Stock
|
Note
9.
|
Segment
Information
|
Logistics
|
Drivetrain
|
Consolidated
|
||||||
For the three months
ended June 30, 2008:
|
||||||||
Net
sales from external customers
|
$ | 86,512 | $ | 49,110 | $ | 135,622 | ||
Operating
income
|
11,396 | 3,064 | 14,460 | |||||
For the three months
ended June 30, 2007:
|
||||||||
Net
sales from external customers
|
$ | 69,195 | $ | 61,162 | $ | 130,357 | ||
Operating
income
|
10,357 | 7,712 | 18,069 | |||||
For the six months ended June 30,
2008:
|
||||||||
Net
sales from external customers
|
$ | 171,269 | $ | 93,895 | $ | 265,164 | ||
Operating
income
|
26,709 | 5,624 | 32,333 | |||||
For the six months ended June
30, 2007:
|
||||||||
Net
sales from external customers
|
$ | 137,627 | $ | 123,999 | $ | 261,626 | ||
Operating
income
|
19,725 | 17,348 | 37,073 |
Note
10.
|
Exit,
Disposal, Certain Severance and Other
Charges
|
Note
11.
|
Discontinued
Operations
|
For
the three months ended June 30,
|
For
the six months ended June 30,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||
NuVinci:
|
|||||||||||||||
Loss
from sale and exit
|
$ | (163 | ) | $ | – | $ | (1,891 | ) | $ | – | |||||
Operating
loss
|
(38 | ) | (2,449 | ) | (2,401 | ) | (5,647 | ) | |||||||
Loss
before income taxes
|
(201 | ) | (2,449 | ) | (4,292 | ) | (5,647 | ) | |||||||
Income
tax benefit
|
207 | 955 | 1,801 | 2,201 | |||||||||||
Gain
(loss) from NuVinci project, net of income taxes
|
6 | (1,494 | ) | (2,491 | ) | (3,446 | ) | ||||||||
Independent
Aftermarket:
|
|||||||||||||||
Gain
(loss) from closure and sale of businesses
|
46 | (10 | ) | 46 | (34 | ) | |||||||||
Operating
loss
|
(1 | ) | (100 | ) | (25 | ) | (63 | ) | |||||||
Non-operating
income
|
– | 2 | – | 11 | |||||||||||
Income
(loss) before income taxes
|
45 | (108 | ) | 21 | (86 | ) | |||||||||
Income
tax (expense) benefit
|
(17 | ) | 36 | (8 | ) | 29 | |||||||||
Gain
(loss) from Independent Aftermarket, net of income taxes
|
28 | (72 | ) | 13 | (57 | ) | |||||||||
Gain
(loss) from discontinued operations, net of income taxes
|
$ | 34 | $ | (1,566 | ) | $ | (2,478 | ) | $ | (3,503 | ) |
June
30, 2008
|
December
31, 2007
|
||||
Assets:
|
|||||
NuVinci:
|
|||||
Accounts
receivable
|
$ | 292 | $ | 476 | |
Inventory
|
− | 1,601 | |||
Other
current assets
|
− | 331 | |||
Total
current assets of discontinued operations
|
292 | 2,408 | |||
Property,
plant and equipment, net
|
– | 4,525 | |||
Intangible
assets, net
|
– | 681 | |||
Total
long term assets of discontinued operations
|
– | 5,206 | |||
Total
assets of discontinued operations
|
$ | 292 | $ | 7,614 | |
Liabilities:
|
|||||
NuVinci:
|
|||||
Current
liabilities
|
$ | 1,191 | $ | 506 | |
Independent
Aftermarket:
|
|||||
Current
liabilities
|
154 | 283 | |||
Total
liabilities of discontinued operations
|
$ | 1,345 | $ | 789 |
Note
12.
|
Earnings
Per Share
|
For
the three months ended June 30,
|
For
the six months ended June 30,
|
||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||
Numerator:
|
|||||||||||
Income
from continuing operations
|
$ | 8,960 | $ | 11,638 | $ | 20,045 | $ | 23,249 | |||
Denominator:
|
|||||||||||
Weighted-average
common shares outstanding
|
21,002,308 | 21,776,962 | 21,422,372 | 21,714,056 | |||||||
Common
stock equivalents
|
185,011 | 327,271 | 222,292 | 307,898 | |||||||
Denominator
for diluted earnings per common share
|
21,187,319 | 22,104,233 | 21,644,664 | 22,021,954 | |||||||
Per
common share -
basic
|
$ | 0.43 | $ | 0.53 | $ | 0.94 | $ | 1.07 | |||
Per
common share -
diluted
|
$ | 0.42 | $ | 0.53 | $ | 0.93 | $ | 1.06 |
Note
13.
|
Contingencies
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
·
|
lower
volumes of Honda remanufactured transmissions for warranty applications
compared to higher volumes in the second quarter of 2007 believed to be
attributable to an extension of warranty coverage on certain
models;
|
|
·
|
a
decrease in sales to GM primarily related to an automotive electronics
upgrade program that was substantially completed at the end of the first
quarter of 2008;
|
|
·
|
scheduled
price concessions to certain customers in our Logistics and Drivetrain
segments granted in connection with previous contract renewals;
and
|
|
·
|
a
decline in sales to Nokia due to the termination of a test and repair
program in June 2007;
|
|
·
|
the
launch and ramp-up of our logistics programs with TomTom;
and
|
|
·
|
increased
volumes in our programs with AT&T and other base business customers in
our Logistics segment.
|
|
·
|
the
launch and ramp-up of our logistics programs with TomTom;
and
|
|
·
|
increased
volumes in our programs with AT&T and other base business customers in
our Logistics segment;
|
|
·
|
lower
volumes of Honda remanufactured transmissions for warranty applications
compared to higher volumes in the second quarter of 2007 believed to be
attributable to an extension of warranty coverage on certain
models;
|
|
·
|
a
decrease in sales to GM primarily related to an automotive electronics
upgrade program that was substantially completed at the end of the first
quarter of 2008;
|
|
·
|
a
decline in sales to Nokia due to the termination of a test and repair
program in June 2007; and
|
|
·
|
scheduled
price concessions to certain customers in our Logistics and Drivetrain
segments granted in connection with previous contract
renewals.
|
For
the Three Months Ended June 30,
|
|||||||||||
2008
|
2007
|
||||||||||
Net
sales
|
$ | 86.5 | 100.0 | % | $ | 69.2 | 100.0 | % | |||
Segment
profit
|
$ | 11.4 | 13.2 | % | $ | 10.4 | 15.0 | % |
|
·
|
the
launch and ramp-up of programs with TomTom;
and
|
|
·
|
increased
volumes in our programs with AT&T and other base business
customers;
|
|
·
|
a
decline in sales to GM primarily related to an automotive electronics
upgrade program that was substantially complete at the end of the first
quarter of 2008;
|
|
·
|
a
decline in sales to Nokia due to the termination of a test and repair
program in June 2007; and
|
|
·
|
scheduled
price concessions granted to a customer in connection with previous
contract renewals.
|
For
the Three Months Ended June 30,
|
|||||||||||
2008
|
2007
|
||||||||||
Net
sales
|
$ | 49.1 | 100.0 | % | $ | 61.2 | 100.0 | % | |||
Segment
profit
|
$ | 3.1 | 6.3 | % | $ | 7.7 | 12.6 | % |
|
·
|
lower
volumes of Honda remanufactured transmissions for warranty applications
compared to higher volumes in the second quarter of 2007 believed to be
attributable to an extension of warranty coverage on certain
models;
|
|
·
|
lower
volumes of Ford remanufactured transmissions resulting from lower sales
over the last several years of new vehicles using transmissions we
remanufacture, resulting in a reduction in the population of Ford vehicles
in the zero to eight-year age category, which category we believe drives
the majority of demand for our Ford products; however, we expect this
trend to reverse as the population of vehicles using the 6-speed
transmission families for which we recently launched remanufacturing
programs begins to grow and age;
|
|
·
|
lower
volumes of Chrysler remanufactured transmissions due to Chrysler’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; however, a
transmission model we remanufacture has recently been approved by Chrysler
for use in its warranty program;
and
|
|
·
|
price
concessions granted to certain customers in connection with previous
contract renewals.
|
|
·
|
lower
volumes of Honda remanufactured transmissions for warranty applications
(i) compared to higher volumes in the first half of 2007 believed to be
attributable to an extension of warranty coverage on certain models, and
(ii) due to the reduction of inventory levels by Honda in the
first quarter of 2008 in connection with its March 31 fiscal
year-end;
|
|
·
|
scheduled
price concessions to certain customers in our Logistics and Drivetrain
segments granted in connection with previous contract
renewals;
|
|
·
|
lower
volumes of Ford remanufactured transmissions resulting from (i) lower
sales over the last several years of new vehicles using transmissions we
remanufacture, resulting in a reduction in the population of Ford vehicles
in the zero to eight-year age category, which category we believe drives
the majority of demand for our Ford products (however we expect this trend
to reverse as the population of vehicles using the 6-speed transmission
families for which we recently launched remanufacturing programs begins to
grow and age), and (ii) an inventory reduction at a large
distributor;
|
|
·
|
lower
volumes of Chrysler remanufactured transmissions due to (i) Chrysler’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 (however, a
transmission model we remanufacture has recently been approved by Chrysler
for use in its warranty program), and (ii) an inventory reduction at a
large distributor; and
|
|
·
|
a
decline in sales to Nokia due to the termination of a test and repair
program in June 2007;
|
|
·
|
the
launch and ramp-up of our logistics programs with TomTom;
and
|
|
·
|
increased
volumes and favorable mix in our programs with AT&T and other base
business customers in our Logistics
segment.
|
|
·
|
the
launch and ramp-up of our logistics programs with TomTom;
and
|
|
·
|
increased
volumes in our programs with AT&T and other base business customers in
our Logistics segment;
|
|
·
|
lower
volumes of Honda remanufactured transmissions for warranty applications
(i) compared to higher volumes in the first half of 2007 believed to be
attributable to an extension of warranty coverage on certain models, and
(ii) due to the reduction of inventory levels by Honda in the first
quarter of 2008 in connection with its March 31 fiscal
year-end;
|
|
·
|
a
decline in Nokia revenues due to the termination of a test and repair
program in June 2007;
|
|
·
|
lower
volumes of Ford remanufactured transmissions resulting from (i) lower
sales over the last several years of new vehicles using transmissions we
remanufacture, resulting in a reduction in the population of Ford vehicles
in the zero to eight-year age category, which category we believe drives
the majority of demand for our Ford products (however we expect this trend
to reverse as the population of vehicles using the 6-speed transmission
families for which we recently launched remanufacturing programs begins to
grow and age), and (ii) an inventory reduction at a large
distributor;
|
|
·
|
scheduled
price concessions to certain customers in our Logistics and Drivetrain
segments granted in connection with previous contract renewals;
and
|
|
·
|
lower
volumes of Chrysler remanufactured transmissions due to (i) Chrysler’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 (however, a
transmission model we remanufacture has recently been approved by Chrysler
for use in its warranty program), and (ii) an inventory reduction at a
large distributor.
|
For
the Six Months Ended June 30,
|
|||||||||||
2008
|
2007
|
||||||||||
Net
sales
|
$ | 171.3 | 100.0 | % | $ | 137.6 | 100.0 | % | |||
Segment
profit
|
$ | 26.7 | 15.6 | % | $ | 19.7 | 14.3 | % |
|
·
|
the
launch and ramp-up of programs with TomTom;
and
|
|
·
|
increased
volumes in our programs with AT&T and other base business
customers;
|
|
·
|
a
decline in Nokia revenues due to the termination of a test and repair
program in June 2007; and
|
|
·
|
scheduled
price concessions granted to a customer in connection with previous
contract renewals.
|
For
the Six Months Ended June 30,
|
|||||||||||
2008
|
2007
|
||||||||||
Net
sales
|
$ | 93.9 | 100.0 | % | $ | 124.0 | 100.0 | % | |||
Segment
profit
|
$ | 5.6 | 6.0 | % | $ | 17.3 | 14.0 | % |
|
·
|
lower
volumes of Honda remanufactured transmissions for warranty applications
(i) compared to higher volumes in the first half of 2007 believed to be
attributable to an extension of warranty coverage on certain models, and
(ii) due to the reduction of inventory levels by Honda in the first
quarter of 2008 in connection with its March 31 fiscal
year-end;
|
|
·
|
lower
volumes of Ford remanufactured transmissions resulting from (i) lower
sales over the last several years of new vehicles using transmissions we
remanufacture, resulting in a reduction in the population of Ford vehicles
in the zero to eight-year age category, which category we believe drives
the majority of demand for our Ford products (however we expect this trend
to reverse as the population of vehicles using the 6-speed transmission
families for which we recently launched remanufacturing programs begins to
grow and age), and (ii) an inventory reduction at a large
distributor;
|
|
·
|
lower
volumes of Chrysler remanufactured transmissions due to (i) Chrysler’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 (however, a
transmission model we remanufacture has recently been approved by Chrysler
for use in its warranty program), and (ii) an inventory reduction at a
large distributor; and
|
|
·
|
price
concessions granted to certain customers in connection with previous
contract renewals.
|
|
·
|
$21.0
million for accounts receivable primarily as the result of increased
volume coupled with the timing of payments received from certain customers
in the Logistics segment;
|
|
·
|
$10.1
million for inventories primarily related to the launch and ramp-up of new
programs coupled with increased test and repair volume in our Logistics
segment;
|
|
·
|
$9.3
million for accounts payable and accrued expenses, which included the use
of $9.4 million in cash for payments of our 2007 incentive compensation;
and
|
|
·
|
$0.4
million for prepaid and other
assets.
|
Quantitative
and Qualitative Disclosures About Market
Risk
|
Controls
and Procedures
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
Period
|
Total
number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans
or Programs
|
Maximum
Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased
Under the Plan
(1)
(2)
|
||||
April
1-30, 2008
|
411,144
|
$
21.30
|
411,144
|
$
31,242,718
|
||||
May
1-31, 2008
|
222,784
|
$
21.95
|
222,784
|
$
26,351,597
|
||||
June
1-30, 2008
|
70,786
|
$
22.12
|
70,786
|
$
25,215,722
|
(1)
|
Excludes
amounts that could be used to repurchase shares acquired under our stock
incentive plans to satisfy withholding tax obligations of employees and
non-employee directors upon the vesting of restricted
stock.
|
(2)
|
Announced
on February 28, 2008, our stock repurchase plan authorizes us to
repurchase up to $50,000,000 of our common stock through December 31,
2008, excluding broker commissions and transaction
fees.
|
Submission
of Matters to a Vote of Security
Holders
|
Votes
|
||
For
|
Against
|
|
Robert
L. Evans
|
17,015,720
|
3,660,371
|
Curtland
E. Fields
|
17,025,130
|
3,650,961
|
Dr.
Michael J. Hartnett
|
16,774,786
|
3,901,305
|
Donald
T. Johnson, Jr.
|
16,896,135
|
3,779,956
|
Michael
D. Jordan
|
17,025,130
|
3,650,961
|
S.
Lawrence Prendergast
|
16,106,334
|
4,569,757
|
Edward
Stewart
|
16,784,209
|
3,891,882
|
Exhibits
|
ATC
TECHNOLOGY CORPORATION
|
|
Date: July 29,
2008
|
/s/
John M. Pinkerton
|
John
M. Pinkerton, Vice President, Controller and Chief Financial Officer
(acting)
|
·
|
John
M. Pinkerton is signing in the dual capacities as i) the principal
financial officer, and ii) a duly authorized officer of the
company.
|