10-Q 1 k79031qe10vq.txt QUARTERLY REPORT FOR PERIOD ENDED JUNE 28, 2003 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark one) / X / Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 28, 2003. / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From_______to_______. Commission file Number 333-49429-01 PRESTOLITE ELECTRIC HOLDING, INC. --------------------------------- (Exact name of registrant as specified in its charter) Delaware 94-3142033 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2311 Green Road, Ste. B., Ann Arbor, Michigan 48105 ------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (734) 913 - 6600 ---------------- (Registrant's telephone number, including area code) Not Applicable (Former name, address, and former fiscal year, if changed since last report) Indicate 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 the filing requirements for the past 90 days. Yes X No ----------- ------------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Number of common shares outstanding Class: as of August 13, 2003 Common Stock 1,969,000 This form 10Q may be found on Prestolite's website at http://www.prestolite.com/literature/corp/2003_2q10q.pdf. FORM 10-Q TABLE OF CONTENTS Part I: Item 1: Financial Information Condensed Consolidated Balance Sheets at June 28, 2003 (unaudited) and December 31, 2002 3 Condensed Consolidated Statements of Operations Three and six months ended June 28, 2003 and June 29, 2002 4 Condensed Consolidated Statements of Cash Flows Six months ended June 28, 2003 and June 29, 2002 5 Notes to Condensed Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 4: Internal Controls and Procedures 18 Part II: Other Information 19 Signatures 20 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 21 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 22 Page 2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

The accompanying notes are an integral part of the condensed consolidated financial statements. Page 3 PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts

The accompanying notes are an integral part of the condensed consolidated financial statements. Page 4 PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

The accompanying notes are an integral part of the condensed consolidated financial statements. Page 5 PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: GENERAL INFORMATION Prestolite Electric Holding, Inc. conducts all of its operations through its wholly-owned principal subsidiary, Prestolite Electric Incorporated. There are no material differences between the financial statements of Prestolite Electric Holding, Inc. and Prestolite Electric Incorporated (collectively, "Prestolite," "us," "we" or the "Company"). These unaudited consolidated financial statements have been prepared by us in accordance with Rule 10-01 of Regulation S-X and have been prepared on a basis consistent with our audited financial statements for the year ended December 31, 2002. These statements reflect all adjustments, including items of a normal recurring nature, which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations, and cash flows for the interim periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements and the related notes should be read in conjunction with our audited financial statements, the notes to those statements and the other material included in our Annual Report on Form 10-K for the year ended December 31, 2002. The results of operations for the six-month period ended June 28, 2003 are not necessarily indicative of the operating results that may be expected for the full year or any other interim period. On January 22, 2002, the 1,920,000 shares of Prestolite Electric Holding, Inc. formerly held by Genstar Capital Corporation were distributed to the 39 shareholders of Genstar Capital Corporation. The voting power associated with the shares is exercised by Genstar Capital Corporation. NOTE 2: JOINT VENTURE Prestolite Electric Beijing, Ltd. (PEBL) began operations in The People's Republic of China on April 1, 2001. Prestolite initially contributed certain technology to PEBL and agreed to contribute an additional $1.9 million in cash to PEBL by the first quarter of 2004. In order to receive a dividend from PEBL, the contributed capital was required to be made. Therefore in the second quarter of 2003 the contribution of $1.9 million was made. Subsequently, we received a dividend of $2.2 million from PEBL. The joint venture partners did not receive their corresponding dividend at June 28, 2003 and as a result, $2.1 million is included in accrued liabilities at June 28, 2003. Page 6 PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements NOTE 3: GOODWILL AND INTANGIBLE ASSETS Changes in goodwill for the six months ended June 28, 2003 follow (in thousands):

Amortizable intangible assets consist of the following (in thousands):

The MOSAL change was caused by the impact of exchange rate changes for foreign currency. Page 7 PRESTOLITE ELECTRIC HOLDING, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements NOTE 4: INVENTORIES Inventories are summarized as follows (in thousands):

NOTE 5: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following (in thousands):

Page 8 NOTE 6: DEBT Debt consists of the following (in thousands):

Our U.S. bank borrowing arrangements consist of a $10 million revolving credit facility and a $3.5 million revolving credit and letter of credit facility. Interest is payable on amounts borrowed under the revolving credit facility at the bank's prime rate plus up to another 0.75% depending upon amounts borrowed and our Funded Debt Ratio. We were paying interest at prime, 4% at June 28, 2003. The letter of credit fee is 2% of amounts drawn. Both U.S. facilities are collateralized by eligible accounts receivable and inventory. On June 28, 2003, letters of credit totaling $0.7 million were outstanding. The 9.625% (interest payable semiannually) senior notes are senior unsecured obligations of Prestolite Electric Incorporated and are fully and unconditionally guaranteed on a senior unsecured basis by Prestolite Electric Holding, Inc. The notes mature on February 1, 2008, and are redeemable at our option, in whole or in part, beginning on February 1, 2003 at amounts from 104.8125% to 100% of the principal plus accrued interest. The senior notes are more fully described in our Prospectus dated June 26, 1998. Page 9 NOTE 6: DEBT (CONTINUED) Our U.K. agreement consists of a (pound)3.6 million variable rate term loan and a (pound)2.3 million overdraft facility. Interest on the variable rate loan is 1.375% above the bank's base rate (3.75% at June 28, 2003) and interest on the overdraft is at 1.25% above the base rate. The term loan is repayable in sixty monthly payments through December 2007. The U.K. loans are collateralized by eligible receivables and fixed assets in the United Kingdom. At June 28, 2003 and December 31, 2002 we had no Argentine bank debt outstanding. In March 2002 our Argentine subsidiary acquired an Argentine corporation ("MOSAL") with certain tax benefits for 4.0 million Argentine pesos: 500,000 pesos in cash and 3.5 million pesos due over the next three years. The 3.5 million pesos are shown in the table above as $1.0 million of "MOSAL obligation" at December 31, 2002 and 3.0 million pesos are recorded as $1.0 million at June 28, 2003. In South Africa we borrow from a bank at the bank's prime lending rate. This loan is supported by a pledge of South African receivables and fixed assets. In China, our joint venture has a bank line of credit for Rmb 10.0 million ($1.2 million translated at 8.28 Rmb to one U.S. dollar on June 28, 2003). There were no borrowings against this line at June 28, 2003 or December 31, 2002. We classified $6.6 million of debt as current at June 28, 2003. This consisted of principal payments of $1.0 million due in the United Kingdom, principal payments of $0.3 million due on lease rental obligations, $0.6 million due for the MOSAL obligation, and $4.7 million of revolving debt which we expect (but are not obligated) to pay down over the following twelve months. The senior notes and bank arrangements mentioned above contain various covenants including maintenance of certain financial ratios and limits on (a) issuance of additional debt or preferred stock; (b) the payment of dividends and purchases, redemptions or retirements of common stock; (c) investments; (d) sale of assets and capital stock of subsidiaries; and (e) certain consolidations, mergers, transfers of assets and certain other transactions with affiliates. Our U.S. bank covenants require us to maintain a Funded Debt Ratio of not more than 6.5:1 and a Fixed Charge Coverage Ratio of not less that 1:1, as those terms are defined in our bank agreements. The foreign facilities contain covenants that pertain to the foreign operations. Page 10 NOTE 7: SEVERANCE We record severance expense when plans are announced and employees notified. The severance charged to operations in the table below is related to personnel reductions in the United Kingdom and in Argentina for the first half of 2003. The following is a summary of our severance liability charges and outlays (in thousands): Beginning balance, December 31, 2002 $ 1,915 Severance charged to operations 83 Payments (1,337) Currency change (129) --------- Ending balance, June 28, 2003 $ 532 =========

NOTE 8: DISCONTINUED OPERATIONS Net assets related to discontinued operations at June 28, 2003 and December 31, 2002 are presented below (in thousands):

NOTE 9: ARGENTINA Beginning in 1991 the Argentine government maintained the value of its currency such that one Argentine peso equaled one U.S. dollar. During the second half of 2001, Argentina suffered a severe economic and monetary crisis. During most of December 2001 and early January 2002 the banks in Argentina were closed. On January 14, 2002, the banks reopened and the Argentina peso traded at $0.606 per peso (1.65 pesos per dollar). The peso traded at $0.3396 (2.94 pesos per dollar) on March 30, 2002 and as a result of using this rate, we recorded a first quarter 2002 foreign exchange loss of $585,000 and a charge to other comprehensive income of $4.4 million representing the cumulative translation adjustment. The Argentine peso ended 2002 with a value of $0.2972 and we used that rate to translate the December 31, 2002 Argentina balance sheet. The peso traded at $0.3552 (2.82 pesos per dollar) on June 27, 2003. As a result, we recorded a first half 2003 foreign exchange gain of $0.1 million and other comprehensive income of $1.1 million representing the cumulative translation adjustment. Page 11 NOTE 10: GEOGRAPHIC REGIONS Prestolite operates in five principal geographic regions; each region's revenue and operating performance is managed and reported separately. We evaluate operating performance based on adjusted earnings before interest expense, taxes, depreciation, and amortization (Adjusted EBITDA) in each geographic region. The Company defines Adjusted EBITDA as operating income plus depreciation, amortization and other special charges. Corporate overhead and certain other charges are not allocated to the business/geographic units. Sales from Africa and South America consist largely of products for automotive and light truck applications while sales of products from North America and Europe consist largely of products for heavy-duty applications. China sales are primarily products for medium and heavy-duty applications. Sales, assets and Adjusted EBITDA are summarized by geographic region as follows (in thousands):

Page 12 NOTE 10: GEOGRAPHIC REGIONS (CONTINUED) The senior notes and bank arrangements mentioned above contain various covenants including maintenance of certain financial ratios and limits on (a) issuance of additional debt or preferred stock; (b) the payment of dividends and purchases, redemptions or retirements of common stock; (c) investments; (d) sale of assets and capital stock of subsidiaries; and (e) certain consolidations, mergers, transfers of assets and certain other transactions with affiliates. Our U.S. bank covenants require us to maintain a Funded Debt Ratio of not more than 6.5:1 and a Fixed Charge Coverage Ratio of not less that 1:1, as those terms are defined in our bank agreements. The foreign facilities contain covenants that pertain to the foreign operations. A reconciliation of adjusted EBITDA to net income follows (in thousands of U.S. dollars):

Page 13 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. OVERVIEW We manufacture alternators, starter motors and other items for heavy duty, automotive, defense and industrial markets. These are supplied under the "Prestolite," "Leece-Neville," and "Indiel" brand names for original equipment and aftermarket application on a variety of vehicles and industrial equipment. We sell our products to a variety of markets, in terms of both end-use and geography. We operate in five principal geographic regions. While each region primarily sells in its own area, no location sells exclusively into its geographic region. Our North American and European facilities produce alternators, starter motors, inline pumps, and other products, primarily for installation on diesel engines used in the heavy duty, defense, marine and industrial markets. These facilities are located in Arcade, NY; Florence, KY; Garfield, NJ; Acton, England; and Leyland, England. The African and South American facilities manufacture lighter duty alternators and starter motors. These facilities are located in Johannesburg, South Africa; and in Buenos Aires and San Luis, Argentina. In both South Africa and Argentina a significant portion of our sales are to the automotive aftermarket, and a portion of those aftermarket sales are products purchased for resale. Prestolite Electric Beijing, Ltd. manufactures automotive products in China, selling primarily into the heavy-duty (non-automotive) market. RESULTS OF OPERATIONS Quarter Ended June 28, 2003 Compared to Quarter Ended June 29, 2002 Sales to external customers for the quarter ended June 28, 2003 were $46.0 million, an increase of $5.3 million, or 13.0%, from $40.7 million in the second quarter of 2002. Contributions to the sales increase were South American sales of $5.4 million in the second quarter of 2003, an increase of $2.8 million, or 104.2%, from sales in the second quarter of 2002 of $2.7 million; North American sales of $25.4 million, an increase of $2.5 million, or 11.1%, over sales in the second quarter of 2002 of $22.8 million; African sales of $1.7 million, an increase of $0.1 million or 8.8%; and European sales of $9.5 million, an increase of $0.7 million or 8.4%. These sales increases were partially offset by sales in China of $4.1 million, a decrease of $0.9 million, or 17.6%, from sales of $5.0 million in the second quarter 2002, mostly due to the impact of SARS on our bus manufacturing customers. The increases in Argentinean, European and African sales were partially due to exchange rate changes. In local currencies, South American sales rose approximately 102%, with aftermarket sales from South America increasing 102.5% and export sales from South America increasing 99.2%; European and African sales fell slightly across most markets. Page 14 Gross profit was $11.4 million in the second quarter of 2003, or 24.8% of sales. This compares to gross profit of $10.1 million, or 24.9% of sales, in the second quarter of 2002. Increased sales volumes, control of product costs, offset by the strengthening of the Argentine Peso and South African Rand produced the improvement in gross profit. Selling, general, and administrative expense was $5.8 million, or 12.6% of sales for the second quarter of 2003, an increase of $0.3 million, or 4.9%, from $5.5 million, or 13.6% of sales, in the second quarter of 2002. The dollar increase in selling, general, and administrative expense is due to inflation plus additional spending for sales and marketing. Operating income in the second quarter of 2003 was $5.0 million, or 10.8% of sales, an increase of $0.5 million, or 10.0%, from the $4.5 million, or 11.0% of sales, in the second quarter of 2002. This was due to the factors discussed above. In the second quarter a $0.6 million charge for options was recorded. Interest expense was $2.8 million in the second quarter of 2003, an increase of $0.1 million compared to $2.7 million in the second quarter of 2002. This increase is due to an increase in South African debt and changes in the interest rates on bank debt. The provision for income taxes was $488,000, 29.2% of the income before taxes, for the second quarter of 2003 compared to the $307,000 provision for income taxes, 62.0% of income before tax, for the second quarter of 2002. During the second quarter of 2003 we booked a benefit in the United Kingdom to adjust for corrections to the 2002 provision. In 2002 we did not book a benefit in the Unites States for the second quarter loss. Six Months Ended June 28, 2003 Compared to Six Months Ended June 29, 2002 Sales for the six months ended June 28, 2003 were $88.4 million, an increase of $11.0 million, or 14.3%, from $77.4 million in the first six months of 2002. The sales increase is attributable to the North American sales of $48.5 million in the first six months of 2003, an increase of $3.8 million, or 8.4%, from sales in the first six months of 2002 of $44.7 million; South American sales of $9.0 million, an increase of $4.3 million or 91.0%; European sales of $18.5 million, an increase of $1.4 million or 8.4%; and African sales of $3.1 million, an increase of $0.5 million or 19.1%; and Asian sales of $9.4 million, an increase of $1.1 million, or 12.8%, from sales of $8.3 million in the first six months of 2002. The increases in South American, European and African sales were partially due to exchange rate changes. In local currencies, South American sales grew 101.7%, with aftermarket sales from South America increasing 139.3% and export sales from South America increasing 113.1%; European and African sales fell slightly. Gross profit was $65.7 million in the first six months of 2003, or 25.7% of sales. This compares to gross profit of $58.7 million, or 24.1% of sales, in the first six months of 2002. Increased sales volume, control of product costs, and the weakening of the Argentine peso offset by the strengthening of the South African Rand produced the improvement in gross profit. Selling, general, and administrative expense was $11.5 million, or 13.0% of sales for the first six months of 2003, an increase of $0.4 million, or 3.6%, from $11.1 million, or 14.3% of Page 15 sales, in the first six months of 2002. The dollar increase in selling, general, and administrative expense is due to inflation plus additional spending for sales and marketing. Operating income in the first six months of 2003 was $10.5 million, or 11.9% of sales, an increase of $3.2 million, or 42.7%, from the $7.4 million, or 9.6% of sales, in the first six months of 2002. This was due to the factors discussed above. In the second quarter of the 2003 a $0.6 million charge for options was recorded. Interest expense was $5.5 million in the first six months of 2003, a decrease of $0.1 million compared to $5.6 million in the first six months of 2002. This decrease is due to the reductions in United States and United Kingdom debt and lower interest rates on bank debt offset by a slight increase in African debt in the second quarter of 2002. The provision for income taxes was $892,000, 20.9% of the income before taxes, for the first six months of 2003 compared to the $466,000 provision for income taxes for the first six months of 2002 on a book loss of $451,000. In 2002 we did not record a tax benefit in the United States on a $2.4 million pretax loss. LIQUIDITY AND CAPITAL RESOURCES Cash generated by operating activities in the first half of 2003 was $0.2 million. Capital spending for the first half of 2003 was $2.4 million, an increase of $0.4 million from the first half of 2002, not including the MOSAL transaction in 2002. Of the $2.4 million, $1.5 million was spent in the United States and $0.9 million outside the United States. Planned capital expenditures consist primarily of expenditures to reduce costs through automation, replace existing equipment and enable us to manufacture new products. Debt, net of cash, increased from $105.1 million at December 31, 2002 to $107.1 million at June 28, 2003, an increase of $2.0 million. Factors contributing to this increase were the $2.4 million of capital spending, a $1.7 million increase in accounts receivable, and a $8.1 million increase in inventory, offset by a $0.9 million increase in accrued liabilities. We had a cash balance of $3.7 million and revolving credit facilities with banks in the United States and United Kingdom under which additional borrowings of $10.5 million and $3.4 million were available based on the June 28, 2003 levels of eligible receivables (United States and United Kingdom) and inventory (United States only) which are pledged to support that debt. As of June 28, 2003, we had no bank debt outstanding in China or Argentina. We expect our liquidity needs to consist primarily of working capital needs, scheduled payments under certain contractual obligations, and scheduled payments of principal and interest on our indebtedness. We expect our short-term liquidity needs to be provided by operating cash flows and borrowings under our revolving credit facilities. We expect to fund our long-term liquidity needs from our operating cash flows, the issuance of debt and/or equity securities, and bank borrowings. Page 16 We believe that cash flows from operations, our existing cash balances and amounts available under these revolving credit facilities will provide adequate funds for ongoing operations, planned capital expenditures, investments, and debt service for at least the next twelve months. Estimates as to working capital needs and other expenditures may be materially affected if the foregoing sources are not available or do not otherwise provide sufficient funds to meet our obligations. NEW ACCOUNTING PRONOUNCEMENTS In April 2002, the FASB issued SFAS No.145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." With the rescission of SFAS No. 4 and 64, only gains and losses from extinguishments of debt that meet the criteria of APB Opinion No. 30 would be classified as extraordinary items. Accordingly, we will reclassify to other income the gains recorded on the repurchase of our senior notes previously treated as extraordinary items. In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45, "Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN No. 45 clarifies disclosures that are required to be made for certain guarantees and establishes a requirement to record liability at fair value for certain guarantees at the time of the guarantee's issuance. The disclosure requirements of FIN No. 45 are currently effective. The requirement to record a liability applies to guarantees issued or modified after December 31, 2002. We do not believe the adoption of this portion of the Interpretation will have a material effect on our financial condition or results of operations. In January 2003, the FASB issued Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB 51." FIN No. 46 requires that the primary beneficiary in a variable interest entity consolidate the entity even if the primary beneficiary does not have a majority voting interest. The consolidation requirements of this Interpretation are required to be implemented for any variable interest entity created on or after January 31,2003. In addition, FIN No. 46 requires disclosure of information regarding guarantees or exposures to loss relating to any variable interest entity existing prior to January 31, 2003 in financial statements issued after January 31, 2003. We do not believe this Interpretation will significantly impact our financial position or results of operations. On April 30, 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Statement 133 and is to be applied prospectively to contracts entered into or modified after June 30, 2003. The adoption of this statement will not have have an impact on the Company's consolidated financial position or results of operations. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify certain financial instruments as a liability (or as an asset in some circumstances). The adoption of this statement Page 17 will not have an impact on the Company's consolidated financial position or results of operations. FORWARD-LOOKING STATEMENTS This form 10-Q contains, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included herein may contain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. Such forward-looking statements are based upon information currently available in which our management shares its knowledge and judgment about factors that they believe may materially affect our performance. We make the forward-looking statements in good faith and believe them to have a reasonable basis. However, such statements are speculative, speak only as of the date made and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could vary materially from those anticipated, estimated or expected. Factors that might cause actual results to differ materially from those in such forward-looking statements include, but are not limited to, those discussed in the "Management's Discussion and Analysis of Financial Condition and Results of Operations." All subsequent written and oral statements that we make are qualified in their entirety by these factors. ITEM 4: CONTROLS AND PROCEDURES Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the President and Chief Executive Officer and the Chief Financial Officer of the Company, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13-a14. Based upon that evaluation, the principal executive officers and Chief Financial Officer concluded that the Company's 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. Subsequent to the evaluation, there were no significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses. Page 18 PART II. OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. None Item 3. Defaults Upon Senior Securities. None 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) Reports on Form 8-K filed in the three month period ended June 28, 2003, and incorporated by reference include: 1. 8K filed on April 7, 2003, accompanied by the press release of April 4, 2003 announcing the election of Peter J. Corrigan to the position of Executive Vice President and Chief Operating Officer. 2. 8K filed on May 7, 2003 accompanied by the press release of May 6, 2003 reporting results for the quarter ended March 29, 2003. 3. 8K filed on May 9, 2003 accompanied by the press release of May 8, 2003 announcing the selection of CIBC World Markets Corp. to assist in the potential sale of the company. (b) Exhibits 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 M:\aa_acct\ECKLEY\Quarter\2003\2nd Qtr\2Q-10Q\SIGNATURES.doc M:\aa_acct\ECKLEY\Quarter\2003\2nd Qtr\2Q-10Q\CEO 302 Cert.doc M:\aa_acct\ECKLEY\Quarter\2003\2nd Qtr\2Q-10Q\CFO 302 Cert.doc M:\aa_acct\ECKLEY\Quarter\2003\2nd Qtr\2Q-10Q\CEO 906 Cert.doc Page 19 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. Date: August 15, 2003 By: /s/ Kenneth C. Cornelius ------------------------ Kenneth C. Cornelius Executive Vice President and Chief Financial Officer (principal financial and accounting officer) Page 20 Exhibit Index Exhibit No. Description ----------- ----------- 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

PRESTOLITE ELECTRIC HOLDING INC 10-Q