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Delaware | 3568 | 30-0283143 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to be | Offering | Aggregate Offering | Registration | ||||||||
Securities to be Registered | Registered | Price per Unit | Price(1) | Fee | ||||||||
111/4% Senior Notes due 2013 | £33,000,000 | 100% | £33,000,000 | $6,550 | ||||||||
Guarantees of 111/4% Senior Notes due 2013 | — | — | — | —(2) | ||||||||
(1) | Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended. | |
(2) | The additional registrants will guarantee the payment of the 111/4% Senior Secured Notes due 2013. Pursuant to Section 457(n) of the Securities Act, no separate registration fee for the guarantees is payable. |
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State or | Primary | |||||||||||
Other | Standard | |||||||||||
Jurisdiction of | Industrial | |||||||||||
Incorporation | Classification | |||||||||||
Exact Name of Registrant | or | Code | I.R.S. Employer | |||||||||
as Specified in its Charter | Organization | Number | Identification No. | |||||||||
American Enterprises MPT Corp. | Delaware | 3568 | 52-2005169 | |||||||||
American Enterprises MPT Holdings, LLC | Delaware | 3568 | 52-2005171 | |||||||||
Ameridrives International, LLC | Delaware | 3568 | 54-1826102 | |||||||||
Boston Gear LLC | Delaware | 3568 | 11-3723980 | |||||||||
Formsprag LLC | Delaware | 3568 | 01-0712538 | |||||||||
Inertia Dynamics, LLC | Delaware | 3568 | 20-4221420 | |||||||||
The Kilian Company | Delaware | 3568 | 20-1681824 | |||||||||
Kilian Manufacturing Corporation | Delaware | 3568 | 06-0933715 | |||||||||
Nuttall Gear LLC | Delaware | 3568 | 54-1856788 | |||||||||
Warner Electric LLC | Delaware | 3568 | 54-1967089 | |||||||||
Warner Electric Technology LLC | Delaware | 3568 | 54-1967084 | |||||||||
Warner Electric International Holding, Inc. | Delaware | 3568 | 54-1967086 |
Quincy, Massachusetts 02171
(617) 328-3300
Chief Executive Officer
Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, Massachusetts 02171
(617) 328-3300
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The information in this prospectus is not complete and may be changed. We may not sell or offer these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
• | The exchange offer expires at midnight, New York City time, on , 2006, unless extended. Whether or not the exchange offer is extended, the time at which it ultimately expires is referred to in this prospectus as the time of expiration. | |
• | The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or interpretation of the staff of the Securities and Exchange Commission and that no injunction, order or decree of any court or governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect. | |
• | All old notes that are validly tendered and not validly withdrawn will be exchanged. | |
• | Tenders of old notes in the exchange offer may be withdrawn at any time prior to the time of expiration. | |
• | We will not receive any cash proceeds from the exchange offer. |
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• | We operate in the highly competitive mechanical power transmission industry and if we are not able to successfully compete our business may be harmed. | |
• | Changes in general economic conditions or the cyclical nature of our markets could harm our operations and financial performance. | |
• | Our operating results may vary significantly in the future due to both internal and external factors affecting our business and operations. | |
• | We rely on independent distributors and the loss of these distributors would adversely affect our business. | |
• | Our ability to develop or adapt to changing technology and manufacturing techniques is uncertain and our failure to do so could place us at a competitive disadvantage. | |
• | Our operations are subject to international risks that could affect our operating results. | |
• | We rely on estimated forecasts of our OEM customers’ needs and inaccuracies in such forecasts could adversely affect our business. | |
• | The materials used to produce our products are subject to price fluctuations that could increase costs of production and adversely affect our profitability. | |
• | Our future success depends on our ability to effectively integrate acquired companies and manage our growth. |
Predecessor | ||||||||||||||||||||||||||||||||||||
Period from | Colfax PT | |||||||||||||||||||||||||||||||||||
Three | Three | Inception On | (Period from | |||||||||||||||||||||||||||||||||
Months | Months | Pro-Forma | December 1, | January 1 | ||||||||||||||||||||||||||||||||
Ended | Ended | Year-Ended | Year-Ended | through | through | |||||||||||||||||||||||||||||||
March 31, | April 1, | December 31, | December 31, | December 31, | November 30, | |||||||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2005 | 2004 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(1)(2) | 2.3 | x | 1.2 | x | 1.3 | x | 1.5 | x | — | 3.6 | x | — | — | 1.9x |
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(1) | For purposes of calculating the ratio of earnings to fixed charges, earnings represent income before income taxes, discontinued operations and cumulative effect of change in accounting principles charges. Fixed charges represent interest expense and a portion of rental expense which we believe is representative of the interest component of rental expense. | |
(2) | Earnings were insufficient to cover fixed charges in, the period December 1 through December 31, 2004, and each of the years ended December 31, 2003 and 2002 by $.7 million, $6.0 million, $11.0 million and $21.7 million, respectively. |
Company | Products | Year Established | ||||
Bibby Transmissions Ltd. | Couplings | 1919 | ||||
Matrix International Ltd. | Clutch Brakes, Couplings | 1939 | ||||
Twiflex Ltd. | Clutch Brakes, Couplings | 1946 | ||||
Huco Engineering Industries, Ltd. | Couplings, Power Transmission Components | 1965 | ||||
Inertia Dynamics Inc. | Clutch Brakes | 1971 |
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Registration Rights Agreement | Under the registration rights agreement, we are obligated to offer to exchange the old notes for registered notes with terms identical in all material respects to the old notes. The exchange offer is intended to satisfy that obligation. After the exchange offer is complete, except as set forth in the next paragraph, you will no longer be entitled to exchange or registration rights with respect to your old notes. | |
The registration rights agreement requires us to file a registration statement for a continuous offering in accordance with Rule 415 under the Securities Act for your benefit if you would not receive |
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freely tradeable registered notes in the exchange offer or you are ineligible to participate in the exchange offer and indicate that you wish to have your old notes registered under the Securities Act. | ||
We note that under the registration rights agreement, we were required to file a registration statement with the Securities and Exchange Commission (the “SEC”) by or on June 8, 2006 and such registration statement, as amended, was required to be declared effective by or on September 6, 2006. Failure to meet such requirements as of the applicable dates subjects the company to an additional interest penalty on the old notes of .25% per annum for the first 90 days following such date, with an additional increase of .25% per annum for each90-day period thereafter. The amount of additional interest penalty at any time is capped at 1.00% per annum and such penalty ceases to accrue after we have filed our registration statement or it has been declared effective, as applicable. | ||
The Exchange Offer | We are offering to exchange $1,000 principal amount of 111/4% Senior Notes due 2013, which have been registered under the Securities Act, for each $1,000 principal amount of unregistered 111/4% Senior Notes due 2013 that were issued in the original issuance. | |
In order to be exchanged, an old note must be validly tendered and accepted. All old notes that are validly tendered and not validly withdrawn before the time of expiration will be accepted and exchanged. As of this date, there are £33.0 million aggregate principal amount of old notes outstanding. | ||
Resales of the Registered Notes | We will issue the registered notes promptly after the time of expiration. | |
Except as described below, we believe that the registered notes to be issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and (except with respect to broker-dealers) prospectus delivery provisions of the Securities Act if (but only if) you meet the following conditions: | ||
• you are not an “affiliate” of us, as that term is defined in Rule 405 under the Securities Act. | ||
• if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from us and you comply with the prospectus delivery requirements of the Securities Act; | ||
• the registered notes are acquired by you in the ordinary course of your business; | ||
• you are not engaging in and do not intend to engage in a distribution of the registered notes; and | ||
• you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes. |
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Our belief is based on interpretations by the staff of the Securities and Exchange Commission (the “SEC”), as set forth in no-action letters issued to third parties unrelated to us. The staff has not considered the exchange offer in the context of a no-action letter, and we cannot assure you that the staff would make a similar determination with respect to the exchange offer. | ||
If you do not meet the above conditions, you may not participate in the exchange offer or sell, transfer or otherwise dispose of any old notes unless (i) they have been registered for resale by you under the Securities Act and you deliver a “resale” prospectus meeting the requirements of the Securities Act or (ii) you sell, transfer or otherwise dispose of the registered notes in accordance with an applicable exemption from the registration requirements of the Securities Act. | ||
Any broker-dealer that acquired old notes as a result of market-making activities or other trading activities, and receives registered notes for its own account in exchange for old notes, must acknowledge that it will deliver a prospectus in connection with any resale of the registered notes. See “Plan of Distribution.” A broker-dealer may use this prospectus for an offer to resell or to otherwise transfer those registered notes for a period of 180 days after the time of expiration. | ||
Time of Expiration | The exchange offer will expire at midnight, New York City time, on , 2006, unless we decide to extend the exchange offer. We do not intend to extend the exchange offer, although we reserve the right to do so. | |
Conditions to the Exchange Offer | The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or applicable interpretation of the staff of the SEC and that no injunction, order or decree of any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect. See “The Exchange Offer — Conditions.” | |
Procedures for Tendering Old Notes Held in the Form of Book-Entry Interests | The old notes were issued as global notes in fully registered form. Beneficial interests in the old notes held by direct or indirect participants in The Depository Trust Company, or DTC, are shown on, and transfers of those interests are effected only through, records maintained in book-entry form by DTC with respect to its participants. | |
If you hold old notes in the form of book-entry interests and you wish to tender your old notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration of the exchange offer either: | ||
• a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, at the address set forth on the cover page of the letter of transmittal; or |
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• a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal. | ||
The exchange agent must also receive on or prior to the expiration of the exchange offer either: | ||
• a timely confirmation of book-entry transfer of your old notes into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfers described in this prospectus under the heading “The Exchange Offer — Book-Entry Transfer;” or | ||
• the documents necessary for compliance with the guaranteed delivery procedures described below. | ||
A letter of transmittal for your notes accompanies this prospectus. By executing the letter of transmittal or delivering a computer-generated message through DTC’s Automated Tender Offer Program system, you will represent to us that, among other things: | ||
• you are not an affiliate of us; | ||
• you are not a broker-dealer who acquired the old notes that you are sending to the issuer directly from the issuer; | ||
• the registered notes to be acquired by you in the exchange offer are being acquired in the ordinary course of your business; | ||
• you are not engaging in and do not intend to engage in a distribution of the registered notes; and | ||
• you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes. | ||
Procedures for Tendering Certificated Old Notes | If you are a holder of book-entry interests in the old notes, you are entitled to receive, in limited circumstances, in exchange for your book-entry interests, certificated notes which are in equal principal amounts to your book-entry interests. See “Description of Notes — Exchanges of Book-Entry Notes for Certificated Notes.” If you acquire certificated old notes prior to the expiration of the exchange offer, you must tender your certificated old notes in accordance with the procedures described in this prospectus under the heading “The Exchange Offer — Procedures for Tendering — Certificated Old Notes.” | |
Special Procedures for Beneficial Owners | If you are the beneficial owner of old notes and they are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered |
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holder. The transfer of registered ownership may take considerable time. See “The Exchange Offer — Procedures for Tendering — Procedures Applicable to All Holders.” | ||
Guaranteed Delivery Procedures | If you wish to tender your old notes in the exchange offer and: | |
(1) they are not immediately available; | ||
(2) time will not permit your old notes or other required documents to reach the exchange agent before the expiration of the exchange offer; or | ||
(3) you cannot complete the procedure for book-entry transfer on a timely basis, | ||
you may tender your old notes in accordance with the guaranteed delivery procedures set forth in “The Exchange Offer — Procedures for Tendering — Guaranteed Delivery Procedures.” | ||
Acceptance of Old Notes and Delivery of Registered Notes | Except under the circumstances described above under “The Exchange Offer — Conditions,” the issuer will accept for exchange any and all old notes which are properly tendered prior to the time of expiration. The registered notes to be issued to you in the exchange offer will be delivered promptly following the time of expiration. See “The Exchange Offer — Terms of the Exchange Offer.” | |
Withdrawal | You may withdraw the tender of your old notes at any time prior to the time of expiration. We will return to you any old notes not accepted for exchange for any reason without expense to you as promptly after withdrawal, rejection of tender or termination of the exchange offer. | |
Exchange Agent | The Bank of New York is serving as the exchange agent in connection with the exchange offer. | |
Consequences of Failure to Exchange | If you do not participate in the exchange offer for your old notes, upon completion of the exchange offer, the liquidity of the market for your old notes could be adversely affected. See “The Exchange Offer — Consequences of Failure to Exchange.” | |
United States Federal Income Tax Consequences of the Exchange Offer | The exchange of old notes for registered notes in the exchange offer will not be a taxable event for United States federal income tax purposes. See “United States Federal Income Tax Consequences.” |
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Issuer | Altra Industrial Motion, Inc. | |
Securities | £33,000,000 aggregate principal amount of 111/4% Senior Notes due 2013. | |
Maturity | February 15, 2013. | |
Interest Rate and Interest Payment Dates | We will pay interest on the notes at an annual rate of 111/4%. We will make interest payments in U.K. pounds sterling in arrears on February 15 and August 15 of each year, beginning on August 15, 2006. | |
Guarantees | The notes will be unconditionally guaranteed on a senior unsecured basis by all of our existing and future domestic restricted subsidiaries. The notes will be structurally subordinated to all of the existing and future liabilities of our subsidiaries that do not guarantee the notes, including all of our foreign subsidiaries. As of March 31, 2006, the aggregate total assets (based on book value) of our non-guarantor subsidiaries was $131.6 million. | |
Ranking | The notes will be our senior unsecured obligations and will rank equally in right of payment to all of our existing and future senior indebtedness, senior in right of payment to all of our existing and future subordinated indebtedness and effectively junior to our secured indebtedness, including our senior credit facility and our senior secured notes, to the extent of the value of the assets securing such indebtedness. The guarantees will be senior obligations of the subsidiary guarantors and will rank equally in right of payment to all of our subsidiary guarantors’ existing and future senior indebtedness, senior in right of payment to all of our subsidiary guarantors’ existing and future subordinated indebtedness and effectively junior to secured indebtedness of such subsidiaries to the extent of the value of the assets securing such indebtedness. As of March 31, 2006, we have outstanding approximately $204.4 million of senior indebtedness and accounts payable that will be pari passu with the notes, including approximately $166.5 million of secured indebtedness to which the notes would have been effectively subordinated. | |
Optional Redemption | On or after February 15, 2010, we may redeem some or all of the notes at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the date of redemption: |
For the Period Below | Percentage | |||
On or after February 15, 2010 | 105.625% | |||
On or after February 15, 2011 | 102.813% | |||
February 15, 2012 and thereafter | 100.000% |
Prior to February 15, 2009, up to 35% of the aggregate principal amount of the notes originally issued under the indenture may be redeemed at our option with the net proceeds of certain equity offerings at 111.25% of their principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of redemption, provided at least 65% of the aggregate principal amount of the notes remain outstanding. |
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Change of Control Offer | If we experience a change of control, we must give holders of the notes the opportunity to sell us their notes at 101% of their principal amount thereof, plus accrued and unpaid interest and additional interest, if any. | |
Asset Sale Proceeds | If we sell assets, we must use the net cash proceeds to: | |
• repay outstanding indebtedness under our credit agreement; | ||
• repurchase, redeem or defease some or all of our senior secured notes; | ||
• reinvest such net proceeds in property, plant and equipment and other long-term assets used in our business; and/or | ||
• to the extent such net proceeds are not so used within 360 days of our receipt thereof, to make an offer to purchase our senior secured notes in accordance with the terms of the indenture thereof. If any proceeds remain after the consummation of the senior secured notes offer, such proceeds will be used to offer to purchase the notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of purchase. | ||
Principal Covenants | The indenture governing the notes contains covenants limiting our and our restricted subsidiaries’ ability to: | |
• incur additional indebtedness or issue certain preferred stock; | ||
• pay dividends, redeem or repurchase our stock or subordinated debt or make other distributions; | ||
• issue stock of our subsidiaries; | ||
• make certain investments or acquisitions; | ||
• merge, consolidate or transfer substantially all of our assets; | ||
• grant liens on our assets; | ||
• enter into transactions with affiliates; and | ||
• transfer or sell assets. | ||
These covenants are subject to a number of important limitations and exceptions | ||
Listing | Application has been made to list the notes on the Euro MTF, the alternative market of the Luxembourg Stock Exchange. | |
Use of Proceeds | We will not receive any cash proceeds upon completion of the exchange offer. |
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• | a liquid trading market for the registered notes may not develop; | |
• | holders may not be able to sell their registered notes; or | |
• | the price at which the holders would be able to sell their registered notes may be lower than anticipated and lower than the principal amount or original purchase price. |
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• | our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; | |
• | we must use a substantial portion of our cash flow from operations to pay interest on the notes and our other indebtedness, which will reduce the funds available to us for operations and other purposes; | |
• | any and all of the indebtedness outstanding under our senior revolving credit facility will have a prior ranking claim on substantially all of our assets and all of the indebtedness outstanding under our purchase money indebtedness, equipment financing and real estate mortgages will have a prior ranking claim on the underlying assets; | |
• | our ability to fund a change of control offer may be limited; | |
• | our high level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt; | |
• | our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and | |
• | our high level of indebtedness makes us more vulnerable to economic downturns and adverse developments in our business. |
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• | incur additional indebtedness; | |
• | repay subordinated indebtedness prior to stated maturities; | |
• | pay dividends on or redeem or repurchase our stock or make other distributions; | |
• | issue capital stock; | |
• | make investments or acquisitions; | |
• | sell certain assets or merge with or into other companies; | |
• | restrict dividends, distributions or other payments from our subsidiaries; | |
• | sell stock in our subsidiaries; | |
• | create liens; | |
• | enter into certain transactions with stockholders and affiliates; and | |
• | otherwise conduct necessary corporate activities. |
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• | was insolvent or was rendered insolvent by reason of such guarantee; | |
• | was engaged, or about to engage, in a business or transaction for which its assets constituted unreasonably small capital; | |
• | intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured (as all of the foregoing terms are defined in or interpreted under the fraudulent transfer or conveyance statutes); or | |
• | was a defendant in an action for money damages, or had a judgment for money damages docketed against it (if, in either case, after final judgment the judgment is unsatisfied). |
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• | the size, timing, cancellation or rescheduling of significant orders; | |
• | product configuration, mix, performance and quality issues; |
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• | market acceptance of our new products and product enhancements and new product announcements or introductions by our competitors; | |
• | manufacturing costs; | |
• | changes in the cost of raw materials; | |
• | changes in pricing by us or our competitors; | |
• | federal exchange rates related to our international operations; | |
• | seasonality related primarily to the turf and garden market; | |
• | our ability to develop, introduce and market new products and product enhancements on a timely basis; | |
• | our success in maintaining brand awareness and in expanding our sales and marketing programs; | |
• | the loss of any of our intellectual property rights or third-party infringement or misappropriation of our intellectual property rights; | |
• | the level of competition; | |
• | potential reductions in inventories held by channel partners; | |
• | slowing sales of the products of our channel partners; | |
• | levels of expenditures on research, engineering and product development; | |
• | changes in our business strategies; | |
• | personnel changes; and | |
• | general economic trends and other factors. |
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• | product quality; | |
• | price competitiveness; | |
• | technical expertise and development capability; | |
• | reliability and timeliness of delivery; | |
• | product design capability; | |
• | manufacturing expertise; | |
• | sales support and customer service; and | |
• | overall management. |
• | fluctuations in currency exchange rates; | |
• | exchange controls; | |
• | compliance with U.S. Department of Commerce export controls; | |
• | tariffs or other trade protection measures and import or export licensing requirements; | |
• | potentially negative consequences from changes in tax laws; | |
• | interest rates; | |
• | unexpected changes in regulatory requirements; | |
• | a change in foreign intellectual property law; | |
• | differing labor regulations; | |
• | requirements relating to withholding taxes on remittances and other payments by subsidiaries; | |
• | restrictions on our ability to own or operate subsidiaries, make investments or acquire new businesses in these jurisdictions; | |
• | potential political instability and the actions of foreign governments; | |
• | restrictions on our ability to repatriate dividends from our subsidiaries; and | |
• | exposure to liabilities under the Foreign Corrupt Practices Act. |
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• | minimum wages; | |
• | mandated health benefits; |
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• | paid leaves of absence; and | |
• | tax reporting. |
• | regulate activities and operations that may have environmental or health and safety effects, such as discharges to air and water, and management and disposal practices for solid and hazardous wastes; and | |
• | impose liability for the costs of investigating and cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances. |
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• | the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business; | |
• | you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and | |
• | you have no arrangement or understanding with any person to participate in the distribution of the registered notes to be issued to you in the exchange offer. |
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• | subject to applicable law, to delay accepting any old notes and extend the exchange offer if any of the conditions set forth below under “— Conditions” have not been satisfied or waived, to terminate the exchange offer by giving oral or written notice of the delay or termination to the exchange agent; or | |
• | to amend the terms of the exchange offer in any manner by complying withRule 14e-1(d) under the Exchange Act to the extent that rule applies, provided that, in the event of a material change in the exchange offer, involving the waiver of a material condition, we will extend the offer period if necessary so that at least 5 business days remain in the exchange offer following notice of the material change. |
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• | a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by that letter of transmittal, to the exchange agent at the address set forth on the cover page of the letter of transmittal; or | |
• | a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal. |
• | a timely confirmation of book-entry transfer of those old notes into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfers described below under “— Book-Entry Transfer” must be received by the exchange agent prior to the time of expiration; or | |
• | you must comply with the guaranteed delivery procedures described below. |
• | the certificates representing your old notes must be received by the exchange agent prior to the time of expiration; or | |
• | you must comply with the guaranteed delivery procedures described below. |
• | old notes tendered in the exchange offer are tendered either: |
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• | by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the holder’s letter of transmittal; or | |
• | for the account of an eligible institution; and | |
• | the box entitled “Special Registration Instructions” on the letter of transmittal has not been completed. |
• | you improperly tender your old notes; or | |
• | you have not cured any defects or irregularities in your tender; and | |
• | we have not waived those defects, irregularities or improper tender. |
• | purchase or make offers for, or offer registered notes for, any old notes that remain outstanding subsequent to the expiration of the exchange offer; | |
• | terminate the exchange offer upon the failure of any condition to the exchange offer to be satisfied; and | |
• | to the extent permitted by applicable law, purchase notes in the open market, in privately negotiated transactions or otherwise. |
• | you are not an “affiliate” of us, as defined in Rule 405 under the Securities Act; | |
• | if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from the issuer and you comply with the prospectus delivery requirements of the Securities Act; | |
• | the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business; |
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• | you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and | |
• | you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes to be acquired by you in the exchange offer. |
• | you tender through an eligible institution; | |
• | on or prior to the time of expiration, the exchange agent receives from an eligible institution, a written or facsimile copy of a properly completed and duly executed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us; and | |
• | the certificates for all certificated old notes, in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery. |
• | your name and address; | |
• | the amount of old notes you are tendering; and | |
• | a statement that your tender is being made by the notice of guaranteed delivery and that you guarantee that within three New York Stock Exchange trading days after the execution of the notice of guaranteed delivery, the eligible institution will deliver the following documents to the exchange agent: | |
• | the certificates for all certificated old notes being tendered, in proper form for transfer or a book-entry confirmation of tender; | |
• | a written or facsimile copy of the letter of transmittal, or a book-entry confirmation instead of the letter of transmittal; and | |
• | any other documents required by the letter of transmittal. |
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• | deliver a book-entry confirmation of book-entry delivery of your book-entry interests into the relevant account of the exchange agent at DTC; or | |
• | deliver all other documents required by the letter of transmittal to the exchange agent prior to the time of expiration; |
• | state your name; | |
• | identify the specific old notes to be withdrawn, including the certificate number or numbers and the principal amount of old notes to be withdrawn; | |
• | be signed by you in the same manner as you signed the letter of transmittal when you tendered your old notes, including any required signature guarantees, or be accompanied by documents of transfer sufficient for the exchange agent to register the transfer of the old notes into your name; and | |
• | specify the name in which the old notes are to be registered, if different from yours. |
• | any injunction, order or decree has been issued by any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer; or | |
• | the exchange offer violates any applicable law, regulation or interpretation of the staff of the SEC. |
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Corporate Trust Operations
Reorganization Unit
Attn: Corporate Trust Operations
101 Barclay Street, 7 East
New York, New York 10286
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As of March 31, 2006 | ||||
(Dollars in thousands) | ||||
Cash and cash equivalents | $ | 5,322 | ||
Debt: | ||||
Senior revolving credit facility(1) | — | |||
Senior secured notes | 165,000 | |||
Senior notes offered hereby | 57,582 | |||
Capital leases | 1,508 | |||
Total debt | $ | 224,090 | ||
Stockholder’s equity(2) | 32,824 | |||
Total capitalization | $ | 256,914 | ||
(1) | Our senior revolving credit facility has $30.0 million of borrowing capacity (including $10.0 million available for letters of credit), $27.6 of which is available as of March 31, 2006. | |
(2) | Includes (i) $26.3 million of proceeds from the sale of Altra Holdings capital stock, $8.8 million of Kilian capital stock that was exchanged for Altra Holdings capital stock, and $4.7 million of subordinated notes investments in Altra Holdings, all of which were contributed to us at the consummation of the offering of the old notes, and (ii) the financial results of our operations for the period from December 1, 2004 to March 31, 2006. For a description of transactions with our affiliates related to the Acquisition and Related Transactions, see “Certain Relationships and Related Transactions.” |
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For the Fiscal Year Ended December 31, 2005
Historical | ||||||||||||||||||||||||||||
Hay Hall Holdings | ||||||||||||||||||||||||||||
Altra | UK GAAP Year | Hay Hall Holdings | Hay Hall | Hay Hall | ||||||||||||||||||||||||
Year Ended | Ended | UK GAAP to US | Holdings | Holdings | Pro Forma | Pro Forma | ||||||||||||||||||||||
December 31, 2005 | December 31, 2005 | GAAP Adjustments | US GAAP | US GAAP(a) | Adjustments | Combined | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Net sales | $ | 363,465 | £ | 39,262 | £ | — | £ | 39,262 | $ | 71,496 | $ | (8,515 | )(1) | $ | 426,446 | |||||||||||||
Cost of sales | 271,952 | 23,015 | (7 | ) | 23,008 | 41,898 | (6,744 | )(2) | 307,106 | |||||||||||||||||||
Gross profit | 91,513 | 16,247 | 7 | 16,254 | 29,598 | (1,771 | ) | 119,340 | ||||||||||||||||||||
Selling, general, administrative and other operating expenses | 66,104 | 14,909 | 125 | 14,784 | 26,922 | (3,608 | )(3) | 89,418 | ||||||||||||||||||||
Operating profit (loss) | 25,409 | 1,338 | 132 | 1,470 | 2,676 | 1,837 | 29,922 | |||||||||||||||||||||
Interest expense (income), net | 17,065 | 1,230 | — | 1,230 | 2,240 | 4,782 | (4) | 24,087 | ||||||||||||||||||||
Other (income) expense, net | (17 | ) | (107 | ) | — | (107 | ) | (195 | ) | — | (212 | ) | ||||||||||||||||
(Loss) income before income taxes | 8,361 | 215 | 132 | 347 | 631 | (2,945 | ) | 6,047 | ||||||||||||||||||||
Income tax (benefit) expense | 3,917 | 292 | — | 292 | 532 | (1,384 | )(5) | 3,065 | ||||||||||||||||||||
Net (loss) income | $ | 4,444 | £ | (77 | ) | £ | 132 | £ | 55 | $ | 99 | $ | (1,561 | ) | $ | 2,982 | ||||||||||||
(a) | Reflects Hay Hall Holdings Combined Statement of Operations on a US GAAP basis after translation to U.S. dollars at an exchange rate of 1.821 U.S. dollars per U.K. pound sterling. |
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For the Three Months Ended March 31, 2006
Hay Hall | ||||||||||||||||||||||||||||
Holdings | ||||||||||||||||||||||||||||
UK GAAP | ||||||||||||||||||||||||||||
Period from | Hay Hall | |||||||||||||||||||||||||||
Altra | January 1, | Holdings | ||||||||||||||||||||||||||
Three Months | 2006 through | UK GAAP | Hay Hall | Hay Hall | ||||||||||||||||||||||||
Ended | February 9, | US GAAP | Holdings | Holdings | Pro Forma | Pro Forma | ||||||||||||||||||||||
March 31, 2006 | 2006 | Adjustments | US GAAP | US GAAP(a) | Adjustments | Combined | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Net Sales | $ | 114,784 | £ | 4,371 | £ | — | £ | 4,371 | $ | 7,662 | $ | (716 | )(1) | $ | 121,730 | |||||||||||||
Cost of Sales | 82,930 | 2,513 | (1 | ) | 2,512 | 4,404 | (1,592 | )(2) | 85,742 | |||||||||||||||||||
Gross Profit | 31,854 | 1,858 | 1 | 1,859 | 3,258 | 876 | 35,988 | |||||||||||||||||||||
Selling, general, administrative and other expenses | 19,931 | 1,706 | (12 | ) | 1,694 | 2,970 | (1,251 | )(3) | 21,650 | |||||||||||||||||||
Operating profit | 11,923 | 152 | 13 | 165 | 288 | 2,127 | 14,338 | |||||||||||||||||||||
Interest expense (income), net | 5,176 | 111 | — | 111 | 195 | 626 | (4) | 5,997 | ||||||||||||||||||||
Other (income) expense, net | (159 | ) | — | — | — | — | — | (159 | ) | |||||||||||||||||||
Income (loss) before income taxes | 6,906 | 41 | 13 | 54 | 93 | 1,501 | 8,500 | |||||||||||||||||||||
Income tax (benefit) expense | 2,822 | 13 | — | 13 | 23 | 615 | 3,460 | |||||||||||||||||||||
Net Income (loss) | $ | 4,084 | £ | 28 | £ | 13 | £ | 41 | $ | 70 | $ | 886 | $ | 5,040 | ||||||||||||||
(a) | Reflects Hay Hall Holdings Unaudited Interim Condensed Statement of Operations on a US GAAP basis after translation to U.S. dollars at an exchange rate of 1.753 U.S. dollars per U.K. pound sterling |
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Three Months | ||||||||
Year Ended | Ended | |||||||
December 31, | March 31, | |||||||
2005 | 2006 | |||||||
(In thousands) | ||||||||
(1) Adjustments to net sales as follows: | ||||||||
Elimination of net sales of Engineered Systems of Matrix that are not part of the transaction | $ | (6,805 | ) | $ | (291 | ) | ||
Elimination of intercompany sales from Hay Hall to Altra | (1,456 | ) | (378 | ) | ||||
Elimination of intercompany sales from Altra to Hay Hall | (254 | ) | (47 | ) | ||||
Total pro forma adjustment | $ | (8,515 | ) | $ | (716 | ) | ||
(2) Adjustments to cost of sales as follows: | ||||||||
Elimination of cost of sales of Engineered Systems of Matrix that are not part of the transaction | $ | (5,121 | ) | $ | (205 | ) | ||
Elimination of cost of sales on intercompany sales from Hay Hall to Altra | (1,456 | ) | (378 | ) | ||||
Elimination of cost of sales on intercompany sales from Altra to Hay Hall | (254 | ) | (47 | ) | ||||
Elimination of additional cost of goods sold as a result of the fair value adjustment to inventory recorded in connection with the Acquisition | — | (984 | ) | |||||
To record additional depreciation expense resulting from the adjustment to the fair market value of property, plant and equipment in connection with the transaction | 87 | 22 | ||||||
Total pro forma adjustment | $ | (6,744 | ) | $ | (1,592 | ) | ||
(3) Adjustments to selling, general, administrative and other operating expenses as follows: | ||||||||
Elimination of selling, general, administrative and other operations expenses of Engineered Systems of Matrix that are not part of the transaction | $ | (1,724 | ) | $ | (156 | ) | ||
Elimination of the selling, general, administrative, and other operations expenses of Hay Hall’s corporate office that are not part of the transaction | (2,844 | ) | (330 | ) | ||||
Additional expense required to present amortization expense (based on lives ranging from 8 to 12 years) associated with intangible assets recorded in connection with the Acquisition | 960 | 240 | ||||||
Elimination of additional expense related to Genstar transaction fee | — | (1,005 | ) | |||||
Total pro forma adjustment | $ | (3,608 | ) | $ | (1,251 | ) | ||
(4) Adjustments to interest expense as follows: | ||||||||
Additional expense required associated with the notes (consists of interest on £33.0 million of notes at 11.25%) | $ | 6,760 | $ | 756 | ||||
Elimination of interest expense recorded at Hay Hall | (2,240 | ) | (195 | ) | ||||
Additional expense required to present a full year of amortization expense (based on a 7 year life) associated with debt issuance costs incurred in connection with the notes | 262 | 65 | ||||||
Total pro forma adjustment | $ | 4,782 | $ | 626 | ||||
(5) Adjustment to record additional tax (benefit) expense of 47% and 41%, calculated at an effective which reflects the federal, state and foreign statutory rate in effect at the beginning of 2005 and 2006, respectively, resulting from the other pro forma adjustments. Historical tax expense has not been adjusted | $ | (1,384 | ) | $ | 615 |
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Altra | Predecessor | ||||||||||||||||||||||||||||||||
(Period from | (Period from | ||||||||||||||||||||||||||||||||
Three Months | Three Months | December 1 | January 1 | ||||||||||||||||||||||||||||||
Ended | Ended | Year Ended | through | through | Year Ended | ||||||||||||||||||||||||||||
March 31, | April 1, | December 31, | December 31, | November 30, | December 31, | ||||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004) | 2004) | 2003 | 2002 | 2001 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||||||||||||
Net sales | $ | 114,784 | $ | 95,302 | $ | 363,465 | $ | 28,625 | $ | 275,037 | $ | 266,863 | $ | 253,217 | $ | 259,761 | |||||||||||||||||
Cost of sales | 82,930 | 73,402 | 271,952 | 23,847 | 209,253 | 207,941 | 190,465 | 193,577 | |||||||||||||||||||||||||
Gross profit | 31,854 | 21,900 | 91,513 | 4,778 | 65,784 | 58,922 | 62,752 | 66,184 | |||||||||||||||||||||||||
Selling, general and administrative expenses | 18,727 | 15,727 | 61,520 | 8,973 | 45,321 | 49,513 | 48,303 | 50,508 | |||||||||||||||||||||||||
Research and development expenses | 1,204 | 1,196 | 4,683 | 378 | 3,947 | 3,455 | 3,103 | 2,518 | |||||||||||||||||||||||||
(Gain) on sale of assets | — | — | (99 | ) | — | (1,300 | ) | — | — | — | |||||||||||||||||||||||
Restructuring charge, asset impairment and transition expenses | — | — | — | — | 947 | 11,085 | 27,825 | — | |||||||||||||||||||||||||
Income (loss) from operations | 11,923 | 4,977 | 25,409 | (4,573 | ) | 16,869 | (5,131 | ) | (16,479 | ) | 13,158 | ||||||||||||||||||||||
Interest expense | 5,176 | 4,262 | 17,065 | 1,410 | 4,294 | 5,368 | 5,489 | 6,655 | |||||||||||||||||||||||||
Other expense (income) | (159 | ) | — | (17 | ) | 148 | 465 | (312 | ) | 94 | |||||||||||||||||||||||
Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principles | 6,906 | 715 | 8,361 | (5,983 | ) | 12,427 | (10,964 | ) | (21,656 | ) | 6,409 | ||||||||||||||||||||||
Provision (benefit) for income taxes | 2,822 | 314 | 3,917 | (221 | ) | 5,532 | (1,658 | ) | 2,455 | 4,794 | |||||||||||||||||||||||
Loss from disposal of discontinued operations, net of income taxes | — | — | — | — | — | — | (700 | ) | (1,867 | ) | |||||||||||||||||||||||
Income (loss) from operations and disposal of discontinued operations, net of income taxes | 4,084 | 401 | 4,444 | (5,762 | ) | 6,895 | (9,306 | ) | (24,811 | ) | (252 | ) | |||||||||||||||||||||
Cumulative effect of change in accounting principle — goodwill impairment | — | — | — | — | — | — | (83,412 | ) | — | ||||||||||||||||||||||||
Net income (loss) | $ | 4,084 | $ | 401 | 4,444 | $ | (5,762 | ) | 6,895 | $ | (9,306 | ) | $ | (108,223 | ) | $ | (252 | ) | |||||||||||||||
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Altra | Predecessor | ||||||||||||||||||||||||||||||||
(Period from | (Period from | ||||||||||||||||||||||||||||||||
Three Months | Three Months | December 1 | January 1 | ||||||||||||||||||||||||||||||
Ended | Ended | Year Ended | through | through | Year Ended | ||||||||||||||||||||||||||||
March 31, | April 1, | December 31, | December 31, | November 30, | December 31, | ||||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004) | 2004) | 2003 | 2002 | 2001 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||||||
Depreciation and Amortization | $ | 2,945 | $ | 2,761 | $ | 11,533 | $ | 919 | $ | 6,074 | $ | 8,653 | $ | 9,547 | $ | 12,207 | |||||||||||||||||
Purchases of fixed assets | 1,245 | 951 | 6,199 | 289 | 3,489 | 5,294 | 5,911 | 4,374 | |||||||||||||||||||||||||
Cash flow provided by (used in): | |||||||||||||||||||||||||||||||||
Operating activities | 1,647 | (3,862 | ) | 13,835 | 5,623 | 3,604 | (14,289 | ) | 21,934 | 27,658 | |||||||||||||||||||||||
Investing activities | (51,785 | ) | (1,666 | ) | (5,197 | ) | (180,401 | ) | 953 | (1,573 | ) | (4,585 | ) | (3,645 | ) | ||||||||||||||||||
Financing activities | 45,325 | 3,303 | (2,783 | ) | 179,649 | (6,696 | ) | 12,746 | (13,037 | ) | (23,379 | ) | |||||||||||||||||||||
Ratio of earnings to fixed charges | 2.3 | x | 1.1 | x | 1.5 | x | — | 3.6 | x | — | — | 1.9 | x | ||||||||||||||||||||
Altra | Predecessor | ||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||
Ended | Altra | Altra | |||||||||||||||||||||||
March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 5,322 | $ | 10,060 | $ | 4,729 | $ | 3,163 | $ | 5,214 | $ | 2,706 | |||||||||||||
Property, plant and equipment, net | 73,243 | 66,393 | 68,006 | 61,605 | 69,827 | 88,437 | |||||||||||||||||||
Total assets | 369,812 | 297,404 | 299,051 | 174,324 | 173,034 | 281,567 | |||||||||||||||||||
Long-term debt | 218,234 | 159,574 | 158,740 | 1,025 | 46,183 | 61,338 | |||||||||||||||||||
Total stockholder’s equity (deficit)/Invested capital | $ | 32,824 | $ | 38,613 | $ | 42,879 | $ | (3,004 | ) | $ | (9,418 | ) | $ | 138,373 | |||||||||||
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Company | Products | Year Established | ||||
Bibby Transmissions Ltd. | Couplings | 1919 | ||||
Matrix International Ltd. | Clutch Brakes, Couplings | 1939 | ||||
Twiflex Ltd. | Clutch Brakes, Couplings | 1946 | ||||
Huco Engineering Industries, Ltd. | Couplings, Power Transmission Components | 1965 | ||||
Inertia Dynamics Inc. | Clutch Brakes | 1971 |
• | In 2002 and 2003, the Predecessor incurred transition expenses, including relocation, training, recruiting and moving costs, directly related to implementing its restructuring activities amounting to $2.6 million and $9.1 million, respectively. | |
• | In 2003, the Predecessor recorded a $2.0 million loss from the sale of certain real estate associated with facilities closed as a part of its restructuring activities. |
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• | cash expenditures, or future requirements, for capital expenditures or contractual commitments; | |
• | changes in, or cash requirements for, working capital needs; | |
• | the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debts; | |
• | tax distributions that would represent a reduction in cash available to the Company; and | |
• | any cash requirements for assets being depreciated and amortized that may have to be replaced in the future. |
Quarter Ended | Quarter Ended | |||||||
March 31, 2006 | April 1, 2005 | |||||||
(unaudited) | ||||||||
(Dollars in thousands) | ||||||||
Net sales | $ | 114,784 | $ | 95,302 | ||||
Cost of sales | 82,930 | 73,402 | ||||||
Gross profit | 31,854 | 21,900 | ||||||
Gross profit percentage | 27.8 | % | 23.0 | % | ||||
Selling, general and administrative expenses | 18,727 | 15,727 | ||||||
Research and development expenses | 1,204 | 1,196 | ||||||
Income from operations | 11,923 | 4,977 | ||||||
Interest expense | 5,176 | 4,262 | ||||||
Other non-operating (income) expense | (159 | ) | — | |||||
Income before income taxes | 6,906 | 715 | ||||||
Provision for income taxes | 2,822 | 314 | ||||||
Net income | $ | 4,084 | $ | 401 | ||||
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From Inception | ||||||||||||||||||||
Combined | (December 1, | Predecessor | ||||||||||||||||||
Year | 12 Months | 2004) | 11 Months | |||||||||||||||||
Ended | Ended | through | Ended | Year-Ended | ||||||||||||||||
December 31, | December 31, | December 31, | November 30, | December 31, | ||||||||||||||||
2005 | 2004 | 2004 | 2004 | 2003 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net sales | $ | 363,465 | $ | 303,662 | $ | 28,625 | $ | 275,037 | $ | 266,863 | ||||||||||
Cost of sales | 271,952 | 233,100 | 23,847 | 209,253 | 207,941 | |||||||||||||||
Gross profit | 91,513 | 70,562 | 4,778 | 65,784 | 58,922 | |||||||||||||||
Gross profit percentage | 25.2 | % | 23.2 | % | 16.7 | % | 23.9 | % | 22.1 | % | ||||||||||
Selling, general and administrative expenses | 61,520 | 54,294 | 8,973 | 45,321 | 49,513 | |||||||||||||||
Research and development expenses | 4,683 | 4,325 | 378 | 3,947 | 3,455 | |||||||||||||||
Gain on sale of assets | (99 | ) | (1,300 | ) | — | (1,300 | ) | — | ||||||||||||
Restructuring charge, asset impairment and transition expenses | — | 947 | — | 947 | 11,085 | |||||||||||||||
Income (loss) from operations | 25,409 | 12,296 | (4,573 | ) | 16,869 | (5,131 | ) | |||||||||||||
Interest expense | 17,065 | 5,704 | 1,410 | 4,294 | 5,368 | |||||||||||||||
Other non-operating (income) expense | (17 | ) | 148 | — | 148 | 465 | ||||||||||||||
Income (loss) before income taxes | 8,361 | 6,444 | (5,983 | ) | 12,427 | (10,964 | ) | |||||||||||||
Provision (benefit) for income taxes | 3,917 | 5,311 | (221 | ) | 5,532 | (1,658 | ) | |||||||||||||
Net income (loss) | $ | 4,444 | $ | 1,133 | $ | (5,762 | ) | $ | 6,895 | $ | (9,306 | ) | ||||||||
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Payments Due by Period | ||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | Thereafter | |||||||||||||||||||
Management fee(1) | $ | 0.8 | $ | 1.0 | $ | 1.0 | $ | 1.0 | $ | 1.0 | $ | 1.0 | ||||||||||||
Senior revolving credit facility(2) | — | — | — | — | — | — | ||||||||||||||||||
Capital leases | 0.6 | 0.5 | 0.3 | 0.1 | — | — | ||||||||||||||||||
Operating leases | 2.5 | 3.0 | 1.9 | 1.0 | 0.6 | 1.5 | ||||||||||||||||||
Senior secured notes(3) | — | — | — | — | — | 165.0 | ||||||||||||||||||
Senior notes(4) | — | — | — | — | — | 57.6 | ||||||||||||||||||
Total contractual cash obligations | $ | 3.9 | $ | 4.5 | $ | 3.2 | $ | 2.1 | $ | 1.6 | $ | 225.1 | ||||||||||||
(1) | We have entered into an advisory services agreement with Genstar Capital which requires the annual payment of $1.0 million for management and consulting services until the agreement is terminated per mutual agreement between Altra and Genstar Capital. See “Certain Relationships and Related Party Transactions — Genstar Capital Management Agreement.” | |
(2) | We have up to $30.0 million of borrowing capacity, through November 2009, under our senior revolving credit facility (including $10.0 million available for use for letters of credit). There were no outstanding borrowings and $2.4 million of outstanding letters of credit at March 31, 2006. | |
(3) | We have semi-annual cash interest requirements due on the Senior secured notes with $14.9 payable in 2006, 2007, 2008, 2009, 2010 and thereafter | |
(4) | We have semi-annual cash interest requirements due on the senior notes, assuming an exchange rate of 1.745 U.S. dollars per U.K. pound sterling as of March 31, 2006, we will have $3.2 million payable in 2006, $6.5 million payable in 2007, 2008, 2009, 2010 and $16.2 million thereafter. The principal balance of £33.0 million is due in 2013. |
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• | Leverage Our Sales and Distribution Network. Due to our strength of brand, breadth of product offering and large installed base of products, we believe we have developed strong relationships with our distribution partners. We intend to continue to leverage our relationships with our distributors to gain shelf space and sell new products. For example, in 2002 we launched a product in our clutch brake line that incorporated similar features and technology as competitive products. Due to the strength of our Warner Electric brand, we quickly captured market share and generated net sales of approximately $1.9 and $2.4 million for fiscal 2004 and 2005, respectively. In addition, we will continue to actively pursue new OEM opportunities with innovative and cost-effective product designs and applications to help grow and protect our aftermarket revenues. This strategy capitalizes on customer brand preference for our products, generating pull-through aftermarket demand from our distribution channel. We believe this strategy also allows our distributors to achieve high profit margins, which further enhances our preferred position with them. | |
• | Focus on Strategic Marketing. We intend to continue to build our strategic marketing organization to focus on new growth opportunities in key, fast-growing OEM and end user markets, including elevators, food processing, material handling, packaging machinery and turf and garden. Through a systematic process that leverages our core brands and products, we seek to identify attractive product niches, collect customer and market data, identify market drivers, tailor product and service solutions to specific market and customer requirements and deploy resources to gain market share and drive future sales growth. In support of our strategic marketing initiatives, we recently began to redirect our sales organization to focus on key accounts in specific markets. | |
• | Accelerate New Product and Technology Development. In a number of our strategic markets, we have identified opportunities to expand our served market by introducing new products and by improving existing products. We intend to refocus our efforts with our integrated product management, engineering and manufacturing teams to work closely with customers to improve existing application performance, reduce overall cost of ownership and develop new products and technologies. |
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Products | Principal Brands | Principal Markets | Sample Applications | |||
Clutches, Clutch Brakes | Warner Electric, Formsprag Clutch, Stieber, Wichita Clutch, Matrix International, Inertia Dynamics, Twiflex | Material handling, turf and garden, aerospace, marine and energy | Forklifts, elevators, lawn mowers and winches | |||
Enclosed Gear Drives | Boston Gear, Nuttall Gear | Food processing, material handling and specialty machinery | Conveyors, industrial ovens and mixers | |||
Open Gearing | Boston Gear | General industrial applications and specialty machinery | Printing and military | |||
Couplings | Ameridrives, Bibby Transmissions, Twiflex, Matrix International, Huco | Steel, power generation and petrochemical | Strip mills and turbines | |||
Machined-race Bearings | Kilian | General industrial applications and automotive | Sliding doors, steering columns, furniture and conveyors |
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• | lowering the cost of manufacturing our existing products; | |
• | redesigning existing product lines to increase their efficiency or enhance their performance; and | |
• | developing new product applications. |
Location | Owned/Leased | Principal Use | ||
United States | ||||
South Beloit, Illinois | Owned | Production and Administrative | ||
Columbia City, Indiana | Owned | Production | ||
Warren, Michigan | Owned | Production | ||
Syracuse, New York | Owned | Production and Administrative | ||
Erie, Pennsylvania | Owned | Production | ||
Wichita Falls, Texas | Owned | Production | ||
Quincy, Massachusetts | Leased | Corporate Headquarters | ||
Niagara Falls, New York | Leased | Production | ||
Charlotte, North Carolina | Leased | Production | ||
Torrington, Connecticut | Leased | Production | ||
International | ||||
Toronto, Canada | Owned | Production | ||
Bedford, England | Owned | Production | ||
Dewsbury, England | Owned | Production | ||
Allones, France | Owned | Production | ||
Saint Barthelemy, France | Owned | Production | ||
Heidelberg, Germany | Owned | Production | ||
Toronto, Canada | Leased | Production | ||
Shenzhen, China | Leased | Production | ||
Garching, Germany | Leased | Production | ||
Brechin, Scotland | Leased | Production | ||
Twickenham, England | Leased | Production | ||
Hertford, England | Leased | Production | ||
Telford, England | Leased | Production |
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Name | Age | Position | ||||
Michael L. Hurt | 60 | Chief Executive Officer and Director | ||||
Carl Christenson | 46 | President and Chief Operating Officer | ||||
David Wall | 47 | Chief Financial Officer | ||||
Craig Schuele | 42 | Vice President of Marketing and Business Development | ||||
Gerald Ferris | 56 | Vice President of Global Sales | ||||
Timothy McGowan | 49 | Vice President of Human Resources | ||||
Edward L. Novotny | 53 | Vice President and General Manager, Boston Gear and Overrunning Clutch | ||||
Jean-Pierre L. Conte | 42 | Director | ||||
Richard D. Paterson | 63 | Director | ||||
Darren J. Gold | 35 | Director | ||||
Frank K. Bauchiero | 71 | Director | ||||
Larry McPherson | 60 | Director |
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Annual Compensation | Long-Term Compensation | |||||||||||||||||||||||||||||||
Awards | Payouts | |||||||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||||||
Other | Restricted | Underlying | ||||||||||||||||||||||||||||||
Annual | Stock | Options/ | LTIP | All Other | ||||||||||||||||||||||||||||
Salary | Bonus | Compensation(1) | Award(s) | SARs | Payouts | Compensation | ||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | (#) | ($) | ($) | ||||||||||||||||||||||||
Michael L. Hurt | 2005 | 347,500 | 446,375 | (11) | 12,600 | 68,233 | (2) | — | — | — | ||||||||||||||||||||||
Chief Executive Officer | 2004 | 43,301 | — | 33,877 | 18,146 | — | — | 125,000 | ||||||||||||||||||||||||
and Director | 2003 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Charles W. Nims(8) | 2005 | 36,309 | — | 9,012 | — | — | — | 242,132 | ||||||||||||||||||||||||
Former President | 2004 | 261,144 | 113,889 | 12,357 | — | — | — | 191,250 | ||||||||||||||||||||||||
2003 | 260,188 | 54,554 | — | — | — | — | — | |||||||||||||||||||||||||
Carl R. Christenson | 2005 | 240,994 | 290,141 | (9) | 174,134 | (6) | 78,000 | (3) | ||||||||||||||||||||||||
President and Chief | 2004 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Operating Officer | 2003 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
David A. Wall | 2005 | 208,523 | 149,925 | (10) | 51,145 | (7) | 39,000 | (4) | ||||||||||||||||||||||||
Chief Financial Officer | 2004 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2003 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Edward L. Novotny | 2005 | 183,614 | 112,378 | 12,600 | 19,500 | (5) | — | — | — | |||||||||||||||||||||||
Vice President and G M | 2004 | 178,954 | 77,764 | 12,268 | — | — | — | 134,250 | ||||||||||||||||||||||||
Boston Gear and | 2003 | 174,930 | 24,980 | — | — | — | — | — | ||||||||||||||||||||||||
Overrunning Clutch |
(1) | Excludes customary medical and dental benefits. | |
(2) | Value at time of grant. The aggregate restricted stock holdings of Mr. Hurt at the end of 2005 were 975,000 shares with a value of $86,379. Restricted stock grants vest in five equal annual installments and include the right to receive dividends on such stock when declared by the board. | |
(3) | Value at time of grant. The aggregate restricted stock holdings of Mr. Christenson at the end of 2005 were 780,000 shares with a value of $78,000. Restricted stock grants vest in five equal annual installments and include the right to receive dividends on such stock when declared by the board. |
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(4) | Value at time of grant. The aggregate restricted stock holdings of Mr. Wall at the end of 2005 were 390,000 shares with a value of $39,000. Restricted stock grants vest in five equal annual installments and include the right to receive dividends on such stock when declared by the board. | |
(5) | Value at time of grant. The aggregate restricted stock holdings of Mr. Novotny at the end of 2005 was 195,000 shares with a value of $19,500. Restricted stock grants vest in five equal annual installments and include the right to receive dividends on such stock when declared by the board. | |
(6) | Mr. Christenson was reimbursed $161,534 in 2005 for costs related to his relocation. | |
(7) | Mr. Wall was reimbursed $38,545 in 2005 for costs related to his relocation. | |
(8) | Mr. Nims’ employment with the Company ended in January 2005. Mr. Nims received $242,132 in severance during 2005. | |
(9) | Mr. Christenson was paid a signing bonus of $120,000 during 2005. | |
(10) | Mr. Wall was paid a signing bonus of $10,000 during 2005 | |
(11) | Mr. Hurt was paid a signing bonus of $146,000 during 2005 |
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• | each person known by us to own beneficially more than 5% of the capital stock; | |
• | each of the directors of Altra Holdings; | |
• | each of our named executive officers; and | |
• | all of the directors and our executive officers as a group. |
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Number | Percentage | |||||||
Beneficial Owner | of Shares | of Class | ||||||
Genstar Capital Partners III, L.P.(1) | 25,080,999 | 64.5 | % | |||||
Stargen III, L.P.(2) | 904,001 | 2.3 | % | |||||
Caisse de dépôt et placement du Québec(3) | 7,000,000 | 18.0 | % | |||||
Michael L. Hurt | 1,475,000 | 3.8 | % | |||||
Charles W. Nims | — | — | ||||||
Carl Christenson | 1,080,000 | 2.8 | % | |||||
David Wall | 490,000 | 1.3 | % | |||||
Edward L. Novotny | 280,000 | * | ||||||
Jean-Pierre L. Conte(1) | 25,080,999 | 64.5 | % | |||||
Richard D. Paterson(1) | 25,080,999 | 64.5 | % | |||||
Darren J. Gold(4) | — | — | ||||||
Frank Bauchiero(4) | 818,250 | 2.1 | % | |||||
Larry McPherson | 318,250 | * | ||||||
All directors and executive officers as a group(1)(2) | 31,693,000 | 81.5 | % |
* | Less than one percent (1%). | |
(1) | Genstar Capital Partners III, L.P., a Delaware limited partnership (“Genstar III”), owns 64.6% of the outstanding capital stock of Altra Holdings. Genstar Capital exercises investment discretion and control over the shares held by Genstar III. Jean-Pierre L. Conte, the chairman and a managing director of Genstar Capital, and Richard D. Paterson, a managing director of Genstar Capital, may be deemed to share beneficial ownership of the shares shown as beneficially owned by Genstar III. Each of Mr. Conte and Mr. Paterson disclaims such beneficial ownership except to the extent of his pecuniary interest therein. The address of Genstar III is Four Embarcadero Center, Suite 1900, San Francisco, California 94111. | |
(2) | Stargen III, L.P., a Delaware limited partnership, owns 2.3% of the outstanding capital stock of Altra Holdings. Genstar Capital exercises investment discretion and control over the shares held by Stargen III, L.P. The address of Stargen III, L.P. is Four Embarcadero Center, Suite 1900, San Francisco, California 94111. | |
(3) | CDPQ is a limited partner of the Genstar Fund and its address is 1000 place Jean-Paul-Riopelle, Montreal, Québec. | |
(4) | Includes 750,000 shares of stock held by Frank Bauchiero MKC Worldwide. Mr. Bauchiero is a Strategic Advisor, and Mr. Gold is a Principal of Genstar III and do not directly or indirectly have or share voting or investment power or have or share the ability to influence voting or investment power over the shares shown as beneficially owned by Genstar III. |
• | not redeemable; | |
• | convertible into common stock at the election of the holders of preferred stock and automatically upon certain enumerated events; |
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• | entitled to noncumulative preferential annual dividend payments of $0.08 per share when, as and if declared by the board of directors of Altra Holdings; | |
• | in the event of any liquidation, dissolution, winding up or sale of Altra Holdings, entitled to a preferential distribution of $1.00 per share (plus any declared but unpaid dividends); | |
• | entitled to protective class voting rights, including the right to veto sales or mergers of Altra Holdings, to prevent amendments to its certificate of incorporation and to prohibit future sales of its capital stock; and | |
• | entitled to anti-dilution protections. |
• | accruepayment-in-kind interest at an annual rate of 17%, provided that Altra Holdings may in its sole discretion pay such interest in whole or in part in cash to the extent allowed under the terms of the indenture governing the notes; | |
• | mature on November 30, 2019; | |
• | are redeemable at the option of Altra Holdings prior to maturity at specified prepayment premiums; and | |
• | are redeemable at the option of the holder at 101% of the principal amount with accrued interest in the event of a change of control of Altra Holdings or any of its material subsidiaries. |
• | imposes restrictions on their transfer of Altra Holdings shares; | |
• | grants the parties certain rights of first refusal and co-sale rights with respect to sales of shares by the other parties; | |
• | grants the Genstar Funds the right to require the other parties to participate pro rata in any sale of shares by the Genstar Funds; and | |
• | provides for the Genstar Funds to designate five directors. |
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• | incur additional indebtedness; | |
• | repay subordinated indebtedness prior to stated maturities; | |
• | pay dividends on or redeem or repurchase our stock or make other distributions; | |
• | issue capital stock; | |
• | make investments or acquisitions; | |
• | sell certain assets or merge with or into other companies; | |
• | restrict dividends, distributions or other payments from our subsidiaries; | |
• | sell stock in our subsidiaries; | |
• | create liens; | |
• | enter into certain transactions with stockholders and affiliates; and | |
• | otherwise conduct necessary corporate activities. |
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• | “registered notes” refers to the registered notes being offered by this prospectus; | |
• | “old notes” refers to your old notes that may be exchanged for new notes in the exchange offer; | |
• | “Notes” refers collectively to the registered notes and the old notes; | |
• | references to the “company” include only Altra Industrial Motion, Inc. and not any of its subsidiaries; and | |
• | you can find definitions of various terms under the subsection “— Certain Definitions.” |
• | be senior unsecured obligations of the Company; | |
• | rank equally in right of payment with all existing and future senior obligations of the Company and senior in right of payment to all existing and future Indebtedness that by its terms is subordinated to the Notes; | |
• | will be effectively subordinated to all of the Company’s existing and future secured Indebtedness, including under our senior credit facility and Senior Secured Notes to the extent of the value of the assets securing such Indebtedness; and | |
• | be unconditionally guaranteed, jointly and severally, by all of the Company’s Domestic Restricted Subsidiaries, as set forth under“— Guarantees” below. |
• | be a senior unsecured obligation of such Guarantor; | |
• | rank equally in right of payment with all existing and future senior obligations of such Guarantor and senior in right of payment to all existing and future Indebtedness that by its terms is subordinated to the Guarantee of such Guarantor; and | |
• | will be effectively subordinated to all of the existing and future secured Indebtedness, including under our senior credit facility and Senior Secured Notes of such Guarantor to the extent of the value of the assets securing such Indebtedness. |
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Year | Percentage | |||
2010 | 105.625% | |||
2011 | 102.813% | |||
2012 and thereafter | 100.000% |
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Page No. | ||||
Altra Industrial Motion, Inc. (the “Company”) | ||||
Audited Financial Statements: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
Unaudited Interim Financial Statements: | ||||
F-40 | ||||
F-41 | ||||
F-42 | ||||
F-43 | ||||
Hay Hall Holdings Limited | ||||
Audited Financial Statements: | ||||
F-56 | ||||
F-57 | ||||
F-58 | ||||
F-59 | ||||
F-60 | ||||
F-61 | ||||
F-62 |
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December | ||||||||
2005 | 2004 | |||||||
(Dollars in thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,060 | $ | 4,729 | ||||
Trade receivables, less allowance for doubtful accounts of $1,797 and $1,424 | 46,441 | 45,969 | ||||||
Inventories, less allowance for obsolete materials of $6,843 and $6,361 | 54,654 | 56,732 | ||||||
Deferred income taxes | 2,779 | 1,145 | ||||||
Prepaid expenses and other | 1,973 | 4,792 | ||||||
Total current assets | 115,907 | 113,367 | ||||||
Property, plant and equipment, net | 66,393 | 68,006 | ||||||
Intangible assets, net | 44,751 | 48,758 | ||||||
Goodwill | 65,345 | 63,145 | ||||||
Other assets | 5,008 | 5,775 | ||||||
Total assets | $ | 297,404 | $ | 299,051 | ||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 30,724 | $ | 28,787 | ||||
Accrued payroll | 16,016 | 11,661 | ||||||
Accruals and other liabilities | 16,239 | 14,377 | ||||||
Deferred income taxes | 33 | 129 | ||||||
Current portion of long-term debt | 186 | 913 | ||||||
Total current liabilities | 63,198 | 55,867 | ||||||
Long-term debt, less current portion and net of unaccreted discount | 159,574 | 158,740 | ||||||
Deferred income taxes | 7,550 | 9,828 | ||||||
Pension liabilities | 14,368 | 19,534 | ||||||
Other post retirement benefits | 12,500 | 12,203 | ||||||
Other long term liabilities | 1,601 | — | ||||||
Commitments and Contingencies | — | — | ||||||
Stockholder’s equity: | ||||||||
Common stock (1,000 shares authorized, issued & outstanding, $0.001 par value) | — | — | ||||||
Additional paid-in capital | 48,814 | 48,814 | ||||||
Due from Parent | (1,610 | ) | — | |||||
Retained deficit | (1,318 | ) | (5,762 | ) | ||||
Cumulative foreign currency translation adjustment | (5,851 | ) | 549 | |||||
Minimum pension liability | (1,422 | ) | (722 | ) | ||||
Total stockholder’s equity | 38,613 | 42,879 | ||||||
Total liabilities and stockholder’s equity | $ | 297,404 | $ | 299,051 | ||||
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Altra | Predecessor (Note 1) | ||||||||||||||||
From | |||||||||||||||||
Inception | |||||||||||||||||
(December 1, 2004 | 11 Months | ||||||||||||||||
Year-Ended | through | Ended | Year-Ended | ||||||||||||||
December 31, | December 31 | November 30, | December 31 | ||||||||||||||
2005 | 2004) | 2004 | 2003 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Net sales | $ | 363,465 | $ | 28,625 | $ | 275,037 | $ | 266,863 | |||||||||
Cost of sales | 271,952 | 23,847 | 209,253 | 207,941 | |||||||||||||
Gross profit | 91,513 | 4,778 | 65,784 | 58,922 | |||||||||||||
Selling, general and administrative expenses | 61,520 | 8,973 | 45,321 | 49,513 | |||||||||||||
Research and development expenses | 4,683 | 378 | 3,947 | 3,455 | |||||||||||||
Restructuring charge, asset impairment and transition expenses | — | — | 947 | 11,085 | |||||||||||||
Gain on sale of fixed assets | (99 | ) | — | (1,300 | ) | — | |||||||||||
Income (loss) from operations | 25,409 | (4,573 | ) | 16,869 | (5,131 | ) | |||||||||||
Interest expense, net | 17,065 | 1,410 | 4,294 | 5,368 | |||||||||||||
Other non-operating expense (income), net | (17 | ) | — | 148 | 465 | ||||||||||||
Income (loss) before income taxes | 8,361 | (5,983 | ) | 12,427 | (10,964 | ) | |||||||||||
Provision (benefit) for income taxes | 3,917 | (221 | ) | 5,532 | (1,658 | ) | |||||||||||
Net income (loss) | 4,444 | (5,762 | ) | 6,895 | (9,306 | ) | |||||||||||
Other comprehensive (loss) income, net of income taxes: | |||||||||||||||||
Minimum pension liability adjustment | (700 | ) | (722 | ) | (6,031 | ) | 5,418 | ||||||||||
Foreign currency translation adjustment | (6,400 | ) | 549 | 478 | 3,917 | ||||||||||||
Other comprehensive (loss) income | (7,100 | ) | (173 | ) | (5,553 | ) | 9,335 | ||||||||||
Comprehensive (loss) income | $ | (2,656 | ) | $ | (5,935 | ) | $ | 1,342 | $ | 29 | |||||||
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Accumulated | ||||||||||||
Other | Net | |||||||||||
Invested | Comprehensive | Invested | ||||||||||
Capital | Loss | Capital | ||||||||||
(Dollars in thousands) | ||||||||||||
For the Predecessor | ||||||||||||
Balance at December 31, 2002 | $ | 33,142 | $ | (42,560 | ) | $ | (9,418 | ) | ||||
Net loss | (9,306 | ) | — | (9,306 | ) | |||||||
Contribution from affiliates | 6,385 | — | 6,385 | |||||||||
Other comprehensive income, net of $4,251 tax benefit | — | 9,335 | 9,335 | |||||||||
Balance at December 31, 2003 | 30,221 | (33,225 | ) | (3,004 | ) | |||||||
Net income | 6,895 | — | 6,895 | |||||||||
Contribution from affiliates | 7,922 | — | 7,922 | |||||||||
Other comprehensive income, net of $3,697 tax benefit | — | (5,553 | ) | (5,553 | ) | |||||||
Balance at November 30, 2004 | $ | 45,038 | $ | (38,778 | ) | $ | 6,260 | |||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Common | Paid-In | Retained | Due from | Comprehensive | ||||||||||||||||||||
Stock | Capital | Deficit | Parent | Loss | Total | |||||||||||||||||||
For the Company | ||||||||||||||||||||||||
Initial capital contribution | $ | — | $ | 39,994 | $ | — | $ | — | $ | — | $ | 39,994 | ||||||||||||
Common stock issuance related to acquisition | — | 8,820 | — | — | — | 8,820 | ||||||||||||||||||
Net loss | — | — | (5,762 | ) | — | — | (5,762 | ) | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (173 | ) | (173 | ) | ||||||||||||||||
Balance at December 31, 2004 | — | 48,814 | (5,762 | ) | — | (173 | ) | 42,879 | ||||||||||||||||
Net income | — | — | 4,444 | — | — | 4,444 | ||||||||||||||||||
Payments made on behalf of parent company | — | — | — | (1,610 | ) | — | (1,610 | ) | ||||||||||||||||
Other comprehensive loss, net of $1,938 tax benefit | — | — | — | — | (7,100 | ) | (7,100 | ) | ||||||||||||||||
Balance at December 31, 2005 | $ | — | $ | 48,814 | $ | (1,318 | ) | $ | (1,610 | ) | $ | (7,273 | ) | $ | 38,613 | |||||||||
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Altra | Predecessor (Note 1) | ||||||||||||||||
From Inception | |||||||||||||||||
(December 1, | 11 Months | ||||||||||||||||
Year-Ended | 2004 through | Ended | Year-Ended | ||||||||||||||
December 31, | December 31, | November 30, | December 31, | ||||||||||||||
2005 | 2004) | 2004 | 2003 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income (loss) | $ | 4,444 | $ | (5,762 | ) | $ | 6,895 | $ | (9,306 | ) | |||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||||||
Depreciation | 8,574 | 673 | 6,074 | 8,653 | |||||||||||||
Amortization of intangible assets | 2,959 | 246 | — | — | |||||||||||||
Amortization of deferred loan costs | 621 | 49 | — | 587 | |||||||||||||
Accretion of debt discount | 942 | 79 | — | — | |||||||||||||
Amortization of inventory fair value adjustment | 1,699 | 1,699 | — | — | |||||||||||||
(Gains) impairments on sale of fixed assets | (99 | ) | — | (1,300 | ) | 2,126 | |||||||||||
Provision (benefit ) for deferred taxes | 248 | (1,031 | ) | 117 | (2,679 | ) | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Trade receivables | (2,654 | ) | (324 | ) | (4,197 | ) | (578 | ) | |||||||||
Inventories | (1,353 | ) | (412 | ) | (6,418 | ) | (2,232 | ) | |||||||||
Accounts payable and accrued liabilities | (1,832 | ) | 9,473 | 3,734 | (13,842 | ) | |||||||||||
Other current assets and liabilities | 2,226 | (2,126 | ) | 1,477 | (445 | ) | |||||||||||
Other operating assets and liabilities | (1,940 | ) | 3,059 | (2,778 | ) | 3,427 | |||||||||||
Net cash provided by (used in) operating activities | 13,835 | 5,623 | 3,604 | (14,289 | ) | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Purchases of fixed assets | (6,199 | ) | (289 | ) | (3,489 | ) | (5,294 | ) | |||||||||
Acquisitions, net of $2,367 of cash acquired in 2004 | 1,607 | (180,112 | ) | — | — | ||||||||||||
Payment of additional Kilian purchase price | (730 | ) | — | — | — | ||||||||||||
Proceeds from sale of fixed assets | 125 | — | 4,442 | 3,721 | |||||||||||||
Net cash (used in) provided by investing activities | (5,197 | ) | (180,401 | ) | 953 | (1,573 | ) | ||||||||||
Cash flows from financing activities: | |||||||||||||||||
Contributed capital | — | 39,994 | — | 5,000 | |||||||||||||
Proceeds from issuance of senior subordinated notes | — | 158,400 | — | — | |||||||||||||
Payments of debt acquired in acquisitions | — | (12,178 | ) | — | (64,242 | ) | |||||||||||
Payment of debt issuance costs | (338 | ) | (6,747 | ) | — | — | |||||||||||
Payments made on behalf of Parent company | (1,610 | ) | — | — | — | ||||||||||||
Borrowings under revolving credit agreement | 4,408 | 4,988 | — | — | |||||||||||||
Payments on revolving credit agreement | (4,408 | ) | (4,988 | ) | — | — | |||||||||||
Payment of capital leases | (835 | ) | (37 | ) | — | — | |||||||||||
Contribution from affiliates | — | — | 7,922 | 1,385 | |||||||||||||
Change in affiliate debt | — | 179,612 | (14,618 | ) | 70,603 | ||||||||||||
Net cash (used in) provided by financing activities | (2,783 | ) | 179,649 | (6,696 | ) | 12,746 | |||||||||||
Effect of exchange rates on cash | (524 | ) | 75 | 159 | 1,065 | ||||||||||||
Increase (Decrease) in cash and cash equivalents | 5,331 | 4,729 | (1,980 | ) | (2,051 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 4,729 | — | 3,163 | 5,214 | |||||||||||||
Cash and cash equivalents, end of period | $ | 10,060 | $ | 4,729 | $ | 1,183 | $ | 3,163 | |||||||||
Cash paid during the period for: | |||||||||||||||||
Interest | $ | 15,448 | $ | — | $ | 2,796 | $ | 4,061 | |||||||||
Income Taxes | $ | 1,761 | $ | — | $ | 446 | $ | 1,249 |
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1. | Description of Business and Summary of Significant Accounting Policies |
F-7
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Buildings and improvements | 15 to 45 years | |||
Machinery and equipment | 2 to 15 years |
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2. | Recent Accounting Pronouncements |
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3. | Acquisitions |
Predecessor | Kilian | Total | ||||||||||
Total purchase price, including closing costs of approximately $2.6 million | $ | 181,019 | $ | 9,594 | $ | 190,613 | ||||||
Cash and cash equivalents | 1,183 | 1,184 | 2,367 | |||||||||
Trade receivables | 39,233 | 6,096 | 45,329 | |||||||||
Inventories | 52,761 | 5,108 | 57,869 | |||||||||
Prepaid expenses and other | 4,770 | 207 | 4,977 | |||||||||
Property, plant and equipment | 59,320 | 9,111 | 68,431 | |||||||||
Intangible assets | 49,004 | — | 49,004 | |||||||||
Deferred income taxes — long term | — | 104 | 104 | |||||||||
Other assets | 150 | — | 150 | |||||||||
Total assets acquired | 206,421 | 21,810 | 228,231 | |||||||||
Accounts payable, accrued payroll, and accruals and other current liabilities | 46,422 | 3,125 | 49,547 | |||||||||
Bank debt | — | 12,178 | 12,178 | |||||||||
Deferred income taxes | 8,127 | — | 8,127 | |||||||||
Pensions, other post retirement benefits and other liabilities | 34,166 | — | 34,166 | |||||||||
Total liabilities assumed | 88,715 | 15,303 | 104,018 | |||||||||
Net assets acquired | 117,706 | 6,507 | 124,213 | |||||||||
Excess purchase price over the fair value of net assets acquired | $ | 63,313 | $ | 3,087 | $ | 66,400 | ||||||
F-12
Table of Contents
Predecessor | Kilian | Total | ||||||||||
Customer relationships | $ | 27,802 | $ | — | $ | 27,802 | ||||||
Product technology and patents | 5,122 | — | 5,122 | |||||||||
Total intangible assets subject to amortization | 32,924 | — | 32,924 | |||||||||
Trade names and trademarks, not subject to amortization | 16,080 | — | 16,080 | |||||||||
Total intangible assets | $ | 49,004 | $ | — | $ | 49,004 | ||||||
2004 | 2003 | |||||||
(Pro forma, unaudited, in thousands) | ||||||||
Total Revenues | $ | 343,308 | $ | 305,513 | ||||
Net income (loss) | (541 | ) | (19,769 | ) |
4. | Inventories |
2005 | 2004 | |||||||
Raw materials | $ | 22,512 | $ | 29,219 | ||||
Work in process | 13,876 | 12,636 | ||||||
Finished goods | 25,109 | 21,238 | ||||||
61,497 | 63,093 | |||||||
Less — Allowance for excess, slow-moving and obsolete inventory | (6,843 | ) | (6,361 | ) | ||||
$ | 54,654 | $ | 56,732 | |||||
F-13
Table of Contents
5. | Property, Plant and Equipment |
2005 | 2004 | |||||||
Land | $ | 7,892 | $ | 5,848 | ||||
Buildings and improvements | 16,500 | 14,597 | ||||||
Machinery and equipment | 50,402 | 48,234 | ||||||
74,794 | 68,679 | |||||||
Less — Accumulated depreciation | (8,401 | ) | (673 | ) | ||||
$ | 66,393 | $ | 68,006 | |||||
6. | Goodwill and Intangible Assets |
Goodwill | ||||
Balance December 31, 2004 | $ | 63,145 | ||
Adjustments, net | 3,255 | |||
Impact of changes in foreign currency | (1,055 | ) | ||
Balance December 31, 2005 | $ | 65,345 | ||
December 31, 2005 | December 31, 2004 | |||||||||||||||
Accumulated | Accumulated | |||||||||||||||
Other Intangibles | Cost | Amortization | Cost | Amortization | ||||||||||||
Intangible assets not subject to amortization Tradenames and trademarks | $ | 16,080 | $ | — | $ | 16,080 | $ | — | ||||||||
Intangible assets subject to amortization: | ||||||||||||||||
Customer relationships | 27,802 | 2,515 | 27,802 | 193 | ||||||||||||
Product technology and patents | 5,122 | 690 | 5,122 | 53 | ||||||||||||
Impact of changes in foreign currency | (1,048 | ) | — | — | — | |||||||||||
Total intangible assets | $ | 47,956 | $ | 3,205 | $ | 49,004 | $ | 246 | ||||||||
F-14
Table of Contents
7. | Warranty Costs |
December 1, 2004 | Predecessor | ||||||||||||
Year-Ended | through | 11 Months Ended | |||||||||||
December 31, | December 31, | November 30, | |||||||||||
2005 | 2004 | 2004 | |||||||||||
Balance at beginning of period | $ | 1,528 | $ | 1,524 | $ | 1,300 | |||||||
Accrued warranty costs | 1,265 | 94 | 1,093 | ||||||||||
Payments and adjustments | (917 | ) | (90 | ) | (869 | ) | |||||||
Balance at end of period | $ | 1,876 | $ | 1,528 | $ | 1,524 | |||||||
8. | Income Taxes |
Predecessor (Note 1) | |||||||||||||||||
December 1, | 11 Months | ||||||||||||||||
2004 through | Ended | Year-Ended | |||||||||||||||
December 31, | December 31, | November 30, | December 31, | ||||||||||||||
2005 | 2004 | 2004 | 2003 | ||||||||||||||
Domestic | $ | 4,635 | $ | (6,337 | ) | $ | 9,125 | $ | (9,189 | ) | |||||||
Foreign | 3,726 | 354 | 3,302 | (1,775 | ) | ||||||||||||
$ | 8,361 | $ | (5,983 | ) | $ | 12,427 | $ | (10,964 | ) | ||||||||
Predecessor (Note 1) | |||||||||||||||||
December 1, | 11 Months | ||||||||||||||||
2004 through | Ended | Year-Ended | |||||||||||||||
December 31, | December 31, | November 30, | December 31, | ||||||||||||||
2005 | 2004 | 2004 | 2003 | ||||||||||||||
Current: | |||||||||||||||||
Federal | $ | 1,631 | $ | — | $ | 3,851 | $ | 434 | |||||||||
Foreign and State | 2,038 | 810 | 1,564 | 587 | |||||||||||||
3,669 | 810 | 5,415 | 1,021 | ||||||||||||||
Deferred: | |||||||||||||||||
Federal | 532 | (564 | ) | 98 | (1,707 | ) | |||||||||||
Foreign and state | (284 | ) | (467 | ) | 19 | (972 | ) | ||||||||||
248 | (1,031 | ) | 117 | (2,679 | ) | ||||||||||||
Provision (benefit) for income taxes | $ | 3,917 | $ | (221 | ) | $ | 5,532 | $ | (1,658 | ) | |||||||
F-15
Table of Contents
Predecessor (Note 1) | |||||||||||||||||
December 1, | 11 Months | ||||||||||||||||
2004 through | Ended | Year-Ended | |||||||||||||||
December 31, | December 31, | November 30, | December 31, | ||||||||||||||
2005 | 2004 | 2004 | 2003 | ||||||||||||||
Tax at U.S. federal income tax rate | $ | 2,926 | $ | (2,094 | ) | $ | 4,371 | $ | (3,749 | ) | |||||||
State taxes, net of federal income tax effect | 373 | (67 | ) | 366 | (209 | ) | |||||||||||
Effect of losses of domestic S corporation and partnership entities | — | — | — | (5,927 | ) | ||||||||||||
Valuation allowance | — | 2,011 | 895 | 7,153 | |||||||||||||
Foreign and other | 618 | (71 | ) | (100 | ) | 1,074 | |||||||||||
Provision (benefit) for income taxes | $ | 3,917 | $ | (221 | ) | $ | 5,532 | $ | (1,658 | ) | |||||||
2005 | 2004 | |||||||
Deferred tax assets: | ||||||||
Post-retirement obligations | $ | 12,050 | $ | 10,580 | ||||
Expenses not currently deductible | 8,657 | 8,575 | ||||||
Net operating loss carryover | 1,740 | 1,997 | ||||||
Other | 883 | 842 | ||||||
Total deferred tax assets | 23,330 | 21,994 | ||||||
Valuation allowance for deferred tax assets | (16,389 | ) | (18,374 | ) | ||||
Net deferred tax assets | 6,941 | 3,620 | ||||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment | 6,264 | 4,010 | ||||||
Intangible assets | 5,278 | 7,638 | ||||||
Other | 203 | 784 | ||||||
Total deferred tax liabilities | 11,745 | 12,432 | ||||||
Net deferred tax liabilities | $ | (4,804 | ) | $ | (8,812 | ) | ||
F-16
Table of Contents
9. | Pension and Other Employee Benefits |
F-17
Table of Contents
Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||||
From | Predecessor | From | Predecessor | |||||||||||||||||||||||
Inception | (Note 1) | Inception | (Note 1) | |||||||||||||||||||||||
(December 1, | 11 Months | (December 1, | 11 Months | |||||||||||||||||||||||
Year Ended | 2004) through | Ended | Year Ended | 2004) through | Ended | |||||||||||||||||||||
December 31, | December 31, | November 30, | December 31, | December 31, | November 30, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||
Change in benefit obligation: | ||||||||||||||||||||||||||
Obligation at beginning of period | $ | 24,706 | $ | — | $ | 149,338 | $ | 12,570 | $ | — | $ | 30,903 | ||||||||||||||
Benefit obligation assumed from Predecessor | — | 23,750 | — | — | 12,040 | — | ||||||||||||||||||||
Service cost | 591 | 35 | 530 | 295 | 30 | 269 | ||||||||||||||||||||
Interest cost | 1,362 | 112 | 8,352 | 549 | 59 | 1,654 | ||||||||||||||||||||
Amendments | 55 | — | 440 | (2,088 | ) | — | — | |||||||||||||||||||
Actuarial loss (gain) | 1,610 | 687 | 6,757 | (218 | ) | 441 | (2,199 | ) | ||||||||||||||||||
Foreign exchange effect | (424 | ) | 144 | 125 | — | — | — | |||||||||||||||||||
Benefits paid | 203 | (22 | ) | (10,541 | ) | 125 | — | (1,651 | ) | |||||||||||||||||
Obligation at end of period | $ | 27,697 | $ | 24,706 | $ | 155,001 | $ | 10,983 | $ | 12,570 | $ | 28,976 | ||||||||||||||
Change in plan assets: | ||||||||||||||||||||||||||
Fair value of plan assets, beginning of period | $ | 4,647 | $ | — | $ | 111,287 | $ | — | $ | — | $ | — | ||||||||||||||
Plan assets transferred from Predecessor | — | 4,647 | — | — | — | — | ||||||||||||||||||||
Actual return on plan assets | 309 | — | 3,979 | — | — | — | ||||||||||||||||||||
Employer contribution | 961 | 22 | 5,055 | — | — | 1,651 | ||||||||||||||||||||
Benefits paid | 85 | (22 | ) | (10,541 | ) | — | — | (1,651 | ) | |||||||||||||||||
Fair value of plan assets, end of period | $ | 5,832 | $ | 4,647 | $ | 109,780 | $ | — | $ | — | $ | — | ||||||||||||||
Funded status: | ||||||||||||||||||||||||||
Plan assets less than benefit obligation | $ | (21,865 | ) | $ | (20,059 | ) | $ | (45,221 | ) | $ | (10,983 | ) | $ | (12,570 | ) | $ | (28,976 | ) | ||||||||
Unrecognized actuarial loss | 2,390 | 722 | 58,494 | 162 | 367 | 1,666 | ||||||||||||||||||||
Unrecognized prior service cost | 49 | — | 223 | (1,679 | ) | — | (28 | ) | ||||||||||||||||||
(Accrued) prepaid cost | $ | (19,426 | ) | $ | (19,337 | ) | $ | 13,496 | $ | (12,500 | ) | $ | (12,203 | ) | $ | (27,338 | ) | |||||||||
Amounts recognized in the balance sheets consist of: | ||||||||||||||||||||||||||
Accrued benefit cost | $ | (21,865 | ) | $ | (20,059 | ) | $ | (45,343 | ) | $ | (12,500 | ) | $ | (12,203 | ) | $ | (27,338 | ) | ||||||||
Intangible asset | 49 | — | 223 | — | — | — | ||||||||||||||||||||
Accumulated other comprehensive income | 2,390 | 722 | 58,616 | — | — | — | ||||||||||||||||||||
Net amount recognized | $ | (19,426 | ) | $ | (19,337 | ) | $ | 13,496 | $ | (12,500 | ) | $ | (12,203 | ) | $ | (27,338 | ) | |||||||||
F-18
Table of Contents
Pension Benefits | Postretirement Benefits | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Weighted-average discount rate | 5.5 | % | 5.8 | % | 5.5 | % | 5.8 | % | ||||||||
Weighted-average rate of compensation increase | N/A | N/A | N/A | N/A |
Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||||||||||||
From | From | |||||||||||||||||||||||||||||||||
Inception | Inception | |||||||||||||||||||||||||||||||||
(December 1, | Predecessor (Note 1) ) | (December 1, | Predecessor (Note 1) | |||||||||||||||||||||||||||||||
2004) | 11 Months | 2004) | 11 Months | |||||||||||||||||||||||||||||||
Year Ended | through | Ended | Year-Ended | Year Ended | through | Ended | Year-Ended | |||||||||||||||||||||||||||
December 31, | December 31, | November 30, | December 31, | December 31, | December 31, | November 30, | December 31, | |||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2005 | 2004 | 2004 | 2003 | |||||||||||||||||||||||||||
Service cost | $ | 591 | $ | 35 | $ | 530 | $ | 650 | $ | 295 | $ | 30 | $ | 269 | $ | 390 | ||||||||||||||||||
Interest cost | 1,362 | 112 | 8,352 | 9,211 | 549 | 59 | 1,654 | 1,876 | ||||||||||||||||||||||||||
Recognized net actuarial loss | — | — | 2,783 | 23 | — | — | 183 | — | ||||||||||||||||||||||||||
Expected return on plan assets | 431 | (31 | ) | (9,747 | ) | (10,971 | ) | — | — | — | — | |||||||||||||||||||||||
Amortization | 72 | — | 14 | 1,266 | (423 | ) | — | (19 | ) | 232 | ||||||||||||||||||||||||
Net periodic benefit cost | $ | 1,594 | $ | 116 | $ | 1,932 | $ | 179 | $ | 421 | $ | 89 | $ | 2,087 | $ | 2,498 | ||||||||||||||||||
Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||||||||||||
From | From | |||||||||||||||||||||||||||||||||
Inception | Inception | |||||||||||||||||||||||||||||||||
(December 1, | Predecessor (Note 1) | (December 1, | Predecessor (Note 1) | |||||||||||||||||||||||||||||||
2004) | 11 Months | Year | 2004) | 11 Months | ||||||||||||||||||||||||||||||
Year Ended | through | Ended | Year-Ended | Ended | through | Ended | Year-Ended | |||||||||||||||||||||||||||
December 31, | December 31, | November 30, | December 31, | December 31, | December 31, | November 30, | December 31, | |||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2005 | 2004 | 2004 | 2003 | |||||||||||||||||||||||||||
Discount rate | 5.5 | % | 6.0 | % | 6.2 | % | 7.2 | % | 5.5 | % | 6.0 | % | 6.3 | % | 6.8 | % | ||||||||||||||||||
Expected return on plan assets | 8.5 | % | 8.5 | % | 8.5 | % | 9.0 | % | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Compensation rate increase | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
F-19
Table of Contents
1-Percentage- | 1-Percentage- | |||||||
Point | Point | |||||||
Increase | Decrease | |||||||
Effect on service and interest cost components for the period January 1, 2005 through December 31, 2005 | $ | 122 | $ | (101 | ) | |||
Effect on the December 31, 2005 post-retirement benefit obligation | 1,453 | (1,378 | ) |
Allocation Percentage of | ||||||||||||
Plan Assets at Year-End | ||||||||||||
Asset | 2005 | 2005 | 2004 | |||||||||
Category | Actual | Target | Actual | |||||||||
Equity securities | 67 | % | 65 | % | (i) | |||||||
Fixed income securities | 33 | % | 35 | % | (i) |
(i) | The assets for the Company’s funded retirement plan at the end of 2004 were held by the Predecessor, awaiting transfer. Once received, they were invested in a manner consistent with the 2005 target allocation. |
Pension | Postretirement | |||||||||||
Benefits | Benefits | |||||||||||
Expected benefit payments (from plan assets) | 2006 | 446 | 208 | |||||||||
2007 | 633 | 296 | ||||||||||
2008 | 818 | 394 | ||||||||||
2009 | 1,035 | 499 | ||||||||||
2010 | 1,212 | 618 | ||||||||||
2011-2015 | 8,577 | 4,203 |
F-20
Table of Contents
10. | Long-Term Debt |
F-21
Table of Contents
11. | Stockholder’s Equity |
F-22
Table of Contents
12. | Related-Party Transactions |
F-23
Table of Contents
13. | Concentrations of Credit, Business Risks and Workforce |
Net Sales | Property, Plant and | ||||||||||||||||||||||||
Predecessor (Note 1) | Equipment | ||||||||||||||||||||||||
December 1, | 11 Months | ||||||||||||||||||||||||
Year-Ended | 2004 through | Ended | Year-Ended | ||||||||||||||||||||||
December 31, | December 31, | November 30, | December 31, | December 31, | December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2005 | 2004 | ||||||||||||||||||||
North America (primarily U.S.) | $ | 288,883 | $ | 23,071 | $ | 207,731 | $ | 198,244 | $ | 47,587 | $ | 47,284 | |||||||||||||
Europe | 59,176 | 4,632 | 54,141 | 54,672 | 16,968 | 18,760 | |||||||||||||||||||
Asia and other | 15,406 | 922 | 13,165 | 13,947 | 1,838 | 1,962 | |||||||||||||||||||
Total | $ | 363,465 | $ | 28,625 | $ | 275,037 | $ | 266,863 | $ | 66,393 | $ | 68,006 | |||||||||||||
F-24
Table of Contents
14. | Predecessor Restructuring, Asset Impairment and Transition Expenses |
11 Months Ended | Year-Ended | |||||||
November 30, | December 31, | |||||||
2004 | 2003 | |||||||
Accrued restructuring charge | $ | — | $ | — | ||||
Impairment or loss on sale of fixed assets | 306 | 2,011 | ||||||
Period cost transition expenses | 641 | 9,074 | ||||||
$ | 947 | $ | 11,085 | |||||
F-25
Table of Contents
11 Months | ||||||||
Ended | ||||||||
November 30, | December 31, | |||||||
2004 | 2003 | |||||||
United States programs: | ||||||||
Speed reducer product line consolidation | $ | — | $ | 2,011 | ||||
Electronic clutch brake consolidation | 306 | — | ||||||
Total United States programs | $ | 306 | $ | 2,011 | ||||
Total non-cash asset impairment and loss on sale of assets | $ | 306 | $ | 2,011 | ||||
F-26
Table of Contents
11 Months | ||||||||
Ended | ||||||||
November 30, | December 31, | |||||||
2004 | 2003 | |||||||
United States programs: | ||||||||
Speed reducer product line consolidation | $ | — | $ | 3,516 | ||||
Electronic clutch brake consolidation | 641 | 2,203 | ||||||
Sprag clutch consolidation | — | 24 | ||||||
Heavy duty clutch consolidation | — | 516 | ||||||
Administrative streamlining | — | 592 | ||||||
Total United States programs | $ | 641 | $ | 6,851 | ||||
Europe and Asia electronic clutch brake consolidation | — | 2,223 | ||||||
Total transition expense | $ | 641 | $ | 9,074 | ||||
11 Months | ||||||||
Ended | ||||||||
November 30, | December 31, | |||||||
2004 | 2003 | |||||||
Training | $ | — | $ | 914 | ||||
Relocation | — | 959 | ||||||
Moving costs | — | 3,485 | ||||||
Severance | — | 767 | ||||||
Duplicate employees | — | 1,689 | ||||||
ERP system integration | — | 477 | ||||||
Other | 641 | 783 | ||||||
Total transition expense | $ | 641 | $ | 9,074 | ||||
Combined, | ||||||||||||
Period from | ||||||||||||
11 Months | January 1, 2003 | |||||||||||
Ended | Year Ended | through | ||||||||||
November 30, | December 31, | November 30, | ||||||||||
2004 | 2003 | 2004 | ||||||||||
United States programs: | ||||||||||||
Speed reducer product line consolidation | $ | 331 | $ | 583 | $ | 914 | ||||||
Electronic clutch brake consolidation | 711 | 908 | 1,619 | |||||||||
Sprag clutch consolidation | 89 | 103 | 192 | |||||||||
Heavy duty clutch consolidation | 158 | 416 | 574 | |||||||||
Administrative streamlining | 8 | 284 | 292 | |||||||||
Total United States programs | $ | 1,297 | $ | 2,294 | $ | 3,591 | ||||||
Europe and Asia electronic clutch brake consolidation | 288 | 2,553 | 2,841 | |||||||||
Cash charged against the restructuring reserve | $ | 1,585 | $ | 4,847 | $ | 6,432 | ||||||
Transition expense | 641 | 9,074 | 9,715 | |||||||||
Total cash utilized | $ | 2,226 | $ | 13,921 | $ | 16,147 | ||||||
F-27
Table of Contents
11 Months Ended | ||||
November 30, | ||||
2004 | ||||
Balance at beginning of period | $ | 1,606 | ||
Cash payments | (1,585 | ) | ||
Balance at end of period | $ | 21 | ||
15. | Commitments and Contingencies |
Operating | Capital | |||||||
Year Ending December 31: | Leases | Leases | ||||||
2006 | $ | 2,709 | $ | 211 | ||||
2007 | 2,269 | 166 | ||||||
2008 | 1,396 | 6 | ||||||
2009 | 680 | — | ||||||
2010 | 513 | — | ||||||
Thereafter | 1,464 | — | ||||||
Total lease obligations | $ | 9,031 | 383 | |||||
Less amounts representing interest | (44 | ) | ||||||
Present value of minimum capital lease obligations | $ | 339 | ||||||
F-28
Table of Contents
16. | Guarantor Subsidiaries |
F-29
Table of Contents
December 31, 2005
December 31, 2005 | ||||||||||||||||||||
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 8,819 | $ | (2,713 | ) | $ | 3,954 | $ | — | $ | 10,060 | |||||||||
Trade receivables, less allowance for doubtful accounts | — | 32,892 | 13,549 | — | 46,441 | |||||||||||||||
Loan receivable from related parties | — | 34,306 | 4,301 | (38,607 | ) | — | ||||||||||||||
Inventories, less allowances for obsolete materials | — | 43,562 | 11,092 | — | 54,654 | |||||||||||||||
Deferred income taxes | — | 2,652 | 127 | — | 2,779 | |||||||||||||||
Prepaid expenses and other | 25 | 934 | 1,014 | — | 1,973 | |||||||||||||||
Total current assets | 8,844 | 111,633 | 34,037 | (38,607 | ) | 115,907 | ||||||||||||||
Property, plant and equipment, net | — | 45,405 | 20,988 | — | 66,393 | |||||||||||||||
Intangible assets, net | — | 36,729 | 8,022 | — | 44,751 | |||||||||||||||
Goodwill | — | 53,784 | 11,561 | — | 65,345 | |||||||||||||||
Other assets | 4,804 | 167 | 37 | — | 5,008 | |||||||||||||||
Investments in subsidiaries | 225,974 | — | — | (225,974 | ) | — | ||||||||||||||
$ | 239,622 | $ | 247,718 | $ | 74,645 | $ | (264,581 | ) | $ | 297,404 | ||||||||||
Liabilities and stockholder’s (deficit) equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 44 | $ | 21,931 | $ | 8,749 | $ | — | $ | 30,724 | ||||||||||
Accrued payroll | — | 12,487 | 3,529 | — | 16,016 | |||||||||||||||
Accruals and other current liabilities | 2,937 | 10,384 | 2,918 | — | 16,239 | |||||||||||||||
Deferred income taxes | — | — | 33 | — | 33 | |||||||||||||||
Current portion of long-term debt | — | 186 | — | — | 186 | |||||||||||||||
Loans payable from related parties | 38,607 | — | — | (38,607 | ) | — | ||||||||||||||
Total current liabilities | 41,588 | 44,988 | 15,229 | (38,607 | ) | 63,198 | ||||||||||||||
Long-term debt, less current portion | 159,421 | 153 | — | — | 159,574 | |||||||||||||||
Deferred income taxes | — | 1,719 | 5,831 | — | 7,550 | |||||||||||||||
Pension liabilities | — | 11,505 | 2,863 | — | 14,368 | |||||||||||||||
Other post-retirement benefits | — | 12,500 | — | — | 12,500 | |||||||||||||||
Other long-term liabilities | — | 107 | 1,494 | — | 1,601 | |||||||||||||||
Total liabilities | 201,009 | 70,972 | 25,417 | (38,607 | ) | 258,791 | ||||||||||||||
Total stockholder’s equity | 38,613 | 176,746 | 49,228 | (225,974 | ) | 38,613 | ||||||||||||||
$ | 239,622 | $ | 247,718 | $ | 74,645 | $ | (264,581 | ) | $ | 297,404 | ||||||||||
F-30
Table of Contents
December 31, 2004
December 31, 2004 | ||||||||||||||||||||
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 2,219 | $ | (1,913 | ) | $ | 4,423 | $ | — | $ | 4,729 | |||||||||
Trade receivables, less allowance for doubtful accounts | — | 31,412 | 14,557 | — | 45,969 | |||||||||||||||
Loan receivable from related parties | — | 11,392 | 912 | (12,304 | ) | — | ||||||||||||||
Inventories, less allowances for obsolete materials | — | 41,938 | 14,794 | — | 56,732 | |||||||||||||||
Deferred income taxes | — | 1,015 | 130 | — | 1,145 | |||||||||||||||
Prepaid expenses and other | — | 3,660 | 1,132 | — | 4,792 | |||||||||||||||
Total current assets | 2,219 | 87,504 | 35,948 | (12,304 | ) | 113,367 | ||||||||||||||
Property, plant and equipment, net | — | 47,284 | 20,722 | — | 68,006 | |||||||||||||||
Intangible assets, net | — | 38,990 | 9,768 | — | 48,758 | |||||||||||||||
Goodwill | — | 49,310 | 13,835 | — | 63,145 | |||||||||||||||
Other assets | 3,341 | 147 | 2,287 | — | 5,775 | |||||||||||||||
Investments in subsidiaries | 204,639 | — | — | (204,639 | ) | — | ||||||||||||||
$ | 210,199 | $ | 223,235 | $ | 82,560 | $ | (216,943 | ) | $ | 299,051 | ||||||||||
Liabilities and (deficit) equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 20,968 | $ | 7,819 | $ | — | $ | 28,787 | ||||||||||
Accrued payroll | 733 | 6,962 | 3,966 | — | 11,661 | |||||||||||||||
Accruals and other current liabilities | 3,130 | 9,958 | 1,289 | — | 14,377 | |||||||||||||||
Deferred income taxes | — | — | 129 | — | 129 | |||||||||||||||
Current portion of long-term debt | — | 247 | 666 | — | 913 | |||||||||||||||
Affiliate debt | 4,978 | (4,014 | ) | 11,340 | (12,304 | ) | — | |||||||||||||
Total current liabilities | 8,841 | 34,121 | 25,209 | (12,304 | ) | 55,867 | ||||||||||||||
Long-term debt, less current portion | 158,479 | 261 | — | — | 158,740 | |||||||||||||||
Deferred income taxes | — | 2,474 | 7,354 | — | 9,828 | |||||||||||||||
Pension liabilities | — | 16,301 | 3,233 | — | 19,534 | |||||||||||||||
Other post-retirement benefits | — | 12,203 | — | — | 12,203 | |||||||||||||||
Total liabilities | 167,320 | 65,360 | 35,796 | (12,304 | ) | 256,172 | ||||||||||||||
Total stockholder’s equity | 42,879 | 157,875 | 46,764 | (204,639 | ) | 42,879 | ||||||||||||||
$ | 210,199 | $ | 223,235 | $ | 82,560 | $ | (216,943 | ) | $ | 299,051 | ||||||||||
F-31
Table of Contents
Year ended December 31, 2005
Year Ended December 31, 2005 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 279,292 | $ | 93,201 | $ | (9,028 | ) | $ | 363,465 | |||||||||
Cost of sales | — | 211,898 | 69,082 | (9,028 | ) | 271,952 | ||||||||||||||
Gross (loss) profit | — | 67,394 | 24,119 | — | 91,513 | |||||||||||||||
Selling, general and administrative expenses | — | 43,729 | 17,692 | — | 61,421 | |||||||||||||||
Research and development expenses | — | 2,478 | 2,205 | — | 4,683 | |||||||||||||||
Income from operations | — | 21,187 | 4,222 | — | 25,409 | |||||||||||||||
Interest expense (income) | 16,908 | (339 | ) | 496 | — | 17,065 | ||||||||||||||
Other non-operating expense (income) | (17 | ) | — | — | — | (17 | ) | |||||||||||||
Equity in earnings of subsidiaries | 21,335 | — | — | (21,335 | ) | — | ||||||||||||||
Income (loss) before income taxes | 4,444 | 21,526 | 3,726 | (21,335 | ) | 8,361 | ||||||||||||||
Provision for income taxes | — | 2,655 | 1,262 | — | 3,917 | |||||||||||||||
Net (loss) income | $ | 4,444 | $ | 18,871 | $ | 2,464 | $ | (21,335 | ) | $ | 4,444 | |||||||||
Period from Inception (December 1, 2004) through December 31, 2004
Period from Inception (December 1, 2004) to December 31, 2004 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 22,591 | $ | 6,850 | $ | (816 | ) | $ | 28,625 | |||||||||
Cost of sales | — | 19,115 | 5,548 | (816 | ) | 23,847 | ||||||||||||||
Gross (loss) profit | — | 3,476 | 1,302 | — | 4,778 | |||||||||||||||
Selling, general and administrative | ||||||||||||||||||||
Expenses | 4,855 | 3,480 | 638 | — | 8,973 | |||||||||||||||
Research and development expenses | — | 176 | 202 | — | 378 | |||||||||||||||
(Loss) income from operations | (4,855 | ) | (180 | ) | 462 | — | (4,573 | ) | ||||||||||||
Interest expense (income) | 1,384 | (82 | ) | 108 | — | 1,410 | ||||||||||||||
Equity in earnings of subsidiaries | 256 | — | — | (256 | ) | — | ||||||||||||||
Income (loss) before income taxes | (5,983 | ) | (98 | ) | 354 | (256 | ) | (5,983 | ) | |||||||||||
(Benefit) provision for income taxes | (221 | ) | — | — | — | (221 | ) | |||||||||||||
Net (loss) income | $ | (5,762 | ) | $ | (98 | ) | $ | 354 | $ | (256 | ) | $ | (5,762 | ) | ||||||
F-32
Table of Contents
Period from January 1, 2004 through November 30, 2004
Predecessor (Note 1) | ||||||||||||||||
Period from January 1, 2004 to November 30, 2004 | ||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | Consolidated | |||||||||||||
Net sales | $ | 212,005 | $ | 72,402 | $ | (9,370 | ) | $ | 275,037 | |||||||
Cost of sales | 166,989 | 51,634 | (9,370 | ) | 209,253 | |||||||||||
Gross profit | 45,016 | 20,768 | — | 65,784 | ||||||||||||
Selling, general and administrative expenses | 31,538 | 13,783 | — | 45,321 | ||||||||||||
Research and development expenses | 1,972 | 1,975 | — | 3,947 | ||||||||||||
Gain on sale of assets | (1,300 | ) | — | — | (1,300 | ) | ||||||||||
Restructuring charge, asset impairment and transition expenses | 947 | — | — | 947 | ||||||||||||
Income from operations | 11,859 | 5,010 | — | 16,869 | ||||||||||||
Interest expense | 2,751 | 1,543 | — | 4,294 | ||||||||||||
Other non-operating expense (income) | (17 | ) | 165 | — | 148 | |||||||||||
Equity in income of subsidiaries | 1,742 | — | (1,742 | ) | — | |||||||||||
Income before income taxes | 10,867 | 3,302 | (1,742 | ) | 12,427 | |||||||||||
Provision for income taxes | 3,972 | 1,560 | — | 5,532 | ||||||||||||
Net income | $ | 6,895 | $ | 1,742 | $ | (1,742 | ) | $ | 6,895 | |||||||
Year ended December 31, 2003
Predecessor (Note 1) | ||||||||||||||||
Year ended December 31, 2003 | ||||||||||||||||
Guarantor | Non-Guarantor | Eliminations | Consolidated | |||||||||||||
Net sales | $ | 204,983 | $ | 71,798 | $ | (9,918 | ) | $ | 266,863 | |||||||
Cost of sales | 164,493 | 53,366 | (9,918 | ) | 207,941 | |||||||||||
Gross profit | 40,490 | 18,432 | — | 58,922 | ||||||||||||
Selling, general and administrative expenses | 34,860 | 14,653 | — | 49,513 | ||||||||||||
Research and development expenses | 1,840 | 1,615 | — | 3,455 | ||||||||||||
Restructuring charge, asset impairment and transition expenses | 8,928 | 2,157 | — | 11,085 | ||||||||||||
Income (loss) from operations | (5,138 | ) | 7 | — | (5,131 | ) | ||||||||||
Interest expense | 3,570 | 1,798 | — | 5,368 | ||||||||||||
Loss (gain) on sale of assets and other non-operating expense (income) | 481 | (16 | ) | — | 465 | |||||||||||
Equity in loss of subsidiaries | (2,349 | ) | — | 2,349 | — | |||||||||||
Income (loss) before income taxes | (11,538 | ) | (1,775 | ) | 2,349 | (10,964 | ) | |||||||||
Provision (benefit) for income taxes | (2,232 | ) | 574 | — | (1,658 | ) | ||||||||||
Net loss | $ | (9,306 | ) | $ | (2,349 | ) | $ | 2,349 | $ | (9,306 | ) | |||||
F-33
Table of Contents
Year ended December 31, 2005
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | 4,444 | $ | 18,871 | $ | 2,464 | $ | (21,335 | ) | $ | 4,444 | |||||||||
Undistributed equity in earnings of subsidiaries | (21,335 | ) | — | — | 21,335 | — | ||||||||||||||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||||||||||
Depreciation | — | 5,845 | 2,729 | — | 8,574 | |||||||||||||||
Amortization of intangible assets | — | 2,261 | 698 | — | 2,959 | |||||||||||||||
Amortization and write-off of deferred loan costs | 621 | — | — | — | 621 | |||||||||||||||
Accretion of debt discount | 942 | — | — | — | 942 | |||||||||||||||
Amortization of inventory fair value adjustment | — | 1,270 | 429 | — | 1,699 | |||||||||||||||
Gain on sale of fixed assets | — | — | (99 | ) | — | (99 | ) | |||||||||||||
Provision for deferred taxes | — | 568 | (320 | ) | — | 248 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Trade receivables | — | (1,608 | ) | (1,046 | ) | — | (2,654 | ) | ||||||||||||
Inventories | — | (2,894 | ) | 1,541 | — | (1,353 | ) | |||||||||||||
Accounts payable and accrued liabilities | (882 | ) | (6,632 | ) | 5,682 | — | (1,832 | ) | ||||||||||||
Other current assets and liabilities | (26 | ) | 2,727 | 475 | — | 2,226 | ||||||||||||||
Other operating assets and liabilities | (1,746 | ) | 87 | (281 | ) | — | (1,940 | ) | ||||||||||||
Net cash provided by (used in) continuing operating activities | (17,982 | ) | 20,495 | 11,322 | — | 13,835 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases of fixed assets | — | (4,099 | ) | (2,100 | ) | — | (6,199 | ) | ||||||||||||
Acquisitions, net of cash acquired | — | 1,607 | — | — | 1,607 | |||||||||||||||
Payment of additional Kilian purchase price | — | (730 | ) | — | — | (730 | ) | |||||||||||||
Proceeds from sale of fixed assets | — | 20 | 105 | — | 125 | |||||||||||||||
Net cash used in investing activities | — | (3,202 | ) | (1,995 | ) | — | (5,197 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Payment of debt issuance costs | (338 | ) | — | — | — | (338 | ) | |||||||||||||
Payment on behalf of parent company | (1,610 | ) | — | — | — | (1,610 | ) | |||||||||||||
Borrowings under revolving credit agreements | 4,408 | — | — | — | 4,408 | |||||||||||||||
Payments on revolving credit agreements | (4,408 | ) | — | — | — | (4,408 | ) | |||||||||||||
Payment of capital leases | — | (169 | ) | (666 | ) | — | (835 | ) | ||||||||||||
Change in affiliated debt | 26,530 | (17,924 | ) | (8,606 | ) | — | — | |||||||||||||
Net cash (used in) provided by financing activities | 24,582 | (18,093 | ) | (9,272 | ) | — | (2,783 | ) | ||||||||||||
Effect of exchange rates on cash | — | — | (524 | ) | — | (524 | ) | |||||||||||||
Increase (decrease) in cash and cash equivalents | 6,600 | (800 | ) | (469 | ) | — | 5,331 | |||||||||||||
Cash and cash equivalents, beginning of the period | 2,219 | (1,913 | ) | 4,423 | — | 4,729 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 8,819 | $ | (2,713 | ) | $ | 3,954 | $ | — | $ | 10,060 | |||||||||
F-34
Table of Contents
Period from Inception (December 1, 2004) through December 31, 2004
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | (5,762 | ) | $ | (98 | ) | $ | 354 | $ | (256 | ) | $ | (5,762 | ) | ||||||
Undistributed equity in earnings of subsidiaries | (256 | ) | — | — | 256 | — | ||||||||||||||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||||||||||
Depreciation | — | 551 | 122 | — | 673 | |||||||||||||||
Amortization of intangible assets | — | 196 | 50 | — | 246 | |||||||||||||||
Amortization and write-off of deferred loan costs | 49 | — | — | — | 49 | |||||||||||||||
Accretion of debt discount | 79 | — | — | — | 79 | |||||||||||||||
Amortization of inventory fair value adjustment | — | 1,270 | 429 | — | 1,699 | |||||||||||||||
Provision (benefit) for deferred taxes | — | (1,031 | ) | — | — | (1,031 | ) | |||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Trade receivables | — | (1,403 | ) | 1,079 | — | (324 | ) | |||||||||||||
Inventories | — | 994 | (1,406 | ) | — | (412 | ) | |||||||||||||
Accounts payable and accrued liabilities | 1,900 | 8,899 | (1,326 | ) | — | 9,473 | ||||||||||||||
Other current assets and liabilities | — | (2,222 | ) | 96 | — | (2,126 | ) | |||||||||||||
Other operating assets and liabilities | 3,357 | (356 | ) | 58 | — | 3,059 | ||||||||||||||
Net cash provided by (used in) continuing operating activities | (633 | ) | 6,800 | (544 | ) | — | 5,623 | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases of fixed assets | — | (243 | ) | (46 | ) | — | (289 | ) | ||||||||||||
Acquisitions, net of cash acquired | (182,479 | ) | (1,949 | ) | 4,316 | — | (180,112 | ) | ||||||||||||
Sale of fixed assets | — | — | — | — | — | |||||||||||||||
Net cash used in investing activities | (182,479 | ) | (2,192 | ) | 4,270 | — | (180,401 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Contributed capital | 39,994 | — | — | — | 39,994 | |||||||||||||||
Proceeds from issuance of senior subordinated notes | 158,400 | — | — | — | 158,400 | |||||||||||||||
Payment of debt acquired in acquisitions | (12,178 | ) | — | — | — | (12,178 | ) | |||||||||||||
Payment of debt issuance costs | (6,747 | ) | — | — | — | (6,747 | ) | |||||||||||||
Payment of capital leases | — | (37 | ) | — | — | (37 | ) | |||||||||||||
Borrowings under revolving credit agreements | 4,988 | — | — | — | 4,988 | |||||||||||||||
Payments on revolving credit agreements | (4,988 | ) | — | — | — | (4,988 | ) | |||||||||||||
Change in affiliated debt | 5,862 | (6,484 | ) | 622 | — | — | ||||||||||||||
Net cash (used in) provided by financing activities | 185,331 | (6,521 | ) | 622 | — | 179,432 | ||||||||||||||
Effect of exchange rates on cash | — | — | 75 | — | 75 | |||||||||||||||
Increase (decrease) in cash and cash equivalents | 2,219 | (1,913 | ) | 4,423 | — | 4,729 | ||||||||||||||
Cash and cash equivalents, beginning of the period | — | — | — | — | — | |||||||||||||||
Cash and cash equivalents, end of period | $ | 2,219 | $ | (1,913 | ) | $ | 4,423 | $ | — | $ | 4,729 | |||||||||
F-35
Table of Contents
Period from January 1, 2004 through November 30, 2004
Non- | ||||||||||||||||
Guarantor | Guarantor | Eliminations | Consolidated | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | 6,895 | $ | 1,742 | $ | (1,742 | ) | $ | 6,895 | |||||||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||||||
Depreciation | 5,038 | 1,036 | — | 6,074 | ||||||||||||
Impairments, (gains) losses on fixed assets | (1,300 | ) | — | — | (1,300 | ) | ||||||||||
Provision (benefit) for deferred taxes | 102 | 15 | — | 117 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade receivables | (492 | ) | (3,705 | ) | — | (4,197 | ) | |||||||||
Inventories | (2,610 | ) | (3,808 | ) | — | (6,418 | ) | |||||||||
Accounts payable and accrued liabilities | 4,825 | (1,091 | ) | — | 3,734 | |||||||||||
Other current assets and liabilities | 2,883 | (1,406 | ) | — | 1,477 | |||||||||||
Other operating assets and liabilities | (2,794 | ) | 16 | — | (2,778 | ) | ||||||||||
Net cash provided by (used in) operating activities | 12,547 | (7,201 | ) | (1,742 | ) | 3,604 | ||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of fixed assets | (2,533 | ) | (956 | ) | — | (3,489 | ) | |||||||||
Sale of fixed assets | 4,442 | — | — | 4,442 | ||||||||||||
Net cash provided by (used in) investing activities | 1,909 | (956 | ) | — | 953 | |||||||||||
Cash flows from financing activities: | ||||||||||||||||
Change in affiliated debt | (13,697 | ) | (921 | ) | — | (14,618 | ) | |||||||||
(Distribution to) contribution from affiliates | 2,019 | 4,161 | 1,742 | 7,922 | ||||||||||||
Net cash (used in) provided by financing activities | (11,678 | ) | 3,334 | 1,742 | (6,602 | ) | ||||||||||
Effect of exchange rates on cash | — | 159 | — | 159 | ||||||||||||
Increase (decrease) in cash and cash equivalents | 2,778 | (4,758 | ) | — | (1,980 | ) | ||||||||||
Cash and cash equivalents, beginning of the period | (125 | ) | 3,288 | — | 3,163 | |||||||||||
Cash and cash equivalents, end of period | $ | 2,653 | $ | (1,470 | ) | $ | — | $ | 1,183 | |||||||
F-36
Table of Contents
Year ended December 31, 2003
Predecessor (Note 1) | ||||||||||||||||
Year Ended December 31, 2003 | ||||||||||||||||
Non- | ||||||||||||||||
Guarantor | Guarantor | Eliminations | Consolidated | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net (loss) income | $ | (9,306 | ) | $ | (2,349 | ) | $ | 2,349 | $ | (9,306 | ) | |||||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 7,396 | 1,257 | — | 8,653 | ||||||||||||
Amortization and write-off of deferred loan costs | 587 | — | — | 587 | ||||||||||||
Impairment or loss on fixed assets | 2,126 | — | — | 2,126 | ||||||||||||
Provision for deferred taxes | (2,480 | ) | (199 | ) | — | (2,679 | ) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade receivables | (1,082 | ) | 504 | — | (578 | ) | ||||||||||
Inventories | (2,471 | ) | 239 | — | (2,232 | ) | ||||||||||
Accounts payable and accrued liabilities | (12,197 | ) | (1,645 | ) | — | (13,842 | ) | |||||||||
Other current assets and liabilities | (903 | ) | 458 | — | (445 | ) | ||||||||||
Other operating assets and liabilities | 3,646 | (219 | ) | — | 3,427 | |||||||||||
Net cash (used in) provided by operating activities | (14,684 | ) | (1,954 | ) | 2,349 | (14,289 | ) | |||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of fixed assets | (4,381 | ) | (913 | ) | — | (5,294 | ) | |||||||||
Sale of fixed assets | 3,721 | — | — | 3,721 | ||||||||||||
Net cash used in investing activities | (660 | ) | (913 | ) | — | (1,573 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Change in debt | (51,668 | ) | (12,574 | ) | — | (64,242 | ) | |||||||||
Change in affiliate debt | 52,132 | 18,471 | — | 70,603 | ||||||||||||
Contributed capital | 5,000 | — | — | 5,000 | ||||||||||||
Contribution from (Distribution to) affiliates | 7,304 | (3,570 | ) | (2,349 | ) | 1,385 | ||||||||||
Net cash (used in) provided by financing activities | 12,768 | 2,327 | (2,349 | ) | 12,746 | |||||||||||
Effect of exchange rates on cash | — | 1,065 | — | 1,065 | ||||||||||||
Increase (decrease) in cash and cash equivalents | (2,576 | ) | 525 | — | (2,051 | ) | ||||||||||
Cash and cash equivalents, beginning of year | 2,451 | 2,763 | — | 5,214 | ||||||||||||
Cash and cash equivalents, end of year | $ | (125 | ) | $ | 3,288 | $ | — | $ | 3,163 | |||||||
F-37
Table of Contents
17. | Unaudited Quarterly Results of Operations (in thousands): |
Fourth | Third | Second | First | |||||||||||||
Net Sales | $ | 90,205 | $ | 85,056 | $ | 92,902 | $ | 95,302 | ||||||||
Gross Profit | 25,075 | 21,396 | 23,162 | 21,880 | ||||||||||||
Net income | 2,012 | 414 | 1,822 | 196 |
Period from | Predecessor (Note 1) | ||||||||||||||||||||
Inception | Period from | ||||||||||||||||||||
(December 1) | October 1, 2004 | ||||||||||||||||||||
to | to | ||||||||||||||||||||
December 31, | November 30, | ||||||||||||||||||||
2004 | 2004 | Third | Second | First | |||||||||||||||||
Net Sales | $ | 28,625 | $ | 46,770 | $ | 72,413 | $ | 77,963 | $ | 77,891 | |||||||||||
Gross Profit | 4,778 | 10,088 | 17,838 | 18,459 | 19,399 | ||||||||||||||||
Net income (loss) | (5,762 | ) | 843 | (1,241 | ) | 2,516 | 4,777 | ||||||||||||||
18. | Subsequent Event (Unaudited) |
F-38
Table of Contents
Total purchase price, including closing costs of approximately $1.7 million | $ | 50,981 | ||
Cash and cash equivalents | 441 | |||
Trade receivables | 11,668 | |||
Inventories | 16,989 | |||
Prepaid expenses and other | 1,442 | |||
Property, plant and equipment | 10,509 | |||
Intangible assets | 15,900 | |||
Total assets acquired | 56,949 | |||
Accounts payable, accrued payroll, and accruals and other current liabilities | 11,862 | |||
Other liabilities | 5,647 | |||
Total liabilities assumed | 17,509 | |||
Net assets acquired | 39,440 | |||
Excess purchase price over the fair value of net assets acquired | $ | 11,541 | ||
Customer relationships | $ | 9,064 | ||
Product technology and patents | 1,589 | |||
Total intangible assets subject to amortization | 10,653 | |||
Trade names and trademarks, not subject to amortization | 5,246 | |||
Total intangible assets | $ | 15,900 | ||
F-39
Table of Contents
March 31, | December 31, | |||||||
2006 | 2005 | |||||||
(Unaudited) | ||||||||
Dollars in thousands | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,322 | $ | 10,060 | ||||
Trade receivables, less allowance for doubtful accounts of $2,114 and $1,797 | 68,535 | 46,441 | ||||||
Inventories, less allowance for obsolete materials of $9,697 and $6,843 | 72,524 | 54,654 | ||||||
Deferred income taxes | 2,499 | 2,779 | ||||||
Prepaid expenses and other current assets | 4,965 | 1,973 | ||||||
Total current assets | 153,845 | 115,907 | ||||||
Property, plant and equipment, net | 73,243 | 66,393 | ||||||
Intangible assets, net | 60,045 | 44,751 | ||||||
Goodwill | 76,838 | 65,345 | ||||||
Other assets, net | 5,841 | 5,008 | ||||||
Total assets | $ | 369,812 | $ | 297,404 | ||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 37,881 | $ | 30,724 | ||||
Accrued payroll | 16,719 | 16,016 | ||||||
Accruals and other liabilities | 22,329 | 16,239 | ||||||
Deferred income taxes | 188 | 33 | ||||||
Current portion of capital leases and short term bank borrowings | 3,651 | 186 | ||||||
Total current liabilities | 80,768 | 63,198 | ||||||
Long-term debt, less current portion and net of unaccreted discount | 218,234 | 159,574 | ||||||
Deferred income taxes | 9,011 | 7,550 | ||||||
Pension liabilities | 14,731 | 14,368 | ||||||
Other post retirement benefits | 12,650 | 12,500 | ||||||
Other long term liabilities | 1,594 | 1,601 | ||||||
Commitments and Contingencies | — | — | ||||||
Stockholder’s equity: | ||||||||
Common stock (1,000 shares authorized, issued & outstanding, $0.001 par value) | — | — | ||||||
Additional paid-in capital | 48,814 | 48,814 | ||||||
Due from Parent | (11,955 | ) | (1,610 | ) | ||||
Retained earnings (deficit) | 2,766 | (1,318 | ) | |||||
Cumulative foreign currency translation adjustment | (5,379 | ) | (5,851 | ) | ||||
Minimum pension liability | (1,422 | ) | (1,422 | ) | ||||
Total stockholder’s equity | 32,824 | 38,613 | ||||||
Total liabilities and stockholder’s equity | $ | 369,812 | $ | 297,404 | ||||
F-40
Table of Contents
Three Months Ended | ||||||||
March 31, | April 1, | |||||||
2006 | 2005 | |||||||
(Unaudited) | (Unaudited) | |||||||
Dollars in thousands | ||||||||
Net sales | $ | 114,784 | $ | 95,302 | ||||
Cost of sales | 82,930 | 73,402 | ||||||
Gross profit | 31,854 | 21,900 | ||||||
Selling, general and administrative expenses | 18,727 | 15,727 | ||||||
Research and development expenses | 1,204 | 1,196 | ||||||
Income from operations | 11,923 | 4,977 | ||||||
Interest expense, net | 5,176 | 4,262 | ||||||
Other non-operating income, net | (159 | ) | — | |||||
Income before income taxes | 6,906 | 715 | ||||||
Provision for income taxes | 2,822 | 314 | ||||||
Net income | 4,084 | 401 | ||||||
Other comprehensive income (loss), net of income taxes: | ||||||||
Foreign currency translation adjustment | 472 | (793 | ) | |||||
Other comprehensive income (loss) | 472 | (793 | ) | |||||
Comprehensive income (loss) | $ | 4,556 | $ | (392 | ) | |||
F-41
Table of Contents
Three Months Ended | ||||||||
March 31, | April 1, | |||||||
2006 | 2005 | |||||||
(Unaudited) | (Unaudited) | |||||||
Dollars in thousands | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 4,084 | $ | 401 | ||||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||||||
Depreciation | 2,200 | 2,021 | ||||||
Amortization of intangible assets | 745 | 740 | ||||||
Amortization of deferred loan costs | 178 | 160 | ||||||
Accretion of debt discount | 237 | 237 | ||||||
Amortization of inventory fair value adjustment | 984 | 1,699 | ||||||
Gains on sale of fixed assets | (6 | ) | (15 | ) | ||||
Provision for deferred taxes | 1,094 | 231 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade receivables | (9,040 | ) | (5,643 | ) | ||||
Inventories | (2,309 | ) | (1,570 | ) | ||||
Accounts payable and accrued liabilities | 3,282 | 1,249 | ||||||
Other current assets and liabilities | 1,030 | (2,802 | ) | |||||
Other operating assets and liabilities | (832 | ) | (570 | ) | ||||
Net cash provided by (used in) operating activities | 1,647 | (3,862 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchases of fixed assets | (1,245 | ) | (951 | ) | ||||
Sales of fixed assets | — | 15 | ||||||
Payment of additional Kilian purchase price | — | (730 | ) | |||||
Acquisitions, net of $441 of cash acquired | (50,540 | ) | — | |||||
Net cash used in investing activities | (51,785 | ) | (1,666 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of senior notes | 57,625 | — | ||||||
Payment of debt issuance costs | (1,833 | ) | — | |||||
Payments made on behalf of Parent company | (10,410 | ) | (801 | ) | ||||
Borrowings under revolving credit agreement | 5,057 | 4,164 | ||||||
Payments on revolving credit agreement | (5,057 | ) | — | |||||
Payment of capital leases | (57 | ) | (60 | ) | ||||
Net cash provided by financing activities | 45,325 | 3,303 | ||||||
Effect of exchange rates on cash | 75 | (115 | ) | |||||
Decrease in cash and cash equivalents | (4,738 | ) | (2,340 | ) | ||||
Cash and cash equivalents, beginning of period | 10,060 | 4,729 | ||||||
Cash and cash equivalents, end of period | $ | 5,322 | $ | 2,389 | ||||
Cash paid during the period for: | ||||||||
Interest | $ | 14 | $ | 26 | ||||
Income Taxes | $ | 184 | $ | 398 |
F-42
Table of Contents
1. | Organization and Nature of Operations |
2. | Basis of Presentation |
3. | Acquisitions |
F-43
Table of Contents
Total purchase price, including closing costs of approximately $1.7 million | $ | 50,981 | ||
Cash and cash equivalents | 441 | |||
Trade receivables | 12,959 | |||
Inventories | 16,442 | |||
Prepaid expenses and other | 1,099 | |||
Property, plant and equipment | 7,587 | |||
Intangible assets | 15,900 | |||
Total assets acquired | 54,428 | |||
Accounts payable, accrued payroll, and accruals and other current liabilities | 11,282 | |||
Other liabilities | 3,472 | |||
Total liabilities assumed | 14,754 | |||
Net assets acquired | 39,674 | |||
Excess purchase price over the fair value of net assets acquired | $ | 11,307 | ||
Customer relationships | $ | 9,064 | ||
Product technology and patents | 1,589 | |||
Total intangible assets subject to amortization | 10,653 | |||
Trade names and trademarks, not subject to amortization | 5,247 | |||
Total intangible assets | $ | 15,900 | ||
F-44
Table of Contents
Quarter Ended | Quarter Ended | |||||||
March 31, | April 1, | |||||||
(Pro Forma, Unaudited, in Thousands) | 2006 | 2005 | ||||||
Total Revenues | $ | 122,275 | $ | 104,393 | ||||
Net income | $ | 5,135 | $ | 517 |
4. | Cash and Cash Equivalents |
5. | Inventories |
March 31, | December 31, | |||||||
2006 | 2005 | |||||||
Raw materials | $ | 26,860 | $ | 22,512 | ||||
Work in process | 18,096 | 13,876 | ||||||
Finished goods | 37,265 | 25,109 | ||||||
82,221 | 61,497 | |||||||
Less — Allowance for excess, slow-moving and obsolete inventory | (9,697 | ) | (6,843 | ) | ||||
$ | 72,524 | $ | 54,654 | |||||
6. | Goodwill and Intangible Assets |
Goodwill | Cost | |||
Balance December 31, 2005 | $ | 65,345 | ||
Additions related to Hay Hall acquisition | 11,307 | |||
Impact of changes in foreign currency | 186 | |||
Balance March 31, 2006 | $ | 76,838 | ||
F-45
Table of Contents
March 31, 2006 | December 31, 2005 | |||||||||||||||
Accumulated | Accumulated | |||||||||||||||
Cost | Amortization | Cost | Amortization | |||||||||||||
Intangible assets not subject to amortization: | ||||||||||||||||
Tradenames and trademarks | $ | 21,327 | $ | — | $ | 16,080 | $ | — | ||||||||
Intangible assets subject to amortization: | ||||||||||||||||
Customer relationships | 36,866 | 3,101 | 27,802 | 2,515 | ||||||||||||
Product technology and patents | 6,711 | 849 | 5,122 | 690 | ||||||||||||
Impact of changes in foreign currency | (909 | ) | — | (1,048 | ) | — | ||||||||||
Total intangible assets | $ | 63,995 | $ | 3,950 | $ | 47,956 | $ | 3,205 | ||||||||
7. | Warranty Costs |
March 31, | April 1, | |||||||
2006 | 2005 | |||||||
Balance at beginning of period | $ | 1,876 | $ | 1,528 | ||||
Accrued warranty costs | 449 | 381 | ||||||
Payments and adjustments | (458 | ) | (469 | ) | ||||
Balance at end of period | $ | 1,867 | $ | 1,440 | ||||
8. | Income Taxes |
9. | Pension and Other Employee Benefits |
F-46
Table of Contents
Pension Benefits | Other Benefits | |||||||||||||||
March 31, | April 1, | March 31, | April 1, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Service cost | $ | 151 | $ | 127 | $ | 84 | $ | 94 | ||||||||
Interest cost | 334 | 309 | 150 | 180 | ||||||||||||
Amortization of net (gain) loss | — | — | 17 | — | ||||||||||||
Expected return on plan assets | (207 | ) | (105 | ) | — | — | ||||||||||
Amortization of prior service cost | 2 | — | (101 | ) | — | |||||||||||
Net periodic benefit cost | $ | 280 | $ | 331 | $ | 150 | $ | 274 | ||||||||
10. | Financing Arrangements |
F-47
Table of Contents
11. | Stockholder’s Equity |
12. | Related-Party Transactions |
F-48
Table of Contents
13. | Concentrations of Credit, Business Risks and Workforce |
14. | Geographic Information |
F-49
Table of Contents
Net Sales | Property, Plant | |||||||||||||||
Quarter Ended | Quarter Ended | and Equipment | ||||||||||||||
March 31, | April 1, | March 31, | December 31, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(Restated) | ||||||||||||||||
North America (primarily U.S.) | $ | 84,614 | $ | 71,729 | $ | 47,055 | $ | 47,587 | ||||||||
Europe | 26,230 | 19,714 | 24,418 | 16,968 | ||||||||||||
Asia and other | 3,940 | 3,859 | 1,770 | 1,838 | ||||||||||||
Total | $ | 114,784 | $ | 95,302 | $ | 73,243 | $ | 66,393 | ||||||||
15. | Commitments and Contingencies |
F-50
Table of Contents
16. | Guarantor Subsidiaries |
March 31, 2006
March 31, 2006 | ||||||||||||||||||||
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 2,788 | $ | (2,788 | ) | $ | 5,322 | $ | — | $ | 5,322 | |||||||||
Trade receivables, less allowance for doubtful accounts | — | 41,762 | 26,773 | — | 68,535 | |||||||||||||||
Loans receivable from related parties | 13,840 | 30,826 | — | (44,666 | ) | — | ||||||||||||||
Inventories, less allowances for obsolete materials | — | 47,551 | 24,973 | — | 72,524 | |||||||||||||||
Deferred income taxes | — | 2,372 | 127 | — | 2,499 | |||||||||||||||
Prepaid expenses and other | 394 | 2,475 | 2,096 | — | 4,965 | |||||||||||||||
Total current assets | 17,022 | 122,198 | 59,291 | (44,666 | ) | 153,845 | ||||||||||||||
Property, plant and equipment, net | — | 47,055 | 26,188 | — | 73,243 | |||||||||||||||
Intangible assets, net | — | 36,158 | 23,887 | — | 60,045 | |||||||||||||||
Goodwill | — | 54,596 | 22,242 | — | 76,838 | |||||||||||||||
Other assets | 5,353 | 456 | 32 | — | 5,841 | |||||||||||||||
Investments in subsidiaries | 235,470 | — | — | (235,470 | ) | — | ||||||||||||||
$ | 257,845 | $ | 260,463 | $ | 131,640 | $ | (280,136 | ) | $ | 369,812 | ||||||||||
Liabilities and stockholder’s equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 22,432 | $ | 15,449 | $ | — | $ | 37,881 | ||||||||||
Accrued payroll | — | 12,037 | 4,682 | — | 16,719 | |||||||||||||||
Accruals and other current liabilities | 7,782 | 10,082 | 4,465 | — | 22,329 | |||||||||||||||
Deferred income taxes | — | — | 188 | — | 188 | |||||||||||||||
Current portion of capital leases and short term bank borrowings | — | 3,453 | 198 | — | 3,651 | |||||||||||||||
Loans payable from related parties | — | — | 44,666 | (44,666 | ) | — | ||||||||||||||
Total current liabilities | 7,782 | 48,004 | 69,648 | (44,666 | ) | 80,768 | ||||||||||||||
Long-term debt, less current portion | 217,239 | 120 | 875 | — | 218,234 | |||||||||||||||
Deferred income taxes | — | 2,448 | 6,563 | — | 9,011 | |||||||||||||||
Pension liabilities | — | 11,823 | 2,908 | — | 14,731 | |||||||||||||||
Other post-retirement benefits | — | 12,650 | — | — | 12,650 | |||||||||||||||
Other long-term liabilities | — | 107 | 1,487 | — | 1,594 | |||||||||||||||
Total liabilities | 225,021 | 75,152 | 81,481 | (44,666 | ) | 336,988 | ||||||||||||||
Total stockholder’s equity | 32,824 | 185,311 | 50,159 | (235,470 | ) | 32,824 | ||||||||||||||
$ | 257,845 | $ | 260,463 | $ | 131,640 | $ | (280,136 | ) | $ | 369,812 | ||||||||||
F-51
Table of Contents
December 31, 2005
December 31, 2005 | ||||||||||||||||||||
Non | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 8,819 | $ | (2,713 | ) | $ | 3,954 | $ | — | $ | 10,060 | |||||||||
Trade receivables, less allowance for doubtful accounts | — | 32,892 | 13,549 | — | 46,441 | |||||||||||||||
Loan receivable from related parties | — | 34,306 | 4,301 | (38,607 | ) | — | ||||||||||||||
Inventories, less allowances for obsolete materials | — | 43,562 | 11,092 | — | 54,654 | |||||||||||||||
Deferred income taxes | — | 2,652 | 127 | — | 2,779 | |||||||||||||||
Prepaid expenses and other | 25 | 934 | 1,014 | — | 1,973 | |||||||||||||||
Total current assets | 8,844 | 111,633 | 34,037 | (38,607 | ) | 115,907 | ||||||||||||||
Property, plant and equipment, net | — | 45,405 | 20,988 | — | 66,393 | |||||||||||||||
Intangible assets, net | — | 36,729 | 8,022 | — | 44,751 | |||||||||||||||
Goodwill | — | 53,784 | 11,561 | — | 65,345 | |||||||||||||||
Other assets | 4,804 | 167 | 37 | — | 5,008 | |||||||||||||||
Investments in subsidiaries | 225,974 | — | — | (225,974 | ) | — | ||||||||||||||
$ | 239,622 | $ | 247,718 | $ | 74,645 | $ | (264,581 | ) | $ | 297,404 | ||||||||||
Liabilities and stockholder’s equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | 44 | $ | 21,931 | $ | 8,749 | $ | — | $ | 30,724 | ||||||||||
Accrued payroll | — | 12,487 | 3,529 | — | 16,016 | |||||||||||||||
Accruals and other current liabilities | 2,937 | 10,384 | 2,918 | — | 16,239 | |||||||||||||||
Deferred income taxes | — | — | 33 | — | 33 | |||||||||||||||
Current portion of capital leases and short term bank borrowings | — | 186 | — | — | 186 | |||||||||||||||
Loans payable from related parties | 38,607 | — | — | (38,607 | ) | — | ||||||||||||||
Total current liabilities | 41,588 | 44,988 | 15,229 | (38,607 | ) | 63,198 | ||||||||||||||
Long-term debt, less current portion | 159,421 | 153 | — | — | 159,574 | |||||||||||||||
Deferred income taxes | — | 1,719 | 5,831 | — | 7,550 | |||||||||||||||
Pension liabilities | — | 11,505 | 2,863 | — | 14,368 | |||||||||||||||
Other post-retirement benefits | — | 12,500 | — | — | 12,500 | |||||||||||||||
Other long-term liabilities | — | 107 | 1,494 | — | 1,601 | |||||||||||||||
Total liabilities | 201,009 | 70,972 | 25,417 | (38,607 | ) | 258,791 | ||||||||||||||
Total stockholder’s equity | 38,613 | 176,746 | 49,228 | (225,974 | ) | 38,613 | ||||||||||||||
$ | 239,622 | $ | 247,718 | $ | 74,645 | $ | (264,581 | ) | $ | 297,404 | ||||||||||
F-52
Table of Contents
Three months ended March 31, 2006
Three Months Ended March 31, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 84,614 | $ | 33,131 | $ | (2,961 | ) | $ | 114,784 | |||||||||
Cost of sales | — | 61,691 | 24,200 | (2,961 | ) | 82,930 | ||||||||||||||
Gross profit | — | 22,923 | 8,931 | — | 31,854 | |||||||||||||||
Selling, general and administrative expenses | 1,005 | 11,844 | 5,878 | — | 18,727 | |||||||||||||||
Research and development expenses | — | 666 | 538 | — | 1,204 | |||||||||||||||
Income (loss) from operations | (1,005 | ) | 10,413 | 2,515 | — | 11,923 | ||||||||||||||
Interest expense (income) | 4,407 | (53 | ) | 822 | — | 5,176 | ||||||||||||||
Other non-operating income | — | (110 | ) | (49 | ) | — | (159 | ) | ||||||||||||
Equity in earnings of subsidiaries | 9,496 | — | — | (9,496 | ) | — | ||||||||||||||
Income before income taxes | 4,084 | 10,576 | 1,742 | (9,496 | ) | 6,906 | ||||||||||||||
Provision for income taxes | — | 2,011 | 811 | — | 2,822 | |||||||||||||||
Net income | $ | 4,084 | $ | 8,565 | $ | 931 | $ | (9,496 | ) | $ | 4,084 | |||||||||
Three months ended April 1, 2005
Three Months Ended April 1, 2005 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | — | $ | 72,553 | $ | 24,969 | $ | (2,220 | ) | $ | 95,302 | |||||||||
Cost of sales | — | 56,871 | 18,751 | (2,220 | ) | 73,402 | ||||||||||||||
Gross profit | — | 15,682 | 6,218 | — | 21,900 | |||||||||||||||
Selling, general and administrative expenses | — | 11,351 | 4,376 | — | 15,727 | |||||||||||||||
Research and development expenses | — | 571 | 625 | — | 1,196 | |||||||||||||||
Income from operations | — | 3,760 | 1,217 | — | 4,977 | |||||||||||||||
Interest expense (income) | 4,110 | (225 | ) | 377 | — | 4,262 | ||||||||||||||
Equity in earnings of subsidiaries | 4,511 | — | — | (4,511 | ) | — | ||||||||||||||
Income before income taxes | 401 | 3,985 | 840 | (4,511 | ) | 715 | ||||||||||||||
Provision for income taxes | — | 284 | 30 | — | 314 | |||||||||||||||
Net income | $ | 401 | $ | 3,701 | $ | 810 | $ | (4,511 | ) | $ | 401 | |||||||||
F-53
Table of Contents
Three months ended March 31, 2006
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 4,084 | $ | 8,565 | $ | 931 | $ | (9,496 | ) | $ | 4,084 | |||||||||
Undistributed equity in earnings of subsidiaries | (9,496 | ) | — | — | 9,496 | — | ||||||||||||||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation | — | 1,555 | 645 | — | 2,200 | |||||||||||||||
Amortization of intangible assets | — | 571 | 174 | — | 745 | |||||||||||||||
Amortization of deferred loan costs | 178 | — | — | — | 178 | |||||||||||||||
Accretion of debt discount | 237 | — | — | — | 237 | |||||||||||||||
Amortization of inventory fair value adjustment | — | 103 | 881 | — | 984 | |||||||||||||||
Gain on sale of fixed assets | — | — | (6 | ) | — | (6 | ) | |||||||||||||
Provision for deferred taxes | — | 854 | 240 | — | 1,094 | |||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Trade receivables | — | (6,862 | ) | (2,178 | ) | — | (9,040 | ) | ||||||||||||
Inventories | — | (1,718 | ) | (591 | ) | — | (2,309 | ) | ||||||||||||
Accounts payable and accrued liabilities | 4,801 | (1,074 | ) | (445 | ) | — | 3,282 | |||||||||||||
Other current assets and liabilities | (369 | ) | 1,633 | (234 | ) | — | 1,030 | |||||||||||||
Other operating assets and liabilities | 1,106 | (289 | ) | (1,649 | ) | — | (832 | ) | ||||||||||||
Net cash provided by (used in) continuing operating activities | 541 | 3,338 | (2,232 | ) | — | 1,647 | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases of fixed assets | — | (1,157 | ) | (88 | ) | — | (1,245 | ) | ||||||||||||
Acquisitions, net of cash acquired | — | (5,692 | ) | (44,848 | ) | — | (50,540 | ) | ||||||||||||
Net cash used in investing activities | — | (6,849 | ) | (44,936 | ) | — | (51,785 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from issuance of senior subordinated notes | 57,625 | — | — | — | 57,625 | |||||||||||||||
Payment of debt issuance costs | (1,833 | ) | — | — | — | (1,833 | ) | |||||||||||||
Payment on behalf of parent company | (10,410 | ) | — | — | — | (10,410 | ) | |||||||||||||
Borrowings under revolving credit agreements | 5,057 | — | — | — | 5,057 | |||||||||||||||
Payments on revolving credit agreements | (5,057 | ) | — | — | — | (5,057 | ) | |||||||||||||
Change in affiliate debt | (51,954 | ) | 3,480 | 48,474 | — | — | ||||||||||||||
Payment of capital leases | — | (44 | ) | (13 | ) | — | (57 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (6,572 | ) | 3,436 | 48,461 | — | 45,325 | ||||||||||||||
Effect of exchange rates on cash | — | — | 75 | — | 75 | |||||||||||||||
Increase (decrease) in cash and cash equivalents | (6,031 | ) | (75 | ) | 1,368 | — | (4,738 | ) | ||||||||||||
Cash and cash equivalents, beginning of the period | 8,819 | (2,713 | ) | 3,954 | — | 10,060 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 2,788 | $ | (2,788 | ) | $ | 5,322 | $ | — | $ | 5,322 | |||||||||
F-54
Table of Contents
Three months ended April 1, 2005
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | Eliminations | Consolidated | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 401 | $ | 3,701 | $ | 810 | $ | (4,511 | ) | $ | 401 | |||||||||
Undistributed equity in earnings of subsidiaries | (4,511 | ) | — | — | 4,511 | — | ||||||||||||||
Adjustments to reconcile net income to cash used in operating activities: | ||||||||||||||||||||
Depreciation | — | 1,573 | 448 | — | 2,021 | |||||||||||||||
Amortization of intangible assets | — | 576 | 164 | — | 740 | |||||||||||||||
Amortization and write-off of deferred loan costs | 160 | — | — | — | 160 | |||||||||||||||
Accretion of debt discount | 237 | — | — | — | 237 | |||||||||||||||
Amortization of inventory fair value adjustment | — | 1,270 | 429 | — | 1,699 | |||||||||||||||
Gain on sale of fixed assets | — | — | (15 | ) | — | (15 | ) | |||||||||||||
Provision for deferred taxes | — | 231 | — | — | 231 | |||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Trade receivables | — | (3,240 | ) | (2,403 | ) | — | (5,643 | ) | ||||||||||||
Inventories | — | (2,162 | ) | 592 | — | (1,570 | ) | |||||||||||||
Accounts payable and accrued liabilities | 2,222 | (334 | ) | (639 | ) | — | 1,249 | |||||||||||||
Other current assets and liabilities | — | (2,614 | ) | (188 | ) | — | (2,802 | ) | ||||||||||||
Other operating assets and liabilities | (976 | ) | (391 | ) | 797 | — | (570 | ) | ||||||||||||
Net cash used in continuing operating activities | (2,467 | ) | (1,390 | ) | (5 | ) | — | (3,862 | ) | |||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases of fixed assets | — | (724 | ) | (227 | ) | — | (951 | ) | ||||||||||||
Payment of additional Kilian purchase price | — | (730 | ) | — | — | (730 | ) | |||||||||||||
Sale of fixed assets | — | — | 15 | — | 15 | |||||||||||||||
Net cash used in investing activities | — | (1,454 | ) | (212 | ) | — | (1,666 | ) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Payments made on behalf of Parent company | (801 | ) | — | — | — | (801 | ) | |||||||||||||
Borrowings under revolving credit agreements | 4,164 | — | — | — | 4,164 | |||||||||||||||
Change in affiliate debt | (1,746 | ) | 2,304 | (558 | ) | — | ||||||||||||||
Change in capital leases | — | (85 | ) | 25 | — | (60 | ) | |||||||||||||
Net cash (used in) provided by financing activities | 1,617 | 2,219 | (533 | ) | — | 3,303 | ||||||||||||||
Effect of exchange rates on cash | — | — | (115 | ) | — | (115 | ) | |||||||||||||
Increase (decrease) in cash and cash equivalents | (850 | ) | (625 | ) | (865 | ) | — | (2,340 | ) | |||||||||||
Cash and cash equivalents, beginning of the period | 2,219 | (1,913 | ) | 4,423 | — | 4,729 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 1,369 | $ | (2,538 | ) | $ | 3,558 | $ | — | $ | 2,389 | |||||||||
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F-56
Table of Contents
For the year ended 31 December 2005
Year Ended | ||||||||
31 December | ||||||||
Notes | 2005 | |||||||
£’000 | ||||||||
Turnover | 2 | 39,262 | ||||||
Operating costs less other income | 3 | (37,924 | ) | |||||
Operating profit | 4 | 1,338 | ||||||
Interest receivable | 56 | |||||||
Interest payable | 5 | (1,286 | ) | |||||
Other financial income | 107 | |||||||
Profit on ordinary activities before taxation | 215 | |||||||
Tax on profit on ordinary activities | 8 | (292 | ) | |||||
(77 | ) | |||||||
Minority interests | — | |||||||
(Loss) profit for the financial period | (77 | ) | ||||||
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Table of Contents
For the year ended 31 December 2005
Year Ended | ||||
31 December | ||||
2005 | ||||
£’000 | ||||
(Loss) profit for the financial period | (77 | ) | ||
Profit (loss) on foreign currency translation | 118 | |||
Actuarial (losses) gains on retirement benefit scheme | (2,148 | ) | ||
Total recognised gains and losses relating to the period | (2,107 | ) | ||
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Table of Contents
31 December 2005
Notes | 2005 | |||||||
£’000 | ||||||||
Fixed assets | ||||||||
Goodwill | 9 | 2,593 | ||||||
Tangible assets | 10 | 6,131 | ||||||
Investments | 11 | 19 | ||||||
8,743 | ||||||||
Current assets | ||||||||
Stocks | 12 | 8,659 | ||||||
Debtors | 13 | 7,537 | ||||||
Cash at bank and in hand | 2,207 | |||||||
18,403 | ||||||||
Creditors: Amounts falling due within one year | 14 | (13,673 | ) | |||||
Net current assets | 4,730 | |||||||
Total assets less current liabilities | 13,473 | |||||||
Financed by: | ||||||||
Creditors: Amounts falling due after more than one year | ||||||||
Obligations under finance leases and hire purchase contracts | 15 | 513 | ||||||
Borrowings | 16 | 9,185 | ||||||
Pension obligations | 25 | 3,573 | ||||||
13,271 | ||||||||
Capital and reserves | ||||||||
Called-up share capital | 18 | 2,130 | ||||||
Profit and loss account | 19 | (1,928 | ) | |||||
Shareholders’ funds | 20 | 202 | ||||||
Minority interests | 21 | — | ||||||
13,473 | ||||||||
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Table of Contents
31 December 2005
Notes | 2005 | |||||||||||
£’000 | ||||||||||||
Fixed assets | ||||||||||||
Investments | 11 | 2,280 | ||||||||||
Creditors: Amounts falling due after more than one year | 14 | (150 | ) | |||||||||
Total assets less current liabilities | 2,130 | |||||||||||
Financed by: | ||||||||||||
Capital and reserves | ||||||||||||
Called-up share capital | 18 | 2,130 | ||||||||||
Profit and loss account | 19 | — | ||||||||||
Shareholders’ funds | 20 | 2,130 | ||||||||||
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Table of Contents
For the period ended 31 December 2005
Year Ended | ||||||||
31 December | ||||||||
Notes | 2005 | |||||||
£’000 | ||||||||
Net cash inflow from operating activities | 22 | 2,789 | ||||||
Returns on investments and servicing of finance | ||||||||
Interest received | 56 | |||||||
Interest paid — HP and finance lease | (26 | ) | ||||||
Interest paid — other interest | (1,129 | ) | ||||||
Net cash outflow for returns on investments and servicing of finance | (1,099 | ) | ||||||
Taxation | ||||||||
Tax paid | (186 | ) | ||||||
Net cash outflow for taxation | (186 | ) | ||||||
Capital expenditure | ||||||||
Purchase of tangible fixed assets | (680 | ) | ||||||
Sale of tangible fixed assets | 8 | |||||||
Net cash outflow for capital expenditure | (672 | ) | ||||||
Acquisition and disposals | ||||||||
Purchase of subsidiary undertaking | (288 | ) | ||||||
Net cash acquired with subsidiary undertakings | 42 | |||||||
Purchase of investments | (5 | ) | ||||||
Net cash outflow for acquisition and disposals | (251 | ) | ||||||
Cash outflow before financing | 581 | |||||||
Financing | ||||||||
Capital element of finance lease rental payments | (178 | ) | ||||||
New loans | 238 | |||||||
Repayment of loans | (1,007 | ) | ||||||
Net cash (outflow) inflow from financing | (947 | ) | ||||||
Decrease in cash in the period | 23 | (366 | ) | |||||
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1 | Accounting policies |
Freehold buildings | 2% to 31/3% per annum | |
Improvements to short leasehold premises | Over term of lease | |
Plant and machinery and equipment | 4% to 331/3% per annum |
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F-63
Table of Contents
F-64
Table of Contents
2 | Turnover |
2005 | ||||
£’000 | ||||
UK | 12,348 | |||
Rest of Europe | 8,471 | |||
Americas | 14,086 | |||
Rest of the World | 4,357 | |||
39,262 | ||||
2005 | ||||
£’000 | ||||
UK | 30,050 | |||
Rest of Europe | 700 | |||
USA | 7,192 | |||
Africa | 1,320 | |||
39,262 | ||||
3 | Operating costs less other income |
2005 | ||||
Continuing | ||||
Operations | ||||
£’000 | ||||
Change in stocks of finished goods and work in progress | 607 | |||
Other operating income | 54 | |||
Raw materials and consumables | (14,438 | ) | ||
Other external charges | (7,317 | ) | ||
Staff costs | (15,631 | ) | ||
Depreciation and Amortisation | (1,200 | ) | ||
(37,924 | ) | |||
4 | Operating profit |
2005 | ||||
£’000 | ||||
Depreciation of tangible fixed assets | 1,075 | |||
Amortisation of goodwill | 125 | |||
Auditors’ remuneration for audit services | 71 | |||
Operating lease rentals — plant and machinery | 113 | |||
— other | 473 | |||
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Table of Contents
5 | Interest payable and similar charges |
2005 | ||||
£’000 | ||||
Bank loans and overdrafts | 1,079 | |||
Finance leases and hire purchase contracts | 26 | |||
Amortisation of loan issue costs | 181 | |||
1,286 | ||||
6 | Staff costs |
2005 | ||||
Number | ||||
Works employees | 349 | |||
Staff | 199 | |||
548 | ||||
2005 | ||||
£’000 | ||||
Wages and salaries | 13,969 | |||
Redundancy costs | 55 | |||
Social security costs | 1,328 | |||
Other pension costs | 279 | |||
15,631 | ||||
7 | Directors’ remuneration |
8 | Tax on profit on ordinary activities |
2005 | ||||
£’000 | ||||
Current tax | ||||
UK corporation tax at 30% | 5 | |||
Overseas tax | 215 | |||
220 | ||||
Deferred tax (see note 17) | ||||
Origination and reversal of timing differences | 72 | |||
Total tax on profit on ordinary activities | 292 | |||
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Table of Contents
2005 | ||||
£’000 | ||||
Profit on ordinary activities before tax | 215 | |||
Tax on profit on ordinary activities at standard UK corporation tax rate of 30% | 65 | |||
Effects of: | ||||
Expenses not deductible for tax purposes | 6 | |||
Depreciation in excess of capital allowances | 125 | |||
Other timing differences | 24 | |||
Current tax charges for period | 220 | |||
9 | Goodwill |
Group | £’000 | |||
Cost | ||||
Beginning of year (as previously reported) | 745 | |||
Prior year adjustment | 1,604 | |||
Beginning of year (as restated) | 2,349 | |||
Goodwill on acquisition in the year (note 11) | 399 | |||
End of year | 2,748 | |||
Amortisation | ||||
Beginning of year (as previously reported) | (10 | ) | ||
Prior year adjustment | (20 | ) | ||
Beginning of year (as restated) | (30 | ) | ||
Charge for the year | (125 | ) | ||
End of year | (155 | ) | ||
Net book value | ||||
End of year | 2,593 | |||
Beginning of year (as restated) | 2,319 | |||
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10 | Tangible fixed assets |
Freehold | Short | Plant, | ||||||||||||||
Land and | Leasehold | Machinery & | ||||||||||||||
Group | Buildings | Buildings | Equipment | Total | ||||||||||||
£’000 | ||||||||||||||||
£’000 | £’000 | £’000 | ||||||||||||||
Cost or valuation | ||||||||||||||||
Beginning of year | 1,579 | 218 | 10,331 | 12,128 | ||||||||||||
Acquisitions | — | — | 13 | 13 | ||||||||||||
Additions | — | — | 672 | 672 | ||||||||||||
Disposal | — | (132 | ) | (395 | ) | (527 | ) | |||||||||
Exchange adjustment | — | 2 | 173 | 175 | ||||||||||||
End of year | 1,579 | 88 | 10,794 | 12,461 | ||||||||||||
Depreciation | ||||||||||||||||
Beginning of year | 212 | 114 | 5,405 | 5,731 | ||||||||||||
Acquisitions | 4 | 4 | ||||||||||||||
Charge for the year | 30 | 34 | 1,003 | 1,067 | ||||||||||||
Disposal | (132 | ) | (391 | ) | (523 | ) | ||||||||||
Exchange adjustment | 51 | 51 | ||||||||||||||
End of year | 242 | 16 | 6,072 | 6,330 | ||||||||||||
Net book value | ||||||||||||||||
Beginning of year | 1,367 | 104 | 4,926 | 6,397 | ||||||||||||
End of year | 1,337 | 72 | 4,722 | 6,131 | ||||||||||||
11 | Fixed asset investments |
2005 | ||||||||
Group | Company | |||||||
2005 | 2005 | |||||||
£’000 | ||||||||
£’000 | ||||||||
Subsidiary undertaking | — | 2,280 | ||||||
Investments | 19 | — | ||||||
19 | 2,280 | |||||||
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Table of Contents
Country of | ||||||||
Registration | Holding | % | ||||||
The Hay Hall Group Limited | England | Ordinary | 85 | |||||
Preference | 82 | |||||||
B Preference | 84 | |||||||
C Preference | 100 | |||||||
The subsidiary undertaking has investments in the following companies: | ||||||||
Trading companies | ||||||||
Matrix International Limited | England | Ordinary | 100 | |||||
Inertia Dynamics Inc | USA | Ordinary | 100 | |||||
Matrix International GmbH | Germany | Ordinary | 100 | |||||
Bibby Transmissions Limited | England | Ordinary | 100 | |||||
Huco Engineering Industries Limited | England | Ordinary | 100 | |||||
Twiflex Limited | England | Ordinary | 100 | |||||
Bibby Turboflex (SA) (Pty) Limited | South Africa | Ordinary | 100 | |||||
Scandicom AB | Sweden | Ordinary | 100 | |||||
Saftek Limited | England | Ordinary | 100 | |||||
Holding companies | ||||||||
Bibby Group Limited | England | Ordinary | 100 | |||||
Huco Power Transmissions Limited | England | Ordinary | 100 | |||||
MEL Holding Inc | USA | Ordinary | 100 | |||||
Non trading companies | ||||||||
Turboflex Limited | England | Ordinary | 100 | |||||
Matrix Engineering Limited | England | Ordinary | 100 | |||||
Hay Hall Leicester Limited | England | Ordinary | 100 | |||||
Stainless Steel Tubes Limited | England | Ordinary | 100 | |||||
Hay Hall Tyseley Limited | England | Ordinary | 100 | |||||
T&A Nash (Penn) Limited | England | Ordinary | 100 | |||||
Motion Developments Limited | England | Ordinary | 100 | |||||
Hay Hall Trustees Limited | England | Ordinary | 100 | |||||
Turboflex (South Africa) (Pty) Limited | South Africa | Ordinary | 100 | |||||
Torsiflex Limited | England | Ordinary | 100 | |||||
Dynatork Air Motors Limited | England | Ordinary | 100 | |||||
Dynatork Limited | England | Ordinary | 100 |
Country of | ||||||||||||
Registration | Holding | % | ||||||||||
Rathi Turboflex Pty Limited | India | Ordinary | 50 |
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Table of Contents
Book and Fair | ||||
Value | ||||
£’000 | ||||
Tangible fixed assets | 13 | |||
Stocks | 25 | |||
Debtors | 56 | |||
Creditors | (6 | ) | ||
Taxation | (41 | ) | ||
Cash acquired | 42 | |||
89 | ||||
Goodwill (note 9) | 399 | |||
488 | ||||
Satisfied by: | ||||
Cash | 288 | |||
Deferred consideration | 200 | |||
488 | ||||
Profit and Loss Account | ||||
£’000 | ||||
Turnover | 144 | |||
Cost of sales | (43 | ) | ||
Operating profit | 101 | |||
Finance charges (net) | — | |||
Profit on ordinary activities before taxation | 101 | |||
tax on profit on ordinary activities | (20 | ) | ||
Profit for the financial period | 81 | |||
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Table of Contents
Book and | ||||||||
Fair Value | ||||||||
£’000 | ||||||||
(As restated) | ||||||||
Investments | 10 | |||||||
Tangible fixed assets | 6,563 | |||||||
Stocks | 7,309 | |||||||
Debtors | 8,728 | |||||||
Creditors | (7,074 | ) | ||||||
Overdrafts acquired | (5,206 | ) | ||||||
Loans | (8,280 | ) | ||||||
Obligations under finance leases and hire purchase contracts | (515 | ) | ||||||
Pension obligations | (1,604 | ) | ||||||
(69 | ) | |||||||
Goodwill (note 9) (as previously reported) | 745 | |||||||
Prior year adjustment | 1,604 | 2,349 | ||||||
2,280 | ||||||||
Satisfied by: | ||||||||
Cash | 150 | |||||||
Issue of shares | 2,130 | |||||||
2,280 | ||||||||
12 | Stocks |
2005 | ||||
£’000 | ||||
Group | ||||
Raw materials and consumables | 1,668 | |||
Work in progress | 1,848 | |||
Finished goods and goods for resale | 5,143 | |||
8,659 | ||||
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Table of Contents
13 | Debtors |
2005 | ||||||||
Group | Company | |||||||
£’000 | £’000 | |||||||
Amounts falling due within one year: | ||||||||
Trade debtors | 6,792 | — | ||||||
VAT | 262 | — | ||||||
Taxation recoverable | 11 | — | ||||||
Deferred tax debtor | 83 | — | ||||||
Prepayments and accrued income | 389 | — | ||||||
7,537 | — | |||||||
14 | Creditors: Amounts falling due within one year |
2005 | ||||||||
Group | Company | |||||||
£’000 | £’000 | |||||||
Bank loans and overdrafts (secured) | 5,668 | — | ||||||
Trade creditors | 4,531 | — | ||||||
Amounts due to group undertakings | 150 | |||||||
Corporate tax payable | 353 | — | ||||||
Other taxation and social security | 437 | — | ||||||
Obligations under finance leases and hire purchase contracts | 233 | — | ||||||
Accruals | 2,451 | — | ||||||
13,673 | 150 | |||||||
15 | Creditors: Amounts falling due after more than one year |
2005 | ||||||||
Group | Company | |||||||
£’000 | £’000 | |||||||
Obligations under finance leases and hire purchase contracts | 331 | — | ||||||
Deferred consideration | 182 | — | ||||||
Amounts due to subsidiary undertaking | — | 150 | ||||||
513 | 150 | |||||||
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2005 | ||||
£’000 | ||||
Amounts payable: | ||||
— Within one year | 233 | |||
— between one and two years | 163 | |||
— between two and five years | 168 | |||
564 | ||||
16 | Creditors: Amounts falling due after more than one year |
2005 | ||||||||
Group | Company | |||||||
£’000 | £’000 | |||||||
Senior loans | 9,185 | — | ||||||
2005 | ||||
Group | ||||
£’000 | ||||
Amounts payable: | ||||
— within one year | 1,200 | |||
— between one and two years | 1,200 | |||
— between two and five years | 7,985 | |||
10,385 | ||||
Loan issue costs not amortised | — | |||
10,385 | ||||
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17 | Provisions for liabilities and charges |
2005 | ||||||||
Group | Company | |||||||
£’000 | £’000 | |||||||
Deferred tax | ||||||||
At beginning of period | 131 | — | ||||||
On acquisitions | — | |||||||
Charged to the profit and loss account | (72 | ) | — | |||||
Differences on exchange | (12 | ) | — | |||||
Offset against pension obligations | 32 | |||||||
Transferred to debtors | (83 | ) | — | |||||
At end of period | — | — | ||||||
The deferred tax provision comprises: | ||||||||
Accelerated capital allowances | (8 | ) | — | |||||
Other timing differences | 91 | — | ||||||
83 | — | |||||||
18 | Called-up share capital |
2005 | ||||
£’000 | ||||
Authorised | ||||
2,600,000 ordinary shares of £1 each | 2,600 | |||
Allotted,called-up and fully-paid | ||||
2,130,370 ordinary shares of £1 each | 2,130 | |||
19 | Reserves |
Profit and | ||||
Loss Account | ||||
£’000 | ||||
Group | ||||
Beginning of year (as restated) | 179 | |||
Retained loss for the period | (77 | ) | ||
Profit on foreign currency translation | 118 | |||
Actuarial losses on pension scheme | (2,148 | ) | ||
End of year | (1,928 | ) | ||
Company | ||||
Beginning and end of period | — | |||
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Table of Contents
20 | Reconciliation of movements in shareholders’ funds |
2005 | ||||||||
Group | Company | |||||||
£’000 | £’000 | |||||||
(Loss) Profit for the financial period | (77 | ) | — | |||||
Issue of share capital | — | — | ||||||
Profit (Loss) on foreign currency translation | 118 | — | ||||||
Actuarial losses on pension scheme | (2,148 | ) | — | |||||
Net (reduction in) addition to shareholders’ funds | (2,107 | ) | — | |||||
Opening shareholders’ funds | 2,309 | 2,130 | ||||||
Closing shareholders’ funds | 202 | 2,130 | ||||||
21 | Minority interests |
2005 | ||||
£’000 | ||||
At 1 January 2005 (as restated) | — | |||
Profit on ordinary activities after taxation for the year | — | |||
At 31 December 2005 | — | |||
22 | Reconciliation of operating profit to operating cash flows |
2005 | ||||
£’000 | ||||
Operating profit | 1,338 | |||
Depreciation and amortisation charges | 1,200 | |||
(Increase) in stocks | (841 | ) | ||
Decrease in debtors | 392 | |||
Decrease in creditors | 700 | |||
Net cash inflow from operating activities | 2,789 | |||
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Table of Contents
23 | Analysis and reconciliation of net debt |
At Start | Exchange | At End | ||||||||||||||||||
of Year | Cash Flow | Acquisition | Adjustment | of Year | ||||||||||||||||
£’000 | £’000 | £’000 | £’000 | £’000 | ||||||||||||||||
Cash in hand, at bank | 1,958 | 207 | 42 | — | 2,207 | |||||||||||||||
Overdrafts | (3,853 | ) | (615 | ) | — | — | (4,468 | ) | ||||||||||||
(1,895 | ) | (408 | ) | 42 | (2,261 | ) | ||||||||||||||
Debt due after one year | (9,583 | ) | 645 | — | (247 | ) | (9,185 | ) | ||||||||||||
Debt due within one year | (1,200 | ) | — | — | — | (1,200 | ) | |||||||||||||
Net debt | (12,678 | ) | 237 | 42 | (247 | ) | (12,646 | ) | ||||||||||||
2005 | ||||
£’000 | ||||
Decrease in cash in the year | (366 | ) | ||
Cash inflow (outflow) from (decrease) increase in debt | 398 | |||
Change in net debt resulting from cash flows in the year | 32 | |||
Net debt at start of year | (12,678 | ) | ||
Net debt at end of year | (12,646 | ) | ||
24 | Guarantees and other financial commitments |
2005 | ||||
£’000 | ||||
Group | ||||
Contracted but not provided for | — | |||
Land and | Plant and | |||||||
Buildings | Machinery | |||||||
2005 | 2005 | |||||||
£’000 | £’000 | |||||||
Group | ||||||||
Expiry date | ||||||||
— within one year | 5 | 51 | ||||||
— between one and two years | 168 | 65 | ||||||
— between two and five years | 281 | 52 | ||||||
454 | 168 | |||||||
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Table of Contents
2005 | ||||
£’000 | ||||
Group | ||||
Trade guarantees | 79 | |||
HM Customs and Excise | 36 | |||
25 | Pension arrangements |
At 31 December 2005 | ||||
Rate of increase in pensions in payment (where increases are not fixed) | 2.65% | |||
Discount rate | 5.00% | |||
Inflation assumption | 2.75% |
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Table of Contents
Long Term Rate | ||||||||
of Return | ||||||||
Expected at | Market Value at | |||||||
31 December | 31 December | |||||||
2005 | 2005 | |||||||
£000 | ||||||||
Equities | 8.00 | % | 11,366 | |||||
Bonds | 4.70 | % | 15,656 | |||||
Cash | 4.10 | % | 155 | |||||
Total market value of assets | 27,177 | |||||||
Present value of scheme liabilities | 32,281 | |||||||
(Deficit) surplus in the Scheme | (5,104 | ) | ||||||
Related deferred tax asset (liability) | 1,531 | |||||||
Net pension liability | (3,573 | ) | ||||||
31 December 2005 | ||||
£000 | ||||
Analysis of the amount charged in operating profit | ||||
Current service cost | — | |||
Past service cost | — | |||
Curtailment (gain) / loss | — | |||
Total Operating Charge | — | |||
Analysis of the amount credited to other finance income | ||||
Expected return on pension scheme assets | 1,571 | |||
Interest on pensions scheme liabilities | (1,464 | ) | ||
Net return | 107 | |||
F-78
Table of Contents
31 December 2005 | ||||||||
£000 | ||||||||
Analysis of amount recognised in statement of total recognised gains and losses (STRGL) | ||||||||
Actual return less expected return on scheme assets | 1,777 | |||||||
Experience gains and losses arising on the scheme liabilities | (334 | ) | ||||||
Changes in assumptions underlying the present value of the scheme liabilities | (4,511 | ) | ||||||
Actuarial (loss) gain recognised in STRGL | (3,068 | ) | ||||||
Movement in (deficit) during the period | ||||||||
Deficit in scheme at beginning of the period | (2,143 | ) | ||||||
Movement in the period: | ||||||||
Current service cost | — | |||||||
Contributions | — | |||||||
Past service cost | — | |||||||
Curtailments gain/(loss) | — | |||||||
Other finance income | 107 | |||||||
Actuarial loss | (3,068 | ) | ||||||
(5,104 | ) | |||||||
History of experience gains and losses | ||||||||
Actuarial less expected return | 1,777 | |||||||
7 | % | |||||||
Experience gain on the liabilities | (334 | ) | ||||||
(1 | )% | |||||||
Total amount recognised in the STRGL | (3,068 | ) | ||||||
(10 | )% |
26 | Subsequent Events |
27 | Related Party Disclosures |
28 | Summary of differences between accounting principles in the United Kingdom and the United State of America |
F-79
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Notes | 2005 | |||||||
£’000 | ||||||||
Net (loss) income in accordance with UK GAAP | (77 | ) | ||||||
Goodwill | a | 125 | ||||||
Tangible assets | b | 7 | ||||||
Net (loss) income in accordance with US GAAP | 55 | |||||||
Shareholders’ funds in accordance with UK GAAP | 202 | |||||||
Goodwill | a | 155 | ||||||
Tangible assets | b | (268 | ) | |||||
Shareholders’ funds in accordance with US GAAP | 89 | |||||||
(a) | Goodwill Amortization |
(b) | Tangible Assets |
1. | Balance sheet and profit and loss account presentation |
2. | Consolidated statement of cashflow |
F-80
Table of Contents
2005 | ||||
£’000 | ||||
Net cash provided by operating activities | 1,504 | |||
Net cash used by investing activities | (923 | ) | ||
Net cash provided by financing activities | (947 | ) | ||
Net decrease in cash and cash equivalents | (366 | ) | ||
Cash and cash equivalents under US GAAP at beginning of the period | (1,895 | ) | ||
Cash and cash equivalents under US GAAP at end of the period | (2,261 | ) | ||
Cash and cash equivalents under UK GAAP at end of the period | (2,261 | ) | ||
F-81
Table of Contents
£33,000,000 principal amount of
111/4% Senior Notes due 2013
for
£33,000,000 principal amount of
111/4% Senior Notes due 2013
registered under the Securities Act of 1933
Table of Contents
ITEM 20. | INDEMNIFICATION OF DIRECTORS AND OFFICERS. |
II-1
Table of Contents
II-2
Table of Contents
ITEM 21. | EXHIBITS. |
Number | Description | |||
1 | .1(1) | Purchase Agreement, dated as of November 22, 2004, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein | ||
2 | .1(1) | LLC Purchase Agreement, dated as of October 25, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc. | ||
2 | .2(1) | Assignment and Assumption Agreement, dated as of November 21, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc. | ||
3 | .1(1) | Certificate of Incorporation of Altra Industrial Motion, Inc. | ||
3 | .2(1) | By-laws of Altra Industrial Motion, Inc. | ||
3 | .3(1) | Amended and Restated Certificate of American Enterprises MPT Corp. | ||
3 | .4(1) | By-laws of American Enterprises MPT Corp. | ||
3 | .5 | Certificate of Formation of American Enterprises MPT Holdings, LLC, as amended | ||
3 | .6 | Limited Liability Company Agreement of American Enterprises MPT Holdings, LLC, as amended | ||
3 | .7 | Certificate of Formation of Ameridrives International, LLC, as amended | ||
II-3
Table of Contents
Number | Description | |||
3 | .8 | Limited Liability Company Agreement of Ameridrives International, LLC, as amended | ||
3 | .9(1) | Certificate of Formation of Boston Gear LLC | ||
3 | .10(1) | Limited Liability Company Agreement of Boston Gear LLC | ||
3 | .11(1) | Certificate of Formation of Formsprag LLC, as amended | ||
3 | .12(1) | Limited Liability Company Agreement of Formsprag LLC, as amended | ||
3 | .13(1) | Amended and Restated Certificate of Incorporation of The Kilian Company | ||
3 | .14(1) | By-laws of The Kilian Company | ||
3 | .15(1) | Certificate of Incorporation of Kilian Manufacturing Corporation | ||
3 | .16(1) | By-laws of Kilian Manufacturing Corporation | ||
3 | .17(1) | Certificate of Formation of Nuttall Gear LLC | ||
3 | .18(1) | Amended and Restated Limited Liability Company Agreement of Nuttall Gear LLC | ||
3 | .19(1) | Certificate of Formation of Warner Electric LLC | ||
3 | .20(1) | Limited Liability Company Agreement of Warner Electric LLC | ||
3 | .21(1) | Certificate of Formation of Warner Electric Technology LLC | ||
3 | .22(1) | Limited Liability Company Agreement of Warner Electric Technology LLC | ||
3 | .23(1) | Certificate of Incorporation of Warner Electric International Holding, Inc. | ||
3 | .24(1) | By-laws of Warner Electric International Holding, Inc. | ||
3 | .25 | Certificate of Formation of Inertia Dynamics, LLC | ||
3 | .26 | Operating Agreement of Inertia Dynamics, LLC as amended | ||
4 | .1(1) | Indenture, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee | ||
4 | .2(1) | Form of 9% Senior Secured Notes due 2011 (included in Exhibit 4.1) | ||
4 | .3(1) | Registration Rights Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto | ||
4 | .4(2) | Indenture, dated as of February 8, 2006, among Altra Industrial Motion Inc. the guarantors party thereto, the Bank of New York, as trustee and paying agent and the Bank of New York (Luxembourg) SA, as Luxembourg paying agent | ||
4 | .5(2) | Form of 111/4 % Senior Notes due 2013 | ||
4 | .6(2) | Registrants Rights Agreement, dated as of February 8, 2006, among Altra Industrial Inc., the guarantors party thereto, and Jefferies International Limited, as initial purchasers | ||
4 | .7(3) | First Supplemental Indenture, dated as of February 7, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York Trust Company, N.A. as trustee | ||
4 | .8(2) | Second Supplemental Indenture, dated as of February 8, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York Trust Company, N.A. as trustee | ||
4 | .9(3) | Third Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York Trust Company, N.A. as trustee | ||
4 | .10(3) | First Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York as trustee | ||
5 | .1+ | Opinion of Weil, Gotshal Manges LLP. | ||
10 | .22(1) | Credit Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc. and certain subsidiaries of the Company, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Bank, as Lead Arranger | ||
10 | .23(1) | Security Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A. | ||
10 | .24(1) | Patent Security Agreement, dated as of November 30, 2004, among Kilian Manufacturing Corporation, Warner Electric Technology LLC, Formsprag LLC, Boston Gear LLC, Ameridrives International, L.P. and The Bank of New York Trust Company, N.A. | ||
II-4
Table of Contents
Number | Description | |||
10 | .25(1) | Trademark Security Agreement, dated as of November 30, 2004, among Warner Electric Technology LLC, Boston Gear LLC and The Bank of New York Trust Company, N.A. | ||
10 | .26(1) | Intercreditor and Lien Subordination Agreement, dated as of November 30, 2004, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A. and Altra Industrial Motion, Inc. | ||
10 | .27(1) | Share Purchase Agreement, dated as of November 7, 2005, among Altra Industrial Motion, Inc. and the stockholders of Hay Hall Holdings Limited listed therein. | ||
12 | .1 | Computation of ratio of earnings to fixed charges | ||
21 | .1 | Subsidiaries of Altra Industrial Motion, Inc. | ||
23 | .1 | Consent of Ernst & Young LLP. | ||
23 | .3+ | Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1) | ||
23 | .4 | Consent of BDO Stoy Hayward LLP | ||
24 | .1 | Power of Attorney (included on signature pages hereto) | ||
25 | .1+ | Statement of Eligibility of Trustee onForm T-1 | ||
99 | .1+ | Form of Letter of Transmittal | ||
99 | .2+ | Form of Notice of Guaranteed Delivery | ||
99 | .3+ | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | ||
99 | .4+ | Form of Letter to Beneficial Holders | ||
99 | .5+ | Form of Exchange Agent Agreement, between Altra Industrial Motion, Inc. and The Bank of New York |
(1) | Incorporated by reference to the Registration Statement onForm S-4 (FileNo. 333-124944) filed with the Securities and Exchange Commission on May 16, 2005. | |
(2) | Incorporated by reference to the Registrants Current Report onForm 8-K (FileNo. 333-124944) filed with the Securities and Exchange Commission on February 14, 2006. | |
(3) | Incorporated by reference to the Registrants Annual Report onForm 10-K (FileNo. 333-124944) filed with the Securities and Exchange Commission on May 15, 2006. | |
+ | To be filed by amendment |
ITEM 22. | UNDERTAKINGS. |
II-5
Table of Contents
II-6
Table of Contents
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer and Director (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer (principal financial officer and principal accounting officer) | |||
Frank E. Bauchiero | Director | |||
/s/ Jean-Pierre L. Conte Jean-Pierre L. Conte | Director | |||
/s/ Darren J. Gold Darren J. Gold | Director | |||
Larry McPherson | Director | |||
/s/ Richard D. Paterson Richard D. Paterson | Director |
II-7
Table of Contents
Schedule A hereto.
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer and Director (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer (principal financial officer and principal accounting officer) | |||
/s/ Jean-Pierre L. Conte Jean-Pierre L. Conte | Director | |||
/s/ Darren J. Gold Darren J. Gold | Director |
II-8
Table of Contents
Schedule B hereto.
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer (principal financial officer and principal accounting officer) | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer of Altra Industrial Motion, Inc., as Member |
II-9
Table of Contents
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer (principal financial officer and principal accounting officer) | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer of American Enterprises MPT Corp., as Member |
II-10
Table of Contents
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer and Manager (principal financial officer and principal accounting officer) | |||
/s/ Carl Christenson Carl Christenson | Manager |
II-11
Table of Contents
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer (principal financial officer and principal accounting officer) | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer of Warner Electric LLC, as member; and Chief Executive Officer of Ameridrives International, LLC, as member |
II-12
Table of Contents
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer (principal financial officer and principal accounting officer) | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer of American Enterprises MPT Corp., as Member |
II-13
Table of Contents
By: | /s/ Michael L. Hurt |
Title: | Chief Executive Officer |
Signature | Title | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer (principal executive officer) | |||
/s/ David Wall David Wall | Chief Financial Officer (principal financial officer and principal accounting officer) | |||
/s/ Michael L. Hurt Michael L. Hurt | Chief Executive Officer of American Enterprises MPT Corp., Member |
II-14
Table of Contents
THE KILIAN COMPANY
KILIAN MANUFACTURING CORPORATION
WARNER ELECTRIC INTERNATIONAL HOLDING, INC
II-15
Table of Contents
WARNER ELECTRIC LLC
WARNER ELECTRIC TECHNOLOGY LLC
II-16
Table of Contents
Balance at | ||||||||||||||||
Beginning | Balance at | |||||||||||||||
Reserve for Inventory Obsolescence: | of Period | Additions | Deductions | End of Period | ||||||||||||
Predecessor-For the year ended December 31, 2003 | $ | 5,089 | $ | 3,033 | $ | (1,309 | ) | $ | 6,813 | |||||||
Predecessor-For the year ended November 30, 2004 | 6,813 | 1,459 | (2,084 | ) | 6,188 | |||||||||||
From Inception (December 1) through December 31, 2004 | 6,188 | 545 | (372 | ) | 6,361 | |||||||||||
For the year ended December 31, 2005 | $ | 6,361 | $ | 2,385 | $ | (1,903 | ) | $ | 6,843 |
Balance at | ||||||||||||||||
Beginning | Balance at | |||||||||||||||
Reserve for Uncollectible Accounts: | of Period | Additions | Deductions | End of Period | ||||||||||||
Predecessor-For the year ended December 31, 2003 | $ | 2,939 | $ | 730 | $ | (2,053 | ) | $ | 1,616 | |||||||
Predecessor-For the year ended November 30, 2004 | 1,616 | 589 | (772 | ) | 1,433 | |||||||||||
From Inception (December 1) through December 31, 2004 | 1,433 | 135 | (145 | ) | 1,424 | |||||||||||
For the year ended December 31, 2005 | $ | 1,424 | $ | 687 | $ | (314 | ) | $ | 1,797 |
Balance at | ||||||||||||||||
Beginning | Balance at | |||||||||||||||
Income Tax Assets Valuation Allowance: | of Period | Additions | Deductions | End of Period | ||||||||||||
Predecessor-For the year ended December 31, 2003 | $ | 10,261 | $ | 7,573 | $ | — | $ | 17,834 | ||||||||
Predecessor-For the year ended November 30, 2004 | 17,834 | 895 | — | 18,729 | ||||||||||||
From Inception (December 1) through December 31, 2004(1) | 18,462 | — | (88 | ) | 18,374 | |||||||||||
For the year ended December 31, 2005 | $ | 18,374 | — | $ | (1,985 | ) | $ | 16,389 |
(1) | The difference between the balance at the end of the period ending November 30, 2004 and the balance at December 1, 2004 is the result of purchase accounting for the Acquisition. |
II-17
Table of Contents
Number | Description | |||
1 | .1(1) | Purchase Agreement, dated as of November 22, 2004, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein | ||
2 | .1(1) | LLC Purchase Agreement, dated as of October 25, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc. | ||
2 | .2(1) | Assignment and Assumption Agreement, dated as of November 21, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc. | ||
3 | .1(1) | Certificate of Incorporation of Altra Industrial Motion, Inc. | ||
3 | .2(1) | By-laws of Altra Industrial Motion, Inc. | ||
3 | .3(1) | Amended and Restated Certificate of American Enterprises MPT Corp. | ||
3 | .4(1) | By-laws of American Enterprises MPT Corp. | ||
3 | .5 | Certificate of Formation of American Enterprises MPT Holdings, LLC, as amended | ||
3 | .6 | Limited Liability Company Agreement of American Enterprises MPT Holdings, LLC, as amended | ||
3 | .7 | Certificate of Formation of Ameridrives International, LLC, as amended | ||
3 | .8 | Limited Liability Company Agreement of Ameridrives International, LLC, as amended | ||
3 | .9(1) | Certificate of Formation of Boston Gear LLC | ||
3 | .10(1) | Limited Liability Company Agreement of Boston Gear LLC | ||
3 | .11(1) | Certificate of Formation of Formsprag LLC, as amended | ||
3 | .12(1) | Limited Liability Company Agreement of Formsprag LLC, as amended | ||
3 | .13(1) | Amended and Restated Certificate of Incorporation of The Kilian Company | ||
3 | .14(1) | By-laws of The Kilian Company | ||
3 | .15(1) | Certificate of Incorporation of Kilian Manufacturing Corporation | ||
3 | .16(1) | By-laws of Kilian Manufacturing Corporation | ||
3 | .17(1) | Certificate of Formation of Nuttall Gear LLC | ||
3 | .18(1) | Amended and Restated Limited Liability Company Agreement of Nuttall Gear LLC | ||
3 | .19(1) | Certificate of Formation of Warner Electric LLC | ||
3 | .20(1) | Limited Liability Company Agreement of Warner Electric LLC | ||
3 | .21(1) | Certificate of Formation of Warner Electric Technology LLC | ||
3 | .22(1) | Limited Liability Company Agreement of Warner Electric Technology LLC | ||
3 | .23(1) | Certificate of Incorporation of Warner Electric International Holding, Inc. | ||
3 | .24(1) | By-laws of Warner Electric International Holding, Inc. | ||
3 | .25 | Certificate of Formation of Inertia Dynamics, LLC | ||
3 | .26 | Operating Agreement of Inertia Dynamics, LLC as amended | ||
4 | .1(1) | Indenture, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee | ||
4 | .2(1) | Form of 9% Senior Secured Notes due 2011 (included in Exhibit 4.1) | ||
4 | .3(1) | Registration Rights Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto | ||
4 | .4(2) | Indenture, dated as of February 8, 2006, among Altra Industrial Motion Inc. the guarantors party thereto, the Bank of New York, as trustee and paying agent and the Bank of New York (Luxembourg) SA, as Luxembourg paying agent | ||
4 | .5(2) | Form of 111/4 % Senior Notes due 2013 | ||
4 | .6(2) | Registrants Rights Agreement, dated as of February 8, 2006, among Altra Industrial Inc., the guarantors party thereto, and Jefferies International Limited, as initial purchasers | ||
4 | .7(3) | First Supplemental Indenture, dated as of February 7, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York Trust Company, N.A. as trustee | ||
4 | .8(2) | Second Supplemental Indenture, dated as of February 8, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York Trust Company, N.A. as trustee | ||
Table of Contents
Number | Description | |||
4 | .9(3) | Third Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York Trust Company, N.A. as trustee | ||
4 | .10(3) | First Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Inc., the guarantors party thereto, and The Bank of New York as trustee | ||
5 | .1+ | Opinion of Weil, Gotshal Manges LLP. | ||
10 | .22(1) | Credit Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc. and certain subsidiaries of the Company, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Bank, as Lead Arranger | ||
10 | .23(1) | Security Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A. | ||
10 | .24(1) | Patent Security Agreement, dated as of November 30, 2004, among Kilian Manufacturing Corporation, Warner Electric Technology LLC, Formsprag LLC, Boston Gear LLC, Ameridrives International, L.P. and The Bank of New York Trust Company, N.A. | ||
10 | .25(1) | Trademark Security Agreement, dated as of November 30, 2004, among Warner Electric Technology LLC, Boston Gear LLC and The Bank of New York Trust Company, N.A. | ||
10 | .26(1) | Intercreditor and Lien Subordination Agreement, dated as of November 30, 2004, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A. and Altra Industrial Motion, Inc. | ||
10 | .27(1) | Share Purchase Agreement, dated as of November 7, 2005, among Altra Industrial Motion, Inc. and the stockholders of Hay Hall Holdings Limited listed therein. | ||
12 | .1 | Computation of ratio of earnings to fixed charges | ||
21 | .1 | Subsidiaries of Altra Industrial Motion, Inc. | ||
23 | .1 | Consent of Ernst & Young LLP. | ||
23 | .3+ | Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1) | ||
23 | .4 | Consent of BDO Stoy Hayward LLP | ||
24 | .1 | Power of Attorney (included on signature pages hereto) | ||
25 | .1+ | Statement of Eligibility of Trustee onForm T-1 | ||
99 | .1+ | Form of Letter of Transmittal | ||
99 | .2+ | Form of Notice of Guaranteed Delivery | ||
99 | .3+ | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | ||
99 | .4+ | Form of Letter to Beneficial Holders | ||
99 | .5+ | Form of Exchange Agent Agreement, between Altra Industrial Motion, Inc. and The Bank of New York |
(1) | Incorporated by reference to the Registration Statement onForm S-4 (FileNo. 333-124944) filed with the Securities and Exchange Commission on May 16, 2005. | |
(2) | Incorporated by reference to the Registrants Current Report onForm 8-K (FileNo. 333-124944) filed with the Securities and Exchange Commission on February 14, 2006. | |
(3) | Incorporated by reference to the Registrants Annual Report onForm 10-K (FileNo. 333-124944) filed with the Securities and Exchange Commission on May 15, 2006. | |
+ | To be filed by amendment |