CAUTIONARY STATEMENTS
Information provided by the Company from time to time may contain "forward-
looking statements" as defined by the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are typically identified by words or
phrases such as "expects," "anticipates," "intends," "plans," "believes,"
"estimates" and similar expressions. The Company does not intend or assume any
obligation to update any of these forward-looking statements.
Such forward-looking
statements are subject to risks and uncertainties including, but not
limited to, those discussed below, which could cause actual results to differ
materially from those expressed, projected or implied in the forward-looking
statement.
1. The Company's principal operations are cyclical, because they are
directly related to domestic and foreign vehicle production, which is itself
cyclical and dependent on general economic conditions and other factors. Any
significant reduction in such production would have an adverse effect on the
level of the Company's sales to vehicle original equipment manufacturers
("OEMs") and on the Company's financial position and operating results.
2. Certain of the Company's products are currently used exclusively in
sport-utility vehicles and light trucks. Any significant reduction in the
production of such vehicles and trucks would have an adverse effect on the level
of the Company's sales to OEMs and the Company's financial position and
operating results.
3. A number of the Company's major OEM customers manufacture products for
their own use that compete with the Company's products. Although these OEM
customers have indicated that they will continue to rely on outside suppliers,
the OEMs could elect to manufacture products for their own use and in place of
the products now supplied by the Company.
4. The Company has a stated goal of increasing its revenues through the
expansion of existing business and select acquisitions. Failure to grow existing
business in sufficient volume because of changes in the vehicle market and/or
the unavailability of suitable acquisition candidates could result in
nonattainment of this goal.
5. Annual price reductions to OEM customers have become a permanent
feature of the Company's business environment. To maintain its profit margins,
the Company, among other things, seeks price reductions from its own suppliers,
adopts improved production processes to increase manufacturing efficiency,
updates product designs to reduce costs and develops new products whose benefits
support increased pricing. The Company's ability to pass through increased raw
material costs to its OEM customers is also limited, with cost recovery less
than 100% and often on a delayed basis. There can be no assurance that the
Company will be able to reduce costs in an amount equal to the annual price
reductions and the increase in raw material costs.
6. The Company makes a significant annual investment in research and
development activities to develop new and improved products and manufacturing
processes. There can be no assurance that research and development activities
will yield new or improved products or products which will be purchased by the
OEMs, or new and improved manufacturing processes.
7. The Company has a stated goal to expand its operations in all
significant global markets to balance the cyclical nature of the vehicle
business. There can be no assurance that the Company will be able to expand its
existing business or obtain new business outside of North America to balance its
sales. In addition, there can be no assurance that vehicle production in North
America, South America, Europe and Asia will not decline simultaneously.
8. The Company has a stated goal of continuing to increase revenues and
operating earnings at a rate greater than overall world vehicle production by
increasing its content per vehicle with innovative new components and systems.
Any of the following factors could cause the Company to fail to outperform world
automotive production: (a) a significant drop in production of sport utility
vehicles and light trucks, high content vehicles for the Company's products; (b)
a failure of research and development spending to result in new components and
systems which will be purchased by the OEMs; (c) technology changes which could
render the Company's components and systems obsolete; and (d) a reversal of the
trend of supplying systems (which allows the Company to increase content per
vehicle) instead of components.
9. With operations and sales in countries outside the United States, the
Company could be affected by changes in trade, monetary and fiscal policies
(both in the United States and elsewhere), trade restrictions or prohibitions,
import and other charges or taxes, and fluctuations in foreign currency and
foreign exchange rates, and political instability and disputes.
10. Certain of our OEM customers are exploring the use of the Internet to
modify their existing business model for dealing with suppliers. The Company
has a strategy to be responsive to these initiatives through a combination of
increasing cost efficiency and product development. If such efforts are
unsuccessful, the Company would be subject to a greater risk of lower sales and
reduced profitability.
11. The Company bases its growth projections, in part, on long-term
commitments made by our customers. These commitments generally range anywhere
from one year to seven years into the future. If the actual production orders
from our customers do not aproximate such commitments, it could have a material
adverse effect on the Company's growth and financial performance.
12. The Company competes worldwide with a number of other manufactures and
distributors that produce and sell similar products. Price, quality and
technological innovation are the primary elements of competition. Competitors
include vertically integrated units of major customers, as well as, a large
number of independent domestic and international suppliers. Increased pressure
to lower the selling price of the Company's products could effect the Company's
profitability.