1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission File Number: 333-82617
----------
VENTURE HOLDINGS COMPANY LLC
Michigan 38-3470015
VEMCO, INC.
Michigan 38-2737797
VENTURE INDUSTRIES CORPORATION
Michigan 38-2034680
VENTURE MOLD & ENGINEERING CORPORATION
Michigan 38-2556799
VENTURE LEASING COMPANY
Michigan 38-2777356
VEMCO LEASING, INC.
Michigan 38-2777324
VENTURE HOLDINGS CORPORATION
Michigan 38-2793543
VENTURE SERVICE COMPANY
Michigan 38-3024165
EXPERIENCE MANAGEMENT, LLC
Michigan 38-3382308
VENTURE EUROPE, INC.
Michigan 38-3464213
VENTURE EU CORPORATION
Michigan 38-3470019
(State or other (Exact name of registrant as
jurisdiction of specified in its charter) (I.R.S. Employer
incorporation or Identification
organization) Number)
------------------
33662 James J. Pompo
Fraser, Michigan 48026
(Address, including zip code of registrants' principal executive offices)
Registrants' telephone number, including area code:
(810) 294-1500
2
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
------------ --------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
VENTURE HOLDINGS COMPANY LLC
FORM 10-K
TABLE OF CONTENTS
-----------------
PAGE #
------
PART I
Item 1. Business 1
Item 2. Properties 8
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to Vote of Security Holders 12
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholders Matters 12
Item 6. Selected Consolidated Financial Data 12
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations 14
Item 7a. Quantitative and Qualitative Disclosures about Market Risks 20
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 51
PART III.
Item 10. Directors and Executive Officers of Registrant 51
Item 11. Executive Compensation 53
Item 12. Security Ownership of Certain Beneficial Owners and Management 55
Item 13. Certain Relationships and Related Transactions 55
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 59
SIGNATURES 60
3
PART I
ITEM 1. BUSINESS
GENERAL
Venture Holdings Company LLC, ("Venture") is the successor to Venture
Holdings Trust, which was established by Larry J. Winget in 1987. Venture
Holdings Company LLC owns, directly or indirectly, all of the outstanding
capital stock of, or equity interests in, each of its subsidiaries,
except for its 70% owned Mexican and 50% owned Spanish joint ventures. As
used in this report, unless otherwise stated, "our," "us," and "we" refer
to Venture Holdings Company LLC and its subsidiaries.
We are an industry leader and a worldwide full-service supplier, systems
integrator and manufacturer of plastic components, modules and systems
and an industry leader in applying new design and engineering technology
to develop innovative products, create new applications and reduce
product development time. We rank among the largest designers, systems
integrators and manufacturers of interior and exterior plastic components
and systems to the North American and European automotive markets. We
have the capability to provide customers state-of-the-art design and
advanced engineering services 24 hours a day around the world. Our
principal customers include every major North American original equipment
manufacture, or OEM, eleven of the twelve major European OEMs, several
major Japanese OEMs, and leading direct or "Tier I" suppliers. We operate
59 facilities in the following 10 countries: the United States, Canada,
Germany, Spain, France, Hungary, the Czech Republic, Mexico, Netherlands,
and Brazil. Our comprehensive manufacturing capabilities include custom
plastic molding, automated painting and assembly, and material and
product testing and development. We also have extensive tool making
capabilities. Our engineering focuses on anticipating actual production
issues and integrating part design with tool design to create an
efficient manufacturing process. We refer to this emphasis as "design for
manufacture."
We emphasize the design and manufacture of components and integrated
systems as a sole-source supplier. We currently supply components or
systems on over 150 models. Interior products include such items as
instrument panel systems, door panels, airbag covers, side wall trim,
garnishment molding systems and consoles. Exterior products include front
and rear bumper fascias and systems, body side moldings, hatchback doors,
fenders, grille opening panels and reinforcements, farings, wheel lips,
and large body panels such as hoods, sunroofs, doors and convertible
hardtops.
Our principal executive offices are located at 33662 James J. Pompo
Drive, Fraser, Michigan 48026 and our telephone number is (810) 294-1500.
PRINCIPAL PRODUCTS
We design and produce injection, compression, injection compression,
reaction injection ("RIM") and slush molded plastic parts primarily for
OEMs and other Tier I suppliers. We also emphasize complex products and
systems, such as instrument and door panel assemblies, which require the
integration of multiple components into sub-assemblies and complete
systems integration.
The following sets forth information about our automotive products and
vehicle models on which they are used or for which we have been awarded
business.
AWARDED BUSINESS ON
COMPONENT OEM/CUSTOMER CURRENT PRODUCTION (A) FUTURE PRODUCTION (B)
--------- ------------ ---------------------- ---------------------
Interior Trim Audi A3, A4, TT, A8
DaimlerChrysler A Class, Vito, Viano, V-Class, B Van, Breeze, B Van, Breeze, Cirrus,
Cirrus, Concorde, Grand Cherokee, LHS, 300M, Neon, Stratus, Wrangler
Intrepid, Neon, Stratus, Wrangler, Viper,
Actros, PT Cruiser
Finley Industries Beauville
1
4
AWARDED BUSINESS ON
COMPONENT OEM/CUSTOMER CURRENT PRODUCTION (A) FUTURE PRODUCTION (B)
--------- ------------ ---------------------- ---------------------
Ford Continental, Escort, Mountaineer, Taurus
General Motors Blazer, Bravada, Cadillac, S5S, Camaro, Century, Regal, Envoy,
Cavalier, Century, Envoy, LeSabre, Lumina, GMT 370, GMT 560,
Express/Savanna Van, Park Avenue, Regal, STS, Malibu, Saturn
Skylark, Sunfire, Suburban, TransAm, Tahoe, CK
Pickup
Lear GMT600
Nissan HM, Vanette, Terrano, Primera, Serana
Opel Corsa, Vectra, Astra Monocab
Porsche Boxster, 911 Boxster, 911
Renault Espace
Seat Ibiza, Inca, Cordoba, Toledo Inca
Skoda Felicia, Octavia
Toyota Corolla
Volkswagen Polo, Polo, D1
Instrument and Audi A2, A4, A8, TT Coupe
Door DaimlerChrysler A Class, B Van, Vito, V Class, Jeep Liberty
Panels/Assemblies General Motors Corvette, Express/Savanna
Nissan Serena
Opel Corsa, Tigra
Porsche Boxster, 911 Boxster, 911
Renault Espace
Seat Ibiza, Inca, Cordoba, Vario Cordoba, Ibiza, Vario
Skoda Felicia, Fabia B5
Volkswagen Passat, T4, Caddy D1
Airbag Covers Autoliv Accord, Alero Cobra, Caravan, Grand Am, Grand
Cherokee, Mazda 626, Mustang, Mercedes,
Navigator, S5S, Sable, Subaru, Taurus, Town &
Country, Volkswagen Voyager
Breed Suzuki Tracker, Wrangler Chrysler RS, Chrysler
DaimlerChrysler A Class
TRW Breeze, Cirrus, Mustang, Neon, Stratus, PN96,
Town Car, Ranger, Expedition, Jeep Liberty, B
Van, FN150, FN145
Cladding/Exterior Audi A3, A6
BMW 3 Series, 7 Series, K 1200 RS 3 Series, 5 Series, 7
Series
DaimlerChrysler A Class, Dakota, Dakota Quad, Durango, Eclipse, MRR Roadster, Z-Car
Vito, V Class, Actros
Ford Escort, Explorer, Expedition, F-Series Pickups,
Mustang, Navigator, Nissan, Quest, Ranger,
Villager
General Motors Astro Van, Aurora, Blazer, Bonneville, Malibu, CK Pickup
Corvette, Express/Savanna Van, Firebird, Grand
Am, Grand Am GT, Impala, Lumina, Malibu,
Monte Carlo, Opel, Safari, Saturn, Silhouette,
Sonoma, S10, Suburban, Sunfire, Tahoe,
Transport, Yukon, Venture
Nissan Serena, Micra, Almera
Opel Vectra, Frontera Vectra (Epsilon)
PSA Peugeot Xantia, Xsara, Saxo, Berlingo A6, 807
2
5
AWARDED BUSINESS ON
COMPONENT OEM/CUSTOMER CURRENT PRODUCTION (A) FUTURE PRODUCTION (B)
--------- ------------ ---------------------- ---------------------
Renault Espace, Kangoo, Clio, Scenic 4x4 Megane, Scenic, Avantime
Seat Ibiza, Toledo
Skoda Oktavia, Fabia, Felicia B5
Toyota Corolla
Volkswagen Polo, Beetle, Bora, Lupo
Volvo V/S 40
Audi A4, TT, A3
Fascias BMW 3 Series, 5 Series 3 Series
DaimlerChrysler Vito, Viano
Fiat 178 178
Ford F-Series Pick-up, Explorer
General Motors Astro, DeVille, Eldorado, Extreme, Montana,
Seville, Safari, Transport, Opel, STS, Venture
Isuzu TF 140 TF 140
Karmann Golf Cabrio
Mitsubishi Carisma, Spacestar, Colt LVC Spacestar, Colt LVC
Nissan Primera
Opel Omega, Catera, Vectra, Frontera Vectra (Epsilon)
PSA Peugeot 206, Berlingo, 806, Picasso 807
Porsche Boxster, 911 Boxster, 911
Renault Espace, Twingo, Clio, Kangoo, Scenic Scenic, Master
Skoda Felicia, Octavia, Fabia B5
Seat Ibiza, Inca, Cordoba, Toledo, Leon, Vario Ibiza, Inca, Cordoba,
Vario
Toyota P165, P151, P690, P960 Corolla, P690
Volvo V/S 40 P1X
Volkswagen Passat, Golf, Polo, Jetta, Caddy, Bora, Lupo, Polo, Golf
LT2, Utility, NB
DaimlerChrysler W203, T1N, V Class, NCV 3
Functional Ford Taurus, F-Series Pick-up, Econoline Van, Ranger, Navigator,
Jaguar, Lincoln LS, Mustang, Navigator, Expedition
Expedition, Ka, Thunderbird
Components General Motors Blazer, Delphi-AC Spark Plug, G Van,
Express/Savanna Van, Seville, Skylark
Nissan Primera, Sentra
Opel Astra, Corsa, Vectra
PSA Peugeot 306, 806, Berlingo, Picasso, C5, Saxo, 106, 206 306, C5, D2, A8
Scenic, Master P1X
Renault Twingo, Clio, Kangoo, Scenic Scenic, Master
Volvo P1X
Club Car Golf Cart bodies
Miscellaneous Whirlpool Consumer white goods
Non-Automotive Esswein Consumer white goods
Panasonic Television cases
Supercart Shopping Trolley
Naschem 76mm Bombcontainer
New Holland Series 2 Hoods, Series 3 Hoods
Case Tractor MU7 Tractor Exterior, 2883 Combine
3
6
------------------------
(a) Represents models for which we will produce and supply products in
2001 and, in most cases, future years beyond 2001.
(b) The amount of products produced under these awards is dependent on
the number of vehicles manufactured by the OEMs. Many of the models are
versions of vehicles not yet in production. There can be no assurance
that any of these vehicles will be produced or that we will generate
certain revenues under these awards even if the models are produced.
CUSTOMERS AND MARKETING
We compete in the global OEM supplier industry, which is characterized by
a small number of OEMs, which are able to exert considerable pressure on
OEM suppliers. Sales to these customers consist of a large number of
different parts, tooling and other services, which are sold to separate
divisions and operating groups within each customer's organization. We
typically receive purchase orders from such customers that generally
provide for supplying the customer's requirements for a particular model
or model year rather than for manufacturing a specific quantity of
products. The loss of any one of such customers or purchase orders, or a
significant decrease in demand in the general retail automobile industry,
or for certain models or a group of related models sold by any of our
major customers could have a material adverse effect on us. In addition,
our failure to obtain new business on new models or to retain or increase
business on redesigned existing models could adversely affect us. OEM
customers are also able to exert considerable pressure on component and
system suppliers to reduce costs, finance tooling, improve quality and
provide additional design and engineering capabilities. There can be no
assurance that the additional costs of increased quality standards, price
reductions or additional engineering capabilities required by OEMs will
not have a material adverse effect on our financial condition or results
of operations.
Our principal customers include every major North American OEM, eleven of
the twelve major European OEMs, several major Japanese OEMs, and leading
Tier 1 suppliers, giving us geographic diversity. We maintain diversity
of volume among the various divisions of the OEMs, and we are further
diversified by our position as a supplier for a number of high volume
vehicle platforms manufactured by those divisions. We continue to pursue
new opportunities with North American, European, and Japanese OEMs. Our
non-automotive customers include Club Car, Inc., Whirlpool, Case Tractor,
Panasonic, Supercart, Naschem, New Holland and Esswein. See Note 13 of
Notes to Consolidated Financial Statements for a description of our North
American and European segments.
4
7
The approximate percentage of net sales to our principal customers for
the years ended December 31, 1998 through 2000 are shown below:
YEAR ENDED DECEMBER 31,
CUSTOMER 2000 1999 1998
-------- ---- ---- ----
NORTH AMERICA:
General Motors 13% 18% 38%
Ford 8 11 23
DaimlerChrysler 5 7 15
Foreign OEM's -- 1 5
Tier 1 Suppliers to OEMs 3 6 15
Other Automotive 2 2 --
Non-Automotive 1 1 4
EUROPE:
Audi AG 14 13 --
Volkswagen AG 11 9 --
DaimlerChrysler AG 6 5 --
PSA Peugeot Citroen 6 4 --
Renault SA 6 2 --
Other Automotive 5 5 --
Skoda Automobilova 4 3 --
Bayerische Motoren Werke AG (BMW) 4 3 --
Seat, S.A. 5 5 --
Porsche AG 3 2 --
Adam Opel AG 2 1 --
Non-Automotive 1 1 --
OTHER:
Isuzu Motors Limited 1 1 --
----------- ----------- -----------
TOTAL 100% 100% 100%
=========== =========== ===========
Our sales are made directly to the OEMs with marketing, management and
customer support assistance provided by an affiliated company, wholly
owned by Mr. Winget, and by other unaffiliated entities. See "Item 13.
Certain Relationships and Related Transactions."
RAW MATERIALS
Our manufacturing processes use a variety of raw materials, principally
engineered plastic resins such as nylon, polypropylene (including
thermoplastics), polycarbonate, acrylonitrile-butadiene-styrene,
fiberglass reinforced polyester, polyethylene terephthalate ("PET") and
thermoplastic polyurethane ("TPU"); a variety of ingredients (such as
fiberglass) used in compounding materials used in the compression molding
process; paint related products; and steel for production molds. Although
all of these materials are available from one or more suppliers, our
customers generally specify materials and suppliers to be used by us in
connection with a specific program. We procure most of our raw materials
by issuing annual purchase orders under which our annual needs for such
materials are estimated. Releases against such purchase orders are made
only upon our receipt of corresponding orders from our customers. We have
not experienced raw material shortages, although there can be no
assurance that we will not experience raw material shortages in the
future. We have, as a result of an increase in world oil prices and
pressures from competing industries, seen an increase in raw material
prices and we expect more in the future. We are working with our
customers and alternative suppliers to offset these increases, but there
can be no assurance that we can fully offset the effect of any increase,
which may negatively impact our gross margin.
COMPETITION
Our business is highly competitive, and competition generally occurs on
the basis of product groups. A large number of actual or potential
competitors exist, including the internal component operations of the
OEMs as well as independent suppliers, some of which are larger than us.
The competitive
5
8
environment has been affected in recent years by supplier consolidations
resulting from OEM supplier optimization policies and the spin-off by
OEMs of formerly in-house plastics manufacturing facilities. We believe
these consolidations and divestitures could benefit our future product
pricing, as formerly marginal competitors are removed and spun-off
in-house manufacturing facilities are forced to compete independently.
We compete primarily on the basis of quality, cost, timely delivery and
customer service and, increasingly, on the basis of design and
engineering capability, painting capability, new product innovation,
product testing capability and the ability to reduce the time from
concept to mass production, commonly referred to as "art to part." Some
of the OEMs have adopted supplier management policies, which designate
preferred future suppliers and, in some cases, encourage new suppliers to
supply selected product groups. We believe that as the OEMs continue to
strive to reduce new model development cost and timing; innovation, and
design and engineering capabilities will become more important as a basis
for distinguishing competitors. We believe that we have an outstanding
reputation among OEMs in these two areas which has been enhanced as a
result of the Peguform acquisition.
We believe that in both North America and Europe, our two largest
markets, we maintain a competitive advantage due to our position as a
full-service OEM supplier. Our major North American competitors include
Magna International, Meridian Automotive (formerly Cambridge Industries),
the Textron Automotive division of Textron Corporation, Lear Corporation,
The Budd Company plastic division, Johnson Controls, Inc., and Visteon
Automotive, plus a large number of smaller competitors.
The European market is best described in terms of interior and exterior
products. Our market position is enhanced as a result of the considerable
synergies between interior and exterior modules and by our technological
leadership in injection molding. In interior products, we focus on
dashboard and door panel modules. In both of these fragmented product
markets we rank behind market leader Faurecia, in a group which includes
Plastic Omnium, Johnson Controls, Magna, Lear, Visteon, and Textron. In
exterior products, we focus on bumper systems, and we have a favorable
market position relative to Plastic Omnium, Dynamit Nobel, Magna,
Faurecia and Rehau.
EMPLOYEES
At December 31, 2000, we employed approximately 12,900 persons worldwide.
In North America, we have 1,096 hourly persons at our Seabrook, New
Hampshire; Lancaster, Ohio; and Grand Blanc, Michigan facilities who are
covered by collective bargaining agreements with the United Auto Workers.
Our contract with Seabrook employees expires in June 2002, the Lancaster
contract expires in June 2001 and Grand Blanc expires in May 2003. At our
Conneaut, Ohio facility, 246 employees are represented by a collective
bargaining agreement with the Teamsters Union which expires in August of
2003. Formal negotiations for the Lancaster contract expiring in June
2001 have not begun. We have not experienced any work stoppages in North
America and consider our relations with our North American employees to
be good. From time to time the Company is notified that labor unions are
attempting to organize some of our remaining hourly work force but
nothing official has happened.
For reasons of flexibility, part of our European workforce is employed on
short-term contracts. In addition, leased personnel are utilized in
Europe on a short-term basis to cover peak requirements.
6
9
The international workforce is covered by collective bargaining
agreements with the following workers unions:
Germany: IG Bergbau, Chemie und Erden and IG Holz und Kunststoff
France: CFTC, CGC, CGT, CGT-FO and Syndicat National Autonome des
Plastiques
Spain: Comisiones Obreras, Union General Trabajadores and Central
Intersindical Galega
Czech Republic: KOVO
Brazil: Union of the Workers in the Industries of Metal, Mechanics, Electrical Material,
Components and Parts for Automotive Vehicles of Great Curitiba
Although we have experienced several minor work stoppages in France in
the past, we believe that our relationships with the European workers
councils and unions are good.
PATENTS
We have the right to use various patents, which aid in maintaining our
competitive position. These patents begin to expire over the next 15
years. The expiration of such patents is not expected to have a material
adverse effect on our financial position or results of operations. See
"Item 13. Certain Relationships and Related Transactions."
ENVIRONMENTAL
Our operations are subject to numerous federal, state and local laws and
regulations pertaining to the generation and discharge of materials into
the environment. We have taken steps related to such matters in order to
minimize the risks of potentially harmful aspects of our operations on
the environment. However, from time to time, we have been subject to
claims asserted against us by regulatory agencies for environmental
matters relating to the generation and disposal of hazardous substances
and wastes. Some of these claims relate to properties or business lines
acquired by us after a release had occurred. In each known instance,
however, we believe that the claims asserted against us, or obligations
incurred by us, will not result in a material adverse effect upon our
financial position or results of operations. Nonetheless, there can be no
assurance that activities at these facilities or facilities acquired in
the future, or changes in environmental laws and regulations, will not
result in additional environmental claims being asserted against us or
additional investigations or remedial actions being required.
As previously reported, we have been involved in legal proceedings with
the Michigan Department of Environmental Quality (MDEQ) concerning the
emissions from our Grand Blanc paint facility. In October 1999, the
parties to the litigation reached an agreement in principle to settle the
case by the installation of full pollution abatement equipment at the
Grand Blanc facility and payment by us of $1.1 million. The agreement was
subject to several conditions, primarily rezoning of the property. In
January of 2000, rezoning approval was granted for the new equipment. In
February of 2000, we applied for new permits for the installation of the
equipment. We entered into a consent decree with MDEQ in January of 2001.
The $1.1 million payment was made in February of 2001. As required under
the decree, we plan to make certain capital expenditures of approximately
$8.5 million to the current Grand Blanc systems. We are obligated to
complete and expect to complete the installation of the new abatement
equipment by July of 2001. See "Item 3. Legal Proceedings."
In 1998 and 1999, the MDEQ issued 3 letters of violation to our Grand
Rapids, Michigan facility, alleging violations of certain emission
limitations and coating solvent content requirements of the facility's
state air use permit. In late 2000, we filed suit against the MDEQ
contesting some of these violations. In 2001, jointly with MDEQ, we have
suspended any proceedings under this suit and are presently reviewing and
discussing the alleged violations in an attempt to resolve this matter
without further litigation, as it is possible that some of the violations
may be the result of computation and reporting discrepancies. It is
possible that the MDEQ may seek administrative penalties in connection
with the resolution of these matters. We do not believe that the amount
of those penalties,
7
10
if any, will have a material adverse effect on our operations, or that
the resolution of these matters will require material capital
expenditures, although there can be no assurance that this will be the
case.
The New Hampshire Department of Environmental Services is currently
undertaking an evaluation of certain modifications made in the early
1990's to the paint lines at our Seabrook, New Hampshire facility to
determine whether those changes made that facility subject to new source
review. The outcome of that evaluation cannot reasonably be predicted or
estimated at this time. If the New Hampshire Department of Environmental
Services concludes that the facility is subject to new source review, it
would likely require the installation of emission control equipment and
potentially other capital and operational expenditures, and could
possibly give rise to enforcement proceedings against the facility. While
we do not believe that any of the foregoing would have a material adverse
effect on our operations, there can be no assurance that this will be the
case.
In December of 1999, MDEQ contacted the Grand Blanc facility relating to
the classification of wastes leaving the facility. We have been
discussing the issue with the MDEQ and have been conducting tests of the
waste. As a result of the contact and to avoid future liability, we have
voluntarily changed the classification of the waste on all subsequent
disposals even though we disagree with MDEQ. In addition, we have changed
materials and certain processes to remove the concern of the MDEQ. By
changing the classification of the waste for disposal subsequent to the
contact, we have limited our potential liability to disposals prior to
the contact. However, we may be exposed to some liability for past
disposal. On March 20, 2000 we received a notice of warning from MDEQ
regarding this matter. In light of the notice to Grand Blanc, we
voluntarily undertook the same actions and clean up procedures at our
Grand Rapids facility to minimize risk as the same procedures and methods
were used at the Grand Rapids and Grand Blanc facilities. At the present
time we are unable to quantify or qualify any liability for these
disposals.
Estimates of the future cost of these environmental matters are
necessarily imprecise due to numerous uncertainties, including the
enactment of new laws and regulations, the development and application of
new technologies, the identification of new sites for which we may have
remediation responsibility and the apportionment and collectibility of
remediation costs among responsible parties. We establish reserves for
these environmental matters when the loss is probable and reasonably
estimable. At December 31, 2000, we had a reserve of approximately $1.5
million, and at December 31, 1999, we had a reserve of $1.8 million to
address the issues discussed above and for compliance monitoring
activities. We periodically evaluate and revise estimates for
environmental reserves based upon expenditures against established
reserves and the availability of additional information. It is possible
that final resolution of some of these matters may require us to make
expenditures in excess of established reserves, over an extended period
of time and in a range of amounts that cannot be reasonably estimated.
Although the ultimate cost of resolving these matters could not be
precisely determined at December 31, 2000, we believe, based on currently
known facts and circumstances, that the disposition of these matters will
not have a material adverse effect on our consolidated financial position
and results of operations.
ITEM 2. PROPERTIES
Our executive offices are located in Fraser, Michigan. Our North American
molding operations are conducted at fourteen facilities in Michigan,
Ohio, Kentucky, Indiana and New Hampshire. We also operate twenty plants
in Europe, Mexico and Brazil. In addition, we have ten module centers
located in four European countries in order to meet our OEM's
requirements for just-in-time deliveries. The utilization and capacity of
our facilities may fluctuate based upon the mix of components we produce
and the vehicle models for which we are producing the components. We
believe that substantially all of our property and equipment is in good
condition and that we have sufficient capacity to meet our current
manufacturing and distribution needs through the 2003 model year. As a
result of business previously awarded by Ford Motor Company, we were
required to acquire new facilities and equipment for the Ford Ranger
program. We have been advised, by Ford Motor, that this program
8
11
has been cancelled, eliminating the need for the facilities and
equipment. We are seeking cancellation costs from Ford in conjunction
with this program.
The following table sets forth certain information concerning our
principal facilities:
SQUARE TYPE OF
LOCATION FOOTAGE INTEREST DESCRIPTION OF USE
-------- ------- -------- ------------------
MICHIGAN
Masonic 178,000 Leased(1) Molding, Mold Fabrication and Repair
Malyn 23,000 Leased(1) Molding
22,000 Leased(1) Molding
18,000 Owned Warehouse
Technical Center 56,000 Owned Headquarters, Laboratory, Tryout, Mold
Fabrication
Commerce 24,000 Leased(1) Mold Fabrication and Repair
Doreka Center 6,000 Leased Engineering and Sales
Grand Blanc 365,000 Owned Molding, Painting, Assembly
Grand Rapids 440,000 Leased Molding, Painting, Assembly
125,000 Leased Assembly Warehouse
Harper 180,000 Leased(1) Molding, Painting, Assembly
Groesbeck 128,000 Owned Molding
100,000 Leased Warehouse
Flint 208,000 Leased(1) Assembly, Warehouse, Shipping
Almont 10,000 Leased(1) Mold Fabrication and Repair
10,000 Leased(1) Mold Fabrication and Repair
Troy Center 10,000 Leased Mold Fabrication
Hillsdale 119,000 Owned Molding, Painting, Assembly
KENTUCKY
Hopkinsville 104,000 Owned Molding, Painting, Assembly
113,400 Leased Warehouse
NEW HAMPSHIRE
Seabrook 390,000 Owned Molding, Painting, Assembly
12,100 Leased Assembly
OHIO
Conneaut 183,000 Leased Molding, Painting, Assembly
Lancaster 156,000 Owned Molding, Painting, Assembly
INDIANA
Madison 71,000 Owned Painting and Assembly (inactive)
Hartford City 116,000 Owned Molding and Assembly
Portland 120,000 Owned Molding and Painting (inactive)
9
12
SQUARE TYPE OF
LOCATION FOOTAGE INTEREST DESCRIPTION OF USE
-------- ------- -------- ------------------
WALLACEBURG, ONTARIO, CANADA
Venture Canada 52,500 Owned Painting, Assembly, Warehouse
GERMANY
Botzingen 167,000 Owned Molding, Painting and R&D Center
415,000 Leased Molding, Painting and R&D Center
Gottingen 274,000 Owned(2) Molding and Painting
Korntal 35,000 Leased Module Center
Ingolstadt 118,000 Leased Module Center
Meerane 161,000 Leased Slushing and Assembly
Mosel 67,000 Leased Module Center
Munchen 52,000 Leased Module Center
Neckarsulm 25,000 Leased Module Center
Neustadt 506,000 Owned Molding and Painting
Oldenburg 312,000 Owned Molding and Painting
Rastatt 65,000 Leased Module Center
Regensburg 75,000 Leased Module Center
Umkirch 38,000 Leased Warehouse
FRANCE
Burnhaupt 127,000 Leased Molding and Painting
Noeux-les Mines 312,000 Leased Molding and Painting
Pouance 140,000 Leased Molding and Painting
54,000 Owned Molding and Painting
Rueil 4,000 Leased Module Center
Vernon 194,000 Leased Molding and Painting
HUNGARY
Gyor 26,000 Leased Module Center
SPAIN
Palencia 244,000 Owned Molding and Painting
Polinya 269,000 Owned Molding and Painting
Sant Esteve Sesrovires 107,000 Leased Molding
Vigo 133,000 Owned Molding and Painting
Zaragoza 267,000 Owned(3) Molding
10
13
SQUARE TYPE OF
LOCATION FOOTAGE INTEREST DESCRIPTION OF USE
-------- ------- -------- ------------------
THE CZECH REPUBLIC
Liban 118,000 Owned Molding
Liberec 950,000 Owned Molding and Painting
BRAZIL
Curtiba 204,000 Leased Molding and Painting
MEXICO
Puebla 66,000 Leased(4) Molding
NETHERLANDS
Sittard 95,000 Leased Module Center
UNITED KINGDOM
Luton 69,000 Owned Molding, Painting and Assembly
Luton 57,000 Leased Molding, Painting and Assembly
Luton 25,000 Leased Assembly
Luton 15,000 Leased Warehouse
-------------------------
(1) Leased from an affiliate of Venture. See "Item 13. Certain
Relationships and Related Transactions."
(2) A portion of this facility is used on the basis of hereditary
building rights, which expire in 2012.
(3) Operated by a joint venture in which we hold a 50% interest.
(4) Operated by a joint venture in which we hold a 70% interest.
In addition to the above facilities, we rely upon certain affiliated
companies, which are owned or controlled by Mr. Winget, to provide
facilities, machinery and equipment, technology and services that are
necessary for us to be a full-service supplier. Deluxe Pattern Company, a
company wholly owned by Mr. Winget's living trust, makes available to us
a 30,000 square foot advanced design and model building facility under a
usage agreement. In addition, we have subcontracted certain work to Nova
Corporation, a business in which Mr. Winget has a significant equity
interest. See "Item 13. Certain Relationships and Related Transactions."
ITEM 3. LEGAL PROCEEDINGS
On February 23, 1998, the Attorney General of the State of Michigan and
the Michigan Department of Environmental Quality instituted legal
proceedings in state court alleging that we have ongoing violations of
air pollution control laws, primarily related to the level of emissions
and odors discharged from our Grand Blanc paint facility. In October of
1999, the parties reached an agreement in principle to settle the case by
installation of full pollution abatement equipment at Grand Blanc, the
payment of $1.1 million and execution of a consent decree all of which is
subject to several conditions precedent. In January of 2001, upon the
signing of a consent decree this action was jointly dismissed. See "Item
1. Business - Environmental" for the current status of events. As
required under the decree, we plan to make certain capital expenditures
of approximately $8.5 million to the current Grand Blanc systems. During
the first quarter of 1999, the U.S. Environmental Protection Agency
issued a notice of violation and has taken an active role in monitoring
these legal proceedings and may take action separate and distinct from
the legal proceedings begun by the State
11
14
of Michigan and the Michigan Department of Environmental Quality. We have
not been advised what the U.S. Environmental Protection Agency will do in
light of the consent decree with the State of Michigan. Upon our
compliance with the consent decree, we expect no action from the U.S.
Environmental Protection Agency, however we can offer no assurance that
will happen.
In December of 2000, we filed suit against the State of Michigan and
Michigan Department of Environmental Quality over notices of air
pollution violations at our Grand Rapids facility. In February of 2001,
those proceeding were jointly suspended while the parties work to find an
acceptable solution to the issues. This may require the installation of
new abatement equipment at the facility, however in light of production
changes at the plant no new capital expenditures may be required. It is
still too early in the process to assess what actions may be taken or
required.
In late 2000, we were notified by Union Carbide Corporation that, based
upon our usage of some paint application equipment at our Grand Blanc
facility, we were obligated to pay certain royalties related to patent
infringements. We are currently reviewing this matter with our attorney.
At the present time, we have been unable to reach a conclusion as to
possible infringements because of modifications we made, and the amount
of any royalty that would be owed. We do use the Union Carbide equipment
at our Seabrook facility, without the modifications and are paying the
royalty at that location.
In addition to the matters described above and under "Item 1. Business --
Environmental," we are a party to several legal proceedings incidental to
the conduct of our business. We do not believe that any of these actions,
individually or in the aggregate, will have a material adverse effect on
our financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Venture Holdings Company LLC is a limited liability company and 100% of
our membership interests are held by Venture Holdings Trust, of which Mr.
Winget is the sole beneficiary. There is no market for the interests of
Venture Holdings Company LLC. Venture Holdings Company LLC owns, directly
or indirectly, all of the outstanding capital stock of, or equity
interests in our subsidiaries, except for certain of our joint ventures.
There is no market for such capital stock or equity interests.
We did not pay any cash dividends during the past three years, and have
no current plan to pay any cash dividends in the near term other than for
the payment of the beneficiary's tax obligations resulting from the
activities of the Company. We are restricted in our ability to pay
dividends under various debt covenants.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated balance sheet data presented below as of
December 31, 2000 and 1999 and the income statement data presented below
for the years ended December 31, 2000, 1999 and 1998, are derived from
our consolidated financial statements, audited by Deloitte & Touche LLP,
independent auditors, and should be read in conjunction with our audited
consolidated financial statements and notes thereto included elsewhere
herein. The selected consolidated balance sheet data presented below as
of December 31, 1998, 1997 and 1996 and the income statement data
presented below for the years ended December 31, 1997 and 1996, are
derived from our audited consolidated financial statements not included
herein.
12
15
YEARS ENDED DECEMBER 31,
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
INCOME STATEMENT DATA (1) (2):
Net sales 1,829,965 1,366,170 645,196 624,113 351,777
Cost of products sold 1,602,326 1,215,472 532,809 521,361 302,940
Gross profit 227,639 150,698 112,387 102,752 48,837
Selling, general and administrative
Expense 130,444 109,215 59,689 57,217 26,588
Payments to beneficiary in lieu of
taxes 1,165 259 535 472 666
Income from operations 96,030 41,224 52,163 45,063 21,583
Interest expense 102,513 72,606 36,641 30,182 19,248
Other (income) (3) (5,682) (31,222) -- -- --
Net (loss) income before taxes (801) (160) 15,522 14,881 2,335
Tax (benefit) provision (4) (11,289) 8,227 1,954 3,358 336
Minority interest 1,406 554 -- -- --
Net income (loss) before
extraordinary loss 9,082 (8,941) 13,568 11,523 1,999
Extraordinary loss on early
Extinguishment of debt -- 5,569 -- -- 2,738
Net income (loss) 9,082 (14,510) 13,568 11,523 (739)
Ratio of earnings to fixed charges (5) -- -- 1.4X 1.5X 1.2X
OTHER FINANCIAL DATA:
EBITDA (6) 198,371 120,462 94,216 80,391 46,123
Depreciation and amortization 91,077 75,996 39,320 32,147 22,628
Capital expenditures 85,718 53,176 24,706 33,012 64,593
Net cash provided by (used in):
Operating activities 61,346 88,811 (5,393) (13,058) 35,003
Investing activities (6,526) (496,847) (24,706) (37,093) (121,547)
Financing activities (43,358) 416,854 28,752 36,192 82,976
BALANCE SHEET DATA
Working capital 129,707 182,698 168,655 125,101 83,403
Property, plant and equipment - net 553,038 562,838 200,544 205,765 201,035
Total assets 1,426,303 1,414,976 541,315 524,122 498,067
Total debt 876,983 920,376 364,939 336,188 299,996
Member's equity 67,037 60,903 77,113 64,282 52,759
--------------
(1) Venture Holdings Company LLC operates as a holding company and has no
independent operations of our own. Separate financial statements for our
subsidiaries have not been presented because we do not believe that such
information is material.
(2) The results for 1996 include the operations of Bailey Corporation
from August 26, 1996, and of AutoStyle from June 3, 1996. The 1999
results include the operations of Peguform GmbH and our subsidiaries from
May 28, 1999.
(3) Other (income) is comprised of unrealized and realized gains and
losses on currency exchange, unrealized and realized gains and losses on
investments and other miscellaneous non-operating items.
(4) This (benefit) provision relates to Venture Holdings Corporation
(which operates Bailey Corporation) and the Peguform subsidiaries (see
Note 2 above). Other significant subsidiaries of Venture have elected "S"
corporation status under the Code, or are limited liability companies
taxed as partnerships, and, consequently, do not incur liability for
federal and certain state income taxes.
(5) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of net income before extraordinary items and fixed
charges. Fixed charges consist of (i) interest, whether expensed or
capitalized; (ii) amortization of debt discount and debt financing costs;
and (iii) the portion of rental expense that management believes is
representative of the interest component of rental expense. For the year
ended December 31, 2000 and 1999, our earnings were insufficient to cover
fixed charges by $2.2 million and $0.7 million, respectively. This
calculation is not our fixed charge coverage calculation required under
the credit agreement.
13
16
(6) EBITDA represents net (loss) income before extraordinary loss, taxes
(including the Michigan single business tax), depreciation, amortization,
other non-cash items, interest and payment to beneficiary in lieu of
taxes, as defined in debt covenants. EBITDA is not presented as an
alternative to net income, as a measure of operating results or as an
indicator of our performance, nor is it presented as an alternative to
cash flow or as a measure of liquidity, but rather to provide additional
information related to debt service capacity. EBITDA should not be
considered in isolation or as a substitute for net income or cash flow
data prepared in accordance with generally accepted accounting principles
or as a measure of a company's profitability. EBITDA, while commonly
used, is not calculated uniformly by all companies and should not be used
as a comparative measure without further analysis, nor does EBITDA
necessarily represent funds available for discretionary use. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations" for a discussion of liquidity and operating results.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion and analysis contains a number of "forward
looking" statements within the meaning of the Securities Exchange Act of
1934 and are subject to a number of risks and uncertainties. Such factors
include, among others, the following: international, national and local
general economic and market conditions; demographic changes; the size and
growth of the automobile market or the plastic automobile component
market; our ability to sustain, manage or forecast our growth; the size,
timing and mix of purchases of our products; new product development and
introduction; existing government regulations and changes in, or the
failure to comply with, government regulations; adverse publicity;
dependence upon original equipment manufacturers; liability and other
claims asserted against us; competition; the loss of significant
customers or suppliers; fluctuations and difficulty in forecasting
operating results; changes in business strategy or development plans;
business disruptions; product recalls; warranty costs; the ability to
attract and retain qualified personnel; the ability to protect
technology; retention of earnings; control and the level of affiliated
transactions.
On May 28, 1999, we acquired Peguform GmbH, a leading international
designer and manufacturer of complete interior modules, door panels and
dashboards and of exterior modules and other structural plastic body
parts, including bumper fascias and hatchback doors.
14
17
The following table sets forth, for the periods indicated, our
consolidated statements of income expressed as a percentage of net sales.
This table and the subsequent discussion should be read in conjunction
with the consolidated financial statements and notes thereto included
elsewhere herein.
Years Ended December 31,
2000 1999 1998
---- ---- ----
Net sales 100.0 100.0% 100.0%
Cost of products sold 87.6 89.0 82.6
------- ------ ------
Gross profit 12.4 11.0 17.4
Selling, general and administrative expense 7.1 8.0 9.2
Payments to beneficiary in lieu of distributions 0.1 0.0 0.1
------- ------ ------
Income from operations 5.2 3.0 8.1
Interest expense 5.6 5.3 5.7
Other (income) expense (0.3) (2.3) 0.0
------- ------ ------
Income before taxes (0.1) 0.0 2.4
Tax (benefit) provision (0.6) 0.6 0.3
Minority interest 0.1 0.0 0.0
------- ------ ------
Net income (loss) before extraordinary loss 0.4 (0.6) 2.1
Extraordinary loss on early extinguishment of debt 0.0 0.5 0.0
------- ------ ------
Net income (loss) 0.4% (1.1)% 2.1%
======= ====== ======
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
Net sales increased $463.8 million for the year ended December 31, 2000,
or 33.9%, to $1,829.9 million, compared to net sales of $1,366.2 million
for the year ended December 31, 1999. This increase was mainly due to the
addition of Peguform's net sales for twelve months in 2000 compared to
seven months in 1999. On a proforma basis, sales decreased $96.6 million
from 1999. $74.3 million of the decrease was due to Euro devaluation
offset by net increases in European volumes. Domestically, sales
decreased $22.4 million, or 3.7%, due to a general softening of the
automotive market.
Gross profit for the year ended December 31, 2000 increased $76.9
million, or 51.0%, to $227.6 million compared to $150.7 million for the
year ended December 31, 1999. As a percentage of net sales, gross profit
increased from 11.0% for the year ended December 31, 1999 to 12.4% for
the year ended December 31, 2000. This dollar increase was mainly due to
the addition of Peguform's activity for twelve months in 2000 compared to
seven months in 1999. Domestically, gross profit as a percent of sales
increased 1.0% due to the implementation of lean manufacturing techniques
despite sales reductions. Internationally, gross profit as a percent of
sales increased 1.0% due to manufacturing efficiencies. We expect to
continue to achieve manufacturing efficiencies in 2001. Effective January
1, 2001, we granted DaimlerChrysler Corporation in North America a 5%
sales price reduction. We are attempting to recover all of this from
either our suppliers or our own operating efficiencies. We may not be
able to fully offset this reduction which could reduce margins.
Selling, general and administrative expense for the year ended December
31, 2000 increased by $21.2 million, or 19.4%, to $130.4 million compared
to $109.2 million for the year ended December 31, 1999. As a percentage
of net sales, selling, general and administrative expense decreased to
7.1% for the year ended December 31, 2000 as compared to 8.0% for the
year ended December 31, 1999. The overall dollar increase was mainly due
to the addition of Peguform's activity for twelve months in 2000 compared
to seven months in 1999. The decrease as a percent of net sales is
primarily attributable to Peguform's lower selling, general and
administrative expense as a percentage of net sales, relative to
Venture's. Venture Sales & Engineering (a related party) eliminated $2.6
million of management fees relating to sales commissions charged to
us. This was done due to the slow down in the automotive industry
and to ensure that we remained competitive.
As a result of the foregoing, income from operations for the year ended
December 31, 2000 increased $54.8 million, or 132.9%, to $96.0 million,
compared to $41.2 million for the year ended December 31, 1999. As a
percentage of net sales, income from operations increased to 5.2% in
fiscal 2000 from 3.0% in fiscal 1999.
Interest expense increased $29.9 million to $102.5 million in fiscal 2000
compared to $72.6 million in fiscal 1999. The increase is the result of
incurring interest for twelve months in 2000 as opposed
15
18
to only seven months in 1999 related to the increased debt associated
with the acquisition of Peguform and rising interest rates. $2.5
million of this expense is noncash amortization from the termination
of interest rate swaps.
Other (income) expense is primarily comprised of $79.0 million of
realized gains and $41.1 million of unrealized losses related to the
termination of the cross-currency interest rate swap agreements and a
portion of the foreign exchange collars. Other (income) expense was also
comprised of unrealized currency losses of $41.9 million, which were
offset, in part, by realized currency gains of $8.6 million. See note 7
of Notes to Consolidated Financial Statements.
For the year ended December 31, 2000, we reported a net tax benefit of
$11.3 million. The tax benefit was generated as a result of finalizing
the restructuring of the Peguform companies. $3.1 million was a reduction
of the tax rates in Germany and $22.7 million was from the recognition of
the benefit of NOL carryforwards. $14.5 million was income tax expense
charged to the normal operations of Venture Holdings Corporation and the
Peguform Group of companies.
Due to the foregoing, net income for the year ended December 31, 2000 was
$9.0 million compared to a net loss of $14.5 million for year ended
December 31, 1999.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Net sales increased $721.0 million for the year ended December 31, 1999,
or 111.7%, to $1,366.2 million, compared to net sales of $645.2 million
for the year ended December 31, 1998. This increase was due to the
addition of Peguform's net sales since its acquisition in the second
quarter. Domestically, sales decreased $39.6 million, or 6.1%, due
primarily to lower tooling sales as compared to the prior year. Net sales
for the year were also reduced by a $6.4 million retroactive sales price
reduction negotiated with a major customer. This customer had awarded us
with a significant New Program (described below) but has subsequently
cancelled this program.
Gross profit for the year ended December 31, 1999 increased $38.3
million, or 34.1%, to $150.7 million compared to $112.4 million for the
year ended December 31, 1998. As a percentage of net sales, gross profit
decreased from 17.4% for the year ended December 31, 1998 to 11.0% for
the year ended December 31, 1999. The decrease was in part due to the
contribution of Peguform's lower margin business being included in the
consolidated sales since its acquisition in the second quarter. However,
the primary reason for the reduction was a reduction in the gross profit
margin for domestic operations from 17.4% in 1998 to 9.5% in 1999. The
decrease in margin arose as a result of several items, including: (1)
lower tooling sales which historically have higher margins, (2) sales
price reductions as described above not offset by productivity
improvements at the manufacturing plants (3) establishment of a $1.1
million reserve during the fourth quarter relating to environmental costs
and (4) several significant new model launch problems sustained in the
third quarter. The new model launch problems also negatively impacted the
fourth quarter gross profit margin; however, the new model launch
problems were substantially resolved by year end.
Selling, general and administrative expense for the year ended December
31, 1999 increased by $49.5 million, or 83.0%, to $109.2 million compared
to $59.7 million for the year ended December 31, 1998. As a percentage of
net sales, selling, general and administrative expense decreased to 8.0%
for the year ended December 31, 1999 as compared to 9.2% for the year
ended December 31, 1998. The decrease is primarily attributable to
Peguform's lower selling, general and administrative expense as a
percentage of net sales, relative to Venture's, being included in the
operating results since our acquisition of Peguform in the second
quarter. Domestically, selling, general and administrative expense was
negatively impacted by $3.9 million for wage increases and bonuses
granted to management employees during the third quarter. The ongoing
effect of the wage increase on an annual basis will be approximately $1.2
million.
As a result of the foregoing, income from operations for the year ended
December 31, 1999 decreased $10.9 million, or 21.0%, to $41.2 million,
compared to income of $52.2 million for the year ended December 31, 1998.
As a percentage of net sales, income from operations decreased to 3.0% in
fiscal 1999 from 8.1% in fiscal 1998.
Interest expense increased $36.0 million to $72.6 million in fiscal 1999
compared to $36.6 million in fiscal 1998. The increase is the result of
the increased debt associated with the acquisition of
16
19
Peguform, offset by a reduced overall cost of capital under the new
capital structure, after consideration of cross-currency interest rate
swap agreements.
Other (income) expense is primarily comprised of $40.5 million of
unrealized gains and $5.9 million of realized gains on portions of the
cross-currency interest rate swap agreements entered into during the
second quarter to economically hedge a portion of the Company's exposure
to foreign exchange and interest rate risk associated with the Peguform
Acquisition. These financial instruments serve to reduce the overall cost
of capital of the Company, while also providing an economic hedge to
fluctuations in foreign exchange rates. Other (income) expense was also
comprised of unrealized currency losses of $17.4 million, which were
offset, in part, by realized currency gains of $2.7 million. On March 20,
2000, we terminated our three cross-currency swap agreements. See Note 7
of Notes to Consolidated Financial Statements.
In connection with the issuance of the 1999 Notes, we redeemed our 9 3/4%
senior subordinated notes due 2004 at the redemption price of 104.875%
plus accrued interest which resulted in an extraordinary loss of $5.6
million ($3.8 million prepayment penalty plus unamortized deferred
financing costs of $1.8 million) for the year ended December 31, 1999.
Due to the foregoing, we incurred a net loss for the year ended December
31, 1999 of $14.5 million compared to net income of $13.6 million for
year ended December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Our consolidated working capital was $129.7 million at December 31, 2000
compared to $182.7 million at December 31, 1999, a decrease of $53.0
million. Our working capital ratio was 1.3x and 1.5x at December 31, 2000
and 1999, respectively. Net cash provided by operating activities was
$61.3 million for the year ended December 31, 2000 compared to net cash
provided by operations of $88.8 million for the year ended December 31,
1999. The decrease in cash provided by operations is due primarily to
increases in inventory and other assets which are partially offset by
increases in accounts payable and accrued expenses.
Capital expenditures were $85.7 million for the year ended December 31,
2000 compared to $53.2 million for the year ended December 31, 1999. We
continue to upgrade machinery and equipment and paint lines at all
facilities to handle expected increased volumes and general
reconditioning of equipment. In 2000, we received $78.5 million from the
termination of derivatives which resulted in a net use of cash of $6.5
million from investment activities. In 1999, $496.8 million was used
primarily related to the Peguform acquisition.
In the ordinary course of business, we seek additional business with
existing and new customers. We continue to compete for the right to
supply new components which could be material to us and require
substantial capital investment in machinery, equipment, tooling and
facilities. As of the date hereof, however, we have no formal commitments
with respect to any such material business.
In August 1999, we were awarded a letter of intent for a significant new
program for the Ford Ranger (the "New Program") that had projected annual
revenues of approximately $225 million with production that had been
scheduled to start and ramp up in late 2002. As a result of this award,
we would have been required to make capital expenditures in the range of
$40.0 to $80.0 million payable over the next several years in addition to
our normal capital expenditures. This program has now been cancelled and
we no longer have any need to make these additional expenditures. We are
seeking cancellation costs from Ford in connection with the termination
of this program.
Net cash used in financing activities was $43.4 million for the year
ended December 31, 2000 compared to net cash provided by financing
activities of $416.9 million for the year ended December 31, 1999.
1999 reflects debt incurred for the Peguform acquisition. 2000
reflects the scheduled paydown of debt.
Our senior credit facility provides for borrowings of (1) up to $175.0
million under a revolving credit facility, which, in addition to those
matters described below, used for working capital and general corporate
purposes; (2) $75.0 million under a five year term loan A; and (3) $200.0
million
17
20
under a six year term loan B. The credit facility also originally
provided for a $125.0 million 18 month interim term loan. Through October
2000, we applied payments of $61.2 million to the 18 month interim term
loan. In November of 2000, the Company repaid the remaining principal of
$63.8 primarily with proceeds from the revolving credit agreement. The
senior credit facility was amended in 2000 and now requires that we issue
$125 million principal amount of securities that rank pari passu in right
of payment with, or are junior to, our 12% senior subordinated notes due
2009, described below, by March 31, 2002. The amendment to the senior
credit facility also added a $100 million non-recourse factoring program
and amended various restrictive covenants to provide us with additional
flexibility in our stipulated financial ratios. See Note 6 of Notes to
consolidated Financial Statements.
The revolving credit facility permits us to borrow up to the lesser of a
borrowing base computed as a percentage of accounts receivable and
inventory, or $175 million less the amount of any letters of credit
issued against the credit agreement. Pursuant to the borrowing base
formula as of December 31, 2000, we could have borrowed an additional
$54.0 million under the revolving credit facility. Obligations under the
credit agreement are jointly and severally guaranteed by our domestic
subsidiaries and are secured by first priority security interests in
substantially all of our assets and our domestic subsidiaries.
The senior credit agreement, the documents governing our $205 million of
9 1/2% senior notes due 2005 (the "1997 Senior Notes"), and the documents
governing our $125 million of 11% unsecured senior notes (the "1999
Senior Notes") and 12% unsecured senior subordinated notes (the "1999
Senior Subordinated Notes" and together with the 1999 Senior Notes, the
"1999 Notes"), contain restrictive covenants relating to cash flow, fixed
charges, debt, member's equity, distributions, leases, and liens on
assets. Our debt obligations also contain various restrictive covenants
that require us to maintain stipulated financial ratios, including a
minimum consolidated net worth (adjusted yearly), fixed charge coverage
ratio, interest coverage ratio and total indebtedness ratio. As of
December 31, 2000, we were in compliance with all debt covenants.
In connection with the senior credit facility and the 1999 Notes, we
entered into two five-year Euro dollar cross-currency interest rate swap
agreements and one three-year Euro dollar cross-currency interest rate
swap agreement.
In March 2000, we terminated our cross-currency swap agreements within
each of the three original cross-currency interest rate swap agreements
and realized a cash gain of $42.0 million. The entire cash proceeds were
applied as a prepayment of our $125 million interim term loan. At
December 31, 1999, these financial instruments had an estimated fair
market value of $27.1 million which was recorded as an investment on the
balance sheet with a corresponding unrealized gain of $27.1 million being
recorded in other income. Accordingly, as a result of the termination of
the cross-currency swap agreements, the net impact on earnings for the
twelve months ended December 31, 2000 is an increase in other income of
$14.9 million, which is comprised of a realized gain of $42.0 million,
offset by an unrealized loss of $27.1 million.
The cross-currency swap agreements were replaced with a twelve-month
zero-cost foreign exchange collar. The collar was originally designed to
reduce the economic risk to us of Euro to US dollar exchange movements.
The notional amount of each of the put and call sides of the foreign
currency exchange collar was originally 500,000,000 Euros. During July
2000, we terminated the put side of the foreign currency exchange collar
and received $10.9 million. We used $2.7 million of the proceeds to
purchase a replacement put to protect against additional devaluations in
the Euro to US dollar exchange rate and applied $8.0 million of the net
cash proceeds as a prepayment of the 18-month interim term loan. The
notional amount of the replacement put was 400,000,000 Euros. During
November 2000, we again terminated the put side of the foreign currency
exchange collar and received $9.2 million. We used these proceeds, along
with additional borrowings under the revolving credit agreement to repay
the remaining portion of the 18-month interim term loan. At December 31,
2000, only the original call side of the foreign currency exchange collar
remains outstanding. The estimated fair market value of this financial
instrument is $(0.6) million and is recorded as an investment on the
balance sheet as of December 31, 2000. Accordingly, as a result of
18
21
these foreign exchange collar transactions, the net impact on earnings
for the twelve months ended December 31, 2000 is an increase in other
income of $19.5 million, which is comprised of a realized gain of $20.1
million, offset by an unrealized loss of $0.6 million. On March 16, 2001,
the original call side of the foreign currency exchange collar expired
unexercised. We currently have no foreign currency derivative
transactions in place to protect us from currency movements. We are
continuing to review the situation and will take actions when it is
deemed proper.
One of the interest rate swap agreements within each of the original
cross-currency interest rate swap agreements was accounted for using
settlement accounting. The cash flows from these interest rate swap
agreements were accounted for as adjustments to interest expense. During
2000, these interest rate swap agreements resulted in an increase to
interest expense of $0.5 million. During 1999, these interest rate swap
agreements resulted in a reduction to interest expense of $0.9 million.
During July 2000, we paid $14.9 million to terminate these financial
instruments. This amount has been capitalized and will be amortized into
interest expense over the terms of the original interest rate swap
agreements. During 2000, interest expense includes $2.5 million of this
deferred interest asset amortization.
The other interest rate swap agreements within each of the original
cross-currency interest rate swap agreements did not meet all the
criteria for settlement accounting under generally accepted accounting
principles. The cash flows from these interest rate swap agreements are
included in other income. During 2000 and 1999, these interest rate swap
agreements resulted in a realized loss, or a reduction to other (expense)
income, of $0.3 million and $2.4 million, respectively. The estimated
fair market value of these financial instruments as of December 31, 1999
of $13.4 million was recorded as an investment on the balance sheet. The
corresponding $13.4 million non-cash change to estimated fair market
value was recorded in other income in 1999. During July 2000, we
terminated these financial instruments and realized a cash gain of $16.9
million plus interest income of $0.1 million. Accordingly, as a result of
the termination of these interest rate swap agreements, the net impact on
earnings during 2000 is an increase in other income of $3.6 million,
which is comprised of a realized gain of $16.9 million and interest
income of $0.1 million, offset by an unrealized loss of $13.4 million.
During July 2000, we applied $2.0 million of the net cash proceeds from
the terminations of the interest rate swap agreements as an additional
prepayment of the 18-month interim term loan.
We have also entered into interest rate swap agreements with a total
notional value of $55 million to mitigate the risk associated with
changing interest rates on certain floating rate debt. During 2000,
certain of these interest rate swaps agreements with a notional value of
$25 million expired. All of these interest rate swap agreements are
accounted for using settlement accounting. The impact of these interest
rate swap agreements resulted in $0.1 million and $0.8 million of
additional interest expense during 2000 and 1999, respectively.
We believe that our existing cash balances, operating cash flow,
borrowings under our bank credit facility and other short term
arrangements will be sufficient to fund working capital needs, and normal
capital expenditures required for the operation of our existing business
through the end of 2002. During 2001, we may seek new or amended credit
arrangements to address our currency exposure related to the existing
financing structure and also deal with the need to issue new debt as
required under the current credit agreement as outlined above.
NEW ACCOUNTING STANDARDS
In June 1998, the FASB approved SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and
measure those instruments at fair value. This Standard was to apply in
the first quarter of our fiscal year beginning January 1, 2000. In July
1999 the FASB approved SFAS No. 137, which delayed the implementation
date for SFAS No. 133 for one year.
19
22
We analyzed the impact of this Standard on our financial position and
results of operations for 2001, and the effect was to record a liability
of $0.2 million. This adjustment will be recorded as a cumulative effect
of change in accounting principle.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We are exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. In order to manage the risk
arising from these exposures, we have selectively entered into a variety
of foreign exchange and interest rate financial instruments. A discussion
of our accounting policies for derivative financial instruments can be
found in the Organization and Summary of Significant Accounting Policies
and Financial Instruments footnotes to the financial statements found in
Item 8 of this report.
FOREIGN CURRENCY EXCHANGE RATE RISK
We have foreign currency exposures related to buying, selling and
financing in currencies other than the local currencies in which we
operate. Our most significant foreign currency exposures relate to
Germany, Spain, France, the Czech Republic, Mexico, Brazil and Canada. As
of December 31, 2000, the net fair value asset of financial instruments
with exposure to foreign currency risk was approximately $(0.6) million.
The potential loss in fair value for such financial instruments from a
hypothetical 10% adverse change in quoted foreign currency exchange rates
would be approximately $57,000. The model assumes a parallel shift in the
foreign exchange currency exchange rates. Exchange rates rarely move in
the same direction. The assumption that exchange rates change in a
parallel fashion may overstate the impact of changing exchange rates on
assets and liabilities denominated in a foreign currency.
A portion of our assets are based in our foreign operations and are
translated into U. S. dollars at foreign currency exchange rates in
effect as of the end of each period, with the effect of such translation
reflected as a separate component of member's equity. Accordingly, our
consolidated member's equity will fluctuate depending upon the weakening
or strengthening of the U. S. dollar against the respective foreign
currency.
INTEREST RATE RISK
We have exposure to interest rate risk on a portion of our debt
obligations. A one percent change in interest rates on floating rate debt
would result in approximately $3.8 million change in earnings.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
VENTURE HOLDINGS COMPANY LLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants................................ 21
Consolidated Balance Sheets............................................. 22
Consolidated Statements of Operations and Comprehensive Income.......... 23
Consolidated Statements of Changes in Member's Equity................... 24
Consolidated Statements of Cash Flow.................................... 25
Notes to Consolidated Financial Statements.............................. 26
20
23
INDEPENDENT AUDITORS' REPORT
Trustee of Venture Holdings Company LLC
Fraser, Michigan
We have audited the accompanying consolidated balance sheets of Venture
Holdings Company LLC as of December 31, 2000 and 1999, and the related
consolidated statements of operations, comprehensive income, member's equity and
cash flows for each of the three years in the period ended December 31, 2000.
Our audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements and the financial statement schedule are the
responsibility of Venture's management. Our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of Venture Holdings Company LLC as
of December 31, 2000 and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
Deloitte & Touche LLP
March 31, 2001
Detroit, Michigan
21
24
VENTURE HOLDINGS COMPANY LLC
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
December 31, December 31,
ASSETS 2000 1999
------ ---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 941 $ 7,392
Accounts receivable, net, includes related party receivables of $54,478
and $82,644 at December 31, 2000 and December 31, 1999,
respectively (Notes 3 & 8) 293,072 311,344
Inventories (Note 4) 206,622 154,620
Investments (Notes 7 ) 489 40,501
Prepaid and other current assets (Notes 8 & 12) 45,933 53,861
----------- -----------
Total current assets 547,057 567,718
Property, Plant and Equipment, Net (Notes 1 & 5) 553,038 562,838
Intangible Assets, Net (Note 1) 123,130 172,090
Other Assets, includes related party receivables of $33,560 at
December 31, 2000. (Note 1 & 8) 151,938 82,504
Deferred Tax Assets (Note 12) 51,140 29,826
----------- -----------
Total Assets $ 1,426,303 $ 1,414,976
=========== ===========
LIABILITIES AND MEMBER'S EQUITY
-------------------------------
CURRENT LIABILITIES:
Accounts payable (Note 8) $ 257,649 $ 194,596
Accrued interest 15,482 13,403
Accrued expenses 119,814 108,653
Current portion of long term debt (Notes 6 ) 24,405 68,368
----------- -----------
Total current liabilities 417,350 385,020
Pension Liabilities & Other (Note 11) 51,371 57,614
Deferred Tax Liabilities (Note 12) 37,967 59,431
Long Term Debt (Note 6) 852,578 852,008
----------- -----------
Total liabilities 1,359,266 1,354,073
Commitments and Contingencies (Note 9) -- --
Member's Equity:
Member's equity 72,422 63,340
Accumulated other comprehensive income - cumulative translation
adjustment (5,385) (2,437)
----------- -----------
Member's Equity 67,037 60,903
----------- -----------
Total Liabilities and Member's Equity $ 1,426,303 $ 1,414,976
=========== ===========
See notes to consolidated financial statements.
22
25
VENTURE HOLDINGS COMPANY LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Years Ended December 31,
------------------------
2000 1999 1998
---- ---- ----
Net Sales (Notes 8 & 10) $ 1,829,965 $ 1,366,170 $ 645,196
Cost of Products Sold (Note 8) 1,602,326 1,215,472 532,809
----------- ----------- -----------
Gross Profit 227,639 150,698 112,387
Selling, General, and Administrative Expense (Note 8) 130,444 109,215 59,689
Payments to Beneficiary in Lieu of Distributions 1,165 259 535
----------- ----------- -----------
Income From Operations 96,030 41,224 52,163
Interest Expense (Note 6) 102,513 72,606 36,641
Other Income (Note 7) (5,682) (31,222) --
----------- ----------- -----------
(Loss) Income Before Taxes (801) (160) 15,522
Tax (Benefit) Provision (Note 12) (11,289) 8,227 1,954
Minority Interest 1,406 554 --
----------- ----------- -----------
Net Income (Loss) Before Extraordinary Loss 9,082 (8,941) 13,568
Extraordinary Loss on Early Extinguishment
of Debt -- 5,569 --
----------- ----------- -----------
Net Income (Loss) 9,082 (14,510) 13,568
Other Comprehensive Income (Loss) - minimum pension
liability in excess of unrecognized prior service cost,
net of tax 737 (737)
Other Comprehensive Loss - cumulative translation
Adjustments (2,948) (2,437) --
----------- ----------- -----------
Comprehensive Income (Loss) $ 6,134 $ (16,210) $ 12,831
=========== =========== ===========
See notes to consolidated financial statements.
23
26
VENTURE HOLDINGS COMPANY LLC
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Years Ended December 31,
2000 1999 1998
---- ---- ----
Member's Equity, Beginning of Period $ 60,903 $ 77,113 $ 64,282
Comprehensive Income (Loss):
Net Income (Loss) 9,082 (14,510) 13,568
Other Comprehensive (Loss) (2,948) (1,700) (737)
-------- -------- --------
Comprehensive Income (Loss) 6,134 (16,210) 12,831
-------- -------- --------
Member's Equity, End of Period $ 67,037 $ 60,903 $ 77,113
======== ======== ========
See notes to consolidated financial statements.
24
27
VENTURE HOLDINGS COMPANY LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Years Ended December 31,
2000 1999 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 9,082 $ (14,510) $ 13,568
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 91,077 75,996 39,320
Unrealized loss on currency exchange 41,623 17,419 --
Unrealized gain on investments -- (40,501) --
Net gain on termination of derivatives (37,421) -- --
Loss from the disposal of fixed assets 564 181 --
Net extraordinary loss on early extinguishment of debt -- 5,569 --
Change in accounts receivable 18,272 53,004 (29,795)
Change in inventories (52,000) 23,900 1,477
Change in prepaid and other current assets 7,927 (8,704) 2,147
Change in other assets (45,046) (29,715) (7,045)
Change in investments in associated company -- (723) --
Change in accounts payable 63,052 10,205 (17,696)
Change in accrued expenses 13,239 (13,645) (21)
Change in other liabilities (6,244) 4,499 (7,028)
Change in deferred taxes (42,779) 5,836 (320)
--------- --------- ---------
Net cash provided by (used in) operating activities 61,346 88,811 (5,393)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of subsidiaries, net of cash acquired -- (444,061) --
Capital expenditures (85,718) (53,176) (24,706)
Proceeds from sale of fixed assets 661 390 --
Proceeds from termination of derivatives 78,531 -- --
--------- --------- ---------
Net cash used in investing activities (6,526) (496,847) (24,706)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving credit agreement 96,452 (71,571) 32,000
Debt issuance fees -- (27,066) --
Net proceeds from issuance of debt -- 650,000 --
Payment for early extinguishment of debt 5,717 (128,650) --
Principal payments on debt (145,527) (5,859) (3,248)
--------- --------- ---------
Net cash (used in) provided by financing activities (43,358) 416,854 28,752
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents (17,913) (1,556) --
NET (DECREASE) INCREASE IN CASH (6,451) 7,262 (1,347)
CASH AT BEGINNING OF PERIOD 7,392 130 1,477
--------- --------- ---------
CASH AT END OF PERIOD $ 941 $ 7,392 $ 130
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $ 93,083 $ 72,129 $ 35,402
========= ========= =========
Cash paid during the period for taxes $ 5,827 $ 4,337 $ 285
========= ========= =========
See notes to consolidated financial statements.
25
28
VENTURE HOLDINGS COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
Organization - In 1987, the sole shareholder of the Venture Group of
companies contributed all of the common stock of the companies to Venture
Holdings Trust (the "Trust"). Simultaneously, certain property, plant,
and equipment were contributed by the sole shareholder to certain
companies owned by the Trust. In exchange, the shareholder was named the
sole beneficiary of the Trust. In May of 1999, the Trust effected a trust
contribution by contributing its assets, including the capital stock of
the companies owned by the Trust other than the membership interest in
Venture Holdings Company LLC ("Venture"), to Venture. Venture, a wholly
owned subsidiary of the Trust, also assumed the obligations of the Trust.
The Trust is the sole member of Venture.
Principles of Consolidation - The consolidated financial statements
include the accounts of Venture and all of Venture's domestic and foreign
subsidiaries that are wholly owned or majority-owned (collectively
referred to as the "Company"). The Company's investment in a less than
majority-owned business is accounted for under the equity method. All
intercompany accounts and transactions have been eliminated.
Estimates - The preparation of the Company's financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents - Highly liquid investments with an initial
maturity of three months or less are classified as cash equivalents.
Inventories - Manufactured parts inventories are stated at the lower of
cost or market using the first-in, first-out method. Inventory also
includes costs associated with building molds under contract. Molds owned
by the Company and used in the Company's manufacturing operations are
transferred to tooling, in property, plant and equipment, when the molds
are operational.
Property and Depreciation - Property, plant, and equipment are recorded
at cost. Depreciation is computed by the straight-line method over the
estimated useful lives of the various classes of assets. Tooling is
amortized on a piece price or straight line basis over the related
production contract, generally 3 to 7 years. The principal estimated
useful lives are as follows:
YEARS
-----
Building and improvements.......................... 10-40
Machinery and equipment, and automobiles........... 3-20
Leasehold improvements are amortized over the useful life or the term of
the lease, whichever is shorter. Expenditures for maintenance and repairs
are charged to expense as incurred.
Other Assets - Deferred financing costs are included in other assets and
are amortized over the life of the related financing arrangement. The
Company holds a 50% interest in Celulosa Fabril (Cefa) S.A.,
Zaragoza/Spain. This investment is accounted for under the equity method.
Program Costs - Certain costs incurred for the design of components to be
built for customers are recorded as deferred program costs which are
included in other assets. These costs are recovered based on units
produced in each year over the term of production contracts.
26
29
Intangible Assets - The purchase price of companies in excess of the fair
value of net identifiable assets acquired ("goodwill") is amortized over
30 years using the straight-line method. The amount of goodwill reported
at December 31, 2000 and 1999 was $119.3 million and $168.4 million,
respectively, which is net of accumulated amortization. (See Note 12)
Long-Lived Assets and Long-Lived Assets to be Disposed of - Effective
January 1, 1996, Statement of Financial Accounting Standards ("SFAS") No.
121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" was adopted. This Statement
establishes accounting standards for the impairment of long-lived assets,
and certain identifiable intangibles, and goodwill related to those
assets to be held and used and long-lived and certain identifiable
intangibles to be disposed of. The statement requires that long-lived
assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. In addition, the Statement requires that certain long-lived
assets and identifiable intangibles to be disposed of be reported at the
lower of carrying amount or fair value less cost to sell. The Company
periodically evaluates the carrying value for impairment, such
evaluations are based principally on the undiscounted cash flows of the
operations to which the asset is related.
Derivative Financial Instruments - The Company was party to a number of
interest rate, collar and cross-currency swap agreements. The Company
accounts for certain interest rate swap agreements using settlement
accounting as they alter the characteristics of the liabilities to which
they are matched. The cash flows from these interest rate swap agreements
are accounted for as adjustments to interest expense.
Certain other interest rate swap agreements did not meet all of the
criteria for settlement accounting under accounting principles generally
accepted in the United States of America. The cash flows from these
interest rate swap agreements are included in other income. The estimated
fair market value of these financial instruments is recorded as an
investment on the balance sheet and the non-cash change in estimated fair
market value is recorded in other income.
The Company's cross-currency swap agreements did not meet all of the
criteria for hedge accounting under accounting principles generally
accepted in the United States of America. The cash flows from these
cross-currency swap agreements are included in other income. The
estimated fair market value of these financial instruments is recorded as
an investment on the balance sheet and the non-cash change in estimated
fair market value is recorded in other income.
See Note 7-Derivative Financial Instruments and Risk Management.
Revenue Recognition - Revenue from the sale of manufactured parts is
recognized when the parts are shipped. Revenue from mold sales is
recognized using the completed contract method due to the reasonably
short build cycle. Accounts receivable includes unbilled receivables for
mold contracts that are substantially complete. The amounts are billed
when final approval has been received from the customer or in accordance
with contract terms. Provision for estimated losses on uncompleted
contracts, if any, is made in the period such losses are identified.
Income Taxes - Amounts in the financial statements relating to income
taxes relate to the subsidiaries that are not limited liability companies
or have not elected S corporation status and are calculated using the
SFAS No. 109, "Accounting for Income Taxes".
Other significant subsidiaries have elected to be taxed as S corporations
or limited liability companies taxed as a partnership under the Internal
Revenue Code. The beneficiary of Venture Holdings Trust is required to
report all income, gains, losses, deductions, and credits of the S
corporations or limited liability companies included in the Trust on his
individual tax returns.
Foreign Currencies - Currency translation is based upon the SFAS 52
"Foreign Currency Translation," whereby the assets and liabilities of
foreign subsidiaries where the functional currency is the local currency
are generally translated using period end exchange rates while the income
27
30
statements are translated using average exchange rates during the period.
Differences arising from the translation of assets and liabilities in
comparison with the translation of the previous periods are included as a
separate component of stockholders' equity.
Reclassifications - Certain reclassifications have been made to the 1999
financial statements in order to conform to the 2000 presentation.
Recent Accounting Pronouncements - In June 1998, the FASB approved SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. This Standard is effective January 1, 2001. The Company analyzed
the impact of this Standard on its financial position and results of
operations for 2001, and the effect was to record an additional liability
of $0.2 million. This adjustment will be recorded as a cumulative effect
of change in accounting principle.
2. ACQUISITION
On May 28, 1999, the Company purchased Peguform GmbH ("Peguform"), a
leading European supplier of high performance interior and exterior
plastic modules, systems and components to European OEMs (the "Peguform
Acquisition"), for approximately $463 million. During the second quarter
of 2000, an agreement was reached on post closing adjustments related to
the Peguform Acquisition reducing the consideration paid for Peguform by
$18 million to $445 million. The Company used the proceeds of the final
settlement to reduce its outstanding borrowings.
The following unaudited pro forma financial data is presented to
illustrate the estimated effects of the Peguform Acquisition, as if the
transaction had occurred as of the beginning of the periods presented.
Years Ended December 31,
1999 1998
---- ----
Net sales $ 1,926,594 $ 1,306,418
Net income before extraordinary loss 12,150 15,942
Net income 6,581 10,373
3. ACCOUNTS RECEIVABLE
Accounts receivable included the following (in thousands): December 31
2000 1999
---- ----
Accounts receivable (including related parties) $ 284,233 $ 301,377
Unbilled mold contract receivables 19,290 19,915
--------- ---------
303,523 321,292
Allowance for doubtful accounts (10,451) (9,948)
--------- ---------
Net accounts receivable $ 293,072 $ 311,344
========= =========
Excluding receivables from related parties, substantially all of the
receivables are from companies operating in the automobile industry.
28
31
4. INVENTORIES
Inventories included the following (in thousands):
December 31,
2000 1999
---- ----
Raw materials $ 49,672 $ 59,243
Work-in-process - manufactured parts 15,721 17,623
Work-in-process - tools and molds 119,537 57,984
Finished goods 21,692 19,770
-------- --------
Total $206,622 $154,620
======== ========
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
December 31,
2000 1999
---- ----
Land $ 25,598 $ 27,181
Building and improvements 209,933 216,359
Leasehold improvements 6,524 0
Machinery and equipment 431,736 414,240
Tooling/molds 12,713 12,520
Office and transportation equipment 25,746 23,576
Construction in progress 56,056 26,239
-------- --------
768,306 720,115
Less accumulated depreciation and amortization 215,268 157,277
-------- --------
Total $553,038 $562,838
======== ========
Included in property, plant and equipment is equipment and buildings held
under capitalized leases. These assets had a cost basis of $39.1 million
and accumulated depreciation relating to these assets of $5.9 million at
December 31, 2000. As of December 31, 1999, these assets had a cost basis
of $39.1 million and accumulated depreciation of $4.8 million.
29
32
6. DEBT
Debt consisted of the following (in thousands):
December 31,
2000 1999
---- ----
Credit agreement
Term loan A, with interest of 9.62%, Due 2004 $ 66,150 $ 73,950
Term loan B, with interest of 10.12%, Due 2005 197,000 199,000
Interim term loan, with interest of 8.93%, Due 2000 -- 125,000
Revolving credit outstanding, with interest of 9.50%,
Due 2004 117,947 5,500
Bank debt payable with interest from 0.0% to 9.04%,
Due 2004 7,138 25,930
Senior notes payable, Due 2005
With interest at 9.5% 205,000 205,000
Senior notes payable, Due 2007
With interest at 11.0% 125,000 125,000
Senior subordinated notes payable, Due 2009
With interest at 12.0% 125,000 125,000
Capital leases with interest from 3.95%
to 11.250% 32,941 34,658
Installment notes payable with interest
from 3.00% to 7.41% 807 1,338
-------- --------
Total 876,983 920,376
Less current portion of debt 24,405 68,368
-------- --------
Total $852,578 $852,008
======== ========
In March 2000, the Company applied a prepayment of $42 million to the
18-month interim term loan which matured November 27, 2000. In July 2000,
the Company applied an additional $8 million and $2 million prepayments
to the 18-month interim term loan, reducing the principal balance to $73
million. During November 2000, the Company repaid the remaining principal
balance of the 18-month interim term loan with $9.2 million received from
termination of the put side of its foreign exchange collar and proceeds
under the revolving credit facility.
On June 29, 2000, the credit agreement was amended for several purposes.
First, the requirement that the Company issue $125 million of securities
that rank pari passu in right of payment with, or are junior to, the
Company's 12% senior subordinated notes due 2009, described below was
extended from November 27, 2000 to March 31, 2002. Second, the credit
agreement was amended to allow for a $100 million non-recourse factoring
program. Third, certain restrictive covenants were amended to provide the
Company with additional flexibility in its stipulated financial ratios.
The revolving credit facility permits the Company to borrow up to the
lesser of a borrowing base computed as a percentage of accounts
receivable and inventory, or $175 million less the amount of any letters
of credit issued against the credit agreement. Pursuant to the borrowing
base formula as of December 31, 2000, the Company could have borrowed an
additional $54.0 million under the revolving credit facility. Obligations
under the credit agreement are jointly and severally guaranteed by
Venture's domestic subsidiaries and are secured by first priority
security interests in substantially all of the assets of Venture and its
domestic subsidiaries.
The credit agreement, the documents governing the Company's 9 1/2% senior
notes due 2005 (the "1997 Senior Notes"), and the documents governing the
Company's 11% unsecured senior notes (the "1999 Senior Notes") and 12%
unsecured senior subordinated notes (the "1999 Senior Subordinated Notes"
and together with the 1999 Senior Notes, the "1999 Notes"), contain
restrictive covenants relating to cash flow, fixed charges, debt,
member's equity, distributions, leases, and liens on assets. The
Company's debt obligations also contain various restrictive covenants
that require the Company to maintain stipulated financial ratios,
including a minimum consolidated net worth
30
33
(adjusted yearly), fixed charge coverage ratio, interest coverage ratio
and total indebtedness ratio. As of December 31, 2000, the Company was in
compliance with all debt covenants.
Scheduled maturities of debt at December 31, 2000 were as follows (in
thousands):
2001 24,405
2002 27,453
2003 30,071
2004 148,000
2005 386,583
Remaining years 260,471
----------
Total $ 876,983
==========
7. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and the credit agreement approximate fair market value
due to the short-term maturities of these instruments.
Debt Instruments
The estimated fair values of the Company's debt instruments have been
determined using available market information. However, considerable
judgment is required in interpreting market data to develop the estimates
of fair value. Accordingly, the estimates presented herein may not be
indicative of the amounts that the Company could realize in a current
market exchange. The use of different assumptions or valuation
methodologies may have a material effect on the estimated fair value
amounts. The fair value of long-term debt was estimated using quoted
market prices (in thousands).
December 31, 2000 December 31, 1999
Carrying Amount Fair Value Carrying Amount Fair Value
--------------- ---------- --------------- ----------
Debt $ 876,983 $ 588,133 $ 920,376 $ 885,051
Derivative Financial Instruments
In connection with the issuance of debt to finance the Peguform
Acquisition, Venture entered into two five-year Euro dollar
cross-currency interest rate swap agreements and one three-year Euro
dollar cross-currency interest rate swap agreement.
In March 2000, the Company terminated its cross-currency swap agreements
within each of its three original cross-currency interest rate swap
agreements and realized a cash gain of $42.0 million. The entire cash
proceeds were applied as a prepayment of the Company's $125 million
interim term loan. At December 31, 1999, these financial instruments had
an estimated fair market value of $27.1 million which was recorded as an
investment on the balance sheet with a corresponding unrealized gain of
$27.1 million being recorded in other income. Accordingly, as a result of
the termination of the cross-currency swap agreements, the net impact on
earnings for the twelve months ended December 31, 2000 is an increase in
other income of $14.9 million, which is comprised of a realized gain of
$42.0 million, offset by an unrealized loss of $27.1 million.
The cross-currency swap agreements were replaced with a twelve-month
zero-cost foreign exchange collar. The collar was originally designed to
reduce the economic risk to the Company of Euro to US dollar exchange
movements. The notional amount of each of the put and call sides of the
foreign currency exchange collar was originally 500,000,000 Euros. During
July 2000, the Company terminated the put side of its foreign currency
exchange collar and received $10.9 million. The Company used $2.7 million
of the proceeds to purchase a replacement put to protect against
additional devaluations in the Euro to US dollar exchange rate and
applied $8.0 million of the net cash proceeds as a prepayment of the
18-month interim term loan. The notional amount of the replacement put
was 400,000,000 Euros. During November 2000, the Company again terminated
31
34
the put side of its foreign currency exchange collar and received $9.2
million. The Company used these proceeds, along with additional
borrowings under its revolving credit agreement to repay the remaining
portion of the 18-month interim term loan. At December 31, 2000, only the
original call side of the foreign currency exchange collar remains
outstanding. The estimated fair market value of this financial instrument
is $(0.6) million and is recorded as an investment on the balance sheet
as of December 31, 2000. Accordingly, as a result of these foreign
exchange collar transactions, the net impact on earnings for the twelve
months ended December 31, 2000 is an increase in other income of $19.5
million, which is comprised of a realized gain of $20.1 million, offset
by an unrealized loss of $0.6 million. On March 16, 2001, the original
call side of the foreign currency exchange collar expired unexercised.
The Company currently has no foreign currency derivative transactions in
place to protect itself from currency movements. The Company is
continuing to review the situation and will take actions when it deems
proper.
One of the interest rate swap agreements within each of the original
cross-currency interest rate swap agreements was accounted for using
settlement accounting. The cash flows from these interest rate swap
agreements were accounted for as adjustments to interest expense. During
2000, these interest rate swap agreements resulted in an increase to
interest expense of $0.5 million. During 1999, these interest rate swap
agreements resulted in a reduction to interest expense of $0.9 million.
During July 2000, the Company paid $14.9 million to terminate these
financial instruments. This amount has been capitalized and will be
amortized into interest expense over the terms of the original interest
rate swap agreements. During 2000, interest expense includes $2.5 million
of this deferred interest asset amortization.
The other interest rate swap agreements within each of the original
cross-currency interest rate swap agreements did not meet all the
criteria for settlement accounting under generally accepted accounting
principles. The cash flows from these interest rate swap agreements are
included in other income. During 2000 and 1999, these interest rate swap
agreements resulted in a realized loss, or a reduction to other (expense)
income, of $0.3 million and $2.4 million, respectively. The estimated
fair market value of these financial instruments as of December 31, 1999
of $13.4 million was recorded as an investment on the balance sheet. The
corresponding $13.4 million non-cash change to estimated fair market
value was recorded in other income in 1999. During July 2000, the Company
terminated these financial instruments and realized a cash gain of $16.9
million plus interest income of $0.1 million. Accordingly, as a result of
the termination of these interest rate swap agreements, the net impact on
earnings during 2000 is an increase in other income of $3.6 million,
which is comprised of a realized gain of $16.9 million and interest
income of $0.1 million, offset by an unrealized loss of $13.4 million.
During July 2000, the Company applied $2.0 million of the net cash
proceeds from the terminations of the interest rate swap agreements as an
additional prepayment of the 18-month interim term loan.
The Company has also entered into interest rate swap agreements with a
total notional value of $55 million to mitigate the risk associated with
changing interest rates on certain floating rate debt. During 2000,
certain of these interest rate swaps agreements with a notional value of
$25 million expired. All of these interest rate swap agreements are
accounted for using settlement accounting. The impact of these interest
rate swap agreements resulted in $0.1 million and $0.8 million of
additional interest expense during 2000 and 1999, respectively.
8. RELATED PARTY TRANSACTIONS
The Company has entered into various transactions with entities that the
sole beneficiary of the Trust owns or controls. These transactions
include leases of real estate, usage of machinery, equipment and
facilities, purchases and sales of inventory, performance of
manufacturing related services, administrative services, insurance
activities, and payment and receipt of sales commissions. In addition,
employees of the Company are made available to certain of these entities
for services such as design, model and tool building. Since the Trust is
the sole member of Venture Holdings Company LLC, the terms of these
transactions are not the result of arms'-length bargaining; however, the
Company believes that such transactions are on terms no less favorable to
the
32
35
Company than would be obtained if such transactions or arrangements were
arms'-length transactions with non-affiliated persons.
The Company provides or arranges for others to provide certain related
parties with various administrative and professional services, including
employee group insurance and benefit coverage, property and other
insurance, financial and cash management and administrative services such
as data processing. The related parties are charged fees and premiums for
these services. Administrative services were allocated to the entity for
which they were incurred and certain entities were charged a management
fee. In connection with the above cash management services, the Company
pays the administrative and operating expenses on behalf of certain
related parties and charges them for the amounts paid which results in
receivables from these related parties.
The Company purchased from Pompo Insurance & Indemnity Company Ltd.
("Pompo"), a corporation indirectly owned by the sole beneficiary of the
Trust, insurance to cover certain medical claims by the Company's covered
employees and certain workers compensation claims. The Company remains an
obligor for any amounts in excess of insurance coverage or any amounts
not paid by Pompo under these coverages. If a liability is settled for
less than the amount of the premium a portion of the excess is available
as a premium credit on future insurance. The Company has accounted for
this arrangement using the deposit method wherein the full amount of the
estimated liability for such claims is recorded in other liabilities and
the premiums paid to Pompo are recorded in other assets until such time
that the claims are settled. The Company made additional payments of $0.9
million, $0.8 million and $0.6 million to Pompo in 2000, 1999 and 1998,
respectively. At December 31, 2000, 1999 and 1998, the Company had
approximately $3.7 million, $3.7 million and $3.4 million, respectively,
on deposit with Pompo. A portion of this amount was invested on a short
term basis with a related party in 1999 and 1998.
During 1999, the Company entered into an agreement to purchase vehicles
from Shelby American, Inc. ("Shelby"), an entity in which the sole
beneficiary of the Trust has a 75% ownership interest. Venture made
deposits of approximately $13 million for each of the years ended
December 31, 2000 and 1999 on these vehicles. The Company intends to
market the vehicles to other parties. However, sales results to date have
proven more difficult to achieve than had been anticipated due to quality
and pricing issues. The Company is currently addressing these issues and
has an updated marketing plan for selling the vehicles. The Company has
a secured interest in the assets of Shelby, if the vehicles are not sold
as planned. The Company believes the deposit of $26 million is fully
recoverable. The deposit has been recorded in other assets as of December
31, 2000 and 1999. During 1999, the Company sold certain parts to Shelby
for use in the manufacturing of these vehicles and performed engineering
services. Sales to Shelby for the year ended December 31, 1999 were $3.8
million.
The Company contracts with Deluxe Pattern Corporation ("Deluxe"), an
entity wholly owned by the sole beneficiary of the Trust, to provide the
Company with design, prototype, and fixture work. During the years ended
December 31, 2000, 1999, and 1998, the Company was charged $18.9 million
$11.0 million, and $6.6 million under this arrangement. A majority of
these amounts for 1999 and 1998 were capitalized in other assets and
amortized over the term of the respective program for which the Company
has the production contract. The remainder of these amounts were billed
and collected from outside third parties. In 2000, the Company expensed
certain design costs as incurred due to a recently issued accounting
pronouncement. While Deluxe will continue to provide design, prototype
and fixture work, Deluxe will now be paid in accordance with standard
contract terms. In accordance with these terms at December 31, 2000, the
Company had made progress payments to Deluxe of $9.9 million through a
reduction of the related party receivable.
Deluxe also buys services from the Company, principally labor and
materials, however, these services will be significantly reduced in 2001
and the future. During the years ended December 31, 2000, 1999, and 1998,
Deluxe made purchases, and the Company recognized revenue, in the amount
of $9.1 million, $12.9 million, and $17.3 million. In addition to the
above transactions, Deluxe also charged the Company approximately $1.1
million during each of the years ended December 31, 2000, 1999, and 1998
for equipment rental and other services. These charges ceased at the end
of 2000. The net effect of these transactions between Deluxe and the
Company was a receivable balance from Deluxe of $30.2 million and $32.3
million at December 31, 2000 and 1999, respectively, of which $3.3
million is recorded as a long term receivable in other assets as of
December 31, 2000.
33
36
During 1999, the Company advanced approximately $5.5 million to Venture
Africa, an entity wholly owned by the sole beneficiary of the Trust for
the construction and refurbishment of a paint line. This amount has been
included in receivables from related parties as of December 31, 1999.
This amount was substantially settled in early 2001. In 2000, the Company
began selling raw material to South Africa amounting to $10.3 million
under established repayment terms. At December 31, 2000 and 1999, the
amount outstanding was $16.0 million and $5.5 million, respectively,
From time to time, the Company makes certain employees available to the
sole beneficiary of the Trust for purposes of performing services for
companies controlled by the beneficiary and for performing construction
services at his personal residence. The beneficiary was indebted to the
Company in the amount of $1.1 million and $0.5 million at December 31,
2000 and 1999, respectively. These amounts were repaid in early 2001
During 1999, the Company contracted with M&M Flow Through Systems, LLC
("M&M"), an entity owned by the son of the sole beneficiary of the Trust,
to manufacture certain machinery and equipment used at the Company's
Grand Blanc facility. The Company purchased three different machines from
M&M at an approximate cost of $965,000. In addition, the Company
contracts M&M to dispose of scrap parts that have previously been
rejected by the automotive original equipment manufacturers. The
Company's sales of these parts to M&M for the year December 31, 1999 were
approximately $200,000, which approximates a recovery of the material
cost of producing the parts.
The Company leased buildings and machinery and equipment to an entity in
which the sole beneficiary of the Trust owns a significant equity
interest. During 1999 and 1998, the Company received $0.2 million per
year, in connection with this agreement.
Venture Sales and Engineering (VS&E) and Venture Foreign Sales
Corporation, corporations wholly owned by the sole beneficiary of the
Trust, serve as the Company's sales and management representatives. The
Company pays Venture Sales and Engineering and Venture Foreign Sales
Corporation, in the aggregate, a sales management commission of 3% on all
production sales. The Company entered into an amendment to these
agreements with VS&E to allow the Company flexibility to reduce this
expense with the cooperation of VS&E. VS&E eliminated approximately $2.6
million of management fees relating to sales commissions for the fourth
quarter of 2000. This was done due to the slowing of the automotive
industry and to ensure the Company remained competitive. VS&E has
conducted sales and marketing activities around the world for the Company
and has been advanced certain funds in order to carry on that work on
behalf of the Company. These activities result in a net receivable from
VS&E of $25.5 million and $24.2 million at December 31, 2000 and 1999,
respectively, of which $15.5 million is recorded as a long term
receivable in other assets at December 31, 2000.
The Company provided management services to Venture Asia Pacific Pty.
Ltd. (VAP) and its subsidiaries and corporations wholly owned by the sole
beneficiary. The Company billed management fees and commissions totaling
$4.9, $4.5, and $4.5 million to VAP in 2000, 1999, and 1998,
respectively. These fees and commissions ceased as of December 31, 2000.
In addition, VAP reimbursed Venture for certain other expenditures made
on its behalf and assigned certain tooling contracts to Venture. These
arrangements will continue. As a result of negotiations with an
Australian customer, Venture Asia Pacific was granted an increased piece
price to cover excess tooling and other program associated costs. This
agreement has facilitated repayment terms between the Company and Venture
Asia Pacific for the outstanding accounts receivable balance related to
management fees, commissions, tooling and other expenditures. In
conjunction with this agreement, $14.7 million of the $20.3 million has
been reclassified from a current receivable to a long-term receivable in
other assets.
34
37
The following is a summary of transactions with all related parties at
December 31, 2000, 1999 and 1998 (in thousands):
December 31,
Revenue for: 2000 1999 1998
---- ---- ----
Materials sold, tooling sales,
Sales commission and rent charged $ 21,154 $ 17,618 $ 18,974
Providing administrative services 462 -- --
Insurance and benefit premiums -- -- --
Management fees 4,980 4,476 4,533
Subcontracted services 75 -- 2,324
Manufacturing related services and inventory
purchased 21,862 15,557 8,084
Rent expense paid 2,180 2,599 2,180
Machine and facility usage fees paid 6,699 6,340 4,158
Commission expense paid 8,206 10,929 10,391
Litigation, workers compensation and medical
insurance premiums 913 766 613
Property, plant and equipment purchased -- 965 40
Deposit, paid for vehicles 12,400 13,268 --
The total of these related party transactions is as follows
(in thousands):
December 31,
2000 1999
---- ----
Amounts receivable $113,557 $ 96,795
Amounts payable 25,519 14,151
-------- --------
Net amounts receivable $ 88,038 $ 82,644
======== ========
During 2000, the company reassessed the collectibility and classification
of the related party receivables. Based on the assessment and
finalization of certain repayment agreements, $33.6 million of the amount
was reclassed to other assets. The amounts are generally from entities
wholly owned by the sole beneficiary of the Company and management
believes that the amounts are fully recoverable.
9. COMMITMENTS AND CONTINGENCIES
Operating Leases - The Company leases certain machinery and equipment
under operating leases which have initial or remaining terms of one year
or more at December 31, 2000. Future minimum lease commitments, including
related party leases, are as follows (in thousands):
Related Party Other Operating
Operating Leases Leases
---------------- ------
Years:
2001 $ 133 $11,141
2002 -- 9,129
2003 -- 7,848
2004 -- 6,510
2005 -- 4,803
Remaining years -- 20,112
------- -------
Total $ 133 $59,543
======= =======
Rent expense for operating leases and other agreements with a term of
greater than one month, including amounts paid to related parties, was
$17.4 million, $10.9 and $5.5 million for the years ended December 31,
2000, 1999, and 1998, respectively. Usage fees paid based on monthly
usage of certain machinery and equipment and facilities were $7.0, $6.7,
and $4.0 million for the years ended December 31, 2000, 1999 and 1998,
respectively. With the exception of $0.3 million paid during 2000 and
1999, all usage fees were paid to related parties.
35
38
Resolution of Commercial Issues - During the fourth quarter of 1998, the
Company resolved several commercial issues which resulted in the recovery
of gross profit lost during current and prior years. The resolution of
these issues resulted in an additional $7.4 million of gross profit in
1998.
Environmental Costs - The Company is subject to potential liability under
government regulations and various claims and legal actions which are
pending or may be asserted against the Company concerning environmental
matters. Estimates of future costs of such environmental matters are
necessarily imprecise due to numerous uncertainties, including the
enactment of new laws and regulations, the development and application of
new technologies, the identification of new sites for which the Company
may have remediation responsibility and the apportionment and
collectibility of remediation costs among responsible parties. The
Company establishes reserves for these environmental matters when a loss
is probable and reasonably estimable. The Company's reserves for these
environmental matters totaled $1.5 million at December 31, 2000 and $1.8
million at December 31, 1999.
The Company has been involved in legal proceedings with the Michigan
Department of Environmental Quality (MDEQ) concerning the emissions from
our Grand Blanc paint facility. In October 1999, the parties to the
litigation reached an agreement in principle to settle the case by the
installation of full pollution abatement equipment at the Grand Blanc
facility and payment by us of $1.1 million. The agreement was subject to
several conditions, primarily rezoning of the property. In January of
2000, rezoning approval was granted for the new equipment. In February of
2000, the Company applied for new permits for the installation of the
equipment. The Company entered into a consent decree in January of 2001
to settle this matter. During the fourth quarter of 1999, the Company
established a reserve in the amount of $1.1 million relating to this
payment and made the payment in February of 2001. As required under the
decree, the Company plans to make certain capital expenditures of
approximately $8.5 million to the current Grand Blanc systems.
In December of 1999, the MDEQ contacted the Grand Blanc facility relating
to the classification of waste leaving the facility. The Company has been
discussing the issue with the MDEQ and have been conducting tests of the
waste. As a result of the contact and to avoid future liability, the
Company has voluntarily changed the classification of the waste on all
subsequent disposals even though the Company disagrees with MDEQ. In
addition, the Company has changed materials and certain
processes to remove the concern of the MDEQ. By changing the
classification of the waste for disposal subsequent to the contact the
Company has limited its potential liability to disposals prior to the
contact. However, the Company may be exposed to some liability for past
disposal. On March 20, 2000 the Company received a notice of warning from
MDEQ regarding this matter. As a result of the notice received for the
Grand Blanc facility the Company voluntarily undertook the same actions
at the Grand Rapids facility to reduce risk of potential damage claims as
the same procedures and methods were used at the Grand Rapids and Grand
Blanc facilities. At the present time the Company is unable to quantify
any liability for these disposals.
In late 2000, the Company was notified by Union Carbide Corporation that,
based upon the usage of some paint application equipment at the Grand
Blanc facility, the Company was obligated to pay certain royalties
related to patent infringements. The Company is currently reviewing this
matter with an attorney. At the present time, the Company has been unable
to reach a conclusion as to possible infringements because of
modifications we made, and the amount of any royalty that would be owed.
The Company does use the Union Carbide equipment at our Seabrook
facility, without the modifications and are paying the royalty at that
location.
The Company is party to various contractual, legal and environmental
proceedings, some of which assert claims for large amounts. Although the
ultimate cost of resolving these matters could not be precisely
determined at December 31, 2000, management believes, based on currently
known facts and circumstances, that the disposition of these matters will
not have a material adverse effect on the Company's consolidated
financial position and results of operations. These matters are subject
to many uncertainties, and the outcome of individual matters is not
predictable with assurance. It is more than remote but less than likely
that the final resolution of these matters may require the Company to
make expenditures, in excess of established reserves, over an extended
period of time and in a range of amounts that cannot be reasonably
estimated. The Company's reserves have been set based upon a review of
costs that may be incurred after considering the creditworthiness of
guarantors and/or indemnification from third parties which the Company
has received. The Company is not covered by insurance for any unfavorable
environmental outcomes, but relies on the established reserves,
guarantees and indemnifications it has received.
36
39
10. CONCENTRATIONS
The Company's sales to General Motors Corporation ("GM"), Ford Motor
Company ("Ford") and DaimlerChrysler Corporation ("DaimlerChrysler"),
expressed as a percentage of sales, were 38%, 23% and 15%, respectively,
in 1998. During 1999, the percentages were 18%, 13%, 12%, 11% and 9% for
GM, Audi, DaimlerChrysler, Ford and Volkswagen, respectively. During
2000, the percentages were 14%, 13%, 11% and 11% for Audi, General
Motors, DaimlerChrysler and Volkswagon, respectively. Many of the
Company's automotive industry customers are unionized and work stoppages
or slow-downs experienced by them, and their employee relations policies
could have an adverse effect on the Company's results of operations. Net
sales during the second and third quarters of 1998 were impacted
negatively due to strikes at certain General Motors plants. The Company
believes that a portion of these lost sales were recouped in the fourth
quarter of 1998 as GM accelerated production to refill its distribution
channels. Approximately 35% of the Company's North American workforce is
covered by collective bargaining agreements. A portion of the European
workforce is covered by collective bargaining agreements. The UAW
contract at the Lancaster facility expires in June 2001 and formal
negotiations have not begun.
11. PENSIONS, PROFIT-SHARING AND SALARY REDUCTION PLAN
North America
The Company sponsors profit-sharing and salary reduction 401(k) plans
which cover substantially all North American employees. The plans provide
for the Company to contribute a discretionary amount each year.
Contributions were $2.3 million for the years ended December 31, 2000,
1999 and 1998.
Venture Holdings Corporation, into which Bailey Corporation ("Bailey")
was merged in July 1997, has various retirement plans covering
substantially all North American employees, including three defined
benefit pension plans covering full-time hourly and salaried employees.
The benefits payable under the plans are generally determined based on
the employees' length of service and earnings. For all these plans the
funding policy is to make at least the minimum annual contributions
required by Federal law and regulation.
The change in benefit obligation for the years ended December 31, 2000
and 1999 was as follows (in thousands):
December 31,
2000 1999
---- ----
Benefit obligation at beginning of year $ 17,241 $ 18,230
Service cost 443 589
Interest cost 1,299 1,234
Amendments -- 638
Actuarial loss (gain) 1,716 (2,856)
Effect of Settlement (755) --
Benefits paid (8,388) (594)
-------- --------
Benefit obligation at end of year $ 11,556 $ 17,241
======== ========
37
40
The change in the market value of plan assets for the years ended
December 31, 2000 and 1999 was as follows (in thousands):
December 31,
2000 1999
---- ----
Market value of plan assets at
beginning of year $ 15,982 $ 14,255
Actual return on plan assets 1,125 1,606
Employer contribution 1,232 715
Benefits paid (8,388) (594)
-------- --------
Market value of plan assets at
end of year $ 9,951 $ 15,982
======== ========
The funded status of the defined benefit plans at December 31, 2000 was
as follows (in thousands):
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets
-------------------- -------------
Actuarial present value of benefit obligations:
Vested benefits $ -- $ 11,387
Nonvested benefits -- 168
-------- --------
Accumulated benefit obligation -- 11,555
Projected benefit obligation -- 11,556
Market value of plan assets -- 9,951
-------- --------
(Deficiency) of assets over projected benefit
obligation -- (1,605)
Unrecognized net (gain) -- (2,399)
Unrecognized prior service cost -- 978
-------- --------
(Accrued) pension cost $ -- $ (3,026)
======== ========
The funded status of the defined benefit plans at December 31, 1999 was
as follows (in thousands):
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets
-------------------- -------------
Actuarial present value of benefit obligations:
Vested benefits $ 5,841 $ 11,261
Nonvested benefits 18 121
-------- --------
Accumulated benefit obligation 5,859 11,382
Projected benefit obligation 5,859 11,382
Market value of plan assets 7,673 8,309
-------- --------
Excess (deficiency) of assets over projected benefit
obligation 1,814 (3,073)
Unrecognized net (gain) (1,558) (1,403)
Unrecognized prior service cost -- 1,067
-------- --------
Prepaid (Accrued) pension cost $ 256 $ (3,409)
======== ========
Net periodic pension expense (benefit) for the years ended December 31,
2000 and 1999 included the following components (in thousands):
December 31,
2000 1999
---- ----
Service cost benefit during the year $ 443 $ 589
Interest cost on projected benefit obligation 1,299 1,234
Expected return on plan assets (1,359) (1,196)
Net amortization and deferral (33) 89
------- -------
Net periodic pension expense $ 350 $ 716
======= =======
38
41
The date used to measure plan assets and liabilities is as of
September 30 each year.
The weighted-average assumed discount rate was 8.0% and 7.75% for 2000
and 1999, respectively. The assumed rate of return on plan assets was
8.5% for 2000 and 2001, respectively. For salary based plans, the
expected rate of increase in compensation levels was 0.0% (as all
salaried plans have been frozen).
Plan assets consist principally of cash and cash equivalents, listed
common stocks, debentures, and fixed income securities.
A salaried pension plan has been frozen since 1992, and no further
service liability will accrue under the plan. During 1998, an additional
salaried pension plan and an hourly pension plan were frozen, and no
further service liability will accrue under these plans.
Effective January 1, 1999, the three frozen plans were merged into one
plan. The merged plan was terminated in 2000.
Europe
Peguform Germany maintains one defined benefit pension plan covering all
its full-time hourly and salaried employees plus some individual defined
benefit pension agreements for managers and members of the board. The
benefits payable under the plans are generally determined based on the
employees' length of service and earnings. These benefit plans are not
funded.
The change in benefit obligation for the year ended December 31, 2000 and
1999 was as follows (in thousands):
December 31, December 31,
2000 1999
---- ----
Benefit obligation at beginning of year $ 25,255 $ 25,919
Service cost 1,174 1,029
Interest cost 1,404 1,092
Actuarial loss (gain) 164 (2,175)
Benefits paid (810) (610)
-------- --------
Benefit obligation at end of year $ 27,187 $ 25,255
======== ========
The funded status of the defined benefit plans at December 31, 2000 was
as follows (in thousands):
Accumulated Benefits
Exceed Assets
-------------
Actuarial present value of benefit obligations:
Vested benefits $ 23,374
Nonvested benefits 3,220
--------
Accumulated benefit obligation 26,594
Projected benefit obligation 27,187
Market value of plan assets --
--------
(Deficiency) of assets over projected benefit obligation (27,187)
Unrecognized net (gain) (175)
--------
Accrued pension cost $(27,362)
========
39
42
The funded status of the defined benefit plans at December 31, 1999 was
as follows (in thousands):
Accumulated Benefits
Exceed Assets
-------------
Actuarial present value of benefit obligations:
Vested benefits $ 21,117
Nonvested benefits 3,613
--------
Accumulated benefit obligation 24,730
Projected benefit obligation 25,255
Market value of plan assets --
--------
(Deficiency) of assets over projected benefit obligation (25,255)
Unrecognized net (gain) (2,175)
--------
Accrued pension cost $(27,430)
========
Net periodic pension expense for the year ended December 31, 2000 and
1999 included the following components (in thousands):
December 31, December 31,
2000 1999
---- ----
Service cost benefit during the year $1,174 $1,029
Interest cost on projected benefit obligation 1,404 1,092
------ ------
Net periodic pension expense $2,578 $2,121
====== ======
The date used to measure plan assets and liabilities was as of December
31, 2000 and 1999.
The weighted-average assumed discount rate was 6.0% for 2000 and 1999.
For salary based plans, the expected rate of increase in compensation
levels was 2.0% and 1.5% for 2000 and 1999, respectively.
12. INCOME TAXES
Amounts in the financial statements related to income taxes are for the
operations of Venture Holdings Corporation, and Peguform subsidiaries.
The other significant Subsidiaries have elected S corporation or flow
through tax status under the Internal Revenue Code and will incur no
domestic or foreign income tax. The member is required to report all
income, gains, losses, deductions, and credits of the S corporations and
other flow through entities included in the LLC on his individual tax
returns.
The provision for income tax (benefit) expense for the period ended (in
thousands):
December 31,
2000 1999 1998
---- ---- ----
Currently Payable
United States $ 60 $ (351) $ 80
State and Local -- -- --
Foreign 10,330 2,941 16
-------- -------- --------
Total 10,390 2,590 96
======== ======== ========
Deferred
United States $ (197) $ 1,994 $ 1,618
State and Local (25) 297 240
Foreign (21,457) 3,346 --
-------- -------- --------
Total $(21,679) 5,637 1,858
======== ======== ========
40
43
The Company does not provide for U.S. income taxes or foreign withholding
taxes on cumulative undistributed earnings of foreign subsidiaries which
are considered to be permanently reinvested outside the U.S.
The effective rate of Venture Holdings Corporation on pre-tax income was
(7.4)% for the year ended December 31, 2000, of which 32.8% relates to
permanent differences not deductible for income taxes (primarily goodwill
amortization) and 5.2% for state and local income taxes, net of federal
tax benefit. The effective rate of foreign entities on pre-tax income was
95.2% for the year ended December 31, 2000. The effective tax rate of
Venture Holdings Corporation on pretax income was 65.27% for the year
ended December 31, 1999, of which 24.17% relates to permanent differences
not deductible for income taxes (primarily goodwill amortization) and
5.2% for state and local income taxes, net of the federal tax benefit.
The effective tax rate of foreign entities on pre-tax income was 36.8%
for the year ended December 31, 1999. The effective tax rate on pretax
income was 70.4% for the year ended December 31, 1998, of which 29.9%
relates to permanent differences not deductible for income taxes and 5.2%
for state and local income taxes, net of the federal tax benefit.
The tax benefits were generated during 2000 primarily as a result of
finalizing the restructuring of the Peguform group of companies, a
reduction of tax rates in Germany and the recognition of the benefit of
NOL carryforwards. The tax-effected temporary differences and
carryforwards which comprised deferred assets and liabilities were as
follows (in thousands):
December 31,
2000 1999
---- ----
Deferred tax assets:
Accrued expenses and reserves $ 14,107 $ 13,487
Net operating loss carryforward 38,181 16,556
Minimum tax credit carryforward 824 764
Other 7,211 9,784
-------- --------
Total deferred tax assets $ 60,323 $ 40,591
-------- --------
Deferred tax liabilities:
Depreciation $ 38,138 $ 59,277
Other 299 1,396
-------- --------
Total deferred tax liabilities $ 38,437 $ 60,673
-------- --------
Net deferred tax asset (liability) $ 21,886 $(20,082)
======== ========
The current portion of deferred tax assets, $9.2 and $10.7 million is
included in prepaid expense and other at December 31, 2000 and 1999,
respectively. The current portion of deferred tax liabilities of $0.5
million and $1.2 million is included in accrued expenses at December 31,
2000 and 1999, respectively. As a result of restructuring the Peguform
Group of companies, deferred tax liabilities and goodwill have both been
reduced by $21.9 million at December 31, 2000. Venture Holdings
Corporation U.S. net operating loss carryforwards, which totaled $33.4
and $30.8 million at December 31, 2000 and 1999, respectively, begin to
expire in the year 2011. Peguform France has net operating loss
carryforwards of approximately $11.9 and $16 million at December 31, 2000
and 1999, respectively, which have an unlimited expiration period.
Peguform Brazil has net operating loss carryforwards of approximately
$9.5 million at December 31, 2000 and have an unlimited expiration
period. Venture Germany has net operating loss carryforwards of
approximately $62.2 million at December 31, 2000 and an unlimited
expiration period. Alternative minimum tax credit carryforwards totaled
$824 thousand at December 31, 2000 and have no expiration date.
Management believes the net operating loss carryforwards at December 31,
2000 are realizable based on forecasted earnings and available tax
planning strategies.
41
44
13. SEGMENT REPORTING
Prior to the Peguform Acquisition on May 28, 1999, the Company was
organized and operated in one reporting segment. As a result of the
Peguform Acquisition, the Company is organized and managed based
primarily on geographic markets served. Under this organizational
structure, the Company's operating segments have been divided into two
reportable segments: North America and Europe. The following table
presents net sales and other financial information by business segment
for the twelve months ended December 31, 2000 (in thousands):
INCOME NET (LOSS) TOTAL
NET SALES FROM OPERATIONS INCOME ASSETS
--------- --------------- ------ ------
NORTH AMERICA (Venture) $ 583,218 $ 22,505 $ (29,981) $ 989,131
EUROPE (Peguform) 1,250,196 73,525 39,063 437,172
ELIMINATIONS (3,449) -- -- --
----------- ----------- ----------- -----------
TOTAL 1,829,965 96,030 9,082 1,426,303
=========== =========== =========== ===========
The following table presents net sales and other financial information by
business segment for the twelve months ended December 31, 1999 (in
thousands):
INCOME NET (LOSS) TOTAL
NET SALES FROM OPERATIONS INCOME ASSETS
--------- --------------- ------- ------
NORTH AMERICA (Venture) $ 605,637 $ 6,666 $ (24,702) $1,029,332
EUROPE (Peguform) 760,533 34,558 10,192 385,644
ELIMINATIONS
---------- ---------- ---------- ----------
TOTAL 1,366,170 41,224 (14,510) 1,414,976
========== ========== ========== ==========
14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Venture, as the successor to Venture Holdings Trust, and certain of its
wholly-owned, domestic subsidiaries are jointly and severally liable for
the 1997 Senior Notes issued on July 9, 1997. On May 27, 1999, certain
100%-owned, domestic subsidiaries of Venture became guarantors of the
1997 Senior Notes. These guarantees are full and unconditional, joint and
several. Venture issued the 1999 Notes on May 27, 1999 in connection with
the Peguform Acquisition, as a result of which Venture acquired certain
additional foreign subsidiaries. The 1999 Notes are guaranteed by each of
Venture's 100%-owned, domestic subsidiaries. The guarantees of these
100%-owned, domestic subsidiaries are full and unconditional, joint and
several.
Condensed consolidating financial information for the periods prior to
June 30, 1999 are not presented because prior to May 27, 1999 the
non-guarantors and the non-issuers of the 1997 Senior Notes and the
non-guarantors of the 1999 Notes during those periods were minor
subsidiaries, individually and in the aggregate. Management does not
believe that separate financial statements of the issuer subsidiaries or
guarantor subsidiaries are material to investors in the 1997 Senior Notes
or the 1999 Notes.
The principal elimination entries eliminate investments in subsidiaries
and intercompany balances and transactions.
42
45
1997 SENIOR NOTES:
The following condensed consolidating financial information presents:
(1) Condensed consolidating financial statements for years ended December
31, 2000 and 1999, of (a) Venture, as a co-issuer of the 1997 Senior
Notes (b) the subsidiaries that are co-issuers of the 1997 Senior
Notes, (c) the guarantor subsidiaries, (d) the nonguarantor
subsidiaries and (e) the Company on a consolidated basis, and
(2) Elimination entries necessary to consolidate Venture, the other
issuers and the guarantor subsidiaries with the nonguarantor
subsidiaries.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
OTHER GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE ISSUERS SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------- ------------ ------------ ------------ -----
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ -- $ -- $ -- $ 941 $ -- $ 941
Accounts receivable, net -- 146,309 117 146,646 -- 293,072
Inventories -- 68,466 -- 138,156 -- 206,622
Investments (609) -- -- 1,098 -- 489
Prepaid and other current assets -- 5,295 319 40,319 -- 45,933
--------- --------- --------- --------- --------- ----------
Total current assets (609) 220,070 436 327,160 -- 547,057
Property, Plant and Equipment, Net -- 190,545 10 362,483 -- 553,038
Intangible Assets, Net -- 48,251 -- 74,879 -- 123,130
Other Assets 12,392 117,965 -- 21,581 -- 151,938
Deferred Tax Assets -- 11,864 -- 39,276 -- 51,140
Net Investment in and advances to (from)
Subsidiaries & affiliates 912,207 (506,152) 43,849 (233,601) (216,303) --
--------- --------- --------- --------- --------- ----------
Total Assets $ 923,990 $ 82,543 $ 44,295 $ 591,778 $(216,303) $1,426,303
========= ========= ========= ========= ========= ==========
LIABILITIES AND MEMBER'S EQUITY
- -------------------------------
CURRENT LIABILITIES:
Accounts payable $ -- $ 67,562 $ 1,209 $ 188,878 $ -- $ 257,649
Accrued interest 15,294 -- -- 188 -- 15,482
Accrued expenses -- 8,194 1,949 109,671 -- 119,814
Current portion of long term debt 17,908 -- -- 6,497 -- 24,405
--------- --------- --------- --------- --------- ----------
Total current liabilities 33,202 75,756 3,158 305,234 -- 417,350
Pension Liabilities & Other -- 5,784 -- 45,587 -- 51,371
Deferred Tax Liabilities -- 12,191 -- 25,776 -- 37,967
Long Term Debt 818,189 1,500 -- 32,889 -- 852,578
--------- --------- --------- --------- --------- ----------
Total liabilities 851,391 95,231 3,158 409,486 -- 1,359,266
Commitments and Contingencies -- -- -- -- -- --
Member's Equity:
Member's equity 72,599 (12,688) 41,137 187,677 (216,303) 72,422
Accumulated other comprehensive income-
minimum pension liability in excess of
unrecognized prior service cost, net of tax -- -- -- -- -- --
Accumulated other comprehensive income-
cumulative translation adjustments -- -- -- (5,385) -- (5,385)
--------- --------- --------- --------- --------- ----------
Member's Equity 72,599 (12,688) 41,137 182,292 (216,303) 67,037
--------- --------- --------- --------- --------- ----------
Total Liabilities and Member's Equity $ 923,990 $ 82,543 $ 44,295 $ 591,778 $(216,303) $1,426,303
========= ========= ========= ========= ========= ==========
43
46
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2000
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
OTHER GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE ISSUERS SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------- ------------ ------------ ------------ -----
NET SALES $ -- $ 413,394 $ 164,960 $ 1,255,060 $ (3,449) $ 1,829,965
COST OF PRODUCT SOLD -- 356,417 165,032 1,084,326 (3,449) 1,602,326
----------- ----------- ----------- ----------- ----------- -----------
GROSS PROFIT -- 56,977 (72) 170,734 -- 227,639
SELLING, GENERAL & ADMINISTRATIVE
EXPENSE -- 34,701 -- 95,743 -- 130,444
PAYMENTS TO BENEFICIARY IN LIEU OF
TAXES 1,165 -- -- -- -- 1,165
----------- ----------- ----------- ----------- ----------- -----------
(LOSS) INCOME FROM OPERATIONS (1,165) 22,276 (72) 74,991 -- 96,030
INTEREST EXPENSE 92,608 139 -- 9,766 -- 102,513
INTERCOMPANY INTEREST ALLOCATION (90,151) 57,825 (33,033) 65,359 -- --
OTHER EXPENSE (INCOME) (33,944) 3,436 (17,090) 41,916 -- (5,682)
----------- ----------- ----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE TAXES 30,322 (39,124) 50,051 (42,050) -- (801)
TAX (BENEFIT) PROVISION -- (163) -- (11,126) -- (11,289)
MINORITY INTEREST -- -- -- 1,406 -- 1,406
----------- ----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME $ 30,322 $ (38,961) $ 50,051 $ (32,330) $ -- $ 9,082
=========== =========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
OTHER GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE ISSUERS SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------- ------------ ------------ ------------ -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,322 $ (38,961) $ 50,051 $ (32,330) $ -- $ 9,082
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,457 43,385 5 45,230 -- 91,077
Unrealized loss on currency exchange -- 3,199 (12,735) 51,159 -- 41,623
Net gain on termination of derivatives (37,421) -- -- -- -- (37,421)
Loss from the disposal of fixed assets -- (43) -- 607 -- 564
Change in accounts receivable -- 42,454 36 (24,218) -- 18,272
Change in inventories -- (19,529) -- (32,471) -- (52,000)
Change in prepaid and other current assets -- 14,755 (319) (6,509) -- 7,927
Change in other assets (14,849) (66,686) -- 36,489 -- (45,046)
Change in accounts payable -- 10,175 697 52,180 -- 63,052
Change in accrued expenses 2,066 (7,966) 350 18,789 -- 13,239
Change in pension liabilities and other -- (456) -- (5,788) -- (6,244)
Change in deferred taxes -- (17) -- (42,762) -- (42,779)
--------- --------- --------- --------- ------- ---------
Net cash provided by (used in) operating
activities (17,425) (19,690) 38,085 60,376 -- 61,346
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- (25,441) -- (60,277) -- (85,718)
Net activity in investments in and advances to (from)
subsidiaries and affiliates (38,753) 49,354 (50,820) 40,219 -- --
Proceeds from sale of fixed assets -- -- -- 661 -- 661
Proceeds from termination of derivatives 78,531 -- -- -- -- 78,531
--------- --------- --------- --------- ------- ---------
Net cash used in investing activities 39,778 23,913 (50,820) (19,397) -- (6,526)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under revolving credit
facility 112,447 -- -- (15,995) -- 96,452
Principal payments on debt (134,800) (982) -- (9,745) -- (145,527)
Net proceeds from issuance of debt 5,717 5,717
--------- --------- --------- --------- ------- ---------
Net cash (used in) provided by
financing activities (22,353) (982) -- (20,023) -- (43,358)
Effect of exchange rate changes on cash and cash
Equivalents -- (3,267) 12,735 (27,381) -- (17,913)
NET (DECREASE) INCREASE IN CASH -- (26) -- (6,425) -- (6,451)
CASH AT BEGINNING OF PERIOD $ -- $ 26 $ -- $ 7,366 $ -- $ 7,392
--------- --------- --------- --------- ------- ---------
CASH AT END OF PERIOD $ -- $ -- $ -- $ 941 $ -- $ 941
========= ========= ========= ========= ======= =========
44
47
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
OTHER GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE ISSUERS SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------- ------------ ------------ ------------ -----
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ -- $ 26 $ -- $ 7,366 $ -- $ 7,392
Accounts receivable, net -- 188,763 153 122,428 -- 311,344
Inventories -- 48,936 -- 105,684 -- 154,620
Investments 40,501 -- -- -- -- 40,501
Prepaid and other current assets -- 20,051 -- 33,810 -- 53,861
--------- ----------- -------- ----------- --------- -----------
Total current assets 40,501 257,776 153 269,288 -- 567,718
Property, Plant and Equipment, Net -- 193,199 15 369,624 -- 562,838
Intangible Assets, Net -- 50,140 -- 121,950 -- 172,090
Other Assets -- 64,620 -- 17,884 -- 82,504
Deferred Tax Assets -- 11,711 -- 18,115 -- 29,826
Net Investment in and advances to (from)
subsidiaries & affiliates 873,454 (456,809) (6,971) (409,674) -- --
--------- ----------- -------- ----------- --------- -----------
Total Assets $ 913,955 $ 120,637 $ (6,803) $ 387,187 $ -- $1,414,976
========= =========== ======== =========== ========= ===========
LIABILITIES AND MEMBER'S EQUITY
- -------------------------------
CURRENT LIABILITIES:
Accounts payable $ -- $ 57,388 $ 512 $ 136,696 $ -- $ 194,596
Accrued interest 13,228 -- -- 175 -- 13,403
Accrued expenses -- 16,161 1,599 90,893 -- 108,653
Current portion of long term debt 51,800 1,021 -- 15,547 -- 68,368
--------- ----------- -------- ----------- --------- -----------
Total current liabilities 65,028 74,570 2,111 243,311 -- 385,020
Pension Liabilities & Other -- 6,239 -- 51,375 -- 57,614
Deferred Tax Liabilities -- 12,054 -- 47,377 -- 59,431
Long Term Debt 806,650 1,496 -- 43,862 -- 852,008
--------- ----------- -------- ----------- --------- -----------
Total liabilities 871,678 94,359 2,111 385,925 -- 1,354,073
Commitments and Contingencies -- -- -- -- -- --
Member's Equity:
Member's equity 42,277 26,274 (8,914) 3,703 -- 63,340
Accumulated other comprehensive income-
minimum pension liability in excess of
unrecognized prior service cost, net of tax -- -- -- -- -- --
Accumulated other comprehensive income-
cumulative translation adjustments -- 4 -- (2,441) -- (2,437)
--------- ----------- -------- ----------- --------- -----------
Member's Equity 42,277 26,278 (8,914) 1,262 -- 60,903
--------- ----------- -------- ----------- --------- -----------
Total Liabilities and Member's Equity $ 913,955 $ 120,637 $ (6,803) $ 387,187 $ -- $1,414,976
========= =========== ======== =========== ========= ===========
45
48
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
OTHER GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE ISSUERS SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------- ------------ ------------ ------------ -----
NET SALES $ -- $ 599,434 $ 157,376 $ 766,685 $ (157,325) $ 1,366,170
COST OF PRODUCT SOLD -- 550,273 149,598 672,926 (157,325) 1,215,472
----------- ----------- ----------- ----------- ----------- -----------
GROSS PROFIT -- 49,161 7,778 93,759 -- 150,698
SELLING, GENERAL & ADMINISTRATIVE
EXPENSE -- 50,629 -- 58,586 -- 109,215
PAYMENTS TO BENEFICIARY IN LIEU OF
TAXES 259 -- -- -- -- 259
----------- ----------- ----------- ----------- ----------- -----------
(LOSS) INCOME FROM OPERATIONS (259) (1,468) 7,778 35,173 -- 41,224
INTEREST EXPENSE 67,271 171 -- 5,164 -- 72,606
INTERCOMPANY INTEREST ALLOCATION (67,271) 47,767 -- 19,504 -- --
OTHER EXPENSE (INCOME) (48,105) (514) 16,800 597 -- (31,222)
----------- ----------- ----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE TAXES 47,846 (48,892) (9,022) 9,908 -- (160)
TAX (BENEFIT) PROVISION -- 1,940 -- 6,287 -- 8,227
MINORITY INTEREST -- -- -- 554 -- 554
----------- ----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME BEFORE
EXTRAORDINARY LOSS 47,846 (50,832) (9,022) 3,067 -- (8,941)
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT 5,569 -- -- -- -- 5,569
----------- ----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME $ 42,277 $ (50,832) $ (9,022) $ 3,067 $ -- $ (14,510)
=========== =========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
OTHER GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE ISSUERS SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------- ------------ ------------ ------------ -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 42,277 $ (50,832) $ (9,022) $ 3,067 $ -- $ (14,510)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization -- 49,824 4 26,168 -- 75,996
Unrealized loss on currency exchange -- (411) 17,830 -- -- 17,419
Unrealized gain on investments (40,501) -- -- -- -- (40,501)
Loss from the disposal of fixed assets -- -- -- 181 -- 181
Net extraordinary loss on early extinguishment
of debt 5,569 -- -- -- -- 5,569
Change in accounts receivable -- 419 (61) 52,646 -- 53,004
Change in inventories -- 1,834 -- 22,066 -- 23,900
Change in prepaid and other current assets -- (13,834) -- 5,130 -- (8,704)
Change in other assets -- (29,884) -- 169 -- (29,715)
Change in investments in associated company -- -- -- (723) -- (723)
Change in accounts payable -- 6,113 (489) 4,581 -- 10,205
Change in accrued expenses (97) 3,921 (516) (16,953) -- (13,645)
Change in pension liabilities and other -- 736 -- 3,763 -- 4,499
Change in deferred taxes -- 2,371 -- 3,465 -- 5,836
--------- --------- --------- --------- -------- ---------
Net cash provided by (used in) operating
activities 7,248 (29,743) 7,746 103,560 -- 88,811
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of subsidiaries, net of cash acquired -- -- (75,531) (368,530) -- (444,061)
Capital expenditures -- (23,740) -- (29,436) -- (53,176)
Net activity in investments in and advances to (from)
subsidiaries and affiliates (502,960) 84,078 67,785 351,097 -- --
Proceeds from sale of fixed assets -- -- -- 390 -- 390
--------- --------- --------- --------- -------- ---------
Net cash used in investing activities (502,960) 60,338 (7,746) (46,479) -- (496,847)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under revolving credit
facility (71,500) -- -- (71) -- (71,571)
Debt issuance fees -- (27,066) -- -- -- (27,066)
Net proceeds from issuance of debt 650,000 -- -- -- -- 650,000
Payment for early extinguishment of debt (82,788) -- -- (45,862) -- (128,650)
Principal payments on debt -- (3,532) -- (2,327) -- (5,859)
--------- --------- --------- --------- -------- ---------
Net cash (used in) provided by
financing activities 495,712 (30,598) -- (48,260) -- 416,854
Effect of exchange rate changes on cash and cash
Equivalents -- -- -- (1,556) -- (1,556)
NET INCREASE IN CASH -- (3) -- 7,265 -- 7,262
CASH AT BEGINNING OF PERIOD $ -- $ 29 $ -- $ 101 $ -- $ 130
--------- --------- --------- --------- -------- ---------
CASH AT END OF PERIOD $ -- $ 26 $ -- $ 7,366 $ -- $ 7,392
========= ========= ========= ========= ======== =========
46
49
1999 NOTES:
The following condensed consolidating financial information presents:
(1) Condensed consolidating financial statements for the years ended
December 31, 2000 and 1999, of (a) Venture, the sole issuer of the
1999 Notes, (b) the guarantor subsidiaries, (c) the nonguarantor
subsidiaries and (d) the Company on a consolidated basis, and
(2) Elimination entries necessary to consolidate Venture and the
guarantor subsidiaries with the nonguarantor subsidiaries.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ -----
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ -- $ -- $ 941 $ -- $ 941
Accounts receivable, net -- 146,426 146,646 -- 293,072
Inventories -- 68,466 138,156 -- 206,622
Investments (609) -- 1,098 -- 489
Prepaid and other current assets -- 5,614 40,319 -- 45,933
----------- ----------- ----------- ----------- -----------
Total current assets (609) 220,506 327,160 -- 547,057
Property, Plant and Equipment, Net -- 190,555 362,483 -- 553,038
Intangible Assets, Net -- 48,251 74,879 -- 123,130
Other Assets 12,392 117,965 21,581 -- 151,938
Deferred Tax Assets -- 11,864 39,276 -- 51,140
Net Investment in and advances to (from)
subsidiaries & affiliates 912,207 (462,303) (233,601) (216,303) --
----------- ----------- ----------- ----------- -----------
Total Assets $ 923,990 $ 126,838 $ 591,778 $ (216,303) $ 1,426,303
=========== =========== =========== =========== ===========
LIABILITIES AND MEMBER'S EQUITY
-------------------------------
CURRENT LIABILITIES:
Accounts payable $ -- $ 68,771 $ 188,878 $ -- $ 257,649
Accrued interest 15,294 -- 188 -- 15,482
Accrued expenses -- 10,143 109,671 -- 119,814
Current portion of long term debt 17,908 -- 6,497 -- 24,405
----------- ----------- ----------- ----------- -----------
Total current liabilities 33,202 78,914 305,234 -- 417,350
Pension Liabilities & Other -- 5,784 45,587 -- 51,371
Deferred Tax Liabilities -- 12,191 25,776 -- 37,967
Long Term Debt 818,189 1,500 32,889 -- 852,578
----------- ----------- ----------- ----------- -----------
Total liabilities 851,391 98,389 409,486 -- 1,359,266
Commitments and Contingencies -- -- -- -- --
Member's Equity:
Member's equity 72,599 28,449 187,677 (216,303) 72,422
Accumulated other comprehensive income-
minimum pension liability in excess of
unrecognized prior service cost, net of tax -- -- -- -- --
Accumulated other comprehensive income-
cumulative translation adjustments -- -- (5,385) -- (5,385)
----------- ----------- ----------- ----------- -----------
Member's Equity 72,599 28,449 182,292 (216,303) 67,037
----------- ----------- ----------- ----------- -----------
Total Liabilities and Member's Equity $ 923,990 $ 126,838 $ 591,778 $ (216,303) $ 1,426,303
=========== =========== =========== =========== ===========
47
50
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2000
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ -----
NET SALES $ -- $ 578,354 $ 1,255,060 $ (3,449) $ 1,829,965
COST OF PRODUCT SOLD -- 521,449 1,084,326 (3,449) 1,602,326
----------- ----------- ----------- ----------- -----------
GROSS PROFIT -- 56,905 170,734 -- 227,639
SELLING, GENERAL & ADMINISTRATIVE
EXPENSE -- 34,701 95,743 -- 130,444
PAYMENTS TO BENEFICIARY IN LIEU OF
TAXES 1,165 -- -- -- 1,165
----------- ----------- ----------- ----------- -----------
(LOSS) INCOME FROM OPERATIONS (1,165) 22,204 74,991 -- 96,030
INTEREST EXPENSE 92,608 139 9,766 -- 102,513
INTERCOMPANY INTEREST ALLOCATION (90,151) 24,792 65,359 -- --
OTHER EXPENSE (INCOME) (33,944) (13,654) 41,916 -- (5,682)
----------- ----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE TAXES 30,322 10,927 (42,050) -- (801)
TAX (BENEFIT) PROVISION -- (163) (11,126) -- (11,289)
MINORITY INTEREST -- -- 1,406 -- 1,406
----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME $ 30,322 $ 11,090 $ (32,330) $ -- $ 9,082
=========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,322 $ 11,090 $ (32,330) $ -- $ 9,082
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,457 43,390 45,230 -- 91,077
Unrealized loss on currency exchange -- (9,536) 51,159 -- 41,623
Net gain on termination of derivatives (37,421) -- -- -- (37,421)
Loss from the disposal of fixed assets -- (43) 607 -- 564
Change in accounts receivable -- 42,490 (24,218) -- 18,272
Change in inventories -- (19,529) (32,471) -- (52,000)
Change in prepaid and other current assets -- 14,436 (6,509) -- 7,927
Change in other assets (14,849) (66,686) 36,489 -- (45,046)
Change in accounts payable -- 10,872 52,180 -- 63,052
Change in accrued expenses 2,066 (7,616) 18,789 -- 13,239
Change in pension liabilities and other -- (456) (5,788) -- (6,244)
Change in deferred taxes -- (17) (42,762) -- (42,779)
--------- --------- --------- ---------- ---------
Net cash provided by (used in) operating
activities (17,425) 18,395 60,376 -- 61,346
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- (25,441) (60,277) -- (85,718)
Net activity in investments in and advances to (from)
subsidiaries and affiliates (38,753) (1,466) 40,219 -- --
Proceeds from sale of fixed assets -- -- 661 -- 661
Proceeds from termination of derivatives 78,531 -- -- -- 78,531
--------- --------- --------- ---------- ---------
Net cash used in investing activities 39,778 (26,907) (19,397) -- (6,526)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under revolving credit
facility 112,447 -- (15,995) -- 96,452
Principal payments on debt (134,800) (982) (9,745) -- (145,527)
Net proceeds from issuance of debt 5,717 5,717
--------- --------- --------- ---------- ---------
Net cash (used in) provided by
financing activities (22,353) (982) (20,023) -- (43,358)
Effect of exchange rate changes on cash and cash
Equivalents -- 9,468 (27,381) -- (17,913)
NET (DECREASE) INCREASE IN CASH -- (26) (6,425) -- (6,451)
CASH AT BEGINNING OF PERIOD $ -- $ 26 $ 7,366 $ -- $ 7,392
--------- --------- --------- ---------- ---------
CASH AT END OF PERIOD $ -- $ -- $ 941 $ -- $ 941
========= ========= ========= ========== =========
48
51
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1999
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ -----
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ -- $ 26 $ 7,366 $ -- $ 7,392
Accounts receivable, net -- 188,916 122,428 -- 311,344
Inventories -- 48,936 105,684 -- 154,620
Investments 40,501 -- -- -- 40,501
Prepaid and other current assets -- 20,051 33,810 -- 53,861
----------- ----------- ----------- ---------- -----------
Total current assets 40,501 257,929 269,288 -- 567,718
Property, Plant and Equipment, Net -- 193,214 369,624 -- 562,838
Intangible Assets, Net -- 50,140 121,950 -- 172,090
Other Assets -- 64,620 17,884 -- 82,504
Deferred Tax Assets -- 11,711 18,115 -- 29,826
Net Investment in and advances to (from)
subsidiaries & affiliates 873,454 (463,780) (409,674) -- --
----------- ----------- ----------- ---------- -----------
Total Assets $ 913,955 $ 113,834 $ 387,187 $ -- $ 1,414,976
=========== =========== =========== ========== ===========
LIABILITIES AND MEMBER'S EQUITY
-------------------------------
CURRENT LIABILITIES:
Accounts payable $ -- $ 57,900 $ 136,696 $ -- $ 194,596
Accrued interest 13,228 -- 175 -- 13,403
Accrued expenses -- 17,760 90,893 -- 108,653
Current portion of long term debt 51,800 1,021 15,547 -- 68,368
----------- ----------- ----------- ---------- -----------
Total current liabilities 65,028 76,681 243,311 -- 385,020
Pension Liabilities & Other -- 6,239 51,375 -- 57,614
Deferred Tax Liabilities -- 12,054 47,377 -- 59,431
Long Term Debt 806,650 1,496 43,862 -- 852,008
----------- ----------- ----------- ---------- -----------
Total liabilities 871,678 96,470 385,925 -- 1,354,073
Commitments and Contingencies -- -- -- -- --
Member's Equity:
Member's equity 42,277 17,360 3,703 -- 63,340
Accumulated other comprehensive income-
minimum pension liability in excess of
unrecognized prior service cost, net of tax -- -- -- -- --
Accumulated other comprehensive income-
cumulative translation adjustments -- 4 (2,441) -- (2,437)
----------- ----------- ----------- ---------- -----------
Member's Equity 42,277 17,364 1,262 -- 60,903
----------- ----------- ----------- ---------- -----------
Total Liabilities and Member's Equity $ 913,955 $ 113,834 $ 387,187 $ -- $ 1,414,976
=========== =========== =========== ========== ===========
49
52
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ -----
NET SALES $ -- $ 756,810 $ 766,685 $ (157,325) $ 1,366,170
COST OF PRODUCT SOLD -- 699,871 672,926 (157,325) 1,215,472
----------- ----------- ----------- ----------- -----------
GROSS PROFIT -- 56,939 93,759 -- 150,698
SELLING, GENERAL & ADMINISTRATIVE
EXPENSE -- 50,629 58,586 -- 109,215
PAYMENTS TO BENEFICIARY IN LIEU OF
TAXES 259 -- -- -- 259
----------- ----------- ----------- ----------- -----------
(LOSS) INCOME FROM OPERATIONS (259) 6,310 35,173 -- 41,224
INTEREST EXPENSE 67,271 171 5,164 -- 72,606
INTERCOMPANY INTEREST ALLOCATION (67,271) 47,767 19,504 -- --
OTHER EXPENSE (INCOME) (48,105) 16,286 597 -- (31,222)
----------- ----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE TAXES 47,846 (57,914) 9,908 -- (160)
TAX (BENEFIT) PROVISION -- 1,940 6,287 -- 8,227
MINORITY INTEREST -- -- 554 -- 554
----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME BEFORE
EXTRAORDINARY LOSS 47,846 (59,854) 3,067 -- (8,941)
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT 5,569 -- -- -- 5,569
----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME $ 42,277 $ (59,854) $ 3,067 $ -- $ (14,510)
=========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
GUARANTOR NONGUARANTOR CONSOLIDATED
VENTURE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 42,277 $ (59,854) $ 3,067 $ -- $ (14,510)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization -- 49,828 26,168 -- 75,996
Unrealized loss on currency exchange -- 17,419 -- -- 17,419
Unrealized gain on investments (40,501) -- -- -- (40,501)
Loss from the disposal of fixed assets -- -- 181 -- 181
Net extraordinary loss on early extinguishment
of debt 5,569 -- -- -- 5,569
Change in accounts receivable -- 358 52,646 -- 53,004
Change in inventories -- 1,834 22,066 -- 23,900
Change in prepaid and other current assets -- (13,834) 5,130 -- (8,704)
Change in other assets -- (29,884) 169 -- (29,715)
Change in investments in associated company -- -- (723) -- (723)
Change in accounts payable -- 5,624 4,581 -- 10,205
Change in accrued expenses (97) 3,405 (16,953) -- (13,645)
Change in pension liabilities and other -- 736 3,763 -- 4,499
Change in deferred taxes -- 2,371 3,465 -- 5,836
--------- --------- --------- ---------- ---------
Net cash provided by (used in) operating
activities 7,248 (21,997) 103,560 -- 88,811
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of subsidiaries, net of cash acquired -- (75,531) (368,530) -- (444,061)
Capital expenditures -- (23,740) (29,436) -- (53,176)
Net activity in investments in and advances to (from)
subsidiaries and affiliates (502,960) 151,863 351,097 -- --
Proceeds from sale of fixed assets -- -- 390 -- 390
--------- --------- --------- ---------- ---------
Net cash used in investing activities (502,960) 52,592 (46,479) -- (496,847)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under revolving credit
facility (71,500) -- (71) -- (71,571)
Debt issuance fees -- (27,066) -- -- (27,066)
Net proceeds from issuance of debt 650,000 -- -- -- 650,000
Payment for early extinguishment of debt (82,788) -- (45,862) -- (128,650)
Principal payments on debt -- (3,532) (2,327) -- (5,859)
--------- --------- --------- ---------- ---------
Net cash (used in) provided by
financing activities 495,712 (30,598) (48,260) -- 416,854
Effect of exchange rate changes on cash and cash
Equivalents -- -- (1,556) -- (1,556)
NET INCREASE IN CASH -- (3) 7,265 -- 7,262
CASH AT BEGINNING OF PERIOD $ -- $ 29 $ 101 $ -- $ 130
--------- --------- --------- ---------- ---------
CASH AT END OF PERIOD $ -- $ 26 $ 7,366 $ -- $ 7,392
========= ========= ========= ========== =========
50
53
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following individuals are the Executive Officers of the Company,
having the operational titles set forth opposite their names. Venture
Holdings Trust is the sole member of Venture Holdings Company LLC. Larry
J. Winget is the sole manager of the Venture Holdings Company LLC and
exercises the management powers of Venture Holdings Company LLC in his
capacity as Special Advisor, as defined in the Amended and Restated
Operating Agreement of Venture Holdings Company LLC. Messrs. Winget,
Schutz and Torakis serve as the directors of each Subsidiary, other than
Venture Canada. Mr. Winget and Stephen M. Cheifetz serve as the directors
of Venture Canada. Mr. Butler is a director of Venture Holdings
Corporation only.
Name Age Position
---- --- --------
Larry J. Winget 58 Chairman and Chief Executive Officer
Larry J. Winget, Jr. 40 Chairman of Peguform GmbH and Executive Vice President
A. James Schutz 55 Vice Chairman
Fred L. Hubacker 56 Vice Chairman
Michael G. Torakis 44 President and Chief Operating Officer of Venture Holdings
Company LLC and Peguform GmbH
James E. Butler, Jr. 47 Chief Financial Officer, Executive Vice President, Secretary
and Treasurer of Venture Holdings Company LLC
Gary Woodall 58 President - North American Manufacturing
Charles Hunter 46 President - Engineering
Patricia A. Stephens 53 Executive Vice President - Purchasing
Joseph R. Tignanelli 39 Executive Vice President - Interior Operations
Ray Kolehmainen 56 Vice President - Exterior Operations
Warren Brown 57 Vice President - Composite Operations
Thomas Gougherty 45 Chief Financial Officer - Peguform GmbH
Larry J. Winget was one of the five original founders and shareholders of
Venture Industries Corporation and is the only one still involved with
us. Since 1987 he has owned 100% of Venture and is currently the sole
beneficiary of Venture Holdings Trust, which is the sole member of
Venture.
Larry J. Winget, Jr., Larry J. Winget's son, has been employed by us in
various positions since 1976, including Molding Plant Manager of Vemco,
Inc. from 1988 until 1990, Assistant Manager of Vemco, Inc. from 1990
until 1993, and Vice President and General Manager of Vemco, Inc. until
being named to the position of Vice President -- Manufacturing in April
of 1995. In December of 1997 he assumed the additional role of leading
all manufacturing operations and on May 28, 1999 became Chairman of
Peguform.
A. James Schutz assumed the position of Vice Chairman in October 1997 and
had been Vice President since 1987. He has been in the injection molding
business for 25 years.
Fred L. Hubacker joined Venture in January 2001 as Vice Chairman
responsible for business development worldwide including all joint
ventures and all financial activities. He previously served as President
and CEO of New Venture Gear, Inc. Prior to that position, he was
President and COO of Textron Automotive Company and a Group Vice
President of Textron Inc. Mr. Hubacker
51
54
had previously been employed over 25 years with Chrysler Corporation in a
variety of senior operational and financial management positions.
Michael G. Torakis joined us in 1985 and has been President since 1995.
He previously served as Treasurer and Chief Financial Officer and in
various other capacities with Venture, including Executive Vice
President. On May 28, 1999, Mr. Torakis became President of Peguform.
James E. Butler became Chief Financial Officer of Venture in 1999. He
joined us in 1994 and assumed the position of Executive Vice President --
Finance and Secretary in April of 1995. From 1981 until joining Venture,
Mr. Butler was employed by Coopers & Lybrand L.L.P., a certified public
accounting firm.
Gary Woodall joined us on April 1, 1999 as Vice President of Interior
Operations and General Motors Customer Executive. Late in 1999 Gary
assumed the role of President of North American Manufacturing. Mr.
Woodall had previously been employed by General Motors Corporation for
over 35 years. Mr. Woodall's last position with General Motors was as
General Director of Products, Manufacturing and Process Engineering.
Prior to holding that position, Mr. Woodall served as General Director of
Operations, and was responsible for General Motors' North American
interior automotive component manufacturing.
Charles Hunter has been with us since 1989 and has held a number of
different positions with us involving mold building, design engineering
and prototype operations. In 1999, he was appointed President of Venture
Engineering and oversees worldwide design, tooling and advanced
engineering operations.
Patricia A. Stephens joined us in 1993 and has held positions involving
program management, contract administration and purchasing. She
previously had been employed for 23 years by General Motors, her last
position being purchasing agent.
Joseph R. Tignanelli, Larry J. Winget's son-in-law, has been employed by
us in several positions since 1980, including Molding Manager for Venture
Industries Corporation -- Groesbeck plant from 1985 until 1990, Assistant
Manager of Venture Industries Corporation from 1990 until 1993, Vice
President of Venture Industries until October of 1995, and Executive Vice
President -- Customer Services until December 1997, when he assumed his
current position.
Ray Kolehmainen joined us in August 1999 as General Manager of the Grand
Blanc and Flint operations. Since September 2000, he has held the
position of Vice President - Exterior Operations. Ray was employed by
General Motors Corporation for over 30 years where he held various
manufacturing positions including Manager of Industrial Engineering and
his last position being Manager of Fuel Tank Operations.
Warren Brown joined us in 1993 as Vice President -- Mergers and
Acquisitions and assumed his current position in 1999. Prior to joining
us, Mr. Brown was employed for eight years as Chief Operating Officer of
Autodie Corporation. He has over 30 years experience in the automotive
supplier industry.
Thomas Gougherty joined us in his current position in December 1999. From
1977 to 1999, Mr. Gougherty held a variety of Finance and Information
Technology positions at Ford Motor Company.
Stephen M. Cheifetz, 45, is a partner of Corrent and Macri and has served
as partner of this firm since 1999. Prior to joining his current firm, he
was a partner with Wilson, Walker, Hochberg, Slopen, a Windsor, Ontario
law firm, and served as a partner of that firm for over five years.
52
55
ITEM 11. EXECUTIVE COMPENSATION
The following Summary Compensation Tables sets forth compensation paid
for the years ended December 31, 2000, 1999 and 1998, respectively, to
those persons who were, at such date, the chief executive officer of
Venture and the other four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE(1)
Other Annual All Other
Name and Principal Position Year Salary ($) (2) Bonus ($) Compensation (3) Compensation (4)
--------------------------- ---- -------------- --------- ---------------- ----------------
Larry J. Winget 2000 $ 512,650 $ ---- $ 1,182,141 $ 152,140
Chairman and 1999 528,618 500,000 262,779 504,400
Chief Executive Officer 1998 526,503 ---- 542,872 366,063
Michael G. Torakis 2000 $ 677,980 $ ---- $ ---- $ 5,400
President 1999 340,164 187,500 ---- 5,100
1998 268,834 ---- ---- 5,100
Larry J. Winget, Jr. 2000 $ 484,719 $ ---- $ ---- $ 4,275
Executive Vice President 1999 281,165 250,000 ---- 5,100
1998 219,224 ---- ---- 5,100
Charles Hunter 2000 $ 396,415 $ ---- $ ---- $ 2,120
President - Engineering 1999 280,869 400,000 ---- 2,120
1998 181,634 ---- ---- 2,120
Gary Woodall 2000 $ 365,618 $ 40,000 $ ---- $ 5,400
President of North American 1999 199,545 ---- ---- 4,200
Manufacturing 1998 ---- ---- ---- ----
- --------------------------------------------------------------------------------
(1) The compensation described in this table does not include benefits
under group plans which do not discriminate in scope, terms or operation
in favor of the officers listed and that are generally available to all
salaried employees, and certain perquisites and personal benefits
received by the officers listed, where these perquisites do not exceed
the lesser of $50,000 or 10% of the officer's salary and bonus.
(2) Includes salary reductions made under Venture's 401(k) Plan and
Venture's Cafeteria Benefit Plan.
(3) The amount indicated for Mr. Winget represents compensation in lieu
of a distribution of Trust principal, equal to taxes incurred by the
beneficiary as a result of activities of Venture Holdings Trust's
subsidiaries which have elected "S" corporation status under the Internal
Revenue Code or are limited liability companies (taxed as partnerships).
(4) "All Other Compensation" is comprised of: (1) a contribution made by
us to the accounts of each of the officers listed under Venture's 401(k)
Plan; (2) the incremental cost to us of additional premiums for term life
insurance benefits for the officers listed which are not generally
available to the other salaried employees of Venture, and (3) for Mr.
Winget, the portion of the premium paid by us under a reverse split
dollar life insurance policy attributable to the build-up of the cash
surrender value of the policy, which aggregated $2,318,745, $2,172,005
and $1,672,705 at December 31, 2000, 1999 and 1998, respectively, and is
owned by Mr. Winget. We are the beneficiary of the term insurance portion
of the reverse split dollar policy, of which we pay all premiums due
under the policy and are entitled to receive a $20.0 million benefit in
the event of Mr. Winget's death. Mr. Winget has the right to designate
the distribution of the cash surrender value and may, prior to his death,
surrender the policy in cancellation thereof and receive the benefit of
the cash surrender value.
53
56
See the table below for complete details concerning all other
compensation.
Term Life Reverse Split
Name and Year 401 (k) Insurance Dollar Policy Total
------------- ------- --------- ------------- -----
Winget
2000 $ 5,100 $ 300 $ 146,740 $ 152,140
1999 4,800 300 499,300 504,400
1998 4,800 300 360,963 366,063
Torakis
2000 $ 5,100 $ 300 $ -- $ 5,400
1999 4,800 300 -- 5,100
1998 4,800 300 -- 5,100
Winget, Jr.
2000 $ 3,975 $ 300 $ -- $ 4,275
1999 4,800 300 -- 5,100
1998 4,800 300 -- 5,100
Hunter
2000 $ 1,820 $ 300 $ -- $ 2,120
1999 1,820 300 -- 2,120
1998 1,820 300 -- 2,120
Woodall
2000 $ 5,100 $ 300 $ -- $ 5,400
1999 3,900 300 -- 4,200
1998 -- -- -- --
COMPENSATION OF DIRECTORS
Mr. Winget serves as the Special Advisor to Venture, Messrs. Winget,
Schutz and Torakis serve as the directors of each guarantor of the Notes,
and Mr. Butler serves as director of Venture Holdings Company LLC. None
receive any additional compensation or fees for their service in these
capacities. Mr. Cheifetz does not receive compensation for acting as a
director of Venture Canada; however, the law firm of which he is a
partner acts as counsel to Venture Canada.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the compensation for each of the officers listed in the Summary
Compensation Table above for the year ended December 31, 2000 was paid by
Experience Management LLC. Messrs. Winget and Torakis, in their
capacities as directors, participated in the deliberations concerning
executive compensation. In addition, some of the officers listed in the
Summary Compensation Table above have engaged in certain transactions
with Venture. See "Item 13. Certain Relationships and Related
Transactions."
OPTIONS
None of the officers listed in the Summary Compensation Table above hold
any options to acquire any interest in Venture or to acquire stock of the
subsidiaries of Venture or were granted any such options in the 2000
fiscal year.
54
57
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Venture owns, directly or indirectly, all of the outstanding capital
stock of, or equity interests in, its subsidiaries, except for its
70%-owned Mexican and 50%-owned Spanish joint ventures. Venture Holdings
Trust is the sole member of Venture, and Mr. Winget is the sole
beneficiary of Venture Holdings Trust. Mr. Winget's address is c/o
Venture Holdings Company LLC, 33662 James J. Pompo Drive, Fraser,
Michigan 48026.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In addition to making distributions to Mr. Winget, either directly as
sole beneficiary of Venture Holdings Company LLC before the trust
contribution by Venture Holdings Trust to Venture, or indirectly through
distributions to Venture Holdings Company LLC as the sole member of
Venture after the Trust Contribution, and also compensating him in his
capacity as an Executive Officer of Venture, Venture has maintained
business relationships and engaged in certain transactions with Mr.
Winget and certain companies owned or controlled by him (each an
"affiliate" and collectively, the "affiliates") as described below. Since
Mr. Winget is the sole beneficiary of the Venture Holdings Trust, which
is the sole member of Venture the terms of these transactions are not the
result of arms'-length bargaining; however, we believe that these
transactions are on terms no less favorable to us than would be obtained
if these transactions or arrangements were arms'-length transactions with
non-affiliated persons.
Pursuant to the indentures governing the 11% Senior Notes due 2007 and
12% Senior Subordinated Notes due 2009 issued in 1999 and the indenture
governing the 1997 senior notes, Venture, each issuer of the 1997 senior
notes and each guarantor of each of the 1997 senior notes and the 1999
notes is required to maintain a Fairness Committee, at least one of whose
members is independent, which approves the terms and conditions of
certain transactions between Venture and our affiliates and participates
in decisions concerning whether certain corporate opportunities will be
pursued by us. The indentures also contain restrictions on distributions
to Mr. Winget and other restrictions on transactions with affiliates,
including the Corporate Opportunity Agreement. The Corporate Opportunity
Agreements require Mr. Winget to offer to us certain corporate
opportunities which relate to our business before he may pursue these
opportunities outside Venture.
FACILITIES AND EQUIPMENT
We lease, or have arranged for the usage of, certain facilities,
machinery and equipment that are owned by affiliates, as set forth below.
We believe that the lease and usage agreements are based on the fair
market value of the facilities, machinery and equipment at the inception
of the agreements. Venture has made significant capital improvements to
these properties. Venture has accounted for these improvements as
leasehold improvements. At the conclusion of the applicable lease or
usage agreement, the benefits of these improvements inure to the benefit
of the lessor.
Venture Real Estate, Inc., a corporation wholly owned by Mr. Winget's
living trust since 1988, leases two separate injection molding buildings
to us in our Malyn Complex, and our Commerce Mold Shop. Starting in 1996,
the Redford facility, and in 1998 the Almont II facility, were also
leased to us by Venture Real Estate, Inc. Amounts paid to Venture Real
Estate, Inc. and a predecessor affiliate were approximately $0.8 million,
$0.8 million and $0.7 million for the years ended December 31, 1998, 1999
and 2000, respectively.
Harper Properties of Clinton Township Limited Partnership leases its
Harper facility to us on a month-to-month basis. Realven Corporation also
leases the machinery and equipment located at the Harper facility to us
on a month-to-month basis. Harper Properties is a limited partnership in
which the living trusts of Mr. Winget and his wife, Alicia, and an
affiliated company are the general partners and Mr. Winget, members of
his family, A. James Schutz, an Executive Officer of Venture, and Michael
G. Torakis, an Executive Officer of Venture, are the limited partners.
Realven is a corporation wholly owned by Mr. Winget and his wife, Alicia.
The Harper lease provides for semi-
55
58
annual lease payments. Harper Properties and Realven have the right to
require us to enter into negotiations regarding an increase in the lease
payments under the Harper lease and the Realven lease, so that lease
payments under these leases will reflect all expenses to Harper
Properties, Realven and their owners. Venture has made several
improvements to the Harper facility and the machinery and equipment
leased from Realven, and has accounted for them as leasehold
improvements. At the termination of the Harper and Realven leases, Harper
Properties and Realven, respectively, will retain the value, if any, of
the leasehold improvements. Venture paid Harper Properties $1.7 million
in each of the years ended December 31, 1998, 1999 and 2000,
respectively, under the Harper lease. Venture paid Realven $0.4 million
in each of the years ended December 31, 1998, 1999 and 2000 under the
Realven lease.
Mr. Winget has since 1991 allowed Venture to use approximately 12 molding
machines pursuant to the terms of usage agreements. In January of 1994,
Mr. Winget leased 28 additional injection molding machines to Venture as
part of the expansions of the Harper and Groesbeck facilities. Mr. Winget
also leases certain injection molding equipment to us. In February of
1995, Mr. Winget contributed and assigned his interests in the leases to
the various injection molding machines and equipment to a new entity,
Venture Heavy Machinery Limited Liability Company. Venture paid Venture
Heavy Machinery Limited Liability Company $1.8 million in each of the
years ended December 31, 1998, 1999 and 2000, respectively, under the
usage agreements.
Venture Real Estate Acquisition Company and Venture Equipment Acquisition
Company, each wholly owned by Mr. Winget's living trust, acquired a
176,000 square foot injection molding facility and the machinery and
equipment located in the facility, including 35 molding machines, on
February 4, 1994. Venture entered into usage agreements for this
facility, the Masonic facility, machinery and equipment, the terms of
which were reviewed and approved by the Fairness Committee. During 1998,
1999 and 2000 Venture paid $1.3 million in each year to Venture Real
Estate Acquisition Company and Venture Equipment Acquisition Company
pursuant to these agreements.
BUSINESS RELATIONSHIPS
We maintain ongoing business relationships with affiliates, as set forth
below:
Nova Corporation is a corporation in which Windall Industries, a
corporation in which Mr. Winget owns a 49% equity interest and a former
Executive Manager of Venture owns the controlling 51% interest. Nova is a
successor to Windall Industries' business. Nova supplies us with certain
small parts or components of large assemblies that are sold to our
customers. Venture paid Nova $1.5 million, $2.1 million and $1.8 million
for the years ended December 31, 1998, 1999 and 2000, respectively. In
connection with this relationship, Venture has provided Nova with various
raw materials at cost and received commission income, for which Nova paid
Venture $0.4 million, $0.3 million and $0.2 million in the years ended
December 31, 1998, 1999 and 2000 respectively. Nova sells products to
other customers besides us, and has and will compete with us for certain
contracts. Nova paid Venture $0.2 million each year pursuant to machinery
and equipment operating leases for each of the years ended December 31,
1998 and 1999. Venture paid Windall Industries usage fees of $0.1 million
in each of the years ended December 31, 1998, 1999 and 2000.
Venture Sales and Engineering and Venture Foreign Sales Corporation,
corporations wholly owned by Mr. Winget, serve as our outside sales
management agencies for sales of manufactured products. Generally, we pay
Venture Sales and Venture Foreign Sales, in the aggregate, a sales
commission of 3% on all production sales. Venture paid Venture Sales,
$10.4 million, $10.9 million and $8.2 million in the years ended December
31, 1998, 1999 and 2000, respectively. We entered into an amendment to
these agreements with VS&E to allow us flexibility to reduce this expense
with the cooperation of VS&E. We were allowed to reduce the expense by
approximately $2.6 million for the fourth quarter of 2000. This reduction
was limited to the fourth quarter of 2000 only and resumed at the
original rate January 2001. Venture made no payments to Venture Foreign
Sales in the years ended December 31, 1998, 1999 and 2000. Venture Sales
has conducted sales and marketing activities around the world for us and
has been advanced certain funds in order to carry on that work on our
behalf.
Venture Automotive Corp. has, since 1991, performed sequencing and
value-added assembly of parts manufactured at our Grand Blanc facility.
Beginning October 1, 1996 the manufacturing
56
59
services previously provided by Venture Automotive Corp. have been
contracted to MAST Services LLC, a company in which N. Matthew Winget,
Mr. Winget's son, owned a minority interest until the fourth quarter of
1998. Effective January 1, 1999, the Grand Blanc facility took over all
operations of this facility and pays rent and operating expenses for this
facility. Services performed by MAST for the period ending December 31,
1998 were $2.3 million. Rent paid to Venture Automotive Corp for the
periods ending December 31, 1999 and 2000 was $1.5 million.
During 1999, we entered into an agreement to purchase vehicles from
Shelby American, Inc. ("Shelby"), an entity in which Mr. Winget has a 75%
ownership interest. We made deposits of approximately $13 million for
each of the years ended December 31, 2000 and 1999 on these vehicles. We
intend to market the vehicles to other parties. However, sales results to
date have proven more difficult to achieve than had been anticipated due
to quality and pricing issues. We are currently addressing these issues
and have an updated marketing plan for selling the vehicles. We have a
secured interest in the assets of Shelby, if the vehicles are not sold as
planned. We believe the deposit of $26 million is fully recoverable.
During 1999, we sold certain parts to Shelby for use in the manufacturing
of these vehicles and performed engineering services. Sales to Shelby for
the year ended December 31, 1999 were $3.8 million.
We contract with Deluxe Pattern Corporation ("Deluxe"), an entity wholly
owned by Mr. Winget, to provide us with design, prototype, and fixture
work. During the years ended December 31, 2000, 1999 and 1998, we were
charged $18.9 million, $11.0 million and $6.6 million, respectively,
under this arrangement. While Deluxe will continue to provide design,
prototype and fixture work, Deluxe will now be paid in accordance with
standard contract terms. In accordance with these terms at December 31,
2000, we have made progress payments to Deluxe of $9.9 million through a
reduction of the related party receivable.
Deluxe also buys services from us, principally, labor and materials,
however, these services will be significantly reduced in 2001 and the
future. During the years ended December 31, 2000, 1999 and 1998, Deluxe
made purchases, and we recognized revenue, in the amount of $9.1 million,
$12.9 million and $17.3 million, respectively. In addition to the above
transactions, Deluxe also charged us approximately $1.1 million during
each of the years ended December 31, 2000, 1999, and 1998 for equipment
rental and other services. These charges ceased at the end of 2000.
The net effect of these transactions was a receivable balance from Deluxe
of $30.2 million and $32.3 million at December 31, 2000 and 1999,
respectively, of which $3.3 million is recorded as a long term receivable
in other assets as of December 31, 2000.
During 1999, we contracted with M&M Flow Through Systems, LLC ("M&M"), an
entity owned by Mr. Winget's son, to manufacture certain machinery and
equipment used at our Grand Blanc facility. We purchased three different
machines from M&M at an approximate cost of $965,000. In addition, we
contract M&M to dispose of scrap parts that have previously been rejected
by the automotive original equipment manufacturers. Our sales of these
parts to M&M for the year ended December 31, 1999 were approximately
$200,000, which approximates a recovery of the material cost of producing
the parts.
MANAGEMENT SERVICES
Venture provided Venture Asia Pacific Pty. Ltd. and its subsidiaries with
management and sales services, for which they paid Venture $4.5 million,
$4.5 million and $4.9 million for 1998, 1999 and 2000, respectively.
These fees and commissions ceased as of December 31, 2000. These fees
ceased as of December 31, 2000. In addition, Venture Asia Pacific also
reimbursed Venture for certain other expenditures made on its behalf and
assigned certain tooling contracts to Venture. These arrangements will
continue. As a result of negotiations with an Australian customer,
Venture Asia Pacific was granted an increased piece price to cover excess
tooling and other program associated costs. This agreement has
facilitated repayment terms between us and Venture Asia Pacific for the
outstanding accounts receivable balance related to management fees,
commissions, tooling and other expenditures. In conjunction with this
agreement, $14.7 million of the $20.3 million has been reclassified from
a current receivable to a long-term receivable in other assets.
Pompo Insurance & Indemnity Company Ltd., a Barbados corporation
indirectly wholly owned by Mr. Winget, was incorporated in 1992 under the
Barbados Exempt Insurance Act. We purchase insurance from Pompo Insurance
to cover certain medical claims by our employees and certain workers
compensation claims. Venture has accounted for this arrangement using the
deposit method wherein the full amount of the estimated liability for
these claims is recorded in other liabilities and the premiums paid to
Pompo are recorded in other assets until such time that the claims are
settled.
We remain primarily liable for any amounts in excess of insurance
coverage or any amounts not paid by Pompo Insurance under these
coverages. If a liability is settled for less than the amount of the
premium paid to Pompo, a portion of the excess is available as a premium
credit on future insurance.
57
60
In 2000, Venture paid Pompo Insurance $0.9 million in premiums and
utilized premium credits of $0.4 million. In 1999, Venture paid Pompo
Insurance $0.8 million in premiums and utilized premium credits of $0.2
million. In 1998, Venture paid Pompo Insurance $0.6 million in premiums
and utilized premium credits of $0.7 million.
OTHER
From time to time, we pay certain expenses on behalf of Mr. Winget which
he is obligated to repay to us. These amounts payable by Mr. Winget do
not bear interest and are payable on demand. Mr. Winget's indebtedness to
Venture for these expenses was $0.5 million and $1.1 million for the
years ended December 31, 1999 and 2000, respectively. The highest amount
of this indebtedness outstanding at any one time during these periods was
$1.1 million. In addition, from time to time we make certain employees
available to Mr. Winget for purposes of performing services for other
companies owned by and controlled by Mr. Winget and for performing
construction services at his personal residence.
Mr. Winget and his wife, Alicia, own the Acropolis Resort, which consists
of several separate units and a lodge near Gaylord, Michigan, a resort
community north of Detroit. We lease this facility from Mr. Winget
primarily for use by our employees, who are permitted to use the facility
on an availability basis. Cumulative leasehold improvements to this
facility through December 31, 1999 aggregate $0.3 million. Our lease
obligation to Mr. Winget is based upon the actual use of the facility by
our employees, provided that we are required to pay for the use of 500
room nights per calendar year, approximately $25,000, whether or not
these rooms are rented. Venture paid Mr. Winget $90,000, $90,000 and
$73,000 in the years ended December 31, 1998, 1999 and 2000,
respectively, under this arrangement.
Farm and Country Real Estate Company, a corporation wholly owned by Mr.
Winget, leases to us approximately 84 acres of undeveloped land adjacent
to our Grand Blanc facility on a month-to-month basis. This lease
provides for monthly rental payments of $16,100. Rent paid in 1998, 1999
and 2000 was $0.2 million in each year.
Mr. Winget and Patent Holdings, Inc., a corporation wholly owned by Mr.
Winget, have granted to us non-exclusive, royalty free licenses to
certain patents which have been issued under applications filed by Mr.
Winget, as assignee. Mr. Winget and the affiliated companies also
generally permit us to utilize proprietary technologies or processes,
such as reverse engineering automated process for rapid prototyping,
which are developed by Deluxe and the affiliated companies. The licenses
are perpetual, but provide that the licensor may negotiate a reasonable
royalty in the event that Mr. Winget or an Excluded Person, as defined in
the indenture relating to the 1997 senior notes, no longer owns at least
80% of the beneficial interest of Venture Holdings Company LLC.
On July 1, 1996, Venture Industries Corporation and its affiliated
companies, not including Venture Holdings Company LLC or Venture Canada,
along with VIC Management, LLC, a limited liability company wholly owned,
directly or indirectly, by Mr. Winget, entered into an agreement
guaranteeing up to $3.5 million of the obligations of Atlantic Automotive
Components, LLC to RIC Management Corp. This guarantee is one of a series
of transactions whereby VIC Management acquired RIC Management's minority
interest in Atlantic Automotive. Deluxe agreed to fully indemnify the
Venture entities for all amounts paid under the guarantee.
In 1999, we agreed to a number of corporate and non-resident golf
memberships for certain of our employees in a golf club owned by
companies Mr. Winget controls. The aggregate initial fee for these
memberships is approximately $1.5 million, and the annual dues will be
approximately $0.3 million. The initial fees are refundable upon
termination, over various periods. We will no longer pay dues for these
employees in other clubs to which they may belong.
During 1999 we advanced approximately $5.5 million to Venture Africa, an
entity wholly owned by Mr. Winget, for the construction and refurbishment
of a paint line. This amount was substantially repaid in 2001. In 2000,
we began selling raw material to South Africa amounting to $10.3 million
under established repayment terms. At December 31, 2000 and 1999, the
amount outstanding was $16.0 million and $5.5 million, respectively.
58
61
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Financial Statements filed as part of this Form 10-K are under
Part II, Item 8.
2. Financial Statement Schedules Valuation and qualifying accounts
for the years ended December 31, 2000, 1999 and 1998.
3. Exhibits.
A list of the exhibits required to be filed as part of this Form
10-K is included under the heading "Exhibit Index" in this Form
10-K and incorporated herein by reference.
(b) The Company did not file any reports on Form 8-K during the quarter
ended December 31, 2000.
59
62
SIGNATURES
Pursuant to the requirements of section 13 or 15 (d) of the Securities
Act of 1934, each registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
VENTURE HOLDINGS COMPANY LLC,
Date: April 2, 2001 By: /s/ LARRY J. WINGET
-----------------------------------------
LARRY J. WINGET, Chairman
VEMCO, INC., VENTURE INDUSTRIES
CORPORATION, VENTURE MOLD &
ENGINEERING CORPORATION, VENTURE
LEASING COMPANY, VEMCO LEASING,
INC., VENTURE SERVICE COMPANY,
VENTURE HOLDINGS CORPORATION,
EXPERIENCE MANAGEMENT LLC,
VENTURE EUROPE, INC., VENTURE
EU CORPORATION
Date: April 2, 2001 By: /s/ MICHAEL G. TORAKIS
-----------------------------------------
MICHAEL G. TORAKIS, President
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed by the following persons on behalf of each registrant
in the capacities indicated on April 2, 2001.
SIGNATURES TITLE
- ---------- -----
/s/ Larry J. Winget Chairman and Principal Executive Officer and
- -------------------------- Special Advisor to Venture, and Director of each
Larry J. Winget other registrant
/s/ Michael G. Torakis President and Principal Executive Officer and
- -------------------------- Director of each other registrant
Michael G. Torakis
/s/ A. James Schutz Director of each registrant other than Venture
- --------------------------
A. James Schutz
/s/ James E. Butler, Jr. Principal Financial Officer and Principal
- -------------------------- Accounting Officer of each registrant and a
James E. Butler, Jr. Director of Venture Holdings Corporation
60
63
INDEX TO EXHIBITS
2.1 Share Purchase and Transfer Agreement between Klockner Mercator
Maschinenbau GmbH, on the one hand, and Venture Beteiligungs GmbH
and Venture Holdings Trust, on the other hand, dated March 8,
1999, filed as Exhibit 2.1 to the Issuer's Annual Report on Form
10-K for the year ended December 31, 1998 (File No. 333-34475) and
incorporated herein by reference. Schedules to the Agreement,
listed on the last two pages of the Agreement, were not filed, but
will be provided to the Commission supplementally upon request.
2.2 Share Purchase and Transfer Agreement among Neptuno
Verwaltungs-und-Treuhand-Gesellschaft mbH, and Venture Verwaltungs
GmbH and Venture Holdings Trust, dated March 8, 1999, filed as
Exhibit 2.2 to Venture's Current Report on Form 8-K on June 11,
1999 (File No. 333-34475) and incorporated herein by reference.
2.3 Trust Contribution Agreement, made as of the 27th day of May,
1999, by and between Venture Holdings Trust and Venture Holdings
Company LLC, filed as Exhibit 2.3 to Venture's Current Report on
Form 8-K on June 11, 1999 (File No. 333-34475) and incorporated
herein by reference.
3.1 Restated Articles of Organization of Venture Holdings Company LLC,
filed as Exhibit 3.1 to Venture's Registration Statement on Form
S-4, effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
3.2 Restated Articles of Incorporation of Vemco, Inc., filed as
Exhibit 3.1 to Venture's Registration Statement on Form S-4,
effective October 27, 1997 (Registration No. 333-34475), and
incorporated herein by reference.
3.3 Restated Articles of Incorporation of Venture Industries
Corporation, filed as Exhibit 3.2 to Venture's Registration
Statement on Form S-4, effective October 27, 1997 (Registration
No. 333-34475), and incorporated herein by reference.
3.4 Restated Articles of Incorporation of Venture Mold & Engineering
Corporation, filed as Exhibit 3.3 to Venture's Registration
Statement on Form S-4, effective October 27, 1997 (Registration
No. 333-34475), and incorporated herein by reference.
3.5 Restated Articles of Incorporation of Venture Leasing Company,
filed as Exhibit 3.4 to Venture's Registration Statement on Form
S-4, effective October 27, 1997 (Registration No. 333-34475), and
incorporated herein by reference.
3.6 Restated Articles of Incorporation of Vemco, Leasing, Inc., filed
as Exhibit 3.5 to Venture's Registration Statement on Form S-4,
effective October 27, 1997 (Registration No. 333-34475), and
incorporated herein by reference.
3.7 Restated Articles of Incorporation of Venture Holdings
Corporation, filed as Exhibit 3.6 to Venture's Registration
Statement on Form S-4, effective October 27, 1997 (Registration
No. 333-34475), and incorporated herein by reference.
3.8 Restated Articles of Incorporation of Venture Service Company,
filed as Exhibit 3.7 to Venture's Registration Statement on Form
S-4, effective October 27, 1997 (Registration No. 333-34475), and
incorporated herein by reference.
3.9 Articles of Organization of Experience Management LLC, filed as
Exhibit 3.9 to Venture's Registration Statement on Form S-4,
effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
61
64
3.10 Articles of Incorporation of Venture Europe, Inc., filed as
Exhibit 3.10 to Venture's Registration Statement on Form S-4,
effective October 21, 1999 (Registration No. 333- 82617) and
incorporated herein by reference.
3.11 Articles of Incorporation of Venture EU Corporation, filed as
Exhibit 3.1 to Venture's Registration Statement on Form S-4,
effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
3.12 Amended and Restated Operating Agreement of Venture Holdings
Company LLC, filed as Exhibit 3.12 to Venture's Registration
Statement on Form S-4, effective October 21, 1999 (Registration
No. 333-82617) and incorporated herein by reference.
3.13 Bylaws of Vemco, Inc., filed as Exhibit 3.9 to Venture's
Registration Statement on Form S-1, effective February 8, 1994
(Registration No. 33-72826), and incorporated herein by reference.
3.14 Bylaws of Venture Industries Corporation, filed as Exhibit 3.10 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
3.15 Bylaws of Venture Mold & Engineering Corporation, filed as Exhibit
3.11 to Venture's Registration Statement on Form S-1, effective
February 8, 1994 (Registration No. 33-72826) and incorporated
herein by reference.
3.16 Bylaws of Venture Leasing Company, filed as Exhibit 3.12 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
3.17 Bylaws of Vemco Leasing, Inc., filed as Exhibit 3.13 to Venture's
Registration Statement on Form S-1, effective February 8, 1994
(Registration No. 33-72826), and incorporated herein by reference.
3.18 Bylaws of Venture Holdings Corporation, filed as Exhibit 3.14 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
3.19 Bylaws of Venture Service Company, filed as Exhibit 3.15 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
3.20 Operating Agreement of Experience Management LLC, filed as Exhibit
3.20 to Venture's Registration Statement on Form S-4, effective
October 21, 1999 (Registration No. 333-82617) and incorporated
herein by reference.
3.21 Bylaws of Venture Europe, Inc., filed as Exhibit 3.21 to
Venture's Registration Statement on Form S-4, effective October
21, 1999 (Registration No. 333-82617) and incorporated herein by
reference.
3.22 Bylaws of Venture EU Corporation, filed as Exhibit 3.22 to
Venture's Registration Statement on Form S-4, effective October
21, 1999 (Registration No. 333-82617) and incorporated herein by
reference.
4.1 Indenture, dated as of May 27, 1999, between Venture Holdings
Trust and The Huntington National Bank, as Trustee, regarding 11%
Senior Notes due 2007 (including form of Notes), filed as Exhibit
4.1 to Venture's Registration Statement on Form S-4, effective
October 21, 1999 (Registration No. 333-82617) and incorporated
herein by reference.
62
65
4.1.1 First Supplemental Indenture to the Indenture incorporated herein
as Exhibit 4.1, made as of the 27th day of May, 1999, by and among
Venture Holdings Trust and The Huntington National Bank, as
Trustee, filed as Exhibit 4.1.1 to Venture's Registration
Statement on Form S-4, effective October 21, 1999 (Registration
No. 333-82617) and incorporated herein by reference.
4.2 Indenture, dated as of May 27, 1999, between Venture Holdings
Trust and The Huntington National Bank, as Trustee, regarding 12%
Senior Subordinated Notes due 2009 (including form of Notes), and
filed as Exhibit 4.2 to Venture's Registration Statement on Form
S-4, effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
4.2.1 First Supplemental Indenture to the Indenture filed as Exhibit
4.2, made as of the 27th day of May, 1999, by and among Venture
Holdings Trust and The Huntington National Bank, as Trustee, and
filed as Exhibit 4.2.1 to Venture's Registration Statement on Form
S-4, effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
4.3 Indenture for 9 1/2% Senior Notes due 2005 (including form of
Notes) filed as Exhibit 4.1 to Venture's Registration Statement on
Form S-4, effective October 27, 1997 (Registration No. 333-34475),
and incorporated herein by reference.
4.3.1 First Amendment to the Indenture incorporated by reference as
Exhibit 4.3, by and among Venture Holdings Trust, Vemco, Inc.
Vemco Leasing, Inc., Venture Industries Corporation, Venture
Holdings Corporation, Venture Leasing Company, Venture Mold &
Engineering Corporation and Venture Service Company, as Issuers,
and The Huntington National Bank, as Trustee, made as of the 27th
day of May, 1999, and filed as Exhibit 4.3.1 to Venture's
Registration Statement on Form S-4, effective October 21, 1999
(Registration No. 333-82617) and incorporated herein by reference.
4.3.2 First Supplemental Indenture to the Indenture incorporated by
reference as Exhibit 4.3, by and among Venture Holdings Trust,
Vemco, Inc. Vemco Leasing, Inc., Venture Industries Corporation,
Venture Holdings Corporation, Venture Leasing Company, Venture
Mold & Engineering Corporation and Venture Service Company, as
Issuers, Venture Holdings Company LLC, Experience Management LLC,
Venture Europe, Inc. and Venture EU Corporation, as Guarantors,
and The Huntington National Bank, as Trustee, made as of May 27,
1999, and filed as Exhibit 4.3.2 to Venture's Registration
Statement on Form S-4, effective October 21, 1999 (Registration
No. 333-82617) and incorporated herein by reference.
4.3.3 Second Amendment to the Indenture incorporated by reference as
Exhibit 4.3, by and among Venture Holdings Trust, Vemco, Inc.
Vemco Leasing, Inc., Venture Industries Corporation, Venture
Holdings Corporation, Venture Leasing Company, Venture Mold &
Engineering Corporation and Venture Service Company, as Issuers,
and The Huntington National Bank, as Trustee, made as of May 27,
1999, and filed as Exhibit 4.3.3 to Venture's Registration
Statement on Form S-4, effective October 21, 1999 (Registration
No. 333-82617) and incorporated herein by reference.
4.3.4 Second Supplemental Indenture to the Indenture incorporated by
reference as Exhibit 4.3, by and among Venture Holdings Trust,
Vemco, Inc. Vemco Leasing, Inc., Venture Industries Corporation,
Venture Holdings Corporation, Venture Leasing Company, Venture
Mold & Engineering Corporation and Venture Service Company, as
Issuers, Venture Holdings Company LLC, and The Huntington National
Bank, as Trustee, made as of May 27, 1999, and filed as Exhibit
4.3.4 to Venture's Registration Statement on Form S-4, effective
October 21, 1999 (Registration No. 333-82617) and incorporated
herein by reference.
4.3.5 Guarantee executed by Venture Holdings Company LLC on the 27th day
of May, 1999, pursuant to the terms of the Indenture incorporated
by reference as Exhibit 4.3, including
63
66
Trustee's Certificate of Authorization, and filed as Exhibit 4.3.5
to Venture's Registration Statement on Form S-4, effective October
21, 1999 (Registration No. 333-82617) and incorporated herein by
reference.
4.3.6 Guarantee executed by Experience Management LLC on the 27th day of
May, 1999, pursuant to the terms of the Indenture incorporated by
reference as Exhibit 4.3, including Trustee's Certificate of
Authorization, and filed as Exhibit 4.3.6 to Venture's
Registration Statement on Form S-4, effective October 21, 1999
(Registration No. 333-82617) and incorporated herein by reference.
4.3.7 Guarantee executed by Venture Europe, Inc. on the 27th day of May,
1999, pursuant to the terms of the Indenture incorporated by
reference as Exhibit 4.3, including Trustee's Certificate of
Authorization, and filed as Exhibit 4.3.7 to Venture's
Registration statement on Form S-4, effective October 21, 1999
(Registration No. 333-82617) and incorporated herein by reference.
4.3.8 Guarantee executed by Venture EU Corporation on the 27th day of
May, 1999, pursuant to the terms of the Indenture incorporated by
reference as Exhibit 4.3, including Trustee's Certificate of
Authorization, and filed as Exhibit 4.3.8 to Venture's
Registration Statement on Form S-4, effective October 21, 1999
(Registration No. 333-82617) and incorporated herein by reference.
4.4 Registrant Rights Agreement, made and entered into as of May 27,
1999, among Venture Holdings Trust, Vemco, Inc., Vemco Leasing,
Inc., Venture Industries Corporation, Venture Holdings
Corporation, Venture Leasing Company, Venture Mold & Engineering
Corporation, Venture Service Company, Venture Europe, Inc.,
Venture EU Corporation, Experience Management LLC and Venture
Holdings Company LLC, as Issuers, and Banc One Capital Markets,
Inc. and Goldman Sachs & Co., as Initial Purchasers, and filed as
Exhibit 4.4 to Venture's Registration Statement on Form S-4,
effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
10.1 Credit Agreement, dated as of May 27, 1999, among Venture Holdings
Trust, the Lenders (as defined therein) and The First National
Bank of Chicago, as Administrative Agent, and filed as Exhibit
10.1 to Venture's Registration Statement on Form S-4, effective
October 21, 1999 (Registration No. 333-82617) and incorporated
herein by reference.
10.1.1 First Amendment, dated June 4, 1999, to the Credit Agreement
incorporated by reference as Exhibit 10.1, and filed as Exhibit
10.1.1 to Venture's Registration Statement on Form S-4, effective
October 21, 1999 (Registration No. 333-82617) and incorporated
herein by reference.
10.1.2 Second Amendment, dated June 29, 2000, to the Credit Agreement
incorporated by reference as Exhibit 10.1, and filed as Exhibit
10.1 to Venture's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000 (File No. 333-86217), and incorporated herein
by reference.
10.2 ISDA Master Agreement, dated May 27, 1999, between Venture
Holdings Company LLC and The First National Bank of Chicago, and
filed as Exhibit 10.2 to Venture's Registration Statement on Form
S-4, effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
10.2.1 Schedules to the Agreement incorporated by reference as Exhibit
10.2, filed as Exhibit 10.2.1 to Venture's Registration Statement
on Form S-4, effective October 21, 1999 (Registration No.
333-82617) and incorporated herein by reference.
10.3 Corporate Opportunity Agreement, made and entered into on the 27th
day of May, 1999, by and between Larry J. Winget and The
Huntington National Bank, as Indenture Trustee, filed
64
67
as Exhibit 10.3 to Venture's Registration Statement on Form S-4,
effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
10.4 Corporate Opportunity Agreement, dated February 16, 1994, by and
between Larry J. Winget and Comerica Bank, as Indenture Trustee,
filed as Exhibit 10.3 to Venture's Registration Statement on Form
S-4, effective October 27, 1997 (Registration No. 333-34475), and
incorporated herein by reference.
10.4.1 Agreement, dated October 21, 1997, by Larry J. Winget to be bound
by the terms of the Corporate Opportunity Agreement, filed as
Exhibit 10.3, for the benefit of the holders of the Issuers'
9 1/2% Senior Notes due 2005 filed as Exhibit 10.3.1 to Venture's
Registration Statement on Form S-4, effective October 27, 1997
(Registration No. 333-34475), and incorporated herein by
reference.
10.5 Service Agreement, dated as of January 1, 1992, by and between
Venture Industries Corporation, Vemco, Inc., Venture Mold &
Engineering Corporation, Venture Leasing Company, Vemco Leasing,
Inc., Deluxe Pattern Corporation, Venture Automotive Corp.,
Venture Sales & Engineering Corp. and Venture Service Company,
filed as Exhibit 10.11 to Venture's Registration Statement on Form
S-1, effective February 8, 1994 (Registration No. 33-72826), and
incorporated herein by reference.
10.6 Lease, dated as of November 1, 1990, by and among Venture
Industries Corporation, Venture Technical Development Company,
Venture Mold & Engineering Corporation, Vemco, Inc., Deluxe
Pattern Company, Venture Automotive Corp., Larry J. Winget and
Alicia Winget (Acropolis Resort), filed as Exhibit 10.14 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
10.7 Real Estate Lease Agreement, dated December 7, 1988, by and
between Harper Properties of Clinton Township Limited Partnership
and Venture Industries Corporation (Harper Lease), filed as
Exhibit 10.15 to Venture's Registration Statement on Form S-1,
effective February 8, 1994 (Registration No. 33-72826), and
incorporated herein by reference.
10.7.1 First amendment to Real Estate Lease Agreement, dated December 30,
1993, by and between Harper Properties of Clinton Township Limited
Partnership and Venture Industries Corporation (Harper Lease),
filed as Exhibit 10.15.1 to Venture's Registration Statement on
Form S-1, effective February 8, 1994 (Registration No. 33-72826),
and incorporated herein by reference.
10.8 Machinery and Equipment Lease Agreement, dated as of December 7,
1988, by and between Realven Corporation and Venture Industries
Corporation (Realven Lease), filed as Exhibit 10.16 to Venture's
Registration Statement on Form S-1, effective February 8, 1994
(Registration No. 33-72826), and incorporated herein by reference.
10.8.1 First Amendment to Machinery and Equipment Lease Agreement, dated
December 30, 1993, by and between Realven Corporation and Venture
Industries Corporation (Realven Lease), filed as Exhibit 10.16.1
to Venture's Registration Statement on Form S-1, effective
February 8, 1994 (Registration No. 33-72826), and incorporated
herein by reference.
10.9 Real Estate Lease Agreement, dated as of January 27, 1989, by and
between Venture Real Estate, Inc. and Venture Mold & Engineering
Corporation (Commerce Road facility), filed as Exhibit 10.17 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
10.10 Real Estate Lease Agreement, dated as of August 1, 1992, by and
between Venture Real Estate, Inc. and Venture Industries
Corporation (17400 Malyn), filed as Exhibit 10.18 to Venture's
Registration Statement on Form S-1, effective February 8, 1994
(Registration No. 33-72826), and incorporated herein by reference.
65
68
10.11 Real Estate Lease Agreement, dated as of August 1, 1992, by and
between Venture Real Estate, Inc. and Venture Industries
Corporation (17350 Malyn), filed as Exhibit 10.19 to Venture's
Registration Statement on Form S-1, effective February 8, 1994
(Registration No. 33-72826), and incorporated herein by reference.
10.12 Farm and Country Real Estate Company and Vemco, Inc. Real Estate
Availability and Usage Agreement, dated April 24, 1992, filed as
Exhibit 10.20 to Venture's Registration Statement on Form S-1,
effective February 8, 1994 (Registration No. 33-72826), and
incorporated herein by reference.
10.13 Sales Representation Agreement by and between Vemco, Inc. and
Venture Sales & Engineering Corporation, filed as Exhibit 10.21 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
10.13.1 Sales Representation Agreement by and between Venture Industries
Corporation and Venture Sales & Engineering Corporation, filed as
Exhibit 10.21.1 to Venture's Registration Statement on Form S-1,
effective February 8, 1994 (Registration No. 33-72826), and
incorporated herein by reference.
10.13.2 Amendment to Sales/Management Representative Agreements dated
October 1, 2000, by and between Venture Industries Corporation,
Vemco, Inc., Venture Holdings Corporation and Venture Sales
& Engineering Corporation.
10.14 Manufacturing Agreement by and between Venture Automotive Corp.
and Vemco, Inc., filed as Exhibit 10.22 to Venture's Registration
Statement on Form S-1, effective February 8, 1994 (Registration
No. 33-72826), and incorporated herein by reference.
10.15 Machinery Usage Agreements between Larry J. Winget Living Trust
and Venture Industries Corporation, filed as Exhibit 10.23 to
Venture's Registration Statement on Form S-1, effective February
8, 1994 (Registration No. 33-72826), and incorporated herein by
reference.
10.15.1 Machinery Usage Agreement between Larry J. Winget Living Trust and
Vemco, Inc., filed as Exhibit 10.23.1 to Venture's Registration
Statement on Form S-1, effective February 8, 1994 (Registration
No. 33-72826), and incorporated herein by reference.
10.16 Machinery Usage Agreement between Deluxe Pattern Corporation and
Venture Mold & Engineering, filed as Exhibit 10.24 to Venture's
Registration Statement on Form S-1, effective February 8, 1994
(Registration No. 33-72826), and incorporated herein by reference.
10.17 Form of Machinery and Equipment Lease Agreement between Venture
Industries Corporation and Nova Industries, Inc., filed as Exhibit
10.25 to Venture's Registration Statement on Form S-1, effective
February 8, 1994 (Registration No.33-72826), and incorporated
herein by reference.
10.18 Form of Machinery and Equipment Lease Agreement between Venture
Industries Corporation and Nova Industries, Inc., filed as Exhibit
10.26 to Venture's Registration Statement on Form S-1, effective
February 8, 1994 (Registration No. 33-72826), and incorporated
herein by reference.
10.19 Indemnification Agreement between the Company and Larry J. Winget
filed as Exhibit 10.19 filed as Exhibit 10.19 to Venture's
Registration Statement on Form S-4 effective October 21, 1999
(Registration No. 333-82617) and incorporated herein by reference.
10.20 Indemnification Agreement between the Company and Michael G.
Torakis filed as Exhibit 10.20 to Venture's Registration statement
on Form S-4, effective October 21, 1999 (Registration No.
333-82617) and incorporated herein by reference.
66
69
10.21 Indemnification Agreement between the Company and A. James Schutz
filed as Exhibit 10.21 to Venture's Registration statement on Form
S-4, effective October 21, 1999 (Registration No. 333-82617) and
incorporated herein by reference.
10.22 Insurance Policies issued by Pompo Insurance & Indemnity Company
Ltd. to the Registrants and affiliated companies, filed as Exhibit
10.32 to Venture's Registration Statement on Form S-1, effective
February 8, 1994 (Registration No.33-72826), and incorporated
herein by reference.
10.23 Real Estate Usage Agreement between Venture Real Estate
Acquisition Company and Venture Industries Corporation, dated
February 15, 1995, filed as Exhibit 10.23 to Venture's
Registration Statement on Form S-4, effective October 27, 1997
(Registration No. 333-34475), and incorporated herein by
reference.
10.24 Machinery Usage Agreement between Venture Equipment Acquisition
Company and Venture Industries Corporation, dated February 15,
1995, filed as Exhibit 10.24 to Venture's Registration Statement
on Form S-4, effective October 27, 1997 (Registration No.
333-34475), and incorporated herein by reference.
10.25 Venture Industries Group Participation Agreement between Venture
Industries Corporation and Venture Asia Pacific Pty Ltd. filed as
Exhibit 10.29 to Venture's Registration Statement on Form S-4,
effective October 27, 1997 (Registration No. 333-34475), and
incorporated herein by reference.
10.26 License Agreement as to Proprietary Technologies and Processes,
dated July 2, 1997, between Larry J. Winget and Venture Industries
Corporation, Vemco, Inc., Venture Mold & Engineering Corporation,
Venture Industries Canada Ltd., Vemco Leasing, Inc., Venture
Leasing Company, Venture Service Company, Venture Holdings
Corporation and Venture Holdings Trust filed as Exhibit 10.30 to
Venture's Registration Statement on Form S-4, effective October
27, 1997 (Registration No. 333-34475), and incorporated herein by
reference.
10.27 License Agreement as to Patents, dated July 2, 1997, between Larry
J. Winget and Venture Industries Corporation, Vemco, Inc., Venture
Mold & Engineering Corporation, Venture Industries Canada Ltd.,
Vemco Leasing, Inc., Venture Leasing Company, Venture Service
Company, Venture Holdings Corporation and Venture Holdings Trust
filed as Exhibit 10.31 to Venture's Registration Statement on Form
S-4, effective October 27, 1997 (Registration No. 333-34475), and
incorporated herein by reference.
10.28 Purchase Agreement, dated May 25, 1999, relating to $125,000,000
11% Senior Notes due 2007 and $125,000,000 12% Senior Subordinated
Notes due 2009, filed as Exhibit 10.4 to Venture's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999 (File No.
333-34475), and incorporated herein by reference.
10.29 Purchase Agreement, entered into to be effective as of the 15th
day of October, 1999, by and among Venture Mold & Engineering
Corporation and Shelby American, Inc filed as Exhibit 10.29 to
Venture's Annual Report on Form 10-K for the year ended December
31, 1999 (Registration No. 333-82617) and incorporated herein by
reference.
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed
Charges.
14(a)2 Valuation and Qualifying Accounts.
21.1 Subsidiaries of the Registrants, filed as Exhibit 21.1 to
Venture's Registration Statement on Form S-4, effective October
21, 1999 (Registration No. 333-82617) and incorporated herein by
reference.
67