1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
----- THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended March 31, 2001
OR
----- 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 333-75849
OXFORD AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-3262809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1250 STEPHENSON HIGHWAY, TROY MICHIGAN 48083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 577-1400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or such shorter
period that the registrant has been 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]
The Registrant is a privately held corporation. As such, there is no practicable
method to determine the aggregate market value of the voting stock held by
non-affiliates of the Registrant.
At June 20, 2001, there were outstanding 298,711 shares of the Registrant's
common stock.
1
2
PART I
ITEM 1. BUSINESS
GENERAL
For purposes of this Report, the "Company", "our", "we", and "us" shall
refer to Oxford Automotive, Inc. ("Oxford Automotive") and its consolidated
subsidiaries, unless the context otherwise requires.
We are a leading global Tier 1 or direct supplier of high-quality,
engineered metal components, assemblies, mechanisms and modules used by
original equipment automotive manufacturers, commonly referred to as "OEMs".
Our core products are complex, high value-added products, primarily
assemblies containing multiple stamped parts, forgings, various welded,
hemmed or fastened components and locking and release mechanisms. Our
product focus is directed toward four areas: closure panels, suspension
systems, complex structural systems and mechanisms. These products, which
include large structural stampings (door module) and assemblies, including
exposed "Class A" surfaces, leaf springs and smaller complex welded
assemblies, are used in manufacturing a variety of sport utility vehicles
("SUVs"), light and medium trucks, mini-vans, vans and passenger cars. These
products are also used in the recently introduced "hybrid vehicles", defined
as a cross between the popular SUV segment and traditional passenger car
segment. We are the sole source supplier of these products to our customers.
On a pro forma basis, assuming the acquisition of Aries Industries
Mecanismes et Decoupage Fin S.A. described below, had occurred on April 1,
2000, we would have had net sales of $884.5 million and EBITDA before the
impact of the Rationalization Charge described below of $62.1 million for
the fiscal year ended March 31, 2001.
Our largest customers, based on pro forma net sales for the fiscal year
ended March 31, 2001, assuming the acquisition of Aries Mecanismes had
occurred April 1, 2000 are: Ford Motor Company (23%), General Motors
Corporation (18%), DaimlerChrysler AG (15%), Renault S.A. (14%), Peugeot
S.A. (14%), Fiat (5%) and The Saturn Corporation (4%). We have been
providing products to our major customers in the United States for more than
50 years and the European OEMs for more then 20 years and have earned
outstanding commercial ratings for our high-quality standards, including
GM's Supplier of the Year and Mark of Excellence Awards, Ford's Q1 Award,
DaimlerChrysler's Gold Pentestar Award, CAMI's President's Award and have
recently been named one of three strategic stampers for Mercedes Benz. We
also sell our products to other Tier 1 suppliers. For the fiscal year ended
March 31, 2001, approximately 58% of our net sales, on a pro forma basis
assuming the acquisition of Aries Mecanismes occurred on April 1, 2000, were
derived from sales of our products manufactured for SUVs, mini-vans, vans
and light trucks. In recent years, SUVs, mini-vans, vans and light trucks
have experienced stronger growth in vehicle production as compared to the
passenger car sector. This sector includes those platforms and models which
have strong consumer demand, such as Ford's F-Series Pickup, Ranger,
Explorer and Windstar, DaimlerChrysler's Ram pickup and mini-vans, Renault's
Kangoo and Espace, and Peugeot's Monospace. See Note 14 of the Oxford
Automotive, Inc. Notes to Consolidated Financial Statements for a
description of the Company's domestic and export sales.
OEMs are increasingly demanding full service design, engineering,
program management and production capabilities. Our recent acquisitions
continue to strengthen our position as a leading Tier 1 supplier of
assemblies, systems and modules to the OEMs. We have the critical mass and
capabilities in the areas of design and advance engineering, sales and
marketing, and product expertise that provide the basis for our strategy of
becoming a fully-integrated, global systems/module supplier. Through
acquisitions, the Company's revenues have risen at a compounded annual
growth rate of 58% from $85 million for fiscal year 1996 to $824 million for
the fiscal year ended March 31, 2001. These acquisitions have also allowed
us to support our customers on a worldwide basis, with current facilities in
the United States, Canada, Mexico, France, Germany, Italy, Turkey, Argentina
and a joint venture interest in Venezuela.
2
3
We currently operate 38 manufacturing facilities, all of which are
QS9000 certified. The facilities offer the latest technologies in metal
stamping (machining and fine blanking), forging, welding and assembly
production equipment, including fully-automated hydraulic and wide-bed press
lines (up to 350 inches), robotic welding cells, robotic hemming,
autophoretic and cataphoretic corrosion resistant coating, injection
molding, die casting and a patented eye forming process. We also have the
worldwide exclusive rights (outside the CIS--formerly Soviet Union) to the
"MAZ" tapering process for our suspension applications. In excess of $300
million has been invested since 1992 in capital investments to support sales
growth, expand production capabilities and improve efficiency and
flexibility. Our diverse line of over 575 presses that range up to 3,000
tons including both conventional and transfer technology and
state-of-the-art robotic weld assembly and hemming equipment are capable of
manufacturing a broad assortment of parts and assemblies ranging from simple
stampings to full-size, Class A door and closure panels. We are one of a few
independent suppliers that has the ability to produce large, complex
stampings, as well as the technical expertise and automated assembly
capabilities to provide high value-added modules such as door apertures and
assemblies, A-pillars, Class A surface products, control arms, multiple leaf
and parabolic leaf springs and mechanisms.
During the year ended March 31, 2001, we successfully launched several
new programs including control arms for the GM - Trailblazer/Envoy/Bravada,
the door, hood, and underbody assemblies for the Pontiac Aztec and Buick
Rendezvous, doors and structural components and apron assembly for the Ford
Focus and Escort, and structural components for the Peugeot 306 and
Monospace. These programs generated approximately $53.0 million of net sales
in 2001. Other recent significant business awards not yet in production,
together with the sales management believes will be generated by the awards,
include: Saturn Vue front and rear sub-frame ($24.0 million), Renault W84
closure panels ($40.0 million), Peugeot T52 program ($50.0 million) and the
Ford Mustang control arms ($11.0 million). We believe these awards may
generate the proposed sales, however, such sales will be subject to an
automotive industry downturn and a decrease in customer demand for motor
vehicles could adversely affect our sales. See "Item 1. Business - Forward
Looking Statements."
BUSINESS STRATEGY
Our principal objective is to be a leading, full-service, global Tier 1
supplier of design and engineering services and integrated systems solutions
based on metal forming and related manufacturing technologies. We believe
that we are well positioned to benefit from three significant trends in the
stamping and metal forming segments of the automotive industry: outsourcing,
consolidation and globalization. Outsourcing of metal stamping has increased
in response to competitive pressures on OEMs to improve quality and reduce
capital requirements, labor costs, overhead and inventory. Whereas
traditionally this was only prevalent in North American OEMs, European OEMs
are now actively pursuing this strategy. Consolidation among automotive
industry suppliers has occurred as OEMs have more frequently awarded
long-term sole source contracts to the most capable global suppliers. In
addition, OEMs are increasingly seeking full service suppliers who can
provide a complete package of design, engineering, project management and
manufacturing support for an integrated system (such as a front-end system).
Finally, OEMs are positioning themselves to reach emerging markets in a cost
effective manner by seeking to design and produce "world cars" which can be
designed in one vehicle center and produced and sold in different geographic
markets. We intend to capitalize on these trends through internal
development and strategic acquisitions. The key elements of our strategy
include the following:
Provide Full-Service Program Management. We are focused on developing
full-service program management capabilities. We work with OEMs throughout
the product development process from concept and prototype development
through the design and implementation of manufacturing processes. Program
management begins with the assembly of a cross functional team drawn from
every aspect of the business - program managers with experience in all
disciplines, as well as personnel from such areas as engineering, quality,
finance, purchasing and human resources. This roster also includes key
representatives from our technical headquarters, the manufacturing plant and
the client. We believe our ability, through our North American and European
technology
3
4
centers, to manage programs and provide design, engineering, prototyping,
tooling, blanking, stamping, forging, assembly, and corrosion resistant
coating to our customers creates a unique capability present in only a
limited number of suppliers. We believe this capability will enable us to
manage large programs, assist us in reducing customer program launch time,
lower customer costs and increase our margins.
Supply Complex, High Value-Added Systems. As a result of our technical
design and engineering capabilities and our reputation for highly-efficient
manufacturing operations, we are able to secure supply relationships for
complex, high value-added products, primarily assemblies and modules that
contain multiple stamped parts and various welded, hemmed or fastened
components. For example, we produce closure panels - doors, decklids, hoods
and trunk lids for the Saturn LS, Saturn Sport Coupe, Pontiac Aztek and the
Renault Megane, the radiator enclosure, floor pan and toe-to-dash panel for
the Ford Windstar, floor pan assembly for the Renault Espace, the control
arm on the PN-131 platform, the control arm assemblies for Ford's F-Series
pickups and DaimlerChrysler's T-300, the radiator support assembly for GM's
W-car (Grand Prix, Century, Lumina, Monte Carlo, Regal and Intrigue),
complex A-pillar assemblies for the Ford Mustang and the Ford Ranger pickup,
and multiple leaf, parabolic (long taper) multiple leaf, and single leaf
long taper suspension systems for products ranging from Ford's F-Series
pickups to DaimlerChrysler's mini-vans. These complex products typically
generate higher dollar content per vehicle as well as higher margins for the
Company as compared to simple, individual stampings. We plan to capitalize
on our ability to develop and provide integrated modules and assemblies to
deliver to the OEMs an integrated product such as a complete door or
front-end system. In addition to doors, radiator supports and Class A
surface components, we believe we have unique expertise with respect to
control arms and leaf springs, which we will further develop as a fully
integrated suspension system.
Focus on High Growth Vehicle Categories. Our sales and marketing
efforts have been, and will continue to be, directed toward sectors of the
automotive market that have experienced strong consumer demand. In North
America, the high growth segment is SUVs, mini-vans, vans and light trucks
and the emerging hybrid segment, while in Europe the high growth segment is
passenger cars. For the fiscal year ended March 31, 2001, approximately 58%
of our sales were derived from the SUV segment and on a pro forma basis
assuming the acquisition of Aries Mecanismes had occurred on April 1, 2000,
approximately 35% of our sales were derived from the passenger car segment.
Provide Superior Engineering Solutions. We provide engineering
solutions to our customers through our extensive product and engineering
expertise. Weight reduction, modularization and integration of components
into systems, using state of the art design, prototyping and process
technologies, address the customer requirements for continuous improvement.
As a full service global supplier, we have taken a leading position in
integrating simulation software into our design culture. This considerable
investment in time and resources supports one long-term goal: finding new
technologies for old line stamping operations and working to achieve cost
reduction and manufacturing efficiencies. Our Technology Division is a full
service provider of early phase product design, process simulation and is a
leader in large die prototyping and complex welded assemblies. The division
also provides supplemental design and engineering services to the automotive
OEMs and Tier 1 suppliers.
Further Our Global Presence. We are actively pursuing additional
strategic acquisitions and joint-venture opportunities in Europe and Mexico
and intend to pursue opportunities that will allow us to increase our
presence in South America, and establish a presence in Asia and other
markets in order to serve our customers on a global basis. Several OEMs have
announced certain models designed for the world automobile market. As a
result, the OEMs have encouraged their existing suppliers to establish
foreign production support for these programs. This globalization provides
access to new customers and technology, as well as economic cycle
diversification. We currently have operations in the United States, Canada,
Mexico, France, Germany , Turkey, Argentina and Italy and have established a
presence in Venezuela.
4
5
Pursue Strategic Acquisitions and Alliances. In response to the trend
in the OEM market toward "full service systems suppliers", we are focused on
making strategic acquisitions and entering into strategic alliances and
joint ventures that will enhance our ability to provide integrated systems
(such as a door or front-end systems) or otherwise leverage our existing
business by providing additional program management, engineering, product,
manufacturing and service capabilities. We also intend to pursue
acquisitions that will expand our customer base by providing an entree to
new customers, including the North American operations of Asian and European
based OEMs. We believe that the continuing supplier consolidation in the
stamping and metal forming segments may also provide attractive
opportunities to acquire high-quality companies at favorable prices,
including businesses which can be improved financially through overhead
elimination, organizational restructuring, plant reconfiguration, labor
contract negotiations and management changes. We will also pursue
acquisitions that enable us to achieve a global presence.
RECENT DEVELOPMENTS
On April 3, 2000, we acquired through a wholly owned indirect subsidiary,
the Group Gessaroli business from Officine Meccaniche Gessaroli S.p.A.,
Gess.cardi Gessaroli Agostino & c.s. as., and various individuals. The
purchase price was ITL 24.0 billion ($11.8 million) plus up to ITL 3.6
billion ($1.8 million) for the payment of income taxes and debt, subject to
a closing date net asset adjustment, if applicable. On April 3, 2000, ITL
21.6 billion ($10.7 million) of the total purchase price was paid to sellers
and ITL 2.4 billion ($1.2 million) was held back, pending any applicable
purchase price adjustment or indemnification claim. On October 19, 2000, the
purchase price adjustment was finalized and resulted in the elimination of
the ITL 2.4 billion hold back. The Gessaroli Group's integrated
manufacturing operations cover all functions of design, engineering, die and
mold construction, parts production and assembly for its metal formed
components including fine blanking and weld and assembly of components,
modules and injection molded products.
On August 2, 2000, pursuant to a share purchase and sales agreement,
dated August 2, 2000, among Oxford Automotive Mecanismes et Decoupage Fin II
SAS, a wholly-owned indirect subsidiary of the Company and Aries Industries,
S.A., we acquired all of the issued and outstanding shares of Aries
Mecanismes from Aries Industries. The purchase price was FF 430 million,
subject to possible downward adjustments for minimum net assets as of the
August 2, 2000 and minimum EBITDA for the twelve months after August 2,
2000. On the closing date, FF 350 million less approximately FF 60 million
in financial indebtedness assumed or approximately FF 290 million was paid
to Aries Industries. The remaining purchase price of FF 80 million, subject
to any applicable purchase price adjustment or indemnification claim, is
payable in two equal installments on the second and third anniversaries of
the closing date, subject to the possible early payment of up to FF 10
million of the deferred payments if certain conditions relating to the
minimum EBITDA adjustment are met. Effective February 13, 2001, the final
purchase price negotiations resulted in the elimination of the deferred
purchase price of FF 80 million. For the year ended December 31, 1999, Aries
Mecanismes had net sales of approximately $160 million US. Aries
Mecanismes' integrated manufacturing operations cover all functions of
design, engineering, parts production and assembly of door, hood and decklid
hinges, latches, sliding door mechanisms, parking brakes, jacks, fine
blanking, hot rolled profiles and other metal formed components. The Company
intends to continue and expand the current operations of Aries Mecanismes.
On March 30, 2001, we announced that we would close plants, eliminate jobs
and take a one-time after tax restructuring charge of approximately $43
million ($71 million pre-tax). Approximately $37 million of the charge was
recorded in the fourth quarter of fiscal year ended March 31, 2001, with the
balance to be reflected in the first two quarters of fiscal year ending
March 31, 2002. This capacity rationalization action anticipates the closure
of four North American plants over a two year period and will result in the
elimination of up to 500 jobs of the North American salaried and hourly
workforce. These actions will reduce excess capacity and result in the
transfer of substantially all of the products manufactured in the closed
facilities to other Oxford Automotive facilities ( See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Capacity Rationalization Plan").
5
6
INDUSTRY TRENDS
The OEM market to which we sell our products consists of program
management, design, engineering, prototype and development, production and
sale of parts, components, assemblies and modules or systems (several
components assembled together) for use in the manufacture of new motor
vehicles. Our performance, growth and strategic plan are directly related to
certain trends within the OEM market. The North American OEMs have each been
substantially reducing the number of suppliers that may bid for awards and
outsourcing an increasing percentage of their production requirements. This
trend is now rapidly developing among the European OEMs as well. As a
result, the OEMs are focusing on the development of long-term, sole source
relationships with suppliers who can provide more complex parts, as well as
complete subassemblies and modules on a just-in-time basis while at the same
time meeting strict quality requirements. These requirements are
accelerating the trend toward consolidation of the OEMs supplier base, as
those suppliers who lack the capital and production expertise to meet the
OEMs needs, either cease to operate or are merged with larger suppliers.
OEMs benefit from outsourcing because outside suppliers generally have
significantly lower cost structures and, as described below, suppliers can
assist in shortening development periods for new products.
In addition to consolidation and outsourcing, suppliers are
participating earlier in the design and engineering process, providing
research, as well as product development, product testing/validation,
prototyping and tooling. OEMs generally expect Tier 1 suppliers to (i)
participate in the design and engineering of complex assemblies, (ii)
develop the required manufacturing process to deliver these assemblies on a
just-in-time basis, and (iii) assume responsibility for quality control.
This results in shorter development times for new products, as evidenced by
the "go-fast" program, proceeding from concept to market in less than 24
months, initiated by General Motors on the Pontiac Aztek, as well as higher
quality and lower part costs.
While the focus by the OEMs remains quality and cost, we believe that
the focus for the future will also be on global capabilities of program
management, design innovation and ability to provide value-added products
and systems. The OEMs have been very successful in making high-quality and
low cost a minimum requirement to remain in the industry, as opposed to a
competitive advantage for certain suppliers. These evolving requirements can
best be addressed by suppliers with sufficient resources to meet such
demands. For full-service suppliers such as us, this environment provides an
opportunity to grow by obtaining business previously provided by other
suppliers who can no longer meet the current or future requirements and
expectations of the OEMs and by acquisitions that further enhance product
manufacturing and service capabilities. Although the requirements of the
OEMs have already resulted in significant consolidation of component
suppliers in many product segments, we believe that many opportunities exist
for further consolidation within our business segments.
PRODUCTS
We generate the majority of our net sales from large, complex, high
value-added closures and structural modules, primarily assemblies that
generally consist of multiple parts, which we stamp, forge and assemble with
various welded or fastened components. We are the sole source supplier of
these complex modules and assemblies. Our product focus is directed toward
four areas: closure panels, suspension systems, complex structural systems
and mechanisms. These products include unexposed components and assemblies
that are fundamental to the structural integrity of the vehicle such as
A-pillars, radiator supports, floor pans, toe-to-dash panels, leaf springs,
frame and suspension components, reinforcements, locking mechanisms, latches
and hinges. In addition to unexposed modules and assemblies, we have the
capability and expertise to produce Class A surfaces such as door
assemblies, door apertures, rocker panels, fuel filler doors, which require
virtually flawless finishes and more stringent customer requirements than
unexposed assemblies. These products require superior engineering and
automated manufacturing and assembly capabilities due to their exterior
visibility, complexity, and high volume requirements. The combination of
these systems and modules provides the capability to virtually build an
entire body-in-white and all related closure panels.
6
7
We focus on complex and larger components and assemblies that typically
generate higher dollar content per vehicle as well as higher margins for the
Company. These assemblies, such as the A, B and C pillars, control arms,
leaf springs, door assemblies, door apertures, deck lids and radiator
supports require larger, high tonnage, wide-bed, fully-automated press
capabilities, complex automated weld and hemming assembly, autophoretic and
cataphoretic corrosion resistant coating, machining, and automated assembly
of purchased components. In addition, we provide mechanisms for high value/
complex function such as door hinges with integrated door stops and electric
sliding door devices.
The charts below detail our major customers, platforms and our major
products
WORLDWIDE WORLDWIDE
CUSTOMERS PLATFORMS
Audi A6, B6, C6,
CAMI Tracker, Vitara, Swift
DaimlerChrysler Dakota, Cherokee, Ram pickup, Durango, Caravan/Voyager
Fiat Punto, Bravo/Brava, Marea, Ducato, Multipla, Alfa 145/146, Alfa 156,
Alfa 166, Alfa Sportive, Lancia Y, Lancia K, Lancia Lybra
Ford Motor Company Explorer, F-Series Pickup, Focus, Mustang, Ranger, Econoline,
Expedition, Countour/Mystique, Escort, Sporttrac, Mondeo and Transit
General Motors Corvette, Grand Prix, S/T Pickup, Suburban, Astro/Safari, Cavalier, Seville, Aztek,
Rendezvous, Envoy/Bravada/Trailblazer, Grand Am
Honda Accord/Civic
Mercedes Ebobus, Sprinter, Actros/Atego , C Class SL, E Class, Unimog, SLK, A Class, CLK S Class
and Maybach
Nissan Micra
Opel T300/Corsa, T600/Zaphra, Astra
PSA Peugeot Citroen Evasion /806 , Xantia, 205, 306, 405, Berlingo, 106/Saxo, Xsara
Renault Megane, Express, Kangoo, Master, Laguna, Espace, Twingo, Clio
Saab 9.3 Convertible, 9.5 Sedan
Saturn LS, Sport Coupe, Vue
Toyota Yaris
Volkswagon Golf, Passat
PRODUCT LINES
STRUCTURAL CHASSIS
Bow-roof panel, door frame, frame rear upper, front body Brackets, cross members, engine cradles, fuel tanks,
hinge pillar, full floor pan, instrument panels, panel back spring shackles/hangers, spring towers
body pillar, panel center pillar inner, rail assembly engine
compartment, rear floor member, roof rails, toe to dash panel
COMPLEX STAMPINGS/ASSEMBLIES SUSPENSION
Floor pan assemblies, frame windshield front, inner Control arms, leaf springs (multi/ conventional/parabolic),
door panels, heat shields, oil pans, radiator support twist axles, control links and spring mounts
assembly
CLASS A MECHANISMS
Closure panels, door assemblies, hood/bonnet, roof panels Door and articulating hinges, latches, locking mechanisms,
truck cabs sliding door mechanisms, pedal assemblies, parking brakes
and jacks
7
8
We have received purchase orders for production commencing after the current
model year, which production typically continues through the product's life
cycle and is subject to the volume requirements of customers, for the
following major products on an annualized basis: Saturn Vue front and rear
sub-frame ($24.0 million), Renault W84 closure panels ($40.0 million),
Peugeot T52 program ($50.0 million) and the Ford Mustang control arms ($11.0
million). We believe these awards may generate the proposed sales, however
such sales will be subject to an automotive industry downturn and a decrease
in customer demand for motor vehicles could adversely affect our sales. See
"Item 1. Business - Forward Looking Statements."
DESIGN AND ADVANCED ENGINEERING
We strive to maintain a technological advantage through investment in
program management, product design, advanced engineering and prototype
capabilities in an effort to exceed the customer's expectations for value
and service. Our engineering staff encompasses such disciplines as computer
aided design, commonly known as CAD, virtual prototyping, draw die and
process simulation, advanced engineering, manufacturing feasibility, and
tooling and process development.
As our customers continue to outsource larger assembled systems which
must be designed at earlier stages of vehicle development rather than the
smaller parts which are attached to them, we are increasingly required to
utilize advanced engineering resources early in the planning process.
Advanced engineering resources create improved engineering design, CAD
feasibility studies, working prototypes and testing programs to meet
customer specifications. Given this increased demand for early involvement
in the design and engineering aspects of production development, we
established a technical center in North America, and most recently Europe,
that houses our engineering and design groups. We utilize structured program
management based on the Automotive Industry Action Group sanctioned Advanced
Part Quality Planning principles to ensure part quality in all phases of
design and manufacturing. We have an established data management and CAD
department through the Technology Division that supports all major customer
systems. We provide full and complete engineering solutions up through
"black box" design. "Black box" design involves the customer setting broad
product requirements and leaving the design, material, tooling and
production to the supplier. We also provide "gray box" engineering
capabilities in which the customer has principal design responsibility while
our engineers work closely with the customer in designing the specifications
of the product material, the part to be produced and the tooling required to
produce the finished product. We are also on-line with all major customers
which accelerates the process of design changes.
Our design and advanced engineering expertise is an important
differentiating factor in maintaining our relationships with and obtaining
new business from our customers and, in management's judgment, was an
essential factor in winning the new business described above. We believe our
design and advanced engineering expertise is among the best in the industry
based on products provided to customers.
8
9
CUSTOMERS AND MARKETING
We supply our products on a long-term preferred and sole source basis,
primarily to Ford (23%), GM (18%), DaimlerChrysler (15%), Renault (14%),
Peugeot (14%), Fiat (5%) and Saturn (4%) (percentages are approximates of
net sales for the fiscal year ended March 31, 2001 on a pro forma basis for
the acquisition of Aries Mecanismes) with the remaining net sales comprised
of sales primarily to other automotive suppliers. We have been providing
products directly to our customers in the United States for more than 50
years, and directly to European OEMs for more than 20 years. We currently
have locations in the United States, Canada, Mexico, France, Germany, Italy,
Turkey, Argentina and Venezuela and provide components for OEMs doing
business in Europe, North America and South America. We believe our presence
in Europe and Mexico is strategically important and has led to several
significant new opportunities with OEMs doing business in these locations.
We also believe that Metalcar, our Venezuelan joint venture, provides
further entree into Mexican and South American markets. We believe
Metalcar's production capabilities and strong management team will provide
us with the means to further penetrate these markets not only for springs,
but also metal stamping and other Company products. We maintain very strong
relationships with our customers and continually strive to exceed customer
expectations and anticipate customer needs. This approach has enabled us to
maintain our status as a long-term supplier with each of our major customers
and as part of a limited group of preferred suppliers invited to bid for
platform work.
With the efforts by the OEMs to reduce the product development cycle
time ("go fast" programs), top suppliers are increasingly charged with
responsibility in the early design and development stages. For example, we
obtain many of our new orders through a presourcing process by which the
customer invites one or a few preferred suppliers to manufacture and design
a component, assembly or module that meets certain price, timing and
functional parameters. Upon selection at the development stage, we typically
agree with the customer to cooperate in developing the product to meet the
specified parameters. Upon completion of the development stage and the award
of the manufacturing business, we receive a blanket purchase order for those
components, assemblies or modules for the life of a vehicle model or
platform, which typically range from five to seven years. Consequently, the
key success factors for OEM suppliers now include total program management
that encompasses state-of-the-art design, reduced launch cycle times, and
the manufacture and delivery of high quality products at competitive prices.
We believe that the advanced engineering and sales organization at our
technical centers offer services few other suppliers have available for
their customers on a global basis. The group's primary activities are:
- program management
- quoting/cost estimating
- assembly/automation
- CAD design and data control
- virtual prototyping
- draw die simulation
- tool process/design
- early phase prototypes
The sales group is divided into customer-oriented business units, each
with a business unit manager responsible for all facets of customer needs,
as well as strategies for growing their particular customer base. The entire
group is dedicated to advanced technical development and servicing a
multitude of customers' needs as one team.
9
10
RAW MATERIALS
The cost of raw materials represented approximately 49.6% of our net
sales for the fiscal year ended March 31, 2001 on a pro forma basis for the
acquisition of Aries Mecanismes. On an annual basis, steel represents
approximately 58% of total raw materials purchases. We expect to purchase
nearly 500,000 tons of steel in fiscal 2002 for use in our production. The
remaining 42% of raw materials purchases is represented by various purchased
parts such as forgings, bushings, ball joints, isolators, corrosion
resistant coating, and various fasteners.
We participate with respect to the majority of our North American
platforms in steel purchase programs through Ford, GM and DaimlerChrysler.
Beginning in November of 2000, our European operations also began limited
participation in such programs with Renault. Under these programs, the steel
is purchased by the OEM from the steel mill and sold to us at a negotiated
or matrixed price. These purchase programs effectively neutralize the
exposure to steel price increases and decreases, as any price increases from
the steel mills are either absorbed by the OEM prior to our purchase of the
steel or such increases are reflected in our purchase of the steel and
passed back to the OEM in the product pricing.
COMPETITION
The market for our products is characterized by strong competition from
both captive OEM suppliers and external, non-captive suppliers. We compete
with a limited number of competitors that have the physical assets and
technical resources to produce large bed stampings, complex parts and
subassemblies of multiple parts. Our largest competitors include The Budd
Company, a subsidiary of Thyssen AG; Magna International Inc.; Tower
Automotive, Inc.; Trianon Industries Corp.; Ogihara America Corp.; Wagon
PLC; Mayflower Corporation, PLC; Shiloh Industries; Magnettosre; Benteler
AG; and divisions of OEMs with internal stamping and assembly operations.
Within the leaf spring segment of our business our main competitor is
Rassini, Inc., and in the suspension segment of our business our major
competitors are TRW, Inc., Dana Corp. and Benteler AG.
We compete for business at the beginning of the development for new
model platforms, as well as the redesign of current models. This process can
begin from 18 to 36 months prior to the introduction of the new model. After
the customer awards a program, that supplier is generally designated as the
sole source supplier for the life of that program, which typically lasts 4
to 5 years for passenger cars and up to 10 years for trucks (particularly
for unexposed structural components and assemblies).
EMPLOYEES
At March 31, 2001, we employed approximately 7,400 persons in the
United States, Canada, Mexico, France, Italy, Germany, Turkey and South
America, of which approximately 1,600 are employed on a salaried basis and
the balance are hourly employees. Substantially all of the hourly employees
are represented by various local unions through collective bargaining
agreements. These individual agreements which are from three to five years
in length expire over the period February 2002 through July 2005.
In 1994, prior to our acquisition of the facility, we experienced a
two-week work stoppage at the Chatham, Ontario facility. In addition, in
1996, prior to our acquisition of Cofimeta S.A, we experienced a three-week
work stoppage at the saint Florent facility. Other than these events, we
have not experienced any organized work stoppages at any time during the
past ten years. At the present time, we believe that our relations with our
employees are good.
REGULATORY MATTERS
Our facilities and operations are subject to a wide variety of federal,
state, local, and foreign environmental laws, regulations, and ordinances,
including those related to air emissions, wastewater discharges, and
chemical and hazardous waste management and disposal ("Environmental Laws").
Our operations also are governed by laws relating to workplace safety and
worker health, primarily the Occupational Safety and Health Act, and foreign
10
11
counterparts to such laws. In many jurisdictions, these laws are complex and
change frequently. The nature of our operations exposes us to risks of
liabilities or claims with respect to environmental and worker health and
safety matters. There can be no assurance that material costs will not be
incurred in connection with such liabilities or claims.
Based on our experience to date, we believe that the future cost of
compliance with existing Environmental Laws (or liability for known
environmental claims) will not have a material adverse effect on our
business, financial condition or results of operations. However, future
events, such as changes in existing Environmental Laws or their
interpretation, may give rise to additional compliance costs or liabilities
that could have a material adverse effect on our business, financial
condition or results of operations. Compliance with more stringent
Environmental Laws, as well as more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing
Environmental Laws, may require additional expenditures by the Company that
may be material.
Certain Environmental Laws hold current owners or operators of land or
businesses liable for their own and for previous owners' or operators'
releases of hazardous or toxic substances, materials or wastes, pollutants
or contaminants, including petroleum and petroleum products ("Hazardous
Substances"). Certain laws, including but not limited to the Comprehensive
Environmental Response, Compensation & Liability Act ("CERCLA"), may impose
joint and several liability on responsible parties. Because of our
operations, the long history of industrial uses at some of our facilities,
the operations of predecessor owners or operators of certain of the
businesses, and the use, production, and releases of Hazardous Substances at
these sites, we are affected by such liability provisions of the
Environmental Laws. Several of our facilities have experienced some level of
regulatory scrutiny in the past and are or may be subject to further
regulatory inspections, future requests for investigation or liability for
past disposal practices.
Our Alma, Michigan plant is listed on the Michigan Department of
Environmental Quality ("MDEQ") list of Michigan Sites of Environmental
Contamination. Based on filings with the MDEQ by the current owner of the
petroleum refinery which adjoins the Alma plant property, the refinery has
been determined by the MDEQ to be the source of certain contamination
existing in the eastern area of the Alma plant property. While we do not
expect to incur significant future costs in connection with this matter, we
cannot guarantee that such future costs will not be material.
The Resource Conservation and Recovery Act and the regulations
thereunder ("RCRA") regulates the generation, treatment and disposal of
hazardous wastes. In the mid-1980s, we entered into a Consent Agreement and
Final Order, through a subsidiary, with the United States Environmental
Protection Agency (the "EPA") relating to the final closure of a surface
water impoundment area at the Alma plant under RCRA. We have remediated the
impoundment soils and sediments and we have implemented a groundwater
monitoring program with EPA approval under RCRA. A final closure report has
been submitted to the EPA. In addition, we are conducting soil investigation
and groundwater monitoring, with MDEQ involvement, in a separate section of
the Alma plant at which contaminants have been detected by our consultants.
Both of these programs may be affected by the suspected contamination from
the petroleum refinery described above. While future soil and/or groundwater
remediation costs, if any, are not expected to be material, we cannot
predict such costs with certainty and no guarantee can be made that these
costs will not be material.
We have been named as a potentially responsible party, along with
several other companies, in connection with a former disposal facility
located in the St. Louis, Michigan area. The State of Michigan has begun an
investigation of this facility which we, along with certain other named
parties, are monitoring. While the costs of investigation and remediation,
if any, are not expected to be material, we cannot accurately estimate such
costs at this time.
11
12
FORWARD LOOKING STATEMENTS
This report contains statements relating to such matters as anticipated
financial performance, business prospects and other matters, including
statements relating to volume growth, awarded sales contracts, or statements
expressing general optimism about future operating results that are
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. In addition, the Company may
from time to time publish or communicate other statements that could also be
construed to be forward-looking statements. These statements are or will be
based on the Company's estimates, assumptions and projections, and are
subject to risks and uncertainties, including those specifically listed
below, that could cause actual results to differ materially from those
included in the forward-looking statements.
The risks and uncertainties that may affect the operations,
performance, development and results of operations of the Company include
the following: (1) the OEM supplier industry is highly cyclical and, in
large part, impacted by the strength of the economy generally, by prevailing
interest rates and by other factors which may have an effect on the level of
sales of automotive vehicles; (2) future price reductions, increased quality
standards or additional engineering capabilities may be required by the
OEMs, which are able to exert considerable pressure on their suppliers; (3)
the OEMs may decide to in-source some of the work currently performed by the
Company; (4) work stoppages and slowdowns may be experienced by OEMs and
their Tier 1 suppliers, as a result of labor disputes; (5) there may be a
significant decrease in sales of vehicles using the Company's products or
the loss by the Company of the right to supply any of such products to its
major customers; (6) increased competition could arise in the OEM supplier
industry; and (7) changing federal, state, local and foreign laws,
regulations and ordinances relating to environmental matters could affect
the Company's operations, including the effects of any possible new
legislation related to the Ford/Firestone recall.
ITEM 2. PROPERTIES
Our corporate headquarters, engineering, technical center and sales
offices are currently located in Troy, Michigan, a suburb of Detroit, close
to our core of North American automotive customers. Our manufacturing plants
are strategically located near OEM manufacturing sites.
We operate over 575 presses ranging from under 100 ton to 3,000 ton
capabilities. We are capable of producing components and assemblies from the
smallest brackets to full-size, Class A door and closure panels with our
unique wide-bed (180 inch), automated press line. Production systems include
welding robots, pick and place robots and other state-of-the-art automation,
as well as autophoretic, cataphoretic and Hunting corrosion resistant
coating systems.
As OEMs have increased quality standards and implemented just-in-time
and sequenced delivery/inventory management methods, the consistency of
quality, as well as the timeliness and reliability of shipments by OEM
suppliers, have become crucial in meeting logistical demands of the OEMs and
reducing operating costs of the supplier. We have responded by developing
and adopting manufacturing practices that seek to maximize quality and
eliminate waste and inefficiency in our own operations and in those of our
customers. Our manufacturing and engineering capabilities enable us to
design and build high quality, efficient manufacturing systems, processes
and equipment. We have invested heavily in our commitment to quality through
education of employees and implementation of cost management and control
systems from the plant floor up.
12
13
All suppliers are required to meet numerous quality standards in order
to qualify as a preferred and long-term supplier to the OEMs. The QS-9000
standards were developed by international and domestic automobile and truck
manufacturers to ensure that their suppliers meet consistent quality
standards that can be independently audited. The QS-9000 standards provide
for the standardization and documentation of a supplier's policies and
procedures to improve suppliers' efficiencies. The European automobile and
truck manufacturers have developed similar standards to the QS-9000
standards, referred to as EAQF. We are QS-9000 certified and our operations
in Europe are EAQF, QS-9000 and ISO 9002 certified.
In addition to the QS-9000 standard, each OEM maintains its own
certification or award system for preferred suppliers based on the
supplier's demonstrated quality, delivery and certain commercial
considerations. Ford requires that all suppliers receive its Q1 rating in
order to quote for new production business. GM's Supplier of the Year Award
provides certain competitive advantages to the recipients but is not a
requirement for current GM suppliers to bid on new business. DaimlerChrysler
allows suppliers who have received its Gold Pentastar Award to retain any
current business when it is replaced by a new model without competitive
bidding. Other OEMs maintain various award programs for their suppliers that
recognize outstanding performance by the supplier. We have received
DaimlerChrysler's Gold Pentastar Award for each of our facilities that have
DaimlerChrysler as a customer. We have the Q1 rating from Ford at all plants
that are required to have the Q1 rating.
A summary of our major facilities, including the facilities of our less
than majority owned affiliates is set forth below:
Country Facility Size (Sq. Ft.) Country Facility Size (Sq. Ft.)
------- -------- -------------- ------- -------- --------------
United States Alma, Michigan 389,000 Mexico Saltillo (1) 20,000
Argos, Indiana 386,000 Silao (1) 42,000
Corydon, Indiana 200,000 Ramos Arizpe (1)(2) 330,000
Chicago, Illinois 160,000
Greencastle, Indiana 214,000 France Douai (3) 600,000
Lapeer, Michigan (5) 85,000 Elancourt (1) 37,000
Hillman, Michigan 6,760 Orbec 188,000
Masury, Ohio (5) 150,000 St. Florent 431,000
Oscoda, Michigan (5) 57,000 Essomes 150,700
Prudenville, Michigan (5) 76,000 Champigny 112,000
Troy, Michigan (1) 54,000 St. Pierre 188,400
Troy CET 16,000 Brevilly 172,200
Canada Cambridge, Ontario (5) 290,000 Germany Altensteiger 301,000
Chatham, Ontario (5) 190,000 Iselshausen 132,000
Wallaceburg, Ontario (5) 240,000 Wolfsberg 134,000
Italy Turin (3) 110,000 Argentina General Rodriguez (1) 6,450
Pozilli (1) 129,000 Venezuela Valencia (4) 122,000
Turkey Bursa (1) 32,300
13
14
(1) All properties above are owned, with the exception of those
denoted above. These properties are leased with lease expiration
dates ranging from June 2002 to February 2008.
(2) We have entered into a cross border asset usage facility for this
location.
(3) The Douai, France location has two facilities. The Turin, Italy
location has four facilities.
(4) Owned by Metalurgica Carabobo, S.A., a Venezuelan joint venture
of which we have a 49% interest.
(5) This facility is subject to a mortgage under the Company's Senior
Credit Facility.
ITEM 3. LEGAL PROCEEDINGS
We are subject to various claims, lawsuits and administrative
proceedings related to matters arising in the normal course of business. In
the opinion of management, after reviewing the information that is currently
available with respect to such matters and consulting with legal counsel,
any liability which may ultimately be incurred with respect to these matters
will not materially affect our financial position. See Item 1
"Business-Regulatory Matters".
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's security
holders during the fourth quarter ended March 31, 2001.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
There is no established trading market for any class of common equity
of the Company. As of June 20, 2001, there were 22 shareholders of record of
the Company's common stock.
We have not paid cash dividends during the past two fiscal years and do
not plan to pay cash dividends in the near term. We are restricted in our
ability to pay dividends under certain debt covenants.
The Company did not sell any equity securities during the year ended
March 31, 2001 that were not registered under the Securities Act of 1933, as
amended.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated historical
financial data of the Company for the years ended March 31, 1997, 1998,
1999, 2000 and 2001. The selected consolidated historical financial data for
the years ended March 31, 1997 and 1998 was derived from the audited
consolidated financial statements of the Company not included herein. The
selected consolidated historical financial data for the years ended March
31, 1999, 2000 and 2001 was derived from the audited consolidated financial
statements of the Company, which are included elsewhere in this Report,
together with the report of PricewaterhouseCoopers LLP, independent
accountants. The following table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the Consolidated Financial Statements of the Company and
the related notes and other financial information presented elsewhere in
this Report.
14
15
Historical
----------------------------------------------------------
3/31/97 3/31/98 3/31/99 3/31/00 3/31/01
------- ------- ------- ------- -------
(Dollars in thousands)
Statement of Operations Data:
Net Sales $136,861 $ 410,321 $ 591,645 $809,065 $823,548
Gross Profit 11,773 41,901 55,067 96,126 66,584
Selling, General and Administrative 7,685 21,180 32,129 49,247 56,942
Restructuring Charge 1,610 1,151 55,154
(Gain) loss on Sale of Equipment (1,602) (777) 193 (1,274)
Equipment Impairment and
Nonrecurring charges (a) 287
-------- -------- -------- -------- --------
Operating Income (Loss) 3,801 20,713 22,564 46,686 (44,238)
Interest Expense 3,388 10,710 20,903 31,350 40,844
Other Income (Expense) 2,201 321 4,445 1,486 (1,280)
Income (Loss) Before Income Taxes 2,614 10,324 6,106 16,822 (86,362)
Provision (Benefit) for Income Taxes 1,065 4,733 2,953 9,216 (18,604)
-------- -------- -------- -------- --------
Net Income (Loss) $ 1,549 $ 5,591 $ 3,153 $ 7,606 $(67,758)
======== ======== ======== ======== ========
Net Income (Loss) per share $ 9.37 $ 13.74 $ 5.92 $ 20.29 $(223.01)
Balance Sheet Data (end of period):
Cash and Cash Equivalents $ 9,671 $ 18,321 $ 19,008 $ 17,643 $63,600
Accounts Receivable 47,626 65,273 152,281 139,912 115,764
Inventories 13,411 21,305 48,104 53,187 61,652
Total Assets 243,694 320,032 542,930 598,812 750,731
Total Debt 99,829 139,448 263,862 273,676 396,624
Redeemable Preferred Stock 39,300 40,192 40,319 40,451 40,574
Total Shareholders' Equity 2,341 6,118 928 4,229 (75,954)
OTHER DATA:
Depreciation and Amortization $ 5,041 $ 20,279 $ 25,450 $ 32,038 $ 40,166
Capital Expenditures 3,326 16,273 33,625 37,843 80,796
EBITDA (b) $ 11,043 $ 40,654 $ 51,818 $ 80,210 $ (5,352)
Gross Margin (c) 8.60% 10.21% 9.31% 11.88% 8.09%
--------------
(a) This provision includes income before taxes for the
discontinuance of Laserweld International, L.L.C. and Parallel
Group International, Inc. Management does not anticipate that
these costs will be a part of future operations.
(b) EBITDA is defined as income (loss) before interest, income taxes,
depreciation and amortization. EBITDA should not be construed as
a substitute for income from operations, net income or cash flow
from operating activities for the purpose of analyzing the
Company's operating performance, financial position and cash
flows.
(c) Gross margin is defined as gross profit as a percent of net sales
for each of the applicable periods.
15
16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial
condition and results of operations should be read in conjunction with the
Consolidated Financial Statements of the Company and notes thereto included
elsewhere in this Report. The historical financial information for the
Company has been impacted by several recent acquisitions. The historical
information for the fiscal year ended March 31, 2001 includes the complete
results of operations for the Gessaroli Group, which was acquired on April
3, 2000. The historical information for the fiscal year ended March 31, 2001
includes only a portion of the operating results of Aries Mecanismes, which
was acquired on August 2, 2000. The historical information for the fiscal
year ended March 31, 2000 includes only a portion of the operating results
of Wackenhut Gmbh Karosserie und Fahzeugfabrik, acquired June 28, 1999, and
the automotive engineering, design and prototype service business (the
"Technology Division") of Farley, Inc. acquired February 16, 2000. Each of
these acquisitions was accounted for using the purchase method of
accounting. The historical information for the fiscal year ended March 31,
1999 includes only a portion of the results of operations for Cofimeta S.A.
and its subsidiaries, acquired February 5, 1999.
FISCAL YEAR ENDED MARCH 31, 2001 COMPARED TO FISCAL YEAR ENDED MARCH 31,
2000
Net Sales -- Net sales for the year ended March 31, 2001 were
$823.5 million. This represents an increase of $14.4 million as compared to
net sales for the fiscal year ended March 31, 2000 of $809.1 million.
Excluding $126.3 million of net sales due to acquisitions made since the
prior year, there was an overall decrease in net sales. The primary factor
was the significant reduction in overall North American OEM production
schedules, specifically in the fourth quarter, as a reaction to softening
vehicle sales and a rapid OEM inventory adjustment. Other factors included
negative foreign exchange impact due to the devaluation of the EURO, reduced
volumes relating to the Ford Explorer and the balance out of certain General
Motors light truck and SUV platforms. The decrease was partially offset by
the launch of components for the GMT 250 Pontiac Aztek and the Ford
four-door F150, as well as increased content on the Mercedes C, E and S
Class platforms and increased volume with Peugeot and Renault (Kangoo and
Megane). On a pro forma basis, had the net sales from all acquisitions been
included for the entire fiscal 2001, net sales would have been $884.5
million.
Gross Profit -- Gross profit was $66.6 million or 8.1% of net
sales for the year ended March 31, 2001 as compared to $96.1 million or
11.9% of net sales for the year ended March 31, 2000. Excluding the impact
of acquisitions made since the prior year, and the impact of the $6.9
million rationalization charge recorded in cost of goods sold, there was a
decrease in gross profit, which is primarily the result of lost gross profit
related to lower North American production volumes, the balance out of
certain General Motors' light truck and SUV platforms, increased European
raw material costs, increased costs of outsourcing due to European capacity
constraints and the negative impact of foreign exchange. The decrease was
partially offset by the ramp up of current year production launches,
incremental gross profit from the added vehicle sales content as described
above and the favorable impact of customer tooling. In addition, the Company
continues to reduce fixed costs through successful asset utilization and
redeployment, management of employee benefits and effective program
management of product launches.
Selling, General and Administrative Expenses ("SG&A") -- SG&A
expenses were $56.9 million or 6.9% of net sales as compared to $49.2
million or 6.1% for the year ended March 31, 2000. The increase in spending
can be directly associated with recent acquisitions, including the growth of
our European technical centers. We continue to support ongoing and new
customer program launches, through global tool management, training, and
commitment to product innovation. The increase as a percentage of sales is
the result of increased current spending required for these future global
programs and the impact of the rapid reduction in North American production
volumes.
16
17
Interest Expense - Interest expense was $40.8 million or 5.0% of
net sales as compared to $31.4 million or 3.9% for the year ended March 31,
2000. The increase of $9.4 million can be attributed to acquisitions during
the period, interim financing of customer tooling, and higher incremental
borrowing rates on variable rate debt. The increase was offset by working
capital initiatives implemented during the period.
Income Tax -- Income tax benefit recorded was $18.6 million for
the period ended March 31, 2001 as compared to $9.2 million tax provision
for the year ended March 31, 2000. The decreased income tax of $27.8 million
is a result of the decrease in income as explained previously (including the
benefit related to the rationalization charge) as well as an overall
decrease in the effective rate related to the impact of foreign operations.
We expect the overall effective rate to be reduced in the future based on
strategic foreign tax planning and the management of foreign tax credits.
Net Income - Due to the foregoing, the net loss was $67.8 million
or 8.2% of net sales for the year ended March 31, 2001 as compared to net
income of $7.6 million or 0.9% of net sales for the year ended March 31,
2000.
FISCAL YEAR ENDED MARCH 31, 2000 COMPARED TO FISCAL YEAR ENDED MARCH 31,
1999
Net Sales -- Net sales for the year ended March 31, 2000 were
$809.1 million. This represents an increase of $217.5 million as compared to
net sales for the fiscal year ended March 31, 1999 of $591.6 million. Net
sales for the fiscal year ended March 31, 1999 included net sales of
Cofimeta only from the acquisition date of February 5, 1999 through March
31, 1999. The increase for fiscal year 2000 was due principally from the
incremental sales for Cofimeta and the acquisitions of the Wackenhut and the
Technology Division ($200.5 million). The remaining increase resulted from
continued strength of the sport utility, light truck and van segments, the
launch of the Saturn LS and incremental business on the Dodge Durango
platform, the impact of the General Motors strike ($12.7 million reduction
included in prior year) and increased volumes for the Renault Espace and
Kangoo platforms. The increase in sales was offset by the balance out of
certain General Motors light truck and SUV platforms and the reduction in
European cataphoretic volumes. On a pro forma basis, had the net sales from
all acquisitions been included for the entire fiscal 2000, net sales would
have been $838.5 million.
Gross Profit -- Gross profit was $96.1 million or 11.9% of net
sales for the year ended March 31, 2000 as compared to $55.1 million or 9.3%
of net sales for the year ended March 31, 1999. This represents an increase
of $41.0 million as compared to the prior year. The gross profit increase is
related to the incremental sales resulting from acquisitions, combined with
operating improvements made throughout the year on existing as well as
acquired sales. Gross profit was also increased based on productivity
improvements, fixed costs reduction through plant rationalization
(previously announced Hamilton, Indiana and Athens, Tennessee facility
closures), increased uptime through employment of quick die change
technology and recovery from the impact of the GM strike ($5.2 million).
Gross profit was adversely impacted by investments made for program launches
(Pontiac Aztek in Mexico, Saturn LS, DaimlerChrysler Durango/Dakota) and
premium costs associated with customer demand in excess of tool capacity.
Continued efforts are being made through plant and capacity rationalization
and maximization of asset utilization to improve the overall performance of
operations.
In December 1999, the Company entered into an agreement with Grainger
Integrated Supply, a division of W.W. Grainger, Inc. ("Grainger") for the
management of its North American routine maintenance and manufacturing
supplies. As a part of the agreement, Grainger agreed to purchase from the
Company, selected supply inventories at cost. In accordance with the
Company's policy, these costs were expensed as originally purchased and a
portion of the expense was reversed.
Selling, General and Administrative Expenses ("SG&A") -- SG&A
expenses were $49.2 million or 6.1% of net sales as compared to $32.1
million or 5.4% for the year ended March 31, 1999. The increase in spending
17
18
can be directly associated with the European acquisitions, including the
establishment and staffing of a European technical center. In addition, we
continue to support ongoing and new customer program launches, through
global tool management, training, and commitment to product innovation. We
intend to invest in the necessary resources to support customer engineering
requirements and global program management needs.
Interest Expense - The increase in expense of $10.5 million was
due to the issuance of $40.0 million of 10 1/8% Senior Subordinated Notes
due 2007, Series C (the "Series C Notes") on December 8, 1998. The Series C
Notes represent incremental borrowings issued at an effective interest rate
of approximately 9.685%. The balance of the increase is a result of
incremental borrowings related to the acquisitions of Cofimeta, Wackenhut
and the Technology Division. The increase was offset during the year by
strategic working capital initiatives.
Income Tax -- Income tax expense was $9.2 million for the period
ended March 31, 2000 as compared to $3.0 million for the year ended March
31, 1999. The increased income tax of $6.2 million is a result of the
increase of income as explained previously as well as an overall increase in
effective rate related to the impact of foreign operations. We expect the
overall effective rate to be reduced in the future based on strategic
foreign tax planning and the management of foreign tax credits.
Net Income - Due to the foregoing, net income was $7.6 million or
0.9% of net sales for the year ended March 31, 2000 as compared to $3.2
million or 0.5% of net sales for the year ended March 31, 1999.
CAPACITY RATIONALIZATION PLAN
The production schedules of our North American customers during the three
months ended March 31, 2001 were significantly lower as compared to the
three months ended March 31, 2000. As a result of this lower volume, as well
as the weaker retail automotive market in North America, our North American
sales decreased during the three months ended March 31, 2001. In light of
the current market conditions, lower industry volumes and other strategic
factors, on March 27, 2001, the Company announced a capacity rationalization
plan (the "Rationalization"). The Rationalization includes the planned
closure of several plants, elimination of jobs and includes a one-time
restructuring charge of $71.3 million before taxes. See Note 9 of the Oxford
Automotive, Inc. Notes to Consolidated Financial Statements.
The charge is to be recorded in the following periods (dollars in
thousands):
Year ended March 31, 2001 $ 62,081
Year ended March 31, 2002 9,227
--------
Total Rationalization charge before taxes $ 71,308
========
The charge for the year ended March 31, 2001 consists of and has been
reflected in the income statement as follows (dollars in thousands):
COST OF GOODS SOLD:
Reserve for loss contract $ 4,400
Provision for supply obsolescence 2,527
-------
Total cost of goods sold $ 6,927
=======
RESTRUCTURING PROVISION:
Asset impairment including costs to dispose $42,088
Lease termination charges and other exit costs to be incurred 9,197
Employee severance 5,443
18
19
Employee benefits (including curtailment gain) (5,365)
Write off of intangible assets 1,396
Other charges 2,395
-------
$55,154
Total Rationalization charge $62,081
=======
The expected charge to be recorded during fiscal year ended March 31, 2002
($9.2 million) represents expenses such as production transfer, inventory
movement and other period costs which must be recognized in the period
incurred. This Rationalization action anticipates the closure of four North
American plants over two years and will result in the elimination of up to
500 jobs of the North American salaried and hourly workforce. These actions
will reduce excess capacity and result in the transfer of substantially all
of the products manufactured in the closed facilities to other of our
facilities. We expect that the Rationalization action will result in net
cash charges of approximately $12.9 million during the fiscal year ending
March 31, 2002. The Rationalization charge includes a $42.1 million
write-down of the net book value of excess, obsolete and non-core assets
including costs necessary to dispose of such assets.
The Rationalization accrual has been reflected in the balance sheet as
follows (dollars in thousands):
Property, plant and equipment -- asset impairment $42,088
Restructuring accrual 20,835
Employee benefit liabilities (5,365)
Noncurrent assets 1,396
Accrued expenses and other current liabilities 2,527
Noncurrent liabilities -- environmental reserve 600
-------
Total Rationalization accrual $62,081
=======
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Net income adjusted for non-cash charges generated approximately
$20.3 million of cash for the year ended March 31, 2001. A net change in the
working capital items relating to accounts receivable, inventory, and
accounts payable provided $94.4 million of cash during the period. Cash of
$30.9 million was used to support customer tooling programs. Net cash of
$41.3 million was used to support the remainder of non-working capital
operating activities (accrued expenses, restructuring reserve, other
noncurrent liabilities and prepaid expenses and other noncurrent assets).
During the period, we used approximately $103.5 million for investing
activities, including $25.7 million for the acquisition of the Gessaroli
Group and Aries Mecanismes and $77.8 million for net capital expenditures.
On August 1, 2000, we entered into a credit agreement with a
syndicate of banks (the "Credit Agreement"), as subsequently amended and
restated, under which the Company may borrow up to $175.0 million, of which
a maximum of $30.0 million is available for letters of credit. At March 31,
2001, there was $103.6 million outstanding under the revolving line of
credit, $50.0 million was outstanding under the term loan and $4.0 million
was outstanding under letters of credit, leaving $17.4 million unused and
available. At June 1, 2001, we had approximately $17.4 million available
under the senior credit facility. The obligations under this senior credit
facility are secured by substantially all of our assets and the assets of
certain of our subsidiaries. The senior credit facility contains certain
customary covenants, including reporting and other affirmative covenants,
financial covenants, and negative covenants, as well as customary events of
default, including non-payment of principal, violation of covenants, and
cross-defaults to certain other indebtedness, including the indebtedness
evidenced by the notes described below.
19
20
As of June 8, 2001, the Company amended and restated its Credit
Agreement to revise certain financial covenants and other conditions. These
amendments revise the existing financial covenants which we expect will be
through June 30, 2002, add a minimum EBITDA covenant, and institute
restrictions on investments, acquisitions, capital expenditures, asset
dispositions and other spending, generally until the Company attains
certain financial performance benchmarks which we expect to achieve no later
than the fiscal quarter ending December 31, 2002. In addition, the
amendments require the pledge of certain Mexican assets in support of the
borrowings by the Company's Canadian Subsidiary.
During fiscal 1998, we issued $125 million of Series A 10 1/8th %
Senior Subordinated Notes Due June 2007. During fiscal 1999, we issued $35
million of Series B 10 1/8th % Senior Subordinated Notes Due June 2007 and
$40 million of Series C Senior Subordinated Noted Due June 2007. On June 9,
1999, we completed an exchange offer for our outstanding Notes. Pursuant to
the exchange offer, all of the Series C Notes and $159.6 million aggregate
principal amount of the Series A and Series B Notes were exchanged for our
registered 10 1/8% Senior Subordinated Notes Due 2007, Series D, which are
substantially identical to, and rank pari passu in right of payment with the
Notes.
We believe the proceeds of the Notes have enhanced our ability to
meet our growth and business objectives. However, interest payments on the
Notes represents a significant liquidity requirement for us. We are required
to make scheduled semi-annual interest payments on the Notes of
approximately $10.1 million on June 15 and December 15 each year until their
maturity on June 15, 2007 or until the Notes are redeemed.
Cash outlays for capital expenditures for both restricted and
unrestricted subsidiaries were $80.8 million, or 9.8% of net sales for the
year ending March 31, 2001 as compared to $37.8 million, or 4.7% of net
sales for the year ended March 31, 2000. The increase of $43.0 million was
due primarily to other capital expenditures related to the current year and
upcoming launches of customer platforms (Buick Rendezvous, GM
Envoy/Trailblazer/Bravada, Peugeot T52 program and Saturn Vue), press
equipment and rebuilds, safety and maintenance equipment, automation and
other productivity improvement expenditures, and other items including
computers and welding equipment.
For fiscal 2002, our capital expenditures are expected to be $78.3
million, consisting of a $56.2 million investment to support new business
and increase capacity, $18.4 million for maintenance, rebuilds and
improvements, and $3.7 million in other expenditures, including health,
safety, environmental and maintenance items.
We believe that cash generated from operations, together with
amounts available under the Senior Credit Facility, will be adequate to meet
our debt service requirements, capital expenditures and working capital
needs for the foreseeable future, although no assurance can be given in this
regard. Our future operating performance and ability to service or refinance
the Notes and to extend or refinance our other indebtedness will be subject
to future economic conditions and to financial, business and other factors
that are beyond our control.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, we are exposed to market risk
associated with fluctuations in foreign exchange rates and interest rates.
We conservatively manage these risks through the use of derivative financial
instruments in accordance with management's guidelines.
We enter into all hedging transactions for periods consistent with
the underlying exposures. We do not enter into derivative instruments for
trading purposes.
20
21
Foreign Exchange. We enter into foreign currency forward contracts
to protect ourselves from adverse currency rate fluctuations on foreign
currency commitments. These commitments are generally for terms of less than
one year. The foreign currency contracts are executed with banks that we
believe are creditworthy and are denominated in currencies of major
industrialized countries. The gains and losses relating to the foreign
currency forward and option contracts are deferred and included in the
measurement of the foreign currency transaction subject to the hedge. We
believe that any gain or loss incurred on foreign currency forward contracts
is offset by the direct effects of currency movements on the underlying
transactions.
We have performed a quantitative analysis of our overall currency
rate exposure at March 31, 2001. Based on this analysis, a 10% change in
currency rates would not have a material effect on our earnings.
Interest Rates. We generally manage risk associated with interest
rate movements through the use of or combination of variable and fixed rate
debt. Our exposure as a result of variable interest rates relates primarily
to outstanding floating rate debt instruments that are indexed to U.S. or
European Monetary Union short-term money market rates.
We have performed a quantitative analysis of our overall interest
rate exposure at March 31, 2001. Based on this analysis, a 10% change in the
average cost of our variable rate debt would not have a material effect on
our earnings.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedules filed herewith are set
forth on the Index to Financial Statements and Financial Statement Schedules
on page F-1 of the separate financial section of this Report and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
21
22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and position of each
of the directors and executive officers of Oxford Automotive. Each director
of Oxford Automotive will hold office until the next annual meeting of
shareholders or until his successor has been elected and qualified. Officers
of Oxford Automotive serve at the discretion of the Board of Directors.
NAME AGE POSITIONS
Selwyn Isakow 49 Chairman of the Board of Directors
Rex E. Schlaybaugh, Jr 52 Vice Chairman of the Board of Directors and Secretary
John W. Potter 58 Director, President and Chief Executive Officer
Manfred J. Walt 48 Director
Dennis K. Pawley 59 Director
Herve Guillaume 54 Director
George R. Mrkonic 48 Director
Aurelian Bukatko 50 Executive Vice President-Chief Financial Officer
Larry C. Cornwall 53 Executive Vice President
John H. Ferguson 53 Vice President-Financial Operations and Assistant Secretary
Noel R. Ancian 50 President Oxford Automotive Europe
Selwyn Isakow, Chairman of the Board of Directors. Mr. Isakow has
been a director of Oxford Automotive since its inception in 1995, was the
President of Oxford Automotive from 1995 to May 1997, and was appointed
Chairman of the Board in May 1997. Since 1985, Mr. Isakow has been the
President of The Oxford Investment Group, Inc. ("Oxford Investment"), a
private investment and corporate development company that acquires majority
equity positions on behalf of its principals in industrial products
manufacturing, financial services, niche distribution and other selected
companies. Mr. Isakow generally serves as Chairman of the Board and a
director of all such portfolio companies. Mr. Isakow is also a director of
Champion Enterprises, Inc. and Ramco-Gershenson Properties Trust, and serves
on the boards of numerous community organizations. From 1982 to 1985, Mr.
Isakow was the Executive Vice President of Comerica Incorporated, a regional
bank holding company, and from 1978 to 1982, was a principal at Booz, Allen
and Hamilton, management consultants.
Rex E. Schlaybaugh, Jr., Vice Chairman of the Board of Directors
and Secretary. Mr. Schlaybaugh has been the Secretary and a director of
Oxford Automotive since its inception in 1995 and was appointed Vice
Chairman of the Board in May 1997. Mr. Schlaybaugh was appointed the Vice
Chairman of Oxford Investment in May 1997. Mr. Schlaybaugh has been a member
of the firm of Dykema Gossett PLLC since 1985. Mr. Schlaybaugh is also a
director of certain other portfolio companies of Oxford Investment. Mr.
Schlaybaugh is also a member of the Board of Directors of the Manufacturers
Life Insurance Company (U.S.A.), the Michigan State Chamber of Commerce and
is a Trustee of Oakland University.
John W. Potter, Director, President and Chief Executive Officer.
Mr. Potter was appointed director, President and Chief Executive Officer of
Oxford Automotive in June 2001. Prior to joining Oxford Automotive, Mr.
Potter spent 13 years with TI Group plc, a $4 billion global engineering
company with world-leading business groups in automotive, aerospace and
industrial markets. Mr. Potter joined TI Group in 1988 as managing director
of Bundy Europe. He was appointed president of Bundy Western Hemisphere in
1989 and chief executive of Bundy Group in 1990. He became a main board
director of TI Group in 1992. He was chief executive of John Crane Group
from 1994 to 1998. Upon his retirement from TI Group in 1999, Mr. Potter was
a main board director and group director of manufacturing and quality.
22
23
Manfred J. Walt, Director. Mr. Walt has been a director of Oxford
Automotive since May 1997. Mr. Walt has been the Executive Vice President
and Chief Financial Officer of Central Park Lodges Ltd., a Canadian assisted
living company located in Toronto, Canada, since May 1998 and Executive Vice
President of Retirement Residences Real Estate Investment Trust, a Canadian
publicly held assisted living REIT since April 2001. From October 1997 to
May 1998, Mr. Walt was the Sr. Vice President of Gentra, Inc., a Real Estate
Company based in Toronto, Canada. From 1989 to September 1997, Mr. Walt was
the Managing Partner-Financial Services of Edper Brascan Corporation
("Edper"), a diversified natural resources, energy and property development
company. Gentra, Inc. is an affiliate of Edper. From 1980 to 1989, Mr. Walt
served in various capacities with Edper. Mr. Walt is also director of
Central Park Lodges Ltd., a privately held corporation engaged in the
operation of assisted living facilities.
Dennis K. Pawley, Director. Mr. Pawley has been a director of
Oxford Automotive since January 1999. Mr Pawley co-founded the Lean Learning
Center, assisting suppliers in the development of lean operating systems in
April 2001. Mr. Pawley is also the Chairman and CEO of Pawley Enterprises,
L.L.C., a provider of business consulting services. Mr. Pawley was Chairman
and CEO of Guide Corporation from January 2000 to December 2000. Mr. Pawley
had been the President and Chief Operating Officer of Performance Learning,
a consulting company located in Las Vegas, Nevada, from February 1999 to
April 2001. From 1991 to 1998, Mr. Pawley served as the Executive Vice
President of Manufacturing for DaimlerChrysler in Auburn Hills, Michigan.
Herve Guillaume, Director. Mr. Guillaume was appointed to the
board of Oxford Automotive in November 2000. Mr. Guillaume has been the
Chairman of Group Bonnet, a European consumer goods conglomerate since March
1997. From 1996 until 1998, he was Chairman of Groupe Valfond, a large
automotive casting, forging and stamping company, from whom Oxford
Automotive acquired the assets of Cofimeta, now Oxford Automotive-France.
Previously he was President of Groupe Seribo and a member of the Board of
the well-known Pinault Printemps Group where he held various leadership
positions including President of several subsidiaries. He started his career
at Citibank and spent ten years at Renault, ultimately rising to Director of
Finance as well as Director of Commercial and Industrial Affairs of Renault
Vehicules Industriels, the truck division of Renault.
George R. Mrkonic, Director. Mr. Mrkonic was appointed to the
board of Oxford Automotive in November 2000. Mr. Mrkonic is Vice Chairman of
Borders Group, Inc., a global book and music retailer. From November 1994 to
January 1997, Mr. Mrkonic was also the President of Borders Group, Inc. He
was formerly President of Kmart Specialty Retail Group including Sports
Authority, Builders Square, Pace, Payless Drugs and Office Max. His retail
experience also included being President of Eyelab, Inc., a fast growing
chain of optical super stores, and Herman's Sporting Goods, Inc., the
largest U.S. sporting goods retailer. Mr. Mrkoninc is also on the Board of
Directors of Champion Enterprises, Inc., Syntel, Inc., Cheap Tickets, Inc.,
Nashua Corporation, and Borders Group, Inc.
Aurelian Bukatko, Executive Vice President-Chief Financial
Officer. Mr. Bukatko was appointed Executive Vice President-Chief Financial
Officer of Oxford Automotive in June 2000. From February 1999 to June 2000,
Mr. Bukatko was Senior Vice President-Chief Financial Officer of Oxford
Automotive. From December 1997 to February 1999, Mr. Bukatko was Corporate
Treasurer of Hayes-Lemmerz International, a worldwide manufacturer of
wheels, brake drums and rotors for motor vehicles. From August 1996 to
November 1997, Mr. Bukatko served as Director of Global Currency Management
for the Lear Corporation, a worldwide supplier of automotive interiors. From
September 1991 to July 1996, Mr. Bukatko was the Treasurer and Financial
Director, International for Lear Seating in Gustavsburg, Germany. Before
joining Lear in 1991, Mr. Bukatko spent sixteen years at Inland Steel
Industries, Inc. where he held various financial positions.
Larry C. Cornwall, Executive Vice President. Mr. Cornwall was
appointed Executive Vice President of Oxford Automotive in May 2000. From
June 1999 to May 2000, Mr. Cornwall was the Senior Vice President-Global
Business Development and from October 1995 to June 1999, Mr. Cornwall was
the Vice President-Sales and
23
24
Engineering at Veltri International, an automotive stamper. Engineering of
Oxford Automotive and its predecessors. From 1991 to 1995, Mr. Cornwall was
Vice President of Sales and
John H. Ferguson, Vice President-Financial Operations and
Assistant Secretary. Mr. Ferguson was appointed as a Vice
President-Financial Operations and Assistant Secretary of Oxford Automotive
in May 1997. Prior to that time, Mr. Ferguson was with Bundy, where he acted
as Group Plant Manager from 1994 to 1996 and as Corporate Controller from
1992 to 1994. From 1984 to 1992, Mr. Ferguson held several positions with
GenCorp. Inc., an automotive tire supplier, including Controller of the
Automotive Products Group.
Noel R. Ancian, President Oxford Automotive Europe. Mr. Ancian
was appointed President of Oxford Automotive Europe ApS in July 2000. Prior
to joining Oxford Automotive Europe, Mr. Ancian spent four years at Groupe
Lapeyre as Managing Director. Groupe Lapeyre is a specialist in the
manufacture and distribution of durable home equipment in Western Europe.
Certain of the officers and directors of Oxford Automotive are
also directors or officers of Oxford Automotive subsidiaries.
BOARD COMMITTEES
The Board of Directors have established an Executive Committee, an
Audit Committee, and a Compensation Committee. The Executive Committee is
responsible for exercising all of the duties of the Board of Directors that
may lawfully be delegated to it by the Board of Directors under Michigan
Law. The Executive Committee consists of Messrs. Isakow, Schlaybaugh and
Potter. The Audit Committee is responsible for reviewing with management our
financial controls and accounting and reporting activities. The Audit
Committee reviews the qualifications of our independent auditors, makes
recommendations to the Board of Directors regarding the selection of
independent auditors, reviews the scope, fees and results of any audit and
reviews non-audit services and related fees. The Audit Committee consists of
Messrs. Schlaybaugh, Walt and Mrkonic. The Compensation Committee is
responsible for the administration of all salary and incentive compensation
plans for our officers and key employees, including bonuses. Salaries and
bonuses will be reviewed by the Compensation Committee and will be adjusted
in light of our performance, the responsibilities of each of our officers in
meeting corporate performance objectives and other factors, such as length
of service and subjective assessments. The Compensation Committee consists
of Messrs. Isakow, Pawley and Guillaume.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information as to the compensation
earned by our Chief Executive Officer and our four other most highly paid
officers (the "Named Executive Officers") for the last three fiscal years.
Summary Compensation Table
Annual Compensation
------------------------------------------------
Name and Principal All Other Compensation (1)
Position Year Salary ($) Bonus ($) ($)
Steven M. Abelman, 2001 347,244 - 2,202
President and CEO (2) 2000 320,833 121,680 2,594
1999 291,669 74,500 2,267
Larry C. Cornwall, Executive 2001 269,712 - 1,572
Vice President 2000 250,625 60,060 1,975
1999 199,583 37,500 2,069
Aurelian Bukatko, Executive 2001 238,526 - 3,022
Vice President and CFO (3) 2000 200,000 46,800 1,500
1999 - - -
24
25
Selwyn Isakow, 2001 171,634 - -
Chairman 2000 158,333 84,240 -
1999 108,333 37,500 -
Rex E. Schlaybaugh, Jr., 2001 171,634 - -
Vice Chairman 2000 158,333 84,240 -
1999 150,000 37,500 -
(1) "All Other Compensation" is comprised of contributions made by
the Company to the accounts of each of the Named Executive
Officers under the Company's 401K Plan.
(2) Mr. Abelman resigned his positions with Oxford Automotive
effective June 2001. See "Employment Agreements"
(3) Mr. Bukatko was appointed Executive Vice President-Chief
Financial Officer of Oxford Automotive in June 2000 and has been
an executive officer since February 1999. Mr. Bukatko has agreed
not to compete with the company for a period following
termination of his employment and the Company has agreed to
provide Mr. Bukatko severance payments equal to his base salary
for three months following termination of his employment without
cause.
EMPLOYMENT AGREEMENTS
As of May 1, 1997, as amended July 1, 1999, Oxford Automotive and
Steven M. Abelman entered into an Employment and Noncompetition Agreement.
The agreement provides that Mr. Abelman will serve as President and Chief
Executive Officer of Oxford Automotive on an "at-will" basis. The agreement
provides that Mr. Abelman will receive an annual base salary, will be
eligible to receive a bonus of up to 60% of his salary as determined by the
Board of Directors of Oxford Automotive, and will be entitled to certain
fringe benefits. Mr. Abelman has also agreed not to compete with the Company
during the period of his employment and for two years following the
termination of his employment. Mr. Abelman is entitled to severance payments
equal to 1.5 times his annual base salary as a result of the termination of
his employment effective June 2001.
As of June 2001, Oxford Automotive and John W. Potter entered into
an Employment and Noncompetition Agreement. The agreement provides that Mr.
Potter will serve as an executive officer of Oxford Automotive on an
"at-will" basis. The agreement provides that Mr. Potter will receive an
annual base salary, will be eligible to receive a bonus of up to 50% of his
salary as determined by the Board of Directors of Oxford Automotive, and
will be entitled to certain fringe benefits. Mr. Potter has also agreed not
to compete with the Company during the period of his employment and for two
years following the termination of his employment. Upon termination of his
employment without cause, Mr. Potter is entitled to receive severance
payments of up to one-half his annual base salary.
On November 24, 1995, BMG, the predecessor to Oxford Automotive
and Larry C. Cornwall entered into an Employment Agreement. The agreement
provides that Mr. Cornwall will serve as an executive officer of the Company
on an "at-will" basis. Mr. Cornwall has subsequently been appointed to his
present position of Oxford Automotive. The agreement provides that Mr.
Cornwall will receive an annual base salary, will be eligible to receive a
bonus of up to 35% of his salary as determined by the Board of Directors,
will be eligible to participate in the Company's profit sharing plan, and
will be entitled to certain fringe benefits. Upon the termination of the
agreement, Mr. Cornwall will be entitled to continue to receive his base
salary for the longer of three months or the Canadian statutory requirement.
See also Item 13 "Certain Relationships and Related Transactions."
25
26
DIRECTOR COMPENSATION AND ARRANGEMENTS
We pay fees to our non-employee directors of up to $2,000 per
meeting and reimburse the out-of-pocket expenses related to directors'
attendance at each Board and committee meeting. In addition, we may elect to
adopt a non-employee director option plan or other similar plan to provide
for grants of stock options or other benefits as a means of attracting and
retaining highly qualified independent directors for the Company. Members of
the Board of Directors are elected pursuant to certain shareholder
agreements by and among the Company and certain of its shareholders. See
Item 12 "Security Ownership of Certain Beneficial Owners and Management."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On August 4, 1997, a Compensation Committee, whose current members
are Messrs. Isakow, Pawley and Guillaume, was appointed by the Board of
Directors. Mr. Isakow is our Chairman and was our President from our
inception in 1995 to May 1997. Pursuant to the terms of the Indentures for
our outstanding 10 1/8% Senior Subordinated Notes due 2007, we are not
permitted to enter into any transaction (including employee compensation
arrangements) with any Affiliate (as defined in the Indentures) unless the
transaction is arm's length and, if the transaction involves amounts in
excess of $1 million in any one year, the terms of the transaction are set
forth in writing and approved by a majority of the disinterested members of
the Board of Directors. For similar transactions in excess of $5 million in
any one year, an opinion of a recognized investment banking firm that such
transaction is fair, from a financial standpoint, is also required.
Mr. Isakow controls Oxford Investment, a private investment and
corporate development company and Mr. Schlaybaugh is the Vice Chairman of
Oxford Investment. We have entered into an Amended and Restated Management
and Consulting System Agreement with Oxford Investment. Pursuant to the
terms of this management agreement, Oxford Investment performs various
consulting, management and financial advisory services on our behalf. We pay
Oxford Investment a monthly management fee of $166,667 and will pay an
investment banking fee, for acquisitions of $2.5 million or more, of 1.0% or
1.25% (for acquisitions outside of North America) of the aggregate
acquisition cost for advice and assistance in connection with such
acquisition, with a minimum fee of $200,000. No investment banking fee will
be paid to Oxford Investment in connection with acquisitions for aggregate
consideration of less than $2.5 million. The initial term of the agreement
will end on December 31, 2005, but will automatically extend for additional
one-year periods thereafter unless either party terminates the agreement. In
addition, pursuant to the management agreement, Oxford Investment licenses
to us the name "Oxford Automotive" which is owned by Oxford Investment.
During the fiscal year ended March 31, 2001, we paid Oxford
Investment management fees and expenses of approximately $1.8 million, and
investment banking fees of $1.0 million.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of June 20, 2001, there were 298,711 issued and outstanding
shares of the Common Stock, without par value, of the Company (the "Common
Stock"). The following table sets forth information as of June 20, 2001 with
respect to the Common Stock beneficially owned by each of our directors, the
Named Executive Officers, all of our directors and executive officers as a
group, and by other holders known to us as having beneficial ownership of
more than 5% of the Common Stock. Selwyn Isakow and our other shareholders
have entered into certain agreements, each of which contain substantially
identical terms, the result of which gives Mr. Isakow voting control over
100% of the Common Stock, except under certain circumstances. See "--
Shareholder Agreements." Unless otherwise specified, the address for each
person is 1250 Stephenson Highway, Troy, Michigan 48083.
26
27
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
------------------------------------ ---------- -----------
Selwyn Isakow (1) (3)............................... 167,371 56.03%
40900 Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
----------------------------------------------------------------------------------------
Rex E. Schlaybaugh, Jr................................ 20,900 7.00%
40900 Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
----------------------------------------------------------------------------------------
Steven M. Abelman (2)................................. N/A N/A
----------------------------------------------------------------------------------------
John W. Potter........................................ 1,500 0.50%
----------------------------------------------------------------------------------------
Manfred J. Walt....................................... 2,000 0.67%
175 Bloor St., E., S. Tower, Suite 601
Toronto, Ontario, Canada M4W 3R8
----------------------------------------------------------------------------------------
Dennis K. Pawley 300 0.10%
30201 Orchard Lake Road
Suite 315
Farmington Hills, Michigan 48334
----------------------------------------------------------------------------------------
George R. Mrkonic N/A N/A
100 Phoenix
Ann Arbor, Michigan 48104
----------------------------------------------------------------------------------------
Herve Guillaume N/A N/A
53, rue de Boulainvilliers 75016 Paris,
France
----------------------------------------------------------------------------------------
Aurelian Bukatko (3).................................. 3,000 1.00%
----------------------------------------------------------------------------------------
Larry C. Cornwall..................................... 4,000 1.34%
----------------------------------------------------------------------------------------
Robert H. Orley....................................... 20,600 6.90%
40900 Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
----------------------------------------------------------------------------------------
Gregg L. Orley........................................ 20,600 6.90%
40900 Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
----------------------------------------------------------------------------------------
All directors and executive officers as a group
(11 persons) (1)(2) 204,571 68.48%
(1) Includes 140,124 shares owned by Hilsel Investment
Company Limited Partnership, of which Tridec
Management, Inc. is General Partner. Mr. Isakow is the
President and a shareholder of Tridec Management, Inc.
In addition, Mr. Isakow may be deemed to be the
beneficial owner of all of the outstanding shares of
Common Stock as a result of certain voting power over
such shares pursuant to the shareholder agreements
described below and certain purchase options that may
be exercised by Mr. Isakow with respect to 45,040
outstanding shares of Common Stock.
(2) Pursuant to the terms of Mr. Abelman's Employment and
Noncompetition Agreement with Oxford Automotive, Oxford
Automotive repurchased 11,039 of Mr. Abelman's shares
of Common Stock upon the termination of his employment
and assigned its right to purchase 1,287 of Mr.
Abelman's shares to Mr. Isakow.
(3) Mr. Bukatko's shares are subject to a Pledge Agreement
in favor of Mr. Isakow. Under the Pledge Agreement, Mr.
Bukatko has sole voting power over his shares but is
not permitted to dispose of his shares without Mr.
Isakow's consent.
SHAREHOLDER AGREEMENTS
Each holder of Common Stock is a party to a shareholder agreement
that provides for certain restrictions on transfer by shareholders and
grants certain other shareholders the option to purchase the shares of a
shareholder upon his death. Each surviving shareholder has the right to
exercise this option within 30 days of the death of a
27
28
shareholder. The exercising shareholders will divide the deceased
shareholder's shares as they agree or, if they are not able to agree, pro
rata. If the exercising shareholders are not able to agree on a purchase
price with the estate of the deceased shareholder, then the per share
purchase price shall be the per share value of the Company based on the
greater of the value of the Company as a going concern or on a liquidation
basis, as determined by an independent appraisal. The purchase price shall
be paid by an initial cash payment of up to 20% of the purchase price with
the balance paid pursuant to a five-year, unsecured promissory note bearing
interest at the prime rate. The agreements also provide that each
shareholder will grant a proxy to Mr. Isakow to vote all of the
shareholder's shares at any meeting of the Company; provided, however, that
if holders of shares having a majority in interest of the shares of Common
Stock determine that it is in the best interest of all of the shareholders
to sell all or substantially all of the assets of the Company or to cause
the Company to merge or consolidate with or into another corporation, Mr.
Isakow shall exercise the proxies provided to him consistent with that
decision. As a result, except as described above, Mr. Isakow has voting
control over 100% of the Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 1, 1999, we entered into a Consulting Services
Agreement (the "Consulting Agreement") with Performance Learning, Inc., a
Nevada corporation ("Performance Learning"). Dennis K. Pawley, a director of
Oxford Automotive is the President and Chief Operating Officer and a
shareholder of Performance Learning. Under the Consulting Agreement,
Performance Learning has provided consulting services to us for the period
from February 1999 - April 2001. As compensation for such consulting
services, we paid Performance Learning $273,000 during fiscal 2001. We paid
Performance Learning $5,000 per day for each day a principal of Performance
Learning performed consulting services for the Company, $1,000 per day for
each day a non-principal of Performance Learning performed consulting
services for the Company, certain other nominal quarterly charges and the
reimbursement of reasonable expenses it incurred in connection with
performing the consulting services.
See also Item 11 "Executive Compensation - Compensation Committee
Interlocks and Insider Participation."
LEGAL
Rex E. Schlaybaugh, Jr. is a shareholder, the Vice Chairman of the
Board and a director of the Company. Dykema Gossett PLLC, of which Mr.
Schlaybaugh is a member, has performed legal services for the Company since
its inception. The Company expects to continue to retain this firm for
various legal services.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The financial statements, supplementary financial information, and
financial statement schedules filed herewith are set forth on the Index to
Financial Statements and Financial Statement Schedules on page F-1 of the
separate financial section of this Report, which is incorporated herein by
reference.
28
29
A list of Exhibits included as part of this report is set forth in the
Exhibit Index that immediately precedes such exhibits and is incorporated
herein by reference.
(b) The following reports on Form 8-K were filed by the Company during the
quarter ended March 31, 2001:
(i) Report on Form 8-K, dated March 27, 2001, was filed by the Company
on March 30, 2001; such report contained information under Item 5 with
respect to a restructuring charge.
29
30
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001, 2000 AND 1999
31
OXFORD AUTOMOTIVE, INC.
INDEX TO FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
Description Page
Report of Independent Accountants.......................................... F-2
Consolidated Balance Sheets as of March 31, 2001 and 2000.................. F-3
Consolidated Statements of Operations for the years ended March 31, 2001,
2000 and 1999.............................................................. F-4
Consolidated Statements of Comprehensive Income and Changes in Shareholders'
Equity for the years ended March 31, 2001, 2000 and 1999................. F-5
Consolidated Statements of Cash Flows for the years ended March 31, 2001,
2000 and 1999............................................................ F-6
Notes to Consolidated Financial Statements................................. F-7
F-1
32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Oxford Automotive, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of comprehensive income (loss) and
changes in shareholders' equity (deficit) and of cash flows present fairly, in
all material respects, the financial position of Oxford Automotive, Inc. and its
subsidiaries (the Company) at March 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 2001 in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Detroit, Michigan
June 8, 2001
F-2
33
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
March 31,
2001 2000
ASSETS
Current assets
Cash and cash equivalents $63,600 $17,643
Trade receivables, net 115,764 139,912
Inventories, net 61,652 53,187
Refundable income taxes 12,100 2,027
Reimbursable tooling 58,307 25,038
Deferred income taxes 11,203 2,374
Prepaid expenses and other current assets 41,021 37,050
----------------- ------------------
Total Current Assets 363,647 277,231
Assets held for sale 32,428 1,178
Other noncurrent assets 60,038 34,876
Deferred income taxes 41,674 34,278
Property, plant and equipment, net 252,944 251,249
----------------- ------------------
TOTAL ASSETS $750,731 $598,812
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Trade accounts payable $207,522 $144,701
Employee compensation 30,012 21,602
Accrued expenses and other current liabilities 53,776 37,927
Restructuring reserve 29,165 4,089
Current portion of borrowings 15,052 11,055
----------------- ------------------
Total current liabilities 335,527 219,374
Pension liability 11,958 9,601
Postretirement medical benefits liability 40,646 46,953
Deferred income taxes 9,645 7,294
Other noncurrent liabilities 6,763 8,289
Long-term borrowings - less current portion 381,572 262,621
----------------- ------------------
Total liabilities 786,111 554,132
----------------- ------------------
Commitments and contingent liabilities (Note 13)
Redeemable Series A $3.00 cumulative preferred stock, $100
stated value - 457,541 shares authorized, 397,539 shares issued
and outstanding in 2001 and 2000 (Note 11) 40,574 40,451
----------------- ------------------
Shareholders' equity (deficit)
Common stock, no par value, 400,000 shares authorized; 309,750
shares issued and outstanding at March 31, 2001 and 2000 1,050 1,050
Accumulated other comprehensive loss (20,795) (9,690)
Retained earnings (deficit) (56,209) 12,869
----------------- ------------------
Total shareholders' equity (deficit) (75,954) 4,229
----------------- ------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $750,731 $598,812
================= ==================
The accompanying notes are an integral part of the financial statements.
F-3
34
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
------------------------------------------------------
2001 2000 1999
Net sales $823,548 $809,065 $591,645
Cost of sales 756,964 712,939 536,578
--------------- --------------- ---------------
GROSS PROFIT 66,584 96,126 55,067
Selling, general and administrative 56,942 49,247 32,129
Restructuring charge 55,154 1,151
(Gain) loss on sale of equipment (1,274) 193 (777)
--------------- --------------- ---------------
OPERATING INCOME (LOSS) (44,238) 46,686 22,564
Other income (expense):
Interest expense (40,844) (31,350) (20,903)
Other (1,280) 1,486 4,445
--------------- --------------- ---------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (86,362) 16,822 6,106
Income tax (provision) benefit 18,604 (9,216) (2,953)
--------------- --------------- ---------------
NET INCOME (LOSS) (67,758) 7,606 3,153
Accrued dividends and accretion on
redeemable preferred stock 1,320 1,320 1,320
--------------- --------------- ---------------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK ($69,078) $6,286 $1,833
=============== =============== ===============
NET INCOME (LOSS) PER SHARE (BASIC AND DILUTED) ($223.01) $20.29 $5.92
=============== =============== ===============
The accompanying notes are an integral part of the financial statements.
F-4
35
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) AND CHANGES IN
SHAREHOLDERS' EQUITY (DEFICIT)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
ACCUMULATED
OTHER RETAINED
COMMON COMPREHENSIVE EARNINGS
STOCK LOSS (DEFICIT) TOTAL
BALANCES AT MARCH 31, 1998 $1,050 $318 $4,750 $6,118
Comprehensive income (loss):
Net income 3,153 3,153
Foreign currency translation adjustments (6,054) (6,054)
Reclassification adjustment for net
gains realized in net income (969) (969)
-------------
Comprehensive loss (3,870)
Accrued dividends and accretion of
redeemable preferred stock (1,320) (1,320)
------------- -------------------- -------------- -------------
BALANCES AT MARCH 31, 1999 1,050 (6,705) 6,583 928
Comprehensive income (loss):
Net income 7,606 7,606
Foreign currency translation adjustments (2,985) (2,985)
-------------
Comprehensive income 4,621
Accrued dividends and accretion of
redeemable preferred stock (1,320) (1,320)
------------- -------------------- -------------- -------------
BALANCES AT MARCH 31, 2000 1,050 (9,690) 12,869 4,229
Comprehensive income (loss):
Net loss (67,758) (67,758)
Foreign currency translation adjustments (9,435) (9,435)
Equity adjustment for minimum pension
liability (1,670) (1,670)
-------------
Comprehensive loss (78,863)
Accrued dividends and accretion of
redeemable preferred stock (1,320) (1,320)
------------- -------------------- -------------- -------------
BALANCES AT MARCH 31, 2001 $1,050 ($20,795) ($56,209) ($75,954)
============= ==================== ============== =============
The accompanying notes are an integral part of the financial statements.
F-5
36
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
------------------------------------------------------------
2001 2000 1999
OPERATING ACTIVITIES
Net income (loss) ($67,758) $7,606 $3,153
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 40,166 32,038 25,450
Deferred income taxes (7,252) (1,853) (7,963)
Restructuring charge 55,154
(Gain) loss on sale of equipment (1,274) 181 (777)
Gain on sale of marketable securities (3,459)
Changes in operating assets and liabilities affecting cash:
Trade receivables 75,062 18,290 (38,692)
Inventories 3,257 747 (2,718)
Reimbursable tooling (30,896) (6,580) (4,502)
Prepaid expenses and other current assets (6,264) (21,510) 4,250
Other noncurrent assets (11,877) (5,614) (4,139)
Trade accounts payable 16,061 34,267 28,971
Accrued expenses and other current liabilities (7,434) (1,961) 6,533
Restructuring reserve 2,612 (4,332) (7,051)
Income taxes payable (refundable) (10,280) (2,027) 1,601
Other noncurrent liabilities (6,736) 4,936 5,087
---------------- ---------------- ----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 42,541 54,188 5,744
---------------- ---------------- ----------------
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (25,748) (9,117) (75,080)
Purchase of property, plant and equipment (80,796) (37,843) (33,625)
Proceeds from sale of equipment 3,017 3,986 1,550
Purchase of marketable securities (892)
Proceeds from sale of marketable securities 12,009
---------------- ---------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (103,527) (42,974) (96,038)
---------------- ---------------- ----------------
FINANCING ACTIVITIES
Proceeds from borrowing arrangements 108,544
Principal advances (payments) on borrowing arrangements 114,160 (10,042) (10,161)
Payment of preferred stock dividends (1,192) (1,192) (1,194)
Debt financing costs (2,632) (378) (5,195)
---------------- ---------------- ----------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 110,336 (11,612) 91,994
---------------- ---------------- ----------------
Effect of exchange rate changes on cash (3,393) (967) (1,013)
---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 45,957 (1,365) 687
Cash and cash equivalents at beginning of period 17,643 19,008 18,321
---------------- ---------------- ----------------
Cash and cash equivalents at end of period $63,600 $17,643 $19,008
================ ================ ================
Cash paid for interest $38,012 $28,926 $19,583
================ ================ ================
Cash paid for income taxes $5,441 $12,140 $2,900
================ ================ ================
The accompanying notes are an integral part of the financial statements.
F-6
37
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
Oxford Automotive, Inc. (the Company) is a full-service supplier of metal
stampings and welded assemblies used as original equipment components
primarily by North American and European original equipment automotive
manufacturers. The Company's products are used in a wide variety of sport
utility vehicles, light and medium trucks, vans and passenger cars. The
Company primarily operates from plants located in the United States,
Canada, Mexico, France, Germany and Italy. The Company's hourly workforce
is represented by various unions.
Net sales to the Company's five primary customers as a percentage of
total sales are as follows:
YEAR ENDED MARCH 31,
----------------------------
2001 2000 1999
Ford Motor Company 23% 25% 35%
General Motors Corporation 18% 32% 47%
DaimlerChrysler AG 15% 16% 13%
Renault 14% 8% N/A
PSA Peugeot Citroen 14% 6% N/A
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts
of Oxford Automotive, Inc. and its wholly-owned subsidiaries, BMG
Holdings, Inc. (BMGH); Howell Industries, Inc. (Howell); Lobdell Emery
Corporation (Lobdell); RPI Holdings, Inc. (RPIH); Oxford Automotive
France, SAS (OAF); Oxford Automotriz de Mexico S.A. de C.V. (Oxford
Mexico); Oxford Suspension, Inc.; Oxford Suspension Ltd. (Suspension
Ltd.); Wackenhut GmbH (Wackenhut); CE Technologies and Tool and
Engineering (collectively Technology Division); Group Gessaroli
(Gessaroli); Oxford Automotive Mecanismes et Decoupage Fin S.A. (OAMDF).
Intercompany accounts and transactions have been eliminated.
USE OF ESTIMATES
The preparation of 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.
F-7
38
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
At March 31, 2001 and 2000, the carrying amount of financial instruments
such as cash and cash equivalents, trade receivables and payables
approximated their fair values. The carrying amount of the borrowings at
March 31, 2001 and 2000 approximated their fair values based on the
variable interest rates available to the Company for similar
arrangements, excluding the Senior Subordinated Notes, which had a fair
value of $120,000 at March 31, 2001. The Company had no outstanding
forward foreign currency exchange contracts at March 31, 2001.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of
three months or less when purchased to be cash equivalents.
REVENUE RECOGNITION
Revenue is recognized by the Company upon shipment (FOB shipping point)
of product to the customer.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
principally determined by the first-in first-out (FIFO) method. During
the current fiscal year, the Company elected to discontinue using the
last-in first-out (LIFO) method of costing for its United States
operations. This amounted to an increase in current year net income of
$388.
MANUFACTURING SUPPLIES
Maintenance, repair and other (MRO) material used in the manufacturing
process are expensed as incurred. On December 15, 1999, the Company
signed an integrated supply and services arrangement with Grainger
Supply, Inc. and sold substantially all of its MRO supplies from the
North American Operations to Grainger. The Company is reporting the
remaining revenue ($5,222 and $6,000 in 2001 and 2000, respectively) over
the life of the contract as the supplies are consumed or purchased and
the repurchase obligation is reduced.
REIMBURSABLE TOOLING
Reimbursable tooling represents net costs incurred on tooling projects
for which the Company expects to be reimbursed by customers. Ongoing
estimates of total costs to be incurred on each tooling project are made
by management. Losses, if any, are recorded when known and in cases where
billings exceed costs incurred, the related tooling gain is recognized.
For major tooling (in excess of $5,000) projects, the Company recognizes
profit at the point of completion and testing at the vendor, less costs
of installation in the stamping plant. The Company has a legal claim for
the full value of the tooling contract from its customers at that point
in time. For other tooling projects, the Company recognizes profit at the
time of final customer billing. During the year ended March 31, 2001, the
Company billed its major customers for $95,396 in tooling. Tooling
activity is included in cost of goods sold.
F-8
39
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost and include
expenditures for improvements which materially increase the useful lives
of existing assets. Expenditures for normal repair and maintenance are
charged to operations as incurred. For federal income tax purposes,
depreciation is computed using accelerated and straight-line methods. For
financial reporting purposes, depreciation is computed principally using
the straight-line method over the following estimated useful lives:
YEARS
Land improvements 15
Buildings and improvements 30-40
Machinery and equipment 3-20
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for long-lived assets in accordance with 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". This Statement requires that long-lived assets and certain
identifiable intangibles to be held and used by the Company be reviewed
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be fully recoverable. The Company
recognizes impairment losses for assets or groups of assets where the sum
of the estimated future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the related asset or group
of assets. The amount of the impairment loss recognized is the excess of
the carrying amount over the fair value of the asset or group of assets
being measured.
EQUITY INVESTMENT
As discussed in Note 3, the Company holds a 49% interest in Metalurgica
Carabobo, S.A. (Metalcar), a Venezuelan joint venture. The Company
accounts for this investment under the equity method. At March 31, 2001,
this investment, classified in other noncurrent assets, is carried at
$5,982 compared with underlying equity in net assets of $4,028. The
difference between these amounts is amortized over 40 years. Income
recognized amounted to $515 and $298, net of taxes, for fiscal years
ended March 31, 2001 and 2000, respectively. Cash dividends received from
Metalcar in 2001 were $980. There were no dividends paid during 2000.
GOODWILL
Net goodwill of $23,370 and $6,647 at March 31, 2001 and 2000,
respectively, represents the excess of cost over the fair value of net
assets of acquired entities and is amortized on a straight-line basis
over its expected benefit not to exceed 40 years.
ENVIRONMENTAL COMPLIANCE AND REMEDIATION
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations which do not contribute to current or
future revenue generation are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable and the
costs can be reasonably estimated. Estimated costs are based upon enacted
laws and regulations, existing technology and the most probable method of
remediation. The costs determined are not discounted and exclude the
effects of inflation and other social and economic factors.
F-9
40
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Deferred taxes are provided to give recognition to the effect of expected
future tax consequences of temporary differences between the carrying
amounts for financial reporting purposes and the tax basis for income tax
purposes of assets and liabilities. Provision has not been made for U.S.
or additional foreign income taxes on undistributed earnings of foreign
subsidiaries that are permanently reinvested. If such earnings were to be
remitted, management believes that U.S. income taxes would not be
significant.
FOREIGN EXCHANGE CONTRACTS
Gains and losses of foreign currency firm commitment hedges are deferred
and included in the basis of the transactions underlying the commitments.
FOREIGN CURRENCY TRANSLATION
The foreign currency financial statements of BMGH, Suspension Ltd.,
Oxford Mexico, Oxford Europe, OAF, Wackenhut, Gessaroli and OAMDF, where
the local currency is the functional currency, are translated using
exchange rates in effect at period end for assets and liabilities and at
weighted average exchange rates during the period for operating statement
accounts. The resulting foreign currency translation adjustments are
recorded as a separate component of shareholders' equity. Exchange gains
and losses resulting from foreign currency transactions are included in
operating results during the period in which they occur.
CHANGE IN ACCOUNTING PRINCIPLES
In June 1999, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 137, "Accounting for Derivatives
Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133 - an amendment of FASB No. 133". Statement No. 137
defers the effective date of Statement No. 133 by one year to fiscal
years beginning after June 15, 2000. Accordingly, the Company plans to
adopt Statement No. 133 beginning with the fiscal year ending March 31,
2002. Implementation of this Statement is not expected to have a material
impact on the Company's results of operations.
RECLASSIFICATIONS
Certain amounts from the prior year have been reclassified to conform
with the current year presentation.
3. ACQUISITIONS
On April 1, 1998, the Company purchased the assets of the Suspension
Division of Eaton Corporation ("Suspension") for cash and acquisition
expenses of approximately $54,350, including the investment in the
Metalcar joint venture. The acquisition was financed through the proceeds
of the Notes described in Note 7, including the issuance of $35,000 of
Series B 10.125% Senior Subordinated Notes Due 2007. The acquisition has
been recorded in accordance with the purchase method of accounting.
Accordingly, the purchase price plus direct cost of the acquisition have
been allocated to the assets acquired and liabilities assumed based on
their estimated fair values at the date of acquisition and Suspension's
operating results have been included with those of the Company since the
date of acquisition.
F-10
41
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
On February 5, 1999, Oxford France acquired 100% of the shares of
Cofimeta S.A. and approximately 99% of the shares of its four
subsidiaries; Somenor S.A.; Aubry S.A.; Ecrim S.A.; and Socori
Technologies S.A (collectively "Cofimeta"). Cofimeta was acquired for
$37,045 in cash, including acquisition costs, and deferred payments of
$26,172. The acquisition was financed through proceeds from the Credit
Agreement, as described in Note 7. The acquisition has been recorded in
accordance with the purchase method of accounting. Accordingly, the
purchase price plus direct cost of the acquisition have been allocated to
the assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition. During the March 31, 2000 fiscal year,
purchase accounting was finalized, resulting in the recording of
additional deferred tax assets of $4,441, an increase of $3,217 of
accrued expenses and other current liabilities as well as the reduction
in the reserves established in purchase accounting of $3,865. The net
result of the adjustments was recorded as a reduction in property, plant
and equipment and is being amortized over the remaining useful life of
the assets and Cofimeta's operating results have been included with those
of the Company since the date of acquisition.
On June 28, 1999, the Company purchased, through Oxford Automotive Europe
APS, a wholly owned subsidiary ("Oxford Europe"), all the outstanding
stock of Gebr. Wackenhut GmbH Karosserie-und Fahrzeugfabrik
("Wackenhut"). The Company agreed to pay DM 1 for the shares, provide DM
5 million ($2,642 US) in subordinated debt and additional paid in
capital, restructure approximately DM 63.4 million ($33,500 US) in bank
debt, and purchase approximately DM 18.6 million ($9,800 US) in bank and
shareholder debt for DM 1. The acquisition, subordinated debt, and
additional paid in capital were financed from the Company's available
cash and credit facility. The acquisition has been recorded in accordance
with the purchase method of accounting. Accordingly, the purchase price
plus direct costs of the acquisition have been allocated to the assets
acquired and liabilities assumed based on their estimated fair values at
the date of acquisition and Wackenhut's operating results have been
included with those of the Company since the date of acquisition.
On February 16, 2000, the Company acquired the automotive engineering,
design and prototype service business of Farley Inc. (the "Technology
Division"). The purchase price for the Technology Division was $6,339
including closing costs, subject to a Closing Date working capital
adjustment, if applicable. On the Closing Date, $5,070 of the total
purchase price was paid to Farley and $1,000 was placed in escrow,
pending any applicable purchase price adjustment or indemnification
claim. On July 24, 2000, the purchase price adjustment was settled for
$500. The outstanding escrow balance of $500 remains for potential
indemnification claims. The acquisition of the Technology Division was
financed from the Company's available working capital. The acquisition
has been recorded in accordance with the purchase method of accounting.
Accordingly, the purchase price plus direct costs of the acquisition have
been allocated to the assets acquired and liabilities assumed based on
their estimated fair values at the date of acquisition and the Technology
Division's operating results have been included with those of the Company
since the date of acquisition.
On April 3, 2000 (the "Gessaroli Closing Date"), pursuant to a Purchase
and Sale Agreement, dated as of February 5, 2000, among a wholly-owned
indirect subsidiary of the Company (the "Purchaser") and Agostino
Gessaroli, Irene Salezzi, Denis Gessaroli, Luana Gessaroli, Officine
Meccaniche Gessaroli S.p.A., and Gess.cardi Gessaroli Agostino & C. S.a.s
(collectively, "Sellers"), the Purchaser acquired the Group Gessaroli
business of Sellers (the "Gessaroli Group").
F-11
42
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
The purchase price was ITL 24.0 billion ($11,800 US) plus up to ITL 5.3
billion ($2,700 US) for the payment of income taxes and debt, subject to
a Gessaroli Closing Date net asset adjustment, if applicable. On the
Gessaroli Closing Date, ITL 21.6 billion ($10,700 US) of the total
purchase price was paid to Sellers and ITL 2.4 billion ($1,200 US) was
held back, pending any applicable purchase price adjustment or
indemnification claim. On October 19, 2000, the purchase price adjustment
was finalized and resulted in the elimination of the ITL 2.4 billion hold
back. The Gessaroli Group's integrated manufacturing operations cover all
functions of design, engineering, die and mold construction, parts
production and assembly for its metal-formed components, modules and
injection-molded products. The acquisition has been recorded in
accordance with the purchase method of accounting. Accordingly, the
purchase price plus direct cost of the acquisition ($11,767 US) have been
allocated to the assets acquired and liabilities assumed based on their
estimated fair values at the date of acquisition and Gessaroli's
operating results have been included with those of the Company since the
date of acquisition.
The estimated fair market value of assets acquired and liabilities
assumed is summarized as follows:
Current assets $ 18,528
Noncurrent assets 4,831
Property, plant and equipment 8,454
Current liabilities (17,731)
Noncurrent liabilities (2,315)
---------------
$ 11,767
==============
On August 2, 2000 (the "AIMDF Closing Date"), pursuant to a share
purchase and sales agreement, dated August 2, 2000, among Oxford
Automotive Mecanismes et Decoupage Fin II SAS, a wholly-owned indirect
subsidiary of the Company and Aries Industries, S.A. (the "Seller"), the
Company acquired all of the issued and outstanding shares of Aries
Industries Mecanismes et Decoupage Fin S.A. ("AIMDF") from the Seller.
The purchase price was FF 430 million ($60,200 US), subject to possible
downward adjustments for minimum net assets as of the AIMDF Closing Date
and minimum EBITDA for the twelve months after the AIMDF Closing Date. On
the AIMDF Closing Date, FF 350 million ($49,000 US) less approximately FF
60 million ($8,400 US) in financial indebtedness assumed, or
approximately FF 290 million ($40,600 US), was paid to the Seller. The
remaining purchase price of FF 80 million ($11,200 US), subject to any
applicable purchase price adjustment or indemnification claim, is payable
in two equal installments on the second and third anniversaries of the
AIMDF Closing Date, subject to the possible early payment of up to FF 10
million ($1,400 US) of the deferred payments if certain conditions
relating to the minimum EBITDA adjustment are met. Effective February 13,
2001, the final purchase price negotiations resulted in the elimination
of the deferred purchase price of FF 80 million ($11,200 US). For the
year ended December 31, 1999, AIMDF had net sales of approximately
$160,000 US. AIMDF's integrated manufacturing operations cover all
functions of design, engineering, parts production and assembly of door,
hood and decklid hinges, latches, sliding door mechanisms, parking
brakes, jacks, fine blanking, hot rolled profiles and other metal formed
components. The acquisition has been recorded in accordance with the
purchase method of accounting. Accordingly, the purchase price paid plus
direct cost of the acquisition ($11,921 US) have been preliminarily
allocated to the assets acquired and liabilities assumed based on their
estimated fair values at
F-12
43
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
the date of acquisition and AIMDF's operating results have been included
with those of the Company since the date of acquisition.
The estimated fair market value of assets acquired and liabilities
assumed is summarized as follows:
Current assets $ 58,416
Noncurrent assets 13,525
Property, plant and equipment 31,224
Deferred tax asset 9,287
Current liabilities (89,346)
Noncurrent liabilities (11,185)
--------------
$ 11,921
==============
The following unaudited pro forma combined results of operations of the
Company have been prepared as if the acquisitions of Wackenhut, the
Technology Division, Gessaroli and AIMDF had occurred at the beginning of
fiscal 2001 and 2000. The pro forma information is not intended to be a
projection of future results.
YEAR ENDED MARCH 31,
--------------------
2001 2000
(UNAUDITED)
Net sales $ 884,496 $1,041,739
Net income (loss) $ (66,450) $ 10,130
Net income (loss) applicable to common shares $ (67,770) $ 8,810
Net income (loss) per common share $ (218.79) $ 28.44
The foregoing unaudited pro forma results of operations reflect
adjustments for additional interest expense related to the financing of
the acquisitions, depreciation expense and amortization of goodwill as a
result of the revaluation of property, plant and equipment, net of the
related tax benefit.
4. ACCOUNTS RECEIVABLE
Accounts receivable are comprised of the following at March 31:
2001 2000
Trade receivables $ 123,257 $ 144,734
Less - allowance (7,493) (4,822)
----------- ----------
Trade receivables, net $ 115,764 $ 139,912
=========== ==========
Although the Company is directly affected by the economic well being of
the automotive industry, management does not believe significant credit
risk exists at March 31, 2001. The Company does not require collateral to
reduce such risk and historically has not experienced significant losses
related to receivables from individual customers or groups of customers
in the automotive industry.
F-13
44
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
4. ACCOUNTS RECEIVABLE (CONTINUED)
OAF, OAMDF and Gessaroli sell accounts receivable to various financial
institutions for which they surrender control. The balance of accounts
receivable transferred that remained uncollected was approximately
$90,399 and $39,589 at March 31, 2001 and 2000, respectively. In
addition, included in prepaid assets and accounts receivable are amounts
factored but not yet financed for approximately $8,815 and $4,222 at
March 31, 2001 and 2000, respectively.
5. INVENTORIES
Inventories are comprised of the following at March 31:
2001 2000
Raw materials $ 27,492 $ 24,870
Finished goods and work-in-process 41,307 32,607
------------- --------------
68,799 57,477
Reserves (7,147) (4,290)
-------------- ---------------
$ 61,652 $ 53,187
============= ==============
The Company does not separately identify finished goods from
work-in-process.
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following at March 31:
2001 2000
Land and land improvements $ 9,772 $ 11,466
Buildings and improvements 54,325 51,988
Machinery and equipment 192,393 241,629
Construction-in-process 54,260 18,536
------------- --------------
310,750 323,619
Less - accumulated depreciation (57,806) (72,370)
------------- --------------
$ 252,944 $ 251,249
============= ==============
As discussed in Note 9, certain of the Company's facilities were closed
or were announced they would be closed. As management intends to sell
these facilities, the net book value of the land, buildings and
equipment, net of estimated cost to dispose, approximating $32,428, has
been reclassified to other noncurrent assets as of March 31, 2001 in the
accompanying consolidated balance sheet.
Depreciation expense amounted to $37,495, $30,442 and $18,596 for the
years ended March 31, 2001, 2000 and 1999, respectively.
F-14
45
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
7. BORROWING ARRANGEMENTS
Borrowings consist of the following at March 31:
2001 2000
10.125% SENIOR SUBORDINATED NOTES DUE
2007, OXFORD $ 202,357 $ 202,734
BANK SYNDICATE - OXFORD
Interest at variable rate over LIBOR or Prime, matures June 30, 2005.
TERM LOAN - 7.91% at March 31, 2001 50,000 28,500
REVOLVING CREDIT LINE - UNITED STATES - Interest
at various rates (7.73 - 9.25% at March 31, 2001). 73,575
REVOLVING CREDIT LINE - CANADA - Interest at
prime rate (7.46 - 8.00% at March 31, 2001). 30,068 69
SHARE PURCHASE OBLIGATION, OXFORD FRANCE
Principal amount of $4,812 less unamortized discount
of $278. Interest payable at 3%; discounted
at 10%. Annual payments beginning February 2000,
matures February 2002. 4,534 8,312
DEBT OBLIGATION, OXFORD FRANCE
Principal amount of $1,871 less unamortized discount
of $123. Interest payable at 2%; discounted
at 10%. Annual payments beginning February 2000,
matures February 2002. 1,748 3,531
CONTINUATION PLAN DEBT, OXFORD FRANCE
Principal amount of $8,510 less unamortized discount
of $2,548. Non-interest bearing; discounted at 10%.
Annual payments beginning June 1999,
matures June 2008. 5,962 6,195
DEBT OBLIGATION, WACKENHUT
Term loan. Principal amount of $17,930 less unamortized discount of
$5,722. Interest rate 5.25%; discounted at 10%.
Semi-annual payments beginning March 2004,
matures June 30, 2009. 12,208 13,303
DEBT OBLIGATION, WACKENHUT
Revolving credit. Interest rate at competitive rates. 9,645 8,107
DEBT OBLIGATION, WACKENHUT
Term loan. Land and building; interest rate 5.69%.
Semi-annual payments beginning January 31, 2001,
matures July 31, 2009. 1,271 1,539
DEBT OBLIGATION, WACKENHUT
Term loan. Land and building; interest rate 6.27%. Annual
principal payments beginning January 31, 2002, matures
September 30, 2010. 2,241
Other 3,015 1,386
------------- --------------
Total 396,624 273,676
Less - current portion of long-term borrowings (15,052) (11,055)
------------- --------------
Long-term borrowings - less current portion $ 381,572 $ 262,621
============= ==============
F-15
46
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
7. BORROWING ARRANGEMENTS (CONTINUED)
On June 24, 1997, the Company issued $125,000 of Series A 10.125% Senior
Subordinated Notes Due 2007. On April 1, 1998, the Company issued $35,000
of Series B 10.125% Senior Subordinated Notes Due 2007. On December 8,
1998, the Company issued $40,000 of Series C 10.125% Senior Subordinated
Notes Due 2007. The Series A, Series B and the Series C Notes are
collectively referred to as "the Notes". The Notes mature on June 15,
2007 and require semi-annual interest payments of approximately $10,125.
The proceeds from the Notes were primarily used to repay certain of the
Company's indebtedness and finance various Company acquisitions. The
Notes are unsecured and issued by Oxford and guaranteed by certain of its
wholly owned subsidiaries. The Company is restricted regarding the
payment of common share dividends.
Concurrent with the issuance of the Notes, the Company entered into a
credit agreement with a syndicate of banks (the "Credit Agreement"), as
subsequently amended, under which the Company may borrow up to $175,000,
of which a maximum of $30,000 is available for letters of credit. At
March 31, 2001, there was $103,600 outstanding under the revolving line
of credit, $50,000 was outstanding under the term loan and $4,000 was
outstanding under letters of credit, leaving $17,400 unused and
available. The terms of the Credit Agreement contain, among other
provisions, requirements for maintaining total debt to cash flows,
interest coverage, limitations on capital expenditures and certain
restrictions on the payment of dividends. Facility fees on the aggregate
amount of the Credit Agreement ranging from 0.375% to 0.50% are payable
quarterly. Borrowings are secured by substantially all of the assets of
the US Subsidiaries and pledges of the stock of the other restricted
subsidiaries. Canadian borrowings are secured by substantially all of the
assets of the Canadian Subsidiaries. The facility matures June 2005.
As part of the Wackenhut acquisition, the Company assumed a revolving
line of credit with a limit of 35 Million DM. Interest is calculated
based on a competitive variable rate.
As of June 8, 2001, the Company amended and restated its Credit Agreement
revising certain financial covenants and other conditions. These
amendments revise the existing financial covenants, which the Company
expects will be through June 30, 2002, add a minimum EBITDA covenant,
and institute restrictions on investments, acquisitions, capital
expenditures and other spending, generally until the attainment of
certain financial performance benchmarks which the Company expect to
achieve no later than the fiscal quarter ending December 31, 2002. In
addition, the amendment requires the pledge of certain Mexican assets in
support of the Canadian borrowings.
Aggregate maturities of long-term borrowings at March 31, 2001 are as
follows:
2002 15,052
2003 12,067
2004 15,964
2005 20,182
2006 8,496
Thereafter 324,863
-----------
$ 396,624
===========
F-16
47
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
8. INCOME TAXES
The Company's income tax provision (benefit) consists of the following:
YEAR ENDED MARCH 31
-----------------------------------------
2001 2000 1999
Current
Federal $ (7,209) $ 3,624 $ 6,037
State 46 1,662 1,719
Foreign (1,884) 6,401 3,160
----------- ----------- -----------
(9,047) 11,687 10,916
----------- ----------- -----------
Deferred
Federal (20,472) (2,538) (3,067)
State (521) 8 (317)
Foreign 11,436 59 (4,579)
----------- ----------- -----------
(9,557) (2,471) (7,963)
----------- ----------- -----------
$ (18,604) $ 9,216 $ 2,953
=========== =========== ===========
The difference between the statutory rate and the Company's effective
rate was as follows:
YEAR ENDED MARCH 31
-----------------------------------------
2001 2000 1999
Statutory rate 35.0% 35.0% 35.0%
Foreign rates varying from 35% (5.0) 5.8 0.1
Valuation allowance (4.4)
FSC benefit (1.5) (5.6)
State taxes, net of federal benefit 0.4 6.4 15.1
Effect of foreign earnings taxed in US (3.0) 7.2
Nondeductible items (0.7) 1.4 5.8
Other (0.8) 0.5 (2.0)
----- ------ -----
Effective income tax rate 21.5% 54.8% 48.4%
===== ====== =====
F-17
48
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
8. INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax assets and
(liabilities) are as follows at March 31:
2001 2000
Deferred tax liabilities
Tax depreciation in excess of book $ (13,736) $ (26,762)
Debt related (4,030) (4,302)
Pension (643)
Other (3,593) (360)
------------- --------------
Gross deferred tax liabilities (22,002) (31,424)
------------- --------------
Deferred tax assets
Postretirement medical benefits 15,706 16,746
Workers' compensation 1,171 1,610
Medical benefits accrual 806 550
Allowance for bad debts 1,640 1,606
AMT credit carryforward 1,743 970
Pension benefits 5,287
Net operating loss carryforwards 24,281 25,377
Restructuring reserve 18,219 1,592
Foreign tax credit 6,581 4,002
Inventory 1,181 2,291
Other 2,080 2,546
------------- --------------
Gross deferred tax assets 73,408 62,577
------------- --------------
Valuation allowance (8,174) (1,795)
------------- --------------
Net deferred tax assets $ 43,232 $ 29,358
============= ==============
A valuation allowance is provided on the tax benefits otherwise
associated with certain tax attributes unless it is considered more
likely than not that the benefit will be realized. Based on forecasted
earnings, the Company has established a valuation allowance relative to a
portion of its foreign tax credit carryforward ($4,374) and a portion of
its Canadian net operating loss carryforward ($3,800).
The Company has net operating loss carryforwards for federal income tax
purposes of $3,983 at March 31, 2001, $1,941 of which expire during 2011,
with the remaining $2,042 expiring during 2021. The Company also has
Foreign Tax Credit carryforwards for federal income tax purposes of
$6,581 at March 31, 2001. These credits expire in 2004-2005. In addition,
the Company has Alternative Minimum Tax Credit carryforwards of $1,743,
which have no expiration date.
The Company has net operating loss carryforwards for Canadian income tax
purposes of $38,929 at March 31, 2001. The Canadian net operating losses
expire from 2003 to 2008.
The Company also has net operating losses for French tax purposes of
$18,678 at March 31, 2001, $2,556 of which will expire from 2002-2006 and
the remaining $16,122 can be carried forward indefinitely.
F-18
49
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
8. INCOME TAXES (CONTINUED)
In addition to losses identified above, the Company has a net operating
loss for German tax purposes with potential future tax deductions of
approximately $11,682 at March 31, 2001. These losses can be carried
forward indefinitely.
9. RESTRUCTURING RESERVES
A summary of the restructuring activity is presented below.
BALANCE AT MARCH 31, 1998 $ 6,363
1999 provision 1,151
Restructuring accrual associated with the acquisition
of Suspension and Cofimeta 10,291
Reduction in workforce and other cash outflows (8,257)
Reversal of excess accruals to noncurrent assets (801)
--------------
BALANCE AT MARCH 31, 1999 8,747
Restructuring accrual associated with the acquisition
of Wackenhut and the Technology Division
3,750
Reduction in workforce and other cash outflows (4,543)
Reversal of excess accruals to noncurrent assets and currency fluctuations (3,865)
--------------
BALANCE AT MARCH 31, 2000 4,089
Rationalization charge - see below 20,835
Restructuring accrual associated with the acquisition
of Gessaroli and AIMDF 9,023
Reduction in workforce and other cash outflows (4,782)
--------------
BALANCE AT MARCH 31, 2001 $ 29,165
==============
The accrual recorded in connection with the acquisition of Suspension of
$1,710 represents costs associated with management's plan to close the
operating facility in Hamilton; 119 employees were permanently severed as
a result of this closure. This restructuring action was completed by
September 1999. The Hamilton facility was sold in March 2001.
In connection with the acquisition of Cofimeta, management established
certain restructuring reserves aggregating $8,581. Management's
restructuring plan includes a facility closure and the termination of
certain production processes. At March 31, 2001, the balance of
restructuring reserves related to Cofimeta was $475. These restructuring
actions should be completed during fiscal year 2002.
In connection with the acquisition of Wackenhut, management established
certain restructuring reserves aggregating $2,950. Management's
restructuring plan includes a facility closure and the termination of
certain production processes. Included in the restructuring reserve at
March 31, 2001 were costs for severance and benefits for employees to be
terminated and other restructuring costs of $719. These restructuring
actions should be completed during fiscal year 2002.
In connection with the acquisition of the Technology Division, management
established certain restructuring reserves aggregating $800 for severance
and benefits for employees to be terminated.
F-19
50
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
9. RESTRUCTURING RESERVES (CONTINUED)
At March 31, 2001, the balance of restructuring reserves related to the
Technology Division was $54. These restructuring actions should be
completed during fiscal year 2002.
In connection with the acquisition of Gessaroli, described in Note 3,
management established certain restructuring reserves aggregating $863
for severance and employee benefits as well as the discontinuance of
certain production processes. At March 31, 2001, the balance of
restructuring reserves related to Gessaroli was $607. These restructuring
actions should be completed during fiscal year 2002.
In connection with the acquisition of AIMDF, described in Note 3,
management established certain restructuring reserves aggregating $8,160
for severance and employee benefits, facility closures, discontinuance of
certain production processes, loss contracts as well as other
restructuring costs. At March 31, 2001, the balance of restructuring
reserves related to AIMDF was $7,578. These restructuring actions should
be completed during fiscal year 2002.
On March 27, 2001, the Company announced a capacity rationalization plan
("the Rationalization"). The Rationalization includes the closure of
several plants, elimination of jobs and includes a one-time restructuring
charge of $71,308 before taxes.
The charge is to be recorded in the following periods:
Year ended March 31, 2001 $62,081
Year ended March 31, 2002 9,227
-------
Total Rationalization charge before taxes $71,308
=======
The charge for the year ended March 31, 2001 consists of and has been
reflected in the income statement as follows:
COST OF GOODS SOLD:
Reserve for loss contract $4,400
Provision for supply obsolescence 2,527
-------
Total cost of goods sold $6,927
=======
RESTRUCTURING PROVISION:
Asset impairment including costs to dispose $42,088
Lease termination charges and other exit costs to be incurred 9,197
Employee severance 5,443
Employee benefits (including curtailment gain) (5,365)
Write off of intangible assets 1,396
Other charges 2,395
-------
$55,154
=======
Total Rationalization charge $62,081
=======
F-20
51
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
9. RESTRUCTURING RESERVES (CONTINUED)
The expected charge to be recorded during fiscal year ended March 31,
2002 ($9,227) represents expenses such as production transfer, inventory
movement and other period costs which must be recognized in the period
incurred.
This Rationalization action anticipates the closure of four North
American plants and will result in the elimination of up to 500 jobs of
the North American salaried and hourly workforce. These actions will
reduce excess capacity and result in the transfer of substantially all of
the products manufactured in the closed facilities to other Company
facilities.
The Company expects that the Rationalization action will result in net
cash charges of approximately $12,933 during the fiscal year ending March
31, 2002. The Rationalization charge includes a $42,088 write-down of the
net book value of excess, obsolete and non-core assets including costs
necessary to dispose of such assets.
The Rationalization accrual has been reflected in the balance sheet as
follows:
Property, plant and equipment - asset impairment $42,088
Restructuring accrual 20,835
Employee benefit liabilities (5,365)
Noncurrent assets 1,396
Accrued expenses and other current liabilities 2,527
Noncurrent liabilities - environmental reserve 600
-------
Total Rationalization accrual $62,081
=======
The provision for restructuring recorded during the years ended March 31,
2001 and 1999 represents costs associated with management's plans to
close various Company facilities. Costs recorded in 1999 primarily relate
to severance costs.
The reversal of excess accruals recorded during the years ended March 31,
2000 and 1999 are due to management's finalization of its restructuring
plans established in purchase accounting. No future requirement for these
accruals exists. These reversals were recorded as a reduction of
noncurrent assets.
10. BENEFIT PLANS
The Company sponsors 18 noncontributory plans covering substantially all
employees meeting the age and length of service requirements as specified
in the plans. The plan covering salaried employees provides pension
benefits that are based on a percentage of the employee's average monthly
compensation during the five highest consecutive years out of their last
ten years, and their years of credited service up to a maximum of 30
years. The hourly plans do not provide for increases in future
compensation levels. The Company's funding policy for the plan covering
salaried employees is to make contributions in amounts sufficient to
annually fund the plan's current service cost and the initial past
service cost, plus interest, over a period of 30 years. Plans covering
hourly employees generally provide benefits of stated amounts based on
their unique labor agreements for each year of service. The Company's
funding policy for these plans is to make at least the minimum annual
contributions required by applicable regulations.
F-21
52
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
10. BENEFIT PLANS (CONTINUED)
The Company sponsors seven defined contribution 401(k) plans. The Company
generally contributes 25% of the first 6% of the base compensation that a
participant contributes to the plans.
In addition to the Company's pension plans, the Company sponsors unfunded
defined benefit medical plans that provide postretirement medical
benefits to certain full-time employees meeting the age, length of
service and contractual requirements as specified in the plans.
F-22
53
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
10. BENEFIT PLANS (CONTINUED)
The following table sets forth the plans' funded status and amounts
recognized on the Company's balance sheets at March 31:
OTHER
POSTRETIREMENT
PENSION PLANS BENEFIT PLANS
------------------------- -------------------------
2001 2000 2001 2000
CHANGES IN PLAN ASSETS
Beginning balance $ 121,426 $ 106,183 $ $
Actual return on plan assets (10,456) 16,358
Employer contributions 8,752 3,258 1,543 1,513
Benefits paid from plan assets (4,765) (5,266) (1,543) (1,513)
Effect of exchange rate changes (5,107)
Other (1,370) 893
----------- ----------- ----------- ----------
Ending balance 108,480 121,426
----------- ----------- ----------- ----------
CHANGE IN BENEFIT OBLIGATIONS
Beginning balance 111,670 109,518 50,238 48,006
Obligations assumed 2,330 163
Service cost 3,723 3,927 761 1,654
Interest cost 7,566 7,168 2,391 3,532
Plan amendments 2,184 899
Actuarial loss (gain) 113 (5,234) (11,797) (1,172)
Total benefits paid (4,887) (5,286) (1,543) (1,513)
Effect of discount rate changes (2,038) (355)
Effect of exchange rate changes (4,619)
Curtailment gain (3,348) (6,752)
Other (1,652) (579) (432)
----------- ----------- ----------- ----------
Ending balance 110,364 111,670 32,364 50,238
----------- ----------- ----------- ----------
FUNDED STATUS (1,884) 9,756 (32,364) (50,238)
Unrecognized net actuarial loss (gain) 8,052 (11,732) (10,409) 794
Unrecognized prior service cost 2,868 2,346 2,127 2,491
----------- ----------- ----------- ----------
NET AMOUNT RECOGNIZED IN THE
CONSOLIDATED BALANCE SHEET $ 9,036 $ 370 $ (40,646) $ (46,953)
=========== =========== =========== ==========
AMOUNTS RECOGNIZED IN THE CONSOLIDATED
BALANCE SHEET CONSIST OF:
Prepaid benefit cost $ 17,363 $ 9,971 $ $
Accrued benefit liability (11,958) (9,601) (40,646) (46,953)
Intangible asset 848
Deferred tax asset 1,113
Accumulated other comprehensive income 1,670
----------- ----------- ----------- ----------
Net amount recognized $ 9,036 $ 370 $ (40,646) $ (46,953)
=========== =========== =========== ==========
F-23
54
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
10. BENEFIT PLANS (CONTINUED)
PENSION PLANS IN WHICH BENEFIT OBLIGATION
EXCEEDS PLAN ASSETS AT MARCH 31,
2001 2000
Fair value of plan assets $ 31,710 $ 11,562
Benefit obligation 41,121 14,521
COMPONENTS OF NET PERIODIC BENEFIT COST
2001 2000 1999
Pension benefits
Service cost $ 3,723 $ 3,927 $ 3,943
Interest cost 7,566 7,168 7,118
Expected return on plan assets (10,442) (9,232) (9,044)
Amortization of prior service cost 58 8 40
Recognized actuarial net loss (488) 18
Curtailment - restructuring charge 1,648
Net settlement and curtailment (plan freeze) (3,003)
------------ ----------- ----------
Net periodic benefit cost (income) $ (938) $ 1,871 $ 2,075
============ =========== ==========
Net periodic benefit cost of defined
contribution plans $ 692 $ 656 $ 452
=========== =========== ==========
Other postretirement benefits
Service cost $ 761 $ 1,654 $ 1,510
Interest cost 2,390 3,532 3,522
Amortization of prior service cost 171
Recognized actuarial net (gain) loss (890) 182 35
Net curtailment gain (6,752)
------------ ----------- ----------
Net periodic benefit cost (income) $ (4,320) $ 5,368 $ 5,067
============ =========== ==========
2001 2000 1999
Pension benefits
Discount rate
U.S. plans 7.50% 7.75% 7.25%
Canadian plans 7.25% 7.00% 6.50%
German plans 6.00% 6.00%
Expected return on assets
U.S. plans 8.50-9.00% 9.00% 8.50-9.00%
Canadian plans 8.50% 8.50% 8.50%
German plans
Salary progression
U.S. plans 4.50% 4.50% 4.50%
Canadian plans 5.50% 5.50% 5.50%
German plans 3.50% 3.50%
Other retirement benefits
Discount rate 7.50% 7.75% 7.25%
F-24
55
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
10. BENEFIT PLANS (CONTINUED)
The weighted average annual assumed healthcare cost trend rate is 10.5%
in 2001 trending to 5.5% in 2011 and thereafter for retirees less than 65
years of age. The healthcare cost trend rate assumption has a significant
effect on the amounts reported. For example, increasing the assumed
healthcare cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of March
31, 2001 by approximately $2,952 and net periodic postretirement benefit
cost for the year ended March 31, 2001 by approximately $307. Conversely,
decreasing the assumed healthcare cost trend rates by one percentage
point in each year would decrease the accumulated postretirement benefit
obligation as of March 31, 2001 by approximately $2,411 and net periodic
postretirement benefit cost for the year ended March 31, 2001 by
approximately $246.
In addition to the above plans, the Company has a non-funded pension
arrangement in France covering all employees. At March 31, 2001, accrued
pension costs of $5,747 were included in accrued expenses.
11. REDEEMABLE PREFERRED STOCK
In connection with the acquisition of Lobdell, Series A $3.00 Cumulative
Preferred Stock (Series A Preferred) with a fair value of $39,754 was
issued. The annual dividend on the Series A Preferred is $3.00 per share,
payable semi-annually. Dividends on the Series A Preferred are
cumulative, but do not bear interest. Under the terms of the issuance of
the Series A Preferred (the Stock Agreement), the holders of the Series A
Preferred maintain limited voting rights. Holders are entitled to vote on
any provisions that would adversely affect their rights or privileges or
management's plans to issue any equity securities that would rank prior
to the Series A Preferred. Holders are also entitled to elect at least
one director of Lobdell, which, under certain provisions of the Stock
Agreement, may increase to two.
Lobdell is required to redeem all shares of Series A Preferred on
December 31, 2006 at a price of $100 per share, plus all declared or
accumulated but unpaid dividends. If Oxford does not commence an initial
public offering of common stock (IPO) prior to June 30, 2006, then the
redemption price of the Series A Preferred is $103 per share. If an IPO
does not occur by December 31, 2001, each holder of Series A Preferred
has the option to redeem annually a maximum of 20 percent of the shares
held at a price of $100 per share on each December 31, beginning in 2002.
Beginning February 1, 1999, Series A Preferred holders are allowed to
transfer, sell or assign the shares. Lobdell has the right of first
refusal to purchase any of the shares transferred, sold or assigned by a
holder of Series A Preferred.
Holders of Series A Preferred are entitled to convert their shares to
Oxford common stock issued in connection with an IPO. Individual holders
may convert a maximum of 50% of their shares, but the total of all Series
A Preferred shares converted may not exceed 25% of the shares issued in
the IPO.
The Series A Preferred has been included in the accompanying consolidated
balance sheet at its fair value at the date of issuance of $39,754, and
has been adjusted for accrued dividends and accretion totaling $820 and
$697 for the years ended March 31, 2001 and 2000, respectively.
F-25
56
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
12. RELATED PARTY TRANSACTIONS
The Company is charged fees and expenses by a related party, The Oxford
Investment Group, Inc., for consulting, finance and management services.
Fees and expenses charged to the Company by The Oxford Investment Group,
Inc. approximated $1,796, $1,065, and $1,076 for the years ended March
31, 2001, 2000 and 1999, respectively. In connection with the
acquisitions of the Technology Division, Wackenhut, Suspension Division,
Cofimeta, Gessaroli and AIMDF, investment banking fees of $1,007, $899,
and $1,747 were paid to The Oxford Investment Group, Inc., during the
periods ended March 31, 2001, 2000 and 1999, respectively.
13. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
As of March 31, 2001, the Company had long-term operating leases covering
certain machinery and equipment. The minimum rental commitments under
noncancellable operating leases with lease terms in excess of one year
are as follows as of March 31, 2001:
2002 $ 13,682
2003 12,049
2004 10,843
2005 9,675
2006 3,387
--------------
$ 49,636
==============
MEXICAN ASSET USAGE AGREEMENT
On March 31, 1999, Oxford Mexico entered into an asset usage agreement
for the acquisition of new equipment for and construction of a new
facility built in Ramos Arizpe, Mexico through a special purpose entity
(SPE). This agreement is classified as an operating lease. Payments for
the facility under this agreement, which vary based upon interest rates
at LIBOR plus 3.75% - 4.50%, will be approximately $6,600 per year
beginning on April 1, 2001. The asset usage agreement is for five years,
with renewal options covering an additional four years. Oxford has
guaranteed these lease payments.
F-26
57
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
13. COMMITMENTS AND CONTINGENCIES (CONTINUED)
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws and regulations
which govern environmental matters. These laws regulate the discharge of
materials into the environment and may require the Company to remove or
mitigate the environmental effects of the disposal or release of
petroleum or chemical substances. The Company has identified several
environmental matters resulting from prior operations. Due to the
relatively early stage of investigation of certain of these identified
matters as well as potential indemnification by other potentially
responsible parties, management is unable to reasonably estimate the
ultimate cost of remediating certain of these identified environmental
matters. The Company has recorded a liability in other noncurrent
liabilities of approximately $1,343 and $1,063 at March 31, 2001 and
2000, respectively, for estimated costs of known environmental matters.
GENERAL
The Company is subject to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of
business. In the opinion of management, after reviewing the information
which is currently available with respect to such matters and consulting
with legal counsel, any liability which may ultimately be incurred with
respect to these matters will not materially affect the financial
position, results of operations or cash flows of the Company.
F-27
58
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
14. SEGMENT INFORMATION
The Company has one reportable segment in the global automotive original
equipment supply industry. Net sales and operating income (loss) are
attributed to geographic regions based upon their location of origin. Net
sales, operating income (loss) and identifiable assets by geographic area
are as follows:
YEAR ENDED MARCH 31
------------------------------------------
2001 2000 1999
Net sales
United States $ 258,577 $ 367,245 $ 378,227
Canada 153,038 193,077 167,547
Mexico 53,860 14,770 9,666
France 271,635 191,070 36,205
Germany 56,257 42,903
Other Europe 30,181
------------ ----------- -----------
$ 823,548 $ 809,065 $ 591,645
============ =========== ===========
Operating income (loss)
United States $ (61,923) $ 18,906 $ 20,046
Canada (17,589) 1,472 2,116
Mexico 13,534 6,337 (1,152)
France 14,643 15,489 1,554
Germany 4,162 4,482
Other Europe 2,935
------------ ----------- -----------
$ (44,238) $ 46,686 $ 22,564
============ =========== ===========
Identifiable assets
United States $ 285,106 $ 302,860
Canada 104,353 105,040
Mexico 61,101 27,265
France 214,391 121,219
Germany 62,208 42,428
Other Europe 23,572
------------ -----------
$ 750,731 $ 598,812
============ ===========
F-28
59
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
15. CONDENSED CONSOLIDATING INFORMATION
The Notes were issued by Oxford Automotive, Inc. and as of March 31, 2001
were guaranteed by certain of its 100% owned subsidiaries, including
Lobdell, Howell, RPIH, Suspension, Inc. and the Technology Division (the
Guarantor Subsidiaries). As of March 31, 2001, the Notes are not
guaranteed by other consolidated subsidiaries, BMGH, Oxford Mexico,
Oxford Europe, OAF, Suspension Ltd. and Wackenhut (the Non-guarantor
Subsidiaries). As of March 31, 2000, the Notes were guaranteed by
Lobdell, Howell, BMGH, RPIH, Suspension Inc., Suspension Ltd. and the
Technology Division (the Guarantor Subsidiaries). As of March 31, 2000,
the Notes were not guaranteed by other consolidated subsidiaries, Oxford
Mexico, Oxford Europe, OAF and Wackenhut. During the year ended March 31,
2001, the guarantee of the Company's Canadian subsidiaries (BMGH and
Suspension Ltd.) was eliminated. During the year ended March 31, 1999,
the Notes were guaranteed by Lobdell, Howell, BMGH, RPIH, Suspension Inc.
and Suspension Ltd. During the year ended March 31, 1999 the Notes were
not guaranteed by Cofimeta. The guarantee of the Notes by the Guarantor
Subsidiaries is full and unconditional and the guarantees are joint and
several. The following condensed consolidated financial information
presents the financial position, results of operations and cash flows of
(i) the Company as if it accounted for its subsidiaries on the equity
method, (ii) the Guarantor Subsidiaries on a combined basis and (iii) the
Non-guarantor Subsidiaries.
F-29
60
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 2001
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
ASSETS
Current assets
Cash $19,270 $44,285 $45 $ $63,600
Receivables, net 959 78,040 36,765 115,764
Inventories, net 46,167 15,485 61,652
Refundable income taxes 5,300 6,100 700 12,100
Reimbursable tooling 42,678 15,629 58,307
Deferred income taxes 970 10,233 11,203
Prepaid expenses and other 2,972 27,135 10,914 41,021
----------- ----------- ----------- ----------- ------------
TOTAL CURRENT ASSETS 72,149 217,356 74,142 363,647
Assets held for sale 3,183 29,245 32,428
Other noncurrent assets 15,381 30,729 13,928 60,038
Deferred income taxes 2,195 35,691 3,788 41,674
Property, plant and equipment, net 5,856 175,080 72,008 252,944
Investment in consolidated subsidiaries 78,692 75,761 55,182 (209,635)
----------- ----------- ----------- ----------- ------------
TOTAL ASSETS $174,273 $537,800 $248,293 ($209,635) $750,731
=========== =========== =========== =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities
Accounts payable $48,799 $129,904 $28,819 $ $207,522
Intercompany accounts (143,706) 67,856 75,850
Employee compensation 487 26,889 2,636 30,012
Accrued expenses and other 17,715 35,788 273 53,776
Restructuring reserve 1,000 11,592 16,573 29,165
Current portion of borrowings 6,000 9,052 15,052
----------- ----------- ----------- ----------- ------------
TOTAL CURRENT LIABILITIES (69,705) 281,081 124,151 335,527
Pension liability 3,570 8,388 11,958
Postretirement medical benefits 5,395 35,251 40,646
Deferred income taxes and other 9,645 9,645
Other noncurrent liabilities 5,677 1,086 6,763
Long-term borrowings 319,932 61,640 381,572
----------- ----------- ----------- ----------- ------------
TOTAL LIABILITIES 250,227 367,008 168,876 786,111
Redeemable preferred stock 40,574 40,574
----------- ----------- ----------- ----------- ------------
Shareholders' equity (deficit)
Common stock 1,050 197,064 88,582 (285,646) 1,050
Accumulated other comprehensive income
(loss) (19,125) (1,670) (20,795)
Retained earnings (deficit) (77,004) (7,147) (48,069) 76,011 (56,209)
----------- ----------- ----------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY
(DEFICIT) (75,954) 170,792 38,843 (209,635) (75,954)
----------- ----------- ----------- ----------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS'
EQUITY (DEFICIT) $174,273 $537,800 $248,293 ($209,635) $750,731
=========== =========== =========== =========== ============
F-30
61
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
ASSETS
Current assets
Cash $8,563 $8,839 $241 $ $17,643
Receivables, net 12,372 41,952 85,588 139,912
Inventories, net 20,462 32,725 53,187
Income taxes refundable 3,515 (1,488) 2,027
Reimbursable tooling 19,843 6,120 (925) 25,038
Deferred income taxes 388 1,986 2,374
Prepaid expenses and other 6,809 26,620 3,621 37,050
----------- ----------- ------------- ----------- ------------
TOTAL CURRENT ASSETS 51,490 103,993 121,748 277,231
Assets held for sale 1,178 1,178
Other noncurrent assets 11,389 448 23,039 34,876
Deferred income taxes 16,930 17,348 34,278
Property, plant and equipment, net 8,536 51,857 190,856 251,249
Investment in consolidated subsidiaries 94,437 45,766 (140,203)
----------- ----------- ------------- ----------- ------------
TOTAL ASSETS $165,852 $173,228 $399,935 ($140,203) $598,812
=========== =========== ============= =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $53,517 $40,822 $50,362 $ $144,701
Intercompany accounts (133,574) 1,485 132,089
Employee compensation 1,410 12,820 7,372 21,602
Accrued expenses and other 11,033 20,250 6,644 37,927
Restructuring reserve 3,335 754 4,089
Current portion of borrowings 4,500 6,423 132 11,055
----------- ----------- ------------- ----------- ------------
TOTAL CURRENT LIABILITIES (63,114) 85,135 197,353 219,374
Pension liability 2,175 7,426 9,601
Postretirement medical benefits 46,953 46,953
Deferred income taxes and other (1,997) 9,291 7,294
Other noncurrent liabilities 4,631 3,658 8,289
Long-term borrowings 226,734 35,690 197 262,621
----------- ----------- ------------- ----------- ------------
TOTAL LIABILITIES 161,623 127,631 264,878 554,132
Redeemable preferred stock 40,451 40,451
----------- ----------- ------------- ----------- ------------
Shareholders' equity
Common stock 1,050 39,882 97,349 (137,231) 1,050
Accumulated other comprehensive income
(loss) (6,914) (2,776) (9,690)
Retained earnings 3,179 12,629 33 (2,972) 12,869
----------- ----------- ------------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY 4,229 45,597 94,606 (140,203) 4,229
----------- ----------- ------------- ----------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $165,852 $173,228 $399,935 ($140,203) $598,812
=========== =========== ============= =========== ============
F-31
62
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 2001
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
Sales $ $ 411,933 $ 411,615 $ $ 823,548
Cost of sales 353,695 403,269 756,964
----------- ------------ ------------ ----------- ------------
GROSS PROFIT 58,238 8,346 66,584
Selling, general and administrative (6,377) 23,839 39,480 56,942
Restructuring charge 1,000 54,154 55,154
Gain on sale of equipment (10) (875) (389) (1,274)
----------- ------------ ------------ ----------- ------------
OPERATING INCOME (LOSS) 5,387 35,274 (84,899) (44,238)
Other income (expense):
Interest expense (7,006) (11,361) (22,477) (40,844)
Other 201 (1,106) (375) (1,280)
----------- ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES (1,418) 22,807 (107,751) (86,362)
Benefit (provision) for income taxes (375) (10,901) 29,880 18,604
----------- ------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE EQUITY IN LOSS OF
CONSOLIDATED SUBSIDIARIES (1,793) 11,906 (77,871) (67,758)
Equity in loss of consolidated subsidiaries (65,965) 65,965
----------- ------------ ------------ ----------- ------------
NET INCOME (LOSS) $ (67,758) $ 11,906 $ (77,871) $ 65,965 $ (67,758)
=========== ============ ============ =========== ============
F-32
63
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
Sales $ $ 248,743 $ 560,322 $ $ 809,065
Cost of sales 207,941 504,998 712,939
------------ ------------- ------------ ------------ ------------
GROSS PROFIT 40,802 55,324 96,126
Selling, general and administrative (4,184) 14,928 38,503 49,247
Restructuring charge
(Gain) loss on sale of equipment (436) 629 193
------------ ------------- ------------ ------------ ------------
OPERATING INCOME 4,184 26,310 16,192 46,686
Other income (expense):
Interest expense (5,170) (4,703) (21,477) (31,350)
Other 111 1,334 41 1,486
------------ ------------- ------------ ------------ ------------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (875) 22,941 (5,244) 16,822
Provision for income taxes (245) (8,799) (172) (9,216)
------------ ------------- ------------ ------------ ------------
INCOME (LOSS) BEFORE EQUITY IN INCOME OF
CONSOLIDATED SUBSIDIARIES (1,120) 14,142 (5,416) 7,606
Equity in income of consolidated subsidiaries 8,726 (8,726)
------------ ------------- ------------ ------------ ------------
NET INCOME (LOSS) $ 7,606 $ 14,142 $ (5,416) $ (8,726) $ 7,606
============ ============= ============ ============ ============
F-33
64
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARY SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
Sales $ -- $ 45,871 $ 545,774 $ -- $ 591,645
Cost of sales 42,896 493,682 536,578
------ -------- --------- -------- ---------
GROSS PROFIT 2,975 52,092 55,067
Selling, general and administrative expenses (2,054) 2,648 31,535 32,129
Restructuring charge (59) 1,210 1,151
Gain on sale of equipment (16) (761) (777)
------ -------- --------- -------- ---------
OPERATING INCOME 2,054 402 20,108 22,564
Other income (expense)
Interest expense (2,438) (595) (17,870) (20,903)
Other 3,682 (306) 1,069 4,445
------ -------- --------- -------- ---------
INCOME BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES 3,298 (499) 3,307 6,106
Benefit (provision) for income taxes (1,179) 107 (1,881) (2,953)
------ -------- --------- -------- ---------
INCOME BEFORE EQUITY IN INCOME OF
CONSOLIDATED SUBSIDIARIES 2,119 (392) 1,426 3,153
Equity in income of consolidated subsidiaries 1,034 (1,034)
------ -------- --------- -------- ---------
NET INCOME $3,153 $ (392) $ 1,426 $ (1,034) $ 3,153
====== ======== ========= ======== =========
F-34
65
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 2001
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES CONSOLIDATED
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (65,627) $ 88,605 $ 19,563 $ 42,541
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (17,058) (8,690) (25,748)
Purchase of property, plant and equipment 1,304 (62,034) (20,066) (80,796)
Proceeds from sale of equipment 22 1,493 1,502 3,017
------------- ------------- -------------- -------------
NET CASH USED IN
INVESTING ACTIVITIES (15,732) (69,231) (18,564) (103,527)
------------- ------------- -------------- -------------
FINANCING ACTIVITIES
Principal advances (payments) on borrowing
arrangements 94,698 19,465 (3) 114,160
Payment of preferred stock dividends (1,192) (1,192)
Debt financing costs (2,632) (2,632)
------------- ------------- -------------- -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 92,066 19,465 (1,195) 110,336
------------- ------------- -------------- -------------
Effect of foreign currency rate fluctuations on cash (3,393) (3,393)
------------- ------------- -------------- -------------
NET INCREASE IN CASH 10,707 35,446 (196) 45,957
Cash at beginning of period 8,563 8,839 241 17,643
------------- ------------- -------------- -------------
Cash at end of period $ 19,270 $ 44,285 $ 45 $ 63,600
============= ============= ============== =============
F-35
66
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 2000
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES CONSOLIDATED
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 15,464 $ 15,104 $ 23,620 $ 54,188
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (9,176) 59 (9,117)
Purchase of property, plant and equipment (5,211) (11,418) (21,214) (37,843)
Purchase of marketable securities
Proceeds from sale of equipment 724 3,262 3,986
------------- ------------- -------------- -------------
NET CASH USED IN
INVESTING ACTIVITIES (14,387) (10,635) (17,952) (42,974)
------------- ------------- -------------- -------------
FINANCING ACTIVITIES
Principal payments on borrowing arrangements (1,877) (3,862) (4,303) (10,042)
Payment of preferred stock dividends (1,192) (1,192)
Debt financing costs (378) (378)
------------- ------------- -------------- -------------
NET CASH USED IN FINANCING ACTIVITIES (2,255) (3,862) (5,495) (11,612)
------------- ------------- -------------- -------------
Effect of foreign currency rate fluctuations on cash (926) (41) (967)
------------- ------------- -------------- -------------
NET INCREASE (DECREASE) IN CASH (1,178) (319) 132 (1,365)
Cash at beginning of period 9,741 9,158 109 19,008
------------- ------------- -------------- -------------
Cash at end of period $ 8,563 $ 8,839 $ 241 $ 17,643
============= ============= ============== =============
F-36
67
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR
PARENT SUBSIDIARY SUBSIDIARIES CONSOLIDATED
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (24,520) $ (4,569) $ 34,833 $ 5,744
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (91,396) 16,316 (75,080)
Purchase of property, plant and equipment (2,221) (2,069) (29,335) (33,625)
Purchase of marketable securities (892) (892)
Proceeds from sale of equipment 16 1,534 1,550
Proceeds from sale of marketable securities 12,009 12,009
--------- -------- --------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (82,500) 14,263 (27,801) (96,038)
--------- -------- --------- ---------
FINANCING ACTIVITIES
Proceeds from borrowing arrangements 108,544 108,544
Principal payments on borrowing arrangements (261) (9,900) (10,161)
Payment of preferred stock dividends (1,194) (1,194)
Debt financing costs (5,195) (5,195)
--------- -------- --------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 103,088 (11,094) 91,994
--------- -------- --------- ---------
Effect of foreign currency rate fluctuations on cash (858) (155) (1,013)
--------- -------- --------- ---------
NET INCREASE (DECREASE) IN CASH (3,932) 8,836 (4,217) 687
Cash at beginning of period 13,673 322 4,326 18,321
--------- -------- --------- ---------
Cash at end of period $ 9,741 $ 9,158 $ 109 $ 19,008
========= ======== ========= =========
F-37
68
OXFORD AUTOMOTIVE, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(DOLLAR AMOUNTS IN THOUSANDS)
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
2001 2000 1999
--------------- ------------ ------------
Balance, beginning of period 4,822 4,506 400
Additions
Acquisition 3,465 717 4,195
Provision for additional allowance 437 524 11
Deductions
Currency translation adjustments
Reversals (271)
Doubtful accounts (charged) recovered (960) (925) (100)
--------------- ------------ ------------
Balance, end of period $ 7,493 $ 4,822 $ 4,506
=============== ============ ------------
F-38
69
SIGNATURES
Pursuant to the requirements of section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized on
June 29, 2001.
OXFORD AUTOMOTIVE, INC.
By: /S/ John W. Potter
------------------------
John W. Potter
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on June 29, 2001.
SIGNATURE TITLE
/S/ Selwyn Isakow Chairman of the Board and Director
- ----------------------------------
Selwyn Isakow
/S/ Rex E. Schlaybaugh, Jr. Vice Chairman of the Board and Director
- ----------------------------------
Rex E. Schlaybaugh, Jr.
/S/ John W. Potter President and Chief Executive Officer
- ---------------------------------- and Director
John W. Potter
/S/ Aurelian Bukatko Executive Vice President-Chief Financial
- ---------------------------------- Officer (Principal Accounting and
Aurelian Bukatko Financial Officer)
/S/ Manfred J. Walt Director
- ----------------------------------
Manfred J. Walt
/S/ Dennis K. Pawley Director
- ----------------------------------
Dennis K. Pawley
/S/ Herve Guillaume Director
- ----------------------------------
Herve Guillaume
/S/ George R. Mrkonic Director
- ----------------------------------
George R. Mrkonic
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
No Annual Report or Proxy Materials have been or will be sent to
security holders.
70
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2.1 Share Purchase and Sale Agreement, dated August 2, 2000 between Oxford
Automotive Mecanismes et Decoupage Fin II, a wholly-owned indirect
subsidiary of Oxford Automotive, Inc., and Aires Industries, S.A. The
Share Purchase and Sale Agreement as filed does not contain certain
exhibits which are described in the Share Purchase and Sale Agreement.
The Registrant will furnish a copy of the omitted material to the
Commission upon request (previously filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K dated August 14, 2000, and
incorporated herein by reference)
3.1 Articles of Incorporation of the Company (previously filed as Exhibit
3.1 to the Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
3.2 Bylaws of the Company (previously filed as Exhibit 3.11 to the
Registrant's Registration Statement on Form S-4, File No. 333-32975,
and incorporated herein by reference)
4.1 Indenture, dated as of June 15, 1997, by and among the Company, the
Subsidiary Guarantors and First National Trust Association, as Trustee
(including form of the 10 1/8% Senior Subordinated Notes Due 2007,
form of the Guaranty, and form of Supplemental Indenture) (previously
filed as Exhibit 4.1 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by reference)
4.2 Indenture, dated as of December 1, 1998, by and among the Company, the
Subsidiary Guarantors and U.S. Bank Trust National Association, as
Trustee (including form of the 10 1/8% Senior Subordinated Notes Due
2007, Series C, form of Guaranty, and form of Supplemental Indenture)
(previously filed as Exhibit 4.1 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1998, and
incorporated herein by reference)
4.3 Amended and Restated Pledge and Security Agreement, dated as of August
1, 2000 in favor of Citicorp USA, Inc. as Collateral Agent (previously
filed as Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 2000, and incorporated herein by
reference)
4.4 Amended and Restated Guaranty, dated as of August 1, 2000 in favor of
Citicorp USA, Inc. as Administrative Agent and Collateral Agent
(previously filed as Exhibit 4.3 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 2000, and
incorporated herein by reference)
4.5 Supplemental Indenture, dated as of August 29, 2000, among Oxford
Automotive, Inc., the Subsidiary Guarantors under the Indenture and
U.S. Bank Trust National Association relating to the Indenture dated
as of June 15, 1997, providing for the issuance of 10-1/8% Senior
Subordinated Notes Due 2007, Series A/B (previously filed as Exhibit
4.1 to the Registrant's Current Report on Form 8-K dated September 6,
2000, and incorporated herein by reference)
4.6 Supplemental Indenture, dated as of August 29, 2000, among Oxford
Automotive, Inc., the Subsidiary Guarantors under the Indenture and
U.S. Bank Trust National Association relating to
71
the Indenture dated as of December 1, 1998, providing for the issuance
of 10-1/8% Senior Subordinated Notes Due 2007, Series D (previously
filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K
dated September 6, 2000, and incorporated herein by reference)
4.7 Fourth Amended and Restated Credit Agreement, dated as of June 8, 2001
among Oxford Automotive, Inc., the Borrowing Subsidiary and the
Lenders identified therein, Citicorp USA, Inc. as Administrative Agent
and Collateral Agent, Comerica Bank as Syndication Agent, and Credit
Suisse First Boston as Documentation Agent (previously filed as
Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated June
8, 2001, and incorporated herein by reference)
10.1 Form of Director Indemnification Agreement (previously filed as
Exhibit 10.2 to the Registrant's Registration Statement on Form S-4,
File No. 333-32975, and incorporated herein by reference)
10.2 Employment and Noncompetition Agreement between the Company and Steven
M. Abelman (previously filed as Exhibit 10.3 to the Registrant's
Registration Statement on Form S-4, File No. 333-32975, and
incorporated herein by reference)
10.3 Employment Agreement between BMG North America and Larry C. Cornwall
(previously filed as Exhibit 10.5 to the Registrant's Registration
Statement on Form S-4, File No. 333-32975, and incorporated herein by
reference)
10.4 Shareholders Agreement among certain of the Shareholders of the
Company and BMG-MI, Inc. (now known as Oxford Automotive, Inc.), dated
October 23, 1995 (previously filed as Exhibit 10.6 to the Registrant's
Registration Statement on Form S-4, File No. 333-32975, and
incorporated herein by reference)
10.5 Shareholders Agreement among certain of the Shareholders of the
Company and the Company dated January 10, 1997 (previously filed as
Exhibit 10.7 to the Registrant's Registration Statement on Form S-4,
File No. 333-32975, and incorporated herein by reference)
10.6 Purchase Agreement among the Registrant and the Initial Purchasers of
the 10 1/8% Senior Subordinated Notes Due 2007, Series C, dated
December 1, 1998 (previously filed as Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal Quarter ended December
31, 1998, and incorporated herein by reference)
10.7 Asset Use Agreement between Automotive Business Trust 1999-A and
Oxford Automotriz de Mexico S.A. de C.V. dated March 31, 1999
(previously filed as Exhibit 10.12 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1999, and
incorporated herein by reference)
10.8 Guaranty of the Company in favor of Automotive Business Trust 1999-A
dated March 31, 1999 (previously filed as Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999, and incorporated herein by reference)
10.9 Amendment to Employment and Noncompetition Agreement between Oxford
Automotive, Inc. and Mr. Abelman dated as of July 1, 1999 (previously
filed as Exhibit 10.11 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000, and incorporated herein by
reference)
72
10.10 Noncompetition and employment arrangement between Oxford Automotive,
Inc. and Mr. Bukatko, effective February 1999 (previously filed as
Exhibit 10.12 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 2000, and incorporated herein by
reference)
10.11 Amended and Restated Management and Consulting Agreement between
Oxford Automotive, Inc. and The Oxford Investment Group, Inc., dated
as of July 1, 2000 (previously filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal Quarter
ended September 30, 2000, and incorporated herein by reference)
10.12 *Employment and Noncompetition Agreement between the Company and John
W. Potter
12 *Statement regarding computation of ratios
21 *Subsidiaries of the Registrant