FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 1-12733
TOWER AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 41-1746238
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5211 CASCADE ROAD SE - SUITE 300 49546
GRAND RAPIDS, MICHIGAN (Zip Code)
(Address of principal executive offices)
(616) 802-1600
(Registrant's telephone number, including area code)
4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the Registrant's common stock, par value
$.01 per share, at October 31, 2001 was 48,076,524 shares.
TOWER AUTOMOTIVE, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations (unaudited) for
the Three Months Ended September 30, 2001 and 2000
Condensed Consolidated Statements of Operations (unaudited) for
the Nine Months Ended September 30, 2001 and 2000
Condensed Consolidated Balance Sheets at September 30, 2001
(unaudited) and December 31, 2000
Condensed Consolidated Statements of Cash Flows (unaudited) for
the Nine Months Ended September 30, 2001 and 2000
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See "Market Risk" section of Item 2
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
-2-
ITEM 1 - FINANCIAL INFORMATION
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS - UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2001 2000
--------------- ---------------
Revenues $ 557,785 $ 536,210
Cost of sales 502,366 471,482
--------- ---------
Gross profit 55,419 64,728
Selling, general and administrative expenses 33,002 31,535
Amortization expense 6,232 5,576
--------- ---------
Operating income 16,185 27,617
Interest expense, net 19,082 16,405
--------- ---------
Income (loss) before provision for income taxes (2,897) 11,212
Provision for income taxes (2,771) 4,484
--------- ---------
Income (loss) before equity in earnings of joint
ventures and minority interest (126) 6,728
Equity in earnings of joint ventures 3,120 5,844
Minority interest (4,358) (2,619)
--------- ---------
Income (loss) before extraordinary item (1,364) 9,953
Extraordinary loss on early extinguishments of debt, net -- 2,988
--------- ---------
Net income (loss) ($1,364) $ 6,965
========= =========
Basic earnings (loss) per share (Note 3):
Income (loss) before extraordinary loss ($0.03) $ 0.21
Extraordinary loss -- (0.06)
--------- ---------
Net income (loss) ($0.03) $ 0.15
========= =========
Diluted earnings (loss) per share (Note 3):
Income before extraordinary loss ($0.03) $ 0.21
Extraordinary loss -- (0.06)
--------- ---------
Net income (loss) ($0.03) $ 0.15
========= =========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-3-
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS - UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2001 2000
------------- --------------
Revenues $ 1,828,568 $ 1,902,594
Cost of sales 1,608,617 1,611,773
----------- -----------
Gross profit 219,951 290,821
Selling, general and administrative expenses 103,321 99,622
Amortization expense 18,440 15,793
----------- -----------
Operating income 98,190 175,406
Interest expense, net 58,925 43,136
----------- -----------
Income before provision for income taxes 39,265 132,270
Provision for income taxes 13,701 52,908
----------- -----------
Income before equity in earnings of joint ventures
and minority interest 25,564 79,362
Equity in earnings of joint ventures 12,291 14,864
Minority interest (9,686) (7,857)
----------- -----------
Income before extraordinary item 28,169 86,369
Extraordinary loss on early extinguishments of debt, net -- 2,988
----------- -----------
Net income $ 28,169 $ 83,381
=========== ===========
Basic earnings per share (Note 3):
Income before extraordinary loss $ 0.63 $ 1.81
Extraordinary loss -- (0.06)
----------- -----------
Net income $ 0.63 $ 1.75
=========== ===========
Diluted earnings per share (Note 3):
Income before extraordinary loss $ 0.63 $ 1.54
Extraordinary loss -- (0.05)
----------- -----------
Net income $ 0.63 $ 1.49
=========== ===========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-4-
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
ASSETS 2001 2000
- -------------------------------------------------------------- ------------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $ 15,960 $ 3,373
Accounts receivable, net 274,628 278,707
Inventories, net 115,445 132,478
Prepaid tooling and other 116,632 222,119
----------- -----------
Total current assets 522,665 636,677
----------- -----------
Property, plant and equipment, net 1,190,306 1,111,780
Investments in joint ventures 287,331 267,217
Goodwill and other assets, net 881,944 877,073
----------- -----------
$ 2,882,246 $ 2,892,747
=========== ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt and capital lease
obligations $ 165,548 $ 149,066
Accounts payable 352,476 248,389
Accrued liabilities 253,272 175,219
----------- -----------
Total current liabilities 771,296 572,674
----------- -----------
Long-term debt, net of current maturities 650,836 933,442
Obligations under capital leases, net of current maturities 5,325 8,458
Convertible subordinated notes 200,000 200,000
Deferred income taxes 37,052 33,884
Other noncurrent liabilities 202,011 185,444
----------- -----------
Total noncurrent liabilities 1,095,224 1,361,228
----------- -----------
Mandatorily redeemable trust convertible preferred securities 258,750 258,750
Stockholders' investment:
Preferred stock -- --
Common stock 480 476
Additional paid-in capital 456,615 450,455
Retained earnings 336,125 307,956
Deferred compensation plans (15,571) (8,942)
Accumulated other comprehensive loss (20,673) (9,672)
Treasury stock, at cost -- (40,178)
----------- -----------
Total stockholders' investment 756,976 700,095
----------- -----------
$ 2,882,246 $ 2,892,747
=========== ===========
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
-5-
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS - UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2001 2000
------------- -------------
OPERATING ACTIVITIES:
Net income $ 28,169 $ 83,381
Adjustments to reconcile net income to net cash provided by
operating activities -
Depreciation and amortization 120,980 112,790
Deferred income tax provision 9,371 14,516
Extraordinary loss on extinguishments of debt -- 2,988
Changes in other operating items 267,990 (76,457)
----------- -----------
Net cash provided by operating activities 426,510 137,218
----------- -----------
INVESTING ACTIVITIES:
Acquisitions and investment in joint ventures (14,103) (232,651)
Capital expenditures, net (147,583) (157,547)
----------- -----------
Net cash used in investing activities (161,686) (390,198)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings 2,018,950 2,729,055
Repayment of debt (2,310,067) (2,484,282)
Proceeds from issuance of stock 38,880 5,994
----------- -----------
Net cash (used in) provided by financing activities (252,237) 250,767
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 12,587 (2,213)
CASH AND CASH EQUIVALENTS:
Beginning of period 3,373 3,617
----------- -----------
End of period $ 15,960 $ 1,404
=========== ===========
NON-CASH FINANCING ACTIVITIES:
Notes payable converted to common stock $ 828 $ --
=========== ===========
Deferred income stock plan $ 1,277 $ 4,458
=========== ===========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-6-
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying condensed consolidated financial statements have been
prepared by Tower Automotive, Inc. (the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. The
information furnished in the condensed consolidated financial statements
includes normal recurring adjustments and reflects all adjustments which
are, in the opinion of management, necessary for a fair presentation of
such financial statements. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that
the disclosures are adequate to make the information presented not
misleading, it is suggested that these condensed consolidated financial
statements be read in conjunction with the audited financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000.
Revenues and operating results for the nine months ended September 30, 2001
are not necessarily indicative of the results to be expected for the full
year.
Certain prior year amounts were reclassified to conform to current year
presentation.
2. Inventories consisted of the following (in thousands):
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------ ----------
Raw materials $ 53,427 $ 54,958
Work in process 26,217 40,281
Finished goods 35,801 37,239
---------- ---------
$115,445 $ 132,478
========== =========
3. Basic earnings per share were computed by dividing net income by the
weighted average number of common shares outstanding during the respective
quarters. Diluted earnings per share were determined on the assumptions:
(i) the Edgewood notes were converted at the beginning of the period, (ii)
the Convertible Subordinated Notes were converted at the beginning of the
period, and (iii) the Preferred Securities were converted at the beginning
of the period. None of the common stock equivalents were included in the
computation of earnings per share for the three months ended September 30,
2001 due to their anti-dilutive effect. The Convertible Subordinated Notes
and Preferred Securities were not included in the computation of earnings
per share for the three months ended September 30, 2000 and for the nine
months ended September 30, 2001 due to their anti-dilutive effect (in
thousands, except for per share data):
-7-
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net income (loss) $ (1,364) $ 6,965 $ 28,169 $ 83,381
Interest expense on Edgewood notes,
net of tax -- 7 11 23
Interest expense on Convertible
Subordinated Notes, net of tax -- -- -- 4,879
Dividends on Preferred Securities,
net of tax -- -- -- 7,857
-------- -------- -------- --------
Net income (loss) applicable to
common stockholders -- diluted $ (1,364) $ 6,972 $ 28,180 $ 96,140
======== ======== ======== ========
Weighted average number of common
shares outstanding 45,784 47,986 44,770 47,649
Dilutive effect of outstanding stock
options and warrants after
application of the treasury
stock method -- 136 137 192
Dilutive effect of Edgewood notes,
assuming conversion -- 289 137 289
Dilutive effect of Convertible
Subordinated Notes, assuming
conversion -- -- -- 7,730
Dilutive effect of Preferred
Securities, assuming conversion -- -- -- 8,424
-------- -------- -------- --------
Diluted shares outstanding 45,784 48,411 45,044 64,284
======== ======== ======== ========
Basic earnings per share $ (0.03) $ 0.15 $ 0.63 $ 1.75
======== ======== ======== ========
Diluted earnings per share $ (0.03) $ 0.15 $ 0.63 $ 1.49
======== ======== ======== ========
4. Long-term debt consisted of the following (in thousands):
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------- -----------
Revolving credit facility $ 96,020 $ 345,919
Senior Euro notes 136,710 141,330
Term credit facility 325,000 325,000
Industrial development revenue bonds 43,765 43,765
Edgewood notes 50 878
Other foreign subsidiary indebtedness 158,711 151,171
Other 53,453 72,969
--------- ------------
813,709 1,081,032
Less-current maturities (162,873) (147,590)
--------- -----------
Total long-term debt $ 650,836 $ $933,442
========= ===========
On July 25, 2000, the Company replaced its existing $750 million amortizing
credit agreement with a new six-year $1.15 billion senior unsecured credit
agreement. The new credit agreement includes a non-amortizing revolving
facility of $825 million along with an amortizing term loan of $325
million. The new facility also includes a multi-currency borrowing feature
that allows the Company to borrow up to $500 million in certain freely
tradable offshore currencies, and letter of credit sublimits of $100
million. As of September 30, 2001, approximately $22.0 million of the
outstanding borrowings are denominated in Japanese yen and $68.4 million of
the outstanding borrowings are denominated in Euro. Interest on the new
credit facility is at the financial institutions' reference rate, LIBOR, or
the Eurodollar rate plus a margin ranging from 0 to 200 basis points
depending on the ratio of the
-8-
consolidated funded debt for restricted subsidiaries of the Company to its
total EBITDA. The weighted average interest rate for such borrowings was
7.25 percent for the nine months ended September 30, 2001. The new credit
agreement has a final maturity of July 2006. As a result of the debt
replacement, the Company recorded an extraordinary loss, net of tax, of
$3.0 million during the third quarter of 2000.
The Credit Agreement requires the Company to meet certain financial tests,
including but not limited to a minimum interest coverage and maximum
leverage ratio. The Credit Agreement also limits the Company's ability to
pay dividends. As of September 30, 2001, the Company was in compliance with
all debt covenants.
On July 25, 2000, R. J. Tower (the "Issuer"), a wholly-owned subsidiary of
the Company, issued Euro-denominated senior unsecured notes in the amount
of (euro) 150 million. The notes bear interest at a rate of 9.25 percent,
payable semi-annually. The notes rank equally with all of the Company's
other unsecured and unsubordinated debt. The net proceeds after issuance
costs were used to repay a portion of the Company's existing
Euro-denominated indebtedness under its existing credit facility. The notes
mature on August 1, 2010.
During September 2000, the Company entered into an interest rate swap
contract to hedge against interest rate exposure on approximately $160
million of its floating rate indebtedness under its $1.15 billion senior
unsecured credit facility. The contracts have the effect of converting the
floating rate interest to a fixed rate of approximately 6.9 percent, plus
any applicable margin required under the revolving credit facility. The
interest rate swap contract was executed to balance the Company's
fixed-rate and floating-rate debt portfolios and expires in September 2005.
5. In June 2001, the Company entered into an agreement whereby its domestic
operating units sell eligible customer receivables on an ongoing basis to a
newly formed special purpose entity (the "SPE"). Upon recording the sale,
the operating units recognize a loss representing the difference between
the carrying value of the eligible receivables and the net sales proceeds
received. The loss consists of the effects of yield adjustments and
projected credit losses associated with the receivables pool. The SPE
records its ownership in the net receivables purchased from the operating
units. The SPE subsequently sells its interest in receivables to a third
party funding agent in exchange for cash and a subordinated interest in the
unfunded receivables transferred. The Company acts as an administrative
agent in the management and collection of accounts receivable sold. The
Company remits all cash collected from domestic receivables to the SPE. The
SPE records a liability for amounts due to the funding agent along with any
funding costs and applies any excess collections to reduce its subordinated
interest in receivables sold. Cash collected by the SPE in excess of
amounts due the funding agent and its net subordinated interest in the
receivables pool are recorded as investment income by the SPE. This income
represents an offset of the yield adjustments and credit losses recorded by
the operating units upon sale in adjusting the carrying value of
receivables sold. The net impact of the yield loss and credit loss
adjustment is not material.
At September 30, 2001, the Company had sold approximately $167.8 million of
net accounts receivable in exchange for $40.9 million of cash and a
retained subordinated interest in the receivables sold of approximately
$126.9 million. The net proceeds from the sale of the receivables were used
to pay down borrowings under the Company's revolving credit facility. As of
September 30, 2001, the SPE recorded a liability to the funding agent of
$40.9 million. Settlement of amounts due to the funding agent as well as
its funding cost of approximately 7.6 percent occurs during the month
subsequent to the sale of the receivables. During the period preceding this
settlement, the SPE advances any excess cash from collections to R.J. Tower
in the form of a demand note receivable. The demand note is eliminated on
consolidation.
6. On November 30, 2000, the Company completed the acquisition of Strojarne
Malacky, a.s. ("Presskam"), a manufacturer of upper body structural
assemblies for Volkswagen, Porsche and Skoda, located near Bratislava,
Slovakia. The Company paid total consideration of approximately $10
-9-
million for Presskam and intends to use the investment to further support
Volkswagen's Bratislava assembly operation.
On July 6, 2000, the Company acquired the remaining 60 percent equity
interest in Metalurgica Caterina S.A. ("Caterina") for approximately $42
million. The initial 40 percent interest was acquired in March 1998, for
approximately $48 million. Caterina is a supplier of structural stampings
and assemblies to the Brazilian automotive market, including Volkswagen and
Mercedes-Benz. The acquisition was funded with proceeds from the Company's
revolving credit facility.
On May 3, 2000, the Company acquired all of the outstanding common stock of
Algoods, Inc. ("Algoods") for total consideration of approximately $33
million. Algoods manufactures aluminum heat shields and impact discs for
the North American automotive industry from aluminum mini-mill and
manufacturing operations located in Toronto, Canada. Its primary customer
is DaimlerChrysler. The acquisition of Algoods represents a significant
investment in processing technology for lightweight materials which
complements the Company's existing heat shield capabilities and provides
opportunities for application in other lightweight vehicle structural
products. The acquisition was funded with proceeds from the Company's
revolving credit facility.
Effective January 1, 2000, the Company acquired all of the outstanding
shares of Dr. Meleghy GmbH & Co. KG Werkzeugbau und Presswerk, Bergisch
Gladbach ("Dr. Meleghy") for approximately $86.4 million. Dr. Meleghy
designs and produces structural stampings, assemblies, exposed surface
panels and modules to the European automotive industry. Dr. Meleghy also
designs and manufactures tools and dies for use in their production and for
the external market. Dr. Meleghy operates three facilities in Germany and
one facility in both Hungary and Poland. Dr. Meleghy's main customers
include DaimlerChrysler, Audi, Volkswagen, Ford, Opel and BMW. Products
offered by Dr. Meleghy include body side panels, floor pan assemblies and
miscellaneous structural stampings. Based on the purchase contract, the
Company paid approximately $2 million during the third quarter of 2001 and
anticipates it will pay an additional $22 million during the first quarter
of 2002 for achieving certain operating earnings targets during the 2000
period. The acquisition was financed with proceeds from the Company's
revolving credit facility.
On October 29, 1999, the Company invested $21 million for new shares
representing a 49 percent equity interest in Seojin Industrial Company
Limited ("Seojin"). Seojin is a supplier of frames, modules and structural
components to the Korean automotive industry. Consideration for the equity
interest was financed under the Company's revolving credit facility. In
addition, the Company advanced $19 million to Seojin in exchange for
variable rate convertible bonds (the "Bonds") due October 30, 2009. On
October 31, 2000, the Company exercised its right to convert the bonds into
17 percent of the common stock of Seojin, increasing the Company's equity
interest to 66 percent. Based upon the formula for conversion of the Seojin
bonds, the Company paid an additional $1.2 million for the 17 percent
equity interest.
The acquisitions discussed above have been accounted for using the purchase
method of accounting and, accordingly, the assets acquired and liabilities
assumed have been recorded at the fair value as of the date of the
acquisitions. The excess of the purchase price over the fair value of the
assets acquired and liabilities assumed has been recorded as goodwill.
In conjunction with its acquisitions, the Company has established reserves
for certain costs associated with facility shutdown and consolidation
activities and for general and payroll related costs primarily for planned
employee termination activities.
-10-
The table below summarizes the accrued facility-related and payroll-related
costs through September 30, 2001 (in millions):
FACILITY PAYROLL
COSTS COSTS
----------- ----------
Balance at December 31, 2000 $ 7.3 $ 3.9
Utilization (1.1) (1.7)
----- -----
Balance at September 30, 2001 $ 6.2 $ 2.2
===== =====
The timing of facility shutdown and consolidation activities has been
adjusted to reflect customer concerns with supply interruption. These
reserves have been utilized as originally intended and management believes
the liabilities recorded for shutdown and consolidation activities are
adequate but not excessive as of September 30, 2001.
In certain instances, the Company is committed under existing agreements to
supply product to its customers at selling prices that are not sufficient
to cover the direct costs to produce such parts. The Company is obligated
to supply these products to its customers for the life of the related
vehicles, which typically ranges from three to 10 years. Accordingly, the
Company recognizes losses at the time these losses are probable and
reasonably estimable at an amount equal to the minimum amount necessary to
fulfill its obligations to its customers. The reserves established in
connection with these recognized losses are reversed as the product is
shipped to the customer. The liability for loss contracts was $19.9 million
and $28.7 million at September 30, 2001 and December 31, 2000,
respectively.
7. The Company has a 31 percent equity interest in Yorozu Corporation
("Yorozu") acquired from Nissan Motor Co. Ltd. ("Nissan"). The Company
acquired its original 17 percent equity interest in Yorozu for
approximately $38 million in September 2000 payable to Nissan over two and
one-half years. The Company exercised its option to purchase an additional
13.8 percent equity interest in Yorozu for approximately $30 million in
February 2001 payable to Nissan over two and one-half years.
The Company formed a product technology and development joint venture, DTA
Development, with Defiance Testing & Engineering Services, Inc., a
subsidiary of GenTek Inc. through an investment of $2.1 million in March
2000, which represents a 40 percent equity interest.
8. The Company is a 40 percent partner in Metalsa S. de R.L. ("Metalsa") with
Promotora de Empresas Zano, S.A. de C.V. ("Proeza"). The partnership
agreement provides additional amounts of up to $45 million payable by the
Company based upon net earnings of Metalsa during 1998, 1999, and 2000.
Based upon Metalsa's net earnings, the Company paid Proeza approximately
$9.0 million and $7.9 million in additional consideration during 1999 and
2000, respectively. Based upon Metalsa's 2000 net earnings, the Company
anticipates it will pay Proeza approximately $8.0 million in additional
consideration during the first quarter of 2002.
9. On October 2, 2000, the Company's board of directors approved a
comprehensive operational realignment plan (the "Plan"), which is intended
to improve the Company's long-term competitive position and lower its cost
structure. The Plan includes phasing out the heavy truck rail manufacturing
in Milwaukee, Wisconsin; reducing stamping capacity by closing the
Kalamazoo, Michigan facility; and consolidating related support activities
across the enterprise. The Company recognized a charge to operations of
approximately $141.3 million in the fourth quarter of 2000, which reflects
the estimated qualifying "exit costs" to be incurred over the next 12
months under the Plan.
The charge includes costs associated with asset impairments, severance, and
outplacement costs related to employee terminations, loss contract
provisions and certain other exit costs. Through September 30, 2001, the
Company had eliminated approximately 850 employees pursuant to the Plan.
The estimated
-11-
realignment charge does not cover certain aspects of the Plan, including
movement of equipment and employee relocation and training. These costs
are recognized as incurred.
The asset impairments consist of long-lived assets, including fixed assets,
manufacturing equipment and land, from the facilities the Company intends
to dispose of or discontinue. The Company measured impairment based on
estimated proceeds on the sale of the facilities and equipment. For assets
that will be held and used in the future, the Company prepared a forecast
of expected undiscounted cash flows to determine whether asset impairment
existed, and used fair values to measure the required write-downs. These
asset impairments have arisen only as a consequence of the Company making
the decision to exit these activities during the fourth quarter of 2000.
The accrual for operational realignment and other costs is included in
accrued liabilities in the accompanying consolidated balance sheet as of
September 30, 2001. The table below summarizes the accrued operational
realignment and other charges through September 30, 2001 (in millions):
SEVERANCE AND OTHER
ASSET OUTPLACEMENT LOSS EXITS
IMPAIRMENTS COSTS CONTRACTS COSTS TOTAL
----------------------------------------------------------------
Provision for operational
realignment and other charges $103.7 $25.2 $ 8.1 $ 4.3 $141.3
Cash payments -- (8.7) (2.5) (0.3) (11.5)
Non cash charges (103.7) -- -- -- (103.7)
---------------------------------------------------------------
Balance at December 31, 2000 -- 16.5 5.6 4.0 26.1
Cash payments -- (9.9) (4.2) (2.1) (16.2)
Non cash charges -- -- -- -- --
---------------------------------------------------------------
Balance at September 30, 2001 $ -- $ 6.6 $ 1.4 $ 1.9 $ 9.9
===============================================================
10. Supplemental cash flow information (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
2001 2000 2001 2000
------- -------- ------- -------
Cash paid for -
Interest $29,966 $19,232 $68,948 $51,505
Income taxes 1,235 1,128 4,516 17,345
11. The following table presents comprehensive income, defined as changes in
the stockholders' investment of the Company, for the nine months ended
September 30, 2001 and 2000 (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ---------------------
2001 2000 2001 2000
-------- -------- ------- ---------
Net income (loss) $(1,364) $6,965 $28,169 $83,381
Change in cumulative
translation adjustment 1,394 6,511 (1,012) 5,761
Transition adjustment relating
to loss on qualifying cash
flow hedges -- -- (4,200) --
Unrealized gain (loss)
on qualifying cash flow hedges (4,654) -- (5,789) --
------- ------- ------- -------
Comprehensive income (loss) $(4,624) $13,476 $17,168 $89,142
======= ======= ======= =======
-12-
12. On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," issued by the Financial
Accounting Standards Board (the "FASB") in 1998. SFAS No. 133, as amended,
establishes accounting and reporting standards requiring the recording of
each derivative instrument in the balance sheet as either an asset or
liability measured at fair value. Changes in the derivative instrument's
fair value must be recognized currently in earnings unless specific hedge
accounting criteria is met. For hedges which meet the criteria, the
derivative instrument's gains and losses, to the extent effective, may be
recognized in accumulated other comprehensive income or loss, rather than
in earnings.
The Company has entered into an interest rate swap (see note 4) to hedge
the exposure to interest rate fluctuations on the credit agreement. This
agreement meets the specific hedge accounting criteria and is designated as
a cash flow hedge. The effective portion of the cumulative gain or loss on
the derivative instrument has been reported as a component of accumulated
other comprehensive loss in stockholders' investment and will be recognized
into current earnings in the same period or periods during which the hedged
transactions affect current earnings.
The adoption of SFAS No. 133 on January 1, 2001 resulted in a pretax charge
to accumulated other comprehensive loss of $6.8 million ($4.2 million net
of income tax benefit) for derivative instruments that were issued,
acquired or modified after December 31, 1998. The accumulated other
comprehensive loss was attributable to losses on effective cash flow
hedges. Amounts currently recorded in accumulated other comprehensive loss
($10.0 million at September 30, 2001) will be reclassified into current
earnings by September 2005, the termination date for the current agreement.
Derivative liabilities relating to the interest rate swap agreement
totaling $16.2 million have been recorded in accrued liabilities on the
balance sheet as of September 30, 2001. The fair value of the interest rate
swap agreement is based upon the difference between the contractual rates
and the present value of the expected future cash flows on the hedged
interest rate.
13. On June 29, 2001, the FASB approved for issuance, SFAS No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Intangible Assets." Major
provisions of these Statements are as follows: all business combinations
initiated after September 30, 2001 must use the purchase method of
accounting; the pooling of interest method of accounting is prohibited
except for transactions initiated before July 1, 2001; intangible assets
acquired in a business combination must be recorded separately from
goodwill if they arise from contractual or other legal rights or are
separable from the acquired entity and can be sold, transferred, licensed,
rented or exchanged, either individually or as part of a related contract,
asset or liability; goodwill and intangible assets with indefinite lives
are not amortized but tested for impairment annually, except in certain
circumstances, and whenever there is an impairment indicator; all acquired
goodwill must be assigned to reporting units for purposes of impairment
testing and segment reporting; effective January 1, 2002, goodwill will no
longer be subject to amortization. Management is currently reviewing the
provisions of these Statements and their impact on the Company's results of
operations.
14. On August 30, 2001, the Company issued 3,636,400 shares of common stock
(par value $0.01 per share) at a price of $11.00 per share in a private
placement transaction. The Company used the net proceeds of approximately
$37.6 million to repay outstanding indebtedness under its revolving credit
facility.
15. On October 18, 2001, the Company announced that it will be relocating
stamping and assembly operations currently performed at its Sebewaing,
Michigan facility to other Tower Automotive locations, resulting in the
closing of the Sebewaing facility by March 2002. This restructuring
activity will result in a fourth quarter 2001 pre-tax charge of
approximately $95 million, which includes a cash portion of approximately
$23 million and a non-cash portion of approximately $72 million.
16. On July 25, 2001, the Company offered to its existing colleagues, and
certain consultants, the right to exchange Company stock options, having an
exercise price of $17.125 or more, for shares of restricted stock. As a
result of the offer, effective September 17, 2001, the Company issued
approximately 518,717 shares of its common stock in exchange for the
surrender of options to purchase a total of 1,503,500 shares of the
Company's Common Stock. The cost of this exchange was recorded in
shareholders' investment as deferred compensation and will be expensed
as the restrictions lapse.
-13-
17. The following consolidating financial information presents balance sheets,
statements of operations and cash flow information related to the Company's
business. Each Guarantor, as defined, is a direct or indirect wholly-owned
subsidiary of the Company and has fully and unconditionally guaranteed the
9.25 percent senior unsecured notes issued by R. J. Tower Corporation, on a
joint and several basis. Tower Automotive, Inc. (the parent company) has
also fully and unconditionally guaranteed the note and is reflected as the
Parent Guarantor in the consolidating financial information. The
Non-Guarantors include the Company's foreign subsidiaries. Separate
financial statements and other disclosures concerning the Guarantors have
not been presented because management believes that such information is not
material to investors.
-14-
TOWER AUTOMOTIVE INC.
CONSOLIDATING BALANCE SHEETS AT SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS - UNAUDITED)
<Table>
<Caption>
R. J. TOWER PARENT GUARANTOR NON-GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ --------- --------- ------------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ -- $ -- $ 1,413 $ 14,547 $ -- $ 15,960
Accounts receivable, net -- -- 181,991 92,637 -- 274,628
Subordinated interest in accounts
receivable -- -- -- -- -- --
Inventories, net -- -- 74,314 41,131 -- 115,445
Prepaid tooling and other -- -- 76,692 39,940 -- 116,632
----------- --------- ----------- ----------- ----------- -----------
Total current assets -- -- 334,410 188,255 -- 522,665
----------- --------- ----------- ----------- ----------- -----------
Property, plant and equipment, net -- -- 902,871 287,435 -- 1,190,306
Investments in joint ventures 236,638 45,982 3,496 1,215 -- 287,331
Investment in subsidiaries 1,059,270 756,496 -- -- (1,815,766) --
Goodwill and other assets, net 10,099 10,027 577,586 284,232 -- 881,944
----------- --------- ----------- ----------- ----------- -----------
$ 1,306,007 $ 812,505 $ 1,818,363 $ 761,137 (1,815,766) $ 2,882,246
=========== ========= =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Current maturities of long-term debt
and capital lease obligations $ 71,133 $ -- $ 2,675 $ 91,740 $ -- $ 165,548
Accounts payable -- -- 249,066 103,410 -- 352,476
Accrued liabilities 2,783 6,033 151,092 93,364 -- 253,272
----------- --------- ----------- ----------- ----------- -----------
Total current liabilities 73,916 6,033 402,833 288,514 -- 771,296
----------- --------- ----------- ----------- ----------- -----------
Long-term debt, net of current maturities 490,702 -- 44,765 115,369 -- 650,836
Obligations under capital leases,
net of current maturities -- -- 5,325 -- -- 5,325
Convertible subordinated notes -- 200,000 -- -- -- 200,000
Due to/(from) affiliates (25,000) (408,774) 428,444 5,330 -- --
Deferred income taxes -- -- 32,209 4,843 -- 37,052
Other noncurrent liabilities -- -- 140,689 61,322 -- 202,011
----------- --------- ----------- ----------- ----------- -----------
Total noncurrent liabilities 465,702 (208,774) 651,432 186,864 -- 1,095,224
----------- --------- ----------- ----------- ----------- -----------
Mandatorily redeemable trust convertible
preferred securities -- 258,750 -- -- -- 258,750
Stockholders' investment 777,649 756,496 764,098 295,172 (1,815,766) 777,649
Accumulated other comprehensive loss (11,260) -- -- (9,413) -- (20,673)
----------- --------- ----------- ----------- ----------- -----------
Total stockholders' investment 766,389 756,496 764,098 285,759 (1,815,766) 756,976
----------- --------- ----------- ----------- ----------- -----------
$ 1,306,007 $ 812,505 $ 1,818,363 $ 761,137 $(1,815,766) $ 2,882,246
=========== ========= =========== =========== =========== ===========
</Table>
-15-
TOWER AUTOMOTIVE INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS - UNAUDITED)
R. J. NON-
TOWER PARENT GUARANTOR GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ --------- --------- ---------- ------------ ------------
Revenues $ -- $ -- $ 350,279 $ 207,506 $ -- $ 557,785
Cost of sales -- -- 320,617 181,749 -- 502,366
--------- --------- --------- --------- --------- ---------
Gross profit -- -- 29,662 25,757 -- 55,419
Selling, general and administrative
expenses -- -- 25,110 7,892 -- 33,002
Amortization expense 453 328 3,694 1,757 -- 6,232
--------- --------- --------- --------- --------- ---------
Operating income (loss) (453) (328) 858 16,108 -- 16,185
Interest expense, net 15,273 1,879 (2,345) 4,275 -- 19,082
--------- --------- --------- --------- --------- ---------
Income (loss) before provision for (15,726) (2,207) 3,203 11,833 -- (2,897)
income taxes
Provision for income taxes (6,133) (861) 1,249 2,974 -- (2,771)
--------- --------- --------- --------- --------- ---------
Income (loss) before equity in earnings (9,593) (1,346) 1,954 8,859 -- (126)
of joint ventures and minority interest
Equity in earnings of joint ventures and 12,239 2,646 -- -- (11,765) 3,120
subsidiaries
Minority interest -- (2,664) -- (1,694) -- (4,358)
--------- --------- --------- --------- --------- ---------
Net income (loss) $ 2,646 $ (1,364) $ 1,954 $ 7,165 $ (11,765) $ (1,364)
========= ========= ========= ========= ========= =========
-16-
TOWER AUTOMOTIVE INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS - UNAUDITED)
<Table>
<Caption>
R. J. NON-
TOWER PARENT GUARANTOR GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------ ------------
Revenues $ -- $ -- $ 1,220,914 $ 607,654 $ -- $ 1,828,568
Cost of sales -- -- 1,072,912 535,705 -- 1,608,617
----------- ----------- ----------- ----------- ----------- -----------
Gross profit -- -- 148,002 71,949 -- 219,951
Selling, general and
administrative expenses -- -- 77,130 26,191 -- 103,321
Amortization expense 1,378 973 11,033 5,056 -- 18,440
----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss) (1,378) (973) 59,839 40,702 -- 98,190
Interest expense, net 50,949 5,430 (8,685) 11,231 -- 58,925
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before provision for (52,327) (6,403) 68,524 29,471 -- 39,265
income taxes
Provision for income taxes (20,408) (2,498) 26,725 9,882 -- 13,701
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before equity in earnings
of joint ventures and minority interest (31,919) (3,905) 41,799 19,589 -- 25,564
Equity in earnings of joint ventures and 71,985 40,066 -- -- (99,760) 12,291
subsidiaries
Minority interest -- (7,992) -- (1,694) -- (9,686)
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) $ 40,066 $ 28,169 $ 41,799 $ 17,895 $ (99,760) $ 28,169
=========== =========== =========== =========== =========== ===========
</Table>
-17-
TOWER AUTOMOTIVE INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
(AMOUNTS IN THOUSANDS - UNAUDITED)
<Table>
<Caption>
R. J. NON
TOWER PARENT GUARANTOR GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- --------- --------- --------- ------------ ------------
OPERATING ACTIVITIES:
Net income $ 40,066 $28,169 $ 41,799 $ 17,895 $ (99,760) $ 28,169
Adjustments required to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation and amortization 453 973 92,718 26,836 -- 120,980
Deferred income tax provision -- -- 9,941 (570) -- 9,371
Changes in other operating items 827,615 2,247 (327,126) (36,923) (197,823) 267,990
------------ ------- --------- --------- ------------ -----------
Net cash provided by (used in) operating
activities 868,134 31,389 (182,668) 7,238 (297,583) 426,510
------------ ------- --------- --------- ------------ -----------
INVESTING ACTIVITIES:
Capital expenditures, net -- -- (110,211) (37,372) -- (147,583)
Acquisitions and other, net (539,596) (70,269) 294,674 3,505 297,583 (14,103)
------------ ------- --------- --------- ------------ -----------
Net cash provided by (used in) investing
activities (539,596) (70,269) 184,463 (33,867) 297,583 (161,686)
------------ ------- --------- --------- ------------ -----------
FINANCING ACTIVITIES:
Proceeds from borrowings 1,935,525 -- -- 83,425 -- 2,018,950
Repayments of debt (2,245,291) -- (1,957) (62,819) -- (2,310,067)
Net proceeds from the issuance of common stock -- 38,880 -- -- -- 38,880
------------ ------- --------- --------- ------------ -----------
Net cash provided by (used for) financing
activities (309,766) 38,880 (1,957) 20,606 -- (252,237)
------------ ------- --------- --------- ------------ -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 18,772 -- (162) (6,023) -- 12,587
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
(18,772) -- 1,575 20,570 -- 3,373
------------ ------- --------- --------- ------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ -- $ -- $ 1,413 $ 14,547 $ -- $ 15,960
============ ======= ========= ========= ============ ===========
</Table>
-18-
TOWER AUTOMOTIVE INC.
CONSOLIDATING BALANCE SHEETS AT DECEMBER 31, 2000
(AMOUNTS IN THOUSANDS)
<Table>
<Caption>
NON-
R. J. TOWER PARENT GUARANTOR GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ---------- ----------- ----------- ------------ -------------
ASSETS
Current assets:
Cash and cash equivalents $ (18,772) $ -- $ 1,575 $ 20,570 $ -- $ 3,373
Accounts receivable, net 6,983 381 172,332 99,011 -- 278,707
Inventories, net 2,032 -- 83,479 46,967 -- 132,478
Prepaid tooling and other 24,704 -- 171,107 26,308 -- 222,119
--------- --------- ----------- ----------- ----------- -----------
Total current assets 14,947 381 428,493 192,856 -- 636,677
--------- --------- ----------- ----------- ----------- -----------
Property, plant and equipment, net 37,245 -- 836,175 238,360 -- 1,111,780
Investments in joint ventures 221,165 43,912 2,140 -- -- 267,217
Investment in subsidiaries 541,468 734,624 -- -- (1,276,092) --
Goodwill and other assets, net 21,527 11,001 536,142 308,403 -- 877,073
--------- --------- ----------- ----------- ----------- -----------
$ 836,352 $ 789,918 $ 1,802,950 $ 739,619 $(1,276,092) $ 2,892,747
========= ========= =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Current maturities of long-term debt and
capital lease obligations $ 56,569 $ -- $ 1,477 $ 91,020 $ -- $ 149,066
Accounts payable (13,260) -- 156,724 104,925 -- 248,389
Accrued liabilities 35,183 4,167 101,001 34,868 -- 175,219
--------- --------- ----------- ----------- ----------- -----------
Total current liabilities 78,492 4,167 259,202 230,813 -- 572,674
--------- --------- ----------- ----------- ----------- -----------
Long-term debt, net of current maturities 800,401 -- 44,787 88,254 -- 933,442
Obligations under capital leases,
net of current maturities -- -- 8,458 -- -- 8,458
Convertible subordinated notes -- 200,000 -- -- -- 200,000
Due to/(from) affiliates (822,981) (373,094) 915,331 280,744 -- --
Deferred income taxes 29,102 -- (631) 5,413 -- 33,884
Other noncurrent liabilities 9,060 -- 132,105 44,279 -- 185,444
--------- --------- ----------- ----------- ----------- -----------
Total noncurrent liabilities 15,582 (173,094) 1,100,050 418,690 -- 1,361,228
--------- --------- ----------- ----------- ----------- -----------
Mandatorily redeemable trust convertible
preferred securities -- 258,750 -- -- -- 258,750
Stockholders' investment 744,296 700,095 443,698 97,770 (1,276,092) 709,767
Accumulated other comprehensive income
(loss) - cumulative translation adjustment (2,018) -- -- (7,654) -- (9,672)
--------- --------- ----------- ----------- ----------- -----------
Total stockholders' investment 742,278 700,095 443,698 90,116 (1,276,092) 700,095
--------- --------- ----------- ----------- ----------- -----------
$ 836,352 $ 789,918 $ 1,802,950 $ 739,619 $(1,276,092) $ 2,892,747
========= ========= =========== =========== =========== ===========
</Table>
-19-
TOWER AUTOMOTIVE INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
(AMOUNTS IN THOUSANDS - UNAUDITED)
NON-
R. J. TOWER PARENT GUARANTOR GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- --------- ---------- ---------- ------------ ------------
Revenues $ 17,538 $ -- $ 414,218 $ 104,454 $ -- $ 536,210
Cost of sales 6,159 -- 371,108 94,215 -- 471,482
--------- --------- --------- --------- --------- ---------
Gross profit 11,379 -- 43,110 10,239 -- 64,728
Selling, general and administrative expenses 336 -- 26,406 4,793 -- 31,535
Amortization expense 794 328 3,216 1,238 -- 5,576
--------- --------- --------- --------- --------- ---------
Operating income (loss) 10,249 (328) 13,488 4,208 -- 27,617
Interest expense, net 17,482 1,737 (4,050) 1,236 -- 16,405
--------- --------- --------- --------- --------- ---------
Income (loss) before provision for income taxes (7,233) (2,065) 17,538 2,972 -- 11,212
Provision for income taxes (2,893) (826) 7,015 1,188 -- 4,484
--------- --------- --------- --------- --------- ---------
Income (loss) before equity in earnings of
joint ventures and minority interest (4,340) (1,239) 10,523 1,784 -- 6,728
Equity in earnings of joint ventures and 18,151 10,823 -- -- (23,130) 5,844
subsidiaries
Minority interest - dividends on trust preferred, net -- (2,619) -- -- -- (2,619)
--------- --------- --------- --------- --------- ---------
Income (loss) before extraordinary item 13,811 6,965 10,523 1,784 (23,130) 9,953
Extraordinary loss on early
extinguishments of debt, net 2,988 -- -- -- -- 2,988
--------- --------- --------- --------- --------- ---------
Net income (loss) $ 10,823 $ 6,965 $ 10,523 $ 1,784 $ (23,130) $ 6,965
========= ========= ========= ========= ========= =========
-20-
TOWER AUTOMOTIVE INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(AMOUNTS IN THOUSANDS - UNAUDITED)
R. J. NON-
TOWER PARENT GUARANTOR GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ----------- ------------ ------------
Revenues $ 59,884 $ -- $ 1,501,294 $ 341,416 $ -- $ 1,902,594
Cost of sales 38,216 -- 1,268,815 304,742 -- 1,611,773
-------- --------- ----------- ----------- ----------- -----------
Gross profit 21,668 -- 232,479 36,674 -- 290,821
Selling, general and administrative expenses 5,676 -- 80,491 13,455 -- 99,622
Amortization expense 2,392 1,087 9,543 2,771 -- 15,793
-------- --------- ----------- ----------- ----------- -----------
Operating income (loss) 13,600 (1,087) 142,445 20,448 -- 175,406
Interest expense, net 40,221 5,787 (7,706) 4,834 -- 43,136
-------- --------- ----------- ----------- ----------- -----------
Income (loss) before provision for
income taxes (26,621) (6,874) 150,151 15,614 -- 132,270
Provision for income taxes (10,648) (2,749) 60,060 6,245 -- 52,908
-------- --------- ----------- ----------- ----------- -----------
Income (loss) before equity in earnings of
joint ventures and minority interest (15,973) (4,125) 90,091 9,369 -- 79,362
Equity in earnings of joint ventures and 114,324 95,363 -- -- (194,823) 14,864
subsidiaries
Minority interest - dividends on trust preferred,
net -- (7,857) -- -- -- (7,857)
-------- --------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary item 98,351 83,381 90,091 9,369 (194,823) 86,369
Extraordinary loss on early extinguishments of
debt, net 2,988 -- -- -- -- 2,988
-------- --------- ----------- ----------- ----------- -----------
Net income (loss) $ 95,363 $ 83,381 $ 90,091 $ 9,369 $ (194,823) $ 83,381
======== ========= =========== =========== =========== ===========
-21-
TOWER AUTOMOTIVE INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(AMOUNTS IN THOUSANDS - UNAUDITED)
R. J. NON
TOWER PARENT GUARANTOR GUARANTOR
CORPORATION GUARANTOR COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ---------- --------- --------- ------------ ------------
OPERATING ACTIVITIES:
Net income $ 95,363 $ 83,381 $ 90,091 $ 9,369 $ (194,823) $ 83,381
Adjustments required to reconcile net income to net
cash provided by (used in) operating activities
Depreciation and amortization 5,252 1,087 93,100 13,351 -- 112,790
Deferred income tax provision 14,667 -- -- (151) -- 14,516
Extraordinary loss on extinguishments of debt 2,988 -- -- -- -- 2,988
Changes in other operating items (313,651) (2,635) 15,866 223,963 -- (76,457)
----------- -------- -------- --------- ----------- ---------
Net cash provided by (used in) operating
activities (195,381) 81,833 199,057 246,532 (194,823) 137,218
----------- -------- -------- --------- ----------- ---------
INVESTING ACTIVITIES:
Capital expenditures, net (3,279) -- (154,348) 80 -- (157,547)
Acquisitions and other, net (148,342) (87,827) (33,530) (157,775) 194,823 (232,651)
----------- -------- -------- --------- ----------- ---------
Net cash provided by (used in) investing
activities (151,621) (87,827) (187,878) (157,695) 194,823 (390,198)
----------- -------- -------- --------- ----------- ---------
FINANCING ACTIVITIES:
Proceeds from borrowings 2,684,777 -- 21 44,257 -- 2,729,055
Repayments of debt (2,349,510) -- (9,383) (125,389) -- (2,484,282)
Net proceeds from the issuance of common stock -- 5,994 -- -- -- 5,994
----------- -------- -------- --------- ----------- ---------
Net cash provided by (used for) financing
activities 335,267 5,994 (9,362) (81,132) -- 250,767
----------- -------- -------- --------- ----------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (11,735) -- 1,817 7,705 -- (2,213)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,312 -- 484 821 -- 3,617
----------- -------- -------- --------- ----------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ (9,423) $ -- $ 2,301 $ 8,526 $ -- $ 1,404
=========== ======== ======== ========= =========== =========
-22-
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2001 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 2000
Revenues -- Revenues for the third quarter of 2001 were $557.8 million, a 4.0
percent increase, compared to $536.2 million for the prior period. The increase
in revenues is due to the incremental revenue associated with the Presskam
acquisition and the consolidation of Seojin and Tower Golden Ring, which
contributed revenues of $106.6 million. These increases are offset by volume
declines on the Dodge Durango, Dakota and Ram pickup, the Chrysler LH, and the
Ford Focus, Taurus, and Econoline and the Lincoln LS/Jaguar S-Type. These
declines, which primarily affected the U.S. and Canada business units, accounted
for $63.6 million of the revenue decline as compared to the third quarter of
2000. Other declines of $21.4 million are attributable to the exit of the heavy
truck business. The strength of sales volumes for the remainder of 2001
continues to be uncertain.
Cost of Sales -- Cost of sales as a percentage of revenues for the third quarter
of 2001 was 90.1 percent compared to 87.9 percent for the prior period. The
decline in gross profit percentage was primarily due to decreased production
volumes and product mix on light truck, sport utility and other models served by
the Company in North America and increasing sales with lower margins in Europe,
Asia, and South America. Increased costs associated with the launch of the Ford
Explorer, Dodge Ram truck and GM Sigma programs also contributed to the
decline in gross margins as compared to the third quarter of 2000.
S, G & A Expenses -- Selling, general and administrative expenses increased to
$33.0 million, or 5.9 percent of revenues, for the third quarter of 2001
compared to $31.5 million, or 5.9 percent of revenues for the prior period. This
increase was due primarily to incremental costs associated with the Company's
acquisition of Presskam and the consolidation of the Seojin and Tower Golden
Ring joint ventures of $4.1 million. This increase was offset by $2.6 million in
decreased costs due mainly to reductions in headcount in the consolidation of
the Company's engineering and support activities.
Amortization Expense -- Amortization expense for the third quarter of 2001 was
$6.2 million compared to $5.6 million for the prior period. The increase was due
to incremental goodwill amortization related to the acquisitions of Presskam and
Seojin.
Interest Expense -- Interest expense for the third quarter of 2001 was $19.1
million compared to $16.4 million for the prior period. Interest expense was
affected by increased borrowings incurred to fund the Company's acquisitions of
Presskam and Seojin and by lower capitalized interest in the 2001 period. These
increases were offset by decreases in expense due to decreased interest rates in
2001.
Income Taxes -- The effective income tax rate for the third quarter of 2001 is
not meaningful due to the very small pre-tax loss. The effective tax rate
reflects the actual rates in the tax jurisdictions in which the Company
operates, adjusted for permanent differences.
Equity in Earnings of Joint Ventures -- Equity in earnings of joint ventures,
net of tax, was $3.1 million and $5.8 million for the third quarters of 2001 and
2000, respectively. These amounts represent the Company's share of the earnings
from its joint venture interests in Metalsa, DTA Development and Yorozu in the
2001 period and in Metalsa, Tower Golden Ring, Seojin, and Yorozu in the 2000
period.
Minority Interest -- Minority interest for the third quarter of 2001 represents
dividends, net of income tax benefits, on the Preferred Securities, and the
minority interest held by the 40 percent joint venture partners in Tower Golden
Ring. Minority interest for the third quarter of 2000 represents dividends, net
of income tax benefits, on the Preferred Securities.
-23-
\COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2001 TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2000
Revenues -- Revenues for the first nine months of 2001 were $1,828.6 million, a
3.9 percent decrease, compared to $1,902.6 million for the prior period. The
decrease primarily affected the U.S. and Canada business units and accounted for
approximately $272.0 million of the change as compared to the 2000 period.
Additional declines of $112.4 million are attributable to the balance-out of the
General Motors light truck programs and the exit of the heavy truck business.
These declines were offset by incremental revenue of $310.4 million from the
acquisitions of Algoods and Presskam and the consolidation of Caterina, Seojin
and Tower Golden Ring. The strength of sales volumes for the remainder of 2001
continues to be uncertain.
Cost of Sales -- Cost of sales as a percentage of revenues for the first nine
months of 2001 was 88.0 percent compared to 84.7 percent for the prior period.
The decline in gross profit percentage was primarily due to decreased production
volumes and product mix on light truck, sport utility and other models served by
the Company in North America and increasing sales with lower margins in Europe,
Asia, and South America. Increased costs associated with the launch of the Ford
Explorer, Dodge Ram truck and GM Sigma programs also contributed to the decline
in gross margins as compared to the first nine months of 2000.
S, G & A Expenses -- Selling, general and administrative expenses increased to
$103.3 million, or 5.7 percent of revenues, for the first nine months of 2001
compared to $99.6 million, or 5.2 percent of revenues for the prior period. This
increase was due primarily to incremental costs associated with the Company's
acquisitions of Algoods, Caterina and Presskam and the consolidation of the
Seojin and Tower Golden Ring joint ventures of $11.7 million. This increase was
offset by $8.0 million in decreased costs due mainly to reductions in headcount
in the consolidation of the Company's engineering and support activities.
Amortization Expense -- Amortization expense for the first nine months of 2001
was $18.4 million compared to $15.8 million for the prior period. The increase
was due to incremental goodwill amortization related to the acquisitions of
Algoods, Caterina, Presskam, and Seojin.
Interest Expense -- Interest expense for the first nine months of 2001 was $58.9
million compared to $43.1 million for the prior period. Interest expense was
affected by increased borrowings incurred to fund the Company's acquisitions of
Algoods, Caterina, Presskam and Seojin. These increases were offset by an
increase in capitalized interest of $3.2 million.
Income Taxes -- The effective income tax rate was 34.9 percent and 40.0 percent
for the nine months ended September 30, 2001 and 2000, respectively. The
decrease in the effective rate is due primarily as a result of increased income
in lower tax jurisdictions. The effective tax rate reflects the actual rates in
the tax jurisdictions in which the Company operates, adjusted for permanent
differences.
Equity in Earnings of Joint Ventures -- Equity in earnings of joint ventures,
net of tax, was $12.3 million and $14.9 million for the first nine months of
2001 and 2000, respectively. These amounts represent the Company's share of the
earnings from its joint venture interests in Metalsa, DTA Development, Tower
Golden Ring and Yorozu in the 2001 period and Metalsa, Caterina, Tower Golden
Ring, Seojin and Yorozu in the 2000 period.
Minority Interest -- Minority interest for the nine months ended September 30,
2001 represents dividends, net of income tax benefits, on the Preferred
Securities and the minority interest held by the 40 percent joint venture
partners in Tower Golden Ring. Minority interest for the nine months ended
September 30, 2000 represents dividends, net of income tax benefits, on the
Preferred Securities.
-24-
RESTRUCTURING AND ASSET IMPAIRMENT CHARGE
On October 2, 2000, the Company's board of directors approved a comprehensive
operational realignment plan (the "Plan"), which is intended to improve the
Company's long-term competitive position and lower its cost structure. The Plan
includes phasing out the heavy truck rail manufacturing in Milwaukee, Wisconsin;
reducing stamping capacity by closing the Kalamazoo, Michigan facility; and
consolidating related support activities across the enterprise. The Company
recognized a charge to operations of approximately $141.3 million in the fourth
quarter of 2000, which reflects the estimated qualifying "exit costs" to be
incurred over the next 12 months under the Plan.
The charge includes costs associated with asset impairments, severance, and
outplacement costs related to employee terminations, loss contract provisions
and certain other exit costs. Through September 30, 2001, the Company had
eliminated approximately 850 employees pursuant to the Plan. The estimated
realignment charge does not cover certain aspects of the Plan, including
movement of equipment and employee relocation and training. These costs are
recognized as incurred.
The asset impairments consist of long-lived assets, including fixed assets,
manufacturing equipment and land, from the facilities the Company intends to
dispose of or discontinue. The Company measured impairment based on estimated
proceeds on the sale of the facilities and equipment. For assets that will be
held and used in the future, the Company prepared a forecast of expected
undiscounted cash flows to determine whether asset impairment existed, and used
fair values to measure the required write-downs. These asset impairments have
arisen only as a consequence of the Company making the decision to exit these
activities during the fourth quarter of 2000.
The accrual for operational realignment and other costs is included in accrued
liabilities in the accompanying consolidated balance sheet as of September 30,
2001. The table below summarizes the accrued operational realignment and other
charges through September 30, 2001 (in millions):
SEVERANCE AND
ASSET OUTPLACEMENT LOSS OTHER EXIT
IMPAIRMENTS COSTS CONTRACTS COSTS TOTAL
---------------------------------------------------------------------------
Provision for operational
realignment and other charges $103.7 $25.2 $ 8.1 $ 4.3 $141.3
Cash payments -- (8.7) (2.5) (0.3) (11.5)
Non cash charges (103.7) -- -- -- (103.7)
---------------------------------------------------------------------------
Balance at December 31, 2000 -- 16.5 5.6 4.0 26.1
Cash payments -- (9.9) (4.2) (2.1) (16.2)
Non cash charges -- -- -- -- --
---------------------------------------------------------------------------
Balance at September 30, 2001 $ -- $ 6.6 $ 1.4 $ 1.9 $ 9.9
===========================================================================
Additionally, on October 18, 2001, the Company announced that it will be
relocating stamping and assembly operations currently performed at its
Sebewaing, Michigan, facility to other Tower Automotive locations, resulting in
the closing of the Sebewaing facility by March 2002. This restructuring activity
will result in a fourth-quarter pre-tax charge of approximately $95 million,
which includes a cash portion of approximately $23 million and a non-cash
portion of approximately $72 million. Based on prevailing economic conditions,
the Company will continue its evaluation for potential additional
fourth-quarther restructuring activities and asset valuation issues.
-25-
LIQUIDITY AND CAPITAL RESOURCES
In July 2000, the Company replaced its existing $750 million amortizing credit
agreement with a new six-year $1.15 billion senior unsecured credit agreement.
The new credit agreement includes a non-amortizing revolving facility of $825
million along with an amortizing term loan of $325 million. The new facility
also includes a multi-currency borrowing feature that allows the Company to
borrow up to $500 million in certain freely tradable offshore currencies, and
letter of credit sublimits of $100 million. As of September 30, 2001,
approximately $22.0 million of the outstanding borrowings are denominated in
Japanese yen and $68.4 million of the outstanding borrowings are denominated in
Euro. Interest on the new credit facility is at the financial institutions'
reference rate, LIBOR, or the Eurodollar rate plus a margin ranging from 0 to
200 basis points depending on the ratio of the consolidated funded debt for
restricted subsidiaries of the Company to its total EBITDA. The weighted average
interest rate for such borrowings was 7.25 percent for the nine months ended
September 30, 2001. The new credit agreement has a final maturity of July 2006.
As a result of the debt replacement, the Company recorded an extraordinary loss,
net of tax, of $3.0 million during the third quarter of 2000.
The Credit Agreement requires the Company to meet certain financial tests,
including but not limited to a minimum interest coverage and maximum leverage
ratio. The Credit Agreement also limits the Company's ability to pay dividends.
As of September 30, 2001, the Company was in compliance with all debt covenants.
In July 2000, R. J. Tower (the "Issuer"), a wholly-owned subsidiary of the
Company, issued Euro-denominated senior unsecured notes in the amount of 150
(euro) million (approximately $136.7 million at September 30, 2001). The notes
bear interest at a rate of 9.25 percent, payable semi-annually. The notes rank
equally with all of the Company's other unsecured and unsubordinated debt. The
net proceeds after issuance costs were used to repay a portion of the Company's
existing Euro-denominated indebtedness under its existing credit facility. The
notes mature on August 1, 2010.
In September 2000, the Company entered into an interest rate swap contract to
hedge against interest rate exposure on approximately $160 million of its
floating rate indebtedness under its $1.15 billion senior unsecured credit
facility. The contracts have the effect of converting the floating rate interest
to a fixed rate of approximately 6.9 percent, plus any applicable margin
required under the revolving credit facility. The interest rate swap contract
was executed to balance the Company's fixed-rate and floating-rate debt
portfolios and it expires in September 2005.
Effective January 1, 2001, unrealized gains and losses on interest rate swap
agreements used to hedge the Company's exposure to interest rate fluctuations
are recognized currently for financial reporting purposes. The swap agreement is
marked to market on a quarterly basis. The effect of this change as of January
1, 2001, was a pretax charge to accumulated other comprehensive loss of $6.8
million ($4.2 million net of income tax benefit). During the nine months ended
September 30, 2001, pretax other comprehensive loss increased by $9.4 million
($5.8 million net of income tax benefit) to reflect an unrealized loss on the
swap agreement from January 1, 2001 to September 30, 2001.
As discussed in note 5, the Company sold all of its eligible domestic
receivables pursuant to a revolving securitization agreement with an independent
third party funding agent. The domestic subsidiaries of the Company sell
receivables to a special purpose bankruptcy-remote subsidiary, which then
receives proceeds for receivables sold. The Company received $40.9 million from
the sale of receivables at September 30, 2001. This amount is repaid monthly as
the underlying accounts receivable are collected, along with funding costs of
approximately 7.6 percent.
During the first nine months of 2001, the Company generated $426.5 million of
cash from operations compared to $137.2 million in the 2000 period. Cash
provided by net income, depreciation, amortization, deferred income tax
provision, and the extraordinary loss was $158.5 million during the first nine
months of 2001 and $213.8 million during the first nine months of 2000. Other
operating items and working capital requirements increased operating cash
-26-
flow by $268.0 million during the first nine months of 2001 and decreased
operating cash flow by $76.5 million during the comparable 2000 period.
Net cash used in investing activities was $161.7 million during the first nine
months of 2001 as compared to $390.2 million in the prior period. Net capital
expenditures totaled $147.6 million in the first nine months of 2001 for
equipment and dedicated tooling purchases related to new or replacement
programs. This compares with net capital expenditures of $157.5 million for the
prior period.
Net cash used in financing activities totaled $252.2 million for the first nine
month of 2001 compared with net cash provided by financing activities of $250.8
million in 2000. The reduction of debt totaled approximately $291.1 million,
excluding acquired debt of approximately $21.8 million, during the first nine
months of 2001 due in large part to the Company's working capital and
balance sheet management.
At September 30, 2001, the Company had borrowed approximately $96 million under
its revolving credit facility of $825 million. Based on the most restrictive
debt covenant, availability under the revolving credit facility was limited to
approximately $100 million at September 30, 2001, compared to availability of
approximately $326 million at December 31, 2000. This reduction in availability
reflects a decrease due to the calculation of earnings before interest, taxes,
depreciation and amortization (as defined in the credit agreement) of
approximately $471 million, offset by an increase due to the reduction of
borrowings between the periods (as defined in the credit agreement) of
approximately $245 million. The Company believes the borrowing availability
under its credit agreement, together with funds generated by operations, should
provide sufficient liquidity and capital resources to pursue its business
strategy for the foreseeable future, with respect to working capital, capital
expenditures, and other operating needs. The Company estimates its 2001 net
capital expenditures will be approximately $170 million. Under present
conditions, management does not believe access to funds will restrict its
ability to pursue its business strategy.
During the nine months ended September 30, 2001, working capital decreased by
approximately $313 million. This decrease is comprised of the effects of the
accounts receivable securitization, which decreased working capital by
approximately $41 million; a change in the accounts payable payment terms, which
decreased working capital by approximately $70 million; accelerated collections
of amounts due from customers, which decreased working capital by approximately
$110 million; the receipt of amounts due from lessors, which decreased working
capital by approximately $88 million; and other net changes in the components of
working capital of approximately $4 million.
EFFECTS OF INFLATION
Inflation generally affects the Company by increasing the interest expense of
floating-rate indebtedness and by increasing the cost of labor, equipment and
raw materials. Management believes that inflation has not significantly affected
the Company's business over the past 12 months. However, because selling prices
generally cannot be increased until a model changeover, the effects of inflation
must be offset by productivity improvements and volume from new business awards.
MARKET RISK
The Company is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. The Company's policy is not to enter into
derivatives or other financial instruments for trading or speculative purposes.
The Company enters into financial instruments to manage and reduce the impact of
changes in interest rates.
Interest rate swaps are entered into as a hedge of underlying debt instruments
to effectively change the characteristics of the interest rate without actually
changing the debt instrument. Therefore, these interest rate swap agreements
convert outstanding floating rate debt to fixed rate debt for a period of time.
For fixed rate debt, interest rate changes affect the fair market value but do
not impact earnings and cash flows.
-27-
Conversely for floating rate debt, interest rate changes generally do not affect
the fair market value but do impact future earnings and cash flows, assuming
other factors are held constant.
At September 30, 2001, the Company had total debt and obligations under capital
leases of $1.0 billion. The debt is comprised of fixed rate debt of $496.7
million and floating rate debt of $525.0 million. The pre-tax earnings and cash
flows impact for the next year resulting from a one percentage point increase in
interest rates on variable rate debt would be approximately $5.3 million,
holding other variables constant. A one-percentage point increase in interest
rates would not materially impact the fair value of the fixed rate debt.
A portion of Tower Automotive's revenue was derived from manufacturing
operations in Europe, Asia, and South America. The results of operations and
financial position of the Company's foreign operations are principally measured
in its respective currency and translated into U. S. dollars. The effects of
foreign currency fluctuations in Europe, Asia, and South America are somewhat
mitigated by the fact that expenses are generally incurred in the same currency
in which revenues are generated. The reported income of these subsidiaries will
be higher or lower depending on a weakening or strengthening of the U. S. dollar
against the respective foreign currency.
A portion of Tower Automotive's assets is based in its foreign operations and is
translated into U. S. dollars at foreign currency exchange rates in effect as of
the end of each period, with the effect of such translation reflected as a
separate component of stockholders' investment. Accordingly, the Company's
consolidated stockholders' investment will fluctuate depending upon the
weakening or strengthening of the U. S. dollar against the respective foreign
currency.
The Company's strategy for management of currency risk relies primarily upon
conducting its operations in a country's respective currency and may, from time
to time, engage in hedging programs intended to reduce the Company's exposure to
currency fluctuations. As of September 30, 2001, the Company held no foreign
currency hedge positions. Management believes the effect of a one percent
appreciation or depreciation in foreign currency rates would not materially
affect the Company's financial position or results of operations for the periods
presented.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Company adopted SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended on January 1, 2001 (see note 11). The effect of
this change as of January 1, 2001, was a pretax charge to accumulated other
comprehensive loss of $6.8 million ($4.2 million net of income tax benefit).
During the first nine months of 2001, pretax other comprehensive loss increased
by $9.4 million ($5.8 million net of income tax benefit) to reflect an
unrealized loss on the swap agreement from January 1, 2001 through September 30,
2001.
On June 29, 2001, the FASB approved for issuance, SFAS No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Intangible Assets." Major
provisions of these Statements are as follows: all business combinations
initiated after September 30, 2001 must use the purchase method of accounting;
the pooling of interest method of accounting is prohibited except for
transactions initiated before July 1, 2001; intangible assets acquired in a
business combination must be recorded separately from goodwill if they arise
from contractual or other legal rights or are separable from the acquired entity
and can be sold, transferred, licensed, rented or exchanged, either individually
or as part of a related contract, asset or liability; goodwill and intangible
assets with indefinite lives are not amortized but tested for impairment
annually, except in certain circumstances, and whenever there is an impairment
indicator; all acquired
-28-
goodwill must be assigned to reporting units for purposes of impairment testing
and segment reporting; effective January 1, 2002, goodwill will no longer be
subject to amortization. Management is currently reviewing the provisions of
these Statements and their impact on the Company's results of operations.
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in this Form
10-Q, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" are, or may be
deemed to be, forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended. When used in this Form 10-Q, the words "anticipate," "believe,"
"estimate," "expect," "intends," and similar expressions, as they relate to the
Company, are intended to identify forward-looking statements. Such
forward-looking statements are based on the beliefs of the Company's management
as well as on assumptions made by and information currently available to the
Company at the time such statements were made. Various economic and competitive
factors could cause actual results to differ materially from those discussed in
such forward-looking statements, including factors which are outside the control
of the Company, such as risks relating to: (i) the degree to which the Company
is leveraged; (ii) the Company's reliance on major customers and selected
models; (iii) the cyclicality and seasonality of the automotive market; (iv) the
failure to realize the benefits of recent acquisitions and joint ventures; (v)
obtaining new business on new and redesigned models; (vi) the Company's ability
to continue to implement its acquisition strategy; and (vii) the highly
competitive nature of the automotive supply industry. All subsequent written and
oral forward-looking statements attributable to the Company or persons acting on
behalf of the Company are expressly qualified in their entirety by such
cautionary statements.
-29-
PART II. OTHER INFORMATION
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings:
None
Item 2. Change in Securities and Use of Proceeds:
On August 30, 2001, the Company completed a private placement of
3,636,400 shares of its common stock to six investors. The
gross proceeds of the offering were approximately $40.0 million. The
shares were sold with the assistance of Robert W. Baird & Co., Inc.
("Baird"). As the placement agent, Baird received a fee of
approximately $2.4 million.
The shares of common stock were sold in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933
(the "Securities Act"). The private placement was made without any
general solicitation or advertising and each investor represented to
the Company in writing that it was either: (i) a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act;
or (ii) an "institutional accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D.
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
None.
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
10.1 Receivables Purchase Agreement, dated as of June 19, 2001,
among Tower Automotive Receivables Company, Inc., as seller,
R.J. Tower Corporation, as initial servicer, Blue Ridge
Asset Funding Corporation and Wachovia Bank, N.A., as agent.
(b) During the quarter for which this report is filed, the Company
filed the following Form 8-K Current Reports with the Securities
and Exchange Commission:
1. The Company's current report on Form 8-K dated July 30, 2001,
under Item 9 (Commission File No. 1-12733).
2. The Company's current report on Form 8-K dated September 4,
2001, under Item 5 and 7.(Commission File No. 1-12733).
3. The Company's current report on Form 8-K/A dated September 5,
2001, under Item 5 (Commission File No. 1-12733).
4. The Company's current report on Form 8-K dated September 28,
2001, under Item 9 (Commission File No. 1-12733).
-30-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TOWER AUTOMOTIVE, INC.
Date: November 14, 2001 By /s/ Anthony A. Barone
--------------------------------------------
Anthony A. Barone
Vice President, Chief Financial Officer
(principal accounting and financial officer)
-31-
TOWER AUTOMOTIVE, INC.
EXHIBIT INDEX TO FORM 10-Q
For the quarter ended September 30, 2001
Exhibits
- --------
10.1 Receivables Purchase Agreement, dated as of June 19, 2001, among
Tower Automotive Receivables Company, Inc., as seller, R.J. Tower
Corporation, as initial servicer, Blue Ridge Asset Funding
Corporation and Wachovia Bank, N.A., as agent.