<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 29, 1997
DURA AUTOMOTIVE SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-21139 38-3185711
(Commission File Number) (I.R.S. Employer Identification No.)
4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402
(Address of Principal Executive Offices) (Zip Code)
(612) 342-2311
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K, dated
September 12, 1997, relating to events occurring on August 29, 1997, as set
forth in the pages attached hereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The audited financial statements for GT Automotive Systems, Inc., the
business acquired, as of December 31, 1996 and for the six months ended
December 31, 1996, the audited financial statements for Gel, Inc. for the
ten months ended October 31, 1996 and the audited financial statements for
Tamco Ltd. for the six months ended June 30, 1996, together with a report
of independent public accountants, and the unaudited financial statements
of GT Automotive Systems, Inc. as of June 30, 1997 and for the six months
ended June 30, 1997 are hereby filed as part of this Report on Form 8-K/A
in the form attached as Exhibit A.
(b) PRO FORMA FINANCIAL INFORMATION.
The required pro forma financial information for the transaction that
is the subject of this Report is hereby filed as part of this Report on
Form 8-K/A in the form attached as Exhibit B.
(c) EXHIBITS.
23. Consent of Arthur Andersen LLP in the form attached as Exhibit
C.
<PAGE>
SIGNATURES
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.
DURA AUTOMOTIVE SYSTEMS, INC.
DATE: NOVEMBER 11, 1997 /s/ STEPHEN E.K. GRAHAM
STEPHEN E.K. GRAHAM, VICE PRESIDENT, CHIEF
FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER)
<PAGE>
Exhibit A
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
GT Automotive Systems, Inc.:
We have audited the accompanying consolidated balance sheet of GT Automotive
Systems, Inc. (a Michigan corporation) as of December 31, 1996, and the
related consolidated statements of income, stockholders' equity and cash
flows for the period from inception (July 1, 1996) to December 31, 1996.
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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of GT Automotive
Systems, Inc. as of December 31, 1996 and the results of their operations and
their cash flows for the period from inception (July 1, 1996) to December 31,
1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
October 31, 1997
<PAGE>
GT AUTOMOTIVE SYSTEMS, INC.
Consolidated Balance Sheets
As of
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1997
------------------ --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 299,217 $ -
Accounts receivable 8,294,679 8,287,408
Inventory 3,848,993 4,125,923
Unbilled tooling 1,326,233 590,524
Deferred taxes 377,486 377,486
Prepaid expenses 361,323 825,506
------------ -----------
Total current assets 14,507,931 14,206,847
PROPERTY, PLANT AND EQUIPMENT, net 12,361,241 13,729,781
OTHER ASSETS 17,900,836 17,679,028
------------ -----------
$44,770,008 $45,615,656
------------ -----------
------------ -----------
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 5,110,599 $ 5,157,525
Accrued liabilities 6,507,769 4,704,842
Current maturities of long-term debt 2,733,352 2,671,668
------------ -----------
Total current liabilities 14,351,720 12,534,035
SENIOR DEBT 18,423,545 20,762,564
SUBORDINATED DEBT 6,825,584 6,504,998
DEFERRED TAX LIABIILITY 1,271,279 1,271,729
OTHER LONG-TERM LIABILITIES 2,445,344 2,480,240
------------ -----------
Total liabilities 43,317,472 43,553,566
------------ -----------
STOCKHOLDERS' EQUITY
COMMON STOCK, $.01 par value; 5,000,000 shares authorized,
1,000,000 shares issued and outstanding 10,000 10,000
PAID-IN CAPITAL 1,100,000 1,100,000
CUMULATIVE TRANSLATION ADJUSTMENT (329) 12,677
RETAINED EARNINGS 342,865 939,413
------------ -----------
Total stockholders' equity 1,452,536 2,062,090
------------ -----------
$44,770,008 $45,615,656
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
<PAGE>
GT AUTOMOTIVE SYSTEMS, INC.
Consolidated Statements of Operations
For the Period From Inception (July 1, 1996) To December 31, 1996 and
For the Six Month Period Ended June 30, 1997 (Unaudited)
Six Month Six Month
Period Ended Period Ended
December 31, June 30,
1996 1997
------------- --------------
(Unaudited)
NET SALES $20,988,165 $31,554,998
COST OF SALES 18,269,246 27,047,642
----------- -----------
Gross profit 2,718,919 4,507,356
SELLING AND ADMINISTRATIVE EXPENSES 1,327,582 2,039,532
----------- -----------
Operating income 1,391,337 2,467,824
INTEREST EXPENSE 562,881 1,403,639
----------- -----------
Income before income taxes 828,456 1,064,184
INCOME TAXES 485,591 467,637
----------- -----------
Net income $ 342,865 $ 596,548
----------- -----------
----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
GT AUTOMOTIVE SYSTEMS, INC.
Consolidated Statements of Stockholders' Equity
For the Period From Inception (July 1, 1996) To December 31, 1996 and
For the Six Month Period Ended June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Cumulative
Common Paid-in Translation Retained
Stock Capital Adjustment Earnings Total
--------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SHARES ISSUED UPON FORMATION $10,000 $1,100,000 $ - $ - $ 1,110,000
NET INCOME - - - 342,865 342,865
TRANSLATION ADJUSTMENTS - - (329) - (329)
------- ---------- ------- -------- ----------
BALANCE, December 31, 1996 10,000 1,100,000 (329) 342,865 1,452,536
TRANSLATION ADJUSTMENTS - - 13,006 - 13,006
NET INCOME - - - 596,548 596,548
------- ---------- ------- -------- ----------
BALANCE, June 30, 1997 (Unaudited) $10,000 $1,100,000 $12,667 $939,413 $ 2,062,090
------- ---------- ------- -------- ----------
------- ---------- ------- -------- ----------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
GT AUTOMOTIVE SYSTEMS, INC.
Consolidated Statements of Cash Flows
For the Period From Inception (July 1, 1996) To December 31, 1996 and
For the Six Month Period Ended June 30, 1997
<TABLE>
<CAPTION>
Six Month Period Six Month Period
Ended Ended
December 31, 1996 June 30, 1997
----------------- ----------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 342,865 $ 596,548
Adjustments to reconcile net income to net cash provided by
(used in) operating activities-
Depreciation 322,517 648,236
Amortization 116,630 231,552
Deferred taxes 103,306 -
Change in operating items -
Accounts receivable (747,097) 7,271
Inventories 106,604 (276,930)
Prepaid expenses and other 25,379 (221,771)
Accounts payable 1,190,919 46,926
Accrued liabilities 481,824 (1,802,927)
------------ -----------
Net cash provided by (used in) operating activities 1,942,947 (771,095)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (936,183) (2,016,776)
Acquisitions:
Acquisition of Tamco Limited and Tamco Manufacturing Inc.
net of cash acquired of $300 (3,886,721) -
Acquisition of Gel, Inc., net of cash acquired of $360,819 (13,918,234) -
Acquisition costs (381,702) -
------------ -----------
Net cash used in investing activities (19,122,840) (1,484,871)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new debt 16,905,407 15,600,000
Repayment of debt (804,583) (15,061,323)
Borrowings on line of credit 10,998,379 18,146,827
Repayments on line of credit (10,620,093) (16,728,755)
Cash proceeds from issuance of common stock 1,000,000 -
------------ -----------
Net cash provided by financing activities 17,479,110 1,956,749
------------ -----------
NET CHANGE IN CASH 299,217 (299,217)
CASH, beginning of period - 299,217
------------ -----------
CASH, end of period $ 299,217 $ -
------------ -----------
------------ -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 209,501 $ 1,747,000
------------ -----------
------------ -----------
Cash paid for income taxes $ 326,500 $ 334,301
------------ -----------
------------ -----------
Noncash financing activities (see Note 1)-
Issuance of promissory note to former Tamco stockholder $ 1,545,270 $ -
------------ -----------
------------ -----------
Earn-out liability related to Tamco acquisition $ 1,168,305 $ -
------------ -----------
------------ -----------
Issuance of promissory note to former Gel shareholders $ 3,000,000 $ -
------------ -----------
------------ -----------
Conversion of Gel minority interest to GT common stock $ 110,000 $ -
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
GT AUTOMOTIVE SYSTEMS, INC.
Notes to Consolidated Financial Statements
December 31, 1996
(Information as of and for the six months ended June 30, 1997 is unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION:
GT Automotive Systems, Inc. (GT ) was formed as a result of a merger of WLP
Acquisition Company (WLP) with Gel, Inc. (Gel). The GT consolidated financial
statements include the accounts of GT and its wholly owned subsidiaries GT
Automotive System Windsor Limited (formerly Tamco Limited (Tamco)), a
Canadian Corporation and GTS Shift Systems, Inc. (formerly Tamco
Manufacturing Inc. (TMI)), collectively referred to as the Company. The
Company is a manufacturer and supplier of transmission shifter systems for
the North American automotive industry and has five manufacturing facilities
located in Ontario and Michigan.
WLP was capitalized with an initial cash contribution of $1 million for the
purpose of acquiring Tamco and TMI. Effective July 1, 1996, WLP activated a
new Canadian corporation that acquired 100 percent of the common stock of
Tamco Limited. Through a series of transactions, TMI (formerly a wholly owned
subsidiary of Tamco) became a wholly owned subsidiary of WLP. The total
purchase price of the acquisition was $7.3 million. A summary of the net
assets of TMI and Tamco that were acquired is as follows:
Cash $ 300
Other current assets 7,891,984
Property, plant and equipment 4,166,908
Goodwill 5,820,755
Deferred taxes 885,494
Other assets 41,921
------------
Total assets 18,807,362
------------
Liabilities (6,741,587)
Outside debt assumed (4,731,782)
------------
7,333,993
Note payable, former stockholder 1,545,270
Earn out liability 1,168,305
Note payable, TMW Enterprise of Canada 733,397
------------
Cash investment $ 3,887,021
------------
------------
Under the terms of the earn out up to $440,000 would be paid in 1997 and up
to $733,000 in 1998 if certain financial performance is achieved. The earn
out amount recorded is management's estimate of the amount that they believe
is probable will be paid out. Subsequent adjustments, if any, to this
liability will result in a corresponding adjustment to goodwill.
<PAGE>
Effective November l, 1996, WLP acquired from the Gel stockholders 80 percent
of the outstanding common stock of Gel for $9.48 million in cash and a $3
million, 8.25 percent promissory note. Immediately prior to the acquisition,
Gel redeemed the common stock of two of its five stockholders (representing,
at the time, 20 percent of Gel's outstanding common stock) for $4.2 million
in cash and acquired certain intellectual property from one of these
stockholders for $600,000. Following the stock acquisition, WLP and Gel were
merged and the merged company was renamed GT Automotive Systems, Inc. In
connection with the merger the 20 percent minority interest in Gel was
converted to a l0 percent interest in GT and assigned a value of $110,000. A
summary of the Gel net assets acquired is as follows:
Cash $ 360,819
Other current assets 4,520,004
Property, plant and equipment 7,594,357
Goodwill and intangible assets 11,722,872
Other assets 69,432
------------
Total assets 24,267,484
Current liabilities (4,512,285)
Deferred taxes (840,195)
Existing debt (1,525,951)
Minority interest (110,000)
------------
Total purchase price 17,279,053
Subordinated note payable (3,000,000)
------------
Cash investment $ 14,279,053
------------
------------
The above acquisitions have been accounted for as a purchase transaction,
accordingly the assets and liabilities have been stated at fair value. The
purchase price has been allocated to the assets and liabilities in accordance
with Accounting Principles Board Opinion Number 16 and the excess of the
purchase price over the fair value of the net assets acquired has been
recorded as goodwill.
On August 29, 1997, the Company was acquired by Dura Shifting Holding Corp.
(Dura) , a wholly-owned subsidiary of Dura Automotive Systems, Inc. (see Note
10), pursuant to the terms of a Stock Purchase Agreement (the Acquisition).
2. SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of GT and its
subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments with original
maturities of three months or less.
<PAGE>
INVENTORIES
Inventories are valued at the lower of first-in, first-out cost or market.
Inventories consisted of the following:
December 31, June 30,
1996 1997
------------ ----------
(Unaudited)
Raw materials $2,066,743 $2,258,897
Work in process 1,168,731 1,224,324
Finished goods 613,519 642,702
---------- ----------
$3,848,993 $4,125,923
---------- ----------
---------- ----------
UNBILLED CUSTOMER TOOLING
Unbilled customer tooling represents the excess of cost over billings on
uncompleted tooling projects. The Company receives a specific purchase order
for this tooling and is reimbursed by the customer within one operating
cycle. Costs are deferred until reimbursed by the customer. Forecasted
losses on incomplete projects are recognized currently.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. For financial reporting
purposes, depreciation is provided using the straight-line method over the
following estimated useful lives:
Buildings and improvements 5 to 40 years
Machinery and equipment 2 to 15 years
Maintenance and repairs are charged to expense as incurred. Major
betterments and improvements which extend the useful life of the item are
capitalized and depreciated. The cost and accumulated depreciation of
property, plant and equipment retired or otherwise disposed of are removed
from the related accounts and any residual values are charged or credited to
income.
<PAGE>
Property, plant and equipment consisted of the following as of:
December 31, June 30,
1996 1997
----------- -----------
(Unaudited)
Land and buildings $ 5,269,818 $ 6,314,328
Machinery and equipment 7,413,940 8,386,206
----------- -----------
12,683,758 14,700,534
Less- Accumulated depreciation (322,517) (970,753)
----------- -----------
Net property, plant
and equipment $12,361,241 $13,729,781
----------- -----------
----------- -----------
OTHER ASSETS
Other assets are comprised primarily of goodwill that is being amortized
using the straight-line method over 40 years from the date of the related
acquisition. Accumulated amortization is $116,630 as of December 31, 1996 and
$348,182 as of June 30, 1997.
The Company periodically evaluates whether events and circumstances have
occurred which may affect the estimated useful life or the recoverability of
the remaining balance of its long-lived assets. If such events or
circumstances indicate that the carrying amount of such assets may not be
recoverable, the Company estimates the future cash flows expected to result
from the assets and their eventual disposition. If the sum of the expected
future cash flows (undiscounted and without interest charges) is less than
the carrying amount of the long-lived assets, the Company will recognize an
impairment loss. No loss has been recognized for the six month period ended
December 31, 1996 or June 30, 1997.
ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
June 30,
December 31, 1996 1997
----------------- ----------
(Unaudited)
Compensation and benefits $1,580,385 $1,043,332
Liability for loss contracts 2,074,303 1,369,322
Customer advances 751,996 496,445
Other 2,101,085 1,795,743
---------- ----------
$6,507,769 $4,704,842
---------- ----------
---------- ----------
<PAGE>
INCOME TAXES
The Company accounts for income taxes under the liability method, whereby
deferred income taxes are recognized at currently enacted income tax rates to
reflect the tax effect of temporary differences between the financial
reporting and tax bases of assets and liabilities.
FOREIGN CURRENCY TRANSLATION
The assets of the Company's Canadian operations are translated into U.S.
dollars using current exchange rates with the effects of translation
adjustments deferred and included as separate component of stockholders'
equity. Revenues and expenses are translated at the average rate of exchange
during the period.
UNAUDITED FINANCIAL INFORMATION
The accompanying balance sheet as of June 30, 1997 and the statements of
operations, stockholders' equity and cash flows for the six month period
ended June 30, 1997, are unaudited. In the opinion of management, such
financial statements include all adjustments, consisting solely of normal
recurring adjustments, necessary for a fair presentation of results for these
interim periods. The revenues and expenses for the six-month period ended
June 30, 1997 are not necessarily indicative of results to be expected for
the entire year.
USE OF ESTIMATES
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles required management to make
estimates and assumptions that affected the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Such estimates related primarily to the
carrying amounts of accounts receivable, inventories and customer tooling
balances. The ultimate results could differ from those estimates.
3. MAJOR CUSTOMERS:
The Company sells its products directly to automobile manufacturers and their
direct suppliers. Following is a summary of customers that accounted for
more than 10% of revenues:
Six Month Six Month
Period Ended Period Ended
December 31, June 30,
1996 1997
------------ ------------
(Unaudited)
Ford 49% 44%
Chrysler 25 19
General Motors 6 14
Receivables from these customers represented 71% of total accounts receivable
at December 31, 1996 and 75% at June 30, 1997.
<PAGE>
4. INCOME TAXES:
The provision for income taxes for the period ended December 31, 1996 is
summarized below:
Current $303,317
Deferred 103,306
State and local 78,968
--------
$485,591
--------
--------
The effective tax rate exceeds the U.S. statutory rate primarily due to
goodwill amortization that is not deductible for tax purposes and due to
state and local taxes.
As of December 31, 1996, the Company had provided a valuation allowance for
its net deferred income taxes, as based on available evidence, it is more
likely than not that net deferred tax assets will not be realized. A summary
of deferred tax assets (liabilities) is as follows:
Assets:
Accrued liabilities $1,712,859
Net operating loss carryforward 640,926
Other assets 365,281
----------
2,719,066
Liabilities: Property, plant and equipment (2,137,859)
----------
581,207
Valuation allowance (1,475,000)
----------
$ (893,793)
----------
----------
5. EMPLOYEE BENEFIT PLANS:
The Company provides certain health, dental and vision care benefits for
retired employees of its Canadian subsidiary. The employees become eligible
for these benefits if they retire from the Company at age 55 or older.
Net periodic post-retirement benefit costs include the following components
as of December 31, 1996:
Service cost, benefits earned during year $43,442
Interest on accumulated benefit 42,698
-------
$86,140
-------
-------
The following is an analysis of the liability included in other long-term
liabilities on the Company's balance sheet at December 31, l996:
<PAGE>
Accumulated post-retirement benefit obligation:
Retirees $ 313,599
Active plan participants not yet eligible 963,440
----------
Accrued
post-retirement benefits $1,277,039
----------
----------
A 12% increase in the cost of covered health, dental and vision care benefits
was assumed for 1997. This rate is assumed to decrease gradually to a rate of
5% by 2005 and remain at that level thereafter. The cost trend rate
assumption has a significant effect on the amounts reported. For example, a
1% increase in the rate would increase the accumulated post-retirement
benefit obligation by $308,000 (or 24%) at the end of 1996; the service cost
by $12,500 (29%) and the interest cost by $10,400 (24%) for the year. The
weighted average discount rate used in determining the accumulated
post-retirement benefit obligation was 7.25%.
In addition, the Company maintains two 401(k) defined contribution plan for
substantially all U. S. employees and participates in a multiemployer plan
covering substantially all of its Canadian hourly employees. The Company's
obligation under the multiemployer plan is limited to a fixed contribution
per employee hour worked. Company contributions under these plans are charged
to operations and were to $254,000 for the six-month period ended December
31, 1996 and $170,000 for the six-month period ended June 30, 1997.
6. RELATED-PARTY TRANSACTIONS:
Interest of $138,906 for the six-month period ended December 31, 1996 and
$167,756 for the six-month period ended June 30, 1997 was charged to
operations related to the subordinated debt with related parties. In addition
to the subordinated debt as shown in Note 9, approximately $500,000 of
amounts owed to related parties is included in accounts payable and is owed
to TMW Enterprises and TMW Enterprises of Canada primarily for costs incurred
in connection with the acquisitions of Gel, TMI and Tamco as of December 31,
1996 and June 30, 1997
7. EMPLOYMENT AGREEMENTS:
GT has entered into employment agreements with the three prior Gel (current
GT) stockholders and one TMI employee. The agreements call for various annual
base salaries plus benefits. In addition, each of the former Gel executives
shall be eligible for an annual bonus if certain mutually agreed upon
business goals are achieved. The Gel agreements have a five-year term and the
TMI agreement has a three-year term. The agreements carry a noncompete clause
that prohibits the executive from competing for a period that is the greater
of the remaining term of the agreement or two years (one year for the TMI
employee) from the date of termination of employment.
<PAGE>
8. COMMITMENTS AND CONTINGENCIES:
LEASES
The Company is obligated under operating lease agreements for a building,
machinery and equipment, computers and vehicles.
Future minimum rental payments required under the operating leases are as
follows as of December 31, 1996:
1997 $ 584,716
1998 448,187
1999 284,234
2000 239,772
2001 and after 513,606
----------
Total minimum payments required $2,070,515
----------
----------
Rental expense was $270,000 for the six-month period ended December 31, 1996
and $402,350 for the six-month period ended June 30, 1997.
ENVIRONMENTAL AND LEGAL MATTERS
Due to the nature of its business, the Company may, from time to time, be
exposed to potential liabilities to clean up environmental contaminates. In
addition, the Company is periodically involved in legal proceedings in the
ordinary course of business. In the opinion of management, such matters are
not expected to have a material impact on the Company's future operating
results or financial position.
<PAGE>
9. DEBT:
Debt consists of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
----------- ------------
<S> <C> <C>
Senior debt:
Notes payable to banks, refinanced in January 1997
with the proceeds from a term loan $14,279,053 $ -
Notes payable to banks, refinanced in January 1997
with the proceeds from a revolving line of credit 5,744,492 -
Term loan payable to bank, due in quarterly installments
of $400,000 due November 2003 - 15,200,000
Revolving line of credit, due November 2003 - 7,162,564
----------- -----------
20,023,545 22,362,564
Less- Current maturities 1,600,000 1,600,000
----------- -----------
$18,423,545 $20,762,564
----------- -----------
----------- -----------
Subordinated debt (all due to related parties):
Notes payable to stockholders, 8.25 percent payable in
quarterly installments of $222,046 including accrued
interest, due November 1, 2000 $ 3,000,000 $ 2,676,355
Notes payable to former Tamco stockholder, 8 percent,
payable in quarterly installments of $95,838, due
July 1, 2000 1,341,725 1,283,100
Note payable to TMW Enterprises, 6.75 percent, due
July 1, 2004 1,757,317 1,757,317
Note payable to GT stockholders, 6.75 percent, due
July 1, 2004 1,129,703 1,129,703
Note payable to TMW Enterprises of Canada, 8 percent,
due May 6, 2001 730,191 730,191
----------- -----------
7,958,936 7,576,666
Less- Current maturities 1,133,352 1,071,668
----------- -----------
$ 6,825,584 $ 6,504,998
----------- -----------
----------- -----------
</TABLE>
Subsequent to December 31, 1996, all notes payable to bank were refinanced
with the proceeds from a $16 million term loan and a $9 million revolving
line of credit (senior debt). Interest on the senior debt is payable at
various dates and at GT's option accrues at either the bank's prime rate
(plus .5 percent to 2.5 percent) or the Eurodollar rate (plus up to .5
percent). Amounts advanced under the line of credit are based on a percentage
of eligible accounts receivable and inventory. In addition, GT must pay a fee
on the average unused balance as defined by the revolving credit agreement at
a rate varying from .2 percent to .375 percent of the average unused balance.
The senior debt is collateralized by substantially all assets of GT.
<PAGE>
The senior debt agreement contains certain financial covenants, including
maintenance of minimum tangible net worth, a minimum debt service coverage
ratio and a limitation on total senior debt based upon earnings before
interest, taxes, depreciation and amortization. In addition, GT is prohibited
from paying dividends while the senior debt is outstanding. The Company was
in compliance with, or has received waivers for, all such covenants as of
December 31, 1996. Maturities of long-term debt are as follows as of December
31, 1996:
1997 $ 2,733,352
1998 2,733,352
1999 3,533,352
2000 3,341,669
2001 3,130,191
Thereafter 12,510,565
------------
$ 27,982,481
------------
------------
Subsequent to June 30, 1997, the Company's debt was refinanced in conjunction
with acquisition by Dura (see Note 10).
10. SUBSEQUENT EVENT:
ACQUISITION BY DURA
On August 29, 1997 Dura acquired from eight individuals, one living trust and
one limited partnership all of the issued and outstanding stock of GT for
total consideration of approximately $46 million in cash and approximately
$15 million of contingent consideration. The acquisition of the Company will
be accounted for by Dura as a purchase and accordingly, the Company's assets
and liabilities will be recorded at their estimated fair values at the
acquisition date.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Gel, Inc.:
We have audited the accompanying statements of operations and cash flows of
Gel, Inc. (a Delaware Corporation) for the ten-month period ended October 31,
1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, Gel, Inc.'s results of operations and cash flows for
the ten-month period ended October 31, 1996 in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
October 17, 1997
<PAGE>
GEL, INC.
Statement of Operations
For the Ten Months Ended October 31, 1996
NET SALES $19,945,147
COST OF SALES 15,318,839
-----------
Gross profit 4,626,308
SELLING AND ADMINISTRATIVE EXPENSES 2,900,290
-----------
Operating income 1,726,018
OTHER INCOME (EXPENSES):
Interest expense (148,145)
Other 31,769
-----------
Net income $ 1,609,642
-----------
-----------
The accompanying notes are an integral part of this
financial statement.
<PAGE>
GEL, INC.
Statement of Cash Flows
For the Ten Months Ended October 31, 1996
<TABLE>
<CAPTION>
October 31,
1996
-----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,609,642
Adjustments to reconcile net income to net cash provided by operating
activities-
Depreciation 498,197
Loss on sale of property and equipment 47,850
(Increase) decrease in assets:
Accounts receivable 425,125
Inventories (259,923)
Prepaid expenses and other assets 140,933
Increase (decrease) in liabilities:
Accounts payable (154,053)
Accrued liabilities 75,318
----------
Total adjustments 773,447
----------
Net cash provided by operating activities 2,383,089
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of plant and equipment 42,360
Purchases of property, plant and equipment (805,121)
----------
Net cash used in investing activities (762,761)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt (674,325)
Proceeds from issuance of debt 500,000
Dividends paid (1,097,160)
----------
Net cash used in financing activities (1,271,485)
----------
NET INCREASE IN CASH 348,843
CASH, beginning of period 11,976
----------
CASH, end of period $ 360,819
----------
----------
SUPPLEMENTAL CASH FLOW INFORMATION, cash paid during the year for
interest $ 148,145
----------
----------
</TABLE>
The accompanying notes are an integral part of this
financial statement.
<PAGE>
GEL, INC.
Notes to Financial Statements
October 31, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION:
Gel, Inc. (Gel or the Company) designs and manufactures automotive parts,
transmissions and shifter systems for the North American automotive industry
and has manufacturing facilities in Michigan. The Company sells primarily to
original equipment manufacturers located in the United States.
2. SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and highly liquid investments with
original maturity of three months or less.
INVENTORIES:
Inventories are valued at the lower of cost or market. The first-in,
first-out (FIFO) method of determining costs is used. Cost includes
material, labor and manufacturing overhead required in the production of the
Company's product.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. Predominately all
depreciation is computed using the straight-line method over the following
estimated useful lives:
Buildings and improvements 3 to 40 years
Machinery and equipment 3 to 10 years
Office furniture and fixtures 3 to 10 years
Vehicles 3 to 5 years
MAJOR CUSTOMERS:
Sales to customers who represents greater than 10% of sales for the ten-month
period ended October 31, 1996 are as follows:
1996
------
Ford 29%
General Motors 33%
United Technologies 20%
<PAGE>
USE OF ESTIMATES
The preparation of the 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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Ultimate results could differ from those estimates.
3. DEBT:
The Company has a $2,000,000 line of credit with a bank with no outstanding
balance as of October 31, 1996. This line bears interest at the bank's prime
rate (8.25 percent at October 31, 1996) minus one quarter of a percent.
Debt consists of the following at October 31, 1996:
Notes payable to bank, $24,103 monthly at 7.6% per
annum, due through 1998, collateralized by
machinery and equipment $664,008
Notes payable to bank, $10,103 monthly at 7.85% per
annum, due through 2000, collateralized by machinery
and equipment 416,223
Note payable to bank $9,889 monthly at 6.95% per annum,
due through 2001, collateralized by machinery and
equipment 442,376
Other 3,344
----------
1,525,951
Less current maturities 418,532
----------
$1,107,419
----------
----------
Future maturities of long-term debt are as follows:
Year Amount
---------------------- ----------
November-December 1996 $ 69,250
1997 418,657
1998 577,935
1999 205,969
2000 220,898
2001 33,242
Notes payable to bank contain certain financial covenants, which, among other
matters, require the Company to maintain certain levels of net worth. The
Company was in compliance with these covenants at October 31, 1996.
<PAGE>
4. FEDERAL INCOME TAX:
The Company is an S-Corporation under the applicable provisions of the
Internal Revenue Code. Accordingly, the Company's taxable income or loss is
reported by the stockholders in their personal returns, and the Company does
not pay any federal income tax. The Company paid dividends of $1,097,160 to
the stockholders to cover their personal tax liability during the ten months
ended October 31, 1996.
5. SALE OF STOCK:
Effective January 1, 1992, certain members of management purchased 80 percent
of the Company's common stock from the Company's majority shareholder
(Seller) for cash and a note payable to the Seller in the amount of
$3,704,419, with monthly payments of $48,779 at an annual rate of interest of
15 percent over 20 years. The balance on this note was $3,500,529 at October
31, 1996. The note payable to the seller is guaranteed by the Company. This
note was repaid on November 1, 1996, in connection with the common stock
redemption and acquisition (see Note 7).
6. EMPLOYEE BENEFIT PLAN:
The Company maintains a 401(k) defined contribution plan for substantially
all the employees. No contributions were made for the ten months ended
October 31, 1996.
7. ACQUISITION BY WLP:
Effective November 1, 1996, the Company redeemed 98,400 shares of common
stock (20% of its outstanding common stock) for $4.16 million. In addition,
the Company paid $600,000 to one of the stockholders whose common stock was
redeemed in exchange for an assignment of the stockholder's intellectual
property rights. The redemption and payment were financed from the proceeds
of a $4.76 million promissory note from WLP Acquisition Company (WLP). WLP
is a holding company with one operating subsidiary, Tamco LTD. Concurrent
with the stock redemption, WLP acquired from the stockholders for $9.48
million in cash and a $3 million promissory note, 314,880 shares of the
Company's common stock (80% of the outstanding common stock after the
redemption). Upon completion of the common stock redemption, WLP was merged
with the Company, and the merged company was renamed GT Automotive Systems
(GT). Under the terms of the merger agreement, the remaining individual
stockholders of the Company (excluding WLP) exchanged their 20% of the common
stock of the Company for 10% of the outstanding common stock of GT.
8. COMMITMENTS AND CONTINGENCIES:
LEASES
The Company is obligated under operating lease agreements for a building,
machinery and equipment, computers and vehicles.
Future minimum rental payments required under the operating leases at October
31, 1996 are as follows:
<PAGE>
1997 $ 543,801
1998 488,187
1999 284,234
2000 239,772
2001 and thereafter 513,606
----------
$2,069,600
----------
----------
Rental expense under the leases was $473,148 for the ten months ended
October 31, 1996.
ENVIRONMENTAL AND LEGAL MATTERS:
Due to the nature of its business, the Company may, from time to time, be
exposed to potential liabilities to clean up environmental contaminants. In
addition, the Company is periodically involved in legal proceedings in the
ordinary course of business. In the opinion of management, such matters are
not expected to have a material impact in the Company's future operating
results or financial position.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Tamco Limited:
We have audited the accompanying consolidated statements of operations and
cash flows of Tamco Limited (a Canadian corporation) and subsidiary for the
six months ended June 30, 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, Tamco Limited and Subsidiary's results of operations
and cash flows for the six months ended June 30, 1996 in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
October 17, 1997
<PAGE>
TAMCO LIMITED
Consolidated Statement of Operations (in Canadian Dollars)
For the Six Months Ended June 30, 1996
NET SALES $ 23,826,156
COST OF SALES 20,321,580
-------------
Gross profit 3,504,576
SELLING AND ADMINISTRATIVE EXPENSES 928,004
-------------
Operating income 2,576,572
INTEREST EXPENSE 222,036
-------------
Net income before income taxes 2,354,536
PROVISION FOR INCOME TAXES 175,000
-------------
Net income $ 2,179,536
-------------
-------------
The accompanying notes are an integral part of this
consolidated financial statement.
<PAGE>
TAMCO LIMITED
Consolidated Statement of Cash Flows (in Canadian Dollars)
For the Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,179,536
Adjustments to reconcile net income to net cash provided by operating
activities-
Depreciation 438,000
Amortization 78,000
Deferred income taxes (38,000)
(Increase) decrease in operating items:
Accounts receivable (718,774)
Inventory (1,442,155)
Prepaid expenses and other (202,488)
Accounts payable and accrued liabilities (62,952)
------------
Net cash provided by operating activities 231,167
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (387,819)
------------
Net cash used in operating activities (387,819)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (313,894)
Borrowings on line of credit, net 470,955
------------
Net cash provided by financing activities 157,061
------------
Increase in cash during the period 409
Cash, beginning of period -
------------
Cash, end of period $ 409
------------
------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 107,985
------------
------------
Cash paid for income taxes $ 314,766
------------
------------
</TABLE>
The accompanying notes are an integral part of this
consolidated financial statement.
<PAGE>
TAMCO LIMITED
Notes to Consolidated Financial Statements (in Canadian Dollars)
June 30, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION:
The accompanying financial statements include the accounts of Tamco Limited
(Tamco or the Company), a Canadian corporation, and its wholly owned
subsidiary Tamco Manufacturing Inc. (TMI), a Michigan Corporation. Tamco and
its subsidiary were acquired by WLP Acquisition Corp. (WLP) on July 1, 1996
(see Note 5).
The Company is a manufacturer and supplier of transmission shifter systems
for the North American automotive industry and has four manufacturing
facilities located in Ontario and Michigan.
2. SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiary (collectively referred to as the Company). All significant
intercompany accounts and transactions have been eliminated in consolidation.
CASH EQUIVALENTS
Cash equivalents consist of money market instruments with original maturities
of three months or less and are stated at fair value.
INVENTORY
Inventories are valued at the lower of first-in, first-out (FIFO) cost or
market and consists of raw materials, labor and manufacturing overhead
incurred in the manufacture of the Company's product.
PREPAID CUSTOMER TOOLING
Prepaid customer tooling is recorded at cost. Amortization is provided by
charges to income on the basis of estimated units of production over the
estimated useful life of the tooling, not to exceed five years from
commencement of commercial production.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost and depreciation is
provided by charges to income using the following rates:
Building 2-1/2% straight-line
Machinery and equipment 10% straight-line
Computer equipment 50% straight-line
<PAGE>
-2-
Maintenance and repairs are charged to expense as incurred. Major
betterments and improvements which extend the useful life of the item are
capitalized and depreciated. The cost and accumulated depreciation of
property, plant and equipment retired or otherwise disposed of are removed
from the related accounts and any residual values are charged or credited to
income.
OTHER ASSETS
Other assets consist primarily of patents that are recorded at the lower of
cost and net realizable value. Amortization is provided by charges to income
on a straight-line basis over their expected life.
MAJOR CUSTOMERS
Sales to customers who represents greater than 10% of sales for the six-month
period ended June 30, 1996 are as follows:
June 1996
---------
Ford 50%
Chrysler 28%
INCOME TAXES
Deferred income taxes result from the recognition of the income tax effect of
timing differences in reporting transactions for financial and tax purposes.
FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities denominated in foreign currency are
translated into Canadian dollars at the rate of exchange in effect at
year-end. Non-monetary assets and liabilities are translated using
historical exchange rates. Revenue and expenses are translated at average
exchange rates for the year, with the exception of amortization which is
translated at the rates of exchange applicable to the related assets.
The Company's wholly owned foreign subsidiary, TMI, is considered to be a
self-sustaining foreign subsidiary. Its balance sheet accounts have been
translated into Canadian dollars using the rate of exchange in effect at
year-end and its revenue and expense accounts have been translated using the
average exchange rate for the year. Gains or losses arising from these
translation adjustments are charged to shareholder's equity.
USE OF ESTIMATES
The preparation of consolidated 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 at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Ultimate results could
differ from those estimates.
<PAGE>
-3-
3. INCOME TAXES:
The provision for income taxes for the six-month period ended June 30, 1996 is
summarized below:
Current $ 205,000
Deferred (38,000)
State and local 8,000
----------
$ 175,000
----------
----------
4. COMMITMENTS AND CONTINGENCIES:
ENVIRONMENTAL MATTERS
Due to the nature of the business, the Company may, from time to time, be
exposed to potential liabilities to clean up environmental contaminants. In
addition, the Company is periodically involved in legal proceedings in the
ordinary course of business. In the opinion of management, such matters are
not expected to have a material impact on the Company's future operating
results or financial position.
LEASES
The Company is obligated under operating lease agreements for a building and
equipment. Future minimum lease payments under the operating leases are as
follows as of June 30, 1996:
1997 $217,293
1998 56,500
1999 15,024
2000 15,024
2001 15,024
--------
$318,865
--------
--------
Rental expense under the leases was $180,000 for the six months ended June
30, 1996.
5. ACQUISITION OF THE COMPANY
On July 1, 1996 WLP acquired the Company for total consideration of
approximately $7.3 million. This transaction was consummated through the
purchase of common stock of the Company.
<PAGE>
EXHIBIT B
PRO FORMA FINANCIAL INFORMATION
On August 29, 1997, Dura Shifter Holding Corp., a wholly owned indirect
subsidiary of Dura Automotive Systems, Inc. (the "Company"), acquired from
eight individuals, one living trust, and one limited partnership all of the
issued and outstanding stock of GT Automotive Systems, Inc. (the "Acquired
Operation"). The Acquired Operation designs and manufactures gearshift lever
systems and turn signal and tilt lever assemblies for the North American
automotive industry. The acquisition of the Acquired Operation was accounted
for using the purchase method of accounting and, accordingly, the results of
operations of the Acquired Operation are consolidated with the results of
operations of the Company as of the date of acquisition.
The following unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1996 gives effect to the
acquisition of the Acquired Operation, the December 5, 1996 acquisition from
Sparton Corporation of the KPI Group (whose name was changed to Dura
Automotive Systems, Inc. Shifter Operations ("DASSO")) and the Company's
August 14, 1996 initial public offering of 3,975,000 shares of Class A common
stock ("Offering") as if such transactions had occurred at the beginning of
the year. The following unaudited pro forma condensed consolidated statement
of operations for the six months ended June 30, 1997 gives effect to the
acquisition of the Acquired Operation as if it had occurred at the beginning
of the period. The following unaudited condensed consolidated balance sheet
as of June 30, 1997 reflects the acquisition of the Acquired Operation as if
it had occurred on that date. The unaudited pro forma financial statements
are based on a preliminary allocation of the purchase price of the Acquired
Operation and do not purport to represent what the Company's results of
operations would actually have been if such transaction in fact had occurred
at such dates or to project the Company's results of future operations. The
unaudited pro forma information should be read in conjunction with the
Company's audited historical consolidated financial statements and notes
thereto included in the Company's 1996 Annual Report to Stockholders and with
the audited historical financial statements and notes thereto of the Acquired
Operation filed herewith.
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 1997
(in thousands)
<TABLE>
<CAPTION>
Acquired
Company Operation
as of as of Pro Forma
June 30, 1997 June 30, 1997 Adjustments Total
-------------- -------------- ------------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,779 $ - $ - $ 10,779
Accounts receivable 67,913 8,287 - 76,200
Inventories 24,910 4,126 - 29,036
Other current assets 17,651 1,794 - 19,445
--------- --------- --------- ---------
Total current assets 121,253 14,207 - 135,460
Property, plant and equipment, net 62,510 13,730 - 76,240
Goodwill and other assets, net 135,499 17,679 27,441 (2) 180,619
--------- --------- --------- ---------
$ 319,262 $ 45,616 $ 27,441 $ 392,319
--------- --------- --------- ---------
--------- --------- --------- ---------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $ 2,512 $ 2,672 $ - $ 5,184
Accounts payable 34,782 5,158 - 39,940
Accrued liabilities 42,689 4,705 - 47,394
--------- --------- --------- --------
Total current liabilities 79,983 12,535 - 92,518
Long-term debt, net of current maturities 119,629 27,268 16,260 (1) 163,157
Other noncurrent liabilities 25,399 3,751 13,243 (3) 42,393
--------- --------- --------- --------
Stockholders' investment:
Common stock 88 10 (10)(4) 88
Additional paid-in capital 63,282 1,100 (1,100)(4) 63,282
Retained earnings 33,030 939 (939)(4) 33,030
Cumulative translation adjustment (2,002) 13 (13)(4) (2,002)
Common stock subscriptions receivable (147) - - (147)
--------- --------- --------- --------
Total stockholders' investment 94,251 2,062 (2,062) 94,251
--------- --------- --------- --------
$ 319,262 $ 45,616 $ 27,441 $ 392,319
--------- --------- --------- --------
--------- --------- --------- --------
</TABLE>
See Accompanying Notes to Pro Forma Condensed Consolidated
Balance Sheet.
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(1) Adjustment to reflect the incremental borrowings to finance the purchase
price of the Acquired Operation ($45,000) and transaction costs ($1,200).
(2) To record the excess of the purchase price of the Acquired Operation over
the fair value of the net assets acquired as goodwill. The goodwill will
be amortized on a straight-line basis over forty years.
(3) To record management's preliminary estimate of reserves to be established
in connection with the acquisition of the Acquired Operation, including
costs to be incurred to exit certain manufacturing activities of the
Acquired Operation and other costs. These reserves have been established
based on preliminary estimates. Changes in these estimates will result in
adjustment to the recorded goodwill.
(4) To eliminate the historical stockholders' investment of the Acquired
Operation.
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
Acquired Pro Forma
Company DASSO(7) Operation(6) Combined Adjustments
----------- ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 245,329 $ 89,815 $ 57,837 $ 392,981 $ -
Cost of sales 208,939 79,070 48,145 336,154 (1,219)(1)
---------- --------- --------- ---------- -----------
Gross profit 36,390 10,745 9,692 56,827 1,219
Selling, general & administrative expenses 16,028 6,569 4,770 27,367 -
Amortization expense 1,036 - 413 1,449 2,500 (2)
---------- --------- --------- ---------- -----------
Operating income 19,326 4,176 4,509 28,011 (1,281)
Interest expense 2,589 - 2,385 4,974 6,883 (3)
---------- --------- --------- ---------- -----------
Income before income taxes 16,737 4,176 2,124 23,037 (8,164)
Provision for income taxes 6,609 1,700 850 9,159 (3,143)(4)
---------- --------- --------- ---------- -----------
Net income $ 10,128 $ 2,476 $ 1,274 $ 13,878 $ (5,021)
---------- --------- --------- ---------- -----------
---------- --------- --------- ---------- -----------
Weighted average common and common
equivalent shares outstanding 6,462
----------
----------
Earnings per common and common
equivalent share $ 1.57
----------
----------
Offering Pro Forma
Pro Forma Adjustments As Adjusted
----------- -------------- --------------
Revenues $ 392,981 - $ 392,981
Cost of sales 334,935 - 334,935
---------- ---------- ----------
Gross profit 58,046 - 58,046
Selling, general & administrative expenses 27,367 - 27,367
Amortization expense 3,949 - 3,949
---------- ---------- ----------
Operating income 26,730 - 26,730
Interest expense 11,857 (2,333)(5) 9,524
---------- ---------- ----------
Income before income taxes 14,873 2,333 17,206
Provision for income taxes 6,016 912 (5) 6,928
---------- ---------- ----------
Net income $ 8,857 $ 1,421 $ 10,278
---------- ---------- ----------
---------- ---------- ----------
Weighted average common and common
equivalent shares outstanding 6,462 2,359 8,821
---------- ---------- ----------
---------- ---------- ----------
Earnings per common and common
equivalent share $ 1.37 $ 1.17
---------- ----------
---------- ----------
</TABLE>
See Accompanying Notes to Pro Forma Condensed Consolidated
Statements of Operations.
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(1) To reflect the change in depreciation expense resulting from adjustments to
the depreciable lives of property, plant and equipment of DASSO to their
estimated useful lives at the time of the acquisition and from adjustments
to value such property, plant and equipment at fair value such property,
plant and equipment at fair value as of the date of acquisition.
(2) Represents amortization of goodwill arising from the acquisitions of the
Acquired Operation ($712) and DASSO ($1,788). Goodwill will be amortized
on a straight-line basis over forty years.
(3) Represents incremental interest expense arising from indebtedness incurred
to acquire the Acquired Operation ($1,295) and DASSO ($5,588). Interest
was calculated using the Company's weighted average interest rates for the
periods.
(4) To record the income tax effects of the pro forma adjustments and reflect
the income tax provision at the Company's effective income tax rate of 40%.
(5) Represents the reduction in interest expense and corresponding increase in
income tax expense arising from the use of the proceeds from the Offering
to repay indebtedness, calculated using the Company's weighted average
interest rate on debt assumed to be retired.
(6) Represents the pro forma results of operations of the Acquired Operation
for the year ended December 31, 1996. The pro forma results give effect to
the Acquired Operations 1996 acquisitions of Gel, Inc. (Gel) and Tamco,
Ltd. (Tamco). See Exhibit A for financial statements of the Acquired
Operation, Gel and Tamco.
<TABLE>
<CAPTION>
GT Automotive Pro Forma Acquired
Systems, Inc. Gel Tamco Adjustments Operation
------------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $ 20,988 $ 19,945 $ 16,904 $ - $ 57,837
Cost of sales 18,269 15,319 14,418 139 (a) 48,145
--------- --------- --------- ------- ---------
Gross profit 2,719 4,626 2,486 (139) 9,692
S,G&A 1,212 2,900 658 - 4,770
Amortization expense 116 - - 297 (b) 413
--------- --------- --------- ------- ---------
Operating income 1,391 1,726 1,828 (436) 4,509
Interest expense 563 116 158 1,548 (c) 2,385
--------- --------- --------- ------- ---------
Income before income taxes 828 1,610 1,670 (1,984) 2,124
Provision for income taxes 486 - 124 240 (d) 850
--------- --------- --------- ------- ---------
Net income $ 342 $ 1,610 $ 1,546 $ (2,224) $ 1,274
--------- --------- --------- ------- ---------
--------- --------- --------- ------- ---------
</TABLE>
<PAGE>
(a) To reflect the change in depreciation expense resulting from adjustments
to the depreciable lives of property, plant and equipment of Gel and Tamco
to their estimated useful lives at the time of the acquisition and from
adjustments to value such property, plant and equipment at fair value such
property, plant and equipment at fair value as of the date of acquisition
(b) Represents amortization of goodwill arising from the acquisitions of Gel
and Tamco. Goodwill will be amortized on a straight-line basis over forty
years.
(c) Represents incremental interest expense arising from indebtedness incurred
to acquire Gel and Tamco. Interest was calculated using the Acquired
Operations weighted average interest rates for the periods.
(d) To record the income tax effects of the pro forma adjustments.
(7) Represents the results of operations of DASSO for the period from January
1, 1996 through December 5, 1996, the date of acquisition by the Company.
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended June 30, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Acquired Pro Forma
Company Operation Combined Adjustments Pro Forma
------------ ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 222,717 $ 31,555 $ 254,272 $ - $ 254,272
Cost of sales 188,542 27,048 215,590 - 215,590
---------- --------- ---------- ------ ---------
Gross profit 34,175 4,507 38,682 - 38,682
Selling, general & administrative expenses 13,829 1,808 15,637 - 15,637
Amortization expense 1,774 232 2,006 331 (1) 2,337
---------- --------- ---------- ------ ---------
Operating income 18,572 2,467 21,039 (331) 20,708
Interest expense 3,853 1,403 5,256 437 (2) 5,693
---------- --------- ---------- ------ ---------
Income before income taxes 14,719 1,064 15,783 (768) 15,015
Provision for income taxes 6,075 467 6,542 (166)(3) 6,376
---------- --------- ---------- ------ ---------
Net income $ 8,644 $ 597 $ 9,241 $ (602) $ 8,639
---------- --------- ---------- ------ ---------
---------- --------- ---------- ------ ---------
Weighted average common and common
equivalent shares outstanding 8,860 8,860
---------- ---------
---------- ---------
Earnings per common and common
equivalent share $ 0.98 $ 0.98
---------- ---------
---------- ---------
</TABLE>
See Accompanying Notes to Pro Forma Condensed Consolidated
Statements of Operations.
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(1) Represents amortization of goodwill arising from the acquisition of the
Acquired Operation. Goodwill will be amortized on a straight-line basis
over forty years.
(2) Represents incremental interest expense arising from indebtedness incurred
to acquire the Acquired Operation. Interest was calculated using the
Company's weighted average interest rates for the periods.
(3) To record the income tax effects of the pro forma adjustments and reflect
the income tax provision at the Company's effective income tax rate of
approximately 42%.
<PAGE>
EXHIBIT C - EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 8-K/A, into the Company's previously filed
Registration Statement File No. 333-17821.
Arthur Andersen LLP
Minneapolis, Minnesota,
November 11, 1997
