<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1998.
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 No. 333-11801 (Aetna Industries, Inc.)
Commission File No. 333-11801-01 (MS Acquisition Corp.)
AETNA INDUSTRIES, INC.
MS ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
Delaware 38-200-7550/13-337-9803
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24331 Sherwood Avenue, P.O. Box 3067, Centerline, Michigan 48015-0067
1, rue Thomas Edison, Quartier des Chenes
78056 St. Quentin en Yvelines, France
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 759-2200
(33-1) 39-412000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of October 25, 1998, there were 1,000 shares of Aetna Industries, Inc. common
stock outstanding and 3,902,498 shares of MS Acquisition Corp. common stock
outstanding.
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. FINANCIAL STATEMENTS OF AETNA INDUSTRIES, INC.
Condensed Consolidated Balance Sheets - 3
September 27, 1998 and December 28, 1997
Consolidated Statements of Operations - 4
three months and nine months ended September 27, 1998
and September 28, 1997
Condensed Consolidated Statements of Cash Flows - 5
nine months ended September 27, 1998
and September 28, 1997
Notes to Consolidated Financial Statements 6
FINANCIAL STATEMENTS OF MS ACQUISITION CORP.
Condensed Consolidated Balance Sheets - 8
September 30, 1998 and December 31, 1997
Consolidated Statements of Operations - 9
three months and nine months ended September 30, 1998
and September 30, 1997
Condensed Consolidated Statements of Cash Flows - 10
nine months ended September 30, 1998
and September 30, 1997
Notes to Consolidated Financial Statements 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 17
Item 3. Not Applicable
PART II OTHER INFORMATION 25
Description of Exhibits 26
Signatures 27
EXHIBIT INDEX 28
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
MS ACQUISITION CORP.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 27, 1998 DECEMBER 28, 1997
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 41 $ 23
Accounts receivable (less allowance for doubtful
accounts of $398 and $359, respectively) 35,905 40,665
Inventories 6,286 7,276
Tooling 48,765 11,410
Other current assets 2,249 1,661
----------- -----------
Total current assets 93,246 61,035
----------- -----------
Property, plant and equipment, net 59,327 51,572
Deferred costs and other assets 5,989 5,489
Goodwill 24,372 24,973
----------- -----------
$ 182,934 $ 143,069
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 48,985 $ 33,485
Accrued expenses 7,645 9,508
Line of credit 47,870 13,530
----------- -----------
Total current liabilities 104,500 56,523
----------- -----------
Long-term debt 85,000 85,000
Deferred income taxes 7,433 7,432
Stockholder's equity (deficit)
Common stock - $.01 par value; 1,000 shares - -
issued and outstanding
Contributed capital 9,024 9,024
Accumulated deficit (22,842) (14,910)
Cumulative translation adjustment (181) -
----------- -----------
(13,999) (5,886)
----------- -----------
$ 182,934 $ 143,069
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
MS ACQUISITION CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
1998 1997 1998 1997
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales $ 32,308 $ 45,599 $ 132,616 $ 149,388
Cost of sales 32,541 41,022 121,206 130,709
------------ ----------- ---------- ----------
Gross profit (loss) (233) 4,577 11,410 18,679
Selling, general and administrative expenses 4,553 4,656 13,693 12,448
------------ ----------- ---------- ----------
Operating income (loss) (4,786) (79) (2,283) 6,231
Interest expense, net 3,623 2,716 9,676 7,986
------------ ----------- ---------- ----------
Income (loss) before income taxes (8,409) (2,795) (11,959) (1,755)
Income tax provision (credit) (3,157) (1,119) (4,027) (702)
------------ ----------- ---------- ----------
Net income (loss) $ (5,252) $ (1,676) $ (7,932) $ (1,053)
============ =========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
MS ACQUISITION CORP.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 27, SEPTEMBER 28,
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (7,932) $ (1,053)
Adjustments to reconcile net income to net cash
used for operating activities
Depreciation and amortization 7,304 5,616
Deferred income taxes (53) (209)
Changes in other assets and liabilities (16,668) (7,173)
---------- ------------
Net cash used for operating activities (17,349) (2,819)
---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (13,270) (8,460)
Increase in other assets (4,859) (663)
---------- ------------
Net cash used for investing activities (18,129) (9,123)
---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in line of credit 34,340 8,427
(Increase) decrease in other assets 1,156 (323)
---------- ------------
Net cash provided by financing activities 35,496 8,104
---------- ------------
Net increase (decrease) in cash 18 (3,838)
Cash - beginning of year 23 4,011
---------- ------------
Cash - end of period $ 41 $ 173
========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
MS ACQUISITION CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
Aetna Industries, Inc. ("Aetna") is a wholly-owned indirect subsidiary of
MS Acquisition Corp. ("MS Acquisition") and is a wholly-owned direct
subsidiary of Aetna Holdings, Inc. ("Aetna Holdings") and has two
wholly-owned subsidiaries Aetna Export Sales Corp. ("Export") and Aetna
Manufacturing Canada Ltd ("Aetna Canada"). MS Acquisition is a holding
company that was formed for the sole purpose of purchasing Aetna and does
not have any significant operations, other than its investments in its
subsidiaries assets, or liabilities, other than preferred stock, junior
subordinated debentures and accruals resulting from stock acquisition
transactions.
MS, Holdings, Export and Canada have fully and unconditionally guaranteed
the 11 7/8% Senior Notes due 2006 issued by Aetna in an aggregate principal
amount of $85,000,000 (the "Senior Notes"). Separate financial statements
or other disclosures relative to Aetna Holdings, Export or Aetna Canada
have not been presented as management has determined that such information
is not material to investors.
The accompanying unaudited condensed consolidated financial statements of
Aetna Industries, Inc. (Aetna) have been prepared in accordance with Rule
10-01 of Regulation S-X and do not include all the information and notes
required by generally accepted accounting principles for complete financial
statements. All adjustments, which include only normal recurring
adjustments that are, in the opinion of management, necessary for a fair
presentation of the results of the interim periods, have been made. The
results of operations for such interim periods are not necessarily
indicative of results of operations for a full year. The unaudited
condensed consolidated financial statements should be read in conjunction
with Aetna's consolidated financial statements and notes thereto for the
year ended December 28, 1997.
On April 14, 1998, Aetna's parent, MS Acquisition, completed a combination
with Societe Financiere de Developpement Industriel et Technologique S.A.,
a French societe anonyme (Sofedit) (the Combination). In connection with
the Combination, Sofedit's former stockholders transferred the outstanding
capital stock of Sofedit to MS Acquisition in exchange for: (i) promissory
notes of MS Acquisition in the principal amount of $40.9 million; (ii)
dividends in an amount of approximately $1.0 million; (iii) 270,000 shares
of Series B Preferred stock ($27.0 million stated value) of MS Acquisition;
(iv) 3.0 million shares of Common Stock of MS Acquisition, and (v) the
assumption of approximately $12.0 million of debt of such former
stockholders. The Combination has been accounted for as a reverse
acquisition because the former owners of Sofedit own approximately 75% of
the fully diluted outstanding Common Stock of MS Acquisition as a result of
the Combination. For accounting purposes, Sofedit is considered to be the
acquirer of, and the predecessor to, MS Acquisition.
6
<PAGE> 7
AETNA INDUSTRIES, INC.
(A WHOLLY-OWNED SUBSIDIARY OF
MS ACQUISITION CORP.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
2. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 27, DECEMBER 28,
1998 1997
---- ----
<S> <C> <C>
Raw materials $ 902 $ 483
Work-in-process 2,107 3,134
Finished goods 1,394 1,500
Purchased parts and purchased labor 2,083 2,359
--------- ---------
6,486 7,476
Reserve (200) (200)
--------- ---------
Total inventories $ 6,286 $ 7,276
========= =========
</TABLE>
3. STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CUMULATIVE TOTAL
CONTRIBUTED ACCUMULATED TRANSLATION STOCKHOLDER'S
CAPITAL DEFICIT ADJUSTMENT EQUITY (DEFICIT)
------- ------- ---------- ----------------
<S> <C> <C> <C> <C>
Balance at December 28, 1997 $ 9,024 $ (14,910) $ - $ (5,886)
Translation adjustment (181) (181)
Net loss (7,932) (7,932)
------------ ----------- ---------- -----------
Balance at September 27, 1998 $ 9,024 $ (22,842) $ (181) $ (13,999)
============ =========== ========== ===========
</TABLE>
4. COMPREHENSIVE INCOME
Aetna adopted SFAS No. 130 "Reporting Comprehensive Income". The impact of
adoption has been to include changes in foreign currency translation, which have
not been recognized in determining net income, in a new presentation of
comprehensive income, as presented below.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------------
SEPTEMBER 27, SEPTEMBER 27,
1998 1997
---- ----
<S> <C> <C>
Net income (loss) $ (7,932) $ (1,053)
Foreign currency translation (181) -
--------- ---------
Comprehensive income (loss) $ (8,113) $ (1,053)
========= =========
</TABLE>
7
<PAGE> 8
MS ACQUISITION CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 11,307 $ 11,626
Restricted cash 10,727 --
Accounts receivable (less allowance for doubtful
accounts of $1,921 and $1,293 respectively) 163,281 115,823
Inventories 76,163 64,013
Tooling 49,151 --
Other current assets 13,694 36,826
--------- ---------
Total current assets 324,323 228,288
--------- ---------
Property, plant and equipment, net 193,674 122,028
Deferred costs and other assets 13,526 5,430
Goodwill 65,914 6,166
--------- ---------
$ 597,437 $ 361,912
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 174,730 $ 109,876
Accrued expenses 61,795 52,849
Customer deposits and advances 6,047 8,448
Deferred income taxes 4,773 4,882
Short-term borrowings 111,287 43,778
--------- ---------
Total current liabilities 358,632 219,833
--------- ---------
Long-term debt 185,333 71,416
Junior subordinated notes 7,789 --
Deferred interest, junior subordinated notes 857 --
Deferred income taxes and other long-term liabilities 12,265 5,374
Redeemable preferred stock
Series A - $100 stated value; 293,123 shares authorized;
142,424 shares issued and outstanding 14,440 --
Series B - $100 stated value; 270,000 shares authorized;
270,000 shares issued and outstanding 27,000 --
Stockholders' Equity (Deficit)
Class A, common stock - $.01 par value, 12,000,000
shares authorized, 3,902,498 shares issued and outstanding 39 39
Additional paid-in capital 39,132 41,654
Retained earnings (accumulated deficit) (47,984) 28,138
Cumulative translation adjustment (66) (4,542)
--------- ---------
(8,879) 65,289
--------- ---------
$ 597,437 $ 361,912
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
MS ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales $ 151,045 $ 108,892 $ 473,296 $ 364,499
Cost of sales 141,095 99,087 427,295 320,028
------------ ----------- ----------- ----------
Gross profit 9,950 9,805 46,001 44,471
Selling, general and administrative expenses 10,656 5,390 28,150 19,394
Research and development expenses 2,713 2,266 6,947 6,308
Other Expenses 1,671 30 3,657 2,138
------------ ----------- ----------- ----------
Operating income (loss) (5,090) 2,119 7,247 16,631
Interest expense, net 6,662 2,781 15,644 8,196
------------ ----------- ----------- ----------
Income (loss) before income taxes (11,752) (662) (8,397) 8,435
Income tax provision (credit) (5,329) (1,353) (3,901) 1,240
------------ ----------- ----------- ----------
Income (loss) before discontinued operations (6,423) 691 (4,496) 7,195
Share in net income of equity investees
and minority interest (48) 107
Losses on discontinued operations (1,754) (1,788) (3,244) (3,162)
------------ ----------- ----------- ----------
Net income (loss) before
preferred stock dividends (8,177) $ (1,145) (7,740) $ 4,140
------------ =========== ---------- ===========
Preferred stock dividends (381) (751)
------------ -----------
Net income available for common stockholders $ (8,558) $ (8,491)
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE> 10
MS ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (7,740) $ 4,140
Equity income -- 102
Adjustments to reconcile net income to net cash
used for operating activities
Depreciation and amortization 24,277 19,489
(Decrease) increase in other long-term liabilities (1,384) 1,034
Changes in other assets and liabilities 7,588 1,406
-------- --------
Net cash provided by operating activities 22,741 26,171
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (31,617) (19,398)
Disposal of property, plant and equipment 4,408
Increase in restricted cash (10,727) --
(Increase) decrease in other assets 743 (4,094)
-------- --------
Net cash used for investing activities (41,601) (19,084)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital increase -- 127
Dividends paid (2,396) (2,295)
Increase in long-term borrowings 12,943 22,475
Repayments of long-term debt (22,678) (25,299)
Net increase (decrease) in line of credit 28,621 (703)
-------- --------
Net cash (used for) provided by financing 16,490 (5,695)
-------- --------
Net effect of exchange rates 2,051 (1,861)
-------- --------
Net decrease in cash (319) (469)
Cash - beginning of year 11,626 11,350
-------- --------
Cash - end of period $ 11,307 $ 10,881
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
10
<PAGE> 11
MS ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
MS Acquisition Corp. ("MS Acquisition") is a holding company that was
formed for the sole purpose of purchasing Aetna Industries, Inc. ("Aetna")
and does not have any significant operations, other than its investment in
its subsidiaries, assets or liabilities, other than preferred stock, junior
subordinated debentures and accruals resulting from stock acquisition
transactions. MS Acquisition has four direct and indirect U.S.
subsidiaries, Aetna, Aetna Holdings, Inc. ("Aetna Holdings"), Aetna Export
Sales Corp. ("Export") and Aetna Manufacturing Canada Ltd ("Aetna Canada").
It does not have any other direct or indirect U.S. subsidiaries.
MS, Holdings, Export and Canada have fully and unconditionally guaranteed
the 11 7/8% Senior Notes due 2006 issued by Aetna in an aggregate principal
amount of $85,000,000 (the "Senior Notes"). Separate financial statements
or other disclosures relative to Aetna Holdings, Export or Aetna Canada
have not been presented as management has determined that such information
is not material to investors.
The accompanying unaudited condensed consolidated financial statements of
MS Acquisition have been prepared in accordance with Rule 10-01 of
Regulation S-X and do not include all the information and notes required by
generally accepted accounting principles for complete financial statements.
All adjustments, which include only normal recurring adjustments that are,
in the opinion of management, necessary for a fair presentation of the
results of the interim periods, have been made. The results of operations
for such interim periods are not necessarily indicative of results of
operations for a full year. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1997.
On April 14, 1998, MS Acquisition completed a combination with Societe
Financiere de Developpement Industriel et Technologique S.A., a French
societe anonyme (Sofedit) (the Combination). In connection with the
Combination, Sofedit's former stockholders transferred the outstanding
capital stock of Sofedit to MS Acquisition in exchange for: (i) promissory
notes of MS Acquisition in the principal amount of $40.9 million; (ii)
dividends in an amount of approximately $1.0 million; (iii) 270,000 shares
of Series B Preferred stock ($27.0 million stated value) of MS Acquisition;
(iv) 3.0 million shares of Common Stock of MS Acquisition, and (v) the
assumption of approximately $12.0 million of debt of such former
stockholders. The Combination has been accounted for as a reverse
acquisition because the former owners of Sofedit own approximately 75% of
the fully diluted outstanding Common Stock of MS Acquisition as a result of
the Combination. For accounting purposes, Sofedit is considered to be the
acquirer of, and the predecessor to, MS Acquisition.
As a result of the Combination being accounted for as a reverse
acquisition, the financial statements included herein for December 31, 1997
and for the nine month period ended September 30, 1997 represent the
historical information of Sofedit, as predecessor. The consolidated balance
sheet at September 30, 1998 represents the consolidated financial position
of Sofedit and MS Acquisition. The statements of operations and cash flows
for the nine months ended September 30, 1998 represent the nine month
financial data of Sofedit, plus six months of financial data of MS
Acquisition (from April 1,1998). On a pro forma basis, MS Acquisition had
net sales of $526.4 million and $513.9 million, and pre-tax income (loss)
of ($7.9) million and $6.7 million, for the nine months ended September 30,
1998 and 1997, respectively.
11
<PAGE> 12
1. BASIS OF PRESENTATION (CONTINUED)
The acquisition was accounted for using the purchase method. Therefore, the
purchase price was allocated to the identifiable assets and liabilities of
MS Acquisition, based upon independent appraisals and management estimates.
The initial purchase price allocations were based on preliminary estimates
of fair market value and are subject to revision. The excess of the
purchase price over the fair market value of assets and liabilities
aggregated $60,454 and has been recorded as goodwill and is being amortized
over forty years.
<TABLE>
<S> <C>
Estimated fair value:
MS Acquisition common stock $ 10,000
MS Acquisition's shareholders' deficit at
March 31, 1998 (27,565)
---------------
Excess purchase price $ 37,565
===============
</TABLE>
This excess purchase price has been allocated to the assets and liabilities
of MS Acquisition as follows:
<TABLE>
<S> <C>
Inventory and tooling $ 811
Property, plant and equipment 7,280
Goodwill, previously recorded (24,773)
Goodwill 60,454
Accrued liability (2,500)
Deferred tax liability (3,707)
---------------
$ 37,565
===============
</TABLE>
2. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
Raw materials $ 27,025 $ 19,189
Work-in-process 31,909 30,214
Finished goods 17,632 16,819
Purchased parts and purchased labor 2,083 -
----------- -----------
78,649 66,222
Reserves (2,486) (2,209)
----------- -----------
Total inventories $ 76,163 $ 64,013
=========== ===========
</TABLE>
12
<PAGE> 13
3. STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE
CAPITAL PAID-IN RETAINED TRANSLATION STOCKHOLDERS'
STOCK CAPITAL EARNINGS ADJUSTMENT EQUITY (DEFICIT)
----- ------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $ 39 $ 41,654 $ 28,138 $ (4,542) $ 65,289
Dividends paid (1,685) (68,382) (70,067)
Translation adjustment 4,476 4,476
Common issued under
stock option plan 4 4
Dividends on redeemable
preferred stock (751) (751)
Stock issuance costs (90) (90)
Net loss (7,740) (7,740)
---------- ---------- --------- ------------- ----------
Balance at September 30, 1998 $ 39 $ 39,132 $ (47,984) $ (66) $ (8,879)
========== ========== ========= ============= ==========
</TABLE>
4. COMPREHENSIVE INCOME
MS Acquisition adopted SFAS No. 130 "Reporting Comprehensive Income". The impact
of adoption has been to include changes in foreign currency translation, which
have not been recognized in determining net income, in a new presentation of
comprehensive income, as presented below.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30, DECEMBER 31
1998 1997
---- ----
<S> <C> <C>
Net income (loss) $ (8,491) $ 4,140
Foreign currency translation 4,476 (4,542)
----------- ------------
Comprehensive income (loss) $ (4,015) $ (402)
=========== ============
</TABLE>
13
<PAGE> 14
5. COMBINING FINANCIAL INFORMATION OF MS ACQUISITION
BALANCE SHEET AS OF SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AETNA MS
AETNA HOLDINGS ACQUISITION SOFEDIT ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Total current assets $ 93,246 $ - $ 586 $ 234,504 $ (4,013) $ 324,323
Property, plant and
equipment, net 59,327 6,916 127,431 193,674
Other long-term assets 30,361 7,845 135,422 13,753 (107,941) 79,440
--------- --------- ----------- ----------- ----------- -----------
Total assets $ 182,934 $ 7,845 $ 142,924 $ 375,688 $ (111,954) $ 597,437
========= ========= =========== =========== =========== ===========
Total current liabilities $ 104,500 $ (509) $ 55,217 $ 203,878 $ (4,454) $ 358,632
Long-term debt 85,000 100,333 185,333
Junior subordinated notes 7,789 7,789
Deferred interest,
junior subordinated notes 857 857
Deferred income taxes and
other long-term liabilities 7,433 3,464 1,368 12,265
Redeemable preferred stock
Series A 14,440 14,440
Series B 27,000 27,000
Class A, common stock -
$.01 par value,
12,000,000 shares
authorized, 3,902,498 39 39
shares issued and
outstanding
Additional paid-in capital 9,024 30,108 39,132
Retained earnings
(accumulated deficit) (22,842) (292) 12,656 69,994 (107,500) (47,984)
Cumulative translation
adjustment (181) 115 (66)
--------- ----------- ----------- ----------- ---------- ----------
(13,999) (292) 42,803 70,109 (107,500) (8,879)
--------- ----------- ----------- ----------- ---------- ----------
$ 182,934 $ 7,845 $ 142,924 $ 375,688 $(111,954) $ 597,437
========= =========== =========== =========== ========== ==========
</TABLE>
14
<PAGE> 15
5. COMBINING FINANCIAL INFORMATION OF MS ACQUISITION (CONTINUED)
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AETNA MS
AETNA HOLDINGS ACQUISITION SOFEDIT ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 79,531 $ - $ - $ 393,765 $ - $ 473,296
Cost of sales 76,195 589 350,511 427,295
----------- ---------- --------- ------------ ------------ -----------
Gross profit 3,336 (589) 43,254 46,001
Selling, general and
administrative expenses 8,521 46 19,583 28,150
Research and development
expenses 6,947 6,947
Other non-recurring
expenses 723 355 2,579 3,657
----------- ---------- --------- ----------- ------------ -----------
Operating income (loss) (5,908) (990) 14,145 7,247
Net interest expense 6,810 460 1,673 6,701 15,644
----------- ---------- --------- ----------- ------------ -----------
Income (loss) before income
taxes (12,718) (460) (2,663) 7,444 (8,397)
Income tax provision (credit) (4,262) (168) (933) 1,462 (3,901)
----------- ---------- --------- ----------- ------------ -----------
Income (loss) before
discontinued operations $ (8,456) $ (292) $ (1,730) $ 5,982 $ $ (4,496)
=========== ========== ========= =========== ============ ===========
</TABLE>
15
<PAGE> 16
5. COMBINING FINANCIAL INFORMATION OF MS ACQUISITION (CONTINUED)
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998
<TABLE>
<CAPTION>
AETNA MS
AETNA HOLDINGS ACQUISITION SOFEDIT TOTAL
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by
operating activities $ (14,476) $ (519) $ (1,714) $ 38,877 $ 22,168
---------- ------------ ---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used for
investing activities (14,886) 1,714 (27,856) (41,028)
---------- ------------ ----------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by
financing 29,403 519 (13,432) 16,490
---------- ------------ ----------- ---------- -----------
Net effect of exchange
rates 2,051 2,051
---------- ------------ ----------- ---------- -----------
Net increase in cash 41 (360) (319)
Cash - beginning of year 11,626 11,626
---------- ------------ ----------- ---------- -----------
Cash - end of period $ 41 $ - $ - $ 11,266 $ 11,307
========== ============ =========== ========== ===========
</TABLE>
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
AETNA
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, Aetna's statement of
operations expressed as a percentage of net sales. This table and subsequent
discussions should be read in conjunction with the condensed consolidated
financial statements and related notes thereto of Aetna included elsewhere
herein.
AS A PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------ ----------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 100.7 90.0 91.4 87.5
----------- ----------- --------- -----------
Gross profit (0.7) 10.0 8.6 12.5
Selling, general and
administrative expenses 14.1 10.2 10.3 8.3
----------- ----------- --------- -----------
Operating income (loss) (14.8) (0.2) (1.7) 4.2
Interest expense, net 11.2 6.0 7.3 5.4
----------- ----------- --------- -----------
Income (loss) before
income taxes (26.0) (6.2) (9.0) (1.2)
Income tax provision (credit) (9.8) (2.5) (3.0) (0.5)
----------- ----------- --------- -----------
Net loss (16.2) (3.7) (6.0) (0.7)
=========== =========== ========= ===========
</TABLE>
THREE MONTHS ENDED SEPTEMBER 27, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
28, 1997
NET SALES: Net sales for the third quarter of 1998 were $32.3 million, or 29.1%
lower than third quarter 1997 sales of $45.6 million. Production sales of $27.6
million in the third quarter of 1998 were down $16.9 million from $44.5 million
in the third quarter of 1997, due to the planned ramp-up of the new Grand
Cherokee and the eight-week strike at General Motors. Tooling and prototype
sales were up $ 3.6 million for the same period. Also contributing to the
decrease was the phase out of short-term customer factory assist work.
GROSS PROFIT: Gross profit was $(0.2) million, or (.7)% of net sales, for the
third quarter of 1998 compared to $ 4.6 million, or 10.0% of net sales, for the
same period in 1997. The decrease in gross profit was primarily the result of
the impact of the UAW strike General Motors (GM) and the ramp-up of the Grand
Cherokee production in May.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for the
third quarter of 1998 were $4.6 million, or 14.1 % of net sales, compared to $
4.7 million, or 10.2% of net sales, for the same period in 1997. The increase is
due principally to ongoing launch costs for Saturn, WJ and CAMI platforms, and
costs incurred relative to quote preparation for a significant OEM platform with
worldwide launch planned for model year 2002.
17
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
INTEREST EXPENSE: Interest expense for the third quarter of 1998 was $3.6
million, or 11.2% of net sales, compared to $2.7 million or 6.0% of net sales
for the same period in 1997. Interest expense was impacted by higher levels of
short-term debt used to finance the launch of the Saturn and WJ programs,
production inefficiencies increased during the GM strike and the planned ramp-up
of the Jeep Grand Cherokee production.
INCOME TAXES: The income tax credit in the third quarter of 1998 was $3.2
million with an effective tax rate of 37.5% as compared to a credit of $1.1
million with an effective tax rate of 40.0% for the same period in 1997.
NINE MONTHS ENDED SEPTEMBER 27, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 28,
1997
NET SALES: Net sales for the nine months ended September 27, 1998 were $132.6
million, down from the $149.4 million reported for the nine months ended
September 28, 1997. Production sales decreased $22.9 million, while tooling and
prototype sales increased $ 6.1 million for the same period.
GROSS PROFIT: Gross profit was $11.4 million, or 8.6% of net sales, for the nine
months ended September 27, 1998 compared to $18.7 million, or 12.5 % of net
sales, for the same period in 1997. The decline in gross profit was primarily
due to the strike at GM and the transition to the new Grand Cherokee. The eight
week GM strike that occurred from June through early August of this year
resulted in approximately $5.3 million of lost revenue with an estimated $0.8
million loss in earnings before interest and taxes (EBIT).
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for the
nine months ended September 27, 1998 were $13.7 million, or 10.3% of net sales,
compared to $12.4 million, or 8.3% of net sales, for the same period in 1997.
The increase was due principally to the interruption of production sales during
the GM strike along with ongoing launch costs for Saturn, WJ and CAMI platforms,
and costs incurred relative to quote preparation for a significant OEM platform
with worldwide launch planned for model year 2002.
INTEREST EXPENSE: Interest expense for the nine months ended September 27,1998
was $9.7 million, or 7.3% of net sales, compared to $8.0 million or 5.4% of net
sales for the same period in the prior year. Working capital requirements
necessary to fund tooling expenditures relating to the three major program
launches resulted in higher interest expense year over year. The full effect on
sales of these new jobs will be realized in 1999 as two of the new platforms are
launched by the fourth quarter of 1998 and the third platform is planned to
launch in the second quarter of 1999.
INCOME TAXES: The income tax credit for the nine months ended September 27, 1998
was $4.0 million with an effective tax rate of 33.7% as compared to a credit of
$ 0.7 million with an effective tax rate of 40.0% for the same period in the
prior year.
LIQUIDITY AND CAPITAL RESOURCES
Aetna's principal capital requirements are to fund working capital needs, to
meet required debt payments and to complete planned maintenance and expansion
expenditures.
18
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
At September 27, 1998 there was $1.4 million available under the Senior
Revolving Credit Facility. Management currently anticipates that its operating
cash flow, together with available borrowings under the Senior Revolving Credit
Facility, will be sufficient to meet working capital requirements, capital
expenditure requirements, and interest requirements on debt obligations.
The terms of the indenture pursuant to which the Senior Notes were issued
contains certain restrictive covenants which include restrictions on the
ability of Aetna, Aetna Canada and Export from paying dividends or making
certain other payments to Aetna Holdings or MS Acquisition.
CASH FLOWS
Net cash flows used for operations for the nine months ended September 27, 1998
aggregated $17.4 million. This compares to net cash used for operations of $ 2.8
million for the same period in 1997. The decrease is due primarily to lower net
income and increase in tooling inventory, partially offset by increased
depreciation and amortization expenses.
Net cash flows used for investing activities aggregated $18.1 million for the
nine months ended September 27, 1998 as compared to $9.1 million for the same
period in 1997 and consists principally of capital expenditures. The major
capital projects during 1998 have been the renovation of Plant 7 which will be
used to stamp the majority of the new Saturn LS jobs and the purchase of
equipment for the start up of the Aetna Manufacturing Canada plant in London,
Ontario serving CAMI's J II platform.
Net cash flows provided by financing aggregated $35.5 million for the nine
months ended September 27, 1998 as compared to $8.1 million for the same period
in the prior year and in both cases represented increases in the Senior
Revolving Credit Facility.
19
<PAGE> 20
MS ACQUISITION
RESULTS OF OPERATIONS
On April 14, 1998, MS Acquisition completed a combination with Societe
Financiere de Developpement Industriel et Technologique S.A., a French societe
anonyme (Sofedit) (the Combination). In connection with the Combination,
Sofedit's former stockholders transferred the outstanding capital stock of
Sofedit to MS Acquisition in exchange for: (i) promissory notes of MS
Acquisition in the principal amount of $40.9 million; (ii) dividends in an
amount of approximately $1.0 million; (iii) 270,000 shares of Series B Preferred
stock ($27.0 million stated value) of MS Acquisition; (iv) 3.0 million shares of
Common Stock of MS Acquisition, and (v) the assumption of approximately $12.0
million of debt of such former stockholders. The Combination has been accounted
for as a reverse acquisition because the former owners of Sofedit own
approximately 75% of the fully diluted outstanding Common Stock of MS
Acquisition as a result of the Combination. For accounting purposes, Sofedit is
considered to be the acquirer of, and predecessor of MS Acquisition.
As a result of the Combination being accounted for as a reverse acquisition, the
financial statements included herein for December 31, 1997 and for the nine
month period ended September 30, 1997 represent the historical information of
Sofedit, as predecessor. The consolidated balance sheet at September 30, 1998
represents the consolidated financial position of Sofedit and MS Acquisition.
The statements of operations and cash flows for the nine months ended September
30, 1998 represent the nine month financial data of Sofedit, plus six months of
financial data of MS Acquisition (from April 1, 1998).
The following table sets forth, for the periods indicated, MS Acquisition's
statement of operations expressed as a percentage of net sales. This table and
subsequent discussions should be read in conjunction with the condensed
consolidated financial statements and related notes thereto of MS Acquisition
included elsewhere herein.
AS A PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 93.4 91.0 90.3 87.8
-------------- ------------- -------------- -------------
Gross profit 6.6 9.0 9.7 12.2
Selling, general and administrative expenses 7.1 4.9 5.9 5.3
Research and development expenses 1.8 2.1 1.5 1.7
Other non-recurring expenses 1.1 - 0.8 0.6
-------------- ------------- -------------- -------------
Operating income (loss) (3.4) 2.0 1.5 4.6
Interest expense, net 4.4 2.6 3.3 2.3
-------------- ------------- -------------- -------------
Income (loss) before income taxes (7.8) (0.6) (1.8) 2.3
Income tax provision (credit) (3.5) (1.2) (0.8) 0.3
Share in net income of equity
investees and minority interests - - - -
Losses in discontinued operations (1.1) (1.6) (0.7) (0.9)
-------------- ------------- -------------- -------------
Net income (loss) before preferred stock dividends (5.4) (1.0) (1.7) 1.1
============== ============= ============== =============
</TABLE>
20
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997
NET SALES: Net sales were $151.0 million, up from the $108.9 million for the
three months ended September 30, 1997. Net sales in Europe were up 9% in the
third quarter 1998 from 1997, or 5.8% excluding the effects of foreign exchange.
The increase in European sales was due to both a general growth in the car
market and to the launch of new products in 1997 which reach full production in
1998.
GROSS PROFIT: Gross profit was $10.0 million, or 6.6% of net sales, for the nine
months ended September 30, 1998 compared to $9.8 million, or 9.0% of net sales,
for the same period in 1997. The decrease in gross profit was due to higher
launch costs and related manufacturing inefficiencies.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for the
nine months ended September 30,1998 were $10.7 million, or 7.1% of net sales,
compared to $5.4 million, or 4.9% of net sales, for the same period in 1997.
Increased costs were due to increased project team activity and the
reinforcement of the current management structure.
INTEREST EXPENSE: Interest expense for the three months ended September 30, 1998
was $6.7 million, or 4.4% of net sales, compared to $2.8 million, or 2.6% of net
sales in the same period in the prior year. The increase in interest expense is
due principally to the Combination.
INCOME TAXES: The income tax credit for the three months ended September 30,
1998 was $5.3 million with an effective tax rate of 45.3% as compared to a
credit of $1.4 million with an effective tax rate of 204.4% for the same period
in the prior year. The change in the effective tax rate was due to a reduction
in the French research & development tax credit.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997
NET SALES: Net sales were $473.3 million, up from the $364.5 million for the
nine months ended September 30, 1997. The increase in net sales is primarily
attributable to the Combination with MS Acquisition, which had sales of $79.5
million for the six months since the date of Combination. The remaining increase
of $29.3 million is due primarily to increased sales at Sofedit, partially
offset by the negative effect of currency fluctuation.
GROSS PROFIT: Gross profit was $46.0 million, or 9.7% of net sales, for the nine
months ended September 30, 1998 compared to $44.5 million, or 12.2% of net
sales, for the same period in 1997. The gross profit decrease, as a percentage
of sales, is due primarily to higher launch costs and related manufacturing
inefficiencies.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for the
nine months ended September 30,1998 were $28.2 million, or 5.9% of net sales,
compared to $19.4 million, or 5.3% of net sales, for the same period in 1997.
INTEREST EXPENSE: Interest expense for the nine months ended September 30, 1998
was $15.6 million, or 3.3% of net sales, compared to $8.2 million, or 2.3% of
net sales in the same period in the prior year. The increase in interest expense
is due principally to the Combination.
21
<PAGE> 22
INCOME TAXES: The income tax credit for the nine months ended September 30, 1998
was $ 3.9 million with an effective tax rate of 46.5% as compared to a provision
of $1.2 million with an effective tax rate of 14.7% for the same period in the
prior year.
LIQUIDITY AND CAPITAL RESOURCES
MS Acquisition's primary sources of liquidity are cash generated from operations
and short-term and long-term debt, including the sale of receivables. MS
Acquisition's principal use for these funds is to finance working capital needs,
debt payments and planned maintenance and expansion activities. The Company's
liquidity is affected by both the cyclical nature of its business and its level
of net sales. The Company believes that operating cash flow and its line of bank
credit will be sufficient to cover its short-term and long-term capital
expenditures and debt payment obligations. Nevertheless, MS Acquisition's
ability to meet these liquidity demands will depend upon future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond MS
Acquisition's control.
FINANCIAL CONDITION
At September 30, 1998, MS Acquisition had available cash, cash equivalents and
marketable securities totaling $22.0 million, compared to $11.6 million at
December 31. At September 30, 1998, MS Acquisition had current assets of $324.3
million, compared to $358.6 million in current liabilities, giving it negative
working capital of $34.3 million, compared to $8.5 million at December 31, 1997.
At September 30, 1998, MS Acquisition had $1.4 million available under its
Amended and Restated Credit Agreement among Aetna, MS Acquisition, Aetna
Holdings, Aetna Export Sales Co., Aetna Canada and NBD Bank (the "Senior
Revolving Credit Facility"). Restricted cash of $10.7 million at September 30,
1998 represents cash held by Sofedit in a mutual fund until February 1999 to
warranty an additional line of credit for Aetna Industries.
On September 30, 1998, short-term debt consisted of a line of credit of $11.7
million, promissary notes of $40.9 million, discount on the notes of $1.3
million, assumed debt of $12.0 million and notes payable of $47.9 million.
Long-term debt consisted of Senior notes of $85.0 million, long-term bank loans
of $66.1 million, leasing contracts of $34.2 million and junior debt of $8.6
million.
CASH FLOWS
Net cash provided by operating activities was $22.2 million compared to $26.2
million in the same period of the prior year. The principal reason for the
decrease in cash provided by operating activities is attributable to lower net
income, tooling inventory increases, partially offset by increased depreciation
and amortization.
Net cash used for investing activities was $41.0 million and $19.1 million for
the nine months ended September 30, 1998 and 1997, respectively. The change was
due principally to increased capital expenditures.
Net cash provided by financing was $16.5 million compared to cash used of 5.7
million for the nine months ended September 30, 1998 and 1997 respectively. This
change was principally due to an increase in line of credit borrowings in 1998.
22
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
EUROPEAN MONETARY UNION
Since substantial portions of MS Acquisition's activities are carried out in
Europe, MS Acquisition is actively preparing for the introduction of a single
European currency. After January 1, 1999, MS Acquisition will be required, upon
the request of any party with which it transacts to use the euro as a currency
of payment in its European commercial activities in certain financial
transactions and in dealings with administrative bodies. On the basis of
currently available information, MS Acquisition does not expect that expenses to
be incurred in connection with the introduction of the euro as a currency of
payment for MS Acquisition will have a material adverse effect on the results of
operations or financial position of MS Acquisition.
YEAR 2000
MS Acquisition has conducted a review of its computer systems to identity those
areas that may not be Year 2000 compliant and is developing a plan to resolve
the issue. MS Acquisition believes that by modifying existing software and
obtaining new releases of licensed software, the Year 2000 transition can be
carried out without significant operational expenses or significant investments
in computer systems improvements. On the basis of currently available
information, MS Acquisition does not expect that expenses be incurred in
connection with the continuing identification of systems which are not Year 2000
compliant and with their replacement or upgrade will have a material adverse
impact on the results of operations or financial position of MS Acquisition.
There can be, however, no assurances of the absence of any disruptions in MS
Acquisition's own systems or those of its customers and suppliers. MS
Acquisition considers that sufficient resources have been dedicated to address
these issues in a timely manner.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 addresses the accounting for
derivative instruments. This statement is not expected to have a material effect
on MS Acquisition's financial position or results of operations.
In April 1998, the Accounting Standards Executive Committee issued Statement of
Position 98-5 ("SOP") 98-5), "Reporting on the Costs of Start-up Activities.
This statement prescribes accounting treatment for start-up activities and is
effective for fiscal years beginning after December 15, 1998. This statement is
not expected to have a material effect on MS Acquisition's financial position or
result of operations.
In February, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132 ("SFAS 132"), "Employers' Disclosure
about Pension and Other post-Retirement Benefits." SFAS 132 revises employers'
disclosures about pension and other post-retirement benefit plans but does not
change the measurement or recognition of those plans. This statement is not
expected to have a material effect on MS Acquisition's financial position or
results of operation.
23
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
FUTURE OPERATING RESULTS
With the exception of historical matters, the matters discussed in this
Quarterly Report on Form 10-Q are forward-looking statements that involve risks
and uncertainties, including, but not limited to, factors related to the highly
competitive nature of the automotive supplier industry and its sensitivity to
changes in general economic conditions, the results of financing efforts and
other factors discussed in Aetna's or MS Acquisition's filings with the
Securities and Exchange Commission. Such factors could cause MS Acquisition's
actual results during the remainder of 1998 and beyond to differ materially from
those expressed in any forward-looking statement made by or on behalf of Aetna
or MS Acquisition. There can be no assurance that additional sources of
financing will not be required during the next twelve months as a result of
unanticipated cash demands or opportunities for expansion or acquisition,
changes in growth strategy or adverse operating results. There can be no
assurance that any additional funds required, whether within the next twelve
months or thereafter, will be available to Aetna or MS Acquisition on
satisfactory terms.
24
<PAGE> 25
PART II. OTHER INFORMATION
ITEM 1. NOT APPLICABLE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On August 13, 1998, a former employee excercised an option to acquire
2,500 shares of MS Acquisition Series A-3 Common Stock for $1,875.
ITEM 3. NOT APPLICABLE
ITEM 4. NOT APPLICABLE
ITEM 5. NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
25
<PAGE> 26
EXHIBIT NO. DESCRIPTION OF EXHIBITS
4.1 First Supplemental Indenture dated as of August 3, 1998 among Aetna
Industries, Inc., MS Acquisition Corp., Aetna Holdings, Inc., Aetna
Export Sales Corp., Aetna Manufacturing Canada Ltd. and Norwest Bank
Minnesota National Association.
4.2 Second Amendment to Credit Agreement dated as of August 6, 1998 among
Aetna Industries, Inc., the Guarantors party thereto, the lenders party
thereto and NBD Bank
27.1 Financial Data Schedule for Aetna Industries, Inc. (EDGAR Filing Only)
27.2 Financial Data Schedule for MS Acquisition Corp. (EDGAR Filing Only)
(b) Reports on Form 8-K
(1) MS Acquisition Corp. Current Report on Form 8-K dated September 15,
1998 reporting Item 6 - Changes in registrant's certifying accountants
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
The signatory hereby acknowledges and adopts the typed form of his name in the
electronic filing of this document with the Securities and Exchange Commission.
Aetna Industries, Inc.
Date: November 11, 1998 By: s/ Harold A. Brown
-------------------
Harold A. Brown
Secretary, Vice President, Finance
and Chief Financial Officer
MS Acquisition Corp.
Date: November 11, 1998
By: s/ Harold A. Brown
-------------------
Harold A. Brown
Secretary, Vice President North America
27
<PAGE> 28
EXHIBIT INDEX
Exhibit No. Description of Exhibits
4.1 First Supplemental Indenture dated as of August 3, 1998 among Aetna
Industries, Inc.; MS Acquisition Corp., Aetna Holdings, Inc., Aetna
Export Sales Corp., Aetna Manufacturing Canada Ltd. and Norwest Bank
Minnesota National Association.
4.2 Second Amendment to Credit Agreement dated as of August 6, 1998 among
Aetna Industries, Inc., the Guarantors party thereto, the lenders party
thereto and NBD Bank
27.1 Financial Data Schedule for Aetna Industries, Inc.
27.2 Financial Data Schedule for MS Acquisition Corp.
28
<PAGE> 1
Exhibit 4.1
================================================================================
AETNA INDUSTRIES, INC.
as Issuer,
MS ACQUISITION CORP.,
AETNA HOLDINGS, INC.,
as Guarantors,
AETNA EXPORT SALES CORP.,
AETNA MANUFACTURING CANADA LTD.
as Subsidiary Guarantors,
AND
NORWEST BANK MINNESOTA NATIONAL ASSOCIATION,
as Trustee
----------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of AUGUST 3, 1998
----------------------------------
Supplemental to the Indenture
among
Aetna Industries, Inc.,
the Guarantors named therein,
the Subsidiary Guarantor named therein
and
Norwest Bank Minnesota National Association
Dated as of August 1, 1996
================================================================================
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of August 3, 1998, among AETNA
INDUSTRIES, INC., a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), MS ACQUISITION CORP., a corporation duly
organized and existing under the laws of the State of Delaware ("MS
Acquisition"), AETNA HOLDINGS, INC., a corporation duly organized and existing
under the laws of the State of Delaware ("Aetna" and, together with MS
Acquisition, the "Guarantors"), AETNA EXPORT SALES CORP., a corporation duly
organized and existing under the laws of the U.S. Virgin Islands ("Export"),
AETNA MANUFACTURING CANADA LTD., a corporation duly organized and existing under
the laws of the State of Michigan ("Aetna Canada" and, together with Export, the
"Subsidiary Guarantors") and NORWEST BANK MINNESOTA NATIONAL ASSOCIATION, a
national banking association organized under the laws of the United States, as
Trustee (the "Trustee") supplementing the Indenture (the "Indenture"), dated as
of August 1, 1996, among the Company, the Guarantors, Export and the Trustee.
RECITAL OF THE TRUSTEE
WHEREAS, the Company, the Guarantors, Export and the Trustee are
parties to that certain Indenture, dated as of August 1, 1996, pertaining to
$85,000,000 principal amount of the Company's 11 7/8% Senior Notes due 2006
(including the related guarantees, the "Securities").
RECITALS OF THE COMPANY,
THE GUARANTORS AND THE SUBSIDIARY GUARANTORS
WHEREAS, the Company, the Guarantors, and the Subsidiary
Guarantors desire, pursuant to Section 9.01 of the Indenture, to execute this
First Supplemental Indenture in order to comply with Section 4.19 of the
Indenture; and
WHEREAS, the Company, the Guarantors, and the Subsidiary
Guarantors have duly authorized the execution and delivery of this First
Supplemental Indenture in order for Aetna Canada to assume all the obligations
of a Subsidiary Guarantor under the Securities and the Indenture.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree for the equal and proportionate benefit
of all holders of the Securities, as follows:
Section 1. Aetna Canada hereby assumes all the obligations of a
Subsidiary Guarantor, under the Securities and the Indenture, and Aetna Canada
may exercise every right and power of a Subsidiary Guarantor with the same
effect as if Aetna Canada had been named as a Subsidiary Guarantor therein.
<PAGE> 3
Section 2. Any notice or communication by the Trustee to Aetna Canada
shall be addressed as follows:
Aetna Manufacturing Canada Ltd.
24331 Sherwood Avenue
P.O. Box 3067
Centerline, Michigan 48015-0067
Attn: Chief Executive Officer
Section 3. From and after the date hereof, the Indenture, as
supplemented by this First Supplemental Indenture, shall be read, taken and
construed as one and the same instrument with respect to the Securities.
Section 4. This Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instruments.
* * * * * * *
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year above written.
AETNA INDUSTRIES, INC.
By: /s/ Ueli Spring
----------------------------------
Title: President and Chief Executive
Officer
Attest:
/s/ Harold Brown
- -------------------------
Title: Secretary
NORWEST BANK MINNESOTA NATIONAL
ASSOCIATION, as Trustee
By: /s/ Jane Schuieger
----------------------------------
Title:
Attest:
/s/ Timothy Mowdy
- -------------------------
Title: Account Representative
-----------------------
MS ACQUISITION CORP., as Guarantor
By: /s/ Francis Barge
----------------------------------
Title: President and Chief Executive
Officer
Attest:
/s/ Harold Brown
- -------------------------
Title: Secretary
<PAGE> 5
AETNA HOLDINGS, INC., as Guarantor
By: /s/ Ueli Spring
----------------------------------
Title: President and Chief Executive
Officer
Attest:
/s/ Harold Brown
- -------------------------
Title: Secretary
AETNA EXPORT SALES CORP., as
Subsidiary Guarantor
By: /s/ Ueli Spring
----------------------------------
Title: Director
Attest:
- -------------------------
Title: Secretary
AETNA MANUFACTURING CANADA
LTD., as Subsidiary Guarantor
By: /s/ Ueli Spring
----------------------------------
Title: President and Chief Executive
Officer
Attest:
/s/ Harold Brown
- -------------------------
Title: Secretary
<PAGE> 1
Exhibit 4.2
Execution Copy
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of August
6, 1998 (this "Amendment"), is among AETNA INDUSTRIES, INC., a Delaware
corporation (the "Company"), the guarantors set forth on the signature pages
hereof (collectively, the "Guarantors"), the Lenders set forth on the signature
pages hereof (collectively, the "Lenders") and NBD BANK, a Michigan banking
corporation, as agent for the Lenders (in such capacity, the "Agent").
RECITALS
A. The Company, the Guarantors, the Agent and the Lenders are
parties to an Amended and Restated Credit Agreement dated as of April 10, 1998
(as now and hereafter amended, the "Credit Agreement").
B. The Company and the Guarantors desire to amend the Credit
Agreement, and the Agent and the Lenders are willing to do so in accordance with
the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements
herein contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in Article
III hereof, the Credit Agreement shall be amended as follows:
1.1 The definition of "Change of Control " in Section 1.1 is
restated as follows:
"Change of Control" shall mean the occurrence of any
event or transaction or series of related transactions in connection
with or as a consequence of which (i) prior to a registered initial
public offering of the Common Stock of the Company, MS (directly or
indirectly) or Holdings shall cease to own 100% of the Company's
outstanding Capital Stock, clear of any Liens; (ii)(A) prior to a
registered initial public offering of the Common Stock of MS or
Holdings, the CVC Investor Group and the SOFEDIT Shareholders,
collectively, shall cease to own Common Stock of, as the case may be,
MS or Holdings, representing not less than 51% of the common equity
interest in, as the case may be, MS's or Holding's, Capital Stock
(whether voting or non-voting) on a fully-diluted basis assuming the
exercise of all securities exercisable, convertible or exchangeable for
or into common equity interests or (B) after a registered initial
public offering of the Common Stock of MS, Holdings or the Company, the
CVC Investor Group and the SOFEDIT Shareholders, collectively, shall
cease to own, free and clear of all Liens, Common Stock of, MS,
Holdings or the Company, as the case may be, representing not less than
10% of the common equity interest in MS's, Holding's or, as the case
may be, the Company's Capital Stock (whether voting or non-voting) on a
fully-diluted basis assuming the exercise of all securities
exercisable, convertible or exchangeable for or into common equity
interests; (iii) after a registered initial public offering of the
Common Stock of MS, Holdings or the Company, any Person or group of
Persons (as such term is used under the Exchange Act) shall own,
beneficially or of record, a greater percentage of the common equity
<PAGE> 2
interests or total combined voting power of all classes of Capital
Stock of MS, Holdings or the Company, as the case may be, than is so
owned by the CVC Investor Group and the SOFEDIT Shareholders; or (iv)
after a registered initial public offering of the Common Stock of MS,
Holdings or the Company, during any one year period individuals who at
the beginning of such one year period constituted the board of
directors (together with any new directors whose election by such board
of directors or whose nomination for election was approved by a vote of
a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of MS,
Holdings or the Company then in office. For purposes of this
definition, the term "CAPITAL STOCK" of any Person means any and all
shares, interests, participations, or other equivalents, (however
designated) of its capital stock and any rights (other than debt
securities convertible into capital stock), warrants or options to
acquire such capital stock and the term "COMMON STOCK" means, as
applicable, the Common Stock, par value $.01, of Holdings and the
Common Stock, par value $.01 of the Company and, collectively, the
Class A Common Stock, par value $.01 per share, and Class B Common
Stock, par value $0.01 per share, of MS, and, in each case, any Capital
Stock issued with respect thereto in a stock consolidation,
reclassification or recapitalization.
1.2 The following new definition is hereby added to Section
1.1 in appropriate alphabetical order:
"Initial Public Offering" shall mean the initial public
offering of common stock to be made by MS (and pursuant to which MS will be
changing its name) pursuant to the registration to be filed by MS with the
Securities and Exchange Commission on Form S-1 on or before August 31, 1998.
1.3 Section 3.1(f) is redesignated as Section 3.1(g) and a new
Section 3.1(f) is added as follows:
(f) In addition to all other payments of the Advances
required hereunder, the Company shall prepay the Advances by an amount equal to
100% of the net proceeds of any subordinated debt or similar obligation
incurred at any time by the Company or any Guarantor and by an amount equal to
100% of the net proceeds from the issuance or other sale of any Capital Stock
or any other equity interest of MS, Holdings, any other Guarantor or the
Company (exclusive of the proceeds to be received from the Initial Public
Offering). Such prepayments shall be applied to such Advances as determined by
the Agent, and shall also permanently reduce the Commitments related to the
Advances being prepaid by an amount equal to such prepayment.
1.4 Sections 5.2(b), (c) and (e) are restated as follows:
(b) Fixed Charge Coverage Ratio. Permit or suffer the
Fixed Charge Coverage Ratio to be less than: (i) 1.00:1.00 from and
including the Effective Date through and including July 30, 1998; (ii)
0.75:1.00 from and including July 31, 1998 through and including
August 30, 1998; (iii) 0.55:1.00 from and including August 31, 1998
through and including December 30, 1998; (iv) 0.65:1.00 from and
including December 31, 1998 through and including March 30, 1999; (v)
0.75:1.00 from and including March 31, 1999 through and including June
29, 1999; (vi) 1.10:1.00 from and including June 30, 1999 through and
including September 29, 1999; (vii) 1.30:1.00 from and including
September 30, 1999 through and including December 30, 1999; and (viii)
1.60:1.00 at any time thereafter.
(c) Senior Secured Funded Debt Ratio. Permit or suffer the
Senior Secured Funded Debt Ratio of the Company and Subsidiaries to
exceed at any time: (i) 3.00:1.00 from
-2-
<PAGE> 3
and including the Effective Date through and including July 30, 1998;
(ii) 4.50:1.00 from and including July 31, 1998 through and including
August 30, 1998; (iii) 5.25:1.00 from and\ including August 31, 1998
through and including September 29, 1998; (iv) 9.00:1.00 from and
including September 30, 1998 through and including October 30, 1998;
(v) 8.50:1.00 from and including October 31, 1998 through and including
December 30, 1998; (vi) 5.00:1.00 from and including December 31, 1998
through and including February 27, 1999; (vii) 4.00:1.00 from and
including February 28, 1999 to and including March 30, 1999, (viii)
3.00:1.00 from and including March 31, 1999 through and including June
29, 1999, and (ix) 2.00:1.00 at any time thereafter.
(e) Net Worth. Permit or suffer the consolidated Net
Worth of the Company and its Subsidiaries to be less than the sum of:
(a)(i) $21,000,000 from the Effective Date through and including
August 30, 1998; and (ii) $19,000,000 thereafter, plus (b) 50% of Net
Income, adjusted as of the last day of the fiscal quarter of the
Company ending December 31, 1998 as calculated for the fiscal quarter
then ending and as of each fiscal year of the Company thereafter as
calculated for the fiscal year ending; provided, that if such Net
Income is negative in any fiscal quarter or any fiscal year, as the
case may be, the amount added for such period shall be zero and shall
not reduce the amount added for any other period.
1.5 The periods at the end of Sections 6.1(i) and (j) are
deleted and replaced with "; or" and the following new Section 6.1(k) is hereby
added:
(k) Senior Notes. Any offer is made to repurchase,
redeem, defease or otherwise prepay, whether mandatory or otherwise,
any of the Senior Notes (including without limitation any Change of
Control Offer, as defined in the Senior Note Documents) or the Company
makes or is required to make any prepayment, redemption, repurchase or
other defeasance or any of the Senior Note Debt, whether mandatory or
otherwise, provided that an Event of Default shall not be deemed to
have occurred in connection with an offer to repurchase the Senior
Notes if either of the following two conditions is satisfied: (i) none
of the holders of any of the Senior Notes tenders the Senior Notes and
none of the Senior Notes are repurchased or (ii) if any of the Senior
Notes are tendered or otherwise requested to be repurchased, then at
least 10 days prior to the repurchase, redemption or other prepayment
thereof the Company obtains, or makes arrangements satisfactory to the
Agent to obtain, Subordinated Debt or equity sufficient to make all
such repurchases, redemptions or other prepayments.
1.6 A new Section 8.9 is hereby added to read as follows:
8.9 Aetna. MS represents and acknowledges that it
owns, directly or indirectly, all of the capital stock and other equity
and other ownership interests of the Company (the "Company Ownership
Interests") free and clear of all Liens. MS will not permit or suffer
any Lien to exist on the Company Ownership Interests and will not sell
or otherwise transfer the Company Ownership Interests. MS will take or
cause to be taken all actions necessary, to the extent possible, to
avoid the occurrence of any Event of Default.
ARTICLE II. REPRESENTATIONS. The Company and each
Guarantor represent and warrant to the Agent and the Lenders that:
2.1 The execution, delivery and performance of this Amendment
is within its powers, has been duly authorized and is not in contravention of
any statute, law or regulation known to it or of any terms of its Articles of
Incorporation or By-laws, or of any material agreement or undertaking to which
it is a party or by which it is bound.
-3-
<PAGE> 4
2.2 This Amendment is the legal, valid and binding obligation
of the Company and each Guarantor enforceable against each in accordance with
the terms hereof.
2.3 After giving effect to the amendments contained herein,
the representations and warranties contained in Article IV of the Credit
Agreement are true on and as of the date hereof with the same force and effect
as if made on and as of the date hereof.
2.4 After giving effect to the amendments contained herein, no
Event of Default or Default exists or has occurred and is continuing on the date
hereof. Without limiting the foregoing, no event of default or event or
condition which may become an event of default under the Senior Note Documents
has occurred or will be caused by this Amendment or any of the transactions
contemplated hereby.
2.5 MS will be filing a registration statement with the
Securities and Exchange Commission on Form S-1 on or before August 31, 1998.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall
not become effective until each of the following conditions is satisfied:
3.1 The Company shall have delivered to the Agent a comfort
letter from SOFEDIT in the form attached hereto.
3.2 The Company shall have delivered to the Agent the most
recent draft of the S-1 registration statement to be filed by MS with the
Securities and Exchange Commission, provided that the Agent and each Lender
agree to hold any such draft it may receive in confidence, unless such draft
otherwise becomes public information, and except for disclosure to its
affiliates, to legal counsel, accountants and other professional advisors, to
regulatory officials, or to any person as required pursuant to law, regulation
or legal process.
3.3 The Company, the Guarantors and the Required Lenders shall
have signed this Amendment.
3.4 The Company shall have delivered to the Agent such other
documents and satisfied such other conditions, if any, as reasonably requested
by the Agent.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Credit Agreement or in any note,
certificate, instrument or other document to the Credit Agreement shall be
deemed to be references to the Credit Agreement as amended hereby and as further
amended from time to time.
4.2 The Company agrees to pay and to save the Agent harmless
for the payment of all reasonable documented costs and expenses arising in
connection with this Amendment, including the reasonable documented fees of
counsel to the Agent in connection with preparing this Amendment and the related
documents.
4.3 The Company and each Guarantor acknowledge and agree that,
to the best of their knowledge, the Agent and the Lenders have fully performed
all of their obligations under all documents executed in connection with the
Credit Agreement. The Company and each Guarantor represent and warrant that they
are not aware of any claims or causes of action against the Agent or any Lender.
-4-
<PAGE> 5
4.4 Except as expressly amended hereby, the Company and each
Guarantor agree that the Credit Agreement, the Notes, the Security Documents and
all other documents and agreements executed by the Company in connection with
the Credit Agreement in favor of the Agent or any Lender are ratified and
confirmed, as amended hereby, and shall remain in full force and effect in
accordance with their terms and that they are not aware of any set off,
counterclaim or defense with respect to any of the foregoing. Terms used but not
defined herein shall have the respective meanings ascribed thereto in the Credit
Agreement. This Amendment may be signed upon any number of counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument, and telecopied signatures shall be effective as originals.
4.5 The Company and the Guarantors agree to deliver to the
Agent board resolutions approving this amendment and all transactions
contemplated hereby on or before August 21, 1998, and any failure to deliver
such board resolutions shall be an Event of Default under the Credit Agreement.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties signing this Amendment have
caused this Amendment to be executed and delivered as of the day and year first
above written.
AETNA INDUSTRIES, INC.
By: /s/ Harold Brown
-------------------------------
Its: Vice President, Finance,
Chief Financial Officer
----------------------------
Guarantor
AETNA HOLDINGS, INC.
By: /s/ Harold Brown
-------------------------------
Its: Vice President, Finance,
Chief Financial Officer
-----------------------------
Guarantor
AETNA EXPORT SALES CORP.
By: /s/ Harold Brown
-------------------------------
Its: Secretary
-----------------------------
Guarantor
MS ACQUISITION CORP.
By: /s/ Harold Brown
-------------------------------
Its: Secretary
-----------------------------
Guarantor
AETNA MANUFACTURING CANADA LTD.
By: /s/ Harold Brown
------------------------------
Its Treasurer and Secretary
------------------------------
-6-
<PAGE> 7
NBD BANK, as a Lender and as Agent
By: /s/ Thomas A. Gamm
-------------------------------
Its: Vice President
-----------------------------
PNC BUSINESS CREDIT, INC.
By: /s/ Michael D. Shovner
-------------------------------
Its: Bank Officer
-----------------------------
NATIONAL BANK OF CANADA
By: /s/ Diane K. Bedard &
Angela White
-------------------------------
Its: Vice President & Vice
President
-----------------------------
MICHIGAN NATIONAL BANK
By: /s/ Fred O. Molner
-------------------------------
Its: First Vice President
-----------------------------
-7-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE CONSOLIDATED STATEMENTS OF OPERATIONS AND THE CONSOLIDATED BALANCE SHEET AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001022657
<NAME> AETNA INDUSTRIES
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> SEP-27-1998
<CASH> 41
<SECURITIES> 0
<RECEIVABLES> 36,303
<ALLOWANCES> 398
<INVENTORY> 55,051
<CURRENT-ASSETS> 93,246
<PP&E> 106,207
<DEPRECIATION> 46,880
<TOTAL-ASSETS> 182,934
<CURRENT-LIABILITIES> 104,500
<BONDS> 85,000
0
0
<COMMON> 0
<OTHER-SE> (13,999)
<TOTAL-LIABILITY-AND-EQUITY> 182,934
<SALES> 132,616
<TOTAL-REVENUES> 132,616
<CGS> 121,206
<TOTAL-COSTS> 121,206
<OTHER-EXPENSES> 13,693
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,676
<INCOME-PRETAX> (11,959)
<INCOME-TAX> (4,027)
<INCOME-CONTINUING> (7,932)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,932)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE CONSOLIDATED STATEMENTS OF OPERATIONS AND THE CONSOLIDATED BALANCE SHEET AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001021907
<NAME> MS ACQUISITION
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 11,307
<SECURITIES> 0
<RECEIVABLES> 165,202
<ALLOWANCES> 1,921
<INVENTORY> 125,314
<CURRENT-ASSETS> 324,323
<PP&E> 381,098
<DEPRECIATION> 187,424
<TOTAL-ASSETS> 597,437
<CURRENT-LIABILITIES> 358,632
<BONDS> 85,000
0
41,440
<COMMON> 0
<OTHER-SE> (8,879)
<TOTAL-LIABILITY-AND-EQUITY> 597,437
<SALES> 473,296
<TOTAL-REVENUES> 473,296
<CGS> 427,295
<TOTAL-COSTS> 427,295
<OTHER-EXPENSES> 38,754
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,644
<INCOME-PRETAX> (8,397)
<INCOME-TAX> (3,901)
<INCOME-CONTINUING> (4,496)
<DISCONTINUED> (3,244)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,740)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
