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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
___ THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended March 31, 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 NUMBER 333-32975
OXFORD AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-3262809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1250 STEPHENSON HIGHWAY, TROY MICHIGAN 48083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 577-1400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or such shorter
period that the registrant has been required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant, computed by reference to the book value of
the Registrant's common stock as of March 31, 1998 (because there is no market
for the Registrant's common stock) was $3,076,977.
At June 1, 1998, there were outstanding 309,750 shares of the Registrant's
common stock.
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PART I
ITEM 1. BUSINESS.
GENERAL
Oxford Automotive, Inc., a Michigan corporation ("Oxford Automotive"
and together with its consolidated subsidiaries the "Company") is a leading
Tier 1 or direct supplier of high-quality, engineered metal components,
assemblies and modules used by original equipment automotive manufacturers
("OEMs"). The Company's core products are complex, high value-added products,
primarily assemblies containing multiple stamped parts, forgings and various
welded, hemmed or fastened components. These products which include large
structural stampings and assemblies, including exposed ("Class A") surfaces,
leaf springs and smaller complex welded assemblies, are used in manufacturing a
variety of sport utility vehicles ("SUVs"), light and medium trucks, mini-vans,
vans and passenger cars. The Company is the sole source supplier of these
products to its customers. The Company had net sales of $410.3 million for the
fiscal year ended March 31, 1998. Based on net sales, management believes the
Company is one of the ten largest suppliers of stampings to the North American
automotive market.
The Company's five largest customers, General Motors Corporation
("GM"), Ford Motor Company ("Ford"), Chrysler Corporation ("Chrysler"), CAMI (a
joint venture of GM and Suzuki Motor Corporation ("Suzuki")) and The Saturn
Corporation ("Saturn"), accounted for approximately 54%, 31%, 9%, 2%, and 2%,
respectively of the Company's net sales for the fiscal year ended March 31,
1998. The Company has been providing products directly to GM and Ford for more
than 50 years and has earned outstanding commercial ratings for its
high-quality standards, including GM's Supplier of the Year and Mark of
Excellence Awards, Ford's Q1 Award and CAMI's President's Award. The Company
also sells its products to other Tier 1 suppliers. For the fiscal year ended
March 31, 1998, approximately 77% of the Company's net sales were derived from
sales of its products manufactured for SUVs, mini-vans, vans and light trucks.
In recent years, SUVs, mini-vans, vans and light trucks have experienced
stronger growth in vehicle production as compared to the passenger car sector.
This sector includes those platforms and models which have strong consumer
demand, such as GM's popular C/K platform (full-size pickups and the
Yukon/Tahoe/Suburban models), Ford's Ranger, Explorer and Windstar and
Chrysler's Ram pickup and Mini-van. See Note 16 of Notes to Consolidated
Financial Statements included in this Report for a description of the
Company's domestic and export sales.
Prior to August 1997, the Company conducted its business through two
principal operations, BMG North America Limited ("BMG") and Lobdell Emery
Corporation ("Lobdell"). The Company's recent acquisitions significantly
strengthen the Company's position as a leading Tier 1 supplier of assemblies
and modules to the OEMs. These strategic combinations provide the Company with
the critical mass and capabilities in the areas of design and engineering,
sales and marketing, and product expertise which provide the basis for the
Company's strategy of becoming a fully-integrated, global systems supplier. The
Company has already implemented a successful, focused sales and marketing
initiative, which commenced concurrently with the operational improvements at
BMG. As a result, the Company has been awarded the door assemblies and the
side panel package for the new Saturn LS Program (the "LS Program"), the new
vehicle which Saturn is launching in 1999 based upon the current Opel Vectra.
Management believes these awards from Saturn will generate approximately $65.0
million of annual net sales beginning with the 1999 model year. In addition,
the Company was recently awarded the door, hood, and underbody assemblies for
the GMT 250 Program (Pontiac Recon, Buick Signia) (the "GMT 250 Program").
This program, a new GM platform, will be produced solely in Mexico and
management believes will generate approximately $85.0 million of annual net
sales beginning in 1999.
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The Company currently operates 17 manufacturing facilities (including
three facilities acquired in connection with the Suspension Division, described
below), which offer the latest technologies in metal stamping, forging,
welding and assembly production equipment, including fully-automated hydraulic
and wide-bed press lines (up to 180 inches), robotic welding cells, robotic
hemming, autophoretic corrosion resistant coating, and a patented eye forming
process. The Company also has the world-wide exclusive rights (outside the
CIS-formerly Soviet Union) to the "MAZ" tapering process for its suspension
applications. Since 1992, the Company has invested in excess of $110 million in
capital investments to support sales growth, expand production capabilities and
improve efficiency and flexibility. The Company's diverse line of over 380
presses that range up to 2,600 tons and both include conventional and transfer
technology and state-of-the-art robotic weld assembly and hemming equipment are
capable of manufacturing a broad assortment of parts and assemblies ranging
from simple stampings to full-size, Class A door and closure panels. The
Company is one of a few independent suppliers that has the ability to produce
large, complex stampings, as well as the technical expertise and automated
assembly capabilities to provide high value-added modules such as door
apertures and assemblies, A-pillars, Class A surface products, control arms,
and multiple leaf and parabolic leaf springs. The Company is currently planning
the addition of a new 300,000 sq. ft. facility in Ramos Arizpe, Mexico to
support the GMT 250 Program and other opportunities in the Mexican market.
BUSINESS STRATEGY
The principal objective of the Company is to be a leading,
full-service, global Tier 1 supplier of integrated systems based on metal
forming and related manufacturing technologies. Management believes that the
Company is well positioned to benefit from two significant trends in the
stamping and metal forming segments of the automotive industry: outsourcing and
consolidation. Outsourcing of metal stamping has increased in response to
competitive pressures on OEMs to improve quality and reduce capital
requirements, labor costs, overhead and inventory. Consolidation among
automotive industry suppliers has occurred as OEMs have more frequently awarded
long-term sole source contracts to the most capable global suppliers. In
addition, OEMs are increasingly seeking systems suppliers who can provide a
complete package of design, engineering, manufacturing and project management
support for an integrated system (such as a front-end system). The Company
intends to capitalize on these trends through internal development and
strategic acquisitions. The key elements of the Company's strategy include the
following:
Provide Full-Service Program Capability. The Company is focused on
developing full-service program capabilities. The Company works with OEMs
throughout the product development process from concept and prototype
development through the design and implementation of manufacturing processes.
The Company believes that its ability to provide the package of design,
engineering, prototyping, tooling, blanking, stamping, forging, assembly, and
corrosion resistant coating to its customers creates a unique capability
present in only a limited number of suppliers. The Company believes this
capability will enable it to manage large programs, assist it in reducing
customer program launch time, lower customer costs and increase its margins.
Supply Complex, High Value-Added Systems. As a result of the Company's
technical design and engineering capabilities and its reputation for
highly-efficient manufacturing operations, the Company is able to secure supply
relationships for complex, high value-added products, primarily assemblies and
modules that contain multiple stamped parts and various welded, hemmed or
fastened components. For example, the Company produces the rear door for GM's
Yukon/Tahoe/Suburban vehicles, the lower control arm for GM's four wheel drive
C/K vehicles, the control arm assemblies for Ford's F-Series pickups and
Chrysler's T-300, the radiator support assembly for GM's W-car (Grand Prix,
Century, Lumina, Monte Carlo and Intrigue), complex A-pillar assemblies for the
Ford Mustang and the Ford Ranger pickup, and multiple leaf, parabolic (long
taper) multiple leaf, and single leaf long taper suspension systems for
products ranging from Ford's F-Series pickups to Chrysler's mini- vans. These
complex products typically generate higher dollar content per vehicle as well
as higher margins for the Company as compared to simple, individual stampings.
The Company plans to capitalize on its ability to develop and provide
integrated modules and assemblies to deliver to the OEMs an integrated product
such as a complete
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door or front-end system. In addition to doors, radiator supports and Class A
surface components, the Company believes it has unique expertise with respect
to control arms and leaf springs, which it will further develop as a fully
integrated suspension system.
Focus on High Growth Vehicle Categories. The Company's sales and
marketing efforts have been, and will continue to be, directed toward sectors
of the automotive market that have experienced strong consumer demand. For the
fiscal year ended March 31, 1998, approximately 77% of the Company's net sales
were derived from sales of products manufactured for SUVs, mini-vans, vans and
light trucks. Similarly, the Company's sales to the passenger car market have
been, and will continue to be, directed to the segments with stronger sales
growth, including Saturn cars.
Establish a Global Presence. The Company is actively pursuing
strategic acquisitions and joint-venture opportunities in Europe and intends to
pursue opportunities which will allow the Company to increase its presence in
South America, and to establish a presence in Asia and other markets in order to
serve its customers on a global basis. Several OEMs have announced certain
models designed for the world automobile market ("World Car"). As a result, the
OEMs have encouraged their existing suppliers to establish foreign production
support for World Car programs. This globalization provides access to new
customers and technology, as well as economic cycle diversification. The
Company has established a presence in Mexico and Venezuela and currently
provides components for OEMs doing business in Mexico and South America.
Pursue Strategic Acquisitions. In response to the trend in the OEM
market toward "systems suppliers," the Company is focused on making strategic
acquisitions that will enhance the Company's ability to provide integrated
systems (such as a door or front end systems) or otherwise leverage its
existing business by providing additional product, manufacturing and service
capabilities. The Company also intends to pursue acquisitions which will expand
its customer base by providing an entree to new customers, including the North
American operations of Asian and European based OEMs. The Company believes that
the continuing supplier consolidation in the stamping and metal forming
segments may also provide attractive opportunities to acquire high-quality
companies at favorable prices, including businesses which can be improved
financially through overhead elimination, organizational restructuring, plant
reconfiguration, labor contract negotiations and management changes. The
Company will also pursue acquisitions that enable it to achieve a global
presence.
RECENT DEVELOPMENTS
On August 13, 1997, the Company acquired Howell Industries, Inc.
("Howell"). Howell is a Tier 1 manufacturer of high-quality welded
subassemblies and detailed stampings used primarily in suspension system
applications in the production of SUVs, light trucks, mini-vans, vans and
passenger cars. Howell has developed a niche in designing, engineering and
manufacturing suspension control arms in a variety of configurations and
variations depending on drive-train and suspension application.
Howell's expertise has complemented and enhanced the Company's ability
to develop key suspension system components. Further, Howell's sales were
principally in the high-growth vehicle categories of SUVs, light trucks,
mini-vans and vans, the same market targeted by the Company. For its fiscal
year ended July 31, 1997, Howell had net sales of $95.2 million.
On November 25, 1997, the Company acquired all of the outstanding
shares of common stock of RPI Holdings, Inc. ("RPIH"). RPIH, through its
wholly owned subsidiary RPI, Inc., provides the Company
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production of roll-formed pieces, metal stampings, service parts, and welded
assemblies of functional and decorative trim for the OEM market. Net sales
for the nine month period from July 1, 1996 to March 31, 1997 for RPIH were
$8.8 million.
On April 1, 1998, the Company acquired the suspension division (the
"Suspension Division") of Eaton Corporation. The Suspension Division is a
leading Tier 1 North American supplier of leaf spring suspension systems for
automotive applications. Products of the Suspension Division include multiple
leaf, parabolic (long taper) multiple leaf, and single leaf long taper
suspension systems.
The Suspension Division is a major supplier to the traditional North
American light truck vehicle manufacturers, and also one Japanese automotive
transplant, one Japanese heavy truck manufacturer, and one European vehicle
program. The Suspension Division designs, manufactures and markets leaf
springs for original equipment vehicle markets with product applications in
light truck rear suspensions. The Suspension Division is focused on the light
truck market, where full-size pick-ups and vans, mini pick-ups and vans, and
sport utility vehicles are the major users of leaf springs, primarily for rear
suspension applications. The Suspension Division includes a 49% interest in
Metalurgica Carabobo, S.A. ("Metalcar"), a Venezuelan manufacturer of
conventional leaf springs and coil springs for both light and heavy trucks.
For its fiscal year ended December 31, 1997, the Suspension Division had net
sales of $125.8 million.
In January 1998, the Company announced the closure of its Winchester
Indiana facility. The decision to close this facility was based on the
Company's rationalization of its current capacity and will result in fixed cost
reductions and improved productivity through reallocation of production to
other facilities during fiscal 1999. The costs associated with the closure had
been previously reserved for and will therefore have no adverse impact on the
financial results of the Company. The Company is currently redeploying
production assets to support recently awarded programs (e.g. GMT 250 Program).
In addition, during the year the Company consolidated the financial and
administrative operations of its acquisitions, thereby allowing for the closure
of the Alma and Southfield administrative offices.
On April 1, 1998, the Company issued $35.0 million aggregate principal
amount of 10 1/8% Senior Subordinated Notes Due 2007, Series B (the "Series B
Notes"). The Series B Notes are substantially identical to, and rank pari
passu in right of payment with the $125.0 million aggregate principal amount of
10 1/8% Senior Subordinated Notes Due 2007 issued by the Company on June 24,
1997. The Series B Notes were issued at 105.84% of par, thereby generating a
yield of approximately 9.0%, based on the earliest redemption date at par.
INDUSTRY TRENDS
The OEM market to which the Company sells its products consists of the
design, engineering, development, production and sale of parts, components,
assemblies and modules or systems (several components assembled together) for
use in the manufacture of new motor vehicles. The Company's performance, growth
and strategic plan are directly related to certain trends within the OEM
market. Since the 1980s, Chrysler, Ford and GM have each been substantially
reducing the number of suppliers that may bid for awards and outsourcing an
increasing percentage of their production requirements. As a result of these
trends, the OEMs are focusing on the development of long-term, sole source
relationships with suppliers who can provide more complex parts, as well as
complete subassemblies and modules on a just-in-time basis while at the same
time meeting strict quality requirements. These requirements are accelerating
the trend toward consolidation of the OEM's supplier base as those suppliers who
lack the capital and production expertise to meet the OEM's needs, either cease
to operate or are merged with larger suppliers. OEMs benefit from outsourcing
because outside suppliers generally have significantly lower cost structures
and, as described below, suppliers can assist in shortening development periods
for new products.
In addition to consolidation and outsourcing, suppliers are
participating earlier in the design and engineering process, providing
research, as well as product development, product testing/validation,
prototyping
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and tooling. OEMs generally expect Tier 1 suppliers to (i) participate in the
design and engineering of complex assemblies, (ii) develop the required
manufacturing process to deliver these assemblies on a just-in-time basis, and
(iii) assume responsibility for quality control. This results in shorter
development times for new products, as well as higher quality and lower parts
costs.
While the focus today by the OEMs is on quality, cost and service, the
Company believes that the focus for the future will be on global capabilities,
innovation and ability to provide value-added products and systems. The OEMs
have been very successful in making high-quality and low cost a minimum
requirement to remain in the industry, as opposed to a competitive advantage
for certain suppliers.
These evolving requirements can best be addressed by suppliers with
sufficient resources to meet such demands. For full-service suppliers such as
the Company, this environment provides an opportunity to grow by obtaining
business previously provided by other suppliers who can no longer meet the
current or future requirements and expectations of the OEMs and by acquisitions
that further enhance product manufacturing and service capabilities. Although
the requirements of the OEMs have already resulted in significant consolidation
of component suppliers in many product segments, the Company believes that many
opportunities exist for further consolidation within the Company's stamping and
metal forming industry.
PRODUCTS
The Company generates the majority of its net sales from large, complex,
high value-added products, primarily assemblies that generally consist of
multiple parts, which the Company stamps and forges and combines with various
welded or fastened components. The Company is the sole source supplier of
these complex modules and assemblies. These products include unexposed
components and assemblies that are intrinsic to the structural integrity of the
vehicle such as A-pillars, radiator supports, floor pans, toe-to-dash panels,
leaf springs, frame and suspension components and reinforcements. In addition
to unexposed components and assemblies, the Company has the capability and
expertise to produce Class A surfaces such as door assemblies, door apertures,
rocker panels, fuel filler doors, and box side outers, which require virtually
flawless finishes and more stringent customer requirements than unexposed
assemblies. These products require superior engineering and automated
manufacturing and assembly capabilities due to their complexity and high volume
requirements.
While the Company has the capability to produce small stampings, such
as brackets and braces, it focuses on more complex and larger components and
assemblies which typically generate higher dollar content per vehicle as well
as higher margins for the Company. These assemblies, such as the A, B and C
pillars, control arms, leaf springs, door assemblies, door apertures, deck lids
and radiator supports require larger, high tonnage, wide-bed, fully-automated
press capabilities, complex automated weld and hemming assembly, autophoretic
corrosion resistant coating, machining, and automated assembly of purchased
components.
The chart below details by major customer the Company's major
products, the type of vehicle and the model/platform for which they are
produced:
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(INCLUDES NEW BUSINESS AWARDS THRU 6/25/98)
<TABLE>
<CAPTION>
CUSTOMER TYPE MODEL/PLATFORM COMPONENTS SUPPLIED
- -------- ---- -------------- -------------------
<C> <C> <C> <C>
General Motors Sport Utility Suburban/Tahoe/Yukon Door Assemblies, Door Apertures, Rocker
Panels,
Lower Control Arms, Wheel Moldings
Sport Utility Blazer/Jimmy Leaf Springs, Seat Supports/Rails
Sport Utility Pontiac Recon/Buick Signia (2000 Launch) Door Assemblies, Tailgate Assemblies,
Hoods,
Floor Assemblies, Rocker Panels, Rail
Assemblies
Light Truck S10/Sonoma Pickup Leaf Springs
Light Truck C/K Crew Cab Pickup Door Apertures, Wheel Moldings
Light Truck C/K Pick Up Lower Control Arms (4 Wheel Drive), Rocker
Panels,
Wheel Moldings
Light Truck C/K Pick Up (Mexico) Class A Blanks
Mini-Van Astro/Safari Struts, Lower Control Arms (All Wheel
Drive), A Pillars,
Leaf Springs
Vans Savanna/Express Leaf Springs, Pillar Reinforcements,
Latches, Supports
Medium Duty Commercial Chassis Leaf Springs, Toe-to-Dash Panel
Medium Duty Kodiak Floor Assembly, Fuel Tank Straps, Raised
Roof Panel
Passenger Car Saturn SC Deck Lid, Pillar Reinforcement, Inner
Doors,
Window Frame Reinforcement
Passenger Car Saturn SC/SL/SW (1999 Launch) Underbody Rails
Passenger Car Saturn LS (1999 Launch) Body Side Inners, Door Assemblies, Shelf
Panel,
Wheel House Inners, Radiator Support, Heat
Shield, Gas Tank Shield
Passenger Car Grand Prix, Regal, Intrigue, Monte Radiator Supports
Carlo, Lumina
Passenger Car Corvette Floor Panels
Passenger Car EV1 Floor Panels, Wheel Houses
Passenger Car Malibu, Cutlass Sun Roof Assembly
Passenger Car Grand Am, Alero Door Beams
Passenger Car Park Avenue, Riviera, Aurora, Seville, Rocker Panels
Deville
Passenger Car Joy, Swing, Monza (Mexico) Class A Blanks, Floor Pan Assemblies
Passenger Car Cavalier/Sunfire (Mexico) Floor Pan Assemblies
Ford Sport Utility Explorer, Mountaineer Rear Floor Reinforcement, Center Body
Pillar,
B-Pillar Assembly, Leaf Springs
Sport Utility Expedition, Navigator Control Arms
Light Truck F Series Pickup Control Arms, Load Floor, Leaf Springs
Light Truck Ranger, Mazda Pickup A Pillar, Upper/Lower Back Panel, Roof
Panel,
Windshield Header, Box Side Outer, Leaf
Springs
Van Windstar Rear Floor Assembly, Dash Panel, Rear
Crossmembers,
Cowl Sides, Radiator Support
Van Econoline Roof Rails, A-Pillar, Floor Pan, Shock
Tower,
Fuel Filler Doors, Leaf Springs,
Brackets, Latches
Passenger Car Contour/Mystique/Mondeo (Europe) Front & Rear Control Arms,
Rear Suspension Bar Assembly, Brackets
Passenger Car Cougar Front & Rear Control Arms,
Rear Suspension Bar Assembly, Brackets
Ford/Nissan Mini-Van Villager, Quest Leaf Springs
Chrysler Sport Utility Cherokee Control Arms
Light Truck Dakota Leaf Springs, Control Arms (1999 Launch)
Sport Utility Durango Skid Plates, Brackets, Control Arms (1999
Launch)
Light Truck Ram Pickup Control Arms
Minivan Extended Voyager/Caravan, AWD Eurostar Leaf Springs
(Europe)
Isuzu Medium Duty NPR/W4 Truck Leaf Springs
CAMI Sport Utility Tracker/Sidekick Rear Bumper, Side Frame Member,
Door Inner Reinforcement, Floor Bar,
Underbody Components
Passenger Car Metro/Swift Rear Cross Members, Side Sill, Dash Panel
</TABLE>
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The Company has received purchase orders for production commencing
after the current model year, which production typically continues through the
product's life cycle and is subject to the volume requirements of customers,
for the following major products: (i) the new Saturn LS Program, which
management believes will generate approximately $65.0 million of annual net
sales beginning with the 1999 model year, (ii) the 1999 Ford Windstar-radiator
support, which management believes will generate approximately $7.2 million of
annual net sales, (iii) the GMT 250 Program, which management believes will
generate approximately $85.0 million of annual net sales beginning in 1999,
(iv) the 2001 Chrysler Durango/Dakota control arms, which management belives
will generate approximatley $8.5 million of annual sales beginning in 2000 and
(v) the 1999 CAMI J2, which management believes will generate approximately $4.0
million of annual net sales beginning in 1998.
DESIGN AND ADVANCED ENGINEERING
The Company strives to maintain a technological advantage through
investment in product development and advanced engineering capabilities that
utilize structured program management techniques in an effort to exceed the
customer's expectations for value and service. The Company's engineering staff
encompasses such disciplines as program management, computer aided design
("CAD"), virtual prototyping, draw die and process simulation, advanced
engineering, manufacturing feasibility, and tooling and process development.
Responsibilities of the Company's engineers include (i) design, (ii) initial
prototype development, (iii) design and implementation of manufacturing
processes, (iv) production feasibility and improvement, and (v) data
management.
As the Company's customers continue to outsource larger assembled
systems which must be designed at earlier stages of vehicle development rather
than the smaller parts which are attached to them, the Company is increasingly
required to utilize advanced engineering resources early in the planning
process. Advanced engineering resources create improved engineering design, CAD
feasibility studies, working prototypes and testing programs to meet customer
specifications. Given this increased demand for early involvement in the design
and engineering aspects of production development, the Company established a
new technical center which houses its engineering and design group. The
Company utilizes structured program management based on the Automotive Industry
Action Group sanctioned Advanced Part Quality Planning principles to ensure
part quality in all phases of design and manufacturing. The Company has
established a data management and CAD department which is able to support all
major customer systems. The Company provides "gray box" engineering
capabilities in which the customer has
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principal design responsibility while the Company's engineers work closely with
the customer in designing the specifications of the product material, the part
to be produced and the tooling required to produce the finished product. The
Company is also on-line with all major customers which accelerates the process
of design changes.
The Company's design and advanced engineering expertise is an
important differentiating factor in maintaining its relationships with and
obtaining new business from Ford, GM, and Chrysler and, in management's
judgment, was an essential factor in winning the LS Program business.
CUSTOMERS AND MARKETING
The Company supplies its products on a long-term preferred and sole
source basis, primarily to GM (54%), Ford (31%), Chrysler (9%), CAMI (2%), and
Saturn (2%) (percentages are approximates of net sales for the fiscal year
ended as of March 31, 1998) with the remaining net sales comprised of sales
primarily to other automotive suppliers. The Company has been providing
products directly to GM and Ford for more than 50 years and directly to
Chrysler for more than 20 years. The Company currently has locations in Mexico
and Venezuela and provides components for OEMs doing business in Mexico and
South America. The Company believes its presence in Mexico is strategically
important and has led to several significant new opportunities (e.g. GMT 250
Program) with OEMs doing business in Mexico. The Company also believes the
Venezuelan joint venture provides further entree into Latin and South American
markets. Metalcar's production capabilities and strong management team will
provide the Company the means to further penetrate these markets not only for
springs, but also metal stamping and other Company products. The Company
maintains very strong relationships with its customers and continually strives
to exceed customer expectations and anticipate customer needs. This approach
has enabled the Company to maintain its status as a long-term supplier with
each of its major customers and as part of a limited group of preferred
suppliers invited to bid for platform work.
With the efforts by the OEMs to reduce the product development cycle
time, top suppliers are increasingly included in the early design and
development stages. For example, the Company obtains many of its new orders
through a presourcing process by which the customer invites one or a few
preferred suppliers to manufacture and design a component, assembly or module
that meets certain price, timing and functional parameters. Upon selection at
the development stage, the Company and the customer typically agree to
cooperate in developing the product to meet the specified parameters. Upon
completion of the development stage and the award of the manufacturing
business, the Company receives a blanket purchase order for those components,
assemblies or modules for the life of a vehicle model or platform, which
typically range from five to seven years. Consequently, the key success factors
for OEM suppliers now include total program management that encompasses
state-of-the-art design, reduced launch cycle times, manufacture and delivery
of high quality products at competitive prices.
The Company believes that the advanced engineering and sales
organization at the Company's technical center offers services few other
suppliers have available for their customers. The group's primary activities
are: (i) Quoting/Cost Estimating; (ii) Assembly/Automation; (iii) CAD Design
and Data Control; (iv) Virtual prototyping; (v) Draw die simulation (vi) Tool
Process/Design; and (vii) Program Management. The sales group is divided into
customer oriented business units, each with a business unit manager
responsible for all facets of customer needs, as well as strategies for growing
their particular customer base. The entire group is dedicated to advanced
technical development and servicing a multitude of customers' needs as one
team.
RAW MATERIALS
The cost of raw materials represented approximately 54.7% of net sales
of the Company for the fiscal year ended March 31, 1998 and steel represented
approximately 69% of total raw materials purchases for the fiscal year ended
March 31, 1998. The Company expects to purchase nearly 360,000 tons of steel
in fiscal 1999 for use in its
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production. The remaining 31% of raw materials purchases for fiscal 1998
represents various purchased parts such as forgings, bushings, ball joints,
isolators, corrosion resistant coating, and various fasteners.
The Company participates with respect to the majority of its platforms
in steel purchase programs through Ford, GM and Chrysler wherein the steel is
purchased by the OEM from the steel mill and sold to the Company at a
negotiated price. These purchase programs effectively neutralize the exposure
to steel price increases, as any price increases from the steel mills are
either absorbed by the OEM prior to the Company's purchase of the steel or such
increases are reflected in the Company's purchase of the steel and passed back
to the OEM in the product pricing.
COMPETITION
The market for the Company's products is characterized by strong
competition from both captive OEM suppliers and external, non-captive
suppliers. The Company competes with a limited number of competitors that have
the physical assets and technical resources to produce large bed stampings,
complex parts and subassemblies of multiple parts. The Company's largest
competitors include The Budd Company, a subsidiary of Thyssen AG; Magna
International Inc.; Tower Automotive, Inc.; Aetna Industries, Inc.; Ogihara
America Corp., a subsidiary of Marubeni Corp.; Midway Products Corporation;
Active Tool & Manufacturing Co., Inc.; A.G. Simpson Automotive, Inc.; Mayflower
Vehicle Systems Inc.; L&W Engineering; National Automotive Radiator
Manufacturing Company; and divisions of OEMs with internal stamping and
assembly operations.
The Company competes for business at the beginning of the development
for new model platforms, as well as the redesign of current models. This
process can begin from two to five years prior to the introduction of the new
model. After the customer awards a program, that supplier is generally
designated as the sole source supplier for the life of that program, which
typically lasts 4 to 5 years for passenger cars and up to 10 years for trucks
(particularly for unexposed structural components and assemblies).
EMPLOYEES
At June 1, 1998, the Company employed approximately 3,800 persons in
the United States, Canada and Mexico, approximately 700 of whom are employed on
a salaried basis and the balance of whom are hourly employees. Substantially
all of the Company's hourly employees are represented by various local unions
through collective bargaining agreements. These individual agreements which
are from three to five years in length expire over the period February 1999
through March 2003.
In 1994, the Company, through the recently acquired Suspension Division,
experienced a 2-week work stoppage at the Chatham, Ontario facility. Other than
this, the Company has not experienced any organized work stoppages at any
time during the past ten years. At the present time, the Company believes that
its relations with its employees are good.
REGULATORY MATTERS
The Company's facilities and operations are subject to a wide variety
of federal, state, local, and foreign environmental laws, regulations, and
ordinances, including those related to air emissions, wastewater discharges,
and chemical and hazardous waste management and disposal ("Environmental
Laws"). The Company's operations also are governed by laws relating to
workplace safety and worker health, primarily the Occupational Safety and
10
<PAGE> 11
Health Act, and foreign counterparts to such laws. In many jurisdictions, these
laws are complex and change frequently. The nature of the Company's operations
exposes it to risks of liabilities or claims with respect to environmental and
worker health and safety matters. At March 31, 1998, the Company has a
liability of approximately $1.7 million recorded for estimated costs of known
environmental matters. There can be no assurance that material costs will not
be incurred in connection with such liabilities or claims. See Note 14 of
Notes to Consolidated Financial Statements included in this Report.
Based on the Company's experience to date, the Company believes that
the future cost of compliance with existing Environmental Laws (or liability
for known environmental claims) will not have a material adverse effect on the
Company's business, financial condition or results of operations. However,
future events, such as changes in existing Environmental Laws or their
interpretation, may give rise to additional compliance costs or liabilities
that could have a material adverse effect on the Company's business, financial
condition or results of operations. Compliance with more stringent
Environmental Laws, as well as more vigorous enforcement policies of regulatory
agencies or stricter or different interpretations of existing Environmental
Laws, may require additional expenditures by the Company that may be material.
Certain Environmental Laws hold current owners or operators of land or
businesses liable for their own and for previous owners' or operators' releases
of hazardous or toxic substances, materials or wastes, pollutants or
contaminants, including petroleum and petroleum products ("Hazardous
Substances"). Certain laws, including but not limited to CERCLA, may impose
joint and several liability on responsible parties. Because of the Company's
operations, the long history of industrial uses at some of its facilities, the
operations of predecessor owners or operators of certain of the businesses, and
the use, production, and releases of Hazardous Substances at these sites, the
Company is affected by such liability provisions of the Environmental Laws.
Several of the Company's facilities have experienced some level of regulatory
scrutiny in the past and are or may be subject to further regulatory
inspections, future requests for investigation or liability for past disposal
practices.
The Company's Alma, Michigan plant is listed on the Michigan
Department of Environmental Quality ("MDEQ") list of Michigan Sites of
Environmental Contamination. Based on filings with the MDEQ by the current
owner of the petroleum refinery which adjoins the Alma Plant property, the
refinery has been determined by the MDEQ to be the source of certain
contamination existing in the eastern area of the Alma plant property. While
the Company is currently conducting certain remedial activity at its Alma plant
in connection with this contamination, the Company may have claims against the
refinery owner relating to this contamination. While the Company does not
expect to incur significant future costs in connection with this matter, the
Company cannot guarantee that such future costs will not be material.
The Resource Conservation and Recovery Act and the regulations
thereunder ("RCRA") regulates the generation, treatment and disposal of
hazardous wastes. In the mid-1980s, the Company, through Lobdell, entered into
a Consent Agreement and Final Order with the United States Environmental
Protection Agency (the "EPA") relating to the final closure of a surface water
impoundment area at the Alma plant under RCRA. The Company has remediated the
impoundment soils and sediments and is now implementing a groundwater
monitoring program with EPA approval under RCRA. In addition, the Company is
conducting groundwater monitoring in a separate section of the Alma plant at
which contaminants have been detected by the Company's consultants. Both of
these programs may be affected by the suspected contamination from the
petroleum refinery described above. While future groundwater remediation costs,
if any, are not expected to be material, the Company cannot predict such costs
with certainty and no guarantee can be made that these costs will not be
material.
11
<PAGE> 12
The Company has been named as a potentially responsible party, along
with several other companies, in connection with a former disposal facility
located in the St. Louis, Michigan area. The Company and certain other named
parties, in cooperation with the State of Michigan, currently are undertaking a
remedy for which they are sharing costs. Groundwater at the site is currently
being monitored and while the costs of groundwater remediation, if any, are not
expected to be material, the Company cannot accurately estimate such costs at
this time.
On April 1, 1998, the Company acquired the Suspension Division and is
in the process of addressing certain environmental concerns. Eaton Corporation
has agreed to retain and reimburse the Company for all known environmental
liabilities for which claims are made prior to April 1, 2008 arising from the
operation of the acquired facilities prior to the acquisition of the Suspension
Division, including the present remediation efforts. Eaton Corporation has
also agreed to retain and reimburse the Company for all unknown environmental
liabilities arising from the operation of the acquired facilities prior to the
acquisition of the Suspension Division, for which claims are made prior to
April 1, 2000, up to a $1.5 million aggregate cap. While there can be no
assurance that all costs associated with such matters will ultimately be
reimbursed by Eaton Corporation, the Company does not currently believe that
any liability associated with such matters will be material to the Company.
FORWARD LOOKING STATEMENTS
This report contains statements relating to such matters as
anticipated financial performance, business prospects and other matters that
may be construed as forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. In addition, the
Company may from time to time publish or communicate other statements that
could also be construed to be forward-looking statements. These statements are
or will be based on the Company's estimates, assumptions and projections, and
are subject to risks and uncertainties, including those specifically listed
below, that could cause actual results to differ materially from those included
in the forward-looking statements.
The risks and uncertainties that may affect the operations,
performance, development and results of operations of the Company include the
following: (1) the OEM supplier industry is highly cyclical and, in large
part, impacted by the strength of the economy generally, by prevailing interest
rates and by other factors which may have an effect on the level of sales of
automotive vehicles; (2) future price reductions, increased quality standards
or additional engineering capabilities may be required by the OEMs, which are
able to exert considerable pressure on their suppliers; (3) the OEMs may decide
to in-source some of the work currently performed by the Company; (4) work
stoppages and slowdowns may be experienced by OEMs and their Tier 1 suppliers,
as a result of labor disputes; (5) there may be a significant decrease in
sales of vehicles using the Company's products or the loss by the Company of
the right to supply any of such products to its major customers; (6)increased
competition could arise in the OEM supplier industry; and (7) changing federal,
state, local and foreign laws, regulations and ordinances relating to
environmental matters could affect the Company's operations.
ITEM 2. PROPERTIES.
The Company's corporate headquarters, engineering, technical center
and sales offices are currently located in Troy, a suburb of Detroit, Michigan,
close to its core of automotive customers. The Company's manufacturing plants
are strategically located near OEM manufacturing sites.
The Company currently operates over 380 presses ranging from under 100
ton to 2,500 ton capabilities. The Company is capable of producing components
and assemblies from the smallest brackets to full-size, Class
12
<PAGE> 13
A door and closure panels with its unique wide-bed (180 inch), automated press
lines. Production systems include oil feeders, welding robots, pick and place
robots and other state-of-the-art automation, as well as autophoretic corrosion
resistant coating systems.
As OEMs have increased quality standards and implemented just-in-time
and sequenced delivery/inventory management methods, the consistency of
quality, as well as the timeliness and reliability of shipments by OEM
suppliers, have become crucial in meeting logistical demands of the OEMs and
reducing operating costs of the supplier. The Company has responded by
developing and adopting manufacturing practices that seek to maximize quality
and eliminate waste and inefficiency in its own operations and in those of its
customers. The Company's manufacturing and engineering capabilities enable it
to design and build high-quality, efficient manufacturing systems, processes
and equipment. The Company has invested heavily in its commitment to quality
through education of employees and implementation of cost management and
control systems from the plant floor up.
All suppliers are required to meet numerous quality standards in order
to qualify as a preferred and long-term supplier to the OEMs. The QS-9000
standards were developed by international and domestic automobile and truck
manufacturers to ensure that their suppliers meet consistent quality standards
that can be independently audited. The QS-9000 standards provided for the
standardization and documentation of a supplier's policies and procedures to
improve suppliers' efficiencies. The Company is scheduled to meet the current
qualification requirements of its customers.
In addition to the QS-9000 standard, each OEM maintains its own
certification or award system for preferred suppliers based on the supplier's
demonstrated quality, delivery and certain commercial considerations. Ford
requires that all suppliers receive its Q1 rating in order to quote for new
production business. GM's Supplier of the Year Award provides certain
competitive advantages to the recipients but is not a requirement for current
GM suppliers to bid on new business. Chrysler allows suppliers who have
received its Gold Pentastar Award to retain any current business when it is
replaced by a new model without competitive bidding. Other OEMs maintain
various award programs for their suppliers that recognize outstanding
performance by the supplier. The Company has received Chrysler's Gold Pentastar
Award for each of its facilities that have Chrysler as a customer. The Company
has the Q1 rating from Ford at 9 of the 10 plants that are required to have the
Q1 rating. The Company has initiated steps necessary to obtain the Q1 rating at
this plant. The Company believes that this plant has met the minimum
standards, is in the final phase for approval, and will be awarded the Q1
rating by September 1998. If this plant does not obtain the Q1 rating, it
would be precluded from quoting on new Ford business and the Company would
likely consolidate its Ford production in its other Q1 rated plants.
A summary of the Company's major facilities, including the facilities
of the Company's less than majority owned affiliates is set forth below:
<TABLE>
<CAPTION>
SIZE
FACILITY (SQ. FT.)
-------- -------
<S> <C>
Alma, Michigan 389,000
Argos, Indiana 386,000
Corydon, Indiana 200,000
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C>
Greencastle, 214,000
Indiana
Cambridge, Ontario 290,000
Delhi, Ontario 115,000
Athens, Tennessee 100,000
Masury, Ohio 150,000
Lapeer, Michigan 85,000
Prudenville, 76,000
Michigan
Oscoda, Michigan 57,000
Hamilton, Indiana 85,000
Chatham, Ontario 190,000
Wallaceburg, 240,000
Ontario
Saltillo, 20,000
Mexico(1)
Silao, Mexico(1) 42,000
Troy, Michigan(1) 34,000
Valencia, 122,000
Venezuela(2)
</TABLE>
- -----------------
(1) All properties above are owned, with the exception of the Silao
and Saltillo facilities and the Troy office. These properties are leased with
lease expiration dates ranging from December 1999 to June 2005.
(2) Owned by Metalurgica Carabobo, S.A., a Venezuelan joint venture
of which the Company has a 49% interest.
The Company is in the planning stage of a new facility in Ramos Arizpe,
Mexico. The 300,000 sq.ft. facility will support the GMT 250 Program as well
as other customer opportunities.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to various claims, lawsuits and administrative
proceedings related to matters arising in the normal course of business. In the
opinion of management, after reviewing the information which is currently
available with respect to such matters and consulting with legal counsel, any
liability which may ultimately be incurred with respect to these matters will
not materially affect the financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of the Company's security
holders during the fourth quarter ended March 31, 1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
There is no established trading market for any class of common equity
of the Company. As of June 1, 1998, there were 21 shareholders of record of
the Company's common stock.
The Company has not paid cash dividends during the past two fiscal
years and does not plan to pay cash dividends in the near term. The Company is
restricted in its ability to pay dividends under the terms of the Indenture
governing its 10-1/8% Senior Subordinated Notes due 2007 (the "Indenture") and
the terms of its Credit Agreement (the "Senior Credit Facility") dated June 24,
1997, with NBD Bank, on behalf of itself and as agent for a syndicate of other
lenders.
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<PAGE> 15
The Company did not sell any equity securities during the year ended
March 31, 1998 that were not registered under the Securities Act of 1933, as
amended.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth (i) the selected consolidated
historical financial data of BMG (the "Predecessor") for the years ended March
31, 1994 and 1995 which was derived from the audited consolidated financial
statements of the Predecessor, (ii) selected consolidated historical financial
data of the Predecessor for the period from April 1, 1995 through October 27,
1995, and (iii) selected consolidated historical financial data of the Company
from October 28, 1995 through March 31, 1996 and the years ended March 31, 1997
and 1998. The selected consolidated historical financial data for the period
April 1, 1995 through October 27, 1995; and the period October 28, 1995 through
March 31, 1996 was derived from the audited consolidated financial statements
of the Predecessor and the Company, which are included elsewhere in this
Report, together with the report of Deloitte & Touche, independent accountants.
The selected consolidated historical financial data for the years ended March
31, 1997 and 1998 was derived from the audited consolidated financial
statements of the Company, which are included elsewhere in this Report,
together with the report of Price Waterhouse LLP, independent accountants. The
following table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and the
Consolidated Financial Statements of the Company and the related notes and
other financial information presented elsewhere in this Report.
15
<PAGE> 16
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------------------------
PREDECESSOR COMPANY
---------------------------------------- ------------------------------------------
APRIL 1, OCTOBER 28,
1995 - 1995 -
MARCH 31, MARCH 31, OCTOBER 27, MARCH 31, MARCH 31, MARCH 31,
1994(a) 1995 1995 1996 1997 1998
----------- ------------ ----------- ----------- ------------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales . . . . . . . . . . . . $65,182 $75,097 $49,043 $35,572 $136,861 $410,321
Gross profit . . . . . . . . . . 5,955 4,206 2,148 3,948 11,773 41,901
Selling, general and
administrative . . . . . . . . 2,164 4,554 3,922 2,235 7,685 21,839
Restructuring provision . . . . . -- -- -- -- -- 1,610
Gain on sale of equipment . . . . -- -- -- -- -- (1,602)
Equipment impairment and non-
recurring charges(b) . . . . . -- -- -- -- 287 --
------- ------- ------- ------- -------- --------
Operating income (loss) . . . . . 3,791 (348) (1,774) 1,713 3,801 20,054
Interest expense . . . . . . . . 1,658 1,267 1,048 1,096 3,388 10,710
Other income (expense) . . . . . -- -- -- -- 2,201 321
Income (loss) before income
taxes . . . . . . . . . . . . . 2,133 (1,615) (2,822) 617 2,614 9,665
Provision (benefit) for income
taxes . . . . . . . . . . . . . 706 (349) (938) 202 1,065 4,074
------- ------- ------- ------- -------- --------
Net income (loss) . . . . . . . . $ 1,427 $(1,266) $(1,884) $ 415 $ 1,549 $ 5,591
======= ======= ======= ======= ======== ========
Net income (loss) per share . . . $ -- $ -- $ -- $ 9.10 $ 9.37 $ 13.74
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents . . . . $ 4,261 $ -- $ -- $ -- $ 9,671 $ 18,321
Accounts receivable . . . . . . . 7,936 9,835 13,312 8,338 47,626 65,273
Inventories . . . . . . . . . . . 3,542 4,170 4,429 3,719 13,411 21,305
Total assets . . . . . . . . . . 36,127 41,523 59,770 49,200 243,694 320,032
Total debt . . . . . . . . . . . 13,396 12,907 23,233 26,758 99,829 139,448
Redeemable preferred stock . . . -- -- -- -- 39,300 40,192
Total shareholders equity . . . . 12,406 10,833 9,329 935(c) 2,341 6,118
OTHER DATA:
Depreciation and amortization . . $ 1,747 $ 1,413 $ 919 $ 687 $ 5,041 $ 20,279
Capital expenditures . . . . . . 920 4,384 5,111 3,466 3,326 16,723
EBITDA(d) . . . . . . . . . . . . $ 5,538 $ 1,065 $ (855) $ 2,400 $ 11,330 $ 40,654
Gross margin(e) . . . . . . . . . 9.14% 5.60% 4.38% 11.10% 8.60% 10.21%
</TABLE>
See Notes to Selected Consolidated Historical Financial Data included with this
Report.
(a)Reflects the audited financial statements of the Predecessor prepared in
accordance with Canadian generally accepted accounting principals, with
Canadian dollars being converted to a U.S. dollar equivalent using an
average Canadian to U.S. foreign currency exchange rate of 1.3810 for the
period ended March 31, 1994.
(b)This provision includes income before taxes for the discontinuance of
Laserweld International, L.L.C. and Parallel Group International, Inc.
Management does not anticipate that these costs will be a part of future
operations.
(c)The reduction in equity of $8.4 million from October 27, 1995 to March 31,
1996, is primarily a result of the elimination of the Predecessor's equity
as a part of the purchase accounting adjustments made upon the acquisition
of the Predecessor on October 27, 1995.
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<PAGE> 17
(d)EBITDA is defined as income (loss) before interest, income taxes,
depreciation and amortization and equipment impairment and non-recurring
charges. EBITDA should not be construed as a substitute for income from
operations, net income or cash flow from operating activities for the
purpose of analyzing the Company's operating performance, financial position
and cash flows.
(e)Gross margin is defined as gross profit as a percent of net sales for each
of the applicable periods.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial condition
and results of operations should be read in conjunction with the Consolidated
Financial Statements of the Company and notes thereto included elsewhere in
this Report. The historical information for the fiscal year ended March 31,
1997 includes the Lobdell results of operations for the period subsequent to
its acquisition. For comparative purposes, the financial information for the
fiscal year ended March 31, 1996 represents the combination of the results of
operations for the Predecessor for the period from April 1, 1995 to October 27,
1995 together with the results of operations of the Company from October 28,
1995 through March 31, 1996 (the period subsequent to the acquisition of the
Predecessor by the Company). The financial statements of the Predecessor and
the Company in the two combined periods are not comparable in certain respects
due to differences between the cost basis of certain assets held by the Company
versus that of the Predecessor, resulting in reduced depreciation and
amortization charges subsequent to October 27, 1995, changes in accounting
policies and the recording of certain liabilities at the date of acquisition in
connection with the purchase of the Predecessor by the Company. Accordingly,
the combination of these two periods does not purport to represent what the
results of operations of the Company would have been on a pro forma basis had
it acquired the Predecessor on April 1, 1995.
Fiscal Year Ended March 31, 1998 Compared to Fiscal Year Ended March 31, 1997
Net Sales -- Net sales for the year ended March 31, 1998 were $410.3
million. This represents an increase of $273.4 million as compared to net sales
for the fiscal year ended March 31, 1997 of $136.9 million. Net sales for the
fiscal year ended March 31, 1997 included net sales of Lobdell only from the
acquisition date of January 10, 1997 through March 31, 1997. The increase for
the year was due principally from the Lobdell, Howell and RPIH acquisitions
($269.8 million). The balance of the increase related primarily to the
strength of light truck and sport utility vehicle production partially offset
by the discontinuance of certain customer platforms. On a pro forma basis, had
the net sales from all acquisitions been included for the entire fiscal 1998,
net sales would have been $453.7 million.
Gross Profit -- Gross profit was $41.9 million or 10.2% of net sales for
the year ended March 31, 1998 as compared to $11.8 million or 8.6% of net sales
for the year ended March 31, 1997. This represents an increase of $30.1
million as compared to the prior year. The gross profit increase is related
to the incremental sales resulting from the acquisitions, combined with
operating improvements made throughout the year on existing as well as acquired
sales. The increase in gross margin is a result of operating improvements
through employment and cost reductions, productivity improvements, increased
capacity utilization, quality improvements and production schedule attainment.
The increased gross profit was partially offset by costs associated with the
conversion of Canadian operations to transfer and robotic technology, startup
of the Mexican operations and costs associated with the launch of future
platforms (Saturn LS, Windstar and Ford Heavy duty pickup (PN 131)).
Selling, General and Administrative Expenses ("SG&A") -- SG&A expenses
were $21.8 million or 5.3% of net sales as compared to $7.7 million or $5.6%
for the year ended March 31, 1997. The decrease as a percentage
17
<PAGE> 18
\
of net sales was a result of the efficiencies derived through acquisition
integration and cost reduction programs. The financial and administrative
functions were consolidated into the Troy office, thereby allowing for the
closure of the Alma and Southfield administrative offices. The increase in
expenditures is primarily due to the overall growth of the organization during
the year and the need to provide the necessary resources to support customer
engineering support, global program management and the continued growth
initiatives of the organization.
Operating Income -- Income from operations was $20.1 million or 4.9% of
net sales for the year ended March 31, 1998 as compared to $3.8 million or 2.8%
of net sales for the year ended March 31, 1997. For fiscal 1998, operating
income benefited from the growth in the light truck and SUV programs as well
acquisitions during the year. The increase in operating margin reflects the
continued improvement of operations, implementation of cost saving programs and
the gain on the sale of equipment of the laser welding operations. Partially
offsetting the increase was the recording of restructuring charges as a part of
the Company's overall plant rationalization initiatives.
Other Income - Other income for the year ended March 31, 1998 was $0.3
million or .07% of net sales as compared to $2.2 million or 1.6% of net sales
for the year ended March 31, 1997. The decrease was due primarily to foreign
currency exchange transactions gains recorded in Fiscal 1997 which were not
present in fiscal 1998.
Interest Expense - Interest expense for the year ended March 31, 1998 was
$10.7 million or 2.6% of net sales as compared to $3.4 million or 2.5% of net
sales for the year ended March 31, 1997. While interest as a percentage of net
sales remained relatively flat, the overall increase in expense was due
primarily to the issuance of $125.0 million of 10 1/8% Senior Subordinated
Notes on June 24, 1997. The Notes represent both incremental borrowing as well
as increased interest rate as compared to outstanding debt of the prior period.
Proceeds of the Notes were used to payoff existing debt and support the
acquisition activities of the Company. The increase in interest expense was
partially offset by interest income derived over the year on unused bond
proceeds available for short term investment.
Income Tax -- Income tax expense was $4.1 million or 1.0% of net sales for
the period ended March 31, 1998 as compared to $1.1 million or 0.8% of net sales
for the year ended March 31, 1997. The increased income tax of $3.0 million is
a result of the $7.1 million increase in income before taxes for the year ended
March 31, 1998 as compared to the previous year and an increase in the overall
effective tax rate of the Company.
Net Income - Net income was $5.6 million or 1.4% of net sales for the year
ended March 31, 1998 as compared to $1.5 million or 1.1% of net sales for the
year ended March 31, 1997. The improvement of $4.1 million was a result of
increased operating and other income of $14.4 million, offset by the increase
in interest expense of $7.3 million and income taxes of $3.0 million,
respectively.
Fiscal Year Ended March 31, 1997 Compared to Fiscal Year Ended March 31,
1996
Net Sales -- Net sales for the year ended March 31, 1997 were $136.9
million, including the net sales of Lobdell from January 10, 1997 (the
"Acquisition Date") through March 31, 1997. This was an increase of $52.2
million or 61.7% as compared to net sales for the fiscal year ended March 31,
1996 of $84.6 million. The increase was due principally to the acquisition of
Lobdell and was partially offset by lower sales volume due to model
changeovers. On a pro forma basis, if Lobdell net sales were included with that
of the Company for the entire fiscal year ended March 31, 1997, net sales would
have been $330.2 million, an increase of $245.6 million as compared to the
prior year, and if Howell and RPIH net sales were also included for fiscal
1997, net sales would have been $433.4 million, an increase of $348.8 million
as compared to the prior year.
Gross Profit -- Gross profit was $11.8 million or 8.6% of net sales for
the year ended March 31, 1997 as compared to $6.1 million or 7.2% of net sales
for the year ended March 31, 1996. This represents an increase of
18
<PAGE> 19
$5.7 million, or 93.4% as compared to the prior year. The increase was
primarily a result of higher margins on Lobdell sales for the eighty day period
from the Acquisition Date through March 31, 1997. Gross profit also increased
due to (i) workforce reductions, (ii) improved materials cost management which
resulted in lower raw material costs and (iii) strong sales in the light truck
and SUV markets, the Company's largest sales segments and those which produce
its highest margins. The increased gross profit was partially offset by costs
associated with the production launch of the Saturn Coupe stampings.
Selling, General and Administrative Expenses ("SG&A") -- SG&A expenses
were $7.7 million or 5.6% of net sales for the year ended March 31, 1997 as
compared to $6.2 million or 7.3% of net sales for the year ended March 31,
1996. The decrease as a percentage of net sales was a result of efficiencies
and cost reduction programs undertaken by Company management. Specifically, the
reduction in SG&A expenses as a percentage of net sales resulted from a
restructuring of the sales and product engineering functions into customer
focused business units.
Operating Income -- Income from operations was $3.8 million or 2.8% of net
sales for the year ended March 31, 1997 as compared to a deficit of $0.1
million for the year ended March 31, 1996. The improvement of $3.9 million was
a result of improved gross profit of $5.7 million, partially offset by
increased SG&A expenses of $1.5 million.
Other Income -- Other income for the year ended March 31, 1997 was $2.2
million or 1.6% of net sales due primarily to foreign currency exchange
transactions. No significant other income was earned for the year ended March
31, 1996.
Interest Expense -- Interest expense for the year ended March 31, 1997 was
$3.4 million or 2.5% of net sales, an increase of $1.3 million over the
interest expense for the year ended March 31, 1996. While interest expense for
both periods remained constant at 2.5% of net sales, the increase of $1.3
million was a result of variations in base lending rates and additional
borrowings resulting from the acquisition of Lobdell.
Income Tax -- Income tax expense was $1.1 million or 0.8% of net sales for
the period ended March 31, 1997 as compared to a benefit of $0.7 million or
0.8% of net sales for the year ended March 31, 1996. The increased income tax
expense of $1.8 million is a result of the $4.8 million increase in income
before taxes for the year ended March 31, 1997 as compared to the previous
year.
Net Income -- Net income was $1.5 million or 1.1% of net sales for the
year ended March 31, 1997 as compared to a loss of $1.5 million or 1.8% of net
sales for the year ended March 31, 1996. The improvement of $3.0 million was a
result of improved operating income of $3.9 million and increased other income
of $2.2 million. The increase in net income was partially offset by increased
interest expense and income taxes of $1.3 million and $1.8 million,
respectively.
19
<PAGE> 20
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Net income adjusted for non-cash charges generated approximately $24.2
million of cash for the year ended March 31, 1998. Cash also increased during
the period based on overall increases in trade accounts payable of $11.4
million and refundable income taxes of $2.9 million. Offsetting the increase
in cash for fiscal 1998 was a net increase in accounts receivable, customer
tooling, and other working capital requirements of $13.0 million. The increase
in customer tooling is primarily a result of progress payments made to tooling
vendors to support scheduled program launches set for fiscal 1999 (Saturn LS,
Ford Windstar and CAMI J2). During the year, the Company used approximately
$43.2 million for investing activities, including the acquisitions of Howell
and RPIH, as well as the purchase of an equity interest in a publicly traded
automotive supplier. The overall cash requirements were funded by approximately
$26.3 million of incremental borrowings.
The Company has $ 98.7 million available under the Senior Credit Facility.
At March 31, 1998, the Company had $1.8 million outstanding under the line of
credit and $9.5 million in outstanding letters of credit to support certain
Industrial Development Revenue Bonds and workers compensation commitments.
During fiscal 1998, the Company received net proceeds of $37.6 million
from its offering of $125.0 million of its 10 1/8% Senior Subordinated Notes
due 2007 (the "Series A Notes"), after payment of approximately $83.1 million
to refinance existing indebtedness and approximately $4.3 million in issuance
costs. The Company used approximately $23.2 million and $2.5 million
respectively toward the acquisitions of Howell and RPIH and related expenses.
The remainder of the proceeds were used for general corporate purposes and in
part to fund the acquisition of the Suspension Division.
The balance of the Suspension Division acquisition was funded by the
issuance of an additional $35.0 million of 10 1/8% Senior Subordinated Notes Due
2007, Series B ("Series B Notes"). The Series B Notes were issued April 1, 1998
and are substantially identical to, and rank pari passu in right of payment
with the Series A Notes.
The Company believes the proceeds of the Series A and Series B Notes have
enhanced its ability to meet its growth and business objectives. However,
interest payments on the Notes will represent a significant liquidity
requirement for the Company. The Company will be required to make scheduled
semi-annual interest payments on the Notes of approximately $8.1 million on
June 15 and December 15 each year until their maturity on June 15, 2007 or
until the Notes are redeemed.
Cash outlays for capital expenditures were $16.7 million, or 4.1% of
net sales for the year ending March 31, 1998 as compared to $3.3 million, or
2.4% of net sales for the year ended March 31, 1998. The increase of $13.4
million was due primarily to the inclusion of acquisitions, the start up of two
Mexican operations ($3.7 million) and the development of a corporate Technical
and Administrative center ($1.3 million). Other capital expenditures included
investments to support new business (primarily the 1999 model year Saturn LS
(previously designated Innovate), and Ford's Windstar and CAMI's J2, each due
to launch during the summer of 1998), press equipment and rebuilds, safety and
maintenance equipment, automation and other productivity improvement
expenditures, and other items including computers and welding equipment.
For fiscal 1999, the Company's capital expenditures are expected to be
$34.7 million; consisting of a $15.8 million investment to support new
business and increase capacity; $4.2 million for tooling and quality projects;
$5.3 million for press automation, rebuilds and improvements; $3.7 million in
productivity and cost improvements; and $5.7 million in other expenditures,
including health, safety, environmental and maintenance items.
20
<PAGE> 21
The Company believes that the operations of the Suspension Division will
enhance the Company's ability to develop key suspension components. The
Company believes that the acquisition of the Suspension Division will have a
positive impact on the Company's results of operations for the fiscal year
ending March 31, 1999 and thereafter.
The Company believes that cash generated from operations, together with
amounts available under the Senior Credit Facility will be adequate to meet its
debt service requirements, capital expenditures and working capital needs for
the foreseeable future, although no assurance can be given in this regard. The
Company's future operating performance and ability to service or refinance the
Series A and Series B Notes and to extend or refinance its other indebtedness
will be subject to future economic conditions and to financial, business and
other factors that are beyond the Company's control.
IMPACT OF GENERAL MOTORS STRIKE
A substantial portion of General Motors vehicle production has been shut
down due to two local strikes in Flint, Michigan. GM is a significant customer
of the Company and any prolonged shutdown would have a material adverse effect
on the Company's results of operations for the fiscal year ended March 31,
1999. While the Company is unable to predict the duration and ultimate impact
of these strikes, it is currently taking necessary actions to minimize the
adverse impact.
YEAR 2000
The Company is currently working to resolve any potential impact of the
Year 2000 on the processing of information by the Company's information
systems. The Year 2000 problem is a result of a date problem , where computer
hardware and/or computer programs rely on a two-digit year for processing.
Incorrect calculations, system failures, or misrepresentations resulting from
the change in century are being addressed by following a process defined by the
Auto Industry Action Group (AIAG). This process includes creating an inventory
of all computer-related equipment and software programs, determining their
compliance to proper Year 2000 processing capabilities, remediating any
identifiable problems, and testing each item for compliance. The Company is
utilizing both internal employees and external contractors for inventory,
remediation, and testing activities. Having completed the inventory, the
Company believes that the Year 2000 remediation and testing activities will not
have a material impact on the Company's financial position, results of
operations, or cash flows in future periods. Software and hardware upgrades
and updates will be expensed, while any major replacements will be leased or
capitalized and amortized over the useful life of the equipment. Most of these
potential hardware upgrades occur regularly as a normal part of business
through technology changes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and schedules filed herewith are set forth on the
Index to Financial Statements and Financial Statement Schedules on page F-1 of
the separate financial section of this Report and are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The information relating to changes in accountants was previously filed by
the Company in its Registration Statement on Form S-4, Registration No.
333-32975.
21
<PAGE> 22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each of the
directors and executive officers of Oxford Automotive. Each director of Oxford
Automotive will hold office until the next annual meeting of shareholders or
until his successor has been elected and qualified. Officers of Oxford
Automotive serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---- --- ---------
<S> <C> <C>
Selwyn Isakow........... 46 Chairman of the Board of Directors
Rex E. Schlaybaugh, Jr.. 49 Vice Chairman of the Board of Directors and
Secretary
Steven M. Abelman....... 47 Director, President and Chief Executive Officer
Manfred J. Walt......... 45 Director
Donald C. Campion....... 49 Senior Vice President-Chief Financial Officer
Larry C. Cornwall....... 51 Senior Vice President-Sales and Engineering
John H. Ferguson........ 50 Vice President-Financial Operations and
Assistant Secretary
</TABLE>
Selwyn Isakow, Chairman of the Board of Directors. Mr. Isakow has been and a
director of Oxford Automotive since its inception in 1995, was the President of
Oxford Automotive from 1995 to May 1997, and was appointed Chairman of the
Board in May 1997. Since 1985, Mr. Isakow has been the President of The Oxford
Investment Group, Inc. ("Oxford Investment"), a private investment and
corporate development company that acquires majority equity positions on behalf
of its principals in industrial products manufacturing, financial services,
niche distribution and other selected companies. Mr. Isakow generally serves as
Chairman of the Board and a director of all such portfolio companies. Mr.
Isakow is also a director of Champion Enterprises, Inc. and Ramco Gershenson
Properties Trust, and serves on the boards of numerous community organizations.
From 1982 to 1985, Mr. Isakow was the Executive Vice President of Comerica
Incorporated, a regional bank holding company, and from 1978 to 1982, was a
principal at Booz, Allen and Hamilton, management consultants.
Rex E. Schlaybaugh, Jr., Vice Chairman of the Board of Directors and Secretary.
Mr. Schlaybaugh has been the Secretary and a director of Oxford Automotive
since its inception in 1995 and was appointed Vice Chairman of the Board in May
1997. Mr. Schlaybaugh was appointed the Vice Chairman of Oxford Investment in
May 1997. Mr. Schlaybaugh has been a member of the firm of Dykema Gossett PLLC
since 1985. Mr. Schlaybaugh is also a director of certain other portfolio
companies of Oxford Investment. Mr. Schlaybaugh is currently the Chairman of
the Board of Trustees of Oakland University.
Steven M. Abelman, Director, President and Chief Executive Officer. Mr. Abelman
was appointed President and Chief Executive Officer of Oxford Automotive in May
1997. Prior to joining Oxford Automotive, Mr. Abelman was Deputy Chief
Executive Officer of Bundy North America ("Bundy"), an automotive supplier of
brake and fuel
22
<PAGE> 23
delivery systems, from February 1996 until May 1997 and prior to that he was
President of Bundy from September 1995 until February 1996. From December 1991
to September 1995, Mr. Abelman was Vice President and General Manager of Augat
Wiring Systems, a manufacturer of automotive wiring systems and components.
Manfred J. Walt, Director. Mr. Walt has been a director of Oxford Automotive
since May 1997. Mr. Walt has been the Executive Vice President and Chief
Financial Officer of Central Park Lodges Ltd., a Canadian assisted living
company located in Toronto, Canada, since May 1998. From October 1997 to May
1998, Mr. Walt was the Sr. Vice President of Gentra, Inc., a Real Estate
Company based in Toronto, Canada. From 1989 to September 1997, Mr. Walt was
the Managing Partner-Financial Services of Edper Brascan Corporation ("Edper"),
a diversified natural resources, energy and property development company.
Gentra, Inc. is an affiliate of Edper. From 1980 to 1989, Mr. Walt served in
various capacities with Edper.
Donald C. Campion, Senior Vice President-Chief Financial Officer. Mr. Campion
was appointed Senior Vice President-Chief Financial Officer of Oxford
Automotive in July 1997. From June 1996 to March 1997, Mr. Campion was the
Senior Vice President and Chief Financial Officer at Delco Electronics
Corporation. From November 1993 to May 1996, Mr. Campion was the Chief
Financial Officer for the services parts division of GM, and from August 1992
to October 1993 was the Financial Director of Performance Analysis for the
North American Operations of GM.
Larry C. Cornwall, Senior Vice President-Sales and Engineering. Mr. Cornwall
was appointed Vice President-Sales and Engineering of Oxford Automotive in May
1997. From October 1995 to May 1997, Mr. Cornwall was the Senior Vice
President-Sales and Engineering at BMG. From 1991 to 1995, Mr. Cornwall was
Vice President of Sales and Engineering at Veltri International, an automotive
stamper.
John H. Ferguson, Vice President-Financial Operations and Assistant Secretary.
Mr. Ferguson was appointed as a Vice President-Financial Operations and
Assistant Secretary of Oxford Automotive in May 1997. Mr. Ferguson is also the
Chief Financial Officer of BMG, a position he has held since April 1996. Prior
to that time, Mr. Ferguson was with Bundy, where he acted as Group Plant
Manager from 1994 to 1996 and as Corporate Controller from 1992 to 1994. From
1984 to 1992, Mr. Ferguson held several positions with GenCorp. Inc., an
automotive tire supplier, including Controller of the Automotive Products
Group.
Certain of the officers and directors of Oxford Automotive are also directors
or officers of Oxford Automotive subsidiaries.
BOARD COMMITTEES
In the past, the Company has not maintained any committees of the
Board of Directors. On August 4, 1997, the Board of Directors established an
Audit Committee and a Compensation Committee.
The Audit Committee will be responsible for reviewing with management
the financial controls and accounting and reporting activities of the Company.
The Audit Committee will review the qualifications of the Company's independent
auditors, make recommendations to the Board of Directors regarding the
selection of independent auditors, review the scope, fees and results of any
audit and review non-audit services and related fees. The Audit Committee
consists of Messrs. Schlaybaugh and Walt.
The Compensation Committee will be responsible for the administration
of all salary and incentive compensation plans for the officers and key
employees of the Company, including bonuses. Salaries and bonuses will be
reviewed by the Compensation Committee and will be adjusted in light of
performance of the Company, the responsibilities of each of the Company's
officers in meeting corporate performance objectives and other
23
<PAGE> 24
factors, such as length of service and subjective assessments. The
Compensation Committee consists of Messrs. Isakow and Walt.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth certain information as to the
compensation earned by the Company's Chief Executive Officer and the Company's
four other most highly paid officers (the "Named Executive Officers") for the
last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1)
--------------------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND TITLE YEAR SALARY BONUS COMPENSATION COMPENSATION
-------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Selwyn Isakow, Chairman(2) 1998 $ 95,577 $101,250 $ -- $ --
1997 -- -- -- --
Steven M. Abelman, President and 1998 $230,769 $150,000 $ -- $ --
Chief Executive Officer(3)
Donald C. Campion, Senior Vice 1998 $147,808 $52,500 $ -- $ --
President-Chief Financial Officer(4) 1997 -- -- -- --
Larry C. Cornwall, Senior Vice 1998 $161,846 $68,000 $ --
President-Sales and Engineering(5) 1997 124,196 36,000 -- --
1996 31,504 24,200 -- --
John H. Ferguson, Vice President- 1998 $131,500 $39,000 $ -- $ --
Financial Operations and Assistant 1997 101,250 -- -- --
Secretary (6)
Rex E. Schlaybaugh, Jr., 1998 $138,462 $101,250 $ -- $ --
Vice Chairman (7) 1997 -- -- -- --
</TABLE>
- ----------------
(1) The Company was formed in October 1995 and executive officers
of the Company did not receive any compensation prior to 1997.
(2) Mr. Isakow was the President of the Company from its inception
until May 1997, for which he did not receive any compensation from the Company.
Steven M. Abelman was appointed President and Chief Executive Officer in May
1997. Mr. Isakow received compensation during the last fiscal year in
connection with his position as Chairman of the Board of the Company.
(3) Mr. Abelman was appointed President and Chief Executive Officer
in May 1997. See "-Employment Agreements."
(4) Mr. Campion was appointed Senior Vice President-Chief Financial
Officer of Oxford Automotive in July 1997. See "--Employment Agreements."
24
<PAGE> 25
(5) Mr. Cornwall joined the Company in October 1995 and only
received compensation from the Company for a full fiscal year in 1997 and 1998.
(6) Mr. Ferguson joined the Company in April 1996 and only received
compensation from the Company for a full fiscal year in 1998.
(7) Mr. Schlaybaugh did not receive any compensation from the Company
prior to the last fiscal year.
EMPLOYMENT AGREEMENTS
As of May 1, 1997, Oxford Automotive and Steven M. Abelman entered
into an Employment and Noncompetition Agreement. The agreement provides that
Mr. Abelman will serve as President and Chief Executive Officer of Oxford
Automotive on an "at-will" basis. The agreement provides that Mr. Abelman will
receive an annual base salary, will be eligible to receive a bonus of up to 60%
of his salary as determined by the Board of Directors of Oxford Automotive, and
will be entitled to certain fringe benefits. Mr. Abelman has also agreed not to
compete with the Company during the period of his employment and for two years
following the termination of his employment. Upon the termination of his
employment without cause, Mr. Abelman is entitled to severance payments equal
to (a) his annual base salary, if such termination is prior to May 1, 1999 or
(b) 1.5 times his annual base salary, if such termination is after May 1, 1999.
On November 24, 1995, BMG and Larry C. Cornwall entered into an
Employment Agreement. The agreement provides that Mr. Cornwall will serve as
Senior Vice President-Sales and Marketing of BMG on an "at-will" basis. Mr.
Cornwall has subsequently been appointed as Senior Vice President-Sales and
Engineering of Oxford Automotive. The agreement provides that Mr. Cornwall will
receive an annual base salary, will be eligible to receive a bonus of up to 50%
of his salary as determined by the Board of Directors of BMG, will be eligible
to participate in the Company's profit sharing plan, and will be entitled to
certain fringe benefits. Upon the termination of the agreement, Mr. Cornwall
will be entitled to continue to receive his base salary for the longer of three
months or the Canadian statutory requirement.
As of July 21, 1997, Oxford Automotive and Donald C. Campion entered
into an Employment and Noncompetition Agreement. The agreement provides that
Mr. Campion will serve as Senior Vice President-Chief Financial Officer of
Oxford Automotive on an "at-will" basis. The agreement provides that Mr.
Campion will receive an annual base salary, will be eligible to receive a bonus
of up to 50% of his salary as determined by the Board of Directors of Oxford
Automotive, and will be entitled to certain fringe benefits. Mr. Campion has
also agreed not to compete with the Company during the period of his employment
and for two years following the termination of his employment. Upon
termination of his employment without cause, Mr. Campion is entitled to a
severance payment of 50% of his annual base salary, payable over six months,
plus the continuation of certain benefits during this six-month period.
See also "Certain Relationships and Related Transactions."
DIRECTOR COMPENSATION AND ARRANGEMENTS
The Company pays fees to its non-employee directors of $1,000 for each
meeting and reimburses the out-of-pocket expenses related to directors'
attendance at each Board and committee meeting. In addition, the Company may
elect to adopt a non-employee director option plan or other similar plan to
provide for grants of stock options or other benefits as a means of attracting
and retaining highly qualified independent directors for the Company. Members
of the Board of Directors are elected pursuant to certain shareholder
agreements by and among the Company and certain of its shareholders. See
"Security Ownership of Certain Beneficial Owners and Management -- Shareholder
Agreements."
25
<PAGE> 26
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee prior to August 4,
1997. Accordingly, all determinations with respect to executive compensation
were made by the Board of Directors. Prior to August 4, 1997, Messrs. Isakow
and Schlaybaugh participated in deliberations of the Company's Board of
Directors concerning executive officers compensation. On August 4, 1997 a
Compensation Committee, whose members are Selwyn Isakow and Manfred Walt, was
appointed by the Board of Directors. Mr. Isakow is the Chairman of the Company
and was the President of the Company from its inception in 1995 to May 1997.
Mr. Isakow controls Oxford Investment, a private investment and
corporate development company and Mr. Schlaybaugh is the Vice Chairman of
Oxford Investment. At the time the Company acquired Lobdell (January 10, 1997),
Oxford Investment entered into a management agreement with Lobdell (the
"Lobdell Agreement"). At the time the Company acquired BMG (October 25, 1995),
Oxford Investment entered into a management agreement with BMG (the "BMG
Agreement"). The Lobdell Agreement and the BMG Agreement were terminated on
June 24, 1997. The Company entered into a new management agreement with Oxford
Investment upon the termination of the Lobdell Agreement and the BMG Agreement.
Pursuant to the terms of this management agreement, Oxford Investment will
perform various consulting, management and financial advisory services on
behalf of the Company. The Company will pay Oxford Investment a monthly
management fee of $83,334 and will pay an investment banking fee, for
acquisitions of $2.5 million or more, of 1.0% or 1.25% (for acquisitions
outside of North America) of the aggregate acquisition cost for advice and
assistance in connection with such acquisition, with a minimum fee of $200,000.
No investment banking fee will be paid to Oxford Investment in connection with
acquisitions for aggregate consideration of less than $2.5 million. The initial
term of the agreement will end on December 31, 2001, but will automatically
extend for additional one-year periods thereafter unless either party
terminates the agreement. In addition, pursuant to the management agreement,
Oxford Investment will license to the Company the name "Oxford Automotive"
which is owned by Oxford Investment.
During the fiscal year ended March 31, 1998, the Company paid Oxford
Investment management fees of approximately $1.0 million and investment banking
fees of approximately $230,000. In connection with the acquisition of the
Suspension Division, the Company paid Oxford Investment an investment banking
fee of approximately $550,000 during the first quarter of fiscal 1999.
On November 25, 1997, the Company acquired all of the issued and
outstanding shares of the common stock of RPIH, the parent of RPI for
approximately $2.5 million. The shareholders of RPIH received approximately
$2.5 million in the aggregate for all outstanding RPIH shares. In addition,
the shareholders of RPIH received approximately $402,788 as payment of the
principal and accrued interest on certain outstanding loans to RPIH. Certain
officers, directors, and shareholders of the Company were also officers,
directors, or shareholders of RPIH prior to the transaction. Messrs. Isakow
and Schlaybaugh were officers, directors and shareholders of RPIH. Robert H.
Orley was also an officer, director and shareholder of RPIH and is a
shareholder of the Company. Mr. Isakow, directly and indirectly, received
$753,150, which included the payment of $117,971 for the principal and accrued
interest on certain outstanding loans to RPIH. Mr. Schlaybaugh received
$91,296, which included the payment of $13,120 for the principal and accrued
interest on an outstanding loan to RPIH. Messrs. Robert H. and Gregg L. Orley,
each beneficial owners of more than 5% of the Company's outstanding Common
Stock, each received $252,248, which included the payment of $50,293 to each
for the principal and accrued interest on an outstanding loan to RPIH.
RPIH's wholly owned subsidiary, RPI, Inc. ("RPI"), a Michigan
corporation, issued various demand notes to Lobdell in the aggregate principal
amount of $1.4 million during the year ended March 31, 1998, each bearing
interest at the prime rate plus 1.0% per annum. The notes were issued in
connection with ongoing discussions between RPIH and the Company regarding a
possible merger or other similar transaction in consideration for
26
<PAGE> 27
which RPIH had agreed to deal exclusively with the Company and its affiliates
until December 31, 1997. This agreement to deal exclusively with the Company
allowed the Company to negotiate a transaction with RPIH without undue
interference from a third party.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of June 1, 1998, there were 309,750 issued and outstanding shares
of the Common Stock of the Company (the "Common Stock"). The following table
sets forth information as of June 1, 1998 with respect to the Common Stock
beneficially owned by each director of the Company, the Named Executive
Officers, all directors and executive officers of the Company as a group, and
by other holders known to the Company as having beneficial ownership of more
than 5% of the Common Stock. Selwyn Isakow and the Company's other shareholders
have entered into certain agreements, each of which contain substantially
identical terms, the result of which gives Mr. Isakow voting control of 100% of
the Company's Common Stock, except under certain circumstances. See "--
Shareholder Agreements." Unless otherwise specified, the address for each
person is 1250 Stephenson Highway, Troy, Michigan 48083.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
- ------------------------------------ --------- ------------
<S> <C> <C>
Selwyn Isakow (1) . . . . . . . . . . . . . . . . . 155,724 50.27%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
Rex E. Schlaybaugh, Jr . . . . . . . . . . . . . . . 20,900 6.75%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
Steven M. Abelman (2) . . . . . . . . . . . . . . . 12,326 3.98%
Manfred J. Walt . . . . . . . . . . . . . . . . . . 2,300 *
175 Boor St., E., S. Tower, Suite 601
Toronto, Ontario, Canada M4W 3R8
Donald C. Campion (2) . . . . . . . . . . . . . . 4,000 1.29%
John H. Ferguson . . . . . . . . . . . . . . . . . . 6,180 2.0%
Larry C. Cornwall . . . . . . . . . . . . . . . . . 7,000 2.26%
Robert H. Orley . . . . . . . . . . . . . . . . . . 20,600 6.65%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
Gregg L. Orley . . . . . . . . . . . . . . . . . . . 20,600 6.65%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
All directors and officers as a group (7 persons) 208,430 67.29%
(1)(2)
</TABLE>
- ------------------------------
*Less than 1.0%
(1) Includes 140,124 shares owned by Hilsel Investment Company Limited
Partnership, of which Tridec Management, Inc. is General Partner. Mr. Isakow
is the President and a shareholder of Tridec Management,
27
<PAGE> 28
Inc. In addition, Mr. Isakow may be deemed to be the beneficial owner of all of
the outstanding shares of Common Stock as a result of certain voting power over
such shares pursuant to the shareholder agreements described below and certain
purchase options that may be exercised by Mr. Isakow with respect to 52,400
outstanding shares of Common Stock.
(2) Each of Mr. Abelman's and Mr. Campion's Employment and
Noncompetition Agreement with Oxford Automotive provides Oxford Automotive with
the right to repurchase their respective shares of Common Stock if their
employment is terminated for any reason.
SHAREHOLDER AGREEMENTS
Each holder of Common Stock is a party to a shareholder agreement
which provides for certain restrictions on transfer by shareholders and grants
certain other shareholders the option to purchase the shares of a shareholder
upon his death. Each surviving shareholder has the right to exercise this
option within 30 days of the death of a shareholder. The exercising
shareholders will divide the deceased shareholder's shares as they agree or, if
they are not able to agree, pro rata. If the exercising shareholders are not
able to agree on a purchase price with the estate of the deceased shareholder,
then the per share purchase price shall be the per share value of the Company
based on the greater of the value of the Company as a going concern or on a
liquidation basis, as determined by an independent appraisal. The purchase
price shall be paid by an initial cash payment of up to 20% of the purchase
price with the balance paid pursuant to a five-year, unsecured promissory note
bearing interest at the prime rate. The agreements also provide that each
shareholder will grant a proxy to Mr. Isakow to vote all of the shareholder's
shares at any meeting of the Company; provided, however, that if holders of
shares having a majority in interest of the shares of Common Stock determine
that it is in the best interest of all of the shareholders to sell all or
substantially all of the assets of the Company or to cause the Company to merge
or consolidate with or into another corporation, Mr. Isakow shall exercise the
proxies provided to him consistent with that decision. As a result, except as
described above, Mr. Isakow has voting control of 100% of the Company's Common
Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As of March 31, 1997, Mr. Abelman issued a note to the Company in
connection with his acquisition of shares of the Company's Common Stock. The
principal amount of the note was $130,000 and the note bears interest at the
prime rate plus 1.0%, which rate is adjusted on March 31 of each year to
reflect the then current prime rate. Principal and interest on the note is
payable in equal annual installments with interest on the unpaid principal,
with the final payment due May 31, 2002.
As of March 31, 1997, the Company issued a subordinated demand note to
Mr. Robert H. Orley in connection with the redemption of certain shares of the
Company's Common Stock. The principal amount of the note was $108,203 and was
paid in full subsequent to March 31, 1997.
See also "Compensation Committee Interlocks and Insider Participation."
LEGAL
Rex E. Schlaybaugh, Jr. is a shareholder, the Vice Chairman of the
Board and a director of the Company. Dykema Gossett PLLC, of which Mr.
Schlaybaugh is a member, has performed legal services for the Company since its
inception. The Company expects to continue to retain the firm as general
counsel.
28
<PAGE> 29
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The financial statements, supplementary financial information,
and financial statement schedules filed herewith are set forth on the Index to
Financial Statements and Financial Statement Schedules on page F-1 of the
separate financial section of this Report, which is incorporated herein by
reference.
A list of Exhibits included as part of this report is set forth in the
Exhibit Index which immediately precedes such exhibits and is incorporated
herein by reference.
(b) The following reports on Form 8-K were filed by the Company
during the quarter ended March 31, 1998:
(i) Report on Form 8-K/A, dated February 9, 1998, was filed
by the Company on February 9, 1998; such report amended a Report on
Form 8-K dated November 25, 1997 and contained information under Item
7 relating to RPI Holdings, Inc. and the related proforma financial
information.
(ii) Report Form 8-K, dated March 13, 1998, was filed by the
Company on March 16, 1998; such report contained information under
Item 5 with respect to the signing of an Asset Purchase Agreement
relating to the acquisition of the Suspension Division from Eaton
Corporation.
(iii) Report on Form 8-K/A, dated March 13, 1998, was filed
by the Company on March 20, 1998; such report amended information
under Item 5 of the Form 8-K filed on March 16, 1998.
(iv) Report on Form 8-K/A, dated March 20, 1998, was filed by
the Company on March 20, 1998; such report amended information under
Item 7 of the Form 8-KA filed on February 9, 1998.
29
<PAGE> 30
SIGNATURES
Pursuant to the requirements of section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on June 25, 1998.
OXFORD AUTOMOTIVE, INC.
By: /s/ Steven M. Abelman
-------------------------------
Steven M. Abelman
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on June 25, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Selwyn Isakow Chairman of the Board and Director
- -------------------------------------
Selwyn Isakow
/s/ Rex E. Schlaybaugh, Jr. Vice Chairman of the Board and Director
- -------------------------------------
Rex E. Schlaybaugh, Jr.
/s/ Steven M. Abelman President, Chief Executive Officer and
- ------------------------------------- Director
Steven M. Abelman
/s/ Donald C. Campion Senior Vice President-Chief Financial
- ------------------------------------- Officer (Principal Accounting and
Donald C. Campion Financial Officer)
/s/ Manfred J. Walt Director
- -------------------------------------
Manfred J. Walt
</TABLE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
No Annual Report or Proxy Materials have been or will be sent to security
holders.
30
<PAGE> 31
OXFORD AUTOMOTIVE, INC.
INDEX TO FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Description Page
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Balance Sheets as of March 31, 1998, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Operations for the years ended March 31, 1998 and 1997, and
the period from October 28, 1995 through March 31, 1996 for the Company; and for the period
from April 1, 1995 through October 27, 1995 for the Predecessor . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Changes in Shareholders' Equity for the years ended March 31, 1998
and 1997, and the period from October 28, 1995 through March 31, 1996 for the Company; and
for the period from April 1, 1995 through October 27, 1995 for the Predecessor . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the years ended March 31, 1998 and 1997, and
the period from October 28, 1995 through Mach 31, 1996 for the Company; and for the period
from April 1, 1995 through October 27, 1995 for the Predecessor . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
Financial Statement Schedules
II - Valuation and Qualifying Accounts
</TABLE>
F-1
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Oxford Automotive, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in shareholders' equity and
of cash flows present fairly, in all material respects, the financial position
of Oxford Automotive, Inc. and its subsidiaries (the Company) at March 31, 1998
and 1997 and the results of their operations and their cash flows for the years
ended March 31, 1998 and 1997 in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
The financial statements of the Company as of March 31, 1996 and for the period
from October 28, 1995 through March 31, 1996 and the financial statements of
BMG North America Limited (the Predecessor) for the period from April 1, 1995
through October 27, 1995 were audited by other independent accountants whose
report dated May 21, 1996 expressed an unqualified opinion on those statements.
PRICE WATERHOUSE LLP
Bloomfield Hills, Michigan
June 22, 1998
F-2
<PAGE> 33
INDEPENDENT AUDITORS' REPORT
To the Directors of
Oxford Automotive, Inc. and BMG North America Limited
We have audited the consolidated balance sheet of Oxford Automotive, Inc. as at
March 31, 1996 and the consolidated statements of operations, changes in
shareholders' equity and cash flows for the period from October 28, 1995 to
March 31, 1996 for Oxford Automotive, Inc. and the consolidated statements of
operations, changes in shareholders' equity and cash flows for the period from
April 1, 1995 to October 27, 1995 for BMG North America Limited. These
financial statements are the responsibility of the management of Oxford
Automotive, Inc. and BMG North America Limited. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of Oxford Automotive, Inc., as at
March 30, 1996 and the results of its operations and its cash flows for the
period from October 28, 1995 to March 31, 1996 and the results of BMG North
America Limited's operations and its cash flows for the period from April 1,
1995 to October 27, 1995 in accordance with U.S. generally accepted accounting
principles.
DELOITTE & TOUCHE
Chartered Accountants
Kitchener, Ontario
May 21, 1996
F-3
<PAGE> 34
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31,
1998 1997 1996
ASSETS
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 18,321 $ 9,671 $ -
Trade receivables, net 65,273 47,626 8,338
Inventories 21,305 13,411 3,719
Refundable income taxes 1,601 1,641
Reimbursable tooling 13,315 4,968 3,298
Deferred income taxes 4,399 4,633
Unexpended bond proceeds 4,159
Prepaid expenses and other current assets 2,803 1,354 1,181
---------- -------- ----------
TOTAL CURRENT ASSETS 131,176 83,304 16,536
Unexpended bond proceeds 3,937
Marketable securities 8,627
Other noncurrent assets 10,116 4,588 6,734
Deferred income taxes 6,405 5,087 6,139
Property, plant and equipment, net 163,708 146,778 19,791
---------- -------- ----------
TOTAL ASSETS $ 320,032 $243,694 $ 49,200
========== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 52,214 $ 31,421 $ 14,570
Employee compensation 4,808 4,986 1,883
Restructuring reserve 6,363 7,050 608
Accrued expenses and other current liabilities 12,242 9,040 3,299
Current portion of borrowings 10,965 24,274 11,258
---------- -------- ----------
TOTAL CURRENT LIABILITIES 86,592 76,771 31,618
Pension liability 4,727 3,631 1,080
Postretirement medical benefits liability 35,992 33,467
Deferred income taxes 15,332 10,442
Other noncurrent liabilities 2,596 2,187 67
Long-term borrowings -- less current portion 128,483 75,555 15,500
---------- -------- ----------
TOTAL LIABILITIES 273,722 202,053 48,265
---------- -------- ----------
Commitments and contingent liabilities (Note 15)
Redeemable Series A $3.00 Cumulative Preferred Stock, $100 stated
value -- 457,541 shares authorized, 397,539 shares issued and
outstanding in 1998 and 457,541 shares issued and outstanding in
1997 (Notes 3 and 13) 40,192 36,012
---------- --------
Redeemable Series B Preferred Stock, $100 stated value -- 49,938
shares authorized, no shares issued and outstanding in 1998 and
49,938 shares issued and outstanding in 1997 (Notes 3 and 13) 3,288
---------- --------
SHAREHOLDERS' EQUITY
Common stock, 400,000 shares authorized; 309,750
shares issued and outstanding at March 31, 1998 and 1997 and
75,000 shares issued and outstanding at March 31, 1996 1,050 1,050 750
Foreign currency translation adjustment (651) (28) 5
Retained earnings 4,750 1,572 415
Net unrealized gain on marketable securities 969
Equity adjustment for minimum pension liability (253) (235)
---------- -------- ----------
6,118 2,341 935
---------- -------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 320,032 $ 243,694 $ 49,200
========== ========= ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 35
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------------- ----------------
PERIOD FROM PERIOD FROM
YEAR ENDED YEAR ENDED OCTOBER 28, 1995 APRIL 1, 1995
MARCH 31, MARCH 31, THROUGH THROUGH
1998 1997 MARCH 31, 1996 OCTOBER 27, 1995
<S> <C> <C> <C> <C>
Net sales $ 410,321 $ 136,861 $ 35,572 $ 49,043
Cost of sales 368,420 125,375 31,624 46,895
----------- ---------- ---------- ----------
GROSS PROFIT 41,901 11,486 3,948 2,148
Selling, general and administrative 21,839 7,685 2,235 3,922
Restructuring provision 1,610
Gain on sale of equipment (1,602)
OPERATING INCOME 20,054 3,801 1,713 (1,774)
Other income (expense)
Interest expense (10,710) (3,388) (1,096) (1,048)
Other 321 2,201
----------- ----------
INCOME BEFORE BENEFIT (PROVISION) FOR
INCOME TAXES 9,665 2,614 617 (2,822)
Benefit (provision) for income taxes (4,074) (1,065) (202) 938
----------- ---------- ---------- ----------
NET INCOME 5,591 1,549 415 $ (1,884)
===========
Accrued dividends and accretion on
Redeemable preferred stock 1,334 300
----------- ---------- ----------
NET INCOME APPLICABLE TO COMMON STOCK $ 4,257 $ 1,249 $ 415
=========== ========== ==========
NET INCOME PER SHARE (BASIC AND DILUTED) $ 13.74 $ 9.37 $ 9.10
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 36
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLAR AMOUNTS IN THOUSANDS)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------------------------------
FOREIGN NET EQUITY
CURRENCY RETAINED UNREALIZED GAIN ADJUSTMENT FOR
COMMON TRANSLATION EARNINGS ON MARKETABLE MINIMUM PENSION
STOCK ADJUSTMENT (DEFICIT) SECURITIES LIABILITY TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT APRIL 1, 1995 $ 14,262 $ 40 $ (3,469) $ - $ - $ 10,833
Net loss (1,884) (1,884)
Foreign currency translation
adjustments 575 (155) 420
Issuance of common stock, net
of redemptions (40) (40)
--------- ------- --------- ----- ----- ---------
BALANCES AT OCTOBER 27, 1995 $ 14,797 $ (115) $ (5,353) $ - $ - $ 9,329
======== ======== ========== ===== ===== =========
<CAPTION>
COMPANY
------------------------------------------------------------------------------------
FOREIGN NET EQUITY
CURRENCY UNREALIZED GAIN ADJUSTMENT FOR
COMMON TRANSLATION RETAINED ON MARKETABLE MINIMUM PENSION
STOCK ADJUSTMENT EARNINGS SECURITIES LIABILITY TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT OCTOBER 28, 1995 $ 750 $ - $ - $ - $ - $ 750
Net income 415 415
Foreign currency translation
adjustments 5 5
Equity adjustment for
Minimum pension liability (235) (235)
------- ----- --------- ----- ----- --------
BALANCES AT MARCH 31, 1996 750 5 415 - (235) 935
Net income 1,549 1,549
Foreign currency translation
Adjustments (33) (33)
Equity adjustment for
Minimum pension liability (18) (18)
Accrued dividends and
Accretion of redeemable
Preferred stock (300) (300)
Issuance of common stock, net
of redemptions 300 (92) 208
------- ----- --------- ----- ----- --------
BALANCES AT MARCH 31, 1997 1,050 (28) 1,572 - (253) 2,341
Net income 5,591 5,591
Excess of purchase price over
Predecessor basis (1,079) (1,079)
Foreign currency translation
Adjustments (623) (623)
Unrealized gain on marketable
securities 969 969
Equity adjustment for
minimum pension liability 253 253
Dividends and accretion
on redeemable preferred stock (1,334) (1,334)
------ ---- --------- ----- ----- --------
BALANCES AT MARCH 31, 1998 $ 1,050 $(651) $ 4,750 $ 969 $ $ 6,118
======= ===== ========= ===== ===== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 37
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------------ -----------------
PERIOD FROM PERIOD FROM
YEAR ENDED YEAR ENDED OCTOBER 28, 1995 APRIL 1, 1995
MARCH 31, MARCH 31, THROUGH THROUGH
1998 1997 MARCH 31, 1996 OCTOBER 27, 1995
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 5,591 $ 1,549 $ 415 $ (1,884)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities
Depreciation and amortization 20,279 5,041 687 919
Deferred income taxes 137 2,136 230 (1,036)
Gain on sale of equipment (1,586) (195) (2)
Changes in operating assets and liabilities
affecting cash
Trade receivables (4,615) (8,953) 6,617 (3,311)
Inventories 1,496 (299) (277) (259)
Reimbursable tooling (7,368) (1,601) 1,824 (760)
Prepaid expenses and other assets 569 129 1,592 (1,768)
Other noncurrent assets (836) 3,544
Trade accounts payable 11,416 (605) (6,501) 6,417
Employee compensation 169 (6,072) 309 (493)
Restructuring reserve (745) (398)
Accrued expenses and other liabilities (3,166) (1,885) (1,716) 3,504
Income taxes payable/refundable 2,914 (199)
Other noncurrent liabilities 1,731 (39)
---------- ---------- ----------- -----------
NET CASH PROVIDED BY (USED IN)OPERATING
ACTIVITIES 25,986 (7,847) 3,178 1,329
---------- ---------- ----------- -----------
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (24,219) (9,309) (1,983)
Purchase of property, plant and equipment (16,723) (3,326) (3,466) (5,111)
Proceeds from sale of equipment 5,433 341 33 11
Purchases of marketable securities (7,658)
NET CASH USED IN INVESTING ACTIVITIES (43,167) (12,294) (5,416) (5,100)
---------- ---------- ----------- -----------
FINANCING ACTIVITIES
Issuance of share capital 300 750
Proceeds from borrowing arrangements 126,653 78,823 23,814 921
Principal payments on borrowing arrangements (93,782) (49,186) (16,482) (7,477)
Payment of preferred stock dividends (1,193)
Debt financing costs (5,372)
Redemption and retirement of common stock (92) (40)
Obligation under capital lease - net (6) (3)
---------- ---------- ----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 26,306 29,845 8,076 (6,599)
---------- ---------- ----------- -----------
Effect of exchange rate changes on cash (475) (33)
---------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 8,650 9,671 5,838 (10,370)
Cash and cash equivalents at beginning of
Period 9,671 (11,238) (868)
---------- ---------- ----------- -----------
Cash and cash equivalents at end of period $ 18,321 $ 9,671 $ (5,400) $ (11,238)
========== ========== =========== ===========
Cash paid for interest $ 7,338 $ 3,033 $ 1,096 $ 1,048
========== ========== =========== ===========
Cash paid for income taxes $ 4,670 $ - $ 42 $ 79
========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE> 38
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
Oxford Automotive, Inc. (the Company) is a full-service supplier of metal
stampings and welded assemblies used as original equipment components
primarily by North American original equipment automotive manufacturers.
The Company's products are used in a wide variety of sport utility
vehicles, light and medium trucks, vans and passenger cars. The Company
primarily operates from thirteen plants located in the United States,
Canada and Mexico. The Company's hourly workforce is represented by
various unions.
Net sales to the Company's three primary customers as a percentage of
total sales are as follows:
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 28, 1995
YEAR ENDED YEAR ENDED THROUGH
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1996
<S> <C> <C> <C>
General Motors Corporation 54% 62% 67%
Ford Motor Company 31% 17% -
Chrysler Corporation 9% - -
</TABLE>
Accounts receivable from General Motors Corporation, Ford Motor Company
and Chrysler Corporation represent approximately 39%, 39% and 13%,
respectively, of the March 31, 1998 accounts receivable balance.
Although the Company is directly affected by the economic well being of
the automotive industry and customers referred to above, management does
not believe significant credit risk exists at March 31, 1998. The Company
does not require collateral to reduce such risk and historically has not
experienced significant losses related to receivables from individual
customers or groups of customers in the automotive industry.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements for the period from April 1, 1995 through
October 27, 1995 are those of BMG North America Limited (the
Predecessor), which was acquired by Oxford Automotive, Inc.
(formerly BMG-MI, Inc.) on October 28, 1995.
The consolidated financial statements as of March 31, 1998 and 1997 and
for the years then ended and for the period from October 28, 1995 through
March 31, 1996 are those of the Company and its subsidiaries. The
financial statements of the Company and the Predecessor are not
comparable in certain respects due to differences between the cost bases
of certain assets held by the Company versus that of the Predecessor,
resulting in reduced depreciation and amortization charges subsequent to
October 27, 1995, changes in accounting policies and the recording of
certain liabilities at the date of acquisition in connection with the
purchase of the Predecessor by the Company, as well as the Company's
acquisitions subsequent to October 28, 1995 discussed further in Note 3.
F-8
<PAGE> 39
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts
of Oxford Automotive, Inc. and its wholly-owned subsidiaries, BMG
Holdings, Inc. (BMGH), Howell Industries, Inc. (Howell), Lobdell Emery
Corporation (Lobdell), RPI Holdings, Inc. (RPIH) and Oxford Automotriz de
Mexico S.A. de C.V. (Oxford Mexico). Intercompany accounts and
transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Revenue is recognized by the Company upon shipment of product to the
customer.
FINANCIAL INSTRUMENTS
At March 31, 1998 and 1997, the carrying amount of financial instruments
such as cash and cash equivalents, trade receivables and payables and
unexpended bond proceeds, approximated their fair values. The carrying
amount of the long-term customer receivables and borrowings at March 31,
1998 and 1997, approximated their fair values based on the variable
interest rates available to the Company for similar arrangements.
CASH EQUIVALENTS
The Company considers all highly-liquid investments with maturity of
three months or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
principally determined by the last-in, first-out (LIFO) method for the
Company's United States operations and by the first-in first-out (FIFO)
method for the Company's Canadian operations.
REIMBURSABLE TOOLING
Reimbursable tooling represents net costs incurred on tooling projects
for which the Company expects to be reimbursed by customers. Ongoing
estimates of total costs to be incurred on each tooling project are made
by management. Losses, if any, are recorded when known and in cases where
billings exceed costs incurred, the related tooling gain is recognized
upon acceptance of the tooling by the customer. Certain of the Company's
tooling costs are financed through lending institutions and are
reimbursed by customers on a piece price basis. These tooling assets are
classified as either accounts receivable ($2,676, $3,695, and $1,809 at
March 31, 1998, 1997, and 1996 respectively), other noncurrent assets
(none, $3,800 and $6,734 at March 31, 1998, 1997, and 1996
respectively) or equipment depending upon the ultimate title holder of
the tooling assets.
F-9
<PAGE> 40
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
UNEXPENDED BOND PROCEEDS
Unexpended bond proceeds in the accompanying consolidated balance sheet
represent unexpended proceeds from the issuance of industrial development
revenue bonds by Creative Fabrication Corporation (Creative), a
wholly-owned subsidiary of Lobdell, as discussed in Note 8, and are
invested in allowable money market accounts and commercial paper with a
maturity of 90 days or less.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost and include
expenditures for improvements which materially increase the useful lives
of existing assets. Expenditures for normal repair and maintenance are
charged to operations as incurred. For federal income tax purposes,
depreciation is computed using accelerated and straight-line methods. For
financial reporting purposes, depreciation is computed principally using
the straight-line method over the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
<S> <C>
Land improvements 15
Buildings and improvements 30-40
Machinery and equipment 3-20
</TABLE>
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for long-lived assets in accordance with Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". This
Statement requires that long-lived assets and certain identifiable
intangibles to be held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be fully recoverable. The Company recognizes
impairment losses for assets or groups of assets where the sum of the
estimated future cash flows (undiscounted and without interest charges)
is less than the carrying amount of the related asset or group of assets.
The amount of the impairment loss recognized is the excess of the
carrying amount over the fair value of the asset or group of assets being
measured.
MARKETABLE SECURITIES
Marketable securities at March 31, 1998, mainly composed of equity
securities, are classified as available-for-sale securities and are
reported at fair value using quoted market prices. Unrealized holding
gains and losses are included as a separate component of shareholders'
equity until realized.
F-10
<PAGE> 41
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ENVIRONMENTAL COMPLIANCE AND REMEDIATION
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations which do not contribute to current or
future revenue generation are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable and the
costs can be reasonably estimated. Estimated costs are based upon enacted
laws and regulations, existing technology and the most probable method of
remediation. The costs determined are not discounted and exclude the
effects of inflation and other social and economic factors.
INCOME TAXES
Deferred taxes are provided to give recognition to the effect of expected
future tax consequences of temporary differences between the carrying
amounts for financial reporting purposes and the tax bases for income tax
purposes of assets and liabilities.
FOREIGN EXCHANGE CONTRACTS
Gains and losses of foreign currency firm commitment hedges are deferred
and included in the basis of the transactions underlying the commitments.
During fiscal 1997, the Company recognized a gain of approximately $2,000
related to certain foreign currency exchange transactions terminated
during the year. The gain is included as a component of other income in
the accompanying March 31, 1997 statement of operations. Had the foreign
currency exchange transactions not been terminated, the recognized gain
would normally have been recorded as a component of sales.
FOREIGN CURRENCY TRANSLATION
The foreign currency financial statements of BMGH and Oxford Mexico,
where the local currency is the functional currency, are translated using
exchange rates in effect at period end for assets and liabilities and at
weighted average exchange rates during the period for operating statement
accounts. The resulting foreign currency translation adjustments are
recorded as a separate component of shareholders' equity. Exchange gains
and losses resulting from foreign currency transactions are included in
operating results during the period in which they occur.
PER SHARE AMOUNTS
The per share amounts of the Predecessor have not been presented as the
Company's capital structure is not comparable to that of the Predecessor.
RECLASSIFICATIONS
Certain amounts from the prior year have been reclassified to conform
with the current year presentation.
F-11
<PAGE> 42
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS
On October 28, 1995, the Company acquired all of the outstanding common
stock of BMG North America Limited (BMGNA). The acquisition was financed
through a $750 Series A promissory note. The acquisition has been
recorded in accordance with the purchase method of accounting.
Accordingly, the purchase price plus direct cost of the acquisition have
been allocated to the assets acquired and liabilities assumed based on
their estimated fair values at the date of acquisition.
On January 10, 1997, pursuant to an Agreement and Plan of Merger among
Lobdell Emery Corporation, certain shareholders of Lobdell Emery
Corporation, BMG-MI, Inc. and L-E Acquisition, Inc. as amended (the
Agreement), certain Lobdell Emery Corporation shareholders and option
holders had their respective shares and options redeemed for cash of
approximately $8,500 and all outstanding shares of common stock of
Lobdell Emery Corporation (Oldco) were exchanged for shares of preferred
stock of Oldco with a face value of approximately $40,700. In addition,
approximately $3,500 of expenses incurred by Oldco were reimbursed by
L-E Acquisition, Inc. In connection with the exchange of Oldco's common
stock for preferred stock, L-E Acquisition, Inc. was merged with and
into Lobdell Emery Corporation (Newco).
The acquisition was financed through the issuance of preferred stock
described in Note 13 and a term loan, which was subsequently refinanced,
as described in Note 8. The acquisition has been recorded in accordance
with the purchase method of accounting. Accordingly, the purchase price
plus direct cost of the acquisition have been allocated to the assets
acquired and liabilities assumed based on their estimated fair values at
the date of acquisition.
The fair market value of assets acquired and liabilities assumed, after
giving effect to the settlement described in Note 13, is summarized as
follows:
<TABLE>
<S> <C>
Current assets $ 56,993
Property, plant and equipment 129,966
Noncurrent assets 9,953
Current liabilities (50,028)
Long-term liabilities (107,130)
------------
Fair value of preferred stock $ 39,754
============
</TABLE>
In accordance with the purchase method of accounting, Lobdell's operating
results have been included with those of the Company since the date of
acquisition.
On August 13, 1997, the Company acquired all of the outstanding common
stock of Howell for approximately $23,700 in cash, including acquisition
costs. The acquisition was financed through the proceeds of the
subordinated notes described in Note 8. The acquisition has been recorded
in accordance with the purchase method of accounting. Accordingly, the
purchase price plus direct cost of the acquisition have been allocated to
the assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition.
F-12
<PAGE> 43
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
The fair market value of assets acquired and liabilities assumed is
summarized as follows:
<TABLE>
<S> <C>
Current assets $ 22,900
Property, plant and equipment 18,100
Current liabilities (14,100)
Long-term liabilities (3,200)
------------
$ 23,700
============
</TABLE>
On November 25, 1997, Oxford purchased all of the outstanding common
stock of RPIH for $2,500 in cash. The acquisition was financed through
the proceeds of the subordinated notes described in Note 8. The
acquisition has been recorded in accordance with the purchase method of
accounting. Accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition. The majority shareholder of Oxford was
also the majority shareholder of RPIH.
The fair market value of assets acquired and liabilities assumed is
summarized as follows:
<TABLE>
<S> <C>
Current assets $ 3,900
Property, plant and equipment 5,000
Noncurrent assets 1,600
Current liabilities (5,400)
Long-term liabilities (3,700)
Excess of purchase price over predecessor basis 1,100
------------
$ 2,500
============
</TABLE>
The excess of purchase price over predecessor basis is a result of the
common ownership by the majority shareholder of Oxford and represents the
portion of the fair value of the net assets acquired in excess of their
book value, multiplied by the majority shareholder's ownership percentage
in RPIH. The Company has recorded this amount as a deduction from
retained earnings in the accompanying statement of changes in
shareholders' equity.
The following unaudited pro forma combined results of operations of the
Company have been prepared as if the acquisitions of Lobdell, Howell and
RPIH had occurred at the beginning of fiscal 1998 and 1997.
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997
<S> <C> <C>
Net sales $ 453,685 $ 433,443
Net income $ 4,692 $ 2,364
Net income applicable to common shares $ 3,358 $ 1,052
Net income per common share $ 10.84 $ 3.40
</TABLE>
The pro forma information is not intended to be a projection of future
results.
F-13
<PAGE> 44
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
The foregoing unaudited pro forma results of operations reflect
adjustments for additional interest expense related to the financing of
the acquisitions and the additional depreciation expense, as a result of
the write-up of property, plant and equipment, net of the related tax
benefit.
4. ACCOUNTS RECEIVABLE
Accounts receivable are comprised of the following at March 31:
<TABLE>
<CAPTION>
1998 1997 1998
<S> <C> <C> <C>
Trade receivables $ 65,673 $ 48,898 $ 8,377
Less - allowance for doubtful accounts (400) (1,272) (39)
--------- --------- --------
Trade receivables, net $ 65,273 $ 47,626 $ 8,338
========= ========= ========
</TABLE>
5. INVENTORIES
Inventories are comprised of the following at March 31:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Raw materials $ 6,737 $ 5,688 $ 1,557
Finished goods and work-in-process 15,135 7,994 2,162
--------- --------- ---------
21,872 13,682 3,719
LIFO and other reserves (567) (271)
--------- --------- ---------
$ 21,305 $ 13,411 $ 3,719
========= ========= =========
</TABLE>
The Company does not separately identify finished goods from
work-in-process.
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following at March 31:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Land and land improvements $ 5,432 $ 5,073 $ 779
Buildings and improvements 29,126 24,697 3,171
Machinery and equipment 140,095 117,535 7,394
Construction-in-process 12,204 4,393 8,914
----------- --------- --------
186,857 151,698 20,258
Less - accumulated depreciation (23,149) (4,920) (467)
----------- --------- --------
$ 163,708 $ 146,778 $ 19,791
=========== ========= ========
</TABLE>
F-14
<PAGE> 45
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
6. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Certain machinery and equipment with a net book value of $9,900 was idle
at March 31, 1998. Management intends to redeploy these assets amongst
its operating facilities and does not believe that the net book value of
these assets is impaired at March 31, 1998. In addition, in connection
with the restructuring activities described in Note 10, management
expects that additional assets, mainly land and buildings with a net book
value of $7,300 at March 31, 1998, will be idled next year.
In March 1998, the Company sold assets acquired in connection with the
acquisition of Lobdell and recorded a gain on the sale of these assets
of $1,602.
As discussed in Note 10, certain of the Company's facilities were closed
during the year ended March 31, 1998. As management intends to sell these
facilities, the net book value of the land and buildings, approximating
$1,815, is classified in prepaid expenses and other current assets as of
March 31, 1998 in the accompanying consolidated balance sheet.
7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities are comprised of the
following at March 31:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Accrued interest $ 3,627 $ 103 $ -
Accrued workers' compensation 3,287 3,071 544
Accrued property taxes 1,454 2,350
Accrued medical benefits 1,040 1,827
Foreign exchange gain 1,975
Other 2,834 1,689 780
-------- -------- -------
$ 12,242 $ 9,040 $ 3,299
======== ======== =======
</TABLE>
F-15
<PAGE> 46
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
8. BORROWING ARRANGEMENTS
Borrowings consist of the following at March 31:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
SERIES A 10.125% SENIOR SUBORDINATED NOTES DUE 2007, OXFORD $ 124,827 $ - $ -
INDUSTRIAL DEVELOPMENT REVENUE BONDS, CREATIVE
$8,500 issued September 27, 1995, floating rate interest (3.85% at
March 31, 1998). Quarterly principal payments based on graduated
maturity schedule. Backed by NBD Bank letter of credit 7,600 8,300
EDC TOOLING LOAN, BMGNA
Interest at a fixed rate of 7.36%. Payments based on parts shipped,
matures September 30, 1999 2,967 5,110
BANK SYNDICATE--REVOLVING CREDIT LINE, OXFORD
Interest at prime rate (8.5% at March 31, 1998), matures June 24, 2003 1,825
BANK-- TERM LOAN, LOBDELL
Interest at .625% over 90-day LIBOR (6.435% at March 31, 1998).
Quarterly principal payments of approximately $400, matures
October 1, 1998 1,233 2,833
IRDP LOAN, BMGNA
Interest at 6%. Monthly principal payments of $7 to October 31, 2000 and
$11 thereafter, matures September 1, 2002 396 467 534
BANK SYNDICATE -- TERM LOAN, LOBDELL
Interest at variable spread over prime. Quarterly principal payments
ranging from $1,250-$2,750 plus interest, repaid in full during 52,750
fiscal 1998
BANK SYNDICATE -- REVOLVING CREDIT LINE, LOBDELL
Interest at variable spread over prime, repaid in full during fiscal 1998 1,250
BANK SYNDICATE -- TERM LOAN, BMGNA
Interest at prime rate plus 1.25%. Quarterly payments of $755 plus
interest, repaid in full during fiscal 1998 14,447
REVOLVING CREDIT LINE, BMGNA
Interest at prime rate plus 1.25%, repaid in full during fiscal 1998 10,376
NATIONS BANK -- SATURN TOOLING, BMGNA
Interest at a variable spread over prime (8.71% at March 31, 1997).
Payments based on parts shipped, repaid in full during fiscal 1998 1,380 7,047
CCFL LOAN, BMGNA
Interest at 11.11%. Monthly principal payments of $21, repaid in full
during fiscal 1998 2,475 2,768
TERM LOAN, BMGNA
Interest at Canadian Index Rate plus 3% or Canadian Banker's
Acceptance Rate plue 3.95%. Quarterly principal payments
based on graduated schedule, repaid in full during fiscal 1997 7,765
REVOLVING CREDIT LINE, BMGNA
Interest at Canadian Banker's Acceptance Rate plue 3.7%,
repaid in full during fiscal 1997 2,803
BANK LOAN, BMGNA
Interest at either the Canadian Index Rate plue 2.5% or BA
rate plus 3.45%, reapid in full during fiscal 1997 2,650
TOOLING LINE, BMGNA
Interest at the Canadian Index Rate plue 3% or the Canadian
Banker's Acceptance Rate plus 3.95%, repaid in full during
fiscal 1997 2,750
SERIES A PROMISSORY NOTE, BMGH
Interest at 7%, repaid in full during fiscal 1998 441 441
OTHER 600
---------- --------- --------
Total 139,448 99,829 26,758
Less - current portion of long-term borrowings (10,965) (24,274) (11,258)
---------- --------- --------
Long-term borrowings-- less current portion $ 128,483 $ 75,555 $ 15,500
========== ========= ========
</TABLE>
F-16
<PAGE> 47
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
8. BORROWING ARRANGEMENTS (CONTINUED)
On June 24, 1997, the Company issued $125,000 of Series A 10.125% Senior
Subordinated Notes Due 2007 (the Notes). The Notes mature on June 15,
2007 and require semi-annual interest payments of approximately $6,300.
The proceeds from the Notes were primarily used to repay certain of the
Company's indebtedness and finance the Company's acquisitions of Howell
and RPIH described in Note 3, as well as the acquisition of the assets of
the Suspension Division of Eaton Corporation described in Note 17. The
Notes are unsecured and are guaranteed by Oxford and certain of its
wholly-owned subsidiaries. See Note 18. On April 1, 1997, the Company
issued $35,000 of Series B 10.125% Senior Subordinated Notes Due 2007 as
discussed in Note 17.
Concurrent with the issuance of the Notes, the Company entered into a
credit agreement with a syndicate of banks (the Oxford Credit Agreement),
under which the Company may borrow up to $110,000, of which a maximum of
$15,000 is available for letters of credit. At March 31, 1998, $1,825 was
outstanding under the revolving line of credit and $9,437 was outstanding
under letters of credit, leaving $98,738 unused and available. The terms
of the Oxford Credit Agreement contain, amount other provisions,
requirements for maintaining defined levels of tangible net worth, total
debt to cash flows, interest coverage and fixed charge coverage. The
Oxford Credit Agreement also contains certain restrictions on the payment
of dividends. Quarterly commitment fees on the unused amounts of the
revolving credit line range from .25% to .50% of the unused portion.
Borrowings are secured by substantially all of the assets of Oxford.
The proceeds of the industrial development revenue bonds were used to
finance the real and personal property of Creative. These bonds are
backed by an NBD letter of credit, which carries a rate of 1.50% and is
collateralized by substantially all assets of Creative. The letter of
credit reimbursement agreement includes covenants requiring minimum
tangible capital, debt service coverage and limitations on other
indebtedness.
The Bank--term loan, Lobdell and EDC tooling loan, BMGNA are used to
finance customer tooling. These loans are collateralized by either a
customer purchase order or the tooling assets.
Aggregate maturities of long-term borrowings at March 31, 1998 are as
follows:
<TABLE>
<S> <C>
1999 $ 10,965
2000 2,032
2001 1,048
2002 93
2003 93
Thereafter 125,217
-----------
$ 139,448
===========
</TABLE>
F-17
<PAGE> 48
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
9. INCOME TAXES
The Company's income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------------------ ----------------
PERIOD FROM PERIOD FROM
OCTOBER 28, 1995 APRIL 1, 1995
YEAR ENDED YEAR ENDED THROUGH THROUGH
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995
<S> <C> <C> <C> <C>
Current
Federal $ 3,116 $ (821) $ - $ -
State 1,098 (124)
Foreign 34 46
--------- -------- -------- --------
4,214 (945) 34 46
--------- -------- -------- --------
Deferred
Federal 2,300 899
State (608) 137
Foreign (1,832) 974 168 (984)
--------- -------- -------- --------
(140) 2,010 168 (984)
--------- -------- -------- --------
$ 4,074 $ 1,065 $ 202 $ (938)
========= ======== ======== ========
</TABLE>
The difference between the statutory rate and the Company's effective
rate was as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
--------------------------------------------------------- ----------------
PERIOD FROM
PERIOD FROM APRIL 1, 1995
OCTOBER 28, 1995 THROUGH
YEAR ENDED YEAR ENDED THROUGH OCTOBER 27,
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1996 1995
<S> <C> <C> <C> <C>
Statutory rate 35.0% 34.0% 36.0% 36.0%
Foreign rates varying from 34% (0.5) 1.8
Large corporation tax (2.8) (1.6)
State taxes, net of federal benefit 3.3 0.3
Nondeductible items 1.9 4.1 (0.5) (1.2)
Other 2.5 0.5
------ ------
Effective income tax rate 42.2% 40.7% 32.7% 33.2%
====== ====== ====== ======
</TABLE>
F-18
<PAGE> 49
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
9. INCOME TAXES (CONTINUED
Significant components of the Company's deferred tax assets and
(liabilities) are as follows at March 31:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Deferred tax liabilities
Tax depreciation in excess of book $ (30,930) $ (30,065) $ -
Inventory reserve (1,581) (1,292)
Other (170)
---------- --------- ---------
Gross deferred tax liabilities (32,681) (31,357)
---------- --------- ---------
Deferred tax assets
Postretirement medical benefits 14,397 13,387
Impairment reserve 22 1,200
Workers' compensation 1,345 1,089
Medical benefits accrual 473 702
Allowance for bad debts 97 502
AMT credit carryforward 3,000
Pension benefits 2,514 1,606 498
Net operating loss carryforwards 2,381 2,905 3,066
Book depreciation in excess of tax 989
Restructuring reserve 3,698 3,927 311
Foreign exchange 127 46 696
Other 3,299 2,471 579
---------- --------- ---------
Gross deferred tax assets 28,353 30,835 6,139
---------- --------- ---------
Valuation allowance (200) (200)
---------- --------- ---------
Net deferred tax asset (liability) $ (4,528) $ (722) $ 6,139
========== ========= =========
</TABLE>
A valuation allowance is provided on the tax benefits otherwise
associated with certain tax attributes unless it is considered more
likely than not that the benefit will be realized.
The Company has net operating loss carryforwards for federal income tax
purposes with potential future tax benefits of approximately $2,147 at
March 31, 1998. The federal net operating losses expire during 2011. The
Company has net operating loss carryforwards for Canadian income tax
purposes with potential future tax benefits of approximately $2,950 at
March 31, 1998. The Canadian net operating losses expire during 2004 and
2005. In addition, the Company has net operating loss carryforwards for
Mexican income tax purposes with potential future tax benefits of
approximately $1,695 at March 31, 1998. The Mexican net operating losses
expire in seven to ten years.
The Company has net operating loss carryforwards with a potential future
tax benefit of approximately $202 for state income tax purposes and
Tennessee Jobs Tax Credit carryforwards of approximately $200 at March
31, 1998, both of which expire during 2010 and 2011.
F-19
<PAGE> 50
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
10. RESTRUCTURING RESERVES
In connection with the acquisition of Lobdell described in Note 3,
management began to formulate and assess a plan to exit certain
activities of Lobdell and, accordingly, established certain restructuring
reserves aggregating $7,050 in Lobdell's opening balance sheet.
Management's restructuring plan included the sale of certain
subsidiaries, closure of a Lobdell owned manufacturing facility and sale
of the current Lobdell owned corporate offices. Included in the
restructuring reserves at March 31, 1997 were costs for severance and
benefits for employees to be relocated and terminated ($5,052) and other
restructuring related costs ($1,998). During the year ended March 31,
1998, total payments to employees that were terminated were $1,979. As a
result of management's plans, approximately 375 employees were
terminated.
In connection with management's plans to reduce costs and improve
operating efficiencies at other facilities, the Company recorded a
provision for restructuring of $1,610 during the year ended March 31,
1998 and established restructuring reserves aggregating $1,339 in
Howell's opening balance sheet.
A summary of the restructuring activity is presented below. There was no
activity during the period from January 10, 1997 to March 31, 1997.
<TABLE>
<S> <C>
Balance at March 31, 1997 $ 7,050
1998 provision 1,610
1998 activity:
Restructuring accrual associated with the
acquisition of Howell 1,339
Reduction in workforce and other cash outflows (2,355)
Reversal of excess accruals to noncurrent assets (1,281)
----------
Balance at March 31, 1998 $ 6,363
==========
</TABLE>
The provision for restructuring recorded during the year ended March 31,
1998 represents costs associated with management's plans to close three
Company facilities. Management expects that, as a result of these
closures, approximately 160 employees will be permanently separated.
Severance costs for these employees will be recorded in 1999. Costs
recorded in 1998 primarily relate to fixed assets.
The restructuring reserve established in Howell's opening balance sheet
represents management's best estimate of the costs to be incurred in
connection with the closure of a leased Howell facility. As a result of
this closure, no employees are expected to be terminated. Management
continues to assess the future manufacturing capacity of Howell and
expects to complete its assessment and finalization of the restructuring
plan within one year of the acquisition date of Howell.
The reversal of excess accruals recorded during the year ended March 31,
1998 is due to management's finalization of its restructuring plans for
Lobdell. No future requirement for this accrual exists. These reversals
were recorded as a reduction of noncurrent assets.
F-20
<PAGE> 51
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
10. RESTRUCTURING RESERVES (CONTINUED)
In connection with the Company's restructuring activities related to
Lobdell, certain employees of Lobdell were terminated. The termination of
certain of these employees resulted in a postretirement medical benefit
curtailment gain of $957 which, in accordance with the purchase method of
accounting, was treated as a reduction in liabilities assumed at the
acquisition date. Accordingly, no postemployment medical benefit
curtailment gain has been recognized in the Company's statement of
operations for the year ended March 31, 1997.
11. BENEFIT PLANS
The Company sponsors twelve noncontributory plans covering substantially
all employees meeting the age and length of service requirements as
specified in the plans. The plan covering salaried employees provides
pension benefits that are based on a percentage of the employee's average
monthly compensation during the five highest consecutive years out of
their last ten years, and their years of credited service up to a maximum
of 30 years. The hourly plans do not provide for increases in future
compensation levels. The Company's funding policy for the plan covering
salaried employees is to make contributions in amounts sufficient to
annually fund the plan's current service cost and the initial past
service cost, plus interest, over a period of 30 years. Plans covering
hourly employees generally provide benefits of stated amounts based on
their unique labor agreements for each year of service. The Company's
funding policy for these plans is to make at least the minimum annual
contributions required by applicable regulations.
The following table sets forth the plans' funded status and amounts
recognized on the Company's balance sheets at March 31:
<TABLE>
<CAPTION>
OVERFUNDED PLANS UNDERFUNDED PLANS
1998 1997 1996 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of benefit obligation
Vested benefits $ 20,132 $17,573 $ 2,376 $ 43,620 $ 34,106 $ 11,539
Nonvested benefits 659 1,170 74 2,602 1,853 356
-------- ------- ------- -------- -------- --------
20,791 18,743 2,450 46,222 35,959 11,895
Effect of projected future compensation levels 2,329 4,060 1,285 3,187
-------- ------- ------- -------- -------- --------
Projected benefit obligation for service rendered 23,120 22,803 3,735 49,409 35,959 11,895
Plan assets at fair value (primarily U.S.
government (23,740) (22,854) (4,155) (47,484) (32,280) (10,525)
-------- ------- ------- -------- -------- --------
securities, bonds and notes and mutual funds)
Plan assets less (greater) than projected
benefit (620) (51) (420) 1,925 3,679 1,370
obligation
Unrecognized net loss, including asset
gains/losses not (1,663) 10 2,723 (21)
yet reflected in market values
Unrecognized prior service cost 44 (20)
Unrecognized net obligation being recognized over
15-20 years 15
Experience gains (losses) (61) 125 (392) (363)
Adjustment required to recognize minimum liability 35 472 368
-------- ------- ------- -------- -------- --------
(Prepaid) accrued pension cost $ (2,283) $ (87) $ (295) $ 4,727 $ 3,718 $ 1,375
======== ======= ======= ======== ======== ========
</TABLE>
The minimum pension liability in excess of the allowable intangible asset
has been recorded as a separate component of equity, net of tax.
F-21
<PAGE> 52
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
11. BENEFIT PLANS (CONTINUED)
Net periodic pension cost for each year and the actuarial assumptions
used in determining the projected benefit obligation were as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------- -----------------
PERIOD FROM PERIOD FROM
YEAR ENDED YEAR ENDED OCTOBER 28, 1995 APRIL 1, 1995
MARCH 31, MARCH 31, THROUGH THROUGH
1998 1997 MARCH 31, 1996 OCTOBER 27, 1995
<S> <C> <C> <C> <C>
Service cost $ 2,143 $ 1,074 $ 266 $ 344
Interest cost 4,808 2,127 530 697
Actual return on assets (12,528) (2,138) (425) (533)
Net amortization and deferral 7,505 15 60
---------- --------- --------- ---------
Net periodic pension cost $ 1,928 $ 1,078 $ 371 $ 568
========== ========= ========= =========
Discount rate
U.S. plans 7.25% 7.75%
Canadian plans 6.50% 8.00% 8.50% 8.75%
Expected return on assets
U.S. plans 8.50-9.00% 9.00%
Canadian plans 8.50% 8.50% 8.50% 7.50%
Salary progression
U.S. plans 4.50% 4.50%
Canadian plans 5.50% 5.50% 5.50% 5.50%
</TABLE>
The Company sponsors seven defined contribution 401(k) plans. The Company
generally contributes 25% of the first 6% of the base compensation that a
participant contributes to the plans.
12. POSTRETIREMENT MEDICAL BENEFITS
In addition to the Company's defined benefit pension plans, Lobdell
sponsors unfunded defined benefit medical plans that provide
postretirement medical benefits to certain full-time employees meeting
the age, length of service and contractual requirements as specified in
the plans. The plan covering salaried employees is a contributory plan
providing medical benefits to those hired before July 1, 1993. The
percentage of cost paid by the retiree currently ranges from 10% for 30
or more years of service at retirement to 55% for 15 years of service at
retirement, with Company contributions commencing upon attainment of age
62. Those retiring with less than 15 years of service and those hired
after June 30, 1993 may participate in the plan at their own cost. The
plan is currently noncontributory for those employees who retired prior
to July 1, 1993. The plans covering hourly employees provide medical
benefit plan options that are similar to those offered to active hourly
employees, with Lobdell contributions limited either to that available
under traditional coverage for Alma hourly retirees or to 87% of the
total applicable premium for Greencastle retirees.
F-22
<PAGE> 53
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
12. POSTRETIREMENT MEDICAL BENEFITS (CONTINUED)
The following table presents the plan's funded status reconciled with
amounts recognized in the Company's balance sheet at March 31.
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees $ 16,332 $ 14,479
Full eligible active plan participants 6,195 4,287
Other active plan participants 18,134 13,510
---------- ----------
Total unfunded obligation 40,661 32,276
Unrecognized gain (loss) (4,669) 1,191
---------- ----------
Postretirement medical benefits liability $ 35,992 $ 33,467
========== ==========
</TABLE>
Net periodic postretirement benefit cost included the following
components:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE YEAR JANUARY 10, 1997
ENDED THROUGH
MARCH 31, 1998 MARCH 31, 1997
<S> <C> <C>
Service cost-- benefits earned during the period $ 1,025 $ 272
Interest cost on the accumulated postretirement benefit
obligation 2,711 623
---------- ----------
Net periodic postretirement benefit cost $ 3,736 $ 895
========== ==========
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% and 7.75% at March 31, 1998
and 1997, respectively. The weighted average annual assumed rate of
increase in the per capita cost of covered benefits (i.e., healthcare
cost trend rate) is 8.5% in 1998 trending to 6.5% in 2008 and thereafter
for retirees less than 65 years of age. For retirees 65 years of age and
over, the rate is 8.3% in 1998 trending to 6.5% in 2008 and thereafter.
The healthcare cost trend rate assumption has a significant effect on the
amounts reported. For example, increasing the assumed healthcare cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of March 31, 1998 by
approximately $5,919 and net periodic postretirement benefit cost for the
year ended March 31, 1998 by approximately $573.
F-23
<PAGE> 54
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
13. REDEEMABLE PREFERRED STOCK
In connection with the acquisition of Lobdell described in Note 3,
redeemable preferred stock with a face value of $50,748 was issued.
Redeemable preferred stock with a face value of $40,748 was delivered to
the former shareholders of Lobdell on January 10, 1997. The remaining
redeemable preferred stock with a face value of $10,000 was placed in
escrow pending final determination of the purchase price. The preferred
stock issuance consisted of 457,541 shares of Series A $3.00 Cumulative
Preferred Stock (Series A Preferred) and 49,938 shares of Series B
Preferred Stock (Series B Preferred). On July 15, 1997, the Company
entered into a Settlement Agreement and Mutual Release with the preferred
shareholders of Lobdell (the Settlement Agreement). Pursuant to the
Settlement Agreement, 60,002 shares of Series A Preferred held in escrow
and all Series B Preferred previously issued were canceled. The remaining
39,938 shares of Series A Preferred held in escrow were released to the
preferred shareholders of Lobdell.
The annual dividend on the Series A Preferred is $3.00 per share, payable
semi-annually. Dividends on the Series A Preferred are cumulative, but do
not bear interest. Under the terms of the issuance of the Series A
Preferred (the Stock Agreement), the holders of the Series A Preferred
maintain limited voting rights. Holders are entitled to vote on any
provisions that would adversely affect their rights or privileges or
management's plans to issue any equity securities that would rank prior
to the Series A Preferred. Holders are also entitled to elect at least
one director of Lobdell, which, under certain provisions of the Stock
Agreement, may increase to two.
Lobdell is required to redeem all shares of Series A Preferred on
December 31, 2006 at a price of $100 per share, plus all declared or
accumulated but unpaid dividends. If Oxford does not commence an initial
public offering of common stock (IPO) prior to June 30, 2006, then the
redemption price of the Series A Preferred is $103 per share. If an IPO
does not occur by December 31, 2001, each holder of Series A Preferred
has the option to redeem annually a maximum of 20 percent of the shares
held at a price of $100 per share on each December 31, beginning in 2002.
Series A Preferred holders are not allowed to transfer, sell or assign
the shares prior to February 1, 1999. Subsequent to that date, Lobdell
has the right of first refusal to purchase any of the shares transferred,
sold or assigned by a holder of Series A Preferred.
Holders of Series A Preferred are entitled to convert their shares to
Oxford common stock issued in connection with an IPO. Individual holders
may convert a maximum of 50% of their shares, but the total of all Series
A Preferred shares converted may not exceed 25% of the total Series A
Preferred shares outstanding.
The Series A Preferred has been included in the accompanying consolidated
balance sheet at its fair value at the date of issuance of $39,754, and
has been adjusted for accrued dividends and accretion totaling $438 and
$258 for the years ended March 31, 1998 and 1997, respectively.
F-24
<PAGE> 55
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
14. RELATED PARTY TRANSACTIONS
The Company is charged a fee by a related party, The Oxford Investment
Group, Inc., for consulting, finance and management services. Fees
charged to the Company by The Oxford Investment Group, Inc. approximated
$1,005 and $275 for the years ended March 31, 1998 and 1997,
respectively. In connection with the acquisitions of BMGNA, Lobdell and
Howell, investment banking fees of $200, $300 and $230, respectively,
were paid to The Oxford Investment Group, Inc., during the periods ended
March 31, 1996, 1997 and 1998, respectively.
As described in Note 3, the majority shareholder of the Company was also
the majority shareholder of RPIH.
15. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
As of March 31, 1998, the Company had long-term operating leases covering
certain machinery and equipment. The minimum rental commitments under
noncancellable operating leases with lease terms in excess of one year
are as follows as of March 31, 1998:
<TABLE>
<S> <C>
1999 $ 3,422
2000 3,480
2001 1,380
2002 3,370
2003 142
-----------
$ 11,794
===========
</TABLE>
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws and regulations
which govern environmental matters. These laws regulate the discharge of
materials into the environment and may require the Company to remove or
mitigate the environmental effects of the disposal or release of
petroleum or chemical substances. The Company has identified several
environmental matters resulting from prior operations. Due to the
relatively early stage of investigation of certain of these identified
matters as well as potential indemnification by other potentially
responsible parties, management is unable to reasonably estimate the
ultimate cost of remediating certain of these identified environmental
matters. The Company has recorded a liability of approximately $1,746 and
$880 at March 31, 1998 and 1997, respectively, for estimated costs of
known environmental matters.
GENERAL
The Company is subject to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of
business. In the opinion of management, after reviewing the information
which is currently available with respect to such matters and consulting
with legal counsel, any liability which may ultimately be incurred with
respect to these matters will not materially affect the financial
position, results of operations or cash flows of the Company.
F-25
<PAGE> 56
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
16. SEGMENT INFORMATION
The Company operates in one industry segment and all sales are to
unaffiliated customers. Net sales represent all sales to unaffiliated
customers. Net export sales represent sales to unaffiliated customers
outside of the enterprise's home country. The Company's home country is
the United States and the Predecessor's home country was Canada.
Accordingly, for the period from April 1, 1995 through October 27, 1995,
net export sales represent sales to unaffiliated customers outside of
Canada. For the period from October 28, 1995 to March 31, 1996 and for
the years ended March 31, 1997 and 1998, net export sales represent sales
to unaffiliated customers outside of the United States. Net sales by
geographic area, identifiable assets by geographic area and net export
sales by geographic area are as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------- -----------------
PERIOD FROM PERIOD FROM
YEAR ENDED YEAR ENDED OCTOBER 28, 1995 APRIL 1, 1995
MARCH 31, MARCH 31, THROUGH THROUGH
1998 1997 MARCH 31, 1996 OCTOBER 27, 1995
<S> <C> <C> <C> <C>
Net Sales
United States $ 324,335 $ 54,660 $ - $ -
Canada 85,030 82,201 35,572 49,043
Mexico 956
----------- ----------- ---------- ---------
$ 410,321 $ 136,861 $ 35,572 $ 49,043
=========== =========== ========== =========
Operating Income (Loss)
United States $ 22,234 $ 1,101 $ - $
Canada (462) 2,700 1,713 (1,774)
Mexico (1,718)
----------- ----------- ---------- ---------
$ 20,054 $ 3,801 $ 1,713 $ (1,774)
=========== =========== ========== =========
Identifiable Assets
United States $ 275,039 $ 189,308 $ -
Canada 40,634 57,153 49,200
Mexico 4,948
----------- ----------- ----------
$ 320,621 $ 246,461 $ 49,200
=========== =========== ==========
Net Export Sales
Canada $ 63,985 $ 41,846 $ 16,476 $ -
United States 25,397
Mexico 52,834 13,573 1,366 664
Other 4,893 2,120
----------- ----------- ---------- ---------
$ 121,712 $ 57,539 $ 17,842 $ 26,061
=========== =========== ========== =========
</TABLE>
F-26
<PAGE> 57
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
17. SUBSEQUENT EVENT
On April 1, 1998, the Company purchased the assets of the Suspension
Division of Eaton Corporation (Suspension) for cash of approximately
$53,500, including the investment in the Metalcar joint venture. The
acquisition was financed through the proceeds of the Notes described in
Note 8 and the issuance of $35,000 of Series B 10.125% Senior
Subordinated Notes Due 2007. The acquisition will be recorded in
accordance with the purchase method of accounting. Accordingly, the
purchase price plus direct cost of the acquisition will be allocated to
the assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition.
The estimated fair market value of assets acquired and liabilities
assumed is summarized as follows:
<TABLE>
<S> <C>
Current assets $ 22,700
Property, plant and equipment 47,200
Current liabilities (11,300)
Long-term liabilities (5,100)
------------
$ 53,500
============
</TABLE>
The unaudited pro forma combined results of operations of the Company and
Suspension for the year ended March 31, 1998 including Howell and RPIH as
if the acquisitions had occurred at the beginning of fiscal 1998 and
after giving effect to certain pro forma adjustments are as follows:
<TABLE>
<S> <C>
Net sales $ 576,163
===========
Net income $ 2,261
===========
Net income applicable to common shares $ 927
===========
Net income per common share $ 2.99
===========
</TABLE>
The pro forma information is not intended to be a projection of future
results. The foregoing unaudited pro forma results of operations reflect
adjustments for additional interest expense related to the financing of
the acquisitions and the additional depreciation expense, as a result of
the write-up of property, plant and equipment, net of the related tax
benefit.
18. CONDENSED CONSOLIDATING INFORMATION
The Notes are guaranteed by Oxford Automotive, Inc. and certain of its
wholly-owned subsidiaries, including Lobdell, Howell, BMGH and RPIH (the
Guarantor Subsidiaries). The Notes are not guaranteed by the Company's
other consolidated subsidiary, Oxford Mexico (the Non-guarantor
Subsidiary). The guarantee of the Notes by the Company and the Guarantor
Subsidiaries is full and unconditional. The following condensed
consolidated financial information presents the financial position,
results of operations and cash flows of (i) the Company as if it
accounted for its subsidiaries on the equity method, (ii) the Guarantor
Subsidiaries on a combined basis and (iii) the Non-guarantor Subsidiary.
F-27
<PAGE> 58
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARY SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 13,673 $ 322 $ 4,326 $ $ 18,321
Receivables (net) 7,206 868 64,652 (7,453) 65,273
Inventories 40 21,265 21,305
Reimbursable tooling 13,315 13,315
Income taxes refundable 1,601 1,601
Deferred income taxes 92 4,307 4,399
Prepaid expenses and other 172 10 8,443 (1,663) 6,962
---------- -------- --------- -------- ----------
TOTAL CURRENT ASSETS 21,143 1,240 117,909 (9,116) 131,176
Other noncurrent assets 14,626 45 10,477 25,148
Property, plant and equipment (net) 2,141 3,663 157,904 163,708
Investment in consolidated subsidiaries 31,861 (31,861)
---------- -------- --------- -------- ----------
TOTAL ASSETS $ 69,771 $ 4,948 $ 286,290 $(40,977) $ 320,032
========== ======== ========= ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 746 $ 351 $ 50,956 $ 161 $ 52,214
Employee compensation 1,330 3,478 4,808
Intercompany accounts (65,132) 6,041 52,986 6,105
Restructuring reserve 6,363 6,363
Accrued expenses and other 951 104 20,505 (9,318) 12,242
Current portion of borrowings 10,965 10,965
---------- -------- --------- -------- ----------
TOTAL CURRENT LIABILITIES (62,105) 6,496 145,253 (3,052) 86,592
Pension liability 4,727 4,727
Postretirement medical benefits 35,992 35,992
Deferred income taxes and other 279 (576) 18,225 17,928
Long-term borrowings 124,828 3,655 128,483
---------- -------- --------- -------- ----------
TOTAL LIABILITIES 63,002 5,920 207,852 (3,052) 273,722
---------- -------- --------- -------- ----------
Redeemable preferred stock 40,192 40,192
---------- -------- --------- -------- ----------
Shareholders' equity
Common stock 1,050 32,974 (32,974) 1,050
Foreign currency translation 147 (798) (651)
Retained earnings (accumulated deficit) 4,750 (1,119) 6,070 (4,951) 4,750
Unrealized gain on marketable securities 969 969
Equity adjustment for minimum pension
TOTAL SHAREHOLDERS' EQUITY 6,769 (972) 38,246 (37,925) 6,118
---------- -------- --------- -------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 69,771 $ 4,948 $ 286,290 $(40,977) $ 320,032
========== ======== ========= ======== ==========
</TABLE>
F-28
<PAGE> 59
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARY SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales $ - $ 956 $ 409,365 $ - $ 410,321
Cost of sales 2,674 365,746 368,420
---------- -------- --------- -------- ----------
GROSS PROFIT (1,718) 43,619 41,901
Selling, general and administrative expenses (665) 22,504 21,839
Restructuring provision 1,610 1,610
Gain on sale of equipment (1,602) (1,602)
---------- -------- --------- -------- ----------
OPERATING INCOME 665 (1,718) 21,107 20,054
Other income (expense)
Interest expense (467) 2 (10,245) (10,710)
Other 21 300 321
---------- -------- --------- -------- ----------
INCOME BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES 198 (1,695) 11,162 9,665
Benefit (provision) for income taxes (314) 576 (4,336) (4,074)
---------- -------- --------- -------- ----------
INCOME BEFORE EQUITY IN INCOME OF
CONSOLIDATED SUBSIDIARIES (116) (1,119) 6,826 5,591
Equity in income of consolidated subsidiaries 5,707 (5,707)
---------- -------- --------- -------- ----------
NET INCOME $ 5,591 $ (1,119) $ 6,826 $ (5,707) $ 5,591
========== ======== ========= ======== ==========
</TABLE>
F-29
<PAGE> 60
OXFORD AUTOMOTIVE, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NON-GUARANTOR GUARANTOR
PARENT SUBSIDIARY SUBSIDIARIES CONSOLIDATED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (71,916) $ 3,801 $ 94,101 $ 25,986
--------- --------- ---------- ---------
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (24,219) (24,219)
Purchase of property, plant and equipment (2,228) (3,774) (10,721) (16,723)
Proceeds from sale of equipment 5,433 5,433
Purchases of marketable securities (7,658) (7,658)
--------- --------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (34,105) (3,774) (5,288) (43,167)
--------- --------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from borrowing arrangements 124,828 1,825 126,653
Principal payments on borrowing arrangements (93,782) (93,782)
Payment of preferred stock dividends (1,193) (1,193)
Debt financing costs (5,372) (5,372)
--------- --------- ---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 119,456 (93,150) 26,306
--------- --------- ---------- ----------
Effect of foreign currency rate fluctuations on cash 295 (770) (475)
--------- --------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 13,435 322 (5,107) 8,650
Cash at beginning of period 238 9,433 9,671
--------- --------- ---------- ----------
Cash at end of period $ 13,673 $ 322 $ 4,326 $ 18,321
========= ========= ========== ==========
</TABLE>
F-30
<PAGE> 61
OXFORD AUTOMOTIVE, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
OCTOBER 28, APRIL 1,
1995 1995
YEAR ENDED YEAR ENDED THROUGH THROUGH
MARCH 31, MARCH 31, MARCH 31, OCTOBER 27,
1998 1997 1996 1995
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, beginning of period 1,272 39 31 25
Additions
Acquisition 200 1,254 -- --
Provision for additional allowance 12 8 5
Deductions
Currency translation adjustments (1) -- -- 1
Reversals (644) -- -- --
Doubtful accounts (charged) recovered (427) (33) -- --
---- ----- -- --
Balance, end of period 400 1,272 39 31
==== ===== == ==
</TABLE>
F-31
<PAGE> 62
EXHIBIT INDEX
The following exhibits are filed as part of this Report. Those exhibits with
an asterisk (*) designate the Registrant's management contracts or compensation
plans or arrangements for its executive officers.
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger by and among Howell Industries, Inc.,
the Company and HI Acquisition, Inc., dated May 21, 1997
(previously filed as Exhibit 2.1 to the Registrant's Registration
Statement on Form S-4, File No. 333-32975, and incorporated herein
by reference).
2.2 Shareholders Agreement by and among the Company, HI Acquisition,
Inc., and NBD Bank and Morton Schiff, co-trustees of the Herbert
H. Freedland Marital Trusts, dated May 21, 1997 (previously filed
as Exhibit 2.2 to the Registrant's Registration Statement on Form
S-4, File No. 333-32975, and incorporated herein by reference).
2.3 Agreement and Plan of Merger dated as of November 14, 1996, by and
between Lobdell Emery Corporation, BMG-MI, Inc. (now known as
"Oxford Automotive, Inc."), L-E Acquisition, Inc., the
Shareholders of Lobdell Emery Corporation, and D. Kennedy
Fesenmyer, as Shareholders' Agent (previously filed as Exhibit 2.3
to the Registrant's Registration Statement on Form S-4,
Registration No. 333-32975).
2.4 Amendment to Agreement and Plan of Merger, dated December 27, 1996
by and among Lobdell Emery Corporation, BMG-MI, Inc. (now known as
"Oxford Automotive, Inc."), L-E Acquisition, Inc., D. Kennedy
Fesenmyer, as Shareholders' Agent, and Lobdell Holdings, Inc.
(previously filed as Exhibit 2.4 to the Registrant's Registration
Statement on Form S-4, Registration No. 333-32975)
2.5 Agreement and Plan of Merger, dated as of January 8, 1997 among
Lobdell Holdings, Inc. and BMG-MI, Inc. (now known as "Oxford
Automotive, Inc.") (previously filed as Exhibit 2.5 to the
Registrant's Registration Statement on Form S-4, Registration No.
333-32975).
2.6 Stock Purchase Agreement, dated as of November 25, 1997, by and
among Oxford Automotive, Inc. and the Shareholders of RPI
Holdings, Inc. (previously filed as Exhibit 2.1 to the
Registrant's Form 8-K dated November 25, 1997, and incorporated
herein by reference)
2.7 Asset Purchase Agreement, dated as of March 13, 1998, between
Oxford Automotive, Inc. and Eaton Corporation. (previously filed
as Exhibit 2.1 to the Registrant's Form 8-K dated April 1, 1998,
and incorporated herein by reference)
3.1 Articles of Incorporation of the Company (previously filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form
S-4, File No. 333-32975, and incorporated herein by reference)
3.2 Bylaws of the Company (previously filed as Exhibit 3.11 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
<PAGE> 63
4.1 Indenture, dated as of June 15, 1997, by and among the Company,
the Subsidiary Guarantors and First National Trust Association, as
Trustee (including form of the 10 1/8% Senior Subordinated Notes
Due 2007, form of the Guaranty and form of Supplemental Indenture)
(previously filed as Exhibit 4.1 to the Registrant's Registration
Statement on Form S-4, File No. 333-32975, and incorporated herein
by reference)
4.2 Credit Agreement between the Company and NBD Bank, as agent, dated
June 24, 1997 (previously filed as Exhibit 4.2 to the Registrant's
Registration Statement on Form S-4, File No. 333-32975, and
incorporated herein by reference)
4.3 +Registration Rights Agreement dated April 1, 1998 by and among
the Company, certain of its subsidiaries and the initial purchaser
of its 10 1/8% Senior Subordinated Notes Due 2007, Series B
10.1 Form of RPI Note (previously filed as Exhibit 10.1 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.2 *Form of Director Indemnification Agreement (previously filed as
Exhibit 10.2 to the Registrant's Registration Statement on Form
S-4, File No. 333-32975, and incorporated herein by reference)
10.3 *Employment and Noncompetition Agreement between the Company and
Steven M. Abelman (previously filed as Exhibit 10.3 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.4 *Employment and Noncompetition Agreement between the Company and
Donald C. Campion (previously filed as Exhibit 10.4 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.5 *Employment Agreement between BMG North America and Larry C.
Cornwall (previously filed as Exhibit 10.5 to the Registrant's
Registration Statement on Form S-4, File No. 333-32975, and
incorporated herein by reference)
10.6 Shareholders Agreement among certain of the Shareholders of the
Company and BMG-MI, Inc. (now known as Oxford Automotive, Inc.),
dated October 23, 1995 (previously filed as Exhibit 10.6 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.7 Shareholders Agreement among certain of the Shareholders of the
Company and the Company dated January 10, 1997 (previously filed
as Exhibit 10.7 to the Registrant's Registration Statement on Form
S-4, File No. 333-32975, and incorporated herein by reference)
10.8 Management and Consulting Agreement ("Management Agreement")
between the Company and The Oxford Investment Group, Inc., dated
June 24, 1997 (previously filed as Exhibit 10.8 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.9 Settlement Agreement and Mutual Release, dated July 15, 1997,
regarding Lobdell Preferred Shareholders (previously filed as
Exhibit 10.9 to the Registrant's Registration Statement on Form
S-4, File No. 333-32975, and incorporated herein by reference)
<PAGE> 64
10.10 +Amendment to Management Agreement, dated November 24, 1997
10.11 +Form of Purchase Agreement among the Company and the initial
purchasers of its 10 1/8% Senior Subordinated Notes Due 2007
12 +Statement regarding computation of ratios
21 +Subsidiaries of the Company
27 +Financial Data Schedule
- -------
+Filed herewith
<PAGE> 1
EXHIBIT 4.3
OXFORD AUTOMOTIVE, INC.
Senior Subordinated Notes Due 2007
REGISTRATION RIGHTS AGREEMENT
April 1, 1998
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Oxford Automotive, Inc., a Michigan corporation (the "Company"), proposes to
issue and sell to Salomon Brothers Inc. (the "Purchaser"), upon the terms set
forth in a purchase agreement of even date herewith (the "Purchase Agreement")
$35,000,000 aggregate principal amount of its 10-1/8% Senior Subordinated Notes
due 2007 (the "Securities"), which Securities will be guaranteed on a senior
subordinated basis (the "Subsidiary Guarantees") by BMG North America Limited,
an Ontario corporation; BMG Holdings, Inc., an Ontario corporation; Lobdell
Emery Corporation, a Michigan corporation; Winchester Fabrication Corporation, a
Michigan corporation; Creative Fabrication Corporation, a Tennessee corporation;
Parallel Group International, Inc., an Indiana corporation; Laserweld
International LLC, an Indiana corporation; Concept Management Corporation, a
Michigan corporation and Lewis Emery Capital Corporation, a Michigan
corporation, RPI Holdings, Inc., a Michigan corporation and Howell
Industries, Inc., a Michigan corporation (each a "Subsidiary Guarantor" and
collectively the "Subsidiary Guarantors") (the "Initial Placement"). The
Company and the Subsidiary Guarantors are collectively referred to herein as
the "Issuers." As an inducement to the Purchaser to enter into the Purchase
Agreement and in satisfaction of a condition to your obligations thereunder,
the Issuers agree with you, (i) for your benefit and (ii) for the benefit of
the holders from time to time of the Securities (including you) (each of the
foregoing, a "Holder" and, together, the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:
<PAGE> 2
2
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the one year period following the
consummation of the Registered Exchange Offer, exclusive of any period during
which any stop order shall be in effect suspending the effectiveness of the
Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration statement of
the Company on an appropriate form under the Act with respect to the Registered
Exchange Offer, all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchanging Dealer" means any Holder (which may include the Purchaser) which
is a broker-dealer, electing to exchange Securities acquired for its own account
as a result of market-making activities or other trading activities, for New
Securities.
"Final Memorandum" means the Offering Memorandum dated March 24, 1998
including and any documents incorporated by reference therein.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Securities
<PAGE> 3
3
dated as of June 15, 1997, between the Company, the Subsidiary Guarantors and
First Trust National Association, as trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering.
"New Securities" means debt securities of the Company identical in all
material respects to the Securities (except that the cash interest and interest
rate step-up provisions and the transfer restrictions will be modified or
eliminated, as appropriate) to be issued under the Indenture or the New
Securities Indenture.
"New Securities Indenture" means an indenture between the Company, the
Subsidiary Guarantors and the New Securities Trustee, identical in all material
respects with the Indenture (except that the cash interest and interest rate
step-up provisions will be modified or eliminated, as appropriate).
"New Securities Trustee" means a bank or trust company reasonably
satisfactory to the Purchaser, as trustee with respect to the New Securities
under the New Securities Indenture.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Securities or the New Securities, covered by such Registration
Statement, and all amendments and supplements to the Prospectus, including
post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to issue
and deliver to such Holders, in exchange for the securities, a like principal
amount of the New Securities.
<PAGE> 4
4
"Registration Statement" means any Exchange Offer Registration Statement or
Shelf Registration Statement that covers any of the Securities or the New
Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration" means a registration effected pursuant to Section 3
hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of the
Company pursuant to the provisions of Section 3 hereof which covers some or all
of the Securities or New Securities, as applicable, on an appropriate form under
Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Trustee" means the trustee with respect to the Securities under the
Indenture.
"Underwriter" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of New Securities by Exchanging
Dealers; Private Exchange. (a) The Issuers shall prepare and, not later than 90
days following the Closing Date, shall file with the Commission the Exchange
Offer Registration Statement with respect to the Registered Exchange Offer. The
Issuers shall cause the Exchange Offer Registration Statement to become
effective under the Act within 150 days of the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration Statement,
the Issuers shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
<PAGE> 5
5
exchange Securities for New Securities (assuming that such Holder is not an
affiliate of the Issuers within the meaning of the Act, acquires the New
Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the New
Securities) to trade such New Securities from and after their receipt without
any limitations or restrictions under the Act and without material restrictions
under the securities laws of a substantial proportion of the several states of
the United States.
(c) In connection with the Registered Exchange Offer, the Issuers shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30 days
and not more than 45 days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law);
(iii) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York; and
(iv) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Issuers shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all securities so
accepted for exchange; and
(iii) cause the Trustee or the New Securities Trustee, as the case may
be, promptly to authenticate and deliver to each Holder of Securities, New
Securities equal in principal amount to the Securities of such Holder so
accepted for exchange.
(e) The Purchaser and the Issuers acknowledge that, pursuant to
interpretations by the Commission's staff of Section 5 of the Act, and in the
absence of an applicable exemption
<PAGE> 6
6
therefrom, each Exchanging Dealer is required to deliver a Prospectus in
connection with a sale of any New Securities received by such Exchanging Dealer
pursuant to the Registered Exchange Offer in exchange for Securities acquired
for its own account as a result of market-making activities or other trading
activities. Accordingly, the Issuers shall:
(i) include the information set forth in Annex A hereto on the cover
of the Exchange Offer Registration Statement, in Annex B hereto in the
forepart of the Exchange Offer Registration Statement in a section setting
forth details of the Exchange Offer, and in Annex C hereto in the
underwriting or plan of distribution section of the Prospectus forming a
part of the Exchange Offer Registration Statement, and include the
information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and
(ii) use their best efforts to keep the Exchange Offer Registration
Statement continuously effective under the Act during the Exchange Offer
Registration Period for delivery by Exchanging Dealers in connection with
sales of New Securities received pursuant to the Registered Exchange Offer,
as contemplated by Section 4(h) below.
(f) In the event that any Purchaser determines that it is not eligible to
participate in the Registered Exchange Offer with respect to the exchange of
Securities constituting any portion of an unsold allotment, at the request of
such Purchaser, the Issuers shall issue and deliver to such Purchaser or the
party purchasing New Securities registered under a Shelf Registration Statement
as contemplated by Section 3 hereof from such Purchaser, in exchange for such
Securities, a like principal amount of New Securities. The Issuers shall seek to
cause the CUSIP Service Bureau to issue the same CUSIP number for such New
Securities as for New Securities issued pursuant to the Registered Exchange
Offer.
3. Shelf Registration. If (i) because of any change in law or applicable
interpretations thereof by the Commission's staff, the Issuers determine upon
advice of their outside counsel that they are not permitted to effect the
Registered Exchange Offer as contemplated by Section 2 hereof, or (ii) for any
other reason the Registered Exchange Offer is not consummated within 180 days of
the date hereof, or (iii) any Purchaser so requests with respect to Securities
held by it following consummation of the Registered Exchange Offer, or (iv) any
Holder (other than a Purchaser) is not eligible to participate in the Registered
<PAGE> 7
7
Exchange Offer or (v) in the case of any Purchaser that participates in the
Registered Exchange Offer or acquires New Securities pursuant to Section 2(f)
hereof, such Purchaser does not receive freely tradeable New Securities in
exchange for Securities constituting any portion of an unsold allotment (it
being understood that, for purposes of this Section 3, (x) the requirement that
a Purchaser deliver a Prospectus containing the information required by Items
507 and/or 508 of Regulation S-K under the Act in connection with sales of New
Securities acquired in exchange for such Securities shall result in such New
Securities being not "freely tradeable" but (y) the requirement that an
Exchanging Dealer deliver a Prospectus in connection with sales of New
Securities acquired in the Registered Exchange Offer in exchange for Securities
acquired as a result of market-making activities or other trading activities
shall not result in such New Securities being not "freely tradeable"), the
following provisions shall apply:
(a) The Issuers shall as promptly as practicable (but in no event more
than 45 days after so required or requested pursuant to this Section 3),
file with the Commission and thereafter shall cause to be declared effective
under the Act a Shelf Registration Statement relating to the offer and sale
of the Securities or the New Securities, as applicable, by the Holders from
time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement; provided that,
with respect to New Securities received by a Purchaser in exchange for
securities constituting any portion of an unsold allotment, the Issuers may,
if permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement
containing the information required by Regulation S-K Items 507 and/or 508,
as applicable, in satisfaction of its obligations under this paragraph (a)
with respect thereto, and any such Exchange Offer Registration Statement, as
so amended, shall be referred to herein as, and governed by the provisions
herein applicable to, a Shelf Registration Statement.
(b) The Issuers shall use their best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of two
years from the date the Shelf Registration Statement is declared effective
by the Commission or such shorter period that will terminate when all the
Securities or New Securities, as applicable, covered by the Shelf
Registration Statement have been sold
<PAGE> 8
8
pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Issuers shall be deemed
not to have used their best efforts to keep the Shelf Registration Statement
effective during the requisite period if any Issuer voluntarily takes any
action that would result in Holders of securities covered thereby not being
able to offer and sell such securities during that period, unless (i) such
action is required by applicable law, or (ii) such action is taken by such
Issuer in good faith and for valid business reasons (not including avoidance
of such Issuer's obligations hereunder), including the acquisition or
divestiture of assets, so long as such Issuer promptly thereafter complies
with the requirements of Section 4(k) hereof, if applicable.
4. Registration Procedures. In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) The Issuers shall furnish to you, prior to the filing thereof with
the Commission, a copy of any Shelf Registration Statement and any Exchange
Offer Registration Statement, and each amendment thereof and each amendment
or supplement, if any, to the Prospectus included therein and shall use
their best efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably may propose.
(b) The Issuers shall ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder, (ii) any Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any
Registration Statement, and any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Issuers shall advise you or your representative and, in
the case of a Shelf Registration Statement, the Holders of securities
covered thereby, and,
<PAGE> 9
9
if requested by you or your representative or any such Holder, confirm such
advice in writing:
(i) when a Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information.
(2) The Issuers shall advise you or your representative and, in the
case of a Shelf Registration Statement, the Holders of securities covered
thereby, and, in the case of an Exchange Offer Registration Statement, any
Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by you or
your representative or any such Holder or Exchanging Dealer, confirm such
advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(ii) of the receipt by the Issuers of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the happening of any event that requires the making of
any changes in the Registration Statement or the Prospectus so that, as
of such date, the statements therein are not misleading and do not omit
to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading (which
advice shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made).
(d) The Issuers shall use their best efforts to obtain
<PAGE> 10
10
the withdrawal of any order suspending the effectiveness of any Registration
Statement at the earliest possible time.
(e) The Issuers shall furnish to each Holder of securities included
within the coverage of any Shelf Registration Statement, without charge, at
least one copy of such Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Holder so requests in writing, all exhibits (including those incorporated by
reference).
(f) The Issuers shall, during the Shelf Registration Period, deliver
to each Holder of securities included within the coverage of any Shelf
Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may
reasonably request; and the Issuers consent to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders of
securities in connection with the offering and sale of the securities
covered by the Prospectus or any amendment or supplement thereto.
(g) The Issuers shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
(including those incorporated by reference).
(h) The Issuers shall, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer, without charge, as many copies
of the Prospectus included in such Exchange Offer Registration Statement and
any amendment or supplement thereto as such Exchanging Dealer may reasonably
request for delivery by such Exchanging Dealer in connection with a sale of
New Securities received by it pursuant to the Registered Exchange Offer; and
the Issuers consent to the use of the Prospectus or any amendment or
supplement thereto by any such Exchanging Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other offering of
securities pursuant to any Registration Statement, the Issuers shall
register or qualify or
<PAGE> 11
11
cooperate with the Holders of securities included therein and their
respective counsel in connection with the registration or qualification of
such securities for offer and sale under the securities or blue sky laws of
such jurisdictions as any such Holders reasonably request in writing and do
any and all other acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the securities covered by such
Registration Statement; provided, however, that the Issuers will not be
required to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction where it
is not then so subject.
(j) The Issuers shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names
as Holders may request prior to sales of securities pursuant to such
Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Issuers shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to the
related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(l) Not later than the effective date of any such Registration
Statement hereunder, the Issuers shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement, and provide the applicable trustee with printed
certificates for such Securities or New Securities, in a form eligible for
deposit with The Depository Trust Company.
(m) The Issuers shall use their best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement
<PAGE> 12
12
satisfying the provisions of Section 11(a) of the Act.
(n) The Issuers shall cause the Indenture or the New Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act
in a timely manner.
(o) The Issuers may require each Holder of Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Issuers such
information regarding the Holder and the distribution of such Securities as
the Issuers may from time to time reasonably require for inclusion in such
Registration Statement. No Holder may include any of its Securities in any
Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Issuers in writing, within 20 days after
receipt of a written request therefor, such information as the Issuers may
reasonably request, including, but not limited to, information specified by
Regulation S-K or otherwise required by the Commission for use in connection
with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Issuers all
information required to be disclosed in order to make the information
previously furnished to the Issuers by such Holder not materially
misleading.
(p) The Issuers shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters and Majority
Holders reasonably agree should be included therein and shall make all
required filings of such Prospectus supplement or post-effective amendment
as soon as notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the Issuers shall
enter into such agreements (including underwriting agreements) and take all
other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than
those set forth in Section 6 (or such other provisions and procedures
acceptable to the Majority Holders and the Managing Underwriters, if any,)
with respect to all parties to be indemnified pursuant to
<PAGE> 13
13
Section 6 from Holders of Securities to the Company.
(r) In the case of any Shelf Registration Statement, the Issuers shall
(i) make reasonably available for inspection by the Holders of Securities to
be registered thereunder, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney, accountant or
other agent retained by the Holders or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties of
the Issuers and their subsidiaries; (ii) cause the Issuers', officers,
directors and employees to supply all relevant information reasonably
requested by the Holders or any such underwriter, attorney, accountant or
agent in connection with any such Registration Statement as is customary for
similar due diligence examinations; provided, however, that any information
that is designated in writing by the Issuers, in good faith, as confidential
at the time of delivery of such information shall be kept confidential by
the Holders or any such underwriter, attorney, accountant or agent, unless
such disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of confidentiality;
(iii) make such representations and warranties to the Holders of Securities
registered thereunder and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not limited to,
those set forth in the Purchase Agreement; (iv) obtain opinions of counsel
to the Issuers and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder of Securities
registered thereunder and the underwriters, if any, in customary form and
covering such matters as are customarily covered in opinions requested in
underwritten offerings; (v) obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of
any subsidiary of the Issuers or of any business acquired by the Issuers for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each selling Holder of
securities registered thereunder and the underwriters, if any, in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with primary underwritten offerings; and (vi)
<PAGE> 14
14
deliver such documents and certificates as may be reasonably requested by
the Majority Holders and the Managing Underwriters, if any, including those
to evidence compliance with Section 4(k) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by
the Issuers. The foregoing actions set forth in clauses (iii), (iv), (v) and
(vi) of this Section 4(r) shall be performed at (A) the effectiveness of
such Registration Statement and each post-effective amendment thereto and
(B) each closing under any underwriting or similar agreement as and to the
extent required thereunder.
(s) In the case of any Exchange Offer Registration Statement, the
Issuers shall, to the extent requested by any Purchaser, (i) make reasonably
available for inspection by such Purchaser, and any attorney, accountant or
other agent retained by such Purchaser, all relevant financial and other
records, pertinent corporate documents and properties of the Issuers and
their subsidiaries; (ii) cause the Issuers' officers, directors and
employees to supply all relevant information reasonably requested by such
Purchaser or any such attorney, accountant or agent in connection with any
such Registration Statement as is customary for similar due diligence
examinations; provided, however, that any information that is designated in
writing by the Issuers, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by such Purchaser or
any such attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such information
becomes available to the public generally or through a third party without
an accompanying obligation of confidentiality; (iii) make such
representations and warranties to such Purchaser, in form, substance and
scope as are customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not limited to,
those set forth in the Purchase Agreement; (iv) obtain opinions of counsel
to the Issuers and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to such Purchaser and
its counsel, addressed to such Purchaser, covering such matters as are
customarily covered in opinions requested in underwritten offerings;(v)
obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Issuers(and, if necessary, any other
independent certified public accountants of any subsidiary of the Issuers or
of any business acquired by the Issuers for which financial statements and
financial data are, or are required to be,
<PAGE> 15
15
included in the Registration Statement), addressed to such Purchaser, in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with primary underwritten offerings, or if
requested by such Purchaser or its counsel in lieu of a "cold comfort"
letter, an agreed-upon procedures letter under Statement on Auditing
Standards No. 35, covering matters requested by such Purchaser or its
counsel; and (vi) deliver such documents and certificates as may be
reasonably requested by such Purchaser or its counsel, including those to
evidence compliance with Section 4(k) and with conditions customarily
contained in underwriting agreements. The foregoing actions set forth in
clauses (iii), (iv), (v), and (vi) of this Section 4(s) shall be performed
at the close of the Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration Statement.
5. Registration Expenses. The Issuers shall bear all expenses incurred in
connection with the performance of their obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Purchasers for the reasonable fees and
disbursements of one firm or counsel acting in connection therewith.
6. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Issuers, jointly and severally, agree to indemnify
and hold harmless each Holder of Securities covered thereby (including the
Purchaser and, with respect to any Prospectus delivery as contemplated in
Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees
and agents of each such Holder and each person who controls any such Holder
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed or in
any amendment thereof, or in any preliminary Prospectus or Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission
<PAGE> 16
16
to state therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Issuers will not be liable in
any case to the extent that any such loss, claim, damage or liability arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Issuers by or on behalf of any such
Holder specifically for inclusion therein and provided, further, with respect to
any untrue statement or omission of a material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Holder (or any of the directors, officers and
employees of such Holder or any controlling person of such Holder) from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities concerned, to the extent that any such loss, claim, damage or
liability of such Holder occurs under circumstances where it shall have been
determined by a court of competent jurisdiction by final and nonappealable
judgment that (x) the Issuers had previously furnished copies of the Prospectus
to the Holder, (y) the untrue statement or omission of a material fact contained
in the Preliminary Prospectus was corrected in the Prospectus and (z) there was
not sent or given to such person, at or prior to the written confirmation of the
sale of such Securities to such person, a copy of the Prospectus. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
The Issuers, jointly and severally, also agree to indemnify or contribute to
Losses of, as provided in Section 6(d), any underwriters of Securities
registered under a Shelf Registration Statement, their officers and directors
and each person who controls such underwriters on substantially the same basis
as that of the indemnification of the Purchaser and the selling Holders provided
in this Section 6(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement as provided in Section 4(q)
hereof.
(b) Each Holder of Securities covered by a Registration Statement
(including each Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer) severally agrees to
indemnify and hold harmless (i) the Issuers, (ii) each of their directors, (iii)
<PAGE> 17
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each of their respective officers who signs such Registration Statement and (iv)
each person who controls the Issuers within the meaning of either the Act or the
Exchange Act to the same extent as the foregoing indemnity from the Issuers to
each such Holder, but only with reference to written information relating to
such Holder furnished to the Issuers by or on behalf of such Holder specifically
for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and local
counsel) if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and counsel to the
indemnified party shall have reasonably concluded that there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time
<PAGE> 18
18
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 6 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively, "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
no case shall any Purchaser or any subsequent Holder of any Security or New
Security be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a
New Security, applicable to the Security which was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall any
underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such underwriter under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Issuers shall be deemed to be equal to
the proceeds from the Initial Placement net of purchase discounts and
commissions (before deducting
<PAGE> 19
19
expenses) as set forth on the cover page of the Final Memorandum. Benefits
received by the Purchasers shall be deemed to be equal to the total purchase
discounts and commissions as set forth on the cover page of the Final
Memorandum, and benefits received by any other Holders shall be deemed to be
equal to the value of receiving Securities or New Securities, as applicable,
registered under the Act. Benefits received by any underwriter shall be deemed
to be equal to the total underwriting discounts and commissions, as set forth on
the cover page of the Prospectus forming a part of the Registration Statement
which resulted in such Losses. Relative fault shall be determined by reference
to whether any alleged untrue statement or omission relates to information
provided by the indemnifying party, on the one hand, or by the indemnified
party, on the other hand. The parties agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person who controls a Holder within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Issuers within the meaning of either the Act or the Exchange Act,
each officer of the Issuers who shall have signed the Registration Statement and
each director of the Issuers shall have the same rights to contribution as the
Company or the Subsidiary Guarantors respectively, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the
Issuers or any of the officers, directors or controlling persons referred to in
Section 6 hereof, and will survive the sale by a Holder of securities covered by
a Registration Statement.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, entered into, nor shall any of them, on or after the date hereof, enter
into, any agreement with respect to their securities that is inconsistent with
the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
<PAGE> 20
20
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuers have obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate principal
amount of Securities (or, after the consummation of any Exchange Offer in
accordance with Section 2 hereof, of New Securities); provided that, with
respect to any matter that directly or indirectly affects the rights of any
Purchaser hereunder, the Issuers shall obtain the written consent of each such
Purchaser against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by the
Majority Holders, determined on the basis of securities being sold rather than
registered under such Registration Statement.
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand- delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such holder
to the Issuers in accordance with the provisions of this Section 7(c), which
address initially is, with respect to each Holder, the address of such
Holder maintained by the Registrar under the Indenture, with a copy in like
manner to Salomon Brothers Inc.;
(2) if to you, initially at the respective addresses set forth in the
Purchase Agreement; and
(3) if to the Issuers, initially at the address of the Company set
forth in the Purchase Agreement with copies as indicated therein.
All such notices and communications shall be deemed to have been duly given
when received.
The Purchasers or the Issuers by notice to the other may designate
additional or different addresses for subsequent notices or communications.
<PAGE> 21
21
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Issuers thereto, subsequent Holders of Securities and/or New Securities. The
Issuers hereby agree to extend the benefits of this Agreement to any Holder of
Securities and/or New Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State.
(h) Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Issuers, etc. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities or New
Securities is required hereunder, Securities or New Securities, as applicable,
held by the Issuers or their Affiliates (other than subsequent Holders of
Securities or New Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or New
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
Please confirm that the foregoing correctly sets forth the agreement between
the Issuers and you.
<PAGE> 22
22
Very truly yours,
OXFORD AUTOMOTIVE, INC.
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Senior Vice President
BMG NORTH AMERICA LIMITED
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
LOBDELL EMERY CORPORATION
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
WINCHESTER FABRICATION
CORPORATION
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
CREATIVE FABRICATION CORPORATION
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
PARALLEL GROUP INTERNATIONAL, INC.
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
<PAGE> 23
23
CONCEPT MANAGEMENT CORPORATION
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
LEWIS EMERY CAPITAL CORPORATION
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
RPI HOLDINGS, INC.
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
HOWELL INDUSTRIES, INC.
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
BMG HOLDINGS INC.
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
LASERWELD INTERNATIONAL, L.L.C
By: Lobdell Emery Corporation,
Its Sole Member
By: /s/ Donald C. Campion
-----------------------------------
Name: Donald C. Campion
Title: Treasurer
<PAGE> 24
24
Accepted April 1, 1998
SALOMON BROTHERS INC
By: /s/ Thomas J. Spoto
-----------------------------------
Name: Thomas J. Spoto
Title: Associate
<PAGE> 25
ANNEX A
Annex A
Each broker-dealer that receives New Securities for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Securities where such New Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Issuers have agreed that, starting on the Expiration
Date (as defined herein) and ending on the close of business on the first
anniversary of the Expiration Date, they will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
<PAGE> 26
ANNEX B
Annex B
Each broker-dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Securities. See "Plan of Distribution."
<PAGE> 27
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Securities received in exchange for Securities
where such Securities were acquired as a result of market-making activities or
other trading activities. The Issuers have agreed that, starting on the
Expiration Date and ending on the close of business on the first anniversary of
the Expiration Date, they will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until ________, 199_, all dealers effecting transactions in the New
Securities may be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sale of New Securities by
broker-dealers. New Securities received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Securities. Any
broker-dealer that resells New Securities that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of
<PAGE> 28
Transmittal. The Issuers have agreed to pay all expenses incident to the
Exchange Offer (including the expenses of one counsel for the holders of the
Securities) other than commissions or concessions of any brokers or dealers and
will indemnify the holders of the Securities (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
If applicable, add information required by Regulation S-K Items 507 and/or
508.
<PAGE> 29
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND
WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name: ____________________________________
Address: _________________________________
_________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New
Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for securities, it represents that
the Securities to be exchanged for New securities were acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such New
Securities; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE> 1
EXHIBIT 10.10
AMENDMENT
TO
MANAGEMENT AND CONSULTING AGREEMENT
AMENDMENT TO MANAGEMENT AND CONSULTING AGREEMENT (this "Amendment") made
this 24th day of November, 1997 by and between Oxford Automotive, Inc., a
Michigan corporation the ("Company"), and The Oxford Investment Group, Inc., a
Michigan corporation ("Consultant").
A. Consultant and the Company entered into a Management and Consultant
Agreement dated June 24, 1997 (the "Agreement").
B. Since entering into the Agreement, the parties negotiated and agreed to
certain changes to the Agreement set forth herein.
NOW, THEREFORE, the Company and Consultant, in consideration of the
premises, agreements and covenants contained herein, hereby agree to the
following modifications of the Agreement:
1. All references to capitalized terms contained herein which are not
otherwise defined in this Amendment shall have the meanings ascribed to them in
the Agreement.
2. Section 11(d) of the Agreement is amended and restated as follows:
"(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all other agreements or arrangements,
oral and written, between the parties hereto relating to the matters set
forth herein. No representations, inducement, agreement, amendment, promise
or understanding will have any force or effect unless the same is in writing
and validly executed by the parties hereto. Notwithstanding the forgoing,
Schedule A may be modified from time to time by Consultant to reflect any
additional Marks that shall be subject to this Agreement and the
registrations (and applications therefor) relating to such Marks."
3. Except as specifically amended by this Amendment, all provisions of the
Agreement shall remain in full force and effect. This Amendment shall govern in
the event that there is a conflict between the Agreement and this Amendment.
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
OXFORD AUTOMOTIVE, INC.
By: Steven M. Abelman
----------------------------
Its: President
---------------------------
STATE OF MICHIGAN )
) SS.
COUNTY OF OAKLAND )
On this 3rd day of December, 1997, before me, a Notary Public in and for
said County, the foregoing instrument was executed by Steven M. Abelman, the
President of, Oxford Automotive, Inc. a Michigan corporation, on behalf of said
corporation.
Kelly M. Kotsull
--------------------------------
Notary Public, Oakland County, Michigan
My Commission Expires:
----------
KELLY M. KOTSULL
NOTARY PUBLIC - OAKLAND COUNTY, MI
MY COMMISSION EXPIRES 09/06/00
2
<PAGE> 3
THE OXFORD INVESTMENT GROUP, INC.
By: Selwyn Isakow
----------------------------
Its: Chairman
---------------------------
STATE OF MICHIGAN )
) SS.
COUNTY OF OAKLAND )
On this 3 day of December, 1997, before me, a Notary Public in and for
said County, the foregoing instrument was acknowledged by Selwyn Isakow, the
Chairman, of The Oxford Investment Group, Inc., a Michigan corporation, on
behalf of said corporation.
Kelly M. Kotsull
--------------------------------
Notary Public, Oakland County, Michigan
My Commission Expires:
----------
KELLY M. KOTSULL
NOTARY PUBLIC - OAKLAND COUNTY, MI
MY COMMISSION EXPIRES 09/06/00
3
<PAGE> 1
EXHIBIT 10.11
OXFORD AUTOMOTIVE, INC.
$35,000,000
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
PURCHASE AGREEMENT
New York, New York
March 24, 1998
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Oxford Automotive, Inc., a Michigan corporation (the "Company"), proposes to
issue and sell to Salomon Brothers Inc (the "Initial Purchaser"), $35,000,000
principal amount of its 10 1/8% Senior Subordinated Notes Due 2007 (the
"Securities"), to be guaranteed on a senior subordinated basis (the "Subsidiary
Guarantees") by BMG North America Limited, an On- tario corporation; BMG
Holdings Inc., an Ontario corporation; Lobdell Emery Corporation, a Michigan
corporation; Winchester Fabrication Corporation, a Michigan corporation;
Creative Fabrication Corporation, a Tennessee corporation; Parallel Group
International, Inc., an Indiana corporation; Laserweld International LLC, an
Indiana corporation; Concept Management Corporation, a Michigan corporation,
Lewis Emery Capital Corporation, a Michigan corporation, RPI Holdings, Inc., a
Michigan corporation and Howell Industries, Inc., a Michigan corporation (each a
"Subsidiary Guarantor" and collectively the "Subsidiary Guarantors"), and to be
issued under an indenture (the "Indenture") dated as of June 15, 1997 between
the Company, the Subsidiary Guarantors and First Trust National Association, as
trustee (the "Trustee").
The sale of the Securities to the Initial Purchaser will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. You have advised the Company that the
Initial Purchaser will offer and sell the Securities purchased hereunder in
accordance with Section 4 hereof as soon as you deem advisable.
In connection with the sale of the Securities, the Company has prepared a
final offering memorandum, dated March 24, 1998 (including any and all exhibits
thereto and any information or documents incorporated by reference therein, the
"Final Memorandum"). The Final Memorandum sets forth certain information
concerning the Company, the Subsidiary Guarantors and the Securities. The
Company and the Subsidiary Guarantors, jointly and severally, hereby confirm
that they
<PAGE> 2
2
have authorized the use of the Final Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Securities by the Initial
Purchaser. Unless stated to the contrary, all references herein to the Final
Memorandum are to the Final Memorandum at the Execution Time (as defined below)
and are not meant to include any amendment or supplement, or any information
incorporated by reference therein, subsequent to the Execution Time and any
references herein to the terms "amend," "amendment" or "supplement" with respect
to the Final Memorandum shall be deemed to refer to and include any information
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), subsequent to the Execution Time which is incorporated by reference
therein.
The holders of the Securities will be entitled to the benefits of the
Registration Agreement dated the date hereof, among the Company, the Subsidiary
Guarantors and the Initial Purchaser (the "Registration Agreement").
Capitalized terms used herein without definitions have the respective
meanings assigned to them in the Final Memorandum.
1. Representations and Warranties. The Company and the Subsidiary Guarantors,
jointly and severally, represent and warrant to, and agree with the Initial
Purchaser as set forth below in this Section 1.
(a) Each of the Company, the Subsidiary Guarantors and their
respective subsidiaries is a corporation, a limited liability company or a
partnership, duly incorporated or formed, and is validly existing as a
corporation, a limited liability company or a partnership in good standing
under the laws of the jurisdiction in which it is chartered, organized or
formed and is duly qualified to do business as a foreign corporation,
limited liability company or partnership and is in good standing under the
laws of each jurisdiction which requires such qualification wherein it owns
or leases material properties or conducts material business, except in such
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the Company, the Subsidiary Guarantors and their
respective subsidiaries taken as a whole.
(b) Each of the Company, the Subsidiary Guarantors and their
respective subsidiaries has full power (corporate and other) to own or lease
its properties and conduct its business as described in the Final
Memorandum; and each of the Company and the Subsidiary Guarantors has full
power (corporate and other) to issue
<PAGE> 3
3
the Securities and to enter into this Agreement, the Indenture, the
Subsidiary Guarantees and the Registration Agreement (collectively, the
"Transaction Documents") to which it is a party and to carry out all the
terms and provisions hereof and thereof to be carried out by it, including,
without limitation, the issuance, sale and delivery of the Securities.
(c) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and, except as otherwise set forth in the Final
Memorandum, are owned beneficially, directly or indirectly, by the Company
free and clear of any security interests, liens, encumbrances, preemptive
rights or claims.
(d) The Company's authorized capital stock consists of 400,000 shares
of common stock, of which 309,750 shares are issued and outstanding. Except
as set forth in the Final Memorandum, no holders of outstanding shares of
capital stock of the Company are entitled as such to any preemptive or other
rights to subscribe for any of the Securities.
(e) The consolidated financial statements and schedules of the Company
and its consolidated subsidiaries included in the Final Memorandum present
fairly in all material respects the financial position of the Company and
its consolidated subsidiaries and the results of operations and changes in
financial condition as of the dates and periods therein specified. Such
financial statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein). The pro forma
financial statements of the Company and its subsidiaries and the related
notes thereto included in the Final Memorandum have been properly compiled
on the bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein and to
the knowledge of the Company such pro forma financial statements and the
related notes thereto have been prepared in accordance with the Securities
and Exchange Commission's (the "Commission") rules and guidelines with
respect to pro forma financial statements, except as may be required with
respect to the proposed acquisition of the Eaton Suspension Division. The
selected financial data set forth under the caption "Selected Consolidated
Historical Financial Data" and "Pro Forma Combined Financial Data" in the
Final Memorandum present fairly in
<PAGE> 4
4
all material respects, on the basis stated in the Final Memorandum, the
information included therein.
(f) Each of Price Waterhouse LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and Deloitte &
Touche, who have certified certain financial statements of BMG North America
Limited and delivered their respective reports with respect to the audited
consolidated financial statements and schedules included in or incorporated
by reference in the Final Memorandum, are independent public accountants
within the meaning of the Securities Act and the applicable rules and
regulations thereunder.
(g) The execution, delivery and performance of this Agreement have
been duly authorized by the Company and the Subsidiary Guarantors, this
Agreement has been duly executed and delivered by the Company and the
Subsidiary Guarantors and, upon the due execution and delivery by the other
parties hereto, this Agreement will constitute a legal, valid and binding
obligation of the Company and the Subsidiary Guarantors, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, moratorium, reorganization or other similar laws or
court decisions relating to or affecting the rights of creditors generally
or of general principles of equity (whether considered in a proceeding in
equity or at law) and the unenforceability under certain circumstances under
law or court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy. This Agreement
conforms in all material respects to the description thereof contained in
the Final Memorandum.
(h) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of
the Company or any of its subsidiaries is subject that are not described in
the Final Memorandum, and no such proceedings have been threatened against
the Company or any of its subsidiaries or with respect to any of their
respective properties, except in each case for such proceedings that, if the
subject of an unfavorable decision, ruling or finding, would not,
individually or in the aggregate, result in a material adverse effect on the
condition (financial or otherwise), business prospects, net worth or results
of operations of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect"), or have a Material Adverse Effect on the ability
of the Company or any Subsidiary Guarantor to perform its obligations under
any
<PAGE> 5
5
of the Transaction Documents.
(i) The issuance, offering and sale of the Securities to the Initial
Purchaser by the Company and the Subsidiary Guarantors pursuant to this
Agreement, the compliance by the Company and the Subsidiary Guarantors with
the other provisions of this Agreement and the authorization, execution and
delivery by the Company and the Subsidiary Guarantors of this Agreement and
the other Transaction Documents to which it is a party and the consummation
of the other transactions contemplated herein and therein do not (i) require
the consent, approval, authorization, registration or qualification of or
with any governmental authority, except such as have been obtained and such
as may be required under state securities or blue sky laws or, with respect
to the obligations under the Registration Agreement, except such as may be
required under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), or as may be required to register the Securities under the
Securities Act or (ii) conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default under, (A) any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties are
bound, or (B) the charter documents or bylaws of the Company or any of its
subsidiaries or (C) any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to the Company or any of its subsidiaries, except in each case
for such conflicts, breaches or violations that would not, individually or
in the aggregate, result in a Material Adverse Effect.
(j) The Company and each of its subsidiaries have good and marketable
title to all items of real property and good title to all material personal
property owned by each of them, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other defects, except
such as do not materially and adversely affect the value of such property
and do not interfere with the use made or proposed to be made of such
property by the Company or its subsidiaries, and the Company and its
subsidiaries have valid, subsisting and enforceable leases for the
properties described in the Final Memorandum as leased by them, with
exceptions in each case as are not material and do not interfere with the
business of the Company and its subsidiaries, taken as a whole, in each case
except as described in or contemplated by the Final Memorandum.
<PAGE> 6
6
(k) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company or any of its
Subsidiary Guarantors, is threatened or imminent that would result in a
Material Adverse Effect, except as described in or contemplated by the Final
Memorandum.
(l) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a cost
that would not result in a Material Adverse Effect, except as described in
or contemplated by the Final Memorandum.
(m) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company,
except as described in the Final Memorandum.
(n) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities required to conduct their respective
businesses except for those the failure to possess which, individually or in
the aggregate, would not have a Material Adverse Effect, and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect, except as described in or contemplated by the Final
Memorandum.
(o) The Company and its subsidiaries have filed all foreign, federal,
state and local tax returns that are required to be filed through the date
hereof or have requested extensions thereof and have paid all taxes (other
than immaterial amounts of franchise taxes with respect to immaterial
subsidiaries and immaterial amounts of severance taxes) required to be paid
by them and any other assessment, fine or penalty levied against them, to
<PAGE> 7
7
the extent that any of the foregoing is due and payable, except where the
failure to pay such assessment, fine or penalty levied against them would
not singly or in the aggregate have a Material Adverse Effect and except for
any such assessment, fine or penalty that is currently being contested in
good faith or as described in or contemplated by the Final Memorandum.
(p) Neither the Company nor any of its subsidiaries is in violation of
any federal or state law or regulation relating to occupational safety and
health or to the storage, handling or transportation of hazardous or toxic
materials, and the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and
state occupational safety and health and environmental laws and regulations
to conduct their respective businesses, and the Company and its subsidiaries
are in compliance with all terms and conditions of any such permit, license
or approval, except any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals which
would not, singly or in the aggregate, result in a Material Adverse Effect,
except as described in or contemplated by the Final Memorandum.
(q) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(r) No default exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default in the due performance and
observance of any terms, covenant or condition of any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties is bound or may be
affected in any material adverse respect with regard to property, business
or
<PAGE> 8
8
operations of the Company and its subsidiaries, taken as a whole, except for
such defaults that would not result in a Material Adverse Effect.
(s) The Indenture has been duly and validly authorized and the
Registration Agreement, the Securities and the Subsidiary Guarantees have
been duly and validly authorized and, in the case of the Registration
Agreement, when duly executed and delivered by the parties thereto and, in
the case of the Securities, when duly issued, authenticated and delivered in
accordance with the terms of the Indenture, endorsed by each Subsidiary
Guarantor and paid for in accordance with the terms of this Agreement, (A)
the Securities will be validly issued and outstanding and will constitute
valid and binding obligations of the Company enforceable against the Company
in accordance with their terms and entitled to the benefits of the Indenture
and the Registration Agreement and (B) the Subsidiary Guarantees will
constitute valid and binding obligations of the Subsidiary Guarantors
enforceable against the Subsidiary Guarantors in accordance with their
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization or other similar laws or court
decisions relating to or affecting the rights of creditors generally or of
general principles of equity (whether considered in a proceeding in equity
or at law). The Securities, the Subsidiary Guarantees, the Indenture and the
Registration Agreement conform in all material respects to the description
thereof contained in the Final Memorandum.
(t) Except as may otherwise be disclosed in the Final Memorandum, the
Company and its subsidiaries conduct their business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which they
are conducting business, except where the failure to be so in compliance
would not have a Material Adverse Effect.
(u) The Final Memorandum, at the date hereof, does not, and at the
Closing Date (as defined below) will not (and any amendment or supplement
thereto, at the date thereof and at the Closing Date, will not), contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that no
representation or warranty is made by the Company and its subsidiaries with
respect to the information contained in or omitted from the Final
Memorandum, or any amendment or supplement thereto, in reliance upon and in
conformity
<PAGE> 9
9
with information furnished in writing to the Company or the Subsidiary
Guarantors by or on behalf of the Initial Purchaser specifically for
inclusion therein.
(v) Neither the Company, the Subsidiary Guarantors nor any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act ("Regulation D")), nor any person acting on its or their
behalf (provided that no representation is made as to the Initial Purchaser
or any person acting on its behalf), has, directly or indirectly, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect
of any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Securities and requires registration of the
Securities under the Securities Act or (ii) engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offering of the Securities.
(w) Assuming the Securities are issued, sold and delivered as
contemplated by the Final Memorandum and this Agreement; that each of the
representations, warranties and covenants of the Initial Purchaser contained
in this Agreement are true, correct and complete; and that the Initial
Purchaser complies with the covenants in this Agreement, it is not necessary
in connection with the offer and sale and delivery of the Securities in the
manner contemplated by this Agreement and the Final Memorandum to register
the Securities or the Subsidiary Guarantees under the Securities Act or to
qualify the Indenture under the Trust Indenture Act.
(x) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(y) None of the Company, the Subsidiary Guarantors nor any of their
respective Affiliates, nor any person acting on its or their behalf
(provided that no representation is made as to the Initial Purchaser or any
person acting on its behalf), has engaged in any directed selling efforts
with respect to the Securities, and each of them has complied with the
offering restrictions requirement of Regulation S ("Regulation S") under the
Securities Act. Terms used in this paragraph have the meanings given to them
by Regulation S.
(z) The Company has been advised by the National Association of
Securities Dealers, Inc. PORTAL Market that the Securities have been
designated PORTAL eligible securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc.
<PAGE> 10
10
(aa) Neither the Company nor any Subsidiary Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), without taking account of any
exemption arising out of the number of holders of the Company's or the
Subsidiary Guarantors' securities.
(bb) Neither the Company nor any Subsidiary Guarantor has paid or
agreed to pay to any person any compensation for soliciting another to
purchase any securities of the Company or the Subsidiary Guarantors (except
as contemplated by this Agreement).
(cc) The information provided by the Company pursuant to Section 5(h)
hereof will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(dd) To the knowledge of the Company and each of the Subsidiary
Guarantors, except as described in the Final Memorandum and except as would
not reasonably be expected to result in a Material Adverse Effect, (A)
neither the Company nor any of its subsidiaries is in violation of, or has
received any notice that it is subject to liability under, any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code or
rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, decree, judgment or
injunction relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, indoor air, surface
water, groundwater, land surface or subsurface strata and natural
resources), including, without limitation, those relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances or constituents, petroleum or petroleum
products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, "Environmental Laws"), (B)
the Company and its subsidiaries have all permits, licenses, authorizations
and approvals required under any applicable Environmental Laws, all of which
are in full force and effect, and are each in compliance with any applicable
Environmental Laws, (C) neither the Company nor any subsidiary has received
notice that there are any pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices
of noncompliance, violation or potential
<PAGE> 11
11
responsibility or liability, investigation or proceedings pursuant to any
Environmental Laws against the Company or of its subsidiaries, or any of
their respective predecessors-in-interest for which the Company or any of
its subsidiaries is liable and (D) neither the Company nor any subsidiary
has received notice that there are any past or present events, conditions or
circumstances which have been alleged to form the basis of an order to
conduct responsive or corrective action, or an action, suit or proceeding by
any private party or governmental agency, against or affecting, or requiring
capital or operating expenditures by, the Company or any of the subsidiaries
pursuant to any Environmental Laws.
2. Purchase and Sale. Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company agrees to
sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase
from the Company, at a purchase price of 104.59% of the principal amount
thereof, $35,000,000 aggregate principal amount of Securities.
3. Delivery and Payment. Delivery of and payment for the Securities shall be
made at 10:00 AM, New York City time, on April 1, 1998, or such later date
as the Initial Purchaser shall designate, which date and time may be
postponed by agreement between the Initial Purchaser and the Company (such
date and time of delivery and payment for the Securities being herein called
the "Closing Date"). Delivery of the Securities shall be made to the Initial
Purchaser against payment by the Initial Purchaser of the purchase price
thereof to or upon the order of the Company by wire transfer in federal
(same-day) funds or such other manner of payment as may be agreed by the
Company and the Initial Purchaser. Delivery of the Securities shall be made
at such location as the Initial Purchaser shall reasonably designate at
least one business day in advance of the Closing Date and payment for the
Securities shall be made at the office of Cahill Gordon & Reindel ("Counsel
for the Initial Purchaser"), 80 Pine Street, New York, New York or such
other place as the parties may otherwise agree. Certificates for the
Securities shall be registered in such names and in such denominations as
the Initial Purchaser may request not less than three full business days in
advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Initial Purchaser in New York, New York, not
later than 1:00 PM, New York City time, on the business day prior to the
Closing Date.
<PAGE> 12
12
4. Offering of Securities. The Initial Purchaser represents and warrants to and
agrees with the Company that:
(a) It has not offered or sold, and will not offer or sell, any
Securities except (i) to those it reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act) and
that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such Securities is aware
that such sale is being made in reliance on Rule 144A, or (ii) in accordance
with the restrictions set forth in Exhibit A hereto.
(b) Neither it nor any person acting on its behalf has made or will
make offers or sales of the Securities in the United States by means of any
form of general solicitation or general advertising within the meaning of
Regulation D in the United States.
5. Agreements. The Company and each of the Subsidiary Guarantors agree with the
Initial Purchaser that:
(a) The Company will furnish to the Initial Purchaser and to Counsel
for the Initial Purchaser, without charge, during the period referred to in
paragraph (c) below, as many copies of the Final Memorandum (including any
documents incorporated by reference therein) and any amendments and
supplements thereto as it may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to the
offering.
(b) The Company will not amend or supplement the Final Memorandum
without the prior written consent of the Initial Purchaser.
(c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchaser, any event occurs as a result of which
the Final Memorandum, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it should be necessary to
amend or supplement the Final Memorandum to comply with applicable law, the
Company will promptly notify the Initial Purchaser of the same and, subject
to the requirements of paragraph (b) of this Section 5, will prepare and
provide to the Initial Purchaser pursuant to paragraph (a) of this Section 5
an amendment or supplement which will correct such statement or omission or
effect such compliance.
<PAGE> 13
13
(d) The Company will arrange for the qualification of the Securities
for sale by the Initial Purchaser under the laws of such jurisdictions as
the Initial Purchaser may designate and will maintain such qualifications in
effect so long as required for the sale of the Securities. Each of the
Company and the Subsidiary Guarantors will promptly advise the Initial
Purchaser of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(e) The Company and the Subsidiary Guarantors will not, and will not
permit any of their respective Affiliates to, resell any Securities which
constitute "restricted securities" under Rule 144 that have been acquired by
any of them.
(f) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will, directly or indirectly, make offers or
sales of any security, or solicit offers to buy any security, under
circumstances the offering of which security will be integrated with the
sale of the Securities in a manner that would require the registration of
the Securities under the Securities Act.
(g) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities in the United States.
(h) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Company
will, during any period in which it is not subject to and in compliance with
Section 13 or 15(d) of the Exchange Act, provide to each holder of such
restricted securities and to each prospective purchaser (as designated by
such holder) of such restricted securities, upon the request of such holder
or prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. This covenant is intended to be for the
benefit of the holders, and the prospective purchasers designated by such
holders, from time to time of such restricted securities.
(i) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any directed selling efforts
with respect to the
<PAGE> 14
14
Securities, and each of them will comply with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the meanings
given to them by Regulation S.
(j) The Company will cooperate with the Initial Purchaser and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
(k) The Company will not, until 90 days following the Closing Date,
without the prior written consent of the Initial Purchaser, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any debt securities issued or guaranteed by the
Company or any of its subsidiaries (other than the Securities); provided,
however, that the foregoing will not apply to borrowings from banks under
bank credit facilities or to the issuance of debt securities to the seller
of assets or businesses acquired by the Company or subsidiaries as part of
the purchase price therefor provided that each seller agrees not to resell
such debt securities for a period of 90 days following the Closing Date.
(l) The Company will apply the net proceeds from the sale of the
Securities sold by it substantially in accordance with its statements under
the caption "Use of Proceeds" in the Final Memorandum.
(m) The Company shall include information substantially in the form
set forth in Exhibit A in the Final Memorandum.
6. Conditions to the Obligations of the Initial Purchaser. The obligations of
the Initial Purchaser to purchase the Securities shall be subject to the
accuracy, in all material respects, of the representations and warranties on
the part of the Company and the Subsidiary Guarantors contained herein at
the date and time that this Agreement is executed and delivered by the
parties hereto (the "Execution Time"), and the Closing Date, to the accuracy
of the statements of the Company and the Subsidiary Guarantors made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and the Subsidiary Guarantors of their obligations hereunder and to
the following additional conditions:
(a) The Company shall have furnished to the Initial Purchaser the
opinion of Dykema Gossett PLLC, counsel for the Company and the Subsidiary
Guarantors, dated the Closing Date, to the effect that
<PAGE> 15
15
(i) each of the Company and the Subsidiary Guarantors and
each other subsidiary of the Company has been duly incorporated or
organized and is validly existing as a corporation or limited liability
company in good standing under the laws of the jurisdiction in which it
is chartered or organized, with full corporate power and authority to
own its properties and conduct its business as described in the Final
Memorandum, and is duly qualified to do business as a foreign
corporation or limited liability company and is in good standing under
the laws of each jurisdiction listed on Schedule I hereto;
(ii) the Indenture has been duly authorized, executed and
delivered, and constitutes a legal, valid and binding instrument
enforceable against the Company and the Subsidiary Guarantors in
accordance with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally from time to time in
effect) except that such counsel shall express no opinion concerning
the enforceability of waivers or defenses therein; the Securities and
the Subsidiary Guarantees are in the form contemplated by the Indenture
and have been duly and validly authorized and, when the Securities are
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchaser
pursuant to this Agreement, will constitute legal, valid and binding
obligations of the Company and the Subsidiary Guarantors entitled to
the benefits of the Indenture, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization or other
similar laws or court decisions relating to or affecting the rights of
creditors generally or of general principles of equity (whether
considered in a proceeding in equity or at law);
(iii) insofar as the Final Memorandum contains a discussion of
specific legal proceedings or regulatory matters, including the
information contained in the Final Memorandum under the headings
"Business - Legal Proceedings," "Business Regulatory Matters" and
"Description of Certain Indebtedness," to such counsel's knowledge such
discussion fairly summarizes the matters therein described;
(iv) this Agreement has been duly authorized,
<PAGE> 16
16
executed and delivered by the Company and the Subsidiary Guarantors;
(v) to such counsel's knowledge, no consent, approval,
authorization or order of any court or governmental agency or body is
required for the consummation of the transactions contemplated herein,
except such as may be required under the blue sky or securities laws of
any jurisdiction in connection with the purchase and sale of the
Securities by the Initial Purchaser;
(vi) none of the issue and sale of the Securities, the
execution and delivery of the Indenture, the issuance of the Subsidiary
Guarantees, the consummation of any other of the transactions herein or
therein contemplated nor the fulfillment of the terms hereof or thereof
will conflict with, result in a breach or violation of, or constitute a
default under any Law applicable to the Company or the charter or
by-laws of the Company or the Subsidiary Guarantors or the terms of any
indenture or other agreement or instrument known to such counsel and to
which the Company or any of its subsidiaries is a party or bound or any
judgment, order or decree known to such counsel to be applicable to the
Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its subsidiaries except to the
extent any such breach, violation or default will not have a Material
Adverse Effect;
(vii) assuming the accuracy of the representations and
warranties and compliance with the agreements contained herein, no
registration of the Securities or the Subsidiary Guarantees under the
Securities Act is required, and no qualification of the Indenture or
the Subsidiary Guarantees under the Trust Indenture Act is necessary,
for the offer and sale by the Initial Purchaser of the Securities in
the manner contemplated by this Agreement;
(viii) neither the Company nor any of the Subsidiary Guarantors
is an "investment company" within the meaning of the Investment Company
Act without taking account of any exemption arising out of the number
of holders of the Company's or the Subsidiary Guarantors' securities;
and
(ix) to the best of such counsel's knowledge,
<PAGE> 17
17
there are no legal or governmental actions, suits or proceedings
pending or threatened to which the Company or any of its subsidiaries
is or is threatened to be made a party or of which property owned or
leased by the Company or any of its subsidiaries is or is threatened to
be made the subject, which actions, suits or proceedings could,
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by the Transaction Documents or the
Securities or result in a Material Adverse Effect in the condition
(financial or otherwise) of the Company; and except as may otherwise be
described in the Final Memorandum, neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative
agency or other governmental body which could have a Material Adverse
Effect on the condition (financial or otherwise) of the Company.
Such counsel shall also state that although such counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained or incorporated by
reference in the Final Memorandum, such counsel has participated in the
preparation of the Final Memorandum, including review and discussion of the
contents thereof, and nothing has come to the attention of such counsel that
has caused them to believe that at the Execution Time the Final Memorandum,
including the documents incorporated by reference therein, contained an
untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading or
that any amendment or supplement to the Final Memorandum, as of its
respective date, and as of the Closing Date contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial and statistical data included or incorporated by reference in the
Final Memorandum).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any
<PAGE> 18
18
jurisdiction other than the State of New York, the State of Michigan or the
United States, to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they reasonably
believe to be reliable and who are satisfactory to counsel for the Initial
Purchaser and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
All references in this Section 6(a) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
(b) The Initial Purchaser shall have received from Counsel for the
Initial Purchaser such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Securities, the Final Memorandum (as
amended or supplemented at the Closing Date) and other related matters as
the Initial Purchaser may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(c) The Company shall have furnished to the Initial Purchaser a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Final Memorandum, any amendment or supplement to
the Final Memorandum and this Agreement and that:
(i) the representations and warranties of the Company and
the Subsidiary Guarantors in this Agreement are true and correct in all
material respects on and as of the Closing Date with the same effect as
if made on the Closing Date, and the Company and the Subsidiary
Guarantors have complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date; and
(ii) since the date of the most recent financial statements
included in the Final Memorandum, there has been no material adverse
change in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not arising
from transactions in the ordinary course of business, except at set
forth in or contemplated by the Final Memorandum (exclusive of any
amendment or supplement
<PAGE> 19
19
thereto).
(d) At the Execution Time and at the Closing Date, Price Waterhouse
LLP shall have furnished to the Initial Purchaser a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Initial Purchaser.
(e) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum, there shall not have
been (i) any change or decrease specified in the letter or letters referred
to in paragraph (d) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the business or properties
of the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the reasonable judgment of
the Initial Purchaser, so material and adverse as to make it impractical or
inadvisable to market the Securities as contemplated by the Final
Memorandum.
(f) The Company shall have furnished to the Initial Purchaser the
opinion of Fasken Campbell Godfrey, special Canadian counsel for the Company
and the Subsidiary Guarantors, dated the Closing Date, substantially in the
form of Exhibit B hereto.
(g) On or prior to the Closing Date, the Company and the Subsidiary
Guarantors shall have furnished to the Initial Purchaser such further
information, certificates and documents as the Initial Purchaser may
reasonably request.
(h) On or prior to the Closing Date, the Registration Agreement shall
have been executed substantially in the form hereto delivered to you and
shall have been delivered to you and the Trustee.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Initial Purchaser and Counsel for the Initial Purchaser,
this Agreement and all obligations of the Initial Purchaser hereunder may be
canceled at, or at any time prior to, the Closing Date by the Initial Purchaser.
Notice of such cancellation shall be given to the Company in writing or by
telephone or telegraph confirmed in writing.
<PAGE> 20
20
The documents required to be delivered by this Section<0- 95>6 will be
delivered at the office of Counsel for the Initial Purchaser, at 80 Pine Street,
New York, New York, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided for herein
is not consummated because any condition to the obligations of the Initial
Purchaser set forth in Section 6 hereof is not satisfied, because of any
termination pursuant to Section 9 hereof or because of any refusal,
inability or failure on the part of the Company or the Subsidiary Guarantors
to perform any agreement herein or comply with any provision hereof other
than by reason of a default by the Initial Purchaser in payment for the
Securities on the Closing Date, the Company and the Subsidiary Guarantors
will, jointly and severally, reimburse the Initial Purchaser severally upon
demand for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of Cahill Gordon & Reindel) that shall have been incurred
by them in connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company and the Subsidiary
Guarantors, jointly and severally, agree to indemnify and hold harmless the
Initial Purchaser, the directors, officers, employees and agents of the
Initial Purchaser and each person who controls the Initial Purchaser within
the meaning of either the Securities Act or the Exchange Act against any and
all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Securities Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Final Memorandum or any information provided by the Company to any holder or
prospective purchaser of the Securities pursuant to Section 5(h) hereof, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that neither the Company nor the
Subsidiary Guarantors will be liable in any such case to the extent
<PAGE> 21
21
that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the Final Memorandum, or in any amendment thereof
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial
Purchaser specifically for inclusion therein.
(b) he Initial Purchaser agrees to indemnify and hold harmless each of
the Company and the Subsidiary Guarantors, their respective directors,
officers and each person who controls the Company or a Subsidiary Guarantor
within the meaning of either the Securities Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company and the Subsidiary
Guarantors to the Initial Purchaser, but only with reference to written
information relating to the Initial Purchaser furnished to the Company by or
on behalf of the Initial Purchaser specifically for inclusion in the Final
Memorandum (or in any amendment or supplement thereto). This indemnity
agreement will be in addition to any liability which the Initial Purchaser
may otherwise have. The Company and the Subsidiary Guarantors acknowledge
that the statements set forth in the last paragraph of the cover page and
under the heading "Plan of Distribution" in the Final Memorandum constitute
the only information furnished in writing by or on behalf of the Initial
Purchaser for inclusion in the Final Memorandum (or in any amendment or
supplement thereto).
(c) romptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the
<PAGE> 22
22
indemnified party or parties except as set forth below); provided, however,
that such counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or targets
of, any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded on the
advice of counsel that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall authorize
the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit
or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Subsidiary Guarantors
on the one hand and the Initial Purchaser on the other hand agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively, "Losses") to which the
Company and the Subsidiary Guarantors or the Initial Purchaser, as
applicable, may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Subsidiary Guarantors
on the one hand or the Initial Purchaser on the other hand from the offering
of the Securities;
<PAGE> 23
23
provided, however, that in no case shall the Initial Purchaser be
responsible for any amount in excess of the purchase discount or commission
applicable to the Securities purchased by the Initial Purchaser hereunder.
If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Subsidiary Guarantors on one
hand and the Initial Purchaser on the other hand shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Subsidiary Guarantors or the
Initial Purchaser, as applicable, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company and the
Subsidiary Guarantors shall be deemed to be equal to the proceeds from the
offering net of purchase discounts and commissions (before deducting
expenses), and benefits received by the Initial Purchaser shall be deemed to
be equal to the total purchase discounts and commissions received by the
Initial Purchaser from the Company in connection with the purchase of the
Securities hereunder. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information
provided by the Company, the Subsidiary Guarantors or the Initial Purchaser.
The Company, the Subsidiary Guarantors and the Initial Purchaser agree that
it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding
the provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each
person who controls the Initial Purchaser within the meaning of either the
Securities Act or the Exchange Act and each director, officer, employee and
agent of the Initial Purchaser shall have the same rights to contribution as
the Initial Purchaser, and each person who controls the Company or the
Subsidiary Guarantors within the meaning of either the Securities Act or the
Exchange Act and each officer and director of the Company or the Subsidiary
Guarantors shall have the same rights to contribution as the Company and the
Subsidiary Guarantors, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Initial
<PAGE> 24
24
Purchaser, by notice given to the Company prior to delivery of and payment
for the Securities, if prior to such time (i) any of the Company's
securities shall have been suspended by the Commission or trading in
securities generally on the New York Stock Exchange or the NASDAQ National
Market shall have been suspended or limited or minimum prices shall have
been established on either of such exchanges, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Initial Purchaser, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Memorandum.
10. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the
Company, the Subsidiary Guarantors or their respective officers and of the
Initial Purchaser set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or
on behalf of the Initial Purchaser or the Company, the Subsidiary Guarantors
or any of their respective officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment
for the Securities. The provisions of Sections 7 and 8 hereof shall survive
the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and effective only
on receipt, and, if sent to the Initial Purchaser, will be mailed, delivered
or telegraphed and confirmed to them, care of Salomon Brothers Inc, at Seven
World Trade Center, New York, New York 10048; or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at Oxford
Automotive, Inc., 1250 Stephenson Highway, Troy, Michigan 48083.
12. Successors. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8 hereof, and,
except as expressly set forth in Section 5(h) hereof, no other person will
have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New
<PAGE> 25
25
York without regard to principles of conflicts of law thereof.
14. Business Day. For purposes of this Agreement, "business day" means each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in the City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
15. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original, but all such counterparts
will together constitute one and the same instrument.
<PAGE> 26
26
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement among the
Company, the Subsidiary Guarantors and the Initial Purchaser.
Very truly yours,
OXFORD AUTOMOTIVE, INC.
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Senior Vice President and Chief
Financial Officer
BMG NORTH AMERICA LIMITED
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
LOBDELL EMERY CORPORATION
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
WINCHESTER FABRICATION CORPORATION
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
CREATIVE FABRICATION CORPORATION
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
<PAGE> 27
27
BMG HOLDINGS INC.
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
LASERWELD INTERNATIONAL, L.L.C.
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
PARALLEL GROUP INTERNATIONAL, INC.
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
CONCEPT MANAGEMENT CORPORATION
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
LEWIS EMERY CAPITAL CORPORATION
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
RPI HOLDINGS, INC.
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
<PAGE> 28
28
HOWELL INDUSTRIES, INC.
By: /s/ Donald C. Campion
-------------------------------------
Name: Donald C. Campion
Title: Vice President, Chief Financial
Officer and Treasurer
<PAGE> 29
29
The foregoing Agreement is hereby confirmed and accepted as of the date
first above written.
Salomon Brothers Inc
By /s/ Thomas J. Spoto
-------------------------------
Name: Thomas J. Spoto
Title: Associate
<PAGE> 30
30
SCHEDULE I
1. Lobdell Emery Corporation, a Michigan corporation, is authorized to transact
business in the State of Indiana.
2. Howell Industries, Inc., a Michigan corporation, is authorized to transact
business in the State of Ohio.
<PAGE> 31
EXHIBIT A
Selling Restrictions for Offers and
Sales Outside the United States
(1) (a) The Securities have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. The Initial Purchaser represents and agrees
that, except as otherwise permitted by Section 4(a)(i) or (ii) of the Agreement
to which this is an exhibit, it has offered and sold the Securities, and will
offer and sell the Securities, (i) as part of their distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the offering
and the Closing Date, only in accordance with Rule 903 of Regulation S under the
Securities Act. Accordingly, the Initial Purchaser represents and agrees that
neither it nor any of its affiliates nor any person acting on its or their
behalf has engaged or will engage in any directed selling efforts with respect
to the Securities, and that it and they have complied and will comply with the
offering restrictions requirement of Regulation S. The Initial Purchaser agrees
that, at or prior to the confirmation of sale of Securities (other than a sale
of Securities pursuant to Section 4(a)(i) or (ii) of the Agreement to which this
is an exhibit), it shall have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering and
[specify closing date of the offering], except in either case in accordance
with Regulation S or Rule 144A under the Securities Act. Terms used above
have the meanings given to them by Regulation S."
(b) The Initial Purchaser also represents and agrees that it has not
entered and will not enter into any contractual arrangement with any distributor
with respect to the distribution of the Securities, except with its affiliates
A-1
<PAGE> 32
or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them by
Regulation S.
(2) The Initial Purchaser represents and agrees that (i) it has not offered
or sold and will not offer or sell, in the United Kingdom, by means of any
document, any Securities other than to persons whose ordinary business it is to
buy or sell shares or debentures, whether as principal or as agent (except in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act 1985 of Great Britain), (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 of the
United Kingdom with respect to anything done by it in relation to the Securities
in, from or otherwise involving the United Kingdom, and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Securities to a person who is
of a kind described in Article 9(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1988 or is a person to whom the
document may otherwise lawfully be issued or passed on.
A-2
<PAGE> 33
Annex 1
[SALOMON BROTHERS INC LETTERHEAD]
___________, 1998
Price Waterhouse LLP
2301 West Big Beaver
Troy, Michigan 48084
Ladies and Gentlemen:
Reference is hereby made to the Purchase Agreement (the "Purchase
Agreement") dated February [_____], 1998 among the undersigned (the "Initial
Purchasers") and Oxford Automotive, Inc. (the "Company") and the Subsidiary
Guarantors listed therein pursuant to which the Company will sell to the Initial
Purchaser, and the Initial Purchaser will purchase from the Company, $35,000,000
principal amount of the Company's [_____]% Senior Subordinated Notes Due 2007
(the "Securities").
Pursuant to Section 6(d) of the Purchase Agreement, you are required to
deliver certain letters, in form and substance satisfactory to us, setting forth
the matters described in such Section (the "Auditor's Letters"). In connection
with your delivery of the Auditor's Letters, we confirm to you that:
(i) we are knowledgeable with respect to the due diligence review
process that would be performed if this placement of Securities were being
registered pursuant to the Securities Act of 1933, as amended (the "Act");
and
(ii) we will be reviewing certain information relating to the Company
and the Subsidiary Guarantors that will be included or incorporated by
reference in the Final Memorandum (as defined in the Purchase Agreement) and
this review process, applied to the information relating to the Company and
the Subsidiary Guarantors, will be substantially consistent with the due
diligence review process that we would perform if this placement of
Securities were being registered pursuant to the Act.
In accordance with the foregoing, we hereby request that you deliver to us
the Auditor's Letters.
<PAGE> 34
-2-
This letter is being furnished to you solely for the purpose of obtaining the
Auditor's Letters and may not be relied upon or used by you for any other
purpose, or given or shown to any other person, without our prior written
consent.
Very truly yours,
SALOMON BROTHERS INC
By:
--------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 12
COMPUTATION OF RATIOS
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
10/28/95- 4/1/95-
3/31/98 3/31/97 3/31/96 10/27/95 3/31/95 3/31/94
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes $ 9,665 $2,614 $ 617 ($2,822) ($1,615) $2,133
ADD:
Portion of rents
representative of interest factor 1,736 440 54 73 143 105
Interest on indebtedness 10,710 3,388 1,096 1,048 1,267 1,658
------- ------ ------ ------- ------- ------
$22,111 $6,442 $1,767 ($1,701) ($205) $3,896
======= ====== ====== ======= ======= ======
FIXED CHARGES
Portion of rents
representative of interest factor 1,736 440 54 73 143 105
Interest on indebtedness 10,710 3,388 1,096 1,048 1,267 1,658
------- ------ ----- ------- ------- ------
$12,446 $3,828 $1,150 $ 1,121 $ 1,410 $1,763
======= ====== ====== ======= ======= ======
Ratio of Earnings to Fixed Charges $ 1.8 1.7 1.5 -- -- 2.2
======= ====== ====== ======= ======= ======
Deficiency of Earnings over
fixed charges -- -- -- ($2,822) ($1,615) --
======= =======
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Jurisdiction of Percent Assumed
Name of Subsidiary Incorporation Owned Names
------------------ ------------- ------- -------
<S> <C> <C> <C>
Lobdell Emery Corporation ("Lobdell) Michigan 100% The Lobdell-Emery
Manufacturing Company
Laserweld International, L.L.C. Indiana 100%-Lobdell
Concept Management Corporation ("CMC") Michigan 100%-Lobdell
Creative Fabrication Corporation Tennessee 100%-CMC Oxford Automotive
BMG Holdings, Inc. ("BMGH") Ontario, Canada 100%
BMG North America Limited ("BMG") Ontario, Canada 100%-BMGH
829500 Ontario Limited Ontario, Canada 100%-BMG
976459 Ontario Limited Ontario, Canada 100%-BMG
Howell Industries, Inc. Michigan 100%
Oxford Suspension Ltd. Ontario, Canada 100%
Oxford Suspension, Inc. ("OSI") Michigan 100%
Metalurgica Carabobo S.A. Venezuela 49%-OSI
RPI Holdings, Inc. ("RPIH") Michigan 100%
RPI, Inc. Michigan 100%-RPIH
Prudenville Manufacturing, Inc. Michigan 100%-RPIH
Oxford Automotriz de Mexico S.A. de C.V. ("OAM") Mexico, D.F. 100%
Oxford Automotriz Silao S.A. de C.V. Mexico, D.F. 100% - OAM
Oxford Automotriz Saltillo S.A. de C.V. Mexico, D.F. 100% - OAM
Oxford Automotriz Administrativos S.A. de C.V. Mexico, D.F. 100% - OAM
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDED MARCH 31,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 18,321
<SECURITIES> 0
<RECEIVABLES> 65,273
<ALLOWANCES> 400
<INVENTORY> 21,305
<CURRENT-ASSETS> 131,176
<PP&E> 163,708
<DEPRECIATION> 23,149
<TOTAL-ASSETS> 320,032
<CURRENT-LIABILITIES> 86,592
<BONDS> 124,827
40,192
0
<COMMON> 1,050
<OTHER-SE> 5,068
<TOTAL-LIABILITY-AND-EQUITY> 320,032
<SALES> 410,321
<TOTAL-REVENUES> 410,321
<CGS> 368,420
<TOTAL-COSTS> 368,420
<OTHER-EXPENSES> 21,847
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,710
<INCOME-PRETAX> 9,665
<INCOME-TAX> 4,074
<INCOME-CONTINUING> 5,591
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,591
<EPS-PRIMARY> 13.74
<EPS-DILUTED> 13.74
</TABLE>
