<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 1, 1998
OXFORD AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
Michigan 333-32975 38-3262809
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1250 Stephenson Highway
Troy, Michigan 48083
(Address of principal executive offices)
Registrant's telephone number, including area code: (248) 577-1400
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
AMENDMENT NO. 1
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
April 1, 1998 as set forth in the pages attached hereto:
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Filed with this Amendment are the following financial statements of the
Suspension Division:
(1) Audited Combined Balance Sheet as of December 31, 1997.
(2) Audited Combined Statement of Operations, and Statement of
Cash Flows for the year ended December 31, 1997.
(3) Unaudited Combined Balance Sheet as of March 31, 1998.
(4) Unaudited Combined Statements of Operations, and Statements of
Cash Flows for the three months ended March 31, 1998 and 1997.
(b) Pro Forma Financial Information.
Filed with this Amendment is the following pro forma financial
information:
(1) Unaudited Pro Forma Combined Balance Sheet as of December 31, 1997.
(2) Unaudited Pro Forma Combined Statement of Operations for the year
ended March 31, 1997 and for the nine months ended December 31,
1997.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
OXFORD AUTOMOTIVE, INC.
/S/ Donald C. Campion
------------------------------------
Donald C. Campion
Senior Vice President and
Chief Financial Officer
Dated: June 15, 1998
<PAGE> 4
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
INDEX TO COMBINED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
PAGES
Report of Independent Accountants.............................................1
Combined Balance Sheets as of March 31, 1998 (Unaudited)
and December 31, 1997........................................................2
Combined Statements of Operations - For the Three Months Ended
March 31, 1998 and 1997 (Unaudited) and for the Year Ended
December 31, 1997............................................................3
Combined Statements of Cash Flows - For the Three Months Ended
March 31, 1998 and 1997 (Unaudited) and for the Year Ended
December 31, 1997............................................................4
Notes to Combined Financial Statements.....................................5-16
F-1
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Directors of Oxford Automotive, Inc.
In our opinion, the accompanying combined balance sheet and the related combined
statements of operations and of cash flows present fairly, in all material
respects, the financial position of the Suspension Division (Suspension), a
Division of Eaton Corporation (Eaton), at December 31, 1997, and the results of
its operations and its cash flows for the year ended December 31, 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the management of Suspension; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit 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 audit provides a reasonable basis for the opinion expressed
above.
Our engagement as auditors of Suspension was subsequent to December 31, 1997.
Therefore, we were not present to observe physical inventories taken on or prior
to that date, the amounts of which entered into the determination of cost of
goods sold for the year ended December 31, 1997. However, we observed physical
inventories subsequent to December 31, 1997 and performed such other procedures
as we deemed appropriate.
Suspension, as disclosed in Note 2 to the accompanying financial statements, is
a division of Eaton and has extensive transactions and relationships with Eaton.
Because of these relationships, it is possible that the terms of these
transactions are not the same as those that would result from transactions among
wholly unrelated parties.
As discussed in Note 14, on April 1, 1998, Eaton sold certain net assets of
Suspension to Oxford Automotive, Inc. The accompanying financial statements do
not give effect to this purchase transaction.
Price Waterhouse LLP
Detroit, Michigan
June 11, 1998
F-2
<PAGE> 6
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash $ 2 $ 7
Accounts receivable 11,784 13,115
Inventories 11,704 9,574
Prepaid expenses 30 21
----------- ------------
Total current assets 23,520 22,717
Property, plant and equipment, net 26,869 26,808
Prepaid pension asset 5,078 4,770
Other assets 3,575 3,346
----------- ------------
TOTAL ASSETS $ 59,042 $ 57,641
=========== ============
LIABILITIES AND EATON INVESTMENT
Current liabilities
Accounts payable $ 6,002 $ 7,164
Employee compensation 2,869 2,381
Accrued expenses and other current liabilities 1,750 1,798
----------- ------------
Total current liabilities 10,621 11,343
Deferred income taxes 2,059 2,059
Postretirement benefits liability 2,554 2,360
Environmental commitments and contingencies (Note 12) 1,557 1,557
----------- ------------
Total liabilities 16,791 17,319
Eaton investment 42,251 40,322
----------- ------------
TOTAL LIABILITIES AND EATON INVESTMENT $ 59,042 $ 57,641
=========== ============
</TABLE>
See accompanying notes to combined financial statements.
F-3
<PAGE> 7
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1998 1997 1997
(UNAUDITED)
<S> <C> <C> <C>
Sales $ 30,261 $ 33,559 $ 125,776
Cost of goods sold 28,808 30,572 116,485
----------- ---------- -----------
Gross profit 1,453 2,987 9,291
Selling, general and administrative expense 1,740 1,799 7,214
----------- ---------- -----------
Operating income (loss) (287) 1,188 2,077
----------- ---------- -----------
Equity in income of Metalcar 226 39 741
Interest expense (291) (273) (1,015)
Other income (expense) (248) 100 280
----------- ---------- -----------
Income (loss) before provision (benefit)
for income taxes (600) 1,054 2,083
Provision (benefit) for income taxes (237) 416 827
----------- ---------- -----------
Net income (loss) $ (363) $ 638 $ 1,256
=========== ========== ===========
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE> 8
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1998 1997 1997
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (363) $ 638 $ 1,256
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities
Depreciation and amortization 957 1,024 4,317
Loss on disposal of fixed assets 8 49 451
Income of affiliate, net of dividend received (226) (59) (238)
Deferred income taxes 516
Changes in assets and liabilities
Accounts receivable 1,399 (2,228) 236
Inventories (2,067) 407 (1,158)
Prepaid expenses (9) (202) 1
Other noncurrent assets (308) (318) (1,243)
Accounts payable (1,198) (1,079) 1,907
Employee compensation 473 641 (287)
Accrued expenses and other current liabilities (93) 510 683
Postretirement benefits liability 194 (50) 355
Environmental commitments and contingencies 37 (23) (20)
--------- --------- ----------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (1,196) (690) 6,776
--------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (919) (152) (4,994)
--------- --------- ----------
NET CASH USED FOR INVESTING ACTIVITIES (919) (152) (4,994)
--------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Intercompany activity 2,292 644 (3,024)
--------- --------- ----------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 2,292 644 (3,024)
--------- --------- ----------
Effect of exchange rate changes on cash (182) 198 1,248
--------- --------- ----------
NET DECREASE IN CASH (5) - 6
--------- --------- ----------
Cash at beginning of the period 7 1 1
--------- --------- ----------
Cash at end of the period $ 2 $ 1 $ 7
========= ========= ==========
</TABLE>
See accompanying notes to combined financial statements.
F-5
<PAGE> 9
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
The Suspension Division (Suspension) of Eaton Corporation (Eaton) is a
leading tier one North American supplier of leaf spring suspension systems
for automotive applications. Suspension's products are primarily sold to
original equipment manufacturers (OEMs) of passenger cars, light trucks and
heavy trucks.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements present the historical financial position,
results of operations and cash flows of Suspension previously included in
the Eaton consolidated financial statements. Suspension's financial
information included herein is not necessarily indicative of the financial
position, results of operations and cash flows of Suspension in the future
or of the results which would have been reported if Suspension had operated
as an unaffiliated enterprise.
Transactions between Eaton and Suspension (and Eaton's other business units)
are herein referred to as "intercompany" or "related party" transactions.
If Suspension was operated as an independent, unaffiliated entity, it may
not be able to obtain raw material and other goods and services at
historical price levels obtained when purchasing as a part of Eaton's
worldwide purchasing process.
Suspension accounts for its investment in the Metalurgica Carabobo, S.A.
(Metalcar) joint venture under the equity method of accounting. Metalcar is
included in the combined financial statements on the basis of its September
30, 1997 fiscal year end.
CONCENTRATION OF CREDIT RISK
Suspension's customer base is primarily comprised of OEMs. Sales to
Suspension's three largest customers aggregated 93% of 1997 sales. Financial
instruments which potentially expose Suspension to a concentration of credit
risk consist primarily of accounts receivable. At December 31, 1997,
approximately 96% of trade accounts receivable were from the aforementioned
customers.
Although Suspension is directly affected by the economic well being of the
automotive industry, as well as its major customers, management does not
believe significant credit risk exists at December 31, 1997. Suspension does
not require collateral to reduce such credit risk and historically has not
experienced significant losses related to receivables.
FOREIGN CURRENCY TRANSLATION
The functional currency of the Canadian operations is the local currency.
Financial statements for these operations are translated into United States
dollars at year-end exchange rates as to assets and liabilities and
weighted-average exchange rates as to revenues and expenses. The resulting
translation adjustments are recorded as a component of Eaton investment.
F-6
<PAGE> 10
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are carried at lower of cost or market using the first-in,
first-out (FIFO) method.
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 repairs and maintenance are charged
to operations as incurred. For federal income tax purposes, depreciation is
computed using accelerated 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 40
Buildings and building improvements 10-40
Machinery and equipment 3-10
</TABLE>
VALUATION OF 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, Suspension periodically evaluates the carrying value of
long-lived assets to be held and used. The carrying value of a long-lived
asset is considered impaired when the anticipated undiscounted cash flow
from such asset is separately identifiable and is less than its carrying
value. In that event, a loss is recognized based on the amount by which the
carrying value exceeds the fair market value of the long-lived asset. Fair
market value is determined primarily using the anticipated cash flows
discounted at a rate commensurate with the risk involved or independent
appraisal.
REVENUE RECOGNITION
Sales and related cost of sales are recognized when products are shipped.
INCOME TAXES
Suspension's United States and Canadian locations are included in the
consolidated federal income tax returns of Eaton Corporation and Eaton Yale
Limited, respectively. In preparing its combined financial statements,
Suspension has determined its tax provision on a separate return basis.
Income taxes payable and refundable income taxes are recorded as a component
of Eaton investment. Deferred tax liabilities or assets reflect the impact
of temporary differences between amounts of assets and liabilities for
financial and tax reporting. Such amounts are subsequently adjusted, as
appropriate, to reflect changes in tax rates expected to be in effect when
the temporary differences reverse. A valuation allowance on deferred tax
assets is provided if it is considered more likely than not that such
deferred tax assets will not be realized.
ESTIMATES
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
in certain circumstances that affect amounts reported in the accompanying
combined financial statements and notes. Actual results could differ from
these estimates.
F-7
<PAGE> 11
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ENVIRONMENTAL
Suspension expenses environmental expenditures related to existing
conditions resulting from past or current operations and from which no
current or future benefit is discernible. Expenditures which extend the life
of the related property or mitigate or prevent future environmental
contamination are capitalized. Suspension records a liability for
remediation costs at the time when it is probable and can be reasonably
estimated. The estimated liability of Suspension is not discounted or
reduced for possible recoveries from insurance carriers.
3. ACCOUNTS RECEIVABLE
Accounts receivable comprises the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
<S> <C>
Trade $ 12,811
Other 304
--------
$ 13,115
========
</TABLE>
4. INVENTORIES
Inventories comprise the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
<S> <C> <C>
Raw materials $ 7,694 $ 5,633
Work-in-process 3,141 2,768
Finished goods 1,298 1,600
------- -------
12,133 10,001
Less - inventory reserve (429) (427)
------- -------
$11,704 $ 9,574
======= =======
</TABLE>
F-8
<PAGE> 12
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
<S> <C>
Land and land improvements $ 503
Buildings and building improvements 10,817
Machinery and equipment 47,238
Construction-in-progress 3,562
---------
62,120
Less - Accumulated depreciation (35,312)
---------
$ 26,808
</TABLE> =========
6. OTHER ASSETS
Other assets comprise the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
<S> <C>
Equity investment in Metalcar $ 3,284
Other 62
---------
$ 3,346
=========
</TABLE>
The table below contains the summarized financial information of Metalcar
for the year ended September 30, 1997:
<TABLE>
<S> <C>
Net sales $ 15,737
=========
Operating income $ 2,581
=========
Net income $ 1,509
=========
Current assets $ 6,174
Non-current assets 4,336
---------
Total assets $ 10,510
=========
Current liabilities $ 3,725
Non-current liabilities 81
Shareholders equity 6,704
---------
Total liabilities and equity $ 10,510
=========
</TABLE>
F-9
<PAGE> 13
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
6. OTHER ASSETS (CONTINUED)
Suspension has a 49% joint venture interest in Metalcar, a Venezuelan
manufacturer of conventional leaf springs and coil springs for both light
and heavy trucks.
7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities comprise the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
<S> <C>
Utilities $ 561
Warranty 458
Other 779
-------
$ 1,798
</TABLE> =======
8. EMPLOYEE BENEFIT PLANS
PENSIONS
Substantially all salaried employees of Suspension participate in
defined benefit pension plans covering all Eaton salaried employees. Plan
benefits are generally based on years of service and the employee's
compensation. Solely for the purpose of these financial statements,
Suspension salaried employees are considered to have participated in
multi-employer pension plans. Suspension recorded net periodic pension
benefits of $30 for the year ended December 31, 1997, related to its
participation in the Eaton defined benefit pension plans.
In addition, Suspension sponsors two noncontributory defined benefit
pension plans covering substantially all hourly employees at Suspension's
two Canadian manufacturing facilities. These plans are subject to collective
bargaining agreements and provide pension benefits that are based on a fixed
rate applied to the hourly employees' years of credited service up to a
maximum of 30 years. The hourly plans do not provide for increases in future
compensation levels. Suspension's funding policy for these plans is to make
contributions in amounts sufficient to fund the plan's current service cost
and any going concern unfunded actuarial liabilities and/or solvency
deficiencies.
F-10
<PAGE> 14
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
8. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table sets forth the Canadian hourly plans' funded status and
amounts recognized on Suspension's combined balance sheet at December 31,
1997:
<TABLE>
<S> <C>
Actuarial present value of benefit obligation
Vested benefits $ 19,236
Nonvested benefits 724
--------
Projected benefit obligation 19,960
Plan assets at fair value (primarily U.S. government securities,
bonds, notes and mutual funds) 22,821
--------
Plan assets greater than projected benefit obligation 2,861
Unrecognized net gains (543)
Unrecognized prior service cost 2,902
Unrecognized net asset being recognized over 15-20 years (450)
--------
Prepaid pension cost $ 4,770
========
</TABLE>
Net periodic pension cost for 1997 and the actuarial assumptions used in
determining the projected benefit obligation are as follows:
<TABLE>
<S> <C>
Service cost $ 636
Interest cost 1,367
Actual return on assets (3,589)
Net amortization and deferral 2,074
--------
Net periodic pension cost $ 488
========
Discount rate 7.25%
Expected return on assets 9.25%
</TABLE>
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
U.S. retiree medical programs cover employees who retire with eligibility
for hospital, professional and other medical services. Most of the programs
require deductibles and copayments and virtually all are integrated with
Medicare. Retiree contributions are generally required based on length of
service, location, coverage type, plan and Medicare eligibility. For U.S.
salaried employees, Eaton also sponsors retiree life insurance programs
which generally provide a benefit as a percent of pay.
Solely for the purposes of these financial statements, Suspension's U.S.
salaried employees are considered to have participated in a multi-employer
postretirement benefit plan. Suspension charged $128 to expense for the year
ended December 31, 1997, related to its participation in this plan.
F-11
<PAGE> 15
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
8. EMPLOYEE BENEFIT PLANS (CONTINUED)
In addition to the aforementioned defined benefit plans, Suspension also
sponsors several defined benefit postretirement plans covering substantially
all Canadian salaried and hourly employees. These plans provide health care
and life insurance benefits for eligible retirees and are noncontributory.
Provisions of the benefit plans for hourly employees are subject to
collective bargaining agreements. Both Canadian salaried and hourly
postretirement medical benefits are supplements to Canadian government
sponsored benefits. Suspension's postretirement health care and life
insurance plans are unfunded.
The following table presents the Canadian salaried and hourly employee
funded status reconciled with amounts recognized in Suspension's December
31, 1997 combined balance sheet.
<TABLE>
<S> <C>
Accumulated postretirement benefit obligations
Retirees $ 1,449
Full eligible active plan participants 1,240
Non-eligible plan participants 2,339
-----------
Accumulated postretirement benefit obligation 5,028
Unrecognized prior service cost (2,673)
Unrecognized gain 5
-----------
Accrued postretirement medical benefit obligation $ 2,360
===========
</TABLE>
Net periodic postretirement benefit cost for 1997 included the following
components:
<TABLE>
<S> <C>
Service cost benefits earned during the period $ 143
Amortization of prior service cost 155
Interest cost on the accumulated postretirement
benefit obligation 258
-----------
Net periodic postretirement benefit cost $ 556
===========
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.0%. The weighted average annual
assumed rate of increase in the per capita cost of covered benefits (i.e.,
healthcare cost trend rate) is 10.0% in 1998 trending to 5.0% in 2003. 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 December 31, 1997 by approximately
$905 and net periodic postretirement benefit cost for the period from
January 1, 1997 to December 31, 1997 by approximately $147.
F-12
<PAGE> 16
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
9. INCOME TAXES
The provision for income taxes comprises:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
<S> <C>
Income (loss) before taxes on income:
United States $ (3,916)
Canada 5,999
----------
$ 2,083
==========
Taxes (benefit) on income:
United States $ (1,332)
Canada 2,159
----------
$ 827
==========
Taxes (benefit) on income consist of:
Current
United States $ (1,417)
Canada 1,728
----------
$ 311
==========
Deferred
United States $ 85
Canada 431
----------
$ 516
==========
</TABLE>
The principal items accounting for the difference in taxes on income
computed at the U.S. statutory rate and as recorded on an overall basis
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
<S> <C>
Statutory U.S. federal income tax rate 35.0%
-----
Taxes on foreign earnings over
U.S. tax rate 2.9
Effect of U.S. graduated rates 1.8
-----
39.7%
=====
</TABLE>
F-13
<PAGE> 17
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
9. INCOME TAXES (CONTINUED)
The temporary differences which give rise to deferred tax assets and
(liabilities) are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
<S> <C>
Deferred tax assets
Postretirement benefits $ 849
Environmental reserve 560
Other 215
----------
Gross deferred tax assets 1,624
----------
Deferred tax liabilities
Property, plant and equipment (1,966)
Pension benefits (1,717)
----------
Gross deferred tax liabilities (3,683)
----------
Net deferred tax liability $ (2,059)
==========
</TABLE>
10. INTERCOMPANY TRANSACTIONS AND ALLOCATIONS
CASH MANAGEMENT
Suspension utilizes Eaton's centralized cash management services. Under this
arrangement, Suspension's accounts receivable are collected and its cash
disbursements are funded by Eaton on a daily basis. Net activity between
Eaton and Suspension is reflected in Eaton's investment in Suspension.
CORPORATE SERVICES
Eaton allocates costs associated with certain corporate overhead, including
executive salaries, risk management, sales and marketing, human resources,
corporate finance and accounting, treasury and public affairs to its
divisions through a corporate assessment charge which is allocated based on
operating capital which consists primarily of current assets, capital assets
and current liabilities. Charges from Eaton for such costs aggregated $1,563
for the year ended December 31, 1997 and are included in selling, general
and administrative expenses in the accompanying combined statement of
operations.
Eaton charges its divisions interest expense based on Eaton's overall debt
structure as well as the net cash used or provided by the divisions.
Interest charges from Eaton aggregated $1,015 for the year ended December
31, 1997.
F-14
<PAGE> 18
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
10. INTERCOMPANY TRANSACTIONS AND ALLOCATIONS (CONTINUED)
Eaton provides various information systems assistance, employee payroll
processing, accounts receivable processing, accounts payable processing,
payment processing and fixed asset processing. These costs are allocated to
Suspension based on certain criteria, including invoices or checks
processed, headcount, fixed asset line items maintained, predetermined rates
or on actual services provided. Charges from Eaton for such costs aggregated
$423 for the year ended December 31, 1997 and are included in selling,
general and administrative expenses in the accompanying combined statement
of operations.
Eaton manages employee medical, dental, life insurance, pension,
postretirement and postemployment benefits on a consolidated basis. Eaton
charges Suspension for its share of such employee-related costs based upon
Suspension's estimated experience or headcount, depending on the nature of
the cost. Charges for such costs are disclosed in the related footnotes
herein with the exception of self insured medical charges for U.S. employees
which aggregated $454 in 1997.
Eaton provides certain research and development and manufacturing technology
services to its divisions. Eaton allocates these costs based on hours
applicable to the respective division. Charges from Eaton to Suspension for
such services aggregated $1,369 for the year ended December 31, 1997. Of
this amount, $271 is included in selling, general and administrative and
$1,098 is included in cost of goods sold in the accompanying statement of
operations.
Suspension shares certain facilities with other Eaton divisions. Eaton
allocates rent expense to Suspension based on square footage occupied. These
charges aggregated $150 in 1997.
Management believes that the methods utilized to allocate costs to
Suspension, as discussed above, are reasonable. However, the terms of
transactions between Eaton and Suspension, including allocated costs, may
differ from those that would result from transactions with unrelated
parties.
INTERCOMPANY PURCHASES
Suspension purchased approximately $471 of inventory from Eaton Japan, a
related party. This inventory is used in the leaf spring manufacturing
process from which the related products are sold to a Japanese transplant.
F-15
<PAGE> 19
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
10. INTERCOMPANY TRANSACTIONS AND ALLOCATIONS (CONTINUED)
EATON INVESTMENT
The Eaton investment balance represents the cumulative transaction
adjustment, cumulative intercompany activity from transactions, cost
allocations, cash management and other charges and credits, between
Suspension and Eaton (and its other business units). A summary of changes in
Eaton investment follows.
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, 1998 1997
(UNAUDITED)
<S> <C> <C>
Beginning Eaton investment $ 40,322 $ 42,090
Net (loss) income (363) 1,256
Intercompany activity 2,292 (3,024)
---------- ----------
Ending Eaton investment $ 42,251 $ 40,322
========== ==========
</TABLE>
11. LEASE COMMITMENTS
Suspension leases certain buildings and equipment under operating lease
agreements. Future minimum lease payments under operating leases having
initial or remaining noncancellable lease terms in excess of one year are as
follows for the year ended December 31:
<TABLE>
<S> <C>
1998 $ 284
1999 117
2000 58
2001 53
-----
$ 512
=====
</TABLE>
Rent expense for the year ended December 31, 1997 was $476.
12. COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL
Suspension is subject to federal, state and local regulations which govern
environmental matters. Suspension has recorded amounts aggregating $1,557
which, in management's best estimate, will be sufficient to provide for
anticipated costs of known environmental matters, which consist primarily of
remediation requirements at Suspension's Canadian facilities.
The effect of resolution of environmental matters on results of operations
cannot be predicted due to the uncertainty concerning both the amount and
timing of future expenditures and future results of operations. However,
management believes, on the basis of presently-available information, that
resolution of these matters will not materially affect the financial
condition of Suspension.
F-16
<PAGE> 20
SUSPENSION DIVISION
A DIVISION OF EATON CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
13. GEOGRAPHIC AREAS - FINANCIAL DATA
<TABLE>
<CAPTION>
UNITED
STATES CANADA TOTAL
<S> <C> <C> <C> <C>
Net sales 1997 $ 15,941 $ 109,835 $ 125,776
Net income (loss) 1997 (2,584) 3,840 1,256
Assets 1997 14,536 43,105 57,641
Liabilities 1997 2,625 14,694 17,319
</TABLE>
Sales between geographic areas approximate market and are not significant.
Suspension corporate office income, expenses, assets and liabilities are
included in the United States column.
14. SUBSEQUENT EVENTS
On April 1, 1998, Eaton sold substantially all of the net assets of
Suspension to Oxford Automotive, Inc. The accompanying financial statements
do not give effect to this transaction.
F-17
<PAGE> 21
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The unaudited pro forma combined balance sheet as of December 31, 1997 (the
"Unaudited Pro Forma Balance Sheet") gives pro forma effect to the acquisition
of the Eaton Corporation Suspension Division (the "Suspension Division") and the
issuance of $35 million of 10 1/8% Senior Subordinated Notes Due 2007, Series B
(the "Series B Offering") as if each had occurred on December 31, 1997. The
acquisition of the Suspension Division is accounted for by the purchase method
of accounting pursuant to which the purchase price is allocated among the
acquired tangible and intangible assets and assumed liabilities in accordance
with estimates of their fair values on the date of acquisition. The pro forma
adjustments represent management's preliminary determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that Oxford Automotive, Inc. (the "Company") believes to be
reasonable under the circumstances. Consequently, the amounts reflected in the
Unaudited Pro Forma Balance Sheet are subject to change and the final values may
differ substantially from these amounts. Management does not expect that
differences between the preliminary and final purchase price allocation will
have a material impact on the Company's financial position. The Unaudited Pro
Forma Balance Sheet does not purport to be indicative of the financial position
of the Company had such transactions actually been completed as of the assumed
dates and for the periods presented, or which may be obtained in the future.
The unaudited pro forma combined statement of operations for the year ended
March 31, 1997 gives pro forma effect to the Company's issuance of $125 million
of 10 1/8% Senior Subordinated Notes Due 2007 (the "Series A Offering"), the
Series B Offering, and the acquisitions of Lobdell Emery Corporation
("Lobdell"), Howell Industries, Inc. ("Howell"), RPI Holdings, Inc. ("RPIH") and
the Suspension Division as if they had occurred on April 1, 1996. The unaudited
pro forma combined statement of operations for the nine months ended December
31, 1997 gives pro forma effect to the Series A Offering, the Series B Offering,
and the acquisitions of Howell, RPIH and the Suspension Division as if they had
occurred on April 1, 1997. The unaudited pro forma combined statement of
operations for the year ended March 31, 1997 and for the nine months ended
December 31, 1997 are collectively referred to as the "Unaudited Pro Forma
Statements of Operations." The Unaudited Pro Forma Statements of Operations do
not purport to be indicative of the results of operations of the Company had
such transactions actually been completed as of the assumed dates and for the
periods presented, or which may be obtained in the future.
F-18
<PAGE> 22
UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF THE PERIOD ENDED
<TABLE>
<CAPTION>
SUSPENSION
COMPANY DIVISION SERIES B PRO FORMA PRO FORMA
DEC 31, 1997 DEC 31, 1997(a) DEC 31, 1997(b) ADJUSTMENTS COMBINED
------------- ------------- ---------------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents .................. $ 19,555 $ 7 $ 36,764 $ (53,465) (c)(d) $ 2,861
Trade accounts receivable, net ............. 51,375 13,115 - - 64,490
Inventories ................................ 20,158 9,574 - - 29,732
Reimbursable tooling ....................... 6,856 - - - 6,856
Prepaid expenses and other current
assets ................................... 1,916 21 - 1,937
Deferred income taxes ...................... 4,681 - - - 4,681
--------- --------- --------- --------- ---------
Total current assets .................. 104,541 22,717 36,764 (53,465) 110,557
Unexpended bond proceeds ................... 4,127 - - - 4,127
Deferred income taxes ...................... 3,886 - - - 3,886
Property, plant and equipment,
net ...................................... 166,055 26,808 - - 192,863
Goodwill ................................... 2,080 - - 12,302 (d) 14,382
Other noncurrent assets .................... 9,623 8,116 438 - (d) 18,177
--------- --------- --------- --------- ---------
Total assets .......................... $ 290,312 $ 57,641 37,202 $ (41,163) $ 343,992
========= ========= ========= ========= =========
Trade accounts payable ..................... $ 32,823 $ 7,164 $ - - $ 39,987
Accrued expenses and other
liabilities .............................. 16,720 4,179 158 - 21,057
Restructuring reserve ...................... 8,845 - - - 8,845
Current portion of long-term debt .......... 4,772 - - - 4,772
--------- --------- --------- --------- ---------
Total current liabilities ............. 63,160 11,343 158 - 74,661
Deferred income taxes ...................... 8,865 2,059 - (2,059) (d) 8,865
Pension liability .......................... 4,644 - - - 4,644
Postretirement medical benefits ............ 35,236 2,360 1,218 (d) 38,814
Other noncurrent liabilities ............... 2,827 1,557 - - 4,384
Long-term debt ............................. 133,745 - 37,044 - 170,789
--------- --------- --------- --------- ---------
Total liabilities ..................... 248,477 17,319 37,202 (841) 302,157
--------- --------- --------- --------- ---------
Redeemable Series A preferred
Stock .................................... 40,458 - - 40,458
Total shareholders' equity ............ 1,377 40,322 - (40,322) (d) 1,377
--------- --------- --------- --------- ---------
Total liabilities and
Shareholders' equity ................. $ 290,312 $ 57,641 $ 37,202 $ (41,163) $ 343,992
========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes To Unaudited Pro Forma Combined Balance Sheet.
F-19
<PAGE> 23
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(Dollars in thousands)
(a) Represents the adjustments for the Suspension Division acquisition
as if it had occurred on December 31, 1997. The December 31,
1997 balance sheet for the Suspension Division was derived from the
December 31, 1997 audited financial statements attached.
(b) Represents the Series B Offering as if it had occurred on December 31,
1997.
<TABLE>
<S> <C>
Issuance of notes - $35.0 million face value, issued at 105.84% $37,044
Prepaid interest on bonds - December 15, 1997 to December 31, 1997 158
Bond acquisition cost (438)
-------
Net proceeds of Series B Notes $36,764
=======
</TABLE>
(c) Represents the estimated purchase price for the Suspension Division.
The acquisition was funded using proceeds of the Series B Offering,
remaining unused proceeds from the Series A Offering and other
available cash.
(d) The acquisition of the Suspension Division will be accounted for by the
purchase method of accounting, pursuant to which the purchase price is
allocated among the acquired tangible and intangible assets and assumed
liabilities in accordance with their estimated fair values on the date
of acquisition. The purchase price and preliminary adjustments to
historical book value of the Suspension Division as a result of the
transaction are as follows:
<TABLE>
<S> <C>
Estimated goodwill $12,302
-------
Net increase in assets $12,302
=======
Proceeds from Series A and Series B Offerings used to finance acquisition 53,465
Increase in Postretirement benefit obligation 1,218
Decrease in deferred taxes (2,059)
Elimination of predecessors investment in the Suspension Division (40,322)
-------
Net increase in liabilities and shareholders equity $12,302
=======
</TABLE>
F-20
<PAGE> 24
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Suspension
Company Howell RPIH Division Pro Forma
Company(a) Pro Forma(b) Pro Forma(c) Pro Forma (d) Pro Forma (e) Combined
------------- ------------- ------------- ------------- -------------- -------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
Mar. 31, 1997 Mar. 31, 1997 Mar. 31, 1997 Mar. 31, 1997 Mar. 31, 1997 Mar. 31, 1997
------------- ------------- ------------- ------------- -------------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 136,861 $ 193,303 $ 91,543 $ 11,736 $ 130,951 $ 564,394
Cost of sales 125,088 187,056 85,795 11,718 121,474 531,131
--------- --------- --------- --------- --------- ---------
Gross profit 11,773 6,247 5,748 18 9,477 33,263
Selling, general and
administrative expenses 7,685 12,437 4,582 963 7,262 32,929
Provision for equipment
impairment and
non-recurring 287 4,960 - - - 5,247
Income (loss) from
operations 3,801 (11,150) 1,166 (945) 2,215 (4,913)
Interest expense, net 3,388 6,830 2,359 581 5,108 18,266
Other income (expense) 2,201 674 399 53 673 4,000
--------- --------- --------- --------- --------- ---------
Income (loss) before
income taxes 2,614 (17,306) (794) (1,473) (2,220) (19,179)
Provision (benefit) for
income taxes 1,065 (6,524) (416) (567) (905) (7,347)
--------- --------- --------- --------- --------- ---------
Net income (loss) $ 1,549 $ (10,782) $ (378) $ (906) $ (1,315) $ (11,832)
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Suspension
Company Howell RPIH Division Pro Forma
Company(f) Pro Forma Pro Forma(j) Pro Forma (k) Pro Forma (l) Combined
---------- --------- ------------ ------------ ------------- --------
Nine Months Nine Months Period Period Nine Months Nine Months
Ended Ended Apr. 1, 1997 - Apr. 1, 1997 - Ended Ended
Dec. 31, 1997 Dec. 31, 1997 Aug. 13, 1997 Nov. 25, 1997 Dec. 31, 1997 Dec. 31, 1997
------------- ------------- --------------- -------------- ------------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net sales $295,530 $ - $ 34,329 $ 9,035 $ 92,217 $431,111
Cost of sales 267,180 - 31,189 10,642 85,913 394,924
-------- -------- -------- -------- -------- --------
Gross profit 28,350 - 3,140 (1,607) 6,304 36,187
Selling, general and
administrative expenses 13,587 37(g) 1,651 177 5,706 21,158
Provision for equipment
impairment and
non-recurring - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) from
operations 14,763 (37) 1,489 (1,784) 598 15,029
Interest expense, net 7,921 (88)(h) 858 432 3,830 12,953
Other income (expense) 531 - - (35) 882 1,378
-------- -------- -------- -------- -------- --------
Income (loss) before
income taxes 7,373 51 631 (2,251) (2,350) 3,454
Provision (benefit) for
income taxes 2,949 20 (i) 269 (846) (941) 1,451
-------- -------- -------- -------- -------- --------
Net income (loss) $ 4,424 $ 31 $ 362 $ (1,405) $ (1,409) $ 2,003
======== ======== ======== ======== ======== ========
</TABLE>
F-21
<PAGE> 25
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(a) Statement of Operations Data for the Company for the year ended March
31, 1997 includes operating data for Lobdell Emery Corporation
("Lobdell") for the period subsequent to acquisition by the Company
(January 11, 1997 to March 31, 1997).
(b) The Company Pro Forma information has been adjusted as follows to
reflect the Company's Statement of Operations Data as if the Company
had acquired Lobdell on April 1, 1996:
<TABLE>
<CAPTION>
PRO FORMA COMPANY
LOBDELL(1) ADJUSTMENTS PRO FORMA
---------- ----------- ---------
PERIOD FROM
APRIL 1, 1996
THROUGH YEAR ENDED YEAR ENDED
JANUARY 10, MARCH 31, MARCH 31,
1997 1997 1997
-------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $193,303 $ - $193,303
Cost of sales 186,707 349 (2) 187,056
-------- ------ --------
Gross profit 6,596 (349) 6,247
Selling, general and administrative expenses 12,398 39 (3) 12,437
Provision for equipment impairment and non-recurring 4,960 - 4,960 (4)
-------- ------ --------
Income (loss) from operation (10,762) (388) (11,150)
Interest expense, net 2,729 4,101 (5) 6,830
Other income (expense) 674 - 674
-------- ------ --------
Income (loss) before income taxes (12,817) (4,489) (17,306)
Provision (benefit) for income taxes (4,728) (1,796) (6) (6,524)
-------- ------ --------
Net income (loss) $ (8,089) $(2,693) $(10,782)
======== ======= ========
</TABLE>
<TABLE>
<S> <C> <C>
(1) Statement of Operations data for Lobdell for the period prior to
acquisition by the Company (April 1, 1996 - January 10, 1997) was
derived from Lobdell's unaudited internal financial statements.
(2) In accordance with the purchase method of accounting, the Company
recognized Lobdell's unfunded Accumulated Postretirement Benefit
Obligation ("APBO"), which included Lobdell's unrecognized
transition obligation of approximately $11,500, at January 10,
1997. Accordingly, this adjustment reflects the decrease in net
periodic postretirement benefit cost, from April 1, 1996 through
January 10, 1997, had Lobdell's unfunded APBO been recognized at
the beginning of the fiscal year.......................... $(564)
Increased depreciation expense as a result of the write up of
property, plant and equipment to fair market value as a part of
the acquisition of Lobdell................................ 913
-----
$ 349
=====
</TABLE>
F-22
<PAGE> 26
<TABLE>
<S> <C> <C>
(3) Represents the following changes as they relate to selling,
general and administrative expenses: Elimination of commissions
paid by Lobdell to Grace Emery Sales Corporation ("GESC"), a
related Domestic International Sales Corporation. These amounts
ultimately represented dividends paid to the prior shareholders of
Lobdell. On a pro forma basis, assuming the acquisition of Lobdell
on April 1, 1996, and the dissolution of GESC as of such date,
thereby eliminating the commission payment................ $(370)
Amortization of bond acquisition fees..................... 409
-----
$ 39
=====
</TABLE>
(4) The Provision for equipment impairment and non-recurring charges
includes: (i) on a pro forma basis, for the year ended March 31,
1997, a $3,000 impairment reserve against certain long-lived
assets of Laserweld, a $540 provision for liability under the WARN
Act, $500 of excess legal and professional fees associated with
the marketing and sale of Lobdell and $920 related to the loss
before income tax for the discontinuance of the Laserweld and
Parallel operations. Management does not anticipate that these
costs will be a part of future operations.
(5) Represents the net effect on interest expense as a result of (i)
the elimination of historical interest expense after the repayment
of the existing senior bank credit facilities and other
outstanding debt, using proceeds from the Series A Offering and
(ii) the Series A Offering, using an interest rate of 10.125% per
annum and the Series B Offering using an interest rate of 9.25%
per annum. Amortization of bond premium will be on a straight line
basis over the life of the bonds. This amount excludes interest on
the portion of the proceeds of the Series A and Series B Offerings
used for the acquisitions of Howell Industries, Inc. ("Howell"),
RPIH and the Suspension Division. See Notes (c)(4), (d)(4) and
(e)(4).
(6) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
F-23
<PAGE> 27
(c) The Howell Pro Forma information includes the Statement of Operations
data for Howell as if the Company had acquired Howell on April 1, 1996:
<TABLE>
<CAPTION>
PRO FORMA HOWELL
HOWELL (1) ADJUSTMENTS PRO FORMA
---------- ----------- ---------
PERIOD FROM
MAY 1, 1996
THROUGH YEAR ENDED YEAR ENDED
APRIL 30, 1997 MARCH 31, 1997 MARCH 31, 1997
-------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $ 91,543 $ - $ 91,543
Cost of sales 85,477 318 (2) 85,795
-------- ------- --------
Gross profit 6,066 (318) 5,748
Selling, general and administrative expenses 4,440 142 (3) 4,582
Provision for equipment impairment and non-recurring - - -
-------- ------- --------
Income (loss) from operations 1,626 (460) 1,166
Interest expense, net 5 2,354 (4) 2,359
Other income (expense) 399 - 399
-------- ------- --------
Income (loss) before income taxes 2,020 (2,814) (794)
Provision (benefit) for income taxes 710 (1,126) (5) (416)
-------- -------- --------
Net income (loss) $ 1,310 $(1,688) $ (378)
======== ======= ========
</TABLE>
(1) For purposes of the Unaudited Pro Forma Statement of
Operations, it has been assumed that the results of
operations of Howell for the twelve months ended April 30,
1997 would have been comparable to the twelve months ended
March 31, 1997. The Statement of Operations data for the
twelve months ended April 30, 1997 was derived from Howell's
filings with the SEC under the Exchange Act.
(2) Represents increased depreciation expense as a result of the
write up of property, plant and equipment to the fair market
value as a part of the purchase accounting related to the
acquisition of Howell.
(3) Represents amortization of acquisition expenses and goodwill
as a result of the acquisition.
(4) Represents the net effect on interest expenses as a result of
the use of proceeds from the Series A Offering for the
acquisition of Howell of $23,245. Interest expense is
calculated using an interest rate of 10.125% per annum. See
Note (b)(5).
(5) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
F-24
<PAGE> 28
(d) The RPIH Pro Forma information includes the Statement of Operations
data for RPIH as if the Company had acquired RPIH on April 1, 1996:
<TABLE>
<CAPTION>
PRO FORMA RPIH
RPIH(1) ADJUSTMENTS PRO FORMA
------- ----------- ---------
PERIOD FROM
APRIL 1, 1996
THROUGH YEAR ENDED YEAR ENDED
MARCH 31, 1997 MARCH 31, 1997 MARCH 31, 1997
-------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $11,736 $ - $11,736
Cost of sales 11,658 60 (2) 11,718
------- ------- --------
Gross profit 78 (60) 18
Selling, general and administrative expenses 889 74 (3) 963
Provision for equipment impairment and non-recurring - - -
------ ------- -----------
Income (loss) from operations (811) (134) (945)
Interest expense, net 328 253 (4) 581
Other income (expense) 53 - 53
------ ------- -----------
Income (loss) before income taxes (1,086) (387) (1,473)
Provision (benefit) for income taxes (412) (155) (5) (567)
------ ------- -----------
Net income (loss) $ (674) $ (232) $ (906)
======= ======= =======
</TABLE>
(1) Statement of Operations data for RPIH for the twelve months
ended March 31, 1997 was derived from RPIH's unaudited
internal financial statements.
(2) Represents increased depreciation expense as a result of the
write up of property, plant and equipment to fair market
value as a part of the purchase accounting related to the
acquisition of RPIH.
(3) Represents amortization of acquisition expenses and goodwill
related to the RPIH acquisition.
(4) Represents the net effect on interest expense as a result of
the use of proceeds from the Series A Offering for the
acquisition of RPIH of $2,500. Interest expense is calculated
using an interest rate of 10.125% per annum. See Note (b)(5).
(5) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
F-25
<PAGE> 29
(e) The Suspension Division Pro Forma information includes the Statement of
Operations data for the Suspension Division as if the Company had
acquired the Suspension Division on April 1, 1996:
<TABLE>
<CAPTION>
SUSPENSION
SUSPENSION PRO FORMA DIVISION
DIVISION(1) ADJUSTMENTS PRO FORMA
----------- ----------- ---------
PERIOD FROM
APR. 1, 1996 - YEAR ENDED YEAR ENDED
MAR. 31, 1997 MAR. 31, 1997 MAR. 31, 1997
------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $ 130,951 $ -- $ 130,951
Cost of sales 121,474 -- 121,474
--------- --------- ---------
Gross profit 9,477 9,477
Selling, general and administrative expenses 6,873 389 (2) 7,262
Provision for equipment impairment and non-recurring -- -- --
--------- --------- ---------
Income (loss) from operations 2,604 (389) 2,215
Interest expense, net 974 4,134 (3) 5,108
Other income (expense) 673 -- 673
--------- --------- ---------
Income (loss) before income taxes 2,303 (4,523) (2,220)
Provision (benefit) for income taxes 904 (1,809)(4) (905)
--------- --------- ---------
Net income (loss) $ 1,399 $ (2,714) $ (1,315)
========= ========= =========
</TABLE>
(1) Statement of Operations data for the Suspension Division for
the twelve months ended March 31, 1997 was derived from the
Suspension Division's unaudited internal financial
statements.
(2) Represents amortization of acquisition expenses and goodwill
related to the Suspension Division acquisition.
(3) Represents the net effect on interest expense as a result of
the use of proceeds from the Series A and Series B Offerings
for the acquisition of the Suspension Division of $53,465.
Interest expense is calculated using an interest rate of
10.125% per annum for the Series A Notes and 9.25% per annum
for the Series B Notes. See Note (b)(5).
(4) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
(f) Statement of Operations Data for the Company for the Nine Months
Ended December 31, 1997 includes operating data for Howell and
RPIH for the periods subsequent to acquisition (Howell - August
14, 1997 to December 31, 1997 and RPIH - November 26, 1997 to
December 31, 1997).
(g) Represents amortization of bond acquisition fees associated with
the Series A Notes.
(h) Represents the net effect on interest expense as a result of (1)
the elimination of historical interest expense after the repayment
of the existing senior bank credit facilities and other
outstanding debt, using proceeds from the Series A Offering and
(2) the Series A and Series B Offerings, using an interest rate of
10.125% per annum for the Series A Notes and 9.25% per annum for
the Series B Notes. This amount excludes interest
F-26
<PAGE> 30
on the portion of the proceeds of the Series A and Series B Offerings
used for the Howell, RPIH and the Suspension Division acquisitions as
follows:
Interest differential historical versus Offerings $ 4,053
Acquisition of:
Howell (884)
RPI (169)
Suspension (3,088)
--------
$ ( 88)
========
See Notes (j)(4), (k)(4) and (l)(4).
(i) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
(j) The Howell Pro Forma information includes Statement of Operations data
for Howell as if the Company had acquired Howell on April 1, 1997:
<TABLE>
<CAPTION>
PRO FORMA HOWELL
HOWELL(1) ADJUSTMENTS PRO FORMA
--------------- --------------- ---------------
PERIOD FROM PERIOD FROM PERIOD FROM
APRIL 1, 1997 APRIL 1, 1997 APRIL 1, 1997
THROUGH THROUGH THROUGH
AUGUST 13, 1997 AUGUST 13, 1997 AUGUST 13, 1997
--------------- --------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $34,329 $ - $34,329
Cost of sales 31,070 119 (2) 31,189
------ -------- ------
Gross profit 3,259 (119) 3,140
Selling, general and administrative expenses 1,626 25 (3) 1,651
Provision for equipment impairment and non-recurring - - -
------ -------- ------
Income (loss) from operations 1,633 (144) 1,489
Interest expense, net (26) 884 (4) 858
Other income (expense) - - -
------ -------- ------
Income (loss) before income taxes 1,659 (1,028) 631
Provision (benefit) for income taxes 680 (411) (5) 269
------ -------- ------
Net income (loss) $ 979 $ (617) $ 362
======= ======== =======
</TABLE>
(1) Statement of Operations data for Howell for the period prior
to acquisition by the Company (April 1, 1997 - August 13,
1997). The information was derived from Howell's unaudited
internal financial statements.
(2) Represents increased depreciation expense as a result of the
write up of property, plant and equipment to fair market
value as a part of the purchase accounting related to the
acquisition of Howell.
(3) Represents amortization of acquisition expenses and goodwill
related to the Howell acquisition.
(4) Represents the net effect on interest expense as a result of
the use of proceeds from the Series A Offering for the
acquisition of Howell of $23,245. Interest expense is
calculated using an interest rate of 10.125% per annum. See
Note (h).
(5) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
F-27
<PAGE> 31
(k) The RPIH Pro Forma information includes Statement of Operations
data as if the Company had acquired RPIH on April 1, 1997:
<TABLE>
<CAPTION>
PRO FORMA RPIH
RPIH(1) ADJUSTMENTS PRO FORMA
----------------- ----------------- -----------------
PERIOD FROM PERIOD FROM PERIOD FROM
APRIL 1, 1997 APRIL 1, 1997 APRIL 1, 1997
THROUGH THROUGH THROUGH
NOVEMBER 25, 1997 NOVEMBER 25, 1997 NOVEMBER 25, 1997
----------------- ----------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $ 9,035 $ - $ 9,035
Cost of sales 10,602 40 (2) 10,642
------ ----- ------
Gross profit (1,567) (40) (1,607)
Selling, general and administrative expenses 127 50 (3) 177
Provision for equipment impairment and non-recurring - - -
------ ----- ------
Income (loss) from operations (1,694) (90) (1,784)
Interest expense, net 263 169 (4) 432
Other income (expense) (35) - (35)
------ ----- ------
Income (loss) before income taxes (1,992) (259) (2,251)
Provision (benefit) for income taxes (742) (104) (5) (846)
------ ----- ------
Net income (loss) $(1,250) $(155) $(1,405)
======= ===== =======
</TABLE>
(1) Statement of Operations data for RPIH for the period prior to
acquisition by the Company (April 1, 1997 to November 25,
1997). The information was derived from RPIH's unaudited
internal financial statements.
(2) Represents increased depreciation expense as a result of the
write up of property, plant and equipment to fair market
value as a part of the purchase accounting related to the
acquisition of RPIH.
(3) Represents amortization of acquisition expenses and goodwill
related to the RPIH acquisition.
(4) Represents the net effect on interest expense as a result of
the use of proceeds from the Series A Offering for the
acquisition of RPIH of $2,500. Interest expense is calculated
using an interest rate of 10.125% per annum. See Note (h).
(5) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
F-28
<PAGE> 32
(l) The Suspension Division Pro Forma information includes Statement
of Operations data as if the Company had acquired the Suspension
Division on April 1, 1997:
<TABLE>
<CAPTION>
SUSPENSION
SUSPENSION PRO FORMA DIVISION
DIVISION(1) ADJUSTMENTS PRO FORMA
------------- ------------- -------------
PERIOD FROM PERIOD FROM PERIOD FROM
APR. 1, 1997 - APR. 1, 1997 - APR. 1, 1997 -
DEC. 31, 1997 DEC. 31, 1997 DEC. 31, 1997
------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales $ 92,217 $ - $ 92,217
Cost of sales 85,913 - 85,913
-------- -------- --------
Gross profit 6,304 6,304
Selling, general and administrative expenses 5,414 292 (2) 5,706
Provision for equipment impairment and non-recurring - - -
-------- -------- --------
Income (loss) from operations 890 (292) 598
Interest expense, net 742 3,088 (3) 3,830
Other income (expense) 882 - 882
-------- -------- --------
Income (loss) before income taxes 1,030 (3,380) (2,350)
Provision (benefit) for income taxes 411 (1,352) (4) (941)
-------- -------- --------
Net income (loss) $ 619 ($ 2,028) ($ 1,409)
======== ======== ========
</TABLE>
(1) Statement of Operations data for the Suspension Division for
the nine months ended December 31, 1997 was derived from the
Suspension Division's unaudited internal financial
statements.
(2) Represents amortization of acquisition expenses and goodwill
related to the Suspension Division acquisition.
(3) Represents the net effect on interest expense as a result of
the use of proceeds from the Series A and Series B Offerings
for the acquisition of the Suspension Division of $53,465.
Interest expense is calculated using an interest rate of
10.125% per annum for the Series A Notes and 9.25% per annum
for the Series B Notes. See Note (h).
(4) Represents the estimated income tax effect of the pro forma
adjustments using an effective tax rate of 40%.
F-29
